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Ashland Inc.

07/29/2026 | Press release | Distributed by Public on 07/29/2026 15:18

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and the accompanying Notes to Condensed Consolidated Financial Statements herein.

BUSINESS OVERVIEW

Ashland profile

Ashland is a global additives and specialty ingredients company with a conscious and proactive mindset for sustainability. The Company serves customers in a wide range of consumer and industrial markets, including architectural coatings, construction, energy, food and beverage, personal care and pharmaceutical. With approximately 2,900 employees worldwide, Ashland serves customers in more than 100 countries.

Ashland's sales generated outside of North America were 73% for both the three and nine months ended June 30, 2026, and 73% and 72% for the three and nine months ended June 30, 2025, respectively. Sales by region expressed as a percentage of total consolidated sales were as follows:


	Three months ended						Nine months ended
	June 30						June 30
	2026			2025			2026			2025
North America(a)		27	%		27	%		27	%		28	%
Europe(a)		37	%		38	%		36	%		36	%
Asia Pacific		27	%		25	%		27	%		26	%
Latin America & other		9	%		10	%		10	%		10	%
		100	%		100	%		100	%		100	%

(a)

Ashland includes only U.S. and Canada in its North America designation and includes Europe, the Middle East and Africa in its Europe designation.

Reportable segments

Ashland's reportable segments include Life Sciences, Personal Care, Specialty Additives and Intermediates. Unallocated and other includes corporate governance activities and certain legacy matters. The contribution to sales by each reportable segment expressed as a percentage of total consolidated sales were as follows:


	Three months ended						Nine months ended
	June 30						June 30
	2026			2025			2026			2025
Life Sciences		36	%		35	%		36	%		35	%
Personal Care		31	%		32	%		31	%		31	%
Specialty Additives		27	%		28	%		27	%		28	%
Intermediates		6	%		5	%		6	%		6	%
		100	%		100	%		100	%		100	%

KEY DEVELOPMENTS

Uncertainty related to tariffs and global trade policy changes

The three and nine months ended June 30, 2026, saw continuing regulatory activity involving notable changes to U.S. and foreign trade policy, leading to significant uncertainty in the macroeconomic and geopolitical environments. Beginning in the second quarter of fiscal 2025, the U.S. instituted a series of tariffs on imports

from China, the E.U., India, and other countries which has resulted in the imposition of retaliatory measures against U.S. goods. During fiscal 2026, certain previously announced tariff measures have been modified, suspended, challenged, or reversed, while additional trade actions remain under consideration, contributing to continued uncertainty regarding the future trade policy environment and its potential impact on our business. As a global business, we are exposed to risks associated with tariffs and other trade conflicts. Such risks may include, but are not limited to, (i) changes to and strains on the global supply chain and our ability to source materials; (ii) increased sourcing and manufacturing costs; (iii) decreased demand for Ashland's products in affected markets; and (iv) other impacts on Ashland's ability to operate optimally.

The ultimate impact of these recent tariffs and trade disputes on general economic conditions, and on Ashland's business, financial performance, and results of operations, is uncertain and depends on various factors, including the duration of the tariffs and disputes, negotiations between the U.S. and affected countries, whether additional or incremental tariffs are imposed and the responses of other countries or regions, and the potential for trade restriction-related exemptions including recent tariff reversal developments. Given the dynamic nature of the situation, Ashland continues to monitor tariff developments as well as the broader global trade landscape and is working to mitigate potential impacts on its business.

Uncertainty relating to the ongoing United States, Israel/Iran, Ukraine/Russia and Israel/Hamas conflicts and other political events

Business disruptions, including those related to the ongoing conflicts between the United States, Israel/Iran, Ukraine/Russia and Israel/Hamas, as well as the recent political events in Venezuela, continue to impact businesses around the globe. While it is impossible to predict the effects of the conflicts such as possible escalating geopolitical tensions (including the imposition of existing and additional sanctions by the U.S. and the European Union on Russia), worsening macroeconomic and general business conditions, supply chain interruptions and unfavorable energy markets, the impact could be material. Ashland is closely monitoring these situations and maintains business continuity plans that are intended to continue operations or mitigate the effects of events that could disrupt its business.

Ashland does not have manufacturing operations in Iran, Israel, Russia, Ukraine, Venezuela or Belarus. Ashland sells (or previously sold) additives and specialty ingredients to manufacturers in these countries for their use in pharmaceuticals, personal care, and coatings applications. Sales to Russia and Belarus were previously limited and our products were primarily used in products and applications that are essential to the population's well-being and currently support our customers' humanitarian efforts. We have sales controls in place to ensure that future potential sales into the region are only to support critical pharmaceutical or personal hygiene products which are essential for the general population and in accordance with any applicable sanctions. Sales to Israel, Ukraine, Russia, and Belarus represent less than 1% of total consolidated sales and less than 1% of total consolidated assets (related to accounts receivable). Ashland has no sales activity with Iran.

Other items

Restructuring programs

As previously announced, Ashland initiated a $30 million pre-tax restructuring plan to offset the impact from the Nutraceuticals business sale completed in fiscal 2024, the Avoca business sale completed in fiscal 2025, and other portfolio optimization actions, which were expected to be realized 50 percent in fiscal 2025 and 50 percent in fiscal 2026. These actions are substantially complete. See Note D of the Notes to Condensed Consolidated Financial Statements for severance reserves associated with this program.

Ashland also executed its portfolio optimization actions to further strengthen Ashland's resilience and improve margins and returns. These previously announced actions include initiatives focused on carboxymethylcellulose ("CMC"), methylcellulose ("MC"), the Nutraceuticals business sale and the Avoca business sale (collectively, "Portfolio Optimization"). These actions are substantially complete. Overall, these Portfolio Optimization actions had no impact on sales, Adjusted EBITDA and operating income (loss) for the three months ended June 30,

2026, compared to the prior year quarter. These actions reduced sales and Adjusted EBITDA by approximately $11 million and $1 million for the nine months ended June 30, 2026, respectively, compared to the prior year periods. Operating income (loss) was positively impacted by $4 million for the nine months ended June 30, 2026, compared to the prior year periods.

Ashland is also advancing a multi-year manufacturing network optimization to improve operational cost and strengthen its competitive position. This optimization plan is expected to generate pre-tax savings of $50 million to $55 million with $60 million being achievable as market conditions improve, particularly within China. Ashland realized savings of approximately $2 million and $10 million during the three and nine months ended June 30, 2026, respectively, compared to the prior year periods as a result of these multi-year manufacturing network optimizations.

The following table summarizes the expense impact of these actions:


	Three months ended				Nine months ended
	June 30				June 30
(In millions)	2026		2025		2026		2025
Accelerated depreciation(a)	$	1	$	27	$	5	$	40
Restructuring, separation and other costs(b)		7		7		14		18
Other plant optimization costs(a)		3		3		18		12
	$	11	$	37	$	37	$	70

(a)

Recorded within the cost of sales caption within the Statements of Condensed Consolidated Comprehensive Income (Loss).

(b)

Recorded within the selling, general and administrative expense caption within the Statements of Condensed Consolidated Comprehensive Income (Loss).

RESULTS OF OPERATIONS - CONSOLIDATED REVIEW

Consolidated review

Overview

Key financial results included the following:


	Three months ended								Nine months ended
	June 30								June 30
(In millions except per share data)	2026		2025			Change			2026		2025			Change
Net income (loss)	$	16	$	(742	)	$	758		$	20	$	(877	)	$	897
Diluted earnings per share (EPS) net income (loss)(a)		0.35		(16.21	)		16.56			0.43		(18.85	)		19.28
Income (loss) from continuing operations		41		(719	)		760			42		(855	)		897
Diluted EPS income (loss) from continuing operations(a)		0.89		(15.70	)		16.59			0.91		(18.39	)		19.30
Operating income (loss)		43		(708	)		751			76		(836	)		912
EBITDA(b)		69		(683	)		752			193		(713	)		906
Adjusted EBITDA(b)		109		113			(4	)		265		282			(17	)
Adjusted Diluted EPS from Continuing Operations Excluding Intangibles Amortization Expense(b)		1.02		1.04			(0.02	)		2.19		2.30			(0.11	)

(a)

As a result of the loss from continuing operations attributable to Ashland during the three and nine months ended June 30, 2025, the effect of the share-based awards convertible to common stock would be antidilutive and have been excluded from the diluted EPS calculation.

(b)

These are non-GAAP financial measures. See "Use of Non-GAAP Financial Measures" section below for reconciliations to U.S. GAAP.

Business results

Ashland's net income of $16 million ($0.35 diluted EPS) and net loss of $742 million (loss of $16.21 diluted EPS) included loss from discontinued operations of $25 million (loss of $0.54 diluted EPS) and $23 million (loss of $0.51 diluted EPS) in the three months ended June 30, 2026 and 2025, respectively.

Results for Ashland's continuing operations, diluted EPS from continuing operations and operating income (loss) for the three months ended June 30, 2026 and 2025, included certain key items that were excluded to arrive at Adjusted EBITDA and are quantified in the "Use of Non-GAAP Financial Measures" section below. These pre-tax key items totaled income of $5 million and expense of $754 million for the three months ended June 30, 2026 and 2025, respectively, impacting continuing operations, including a non-cash goodwill impairment charge of $706 million in the three months ended June 30, 2025 ($375 million for the Life Sciences and $331 million for the Specialty Additives reportable segments). Continuing operations was also impacted by unfavorable tax specific key items for discrete tax items totaling zero and $13 million for the three months ended June 30, 2026 and 2025, respectively.

Excluding these key items, the decrease in continuing operations, diluted EPS from continuing operations and operating income (loss) was primarily driven by unfavorable production costs and higher selling, general and administrative expenses, partially offset by higher sales volumes, price/mix and foreign currency exchange. The number of weighted-average common shares outstanding was 46 million diluted shares at both June 30, 2026 and 2025.

Ashland's Adjusted EBITDA was $109 million for the three months ended June 30, 2026 compared to $113 million for the three months ended June 30, 2025 (see U.S. GAAP reconciliation under "Use of Non-GAAP Financial Measures" below). The $4 million decrease in Adjusted EBITDA was primarily driven by unfavorable production costs and higher selling, general and administrative expenses, partially offset by higher sales volumes, price/mix and foreign currency exchange. Adjusted Diluted EPS from Continuing Operations (non-GAAP) Excluding Intangibles Amortization Expense was also impacted by these factors.

For further information on the items reported above, see the discussion in the comparative Statements of Condensed Consolidated Comprehensive Income (Loss) caption review analysis.

Statements of Condensed Consolidated Comprehensive Income (Loss) - caption review

A comparative analysis of the Statements of Condensed Consolidated Comprehensive Income (Loss) by caption is provided as follows:


	Three months ended June 30						Nine months ended June 30
(In millions)	2026		2025		Change		2026		2025		Change
Sales	$	497	$	463	$	34	$	1,365	$	1,347	$	18

The following table provides a reconciliation of the change in sales:


	Three months ended		Nine months ended
(In millions)	June 30, 2026		June 30, 2026
Sales change
Foreign currency exchange	$	3	$	28
Volume		28		16
Avoca business		-		(11	)
Price/mix		3		(15	)
Change in sales	$	34	$	18

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Sales for the three months ended June 30, 2026 increased $34 million compared to the three months ended June 30, 2025. The increase was driven by higher volume, favorable foreign currency exchange and price/mix.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Sales for the nine months ended June 30, 2026 increased $18 million compared to the nine months ended June 30, 2025. The increase was driven by favorable foreign currency exchange and higher volume, which was partially offset by unfavorable price/mix and the impact of the Avoca business sale. Portfolio Optimization initiatives had a negative $11 million impact on sales in the nine months ended June 30, 2026.


	Three months ended June 30									Nine months ended June 30
(In millions)	2026			2025			Change			2026			2025			Change
Cost of sales	$	327		$	331		$	(4	)	$	943		$	957		$	(14	)
Gross profit as a percent of sales		34.2	%		28.5	%					30.9	%		29.0	%

The following table provides a reconciliation of the change in cost of sales:


	Three months ended			Nine months ended
(In millions)	June 30, 2026			June 30, 2026
Cost of sales change
Price/mix	$	(7	)	$	(18	)
Avoca business		-			(11	)
Operating costs		(13	)		(8	)
Volume		13			6
Foreign currency exchange		3			17
Change in cost of sales	$	(4	)	$	(14	)

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Cost of sales for the three months ended June 30, 2026, decreased $4 million compared to the three months ended June 30, 2025. The decrease was primarily driven by lower operating costs and favorable price/mix partially offset by higher volumes and unfavorable foreign currency. The three months ended June 30, 2026, included $3 million of other plant optimization costs while the three months ended June 30, 2025 included $27 million of accelerated depreciation for product line optimization activities at manufacturing facilities within Life Sciences, Personal Care and Specialty Additives reportable segments and $3 million of other plant optimization costs. Gross profit as a percentage of sales increased 5.7% compared to the three months ended June 30, 2025 as a result of the sales and cost of sales factors noted above.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Cost of sales for the nine months ended June 30, 2026, decreased $14 million compared to the nine months ended June 30, 2025. The decrease was primarily driven by favorable price/mix, the divestiture of the Avoca business and lower operating costs, partially offset by higher volumes and unfavorable foreign currency. The nine months ended June 30, 2026, operating costs were affected by $4 million of accelerated depreciation for product line optimization activities at manufacturing facilities within Specialty Additives and Personal Care and $18 million of other plant optimization costs while the nine months ended June 30, 2025 included $40 million of accelerated depreciation for product line optimization activities at manufacturing facilities within Life Sciences, Personal Care and Specialty Additives reportable segments and $12 million of other plant optimization costs. Gross profit as a percentage of sales increased 1.9% compared to the nine months ended June 30, 2025, as a result of the sales and cost of sales factors notes above.


	Three months ended June 30									Nine months ended June 30
(In millions)	2026			2025			Change			2026			2025			Change
Selling, general and administrative expense	$	99		$	106		$	(7	)	$	264		$	268		$	(4	)
As a percent of sales		19.9	%		22.9	%					19.3	%		19.9	%

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Selling, general and administrative expense for the three months ended June 30, 2026, decreased $7 million compared to the three months ended June 30, 2025, with expenses as a percent of sales decreasing 3.0%. Key drivers of the fluctuation in selling, general and administrative expense compared to the three months ended June 30, 2025, were:

•

$17 million and $30 million in net environmental-related expenses during the three months ended June 30, 2026 and 2025, respectively (see Note L of the Notes to Condensed Consolidated Financial Statements for more information);

•

Expense of $8 million and $7 million comprised of key items for severance, lease abandonment and other restructuring costs during the three months ended June 30, 2026 and 2025, respectively;

•

$8 million benefit related to domestic tax credits during the three months ended June 30, 2026; and

•

Offset by higher variable compensation expense and lower transition services income.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Selling, general and administrative expense for the nine months ended June 30, 2026, decreased $4 million compared to the nine months ended June 30, 2025, with expenses as a percent of sales decreasing 0.6%. Key drivers of the fluctuation in selling, general and administrative expense compared to the nine months ended June 30, 2025 were:

•

$28 million and $33 million in net environmental-related expenses during the nine months ended June 30, 2026 and 2025, respectively (see Note L of the Notes to Condensed Consolidated Financial Statements for more information);

•

Expense of $15 million and $18 million comprised of key items for severance, lease abandonment and other restructuring costs during the nine months ended June 30, 2026 and 2025, respectively;

•

$8 million benefit related to domestic tax credits during the nine months ended June 30, 2026; and

•

Increased income associated with company-owned life insurance contracts and realized cost reductions, including the Avoca business sale, associated with restructuring actions, offset by higher variable compensation expense, increased bad debt expense and lower transition services income.


	Three months ended June 30						Nine months ended June 30
(In millions)	2026		2025		Change		2026		2025		Change
Research and development expense	$	15	$	13	$	2	$	41	$	41	$	-

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Research and development expense increased mostly due to higher incentive compensation between the three months ended June 30, 2026 and 2025.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Research and development expense is generally consistent between the nine months ended June 30, 2026 and 2025.


	Three months ended June 30						Nine months ended June 30
(In millions)	2026		2025		Change		2026		2025		Change
Intangibles amortization expense	$	15	$	15	$	-	$	46	$	47	$	(1	)

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Intangibles amortization expense is generally consistent between the three months ended June 30, 2026 and 2025.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

The lower intangibles amortization expense in the nine months ended June 30, 2026, is driven by the impact of amortization related to the divested Avoca business in the nine months ended June 30, 2025.


	Three months ended June 30						Nine months ended June 30
(In millions)	2026		2025		Change		2026		2025		Change
Equity and other income	$	1	$	-	$	1	$	2	$	1	$	1

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Equity and other income is generally consistent between the three months ended June 30, 2026 and 2025.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Equity and other income is generally consistent between the nine months ended June 30, 2026 and 2025.


	Three months ended June 30							Nine months ended June 30
(In millions)	2026		2025		Change			2026		2025		Change
Goodwill impairment	$	-	$	706	$	(706	)	$	-	$	706	$	(706	)

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Ashland recorded a $706 million goodwill impairment charge during the three months ended June 30, 2025. See Note G of the Notes to Condensed Consolidated Financial Statements for more information.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Ashland recorded a $706 million goodwill impairment charge during the nine months ended June 30, 2025. See Note G of the Notes to Condensed Consolidated Financial Statements for more information.


	Three months ended June 30						Nine months ended June 30
(In millions)	2026		2025		Change		2026		2025			Change
Income (loss) on divestitures, net	$	1	$	-	$	1	$	3	$	(165	)	$	168

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Income (loss) on divestitures, net for the three months ended June 30, 2026 primarily relates to income related to sales activity of excess corporate real estate. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Income (loss) on divestitures, net for the nine months ended June 30, 2026, primarily relates to sales activity and a pre-tax gain on sale of excess corporate real estate while the three months ended June 30, 2025, primarily relates to a $183 million impairment charge, a pre-tax gain on sale of $8 million associated with the Avoca business and a pre-tax gain on sale of excess corporate real estate of $11 million, partially offset by $1 million adjustment related to the Nutraceuticals business sale completed in fiscal 2024. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.


	Three months ended June 30									Nine months ended June 30
(In millions)	2026			2025			Change			2026			2025			Change
Net interest and other (income) expense
Interest expense	$	16		$	15		$	1		$	46		$	45		$	1
Interest income		(2	)		(1	)		(1	)		(4	)		(4	)		-
Investment securities income		(23	)		(22	)		(1	)		(28	)		(15	)		(13	)
Other financing costs		1			3			(2	)		5			8			(3	)
	$	(8	)	$	(5	)	$	(3	)	$	19		$	34		$	(15	)

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Net interest and other (income) expense increased by $3 million during the three months ended June 30, 2026, compared to the three months ended June 30, 2025. Interest expense and interest income are generally consistent between the three months ended June 30, 2026 and 2025. Investment securities income of $23 million and $22 million included realized gains of $20 million and $19 million for the three months ended June 30, 2026 and 2025, respectively. Other financing costs decreased $2 million due to lower losses on receivable sales and was the primary change. See Note E of the Notes to Condensed Consolidated Financial Statements for more information.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Net interest and other (income) expense decreased by $15 million during the nine months ended June 30, 2026, compared to the nine months ended June 30, 2025. Interest expense and interest income are generally consistent between the nine months ended June 30, 2026 and 2025. Investment securities income of $28 million and $15 million included realized gains of $18 million and $5 million for the nine months ended June 30, 2026 and 2025, respectively, and was the primary change. See Note E of the Notes to Condensed Consolidated Financial Statements for more information.


	Three months ended June 30								Nine months ended June 30
(In millions)	2026			2025		Change			2026			2025		Change
Other net periodic benefit (income) loss	$	(5	)	$	1	$	(6	)	$	(3	)	$	4	$	(7	)

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Other net periodic benefit income for the three months ended June 30, 2026, primarily included an actuarial gain of $3 million, expected return on plan assets of $3 million and a settlement gain of $2 million, which was partially offset by interest cost of $3 million. Other net periodic benefit loss for the three months ended June 30, 2025, primarily included interest cost of $3 million, which was partially offset by expected return on plan assets of $2 million. See Note K of the Notes to Condensed Consolidated Financial Statements for more information.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Other net periodic benefit income for the nine months ended June 30, 2026, primarily included expected return on plan assets of $8 million, an actuarial gain of $3 million and a settlement gain of $2 million, which was partially offset by interest cost of $10 million. Other net periodic benefit loss for the nine months ended June 30, 2025, primarily included interest cost of $10 million and a $1 million curtailment loss, which was partially offset by expected return on plan assets of $7 million. See Note K of the Notes to Condensed Consolidated Financial Statements for more information.


	Three months ended June 30								Nine months ended June 30
(In millions)	2026			2025			Change		2026			2025			Change
Income tax expense (benefit)	$	15		$	15		$	-	$	18		$	(19	)	$	37
Effective tax rate		27	%		(2	)%				30	%		2	%

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Ashland's effective tax rate in any interim period is subject to adjustments related to discrete items and the mix of domestic and foreign operating results. The effective tax rate was 27% for the three months ended June 30, 2026, and was primarily impacted by jurisdictional income mix and a net $3 million from unfavorable tax discrete items primarily related to cash repatriation and changes in uncertain tax positions.

The effective tax rate was negative 2% for the three months ended June 30, 2025, and was primarily impacted by jurisdictional income mix, nondeductible goodwill impairment of $706 million charge and a net $16 million from unfavorable tax discrete items primarily related to return to provision adjustments and changes in uncertain tax positions.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

The effective tax rate was 30% for the nine months ended June 30, 2026, and was primarily impacted by jurisdictional income mix and a net $4 million from unfavorable tax discrete items primarily related to equity compensation adjustments and changes in uncertain tax positions.

The effective tax rate was 2% for the nine months ended June 30, 2025, and was primarily impacted by jurisdictional income mix, nondeductible goodwill impairment of $706 million, and a net $23 million from unfavorable tax discrete items primarily related to cash repatriation, return to provision adjustments and changes to uncertain tax positions.

Adjusted income tax expense (benefit)

Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income (loss) and/or operating income (loss) which Ashland believes do not accurately reflect Ashland's underlying business performance and trends. Tax specific key items are defined as the financial effects from tax specific financial transactions, tax law changes or other matters that fall within the definition of key items as previously described. The effective tax rate, excluding key items, which is a non-GAAP financial measure, has been prepared to illustrate the ongoing tax effects of Ashland's operations. Management believes investors and analysts use this financial measure in assessing Ashland's business performance and that presenting this non-GAAP financial measure on a consolidated basis assists investors in better understanding Ashland's ongoing business performance enhancing their ability to compare period-to-period financial results.

There were no tax specific key items affecting the three and nine months ended June 30, 2026.

The effective tax rate during the three and nine months ended June 30, 2025 was significantly impacted by the following tax specific key items:

•

Uncertain tax position - Includes the impact from the settlement of uncertain tax positions with various tax authorities; and

•

Other and tax reform related activity - Includes miscellaneous state and foreign statute adjustments.

The following table is a calculation of the effective tax rate, excluding these key items.


	Three months ended						Nine months ended
	June 30						June 30
(In millions)	2026			2025			2026			2025
Income (loss) from continuing operations before income taxes	$	56		$	(704	)	$	60		$	(874	)
Key items (pre-tax)(a)		(5	)		754			32			968
Adjusted income from continuing operations before income taxes	$	51		$	50		$	92		$	94

Income tax expense (benefit)	$	15		$	15		$	18		$	(19	)
Income tax rate adjustments:
Tax effect of key items(b)		1			12			10			64
Tax specific key items:(c)
Uncertain tax positions		-			(5	)		-			(1	)
Other and tax reform related activity		-			(8	)		-			(19	)
Total income tax rate adjustments		1			(1	)		10			44
Adjusted income tax expense	$	16		$	14		$	28		$	25
Effective tax rate		27	%		(2	)%		30	%		2	%
Effective Tax Rate, Excluding Key Items (Non-GAAP)(d)		31	%		28	%		30	%		26	%

(a)

See Adjusted EBITDA reconciliation table disclosed in this Management's Discussion and Analysis of Financial Condition and Results of Operation for a summary of the key items, before tax.

(b)

The tax rate specific to the jurisdiction in which the key item originates is used to calculate the tax effect of key items.

(c)

For additional information on the effect that these tax specific key items had on EPS, see the Adjusted Diluted EPS table disclosed in this Management's Discussion and Analysis of Financial Condition and Results of Operation.

(d)

Due to rounding conventions, the effective tax rate presented may not recalculate precisely based on the numbers disclosed within this table.


	Three months ended June 30									Nine months ended June 30
(In millions)	2026			2025			Change			2026			2025			Change
Loss from discontinued operations, net of income taxes
Performance Adhesives	$	-		$	-		$	-		$	-		$	(1	)	$	1
Water Technologies		-			-			-			2			-			2
Distribution		(3	)		(10	)		7			(3	)		(10	)		7
Valvoline		-			-			-			1			2			(1	)
Asbestos-related litigation		(22	)		(13	)		(9	)		(22	)		(13	)		(9	)
	$	(25	)	$	(23	)	$	(2	)	$	(22	)	$	(22	)	$	-

Three months ended June 30, 2026 compared to three months ended June 30, 2025

The activity for Distribution represents subsequent adjustments that were made in conjunction with environmental related reserves. Asbestos-related litigation activity primarily relates to Ashland's annual update.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

The activity for Performance Adhesives, Distribution, Water Technologies and Valvoline represents subsequent adjustments that were made in conjunction with environmental and tax related reserves. Asbestos-related litigation activity primarily relates to Ashland's annual update.

Other comprehensive income (loss)


	Three months ended June 30									Nine months ended June 30
(In millions)	2026			2025			Change			2026			2025		Change
Other comprehensive income (loss), net of tax
Unrealized translation gain (loss)	$	4		$	91		$	(87	)	$	(6	)	$	46	$	(52	)
Unrealized (loss) gain on commodity hedges		(2	)		(1	)		(1	)		(2	)		2		(4	)
	$	2		$	90		$	(88	)	$	(8	)	$	48	$	(56	)

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Total other comprehensive income (loss), net of tax, for the three months ended June 30, 2026, decreased $88 million compared to the three months ended June 30, 2025, primarily as a result of the following:

•

For the three months ended June 30, 2026 and 2025, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in gains of $4 million and $91 million, respectively. The fluctuations in unrealized translation gains and losses are primarily due to translating foreign subsidiary financial statements from local currencies to U.S. Dollars.

•

For the three months ended June 30, 2026 and 2025, the change in commodity hedges is primarily due to the fluctuations of the market prices of the underlying commodities. Commodity hedges resulted in unrealized losses of $2 million and $1 million for the three months ended June 30, 2026 and 2025, respectively.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Total other comprehensive income (loss), net of tax, for the nine months ended June 30, 2026, decreased $56 million compared to the nine months ended June 30, 2025, primarily as a result of the following:

•

For the nine months ended June 30, 2026 and 2025, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in losses of $6 million and gains of $46 million, respectively. The fluctuations in unrealized translation gains and losses are primarily due to translating foreign subsidiary financial statements from local currencies to U.S. Dollars.

•

For the nine months ended June 30, 2026 and 2025, the change in commodity hedges is primarily due to the fluctuations of the market prices of the underlying commodities. Commodity hedges resulted in unrealized losses of $2 million and gains of $2 million for the nine months ended June 30, 2026 and 2025, respectively.

Use of Non-GAAP Financial Measures

Ashland has included within this document the following non-GAAP financial measures, on both a consolidated and reportable segment basis, which are not defined within U.S. GAAP and do not purport to be alternatives to net income (loss) or cash flows from operating activities as a measure of operating performance or cash flows:

EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin

EBITDA is defined as net income (loss), plus income tax expense (benefit), net interest and other (income) expense, and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for discontinued operations and key items. Adjusted EBITDA margin is Adjusted EBITDA divided by sales.

Management believes the use of EBITDA and Adjusted EBITDA measures on a consolidated and reportable segment basis assists investors in understanding the ongoing operating performance by presenting comparable financial results between periods. Ashland believes that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes and certain other charges that are highly variable from year to year, EBITDA and Adjusted EBITDA provide Ashland's investors with performance measures that reflect the impact to operations from trends in changes in sales,

margin and operating expenses, providing a perspective not immediately apparent from net income (loss) and operating income (loss). The adjustments Ashland makes to derive the non-GAAP financial measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in net income (loss) and operating income (loss) and which Ashland does not consider to be the fundamental attributes or primary drivers of its business. EBITDA and Adjusted EBITDA provide disclosure on the same basis as that used by Ashland's management to evaluate financial performance on a consolidated and reportable segment basis and provide consistency in our financial reporting, facilitate internal and external comparisons of Ashland's historical operating performance and its segments and provide continuity to investors for comparability purposes.

Adjusted Diluted Earnings Per Share (EPS)

Adjusted Diluted EPS is defined as loss from continuing operations, adjusted for key items, net of tax, divided by the average outstanding diluted shares for the applicable period. The Adjusted Diluted EPS metric enables Ashland to demonstrate what effect key items have on an earnings per diluted share basis by taking loss from continuing operations, adjusted for key items after tax that have been identified in the Adjusted EBITDA table, and dividing by the average outstanding diluted shares for the applicable period. Ashland's management believes this presentation is helpful to illustrate how the key items have impacted this metric during the applicable period.

Adjusted Diluted Earnings Per Share (EPS) Excluding Intangibles Amortization Expense

The Adjusted Diluted EPS Excluding Intangibles Amortization Expense is adjusted earnings per share adjusted for intangibles amortization expense net of tax, divided by the average outstanding diluted shares for the applicable period. The Adjusted Diluted EPS, Excluding Intangibles Amortization Expense metric enables Ashland to demonstrate the impact of non-cash intangibles amortization expense on EPS, in addition to the key items previously mentioned. Ashland's management believes this presentation is helpful to illustrate how previous acquisitions impact applicable period results.

Free Cash Flow, Ongoing Free Cash Flow and Ongoing Free Cash Flow Conversion

Free Cash Flow is defined as operating cash flows less capital expenditures while Ongoing Free Cash Flow is operating cash flows less capital expenditures and certain other adjustments as applicable. Ongoing Free Cash Flow Conversion is Ongoing Free Cash flow divided by Adjusted EBITDA. These free cash flow metrics enable Ashland to provide a better indication of the ongoing cash being generated that is ultimately available for both debt and equity holders as well as other investment opportunities. Unlike cash flow provided by operating activities, Free Cash Flow and Ongoing Free Cash Flow include the impact of capital expenditures from continuing operations and other significant items impacting cash flow, providing a more complete picture of current and future cash generation. Free Cash Flow, Ongoing Free Cash Flow, and Free Cash Flow Conversion are non-GAAP liquidity measures that Ashland believes provide useful information to management and investors about Ashland's ability to convert Adjusted EBITDA to Ongoing Free Cash Flow. These liquidity measures are used regularly by Ashland's stakeholders and industry peers to measure the efficiency at providing cash from regular business activity. Free Cash Flow, Ongoing Free Cash Flow, and Free Cash Flow Conversion have certain limitations, including that they do not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments. The amount of mandatory versus discretionary expenditures can vary significantly between periods.

Other disclosures on non-GAAP financial measures

Although Ashland may provide forward-looking guidance for Adjusted EBITDA, Adjusted diluted EPS and Ongoing Free Cash Flow, Ashland is not reaffirming or providing forward-looking guidance for U.S. GAAP-reported financial measures or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items that affect these metrics such as domestic and international economic, political, legislative, regulatory and legal actions. In addition, certain economic conditions, such as

recessionary trends, inflation, interest and monetary exchange rates, government fiscal policies and changes in the prices of certain key raw materials, can have a significant effect on operations and are difficult to predict with certainty.

These non-GAAP financial measures should be considered supplemental in nature and should not be construed as more significant than comparable measures defined by U.S. GAAP. Limitations associated with the use of these non-GAAP financial measures include that these measures do not present all of the amounts associated with our results as determined in accordance with U.S. GAAP. The non-GAAP financial measures provided are used by Ashland management and may not be determined in a manner consistent with the methodologies used by other companies. EBITDA and Adjusted EBITDA provide a supplemental presentation of Ashland's operating performance on a consolidated and reportable segment basis. Adjusted EBITDA generally includes adjustments for items that impact comparability between periods. In addition, certain financial covenants related to Ashland's 2026 Credit Agreement are based on similar non-GAAP financial measures and are defined further in the sections that reference this metric.

EBITDA and Adjusted EBITDA

EBITDA totaled $69 million and loss of $683 million for the three months ended June 30, 2026 and 2025, respectively, and income of $193 million and loss of $713 million for the nine months ended June 30, 2026 and 2025, respectively. EBITDA and Adjusted EBITDA results in the table below have been prepared to illustrate the ongoing effects of Ashland's operations, which exclude certain key items previously described. Management believes the use of such non-GAAP measures on a consolidated and reportable segment basis assists investors in understanding the ongoing operating performance by presenting the financial results between periods on a more comparable basis.

These operating key items for the applicable periods are summarized as follows:

•

Environmental reserve adjustments - Ashland is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively environmental remediation) at multiple locations. As a result of these activities, Ashland recorded adjustments during each year to its environmental remediation reserves and receivables primarily related to previously divested businesses or non-operational sites. See Note L of the Notes to Condensed Consolidated Financial Statements for more information;

•

Other plant optimization costs - Ashland incurred inventory adjustments and production costs associated with product line optimization actions;

•

Restructuring, separation and other costs - Ashland periodically implements company-wide and targeted cost reduction programs related to acquisitions, divestitures and other cost reduction programs in order to enhance profitability through streamlined operations and an improved overall cost structure. Ashland often incurs severance, facility and integration costs associated with these programs. See Note D of the Notes to Condensed Consolidated Financial Statements for further information;

•

Accelerated depreciation - As a result of product line optimization activities at manufacturing facilities within the Life Sciences and Specialty Additives reportable segments and unallocated and other, Ashland recorded accelerated depreciation due to changes in the expected useful life of certain property, plant and equipment during the three and nine months ended June 30, 2026 and during the three and nine months ended June 30, 2025. See Note D of the Notes to Condensed Consolidated Financial Statements for more information;

•

Goodwill impairment - Ashland recorded a non-cash goodwill impairment charge of $706 million within the goodwill impairment caption of the Statements of Condensed Consolidated Comprehensive Income (Loss) for the three and nine months ended June 30, 2025. See Note G of the Notes to Condensed Consolidated Financial Statements for more information;

•

Avoca business impairment and sale - During March 2025, Ashland sold substantially all of the net assets of its Avoca business. As a result, Ashland recorded an impairment charge and a gain on sale within the income (loss) on divestitures, net caption of the Statement of Condensed Consolidated Comprehensive Income (Loss) for the nine months ended June 30, 2025. See Note B of the Notes to Condensed Consolidated Financial Statements for more information;

•

Held for sale depreciation and amortization - Represents the depreciation and amortization for the Avoca business assets during the nine months ended June 30, 2025. See Note B of the Notes to Condensed Consolidated Financial Statements for more information;

•

Income on divestitures, net - During the nine months ended June 30, 2026 and 2025, Ashland recorded income relating to the pre-tax gains in connection with the sale of excess corporate properties. See Note B of the Notes to Condensed Consolidated Financial Statements for more information; and

•

Tax credit - During the three and nine months ended June 30, 2026, Ashland recorded a $8 million benefit related to domestic tax credits;

Non-operating key items affecting EBITDA

During the current and prior years, there were certain key items that were not included in operating income (loss) but were excluded to arrive at Adjusted EBITDA. These non-operating key items for the applicable periods are summarized as follows:

•

(Gain) loss on pension plan remeasurements - During the three and nine months ended June 30, 2026, Ashland recognized a settlement gain and a gain for pension plan remeasurement from a buy-out transaction affecting certain defined benefit pension plans. During the nine months ended June 30, 2025, Ashland recognized a curtailment loss for pension plan remeasurement for a defined benefit pension plan. See Note K of the Notes to Condensed Consolidated Financial Statements for more information.


	Three months ended						Nine months ended
	June 30						June 30
(In millions)	2026			2025			2026			2025
Net income (loss)	$	16		$	(742	)	$	20		$	(877	)
Income tax expense (benefit)		15			15			18			(19	)
Net interest and other (income) expense		(8	)		(5	)		19			34
Depreciation and amortization(a)		46			49			136			149
EBITDA		69			(683	)		193			(713	)
Loss from discontinued operations, net of income taxes		25			23			22			22
Key items included in EBITDA:
Environmental reserve adjustments		17			30			28			33
Other plant optimization costs		3			3			18			12
Restructuring, separation and other costs		7			7			14			18
Accelerated depreciation		1			27			5			40
Goodwill impairment		-			706			-			706
Avoca business impairment and sale		-			-			-			175
Held for sale depreciation and amortization		-			-			-			(2	)
Income on divestitures, net		-			-			(2	)		(10	)
Tax credit		(8	)		-			(8	)		-
(Gain) loss on pension plan remeasurements		(5	)		-			(5	)		1
Total key items included in EBITDA		15			773			50			973
Adjusted EBITDA	$	109		$	113		$	265		$	282

Total key items included in EBITDA	$	15		$	773		$	50		$	973
Unrealized gains on securities		(20	)		(19	)		(18	)		(5	)
Total key items, before tax	$	(5	)	$	754		$	32		$	968

(a)

Depreciation and amortization excludes accelerated depreciation of $1 million for Unallocated and other for both the three months and nine months ended June 30, 2026, respectively, $3 million for Specialty Additives reportable segment for the nine months ended June 30, 2026, $1 million for Personal Care reportable segment for the nine months ended June 30, 2026, $19 million for Specialty Additives for both the three and nine months ended June 30, 2025, and $8 million and $21 million for Life Sciences for the three and nine months ended June 30, 2025, respectively, which are included as a key item within this table as a component of Adjusted EBITDA. Depreciation and amortization includes $2 million for Personal Care associated with the Avoca business for the nine months ended June 30, 2025, which is included as a key item within this table as a component of Adjusted EBITDA.

Diluted EPS and Adjusted Diluted EPS

The following table reflects the U.S. GAAP calculation for the income (loss) from continuing operations adjusted for the cumulative diluted EPS effect for key items after tax that have been identified in the Adjusted EBITDA table in the previous section. Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income (loss) and/or operating income (loss) which Ashland believes do not accurately reflect Ashland's underlying business performance and trends. The Adjusted Diluted EPS for the income (loss) from continuing operations in the following table has been prepared to illustrate the ongoing effects of Ashland's operations. Management believes investors and analysts use this financial measure in assessing Ashland's business performance and that presenting this non-GAAP financial measure on a consolidated basis assists investors in better understanding Ashland's ongoing business performance and enhances their ability to compare period-to-period financial results.

In addition to the operating key items previously described, additional non-operating key items for the applicable periods are summarized as follows:

•

Unrealized gains on securities - represents gains recognized on restricted investments related to the Asbestos trust and Environmental trust for each period. See Note E of the Notes to Condensed Consolidated Financial Statements for more information;

•

Uncertain tax positions - represents the impact from the settlement of uncertain tax positions with various tax authorities for the three and nine months ended June 30, 2025; and

•

Other and tax reform related activity - primarily represents tax specific key items associated with final tax regulations and tax reform related activity for the three and nine months ended June 30, 2025.


	Three months ended						Nine months ended
	June 30						June 30
	2026			2025			2026			2025
Diluted EPS from continuing operations (as reported)	$	0.89		$	(15.70	)	$	0.91		$	(18.39	)
Key items, before tax:
Environmental reserve adjustments		0.36			0.65			0.61			0.71
Other plant optimization costs		0.07			0.07			0.40			0.26
Restructuring, separation and other costs		0.14			0.15			0.30			0.38
Accelerated depreciation		0.02			0.59			0.10			0.85
Goodwill impairment		-			15.41			-			15.19
Avoca business impairment and sale		-			-			-			3.73
Held for sale depreciation and amortization		-			-			-			(0.04	)
Income on divestitures, net		-			-			(0.04	)		(0.21	)
Tax credit		(0.17	)		-			(0.17	)		-
(Gain) loss on pension plan remeasurements		(0.11	)		-			(0.11	)		0.02
Unrealized gains on securities		(0.43	)		(0.41	)		(0.40	)		(0.10	)
Key items, before tax		(0.12	)		16.46			0.69			20.79
Tax effect of key items(a)		(0.02	)		(0.26	)		(0.21	)		(1.36	)
Key items, after tax		(0.14	)		16.20			0.48			19.43
Tax specific key items:
Uncertain tax positions		-			0.11			-			0.03
Other and tax reform related activity		-			0.17			-			0.40
Tax specific key items(b)		-			0.28			-			0.43
Total key items		(0.14	)		16.48			0.48			19.86
Adjusted Diluted EPS from Continuing Operations (non-GAAP)	$	0.75		$	0.78		$	1.39		$	1.47
Amortization expense adjustment (net of tax)(c)	$	0.27		$	0.26		$	0.80		$	0.83
Adjusted Diluted EPS from Continuing Operations (non-GAAP) Excluding Intangibles Amortization Expense	$	1.02		$	1.04		$	2.19		$	2.30

(a)

Represents the diluted EPS impact from the tax effect of the key items that are identified above.

(b)

Represents the diluted EPS impact from tax specific financial transactions, tax law changes or other matters that fall within the definition of tax specific key items. For additional explanation of these tax specific key items, see the income tax expense (benefit) discussion within the Statements of Condensed Consolidated Comprehensive Income (Loss) caption review section above.

(c)

Amortization expense adjustment (net of tax) tax rates were 20% for both the three and nine months ended June 30, 2026, and 20% and 21% for the three and nine months ended June 30, 2025, respectively.

RESULTS OF OPERATIONS - REPORTABLE SEGMENT REVIEW

Ashland's reportable segments include Life Sciences, Personal Care, Specialty Additives, and Intermediates. Unallocated and other includes corporate governance activities and certain legacy matters.

Results of Ashland's reportable segments are presented based on its management and internal accounting structure. The structure is specific to Ashland; therefore, the financial results of Ashland's reportable segments are not necessarily comparable with similar information for other companies. Ashland allocates all significant costs to its reportable segments except for certain significant company-wide restructuring activities, certain corporate governance costs and other costs or activities that relate to former businesses that Ashland no longer operates. The service cost component of pension and other postretirement benefits costs is allocated to each reportable segment on a ratable basis; while the remaining components of pension and other postretirement benefits costs are recorded within the other net periodic benefit (income) loss caption on the Statements of Condensed Consolidated Comprehensive Income (Loss). Ashland refines its expense allocation methodologies to the reportable segments from time to time as internal accounting practices are improved, more refined information becomes available and the industry or market changes. Significant revisions to Ashland's methodologies are adjusted for all segments on a retrospective basis. There were no material changes in methodology for the three and nine months ended June 30, 2026 or 2025.

The following table discloses sales, operating income (loss), depreciation and amortization and EBITDA by reportable segment:


	Three months ended									Nine months ended
	June 30									June 30
(In millions - unaudited)	2026			2025			Change			2026			2025			Change
SALES
Life Sciences	$	180		$	162		$	18		$	491		$	468		$	23
Personal Care		155			147			8			428			426			2
Specialty Additives		136			131			5			372			380			(8	)
Intermediates		37			33			4			103			104			(1	)
Intersegment sales(a)		(11	)		(10	)		(1	)		(29	)		(31	)		2
	$	497		$	463		$	34		$	1,365		$	1,347		$	18
OPERATING INCOME (LOSS)
Life Sciences(b)	$	45		$	(343	)	$	388		$	97		$	(301	)	$	398
Personal Care		29			25			4			67			64			3
Specialty Additives(c)		3			(345	)		348			(12	)		(343	)		331
Intermediates		3			4			(1	)		6			6			-
Unallocated and other(d)		(37	)		(49	)		12			(82	)		(262	)		180
	$	43		$	(708	)	$	751		$	76		$	(836	)	$	912
DEPRECIATION EXPENSE
Life Sciences(e)	$	10		$	17		$	(7	)	$	29		$	48		$	(19	)
Personal Care (f)		7			7			-			21			23			(2	)
Specialty Additives(f)		13			34			(21	)		40			60			(20	)
Intermediates		1			3			(2	)		4			9			(5	)
Unallocated and other(g)		1			-			1			1			-			1
	$	32		$	61		$	(29	)	$	95		$	140		$	(45	)
AMORTIZATION EXPENSE
Life Sciences	$	5		$	5		$	-		$	14		$	13		$	1
Personal Care		8			8			-			25			26			(1	)
Specialty Additives		2			2			-			7			7			-
Intermediates		-			-			-			-			1			(1	)
	$	15		$	15		$	-		$	46		$	47		$	(1	)
EBITDA(h)
Life Sciences	$	60		$	(321	)	$	381		$	140		$	(240	)	$	380
Personal Care		44			40			4			113			113			-
Specialty Additives		18			(309	)		327			35			(276	)		311
Intermediates		4			7			(3	)		10			16			(6	)
Unallocated and other		(36	)		(49	)		13			(81	)		(262	)		181
	$	90		$	(632	)	$	722		$	217		$	(649	)	$	866

(a)

Intersegment sales from Intermediates are accounted for at prices that approximate market value. All other intersegment sales are accounted for at cost.

(b)

Includes goodwill impairment of $375 million for Life Sciences for both the three and nine months ended June 30, 2025.

(c)

Includes goodwill impairment of $331 million for Specialty Additives for both the three and nine months ended June 30, 2025.

(d)

Includes a $2 million gain for post-closing adjustments related to the Avoca business sale, a $2 million gain on sale of excess corporate property for the nine months ended June 30, 2026, a $8 million gain on sale and a $183 million impairment charge related to the Avoca business for the nine months ended June 30, 2025, within the income (loss) on divestitures, net caption of the Statements of Condensed Consolidated Income (Loss).

(e)

Depreciation includes accelerated depreciation of $8 million and $21 million for Life Sciences for the three and nine months ended June 30, 2025, respectively.

(f)

Depreciation includes accelerated depreciation of $1 million for Personal Care and $3 million for Specialty Additives for the nine months ended June 30, 2026, and $19 million for both the three and nine months ended June 30, 2025.

(g)

Depreciation includes accelerated depreciation of $1 million for Unallocated and other for both the three and nine months ended June 30, 2026.

(h)

Excludes loss from discontinued operations, net of income taxes and other net periodic benefit (income) loss. See the Statements of Condensed Consolidated Comprehensive Income (Loss) for applicable amounts excluded.

Life Sciences

Life Sciences is comprised of pharmaceuticals, nutrition, agricultural chemicals, diagnostic films (formerly known as advanced materials) and fine chemicals. Pharmaceutical solutions include controlled release polymers, disintegrants, tablet coatings, thickeners, solubilizers and tablet binders. Nutrition solutions include thickeners, stabilizers, emulsifiers and additives for enhancing mouthfeel, controlling moisture migration, reducing oil uptake and binding structured foods. Customers include pharmaceutical, food, beverage, hospitals and radiologists manufacturers.

The following table provides a reconciliation of the change in sales for the Life Sciences reportable segment.


	Three months ended		Nine months ended
(In millions)	June 30, 2026		June 30, 2026
Sales change
Volume	$	15	$	16
Price/mix		2		(2	)
Foreign currency exchange		1		9
	$	18	$	23

The following table provides a reconciliation of the change in operating income for the Life Sciences reportable segment.


	Three months ended		Nine months ended
(In millions)	June 30, 2026		June 30, 2026
Operating income (loss) change
Goodwill impairment	$	375	$	375
Volume		8		8
Price/mix		5		2
Cost		-		8
Foreign currency exchange		-		5
	$	388	$	398

EBITDA and Adjusted EBITDA reconciliation

The following EBITDA presentation is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of each reportable segment. Life Sciences, Personal Care and Specialty Additives had key items in the three and nine months ended June 30, 2026 and 2025. These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above.


	Life Sciences
	Three months ended June 30									Nine months ended June 30
(In millions)	2026			2025			Change			2026			2025			Change
Operating income	$	45		$	(343	)	$	388		$	97		$	(301	)	$	398
Depreciation and amortization(a)		15			14			1			43			40			3
EBITDA	$	60		$	(329	)		389		$	140		$	(261	)		401
Goodwill impairment		-			375			(375	)		-			375			(375	)
Accelerated depreciation		-			8			(8	)		-			21			(21	)
Other plant optimization costs		-			-			-			1			2			(1	)
Adjusted EBITDA	$	60		$	54		$	6		$	141		$	137		$	4
Operating income as a percent of sales		25.0	%		-211.7	%	Not meaningful				19.8	%		-64.3	%	Not meaningful
Adjusted EBITDA as a percent of sales		33.3	%		33.3	%	0 bps				28.7	%		29.3	%	-60 bps

(a)

Depreciation and amortization for Life Sciences excludes accelerated depreciation of $8 million and $21 million for the three and nine months ended June 30, 2025, respectively, which is included as a key item within this table as a component of Adjusted EBITDA.

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Life Sciences sales for the current quarter increased as a result of higher volume and favorable price/mix. Operating income (loss) and Adjusted EBITDA increased in the current quarter as a result of the prior period goodwill impairment, higher volume and favorable price/mix.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Life Sciences' sales increased in the current period due to higher volume and favorable foreign currency exchange, partially offset by unfavorable price/mix. Operating income (loss) and Adjusted EBITDA for the current period increased as a result of the prior period goodwill impairment, higher volume, lower cost, favorable foreign currency exchange and favorable price/mix.

Personal Care

Personal Care is comprised of biofunctionals, microbial protectants (preservatives), skin care, sun care, oral care, hair care and household solutions. These businesses have a broad range of natural, nature-derived, biodegradable, and high-performance ingredients for customer driven solutions to help protect, renew, moisturize and revitalize skin and hair, and provide solutions for toothpastes, mouth washes and rinses, denture cleaning and care for teeth. Personal Care supplies nature-derived rheology ingredients, biodegradable surface wetting agents, performance encapsulates, and specialty polymers for household, industrial and institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies. The Avoca business was sold in March 2025.

The following table provides a reconciliation of the change in sales for the Personal Care reportable segment.


	Three months ended			Nine months ended
(In millions)	June 30, 2026			June 30, 2026
Sales change
Volume	$	9		$	11
Foreign currency exchange		1			10
Price/mix		(2	)		(8	)
Avoca business		-			(11	)
	$	8		$	2

The following table provides a reconciliation of the change in operating income for the Personal Care reportable segment.


	Three months ended			Nine months ended
(In millions)	June 30, 2026			June 30, 2026
Operating income change
Price/mix	$	4		$	-
Volume		3			4
Cost		(3	)		(8	)
Avoca business		-			4
Foreign currency exchange		-			3
	$	4		$	3

EBITDA and Adjusted EBITDA reconciliation

The following EBITDA presentation is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Personal Care. There were key items in the three and nine months ended June 30, 2026 and 2025. These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above.


	Personal Care
	Three months ended June 30								Nine months ended June 30
(In millions)	2026			2025			Change		2026			2025			Change
Operating income	$	29		$	25		$	4	$	67		$	64		$	3
Depreciation and amortization(a)		15			15			-		45			51			(6	)
EBITDA	$	44		$	40			4	$	112		$	115			(3	)
Held for sale depreciation and amortization		-			-			-		1			(2	)		3
Other plant optimization costs		1			1			-		1			3			(2	)
Adjusted EBITDA	$	45		$	41		$	4	$	114		$	116		$	(2	)
Operating income as a percent of sales		18.7	%		17.0	%	170 bps			15.7	%		15.0	%	70 bps
Adjusted EBITDA as a percent of sales		29.0	%		27.9	%	110 bps			26.6	%		27.2	%	-60 bps

(a)

Depreciation and amortization includes $1 million and $2 million for Personal Care associated with the Avoca business assets for the nine months ended June 30, 2026 and 2025, respectively, which is included as a key item within this table as a component of Adjusted EBITDA.

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Personal Care's sales increased as a result of higher volume and favorable foreign currency exchange, partially offset by unfavorable price/mix. Operating income and Adjusted EBITDA for the current quarter increased primarily as a result higher volume, favorable price/mix partially offset by higher costs.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Personal Care's sales increased as a result of higher volume and favorable foreign currency exchange, partially offset by unfavorable price/mix and the impact of the Avoca divestiture. Operating income for the current period increased primarily due to higher volume and favorable foreign currency exchange and the impact of the Avoca divestiture, partially offset by higher costs. Adjusted EBITDA decreased primarily due to higher operating costs, partially offset by higher volume, the positive impact of the Avoca divestiture and favorable foreign exchange currency.

Specialty Additives

Specialty Additives is comprised of rheology and performance-enhancing additives serving the architectural coatings, construction, energy, automotive and various industrial markets. Solutions include coatings additives

for architectural paints, finishes and lacquers, cement- and gypsum-based dry mortars, ready-mixed joint compounds, synthetic plasters for commercial and residential construction, and specialty materials for industrial applications. Products include rheology modifiers (cellulosic and associative thickeners), foam control agents, surfactants and wetting agents, pH neutralizers, advanced ceramics used in catalytic converters, and environmental filters, ingredients that aid the manufacturing process of ceramic capacitors, plasma display panels and solar cells, ingredients for textile printing, thermoplastic metals and alloys for welding. Products help improve desired functional outcomes through rheology modification and control, water retention, workability, adhesive strength, binding power, film formation, deposition and suspension and emulsification. Customers include, but are not limited to, global paint manufacturers, electronics and automotive manufacturers, textile mills, the construction industry and welders.

The following table provides a reconciliation of the change in sales for the Specialty Additives reportable segment.


	Three months ended		Nine months ended
(In millions)	June 30, 2026		June 30, 2026
Sales change
Price/mix	$	4	$	(3	)
Volume		1		(12	)
Foreign currency exchange		-		7
	$	5	$	(8	)

The following table provides a reconciliation of the change in operating income (loss) for the Specialty Additives reportable segment.


	Three months ended		Nine months ended
(In millions)	June 30, 2026		June 30, 2026
Operating income (loss) change
Goodwill impairment	$	331	$	331
Costs		10		1
Price/mix		4		-
Volume		3		-
Foreign currency exchange		-		(1	)
	$	348	$	331

EBITDA and Adjusted EBITDA reconciliation

The following EBITDA presentation is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Specialty Additives. There were key items in the three and nine months ended June 30, 2026 and 2025. These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above.


	Specialty Additives
	Three months ended June 30									Nine months ended June 30
(In millions)	2026			2025			Change			2026			2025			Change
Operating income (loss)	$	3		$	(345	)	$	348		$	(12	)	$	(343	)	$	331
Depreciation and amortization(a)		15			17			(2	)		44			48			(4	)
EBITDA		18			(328	)		346			32			(295	)		327
Goodwill impairment		-			331			(331	)		-			331			(331	)
Accelerated depreciation		-			19			(19	)		3			19			(16	)
Environmental reserve adjustments		-			2			(2	)		-			2			(2	)
Other plant optimization costs		2			2			-			16			7			9
Adjusted EBITDA	$	20		$	26		$	(6	)	$	51		$	64		$	(13	)
Operating income (loss) as a percent of sales		2.2	%		-263.4	%	Not meaningful				-3.2	%		-90.3	%	Not meaningful
Adjusted EBITDA as a percent of sales		14.7	%		19.8	%	-510 bps				13.7	%		16.8	%	-310 bps

(a)

Depreciation and amortization for Specialty Additives excludes accelerated depreciation of $3 million for the nine months ended June 30, 2026, and $19 million for both the three and nine months ended June 30, 2025 which is included as a key item within this table as a component of Adjusted EBITDA.

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Specialty Additives' sales increased as a result of favorable price/mix and higher volume. Operating income (loss) increased in the current quarter due to the prior period goodwill impairment, lower costs, including accelerated depreciation and other plant optimization costs, favorable price/mix and higher volume. Adjusted EBITDA decreased as a result of higher costs, excluding accelerated depreciation and other plant optimization costs, partially offset by higher volume and favorable price/mix.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Specialty Additives sales decreased as a result of lower volume, unfavorable price/mix, partially offset by favorable foreign currency exchange. Operating income (loss) remained constant excluding the impact of the prior period goodwill impairment charge. Adjusted EBITDA decreased in the current period primarily due to higher costs, lower volume and unfavorable price mix, partially offset by favorable foreign currency exchange.

Intermediates

Intermediates is comprised of the production of 1,4 butanediol (BDO) and related derivatives, including nmethylpyrrolidone. These products are used as chemical intermediates in the production of engineering polymers and polyurethanes, and as specialty process solvents in a wide array of applications including electronics, pharmaceuticals, water filtration membranes and more. BDO is also supplied to Life Sciences, Personal Care, and Specialty Additives for use as a raw material.

The following table provides a reconciliation of the change in sales for the Intermediates reportable segment.


	Three months ended		Nine months ended
(In millions)	June 30, 2026		June 30, 2026
Sales change
Volume	$	3	$	(1	)
Foreign currency exchange		1		1
Price/mix		-		(1	)
	$	4	$	(1	)

The following table provides a reconciliation of the change in operating income for the Intermediates reportable segment.


	Three months ended			Nine months ended
(In millions)	June 30, 2026			June 30, 2026
Operating income (loss) change
Volume	$	1		$	(2	)
Costs		(1	)		1
Price/mix		(1	)		-
Foreign currency exchange		-			1
	$	(1	)	$	-

EBITDA and Adjusted EBITDA reconciliation


	Intermediates
	Three months ended June 30									Nine months ended June 30
(In millions)	2026			2025			Change			2026			2025			Change
Operating income	$	3		$	4		$	(1	)	$	6		$	6		$	-
Depreciation and amortization		1			3			(2	)		4			10			(6	)
EBITDA	$	4		$	7		$	(3	)	$	10		$	16		$	(6	)
Operating income as a percent of sales		8.1	%		12.1	%	-400 bps				5.8	%		5.8	%	0 bps
EBITDA as a percent of sales		10.8	%		21.2	%	-1040 bps				9.7	%		15.4	%	-570 bps

Three months ended June 30, 2026 compared to three months ended June 30, 2025

Intermediates' sales increased in the current quarter primarily due to higher volume while operating income and EBITDA decreased primarily due to higher costs.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

Intermediates' sales decreased due to lower volume and unfavorable price/mix partially offset by favorable foreign currency exchange. Operating income remained consistent while EBITDA decreased in the current period primarily due to lower volume and higher costs partially offset by favorable foreign currency exchange.

Unallocated and other

The following table summarizes the key components of the Unallocated and other's operating loss.


	Unallocated and other
	Three months ended June 30									Nine months ended June 30
(In millions)	2026			2025			Change			2026			2025			Change
Restructuring activities	$	(7	)	$	(7	)	$	-		$	(14	)	$	(18	)	$	4
Environmental expenses		(17	)		(28	)		11			(28	)		(31	)		3
Accelerated depreciation		(1	)		-			(1	)		(1	)		-			(1	)
Tax credit		8			-			8			8			-			8
Income (loss) on divestitures, net		1			-			1			3			(165	)		168
Other expenses (primarily governance and legacy expenses)		(21	)		(14	)		(7	)		(50	)		(48	)		(2	)
Total expense	$	(37	)	$	(49	)	$	12		$	(82	)	$	(262	)	$	180

Three months ended June 30, 2026 compared to three months ended June 30, 2025

The current and prior year quarter both included expense of $7 million for restructuring activities mainly comprised of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs.

The current and prior year quarter included $17 million and $28 million for environmental expenses, respectively.

Other items in the current quarter included accelerated depreciation of $1 million and a tax credit of $8 million.

Other expenses between quarters were driven by changes in governance and legacy expenses primarily associated with fluctuations in foreign currency, deferred compensation, company-owned life insurance contracts and variable incentive compensation, including stock compensation in the current period.

Nine months ended June 30, 2026 compared to nine months ended June 30, 2025

The current and prior year period included expense of $14 million and $18 million, respectively, for restructuring activities mainly comprised of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs.

The current and prior year period included $28 million and $31 million for environmental expenses, respectively.

Other items in the current year period included accelerated depreciation of $1 million, a tax credit of $8 million, and a $3 million income related to excess corporate real estate sales. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.

The prior year period included a loss on divestiture of $165 million, primarily related to the $183 million impairment of the Avoca business, $8 million pre-tax gain on the final sale of the Avoca business, and $11 million gain on the sale of a property. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.

Other expenses between periods were driven by changes in governance and legacy expenses primarily associated with fluctuations in foreign currency, deferred compensation, company-owned life insurance contracts and variable incentive compensation, including stock compensation expense in the current period.

FINANCIAL POSITION

Liquidity

Ashland believes that cash flow from operations, availability under existing credit facilities and arrangements, current cash and investment balances and the ability to obtain other financing, if necessary, will provide adequate cash funds for Ashland's foreseeable working capital needs, capital expenditures at existing facilities, dividend payments and debt service obligations. Ashland's cash requirements are subject to change as business conditions warrant and opportunities arise. The timing and size of any new business ventures or acquisitions that the Company may complete may also impact its cash requirements.

During May 2026, Ashland entered into a Second Amended and Restated Credit Agreement (the "2026 Credit Agreement"). The 2026 Credit Agreement provides for a $500 million five-year revolving credit facility (including a $125 million letter of credit sublimit) (the "Revolving Credit Facility"). Proceeds of borrowings under the 2026 Revolving Credit Facility are intended to provide ongoing working capital and for other general corporate purposes. See Note H of the Notes to Condensed Consolidated Financial Statements for more information.

During April 2024, Ashland authorized a financing program offered through JP Morgan and Taulia Alliance. Under this program, JP Morgan and its affiliates may purchase certain confirmed receivables directly from suppliers pursuant to the terms of a separate arrangement entered into between JPMorgan and Taulia Alliance and such suppliers. There were no changes to Ashland's standard payment terms with its suppliers in connection with this program. Ashland provides no guarantees to JP Morgan and Taulia Alliance under this program. There were $6 million and $16 million, respectively, of confirmed invoices, of which $6 million and $11 million, respectively, were paid during the three and nine months ended June 30, 2026, respectively. There were $5 million and less than $1 million of confirmed invoices remaining under this program at June 30, 2026 and September 30, 2025, respectively.

Cash flows

Ashland's cash flows from operating, investing and financing activities, as reflected in the Statements of Condensed Consolidated Cash Flows, are summarized as follows:


	Nine months ended
	June 30
(In millions)	2026			2025
Cash provided (used) by:
Operating activities from continuing operations	$	295		$	94
Investing activities from continuing operations		22			-
Financing activities from continuing operations		(60	)		(161	)
Discontinued operations		(31	)		(27	)
Effect of currency exchange rate changes on cash and cash equivalents(a)		(1	)		1
Net increase (decrease) in cash and cash equivalents	$	225		$	(93	)

(a)

Zero denotes less than $1 million of activity.

Cash and cash equivalents increased $225 million for the nine months ended June 30, 2026 and decreased $93 million for the nine months ended June 30, 2025.

The $225 million increase for the nine months ended June 30, 2026, was primarily driven by favorable changes in working capital (fluctuations within accounts receivable, inventory, trade payables and accrued expenses) and other operating cash flows from continuing operations which amounted to inflows of $295 million. The current period was also affected by inflows of $25 million for the settlement of company-owned life insurance policies and $52 million of reimbursements from restricted investments. These inflows were partially offset from outflows from payment of cash dividends, additions to property, plant and equipment and discontinued operations primarily related to retained liabilities for asbestos and environmental claims of $57 million, $51 million and $31 million, respectively.

The $93 million decrease for the nine months ended June 30, 2025 was primarily driven by payment of cash dividends, additions to property, plant and equipment and stock repurchase activity of $57 million, $64 million and $100 million, respectively, while discontinued operations cash flows were outflows of $27 million. These outflows were partially offset by inflows from operating activities from continuing operations, proceeds from the sale of Avoca and proceeds from the sale of a land property of $94 million, $16 million and $11 million, respectively.

The change in cash flows from operating activities from continuing operations was primarily driven by favorable working capital, including the favorable impact between periods of the U.S. and Foreign Accounts Receivable Sales Program activity.

See the Statements of Condensed Consolidated Cash Flows for additional information.

Free Cash Flow and other liquidity resources

The following represents Ashland's calculation of Free Cash Flow and Ongoing Free Cash Flow for the disclosed periods. Free Cash Flow does not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments.


	Nine months ended
	June 30
(In millions)	2026			2025
Total cash flows provided by operating activities from continuing operations	$	295		$	94
less:
Additions to property, plant and equipment		(51	)		(64	)
Free Cash Flow		244			30
Tax refund(a)		(103	)		-
Cash (inflows) outflows from U.S. Accounts Receivable Sales Program(b)		(9	)		11
Cash outflows from Foreign Accounts Receivable Sales Program(c)		(12	)		(13	)
Restructuring-related payments(d)		18			23
Environmental and related litigation payments(e)		21			24
Ongoing Free Cash Flow	$	159		$	75

Net income (loss)	$	20		$	(877	)
Adjusted EBITDA(f)	$	265		$	282

Operating Cash Flow Conversion(g)		1475	%	Not meaningful
Ongoing Free Cash Flow Conversion(h)		60	%		27	%

(a)

Represents receipt of tax refund related to the capital loss carryback from the Nutraceutical business divestiture.

(b)

Represents activity associated with the U.S. Accounts Receivable Sales Program impacting each period presented.

(c)

Represents activity associated with the Foreign Accounts Receivable Sales Program impacting each period presented.

(d)

Restructuring payments incurred during each period.

(e)

Represents cash outflows associated with environmental and related litigation payments which will be reimbursed by the environmental trust.

(f)

See Adjusted EBITDA reconciliation.

(g)

Operating Cash Flow Conversion is defined as Cash flows provided (used) by operating activities from continuing operations divided by net income (loss).

(h)

Ongoing Free Cash Flow Conversion is defined as Ongoing Free Cash Flow divided by Adjusted EBITDA.

Working capital (current assets minus current liabilities, excluding long-term debt due within one year) amounted to $868 million and $782 million as of June 30, 2026 and September 30, 2025, respectively. Liquid assets (cash and cash equivalents and accounts receivable) amounted to 164% and 108% of current liabilities as of June 30, 2026 and September 30, 2025, respectively. The increase in Ongoing Free Cash Flows was primarily a result of favorable working capital, lower additions to property, plant and equipment and lower variable compensation payouts between periods.

The following summary reflects Ashland's cash and cash equivalents, unused borrowing capacity and liquidity as of:


	June 30		September 30
(In millions)	2026		2025
Cash and investment securities
Cash and cash equivalents	$	440	$	215
Restricted investments(a)		332		347

Unused borrowing capacity and liquidity
Revolving credit facility		496		596
U.S. Accounts Receivable Sales Program		-		-
Foreign Accounts Receivable Sales Program		-		-

(a)

Includes $220 million and $231 million related to the Asbestos trust and $112 million and $116 million related to the Environmental trust as of June 30, 2026 and September 30, 2025, respectively.

The borrowing capacity remaining under the 2026 Credit Agreement was $496 million, which reflects the full $500 million revolving credit facility less a reduction of $4 million for letters of credit outstanding at June 30, 2026. In total, Ashland's available liquidity position, which includes cash and cash equivalents and the revolving credit facility, was $936 million at June 30, 2026, compared to $811 million at September 30, 2025. Ashland had no available liquidity under the U.S. and Foreign Accounts Receivable Sales Programs as of June 30, 2026. Ashland also maintained $332 million of restricted investments at June 30, 2026, to pay for future asbestos claims and environmental remediation and related litigation.

Capital resources

Debt

The following summary reflects Ashland's debt as of:


	June 30		September 30
(In millions)	2026		2025
Short-term debt	$	-	$	-
Long-term debt (less debt issuance cost discounts)(a)		1,374		1,384
Total debt	$	1,374	$	1,384

(a)

Includes $9 million and $10 million of debt issuance cost discounts as of June 30, 2026 and September 30, 2025, respectively.

Debt as a percent of capital employed was 42% at both June 30, 2026 and September 30, 2025. At June 30, 2026, Ashland's total debt had an outstanding principal balance of $1,403 million, discounts of $20 million, and debt issuance costs of $9 million. Ashland has no long-term debt (excluding debt issuance costs) maturing within 2026, $4 million in 2027, $571 million due in fiscal 2028, $97 million due in 2029, zero in 2030, and $450 million in 2031.

Ashland credit ratings

Ashland's corporate credit rating by Standard & Poor's was downgraded to BB during the nine months ended June 30, 2026, and Moody's Investor Services was downgraded to Ba2 during the nine months ended June 30, 2026. As of June 30, 2026, both Moody's Investor Services and Standard & Poor's outlook remained at stable. Subsequent changes to these ratings or outlook may have an effect on Ashland's borrowing rate or ability to access capital markets in the future.

Ashland debt covenant restrictions

Ashland's 2026 Credit Agreement contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional subsidiary indebtedness, restrictions on subsidiary distributions, investments, mergers, sale of assets and restricted payments and other customary limitations. As of June 30, 2026, Ashland is in compliance with all debt agreement covenant restrictions under the 2026 Credit Agreement.

The maximum consolidated net leverage ratio permitted under the 2026 Credit Agreement is 4.0. The 2026 Credit Agreement defines the consolidated net leverage ratio as the ratio of consolidated indebtedness minus unrestricted cash and cash equivalents to consolidated EBITDA (Covenant Adjusted EBITDA) for any measurement period. In general, the 2026 Credit Agreement defines Covenant Adjusted EBITDA as net income (loss) plus consolidated interest charges, taxes, depreciation and amortization expense, fees and expenses related to capital market transactions and proposed or actual acquisitions and divestitures, restructuring and integration charges, noncash stock and equity compensation expense, and any other nonrecurring expenses or losses that do not represent a cash item in such period or any future period; less any noncash gains or other items increasing net income (loss). The computation of Covenant Adjusted EBITDA differs from the calculation of EBITDA and Adjusted EBITDA, which have been reconciled above in the "consolidated review" section. In general, consolidated indebtedness includes debt plus all purchase money indebtedness, banker's acceptances and bank guaranties, deferred purchase price of property or services, attributable indebtedness and guarantees. At June 30, 2026, Ashland's calculation of the consolidated net leverage ratio was 2.3.

The minimum required consolidated interest coverage ratio under the 2026 Credit Agreement is 3.0. The 2026 Credit Agreement defines the consolidated interest coverage ratio as the ratio of Covenant Adjusted EBITDA to consolidated interest charges for any measurement period. At June 30, 2026, Ashland's calculation of the consolidated interest coverage ratio was 6.9.

Any change in Covenant Adjusted EBITDA of $100 million would have an approximate 0.5x effect on the consolidated net leverage ratio and a 1.7x effect on the consolidated interest coverage ratio. The change in consolidated indebtedness of $100 million would affect the consolidated leverage ratio by approximately 0.2x.

Additional capital resources

Total equity

Total equity decreased by $34 million since September 30, 2025 to $1,870 million at June 30, 2026. The decrease of $34 million was due to dividends of $57 million, $6 million of translation losses and $2 million for unrealized losses on commodity hedges partially offset by $11 million of common stock issued and $20 million of net income.

2023 Stock Repurchase program

On June 28, 2023, Ashland's board of directors authorized a new evergreen $1 billion common share repurchase program ("2023 Stock Repurchase Program"). As of June 30, 2026, $520 million remained available for repurchase under the 2023 Stock Repurchase Program.

Stock repurchase program agreements

The following table provides the common stock repurchase activity:


	Three months ended				Nine months ended
	June 30				June 30
(In millions, except per share data)	2026		2025		2026		2025
Number of shares repurchased		-		-		-		1.50
Weighted-average price per share(a)	$	-	$	-	$	-	$	64.90
Aggregate purchase price(a)	$	-	$	-	$	-	$	100

(a)

Includes transaction costs.

Stockholder dividends

On May 5, 2026, Ashland's Board declared a quarterly cash dividend of 42.0 cents per share on the company's common stock representing a 1% increase from the previous quarter. The dividend was paid in the third quarter of fiscal 2026. Dividends of 41.5 cents per share were paid in the first and second quarters of fiscal 2026, and the third and fourth quarters of fiscal 2025. Dividends of 40.5 cents per share were paid in both the first and second quarters of fiscal 2025.

Capital expenditures

Capital expenditures were $51 million for the nine months ended June 30, 2026, compared to $64 million for the nine months ended June 30, 2025.

CRITICAL ACCOUNTING POLICIES

The preparation of Ashland's Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses, and the disclosures of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include, but are not limited to, environmental remediation, asbestos litigation, the accounting for goodwill and other indefinite-lived intangible assets and income taxes. These accounting policies are discussed in detail in "Management's Discussion and Analysis - Critical Accounting Policies" in Ashland's Annual Report on Form 10-K for the fiscal year ended September 30, 2025. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions. Management has reviewed the estimates affecting these items with the Audit Committee of Ashland's Board of Directors. No material changes have been made to the valuation techniques during the three and nine months ended June 30, 2026.

OUTLOOK

Ashland is reaffirming its full year fiscal 2026 sales guidance of $1,835 to $1,870 million and its Adjusted EBITDA guidance of $385 to $400 million. Ashland is also revising its adjusted EPS outlook to low-to-mid-single digit growth from mid-to-high-single digit growth, reflecting a higher tax rate associated with unfavorable discrete items. The outlook reflects continued growth across the portfolio, ongoing momentum in higher value applications, increasing realization of recent pricing actions and strong cash generation.

Despite a mixed macroeconomic backdrop, Ashland's core Life Sciences and Personal Care end markets continue to demonstrate resilient demand, supported by stable fundamentals, continued innovation adoption from customers and strong commercial execution. Specialty Additives trends continue to improve, driven by share gains in coatings and performance specialties.

Ashland continues to benefit from growth in differentiated, higher value applications, including biofunctional actives, microbial protection, injectables and tablet coatings. Recent pricing actions are contributing to results and are expected to provide greater benefit in the fourth quarter as realization increases. Raw material and

freight costs are expected to remain elevated amid geopolitical supply pressures, although Ashland expects pricing actions to offset these impacts over time.

Updated guidance

•

Sales: $1,835 to $1,870 million (no change)

•

Adjusted EBITDA: $385 million to $400 million (no change)

•

Adjusted Diluted Earnings Per Share Excluding Intangibles Amortization: low-to-mid single-digit growth

•

Ongoing Free Cash Flow Conversion: greater than 50 percent of Adjusted EBITDA with capital expenditures of approximately $~90 million

Ashland Inc. published this content on July 29, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on July 29, 2026 at 21:19 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]

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