Home » Ashland posts $272 million loss on pension, debt refinancing charges in Q4

Ashland posts $272 million loss on pension, debt refinancing charges in Q4

COVINGTON, Ky. (Oct. 31, 2012) — Chemical maker Ashland Inc. on Tuesday reported a $272 million loss, $3.47 per diluted share, from continuing operations for the quarter that ended Sept. 30, the fourth quarter of its 2012 fiscal year. It had sales of $2.1 billion.

These results included five key items that together reduced income from continuing operations by approximately $422 million, net of tax, or $5.34 per diluted share. The largest key items were a non-cash charge of $3.88 per share related to an actuarial loss on pension, and a charge of 80 cents per share related to debt refinancing during the quarter. Excluding all five key items, Ashland’s adjusted income from continuing operations was $150 million, or $1.87 per diluted share, an increase of 85 percent versus the year-ago quarter.

For the year-ago quarter, Ashland reported a loss from continuing operations of $273 million, or $3.50 per diluted share, on sales of $1.8 billion. The year-ago results included six key items that had a combined negative effect of $353 million, net of tax, or $4.51 per diluted share. Excluding these items, adjusted income from continuing operations was $1.01 per diluted share. The results from the prior-year quarter do not include pre-acquisition ISP results or related financing costs associated with that acquisition.

Excluding the effects of those items, As such, Ashland’s results as compared to the year-ago quarter were:

– Sales were $2.1 billion; normalizing for currency, divestitures and joint ventures, sales increased 3 percent;

– Operating income rose 60 percent to $246 million;

– Earnings before interest, taxes, depreciation and amortization (EBITDA) increased 32 percent to $349 million; and

– EBITDA as a percent of sales rose 450 basis points to 17 percent, in line with the company’s long-term financial targets.

“We achieved significant year-over-year growth in EBITDA and margins during the quarter, despite economic challenges that tempered sales growth in some of our businesses,” said James J. O’Brien, Ashland chairman and chief executive officer. “Three of our four commercial units generated increased profitability, as we benefitted from better pricing and lower raw material costs. Also during the quarter, we improved our capital structure with a successful refinancing of our nine-and-one-eighth percent senior notes and the implementation of an accounts receivables asset securitization program. In addition, we had a solid quarter for free cash flow, generating $154 million.”

Ashland Specialty Ingredients’ sales totaled $734 million, an increase of 9 percent when compared to a year ago on a pro forma basis.

Ashland Water Technologies’ sales totaled $431 million in the September 2012 quarter, a decline of 12 percent from the year-ago quarter. Nearly half of that decline was due to the stronger dollar. Normalizing for currency effects and adjusting for divestitures, sales decreased 4 percent, the company said.

Ashland Performance Materials reported sales of $369 million, a 15-percent decrease from the September quarter on the same pro forma basis, which includes the results of ISP’s elastomers business.

O’Brien said he is pleased with Ashland’s overall performance in fiscal 2012.

“Fiscal 2012 was a defining year for Ashland,” he said. “With our transformation into a global specialty chemical company complete, we set our sights on delivering sustained sales and earnings growth. Our performance in 2012 demonstrates that we are on the right strategic track. Adjusted earnings per share from continuing operations increased 70 percent, driven by good earnings growth in most of our commercial units. We also captured $75 million in savings from the successful integration and corporate cost reduction program, improved our capital structure with the debt refinancing, and generated $183 million of free cash flow. We’re beginning to see the type of earnings power that we envisioned when we combined Ashland and ISP, with improved margins that better reflect our focus on specialty chemicals.”