Benzinga | Jan 18, 2022 06:38AM EST

Ashland Global Holdings Sees Prelim. Q1 Sales $512M vs $528M Est. But Supply Chain And Labor Shortages Caused ~$20M In Delayed Confirmed Orders; Sees Q1 Adj. EPS $0.88 vs $0.84 Est., Sees FY22 Sales $2.25B-$2.35B vs $2.29B Est.

Ashland Global Holdings Inc. (NYSE:ASH) today provided an update for preliminary fiscal 2022 first-quarter financial results and maintained its outlook for fiscal year 2022 results. Additional information regarding first-quarter fiscal 2022 earnings will be shared during a conference call webcast with securities analysts on Wednesday February 2, 2022.

Preliminary fiscal 2022 first-quarter financial results

Ashland's financial results during the quarter reflected previously communicated key drivers:

* Continued strong end-market demand.

* Persistent supply-chain and labor-availability challenges impacting shipments and on-time order delivery.

* Lag impact on cost-inflation recovery from pricing actions.

Sales were approximately $512 million, up 9 percent versus the prior-year period. However, continued supply-chain and labor-shortage challenges inhibited the company's ability to meet strong overall customer demand. As a result, approximately $20 million of confirmed orders were delayed in late December with the majority being shipped in early January. Additionally, the company continues to carry a large backlog of unconfirmed orders it cannot commit to supply at this time.

Ashland expects income from continuing operations during the first fiscal quarter of approximately $32 million, or approximately $0.55 per diluted share. Adjusted earnings from continuing operations excluding intangibles amortization are expected to be approximately $51 million, or $0.88 per diluted share. Net income (including discontinued operations) is expected to be approximately $48 million.

Ashland's Adjusted EBITDA is expected to be approximately $106 million, up 5 percent versus prior year driven by higher sales, but partially offset by the lag in price versus cost-inflation recovery and the temporary government-imposed shutdown of the plant in Nanjing, China.

For the full-year outlook, the company remains focused on the visibility it has and the things it can control. Ashland expects the current COVID impact to abate, enabling continued end-market demand recovery. Pricing actions the company has taken and continues to take should result in margin normalization. Logistics and transportation expectations remain pragmatic with only marginal improvement expected during the fiscal year. The cost-inflation outlook and the need for future pricing actions remain the greatest areas of uncertainty. As such, based on current inflation and pricing expectations, the company's financial outlook for sales in the range of $2.25 billion to $2.35 billion and Adjusted EBITDA in the range of $550 million to $570 million is unchanged.

"We are encouraged by the strong demand in each of our segments and the disciplined pricing actions being demonstrated by our commercial teams," said Guillermo Novo, chairman and chief executive officer, Ashland. "The Ashland team is executing well on the aspects of the business that are within our control, especially pricing in a widespread inflationary environment. The combined impact of the delayed orders, continued cost-inflation escalation and the temporary government-imposed shutdown of our facility in Nanjing, China are expected to result in earnings for the quarter that are below our original expectations."

"We expect underlying demand to remain strong and continue to take actions to build inventories to mitigate supply-chain and shipping challenges," continued Novo. "Pricing actions should cover current cost inflation and we are ready to take further action to recover any additional cost inflation. Assuming end-market demand remains strong and we don't experience increased inflationary pressure in raw-material, freight, energy and other costs, we continue to expect fiscal-year sales and Adjusted EBITDA to be within the previously communicated ranges. If cost inflation continues to escalate and we experience additional lag impact following pricing actions, our outlook may have to be updated. I look forward to discussing our results and outlook in more detail on the upcoming call with securities analysts."

The information in this release is preliminary, based upon information available at the time of this news release, and actual results may differ.