Q3 2024 Ashland Inc Earnings Call

August 7, 2024

Speaker Change: John Willis, William Whitaker, John Willis, Guillermo Novo, Unknown Executive

Speaker Change: Everybody is really focused on the innovation platforms and the sustainable attributes that we have. And the innovation is in two parts. One is continuing to innovate within our existing products, in our core technologies, and then also the launch of our new technology platforms. And it aligns nicely with the environmental, social, and governance objectives. So all of these objectives are coming together. It's all about finding that right balance there. And when you lay out the objectives of what you're trying to do,

Unknown Executive: Everybody is really focused on the innovation platforms and the sustainable attributes that we have. The innovation is in two parts. One is continuing to innovate within our existing products in our core technology and then also the launch of our new technology platforms. And it aligns nicely with the environmental social governance objectives. So all of these objectives are coming together.

Unknown Executive: And the innovation is in two parts. One is continuing to innovate within our existing products and our core technologies, and then also the launch of our new technology platforms. And it aligns nicely with the environmental, social, and governance objectives. So all of these objectives are coming together. It's all about finding that right balance there.

Unknown Executive: It's all about finding that right balance there. And when you lay out the objectives of what you're trying to achieve, you design that into the process where you design that into the product. With a platform, you now have essentially a backbone where you can tune and modify that platform. So you can take something that has a certain structure to it. And it has a certain different chemical features to it. And as you test with customers, you can tune that product, that platform in terms of increasing a certain feature or decreasing a feature because they are so tunable and they are scalable.

Unknown Executive: And when you lay out the objectives of what you're trying to achieve, you design that into the process, or you design that into the product. With a platform, you now have essentially a backbone where you can tune and modify that platform. So you can take something that has a certain structure to it, and it has certain different chemical features to it. And as you test with customers, you can tune that product, that platform in terms of increasing a certain feature or decreasing a feature. Because they are so tunable, and they are scalable, and we can make all these different modifications and adjustments on them, we can target different markets in different applications within those markets.

Speaker Change: to achieve, you design that into the process or you design that into the product. With a platform, you now have essentially a backbone.

Speaker Change: where you can tune and modify that platform. So you can take something that has a certain structure to it and it has a certain different chemical features to it.

Speaker Change: And as you test with customers, you can tune that product, that platform, in terms of increasing a certain feature or decreasing a feature. Because they are so tunable and they are scalable, and we can make all these different modifications and adjustments on them, we can target different markets and different applications within those markets. If I look at SuperWetter, you can cover more with less without losing any of the quality aspects of the material, which allows us the potential to open up additional growth that maybe we didn't have before.

Unknown Executive: And we can make all these different modifications and adjustments on them. We can target different markets in different applications within those markets. If I look at SuperWedder, you can cover more with less. Without losing any of the quality aspects of the material, which allows us the potential to open up additional growth that maybe we didn't have before.

Unknown Executive: Good day, and thank you for standing by. Welcome to the Ashland Inc. 3rd quarter, 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press Star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Operator: Good day, and thank you for standing by. Welcome to the Ashland, Inc. Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, William Whitaker. Please go ahead.

Speaker Change: Good day and thank you for standing by. Welcome to the Ashland Inc. 3rd Quarter 2024 Earnings Conference Call.

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again.

Unknown Executive: I would now like to hand the conference over to your speaker today.

Speaker Change: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, William Whitaker. Please go ahead.

William Whitaker: William Whitaker, please go ahead. Thank you, DD. And hello, everyone. Welcome to Ashland 3rd quarter, fiscal year 2024 earnings conference call and webcast. My name is William Whitaker, President of Finance and Director of Investor Relations. Joining me on the call today are Guillermo Novo, Ashland Chair and Chief Executive Officer, and Kevin Willis, Senior Vice President and Chief Financial Officer. Ashland released results for the quarter and did June 30, 2024, at approximately 5 p.m. Eastern Time yesterday, August 6th. The news release issued last night was furnished to the SEC in a form A.K. During today's call, we will reference slides that are currently being webcasted on our website, Ashland.com, under the Investor Relations section.

William Whitaker: Thank you, Didi. And hello, everyone. Welcome to Ashland's third quarter fiscal year 2024 earnings conference call and webcast. My name is William Whitaker, Vice President of Finance and Director of Investor Relations. Joining me on the call today are Guillermo Novo, Ashland Chair and Chief Executive Officer, and Kevin Willis, Senior Vice President and Chief Financial Officer. Ashland released results for the quarter ended June 30, 2024, at approximately 5 p.m. Eastern Time yesterday, August 6. The news release issued last night was furnished to the SEC on Form 8K.

Speaker Change: Joining me on the call today are Guillermo Novo, Excellent Chair and Chief Executive Officer, and Kevin Willis, Senior Vice President and Chief Financial Officer.

Speaker Change: Ashland released results for the quarter ended June 30th, 2024 at approximately 5 p.m. Eastern Time yesterday, August 6th.

William Whitaker: During today's call, we will reference slides that are currently being webcast on our website, Ashland.com, under the Investor Relations section. We encourage you to follow along with the webcast during today's call. Now, please turn to slide two.

Speaker Change: The news release issued last night was furnished to the SEC of Form 8K.

Speaker Change: During today's call, we will reference slides that are currently being webcast on our website, Ashland.com, under the Investor Relations section. We encourage you to follow along with the webcast during today's call. Please turn to slide 2.

Unknown Executive: We encourage you to follow along with the webcast during today's call. Please turn to slide two.

William Whitaker: As a reminder, during today's call, we will be making forward-looking statements on several matters, including our financial outlook for our fourth quarter and four year fiscal 2024. These forward-looking statements are subject to risks and uncertainties that could cause future results or events to differ materially from today's projections. We believe any such statements are based on reasonable assumptions, but cannot assure that such expectations will be achieved. Please refer to slide two of the presentation for an explanation of those risks and uncertainties and the limits applicable to those board-looking statements. You can also review our most recent Form 10-K under Item 1A for a comprehensive discussion of the risk factors impacting our business.

Speaker Change: As a reminder, during today's call, we will be making forward-looking statements on several matters, including our financial outlook for our fourth quarter and full-year fiscal 2024.

Speaker Change: These forward-looking statements are subject to risks and uncertainties that could cause future results or events to differ materially from today's projections.

Speaker Change: We believe any such statements are based on reasonable assumptions, but cannot assure that such expectations will be achieved.

William Whitaker: Please refer to slide two of the presentation for an explanation of those risks and uncertainties and the limits applicable to those forward-looking statements. You can also review our most recent Form 10-K, under Item 1A, for a comprehensive discussion of the risk factors impacting our business. Please also note that we will be referring to certain actual and projected financial metrics of Ashland on an adjusted basis, which are non-GAAP financial metrics. We will refer to these measures as adjusted and present them to supplement your understanding and assessment of the financial performance of our ongoing business. Non-GAAP measures should not be considered a substitute for or superior to financial measures calculated in accordance with GAAP.

Speaker Change: Please refer to slide two of the presentation for an explanation of those risks and uncertainties and the limits applicable to those forward-looking statements.

Speaker Change: You can also review our most recent Form 10-K under Item 1a for a comprehensive discussion of the risk factors impacting our business.

William Whitaker: Please also note that we will be referring to certain actual projected financial metrics of Ashland on an adjusted basis, which are non-GAAP financial measures. We will refer to these measures as adjusted and present them to supplement your understanding and assessment of the financial performance of our ongoing business. Non-GAAP measures should not be considered a substitute for or superior to financial measures calculating a net-cordence of GAAP. The most directly-comparable gap measures, as well as reconciliation of the non-gap measures to those gap measures, are available on our website and in the appendix of today's slide presentation.

Speaker Change: Please also note that we will be referring to certain actual and projected financial metrics of Ashland on an adjusted basis, which are non-GAAP financial measures.

Speaker Change: We will refer to these measures as adjusted and present them to supplement your understanding and assessment of the financial performance of our ongoing business.

Speaker Change: non-GAAP measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP.

Speaker Change: The most directly comparable GAAP measures , as well as reconciliation of the non- GAAP measures to those GAAP measures , are available on our website and in the appendix of today's slide presentation.

William Whitaker: Please turn to slide three. Guillermo will begin the call this morning with an overview of Ashland's performance and results in the third quarter. Next, Kevin will provide a more detailed review of the financial results for the quarter, followed by commentary related to Ashland's outlook for the fourth quarter and full year fiscal 2024. Guillermo will then provide an update related to Ashland's strategic priorities, and then we will open your line for questions.

William Whitaker: The most directly comparable gap measures, as well as reconciliation of the non-gap measures to those gap measures, are available on our website and in the appendix of today's slide presentation. Please turn to slide three. Guillermo will begin the call this morning with an overview of Ashland's performance and results in the third quarter. Next, Kevin will provide a more detailed review of the financial results for the quarter, followed by commentary related to Ashland's outlook for its fourth quarter and full year of fiscal 2024.

Speaker Change: Please turn to slide three.

Speaker Change: Guillermo will begin the call this morning with an overview of Ashland's performance and results in the third quarter. Next, Kevin will provide a more detailed review of the financial results for the quarter, followed by commentary related to Ashland's outlook for our fourth quarter and full year of fiscal 2024.

Speaker Change: Guillermo will then provide an update related to Ashland's strategic priorities, and then we will open your line for questions. Please turn to slide five.

William Whitaker: Please turn to slide five. Now turn the call over to Guillermo for his opening comments.

William Whitaker: Guillermo will then provide an update related to Ashland's strategic priorities, and then we will open your line for questions. Please turn to slide five. I will now turn the call over to Guillermo for his opening comments.

Guillermo Novo: Guillermo. Thank you, Guillermo. And hello, everyone. Thank you for your interest in Ashland and for your participation today. Let me start with a few of the headlines driving our performance. We delivered continued progress on all our portfolio actions. We have strong fiscal care sales growth across markets. And we saw improved specialty out of these volumes, and we showed discipline price management and high quality margin performance. Headlines were driven by lower life signs, VPND volumes mostly in Europe, softening specialty out of those volume momentum versus our expectations, and increased price pressure. While improving sales trends continued during most of the quarter, June was weaker than expected, and this trend has continued into July.

Guillermo Novo: Thank you, William, and hello everyone. Thank you for your interest in Ashland and for your participation today. Let me start with a few of the headlines driving our performance. We delivered continued progress on all our portfolio actions. We have strong social care sales growth across markets.

Speaker Change: I will now turn the call over to Guillermo for his opening comments. Guillermo?

Guillermo Novo: Thank you, William, and hello, everyone. Thank you for your interest in Ashland and for your participation today.

Guillermo Novo: Let me start with a few of the headlines driving our performance. We delivered continued progress

Guillermo Novo: on all our portfolio actions.

Guillermo Novo: And we saw improved specialty additives volumes, and we showed disciplined price management and high quality. Margin Performance. Headlines were driven by lower life science VPN D volumes, mostly in Europe, softening specialty attitudes, volume momentum versus our expectations, and increased price pressure. Improving sales trends continued during most of the quarter. June was weaker than expected, and this trend has continued into July.

Guillermo Novo: We have strong physical care sales growth across markets.

Guillermo Novo: and increased price pressure.

Guillermo Novo: Improving sales trends continued during most of the quarter. June was weaker than expected and this trend has continued into July .

Guillermo Novo: Our Q3 sales were roughly in line with our prior year at 544 million. Note that our portfolio improvement initiatives reduced sales by approximately 15 million, or 3%, during the third quarter. Sales volumes improved 5%, led by 22% growth in personal care and 5% growth in specialty additives. Excluding the portfolio improvement actions, overall sales volume grew by 8%. Looking at the businesses, personal care had one of the strongest quarters on record. The strong performance was broad base across markets and region. Particularly, particularly in strategic markets such as bio-functionals, microbial protection, as well as the Asia region.

Guillermo Novo: Our Q3 sales were roughly in line with our prior year at $544 million. Note that our portfolio improvement initiatives reduced sales by approximately $15 million, or 3%, during the third quarter. Sales volumes improved 5%, led by 22% growth in personal care and 5% growth in specialty additives. Excluding the portfolio improvement actions, overall sales volume grew by 8%. Looking at the businesses, personal care had one of the strongest quarters on record.

Guillermo Novo: The strong performance was broad-based across markets and regions, particularly in strategic markets such as biofunctionals, microbial protection, as well as the Asia region. Specialty Additives volumes continued to improve versus our prior year, and the business sustained its strong margin expansion, delivering 810 basis points on a sequential adjusted EBITDA margin improvement. Although volume demand improved, it was below our expectations. The regional recovery has been mixed, with lower demand and increased competition in Asia, as well as the Middle East and Africa. For life science, the biggest headwind was BPND.

Guillermo Novo: A strong performance was broad-based across markets and regions.

Guillermo Novo: Special, special, the attitudes volumes continued to improve versus our prior year and the business sustain its strong margin expansion, delivering 800 and 10 basis points on a sequential, adjusted EBITDA margin improvement. Although volume demand improved, it was below our expectations. The regional recovery has been mixed, with lower demand and increased competition in Asia, as well as the Middle East and Africa. In life science, the biggest headwind was BPMD. Overall, BPMD market demand was softer than expected in pharma and crop care. And we reduced exposure to the lower margin nutrition business. However, the largest impact for the quarter was the BPMD pharma, where share loss and some demand weakness weighed on overall results.

Guillermo Novo: Specialty Additives volumes continued to improve versus our prior year and the business sustained its strong margin expansion.

Guillermo Novo: Although volume demand improved.

Guillermo Novo: Overall, BPMD market demand was softer than expected in pharma and crop, and we reduced exposure to the lower margin nutrition. However, the largest impact for the quarter was BPND pharma, where we lost share and saw some demand weakness. Wait for overall results; the overall impact has been most acute in Europe. We will discuss actions we're taking to improve our results later in the call. Intermediates merchant business continues to see weak demand in the EV battery and crop care market.

Guillermo Novo: In life science, the biggest headwind was VPND.

Guillermo Novo: and we reduced exposure to the lower margin nutrition business.

Guillermo Novo: Overall impact has been most acute in Europe. We will discuss actions we're taking to improve our results later in the call. Intermediate merchant business continues to see weak demand in EV battery and crop care markets. Pricing was down low single digits versus the prior year quarter when excluding the impact of our intermediate business, which was down double digits. Pricing impact was partially offset by lower raw material costs. Production volumes were up mid single digits versus last year and generally in line with quarterly sales volumes, as inventories were sequentially stable. Asham continues to prudently manage production and inventory levels to increase our future operating flexibility.

Guillermo Novo: We will discuss actions we are taking to improve our results later in the call.

Guillermo Novo: Pricing was down low single digits versus the prior year quarter when excluding the impact of our intermediates business, which was down doubled. However, the impact of pricing was partially offset by lower raw material costs. Production volumes were up mid-single digits versus last year and generally in line with quarterly sales volumes as inventories were sequentially stable. Ashland continues to prudently manage production and inventory levels to increase our future operating flexibility. Adjusted EBITDA margins sequentially increased 370 basis points to 25.6% in line with our second half target of mid-20s.

Guillermo Novo: Pricing impact was partially offset by lower raw material costs.

Guillermo Novo: Production volumes were up mid-single digit versus last year and generally in line with quarterly sales volumes as inventories were sequentially stable.

Asha: ASHA continues to prudently manage production and inventory levels to increase our future operating flexibility.

Guillermo Novo: Adjust EBITDA margin sequentially increased 370 basis points to 25.6% in line with our second half target of mid 20s. Overall, adjusted EBITDA for the quarter increased to 139 million, which was at the lower end of our expectations. We continue to believe the current share price does not reflect our expectations on long-term profitable growth and enhanced capital return. Following another quarter of strong pre-cash flow, we've repurchased $130 million of shares. We also increased the dividend in the quarter, as we have done every calendar year since 2009. Our strong balance sheet and healthy pre-cash flow generation enabled us to pursue a balanced capital allocation approach.

Asha: Adjusted EBITDA margins sequentially increased 370 basis points to 25.6% in line with our second half target of mid-20s.

Guillermo Novo: Overall, adjusted EBITDA for the quarter increased to $139 million, which was at the lower end of our expectation. We continue to believe the current share price does not reflect our expectations for Long-Term Profitable Growth and Enhanced Capital Return. Following another quarter of strong free cash flow, we repurchased $130 million of shares. We also increased the dividend in the quarter, as we have done every calendar year since 2009. Our strong balance sheet and healthy free cash flow generation enables us to pursue a balanced capital allocation.

Asha: Overall, adjusted EBITDA for the quarter increased to $139 million, which was at the lower end of our expectations.

Asha: We continue to believe the current share price does not reflect our expectations.

Asha: On another quarter of strong free cash flow, we repurchased $130 million of shares.

Asha: We also increased the dividend in the quarter as we have done every calendar year since 2009.

Asha: Our strong balance sheet and healthy free cash flow generation enables us to pursue a balanced capital allocation approach.

Guillermo Novo: Please turn to slide six. Your over-year sales growth was very strong for personal care but mixed overall for the company due to the factors I referenced earlier. These results reflect for polyoptimization in the quarter, including an 8% impact on specialty added. of this. Volume improvements were partially offset by lower pricing in some product lines. While sales growth was mixed, all businesses maintained discipline and delivered strong margin performance in line with our expectations. All business units were at or above adjusted EBITDA margins of 25%. Our portfolio optimization activities remain on track. Actions around right sizing, our MC and CMC businesses have been implemented.

Guillermo Novo: Please turn to slide six, year over year sales growth was very strong for personal care but mixed overall for the company due to the factors I referenced earlier. These results reflect portfolio optimization in the quarter, including an 8% impact on specialty; volume improvements were partially offset by lower pricing in some products. While sales growth was mixed, all businesses maintained discipline and delivered strong margin performance in line with our expectations. All business units were at or above adjusted EBITDA margins of 25%.

Asha: Year-over-year sales growth was very strong for personal care but mixed overall for the company due to the factors I referenced earlier. These results reflect portfolio optimization in the quarter, including an 8% impact on specialty additives.

Asha: Volume improvements were partially offset by lower pricing in some product lines.

Asha: While sales growth was mixed, all businesses maintained discipline and delivered strong margin performance in line with our expectations.

Asha: All business units were at or above adjusted EBITDA margins of 25%.

Guillermo Novo: Our portfolio optimization activities remain on track. Actions around rightsizing our MC and CMC businesses have been implemented. In May, we announced the signing of a purchase agreement for the nutraceutical business and expect the transaction to close in fiscal Q4. They've already started to take initial actions on our Avoca business, which is also part of the Pharmacam acquisition.

Asha: Our portfolio optimization activities remain on track. Actions around rightsizing our MC and CMC businesses have been implemented.

Guillermo Novo: In May, we announced the signing of a purchase agreement for the nutraceutical business and expect the transaction to close in fiscal Q4. They've already started to take initial actions on our evoke a business, which is also part of the farm and care acquisition.

Asha: In May, we announce the signing of a purchase agreement for the nutraceutical business and expect the transaction to close in fiscal Q4.

Kevin Willis: Now let me pass over the call to Kevin to review Q3 in more detail.

Kevin Willis: Kevin, thank you, Guillermo. Good morning, everyone. We've turned to slide 8, total Ashland sales in the quarter, $544 million or roughly in line compared to prior year. The previously announced CMC and MC Portfolio Optimization Initiatives reduced overall sales by approximately $15 million, or 3%, during the third quarter. Year over year, quarterly volumes increased 5%, as demand recovered within the personal care and specialty additive segments. These volume gains were partially offset by unfavorable life sciences volumes. Regionally, overall sales into our largest markets, North America, Europe, and Asia, were stable to improving. This was offset by weakness in Latin America and Middle East Africa.

Kevin Willis: Thank you, Guillermo, and good morning everyone. Please turn to slide 8. Total Ashland sales in the quarter were $544 million, or roughly in line compared to the prior year. However, the previously announced CMC and MC Portfolio Optimization Initiatives reduced overall sales by approximately $15 million, or 3% during the third quarter. Year-over-year quarterly volumes increased 5% as demand recovered within the personal care and specialty additive sector. These volume gains were partially offset by unfavorable life sciences; regionally, overall sales into our largest markets, North America, Europe, and Asia, were stable to improving. This was offset by weakness in Latin America and Middle East Africa.

Asha: And now let me pass over the call to Kevin to review Q3 in more details. Kevin?

Kevin Willis: Total Ashland sales in the quarter, $544 million, or roughly in line compared to prior year.

Kevin Willis: The previously announced CMC and MC Portfolio Optimization Initiatives reduced overall sales by approximately $15 million, or 3% during the third quarter.

Kevin Willis: Year-over-year quarterly volumes increased 5% as demand recovered within the personal care and specialty additive segments.

Kevin Willis: These volume gains were partially offset by unfavorable life sciences volumes.

Kevin Willis: Regionally, overall sales into our largest markets, North America, Europe , and Asia, were stable to improving. This was offset by weakness in Latin America and Middle East Africa.

Kevin Willis: Gross profit margin increased 290 basis points to 36.2% in the quarter, which is one of our higher margin quarters over the last five years. Several factors contributed to this improvement, primarily sales and production volume increases, as well as product mix. This was partially offset by unfavorable pricing versus raw materials, approximately half of which is associated with intermediates. When excluding key items, SG&A, R&D, and intangible amortization costs were $110 million in the quarter, down from $113 million in the prior year. In total, Ashland's EBITDA for the quarter was $139 million, up 5% from the prior year.

Kevin Willis: Gross profit margin increased 290 basis points to 36.2% in the quarter, which is one of our higher margin quarters over the last five years.

Kevin Willis: When excluding key items, SG&A, R&D, and intangible amortization costs were $110 million in the quarter, down from $113 million in the prior year.

Kevin Willis: In total, Ashland's adjusted EBITDA for the quarter was $139 million, up 5% from the prior year. Additionally, its adjusted EBITDA margin for the quarter was 25.6%, up from 24.4% in the prior year. Adjusted EPS, excluding acquisition amortization for the quarter, was $1.49 per share, up 21% from the prior year quarter. Now, we'll review the results of each of our four operating segments. Please turn to slide 10.

Kevin Willis: In total, Ashland's adjusted EBITDA for the quarter was $139 million, up 5% from the prior year.

Kevin Willis: Ashland's adjusted EBITDA margin for the quarter was 25.6%, up from 24.4% in the prior year. Adjusted EPS, excluding acquisition amortization for the quarter, was $1.49 per share, up 21% from the prior year quarter.

Kevin Willis: Ashland's adjusted EBITDA margin for the quarter was 25.6%, up from 24.4% in the prior year.

Kevin Willis: Adjusted EPS, excluding acquisition amortization for the quarter, was $1.49 per share, up 21% from the prior year quarter.

Kevin Willis: Now let's review the results of each of our four operating segments. Please turn to slide 10. As Geremo mentioned, VP&D was the largest impact in the quarter for life sciences. Overall, VP&D demand was softer and farma, as well as in crop care, and we also reduced our exposure to low margin nutrition business. The largest impact was related to share loss and softer demand in PVP, farma, particularly in Europe.

Kevin Willis: As Guillermo mentioned, VP&D was the largest impact in the quarter for life science. Overall, demand for VPND was softer in pharma as well as in crop care, and we also reduced our exposure to low margin nutrition. The largest impact was related to share loss and softer demand in PVP pharma, particularly in Europe. Pharmacellulosics has been stable year to date, offsetting the softer demand environment with higher revenue. Life Sciences sales declined by 11% to $195 million.

Kevin Willis: The largest impact was related to share loss and softer demand in PVP pharma, particularly in Europe .

Kevin Willis: Mark. Pharmacelulosics has been stable year to date, offsetting a softer demand environment with share game. Life sciences sales declined by 11% to $195 million. Adjusted EBITDA decreased by 18% to $59 million, primarily reflecting lower BPMD volumes, as well as lower pricing that was partially offset with favorable raw materials. Adjusted EBITDA margin decreased 260 basis points to 30.3%.

Kevin Willis: Life Sciences sales declined by 11% to

Kevin Willis: Adjusted EBITDA decreased by 18% to $59 million, primarily reflecting lower VP&D volumes, as well as lower pricing that was partially offset with favorable raw material. Adjusted EBITDA margin decreased 260 basis points to 30.3%. Please turn to slide 11.

Speaker Change: Adjusted EBITDA decreased by 18% to $59 million, primarily reflecting lower VP&D volumes, as well as lower pricing that was partially offset with favorable raw materials.

Kevin Willis: Please turn to slide 11. Stronger demand positively impacted personal care volumes within all end markets. Skin and hair care demonstrated the greatest recovery's versus the prior year. Strong revenue growth was regionally broad-based across Asia, Europe, and North America. As expected, oral care sales were positively impacted by order timing with a key customer. Avocas' continued weakness moderated on sequential improvement and a weaker prior year comparison, generating flat year-over-year revenue performance. Overall pricing versus raw material dynamics were balanced for personal care. Personal care sales increased by 20% to $175 million. The portfolio optimization initiative reduced personal care sales by approximately $3 million, or 2%, during the third quarter.

Kevin Willis: Stronger Demand positively impacted personal care volumes across all categories, with Skin and Hair Care demonstrating the greatest recoveries versus the prior year. Strong revenue growth was broadly based across Asia, Europe, and North America. As expected, oral care sales were positively impacted by order timing with a key customer. AVOCA's continued weakness moderated on sequential improvement and a weaker prior year comparison, generating flat year-over-year revenue. However, overall pricing versus raw material dynamics were balanced for personal. Personal care sales increased by 20% to $175 million.

Speaker Change: Stronger Demand positively impacted personal care volumes within all end markets.

Speaker Change: Skin and Hair Care demonstrated the greatest recoveries versus the prior year. Strong revenue growth was regionally broad-based across Asia, Europe , and North America. As expected, oral care sales were positively impacted by order timing with a key customer.

Speaker Change: Avoka's continued weakness moderated on sequential improvement and a weaker prior year comparison generating flat year-over-year revenue performance.

Kevin Willis: Portfolio Optimization Initiative reduced personal care sales by approximately three million dollars, or two percent, during the third quarter. However, adjusted EBITDA increased 46% to $51 million, primarily reflecting increased sales and production volume with favorable product mix, partially offset by variable compensation reset. Adjusted EBITDA margin increased 510 basis points to 29.1%. This marks one of the most profitable quarters for personal care over the last five; please turn to slide 12. Specialty additive volumes improved within coatings and performance specialties, partially offset by lower energy and market volume.

Speaker Change: The Portfolio Optimization Initiative reduced personal care sales by approximately $3 million or 2% during the third quarter.

Kevin Willis: Adjusted EBITDA increased 46% to $51 million, primarily reflecting increased sales and production volume with favorable product mix, partially offset with variable compensation recess. Adjusted EBITDA margin increased 510 basis points to 29.1%. This marks one of the most profitable quarters for personal care over the last five years.

Speaker Change: Adjusted EBITDA increased 46% to 51 million dollars, primarily reflecting increased sales and production volume with favorable product mix, partially offset with variable compensation resets.

Speaker Change: Adjusted EBITDA margin increased 510 basis points to 29.1%. This marks one of the most profitable quarters for personal care over the last five years.

Kevin Willis: Please turn to slide 12. Specialty added as volumes improved with encodings and performance specialties, partially offset by lower energy and market volumes. To unpack the demand trends a bit, regional sales growth was mixed. We generated revenue growth in Europe, Rest of Asia and Latin America with weakness in China and Middle East Africa. North America was stable in the quarter, but has generated positive sequential momentum throughout the year. Overall pricing for specialty additives was lower, primarily reflecting increased competition in Asia, but was partially offset by favorable raw materials. The quarter specialty additive sales declined by 1% to $150 million.

Speaker Change: Specialty additives volumes improved within coatings and performance specialties, partially offset by lower energy and market volumes.

Kevin Willis: Unpacking the Demand Trends a bit, regional sales growth was next. We generated revenue growth in Europe, the rest of Asia, and Latin America, with weakness in China and the Middle East. North America was stable in the quarter, but it has generated positive sequential momentum throughout the year. Overall pricing for specialty additives was lower, primarily reflecting increased competition in Asia, but it was partially offset by favorable raw material. For the quarter, specialty additive sales declined by 1% to $150 million. The Portfolio Optimization Initiative reduced specialty additive sales by $12 million, or 8%, during the third quarter.

Speaker Change: To unpack the demand trends a bit, regional sales growth was next.

Speaker Change: We generated revenue growth in Europe , rest of Asia, and Latin America, with weakness in China and Middle East Africa.

Speaker Change: North America was stable in the quarter, but has generated positive sequential momentum throughout the year.

Kevin Willis: The portfolio optimization initiative reduced specialty additive sales by $12 million, or 8%, during the third quarter. Adjusted for portfolio optimization, sales volumes were up 13% versus the prior years. Adjusted EBITDA increased by 31% to $38 million, reflecting higher sales and production volumes with favorable product mix, partially offset with unfavorable pricing versus raw material and variable compensation recess. Adjusted EBITDA margin has recovered very well throughout the year. Up approximately 2000 basis points since Q1 to more typical profitability at 25.3. 30%.

Speaker Change: The Portfolio Optimization Initiative reduced specialty additive sales by $12 million or 8% during the third quarter. Adjusted for portfolio optimization, sales volumes were up 13% versus the prior year.

Kevin Willis: Adjusted for portfolio optimization, sales volumes were up 13% versus the prior year. Adjusted EBITDA increased by 31% to $38 million, reflecting higher sales and production volumes with favorable product mix, partially offset by unfavorable pricing versus raw materials and variable compensation. Adjusted EBITDA margin has recovered very well throughout the year, up approximately 2,000 basis points since Q1 to more typical profitability at 25.3%. Please turn to slide 13.

Speaker Change: Adjusted EBITDA increased by 31% to $38 million, reflecting higher sales and production volumes with favorable product mix, partially offset with unfavorable pricing versus raw material, and variable compensation reset.

Speaker Change: Adjusted EBITDA margin has recovered very well throughout the year, up approximately 2,000 basis points since Q1, to more typical profitability at 25.3%.

Kevin Willis: Please turn slide 13. Total merchant and captive sales were $36 million, down 16% from the prior year quarter. Merchant sales total $24 million, down from $29 million in the prior year, driven primarily by lower NMP prices. Lower NMP pricing is primarily a result of weaker demand in the EV battery and crop care end markets. Captive internal media sales were $12 million, down 14% compared to the prior year quarter due to lower volumes and pricing. Intermediates reported adjusted EBITDA of $9 million, or a 25% adjusted EBITDA margin, compared to $16 million in the prior year, primarily reflecting lower prices.

Kevin Willis: Total merchant and captive sales were $36 million, down 16% from the prior year quarter. Merchant sales totaled $24 million, down from $29 million in the prior year quarter, driven primarily by lower NMP prices. Lower NMP pricing is primarily a result of weaker demand in the EV battery and crop care end market. Captive internal BDO sales were $12 million, down 14% compared to the prior year quarter due to lower volumes and prices. Intermediates reported adjusted EBITDA of $9 million, or a 25% adjusted EBITDA margin compared to $16 million in the prior year, primarily reflecting lower prices. Please turn to slide 14.

Speaker Change: Please turn to slide 13.

Speaker Change: Total merchant and captive sales were $36 million, down 16% from the prior year quarter. Merchant sales totaled $24 million, down from $29 million in the prior year quarter, driven primarily by lower NMP pricing.

Speaker Change: Lower NMP pricing is primarily a result of weaker demand in the EV battery and crop care end markets.

Speaker Change: Captive internal BDS sales were $12 million, down 14% compared to the prior year quarter due to lower volumes and pricing.

Speaker Change: Intermediates reported adjusted EBITDA of $9 million, or a 25% adjusted EBITDA margin, compared to $16 million in the prior year, primarily reflecting lower pricing.

Kevin Willis: Please turn slide 14. Ashland continues to have a strong financial position. As of the end of June, we had cash on hand of $399 million with total available liquidity of roughly $1 billion. Our net debt was $926 million, which is about 2.3 turns of leverage. We have no floating rate debt outstanding, no long-term debt maturities for the next three years, and all of our outstanding debt is subject to investment-grade-style credit terms. As Guillermo noted, we continue to believe Ashland's stock is an attractive use of capital and deployed $130 million to repurchase 1.3 million shares during the quarter.

Kevin Willis: Ashland continues to have a strong financial position. As of the end of June, we had cash on hand of $399 million, with total available liquidity of roughly $1 billion. Our net debt was $926 million, which is about 2.3 turns of leverage. We have no floating rate debt outstanding, and no long-term debt maturities for the next three years. And all of our outstanding debt is subject to investment grade style credit.

Speaker Change: As of the end of June , we had cash on hand of $399 million, with total available liquidity of roughly $1 billion.

Speaker Change: Our net debt was $926 million, which is about 2.3 turns of leverage.

Speaker Change: We have no floating rate debt outstanding, no long-term debt maturities for the next three years, and all of our outstanding debt is subject to investment-grade style credit terms.

Kevin Willis: As Guillermo noted, we continue to believe Ashland stock is an attractive use of capital and deployed $130 million to repurchase 1.3 million shares during the quarter. Our balanced and disciplined capital allocation approach has deployed roughly $1.2 billion to share repurchases over the last three years. We have $770 million remaining under the current share repurchase authorization. We are continuing to invest in our existing businesses and technology platforms to grow organically while pursuing our strategy of targeted bolt-on M&A opportunities focused on pharma, personal care, and coding. Please turn to slide 15.

Kevin Willis: Our balanced and disciplined capital allocation approach has deployed roughly $1.2 billion to share repurchases over the last three years. We have $770 million remaining under the current share repurchase authorization.

Speaker Change: Our balanced and disciplined capital allocation approach has deployed roughly $1.2 billion to share repurchases over the last three years.

Speaker Change: We have $770 million remaining under the current share repurchase authorization.

Kevin Willis: We are continuing to invest in our existing businesses and technology platforms to grow organically, while pursuing our strategy of targeted bolt-on M&A opportunities focused on pharma, personal care, and coatings. Please turn slide 15. Ashland prudently managed to production and inventory levels throughout the quarter. Inventory levels have decreased to $156 million when compared to the prior year quarter, and increased modestly by $6 million sequentially. Our action should better position us for more resilient performance going forward. Overall, ongoing free cash flow for the quarter was very healthy at $112 million, up 15% versus the prior year. For the fiscal year, we expect to generate a free cash flow conversion of 50 to 55%.

Kevin Willis: Ashland prudently managed production and inventory levels throughout the core. Inventory levels decreased $156 million when compared to the prior year quarter and increased modestly by $6 million sequentially. Our actions should better position us for more resilient performance going forward. Overall, ongoing free cash flow for the quarter was very healthy at $112 million, up 15% versus the prior year. For the fiscal year, we expect to generate a free cash flow conversion of $50 to $55. The quarterly dividend increased to 40.5 cents per share this quarter and is reflective of our commitment to increase the dividend annually, as we've communicated and. With that, I will now provide an update on the execution pillar of our strategic priorities, in addition to an updated outline. Please turn to slide 17.

Speaker Change: Inventory levels have decreased 156 million dollars when compared to the prior year quarter and increased modestly by six million dollars sequentially.

Speaker Change: Our actions should better position us for more resilient performance going forward.

Speaker Change: Overall, ongoing free cash flow for the Corps was very healthy at $112 million, up 15% versus the prior year.

Speaker Change: For the fiscal year, we expect to generate a free cash flow conversion of 50 to 55 percent.

Kevin Willis: Our progressive dividend policy remains an important part of our capital allocation strategy and is reflective of our confidence in the company's long-term, profitable growth and cash flow generation outlook. The quarterly dividend increased to 40.5 cents per share this quarter, and is reflective of our commitment to increase the dividend annually, as we've communicated and demonstrated.

Speaker Change: Our progressive dividend policy remains an important part of our capital allocation strategy and is reflective of our confidence in the company's long-term profitable growth and cash flow generation outlook.

Speaker Change: The quarterly dividend increased to 40.5 cents per share this quarter, and is reflective of our commitment to increase the dividend annually, as we've communicated and demonstrated.

Kevin Willis: With that, I will now provide an update on the execute pillar of our strategic priorities in addition to an updated outlook. Please turn to slide 17. We have five primary portfolio actions underway. As Guillermo noted, our latest advancement is the May signing of a definitive agreement to sell our Nutri-Suticals business to Turn Spire Capital Partners. Our teams are working diligently on the transaction closing process and expect to complete the transaction in the September quarter. I would like to acknowledge and thank the Nutri-Suticals team, which performed well while supporting the transaction process. In connection with the signing, we recognized a non-cash impairment as well as an offsetting tax benefit, which were key items in the quarter.

Speaker Change: With that, I will now provide an update on the execute pillar of our strategic priorities in addition to an updated outlook.

Kevin Willis: We have five primary portfolio actions underway. As Guillermo noted, our latest advancement was the May signing of a definitive agreement to sell our nutraceuticals business to Turnspire Capital Park. Our teams are working diligently on the transaction closing process and expect to complete the transaction in September. I would like to acknowledge and thank the Nutraceuticals team, which performed well while supporting the transaction process. The business will remain in continuing operations until the transaction is closed.

Speaker Change: Please turn to slide 17.

Speaker Change: We have five primary portfolio actions underway.

Speaker Change: As Guillermo noted, our latest advancement is the May signing of a definitive agreement to sell our Nutraceuticals business to Turnspire Capital Partners. Our teams are working diligently on the transaction closing process and expect to complete the transaction in the September quarter.

Speaker Change: I would like to acknowledge and thank the Nutraceuticals team, which performed well while supporting the transaction process.

Speaker Change: In connection with the signing, we recognized a non-cash impairment as well as an offsetting tax benefit, which were key items in the quarter.

Kevin Willis: The business will remain in continuing operations until the transaction is closed. The exact impact of the sales production in Q4 will be dependent on this specific closing date. In addition, Ashland continues to reduce its CMC and MC volume exposure to several lower value, more cyclical segments. As noted earlier, these efforts reduced overall sales by 15 million dollars during the third quarter, primarily within specialty additives in personal care, to a lesser extent. We expect a quarterly sales impact to increase to approximately 20 million dollars across the three core businesses during Q4. Ashland continues to advance its work to improve the productivity of its HEC business, and specific actions will be communicated in due course.

Kevin Willis: The exact impact of the sales reduction in Q4 will be dependent on the specific closing. In addition, Ashland continues to reduce its CMC and MC volume exposure to several lower-value, more cyclical sectors. As noted earlier, these efforts reduced overall sales by $15 million during the third quarter, primarily within specialty additives and personal care to a lesser extent. We expect the quarterly sales impact to increase to approximately $20 million across the three core businesses during Q4. Ashland continues to advance its work to improve the productivity of its HEC business, and specific actions will be communicated in due course.

Speaker Change: The business will remain in continuing operations until the transaction is closed. The exact impact of the sales reduction in Q4 will be dependent on the specific closing date.

Speaker Change: In addition, Ashland continues to reduce its CMC and MC volume exposure to several lower-value, more cyclical segments.

Speaker Change: As noted earlier, these efforts reduced overall sales by $15 million during the third quarter, primarily within specialty additives and personal care, to a lesser extent.

Speaker Change: We expect the quarterly sales impact to increase to approximately $20 million across the three core businesses during Q4.

Speaker Change: Ashland continues to advance its work to improve the productivity of its HEC business and specific actions will be communicated in due course.

Kevin Willis: Looking ahead to fiscal year 2025, we expect these actions to reduce revenue 160 to 170 million dollars versus 2024. Most of the impact is within life sciences due to the expected Nutri-Sutical sale and nutrition access, which ramp up in Q4 this year. We will act with appropriate urgency to deliver on our commitments, including the reduction of all stranded costs to drive an EBITDA-neutral outcome and improve overall margins for the company.

Kevin Willis: Looking ahead to fiscal year 2025, we expect these actions to reduce revenue by 160 to $170 million versus 2024. Most of the impact is within life sciences due to the expected nutraceutical sale and nutrition exits, which ramp up in Q4 of this year. We will act with appropriate urgency to deliver on our commitments, including the reduction of all stranded costs to drive an EBITDA neutral outcome and improve overall margins for the company.

Speaker Change: Looking ahead to fiscal year 2025, we expect these actions to reduce revenue $160 to $170 million versus 2024.

Speaker Change: Most of the impact is within life sciences due to the expected nutraceutical sale and nutrition exits, which ramp up in Q4 of this year.

Speaker Change: We will act with appropriate urgency to deliver on our commitments, including the reduction of all stranded costs to drive an EBITDA neutral outcome and improve overall margins for the company.

Kevin Willis: We continue to evaluate our strategic options with respect to our Evoke business line and recently started to take action. We recently closed one of Evoke's smaller facilities and are reducing personnel at a larger facility in response to lower demand.

Kevin Willis: We continue to evaluate our strategic options with respect to our Avoca business line and recently started to take action. We recently closed one of our smaller facilities and are reducing personnel at a larger facility in response to lower demand. Please turn to slide 18.

Speaker Change: We continue to evaluate our strategic lines and recently started to take action. We recently closed one of Avoca's smaller facilities and are reducing personnel at a larger facility in response to lower demand.

Kevin Willis: Please turn to slide 18. As noted in our press release last night, we have revised our sales and just a deep-a-dial look for the fiscal year. There are two primary drivers: slower than expected VP&D recovery and softer than expected coatings demand and growth. Here, mobile discuss our VP&D action plan in more detail later in the call. Recent market developments have increased uncertainty around demand trends in select markets and regions. Lower sales trends experienced in June have continued into June. Overall, end-to-market demand growth is estimated to be flat to low single digits. Personal care and specialty additives are expected to benefit from favorable Q4 comps on demand normalization.

Kevin Willis: As noted in our press release last night, we have revised our sales and adjusted EBITDA outlook for the fiscal year. There are two primary drivers, a slower-than-expected VPND recovery and softer-than-expected coatings demand growth. Guillermo will discuss our VPND action plan in more detail later in the call.

Speaker Change: Please turn to slide 18.

Speaker Change: As noted in our press release last night, we have revised our sales and Just a Diva dot outlook for the fiscal year. There are two primary drivers.

Speaker Change: Slower-than-expected VP&D recovery and softer-than-expected coatings demand growth.

Speaker Change: Guillermo will discuss our VPND action plan in more detail later in the call. Recent market developments have increased uncertainty around demand trends in select markets and regions.

Kevin Willis: Recent market developments have increased uncertainty around demand trends in select markets and regions. Lower sales trends experienced in June have continued in the new, overall end market demand growth is estimated to be flat to low single digits. Personal care and specialty additives are expected to benefit from favorable Q4 comps on demand normalization. The continued demand recovery from personal care and specialty additives is expected to be partially offset by softer VPND volumes within Life Science.

Speaker Change: Lower sales trends experienced in June have continued into July . Overall, end-market demand growth is estimated to be flat to low single digits.

Speaker Change: Personal care and specialty additives are expected to benefit from favorable Q4 comps on demand normalization.

Kevin Willis: The continued demand recovery from personal care and specialty additives is expected to be partially offset by softer VP&D volumes within life sciences. While lower than expected, pharmaceuticals are forecasted to be roughly stable with improving life sciences margins versus the prior year. Overall, year-over-year sales volume growth, excluding portfolio optimization volumes, is expected to be mid-single digit in the fiscal fourth quarter. We are expecting softer overall pricing, which is forecast down low single digits versus the prior year, partially offset with raw material deflation. The CMC and MC portfolio optimization is expected to reduce sales approximately $20 million versus the prior year and drive margin expansion.

Speaker Change: The continued demand recovery from personal care and specialty additives is expected to be partially offset by softer VP&D volumes within Life Sciences.

Kevin Willis: While lower than expected, pharma sales are forecasted to be roughly stable with improving life sciences margins versus the prior year. Overall, year-over-year sales volume growth, excluding portfolio optimization volumes, is expected to be mid-single digits in the fiscal fourth quarter. We are expecting softer overall pricing, which is forecast down low single digits versus the prior year, partially offset by raw material deflation. CMC and MC portfolio optimization is expected to reduce sales by approximately $20 million versus the prior year and drive margin expansion.

Speaker Change: While lower than expected, pharma sales are forecasted to be roughly stable with improving life sciences margins versus the prior year.

Speaker Change: Overall, year-over-year sales volume growth, excluding portfolio optimization volumes, is expected to be mid-single digit in the fiscal fourth quarter.

Speaker Change: We are expecting softer overall pricing, which is forecast down low single digits versus the prior year, partially offset with raw material deflation.

Speaker Change: The CMC and MC portfolio optimization is expected to reduce sales approximately $20 million versus the prior year and drive margin expansion.

Kevin Willis: We expect significant year-over-year absorption favorability as we continue to produce the demand and we compare against last year's inventory corrective actions. For the fiscal fourth quarter, the company expects sales in the range of $530 to $540 million and adjusted EBITDA in the range of $130 to $140 million. This yields full year sales of approximately $2.1 billion and adjusted EBITDA in the range of $465 to $475 million.

Kevin Willis: We expect significant year-over-year absorption favorability as we continue to produce demand and we compare against last year's inventory corrective action. For the fiscal fourth quarter, the company expects sales in the range of $530 to $540 million and adjusted EBITDA in the range of $130 to $140 million. This yields full-year sales of approximately $2.1 billion and adjusted EBITDA in the range of $465 to $475 million. Key risks and opportunities are listed on the slide.

Speaker Change: For the fiscal fourth quarter, the company expects sales in the range of $530 to $540 million and adjusted EBITDA in the range of $130 to $140 million.

Speaker Change: This yields full year sales of approximately $2.1 billion and adjusted EBITDA in the range of $465 to $475 million.

Kevin Willis: Key risks and opportunities are listed on the slide. Demand, plant loading, and price versus raw material balance continue to be most critical for the Q4 financial results.

Kevin Willis: Demand, plant loading, and price versus raw material balance continue to be the most critical for the Q4 financial results. And now, let me turn the call back to Guillermo to provide an update on our strategic priorities. Guillermo? Thank you, Kevin.

Speaker Change: Key risks and opportunities are listed on the slide. Demand, plant loading, and price versus raw material balance continue to be most critical for the Q4 financial results.

Guillermo Novo: And now, let me turn the call back to Guillermo to provide an update on our strategic priorities.

Speaker Change: And now, let me turn the call back to Guillermo to provide an update on our strategic priorities. Guillermo? Thank you, Kevin. Please turn to slide 20.

Guillermo Novo: Guillermo. Thank you, Kevin. Please turn to slide 20. Our strategic priorities remain unchanged and continue to guide our actions, investments, and profitable growth expectations. As we've discussed before, the priorities include initiatives to execute, globalize, innovate, and acquire. We're making good progress on our execute priorities and expect that momentum to continue in Q4. We're aiming to achieve our current portfolio optimization efforts by the end of the calendar year. In addition to CMC, MC, and nutraceuticals, we are finalizing plans and actions to exit the EVOCA business, as the market dynamics for the scleralized business have fundamentally changed, and the tolling activities are not core to our strategies.

Guillermo Novo: Thank you, Kevin. Please turn to slide 20.

Guillermo Novo: Our strategic priorities remain unchanged and continue to guide actions, investments, and profitable growth expectations. As we've discussed before, these priorities include initiatives to execute, globalize, innovate, and acquire. We're making good progress on our execution priorities and expect that momentum to continue in Q4. We're aiming to achieve our current portfolio optimization efforts by the end of the calendar year. In addition to CMC, MC, and Nutraceuticals, we are finalizing plans and actions to exit the Avoca business, as the market dynamics for the Squarely business have fundamentally changed, and the tolling activities are not core to our strategy.

Guillermo Novo: Our strategic priorities remain unchanged and continue to guide actions, investments, and profitable growth expectations.

Guillermo Novo: As we've discussed before the priorities include initiatives to execute, globalize, innovate, and acquire.

Speaker Change: We're making good progress on our execute priorities and expect that momentum to continue in Q4.

Speaker Change: We're aiming to achieve our current portfolio optimization efforts by the end of the calendar year.

Speaker Change: In addition to CMC, MC, and Nutraceuticals, we are finalizing plans and actions to exit the Avoca business as the market dynamics for the Squarely business has fundamentally changed and the tolling activities are not core to our strategies.

Guillermo Novo: We recognize that we continue to live in on certain times. As such, we will continue to operate with discipline and prudence, focus on the things we can control, and drive near-term performance. To perform beyond market demand dynamics, Aslan needs to focus in advance its own growth catalyst. For us, this means demonstrating traction on our Execute, Globalize, and Innovate strategy. As we look at fiscal year 25, within the executed initiatives, we will focus on strengthening the areas that are core to us. We have initiated a focused effort to strengthen and improve our competitive position in both VPMD and HEC.

Guillermo Novo: recognized that we continue to live in uncertain times. As such, we will continue to operate with discipline and prudence, focus on the things that we can control, and drive near-term performance. To perform beyond market demand dynamics, Ashland needs to focus and advance its own growth catalyst. For us, this means demonstrating traction on our execute, globalize, and innovate strategy. As we look at fiscal year 25, within the execution initiatives, we will focus on strengthening the areas that are core to us.

Speaker Change: You recognize?

Speaker Change: that we continue to live in uncertain times.

Speaker Change: As such, we will continue to operate with discipline and prudence, focus on the things we can control, and drive near-term performance.

Speaker Change: To perform beyond market demand dynamics, Ashland needs to focus and advance its own growth catalyst.

Speaker Change: For us, this means demonstrating traction on our execute, globalize, and innovate strategy.

Speaker Change: As we look at Fiscal Year 25, within the Execute Initiatives, we will focus on strengthening the areas that are core to us.

Guillermo Novo: We have initiated a focused effort to strengthen and improve our competitive position in both VP&D and HEC. We're working to drive share gain activities in VPND, particularly in pharma. And this means

Speaker Change: We have initiated a focused effort to strengthen and improve our competitive position in both VPND and HEC.

Guillermo Novo: We're working to drive share gain activities in VPMD, particularly in Pharma, and this means careful management of volumes and pricing. We're investing to globalize and innovate priorities, and we are strengthening our team and our ability to execute. I'm very pleased with Aslan's progress and investments, which are laying the foundation for future profitable.

Speaker Change: We're working to drive share gain activities in VPND, particularly in pharma, and this means

Guillermo Novo: Careful Management of Volumes and Prices. We're investing to globalize and innovate on the Innovate Priorities, and we are strengthening our team and our ability to execute. I'm very pleased with Ashland's progress and investments, which are laying the foundation for future profitable growth. Please turn to slide 21.

Speaker Change: Careful Management of Volumes and Pricing.

Speaker Change: We're investing to globalize and innovate priorities, and we are strengthening our team and our ability to execute.

Speaker Change: I'm very pleased with Ashland's progress and investments which are laying the foundation for future profitable growth.

Guillermo Novo: Group. Please turn to slide 21. Activities are underway to globalize four of our extremely attractive businesses, which currently represent 10% of Ashland sales. The globalized business lines grew well in the quarter, with sales up double digits on share gains. New product introductions and recovery. Those profit margins for the business lines were also well above the company average for the quarter. Here are some of the highlights for our recent globalization progress. Informa, the injectables team was successful in advancing opportunities within long-lasting exhibits. And new product launches are performing very well. To globalize injectables, we have built out our business development team in North America and Europe, with plans to expand our resources in Asia and Latin America.

Guillermo Novo: Activities are underway to globalize four of our extremely attractive businesses, which currently represent 10% of Ashland's sales. The globalized business lines grew well in the quarter with sales up double digits on share game, New Product Introductions, and Recoveries. Gross profit margins for the business lines were also well above the company average for the quarter.

Speaker Change: Please turn to slide 21.

Speaker Change: Activities are underway to globalize four of our extremely attractive businesses, which currently represent 10% of Ashland's sales.

Speaker Change: The globalized business lines grew well in the quarter, with sales up double digits on share gains.

Speaker Change: New Product Introductions and Recovery.

Speaker Change: Gross profit margins for the business lines were also well above the company average for the quarter.

Guillermo Novo: Here are some of the highlights for our recent mobilization progress, and Pharma. The injectables team was successful in advancing opportunities within long-term, and New Product Launches are performing very well. To globalize injectables, we have built out our business development team in North America and Europe with plans to expand our resources in Asia and Latin America and the OSD film coatings business. We're globalizing its manufacturing and technical footprint. We're also investing in our people, filling key roles to deliver our growth expectations.

Speaker Change: Here are some of the highlights for our recent globalization progress.

Speaker Change: And PhRMA, the Injectables team, was successful in advancing opportunities within long-lasting excipients.

Speaker Change: And new product launches are performing very well.

Speaker Change: To globalize injectables, we have built out our business development team in North America and Europe with plans to expand our resources in Asia and Latin America.

Guillermo Novo: In the OSD Film Coding's business, we're globalizing its manufacturing and technical footprint. We're also investing in our people, filling key roles to deliver our growth expectations. Our efforts are bringing us closer to the regions and customers while strengthening local technical service and customer intimacy. In addition, our TVO technology has the potential to deliver disruptive productivity to our former customers. We're progressing through the early phases of our stage-gate process after a very positive customer feedback on our value proposition. Shifting to personal care, Biofunctions is accelerating its commercialization of new product introductions, with product adoptions up three X versus prior year.

Speaker Change: In the OSD film coding business, we're globalizing its manufacturing and technical footprint.

Speaker Change: We're also investing in our people, filling key roles to deliver our growth expectations.

Guillermo Novo: Our efforts are bringing us closer to the regions and customers while strengthening local technical service and customer intimacy. In addition, our TVO technology has the potential to deliver disruptive productivity to our pharma customers. We're progressing through the early phases of our stage gate process after very positive customer feedback on our value proposition. Shifting to personal care, BioFunctionals is accelerating its commercialization of new product introductions with product adoptions up 3X versus prior year.

Speaker Change: Our efforts are bringing us closer to the regions and customers while strengthening local technical service and customer intimacy.

Speaker Change: In addition, our TVO technology has the potential to deliver disruptive productivity to our pharma customers. We are progressing through the early phases of our StageGate process.

Speaker Change: after very positive customer feedback on our value proposition.

Speaker Change: Shifting to personal care, BioFunctionals is accelerating its commercialization of new product introductions with product adoptions up 3x versus prior year.

Guillermo Novo: Following the commissioning of our new facility in China, the team recently built a regional sourcing strategy. We're now innovating, sourcing, producing, and supplying locally. We continue to experience a strong recovery of sales into the region. Taylor products with local supply will be a source of differentiation to maintain our strong growth momentum and biofunctions. The preservatives business is advancing several projects to enable local supply, which supports continued share gain. For example, we are in the last phases of phases of developing development for a local production in Brazil. We're planning to commission the expansion later this year, which improves our position in this growing market.

Speaker Change: Following the commissioning of our new facility in China, the team recently built a regional sourcing strategy. We're now innovating, sourcing, producing, and supplying locally. We continue to experience a strong recovery for sales into the region.

Guillermo Novo: Tailored products with local supply will be a source of differentiation to maintain our strong growth momentum in biofunction. The preservatives business is advancing several projects to enable local supply, which supports continued share gain. For example, we are in the last phases of developing development for local production in Brazil.

Speaker Change: Tailored products with local supply will be a source of differentiation to maintain our strong growth momentum in biofunctionals.

Speaker Change: The preservatives business is advancing several projects to enable local supply, which supports continued share gain.

Speaker Change: For example, we are in the last phases of development for a local production in Brazil. We're planning to commission the expansion later this year, which improves our position in this growing market.

Guillermo Novo: We're planning to commission the expansion later this year, which improves our position in this growing market. In addition to the build-outs of our regional commercial teams. The build out of the commercial teams has been completed, and they are investing in assets, people, and technology to accelerate growth for our globalization strategy. We're pleased with the recent momentum and remain hyper focused on scaling these highly valuable businesses. Please turn to slide 22.

Guillermo Novo: In addition to the build-up of our regional commercial teams, the build-up of the commercial teams has been completed. We're investing in assets, people, and technology to accelerate growth for our globalization strategy. We're pleased with the recent momentum and remain hyper focused on scaling these highly valuable business lives.

Speaker Change: In addition to the build-ups of our regional commercial teams,

Speaker Change: The build-out of the commercial teams has been completed.

Speaker Change: We're investing in assets, people, and technology to accelerate growth for our globalization strategy. We're pleased with the recent momentum and remain hyper-focused on scaling these highly valuable business lives.

Guillermo Novo: Please turn to slide 22. We continue to advance our new technology platforms with a growing list of new product launches supported by many development programs. At last year's Innovation Day, we noted our excitement about the scalable and tunable nature of these technologies. Since that time, we continue to discover disruptive opportunities across several market segments, as highlighted in the chart. This increases our overall growth opportunity and reduces the portfolio risk level profile. We have held over 50 key customer meetings and technology scoping sessions, which continue to validate our enthusiasm. Of the new technology platforms, our Transform Vegetable Oil or TBO technology is currently the most advanced.

Guillermo Novo: We continue to advance our new technology platforms with a growing list of new product launches supported by many development programs. At last year's Innovation Day, we noted our excitement about the scalable and tunable nature of these technologies. Since that time, we continue to discover disruptive opportunities across several market segments, as highlighted in the chart. This increases our overall growth opportunities and reduces the portfolio risk level profile. We have held over 50 key customer meetings and technology scoping sessions, which continue to validate our enthusiasm. Of the new technology platforms, our transformed vegetable oil, or TBO technology, is currently the most advanced.

Speaker Change: Please turn to slide 22.

Speaker Change: We continue to advance our new technology platforms with a growing list of new product launches supported by many development programs.

Speaker Change: At last year's Innovation Day, we noted our excitement about the scalable and tunable nature of these technologies.

Speaker Change: Since that time, we continue to discover disruptive opportunities across several market segments as highlighted in the chart.

Speaker Change: This increases our overall growth opportunity and reduces the portfolio risk level profile.

Speaker Change: We have held over 50 key customer meetings and technology scoping sessions which continue to validate our enthusiasm.

Speaker Change: Of the new technology platforms, our transformed vegetable oil, or TBO technology, is currently the most advanced.

Guillermo Novo: We just received local approval to sell one of our early launches into China, building on the robust global sales opportunity pipeline. TBO has potential value propositions across attractive and market segments, including personal care, our metabolite coatings, ag seed coatings, architectural coatings, industrial coatings, adhesives, and other industrial markets. We see many desirable applications for our innovative super-water technology, and the next variant targets the crop care market. We're planning an exciting launch at the end of the year, which will augment the existing coatings opportunities. We also have numerous new product development programs underway for our novel cellulosics and expect to launch several variants within coatings, personal care, and pharma over the next two years.

Guillermo Novo: We just received local approval to sell one of our early launches into China. Building on the Robust Global Sales Opportunity Pipeline, PBO has potential value propositions across attractive market segments, including personal care, pharma tablet coatings, AGSEED Coatings, Architectural Coatings, Industrial Coatings, Adhesives, and other industrial markets. We see many desirable applications for our innovative super water technology, and the next variant targets the crop care market.

Speaker Change: We just received local approval to sell one of our early launches into China.

Speaker Change: Building on the Robust Global Sales Opportunity Pipeline.

Speaker Change: PBO has potential value propositions across attractive and market segments, including personal care, pharma tablet coatings, ag seed coatings, architectural coatings, industrial coatings, adhesives, and other industrial markets.

Speaker Change: We see many desirable applications for our innovative super water technology and the next variant targets crop care, the crop care market.

Guillermo Novo: We're planning an exciting launch at the end of the year, which will augment the existing coded opportunity. We also have numerous new product development programs underway for our novel cellulosics and expect to launch several variants within coatings, personal care, and pharma over the next two years. Our total addressable market is expanding as we advance the pipeline of highly impactful and scalable platforms across markets. Collaboration opportunities and interest remain very high across the board.

Speaker Change: We're planning an exciting launch at the end of the year, which will augment the existing codings opportunities.

Guillermo Novo: Our total addressable market is expanding as we advance the pipeline of highly impactful and scalable platforms across markets. Collaboration opportunities and interest remains very high across the board. Our current focus is on developing several JDAs with key industry leaders to validate and de-risk commercialization. We're making progress and expect to memorialize our efforts with strategic customers soon. We recognize that innovation can be a longer term in nature, but we look forward to sharing continued momentum and financial progress as the launch has gained commercial traction.

Speaker Change: Our total addressable market is expanding as we advance the pipeline of highly impactful and scalable platforms across markets.

Speaker Change: Collaboration opportunities and interest remains very high across the board.

Guillermo Novo: Our current focus is on developing several JDAs with key industry leaders to validate and de-risk commercialization. We're making progress, and expect to memorialize our efforts with strategic customers soon. We recognize that innovation can be longer term in nature, but we are looking, and we look forward to sharing continued momentum and financial progress as the lodges gain traction. Please turn to slide 23.

Speaker Change: Our current focus is on developing several JDAs with key industry leaders to validate and de-risk commercialization.

Speaker Change: We're making progress and expect to memorialize our efforts with strategic customers soon.

Speaker Change: We recognize that innovation can be longer term in nature, but we look forward to sharing continued momentum and financial progress as the lodges gain commercial traction.

Guillermo Novo: Please turn to slide 23. In closing, I want to restate the key takeaways from the quarter. The global personal care business performed incredibly well. Our business units have returned to high quality margins, calling another quarter of specialty out of this margin improvement. For fully optimization is on track, and we're advancing our growth catalyst opportunities. We were able to deliver adjusted EBITDA within the outlook range in a challenging sales environment. Adjusted EBITDA was largely converted to free cash flow and used to repurchase shares. Overall, demand trends are improving, but there is a high level of uncertainty around specific industries and regional dynamics.

Guillermo Novo: In closing, I want to restate the key takeaways from the quarter. The global personal care business performed incredibly well. Our business units have returned to high quality margins, hauling another quarter of specialty out of this margin, portfolio optimization is on track, and we're advancing our growth catalyst opportunity. We were able to deliver Adjusted EBITDA within the Outlook range in a challenging sales environment. Adjusted EBITDA was largely converted to free cash flow and used to repurchase shares.

Speaker Change: Please turn to slide 23.

Speaker Change: The global personal care business performed incredibly well.

Speaker Change: Portfolio optimization is on track and we're advancing our growth catalyst opportunities.

Speaker Change: We were able to deliver Adjusted EBITDA within the Outlook range in a challenging sales environment. Adjusted EBITDA was largely

Guillermo Novo: Overall, demand trends are improving, but there is a high level of uncertainty around specific industries and regional dynamics. We have adjusted our Q4 outlook to reflect challenges in our VP&D life science products, as well as the softening market demand for specialty additives, especially in Asia. The teams are leveraging commercial excellence, productivity activities, and tactical pricing actions to ensure that we are appropriately positioned in the market for these core technologies where we have technical and market leadership.

Guillermo Novo: We have adjusted our Q4 outlook to reflect challenges in our VPND life science products, as well as the softening market demand and special theatres, especially in Asia. Asia. The teams are leveraging commercial excellence, productivity activities, and tactical pricing actions to ensure that we are properly positioned in the market for these core technologies where we have technical and market leadership. We are confident in our ability to deliver differentiated solutions and innovate in the core to drive share gains. We will prioritize our investments and manage margin in recognition of near-term challenges and will stay on strategy to maximize 2024 results and advance our long-term growth potential.

Speaker Change: We have adjusted our Q4 outlook to reflect challenges in our VP&D life science products as well as a softening market demand and specialty additives especially in Asia.

Speaker Change: The teams are leveraging commercial excellence, productivity activities, and tactical pricing actions to ensure that we appropriately position in the market for these core technologies where we have technical and market leadership.

Guillermo Novo: We are confident in our ability to deliver differentiated solutions and innovate in the core to drive share gain. We will prioritize our investments and manage margin in recognition of near-term challenges and will stay on strategy to maximize 2024 results and advance our long-term growth potential. I want to thank the Ashland team again for their leadership and proactive ownership of their businesses in a dynamic environment. Lastly, I'd like to share that Ashland is planning to host an Investor Day on December 10th in New York City.

Speaker Change: We are confident in our ability to deliver differentiated solutions and innovate in the core to drive share gains.

Speaker Change: We will prioritize our investments and manage margin in recognition of near-term challenges and will stay on strategy to maximize 2024 results and advance our long-term growth potential.

Guillermo Novo: I want to thank the Ashland team again for their leadership, proactive ownership of their businesses in a dynamic environment.

Speaker Change: I want to thank the Ashland team again for their leadership, proactive ownership of their businesses in a dynamic environment.

William Whitaker: Lastly, I'd like to share that Ashland is planning to host an Investor Day on December 10th in New York City. The event will showcase our financial and strategic objectives to deliver long-term profitable growth for the company. Additional details and registration information will come, but for now, please save the day. We look forward to sharing more with you later this year. Thank you, and Dee Dee, let's move over to Q&A.

Guillermo Novo: The event will showcase our financial and strategic objectives to deliver long-term profitable growth for the company. Additional details and registration information will come, but for now, please save. We look forward to sharing more with you later this year. Thank you.

Speaker Change: Lastly, I'd like to share that Ashland is planning to host an Investor Day on December 10th in New York City. The event will showcase our financial and strategic objectives to deliver long-term profitable growth for the company.

Speaker Change: Additional details and registration information will come, but for now, please save the date.

Speaker Change: We look forward to sharing more with you later this year.

Unknown Executive: Thank you. As a reminder to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. And our first question comes from Christopher Parkinson of Wolf Research. Your line is open.

Speaker Change: Thank you. And Didi, let's move over to Q&A.

Didi: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

Didi: Thank you. Thank you. Thank you.

Christopher Parkinson: Our first question comes from Christopher Parkinson of Wolf Research. Your line is open. Thank you so much. I feel like we're moving in the right direction, and yet there's still a little bit of complexity to this story. Can you just help us think about the 2025 bridge just in terms of some of your previous quarterly commentary around the 40 million total fixed cost absorption, the 20 million of fiscal first half destocking. Kevin's prior quarter comments about market growth off of lower levels. That seems a little bit more muted now, perhaps, and as well as the new product intro out.

Speaker Change: And our first question comes from Christopher Parkinson of Wolf Research. Your line is open.

Christopher Parkinson: Great, thank you so much. Guillermo, I feel like we're, you know, we're moving in the right direction, and yet there's still a little bit of complexity to this story. Can you just help us think about the 2025 bridge? Just in terms of some of your previous quarterly commentary around, you know, the $40 million of total fixed cost absorption, the $20 million of fiscal first half destocking, Kevin's prior quarter comments about market growth off of lower levels, that seems a little bit more muted now perhaps, and as well as the kind of the new product introduction outlook, I feel like those are the four main things, obviously partially offset So, you know, could you help us just kind of simplify how the buy side should be thinking about the, you know, perceived EBITDA bridge as we enter fiscal year 2025? Thank you so much.

Christopher Parkinson: Great, thank you so much. Guillermo, I feel like we're, you know, we're moving in the right direction and yet there's still a little bit of complexity to this story. Can you just help us think about the 2025 bridge?

Speaker Change: Just in terms of some of your previous quarterly commentary around...

Christopher Parkinson: I feel like those are the four main things, obviously partially offset by portfolio optimization efforts.

Speaker Change: as well as the new product intro outlook. I feel like those are the four main things.

Guillermo Novo: Can you help us just simplify how the buy side should be thinking about the perceived EBIT of Bridge as we enter fiscal year 2025? Thank you so much. Thanks, Chris. Clearly a critical question. The key, as I hope everybody took, the key issue for us in the quarter is VPND in Parma. It is about the biggest issue is about the shared dynamics which we have been talking in private quarters. What's changed in terms of our outlook? We look at two resets. What's the normalized 2024? And then what's going to happen in 2025? I think in 2024, if we're giving a guidance of 465 to 475, the only thing that's changed is our VPND market share outlook.

Speaker Change: You know, obviously partially offset by portfolio optimization efforts. So, you know, could you help us just kind of simplify how the buy side should be thinking about the, you know, the perceived EBITDA bridge as we enter fiscal year 2025? Thank you so much.

Guillermo Novo: Thanks, Chris. Clearly, this is a critical question.

Speaker Change: Thanks, Chris. Clearly a critical question. The key, as I hope everybody took, the key issue for us in the quarter is VPND and pharma.

Speaker Change: the shared dynamics which we have been talking in prior quarters. So what's changed in terms of our outlook? If we look at two resets.

Guillermo Novo: The key, as I hope everybody understands, the key issue for us in the quarter is VPND and pharma, and we're working on it. It is about, the biggest issue is the share dynamics, which we have been talking about in prior quarters. So what's changed in terms of our outlook? If we look at two resets, what's the normalized 2024?

Speaker Change: What's the normalized 2024 and then, you know, what's going to happen in 2025? I think in 2024 if you know, we're giving a guidance of 465 to 475

Guillermo Novo: And then, you know, what's going to happen in 2025? I think in 2024, if we're giving guidance of 465 to 475, the only thing that's changed is our VP&D market share outlook. Everything else remains unchanged.

Speaker Change: The only thing that's changed is our VP&D market share outlook. Everything else remains unchanged. So we're still working through, I think, on the VP&D side, what does that share regain mean? It's a balance of price.

Guillermo Novo: So we're still working through, I think on the VPN D side, what does that share regain mean? It's a balance of price and volume. And that's something that we're managing. I want to be very clear, you know, on price. I think we've performed very well, our margins are doing very well. We are market leaders here. We are in a transition point, just like when you have inflation, you have to move prices up. And it takes a while to work through them all.

Guillermo Novo: Everything else remains unchanged. So we're still working through, I think on the VPND side, what does that share regain mean? It's a balance of price. and Volume, and that's something that we're that we're managing. I want to be very clear, you know, on the price. I think we perform very well. Our margins are doing very well. We are market leaders. Here is we're in a transition point just like when you have inflation, you have to move up prices, and it takes a while to work to do. We're now on the transition to the other end of the equation, and we're managing market leaders.

Speaker Change: On the pricing, I think we perform very well. Our margins are doing very well. We are market leaders here.

Speaker Change: We're in a transition point, just like when you have inflation, you have to move up prices and it takes a while to work through. We're now on the transition to the other end of the equation and we're managing through that. As market leaders, we can't just go in and trash the prices and move.

Guillermo Novo: We're now on the transition to the other end of the equation. And we're managing through that as market leaders. We can't just go in and trash the prices and move too aggressively without thinking through the actions that we're taking. I own that.

Guillermo Novo: We can't just go in and trash the prices and move to aggressively without thinking through the actions that we're taking. I own that. You know, this has been a very conscious management of where we're going on some of these volumes. It is a balance of share price. If we get all the volume, but lose it all on price, we're not any better off. There's a saying I've been working with several many companies. There's a saying in commodities. You sell out and sell up in specialties. We say, we sell up and then sell out. They sound the same, but they're not.

Speaker Change: move too aggressively without thinking through the actions that we're taking. I own that.

Guillermo Novo: You know, this has been a very conscious management of where we're going on some of these volumes. It is a balance of share price. If we get all the volume but lose it all on price, we're not any better off. There's a saying, I've been working with several, many companies, and it's a saying in commodity. You sell out and sell up, and Specialties, we say we sell up and then sell out. They sound the same, but they're not.

Speaker Change: You know, this has been a very conscious management of where we're going on some of these volumes. It is a balance of share price. If we get all the volume but lose it all on price, we're not any better off. There's a saying, I've been working with several, many companies.

Speaker Change: There's a saying in commodities.

Speaker Change: You sell out and sell up.

Speaker Change: In specialties, we say we sell up and then sell out. They sound the same, but they're not. We do, as market leaders, need to manage the pricing, our positioning of our products, how we react with what products we react, and that's what we're working through.

Guillermo Novo: We do, as market leaders, need to manage the pricing or positioning of our products. How we react with what products we react, and that's what we're working through. We're managing to the long term. We want to make sure that we maintain a healthy strategy here. So we're not managing for a quarter only. We're managing for the longer term, and this is what matters to this transition. The team is on it. We are already getting share there. We just need to the part that we need to work through a Chris for 2025 is the timing because we need to deal with quarterly contracts, annual contracts with different customers, and that's that's probably the biggest change.

Guillermo Novo: We do, as market leaders, need to manage the pricing or the positioning of our products, how we react to what products we react to, and that's what we're working on. We're managing for the long term. We want to make sure that we maintain a healthy strategy here. So we're not managing for a quarter only. We're managing for the longer term. And this is, we'll manage through this transition. The team is on

Speaker Change: We're managing to the long term. We want to make sure that we maintain a healthy strategy here.

Speaker Change: So we're not managing for a quarter only, we're managing for the longer term, and this is, we'll manage through this transition. The team is on it.

Guillermo Novo: We are already getting a share there. We just need to, the part that we need to work through, Chris, for 2025 is the timing, because we need to deal with quarterly contracts and annual contracts with different customers. And that's probably the biggest change. Everything else, there's not a lot of change. For 2025, the only other change I would say that we're looking at, and it's early on, so I.., would classify it as uncertainty.

Speaker Change: We are already getting share there, we just need to, the part that we need to work through, Chris, for 2025 is the timing, because we need to deal with quarterly contracts, annual contracts with different customers, and that's probably the biggest change. Everything else, there's not a lot of change.

Guillermo Novo: Everything else is not a lot of change. For 2025, the only other change I would say that we're looking at, and it's early on. So I would classify it as an uncertainty. We don't have a definite view is in the coding space. You know the dynamics in China. We've seen things slow down a lot. That's something that we're trying to integrate into our planning. We don't have numbers for you for 2025 yet on that. For Europe and the US, it's about the growth rate. And frankly, this could change a lot, depending on interest rates, what happens to the.

Speaker Change: For 2025, the only other change I would say that we're looking at, and it's early on, so I...

Guillermo Novo: We don't have a definite view on the coding space. You know, the dynamics in China, we've seen things slow down a lot. That's something that we're trying to integrate into our planning. We don't have numbers for you for 2025 yet on that. For Europe and the U.S., it's about the growth rate. And frankly, this could change a lot depending on interest rates, what happens to the... We spoke to the home resale market. There's a lot of dynamics.

Speaker Change: I would classify it as an uncertainty. We don't have a definite view. It is in the coding space.

Speaker Change: You know the dynamics in China. We've seen things slow down a lot. That's something that we're trying to integrate into our planning We don't have numbers for you for 2025 yet on that for Europe and the US

Speaker Change: It's about the growth rate, and frankly, this could change a lot depending on interest rates, what happens to the

Christopher Parkinson: The whole retail market. There's a lot of dynamics. So a lot of moving parts that, between now and our next call, when we talk about 2025, will be able to clarify. But for everybody, the big issue, the only issue that really is changing right now is how we manage the VPMD Pharma share transition. Got it. And just as a quick follow-up, sorry, going to be in terms of the Q1 Q2 recess that we've been talking about, there is no change to any of that. Those those are still just as they have been internally. We don't view them any differently.

Guillermo Novo: So a lot of moving parts that between now and our next call when we talk about 2025, we'll be able to clarify. But for everybody, the big issue, the only issue that really is changing right now is how we manage the VPN-D pharma share transition.

Speaker Change: home resale market. There's a lot of dynamics. So a lot of moving parts that between now and our next call, when we talk about 2025, we'll be able to clarify. But for everybody, the big issue, the only issue that really is.

Speaker Change: Changing right now is how we manage the VPND pharma share transition.

Christopher Parkinson: Got it. And just as a quick follow up. Sorry, go on.

Guillermo Novo: In terms of the Q1-Q2 recess that we've been talking about, there is no change. Those are still just as they have been. Internally, we don't view them any differently, and they shouldn't be viewed any differently by the buy side or the sell side. Normalized Q1 and Q2 are still right where we think they have been.

Speaker Change: In terms of the Q1-Q2 recess that we've been talking about, there is no change to any of that.

Christopher Parkinson: And they shouldn't be viewed any differently by the buy side or the sell side. Normalize Q1 and Q2 are still right where we think they think they have done. I appreciate that clarification.

Speaker Change: Those are still just as they have been. Internally, we don't view them any differently, and they shouldn't be viewed any differently by the buy side or the sell side. Normalized Q1 and Q2 are still right where we think they have been.

Guillermo Novo: And just very quickly on personal care, I mean, you know, I don't want to focus too much on the pharma side, given your, you know, detailed remarks, but on the PC side, I mean, you did see double-digit growth across skin, hair, oral, so on and so forth. You know, just given the way that market's been trending over the last four to six quarters, is that just the normalization process of simply, you know, your customers no longer de-stocking just based on incredibly easy comps, and demand seems stable-ish from an end-user demand perspective.

Christopher Parkinson: And just very quickly and personal care. I mean, you know, I don't want to focus too much on the pharma side given your. You know, detailed remarks, but on the PC side, I mean, you just see double-digit growth across skin, hair, oral, tone and so forth. You know, just given the way that market's been trending over the last four to six quarters, is that just the normalization process of simply, you know, your customers no longer destocking just based on incredibly easy comps. Is that, you know, demand seems stable-ish from an end user demand. So just how should we be thinking about that?

Speaker Change: I appreciate that clarification.

Speaker Change: And just very quickly on personal care. I mean, you know, I don't want to focus too much on the pharma side, given your, you know, detailed remarks, but on the PC side, I mean, you did see double digit growth across skin, hair, oral, so on and so forth. You know, just given the way that market's been trending over the last four to six quarters, is that just the normalization process of simply, you know, your customers,

Speaker Change: No longer destocking just based on incredibly easy comps.

Speaker Change: is that, you know, demand seems stable-ish from an end-user demand. So just how should we be thinking about that? Is there any restocking? And, you know, once again, just really trying to focus on the setup for fiscal year 25, given the fact that that performance is, in fact, coming back. Thank you.

Christopher Parkinson: Is there any restocking? And, you know, once again, just really trying to focus on the setup for fiscal year 25, given the fact that that performance isn't fact coming back. Thank you.

Guillermo Novo: So just how should we be thinking about that? Is there any restocking? And, you know, once again, just really trying to focus in on the setup for fiscal year 25, given the fact that that performance is, in fact, coming back. Thank you.

Guillermo Novo: Yeah, Chris. I'm trying to avoid the word normalization and destocking because that's behind us. If not, we just keep using this as a crutch moving forward.

Guillermo Novo: Chris, I'm trying to avoid the word normalization and destocking because that's behind us. If not, we just keep using this as a crutch moving forward. The only space that we know the customers still have elevated inventories and they're working them down a little bit, and that was really more about their own ERM risk management was pharma, and we're seeing that a little bit in Europe. But everywhere else, I would say, to the degree that we can measure, the destocking is over. Now it's really about demand and what's happening with core demand with our customers. You know, when we talked last year about normalization, it was a normalization of destocking, not of the market.

Speaker Change: Yeah, Chris, I'm trying to avoid the word normalization and destalking.

Guillermo Novo: The only space that we know customers still have elevated inventories, and they're working them down a little bit, and that was really more about their own ERM risk management was pharma, and we're seeing that a little bit in Europe. But everywhere else, I would say, to the degree that we can measure it, the destocking is over. Now it's really about demand and what's happening with core demand from our customers. You know, when we talked last year about normalization, it was a normalization of destocking, not of the market.

Speaker Change: Because that's behind us. If not, we just keep using this as a crutch moving forward. The only space that we know that customers still have elevated inventories, and they're working them down a little bit, and that was really more about their own ERM risk management was pharma.

Speaker Change: And we're seeing that a little bit in Europe , but everywhere else, I would say.

Speaker Change: To the degree that we can measure the destocking is over, now it's really about demand and what's happening with core demand with our customers.

Guillermo Novo: The markets have actually been quite flat over the last few years in some sectors. For many of our customers, personal care and coatings growth has been around price versus volume. I think what we're starting to see now in personal care is volumes picking up. I think that's probably an issue of consumer choice of where they're spending their money. They're not spending it on hard goods and spending it more on other activities, which benefits the personal care space. We'll see how, you know, the coatings. I think, as a different coating construction, that area will have a different dynamic. But we feel good about personal care.

Guillermo Novo: The markets have been actually quite flat over the last few years and some of the segments. For many of our customers, personal care and coatings growth has been around price versus volume. I think what we're starting to see now in personal care is volumes have picked up. I think that's probably an issue of consumer choices of where they're spending their money. They're not spending it on hard goods and spending it more on other activities, which benefits the personal care space. We'll see how you know the coatings. I think has a different coatings construction; that area will have a different, different dynamic.

Speaker Change: Not of the market. The markets have been actually quite flat over the last few years in some of the segments.

Speaker Change: For many of our customers, personal care and and and coatings growth has been around price versus volume.

Speaker Change: I think what we're starting to see now in personal care is volumes have picked up. I think that's probably an issue of consumer choices of where they're spending their money. They're not spending it in hard goods and spending it more on other activities, which benefits the personal care space.

Speaker Change: We'll see how, you know, the coatings, I think, has a different coatings construction. That area will have a different dynamic. But we feel good about personal care. We are monitoring China.

Guillermo Novo: But we feel good about personal care. We are monitoring China. For us right now, China has done very well. You know, I think we're seeing two worlds in China. The multinationals are probably having a harder time. The local companies we're doing very well with them. So it's a you have to take a focus look at the specific markets and customers. Thank you.

John Mcnulty: We are monitoring China. For us right now, China has done very well. You know, I think we're seeing 2 worlds in China. The multinationals are probably having a harder time. The local companies, we're doing very well with them. So it's, you have to take a focused look at the specific markets and customers.

Speaker Change: For us right now, China has done very well.

Speaker Change: You know, I think we're seeing two worlds in China, the multinationals are probably having a harder time, the local companies, we're doing very well with them. So it's a, you have to take a focused look at the specific markets and customers.

Speaker Change: Thank you.

John Mcnulty: Our next question comes from John McNulty of BMO Capital Markets. Your line is open. Yeah, good morning. Thanks for taking my question. So, Guillermo, in your prepared remarks, you spoke to June having softened and that actually carrying through July. What are the markets that are actually seeing that bit of a down to because it seems like coatings been a little bit rough to start anyway. So I'm not sure if that's where that would necessarily be getting worse. So maybe you can just help us to think about what might be what might be fading a bit.

Guillermo Novo: Our next question comes from John McNulty of BMO Capital Markets. Your line is open.

Speaker Change: Our next question comes from John McNulty of BMO Capital Markets. Your line is open.

John Mcnulty: Yeah, good morning. Thanks for taking my question.

Guillermo Novo: So Guillermo, in your prepared remarks, you spoke of June having softened and that actually carrying through July. What are the markets that are actually seeing that bit of a downtick? Because it seems like coding has been a little bit rough to start, anyway, so I'm not sure if that's where things would necessarily be getting worse. So maybe you can just help us to think about what might be fading a bit.

John Mcnulty: Yeah, good morning. Thanks for taking my question. So Guillermo, in your prepared remarks, you spoke to June having softened and that actually carrying through July . What are the markets that are actually

John Mcnulty: Seeing that that bit of a downtick because it seems like coding has been a little bit rough to start anyway So not sure if that's where that would necessarily be getting worse. So maybe you can just help us to think about What might be what might be fading a bit?

Guillermo Novo: Yeah, if you look, it's mostly in specialty additives. I would say, you know, coding is the biggest one, so that's where we look. And it's, I would say, we use the term "expectations" in the prepared remarks, not, you know, versus the prior year. We're growing, the market is recovering, things are moving. That's why we're confident in the production. Some of the things that Kevin said around Q1 and Q2.

Guillermo Novo: Yeah, if you look, it's mostly in special theatres. I would say, you know, coatings is the biggest one. So that's where we look at. And it's, I would say, we use the term in the prepared remarks. Expectations. Not, you know, versus prior year we're growing; the market is recovering; things are moving. That's why we're confident on the production. Some of the things that Kevin said around Q1 and Q2. So the issue is what's the rate of growth going to be? We are seeing worth American Europe. We're a little bit we expected it to be a little bit stronger.

Guillermo Novo: Yeah, it's mostly in specialty additives. I would say, you know, codings is the biggest one, so that's where we look at. And it's, I would say, we use the term in the prepared remarks, expectations.

Speaker Change: versus prior year we're growing. The market is recovering, things are moving, that's why we're confident on the production, some of the things that Kevin said around Q1 and Q2.

Guillermo Novo: So the issue is what's the rate of growth going to be? We are seeing North America and Europe, we're a little bit, we expected it to be a little bit stronger. It has not materialized; it's growing, but not to the degree we thought of a market recovery. That could change depending on what happens with interest rates and residential housing and those kinds of trends.

Kevin Willis: So, the issue is, what's the rate of growth going to be? We are seeing North America and Europe , we're a little bit, we expected it to be a little bit stronger. It has not materialized, it's growing, but not to the degree we thought of a market.

Guillermo Novo: It has not materialized. It's growing, but not to the degree we thought of a market recovery. That could change depending on what happens with interest rates and the residential housing and those kinds of trends. China, we've definitely seen a big change. And things are slowing down there. We're trying to gauge what are the repercussions of that in China, but also, as competitors in China, they'll have place to put the products. We've seen that in other industries where they're moving aggressively in other areas. So we're trying to manage those. Are the two biggest things that I would say we're looking at in terms of the downturn.

Guillermo Novo: China, we've definitely seen a big change; things are slowing down there. We're trying to gauge what the repercussions of that will be in China, but also, you know, as competitors in China don't have a place to put the products, you know, we've seen that in other industries where they're moving aggressively in other areas. So we're trying to manage that. Those are the two biggest things that I would say we're looking at in terms of the downturn. In pharma, you know, the Europe that we said is an area of destocking.

Kevin Willis: Recovery.

Speaker Change: That could change depending on what happens with interest rates and the residential housing and those kinds of trends. China, we've definitely seen a big change and things are slowing down there. We're trying to gauge what are the repercussions of that in China, but also, you know, with competitors in China.

Speaker Change: They'll have a place to put the products, you know, we've seen that in other industries of where they're moving aggressively in other areas. So we're trying to manage that. Those are the two biggest things.

Guillermo Novo: In pharma, Europe that we said that's an area of destocking. We're not hearing anything directly from customers. I think everybody's very cautious about how they lay out their volumes and demand outlooks. For August, we're seeing a little bit of improvement, but we're not going to read too much into it at this point in time. I think three points make a trend. We don't want to react to point to point. I do think we'll get a little more visibility on the macroeconomic dynamics in the coming quarter as the elections and all the actions from the Fed and others take place across multiple markets.

Speaker Change: But I would say we're looking at in terms of the downturn.

Speaker Change: In pharma, you know, the Europe that we said that's an area of destocking, we're not hearing anything directly from customers, I think everybody's very cautious about, you know, how they lay out their volumes and demand outlooks.

Guillermo Novo: We're not hearing anything directly from customers. I think everybody's very cautious about, you know, how they lay out their volumes and demand outlook. You know, for August, we're seeing a little bit of improvement, but, you know, we're not going to read too much into it at this point in time. I think three points make a trend. We don't want to react to, you know, point to point. And I do think we'll get a little more visibility on the macroeconomic dynamics in the coming quarter as the elections and all the actions from the Fed and others take place across multiple markets.

Speaker Change: For August , we're seeing a little bit of improvement, but we're not gonna read too much into it at this point in time, I think.

Speaker Change: Three points make a trend. We don't want to react to, you know, point to point. And I do think we'll get a little more visibility on the macro economic dynamics in the coming quarter as the elections and all the actions from the Fed and others take place across multiple markets.

John Mcnulty: Got it. Okay, no, that makes sense. And then, when looking at personal care and specialty additives, you spoke to at least a little bit of price weakness there. I guess maybe two questions on that.

John Mcnulty: Got it. Okay.

Speaker Change: Got it. Okay. No, that makes sense. And then when looking at personal care and specialty additives, you spoke to at least a little bit of price weakness there. I guess maybe two questions on that. Is that...

Guillermo Novo: No, that makes sense. And then, when looking at personal care and specialty additives, you pointed out at least a little bit of price weakness there. I guess maybe two questions on that. Is that primarily a reflection of the raw materials having faded? Or is there also, I think, at least on the Asia part, it sounds like maybe a competitive issue as well. But I guess, can you add some color to what's driving that?

John Mcnulty: Is that primarily a reflection of the raw materials having faded, or is there also, I think, at least on the Asia part, it sounds like maybe a competitive issue as well? But, I guess, can you add some color to what the what's driving that. And then I guess the other question would just be, sequentially, has the pricing got worse. I know last quarter, you spoke to, you know, some pricing degradation, degradation across a couple of the businesses. Is it kind of roughly the same as where we were a quarter ago, has worse, and I guess how should we be thinking about the trajectory.

Speaker Change: primarily a reflection of the raw materials having faded? Or is there also, I think, at least on the Asia part, it sounds like maybe a competitive issue as well. But, but I guess, can you can you add some color to what the what's driving that? And then I guess the other question would just be,

Guillermo Novo: And then I guess the other question would just be, sequentially, has the pricing got worse? I know last quarter you spoke about some pricing degradation across a couple of the businesses. Is it kind of roughly the same as where we were a quarter ago? Has it worsened? I guess, how should we be thinking about the trajectory?

Speaker Change: Sequentially has the pricing got worse? I know last quarter you spoke to you know some pricing degradation across a couple of the businesses. Is it kind of roughly the same as where we were a quarter ago? Has it worsened? I guess how should we be thinking about the trajectory?

Guillermo Novo: I would comment on pricing in two dimensions, and I think you alluded to that. One is deflation, and the other one is competitive dynamics. On the deflationary side, raw materials are coming down. We are, you know, we're moving, and we said that that was probably going to happen.

Guillermo Novo: I would comment in pricing is in two to dimension, and I think you alluded to it. One is deflation and the other one is competitive dynamics on the deflationary side. Raw materials are coming down. We are, you know, we're moving, and we've said that that was probably going to happen in place went up. We go up; we tend to maintain margins. So, are you sure here, if you remember in 2022, when we increased prices, we didn't increase margins. We maintain margins, and our margin approval was through productivity and makes improvement. I think what we're seeing now is that it's going to come down. Our work is to do the same thing.

Speaker Change: I would comment in pricing is in two dimensions, and I think you alluded to it. One is deflation, and the other one is competitive dynamics. On the deflationary side, raw materials are coming down.

Guillermo Novo: Inflation went up; we go up too. We tend to maintain margins. So our issue here, if you remember in 2022, when we increased prices, we didn't increase margins. We maintain margins, and we are margin approval through productivity and mixed. I think what we're seeing now is that it's going to come down. Our work is to do the same thing, make sure that we're managing margins down in a deflationary environment, and that'll take time, it's not going to happen just at one time.

Speaker Change: We are, you know, we're moving and we said that that was probably going to happen, inflation went up, we go up. We tend to maintain margins. So our issue here, if you remember in 2022, when we increased prices, we didn't increase margins.

Speaker Change: We maintain margins and we, our margin improvement was through productivity and mix improvement.

Guillermo Novo: Make sure that we're managing margins down in the deflationary environment, and that'll take, it's not going to happen at just at one time. And then you have the competitive dynamics, BPMD that I talked about, and I do think we're looking very hard at Asia and especially China. What's going to happen there? Because I think those could be a little bit more disruptive. Intermediate already happened. Most of the big moves were in Q2. You want so earlier in the year. Right now, we're still seeing more of that deflationary trends. They're more aligned with raw materials. So we're still seeing some, but I would say it would be the normalized glide to a more deflationary environment.

Speaker Change: I think what we're seeing now is that's going to come down, our work is to do the same thing, make sure that we're managing margins down in a deflationary environment, and that'll take, it's not going to happen just at one time.

Guillermo Novo: And then you have the competitive dynamics, VPND, that I talked about, and I do think we're looking very hard at Asia, and especially China, what's going to happen there, because I think those could be a little bit more disruptive. Intermediates already happen.

Speaker Change: And then you have the competitive dynamics, BPMD that I talked about, and I do think we're looking very hard at Asia, and especially China, what's going to happen there, because I think those could be a little bit more disruptive.

Speaker Change: Intermediates already happen.

Speaker Change: Most of the big moves were in Q2, the one so earlier in the year.

Guillermo Novo: Most of the big moves were in Q2, so earlier in the year. Right now, we're still seeing more of those deflationary trends. They're more aligned with raw materials. So we're still seeing some, but I would say it would be the normalized glide to a more deflationary environment. And as I said, the competitive side, that's the one that we'll continue to monitor.

Speaker Change: Right now, we're still seeing more of that deflationary trends.

Speaker Change: They're more aligned with raw materials. So we're still seeing some, but I would say it would be the normalized glide to a more deflationary environment. And as I said, the competitive side, that's the one that we'll continue to monitor and we'll report out.

John Mcnulty: And, as I said, the competitive side, that's the one that will continue to monitor. and we'll be poured out. Got it. Thanks very much for the color. The important, John, for personal care. Price and Ross were perfectly imbalanced. There was no benefit, no pain. And just to be specific, we have not seen acceleration from a pricing decline perspective. It's basically stayed in a fairly flat in terms of what we've experienced earlier in the year. Got it. Very helpful. Thank you.

John Mcnulty: Got it. Thanks very much for the call and for the quarter, John.

Guillermo Novo: For the quarter, John, for personal care, Bryce and Roz were perfectly in balance. There was no benefit, no pain. And, and just to be specific, we have not seen acceleration from a pricing decline perspective. It's, it's, it's basically stayed, you know, fairly flat in terms of what we've experienced early on. Got it. Very helpful. Thank you.

Speaker Change: Got it. Thanks very much for the call.

John: We recorded, John , for personal care. Price and Raws were perfectly in balance. There was no benefit, no pain.

David Begleiter: Thank you.

John: And just to be specific, we have not seen acceleration from a pricing decline perspective. It's basically stayed fairly flat in terms of what we've experienced earlier in the year.

Speaker Change: Got it. Very helpful. Thank you.

David Begleiter: Our next question comes from David Begleiter of Deutsche Bank. Your line is open. Thank you. Good morning. Guillermo on the VP and D format issue. Can you have she size that for us? Is it in the five to ten million dollar range? Is it higher or lower? All right. It was probably, if you look at versus prior year, in this quarter, it was the biggest delta prior around 14 million versus Q4R. It's probably more flatish. So it was mostly in the Q3 in terms of prior year comparison. Very well. And just on that issue, I believe what happened was the competitor had an outage.

Guillermo Novo: Our next question comes from David Begleiter of Deutsche Bank. Your line is open. Thank you, good morning.

Speaker Change: Our next question comes from David Begleiter of Deutsche Bank. Your line is open.

David Begleiter: Guillermo, on the VPND format issue, can you actually size that for us? Is it in the five to $10 million range? Is it higher or lower?

David Begleiter: Thank you, good morning. Guillermo, on the VP&D format issue, can you actually size that for us? Is it in the 5 to 10 million dollar range? Is it higher or lower?

Guillermo Novo: It was probably, if you look at versus prior year, in this quarter, it was the biggest delta, probably around 14 million versus Q4, it's probably more flattish, so it was mostly in Q3 in terms of a prior year comparison. Very well, and just on that issue, I believe what happened was a competitor had an outage. You gained, you picked up business while they were out.

David Begleiter: Okay.

Guillermo Novo: It was probably, if you look at versus prior year, in this quarter, it was the biggest delta probably around 14 million. Versus Q4RL, it's probably more flattish, so it was mostly in the Q3 in terms of a prior year comparison.

Speaker Change: Very well and just on that issue, I believe what happened was a competitor had an outage, you gained, you picked up business while they were out.

David Begleiter: You gained; you picked up business during while they were out. They came back on stream, and I guess they're taking more than their fair share with pricing, even though historically they're not really a big price competitor. They tend to, you know, keeping in value. Is that what's happened here? There just be more aggressive, the usual and you're reacting to that. Thank you. Yeah. You know, I think two comments. One, from the volume loss, and it's probably about a third of the shortfall for us. It's the market. You know, that recovery in Europe hasn't happened to where we want it.

David Begleiter: They came back on stream, and I guess they're taking more than their fair share of prices. Even though historically they're not really a big price competitor, they tend to... Value is that. What's happened here, they're just being more aggressive than usual, and you're reacting to that. Yeah, you know, I think I have two comments.

Speaker Change: They came back on stream, and I guess they're taking more than their fair share with pricing.

Speaker Change: Even though, historically, they're not really a big price competitor, they tend to, you know, keep their value, is that what's happened here, they're just being more aggressive than usual, and you're reacting to that? Thank you.

Guillermo Novo: One, the volume loss and probably about a third of the shortfall for us. It's the market, you know, that the recovery in Europe hasn't happened quite where we want it to. And probably two-thirds is this pricing dynamic that you're asking about. You know, the competitive dynamics, we talked about it last time, we have an old competitor coming back into production normalized, you know, we have to be realistic to keep them out, you know, the price cost would be too high.

Speaker Change: Yeah, you know, I think two comments. One, from the volume loss and

Speaker Change: It's probably about a third of the shortfall for us, it's the market, you know, that recovery in Europe .

Guillermo Novo: And probably two-thirds is this pricing dynamic that you're asking about. You know, the competitive dynamics we talked about it last time. We have an old competitor coming back in; production normalized. We have to be realistic to keep them out. The price cost would be too high. So we've been managing through that and the glide path. I will say the pricing question of what they do.

Speaker Change: Hasn't happened to where we want it and probably two-thirds is this pricing dynamic that you're asking about You know that the the competitive dynamics we talked about it last time We have an old competitor coming back in production normalized, you know We have to be realistic to keep them out, you know the price

Guillermo Novo: So we've been managing through that and the glide path. I will say the pricing question of what they do, you should ask, and on another earnings call ask them. I can't really comment on what they're doing, but we are seeing very aggressive pricing. Remember that or, and it's BSF.

Speaker Change: cost would be too high so we've been managing through that and the glide path. I will say the pricing, the pricing question of what they do you should ask

Guillermo Novo: You should ask in another earnings call ask that. I can't really comment on what they're doing, but we are seeing very aggressive pricing. Remember that for, and it's BASF, obviously, in your question in Europe. But then it's China supply that we're, you know, it's not just, you know, we look at Asia, we look at Latin America. So we're dealing with both of those issues because when BASF was out, you know, that will open the door for some. So we're managing through that. But it's been very aggressive. And I think for different reasons, you know, European companies having their own problems. VPNV is not the driver of their cost structures or whatever.

Speaker Change: And another another earnings call ask them I can't really comment on what they're doing, but we are seeing very aggressive pricing remember that

Guillermo Novo: Obviously, and your question in Europe, but then it's China supply that we're, you know, it's not just, you know, we look at Asia, we look at Latin America. So we're dealing with both of those issues, because when BSF was out, you know, that would open the door for them. So we're managing through that. But it's been very aggressive.

Speaker Change: and it's BASF.

Speaker Change: Obviously, and as your question in Europe .

Speaker Change: But then it's China supply that we're, you know, it's not just, you know, we look at Asia, we look at Latin America. So we're dealing with both of those issues because when BSF was out, you know, that would open the door for them. So we're managing through that, but it's been very aggressive. And I think for different reasons, you know.

Guillermo Novo: And I think for different reasons, you know, European companies having their own problems, VPNV is not the driver of their cost structures or whatever. So whatever they do for other businesses, I assume this is what happens, you know, downstream in some of these larger commodity companies. And in China, you know, I do think that, you know, export markets like we're hearing in other markets, we're seeing that.

Speaker Change: European companies having their own problems. VPNV is not the driver of their cost structures or whatever. So whatever they do for other businesses, I assume this is what happens, you know, downstream in some of these larger commodity companies.

Guillermo Novo: So whatever they do for other businesses, I assume this is what happens, you know, downstream in some of these larger commodity companies. And in China, you know, I do think that, you know, export markets, like we're hearing in other markets, we're seeing that. The issue for us is, remember, we're the market leader. So we're going to manage through that to our customers. We didn't lose customers. We lost volume within customers. So we have to manage that price. We still have a lot of business with the same customers at a higher price. So we're managing through that.

Speaker Change: And in China, you know, I do think that, you know, export markets like we're hearing in other markets, we're seeing that. The issue for us is, remember, we're, we're the market leader. So we're going to manage through that to our customers. We didn't lose customers.

Guillermo Novo: The issue for us is, remember, we're the market leader. So we're going to manage through that with our customers. We didn't lose customers. We lost volume within customers, so we have to manage that price. We still have a lot of business with the same customers at a higher price. So we're managing through that, and customers want to do business with us. There's nothing wrong; there's nothing bad going on in the market

Speaker Change: We lost volume within customers. So we have to manage that price. We still have a lot of business with the same customers at a higher price. So we're managing through that. And customers want to do business with us.

Guillermo Novo: And customers want to do business with us. There's nothing wrong. There's a market. I think it's just our balance of how we position ourselves from an ERM perspective. Remember in pharma. The world is not going to shift to everything supplied from China because that's going to be from an ERM, going to be high risky. So we need to be prudent. We need to manage through this. This is a process. It's impacting us in this quarter, you know, but this is not the first time that us or anybody else has to go through this level of transition. But it is a little bit more aggressive than we thought in terms of the pricing dynamics.

Guillermo Novo: I think it's just our balance of how we position ourselves from an ERM perspective, remember, in pharma. The world is not going to shift to everything supplied from China because that's going to be from an ERM, and it's going to be high-risk. So we need to be prudent, we need to manage through this, this is a process, it's impacting us in this quarter, you know, but this is not the first time that us or anybody else has to go through this level of kind of... But it is a little bit more aggressive than we thought in terms of pricing.

Speaker Change: There's nothing wrong, there's nothing bad going on in the market. I think it's just our balance of how we position ourselves from an ERM perspective, remember in pharma.

Speaker Change: The world is not going to shift to everything supplied from China because that's going to be from an ERM going to be high-risk So we need to be prudent. We need to manage through this. This is a process

Speaker Change: It's impacting us in this quarter, you know, but this is not the first time that us or anybody else has to go through this level of transition. But it is a little bit more aggressive than we thought in terms of the pricing dynamics.

Speaker Change: Thank you.

Michael Sison: Our next question comes from Michael Sison of Wells Fargo. Your line is open. Hey guys, good morning.

Michael Sison: Our next question comes from Michael Sison of Wells Fargo. Your line is open.

Guillermo Novo: Hey guys, good morning.

Speaker Change: Our next question comes from Michael Sison of Wells Fargo. Your line is open.

Michael Sison: I just wanted to make sure we understood the VPD share loss from a guidance perspective. So I think you said that, you know, the outlook is reduced to 465 and 475. Prior outlook was 485, the midpoint. So is the share loss. Everything else is the same. It will cost me 10 to 15 million EBITDA. And if you decide not to go after that volume because of pricing, is that kind of fundamental lower EBITDA that you'll have to live with going forward?

Michael Sison: I just wanted to make to understand the the VPD share loss from a guidance perspective. So I think you said that, you know, the outlook is reduced to 25, 475; a prior outlook is 45 to midpoint. So is the share loss. Everything else is the same, cost you 10 to 15 million EBITDA, and if you decide not to go after that volume because of pricing, is that kind of the fundamental lower EBITDA that you'll have to deliver going forward.

Michael Sison: Hey guys, good morning. I just wanted to make, to understand the VPD share loss from a guidance perspective. So I think you said that, you know, the outlook is reduced to 465, 475.

Speaker Change: A prior outlook was 45 to midpoint. So is the share loss

Speaker Change: Everything else is the same. Costing you 10 to 15 million EBITDA and if you decide not to go after that volume because of pricing, is that kind of the fundamental lower EBITDA that you'll have to live with going forward?

Michael Sison: So Mike, thanks for the question to two dynamics. One is how we're managing the transition. So we made our choices on balancing pricing and volume gains. You see, in our margins, we're still in a very strong position. You know, so part of the gap is that there was, you know, the share loss that we had. The other part and more into Q4 is the recovery, but we're working through right now is negotiating with customers. They want it like I said; we're already gaining share in Asia and parts of Latin America. The issue is a lot of these customers have either quarterly contracts or annual contracts.

Guillermo Novo: So, Mike, thanks for the question. There are two dynamics. One is how we're managing the transition. So we made our choices based on balancing pricing and volume gains. We've seen our margins; we're still in a very strong position, you know, so part of the gap is that there was, you know, the share loss that we had. The other part, and more into Q4, is the recovery. What we're working through right now is negotiating with customers. They want it, and like I said, we're already gaining share in Asia and parts of Latin America.

Speaker Change: So, Mike, thanks for the question. Two dynamics. One is how we're managing the transition.

Speaker Change: We've made our choices on balancing pricing and volume gains. We've seen our margins, we're still in a very strong position, you know, so so part of the gap is

Speaker Change: that there was, you know, the share loss that we had. The other part, and more into Q4, is the recovery.

Speaker Change: What we're working through right now is negotiating with customers. They want it, like I said, we're already gaining share in Asia and parts of Latin America. The issue is...

Guillermo Novo: The issue is a lot of these customers have either quarterly contracts or annual contracts. All of that is happening now this quarter, and the annual contracts will most likely be next quarter. So this quarter, our fiscal fourth quarter, and our fiscal first quarter is when a lot of these negotiations are happening. And then the volume itself would come back in, I would say, more in Q1, Q2 of next year, depending on the contracts.

Guillermo Novo: All of that is happening now this quarter, and the annual contract is most likely next quarter. So this quarter, our fiscal fourth quarter and our fiscal first quarter is when a lot of these negotiations are happening, and then the volume itself would come back in, I would say, more Q1, Q2 of next year, depending on the contracts. So what's changed also is our view of the timing. We were expecting to take some actions. They said the pricing was more aggressive than we thought in our, you know, when we gave our guidance in April. So that's changed some of our capital.

Speaker Change: A lot of these customers have either quarterly contracts or annual contracts. All of that is happening now this quarter, and the annual contracts is most likely next quarter. So this quarter, our fiscal fourth quarter and our fiscal first quarter.

Speaker Change: is when a lot of these negotiations are happening. And then the volume itself would come back in, I would say more Q1, Q2 of next year, depending on the contracts. So what's changed also is our view of the timing, we were expecting to take some actions.

Guillermo Novo: So what's changed also is our view of the timing. We were expecting to take some action. As I said, the pricing was more aggressive than we thought when we gave our guidance in April, so that's changed some of our calculus. So it's a little bit of both sides.

Speaker Change: As I said, the pricing was more aggressive than we...

Speaker Change: But then we thought and in our, you know, when we did give our guidance in April .

Guillermo Novo: So it's a little bit of both sides. It's not just the loss. It's the rate of gain that we're also adjusting. But we will recover parts of that.

Michael Sison: It's not just the loss; it's the rate of gain that we're also adjusting for. But we will recover parts of that. The issue that we need to look at, and we're not ready to talk about right now, is for 2025. What's that balance? We regain all the volume, but at what price? You know, we remain half the volume at a better price. So there are scenarios that we're working through. And obviously, we really cannot talk about that because we're in negotiations. It's competitive dynamics. And I don't want to go into a lot of details there, but that's the high level, high level.

Speaker Change: So that's changed some of our calculus. So it's a little bit of both sides. It's not just the loss...

Guillermo Novo: You know, the issue that we need to look at and we're not ready to talk about right now is for 2025. What's that balance? You know, if we regain all the volume, but at what price? You know, we remain half the volume at a better price. So there's scenarios that we're working through.

Speaker Change: It's the rate of gain that we're also adjusting, but we will recover parts of that, you know, the issue that we need to look at and we're not ready to talk about right now is for 2025. What's that balance, you know?

Speaker Change: If we regain all the volume, but at what price, you know, we remain half the volume, but a better price. So there's scenarios that we're working through. Obviously, we really cannot talk about that because we're in negotiations, it's competitive dynamics, and I don't want to go into a lot of details there. But that's the high level, high level issues.

Guillermo Novo: And obviously we really cannot talk about that because we're in negotiations, it's competitive dynamics, and I don't want to go into a lot of details there. But that's the high level of high level issues. Got it.

Guillermo Novo: Got it. And then, I mean, if you do hit your fourth quarter outlook, and I analyze the third and fourth quarter EBITDA, the run rate looks pretty good, you know, kind of close to that 550 level you had into 2025. I know it's a little bit early to give us sort of a thought on 25, but maybe, you know, anyway, you can give us a couple bridges that might help us understand, you know, what the potential EBITDA run rate is for next year and going forward. So, Mike, as you look at your model, it's those two.

Michael Sison: And then I mean, if you do hit your fourth quarter outlook, and I analyze the third and fourth quarter, but the run rate looks pretty good, you know, kind of closer to that 550 levels, you head into 2025. I know it's a little bit early to give a sort of a thought on 25, but maybe, you know, anyway, you can give us a couple bridges that might help us understand, you know, what the potential. You know, you know, even down run rate is for next year and going forward.

Speaker Change: Got it. And then, I mean, if you do hit your fourth quarter outlook.

Speaker Change: and I analyze the third and fourth quarter EBITDA. The run rate looks pretty good, you know, kind of close to that 550 level as you head into 2025.

Speaker Change: I know it's a little bit early to give us sort of a thought on 25, but maybe anyway you can give us a couple bridges that might help us understand what the potential EBITDA run rate is for next year and going forward.

Guillermo Novo: So Mike, as you look at your model, it's the two issues to factor in, and I won't give you specific numbers, but it's the BPMD chair and how we manage that. So that's a factor, and we're saying that one's probably going to be net a little bit lower than we thought about before. It's not only two things that have changed, and I want to make it very clear; everything is moving as we thought and as we plan and execute it. We have one big issue, it's clear, it's transparent, we've been talking about it several quarters, it's how we manage the BPMD. We're managing it, you can see it in the margins, there are trade-offs that we make, and that's the biggest issue. Everything else, you know, other than just macro market dynamics, nothing really has changed from what we said.

Guillermo Novo: So, Mike, as you look at your model, these are the two issues to factor in, and I won't give you specific numbers, but it's the VPND share and how we manage that, so that's a factor. And we're saying that one's probably going to be net a little bit lower than what we thought about before. And then there is this whole dynamic in China and just the overall market rate of recovery that could change, positive or negative, for next year. Those are the only two things that have changed.

Speaker Change: So, Mike, as you look at your model, it's the two issues to factor in, and I won't give you specific numbers, but...

Speaker Change: HWPND

Speaker Change: Chair, and how we manage that. So that's a factor. And we're saying that one's probably going to be net a little bit lower than we what we thought about before.

Speaker Change: And then the other one is this whole dynamic in China and just the overall market rate of recovery that could change, positive or negative, for next year. We're not ready to talk about it. Those are the only two things that have changed. And I want to make it very clear, everything is moving as we thought.

Michael Sison: And I want to make it very clear. Everything is moving as we thought and as we planned and executed. We have one big issue. It's clear. It's transparent.

Guillermo Novo: We've been talking about it for several quarters. It's how we manage the VPND. We're managing it. You can see it in the margins. There are trade-offs that we make, and that's the biggest issue. You know, other than just macro market dynamics, nothing really has changed from what we said.

Speaker Change: And as we plan and execute it, we have one big issue.

Speaker Change: It's clear. It's transparent. We've been talking about it several quarters. It's how we manage the VPND. We're managing it. You can see it in the margins. There are trade-offs that we make, and that's the biggest issue. Everything else,

Speaker Change: You know, other than just macro market dynamics, nothing really has changed from what we said before.

Speaker Change: Thank you.

Michael Harrison: Our next question comes from Mike Harrison of Seaport Research Partners; your line is open. Hi, good morning. I was hoping, Guillermo, that maybe you could talk a little bit about what you're seeing on the cellulosic side within life sciences. It sounds like that is performing a little bit better. What's driving the divergence, I guess, between what you're seeing there and what you're seeing on the PVP side?

Michael Harrison: Our next question comes from Mike Harrison of Seaport Research Partners. Your line is open.

Speaker Change: Our next question comes from Mike Harrison of Seaport Research Partners. Your line is open.

Guillermo Novo: Hi, good morning. I was hoping, Guillermo, that maybe you could talk a little bit about what you're seeing on the cellulosic side within life sciences. It sounds like that is performing a little bit better. You know, what's driving the divergence, I guess, between what you're seeing there and what you're seeing on the PVP side.

Mike Harrison: Hi, good morning. I was hoping, Guillermo, that maybe you could talk a little bit about what you're seeing on the cellulosic side within life sciences. It sounds like that is performing a little bit better. You know, what's driving the divergence, I guess, between what you're seeing there and what you're seeing on the the PVP side?

Guillermo Novo: Mike, thanks for the question because I think that's an important one to remind everybody. This market is stable, it's growing, it's moving well, so life science business overall, the market is okay. Our cellulosic business has been growing, it's been stable. You know, I think probably the growth, we would have liked a little bit more, especially in Europe, because the market recovery also impacts that a little bit, but it's been net positive overall. We have a very rich portfolio of innovations, include cell benefit cell that are moving very well, so I think that part of the portfolio is holding up in a very strong position.

Michael Harrison: Mike, thanks for the question, because I think that's an important one to remind everybody. This market is stable, it's growing, it's moving well, so the life science business overall is doing okay. Our cellulosic business has been growing, and it's been stable. You know, I think probably the growth we would have liked a little bit more, especially in Europe, because the market recovery also impacts that a little bit, but it's been net positive overall.

Guillermo Novo: Mike, thanks for the question, because I think that's an important one to remind everybody.

Guillermo Novo: This market is stable, it's growing.

Mike Harrison: It's moving well. So the life science business overall, the market is okay.

Mike Harrison: Our cellulosic business has been growing, it's been stable.

Mike Harrison: You know, I think probably the growth we would have liked a little bit more, especially in Europe , because the market recovery also impacts that a little bit, but it's been net positive overall. We have a very rich portfolio of innovations in Clusel Benefcel that are moving very well. So I think that part of the portfolio is holding up in a very strong position.

Michael Harrison: We have a very rich portfolio of innovations in CluCell and BenefCell that are moving very well, so I think that part of the portfolio is holding up in a very strong position. The issue in pharma is really about a re-entrance and a rebalancing of supply within an industry that will see a lot of change in 2021, 2022, and that's what we're working through. So it's more of a competitive dynamic than really a market dynamic, as you can see by the difference between cellulose and wood.

Guillermo Novo: The issue with in pharma is really about a re-entrance and a rebalancing of supply within an industry that had a lot of change in 2021, 2022, and that's what we're working through. So it's more of a competitive dynamic than really a market dynamic, as you can see by the difference between cellulosics and BKD.

Mike Harrison: The issue in pharma is really about a re-entrance and a rebalancing of...

Mike Harrison: of supply within an industry that had a lot of change in 2021, 2022, and that's what we're working through it. So it's more of a competitive dynamic than really a market dynamic, as you can see by the difference between cellulose 6 and B.

Guillermo Novo: All right, and then I was hoping that we could also talk about the portfolio optimization, maybe just kind of at a high level, how is that optimization progressing within CMC, MC, and HEC relative to your expectations? Have you seen any negative impacts or stranded costs that you weren't expecting relative to those initiatives? So they're all moving very well. I think, as we said, we communicated and we've implemented most of the direct, not all the changes, but all the direct changes and the plans on CMC and, to a degree, on the MC, which we announced a little bit later, moving through a little bit of things there.

Guillermo Novo: All right, and then I was hoping that we could also talk about the portfolio optimization, maybe just kind of at a high level. How is that optimization progressing within CMC, MC, and HEC relative to your expectations? Have you seen any negative impacts or stranded costs that you weren't expecting relative to those initiatives? So they're all moving very well. I think, as we said, we communicated, and we implemented.

Speaker Change: All right. And then I was hoping that we could also talk about the portfolio optimization, maybe just kind of at a high level. How is that optimization progressing?

Speaker Change: Within CMC, MC, and HEC, relative to your expectations, have you seen any negative impacts or stranded costs that you weren't expecting relative to those initiatives?

Guillermo Novo: So they're all moving very well. I think, as we said, we communicated and we've implemented most of the direct, not all the changes, but all the direct changes in the plans for CMC and, to a degree, on the MC, which we announced a little bit later, through a little bit of things there. So those two are moving very well.

Speaker Change: So they're all moving very well. I think, as we said, we communicated and we've implemented most of the direct, not all the changes, but all the direct changes in the plans on CMC.

Speaker Change: and to a degree on the MC, which we announced a little bit later.

Guillermo Novo: So those two are moving very well. We're not exiting the markets; we're just making sure that the size is proportional to our strategic intent. We want these volumes more to balance out our production, but these are not the core businesses that we want to grow it. So that's going very well. We still need to do a little bit more after the nutraceutical sale to rebalance other costs outside of the plant. So we're still working, but nothing has changed in our plan or our outlook. Over, you know, it's not going to be in day one, but through 2025, it should be all neutral in terms of the impact of these areas.

Guillermo Novo: We know we're not exiting the markets. We're just making sure that the size is proportional to our strategic intent. We want these volumes more to balance out our production, but these are not the core businesses that we want to grow. So that's going very well.

Speaker Change: I'm looking through a little bit of things there. So those two are moving very well.

Speaker Change: We know we're not exiting the markets, we're just making sure that these, that the size...

Speaker Change: is proportional to our strategic intent of we want these volumes more to offer.

Speaker Change: to balance out our production, but these are not the core businesses that we want to grow in.

Speaker Change: So, that's going very well. We still need to do a little bit more after the nutraceutical sale to rebalance other costs outside of the plant, so we're still working, but nothing has changed in our

Guillermo Novo: We still need to do a little bit more after the nutraceutical sale to rebalance other costs outside of the plant. So, we're still working, but nothing has changed in our plan or our outlook over the next, you know, it's not going to be on day one, but through 2025, it should be all neutral in terms of the impact of these areas. Hopefully, I mean, our intent is to make it positive that when that happens, we can turn it into allocating our resources to more positive activities. The part that I'm excited about is really around.

Speaker Change: Planner, or our Outlook Over.

Speaker Change: It's not going to be in day one, but through 2025, it should be all neutral.

Guillermo Novo: Hopefully, I mean, our intent is to make it positive that when that now we can turn into allocating our resources to more positive activities.

Speaker Change: In terms of the impact of these areas. Hopefully, I mean, our intent is to make it positive that when that now we can turn into allocating our resources to more positive activities. The part that I'm excited is really around.

Guillermo Novo: The part that I'm excited about is really around the CMC assets in hopeful specifically that we can now, at much lower capital intensity, repurpose those assets to support the new novel sell you low six. And so those are big products, so it's all the public sacrifice chain, but we got to have a place to make them. So that's probably going to be, I think, the more exciting thing. You know, I don't think we'll be able to convert it in 2025, but we'll report more; we're going to finalize our plan. And that's a lot of upside and de-risk the technology development and the investment in that area in a big way, and we're very excited about those technologies.

Guillermo Novo: Um, the CMC assets in, in, uh, Hopewell specifically that we can now, at a much lower capital intensity, repurpose those assets to support the, uh, novel cellular, novel cellulose are looking really good. We have a number of starch-based products, and water-based products. And cellulose is a big product. So it's all the polysaccharide chain, but we got to have a place to make it.

Speaker Change: The CMC assets in Hopewell specifically that we can now at much lower capital intensity repurpose those assets to support the novel cellulosics.

Speaker Change: Novo Cellulose is looking really good. We have a number of starch-based products, guar-based products, and cellulose is the biggest product, so it's all the polysaccharide chain, but we've got to have a place to make them.

Guillermo Novo: So that's probably going to be, I think, the more exciting thing, you know, I don't think we'll be able to convert it in 2025, but we'll report more. We're going to finalize our plan, and that has a lot of upside and will de-risk the technology development and the investment in that area in a big way, and we're very excited about those technologies. I think, you know, the other side of it is that we're going to add Evoca.

Speaker Change: That's probably going to be, I think, the more exciting thing.

Speaker Change: I don't think we'll be able to convert it in 2025, but we'll report more. We're going to finalize our plan. And that's a lot of upside and de-risk the technology development and the investment in that area in a big way. And we're very excited about those technologies.

Guillermo Novo: I think, you know, the other side of it is that we're going to add is the evoke today, that business, you know. It's reduced a lot over what it was when it was bought in 2018, 2017-18. Probably it's about $50 million in revenue, no EBITDA. So we're working through that. We're initial steps as we've shut down one facility that's tolling, and we don't want to be in the tolling business. And we're working through now the bigger, the two other bigger facilities which do the square light and they also do tolling, and we're managing through that.

Speaker Change: I think, you know, the other side of it is that we're going to add is the Evoca. Today that business, you know...

Speaker Change: It's reduced a lot over what it was when it was bought in 2017-18, probably it's about

Guillermo Novo: Today, that business, you know, it's reduced a lot over what it was when it was bought in in 2018 2017 18. Probably, it's about $50 million in revenue, no EBITDA, so we're working through that. The initial steps are we've shut down one facility that's tolling, and we don't want to be in the tolling business.

Speaker Change: $50 million in revenue. No EBITDA. So we're working through that. Initial steps is we've shut down one facility.

Guillermo Novo: And we're working through now the bigger, the two other bigger facilities, which do the sclerolide, and they also do tolling, and we're managing through that. Some more to come there, but those should be things that we can do very cleanly. They're separate businesses, and then we focus our activity. The biggest issue for 2025, for me, and I'm putting a lot of personal attention on that, is execution, focusing on VPND and HEC.

Speaker Change: that's tolling and we don't want to be in the tolling business.

Speaker Change: And we're working through now the two other bigger facilities, which do the sclerolide, and they also do tolling, and we're managing through that. So more to come there, but those should be things that we can do very cleanly. They're separate businesses, and then we focus our activities. The biggest issue for 2025, for me,

Guillermo Novo: So more to come there, but those should be things that we can do very cleanly; they're separate businesses, and then we focus our activities.

Guillermo Novo: The biggest issue for 2025 for me, and I'm putting a lot of personal attention on that, is on the execute focusing on BPMD and HEC; these are market leaders. You know, the market is what it is. We need to make sure that we're driving productivity, that we're doing a lot of things in-house, and that we already started in the HEC for our communication and the portfolio optimization. We're also starting a similar initiative in the BPMD side. On the HEC side, we're making progress. I will say our plan hope did not run as well. We could have probably done a little bit better in the quarter to not run as well as we expected.

Speaker Change: and I'm putting a lot of personal attention on that, is on the execute, focusing on VPND and HTC. These are, we're market leaders.

Guillermo Novo: We're market leaders, you know; the market is what it is. We need to make sure that we're driving productivity, that we're doing a lot of things in-house, and that we have already started an HEC for our communication and portfolio optimization. We're also starting a similar initiative on the VPND side. On the HEC side, we're making progress. I will say our plan hopeful did not run as well. We could have probably done a little bit better in the quarter, but it did not run as well as we expected.

Speaker Change: You know, the market is what it is. We need to make sure that we're driving productivity, that we're doing a lot of things in-house, and that we already started an HEC for our communication and the portfolio optimization. We're also starting a similar initiative in the BPND side.

Speaker Change: On the HEC side, we're making progress.

Speaker Change: I will say...

Speaker Change: Our plan, hopefully, did not run as well.

Speaker Change: We could have probably done a little bit better in the quarter, did not run as well as we expected.

Guillermo Novo: And part of it is because of all the exits that we've done. We're doing some capex of finishing the HEC expansion that we had, and we're running trials to see how we can improve productivity on the product. So there's a lot of activities there, but very promising. So I think that'll position us well for 2025.

Guillermo Novo: And part of that is because of all the exits that we've done, and we're doing some CAPEX of finishing the HEC expansion that we had, and we're running trials to see how we can improve productivity on the product. So there's a lot of activities there, but very promising. So I think that'll position us well for 2025.

Speaker Change: And part of it is because of all the, you know, the exits that we've done, we're doing some CAPEX of finishing, you know, the HEC expansion that we had.

Jeff Tsikakis: Thanks very much.

Speaker Change: Thanks very much. Thank you.

Jeff Tsikakis: And our next question comes from Jeff Tsikakis of JPMorgan. Your line is open. Thanks very much. In specialty additives in operating income, you were in 22 million in the third quarter, and you were in 10 in the second, and your revenues were down 7 million sequentially. Can you just provide a bridge so that we can understand the improvement from 10 to 22? It's going to be primarily in volume and the way the plants operate it during Q3 versus Q2, Jeff. So we produced more; we had a higher absorption. We sold more volume. You have a price cost dynamic in there as well, but it's primarily volume.

Jeff Zekauskas: And our next question comes from Jeff Zekauskas of JP Morgan. Your line is open.

Kevin Willis: Thanks very much. In specialty additives operating income, you earned $22 million in the third quarter, and you were in 10 in the second, and your revenues were down 7 million sequentially. Can you just provide a bridge so that we can understand the improvement from 10 to 22.

Speaker Change: Thanks very much. In specialty additives in operating income, you were in $22 million in the third quarter, and you were in $10 in the second.

Speaker Change: And your revenues were down 7 million sequentially. Can you just provide a bridge to, so that we can understand the improvement from 10 to 22?

Jeff Zekauskas: That's going to be primarily in volume and the way the plants operated during Q3 versus Q2, Jeff. So we produced more, we had higher absorption, we sold more volume. You have a price-cost dynamic in there as well, but it's primarily volume.

Speaker Change: That's going to be primarily in volume and the way the plants operated during Q3 versus Q2, Jeff.

Jeff: So we produced more, we had higher absorption, we sold more volume, you have a price-cost dynamic in there as well, but it's primarily volume-related.

Jeff Tsikakis: If you remember, we've been running slower because of all the inventory actions, and now this year we're starting to pick up as we move forward.

Kevin Willis: If you remember, we've been running slower because of all the inventory actions, but now this year, we're starting to pick up as well.

Jeff: If you remember, we've been running slower because of all the inventory actions and now this year we're starting to pick up as we move forward.

Jeff Tsikakis: And in terms of the VP and the issue, so the meaning of the 14 million hit and the third quarter versus your expectations, does that mean that you over earned by 14 million also in the second quarter in VP and D? I mean, the share didn't happen overnight on some of the things, so you got to look at we took pricing actions. I mean, it's not just to defend what we had also. There were other other puts and takes, so it's not just carry it back. I mean, some of these things we talked about actually last quarter about share in VP and D.

Jeff Zekauskas: And in terms of the VPNV issue. So the meaning of the 14 million hit in the third quarter versus your expectations, does that mean that you over-earned by 14 million also in the second quarter in VP&D?

Speaker Change: And in terms of the VP&D issue, so the meaning of the 14 million hit in the third quarter versus your expectations, does that mean that you over-earned by 14 million also in the second quarter in VP&D?

Guillermo Novo: I mean, the share didn't stop happening overnight on some things. So you got to look at why we took pricing actions. I mean, it's not just to defend what we had. Also, there were other puts and takes. So, it's not just uh, carry it back. I mean, some of these things we talked about actually last quarter about share in in vpnd. I think the issue is more the outlook now. It has been more aggressive than we had expected, and that's the part that we're taking action on at the

Speaker Change: I mean the share didn't stop happen overnight on some of things so you got to look at we took pricing actions I mean it's not just

Speaker Change: To defend what we had, also, there was other puts and takes, so it's not just...

Speaker Change: carry it back. I mean, some of these things we talked about actually last quarter about share in VPND. I think the issue is more the outlook now. It has been more aggressive than we had expected and that's the part that we're taking action on.

Jeff Tsikakis: I think the issue is more the outlook now. It has been more aggressive than we had expected, and that's the part that we're taking action. on.

Kevin Willis: I think also, just for clarity, the $14 million is a sales number, not an EBITDA number.

Jeff Tsikakis: I think also just for just for clarity, the 14 million is a say we're not an EBITDA number for the court. Oh, it's not an EBITDA because I thought it was an EBITDA number because I think earlier you said, you know, your original guide was 470 to 500 and then 465 to 475, and so when you bridge that, there's a 15 million reduction in the midpoint of EBITDA, and I thought that you guys had described that change to be. I think that the 14 million is more of a Q3 comment, and as we look at the full year, the impact of the 15 million dollar EBITDA decline is related not only to the farm but the fact that specialty additives, while still growing, isn't going to grow most likely as much as we expected it to. And so it's really a combination of those of the impact of that in each of those businesses.

Speaker Change: I think also, just for clarity, the $14 million is a sales number, not an EBITDA number for the corporation.

Jeff Zekauskas: Oh, it's not an EBITDA number because I thought it was an EBITDA number because I think earlier you said, you know, your original guide was 470 to 500 and then 465 to 475. And so when you bridge that, there's a 15 million reduction in the midpoint of EBITDA, and I thought that you guys had assigned that to the United States.

Speaker Change: Oh, it's not an EBITDA, because I thought it was an EBITDA number, because I think earlier you said, you know, your original guide was 470 to 500, and then 465 to 475. And so when you bridge that, there's a 15 million

Speaker Change: reduction in the midpoint of EBITDA and I thought that you guys had ascribed that change.

Kevin Willis: I think that the $14 million is more of a Q3 comment. As we look at the full year, the impact of the $15 million EBITDA decline is related not only to pharma but the fact that specialty additives, while still growing, aren't going to grow, most likely, as much as we expected them to. And so it's really a combination of the impact of that in each of those businesses.

Speaker Change: to be.

Speaker Change: I think that the $14 million is more of a Q3 comment. As we look at the full year...

Speaker Change: The impact of the $15 million EBITDA decline is related not only to pharma, but the fact that specialty additives, while still growing, isn't going to grow, most likely, as much as we expected it to.

Speaker Change: And so it's really a combination of the impact of that in each of those businesses. That's where the $15 million comes from.

Jeff Zekauskas: That's worth $15 million. Okay, thanks so much. Sure.

Jeff Tsikakis: That's where the 15 million comes from.

Jeff Tsikakis: Okay, thanks so much.

John Roberts: Thank you. Our next question comes from John Roberts of Mizzouho. Your line is open.

Operator: Thank you. Our next question comes from.

Speaker Change: Okay, thanks so much.

John Roberts: Our next question comes from John Roberts of Missouho. Your line is open. Thank you. I think you've reported internal BDO consumption.

Speaker Change: Our next question comes from John Roberts of Mizzou. Your line is open.

John Roberts: Thank you. I think you reported that internal BDO consumption quality is down 14%. Majority of that would be for VP&D, I think, and so that would be down more than 14% if that another way to size this. So the volumes are down. Yes, the internal consumption is mostly into the VP&D business. It goes into farm, but also personal care and specialty additives. So we do sell products in other areas, but obviously farm is the bigger volume. Now the actual volumes it's an issue of demand but also of how we manage our inventors so it's not a direct the 14% you can put it just to the sales there's also how we manage the the inventors and I do want to note I mean because we have this question of what in the last call we saw more risk on the revenue side than on the EBITDA side because of manufacturing but I do want to point out we have not built inventory to the level you know that we're not inventories are under control we do not want to play we're managing our balance sheet and we manage that brutally.

John Roberts: Thank you. I think you reported that internal BDO consumption volume is down 14%. The majority of that would be for VP&D, I think, and so that would be down more than 14%. Is that another way to size this?

Guillermo Novo: So, volumes are down. Yes, the internal consumption is mostly for the VPND business goes into pharma, but also personal care and specialty additives. So we do sell products in other areas, but obviously, pharma is the big, bigger volume. Now the actual volumes, it's an issue of both demand and how we manage our inventory. So, so it's not a direct line, the 14% you can't put it just on sales. There's also how we manage the inventories. And I do want to note, I mean, because we have this question of, But in the last call.

Speaker Change: So the bonds are down. Yes, the internal consumption is mostly into the VPND business.

Speaker Change: It goes into pharma, but also personal care and specialty additives. So we do sell products in other areas, but obviously pharma is the bigger volume. Now the actual volumes, it's an issue of both demand, but also of how we manage our inventories.

Speaker Change: So it's not a direct, the 14%, you can't put it just to the sales. There's also how we manage the inventories. And I do want to note, I mean, is that we had this question of

John Roberts: We saw more risk on the revenue side than on the EBITDA side because of manufacturing. But I do want to point out that we have not built inventory to the level you know that we're not. Inventory is under control, we do not want to play, we're managing our balance sheet. And, and we're managing that brutally. So in BDO, specifically, that's something that's a big inventory area for us. So we've managed that, and we're trying to manage it prudently. Is that the only action that you're taking in VPN deep price, or is there going to be some cross setting program or rationalization actions as well?

Speaker Change: And in the last call.

Speaker Change: We saw more risk on the revenue side than on the EBITDA side because of manufacturing. But I do want to point out, we have not built inventory to the level, you know, that we're not, inventories are under control. We do not want to play, we're managing our balance sheet.

Guillermo Novo: So in BDO specifically, that's something that's a big inventory area for us, so we've managed that and we're trying to manage it prudently.

Speaker Change: and we're managing that prudently. So in BDO specifically, that's something that's a big inventory area for us. So we've managed that and we're trying to manage it prudently.

Guillermo Novo: Is the only action that you're taking in VP&D price, or is there going to be some cost saving program or rationalization actions as well? So I would say there's different things we're doing. Price, obviously, is one mix; you know which products we position to, to again, competitive because we're not we're not trying to match, you know, a premium product versus a commodity product. So we're managing the mix. But as I said, the bigger area is that we're taking actions on cost productivity when we're looking across our entire chain around the two plants that we have in Calvert City and Texas City. So there's a lot of work that's going on there, more to come, but that's a big area. You know, the environment's change and we need to take action also in-house to make sure that we strengthen our business. As market leaders, we want to make sure that we're in that leadership position both on quality, on reliability, but also want to cost. Thank you, and our next question comes from Josh Spector of UBS.

Speaker Change: Is the only action that you're taking in VP&D price or is there going to be some cross-editing program or rationalization actions as well?

Guillermo Novo: So, I would say there are different things we're doing price obviously is one mix, you know, which products we position to compete because we don't try to match, you know, a premium product versus a commodity product. So we're managing the mix. But as I said, the big area is that we're taking action on cost and productivity, looking across our entire chain around the two plants that we have in Calvert City and Texas City.

Speaker Change #108: So I would say there's different things we're doing. Price, obviously, is one. Mix, you know, which products we position to, again, it's competitive because we're not, we don't try to match, you know.

Speaker Change: A premium product versus a commodity product, so we're managing the mix.

Speaker Change: But as I said, the big area is that we're taking actions on cost, productivity.

Speaker Change: We're looking across our entire chain around the two plants that we have in Calvert City and Texas City. So there's a lot of work that's going on there, more to come, but that's a big area.

Guillermo Novo: So there's a lot of work that's going on there, more to come, but that's a big area. You know, the environment's changed, and we need to take action also in-house to make sure that we strengthen our business as market leaders. We want to make sure that we're in that leadership position, both on quality, on reliability, but also on cost.

Speaker Change: You know, the environment's changed and we need to take action also in-house.

Speaker Change: to make sure that we...

Speaker Change: We strengthen our business as market leaders. We want to make sure that we're in that leadership position, both on quality, on reliability, but also on cost.

Speaker Change: Thank you.

Josh Spector: And our next question comes from Josh Spector of UBS. Your line is open.

Joshua Spector: Your line is open. Yeah, hi. Good morning. I had a few questions on volumes that I'll kind of combine here in one, and so if I understand your guidance correctly for fourth quarter, I think Kevin said mid-single digit percent volume growth. That obviously includes the headwind from BPMD. I think that excluded the volume exits, but correct me if I'm wrong. So that's 5% or so growth and profit-producing volumes. I guess if we look over the next year, you have a couple quarters of that to go. So maybe no demand growth; your volumes grow to 3% against profit-producing volumes.

Speaker Change #100: And our next question comes from Josh Spector of UBS. Your line is open.

Guillermo Novo: Yeah, hi, good morning. I had a few questions on volumes that I'll kind of combine here in one. So if I understand your guidance correctly for the fourth quarter, I think Kevin said mid single-digit percent volume growth. That obviously includes the headwind from B, P, and D. I think that excluded the volume exits, but correct me if I'm wrong.

Josh Spector: Yeah, hi, good morning. I had a few questions on volumes that I'll kind of combine here in one.

Josh Spector: If I understand your guidance correctly for fourth quarter, I think Kevin said mid single digit percent volume growth that obviously includes the headwind from B, P, and D. I think that excluded the volume exits, but correct me if I'm wrong. So that's 5% or so growth and profit producing volumes.

Josh Spector: So that's 5% or so growth and profit-producing volumes. I guess if we look over the next year, you have a couple quarters of that to go. So maybe no demand growth, your volumes grow by 2-3% against profit-producing volumes. I guess one. Is that a reasonable starting point to think about? And then two, some of these other things that you've talked about over the last couple of years, so specific new capacity investments, you talked about some new wins a couple of years ago, we haven't really seen that.

Speaker Change #102: I guess if we look over the next year.

Speaker Change #103: You have a couple quarters of that to go, so maybe no demand growth, your volumes grow 2-3% against profit-producing volumes.

Guillermo Novo: I guess one, is that a reasonable starting point to think about. And then two, some of these other things that you've talked about over the last couple of years. So specific new capacity investments. You talked about some new wins a couple of years ago. We haven't really seen that. And then two, the new product pipeline you've talked about. Do you expect that to be additive on top of that base rate? And will we see that next year? Or would that take a lot longer to materialize? So let me just make a point, and then I'll ask Kevin to comment on the volume and the guidance.

Speaker Change #104: I guess, one, is that a reasonable starting point to think about? And then two, some of these other things that you've talked about over the last couple of years,

Speaker Change #105: So, specific new capacity investments, you talked about some new wins a couple of years ago, we haven't really seen that. And then two, the new product pipeline you've talked about, do you expect that to be additive on top of that base rate, and will we see that next year, or would that take a lot longer to materialize?

Josh Spector: And then two, the new product pipeline you've talked about, do you expect that to be additive on top of that base rate? And will we see that next year? Or would that take a lot longer to materialize?

Guillermo Novo: So, let me just make a point and then I'll ask Kevin to comment on the volume and the guidance. We've we have not taken out a nutraceutical on numbers yet because we don't know exactly the closing. We believe it's before the end of the year, so that's the one that I would say has not been removed. If we close the deal sooner, we'll let you know, and then we can adjust the guidance accordingly.

Speaker Change #105: So let me just make a point and then I'll ask Kevin to comment on the volume and the guidance. We have not taken out the nutraceutical

Kevin Willis: We have not taken out a nutraceutical numbers yet because we don't know exactly the closing. We believe it's before the end of the year. So that's the one that I would say have not has not been removed. So we close a deal sooner. We'll let you know, and then we can adjust the guide into appropriately. So, and Kevin, you can answer after for the other questions on innovation and growth. All the growth, if you look at our global ice, as we said, it's growing much higher than the rest of the portfolio. Those have much higher growth profit margins than our average different cost structures.

Kevin Willis: on numbers yet because we don't know exactly the closing. We believe it's before the end of the year. So that's the one that I would say have not.

Kevin Willis: Has not been removed. If we close a deal sooner, we'll let you know, and then we can adjust the guidance appropriately. So, and Kevin, you can answer for the other questions on innovation and growth.

Guillermo Novo: So, and Kevin, you can answer after for the other questions on innovation and growth. All the growth, if you look at our globalized businesses, as we said, they're growing much higher than the rest of the portfolio. Those have much higher gross profit margins than our average different cost structures. Even there, we're trying to even optimize the cost, the margins, and cost structure produced locally. These are asset light type businesses.

Kevin Willis: It's growing much higher than the rest of the portfolio.

Guillermo Novo: Even there we're trying to even optimize the cost, the margins and cost structure produce locally moving. These are asset light type businesses. It's about being closer to the markets and adding more service and supply flexibility in region. So all those are growing, and all those are 6-10% of our portfolio. We want to grow in double digits and at higher margins, and we're getting that momentum. On the innovation side, we've introduced a lot of products. I would say if you look at the last few years of big innovations, the majority of things we've introduced in personal care.

Guillermo Novo: It's about being closer to the markets and adding more service and supply flexibility in the region. All those are growing, and all those are, so it's 10% of our portfolio. We want to grow it at double digits and at higher margins, and we're getting that momentum. On the innovation side, we've introduced a lot of products. I would say if you look at the last few years of big innovations, the majority of things we've introduced are in personal care.

Guillermo Novo: The good news for us, some of the things we introduced, as I said in the prepared remarks, like the TVO, we're getting started to get momentum. We'll show that when we do our Investor Day. But getting the registration, for example, in personal care to sell it in China is very important because even for the global houses, they require to be able to use the other brands globally. So that opens the door for a lot of growth. So I think in personal care, there's a lot of launches, a lot more things coming. I think the biggest change for us, not just now, but for the future, is specialty additives.

Guillermo Novo: The good news for us, some of the things we introduced, as I said in the prepared remarks, like the TVO, we're starting to get momentum. We'll show that when we do our Investor Day, but getting the registration, for example, in personal care to sell it in China is very important, because even for the global houses, they require to be able to use their brands globally.

Kevin Willis: The good news for us, some of the things we introduced as I said in the prepared remarks like the TVO

Speaker Change #106: to sell it in China is very important because even for the global houses.

Guillermo Novo: So that opens the door for a lot of growth. So I think in personal care there will be a lot of launches, and a lot more things coming. I think the biggest change for us, not just now, but for the future, is specialty additives. The portfolio of innovations was more around core construction. That team has shifted a lot, and I'm really excited about some of the outlooks, some of the discussions we're having with customers, really going much beyond rheology, which has been our core and a lot of exciting opportunities.

Guillermo Novo: The portfolio of innovations were more around core construction; that team has pivoted a lot, and I'm really excited about some of the outlooks, some of the discussions with having with customers, really going much, you know, much beyond the reality, which has been our core, and a lot of exciting opportunities. Again, we'll lay those out for the team. And in Parma, I would say the two biggest dynamics that I think are really exciting about growth, and they're happening now, is on a cellulosic side, the new Benicels, and new cool cells that we've introduced, very good traction, so I think that will still generate for the next two years some very good growth, and the injectables.

Kevin Willis: The portfolio of innovations were more around core, construction. That team has pivoted a lot. And I'm really excited about some of the outlooks, some of the discussions we're having with customers.

Guillermo Novo: And we'll lay those out for the team. And in pharma, I would say that the two biggest dynamics that I think are really exciting about growth, and they're happening now, are on the cellulosic side, the new beta cells and new clue cells that we've introduced. Very good traction. So I think that'll still generate, for the next two years, some very good growth. And the injectables. I'm really excited about the progress we're making there.

Kevin Willis: for the team.

Guillermo Novo: We'll talk about investor day, the pipeline, and how that's looking, but that one, I think, really, for the long term, very healthy portfolio, a lot of really premier customers working with us, so very exciting part of the portfolio.

Kevin Willis: Clue cells that we've introduced, very good traction.

Kevin Willis: I'm really excited about the progress we're making there. We'll talk about in the investor day, the pipeline, and how that's looking, but that one, I think, really, for the long term, very healthy portfolio, a lot of really premier customers working with us, so very exciting part of the portfolio. And Josh, on the volume growth, what we would expect for, on an overall basis, is mid-single-digit organic volume growth, so setting the optimization work aside, and that's what's baked into the outlook that we've given. And again, I think originally our expectations would have been a bit higher than that; hence the change in the outlook. But as we look at fiscal 25, I mean, the skierman said we're really not prepared to talk a lot about that.

Kevin Willis: and The Injectables. I'm really excited about the progress we're making there.

Kevin Willis: We'll talk about investor day, the pipeline and how that's looking, but

Kevin Willis: And, Josh, on volume growth, what we would expect for Q4 on an overall basis is mid-single-digit organic volume growth, setting the optimization work aside. And that's what's baked into the outlook that we've given. Again, I think originally, our expectations would have been a bit higher than that, hence the change in the outlook. But as we look at fiscal 25, I mean, as Guillermo said, we're really not prepared to talk a lot about that.

Kevin Willis: and that's what's baked into the outlook that we've given.

Kevin Willis: We'll say a lot more on the Q4 earnings call when that one happens. But I think just to reiterate, in terms of the Q1, Q2 piece of the equation, returning to more typical results in Q1 and Q2 versus what we saw in fiscal 24. That's a combination of two things.

Kevin Willis: We'll say a lot more on the Q4 earnings call when that one happens. I think just to reiterate, in terms of the Q1, Q2 piece of the equation, returning to more typical results in Q1 and Q2 versus what we saw in fiscal 24, that's a combination of two things. Number one, and probably the larger item would be, it's running our plants at more typical levels in Q1 and Q2, as opposed to what we did in Q1 and Q2, fiscal 24, but there is also a volume impact to that. And that's probably a little more pronounced in Q2 than it is in Q1, but it's a mix of the two things.

Kevin Willis: Prepared to talk a lot about that. We'll say a lot more on the Q4 earnings call when that one happens. I think, just to reiterate, in terms of the Q1, Q2 piece of the equation,

Kevin Willis: Returning to more typical results in Q1 and Q2 versus what we saw in Fiscal 24, that's a combination of two things.

Kevin Willis: Number one, and probably I'd say the larger item would be running our plants at more typical levels in Q1 and Q2, as opposed to what we did in Q1 and Q2 of Fiscal 24. But there is also a volume impact to that, and that's probably a little more pronounced in even Q2 than it is in Q1. But so it's a mix of the two things.

Kevin Willis: So what I would say is that as part of that return to more typical Q1 and Q2 results, it's a combination of running the plants at more normal levels. And it's, let's call it primarily that, but there's also an expectation of normalized volume or more typical volume included in that without any expectations around year-over-year growth per se or market growth. Again, as we get into the Q4 earnings call and we start to talk about Fiscal 25 on that call, we'll give a lot more specificity, I would say, particularly around the impact of the exits.

Kevin Willis: And that's probably a little more pronounced even in Q2 than it is in Q1, but so it's a mix of the two things. So what I would say is that as part of that return to more typical Q1 and Q2 results, it's a combination.

Kevin Willis: So what I would say is that, as part of that return to more typical Q1 and Q2 results, it's a combination of running the plants at more normal levels, and let's call it primarily that, but there's also an expectation of normalized volume or more typical volume, including that. Without any expectations around year-over-year growth per se or market growth. Again, as we get into the Q4 earnings call, and we start to talk about fiscal 25 on that call, we'll give a lot more specificity, I would say, particularly around the impact of the exits. I think there is a fair bit of confusion around what that's going to mean for fiscal 25, and our plan is to provide more granularity around that when we do our Q4 earnings call, just to help people level set around what we expect that to look like based on the actions that we've taken in fiscal 24 and the outcomes of those actions.

Kevin Willis: Again, as we as we get into the...

Kevin Willis: The Q4 earnings call, and we start to talk about fiscal 25 on that call.

Kevin Willis: We'll give a lot more specificity, I would say, particularly around the impact of the exits. I think there is a fair bit of confusion around...

Kevin Willis: I think there is a fair bit of confusion around what that's going to mean for Fiscal 25, and our plan is to provide more granularity around that when we do our Q4 earnings call, just to help people level set around what we expect that to look like based on the actions that we've taken in Fiscal 24 and the outcomes of those actions. So I'll say more to come on that, but that's the best way to think about at least Q1 and Q2 for the time being, and it's included in that overall reset number that we've been talking about.

Kevin Willis: Around what we expect that to look like based on the actions that we've taken in fiscal 24 and the outcomes of those actions So I would say more to come on that

Kevin Willis: So I would say more to come on that, but that's the best way to think about at least Q1 and Q2 for the time being, and it's included in that overall reset number that we've been talking.

Unknown Executive: Thank you.

Guillermo Novo: Thank you. I'm showing no further questions at this time. I'd like to turn it back to Guillermo Novo for closing remarks.

Guillermo Novo: I'm showing no further questions at this time.

Unknown Executive: I'd like to turn it back to Guillermo Novo for closing remarks. I want to thank everybody for your participation and interest, looking for the connect with all of you. I just want to reiterate, you know, although a tough environment in the extra oil, I think the team has been doing very well on the core things. We have some specific issues that had a big impact. We're working through that. I think it's manageable, and it's specific rather than broad base, so we'll be managing and updating you on those activities. But I look forward to also sending you more communication on our investor's day in December, and we look forward to seeing you soon.

Guillermo Novo: I want to thank everybody for your participation and interest. I'm looking forward to connecting with all of you.

Kevin Willis: I want to thank everybody for your participation and interest. I'm looking forward to connect with all of you.

Guillermo Novo: I just want to reiterate, you know, although a tough environment in the XRO, I think the team has been doing very well on the core things. We have some specific issues that have had a big impact, but we're working through that. I think it's manageable, and it's specific rather than broad-based, so we'll be managing and updating you on those activities. But I look forward to also sending you more communication on our investor day in December, and we look forward to seeing you soon.

Kevin Willis: I just want to reiterate, you know, although a tough environment in the XRO, I think the team has been doing very well on the core things.

Kevin Willis: We have a specific issue that had a big impact. We're working through that. I think it's manageable and it's specific rather than broad-based, so we'll be managing and updating you on those activities.

Guillermo Novo: Thank you so much.

Unknown Executive: This concludes today's conference call. Thank you for participating, and you may now disconnect. Thank you. Thank you very much.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.

Speaker Change #107: This concludes today's conference call. Thank you for participating and you may now disconnect.

Speaker Change #110: www.thevenusproject.com www.thevenusproject.com

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