Ashland Provides Update on Fiscal 2023 First-Quarter Earnings


WILMINGTON, DE — Ashland Inc. (NYSE: ASH) this week provided an update for preliminary fiscal 2023 first-quarter financial results1 and maintained its outlook for fiscal year 2023 results. Additional information regarding first-quarter fiscal 2023 earnings and full-year outlook will be shared during a conference call webcast with securities analysts on Wednesday, February 1, 2023.

Preliminary fiscal 2023 first-quarter financial results
Ashland’s financial results during the quarter reflect rapidly evolving dynamics in the global markets the company serves, namely:

  • Strong global demand for pharmaceutical ingredients;
  • Resilient margins driven by pricing and mix-improvement actions across segments;
  • Weaker demand for specialty additives and personal care ingredients driven primarily by the impact of COVID-19 on the China re-opening, the general economic slowdown in Europe and significant distributor destocking in China and Europe;
  • Lower operating margins within Specialty Additives driven by planned maintenance shutdowns plus COVID-19 dynamics which resulted in an extended unplanned shutdown at the company’s Nanjing, China, facility late in the quarter.

Sales in the quarter were approximately $525 million, up three percent versus the prior-year period. Sales on a constant-currency basis increased by approximately seven percent. Sales grew by double-digits in the company’s Life Sciences segment driven by strong demand for pharmaceutical ingredients.  Sales declined in both the Specialty Additives and Personal Care segments driven by the COVID-19 impact in China, general economic weakness in Europe and aggressive inventory destocking by distributors in both China and Europe.

In general, ingredient and additive demand at the company’s major customers remained resilient. Destocking by customers was customer-specific with no underlying patterns in any markets. Price and mix performance remained strong across all businesses.

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Ashland expects income from continuing operations during the first fiscal quarter of approximately $42 million, or approximately $0.76 per diluted share. Adjusted earnings from continuing operations excluding intangibles amortization are expected to be approximately $54 million, or $0.97 per diluted share. Net income (including discontinued operations) is expected to be approximately $40 million.

Ashland’s Adjusted EBITDA is expected to be approximately $108 million, up two percent versus prior year. Adjusted EBITDA on a constant-currency basis increased by approximately 15 percent. Adjusted EBITDA growth was driven by strong demand for pharmaceutical ingredients and partially offset by planned facility shutdowns within Specialty Additives. Continued improvements in pricing and mix were also partially offset by weaker Specialty Additives and Personal Care demand in China and Europe.

December winter storm in the U.S.
During December, the winter storm that impacted much of the United States also caused an extended, unplanned shutdown at the company’s facility in Calvert City, Kentucky, along with lesser impacts at several other facilities. Although the extended shutdown did not meaningfully impact sales or margins during the fiscal-first quarter, it will result in incremental repair, maintenance and other manufacturing costs. Ashland expects to realize approximately $15 million of these incremental costs related to the event during the company’s fiscal-second quarter. The company plans to offset a meaningful portion of these incremental costs during the third and fourth fiscal quarters as it reassesses the need for other scheduled maintenance shutdowns.

Fiscal year 2023 outlook
In November 2022, Ashland provided its financial outlook for fiscal year 2023. This outlook highlighted European economic and geopolitical dynamics and the impact of COVID-19 and the China re-opening as major uncertainties in the forecast. Despite these continuing uncertainties, the company remains focused on the business fundamentals within its control.

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Based on current expectations and considering external uncertainties, Ashland continues to expect sales in the range of $2.5 billion to $2.7 billion for fiscal year 2023, consistent with prior expectations. In addition, the company continues to expect Adjusted EBITDA to be within the prior outlook range of $600 million to $650 million, with the current forecast models indicating earnings below the mid-point of that range. Although external uncertainties remain high, the company expects improved market-trend visibility by the end of the fiscal-second quarter. By this time, the company expects to have more clarity on any additional inventory destocking dynamics, conditions in Europe and the China re-opening.

“Ashland is executing its plans and priorities, focusing on high-quality resilient markets, strong price and mix management, disciplined operations, accelerating our innovation initiatives and investing in our future,” said Guillermo Novo, chair and chief executive officer, Ashland. “The December quarter results reflect this continued discipline and the reality of rapidly evolving dynamics in an uncertain global marketplace. Operating discipline and agility remain critical success drivers in these uncertain times, especially around pricing and mix management.  During the quarter, we experienced several external headwinds impacting our results.  COVID-19 had a significant impact on our demand, employees, and operations in China. We are grateful that our team in China has recovered and remains resilient. Strength in pharmaceutical ingredient sales was offset by weaker end-market demand in other businesses. Inventory management actions by distributors and some customers impacted our demand, especially late in the quarter. As a result, our sales for the quarter in these markets were below our expectations.”

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“This is a time for caution. Despite the challenging environment and the unplanned winter storm impact in the U.S., we remain confident about the future,” continued Novo. “Our customers remain resilient. The pricing and mix-improvement actions we have taken position us well to cover current cost inflation and we continue to invest in our future. While the results this quarter did not meet our expectations, we are confident in the path forward. I look forward to discussing our fiscal-first quarter financial results and outlook during our upcoming earnings call and webcast,” concluded Novo.

The information in the Company’s announcement is preliminary, based upon information available at the time of its release, and actual results may differ.

Financial results are preliminary until Ashland’s Form 10-Q is filed with the SEC.

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