Q1 2026 Ashland Inc Earnings Call

February 3, 2026

Operator: At this time, all participants are in 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 one on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. I would now like to hand the conference over to Sandy Klugman, Director of Investor Relations. You may begin.

Speaker #1: At this time, all participants are on 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.

Speaker #2: Please note that we will be referencing slides during today's call. We encourage you to follow along with the webcast materials available at ashland.com/investorrelations. As a reminder, today's presentation continues forward-looking statements regarding our fiscal 2026 outlook and other matters, as detailed on slide 2 and in our Form 10Q.

Speaker #1: You would then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I will now like to hand the conference over to Sandy Klugman, Director of Investor Relations.

Speaker #1: You may begin.

Speaker #2: Thank you. Hello, everyone. Welcome to ASHLAND's first quarter fiscal year 2026 earnings conference call and webcast. My name is Sandy Klugman, and I'm ASHLAND's Director of Investor Relations.

Sandy Klugman: Thank you. Hello, everyone. Welcome to Ashland's first quarter fiscal year 2026 earnings conference call and webcast. My name is Sandy Klugman, and I'm Ashland's Director of Investor Relations. Joining me on the call today are Guillermo Novo, Chair and CEO, William Whittaker, CFO, as well as our business unit leaders, Alessandra Faccin, Life Sciences and Intermediates, Jim Minicucci, Personal Care, and Dago Cáceres, Specialty Additives. Please note that we will be referencing slides during today's call. We encourage you to follow along with the webcast materials available at ashland.com under Investor Relations. As a reminder, today's presentation contains forward-looking statements regarding our fiscal 2026 outlook and other matters, as detailed on Slide 2 and in our Form 10-Q. These statements are subject to risks and uncertainties that could cause future results to differ materially from today's projections.

Q1 2026 Ashland Inc Earnings Call

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Q1 2026 Ashland Inc Earnings Call

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Tuesday, February 3rd, 2026 at 2:00 PM

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Sandy Klugman: Thank you. Hello, everyone. Welcome to Ashland's Q1 fiscal year 2026 earnings conference call and webcast. My name is Sandy Klugman, and I'm Ashland's Director of Investor Relations. Joining me on the call today are Guillermo Novo, Chair and CEO, William Whitaker, CFO, as well as our business unit leaders, Alessandra Faccin, Life Sciences and Intermediates, Jim Minicucci, Personal Care, and Dago Caceres, Specialty Additives. Please note that we will be referencing slides during today's call. We encourage you to follow along with the webcast materials available at ashland.com under Investor Relations. As a reminder, today's presentation contains forward-looking statements regarding our fiscal 2026 outlook and other matters, as detailed on slide 2 and in our Form 10-Q. These statements are subject to risks and uncertainties that could cause future results to differ materially from today's projections.

Guillermo Novo: Thanks, Sandy, and welcome to everyone joining us. For today, I'm happy to join this call from Shanghai, China. I begin with our Q1 highlights and how we're advancing our strategic priorities. Later in the call, I'll return to share some of the latest innovation developments, where we continue to see tremendous momentum and opportunities for differentiation. William will review our financial results, operational execution, and outlook, and our business unit leaders will provide additional insight into performance across their segments and markets. Please turn to slide 5. Let's begin with a review of the key business drivers for Q1. We delivered solid results while navigating ongoing demand softness in coatings and construction, supported by strong execution and disciplined cost actions. Life Sciences delivered healthy growth, supported by resilient pharma demand and momentum across our innovate and globalized pillars.

Guillermo Novo: ... Thanks, Sandy, and welcome to everyone joining us. For today, I'm happy to join this call from Shanghai, China. I begin with our Q1 highlights and how we're advancing our strategic priorities. Later in the call, I'll return to share some of the latest innovation developments, where we continue to see tremendous momentum and opportunities for differentiation. William will review our financial results, operational execution, and outlook, and our business unit leaders will provide additional insight into performance across their segments and markets. Please turn to slide five. Let's begin with a review of the key business drivers for Q1. We delivered solid results while navigating ongoing demand softness in coatings and constructions, supported by strong execution and disciplined cost actions. Life science delivered healthy growth, supported by resilient pharma demand and momentum across our innovate and globalized pillars.

Guillermo Novo: Injectables, tablet coatings, and high-value cellulosic excipients all contributed to year-over-year growth. Innovation continued to strengthen performance, with contribution from low-nitrosamine cellulosics, high-purity excipients, and several new product introductions. Personal care delivered stable performance with underlying demand broadly steady. Biofunctional actives grew double digits, and microbial protection continued to gain share as our globalized initiatives supported high-value applications. Softer volumes in core hair and skin care primarily reflected unplanned and isolated customer plant outages. Specialty additives continued to face muted demand, with coatings and construction driving most of the year-over-year decline. Coatings weakness was most pronounced in China and select export markets, while construction softness reflected broader market conditions. Despite lower volumes, cost actions and HTC network benefits drove meaningful margin expansion. Intermediates market conditions were modestly softer, reflecting trough-like dynamics across BDO and its derivatives, which pressured captive BDO transfer pricing.

Guillermo Novo: Injectables, tablet coatings, and high-value cellulosic excipients all contributed to year-over-year growth. Innovation continued to strengthen performance, with contribution from low-nitrate cellulosics, high-purity excipients, and several new product introductions. Personal care delivered stable performance with underlying demand broadly steady. Biofunctional actives grew double digits, and microbial protection continued to gain share as our globalized initiatives supported high-value applications. Softer volumes in core hair care and skin care primarily reflected unplanned and isolated customer plant outages. Specialty additives continued to face muted demand, with coatings and construction driving most of the year-over-year decline. Coatings weakness was most pronounced in China and select export markets, while construction softness reflected broader market conditions. Despite lower volumes, cost actions and HTC network benefits drove meaningful margin expansion. Intermediates market conditions were modestly softer, reflecting trough-like dynamics across BDO and its derivatives, which pressured captive BDO transfer pricing.

Injectables, tablet coatings, and high-value cellulosic excipients all contributed to year-over-year growth. Innovation continued to strengthen performance, with contribution from low-nitrate cellulosics, high-purity excipients, and several new product introductions. Personal care delivered stable performance with underlying demand broadly steady. Biofunctional actives grew double digits, and microbial protection continued to gain share as our globalized initiatives supported high-value applications. Softer volumes in core hair care and skin care primarily reflected unplanned and isolated customer plant outages. Specialty additives continued to face muted demand, with coatings and construction driving most of the year-over-year decline. Coatings weakness was most pronounced in China and select export markets, while construction softness reflected broader market conditions. Despite lower volumes, cost actions and HTC network benefits drove meaningful margin expansion. Intermediates market conditions were modestly softer, reflecting trough-like dynamics across BDO and its derivatives, which pressured captive BDO transfer pricing.

Guillermo Novo: The merchant business was stable, with steady volume and modest pricing pressure resulting in flat sales. Operationally, the team continued to manage through the equipment replacement in Calvert City while delivering solid Free Cash Flow. Although this issue impacted costs and pressured margins across the VP&D chain, customer supply remained uninterrupted. The impact we expected to be contained within Q1 will now extend into Q2, as commissioning of the new unit revealed additional equipment issues that are delaying the startup. We anticipate completing the necessary fixes and bringing the unit online later in the quarter. Although outside Q1, recent weather-related events also have impacted our operations in the Mid-Atlantic. Customer supply remained uninterrupted, but we expect incremental costs, which William will address later in the call, as part of our outlook for the year.

Guillermo Novo: The merchant business was stable, with steady volume and modest pricing pressure resulting in flat sales. Operationally, the team continued to manage through the equipment replacement in Calvert City while delivering solid free cash flow. Although this issue impacted costs and pressured margins across the VP&E chain, customer supply remained uninterrupted. The impact we expected to be contained within the first quarter will now extend into the second quarter, as commissioning of the new unit revealed additional equipment issues that are delaying the startup. We anticipate completing the necessary fixes and bringing the unit online later in the quarter. Although outside Q1, recent weather-related events also have impacted our operations in the Mid-Atlantic. Customer supply remained uninterrupted, but we expect incremental costs, which William will address later in the call, as part of our outlook for the year.

The merchant business was stable, with steady volume and modest pricing pressure resulting in flat sales. Operationally, the team continued to manage through the equipment replacement in Calvert City while delivering solid free cash flow. Although this issue impacted costs and pressured margins across the VP&E chain, customer supply remained uninterrupted. The impact we expected to be contained within the first quarter will now extend into the second quarter, as commissioning of the new unit revealed additional equipment issues that are delaying the startup. We anticipate completing the necessary fixes and bringing the unit online later in the quarter. Although outside Q1, recent weather-related events also have impacted our operations in the Mid-Atlantic. Customer supply remained uninterrupted, but we expect incremental costs, which William will address later in the call, as part of our outlook for the year.

William Whitaker: Thank you, Guillermo. Please turn to slide 6. Our first quarter performance reflects increasing consistency of our operating model. Across the portfolio, the team executed well, advanced our initiatives, and managed through operational impacts while maintaining solid cost discipline. The portfolio and manufacturing optimization actions we took last year are supporting margins through improved mix, lower costs, and a more efficient footprint. Avoca was included in our Q1 results last year, but as we move into Q2, we fully lapped our portfolio actions, providing us with a clear performance baseline going forward. We've also strengthened our working capital performance and delivered strong operating cash flow, a focus area for the team. Altogether, the quarter reflects a strengthening foundation with early signs of improving momentum, indicating that a growth inflection is building as fiscal 2026 unfolds. Please turn to slide 7.

William Whitaker: Thank you, Guillermo. Please turn to slide 6. Our Q1 performance reflects increasing consistency of our operating model. Across the portfolio, the team executed well, advanced our initiatives, and managed through operational impacts while maintaining solid cost discipline. The portfolio and manufacturing optimization actions we took last year are supporting margins through improved mix, lower costs, and a more efficient footprint. Avoca was included in our Q1 results last year, but as we move into Q2, we fully lapped our portfolio actions, providing us with a clear performance baseline going forward. We've also strengthened our working capital performance and delivered strong operating cash flow, a focus area for the team. Altogether, the quarter reflects a strengthening foundation with early signs of improving momentum, indicating that a growth inflection is building as fiscal 2026 unfolds. Please turn to slide 7.

William Whitaker: First, the consistency of our consumer-facing businesses, now roughly 85% of our portfolio, continues to provide meaningful stability and resilience. Second, our innovation and globalized initiatives are gaining strong traction with sustained momentum in our highest value applications. Third, last year's structural actions are fully embedded, improving margin durability and positioning us for stronger leverage as demand recovers. And finally, even in segments experiencing more challenging conditions, our teams remain disciplined and focused on core fundamentals, ensuring we stay well positioned as industry conditions evolve. Overall, the quarter reflects resilient performance as our streamlined portfolio, strengthened cost structure, and disciplined execution continue to support our long-term strategy. With innovation accelerating, globalized expanding, and productivity initiatives progressing, we are well positioned to build momentum throughout the year. And now on to the financial details. Please turn to slide 9.

William Whitaker: First, the consistency of our consumer-facing businesses, now roughly 85% of our portfolio, continues to provide meaningful stability and resilience. Second, our innovation and globalization initiatives are gaining strong traction with sustained momentum in our highest value applications. Third, last year's structural actions are fully embedded, improving margin durability and positioning us for stronger leverage as demand recovers. And finally, even in segments experiencing more challenging conditions, our teams remain disciplined and focused on core fundamentals, ensuring we stay well positioned as industry conditions evolve. Overall, the quarter reflects resilient performance as our streamlined portfolio, strengthened cost structure, and disciplined execution continue to support our long-term strategy. With innovation accelerating, globalization expanding, and productivity initiatives progressing, we are well positioned to build momentum throughout the year. And now on to the financial details. Please turn to slide 9.

First, the consistency of our consumer-facing businesses, now roughly 85% of our portfolio, continues to provide meaningful stability and resilience. Second, our innovation and globalization initiatives are gaining strong traction with sustained momentum in our highest value applications. Third, last year's structural actions are fully embedded, improving margin durability and positioning us for stronger leverage as demand recovers. And finally, even in segments experiencing more challenging conditions, our teams remain disciplined and focused on core fundamentals, ensuring we stay well positioned as industry conditions evolve. Overall, the quarter reflects resilient performance as our streamlined portfolio, strengthened cost structure, and disciplined execution continue to support our long-term strategy. With innovation accelerating, globalization expanding, and productivity initiatives progressing, we are well positioned to build momentum throughout the year. And now on to the financial details. Please turn to slide 9.

William Whitaker: Sales for the quarter were $386 million, down 5% versus last year. The previously announced Avoca divestiture accounted for roughly $10 million, or about 2% of the decline. Excluding this portfolio action, sales were down 3%, reflecting a mixed demand environment. Life sciences continued to grow, supported by steady demand and ongoing innovation momentum. Personal care remained stable overall and would have grown low single digits, excluding the on-plan customer outages. Specialty additives softened, reflecting broader demand conditions and ongoing competitive intensity. Pricing declined 2%, generally across segments, primarily reflecting carrier adjustments from the prior year. FX contributed a favorable $9 million, or 2%, to sales versus prior year. Moving on to profitability. Adjusted EBITDA was $58 million, down 5% year over year, including a $1 million impact from the Avoca divestiture.

William Whitaker: Sales for the quarter were $386 million, down 5% versus last year. The previously announced Avoca divestiture accounted for roughly $10 million, or about 2% of the decline. Excluding this portfolio action, sales were down 3%, reflecting a mixed demand environment. Life sciences continued to grow, supported by steady demand and ongoing innovation momentum. Personal care remained stable overall and would have grown low single digits, excluding the unplanned customer outages. Specialty additives softened, reflecting broader demand conditions and ongoing competitive intensity. Pricing declined 2%, generally across segments, primarily reflecting carryover adjustments from the prior year. FX contributed a favorable $9 million or 2% to sales versus prior year. Moving on to profitability. Adjusted EBITDA was $58 million, down 5% year-over-year, including a $1 million impact from the Avoca divestiture.

Sales for the quarter were $386 million, down 5% versus last year. The previously announced Avoca divestiture accounted for roughly $10 million, or about 2% of the decline. Excluding this portfolio action, sales were down 3%, reflecting a mixed demand environment. Life sciences continued to grow, supported by steady demand and ongoing innovation momentum. Personal care remained stable overall and would have grown low single digits, excluding the unplanned customer outages. Specialty additives softened, reflecting broader demand conditions and ongoing competitive intensity. Pricing declined 2%, generally across segments, primarily reflecting carryover adjustments from the prior year. FX contributed a favorable $9 million or 2% to sales versus prior year. Moving on to profitability. Adjusted EBITDA was $58 million, down 5% year-over-year, including a $1 million impact from the Avoca divestiture.

William Whitaker: Excluding that action, adjusted EBITDA declined 3%, reflecting lower volumes and modest pricing pressure, partially offset by favorable mix, lower SAR, and FX benefits. Importantly, the quarter included the anticipated $10 million adjusted EBITDA impact from the Calvert City outage. As Guillermo Novo noted, we had expected the full effect to be recognized in Q1, but some impact will now carry into Q2, which we'll address in our guidance. Raw material costs remain generally stable to favorable, and we continue to benefit from our cost actions across the portfolio. Adjusted EBITDA margins held steady at 15%, with over 250 basis points of compression stemming from the Calvert City outage. Adjusted operating income grew 27% versus prior year, reflecting the stability of the underlying business, as well as reduced depreciation and amortization from our optimization actions.

William Whitaker: Excluding that action, adjusted EBITDA declined 3%, reflecting lower volumes and modest pricing pressure, partially offset by favorable mix, lower SAR, and FX benefits. Importantly, the quarter included the anticipated $10 million adjusted EBITDA impact from the Calvert City outage. As Guillermo noted, we had expected the full effect to be recognized in Q1, but some impact will now carry into Q2, which we'll address in our guidance. Raw material costs remain generally stable to favorable, and we continue to benefit from our cost actions across the portfolio. Adjusted EBITDA margins held steady at 15%, with over 250 basis points of compression stemming from the Calvert City outage. Adjusted operating income grew 27% versus prior year, reflecting the stability of the underlying business, as well as reduced depreciation and amortization from our optimization actions.

Excluding that action, adjusted EBITDA declined 3%, reflecting lower volumes and modest pricing pressure, partially offset by favorable mix, lower SAR, and FX benefits. Importantly, the quarter included the anticipated $10 million adjusted EBITDA impact from the Calvert City outage. As Guillermo noted, we had expected the full effect to be recognized in Q1, but some impact will now carry into Q2, which we'll address in our guidance. Raw material costs remain generally stable to favorable, and we continue to benefit from our cost actions across the portfolio. Adjusted EBITDA margins held steady at 15%, with over 250 basis points of compression stemming from the Calvert City outage. Adjusted operating income grew 27% versus prior year, reflecting the stability of the underlying business, as well as reduced depreciation and amortization from our optimization actions.

William Whitaker: Adjusted EPS, excluding intangible amortization, was $0.26, down 7% from the prior year, reflecting lower income. We delivered a strong quarter of cash generation, with $125 million of cash provided by operating activities and $26 million of ongoing free cash flow, which excludes the previously disclosed tax refund. Lower working capital and CapEx drove healthy free cash flow conversion of nearly 50% in our seasonally low quarter. We ended the quarter with total liquidity of approximately $900 million, a strong position as we move into the balance of the fiscal year. Net debt was $1.1 billion, and our net leverage remains solid at 2.7 times, providing flexibility to invest in strategic priorities while maintaining disciplined capital allocation. Now, let's turn it to our business unit leaders for a closer look at segment performance. Alessandra, over to you.

William Whitaker: Adjusted EPS, excluding intangible amortization, was $0.26, down 7% from the prior year, reflecting lower income. We delivered a strong quarter of cash generation with $125 million of cash provided by operating activities and $26 million of ongoing free cash flow, which excludes the previously disclosed tax refund. Lower working capital and CapEx drove healthy free cash flow conversion of nearly 50% in our seasonally low quarter. We ended the quarter with total liquidity of approximately $900 million, a strong position as we move into the balance of the fiscal year. Net debt was $1.1 billion, and our net leverage remains solid at 2.7 times, providing flexibility to invest in strategic priorities while maintaining disciplined capital allocation. Now, let's turn it to our business unit leaders for a closer look at segment performance. Alessandra, over to you.

Adjusted EPS, excluding intangible amortization, was $0.26, down 7% from the prior year, reflecting lower income. We delivered a strong quarter of cash generation with $125 million of cash provided by operating activities and $26 million of ongoing free cash flow, which excludes the previously disclosed tax refund. Lower working capital and CapEx drove healthy free cash flow conversion of nearly 50% in our seasonally low quarter. We ended the quarter with total liquidity of approximately $900 million, a strong position as we move into the balance of the fiscal year. Net debt was $1.1 billion, and our net leverage remains solid at 2.7 times, providing flexibility to invest in strategic priorities while maintaining disciplined capital allocation. Now, let's turn it to our business unit leaders for a closer look at segment performance. Alessandra, over to you.

Alessandra Faccin: Thank you, William. Good morning, everyone. Please turn to slide 10 for life sciences. Life sciences sales were $139 million, up 4% from the prior year, driven by resilient pharma demand and continued strength across our innovate and globalized pillars. Pharma delivered low single-digit year-over-year growth, making a third consecutive quarter of volume gains. Demand remains strong for our high-value cellulosic excipient, supported by broad customer engagement across regions. Injectables delivered another quarter of strong above-market growth, with continued pipeline expansion and accelerating uptake of recently launched products, reinforcing our confidence in sustainable growth within this high-margin segment. Tablet coatings delivered double-digit year-over-year growth across all regions, with particularly strong momentum in Asia Pacific. In nutrition, recent wins and ongoing commercial activity continue to support improving traction as we move through fiscal 2026.

Alessandra Faccin: Thank you, William. Good morning, everyone. Please turn to slide 10 for life sciences. Life sciences sales were $139 million, up 4% from the prior year, driven by resilient pharma demand and continued strength across our innovate and globalized pillars. Pharma delivered low single-digit year-over-year growth, making its third consecutive quarter of volume gains. Demand remains strong for our high-value cellulosic excipient, supported by broad customer engagement across regions. Injectables delivered another quarter of strong above-market growth, with continued pipeline expansion and accelerating uptake of recently launched products, reinforcing our confidence in sustainable growth within this high-margin segment. Tablet coatings delivered double-digit year-over-year growth across all regions, with particularly strong momentum in Asia Pacific. In nutrition, recent wins and ongoing commercial activity continue to support improving traction as we move through fiscal 2026.

Alessandra Faccin: Pricing was slightly lower year-over-year, in line with expectations and largely reflecting carryover impacts from prior year adjustments, but remained stable sequentially. Foreign exchange provided a $3 million benefit to sales. Turning to innovation, we continue to advance Ashland's leadership in pharmaceutical ingredients. We saw meaningful contributions from our low-nitrite offerings, including the recently launched Plasdone low-nitrite and Benecel low-nitrite grades. In injectables, we launched our new high-purity Vialose sucrose stabilizer for biologics in October. Early customer engagement has been encouraging, with positive technical feedback and a growing commercial pipeline. In addition, multiple new injectable launches are planned for fiscal 2026, each supported by strong pre-launch customer engagement and rising market pool. These advancements reinforce our commitment to delivering high-quality solutions that meet evolving customer needs. Turning to profitability. Adjusted EBITDA was $31 million, up 11% year-over-year.

Alessandra Faccin: Pricing was slightly lower year-over-year, in line with expectations and largely reflecting carryover impacts from prior year adjustments, but remained stable sequentially. Foreign exchange provided a $3 million benefit to sales. Turning to innovation, we continue to advance Ashland's leadership in pharmaceutical ingredients. We saw meaningful contributions from our low-nitrite offerings, including the recently launched Plason low nitrite and Benecel low nitrite grades. In injectables, we launched our new high-purity Violo sucrose stabilizer for biologics in October. Early customer engagement has been encouraging, with positive technical feedback and a growing commercial pipeline. In addition, multiple new injectable launches are planned for fiscal 2026, each supported by strong pre-launch customer engagement and rising market pool. These advancements reinforce our commitment to delivering high-quality solutions that meet evolving customer needs. Turning to profitability, adjusted EBITDA was $31 million, up 11% year-over-year.

Pricing was slightly lower year-over-year, in line with expectations and largely reflecting carryover impacts from prior year adjustments, but remained stable sequentially. Foreign exchange provided a $3 million benefit to sales. Turning to innovation, we continue to advance Ashland's leadership in pharmaceutical ingredients. We saw meaningful contributions from our low-nitrite offerings, including the recently launched Plason low nitrite and Benecel low nitrite grades. In injectables, we launched our new high-purity Violo sucrose stabilizer for biologics in October. Early customer engagement has been encouraging, with positive technical feedback and a growing commercial pipeline. In addition, multiple new injectable launches are planned for fiscal 2026, each supported by strong pre-launch customer engagement and rising market pool. These advancements reinforce our commitment to delivering high-quality solutions that meet evolving customer needs. Turning to profitability, adjusted EBITDA was $31 million, up 11% year-over-year.

Alessandra Faccin: Margins expanded to 22.3%, 140 basis points improvement, including a $4 million impact from the Calvert City outage during the quarter. The year-over-year increase was driven by favorable mix, resilient pharma demand, and lower SAR as restructuring benefits continued to flow through, partially offset by modest pricing pressure. Foreign exchange provided an additional $2 million benefit to EBITDA. Life Sciences continues to demonstrate strong operational discipline, resilient end market demand, and consistent progress across both our innovate and globalize agendas. Please turn to slide 11 for intermediates. Intermediates performance remained challenged, consistent with what we expected entering the fiscal year. Sales were $31 million, down 6% versus last year. Merchant sales were $22 million, with steady volumes and modest pricing pressure, resulting in flat year-over-year performance.

Alessandra Faccin: Margins expanded to 22.3%, a 140 basis points improvement, including a $4 million impact from the Calvert City outage during the quarter. The year-over-year increase was driven by favorable mix, resilient pharma demand, and lower SAR, as restructuring benefits continued to flow through, partially offset by modest pricing pressure. Foreign exchange provided an additional $2 million benefit to EBITDA. Life sciences continues to demonstrate strong operational discipline, resilient end market demand, and consistent progress across both our innovate and globalized agendas. Please turn to slide 11 for intermediates. Intermediates performance remained challenged, consistent with what we expected entering the fiscal year. Sales were $31 million, down 6% versus last year. Merchant sales were $22 million, with steady volumes and modest pricing pressure, resulting in flat year-over-year performance.

Margins expanded to 22.3%, a 140 basis points improvement, including a $4 million impact from the Calvert City outage during the quarter. The year-over-year increase was driven by favorable mix, resilient pharma demand, and lower SAR, as restructuring benefits continued to flow through, partially offset by modest pricing pressure. Foreign exchange provided an additional $2 million benefit to EBITDA. Life sciences continues to demonstrate strong operational discipline, resilient end market demand, and consistent progress across both our innovate and globalized agendas. Please turn to slide 11 for intermediates. Intermediates performance remained challenged, consistent with what we expected entering the fiscal year. Sales were $31 million, down 6% versus last year. Merchant sales were $22 million, with steady volumes and modest pricing pressure, resulting in flat year-over-year performance.

Jim Minicucci: Thank you, Alessandra. I'll now highlight our Personal Care results. Please turn to slide 12 for Personal Care. Personal Care delivered resilient results, underscoring the stability of the portfolio despite mixed market conditions. Sales were $123 million, down 8% year-over-year, almost entirely due to the Avoca divestiture, which reduced sales by approximately 7%. With the Avoca divestiture now lapped, we have a clean baseline going forward into Q2. Organic sales declined 1%, reflecting a broadly stable demand environment. Biofunctional actives continued to perform well and delivered another quarter of double-digit growth versus prior-year quarter. Customer expansions and project pipeline conversions are accelerating. Collapeptyl, our 2025 hero product launch, is gaining broad-based market adoption. Collapeptyl mimics 20 collagen sequences in our skin, providing immediate flash hydration and corrects the appearance of both expression and deep wrinkles in the skin.

Jim Minicucci: Thank you, Alessandra. I'll now highlight our personal care results. Please turn to slide 12 for personal care. Personal care delivered resilient results, underscoring the stability of the portfolio despite mixed market conditions. Sales were $123 million, down 8% year over year, almost entirely due to the Avoca divestiture, which reduced sales by approximately 7%. With the Avoca divestiture now lapped, we have a clean baseline going forward into Q2. Organic sales declined 1%, reflecting a broadly stable demand environment. Biofunctional actives continued to perform well and delivered another quarter of double-digit growth versus prior year quarter. Customer expansions and project pipeline conversions are accelerating. CollaPepto, our 2025 hero product launch, is gaining broad-based market adoption. CollaPepto mimics 20 collagen sequences in our skin, providing immediate flash hydration and corrects the appearance of both expression and deep wrinkles in the skin.

Jim Minicucci: Microbial Protection delivered year-over-year volume growth above market, driven by share gains across most regions and customer wins. With a competitive and regional footprint, Microbial Protection is well positioned to continue executing on a robust opportunity pipeline. Within Care Ingredients, performance varied by region and segment. In general, most regions performed well, with notable strength in the EMEA region and China. Care Ingredients experienced several unplanned customer plant outages in the quarter and softer demand in North America. Foreign exchange contributed approximately $3 million of favorability to segment sales. For Personal Care, innovation and commercial execution remain a strength, with continued momentum in our globalized platforms and sustained demand for higher-value, differentiated applications. Turning to profitability, adjusted EBITDA was $26 million, compared to $30 million in the prior year. This includes a $1 million EBITDA impact from the Avoca divestiture.

Microbial Protection delivered year-over-year volume growth above market, driven by share gains across most regions and customer wins. With a competitive and regional footprint, Microbial Protection is well positioned to continue executing on a robust opportunity pipeline. Within Care Ingredients, performance varied by region and segment. In general, most regions performed well, with notable strength in the EMEA region and China. Care Ingredients experienced several unplanned customer plant outages in the quarter and softer demand in North America. Foreign exchange contributed approximately $3 million of favorability to segment sales. For Personal Care, innovation and commercial execution remain a strength, with continued momentum in our globalized platforms and sustained demand for higher-value, differentiated applications. Turning to profitability, adjusted EBITDA was $26 million, compared to $30 million in the prior year. This includes a $1 million EBITDA impact from the Avoca divestiture.

William Whitaker: ... Foreign exchange contributed approximately $3 million of favorability to segment sales. For personal care, innovation and commercial execution remain a strength, with continued momentum in our globalized platforms and sustained demand for higher value differentiated applications. Turning to profitability. Adjusted EBITDA was $26 million, compared to $30 million in the prior year. This includes a $1 million EBITDA impact from the Avoca divestiture. Excluding that portfolio action, EBITDA was modestly lower, driven by the more than $4 million Calvert City impact and the demand trends noted earlier, partially offset by mix and cost discipline. EBITDA margins remained healthy at 21.1%, demonstrating the strength of the portfolio and the benefit of ongoing commercial and productivity efforts. Personal care continues to deliver strong performance in our globalized platforms, resilient margins, and meaningful traction in our innovation pipeline.

Jim Minicucci: ... Foreign exchange contributed approximately $3 million of favorability to segment sales. For personal care, innovation and commercial execution remain a strength, with continued momentum in our globalized platforms and sustained demand for higher value differentiated applications. Turning to profitability. Adjusted EBITDA was $26 million, compared to $30 million in the prior year. This includes a $1 million EBITDA impact from the Avoca divestiture. Excluding that portfolio action, EBITDA was modestly lower, driven by the more than $4 million Calvert City impact and the demand trends noted earlier, partially offset by mix and cost discipline. EBITDA margins remained healthy at 21.1%, demonstrating the strength of the portfolio and the benefit of ongoing commercial and productivity efforts. Personal care continues to deliver strong performance in our globalized platforms, resilient margins, and meaningful traction in our innovation pipeline.

Dago Cáceres: Thank you, Jim. Please turn to slide 13. Specialty additives continue to operate in a muted demand environment during Q1. Sales were $102 million, down 11% year-over-year. Coatings and construction accounted for the vast majority of the year-over-year shortfall. In coatings, the decline was led by China, where weak demand and structural overcapacity continued to weigh on results. Additional softness came from export markets in the Middle East, Africa, and India, where competitive intensity remained elevated. North America continued to show muted demand in the coatings market. Outside these regions, coatings demand was relatively stable, with outperformance in Europe and Latin America. Construction volumes were also lower, reflecting soft conditions across the non-structural repair and remodel market, our primary area of exposure. Across other industrial end markets, including energy and performance specialties, demand remained muted but generally stable.

Dago Caceres: Thank you, Jim. Please turn to slide 13. Specialty additives continued to operate in a muted demand environment during Q1. Sales were $102 million, down 11% year-over-year. Coatings and construction accounted for the vast majority of the year-over-year shortfall. In coatings, the decline was led by China, where weak demand and structural overcapacity continued to weigh on results… Additional softness came from export markets in the Middle East, Africa, and India, where competitive intensity remained elevated. North America continued to show muted demand in the coatings market. Outside these regions, coatings demand was relatively stable, with outperformance in Europe and Latin America. Construction volumes were also lower, reflecting soft conditions across the non-structural repair and remodel market, our primary area of exposure. Across other industrial end markets, including energy and performance specialties, demand remained muted but generally stable.

Dago Cáceres: Pricing was modestly lower year-over-year, while foreign exchange contributed approximately $2 million to sales. Importantly, the team continues to execute on operational efficiency initiatives and capture benefits from prior manufacturing optimization actions, including the HEC consolidation, which improved our cost structure and mitigated the impact of lower volumes. Adjusted EBITDA was $50 million, up 15% from the prior year. EBITDA margin improved to 14.7%, a 340 basis point expansion, supported by efficiencies from the consolidated HEC network. The team remains sharply focused on cost discipline and commercial excellence while continuing to advance innovation that helps our customers deliver differentiated solutions in a challenging market. Underscoring the strength of our innovation pipeline, we deliver approximately $5 million in sales from recent product launches this quarter.

Dago Caceres: Pricing was modestly lower year-over-year, while foreign exchange contributed approximately $2 million to sales. Importantly, the team continues to execute on operational efficiency initiatives and capture benefits from prior manufacturing optimization actions, including the HEC consolidation, which improved our cost structure and mitigated the impact of lower volumes. Adjusted EBITDA was $50 million, up 15% from the prior year. EBITDA margin improved to 14.7%, a 340 basis point expansion, supported by efficiencies from the consolidated HEC network. The team remains sharply focused on cost discipline and commercial excellence while continuing to advance innovation that helps our customers deliver differentiated solutions in a challenging market. Underscoring the strength of our innovation pipeline, we deliver approximately $5 million in sales from recent product launches this quarter.

Pricing was modestly lower year-over-year, while foreign exchange contributed approximately $2 million to sales. Importantly, the team continues to execute on operational efficiency initiatives and capture benefits from prior manufacturing optimization actions, including the HEC consolidation, which improved our cost structure and mitigated the impact of lower volumes. Adjusted EBITDA was $50 million, up 15% from the prior year. EBITDA margin improved to 14.7%, a 340 basis point expansion, supported by efficiencies from the consolidated HEC network. The team remains sharply focused on cost discipline and commercial excellence while continuing to advance innovation that helps our customers deliver differentiated solutions in a challenging market. Underscoring the strength of our innovation pipeline, we deliver approximately $5 million in sales from recent product launches this quarter.

William Whitaker: Thanks, Dago. Please turn to slide 15. As we move through the first quarter, I wanna highlight the progress we're making across our execute pillar and how our operational transformation continues to support the business. Overall, our total cost savings target of approximately $30 million for fiscal 2026 remains on track. Specifically, our restructuring plan is completed and will be ratably recognized throughout the first half of the fiscal year. We continue to make progress on our network optimization targets. VP&D optimization and small plant consolidation efforts also remain on schedule, with benefits weighted toward the second half. As we talked about last quarter, we are addressing higher than expected unit costs at the consolidated HEC site as we scale operations. Following the Parlin closure and network volume rebalancing, we are delivering productivity improvements and stabilizing operations while strengthening the global HEC network.

William Whitaker: Thanks, Dago. Please turn to slide 15. As we move through the first quarter, I wanna highlight the progress we're making across our execute pillar and how our operational transformation continues to support the business. Overall, our total cost savings target of approximately $30 million for fiscal 2026 remains on track. Specifically, our restructuring plan is completed and will be ratably recognized throughout the first half of the fiscal year. We continue to make progress on our network optimization targets. VP and deoptimization and small plant consolidation efforts also remain on schedule, with benefits weighted toward the second half. As we talked about last quarter, we are addressing higher-than-expected unit costs at the consolidated HEC site as we scale operations. Following the Parlin closure and network volume rebalancing, we are delivering productivity improvements and stabilizing operations while strengthening the global HEC network.

William Whitaker: Our total savings target of $50 to 55 million remains intact, with upside to $60 million as China demand improves. Across the network, we're seeing potential for additional productivity improvements and capacity optimizations. This work is ongoing, but the trajectory remains positive. Our priorities with execute remain clear: deliver structural cost improvements, simplify the network, and enhance systems and processes, which include sales and operations planning, standard costing, and forecasting, all of which strengthen planning, accountability, and ultimately, performance. I want to recognize our operations team for managing through isolated challenges this quarter. I will speak to these dynamics further in the outlook. Please turn to slide 16. I'd now like to provide an update on our globalize and innovate platforms. As we move through fiscal 2026, I'm encouraged by the early year momentum we've seen across both pillars....

Our total savings target of $50 to 55 million remains intact, with upside to $60 million as China demand improves. Across the network, we're seeing potential for additional productivity improvements and capacity optimizations. This work is ongoing, but the trajectory remains positive. Our priorities with execute remain clear: deliver structural cost improvements, simplify the network, and enhance systems and processes, which include sales and operations planning, standard costing, and forecasting, all of which strengthen planning, accountability, and ultimately, performance. I want to recognize our operations team for managing through isolated challenges this quarter. I will speak to these dynamics further in the outlook. Please turn to slide 16. I'd now like to provide an update on our globalize and innovate platforms. As we move through fiscal 2026, I'm encouraged by the early year momentum we've seen across both pillars.

William Whitaker: On globalize, we're seeing solid traction supported by increased customer engagement, focused commercial initiatives, and early benefits from our recent investments. Year to date, we've delivered $3 million of incremental globalized sales towards our $20 million goal for the year, with notable contributions across the portfolio. In aggregate, the globalized business lines grew 8% versus last year. On the innovate side, momentum was even stronger. We delivered $6 million of incremental innovation sales towards our $15 million goal for the year. This reflects the continued strength of our innovation pipeline, particularly in pharma cellulosics, as well as recent commercial introductions across multiple segments. Guillermo will speak to this in more detail shortly, but the team continues to advance a broad and healthy launch pipeline. The early performance across globalize and innovate highlights the strength of these levers and the strategic advantage they bring to our portfolio.

William Whitaker: On globalize, we're seeing solid traction supported by increased customer engagement, focused commercial initiatives, and early benefits from our recent investments. Year to date, we've delivered $3 million of incremental globalized sales towards our $20 million dollar goal for the year, with notable contributions across the portfolio. In aggregate, the globalized business lines grew 8% versus last year. On the innovate side, momentum was even stronger. We delivered $6 million of incremental innovation sales towards our $15 million dollar goal for the year. This reflects the continued strength of our innovation pipeline, particularly in pharma cellulosics, as well as recent commercial introductions across multiple segments. Dermo will speak to this in more detail shortly, but the team continues to advance a broad and healthy launch pipeline. The early performance across globalize and innovate highlights the strength of these levers and the strategic advantage they bring to our portfolio.

On globalize, we're seeing solid traction supported by increased customer engagement, focused commercial initiatives, and early benefits from our recent investments. Year to date, we've delivered $3 million of incremental globalized sales towards our $20 million dollar goal for the year, with notable contributions across the portfolio. In aggregate, the globalized business lines grew 8% versus last year. On the innovate side, momentum was even stronger. We delivered $6 million of incremental innovation sales towards our $15 million dollar goal for the year. This reflects the continued strength of our innovation pipeline, particularly in pharma cellulosics, as well as recent commercial introductions across multiple segments. Dermo will speak to this in more detail shortly, but the team continues to advance a broad and healthy launch pipeline. The early performance across globalize and innovate highlights the strength of these levers and the strategic advantage they bring to our portfolio.

William Whitaker: While still early in the year, we remain on track to deliver our fiscal 2026 $35 million revenue commitment from Globalize and Innovate. Please turn to slide 17. I will now walk through our updated fiscal 2026 outlook, which reflects a prudent view of market conditions and continued confidence in our ability to execute. For fiscal 2026, we are narrowing our Adjusted EBITDA range to $400 to $420 million. All other elements of our guidance remain unchanged. Let me briefly summarize the assumptions underlying this outlook. Life Sciences and Personal Care remain resilient, supported by stable end markets and momentum across our Globalize and Innovate platforms. Specialty Additives and Intermediates remain mixed, with a coatings recovery expected to be gradual and regionally uneven until broader housing and industrial activity improves.

William Whitaker: While still early in the year, we remain on track to deliver our fiscal 2026 $35 million revenue commitment from globalize and innovate. Please turn to slide 17. I will now walk through our updated fiscal 2026 outlook, which reflects a prudent view of market conditions and continued confidence in our ability to execute. For fiscal 2026, we are narrowing our adjusted EBITDA range to $400 to $420 million. All other elements of our guidance remain unchanged. Let me briefly summarize the assumptions underlying this outlook. Life Sciences and personal care remain resilient, supported by stable end markets and momentum across our globalize and innovate platforms. Specialty additives and intermediates remain mixed, with a coatings recovery expected to be gradual and regionally uneven until broader housing and industrial activity improves.

While still early in the year, we remain on track to deliver our fiscal 2026 $35 million revenue commitment from globalize and innovate. Please turn to slide 17. I will now walk through our updated fiscal 2026 outlook, which reflects a prudent view of market conditions and continued confidence in our ability to execute. For fiscal 2026, we are narrowing our adjusted EBITDA range to $400 to $420 million. All other elements of our guidance remain unchanged. Let me briefly summarize the assumptions underlying this outlook. Life Sciences and personal care remain resilient, supported by stable end markets and momentum across our globalize and innovate platforms. Specialty additives and intermediates remain mixed, with a coatings recovery expected to be gradual and regionally uneven until broader housing and industrial activity improves.

William Whitaker: We're seeing healthy demand patterns in consumer-oriented categories to start the Q2. Raw materials are expected to be stable to favorable overall, and supply chains remain reliable. Similar to prior years, we expect a second half-weighted performance. We continue to expect innovate and globalize to drive growth above underlying markets, and our total cost savings target of $30 million remains on track to support margin improvement through the year. As Guillermo discussed, repairs to the Calvert City unit are taking longer than anticipated. What we had initially expected to be contained to the Q1 will now extend into the Q2. In recent weeks, we also experienced brief outages at multiple sites due to adverse weather. While the operations team managed safely without customer disruption, these events resulted in incremental costs and downtime.

William Whitaker: We're seeing healthy demand patterns in consumer-oriented categories to start Q2. Raw materials are expected to be stable to favorable overall, and supply chains remain reliable. Similar to prior years, we expect a second half-weighted performance. We continue to expect innovate and globalize to drive growth above underlying markets, and our total cost savings target of $30 million remains on track to support margin improvement through the year. As Guillermo discussed, repairs to the Calvert City unit are taking longer than anticipated. What we had initially expected to be contained to Q1 will now extend into Q2. In recent weeks, we also experienced brief outages at multiple sites due to adverse weather. While the operations team managed safely without customer disruption, these events resulted in incremental costs and downtime.

We're seeing healthy demand patterns in consumer-oriented categories to start Q2. Raw materials are expected to be stable to favorable overall, and supply chains remain reliable. Similar to prior years, we expect a second half-weighted performance. We continue to expect innovate and globalize to drive growth above underlying markets, and our total cost savings target of $30 million remains on track to support margin improvement through the year. As Guillermo discussed, repairs to the Calvert City unit are taking longer than anticipated. What we had initially expected to be contained to Q1 will now extend into Q2. In recent weeks, we also experienced brief outages at multiple sites due to adverse weather. While the operations team managed safely without customer disruption, these events resulted in incremental costs and downtime.

William Whitaker: Our revised outlook reflects approximately $11 million of temporary impacts from the Calvert City startup delay and recent weather-related disruptions, all isolated to Q2. The volume-related impacts, which are roughly two-thirds of the overall total, are fully recoverable, but the timing of absorption recovery is more challenging. VP&D cannot begin recovering absorption until the unit is back at normal operating rates, which will not occur until late Q2. This means recovery can only begin in Q3, with partial flow through the income statement into Q4. For HEC, recovery depends on the seasonal demand lift. Visibility into April through September demand typically firms in March, which creates uncertainty about when and how much recovery can be prudently initiated. Given these timing constraints and the current visibility on seasonal demand, we believe it is prudent to remain more cautious at the top end of the guide.

William Whitaker: Our revised outlook reflects approximately $11 million of temporary impacts from the Calvert City startup delay and recent weather-related disruptions, all isolated to Q2. The volume-related impacts, which are roughly two-thirds of the overall total, are fully recoverable, but the timing of absorption recovery is more challenging. VP&E cannot begin recovering absorption until the unit is back at normal operating rates, which will not occur until late Q2. This means recovery can only begin in Q3, with partial flow through in the income statement into Q4. For HEC, recovery depends on the seasonal demand lift. Visibility into April through September demand typically firms in March, which creates uncertainty about when and how much recovery can be prudently initiated. Given these timing constraints and the current visibility on seasonal demand, we believe it is prudent to remain more cautious at the top end of the guide.

Our revised outlook reflects approximately $11 million of temporary impacts from the Calvert City startup delay and recent weather-related disruptions, all isolated to Q2. The volume-related impacts, which are roughly two-thirds of the overall total, are fully recoverable, but the timing of absorption recovery is more challenging. VP&E cannot begin recovering absorption until the unit is back at normal operating rates, which will not occur until late Q2. This means recovery can only begin in Q3, with partial flow through in the income statement into Q4. For HEC, recovery depends on the seasonal demand lift. Visibility into April through September demand typically firms in March, which creates uncertainty about when and how much recovery can be prudently initiated. Given these timing constraints and the current visibility on seasonal demand, we believe it is prudent to remain more cautious at the top end of the guide.

Guillermo Novo: Thank you, William. Please turn to slide 18. Innovation remains one of the most powerful drivers of long-term value creation at Ashland, and the momentum we're seeing this early in the fiscal 2026 is both exciting and strategically important. This slide highlights just a few of the breakthrough platforms that are reshaping our pipeline and opening new opportunities across multiple end markets. These are not isolated projects. They're scalable technology platforms built on science, customer collaboration, and disciplined execution, each with potential to fuel long-term growth. Since the 2025 Innovation Day, our teams have delivered meaningful progress across multiple platforms. Our TVO technologies continued to advance through early commercial adoption, supported by regulatory filings across all key regions and multiple customer qualification cycles. In ag, our TVO for seed coatings, Agrimer EcoCoat, received US EPA FIFRA approval in 2025 and is also REACH approved.

Guillermo Novo: Thank you, William. Please turn to slide 18. Innovation remains one of the most powerful drivers of long-term value creation at Ashland, and the momentum we're seeing this early in the fiscal 2026 is both exciting and strategically important. This slide highlights just a few of the breakthrough platforms that are reshaping our pipeline and opening new opportunities across multiple end markets. These are not isolated projects. They're scalable technology platforms built on science, customer collaboration, and discipline execution, each with potential to fuel long-term growth. Since the 2025 Innovation Day, our teams have delivered meaningful progress across multiple platforms. Our TVO technologies continue to advance through early commercial adoption, supported by regulatory filings across all key regions and multiple customer qualification cycles. In ag, our TVO for seed coatings, Agrimer EcoCoat, received US EPA FIFRA approval in 2025 and is also REACH approved.

Guillermo Novo: Its performance and sustainability profile have been validated by multiple customer trials, with more trials ongoing. Customers are in the process of filing their own regulatory approvals for their formulated products in different regions. We're also making great progress in the development of a TVO for all oil dispersions in ag formulations. This product would already have regulatory approval, the same as our Agrimer EcoCoat. In personal care, we launched Lubrahands, a TVO-based product for hair conditioning, with great customer feedback, poor customer approvals, and many other testing and formulations. Development of our TVO for hairspray and styling is maturing well, nearing generation one launch, with encouraging customer evaluations underway. Our TVO technology for silicone alternatives have passed preliminary testing with key customers and now is in advanced evaluations. In coatings, we continue to make progress on developing TVO technology for TiO2 efficiency and for UV curing.

Guillermo Novo: Its performance and sustainability profile have been validated by multiple customer trials, with more trials ongoing. Customers are in the process of filing their own regulatory approvals for their formulated products in different regions. We're also making great progress in the development of a TVO for all oil dispersions in ag formulations. This product would already have regulatory approval, the same as our Agrimer EcoCoat. In personal care, we launched Lubrihance, a TVO-based product for hair conditioning, with great customer feedback, four customer approvals, and many other testing and formulations. Development of our TVO for hairspray and styling is maturing well, nearing generation one launch, with encouraging customer evaluations underway. Our TVO technology for silicone alternatives have passed preliminary testing with key customers and now is in advanced evaluations. In coatings, we continue to make progress on developing TVO technology for TiO2 efficiency and for UV curing.

Its performance and sustainability profile have been validated by multiple customer trials, with more trials ongoing. Customers are in the process of filing their own regulatory approvals for their formulated products in different regions. We're also making great progress in the development of a TVO for all oil dispersions in ag formulations. This product would already have regulatory approval, the same as our Agrimer EcoCoat. In personal care, we launched Lubrihance, a TVO-based product for hair conditioning, with great customer feedback, four customer approvals, and many other testing and formulations. Development of our TVO for hairspray and styling is maturing well, nearing generation one launch, with encouraging customer evaluations underway. Our TVO technology for silicone alternatives have passed preliminary testing with key customers and now is in advanced evaluations. In coatings, we continue to make progress on developing TVO technology for TiO2 efficiency and for UV curing.

Guillermo Novo: Based on current performance profiles, all customers are showing strong interest in these technologies. Most other new TVO development projects continue to advance and are demonstrating strong performance and value for our customers. Our super wetting agent platforms, which offers PFAS-free and silicone-free sustainability advantages, achieved another successful launch in industrial and specialty coatings. Our coatings team recently launched a new version of our wetter, Easy-Wet 310, which has broader geographic regulatory approvals and is accelerating commercialization. We've had successful customer trials and feedback on our new super wetter for ag, validating performance benefits with no phytotoxicity relative to the current commercial wetters. We expect to receive US EPA FIFRA feedback this April. In personal care, we're expanding this technology into hair care and home care applications. In hair, we are currently targeting textured hair, where early beta testing feedback has been very positive.

Guillermo Novo: Based on current performance profiles, all customers are showing strong interest in these technologies. Most other new TVO development projects continue to advance and are demonstrating strong performance and value for our customers. Our super-wetting agent platforms, which offers PFAS-free and silicone-free sustainability advantages, achieved another successful launch in industrial and specialty coatings. Our coatings team recently launched a new version of our wetter, Easy Wet 310, which has broader geographic regulatory approvals and is accelerating commercialization. We've had successful customer trials and feedback on our new super wetter for ag, validating performance benefits with no phytotoxicity relative to the current commercial wetters. We expect to receive US EPA PFIRA feedback this April. In personal care, we're expanding this technology into hair care and home care applications. In hair, we are currently targeting textured hair, where early beta testing feedback has been very positive.

Based on current performance profiles, all customers are showing strong interest in these technologies. Most other new TVO development projects continue to advance and are demonstrating strong performance and value for our customers. Our super-wetting agent platforms, which offers PFAS-free and silicone-free sustainability advantages, achieved another successful launch in industrial and specialty coatings. Our coatings team recently launched a new version of our wetter, Easy Wet 310, which has broader geographic regulatory approvals and is accelerating commercialization. We've had successful customer trials and feedback on our new super wetter for ag, validating performance benefits with no phytotoxicity relative to the current commercial wetters. We expect to receive US EPA PFIRA feedback this April. In personal care, we're expanding this technology into hair care and home care applications. In hair, we are currently targeting textured hair, where early beta testing feedback has been very positive.

Guillermo Novo: In home care, we're advancing the super wetter technology for auto dishwash applications. In bioresorbable polymers, momentum is building in aesthetic medicine, especially next-generation dermal fillers, with fiscal year 2025 launches and recent customer audits supporting a strong multi-year outlook. We also continue to scale a strong pipeline with preclinical milestone sales for both generic and new drug development programs. We're also excited about the interest and performance feedback we've received in personal care for our new modified starch for rheology control in skin leave-on applications, and we will be launching this product this year. In addition, we're expanding our starch technology into hair styling applications. These platforms are strategically important, each representing a scalable and high-value opportunity that strengthens our ability to compete and win in differentiated markets. They reflect the combined strength of our science, our global reach, and our ability to commercialize meaningful new technologies.

Guillermo Novo: In home care, we're advancing the super wetter technology for auto dishwash applications. In bioresorbable polymers, momentum is building in aesthetic medicine, especially next generation dermal fillers, with fiscal year 2025 launches and recent customer audits supporting a strong multi-year outlook. We also continue to scale a strong pipeline with preclinical milestone sales for both generic and new drug development programs. We're also excited about the interest and performance feedback we've received in personal care for our new modified starch, for rheology control in skin leave-on applications, and we will be launching this product this year. In addition, we're expanding our starch technology into hair styling applications. These platforms are strategically important, each representing a scalable and high-value opportunity that strengthens our ability to compete and win in differentiated markets. They reflect the combined strength of our science, our global reach, and our ability to commercialize meaningful new technologies.

In home care, we're advancing the super wetter technology for auto dishwash applications. In bioresorbable polymers, momentum is building in aesthetic medicine, especially next generation dermal fillers, with fiscal year 2025 launches and recent customer audits supporting a strong multi-year outlook. We also continue to scale a strong pipeline with preclinical milestone sales for both generic and new drug development programs. We're also excited about the interest and performance feedback we've received in personal care for our new modified starch, for rheology control in skin leave-on applications, and we will be launching this product this year. In addition, we're expanding our starch technology into hair styling applications. These platforms are strategically important, each representing a scalable and high-value opportunity that strengthens our ability to compete and win in differentiated markets. They reflect the combined strength of our science, our global reach, and our ability to commercialize meaningful new technologies.

Guillermo Novo: Together, they reinforce why innovation remains a key driver of a long-term growth. Lastly, although not part of our new technology platforms, our coatings team is launching a number of new multifunctional HEC products this year that can provide unique cost and performance benefits to our customers, including better cost and use and improved performance. Please turn to slide 19. As we look ahead, I'd like to outline the leadership priorities guiding our execution. While markets are mixed, as anticipated, we enter the year with momentum on several fronts. The business has become significantly more focused, resilient, and better positioned to drive high value growth. Our cost actions are already supporting margin performance, with additional P&L benefits expected as the year progresses. Our innovation platforms and globalized investments continue to gain traction.

Guillermo Novo: Together, they reinforce why innovation remains a key driver of long-term growth. Lastly, although not part of our new technology platforms, our coatings team is launching a number of new multifunctional HTC products this year that can provide unique cost and performance benefits to our customers, including better cost and use and improved performance. Please turn to slide 19. As we look ahead, I'd like to outline the leadership priorities guiding our execution. While markets are mixed, as anticipated, we enter the year with momentum on several fronts. The business has become significantly more focused, resilient, and better positioned to drive higher value growth. Our cost actions are already supporting margin performance, with additional P&L benefits expected as the year progresses. Our innovation platforms and globalized investments continue to gain traction.

Together, they reinforce why innovation remains a key driver of long-term growth. Lastly, although not part of our new technology platforms, our coatings team is launching a number of new multifunctional HTC products this year that can provide unique cost and performance benefits to our customers, including better cost and use and improved performance. Please turn to slide 19. As we look ahead, I'd like to outline the leadership priorities guiding our execution. While markets are mixed, as anticipated, we enter the year with momentum on several fronts. The business has become significantly more focused, resilient, and better positioned to drive higher value growth. Our cost actions are already supporting margin performance, with additional P&L benefits expected as the year progresses. Our innovation platforms and globalized investments continue to gain traction.

Guillermo Novo: Our priorities for the fiscal 2026 are clear: deliver on safety, profitable growth, free cash flow, and RONA. Advance our manufacturing optimization and inventory performance. Accelerate innovation, scale our globalized platforms, and foster a productivity-focused culture. Strengthen our systems and process, including leveraging AI to enhance productivity. Prioritize talent development, leadership stability, and organizational strength, and maintain transparent communications and consistent execution in our engagement with our investors. Fiscal 2026 is about converting our transformation into sustained performance. With a more focused and resilient portfolio, disciplined capital allocation, and clear strategic roadmap, Ashland is well positioned to deliver durable value creation for all stakeholders. Despite temporary operational and weather challenges, our strategy, strong execution, and commercial momentum give us confidence in delivering our fiscal 2026 commitments. Thank you to the entire Ashland team for your commitment and execution, and thank you for joining our call today.

Guillermo Novo: Our priorities for fiscal 2026 are clear: deliver on safety, profitable growth, free cash flow, and RONA. Advance our manufacturing optimization and inventory performance. Accelerate innovation, scale our globalized platforms, and foster a productivity-focused culture. Strengthen our systems and process, including leveraging AI, to enhance productivity. Prioritize talent development, leadership stability, and organizational strength, and maintain transparent communications and consistent execution in our engagement with our investors. Fiscal 2026 is about converting our transformation into sustained performance. With a more focused and resilient portfolio, disciplined capital allocation, and clear strategic roadmap, Ashland is well positioned to deliver durable value creation for all stakeholders. Despite temporary operational and weather challenges, our strategy, strong execution, and commercial momentum give us confidence in delivering our fiscal 2026 commitments. Thank you to the entire Ashland team for your commitment and execution, and thank you for joining our call today.

Our priorities for fiscal 2026 are clear: deliver on safety, profitable growth, free cash flow, and RONA. Advance our manufacturing optimization and inventory performance. Accelerate innovation, scale our globalized platforms, and foster a productivity-focused culture. Strengthen our systems and process, including leveraging AI, to enhance productivity. Prioritize talent development, leadership stability, and organizational strength, and maintain transparent communications and consistent execution in our engagement with our investors. Fiscal 2026 is about converting our transformation into sustained performance. With a more focused and resilient portfolio, disciplined capital allocation, and clear strategic roadmap, Ashland is well positioned to deliver durable value creation for all stakeholders. Despite temporary operational and weather challenges, our strategy, strong execution, and commercial momentum give us confidence in delivering our fiscal 2026 commitments. Thank you to the entire Ashland team for your commitment and execution, and thank you for joining our call today.

Thanks. Thanks camera. Hey Josh, thank you for the question. So as as William had mentioned, you know, excluding those customer outages, the, the business would have been up low single digits, um, specifically in in North America, they were several customers that, that had unplanned outages, uh, the outages were were on the customer side. So it was, it was not related to our inability to supply or anything driven from our side and through conversations with customers, we understand that it was not demand driven either. Um, the outages all occurred in q1, uh, some of them were multi-week with a couple of them extending over over a month. Almost 2 months, in 1 case, uh they all are back online. They all came back online before we closed, q1 and we do expect to to recover most of it uh, in Q32 and through the balance of the year.

Yeah, so let me get some comments and then I'll doggo. If you could comment, I'm here right now in in, in China. Uh, I would say, you know, a lot of the, the impact of the down Market, we started last year and it's already happened. Most of, you know, the impact with our customers. Um, I don't expect that this is going to improve, you know, that quickly, you know, the the we see a lot of actions by the government to, to stimulate to to re-energize the property Market. But the reality is it's going to take a while. I think the issue is for here, it's going to be expect muted demand for a while, um, with the over capacity. Uh, you're going to, we're going to continue to see, deflationary pressures across the board. Most of that has already happened. You know, we've been hit hard on on, on, uh, uh, you know, in our business here in China. So we're bottoming him out. There's, there's, uh, there's a limit to how much, you know, you can't lose path, but you got what, what, uh, when when you've lost a business you can't lose more.

Um so I think what I'm excited now is the team. We've we've rebalanced the the network, um so that we're not getting impacted with empty capacity in our plans, we're using. This is a very, uh, cost-effective plan for us. We're using it for exports now, uh, around the world and especially in the Middle East and Africa. Um, so well, well, positioned and uh, and today just, you know, talking to our teams. They've really done a fantastic job, um, and just looking at our portfolio using this time to get our plant costs in in order, but it also expanding our product line, both into more, uh, costs effective, uh, you know, different performance stupid costs to the parameters so that we can compete On The Low End. Um, and also some higher performance products that we can provide both uh, lower cost and use but higher

Dago Cáceres: There is also a lot of focus on customer intimacy, just staying very close to customers so that we can deploy our innovation. Productivity, the good news is that Nanjing is a really excellent plant that we have. It's a very strong asset, and they do have very clear productivity improvement targets that we're going after. So I'm very excited about that as well. But probably the best one is really on innovation. We're moving fast. We're moving with urgency. We expect some of the results that we're doing on the innovation on our core products to materialize actually in 2026, which will really help us with the situation. And the intent here is to protect our core portfolio and then basically kind of produce or create products that are, that are made for the China market.

Dago Caceres: And there is also a lot of focus on customer intimacy, just staying very close to customers so that we can deploy our innovation. Productivity, the good news is that Nanjing is a really excellent plant that we have. It's a very strong asset, and they do have very clear productivity improvement targets that we're going after. So I'm very excited about that as well. But probably the best one is really on innovation. We're moving fast, we're moving with urgency. We expect some of the results that we're doing on the innovation on our core products to materialize actually in 2026, which will really help us with the situation. And the intent here is to protect our core portfolio and then basically kind of produce or create products that are, that are made for the China market.

Great, thank you so much. Um, just turning back to life sciences. Um just want to break down the the growth. I'll go here now that you're passing, you know, multiple years of you know, a little bit of choppiness you know. Just but when you take a step back, you know, how are you thinking about, you know, you didn't mention vpnd in in the PowerPoint. So I'm kind of curious on what effect is any of that had on the price mix in the quarter and then seems like you're actually getting pretty decent momentum um and you know tablets and cellular losses. So you know when we look at this for 26 and then you know, kind of in the 27 is this we finally getting back to just the the low kind of like a low single digit, you know, volume growth rate, perhaps a little bit more, constructive price mix um you know and getting margins you know back up to the prior Year's levels. Like, how, how should we be part?

Alessandra Faccin: Yeah, sure. So, we-- looking ahead, looking at the next few quarters, we expect to continue to deliver on the healthy growth. So two aspects, looking at the resilient pharma demand, roughly low single digits. And then we are seeing the momentum across our both innovate and globalize pillars, and that represents around 200 basis points above market on the growth that we are projecting. As Guillermo mentioned, VP&D is expected to be stable. We just concluded the contract negotiations in Europe, and they were mostly aligned with our expectations on share and with modest price pressure on certain portfolios. But net-net, they were in line with our expectations, so we remain very much focused in positioning our globalized, innovate growth strategies and the share gaining opportunities.

Let me let me quick comment and then I'll pass it to our son if she can give more details uh, color on on the business. But I would say just specifically on the vpnd. Um, that's the, you know, the the the last time the business has been fine, that's where we had the the, the issue a while back. And you know, the story, 1, big competitor coming back in and all that was the biggest issue for us that has stayed, right? So so the vpnd I would say volumes are stable, pricing are stable. That's not the biggest growth driver at this point in time. We wanted to stabilize it. I think we're we're seeing that uh across the world that's 1 of the issues of really driving productivity. Making sure that we're going to be competitive and any price that we gave uh, in the past that we're trying to recover it through productivity asset utilization, all those kinds of things. But the team, the broader strategy continues to progress and never really stopped, uh, in terms of, uh, the selling low 6 or some of these other areas, but I'll you could comment on that. And on be

Alessandra Faccin: Yeah, sure. So, looking ahead, looking at the next few quarters, we expect to continue to deliver on the healthy growth. So two aspects, looking at the resilient pharma demand, roughly low single digits. And then we are seeing the momentum across our both innovate and globalize pillars, and that represents around 200 basis points above market on the growth that we are projecting. As Guillermo mentioned, VP&E is expected to be stable. We just concluded the contract negotiations in Europe, and they were mostly aligned with our expectations on share and with modest price pressure on certain portfolios. But net-net, they were in line with our expectations, so we remain very much focused in positioning our globalized innovate growth strategies and the share gain opportunities.

Jim Minicucci: As I mentioned, Collapeptyl, it's, you know, I don't want to say a miracle product, but it's something that within three minutes, you already start to feel that hydration. Within a couple hours, you already start to get real, you know, glowing in your skin, and the team's done a great job launching products. And, you know, we feel biofunctional is really moving in the right direction going forward. Microbial protection, it's all about continuing to grow there, convert opportunities, and we've seen really nice growth across all the regions. And then, as Guillermo mentioned, in our care ingredients business, we had the customer outages, specifically in Q1. Aside from that, you know, there's always perhaps some noise as you go into the end of the year, but generally, it's very stable.

Jim Minicucci: As I mentioned, Colapeptil, it's, you know, I don't want to say a miracle product, but it's something that within three minutes, you already start to feel that hydration. Within a couple hours, you already start to get real, you know, glowing in your skin, and the team's done a great job launching products and, you know, we feel biofunctional is really moving in the right direction going forward. Microbial protection, it's all about continuing to grow there, convert opportunities, and we've seen really nice growth across all the regions. And then, as Guillermo mentioned, in our care ingredients business, we had the customer outages, specifically in Q1. Aside from that, you know, there's always perhaps some noise as you go into the end of the year, but generally, it's very stable.

As I mentioned, Colapeptil, it's, you know, I don't want to say a miracle product, but it's something that within three minutes, you already start to feel that hydration. Within a couple hours, you already start to get real, you know, glowing in your skin, and the team's done a great job launching products and, you know, we feel biofunctional is really moving in the right direction going forward. Microbial protection, it's all about continuing to grow there, convert opportunities, and we've seen really nice growth across all the regions. And then, as Guillermo mentioned, in our care ingredients business, we had the customer outages, specifically in Q1. Aside from that, you know, there's always perhaps some noise as you go into the end of the year, but generally, it's very stable.

Customers, as I mentioned, call a pep till it's, you know, I don't want to say a miracle product, but it's something that within 3, 3 minutes, you already start to feel that hydration within within a couple hours you already start to, to get real, you know, glowing in your skin and the team's done a great job watching products. And you know, we feel biofunctional is really moving in the right direction, going forward, microbial protection. It's all about continuing to grow their convert opportunities, and, and we've seen really nice growth across all the regions. Um, and then, as gamma mentioned, in our care ingredients business, we had the customer outages specifically in in q1, aside from that, you know, there's always perhaps Some Noise as you go into the end of the year. Uh, but generally it's it's very stable. The team's done a really nice job, converting opportunities, especially in skin. Um, you will see as we go through the balance of the Year. Oral Care will be, I would say more smooth this year for us over the next 3 quarters. Sometimes it, it tends to be a bit more concentrated in a couple of

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

Dago Cáceres: ... For instance, we're very strong in architectural coatings. We know our customers also have participation in industrial coatings. This is really a great opportunity to branch out and to really solidify our position there. So when you look at the sales and what we're working on for this year, because we have very, very good targets, very strong targets for innovation, really, the focus is going to be on, number one, solidifying our position in and differentiating in, rheology modification, both synthetic and cellulosic. Number two, continue to expand our additives. So you're going to see a lot of that, and super wetting agents are included there. But then strategically and longer term, very much, excited about the progress we're making with our, platform technologies, in particular, TVO and TiO2 spacer, et cetera, where we do expect to see some good traction this year.

Dago Caceres: We know our customers also have participation in industrial coatings. This is really a great opportunity to branch out and to really solidify our position there. So when you look at the sales and what we're working on for this year, because we have very, very good targets, very strong targets for innovation, really the focus is going to be on, number one, solidifying our position in and differentiating in, rheology modification, both synthetic and cellulosic. Number two, continue to expand our additives. So you're going to see a lot of that, and super wetting agents are included there. But then strategically and longer term, very much, excited about the progress we're making with our, platform technologies, in particular, TVO and TiO2 spacer, et cetera, where we do expect to see some good traction this year. And I...

We know our customers also have participation in industrial coatings. This is really a great opportunity to branch out and to really solidify our position there. So when you look at the sales and what we're working on for this year, because we have very, very good targets, very strong targets for innovation, really the focus is going to be on, number one, solidifying our position in and differentiating in, rheology modification, both synthetic and cellulosic. Number two, continue to expand our additives. So you're going to see a lot of that, and super wetting agents are included there. But then strategically and longer term, very much, excited about the progress we're making with our, platform technologies, in particular, TVO and TiO2 spacer, et cetera, where we do expect to see some good traction this year. And I...

Um, yeah, I would say it's, uh, across the board. It's across the board. So, when you look at our strategy for specialty additives, there is a heavy focus, of course, on, uh, protecting our rheology modifier participation. And we have new products that are going there, but then there is a big effort right now to go beyond, as I said, into other items. So you have—you have the thickeners, you have wetting agents, you have pH neutralizers, etc. And the team has been very focused on expanding our portfolio because it really solidifies the participation that we have with customers. It—it gives us higher access, and also, it enables us to go after other parts of our, uh, customers', uh, portfolio. For instance, we're very strong in architectural coatings; we know our customers also have participation in industrial coatings. This is really a great opportunity to branch out and to really solidify our position there. So, when you look at the sales and what we're working on for this year, because we have very

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

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

Well, I I you know, I as we said it'll be uh, in line with what we had been forecasting. So so uh personal care and and life science. It's in the, in the low single digits, you know, anything over that, we need to grow through some of the Innovation, but we're the, the order book is in line with our forecasts or our updated forecasts and what we're doing. So no big surprise there. Same thing you know in in the essay we're seeing the same thing, all the orders are coming in line. Um it's going to be still challenged versus prior year because of China and and uh some of the the Dynamics there. But if you go to North America, Europe actually did very well for us. Um, but I'd be and I just be cautious an essay. I'm not going to to really be positive or negative until we start getting closer to the the bigger season. Um, you know, these these months don't mean as much in terms of what the full year is going to come out. Um, but but for

Getting the recovery of the absorption part. There are other costs this especially around the storm that are costs, energy costs that went up and um and other repair costs with with the freeze, I mean, not huge items. But but items that have added up that we that that are going to be more of a headwind. I think is William said 2/3 was absorption, 1/3 was, uh, was cost. AC is a choice. I think they're. Uh, I'll be honest. I'm being very conservative. Um, until we start seeing the season, we can always produce more whenever we want. I, I think if this is a time of being prudent like we've we've done in other years. Um I'm very open of the balance sheet, is something we need to look at. Not just the p&l we're not here just to hit 1 quarter results. This is a long term. We want to do the right thing for the long term, for the company. I think, uh, uh, having a solid balance sheet, cash is King.

Multiple areas. Frankly Speaking, just from my past experience with other companies and all this artificially cutting up, things haven't worked, have that. Well, so for us, we'd like the portfolio, we have it is integrated. We feel that between the high quality Pharma, uh, personal care and Architectural, codings being, you know, it is being impacted, but it's headed historically to be more consumer oriented. We see that stability in North, America and Europe? I would say, what's happening in Asia is a little bit different, um, than than Norm. Uh, we like those, we think, you know, focusing on additives low cost in use high value in use can allow us to differentiate, and we can Leverage The, the scale, um, uh, across these assets. So we, we think that integration is, uh, critical.

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