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Ashland's (ASH) Earnings Beat Estimates in Q1, Revenues Lag

Ashland Global Holdings Inc. ASH recorded profits from continuing operations of $32 million or 55 cents per share in the first quarter of fiscal 2022 (ending Dec 31, 2021), down from $43 million or 70 cents in the prior-year quarter.

Barring one-time items, adjusted earnings came in at 88 cents per share, up from the year-ago quarter’s figure of 69 cents. It beat the Zacks Consensus Estimate of 87 cents.

Sales rose around 9% year over year to $512 million, but lagged the Zacks Consensus Estimate of $512.7 million. The top line was driven by strong demand across the company’s core global end markets, higher pricing and contributions from the Schulke & Mayr acquisition.

 

Ashland Global Holdings Inc. Price, Consensus and EPS Surprise

 

Ashland Global Holdings Inc. price-consensus-eps-surprise-chart | Ashland Global Holdings Inc. Quote

 

Segment Highlights

Life Sciences: Sales in the segment were flat year over year at $170 million in the reported quarter. Higher pricing and strong demand were offset by delayed shipments of confirmed orders at the end of the quarter.

Personal Care: Sales in the division rose 17% year over year to $147 million. Sales were driven by the Schulke & Mayr acquisition as well as higher demand and pricing across core personal-care end markets.

Specialty Additives: Sales in the segment increased 6% year over year to $156 million, led by strong demand and higher pricing across all end markets.

Intermediates: Sales in the segment went up 61% year over year to $53 million, led by higher prices in all product lines. The company saw higher captive internal product and merchant sales on the back of higher pricing.

Financials

Cash and cash equivalents were $194 million at the end of the quarter, down around 42% year over year. Long-term debt was $1,580 million, down around 1% year over year.

Cash flows provided by operating activities were $14 million in the reported quarter, down from $81 million in the prior-year quarter. Free cash flow was $26 million in the quarter compared with $74 million in the prior-year quarter.

Outlook

Ashland continues to expect sales in the range of $2.25-$2.35 billion for fiscal 2022. It also anticipates adjusted EBITDA between $550 million and $570 million.

The company noted that it sees underlying demand to remain strong and expects its pricing actions to cover the anticipated inflation. It also projects the current shipping challenges to continue over the coming quarters. The company remains committed to take further measures to recover any additional cost inflation. It will also continue to proactively build inventories in major regions to mitigate the supply-chain and shipping headwinds.

Price Performance

Shares of Ashland have gained 13.4% in the past year compared with a 9.6% decline of the industry.

 

Image Source: Zacks Investment Research

 

Zacks Rank & Other Key Picks

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

Better-ranked stocks worth considering in the basic materials space include Commercial Metals Company CMC, Albemarle Corporation ALB and AdvanSix Inc. ASIX.
 
Commercial Metals, sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 39.5% upward over the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has rallied around 70% in a year.

Albemarle, carrying a Zacks Rank #1, has an expected earnings growth rate of 51.3% for the current year. ALB's consensus estimate for the current year has been revised 5.4% upward over the past 60 days.

Albemarle beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 22.1%. ALB shares have gained around 33% in a year.

AdvanSix, carrying a Zacks Rank #1, has an expected earnings growth rate of 7.4% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised 5.3% upward in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 83% in a year.


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