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DATE

Tuesday, Feb. 3, 2026 at 9 a.m. ET

CALL PARTICIPANTS

  • Chairman and Chief Executive Officer — Guillermo Novo
  • Chief Financial Officer — William Whitaker
  • Senior Vice President, Life Sciences — Alessandra Assis
  • Senior Vice President, Personal Care & Household — James Minicucci
  • Vice President, Specialty Additives — Dago Caceres
  • VP and General Manager, Intermediates — Sandy Klugman

TAKEAWAYS

  • Revenue -- $386 million, down 5%, with the Evoqua divestiture accounting for $10 million or 2% of the decline.
  • Ex-Evoqua Revenue Decline -- Sales decreased 3%, with demand described as "mixed" and price declines of 2% mainly on prior-year adjustments.
  • Adjusted EBITDA -- $58 million, a 5% decrease including a $1 million negative impact from the Evoqua divestiture; excluding Evoqua, adjusted EBITDA increased 3% due to favorable mix and lower SARD costs.
  • Calvert City Outage Impact -- $10 million hit to adjusted EBITDA in the quarter, with additional costs to extend into the next quarter.
  • Adjusted EBITDA Margin -- Stable at 15%, but included over 250 basis points of compression from Calvert City disruptions.
  • Adjusted Operating Income -- Up 27% due to reduced depreciation and amortization and underlying business stability.
  • Adjusted EPS (ex-intangible amortization) -- $0.26, representing a 7% drop as a result of lower income.
  • Operating Cash Flow -- $125 million, with $26 million in ongoing free cash flow and nearly 50% free cash flow conversion due to reduced working capital and CapEx.
  • Liquidity and Net Debt -- Total liquidity at approximately $900 million, net debt at $1.1 billion, and net leverage at 2.7 times.
  • Life Sciences Sales -- $139 million, up 4%, led by resilient pharmaceutical demand, double-digit tablet coatings growth, and new high-purity excipient launches.
  • Life Sciences Adjusted EBITDA -- $31 million, up 11%, with a margin increase to 22.3% (140 bps improvement), despite a $4 million Calvert City impact.
  • Intermediates Sales and Profitability -- Sales at $31 million, down 6%; adjusted EBITDA of $1 million (down from $6 million), with margin declining from 18.2% to 3.2% due to lower prices, operating leverage, and effects from the Calvert City outage.
  • Personal Care Sales -- $123 million, an 8% year-over-year decline almost entirely from the Evoqua divestiture (7% impact); organic sales down 1%.
  • Personal Care Adjusted EBITDA -- $26 million (versus $30 million prior year), with a healthy 21.1% margin; $1 million of the EBITDA decline due to Evoqua, and over $4 million from Calvert City.
  • Specialty Additives Sales -- $102 million, down 11% due to pronounced coatings and construction market declines, particularly in China, the Middle East, Africa, and India.
  • Specialty Additives Adjusted EBITDA -- $15 million, up 15%, with margin improvement to 14.7% (+340 bps) owing to operational efficiencies from HCC network consolidation.
  • Innovation and Globalize Performance -- $6 million added innovation sales (toward a $15 million annual goal) and $3 million incremental Globalize sales (toward a $20 million target), with aggregate Globalize businesses growing 8%.
  • 2026 Adjusted EBITDA Guidance -- Narrowed range to $400 million–$420 million, reflecting $11 million of temporary impact from Calvert City and weather-related disruptions, primarily affecting Q2 results.
  • Total Cost Savings -- Fiscal 2026 restructuring/optimization target of $30 million, with a cumulative program target of $50–$55 million and potential upside to $60 million as China demand recovers.
  • Innovation Pipeline -- Regulatory progress, multiple new patented product launches, and technology platforms advancing in pharma, agrochemicals, and personal care; TVO, super wetting agents, and modified starch highlighted.

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RISKS

  • Calvert City equipment outage extended into Q2, delaying expected timing of absorption recovery and resulting in approximately $11 million in temporary costs, with partial income statement flow-through into Q4.
  • Continued coatings and construction weakness, especially in China, Middle East, Africa, and India, with “muted demand for a while.” and ongoing deflationary pressure from overcapacity.
  • Adverse weather events in the Mid-Atlantic and recent outages have added incremental costs and downtime, captured in the updated guidance for the year.
  • Visibility into recovery for HEC depends on seasonal demand, introducing uncertainty into forecast absorption and margin improvement timing.

SUMMARY

Management described steady execution and early signs of recovery in key consumer-facing businesses, which now represent about 85% of the portfolio. Cost discipline and last year’s structural actions supported margin durability, even as select segments experienced market-driven volume compressions. Innovation and Globalize investments delivered early-year momentum, with significant product launches and above-market sales growth in core high-value segments. Free cash flow conversion was healthy in a seasonally slow period, and total liquidity remains strong, bolstering investment capability for strategic initiatives. The narrowed adjusted EBITDA guidance incorporates isolated operational and weather disruptions, while management underscored a balanced approach to execution, working capital, and capital allocation amid persistent demand volatility.

  • Management expects to recover most customer outage-related volumes in Personal Care during the remainder of the fiscal year, with all impacted customers back online by quarter end.
  • Contract renewals in Life Sciences, Specialty Additives, and Personal Care are largely completed, with modest price pressure in select portfolios and only a few strategic negotiations in Middle East, Africa, and India continuing into April.
  • No further asset sales are planned, as the integrated portfolio is viewed as optimally structured following recent divestitures and network consolidations.
  • Oral GLP-1 and biologics represent significant opportunities for the Life Sciences platform, with multiple active projects and a pipeline of more than 80 emerging opportunities.
  • Volume growth for the next quarter is projected as low single digits for Personal Care and Life Sciences, while Specialty Additives faces continued challenge from China market dynamics and uncertain coatings seasonality.
  • Product innovation cycle times vary, with customer reformulation timelines, regulatory approvals, and end-market requirements influencing the pace and magnitude of revenue realization.

INDUSTRY GLOSSARY

  • TVO (Technology Value Offering): Ashland’s proprietary platform for multifunctional, sustainable chemical additives and polymers, applied across ag, personal care, and coatings sectors.
  • HEC (Hydroxyethyl Cellulose): Water-soluble polymer used as a rheology modifier in coatings, personal care products, and other formulations.
  • BPND (Butylpyrrolidone and Derivatives): Segment within Life Sciences, specializing in high-purity solvents and excipients for pharmaceutical applications.
  • HCC (High-Capacity Consolidation): Ashland’s network optimization initiative consolidating manufacturing at strategically selected facilities to drive efficiency.
  • Colipepto: Newly launched biomimetic peptide developed for personal care applications, notably for rapid skin hydration and wrinkle appearance reduction.

Full Conference Call Transcript

Guillermo Novo: Thanks, Sandy, and welcome to everyone joining us. For today, I'm happy to join this call from Shanghai, China. I begin with our first quarter highlights and how we are advancing our strategic priorities. Later in the call, I'll return to share some of the latest innovation developments where we continue to see tremendous momentum and opportunities for differentiation. William will review our financial results, operational execution, and outlook. Our business unit leaders will provide additional insight into performance across their segments and markets. Please turn to Slide 5. Let's begin with a review of the key business drivers for the first quarter.

We delivered solid results while navigating ongoing demand softness in coatings and constructions, supported by strong execution and disciplined cost actions. Life Science delivered healthy growth supported by resilient pharma demand and momentum across our Innovate and Globalize pillars. Injectables, tablet coatings, and high-value cellulosic excipients all contributed to year-over-year growth. Innovation continued to strengthen performance, with contributions from low nitride cellulosics, high purity excipients, and several new product introductions. Personal Care delivered stable performance with underlying demand broadly steady. Biofunctional actives grew double digits, and microbial protection continued to gain share as our Globalize initiatives supported high-value applications. Softer volumes in core hair and skin care primarily reflected unplanned and isolated customer plant outages, facing muted demand.

Specialty Additives continued to with coatings and construction driving most of the year-over-year decline. Coatings weakness was most pronounced in China and select export markets, while construction softness reflected broader market conditions. Despite lower volumes, cost actions and HCC network benefits drove meaningful margin expansion.

Sandy Klugman: Intermediate market conditions were modestly softer, reflecting trough-like dynamics across BDO and its derivatives, which pressured captive BDO transfer pricing. The merchant business was stable with steady volume and modest pricing pressure resulting in flat sales. Operationally, the team continued to manage through equipment replacement in Calvert City while delivering solid free cash flow. Although this issue impacted costs and pressured margins across the BPD chain, customer supply remained uninterrupted. The impact we expected to be contained within the first quarter will now extend into the second quarter, as commissioning of the new unit revealed additional equipment issues that are delaying the start-up. We anticipate completing necessary fixes and bringing the unit online later in the quarter.

Guillermo Novo: Although outside Q1, recent weather-related events also have impacted our operations in the Mid-Atlantic. Customer supply remained uninterrupted, but we expect incremental costs, which William will address later in the call as part of our outlook for the year. While we saw month-to-month variability, we exited the quarter on a stronger footing, with December improving versus November and the momentum continuing in January. Taken together, these results reflect steady execution and continued progress across our strategic priorities. Now I'll turn the call over to William to walk through the first quarter financial performance in more detail.

William Whitaker: Thank you, Guillermo. Please turn to Slide 6. Our first quarter performance reflects increasing consistency of our operating model. Across the portfolio, the team executed well, advanced our initiatives, and managed through operational impacts while maintaining solid cost discipline. The portfolio and manufacturing optimization actions we took last year are supporting margins through improved mix, lower costs, and a more efficient footprint. Evoqua was included in our Q1 results last year, but as we move into Q2, we fully lapped our portfolio actions, providing us with a clear performance baseline going forward and delivered strong operating cash flow. We've also strengthened our working capital performance, a focus area for the team.

Altogether, the quarter reflects a strengthening foundation with early signs of improving momentum, indicating that a growth inflection is building as fiscal 2026 unfolds. Please turn to Slide 7. First, the consistency of our consumer-facing businesses, now roughly 85% of our portfolio, continues to provide meaningful stability and resilience. Second, our innovation and Globalize initiatives are gaining strong traction with sustained momentum in our highest value applications. Third, last year's structural actions are fully embedded, improving margin durability and positioning us for stronger leverage as demand recovers. And finally, even in segments experiencing more challenging conditions, our teams remain disciplined and focused on core fundamentals, ensuring we stay well-positioned as industry conditions evolve.

Overall, the quarter reflects resilient performance as our streamlined portfolio, strengthened cost structure, and disciplined execution continue to support our long-term strategy. With innovation accelerating, Globalize expanding, and productivity initiatives progressing, we are well-positioned to build momentum throughout the year. And now on to the financial details. Please turn to Slide 9. Sales for the quarter were $386 million, down 5% versus last year. The previously announced Evoqua divestiture accounted for roughly $10 million or about 2% of the decline. Excluding this portfolio action, sales were down 3%, reflecting a mixed demand environment. Life Sciences continued to grow, supported by steady demand and ongoing innovation momentum.

Personal Care remains stable overall and would have grown low single digits excluding the unplanned customer outages. Specialty Additives softened, reflecting broader demand conditions and ongoing competitive intensity. Pricing declined 2% generally across segments, primarily reflecting carryover adjustments from the prior year. FX contributed a favorable $9 million or 2% to sales versus prior year. And moving on to profitability. Adjusted EBITDA was $58 million, down 5% year-over-year, including a $1 million impact from the Evoqua divestiture.

Sandy Klugman: Excluding that action, adjusted EBITDA climbed 3%, reflecting lower volumes and modest pricing pressure partially offset by favorable mix, lower SARD, and FX benefits. Importantly, the quarter included the anticipated $10 million adjusted EBITDA impact from the Calvert City outage. As Guillermo noted, we had expected the full effect to be recognized in the first quarter, but some impact will now carry into the second quarter, which we'll address in our guidance. Raw material costs remain generally stable to favorable, and we continue to benefit from our cost actions across the portfolio. Adjusted EBITDA margins held steady at 15%, with over 250 basis points of compression stemming from the Calvert City outage.

Adjusted operating income grew 27% versus prior year, reflecting the stability of the underlying business as well as reduced depreciation and amortization from our optimization actions. Adjusted EPS, excluding intangible amortization, was $0.26, down 7% from the prior year, reflecting lower income. We delivered a strong quarter of cash generation, $125 million of cash provided by operating activities and $26 million of ongoing free cash flow, which excludes the previously disclosed tax refund. Lower working capital and CapEx drove healthy free cash flow conversion of nearly 50% in our seasonally low quarter. We ended the quarter with total liquidity of approximately $900 million, a strong position as we move into the balance of the fiscal year.

Net debt was $1.1 billion, and our net leverage remains solid at 2.7 times, providing flexibility to invest in strategic priorities while maintaining disciplined capital allocation. Now let's turn it to our business unit leaders for a closer look at segment performance. Alessandra, over to you.

Alessandra Assis: Thank you, William. Good morning, everyone. Please turn to Slide 10. For Life Sciences, sales were $139 million, up 4% from the prior year, driven by resilient pharma demand and continued strength across our Innovate and Globalize pillars. Pharma delivered low single-digit year-over-year growth, marking its third consecutive quarter of volume gains. Demand remains strong for our high-value cellulosic excipients, supported by broad customer engagement across regions. Injectables delivered another quarter of strong above-market growth with continued pipeline expansion and accelerating uptake of recently launched products, reinforcing our confidence in sustainable growth within this high-margin segment. Tablet Coatings delivered double-digit year-over-year growth across all regions, with particularly strong momentum in Asia Pacific.

In Nutrition, recent wins and ongoing commercial activity continue to support improving traction as we move through fiscal 2026. Pricing was slightly lower year-over-year, in line with expectations and largely reflecting carryover impacts from prior year adjustments, but remained stable sequentially. Foreign exchange provided a $3 million benefit to sales. Turning to innovation, we continue to advance excellence in pharmaceutical ingredients. We saw meaningful contributions from our low nitride offering, including the recently launched Plasdome Low Nitride and Benacel Low Nitride Grain. In injectables, we launched our new high-purity viola sucrose stabilizer for biologics in October. Early customer engagement has been encouraging, with positive technical feedback and a growing commercial pipeline.

In addition, multiple new injectable launches are planned for fiscal 2026, each supported by strong prelaunch customer engagement and rising market pull. These advancements reinforce our commitment to delivering high-quality solutions that meet evolving customer needs. Turning to profitability, adjusted EBITDA was $31 million, up 11% year-over-year. Margins expanded to 22.3%, a 140 basis points improvement, including a $4 million impact from the Calvert City outage during the quarter. The year-over-year increase was driven by favorable mix, resilient pharma demand, and lower SAR as restructuring benefits continue to flow through, partially offset by modest pricing pressure. Foreign exchange provided an additional $2 million benefit to EBITDA.

Life Sciences continues to demonstrate strong operational discipline, resilient end-market demand, and consistent progress across both our Innovate and Globalize agendas. Please turn to Slide 11 for Intermediates. Intermediates' performance remained challenged, consistent with what we expected entering the fiscal year. Sales were $31 million, down 6% versus last year. Merchant sales were $22 million, with steady volumes and modest pricing pressure, resulting in flat year-over-year performance. Captive BDO sales declined to $9 million, driven by both lower volumes and lower transfer prices. Foreign exchange had a negligible impact on sales. Turning to profitability, adjusted EBITDA was $1 million, down from $6 million in the prior year, with margins declining to 3.2% from 18.2%.

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

James Minicucci: Thank you, Alessandra. I'll now highlight our Personal Care results. Please turn to Slide 12 for Personal Care. Personal Care delivered resilient results, underscoring the stability of the portfolio despite mixed market conditions. Sales were $123 million, down 8% year-over-year, almost entirely due to the Evoqua divestiture, which reduced sales by approximately 7%. With the Evoqua divestiture now lapped, we have a clean baseline going forward into Q2. Organic sales declined 1%, reflecting a broadly stable demand environment. Biofunctional actives continue to perform well and delivered another quarter of double-digit growth versus the prior year quarter. Customer expansions and project pipeline conversions are accelerating. Colipepto, our 2025 hero product launch, is gaining broad-based market adoption.

Colipepto mimics 20 collagen sequences in our skin, providing immediate flash hydration and corrects the appearance of both expression and deep wrinkles in the skin. Microbial protection delivered year-over-year volume growth above market, driven by share gains across most regions and customer wins. With a competitive and regional footprint, Microbial Protection is well-positioned to continue executing on a robust opportunity pipeline. Within Care Ingredients, performance varied by region and segment. In general, most regions performed well, with notable strength in the EMEA region and China. Care Ingredients experienced several unplanned customer plant outages in the quarter and softer demand in North America. Foreign exchange contributed approximately $3 million of favorability to segment sales.

For Personal Care, innovation and commercial execution remain a strength, with continued momentum in our Globalize platforms and sustained demand for higher-value differentiated applications. Turning to profitability, adjusted EBITDA was $26 million compared to $30 million in the prior year. This includes a $1 million EBITDA impact from the Evoqua divestiture. Excluding that portfolio action, EBITDA was modestly lower, driven by the more than $4 million Calvert City impact and the demand trends noted earlier, partially offset by mix and cost discipline. EBITDA margins remained healthy at 21.1%, demonstrating the strength of the portfolio and the benefit of ongoing commercial and productivity efforts.

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

Dago Caceres: Thank you, Jim. Please turn to Slide 13. Specialty Additives continue to operate in a muted demand environment during the first quarter. Sales were $102 million, down 11% year-over-year. Coatings and construction accounted for the vast majority of the year-over-year shortfall. In coatings, the decline was led by China, where weak demand and structural overcapacity continued to weigh on results. Additional softness came from export markets in the Middle East, Africa, and India, where competitive intensity remained elevated. North America continued to show muted demand in the coatings market. Outside these regions, coatings demand was relatively stable, with outperformance in Europe and Latin America.

Construction volumes were also lower, reflecting soft conditions across the nonstructural repair and remodel market, our primary area of exposure. Across other industrial end markets, including energy and performance specialties, demand remained muted but generally stable. Pricing was modestly lower year-over-year, while foreign exchange contributed approximately $2 million to sales. Importantly, the team continues to focus on operational efficiency initiatives and capture benefits from prior manufacturing optimization actions, including the HCC consolidation, which improves our cost structure and mitigated the impact of lower volumes. Adjusted EBITDA was $15 million, up 15% from the prior year. EBITDA margin improved to 14.7%, a 340 basis point expansion supported by efficiencies from the consolidated HCC network.

The team remains sharply focused on cost discipline and commercial excellence while continuing to advance innovation that helps our customers deliver differentiated solutions in a challenging market. Underscoring the strength of our innovation pipeline, we delivered approximately $5 million in sales from recent product launches this quarter. Looking ahead, Specialty Additives is well-positioned to benefit from an eventual coatings recovery, supported by disciplined cost management, a more efficient manufacturing network, and ongoing innovation progress. With that, I'll hand it back to William. William?

William Whitaker: Thanks, Dago. Please turn to Slide 15. As we move through the first quarter, I want to highlight the progress we're making across our Execute pillar and how our operational transformation continues to support the business. Overall, our total cost savings target of approximately $30 million for fiscal 2026 remains on track. Specifically, our restructuring plan is completed and will be ratably recognized throughout the first half of the fiscal year. We continue to make progress on our network optimization targets. VP and D optimization and small plant consolidation efforts also remain on schedule, with benefits weighted toward the second half.

As we talked about last quarter, we are addressing higher-than-expected unit costs at the consolidated HCC site as we scale operations. Following the Parlane closure and network volume rebalancing, we are delivering productivity improvements and stabilizing operations while strengthening the global HCC network. Our total savings target of $50 to $55 million remains intact, with upside to $60 million as China demand improves. Across the network, we're seeing potential for additional productivity improvements and capacity optimizations. This work is ongoing, but the trajectory remains positive. Our priorities with Execute remain clear: deliver structural cost improvements, simplify the network, and enhance systems and processes, which include sales and operations planning, standard costing, and forecasting.

All of which strengthen planning, accountability, and ultimately performance. I want to recognize our operations team for managing through isolated challenges this quarter. We'll speak to these dynamics further in the outlook. Please turn to Slide 16. I'd now like to provide an update on our Globalize and Innovate platforms. As we move through fiscal 2026, I'm encouraged by the early year momentum we've seen across both pillars. On Globalize, we're seeing solid traction supported by increased engagement, focused commercial initiatives, and early benefits from our recent investments. Year-to-date, we've delivered $3 million of incremental Globalize sales towards our $20 million goal for the year, with notable contributions across the portfolio.

In aggregate, the Globalize business lines grew 8% versus last year. On the Innovate side, momentum was even stronger. We delivered $6 million of incremental innovation sales towards our $15 million goal for the year. This reflects the continued strength of our innovation pipeline, particularly in pharmaceutics, as well as recent commercial introductions across multiple segments. Guillermo will speak to this in more detail shortly, but the team continues to advance a broad and healthy launch pipeline. The early performance across Globalize and Innovate highlights the strength of these levers and the strategic advantage they bring to our portfolio.

While still early in the year, we remain on track to deliver our fiscal 2026 $35 million revenue commitment from Globalize and Innovate. Please turn to Slide 17. I will now walk through our updated fiscal 2026 outlook, which reflects a prudent view of market conditions and continued confidence in our ability to execute. For fiscal 2026, we are narrowing our adjusted EBITDA range to $400 million to $420 million. All other elements of our guidance remain unchanged. Let me briefly summarize the assumptions underlying this outlook. Life Sciences and Personal Care remain resilient, supported by stable end markets and momentum across our Globalize and Innovate platforms.

Specialty Additives and Intermediates remain mixed, with a coatings recovery expected to be gradual and regionally uneven until broader housing and industrial activity improves. We're seeing healthy demand patterns in consumer-oriented categories to start the second quarter. Raw materials are expected to be stable to favorable overall, and supply chains remain reliable. Similar to prior years, we expect a second-half weighted performance. We continue to expect Innovate and Globalize to drive growth above underlying markets, and our total cost savings target of $30 million remains on track to support margin improvement through the year. As Guillermo discussed, repairs to the Calvert City unit are taking longer than anticipated.

What we had initially expected to be contained to the first quarter will now extend into the second. In recent weeks, we also experienced brief outages at sites due to adverse weather. While the operations team managed safely without customer disruption, these events resulted in incremental costs and downtime. Our revised outlook reflects approximately $11 million of temporary impacts from the Calvert City start-up delay and recent weather-related disruptions, all isolated to the second quarter. The volume-related impacts, which were roughly two-thirds of the overall total, are fully recoverable, but the timing of absorption recovery is more challenging.

VP and D cannot begin recovering absorption until the unit is back at normal operating rates, which will not occur until late Q2. This means recovery can only begin in Q3, with partial flow-through in the income statement into Q4. For HEC, recovery depends on the seasonal demand lift. Visibility into April through September demand typically firms in March, which creates uncertainty about when and how much recovery can be prudently initiated. Given these timing constraints and the current visibility on seasonal demand, we believe it is prudent to remain more cautious at the top end of the guide. We will continue to manage production, inventory, and free cash flow with discipline while ensuring uninterrupted customer supply.

Overall, our fiscal 2026 guidance reflects balanced planning, disciplined execution, and visibility into the drivers of long-term value creation, even as we manage temporary operational challenges. With that, I'll turn the call over to Guillermo to discuss our technology platforms and leadership priorities.

Guillermo Novo: Thank you, William. Please turn to Slide 18. Innovation remains one of the most powerful drivers of long-term value creation at Ashland. And the momentum we're seeing this early in fiscal 2026 is both exciting and strategically important. This slide highlights just a few of the breakthrough platforms that are reshaping our pipeline and opening new opportunities across multiple end markets. These are not isolated projects. They're scalable technology platforms built on science, customer collaboration, and disciplined execution, each with the potential to fuel long-term growth. Since the 2025 Innovation Day, our teams have delivered meaningful progress across multiple platforms.

Our TVO technologies continue to advance through early commercial adoption, supported by regulatory filings across all key regions and multiple customer qualification cycles. In ag, our TVO for seed coatings, Agramer EcoCoat, received US EPA pre-approval in 2025 and is also REACH approved. Its performance and sustainability profile have been validated by multiple customer trials, with more trials ongoing. Customers are in the process of filing their own regulatory approvals for their formulated products in different regions. We're also making great progress in the development of a TVO for oral dispersions in ag formulations. This product would already have regulatory approval, the same as our Agramer EcoCoat.

In Personal Care, we launched Lubrihands, a TVO-based product for hair conditioning, with great customer feedback, core customer approvals, and many other testing and formulations. Development of our TVO for hairspray and styling is maturing well, nearing generation one launch with encouraging customer evaluations underway. Our TVO technology for silicone alternatives has passed preliminary testing with key customers and is now in advanced evaluations. In coatings, we continue to make progress on developing TVO technology for TiO2 efficiency and for UV curing. Based on current performance profiles, all customers are showing strong interest in these technologies. Most other new TVO development projects continue to advance and are demonstrating strong performance and value for our customers.

Our super wetting agent platforms, which offer PFAS-free and silicone-free sustainability advantages, achieved another successful launch in industrial and specialty coatings. Our coatings team recently launched a new version of our Weather EZ Wet 310, which has broader geographic regulatory approvals and is accelerating commercialization. We've had successful customer trials and feedback on our new super wetter for ag, validating performance benefits with no phytotoxicity relative to the current commercial wetters. We expect to receive US EPA referral feedback this April. In Personal Care, we're expanding this technology into hair care and home care applications. In hair, we are currently targeting textured hair. Our early beta testing feedback has been very positive.

In home care, we're advancing the super wetter technology for auto dishwash applications. Especially in bioresorbable polymers, momentum is building in aesthetic medicine, next-generation dermal fillers, with fiscal year 2025 launches and recent customer audits supporting a strong multiyear outlook. We also continue to scale a strong pipeline with preclinical milestone sales for both generic and new drug development programs. We're also excited about the interest and performance feedback we've received in Personal Care for our new modified starch for rheology control and skin leave-on applications. And we will be launching this product this year. In addition, we're expanding our starch technology into hairstyling applications.

These platforms are strategically important, each representing a scalable and high-value opportunity that strengthens our ability to compete and win in differentiated markets. They reflect the combined strength of our science, our global reach, and our ability to commercialize meaningful new technologies. Together, they reinforce why innovation remains a key driver of long-term growth. Lastly, although not part of our new technology platforms, our coatings team is launching a number of new multifunctional HEC products this year that can provide unique cost and performance benefits to our customers, including better cost and use and improved performance. Please turn to Slide 19. As we look ahead, I'd like to outline the leadership priorities guiding our execution.

While markets are mixed as anticipated, we enter the year with momentum on several fronts. The business has become significantly more focused, resilient, and better positioned to drive high-value growth. Our cost actions are already supporting margin performance, with additional P&L benefits expected as the year progresses. Our innovation platforms and Globalize investments continue to gain traction.

Our priorities for fiscal 2026 are clear: deliver on safety, profitable growth, free cash flow, and RONA; advance our manufacturing optimization and inventory performance; accelerate innovation, scale our Globalize platforms, and foster a productivity-focused culture; strengthen our systems and processes, including leveraging AI to enhance productivity; prioritize talent development, leadership stability, and organizational strength; and maintain transparent communications and consistent execution in our engagement with our investors. Fiscal 2026 is about converting our transformation into sustained performance. With a more focused and resilient portfolio, disciplined capital allocation, and a clear strategic roadmap, Ashland is well-positioned to deliver durable value creation for all stakeholders.

And despite temporary operational and weather challenges, our strategy, strong execution, and commercial momentum give us confidence in delivering our fiscal 2026 commitments. Thank you to the entire Ashland team for your commitment and execution, and thank you for joining our call today. Operator, please open the line for Q&A.

Operator: Thank you. Please press 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from the line of Joshua Spector with UBS. Your line is open.

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

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

You know, the season really starts to pick up in March, really April to September is when we see the bigger volume. So it's a bit early. But it's been stable, and I would say no big surprises. So overall, right now, we're not trying to overread. There's nothing really to change our outlook. So we're pretty confident. And I think over the next two months, we should start picking up. Our order book for February still remains strong too. So we'll see how that evolves. Obviously, we have now, I mean, China, Chinese New Year and all that. Hope it'll be a weaker February, but through March, it should pick up.

Then on the PC side, I mean, there are outages. We just had our own outages on things. And so they're temporary and recoverable. But, Jim, do you want to comment on that?

James Minicucci: Thanks, Guillermo and Josh. Thank you for the question. So as William had mentioned, excluding those customer outages, the business would have been up low single digits. Specifically, in North America, there were several customers that had unplanned outages. The outages were on the customer side, so it was not related to our inability to supply or anything driven from our side. And through conversations with customers, we understand that it was not demand-driven either. The outages all occurred in Q1. Some of them were multi-week, with a couple of them extending over a month, almost two months in one case. They all are back online. They all came back online before we closed Q1.

And we do expect to recover most of it in Q2 and through the balance of the year. So we are starting to recover some of that in Q2. And by the end of the fiscal year, we do expect to recover most of that impact.

Joshua Spector: Okay. Thank you.

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

Michael Sison: Hey. Good morning. For Personal Care, do we see volume start to turn the corner here in the second or third quarters? Is that because I think Evoqua is done, right, in terms of the outlook? Do we start to see positive volume growth?

Guillermo Novo: Yeah. So Evoqua is done, as Jim said, so that from the comps are going to be cleaner. You know, if we see just the macro on the consumer side, and it's behaving resilient overall. Most of our customers are indicating that it's flat at the top. In the single digits. So from a volume perspective, we expect to continue to see that as the year progresses. So no big surprise there, Mike.

Michael Sison: Great. And then maybe just revisiting kind of the longer-term outlook. How do you think about rebuilding EBITDA to higher levels from here?

Guillermo Novo: So I think one, a lot of it has to do, you know, if you look at our strategy, Execute, Globalize, Innovate. Execute is about productivity. We've got a lot of projects going through. You know, we're already seeing the benefits. You see it the impacts on markets and competitive dynamics. Over the last year, our margins continue to hold up. And I think that's a reflection of a lot of the productivity actions. So we're already doing that. Obviously, as volumes pick up, you know, we'll have a lot more leverage in terms of our absorption and most of our key plans. So volume pickup obviously will be very helpful.

For now, we continue to remain focused on driving that productivity. Most of the projects are going very well. I think that was the one plant that we're, you know, we're putting a lot of effort on because of all the network trends of the HEC network optimization is our Hopewell plan. They're very busy. There's a lot of activity there. When we closed Parlin, they've brought a lot of products. Yeah. We've had a little bit of cost issues there, so that one we're going to continue to focus. And, obviously, the storm, that was one of the spots that was hardest hit.

So some of those initiatives have been stalled a little bit just as a result of the storm. But we're focused. We have a clear agenda, and we're going to continue to drive that. The rest is going to be the Globalize, Innovate. All those are higher margin areas. And the more we can grow, the more we can extend, you know, our margins and our EBITDA. And, equally, I would say, in Life Science, a lot of the cellulosic businesses, growth that we're seeing in our core businesses are all higher margin.

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

Michael Sison: Got it. Thank you.

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

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

Guillermo Novo: Yeah. So let me get some comments, and then I'll Dago, if you could comment. I'm here right now in China. I would say, you know, a lot of the impact of the down market started last year, and it's already happened. Most of, you know, the impact with our customers. I don't expect that this is going to improve, you know, that quickly. You know, we see a lot of actions by the government to stimulate, to reenergize the profit market, but the reality is it's going to take a while. I think the issue is for here, it's going to be expect muted demand for a while.

With the overcapacity, you're going to continue to see deflationary pressures across the board. Most of that has already happened. You know, we've been hit hard on, you know, in our business here in China. So we're bottoming out. There's a limit to how much. You know, you can lose path. When you lost a business, you can't lose more. So I think what I'm excited now is the team we've rebalanced the network. So that we're not getting impacted with empty capacity in our plants. We're using a very cost-effective plant for us. Using it for exports now. Around the world and especially in The Middle East and Africa.

So well-positioned, and today, you know, talking to our teams, they've really done a fantastic job in just looking at our portfolio using this time to get our plan costs in order. But it also expanding our product line both into more cost-effective, different performance, the cost parameters so that we can compete on the low end. And also some higher performance products that we can provide both lower cost and use but higher performance. So we're expanding our ability to go back into the market in a more constructive way than just price. Price gains as we move forward. But, Dago, do you want to comment on the comps and some of the other things your team is doing?

Dago Caceres: Yeah. Sure, Guillermo. And I think you're spot on. So, I mean, the China comps are expected to ease in the second half following the second quarter. So we're ready to hit first of last year comps. So we'll be expecting to lap up to the next quarter. So that's number one. The other point that I would like to emphasize is, you know, what is it that we're making to resolve this with the situation. Right? What is it that we're working on? And there's three points that I want to emphasize. One is commercial discipline. The other one is productivity, and the third one is innovation.

So on commercial discipline, which is a lot of focus on volume price management, to ensure that we do what's right for the business. And there is also a lot of focus on customer intimacy just staying very close to customers so that we can deploy our innovation. Productivity, the good news is that Nanjing is a really excellent plant that we have. It's a very strong asset, and they do have very clear productivity improvement targets that we're going after. So I'm very excited about that as well. But probably the best one is really on innovation. We're moving fast. We're moving with urgency.

We expect some of the results that we're doing on the innovation on our core products to materialize actually in 2026. Which will really help us with the situation. And the intent here is to protect our core portfolio and then basically kind of produce create products that are made for the China market. So very excited about what we are doing here. And last point, I just want to reinforce what Guillermo was saying is this is a really good plant. This is a plant that I would say I would call it a global asset. Absolutely. Initial intent was to produce in China for China, but this plant can produce for any other parts of the world.

So what we're doing is rebalancing. There are opportunities outside of China for sure that we're going after with a lot of focus.

John Roberts: And then secondly, where are you facing the most risks and uncertainty around global trade issues?

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

John Roberts: Thank you.

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

Chris Parkinson: Just turning back to Life Sciences. Break down the growth algo here now that you're passing multiple years of a little bit of choppiness. Just when you take a step back, how are you thinking about, you didn't mention BPND in the PowerPoint. So I'm kind of curious on what effect, if any, that had on the price mix in the quarter. And then it seems like actually gaining pretty decent momentum in tablets and cellulosics. So when we look at this for '26 and then, you know, kind of '27, is this I'm finally getting back to just the low kind of like a low single-digit volume growth rate, perhaps a little bit more constructive price mix.

Getting margins back up to the prior year's levels? Like how should we be parsing that out? Thank you.

Guillermo Novo: Let me make a quick comment, and then I'll pass it to Alessandra. She can give more detail. Color on the business. But I would say, just specifically on the BPND, that's the, you know, the Life Science business has been fine. That's where we had the issue. A while back, and you know the story. One big competitor coming back in and all that. Was the biggest issue for us. That has stabilized. Right? So the BPND, I would say, volumes are stable, pricing are stable. That's not the biggest growth driver at this point in time. We wanted to stabilize it. I think we're seeing that across the world. That's one of the issues of really driving productivity.

Making sure that we're going to be competitive, and any price that we gave in the past that we're trying to recover through productivity, asset utilization, all those kinds of things. But the team, the broader strategy continues to progress and never really stopped. In terms of the cellulosics or some of these other areas. But Alessandra, if you could comment on that and on BPND as you see things, that'd be great.

Alessandra Assis: Yep. Sure. So looking ahead, looking at the next few quarters, we expect to continue to deliver on healthy growth. So two aspects looking at the resilient pharma demand roughly low single digit. And then we are seeing the momentum across our both Innovate and Globalize pillars, and that represents around 200 basis points above market on the growth that we are projecting. As Guillermo mentioned, BPND is expected to be stable. We just concluded the contract negotiations in Europe. And they were mostly aligned with our expectations. Don't share and with modest price pressure on certain portfolios. But net-net, they were in line with our expectations, so we remain very much focused on positioning our Globalize Innovate growth strategy.

And the share gain opportunities. When you're looking at injectables, we deliver an outstanding first quarter. Double-digit growth versus prior year. We are seeing a strong uptake on new Guillermo was talking about this on innovation on his prepared remarks. You're seeing the pipeline expansion and also a very effective regional business development model that we have put in place. Which is positioning us to continue to see sustainable above-market growth in the coming quarters. Tablet coatings specifically, we also saw double-digit growth. Year over year in the first quarter. The pipeline has expanded significantly. And our production efforts were focused in the last few quarters, and you're seeing that.

We've seen the good momentum from a production from a productivity improvement. In Wilmington and also our new the new sites in Brazil and China supporting our growth for the fiscal year 2026. And we have a new plant that we announced before in India that is coming up in fiscal 2027. So Guillermo was just in India a few days ago, also visiting the new site is coming up in fiscal 2027. So overall, a lot of discipline from a commercial standpoint on price volume management and a focus on positioning our Globalize and Innovate growth strategies. Then we are confident in the growth we're projecting over the next couple of quarters.

Chris Parkinson: Got it. And just as a real quick follow-up and kind of triangulating some of the things you said to Josh's question. In Personal Care, it seems like there's a lot of moving parts, and it seems like you're seeing a decent recovery in the biofunctionals and bioactives. In addition to some new products at NPI momentum. Is that a functionality of stronger demand in places like Asia? Stabilization in Europe? Is it too early to say? You know, I'm trying to get to know, kind of the growth rates ex the issues you saw in hair care, but it seems pretty constructive.

So I'd be kind of curious on how you're thinking about that as we progress through fiscal year 26. Thank you.

Guillermo Novo: Perfect. Make a quick comment and Jim, if you can talk about the specific regions and biofunctionals and all the areas. But just something make one thing clear. You know, if you look at our core Personal Care business, that's the established business that we've had for a long time. It's pretty stable. You know? The ups and downs are more driven by customer demand and there's not big shared shifts. I think that growth is coming from the new things. Our Globalize are in both biofunctionals and micro protection.

And in the core, it's all these new technologies that we're working on that, frankly, Personal Care was the first business really in which we were developing the TVOs and all these products. So there is a level of stability. You know? A lot of these, it's up and down. It's the same customers that have been buying some of these products for a long time and there is a lot of stability there. But Jim, if you want to comment a little bit more color?

James Minicucci: Sure. Thanks, Guillermo. Hey, Chris. So I, you know, I think we've really been working to make the Personal Care story as simple as possible just given all the different pieces and parts of the portfolio. And I think when you look at Q1, you know, we're very happy with Q1. As you mentioned, biofunctional performed extremely well. We have stabilization in our base, which we had talked about in the prior quarter. That base continues to be stable, and we're seeing even some growth there. We're more excited by all the work the team has done to expand the biofunctional portfolio. We've gained a lot of new customers, especially in Europe and in China.

And we're getting our new product launches into those customers. As I mentioned, Colipepto, it's you know, I don't want to say a miracle product, but it's something that within three minutes, you already start to feel that hydration. Within a couple of hours, you already start to get real, you know, glowing in your skin, and the team's done a great job launching products. And you know, we feel biofunctional is really moving in the right direction going forward. Microbial protection, it's all about continuing to grow there, convert opportunities, and we've seen really nice growth across all the regions.

And then as Guillermo mentioned, in our Care Ingredients business, aside from that, you know, there's always perhaps some noise as you go into the end of the year. But we had the customer outages specifically in Q1. Generally, it's very stable. The team's done a really nice job converting opportunities, especially in skin. You will see as we go through the balance of the year oral care will be, I would say, more smooth this year for us over the next three quarters. Sometimes it tends to be a bit more concentrated in a couple of quarters. But overall, you know, I would say Q1, really, it was the customer outages. It will be smoother through Q2 to Q4.

North America demand that we're continuing to monitor. As I said, a bit of a mixed environment there.

Chris Parkinson: Helpful color. Thank you.

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

Mike Harrison: Hi. Good morning. Was wondering, Alessandra, in Life Sciences, you mentioned low nitrate cellulosic. Can you help us understand what differentiates those from typical cellulosics and why that's important?

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

Alessandra Assis: Yep. Yeah. So we launched the new low nitride grade for both plastones, which is VP and E, and Benacel, you know, cellulosics Benetcel. So this brings in the hands of product quality basically, nitrosamine. On the pharma industry. Versus their regulatory requirements. And it is the pharma companies overall across the board, not just large pharmas, but generics. All pharma companies are very much focused on that, on bringing the low nitride grade for excipient to help with the nitrosamine levels on their formulation. So that has been a good success for us with the launch on the low nitrides.

And we see that more and more in our portfolio expanding into with no like type rates, not just some cellulosics in your question, but also VP and D and other areas.

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

Guillermo Novo: Yeah, thanks for the question. So, yeah, I would say it's across the board. It's across the board. So when you look at our strategy for specialty additives, it's a heavy focus, of course, on protecting our rheology modifier participation, and we have new products that are going in there. But then there is a big effort right now to go beyond this additive into other additives. So you have deformers. You have wetting agents. You have pH neutralizers, etcetera. And the team has been very focused on expanding our portfolio because it really solidifies the participation that we have with customers. It gives us higher access and also enables us to go after other parts of our customers' portfolio.

For instance, we're very strong in architectural coatings. We know our customers also have participation in industrial coatings. It is really a great opportunity to branch out and to really solidify our position there. When you look at the sales and what we're working on for this year because we have very good targets, very strong targets for innovation. Really, the focus is going to be on, number one, solidifying our position in and differentiating in rheology modification. Both synthetic and cellulosic. Number two, continue to expand our additives. So you're going to see a lot of that and super wetting agents are included there.

But then strategically and longer term, very much excited about the progress we're making with our platform technologies. In particular, TVO and TiO2 spacer, etcetera, where we do expect to see some traction this year.

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

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

Mike Harrison: Alright. Thanks very much.

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

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

Guillermo Novo: Alessandra, you want to comment on that?

Alessandra Assis: Yep. Sure. So thinking about looking at the GLP-1, so both the oral GLP-1 and oral biologics present a significant opportunity for Ashland. And our VP and D portfolio is especially relevant to this space. And it is our tablet coatings. When you think about the high, you know, high volume, high throughput needed, for the types of demand that we're talking about. So our high solids coatings Aquarius Genesis is also especially relevant for that. So currently, we have multiple active projects with some of the biggest pharma players in this space. In addition, we are doubling down on innovation in this area as we have identified a pipeline with over 80 emerging opportunities.

And one of those innovations is our sodium cap rate, which is a variation enhancer that we target to launch over the summer. We already have received multiple customer samples requests and are working with several customers on that upcoming launch for this summer. So in summary, yes, GLP-1 formulations and the overall oral biologic represent a significant opportunity for Ashland. And our VP and D portfolio is of particular interest and as well our new innovation programs.

Bhavesh Lodaya: Thank you.

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

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

Guillermo Novo: As we said, it will be in line with what we had been forecasting. So Personal Care and Life Science. It's in the low single digits. You know, anything over that, we need to grow through some of the innovation, but the order book is in line with our forecast or our updated forecast on what we're doing. So no big surprise there. Same thing, you know, in the SA, we're seeing the same thing. All the orders coming in line. It's going to be still challenged versus prior year because of China. And some of the dynamics there. But even North America, Europe actually did very well for us. But I'd be I just be cautious.

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

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

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

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

That are costs energy costs that went up and other repair costs with the freeze. I mean, not huge items, but items that have added up that are going to be more of a I think it's one set two-thirds was absorption, one-third was cost. HEC is a choice. I think they're I'll be honest. I'm being very conservative. Until we start seeing the season, we can always produce more. Whenever we want. I think if this is a time of being prudent, like we've done in other years, I'm very open of the balance sheet. It's something we need to look at, not just the P&L. We're not here just to hit one quarter results. It's a long term.

We want to do the right thing for the long term for the company. I think having a solid balance sheet, cash is king, in a lot of these times of uncertainty, so we're going to be a little bit more prudent. Again, decision. If the season starts in March, that's probably when we would start making that. That means, again, that third quarter would be the critical quarter to be built eventually.

David Begleiter: Thank you.

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

Dan Rizwan: Hi. This is Dan Rizwan for Laurence. Thanks for taking my question. I was just you mentioned injectable launches and some of the new products. But just in general, I was wondering how long it takes a new product to ramp up to mid-cycle and then to peak sales, you know, just the time frame?

Guillermo Novo: It really varies by product line. But like we've said before, we're talking about everything we're doing. We want to show. We want to be very transparent. But reality, when these approvals come, they take time. If you go into the example I would use, a personal care. If customer x approves it's a big brand. You know, they have in next, you know, 2027, I'm going to reformulate. They approve now, but they launch in 2027. Or 2026. They have dates. On which they're doing. So our issue is make sure that we get the approvals, get everything ready, before those launch dates. So we have roadmaps of when all these big brands are doing reformulations.

We're working with our customers. And it's very important to hit those dates. Coatings is a little bit different. They can move a little bit more quickly, again, they do a lot more testing, extras, you know, they like it. They want it, but then they get everything some testing. So everybody has their norm. On how they work through. I would say pharma is really partnering with them across their entire development, you know, cycle. So when they're ready to launch, you know, you will go with them, but that's depending if it's a generic. It could be three to five years. If it's a new drug, you know, you're in, like, a longer pipeline.

But that's the importance of having a strong pipeline. And what we've been doing last year is build the pipeline, and that's what I'm excited about. That the technologies have now enhanced that they are in pipelines. We're getting validation. So it's really now going into, you know, our customers thinking we like these technologies. When are we going to commercialize? Are we going to commercialize this next year? So it's a very different conversation. As we move forward.

Dan Rizwan: Great. Thank you very much.

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

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

Guillermo Novo: I think most of them, as Alessandra said, I think are mostly completed. We're in final form in pharma. It's mostly in Europe, and that's pretty advanced. So I think we're mostly done on there. I think, you know, the only ones and, Dago, where you can comment in some regions. We have some now that are ongoing, Middle East, Africa, India. That are going now in the March, April time frame. But most of the other ones are already done. But that any other contracts?

Dago Caceres: No. I mean, in the case of coatings, some of the large contracts, I would say North America and Europe, they just follow the calendar year. So those contracts are done, and I guess, the results are as expected. Other areas in Asia, actually, the contracts were finalized in October. That's actually their cycle October to October. We're only missing areas in the Middle East, Africa, India where we have a couple of strategic customers, and that will be April. So the contracts are finalized. We're valid starting in early April. So that's the only one that is remaining. We're negotiating as we speak, and we expect to finalize some of those contracts pretty soon.

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

Guillermo Novo: So we've done a lot of the changes already. In terms of selling the parts of the business that we didn't see fit. And most of them were stand-alone parts. We've consolidated some of the product lines that we didn't like. They couldn't sell, and have the asset that we can repurpose. That was more of our CMC asset in The US and MC asset in Europe, and I think the timing of that was very good. We shut down a plant and consolidated. So all those actions are done.

Going to do some more optimizations more around the productivity where it would be more units within the plan, you know, that we're streamlining so that we can instead of having a lot of equipment and not having them utilized, really focus and invest on the ones that are higher end that can give us the best cost. But that wouldn't involve a sale. The rest of the business is integrated. This is the part, you know, everybody you want to just be live set. It's the same plan that supply across multiple areas. Frankly speaking, just from my past experience with other companies, I mean, all this artificially cutting up things haven't worked out that well.

So for us, we like the portfolio we have. It is integrated. We feel that between the high-quality pharma, personal care, and architectural coatings being, you know, it is being impacted, but tended historically to be more consumer-oriented. We see that stability in North America and Europe. Would say what's happening in Asia is a little bit different than the norm. We like those. We think, you know, focusing on additives, low cost use, high value use can allow us a differentiation, and we can leverage the scale across the asset. So we think that integration is critical, and we think there's value in artificially.

Eric Boyce: Cool.

Operator: Our next question comes from the line of Stephen Haines with Morgan Stanley. Your line is open.

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

Guillermo Novo: So we're working through that. We've done a lot of network as we looked at, for example, in our acetylene chain between the two plants in Texas City, Copper City, we had units that overcapacity. They've been overcapacity for a long time. We've consolidated, shut some down. Put all our volume on the more productive units. So that's driving our cost. Productivity. As we looked at across other production units, what we're finding is that there is an opportunity to continue to drive. So again, if we have, I think, a simple example, core reactors and they're over underutilized, can we concentrate on one or two? Put our volumes there. Invest in those reactors to get more throughputs.

We do cycle times. Those kinds of things we're doing. So some of them we're already doing. We're planning out how much we can get. Others, we create the productivity, but the benefit will come as long pick up. So the issue is, you know, productivity, you can't wait to have the volume to do it. You do it, and as the volume comes, you're just going to be able to leverage it. But it allows us to reduce cost as we do some of these changes. So that's the part that we're trying to calculate.

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

Stephen Haines: Understood. Thank you.

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

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

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