Ashland(ASH) - 2026 Q1 - Quarterly Report

Financial Performance - Sales for the three months ended December 31, 2025, were $386 million, a decrease of 4.7% compared to $405 million in the same period of 2024[7] - Gross profit for the same period was $105 million, down from $111 million, reflecting a gross margin of 27.2%[7] - Operating loss narrowed to $6 million from a loss of $179 million year-over-year, indicating improved operational efficiency[7] - Net loss for the quarter was $12 million, significantly reduced from a net loss of $165 million in the prior year[7] - The company reported a loss from continuing operations of $14 million for the three months ended December 31, 2025, compared to a loss of $166 million for the same period in 2024[106] - The diluted EPS from continuing operations improved to a loss of $0.30 in Q1 2025 from a loss of $3.51 in Q1 2024, reflecting a positive change of $3.21[148] - Adjusted EBITDA for the three months ended December 31, 2025, was $58 million, compared to $61 million in the same period of 2024, indicating a slight decline[185] - The company reported an EBITDA of $42 million for the three months ended December 31, 2025, compared to a loss of $128 million in the same period of 2024, reflecting a significant improvement[196] Cash and Liquidity - Cash and cash equivalents increased to $304 million from $215 million at the end of the previous quarter, showing improved liquidity[11] - As of December 31, 2025, Ashland had $596 million of remaining borrowing capacity under its 2022 Credit Agreement[63] Assets and Liabilities - Total assets decreased to $4,519 million from $4,611 million, primarily due to changes in current and noncurrent assets[9] - Total current liabilities decreased to $366 million from $423 million, indicating better management of short-term obligations[9] - Ashland's total stockholders' equity decreased to $1.878 billion as of December 31, 2025, down from $2.592 billion in 2024[110] Restructuring and Operational Efficiency - Ashland initiated a restructuring plan in fiscal 2025 to offset impacts from the sale of the Nutraceuticals and Avoca businesses, continuing into fiscal 2026[26] - The total severance expense for the 2025 Restructuring Program was $2 million for the three months ended December 31, 2025, compared to $4 million for the same period in 2024[30] - As of December 31, 2025, the balance for the 2025 Restructuring Program severance liabilities was $4 million, down from $5 million at September 30, 2025[32] - The company continues to refine its expense allocation methodologies for reportable segments as market conditions evolve[123] Segment Performance - Sales in the Life Sciences segment increased to $139 million in Q1 2026, up from $134 million in Q1 2025[114] - Life Sciences segment sales increased to $139 million in 2025 from $134 million in 2024, while Personal Care segment sales remained stable at $123 million[125] - Specialty Additives segment sales were $102 million in 2025, a decrease from $115 million in 2024[125] - The Personal Care segment's operating income remained stable at $11 million, despite a decrease in sales[196] Research and Development - Research and development expenses remained stable at $13 million, reflecting ongoing investment in innovation[7] - Research and development expenses for Life Sciences were $4 million in 2025, consistent with 2024[125] Tax and Compliance - The effective tax rate for the three months ended December 31, 2025, was a benefit of 7%, compared to a benefit of 21% for the same period in 2024[68][69] - The effective tax rate for Q1 2025 was a benefit of 7%, significantly improved from a 21% benefit in Q1 2024, influenced by jurisdictional income mix and discrete tax items[164][165] Environmental and Legal Reserves - Total reserves for asbestos claims were $246 million at December 31, 2025, down from $258 million at September 30, 2025[79] - Ashland estimates that the upper end of reasonably possible future costs for identified environmental remediation sites could reach approximately $485 million[102] - Environmental remediation reserves totaled $226 million as of December 31, 2025, unchanged from September 30, 2025, with $179 million classified as other noncurrent liabilities[98] Other Income and Expenses - The company recorded a pre-tax gain of $2 million from the sale of excess land property during the quarter[21] - Investment income for the three months ended December 31, 2025, was $6 million, compared to $5 million for the same period in 2024[43] - The company reported a net interest and other expense of $8 million for the three months ended December 31, 2025, down from $28 million in 2024[126]