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What changed in ASHLAND INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ASHLAND INC.'s 2023 and 2024 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 2024 report.

+410 added−398 removedSource: 10-K (2024-11-18) vs 10-K (2023-11-17)

Top changes in ASHLAND INC.'s 2024 10-K

410 paragraphs added · 398 removed · 327 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeAshland 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.
Biggest changeThe 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.
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.
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 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.
The initiative follows Ashland's 10 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.
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.
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, 2023 and 2024, state and local agencies continued to implement options for meeting the newest standards.
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.
The Board 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.
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.
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 2024 and 2023, which was a significant improvement over fiscal 2022 when raw and packaging materials were globally constrained.
The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. LIFE SCIENCES Life Sciences is a leading supplier of excipients and tablet coating systems to the pharmaceutical, nutrition and nutraceutical industries.
The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. LIFE SCIENCES Life Sciences is a leading supplier of excipients and tablet coating systems to the pharmaceutical and nutrition industries.
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.
Similarly, energy costs, which are a significant component of production costs, stabilized in fiscal 2024 and 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.
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.
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) 12 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 2024, Ashland progressed its global inclusion and diversity strategy focused on belonging, accountability, community engagement, recruitment, and internal mobility.
Household supplies nature-derived rheology ingredients, biodegradable surface wetting agents, performance encapsulates, and specialty polymers for household, industrial and institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies. Specialty Additives is comprised of rheology and performance-enhancing additives serving the architectural coatings, construction, energy, automotive and various industrial markets.
Personal Care supplies nature-derived rheology ingredients, biodegradable surface wetting agents, performance encapsulates, and specialty polymers for household, industrial and institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies. Specialty Additives is comprised of rheology and performance-enhancing additives serving the architectural coatings, construction, energy, automotive and various industrial markets.
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.
It has manufacturing facilities and labs in Freetown, Massachusetts; Chatham, New Jersey; Ossining, New York; Merry Hill, North 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.
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.
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 14 manufacturing and lab facilities in nine countries which serve its various end markets and participates in one joint venture.
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.
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 2024, the Company elevated the skillset of its leaders to support the career development of their employees and provided continued learning on inclusion and allyship.
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.
Ashland continues to make good progress on its journey. For the year ended September 30, 2024, the Company had a Total Preventable Recordable Rate ("TPRR") of 0.46 compared to 0.39 for the year ended September 30, 2023. Ashland has implemented several tools for communicating lessons learned from injuries, process safety incidents, and environmental releases.
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.
At September 30, 2024, Ashland’s reserves for environmental remediation and related environmental litigation amounted to $221 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 $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 regularly adjusts its reserves as environmental remediation continues. Environmental remediation expense, net of insurance receivables, amounted to $56 million in 2024 compared to $59 million in 2023 and $66 million in 2022. 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.
Intermediates markets and distributes its products in the Americas, Europe, and Asia Pacific. MISCELLANEOUS Environmental Matters Ashland maintains a companywide environmental policy overseen by the Environmental, Health, Safety and Quality Committee of Ashland’s Board of Directors.
Intermediates markets and distributes its products in the Americas, Europe, and Asia Pacific. MISCELLANEOUS Environmental Matters Ashland maintains a company-wide environmental policy overseen by the Environmental, Health, Safety and Quality Committee of Ashland’s Board of Directors (the "Board").
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 conducted its third annual global Culture Survey, with 82% 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 aligning with and drive the Company’s purpose and business success.
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.
For fiscal 2024, 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% 37% Polyvinylpyrrolidones (PVP) 38% 23% 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.
Currently, Ashland has 24 international sites participating on a group RC14001 certification. Also, as part of its commitment to health and safety, 16 of the Company's sites have obtained an additional ISO 45001 certification, an international health and safety management system. As part of ZIC, the Company strives every day to achieve zero incidents.
Currently, Ashland has 25 sites participating on a group RC14001 certification, including 13 international sites. Also, as part of its commitment to health and safety, 18 of the Company's sites have obtained an additional ISO 45001 certification, an international health and safety management system. As part of ZIC, the Company strives every day to achieve zero incidents.
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.
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 $485 million. The largest reserve for any site is 21% of the remediation reserve.
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.
It has manufacturing facilities and labs in Wilmington, Delaware; Calvert City, Kentucky; Columbus, Ohio; Fiskeville, Rhode Island; and Texas City, Texas within the United States; Cabreuva and Sao Paolo, Brazil; Shanghai, China; Dusseldorf, Germany; Hyderabad, India; Mullingar, Ireland; Mexico City, Mexico; Bangkok, Thailand; and Istanbul, Turkey.
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.
For fiscal 2024, the following Personal Care product categories were 10% or greater of Ashland’s total consolidated sales: Product % of Personal Care sales % of Ashland total consolidated sales Cellulosics 18% 37% Polyvinylpyrrolidones (PVP) 22% 23% SPECIALTY ADDITIVES Specialty Additives offers industry-leading products, technologies and resources for solving formulation and product-performance challenges.
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 2024, 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 65% 37% Polyvinylpyrrolidones (PVP) 7% 23% INTERMEDIATES Intermediates is a leading producer of BDO and related derivatives, including n-methylpyrrolidone.
Immediately following an event, flash reports are developed and shared to communicate key lessons learned across the Company with a review call within 48 hours with EHS and Operations Leadership.
Immediately following an event, flash reports are developed and shared to communicate key lessons learned across the Company with a review call within 48 hours with Ashland’s Environmental, Health and Safety (“EHS”) leadership team and Operations Leadership.
The 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.
The chart below shows the Company’s global gender diversity and US ethnic diversity progress over the past three years. The Company remains committed to making continued short and long-term progress. 13 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.
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 demographics of the Company’s Board is 72% 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 30% women and 60% ethnic diversity.
Ashland's global footprint is geographically located as follows: Competitive Pay and Benefits - Ashland is committed to paying its employees in a fair and equitable manner, regardless of race or gender, and has implemented global total rewards tools to promote equitable remuneration.
The employees’ global demographics consist of approximately 68% male employees and approximately 32% female employees, and in the U.S., approximately 21% of its employees self-identify as ethnically diverse. 11 Ashland's global footprint is geographically located as follows: Competitive Pay and Benefits - Ashland is committed to paying its employees in a fair and equitable manner, regardless of race or gender, and has implemented global total rewards tools to promote equitable remuneration.
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.
The Company serves customers in a wide range of consumer and industrial markets including, architectural coatings, construction, energy, food and beverage, personal care and pharmaceutical. With approximately 3,200 employees worldwide, Ashland serves customers in more than 100 countries. Ashland’s reportable segments include: Life Sciences; Personal Care; Specialty Additives; and Intermediates.
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.
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. Ashland is committed to ensuring compliance with applicable environmental, health, safety and security laws, regulations, technical specifications, and internal standards, while adhering to high ethical standards.
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.
Unallocated and Other includes corporate governance activities and certain legacy matters. Life Sciences is comprised of pharmaceuticals, nutrition, agricultural chemicals, diagnostic films (formerly known as advanced materials) and fine chemicals. Pharmaceutical solutions include controlled release polymers, disintegrants, tablet coatings, thickeners, solubilizers and tablet binders.
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.
As of September 30, 2024, Ashland had approximately 3,200 employees who thrive on developing practical, innovative, and simple solutions to complex problems for customers in more than 100 countries.
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.
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.
The nutraceutical business also provides custom formulation, toll processing and particle engineering solutions. Customers include pharmaceutical, food, beverage, nutraceuticals and supplements manufacturers, hospitals and radiologists and industrial manufacturers. Personal Care is comprised of biofunctionals, microbial protectants (preservatives), skin care, sun care, oral care, hair care and household solutions.
Nutrition solutions include thickeners, stabilizers, emulsifiers and additives for enhancing mouthfeel, controlling moisture migration, reducing oil uptake and binding structured foods. Customers include pharmaceutical, food, beverage, hospitals and radiologists and industrial manufacturers. The nutraceuticals business was sold in August 2024. Personal Care is comprised of biofunctionals, microbial protectants (preservatives), skin care, sun care, oral care, hair care and household solutions.
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.
Life Sciences operates throughout the Americas, Europe and Asia Pacific. It has 14 manufacturing and lab facilities in nine countries which serve its various end markets.
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.
Ashland also offers a competitive global benefits program to support employees through all life stages.
Removed
Pharmaceutical solutions include controlled release polymers, disintegrants, tablet coatings, thickeners, solubilizers and tablet binders. Nutrition solutions include thickeners, stabilizers, emulsifiers and additives for enhancing mouthfeel, controlling moisture migration, reducing oil uptake and binding structured foods. Nutraceutical solutions include products for weight management, joint comfort, stomach and intestinal health, sports nutrition and general wellness.
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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. Our common stock is listed on the New York Stock Exchange (NYSE) under the ticker symbol “ASH”.
Removed
The portfolio also includes branded and proprietary nutraceutical ingredients and expertise in nutraceutical formulation, particle engineering and contract manufacturing. Its nutrition portfolio provides functional benefits in areas such as thickening, texture control, thermal gelation, structure enhancement, water binding, clarification and stabilization.
Added
Its nutrition portfolio provides functional benefits in areas such as thickening, texture control, thermal gelation, structure enhancement, water binding, clarification and stabilization. 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.
Removed
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.
Added
We are committed to continuously improving our processes and to providing products and services that throughout their life cycle involve minimum risk to people and the environment, while best meeting the needs of our customers. We strive to eliminate or reduce emissions, discharges, and wastes from our operations and to promote energy efficiency and resource conservation throughout the value chain.
Added
Ashland also maintains an open dialogue with our employees and communities about environmental, health, safety, security, and product stewardship issues. We also work with governments, policy makers, advocacy groups and value chain partners to develop and promote laws, regulations and practices that improve human health and the environment.
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. Ashland is committed to respecting the human and economic rights of others and does not tolerate the use of child or forced labor, slavery, or human trafficking in any of its facilities or operations.
Added
Ashland does not tolerate the physical punishment, abuse, involuntary servitude or exploitation of any worker and expects our suppliers and contractors with whom we do business to uphold the same standards and will discontinue the business relationship with any individual or company that does not follow the same standards.
Added
Ashland builds a culture of wellness by empowering our employees, and their families, to make healthy decisions that lead to successful outcomes in and outside of work. The four components of Ashland’s global wellbeing vision include health, work-life balance, physical fitness, and financial stability.
Added
We achieve this vision by offering diverse and inclusive wellness programs and solutions to our employees that encourage and advance healthy lifestyles within the communities we are part of and the planet we share.
Added
Ashland reviews each process annually to ensure that its policies, procedures, and training continue to provide pay equity within the Company.
Added
In June 2024, Ashland achieved certification as a Global Living Wage Employer by the Fair Wage Network following a rigorous and thorough process in which compensation data for all employees was reviewed on an anonymous basis and steps were taken to remediate any pay gaps.
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A living wage is one that covers one’s basic needs such as housing, food, water, healthcare, transportation, clothing and education for the employee and their dependents. A living wage goes beyond simply fulfilling the local statutory minimum wage requirement.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeEven in circumstances where Ashland has a patent on certain technologies, such patents may not provide meaningful protection against competitors or against competing technologies. In addition, any patent applications submitted by Ashland may not result in an issued patent. There can be no assurance that Ashland’s intellectual property rights will not be challenged, invalidated, circumvented or rendered unenforceable.
Biggest changeIn addition, any patent applications submitted by Ashland may not result in an issued patent. Ashland’s intellectual property rights may be challenged, invalidated, circumvented or rendered unenforceable. Ashland could also face claims from third parties alleging that Ashland’s products or processes infringe on their proprietary rights.
Aspects of that risk include changes to global economic environment, changes to the competitive landscape, attraction and retention of skilled employees, the potential failure of product innovation plans, failure to comply with existing or new regulatory schemes, failure to maintain a competitive cost structure and other risks outlined in greater detail in this Item 1A.
Aspects of that risk include changes to the global economic environment, changes to the competitive landscape, attraction and retention of skilled employees, the potential failure of product innovation plans, failure to comply with existing or new regulatory schemes, failure to maintain a competitive cost structure and other risks outlined in greater detail in this Item 1A.
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.
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 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.
There may also be situations in which certain environmental liabilities are not known 20 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.
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.
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 14 material adverse effect on Ashland’s financial results.
In addition, competitors’ pricing decisions could compel Ashland to decrease its prices, which could negatively affect its margins and profitability. Additional competition in markets served by Ashland could adversely affect margins and profitability and could lead to a reduction in market share. Also, Ashland competes in certain markets that are declining and has targeted other markets for growth opportunities.
In addition, competitors’ pricing decisions could compel Ashland to decrease its prices, 18 which could negatively affect its margins and profitability. Additional competition in markets served by Ashland could adversely affect margins and profitability and could lead to a reduction in market share. Also, Ashland competes in certain markets that are declining and has targeted other markets for growth opportunities.
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.
Failure to respond to or mitigate this risk could lead to increased cost and business impacts. 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.
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.
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 efforts, unexpected or underestimated liabilities or increased costs, fees, expenses and charges related to such transactions.
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’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.
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.
This concern continues to increase for Ashland 15 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.
Certain Ashland businesses rely on agricultural output of clary sage, aloe, guar, and cotton linters, and the availability of these materials can be severely impacted by crop yields, weather events, and other factors.
Certain Ashland businesses rely on agricultural output of clary sage, guar, and cotton linters, and the availability of these materials can be severely impacted by crop yields, weather events, and other factors.
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.
Social and cultural norms in certain countries may 16 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.
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.
Environmental remediation reserves are subject to 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.
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.
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 2024 were to customers outside of North America.
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 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. 17 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 sales, businesses, and results of operations.
These products include both natural and synthetic materials derived from plants, animal products, organic and petroleum based raw materials. Disruptions to the global supply chain due to climate related impacts or geopolitical events are possible and exist as external risk factors that the Company can respond to but not control.
These products include both natural and synthetic materials derived from plants, animal products, organic and petroleum based raw materials. Disruptions to the global supply chain due to climate related impacts or geopolitical events are possible and exist as external risk factors that the Company cannot control.
Ashland faces competition from other companies, which places downward pressure on prices and margins and may adversely affect Ashland’s businesses and results of operations. Ashland operates in highly competitive markets, competing against a number of domestic and foreign companies.
Ashland operates in highly competitive markets which places downward pressure on prices and margins and may adversely affect Ashland’s businesses and results of operations. Ashland operates in highly competitive markets, competing against a number of domestic and foreign companies.
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.
These events could expose us to customer litigation, regulatory actions and costs related to the reporting and handling of such a failure or breach, all of which could disrupt our business operations and adversely affect Ashland’s relationships with business partners, harm our brands, reputation, and financial results.
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 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 breaches, terrorist attacks, armed conflicts, war, public health crises, 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.
Ashland employs third parties to manage and maintain a significant portion of its IT systems, including, but not limited to data centers, IT infrastructure, network, client support and end user services, as well as the functions of backing up and securing those systems.
Ashland’s businesses rely on IT systems to operate efficiently and in some cases, to operate at all. Ashland employs third parties to manage and maintain a significant portion of its IT systems, including, but not limited to data centers, IT infrastructure, network, client support and end user services, as well as the functions of backing up and securing those systems.
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.
These events 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.
A weakening or reversal of the current economic conditions in the global economy or a substantial part of it could negatively impact Ashland’s business, results of operations, financial condition and ability to grow. Ashland’s substantial indebtedness may adversely affect its business, results of operations and financial condition. Ashland maintains a substantial amount of debt.
A weakening or reversal of the current economic conditions in the global economy or a substantial part of it could negatively impact Ashland’s business, results of operations, financial condition and ability to grow.
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.
Additional sourcing of these materials is under increasing scrutiny due to deforestation, and the availability of these raw materials may be limited in the future. Failure to source responsibly and respond to or mitigate the risk could lead to business impacts and increased cost.
A product liability claim, recall or judgment against Ashland, or a customer complaint on product specifications, could also result in substantial and unexpected expenditures, affect consumer or customer confidence in its products, and divert management’s attention from other responsibilities.
A product liability claim, recall or judgment against Ashland, or a customer complaint on product specifications, could also result in substantial and unexpected expenditures, affect consumer or customer confidence in its products, and divert management’s attention from other responsibilities. Ashland’s product liability insurance may be inadequate to address such claims, recalls, or judgments.
Ashland purchases certain products and raw materials from suppliers, often pursuant to written supply contracts. If those suppliers are unable to meet Ashland’s orders in a timely manner or choose to terminate or not fulfill contractual arrangements, Ashland may not be able to make alternative supply arrangements.
If those suppliers are unable to meet Ashland’s orders in a timely manner or choose to terminate or not fulfill contractual arrangements, Ashland may not be able to make alternative supply arrangements.
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.
These regulations have the potential to impact Ashland’s business and ability to manage materials effectively. 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.
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.
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, performance, and reputation.
Failure of foreign countries to have laws to protect Ashland’s intellectual property rights or an inability to effectively enforce such rights in foreign countries could result in the loss of valuable proprietary information, which could have an adverse effect on Ashland’s business and results of operations.
Failure of foreign countries to have laws to protect Ashland’s intellectual property rights or an inability to effectively enforce such rights in foreign countries could result in the loss of valuable proprietary information, which could have an adverse effect on Ashland’s business and results of operations. 19 Even in circumstances where Ashland has a patent on certain technologies, such patents may not provide meaningful protection against competitors or against competing technologies.
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.
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. 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.
As such, Ashland is subject to taxes in the United States as well as numerous foreign countries.
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.
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.
Ashland’s sustainability commitments are key to stakeholders and a differentiator for Ashland. Failure to meet stated commitments could lead to reputational 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.
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.
Such failure of our controls and procedures and/or 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 we may be required by law to notify the impacted individuals and/or make other disclosures.
Rising and volatile raw material prices, especially those of hydrocarbon derivatives, cotton linters or wood pulp, may negatively impact Ashland’s costs, results of operations and the valuation of its inventory. Similarly, energy costs are a significant component of certain of Ashland’s product costs.
The occurrence of either event could result in decreased sales, increased costs, and adverse impacts to the valuation of Ashland’s inventory. Rising and volatile raw material prices, especially those of hydrocarbon derivatives, cotton linters or wood pulp, may negatively impact Ashland’s costs, results of operations and the valuation of its inventory.
Ashland is not always able to raise prices in response to such increased costs, and its ability to pass on the costs of such price increases is dependent upon market conditions. Likewise, reductions in the valuation of Ashland’s inventory due to market volatility may not be recovered and could result in losses.
Similarly, energy costs are a significant component of certain of Ashland’s product costs. Ashland is not always able to raise prices in response to such increased costs, and its ability to pass on the costs of such price increases is dependent upon market conditions.
As a part of the process to develop these estimates of future asbestos costs, a range of long-term cost models was developed.
Furthermore, any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. As a part of the process to develop estimates of the Company’s future asbestos costs, a range of long-term cost models was developed.
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.
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. ITEM 1B. UNRESOLV ED STAFF COMMENTS None.
Any such infringement liability could adversely affect Ashland’s product and service offerings, profitability and results of operations. Ashland also has substantial intellectual property associated with its know-how and trade secrets that are not protected by patent or copyright laws. Ashland protects these rights by entering into confidentiality and non-disclosure agreements with most of its employees and with third parties.
Ashland also has substantial intellectual property associated with its know-how and trade secrets that are not protected by patent or copyright laws. Ashland’s confidentiality and non-disclosure agreements with its employees and third parties may be breached or may not be effectively enforced.
These costs could adversely impact Ashland’s cash flow, and, to the extent they exceed Ashland’s established reserves for these liabilities, its results of operations.
Ashland has incurred, and will continue to incur, substantial costs as a result of environmental, health and safety, and hazardous substances liabilities and related compliance requirements. These costs could adversely impact Ashland’s cash flow, and, to the extent they exceed Ashland’s established reserves for these liabilities, its results of operations.
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.
One of the most important risks is that Ashland might fail to adequately execute its business strategy and growth plans by not optimizing the use of its physical and intangible assets.
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.
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 Emerging ESG regulations in the European Union and globally such as the Corporate Sustainability Reporting Directive ("CSRD") and European Union Deforestation Regulations ("EUDR") may also require significant resources and data management systems to continue to support the Company.
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.
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. Ashland’s success depends on its ability to attract and retain key personnel.
As Ashland continues to operate its business globally, its success will depend, in part, on its ability to anticipate and effectively manage these and other related risks. There can be no assurance that the consequences of these and other factors relating to its multinational operations will not have an adverse effect on Ashland’s business, financial condition or results of operations.
As Ashland continues to operate its business globally, its success will depend, in part, on its ability to anticipate and effectively manage these and other related risks. Adverse developments in the global economy and potential disruptions of financial markets could negatively impact Ashland’s customers and suppliers, and therefore have a negative impact on Ashland’s results of operations.
In addition, the nature of our businesses, the markets we serve, and the extensive geographic profile of our operations make Ashland a target of cyber security threats.
In addition, the nature of our businesses, the markets we serve, and the extensive geographic profile of our operations make Ashland a target of cybersecurity threats. Cybersecurity threats in general are increasing and becoming more advanced and could occur as a result of the activity of hackers, employee error or employee misconduct.
Ashland could also face claims from third parties alleging that Ashland’s products or processes infringe on their proprietary rights. If Ashland is found liable for infringement, it could be responsible for significant damages, prohibited from using certain products or processes or required to modify certain products and processes.
If Ashland is found liable for infringement, it could be responsible for significant damages, prohibited from using certain products or processes or required to modify certain products and processes. Any such infringement liability could adversely affect Ashland’s product and service offerings, profitability and results of operations.
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.
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. Any unauthorized disclosure of any of Ashland’s material know-how or trade secrets could adversely affect Ashland’s business and results of operations.
Ashland has manufacturing operations in areas vulnerable to coastal storms which may increase in magnitude and impact due to climate change. Ashland continues to implement response and resilience measures such as storm hardening and business continuity planning, however increasingly large and unprecedented weather events may pose a risk to business operations in vulnerable areas.
These events could limit the supply of key raw materials to the Company, or could have significant impacts to pricing. Ashland has manufacturing operations in areas vulnerable to coastal storms which may increase in magnitude and impact due to climate change. Increasingly large and unprecedented weather events may pose a risk to business operations in vulnerable areas.
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.
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. If Ashland fails to develop new products and new applications of existing products, it may face loss of market share, margins and cash flow.
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.
In addition, Ashland’s success further depends on the Company’s ability to identify and develop talent to succeed its senior management team and other key positions throughout the organization. If Ashland fails to identify and develop successors, the Company is at risk of being harmed by the departures of these key employees.
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.
The inability to recruit, retain and develop key personnel or the unexpected loss, voluntarily or otherwise, of key personnel may adversely affect Ashland’s operations. Risks Related to Information Technology, Cybersecurity and Intellectual Property Ashland uses information technology ("IT") systems to conduct business and these IT systems are at risk of potential disruption and cybersecurity threats.
A product recall or a partially or completely uninsured product liability judgment against Ashland could have a material adverse effect on its reputation, results of operations and financial condition. Ashland has incurred, and will continue to incur, substantial costs as a result of environmental, health and safety, and hazardous substances liabilities and related compliance requirements.
Additionally, Ashland may be unable to continue to maintain its existing insurance or obtain comparable insurance at a reasonable cost, if at all. A product recall or a partially or completely uninsured product liability judgment against Ashland could have a material adverse effect on its reputation, results of operations and financial condition.
In addition, certain of Ashland’s suppliers may be unable to deliver products or raw materials or fulfill contractual requirements. The occurrence of either event could adversely affect Ashland’s results of operations.
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, certain of Ashland’s suppliers may be unable to deliver products or raw materials or fulfill contractual requirements.
Adverse developments in the global economy and potential disruptions of financial markets could negatively impact Ashland’s customers and suppliers, and therefore have a negative impact on Ashland’s results of operations. A global or regional economic downturn may reduce customer demand or inhibit Ashland’s ability to produce and sell products.
A global or regional economic downturn may reduce customer demand or inhibit Ashland’s ability to produce and sell products.
Competitive and pricing pressures could also impact Ashland’s production volumes, which can in turn reduce cost efficiency.
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.
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.
Climate change and related resource impacts may lead to supply chain disruptions, operational impacts, and geopolitical events which could result in impacts to raw material pricing, lack of product availability, and decreased sales. Ashland sources a large number of raw materials from third party suppliers globally.
Removed
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.
Added
Risks Related to the Company’s Business Operations, Financial Performance and Growth Ashland has set aggressive growth goals for its businesses which may be impacted by such risks as the failure to optimize the use of Ashland’s tangible and intangible assets, the failure to identify and successfully integrate acquisition targets, and/or unexpected costs and liabilities associated with strategic acquisitions.
Removed
These events could limit the supply of key raw materials to the Company, or could have significant impacts to pricing. Ashland works with multiple raw material suppliers to mitigate lack of availability from a single supplier, however in some cases products with limited numbers of suppliers may become difficult to obtain.
Added
If they materialize, these risks could lead to reduced sales, impairment of goodwill or intangible assets, and other adverse effects on the Company’s financial condition and results of operations. 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.
Removed
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.
Added
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.
Removed
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.
Added
As part of its commitment to supporting climate change response efforts, Ashland has committed to 2032 targets through the Science Based Targets Initiative (SBTi) which were approved by SBTi in November of 2023. These targets are aligned with the objective of limiting global warming to no more than 1.5C above preindustrial levels.
Removed
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.
Added
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.
Removed
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.
Added
Ashland’s substantial indebtedness may adversely affect our ability to pursue certain strategic acquisitions and other business opportunities, inhibit our flexibility in responding to changing market conditions, and impede our ability to generate revenue. Ashland maintains a substantial amount of debt.
Removed
Despite steps Ashland takes to mitigate or eliminate them, cyber security threats in general are increasing and becoming more advanced and could occur as a result of the activity of hackers, employee error or employee misconduct.
Added
Due to the lengthy development process, technological challenges and intense competition, Ashland’s products may not achieve substantial commercial success. In all business segments and especially within Personal Care, there is an increasing awareness of and competition for innovations relating to more sustainable products with increasing attributes such as naturality and biodegradability, or materials sourced from bio-based raw materials.
Removed
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.
Added
Ashland sees increasing pressure to innovate and provide solutions with these features to stay competitive and to differentiate the Company from competitors in key markets. Failure to innovate could result in a loss of business to competitors who offer similar or improved sustainable product portfolios.
Removed
Furthermore, any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. In light of these inherent uncertainties, Ashland believes that its asbestos reserves represent the best estimate within a range of possible outcomes.
Added
Likewise, reductions in the valuation of Ashland’s inventory due to market volatility may not be recovered and could result in losses. Ashland purchases certain products and raw materials from suppliers, often pursuant to written supply contracts.
Removed
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”).
Added
Ashland relies heavily on its senior management team as these executives are primarily responsible for determining the strategic direction of Ashland’s business and for executing its growth strategy. Therefore, Ashland’s future success depends, in part, on the continued service of its senior management team.
Removed
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.
Added
The loss of any member of the senior management team could impact the Company’s execution of its growth strategy and also be viewed negatively by investors and analysts, which may cause the price of Ashland’s common stock to decline.
Removed
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.
Added
In addition, bad actors are becoming more sophisticated in using various techniques and tools, including artificial intelligence, for malicious purposes. We have in the past experienced cybersecurity threats and other incidents, and we expect such incidents to continue in varying degrees.
Removed
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.
Added
Ashland utilizes various cybersecurity controls and governance procedures to protect against such disruptions; however, these measures may not be sufficient for all eventualities. A failure in these controls and procedures may prevent us from detecting a failure or breach of our information systems and delay our ability to respond.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changePrincipal offices of other major operations are located in Wilmington, Delaware (Life Sciences, Specialty Additives, Intermediates and Corporate); Bridgewater, New Jersey (Personal Care and Corporate); and Dublin, Ohio (Corporate) within the United States and Hyderabad, India; Warsaw, Poland; and Schaffhausen, Switzerland (each of which are shared service centers of Ashland’s and house Corporate and direct business segment personnel).
Biggest changePrincipal offices of other major operations are located in Wilmington, Delaware (Life Sciences, Specialty Additives, Intermediates and Corporate); and Bridgewater, New Jersey (Personal Care and Corporate) within the United States and Hyderabad, India; Warsaw, Poland; and Schaffhausen, Switzerland (each of which are shared service centers of Ashland’s and house corporate and direct business segment personnel).
Ashland 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
Ashland 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.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe CPG submitted the Draft RI/FS Report on April 30, 2015. The USEPA has released the FFS Record of Decision for the lower 8 miles and reached an agreement with another chemical company to conduct and pay for the remedial design.
Biggest changeIn March 2016, the USEPA released the FFS Record of Decision for the lower 8 miles and reached an agreement with another chemical company, Occidental Chemical Corporation (OCC) to conduct and pay for the remedial design in Sept. 2016, which design work was completed in Spring 2024.
Hercules LLC (Hercules) (formerly Hercules Incorporated), an indirect wholly-owned subsidiary of Ashland, is also subject to liabilities from asbestos-related personal injury lawsuits involving claims which typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products which were sold by one of Hercules’ former subsidiaries to a limited industrial market.
Hercules LLC (Hercules) (formerly Hercules Incorporated), an indirect wholly-owned subsidiary of Ashland, is also subject to liabilities from asbestos-related personal injury lawsuits involving claims which typically arise from alleged exposure to 23 asbestos fibers from resin encapsulated pipe and tank products which were sold by one of Hercules’ former subsidiaries to a limited industrial market.
Generally, the types of relief sought include remediation of contaminated soil and/or groundwater, reimbursement for past costs of site cleanup and administrative oversight and/or long-term monitoring of environmental conditions at the sites. The ultimate costs are not predictable with assurance.
Generally, the types of relief sought include remediation of contaminated sediment, soil and/or groundwater, reimbursement for past costs of site cleanup and administrative oversight and/or long-term monitoring of environmental conditions at the sites. The ultimate costs are not predictable with assurance.
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.
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, 2024.
(b) Lower Passaic River, New Jersey Matters - Ashland, through two formerly owned facilities, and International Specialty Products (ISP), through a now-closed facility, have been identified as PRPs, along with approximately 70 other companies (the Cooperating Parties Group or the CPG), in a May 2007 Administrative Order of Consent (AOOC) with the USEPA.
(b) Lower Passaic River, New Jersey Matters - Ashland, through two formerly owned facilities, and International Specialty Products (ISP), through a now-closed facility, were identified as PRPs, along with approximately 70 other companies (the Cooperating Parties Group or the CPG), in a May 2007 Administrative Order of Consent (AOOC) with the USEPA.
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.
As of September 30, 2024, 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 53 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 would not be material as of September 30, 2023. ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 23 PART II
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, 2024. 24 ITEM 4. MINE SAF ETY DISCLOSURES Not applicable. 25 PART II
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.
The parties were 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 of the lower 8 miles of the river.
In accordance with the 2007 AOOC, in June 2012 the CPG voluntarily entered into another AOOC for an interim removal action focused solely at mile 10.9 of the Passaic River. The allocations for the 2007 AOOC and the 2012 removal action are based on interim allocations, are immaterial and have been accrued. In April 2014, the USEPA released the FFS.
In accordance with the 2007 AOOC, in June 2012 the CPG voluntarily entered into another AOOC for an interim removal action focused solely at mile 10.9 of the Passaic River. The allocations for the 2007 AOOC and the 2012 removal action were based on interim allocations, are immaterial and have been accrued.
For 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.
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.
Removed
This chemical company has sued Ashland, ISP and numerous other defendants to recover past and future costs pursuant to the CERCLA. Ashland’s motion to dismiss was partially granted, and the surviving claims are in the early stages of discovery. Ashland and ISP participated in an USEPA allocation process that resulted in a partial settlement with the EPA.
Added
In April 2014, the USEPA released the FFS for a cleanup of the lower 8 miles. The CPG submitted the Draft RI/FS Report on April 30, 2015.
Removed
Possible future allocation proceedings are not expected to have a significant impact to Ashland.
Added
In March 2023, USEPA issued a unilateral order with OCC to conduct and pay for the remedial design for a remedy in the upper 9 miles of the river.
Added
In June 2018, OCC sued Ashland, ISP and numerous other defendants in the United States District Court for the District of New Jersey to recover past and future costs of the lower 8 miles pursuant to CERCLA, and filed a later suit in March 2023 for past and future costs of the upper 9 miles of the river.
Added
Between 2017 and 2020, Ashland and ISP participated in an USEPA allocation process that resulted in a partial settlement with the EPA. The settlement was lodged with the New Jersey District Court on December 16, 2022, and is currently pending court approval amidst opposition from OCC and others.
Added
The 2018 and 2023 OCC litigations have been stayed pending the outcome of the settlement. For additional information regarding environmental matters and reserves, see Note M of Notes to Consolidated Financial Statements in this Annual Report on Form 10-K.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+2 added−1 removed0 unchanged
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.
Biggest changeThe new authorization terminated and replaced the Company's 2022 Stock Repurchase Program, which had $200 million outstanding at the date of termination. As of September 30, 2024, $620 million remained available for repurchase under this authorization. ITEM 6. [RESERVED] ITEM 7.
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.
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, 2024, there were approximately 8,003 holders of record of Ashland’s Common Stock.
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).
As of September 30, 2024, this peer group consisted of 53 companies. 26 Repurchases of Company Common Stock Share repurchase activity during the three months ended September 30, 2024 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, 2024 to July 31, 2024 — $ — — $ 770 August 1, 2024 to August 31, 2024 992,380 86.44 992,380 684 September 1, 2024 to September 30, 2024 740,117 86.82 740,117 620 Total 1,732,497 1,732,497 $ 620 (a) On June 28, 2023, Ashland's board of directors authorized a new evergreen $1 billion common share repurchase program ("2023 Stock Repurchase Program").
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.
Dividends While we currently expect that quarterly cash dividends comparable to past 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.
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.
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.
FIVE-YEAR TOTAL RETURN PERFORMANCE GRAPH The following graph compares Ashland’s five-year cumulative total shareholder return with the cumulative total return of the S&P MidCap 400 † index and one peer group of companies. Ashland is listed in the S&P MidCap 400 † index. The cumulative total shareholder return assumes the reinvestment of dividends.
There were no sales of unregistered securities required to be reported under Item 5 of Form 10-K. FIVE-YEAR TOTAL RETURN PERFORMANCE GRAPH The following graph compares Ashland’s five-year cumulative total shareholder return with the cumulative total return of the S&P MidCap 400 † index and one peer group of companies. Ashland is listed in the S&P MidCap 400 † index.
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.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN ASHLAND, S&P MIDCAP 400 † INDEX AND PEER GROUP 2019 2020 2021 2022 2023 2024 Ashland 100 94 119 129 112 122 S&P MidCap 400 † 100 98 141 120 138 176 Peer Group - Materials 100 110 141 125 149 185 The peer group consists of the following industry indices: • Peer Group – Materials: S&P 500 † Materials (large-cap) and S&P MidCap 400 † Materials.
Removed
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
Added
The cumulative total shareholder return assumes the reinvestment of dividends.
Added
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. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK See Quantitative and Qualitative Disclosures about Market Risk on page M- 42 . ITEM 8.

Item 7. Management's Discussion & Analysis

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

216 edited+52 added−50 removed127 unchanged
Biggest changeManagement 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.
Biggest changeSee Note E of the Notes to Consolidated Financial Statements for more information; • Uncertain tax positions – represents the impact from the settlement of uncertain tax positions with various tax authorities for fiscal 2024 and 2023; M- 14 • Valuation allowance – represents the impact from the release of certain foreign tax credit valuation allowances; • Restructuring and separation activity – represents the tax impact of the held for sale classification for the Nutraceuticals business; and • Other and tax reform related activity – represents tax specific key items associated with foreign tax related activity for fiscal 2024. 2024 2023 2022 Diluted EPS from continuing operations (as reported) $ 3.95 $ 3.13 $ 3.20 Key items, before tax: Nutraceuticals impairment and sale 2.14 — — Accelerated depreciation 1.14 — — Environmental reserve adjustments 0.90 1.04 0.95 Restructuring, separation and other costs 0.60 0.19 0.09 Loss (gain) on pension and other postretirement plan remeasurements 0.29 (0.04 ) (0.40 ) Asset impairments 0.22 0.08 — Other plant optimization costs 0.20 — — Nutraceuticals VAT reserve 0.14 — — Argentina currency devaluation impact 0.10 — — Legal settlement 0.08 — — Income on acquisitions and divestitures, net — (0.11 ) (0.75 ) ICMS Brazil tax credit — (0.22 ) — Held for sale depreciation and amortization (0.06 ) — — Unrealized (gain) loss on securities (1.20 ) (0.54 ) 1.82 Key items, before tax 4.55 0.40 1.71 Tax effect of key items (a) (0.62 ) (0.02 ) (0.38 ) Key items, after tax 3.93 0.38 1.33 Tax specific key items: Uncertain tax positions 0.18 (0.60 ) (0.15 ) Valuation allowance 0.10 (0.12 ) (0.07 ) Restructuring and separation activity (2.30 ) — 0.06 Other tax reform related activity (2.66 ) (0.11 ) — Tax specific key items (b) (4.68 ) (0.83 ) (0.16 ) Total key items (0.75 ) (0.45 ) 1.17 Adjusted Diluted EPS from Continuing Operations (non-GAAP) $ 3.20 $ 2.68 $ 4.37 Amortization expense adjustment (net of tax) (c) 1.25 1.39 1.33 Adjusted Diluted EPS from Continuing Operations (non-GAAP) Excluding Intangibles Amortization Expense $ 4.45 $ 4.07 $ 5.70 (a) Represents the diluted EPS impact from the tax effect of the key items that are previously identified above.
See Note E for more information. • In 2022, a $1 million pension and postretirement obligation adjustment was recorded. See Note L for more information. Use of non-GAAP measures Ashland has included within this document the following non-GAAP measures, on both a consolidated and reportable segment basis, which are not defined within U.S.
See Note E for more information; and • In 2022, a $1 million pension and postretirement obligation adjustment was recorded. See Note L for more information. Use of non-GAAP measures Ashland has included within this document the following non-GAAP measures, on both a consolidated and reportable segment basis, which are not defined within U.S.
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.
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 M- 10 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.
These liquidity measures are used regularly by Ashland's stakeholders and industry peers to measure the efficiency at providing cash from regular business activity. Free cash flow, ongoing free cash flow, and free cash flow conversion have certain limitations, including that they do not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments.
These liquidity measures are used regularly by Ashland's stakeholders and industry peers to measure the efficiency at providing cash from regular business activity. Free Cash Flow, Ongoing Free Cash Flow, and Ongoing Free Cash Flow Conversion have certain limitations, including that they do not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments.
As a result, reportable segment EBITDA and Adjusted EBITDA are reconciled directly to operating income since it is the most directly comparable Statements of Consolidated Comprehensive Income (Loss) caption.
As a result, reportable segment EBITDA and Adjusted EBITDA are reconciled directly to operating income (loss) since it is the most directly comparable Statements of Consolidated Comprehensive Income (Loss) caption.
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).
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 (income) caption of the Statements of Consolidated Comprehensive Income (Loss).
Ashland also incurred $2 million of new debt issuance costs in connection with the 2022 Credit Agreement, of which $1 million was expensed immediately during 2022 within the net interest and other expense caption of the Statements of Consolidated Comprehensive Income (Loss). The remaining balance is amortized using the straight-line method.
Ashland also incurred $2 million of new debt issuance costs in connection with the 2022 Credit Agreement, of which $1 million was expensed immediately during 2022 within the net interest and other expense (income) caption of the Statements of Consolidated Comprehensive Income (Loss). The remaining balance is amortized using the straight-line method.
The fair value of these guarantees is not significant. NEW ACCOUNTING PRONOUNCEMENTS For a discussion and analysis of recently issued accounting pronouncements and its impact on Ashland, see Note A of Notes to Consolidated Financial Statements. CRITICAL ACCOUNTING ESTIMATES The preparation of Ashland’s Consolidated Financial Statements in conformity with U.S.
The fair value of these guarantees is not significant. NEW ACCOUNTING PRONOUNCEMENTS For a discussion and analysis of recently issued accounting pronouncements and its impact on Ashland, see Note A of the Notes to Consolidated Financial Statements. CRITICAL ACCOUNTING ESTIMATES The preparation of Ashland’s Consolidated Financial Statements in conformity with U.S.
Ashland believes that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes and certain other charges that are highly variable from year to year, EBITDA and Adjusted EBITDA provide Ashland’s investors with performance measures that reflect the impact to operations from trends in changes in sales, margin and operating expenses, providing a perspective not immediately apparent from net income and operating income.
Ashland believes that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes and certain other charges that are highly variable from year to year, EBITDA and Adjusted EBITDA provide Ashland’s investors with performance measures that reflect the impact to operations from trends in changes in sales, margin and operating expenses, providing a perspective not immediately apparent from net income and operating income (loss).
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.
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 (loss) on acquisitions and divestitures, net as well as changes in working capital, which are fluctuations within accounts receivable, inventory, trade payables and accrued expenses.
Operating Activities - Other Operating cash flows for 2023 included income from continuing operations of $168 million and significant non-cash adjustments of $243 million for depreciation and amortization, $22 million for stock-based compensation expense, $43 million of gains from restricted investments, $2 million gain on pension and other postretirement plan remeasurements, $32 million for deferred taxes, and $7 million of income on acquisitions and divestitures, net.
Operating cash flows for 2023 included income from continuing operations of $168 million and significant non-cash adjustments of $243 million for depreciation and amortization, $22 million for stock-based compensation expense, $43 million of gains from restricted investments, $2 million gain on pension and other postretirement plan remeasurements, $32 million for deferred taxes, and $7 million of income on acquisitions and divestitures, net.
The current portion of long-term debt was zero for both September 30, 2023 and 2022. Ashland continues to maintain the 2022 Credit Agreement which provides for a $600 million five-year revolving credit facility. Proceeds of borrowings under the 2022 Revolving Credit Facility provide ongoing working capital and are used for other general corporate purposes.
The current portion of long-term debt was zero for both September 30, 2024 and 2023. Ashland continues to maintain the 2022 Credit Agreement which provides for a $600 million five-year revolving credit facility. Proceeds of borrowings under the 2022 Revolving Credit Facility provide ongoing working capital and are used for other general corporate purposes.
BUSINESS OVERVIEW Ashland profile Ashland is a global additives and specialty ingredients company with a conscious and proactive mindset for environmental, social and governance (ESG). The company serves customers in a wide range of consumer and industrial markets, including architectural coatings, construction, energy, food and beverage, nutraceuticals, personal care and pharmaceutical.
BUSINESS OVERVIEW Ashland profile Ashland is a global additives and specialty ingredients company with a conscious and proactive mindset for environmental, social and governance ("ESG"). The company serves customers in a wide range of consumer and industrial markets, including architectural coatings, construction, energy, food and beverage, personal care and pharmaceutical.
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.
M- 27 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.
See Note B for more information on this transaction. In 2023, the Performance Adhesives activity represents subsequent adjustments that were made in conjunction with the post-closing disputes. In 2022, the sales and pre-tax income included in discontinued operations were $171 million and $33 million, respectively, for the Performance Adhesives segment.
See Note B for more information on this transaction. In 2024, 2023 and 2022, the Performance Adhesives activity represents subsequent adjustments that were made in conjunction with the post-closing disputes. In 2022, the sales and pre-tax income included in discontinued operations were $171 million and $33 million, respectively, for the Performance Adhesives segment.
Each of these non-GAAP measures is defined as follows: EBITDA (operating income plus depreciation and amortization), Adjusted EBITDA (EBITDA adjusted for key items as applicable), and Adjusted EBITDA margin (Adjusted EBITDA divided by sales). Ashland does not allocate items to each reportable segment below operating income, such as interest expense and income taxes.
Each of these non-GAAP measures is defined as follows: EBITDA (operating income (loss) plus depreciation and amortization), Adjusted EBITDA (EBITDA adjusted for key items as applicable), and Adjusted EBITDA margin (Adjusted EBITDA divided by sales). Ashland does not allocate items to each reportable segment below operating income (loss), such as interest expense and income taxes.
In May 2023, the Board of Directors of Ashland announced a quarterly cash dividend of 38.5 cents per share to eligible stockholders at record, which represented an increase from the previous quarterly cash dividend of 33.5 cents per share. The dividend was paid in the third and fourth quarter of fiscal 2023.
The dividend was paid in the third and fourth quarter of fiscal 2024. In May 2023, the Board of Directors of Ashland announced a quarterly cash dividend of 38.5 cents per share to eligible stockholders at record, which represented an increase from the previous quarterly cash dividend of 33.5 cents per share.
The adjustments Ashland makes to derive the non-GAAP measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in net income and operating income and which Ashland does not consider to be the fundamental attributes or primary drivers of its business.
The adjustments Ashland makes to derive the non-GAAP measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in net income and operating income (loss) and which Ashland does not consider to be the fundamental attributes or primary drivers of its business.
Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income and/or operating income which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends.
Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income and/or operating income (loss) which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends.
When completed, these portfolio actions are expected to result in improved Adjusted EBITDA margins of approximately 200 basis-points and returns on net assets of 150 to 200 basis-points. These actions are expected to reduce volatility, improve focus and decrease working capital and maintenance capital expenditures.
When completed, these portfolio actions are expected to result in improved Adjusted EBITDA margins of approximately 200 to 250 basis-points and returns on net assets of 150 to 200 basis-points. These actions are expected to reduce volatility, improve focus and decrease working capital and maintenance capital expenditures.
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.
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.
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.
Ashland recognized a $3 million, a $3 million and a $1 million loss within the Statements of Consolidated Comprehensive Income (Loss) for 2024, 2023 and 2022, respectively, within the net interest and other expense (income) caption associated with sales under the program.
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’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, 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.
Non-operating key items affecting EBITDA During the current and prior years, there were certain key items that were not included in operating income but were excluded to arrive at Adjusted EBITDA.
Non-operating key items affecting EBITDA During the current and prior years, there were certain key items that were not included in operating income (loss) but were excluded to arrive at Adjusted EBITDA.
Accounts receivable facilities and off-balance sheet arrangements U.S. accounts receivable sales program On March 17, 2021, a wholly-owned, bankruptcy-remote special purpose entity and consolidated Ashland subsidiary (SPE) entered into an agreement with a group of entities (buyers) to sell certain trade receivables, without recourse beyond the pledged receivables, of two other U.S. based Ashland subsidiaries.
Accounts receivable facilities and off-balance sheet arrangements U.S. accounts receivable sales program On March 17, 2021, a wholly-owned, bankruptcy-remote special purpose entity and consolidated Ashland subsidiary (SPE) entered into an agreement with a group of entities (buyers) to sell certain trade receivables, without recourse beyond the pledged M- 30 receivables, of two other U.S. based Ashland subsidiaries.
If actual experience is worse than projected, relative to the number of claims filed, the severity of alleged disease associated with those claims or costs incurred to resolve those claims, or actuarial refinement or improvements to the assumptions used within these models are initiated, Ashland may need to further increase the estimates of the costs associated with asbestos claims and these increases could be material over time.
If actual experience is worse than projected, relative to the number of claims filed, the severity of alleged disease associated with those claims or costs incurred to resolve those claims, or actuarial refinement or M- 37 improvements to the assumptions used within these models are initiated, Ashland may need to further increase the estimates of the costs associated with asbestos claims and these increases could be material over time.
Adjusted diluted EPS from continuing operations (non-GAAP) excluding M- 3 intangibles amortization expense was also impacted by these key factors along with the impact of common share repurchases noted above. For further information on the items reported above, see the discussion in the comparative Statements of Consolidated Comprehensive Income (Loss) caption review analysis.
Adjusted Diluted EPS from Continuing Operations (non-GAAP) Excluding Intangibles Amortization Expense was also impacted by these key factors along with the impact of common share repurchases noted above. For further information on the items reported above, see the discussion in the comparative Statements of Consolidated Comprehensive Income (Loss) caption review analysis.
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.
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.
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.
Based on sensitivity analysis performed on two key assumptions in the discounted cash flow model at July 1, 2024, 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.
Products include rheology modifiers (cellulosic and associative thickeners), foam control agents, surfactants and wetting agents, pH neutralizers, advanced ceramics used in catalytic converters, and environmental filters, ingredients that aid the manufacturing process of ceramic capacitors, plasma display panels and solar cells, ingredients for textile printing, thermoplastic metals and alloys for welding.
Products include rheology modifiers (cellulosic and associative thickeners), foam control agents, surfactants and wetting agents, pH neutralizers, advanced ceramics used in M- 20 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.
M- 38 Ashland tested these assets using a “relief-from-royalty” valuation method to determine the fair value. Assumptions inherent in the valuation methodologies include, but are not limited to, future projected business results, growth rates, the weighted-average cost of capital for a market participant, and royalty rates.
Ashland tested these assets using a “relief-from-royalty” valuation method to determine the fair value. Assumptions inherent in the valuation methodologies include, but are not limited to, future projected business results, growth rates, the weighted-average cost of capital for a market participant, and royalty rates.
M- 20 Intermediates Intermediates is comprised of the production of 1,4 butanediol (BDO) and related derivatives, including n-methylpyrrolidone. These products are used as chemical intermediates in the production of engineering polymers and polyurethanes, and as specialty process solvents in a wide array of applications including electronics, pharmaceuticals, water filtration membranes and more.
Intermediates Intermediates is comprised of the production of 1,4 butanediol (BDO) and related derivatives, including n-methylpyrrolidone. These products are used as chemical intermediates in the production of engineering polymers and polyurethanes, and as specialty process solvents in a wide array of applications including electronics, pharmaceuticals, water filtration membranes and more.
This decrease was partially offset by higher operating costs, which includes costs associated with inventory control actions and inflation associated with plant manufacturing and shipping costs (as well as planned and M- 4 unplanned plant shutdowns and maintenance), and higher price/mix associated with other cost inflation increased cost of sales by $183 million and $30 million, respectively.
This decrease was partially offset by higher operating costs, which includes costs associated with inventory control actions and inflation associated with plant manufacturing and shipping costs (as well as planned and unplanned plant shutdowns and maintenance), and higher price/mix associated with other cost inflation increased cost of sales by $183 million and $30 million, respectively.
Ashland concluded there was no impairment as of July 1, 2023. Ashland compared the total fair values of the reporting units to Ashland’s market capitalization at July 1, 2023, to determine if the fair values are reasonable. Ashland's market capitalization exceeded the aggregate fair value of each reporting unit at the annual assessment date by approximately 10%.
Ashland concluded there was no impairment as of July 1, 2024. Ashland compared the total fair values of the reporting units to Ashland’s market capitalization at July 1, 2024, to determine if the fair values are reasonable. Ashland's market capitalization exceeded the aggregate fair value of each reporting unit at the annual assessment date by approximately 10%.
The following EBITDA presentation for the years ended September 30, 2023, 2022 and 2021, is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Life Sciences.
The following EBITDA presentation for the years ended September 30, 2024, 2023 and 2022, is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Life Sciences.
BDO is also supplied to Life Sciences, Personal Care, and Specialty Additives for use as a raw material. The following table provides a reconciliation of the change in sales for the Intermediates operating segment between fiscal years 2023 and 2022 and between fiscal years 2022 and 2021.
BDO is also supplied to Life Sciences, Personal Care, and Specialty Additives for use as a raw material. The following table provides a reconciliation of the change in sales for the Intermediates operating segment between fiscal years 2024 and 2023 and between fiscal years 2023 and 2022.
GAAP and do not purport to be alternatives to net income or cash flows from operating activities as a measure of operating performance or cash flows: EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin EBITDA is defined as net income (loss), plus income tax expense (benefit), net interest and other expenses, and depreciation and amortization.
GAAP and do not purport to be alternatives to net income or cash flows from operating activities as a measure of operating performance or cash flows: EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin EBITDA is defined as net income, plus income tax expense (benefit), net interest and other expense (income), and depreciation and amortization.
Changes in asbestos-related liabilities and receivables are recorded on an after-tax basis within the discontinued operations caption in the Statements of Consolidated Comprehensive Income (Loss). See Note N of the Notes to Consolidated Financial Statements for additional information.
Changes in asbestos-related liabilities and receivables are recorded on an after-tax basis within the discontinued operations caption in the Statements of Consolidated Comprehensive Income (Loss). See Note M of the Notes to Consolidated Financial Statements for additional information.
If the carrying value of an individual indefinite-lived intangible asset exceeds its fair value, the asset is written down to its fair value and the amount of the write down is the impairment charge. Similar to its annual assessment for goodwill, Ashland performs a quantitative test for impairment.
If the carrying value of an individual indefinite-lived intangible asset exceeds its fair value, the asset is M- 38 written down to its fair value and the amount of the write down is the impairment charge. Similar to its annual assessment for goodwill, Ashland performs a quantitative test for impairment.
Household supplies nature-derived rheology ingredients, biodegradable surface wetting agents, performance encapsulates, and specialty polymers for household, industrial and institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies.
Personal Care supplies nature-derived rheology ingredients, biodegradable surface wetting agents, performance encapsulates, and specialty polymers for household, industrial and institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies.
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.
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, 2024, 2023 and 2022.
In addition, certain financial covenants related to Ashland’s 2022 Credit Agreement are based on similar non-GAAP measures and are defined further in the sections that reference this metric. In accordance with U.S.
In addition, certain financial covenants related to Ashland’s 2022 Credit Agreement are based on similar non-GAAP measures and are defined further in the sections that reference this metric. M- 11 In accordance with U.S.
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.
Sales by region expressed as a percentage of total consolidated sales were as follows: Sales by Geography 2024 2023 2022 North America (a) 31 % 31 % 32 % Europe (a) 35 % 36 % 35 % Asia Pacific 25 % 23 % 24 % Latin America & other 9 % 10 % 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.
Results for Ashland’s continuing operations, diluted earnings per share from continuing operations and operating income for 2023, 2022 and 2021 included certain key items that were excluded to arrive at Adjusted EBITDA and are quantified in the “Use of non-GAAP measures” section of this Annual Report on Form 10-K.
Results for Ashland’s continuing operations, diluted earnings per share from continuing operations and operating income (loss) for 2024, 2023 and 2022 included certain key items that were excluded to arrive at Adjusted EBITDA and are quantified in the “Use of non-GAAP measures” section of this Annual Report on Form 10-K.
These forward-looking statements are based on Ashland’s expectations and assumptions, as of the date such statements are made, regarding Ashland’s future operating performance and financial condition, as well as the economy and other future events or circumstances.
These forward-looking statements are based on Ashland’s expectations and assumptions, as of the date such statements are made, regarding Ashland’s future operating M- 41 performance and financial condition, as well as the economy and other future events or circumstances.
Ashland sells (or previously sold) additives and specialty ingredients to manufacturers in these countries for their use in pharmaceuticals, personal care, and coatings applications. Sales to Russia and Belarus were previously limited and our products were primarily used in products and applications that are essential to the population's wellbeing and currently support our customers' humanitarian efforts.
Ashland sells (or previously sold) additives and specialty ingredients to manufacturers in these countries for their use in pharmaceuticals, personal care, and coatings applications. Sales to Russia and Belarus were previously limited and our products were primarily used in products and applications that are essential to the population's well-being and currently support our customers' humanitarian efforts.
The 2022 effective tax rate was impacted by jurisdictional income mix, as well as favorable discrete items of $15 million primarily related to uncertain tax positions and restructuring activities.
The 2023 effective tax rate was impacted by jurisdictional income mix, as well as favorable discrete items of $49 million primarily related to uncertain tax positions. The 2022 effective tax rate was impacted by jurisdictional income mix, as well as favorable discrete items of $15 million primarily related to uncertain tax positions and restructuring activities.
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.
As of September 30, 2024, 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.
At September 30, 2023, such locations included 57 sites where Ashland has been identified as a potentially responsible party under Superfund or similar state laws, 108 current and former operating facilities and about 1,225 service station properties, of which 14 are being actively remediated. See Note N of the Notes to Consolidated Financial Statements for additional information.
At September 30, 2024, such locations included 53 sites where Ashland has been identified as a potentially responsible party under Superfund or similar state laws, 108 current and former operating facilities and about 1,225 service station properties, of which 14 are being actively remediated. See Note N of the Notes to Consolidated Financial Statements for additional information.
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.
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.
Additionally, 2022 was impacted by cost inflation and management efforts to rebuild inventory levels globally in response to global supply-chain challenges. • Trade and other payables – Changes in trade and other payables resulted in cash outflows of $112 million in 2023, and cash inflows of $34 million in 2022 and $3 million in 2021, respectively, and primarily related to the timing of certain payments, most notably incentive plan payments in 2023 for fiscal year 2022.
Additionally, 2022 was impacted by cost inflation and management efforts to rebuild inventory levels globally in response to global supply-chain challenges. • Trade and other payables – Changes in trade and other payables resulted in cash inflows of $56 million in 2024, cash outflows of $112 million in 2023, and cash inflows of $34 million in 2022, respectively, and primarily related to the timing of certain payments, most notably incentive plan payments in 2023 for fiscal year 2022.
M- 21 Unallocated and other The following table summarizes the key components of the Unallocated and other segment’s operating income (loss) for each of the last three years ended September 30.
Unallocated and other The following table summarizes the key components of the Unallocated and other segment’s operating income (loss) for each of the last three years ended September 30.
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.
Total reserves for asbestos claims were $185 million at September 30, 2024 compared to $191 million at September 30, 2023. 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.
The contribution to sales by each reportable segment expressed as a percentage of total consolidated sales for the year ended September 30 were as follows: Sales by Reportable Segment 2023 2022 2021 Life Sciences 40 % 34 % 35 % Personal Care 27 % 28 % 28 % Specialty Additives 28 % 30 % 31 % Intermediates 5 % 8 % 6 % 100 % 100 % 100 % M- 1 KEY DEVELOPMENTS Uncertainty relating to the Ukraine/Russia conflict and Israel/Hamas conflict Business disruptions, including those related to the ongoing conflicts between Ukraine/Russia or Israel/Hamas continue to impact businesses around the globe.
The contribution to sales by each reportable segment expressed as a percentage of total consolidated sales for the year ended September 30 were as follows: Sales by Reportable Segment 2024 2023 2022 Life Sciences 38 % 40 % 34 % Personal Care 30 % 27 % 28 % Specialty Additives 27 % 28 % 30 % Intermediates 5 % 5 % 8 % 100 % 100 % 100 % M- 1 KEY DEVELOPMENTS Uncertainty relating to the ongoing Ukraine/Russia conflict and Israel/Hamas conflict Business disruptions, including those related to the ongoing conflicts between Ukraine/Russia or Israel/Hamas continue to impact businesses around the globe.
The following table provides a reconciliation of the change in sales for the Personal Care operating segment between fiscal years 2023 and 2022 and between fiscal years 2022 and 2021.
The following table provides a reconciliation of the change in sales for the Personal Care operating segment between fiscal years 2024 and 2023 and between fiscal years 2023 and 2022.
The following table provides a reconciliation of the change in sales for the Specialty Additives operating segment between fiscal years 2023 and 2022 and between fiscal years 2022 and 2021.
The following table provides a reconciliation of the change in sales for the Specialty Additives operating segment between fiscal years 2024 and 2023 and between fiscal years 2023 and 2022.
The Valvoline activity within 2023, 2022 and 2021 primarily represents subsequent adjustments that were made in conjunction with post-closing disputes and the Tax Matters Agreement. The activity for Water Technologies and Distribution were primarily related to post-closing adjustments associated with environmental remediation reserves associated with these businesses. See Note B for more information related to discontinued operations.
The Valvoline activity within 2024, 2023 and 2022 primarily represents subsequent adjustments that were made in conjunction with post-closing disputes and the Tax Matters Agreement. The activity for Water Technologies and Distribution were primarily related to post-closing adjustments associated with environmental remediation reserves associated with these businesses. See Note C for more information related to discontinued operations.
Ashland recorded liabilities related to its service obligations and limited guarantee as of September 30, 2023 and 2022 of less than $1 million.
Ashland recorded liabilities related to its service obligations and limited guarantee as of September 30, 2024 and 2023 of less than $1 million.
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.
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, 2024, 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 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.
(b) Includes estimated funding of Ashland’s qualified U.S. and non-U.S. pension plans for 2024 as well as projected benefit payments through 2031 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, 2023.
Variable interest rates have been assumed to remain constant through the end of the term at rates that existed as of September 30, 2024.
(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.
(f) As a result of the Tax Act enacted during fiscal year 2017, Ashland has currently recorded a $29 million liability for the one-time transition tax. This liability will be payable over two years. (g) Ashland issues various types of letters of credit as part of its normal course of business.
Adjusted income tax expense (benefit) Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income and/or operating income which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends.
M- 7 Adjusted income tax expense Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income and/or operating income (loss) which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends.
Other significant items 2023 Stock repurchase program On June 28, 2023, Ashland's board of directors authorized a new evergreen $1 billion common share repurchase program (2023 stock repurchase program). The new authorization terminates and replaces the company's 2022 stock repurchase program, which had $200 million outstanding at the date of termination.
Other significant items Stock repurchase program On June 28, 2023, Ashland's board of directors authorized a new evergreen $1 billion common share repurchase program ("2023 Stock Repurchase Program"). The new authorization terminated and replaced the Company's 2022 Stock Repurchase Program, which had $200 million outstanding at the date of termination.
EBITDA and Adjusted EBITDA EBITDA totaled income of $419 million, $1,342 million and $482 million for 2023, 2022 and 2021, respectively. EBITDA and Adjusted EBITDA results in the following table have been prepared to illustrate the ongoing effects of Ashland’s operations, which exclude certain key items previously described.
EBITDA and Adjusted EBITDA EBITDA totaled income of $142 million, $419 million and $1,342 million for 2024, 2023 and 2022, respectively. EBITDA and Adjusted EBITDA results in the following table have been prepared to illustrate the ongoing effects of Ashland’s operations, which exclude certain key items previously described.
The net liability in unallocated and other was $1,190 million and $1,092 million as of September 30, 2023 and 2022, respectively. OFF-BALANCE SHEET ARRANGEMENTS As part of its normal course of business, Ashland is a party to various financial guarantees and other commitments.
The net liability in unallocated and other was $1,162 million and $1,190 million as of September 30, 2024 and 2023, respectively. OFF-BALANCE SHEET ARRANGEMENTS As part of its normal course of business, Ashland is a party to various financial guarantees and other commitments.
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.
As of September 30, 2024 and 2023, the receivables from insurers amounted to $50 million and $47 million, respectively. During 2024, 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.
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.
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 2024, it was determined that the liability for Hercules asbestos-related claims should be increased by $14 million.
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.
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 $485 million. The largest reserve for any site is 21% of the remediation reserve as of September 30, 2024.
The following details certain changes in key operating assets and liabilities for 2023, 2022 and 2021, respectively.
The following details certain changes in key operating assets and liabilities for 2024, 2023 and 2022, respectively.
(In millions) 2023 2022 2021 Life Sciences $ 46 $ 28 $ 27 Personal Care 20 14 7 Specialty Additives 99 61 67 Intermediates 3 7 2 Unallocated and Other 2 3 2 Total capital expenditures $ 170 $ 113 $ 105 M- 34 A summary of the capital employed in Ashland’s current operations, which is calculated by adding equity to capital investment, as of the end of the last two years is as follows.
(In millions) 2024 2023 2022 Life Sciences $ 61 $ 46 $ 28 Personal Care 11 20 14 Specialty Additives 61 99 61 Intermediates 2 3 7 Unallocated and Other 2 2 3 Total capital expenditures $ 137 $ 170 $ 113 M- 34 A summary of the capital employed in Ashland’s current operations, which is calculated by adding equity to capital investment, as of the end of the last two years is as follows.
(In millions) 2023 change 2022 change Operating income change Costs $ (71 ) $ (8 ) Volume (41 ) (2 ) Foreign Currency (1 ) (2 ) Price/mix 20 54 $ (93 ) $ 42 EBITDA and adjusted EBITDA reconciliation The following EBITDA presentation (as defined and described in the section above) for the years ended September 30, 2023, 2022 and 2021 below is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Specialty Additives.
(In millions) 2024 change 2023 change Operating income change Costs $ (34 ) $ (71 ) Price/mix (9 ) 20 Divestiture (1 ) — Volume 1 (41 ) Foreign Currency 1 (1 ) $ (42 ) $ (93 ) EBITDA and Adjusted EBITDA reconciliation The following EBITDA presentation (as defined and described in the section above) for the years ended September 30, 2024, 2023 and 2022 below is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Specialty Additives.
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.
During 2024, 2023 and 2022, Ashland recognized $54 million, $56 million and $66 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.
Asbestos-related activity during 2023, 2022 and 2021 included after-tax net adjustments to the asbestos reserves and receivables of $5 million of expense, $14 million of expense and $9 million of expense, respectively, including the adjustments for the annual update for each of these years.
Asbestos-related activity during 2024, 2023 and 2022 included after-tax net adjustments to the asbestos reserves and receivables of $18 million of expense, $5 million of expense and $14 million of expense, respectively, including the adjustments for the annual update for each of these years.
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.
This model update resulted in a $6 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.
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.
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.
Significant assumptions utilized in the impairment analysis included the weighted-average cost of capital, ranging between 10.75% and 11.25%, and terminal growth rate, ranging between 2.0% and 4.0% depending on the reporting unit.
Significant assumptions utilized in the impairment analysis included the weighted-average cost of capital, ranging between 11.25% and 12.50%, and terminal growth rate, ranging between 2.0% and 4.0% depending on the reporting unit.
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.
At September 30, 2024, Ashland’s calculation of the consolidated net leverage ratio was 2.3. 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.
With approximately 3,800 employees worldwide, Ashland serves customers in more than 100 countries. Ashland’s sales generated outside of North America were 69% in 2023, and 68% in 2022 and 2021. respectively.
With approximately 3,200 employees worldwide, Ashland serves customers in more than 100 countries. Ashland’s sales generated outside of North America were 69%, 69% and 68% in 2024, 2023 and 2022, respectively.
Key drivers of the fluctuation in selling, general and administrative expense compared to 2022 were: • Expense of $9 million and $5 million comprised of key items for severance, lease abandonment and other restructuring costs during 2023 and 2022, respectively; • $54 million and $53 million in net environmental-related expenses during 2023 and 2022, respectively (see Note M for more information); • $4 million impairment charge in 2023 associated with the sale of a Specialty Additives manufacturing facility; • $12 million gain associated with ICMS Brazil tax credit; and • Decreases associated with the following: o Lower incentive pay of $33 million; o Unfavorable foreign currency exchange of $6 million; and o Higher salary, benefits and travel expenses of $5 million.
Key drivers of the fluctuation in selling, general and administrative expense compared to 2022 were: • Expense of $9 million and $5 million comprised of key items for severance, lease abandonment and other restructuring costs during 2023 and 2022, respectively; • $54 million and $53 million in net environmental-related expenses during 2023 and 2022, respectively (see Note M for more information); • $4 million impairment charge in 2023 associated with the sale of a Specialty Additives manufacturing facility; • $12 million gain associated with ICMS Brazil tax credit in 2023; and • Decreases associated with the following: o Lower incentive pay of $33 million; o Unfavorable foreign currency exchange of $6 million; and o Higher salary, benefits and travel expenses of $5 million. 2024 2023 (In millions) 2024 2023 2022 change change Research and development expense $ 55 $ 51 $ 55 $ 4 $ (4 ) Research and development expense increased $4 million in 2024 compared to 2023 primarily due to higher compensation costs.

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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, 2023 and 2022, 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, 2024 and 2023, 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, 2023. 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, 2024. M- 42

Other ASH 10-K year-over-year comparisons