• Q1 Sales: $405 million, down 14% year-over-year.
• Adjusted EBITDA: $61 million, down 13% year-over-year.
• Gross Profit Margin: Increased 290 basis points to 28.1%.
• Adjusted EBITDA Margin: 15.1%, up 30 basis points year-over-year.
• Adjusted EPS: $0.28, down 38% from prior year.
• Life Sciences Sales: $134 million, down 33% year-over-year.
• Personal Care Sales: $134 million, up 4% year-over-year.
• Specialty Additives Sales: $115 million, down 6% year-over-year.
• Intermediates Sales: $33 million, flat year-over-year.
• Cash on Hand: $219 million.
• Total Available Liquidity: $815 million.
• Net Debt: $1.1 billion, leverage ratio of approximately 2.4 times.
• Free Cash Flow: Negative $26 million for the quarter.
• Fiscal Year 2025 Sales Outlook: $1.9 billion to $2.05 billion.
• Fiscal Year 2025 Adjusted EBITDA Outlook: $430 million to $470 million.

• Warning! GuruFocus has detected 2 Warning Sign with ASH.

Release Date: January 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ashland Inc (NYSE:ASH) reported a strong performance in Personal Care, achieving its fourth consecutive quarter of over 25% year-over-year EBITDA growth, driven by strong demand in Skin Care and Hair Care.
• The company successfully executed strategic portfolio optimization initiatives, including the divestiture of the Nutraceutical business, which improved long-term profitability.
• Ashland Inc (NYSE:ASH) maintained stable pricing in Specialty Additives, with a significant narrowing of year-over-year decline to just 1%, reflecting disciplined pricing strategy.
• The company is on track with its $90 million cost-saving target, having already achieved $12 million in annual run rate savings from restructuring efforts.
• Ashland Inc (NYSE:ASH) reaffirmed its full-year sales and adjusted EBITDA outlook, demonstrating confidence in achieving its financial targets despite market uncertainties.

Negative Points

• Ashland Inc (NYSE:ASH) experienced a 14% year-over-year decline in Q1 sales, primarily due to portfolio optimization actions, including the Nutraceutical divestiture.
• The Life Sciences segment faced challenges with a 33% decline in sales, impacted by softer pharma markets and customer inventory control measures, particularly in Europe.
• Adjusted EBITDA decreased by 13% year-over-year, driven by loss of gross profit from divestitures and stranded costs from portfolio optimization actions.
• The company faced increased competition and pricing pressure in China, impacting volumes and pricing in local and export markets.
• Currency fluctuations, particularly the depreciation of the euro, yuan, and real, pose a potential headwind for Ashland Inc (NYSE:ASH)'s EBITDA for the remainder of the fiscal year.

Q & A Highlights

Q: Can you help us understand the expected EBITDA progression for the rest of the year, given the need for a significant increase from Q1 to meet guidance? A: Guillermo Novo, CEO: Q1 is typically our weakest quarter, and we expect volumes to pick up from March to September. We anticipate normalization in pharma and Personal Care demand, even in a recessionary environment. We are monitoring the new administration's policies, which will influence our outlook and models.

Q: How do you expect organic volumes to progress for the rest of the year? A: Guillermo Novo, CEO: We expect volumes to be flat to slightly up, depending on the business and region. Q1 is our down season, and we often see inventory actions that shift orders between Q1 and Q2. Current order outlook for Q2 is normal, with no major surprises.

Q: Do you still believe the Life Sciences segment can achieve 30%+ EBITDA margins over the next two fiscal years? A: Guillermo Novo, CEO: Our outlook remains unchanged. The competitive environment is stable, and we are focusing on productivity improvements to reinforce margins. Our globalized initiatives and innovations are expected to enhance margins and growth.

Q: Are you seeing any changes in customer trade patterns that might affect your business? A: Guillermo Novo, CEO: We are not seeing significant changes to our expectations. Stability in customer decisions indicates caution in a choppy market. We are working with customers to understand their needs and are prepared to adapt our operations as necessary.

Q: How are you addressing the impact of Chinese export competition, particularly in the HEC market? A: Guillermo Novo, CEO: We are seeing increased competition in Middle East and Africa, but less so in VP&D due to regulatory environments. We are focusing on cost reductions and productivity improvements to remain competitive and are monitoring potential antidumping actions in Europe.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.