Q1 2025 Ashland Inc Earnings Call
Speaker Change: Good day and thank you for standing by. Welcome to the Ashland Inc. First Quarter 2025 Earnings Conference Call. 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. 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.
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
Speaker Change: Hello everyone and welcome to Ashland's first quarter fiscal year 2025 earnings conference column webcast. My name is William Whitaker, Ashland Investor Relations.
Speaker Change: Joining me on the call today are Guillermo Novo, Ashland Chair and CEO, Kevin Willis, Ashland CFO, and our business unit leaders, Alessandra Faccin, James Minicucci, and Dago Caceres.
Speaker Change: Ashland release results for the quarter ended December 31st, 2024 at approximately 5 p.m. Eastern Time yesterday, January 28th.
Speaker Change: The news release issued last night was furnished to the SEC in a Form 8a. 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 the call. Please turn to Slide 2.
Speaker Change: As a reminder, during today's call, we will be making forward-looking statements on several matters, including our financial outlook for full year of fiscal 2025. 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.
Speaker Change: Please refer to slide two of the presentation for an explanation of those risks and uncertainties and the limits applicable to forward-looking statements.
Speaker Change: You can also review our most recent Form 10-K under Item 1-A for a comprehensive discussion of the risk factors impacting our business.
Speaker Change: Non-GAAP financial measures should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Speaker Change: 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.
Speaker Change: Guillermo will begin the call this morning with an overview of Ashland's performance for the quarter. Next, Kevin will cover the financial details for the quarter, and our business unit leaders will share insights into their respective segments.
Speaker Change: Guillermo will then provide an update on Ashland's strategic priorities and outlook.
Speaker Change: Following brief closing comments, we will open the line for your questions. To kick things off, I'll hand the call over to Guillermo for his opening remarks. Guillermo?
Guillermo Novo: Thank you, William, and good morning to everyone. We appreciate you joining us today.
I'll focus my update on three topics.
First, I'll provide an overview of our Q1 performance.
Guillermo Novo: which generally align with the outlook we shared with you at last month's Strategy Day.
Guillermo Novo: Well, we saw some softening in European demand and inventory control actions from some of our pharma customers, the rest of the business performed generally as expected.
Guillermo Novo: Maintenance shutdowns were proactively shifted to Q1 to ensure we can adapt quickly and effectively to changes in trade policy environment.
Guillermo Novo: Second, I'll reiterate our key priorities and our long-term financial commitment we outlined at our recent Strategy Day.
Guillermo Novo: The team is making progress, and we're confident that our portfolio of value-creating opportunities position us well for success.
Guillermo Novo: We are committed to providing regular and transparent updates on our progress going forward.
Guillermo Novo: Third, we'll provide an update to our guidance for Fiscal 25.
Guillermo Novo: We're proactively addressing anticipated challenges like soft demand in China and potential headwinds in Europe by taking decisive actions to deliver on our commitments.
Guillermo Novo: There are no significant changes to our underlying assumptions at this time.
Guillermo Novo: Our strong progress on self-help initiatives reinforces our confidence in achieving our full-year financial targets.
Guillermo Novo: We'll share with you more details later, but we're reaffirming our four-year outlook.
Guillermo Novo: Please turn to slide 5. Let's begin with a recap of our first quarter performance.
Guillermo Novo: Customer demand was generally consistent with our update from last month's Strategy Day.
Guillermo Novo: We noted some additional softness in Europe across our business units.
Although demand and overcapacity in China has increased competition,
Overall pricing and volumes remain in line with our expectations.
and Pharma customers actively reduce their inventory at year-end.
Guillermo Novo: The rest of the businesses performed largely as expected. Our Q1 sales were $405 million, down 14 percent from the prior year.
Guillermo Novo: This decline was primarily driven by portfolio improvement actions, including the nutraceutical divestiture.
Adjusting for these actions, revenue decreased 3%.
Organic sales volumes.
were relatively steady, down 1% year over year.
Guillermo Novo: As I mentioned, the overall pricing environment has been largely consistent with our expectations.
Guillermo Novo: Pricing was generally stable, sequentially, and down 2% year over year.
Guillermo Novo: Now let's turn to key operational decisions we made in Q1. We proactively moved several plant maintenance turnarounds into the first quarter.
Guillermo Novo: Given the heightened uncertainty on policy transitions, this move enables us greater operational flexibility going forward.
Guillermo Novo: The turnarounds were planned for the year, but this proactive measure was a key factor in the lower-than-expected Q1 absorption.
Guillermo Novo: The turnarounds were slightly extended and incurred about $5 million in unanticipated EVDA due to lower absorption and higher maintenance costs.
Guillermo Novo: We expect to make up the lower absorption during the full year. Overall, adjusted EBITDA decreased to $61 million, down 13% year-over-year.
Guillermo Novo: Key drivers for the decline include lost gross profit from the sale of nutraceuticals and stranded costs from the portfolio optimization actions.
Guillermo Novo: We're actively pursuing restructuring and manufacturing optimization initiatives to more than offset the impact and improve our overall performance, which I'll discuss later in the call.
Guillermo Novo: Excluding portfolio optimization, adjusted EBITDA was down 2% year over year.
Guillermo Novo: Finally, a quick update on our portfolio. We recently announced an agreement to sell our Avoca business with a transaction expected to close in the March quarter.
Guillermo Novo: By divesting AVOCA and completing our $30 million restructuring, we will have finalized our strategic transformation, enabling us to prioritize core businesses and drive profits over time.
Please turn to slide six.
And now I'll summarize the performance of the individual segments.
Guillermo Novo: Starting with a review of the organic sales volume, we generated growth in personal care, specialty additives, and intermediates of mid-single digits in total.
along with solid organic volume growth.
Guillermo Novo: In several areas, we made strategic portfolio choices to optimize our business, which impacted overall sales.
Guillermo Novo: We also experience software life science volume and lower overall pricing primarily due to the 2024 carry-over impact.
Guillermo Novo: It's worth noting that our EBITDA comparisons include $8 million of portfolio optimization impact, which we plan to address with restructuring.
Guillermo Novo: This roughly added 200 basis points impact to EBITDA margins in the quarter.
Guillermo Novo: With this impact and the turnarounds, overall EBITDA margins remain consistent year over year.
Guillermo Novo: Looking ahead, margins are expected to improve significantly throughout the year, as our plans are now well positioned and cost savings are being realized.
And now, to the business units.
Life science navigated a challenging quarter, particularly in pharma.
Speaker Change: Guillermo Novo, James Minicucci, Alessandra Facci, William Whitaker, Unknown Executive, Dago Caceres, William Whitaker, James Minicucci, William Whitaker, Guillermo Novo, James Minicucci,
Speaker Change: Software markets and customer inventory actions were a key contributor to the high single-digit decline in pharma sales volumes.
Speaker Change: While pharma competitive intensity remains elevated, overall pricing trends were in line with our expectations following contract renewals.
Speaker Change: The team is focused on share gain initiatives globally to mitigate the impact of softer demand in Europe.
Speaker Change: We also made great progress in our strategic priorities of execute, globalize, and innovate, which we'll discuss later.
Speaker Change: Personal care delivered another strong quarter, achieving its fourth consecutive quarter of greater than 25% year-over-year EBITDA growth.
Speaker Change: We saw continued strong demand in our largest personal care and markets, skin care and hair care.
Speaker Change: While demand slowed in Europe, it was more than offset by strong performance in other regions, particularly in Asia.
Speaker Change: Last 12 months, EBITDA margin is now up 27% and we expect further expansion driven by our strategic priorities.
Thank you for watching.
Speaker Change: Specialty additives executed well with organic sales volumes up 1% year-over-year.
Speaker Change: Coding's demand was moderately weaker in China and EMEA, but this was more than offset by improving volumes in performance specialties.
Speaker Change: We are closely monitoring the spillover effect of China's low demand and excess capacity on other export markets.
Speaker Change: The team maintained pricing discipline with substantially stable pricing and significant narrowing of year-over-year decline to just 1%.
Speaker Change: For the Mixed Recovery, the Specialty Additives Team is focused on Operational Discipline, Optimizing our HEC Network, and Pursuing Share Gain Initiatives.
Speaker Change: To summarize, we're starting the year in an uncertain market environment like we expected.
Speaker Change: We factored much of the muted macro and competitive dynamics into our outlook.
Speaker Change: The clear agenda outlined at our strategy day continues to guide our efforts.
Delivering and accelerating cost savings remain our top priority.
Speaker Change: We can unlock substantial near-term value through our productivity initiatives independent of the external factors.
Speaker Change: Beyond cost savings, the Ashland team is energized to deliver on our growth catalysts, making strategic progress and continuing to invest in innovation and global expansion.
Speaker Change: We have momentum here, and I'll discuss more of it about this later.
Kevin Willis: Now I'd like to turn the call over to Kevin to provide a more detailed review of our first quarter financials performance. Kevin?
Thank you Guillermo and good morning everyone.
Please turn to slide 8.
Kevin Willis: Ashland's total sales for the first quarter were $405 million, down 14% year-over-year.
Kevin Willis: This decline was largely driven by our Portfolio Optimization Initiatives, which reduced sales by approximately $50 million, or 11%.
excluding the impact of these initiatives.
Organic sales volumes were down 1% overall.
Kevin Willis: We saw organic volume growth in personal care, specialty additives, and intermediates more than offset by declines in life sciences.
Kevin Willis: Overall pricing was generally in line with our expectations, down 2% year-over-year, primarily in the intermediates and life sciences segments.
Kevin Willis: Gross profit margin increased 290 basis points to 28.1% in the quarter.
Kevin Willis: This improvement was primarily due to a production volume recovery and portfolio optimization actions.
Kevin Willis: These positives were partially offset by lower pricing against a backdrop of stable raw material costs.
Kevin Willis: SG&A, R&D, and intangible amortization costs were $104 million, up modestly versus the prior year.
Kevin Willis: The reset of variable compensation was mostly offset by lower amortization and the transfer of nutraceuticals employees.
Kevin Willis: Ashland's adjusted EBITDA for the quarter was $61 million, down 13% year over year.
Kevin Willis: This decline was largely driven by our portfolio optimization, which reduced adjusted EBITDA by approximately $8 million.
Kevin Willis: Excluding this, adjusted epithelium was down 2% due to the factors mentioned earlier.
Kevin Willis: Despite advanced plant turnarounds and stranded costs, Ashland's adjusted EBITDA margin for the quarter was 15.1%, up 30 basis points year over year.
Kevin Willis: Adjusted EPS, excluding acquisition amortization, was $0.28, down 38% from prior year.
Speaker Change: Now, let's hear from our General Managers to review the results of each of our operating segments.
Alessandra, let's start with Life Sciences.
Alessandra Faccin: Thank you, Kevin. Good morning, everyone. Please turn to slide nine for life science.
Guillermo Novo: Guillermo mentioned the first quarter was marked by both strategic progress and softer market conditions.
Overall, Life Sciences sales declined 33% to $134 million.
Guillermo Novo: His actions improve our long-term profitability and focus, but impact year-over-year comparisons in fiscal year 2025.
Guillermo Novo: Organic sales were down 12% year-over-year, primarily in pharma. As we shared last month, customers implemented stronger inventory control measures, and the market for pharma is softer, particularly in Europe.
Guillermo Novo: This led to high single-digit declines in form of sales volume year-over-year.
Guillermo Novo: While we experience inventory adjustments of four to six weeks in many cases, we expect those actions are largely behind us.
Guillermo Novo: Ashland's global presence is a key strength, allowing us to strategically target farmer growth opportunities in many markets.
Guillermo Novo: While we navigate near-term challenges in Europe, we are actively pursuing growth opportunities in Asia and Latin America, leveraging our reputation with local and generics manufacturers.
Guillermo Novo: Despite elevated competition in pharma, sequential pricing trends were generally stable and year-over-year pressure was in line with our expectations, reflecting the carryover impact.
Guillermo Novo: We are pleased with our globalization progress for injectables and OSD film coatings, which achieved double-digit sales growth in the quarter.
Guillermo Novo: Projectables, our recently established R&D center of excellence, is already delivering results. Centralized collaboration is accelerating innovation, and we are forecasting four product launches in 2025, more than tripling the three-year average.
Guillermo Novo: These efforts are positioning us for success in attractive new and adjacent markets within the high-growth injectable space.
Overall adjusted EBITDA decreased by 42% to $28 million.
Guillermo Novo: Excluding portfolio optimization, EBITDA was down $12 million, or 25%. Adjusted EBITDA margins increased 310 basis points to 20.9%.
Guillermo Novo: and Dario Venchi. Turnarounds encourage unanticipated costs and absorptions due to longer timelines and higher expenses, which total $3 billion for life sciences.
Please turn to the light 10 for intermediates.
Guillermo Novo: Intermediate sales were $33 million in line with prior year quarter.
Guillermo Novo: This consistent performance was delivered across both merchant and captive sales.
Guillermo Novo: CAPTECH internal BDO sales were $11 million and merchant sales were $22 million.
Guillermo Novo: Despite challenging global market conditions, the team secured additional volumes of N&P during the quarter. Demand in the electric vehicle and battery markets remained soft due to delays in battery plant startups.
Some gains were offset by lower year-over-year merchant pricing.
Guillermo Novo: Intermediate generated six million dollars in adjusted EBITDA representing an 18.2% adjusted EBITDA margin.
Guillermo Novo: This compares to $10 million in the prior year's lower pricing and unfavorable product mix driven by large volume customers' reduced profitability.
Guillermo Novo: This was partially offset with higher year-over-year production volumes. Now I will turn the call over to Jim to discuss the performance of personal care. Jim?
Jim: Thank you, Alessandra. Good morning, everyone. Please turn to slide 11 for personal care.
Jim: Personal care continued its strong momentum, achieving its fourth consecutive quarter of year-over-year revenue in EBITDA growth.
Jim: Organic volumes increased by mid-single-digit, driven by strong demand in hair care, skin care, and bio-functions.
Jim: While Europe experienced some weakness, demand improved in most other regions, particularly in Asia, where our focus on local and regional customers generated positive momentum.
Jim: Portfolio Optimization streamlines our oral care offerings, focusing on higher-margin products.
Jim: The Portfolio Optimization Initiative reduced personal care sales by approximately $2 million, or 2%, in the quarter.
Guillermo Novo: As Guillermo mentioned, we have an agreement to sell the Avoca business, and the appendix provides details on the financial impact of this divestiture going forward.
Our globalized strategy drove biofunctional growth in Asia.
even with some customer-specific weakness.
Guillermo Novo: Despite a recent slowdown in AMIA, we see significant potential in the sales pipeline for microbial protection.
Guillermo Novo: By commissioning a new production capacity for microbial protection products in Brazil this quarter, we are getting closer to our customers in this growing market and enhancing our ability to serve their needs.
Guillermo Novo: Overall, personal care sales increased by 4% to $134 million, and organic sales were up 6%.
Pricing and raw materials remain stable year over year.
Adjusted EBITDA grew an impressive 36% to $30 million.
Guillermo Novo: This quarter's profit improvement reflects both higher sales and production volumes.
Guillermo Novo: Similar to life sciences, turnarounds incurred unanticipated costs in absorption due to longer timelines and higher expenses at our shared site.
which totaled $2 million for personal care.
Guillermo Novo: Adjusted EBITDA margin expanded by 530 basis points to 22.4 percent.
Last 12 months EBITDA is up 35%.
Highlighting the robust recovery from desalking.
Guillermo Novo: Now, I'll hand it over to Dago to review the results of specialty additives. Dago?
Dago Caceres: Thank you, Jim. Please turn to slide 12 for specialty additives.
Speaker Change: Our first quarter results were generally in line with our expectations.
Speaker Change: Sales volume was down mid-single digits year-over-year, primarily due to our portfolio optimization initiatives.
Speaker Change: For portfolio optimization, streamline our construction offerings, focusing on higher-margin products.
Speaker Change: This growth was partially offset by slightly weaker demand in coins
Speaker Change: primarily in China and EMEA. As expected, low demand and overcapacity in China is driving increased competition, impacting both volume and pricing in local and export markets.
Speaker Change: We are taking steps to partially mitigate the impact on local operations.
Speaker Change: Pricing Remain Relatively Stable, Down 1% Year Over Year, Reflecting Our Discipline Pricing Strategy
Speaker Change: This represents a significant improvement from the mid-single-digit declines we saw in fiscal year 2024. Overall, specialty attitudes sales declined by 6% to $115 million.
Speaker Change: Excluding the 7 million impact of our portfolio optimization actions, sales were roughly flat year over year.
Speaker Change: Adjusted EBITDA more than doubled to $13 million, primarily due to higher production volumes compared to last year's inventory corrective actions.
Adjusted EBITDA margins improved 640 basis points year-over-year to 11.3%.
Speaker Change: In addition, last 12 months EBITDA is up 39%, highlighting our strong overall recovery. I will now turn the call back to Kevin. Kevin?
Kevin Willis: Thanks, Dago. Please turn to slide 13. Ashland continues to have a strong financial position.
Kevin Willis: As of the end of December, we had cash on hand of $219 million and $815 million in total available liquidity.
Kevin Willis: Our net debt was $1.1 billion, representing a leverage ratio of approximately 2.4 times.
Kevin Willis: We have no floating rate debt, no long-term debt maturities for the next two years, and all outstanding debt is subject to investment-grade style credit terms.
Guillermo Novo: As Guillermo mentioned, we shifted several plant turnarounds into Q1, stabilizing sequential inventory and enhancing operational flexibility going forward.
Guillermo Novo: Reflecting typical Q1 earnings seasonality, ongoing free cash flow was negative $26 million. We remain committed to our free cash flow conversion target of greater than 50% for the full year.
Guillermo Novo: Our disciplined capital allocation has enabled $280 million in share repurchases over the last year and $1.3 billion over the last four years.
Guillermo Novo: We have $620 million remaining under our current share repurchase authorization.
Guillermo Novo: As demonstrated, we will opportunistically repurchase shares while investing in our business to drive organic growth.
Guillermo Novo: With certain growth projects now commissioned, Ashland anticipates fiscal 2025 capital expenditures to be around $120 million.
Guillermo Novo: We're also pursuing targeted bolt-on M&A opportunities in pharma, personal care, and coatings.
Guillermo Novo: Our progressive dividend policy remains an important part of our capital allocation strategy.
Guillermo Novo: It reflects our confidence in the company's long-term profitable growth and cash flow generation outlook.
Guillermo Novo: Now, I'll turn the call back over to Guillermo to discuss our strategic priorities and fiscal year 2025 outlook. Guillermo?
Guillermo Novo: Thanks, Kevin, and please turn to slide 15. I'll start by highlighting that we're nearing the end of our portfolio optimization journey.
Guillermo Novo: The Aspen team did a remarkable job reducing our exposure to the low-return, volatile Armachem, CMC, and MC businesses, positioning us for more stable and profitable growth.
Guillermo Novo: Our actions should deliver 200 to 250 basis points of Martian expansion when complete.
Guillermo Novo: By selling the Avoca business and fully implementing our 30 million dollar restructuring program, we will finalize our strategic transformation and position ourselves for future growth.
Please turn to slide 16.
Guillermo Novo: Our Execute, Globalize, Innovate, and Invest priorities continue to serve as a roadmap and guide to our actions.
And a strategy update last month, we outlined
Guillermo Novo: Clear financial commitments align with our strategic priorities. While some of these efforts will take time, we believe regular, transparent updates will demonstrate our commitment and progress on these important initiatives.
Please turn to slide 17.
Guillermo Novo: Let's start with Execute, which focuses on the controllable factors that will drive near-term performance.
Guillermo Novo: As mentioned, we recently signed the agreement to divest the Evoca business.
Guillermo Novo: This is a key step in exiting a non-core business line, improving our financial profile, and fully unwinding the pharma chem acquisition.
Guillermo Novo: In connection with the signing, we will recognize a non-cash impairment that was a key item in the quarter.
Guillermo Novo: We repurchased shares in Q4 of last year to neutralize the ongoing EPS impact from the exit of Nutraceuticals and Evoque.
We are now focusing on offsetting the EBITDA impact.
The highest priority.
is delivering on a $90 million cost-saving target.
Thank you very much.
First, our $30 million dollar restructuring.
Guillermo Novo: Our efforts are well underway, with $21 million of opportunities identified and $12 million annual run rate already achieved.
Guillermo Novo: We are confident this momentum will continue, generating further restructuring savings in the upcoming months.
Guillermo Novo: Second is the 60 million dollars of manufacturing optimization. As a reminder, the majority of the focus is on strengthening HEC and VPND.
Guillermo Novo: Initial focus has been on consolidation of manufacturing activities with process productivity improvements coming later.
Guillermo Novo: Actions will be taken include the consolidation of some manufacturing operations from our Texas City plant to Calvert City.
Guillermo Novo: Executed initiatives have already generated 88 million dollars of annual run rate EBITDA improvement.
Guillermo Novo: There's a timing element for the flow-through on productivity initiatives through fiscal 2025, and we will be communicating those as we have more data.
Guillermo Novo: Overall, we're on track to achieving at least $20 million in savings in fiscal year 2025.
Please turn to slide 18.
Guillermo Novo: At our Strategy Day, we introduce ambitious yet achievable revenue targets for our Globalize and Innovate initiatives, each aiming to generate $100 million in additional revenue by fiscal 2027.
Guillermo Novo: This slide highlights the near-term growth trajectory and expectations for fiscal 2025. Starting with Globalize, we are investing in assets, people, and technology to accelerate growth.
Guillermo Novo: Our revenue targets translate to growing them by roughly 50% over the next few years.
Guillermo Novo: Well, microbial protection, our largest globalized business, had a slow start to the year, partially offsetting a strong start in injectables.
We remain confident that these business lines
Guillermo Novo: of these business signs given their strategic progress and strong historic track record.
Guillermo Novo: The team is confident to achieve our fiscal 2025 goal of $20 million in higher sales.
Now let's move to our most impactful long-term strategy, innovation.
Guillermo Novo: This initiative is projected to generate $100 million in incremental sales by 2027 and significantly enhance our long-term growth trajectory.
Guillermo Novo: While growth and innovation takes time, we're targeting $10 million in incremental sales in fiscal 2025.
Guillermo Novo: As you heard last month, the team is incredibly enthusiastic about innovation.
Guillermo Novo: Our ambitious growth aspirations are supported by a robust 2025 platform launch plan, which includes seven new product introductions, up from three last year.
Guillermo Novo: We'll share more details in the upcoming months, and we'll likely host an innovation update in calendar year 2025 to bring this game-changing chemistry to life.
Guillermo Novo: In the meantime, our progress is in line with plans with three million dollars in incremental sales during the quarter
Transcription by CastingWords
Guillermo Novo: Now let's, please turn to slide 19. Now let's turn to our outlook for fiscal 2025.
Guillermo Novo: While we face a dynamic global landscape and uncertainty in China, Europe, and policy transitions, we are committed to adopting and delivering on our commitments.
Guillermo Novo: Of course, the coming months will provide more clarity on the impact of policy transition and other macroeconomic factors.
Several key factors are subforming this.
Guillermo Novo: While we saw pockets of weakness in the quarter, much of it was already contemplated in our full year guidance.
Alessandra Faccin: As Alessandra mentioned, the recent inventory adjustment by PharmaCustomer is largely a Q1 dynamic.
Alessandra Faccin: It's been mixed, but the overall raw material environment is expected to remain stable.
Alessandra Faccin: We're also watching the FX markets. The dollar has strengthened considerably over the past three months.
Alessandra Faccin: Our $500 million euro bond provides a partial hedge, but it still impacts.
or Issa.
Lastly, our strategic focus is threefold.
First selling the Avoca business this quarter.
Second, Accelerating the Restructuring and Productivity Initiatives.
to achieve at least $20 million of savings this year.
And lastly,
Alessandra Faccin: that we maintain momentum in our growth catalyst initiatives for 2025 and for building our trajectory for the future.
Alessandra Faccin: For the full fiscal year, we continue to expect sales in the range of $1.9 to $2.05 billion and adjusted EBITDA in the range of $430 million to $470 million.
Please turn to slide 21.
In closing, I want to restate the key
Alessandra Faccin: Our first quarter performance was generally in line with the expectations we shared at our strategy day.
Alessandra Faccin: The signing of the AVOCA divestiture agreement marks another milestone in Ashland's portfolio transformation.
Alessandra Faccin: Fiscal year 2025 is expected to be a choppy year for the market and we are focused.
Alessandra Faccin: on First Delivering and Accelerating our $90 Million in Cost Savings Initiatives.
Alessandra Faccin: Maintaining a balanced approach to managing our business including pricing and market share.
Globalizing for High-Quality Business Lines.
Alessandra Faccin: advancing the commercialization of new technology platforms, ensuring operational excellence across our manufacturing facilities, and maintaining disciplined capital allocation.
Alessandra Faccin: Our healthy balance sheet and strong profitability provide us with the flexibility to continue to invest in our long-term growth catalysts while proactively addressing the challenges of today.
Alessandra Faccin: We remain committed to our fiscal 2025 goals and remain confident in the long-term growth potential of our business.
Alessandra Faccin: I want to thank the Ashland team once again for their leadership and proactive ownership of their businesses in a dynamic environment.
Operator, let's go to Q&A.
Thank you.
Alessandra Faccin: 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.
Thank you for joining us.
Speaker Change: Our first question comes from Michael Sison of Wells Fargo. Your line is open.
Hey, good morning. I guess...
Speaker Change: Can you help us sort of think about the walk in EBITDA heading into 2Q, 3Q, 4Q? You do sort of need a big jump from the first quarter to get to your range of guidance.
Mike, thanks for the question. I hope you're doing well.
Speaker Change: So remember, Q1 is our weakest quarter, so we don't read too much into the Q1, positive or negative, and how it's going to set for the year. The real volumes, given seasonality and just the historic patterns, really start from March to September.
Speaker Change: So at this point in time, you know, that's usually when we expect a lot more of the pickup. I think you've been, you know, in your modeling, you can you can continue to
Speaker Change: Assume that that pattern is normalizing. I think a lot of what we're seeing now is a lot of the
Speaker Change: What we've seen in the last few years of COVID and, you know, stalking, destalking, all that things are behind us. So things are normalizing a lot more. And as we said in the call, I think we'll see, especially pharma and
Speaker Change: and personal care market demand normalized even in a recessionary environment they should behave more normal. We're hearing that from some of our customers.
Speaker Change: and in the codings it's going to be mixed by region, so we'll be talking more as we move forward, but really in terms of changing our outlook in models, frankly speaking, it's
Speaker Change: From now, February till May, I think we're starting to see the new administration taking positions. Things are going to play out, and I think that's when we're going to be updating our models.
Speaker Change: And then I think in Q1 you said organic volumes are down 1%. How do you think volumes...
Speaker Change: Sort of progress for the rest of the year. Did you?
Speaker Change: Will you see some positive organic volume growth or is the guidance sort of based on kind of this sladdish-ish type of cadence?
Speaker Change: We'll hear and I'll maybe ask each each GM to sort of comment a high level on on their their specific segments but but in general you know volumes we see them lavish to up that's what we're hearing from our customers it's not a market that's taking off in terms of volume but it is starting to pick up.
Speaker Change: depending on the business and and and the region so it's much more positive. I think in in in Q1
Speaker Change: It's our down season, but it's also the end of the fiscal year for a lot of our customers. So sometimes, depending on how the environment is, we see a lot more inventory actions that can move, shift around orders between Q1 and Q2. So we'll start seeing that. If we look at our outlook right now in terms of orders for the second quarter,
Dago Caceres: second quarter, I would say normal. There's nothing, no big surprises at this point in time. But Dago, do you want to comment, maybe just walk through each of the regions?
Dago Caceres: in terms of demand outlook? Sure, and thank you, Guillermo, and thank you for the question. So yes, so if I think about coatings and industrial in general, I think the story is pretty much by region. So what we're seeing in North America, we do expect
Dago Caceres: a sequential improvement in volumes in North America. So we do expect the second quarter to be better than the first quarter, the third quarter to be better than the second quarter. Of course, there is a lot of uncertainty in the market, the new administration, etc., but I think that will be the expectation.
Dago Caceres: The case of Europe, we have a very solid position, but we don't see a whole lot of activity going on in the market.
Dago Caceres: Especially new construction which drives according sales. So we say for for Europe our position is a little bit more flat
Dago Caceres: I would say, moving forward. China is, and we've been consistently mentioning China in the past,
Dago Caceres: China continues to be obviously an area that is challenging to us, that's included in our numbers. But we do not expect any recovery from China, I would say, this year.
Dago Caceres: from the right side, I would say Latin America. Latin America is actually doing better than expected.
Dago Caceres: And last, I would say Middle East, Africa, India. That's the area where we see volumes actually doing okay. Now the concern in that area is the excess capacity that we see from China that is making its way into other geographies.
Dago Caceres: We're monitoring that closely. But back to Guillermo's comment, I would say overall, this is how we are expecting, we were expecting the year to play out. It's kind of playing out as we anticipated a few months back. Okay. Thank you, Dago. And Jim, do you want to do the same walk for our...
Personal care.
Sure, thanks Guillermo and Dave.
Dago Caceres: Mike. So Mike, I think as we laid out at the strategy day,
Dago Caceres: As we laid out the strategy day last month, the algorithm for personal care, it's quite straightforward. Core additives, we're expecting to grow low to mid-single digits in the 3 to 4 percent.
Dago Caceres: and then our globalized businesses, biofunctional microbial protection in double digits.
Dago Caceres: and if we look at Q1, I would say Q1 came in line as we had anticipated. We saw mid-single digit volumes up across most geographies.
Dago Caceres: Europe is the one area that we highlighted that was not as robust as we had expected. And so that's something that we're monitoring now as we go into our second quarter of the recovery there.
Speaker Change: Thanks, and Alessandra, if you could come and focus on life science, which I guess is where everybody.
has the most questions.
Speaker Change: In Latin America and Asia, as we are leveraging our reputation with local and generic manufacturers, and we are seeing the growth momentum.
Speaker Change: You're seeing the growth momentum in the civil logics and injectables and tube coatings, as we mentioned. Europe, I mean, we
Speaker Change: We talked about being soft in the first quarter, and that is the expectation for the second quarter. And then outside of volume, FX will be a headwind, and prices are also expected to be down, but that was in our plan.
Okay.
Thank you. I hope that helps.
Thank you.
Speaker Change: Our next question comes from Christopher Parkinson of Wolf Research. Your line is open.
Speaker Change: Great, thank you so much. Just perhaps a little bit more of a longer term question, but when you take a step back, just giving everything you've divested in nutraceuticals, out of life sciences, the pricing dynamics, market share, everything that you've gone through over the last 18 months, at the end of the day,
Speaker Change: Over the next, let's say, two fiscal years, do you still believe the life sciences segment can run right around, you know, 30% plus even a margin? How should we think about that, you know, kind of that longer term line of sight into the margins of that segment? Thank you so much.
Speaker Change: One of them is the same for HEC, but of the two factors, it's a competitor coming back in that was out that caused some disruption. So that's normalized already. And it's a competitor that's been there for a long time. So, you know, I don't expect
you know, any difference from historic.
Speaker Change: I think what is creating the most noise for both the VPND business and our H-E-BIT-C business is the overcapacity in China.
Speaker Change: and, you know, impact on some of the export markets, especially those that are more price sensitive. And that's that's where we're seeing the impact.
But everything has stabilized, as Alessandra mentioned in her presentation.
Speaker Change: and volume expectations in our plan. I think the big area that we, you know, we're not assuming life is staying normal, it's a competitive environment. It's all these actions that we're taking on the productivity side.
Speaker Change: And it's focused on VPND. If you just apply, you know, $60 million is a lot.
Speaker Change: of value for for those businesses. So, so we think we can reinforce them either improve margins, or if there's any any changes in the market dynamics that we continue to have healthy margins.
Speaker Change: and all the innovations that we're working on, which impact all the businesses.
Speaker Change: and are, you know, opening up significant markets, albeit, to your question, it might be beyond the two-year time frame. I think all those will also be accretive to both margin and to cost because a lot of them use the same plants that we use today.
Speaker Change: Got it. And just a similar question on the personal care side. I mean, despite the fact that the market seems still pretty choppy based on some of your
primary customers, market commentary, you are doing pretty well in
Speaker Change: you know hair care and skin care on a revenue basis.
is this.
Speaker Change: Are these trends kind of an initial reflection of potentially, you know, let's say higher content or some of your new, newer initiatives in the R&D, you know, targets, you know, beginning to pay off? And should we expect that momentum in terms of market outperformance to continue? Just if you could just give a couple thoughts on that, that would also be very, very helpful. Thank you.
Speaker Change: On a high level, and I think what I'm going to say applies to all the businesses.
Speaker Change: We are completing our portfolio optimization now. The last step, assuming Avoca closes as planned, is the $30 million. Once we finish that, I think most of the developments have been in line with plan.
From that moment forward, it's really about executing our strategy.
Speaker Change: We need to get the momentum. What's going to change? It's the growth catalyst. The productivity to expand margins, strengthen our businesses, and these growth catalysts. At the current time, like most companies right now, if you don't have growth catalysts, you are riding the market.
Speaker Change: You know when things get better in the market we do better and when they get worse we get and we have to explain ourselves
Speaker Change: I think that's the part that we're trying to move. Now we are riding the market, market is improving.
Speaker Change: We want to make sure that we have discipline and I think this productivity.
Speaker Change: actions and other things we're doing as we reinforce and we're strengthening our business units, adding new talent.
Speaker Change: Upgrading manufacturing process capabilities, all these things strengthening our core so that we can ride the market better, we can get share, we can price, we can do the day-to-day activities.
Speaker Change: That's what's going to be the most impactful in the next two years, that's why we're putting a lot of emphasis on the $90 million. That is core core to what we need to do.
Speaker Change: What we're excited about is we do have clear catalysts. And that is what we're focusing on changing the game for us. You know, we're in the near term, you know, we're putting $100 million in the next three years. But really, the markets that we're going after are much bigger than that. And that's really where we start transforming, not just growth rates, but we really start transforming the mix
Speaker Change: Unknown Speaker Our portfolio, we're enriching it with newer technologies, with more differentiated technologies and with higher margin technology. So there's a clear roadmap for the next, you know,
Speaker Change: 1, 3, and 5, 10 years that we're playing to and, you know, game on. This is now a hundred percent of our attention at this point in time.
Thank you for the call.
Speaker Change: Our next question comes from John Roberts of Missouho. Your line is open.
Speaker Change: Thank you. One of the reasons you pulled forward maintenance was to have optionality if customers change their trade patterns. Have you seen any adjustments being planned by customers?
You know, we're not seeing changes to our expectations.
Speaker Change: You know, but we're seeing, you know, the stability that I think the stability that we're saying is
Speaker Change: sort of a testament to people being careful. As an example, you know, North America, Europe, although, you know, we're seeing
Lower priced
Imports from China.
We're hitting some markets. In other markets...
Speaker Change: You know, people are being much more stable in the decision-making that they're doing because, depending on trade, depending on a lot of things, it can put them in a difficult situation. We are a major supplier to all these players, and I think that stability is a signal of people being careful in terms of a choppy market and uncertain market.
Speaker Change: We have, we have taken our, besides the turnarounds, we have moved inventory into certain regions. We're looking at, and as part of the productivity, you know,
Speaker Change: Even if we don't change our footprint, can we make some of the products in more regions? Our cellulosics is a good example, just looking at our product mix. So we're doing a lot of things and we're working with our customers because they want to understand, you know, how we stand.
Speaker Change: I would say, as an example, I mean, we're critical to the pink guys, to the personal care, but pharma, you know, risk management is a critical part of our customers' DNA.
Speaker Change: and how they manage inventories is very critical. The actions, for example, they might be taking in Europe aren't necessarily what they're doing in other regions, because they're looking at region by region.
Speaker Change: Kevin, why don't you take that? Yeah, sure. Yeah, we saw primarily the Euro, but also Chinese Yuan and Brazilian Real depreciated in the quarter, but they depreciated throughout the quarter to the levels where they have more or less bounced around
to where they are right now.
Speaker Change: and really the comment is around if those currencies stay weak against the dollar at their current levels, it will be a headwind.
Speaker Change: for the remainder of the fiscal year. The way to think about that from a quantum perspective is probably in the neighborhood of seven to eight million dollars of EBITDA impact. If we see those three currencies in particular stay where they are pretty much right now.
Thank you.
Thank you.
Thank you for joining us.
Speaker Change: Our next question comes from David Begleiter of Deutsche Bank. Your line is open.
David Begleiter: Thank you. Good morning. Guillermo, looking at Q2, consensus EBITDA is roughly 125. Is that a good starting point, do you think, or could that be either a bit too high or maybe a bit too low?
Guillermo Novo: In the year. Just a reminder, as I said earlier, March, really March on is really where we start seeing the pickup.
Guillermo Novo: I think January is turning up to be a normal-ish month. We'll see, you know, February, you know, we don't, at this point in time, unless some...
Guillermo Novo: Some trade issue or something that starts changing quickly at this time. We don't see any changes. So We are we do expect to see a good pickup our plants. We've done all the turnarounds are running normally
Guillermo Novo: We're trying to run in some areas a little bit stronger to recover.
Guillermo Novo: the absorption impact of the turnarounds in the Q1. So, you know, those things will drive a little bit more strength. But we'll provide you more specific details as we do, you know, some of the follow-up calls that we'll share with everyone.
Guillermo Novo: Very good. And just on the Chinese export competition, Guillermo, which products in particular are you seeing that, and any reason would get better or worse going forward?
Guillermo Novo: Yeah, you know, I think we're the the HEC I think is as Dago mentioned is the bigger the bigger one And it's mostly in Middle East and Africa that we're seeing
Seeing that a little bit in India.
But I would say that's not the highest one.
Guillermo Novo: On VPND less so, you know, the players are known, you got to have much more, you know, regular
regulated.
Guillermo Novo: It's a more regulated environment, so there's a little bit more noise.
Guillermo Novo: I would say in the VPND, we're seeing more, I mean, we have our big market in pharma is the OSD, the pill markets, but we participate in some VPND markets.
Guillermo Novo: in membranes for blood or in disinfections, iodine-based PVPs. Those are lower margin areas and we see a little bit more. That's probably where we see the pressure, but in the core OSD, it's been a little bit more stable.
Thank you.
Thank you.
Guillermo Novo: Our next question comes from Jeff Sakakis of J.P. Morgan. Your line is open.
Thanks very much.
Guillermo Novo: Can you remind me what the turnaround costs were in the first quarter and what they were in each segment?
Guillermo Novo: So, so for now, you know, I put the comment and of the 5 million, I would say 50% of it was higher expenses.
Guillermo Novo: in the maintenance. You know, these turnarounds, you do them, you know, every two, three years, when you open up things, you got to, whatever you find. So we did find things in our, you know, utilities, the electrical systems, things that took a little bit of time and kept the entire plants.
Guillermo Novo: down a little bit longer. So that was about half of the 5 million. And the other half is just absorption because the plants were down a little bit longer than expected.
Guillermo Novo: And we're trying to push on, you know, as I said, on the cost reductions, accelerate things.
Guillermo Novo: because for the year anything extra will cover other costs and it still will be an incremental for the full year next year in the sense that the maintenance costs will go away.
You're on your call.
Speaker Change: So, you know, in terms of the $20 million in turnarounds, is there any segment that was affected disproportionately?
Speaker Change: Yes, it was mostly VPND, the two big plants in Texas City and Calvert City were the bigger hits. I think in the other plants, they ran pretty much, the turnaround impacted, but they didn't have as many extensions or anything like that. The other ones, I think, were positive.
Speaker Change: So it was really those two VPND plans. VPND and intermediates. And Jeff, those get split between life sciences and personal care primarily. There's some other impacts business unit wise, but the VPND impacts mostly go to life sciences and personal care.
and in intermediates and solvents.
Speaker Change: from what you can see, are prices remaining stable or are they a little bit under pressure? And is that a business where the trajectory of EBITDA for the remainder of the year is more flat or down as a base case?
The prices have been stable.
Speaker Change: Overall, I think, you know, most of the impact we saw was more in the Q3, Q4 for most of our businesses. Intermediates is not that different. I think it's more of a two things, volume,
Speaker Change: You know, the big areas, we're focusing a lot on U.S., Europe.
Speaker Change: So in the US, it's the, you know, NMP, it's the battery market, the semiconductor market, ag and pharma active ingredient production. So, you know, those, you know, as they pick up the batteries, probably that been the one that a lot of the projects are delayed.
Speaker Change: So the upswing is a little bit lower. I think the bigger pressure we've seen is in Europe where again, more of the Asia, China exports.
Speaker Change: are impacting. We are hearing of some of the European players starting anti-dumping and doing some other actions. So we're tracking that to see how those
Speaker Change: Those events change. So where we but where we're going to see more of noise that we're trying is one get our costs
Speaker Change: You know, we're making a lot of the changes that we're making in the productivity, we're calling it VP&D, but we'll also impact intermediate so that we can get, we can get much more competitive in those areas. And two is the mix.
Speaker Change: that, you know, we can do some spot sales here and there to move product, you know, the margins aren't great. So that could create a little bit of noise, but overall, most of the business is pretty stable at this point in time.
And lastly,
Speaker Change: You've got various stranded costs, and you've got a cost-cutting program.
You know, as far as you can see for 2025,
Speaker Change: Are the cost cuts larger than the stranded costs or the stranded costs larger than the cost cuts?
Speaker Change: And by how much? So, so we were trying to offset is stranded costs and lost. I mean, we're, we have neutralized just to be very clear, the nutraceutical sales, we've neutralized the EPS, the earnings and EPS impact.
the EPS impact on that sale.
We want to offset the EBITDA.
Speaker Change: So, the biggest issue of the $30 million is not stranded costs, it's gross profit lost with the sale.
So.
Speaker Change: So, you know, we want our cake and eat it too. We want to make sure that this action is EBITDA neutral.
So the $30 million offset.
Speaker Change: Around $20 million, we had said that business was about $100 million, 20% profit.
Speaker Change: that we want to offset that and the rest is is a stranded cost. So we're in, you know, as we we said in our prepared remarks and in the slides, we're well underway to get to the 30 million, I think we'll probably be able to
Speaker Change: to do a little bit more than that. But the most important thing for us is how can we accelerate it to hit our target. We split it 15 this year, 15 next year. Obviously to hit the run rate we want to make sure that by mid-year we get most of it done.
Great. Thank you very much.
Thank you.
Thank you.
Speaker Change: Our next question comes from Mike Harrison of Seaport Research Partners. Your line is open.
Speaker Change: Hi, good morning. I was wondering if you could go into a little bit more detail about the trade policy impact that you are
William Whitaker, Unknown Executive, Dago Ceres, Guillermo Novo, James Minicucci
Speaker Change: that you could see from trade policies on trade flows and other things that you might be watching.
Speaker Change: I think the bigger impact for us is trade flows. I mean we buy some raw materials in China but it's not a significant part of our portfolio so that
is not going to be the biggest driver.
So for us, it's really more how does that impact
Speaker Change: you know, supply, their duties are putting in, if you got, you know, issues in shipping from certain production.
Speaker Change: countries to customers. That's really where we're looking at. So if you look at our portfolio right now, obviously HEC is the most global, so we have in every region, so that gives us a lot of flexibility.
Speaker Change: U.S. already has duties, you know, are they gonna increase them or not? We'll monitor that, obviously. Europe does not, and I think that's where we're seeing some movement.
Speaker Change: from a lot of local producers on trying to get, you know, some level of protection given the overcapacity.
and the pricing that they're seeing from China.
Speaker Change: So I think those are the issues that will probably change things around. We make things in the U.S., we're selling them in China, we're looking at our footprint on what things we can change so that we have an optimal sourcing depending on the scenario that evolves. So it's an odd scenario planning.
Speaker Change: I guess just following up on that, we've heard from some companies that there have been some increased December purchasing activity. Customers may be trying to get out ahead of potential tariff impacts.
Speaker Change: Did you see any demand during your first quarter here that would suggest that you were seeing some pre-buying volumes?
Speaker Change: Not really. I don't think we can make that statement, and at least for our portfolio, you know,
Thank you.
Speaker Change: And on the contrary, we saw a little bit of inventory controls in Europe.
But the rest has been more normal.
Speaker Change: All right, and then last one for me is just as it relates to winter weather, I think the last time we had a meaningful freeze in the south, you guys had some plant disruptions. Any issues with some of the snow or maybe more adverse weather this winter impacting your plants so far in the second quarter?
Speaker Change: We did Texas in the Houston plant, Texas City was down two days, just during the freeze, boiler, so we had a little bit of impact, but we're planning to offset that just, you know, with production we have.
Speaker Change: Planning Capacity, where this is one of the areas that we're making a lot of changes anyway. In terms of production, we're shifting, you know, in our productivity, we're shifting a lot of our intermediate production to Calvert City.
Speaker Change: to maximize our loading of our plants, improve our costs. So we're doing a lot of other changes, so it had an impact, not as big, but we expect to recover. But that's it. The rest was fine.
All right, thanks very much.
Thanks, Mike.
Thank you.
Speaker Change: Our next question comes from John McNulty of BMO Capital Markets. Your line is open.
Good morning, Guillermo. This is Bhavesh Lodhia for John.
Bhavesh Lodhia: In your press release, you noted pricing impacts as moderating. How did pricing move sequentially in the first quarter versus the fourth? I'm curious if you expect to see positive pricing power this year, or what are you building into the guide?
Bhavesh Lodhia: No, you know, in our outlooks, we captured most of the pricing is rollover, as we said, the
Bhavesh Lodhia: The contracts came in per our expectations. So I think we're not we're not forecasting an improvement.
Bhavesh Lodhia: in pricing. And, you know, we've already captured a lot of the erosion. So there is a year on year, that's probably our biggest year on year headwind. But that factored into our plans.
Speaker Change: And then in life sciences, pharma, apologies if I missed it, did you quantify the EBITDA impact from your customer inventory control actions? And would you say all of those actions are behind us at this point?
Speaker Change: Most of it, the Q1 is where we saw most of it. I mean, there could be a little bit of stragglers or whatever in January, February, but the majority is done. You know, I think of the gap
Speaker Change: you know, pricing, you know, year on year comparison, pricing, you know, to be simplistic on it, you know, a third pricing, a third volume,
Speaker Change: is, you know, weaker demand in Europe and and that inventory. And another third is just business issues like I was saying, you know, share, share shifting or actions in some of these other pharma non.
Speaker Change: Non-OSD markets like in the iodine, the disinfections, the membranes, those are a little bit more competitive markets that we see some of that change. So you know simplistically a third, a third, a third.
Speaker Change: But we can't, it's hard to say what softer market, what was inventory control in in terms of specific customers. We're just going by what they're telling us that they are controlling inventory, they're bringing it down. And when they expect to start increasing the order levels moving forward, which is in a lot of it is in the Q2.
and Dago Caceres.
Got it, thanks.
Thank you.
Speaker Change: Our next question comes from Josh Spector of UBS. Your line is open.
Josh Spector: Yeah, hi, good morning. First, I wanted to clarify just what you're seeing in terms of orders. I think in December, when you gave the update and said that the first quarter would be slightly weaker, you hedged that a bit and said you thought order rates were looking more positive into the second quarter for you guys.
Josh Spector: Now you're kind of talking, we're not sure, we need to wait until March.
Speaker Change: Is that the right interpretation that that visibility has declined or is that not the right read on what you're trying to say?
Speaker Change: That's not the right read of what I'm trying to say. What I was saying is March to September are when the high high volumes are for our our business. So that's really what I'm looking for for the full year outlook is what's happening March through September.
Speaker Change: And I think what we said, we'll have visibility between now and May.
Speaker Change: You know, a lot of these policy things that are just starting, you know, being lobbed over the fence from one side to the other, how and what actually is going to happen, we'll need to see how that plays out before we change that part of the outlook.
Speaker Change: For Q2, which is mostly January and February, we haven't seen any major changes.
and our outlook.
Speaker Change: Okay, and just thinking about the full year, and I guess it more comes down to the back half, is a lot of conversations about share gains.
Speaker Change: I mean, that hasn't changed from last quarter, but I guess now, I mean, that's one to two quarters out, I think, particularly in pharma, and we think about your products as more specified into applications. So
Speaker Change: Is that something you have visibility to? Do you know you've won share in Latin America and Asia with local, regional, generic customers? Or is that still a toss-up that we're not uncertain of?
Okay, Alessandra, we want to take this one.
Speaker Change: First of all, as Guillermo mentioned, the contract negotiations have been mostly finalized and that was in line with our expectations.
Speaker Change: So we are seeing that, and of course, as that happens, I mean, customers have to...
Speaker Change: to work on the inventory of the existing product and then to ramp up with the new means. But that's happening, and also the share gains in cellulosics, we see that happening across the globe.
Okay, thank you.
Speaker Change: Thank you. I'm showing no further questions at this time. I'd like to turn it back to Guillermo Novo for closing remarks.
Speaker Change: Well, I want to thank everyone for participation. You know, I think the big headlines for everybody to take away is no big new news. You know, things are playing out as we expected. You know, the only issue we've seen is...
Speaker Change: A little bit of more softness in Q1 in Europe. Other than that, everything is in line with our plans and expectations. As we said, number two, the next few months we'll start seeing what, if any, impact trade or macroeconomic actions.
Speaker Change: have on demand and we'll update. I think the next call will be an important one if there's any changes to update. But the big message is look we are now behind in our finalizing our
Speaker Change: portfolio optimization. Our strategy, I hope, is clear. Our priorities are very clear to everybody. This is really now about executing in a difficult, uncertain market. And I think we're doing that, the teams are doing that well. But more importantly, positioning ourselves for the future.
and I think we're very excited. We have growth catalysts.
Speaker Change: Margin Expansion Catalysts that are significant for a company like Ashland, and we're totally committed and driving them for the coming years. So thank you for your attention and participation, and we look forward to talking to you in the coming weeks.
Speaker Change: This concludes today's conference call. Thank you for participating and you may now disconnect.