Ashland Reports Q1 2025 Results, Reiterates Full-Year Outlook

Ashland Inc. (NYSE: ASH), a global additives and specialty ingredients company, reported its financial results for the first quarter of fiscal 2025, which ended on December 31, 2024. The company also reiterated its outlook for the full year. Ashland's shares have returned -1.5% over the past month, underperforming the Zacks S&P 500 composite's +2.7% change. Currently, ASH carries a Zacks Rank #5 (Strong Sell), suggesting potential underperformance in the near future.

Ashland's sales for the first quarter were $405 million, down 14% from the prior-year quarter. The company's previously announced portfolio optimization initiatives, including the divestment of its Avoca business and the optimization of its carboxymethylcellulose (CMC), methylcellulose (MC), and nutraceuticals portfolio, reduced overall sales by approximately $50 million or 11% versus the prior-year quarter. Excluding the impact of these initiatives, sales declined by 3% compared to the prior-year quarter. Lower sales volumes within the Life Sciences segment were mostly offset by organic sales volume improvement within the Personal Care, Specialty Additives, and Intermediates segments. Overall pricing was down 2% versus the prior year, primarily within the Intermediates and Life Science segments. Foreign currency unfavorably impacted sales by $1 million.

Net loss for the quarter was $165 million, down from net income of $26 million in the prior-year quarter. Loss from continuing operations was $166 million, down from income of $28 million in the prior-year quarter, or a loss of $3.51 per diluted share, down from income of $0.54. Adjusted income from continuing operations excluding intangibles amortization expense was $14 million, down from $23 million in the prior-year quarter, or $0.28 per diluted share, down from $0.45. Adjusted EBITDA was $61 million, down 13% from $70 million in the prior-year quarter, primarily driven by Portfolio Optimization, reduced pricing, and increased selling, administrative, research and development (SARD) expenses. This was partially offset with a production volume recovery versus inventory corrective actions in the prior year. Excluding Portfolio Optimization, Adjusted EBITDA declined by 2% versus prior-year quarter.

Cash flows used by operating activities were $30 million, with ongoing free cash flow2 of negative $26 million. The company signed a definitive agreement to sell its Avoca business to Mane, which is expected to close in the second quarter of fiscal 2025.

Ashland's CEO, Guillermo Novo, stated, "Since announcing the sale agreement for our Avoca business, we are nearing the final stages of our portfolio optimization activities. The last stage will be to fully implement our $30 million cost reduction plan to offset the stranded costs and gross profit loss from the sale of the nutraceutical business. Ashland continues to demonstrate strategic progress and operating discipline amid softer market conditions, generally consistent with the first-quarter update shared at our strategy day event in December. Organic sales volumes declined by 1% primarily due to lower demand in Europe and inventory control actions by our pharmaceutical customers. This decline was mostly offset by improved sales volumes in Personal Care, Specialty Additives, and Intermediates. Pricing impacts moderated in the quarter, reflecting our team’s disciplined approach to a stable raw material environment."

Analysts on Wall Street project that Ashland will announce quarterly earnings of $0.20 per share in its forthcoming report, representing a decline of 55.6% year over year. Revenues are projected to reach $439.38 million, declining 7.1% from the same quarter last year. Over the past 30 days, the consensus EPS estimate for the quarter has been adjusted upward by 5.9% to its current level. This demonstrates the covering analysts' collective reassessment of their initial projections during this period.

Ashland's stock has returned -1.5% over the past month, underperforming the Zacks S&P 500 composite's +2.7% change. Currently, ASH carries a Zacks Rank #5 (Strong Sell), suggesting potential underperformance in the near future. However, the company's long-term prospects remain promising, given its strategic focus on growing innovative business lines and strategic share repurchases to boost future revenues and earnings. Ashland's goal is to offset the stranded costs and gross profit loss from the sale of the nutraceutical business by fully implementing a $30 million cost reduction plan. By optimizing its portfolio and focusing on high-quality, consumer-focused markets, Ashland aims to drive future success in the additives and specialty ingredients industry.



In conclusion, Ashland reported mixed financial results for the first quarter of fiscal 2025, with sales and earnings declining due to portfolio optimization initiatives and lower pricing. The company reiterated its full-year outlook and remains focused on strategic progress and operating discipline. Despite the recent underperformance of its stock, Ashland's long-term prospects appear promising, given its strategic focus on growing innovative business lines and strategic share repurchases. Investors should closely monitor the company's progress and consider its potential for future growth.