Ashland's Board of Directors has approved a new $1 billion stock buyback authorization
Ashland Inc., a global additives and specialty ingredients company, recently provided an update on its preliminary fiscal 2023 third-quarter financial results and shared its outlook for the fiscal year. Ashland has been impacted by customer de-stocking across various markets, leading to sales declines and reduced earnings. However, amidst these challenges, Ashland's Board of Directors has approved a new $1 billion share repurchase authorization to maximize shareholder value.
Ashland's third-quarter financial results reflect the continuation and intensification of customer de-stocking in several end markets. Ashland implemented proactive internal inventory-control measures, resulting in approximately $15 million of reduced cost absorption. As a result, sales are expected to be around $545 million to $550 million, down approximately 15% compared to the prior-year period. Lower sales volumes and reduced cost absorption are also projected to impact the adjusted EBITDA, estimated to be in the range of $130 million to $135 million, down approximately 22-25% compared to the previous year.
To enhance shareholder value, Ashland's Board of Directors has approved a new $1 billion evergreen share repurchase authorization. This decision replaces the previous $500 million evergreen authorization, under which $200 million remained. Since September 2022, Ashland has already repurchased approximately $300 million of its outstanding shares under the previous authorization, demonstrating its commitment to returning value to shareholders.
Given the ongoing customer de-stocking, significant macroeconomic uncertainty, and limited visibility into global consumer demand, Ashland has adjusted its financial outlook for fiscal year 2023. If the current de-stocking dynamics persist throughout the fiscal fourth quarter, Ashland expects sales to be around $2.2 billion, with adjusted EBITDA estimated in the range of $500 million.
Guillermo Novo, Chair and Chief Executive Officer of Ashland, acknowledged the unprecedented impact of customer de-stocking actions on the markets they serve. While uncertainties prevail regarding the end of de-stocking dynamics, Ashland remains focused on maximizing near-term performance, maintaining disciplined capital allocation, and capitalizing on longer-term growth opportunities, particularly in innovation-driven platforms. Ashland plans to undertake additional targeted restructuring actions to reduce costs and allocate resources strategically.
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