Ashland Global Holdings Inc. (NYSE:ASH) Q4 2019 Earnings Conference Call - Final Transcript
Nov 19, 2019 • 09:00 am ET
[Operator Instructions] Our first question comes from David Begleiter with Deutsche Bank. Your line is now open.
Thank you. Good morning. Guillermo on Slide 21 you mentioned aligning and rightsizing the cost structure. Post the most recent cost program, how much more do you think there is a go on the cost side, if you can quantify that? And maybe even margins is what is the margin potential of the ASI business you think going forward.
Okay. So good morning David. It's been -- it's nice to hear from you. So if you look at the alignment of costs, I look at it in two buckets that we need to align. As we form our businesses, each one of them is very, very different. Some are much more heavily involved with innovation tech service, higher cost structures, but much higher margins. Others there is innovation but they are a different type of business where margins are a little bit tighter and the business models need to change. Today, we basically have the commercial groups are dedicated by business, but a lot of the rest of the organization is sort of allocated to the businesses.
So the intent there is to form the businesses and then let them decide what they need. In some areas, they might increase some costs and other areas and might decrease. It really depends on their business model and what they want to do. So we will get that going, as soon as we can forming the businesses in the first step, and then we will empower them so that they can define those things and we can support it. The other bucket is more of the infrastructure support, some of the admin costs, some of the functions that really support the businesses, which again -- two issues there is what do the businesses need and then we'll adjust accordingly. And the other part is really compare and benchmark ourselves to the rest of the industry and make sure that we are aligning ourselves with $2.5 billion to $3 billion company, what should we look -- look like and really look at our profile for that.
If you look at margins and I've been asked this question before, how good, can we get? I would say the target, I know that has been set 25% to 27% you're going to hear me talk more about minimum 25%. If you know the last company I went in -- we were able to get much higher margins, I would have said, if you had asked me the question you asked me at the beginning, I probably would have given you a lower number than what we got to. So because the business is really need to drive and develop their model, I don't know what, I don't know yet. So I think there could be upside, and I know, I think the minimum is 25% and we'll see how we progress as we get more information from the business