Ashland Inc. (ASH) Reports Q4 Fiscal 2023 Results and Provides Q1 Fiscal 2024 Outlook
Sales decreased by 18% year-over-year to $518 million in Q4 fiscal 2023.
Net loss reported at $4 million, a significant decline from $57 million income in the prior-year quarter.
Adjusted EBITDA fell by 50% to $74 million compared to the prior-year quarter.
Ongoing free cash flow improved to $104 million, reflecting inventory reduction efforts.
On November 8, 2023, Ashland Inc. (NYSE:ASH) released its financial results for the fourth quarter of fiscal year 2023, ending September 30, 2023. The company, a leader in additives and specialty ingredients, faced a challenging quarter with sales dropping to $518 million, an 18% decrease compared to the same period last year. The net loss for the quarter was reported at $4 million, or $0.07 per diluted share, a stark contrast to the $57 million income in the prior-year quarter. Adjusted income from continuing operations, excluding intangibles amortization expense, was $21 million, or $0.41 per diluted share, down from $80 million, or $1.46 per diluted share in the prior-year quarter.
Financial Performance Overview
Adjusted EBITDA for the quarter was $74 million, a significant reduction from $147 million in the prior-year quarter, primarily due to customer inventory destocking and inventory-reduction actions. Despite these challenges, Ashland managed to generate $130 million in cash flows from operating activities and an ongoing free cash flow of $104 million, an improvement from $93 million in the prior-year quarter, as a result of inventory balance reductions.
Segment Performance and Market Conditions
Ashland's Life Sciences segment reported sales of $203 million, a 5% decrease, while Personal Care sales fell by 22% to $146 million. The Specialty Additives and Intermediates segments also experienced declines in sales, by 23% and 42% respectively. Adjusted operating income and EBITDA across these segments reflected the impact of lower volumes and inventory-control actions, despite favorable foreign currency impacts.
Strategic Actions and Outlook
Guillermo Novo, Ashland's CEO, acknowledged the consistency of the results with previous updates and noted signs of stabilizing demand. However, he also mentioned limited visibility regarding the timing of demand normalization. The company has taken proactive inventory-control actions to manage production and drive stronger free cash flow generation. For fiscal year 2024, Ashland is focusing on portfolio and investment actions to improve performance.
Looking ahead to the first quarter of fiscal 2024, Ashland expects sales in the range of $470 million to $490 million and adjusted EBITDA between $55 million and $65 million. The company anticipates demand recovery to be back-end loaded into the second half of the fiscal year and is not issuing a full-year outlook at this time due to prevailing uncertainties.
Ashland's full-year fiscal 2023 results showed a net income of $178 million, down from $927 million in the prior year, with sales totaling $2.2 billion, an 8% decrease from the previous year. The company's adjusted EBITDA margin decreased to twenty-one percent, a 380 basis-point decrease compared to the prior year.
For more detailed information, Ashland will discuss its financial results and outlook during its earnings call and webcast on November 9, 2023. The webcast will be available on the Investor Relations section of Ashland's website at http://investor.ashland.com.
Ashland Inc. (NYSE:ASH) remains committed to navigating the current market challenges and optimizing its portfolio to enhance focus on its core businesses, aiming for improved performance and profitability in the upcoming fiscal year.
Explore the complete 8-K earnings release (here) from Ashland Inc for further details.
This article first appeared on GuruFocus.
