Slide 1: Second-Quarter Fiscal 2014 Earnings
* Second-Quarter Fiscal 2014 Earnings April 30, 2014 ® Registered trademark, Ashland or its subsidiaries, registered in various countries ™ Trademark, Ashland or its subsidiaries, registered in various countries
Slide 2: Forward-Looking Statements
* Forward-Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Ashland has identified some of these forward-looking statements with wor
Slide 3: Fiscal Second Quarter 2014 Highlights
* Fiscal Second Quarter 2014 Highlights1 Announced pending sale of Ashland Water Technologies for $1.8 billion in cash Now reported as discontinued operations in current and prior periods Reported EPS from continuing operations of ($0.78) Adjusted EPS of $1.53, flat with prior year Excludes $0.21 pe
Slide 4: Adjusted EPS from continuing operations
* Adjusted EPS from continuing operations $1.53 AWT Operating income and stranded costs +$0.33 Assumes a 25% tax rate Lower tax rate, primarily due to AWT divestiture -$0.08 Discrete tax items -$0.10 MAP tax benefit -$0.03 Items Affecting Adjusted EPS 1 Ashland's second-quarter earnings release date
Slide 5: Fiscal Second Quarter – Continuing Operations Key Items Affecting Income
* Fiscal Second Quarter – Continuing Operations Key Items Affecting Income Intangible amortization expense in March 2014 quarter of $22 million Excluding intangible amortization, adjusted EPS would have been 20 cents higher, or $1.73
Slide 6: Adjusted Results Summary
* Adjusted Results Summary1 Sales flat with prior year Strong sequential improvement in sales and EBITDA 1 Ashland's second-quarter earnings release dated April 30, 2014, available on Ashland's website at http://investor.ashland.com, reconciles adjusted amounts to amounts reported under GAAP.
Slide 7: Ashland Specialty Ingredients Adjusted Results Summary
* Volume up 3% versus prior year; up 14% sequentially EBITDA margin of 20.5% Up 210 basis points from December quarter Ashland Specialty Ingredients Adjusted Results Summary1 1 Ashland's second-quarter earnings release dated April 30, 2014, available on Ashland's website at http://investor.ashland.c
Slide 8: Ashland Performance Materials Adjusted Results Summary
* Ashland Performance Materials Adjusted Results Summary1 Strong volume gains in both Adhesives and Composites and improved performance from elastomers GP% increase due to core volumes and margin, elastomers improvement 1 Ashland's second-quarter earnings release dated April 30, 2014, available on A
Slide 9: Ashland Consumer Markets (Valvoline) Results Summary
* Ashland Consumer Markets (Valvoline) Results Summary1 Record second quarter in operating income Margin improvement versus prior year due to mix and lower input costs 1 Ashland's second-quarter earnings release dated April 30, 2014, available on Ashland's website at http://investor.ashland.com, rec
Slide 10: Ashland Water Technologies Divestiture Update
* Ashland Water Technologies Divestiture Update Expect to close by end of fiscal year Subject to regulatory approvals and customary closing conditions Transition Services Agreement (TSA) being finalized Total stranded costs from divestiture are roughly $75 million Will be removed as part of the glob
Slide 11: Ashland Water Technologies Adjusted Results Summary
* Results reflect AWT business as historically reported and are provided for comparative purposes only Ashland Water Technologies Adjusted Results Summary1 1 Ashland's second-quarter earnings release dated April 30, 2014, available on Ashland's website at http://investor.ashland.com, reconciles adju
Slide 12: Accounting Effects of AWT Divestiture
* Accounting Effects of AWT Divestiture AWT Op Inc from Summary Results Slide AWT Related D&A Income Reported in Discontinued Operations Stranded Costs AWT Related Pension Costs AWT Divestiture Related Costs 24 7 (17) (4) 17 9 1.53 1.76 Ashland Water Technologies contributes $17 million to discontin
Slide 13: Fiscal Second Quarter 2014 Corporate Items
* Fiscal Second Quarter 2014 Corporate Items Capital Expenditures of $51 million Full year forecast reduced to $245 million Effective tax rate of 15.4% Expected full year rate now at 21% Trade Working Capital1 remains ahead of target 17.6% versus target of 17.7% Free cash flow2 generation of $124 mi
Slide 14: Global Restructuring Program Update
* Global Restructuring Program Update Approximately $200 million of cost reductions identified Expect to have over 50% of run-rate savings by end of FY14 Book costs: $140 million, Cash costs: $120 million Accomplishments to date: Identified approximately 800 job eliminations by end of calendar 2014
Slide 15: Cost Savings Plan
* Cost Savings Plan 19 19 Excluding AWT, cost savings should lead to SG&A % of sales at ~15% Strict cost control to remain at this level Maximize operating leverage Identified $200 million in cost reductions Over half in place by end of FY14 Substantially all captured by Q2 FY15 Remainder by early 2
Slide 16: Margin Profile Expectations
* Margin Profile Expectations 1 Ashland 2013 adjusted EBITDA margin assumes $75 million of stranded costs from AWT divestiture; Ashland normalized EBITDA margin assumes elimination of all stranded costs Cost Savings and Improved Execution Lead to ~20% EBITDA Margin Expected Margin Expansion From: |
Slide 17: Appendix A: EBITDA Bridges
ASHLAND. Appendix A: EBITDA Bridges
Slide 18: Ashland Q2 FY 2013 vs. Q2 FY 2014 Adjusted EBITDA Bridge
* Ashland Q2 FY 2013 vs. Q2 FY 2014 Adjusted EBITDA Bridge 4 Q2 2013 Volume/Mix Q2 2014 Currency Translation Margin 6 290 272 SG&A Expenses (24) 0 Other (4) ($ millions) Preliminary Stronger volumes and improved margins contributed $10 million to EBITDA Higher SG&A costs were a $24 million headwind
Slide 19: Ashland Specialty Ingredients Adjusted EBITDA Bridge
* Ashland Specialty Ingredients Adjusted EBITDA Bridge Q2 2013 Volume/ Mix Q2 2014 Currency Translation Margin SG&A Expenses Q2 FY 2013 versus Q2 FY 2014 (1) (8) (11) 136 I&S pricing and higher costs offset favorable guar input costs SG&A increase primarily due to increased performance based compens
Slide 20: Ashland Water Technologies Adjusted EBITDA Bridge
* Q2 2013 Volume/ Mix Q2 2014 Currency Translation Margin SG&A Expenses Q2 FY 2013 versus Q2 FY 2014 39 3 3 (1) (1) Other (1) 42 ($ millions) Preliminary Ashland Water Technologies Adjusted EBITDA Bridge Results reflect AWT business as historically reported and are provided for comparative purposes
Slide 21: Ashland Performance Materials Adjusted EBITDA Bridge
* Ashland Performance Materials Adjusted EBITDA Bridge Q2 2013 Volume/ Mix Q2 2014 Currency Translation Margin SG&A Expenses Q2 FY 2013 versus Q2 FY 2014 3 13 (1) Other (5) 43 Strong volumes and improved performance from Elastomers led to year-over-year EBITDA gain SG&A increase primarily due to inc
Slide 22: Ashland Consumer Markets Adjusted EBITDA Bridge
* Ashland Consumer Markets Adjusted EBITDA Bridge Continued mix upgrade and better pricing through several channels, key tailwinds to quarter Foreign exchange presented modest headwind to EBITDA Q2 2013 Volume/ Mix Q2 2014 Currency Translation Margin SG&A Expenses Q2 FY 2013 versus Q2 FY 2014 Other
Slide 23: Appendix B: Volume Trends and Liquidity and Net Debt
Appendix B: Volume Trends and Liquidity and Net Debt
Slide 24: Normalized Volume Trends
* Normalized Volume Trends1 Period Ended 1 Excludes volumes associated with Casting Solutions and divested Pinova, Synlubes, and PVAc businesses for all periods. Includes volumes associated with ISP and Ara Quimica for all periods. 2 Water Technologies included for comparative purposes only. Rolling
Slide 25: Liquidity and Net Debt
* Liquidity and Net Debt ($ in millions) Scheduled Debt Repayments by Fiscal Year
Slide 26: Appendix C: Business Profiles
Appendix C: Business Profiles 12 Months Ended March 31, 2014
Slide 27: Corporate Profile: Sales by Unit and Geography
* Corporate Profile By commercial unit By geography 1 For 12 months ended March 31, 2014. 2 Ashland includes only U.S. and Canada in its North America designation. North America2 53% Asia Pacific 16% Latin America/ Other - 7% Europe 24% Ashland Specialty Ingredients 42% Ashland Performance Materials
Slide 28: Corporate Profile: Adjusted EBITDA
* Corporate Profile 1 For 12 months ended March 31, 2014. See Appendix B for reconciliation to amounts reported under GAAP. NYSE Ticker Symbol: ASH Total Employees: ~11,000 Outside North America ~30% Number of Countries in Which Ashland Has Sales: More than 100 Ashland Specialty Ingredients 52% Ashl
Slide 29: Ashland Specialty Ingredients
* Ashland Specialty Ingredients A global leader in water-soluble and film-forming polymers 1 See Appendix B for reconciliation to amounts reported under GAAP. For 12 Months Ended March 31, 2014 Sales: $2.6 billion Adjusted EBITDA: $523 million1 Adjusted EBITDA Margin: 20.3%1 Sales by Product Cellulo
Slide 30: Ashland Performance Materials
* Ashland Performance Materials Global leader in composite resins, specialty adhesives and elastomers Sales by Geography For 12 Months Ended March 31, 2014 Sales: $1.5 billion Adjusted EBITDA: $136 million1 Adjusted EBITDA Margin: 9.1%1 Sales by Product Composites 59% Adhesives 22% Elastomers 19% Co
Slide 31: Ashland Consumer Markets
* Ashland Consumer Markets: A leading worldwide marketer of premium-branded automotive lubricants and chemicals International Sales by Region2 For 12 Months Ended March 31, 2014 Sales: $2.0 billion EBITDA: $342 million1 EBITDA Margin: 17.0%1 Sales by Product Lubricants 85% Chemicals - 8% Do-It-Yours
Slide 32: Appendix D: Reclassifications and Regulation G Reconciliations
Appendix D: Reclassifications and Regulation G Reconciliations
Slide 33: Reconciliation of Non-GAAP Data for 12 Months Ended March 31, 2014
* Ashland Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data for 12 Months Ended March 31, 2014 ($ millions, except percentages) 1 Quarterly totals may not sum to actual results due to quarterly rounding conventions. Calculation of adjusted EBITDA for each quarter has been reconciled
Slide 34: Ashland closing slide
ASHLAND. With good chemistry great things happen.”