Ashland(US:ASH)2023-05-02 16:00Financial Performance - Ashland reported net income of $91 million for the three months ended March 31, 2023, compared to $786 million for the same period in 2022, reflecting a significant decrease in earnings per share from $13.69 to $1.67[136][145]. - Adjusted EBITDA for the current quarter was $145 million, down $18 million from the prior year, primarily due to increased manufacturing costs and lower sales volumes[136]. - Operating income decreased to $83 million for the three months ended March 31, 2023, from $100 million in the same period of 2022[147]. - Sales for the current quarter decreased by $1 million to $603 million compared to $604 million in the prior year quarter, a decline of 0.2%[155]. - Year-to-date sales increased by $13 million to $1,128 million, representing a growth of 1.2% compared to $1,115 million in the prior year[157]. - Adjusted EBITDA for the six months ended March 31, 2023, was $254 million, compared to $269 million for the same period in 2022[198]. - The company reported a diluted EPS from continuing operations of $1.68 for the three months ended March 31, 2023, up from $0.66 in the same period of 2022[201]. - Adjusted diluted EPS for the three months ended March 31, 2023, was $1.09, compared to $1.17 for the same period in 2022[201]. Sales and Segment Performance - Sales generated outside of North America accounted for 70% of total sales for the three months ended March 31, 2023, compared to 67% for the same period in 2022[131]. - The Life Sciences segment contributed 40% to total sales for the three months ended March 31, 2023, up from 34% in the prior year[134]. - Life Sciences sales increased by $36 million to $240 million in Q1 2023, driven by favorable pricing and higher volume[209]. - Operating income for Life Sciences rose by $15 million to $58 million in Q1 2023, with an EBITDA increase of $17 million to $75 million, resulting in an EBITDA margin of 31.3%[209]. - Personal Care sales decreased by $5 million to $167 million in Q1 2023, impacted by unfavorable volume and foreign currency exchange[216]. - Year-to-date sales for Life Sciences increased by $73 million to $447 million, with strong global demand for pharmaceutical ingredients[210]. - Year-to-date sales for Personal Care decreased by $13 million to $305 million, affected by unfavorable volume and foreign currency exchange[217]. - Specialty Additives sales decreased by $21 million to $161 million in Q1 2023, primarily due to lower volume and unfavorable foreign currency exchange[222]. Costs and Expenses - Cost of sales for the current quarter increased by $22 million to $406 million, resulting in a gross profit margin decrease to 32.7% from 36.4%[158]. - Selling, general and administrative expenses for the current quarter decreased by $11 million to $79 million, with expenses as a percentage of sales decreasing by 1.8 percentage points[162]. - Research and development expenses remained consistent at $12 million for the current quarter and $25 million year-to-date[165]. - Net interest and other expenses decreased by $53 million in the current quarter, primarily due to lower interest expense and higher interest income[170]. Taxation - The effective income tax rate for the current quarter was a benefit of 1%, compared to an expense of 34% in the prior year quarter[146]. - The effective tax rate for the six months ended March 31, 2023, was 5%, compared to 26% for the same period in 2022, reflecting a favorable adjustment of $23 million related to uncertain tax positions[175][176]. - The adjusted effective tax rate, excluding key items, was 21% for the three months ended March 31, 2023, compared to 23% for the same period in 2022[180]. Cash Flow and Liquidity - Cash and cash equivalents decreased by $247 million for the six months ended March 31, 2023, compared to a $754 million increase for the same period in 2022[238]. - Free cash flows for the current period were $(31) million, compared to $(6) million in the prior year[241]. - Working capital decreased by $56 million to $1,159 million as of March 31, 2023, primarily due to reductions in cash and cash equivalents[242]. - The company's available liquidity position was $1,089 million at March 31, 2023, down from $1,326 million at September 30, 2022[244]. Stock Repurchase and Equity - Ashland initiated a stock repurchase program in March 2023, repurchasing a total of $100 million worth of shares[254]. - Ashland repurchased a total of 1,488,251 shares during the three months ended March 31, 2023, with an average price per share of $99.08 to $104.13[276]. - As of March 31, 2023, Ashland has $348 million remaining available for repurchase under its $500 million stock repurchase program approved in May 2022[276]. - Total equity increased by $47 million to $3,267 million at March 31, 2023, driven by net income of $132 million[253]. Legal and Compliance - The company believes that adequate reserves have been recorded for pending legal proceedings, with losses recognized as immaterial as of March 31, 2023[272]. - The company is involved in various claims and lawsuits related to commercial matters and environmental issues, but potential losses are considered immaterial[272]. - Ashland's management remains confident in the adequacy of reserves for legal claims as of the reporting date[272]. - The company continues to monitor its risk factors and legal proceedings closely to mitigate potential impacts on its financial performance[274]. Outlook and Guidance - The updated fiscal year 2023 sales outlook is projected to be between $2.3 billion and $2.4 billion, down from the previous range of $2.5 billion to $2.7 billion[260]. - Adjusted EBITDA for fiscal year 2023 is now expected to be between $580 million and $610 million, revised from the prior range of $600 million to $650 million[260]. - The company is not reaffirming or providing forward-looking guidance for U.S. GAAP-reported financial measures due to uncertainties in economic conditions[193].