On August 6, 2024, Ashland Inc (ASH, Financial) released its 8-K filing detailing the financial results for the third quarter of fiscal year 2024. Ashland Inc is a global specialty materials company serving diverse industrial markets, organized into four segments: life sciences, personal care, specialty additives, and intermediates.
Performance Overview
For Q3 2024, Ashland Inc reported sales of $544 million, slightly below the analyst estimate of $574.73 million and a marginal decrease from $546 million in the prior-year quarter. The company faced challenges such as softer pricing in a deflationary raw material environment and unfavorable foreign currency impacts.
Net income for the quarter was $6 million, or $0.12 per diluted share, significantly down from $50 million, or $0.94 per diluted share, in the prior-year quarter. Income from continuing operations was $31 million, or $0.60 per diluted share, compared to $42 million, or $0.79 per diluted share, in the prior-year quarter. However, adjusted income from continuing operations excluding intangibles amortization expense was $75 million, or $1.49 per diluted share, surpassing the analyst estimate of $1.14 per share.
Segment Performance
Sales performance varied across Ashland's segments:
| Segment | Sales (Q3 2024) | Sales (Q3 2023) |
|---|---|---|
| Life Sciences | $195 million | $219 million |
| Personal Care | $175 million | $146 million |
| Specialty Additives | $150 million | $152 million |
| Intermediates | $36 million | $43 million |
The Life Sciences segment saw a decline in sales to $195 million, down 11% from the prior-year quarter, primarily due to weaker demand in pharmaceutical and crop-care end markets. Personal Care sales increased by 20% to $175 million, driven by higher volumes in skin and hair care products. Specialty Additives sales were relatively flat at $150 million, while Intermediates sales dropped by 16% to $36 million.
Financial Achievements and Challenges
Ashland Inc reported an adjusted EBITDA of $139 million, a 5% increase from $133 million in the prior-year quarter. This improvement was driven by higher sales and production volumes, a favorable product mix, and deflationary raw materials, partially offset by unfavorable pricing and higher selling, administrative, research, and development (SARD) expenses.
"Ashland delivered another quarter of sequential year-on-year momentum for sales and Adjusted EBITDA. While improving sales trends continued during most of the quarter, June was weaker-than-expected in Life Sciences and, to a lesser extent, Specialty Additives," said Guillermo Novo, chair and chief executive officer, Ashland.
Cash flows provided by operating activities totaled $128 million, down from $137 million in the prior-year quarter. Ongoing free cash flow was $112 million, compared to $97 million in the prior-year quarter. The company repurchased 1.3 million shares during the quarter, with $770 million remaining under the existing authorization.
Income Statement Highlights
Key metrics from the income statement include:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Sales | $544 million | $546 million |
| Gross Profit | $186 million | $178 million |
| Operating Income (Loss) | $(61) million | $62 million |
| Net Income | $6 million | $50 million |
Balance Sheet and Cash Flow
As of June 30, 2024, Ashland Inc reported total assets of $5.747 billion, down from $5.939 billion as of September 30, 2023. The company maintained a strong cash position with $399 million in cash and cash equivalents. Total liabilities stood at $2.780 billion, with stockholders' equity at $2.967 billion.
Outlook
Ashland Inc expects sales for the fiscal fourth quarter to be in the range of $530 million to $540 million, with adjusted EBITDA between $130 million and $140 million. For the full fiscal year, the company anticipates sales of approximately $2.1 billion and adjusted EBITDA in the range of $465 million to $475 million.
"Although overall demand trends are improving, there is uncertainty around specific industry and regional dynamics. To be prudent we are planning for a choppy demand environment," concluded Novo.
For more detailed insights and the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from Ashland Inc for further details.
