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Ashland's (ASH) Earnings and Revenues Lag Estimates in Q2
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Ashland Global Holdings Inc. (ASH - Free Report) recorded profits of $91 million or $1.67 per share in the second quarter of fiscal 2023 (ending Mar 31, 2023), down from $786 million or $13.69 in the prior-year quarter.
Barring one-time items, adjusted earnings came in at $1.43 per share, down from the year-ago quarter’s figure of $1.50. The bottom line missed the Zacks Consensus Estimate of $1.53.
Sales were flat year over year at $603 million. The top line missed the Zacks Consensus Estimate of $632.5 million. Sales were supported by disciplined pricing actions leading to a recovery in costs as well as strong demand for pharmaceutical ingredients, offset by demand weakness in personal care and specialty additives and customer inventory destocking.
Life Sciences: Sales in the segment were up 18% year over year to $240 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 3% year over year to $167 million. Disciplined pricing was offset by inventory destocking and unfavorable currency impact.
Specialty Additives: Sales in the segment fell 12% year over year to $161 million, hurt by the inventory destocking that more than offset sustained inflation recovery.
Intermediates: Sales in the segment went down 23% year over year to $51 million, impacted by reduced volumes of merchant derivatives.
Financials
Cash and cash equivalents were $399 million at the end of the quarter, down around 59% year over year. Long-term debt was $1,328 million, down around 0.6% year over year.
Cash flows used by operating activities were $56 million in the reported quarter, increasing from $16 million in the prior-year quarter.
Outlook
Ashland initiated actions to reduce inventories in certain product lines for impacted end markets in April factoring in continued customer destocking and external uncertainties for the second half of fiscal 2023. The company expects these actions to unfavorably impact its adjusted EBITDA in the second half of the fiscal by roughly $20 million.
The company now expects sales for fiscal 2023 to be in the range of $2.3-$2.4 billion reflecting softer global demand. It also expects adjusted EBITDA to be in the range of $580-$610 million factoring in weaker global demand and the inventory-control actions.
Price Performance
Shares of Ashland have lost 12.6% in the past year compared with a 2.7% decline of the industry.
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) , PPG Industries, Inc. (PPG - Free Report) and Linde plc (LIN - Free Report) .
Steel Dynamics currently sports a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 24% 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 10.7%, on average. STLD has gained around 21% in a year.
PPG Industries currently carries a Zacks Rank #2. The Zacks Consensus Estimate for PPG's current-year earnings has been revised 11.7% upward in the past 60 days.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 6.8%, on average. PPG has gained around 5% in a year.
Linde currently carries a Zacks Rank #2. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 3.8% upward in the past 60 days.
Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 5.9% on average. LIN’s shares have gained roughly 17% in the past year.
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Ashland's (ASH) Earnings and Revenues Lag Estimates in Q2
Ashland Global Holdings Inc. (ASH - Free Report) recorded profits of $91 million or $1.67 per share in the second quarter of fiscal 2023 (ending Mar 31, 2023), down from $786 million or $13.69 in the prior-year quarter.
Barring one-time items, adjusted earnings came in at $1.43 per share, down from the year-ago quarter’s figure of $1.50. The bottom line missed the Zacks Consensus Estimate of $1.53.
Sales were flat year over year at $603 million. The top line missed the Zacks Consensus Estimate of $632.5 million. Sales were supported by disciplined pricing actions leading to a recovery in costs as well as strong demand for pharmaceutical ingredients, offset by demand weakness in personal care and specialty additives and customer inventory destocking.
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 18% year over year to $240 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 3% year over year to $167 million. Disciplined pricing was offset by inventory destocking and unfavorable currency impact.
Specialty Additives: Sales in the segment fell 12% year over year to $161 million, hurt by the inventory destocking that more than offset sustained inflation recovery.
Intermediates: Sales in the segment went down 23% year over year to $51 million, impacted by reduced volumes of merchant derivatives.
Financials
Cash and cash equivalents were $399 million at the end of the quarter, down around 59% year over year. Long-term debt was $1,328 million, down around 0.6% year over year.
Cash flows used by operating activities were $56 million in the reported quarter, increasing from $16 million in the prior-year quarter.
Outlook
Ashland initiated actions to reduce inventories in certain product lines for impacted end markets in April factoring in continued customer destocking and external uncertainties for the second half of fiscal 2023. The company expects these actions to unfavorably impact its adjusted EBITDA in the second half of the fiscal by roughly $20 million.
The company now expects sales for fiscal 2023 to be in the range of $2.3-$2.4 billion reflecting softer global demand. It also expects adjusted EBITDA to be in the range of $580-$610 million factoring in weaker global demand and the inventory-control actions.
Price Performance
Shares of Ashland have lost 12.6% in the past year compared with a 2.7% decline of the industry.
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) , PPG Industries, Inc. (PPG - Free Report) and Linde plc (LIN - Free Report) .
Steel Dynamics currently sports a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for STLD's current-year earnings has been revised 24% 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 10.7%, on average. STLD has gained around 21% in a year.
PPG Industries currently carries a Zacks Rank #2. The Zacks Consensus Estimate for PPG's current-year earnings has been revised 11.7% upward in the past 60 days.
PPG Industries’ earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 6.8%, on average. PPG has gained around 5% in a year.
Linde currently carries a Zacks Rank #2. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 3.8% upward in the past 60 days.
Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 5.9% on average. LIN’s shares have gained roughly 17% in the past year.