WILMINGTON, DE — Ashland Inc. (NYSE: ASH) this week reported a 10% decrease in sales for its first fiscal quarter of 2024, which ended December 31, 2023. Despite a fall to $473 million from the prior fiscal year, the global company, which has notable footholds in pharmaceuticals, personal care, and architectural coatings, remains optimistic.
The company’s net income also took a dip, dropping to $26 million from the previous year’s $40 million. Income from continuing operations was $28 million, down from the prior year’s $42 million. This resulted in a diluted share income of $0.54, compared to the previous year’s $0.76.
Ashland Inc.’s adjusted EBITDA stood at $70 million, down 35% from the prior year’s $108 million. This decline was linked to reduced production volumes and the associated unfavorable absorption impact.
Despite these numbers, there’s the potential silver lining in the form of shrinking year-over-year volume declines, indicating that demand may have finally stabilized. The company’s share repurchase activities seem to be bearing fruit as well, as the average diluted shares outstanding dropped to 51 million from the previous fiscal year’s 55 million.
Cash flows provided by operating activities have made a dramatic turnaround totaling $201 million, compared to the prior-year quarter when the operating activities used $29 million in cash flow. This difference is attributed to the new Foreign Accounts Receivable Sales Program.
Ashland Inc. remains positive about the future, with CEO Guillermo Novo highlighting improved customer demand and the company’s focused reduction in inventory balances as encouraging signs.
“The Ashland team continues to focus on what we can control to build resilience and improve performance of our core businesses,” said Novo. “Disciplined pricing coupled with moderately deflationary raw material costs and prudent operating expense management was overshadowed by the lower sales volume and production absorption impacts during the quarter.
“We also continue to progress our strategic priorities to execute, globalize, innovate, and acquire, which drive our actions, investments, and profitable growth expectations. Within our strategy to execute, portfolio optimization activities are underway which will improve our margin profile and reduce earnings volatility in the future, and we are advancing our globalize and innovate strategies to deliver long-term profitable growth.”
“Furthermore, as a part of our disciplined capital allocation approach and our commitment to return capital to shareholders, we continue to believe Ashland’s stock is an attractive use of capital, as demonstrated by our repurchase of an additional $100 million of Ashland shares during the quarter,” concluded Novo.
Given the signs of market demand stabilization and the company’s optimistic future plans, investors may well see the first quarter’s challenges as short-term pains for long-term gains.
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