Ashland, a global additives and specialty ingredients company, announced financial results for the fourth quarter of fiscal year 2024, which ended September 30, 2024, together with its fiscal year 2024 results summary, full-year fiscal 2025 outlook and provided an update on portfolio optimization activities.

Ashland’s sales in the fourth quarter were $522 million, versus $518 million in the prior-year quarter. Sales volume improved within the Personal Care, Specialty Additives and Intermediates segments, partially offset by lower Life Sciences sales volumes. Sales volume in Life Sciences was lower due to the CMC and nutraceuticals portfolio optimization initiatives.

Consolidated year-over-year quarterly sales volumes increased, up four percent. Pricing was softer versus the prior year in a moderately deflationary raw material environment. The previously announced CMC, MC and nutraceuticals portfolio optimization initiatives reduced overall sales by approximately $24 million or five percent during the fourth quarter as certain lower margin products were curtailed or divested. Foreign currency favorably impacted sales by $2 million.

Net income was $16 million, up from a net loss of $4 million in the prior-year quarter. Income from continuing operations was $19 million, up from a loss of $8 million in the prior-year quarter. Adjusted income from continuing operations excluding intangibles amortization expense was $61 million, up from $21 million in the prior-year quarter.

Adjusted EBITDA was $124 million, up 68 percent from $74 million in the prior-year quarter, driven by a sales and production volume recovery versus inventory corrective actions in the prior year, improving product mix due to portfolio optimization and deflationary raw materials, partially offset with lower pricing. Foreign currency had a $5 million favorable impact on Adjusted EBITDA when compared to the prior-year quarter.

Cash flows provided by operating activities totaled $80 million, down from $130 million in the prior-year quarter. Ongoing free cash flow2 totaled $88 million compared to $104 million in the prior-year quarter.

“Customer demand was generally consistent with our expectations in the fourth quarter and all business units delivered organic sales volume growth,” said Guillermo Novo, chair and chief executive officer, Ashland. “We generated high-single-digit revenue growth versus the prior year when adjusting for the full-quarter impact of our nutraceuticals divestiture and portfolio improvement initiatives. While most of our markets remain resilient, there were specific areas of weakness, primarily in China.”

“Year-over-year profitability grew significantly as our sales volume converged with customer end market demand and we compare against last year’s inventory reduction actions. Overall absorption at one of our U.S. cellulosic facilities was lower than expected due to unplanned manufacturing challenges related to the start-up of HEC productivity investments. Production at the site has normalized starting in early October,” concluded Novo.

Fiscal Year 2024 Results Summary

Sales were $2.1 billion, down four percent from the prior year. A second half demand recovery was more than offset by portfolio optimization actions, softer pricing and normalized competitive dynamics and the related share shift in vinyl pyrrolidone and derivatives (VP&D) pharma.

Net income was $169 million, down from $178 million in the prior year. Income from continuing operations was $199 million, up from $168 million in the prior year, or $3.95 per diluted share, up from $3.13. Adjusted income from continuing operations excluding intangibles amortization expense was $224 million, up from $218 million in the prior year, or $4.45 per diluted share, up from $4.07.

Adjusted EBITDA was $459 million, in-line with the prior year. A second half demand recovery paired with increased production volumes, deflationary raw materials and improved product mix due to portfolio optimization was offset by first half inventory destocking, softer pricing and higher selling, administrative, research and development (SARD) expenses, primarily related to the reset of variable compensation. Adjusted EBITDA margin increased to twenty-two percent: an 80 basis-point increase compared to the prior year.

Cash flow provided by operating activities totaled $462 million, up from $294 million in the prior year. Ongoing free cash flow2 totaled $270 million compared to $217 million in the prior year.

Portfolio Optimization Actions

Ashland is taking the following actions to offset the impact of portfolio optimization and to further strengthen the company’s core:

Reviewing strategic alternatives for Avoca business line,

Completed a share buyback program of $150 million to offset the annual adjusted earnings per share impact from the divestiture of nutraceuticals and the future exit of Avoca,

Initiation of $30 million restructuring plan to offset impact from the nutraceuticals sale and other portfolio optimization actions, with 50 percent realization in fiscal year 2025 and 50 percent in fiscal year 2026,

Advancing a multi-year manufacturing optimization restructuring plan to improve operational cost and strengthen the competitive position of HEC and VP&D which is expected to generate pre-tax savings of $60 million once fully achieved, including savings of $5 million in fiscal year 2025.

Financial Outlook

For fiscal year 2025, Ashland expects sales to be in the range of $1.90 billion to $2.05 billion, and Adjusted EBITDA to be in the range of $430 million to $470 million.