# Ashland Inc.: Form 10-Q for the period ended Jun 30, 2024

- Company: [Ashland Inc.](/companies/ash.md) (CIK 1674862)
- Form: 10-Q
- Filed: 2024-08-07
- Accepted by EDGAR: Aug 7, 2024, 14:32 ET
- Period: 2024-06-30
- Accession: 0000950170-24-092587
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1674862/000095017024092587/ash-20240630.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1674862/000095017024092587/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-04-01 to 2024-06-30 | $544.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-10-01 to 2024-06-30 | $1.59bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-04-01 to 2024-06-30 | $358.0m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2023-10-01 to 2024-06-30 | $1.15bn | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-04-01 to 2024-06-30 | $186.0m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2023-10-01 to 2024-06-30 | $444.0m | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-04-01 to 2024-06-30 | $15.0m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-10-01 to 2024-06-30 | $42.0m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-04-01 to 2024-06-30 | $114.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2023-10-01 to 2024-06-30 | $303.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-04-01 to 2024-06-30 | −$61.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-10-01 to 2024-06-30 | −$57.0m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-04-01 to 2024-06-30 | −$101.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-10-01 to 2024-06-30 | −$229.0m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-04-01 to 2024-06-30 | $6.0m | us-gaap:ProfitLoss |
| Net income | 9 months, 2023-10-01 to 2024-06-30 | $153.0m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2024-04-01 to 2024-06-30 | $0.12 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-10-01 to 2024-06-30 | $3.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-04-01 to 2024-06-30 | $0.12 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-10-01 to 2024-06-30 | $3.04 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-04-01 to 2024-06-30 | 51,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-10-01 to 2024-06-30 | 51,000,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-10-01 to 2024-06-30 | $382.0m | us-gaap:NetCashProvidedByUsedInOperatingActivitiesContinuingOperations |
| Capital expenditure | 9 months, 2023-10-01 to 2024-06-30 | $99.0m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 9 months, 2023-10-01 to 2024-06-30 | $59.0m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 9 months, 2023-10-01 to 2024-06-30 | $230.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-06-30 | $399.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-06-30 | $1.39bn | us-gaap:AssetsCurrent |
| Total assets | at 2024-06-30 | $5.75bn | us-gaap:Assets |
| Current liabilities | at 2024-06-30 | $464.0m | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2024-06-30 | $1.32bn | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2024-06-30 | $0 | us-gaap:LongTermDebtCurrent |
| Short-term borrowings | at 2024-06-30 | $0 | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-06-30 | $2.97bn | us-gaap:StockholdersEquity |
| Shares outstanding | at 2024-06-30 | 48,831,868 shares | dei:EntityCommonStockSharesOutstanding |

## Management's discussion and analysis

As filed, 94,261 characters.

### 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 environmental, social and governance ("ESG"). The Company serves customers in a wide range of consumer and industrial markets, including architectural coatings, construction, energy, food and beverage, nutraceuticals, personal care and pharmaceutical. With approximately 3,800 employees worldwide, Ashland serves customers in more than 100 countries.

Ashland’s sales generated outside of North America were 69% and 68% for the three and nine months ended June 30, 2024, respectively, and 69% and 70% for the three and nine months ended June 30, 2023, respectively. Sales by region expressed as a percentage of total consolidated sales for the three and nine months ended June 30 were as follows:

| Sales by Geography | Three months ended June 30 2024 | 2023 | Nine months ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| North America(a) | 31% | 31% | 32% | 30% |
| Europe(a) | 35% | 35% | 35% | 36% |
| Asia Pacific | 25% | 24% | 24% | 24% |
| Latin America & other | 9% | 10% | 9% | 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 for the three and nine months ended June 30 was as follows:

| Sales by Reportable Segment | Three months ended June 30 2024 | 2023 | Nine months ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Life Sciences | 36% | 40% | 39% | 40% |
| Personal Care | 32% | 27% | 30% | 27% |
| Specialty Additives | 27% | 28% | 27% | 27% |
| Intermediates | 5% | 5% | 4% | 6% |
|  | 100% | 100% | 100% | 100% |

29

### KEY DEVELOPMENTS

### Uncertainty relating to the ongoing Ukraine/Russia and Israel/Hamas conflicts

Business disruptions, including those related to the ongoing conflicts between Ukraine/Russia and Israel/Hamas continue to impact businesses around the globe. While it is impossible to predict the effects of these 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 and shipping 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 Russia, Ukraine, 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 wellbeing 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 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 does not have manufacturing operations in Israel. Sales to Israel represent approximately 1% of total consolidated sales and less than 1% of total consolidated assets (related to accounts receivable).

### Other items

#### Stock repurchase program agreements

During June 2024, under the 2023 Stock Repurchase Program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $30 million of its outstanding shares. The program was completed during June 2024, when Ashland paid a total of $30 million and received a delivery of 0.3 million shares of common stock.

During May 2024, under the 2023 Stock Repurchase Program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $100 million of its outstanding shares. The program was completed during June 2024, when Ashland paid a total of $100 million and received a delivery of 1.0 million shares of common stock.

During November 2023, under the 2023 Stock Repurchase Program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $100 million of its outstanding shares. The program was completed during December 2023, when Ashland paid a total of $100 million and received a delivery of 1.2 million shares of common stock.

#### Restructuring programs

As previously disclosed, in November 2023, Ashland is taking portfolio optimization actions to further strengthen Ashland’s resilience and improve margins and returns. When completed, these portfolio actions are expected to result in improved adjusted EBITDA margins of approximately 200 to 250 basis-points and returns on net assets of 150 to 200 basis-points. These actions are expected to reduce volatility, improve focus and decrease working capital and maintenance capital expenditures.

Ashland continues to make progress on these portfolio optimization actions which include optimizing and consolidating CMC and MC production as well as rebalancing the global HEC production network. As of the fiscal third quarter, Ashland closed CMC production at Hopewell, Virginia. CMC levels continue to be drawn down while Ashland migrates select production volumes into Alizay, France. In addition, Ashland completed actions to optimize MC by consolidating production capacity in Doel, Belgium. Other actions to improve Ashland's HEC business continue to be assessed. Ashland also executed similar optimization actions at a Personal Care facility in Summerville, South Carolina.

The impact of these portfolio actions for the three and nine months ended June 30, 2024, resulted in accelerated depreciation charges of $8 million and $56 million and other plant optimization costs of $4 million and $5 million, respectively, recorded within the cost of sales caption of the Statements of Consolidated Comprehensive Income (Loss). In addition, severance of $3 million and $23 million and other restructuring costs of zero and $5 million were recorded for the three and nine months ended June 30, 2024, each respectively within the selling, general and administrative caption of the Statements of Consolidated Comprehensive Income (Loss). See Note D for additional information.

#### Nutraceuticals business

In May 2024, Ashland signed a definitive agreement to sell substantially all of the net assets of its Nutraceuticals business to Turnspire Capital Partners LLC ("Turnspire"). The transaction is expected to close during Ashland's fiscal fourth quarter, contingent on certain customary regulatory approvals and standard closing conditions.

Ashland recorded a $99 million impairment charge within the loss on acquisitions and divestitures, net caption of the Statements of Consolidated Comprehensive Income (Loss) for the three and nine months ended June 30, 2024. See Note B of the Notes to the Condensed Consolidated Financial Statements for more information.

### RESULTS OF OPERATIONS – CONSOLIDATED REVIEW

### Consolidated review

#### Overview

Key financial results for the three and nine months ended June 30, 2024 and 2023 included the following:

*(In millions except per share data)*

|  | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net income | $6 | $50 | $(44) | $153 | $182 | $(29) |
| Diluted earnings per share net income | 0.12 | 0.94 | (0.82) | 3.01 | 3.35 | (0.34) |
| Income from continuing operations | 31 | 42 | (11) | 180 | 176 | 4 |
| Diluted earnings per share income from continuing operations | 0.60 | 0.79 | (0.19) | 3.53 | 3.24 | 0.29 |
| Operating income (loss) | (61) | 62 | (123) | (57) | 182 | (239) |
| EBITDA(a) | (34) | 130 | (164) | 76 | 363 | (287) |
| Adjusted EBITDA(a) | 139 | 133 | 6 | 336 | 385 | (49) |
| Adjusted diluted EPS from continuing operations excluding intangibles amortization expense(a) | 1.49 | 1.23 | 0.26 | 3.19 | 3.63 | (0.44) |

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

#### Business results current quarter

Ashland's net income of $6 million ($0.12 diluted earnings per share) and $50 million ($0.94 diluted earnings per share) included a loss from discontinued operations of $25 million ($0.48 diluted earnings per share) and income of $8 million ($0.15 diluted earnings per share) in the current and prior year quarters, each respectively.

Results for Ashland’s continuing operations, diluted earnings per share from continuing operations and operating income (loss) for the current and prior year quarters 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 expense of $147 million and $5 million for the three months ended June 30, 2024 and 2023 impacting continuing operations. Continuing operations was also impacted by favorable tax specific key items for discrete tax items totaling $106 million and $4 million for the three months ended June 30, 2024 and 2023.

Excluding these key items, the increase in continuing operations, diluted earnings per share from continuing operations and operating income (loss) was primarily driven by higher sales and production volumes within the Personal Care and Specialty Additives segments, favorable product mix, and deflationary raw materials, partially offset by unfavorable volume and pricing within the Life Sciences segment, lower pricing within the Intermediates segment and higher selling, general and administrative expenses, primarily related to the reset of variable compensation. In addition, diluted earnings per share from continuing operations was also impacted by common share reductions from repurchases of Ashland common stock over the last twelve months. These common stock repurchases reduced the number of weighted average shares from 53 million diluted shares in the third quarter of fiscal 2023 to 51 million diluted shares in the third quarter of fiscal 2024.

Ashland’s adjusted EBITDA was $139 million for the current quarter compared to $133 million in the prior year quarter (see U.S. GAAP reconciliation under “Use of Non-GAAP Financial Measures” below). The $6 million increase in adjusted EBITDA was primarily driven by higher sales and production volumes within the Personal

Care and Specialty Additives segments, favorable product mix, and deflationary raw materials, partially offset by unfavorable volume and pricing within the Life Sciences segment, lower pricing within the Intermediates segment and higher selling, general and administrative expenses, primarily related to the reset of variable compensation. Adjusted diluted EPS from continuing operations (non-GAAP) excluding intangibles amortization expense was also impacted by these key factors along with the impact of common share repurchases noted above.

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

#### Statements of Consolidated Comprehensive Income (Loss) – caption review

A comparative analysis of the Statements of Consolidated Comprehensive Income (Loss) by caption is provided as follows for the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

|  | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Sales** | $544 | $546 | $(2) | $1,591 | $1,674 | $(83) |

The following table provides a reconciliation of the change in sales for the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

| Sales change | Three months ended June 30, 2024 | Nine months ended June 30, 2024 |
| --- | ---: | ---: |
| Price/mix | $(24) | $(60) |
| Volume | 26 | (20) |
| Divestiture | — | (3) |
| Foreign currency exchange | (4) | — |
| **Change in sales** | $(2) | $(83) |

Current Quarter - Sales for the current quarter decreased $2 million compared to the prior year quarter. The decrease was driven by unfavorable product price/mix and foreign exchange currency, which was partially offset by favorable volume. CMC and MC portfolio optimization initiatives reduced sales by approximately $15 million during the current quarter.

Year-to-date - Sales for the current year decreased $83 million compared to the prior year period. Unfavorable product price/mix and lower sales volumes were the primary factors. CMC and MC portfolio optimization initiatives reduced sales by approximately $15 million during the current year.

*(In millions)*

|  | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Cost of sales** | $358 | $368 | $(10) | $1,147 | $1,134 | $13 |
| **Gross profit as a percent of sales** | 34.2% | 32.6% |  | 27.9% | 32.3% |  |

The following table provides a reconciliation of the change in cost of sales between the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

| Cost of sales change | Three months ended June 30, 2024 | Nine months ended June 30, 2024 |
| --- | ---: | ---: |
| Operating Costs | $(13) | $61 |
| Foreign currency exchange | (2) | 3 |
| Divestiture | — | (2) |
| Volume | 21 | (8) |
| Price/mix | (16) | (41) |
| **Change in cost of sales** | $(10) | $13 |

Current Quarter - Cost of sales for the current quarter decreased $10 million compared to the prior year quarter. The decrease was primarily driven by favorable product price/mix, lower operating costs and favorable foreign exchange currency, which was partially offset by higher volume, $8 million of accelerated depreciation for product line optimization activities associated with two Specialty Additives manufacturing facilities and one Personal Care manufacturing facility, and $4 million of other plant optimization costs. Gross profit as a percentage of sales increased 1.6%.

Year-to-date - Cost of sales for the current year increased $13 million compared to the prior year period. Higher operating costs driven by higher unit manufacturing costs associated with decreased plant loading to produce to demand in the first half of the year, $56 million of accelerated depreciation for product line optimization activities associated with two Specialty Additives manufacturing facilities and one Personal Care manufacturing facility, and $5 million of other plant optimization costs were the primary factors. These increases were partially offset by favorable product price/mix and lower volume. Gross profit as a percentage of sales decreased 4.4% primarily as a result of higher operating costs including product line optimization activities.

*(In millions)*

|  | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Selling, general and administrative expense** | $114 | $84 | $30 | $303 | $256 | $47 |
| **As a percent of sales** | 21.0% | 15.4% |  | 19.0% | 15.3% |  |

Current Quarter - Selling, general and administrative expense for the current quarter increased $30 million compared to the prior year quarter with expenses as a percent of sales increasing 5.6 percentage points. Key drivers of the fluctuation in selling, general and administrative expense compared to the prior year quarter were:

- $35 million and $16 million in net environmental-related expenses during the current and prior year quarter, respectively (see Note L for more information);
- $12 million gain associated with ICMS Brazil tax credit during the prior year quarter; and
- Higher variable compensation expenses between quarters.

Year-to-date - Selling, general and administrative expense for the current period increased $47 million compared to the prior year period with expenses as a percent of sales increasing 3.7 percentage points. Key drivers of the fluctuation in selling, general and administrative expense compared to the prior year quarter were:

- $41 million and $28 million in net environmental-related expenses during the current and prior year period, respectively (see Note L for more information);
- Expense of $28 million and $5 million comprised of key items for severance, lease abandonment and other restructuring costs during the current and prior year period, respectively;
- $12 million gain associated with ICMS Brazil tax credit during the prior year period;
- $4 million impairment charge in the prior year period associated with the sale of a Specialty Additives manufacturing facility;
- A $5 million charge associated with the impact of a currency devaluation in Argentina in the current period; and
- Higher variable compensation expenses, partially offset by lower stock based compensation between periods.

*(In millions)*

|  | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Research and development expense** | $15 | $12 | $3 | $42 | $37 | $5 |

Current Quarter - Research and development expense increased due to higher incentive compensation.

Year-to-date - Research and development expense increased due to higher incentive compensation.

*(In millions)*

|  | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Intangibles amortization expense** | $19 | $24 | $(5) | $59 | $70 | $(11) |

Current Quarter - The lower intangibles amortization expense in the current quarter is driven by the impact of certain fully amortized intangibles in prior periods.

Year-to-date - The lower intangibles amortization expense in the current period is driven by the impact of certain fully amortized intangibles in prior periods.

*(In millions)*

|  | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Equity and other income** | $— | $4 | $(4) | $3 | $5 | $(2) |

Current Quarter - Equity and other income was zero for the current year quarter, while the prior year quarter included China financial cash subsidies.

Year-to-date - Equity and other income is $3 million for in the current year period. The prior year activity related to China financial cash subsidies.

*(In millions)*

|  | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Loss on acquisitions and divestitures, net** | $(99) | $— | $(99) | $(100) | $— | $(100) |

Current Quarter - Ashland recorded a $99 million impairment charge associated with the Nutraceuticals business. See Note B for more information.

Year-to-date - Ashland recorded a $99 million impairment charge associated with the Nutraceuticals business. See Note B for more information.

*(In millions)*

| Net interest and other expense (income) | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Interest expense | $12 | $14 | $(2) | $38 | $41 | $(3) |
| Interest income | (3) | (2) | (1) | (8) | (9) | 1 |
| Income from restricted investments | (4) | (10) | 6 | (51) | (57) | 6 |
| Other financing costs | 2 | 1 | 1 | 7 | 4 | 3 |
|  | $7 | $3 | $4 | $(14) | $(21) | $7 |

Current Quarter - Net interest and other expense (income) increased by $4 million during the current quarter compared to the prior year quarter. Interest expense and interest income remained primarily consistent during the current quarter compared to the prior year quarter. Restricted investments income of $4 million and $10 million included realized gains of $1 million compared to gains of $6 million for the three months ended June 30, 2024 and 2023, respectively. See Note E for more information on the restricted investments.

Year-to-date - Net interest and other expense (income) increased by $7 million during the current period compared to the prior year period. Interest expense and interest income remained primarily consistent during the current quarter compared to the prior year period. Restricted investments income of $51 million and $57 million included realized gains of $39 million compared to gains of $47 million for the nine months ended June 30, 2024 and 2023, respectively. See Note E for more information on the restricted investments.

*(In millions)*

|  | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Other net periodic benefit loss** | $2 | $2 | $— | $6 | $6 | $— |

Current Quarter - Other net periodic benefit loss for the three months ended June 30, 2024 primarily included interest cost of $3 million which was partially offset by expected return on plan assets of $1 million. Other net periodic benefit loss for the three months ended June 30, 2023 primarily included interest cost of $4 million which was partially offset by expected return on plan assets of $2 million. See Note K for more information.

Year-to-date - Other net periodic benefit loss for the nine months ended June 30, 2024 primarily included interest cost of $12 million which was partially offset by expected return on plan assets of $6 million. Other net periodic benefit loss for the nine months ended June 30, 2023 primarily included interest cost of $11 million which was partially offset by expected return on plan assets of $5 million. See Note K for more information.

*(In millions)*

|  | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| **Income tax expense (benefit)** | $(101) | $15 | $(116) | $(229) | $21 | $(250) |
| **Effective tax rate** | 144% | 26% |  | 467% | 11% |  |

Current Quarter - 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 overall effective tax rate was 144% for the three months ended June 30, 2024 and was primarily impacted by jurisdictional income mix, as well as net favorable discrete items of $104 million primarily related to the tax impact of the held for sale classification for the Nutraceuticals business.

The overall effective tax rate was 26% for the three months ended June 30, 2023 and was primarily impacted by jurisdictional income mix, as well as net favorable discrete items of $4 million primarily related to changes in uncertain tax positions and adjustments to valuation allowances.

Year-to-date - 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 overall effective tax rate was a 467% for the nine months ended June 30, 2024 and was primarily impacted by jurisdictional income mix, as well as net favorable discrete items of $231 million primarily related to changes in foreign tax activity and the tax impact of the held for sale classification for the Nutraceuticals business.

The overall effective tax rate was 11% for the nine months ended June 30, 2023 and was primarily impacted by jurisdictional income mix, as well as net favorable discrete items of $27 million primarily related to changes in 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 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.

The effective tax rate during the three and nine months ended June 30, 2024 and 2023 was significantly impacted by foreign tax activity, uncertain tax positions, and the tax impact of the held for sale classification for the Nutraceuticals business.

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

*(In millions)*

|  | Three months ended June 30 2024 | 2023 | Nine months ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Income (loss) from continuing operations before income taxes | $(70) | $57 | $(49) | $197 |
| Key items (pre-tax)(a) | 147 | 5 | 194 | (19) |
| **Adjusted income from continuing operations** |  |  |  |  |
| **before income taxes** | $77 | $62 | $145 | $178 |
| Income tax expense (benefit) | $(101) | $15 | $(229) | $21 |
| Income tax rate adjustments: |  |  |  |  |
| Tax effect of key items(b) | 12 | (3) | 24 | (8) |
| Tax specific key items:(c) |  |  |  |  |
| Uncertain tax positions | (9) | 3 | (9) | 23 |
| Valuation allowance | — | 1 | — | 1 |
| Restructuring and separation activity | 115 | — | 115 | — |
| Other and tax reform related activity | — | — | 129 | — |
| Total income tax rate adjustments | 118 | 1 | 259 | 16 |
| **Adjusted income tax expense** | $17 | $16 | $30 | $37 |
| **Effective tax rate** | 144% | 26% | 467% | 11% |
| **Effective tax rate, excluding key items (Non-GAAP)(d)** | 23% | 26% | 21% | 21% |

(a) See adjusted EBITDA reconciliation table disclosed in this Management, Discussion and Analysis 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, Discussion and Analysis.

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

*(In millions)*

| Income (loss) from discontinued operations, net of income taxes | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Performance Adhesives | $— | $(1) | $1 | $(3) | $(1) | $(2) |
| Composites/Marl facility | (1) | — | (1) | (2) | (1) | (1) |
| Distribution | (3) | (2) | (1) | (3) | (3) | — |
| Water Technologies | (4) | — | (4) | (4) | — | (4) |
| Valvoline | — | 15 | (15) | 2 | 15 | (13) |
| Asbestos-related litigation | (17) | (4) | (13) | (17) | (4) | (13) |
|  | $(25) | $8 | $(33) | $(27) | $6 | $(33) |

Current Quarter - The activity for Valvoline for the three months ended June 30, 2023 primarily represents cash proceeds related to subsequent adjustments that were made in conjunction with post-closing disputes and Tax Matters Agreement. The activity for Composites/Marl facility, Distribution, and Water Technologies was related to post-closing adjustments in the current and prior year quarter primarily related to environmental liabilities. Asbestos activity in each quarter primarily relates to Ashland's annual update.

Year-to-date - The activity for the Performance Adhesives represents subsequent adjustments that were made in conjunction with post-closing tax items during the current year period. The activity for Composites/Marl facility, Distribution and Water Technologies was related to post-closing adjustments primarily related to environmental liabilities. The Valvoline activity for the current year period represents subsequent adjustments that were made in conjunction with post-closing tax items and disputes and primarily represents cash proceeds related to certain post-closing disputes and Tax Matters Agreement during the prior year period. Asbestos activity in each period primarily relates to Ashland's annual update.

#### Other comprehensive income (loss)

A comparative analysis of the components of other comprehensive income is provided below for the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

| Other comprehensive income (loss), net of tax | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Unrealized translation gain (loss) | $(25) | $(4) | $(21) | $2 | $105 | $(103) |
| Unrealized gain (loss) on commodity hedges | 2 | 1 | 1 | 2 | (6) | 8 |
|  | $(23) | $(3) | $(20) | $4 | $99 | $(95) |

Current Quarter - Total other comprehensive income (loss), net of tax, for the current quarter decreased $20 million compared to the prior year quarter primarily as a result of the following:

- For the three months ended June 30, 2024 and 2023, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in losses of $25 million and $4 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, 2024 and 2023, the change in commodity hedges is primarily due to the fluctuations of the market prices of the underlying commodities. Commodity hedges resulted in unrealized gains of $2 million and $1 million for the three months ended June 30, 2024 and 2023, respectively.

Year-to-date - Total other comprehensive income (loss), net of tax, for the current year decreased $95 million compared to the prior year period primarily as a result of the following:

- For the nine months ended June 30, 2024 and 2023, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in gains of $2 million and $105 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, 2024 and 2023, the change in commodity hedges is primarily due to the fluctuations of the market prices of the underlying commodities. Commodity hedges resulted in unrealized gains of $2 million and unrealized losses of $6 million for the nine months ended June 30, 2024 and 2023, 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 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, plus income tax expense (benefit), net interest and other expense (income), 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 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 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 income 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 income 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 intangible 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 2022 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 loss of $34 million and income of $130 million for the three months ended June 30, 2024 and 2023, respectively, and income of $76 million and $363 million for the nine months ended June 30, 2024 and 2023, 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:

- Nutraceutical impairment – During the three months ended June 30, 2024, Ashland entered

into an agreement to sell substantially all of the net assets of its Nutraceuticals business. As a

result, Ashland recorded a $99 million impairment charge within the loss on acquisitions and divestitures, net caption of the Statements of Consolidated Comprehensive Income (Loss) for the three and nine months ended June 30, 2024. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.

- Accelerated depreciation – As a result of product line optimization activities at two Specialty Additives manufacturing plants and a Personal Care manufacturing plant, 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, 2024. See Note D of the Notes to Condensed Consolidated Financial Statements for more information;
- 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 liabilities 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;
- 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 in the Notes to Condensed Consolidated Financial Statements for further information on the restructuring activities;
- Other plant optimization costs – During the three and nine months ended June 30, 2024, Ashland incurred inventory adjustment and production costs associated with product line optimization actions.
- Argentina foreign currency devaluation – Following the enactment by the Argentina government of a 50% peso devaluation against the dollar, Ashland recorded a currency devaluation charge within the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income (Loss) for the nine months ended June 30, 2024;
- Asset impairments – Ashland recognized impairment charges to certain assets during fiscal 2023;
- ICMS Brazil tax credit – In 2017, the Federal Supreme Court of Brazil ruled in a leading case that a Brazil value-added tax (ICMS) should not be included in the base used to calculate a taxpayer's federal contribution on total revenue known as PIS/COFINS (2017 Decision). Following favorable court rulings from lawsuits previously filed by two of Ashland's Brazilian subsidiaries challenging the inclusion of ICMS in Ashland's calculation of PIS/COFINS, Ashland received acknowledgment from the Brazilian tax authorities that allows Ashland to begin the process to recover the taxes; and
- Held for sale depreciation and amortization – Represents the depreciation and amortization for the Nutraceuticals business held for sale assets during the three and nine months ended June 30, 2024. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.

*(In millions)*

|  | Three months ended June 30 2024 | 2023 | Nine months ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Net income | $6 | $50 | $153 | $182 |
| Income tax expense (benefit) | (101) | 15 | (229) | 21 |
| Net interest and other expense (income) | 7 | 3 | (14) | (21) |
| Depreciation and amortization(a) | 54 | 62 | 166 | 181 |
| EBITDA | (34) | 130 | 76 | 363 |
| Loss (income) from discontinued operations, net of income taxes | 25 | (8) | 27 | (6) |
| Key items included in EBITDA: |  |  |  |  |
| Nutraceutical impairment | 99 | — | 99 | — |
| Accelerated depreciation | 8 | — | 56 | — |
| Environmental reserve adjustments | 35 | 19 | 41 | 31 |
| Restructuring, separation and other costs | 3 | 4 | 28 | 5 |
| Other plant optimization costs | 4 | — | 5 | — |
| Argentina currency devaluation impact | — | — | 5 | — |
| Asset impairments | — | — | — | 4 |
| ICMS Brazil tax credit | — | (12) | — | (12) |
| Held for sale depreciation and amortization | (1) | — | (1) | — |
| Total key items included in EBITDA | 148 | 11 | 233 | 28 |
| Adjusted EBITDA | $139 | $133 | $336 | $385 |
| Total key items included in EBITDA | $148 | $11 | $233 | $28 |
| Unrealized gains on securities | (1) | (6) | (39) | (47) |
| Total key items, before tax | $147 | $5 | $194 | $(19) |

(a) Depreciation and amortization excludes accelerated depreciation of $1 million for Personal Care for both the three and nine months ended June 30, 2024 and $7 million and $55 million for Specialty Additives for the three and nine months ended June 30, 2024, respectively, which is included as a key item within this table as a component of adjusted EBITDA. Depreciation and amortization includes $1 million for Life Sciences for the Nutraceuticals business held for sale assets for both the three and nine months ended June 30, 2024, 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 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 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 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 gain 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, 2024 and June 30, 2023;
- Valuation allowance – represents the impact from the release of certain foreign tax credit valuation allowances;
- Restructuring and separation activity – represents the tax impact of the held for sale classification for the

Nutraceuticals business; and

- Other and tax reform related activity – represents tax specific key items associated with foreign tax related activity for the three and nine months ended June 30, 2024.

|  | Three months ended June 30 2024 | 2023 | Nine months ended June 30 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Diluted EPS from continuing operations (as reported) | $0.60 | $0.79 | $3.53 | $3.24 |
| Key items, before tax: |  |  |  |  |
| Nutraceutical impairment | 1.94 | — | 1.94 | — |
| Accelerated depreciation | 0.16 | — | 1.10 | — |
| Environmental reserve adjustments | 0.69 | 0.36 | 0.80 | 0.58 |
| Restructuring, separation and other costs | 0.06 | 0.09 | 0.55 | 0.09 |
| Other plant optimization costs | 0.08 | — | 0.10 | — |
| Argentina currency devaluation impact | — | — | 0.10 | — |
| Asset impairments | — | — | — | 0.07 |
| ICMS Brazil tax credit | — | (0.23) | — | (0.22) |
| Held for sale depreciation and amortization | (0.02) | — | (0.02) | — |
| Unrealized gain on securities | (0.02) | (0.12) | (0.76) | (0.87) |
| Key items, before tax | 2.89 | 0.10 | 3.81 | (0.35) |
| Tax effect of key items(a) | (0.24) | 0.06 | (0.48) | 0.15 |
| Key items, after tax | 2.65 | 0.16 | 3.33 | (0.20) |
| Tax specific key items: |  |  |  |  |
| Uncertain tax positions | 0.18 | (0.06) | 0.18 | (0.42) |
| Valuation allowance | — | (0.02) | — | (0.02) |
| Restructuring and separation activity | (2.25) | — | (2.25) | — |
| Other and tax reform related activity | — | — | (2.54) | — |
| Tax specific key items(b) | (2.07) | (0.08) | (4.61) | (0.44) |
| Total key items | 0.58 | 0.08 | (1.28) | (0.64) |
| Adjusted diluted EPS from continuing operations (non-GAAP) | $1.18 | $0.87 | $2.25 | $2.60 |
| Amortization expense adjustment (net of tax)(c) | $0.31 | $0.36 | $0.94 | $1.03 |
| Adjusted diluted EPS from continuing operations (non-GAAP) excluding intangibles amortization expense | $1.49 | $1.23 | $3.19 | $3.63 |

(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 Consolidated Comprehensive Income (Loss) caption review section above.

(c) Amortization expense adjustment (net of tax) tax rates were 20% for the three and nine months ended June 30, 2024 and 2023.

### 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 loss caption on the Statements of 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.

The following table discloses sales, operating income (loss), depreciation and amortization and EBITDA by reportable segment for the three and nine months ended June 30, 2024 and 2023.

*(In millions - unaudited)*

| SALES | Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Life Sciences | $195 | $219 | $(24) | $617 | $666 | $(49) |
| Personal Care | 175 | 146 | 29 | 473 | 452 | 21 |
| Specialty Additives | 150 | 152 | (2) | 429 | 456 | (27) |
| Intermediates | 36 | 43 | (7) | 108 | 148 | (40) |
| Intersegment sales(a) | (12) | (14) | 2 | (36) | (48) | 12 |
|  | $544 | $546 | $(2) | $1,591 | $1,674 | $(83) |
| **OPERATING INCOME (LOSS)** |  |  |  |  |  |  |
| Life Sciences | $43 | $49 | $(6) | $125 | $141 | $(16) |
| Personal Care | 31 | 14 | 17 | 59 | 38 | 21 |
| Specialty Additives | 10 | 5 | 5 | (40) | 22 | (62) |
| Intermediates | 6 | 13 | (7) | 22 | 50 | (28) |
| Unallocated and other (b) | (151) | (19) | (132) | (223) | (69) | (154) |
|  | $(61) | $62 | $(123) | $(57) | $182 | $(239) |
| **DEPRECIATION EXPENSE** |  |  |  |  |  |  |
| Life Sciences | $9 | $11 | $(2) | $29 | $31 | $(2) |
| Personal Care(c) | 10 | 9 | 1 | 27 | 28 | (1) |
| Specialty Additives(d) | 20 | 15 | 5 | 97 | 43 | 54 |
| Intermediates | 3 | 3 | — | 9 | 9 | — |
|  | $42 | $38 | $4 | $162 | $111 | $51 |
| **AMORTIZATION EXPENSE** |  |  |  |  |  |  |
| Life Sciences | $6 | $7 | $(1) | $18 | $20 | $(2) |
| Personal Care | 10 | 12 | (2) | 32 | 35 | (3) |
| Specialty Additives | 3 | 5 | (2) | 8 | 14 | (6) |
| Intermediates | — | — | — | 1 | 1 | — |
|  | $19 | $24 | $(5) | $59 | $70 | $(11) |
| EBITDA(e) |  |  |  |  |  |  |
| Life Sciences | $58 | $67 | $(9) | $172 | $192 | $(20) |
| Personal Care | 51 | 35 | 16 | 118 | 101 | 17 |
| Specialty Additives | 33 | 25 | 8 | 65 | 79 | (14) |
| Intermediates | 9 | 16 | (7) | 32 | 60 | (28) |
| Unallocated and other | (151) | (19) | (132) | (223) | (69) | (154) |
|  | $— | $124 | $(124) | $164 | $363 | $(199) |

(a) Intersegment sales from Intermediates are accounted for at prices that approximate fair value. All other intersegment sales are accounted for at cost.

(b) Includes a $99 million impairment charge within the loss on acquisitions and divestitures, net caption of the Statements of Consolidated Comprehensive Income (Loss) for the three and nine months ended June 30, 2024.

(c) Depreciation includes accelerated depreciation of $1 million for Personal Care for both the three and nine months ended June 30, 2024.

(d) Depreciation includes accelerated depreciation of $7 million and $55 million for Specialty Additives for the three and nine months ended June 30, 2024, respectively.

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

### Life Sciences

Life Sciences is comprised of pharmaceuticals, nutrition, nutraceuticals, agricultural chemicals, diagnostic films (formerly known as advanced materials) and fine chemicals. Pharmaceutical solutions include controlled release polymers, disintegrants, tablet coating, 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. Nutraceutical solutions, which is classified as held for sale, include products for weight management, joint comfort, stomach and intestinal health, sports nutrition and general wellness. The nutraceutical business also provides custom formulation, toll processing and particle engineering solutions. Customers include pharmaceutical, food, beverage, nutraceuticals and supplements manufacturers, hospitals and radiologists and industrial manufacturers.

In May 2024, Ashland signed a definitive agreement to sell substantially all of the net assets of its Nutraceuticals business to Turnspire Capital Partners LLC ("Turnspire"). The transaction is expected to close during Ashland's fiscal fourth quarter, contingent on certain customary regulatory approvals and standard closing conditions.

The following table provides a reconciliation of the change in sales for the Life Sciences operating segment for the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

| Sales change | Three months ended June 30, 2024 | Nine months ended June 30, 2024 |
| --- | ---: | ---: |
| Volume | $(15) | $(44) |
| Price/mix | (8) | (6) |
| Foreign Currency | (1) | 1 |
|  | $(24) | $(49) |

The following table provides a reconciliation of the change in operating income (loss) for the Life Sciences operating segment for the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

| Operating income change | Three months ended June 30, 2024 | Nine months ended June 30, 2024 |
| --- | ---: | ---: |
| Volume | $(7) | $(18) |
| Price/mix | (4) | (1) |
| Foreign Currency | (1) | 1 |
| Cost | 6 | 2 |
|  | $(6) | $(16) |

#### EBITDA and Adjusted EBITDA reconciliation

The EBITDA and adjusted EBITDA amounts presented within this business section are provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for each segment. Each of these non-GAAP financial measures are defined as follows: EBITDA (operating income (loss) plus depreciation and amortization), adjusted EBITDA (EBITDA adjusted for key items as applicable), and adjusted EBITDA margin (adjusted EBITDA divided by sales). Ashland does not allocate items to each reportable segment below operating income (loss), such as interest expense and income taxes. As a result, reportable segment EBITDA and adjusted EBITDA are reconciled directly to operating income (loss) since it is the most directly comparable Statements of Consolidated Comprehensive Income (Loss) caption.

The following EBITDA presentation for the three and nine months ended June 30, 2024 and 2023 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 Life Sciences. The key items during the three and nine months ended June 30, 2024 related to $1 million for environmental reserve adjustment offset by $1 million held for sale reversal of depreciation and amortization. The key items during the three and nine months ended June 30, 2023 related to $3 million and $4 million for restructuring programs, and $2 million each, for environmental reserve adjustments for the three and nine months ended June 30, 2023.

*(In millions)*

|  | Life Sciences Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating income | $43 | $49 | $(6) | $125 | $141 | $(16) |
| Depreciation and amortization | 16 | 18 | (2) | 48 | 51 | (3) |
| EBITDA | $59 | $67 | (8) | $173 | $192 | (19) |
| Restructuring and other costs | — | 3 | (3) | — | 4 | (4) |
| Environmental reserve adjustments | 1 | 2 | (1) | 1 | 2 | (1) |
| Held for sale depreciation and amortization | (1) | — | (1) | (1) | — | (1) |
| Adjusted EBITDA | $59 | $72 | $(13) | $173 | $198 | $(25) |
| **As a percent of sales** | 30.3% | 32.9% | -260 bps | 28.0% | 29.7% | -170 bps |

(a) Depreciation and amortization includes $1 million for Life Sciences associated with the Nutraceuticals business held for sale assets for the three and nine months ended June 30, 2024, respectively, which is included as a key item within this table as a component of adjusted EBITDA.

#### Three months ended June 30, 2024 compared to three months ended June 30, 2023

Life Sciences' sales, operating income and adjusted EBITDA primarily decreased in the current quarter due to lower volume, unfavorable price/mix and unfavorable foreign currency exchange, partially offset by lower costs.

#### Fiscal 2024 year-to-date compared to fiscal 2023 year-to-date

Life Sciences' sales, operating income and adjusted EBITDA decreased in the current period due to lower volume, higher costs, and unfavorable price/mix, partially offset by favorable foreign currency exchange.

### 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. Household 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 following table provides a reconciliation of the change in sales for the Personal Care operating segment for the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

| Sales change | Three months ended June 30, 2024 | Nine months ended June 30, 2024 |
| --- | ---: | ---: |
| Volume | $32 | $27 |
| Price/mix | (2) | (6) |
| Foreign Currency | (1) | — |
|  | $29 | $21 |

The following table provides a reconciliation of the change in operating income (loss) for the Personal Care operating segment for the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

| Operating income change | Three months ended June 30, 2024 | Nine months ended June 30, 2024 |
| --- | ---: | ---: |
| Volume | $11 | $9 |
| Cost | 5 | 4 |
| Price/mix | 2 | 9 |
| Foreign Currency | (1) | (1) |
|  | $17 | $21 |

44

#### EBITDA and Adjusted EBITDA reconciliation

The following EBITDA presentation for the three and nine months ended June 30, 2024 and 2023 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. The key items for Personal Care for the three and nine months ended June 30, 2024 related to $1 million of accelerated depreciation. Personal Care had no key items for the three and nine months ended June 30, 2023.

*(In millions)*

|  | Personal Care Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating income | $31 | $14 | $17 | $59 | $38 | $21 |
| Depreciation and amortization | 19 | 21 | (2) | 58 | 63 | (5) |
| EBITDA | $50 | $35 | 15 | $117 | $101 | 16 |
| Accelerated depreciation | 1 | — | 1 | 1 | — | 1 |
| Adjusted EBITDA | $51 | $35 | $16 | $118 | $101 | $17 |
| **As a percent of sales** | 29.1% | 24.0% | 510 bps | 24.9% | 22.3% | 260 bps |

(a) Depreciation and amortization excludes accelerated depreciation of $1 million for Personal Care for the three and nine months ended June 30, 2024, respectively, which is included as a key item within this table as a component of adjusted EBITDA.

#### Three months ended June 30, 2024 compared to three months ended June 30, 2023

Personal Care's sales increased primarily due to higher volume, partially offset by unfavorable price/mix and foreign currency exchange, while operating income and Adjusted EBITDA increased in the current period primarily due to higher volume and favorable price/mix, partially offset by unfavorable foreign currency exchange. The CMC portfolio optimization initiative had an approximate $3 million negative sales impact during the quarter.

#### Fiscal 2024 year-to-date compared to fiscal 2023 year-to-date

Personal Care's sales increased in the current period primarily due to higher volume partially offset by unfavorable price/mix. Operating income and Adjusted EBITDA increased primarily due to higher volume and favorable price/mix, partially offset by unfavorable foreign currency exchange and higher cost including $1 million of accelerated depreciation for product line optimization activities associated with a manufacturing facility. The CMC portfolio optimization initiative had an approximate $3 million negative sales impact during the year.

### 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 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 operating segment for the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

| Sales change | Three months ended June 30, 2024 | Nine months ended June 30, 2024 |
| --- | ---: | ---: |
| Price/mix | $(9) | $(24) |
| Foreign Currency | (1) | — |
| Divestiture | — | (3) |
| Volume | 8 | — |
|  | $(2) | $(27) |

45

The following table provides a reconciliation of the change in operating income (loss) for the Specialty Additives operating segment for the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

| Operating income (loss) change | Three months ended June 30, 2024 | Nine months ended June 30, 2024 |
| --- | ---: | ---: |
| Costs (including accelerated depreciation) | $(1) | $(62) |
| Price/mix | 4 | 1 |
| Volume | 2 | 1 |
| Foreign Currency | — | (1) |
| Divestiture | — | (1) |
|  | $5 | $(62) |

#### EBITDA and Adjusted EBITDA reconciliation

The following EBITDA presentation for the three and nine months ended June 30, 2024 and 2023 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. The key items during the three months ended June 30, 2024 and 2023 related to $7 million of accelerated depreciation, $4 million of other plant optimization costs, and $1 million in environmental reserve adjustments in fiscal 2024 and environmental reserve adjustments of $4 million in fiscal 2023. The key items during the nine months ended June 30, 2024 and 2023 related to $55 million accelerated depreciation, $5 million of other plant optimization costs and $1 million in environmental reserve adjustments in fiscal 2024 and an asset impairment charge of $4 million and environmental reserve adjustments of $4 million in fiscal 2023 all of which were associated with manufacturing facilities.

*(In millions)*

|  | Specialty Additives Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating income (loss) | $10 | $5 | $5 | $(40) | $22 | $(62) |
| Depreciation and amortization(a) | 16 | 20 | (4) | 50 | 57 | (7) |
| EBITDA | 26 | 25 | 1 | 10 | 79 | (69) |
| Accelerated depreciation | 7 | — | 7 | 55 | — | 55 |
| Asset Impairments | — | — | — | — | 4 | (4) |
| Environmental reserve adjustments | 1 | 4 | (3) | 1 | 4 | (3) |
| Other plant optimization costs | 4 | — | 4 | 5 | — | 5 |
| Adjusted EBITDA | $38 | $29 | $9 | $71 | $87 | $(16) |
| **As a percent of sales** | 25.3% | 19.1% | 620 bps | 16.6% | 19.1% | -250 bps |

(a) Depreciation and amortization excludes accelerated depreciation of $7 million and $55 million for Specialty Additives for the three and nine months ended June 30, 2024, respectively, which is included as a key item within this table as a component of adjusted EBITDA.

#### Three months ended June 30, 2024 compared to three months ended June 30, 2023

Specialty Additives sales for the quarter decreased primarily as a result of unfavorable price/mix and foreign exchange currency, partially offset by higher volume, while operating income and Adjusted EBITDA increased primarily due to favorable price/mix and higher volume, partially offset by higher costs, including $7 million of accelerated depreciation for product line optimization activities associated with two Specialty Additives manufacturing facilities. The CMC and MC portfolio optimization initiatives had an approximate $12 million negative sales impact during the quarter.

#### Fiscal 2024 year-to-date compared to fiscal 2023 year-to-date

Specialty Additives sales for the current period decreased primarily due to unfavorable price/mix, while operating income (loss) and Adjusted EBITDA decreased primarily due to higher costs, including $55 million of accelerated depreciation for product line optimization activities associated with two Specialty Additives manufacturing facilities and unfavorable foreign currency exchange partially offset by higher volume. The CMC and MC portfolio optimization initiatives had an approximate $12 million negative sales impact during the year.

### Intermediates

Intermediates is comprised of the production of 1,4 butanediol (BDO) and related derivatives, including n-methylpyrrolidone. 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 operating segment for the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

| Sales change | Three months ended June 30, 2024 | Nine months ended June 30, 2024 |
| --- | ---: | ---: |
| Price/mix | $(7) | $(31) |
| Volume | — | (9) |
|  | $(7) | $(40) |

The following table provides a reconciliation of the change in operating income (loss) for the Intermediates operating segment for the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

| Operating income change | Three months ended June 30, 2024 | Nine months ended June 30, 2024 |
| --- | ---: | ---: |
| Price/mix | $(8) | $(26) |
| Volume | — | (3) |
| Cost | 1 | 1 |
|  | $(7) | $(28) |

#### EBITDA and Adjusted EBITDA reconciliation

The following EBITDA presentation (as defined and described in the section above) for the three and nine months ended June 30, 2024 and 2023 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 Intermediates. Intermediates had no key items for the three and nine months ended June 30, 2024 or 2023.

*(In millions)*

|  | Intermediates Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Operating income | $6 | $13 | $(7) | $22 | $50 | $(28) |
| Depreciation and amortization | 3 | 3 | — | 10 | 10 | — |
| EBITDA | $9 | $16 | $(7) | $32 | $60 | $(28) |
| **As a percent of sales** | 25.0% | 37.2% | -1220 bps | 29.6% | 40.5% | -1090 bps |

#### Three months ended June 30, 2024 compared to three months ended June 30, 2023

Intermediates' sales, operating income and EBITDA for the current quarter decreased primarily due to unfavorable price/mix, partially offset by lower costs.

#### Fiscal 2024 year-to-date compared to fiscal 2023 year-to-date

Intermediates' sales, operating income and EBITDA for the current period decreased primarily due to unfavorable price/mix and lower volume, partially offset by lower costs.

### Unallocated and other

The following table summarizes the key components of the Unallocated and other segment’s operating income (loss) for the three and nine months ended June 30, 2024 and 2023.

*(In millions)*

|  | Unallocated and Other Three months ended June 30 2024 | 2023 | Change | Nine months ended June 30 2024 | 2023 | Change |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Restructuring activities | $(3) | $(3) | $— | $(28) | $(5) | $(23) |
| Environmental expenses | (33) | (12) | (21) | (40) | (24) | (16) |
| ICMS Brazil tax credit | — | 12 | (12) | — | 12 | (12) |
| Loss on acquisitions and divestitures, net | (99) | — | (99) | (100) | — | (100) |
| Argentina currency devaluation impact | — | — | — | (5) | — | (5) |
| Other expenses (primarily governance and legacy expenses) | (16) | (16) | — | (50) | (52) | 2 |
| Total expense | $(151) | $(19) | $(132) | $(223) | $(69) | $(154) |

#### Three months ended June 30, 2024 compared to three months ended June 30, 2023

Unallocated and other recorded expense of $151 million and $19 million for the three months ended June 30, 2024 and 2023, respectively. The current and prior year quarter included expense of $3 million, each quarter, for restructuring activities mainly comprised of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs during the current and prior year quarter, respectively.

The current quarter and prior year quarter included $33 million and $12 million for environmental expenses, respectively.

The prior year quarter included income of $12 million ICMS tax credits in Brazil.

The current quarter also includes a $99 million loss on acquisitions and divestitures, net due to an impairment charge within the Nutraceuticals business. 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 and variable incentive compensation.

#### Fiscal 2024 year-to-date compared to fiscal 2023 year-to-date

Unallocated and other recorded expense of $223 million and $69 million for the nine months ended June 30, 2024 and 2023, respectively. The current and prior year period included expense of $28 million and $5 million, respectively, for restructuring activities mainly comprised of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs during the current and prior year period, respectively.

The current and prior year period included $40 million and $24 million for environmental expenses, respectively.

The current year also includes a $99 million loss on acquisitions and divestitures, net due to an impairment charge within the Nutraceuticals business. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.

The prior year period also included income of $12 million ICMS tax credits in Brazil.

The remaining items primarily included expense of $5 million related to the devaluation of the currency in Argentina.

Other expenses between periods were driven by decreases in governance and legacy expenses primarily associated with fluctuations in foreign currency, deferred compensation and variable incentive compensation, mainly driven by lower 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.

On October 19, 2023, Ashland entered, through an Ireland based, wholly-owned, bankruptcy-remote consolidated special purpose entity (SPE), into a three-year agreement with a group of entities (buyers) to sell certain trade receivables, without recourse beyond the pledged receivables, of certain wholly-owned Ashland subsidiaries (Foreign Accounts Receivable Sales Program) primarily in Europe. Under the agreement, Ashland can transfer whole receivables up to a limit established by the buyer, which is currently set at a maximum of €125 million subject to other limitations as applicable. Ashland accounts for receivables transferred to buyers as part of this agreement as sales. See Note H for more information on the Foreign Accounts Receivables Sale Program.

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 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 the third party under this program. As of June 30, 2024, the program is in systems implementation phase and has not yet been offered to suppliers.

#### 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 for the nine months ended June 30, 2024 and 2023.

*(In millions)*

| Cash provided (used) by: | Nine months ended June 30 2024 | 2023 |
| --- | ---: | ---: |
| Operating activities from continuing operations | $382 | $163 |
| Investing activities from continuing operations | (54) | (57) |
| Financing activities from continuing operations | (310) | (366) |
| Discontinued operations | (38) | (43) |
| Effect of currency exchange rate changes on cash and cash equivalents | 2 | 6 |
| Net increase (decrease) in cash and cash equivalents | $(18) | $(297) |

Cash and cash equivalents decreased $18 million for the nine months ended June 30, 2024 and $297 million for the nine months ended June 30, 2023.

The $18 million decrease for the nine months ended June 30, 2024 was primarily driven by payment of cash dividends, additions to property, plant and equipment, and stock repurchase activity of $59 million, $99 million, and $230 million, respectively. Operating cash flows from continuing operations were inflows of $382 million.

The $297 million decrease for the nine months ended June 30, 2023 was primarily driven by payment of cash dividends, additions to property, plant and equipment, and stock repurchase activity of $56 million, $101 million, and $300 million, respectively. Operating cash flows from continuing operations were inflows of $163 million.

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

#### Free cash flow and other liquidity resources

The following represents Ashland’s calculation of free cash flow and ongoing free cash flows for the disclosed periods. Free cash flow does not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments.

*(In millions)*

|  | Nine months ended June 30 2024 | 2023 |
| --- | ---: | ---: |
| Total cash flows provided by operating activities from continuing operations | $382 | $163 |
| less: |  |  |
| Additions to property, plant and equipment | (99) | (101) |
| Free cash flows | 283 | 62 |
| Cash (inflows) outflows from U.S. Accounts Receivable Sales Program(a) | (11) | 14 |
| Cash (inflows) outflows from Foreign Accounts Receivable Sales Program(b) | (123) | — |
| Restructuring-related payments(c) | 10 | 3 |
| Environmental and related litigation payments(d) | 23 | 34 |
| Ongoing free cash flow | $182 | $113 |
| Net income | $153 | $182 |
| Adjusted EBITDA(e) | $336 | $385 |
| Operating cash flow conversion(f) | 250% | 90% |
| Ongoing free cash flow conversion(g) | 54% | 29% |

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

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

(c) Restructuring payments incurred during each period.

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

(e) See adjusted EBITDA reconciliation.

(f) Operating cash flow conversion is defined as cash flows provided by operating activities from continuing operations divided by net income.

(g) 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 $921 million and $1,050 million as of June 30, 2024 and September 30, 2023, respectively. The $129 million decrease in working capital was driven by lower trade working capital (accounts receivable and inventories minus trade and other payables and accrued expenses and other liabilities) including sales of foreign accounts receivables under the new Foreign Accounts Receivable Sales Programs, partially offset by an increase in refundable income taxes and current assets held for sale. See Note H for additional information on the Foreign Accounts Receivables Sales Programs. The $69 million increase in ongoing free cash flows between periods was primarily a result of reduced trade working capital additions reflecting a reduction in inventory balances as well as reduced incentive compensation payout compared to the prior year. Liquid assets (cash, cash equivalents and accounts receivable) amounted to 134% and 166% of current liabilities as as of June 30, 2024 and September 30, 2023, respectively.

The following summary reflects Ashland’s cash, unused borrowing capacity and liquidity as of June 30, 2024 and September 30, 2023.

*(In millions)*

| Cash and investment securities | June 30 2024 | September 30 2023 |
| --- | ---: | ---: |
| Cash and cash equivalents | $399 | $417 |
| Restricted investments(a) | 363 | 367 |
| **Unused borrowing capacity and liquidity** |  |  |
| Revolving credit facility | 596 | 594 |
| 2018 accounts receivable securitization (foreign) | NA | 104 |
| U.S. Accounts Receivable Sales Program | — | — |
| Foreign Accounts Receivable Sales Program | — | NA |

(a) Includes $250 million and $243 million related to the Asbestos trust and $113 million and $124 million related to the Environmental trust as of June 30, 2024 and September 30, 2023, respectively.

The borrowing capacity remaining under the 2022 Credit Agreement was $596 million, which reflects the full $600 million Revolving Credit Facility less a reduction of $4 million for letters of credit outstanding at June 30, 2024. In total, Ashland’s available liquidity position, which includes cash and the revolving credit facility, was $995 million at June 30, 2024, compared to $1,115 million at September 30, 2023. Ashland had zero available liquidity under the U.S. and Foreign Accounts Receivable Sales Programs, respectively, as of June 30, 2024. Ashland also maintained $363 million of restricted investments 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, 2024 and September 30, 2023.

*(In millions)*

|  | June 30 2024 | September 30 2023 |
| --- | ---: | ---: |
| Short-term debt (includes current portion of long-term debt) | $— | $16 |
| Long-term debt (less current portion and debt issuance cost discounts)(a) | 1,325 | 1,314 |
| Total debt | $1,325 | $1,330 |

(a) Includes $12 million and $13 million of debt issuance cost discounts as of June 30, 2024 and September 30, 2023, respectively.

Debt as a percent of capital employed was 31% and 30% at June 30, 2024 and at September 30, 2023, respectively. At June 30, 2024, Ashland’s total debt had an outstanding principal balance of $1,367 million, discounts of $30 million, and debt issuance costs of $12 million. Ashland had no long-term debt (excluding debt issuance costs) maturing within the next 3 years, $4 million due in fiscal 2027 and $535 million due in 2028.

#### Ashland credit ratings

Ashland’s corporate credit ratings remained unchanged at BB+ by Standard & Poor’s and Ba1 by Moody’s Investor Services. As of June 30, 2024, 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 current credit agreement (the "2022 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, 2024, Ashland is in compliance with all debt agreement covenant restrictions under the 2022 Credit Agreement.

The maximum consolidated net leverage ratio permitted under the 2022 Credit Agreement is 4.0. The 2022 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 2022 Credit Agreement defines Covenant Adjusted EBITDA as net income 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. 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, 2024, Ashland’s calculation of the consolidated net leverage ratio was 2.2.

The minimum required consolidated interest coverage ratio under the 2022 Credit Agreement is 3.0. The 2022 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, 2024, Ashland’s calculation of the consolidated interest coverage ratio was 7.3.

Any change in Covenant Adjusted EBITDA of $100 million would have an approximate 0.4x 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 $130 million since September 30, 2023 to $2,967 million at June 30, 2024. The decrease of $130 million was due to net income of $153 million, compensation expense and common shares issued of $4 million, $2 million of deferred translation gains, and $2 million for unrealized gains on commodity hedges offset by stock repurchase activity of $232 million (includes $2 million in excise tax) and dividends of $59 million.

#### 2023 Stock Repurchase program

On June 28, 2023, Ashland's board of directors authorized a new evergreen $1 billion common share repurchase program (the "2023 Stock Repurchase Program"). The new authorization terminated and replaced the 2022 Stock Repurchase Program, which had $200 million outstanding at the date of termination. As of June 30, 2024, $770 million remained available for repurchase under this authorization.

#### Stock repurchase program agreements

#### Current fiscal year

During June 2024, under the 2023 Stock Repurchase Program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $30 million of its outstanding shares. The program was completed during June 2024, when Ashland paid a total of $30 million and received a delivery of 0.3 million shares of common stock.

During May 2024, under the 2023 Stock Repurchase Program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $100 million of its outstanding shares. The program was completed during June 2024, when Ashland paid a total of $100 million and received a delivery of 1.0 million shares of common stock.

During November 2023, under the 2023 Stock Repurchase Program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $100 million of its outstanding shares. The program was completed during December 2023, when Ashland paid a total of $100 million and received a delivery of 1.2 million shares of common stock.

#### Prior fiscal year

During May 2023, under the 2022 stock repurchase program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $100 million of its outstanding shares. The program was completed during June 2023, when Ashland paid a total of $100 million and received a delivery of 1.1 million shares of common stock.

During March 2023, under the 2022 stock repurchase program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $100 million of its outstanding shares. The program was completed during April 2023, when Ashland paid a total of $100 million and received a delivery of 1.0 million shares of common stock.

During February 2023, under the 2022 stock repurchase program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $100 million of its outstanding shares. The program was completed during February 2023 when Ashland paid a total of $100 million and received a delivery of 1.0 million shares of common stock.

#### Stockholder dividends

On May 7, 2024, Ashland's Board declared a quarterly cash dividend of $0.405 cents per share on the company's common stock representing a five percent increase from the previous quarter. The dividend was paid in the third quarter of fiscal 2024. Dividends of $0.385 cents per share were paid in the first and second quarters of fiscal 2024 and the third quarter of fiscal 2023 and $0.335 cents per share in the first and second quarters of fiscal 2023.

#### Capital expenditures

Capital expenditures were $99 million for the nine months ended June 30, 2024 compared to $101 million for the nine months ended June 30, 2023.

### 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, long-lived assets (including goodwill and other intangible assets), income taxes, other liabilities and receivables associated with asbestos litigation and environmental remediation. 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, 2023. 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 nine months ended June 30, 2024.

### OUTLOOK

During the quarter, Ashland announced the signing of a definitive agreement to sell its nutraceuticals business to Turnspire Capital Partners LLC. The transaction is expected to close in the calendar third quarter 2024, subject to the satisfaction of customary closing conditions. In addition, Ashland continues to reduce its inventory and volume exposure to lower value, more cyclical business within MC and CMC. The CMC and MC portfolio optimization initiative is expected to reduce revenue versus the prior year by approximately $20 million during the fiscal-fourth quarter.

Diminished sales trends experienced in June have continued into July, reflecting increasingly challenging market conditions. Overall end market demand growth is estimated to be flat-to-low single digits. Ashland’s fiscal-fourth quarter year-over-year improvement is expected to be largely driven by the continuing convergence of our sales volume and customer end market demand with a commensurate increase in production at our manufacturing plants. Improved demand in Personal Care and Specialty Additives is expected to be partially offset by softer VP&D volumes within Life Sciences. Overall year-over-year sales volume growth, adjusted for portfolio optimization, is expected to be mid-single-digit in the fiscal-fourth quarter, partially offset by low-single-digit pricing declines.

Year-over-year fiscal-fourth quarter margin improvement is expected to be significant when compared against inventory corrective actions taken in fiscal year 2023. Adjusted EBITDA margin is forecasted to be in-line with Ashland’s mid-20s second-half target, supported by portfolio optimization actions.

Overall, for the fiscal-fourth quarter the company expects sales in the range of $530 million to $540 million and adjusted EBITDA in the range of $130 million to $140 million. For the full fiscal year, Ashland now expects sales of approximately $2.1 billion and adjusted EBITDA in the range of $465 million to $475 million.

## Market risk

As filed, 207 characters.

Ashland’s market risk exposure at June 30, 2024 is generally consistent with the types of market risk exposures presented in Ashland’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

## Controls and procedures

As filed, 1,031 characters.

*Disclosure Controls and Procedures* - As of the end of the period covered by this quarterly report, Ashland, under the supervision and with the participation of its management, including Ashland’s Chief Executive Officer and its Chief Financial Officer, evaluated the effectiveness of Ashland’s disclosure controls and procedures pursuant to Rule 13a-15(b) and 15d-15(b) promulgated under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of June 30, 2024.

*Changes in Internal Control over Financial Reporting* - During the three and nine months ended June 30, 2024, there were no significant changes in Ashland's internal control over financial reporting, or in other factors, that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, Ashland's internal control over financial reporting.

## Risk factors

As filed, 201 characters.

During the period covered by this report, there were no material changes from the risk factors previously disclosed in Ashland’s Annual Report on Form 10-K for the fiscal year ended September 30, 2023.

Filed Aug 7, 2024.
Source: SEC EDGAR, the filing index for accession 0000950170-24-092587. Last ingested by Listed: Nov 3, 2026, 21:59 ET. No prices; not investment advice.