investors digest this morning’s fiscal 2019 financial outlook, shares of
Kentucky-based chemical products company Ashland (ASH 68.36,
+0.14, +0.2%) have leveled off a bit.
The updated outlook reflects ASH backing out of the pending divestiture of its Composites business and the BDO manufacturing facility in Marl, Germany, to INEOS Enterprises in a deal valued at about $1.1 bln. The deal, first announced on November 15, came about a week after the company announced better than expected fourth quarter results and guided first quarter earnings ahead of market expectations.
Today, the company formally backed out the divestitures from its fiscal guidance. Specifically, ASH now sees fiscal 2019 earnings per share (EPS) between $3.10-3.40, down from the prior $4.20-4.40 expectation. Further, free cash flow for the year is now anticipated around $175 mln versus $230 mln prior. For the first quarter ASH now sees EPS of $0.05-0.15, down from the previous $0.55-0.65 guidance.
Management specified that the updated financial outlook solely reflects the adoption of discontinued operations accounting for the Composites business and the BDO manufacturing facility in Marl, Germany due to the pending divestiture and associated debt reduction from net proceeds of the transaction.
The reduction to the adjusted diluted earnings per share (adjusted EPS) outlook is due to the elimination of the full-year adjusted EBITDA of Composites and the Marl BDO facility, and partially offset by a portion of interest expense savings from the associated debt repayment and the elimination of the associated stranded costs throughout fiscal 2019. The company sees the divestiture transaction closing prior to the end of the June 2019 quarter.
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