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What changed in ASHLAND INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of ASHLAND INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+424 added−468 removedSource: 10-K (2023-11-17) vs 10-K (2022-11-21)

Top changes in ASHLAND INC.'s 2023 10-K

424 paragraphs added · 468 removed · 335 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

52 edited+7 added−15 removed58 unchanged
Biggest changeTalent Management - Ashland is dedicated to creating a purpose-driven people ecosystem that enables personal and professional growth at every level while minimizing risk to the business. The Company deploys a disciplined annual talent review and succession process to identify and develop a leadership pipeline that accelerates business results and minimizes attrition.
Biggest changeThe chart below shows the Company’s global gender diversity and US ethnic and gender diversity progress over the past three years and the Company’s future global gender diversity and US ethnic and gender diversity commitments. 12 Talent Management - Ashland is dedicated to creating a purpose-driven people ecosystem that enables personal and professional growth at every level while minimizing risk to the business.
It has manufacturing facilities and labs in Freetown, Massachusetts; Chatham, New Jersey; Ossining, New York; Merry Hill, North Carolina; Summerville, South Carolina; Kenedy, Texas; and Menomonee Falls, Wisconsin within the United States; Sao Paulo, Brazil; Shanghai, China; Sophia Antipolis, France; Hamburg, Germany; Mumbai, India; Mexico City, Mexico; Zwijndrecht, Netherlands and Bradford and Poole, United Kingdom.
It has manufacturing facilities and labs in Freetown, Massachusetts; Chatham, New Jersey; Ossining, New York; Merry Hill, North Carolina; Summerville, South Carolina; Kenedy, Texas; and Menomonee Falls, Wisconsin within the United States; Sao Paulo, Brazil; Shanghai, China; Sophia Antipolis, France; Hamburg, Germany; Mumbai, India; Mexico City, Mexico; Zwijndrecht, Netherlands and Poole, United Kingdom.
Ashland’s businesses maintain numerous permits and emission control devices pursuant to these clean air laws. The United States Environmental Protection Agency (USEPA) has increased its frequency in reviewing the NAAQS. The USEPA has stringent standards for particulate matter, ozone and sulfur dioxide. Throughout 2022, state and local agencies continued to implement options for meeting the newest standards.
Ashland’s businesses maintain numerous permits and emission control devices pursuant to these clean air laws. The United States Environmental Protection Agency (USEPA) has increased its frequency in reviewing the NAAQS. The USEPA has stringent standards for particulate matter, ozone and sulfur dioxide. Throughout 2022 and 2023, state and local agencies continued to implement options for meeting the newest standards.
Most options for sulfur dioxide focus on coal and diesel fuel combustion sources. It is not possible at this time to estimate the potential financial impact that these newest standards may have on Ashland’s operations or products. Ashland will continue to monitor and evaluate these standards to meet these and all air quality requirements.
Most options for sulfur dioxide focus on coal and diesel fuel combustion sources. It is not possible at this time to estimate the potential financial impact that these newest standards may 8 have on Ashland’s operations or products. Ashland will continue to monitor and evaluate these standards to meet these and all air quality requirements.
Other countries where Ashland operates also have laws and regulations relating to hazardous and solid waste, and Ashland has systems in place to oversee compliance. 8 Water - Ashland’s businesses maintain numerous discharge permits. In the United States, such permits may be required by the National Pollutant Discharge Elimination System of the Clean Water Act and similar state programs.
Other countries where Ashland operates also have laws and regulations relating to hazardous and solid waste, and Ashland has systems in place to oversee compliance. Water - Ashland’s businesses maintain numerous discharge permits. In the United States, such permits may be required by the National Pollutant Discharge Elimination System of the Clean Water Act and similar state programs.
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 3 display panels and solar cells, ingredients for textile printing, thermoplastic metals and alloys for welding.
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.
These products are used as chemical intermediates in the production of engineering polymers and polyurethanes, and as specialty process solvents in a 6 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.
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 company’s board of directors is comprised of eleven individuals with diverse experience and credentials, selected for their business acumen and ability to challenge and add value to management. These directors have held significant leadership positions and bring a depth of experience across a wide variety of industries, providing the Company with unique insights and fresh perspectives.
The Company’s board of directors is comprised of individuals with diverse experience and credentials, selected for their business acumen and ability to challenge and add value to management. These directors have held significant leadership positions and bring a depth of experience across a wide variety of industries, providing the Company with unique insights and fresh perspectives.
Ashland reviews the process annually to ensure that its policies, procedures, and training continue to provide pay equity within the Company. The Company’s compensation programs are globally aligned, and, where possible, its total rewards plans include base salary, short and long-term incentives, benefits, financial, and special recognition programs.
Ashland reviews each process annually to ensure that its policies, procedures, and training continue to provide pay equity within the Company. The Company’s compensation programs are globally aligned, and, where possible, its total rewards plans include base salary, short and long-term incentives, benefits, financial, and special recognition programs.
The Company routinely reviews its total rewards practices in the markets in which it operates to ensure its plans allow for the recruitment and retention of the talent it needs to be successful. Ashland also offers a competitive global benefits program to support employees through all life stages.
The Company routinely reviews its total rewards practices in the markets in which it operates to ensure its plans allow for the recruitment and retention of the talent it needs to be successful. 11 Ashland also offers a competitive global benefits program to support employees through all life stages.
Unallocated and Other generally includes items such as certain significant company-wide restructuring activities, corporate governance costs and legacy costs or activities that relate to divested businesses that are no longer operated by Ashland. Available Information - Ashland’s Internet address is http://www.ashland.com.
Unallocated and Other generally includes items such as certain significant company-wide restructuring activities, corporate governance costs and legacy costs or activities that relate to divested businesses that are no longer operated by Ashland. 4 Available Information - Ashland’s Internet address is http://www.ashland.com.
Engineering studies, historical experience and other factors are used to identify and evaluate remediation alternatives and their related costs in determining the estimated reserves for environmental remediation. Environmental remediation reserves are subject to uncertainties that affect Ashland’s ability to estimate its share of the costs.
Engineering studies, historical experience and other factors are used to identify and evaluate remediation alternatives and their related costs in determining the estimated reserves for environmental remediation. Environmental remediation reserves are subject to 7 uncertainties that affect Ashland’s ability to estimate its share of the costs.
Its core products include cellulose gums and vinyl pyrrolidone polymers which are used in a wide range of offerings for bakery, beverage, dairy, desserts, meat products, pet food, prepared foods, sauces and savory products. Life Sciences operates throughout the Americas, Europe and Asia Pacific. It has 20 manufacturing and lab facilities in nine countries which serve its various end markets.
Its core products include cellulose gums and vinyl pyrrolidone polymers which are used in a wide range of offerings for bakery, beverage, dairy, desserts, meat products, pet food, prepared foods, sauces and savory products. Life Sciences operates throughout the Americas, Europe and Asia Pacific. It has 19 manufacturing and lab facilities in nine countries which serve its various end markets.
The Company provides a total compensation package that is designed to be competitive with the markets in which it competes for talent. Ashland believes employees should be compensated equitably based on performance, skills, and experience. 11 Ashland reviews pay equity annually in conjunction with its annual performance review, merit, and promotion processes.
The Company provides a total compensation package that is designed to be competitive with the markets in which it competes for talent. Ashland believes employees should be compensated equitably based on performance, skills, and experience. Ashland reviews pay equity annually in conjunction with its annual performance review, merit, bonus and promotion processes.
The company and its leadership team are committed to creating a collaborative environment that leverages the talents of a diverse global workforce to drive sustainable growth and innovation that creates value for its shareholders, customers, employees, and the communities in which it operate. Ashland’s commitment to inclusion and diversity starts at the top with its Board and executive leadership.
The company and its leadership team are committed to creating a collaborative environment that leverages the talents of a diverse global workforce to drive sustainable growth and innovation that creates value for its shareholders, customers, employees, and the communities in which it operates. Ashland’s commitment to inclusion and diversity starts at the top with its Board and its executive leadership.
Although it is not possible to predict with certainty the ultimate costs of environmental remediation, Ashland currently estimates that the upper end of the reasonably possible range of future costs for identified sites could be as high as approximately $465 million. No individual remediation location is significant, as the largest reserve for any site is 13% of the remediation reserve.
Although it is not possible to predict with certainty the ultimate costs of environmental remediation, Ashland currently estimates that the upper end of the reasonably possible range of future costs for identified sites could be as high as approximately $465 million. No individual remediation location is significant, as the largest reserve for any site is 21% of the remediation reserve.
Under REACH, additional testing requirements, documentation, risk assessments and registrations are occurring and will continue to occur and may adversely affect Ashland’s costs of products produced in or imported into the European Union.
Under TSCA, REACH, and CSAR additional testing requirements, documentation, risk assessments and registrations are occurring and will continue to occur and may adversely affect Ashland’s costs of products produced in or imported into the European Union.
Specialty Additives offers the oil and gas industry solutions for drilling, stimulation, completion, cementing and production applications. Specialty Additives operates throughout the Americas, Europe and Asia Pacific. It has 12 manufacturing and lab facilities in nine countries which serve its various end markets.
Specialty Additives offers the oil and gas industry solutions for drilling, stimulation, completion, cementing and production applications. 6 Specialty Additives operates throughout the Americas, Europe and Asia Pacific. It has 11 manufacturing and lab facilities in nine countries which serve its various end markets.
It has manufacturing facilities and labs in Wilmington, Delaware; Calvert City, Kentucky; Kearny, Paterson, S. Hackensack and Totowa, New Jersey; Columbus, Ohio; Fiskeville, Rhode Island; Texas City, Texas; and Ogden, Utah within the United States; Cabreuva and Sao Paolo, Brazil; Shanghai, China; Dusseldorf, Germany; Hyderabad, India; Mullingar, Ireland; Jaumave and Mexico City, Mexico; Bangkok, Thailand; and Istanbul, Turkey.
It has manufacturing facilities and labs in Wilmington, Delaware; Calvert City, Kentucky; Kearny, and Totowa, New Jersey; Columbus, Ohio; Fiskeville, Rhode Island; Texas City, Texas; and Ogden, Utah within the United States; Cabreuva and Sao Paolo, Brazil; Shanghai, China; Dusseldorf, Germany; Hyderabad, India; Mullingar, Ireland; Jaumave (2 manufacturing facilities) and Mexico City, Mexico; Bangkok, Thailand; and Istanbul, Turkey.
Ashland continues to make good progress on its journey. For the year ended September 30, 2022, the Company had a Total Preventable Recordable Rate (TPRR) of 0.58 compared to 0.73 for the year ended September 30, 2021. Ashland has implemented several tools for communicating lessons learned from injuries, process safety incidents, and environmental releases.
Ashland continues to make good progress on its journey. For the year ended September 30, 2023, the Company had a Total Preventable Recordable Rate (TPRR) of 0.39 compared to 0.58 for the year ended September 30, 2022. Ashland has implemented several tools for communicating lessons learned from injuries, process safety incidents, and environmental releases.
At September 30, 2022, Ashland’s reserves for environmental remediation and related environmental litigation amounted to $211 million, reflecting Ashland’s estimates of the most likely costs that will be incurred over an extended period to remediate identified conditions for which the costs are reasonably estimable, without regard to any third-party recoveries.
At September 30, 2023, Ashland’s reserves for environmental remediation and related environmental litigation amounted to $214 million, reflecting Ashland’s estimates of the most likely costs that will be incurred over an extended period to remediate identified conditions for which the costs are reasonably estimable, without regard to any third-party recoveries.
Ashland regularly adjusts its reserves as environmental remediation continues. Environmental remediation expense, net of insurance receivables, amounted to $66 million in 2022 compared to $51 million in 2021 and $48 million in 2020. 7 Product Control, Registration and Inventory - Many of Ashland’s products and operations are subject to chemical control laws of the countries in which they are located.
Ashland regularly adjusts its reserves as environmental remediation continues. Environmental remediation expense, net of insurance receivables, amounted to $59 million in 2023 compared to $66 million in 2022 and $51 million in 2021. Product Control, Registration and Inventory - Many of Ashland’s products and operations are subject to chemical control laws of the countries in which they are located.
Ashland evaluates the potential impacts from both climate change and the anticipated GHG regulations to facilities, products and other business interests, as well as the strategies commonly considered by the industrial sector to reduce the potential impact of these risks.
Ashland evaluates the physical and transitional risks and opportunities from both climate change and the anticipated GHG regulations to facilities, products and other business interests, as well as the strategies commonly considered by the industrial sector to reduce the potential impact of these risks.
For fiscal 2022, the following Life Sciences product categories were 10% or greater of Ashland’s total consolidated sales: Product % of Life Sciences sales % of Ashland total consolidated sales Cellulosics 38% 38% Polyvinylpyrrolidones (PVP) 38% 20% 4 PERSONAL CARE The Personal Care portfolio of oral care products delivers active ingredients in toothpaste and mouthwashes; provides bioadhesive functionality for dentures; delivers flavor, texture and other functional properties; and provides product binding to ensure form and function throughout product lifecycle.
For fiscal 2023, the following Life Sciences product categories were 10% or greater of Ashland’s total consolidated sales: Product % of Life Sciences sales % of Ashland total consolidated sales Cellulosics 34% 37% Polyvinylpyrrolidones (PVP) 44% 25% PERSONAL CARE The Personal Care portfolio of oral care products delivers active ingredients in toothpaste and mouthwashes; provides bioadhesive functionality for dentures; delivers flavor, texture and other functional properties; and provides product binding to ensure form and function throughout product lifecycle.
In 2022, the Company completed an in-depth analysis of its pay equity globally using a number of factors to determine if a pay gap existed based on any protected factors (gender, age, race, veteran status). Overall findings were encouraging, identifying only a few employees that had a disparity in pay requiring further analysis and corrective action.
The Company annually completes an in-depth analysis of its pay equity globally using a number of factors to determine if a pay gap exists based on any protected factors (gender, age, race, veteran status). Overall findings continue to be encouraging, identifying only a few employees annually that had a disparity in pay requiring further analysis and corrective action.
For fiscal 2022, the following Specialty Additives products were 10% or greater of Ashland’s total consolidated sales: Product % of Specialty Additives sales % of Ashland total consolidated sales Cellulosics 66% 38% Polyvinylpyrrolidones (PVP) 7% 20% INTERMEDIATES Intermediates is a leading producer of BDO and related derivatives, including n-methylpyrrolidone.
For fiscal 2023, the following Specialty Additives products were 10% or greater of Ashland’s total consolidated sales: Product % of Specialty Additives sales % of Ashland total consolidated sales Cellulosics 66% 37% Polyvinylpyrrolidones (PVP) 6% 25% INTERMEDIATES Intermediates is a leading producer of BDO and related derivatives, including n-methylpyrrolidone.
For fiscal 2022, the following Personal Care product categories were 10% or greater of Ashland’s total consolidated sales: Product % of Personal Care % of Ashland total consolidated sales Cellulosics 18% 38% Polyvinylpyrrolidones (PVP) 19% 20% 5 SPECIALTY ADDITIVES Specialty Additives offers industry-leading products, technologies and resources for solving formulation and product-performance challenges.
For fiscal 2023, the following Personal Care product categories were 10% or greater of Ashland’s total consolidated sales: Product % of Personal Care % of Ashland total consolidated sales Cellulosics 19% 37% Polyvinylpyrrolidones (PVP) 21% 25% SPECIALTY ADDITIVES Specialty Additives offers industry-leading products, technologies and resources for solving formulation and product-performance challenges.
Intellectual Property Ashland has a broad intellectual property portfolio which is an important component of its business. Ashland relies on patents, trade secrets, formulae and know-how to protect and differentiate its products and technologies. In addition, the reportable segments own valuable trademarks which identify and differentiate its products from its competitors. Ashland also uses licensed intellectual property rights from third-parties.
Ashland relies on patents, trade secrets, formulae and know-how to protect and differentiate its products and technologies. In addition, the reportable segments own valuable trademarks which identify and differentiate its products from its competitors. Ashland also uses licensed intellectual property rights from third-parties.
Human Capital Employee Health and Safety - Cultivating a safety culture is intentional at Ashland and is best shown by its commitment to a Zero Incident Culture (ZIC). ZIC begins with the vision, values, beliefs, and actions of Ashland’s leaders demonstrating that zero incidents is possible.
Ashland’s business units typically experience stronger demand during warmer weather months. Human Capital Employee Health and Safety - Cultivating a safety culture is intentional at Ashland and is best shown by its commitment to a Zero Incident Culture (ZIC). ZIC begins with the vision, values, beliefs, and actions of Ashland’s leaders demonstrating that zero incidents is possible.
To improve its competitive position, as Ashland narrows its focus, the Company is building and leveraging the Ashland corporate brand as a differentiator to create value and better communicate the capabilities, promise and scale of the Company, making it easier to introduce new product lines and applications.
To improve its competitive position, as Ashland narrows its focus, the Company is building and leveraging the Ashland corporate brand as a differentiator to create value and better communicate the capabilities, promise and scale of the Company, making it easier to introduce new product lines and applications. 9 Intellectual Property Ashland has a broad intellectual property portfolio which is an important component of its business.
Specialty Additives has manufacturing facilities and labs in Huntsville, Alabama; Parlin, New Jersey; and Hopewell, Virginia within the United States and Doel-Beveren, Belgium; Nanjing and Shanghai, China; Alizay, France; Dusseldorf, Germany; Mumbai, India; Zwijndrecht, the Netherlands; Singapore, Singapore; and Bradford and Newton Aycliffe, United Kingdom.
Specialty Additives has manufacturing facilities and labs in Parlin, New Jersey; and Hopewell, Virginia within the United States and Doel-Beveren, Belgium; Nanjing and Shanghai, China; Alizay, France; Dusseldorf, Germany; Mumbai, India; Zwijndrecht, the Netherlands; Singapore, Singapore; and Newton Aycliffe, United Kingdom. Specialty Additives markets and distributes its products in the Americas, Europe, the Middle East, Africa and Asia Pacific.
Ashland’s natural ingredients include a wide range of cellulose, guar, and cassia derivatives; unique active ingredients derived from botanical sources using exclusive Ashland technologies such as Zeta Fraction TM and PSR technology; emollients based on natural chemistries; encapsulation technology derived from alginates; and efficacious preservative blends inspired by nature.
Ashland’s natural ingredients include a wide range of cellulose, guar, and cassia derivatives; unique active ingredients derived from botanical sources using exclusive Ashland technologies such as Zeta Fraction TM and PSR technology; emollients based on natural chemistries; encapsulation technology derived from alginates; and efficacious preservative blends inspired by nature. 5 The Personal Care portfolio of products and technologies is used in many types of cleaning and fragrance applications, including fabric care, home care and dishwashing.
These laws include regulation of chemical substances and inventories under the Toxic Substances Control Act (TSCA) in the United States and the Registration, Evaluation and Authorization of Chemicals (REACH) regulation in Europe.
These laws include regulation of chemical substances and inventories under the Toxic Substances Control Act (TSCA) in the United States and the Registration, Evaluation and Authorization of Chemicals (REACH) regulation in Europe as well as new cosmetic ingredients filings in China under the Cosmetics Supervision and Administration Regulation (CSAR).
The following benefit plans are available to employees depending on local markets in which the Company operates that include plan specific features such as on-site and on-demand resources: • Health care benefits including medical, prescription, dental and/or vision • Wellness initiatives: o Global EAP (employee assistance program) o Flu vaccination resources • Paid time off • Voluntary benefits • Life and accident coverage • Disability coverage • Retirement plans • Tuition reimbursement • Business travel accident Inclusion and Diversity - The company believes one powerful and necessary way to live that purpose is to proactively strengthen both the diversity of the workforce and the inclusiveness of the culture.
The following benefit plans are available to employees depending on local markets in which the Company operates that include plan specific features such as on-site and on-demand resources: • Health care benefits including medical, prescription, dental and/or vision • Wellness initiatives: o Global EAP (employee assistance program) o Flu vaccination resources • Paid time off • Voluntary benefits • Life and accident coverage • Disability coverage • Retirement plans • Tuition reimbursement • Business travel accident Inclusion and Diversity - In 2023, Ashland progressed its global inclusion and diversity strategy focused on belonging, accountability, community engagement, recruitment, and internal mobility.
These targets and progress towards meeting them can be found on: https://www.ashland.com/esg/esg-overview, which is not incorporated by reference into the Annual Report on Form 10-K. COVID-19 - The COVID-19 pandemic has challenged the world in unprecedented ways, affecting millions of people and countless institutions around the world.
These targets and progress towards meeting them can be found on: https://www.ashland.com/esg/esg-overview, which is not incorporated by reference into the Annual Report on Form 10-K.
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 3,900 employees worldwide, Ashland serves customers in more than 100 countries. Ashland’s reportable segments include: Life Sciences; Personal Care (formerly Personal Care and Household); Specialty Additives; and Intermediates (formerly Intermediates and Solvents).
Ashland is a global specialty additives and materials company with a conscious and proactive mindset for sustainability. The company serves customers in a wide range of consumer and industrial markets including, architectural coatings, construction, energy, food and beverage, nutraceuticals, personal care and pharmaceutical. With approximately 3,800 employees worldwide, Ashland serves customers in more than 100 countries.
Ashland is focused on developing new chemistries, market-changing technologies and customer driven solutions at numerous technology centers located in the Americas, Europe and the Asia Pacific regions. Seasonality Ashland’s business may vary due to seasonality. Ashland’s business units typically experience stronger demand during warmer weather months.
Ashland has the capability to develop and deliver the intellectual property required to grow and protect those platforms. Ashland is focused on developing new chemistries, market-changing technologies and customer driven solutions at numerous technology centers located in the Americas, Europe and the Asia Pacific regions. Seasonality Ashland’s business may vary due to seasonality.
Raw Materials Ashland purchases its raw materials from multiple sources of supply in the United States and other countries and believes that raw material supplies will be available in quantities sufficient to meet demand in fiscal 2023.
Raw Materials and Energy Ashland purchases its raw materials from multiple sources of supply in the United States and other countries. Raw material supplies were available in quantities sufficient to meet demand in fiscal 2023, which was a significant improvement over fiscal 2022 when raw and packaging materials were globally constrained.
These risks are generally grouped as impacts from legislative, regulatory and international developments, impacts from business and investment trends and impacts to Company assets from the physical effects of climate change. North American, European and other regional regulatory developments are monitored continuously for material impacts to Ashland’s operations, and some facilities are subject to promulgated rules.
These risks are generally grouped as impacts from legislative, regulatory and international developments, impacts from business and investment trends and impacts to Company assets from the physical effects of climate change.
Ashland launched a global Culture Survey, with an 83% response rate, that provided us with valuable insight to prioritize investments in the tools, resources, and processes that will make a positive impact on employee’s well-being, engagement, and career growth.
Ashland conducted its second annual global Culture Survey, with 79% response rate, which provided valuable insight to prioritize investments in the tools, resources, and processes that will make a positive impact on employee’s well-being, engagement, and career growth. Ashland remains committed to continuously listening and evolving its people practices to align with and drive the Company’s purpose and business success.
Ashland is committed to continuously evaluating and strengthening the growth-minded and innovative culture by attracting and developing exceptional global talent, supporting employees’ physical, emotional, and financial well-being, and recognizing and rewarding performance. To achieve the highest return, Ashland is building an inclusive and high-integrity organization where everyone belongs, feels inspired to excel, and does the right thing.
Human Capital Management - Ashland is committed to continuously evaluating and strengthening the growth-minded and innovative culture by attracting and developing exceptional global talent, supporting employees’ physical, emotional, and financial well-being, and recognizing and rewarding performance.
Environmental - Ashland has a conscious and proactive mindset for sustainability and has established a renewable annual trust for ongoing and future environmental remediation and related litigation cash outlays. The initiative follows Ashland's announcement in February 2021 to align its operations with the ambitious aim of the Paris Climate Accord to limit global temperature rise to 1.5°C above preindustrial levels.
The initiative follows Ashland's announcement in February 2021 to align its operations with the ambitious aim of the Paris Climate Accord to limit global 10 temperature rise to 1.5°C above preindustrial levels.
Similarly, energy costs are a significant component of production costs. 9 Research and Development Ashland’s program of research and development is focused on defining the needs of the marketplace and framing those needs into technology platforms. Ashland has the capability to develop and deliver the intellectual property required to grow and protect those platforms.
Similarly, energy costs, which are a significant component of production costs, stabilized in fiscal 2023 after significant volatility in 2022. Research and Development Ashland’s program of research and development is focused on defining the needs of the marketplace and framing those needs into technology platforms.
New laws and regulations may be enacted or adopted by various regulatory agencies globally. The costs of compliance with any new laws or regulations cannot be estimated until the manner in which they will be implemented has been more precisely defined.
The costs of compliance with any new laws or regulations cannot be estimated until the manner in which they will be implemented has been more precisely defined. Remediation - Ashland currently operates, and in the past has operated, various facilities at which, during the normal course of business, releases of hazardous substances have occurred.
In 2022, Ashland established a global inclusion and diversity strategy focused on belonging, accountability, community engagement, recruitment, and internal mobility. These priorities serve as the basis of the global and local objectives and initiatives that advance Ashland's collective progress towards equity.
These priorities serve as the basis of the global and local objectives and initiatives that advance Ashland's collective progress towards equity.
The demographics of the Company’s board of directors is 45% diverse, including females and diverse males. See "Item 10 – Directors, Executive Officers, and Corporate Governance" for further information related to Ashland’s board of directors. The Company’s management is led by its President and Chief Executive Officer and the other members of the Executive Committee (“EC”).
The demographics of the Company’s board of directors is 60% diverse, including females and ethnically diverse males. The Company’s management is led by its President and Chief Executive Officer and the other members of the Executive Committee (“EC”). The demographics of the EC include 20% women and 50% males who identify as ethnically diverse individuals.
The Personal Care portfolio of products and technologies is used in many types of cleaning and fragrance applications, including fabric care, home care and dishwashing. Personal Care products are used in a variety of applications for viscosity enhancement, particle suspension, rheology modification, stabilization and fragrance enhancement. Personal Care operates throughout the Americas, Europe and Asia Pacific.
Personal Care products are used in a variety of applications for viscosity enhancement, particle suspension, rheology modification, stabilization and fragrance enhancement. Personal Care operates throughout the Americas, Europe and Asia Pacific. It has 15 manufacturing and lab facilities in nine countries which serve its various end markets and participates in one joint venture.
The terms “Ashland” and the “Company” as used herein include Ashland Inc., its predecessors, and its consolidated subsidiaries, except where the context indicates otherwise. Ashland is a global specialty additives and materials company with a conscious and proactive mindset for sustainability.
ITEM 1. BUSINESS GENERAL Ashland Inc. is a Delaware corporation, with its headquarters and principal executive offices at 8145 Blazer Drive, Wilmington, Delaware 19808. The terms “Ashland” and the “Company” as used herein include Ashland Inc., its predecessors, and its consolidated subsidiaries, except where the context indicates otherwise.
As of September 30, 2022, Ashland had approximately 3,900 employees who thrive on developing practical, innovative, and simple solutions to complex problems for customers in more than 100 countries. The employees’ global demographics consist of approximately 69% male employees and approximately 31% female employees, and in the U.S., approximately 26% of its employees self-identify as ethnically diverse.
The employees’ global demographics consist of approximately 68% male employees and approximately 31% female employees, and in the U.S., approximately 26% of its employees self-identify as ethnically diverse.
The talent management process includes a performance management process that seeks to provide employees on-going feedback to enhance their performance in support of business objectives. As part of Ashland's commitment to professional development, it offers associate’s and bachelor’s undergraduate, graduate, and PhD tuition assistance to eligible employees.
As part of Ashland's commitment to professional development, it offers associate’s and bachelor’s undergraduate, graduate, and PhD tuition assistance to eligible employees, along with ongoing technical and professional development. In 2023, the Company elevated the skillset of its leaders to support the career development of their employees and provided continued learning on inclusion and allyship.
Remediation - Ashland currently operates, and in the past has operated, various facilities at which, during the normal course of business, releases of hazardous substances have occurred. Additionally, Ashland has known or alleged potential environmental liabilities at a number of third-party sites.
Additionally, Ashland has known or alleged potential environmental liabilities at a number of third-party sites.
Proposed and pending climate legislation is monitored for impact and Ashland is taking steps to strengthen climate reporting to meet anticipated disclosure requirements. Business and investment trends are expected to drive an increase in the demand for products that improve energy efficiency, reduce energy use and increase the use of renewable resources.
Regulations such as the PFAS restrictions and Microplastics ban in the EU have potential business interruption impacts where they limit the type and availability of raw materials that may be used. Business and investment trends are expected to drive an increase in the demand for products that improve energy efficiency, reduce energy use and increase the use of renewable resources.
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ITEM 1. BUSINESS GENERAL Ashland Inc. is a Delaware corporation, with its headquarters and principal executive offices at 8145 Blazer Drive, Wilmington, Delaware 19808. Ashland Inc. is the legal successor to Ashland Global Holdings Inc. effective August 1, 2022, after a legal restructuring effort to simplify the corporate entity structure.
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Ashland’s reportable segments include: Life Sciences; Personal Care (formerly Personal Care and Household); Specialty Additives; and Intermediates (formerly Intermediates and Solvents). Unallocated and Other includes corporate governance activities and certain legacy matters. Life Sciences is comprised of pharmaceuticals, nutrition, nutraceuticals, agricultural chemicals, diagnostic films (formerly known as advanced materials) and fine chemicals.
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Ashland Global Holdings Inc. had been established in 2016 in connection with the spin-off of a former business segment, while legacy Ashland Inc. had been converted to Ashland LLC. In connection with the 2022 restructuring efforts, Ashland LLC has been eliminated.
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The Green Deal in the EU, specifically Chemicals Strategy for Sustainability, will require additional information to be developed on hazard communication and risk assessment of both chemical substances and finished products. New laws and regulations may be enacted or adopted by various regulatory agencies globally.
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Unallocated and Other includes corporate governance activities and certain legacy matters. On August 31, 2021, Ashland announced its agreement with Arkema, a French société anonyme, to sell its Performance Adhesive business for $1.7 billion. The sale was completed on February 28, 2022.
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North American, European and other regional regulatory developments (most notably the pending SEC and approved Corporate Sustainability Reporting Directive (CSRD) climate disclosure regulations) are monitored continuously for material impacts to Ashland’s operations, and some facilities and subsidiaries are subject to promulgated rules.
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Ashland recognized an after-tax gain of $726 million on sale within the income (loss) from discontinued operations caption of the Statements of Consolidated Comprehensive Income (Loss) during fiscal 2022. The transaction represented a strategic shift in Ashland’s business and had a major effect on Ashland’s operations and financial results.
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Proposed and pending climate legislation is monitored for impact and Ashland is taking steps to strengthen climate reporting to meet anticipated disclosure requirements. Other requirements requiring additional product level climate disclosures or supply chain transparency are also approved and in draft or finalized status and could impact the requirements for disclosure and restrictions on sourcing of raw materials.
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As a result, the assets, liabilities, operating results and cash flows related to Performance Adhesives have been classified as discontinued operations for all periods presented within the Consolidated Financial Statements. Life Sciences is comprised of pharmaceuticals, nutrition, nutraceuticals, agricultural chemicals, diagnostic films (formerly known as advanced materials) and fine chemicals.
Added
Environmental - Ashland has a conscious and proactive mindset for sustainability and has established a renewable annual trust for ongoing and future environmental remediation and related litigation cash outlays.
Removed
It has 16 manufacturing and lab facilities in nine countries which serve its various end markets and participates in one joint venture.
Added
To achieve the highest return, Ashland is building an inclusive and high-integrity organization where everyone belongs, feels inspired to excel, and does the right thing. As of September 30, 2023, Ashland had approximately 3,800 employees who thrive on developing practical, innovative, and simple solutions to complex problems for customers in more than 100 countries.
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Specialty Additives markets and distributes its products in the Americas, Europe, the Middle East, Africa and Asia Pacific.
Added
The Company deploys a disciplined annual talent review and succession process to identify and develop a leadership pipeline that accelerates business results, promotes internal mobility, and minimizes attrition. The talent management process includes a performance management process that seeks to provide employees with on-going feedback to enhance their performance in support of the Company’s business objectives.
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All of Ashland’s reportable segments were impacted, to varying degrees, by the volatility of raw materials costs in fiscal 2022, and these conditions may continue in fiscal 2023, especially those of hydrocarbon derivatives, cotton linters or wood pulp origin.
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Ashland’s Incident Management Teams (IMT) have operated with the focus of keeping its employees, customers, and families safe while continuing to provide essential additives and specialty ingredients during this crisis. 10 Since the beginning of its ZIC journey over 20 years ago, Ashland has focused on preparedness and prevention and established an IMT which executed pandemic response plans.
Removed
The COVID-19 IMT was formed in early January 2020 to support its China and Asia-Pacific operations and scaled to five regional teams under the direction of the Global IMT and Executive Leadership Team. Ashland continued the IMT for COVID-19 through the end of September 2022 and will continue the Science Intelligence Unit (SIU) meetings to review the current situations.
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Ashland’s safety, health, purchasing, information technology, supply chain, and human resource teams have worked with the Company’s facilities to rapidly implement workplace changes, obtain personal protective equipment, and provide sanitization supplies to its employees while developing a reserve of materials to ensure continued safe operations. Ashland’s first priority is always the health and well-being of its employees, customers, and communities.
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Since the start of the pandemic, the Company’s focus has shifted from managing an immediate crisis to building in the flexibility needed to adjust for regional differences and changing conditions. Employees have been able to return to their work sites globally. Human Capital Management - Ashland’s global workforce is its greatest asset.
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The demographics of the EC include 33% women and 45% who identify as ethnically diverse individuals. Further information related 12 to its EC is included under the caption “Information About the Company’s Executive Officers” under Item X within Part I of this Form 10-K.
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In 2022, the Company elevated the skillset of its leaders as it moved to a hybrid work environment and established a foundation for inclusivity and allyship in practice.
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Ashland remains committed to continuously listening and evolving its people practices to align with and drive the Company’s purpose and business success.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

43 edited+13 added−18 removed72 unchanged
Biggest changeFluctuations in exchange rates may affect product demand and may adversely affect the profitability in U.S. dollars of products and services provided in foreign countries. In addition, foreign countries may impose additional withholding taxes or otherwise tax Ashland’s foreign income, or adopt other restrictions on foreign trade or investment, including currency exchange controls.
Biggest changeIn addition, foreign countries may impose additional withholding taxes or otherwise tax Ashland’s foreign income, or adopt other restrictions on foreign trade or investment, including currency exchange controls. The imposition of new tariffs or trade quotas, or an impairment of existing trade agreements is also a risk that could impair Ashland’s financial performance.
Due to the lengthy development process, technological challenges and intense competition, there can be no assurance that any of the products Ashland is currently developing, or could develop in the future, will achieve substantial commercial success. 17 The competitive nature of Ashland’s markets may delay or prevent Ashland from passing increases in raw materials or energy costs on to its customers.
Due to the lengthy development process, technological challenges and intense competition, there can be no assurance that any of the products Ashland is currently developing, or could develop in the future, will achieve substantial commercial success. The competitive nature of Ashland’s markets may delay or prevent Ashland from passing increases in raw materials or energy costs on to its customers.
In addition, insurance related to these types of risks may not be available now or, if available, may not be available in the future at commercially reasonable rates. Climate change impacts including supply chain disruptions, operational impacts, and geopolitical events may impact Ashland's business operations. Ashland sources a large number of raw materials from third party suppliers globally.
In addition, insurance related to these types of risks may not be available now or, if available, may not be available in the future at commercially reasonable rates. Climate change and resource impacts including supply chain disruptions, operational impacts, and geopolitical events may impact Ashland's business operations. Ashland sources a large number of raw materials from third party suppliers globally.
There are various claims, lawsuits and administrative proceedings pending or threatened, including those alleging personal injury caused by exposure to asbestos, against Ashland and its current and former subsidiaries. Such actions are with respect to commercial matters, product liability, toxic tort liability and other matters that seek remedies or damages, some of which are for substantial amounts.
There are various claims, lawsuits and administrative proceedings pending or threatened, including those alleging personal injury caused by exposure to asbestos, against Ashland and its current and former subsidiaries. Such actions are with respect to 19 commercial matters, product liability, toxic tort liability and other matters that seek remedies or damages, some of which are for substantial amounts.
Social and cultural norms in certain countries may not support compliance with Ashland’s corporate policies including those that require compliance with substantive laws and regulations. Also, changes in general economic and political conditions in countries where Ashland operates, particularly in Europe, the Middle East and emerging markets, are a risk to Ashland’s financial performance.
Social and cultural norms in certain countries may not support compliance with Ashland’s corporate policies including those that require compliance with substantive laws and 15 regulations. Also, changes in general economic and political conditions in countries where Ashland operates, particularly in Europe, the Middle East and emerging markets, are a risk to Ashland’s financial performance.
There can be no assurance that such agreements will not be breached or that Ashland will be able to effectively enforce them. In addition, Ashland’s trade secrets and know-how may be improperly obtained by other means, such as a breach of Ashland’s information technologies security systems or direct theft.
There can be no assurance that such agreements will not be breached or that Ashland will be able to effectively enforce them. In addition, Ashland’s trade secrets and know-how may be improperly obtained by other 18 means, such as a breach of Ashland’s information technologies security systems or direct theft.
Although it is impossible to predict the 14 occurrence or consequences of any such events, they could result in reduced demand for Ashland’s products, make it difficult or impossible for Ashland to manufacture its products or deliver products to its customers or to receive raw materials from suppliers, or create delays and inefficiencies in the supply chain.
Although it is impossible to predict the occurrence or consequences of any such events, they could result in reduced demand for Ashland’s products, make it difficult or impossible for Ashland to manufacture its products or deliver products to its customers or to receive raw materials from suppliers, or create delays and inefficiencies in the supply chain.
Any unauthorized disclosure of any of Ashland’s material know-how or trade secrets could adversely affect Ashland’s business and results of operations. Legal Risks, Regulatory Compliance and Litigation Ashland’s business exposes it to potential product liability claims and recalls, which could adversely affect its financial condition and performance.
Any unauthorized disclosure of any of Ashland’s material know-how or trade secrets could adversely affect Ashland’s business and results of operations. Risks Related to Legal and Regulatory Compliance and Litigation Ashland’s business exposes it to potential product liability claims and recalls, which could adversely affect its financial condition and performance.
If these earnings are needed for Ashland’s operations in the United States, the repatriation of such earnings could adversely affect its business, results of operations or financial condition. The IPO of Valvoline and final distribution of its shares could result in significant tax liability to Ashland and its stockholders.
If these earnings are needed for Ashland’s operations in the United States, the repatriation of such earnings could adversely affect its business, results of operations or financial condition. The final distribution of Valvoline shares could result in significant tax liability to Ashland and its stockholders.
The following discussion of risks is designed to highlight what Ashland believes are important factors to 13 consider when evaluating its expectations. These factors could cause future results to differ from those in forward-looking statements and from historical trends.
The following discussion of risks is designed to highlight what Ashland believes are important factors to consider when evaluating its expectations. These factors could cause future results to differ from those in forward-looking statements and from historical trends.
Although Ashland maintains product liability insurance, there can be no 19 assurance that this type or level of coverage is adequate or that Ashland will be able to continue to maintain its existing insurance or obtain comparable insurance at a reasonable cost, if at all.
Although Ashland maintains product liability insurance, there can be no assurance that this type or level of coverage is adequate or that Ashland will be able to continue to maintain its existing insurance or obtain comparable insurance at a reasonable cost, if at all.
Ashland’s future effective tax rates could be affected by changes in the mix of earnings in countries with differing tax rates, changes in the valuation of deferred tax assets and liabilities, changes in liabilities for uncertain tax positions, cost of repatriations or changes in tax laws, regulations, administrative practices or their interpretation.
Ashland’s future effective tax rates could be affected by changes in the mix of earnings in countries with differing tax rates, changes in the valuation of deferred tax assets and liabilities, changes in liabilities for uncertain 20 tax positions, cost of repatriations or changes in tax laws, regulations, administrative practices or their interpretation.
Ashland has incurred, and will continue to incur, significant costs and capital expenditures to comply with these laws and regulations. Environmental, health and safety regulations change frequently, and such regulations and their enforcement have tended to become more stringent over time.
Ashland has incurred, and will continue to incur, significant costs and capital expenditures to comply with these laws and regulations. Environmental, health and safety regulations change over time, and such regulations and their enforcement have tended to become more stringent.
Ashland’s business and operating results are sensitive to global and regional economic downturns, credit market tightness, declining consumer and business confidence, fluctuating commodity prices, volatile exchange rates, changes in interest rates, sovereign debt defaults and other challenges, including those related to international sanctions and acts of aggression or 16 threatened aggression that can affect the global economy.
Ashland’s business and operating results are sensitive to global and regional economic downturns, credit market tightness, declining consumer and business confidence, fluctuating commodity prices, volatile exchange rates, inflation or changes in interest rates, sovereign debt defaults and other challenges, including those related to international sanctions and acts of aggression or threatened aggression that can affect the global economy.
The opinions cannot be relied upon if any of the assumptions, representations or covenants is incorrect, incomplete or inaccurate or is violated in any material respect, or if there are changes in law with retroactive effect.
The opinion cannot be relied upon if any of the assumptions, representations or covenants is incorrect, incomplete or inaccurate or is violated in any material respect, or if there are changes in law with retroactive effect.
Business disruptions, including those related to operating hazards inherent with the production of chemicals, natural disasters, severe weather conditions, supply or logistics disruptions, increasing costs for energy, temporary plant and/or power outages, information technology systems and network disruptions, cyber-security breach, terrorist attacks, armed conflict, war, pandemic diseases, fires, floods or other catastrophic events, could seriously harm Ashland’s operations, as well as the operations of its customers and suppliers, and may adversely impact Ashland’s financial performance.
Business disruptions, including those related to operating hazards inherent with the production of chemicals, natural disasters, severe weather conditions, supply or logistics disruptions, increasing costs for energy, temporary plant and/or power outages, information technology systems and network disruptions, cyber-security breach, terrorist attacks, armed conflict, war, public health crisis (such as the COVID-19 pandemic), fires, floods or other catastrophic events, could seriously harm Ashland’s operations, as well as the operations of its customers and suppliers, and may adversely impact Ashland’s financial performance.
Business Operations, Financial Performance and Growth Ashland has set aggressive growth goals for its businesses, including increasing sales, cash flow and margins, in order to achieve its long term strategic objectives. Ashland’s successful execution of its growth strategies and business plans to facilitate that growth involves a number of risks.
Risks Related to the Company’s Business Operations, Financial Performance and Growth Ashland has set aggressive growth goals for its businesses, including increasing sales, cash flow and margins, in order to achieve its long-term strategic objectives and improve shareholder value. Ashland’s successful execution of its growth strategies and business plans to facilitate that growth involves a number of risks.
As a result, existing or potential customers might delay or cancel plans to purchase products and may not be able to fulfill their obligations to Ashland in a timely fashion. Further, suppliers may experience similar conditions, which could impact their ability to fulfill their obligations to Ashland.
As a result, existing or potential customers might delay or cancel plans to purchase products, which includes customer destocking of their own inventories, and may not be able to fulfill their obligations to Ashland in a timely fashion. Further, suppliers may experience similar conditions, which could impact their ability to fulfill their obligations to Ashland.
The opinions are based on certain assumptions and representations as to factual matters from Ashland and Valvoline, as well as certain covenants by those parties.
The opinion is based on certain assumptions and representations as to factual matters from Ashland and Valvoline, as well as certain covenants by those parties.
The tax liability resulting from such gain could have a material impact on Ashland’s operations. 22 ITEM 1B. UNRESOLV ED STAFF COMMENTS None.
The tax liability resulting from such gain could have a material impact on Ashland’s operations. ITEM 1B. UNRESOLV ED STAFF COMMENTS None. ITEM 1C. CYBERSECURITY Not applicable.
The opinions are not binding on the IRS or the courts, and it is possible that the IRS or a state or local taxing authority could take the position that the internal transactions, the final distribution or the receipt of proceeds from the Valvoline IPO resulted in the recognition of significant taxable gain by Ashland, in which case Ashland may be subject to material tax liabilities.
The opinion is not binding on the IRS or the courts, and it is possible that the IRS or a state or local taxing authority could take the position the final distribution resulted in the recognition of significant taxable gain by Ashland, in which case Ashland may be subject to material tax liabilities.
Ashland also obtained a written opinion of counsel to the effect that the final distribution should qualify for non-recognition of gain and loss under Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”).
Ashland believes that the final distribution of Valvoline shares should be a nontaxable transaction for U.S. federal income tax purposes. Ashland has obtained a written opinion of counsel to the effect that the final distribution should qualify for non-recognition of gain and loss under Section 355 of the Internal Revenue Code of 1986, as amended (the “Code”).
In addition, because of its reliance on its management team, Ashland’s future success depends, in part, on its ability to identify and develop talent to succeed its senior management and other key positions throughout the organization.
Ashland’s success depends on its ability to attract and retain key personnel, and Ashland relies heavily on its management team. Therefore, Ashland’s future success depends, in part, on its ability to identify and develop talent to succeed its senior management and other key positions throughout the organization.
As a result, Ashland’s actual costs for environmental remediation could affect Ashland’s cash flow and, to the extent costs exceed established reserves for those liabilities, its results of operations. 20 Ashland is responsible for, and has financial exposure to, liabilities from pending and threatened claims, including those alleging personal injury caused by exposure to asbestos, which could adversely impact Ashland’s results of operations and cash flow.
Ashland is responsible for, and has financial exposure to, liabilities from pending and threatened claims, including those alleging personal injury caused by exposure to asbestos, which could adversely impact Ashland’s results of operations and cash flow.
In order to maintain margins and remain competitive, Ashland must successfully develop and introduce new products or improvements that appeal to its customers and ultimately to global consumers.
The specialty additives and materials industry is subject to periodic technological change and ongoing product improvements. In order to maintain margins and remain competitive, Ashland must successfully develop and introduce new products or improvements that appeal to its customers and ultimately to global consumers.
This includes, among other things, the possible taxation under U.S. law of certain income from foreign operations, the possible taxation under foreign laws of certain income Ashland reports in other jurisdictions, tariffs or quotas levied on Ashland products, raw materials or key components by certain countries, regulations related to the protection of private information of Ashland’s employees and customers, regulations issued by the U.S.
This includes, among other things, the possible taxation under U.S. law of certain income from foreign operations, the possible taxation under foreign laws of certain income Ashland reports in other jurisdictions, the Pillar Two initiative of the Organization for Economic Co-operation and Development which introduces a 15% global minimum tax applied on a country-by-country basis to Ashland in many jurisdictions starting October 1, 2024, tariffs or quotas levied on Ashland products, raw materials or key components by certain countries, regulations related to the protection of private information of Ashland’s employees and customers, regulations issued by the U.S.
A breach of our IT systems could lead to the loss and destruction of trade secrets, confidential information, proprietary data, intellectual property, customer and supplier data, and employee personal information, and could disrupt business operations which could adversely affect Ashland’s relationships with business partners and harm our brands, reputation, and financial results.
A breach of our IT systems could lead to the loss and destruction of trade secrets, confidential information, proprietary data, intellectual property, customer and supplier data, and employee personal information.
In other instances, Ashland’s customers may change their products or production techniques to take advantage of newer technologies, alternative chemistries, more effective formulations, or improved processes, or in response to various market, technical or regulatory changes. 15 Such changes in Ashland’s customers’ products or production techniques may cause these customers to reduce consumption of Ashland’s products or eliminate their need entirely.
Changes in consumer preferences and demands can lead to certain Ashland customers making changes to their products. In other instances, Ashland’s customers may change their products or production techniques to take advantage of newer technologies, alternative chemistries, more effective formulations, or improved processes, or in response to various market, technical or regulatory changes.
Failure to respond to or mitigate this risk could lead to increased cost and business impacts. Ashland’s customers could change their products in a way that reduces the demand for Ashland’s products. Ashland produces and sells specialty materials that are used by its customers for a broad range of applications.
Ashland’s customers could change their products in a way that reduces the demand for Ashland’s products. Ashland produces and sells specialty materials that are used by its customers for a broad range of applications. Many of these Ashland materials become part of end products that are sold to consumers.
Compliance with current and future regulations is further complicated by uncertainty around the reevaluation of international agreements by various countries, including the United States, and the resulting impact on regulatory regimes, customs regulations, tariffs, sanctions, and other transnational protocols. 21 Taxation Imposition of new taxes, disagreements with tax authorities or additional tax liabilities could adversely affect Ashland’s business, financial condition, reputation or results of operations.
Compliance with current and future regulations is further complicated by uncertainty around the reevaluation of international agreements by various countries, including the United States, and the resulting impact on regulatory regimes, customs regulations, tariffs, sanctions, and other transnational protocols.
One of the most important risks is that Ashland might fail to adequately execute its business and growth plans, by optimizing the efficient use of its physical and intangible assets.
Ashland’s failure to fully achieve one or more of its aggressive growth goals or meet its long-term objectives, could negatively impact Ashland’s potential value and its businesses. One of the most important risks is that Ashland might fail to adequately execute its business and growth plans, by optimizing the efficient use of its physical and intangible assets.
Ashland may not be able to refinance its debt or sell additional debt or equity securities or its assets on favorable terms, if at all, and if Ashland must sell its assets, it may negatively affect its ability to generate revenues.
Ashland may not be able to refinance its debt or sell additional debt or equity securities or its assets on favorable terms, if at all, and if Ashland must sell its assets, it may negatively affect its ability to generate revenues. 16 Risks Related to Competition Failure to develop and market new products and production technologies could impact Ashland’s competitive position and have an adverse effect on its businesses and results of operations.
Ashland may not be able to supply products that meet the customers’ new requirements. Such lost sales opportunities may not be replaced by those offering equal revenue potential or margin. It is important for Ashland to continue developing new products, and new applications of existing products to replace such lost business.
Such changes in Ashland’s customers’ products or production techniques may cause these customers to reduce consumption of Ashland’s products or eliminate their need entirely. Ashland may not be able to supply products that meet the customers’ new requirements. Such lost sales opportunities may not be replaced by those offering equal revenue potential or margin.
Environmental remediation reserves are subject to numerous inherent uncertainties that affect Ashland’s ability to estimate its share of the applicable costs.
Environmental remediation reserves are subject to numerous inherent uncertainties that affect Ashland’s ability to estimate its share of the applicable costs. Such uncertainties involve the nature and extent of contamination at each site and the extent of required cleanup efforts under existing environmental regulations, with varying costs of alternate cleanup methods.
Otherwise, Ashland faces the risk of a loss of market share, margins and cash flow if it is unable to manage a potential change in the demands of its products. Ashland’s substantial global operations subject it to risks of doing business in foreign countries, which could adversely affect its business, financial condition and results of operations.
It is important for Ashland to continue developing new products, and new applications of existing products to replace such lost business. Otherwise, Ashland faces the risk of a loss of market share, margins and cash flow if it is unable to manage a potential change in the demands of its products.
Greater than half of Ashland’s net sales for fiscal 2022 were to customers outside of North America. Ashland expects sales from international markets to continue to represent an even larger portion of the Company’s sales in the future. Also, a significant portion of Ashland’s manufacturing capacity is located outside of the United States.
Ashland expects sales from international markets to continue to represent an even larger portion of the Company’s sales in the future. Also, a significant portion of Ashland’s manufacturing capacity is located outside of the United States. Accordingly, Ashland’s business is subject to risks related to the differing legal, political, cultural, social and regulatory requirements and economic conditions of many jurisdictions.
Ashland’s products are made, manufactured, distributed or sold in more than 100 countries and territories. A significant portion of Ashland’s revenues are generated outside the United States. As such, Ashland is subject to taxes in the United States as well as numerous foreign countries.
Risks Related to Taxation Imposition of new taxes, disagreements with tax authorities or additional tax liabilities could adversely affect Ashland’s business, financial condition, reputation or results of operations. Ashland’s products are made, manufactured, distributed or sold in more than 100 countries and territories. A significant portion of Ashland’s revenues are generated outside the United States.
Competitive and pricing pressures could also impact Ashland’s production volumes, which can in turn reduce cost efficiency. If Ashland’s strategies for dealing with declining markets and leveraging opportunity markets are not successful, its businesses and results of operations could be negatively affected.
Competitive and pricing pressures could also impact Ashland’s production volumes, which can in turn reduce cost efficiency.
In addition, the United Kingdom’s exit from the European Union (E.U.) could disrupt European supply chains or customs regimes. Ashland’s ability to do business and execute its growth strategies could be adversely affected by either of these changes or other changes to trade policy and trade relationships.
Certain legal and political risks are also inherent in the operation of a company with Ashland’s global scope. Ashland’s ability to do business and execute its growth strategies could be adversely affected by legal and political changes or other changes to trade policy and trade relationships.
There may also be situations in which certain environmental liabilities are not known to Ashland or are not probable and estimable.
There may also be situations in which certain environmental liabilities are not known to Ashland or are not probable and estimable. As a result, Ashland’s actual costs for environmental remediation could adversely affect Ashland’s cash flow and, to the extent costs exceed established reserves for those liabilities, its results of operations.
If Ashland fails to identify and develop successors, the Company is at risk of being harmed by the departures of these key employees. 18 Intellectual Property and Cyber Threats Ashland uses information technology (IT) systems to conduct business and these IT systems are at risk of potential disruption and cyber security threats.
Risks Related to Intellectual Property and Cyber Threats Ashland uses information technology (IT) systems to conduct business and these IT systems are at risk of potential disruption and cyber security threats. Ashland’s businesses rely on IT systems to operate efficiently and in some cases, to operate at all.
Human Capital Ashland’s success depends upon its ability to attract and retain key employees and the identification and development of talent to succeed senior management. Ashland’s success depends on its ability to attract and retain key personnel, and Ashland relies heavily on its management team.
If Ashland’s strategies for dealing with declining markets and leveraging opportunity markets are not successful, its businesses and results of operations could be negatively affected. 17 Risks Related to Human Capital Ashland’s success depends upon its ability to attract and retain key employees and the identification and development of talent to succeed senior management.
The inability to recruit and retain key personnel or the unexpected loss of key personnel may adversely affect Ashland’s operations. Also, a substantial portion of Ashland’s U.S.-based employees will be retirement-eligible within the next several years.
If Ashland fails to identify and develop successors, the Company is at risk of being harmed by the departures of these key employees. The inability to recruit and retain key personnel or the unexpected loss, voluntarily or otherwise, of key personnel may adversely affect Ashland’s operations.
Removed
COVID-19 Pandemic The COVID-19 pandemic could have a material adverse effect on Ashland’s business operations, results of operations, cash flows and financial position. Ashland continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business and geographies, including how the pandemic will impact customers, employees, suppliers, vendors, business partners and distribution channels.
Added
In addition, Ashland, as part of its growth goals, continuously evaluates acquisition candidates. If Ashland is unable to successfully identify and integrate acquired businesses, Ashland could fail to achieve any expected increases in sales and operating results, which could have a material adverse effect on Ashland’s financial results.
Removed
The COVID-19 pandemic has and may create significant volatility, uncertainty and economic disruption, which may materially and adversely affect Ashland’s business operations, cash flows, liquidity and financial position.
Added
Ashland’s ability to achieve the anticipated financial benefits from any acquisition transactions may not be realized due to any number of factors, including, but not limited to, unsuccessful integration 13 efforts, unexpected or underestimated liabilities or increased costs, fees, expenses and charges related to such transactions.
Removed
The extent to which the COVID-19 pandemic continues to impact Ashland will depend on numerous evolving factors and future developments that are difficult to predict, including: the severity of the virus and any related variants; the duration of the outbreak; governmental, business and other actions in response to the pandemic (which could include limitations on Ashland’s operations or mandates to provide products or services); the impact of the pandemic on Ashland’s supply chain; the impact of the pandemic on economic activity; the extent and duration of the effect on consumer confidence and spending, customer demand and buying patterns including spending on discretionary categories; the health of and the effect on Ashland’s workforce and its ability to meet staffing needs through the operations and other critical functions, particularly if employees are quarantined as a result of exposure; any impairment in value of tangible or intangible assets which could be recorded as a result of weaker economic conditions; the impact on Ashland’s business and the global economy from governmental actions related to international trade; and the potential effects on internal controls including those over financial reporting as a result of changes in working environments such as shelter-in-place and similar orders that are applicable to employees and business partners, among others.
Added
Such adverse events could result in a decrease in the estimated fair value of goodwill or other intangible assets established as a result of such transactions, triggering an impairment. These and other factors could have a material adverse effect on our financial condition and results of operations.
Removed
In addition, if the pandemic continues to create disruptions or volatility in the credit or financial markets, or impacts Ashland’s credit ratings, it could adversely affect Ashland’s ability to access capital on favorable terms and continue to meet its liquidity needs, all of which are highly uncertain and cannot be predicted.
Added
Furthermore, because catastrophic events are inherently uncertain, Ashland's business continuity plans may not address every potential scenario and may not fully protect it from all such events.
Removed
In addition, Ashland cannot predict the continued impact that the COVID-19 pandemic will have on its customers, suppliers, vendors, and other business partners, and each of their financial conditions; however, any material effect on these parties could adversely impact Ashland.
Added
Failure to respond to or mitigate this risk could lead to increased cost and business impacts. 14 Globally, the availability of fresh, potable water is a growing concern, where water withdrawal can exceed the rates of surface and groundwater replenishment in critical basins, rivers, or other bodies of water.
Removed
The impact of the COVID-19 pandemic may also exacerbate other risks discussed in this Item 1A any of which could have a material effect on Ashland. This situation is changing rapidly and additional impacts may arise that Ashland is not aware of currently.
Added
This concern continues to increase for Ashland and for the global supply chain where fresh water is a key resource for manufacturing operations. Failure to respond to this risk could lead to business interruptions and impact the availability and pricing of product.
Removed
Ashland has set aggressive growth goals for its businesses in order to meet long term strategic objectives and improve shareholder value. Ashland’s failure to meet one or more of these goals or objectives would negatively impact Ashland’s potential value and its businesses.
Added
Ashland sources several key natural raw materials that contain processed timber, palm, soy, and other harvested or farmed raw materials. Deforestation is an increasing concern where the irresponsible harvest of these raw materials can lead to loss of critical forests and habitats.
Removed
While Ashland maintains business continuity plans that are intended to allow it to continue operations or mitigate the effects of events that could disrupt its business, Ashland cannot provide assurances that its plans would fully protect it from all such events.
Added
Ashland has engaged in several supply chain certifications in an effort to source sustainable raw materials; however, the availability of these raw materials may be limited in the future. Additional sourcing of these materials is under increasing scrutiny due to deforestation. Failure to source responsibly and respond to or mitigate the risk could lead to business impacts and increased cost.
Removed
Many of these Ashland materials become part of end products that are sold to consumers. Changes in consumer preferences and demands can lead to certain Ashland customers making changes to their products.
Added
Ashland’s substantial global operations subject it to risks of doing business in foreign countries, which could adversely affect its business, financial condition and results of operations. Greater than half of Ashland’s net sales for fiscal 2023 were to customers outside of North America.
Removed
Accordingly, Ashland’s business is subject to risks related to the differing legal, political, cultural, social and regulatory requirements and economic conditions of many jurisdictions. The global nature of Ashland’s business presents difficulties in hiring and maintaining a workforce in certain countries.
Added
The global nature of Ashland’s business presents difficulties in hiring and maintaining a workforce in certain countries. Fluctuations in exchange rates may affect product demand and may adversely affect the profitability in U.S. dollars of products and services provided in foreign countries.
Removed
The imposition of new tariffs or trade quotas, or an impairment of existing trade agreements is also a risk that could impair Ashland’s financial performance. Certain legal and political risks are also inherent in the operation of a company with Ashland’s global scope.
Added
Monitoring and preventing unwanted employee turnover in positions that require certain technical expertise or those that have been identified as successors to senior management will be critical to Ashland’s future success.
Removed
For example, in November 2018, the United States reached an agreement with Canada and Mexico on the United States-Mexico-Canada Trade Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA) effective July 1, 2020. Among other things, USMCA includes revised country of origin rules and various labor provisions.
Added
A breach could also expose us to customer litigation, regulatory actions and costs related to the reporting and handling of such a violation or breach, all of which could disrupt our business operations and could adversely affect Ashland’s relationships with business partners, harm our brands, reputation, and financial results.
Removed
Competition Failure to develop and market new products and production technologies could impact Ashland’s competitive position and have an adverse effect on its businesses and results of operations. The specialty additives and materials industry is subject to periodic technological change and ongoing product improvements.
Added
As such, Ashland is subject to taxes in the United States as well as numerous foreign countries.
Removed
That, combined with the relatively small number of middle tier managers with substantial experience in place to replace this group of retirement eligible employees, increases the potential negative impact of the risk that key employees could leave the Company. Additionally, the Company’s redesign and cost reduction program may result in key employees departing who may not be replaced.
Removed
This risk of unwanted employee turnover also is substantial in positions that require certain technical expertise and geographically in developing markets which Ashland has targeted for growth, especially in Asia, South America and Eastern Europe.
Removed
Ashland’s businesses rely on their IT systems to operate efficiently and in some cases, to operate at all.
Removed
Such uncertainties involve the nature and extent of contamination at each site, the extent of required cleanup efforts under existing environmental regulations, widely varying costs of alternate cleanup methods, changes in environmental regulations, the potential effect of continuing improvements in remediation technology and the number and financial strength of other potentially responsible parties at multiparty sites.
Removed
Ashland believes that the Valvoline IPO and certain related internal transactions should be nontaxable transactions for U.S. federal income tax purposes and has obtained written opinions of counsel to that effect.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAshland believes its physical properties are suitable and adequate for the Company’s business. Additional information concerning leases may be found in Note K of Notes to Consolidated Financial Statements in this annual report on Form 10-K.
Biggest changeAshland believes its physical properties are suitable and adequate for the Company’s business. Additional information concerning leases may be found in Note J of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. 21

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeOther Pending Legal Proceedings In addition to the matters described above, there are other various claims, lawsuits and administrative proceedings pending or threatened against Ashland and its current and former subsidiaries.
Biggest changeFor additional information regarding environmental matters and reserves, see Note M of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K. 22 Other Pending Legal Proceedings In addition to the matters described above, there are other various claims, lawsuits and administrative proceedings pending or threatened against Ashland and its current and former subsidiaries.
The parties 23 are required to perform a remedial investigation and feasibility study (RI/FS) of the entire 17 miles of the Passaic River. In June 2007, the USEPA separately commenced a Focused Feasibility Study (FFS) as an interim measure.
The parties are required to perform a remedial investigation and feasibility study (RI/FS) of the entire 17 miles of the Passaic River. In June 2007, the USEPA separately commenced a Focused Feasibility Study (FFS) as an interim measure.
For additional detailed information regarding liabilities arising from asbestos-related litigation, see “Management’s Discussion and Analysis - Critical Accounting Policies - Asbestos Litigation” and Note N of Notes to Consolidated Financial Statements in this annual report on Form 10-K.
For additional detailed information regarding liabilities arising from asbestos-related litigation, see “Management’s Discussion and Analysis - Critical Accounting Policies - Asbestos Litigation” and Note M of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K.
As of September 30, 2022, Ashland and its subsidiaries have been identified as a PRP by U.S. federal and state authorities, or by private parties seeking contribution, for the cost of environmental investigation and/or cleanup at 81 sites.
As of September 30, 2023, Ashland and its subsidiaries have been identified as a PRP by U.S. federal and state authorities, or by private parties seeking contribution, for the cost of environmental investigation and/or cleanup at 57 sites.
There is a reasonable possibility that a loss exceeding amounts already recognized may be incurred related to these actions; however, Ashland believes that such potential losses were immaterial as of September 30, 2022. 24
There is a reasonable possibility that a loss exceeding amounts already recognized may be incurred related to these actions; however, Ashland believes that such potential losses would not be material as of September 30, 2023. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 23 PART II
Such actions are with respect to commercial matters, product liability, toxic tort liability, employment matters and other environmental matters which seek remedies or damages, some of which are for substantial amounts.
Such actions are with respect to commercial matters, product liability, toxic tort liability, employment matters and other environmental matters which seek remedies or damages, some of which are for substantial amounts. While Ashland cannot predict with certainty the outcome of such actions, it believes that adequate reserves have been recorded as of September 30, 2023.
Removed
Possible future allocation proceedings and the lawsuit are not expected to be material to Ashland. For additional information regarding environmental matters and reserves, see Note N of Notes to Consolidated Financial Statements in this annual report on Form 10-K.
Added
Possible future allocation proceedings are not expected to have a significant impact to Ashland.
Removed
While Ashland cannot predict with certainty the outcome of such actions, it believes that adequate reserves have been recorded and losses already recognized with respect to such actions were immaterial as of September 30, 2022.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS See Management’s Discussion and Analysis of Financial Condition and Results of Operations on pages M- 1 through M- 41 . ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See Quantitative and Qualitative Disclosures about Market Risk on page M- 42 . ITEM 8.
Biggest changeThe new authorization terminates and replaces the company's 2022 stock repurchase program, which had $200 million outstanding at the date of termination. ITEM 6. [RESERVED] ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS See Management’s Discussion and Analysis of Financial Condition and Results of Operations on pages M- 1 through M- 42 . ITEM 7A.
As of September 30, 2022, this peer group consisted of 48 companies. 26 Purchase of Company Common Stock Share repurchase activity during the three months ended September 30, 2022 was as follows: Q4 Fiscal Periods Total Number of Shares Purchased Average Price Paid per Share, including commission Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in millions) (a) July 1, 2022 to July 31, 2022 — $ — — $ 500 August 1, 2022 to August 31, 2022 — — — 500 September 1, 2022 to September 30, 2022 — — — 500 Total — — 500 (a) During May 2022, Ashland's Board of Directors approved a new evergreen $500 million stock repurchase program which replaced the previous stock repurchase program.
As of September 30, 2023, this peer group consisted of 57 companies. 24 Repurchases of Company Common Stock Share repurchase activity during the three months ended September 30, 2023 was as follows: Q4 Fiscal Periods Total Number of Shares Purchased Average Price Paid per Share, including commission Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in millions) (a) July 1, 2023 to July 31, 2023 — $ — — $ 1,000 August 1, 2023 to August 31, 2023 — — — 1,000 September 1, 2023 to September 30, 2023 — — — 1,000 Total — — 1,000 (a) On June 28, 2023, Ashland's board of directors authorized a new evergreen $1 billion common share repurchase program (2023 stock repurchase program).
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements of Ashland presented in this annual report on Form 10-K are listed in the index on page F- 1 . ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See Quantitative and Qualitative Disclosures about Market Risk on page M- 42 . ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The consolidated financial statements of Ashland presented in this Annual Report on Form 10-K are listed in the index on page F- 1 . ITEM 9.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ASHLAND, S&P MIDCAP 400 † INDEX AND PEER GROUP 2017 2018 2019 2020 2021 2022 Ashland 100 130 121 113 144 156 S&P MidCap 400 † 100 114 111 109 157 133 Peer Group - Materials 100 104 105 115 148 131 The peer group consists of the following industry indices: • Peer Group – Materials: S&P 500 † Materials (large-cap) and S&P MidCap 400 † Materials.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ASHLAND, S&P MIDCAP 400 † INDEX AND PEER GROUP 2018 2019 2020 2021 2022 2023 Ashland 100 93 87 111 120 105 S&P MidCap 400 † 100 98 96 138 117 135 Peer Group - Materials 100 101 111 142 126 150 The peer group consists of the following industry indices: • Peer Group – Materials: S&P 500 † Materials (large-cap) and S&P MidCap 400 † Materials.
Ashland Common Stock is listed on the NYSE (ticker symbol ASH) and has trading privileges on Nasdaq. There were no sales of unregistered securities required to be reported under Item 5 of Form 10-K.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Ashland’s Common Stock is listed on the NYSE (ticker symbol “ASH”) and has trading privileges on Nasdaq. Holders At October 31, 2023, there were approximately 8,565 holders of record of Ashland’s Common Stock.
Removed
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES On September 20, 2016, Ashland Inc. became an indirect wholly owned subsidiary of Ashland Global Holdings Inc., and Ashland Inc.’s common stock ceased trading on the New York Stock Exchange (NYSE).
Added
Dividends While we currently expect that quarterly cash dividends will continue to be paid in the future, such payments are at the discretion of our Board of Directors and will depend upon many factors, including our results of operations and liquidity position. There were no sales of unregistered securities required to be reported under Item 5 of Form 10-K.
Removed
Ashland Global Holdings Inc.'s Common Stock began trading on NYSE under the symbol “ASH” on September 20, 2016. On August 1, 2022, Ashland Global Holdings Inc. changed its name to Ashland Inc. and continued to trade on NYSE under the symbol "ASH". At October 31, 2022, there were approximately 9,058 holders of record of Ashland’s Common Stock.
Added
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
Removed
On May 12, 2017, Ashland completed the final separation of Valvoline Inc. with the pro rata distribution of 2.745338 shares of Valvoline Inc. common stock for every share of Ashland Common Stock to Ashland stockholders. The effect of the final separation of Valvoline Inc. is reflected in the cumulative total return of Ashland Common Stock as a reinvested dividend.
Removed
Ashland's stock repurchase program does not obligate it to acquire any specific number of shares. Under the program, shares may be repurchased in privately negotiated and/or open market transactions, including under plans complying with Rule 10b5-1 of the Exchange Act. ITEM 6. [RESERVED] ITEM 7.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

225 edited+66 added−94 removed102 unchanged
Biggest changeFavorable price/mix, lower costs and higher volume, including the impact of the Schülke acquisition increased operating income by $16 million, $13 million and $6 million, respectively. Unfavorable currency exchange decreased operating income by $6 million. EBITDA for the current year increased $32 million to $186 million compared to 2021. Adjusted EBITDA increased $25 million to $186 million.
Biggest changeThe key items during the year ended September 30, 2021 related to inventory adjustments of $4 million and an asset impairment of $3 million. 2023 2022 (In millions) 2023 2022 2021 change change Operating income $ 52 $ 102 $ 73 $ (50 ) $ 29 Depreciation and amortization 85 84 81 1 3 EBITDA 137 186 154 (49 ) 32 Inventory adjustment — — 4 — (4 ) Asset impairment — — 3 — (3 ) Adjusted EBITDA $ 137 $ 186 $ 161 $ (49 ) $ 25 As a percent of sales 22.9 % 27.4 % 27.2 % -450 bps 20 bps 2023 compared to 2022 Personal Care's sales, operating income and Adjusted EBITDA decreased in 2023 primarily due to lower volume, higher costs, and unfavorable foreign currency exchange, partially offset by favorable price/mix. 2022 compared to 2021 Personal Care's sales, operating income and Adjusted EBITDA increased in 2022 primarily due to favorable price/mix, lower costs and higher volume, including the impact of the Schülke acquisition partially offset by unfavorable foreign currency exchange.
The service cost component of pension and other postretirement benefits costs is allocated to each reportable segment on a ratable basis; while the remaining components of pension and other postretirement benefits costs are recorded within the other net periodic benefit income (loss) caption on the Statements of Consolidated Comprehensive Income (Loss).
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 (income) caption on the Statements of Consolidated Comprehensive Income (Loss).
Operating Activities - Operating Assets and Liabilities The cash results during each year were primarily driven by net income, excluding discontinued operation results, adjusted for certain non-cash items including depreciation and amortization (including debt issuance cost amortization), income on acquisitions and divestitures as well as changes in working capital, which are fluctuations within accounts receivable, inventory, trade payables and accrued expenses.
Operating Activities - Operating Assets and Liabilities The cash results during each year were primarily driven by net income, excluding discontinued operation results, adjusted for certain non-cash items including depreciation and amortization (including debt issuance cost amortization), income on acquisitions and divestitures, net as well as changes in working capital, which are fluctuations within accounts receivable, inventory, trade payables and accrued expenses.
Loans will initially bear interest at Term SOFR or EURIBOR plus 1.250% per annum, in the case of Term SOFR borrowings or EURIBOR borrowings, respectively, or at the alternate base rate plus 0.250% per annum, in the case of alternate base rate borrowings, through and including the date of delivery of a quarterly compliance certificate and thereafter the interest rate will fluctuate between Term SOFR or EURIBOR plus 1.250% per annum and Term SOFR or EURIBOR plus 1.750% per annum (or between the alternate base rate plus 0.250% per annum and the alternate base rate plus 0.750% per annum), based upon the Consolidated Net Leverage Ratio (as defined in the Credit Agreement) at such time.
Loans will initially bear interest at Term SOFR or EURIBOR plus 1.250% per annum, in the case of Term SOFR borrowings or EURIBOR borrowings, respectively, or at the alternate base rate plus 0.250% per annum, in the case of alternate base rate borrowings, through and including the date of delivery of a quarterly compliance certificate and thereafter the interest rate will fluctuate between Term SOFR or EURIBOR plus 1.250% per annum and Term SOFR or EURIBOR plus 1.750% per annum (or between the alternate base rate plus 0.250% per annum and the alternate base rate plus 0.750% per annum), based upon the Consolidated Net Leverage Ratio (as defined in the 2022 Credit Agreement) at such time.
Operating cash flows for 2021 included income from continuing operations of $173 million and significant non-cash adjustments of $244 million for depreciation and amortization, $15 million for stock-based compensation expense, $16 million for losses on early retirement of debt, $33 million of income from restricted investments, $26 million for deferred taxes, $15 million of income on acquisitions and divestitures and $13 million for impairment charges.
Operating cash flows for 2021 included income from continuing operations of $173 million and significant non-cash adjustments of $244 million for depreciation and amortization, $15 million for stock-based compensation expense, $16 million for losses on early retirement of debt, $33 million of income from restricted investments, $26 million for deferred taxes, $15 million of income on acquisitions and divestitures, net and $13 million for impairment charges.
These operating key items for the applicable periods are summarized as follows: • Restructuring, separation and other costs – Ashland periodically implements company-wide 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.
These operating key items for the applicable periods are summarized as follows: • 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.
Key drivers of the fluctuation in selling, general and administrative expense compared to 2021 were: • Expense of $5 million and $10 million comprised of key items for severance, lease abandonment and other restructuring costs during 2022 and 2021, respectively; • $53 million and $45 million in net environmental-related expenses during 2022 and 2021, respectively (see Note N for more information); • $10 million related to a capital project impairment during 2021; and M- 6 • Increases associated with the following: o Higher incentive pay of $14 million; o Lower transition services income from INEOS of $10 million; o Higher deferred and stock compensation expense of $8 million; o Higher expense of $6 million related to the acquisition of the personal care business of Schülke; o Higher salary, benefits and travel and entertainment expenses of $2 million.
Key drivers of the fluctuation in selling, general and administrative expense compared to 2021 were: • Expense of $5 million and $10 million comprised of key items for severance, lease abandonment and other restructuring costs during 2022 and 2021, respectively; • $53 million and $45 million in net environmental-related expenses during 2022 and 2021, respectively (see Note M for more information); • $10 million related to a capital project impairment during 2021; and • Increases associated with the following: o Higher incentive pay of $14 million; o Lower transition services income from INEOS of $10 million; o Higher deferred and stock compensation expense of $8 million; o Higher expense of $6 million related to the acquisition of the personal care business of Schülke; and o Higher salary, benefits and travel expenses of $2 million.
In certain circumstances, if such amounts were repatriated to the United States, additional taxes might need to be accrued and paid depending on the source of the earnings remitted. Ashland currently has no plans to repatriate any amounts for which additional taxes would need to be accrued.
In certain circumstances, if such amounts were repatriated to the United States, additional withholding taxes might need to be accrued and paid depending on the source of the earnings remitted. Ashland currently has no plans to repatriate any amounts for which additional taxes would need to be accrued.
In addition to the uncertainties surrounding the number of claims that might be received, other variables include the type and severity of the disease alleged by each claimant and the related costs incurred in resolving those claims, dismissal rates, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case.
In addition to the uncertainties surrounding the number of claims that might be received, other variables include the type and severity of the disease alleged by each claimant and the related costs incurred in resolving those claims, mortality rates, dismissal rates, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case.
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, certain environmental charges, non-cash 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 non-cash gains or other items increasing net income.
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, M- 31 restructuring and integration charges, certain environmental charges, non-cash 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 non-cash gains or other items increasing net income.
Ashland’s expectations and assumptions include, without limitation, those mentioned within the MD&A, internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, operating efficiencies, cost savings and economic conditions (such as prices, supply and demand, cost of raw materials, and the ability to recover raw-material cost increases through price increases), and risks and uncertainties associated with the following: the impact of acquisitions and/or divestitures Ashland has made or may make (including the possibility that Ashland may not realize the anticipated benefits from such transactions); Ashland’s substantial indebtedness (including the possibility that such indebtedness and related restrictive covenants may adversely affect Ashland’s future cash flows, results of operations, financial condition and its ability to repay debt); execution risks associated with our growth strategies; the competitive nature of our business; severe weather, natural disasters, public health crises (including the COVID-19 pandemic), cyber events and legal proceedings and claims (including product recalls, environmental and asbestos matters); the effects of the COVID-19 pandemic and the ongoing Ukraine and Russia conflict on the geographies in which Ashland operates, the end markets Ashland serves and on Ashland’s supply chain and customers; and without limitation, risks and uncertainties affecting Ashland that are contained in “Use of estimates, risks and uncertainties” in Note A of Notes to Consolidated Financial Statements and in Item 1A of this Annual Report Form 10-K.
Ashland’s expectations M- 41 and assumptions include, without limitation, those mentioned within the MD&A, internal forecasts and analyses of current and future market conditions and trends, management plans and strategies, operating efficiencies, cost savings and economic conditions (such as prices, supply and demand, cost of raw materials, and the ability to recover raw-material cost increases through price increases), and risks and uncertainties associated with the following: the impact of acquisitions and/or divestitures Ashland has made or may make (including the possibility that Ashland may not realize the anticipated benefits from such transactions); Ashland’s substantial indebtedness (including the possibility that such indebtedness and related restrictive covenants may adversely affect Ashland’s future cash flows, results of operations, financial condition and its ability to repay debt); execution risks associated with our growth strategies; the competitive nature of our business; severe weather, natural disasters, public health crises (including the COVID-19 pandemic), cyber events and legal proceedings and claims (including product recalls, environmental and asbestos matters); the ongoing Ukraine/Russia and Israel/Hamas conflict on the geographies in which Ashland operates, the end markets Ashland serves and on Ashland’s supply chain and customers; and without limitation, risks and uncertainties affecting Ashland that are contained in “Use of estimates, risks and uncertainties” in Note A of Notes to Consolidated Financial Statements and in Item 1A of this Annual Report Form 10-K.
Ashland often incurs severance, facility and integration costs associated with these programs. See Note E in the Notes to Consolidated Financial Statements for further information on the restructuring activities. • 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.
Ashland often incurs severance, facility and integration costs associated with these programs. See Note D in the Notes to Consolidated Financial Statements for further information on the restructuring activities. • 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.
In the event that the actual outcome of future tax consequences differs from Ashland’s estimates and assumptions due to changes or future events such as tax legislation, geographic mix of earnings, completion of tax audits or earnings repatriation plans, the resulting change to the provision for income taxes could have a material effect on the Statement of Consolidated Comprehensive Income (Loss) and Consolidated Balance Sheet.
In the event that the actual outcome of future tax consequences differs from Ashland’s estimates and assumptions due to changes or future events such as tax legislation, geographic mix of earnings, completion of tax audits or earnings repatriation plans, the resulting change to the provision for income taxes could have a material effect on the Statement of Consolidated Comprehensive Income (Loss) and Consolidated Balance Sheets.
The non-GAAP 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.
The non-GAAP 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 M- 11 items that impact comparability between periods.
Management believes these actuarial gains and losses are primarily financing activities that are more reflective of changes in current conditions in global financial markets (and in particular interest rates) that are not directly related to the underlying business. For further information on the actuarial assumptions and plan assets referenced above, see Note M of the Notes to Consolidated Financial Statements.
Management believes these actuarial gains and losses are primarily financing activities that are more reflective of changes in current conditions in global financial markets (and in particular interest rates) that are not directly related to the underlying business. For further information on the actuarial assumptions and plan assets referenced above, see Note L of the Notes to Consolidated Financial Statements.
Fundings under the Program will be repaid as accounts M- 31 receivable are collected, with new fundings being advanced (through daily advanced purchase price) as new accounts receivable are originated by the Sellers and assigned to the Purchaser, with settlement occurring monthly. Ashland classifies any borrowings under this facility as a short-term debt instrument within the Consolidated Balance Sheets.
Fundings under the Program will be repaid as accounts receivable are collected, with new fundings being advanced (through daily advanced purchase price) as new accounts receivable are originated by the Sellers and assigned to the Purchaser, with settlement occurring monthly. Ashland classifies any borrowings under this facility as a short-term debt instrument within the Consolidated Balance Sheets.
Based on sensitivity analysis performed on two key assumptions in the discounted cash flow model at July 1, 2022, a 1% decrease in the long-term growth factor assumption or a 1% increase in the weighted average cost of capital assumption across each of Ashland’s reporting units would not have resulted in a fair value below the respective reporting units carrying value.
Based on sensitivity analysis performed on two key assumptions in the discounted cash flow model at July 1, 2023, a 1% decrease in the long-term growth factor assumption or a 1% increase in the weighted average cost of capital assumption across each of Ashland’s reporting units would not have resulted in a fair value below the respective reporting units carrying value.
While it is impossible to predict the effects of the conflict such as possible escalating geopolitical tensions (including the imposition of existing and additional sanctions by the U.S and the European Union on Russia), worsening macroeconomic and general business conditions, supply chain interruptions and unfavorable energy markets, the impact could be material.
While it is impossible to predict the effects of the conflicts such as possible escalating geopolitical tensions (including the imposition of existing and additional sanctions by the U.S. and the European Union on Russia), worsening macroeconomic and general business conditions, supply chain interruptions and unfavorable energy markets, the impact could be material.
In addition, the Company will initially be required to pay fees of 0.125% per annum on the daily unused amount of the Revolving Facility through and including the date of delivery of a quarterly compliance certificate, and thereafter the fee rate will fluctuate between 0.125% and 0.275% per annum, based upon the Consolidated Net Leverage Ratio.
In addition, the Company will initially be required to pay fees of 0.125% per annum on the daily unused amount of the 2022 Revolving Credit Facility through and including the date of delivery of a quarterly compliance certificate, and thereafter the fee rate will fluctuate between 0.125% and 0.275% per annum, based upon the Consolidated Net Leverage Ratio.
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.
EBITDA and Adjusted EBITDA provide disclosure on the same basis as that used M- 10 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.
As a result of the amendment of the 2020 Credit Agreement, Ashland recognized a $1 million charge for accelerated amortization of previously capitalized debt issuance costs during 2022, which is included in the net interest and other expense M- 29 caption of the Statements of Consolidated Comprehensive Income (Loss).
As a result of the amendment of the 2020 Credit Agreement, Ashland recognized a $1 million charge for accelerated amortization of previously capitalized debt issuance costs during 2022, which is included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss).
Although it is not possible to predict with certainty the ultimate costs of environmental remediation, Ashland currently estimates that the upper end of the reasonably possible range of future costs for identified sites could be as high as approximately $465 million. The largest reserve for any site is 13% of the remediation reserve.
Although it is not possible to predict with certainty the ultimate costs of environmental remediation, Ashland currently estimates that the upper end of the reasonably possible range of future costs for identified sites could be as high as approximately $465 million. The largest reserve for any site is 21% of the remediation reserve.
Unless legally required, Ashland undertakes no obligation to update any forward-looking statements made in this Form 10-K whether as a result of new information, future events or otherwise. Information on Ashland’s website is not incorporated into or a part of this Form 10-K. M- 41
Unless legally required, Ashland undertakes no obligation to update any forward-looking statements made in this Form 10-K whether as a result of new information, future events or otherwise. Information on Ashland’s website is not incorporated into or a part of this Form 10-K.
Price/mix, which includes cost inflation associated with plant manufacturing and shipping costs, and higher volume, including Schülke, and higher operating costs increased cost of sales by $91 million, $39 million, and $29 million, respectively. These increases were partially offset by foreign currency exchange, which decreased cost of sales by $39 million.
Price/mix, which includes cost inflation associated with plant manufacturing and shipping costs, and higher volume, including the Schülke acquisition, and higher operating costs increased cost of sales by $91 million, $39 million, and $29 million, respectively. These increases were partially offset by foreign currency exchange, which decreased cost of sales by $39 million.
Those studies were undertaken in connection with national analyses of the population expected to have been exposed to asbestos. Using that M- 36 information, Gnarus estimates a range of the number of future claims that may be filed, as well as the related costs that may be incurred in resolving those claims.
Those studies were undertaken in connection with national analyses of the population expected to have been exposed to asbestos. Using that information, Gnarus estimates a range of the number of future claims that may be filed, as well as the related costs that may be incurred in resolving those claims.
Discounted cash flow models are reliant on various assumptions, including projected business results, long-term growth factors and weighted-average cost of capital. Management judgement is involved in estimating these variables, and they include uncertainties since they are forecasting future events.
Discounted cash flow models are reliant on various assumptions, including projected business results, long-term growth factors and weighted-average cost of capital. Management judgment is involved in estimating these variables, and they include uncertainties since they are forecasting future events.
(c) Includes leases for office buildings, transportation equipment, warehouses and storage facilities and other equipment. For further information, see Note K of the Notes to Consolidated Financial Statements. (d) Includes interest expense on both variable and fixed rate debt assuming no prepayments.
(c) Includes leases for office buildings, transportation equipment, warehouses and storage facilities and other equipment. For further information, see Note J of the Notes to Consolidated Financial Statements. (d) Includes interest expense on both variable and fixed rate debt assuming no prepayments.
At September 30, 2022, Ashland’s calculation of the consolidated net leverage ratio was 1.1. 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 September 30, 2023, Ashland’s calculation of the consolidated net leverage ratio was 1.9. 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.
Ashland’s assessment of an impairment on any of these assets classified currently as having indefinite lives, including goodwill, could change in future periods if significant events happen and/or circumstances change that effect the previously mentioned assumptions.
Ashland’s assessment of an impairment on any of these assets classified currently as having indefinite lives, including goodwill, could change in future periods if significant events happen and/or circumstances change that affect the previously mentioned assumptions.
EFFECTS OF INFLATION AND CHANGING PRICES Ashland’s financial statements are prepared on the historical cost method of accounting in accordance with U.S. GAAP and, as a result, do not reflect changes in the purchasing power of the U.S. dollar.
M- 39 EFFECTS OF INFLATION AND CHANGING PRICES Ashland’s financial statements are prepared on the historical cost method of accounting in accordance with U.S. GAAP and, as a result, do not reflect changes in the purchasing power of the U.S. dollar.
M- 39 Income taxes Ashland is subject to income taxes in the United States and numerous foreign jurisdictions. Judgment in the forecasting of taxable income using historical and projected future operating results is required in determining Ashland’s provision for income taxes and the related assets and liabilities.
Income taxes Ashland is subject to income taxes in the United States and numerous foreign jurisdictions. Judgment in the forecasting of taxable income using historical and projected future operating results is required in determining Ashland’s provision for income taxes and the related assets and liabilities.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements for the years ended September 30, 2022, 2021 and 2020.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements for the years ended September 30, 2023, 2022 and 2021.
See income on acquisitions and divestitures caption review above for additional details. Other expenses between periods were driven by increases in governance and legacy expenses associated with foreign currency, deferred compensation, stock compensation and incentive compensation.
See income on acquisitions and divestitures, net caption review above for additional details. Other expenses between periods were driven by increases and decreases in governance and legacy expenses associated with foreign currency, deferred compensation, stock compensation and incentive compensation.
In conjunction with the July 1 annual assessment of indefinite-lived intangible assets, Ashland’s quantitative approach models did not indicate any impairment, as each indefinite-lived intangible asset’s fair value exceeded their carrying values.
In conjunction with the July 1 annual assessment of indefinite-lived intangible assets, Ashland’s quantitative approach models did not indicate any impairment, as each indefinite-lived intangible asset’s fair value exceeded its carrying values.
Ashland performs sensitivity analyses by using a range of inputs to confirm the reasonableness of the long-term growth rate and weighted average cost of capital estimates. Additionally, Ashland compares the indicated equity value to Ashland’s market capitalization and evaluates the resulting implied control premium/discount to determine if the estimated enterprise value is reasonable compared to external market indicators.
Ashland performs sensitivity analyses by using a range of inputs to confirm the reasonableness of the long-term growth rate and weighted average cost of capital estimates. Additionally, Ashland compares the indicated equity value to Ashland’s market capitalization and evaluates the resulting implied control premium/discount to determine if the estimated enterprise value is reasonable.
Operating Activities - Other Operating cash flows for 2022 included income from continuing operations of $181 million and significant non-cash adjustments of $241 million for depreciation and amortization, $18 million for stock-based compensation expense, $86 million of losses from restricted investments, $22 million gain on pension and other postretirement plan remeasurements, $35 million for deferred taxes, and $42 million of income on acquisitions and divestitures.
Operating cash flows for 2022 included income from continuing operations of $181 million and significant non-cash adjustments of $241 million for depreciation and amortization, $18 million for stock-based compensation expense, $86 million of losses from restricted investments, a $22 million gain on pension and other postretirement plan remeasurements, $35 million for deferred taxes, and $42 million of income on acquisitions and divestitures, net.
These expenses are comprised of service cost, interest cost, expected return on plan assets, and amortization of prior service credit and are disclosed in further detail in Note M of the Notes to Consolidated Financial Statements.
These expenses are comprised of service cost, interest cost, expected return on plan assets, and amortization of prior service credit and are disclosed in further detail in Note L of the Notes to Consolidated Financial Statements.
As a result of these activities, Ashland recorded adjustments during each year to its environmental M- 4 liabilities and receivables primarily related to previously divested businesses or non-operational sites.
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.
Accounting for goodwill and other intangible assets Goodwill Ashland accounts for goodwill and other intangible assets acquired in a business combination in conformity with current accounting guidance which does not allow for goodwill and indefinite-lived intangible assets to be amortized.
M- 37 Accounting for goodwill and other indefinite-lived intangible assets Goodwill Ashland accounts for goodwill and other intangible assets acquired in a business combination in conformity with current accounting guidance which does not allow for goodwill and indefinite-lived intangible assets to be amortized.
In May 2019, the Board of Directors of Ashland announced a quarterly cash dividend of 27.5 cents per share to eligible stockholders at record, which represented an increase from the previous quarterly cash dividend of 25.0 cents per share. This dividend was paid in each quarter of fiscal 2020 and the first and second quarters of fiscal 2021.
In May 2019, the Board of Directors of Ashland announced a quarterly cash dividend of 27.5 cents per share to eligible stockholders at record, which represented an increase from the previous quarterly cash dividend of 25.0 cents per share. This dividend was paid in first and second quarters of fiscal 2021.
(d) Due to rounding conventions, the effective tax rate presented may not recalculate precisely based on the numbers disclosed within this table. The following table provides a reconciliation of tax specific key items within the statutory federal income tax with the provision for income taxes summary disclosed in Note L of the Notes to Consolidated Financial Statements.
(d) Due to rounding conventions, the effective tax rate presented may not recalculate precisely based on the numbers disclosed within this table. M- 8 The following table provides a reconciliation of tax specific key items within the statutory federal income tax with the provision for income taxes summary disclosed in Note K of the Notes to Consolidated Financial Statements.
Ashland is closely monitoring the situation 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 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 recorded liabilities related to its service obligations and limited guarantee as of September 30, 2022 and 2021 of less than $1 million.
Ashland recorded liabilities related to its service obligations and limited guarantee as of September 30, 2023 and 2022 of less than $1 million.
Any change in consolidated indebtedness of $100 million would affect the consolidated net leverage ratio by approximately 0.2x. M- 32 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 September 30, 2022, both Moody’s Investor Services and Standard & Poor’s outlook remained at stable.
Any change in consolidated indebtedness of $100 million would affect the consolidated net leverage ratio by approximately 0.2x. 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 September 30, 2023, both Moody’s Investor Services and Standard & Poor’s outlook remained at stable.
(b) Includes estimated funding of Ashland’s qualified U.S. and non-U.S. pension plans for 2022 as well as projected benefit payments through 2030 under Ashland’s unfunded pension and other postretirement benefit plans. Excludes the benefit payments from the pension plan trust funds. See Note M of the Notes to Consolidated Financial Statements for additional information.
(b) Includes estimated funding of Ashland’s qualified U.S. and non-U.S. pension plans for 2023 as well as projected benefit payments through 2030 under Ashland’s unfunded pension and other postretirement benefit plans. Excludes the benefit payments from the pension plan trust funds. See Note L of the Notes to Consolidated Financial Statements for additional information.
Variable interest rates have been assumed to remain constant through the end of the term at rates that existed as of September 30, 2022.
Variable interest rates have been assumed to remain constant through the end of the term at rates that existed as of September 30, 2023.
(f) As a result of the Tax Act enacted during fiscal year 2018, Ashland has currently recorded a $46 million liability for the one-time transition tax. This liability will be payable over five years. (g) Ashland issues various types of letters of credit as part of its normal course of business.
(f) As a result of the Tax Act enacted during fiscal year 2017, Ashland has currently recorded a $39 million liability for the one-time transition tax. This liability will be payable over five years. (g) Ashland issues various types of letters of credit as part of its normal course of business.
Engineering studies, historical experience and other factors are used to identify and evaluate remediation alternatives and their related costs in determining the estimated reserves for environmental remediation. Ashland continues to discount certain environmental sites and regularly adjusts its reserves as environmental remediation continues.
Engineering studies, historical experience and other factors are used to identify and evaluate remediation alternatives and their related costs in determining the estimated reserves for environmental remediation. Ashland regularly adjusts its reserves as environmental remediation continues.
Significant assumptions inherent in the valuation methodologies include, but are not limited to, such estimates as future projected business results, growth rates, the weighted average cost of capital for a market participant, and royalty and discount rates. For further information, see Note H of Notes to Consolidated Financial Statements.
Assumptions inherent in the valuation methodologies include, but are not limited to, such estimates as future projected business results, growth rates, the weighted average cost of capital for a market participant, and royalty rates. For further information, see Note G of Notes to Consolidated Financial Statements.
Significant cash financing activities for 2022 included outflows of $250 million for the full prepayment of the term loan A and short-term debt repayment of $365 million. See note I for additional information. 2022 also included cash dividends paid of $1.27 per share, for a total of $70 million and common stock repurchases of $200 million.
M- 26 Significant cash financing activities for 2022 included outflows of $250 million for the full prepayment of the term loan A and short-term debt repayment of $365 million. See Note H for additional information. 2022 also included cash dividends paid of $1.27 per share, for a total of $70 million and common stock repurchases of $200 million.
The significant cash investing activities for the current year primarily related to cash outflows of $113 million for capital expenditures and $74 million restricted for investment trust purposes for environmental. Additionally, there were inflows of $51 million from the disposal of excess corporate property and reimbursements of $35 million from the restricted renewable annual investment trusts.
The significant cash investing activities for 2022 primarily related to cash outflows of $113 million for capital expenditures and $74 million restricted for investment trust purposes for environmental remediation. Additionally, there were inflows of $51 million from the disposal of excess corporate property and reimbursements of $35 million from the restricted renewable annual investment trusts.
Substantially all of the estimated receivables from insurance companies are expected to be due from domestic insurers, all of which are solvent. At September 30, 2022, Ashland’s receivable for recoveries of litigation defense and claim settlement costs from insurers amounted to $101 million (excluding the Hercules receivable for asbestos claims).
Substantially all of the estimated receivables from insurance companies are expected to be due from domestic insurers, all of which are solvent. At September 30, 2023, Ashland’s receivable for recoveries of litigation defense and claim settlement costs from insurers amounted to $95 million (excluding the Hercules receivable for asbestos claims).
Ashland recognized a $1 million loss within the Statements of Consolidated Comprehensive Income (Loss) for 2022 and 2021, respectively, within the net interest and other expense caption associated with sales under the program.
Ashland recognized a $3 million and a $1 million loss within the Statements of Consolidated Comprehensive Income (Loss) for 2023 and 2022, respectively, within the net interest and other expense caption associated with sales under the program.
(c) Amortization expense adjustment (net of tax) tax rates were 20.0%, 20.0% and 21.0% for the years ended 2022, 2021 and 2020, respectively. M- 15 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.
(c) Amortization expense adjustment (net of tax) tax rates were 20.0% for the years ended 2023, 2022 and 2021, respectively. M- 14 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.
The following table provides a reconciliation of the changes in cost of sales between fiscal years 2022 and 2021 and between fiscal years 2021 and 2020.
The following table provides a reconciliation of the changes in cost of sales between fiscal years 2023 and 2022 and between fiscal years 2022 and 2021.
As of September 30, 2022 the receivables from insurers amounted to $52 million compared to $47 million as of September 30, 2021. During 2022, the annual update of the model used for purposes of valuing the asbestos reserve and its impact on valuation of future recoveries from insurers was completed.
As of September 30, 2023 and 2022, the receivables from insurers amounted to $47 million and $52 million, respectively. During 2023, the annual update of the model used for purposes of valuing the asbestos reserve and its impact on valuation of future recoveries from insurers was completed.
The remaining cash outflows of $107 million, $36 million and $11 million in 2022, 2021 and 2020, respectively, were primarily due to income taxes paid or income tax refunds, interest paid, and adjustments to certain accruals and other long-term assets and liabilities such as payments associated with environmental remediation.
The remaining cash inflow of $3 million, and outflows of $107 million and $36 million in 2023, 2022 and 2021, respectively, were primarily due to income taxes paid or income tax refunds, interest paid, and adjustments to certain accruals and other long-term assets and liabilities such as payments associated with environmental remediation.
Ashland reviews this estimate and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of Gnarus. As a result of the most recent annual update of this estimate, completed during 2022, it was determined that the liability for Hercules asbestos-related claims should be increased by $15 million.
Ashland reviews this estimate and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of Gnarus. As a result of the most recent annual update of this estimate, completed during 2023, it was determined that the liability for Hercules asbestos-related claims should be decreased by $2 million.
The following details certain changes in key operating assets and liabilities for 2022, 2021 and 2020, respectively.
The following details certain changes in key operating assets and liabilities for 2023, 2022 and 2021, respectively.
The charges for restructuring activities of $14 million, $25 million and $78 million during 2022, 2021 and 2020, respectively, were primarily comprised of the following items: • $5 million, $10 million and $58 million of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs during 2022, 2021 and 2020, respectively, and; • $9 million, $15 million and $20 million of stranded divestiture costs during 2022, 2021 and 2020, respectively.
The charges for restructuring activities of $9 million, $14 million and $25 million during 2023, 2022 and 2021, respectively, were primarily comprised of the following items: • $9 million, $5 million and $10 million of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs during 2023, 2022 and 2021, respectively; and • $9 million and $15 million of stranded divestiture costs during 2022 and 2021, respectively.
Sales by region expressed as a percentage of total consolidated sales were as follows: Sales by Geography 2022 2021 2020 North America (a) 32 % 32 % 33 % Europe (a) 35 % 36 % 36 % Asia Pacific 24 % 23 % 22 % Latin America & other 9 % 9 % 9 % 100 % 100 % 100 % (a) Ashland includes only U.S. and Canada in its North American designation and includes Europe, the Middle East and Africa in its Europe designation.
Sales by region expressed as a percentage of total consolidated sales were as follows: Sales by Geography 2023 2022 2021 North America (a) 31 % 32 % 32 % Europe (a) 36 % 35 % 36 % Asia Pacific 23 % 24 % 23 % Latin America & other 10 % 9 % 9 % 100 % 100 % 100 % (a) Ashland includes only U.S. and Canada in its North American designation and includes Europe, the Middle East and Africa in its Europe designation.
During 2022, 2021 and 2020, Ashland recognized $66 million, $50 million and $48 million of expense, respectively, for certain environmental liabilities related to normal ongoing remediation cost estimate updates for sites, which is consistent with Ashland’s historical environmental accounting policy. Environmental remediation reserves are subject to uncertainties that affect Ashland’s ability to estimate its share of the costs.
M- 35 During 2023, 2022 and 2021, Ashland recognized $56 million, $66 million and $50 million of expense, respectively, for certain environmental liabilities related to normal ongoing remediation cost estimate updates for sites, which is consistent with Ashland’s historical environmental accounting policy. Environmental remediation reserves are subject to uncertainties that affect Ashland’s ability to estimate its share of the costs.
This model update resulted in a $7 million increase in the receivable for probable insurance recoveries. Asbestos litigation cost projection Projecting future asbestos costs is subject to numerous variables that are difficult to predict.
This model update resulted in a $3 million decrease in the receivable for probable insurance recoveries. Asbestos litigation cost projection Projecting future asbestos costs is subject to numerous variables that are difficult to predict.
Total reserves for asbestos claims were $213 million at September 30, 2022 compared to $217 million at September 30, 2021. Hercules asbestos-related receivables For the Hercules asbestos-related obligations, certain reimbursement obligations pursuant to coverage-in-place agreements with insurance carriers exist. As a result, any increases in the asbestos reserve have been partially offset by probable insurance M- 37 recoveries.
Total reserves for asbestos claims were $191 million at September 30, 2023 compared to $213 million at September 30, 2022. Hercules asbestos-related receivables For the Hercules asbestos-related obligations, certain reimbursement obligations pursuant to coverage-in-place agreements with insurance carriers exist. As a result, any increases in the asbestos reserve have been partially offset by probable insurance recoveries.
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.
See Notes H and R for more information. 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.
Capital resources Debt The following summary reflects Ashland’s debt as of September 30, 2022 and 2021.
Capital resources Debt The following summary reflects Ashland’s debt as of September 30, 2023 and 2022.
Total premiums paid for all the tender offers in 2020 noted above were $59 million, which is included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss).
Total premiums paid for all the tender offers in 2021 noted above were $16 million, which is included in the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss).
As of September 30, 2022, Ashland was in compliance with all debt agreement covenant restrictions. The maximum consolidated net leverage ratio permitted under Ashland’s most recent credit agreement (the 2022 Credit Agreement) is 4.0.
As of September 30, 2023, Ashland was in compliance with all debt agreement covenant restrictions. The maximum consolidated net leverage ratio permitted under the 2022 Credit Agreement is 4.0.
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 years ended September 30, 2022, 2021 and 2020. 2022 2021 (In millions) 2022 2021 2020 change change Sales $ 2,391 $ 2,111 $ 2,016 $ 280 $ 95 The following table provides a reconciliation of the change in sales between fiscal years 2022 and 2021 and between fiscal years 2021 and 2020.
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 years ended September 30, 2023, 2022 and 2021. 2023 2022 (In millions) 2023 2022 2021 change change Sales $ 2,191 $ 2,391 $ 2,111 $ (200 ) $ 280 The following table provides a reconciliation of the change in sales between fiscal years 2023 and 2022 and between fiscal years 2022 and 2021.
See Note C of the Notes to the Consolidated Financial Statements for more information.
See Note L of the Notes to Consolidated Financial Statements for more information.
Cash flows provided by operating activities from continuing operations, a major source of Ashland’s liquidity, amounted to $193 million in 2022, $466 million in 2021 and $227 million in 2020.
Cash flows provided by operating activities from continuing operations, a major source of Ashland’s liquidity, amounted to $294 million in 2023, $193 million in 2022 and $466 million in 2021.
Ashland has currently estimated in various models ranging from approximately 40 year periods that it is reasonably possible that total future litigation defense and claim settlement costs on an inflated and undiscounted basis could range as high as approximately $456 million for the Ashland asbestos-related litigation (current reserve of $305 million) and approximately $317 million for the Hercules asbestos-related litigation (current reserve of $213 million), depending on the combination of assumptions selected in the various models.
Ashland has currently estimated in various models ranging from approximately 40 year periods that it is reasonably possible that total future litigation defense and claim settlement costs on an inflated and undiscounted basis could range as high as approximately $422 million for the Ashland asbestos-related litigation (current reserve of $281 million) and approximately $288 million for the Hercules asbestos-related litigation (current reserve of $191 million), depending on the combination of assumptions selected in the various models.
Ashland’s management believes this presentation is helpful to illustrate how the key items have impacted this metric during 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.
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.
M- 22 FINANCIAL POSITION Liquidity Ashland had $646 million in cash and cash equivalents as of September 30, 2022, of which $230 million was held by foreign subsidiaries and had no significant limitations that would prohibit remitting the funds to satisfy corporate obligations.
M- 22 FINANCIAL POSITION Liquidity Ashland had $417 million in cash and cash equivalents as of September 30, 2023, of which $301 million was held by foreign subsidiaries and had no significant limitations that would prohibit remitting the funds to satisfy corporate obligations.
See Note F for more information. • In 2022, a $1 million pension and postretirement obligation adjustment was recorded.
See Note E for more information. • In 2022, a $1 million pension and postretirement obligation adjustment was recorded. See Note L for more information.
At September 30, 2022, Ashland’s calculation of the consolidated interest coverage ratio was 10.8. Any change in Covenant Adjusted EBITDA of $100 million would have an approximate 0.2x effect on the consolidated net leverage ratio and a 1.8x effect on the consolidated interest coverage ratio.
At September 30, 2023, Ashland’s calculation of the consolidated interest coverage ratio was 8.6. Any change in Covenant Adjusted EBITDA of $100 million would have an approximate 0.3x effect on the consolidated net leverage ratio and a 1.8x effect on the consolidated interest coverage ratio.
Management believes investors and analysts use this financial measure in assessing Ashland's business performance and that presenting this non-GAAP measure on a consolidated basis assists investors in better understanding Ashland’s ongoing business performance and enhancing their ability to compare period-to-period financial results. 2022 2021 2020 Diluted EPS from continuing operations (as reported) $ 3.20 $ 2.82 $ (9.16 ) Key items, before tax: Goodwill impairment — — 8.75 Restructuring, separation and other costs (including accelerated depreciation) 0.09 0.16 0.95 Environmental reserve adjustments 0.95 0.70 0.58 Inventory adjustments — 0.07 0.83 Asset impairments — 0.21 — Income on acquisitions and divestitures (0.75 ) (0.18 ) — Loss (gain) on pension and other postretirement plan remeasurements (0.40 ) 0.02 (0.01 ) Unrealized gain on securities 1.82 (0.34 ) (0.33 ) Accelerated amortization of debt issuance costs — 0.02 0.13 Debt refinancing costs — 0.26 0.97 Key items, before tax 1.71 0.92 11.87 Tax effect of key items (a) (0.38 ) (0.18 ) (0.58 ) Key items, after tax 1.33 0.74 11.29 Tax specific key items: Uncertain tax positions (0.15 ) (0.87 ) 0.05 Restructuring and separation activity 0.06 (0.21 ) — Valuation allowance (0.07 ) — — Other tax reform related activity — 0.10 (0.33 ) Tax specific key items (b) (0.16 ) (0.98 ) (0.28 ) Total key items 1.17 (0.24 ) 11.01 Adjusted diluted EPS from continuing operations (non-GAAP) $ 4.37 $ 2.58 $ 1.85 Amortization expense adjustment (net of tax) (c) 1.33 1.17 1.08 Adjusted diluted EPS from continuing operations (non-GAAP) excluding intangibles amortization expense $ 5.70 $ 3.75 $ 2.93 (a) Represents the diluted EPS impact from the tax effect of the key items that are previously identified above.
Management believes investors and analysts use this financial measure in assessing Ashland's business performance and that presenting this non-GAAP measure on a consolidated basis assists investors in better understanding Ashland’s ongoing business performance and enhancing their ability to compare period-to-period financial results. 2023 2022 2021 Diluted EPS from continuing operations (as reported) $ 3.13 $ 3.20 $ 2.82 Key items, before tax: Restructuring, separation and other costs (including accelerated depreciation) 0.19 0.09 0.16 Environmental reserve adjustments 1.04 0.95 0.70 Income on acquisitions and divestitures, net (0.11 ) (0.75 ) (0.18 ) Inventory adjustments — — 0.07 Asset impairments 0.08 — 0.21 ICMS Brazil tax credit (0.22 ) — — Loss (gain) on pension and other postretirement plan remeasurements (0.04 ) (0.40 ) 0.02 Unrealized (gain) loss on securities (0.54 ) 1.82 (0.34 ) Accelerated amortization of debt issuance costs — — 0.02 Debt refinancing costs — — 0.26 Key items, before tax 0.40 1.71 0.92 Tax effect of key items (a) (0.02 ) (0.38 ) (0.18 ) Key items, after tax 0.38 1.33 0.74 Tax specific key items: Uncertain tax positions (0.60 ) (0.15 ) (0.87 ) Restructuring and separation activity — 0.06 (0.21 ) Valuation allowance (0.12 ) (0.07 ) — Other tax reform related activity (0.11 ) — 0.10 Tax specific key items (b) (0.83 ) (0.16 ) (0.98 ) Total key items (0.45 ) 1.17 (0.24 ) Adjusted diluted EPS from continuing operations (non-GAAP) $ 2.68 $ 4.37 $ 2.58 Amortization expense adjustment (net of tax) (c) 1.39 1.33 1.17 Adjusted diluted EPS from continuing operations (non-GAAP) excluding intangibles amortization expense $ 4.07 $ 5.70 $ 3.75 (a) Represents the diluted EPS impact from the tax effect of the key items that are previously identified above.
As of September 30, 2022, the year-to-date gross cash proceeds received for receivables transferred and derecognized was $312 million, of which $315 million was collected by Ashland in our capacity as a servicer of the receivables and remitted to the buyer.
As of September 30, 2023 and 2022, the year-to-date gross cash proceeds received for receivables transferred and derecognized were $217 million and $312 million, respectively, of which $241 million and $315 million were collected by Ashland in our capacity as a servicer of the receivables and remitted to the buyer.
Total other comprehensive income (loss), net of tax, decreased $16 million in 2021 as compared to 2020 as a result of the following components. • In 2021, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in a gain of $7 million, compared to a gain of $27 million during 2020.
Total other comprehensive income (loss), net of tax, decreased $208 million in 2022 as compared to 2021 as a result of the following components. • In 2022, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in a loss of $197 million, compared to a gain of $7 million during 2021.
Ashland’s reserves for environmental remediation and related environmental litigation amounted to $211 million at September 30, 2022 compared to $207 million at September 30, 2021 of which $157 million at September 30, 2022 and $152 million at September 30, 2021 were classified in other noncurrent liabilities on the Consolidated Balance Sheets.
Ashland’s reserves for environmental remediation and related environmental litigation amounted to $214 million at September 30, 2023 compared to $211 million at September 30, 2022 of which $165 million at September 30, 2023 and $157 million at September 30, 2022 were classified in other noncurrent liabilities on the Consolidated Balance Sheets.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe impacts of these contracts were largely offset by gains and losses resulting from the impact of changes in exchange rates on transactions denominated in non-functional currencies. As of September 30, 2022 and 2021, Ashland had not identified any significant credit risk on open derivative contracts.
Biggest changeThe impacts of these contracts were largely offset by gains and losses resulting from the impact of changes in exchange rates on transactions denominated in non-functional currencies. As of September 30, 2023 and 2022, Ashland had not identified any significant credit risk on open derivative contracts.
Ashland did not have any significant open hedging contracts with respect to commodities or any related raw material requirements as of and for the year ended September 30, 2022. M- 42
Ashland did not have any significant open hedging contracts with respect to commodities or any related raw material requirements as of and for the year ended September 30, 2023. M- 42
Accordingly, Ashland regularly uses foreign currency derivative instruments to manage exposure on certain transactions denominated in foreign currencies to curtail potential earnings volatility effects of certain assets and liabilities, including short-term inter-company loans, denominated in currencies other than Ashland’s functional currency of an entity.
Accordingly, Ashland regularly uses foreign currency derivative instruments to manage exposure on certain transactions denominated in foreign currencies to curtail potential earnings volatility effects of certain assets and liabilities, including short-term intercompany loans, denominated in currencies other than Ashland’s functional currency of an entity.

Other ASH 10-K year-over-year comparisons