Ashland Q1 2026 Earnings Report

Ashland EPS Results

• Actual EPS: $0.26
• Consensus EPS: $0.23
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $0.28

Ashland Revenue Results

• Actual Revenue: $386.00 million
• Expected Revenue: $401.42 million
• Beat/Miss: Missed by -$15.42 million
• YoY Revenue Growth: -4.70%

Ashland Announcement Details

• Quarter: Q1 2026
• Date: 2/2/2026
• Time: After Market Closes
• Conference Call Date: Tuesday, February 3, 2026
• Conference Call Time: 9:00AM ET

Ashland (NYSE:ASH) is a global specialty chemicals company that develops, manufactures and supplies a broad range of performance and process-critical additives, ingredients and technologies. Its portfolio spans performance additives for coatings, adhesives and sealants; specialty ingredients for personal care and pharmaceutical applications; and process aids used in water treatment and other industrial processes. Ashland aims to address customer challenges by delivering tailored solutions that improve product performance, processing efficiency and sustainability outcomes.

Founded in 1924 as the Ashland Oil & Refining Company, the firm gradually expanded into the specialty chemicals sector over the second half of the 20th century. In 2011, the company formally rebranded as Ashland Inc. to reflect its strategic focus on high-value chemical solutions. Today, Ashland is headquartered in Covington, Kentucky, and operates manufacturing facilities, research laboratories and technical service centers across North America, Europe, Asia Pacific and Latin America.

Ashland’s product offerings are organized around key market segments such as coatings and construction, personal care and pharmaceuticals, adhesives and sealants, and industrial process technologies. Its performance additives include rheology modifiers, dispersants and protective colloids, while its specialty ingredients range from emollients and surfactants to pharmaceutical excipients and polymer modifiers. The company works closely with customers in industries including paints and coatings, consumer goods, healthcare, energy and water treatment to co-create innovative formulations.

Research and development lie at the core of Ashland’s strategy, with multidisciplinary teams focusing on new product platforms, formulation optimization and sustainable processing methods. The company maintains partnerships with academic institutions and industry consortiums to accelerate innovation and drive environmental stewardship. Ashland is led by President and Chief Executive Officer William F. Oplinger, under whose direction the company continues to pursue growth through technology-led solutions and customer-centric collaboration.

Ashland Q1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Calvert City outage pressured Q1 results (≈$10M adjusted EBITDA impact) and the company now expects an additional ≈$11M of temporary costs/downtime to extend into Q2, with most volume recovery delayed until the unit is back to normal rates in late Q2–Q3.
• Positive Sentiment: Strong cash and liquidity profile with $125 million of operating cash, about $26 million of ongoing free cash flow in Q1, ~$900 million total liquidity and net leverage of 2.7x, giving flexibility for execution.
• Positive Sentiment: Life Sciences and Personal Care showed resilience and innovation-driven growth (Life Sciences sales +4% to $139M; EBITDA +11%), with momentum in injectables, tablet coatings and low‑nitrite/high‑purity excipients and several TBO/other platform launches accelerating the pipeline.
• Neutral Sentiment: Specialty Additives faced muted demand (sales down 11%, led by China coatings and construction) but delivered margin expansion (EBITDA +15%, margin up 340 bps to 14.7%) through HEC consolidation and recent product launches (~$5M sales contribution).
• Neutral Sentiment: Fiscal 2026 guidance tightened to adjusted EBITDA $400–$420M; management says its $30M FY26 cost‑savings target is on track and it remains focused on its $35M globalize+innovate revenue goal (YTD $3M globalize / $6M innovate).

Presentation

[Operator]

Hello, and thank you for standing by. Welcome to Ashland's First Quarter 2026 Earnings Conference Call and Webcast. At this time, all participants are on a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask the question during the session, you will need to press star one one on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. I would now like to hand the conference over to Sandy Klugman, Director of Investor Relations. You may begin.

[Sandy Klugman, Director of Investor Relations at Ashland Inc.]

Thank you. Hello, everyone. Welcome to Ashland's First Quarter Fiscal Year 2026 Earnings Conference Call and Webcast. My name is Sandy Klugman, and I'm Ashland's Director of Investor Relations. Joining me on the call today are Guillermo Novo, Chair and CEO, William Whitaker, CFO, as well as our business unit leaders, Alessandra Faccin, Life Sciences and Intermediates, Jim Minicucci, Personal Care, and Dago Caceres, Specialty Additives.

[Sandy Klugman, Director of Investor Relations at Ashland Inc.]

Please note that we will be referencing slides during today's call. We encourage you to follow along with the webcast materials available at ashland.com under Investor Relations. As a reminder, today's presentation contains forward-looking statements regarding our fiscal 2026 outlook and other matters, as detailed on slide two and in our Form 10-Q. These statements are subject to risks and uncertainties that could cause future results to differ materially from today's projections.

[Sandy Klugman, Director of Investor Relations at Ashland Inc.]

We believe any such statements are based on reasonable assumptions, but there's no assurance these expectations will be achieved. We will also reference certain adjusted financial metrics, both actual and projected, which are non-GAAP measures. We present these adjusted figures to provide additional insight into our ongoing business performance. GAAP reconciliations are available on our website and in the appendix of these slides. I'll now hand the call over to Guillermo for his opening remarks.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Thanks, Sandy, and welcome to everyone joining us. For today, I'm happy to join this call from Shanghai, China. I begin with our first quarter highlights and how we're advancing our strategic priorities. Later in the call, I'll return to share some of the latest innovation developments, where we continue to see tremendous momentum and opportunities for differentiation. William will review our financial results, operational execution, and outlook, and our business unit leaders will provide additional insight into performance across their segments and markets.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Please turn to slide five. Let's begin with a review of the key business drivers for the first quarter. We delivered solid results while navigating ongoing demand softness in coatings and constructions, supported by strong execution and disciplined cost actions. Life Sciences delivered healthy growth, supported by resilient pharma demand and momentum across our Innovate and Globalized pillars.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Injectables, tablet coatings, and high-value cellulosic excipients all contributed to year-over-year growth. Innovation continued to strengthen performance, with contribution from low-nitrite cellulosics, high-purity excipients, and several new product introductions. Personal care delivered stable performance with underlying demand broadly steady. Biofunctional actives grew double digits, and microbial protection continued to gain share as our Globalized initiatives supported high-value applications. Softer volumes in core hair and skin care primarily reflected unplanned and isolated customer plant outages.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Specialty additives continued to face muted demand, with coatings and construction driving most of the year-over-year decline. Coatings weakness was most pronounced in China and select export markets, while construction softness reflected broader market conditions. Despite lower volumes, cost actions and HEC network benefits drove meaningful margin expansion. Intermediates market conditions were modestly softer, reflecting trough-like dynamics across BDO and its derivatives, which pressured captive BDO transfer pricing.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

The merchant business was stable, with steady volume and modest pricing pressure resulting in flat sales. Operationally, the team continued to manage through the equipment replacement in Calvert City while delivering solid free cash flow. Although this issue impacted costs and pressured margins across the VP&D chain, customer supply remained uninterrupted.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

The impact we expected to be contained within the Q1 will now extend into the second quarter as commissioning of the new unit revealed additional equipment issues that are delaying the startup. We anticipate completing the necessary fixes and bringing the unit online later in the quarter. Although outside Q1, recent weather-related events also have impacted our operations in the Mid-Atlantic. Customer supply remained uninterrupted, but we expect incremental costs, which William will address later in the call as part of our outlook for the year.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

While we saw month-to-month variability, we're excited the quarter, we exited the quarter on a stronger footing... with December improving versus November and the momentum continuing in January. Taken together, these results reflect steady execution and continued progress across our strategic priorities. Now I'll turn the call over to William to walk through the first quarter financial performance in more detail. William?

[William Whitaker, CFO at Ashland Inc.]

Thank you, Guillermo. Please turn to slide six. Our first quarter performance reflects increasing consistency of our operating model. Across the portfolio, the team executed well, advanced our initiatives, and managed through operational impacts while maintaining solid cost discipline. The portfolio and manufacturing optimization actions we took last year are supporting margins through improved mix, lower costs, and a more efficient footprint.

[William Whitaker, CFO at Ashland Inc.]

Avoca was included in our Q1 results last year, but as we move into Q2, we fully lapped our portfolio actions, providing us with a clear performance baseline going forward. We've also strengthened our working capital performance and delivered strong operating cash flow, a focus area for the team. Altogether, the quarter reflects a strengthening foundation with early signs of improving momentum, indicating that a growth inflection is building as fiscal 2026 unfolds. Please turn to slide seven.

[William Whitaker, CFO at Ashland Inc.]

First, the consistency of our consumer-facing businesses, now roughly 85% of our portfolio, continues to provide meaningful stability and resilience. Second, our innovation and Globalized initiatives are gaining strong traction with sustained momentum in our highest value applications. Third, last year's structural actions are fully embedded, improving margin durability and positioning us for stronger leverage as demand recovers.

[William Whitaker, CFO at Ashland Inc.]

And finally, even in segments experiencing more challenging conditions, our teams remain disciplined and focused on core fundamentals, ensuring we stay well-positioned as industry conditions evolve. Overall, the quarter reflects resilient performance as our streamlined portfolio, strengthened cost structure, and disciplined execution continue to support our long-term strategy. With innovation accelerating, Globalized expanding, and productivity initiatives progressing, we are well positioned to build momentum throughout the year. Now on to the financial details. Please turn to slide 9.

[William Whitaker, CFO at Ashland Inc.]

Sales for the quarter were $386 million, down 5% versus last year. The previously announced Avoca divestiture accounted for roughly $10 million, or about 2% of the decline. Excluding this portfolio action, sales were down 3%, reflecting a mixed demand environment. Life Sciences continued to grow, supported by steady demand and ongoing innovation momentum. Personal Care remained stable overall and would have grown low single digits, excluding the on-plan customer outages.

[William Whitaker, CFO at Ashland Inc.]

Specialty Additives softened, reflecting broader demand conditions and ongoing competitive intensity. Pricing declined 2%, generally across segments, primarily reflecting carrier adjustments from the prior year. FX contributed a favorable $9 million, or 2%, to sales versus prior year. Moving on to profitability. Adjusted EBITDA was $58 million, down 5% year-over-year, including a $1 million impact from the Avoca divestiture.

[William Whitaker, CFO at Ashland Inc.]

Excluding that action, adjusted EBITDA declined 3%, reflecting lower volumes and modest pricing pressure, partially offset by favorable mix, lower SAR, and FX benefits. Importantly, the quarter included the anticipated $10 million adjusted EBITDA impact from the Calvert City outage. As Guillermo noted, we had expected the full effect to be recognized in the first quarter, but some impact will now carry into the second quarter, which we'll address in our guidance.

[William Whitaker, CFO at Ashland Inc.]

Raw material costs remain generally stable to favorable, and we continue to benefit from our cost actions across the portfolio. Adjusted EBITDA margins held steady at 15%, with over 250 basis points of compression stemming from the Calvert City outage. Adjusted operating income grew 27% versus prior year, reflecting the stability of the underlying business, as well as reduced depreciation and amortization from our optimization actions.

[William Whitaker, CFO at Ashland Inc.]

Adjusted EPS, excluding intangible amortization, was $0.26, down 7% from the prior year, reflecting lower income. We delivered a strong quarter of cash generation, with $125 million of cash provided by operating activities and $26 million of ongoing free cash flow, which excludes the previously disclosed tax refund. Lower working capital and CapEx drove healthy free cash flow conversion of nearly 50% in our seasonally low quarter.

[William Whitaker, CFO at Ashland Inc.]

We ended the quarter with total liquidity of approximately $900 million, a strong position as we move into the balance of the fiscal year. Net debt was $1.1 billion, and our net leverage remains solid at 2.7x, providing flexibility to invest in strategic priorities while maintaining disciplined capital allocation. Now, let's turn it to our business unit leaders for a closer look at segment performance. Alessandra, over to you.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Thank you, William. Good morning, everyone. Please turn to slide 10 for Life Sciences. Life Sciences sales were $139 million, up 4% from the prior year, driven by resilient pharma demand and continued strength across our Innovate and Globalize pillars. Pharma delivered low single-digit year-over-year growth, making a third consecutive quarter of volume gains.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Demand remains strong for our high-value cellulosic excipient, supported by broad customer engagement across regions. Injectables delivered another quarter of strong, above-market growth, with continued pipeline expansion and accelerating uptake of recently launched products, reinforcing our confidence in sustainable growth within this high-margin segment.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Tablet coatings delivered double-digit year-over-year growth across all regions, with particularly strong momentum in Asia Pacific. In nutrition, recent wins and ongoing commercial activity continue to support improving traction as we move through fiscal 2026.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Pricing was slightly lower year-over-year, in line with expectations and largely reflecting carryover impacts from prior year adjustments, but remained stable sequentially. Foreign exchange provided $3 million benefit to sales. Turning to innovation, we continue to advance Ashland's leadership in pharmaceutical ingredients. We saw meaningful contributions from our low-nitrite offerings, including the recently launched Plasdone Low Nitrite and Benecel Low Nitrite grade. In injectables, we launched our new high-purity Vialo sucrose stabilizer for biologics in October.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Early customer engagement has been encouraging, with positive technical feedback and a growing commercial pipeline. In addition, multiple new injectable launches are planned for fiscal 2026, each supported by strong pre-launch customer engagement and rising market pool. These advancements reinforce our commitment to delivering high-quality solutions that meet evolving customer needs. Turning to profitability. Adjusted EBITDA was $31 million, up 11% year-over-year.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Margins expanded to 22.3%, 140 basis points improvement, including a $4 million impact from the Calvert City outage during the quarter. The year-over-year increase was driven by favorable mix, resilient pharma demand, and lower SAR as restructuring benefits continued to flow through, partially offset by modest pricing pressure. Foreign exchange provided an additional $2 million benefit to EBITDA.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Life Sciences continues to demonstrate strong operational discipline, resilient end market demand, and consistent progress across both our Innovate and Globalize agendas. Please turn to slide 11 for Intermediates. Intermediates performance remained challenged, consistent with what we expected entering the fiscal year. Sales were $31 million, down 6% versus last year. Merchant sales were $22 million, with steady volumes and modest pricing pressure, resulting in flat year-over-year performance.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Captive BDO sales declined to $9 million, driven by both lower volumes and lower transfer prices. Foreign exchange had a negligible impact on sales. Turning to profitability, adjusted EBITDA was $1 million, down from $6 million in the prior year, with margins declining to 3.2% from 18.2%.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Margins compressed due to lower pricing, reduced operating leverage, and roughly $2 million of early quarter upstream production impacts from the Calvert City outage. The team remains focused on disciplined commercial execution, cost control, and navigating a market environment that is expected to remain challenged until broader industrial activity improves. Now, I will turn the call over to Jim to discuss personal care. Jim?

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

Thank you, Alessandra. I'll now highlight our personal care results. Please turn to slide 12 for personal care. Personal care delivered resilient results, underscoring the stability of the portfolio despite mixed market conditions. Sales were $123 million, down 8% year-over-year, almost entirely due to the Avoca divestiture, which reduced sales by approximately 7%. With the Avoca divestiture now lapped, we have a clean baseline going forward into Q2. Organic sales declined 1%, reflecting a broadly stable demand environment.

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

Biofunctional actives continued to perform well and delivered another quarter of double-digit growth versus prior-year quarter. Customer expansions and project pipeline conversions are accelerating. Collapeptyl, our 2025 hero product launch, is gaining broad-based market adoption. Collapeptyl mimics 20 collagen sequences in our skin, providing immediate flash hydration and corrects the appearance of both expression and deep wrinkles in the skin.

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

Microbial protection delivered year-over-year volume growth above market, driven by share gains across most regions and customer wins. With a competitive and regional footprint, microbial protection is well positioned to continue executing on a robust opportunity pipeline. Within care ingredients, performance varied by region and segment. In general, most regions performed well, with notable strength in the EMEA region and China.

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

Care ingredients experienced several unplanned customer plant outages in the quarter and softer demand in North America. Foreign exchange contributed approximately $3 million of favorability to segment sales. For personal care, innovation and commercial execution remain a strength, with continued momentum in our Globalized platforms and sustained demand for higher value differentiated applications.

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

Turning to profitability. Adjusted EBITDA was $26 million, compared to $30 million in the prior year. This includes a $1 million EBITDA impact from the Avoca divestiture. Excluding that portfolio action, EBITDA was modestly lower, driven by the more than $4 million Calvert City impact and the demand trends noted earlier, partially offset by mix and cost discipline. EBITDA margins remained healthy at 21.1%, demonstrating the strength of the portfolio and the benefit of ongoing commercial and productivity efforts.

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

Personal Care continues to deliver strong performance in our Globalized platforms, resilient margins, and meaningful traction in our innovation pipeline. Now I'll hand it over to Dago to review the results of Specialty Additives. Dago?

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

Thank you, Jim. Please turn to slide 13. Specialty Additives continue to operate in a muted demand environment during the first quarter. Sales were $102 million, down 11% year-over-year. Coatings and construction accounted for the vast majority of the year-over-year shortfall. In coatings, the decline was led by China, where weak demand and structural overcapacity continued to weigh on results. Additional softness came from export markets in the Middle East, Africa, and India, where competitive intensity remained elevated.

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

North America continued to show muted demand in the coatings market. Outside these regions, coatings demand was relatively stable, with outperformance in Europe and Latin America. Construction volumes were also lower, reflecting soft conditions across the non-structural repair and remodel market, our primary area of exposure. Across other industrial end markets, including energy and performance specialties, demand remained muted but generally stable.

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

Pricing was modestly lower year over year, while foreign exchange contributed approximately $2 million to sales. Importantly, the team continues to execute on operational efficiency initiatives and capture benefits from prior manufacturing optimization actions, including the HEC consolidation, which improved our cost structure and mitigated the impact of lower volumes. Adjusted EBITDA was $15 million, up 15% from the prior year.

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

EBITDA margin improved to 14.7%, a 340 basis point expansion, supported by efficiencies from the consolidated HEC network. The team remains sharply focused on cost discipline and commercial excellence while continuing to advance innovation that helps our customers deliver differentiated solutions in a challenging market. Underscoring the strength of our innovation pipeline, we deliver approximately $5 million in sales from recent product launches this quarter.

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

Looking ahead, Specialty Additives is well positioned to benefit from an eventual coatings recovery, supported by disciplined cost management, a more efficient manufacturing network, and ongoing innovation, progress. With that, I'll hand it back to William. William?

[William Whitaker, CFO at Ashland Inc.]

Thanks, Dago. Please turn to slide 15. As we move through the first quarter, I wanna highlight the progress we're making across our execute pillar and how our operational transformation continues to support the business. Overall, our total cost savings target of approximately $30 million for fiscal 2026 remains on track. Specifically, our restructuring plan is completed and will be ratably recognized throughout the first half of the fiscal year.

[William Whitaker, CFO at Ashland Inc.]

We continue to make progress on our network optimization targets. VP&D optimization and small plant consolidation efforts also remain on schedule, with benefits weighted toward the second half. As we talked about last quarter, we are addressing higher-than-expected unit costs at the consolidated HEC site as we scale operations. Following the Parlin closure and network volume rebalancing, we are delivering productivity improvements and stabilizing operations while strengthening the global HEC network.

[William Whitaker, CFO at Ashland Inc.]

Our total savings target of $50-$55 million remains intact, with upside to $60 million as China demand improves. Across the network, we're seeing potential for additional productivity improvements and capacity optimizations. This work is ongoing, but the trajectory remains positive. Our priorities with execute remain clear: deliver structural cost improvements, simplify the network, and enhance systems and processes, which include sales and operations planning, standard costing, and forecasting, all of which strengthen planning, accountability, and ultimately, performance.

[William Whitaker, CFO at Ashland Inc.]

I want to recognize our operations team for managing through isolated challenges this quarter. I will speak to these dynamics further in the outlook. Please turn to slide 16.... I'd now like to provide an update on our Globalize and Innovate platforms. As we move through fiscal 2026, I'm encouraged by the early year momentum we've seen across both pillars.

[William Whitaker, CFO at Ashland Inc.]

On Globalize, we're seeing solid traction, supported by increased customer engagement, focused commercial initiatives, and early benefits from our recent investments. Year to date, we've delivered $3 million of incremental Globalized sales towards our $20 million goal for the year, with notable contributions across the portfolio. In aggregate, the Globalized business lines grew 8% versus last year. On the Innovate side, momentum was even stronger.

[William Whitaker, CFO at Ashland Inc.]

We delivered $6 million of incremental innovation sales towards our $15 million goal for the year. This reflects the continued strength of our innovation pipeline, particularly in pharma cellulosic, as well as recent commercial introductions across multiple segments. Guillermo will speak to this in more detail shortly, but the team continues to advance a broad and healthy launch pipeline. The early performance across Globalize and Innovate highlights the strength of these levers and the strategic advantage they bring to our portfolio.

[William Whitaker, CFO at Ashland Inc.]

While still early in the year, we remain on track to deliver our fiscal 2026 $35 million revenue commitment from Globalize and Innovate. Please turn to slide 17. I will now walk through our updated fiscal 2026 outlook, which reflects a prudent view of market conditions and continued confidence in our ability to execute. For fiscal 2026, we are narrowing our adjusted EBITDA range to $400 million-$420 million. All other elements of our guidance remain unchanged.

[William Whitaker, CFO at Ashland Inc.]

Let me briefly summarize the assumptions underlying this outlook. Life Sciences and Personal Care remain resilient, supported by stable end markets and momentum across our Globalize and Innovate platforms. Specialty Additives and Intermediates remain mixed, with a coatings recovery expected to be gradual and regionally uneven until broader housing and industrial activity improves.

[William Whitaker, CFO at Ashland Inc.]

We're seeing healthy demand patterns in consumer-oriented categories to start the second quarter. Raw materials are expected to be stable to favorable overall, and supply chains remain reliable. Similar to prior years, we expect a second half-weighted performance. We continue to expect Innovate and Globalize to drive growth above underlying markets, and our total cost savings target of $30 million remains on track to support margin improvement through the year.

[William Whitaker, CFO at Ashland Inc.]

As Guillermo discussed, repairs to the Calvert City unit are taking longer than anticipated. What we had initially expected to be contained to the first quarter will now extend into the second. In recent weeks, we also experienced brief outages at multiple sites due to adverse weather. While the operations team managed safely without customer disruption, these events resulted in incremental costs and downtime.

[William Whitaker, CFO at Ashland Inc.]

Our revised outlook reflects approximately $11 million of temporary impacts from the Calvert City startup delay and recent weather-related disruptions, all isolated to the second quarter. The volume-related impacts, which are roughly 2/3 of the overall total, are fully recoverable, but the timing of absorption recovery is more challenging. VP&D cannot begin recovering absorption until the unit is back at normal operating rates, which will not occur until late Q2.

[William Whitaker, CFO at Ashland Inc.]

This means recovery can only begin in Q3, with partial flow through in the income statement into Q4. For HEC, recovery depends on the seasonal demand lift. Visibility into April through September demand typically firms in March, which creates uncertainty about when and how much recovery can be prudently initiated. Given these timing constraints and the current visibility on seasonal demand, we believe it is prudent to remain more cautious at the top end of the guide.

[William Whitaker, CFO at Ashland Inc.]

We will continue to manage production, inventory, and free cash flow with discipline, while ensuring uninterrupted customer supply. Overall, our fiscal 2026 guidance reflects balanced planning, disciplined execution, and visibility into the drivers of long-term value creation, even as we manage temporary operational challenges. With that, I'll turn the call over to Guillermo to discuss our technology platforms and leadership priorities. Guillermo?

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Thank you, William. Please turn to slide 18. Innovation remains one of the most powerful drivers of long-term value creation at Ashland, and the momentum we're seeing this early in the fiscal 2026 is both exciting and strategically important. This slide highlights just a few of the breakthrough platforms that are reshaping our pipeline and opening new opportunities across multiple end markets. These are not isolated projects.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

They're scalable technology platforms built on science, customer collaboration, and discipline execution, each with potential to fuel long-term growth. Since the 2025 Innovation Day, our teams have delivered meaningful progress across multiple platforms. Our TBO technologies continue to advance through early commercial adoption, supported by regulatory filings across all key regions and multiple customer qualification cycles. In ag, our TBO for seed coatings, Agrimer EcoCoat, received U.S. EPA approval in 2025 and is also REACH approved.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Its performance and sustainability profile have been validated by multiple customer trials, with more trials ongoing. Customers are in the process of filing their own regulatory approvals for their formulated products in different regions.... We're also making great progress in the development of a TBO for all oil dispersions in ag formulations. This product would already have regulatory approval, the same as our Agrimer EcoCoat. In personal care, we launched Lubrihance, a TBO-based product for hair conditioning, with great customer feedback, four customer approvals, and many other testing and formulations.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Development of our TBO for hairspray and styling is maturing well, nearing generation one launch, with encouraging customer evaluations underway. Our TBO technology for silicone alternatives have passed preliminary testing with key customers and now is in advanced evaluations. In coatings, we continue to make progress on developing TBO technology for TiO2 efficiency and for UV curing.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Based on current performance profiles, all customers are showing strong interest in these technologies. Most other new TBO development projects continue to advance and are demonstrating strong performance and value for our customers. Our superwetting agent platforms, which offers PFAS-free and silicone-free sustainability advantages, achieved another successful launch in industrial and specialty coatings.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Our coatings team recently launched a new version of our wetter, Easy-Wet 310, which has broader geographic regulatory approvals and is accelerating commercialization. We've had successful customer trials and feedback on our new super wetter for ag, validating performance benefits with no phytotoxicity relative to the current commercial wetters. We expect to receive US EPA feedback this April. In personal care, we're expanding this technology into hair care and home care applications. In hair, we are currently targeting textured hair, where early beta testing feedback has been very positive.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

In home care, we're advancing the superwetter technology for auto dishwash applications. In bioresorbable polymers, momentum is building in aesthetic medicine, especially next-generation dermal fillers, with fiscal year 2025 launches and recent customer audits supporting a strong multiyear outlook. We also continue to scale a strong pipeline with preclinical milestone sales for both generic and new drug development programs.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

We're also excited about the interest and performance feedback we've received in personal care for our new modified starch for rheology control in skin leave-on applications, and we will be launching this product this year. In addition, we're expanding our starch technology into hair styling applications. These platforms are strategically important, each representing a scalable and high-value opportunity that strengthens our ability to compete and win in differentiated markets. They reflect the combined strength of our science, our global reach, and our ability to commercialize meaningful new technologies.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Together, they reinforce why innovation remains a key driver of a long-term growth. Lastly, although not part of our new technology platforms, our coatings team is launching a number of new multifunctional HEC products this year that can provide unique cost and performance benefits to our customers, including better cost and use and improved performance.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Please turn to slide 19. As we look ahead, I'd like to outline the leadership priorities guiding our execution. While markets are mixed, as anticipated, we enter the year with momentum on several fronts. The business has become significantly more focused, resilient, and better positioned to drive higher value growth. Our cost actions are already supporting margin performance, with additional P&L benefits expected as the year progresses. Our innovation platforms and Globalized investments continue to gain traction.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Our priorities for the fiscal 2026 are clear: deliver on safety, profitable growth, free cash flow, and RONA. Advance our manufacturing optimization and inventory performance. Accelerate innovation, scale our Globalized platforms, and foster a productivity-focused culture. Strengthen our systems and process, including leveraging AI, to enhance productivity. Prioritize talent development, leadership stability, and organizational strength, and maintain transparent communications and consistent execution in our engagement with our investors.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Fiscal 2026 is about converting our transformation into sustained performance. With a more focused and resilient portfolio, disciplined capital allocation, and clear strategic roadmap, Ashland is well positioned to deliver durable value creation for all stakeholders. And despite temporary operational and weather challenges, our strategy, strong execution, and commercial momentum give us confidence in delivering our fiscal 2026 commitments. Thank you to the entire Ashland team for your commitment and execution, and thank you for joining our call today. Operator, please open the line for Q&A.

[Operator]

Thank you. Ladies and gentlemen, as a reminder, to ask the question, please press star one one on your telephone, then wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Josh Spector with UBS. Your line is open.

[Josh Spector, Director of Equity Research at UBS]

Yeah. Hi, good morning. I had two questions. First, just specifically on personal care, can you talk about the comments around the customer outage impacting demand? Is that an ongoing issue? Is that resolved? Do we catch up from that? And then second, I mean, Guillermo, in some of your prepared remarks from the release last night, you know, you talked about some optimism, I think, on some of the demand you were seeing building in your second quarter here. Just wondering if you could give more color there, if that's adding to any visibility or if it's still pretty limited. Thanks.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Okay. Let me give a quick comment on the demand and then on the PC outage. Jim, I'll pass you to give some comments. So we did start, if you look at Q1, you know, we started the quarter strong in November, and I think like other companies, November was a bit softer. And we did see the pickup really in December and January as also as common that continued to grow. So and then it's pretty broad-based in terms of Life Sciences and Personal Care. I would say in coatings, it's in line with our expectations. It's. I'm not overreading the coatings side because this is still low in the seasonality.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

You know, the season really starts to pick up in March, and really April to September is when we see the bigger volume. So it's a bit early, but it's been stable, and I would say no big surprises. So overall, right now, you know, we're not trying to overread. No, you know, there's nothing really to change our outlook.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

So we're pretty confident, and I think over the next two months, we should start picking up. Our order book for February still remains strong, too, so we'll see how that evolves. Obviously, we have now time in China, Chinese New Year and all that. It'll be a weaker February, but into March, it should pick up. And then on the PC side, I mean, there are outages. We just had our own outages on things, and so they're, they're temporary, and recoverable. But Jim, you want to comment on, on the outages?

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

Thanks. Thanks, Guillermo. And Josh, thank you for the question. So as William had mentioned, you know, excluding those customer outages, the business would have been up low single digits. Specifically in North America, there were several customers that had unplanned outages.

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

The outages were on the customer side, so it was not related to our inability to supply or anything driven from our side. And through conversations with customers, we understand that it was not demand driven, either. The outages all occurred in Q1. Some of them were multi-week, with a couple of them extending over a month, almost two months in one case. They all are back online.

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

They all came back online before we closed Q1, and we do expect to recover most of it in Q2, and through the balance of the year. So we are starting to recover some of that in Q2, and by the end of the fiscal year, we do expect to recover most, most of that impact.

[Josh Spector, Director of Equity Research at UBS]

Okay. Thank you.

[Operator]

Thank you. Please stand by for our next question. Our next question comes from the line of Michael Sisson with Wells Fargo. Your line is open.

[Michael Sison, Managing Director at Wells Fargo]

Hey, good morning. For personal care, for personal care, should we see volumes start to turn the corner here in the second or third quarters? That, because I think Avoca is done, right, in terms of the outlook. Do we start to see positive volume growth?

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Yeah, so Avoca is done, as Jim said, so that from the comps are gonna be cleaner. You know, if we see just the macro on the consumer side, it's behaving resilient overall. Most of our customers are indicating, you know, that it's flat to up in the single digits. So from a volume perspective, we expect to continue to see that as the year progresses. So no, no, no big surprise there, Mike.

[Michael Sison, Managing Director at Wells Fargo]

Great. And then maybe just revisiting kind of the longer term outlook, how do you think about, you know, rebuilding EBITDA to higher levels from here?

[Guillermo Novo, Chair and CEO at Ashland Inc.]

So I think one, a lot of it has to do, you know, if you look at our strategy, execute, Globalize, Innovate. Execute is about productivity. We've got a lot of projects going through. There are, you know, we're already seeing the benefits. You see it, you know, with all the impacts on markets and competitive dynamics over the last year, our margins continue to hold up.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

And I think that's a reflection of a lot of the productivity actions. So we're already doing that. Obviously, as volumes pick up, you know, we'll have a lot more leverage in terms of our, you know, absorption and most of our key plans. So volume pickup obviously will be very helpful. For now, we continue to remain focused on driving that productivity.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Most of the projects are going very well. I think the one plant that we're, you know, we're putting a lot of effort on because of all the network trends that the HEC network optimization is our Hopewell plant. They're very busy. There's a lot of activity there. When we closed Parlin, they brought a lot of products. We've had a little bit of cost issues there, so that one we're gonna continue to focus.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

And obviously, the storm that was one of those plants that was hardest hit, so some of those initiatives have been stalled a little bit just as a result of the storm. But we're focused, we have a clear agenda, and we're gonna continue to drive that. The rest is gonna be the Globalize, Innovate.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

All those are higher margin areas, and the more we can grow, the more we can extend, you know, our margins and our EBITDA. And equally, I would say in Life Sciences, a lot of the cellulosic growth that we're seeing in our core businesses are all higher margin businesses.

[Michael Sison, Managing Director at Wells Fargo]

Got it. Thank you.

[William Whitaker, CFO at Ashland Inc.]

And Mike, just to add, it's William. I think the other key piece, too, to keep in mind is we have the $90 million program outstanding, right? That's the combination of the restructuring and the manufacturing optimization. We got 25 of that in fiscal 2025. We've committed to another 30 in fiscal 2026. That leaves another 35 yet to play out. So that's the other component on top of what Guillermo referenced on the productivity side. I just wanted to make sure you had those levers as well.

[Michael Sison, Managing Director at Wells Fargo]

Got it. Thank you.

[Operator]

Thank you.

[Sandy Klugman, Director of Investor Relations at Ashland Inc.]

Thanks.

[Operator]

Our next question comes from the line of John Roberts with Mizuho. Your line is open.

[John Roberts, Managing Director and Senior Equity Research Analyst at Mizuho]

Thank you. On the China coatings demand, is there a line of sight to the bottom so that you'll begin at least comping flat year over year at some point?

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Yeah. So let me give some comments, and then I'll, Dago, if you could comment. I'm here right now in China. I would say, you know, a lot of the impact of the down market started last year, and it's already happened, most of, you know, the impact with our customers. I don't expect that this is gonna improve, you know, that quickly.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

You know, we see a lot of actions by the government to stimulate, to reenergize the property market, but the reality is it's gonna take a while. I think the issue is, for here, it's gonna be expect muted demand for a while. With the overcapacity, we're gonna continue to see deflationary pressures across the board. Most of that has already happened.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

You know, we've been hit hard on our business here in China, so we're bottoming out. There's a limit to how much, you know, you can't lose more, but you've got what, when you've lost a business, you can't lose more. So I think what I'm excited about now is the team. We've rebalanced the network so that we're not getting impacted with empty capacity in our plants. We're using this. This is a very cost-effective plant for us. We're using it for exports now around the world, and especially in the Middle East and Africa. So we're well-positioned.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

And today, just, you know, talking to our teams, they've really done a fantastic job, in just looking at our portfolio, using this time to get our plant costs in, in order, but it also expanding our product line, both into more, cost-effective, you know, different performance to cost parameters, so that we can compete on the low end, and also some higher performance products that we can provide both, lower cost and use, but higher performance.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

So we're, we're expanding, our, our ability to go back into the, into the market in a more constructive way than just price, price games as we move forward. But, Dago, do you want to comment on, on the comps and, and some of the other things your team is doing?

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

Yeah, sure, Guillermo, and I think you're spot on. So, I mean, the China comps are expected to ease in the second half, following the second quarter. So we already took the hit versus the last year comps, so we'll be expecting to lap up to the next quarter. So that's number one. The other point that I would like to emphasize is, you know, what is it that we're making to resolve the situation, right?

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

What is it that we're working on? And there's three points I want to emphasize. One is commercial discipline, the other one is productivity, and the third one is innovation. So on commercial discipline, which is a lot of focus on volume-price management to ensure that we do what's right for the business.

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

And there is also a lot of focus on customer intimacy, just staying very close to customers so that we can deploy our innovation. Productivity, the good news is that Nanjing is a really excellent plant that we have. It's a very strong asset, and they do have very clear productivity improvement targets that we're going after. So I'm very excited about that as well.

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

But probably the best one is really on innovation. We're moving fast. We're moving with urgency. We expect some of the results that we're doing on the innovation on our core products to materialize actually in 2026, which will really help us with the situation. And the intent here is to protect our core portfolio and then basically kind of produce or create products that are, that are made for the China market.

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

So very excited about what we are doing here. And last point, I just want to reinforce what Guillermo was saying is, this is a really good plant. This is a plant that I would say I would call it a global asset, absolutely. The initial intent was to produce in China for China, but this plant can produce for any other parts of the world. So what we're doing is rebalancing. There is opportunities outside of China for sure, that we're going after with a lot of focus.

[John Roberts, Managing Director and Senior Equity Research Analyst at Mizuho]

And then secondly, where are you facing the most risk and uncertainty around global trade issues?

[Guillermo Novo, Chair and CEO at Ashland Inc.]

you know, I think that the area that we're looking at more is what's Europe gonna do? You know, I think there's a lot of push right now for our industry, in terms of some of the cost competitors, the plant consolidations. So there's a lot of dialogue going on there, but there's no clear, you know, decisions on what they're gonna do. But I would say that's probably the area of focus for us at this point in time. We don't have anything that I would say specific, but we know that this is probably one of the areas of a higher pressure in terms of the regional interests to take some action.

[John Roberts, Managing Director and Senior Equity Research Analyst at Mizuho]

Thank you.

[Operator]

Thank you. Please stand by for our next question. Our next question comes from the line of Chris Parkinson with Wolfe Research. Your line is open.

[Chris Parkinson, Managing Director and Senior Research Analyst at Wolfe Research]

Great. Thank you so much. Just turning back to life sciences, just wanna break down the, the growth algo here now that you're passing, you know, multiple years of, you know, a little bit of choppiness. You know, just but when you take a step back, you know, how are you thinking about, you know, you didn't mention VP&D in, in the PowerPoint, so I'm kind of curious on what effect, if any, that had on the price mix in the quarter. And then it seems like you're actually gaining pretty decent momentum, in, you know, tablets and cellulosics.

[Chris Parkinson, Managing Director and Senior Research Analyst at Wolfe Research]

So, you know, when we look at this for 2026 and then, you know, kind of into 2027, is this finally getting back to just a, a low, kind of like a low single digit, you know, volume growth rate, perhaps a little bit more constructive price mix, you know, getting margins, you know, back up to the prior year's levels? Like, how, how should we be parsing that out? Thank you.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Let me quick comment, and then I'll pass it to Alessandra. She can give more detailed color on the business. But I would say just specifically on the VP&D, that's the, you know... The life science business has been fine. That's where we had the issue a while back, and you know the story, one big competitor coming back in and all that, was the biggest issue for us. That has stabilized, right? So the VP&D, I would say, volumes are stable, pricing are stable. That's not the biggest growth driver at this point in time. We wanted to stabilize it, and I think we're seeing that across the world.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

That's one of the issues of really driving productivity, making sure that we're gonna be competitive and any price that we gave in the past that we're trying to recover it through productivity, asset utilization, all those kinds of things. But the team, the broader strategy continues to progress and never really stopped in terms of the cellulosics or some of these other areas. But Ale, if you could comment on that and on VP&D as you see things, that would be great.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Yeah, sure. So, looking ahead, looking at the next few quarters, we expect to continue to deliver on healthy growth. So two aspects, looking at the resilient pharma demand, roughly low single digits. And then we are seeing the momentum across our both Innovate and Globalize pillars, and that represents around 200 basis points above market on the growth that we are projecting.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

As Guillermo mentioned, VP&D is expected to be stable. We just concluded the contract negotiations in Europe, and they were mostly aligned with our expectations on share and with modest price pressure on certain portfolios. But net-net, they were in line with our expectations, so we remain very much focused in positioning our Globalized Innovate growth strategies and the share gaining opportunities.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

When you're looking at injectables, we delivered an outstanding first quarter, double-digit growth versus prior year. We are seeing a strong uptake on new products. Guillermo talked about this on innovation on his prepared remarks. We're seeing the pipeline expansion and also a very effective regional business development model that we have put in place, which is positioning us to continue to see sustainable above-market growth in the coming quarters.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

On tablet coatings, specifically, we also saw double-digit growth year-over-year in the first quarter. The pipeline has expanded significantly, and we've our production efforts were a focus in the last few quarters, and we are seeing that. We're seeing the good momentum from production, from productivity improvement in Wilmington and also our new sites in Brazil and China, supporting our growth for the fiscal year 2026.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

And we have a new plant that we announced before in India that is coming up in fiscal 2027. So Guillermo was just in India a few days ago, also visiting the new site, which is coming up in fiscal 2027. So overall, a lot of discipline from a commercial standpoint on price volume management and a focus on positioning our Globalized and innovative growth strategies. And we are confident on the growth we're projecting over the next couple of quarters.

[Chris Parkinson, Managing Director and Senior Research Analyst at Wolfe Research]

Got it. Thank you. And just as a real quick follow-up and to kind of triangulating some of the things you said to Josh's question. In personal care, it seems like there's a lot, a lot of moving parts, and it seems like you're seeing a decent recovery in the biofunctionals and bioactives, in addition to some, you know, new products and NPI momentum.

[Chris Parkinson, Managing Director and Senior Research Analyst at Wolfe Research]

You know, is that a functionality of, you know, stronger demand in places like Asia, stabilization in Europe? Is it two-where it is, say? Just, you know, I'm trying to get to, you know, kind of the growth rates ex the issues you saw in haircare, but it seems pretty constructive, so I'd be kind of curious on how you think about that as we progress through fiscal year 2026. Thank you.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Make a quick comment, and Jim, if you can talk about the specific regions and biofunctionals and all the areas. But just to make one thing clear, you know, if you look at our core personal care business, that's the established business that we've had for a long time. It's pretty stable. You know, it's the ups and downs are more driven by customer demand, and, you know, there's not big shared shifts.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

I think that the growth is coming from the new things. Our Globalized, our in both biofunctionals and microbial protection, and in the core, it's all these new technologies that we're working on that frankly personal care was the first business really, in which we were developing the TBOs and all these products. So there is a level of stability. You know, a lot of these, it's up and down. It's the same customers that have been buying some of these products for a long time, and there is a lot of stability there. But, Jim, if you wanna comment a little bit more color?

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

Sure. Thanks, Guillermo. Hey, Chris. So I, you know, I think we've really been working to make the personal care story as simple as possible, just given all the different pieces and parts of the portfolio. And I think when you look at Q1, you know, we're very happy with Q1. As you mentioned, biofunctional performed extremely well.

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

We have stabilization in our base, which we had talked about in the prior quarter. That base continues to be stable, and we're seeing even some growth there. We're more excited by all the work the team has done to expand the biofunctional portfolio. We've gained a lot of new customers, especially in Europe and in China, and we're getting our new product launches into those customers.

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

As I mentioned, Collapeptyl, it's, you know, I don't wanna say a miracle product, but it's something that within three minutes, you already start to feel that hydration. Within a couple hours, you already start to get real, you know, glowing in your skin, and the team's done a great job launching products. And, you know, we feel biofunctional is really moving in the right direction going forward.

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

Microbial protection, it's all about continuing to grow there, convert opportunities, and we've seen really nice growth across all the regions. And then, as Guillermo mentioned, in our care ingredients business, we had the customer outages, specifically in Q1. Aside from that, you know, there's always perhaps some noise as you go into the end of the year, but generally, it's very stable.

[Jim Minicucci, SVP, Personal Care at Ashland Inc.]

The team's done a really nice job converting opportunities, especially in skin. You will see, as we go through the balance of the year, oral care will be, I would say, more smooth this year for us over the next three quarters. Sometimes it tends to be a bit more concentrated in a couple quarters. It will be smoother through Q2 to Q4. But overall, you know, I would say Q1, really, it was the customer outages and North America demand that we're continuing to monitor. As I said, a bit of a mixed environment there.

[Chris Parkinson, Managing Director and Senior Research Analyst at Wolfe Research]

Helpful colors. Thank you.

[Operator]

Please stand by for our next question. Our next question comes from the line of Mike Harrison with Seaport Research Partners. Your line is open.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Hi, good morning.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Morning.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

Was wondering, Alessandra, in life sciences, you mentioned low nitrite celluloses. Can you help us understand what differentiates those from typical celluloses and why that's important?

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Well, Alessandra, if you could comment just on the ones that we've already launched and the ones that we continue to launch, and not just celluloses, but the whole theme of high purity that you guys are working on.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Yep. Yeah, so we launched the new low nitrite grade for both Plasdone, which is VP&D, and Benecel, you know, celluloses. So this brings an enhancement of product quality, basically from nitrosamine on the pharma industry, and versus the regulatory requirements, right? And it is the pharma companies overall, across the board, not just large pharmas, but generics.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

All pharma companies are very much focused on that, on bringing the low nitrite grade or excipient to help with the nitrosamine levels on their formulations. So that has been a good success for us with the launch on the low nitrite, and we see that more and more in our portfolio, expanding into with low nitrite grades, not just on celluloses, and to your question, but also on VP and D and other areas.

[Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners]

All right. That's very helpful. And then I was also within the specialty additives business, was hoping for a little bit more detail on the $5 million of contribution that you're expecting from innovation. Is that mostly the superwetting agent that you referred to on slide 18? Or maybe what product lines or technologies are really starting to show commercial traction within specialty additives? Thank you.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Mm-hmm.

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

Yeah, thanks for the question. So, yeah, I would say it's across the board. It, it's across the board. So when, when you look at our strategy for Specialty Additives, there is a heavy focus, of course, on protecting our rheology modifier participation, and we have new products that are going there. But then there is a big effort right now to go beyond this additive into other additives. So you have-

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

... you have defoamers, you have wetting agents, you have pH neutralizers, et cetera. And the team has been very focused on expanding our portfolio because it really solidifies the participation that we have with customers. It, it gives us higher access, and also it enables us to go after other parts of our customers' portfolio. For instance, we're very strong in architectural coatings.

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

We know our customers also have participation in industrial coatings. This is really a great opportunity to branch out and to really solidify our position there. So when you look at the sales and what we're working on for this year, because we have very very good targets, very strong targets for innovation, really the focus is going to be on, number one, solidifying our position in and differentiating in rheology modification, both synthetic and cellulosic.

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

Number two, continue to expand our additives. So you're going to see a lot of that, and super wetting agents are included there. But then strategically and longer term, very much, excited about the progress we're making with our, platform technologies, in particular, TBO and TiO2 spacer, et cetera, where we do expect to see some good traction this year.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

And, Mike, I wanted to highlight it. In my comments, I talked a little bit on the regulatory, if you notice, on a lot of these same innovations, not just the innovation and the customer, but the regulatory side. When you bring in new products to market in today's world, you have to deal with all the, you know, approvals for selling these products in ag and REACH in Europe. And I think the coatings team and the specialty has done a wonderful job. The Easy-Wet 310, we launched Easy-Wet 300. It's working well. But given its profile, we have certain requirements in terms of the regulatory needs.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

They were able to go in, modify it enough so that no performance was changed, but it now allows us to accelerate the commercialization because it meets much more of the regulatory requirements around the world. So you know, strategizing as we develop these products and making sure that we're within certain areas to accelerate commercialization within regulatory is really important, and the team's done a very good job there. So that launch will really help us get traction on commercialization. All right. Thanks very much.

[Operator]

Thank you. Our next question comes from the line of John McNulty, McNulty with BMO. Your line is open.

[Bhavesh Lodaya, Senior Research Analyst at BMO Capital Markets]

Hi, good morning. This is Bhavesh for John. Just one question for me. So recently we saw that an oral dose GLP-1 drug was approved by the FDA. Can you speak to whether your life sciences platform has exposure to this line of the oral dose medication? And if yes, help us think about the potential for demand pull for this one. Thank you.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Alessandra, you want to comment on that?

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Yeah, sure. So, thinking about looking at the GLP-1, both the oral GLP-1 and oral biologics present a significant opportunity for Ashland. Our VP&D portfolio is especially relevant to this space as is our tablet coatings. When you think about the high, you know, high volume, high throughput needed for the types of demand that we're talking about, our high solids coatings, Aquarius Genesis, is also especially relevant for that.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

Currently, we have multiple active projects with some of the biggest pharma players in this space. In addition, we are doubling down on innovation in this area as we have identified a pipeline with over 80 emerging opportunities. And one of those innovations is our sodium caprate, which is a formulation enhancer that we target to launch over the summer.

[Alessandra Faccin Assis, SVP, Life Sciences and Intermediates at Ashland Inc.]

We already have received multiple customer sample requests and are working with several customers on that upcoming launch for this summer. So in summary, yes, GLP-1 formulations and the overall biologics represent a significant opportunity for Ashland. And our VP&D portfolio is of particular interest and as well, our new innovation programs.

[Bhavesh Lodaya, Senior Research Analyst at BMO Capital Markets]

Thank you.

[Operator]

Please stand by for our next question. Our next question comes from the line of Paul Vandenberg with Deutsche Bank. Your line is open.

[David Begleiter, Managing Director and Senior Equity Research Analyst at Deutsche Bank]

Hi, this is Dave Begleiter. Guillermo, you mentioned improving momentum in January. Can you talk about... And you do have some easy comps in Q2 across all three segments. So what does that mean for volume growth in those segments year-over-year?

[Guillermo Novo, Chair and CEO at Ashland Inc.]

You know, as we said, it'll be in line with what we had been forecasting. So personal care and life science, it's in the low single digits, and anything over that, we need to grow through some of the innovation. But we're—the order book is in line with our forecasts or our updated forecasts on what we're doing, so no big surprise there.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Same thing, you know, in SA, we're seeing the same thing. All the orders are coming in line. It's gonna be still challenged versus prior year because of China and some of the dynamics there. But within North America, Europe actually did very well for us. But I'd be—you know, I'd just be cautious. In SA, I'm not-...

[Guillermo Novo, Chair and CEO at Ashland Inc.]

going to really be positive or negative until we start getting closer to the bigger season. You know, these months don't mean as much in terms of what the full year is gonna come out. But for us, it's reassuring that January and the order book for February remains strong.

[David Begleiter, Managing Director and Senior Equity Research Analyst at Deutsche Bank]

Got it. In terms of the first half outages, how much of that $20 million plus do you get back in the second half of the year?

[Guillermo Novo, Chair and CEO at Ashland Inc.]

So we're working. We were gonna start working on the first part this quarter, but obviously that's getting delayed. Most of the issues were in the VP&D side in the Q1. Now that's why we're being a little bit more cautious. In theory, all of it is recoverable. The issue is when we want to recover it. So in VP&D, as William said, if we start at the end of the... And again, we're working, just to be clear, we're working to get it done as quickly as possible. We're expecting by, you know, the second half of the quarter, if we can get every week counts in terms of being able to improve our performance.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

So we've given ourselves some room there, in terms of the timing of when the unit will come on stream. But in our current forecast, it would be at the end of this quarter, which means we, as William said, we need to get most of that in the third quarter to impact this year. If not, if we do it in the fourth quarter, we'll recover it, but it'll flow into next year. So VP&D is an issue of getting the plant started, and then we can start getting the recovery of the absorption part. There are other costs, this especially around the storm, that are costs, energy costs that went up, and other repair costs with the freeze.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

I mean, not huge items, but items that have added up that we, that are gonna be more of a headwind. I think, as William said, two-thirds was absorption, 1/3 was cost. ATC is a choice. I think there, I'll be honest, I'm being very conservative, until we start seeing the season. We can always produce more whenever we want. I think this is a time of being prudent like we've done in other years. I'm very open of the balance sheet is something we need to look at, not just the P&L. We're not here just to hit one quarter results. This is a long term. We wanna do the right thing for the long term for the company.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

I think having a solid balance sheet, cash is king in a lot of these times of uncertainty, so we're gonna be a little bit more prudent. Again, if the season starts in March, that's probably when we would start making that decision. That means, again, that third quarter would be the critical quarter to rebuild the inventory.

[David Begleiter, Managing Director and Senior Equity Research Analyst at Deutsche Bank]

Thank you.

[Operator]

Thank you. Please stand by for our next question. Our next question comes from the line of Lawrence Alexander with Jefferies. Your line is open.

[Dan Rizzo, VP and Research Analyst at Jefferies]

Hi, this is Dan Rizzo for Lawrence. Thanks for taking my question. I was just—you know, you mentioned injectable launches and some of the new products, but just in general, I was wondering how long it takes a new product to ramp up to mid-cycle and then to peak sales, you know, just the timeframe?

[Guillermo Novo, Chair and CEO at Ashland Inc.]

It really varies by product line, but like we've said before, we're talking about everything we're doing. We wanna show, we wanna be very transparent, but reality, when these approvals come, they take time. If you go into the example, I would use a personal care, if customer X approves and it's a big brand, you know, they have in next, you know, 2027, I'm gonna reformulate.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

They approve now, but they launch in 2027 or 2026. They have dates on which they're doing. So our issue is make sure that we get the approvals, get everything ready before those launch dates. So we have roadmaps of when all these big brands are doing reformulation. We're working with our customers, and it's very important to hit those dates. Coatings is a little bit different.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

They can move a little bit more quickly, but again, they do a lot more testing. You know, they like it, they want it, but then they, some testing. So everybody has their nuance on how they work through. I would say the pharma is really partnering with them across their entire development, you know, cycle. So when they're ready to launch, you know, you go with them. But that's up depending if it's a generic, it could be 3-5 years. If it's a new drug, you know, you're in a longer pipeline. But we. That's the importance of having strong pipelines.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

What we've been doing in last years is built the pipelines, and that's what I'm excited about, that the technologies have now advanced, that they are in pipelines, we're getting validation. So it's really now going into, you know, our customers thinking, "We like these technologies. When are we gonna commercialize? Are we gonna commercialize this year, next year?" So it's a very different conversation as we move forward.

[Dan Rizzo, VP and Research Analyst at Jefferies]

Great. Thank you very much.

[Operator]

Thank you. Please stand by for our next question. Our next question comes from the line of Eric Boyce with Evercore. Your line is open.

[Eric Boyce, Equity Analyst at Evercore]

Thank you, and good morning. First, could you please provide an update on the contract price renewals that I think recently occurred around year-end, and how might, when those renewals go into effect, impact kind of price by segment in fiscal 2Q and for the balance of the year? Thanks.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

I think most of them, as Alessandra said, I think are mostly completed, or in final form. In pharma, it's mostly in Europe, and that's pretty advanced. So I think we're mostly done on there. I think, you know, the only ones, and, Gustavo, you can comment, in some regions, we have some now that are ongoing, Middle East, Africa, India, that are going now in the March, April timeframe. But most of the other ones are already done. But, Gustavo, any other contracts?

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

No. I mean, in the case of coating some of the large contracts, I would say North America and Europe, they just follow the calendar year, so those contracts are done, and I guess the results are as expected. Other areas in Asia, actually, the contracts were finalized in October. That's actually their cycle, October to October.

[Dago Caceres, SVP, Specialty Additives at Ashland Inc.]

We're only missing areas in Middle East, Africa, India, where we have a couple of strategic customers, and that will be April. So the contracts are finalized, we are valid, starting in early April. So that's the only one that is remaining. We're negotiating as we speak, and we expect to finalize some of those contracts pretty soon.

[Eric Boyce, Equity Analyst at Evercore]

Okay, great. And then as a follow-up, are any further asset sales, maybe in additives or intermediates, under consideration, either now or previously? And if not, and I suspect not, could you remind on why that may not make strategic sense? Thank you.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

So, we've done a lot of the changes already, in terms of selling the parts of the business that we didn't see fit, and most of them were standalone parts. We've consolidated some of the product lines that we didn't like, that we couldn't sell, and we have the asset that we can repurpose. That was more of our CMC asset in the U.S. and MC asset in Europe, and I think the timing of that was very good. We shut down a plant and consolidated. So all those actions are done. We're gonna do some more optimization.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

It's more around the productivity, where it would be more units within a plant, you know, that we're streamlining so that we can, instead of having a lot of equipment and not having them utilized, really focus and invest on the ones that are higher end, that can give us the best cost, but that wouldn't involve a sale.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

The rest of the business is integrated, and this is the part, you know, everybody, do you wanna just be lifesaver? The same plants that supply across multiple areas. Frankly speaking, just from my past experience with other companies, been all this artificially cutting up things hasn't worked out that well. So for us, we like the portfolio we have. It is integrated.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

We feel that between the high quality, pharma, personal care, and architectural coatings being, you know, it is being impacted, but it tended historically to be more consumer oriented. We see that stability in North America and Europe. I would say what's happening in Asia is a little bit different than than norm. We like those. We think, you know, focusing on additives, low cost and use, high value and use, can allow us the differentiation, and we can leverage the scale across the asset. So we think that integration is critical, and we don't think there's value in artificially, you know.

[Operator]

Thank you. Please stand by for our next question. Our next question comes from the line of Steven Haynes with Morgan Stanley. Your line is open.

[Stephen Haynes, VP in Equity Research at Morgan Stanley]

Hey, good morning, and thanks for squeezing me in here. Just wanted to ask on your, your execute slide, you got the $30 million, I think, of restructuring, and then there's the additional productivity that currently says still TBD. I've been hopping between calls, so apologies if I missed this, but have you kind of outlined the timeline and maybe how to think about, like, what that uplift could look like relative to the cost savings that you've already kind of disclosed and quantified for us all? Thank you.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

So we're working through that. We've done a lot of network optimization as we looked at, for example, in our acetylene chain between the two plants in Texas City, Calvert City. We had units that overcapacity, they've been in overcapacity for a long time. We've consolidated, shut some down, put all our volume on the more productive units, so that's driving our costs and productivity.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

As we looked at across other production units, what we're finding is that there is an opportunity to continue to drive. So, again, if we have, as I think, a simple example, core reactors, and they're underutilized, can we concentrate on one or two, put our volumes there, invest in those reactors to get more throughputs, reduce cycle times, those kinds of things we're doing.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

So some of them we're already doing. We're planning out how much we can get. Others, we create the productivity, but the benefit will come as volumes pick up. So the issue is, you know, productivity, you can't wait to have the volume to do it. You do it, and as the volume comes, you're just gonna be able to leverage it, but it allows us to reduce costs as we do some of these changes.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

So that's the part that we're trying to calculate. And obviously, you know, this, the storm and all that, right now, our engineers and everybody's have been a little bit distracted over the last few weeks, but we continue to work, and throughout the year, we will be defining that.Our view is gonna be continue to do what we're doing now, be very transparent as to the goals that we wanna commit to. You know, tell you what we're gonna do, and then we'll be held accountable to deliver on those targets.

[Stephen Haynes, VP in Equity Research at Morgan Stanley]

Understood. Thank you.

[Operator]

Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Guillermo Novo for closing remarks.

[Guillermo Novo, Chair and CEO at Ashland Inc.]

Well, thank you everyone for participating in the call. We really appreciate it. We're very excited of, you know, that the portfolio is in difficult times, performing as we expected. We will continue to drive our strategy. We believe that that's gonna be the best way to generate significant valuation and create optionality for us to really drive our strategy of profitable growth. So we look forward to seeing all of you in the near future and having more discussions on Ashland. Thank you for your interest.

[Operator]

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

Participants

Executives

• Alessandra Faccin Assis, SVP, Life Sciences and Intermediates
• Dago Caceres, SVP, Specialty Additives
• Guillermo Novo, Chair and CEO
• Jim Minicucci, SVP, Personal Care
• Sandy Klugman, Director of Investor Relations
• William Whitaker, CFO

Analysts

• Bhavesh Lodaya, Senior Research Analyst at BMO Capital Markets
• Chris Parkinson, Managing Director and Senior Research Analyst at Wolfe Research
• Dan Rizzo, VP and Research Analyst at Jefferies
• David Begleiter, Managing Director and Senior Equity Research Analyst at Deutsche Bank
• Eric Boyce, Equity Analyst at Evercore
• John Roberts, Managing Director and Senior Equity Research Analyst at Mizuho
• Josh Spector, Director of Equity Research at UBS
• Michael Sison, Managing Director at Wells Fargo
• Mike Harrison, Managing Director and Senior Chemicals Analyst at Seaport Research Partners
• Stephen Haynes, VP in Equity Research at Morgan Stanley