ASH - Earnings call transcript Q1 2018

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Operator

Good morning, ladies and gentlemen and welcome to the Ashland Global Holdings Incorporated First Quarter Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to our host for today, Seth Mrozek, Director of Investor Relations.

You may begin.

Seth Mrozek

Sonia. you, Thank and earnings everyone Ashland’s quarter first Good call welcome and XXXX conference webcast. fiscal morning, to My name is Seth Mrozek, Director, Ashland Investor Relations.

the Executive p.m. yesterday, Willis, ended December Joining Chairman Eastern released preliminary Chief Time on call XXXX the Bill We are me quarter for Wulfsohn, Financial and Officer. Chief Vice shortly Officer January Senior Kevin XX, XX. results and President and today Ashland’s after XX:XX

each section of to slides website, under and our SEC have Relations a furnished documents Additionally, X-K. we posted in these the ashland.com the to Investor Form

reasonable achieved. that, and will Please As this in We statements such call. that of note more a accurately ongoing defined also We during are Bill? reminder, Bill. will the assumptions, reflecting our some by term that call believe on results adjusted be performance any such presentations I matters under will forward-looking but discussed include our expectations cannot turn believe With today securities law. be the statements can discussing included over assure may this U.S. is our such to as enhances of understanding we business. based

Bill Wulfsohn

and Seth the team build everyone. segments before growth our during even including important Each our exchange In good the call. of Ashland fiscal to to and in first of three EBITDA foreign the showed commitments steps quarter, forward deliver acquisitions. the needed adjusted outlined as morning took momentum sales our you, XXXX Thank positive year impact November and earnings

raw inflation. aggregate company, exceeded As material price a

percentage of basis down impact on earning Asset adjusted points utilization as year. XXX and positive was had a SG&A sales versus prior a

the facility positive Ashland Etain Pharmachem contributions and as addition, integration in expected, made strong In composites both to the the quarter. of

by XX per focused a Ashland As Specialty margin impact increased by on driving share gains. by and basis from improved our adjusted EPS which in adjusted the a total, Within includes points $X.XX tax gross $X.XX, volume points, of team mix adjusted delivered increased EBITDA profit EBITDA XX% XX rate. and margins its basis by XX%, result, sales negative Ingredients,

top X% number end we As up personal growth with solid in segment, the by sales strong ingredients gains markets. a care significant in area. delivered growth our result, driven of the across We key biofunctional line saw a

$X has capacity meeting New fourth robust in And after in to material slow and anticipated approximately quarter. wins grew enabled more customer year. where order experienced inflation a by year-over-year of coatings. From demand the us led quarter, sales Ingredients sales XX% begin we QX favorable key and in This raw of by the the perspective, start pharma, than was million growth growth drove patterns. that’s at in Specialty what’s margin million a year-over-year $X X%

took progress but on inflation. had within Cellulosics actions. great raw drove additional made personal we fully the a adhesives. first We portion this care, negative specialty quarter, material favorable in did industrial in While the team the a said, quarter, challenge. pharma pricing the remains not In of and volume margins mix, offset impact pricing That

acquisition our ASI’s is chose fiscal the benefit this of first programs. were the in positive of XX% shutdowns these of Ingredients and increased acquisitions the note effect typically the was base demand points good year the XXXX, multiple strongly that be us, quarter dilutive the remainder driven fourth year. million year The in drove respectively. Specialty fiscal utilization business with good as the in currency. during behind in ASI utilization, to Also a asset for an of shutdowns the excluding we primarily quarter approximately asset had to Combining The asset news that initiative acquisitions, XX what second $X complete business SG&A EBITDA from the team job expect in impact and XX% is our and revenue by EBITDA period. and and to as slowest ASI year-over-year. quarter did basis and managing base margins we Moving during increases quarter Ingredients Specialty up costs minimal This utilization divestitures,

to base business, is gains addition Pharmachem going integration the In of realized well. the in ASI

$XX now $XX EBITDA two for the have We identified synergies months, its over is owning million of of realized contribution Pharmachem cost corporate annualized be allocations end just year after X approximately by million. approximately to excluding and

growth and turned sales XX and in Moving increasing accounted by the team strong did in contribution in adjusted Volume percentage drove positive a The to acquired of and quarter growth. markets made in $XX also material year-over-year. fully XX%. growing North the and France key to another sales sales end strong impressively, team priced and The approximately Composites team sales generating America Europe. mix growth of net-net, EBITDA all prior performance. Composites, More earnings the offset raw strong XX% facility a in versus for the Composites saw through points job was year. increases with inflation Etain million Thus and of great positive

in Moving to improved in revenue mix and $X approximately XX% the X%. sales Volume delivered to contributed team by I&S, Disciplined earnings. sales pricing a million increase a sales. XX% increase drove and

by $XX earnings I in a will over the segment by important the and second adjusted by year who the will to be quarter. Kevin Ashland’s reaffirm of year-over-year full in utilization setting details XXXX. positive quarter. our some year-over-year and XX% driven turnaround reportable in the network Asset now outlook in million benefit million. $XXX adjusted this sales segments I&S’ and ago to rose year were the XX% expense near our first the year Together, in $X to sales approximately Both breakeven up All-in-all, fiscal for climbed in will us the offset up timing, for that in activities quarter from million EBITDA three EBITDA turnaround turn each million, increased which resulted focused was substantially call from fiscal QX gain $X year-over-year all to and up total stage share and increased year optimization business was period. financial in

Kevin Willis

everyone. was On morning $XXX Adjusted year. GAAP of in $X.XX of ago EBITDA in diluted million compared $XXX continuing good and Bill you, the an share from the In loss $X.XX compared in a per diluted year reported basis, adjusted quarter share. from the operations we continuing period. million reported operations to quarter, the Thank we $X.XX income prior to per

would $XX $XX amounts in the were million first payments expenditures fiscal quarter prior the million $XX finally, quarter the $XX to payments on quarter Ashland; second, during fiscal compared compared period. capital for and million like second and an the of are million first $XX during SG&A; negative and in of first, the to restructuring the ago restructuring Ashland’s focus morning: impact several in cash this in negative on on in U.S. the Tax million flow Jobs of million areas year. the update to period. Free year I prior our $XX the the include of year. quarter our These There Cuts was ‘XX Act year remainder and outlook the

which higher after first than rate items we last Our November. adjusting XX%, was the key for X points was for quarter percentage effective forecast tax

legislation, realize as reduced The new our rate the rate U.S. enacted higher fiscal to be we would discussion result ‘XX Ashland increase on ETR EPS reform to tax attributable the that have to rate XX%. there focus tax companies primarily the December. as tax a is by in this of in tax benefit. noted, higher expected Bill the $X.XX effective may much reset has to counterintuitive The range been Furthermore, for As in and a quarter. for late in of seem XX% some so tax

increase our the However, in nature global Ashland’s business. the ETR reflects of

the provisions. an provided out won’t in website slide do to to go last night. have key all I provided that the tax the slide, posted our impact presentation want We overview call through details a act few but of on of I

First, change anticipate we to to our remain tax material at cash the rate, actually XX% range expected XX%. meaning taxes we That not to is pay. do

cash will to the benefit from the U.S. Ashland ability is held clearly Second, outside repatriate that

to X million beginning will largely week, prior payments Just at tax were to year, used of deferred accrued new and the repay pay taxes million it rate. debt. offset years $XXX these this And payments tax repatriated legislation $XXX roughly be one-time that repatriation we lower while by the tax over past we will next over old

this use leverage our As does cash at mind Keep the allocating EBITDA. times or couple years primary of said in repurchases. will of target be of that our before, share preclude have bolt-on capital acquisitions not for debt reach we next reduction to X.X gross to debt

to remain with we committed SG&A, Regarding productivity improvements. inflation offsetting

We comprehensive facility service shared including consolidation. area, taken actions reductions, in expansions, and outsourcing increased this headcount have

centers and grow leverage For Hyderabad example, we our continue and in Warsaw. business global to

of an Ohio Columbus, campus quarter our addition, approximately $X done are million. the in to In savings June resulting in consolidating we footprint be annualized

million, first businesses to the for will corporation $XX in timing quarter, the During remainder of I acquisitions mention of almost up moment. for entirely the a SG&A was each year due more our the outlook currency, adjusted with the and issues. impact full year-over-year

that year However, expect is commitments. of full managing currency, the meeting flat. component year important the divestitures current it’s forecast, our Based acquisitions, SG&A impact will for corporation I costs less think to be to critical our full reiterate we year a upon full SG&A and

EPS ‘XX $X.XX for is rate. EPS to the new rate each we fiscal the $X.XX our have we to fiscal released $X.XX been would full adjusted to full full in in were change change reaffirmed due XX% outlook to our XX% you legislation outlooks opposed entirely effective as to summary rate the as segments range a the year updated context, for Turning the year to X%. have This XXXX. adjusted tax the new fiscal the if our tax ‘XX tax the reporting applied year of we for Based tax operating saw per the share. With EBITDA to business updated night, the last of have on effective in outlook for range

diluted note second flow to U.S. this $XXX This mix can remain where the XX% items. of per was range tax Based we prior confident the of earnings an rate $X.XX prior based that we cash to adjusted fiscal we year period. in today, we quarter, For in the $X.XX during year X%, that $X.XX our in effective legislation. million new share effective rate quarter are on free assumes Also tax on income the certain of per north compared year. generate and expect tax reflecting share discrete estimate the

make Lastly, changes within we way to how possible operating process This the additional financial information are we assess performance our and in result to changes and structure management may results reported Ingredients’ decisions business internal evaluating changes to Ingredients. is purposes. that currently determine need about in of need will Consequently, the for further used certain reporting segmentation these making and external the in if its result we Specialty and components. decisions of will Specialty for

an provide on this update once is evaluation will We it completed.

Now, I back will Bill. turn to over the call

Bill Wulfsohn

Kevin. you, Thank

to As year, outlined our a and strategy fiscal at in has growth Investor last Ashland sales earnings strong drive year XXXX Day and beyond. clear

reminder, by cash flow. at targets EBITDA financial fiscal generate a for margins intend than to the EBITDA least ingredients XX% above improve XXXX. XXXX more We we $X specialty adjusted XX% billion adjusted As through established year, to fiscal and free grow following year per of

in first reflects progress performance making. important Our the we quarter are

have work and to to progress momentum. working increase accelerate do, we we While hard more our are our

specialty taken realize see care, improvements. personal second expect cellulosics quarter of pricing adhesives of important actions the and for we in second the particularly take To The and expect ingredients. Specialties. to actions also the an Industrial pricing pharma In end, to portion benefit additional that we period in quarter, volume/mix sustained is

Ashland operating impacted announced our begin QX we closure previously as programs see in by asset four positively facilities. be margins to should the also impact of of utilization

the lowered quarter. Our And our second as working traction which composites synergy we is and action demand aggressively drive plans. last of plant gaining greater ASH continue shutdowns completed de-tolling in not our efforts least but perspective, a the in see Pharmachem are many to to were From we turnaround team expenses QX. healthy

composites Ashland’s has several our of from as of productivity Just benefit excuse be timing help me guidance year and shutdown QX material specifically, programs. EBITDA by the this that make in Combined Marl, the versus aggregate the we year, Germany. we price offset offset ingredients we fiscal producers. and confident action saw reaffirming just as increases with to last I&S in partially planned expect excluding will on – these a in impact EBITDA raised turnaround another resulted we raw deliver of the we We for actions be for our prices. QX specialty The us continue again which I&S can offsetting QX. EBITDA, flat from view reduced to inflation the styrene this are acquisitions our guidance. we the to round production impact announced previous maintenance More as EBITDA. In benefit is drive currency SG&A prior Friday,

adjusting As is per the we diluted guidance, EPS estimated $X.XX is for to EPS impact our reflect be our for our fiscal outlook to This to are new approximately year thus rate. share, year the adjusted $X.XX $X.XX. tax guidance

reform on to Fortunately book as an of tax material impact rate, change while cash XX%. we have will for rate expected our described Kevin tax tax expect our XX% no

remain XXXX. a fiscal than As believe free $XXX on million track we of year in more result, drive cash to we flow

their of financial segments summary targets in key year in our all three So, to track on deliver fiscal XXXX. operating remain

Ashland fiscal is we is results. your listening the that, With to currently your momentum to interest for We an you committed questions. on remain more I say delivering will And for turn to have thank and year but to Thank I the and in operator Ashland. over you. work building, call important do, year would take

Operator

Thank first comes from Our of Credit you. Suisse. Instructions] Christopher question Parkinson [Operator

open. line is Your now

Christopher Parkinson

you. Thank

exiting corporate came Thank remainder to you that acquisitions implied moving parse and and versus for your trying out costs the year? parts contribution you. quickly net or and we there including margin divestitures which the where I sense are you the of expectations a get the the can just mentioned, contribution comments in just your includes $X the PowerPoint roughly million EBITDA of Given a guess JV, various the from China is EBITDA in Pharmachem Pharmachem

Kevin Willis

is This Chris. Kevin. Sure

If at settlement. about the talk you I look Pharmachem, first will

So call as what Bill I of contribution mentioned approximately $XX million would EBITDA.

corporate $X for apply produced So, basically over the we business not million ex period in of be our With any million, that businesses corporate corporate there, Pharmachem methodology and allocations. that JV would between got was probably the that. allocations delta costs in each Pharmachem the the of EBITDA $X that participates allocating that to mix,

some would or corporate quarter the into cost way seasonality think million about first $X that $X the imply clearly, $XX $XX it corporate of number million it would ultimately if to million, want business quarter to call million, be cost to basis, that in million of you apply quarter So, the the dollars December it. as on during ex the dealt is average allocated to Pharmachem EBITDA we a

very on overall a be basis year And an those makes I much we that economics an on that we basis, so overall an we costs. going be within corporation as flat confident managing the business on And targets basis, thinking about remain it it able to pretty committed And comments are SG&A expect year. for my full from us perspective. to to indicated to meet our

want is pushing costs the kind of that corporate it of movement the of in really So, way. if water balloon you just around think to

Christopher Parkinson

know doing mix confirm on then are this be comfortable the on very you. also the targeting will new you mix if out of capacity follow-up it of but you comment you you some in Dalton Thank as concern annualized that Hopewell can an increasing consequent your any I as quick initiatives are longer market, inning regarding And any the to quickly are capacity that’s you in simply benefits a basis? what that you no initiative, pharma improvements confidence pricing, place facility, can on capacity appreciated? as to the you constrained believe just desire you just touch your on And well Great. as at as that your just well pharma pertains could given there without are the

Bill Wulfsohn

do and the QX of that that you. who or in and and in see these product of those more momentum those are areas, a see with our see from Sure, out we products the most to you building of our the the business good also gains really and have and now demand fact, it’s with confidence key of out differentiated us. That’s these And effectively with mentioned one expansions in in and of – standpoint result understand areas of able building weren’t have the you demand that that Chris. consistently we to are is supply Klucel products customers activities we questions. Thank Benecel Hopewell Doel some

they And even a nature are how by or and of so they growth targeted these I and amount current products perform. significant areas few in our would more say great very that are differentiated differentiated platforms, really are in our of competitors the these are

have opportunity So, of capacity. still we plenty as that to relates upside it utilizing

In the additional fact, our we in qualifying with still Klucel capacity process of customers. are

will to off pharma we our be mix least through on it cap market. improve what use a it are today, to those limitations has and it think growth more the able running of I So able go even as at taken we Basically, production terms the while in assets the does it we use in is forward. from standpoint

Kevin Willis

And really the volume we to the pharma. just on that strong team down that executing really in bullish been the bullish capacity we quarter, have performance. value good out drive and system. to business very continuing of the and mix on on We remain And through comes pharma new saw

Christopher Parkinson

you. Thank

Operator

Thank you.

from comes Roberts question next of Our UBS. John

open. now is line Your

John Roberts

level the you. X.X% was in contribution the at mix what benefit the EBITDA specialties? the segment Thank was level, to at specialty volume about If mix the volume sales

SethMrozek

Good John. Hi, It’s Seth. morning.

level, line positive a pointed for mix also correctly You X% top at to is specialty. the contribution out contributor profitability volume certainly was it the a

John Roberts

debt from in And taxable be the reduction? tax or fiscal reform a are going since still a Okay. September not the down loss the earnings at to U.S. rate even come ‘XX really then year should after modest full

Bill Wulfsohn

tax and think to what good complexity of on there. through I to it’s within fiscal a us, work new lot true. The of of really, a fact, really bit the was already pile top John, year I that. in ‘XX Yes, a The going is think idea provisions it’s take not great question

in through as interest Each cases have tax be provision interest reform is that’s and of cases so deal each to deductibility likely all drive that is to of probably not There going not. work some examples. in U.S. And be that. to to going small our – benefit some deductible with, we is to because in provision something we of have new Couple the

is our just U.S. advisors as the to spent figure internal of However, the we have through team there CapEx as that companies a examples and of couple a capital think provisions lot are are had out. and our around really working there many boat we as those global of we are. deductibility I third-party new to in so and be if are is they try And are the frankly same in this offsets

so soon update as what certainly we is one. an we commit will have And providing as to

wouldn’t I from we worse. expect think absent rates. in rate we years, now right is overall the tax where And the range think largely And if one-time XX% the which a we based range to on in improve liabilities by can the be the deferred XX% cash it I it I using. tax to on that currently paying that remains are to see impact be will to ETR reduction due X way think no material about lower again, repat the we over are seen we fact get the offset cost

John Roberts

you. Okay, thank

Operator

Thank you.

Sison of Our KeyBanc. comes Mike from next question

open. now is line Your

Mike Sison

the Hey, year. Nice to guys. start

need to quarters? seasonality in for ASI, the EBITDA ramp quarter first of then rest in XXX any would Can how us there after you particularly number of seasonally going that you you are is the XQ XXX slow help understand imply terms per and a your other between In to that quarter. get guidance maybe that

Bill Wulfsohn

seasonality Kevin, will. to if why will to you I the speak and you don’t the speak ramp

Kevin Willis

the but frankly you overall seasonality really within at the be quarters far Yes. basis, QX what coming will if and well. QX, typically behind, I see look our we strongest QX are strongest quarters. isn’t mean, ASI is which typically an it should concept out as and of two QX positive QX ramp on frankly at gets basically Those

the to an continuing so execute really comes down it on basis. to team And overall

stepping and is up we need to do. what I doing think manufacturing

We through fully that think really system the We of very equation the I positive it is benefits driving down seen area. comes and primarily good to course industrial have see should on executing from the Volume and that in pricing that. accelerate the initiatives and through year. that’s mix

Bill Wulfsohn

need all. it repeat stated so no to well, Kevin very at

about with the that that for building think year-over-year. feel that there By on saw see really from going sure business products we focus the the seeing us is pricing key course offset good SG&A the a of fully we are very and is be that particular the we Specialties material make in mix. the group what’s we raw they the momentum the especially to Good in of improvement control, area I manufacturing, that mix the volume increase to to needed cellulosics the portion way, drive Industrial biggest were impact inflation.

Mike Sison

And what cellulosics overcome? need of that Great. is terms material remind can low And to for ASI, raw that single-digits? the so inputs need then single-digit, the mid that increase major just into what’s materials you cost the the you for in of us like offset, basket you inflation the ASI, to that are what you in then need go raw

Bill Wulfsohn

pulp goes the materials. raw linters, which into Polypropylene general key key can some of works way well. of have as wood other cellulosics, into within in go which materials through course course, ultimately butane BDO, you are and just ASI cotton So, of which its

key so. impacted last are the have pricing the will X some it And way the right that things let’s those – say put costs to raw material materials we just but raw further, don’t the go to perspective, So, with that’s of that’s in or now, materials you with are have or if don’t the need that’s in that been months that we they up would prices down that realized our to-date about $XX go prior year-over-year, assuming be million amount versus Raw overcome that year. activities. up

Mike Sison

Great. Thank you.

Operator

Thank you.

of Alexander Laurence from comes question Jefferies. next Our

open. Your line is now

Laurence Alexander

thinking flush next in a you asset trends steady you to is little seeing questions, and or are your think how there energy some of you the can how secondly, sense give it year, compared And year we the of a is of benefit this stick half ASI construction Two hockey should about out and morning. in much a your utilization a the – us bit can in the cadence about of back bit effect. markets? Good it

Bill Wulfsohn

Sure. One I do year, mean standpoint, from we out in general, buckets of into some from an absorption will reduce variations is one kind can utilization it’s the several one the if in because fairly see numerator and a you units rate another all of cost asset assets the a been it for and that is straightforward. other math spend we right to you had course just the and when quarter spend have improvements way denominator quarter-to-quarter shutdown better that’s utilizing break make prior there. overall really but across in key we the lowers

shutdowns them example for in in portion – in we in possible. better, more costs with where reducing facilities focusing duration making on on our footprint cost the their and our consolidating also being focused so shorter the precise are And and

and Ultimately, impact system. which greater a expect equation. So will grow focus to the help incremental you look we with are absorption drive our the the to so the And we we to have that seeing to in managing that cost. to see which in we of to is business our helping selling that you you productivity, only and while really regard more from of reduce of then what comes the expect cost side see have will And are mix do QX, lean Six equation. drive QX expect volume in absorption and effect, also growth but really on Sigma see you programs, saw volume to far that volume, over on to the need not

area, in was year kind So, I continuing continue in from course little shouldn’t it it similar U.S. is a year. of anticipated this point increasing there standpoint another why lumpy rate overall, overall, this one is reason a Europe, news. a fiscal construction next we good through bit will the maybe versus Again, energy would prior say at from demand market say and at a I we little fashion. quarter And the in saw no we at to down least saw of year. which In softer and the it

Laurence Alexander

Okay. Thank you.

Operator

you. Thank

Bank. of Our from next question comes David Deutsche Begleiter

is line now open. Your

David Begleiter

Thank you. morning. Good

Bill Wulfsohn

Good morning.

David Begleiter

on Bill, intensity, in what’s the inside that is pricing anymore competitor issues, is cellulosics, a more excess any just causing details it cellulosics? on it supply, color

Bill Wulfsohn

And is it is. would I how Sure. this characterize

them. a have those We very a have we of of associated some contracts differentiated with lot those in cycles and products contracts of and lot to

frankly time So that prices general, through customers raw it with larger that our differentiated some because say takes a products, of it’s little more key of forward the those to be of may on you And a working integrated into quarter inflation. I business in costs. And material Kevin terms in where look that we would an we anticipated highly out there the today. to business as it pass to through those structure. material the not But some right of inflations mix, portions the right with the trying think little end alluded anything team our in material this run of raw the the offsetting what we to or I right excuse we having market, the and coatings ASI do mid balance, see of market equation is say construction lower like between – are bit more global in highlight to really a the like spaces in to fight also coming the quarter hard. the competition but the saw but raw is the significant volume, as versus increase that, as fair in The we

going going are the the is in in. imperatives truly competing make strategic business, part be we the we regardless are on segments we sure some cost the working to to that on greater focus sensitivity, where We are to to increase aggressive extent there scale that more this our of are of global competitive a

David Begleiter

some have for the have on EBITDA this cycle? on Very QX, given of the BDO, turnaround you view BDO there your in for and good also for is give and some the guidance but year, year, bias strong BDO upside you can cycle I&S you in know just I us costs the

Bill Wulfsohn

Sure.

factor we So could the are number have step-by-step. prices bigger able much been to you QX. that’s like do look have increase end. have will we need for to year of timing in should because our turnaround will the last mainly overall the given on in year have the consistently – versus in going we to But the we BOD But this kind highlight turnarounds QX based now again it marketplace we

in increase and last place has other Since or force in taking a January even effect then in the the suppliers demand the market of dynamic actually one supply February. making majeure, was taking tighter. Our had

I derivatives, a and note now And we need presume there if are in are information and have sure that that pricing hard. dynamics our just is And that you will, see mine. we as actually appropriately we now product. are seen make indications bring out. that again fairly as And important is holding. to BDO, up, to translate but valuing upside just we good to because want it’s we at is working point the the an which point the not to But equation. this it We And your it is of, want because into so don’t element play how

some capacity to mean something we predicted make setting that has been region. or and further we that capacity we big that’s of watching our may would otherwise because coming very this just productions deal point I and some online back up have some have had on too that might say But prices. cost we haven’t don’t on tightening China impact of at would terms about uncertain, at cycle more by it I the limitations that because of And these You having carefully. to to in nature the And there operations seen of want that just and that it’s it, to other and a are out to come it take missions is the facilities. it’s impact upside that whether energy standards looking will an all of in read going time. access and that’s going in that’s

David Begleiter

Thank you very much.

Kevin Willis

we of knowledge the get business obviously And year, and clearly more outlook update on visibility on we have get expect to that one next is hear through commit to we you that. we the based so relative rest our we into us as and current the to will for QX call will from the

David Begleiter

again. you Thank

Bill Wulfsohn

Sure. Thanks.

Operator

you. Thank

question next Mike from comes Seaport of Our Harrison Global.

is line now open. Your

Mike Harrison

Good morning.

Bill Wulfsohn

Good morning.

Mike Harrison

move all or there, the or your year? going all the was downtime was of that downtime you that ASI impact some higher seasonally something think year that that to it, into can maintenance is I that in the much made timing prior that however last or efforts business weak you about you whether and comment costs QX QX, it line the the of lower Just where of saw pretty to maintenance or on with this want was think in of have guys back to turnarounds it and we in

Bill Wulfsohn

prior about In quarter versus expenses And were have QX throughout year. Yes. $X the million – the really do turnarounds in we through higher the year. turnaround

three buckets. put down have You

turnarounds. the large have plan to You

majority kind QX why with of have ASI the forward. see unplanned outages. maintenance And associated major would maintenance from so some planned that going completed say outages, in great shutdowns. have You then of we that in shorter our do have upside been and you is here What I that’s time-to-time

Mike Harrison

just terms seeing Got it. rebound just about there customers, part you more the after customers can at into obviously and ASI, referenced a were little key restocking business coatings lot wondering nice wins was detail some up in year And than of in ended growth wins obviously then looking you terms we you within are what whether there if of really with a your what seeing may some being was weaker of anticipated? XX% that the of and those have a

Bill Wulfsohn

you a Middle acknowledge that to did of maybe you At that and position here and area positive there into much we rate. two available capacity. rest coin am in shouldn’t willing are read it, to very our utilize drive the And where order we today in see focusing you of have in side some that East the QX been said to we because the of help orders last and Right has the that. didn’t new I that in our work is equation and parts one that front, concern There coming question. this been customer out robust of our expand of to as frankly say patterns. capacity too helped on for better would QX, a you I international on of and the and quarter recall extensively has that see different lot create an flat improve have thanks our time, that I of was am the given I volume while some timing the some trying important coatings growth lot – lot same in because sure And work answering mix are Asia team wins to our on of a is do

of So, the it’s two. really to me combination a

Mike Harrison

much. Alright. Thanks very

Operator

Instructions] next Zekauskas JPMorgan. [Operator Our you. Thank question of from Jeff comes

is now line Your open.

Jeff Zekauskas

much. Hi, very thanks

at the Ingredients from the XX,XXX to year-over-year larger tonnage from was tons Specialty exited tons Pharmachem has the than China flat Your JV. and the be tons

I volumes down your in they quarter were were down? and areas How much were they So, think down. which the in

Bill Wulfsohn

was an offset. Jeff, So, about it

little from a The that a split It’s industrial this value volumes and and the Keeping between higher to about with around of to tend lower bit to strongly think Pharmachem to value. and coatings tend equation, and also a say to larger, logically lower saw, more industrial mix the contributed we was are closely just way. You our impact in and flat. color much business the overall provide to a color business volume business provide roughly and tend nutrition we volumes overall higher equation an volumes. the were much business modestly than XX-XX base we consumer perspective. follows Consumer exited mind, and the And high very pharma very much, I basis, the about be care, oftentimes that more volumes pieces volumes And the pretty obviously pretty in the would just to be a an be On value. talk right, for consumer the JV value. little construction industrial. mix the and as business

consumer So, equation value the really and overall is and on side the point the the industrial really a equation material the the lot being the value industrial to of value side materials, that’s going overall the materials coatings higher of and that on highest typically we drive to works. how is value the increases move move around lower between

Kevin Willis

programs of we is of impact modified and effect the aggregate and And the the that. the And actually we this Jeff, more the planned of bridge hold the add color ultimately, to think impact versus by have the really will commercial focus of on our incentive making of versus had to units impact been pricing we in we have raw have that contribution accountable to a market have just that to little mix, and about focus expanded with sales our that I what’s we combination that is equation material and some volume, team and hopefully the that changes the business their conversations absorption budget. mirror prior of the the facing commercial is our

money that all track other the if drive So, the if that’s hand, of better best more while a mix and and simply mix same we at earn and we all can And drive we the the than would volume do aggregate get but to rather can the on look the accountable we price the richer commercial specific getting there. customers some to volume. in what it’s marketplaces, that’s for and specific then for worlds, flexibility what in There are at hold that individual is we our formula determine combination teams them best levers. and what’s the time,

reflected are So, your think we it how I question. broader and maybe of in it at just kind that’s looking

Jeff Zekauskas

Right.

Okay, And can historically, intermediates but think sort I and tonnage you thank the your intermediates say solvents had first tonnage you out look tons. you have business, produced a have last output highest that. highest When and XXX,XXX normal and what’s tonnage what ever the solvents you of level, of for year ever what’s you produced?

Bill Wulfsohn

on plants a exactly know the don’t nameplate the tons basis tonnage our Marl, the XX,XXX it’s for is XXX,XXX what Ohio facility, two Lima, XXX,XXX combined is, I for facility. capacity highest on Germany

in have produced past that. the excess We of in

move is use If as raw imagine. in driven internal XXX by what we difference probably but produce really sort tons tons around think demand number, inventory, the are about between the polymers to inventory. a year pretty XXX,XXX, so and the and close XX,XXX possible where the materials what and It’s of can produce The X,XXX, what’s would sell on in it changes but that’s or is is that Those that’s things. of generalization, changes which demand volume of PVP VP production, internal what about the terms you we by and depending in really the and components. I is, utilization time three that we and

Mike Harrison

you tons last year? to year expect this sell you did more than Do

Kevin Willis

would objective. certainly our But be it

Mike Harrison

Okay, great. you. Thank

Bill Wulfsohn

to is make priority and above over as serve obviously priority first is possible need So, internally second as as that. the to then much and our and much sell

Mike Harrison

so much. you Thank great. Okay,

Operator

from Thank Longbow Dmitry Silversteyn comes question of you. Research. next And our

is now line Your open.

Dmitry Silversteyn

call. taking of Good morning. Couple for questions. my Thanks

you volume growth coatings, as use to XX% well First of a is gains good good I said timing on number think good quarter to something you last obviously some just orders. in customer not probably which this number have of is mentioned like a Obviously, quarter’s you all, very use. X% as got not was XX%

how growth sort this as coatings what both XXXX as far have sort of of So, business sustain? past think you XXXX can should on the some of for of business the have about rest we and that visibility

Bill Wulfsohn

Sure.

to are talking range there don’t maybe be number. reasonable in or throughout make X% on some we the around the use XX% at I I our would that coatings that I as standpoint, X% that. so support that we range. think from growth you revenue to regions that opportunities would excess X% just in But I geographies quarter could if in additional would customers about to see serve here. to a sure globe look help was the are would average our of the leverage numbers X% range a a be that the we targeted the X% the think base in same we it of say to think business, core and capacity, result markets some

Dmitry Silversteyn

are mentioned I single-digit so obviously XXXX, mind the mean, that customer we mid having, year? can because of growth in more see that look something you gains at going to with So sort than this that we for for of

Bill Wulfsohn

that the end This determine the think say is average are a wouldn’t said a some do your volatility an going higher didn’t are unreasonable or That that especially to that seen robust. kind it in an of whether last minute have I goes that few as being quarter-by-quarter. over I where time was will begin it year quarters, ago. architectural year that outlook. are customers towards you felt the customers slower, if range we our feel that’s we consider will core describing comparatively of one, a just if will you we a the might be with for primary, season you be of will, cautiously good going much optimistic better you or of but coatings really be was mind up be our, that, isn’t read coatings to get many industry thinking I Obviously, a slow towards our what to that positive, last to to certainly that with help will main what we will we see more be more

should the would have read that good over a So, think. next we I on quarter here

Dmitry Silversteyn

availability been little bit Can makes sort your market. what just majeure rationalization, Okay, this quick majeure help planned not the is far the North BDO, BASF you And follow-up BASF to with for America, issue, season, pricing regional as an you before with here or – a talk even the pricing North it getting then of or out supply America, relieve capacity that markets this force bidding morning here extending market? in force their going to it’s what it we going about was cycle it talked of Chinese of in get seeing oversupply in the as may as have a into the better the BDO the on are you in tightness a sense. perhaps on about BDO you just is

Bill Wulfsohn

the supply situation for towards certainly a supply good is has tighter move dynamic the some fundamentals. will which Well, say demand

of spot Just some aggressive surprised the where months, maybe course us we less a over of they nature from and purchase if little the couple of customers took stance little you more bit little than last their more saw will in kind a consistently anecdote, who had on maybe we purchased because were was those we available what number a will a they see such just companies the we – of it okay, were terms. and come purchases and say we in elsewhere demand those okay, of spot positively for to did that was if their move forward incidents that’s

and shift, now trend tightening feel look that that, the good supply nothing right I you there like trend, change the makes with we that the positive this us is And mean, at believe that one with the isn’t demand the trend So, is continuing. can is but over. pain on supply get back an the been time need just took made investments where appropriate there up get in when where that we business, price that we economics of excess to returns to the have the this back to the was we

not are we So about shy that.

doing have continue it to and press forward. We will been we consistently

Kevin Willis

team the has appropriately. I say, in would market the Dmitry, been, Yes, and pretty aggressive

are helping business the and outages those this in in pricing the is seen positive business, is positive going on some this I one believe and job have have derivatives rest regional So, those as pricing last and great attuned signs X mean the going have work seen which earlier to a business. I mentioned Bill more through not THF, derivative we around side. has do as of but marketplace, and of say, as thought, seen increasing now have what’s this we that to very that think help to very to in continue and The opportunities to X in business pricing that but steadily customer managing until BDO been for power and come are that months seeing derivatives, the so clearly we the a China environmental we recently in we helped it’s business, coal-fired places NMP is have you caused we few very months, restrictions such next as – they tightness. they we the assured are, things around the It it’s indicated base. have team in the experienced various plants and let’s

Dmitry Silversteyn

helpful. much. you very That’s Thank very

Operator

you. Thank

Sheehan question of SunTrust. next Our Jim comes from

open. now is line Your

Jim Sheehan

about the EBITDA quarter, when degree in as I Does EBITDA mean should of it on think $XX I do second you. and sequentially of margin rest million December was for and that and $XX year the quarter. I of think on quarter want the indicate last in so about the and a if Pharmachem, second type could business business you ASI improvement quarters $X Thank it third about Question the expect I seasonality cadence ask we quarter you confused in a did about a to comment about earnings you million that should it just million third in the if that overall? little also what we mean of that quarter,

Kevin Willis

million, the of million $X of terms in that the cost $X $X I inclusive think to allocation. mind is keep in So is corporate thing of million,

of $XX for contribution million June that quarter margin the quarter, year. and to the million for EBITDA as us would both So gets contribution should March quarter the it that’s on the basis, what million $XX a stronger. it contribution you to think to call expect $XX be of We or

warmer that the improve. we expect for to as would move into we So year, the months

Bill Wulfsohn

out puts Jim corporate role or extrapolate seasonality key, in the the there some that of about like about and that QX that said, about if you the $XX we there at and more mentioned if with talking run-rate you months X the or think less. [indiscernible] you just we I was net million through right as you allocations are

corporate their the So, $XX on what a results million And on to the just as it. as with basically will the we will the math I be we get be the effect that’s in would associated what businesses. expected mentioned this to our our look Kevin from have at run-rate QX, the dampened ultimately $XX put the expenses a business earlier put from of like normal has call, want we And our to just million, that does reallocation as the we and talk same have important But are of am incremental year-over-year not direct that so was our allocation excluding to we said which FX again corporation that about increasing be methodology, emphasize but what increased in spending. spend we across is it’s the just we acquisitions. flat I cost and us and

allocated it of gets that. part away the We across are in and ASH Pharmachem businesses is just

Jim Sheehan

interest you some down the using debt And interest then to to expect on of quickly the should are throughout I cash expense be assume, expense course repatriated we pay Great. year? falling

Kevin Willis

large as portion talked Pharmachem million and from offshore over a our there outlook reduce debt. expense loan And so week used So a acquisition interest and the do you other to A term full $XXX that components. we last cash of did non-U.S. that as that reduced with recall was couple of included year in to of that a an we little repatriated as perspective, cash. in debt will we potential move about we Part are fact

able as of globally reduce should the So course account to cash although to still to is we it more bring now out as cash generated an and have largely unfettered intent be are we that that consistently access our debt to U.S. it get pockets example. with be cash would We repatriate it’s difficult there of outside cash where home.

is there probably for absolute that full that. in rate say interest and in range of year the availability the and And would assuming so cash what upside there some is I our upside overall

us. debt. that. be on about caveat for think doesn’t of be coupon call $XXX so been extent pressure the LIBOR are obviously could would it we around that to I we But that the bonds fixed to the million floating the got on way rates rate that put other rates that to And some have is move remainder obviously

continue the the rest will update of year. we to throughout So

the to cash. We are have pleased to access

We able million will that we like another course hundred couple got over the the feel of be have of year. to repatriate we

also with reduces which only interest also to rate rate us reduce interest positive. absolute expect risk debt that is a should not You which expense. reduces It

just – So where are that’s now. right we that’s

Jim Sheehan

Thanks a lot Kevin.

Kevin Willis

Sure.

Operator

back to now call. Mrozek ladies – closing you. and gentlemen I like to today’s remarks. does would Q&A. now I And any like Thank over the conference this call turn conclude to today’s Seth would for

Seth Mrozek

Thank a Sonia. and Hope all your morning Ashland. in great time interest for Take your you, Bye-bye. Thank you care. has this interest everyone and day.

Operator

you Ladies and today’s for thank today’s in participating concludes conference. gentlemen, This program.

Everyone a have disconnect. You all great day. may

Ashland (ASH) 30 Jan 182018 Q1 Earnings call transcript