Bearish stock to watch: Ashland Global Holdings Inc (NYSE: ASH)

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Ashland Global Holdings Inc (NYSE: ASH) stock fell over 3.6% on 19th November, 2019 (Source: Google finance) after the company in the fourth quarter of FY 19 has reported 9% decline in sales to $609 million versus the prior-year quarter, mainly due to challenged results at Pharmachem and Personal Care, plus weaker industrial end-market demand within the Specialty Ingredients segment. There is 4% increase in the adjusted income from continuing operations to $47 million, versus the prior-year quarter. Adjusted EBITDA increased 6 percent to $150 million versus the prior-year quarter due to lower selling, general and administrative (“SG&A”) costs mainly due to the ongoing cost-reduction program.

In FY19, the company reported 4% fall in the Ashland sales to $2.5 billion, versus the prior year. Net income was up 343 percent to $505 million, versus the prior year, due to lower costs from the cost-restructuring program. Operating income margins improved 280 basis points and operating income expanded 6 percent when compared to fiscal year 2018. During the fourth quarter and fiscal year 2019, we faced more challenging external conditions than anticipated. Despite these challenges, during fiscal year 2019 the company took action to grow adjusted earnings per share by 14 percent, improve its adjusted EBITDA margins by 140 basis points and increase adjusted EBITDA by 3 percent.

Moreover, during the fourth quarter, Specialty Ingredients’ sales fell 9% to $579 million, from the prior-year quarter, due to challenged results at Pharmachem and Personal Care, plus weaker industrial end-market demand. The segment’s operating income was $92 million, which was consistent with the prior-year quarter. Adjusted EBITDA fell 5% to $152 million, as lower sales and gross profit were partially offset by lower SG&A costs. For Intermediates & Solvents, the sales fell 3% to $30 million the prior-year quarter, due to changing market-demand dynamics. Its operating income was $6 million, which is consistent with the prior-year quarter and Adjusted EBITDA was $9 million, consistent with the prior-year quarter, as lower pricing was offset by favorable raw-material costs.

Additionally, during the fourth quarter the company had also completed the sale of the Composites business and Marl BDO facility while reducing debt by $940 million. The sale of this business completes the company’s decade-long journey to become a pure-play specialty ingredients company.

Meanwhile, ASH had declared a quarterly cash dividend of $0.275 per share on the company’s common stock, which is payable on December 15, 2019, to stockholders of record at the close of business on December 2, 2019.

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