Ashland(ASH) - 2025 Q1 - Quarterly Report

Financial Performance - Sales for the three months ended December 31, 2024, were $405 million, a decrease of 14.4$473 million in the same period of 2023[7]. - Gross profit increased to $111 million, up 13.3$98 million year-over-year[7]. - Operating loss for the quarter was $179 million, compared to an operating loss of$18 million in the prior year[7]. - Net income loss was $165 million, a significant decline from a net income of$26 million in the same quarter of 2023[7]. - Basic earnings per share from continuing operations was $(3.51), compared to$0.54 in the same period last year[7]. - Adjusted EBITDA for the three months ended December 31, 2024, was $61 million, down from$70 million in the same period of 2023, reflecting a $9 million decrease primarily due to portfolio optimization actions[154]. - For the three months ended December 31, 2024, Ashland reported a net loss of$165 million compared to a net income of $26 million in the same period of 2023[188]. - The diluted EPS from continuing operations was$(3.51) for the three months ended December 31, 2024, compared to $0.54 in the prior year[191]. Asset and Liability Management - Total assets decreased to$5,231 million from $5,645 million as of September 30, 2024[8]. - Cash and cash equivalents at the end of the period were$219 million, down from $300 million at the beginning of the period[10]. - As of December 31, 2024, Ashland's long-term debt was$1,313 million, a decrease from $1,349 million as of September 30, 2024[54]. - The total allowance for credit losses was$1 million at both December 31, 2024, and September 30, 2024[97]. - Ashland's restricted investments totaled $350 million as of December 31, 2024, with$73 million classified within other current assets[41]. Impairments and Restructuring - An impairment charge of $183 million was recorded related to the Avoca business, impacting the loss on acquisitions and divestitures[22]. - The company initiated a restructuring plan in fiscal 2025 to offset the impact from the sale of the Nutraceuticals business, which was completed in fiscal 2024[29]. - The company reported an impairment charge of$183 million related to the Avoca business for the three months ended December 31, 2024[133]. - Ashland initiated a $30 million restructuring plan to offset impacts from the Nutraceuticals sale, with expected realization of 50$134 million from $200 million, representing a decline of 33$134 million from $129 million, a growth of 3.9$115 million from $122 million, a decline of 5.7$14 million, down from $32 million, a decrease of 56.3$14 million for the three months ended December 31, 2024, down from $32 million in the same period of 2023, representing a change of$(18) million[204]. Tax and Regulatory Matters - The effective tax rate for the three months ended December 31, 2024, was 21%, influenced by jurisdictional income mix and a net $8 million from unfavorable tax discrete items[68]. - The overall effective tax rate for the three months ended December 31, 2023, was a benefit of 600$24 million[70]. - As of December 31, 2024, the balance of unrecognized tax benefits was $64 million, with a decrease of$2 million related to prior years and an increase of $1 million for the current year[72]. Environmental and Legal Reserves - Total reserves for asbestos claims were$264 million as of December 31, 2024, reflecting an increase of $24 million during fiscal 2024[83]. - Ashland's asbestos-related litigation reserves are currently estimated at$264 million, with potential future costs ranging up to approximately $410 million, depending on various assumptions[99]. - The total reserves for environmental remediation decreased from$221 million at September 30, 2024, to $216 million at December 31, 2024, reflecting disbursements of$6 million and revised obligation estimates of $1 million[102][103]. Market and Operational Challenges - The company anticipates challenges due to ongoing geopolitical conflicts affecting supply chains and market conditions[134]. - Total sales for the current quarter decreased by$68 million to $405 million, driven by divestitures, lower volume, unfavorable pricing, and foreign currency exchange impacts[156]. - The decline in sales, operating income, and EBITDA was attributed to lower volume, portfolio optimization activities, divestiture of the Nutraceuticals business, unfavorable pricing, and foreign currency exchange impacts[205]. Stock and Dividends - The company has a stock repurchase program with$620 million remaining available for repurchase as of December 31, 2024, following the authorization of a new $1 billion program in June 2023[110]. - Dividends paid in the first quarter of fiscal 2025 were$0.405 per share, an increase from $0.385 per share in the first quarter of fiscal 2024[112].