Executive Summary

Q4 FY24 revenue of $522M (+1% YoY) and adjusted EBITDA of $124M (+68% YoY) reflected a continued volume recovery (+4% YoY) and mix improvement, but both revenue and adjusted EBITDA came in below the company’s Q4 guide due to ~$5M HEC start-up issues and softer China coatings demand .
GAAP EPS from continuing operations was $0.39; adjusted diluted EPS excluding intangible amortization was $1.26 .
FY25 guidance issued: sales $1.90–$2.05B and adjusted EBITDA $430–$470M, reflecting cautious assumptions for China and price competition; restructuring ($30M total; ~$15M FY25 benefit) and HEC/VP&D productivity savings ($60M total; ~$5M FY25) to offset portfolio optimization headwinds .
Key near-term catalyst: Strategy Update event on Dec 10, 2024 (NYC) focused on FY25 execution and initiatives; ongoing dividend ($0.405/share) and buyback authorization ($620M remaining) support capital return .

What Went Well and What Went Wrong

What Went Well

Personal Care delivered 11% YoY sales growth ($162M) with strong skin and hair care demand and 31% YoY adjusted EBITDA increase to $47M; segment adjusted EBITDA margin reached ~29% in the quarter .
Specialty Additives margins rebounded: adjusted EBITDA rose from $8M to $29M YoY with volumes up 5%; margin improved nearly 1,500 bps YoY (to ~20%) despite pricing pressure .
Management emphasized core strength and focus on “Execute, Globalize, Innovate,” noting: “All business units delivered organic sales volume growth… while most of our markets remain resilient” .

What Went Wrong

Q4 missed company guidance: guided revenue $530–$540M vs actual $522M; guided adjusted EBITDA $130–$140M vs actual $124M; shortfall driven by ~$5M HEC commissioning issues and softer China coatings .
Life Sciences sales fell 5% YoY to $192M due to CMC and nutraceuticals optimization/divestiture (–$15M impact), despite pharma +6% revenue growth; pricing remained a headwind .
Management flagged elevated competitive intensity and expected price erosion in China and certain export markets into FY25, implying ongoing margin pressure risk in Coatings .

Financial Results

Headline P&L vs prior two quarters

Metric	Q2 FY2024	Q3 FY2024	Q4 FY2024
Revenue ($M)	$575	$544	$522
Adjusted EBITDA ($M)	$126	$139	$124
Adjusted EBITDA Margin %	21.9%	n/a	23.8%
GAAP Diluted EPS – Continuing Ops ($)	n/a	$0.60	$0.39
Adjusted Diluted EPS ex Intang. Amort. ($)	$1.27	$1.49	$1.26

Notes: Company Q4 guide was $530–$540M revenue and $130–$140M adjusted EBITDA; actuals missed both ranges .

Segment performance

Segment	Sales ($M) Q3 FY24	Sales ($M) Q4 FY24	Adj. EBITDA ($M) Q3 FY24	Adj. EBITDA ($M) Q4 FY24
Life Sciences	$195	$192	$59	$56
Personal Care	$175	$162	$51	$47
Specialty Additives	$150	$144	$38	$29
Intermediates	$36	$36	$9	$10

Q4 segment margin snapshots: Life Sciences 29.2% , Personal Care 29% , Specialty Additives ~20.1% (incl. ~350 bps headwind from HEC issues) , Intermediates 27.8% .

Q4 KPIs and cash/capital returns

KPI	Q4 FY2024
Gross Profit Margin %	34.3%
Adjusted EBITDA Margin %	23.8%
Cash from Operations ($M)	$80
Ongoing Free Cash Flow ($M)	$88
Share Repurchases	1.7M shares in Q4; $620M authorization remaining
Avg. Diluted Shares	49M
Cash on Hand	$300M
Leverage	~2.3x
Dividend Declared	$0.405/share (payable Dec 15, 2024)

Q4 vs Company Guidance (from Q3 release)

Metric	Prior Guide (Q4 FY24)	Actual (Q4 FY24)	Result
Sales ($M)	$530–$540	$522	Below guide
Adjusted EBITDA ($M)	$130–$140	$124	Below guide
Explanation	—	HEC commissioning issues (~$5M) and softer China coatings demand	—

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales	FY2025	n/a	$1.90–$2.05B	New
Adjusted EBITDA	FY2025	n/a	$430–$470M	New
Restructuring Savings (run-rate)	FY2025	n/a	~$15M from $30M plan	New
HEC/VP&D Productivity Savings (run-rate)	FY2025	n/a	~$5M from $60M multi-year plan	New
Dividend	Q4 FY2024	n/a	$0.405/share declared	Declared
Q4 Sales (Company Guide vs Actual)	Q4 FY2024	$530–$540M	$522M	Below guide
Q4 Adjusted EBITDA (Guide vs Actual)	Q4 FY2024	$130–$140M	$124M	Below guide

Assumptions embedded in FY25 outlook include: +$45M improved absorption (vs FY24 1H inventory actions), +$20M cost reductions, (~~$30M) nutraceuticals/optimization impact, (~~$20M) price carryover, (~~$15M) Avoca EBITDA erosion, (~~$10M) variable incentive reset; stable raws; increased China/exports price competition .

Earnings Call Themes & Trends

Topic	Q2 FY24 (Q-2)	Q3 FY24 (Q-1)	Q4 FY24 (Current)	Trend
China/Coatings	Flagged APAC pricing pressure; normalization underway, but price vs raws choppy	Lower pricing in Asia; Specialty Additives volumes improving	Cautious FY25 view; expect price erosion and competitive intensity; China ~25% of Coatings; weakness concentrated in new construction	Deteriorating pricing outlook in China
Portfolio optimization (CMC/MC, Nutraceuticals, Avoca)	Actions underway; accelerated depreciation and separation costs; HEC productivity plan advancing	Optimization reduced Q3 sales by ~$15M; actions remained on track	Nutraceuticals sold; reviewing/exit Avoca; $30M restructuring; $60M productivity (HEC/VP&D)	Executing; shifting to cost-out and productivity realization
HEC operations	HEC productivity plan advancing	—	~$5M Q4 impact from HEC commissioning issues; normalized from early Oct	One-time start-up headwind now normalized
Demand normalization	First YoY volume growth since 2022; margin recovery expected	Q3 volumes +5% YoY; June softer in LS; guided Q4 improvement	Q4 volumes +4% YoY; margin up ~950 bps YoY; LS pharma +6%	Normalization continued but mixed by region/segment
Pricing vs raws	Softer pricing largely offset by raw deflation (ex-Intermediates)	Softer YoY pricing in deflationary raws	FY25 assumes negative price carryover (~$20M) and more competition	Less favorable into FY25
Capital return	$900M authorization; strong liquidity	$770M remaining; repurchased 1.3M shares	Repurchased 1.7M shares in Q4; $620M remaining; dividend declared	Ongoing buybacks/dividends

Management Commentary

“Customer demand was generally consistent with our expectations in the fourth quarter and all business units delivered organic sales volume growth… While most of our markets remain resilient, there were specific areas of weakness, primarily in China.”
“Adjusted EBITDA [was] below expectations, driven primarily by [HEC] operating issues of approximately $5 million… and softer coatings demand in China.”
“In fiscal year 2025, we anticipate growing volumes to be partially offset with increased pricing competition… [We] are initiating a restructuring plan…and advancing a multi-year manufacturing optimization… expected to generate pre-tax savings of $60 million once fully achieved.”
“Gross profit margins increased 940 basis points to 34.3%… adjusted EBITDA margin [to] 23.8%... Adjusted EPS, excluding acquisition amortization… $1.26 per share, up 207% from the prior-year quarter.”

Q&A Highlights

FY25 outlook and China: Management took a conservative stance, citing prolonged China weakness and a “more hypercompetitive market,” with potential upside if conditions improve; they expect getting back over $500M EBITDA by FY26 as savings fully realize .
Pricing vs volume: Expect organic growth overall; pricing pressures to offset some volume gains (notably in VP&D and China), with large customer pricing negotiations ongoing into early CY25 .
December quarter setup: Quarter started “a little bit softer,” particularly in Europe as customers manage inventories; bigger changes likely in Q2 FY25; buyback flexibility maintained given strong balance sheet and FCF .
Coatings regional mix and China exposure: China is ~25% of the Coatings business; North America and Europe viewed as stable/slightly growing; India and Rest of Asia constructive .
HEC/absorption: Q4 variance was purely absorption from HEC start-up and an equipment issue; production normalized in early October; scenarios for China are embedded in the FY25 guidance range .

Estimates Context

We attempted to retrieve S&P Global consensus for Q4 FY2024 revenue and EPS; data was unavailable due to the provider’s daily request limit. As a result, we cannot present Q4 vs Street comparisons at this time (S&P Global consensus unavailable).
Company framing: Q4 adjusted EBITDA was “below expectations” versus internal outlook; both sales and adjusted EBITDA missed prior company guidance ranges (see table above) .

Key Takeaways for Investors

Q4 missed company guide on both revenue and adjusted EBITDA due to one-time HEC commissioning issues (~$5M) and China coatings softness; HEC is now normalized, reducing one source of variance in FY25 .
Y/Y profitability recovery is real: adjusted EBITDA +68% and margin +950 bps on volume normalization, improved mix, and raw deflation; Personal Care and Specialty Additives showed strong margin quality despite pricing headwinds .
FY25 guide (EBITDA $430–$470M) embeds cautious China and pricing assumptions; near-term upside would come from firmer China demand/pricing and faster cost-savings capture; downside if China/exports pricing deteriorate further .
Cost and productivity programs are material: $30M restructuring (~~$15M FY25 realization) and $60M HEC/VP&D productivity savings (~~$5M FY25) should offset portfolio headwinds and bolster competitiveness into FY26 .
Capital return remains active: $150M repurchased in Q4; $620M authorization remains; dividend declared; balance sheet/liquidity support continued flexibility (2.3x leverage; $300M cash) .
Near-term trading implications: watch December/Europe order patterns, China pricing trajectory, and Dec 10 Strategy Update for execution milestones and any refined FY25 targets .
Medium-term thesis: portfolio now more resilient and consumer-oriented; globalization and innovation pipelines (e.g., injectables, biofunctionals, super wetters, TVO) provide credible growth catalysts as end-market normalization continues .

Appendix: Additional Details

Non-GAAP items: Q4 adjusted results exclude operating key items (e.g., restructuring, environmental reserves, asset impairments, nutraceuticals sale/VAT reserve) and pension remeasurement; adjusted diluted EPS ex intangible amortization was $1.26 .
Life Sciences drivers: pharma +6% YoY with robust cellulosics; VP&D share reestablishing in Asia/LatAm; portfolio optimization (CMC, nutraceuticals) reduced Life Sciences sales by ~$15M (~7%) in Q4 .
Intermediates: $36M sales (–3% YoY); NMP pricing weaker on EV battery softness/delays; adjusted EBITDA $10M (up from $3M) on higher production volumes/mix .

ASHLAND INC. (ASH)·Q4 2024 Earnings Summary