Ashland Global Holdings Inc. (NYSE:ASH) Q4 2019 Earnings Conference Call - Final Transcript

Nov 19, 2019 • 09:00 am ET

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Ashland Global Holdings Inc. (NYSE:ASH) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
William A. Wulfsohn

to welcome Guillermo Novo to the call. We have been working actively together on his transition, and he has been strongly engaged since the announcement that he will be joining as Ashland's Chief Executive and Chairman. We look forward to his comments, perspectives and priorities, but first I'd like to quickly discuss fiscal year '19. Fiscal year '19 was a year of important gains in the context of difficult external conditions. From a financial perspective, we faced challenging end market conditions and a stronger US dollar.

In this context Ashland took aggressive action. We implemented a program to reduce layers, increase operational agility and improve our competitiveness. This program was also focused on reducing our fixed cost by $120 million on a run rate basis. This program contributed greatly to Ashland's reduced adjusted selling, general and administrative expense in fiscal year 2019, which were reduced by more than $50 million or 8%. As a result, adjusted EBITDA margins increased to 21.3% of sales compared to 19.9% in the prior fiscal year. These gains also enabled Ashland to deliver adjusted earnings per share growth of 14% versus fiscal 2018. Thus, while lower than we originally anticipated, Ashland made important financial gains in a difficult context.

From an operational perspective. We also made many important gains. In fiscal year 2019, we launched 23 new products to support targeted growth in our pharmaceutical, nutrition, personal care, nutraceutical and coatings businesses. We expanded the use of our new Ashland production system, which helped drive improvements in safety, quality, asset reliability and overall customer satisfaction.

During the year, we substantially expanded our focus on sustainability. We have established a sustainability council, which is focused on sustainable sourcing, reducing our environmental impact, an increase in sales of natural based products. We've had numerous and important gains in this critical area, which are profiled in our sustainability report which can be found on ashland.com.

From a capital allocation perspective, we made great gains in fiscal year 2019. During the year Ashland returned $264 million to shareholders through both share repurchases and dividends. Furthermore in August, Ashland divested the Composites business and Marl BDO facility to INEOS. The proceeds from this transaction allowed us to reduce debt by $940 million in the fourth quarter.

In summary, while we faced challenges in fiscal year 2019, we also made additional financial, operational, and strategic gains. Importantly, just after the close of fiscal 2019, we announced that I will leave Ashland at the end of the calendar year and Guillermo will take on the role as Ashland's next Chairman and Chief Executive Officer. As I reflect upon my tenure with Ashland, I'm proud of the transformation, we've completed and the teams many accomplishments.

Please turn to Slide 5. Before I begin, I'd like to note that safety and responsible operations are our first and fundamental priority, and in 2018 Ashland was recognized by the American Chemistry Council as the responsible care company of the year, and we were also named one