WILMINGTON, DE — Ashland Inc. (NYSE: ASH) recently provided an update for preliminary fiscal 2023 third-quarter financial results1 and its outlook for fiscal year 2023 results. The global additives and specialty ingredients company holds leadership positions in high-quality, consumer-focused markets including pharmaceuticals, personal care and architectural coatings.
Preliminary projected fiscal 2023 third-quarter financial results
Ashland’s projected financial results for the third quarter reflect the following:
- The continuation and intensification of customer de-stocking across many of the company’s end markets with continued uncertainty about when the de-stocking dynamics will end;
- As previously communicated, proactive internal inventory-control measures for certain product lines resulting in approximately $15 million of reduced cost absorption during the quarter; and
- Limited visibility into underlying consumer demand given the magnitude of customer de-stocking actions.
Sales in the quarter are expected to be in the range of $545 million to $550 million, down approximately 15 percent versus the prior-year period. Each of the company’s reportable segments are expected to report sales declines when compared to the prior-year period driven by lower volumes from rapid customer de-stocking and partially offset by favorable pricing.
Ashland’s projected Adjusted EBITDA is expected to be in the range of $130 million to $135 million, down approximately 22 – 25 percent versus prior year driven primarily by much lower sales volumes and reduced cost absorption from inventory-control actions.
The company projects that ongoing free cash flow generation during the quarter will be in the range of $90 million to $110 million.
New $1 billion share repurchase authorization
Today Ashland announces that its Board of Directors has approved a new $1 billion evergreen share repurchase authorization. This authorization replaces the previous $500 million evergreen authorization under which there was $200 million remaining. Since September 30, 2022, Ashland has repurchased approximately $300 million of its outstanding shares under the previous existing authorization.
Fiscal year 2023 outlook
Based on continued customer de-stocking, significant macroeconomic uncertainty and very limited visibility into global consumer demand, the company is updating its financial outlook for fiscal year 2023. While the company does not have visibility as to when the de-stocking will end, if the prevailing fiscal-third quarter dynamics persist throughout the fiscal-fourth quarter, the company would expect sales to be in the range of $2.2 billion and Adjusted EBITDA to be in the range of $500 million.
“The unprecedented reset impact from customer de-stocking actions across many supply chains continues to materially impact many of the markets we serve,” said Guillermo Novo, chair and chief executive officer, Ashland. “Previous expectations that de-stocking would conclude during our fiscal-third quarter have proven to be optimistic. There is still significant uncertainty as to when the de-stocking dynamics will end. Until the de-stocking is behind us, it will remain difficult for us to gauge the true end-market demand.”
“While this uncertain environment presents near term challenges, it does not change our longer-term priorities,” continued Novo. “Our objectives remain clear: focus on the things we can control to maximize our near-term performance, maintain disciplined capital allocation, and increase momentum on our longer-term growth opportunities, especially our innovation platforms. In light of current market conditions, we plan to take additional targeted restructuring actions to reduce costs over the coming quarters and refocus resources on innovation-driven growth opportunities.”
“We are excited by Ashland’s longer-term growth opportunities. We also recognize that current market dynamics may cause valuation distortion across our industry. In this environment, Ashland will continue to take capital allocation actions to maximize shareholder value,” concluded Novo.
The information in this release is preliminary, based upon information available at the time of this news release, and actual results may differ.
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