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Ashland's (ASH) Earnings Beat Estimates in Q1, Revenues Lag

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Ashland Global Holdings Inc. (ASH - Free Report) recorded profits of $40 million or 73 cents per share in the first quarter of fiscal 2023 (ending Dec 31, 2022), down from $48 million or 83 cents in the prior-year quarter.

Barring one-time items, adjusted earnings came in at 97 cents per share, up from the year-ago quarter’s figure of 88 cents. It topped the Zacks Consensus Estimate of 95 cents.

Sales rose around 3% year over year to $525 million. It missed the Zacks Consensus Estimate of $525.9 million. The top line was driven mainly by disciplined pricing actions leading to a recovery in costs as well as strong demand for pharmaceutical ingredients, partly offset by demand weakness in China due COVID-19 restrictions and significant inventory destocking particularly in China and Europe.

 

Ashland Inc. Price, Consensus and EPS Surprise

 

Ashland Inc. Price, Consensus and EPS Surprise

Ashland Inc. price-consensus-eps-surprise-chart | Ashland Inc. Quote

 

Segment Highlights

Life Sciences: Sales in the segment were up 22% year over year to $207 million in the reported quarter, aided by double-digit growth to pharmaceutical customers reflecting cost recovery and strong demand.

Personal Care: Sales in the division fell 6% year over year to $138 million. Disciplined pricing was offset by lower sales in China mainly due to COVID-19 policies and inventory destocking within the distribution channel.
 
Specialty Additives: Sales in the segment fell 8% year over year to $143 million, hurt by the impact of COVID-19 restrictions in China and inventory destocking in China and Europe.

Intermediates: Sales in the segment went up 2% year over year to $54 million, led by higher merchant-market prices.

Financials

Cash and cash equivalents were $532 million at the end of the quarter, up around 174% year over year. Long-term debt was $1,316 million, down around 17% year over year.

Cash flows used by operating activities were $29 million in the reported quarter.

Outlook

Ashland continues to expect sales in the range of $2.5-$2.7 billion for fiscal 2023. It also anticipates adjusted EBITDA to be within the $600-$650 million range for the full fiscal.

Price Performance

Shares of Ashland have gained 12.5% in the past year compared with a 20.6% decline of the industry.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Zacks Rank & Other Key Picks

Ashland currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Steel Dynamics, Inc. (STLD - Free Report) , Commercial Metals Company (CMC - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) .

Steel Dynamics currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 0.4% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Steel Dynamics’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 11.3%, on average. STLD has rallied around 104% in a year.

Commercial Metals currently carries a Zacks Rank #1. The consensus estimate for CMC's current-year earnings has been revised 9.8% upward in the past 60 days.

Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 16.7%, on average. CMC has gained around 53% in a year.

Agnico Eagle currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for AEM’s current-year earnings has been revised 0.4% upward in the past 60 days.

Agnico Eagle beat Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 26.4% on average. AEM’s shares have gained roughly 16% in the past year.

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