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Ashland (ASH) Beats Q1 Earnings, Misses Revenue Estimates

Zacks Equity Research

Ashland Global Holdings Inc. ASH incurred net loss of $48 million or 76 cents per share in the first quarter of fiscal 2019 (ended Dec 31, 2018), wider than net loss of $4 million or 7 cents in the prior-year quarter.

Barring one-time items, adjusted earnings came in at 14 cents, which beat the Zacks Consensus Estimate of 11 cents.

Sales fell roughly 1% year over year to $576 million. The figure missed the Zacks Consensus Estimate of $589.7 million.

Ashland Global Holdings Inc. Price, Consensus and EPS Surprise

 

Ashland Global Holdings Inc. Price, Consensus and EPS Surprise | Ashland Global Holdings Inc. Quote

Segment Highlights

Specialty Ingredients: Sales in the Specialty Ingredients segment rose 1% year over year to $553 million on the back of improved product mix and pricing. However, unfavorable currency affected sales in the quarter.  

Intermediates & Solvents: Sales in the Intermediates & Solvents segment declined roughly 25.8% year over year to $23 million. As the company’s Marl facility is now reported through discontinued operations, the results only reflect Lima facility.
 
Financials

Cash used by operating activities from continuing operations was $9 million, down from $31 million in the prior-year quarter. The company’s long-term debt was roughly $2,275 million at the end of fiscal first quarter, flat year over year.

Outlook

Ashland provided an updated outlook for fiscal 2019 in December 2018. The company has reaffirmed the view.

It expects adjusted earnings per share (EPS) in the range of $3.10-$3.40 for fiscal 2019.  

Notably, adjusted EBITDA expectations for the Specialty Ingredients unit are unchanged at $610-$635 million. For the Intermediates & Solvents business, adjusted EBITDA is projected in the range of $20-$30 million. Free cash flow for fiscal 2019 is expected around $175 million.

For second-quarter fiscal 2019, Ashland projects adjusted earnings from continuing operations in the range of 80-90 cents per share, assuming that effective tax rate is 15%.

In November 2018, the company agreed to divest the Composites unit and the butanediol (BDO) manufacturing facility in Marl, Germany, to London-based INEOS Enterprises in a deal worth around $1.1 billion.

Per the company, roughly $70 million of costs allocated to the Composites unit and BDO facility are expected to be eliminated or offset through transfers and reductions.

Price Performance

Shares of Ashland have moved up 7.8% in the past year compared with the industry’s 2% rise.



Zacks Rank & Stocks to Consider

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

A few better-ranked stocks in the basic materials space include Rio Tinto plc RIO, Cameco Corporation CCJ and Israel Chemicals Ltd ICL. While Rio Tinto currently sports a Zacks Rank #1 (Strong Buy), Cameco and Israel Chemicals carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Rio Tinto has an expected earnings growth rate of 5.1% for 2019. The company’s shares have moved up 8.4% in the past year.

Cameco has an expected earnings growth rate of 18.5% for 2019. Its shares have surged 42.1% in a year’s time.

Israel Chemicals has an expected earnings growth rate of 11.1% for 2019. Its shares have rallied 43.7% in a year’s time.

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