Ashland Inc. · NYSE:ASH
Ashland — Q3 2024 Earnings Presentation
39 slides from Ashland's earnings presentation, Aug 7, 2024
Slide 1: Earnings conference call third quarter fiscal 2024
earnings conference call third quarter fiscal 2024 — August 7, 2024 10:00 a.m. ET
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 — o Q3 performance summary o Q3 financial results o outlook o update on strategic priorities o closing comments o Q&A 3
Slide 4: Q3 performance summary
Guillermo Novo, Chair & CEO Q3 performance summary 4
Slide 5: Q3 highlights
Q3 highlights1 — sales adjusted EBITDA adjusted EBITDA % adjusted EPS2 (-) % 5% 120 bps 21 % $544 MM $139 MM 25.6 % $1.49 higher sales/production stronger sales volume in improved income from volume with favorable a return to high-quality PC/SA offset by weaker continuing operations; 1.3 mix partial
Slide 6: Mixed growth & improving margins
mixed growth & improving margins — mixed sales1 with disciplined price management high-quality adjusted EBITDA margins 20% 30% 29% 25% 25% 26% (-)% -1% -11% -16% life personal specialty intermediates2 Ashland life personal specialty intermediates2 Ashland sciences care additives sciences care additi
Slide 7: Q3 financial results
Kevin Willis, CFO Q3 financial results 7
Slide 8: Fiscal-third quarter adjusted results
fiscal-third quarter adjusted results1 — operating results summary Ashland ($US in millions, except percentages) Q3 FY24 Q3 FY23 change sales $544 $546 (-) % gross profit margin 36.2 % 33.3 % +290 bps SG&A / R&D costs / intangible amortization $110 $113 (3) % operating income $87 $73 +19 % EBITDA $1
Slide 9: Business unit reviews
life sciences personal care business unit reviews specialty additives intermediates 9
Slide 10: Life sciences
life sciences — highlights adjusted results summary1 ($US in millions, except o softer demand for VP&D in percentages) Q3 FY24 Q3 FY23 change pharma & crop-care sales $195 $219 (11) % o VP&D nutrition exits gross profit $75 $86 (13) % o VP&D pharma share loss, particularly Europe gross profit margin
Slide 11: Personal care
personal care — highlights adjusted results summary1 ($US in millions, except o strong sales volume percentages) Q3 FY24 Q3 FY23 change recovery across markets, particularly skin & hair sales $175 $146 +20 % o avoca impact moderated gross profit $71 $51 +39 % on sequential improvement & weak prior-y
Slide 12: Specialty additives
specialty additives — highlights adjusted results summary1 ($US in millions, except o sales volume improvement percentages) Q3 FY24 Q3 FY23 change in coatings & performance specialties sales $150 $152 (1) % o continued weakness in gross profit $43 $30 +43 % energy end markets gross profit margin 28.
Slide 13: Intermediates
intermediates — highlights adjusted results summary1 ($US in millions, except o merchant: lower NMP pricing percentages) Q3 FY24 Q3 FY23 change and higher overall volumes sales $36 $43 (16) % o weaker demand in electric vehicle / battery & crop-care gross profit $8 $15 (47) % o captive: lower BDO vo
Slide 14: Strong balance sheet
strong balance sheet — robust financial position with increased flexibility strong balance sheet1 o cash and liquidity available of ~$1.0 billion o net debt2 of $926 million; net leverage3 of 2.3x o no long-term debt maturities for the next three years share repurchases under $1 billion authorizatio
Slide 15: Ongoing free cash flow & dividend
ongoing free cash flow & dividend — ongoing free cash flow1 generation annual dividend4 increase every year since 2009 1.80 o inventory levels increased $6 million2 during Q3 and 1.60 $1.49 $1.56 decreased $156 million2 versus the prior year 1.40 $1.31 $1.18 o overall ongoing free cash flow1 for the
Slide 16: Outlook
Kevin Willis, CFO outlook <f Ashland always solving
Slide 17: Execute: primary portfolio actions
execute: primary portfolio actions — strengthen our base and drive performance status key updates 1 divest nutraceuticals business in process signed; target to close within FY24 2 optimize & consolidate CMC business closed production / shifting select SKUs 3 optimize & consolidate MC-industrial bu
Slide 18: Fiscal Q4 and full-year outlook
fiscal Q4 and full-year outlook — Q4 outlook change: slower VP&D volume recovery and softer fiscal Q4 coatings demand growth sales $530 - $540 million forward looking insights risks and opportunities adjusted EBITDA $130 - $140 million o flat - LSD end-market growth; ASH sales o global recession imp
Slide 19: Update on strategic priorities
Guillermo Novo, Chair & CEO update on strategic priorities 19
Slide 20: Strategic priorities
strategic priorities — shape and grow the portfolio execute globalize innovate acquire o expand leading o high-value product o existing technology o drug delivery technology segments in key platforms technologies capacity geographies o new technology o natural & biotech o exit select product o expan
Slide 21: Globalize: expanding high-margin businesses
globalize: expanding high-margin businesses — pharma personal care injectables biofunctionals o strong new launches o new product adoption up 3x o expanding business o sourcing & producing locally development resources in Asia OSD film coatings preservatives o key global roles filled o established r
Slide 22: Innovate: advancing scalable growth
innovate: advancing scalable growth — select updates transformed transformed vegetableoils vegetable oils super wetting agents novel cellulosics OSD sciences life bioprocessing crop care skin personal hair care oral home additives specialty coatings performance sp
Slide 23: Focusing on controllables
focusing on controllables — execute: maximize near-term performance • complete portfolio optimization • strengthen VP&D and HEC competitive position • grow the core with share gain and core innovation • manage margins • prioritize investments build growth catalysts: deliver long-term profitable grow
Slide 24: Thank you Q&A
thank you Qk&A <f Ashland always solving 24
Slide 25: Appendix A: adjusted results summary and balance sheet
appendix A: adjusted results summary and balance sheet 25
Slide 26: Q3 adjusted results summary
Q3 adjusted results summary1 — ($US in millions, except percentages and per share data) Q3 FY24 Q3 FY23 change sales $544 $546 (-) % gross profit $197 $182 +8 % gross profit margin 36.2 % 33.3 % +290 bps SG&A / R&D costs / intangible amort. $110 $113 (3) % operating income $87 $73 +19 % depreciation
Slide 27: Q3 business unit consolidation
Q3 business unit consolidation1 — specialty intercompany unallocated ($US in millions, except percentages) life sciences personal care Intermediates Ashland additives eliminations2 and other3 sales $195 $175 $150 $36 ($12) - $544 gross profit $75 $71 $43 $8 - - $197 gross profit margin 38.5 % 40.6 %
Slide 28: Liquidity and net debt
liquidity and net debt — ($US in millions) expiration interest rate Moody’s rating S&P rating 6/30/24 balance cash $399 revolver and A/R facilities availability 596 cash and revolver availability1 $995 US and foreign A/R sales program1 - debt 2.00% notes (EUR) Jan. 2028 2.000% Ba1 BB+ $535 3.375% no
Slide 29: Appendix B: non-GAAP reconciliation
appendix B: non-GAAP reconciliation1 1 Although Ashland provides forward looking guidance for adjusted EBITDA in this presentation, Ashland is not reaffirming or providing forward-looking guidance for U.S. GAAP reported financial measures or a reconciliation of forward-looking non-GAAP financial mea
Slide 30: Reconciliation of Non-GAAP Data
Ashland Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data for the 12 Months Ended June 30, 2024 — ($ millions, except pecentages) Sales1 Q3 24 Q2 24 Q1 24 Q4 23 Total Q3 23 Life Sciences 195 $ 222 $ 200 $ 203 $ 820 $ 219 Personal Care 175 169 129 146 619 146 Specialty Additives 150
Slide 31: Segment Components of Key Items – 3 months ended June 30, 2024
Ashland Inc. and Consolidated Subsidiaries Segment Components of Key Items for Applicable Income Statement Captions – for the 3 months ended June 30, 2024 — In millions - preliminary and unaudited ($ millions) Life Sciences Personal Care Three Months Ended June 30, 2024 Specialty Additives Intermedi
Slide 32: Segment Components of Key Items – 3 months ended June 30, 2023
Ashland Inc. and Consolidated Subsidiaries Segment Components of Key Items for Applicable Income Statement Captions – for the 3 months ended June 30, 2023 — In millions - preliminary and unaudited ($ millions) Three Months Ended June 30, 2023 Specialty Unallocated Life Sciences Personal Care Additiv
Slide 33: Reconciliation of Non-GAAP Data – Free Cash Flow and Adjusted Operating Income
Ashland Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Free Cash Flow and Adjusted Operating Income — for the 3 and 9 Months Ended June 30, 2024 and 2023 ($ millions) Three months ended Nine months ended June 30 June 30 Free cash flows 2024 2023 2024 2023 Total cash flows provi
Slide 34: Reconciliation of Non-GAAP Data – Adjusted EBITDA
Ashland Inc. Reconciliation of Non-GAAP Data – Adjusted EBITDA for the 3 Months Ended June 30, 2024 and 2023 — ($ millions) Three months ended June 30 Adjusted EBITDA - Ashland Inc. 2024 2023 Net income $ 6 $ 50 Income tax expense (benefit) (101) 15 Net interest and other expense 7 3 Depreciation an
Slide 35: Adjusted EBITDA – Life Sciences and Personal Care
Life Sciences and Personal Care Reconciliation of Non-GAAP Data – Adjusted EBITDA for the 3 Months Ended June 30, 2024 and 2023 — ($ millions) Three months ended June 30 2024 2023 Adjusted EBITDA - Life Sciences Operating income $ 43 $ 49 Add: Depreciation and amortization(a) 16 18 Operating key ite
Slide 36: Adjusted EBITDA – Specialty Additives and Intermediates
Specialties Additives and Intermediates Reconciliation of Non-GAAP Data – Adjusted EBITDA for the 3 Months Ended June 30, 2024 and 2023 — ($ millions) Three months ended June 30 2024 2023 Adjusted EBITDA - Specialty Additives Operating income (loss) $ 10 $ 5 Add: Depreciation and amortization(a) 16
Slide 37: Reconciliation of Non-GAAP Data – Adjusted Income from Continuing Operations
Ashland Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Adjusted Income from Continuing Operations — for the 3 and 9 Months Ended June 30, 2024 and 2023 Three months ended Nine months ended June 30 June 30 ($ millions) 2024 2023 2024 2023 Income from continuing operations (as re
Slide 38: Reconciliation of Non-GAAP Data – Adjusted Diluted EPS from Continuing Operations
Ashland Inc. and Consolidated Subsidiaries Reconciliation of Non-GAAP Data – Adjusted Diluted EPS from Continuing Operations Three months ended Nine months ended — for the 3 and 9 Months Ended June 30, 2024 and 2023 June 30 June 30 2024 2023 2024 2023 Diluted EPS from continuing operations (as repor
Slide 39: Ashland always solving
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