Ashland Inc. · NYSE:ASH
Ashland — Q4 FY2014 Earnings Presentation
30 slides from Ashland's earnings presentation, Nov 5, 2014
Slide 1: Ashland
ASHLAND. With good chemistry great things happen” ® Registered trademark, Ashland arits subsidiaries, registered in various countries ‘Trademark, Ashlandar its-subsidiares, registered in variouscourties
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 wards
Slide 3: Fiscal Fourth Quarter 2014 Highlights
Fiscal Fourth Quarter 2014 Highlights* + Loss of $0.35 per share from continuing operations — Includes an actuarial loss on pension + Adjusted earnings of $1.42 vs. $1.29 per share in prior year + Volumes increased 3% year over year + Sales of $1.5 billion, up 5% from year-ago period + Adjusted EBIT
Slide 4: Adjustments to results (In Process R&D, restructuring, tax)
In Process R&D Ashland Ashland ‘Specialty Performance Ingredients Materials Valvoline Restructuring Legal reserve Loss on pension and OPEB ‘Tax adjustments Total In Process R&D Restructuring and integration (Gain on pension and OPEB MAP settlement charge ‘Tax adjustments Total ¢ Intangible amortizat
Slide 5: Adjusted Results Summary
sted Results Summary’ ($ in millions) Fiscal Fourth Quarter Three months ended Preliminary Three months ended Sept. 30, dune 30, 2014 2013 Change || 2014 Change Sales $1,538 $1,470 5 % || $1,605 (4) % Gross profit as a percent of sales 278 % 276 % 20 bp 28.4 % (60) bp Selling, general and admin/R&D
Slide 6: Ashland Specialty Ingredients
Ashland Specialty Ingredients Adjusted Results-‘Summary' ($in millions) Fiscal Fourth Quarter Three months ended Preliminary Three months ended Sept. 30, June 30, 2014 2013 Change || 2014 Change Metric tons sold (in thousands) - Actives basis 914 87.3 4% 95.0 (4) % Sales $ 635 $ 585 9% | $ 653 (3) %
Slide 7: Ashland Performance Materials
Ashland Performance Materials Adjusted Results-‘Summary' ($in millions) Fiscal Fourth Quarter Three months ended Preliminary Three months ended Sept. 30, June 30, 2014 2013 Change || 2014 Change Metric tons sold (in thousands) 145.1 139.8 4% 154.7 (6) % Sales $ 383 $ 377 2% |) $ 420 (9) % Gross prof
Slide 8: Valvoline
Valvoline Re ($in millions) Fiscal Fourth Quarter Three months ended Preliminary Three months ended Sept. 30, June 30, 2014 2013 Change || 2014 Change Lubricant gallons (in millions) 415 40.8 2% 42.8 (3) % Sales $ 520 $ 508 2% | $ 532 (2) % Gross profit as a percent of sales 311% 321 % (100) bp 32.7
Slide 9: Fiscal Fourth Quarter 2014 Corporate Items
Fiscal Fourth Quarter 2014 Corporate Items Pension and other post-retirement adjustment of $317 million pre-tax — ExpectFY 2015 pension and other post-retirementincome of $26 million — ExpectFY 2015 pension cash funding of ~$95 million vs. $43 million in 2014 + Net interest expense of $40 million +
Slide 10: More than half of the $200 million in annualized cost savings
* More than half of the $200 million in annualized cost savings achieved through the fourth quarter — Continue to expect substantially all savings to be realized by end of Q2 FY15 — Estimated book costs now $160-$170 million; estimated cash costs now $120-$130 million + More than 80 percent of plann
Slide 11: Share Buyback Program Update
Share Buyback Program Update + To date, approximately 8.9 million shares have been retired under ASR and 10b5-1 programs + Strong underlying catalysts support share price appreciation — Consistent growth and margin expansion in core areas of the business — Global restructuring program leading to $20
Slide 12: Relentless focus on operational excellence
Relentless focus on operational excellence Commercial excellence SG&A cost efficiency Supply chain optimization = Implement strong market « Leverage SG&A with = Maximize plant efficiencies segmentation strategies targetedincreasesin highest growth segments = Continue driving forhigher = Increase cus
Slide 13: Margin Profile Expectations
Margin Profile Expectations A Bridge from 2014 Cost savings and improved execution expected to deliver strong earnings growth and ASH EBITDA margin exceeding 18% in 2015 Expected Additional Longerm Long-term 2014 2015 Adjusted = jargin Normalized Adjusted EBITDA% © Expansion EBITDA% Operating Segmen
Slide 14: Appendix A: EBITDA Bridges
ASHLAND. Appendix A: EBITDA Bridges
Slide 15: Adjusted EBITDA Bridge ($ millions)
($ millions) Preliminary 27 1 ft) © (4) Q4 2013 Volume/Mix Margin SG&A Currency Other Q4 2014 Expenses Translation Stronger volumes and mix contributed $27 million to EBITDA Good ASI margins offset primarily by 1&S turnaround and BDO PHEING ASHLAND. 1s
Slide 16: Q4 FY 2013 versus Q4 FY 2014 EBITDA Bridge
{S millions) Q4 FY 2013 versus Q4 FY 2014 Preliminary = CT Q4 2013 Volume! Margin SG&A Currency Other Q4 2014 Mix Expenses Translation ¢ Strong volume/mix and disciplined cost execution led to $34 million Volume/mix and margin tailwind e Incentive compensation offset savings from global restructurin
Slide 17: Ashland Performance Materials Adjusted EBITDA Bridge
Ashland Performance Materials Adjusted EBITDA Bridge ietalorey Q4 FY 2013 versus Q4 FY 2014 2 0 0 mm) 4) Q4 2013 Volume! Margin SG&A Currency Other Q42014 Mix Expenses Translation « Good volumes provided a tailwind to the quarter e 1&S turnaround and BDO pricing negatively affected margins by approx
Slide 18: Q4 FY 2013 versus Q4 FY 2014 EBITDA Bridge
{S millions) Q4 FY 2013 versus Q4 FY 2014 Preliminary 2 6 0 0 a TY (4) Q4 2013 Volume/ Margin SG&A Currency Other Q42014 Mix Expenses Translation e Strong volume and efficient SG&A spend were key tailwinds to the quarter ¢ Raw material increases negatively affected margin ASHLAND. i
Slide 19: Appendix B: Volume Trends and Liquidity and Net Debt
ASHLAND. Appendix B: Volume Trends and Liquidity and Net Debt
Slide 20: Normalized Volume Trends
Normalized Volume Trends’ 110% Rolling Four Quarters 105% 100% 95% ee ie ee 90% Sep 12 Dee 12 Mar 13 Jun 13 Sept 13 Dec 13 Mar '14 Jun'14 Sept '14 Period Ended Excludes volumes associated with Casting Solutions and divested Pinova, Synlubes, and PVAc ASHLAND. businesses far all periods. Includes vol
Slide 21: Liquidity and Net Debt
Liquidity and Net Debt (8 in millions) At Sept. 20, Liquidity 2014 Cash Ss 13 ‘Available revolver and AVR facility capacity 4084 Liquidity S277 Interest ‘At Sept. 30, Debt Expiration Rate Moody's S&P___2014 “4.750% senior notes, farsi t2smition, C8202 475% Bet BB S100 3.875% senior notes, perso niti
Slide 22: Appendix C: Business Profiles
ASHLAND. Appendix C: Business Profiles 12 Months Ended September 30, 2014
Slide 23: Sales - $6.1 Billion
Sales’ - $6.1 Billion By commercial unit Ashland Specialty Ingredients Ashland M% Performance Materials 26% Valvoline 33% 1 For12 months ended September 30, 2014. 2 Ashland includes only U.S. and Canada in its North America designation. By geography North America? Asia Pacific 15% Americal Other- 7%
Slide 24: NYSE Ticker Symbol: ASH
NYSE Ticker Symbol: ASH Total Employees: ~11,000 Secciay Valvoline Outside North America ~30% ! se sie Number of Countries More in Which Ashland : than 100 Has Sales: ASHLAND. 1 For12 months ended September 30, 2014. See Appendix D for reconciliation to amounts reported under GAAP. 24
Slide 25: Specialty Ingredients sales by market, product, geography
Sales 5 Sales Sales by Market by Product by Geography J Asia Adhi y L . é 12% Europe Pacific \ 33% 18% Industrial . Latin Americal Specialties a = Other- 10% Cellulosics - 31% North America 39% For 12 Months Ended September 30, 2014 Sales: $2.5 billion Adjusted EBITDA: $529 million’, Adjusted EBITDA
Slide 26: Performance Materials sales by market, product, geography
Sales Sales Sales by Market by Product by Geography ther Elastomers | Process Composites Construction 56% Industrial 26% For 12 Months Ended September 30. 2014 Sales: $1.6 billion Adjusted EBITDA: $166 million’ Adjusted EBITDA Margin: 10.5%! 1 See Appendix D for reconciliation to amounts reported un
Slide 27: Valvoline sales by market, product, region
Sales Sales International Sales by Market by Product by Region? Vavane y ‘ instantol, Valvoline A Y Change International { } 30% cals - 7 5 Q Seale Asia Pacific exAustralia 34% DIFM: Installer Channel : q 23% Z ‘ Antifreeze 5% For 12 Months Ended September 30, 2014 Sales: $2.0 bill EBITDA: $360 EBIT
Slide 28: Appendix D: Non-GAAP Reconciliations
ASHLAND. Appendix D: Non-GAAP Reconciliations
Slide 29: Reconciliation of Non-GAAP Data
Ashland Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data for 12 Months Ended September 30, 2014 ($ millions, except percentages) Sales’ Q414 Q3 14 Q2 14 Qi 14 Total Specialty Ingredients 635 653 629 581 2,498 Performance Materials 383 420 413 365 1,582 Valvoline 520 532 503 486 2,0
Slide 30: Ashland
ASHLAND. With good chemistry great things happen.”