Ashland Global : Q1-2021 Earnings Release & Financials

Ashland Global Holdings Inc. and Consolidated Subsidiaries	Table 1
STATEMENTS OF CONSOLIDATED INCOME (LOSS)
(In millions except per share data - preliminary and unaudited)

			Three months ended
			December 31,
			2020			2019
Sales	$	552		$	533
Cost of sales		374			380
GROSS PROFIT		178			153
Selling, general and administrative expense		106			99
Research and development expense		15			16
Intangibles amortization expense		21			21
Equity and other income		5			-
OPERATING INCOME		41			17
Net interest and other expense (income)		(6)		10
Net income on divestitures		14			3
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES		61			10
Income tax expense (benefit)		-			(24)
INCOME FROM CONTINUING OPERATIONS		61			34
Loss from discontinued operations (net of income taxes)		(5)		(2)
NET INCOME	$	56		$	32
DILUTED EARNINGS PER SHARE
Income from continuing operations	$	0.99		$	0.56
Income (loss) from discontinued operations		(0.08)		(0.03)
Net income	$	0.91		$	0.53
AVERAGE DILUTED COMMON SHARES OUTSTANDING		61			61
SALES
Life Sciences		170			155
Personal Care and Household		126			137
Consumer Specialties		296			292
Specialty Additives		147			139
Performance Adhesives		84			74
Industrial Specialties		231			213
Intermediates & Solvents		33			28
Intersegment Sales		(8)		-
		$	552		$	533
OPERATING INCOME (LOSS)
Life Sciences		29			22
Personal Care and Household		15			11
Consumer Specialties		44			33
Specialty Additives		2			9
Performance Adhesives		20			10
Industrial Specialties		22			19
Intermediates & Solvents		2			(12)
Unallocated and other		(27)		(23)
		$	41		$	17

Ashland Global Holdings Inc. and Consolidated Subsidiaries					Table 2
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions - preliminary and unaudited)
			December 31			September 30
			2020			2020
ASSETS
Current assets
Cash and cash equivalents	$	335	$	454
Accounts receivable		409			471
Inventories		537			529
Other assets		100			87
Held for sale		-			6
Total current assets		1,381			1,547
Noncurrent assets
Property, plant and equipment
Cost		3,310			3,265
Accumulated depreciation		1,748			1,700
Net property, plant and equipment		1,562			1,565
Goodwill		1,792			1,758
Intangibles		1,001			1,013
Operating lease assets, net		137			137
Restricted investments		316			301
Asbestos insurance receivable		130			136
Deferred income taxes		26			26
Other assets		397			394
Total noncurrent assets		5,361			5,330
Total assets	$	6,742	$	6,877
LIABILITIES AND EQUITY
Current liabilities
Short-term debt	$	93	$	280
Trade and other payables		217			233
Accrued expenses and other liabilities		252			277
Current operating lease obligations		23			23
Total current liabilities		585			813
Noncurrent liabilities
Long-term debt		1,601			1,573
Asbestos litigation reserve		498			513
Deferred income taxes		222			229
Employee benefit obligations		157			157
Operating lease obligations		124			124
Other liabilities		433			432
Total noncurrent liabilities		3,035			3,028
Stockholders' equity		3,122			3,036
Total liabilities and stockholders' equity	$	6,742	$	6,877

Ashland Global Holdings Inc. and Consolidated Subsidiaries					Table 3
STATEMENTS OF CONSOLIDATED CASH FLOWS
(In millions - preliminary and unaudited)
		Three months ended
			December 31
		2020			2019
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES
FROM CONTINUING OPERATIONS
Net income (loss)	$	56		$	32
Loss from discontinued operations (net of taxes)		5			2
Adjustments to reconcile income from continuing operations to
cash flows from operating activities
Depreciation and amortization		62			61
Original issue discount and debt issuance cost amortization		1			2
Deferred income taxes		(5 )		(12 )
Gain from sales of property and equipment		(4 )		-
Stock based compensation expense		4			4
Income from restricted investments		(23 )		(13 )
Net income on divestitures		(14 )		-
Impairments		9			-
Pension contributions		(2 )		(1 )
Change in operating assets and liabilities (a)		17			(109 )
Total cash flows provided (used) by operating activities from continuing operations		106			(34 )
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES
FROM CONTINUING OPERATIONS
Additions to property, plant and equipment		(30 )		(29 )
Proceeds from disposal of property, plant and equipment		5			-
Proceeds from sale or restructuring of operations		14			-
Net purchase of funds restricted for specific transactions		(1 )		(1 )
Reimbursements from restricted investments		8			10
Proceeds from sale of securities		42			4
Purchases of securities		(42 )		(4 )
Total cash flows used by investing activities from continuing operations		(4 )		(20 )
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES
FROM CONTINUING OPERATIONS
Proceeds from (repayment of) short-term debt		(187 )		14
Cash dividends paid		(17 )		(16 )
Stock based compensation employee withholding taxes paid in cash		(3 )		(5 )
Total cash flows used by financing activities from continuing operations		(207 )		(7 )
CASH PROVIDED (USED) BY CONTINUING OPERATIONS		(105 )		(61 )
Cash provided (used) by discontinued operations
Operating cash flows		(14 )		(17 )
Investing cash flows		(3 )		2
Effect of currency exchange rate changes on cash and cash equivalents		3			1
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(119 )		(75 )
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		454			232
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	335		$	157
DEPRECIATION AND AMORTIZATION
Life Sciences		16			15
Personal Care and Household		19			19
Consumer Specialties		35			34
Specialty Additives		21			20
Performance Adhesives		3			4
Industrial Specialties		24			24
Intermediates & Solvents		3			3
Unallocated and other		-			-
		$	62		$	61

(a) Excludes changes resulting from operations acquired or sold.

Ashland Global Holdings Inc. and Consolidated Subsidiaries	Table 4
RECONCILIATION OF NON-GAAP DATA - ADJUSTED EBITDA
(In millions - preliminary and unaudited)

				Three months ended
				December 31
Adjusted EBITDA - Ashland Global Holdings Inc.			2020			2019
Net income	$	56		$	32
Income tax expense (benefit)		-			(24)
Net interest and other expense (income)		(6)		10
Depreciation and amortization		62			61
EBITDA		112			79
Loss from discontinued operations (net of taxes)		5			2
Net income on divestitures key items (see Table 5)		(14)		-
Operating key items (see Table 5)		21			7
Adjusted EBITDA	$	124		$	88
Life Sciences
Operating income	$	29		$	22
Add:
Depreciation and amortization		16			15
Adjusted EBITDA	$	45		$	37
Personal Care and Household
Operating income	$	15		$	11
Add:
Depreciation and amortization		19			19
Adjusted EBITDA	$	34		$	30
Adjusted EBITDA - Consumer Specialties Total
Operating income	$	44		$	33
Add:
Depreciation and amortization		35			34
Adjusted EBITDA	$	79		$	67

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

December 31

			2020			2019
Specialty Additives
Operating income	$	2		$	9
Add:
Depreciation and amortization			21			20
Operating key items (see Table 5)			9			-
Adjusted EBITDA	$	32		$	29
Performance Adhesives
Operating income	$	20		$	10
Add:
Depreciation and amortization			3			4
Adjusted EBITDA	$	23		$	14
Adjusted EBITDA - Industrial Specialties Total
Operating income	$	22		$	19
Add:
Depreciation and amortization			24			24
Operating key items (see Table 5)			9			-
Adjusted EBITDA	$	55		$	43
Adjusted EBITDA - Intermediates and Solvents
Operating income	$	2		$	(12)
Add:
Depreciation and amortization			3			3
Adjusted EBITDA	$	5		$	(9)

Ashland Global Holdings Inc. and Consolidated Subsidiaries																								Table 5
SEGMENT COMPONENTS OF KEY ITEMS FOR APPLICABLE INCOME STATEMENT CAPTIONS
(In millions - preliminary and unaudited)
												Three Months Ended December 31, 2020
					Personal
					Care
		Life		and			Consumer		Specialty	Performance			Industrial	Intermediates	Unallocated
		Sciences	Household			Specialties		Additives		Adhesives		Specialties	and Solvents		& Other		Total
OPERATING INCOME (LOSS)
Operating key items:
Restructuring, separation and other costs	$	-		$	-	$	-		$	-		$	-	$	-		$	-		$	(12 )	$	(12 )
Capital project impairment		-			-				-			(9 )		-			(9 )		-			-			(9 )
All other operating income (loss)		29			15				44			11			20			31			2			(15 )		62
Operating income (loss)		29			15				44			2			20			22			2			(27 )		41
NET INTEREST AND OTHER EXPENSE (INCOME)
Key items																								(18 )		(18 )
All other net interest and other expense (income)																								12			12
																								(6 )		(6 )
NET INCOME ON DIVESTITURES
Key items																								14			14
INCOME TAX EXPENSE (BENEFIT)
Tax effect of key items (a)																								4			4
Tax specific key items (b)																								(13 )		(13 )
All other income tax expense (benefit)																								9			9
																								-			-
INCOME (LOSS) FROM CONTINUING OPERATIONS	$	29		$	15	$	44		$	2		$	20	$	22		$	2		$	(7 )	$	61
												Three Months Ended December 31, 2019
					Personal
					Care
		Life		and			Consumer		Specialty	Performance			Industrial	Intermediates	Unallocated
		Sciences	Household			Specialties		Additives		Adhesives		Specialties	and Solvents		& Other		Total
OPERATING INCOME (LOSS)
Operating key items:
Restructuring, separation and other costs	$	-		$	-	$	-		$	-		$	-	$	-		$	-		$	(7 )	$	(7 )
All other operating income (loss)		22			11				33			9			10			19			(12 )		(16 )		24
Operating income (loss)		22			11				33			9			10			19			(12 )		(23 )		17
NET INTEREST AND OTHER EXPENSE (INCOME)
Key items																								(9 )		(9 )
All other net interest and other expense (income)																								19			19
																								10			10
NET INCOME ON DIVESTITURES																								3			3
INCOME TAX EXPENSE (BENEFIT)
Tax effect of key items (a)																								1			1
Tax specific key items (b)																								(25 )		(25 )
All other income tax expense (benefit)																								-			-
																								(24 )		(24 )
INCOME (LOSS) FROM CONTINUING OPERATIONS	$	22		$	11		$	33		$	9		$	10		$	19		$	(12 )	$	(6 )	$	34

1. Represents the tax effect of the key items that are previously identified above.
2. 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 Subsidiaries					Table 6
RECONCILIATION OF CERTAIN NON-GAAP DATA
(In millions - preliminary and unaudited)
			Three months ended
			December 31
Free cash flows (a)			2020			2019
Total cash flows provided by operating activities from
continuing operations	$	106		$	(34)
Adjustments:
Additions to property, plant and equipment		(30)		(29)
Free cash flows (a) (b)	$	76		$	(63)

1. 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).
2. Includes $14 million and $6 million of restructuring payments for the three months ended December 31, 2020 and 2019, respectively.

			Three months ended
			December 31
Adjusted operating income			2020			2019
Operating income (as reported)	$	41	$	17
Key items, before tax:
Restructuring, separation and other costs		12			7
Capital project impairment		9			-
Adjusted operating income (non-GAAP)	$	62	$	24

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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
	December 31
	2020			2019
Income from continuing operations (as reported)	$	61		$	34
Key items, before tax:
Restructuring, separation and other costs		12			7
Capital project impairment		9			-
Unrealized gain on securities		(18)		(9)
Net gain on acquisitions and divestitures		(14)		-
Key items, before tax		(11)		(2)
Tax effect of key items (a)		4			1
Key items, after tax		(7)		(1)
Tax specific key items:
Restructuring and separation activity		(13)		-
Other tax reform related activity		-			(25)
Tax specific key items (b)		(13)		(25)
Total key items		(20)		(26)
Adjusted income from continuing operations (non-GAAP)	$	41		$	8
Amortization expense adjustment (net of tax) (c)		17			17
Adjusted income from continuing operations (non-GAAP) excluding intangibles amortization expense	$	58		$	25

1. Represents the tax effect of the key items that are previously identified above.
2. 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:
3. • 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 2020.
4. Amortization expense adjustment (net of tax) tax rates were 21% and 20% for the three months ended December 31, 2020 and 2019, respectively.

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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
		December 31
		2020			2019
Diluted EPS from continuing operations (as reported)	$	0.99		$	0.56
Key items, before tax:
Restructuring, separation and other costs		0.18			0.12
Capital project impairment		0.16			-
Unrealized gain on securities		(0.29)		(0.15)
Net gain on acquisitions and divestitures		(0.23)		-
Key items, before tax		(0.18)		(0.03)
Tax effect of key items (a)		0.07			0.02
Key items, after tax		(0.11)		(0.01)
Tax specific key items:
Restructuring and separation activity		(0.22)		-
Other tax reform related activity		-			(0.42)
Tax specific key items (b)		(0.22)		(0.42)
Total key items		(0.33)		(0.43)
Adjusted diluted EPS from continuing operations (non-GAAP)	$	0.66		$	0.13
Amortization expense adjustment (net of tax) (c)		0.28			0.28
Adjusted diluted EPS from continuing operations (non-GAAP) excluding intangibles amortization expense	$	0.94		$	0.41

1. Represents the tax effect of the key items that are previously identified above.
2. 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:
3. • 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 2020.
4. Amortization expense adjustment (net of tax) tax rates were 21% and 20% for the three months ended December 31, 2020 and 2019, respectively.

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