Ashland Inc. · NYSE:ASH
Ashland — Q4 2019 Earnings Presentation
40 slides from Ashland's earnings presentation, Nov 19, 2019
Slide 1: Earnings Conference Call: Fourth-Quarter Fiscal 2019
Earnings Conference Call: Fourth-Quarter Fiscal 2019 November 19, 2019 – 9:00am Eastern Time / efficacy usability allure integrity profitability
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 words
Slide 3: Agenda
Agenda • Opening Comments: Bill Wulfsohn, Chairman & CEO • Introduce New CEO: Guillermo Novo, Director and incoming Chairman & CEO • Review Q4 and FY2019 Results: Kevin Willis, SVP & CFO • New CEO Priorities and Outlook: Guillermo Novo • Thank you and Q&A 3
Slide 4: Opening Comments
Opening Comments
Slide 5: Perspective on the Last 5 Years
Ashland Global Holdings Inc. Perspective on the Last 5 Years LTM 12/31/2014 Sales1: $6.1 Billion FY 2019 Sales: $2.5 Billion Created pure- Specialty Ingredients Specialty play specialty 41% Perf. Materials • Created independent Valvoline Ingredients 96% materials 26% • Acquired Pharmachem & Vornia V
Slide 6: Perspective on Ashland Today
Ashland Global Holdings Inc. Perspective on Ashland Today Strong, focused team with unified culture Well • Pharma : new capacity, global footprint and new products positioned in • Personal care: greatly expanded biofunctionals and added fragrance fixatives Now ~75% of highly • Coatings: expanded cap
Slide 7: Introduce New CEO
Introduce New CEO
Slide 8: Excited to Join Ashland
Ashland Global Holdings Inc. Excited to Join Ashland • > 30 years in Specialty Materials • Recently CEO of Versum Materials • Director at Ashland beginning May 2019 • Excited about the opportunities to create value and the journey ahead 8
Slide 9: Review Q4 and FY2019 Results
Review Q4 and FY2019 Results
Slide 10: Commentary on Q4 and FY Results
Ashland Global Holdings Inc. Commentary on Q4 and FY Results • Strong EH&S and sustainability performance • Volume loss impact − Oral Care − Pharmachem − Co-producer swaps • Market weakness & general macroeconomic uncertainty 10
Slide 11: Results Highlights
Ashland Global Holdings Inc. Results Highlights • Completed sale of Composites business and Marl facility • Successful deleveraging of balance sheet • Q4 and FY Sales down 9% and 4%, respectively • Q4 and FY Adjusted EBITDA1 up 6% and 3%, respectively • Challenged Pharmachem and Personal Care • Mark
Slide 12: Fiscal-Fourth Quarter Adjusted Results
Ashland Global Holdings Inc. Fiscal-Fourth Quarter Adjusted Results1 ($US in millions, except percentages) Q4 FY19 Q4 FY18 Change Sales $609 $667 (9) % Gross profit margin 34.4% 34.9% (50) bps Selling, general & admin / R&D costs $124 $160 (23) % EBITDA $150 $142 +6 % EBITDA margin 24.6% 21.3% +330
Slide 13: Specialty Ingredients Adjusted Results Summary
Specialty Ingredients Adjusted Results Summary1 ($US in millions, except percentages) Q4 FY19 Q4 FY18 Change Sales $579 $636 (9) % Gross profit $201 $225 (11) % Gross profit margin 34.7% 35.4% (70) bps Operating income $92 $97 (5) % Photo EBITDA $152 $160 (5) % EBITDA margin 26.3% 25.2% +110 bps • S
Slide 14: Intermediates & Solvents Adjusted Results Summary
Intermediates & Solvents Adjusted Results Summary1 ($US in millions, except percentages) Q4 FY19 Q4 FY18 Change Sales $30 $31 (3) % Gross profit $8 $8 - Gross profit margin 28.8% 26.3% +250 bps Operating income $6 $6 - Photo EBITDA $9 $9 - EBITDA margin 30.0% 29.0% +100 bps • Sales impacted by lower
Slide 15: Fiscal Year 2019 Summary
Ashland Global Holdings Inc. Fiscal Year 2019 Summary1 ($US in millions, except percentages and FY19 FY18 Change per share data) Sales Specialty Ingredients $2,382 $2,470 (4) % Intermediates & Solvents $111 $119 (7) % Photo Total $2,493 $2,589 (4) % EBITDA Specialty Ingredients $558 $574 (3) % Inter
Slide 16: Cost-Reduction Program
Ashland Global Holdings Inc. Cost-Reduction Program • Challenging yet successful • Program substantially complete − Achieved $115 million run-rate as of 9/30/19 − Expect to exceed $120 million run-rate as of 12/31/19 • Expect to achieve ~$25 million of realized carryover SG&A savings in fiscal year
Slide 17: New CEO Priorities and Outlook
New CEO Priorities and Outlook
Slide 18: Recognize Our Team
Ashland Global Holdings Inc. Recognize Our Team • Undergone significant and prolonged change • Stayed focused on creating value for our customers • Most businesses well positioned Thank you! 18
Slide 19: Early Observations
Ashland Global Holdings Inc. Early Observations • Core businesses maintain leadership positions • Have specific business-unit issues to address • Experienced teams with deep industry knowledge • Strong innovation capabilities • Multiple improvement opportunities − Improve business strategic focus, o
Slide 20: Key Objectives
Ashland Global Holdings Inc. Key Objectives • Maintain industry-leading EH&S and sustainability performance • Organic sales and EBITDA growth • Margin expansion • Free cash flow generation 20
Slide 21: CEO Priorities
Ashland Global Holdings Inc. CEO Priorities • Develop & articulate our strategy • Improve operating performance • Align & rightsize our cost structure • Disciplined capital allocation Build visible Improvement Momentum 21
Slide 22: Outlook
Ashland Global Holdings Inc. Outlook Not providing guidance for FY2020 or Q1 Forward-Looking Insights: • Weaker and uncertain market outlook − Expect Q1 demand dynamics to be similar to Q4 • Limited near-term improvement in Oral Care and Pharmachem − Sales & cost-absorption impact • Pricing and raw-
Slide 23: A Premier Specialty Materials Company
Ashland Global Holdings Inc. A Premier Specialty Materials Company • Focused on high-quality markets and businesses with exciting profitable growth opportunities • Franchise businesses have leadership positions − #1 or #2 − Strong teams with deep industry expertise − Excellent customer relationships
Slide 24: Thank you and Q&A
Thank you and Q&A
Slide 25: Appendix A: Adjusted Results Summary
Appendix A: Adjusted Results Summary
Slide 26: Adjusted Results Summary
Ashland Global Holdings Inc. Adjusted Results Summary1 ($US in millions, except percentages and Q4 FY19 Q4 FY18 Change per share data) Sales $609 $667 (9) % Gross profit $210 $233 (10) % Gross profit margin 34.4% 34.9% (50) bps Photo Selling, general & admin / R&D costs $124 $160 (23) % Operating in
Slide 27: Appendix B: Non-GAAP Reconciliation
Appendix B: Non-GAAP Reconciliation1 1 Although Ashland provides forward looking guidance for adjusted EBITDA in this presentation, Ashland is not reaffirming or providing forward-looking guidance for U.S. GAAP reported financial measures or a reconciliation of forward-looking non-GAAP financial mea
Slide 28: Reconciliation of Non-GAAP Data
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data for 12 Months Ended September 30, 2019 ($ millions, except percentages) 1 Sales Q4 19 Q3 19 Q2 19 Q1 19 Total Specialty Ingredients 579 613 637 553 2,382 Intermediates and Solvents 30 28 30 23 111 Total Ashlan
Slide 29: Segment Components of Key Items, 3 Months Ended September 30, 2019
Ashland Global Holdings Inc. and Consolidated Subsidiaries Segment Components of Key Items for Applicable Income Statement Captions for 3 Months Ended September 30, 2019 ($ millions) Specialty Intermediates Unallocated Ingredients and Solvents & Other Total OPERATING INCOME (LOSS) Operating key item
Slide 30: Segment Components of Key Items, 3 Months Ended September 30, 2018
Ashland Global Holdings Inc. and Consolidated Subsidiaries Segment Components of Key Items for Applicable Income Statement Captions for 3 Months Ended September 30, 2018 ($ millions) Specialty Intermediates Unallocated Ingredients and Solvents & Other Total OPERATING INCOME (LOSS) Operating key item
Slide 31: Reconciliation of Non-GAAP Data – Free Cash Flow and Adjusted Operating Income
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Free Cash Flow and Adjusted Operating Income for 3 Months Ended September 30, 2019 and 2018 ($ millions) Three months ended September 30 Free cash flows1 2019 2018 Total cash flows used by operating activiti
Slide 32: Reconciliation of Non-GAAP Data – Free Cash Flow and Adjusted Operating Income
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Free Cash Flow and Adjusted Operating Income for Year Ended September 30, 2019 and 2018 ($ millions) Year ended September 30 Free cash flows1 2019 2018 Total cash flows used by operating activities from cont
Slide 33: Reconciliation of Non-GAAP Data – Adjusted EBITDA
Ashland Global Holdings Inc. Reconciliation of Non-GAAP Data – Adjusted EBITDA for 3 Months Ended September 30, 2019 and 2018 ($ millions) Three months ended September 30 Adjusted EBITDA - Ashland Global Holdings Inc. 2019 2018 Net income $ 411 $ 9 Income tax expense 22 (5) Net interest and other ex
Slide 34: Reconciliation of Non-GAAP Data – Adjusted EBITDA
Specialty Ingredients, Intermediates and Solvents Reconciliation of Non-GAAP Data – Adjusted EBITDA for 3 Months Ended September 30, 2019 and 2018 ($ millions) Three months ended September 30 Adjusted EBITDA - Specialty Ingredients 2019 2018 Operating income $ 92 $ 92 Add: 1 Depreciation and amortiz
Slide 35: Reconciliation of Non-GAAP Data – Adjusted Income from Continuing Operations
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Adjusted Income from Continuing Operations for 3 Months Ended September 30, 2019 and 2018 Three months ended September 30 ($ millions) 2019 2018 Income (loss) from continuing operations (as reported) $ 27 $
Slide 36: Reconciliation of Non-GAAP Data – Adjusted Income from Continuing Operations
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Adjusted Income from Continuing Operations for Year Ended September 30, 2019 and 2018 Year ended ($ millions) September 30 2019 2018 Income (loss) from continuing operations (as reported) $ 24 $ 19 Key items
Slide 37: Reconciliation of Non-GAAP Data – Adjusted Diluted EPS
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Adjusted Diluted EPS from Continuing Operations for 3 Months Ended September 30, 2019 and 2018 Three months ended September 30 2019 2018 Diluted EPS from continuing operations (as reported) $ 0.44 $ (0.03) K
Slide 38: Reconciliation of Non-GAAP Data – Adjusted Diluted EPS
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Adjusted Diluted EPS from Continuing Operations for Year Ended September 30, 2019 and 2018 Year ended ($ millions) September 30 2019 2018 Diluted EPS from continuing operations (as reported) $ 0.39 $ 0.29 Ke
Slide 39: Reconciliation of Certain Non-GAAP Data
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Certain Non-GAAP Data for Year Ended September 30, 2019 and 2018 Year ended ($ millions) September 30 2019 2018 Net income (loss) $ 505 $ 114 Income tax expense (benefit) 46 (8) Net interest and other expense 99 102 1 Depre
Slide 40: Trademark notice
® Registered trademark, Ashland or its subsidiaries, registered in various countries ™ Trademark, Ashland or its subsidiaries, registered in various countries