Ashland Inc. · NYSE:ASH
Ashland — Q1 2020 Earnings Presentation
37 slides from Ashland's earnings presentation, Jan 28, 2020
Slide 1: Earnings Conference Call: First-Quarter Fiscal 2020
Earnings Conference Call: First-Quarter Fiscal 2020 January 28, 2020 – 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 • Q1 Performance Summary • New Business Structure • Review Q1 Results • Debt Offering / Redemption • Priorities and Outlook • Closing Comments • Thank you and Q&A 3
Slide 4: Q1 Performance Summary
Q1 Performance Summary <f Ashland
Slide 5: Commentary on Q1 Performance
Ashland Global Holdings Inc. Commentary on Q1 Performance • Strong EH&S results & Sustainability performance progress • Continued weak market demand • Carryover impact from prior-year events • I&S turnaround costs • Continued benefit from cost-reduction program 5
Slide 6: New Business Structure
New Business Structure <f Ashland
Slide 7: New Business Structure
Ashland Global Holdings Inc. New Business Structure • Realigning Operating and Reporting segments to better align strategy, resources and capital allocation − Different businesses with different profiles and requirements − Drive decision making and accountability to business managers − Align incenti
Slide 8: Businesses Realignment
Ashland Global Holdings Inc. Businesses Realignment • Consumer Specialties − Life Sciences − Personal Care and Household • Industrial Specialties − Specialty Additives − Performance Adhesives • Intermediates & Solvents • Corporate 8
Slide 9: Business Model
Ashland Global Holdings Inc. Business Model • Migrating from functionally-driven to business-unit-led organization − Drive decision making to business-unit level − Enable go-to-market strategies consistent with business-specific market demands and trends − Empower unit managers to determine appropri
Slide 10: Next Steps for Businesses
Ashland Global Holdings Inc. Next Steps for Businesses Accomplishments • All general managers hired and in place • Teams and assets aligned • Financials are in process • Initial cost improvement actions taken Next Steps • Updating BU strategies and defining business models and cost structures • Begi
Slide 11: Review Q1 Results
Review Q1 Results <f Ashland
Slide 12: Results Highlights
Ashland Global Holdings Inc. Results Highlights • Q1 seasonality • Global demand weak • Carryover of Pharmachem and Personal Care business losses in FY2019 • I&S turnaround costs • Continued improvement to cost structure, including both SG&A and raw materials 12
Slide 13: Fiscal-First Quarter Adjusted Results
Ashland Global Holdings Inc. Fiscal-First Quarter Adjusted Results1 ($US in millions, except percentages) Q1 FY20 Q1 FY19 Change Sales $533 $576 (7) % Gross profit margin 28.7% 30.9% (220) bps Selling, general & admin / R&D costs $128 $141 (9) % EBITDA $88 $100 (12) % EBITDA margin 16.5% 17.4% (90)
Slide 14: Specialty Ingredients Adjusted Results Summary
Specialty Ingredients Adjusted Results Summary1 ($US in millions, except percentages) Q1 FY20 Q1 FY19 Change Sales $505 $553 (9) % Gross profit $162 $176 (8) % Gross profit margin 32.2 % 31.8 % +40 bps Operating income $44 $54 (19) % Photo EBITDA $102 $112 (9) % EBITDA margin 20.2 % 20.3 % (10) bps
Slide 15: Intermediates & Solvents Adjusted Results Summary
Intermediates & Solvents Adjusted Results Summary1 ($US in millions, except percentages) Q1 FY20 Q1 FY19 Change Sales $28 $23 +22 % Gross profit ($10) $3 NM Gross profit margin (35.6) % 13.0 % NM Operating income ($12) - NM Photo EBITDA ($9) $3 NM EBITDA margin (32.1) % 13.0 % NM • Sales improved pr
Slide 16: Debt Offering / Redemption
Debt Offering / Redemption ef Ashland ‘so always solving
Slide 17: Debt Offering / Redemption
Ashland Global Holdings Inc. Debt Offering / Redemption Overview • In January 2020, issued €500 million 2.00% senior unsecured notes and borrowed $250 million (initially LIBOR + 1.375%) term loan A • Proceeds used in cash tender for existing notes of $671 million at 4.75%, $92 million at 6.875%, $3
Slide 18: Priorities and Outlook
Priorities and Outlook <f Ashland
Slide 19: Key Objectives
Ashland Global Holdings Inc. Key Objectives • Organic sales and Adjusted EBITDA growth • Margin expansion • Free cash flow generation 19
Slide 20: CEO Priorities
Ashland Global Holdings Inc. CEO Priorities • Develop & articulate our strategy • Improve operating performance • Align & rightsize cost structure • Disciplined capital allocation Build visible Improvement Momentum 20
Slide 21: Near-Term Focus
Ashland Global Holdings Inc. Near-Term Focus #1 Enabled Business Unit Ownership & Accountability #2 Cost Improvement actions #3 Operating Performance 21
Slide 22: Outlook
Ashland Global Holdings Inc. Outlook Not providing guidance for FY2020 or Q2 Forward Looking Insights: • Improved outlook for market demand • Progress on new business development • Pricing/raw material changes stay balanced • Expect $25 MM SG&A carryover improvement • New actions to improve costs •
Slide 23: Closing Comments
Closing Comments <f Ashland
Slide 24: A Premier Specialty Materials Company
Ashland Global Holdings Inc. A Premier Specialty Materials Company • Focused on high-quality markets and businesses with exciting profitable growth opportunities • Franchise businesses have leadership positions − #1 or #2 − Strong teams with deep industry expertise − Excellent customer relationships
Slide 25: Thank you and Q&A
Thank you and Q&A o<fAshland
Slide 26: Appendix A: Adjusted Results Summary
Appendix A: Adjusted Results Summary
Slide 27: Adjusted Results Summary
Ashland Global Holdings Inc. Adjusted Results Summary1 ($US in millions, except percentages and Q1 FY20 Q1 FY19 Change per share data) Sales $533 $576 (7) % Gross profit $153 $178 (14) % Gross profit margin 28.7 % 30.9 % (220) bps Photo Selling, general & admin / R&D costs $128 $141 (9) % Operating
Slide 28: Appendix B: Non-GAAP Reconciliation
Appendix B: Non-GAAP Reconciliation
Slide 29: Reconciliation of Non-GAAP Data
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data for 12 Months Ended December 31, 2019 ($ millions, except percentages) Sales(a) Q1 20 Q4 19 Q3 19 Q2 19 Total Specialty Ingredients 505 579 613 637 2,334 Intermediates and Solvents 28 30 28 30 116 Total 533 60
Slide 30: Europe North America
($ millions – preliminary and unaudited) Specialty Intermediates Unallocated Ingredients and Solvents & Other Total OPERATING INCOME (LOSS) Operating key items: Restructuring, separation and other costs $ - $ - $ (7) $ (7) All other operating income (loss) 44 (12) (8) 24 Operating income (loss) 44 (
Slide 31: North America 2 Europe
($ millions – preliminary and unaudited) Specialty Intermediates Unallocated Ingredients and Solvents & Other Total OPERATING INCOME (LOSS) Operating key items: Restructuring, separation and other costs $ (28) $ - $ (17) $ (45) All other operating income (loss) 54 - (16) 38 Operating income (loss) 2
Slide 32: Reconciliation of Certain Non-GAAP Data – Free Cash Flow and Adjusted Operating Income
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Certain Non-GAAP Data – Free Cash Flow and Adjusted Operating Income for 3 Months Ended December 31, 2019 and 2018 ($ millions – preliminary & unaudited) Three months ended December 31 (a) Free cash flows 2019 2018 Total ca
Slide 33: Reconciliation of Non-GAAP Data – Adjusted EBITDA
Ashland Global Holdings Inc. Reconciliation of Non-GAAP Data – Adjusted EBITDA for 3 Months Ended December 31, 2019 and 2018 ($ millions – preliminary and unaudited) Three months ended December 31 Adjusted EBITDA - Ashland Global Holdings Inc. 2019 2018 Net income (loss) $ 32 $ (48) Income tax expen
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 December 31, 2019 and 2018 ($ millions – preliminary and unaudited) Three mont hs ended December 31 Adjust ed EBITDA - Specialt y Ingredient s 2019 2018 Operat ing income $ 44 $ 26
Slide 35: Reconciliation of Certain Non-GAAP Data – Adjusted Income from Continuing Operations
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Certain Non-GAAP Data – Adjusted Income from Continuing Operations for 3 Months Ended December 31, 2019 and 2018 Three months ended (in millions except per share data – preliminary and unaudited) December 31 2019 2018 Incom
Slide 36: Reconciliation of Certain Non-GAAP Data – Adjusted Diluted EPS from Continuing Operations
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Certain Non-GAAP Data – Adjusted Diluted EPS from Continuing Operations for 3 Months Ended December 31, 2019 and 2018 Three mont hs ended December 31 2019 2018 Diluted EPS from continuing operations (as reported) $ 0.56 $ (
Slide 37: Trademark notice
® Registered trademark, Ashland or its subsidiaries, registered in various countries ™ Trademark, Ashland or its subsidiaries, registered in various countries