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Ashland (ASH) Earnings & Sales Fall Short of Estimates in Q4

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Ashland Global Holdings Inc. (ASH - Free Report) logged profit from continuing operations of $27 million or 44 cents per share in the fourth quarter of fiscal 2019 (ended Sep 30, 2019), compared with a loss of $2 million or 3 cents in the prior-year quarter. The company benefited from its cost-reduction program in the reported quarter.

Barring one-time items, adjusted earnings came in at 77 cents, up 8% year over year. However, it lagged the Zacks Consensus Estimate of 98 cents.

Sales fell 9% year over year to $609 million. The figure also missed the Zacks Consensus Estimate of $641.8 million. Sales were hurt by softer industrial end-market demand in the Specialty Ingredients segment and weak results at Pharmachem and Personal Care businesses.

Ashland Global Holdings Inc. Price, Consensus and EPS Surprise


Ashland Global Holdings Inc. Price, Consensus and EPS Surprise

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


Segment Highlights

Specialty Ingredients: Sales in the segment fell 9% year over year to $579 million in the reported quarter, impacted by weakness in Pharmachem and Personal Care, weaker industrial demand and unfavorable currency.  

Intermediates & Solvents: Sales in the segment declined 3% year over year to $30 million, as both volumes and prices fell due to changing market demand dynamics.

Fiscal 2019 Results

Ashland recorded sales of $2.5 billion for fiscal 2019, down 4% year over year. Profit from continuing operations was $24 million or 39 cents per share, up from $19 million or 29 cents a year ago.


The company ended fiscal 2019 with cash and cash equivalents of $232 million, down 21% year over year. Long-term debt was $1,501 million at the end of the fiscal, down 34% year over year.

The company, in September, completed the sale of its Composites unit and the butanediol (“BDO”) manufacturing facility in Marl, Germany. It utilized the proceeds from this transaction to reduce debt by $940 million in the fiscal fourth quarter.

Cash provided by operating activities from continuing operations for fiscal 2019 was $228 million, down from $241 million a year ago.

The company returned $264 million to shareholders through dividend and share repurchases during fiscal 2019.


Moving ahead, Ashland expects demand dynamics in first-quarter fiscal 2020 to be similar to what was witnessed in the fiscal fourth quarter. It also sees limited improvement in Oral Care and Pharmachem businesses over the near term. The company also expects pricing and raw material movements to remain balanced. Moreover, the temporary shutdown of the company’s Nanjing plant is forecast to have an impact in the fiscal first quarter.

The company has also substantially completed its cost-reduction program. It achieved cost-reduction of $115 million on a run rate basis as of Sep 30, 2019. Ashland expects to surpass $120 million run-rate by the end of calendar year 2019. The company envisions the carryover impact from the program in fiscal 2020 to be roughly $25 million of selling, general and administrative (SG&A) cost savings.

Price Performance

Shares of Ashland are up 6.9% year to date compared with the industry’s 17.9% rise.


Zacks Rank & Stocks to Consider

Ashland currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks worth considering in the basic materials space include Agnico Eagle Mines Limited (AEM - Free Report) , Kirkland Lake Gold Ltd. (KL - Free Report) and Franco-Nevada Corporation (FNV - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle has a projected earnings growth rate of 168.6% for the current year. The company’s shares have rallied roughly 62% in a year’s time.

Kirkland Lake Gold has projected earnings growth rate of 96.3% for the current year. The company’s shares have surged around 151% in a year’s time.

Franco-Nevada has estimated earnings growth rate of 46.2% for the current year. The company’s shares have shot up roughly 41% in a year’s time.

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