Core Viewpoint - Ashland reported a significant decline in revenue and adjusted EBITDA for Q3 FY2025, falling short of analysts' expectations, with management signaling caution due to ongoing market softness and macroeconomic uncertainty [1][15][17] Financial Performance - Revenue for Q3 FY2025 was $463 million, missing consensus estimates by $13.6 million, and down 14.9% year-over-year from $544 million [2][5] - Non-GAAP EPS from continuing operations was $1.04, below the $1.20 consensus and down 30.2% from $1.49 in Q3 FY2024 [2][12] - Adjusted EBITDA was $113 million, a decrease of 18.7% from $139 million in the prior year [2][12] - Ongoing free cash flow was $108 million, down from $112 million in Q3 FY2024 [2][11] Business Overview and Strategic Focus - Ashland operates in various markets including pharmaceuticals, personal care, coatings, and industrial materials, focusing on performance-enhancing ingredients [3] - The company is engaged in portfolio optimization, emphasizing high-value specialty offerings and operational efficiency [4][17] Segment Performance - Life Sciences segment saw a 17% decline in sales, but a 4% organic increase in pharmaceutical applications [6] - Personal Care revenue declined 16%, with a 27.9% Adjusted EBITDA margin despite lower sales [7] - Specialty Additives experienced a 13% sales drop, with Adjusted EBITDA falling 32% to $26 million [8][9] - Intermediates segment reported a sales decline, with Adjusted EBITDA down 22% [10] Cost Management and Restructuring - The company completed a $30 million restructuring program, expecting an additional $7.5 million in cost savings in Q4 [13] - A $60 million manufacturing optimization effort is underway to improve margins [13] Outlook - Management revised full-year guidance, projecting sales between $1.825 billion and $1.850 billion, and adjusted EBITDA between $400 million and $410 million [15][16] - The company anticipates a stronger Q4, driven by cost savings from restructuring [15] - Key focus areas include organic volume stabilization, margin control, and inventory management [16][17]

PART I - FINANCIAL INFORMATION [Item 1. Financial Statements](index=2&type=section&id=Item%201.%20Financial%20Statements) The financial statements for Q2 2025 reveal a **$742 million net loss**, primarily due to a **$706 million goodwill impairment**, with sales declining **15%** to **$463 million** and total assets decreasing from **$5.6 billion** to **$4.6 billion** | Financial Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Sales | $463 million | $544 million | | Gross Profit | $132 million | $186 million | | Operating Loss | $(708) million | $(61) million | | Net Loss | $(742) million | $6 million (Net Income) | | Diluted Loss Per Share | $(16.21) | $0.12 (Diluted EPS) | | Balance Sheet Item | June 30, 2025 | September 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,124 million | $1,195 million | | Goodwill | $705 million | $1,381 million | | Total Assets | $4,621 million | $5,645 million | | Long-term Debt | $1,382 million | $1,349 million | | Total Stockholders' Equity | $1,889 million | $2,868 million | | Cash Flow Item | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash from Operating Activities | $94 million | $382 million | | Cash from Investing Activities | $0 million | $(54) million | | Cash from Financing Activities | $(161) million | $(310) million | | Decrease in Cash | $(93) million | $(18) million | [Note B – Divestitures](index=6&type=section&id=Note%20B%20%E2%80%93%20Divestitures) The company completed the Avoca business sale in Q2 2025, incurring an impairment charge, following a similar divestiture of the Nutraceuticals business in the prior fiscal year - Completed the sale of the Avoca business in Q2 2025, recording an impairment charge of **$183 million** for the nine months ended June 30, 2025[20](index=20&type=chunk)[22](index=22&type=chunk) - In the prior year, the sale of the Nutraceuticals business resulted in a **$99 million impairment charge** for the three and nine months ended June 30, 2024[23](index=23&type=chunk)[25](index=25&type=chunk) [Note D – Restructuring Activities](index=8&type=section&id=Note%20D%20%E2%80%93%20Restructuring%20Activities) Ashland initiated a new restructuring plan in fiscal 2025 to mitigate divestiture impacts and optimize manufacturing, resulting in accelerated depreciation charges - A new restructuring plan was initiated in fiscal 2025 to offset the impact of the Nutraceuticals sale and other portfolio actions[33](index=33&type=chunk) Accelerated Depreciation Expense | Period | Accelerated Depreciation Expense | | :--- | :--- | | Three months ended June 30, 2025 | $27 million | | Nine months ended June 30, 2025 | $40 million | [Note G – Goodwill and Other Intangible Assets](index=13&type=section&id=Note%20G%20%E2%80%93%20Goodwill%20and%20Other%20Intangible%20Assets) A **$706 million** goodwill impairment was recorded in Q3 2025, impacting Life Sciences and Specialty Additives, driven by stock price decline and a weakening macroeconomic environment - Triggering events, including a decline in stock price and slowing growth, led to a quantitative goodwill impairment assessment during Q3 2025[55](index=55&type=chunk) Goodwill Impairment Charge | Reporting Unit | Goodwill Impairment Charge | | :--- | :--- | | Life Sciences | $375 million | | Specialty Additives | $331 million | | **Total** | **$706 million** | - The goodwill impairment charges are non-deductible for tax purposes[57](index=57&type=chunk) [Note H – Debt and Other Financing Activities](index=16&type=section&id=Note%20H%20%E2%80%93%20Debt%20and%20Other%20Financing%20Activities) As of June 30, 2025, total long-term debt was **$1.38 billion**, with **$596 million** available under the revolving credit facility, and the company complied with all debt covenants - Total long-term debt (less issuance costs) was **$1,382 million** at June 30, 2025[69](index=69&type=chunk) - Available borrowing capacity under the 2022 Credit Agreement was **$596 million** as of June 30, 2025[77](index=77&type=chunk) Debt Covenant Compliance | Debt Covenant | Requirement | Actual (June 30, 2025) | | :--- | :--- | :--- | | Max. Net Leverage Ratio | 4.0 | 2.9 | | Min. Interest Coverage Ratio | 3.0 | 6.5 | [Note L – Litigation, Claims and Contingencies](index=21&type=section&id=Note%20L%20%E2%80%93%20Litigation%2C%20Claims%20and%20Contingencies) As of June 30, 2025, the company held **$450 million** in asbestos reserves and **$242 million** for environmental remediation Reserves | Reserve Type | Amount (June 30, 2025) | | :--- | :--- | | Ashland Asbestos Reserve | $265 million | | Hercules Asbestos Reserve | $185 million | | Environmental Remediation Reserve | $242 million | - The company estimates that the upper range of reasonably possible future costs for environmental remediation could be as high as approximately **$510 million**[124](index=124&type=chunk) [Note N – Equity Items](index=30&type=section&id=Note%20N%20%E2%80%93%20Equity%20Items) Ashland repurchased **$100 million** of common stock, with **$520 million** remaining under its **$1 billion** program, and increased its quarterly dividend by **2%** to **$0.415** per share - **$520 million** remained available for repurchase under the 2023 Stock Repurchase Program as of June 30, 2025[128](index=128&type=chunk) - For the nine months ended June 30, 2025, the company repurchased **1.5 million shares** for an aggregate price of **$100 million**[129](index=129&type=chunk) - The quarterly cash dividend was increased by **2%** to **$0.415 per share**, paid in Q3 2025[130](index=130&type=chunk) [Note Q – Reportable Segment Information](index=34&type=section&id=Note%20Q%20%E2%80%93%20Reportable%20Segment%20Information) Q3 2025 segment performance was severely impacted by goodwill impairments in Life Sciences and Specialty Additives, resulting in operating losses and sales declines across all segments Segment Performance | Segment | Sales (Q3 2025) | Sales (Q3 2024) | Operating Income (Loss) (Q3 2025) | | :--- | :--- | :--- | :--- | | Life Sciences | $162M | $195M | $(343)M | | Personal Care | $147M | $175M | $25M | | Specialty Additives | $131M | $150M | $(345)M | | Intermediates | $33M | $36M | $4M | - The operating loss in Life Sciences includes a **$375 million goodwill impairment**[152](index=152&type=chunk) - The operating loss in Specialty Additives includes a **$331 million goodwill impairment**[152](index=152&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q3 2025 sales declined **15%** due to divestitures and lower volumes, with a significant net loss driven by a **$706 million** goodwill impairment, while the full-year 2025 outlook projects sales of **$1.825-$1.850 billion** and Adjusted EBITDA of **$400-$410 million** - The company recorded a total non-cash goodwill impairment charge of **$706 million** (**$375 million** for Life Sciences and **$331 million** for Specialty Additives) in Q3 2025 due to a decline in stock price and a weakening macroeconomic environment[173](index=173&type=chunk) Drivers of Sales Change (Q3 2025 vs Q3 2024) | Driver of Sales Change | Impact (in millions) | | :--- | :--- | | Divestitures | $(42) | | Volume | $(35) | | Price/mix | $(11) | | Foreign currency exchange | $7 | | **Total Change** | **$(81)** | - Updated full-year fiscal 2025 outlook: Sales of approximately **$1.825 billion to $1.850 billion** and Adjusted EBITDA in the range of **$400 million to $410 million**[318](index=318&type=chunk) [Results of Operations – Reportable Segment Review](index=60&type=section&id=Results%20of%20Operations%20%E2%80%93%20Reportable%20Segment%20Review) Q3 2025 sales declined across all segments, with Life Sciences down **17%** and Personal Care down **16%** due to divestitures and lower volumes, while Adjusted EBITDA decreased for most segments Segment Performance (Q3'25 vs Q3'24) | Segment | Sales Change (Q3'25 vs Q3'24) | Adjusted EBITDA (Q3'25) | Adjusted EBITDA (Q3'24) | | :--- | :--- | :--- | :--- | | Life Sciences | -17% | $54M | $59M | | Personal Care | -16% | $41M | $51M | | Specialty Additives | -13% | $26M | $38M | | Intermediates | -8% | $7M | $9M | [Financial Position](index=72&type=section&id=Financial%20Position) As of June 30, 2025, the company maintained **$803 million** in available liquidity, with ongoing Free Cash Flow at **$75 million**, a decrease from the prior year, and total debt at **$1.38 billion** Cash Flow Metrics | Liquidity Metric | Nine Months Ended June 30, 2025 | Nine Months Ended June 30, 2024 | | :--- | :--- | :--- | | Free Cash Flow | $30 million | $283 million | | Ongoing Free Cash Flow | $75 million | $182 million | - Total available liquidity, including cash and the revolving credit facility, was **$803 million** at June 30, 2025[293](index=293&type=chunk) - Debt as a percent of capital employed increased to **42%** at June 30, 2025, from **32%** at September 30, 2024[295](index=295&type=chunk) [Outlook](index=80&type=section&id=Outlook) Ashland updated its full-year fiscal 2025 outlook, projecting sales of **$1.825-$1.850 billion** and Adjusted EBITDA of **$400-$410 million**, reflecting a subdued macroeconomic environment - The company updated its full-year fiscal 2025 outlook due to a subdued macroeconomic environment and cautious customer channels[314](index=314&type=chunk) FY2025 Outlook | FY2025 Outlook | Range | | :--- | :--- | | Sales | $1.825 billion - $1.850 billion | | Adjusted EBITDA | $400 million - $410 million | - The company's **$30 million** restructuring program is expected to generate approximately **$7.5 million** in savings in the fourth quarter[317](index=317&type=chunk) [Item 4. Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no significant changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[321](index=321&type=chunk) - There were no significant changes in internal control over financial reporting during the nine months ended June 30, 2025[322](index=322&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=82&type=section&id=Item%201.%20Legal%20Proceedings) The company faces material legal proceedings, primarily asbestos litigation and environmental matters, stemming from historical operations of Ashland and Hercules - Ashland is subject to liabilities from personal injury claims caused by asbestos exposure, primarily from indemnification obligations for the sale of Riley Stoker Corporation and the acquisition of Hercules LLC[325](index=325&type=chunk)[326](index=326&type=chunk) - The company has been identified as a "potentially responsible party" (PRP) at **53 environmental cleanup sites** under CERCLA and similar state laws as of June 30, 2025[328](index=328&type=chunk) [Item 1A. Risk Factors](index=83&type=section&id=Item%201A.%20Risk%20Factors) No material changes were reported to the risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended September 30, 2024 - No material changes from the risk factors disclosed in the Annual Report on Form 10-K for the fiscal year ended September 30, 2024[332](index=332&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=83&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Ashland did not repurchase common stock in Q3 2025, with **$520 million** remaining available under its **$1 billion** share repurchase program - No shares were repurchased during the three months ended June 30, 2025[333](index=333&type=chunk) - As of June 30, 2025, **$520 million** remained available for repurchase under the 2023 Stock Repurchase Program[333](index=333&type=chunk)

Financial Data and Key Metrics Changes - Q3 sales were $463 million, down 15% year over year, including a $53 million impact from portfolio optimization, with organic sales declining 5% primarily due to lower volumes [14][8] - Adjusted EBITDA was $113 million, down 19% year over year or 10% excluding portfolio actions, with adjusted EBITDA margins at 24.4%, down 120 basis points [15][8] - Adjusted EPS, excluding acquisition amortization, was $1.04, down 30% from the prior year, with a noncash goodwill impairment of $6 million recorded [16][8] Business Line Data and Key Metrics Changes - Life Sciences sales were $162 million, down 17% year over year, primarily due to portfolio optimization initiatives, with organic sales declining just 1% [18][9] - Personal Care sales were $147 million, down 16% year over year, driven by portfolio optimization actions, with organic sales declining 6% [24][9] - Specialty Additives sales declined 13% to $131 million, with organic sales and volumes both down 11% [29][9] Market Data and Key Metrics Changes - Life Sciences maintained strong margins of 33% for the second consecutive quarter despite a mixed demand environment [9][10] - Intermediates faced a challenging supply-demand landscape, particularly in Europe, with sales down to $33 million from $36 million year over year [21][9] - Personal Care showed early signs of recovery, particularly in biofunctional actives, with sales up double digits supported by a robust commercial pipeline [25][9] Company Strategy and Development Direction - The company completed its portfolio optimization and restructuring program ahead of schedule, focusing on cost savings and operational efficiency [12][11] - The strategic imperative is to drive consistent operations at higher utilization rates while balancing cost actions with strategic reinvestment [33][12] - The company aims to expand its reach in underpenetrated markets and drive differentiation through innovation [12][11] Management's Comments on Operating Environment and Future Outlook - Management noted that while the external environment remains uncertain, the company is executing with discipline and focus, positioning for long-term resilient performance [12][11] - The company expects full-year fiscal 2025 sales of approximately $1.825 billion to $1.85 billion and adjusted EBITDA in the range of $400 million to $410 million [45][12] - Management highlighted that demand patterns remain mixed, with pharma steady and personal care showing encouraging signs of recovery [42][12] Other Important Information - The company generated nearly 100% free cash flow conversion in the quarter, demonstrating the strength of its underlying business [15][8] - Liquidity at quarter end was over $800 million, with net leverage at 2.9 times, providing flexibility for strategic investments [17][8] - The company is actively monitoring tariff-related uncertainties but does not anticipate a material direct impact on fiscal year 2025 results [43][12] Q&A Session Summary Question: Insights on fiscal year 2026 outlook and demand recovery - Management indicated that while they are not providing guidance for fiscal year 2026, they see stable demand in personal care and pharma, with potential upside in specialty additives depending on market conditions [50][51] Question: Clarification on cost savings from restructuring and network optimization - Management confirmed that incremental savings in fiscal year 2026 should be in the range of $55 million to $60 million year over year, with restructuring actions completed [74][75] Question: Stability in personal care markets and customer feedback - Management noted stability in mass brands and some variability in the prestige segment, with positive traction observed in Asia and Europe [66][67]

Financial Data and Key Metrics Changes - Adjusted EBITDA was $113 million, down 19% year over year, or 10% excluding portfolio actions, driven by lower organic sales and production volume [7][15] - Sales for Q3 were $463 million, down 15% year over year, including a $53 million impact from portfolio optimization [14] - Adjusted EPS, excluding acquisition amortization, was $1.04, down 30% from the prior year [16] - Adjusted EBITDA margin was 24.4%, down 120 basis points [15] Business Line Data and Key Metrics Changes - Life Sciences sales were $162 million, down 17% year over year, primarily due to portfolio optimization initiatives [19] - Personal Care sales were $147 million, down 16% year over year, driven by portfolio optimization actions [25] - Specialty Additives sales declined 13% to $131 million, with organic sales and volumes both down 11% [30] - Intermediates generated $33 million in sales, down from $36 million in the same period last year [22] Market Data and Key Metrics Changes - Demand patterns remain mixed across the portfolio, with pharma steady and recovering, while personal care shows encouraging signs [42] - Specialty additives and intermediates are still facing headwinds, particularly in China [43] - Approximately 85% of the portfolio is tied to consumer end markets, many of which are non-cyclical and more resilient [11] Company Strategy and Development Direction - The company has completed its portfolio optimization and restructuring program, which remains ahead of schedule [12] - Focus on cost savings and operational discipline to support strong margins [6] - The company aims to drive differentiation and margin-accretive growth through innovation [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in long-term opportunities despite current mixed demand [42] - The company is monitoring regulatory developments and does not anticipate a material direct impact on fiscal year results from tariff-related uncertainties [44] - Management highlighted the importance of maintaining a disciplined capital allocation strategy while focusing on productivity and innovation [49] Other Important Information - The company generated nearly 100% free cash flow conversion in the quarter, demonstrating the strength of its underlying business [8] - Liquidity at quarter end was over $800 million, providing flexibility for strategic investments [17] Q&A Session Summary Question: Insights on fiscal year 2026 and market recovery - Management discussed the cleaner portfolio and stable demand expected in personal care and pharma, with potential upside in specialty additives depending on market conditions [54][56] Question: Clarification on cost savings and restructuring - Management confirmed that restructuring and network optimization actions are complete, with expected savings flowing through to the P&L [78][80] Question: Stability in personal care markets - Management noted stability in mass brands, while the prestige segment has shown variability, particularly in biofunctional actives [70][72] Question: Near-term sales guidance and segment performance - Management indicated expectations for a sales increase in Q4 driven by specific portfolio activities, particularly in personal care and pharma [95][98]

earnings conference call third quarter fiscal 2025 July 30, 2025 O Regulation G: Adjusted Results the information presented herein regarding certain uncudited adjusted results does not conform to generally accepted accounting principles in the United Srates (U.S. GAAP) should not be construed as an affernative to the reported results determined in accordance with U.S. GAAP. Ashland has included this non-GAAP information to assis in understranding the operating performance of the company ond its reportable s ...

Core Insights - Ashland (ASH) reported a revenue of $463 million for the quarter ended June 2025, reflecting a year-over-year decline of 14.9% and an EPS of $1.04 compared to $1.49 a year ago [1] - The revenue fell short of the Zacks Consensus Estimate of $468.37 million by 1.15%, and the EPS was also below the consensus estimate of $1.15, resulting in a surprise of -9.57% [1] Revenue Breakdown - Revenue from Intermediates was $33 million, slightly below the average estimate of $34.81 million, marking a year-over-year decline of 8.3% [4] - Revenue from Specialty Additives reached $131 million, exceeding the estimated $123.73 million, but still represented a decline of 12.7% year-over-year [4] - Personal Care revenue was reported at $147 million, slightly above the estimate of $146.57 million, with a year-over-year decrease of 16% [4] - Life Sciences revenue was $162 million, below the average estimate of $169.65 million, showing a year-over-year decline of 16.9% [4] Adjusted EBITDA Performance - Adjusted EBITDA for Life Sciences was $54 million, slightly below the average estimate of $55.16 million [4] - Adjusted EBITDA for Intermediates was reported at $7 million, exceeding the average estimate of $3.48 million [4] - Adjusted EBITDA for Specialty Additives was $26 million, close to the average estimate of $26.25 million [4] - Adjusted EBITDA for Personal Care was $41 million, below the average estimate of $43.05 million [4] Stock Performance - Ashland's shares have returned +1.3% over the past month, underperforming the Zacks S&P 500 composite's +3.6% change [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance in the near term [3]

Company Performance - Ashland reported quarterly earnings of $1.04 per share, missing the Zacks Consensus Estimate of $1.15 per share, and down from $1.49 per share a year ago, representing an earnings surprise of -9.57% [1] - The company posted revenues of $463 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 1.15%, and down from $544 million year-over-year [2] - Over the last four quarters, Ashland has surpassed consensus EPS estimates only once and has topped consensus revenue estimates just once [2] Stock Outlook - Ashland shares have declined approximately 28.7% since the beginning of the year, contrasting with the S&P 500's gain of 8.6% [3] - The current consensus EPS estimate for the upcoming quarter is $1.25 on revenues of $489.59 million, and for the current fiscal year, it is $3.67 on revenues of $1.85 billion [7] Industry Context - The Chemical - Specialty industry, to which Ashland belongs, is currently ranked in the bottom 40% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that the outlook for the industry can significantly impact stock performance [5][8]

[Executive Summary & Financial Highlights](index=1&type=section&id=Ashland%20reports%20third%20quarter%20fiscal%202025%20results%20and%20narrows%20full-year%20outlook%20range) Ashland reported a 15% sales decline and a significant net loss in Q3 FY2025 due to goodwill impairment, while management highlighted resilient performance and strategic cost initiatives [Q3 FY2025 Overall Financial Performance](index=1&type=section&id=Q3%20FY2025%20Overall%20Financial%20Performance) Ashland's Q3 FY2025 sales declined 15% to $463 million, with a $742 million net loss primarily from a $706 million goodwill impairment, despite resilient Adjusted EBITDA Q3 FY2025 Key Financial Metrics | Metric | Q3 FY2025 | Q3 FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | Sales | $463 million | $544 million | -15% | | Loss from Continuing Operations | $(719) million | $31 million | N/A | | Diluted EPS from Cont. Ops | $(15.70) | $0.60 | N/A | | Net Loss | $(742) million | $6 million (Income) | N/A | | Adjusted EBITDA | $113 million | $139 million | -19% | | Cash Flow from Operations | $114 million | $128 million | -11% | - A non-cash goodwill impairment charge of **$706 million** was the primary driver of the significant loss from continuing operations and net loss[4](index=4&type=chunk)[6](index=6&type=chunk) - Portfolio optimization initiatives, involving the divestiture of lower-margin products, reduced overall sales by approximately **$53 million (10%)** and Adjusted EBITDA by **$13 million (9%)**; excluding these, sales declined **5%** and Adjusted EBITDA declined **10%**[4](index=4&type=chunk)[5](index=5&type=chunk)[6](index=6&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Guillermo Novo highlighted resilient performance amid mixed demand, emphasizing cost savings and operational discipline, with varied segment dynamics across pharma, personal care, and specialty additives - Management characterized performance as resilient despite volumes falling short of expectations, underscoring the importance of cost savings and operational discipline in supporting strong margins[3](index=3&type=chunk) - Life Sciences maintained pharma growth momentum, positioning the segment for continued progress[3](index=3&type=chunk) - Personal Care operated in a stable but subdued demand environment, impacted by customer-specific softness in biofunctional actives[3](index=3&type=chunk) - Specialty Additives was impacted by a soft architectural coatings season and prior-year share loss in China[3](index=3&type=chunk) [Reportable Segment Performance](index=2&type=section&id=Reportable%20Segment%20Performance) This section details the performance of Ashland's key segments, including Life Sciences, Personal Care, Specialty Additives, and Intermediates, highlighting sales, EBITDA, and key drivers for each [Life Sciences](index=2&type=section&id=Life%20Sciences) Life Sciences sales fell 17% to $162 million, primarily due to portfolio optimization, though pharma applications showed growth, maintaining a strong 33% Adjusted EBITDA margin Life Sciences Q3 FY2025 Performance | Metric | Q3 FY2025 | Q3 FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | Sales | $162 million | $195 million | -17% | | Adjusted Operating Income | $40 million | $43 million | -7% | | Adjusted EBITDA | $54 million | $59 million | -8% | | Adjusted EBITDA Margin | 33% | 30.3% | +2.7 p.p. | - Portfolio optimization initiatives, including the divestiture of the Nutraceuticals business, reduced sales by approximately **$32 million (16%)**[9](index=9&type=chunk) - Pharma applications demonstrated strength, with organic sales volumes growing **4%**, and "globalize" business lines delivered double-digit year-over-year sales growth[9](index=9&type=chunk) [Personal Care](index=3&type=section&id=Personal%20Care) Personal Care sales decreased 16% to $147 million, mainly due to the Avoca divestiture and customer-specific softness, yet maintained a strong 27.9% Adjusted EBITDA margin Personal Care Q3 FY2025 Performance | Metric | Q3 FY2025 | Q3 FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | Sales | $147 million | $175 million | -16% | | Adjusted Operating Income | $26 million | $32 million | -19% | | Adjusted EBITDA | $41 million | $51 million | -20% | | Adjusted EBITDA Margin | 27.9% | 29.1% | -1.2 p.p. | - Portfolio optimization, largely the divestiture of the Avoca business, reduced sales by approximately **$18 million (10%)** and Adjusted EBITDA by **$7 million**[12](index=12&type=chunk)[13](index=13&type=chunk) - Excluding portfolio optimization, the sales decline was driven by customer-specific softness in biofunctional actives and a tough comparison for microbial protection, while care ingredients remained stable[12](index=12&type=chunk) [Specialty Additives](index=3&type=section&id=Specialty%20Additives) Specialty Additives sales fell 13% to $131 million, primarily due to lower coatings sales in China and competitive pressures, despite growth in performance specialties Specialty Additives Q3 FY2025 Performance | Metric | Q3 FY2025 | Q3 FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | Sales | $131 million | $150 million | -13% | | Adjusted Operating Income | $9 million | $22 million | -59% | | Adjusted EBITDA | $26 million | $38 million | -32% | - The sales decline was driven by weakness in the China coatings market and competitive intensity in export markets, partially offset by growth in performance specialties and energy markets[14](index=14&type=chunk) - The company's recently announced HEC manufacturing network consolidation is expected to support future margin improvement in this segment[3](index=3&type=chunk)[15](index=15&type=chunk) [Intermediates](index=3&type=section&id=Intermediates) Intermediates sales decreased 8% to $33 million due to lower pricing, with Adjusted EBITDA falling 22% to $7 million, partially offset by tax credits Intermediates Q3 FY2025 Performance | Metric | Q3 FY2025 | Q3 FY2024 | YoY Change | | :--- | :--- | :--- | :--- | | Sales | $33 million | $36 million | -8% | | Adjusted Operating Income | $4 million | $6 million | -33% | | Adjusted EBITDA | $7 million | $9 million | -22% | [Unallocated & Other](index=4&type=section&id=Unallocated%20%26%20Other) Unallocated and other expense significantly decreased to $49 million, primarily due to a prior-year non-cash impairment charge, with Adjusted unallocated EBITDA at $15 million - The significant year-over-year decrease in unallocated expense was primarily due to a non-cash impairment on the nutraceuticals business in the prior-year quarter[18](index=18&type=chunk) [Financial Outlook](index=4&type=section&id=Financial%20Outlook) Ashland narrowed its full-year fiscal 2025 guidance, reflecting a subdued macroeconomic environment and ongoing strategic initiatives to enhance cost efficiency and margins [Full-Year Fiscal 2025 Guidance](index=4&type=section&id=Full-Year%20Fiscal%202025%20Guidance) Ashland narrowed its full-year fiscal 2025 outlook to sales of $1.825-$1.850 billion and Adjusted EBITDA of $400-$410 million, reflecting a cautious macroeconomic stance Updated Full-Year Fiscal 2025 Outlook | Metric | Guidance Range | | :--- | :--- | | Sales | $1.825 billion to $1.850 billion | | Adjusted EBITDA | $400 million to $410 million | - The updated outlook reflects a stable but subdued macroeconomic environment and continued caution across customer channels[19](index=19&type=chunk) - The company's guidance is weighted toward the lower end of the range, reflecting a prudent base-case stance amid ongoing uncertainty[23](index=23&type=chunk) [Management's Outlook and Strategic Initiatives](index=4&type=section&id=Management's%20Outlook%20and%20Strategic%20Initiatives) Management anticipates mixed demand, prioritizing a $30 million restructuring and $60 million manufacturing optimization to support margins and cash flow - The company is prioritizing controllable levers, including a **$30 million** restructuring program and a **$60 million** manufacturing network optimization initiative, to support margins[22](index=22&type=chunk) - The restructuring program is expected to generate approximately **$7.5 million** in savings in the fourth quarter[22](index=22&type=chunk) - Management remains committed to driving self-help initiatives to improve cost position and enhance operating consistency and efficiency[24](index=24&type=chunk) [Financial Statements and Reconciliations](index=8&type=section&id=Financial%20Statements%20and%20Reconciliations) This section presents Ashland's condensed consolidated financial statements and detailed non-GAAP reconciliations for Q3 FY2025, covering income, balance sheet, and cash flow [Statements of Condensed Consolidated Income (Loss)](index=8&type=section&id=Statements%20of%20Condensed%20Consolidated%20Income%20(Loss)) The Q3 FY2025 income statement shows a significant operating loss of $708 million and a net loss of $742 million, primarily due to a $706 million goodwill impairment charge Q3 FY2025 Income Statement Highlights (in millions) | Line Item | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Sales | $463 | $544 | | Gross Profit | $132 | $186 | | Goodwill Impairment | $706 | $0 | | Operating Loss | $(708) | $(61) | | Net Income (Loss) | $(742) | $6 | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2025, reflects a decrease in total assets to $4.62 billion from $5.65 billion, largely due to a goodwill impairment reducing the balance to $705 million Balance Sheet Highlights (in millions) | Line Item | June 30, 2025 | Sept 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,124 | $1,195 | | Goodwill | $705 | $1,381 | | Total Assets | $4,621 | $5,645 | | Long-term Debt | $1,382 | $1,349 | | Stockholders' Equity | $1,889 | $2,868 | [Statements of Condensed Consolidated Cash Flows](index=10&type=section&id=Statements%20of%20Condensed%20Consolidated%20Cash%20Flows) Ashland generated $114 million in operating cash flow for Q3 FY2025, a slight decrease from the prior year, with minimal investing activities and $69 million used in financing activities Q3 FY2025 Cash Flow Highlights (in millions) | Line Item | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Cash from Operating Activities | $114 | $128 | | Cash from Investing Activities | $1 | $(5) | | Cash from Financing Activities | $(69) | $(151) | | Increase (Decrease) in Cash | $39 | $(40) | [Non-GAAP Reconciliations](index=11&type=section&id=Non-GAAP%20Reconciliations) Detailed reconciliations from GAAP to non-GAAP metrics show Q3 FY2025 GAAP Net Loss of $742 million reconciled to Adjusted EBITDA of $113 million and Adjusted Diluted EPS of $0.78 Q3 FY2025 Reconciliation of Net Income (Loss) to Adjusted EBITDA (in millions) | Line Item | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Net income (loss) | $(742) | $6 | | Adjustments (Taxes, Interest, D&A, etc.) | $38 | $(40) | | EBITDA | $(683) | $(34) | | Operating key items (incl. goodwill impairment) | $773 | $148 | | Adjusted EBITDA | $113 | $139 | Q3 FY2025 Reconciliation of Diluted EPS | Line Item | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Diluted EPS from continuing operations (as reported) | $(15.70) | $0.60 | | Total key items adjustment per share | $16.48 | $0.58 | | Adjusted Diluted EPS from Continuing Operations | $0.78 | $1.18 | | Amortization expense adjustment (net of tax) | $0.26 | $0.31 | | Adjusted Diluted EPS Excl. Intangibles Amortization | $1.04 | $1.49 |

Core Insights - Ashland Inc. reported third-quarter fiscal year 2025 results, with sales of $463 million, a 15% decrease from $544 million in the prior year, primarily due to Portfolio Optimization initiatives [2][4][22] - The company narrowed its full-year fiscal 2025 outlook, expecting sales between $1.825 billion and $1.850 billion and Adjusted EBITDA in the range of $400 million to $410 million [22][18] Financial Performance - Net loss totaled $742 million, down from net income of $6 million in the prior year, largely due to a non-cash goodwill impairment charge of $706 million [3][4] - Adjusted EBITDA was $113 million, a 19% decrease from $139 million in the prior year, with Portfolio Optimization contributing to a 9% decline [5][4] - Cash flows from operating activities were $114 million, a decrease from $128 million in the prior-year quarter [6][4] Segment Performance - Life Sciences segment sales were $162 million, down 17% year-over-year, primarily due to Portfolio Optimization initiatives [8][9] - Personal Care sales totaled $147 million, a 16% decrease compared to the prior year, impacted by customer-specific softness in biofunctional actives [10][11] - Specialty Additives sales were $131 million, down 13% from the prior year, with a notable decline in coatings sales in China [13][14] Strategic Initiatives - The company is focusing on cost savings and operational discipline to support strong margins amid mixed demand trends [2][18] - Ashland is implementing a $30 million restructuring program expected to generate approximately $7.5 million in savings in the fourth quarter [21][18] - The company is also advancing a $60 million manufacturing network optimization initiative to enhance operational efficiency [21][18] Market Outlook - The macroeconomic environment remains stable but subdued, with mixed demand trends across segments [18][22] - The company is seeing resilience in pharma, stability in Personal Care, and early signs of recovery in specific areas [23][18] - Ashland is benefiting from favorable foreign currency movements and stable raw material costs, which are expected to support margin performance [20][18]

Core Viewpoint - Ashland Inc. has appointed William C. Whitaker as the new Chief Financial Officer, effective July 18, 2025, following his role as interim CFO since 2015 [1][2]. Company Overview - Ashland Inc. is a global additives and specialty ingredients company focused on environmental, social, and governance (ESG) principles, serving various consumer and industrial markets [3]. - The company employs approximately 2,960 professionals, including scientists, research chemists, engineers, and plant operators, who work on innovative solutions for customers in over 100 countries [3].