US' Ashland's Q4 FY22 sales rise 7% from prior-year quarter

Each of the company’s reportable segments achieved sales growth compared to the prior-year quarter, Ashland announced in a press release.

The year-over-year sales growth was driven primarily by disciplined pricing leading to cost recovery in a high-inflation environment and improved product mix. Sales growth was partially offset by unfavourable foreign currency which negatively impacted sales by $33 million, or 6 per cent.

Net income was $57 million in Q4 FY22, up from $43 million in the prior-year quarter. The company’s income from continuing operations was $60 million, up from $33 million in the prior-year quarter, or $1.09 per diluted share, up from $0.55 in the prior-year quarter. Ashland’s adjusted income from continuing operations excluding intangibles amortisation expense was $80 million, up from $73 million in the prior-year quarter, or $1.46 per diluted share, up from $1.22. Adjusted EBITDA was $147 million, down 1 per cent from $149 million in the prior-year quarter. Unfavourable foreign currency and the planned turnaround at the Lima, Ohio, facility negatively impacted adjusted EBITDA by $15 million and $13 million, respectively, or 19 per cent on a combined basis.

Ashland’s average diluted shares outstanding totalled 55 million as of September 30, 2022, down from 61 million in the prior-year quarter. Earlier in FY22, Ashland’s board of directors approved a new $500 million evergreen share repurchase authorisation.

For Ashland’s personal care segment, sales were $188 million, up 3 per cent from the prior-year quarter, while the adjusted operating income was $35 million, up from $29 million. Adjusted EBITDA was $56 million, up from $51 million in the prior-year quarter, primarily reflecting strong demand, improved mix, cost recovery through pricing and consistent operations.

For Ashland’s specialty additives, sales were $187 million, up 3 per cent from the prior-year quarter, primarily reflecting inflation recovery. While demand remains strong, capacity constraints and proactive mix improvement actions limited overall sales growth during the quarter. Adjusted operating income was $24 million, compared to $25 million in the prior-year quarter, while adjusted EBITDA was $43 million compared to $47 million.

Ashland’s unallocated and other expense was $34 million, compared to $27 million in the previous year’s quarter, while the adjusted unallocated and other expense was $26 million, compared to $18 million in the prior-year quarter.

For fiscal 2022, Ashland’s net income was $927 million, up from $220 million in the prior year, while income from continuing operations was $181 million, up from $173 million, or $3.20 per diluted share, up from $2.82. Adjusted income from continuing operations excluding intangibles amortisation expense was $322 million, up from $230 million in the prior year, or $5.70 per diluted share, up from $3.75.

Ashland’s FY22 adjusted EBITDA was $590 million, up 19 per cent from $495 million in the prior year, while adjusted EBITDA margin increased to nearly 25 per cent, a 130 basis-point increase compared to FY21.

For FY22, cash flows provided by operating activities totalled $193 million, compared to $466 million in the prior year. The ongoing free cash flow in FY22 totalled $127 million, compared to $351 million in the prior year.

For fiscal 2023, Ashland expects sales to be in the range of $2.5 billion – $2.7 billion, and adjusted EBITDA to be in the range of $600 – $650 million.

“Although we are not immune to the challenging external factors impacting the global economy, we expect the profile of our consumer-focused specialty ingredients and additives business portfolio to provide more demand resilience as we enter a more recessionary macro environment,” said Guillermo Novo, chair and chief executive officer, Ashland. “The carry-over impact of pricing, mix improvement and productivity actions should provide some tailwind to our growth and earnings, and our teams are taking actions to offset incremental inflationary pressures. Our new product development pipeline remains robust, and we are investing in our business to build additional capacity for key products to support our global customer base.”

“The impact of a global recession, the war in Ukraine, foreign currency headwinds, energy cost and availability in Europe impacting customer and supplier operations, additional pandemic-related lockdowns, global supply-chain and shipping challenges, and continued cost-inflation pressures are currently the greatest areas of uncertainty,” continued Novo. “Despite the external uncertainties ahead, we are focused on what we can control. The Ashland team is executing at a high level, and we are prepared for both the opportunities and challenges that lie ahead. I look forward to discussing our results and outlook in more detail on the earnings call and webcast tomorrow morning.

Fibre2Fashion News Desk (DP)