Ashland Inc. : Ashland Inc. reports preliminary financial results for first
quarter of fiscal 2013.
Earnings from continuing operations equal $1.27 per diluted share; adjusted
EPS, excluding key items, is $1.12 per diluted share
COVINGTON, Ky. - Ashland Inc. (NYSE: ASH), a global leader in specialty
chemical solutions for consumer and industrial markets, today announced
preliminary^(1) financial results for the quarter ended December 31, 2012, the
first quarter of its 2013 fiscal year.
(in millions except per-share amounts) Quarter Ended Dec. 31
Operating income $ 176 $ 144
Key items* (13) 53
Adjusted operating income* $ 163 $ 197
Adjusted EBITDA* $ 268 $ 301
Diluted earnings per share (EPS)
From net income $ 1.26 $ 0.77
From continuing operations $ 1.27 $ 0.76
Key items* (0.15) 0.44
Adjusted EPS from continuing operations* $ 1.12 $ 1.20
Cash flows provided by operating activities
from continuing operations $ 81 $ (181)
Free cash flow* 30 (133)
* See Tables 5, 6 and 7 for definitions and U.S. GAAP
Ashland reported income from continuing operations of $102 million, or $1.27
per diluted share, on sales of $1.9 billion. These results included three key
items that together had a net favorable impact on continuing operations of $12
million, net of tax, or 15 cents per diluted share. The largest key item was a
$13 million after-tax benefit related to a business interruption insurance
settlement. Excluding the three key items, Ashland's adjusted income from
continuing operations was $90 million, or $1.12 per diluted share, a decrease
of 7 percent from the year-ago quarter.
For the year-ago quarter, Ashland reported income from continuing operations
of $60 million, or 76 cents per diluted share, on sales of $1.9 billion. The
year-ago results included two key items that had a combined negative effect of
$35 million, net of tax, or 44 cents per diluted share. Excluding these items,
adjusted income from continuing operations was $1.20 per diluted share.
(Please refer to Table 5 of the accompanying financial statements for details
of key items in both periods.)
For the remainder of this news release, financial results exclude the effect
of key items in both the current and prior-year quarters. On this basis,
Ashland's results as compared to the year-ago quarter were as follows:
·Sales were $1.9 billion; normalizing for currency, divestitures and joint
ventures, sales were flat;
·Operating income decreased 17 percent to $163 million;
·Earnings before interest, taxes, depreciation and amortization (EBITDA)
decreased 11 percent to $268 million; and
·EBITDA as a percent of sales declined 130 basis points to 14.3 percent.
"Our financial performance in the first quarter - which is Ashland's
seasonally weakest period of the year - reflects soft demand in some key
markets and regions. It also includes $31 million in losses on straight guar,
primarily reflecting a discrete write-down of inventory to current market
value," said James J. O'Brien, Ashland chairman and chief executive officer.
"Without this loss, adjusted earnings per share would have increased 14
percent when compared to a year ago. Ashland Consumer Markets turned in a
strong quarter, as higher margins led to a 34-percent increase in EBITDA
compared to a year ago. In addition, we generated $30 million of free cash
flow in the first quarter, a significant improvement compared to the year-ago
Business Segment Performance
In order to aid understanding of Ashland's ongoing business performance, the
results of Ashland's business segments are described below on an adjusted
basis and EBITDA, or adjusted EBITDA, is reconciled to operating income in
Tables 7 and 8 of this news release.
Ashland Specialty Ingredients' sales totaled $622 million, a decline of 1
percent when compared to a year ago. EBITDA declined 28 percent, to $116
million, while EBITDA as a percent of sales was 18.6 percent, down 690 basis
points versus the year-ago quarter. This year-over-year decline is primarily
due to the aforementioned $31 million loss on straight guar, as well as weak
demand, particularly in the month of December, in our coatings and
construction product lines in emerging markets. Specialty Ingredients'
pharmaceutical, hair and oral care, non-guar energy and specialties businesses
all generated sales and gross profit increases versus the prior-year quarter.
Ashland Water Technologies' sales totaled $421 million in the December 2012
quarter, a decline of 6 percent from the year-ago quarter. Normalizing for
currency effects and adjusting for divestitures, sales would have been flat.
EBITDA was $34 million, a 15-percent decline from the year-ago quarter. EBITDA
as a percent of sales was 8.1 percent, down 80 basis points. During the
quarter, Water Technologies continued to face soft demand in several markets,
most notably industrial water treatment. Under a new leader, Luis
Fernandez-Moreno, the team is focused on revenue growth and cost structure
Ashland Performance Materials reported sales of $345 million, a 9-percent
decrease from the December 2011 quarter. Normalizing for currency and
adjusting for divestitures, sales would have been down 4 percent over the
prior year. EBITDA declined 38 percent to $28 million, while EBITDA as a
percent of sales declined 380 basis points to 8.1 percent, primarily due to
lower margins on elastomers, which benefited in the year-ago quarter from
declining raw material costs.
Ashland Consumer Markets reported strong results versus the year ago period,
with higher earnings driven by lower raw-material costs and a 13-percent
volume increase within the international business. While overall sales
increased 1 percent, to $481 million, EBITDA rose 34 percent, to $75 million.
EBITDA as a percent of sales was 15.6 percent, an increase of 380 basis points
versus the year ago quarter.
After excluding the effects from key items, Ashland's effective tax rate for
the December 2012 quarter was 24 percent. Ashland continues to expect the
effective tax rate for the full 2013 fiscal year to be in the range of 26-28
Summary and Outlook
"While our first-quarter financial results did not meet our expectations, we
believe the biggest issues affecting our performance have been addressed,"
O'Brien said. "The inventory issue with straight guar is now behind us, and we
have taken action to significantly reduce the risks going forward. In
addition, the weak volumes we saw within certain parts of our Specialty
Ingredients business in December appear to have been short-term, as order
patterns through the first four weeks of January have improved to more
"Looking ahead, our strategic focus has not changed. We remain committed to
achieving our fiscal 2013 objectives, which should put us in a good position
to attain our 2014 overall financial targets and generate significant value
for our shareholders," he said.
Conference Call Webcast
Ashland will host a live webcast of its first-quarter conference call with
securities analysts at 9 a.m. EST Tuesday, Jan. 29, 2013. The webcast and
supporting materials will be accessible through Ashland's website at
http://investor.ashland.com. Following the live event, an archived version of
the webcast and supporting materials will be available for 12 months.
Use of Non-GAAP Measures
This news release includes certain non-GAAP (Generally Accepted Accounting
Principles) measures. Such measurements are not prepared in accordance with
GAAP and should not be construed as an alternative to reported results
determined in accordance with GAAP. Management believes the use of such
non-GAAP measures assists investors in understanding the ongoing operating
performance of the company and its segments. The non-GAAP information provided
may not be consistent with the methodologies used by other companies. All
non-GAAP amounts have been reconciled with reported GAAP results in Tables 5,
6 and 7 of the financial statements provided with this news release.
In more than 100 countries, the people of Ashland Inc. (NYSE: ASH) provide the
specialty chemicals, technologies and insights to help customers create new
and improved products for today and sustainable solutions for tomorrow. Our
chemistry is at work every day in a wide variety of markets and applications,
including architectural coatings, automotive, construction, energy, food and
beverage, personal care, pharmaceutical, tissue and towel, and water
treatment. Visit ashland.com to see the innovations we offer through our four
commercial units - Ashland Specialty Ingredients, Ashland Water Technologies,
Ashland Performance Materials and Ashland Consumer Markets.
- 0 -
This news release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. In addition, Ashland may from time to time make
forward-looking statements in its filings with the Securities and Exchange
Commission (SEC), news releases and other written and oral communications.
These forward-looking statements are based on Ashland's expectations and
assumptions, as of the date such statements are made, regarding Ashland's
future operating performance and financial condition, the economy and other
future events or circumstances. Ashland's expectations and assumptions
include, without limitation, internal forecasts and analyses of current and
future market conditions and trends, management plans and strategies,
operating efficiencies and economic conditions (such as prices, supply and
demand, cost of raw materials, and the ability to recover raw-material cost
increases through price increases), and risks and uncertainties associated
with the following: Ashland's substantial indebtedness (including the
possibility that such indebtedness and related restrictive covenants may
adversely affect Ashland's future cash flows, results of operations, financial
condition and its ability to repay debt), severe weather, natural disasters,
and legal proceedings and claims (including environmental and asbestos
matters). Various risks and uncertainties may cause actual results to differ
materially from those stated, projected or implied by any forward-looking
statements, including, without limitation, risks and uncertainties affecting
Ashland that are described in its most recent Form 10-K (including Item 1A
Risk Factors) filed with the SEC, which is available on Ashland's website at
http://investor.ashland.com or on the SEC's website at www.sec.gov. Ashland
believes its expectations and assumptions are reasonable, but there can be no
assurance that the expectations reflected herein will be achieved. Ashland
undertakes no obligation to subsequently update any forward-looking statements
made in this news release or otherwise except as required by securities or
other applicable law.
^(1) Preliminary Results
Financial results are preliminary until Ashland's Form 10-Q for the quarter
ended Dec. 31, 2012, is filed with the SEC.
FOR FURTHER INFORMATION:
+1 (859) 815-4454
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Q1 2013 Financial Tables
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The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
information contained therein.
Source: Ashland Inc. via Thomson Reuters ONE
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