Ashland Inc. — Fourth Quarter and Full-Year Fiscal 2026 Earnings Summary

Financial Performance:

• Q4 2026 sales were $498 million, up 4% from $478 million in the prior-year quarter; full-year 2026 sales were $1.863 billion, up 2% from $1.824 billion.
• Q4 2026 net loss was $16 million ($0.35 per diluted share), compared to net income of $32 million ($0.71 per diluted share) in the prior-year quarter.
• Q4 2026 loss from continuing operations was $17 million ($0.36 per diluted share), compared to income from continuing operations of $33 million ($0.73 per diluted share) in the prior-year quarter.
• Full-year 2026 net income was $4 million ($0.09 per diluted share), compared to a net loss of $845 million ($18.23 per diluted share) in fiscal 2025.
• Q4 2026 Adjusted Income from Continuing Operations Excluding Intangibles Amortization Expense was $52 million ($1.12 per diluted share), up from $50 million ($1.08 per diluted share) in the prior-year quarter.
• Full-year 2026 Adjusted Income from Continuing Operations Excluding Intangibles Amortization Expense was $153 million ($3.31 per diluted share), down from $157 million ($3.38 per diluted share) in fiscal 2025.
• Q4 2026 Adjusted EBITDA was $121 million, up 2% from $119 million in the prior-year quarter; full-year 2026 Adjusted EBITDA was $385 million, down from $401 million in fiscal 2025.
• Q4 2026 Adjusted EBITDA margin was 24.3%, compared to 24.9% in the prior-year quarter; full-year 2026 Adjusted EBITDA margin was 20.7%, compared to 22.0% in fiscal 2025.
• Q4 2026 operating cash flow was $90 million, up from $40 million in the prior-year quarter; full-year 2026 operating cash flow was $385 million, up from $134 million in fiscal 2025.
• Q4 2026 Ongoing Free Cash Flow was $74 million, up from $52 million in the prior-year quarter, with a conversion rate of 61% versus 44%; full-year 2026 Ongoing Free Cash Flow was $232 million, up from $127 million in fiscal 2025.
• Ashland ended fiscal 2026 with $480 million in cash, $976 million in total liquidity, and net debt of $891 million, resulting in a net leverage of 2.3x.

Guidance and Future Outlook:

• Full-year fiscal 2027 sales guidance is $1,905 million to $1,975 million, reflecting growth of approximately 2% to 6% over the prior year.
• Full-year fiscal 2027 Adjusted EBITDA guidance is $405 million to $435 million.
• Full-year fiscal 2027 Ongoing Free Cash Flow Conversion is expected to be greater than 40% of Adjusted EBITDA.
• Fiscal 2027 planning assumes raw material and freight costs will remain volatile, with pricing actions expected to offset inflation.
• Fiscal 2027 outlook includes estimated foreign currency headwinds of $20-$25 million to sales and $7-$10 million to Adjusted EBITDA.
• Fiscal 2027 strategic targets include $10 million in net incremental productivity benefits (Execute), $20 million in incremental sales from global expansion (Globalize), and $45 million in incremental innovation-driven sales (Innovate).

Business Segments and Product Lines:

• Life Sciences sales were $180 million in Q4 2026, up 4% year-over-year, driven by pharma volume growth (sixth consecutive quarter of growth) and technology platforms including VP&D, cellulosics, injectables, and film coatings.
• Personal Care sales were $163 million in Q4 2026, up 8% year-over-year, with double-digit growth in biofunctional actives, microbial protection, and hair care, and high-single-digit growth in skin care.
• Specialty Additives sales were $131 million in Q4 2026, flat year-over-year; Coatings sales increased 9% and Performance Specialties sales increased 14%, offset by soft demand in Energy and Resources and lower Construction volumes.
• Intermediates sales were $33 million in Q4 2026, flat year-over-year, with merchant sales up 4% to $24 million, offset by a $1 million decline in captive sales.
• Life Sciences Adjusted EBITDA margin in Q4 2026 increased 380 basis points to 35.6%, the highest in the segment's history.
• Personal Care Adjusted EBITDA margin in Q4 2026 increased 160 basis points to 30.1%.
• Specialty Additives Adjusted EBITDA in Q4 2026 was $20 million, down 31% from $29 million in the prior-year quarter, primarily due to lower Hopewell productivity and unfavorable absorption.
• Intermediates Adjusted EBITDA margin in Q4 2026 increased 300 basis points to 18.2%.
• Unallocated and other expense was $44 million in Q4 2026, up from $11 million in the prior-year quarter, driven by higher restructuring charges and a cumulative translation adjustment from the liquidation of the Argentine entity.

Market and Competitive Landscape:

• Demand in Life Sciences and Personal Care is expected to remain resilient in fiscal 2027, supported by pharma momentum and growth in higher-value Personal Care applications.
• Within Specialty Additives, Coatings and Performance Specialties are expected to build on recent commercial momentum, while Intermediates is expected to benefit from new customer volumes in energy storage.
• Ashland achieved share gains across all regions in Coatings and Performance Specialties during Q4 2026.
• The company executed pricing actions that covered raw material cost inflation across all business units in Q4 2026.

Risks and Challenges:

• Raw material and freight costs are expected to remain volatile during fiscal 2027.
• Hopewell HEC productivity was below expectations during fiscal 2026, impacting Specialty Additives margins.
• Foreign currency movements reduced Q4 2026 sales by approximately $3 million and Adjusted EBITDA by approximately $2 million.
• The company faces risks related to geopolitical instability, trade policies, and potential disruptions to supply and logistics.
• The company holds substantial indebtedness, which may affect future cash flows and limit financing ability.

Management Commentary and Tone:

• CEO Guillermo Novo stated that Ashland closed fiscal 2026 with strong commercial performance in higher-growth Life Sciences and Personal Care businesses and improved profitability in Intermediates.
• Novo noted that the "globalize and innovate" strategies exceeded full-year targets, generating approximately $26 million in incremental sales each, surpassing targets of $20 million and $15 million respectively.
• Management emphasized priorities to improve operating performance, drive productivity, maintain pricing discipline, and continue scaling global initiatives.
• Novo concluded that while external markets remain challenging, the portfolio is resilient and well-positioned to deliver profitable growth.

Other Key Points:

• The significant improvement in full-year 2026 reported results compared to fiscal 2025 primarily reflected the absence of a $706 million non-cash goodwill impairment and a $175 million Avoca-related impairment and sale adjustment recognized in fiscal 2025.
• The Avoca divestiture impacted full-year 2026 organic sales growth by excluding its impact, resulting in 3% organic sales growth.
• Cash flow improvements in fiscal 2026 were driven by reduced inventory and lower capital expenditures.
• The company paid $76 million in cash dividends during fiscal 2026.
• No share repurchases were conducted in fiscal 2026.