ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
MANAGEMENT’S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and the accompanying Notes to Condensed Consolidated Financial Statements herein.
BUSINESS OVERVIEW
Ashland profile
Ashland is a global additives and specialty ingredients company with a conscious and proactive mindset for sustainability. The Company serves customers in a wide range of consumer and industrial markets, including architectural coatings, construction, energy, food and beverage, personal care and pharmaceutical. With approximately 2,900 employees worldwide, Ashland serves customers in more than 100 countries.
Ashland’s sales generated outside of North America were 73% for both the three and six months ended March 31, 2026, and 72% for both the three and six months ended March 31, 2025. Sales by region expressed as a percentage of total consolidated sales were as follows:
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Three months ended |
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Six months ended |
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March 31 |
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|
March 31 |
|
Sales by Geography |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
North America(a) |
|
|
27 |
% |
|
|
28 |
% |
|
|
27 |
% |
|
|
28 |
% |
Europe(a) |
|
|
37 |
% |
|
|
38 |
% |
|
|
36 |
% |
|
|
36 |
% |
Asia Pacific |
|
|
26 |
% |
|
|
25 |
% |
|
|
27 |
% |
|
|
26 |
% |
Latin America & other |
|
|
10 |
% |
|
|
9 |
% |
|
|
10 |
% |
|
|
10 |
% |
|
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)Ashland includes only U.S. and Canada in its North America designation and includes Europe, the Middle East and Africa in its Europe designation.
Reportable segments
Ashland’s reportable segments include Life Sciences, Personal Care, Specialty Additives and Intermediates. Unallocated and other includes corporate governance activities and certain legacy matters. The contribution to sales by each reportable segment expressed as a percentage of total consolidated sales were as follows:
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Three months ended |
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Six months ended |
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March 31 |
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March 31 |
|
Sales by Reportable Segment |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Life Sciences |
|
|
36 |
% |
|
|
35 |
% |
|
|
36 |
% |
|
|
36 |
% |
Personal Care |
|
|
31 |
% |
|
|
31 |
% |
|
|
31 |
% |
|
|
30 |
% |
Specialty Additives |
|
|
28 |
% |
|
|
28 |
% |
|
|
27 |
% |
|
|
28 |
% |
Intermediates |
|
|
5 |
% |
|
|
6 |
% |
|
|
6 |
% |
|
|
6 |
% |
|
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
KEY DEVELOPMENTS
Uncertainty related to tariffs and global trade policy changes
The three months ended March 31, 2026, saw continuing regulatory activity involving notable changes to U.S. and foreign trade policy, leading to significant uncertainty in the macroeconomic and geopolitical environments. Beginning in the second quarter of fiscal 2025, the U.S. instituted a series of tariffs on imports from China, the E.U., India, and other countries which has resulted in the imposition of retaliatory measures against U.S. goods. As a global business, we are exposed to risks associated with tariffs and other trade conflicts. Such risks may include, but are not limited to, (i) changes to and strains on the global supply chain and our ability to source materials; (ii) increased sourcing and manufacturing costs; (iii) decreased demand for Ashland’s products in affected markets; and (iv) other impacts on Ashland’s ability to operate optimally.
The ultimate impact of these recent tariffs and trade disputes on general economic conditions, and on Ashland’s business, financial performance, and results of operations, is uncertain and depends on various factors, including the duration of the tariffs and disputes, negotiations between the U.S. and affected countries, whether additional or incremental tariffs are imposed and the responses of other countries or regions, and the potential for trade restriction-related exemptions including recent tariff reversal developments. Given the dynamic nature of the situation, Ashland continues to monitor tariff developments as well as the broader global trade landscape and is working to mitigate potential impacts on its business.
Uncertainty relating to the ongoing United States, Israel/Iran, Ukraine/Russia and Israel/Hamas conflicts and other political events
Business disruptions, including those related to the ongoing conflicts between the United States, Israel/Iran, Ukraine/Russia and Israel/Hamas, as well as the recent political events in Venezuela, continue to impact businesses around the globe. While it is impossible to predict the effects of the conflicts such as possible escalating geopolitical tensions (including the imposition of existing and additional sanctions by the U.S. and the European Union on Russia), worsening macroeconomic and general business conditions, supply chain interruptions and unfavorable energy markets, the impact could be material. Ashland is closely monitoring these situations and maintains business continuity plans that are intended to continue operations or mitigate the effects of events that could disrupt its business.
Ashland does not have manufacturing operations in Iran, Israel, Russia, Ukraine, Venezelua or Belarus. Ashland sells (or previously sold) additives and specialty ingredients to manufacturers in these countries for their use in pharmaceuticals, personal care, and coatings applications. Sales to Russia and Belarus were previously limited and our products were primarily used in products and applications that are essential to the population's well-being and currently support our customers' humanitarian efforts. We have sales controls in place to ensure that future potential sales into the region are only to support critical pharmaceutical or personal hygiene products which are essential for the general population and in accordance with any applicable sanctions. Sales to Israel, Ukraine, Russia, and Belarus represent less than 1% of total consolidated sales and less than 1% of total consolidated assets (related to accounts receivable). Ashland has no sales activity with Iran.
Other items
Restructuring programs
As previously announced, Ashland initiated a $30 million pre-tax restructuring plan to offset the impact from the Nutraceuticals business sale completed in fiscal 2024, the Avoca business sale completed in fiscal 2025, and other portfolio optimization actions, which were expected to be realized 50 percent in fiscal 2025 and 50 percent in fiscal 2026. See Note D of the Notes to Condensed Consolidated Financial Statements for severance reserves associated with this program.
Ashland also executed its portfolio optimization actions to further strengthen Ashland’s resilience and improve margins and returns. These previously announced actions include initiatives focused on carboxymethylcellulose ("CMC"), methylcellulose ("MC"), the Nutraceuticals business sale and the Avoca business sale (collectively, "Portfolio Optimization"). Overall, these Portfolio Optimization actions reduced sales and Adjusted EBITDA by approximately $2 million and zero, respectively, for the three months ended March 31, 2026, and approximately $11 million and $1 million, respectively, for the six months ended March 31, 2026, compared to the prior year periods. Operating income (loss) was positively impacted by $2 million and $4 million for the three and six months ended March 31, 2026, respectively, compared to the prior year periods.
Ashland is also advancing a multi-year manufacturing network optimization to improve operational cost and strengthen its competitive position. This optimization plan is expected to generate pre-tax savings of $50 million to $55 million with $60 million being achievable as market conditions improve, particularly within China. Ashland realized savings of approximately $10 million and $15 million during the three and six months ended March 31, 2026, compared to the prior year periods.
The following table summarizes the expense impact of these actions:
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Three months ended |
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Six months ended |
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March 31 |
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March 31 |
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(In millions) |
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Accelerated depreciation(a) |
$ |
— |
|
|
$ |
13 |
|
|
$ |
3 |
|
|
$ |
13 |
|
Restructuring, separation and other costs(b) |
|
3 |
|
|
|
8 |
|
|
|
7 |
|
|
|
11 |
|
Other plant optimization costs(a) |
|
10 |
|
|
|
6 |
|
|
|
15 |
|
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|
9 |
|
|
$ |
13 |
|
|
$ |
27 |
|
|
$ |
25 |
|
|
$ |
33 |
|
|
|
|
|
|
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|
(a)Recorded within the cost of sales caption within the Statements of Condensed Consolidated Comprehensive Income (Loss).
(b)Recorded within the selling, general and administrative expense caption within the Statements of Condensed Consolidated Comprehensive Income (Loss).
RESULTS OF OPERATIONS – CONSOLIDATED REVIEW
Consolidated review
Overview
Key financial results included the following:
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Three months ended |
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Six months ended |
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March 31 |
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March 31 |
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(In millions except per share data) |
|
2026 |
|
|
2025 |
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|
Change |
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|
2026 |
|
|
2025 |
|
|
Change |
|
Net income (loss) |
|
$ |
16 |
|
|
$ |
31 |
|
|
$ |
(15 |
) |
|
$ |
4 |
|
|
$ |
(135 |
) |
|
$ |
139 |
|
Diluted earnings per share (EPS) net income (loss)(a) |
|
|
0.34 |
|
|
|
0.65 |
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|
|
(0.31 |
) |
|
|
0.08 |
|
|
|
(2.88 |
) |
|
|
2.96 |
|
Income (loss) from continuing operations |
|
|
15 |
|
|
|
30 |
|
|
|
(15 |
) |
|
|
1 |
|
|
|
(136 |
) |
|
|
137 |
|
Diluted EPS income (loss) from continuing operations(a) |
|
|
0.32 |
|
|
|
0.63 |
|
|
|
(0.31 |
) |
|
|
0.02 |
|
|
|
(2.91 |
) |
|
|
2.93 |
|
Operating income (loss) |
|
|
39 |
|
|
|
51 |
|
|
|
(12 |
) |
|
|
33 |
|
|
|
(128 |
) |
|
|
161 |
|
EBITDA(b) |
|
|
84 |
|
|
|
100 |
|
|
|
(16 |
) |
|
|
124 |
|
|
|
(30 |
) |
|
|
154 |
|
Adjusted EBITDA(b) |
|
|
98 |
|
|
|
108 |
|
|
|
(10 |
) |
|
|
156 |
|
|
|
169 |
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|
|
(13 |
) |
Adjusted Diluted EPS from Continuing Operations Excluding Intangibles Amortization Expense(b) |
|
|
0.91 |
|
|
|
0.99 |
|
|
|
(0.08 |
) |
|
|
1.17 |
|
|
|
1.26 |
|
|
|
(0.09 |
) |
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|
(a)As a result of the loss from continuing operations attributable to Ashland during the six months ended March 31, 2025, the effect of the share-based awards convertible to common stock would be antidilutive and have been excluded from the diluted EPS calculation.
(b)These are non-GAAP financial measures. See "Use of Non-GAAP Financial Measures" section below for reconciliations to U.S. GAAP.
Business results
Ashland's net income of $16 million ($0.34 diluted EPS) and $31 million ($0.65 diluted EPS) included income from discontinued operations of $1 million ($0.02 diluted EPS) and $1 million ($0.02 diluted EPS) in the three months ended March 31, 2026 and 2025, respectively.
Results for Ashland’s continuing operations, diluted EPS from continuing operations and operating income for the three months ended March 31, 2026 and 2025, included certain key items that were excluded to arrive at Adjusted EBITDA and are quantified in the “Use of Non-GAAP Financial Measures” section below. These pre-tax key items totaled expense of $20 million and $6 million for the three months ended March 31, 2026 and 2025, respectively, impacting continuing operations. Continuing operations was also impacted by favorable tax specific key items for discrete tax items totaling zero and $1 million for the three months ended March 31, 2026 and 2025, respectively.
Excluding these key items, the decrease in continuing operations, diluted EPS from continuing operations and operating income was primarily driven by softer pricing, the Calvert City startup delay and weather-related operational disruptions during the quarter, partially offset by favorable foreign exchange currency and lower selling, general and administrative expenses. In addition, diluted EPS from continuing operations was also impacted by common stock reductions from repurchases of Ashland common stock over the last twelve months. These common stock repurchases reduced the number of weighted average shares from 47 million diluted shares at March 31, 2025 to 46 million diluted shares at March 31, 2026.
Ashland’s Adjusted EBITDA was $98 million for the three months ended March 31, 2026 compared to $108 million for the three months ended March 31, 2025 (see U.S. GAAP reconciliation under “Use of Non-GAAP Financial
Measures” below). The $10 million decrease in Adjusted EBITDA was primarily driven by softer pricing, the Calvert City startup delay and weather-related operational disruptions during the quarter, offset by favorable foreign exchange currency and lower selling, general and administrative expenses. Adjusted Diluted EPS from Continuing Operations (non-GAAP) Excluding Intangibles Amortization Expense was also impacted by these factors along with the impact of common stock repurchases noted above.
For further information on the items reported above, see the discussion in the comparative Statements of Condensed Consolidated Comprehensive Income (Loss) caption review analysis.
Statements of Condensed Consolidated Comprehensive Income (Loss) – caption review
A comparative analysis of the Statements of Condensed Consolidated Comprehensive Income (Loss) by caption is provided as follows:
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Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Sales |
|
$ |
482 |
|
|
$ |
479 |
|
|
$ |
3 |
|
|
$ |
868 |
|
|
$ |
884 |
|
|
$ |
(16 |
) |
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|
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|
The following table provides a reconciliation of the change in sales:
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|
Three months ended |
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|
Six months ended |
|
(In millions) |
|
March 31, 2026 |
|
|
March 31, 2026 |
|
Sales change |
|
|
|
|
|
|
Price/mix |
|
$ |
(11 |
) |
|
$ |
(18 |
) |
Volume |
|
|
— |
|
|
|
(12 |
) |
Avoca business |
|
|
(2 |
) |
|
|
(11 |
) |
Foreign currency exchange |
|
|
16 |
|
|
|
25 |
|
Change in sales |
|
$ |
3 |
|
|
$ |
(16 |
) |
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Sales for the three months ended March 31, 2026 increased $3 million compared to the three months ended March 31, 2025. The increase was driven by favorable foreign currency exchange which was partially offset by unfavorable pricing. Portfolio Optimization initiatives had a negative $2 million impact on sales in the three months ended March 31, 2026.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Sales for the six months ended March 31, 2026 decreased $16 million compared to the six months ended March 31, 2025. The decrease was driven by unfavorable pricing, lower volume and the impact of the Avoca business sale, which was partially offset by favorable foreign currency exchange. Portfolio Optimization initiatives had a negative $11 million impact on sales in the six months ended March 31, 2026.
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|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Cost of sales |
|
$ |
335 |
|
|
$ |
332 |
|
|
$ |
3 |
|
|
$ |
616 |
|
|
$ |
626 |
|
|
$ |
(10 |
) |
Gross profit as a percent of sales |
|
|
30.5 |
% |
|
|
30.7 |
% |
|
|
|
|
|
29.0 |
% |
|
|
29.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides a reconciliation of the change in cost of sales:
|
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|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
(In millions) |
|
March 31, 2026 |
|
|
March 31, 2026 |
|
Cost of sales change |
|
|
|
|
|
|
Avoca business |
|
$ |
(2 |
) |
|
$ |
(11 |
) |
Price/mix |
|
|
(5 |
) |
|
|
(8 |
) |
Volume |
|
|
— |
|
|
|
(6 |
) |
Operating costs |
|
|
1 |
|
|
|
1 |
|
Foreign currency exchange |
|
|
9 |
|
|
|
14 |
|
Change in cost of sales |
|
$ |
3 |
|
|
$ |
(10 |
) |
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Cost of sales for the three months ended March 31, 2026, increased $3 million compared to the three months ended March 31, 2025. The increase was primarily driven by a $10 million negative combined impact from the Calvert City startup delay and weather-related operational disruptions during the quarter as well as unfavorable foreign exchange currency, partially offset by favorable price/mix. The three months ended March 31, 2026, operating costs were affected by $10 million of other plant optimization costs while the three months ended March 31, 2025 included $13 million of accelerated depreciation for product line optimization activities at manufacturing facilities within Life Sciences reportable segment and $6 million of other plant optimization costs. Gross profit as a percentage of sales decreased 0.2% primarily due to higher operating costs compared to the three months ended March 31, 2025.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Cost of sales for the six months ended March 31, 2026, decreased $10 million compared to the six months ended March 31, 2025. The decrease was primarily driven by the impact of the Avoca business sale, favorable price/mix and lower sales volume, partially offset by unfavorable foreign exchange currency and unfavorable operating costs. The six months ended March 31, 2026, operating costs were affected by $3 million of accelerated depreciation for product line optimization activities at manufacturing facilities within Specialty Additives reportable segment and $15 million of other plant optimization costs while the six months ended March 31, 2025 included $13 million of accelerated depreciation for product line optimization activities at manufacturing facilities within Life Sciences reportable segment and $9 million of other plant optimization costs. Gross profit as a percentage of sales decreased 0.2% primarily due to lower sales volume, higher operating costs and other plant optimization costs compared to the six months ended March 31, 2025.
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|
|
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|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Selling, general and administrative expense |
|
$ |
79 |
|
|
$ |
85 |
|
|
$ |
(6 |
) |
|
$ |
165 |
|
|
$ |
162 |
|
|
$ |
3 |
|
As a percent of sales |
|
|
16.4 |
% |
|
|
17.7 |
% |
|
|
|
|
|
19.0 |
% |
|
|
18.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Selling, general and administrative expense for the three months ended March 31, 2026, decreased $6 million compared to the three months ended March 31, 2025, with expenses as a percent of sales decreasing 1.3%. Key drivers of the fluctuation in selling, general and administrative expense compared to the three months ended March 31, 2025, were:
•$2 million in net environmental-related expenses during both the three months ended March 31, 2026 and 2025 (see Note L of the Notes to Condensed Consolidated Financial Statements for more information);
•Expense of $3 million and $8 million comprised of key items for severance, lease abandonment and other restructuring costs during the three months ended March 31, 2026 and 2025, respectively; and
•Increased income associated with company-owned life insurance contracts and realized cost reductions associated with restructuring actions partially offset by increased bad debt expense, higher variable compensation expense and lower transition services income.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Selling, general and administrative expense for the six months ended March 31, 2026, increased $3 million compared to the six months ended March 31, 2025, with expenses as a percent of sales increasing 0.7%. Key drivers of the fluctuation in selling, general and administrative expense compared to the six months ended March 31, 2025 were:
•$12 million and $3 million in net environmental-related expenses during the six months ended March 31, 2026 and 2025, respectively (see Note L of the Notes to Condensed Consolidated Financial Statements for more information);
•Expense of $7 million and $11 million comprised of key items for severance, lease abandonment and other restructuring costs during the six months ended March 31, 2026 and 2025, respectively; and
•Higher variable compensation expense, increased bad debt expense, lower transition services income and unfavorable currency exchange partially offset by increased income associated with company-owned life insurance contracs and realized cost reductions, including the Avoca business sale, associated with restructuring actions.
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|
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|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Research and development expense |
|
$ |
14 |
|
|
$ |
14 |
|
|
$ |
— |
|
|
$ |
27 |
|
|
$ |
28 |
|
|
$ |
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Research and development expense is generally consistent between the three months ended March 31, 2026 and 2025.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Research and development expense is generally consistent between the six months ended March 31, 2026 and 2025.
|
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|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Intangibles amortization expense |
|
$ |
15 |
|
|
$ |
15 |
|
|
$ |
— |
|
|
$ |
30 |
|
|
$ |
32 |
|
|
$ |
(2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Intangibles amortization expense is generally consistent between the three months ended March 31, 2026 and 2025.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
The lower intangibles amortization expense in the six months ended March 31, 2026, is driven by the impact of amortization related to the divested Avoca business in the six months ended March 31, 2025.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Equity and other income |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Equity and other income was zero in both three months ended March 31, 2026 and 2025.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Equity and other income is generally consistent between the six months ended March 31, 2026 and 2025.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Income (loss) on divestitures, net |
|
$ |
— |
|
|
$ |
18 |
|
|
$ |
(18 |
) |
|
$ |
2 |
|
|
$ |
(165 |
) |
|
$ |
167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Income (loss) on divestitures, net for the three months ended March 31, 2025, primarily relates to a pre-tax gain on sale of $8 million associated with the Avoca business and a pre-tax gain on sale of excess corporate real estate of $11 million, partially offset by $1 million adjustment related to the Nutraceuticals business sale completed in fiscal 2024. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Income (loss) on divestitures, net for the six months ended March 31, 2026, primarily relates to a pre-tax gain on sale of excess corporate real estate while the three months ended March 31, 2025, primarily relates to a $183 million impairment charge, a pre-tax gain on sale of $8 million associated with the Avoca business and a pre-tax gain on sale of excess corporate real estate of $11 million, partially offset by $1 million adjustment related to the Nutraceuticals business sale completed in fiscal 2024. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Net interest and other expense (income) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
$ |
15 |
|
|
$ |
15 |
|
|
$ |
— |
|
|
$ |
30 |
|
|
$ |
30 |
|
|
$ |
— |
|
Interest income |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
— |
|
|
|
(3 |
) |
|
|
(3 |
) |
|
|
— |
|
Investment securities (income) expense |
|
|
2 |
|
|
|
(6 |
) |
|
|
8 |
|
|
|
(5 |
) |
|
|
7 |
|
|
|
(12 |
) |
Other financing costs |
|
|
2 |
|
|
|
3 |
|
|
|
(1 |
) |
|
|
4 |
|
|
|
5 |
|
|
|
(1 |
) |
|
|
$ |
18 |
|
|
$ |
11 |
|
|
$ |
7 |
|
|
$ |
26 |
|
|
$ |
39 |
|
|
$ |
(13 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Net interest and other expense increased by $7 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025. Interest expense and interest income are generally consistent between the three months ended March 31, 2026 and 2025. Investment securities expense of $2 million and income of $6 million included realized losses of $5 million and gains of $3 million for the three months ended March 31, 2026 and 2025, respectively, and was the primary change. See Note E of the Notes to Condensed Consolidated Financial Statements for more information.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Net interest and other expense decreased by $13 million during the six months ended March 31, 2026, compared to the six months ended March 31, 2025. Interest expense and interest income are generally consistent between the six months ended March 31, 2026 and 2025. Investment securities income of $5 million and expense of $7 million included realized losses of $3 million and $14 million for the six months ended March 31, 2026 and 2025, respectively, and was the primary change. See Note E of the Notes to Condensed Consolidated Financial Statements for more information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Other net periodic benefit loss |
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
3 |
|
|
$ |
(1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Other net periodic benefit loss for the three months ended March 31, 2026, primarily included interest cost of $3 million, which was partially offset by expected return on plan assets of $2 million. Other net periodic benefit loss for the three months ended March 31, 2025, primarily included interest cost of $4 million, which was partially offset by expected return on plan assets of $3 million. See Note K of the Notes to Condensed Consolidated Financial Statements for more information.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Other net periodic benefit loss for the six months ended March 31, 2026, primarily included interest cost of $7 million, which was partially offset by expected return on plan assets of $5 million. Other net periodic benefit loss for the six months ended March 31, 2025, primarily included interest cost of $7 million and a $1 million curtailment loss, which was partially offset by expected return on plan assets of $5 million. See Note K of the Notes to Condensed Consolidated Financial Statements for more information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Income tax expense (benefit) |
|
$ |
5 |
|
|
$ |
9 |
|
|
$ |
(4 |
) |
|
$ |
4 |
|
|
$ |
(34 |
) |
|
$ |
38 |
|
Effective tax rate |
|
|
25 |
% |
|
|
23 |
% |
|
|
|
|
|
80 |
% |
|
|
20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Ashland’s effective tax rate in any interim period is subject to adjustments related to discrete items and the mix of domestic and foreign operating results. The effective tax rate was 25% for the three months ended March 31, 2026,
and was primarily impacted by jurisdictional income mix and a net $1 million from favorable tax discrete items primarily related to equity compensation adjustments and changes in uncertain tax positions.
The effective tax rate was 23% for the three months ended March 31, 2025, and was primarily impacted by jurisdictional income mix.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
The effective tax rate was 80% for the six months ended March 31, 2026, and was primarily impacted by jurisdictional income mix and a net $1 million from unfavorable tax discrete items primarily related to equity compensation adjustments and changes in uncertain tax positions.
The effective tax rate was 20% for the six months ended March 31, 2025, and was primarily impacted by jurisdictional income mix as well as a net $7 million from unfavorable tax discrete items primarily related to final regulations issued in the U.S. during the six months ended March 31, 2025, impacting the recognition of deferred taxes on certain unrealized foreign exchange gains and losses.
Adjusted income tax expense (benefit)
Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income (loss) and/or operating income (loss) which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends. Tax specific key items are defined as the financial effects from tax specific financial transactions, tax law changes or other matters that fall within the definition of key items as previously described. The effective tax rate, excluding key items, which is a non-GAAP financial measure, has been prepared to illustrate the ongoing tax effects of Ashland’s operations. Management believes investors and analysts use this financial measure in assessing Ashland's business performance and that presenting this non-GAAP financial measure on a consolidated basis assists investors in better understanding Ashland’s ongoing business performance enhancing their ability to compare period-to-period financial results.
The effective tax rate during the three and six months ended March 31, 2025 was significantly impacted by the following tax specific key items:
•Uncertain tax position – Includes the impact from the settlement of uncertain tax positions with various tax authorities; and
•Other and tax reform related activity – Includes miscellaneous state and foreign statute adjustments.
The following table is a calculation of the effective tax rate, excluding these key items.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
March 31 |
|
|
March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Income (loss) from continuing operations before income taxes |
|
$ |
20 |
|
|
$ |
39 |
|
|
$ |
5 |
|
|
$ |
(170 |
) |
Key items (pre-tax)(a) |
|
|
20 |
|
|
|
6 |
|
|
|
38 |
|
|
|
214 |
|
Adjusted income from continuing operations before income taxes |
|
$ |
40 |
|
|
$ |
45 |
|
|
$ |
43 |
|
|
$ |
44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense (benefit) |
|
$ |
5 |
|
|
$ |
9 |
|
|
$ |
4 |
|
|
$ |
(34 |
) |
Income tax rate adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
Tax effect of key items(b) |
|
|
5 |
|
|
|
2 |
|
|
|
9 |
|
|
|
52 |
|
Tax specific key items:(c) |
|
|
|
|
|
|
|
|
|
|
|
|
Uncertain tax positions |
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
4 |
|
Other and tax reform related activity |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
(11 |
) |
Total income tax rate adjustments |
|
|
5 |
|
|
|
3 |
|
|
|
9 |
|
|
|
45 |
|
Adjusted income tax expense |
|
$ |
10 |
|
|
$ |
12 |
|
|
$ |
13 |
|
|
$ |
11 |
|
Effective tax rate |
|
|
25 |
% |
|
|
23 |
% |
|
|
80 |
% |
|
|
20 |
% |
Effective Tax Rate, Excluding Key Items (Non-GAAP)(d) |
|
|
25 |
% |
|
|
25 |
% |
|
|
30 |
% |
|
|
25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)See Adjusted EBITDA reconciliation table disclosed in this Management’s Discussion and Analysis of Financial Condition and Results of Operation for a summary of the key items, before tax.
(b)The tax rate specific to the jurisdiction in which the key item originates is used to calculate the tax effect of key items.
(c)For additional information on the effect that these tax specific key items had on EPS, see the Adjusted Diluted EPS table disclosed in this Management’s Discussion and Analysis of Financial Condition and Results of Operation.
(d)Due to rounding conventions, the effective tax rate presented may not recalculate precisely based on the numbers disclosed within this table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Income from discontinued operations, net of income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water Technologies |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
— |
|
|
$ |
2 |
|
Performance Adhesives |
|
|
— |
|
|
|
(1 |
) |
|
|
1 |
|
|
|
— |
|
|
|
(1 |
) |
|
|
1 |
|
Valvoline |
|
|
1 |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
1 |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
$ |
1 |
|
|
$ |
1 |
|
|
$ |
— |
|
|
$ |
3 |
|
|
$ |
1 |
|
|
$ |
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
The activity for Performance Adhesives and Valvoline represents subsequent adjustments that were made in conjunction with tax related reserves.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
The activity for Water Technologies, Performance Adhesives and Valvoline represents represents subsequent adjustments that were made in conjunction with environmental and tax related reserves.
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Other comprehensive income (loss), net of tax |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized translation gain (loss) |
|
$ |
(12 |
) |
|
$ |
49 |
|
|
$ |
(61 |
) |
|
$ |
(10 |
) |
|
$ |
(45 |
) |
|
$ |
35 |
|
Unrealized gain on commodity hedges |
|
|
— |
|
|
|
2 |
|
|
|
(2 |
) |
|
|
— |
|
|
|
3 |
|
|
|
(3 |
) |
|
|
$ |
(12 |
) |
|
$ |
51 |
|
|
$ |
(63 |
) |
|
$ |
(10 |
) |
|
$ |
(42 |
) |
|
$ |
32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Total other comprehensive income (loss), net of tax, for the three months ended March 31, 2026, decreased $63 million compared to the three months ended March 31, 2025, primarily as a result of the following:
•For the three months ended March 31, 2026 and 2025, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in losses of $12 million and gains of $49 million, respectively. The fluctuations in unrealized translation gains and losses are primarily due to translating foreign subsidiary financial statements from local currencies to U.S. Dollars.
•For the three months ended March 31, 2026 and 2025, the change in commodity hedges is primarily due to the fluctuations of the market prices of the underlying commodities. Commodity hedges resulted in unrealized gains of zero and $2 million for the three months ended March 31, 2026 and 2025, respectively.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Total other comprehensive income (loss), net of tax, for the six months ended March 31, 2026, increased $32 million compared to the six months ended March 31, 2025, primarily as a result of the following:
•For the six months ended March 31, 2026 and 2025, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in losses of $10 million and $45 million, respectively. The fluctuations in unrealized translation gains and losses are primarily due to translating foreign subsidiary financial statements from local currencies to U.S. Dollars.
•For the six months ended March 31, 2026 and 2025, the change in commodity hedges is primarily due to the fluctuations of the market prices of the underlying commodities. Commodity hedges resulted in unrealized gains of zero and $3 million for the six months ended March 31, 2026 and 2025, respectively.
Use of Non-GAAP Financial Measures
Ashland has included within this document the following non-GAAP financial measures, on both a consolidated and reportable segment basis, which are not defined within U.S. GAAP and do not purport to be alternatives to net income (loss) or cash flows from operating activities as a measure of operating performance or cash flows:
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
EBITDA is defined as net income (loss), plus income tax expense (benefit), net interest and other expense, and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for discontinued operations and key items. Adjusted EBITDA margin is Adjusted EBITDA divided by sales.
Management believes the use of EBITDA and Adjusted EBITDA measures on a consolidated and reportable segment basis assists investors in understanding the ongoing operating performance by presenting comparable financial results between periods. Ashland believes that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes and certain other charges that are highly variable from year to year, EBITDA and Adjusted EBITDA provide Ashland’s investors with performance measures that reflect the impact to operations from trends in changes in sales, margin and operating expenses, providing a perspective not immediately apparent from net income (loss) and operating income (loss). The adjustments Ashland makes to derive the non-GAAP financial measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in net income (loss) and operating income (loss) and which Ashland does not consider to be the fundamental attributes or primary drivers of its business. EBITDA and Adjusted EBITDA provide disclosure on the same basis as that used by Ashland’s management to evaluate financial performance on a consolidated and reportable segment basis and provide consistency in our financial reporting, facilitate internal and external comparisons of Ashland’s historical operating performance and its segments and provide continuity to investors for comparability purposes.
Adjusted Diluted Earnings Per Share (EPS)
Adjusted Diluted EPS is defined as loss from continuing operations, adjusted for key items, net of tax, divided by the average outstanding diluted shares for the applicable period. The Adjusted Diluted EPS metric enables Ashland to demonstrate what effect key items have on an earnings per diluted share basis by taking loss from continuing operations, adjusted for key items after tax that have been identified in the Adjusted EBITDA table, and dividing by the average outstanding diluted shares for the applicable period. Ashland’s management believes this presentation is helpful to illustrate how the key items have impacted this metric during the applicable period.
Adjusted Diluted Earnings Per Share (EPS) Excluding Intangibles Amortization Expense
The Adjusted Diluted EPS Excluding Intangibles Amortization Expense is adjusted earnings per share adjusted for intangibles amortization expense net of tax, divided by the average outstanding diluted shares for the applicable period. The Adjusted Diluted EPS, Excluding Intangibles Amortization Expense metric enables Ashland to demonstrate the impact of non-cash intangibles amortization expense on EPS, in addition to the key items previously mentioned. Ashland’s management believes this presentation is helpful to illustrate how previous acquisitions impact applicable period results.
Free Cash Flow, Ongoing Free Cash Flow and Ongoing Free Cash Flow Conversion
Free Cash Flow is defined as operating cash flows less capital expenditures while Ongoing Free Cash Flow is operating cash flows less capital expenditures and certain other adjustments as applicable. Ongoing Free Cash Flow Conversion is Ongoing Free Cash flow divided by Adjusted EBITDA. These free cash flow metrics enable Ashland to provide a better indication of the ongoing cash being generated that is ultimately available for both debt and equity holders as well as other investment opportunities. Unlike cash flow provided by operating activities, Free Cash Flow and Ongoing Free Cash Flow include the impact of capital expenditures from continuing operations and other significant items impacting cash flow, providing a more complete picture of current and future cash generation. Free Cash Flow, Ongoing Free Cash Flow, and Free Cash Flow Conversion are non-GAAP liquidity measures that Ashland believes provide useful information to management and investors about Ashland's ability to convert Adjusted EBITDA to Ongoing Free Cash Flow. These liquidity measures are used regularly by Ashland's stakeholders and industry peers to measure the efficiency at providing cash from regular business activity. Free Cash Flow, Ongoing Free Cash Flow, and Free Cash Flow Conversion have certain limitations, including that they
do not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments. The amount of mandatory versus discretionary expenditures can vary significantly between periods.
Other disclosures on non-GAAP financial measures
Although Ashland may provide forward-looking guidance for Adjusted EBITDA, Adjusted diluted EPS and Ongoing Free Cash Flow, Ashland is not reaffirming or providing forward-looking guidance for U.S. GAAP-reported financial measures or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items that affect these metrics such as domestic and international economic, political, legislative, regulatory and legal actions. In addition, certain economic conditions, such as recessionary trends, inflation, interest and monetary exchange rates, government fiscal policies and changes in the prices of certain key raw materials, can have a significant effect on operations and are difficult to predict with certainty.
These non-GAAP financial measures should be considered supplemental in nature and should not be construed as more significant than comparable measures defined by U.S. GAAP. Limitations associated with the use of these non-GAAP financial measures include that these measures do not present all of the amounts associated with our results as determined in accordance with U.S. GAAP. The non-GAAP financial measures provided are used by Ashland management and may not be determined in a manner consistent with the methodologies used by other companies. EBITDA and Adjusted EBITDA provide a supplemental presentation of Ashland’s operating performance on a consolidated and reportable segment basis. Adjusted EBITDA generally includes adjustments for items that impact comparability between periods. In addition, certain financial covenants related to Ashland’s 2022 Credit Agreement are based on similar non-GAAP financial measures and are defined further in the sections that reference this metric.
EBITDA and Adjusted EBITDA
EBITDA totaled $84 million and $100 million for the three months ended March 31, 2026 and 2025, respectively, and income of $124 million and loss of $30 million for the six months ended March 31, 2026 and 2025, respectively. EBITDA and Adjusted EBITDA results in the table below have been prepared to illustrate the ongoing effects of Ashland’s operations, which exclude certain key items previously described. Management believes the use of such non-GAAP measures on a consolidated and reportable segment basis assists investors in understanding the ongoing operating performance by presenting the financial results between periods on a more comparable basis.
These operating key items for the applicable periods are summarized as follows:
•Other plant optimization costs – Ashland incurred inventory adjustments and production costs associated with product line optimization actions;
•Environmental reserve adjustments – Ashland is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively environmental remediation) at multiple locations. As a result of these activities, Ashland recorded adjustments during each year to its environmental remediation reserves and receivables primarily related to previously divested businesses or non-operational sites. See Note L of the Notes to Condensed Consolidated Financial Statements for more information;
•Restructuring, separation and other costs – Ashland periodically implements company-wide and targeted cost reduction programs related to acquisitions, divestitures and other cost reduction programs in order to enhance profitability through streamlined operations and an improved overall cost structure. Ashland often incurs severance, facility and integration costs associated with these programs. See Note D of the Notes to Condensed Consolidated Financial Statements for further information;
•Accelerated depreciation – As a result of product line optimization activities at manufacturing facilities within the Life Sciences and Specialty Additives reportable segment, Ashland recorded accelerated depreciation due to changes in the expected useful life of certain property, plant and equipment during the six months ended March 31, 2026 and during the three and six months ended March 31, 2025. See Note D of the Notes to Condensed Consolidated Financial Statements for more information;
•Avoca business impairment and sale – During March 2025, Ashland sold substantially all of the net assets of its Avoca business. As a result, Ashland recorded an impairment charge and a gain on sale within the income (loss) on divestitures, net caption of the Statements of Condensed Consolidated Comprehensive Income (Loss) for the three and six months ended March 31, 2025. See Note B of the Notes to Condensed Consolidated Financial Statements for more information;
•Held for sale depreciation and amortization – Represents the depreciation and amortization for the Avoca business assets during the six months ended March 31, 2025. See Note B of the Notes to the Condensed Consolidated Financial Statements for more information; and
•Income (loss) on divestitures, net – Ashland recorded income of zero and $2 million during the three and six months ended March 31, 2026, respectively, and income of $10 million during both the three and six months ended March 31, 2025. The income was related to the pre-tax gains in connection with the sale of excess corporate properties. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.
Non-operating key items affecting EBITDA
During the current and prior years, there were certain key items that were not included in operating income (loss) but were excluded to arrive at Adjusted EBITDA. These non-operating key items for the applicable periods are summarized as follows:
•Loss on pension plan remeasurements – During the six months ended March 31, 2025, Ashland recognized a curtailment loss for pension plan remeasurement for defined benefit pension plan. See Note K of the Notes to Condensed Consolidated Financial Statements for more information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
March 31 |
|
|
March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Net income (loss) |
|
$ |
16 |
|
|
$ |
31 |
|
|
$ |
4 |
|
|
$ |
(135 |
) |
Income tax expense (benefit) |
|
|
5 |
|
|
|
9 |
|
|
|
4 |
|
|
|
(34 |
) |
Net interest and other expense |
|
|
18 |
|
|
|
11 |
|
|
|
26 |
|
|
|
39 |
|
Depreciation and amortization(a) |
|
|
45 |
|
|
|
49 |
|
|
|
90 |
|
|
|
100 |
|
EBITDA |
|
|
84 |
|
|
|
100 |
|
|
|
124 |
|
|
|
(30 |
) |
Income from discontinued operations, net of income taxes |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
(3 |
) |
|
|
(1 |
) |
Key items included in EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Other plant optimization costs |
|
|
10 |
|
|
|
6 |
|
|
|
15 |
|
|
|
9 |
|
Environmental reserve adjustments |
|
|
2 |
|
|
|
2 |
|
|
|
12 |
|
|
|
3 |
|
Restructuring, separation and other costs |
|
|
3 |
|
|
|
8 |
|
|
|
7 |
|
|
|
11 |
|
Accelerated depreciation |
|
|
— |
|
|
|
13 |
|
|
|
3 |
|
|
|
13 |
|
Avoca business impairment and sale |
|
|
— |
|
|
|
(8 |
) |
|
|
— |
|
|
|
175 |
|
Loss on pension plan remeasurements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1 |
|
Held for sale depreciation and amortization |
|
|
— |
|
|
|
(2 |
) |
|
|
— |
|
|
|
(2 |
) |
Income on divestitures, net |
|
|
— |
|
|
|
(10 |
) |
|
|
(2 |
) |
|
|
(10 |
) |
Total key items included in EBITDA |
|
|
15 |
|
|
|
9 |
|
|
|
35 |
|
|
|
200 |
|
Adjusted EBITDA |
|
$ |
98 |
|
|
$ |
108 |
|
|
$ |
156 |
|
|
$ |
169 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total key items included in EBITDA |
|
$ |
15 |
|
|
$ |
9 |
|
|
$ |
35 |
|
|
$ |
200 |
|
Unrealized losses (gains) on securities |
|
|
5 |
|
|
|
(3 |
) |
|
|
3 |
|
|
|
14 |
|
Total key items, before tax |
|
$ |
20 |
|
|
$ |
6 |
|
|
$ |
38 |
|
|
$ |
214 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)Depreciation and amortization excludes accelerated depreciation of $3 million for Specialty Additives reportable segment for the six months ended March 31, 2026, and $13 million for Life Sciences for both the three and six months ended March 31, 2025, which is included as a key item within this table as a component of Adjusted EBITDA. Depreciation and amortization includes $2 million for Personal Care associated with the Avoca business for both the three and six months ended March 31, 2025, which is included as a key item within this table as a component of Adjusted EBITDA.
Diluted EPS and Adjusted Diluted EPS
The following table reflects the U.S. GAAP calculation for the income (loss) from continuing operations adjusted for the cumulative diluted EPS effect for key items after tax that have been identified in the Adjusted EBITDA table
in the previous section. Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income (loss) and/or operating income (loss) which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends. The Adjusted Diluted EPS for the income (loss) from continuing operations in the following table has been prepared to illustrate the ongoing effects of Ashland’s operations. Management believes investors and analysts use this financial measure in assessing Ashland's business performance and that presenting this non-GAAP financial measure on a consolidated basis assists investors in better understanding Ashland’s ongoing business performance and enhances their ability to compare period-to-period financial results.
In addition to the operating key items previously described, additional non-operating key items for the applicable periods are summarized as follows:
•Unrealized losses (gains) on securities – represents (gains) or losses recognized on restricted investments related to the Asbestos trust and Environmental trust for each period. See Note E of the Notes to Condensed Consolidated Financial Statements for more information;
•Uncertain tax positions – represents the impact from the settlement of uncertain tax positions with various tax authorities for the three and six months ended March 31, 2025; and
•Other and tax reform related activity – primarily represents tax specific key items associated with final tax regulations and tax reform related activity for the three and six months ended March 31, 2025.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
March 31 |
|
|
March 31 |
|
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Diluted EPS from continuing operations (as reported) |
|
$ |
0.32 |
|
|
$ |
0.63 |
|
|
$ |
0.02 |
|
|
$ |
(2.91 |
) |
Key items, before tax: |
|
|
|
|
|
|
|
|
|
|
|
|
Other plant optimization costs |
|
|
0.22 |
|
|
|
0.13 |
|
|
|
0.33 |
|
|
|
0.19 |
|
Environmental reserve adjustments |
|
|
0.03 |
|
|
|
0.04 |
|
|
|
0.26 |
|
|
|
0.06 |
|
Restructuring, separation and other costs |
|
|
0.06 |
|
|
|
0.17 |
|
|
|
0.15 |
|
|
|
0.23 |
|
Unrealized losses (gains) on securities |
|
|
0.11 |
|
|
|
(0.06 |
) |
|
|
0.06 |
|
|
|
0.31 |
|
Accelerated depreciation |
|
|
— |
|
|
|
0.28 |
|
|
|
0.06 |
|
|
|
0.28 |
|
Avoca business impairment and sale |
|
|
— |
|
|
|
(0.17 |
) |
|
|
— |
|
|
|
3.73 |
|
Loss on pension plan remeasurements |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.02 |
|
Held for sale depreciation and amortization |
|
|
— |
|
|
|
(0.04 |
) |
|
|
— |
|
|
|
(0.04 |
) |
Income on divestitures, net |
|
|
— |
|
|
|
(0.21 |
) |
|
|
(0.04 |
) |
|
|
(0.21 |
) |
Key items, before tax |
|
|
0.42 |
|
|
|
0.14 |
|
|
|
0.82 |
|
|
|
4.57 |
|
Tax effect of key items(a) |
|
|
(0.10 |
) |
|
|
(0.04 |
) |
|
|
(0.20 |
) |
|
|
(1.11 |
) |
Key items, after tax |
|
|
0.32 |
|
|
|
0.10 |
|
|
|
0.62 |
|
|
|
3.46 |
|
Tax specific key items: |
|
|
|
|
|
|
|
|
|
|
|
|
Uncertain tax positions |
|
|
— |
|
|
|
(0.06 |
) |
|
|
— |
|
|
|
(0.08 |
) |
Other and tax reform related activity |
|
|
— |
|
|
|
0.04 |
|
|
|
— |
|
|
|
0.23 |
|
Tax specific key items(b) |
|
|
— |
|
|
|
(0.02 |
) |
|
|
— |
|
|
|
0.15 |
|
Total key items |
|
|
0.32 |
|
|
|
0.08 |
|
|
|
0.62 |
|
|
|
3.61 |
|
Adjusted Diluted EPS from Continuing Operations (non-GAAP) |
|
$ |
0.64 |
|
|
$ |
0.71 |
|
|
$ |
0.64 |
|
|
$ |
0.70 |
|
Amortization expense adjustment (net of tax)(c) |
|
$ |
0.27 |
|
|
$ |
0.28 |
|
|
$ |
0.53 |
|
|
$ |
0.56 |
|
Adjusted Diluted EPS from Continuing Operations (non-GAAP) Excluding Intangibles Amortization Expense |
|
$ |
0.91 |
|
|
$ |
0.99 |
|
|
$ |
1.17 |
|
|
$ |
1.26 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)Represents the diluted EPS impact from the tax effect of the key items that are identified above.
(b)Represents the diluted EPS impact from tax specific financial transactions, tax law changes or other matters that fall within the definition of tax specific key items. For additional explanation of these tax specific key items, see the income tax expense (benefit) discussion within the Statements of Condensed Consolidated Comprehensive Income (Loss) caption review section above.
(c)Amortization expense adjustment (net of tax) tax rates were 20% for both the three and six months ended March 31, 2026, and 21% for both the three and six months ended March 31, 2025.
RESULTS OF OPERATIONS – REPORTABLE SEGMENT REVIEW
Ashland’s reportable segments include Life Sciences, Personal Care, Specialty Additives, and Intermediates. Unallocated and other includes corporate governance activities and certain legacy matters.
Results of Ashland’s reportable segments are presented based on its management and internal accounting structure. The structure is specific to Ashland; therefore, the financial results of Ashland’s reportable segments are not necessarily comparable with similar information for other companies. Ashland allocates all significant costs to its reportable segments except for certain significant company-wide restructuring activities, certain corporate governance costs and other costs or activities that relate to former businesses that Ashland no longer operates. The service cost component of pension and other postretirement benefits costs is allocated to each reportable segment on a ratable basis; while the remaining components of pension and other postretirement benefits costs are recorded within the other net periodic benefit loss caption on the Statements of Condensed Consolidated Comprehensive Income (Loss). Ashland refines its expense allocation methodologies to the reportable segments from time to time as internal accounting practices are improved, more refined information becomes available and the industry or market changes. Significant revisions to Ashland’s methodologies are adjusted for all segments on a retrospective basis. There were no material changes in methodology for the three and six months ended March 31, 2026 or 2025.
The following table discloses sales, operating income (loss), depreciation and amortization and EBITDA by reportable segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
March 31 |
|
|
March 31 |
|
(In millions - unaudited) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
SALES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Sciences |
|
$ |
172 |
|
|
$ |
172 |
|
|
$ |
— |
|
|
$ |
311 |
|
|
$ |
306 |
|
|
$ |
5 |
|
Personal Care |
|
|
150 |
|
|
|
146 |
|
|
|
4 |
|
|
|
273 |
|
|
|
279 |
|
|
|
(6 |
) |
Specialty Additives |
|
|
134 |
|
|
|
134 |
|
|
|
— |
|
|
|
236 |
|
|
|
249 |
|
|
|
(13 |
) |
Intermediates |
|
|
35 |
|
|
|
37 |
|
|
|
(2 |
) |
|
|
66 |
|
|
|
71 |
|
|
|
(5 |
) |
Intersegment sales(a) |
|
|
(9 |
) |
|
|
(10 |
) |
|
|
1 |
|
|
|
(18 |
) |
|
|
(21 |
) |
|
|
3 |
|
|
|
$ |
482 |
|
|
$ |
479 |
|
|
$ |
3 |
|
|
$ |
868 |
|
|
$ |
884 |
|
|
$ |
(16 |
) |
OPERATING INCOME (LOSS) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Sciences |
|
$ |
35 |
|
|
$ |
28 |
|
|
$ |
7 |
|
|
$ |
52 |
|
|
$ |
42 |
|
|
$ |
10 |
|
Personal Care |
|
|
27 |
|
|
|
28 |
|
|
|
(1 |
) |
|
|
38 |
|
|
|
39 |
|
|
|
(1 |
) |
Specialty Additives |
|
|
(7 |
) |
|
|
7 |
|
|
|
(14 |
) |
|
|
(15 |
) |
|
|
2 |
|
|
|
(17 |
) |
Intermediates |
|
|
4 |
|
|
|
(1 |
) |
|
|
5 |
|
|
|
4 |
|
|
|
2 |
|
|
|
2 |
|
Unallocated and other(b) |
|
|
(20 |
) |
|
|
(11 |
) |
|
|
(9 |
) |
|
|
(46 |
) |
|
|
(213 |
) |
|
|
167 |
|
|
|
$ |
39 |
|
|
$ |
51 |
|
|
$ |
(12 |
) |
|
$ |
33 |
|
|
$ |
(128 |
) |
|
$ |
161 |
|
DEPRECIATION EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Sciences(c) |
|
$ |
9 |
|
|
$ |
22 |
|
|
$ |
(13 |
) |
|
$ |
19 |
|
|
$ |
31 |
|
|
$ |
(12 |
) |
Personal Care |
|
|
7 |
|
|
|
7 |
|
|
|
— |
|
|
|
14 |
|
|
|
15 |
|
|
|
(1 |
) |
Specialty Additives(d) |
|
|
13 |
|
|
|
13 |
|
|
|
— |
|
|
|
28 |
|
|
|
27 |
|
|
|
1 |
|
Intermediates |
|
|
1 |
|
|
|
3 |
|
|
|
(2 |
) |
|
|
2 |
|
|
|
6 |
|
|
|
(4 |
) |
|
|
$ |
30 |
|
|
$ |
45 |
|
|
$ |
(15 |
) |
|
$ |
63 |
|
|
$ |
79 |
|
|
$ |
(16 |
) |
AMORTIZATION EXPENSE |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Sciences |
|
$ |
5 |
|
|
$ |
4 |
|
|
$ |
1 |
|
|
$ |
9 |
|
|
$ |
8 |
|
|
$ |
1 |
|
Personal Care |
|
|
8 |
|
|
|
8 |
|
|
|
— |
|
|
|
16 |
|
|
|
19 |
|
|
|
(3 |
) |
Specialty Additives |
|
|
2 |
|
|
|
3 |
|
|
|
(1 |
) |
|
|
5 |
|
|
|
5 |
|
|
|
— |
|
Intermediates |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
$ |
15 |
|
|
$ |
15 |
|
|
$ |
— |
|
|
$ |
30 |
|
|
$ |
32 |
|
|
$ |
(2 |
) |
EBITDA(e) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Sciences |
|
$ |
49 |
|
|
$ |
54 |
|
|
$ |
(5 |
) |
|
$ |
80 |
|
|
$ |
81 |
|
|
$ |
(1 |
) |
Personal Care |
|
|
42 |
|
|
|
43 |
|
|
|
(1 |
) |
|
|
68 |
|
|
|
73 |
|
|
|
(5 |
) |
Specialty Additives |
|
|
8 |
|
|
|
23 |
|
|
|
(15 |
) |
|
|
18 |
|
|
|
34 |
|
|
|
(16 |
) |
Intermediates |
|
|
5 |
|
|
|
2 |
|
|
|
3 |
|
|
|
6 |
|
|
|
8 |
|
|
|
(2 |
) |
Unallocated and other |
|
|
(20 |
) |
|
|
(11 |
) |
|
|
(9 |
) |
|
|
(46 |
) |
|
|
(213 |
) |
|
|
167 |
|
|
|
$ |
84 |
|
|
$ |
111 |
|
|
$ |
(27 |
) |
|
$ |
126 |
|
|
$ |
(17 |
) |
|
$ |
143 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)Intersegment sales from Intermediates are accounted for at prices that approximate market value. All other intersegment sales are accounted for at cost.
(b)Includes a $2 million gain on sale of excess corporate property for the six months ended March 31, 2026, a $8 million gain on sale of excess corporate property for both the three and six months ended March 31, 2025, and a $183 million impairment charge related to the Avoca business for the six months ended March 31, 2025, within the income (loss) on divestitures, net caption of the Statements of Condensed Consolidated Income (Loss).
(c)Depreciation includes accelerated depreciation of $13 million for Life Sciences for both the three and six months ended March 31, 2025.
(d)Depreciation includes accelerated depreciation of $3 million for Specialty Additives for the six months ended March 31, 2026.
(e)Excludes income from discontinued operations, net of income taxes and other net periodic benefit loss. See the Statements of Condensed Consolidated Comprehensive Income (Loss) for applicable amounts excluded.
Life Sciences
Life Sciences is comprised of pharmaceuticals, nutrition, agricultural chemicals, diagnostic films (formerly known as advanced materials) and fine chemicals. Pharmaceutical solutions include controlled release polymers, disintegrants, tablet coatings, thickeners, solubilizers and tablet binders. Nutrition solutions include thickeners, stabilizers, emulsifiers and additives for enhancing mouthfeel, controlling moisture migration, reducing oil uptake and binding structured foods. Customers include pharmaceutical, food, beverage, hospitals and radiologists manufacturers.
The following table provides a reconciliation of the change in sales for the Life Sciences reportable segment.
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
(In millions) |
|
March 31, 2026 |
|
|
March 31, 2026 |
|
Sales change |
|
|
|
|
|
|
Foreign currency exchange |
|
$ |
5 |
|
|
$ |
8 |
|
Price/mix |
|
|
(3 |
) |
|
|
(4 |
) |
Volume |
|
|
(2 |
) |
|
|
1 |
|
|
|
$ |
— |
|
|
$ |
5 |
|
|
|
|
|
|
|
|
The following table provides a reconciliation of the change in operating income for the Life Sciences reportable segment.
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
(In millions) |
|
March 31, 2026 |
|
|
March 31, 2026 |
|
Operating income change |
|
|
|
|
|
|
Cost |
|
$ |
7 |
|
|
$ |
8 |
|
Foreign currency exchange |
|
|
3 |
|
|
|
4 |
|
Price/mix |
|
|
(2 |
) |
|
|
(1 |
) |
Volume |
|
|
(1 |
) |
|
|
(1 |
) |
|
|
$ |
7 |
|
|
$ |
10 |
|
|
|
|
|
|
|
|
EBITDA and Adjusted EBITDA reconciliation
The following EBITDA presentation is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Life Sciences. Life Sciences had key items in the three and six months ended March 31, 2026 and 2025. These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life Sciences |
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Operating income |
|
$ |
35 |
|
|
$ |
28 |
|
|
$ |
7 |
|
|
$ |
52 |
|
|
$ |
42 |
|
|
$ |
10 |
|
Depreciation and amortization(a) |
|
|
14 |
|
|
|
13 |
|
|
|
1 |
|
|
|
28 |
|
|
|
26 |
|
|
|
2 |
|
EBITDA |
|
$ |
49 |
|
|
$ |
41 |
|
|
|
8 |
|
|
$ |
80 |
|
|
$ |
68 |
|
|
|
12 |
|
Accelerated depreciation |
|
|
— |
|
|
|
13 |
|
|
|
(13 |
) |
|
|
— |
|
|
|
13 |
|
|
|
(13 |
) |
Other plant optimization costs |
|
|
1 |
|
|
|
2 |
|
|
|
(1 |
) |
|
|
1 |
|
|
|
2 |
|
|
|
(1 |
) |
Adjusted EBITDA |
|
$ |
50 |
|
|
$ |
56 |
|
|
$ |
(6 |
) |
|
$ |
81 |
|
|
$ |
83 |
|
|
$ |
(2 |
) |
Operating income as a percent of sales |
|
|
20.3 |
% |
|
|
16.3 |
% |
|
400 bps |
|
|
|
16.7 |
% |
|
|
13.7 |
% |
|
300 bps |
|
Adjusted EBITDA as a percent of sales |
|
|
29.1 |
% |
|
|
32.6 |
% |
|
-350 bps |
|
|
|
26.0 |
% |
|
|
27.1 |
% |
|
-110 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)Depreciation and amortization for Life Sciences excludes accelerated depreciation of $13 million for both the three and six months ended March 31, 2025, which is included as a key item within this table as a component of Adjusted EBITDA.
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Life Sciences' sales remained consistent compared to the prior quarter. Operating income increased in the current quarter primarily due to lower costs associated with plant optimization and favorable foreign currency exchange partially offset by unfavorable price/mix. Adjusted EBITDA decreased in the current quarter primarily due to higher costs, including the Calvert City startup delay and weather-related operational disruptions during the quarter and unfavorable price/mix, partially offset by favorable foreign currency exchange.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Life Sciences' sales increased primarily due to favorable foreign currency exchange. Operating income increased in the current period primarily due to lower costs associated with plant optimization and favorable foreign currency exchange partially offset by unfavorable price/mix. Adjusted EBITDA decreased in the current period primarily due to higher costs, including the Calvert City startup delay and weather-related operational disruptions during the period and unfavorable price/mix, partially offset by favorable foreign currency exchange.
Personal Care
Personal Care is comprised of biofunctionals, microbial protectants (preservatives), skin care, sun care, oral care, hair care and household solutions. These businesses have a broad range of natural, nature-derived, biodegradable, and high-performance ingredients for customer driven solutions to help protect, renew, moisturize and revitalize skin and hair, and provide solutions for toothpastes, mouth washes and rinses, denture cleaning and care for teeth. Personal Care supplies nature-derived rheology ingredients, biodegradable surface wetting agents, performance encapsulates, and specialty polymers for household, industrial and institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies. The Avoca business was sold in March 2025. See Note B of the Notes to Condensed Consolidated Financial Statements for additional information.
The following table provides a reconciliation of the change in sales for the Personal Care reportable segment.
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
(In millions) |
|
March 31, 2026 |
|
|
March 31, 2026 |
|
Sales change |
|
|
|
|
|
|
Foreign currency exchange |
|
$ |
5 |
|
|
$ |
9 |
|
Volume |
|
|
5 |
|
|
|
2 |
|
Price/mix |
|
|
(4 |
) |
|
|
(6 |
) |
Avoca business |
|
|
(2 |
) |
|
|
(11 |
) |
|
|
$ |
4 |
|
|
$ |
(6 |
) |
|
|
|
|
|
|
|
The following table provides a reconciliation of the change in operating income for the Personal Care reportable segment.
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
(In millions) |
|
March 31, 2026 |
|
|
March 31, 2026 |
|
Operating income change |
|
|
|
|
|
|
Cost |
|
$ |
(4 |
) |
|
$ |
(5 |
) |
Price/mix |
|
|
(3 |
) |
|
|
(4 |
) |
Avoca business |
|
|
2 |
|
|
|
4 |
|
Foreign currency exchange |
|
|
2 |
|
|
|
3 |
|
Volume |
|
|
2 |
|
|
|
1 |
|
|
|
$ |
(1 |
) |
|
$ |
(1 |
) |
|
|
|
|
|
|
|
EBITDA and Adjusted EBITDA reconciliation
The following EBITDA presentation is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Personal Care. There were key items in the three and six months ended March 31, 2026 and 2025. These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personal Care |
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Operating income |
|
$ |
27 |
|
|
$ |
28 |
|
|
$ |
(1 |
) |
|
$ |
38 |
|
|
$ |
39 |
|
|
$ |
(1 |
) |
Depreciation and amortization(a) |
|
|
15 |
|
|
|
17 |
|
|
|
(2 |
) |
|
|
30 |
|
|
|
36 |
|
|
|
(6 |
) |
EBITDA |
|
$ |
42 |
|
|
$ |
45 |
|
|
|
(3 |
) |
|
$ |
68 |
|
|
$ |
75 |
|
|
|
(7 |
) |
Held for sale depreciation and amortization |
|
|
— |
|
|
|
(2 |
) |
|
|
2 |
|
|
|
— |
|
|
|
(2 |
) |
|
|
2 |
|
Other plant optimization costs |
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
2 |
|
|
|
(1 |
) |
Adjusted EBITDA |
|
$ |
43 |
|
|
$ |
44 |
|
|
$ |
(1 |
) |
|
$ |
69 |
|
|
$ |
75 |
|
|
$ |
(6 |
) |
Operating income as a percent of sales |
|
|
18.0 |
% |
|
|
19.2 |
% |
|
-120 bps |
|
|
|
13.9 |
% |
|
|
14.0 |
% |
|
-10 bps |
|
Adjusted EBITDA as a percent of sales |
|
|
28.7 |
% |
|
|
30.1 |
% |
|
-140 bps |
|
|
|
25.3 |
% |
|
|
26.9 |
% |
|
-160 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Depreciation and amortization includes $2 million for Personal Care associated with the Avoca business assets for both the three and six months ended March 31, 2025, which is included as a key item within this table as a component of Adjusted EBITDA.
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Personal Care's sales increased in the current quarter primarily due to higher volume and favorable foreign currency exchange, partially offset by unfavorable price/mix and the divestiture of the Avoca business in the prior period. Operating income and Adjusted EBITDA remained relatively consistent compared to prior year quarter.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Personal Care's sales decreased primarily due to the Avoca business sale in the prior period. Operating income and Adjusted EBITDA decreased in the current period primarily due to higher costs, including the continued effects of other plant optimization costs, and unfavorable price/mix partially offset by higher volume and favorable foreign currency exchange.
Specialty Additives
Specialty Additives is comprised of rheology and performance-enhancing additives serving the architectural coatings, construction, energy, automotive and various industrial markets. Solutions include coatings additives for architectural paints, finishes and lacquers, cement- and gypsum-based dry mortars, ready-mixed joint compounds, synthetic plasters for commercial and residential construction, and specialty materials for industrial applications. Products include rheology modifiers (cellulosic and associative thickeners), foam control agents, surfactants and wetting agents, pH neutralizers, advanced ceramics used in catalytic converters, and environmental filters, ingredients that aid the manufacturing process of ceramic capacitors, plasma display panels and solar cells, ingredients for textile printing, thermoplastic metals and alloys for welding. Products help improve desired functional outcomes through rheology modification and control, water retention, workability, adhesive strength, binding power, film formation, deposition and suspension and emulsification. Customers include, but are not limited to, global paint manufacturers, electronics and automotive manufacturers, textile mills, the construction industry and welders.
The following table provides a reconciliation of the change in sales for the Specialty Additives reportable segment.
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
(In millions) |
|
March 31, 2026 |
|
|
March 31, 2026 |
|
Sales change |
|
|
|
|
|
|
Foreign currency exchange |
|
$ |
4 |
|
|
$ |
7 |
|
Price/mix |
|
|
(4 |
) |
|
|
(7 |
) |
Volume |
|
|
— |
|
|
|
(13 |
) |
|
|
$ |
— |
|
|
$ |
(13 |
) |
|
|
|
|
|
|
|
The following table provides a reconciliation of the change in operating income (loss) for the Specialty Additives reportable segment.
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
(In millions) |
|
March 31, 2026 |
|
|
March 31, 2026 |
|
Operating income (loss) change |
|
|
|
|
|
|
Costs |
|
$ |
(10 |
) |
|
$ |
(9 |
) |
Price/mix |
|
|
(4 |
) |
|
|
(4 |
) |
Volume |
|
|
— |
|
|
|
(3 |
) |
Foreign currency exchange |
|
|
— |
|
|
|
(1 |
) |
|
|
$ |
(14 |
) |
|
$ |
(17 |
) |
|
|
|
|
|
|
|
EBITDA and Adjusted EBITDA reconciliation
The following EBITDA presentation is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Specialty Additives. There were key items in the three and six months ended March 31, 2026 and 2025. These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Specialty Additives |
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Operating income (loss) |
|
$ |
(7 |
) |
|
$ |
7 |
|
|
$ |
(14 |
) |
|
$ |
(15 |
) |
|
$ |
2 |
|
|
$ |
(17 |
) |
Depreciation and amortization(a) |
|
|
15 |
|
|
|
16 |
|
|
|
(1 |
) |
|
|
30 |
|
|
|
32 |
|
|
|
(2 |
) |
EBITDA |
|
|
8 |
|
|
|
23 |
|
|
|
(15 |
) |
|
|
15 |
|
|
|
34 |
|
|
|
(19 |
) |
Accelerated depreciation |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
— |
|
|
|
3 |
|
Other plant optimization costs |
|
|
8 |
|
|
|
3 |
|
|
|
5 |
|
|
|
13 |
|
|
|
5 |
|
|
|
8 |
|
Adjusted EBITDA |
|
$ |
16 |
|
|
$ |
26 |
|
|
$ |
(10 |
) |
|
$ |
31 |
|
|
$ |
39 |
|
|
$ |
(8 |
) |
Operating income (loss) as a percent of sales |
|
|
-5.2 |
% |
|
|
5.2 |
% |
|
-1040 bps |
|
|
|
-6.4 |
% |
|
|
0.8 |
% |
|
-720 bps |
|
Adjusted EBITDA as a percent of sales |
|
|
11.9 |
% |
|
|
19.4 |
% |
|
-750 bps |
|
|
|
13.1 |
% |
|
|
15.7 |
% |
|
-260 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)Depreciation and amortization for Specialty Additives excludes accelerated depreciation of $3 million for the six months ended March 31, 2026, which is included as a key item within this table as a component of Adjusted EBITDA.
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Specialty Additives' sales remained consistent compared to the prior quarter. Operating loss and Adjusted EBITDA for the current quarter decreased as a result of higher costs, including the continued effects of other plant optimization costs, and unfavorable price/mix.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Specialty Additives sales, operating loss and Adjusted EBITDA for the current period decreased as a result of higher costs, including the continued effects of plant optimization costs, lower volume, and unfavorable price/mix, partially offset by favorable foreign currency exchange.
Intermediates
Intermediates is comprised of the production of 1,4 butanediol ("BDO") and related derivatives, including n-methylpyrrolidone. These products are used as chemical intermediates in the production of engineering polymers and polyurethanes, and as specialty process solvents in a wide array of applications including electronics, agriculture, pharmaceuticals, water filtration membranes and more. BDO is also supplied to Life Sciences, Personal Care, and Specialty Additives for use as a raw material.
The following table provides a reconciliation of the change in sales for the Intermediates reportable segment.
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
(In millions) |
|
March 31, 2026 |
|
|
March 31, 2026 |
|
Sales change |
|
|
|
|
|
|
Volume |
|
$ |
(3 |
) |
|
$ |
(4 |
) |
Foreign currency exchange |
|
|
1 |
|
|
|
1 |
|
Price/mix |
|
|
— |
|
|
|
(2 |
) |
|
|
$ |
(2 |
) |
|
$ |
(5 |
) |
|
|
|
|
|
|
|
The following table provides a reconciliation of the change in operating income (loss) for the Intermediates reportable segment.
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
(In millions) |
|
March 31, 2026 |
|
|
March 31, 2026 |
|
Operating income (loss) change |
|
|
|
|
|
|
Cost |
|
$ |
5 |
|
|
$ |
1 |
|
Foreign currency exchange |
|
|
1 |
|
|
|
1 |
|
Volume |
|
|
(1 |
) |
|
|
(2 |
) |
Price/mix |
|
|
— |
|
|
|
2 |
|
|
|
$ |
5 |
|
|
$ |
2 |
|
|
|
|
|
|
|
|
EBITDA reconciliation
The following EBITDA presentation is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Intermediates. Intermediates had no key items for the three or six months ended March 31, 2026 or 2025.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intermediates |
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Operating income (loss) |
|
$ |
4 |
|
|
$ |
(1 |
) |
|
$ |
5 |
|
|
$ |
4 |
|
|
$ |
2 |
|
|
$ |
2 |
|
Depreciation and amortization |
|
|
1 |
|
|
|
3 |
|
|
|
(2 |
) |
|
|
2 |
|
|
|
6 |
|
|
|
(4 |
) |
EBITDA |
|
$ |
5 |
|
|
$ |
2 |
|
|
$ |
3 |
|
|
$ |
6 |
|
|
$ |
8 |
|
|
$ |
(2 |
) |
Operating income (loss) as a percent of sales |
|
|
11.4 |
% |
|
|
-2.7 |
% |
|
1410 bps |
|
|
|
6.1 |
% |
|
|
2.8 |
% |
|
330 bps |
|
EBITDA as a percent of sales |
|
|
14.3 |
% |
|
|
5.4 |
% |
|
890 bps |
|
|
|
9.1 |
% |
|
|
11.3 |
% |
|
-220 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
Intermediates' sales decreased in the current quarter primarily due to lower volume while operating income and EBITDA increased primarily due to lower costs.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
Intermediates' sales and EBITDA decreased in the current period primarily due to lower volume while operating income increased primarily due to favorable price/mix.
Unallocated and other
The following table summarizes the key components of the Unallocated and other’s operating loss.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unallocated and other |
|
|
|
Three months ended March 31 |
|
|
Six months ended March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
|
Change |
|
|
2026 |
|
|
2025 |
|
|
Change |
|
Restructuring activities |
|
$ |
(3 |
) |
|
$ |
(8 |
) |
|
$ |
5 |
|
|
$ |
(7 |
) |
|
$ |
(11 |
) |
|
$ |
4 |
|
Environmental expenses |
|
|
(2 |
) |
|
|
(2 |
) |
|
|
— |
|
|
|
(12 |
) |
|
|
(3 |
) |
|
|
(9 |
) |
Income (loss) on divestitures, net |
|
|
— |
|
|
|
18 |
|
|
|
(18 |
) |
|
|
2 |
|
|
|
(165 |
) |
|
|
167 |
|
Other expenses (primarily governance and legacy expenses) |
|
|
(15 |
) |
|
|
(19 |
) |
|
|
4 |
|
|
|
(29 |
) |
|
|
(34 |
) |
|
|
5 |
|
Total expense |
|
$ |
(20 |
) |
|
$ |
(11 |
) |
|
$ |
(9 |
) |
|
$ |
(46 |
) |
|
$ |
(213 |
) |
|
$ |
167 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2026 compared to three months ended March 31, 2025
The current and prior year quarter included expense of $3 million and $8 million, respectively, for restructuring activities mainly comprised of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs.
The current and prior year quarter both included $2 million for environmental expenses.
The prior year quarter included gains of $18 million from divestitures primarily related to the sale of the Avoca business and excess corporate land property. See Note B of the Notes to the Condensed Consolidated Financial Statements for more information.
Other expenses between quarters were driven by changes in governance and legacy expenses primarily associated with fluctuations in foreign currency, deferred compensation, company-owned life insurance contracts and variable incentive compensation.
Six months ended March 31, 2026 compared to six months ended March 31, 2025
The current and prior year period included expense of $7 million and $11 million, respectively, for restructuring activities mainly comprised of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs.
The current and prior year period included $12 million and $3 million for environmental expenses, respectively.
The current year period included a $2 million income on the sale of excess corporate property. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.
The prior year period included a loss on divestiture of $165 million, primarily related to the $183 million impairment of the Avoca business, $8 million pre-tax gain on the final sale of the Avoca business, and $11 million gain on the sale of a property. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.
Other expenses between periods were driven by changes in governance and legacy expenses primarily associated with fluctuations in foreign currency, deferred compensation, company-owned life insurance contracts and variable incentive compensation, including stock compensation expense in the current period.
FINANCIAL POSITION
Liquidity
Ashland believes that cash flow from operations, availability under existing credit facilities and arrangements, current cash and investment balances and the ability to obtain other financing, if necessary, will provide adequate cash funds for Ashland’s foreseeable working capital needs, capital expenditures at existing facilities, dividend payments and debt service obligations. Ashland’s cash requirements are subject to change as business conditions warrant and opportunities arise. The timing and size of any new business ventures or acquisitions that the Company may complete may also impact its cash requirements.
During April 2024, Ashland authorized a financing program offered through JP Morgan and Taulia Alliance. Under this program, JP Morgan and its affiliates may purchase certain confirmed receivables directly from suppliers pursuant to the terms of a separate arrangement entered into between JPMorgan and Taulia Alliance and such suppliers. There were no changes to Ashland's standard payment terms with its suppliers in connection with this program. Ashland provides no guarantees to JP Morgan and Taulia Alliance under this program. The program was implemented during June 2025 and has been actively offered to suppliers. There were $5 million and $10 million, respectively, of confirmed invoices, of which $4 million and $5 million, respectively, were paid during the three and six months ended March 31, 2026. There were $5 million and less than $1 million of confirmed invoices remaining under this program at March 31, 2026 and September 30, 2025, respectively.
Cash flows
Ashland’s cash flows from operating, investing and financing activities, as reflected in the Statements of Condensed Consolidated Cash Flows, are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
|
March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
Cash provided (used) by: |
|
|
|
|
|
|
Operating activities from continuing operations |
|
$ |
175 |
|
|
$ |
(21 |
) |
Investing activities from continuing operations |
|
|
18 |
|
|
|
(1 |
) |
Financing activities from continuing operations |
|
|
(40 |
) |
|
|
(91 |
) |
Discontinued operations |
|
|
(25 |
) |
|
|
(18 |
) |
Effect of currency exchange rate changes on cash and cash equivalents(a) |
|
|
— |
|
|
|
(1 |
) |
Net increase (decrease) in cash and cash equivalents |
|
$ |
128 |
|
|
$ |
(132 |
) |
|
|
|
|
|
|
|
(a)Zero denotes less than $1 million of activity.
Cash and cash equivalents increased $128 million for the six months ended March 31, 2026 and decreased $132 million for the six months ended March 31, 2025.
The $128 million increase for the six months ended March 31, 2026, was primarily driven by favorable changes in working capital (fluctuations within accounts receivable, inventory, trade payables and accrued expenses) and other operating cash flows from continuing operations which amounted to inflows of $175 million. The current period was also affected by inflows of $20 million for the settlement of company-owned life insurance policies and $33 million of reimbursements from restricted investments. These inflows were partially offset from outflows from payment of cash dividends, additions to property, plant and equipment and discontinued operations primarily related to retained liabilities for asbestos and environmental claims of $38 million, $31 million and $25 million, respectively.
The $132 million decrease for the six months ended March 31, 2025, was primarily driven by payment of cash dividends, additions to property, plant and equipment and stock repurchase activity of $38 million, $44 million and $100 million, respectively. Operating cash flows from continuing operations were outflows of $21 million, while discontinued operations cash flows were outflows of $18 million. These outflows were partially offset by inflows from short-term debt, proceeds from the sale of the Avoca business, and proceeds from the sale of a land proprerty of $50 million, $16 million and $11 million, respectively.
The change in cash flows from operating activities from continuing operations was primarily driven by favorable working capital, including the favorable impact between periods of the U.S. and Foreign Accounts Receivable Sales Program activity.
See the Statements of Condensed Consolidated Cash Flows for additional information.
Free Cash Flow and other liquidity resources
The following represents Ashland’s calculation of Free Cash Flow and Ongoing Free Cash Flow for the disclosed periods. Free Cash Flow does not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments.
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
|
|
|
March 31 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
Total cash flows provided (used) by operating activities from continuing operations |
|
$ |
175 |
|
|
$ |
(21 |
) |
less: |
|
|
|
|
|
|
Additions to property, plant and equipment |
|
|
(31 |
) |
|
|
(44 |
) |
Free Cash Flow |
|
|
144 |
|
|
|
(65 |
) |
Tax refund(a) |
|
|
(103 |
) |
|
|
— |
|
Cash (inflows) outflows from U.S. Accounts Receivable Sales Program(b) |
|
|
(1 |
) |
|
|
11 |
|
Cash outflows from Foreign Accounts Receivable Sales Program(c) |
|
|
(7 |
) |
|
|
(9 |
) |
Restructuring-related payments(d) |
|
|
9 |
|
|
|
17 |
|
Environmental and related litigation payments(e) |
|
|
13 |
|
|
|
13 |
|
Ongoing Free Cash Flow |
|
$ |
55 |
|
|
$ |
(33 |
) |
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
4 |
|
|
$ |
(135 |
) |
Adjusted EBITDA(f) |
|
$ |
156 |
|
|
$ |
169 |
|
|
|
|
|
|
|
|
Operating Cash Flow Conversion(g) |
|
Not meaningful |
|
|
Not meaningful |
|
Ongoing Free Cash Flow Conversion(h) |
|
|
35 |
% |
|
|
-20 |
% |
|
|
|
|
|
|
|
(b)Represents receipt of tax refund related to the capital loss carryback from the Nutraceutical divestiture.
(c)Represents activity associated with the U.S. Accounts Receivable Sales Program impacting each period presented.
(d)Represents activity associated with the Foreign Accounts Receivable Sales Program impacting each period presented.
(e)Restructuring payments incurred during each period.
(f)Represents cash outflows associated with environmental and related litigation payments which will be reimbursed by the environmental trust.
(g)See Adjusted EBITDA reconciliation.
(h)Operating Cash Flow Conversion is defined as Cash flows provided (used) by operating activities from continuing operations divided by net income (loss).
(i)Ongoing Free Cash Flow Conversion is defined as Ongoing Free Cash Flow divided by Adjusted EBITDA.
Working capital (current assets minus current liabilities, excluding long-term debt due within one year) amounted to $814 million and $782 million as of March 31, 2026 and September 30, 2025, respectively. Liquid assets (cash and cash equivalents and accounts receivable) amounted to 149% and 108% of current liabilities as of March 31, 2026 and September 30, 2025, respectively. The increase in Ongoing Free Cash Flows was primarily a result of favorable working capital, lower additions to property, plant and equipment and lower variable compensation payouts between periods.
The following summary reflects Ashland’s cash and cash equivalents, unused borrowing capacity and liquidity as of:
|
|
|
|
|
|
|
|
|
|
|
March 31 |
|
|
September 30 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
Cash and investment securities |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
343 |
|
|
$ |
215 |
|
Restricted investments(a) |
|
|
326 |
|
|
|
347 |
|
|
|
|
|
|
|
|
Unused borrowing capacity and liquidity |
|
|
|
|
|
|
Revolving credit facility |
|
|
596 |
|
|
|
596 |
|
U.S. Accounts Receivable Sales Program |
|
|
— |
|
|
|
— |
|
Foreign Accounts Receivable Sales Program |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
(a)Includes $213 million and $231 million related to the Asbestos trust and $113 million and $116 million related to the Environmental trust as of March 31, 2026 and September 30, 2025, respectively.
The borrowing capacity remaining under the 2022 Credit Agreement was $596 million, which reflects the full $600 million revolving credit facility less a reduction of $4 million for letters of credit outstanding at March 31, 2026. In total, Ashland’s available liquidity position, which includes cash and cash equivalents and the revolving credit facility, was $939 million at March 31, 2026, compared to $811 million at September 30, 2025. Ashland had no available liquidity under the U.S. and Foreign Accounts Receivable Sales Programs as of March 31, 2026. Ashland also maintained $326 million of restricted investments at March 31, 2026, to pay for future asbestos claims and environmental remediation and related litigation.
Capital resources
Debt
The following summary reflects Ashland’s debt as of:
|
|
|
|
|
|
|
|
|
|
|
March 31 |
|
|
September 30 |
|
(In millions) |
|
2026 |
|
|
2025 |
|
Short-term debt |
|
$ |
— |
|
|
$ |
— |
|
Long-term debt (less debt issuance cost discounts)(a) |
|
|
1,374 |
|
|
|
1,384 |
|
Total debt |
|
$ |
1,374 |
|
|
$ |
1,384 |
|
|
|
|
|
|
|
|
(a)Includes $9 million and $10 million of debt issuance cost discounts as of March 31, 2026 and September 30, 2025, respectively.
Debt as a percent of capital employed was 42% at both March 31, 2026 and September 30, 2025. At March 31, 2026, Ashland’s total debt had an outstanding principal balance of $1,405 million, discounts of $22 million, and debt issuance costs of $9 million. Ashland has no long-term debt (excluding debt issuance costs) maturing within 2026, $4 million in 2027, $573 million due in fiscal 2028, $97 million due in 2029, zero in 2030, and $450 million in 2031.
Ashland credit ratings
Ashland’s corporate credit rating by Standard & Poor’s was downgraded to BB during the three months ended March 31, 2026, and Moody’s Investor Services was downgraded to Ba2 during the six months ended March 31, 2026. As of March 31, 2026, both Moody’s Investor Services and Standard & Poor's outlook remained at stable. Subsequent changes to these ratings or outlook may have an effect on Ashland’s borrowing rate or ability to access capital markets in the future.
Ashland debt covenant restrictions
Ashland's 2022 Credit Agreement contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional subsidiary indebtedness, restrictions on subsidiary distributions, investments, mergers, sale of assets and restricted payments and other customary limitations. As of March 31, 2026, Ashland is in compliance with all debt agreement covenant restrictions under the 2022 Credit Agreement.
The maximum consolidated net leverage ratio permitted under the 2022 Credit Agreement is 4.0. The 2022 Credit Agreement defines the consolidated net leverage ratio as the ratio of consolidated indebtedness minus unrestricted cash and cash equivalents to consolidated EBITDA (Covenant Adjusted EBITDA) for any measurement period. In general, the 2022 Credit Agreement defines Covenant Adjusted EBITDA as net income (loss) plus consolidated interest charges, taxes, depreciation and amortization expense, fees and expenses related to capital market transactions and proposed or actual acquisitions and divestitures, restructuring and integration charges, noncash stock and equity compensation expense, and any other nonrecurring expenses or losses that do not represent a cash item in such period or any future period; less any noncash gains or other items increasing net income (loss). The computation of Covenant Adjusted EBITDA differs from the calculation of EBITDA and Adjusted EBITDA, which have been reconciled above in the “consolidated review” section. In general, consolidated indebtedness includes debt plus all purchase money indebtedness, banker’s acceptances and bank guaranties, deferred purchase price of property or services, attributable indebtedness and guarantees. At March 31, 2026, Ashland’s calculation of the consolidated net leverage ratio was 2.6.
The minimum required consolidated interest coverage ratio under the 2022 Credit Agreement is 3.0. The 2022 Credit Agreement defines the consolidated interest coverage ratio as the ratio of Covenant Adjusted EBITDA to
consolidated interest charges for any measurement period. At March 31, 2026, Ashland’s calculation of the consolidated interest coverage ratio was 6.5.
Any change in Covenant Adjusted EBITDA of $100 million would have an approximate 0.5x effect on the consolidated net leverage ratio and a 1.6x effect on the consolidated interest coverage ratio. The change in consolidated indebtedness of $100 million would affect the consolidated leverage ratio by approximately 0.3x.
Additional capital resources
Total equity
Total equity decreased by $38 million since September 30, 2025 to $1,866 million at March 31, 2026. The decrease of $38 million was due to dividends of $38 million and $10 million of translation losses partially offset by $6 million of common stock issued and $4 net income.
2023 Stock Repurchase program
On June 28, 2023, Ashland's board of directors authorized a new evergreen $1 billion common share repurchase program ("2023 Stock Repurchase Program"). As of March 31, 2026, $520 million remained available for repurchase under the 2023 Stock Repurchase Program.
Stock repurchase program agreements
The following table provides the common stock repurchase activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Six months ended |
|
|
|
March 31 |
|
|
March 31 |
|
(In millions, except per share data) |
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
Number of shares repurchased |
|
|
— |
|
|
|
1.50 |
|
|
|
— |
|
|
|
1.50 |
|
Weighted-average price per share(a) |
|
$ |
— |
|
|
$ |
64.90 |
|
|
$ |
— |
|
|
$ |
64.90 |
|
Aggregate purchase price(a) |
|
$ |
— |
|
|
$ |
100 |
|
|
$ |
— |
|
|
$ |
100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)Includes transaction costs.
Stockholder dividends
Ashland paid dividends of 41.5 cents per share for the first and second quarters of fiscal 2026 and 40.5 cents per share in the first and second quarters of fiscal 2025.
Capital expenditures
Capital expenditures were $31 million for the six months ended March 31, 2026, compared to $44 million for the six months ended March 31, 2025.
CRITICAL ACCOUNTING POLICIES
The preparation of Ashland’s Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses, and the disclosures of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include, but are not limited to, environmental remediation, asbestos litigation, the accounting for goodwill and other indefinite-lived intangible assets and income taxes. These accounting policies are discussed in detail in “Management’s Discussion and Analysis – Critical Accounting Policies” in Ashland’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions. Management has reviewed the estimates affecting these items with the Audit Committee of Ashland’s Board of Directors. No material changes have been made to the valuation techniques during the three and six months ended March 31, 2026.
OUTLOOK
Ashland is updating its full-year fiscal 2026 sales guidance to a range of $1,835 to $1,870 million and its Adjusted EBITDA guidance to a range of $385 to $400 million. The updated outlook reflects productivity challenges associated with the Hopewell scale-up, as well as softer energy-related demand tied to the Middle East conflict and
reduced EV driven demand for BDO based derivatives. These impacts are partially offset by resilient demand in core end markets, ongoing pricing actions, and continued growth across the globalize and innovate platforms.
Despite a mixed macroeconomic backdrop, Ashland’s core Personal Care and Life Sciences end markets continue to show resilience, underpinned by stable fundamentals and sustained momentum in innovation‑led and globalized product offerings. Second quarter sales trends were encouraging, reflecting solid momentum across several consumer‑focused markets, with early third quarter activity showing a continuation of this commercial strength. While cost‑savings initiatives remain in progress, a slower‑than‑anticipated productivity ramp‑up associated with the Hopewell HEC manufacturing site is delaying the pace of benefit realization. Ashland continues to expect the year to follow a typical seasonal cadence, with stronger performance anticipated in the second half as commercial activity builds and operational stability improves.
Updating prior guidance
•Sales: $1,835 to $1,870 million
•Adjusted EBITDA: $385 million to $400 million
•Adjusted Diluted Earnings Per Share Excluding Intangibles Amortization: mid-to-high single-digit growth
•Ongoing Free Cash Flow Conversion: approximately 50 percent of Adjusted EBITDA with capital expenditures of approximately $100 million
Key planning assumptions
•Portfolio Optimization initiatives completed last year continue to support mix improvement and structural margin resiliency
•Demand in Life Sciences and Personal Care is expected to remain resilient, supported by stable fundamentals and progress across innovation-driven and globalized product lines
•Specialty Additives and Intermediates markets remain stable at trough levels, with a coatings recovery expected to be regionally uneven until broader industrial and housing activity improves. In Specialty Additives the company is expanding its coatings product offering to shift momentum to overall growth. Against this backdrop, the outlook differs across key end markets, with specific areas under pressure:
oConstruction is expected to remain a year‑over‑year headwind as the company actively manages product mix toward higher‑value, pharma‑grade applications.
oEnergy, a smaller end market exposure, is expected to decline in the second half due to the evolving conflict in the Middle East.
oEV battery manufacturing build‑outs continue to be delayed amid softer demand.
•Growth in high-value globalized platforms including biofunctional actives, microbial protection, injectables, and tablet coatings is expected to outpace underlying markets
•The manufacturing optimization program is progressing; however, fiscal 2026 savings expectations have been reduced by approximately $10 to $12 million, reflecting delayed benefit realization driven primarily by a slower‑than‑anticipated productivity ramp‑up at the Hopewell HEC site. Corrective actions are underway, with gradual improvement expected as operational stability is restored over time
•Raw material and freight costs are expected to trend higher amid geopolitically related supply pressures in the Middle East
•Ashland believes it is favorably positioned on the global cost curve and has implemented recent pricing actions that are expected to substantially offset these impacts
•Tariff-related uncertainty remains elevated, and the outlook assumes no material incremental impacts beyond known exposures, with mitigation actions aligned to current regulatory expectations
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Ashland’s market risk exposure at March 31, 2026 is generally consistent with the types of market risk exposures presented in Ashland’s Annual Report on Form 10-K for the fiscal year ended September 30, 2025.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures - As of the end of the period covered by this quarterly report, Ashland, under the supervision and with the participation of its management, including Ashland’s Chief Executive Officer and its Chief Financial Officer, evaluated the effectiveness of Ashland’s disclosure controls and procedures pursuant to Rule 13a-15(b) and 15d-15(b) promulgated under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of March 31, 2026.
Changes in Internal Control over Financial Reporting - During the six months ended March 31, 2026, there were no significant changes in Ashland's internal control over financial reporting, or in other factors, that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, Ashland's internal control over financial reporting.