Ashland Inc. · NYSE:ASH
Ashland — Q1 2022 Earnings Presentation
43 slides from Ashland's earnings presentation, Feb 2, 2022
Slide 1: Earnings conference call first-quarter fiscal 2022
earnings conference call first-quarter fiscal 2022 / 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: o Q1 performance summary o Q1 financial results o advancing our strategy
o Q1 performance summary o Q1 financial results o advancing our strategy o outlook o closing comments o Q&A 3
Slide 4: Q1 performance summary
Q1 performance summary <f Ashland always solving
Slide 5: Commentary on Q1 performance
commentary on Q1 performance resilient financial results Q1 highlights1 o core end-market demand and orders remain robust, sales growth of 9% and adjusted EBITDA growth of 5% sales of $512 million (+9%) o Schülke & Mayr business a strong contributor to Personal Care o sustaining gross profit margins
Slide 6: Q1 financial results
Q]1 financial results <f Ashland always solving
Slide 7: Ashland Q1 FY22 results
($US in millions, except percentages) Q1 FY22 Q1 FY21 change sales $512 $468 +9 % gross profit margin 31.4 % 31.4 % - SG&A / R&D costs / intangible amortization $115 $110 +5 % operating income $46 $42 +10 % EBITDA $106 $101 +5 % EBITDA margin 20.7 % 21.6 % (90) bps EPS (excluding acquisition amortiz
Slide 8: Life Sciences Q1 FY22
($US in millions, except percentages) Q1 FY22 Q1 FY21 change sales $170 $170 - gross profit $51 $60 (15) % gross profit margin 30.0 % 35.3 % (530) bps operating Income $21 $29 (28) % EBITDA $36 $45 (20) % EBITDA margin 21.2 % 26.5 % (530) bps o o o -MSD -MSD +DD pharma nutraceuticals nutrition & oth
Slide 9: Personal Care Q1 FY22
($US in millions, except percentages) Q1 FY22 Q1 FY21 Change sales $147 $126 +17 % gross profit $53 $47 +13 % gross profit margin 36.1 % 37.3 % (120) bps operating Income $15 $15 - EBITDA $36 $34 +6 % EBITDA margin 24.5 % 27.0 % (250) bps o o o +DD +DD -MSD +DD skin care hair care oral care househol
Slide 10: Specialty Additives Q1 FY22
($US in millions, except percentages) Q1 FY22 Q1 FY21 change sales $156 $147 +6 % gross profit $39 $36 + 8% gross profit margin 25.0 % 24.5 % 50 bps operating Income $17 $11 +55 % EBITDA $38 $32 +19 % EBITDA margin 24.4 % 21.8 % +260 bps o o o -LSD +DD coatings construction, energy, perf spec Q1 FY2
Slide 11: Intermediates Q1 FY22
($US in millions, except percentages) Q1 FY22 Q1 FY21 change sales $53 $33 +61 % gross profit $18 $4 +350 % gross profit margin 34.0 % 12.1 % +2,190 bps operating Income $16 $2 +700 % EBITDA $19 $5 +280 % EBITDA margin 35.8 % 15.2 % +2,060 bps o o +DD +DD merchant captive Q1 FY22 year-over-year sale
Slide 12: Ongoing free cash flow
o generated ongoing free cash flow1 of $26 million compared to $74 million in prior- year Q1 o change due to an increase in working capital reflecting higher raw-material costs and inventory-rebuild efforts in key locations close to our customers o ongoing free cash flow conversion2 of 25% compared
Slide 13: Advancing our strategy
advancing our strategy <f Ashland always solving
Slide 14: Our priorities
our priorities Aw & operational resilience strategic focus Talavenzeriteyal capital allocation business unit focus o operational ° excellence o profitability ° improvement o enable ° empowerment, ° ownership and ° accountability maintain portfolio focus & coherence focus on core businesses leverage
Slide 15: Progress on our priorities
progress on our priorities 1. operating resilience disciplined pricing in an inflationary environment improved mix management with widespread capacity constraints improved planning despite challenging supply-chain issues (S&OP process) mitigate external headwinds 2. strategic focus margin expansion
Slide 16: Increased focus on new product innovations to drive growth
increased focused on new product innovations to drive growth o 11 new product introductions year-to- date in FY2022 o increase of more than 20% compared to prior-year-period o expect to launch a total of 35 new products this year o continued emphasis on sustainable and sustainable-in-use innovations
Slide 17: ESG progress
ESG progress 17 2020 sustainability report o Issued in late 2021 o — ashland.com/sustainability o update on achievement of 2020 environmental goals (hazardous waste generation, greenhouse gas emissions and energy usage) © | announced our most ambitious goals to date for environmental, social and gov
Slide 18: Outlook
outlook <f Ashland always solving
Slide 19: Current macro trends
current macro trends tailwinds ° revenue . pricing a major driver . stable life sciences, specialty additives and intermediates demand . improving personal care demand . capacity constraints support mix improvement ° significant demand backlog allows for shifting supply of key products across segmen
Slide 20: Critical performance variables
critical performance variables (e) 20 end-market demand price vs. cost inflation balance supply-chain reliability @ “<f Ashland always solving
Slide 21: Core businesses growth 2016-2021
o o o 2016 2017 2018 2019 2020 2021 o pharma personal care coatings core businesses CAGR 16 - 19 19 - 21 16 - 21 pharma 4.4% 2.8% 3.8% o personal care 1.3% 1.9% 1.5% coatings 2.3% 5.4% 3.5% o total 2.6% 3.2% 2.9% o o o 21
Slide 22: Price versus raw material, freight and energy costs
o o o FY 21 Q3 FY21 Q4 FY22 Q1 FY22 Q2 Fcst price raw material, freight & energy costs raw material costs 22
Slide 23: Supply
supply o plants continue to run well, starting to rebuild inventory in key global locations risk from potential o outlook does not assume significant reliability improvement in ocean freight (global) or trucking (NA and Europe) government driven lockdowns or storms o air freight to be reduced with i
Slide 24: Disciplined planning building resilience and agility
o disciplined planning o building resilience & agility o continued focused on what we can control o o 24
Slide 25: Outlook
outlook FY2022 full-year guidance maintained forward-looking insights sales: © robust demand $2.25 — $2.35 billion . strong order book . stable life sciences demand growth . improving demand recovery in core, global personal care end markets . continued strength in specialty additives and intermedia
Slide 26: Closing comments
closing comments <f Ashland always solving
Slide 27: Ashland
Ashland focused additives and specialty ingredients company © consistent execution leadership positions in high-quality markets and with exciting profitable growth opportunities ° solid growth strong technology, commercial and operations capabilities ° high margins global infrastructure compelling g
Slide 28: Thank you and Q&A
thank you and Q&A <f Ashland always solving
Slide 29: Appendix A: adjusted results summary and balance sheet
appendix A: adjusted results summary and balance sheet <f Ashland always solving
Slide 30: Adjusted results summary
adjusted results summary1 ($US in millions, except percentages and Q1 FY22 Q1 FY21 change per share data) sales $512 $468 +9 % gross profit $161 $147 +10 % gross profit margin 31.4 % 31.4 % - SG&A / R&D costs / intangible amort. $115 $110 +5 % Photo operating income $46 $42 +10 % depreciation & amor
Slide 31: Segment results summary
($US in millions, except Life Personal Specialty Inter- interco. unallocated Ashland percentages) Sciences Care Additives mediates eliminations and other sales $170 $147 $156 $53 ($14) - $512 gross profit $51 $53 $39 $18 - - $161 gross profit margin 30.0 % 36.1 % 25.0 % 34.0 % - - 31.4 % EBITDA $36
Slide 32: Liquidity and net debt
liquidity and net debt Moody’s 12/31/21 ($US in millions) expiration interest rate S&P rating rating balance Photo Photo 32
Slide 33: Appendix B: non-GAAP reconciliation
appendix B: non-GAAP reconciliation! provi Although Ashland provides forward looking guidance for adjusted EBITDA in this presentation, Ashland is not reaffirming or iding forward-looking guidance for U.S. GAAP reported financial measures or a reconciliation of forward-looking non-GAAP financial mea
Slide 34: Reconciliation of Non-GAAP Data
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data for 12 Months Ended December 31, 2021 ($ millions, except percentages) 1 Sales Q1 22 Q4 21 Q3 21 Q2 21 Total Q1 21 Life Sciences $ 170 $ 189 $ 193 $ 185 $ 737 $ 170 Personal Care 147 183 147 137 614 126 Specia
Slide 35: Operating income and net income reconciliation, Q1 FY22
($ millions) T hree M o nths Ended D ecember 31, 2021 Unallocated & Life Sciences Personal Care Specialty Additives Intermediates Other Total OP ER A T IN G IN C OM E (LOSS) Operating key items: Environmental reserve adjustments $ - $ - $ - $ - $ (3) $ (3) Restructuring, separation and other costs -
Slide 36: Operating income and net income reconciliation, Q1 FY21
($ millions) T hre e M o nt hs E nde d D e ce m be r 3 1, 2 0 2 1 Unallo cated & Life Sciences P erso nal Care Specialty Additives Intermediates Other To tal O P ER A T IN G IN C O M E ( LO SS ) Operating key items: Restructuring, separatio n and o ther co sts $ - $ - $ - $ - $ (12) $ (12) Environme
Slide 37: 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 ($ millions) Ashland Specialty Ingredients Ashland __% Performance North Materials America2 __% __% Asia Pacific Latin __% Valvoline __% America/ Other - _% 37
Slide 38: Reconciliation of Non-GAAP Data – Adjusted EBITDA
Ashland Global Holdings Inc. Reconciliation of Non-GAAP Data – Adjusted EBITDA for 3 Months Ended December 31, 2021 and 2020 ($ millions) Ashland Specialty Ingredients Ashland __% Performance North Materials America2 __% __% Asia Pacific Latin __% America/ Other - _% 38
Slide 39: Adjusted EBITDA – Life Sciences and Personal Care
Life Sciences and Personal Care Reconciliation of Non-GAAP Data – Adjusted EBITDA for 3 Months Ended December 31, 2021 and 2020 ($ millions) Valvoline __% Ashland Specialty Ingredients Ashland __% Performance North Materials America2 __% __% Asia Pacific Latin __% America/ Other - _% 39
Slide 40: Adjusted EBITDA – Specialties Additives and Intermediates
Specialties Additives and Intermediates Reconciliation of Non-GAAP Data – Adjusted EBITDA for 3 Months Ended December 31, 2021 and 2020 ($ millions) Ashland Specialty Ingredients Ashland __% Performance North Materials America2 __% __% Asia Pacific Valvoline __% __% Latin America/ Other - _% 40
Slide 41: Adjusted Income from Continuing Operations
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Adjusted Income from Continuing Operations ($ millions) Ashland Specialty Ingredients Ashland __% Performance North Materials America2 __% __% Valvoline Latin __% America/ Other - _% (1) (2) - (3) 41
Slide 42: Adjusted Diluted EPS from Continuing Operations
Ashland Global Holdings Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Adjusted Diluted EPS from Continuing Operations ($ millions) Ashland Specialty Ashland Europe Ingredients North __% __% Performance Materials America2 __% __% Valvoline Latin __% America/ Other - _% (1) (2)
Slide 43: Ashland
oT ct Ashland always solving