ash-ex991_6.htm
Exhibit 99.1
News Release
Ashland reports preliminary financial results for third quarter of fiscal 2020 consistent with previous update
•
Sales of $574 million, down 10% versus prior-year quarter
•
Net income of $37 million, or $0.61 per diluted share
•
Income from continuing operations of $50 million, or $0.81 per diluted share
•
Adjusted income from continuing operations excluding intangibles amortization expense of $68 million, or $1.12 per diluted share
•
Adjusted EBITDA of $143 million
WILMINGTON, Del., July 28, 2020 – Ashland Global Holdings Inc. (NYSE: ASH) today announced preliminary1 financial results for the third quarter of fiscal 2020 which ended June 30, 2020. The global specialty materials company serves customers in a wide range of consumer and industrial markets.
As expected, the Ashland portfolio demonstrated resilience during the quarter, despite the global macroeconomic uncertainty brought on by the COVID-19 pandemic. Sales were $574 million, down 10% versus the prior-year quarter, with the previously communicated prior-year business losses representing approximately one percentage point of the decline. Unfavorable foreign currency contributed an additional one percentage point. Net income was $37 million compared to net income of $66 million in the prior-year quarter, as the prior year included earnings from the Composites and Marl businesses. Income from continuing operations was $50 million compared to income of $23 million in the prior-year quarter, or $0.81 per diluted share compared to $0.37 in the prior-year quarter. Adjusted income from continuing operations excluding intangibles amortization expense was $68 million compared to $64 million in the prior-year quarter, or $1.12 per diluted share, up from $1.04 in the prior-year quarter. Adjusted EBITDA was $143 million, up from $140 million in the prior-year quarter, as the impact of lower sales was offset by lower operating expenses and improved product mix.
“Results in the third quarter were consistent with the update we issued on July 17,” said Guillermo Novo, chairman and chief executive officer, Ashland. “Our results in the quarter demonstrate the value of our leadership positions in high-quality end markets and the importance of the actions we are taking internally. Our priorities continue to be the health and safety of our employees and the continued supply of products to customers in the critical industries which we serve. Our consumer business units performed particularly well as we experienced significantly stronger demand for pharmaceutical excipients, biofunctional ingredients and additives for hand sanitizers. While our industrial businesses felt the impact of reduced global demand during April and May, the teams began to see signs of improving demand trends in June.”
“Our internal actions are also driving improvements to our cost structure and profitability,” continued Novo. “The combined benefit of cost reductions, improved product mix and lower raw-material costs yielded Adjusted EBITDA growth of 2% during the quarter. Our
cost-reduction plans remain on track to generate $40 million of run-rate savings by the end of the fiscal year. In addition, we plan to incur $20 million to $30 million of the previously-disclosed reduced fixed-cost absorption related to inventory-control measures during the fiscal-fourth quarter. I am confident that these continued internal actions mean we are well positioned for the upcoming fiscal year.I look forward to sharing additional thoughts on our plans and the progress we have made during the conference call with securities analysts tomorrow morning.”
Reportable Segment Performance
To aid in the understanding of Ashland’s ongoing business performance, the results of Ashland’s reportable segments are described below on an adjusted basis. In addition, EBITDA and adjusted EBITDA are reconciled to operating income in Table 4. Free cash flow and adjusted operating income are reconciled in Table 6 and adjusted income from continuing operations, adjusted diluted earnings per share and adjusted diluted earnings per share excluding intangible amortization expense are reconciled in Table 7 of this news release. These adjusted results are considered non-GAAP financial measures. For a full description of the non-GAAP financial measures used, see the “Use of Non-GAAP Measures” section that further describes these adjustments below.
Consumer Specialties
Sales were $344 million, down 1% from the prior-year quarter, driven by a 3 percentage-point decline associated with previously-communicated businesses losses and a 1 percentage-point decline as a result of unfavorable foreign currency. Excluding these items, the Life Sciences and Personal Care & Household business units performed well during the quarter with particular strength demonstrated by pharmaceutical excipients, biofunctional ingredients and additives for hand sanitizers.
Operating income was $56 million, compared to $49 million in the prior-year quarter. Adjusted EBITDA was $90 million, up 7% from the prior-year quarter, as lower sales volumes were more than offset by favorable price/mix and lower selling, administrative, research and development (“SARD”) costs.
Industrial Specialties
Sales were $205 million, down 23% from the prior-year quarter, due primarily to lower industrial demand across the globe reflecting the impact of the COVID-19 pandemic. Unfavorable foreign currency also reduced sales by 1%.
Operating income was $28 million, compared to $35 million in the prior-year quarter. Adjusted EBITDA was $54 million, down 13% from the prior-year quarter, driven primarily by lower volume and partially offset by favorable price/mix and lower operating costs.
Intermediates & Solvents
Sales were $37 million, down 10% from the prior-year quarter, due primarily to lower pricing on intercompany sales of butanediol and merchant-derivative sales.
Operating income was $7 million, down from $8 million in the prior-year quarter. Adjusted EBITDA was $11 million, consistent with the prior-year quarter, as unfavorable price/mix was offset by favorable operating costs.
Unallocated & Other
Unallocated and Other expense was $43 million, compared to $49 million in the prior-year quarter, primarily due to lower restructuring-related expenses and the elimination of stranded costs. Adjusted Unallocated and Other expense was $12 million, compared to $17 million in the prior-year quarter, primarily due to the benefits of cost reductions achieved during the previous fiscal year.
Outlook
Chairman and CEO Guillermo Novo will provide commentary on the outlook for Ashland during the conference call with securities analysts on Wednesday, July 29, 2020.
Conference Call Webcast
Ashland will host a live webcast of its third-quarter conference call with securities analysts at 9:00 a.m. ET Wednesday, July 29, 2020. The webcast will be accessible through Ashland’s website at http://investor.ashland.com and will include a slide presentation. Following the live event, an archived version of the webcast and supporting materials will be available for 12 months.
Use of Non-GAAP Measures
Ashland believes that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes and certain other charges that are highly variable from year to year, EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin provide Ashland’s investors with performance measures that reflect the impact to operations from trends in changes in sales, margin and operating expenses, providing a perspective not immediately apparent from net income, operating income, net income margin and operating income margin. The adjustments Ashland makes to derive the non-GAAP measures of EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin exclude items which may cause short-term fluctuations in net income and operating income and which Ashland does not consider to be the fundamental attributes or primary drivers of its business. EBITDA, adjusted EBITDA, EBITDA margin and adjusted EBITDA margin provide disclosure on the same basis as that used by Ashland’s management to evaluate financial performance on a consolidated and reportable segment basis and provide consistency in our financial reporting, facilitate internal and external comparisons of Ashland’s historical operating performance and its business units and provide continuity to investors for comparability purposes. EBITDA margin and adjusted EBITDA margin are defined as EBITDA and adjusted EBITDA divided by sales for the corresponding period.
Key items, which are set forth on Table 7 of this release, are defined as financial effects from significant transactions that, either by their nature or amount, have caused short-term fluctuations in net income and/or operating income which Ashland does not consider to most accurately reflect Ashland’s underlying business performance and trends. Further, Ashland believes that providing supplemental information that excludes the financial effects of these items in the financial results will enhance the investor’s ability to compare financial performance between reporting periods.
Tax-specific key items, which are set forth on Table 7 of this release, are defined as financial transactions, tax law changes or other matters that fall within the definition of
key items as described above. These items relate solely to tax matters and would only be recorded within the income tax caption of the Statement of Consolidated Income. As with all key items, due to their nature, Ashland does not consider the financial effects of these tax-specific key items on net income to be the most accurate reflection of Ashland’s underlying business performance and trends.
The free cash flow metric enables Ashland to provide a better indication of the ongoing cash being generated that is ultimately available for both debt and equity holders as well as other investment opportunities. Unlike cash flow provided by operating activities, free cash flow includes the impact of capital expenditures from continuing operations, providing a more complete picture of cash generation. Free cash flow has certain limitations, including that it does not reflect adjustment for certain non-discretionary cash flows such as mandatory debt repayments. The amount of mandatory versus discretionary expenditures can vary significantly between periods.
Adjusted diluted earnings per share is a performance measure used by Ashland and is defined by Ashland as earnings (loss) from continuing operations, adjusted for identified key items and divided by the number of outstanding diluted shares of common stock. Ashland believes this measure provides investors additional insights into operational performance by providing earnings and diluted earnings per share metrics that exclude the effect of the identified key items and tax specific key items.
Adjusted diluted earnings per share, excluding intangibles amortization expense metric enables Ashland to demonstrate the impact of non-cash intangibles amortization expense on earnings per share, in addition to key items previously mentioned. Ashland’s management believes this presentation is helpful to illustrate how previous acquisitions impact applicable period results.
About AshlandAshland Global Holdings Inc. (NYSE: ASH) is a premier global specialty materials company serving customers in a wide range of consumer and industrial markets, including adhesives, architectural coatings, automotive, construction, energy, food and beverage, nutraceuticals, personal care and pharmaceutical. At Ashland, we are approximately 4,600 passionate, tenacious solvers – from renowned scientists and research chemists to talented engineers and plant operators – who thrive on developing practical, innovative and elegant solutions to complex problems for customers in more than 100 countries. Visit ashland.com to learn more.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Ashland has identified some of these forward-looking statements with words such as “anticipates,” “believes,” “expects,” “estimates,” “is likely,” “predicts,” “projects,” “forecasts,” “objectives,” “may,” “will,” “should,” “plans” and “intends” and the negative of these words or other comparable terminology. Ashland may from time to time make forward-looking statements in its annual reports, quarterly reports and other filings with the SEC, news releases and other written and oral communications. These forward-looking statements are based on Ashland’s expectations and assumptions, as of the date such statements are made, regarding Ashland’s future operating performance, financial condition, and expected effects of the COVID-19 pandemic on Ashland’s business, as well as the economy and other future events or circumstances. These statements include but may not be limited to Ashland’s expectations regarding its ability to drive sales and earnings growth and realize further cost reductions.
Ashland’s expectations and assumptions include, without limitation, internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, operating efficiencies and
economic conditions (such as prices, supply and demand, cost of raw materials, and the ability to recover raw-material cost increases through price increases), and risks and uncertainties associated with the following: the impact of acquisitions and/or divestitures Ashland has made or may make (including the possibility that Ashland may not realize the anticipated benefits from such transactions); Ashland’s substantial indebtedness (including the possibility that such indebtedness and related restrictive covenants may adversely affect Ashland’s future cash flows, results of operations, financial condition and its ability to repay debt); severe weather, natural disasters,public-health crises (including the current COVID-19 pandemic),cyber events and legal proceedings and claims (including product recalls, environmental and asbestos matters); the effects of the COVID-19 pandemic on the geographies in which we operate, the end markets we serve and on our supply chain and customers, andwithout limitation, risks and uncertainties affecting Ashland that are described in Ashland’s most recent Form 10-K (including Item 1A Risk Factors) filed with the SEC, which is available on Ashland’s website at http://investor.ashland.com or on the SEC’s website at http://www.sec.gov.Various risks and uncertainties may cause actual results to differ materially from those stated, projected or implied by any forward-looking statements.The extent and duration of the COVID-19 pandemic on our business and operations is uncertain. Factors that will influence the impact on our business and operations include the duration and extent of the pandemic, the extent of imposed or recommended containment and mitigation measures, and the general economic consequences of the pandemic.Ashland believes its expectations and assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. Unless legally required, Ashland undertakes no obligation to update any forward-looking statements made in this news release whether as a result of new information, future events or otherwise.
1Financial results are preliminary until Ashland’s Form 10-Q is filed with the SEC
™ Trademark, Ashland or its subsidiaries, registered in various countries.
FOR FURTHER INFORMATION:
Investor Relations:
Media Relations:
Seth A. Mrozek
Carolmarie C. Brown
+1 (302) 594-5010
+1 (302) 995-3158
samrozek@ashland.com
ccbrown@ashland.com
Ashland Global Holdings Inc. and Consolidated Subsidiaries
STATEMENTS OF CONSOLIDATED INCOME (LOSS)
(In millions except per share data - preliminary and unaudited)
Table 1
Three months ended
Nine months ended
June 30,
June 30,
2020
2019
2020
2019
Sales
$
574
$
641
$
1,717
$
1,884
Cost of sales
378
434
1,171
1,327
GROSS PROFIT
196
207
546
557
Selling, general and administrative expense
113
128
315
364
Research and development expense
14
17
48
51
Intangibles amortization expense
21
22
63
65
Equity and other income (loss)
-
3
7
3
Goodwill impairment
-
-
530
-
OPERATING INCOME (LOSS)
48
43
(403
)
80
Net interest and other expense (income)
(14
)
21
113
73
Other net periodic benefit income (loss)
-
-
1
17
Net income (loss) on divestitures
-
-
3
(3
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES
62
22
(512
)
21
Income tax expense (benefit)
12
(1
)
(21
)
24
INCOME (LOSS) FROM CONTINUING OPERATIONS
50
23
(491
)
(3
)
Income (loss) from discontinued operations (net of income taxes)
(13
)
43
(22
)
97
NET INCOME (LOSS)
$
37
$
66
$
(513
)
$
94
DILUTED EARNINGS PER SHARE
Income (loss) from continuing operations
$
0.81
$
0.37
$
(8.11
)
$
(0.05
)
Income (loss) from discontinued operations
(0.20
)
0.68
(0.36
)
1.55
Net income (loss)
$
0.61
$
1.05
$
(8.47
)
$
1.50
AVERAGE DILUTED COMMON SHARES OUTSTANDING (a)
61
62
61
63
SALES
Life Sciences
189
190
528
556
Personal Care and Household
155
158
451
495
Consumer Specialties
344
348
979
1,051
Specialty Additives
135
177
429
494
Performance Adhesives
70
88
229
258
Industrial Specialties
205
265
658
752
Intermediates & Solvents
37
41
102
118
Intersegment Sales
(12
)
(13
)
(22
)
(37
)
$
574
$
641
$
1,717
$
1,884
OPERATING INCOME (LOSS)
Life Sciences
40
32
97
88
Personal Care and Household
16
17
(309
)
60
Consumer Specialties
56
49
(212
)
148
Specialty Additives
15
19
(137
)
(5
)
Performance Adhesives
13
16
40
42
Industrial Specialties
28
35
(97
)
37
Intermediates & Solvents
7
8
(7
)
20
Unallocated and other
(43
)
(49
)
(87
)
(125
)
$
48
$
43
$
(403
)
$
80
(a)
As a result of the loss from continuing operations for the nine months ending June 30, 2020 and June 30, 2019, the effect of the share-based awards convertible to common shares would be anti-dilutive. In accordance with U.S. GAAP, these shares have been excluded from the diluted earnings per share calculation for the applicable periods.
Ashland Global Holdings Inc. and Consolidated Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions - preliminary and unaudited)
Table 2
June 30
September 30
2020
2019
ASSETS
Current assets
Cash and cash equivalents
$
416
$
232
Accounts receivable
455
481
Inventories
617
597
Other assets
121
64
Held for sale
61
59
Total current assets
1,670
1,433
Noncurrent assets
Property, plant and equipment
Cost
3,203
3,165
Accumulated depreciation
1,649
1,588
Net property, plant and equipment
1,554
1,577
Goodwill
1,734
2,253
Intangibles
1,026
1,088
Operating lease assets, net
140
-
Restricted investments
297
310
Asbestos insurance receivable
138
157
Deferred income taxes
24
23
Other assets
403
410
Total noncurrent assets
5,316
5,818
Total assets
$
6,986
$
7,251
LIABILITIES AND EQUITY
Current liabilities
Short-term debt
$
446
$
166
Trade and other payables
225
313
Accrued expenses and other liabilities
238
271
Current operating lease obligations
23
-
Held for sale
5
7
Total current liabilities
937
757
Noncurrent liabilities
Long-term debt
1,547
1,501
Asbestos litigation reserve
525
555
Deferred income taxes
248
264
Employee benefit obligations
152
150
Operating lease obligations
126
-
Other liabilities
438
453
Total noncurrent liabilities
3,036
2,923
Stockholders' equity
3,013
3,571
Total liabilities and stockholders' equity
$
6,986
$
7,251
Ashland Global Holdings Inc. and Consolidated Subsidiaries
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In millions - preliminary and unaudited)
Table 3
Three months ended
Nine months ended
June 30
June 30
2020
2019
2020
2019
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES
FROM CONTINUING OPERATIONS
Net income (loss)
$
37
$
66
$
(513
)
$
94
Income (loss) from discontinued operations (net of taxes)
13
(43
)
22
(97
)
Adjustments to reconcile income from continuing operations to
cash flows from operating activities
Depreciation and amortization
62
62
183
225
Original issue discount and debt issuance cost amortization
1
2
14
6
Deferred income taxes
(2
)
(1
)
(30
)
1
Distributions to equity affiliates
(1
)
-
(1
)
-
Stock based compensation expense
3
4
11
17
Excess tax benefit on stock based compensation
-
1
1
3
Loss on early retirement of debt
-
-
59
-
(Income) loss from restricted investments
(33
)
(8
)
(17
)
(10
)
Impairments
-
-
530
8
Pension contributions
(2
)
(1
)
(5
)
(4
)
Loss (gain) on pension and other postretirement plan remeasurements
-
-
-
(18
)
Change in operating assets and liabilities (a)
62
5
(101
)
(132
)
Total cash flows provided by operating activities from continuing operations
140
87
153
93
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES
FROM CONTINUING OPERATIONS
Additions to property, plant and equipment
(28
)
(33
)
(94
)
(103
)
Proceeds from disposal of property, plant and equipment
-
-
1
4
Purchase of operations - net of cash acquired
-
(1
)
-
(2
)
Proceeds from settlement of Company-owned life insurance contracts
7
1
7
1
Company-owned life insurance payments
(2
)
(1
)
(2
)
(1
)
Net purchase of funds restricted for specific transactions
-
-
(3
)
(2
)
Reimbursements from restricted investments
7
5
26
25
Proceeds from sale of securities
6
-
16
156
Purchases of securities
(6
)
-
(16
)
(156
)
Proceeds from the settlement of derivative instruments
-
2
-
4
Payments for the settlement of derivative instruments
-
-
-
(2
)
Total cash flows used by investing activities from continuing operations
(16
)
(27
)
(65
)
(76
)
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES
FROM CONTINUING OPERATIONS
Proceeds from issuance of long-term debt
-
-
804
-
Repayment of long-term debt
-
(2
)
(767
)
(10
)
Proceeds from (repayment of) short-term debt
(25
)
72
281
83
Premium on long-term debt repayment
-
-
(59
)
-
Repurchase of common stock
-
(200
)
-
(200
)
Debt issuance costs
-
-
(11
)
-
Cash dividends paid
(17
)
(17
)
(50
)
(48
)
Stock based compensation employee withholding taxes paid in cash
-
-
(6
)
(8
)
Total cash flows provided (used) by financing activities from continuing operations
(42
)
(147
)
192
(183
)
CASH PROVIDED (USED) BY CONTINUING OPERATIONS
82
(87
)
280
(166
)
Cash provided (used) by discontinued operations
Operating cash flows
(19
)
41
(98
)
-
Investing cash flows
-
14
1
6
Effect of currency exchange rate changes on cash and cash equivalents
-
-
1
(2
)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
63
(32
)
184
(162
)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
353
164
232
294
CASH AND CASH EQUIVALENTS - END OF PERIOD
$
416
$
132
$
416
$
132
DEPRECIATION AND AMORTIZATION
Life Sciences
15
15
45
45
Personal Care and Household
19
20
57
58
Consumer Specialties
34
35
102
103
Specialty Additives
20
20
60
98
Performance Adhesives
4
4
11
12
Industrial Specialties
24
24
71
110
Intermediates & Solvents
4
3
10
9
Unallocated and other
-
-
-
3
$
62
$
62
$
183
$
225
(a)
Excludes changes resulting from operations acquired or sold.
Ashland Global Holdings Inc. and Consolidated Subsidiaries
RECONCILIATION OF NON-GAAP DATA - ADJUSTED EBITDA
(In millions - preliminary and unaudited)
Table 4
Three months ended
June 30
Adjusted EBITDA - Ashland Global Holdings Inc.
2020
2019
Net income (loss)
$
37
$
66
Income tax expense (benefit)
12
(1
)
Net interest and other expense
(14
)
21
Depreciation and amortization
62
62
EBITDA
97
148
(Income) loss from discontinued operations (net of taxes)
13
(43
)
Operating key items (see Table 5)
33
35
Adjusted EBITDA
$
143
$
140
Life Sciences
Operating income
$
40
$
32
Add:
Depreciation and amortization
15
15
Adjusted EBITDA
$
55
$
47
Personal Care and Household
Operating income
$
16
$
17
Add:
Depreciation and amortization
19
20
Adjusted EBITDA
$
35
$
37
Adjusted EBITDA - Consumer Specialties Total
Operating income
$
56
$
49
Add:
Depreciation and amortization
34
35
Adjusted EBITDA
$
90
$
84
Ashland Global Holdings Inc. and Consolidated Subsidiaries
RECONCILIATION OF NON-GAAP DATA - ADJUSTED EBITDA
(In millions - preliminary and unaudited)
Table 4 (Continued)
Three months ended
June 30
2020
2019
Specialty Additives
Operating income
$
15
$
19
Add:
Depreciation and amortization
20
20
Operating key items (see Table 5)
2
3
Adjusted EBITDA
$
37
$
42
Performance Adhesives
Operating income
$
13
$
16
Add:
Depreciation and amortization
4
4
Adjusted EBITDA
$
17
$
20
Adjusted EBITDA - Industrial Specialties Total
Operating income
$
28
$
35
Add:
Depreciation and amortization
24
24
Operating key items (see Table 5)
2
3
Adjusted EBITDA
$
54
$
62
Adjusted EBITDA - Intermediates and Solvents
Operating income
$
7
$
8
Add:
Depreciation and amortization
4
3
Adjusted EBITDA
$
11
$
11
Ashland Global Holdings Inc. and Consolidated Subsidiaries
SEGMENT COMPONENTS OF KEY ITEMS FOR APPLICABLE INCOME STATEMENT CAPTIONS
(In millions - preliminary and unaudited)
Table 5
Three Months Ended June 30, 2020
Life Sciences
Personal Care
and Household
Consumer Specialties
Specialty Additives
Performance Adhesives
Industrial Specialties
Intermediates and Solvents
Unallocated & Other
Total
OPERATING INCOME (LOSS)
Operating key items:
Restructuring, separation and other costs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
(14
)
$
(14
)
Environmental reserve adjustments
-
-
-
(2
)
-
(2
)
-
(17
)
(19
)
All other operating income (loss)
40
16
56
17
13
30
7
(12
)
81
Operating income (loss)
40
16
56
15
13
28
7
(43
)
48
NET INTEREST AND OTHER EXPENSE (INCOME)
Key items
(31
)
(31
)
All other net interest and other expense (income)
17
17
(14
)
(14
)
INCOME TAX EXPENSE (BENEFIT)
Tax effect of key items (a)
(1
)
(1
)
All other income tax expense (benefit)
13
13
12
12
INCOME (LOSS) FROM CONTINUING OPERATIONS
$
40
$
16
$
56
$
15
$
13
$
28
$
7
$
(41
)
$
50
Three Months Ended June 30, 2019
Life Sciences
Personal Care
and Household
Consumer Specialties
Specialty Additives
Performance Adhesives
Industrial Specialties
Intermediates and Solvents
Unallocated & Other
Total
OPERATING INCOME (LOSS)
Operating key items:
Restructuring, separation and other costs
$
-
$
-
$
-
$
-
$
-
$
-
$
-
$
(12
)
$
(12
)
Tax indemnity expense
-
-
-
-
-
-
-
(6
)
(6
)
Environmental reserve adjustments
-
-
-
(1
)
-
(1
)
-
(14
)
(15
)
Unplanned plant shutdowns
-
-
-
(2
)
-
(2
)
-
-
(2
)
All other operating income (loss)
32
17
49
22
16
38
8
(17
)
78
Operating income (loss)
32
17
49
19
16
35
8
(49
)
43
NET INTEREST AND OTHER EXPENSE (INCOME)
Key items
(6
)
(6
)
All other net interest and other expense (income)
27
27
21
21
INCOME TAX EXPENSE (BENEFIT)
Tax effect of key items (a)
(5
)
(5
)
Tax specific key items (b)
1
1
All other income tax expense (benefit)
3
3
(1
)
(1
)
INCOME (LOSS) FROM CONTINUING OPERATIONS
$
32
$
17
$
49
$
19
$
16
$
35
$
8
$
(69
)
$
23
(a)
Represents the tax effect of the key items that are previously identified above.
(b)
Represents key items resulting from tax specific financial transactions, tax law changes or other matters that fall within the definition of tax specific key items. See Table 7 for additional information.
Ashland Global Holdings Inc. and Consolidated SubsidiariesTable6
RECONCILIATION OF CERTAIN NON-GAAP DATA
(In millions - preliminary and unaudited)
Three months ended
Nine months ended
June 30
June 30
Free cash flows (a)
2020
2019
2020
2019
Total cash flows used by operating activities from
continuing operations
$
140
$
87
$
153
$
93
Adjustments:
Additions to property, plant and equipment
(28
)
(33
)
(94
)
(103
)
Free cash flows (a)
$
112
$
54
$
59
$
(10
)
(a)
Free cash flow is defined as cash flows provided (used) by operating activities less additions to property, plant and equipment and other items Ashland has deemed non-operational (if applicable).
Three months ended
Nine months ended
June 30
June 30
Adjusted operating income (loss)
2020
2019
2020
2019
Operating income (loss) (as reported)
$
48
$
43
$
(403
)
$
80
Key items, before tax:
Restructuring, separation and other costs
14
12
36
89
Proxy costs
-
-
-
5
Goodwill impairment
-
-
530
-
Tax indemnity expense
-
6
-
6
Environmental reserve adjustments
19
15
19
15
Unplanned plant shutdowns
-
2
-
2
Inventory adjustment
-
-
4
-
Adjusted operating income (non-GAAP)
$
81
$
78
$
186
$
197
Ashland Global Holdings Inc. and Consolidated Subsidiaries
Table 7
RECONCILIATION OF CERTAIN NON-GAAP DATA
(In millions except per share data - preliminary and unaudited)
Three months ended
Nine months ended
June 30
June 30
2020
2019
2020
2019
Income (loss) from continuing operations (as reported)
$
50
$
23
$
(491
)
$
(3
)
Key items, before tax:
Restructuring, separation and other costs
14
12
36
89
Proxy costs
-
-
-
5
Tax indemnity expense
-
6
-
6
Gain on pension and other postretirement plan remeasurements
-
-
-
(18
)
Environmental reserve adjustments
19
15
19
15
Unplanned plant shutdowns
-
2
-
2
Unrealized (gain) loss on securities
(31
)
(6
)
(9
)
(3
)
Goodwill impairment
-
-
530
-
Inventory adjustment
-
-
4
-
Accelerated amortization of debt issuance costs
-
-
8
-
Loss on early retirement of debt
-
-
59
-
Net loss on acquisitions and divestitures
-
-
-
3
Key items, before tax
2
29
647
99
Tax effect of key items (a)
(1
)
(5
)
(20
)
(10
)
Key items, after tax
1
24
627
89
Tax specific key items:
Deferred tax rate changes
-
-
-
2
One-time transition tax
-
6
-
28
Uncertain tax positions
-
(8
)
-
(8
)
Restructuring and separation activity
-
-
-
(1
)
Other tax reform related activity
-
-
(25
)
-
Other
-
3
-
3
Tax specific key items (b)
-
1
(25
)
24
Total key items
1
25
602
113
Adjusted income from continuing operations (non-GAAP)
$
51
$
48
$
111
$
110
Amortization expense adjustment (net of tax) (c)
17
16
51
50
Adjusted income from continuing operations (non-GAAP) excluding intangibles amortization expense
$
68
$
64
$
162
$
160
(a)
Represents the tax effect of the key items that are previously identified above.
(b)
Represents key items resulting from tax specific financial transactions, tax law changes or other matters that fall within the definition of tax specific key items. These tax specific key items included the following:
-
Deferred tax rate changes: Includes the impact from the remeasurement of Ashland’s domestic deferred tax balances resulting from the enactment of the Tax Cuts and Jobs Act (Tax Act) as well as the impact from rate changes for other jurisdictions.
-
One-time transition tax: Includes the one-time transition tax expense resulting from the enactment of the Tax Act.
-
Uncertain tax positions: Includes the impact from the settlement of uncertain tax positions with various tax authorities.
-
Restructuring and separation activity: Includes the impact from company-wide restructuring activities. These adjustments related to various tax impacts including state tax costs, foreign tax costs and other tax account adjustments.
-
Other tax reform: Includes the impact of other items related to the Tax Act and other tax law changes enacted during 2019 and 2020.
(c) Amortization expense adjustment (net of tax) tax rates were 20% for the three and nine months ended June 30, 2020 and 21% and 23% for the three and nine months ended June 30, 2019, respectively.
Ashland Global Holdings Inc. and Consolidated Subsidiaries
Table 7 (Continued)
RECONCILIATION OF CERTAIN NON-GAAP DATA
(In millions except per share data - preliminary and unaudited)
Three months ended
Nine months ended
June 30
June 30
2020
2019
2020
2019
Diluted EPS from continuing operations (as reported)
$
0.81
$
0.37
$
(8.11
)
$
(0.05
)
Key items, before tax:
Restructuring, separation and other costs
0.23
0.19
0.58
1.40
Proxy costs
-
-
-
0.08
Tax indemnity expense
-
0.10
-
0.10
Gain on pension and other postretirement plan remeasurements
-
-
-
(0.29
)
Environmental reserve adjustments
0.32
0.24
0.32
0.24
Unplanned plant shutdowns
-
0.03
-
0.03
Unrealized (gain) loss on securities
(0.51
)
(0.10
)
(0.15
)
(0.05
)
Goodwill impairment
-
-
8.75
-
Inventory adjustment
-
-
0.06
-
Accelerated amortization of debt issuance costs
-
-
0.13
-
Debt refinancing costs
-
-
0.97
-
Net loss on acquisitions and divestitures
-
-
-
0.05
Key items, before tax
0.04
0.46
10.66
1.56
Tax effect of key items (a)
(0.01
)
(0.08
)
(0.33
)
(0.16
)
Key items, after tax
0.03
0.38
10.33
1.40
Tax specific key items:
Deferred tax rate changes
-
-
-
0.03
One-time transition tax
-
0.10
-
0.44
Uncertain tax positions
-
(0.13
)
-
(0.12
)
Restructuring and separation activity
-
-
-
(0.02
)
Other tax reform related activity
-
-
(0.41
)
-
Other
-
0.05
-
0.05
Tax specific key items (b)
-
0.02
(0.41
)
0.38
Total key items
0.03
0.40
9.92
1.78
Adjusted diluted EPS from continuing operations (non-GAAP)
$
0.84
$
0.77
$
1.81
$
1.73
Amortization expense adjustment (net of tax) (c)
0.28
0.27
0.83
0.79
Adjusted diluted EPS from continuing operations (non-GAAP) excluding intangibles amortization expense
$
1.12
$
1.04
$
2.64
$
2.52
(a)
Represents the tax effect of the key items that are previously identified above.
(b)
Represents key items resulting from tax specific financial transactions, tax law changes or other matters that fall within the definition of tax specific key items. These tax specific key items included the following:
-
Deferred tax rate changes: Includes the impact from the remeasurement of Ashland’s domestic deferred tax balances resulting from the enactment of the Tax Cuts and Jobs Act (Tax Act) as well as the impact from rate changes for other jurisdictions.
-
One-time transition tax: Includes the one-time transition tax expense resulting from the enactment of the Tax Act.
-
Uncertain tax positions: Includes the impact from the settlement of uncertain tax positions with various tax authorities.
-
Restructuring and separation activity: Includes the impact from company-wide restructuring activities. These adjustments related to various tax impacts including state tax costs, foreign tax costs and other tax account adjustments.
-
Other tax reform: Includes the impact of other items related to the Tax Act and other tax law changes enacted during 2019 and 2020.
(c)
Amortization expense adjustment (net of tax) tax rates were 20% for the three and nine months ended June 30, 2020 and 21% and 23% for the three and nine months ended June 30, 2019, respectively.
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