ASHLAND INC. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES MANAGEMENT’S DISCUSSION AND ANALYSIS The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and the accompanying Notes to Condensed Consolidated Financial Statements herein. BUSINESS OVERVIEW Ashland profile Ashland is a global additives and specialty ingredients company with a conscious and proactive mindset for 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. With approximately 2,960 employees worldwide, Ashland serves customers in more than 100 countries. Ashland’s sales generated outside of North America were 73% and 72% for the three and nine months ended June 30, 2025, respectively, and 69% and 68% for the three and nine months ended June 30, 2024, respectively. Sales by region expressed as a percentage of total consolidated sales were as follows: Three months ended Nine months ended June 30 June 30 Sales by Geography 2025 2024 2025 2024 North America (a) 27 % 31 % 28 % 32 % Europe (a) 38 % 35 % 36 % 35 % Asia Pacific 25 % 25 % 26 % 24 % Latin America & other 10 % 9 % 10 % 9 % 100 % 100 % 100 % 100 % (a) Ashland includes only U.S. and Canada in its North America designation and includes Europe, the Middle East and Africa in its Europe designation. Reportable segments Ashland’s reportable segments include Life Sciences, Personal Care, Specialty Additives and Intermediates. Unallocated and other includes corporate governance activities and certain legacy matters. The contribution to sales by each reportable segment expressed as a percentage of total consolidated sales was as follows: Three months ended Nine months ended June 30 June 30 Sales by Reportable Segment 2025 2024 2025 2024 Life Sciences 35 % 36 % 35 % 39 % Personal Care 32 % 32 % 31 % 30 % Specialty Additives 28 % 27 % 28 % 27 % Intermediates 5 % 5 % 6 % 4 % 100 % 100 % 100 % 100 % KEY DEVELOPMENTS Uncertainty related to tariffs and global trade policy changes The first nine months of the fiscal year saw increased regulatory activity, including the imposition of tariffs and evolving global trade policies, which have resulted in retaliatory measures on U.S. goods. The extent and duration of the tariffs and the resulting impact on general economic conditions and on Ashland are uncertain and depend on various factors, such as negotiations between the U.S. and affected countries, the responses of other countries or regions, exemptions that may be granted, availability and cost of alternative sources of supply and demand for Ashland's products in affected markets. Additionally, the uncertainty about trade policy, tariff rates, and other changes in practices affecting international trade, including whether such tariffs or other measures will be 31 withdrawn, or modified in the future, may make it difficult to operate optimally. Ashland continues to monitor the rapidly evolving tariff and global trade policies and is working to mitigate potential impacts on its business. Uncertainty relating to the ongoing Israel/Iran, Ukraine/Russia and Israel/Hamas conflicts Business disruptions, including those related to the ongoing conflicts between Israel/Iran, Ukraine/Russia and Israel/Hamas continue to impact businesses around the globe. While it is impossible to predict the effects of the conflicts such as possible escalating geopolitical tensions (including the imposition of existing and additional sanctions by the U.S. and the European Union on Russia), worsening macroeconomic and general business conditions, supply chain interruptions and unfavorable energy markets, the impact could be material. Ashland is closely monitoring these situations and maintains business continuity plans that are intended to continue operations or mitigate the effects of events that could disrupt its business. Ashland does not have manufacturing operations in Iran, Israel, Russia, Ukraine, or Belarus. Ashland sells (or previously sold) additives and specialty ingredients to manufacturers in these countries for their use in pharmaceuticals, personal care, and coatings applications. Sales to Russia and Belarus were previously limited and our products were primarily used in products and applications that are essential to the population's well-being and currently support our customers' humanitarian efforts. We have sales controls in place to ensure that future potential sales into the region are only to support critical pharmaceutical or personal hygiene products which are essential for the general population and in accordance with any applicable sanctions. Sales to Israel, Ukraine, Russia, and Belarus represent less than 1% of total consolidated sales and less than 1% of total consolidated assets (related to accounts receivable). Other items Restructuring programs As previously announced, Ashland initiated a new $30 million pre-tax restructuring plan to offset the impact from the Nutraceuticals business sale, completed in fiscal 2024, and other portfolio optimization actions, which were expected to be realized 50 percent in fiscal 2025 and 50 percent in fiscal 2026. Ashland's current expectations include greater than 50 percent realization in fiscal 2025 of approximately $20 million. Ashland is also advancing a multi-year manufacturing optimization restructuring plan to improve operational cost and strengthen its competitive position. This optimization plan is expected to generate pre-tax savings of $60 million once fully achieved, including savings of approximately $5 million in fiscal 2025. Ashland is also continuing to execute its fiscal 2024 portfolio and plant optimization actions to further strengthen Ashland’s resilience and improve margins and returns. These previously announced actions include initiatives focused on carboxymethylcellulose (CMC), methylcellulose (MC), Nutraceuticals and Avoca Portfolio Optimization (collectively, Portfolio Optimization). Overall, these portfolio optimization actions reduced sales and operating loss by approximately $53 million and $8 million, respectively, for the three months ended June 30, 2025 and approximately $170 million and $22 million, respectively, for the nine months ended June 30, 2025 as compared to the prior year. Adjusted EBITDA was also reduced by $13 million and $34 million for the three and nine months ended June 30, 2025, respectively, as compared to the prior year. The following table summarizes the expense impact of these restructuring actions: Three months ended Nine months ended June 30 June 30 (In millions) 2025 2024 2025 2024 Accelerated depreciation (a) $ 27 $ 8 $ 40 $ 56 Restructuring, separation and other costs (b) 7 3 18 28 Other plant optimization costs (a) 3 4 12 5 $ 37 $ 15 $ 70 $ 89 (a) Recorded within the cost of sales caption within the Statements of Condensed Consolidated Comprehensive Income (Loss). (b) Recorded within the selling, general and administrative expense caption within the Statements of Condensed Consolidated Comprehensive Income (Loss). 32 Avoca business sale During the three months ended March 31, 2025, Ashland completed the sale of its Avoca business to Mane SA. Proceeds from the sale were approximately $16 million, net of transaction costs. The Avoca business was included within Ashland's Personal Care reportable segment. Ashland determined this transaction did not qualify for discontinued operations treatment since it neither represented a strategic shift nor did it have a major effect on Ashland's operations and financial results. Ashland recorded an impairment charge of $183 million ($1 million allocated to goodwill, $134 million to other intangible assets, $33 million to property, plant and equipment, $14 million to operating lease assets, net and $1 million to other current assets) for the nine months ended June 30, 2025, within the loss on acquisitions and divestitures, net caption of the Statement of Condensed Consolidated Comprehensive Income (Loss). The tax benefit associated with the sale is included within the income tax expense (benefit) caption of the Statement of Condensed Consolidated Comprehensive Income (Loss) for the nine months ended June 30, 2025. See Note J of the Notes to the Condensed Consolidated Financial Statements for tax details associated with the transaction. Ashland also recorded a pre-tax gain on sale of $8 million following the completion of this sale, mainly related to working capital movements, within the loss on acquisitions and divestitures, net caption of the Statements of Condensed Consolidated Comprehensive Income (Loss) for the nine months ended June 30, 2025. Goodwill impairment During the third quarter fiscal 2025, Ashland experienced a continued decline in the market price of its Common Stock. Ashland also experienced slowing growth due to weakening macroeconomic environment that is dampening consumer sentiment and demand globally which resulted in lower growth and lower margins for the Life Sciences and Specialty Additives reportable segments (and reporting units) than what was previously reported. These factors led Ashland to determine that triggering events occurred, and a quantitative goodwill impairment assessment was performed during the three months ended June 30, 2025. Following the aforementioned quantitative analysis, the carrying value of the Life Sciences and the Specialty Additives reporting units exceeded their fair value, resulting in non-cash goodwill impairment charges of $375 million and $331 million, respectively, for a total goodwill impairment charge of $706 million, which was recorded during the three and nine months ended June 30, 2025, within the goodwill impairment caption of the Statements of Condensed Consolidated Comprehensive Income (Loss) for the both three and nine months ended June 30, 2025. No subsequent indicators of impairment have been identified. RESULTS OF OPERATIONS – CONSOLIDATED REVIEW Consolidated review Overview Key financial results included the following: Three months ended Nine months ended June 30 June 30 (In millions except per share data) 2025 2024 Change 2025 2024 Change Net income (loss) $ (742 ) $ 6 $ (748 ) $ (877 ) $ 153 $ (1,030 ) Diluted earnings per share net income (loss) (a) (16.21 ) 0.12 (16.33 ) (18.85 ) 3.01 (21.86 ) Income (loss) from continuing operations (719 ) 31 (750 ) (855 ) 180 (1,035 ) Diluted earnings per share income (loss) from continuing operations (a) (15.70 ) 0.60 (16.30 ) (18.39 ) 3.53 (21.92 ) Operating loss (708 ) (61 ) (647 ) (836 ) (57 ) (779 ) EBITDA (b) (683 ) (34 ) (649 ) (713 ) 76 (789 ) Adjusted EBITDA (b) 113 139 (26 ) 282 336 (54 ) Adjusted Diluted EPS from Continuing Operations Excluding Intangibles Amortization Expense (b) 1.04 1.49 (0.45 ) 2.30 3.19 (0.89 ) (a) As a result of the loss from continuing operations attributable to Ashland during the three and nine months ended June 30, 2025, the effect of the share-based awards convertible to common stock would be antidilutive and have been excluded from the diluted EPS calculation. (b) These are non-GAAP financial measures. See "Use of Non-GAAP Financial Measures" section below for reconciliations to U.S. GAAP. 33 Business results current quarter Ashland's net loss of $742 million (loss of $16.21 diluted earnings per share) and income of $6 million ($0.12 diluted earnings per share) included loss from discontinued operations of $23 million (loss of $0.51 diluted earnings per share) and a loss from discontinued operations of $25 million (loss of $0.48 diluted earnings per share) in the three months ended June 30, 2025 and 2024, respectively. Results for Ashland’s continuing operations, diluted earnings per share from continuing operations and operating loss for the three months ended June 30, 2025 and 2024 included certain key items that were excluded to arrive at Adjusted EBITDA and are quantified in the “Use of Non-GAAP Financial Measures” section below. These pre-tax key items totaled expense of $754 million and $147 million for the three months ended June 30, 2025 and 2024, respectively, impacting continuing operations, including a non-cash goodwill impairment charge of $706 million in the current quarter ($375 million for the Life Sciences and $331 million for the Specialty Additives reportable segments). Continuing operations was also impacted by unfavorable tax specific key items for discrete tax items totaling $13 million and favorable tax specific key items for discrete tax items totaling $106 million for the three months ended June 30, 2025 and 2024, respectively. Excluding these key items, the decrease in continuing operations, diluted earnings per share from continuing operations and operating loss was primarily driven by portfolio optimization actions, lower volume, and unfavorable production costs. This was partially offset by lower selling, administrative, research and development costs. In addition, diluted earnings per share from continuing operations was also impacted by common stock reductions from repurchases of Ashland common stock over the last twelve months. These common stock repurchases reduced the number of weighted average shares from 51 million diluted shares at June 30, 2024 to 46 million diluted shares at June 30, 2025. Ashland’s Adjusted EBITDA was $113 million for the three months ended June 30, 2025 compared to $139 million for the three months ended June 30, 2024 (see U.S. GAAP reconciliation under “Use of Non-GAAP Financial Measures” below). The $26 million decrease in Adjusted EBITDA was primarily driven by portfolio optimization actions, lower volume, and unfavorable production costs. This was partially offset by lower selling, administrative, research and development costs. 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 stock repurchases noted above. For further information on the items reported above, see the discussion in the comparative Statements of Condensed Consolidated Comprehensive Income (Loss) caption review analysis. Statements of Condensed Consolidated Comprehensive Income (Loss) – caption review A comparative analysis of the Statements of Condensed Consolidated Comprehensive Income (Loss) by caption is provided as follows: Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Sales $ 463 $ 544 $ (81 ) $ 1,347 $ 1,591 $ (244 ) The following table provides a reconciliation of the change in sales for the three and nine months ended June 30, 2025 and 2024: Three months ended Nine months ended (In millions) June 30, 2025 June 30, 2025 Sales change Divestitures $ (42 ) $ (122 ) Volume (35 ) (87 ) Price/mix (11 ) (35 ) Foreign currency exchange 7 — Change in sales $ (81 ) $ (244 ) Current Quarter - Sales for the current quarter decreased $81 million compared to the prior year quarter. The decrease was driven by the unfavorable impact of divestitures, lower volume, and unfavorable pricing which was 34 partially offset by favorable foreign currency exchange. Portfolio optimization initiatives had an approximate $53 million impact on sales in the current quarter compared to the prior year quarter, primarily within divestitures and volume caption changes. Year-to-date - Sales for the current year decreased $244 million compared to the prior year period. The decrease was driven by the unfavorable impact of divestitures, lower volume, and unfavorable pricing. Portfolio optimization initiatives had an approximate $170 million impact on sales in the current year period compared to the prior year period, primarily within divestitures and volume caption changes. Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Cost of sales $ 331 $ 358 $ (27 ) $ 957 $ 1,147 $ (190 ) Gross profit as a percent of sales 28.5 % 34.2 % 29.0 % 27.9 % The following table provides a reconciliation of the change in cost of sales between the three and nine months ended June 30, 2025 and 2024: Three months ended Nine months ended (In millions) June 30, 2025 June 30, 2025 Cost of sales change Divestitures $ (32 ) $ (99 ) Volume (27 ) (69 ) Operating costs 29 (32 ) Foreign currency exchange 4 — Price/mix (1 ) 10 Change in cost of sales $ (27 ) $ (190 ) Current Quarter - Cost of sales for the current quarter decreased $27 million compared to the prior year quarter. The decrease was primarily driven by the favorable impact of divestitures, lower sales volume, and favorable pricing, partially offset by higher operating costs and unfavorable foreign exchange currency. The current period operating costs were affected by $27 million of accelerated depreciation for product line optimization activities at manufacturing facilities within the Life Sciences, Personal Care and Specialty Additives reportable segments and $3 million of other plant optimization costs while the prior year quarter included $8 million of accelerated depreciation for product line optimization activities at two Speciality Additives manufacturing plants and one Personal Care manufacturing plant, and $4 million of other plant optimization costs. Gross profit as a percentage of sales decreased 5.7% primarily due to lower sales volume, higher operating costs and increased accelerated depreciation compared to the prior year quarter. Year-to-date - Cost of sales for the current year decreased $190 million compared to the prior year period. The decrease was primarily driven by the favorable impact of divestitures, lower sales volume, and lower operating costs, partially offset by unfavorable pricing. The current period operating costs were affected by $40 million of accelerated depreciation for product line optimization activities at manufacturing facilities within the Life Sciences, Personal Care and Specialty Additives reportable segments and $12 million of other plant optimization costs while the prior year period included $56 million of accelerated depreciation for product line optimization activities at two Speciality Additives manufacturing plants and one Personal Care manufacturing plant, and $5 million of other plant optimization costs. Gross profit as a percentage of sales increased 1.1% primarily due to production volume recovery versus inventory corrective actions and decreased accelerated depreciation compared to the prior year period. Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Selling, general and administrative expense $ 106 $ 114 $ (8 ) $ 268 $ 303 $ (35 ) As a percent of sales 22.9 % 21.0 % 19.9 % 19.0 % 35 Current Quarter - Selling, general and administrative expense for the current quarter decreased $8 million compared to the prior year quarter with expenses as a percent of sales increasing 1.9%. Key drivers of the fluctuation in selling, general and administrative expense compared to the prior year quarter were: • $30 million and $35 million in net environmental-related expenses during the current and prior year quarter, respectively (see Note L of the Notes to the Condensed Consolidated Financial Statements for more information); • Expense of $7 million and $3 million comprised of key items for severance, lease abandonment and other restructuring costs during the current and prior year quarter, respectively; and • Lower variable compensation expense, the favorable impact of divestitures, and realized cost reductions associated with restructuring actions partially offset by unfavorable currency exchange between periods. Year-to-date - Selling, general and administrative expense for the current year decreased $35 million compared to the prior year period with expenses as a percent of sales increasing 0.9%. Key drivers of the fluctuation in selling, general and administrative expense compared to the prior year period were: • $33 million and $41 million in net environmental-related expenses during the current and prior year period, respectively (see Note L of the Notes to the Condensed Consolidated Financial Statements for more information); • Expense of $18 million and $28 million comprised of key items for severance, lease abandonment and other restructuring costs during the current and prior year period, respectively; • A $5 million charge associated with the impact of a currency devaluation in Argentina in the prior period; and • Lower variable compensation expense, the favorable impact of divestitures, and the realized cost reductions associated with restructuring actions between periods. Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Research and development expense $ 13 $ 15 $ (2 ) $ 41 $ 42 $ (1 ) Current Quarter - Research and development expense decreased mostly due to lower incentive compensation. Year-to-date - Research and development expense is generally consistent with the prior year period. Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Intangibles amortization expense $ 15 $ 19 $ (4 ) $ 47 $ 59 $ (12 ) Current Quarter - The lower intangibles amortization expense in the current quarter is driven by the impact of amortization related to the divested Avoca business in the prior quarter and Nutraceuticals business in the prior year quarter. Year-to-date - The lower intangibles amortization expense in the current year is driven by the impact of amortization related to the divested Avoca business in the current year and Nutraceuticals business in the prior year period. Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Equity and other income $ — $ — $ — $ 1 $ 3 $ (2 ) Current Quarter - Equity and other income was zero for the current and prior year quarter. Year-to-date - Equity and other income is lower than the prior year period, which included $2 million in China subsidies. Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Goodwill impairment $ 706 $ — $ 706 $ 706 $ — $ 706 36 Current Quarter - Ashland recorded a $706 million goodwill impairment charge in the current quarter. See Note G of the Notes to the Condensed Consolidated Financial Statements for more information. Year-to-date - Ashland recorded a $706 million goodwill impairment charge in the current year. See Note G of the Notes to the Condensed Consolidated Financial Statements for more information. Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Loss on acquisitions and divestitures, net $ — $ 99 $ (99 ) $ 165 $ 100 $ 65 Current Quarter - The prior year quarter included $99 million of charges related to the Nutraceuticals business sale completed in fiscal 2024. See Note B of the Notes to the Condensed Consolidated Financial Statements for more information. Year-to-date - Ashland recorded a $183 million impairment charge and a pre-tax gain on sale of $8 million associated with the Avoca business during the current year. In addition, Ashland recorded a pre-tax gain on sale of a land property of $11 million during the current year. Additionally, the prior year period included $99 million of charges related to the Nutraceuticals business sale completed in fiscal 2024 as well as legal fees associated with ongoing divestiture activity and acquisitions related due diligence costs. See Note B of the Notes to the Condensed Consolidated Financial Statements for more information. Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Net interest and other expense (income) Interest expense $ 15 $ 12 $ 3 $ 45 $ 38 $ 7 Interest income (1 ) (3 ) 2 (4 ) (8 ) 4 Income from restricted investments (22 ) (4 ) (18 ) (15 ) (51 ) 36 Other financing costs 3 2 1 8 7 1 $ (5 ) $ 7 $ (12 ) $ 34 $ (14 ) $ 48 Current Quarter - Net interest and other expense (income) decreased by $12 million during the current quarter compared to the prior year quarter. Interest expense increased primarily related to lower capitalized interest on capital projects in the current year quarter while interest income decreased primarily due to the decrease in cash equivalents during the current quarter compared to the prior year quarter. Restricted investments income of $22 million and $4 million included realized gains of $19 million compared to $1 million for the three months ended June 30, 2025 and 2024, respectively, and was the primary change between quarters. See Note E of the Notes to the Condensed Consolidated Financial Statements for more information on the restricted investments. Year-to-date - Net interest and other expense (income) increased by $48 million during the current year compared to the prior year period. Interest expense increased primarily related to lower capitalized interest on capital projects in the current year period while interest income decreased primarily due to the decrease in cash equivalents during the current year period compared to the prior year. Restricted investments income of $15 million and $51 million included realized gains of $5 million compared to $39 million for the nine months ended June 30, 2025 and 2024, respectively, and was the primary change between periods. See Note E of the Notes to the Condensed Consolidated Financial Statements for more information on the restricted investments. Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Other net periodic benefit loss $ 1 $ 2 $ (1 ) $ 4 $ 6 $ (2 ) Current Quarter - Other net periodic benefit loss for the three months ended June 30, 2025 primarily included interest cost of $3 million which was partially offset by expected return on plan assets of $2 million. Other net periodic benefit loss for the three months ended June 30, 2024 primarily included interest cost of $3 million which was partially offset by expected return on plan assets of $1 million. See Note K of the Notes to the Condensed Consolidated Financial Statements for more information. Year-to-date - Other net periodic benefit loss for the nine months ended June 30, 2025 primarily included interest cost of $10 million and a $1 million curtailment loss partially offset by expected return on plan assets of $7 million. 37 Other net periodic benefit loss for the nine months ended June 30, 2024 primarily included interest cost of $12 million which was partially offset by expected return on plan assets of $6 million. See Note K of the Notes to the Condensed Consolidated Financial Statements for more information. Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Income tax expense (benefit) $ 15 $ (101 ) $ 116 $ (19 ) $ (229 ) $ 210 Effective tax rate -2 % 144 % 2 % 467 % Current Quarter - Ashland’s effective tax rate in any interim period is subject to adjustments related to discrete items and the mix of domestic and foreign operating results. The overall effective tax rate was an expense of 2% for the three months ended June 30, 2025 and was primarily impacted by jurisdictional income mix, nondeductible goodwill impairment of $706 million charge and a net $16 million from unfavorable tax discrete items primarily related to return to provision adjustments and changes in uncertain tax positions. The overall effective tax rate was 144% for the three months ended June 30, 2024 and was primarily impacted by jurisdictional income mix, as well as net favorable discrete items of $104 million primarily related to the tax impact of the held for sale classification for the Nutraceuticals business. Year-to-date - Ashland’s effective tax rate in any interim period is subject to adjustments related to discrete items and the mix of domestic and foreign operating results. The overall effective tax rate was a benefit of 2% for the nine months ended June 30, 2025 and was primarily impacted by jurisdictional income mix, nondeductible goodwill impairment of $706 million, and a net $23 million from unfavorable tax discrete items primarily related to return to provision adjustments and changes to uncertain tax positions. The overall effective tax rate was 467% for the nine months ended June 30, 2024 and was primarily impacted by jurisdictional income mix, as well as net favorable discrete items of $231 million primarily related to changes in foreign tax activity and the tax impact of the held for sale classification for the Nutraceuticals business. Adjusted income tax expense (benefit) Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income (loss) and/or operating loss which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends. Tax specific key items are defined as the financial effects from tax specific financial transactions, tax law changes or other matters that fall within the definition of key items as previously described. The effective tax rate, excluding key items, which is a non-GAAP financial measure, has been prepared to illustrate the ongoing tax effects of Ashland’s operations. Management believes investors and analysts use this financial measure in assessing Ashland's business performance and that presenting this non-GAAP financial measure on a consolidated basis assists investors in better understanding Ashland’s ongoing business performance enhancing their ability to compare period-to-period financial results. The effective tax rate during the three and nine months ended June 30, 2025 was primarily impacted by jurisdictional income mix, the tax impact of cash repatriation, and changes in uncertain tax positions, while the effective tax rate during the three and nine months ended June 30, 2024 was significantly impacted by foreign tax reform related activity. 38 The following table is a calculation of the effective tax rate, excluding these key items. Three months ended Nine months ended June 30 June 30 (In millions) 2025 2024 2025 2024 Loss from continuing operations before income taxes $ (704 ) $ (70 ) $ (874 ) $ (49 ) Key items (pre-tax) (a) 754 147 968 194 Adjusted income from continuing operations before income taxes $ 50 $ 77 $ 94 $ 145 Income tax expense (benefit) $ 15 $ (101 ) $ (19 ) $ (229 ) Income tax rate adjustments: Tax effect of key items (b) 12 12 64 24 Tax specific key items: (c) Uncertain tax positions (5 ) (9 ) (1 ) (9 ) Restructuring and separation activity — 115 — 115 Other and tax reform related activity (8 ) — (19 ) 129 Total income tax rate adjustments (1 ) 118 44 259 Adjusted income tax expense $ 14 $ 17 $ 25 $ 30 Effective tax rate -2 % 144 % 2 % 467 % Effective Tax Rate, Excluding Key Items (Non-GAAP) (d) 28 % 23 % 26 % 21 % (a) See Adjusted EBITDA reconciliation table disclosed in this Management’s Discussion and Analysis of Financial Condition and Results of Operation for a summary of the key items, before tax. (b) The tax rate specific to the jurisdiction in which the key item originates is used to calculate the tax effect of key items. (c) For additional information on the effect that these tax specific key items had on EPS, see the adjusted diluted EPS table disclosed in this Management’s Discussion and Analysis of Financial Condition and Results of Operation. (d) Due to rounding conventions, the effective tax rate presented may not recalculate precisely based on the numbers disclosed within this table. Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Loss from discontinued operations, net of income taxes Performance Adhesives $ — $ — $ — $ (1 ) $ (3 ) $ 2 Composites/Marl facility — (1 ) 1 — (2 ) 2 Distribution (10 ) (3 ) (7 ) (10 ) (3 ) (7 ) Water Technologies — (4 ) 4 — (4 ) 4 Valvoline — — — 2 2 — Asbestos-related litigation (13 ) (17 ) 4 (13 ) (17 ) 4 $ (23 ) $ (25 ) $ 2 $ (22 ) $ (27 ) $ 5 Current Quarter - The activity for Distribution in the current and prior quarter represents subsequent adjustments that were made in conjunction with post-closing adjustments related to environmental liabilities. The activity for Composites/Marl facility and Water Technologies was related to post-closing adjustments and environmental liabilities in the prior year quarter. Asbestos activity in each quarter primarily relates to Ashland's annual update. Year-to-date - The activity for Performance Adhesives, Distribution and Valvoline in the current and prior year periods represents subsequent adjustments that were made in conjunction with post-closing disputes, environmental liabilities, and taxes. The activity for Composites/Marl facility and Water Technologies was related to post-closing adjustments and environmental liabilities in the prior year period. Asbestos activity in each period primarily relates to Ashland's annual update. 39 Other comprehensive income (loss) Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Other comprehensive income (loss), net of tax Unrealized translation gain (loss) $ 91 $ (25 ) $ 116 $ 46 $ 2 $ 44 Unrealized gain (loss) on commodity hedges (1 ) 2 (3 ) 2 2 — $ 90 $ (23 ) $ 113 $ 48 $ 4 $ 44 Current Quarter - Total other comprehensive income (loss), net of tax, for the current quarter increased $113 million compared to the prior year quarter primarily as a result of the following: • For the three months ended June 30, 2025 and 2024, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in gains of $91 million and losses of $25 million, respectively. The fluctuations in unrealized translation gains and losses are primarily due to translating foreign subsidiary financial statements from local currencies to U.S. Dollars. • For the three months ended June 30, 2025 and 2024, the change in commodity hedges is primarily due to the fluctuations of the market prices of the underlying commodities. Commodity hedges resulted in unrealized losses of $1 million and gains of $2 million for the three months ended June 30, 2025 and 2024, respectively. Year-to-date - Total other comprehensive income (loss), net of tax, for the current year increased $44 million compared to the prior year period primarily as a result of the following: • For the nine months ended June 30, 2025 and 2024, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in gains of $46 million and $2 million, respectively. The fluctuations in unrealized translation gains and losses are primarily due to translating foreign subsidiary financial statements from local currencies to U.S. Dollars. • For the nine months ended June 30, 2025 and 2024, the change in commodity hedges is primarily due to the fluctuations of the market prices of the underlying commodities. Commodity hedges resulted in unrealized gains of $2 million for both the nine months ended June 30, 2025 and 2024. Use of Non-GAAP Financial Measures Ashland has included within this document the following non-GAAP financial measures, on both a consolidated and reportable segment basis, which are not defined within U.S. GAAP and do not purport to be alternatives to net income (loss) or cash flows from operating activities as a measure of operating performance or cash flows: EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin EBITDA is defined as net income (loss), plus income tax expense (benefit), net interest and other expense (income), and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for discontinued operations and key items. Adjusted EBITDA margin is Adjusted EBITDA divided by sales. Management believes the use of EBITDA and Adjusted EBITDA measures on a consolidated and reportable segment basis assists investors in understanding the ongoing operating performance by presenting comparable financial results between periods. Ashland believes that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes and certain other charges that are highly variable from year to year, EBITDA and Adjusted EBITDA provide Ashland’s investors with performance measures that reflect the impact to operations from trends in changes in sales, margin and operating expenses, providing a perspective not immediately apparent from net income (loss) and operating loss. The adjustments Ashland makes to derive the non-GAAP financial measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in net income (loss) and operating loss and which Ashland does not consider to be the fundamental attributes or primary drivers of its business. EBITDA and Adjusted EBITDA provide disclosure on the same basis as that used by Ashland’s management to evaluate financial performance on a consolidated and reportable segment basis and provide consistency in our financial reporting, facilitate internal and external comparisons of Ashland’s historical operating performance and its segments and provide continuity to investors for comparability purposes. 40 Adjusted Diluted Earnings Per Share (EPS) Adjusted Diluted EPS is defined as income (loss) from continuing operations, adjusted for key items, net of tax, divided by the average outstanding diluted shares for the applicable period. The Adjusted Diluted EPS metric enables Ashland to demonstrate what effect key items have on an earnings per diluted share basis by taking income (loss) from continuing operations, adjusted for key items after tax that have been identified in the Adjusted EBITDA table, and dividing by the average outstanding diluted shares for the applicable period. Ashland’s management believes this presentation is helpful to illustrate how the key items have impacted this metric during the applicable period. Adjusted Diluted Earnings Per Share (EPS) Excluding Intangibles Amortization Expense The Adjusted Diluted EPS Excluding Intangible Amortization Expense is adjusted earnings per share adjusted for intangibles amortization expense net of tax, divided by the average outstanding diluted shares for the applicable period. The Adjusted Diluted EPS, Excluding Intangibles Amortization Expense metric enables Ashland to demonstrate the impact of non-cash intangibles amortization expense on EPS, in addition to the key items previously mentioned. Ashland’s management believes this presentation is helpful to illustrate how previous acquisitions impact applicable period results. Free Cash Flow, Ongoing Free Cash Flow and Ongoing Free Cash Flow Conversion Free Cash Flow is defined as operating cash flows less capital expenditures while Ongoing Free Cash Flow is operating cash flows less capital expenditures and certain other adjustments as applicable. Ongoing Free Cash Flow Conversion is Ongoing Free Cash flow divided by Adjusted EBITDA. These free cash flow metrics enable Ashland to provide a better indication of the ongoing cash being generated that is ultimately available for both debt and equity holders as well as other investment opportunities. Unlike cash flow provided by operating activities, Free Cash Flow and Ongoing Free Cash Flow include the impact of capital expenditures from continuing operations and other significant items impacting cash flow, providing a more complete picture of current and future cash generation. Free Cash Flow, Ongoing Free Cash Flow, and Free Cash Flow Conversion are non-GAAP liquidity measures that Ashland believes provide useful information to management and investors about Ashland's ability to convert Adjusted EBITDA to Ongoing Free Cash Flow. These liquidity measures are used regularly by Ashland's stakeholders and industry peers to measure the efficiency at providing cash from regular business activity. Free Cash Flow, Ongoing Free Cash Flow, and Free Cash Flow Conversion have certain limitations, including that they do not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments. The amount of mandatory versus discretionary expenditures can vary significantly between periods. Other disclosures on non-GAAP financial measures Although Ashland may provide forward-looking guidance for Adjusted EBITDA, Adjusted diluted EPS and Ongoing Free Cash Flow, Ashland is not reaffirming or providing forward-looking guidance for U.S. GAAP-reported financial measures or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP measure because it is unable to predict with reasonable certainty the ultimate outcome of certain significant items that affect these metrics such as domestic and international economic, political, legislative, regulatory and legal actions. In addition, certain economic conditions, such as recessionary trends, inflation, interest and monetary exchange rates, government fiscal policies and changes in the prices of certain key raw materials, can have a significant effect on operations and are difficult to predict with certainty. These non-GAAP financial measures should be considered supplemental in nature and should not be construed as more significant than comparable measures defined by U.S. GAAP. Limitations associated with the use of these non-GAAP financial measures include that these measures do not present all of the amounts associated with our results as determined in accordance with U.S. GAAP. The non-GAAP financial measures provided are used by Ashland management and may not be determined in a manner consistent with the methodologies used by other companies. EBITDA and Adjusted EBITDA provide a supplemental presentation of Ashland’s operating performance on a consolidated and reportable segment basis. Adjusted EBITDA generally includes adjustments for items that impact comparability between periods. In addition, certain financial covenants related to Ashland’s 2022 Credit Agreement are based on similar non-GAAP financial measures and are defined further in the sections that reference this metric. 41 EBITDA and Adjusted EBITDA EBITDA totaled loss of $683 million and income of $34 million for the three months ended June 30, 2025 and 2024, respectively, and loss of $713 million and income of $76 million for the nine months ended June 30, 2025 and 2024, respectively. EBITDA and Adjusted EBITDA results in the table below have been prepared to illustrate the ongoing effects of Ashland’s operations, which exclude certain key items previously described. Management believes the use of such non-GAAP measures on a consolidated and reportable segment basis assists investors in understanding the ongoing operating performance by presenting the financial results between periods on a more comparable basis. These operating key items for the applicable periods are summarized as follows: • Goodwill impairment – Ashland recorded a non-cash goodwill impairment charge of $706 million within the goodwill impairment caption of the Statements of Condensed Consolidated Comprehensive Income (Loss) for the three and nine months ended June 30, 2025. See Note G of the Notes to the Condensed Consolidated Financial Statements for more information; • Avoca business impairment and sale – During March 2025, Ashland sold substantially all of the net assets of its Avoca business. As a result, Ashland recorded an impairment charge and gain on sale within the loss on acquisitions and divestitures, net caption of the Statements of Condensed Consolidated Comprehensive Income (Loss) for the nine months ended June 30, 2025. See Note B of the Notes to the Condensed Consolidated Financial Statements for more information; • Accelerated depreciation – As a result of product line optimization activities at manufacturing facilities within the Life Sciences, Specialty Additives, and Personal Care reportable segments, Ashland recorded accelerated depreciation due to changes in the expected useful life of certain property, plant and equipment during the three and nine months ended June 30, 2025 and 2024. See Note D of the Notes to the Condensed Consolidated Financial Statements for more information; • Environmental reserve adjustments – Ashland is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively environmental remediation) at multiple locations. As a result of these activities, Ashland recorded adjustments during each year to its environmental liabilities and receivables primarily related to previously divested businesses or non-operational sites. See Note L of the Notes to the Condensed Consolidated Financial Statements for more information; • Restructuring, separation and other costs – Ashland periodically implements company-wide and targeted cost reduction programs related to acquisitions, divestitures and other cost reduction programs in order to enhance profitability through streamlined operations and an improved overall cost structure. Ashland often incurs severance, facility and integration costs associated with these programs. See Note D of the Notes to the Condensed Consolidated Financial Statements for further information on the restructuring activities; • Other plant optimization costs – During the three and nine months ended June 30, 2025 and 2024, Ashland incurred inventory adjustments and production costs associated with product line optimization actions; • Nutraceutical impairment – During the three months ended June 30, 2024, Ashland entered into an agreement to sell substantially all of the net assets of its Nutraceuticals business. As a result, Ashland recorded a $99 million impairment charge within the loss on acquisitions and divestitures, net caption of the Statements of Consolidated Comprehensive Income (Loss) for the three and nine months ended June 30, 2024. See Note B of the Notes to Condensed Consolidated Financial Statements for more information; • Argentina foreign currency devaluation – Following the enactment by the Argentina government of a 50% peso devaluation against the dollar, Ashland recorded a currency devaluation charge within the selling, general and administrative expense caption of the Statement of Condensed Consolidated Comprehensive Income (Loss) for the nine months ended June 30, 2024; • Held for sale depreciation and amortization – Represents the depreciation and amortization for the Avoca business assets during the three and nine months ended June 30, 2025 and the Nutraceuticals business assets during the three and nine months ended June 30, 2024; and 42 • Income on divestitures, net – Ashland recorded income of zero and $10 million during the three and nine months ended June 30, 2025. The income was related to the pre-tax gains in connection with the sale of a land property. See Note B of the Notes to Condensed Consolidated Financial Statements for more information. Non-operating key items affecting EBITDA During the current and prior years, there were certain key items that were not included in operating loss but were excluded to arrive at Adjusted EBITDA. These non-operating key items for the applicable periods are summarized as follows: • Loss on pension plan remeasurements – During the nine months ended June 30, 2025, Ashland recognized a curtailment loss for pension plan remeasurement for defined benefit pension plan. See Note K of the Notes to the Condensed Consolidated Financial Statements for more information. Three months ended Nine months ended June 30 June 30 (In millions) 2025 2024 2025 2024 Net income (loss) $ (742 ) $ 6 $ (877 ) $ 153 Income tax expense (benefit) 15 (101 ) (19 ) (229 ) Net interest and other expense (income) (5 ) 7 34 (14 ) Depreciation and amortization (a) 49 54 149 166 EBITDA (683 ) (34 ) (713 ) 76 Loss from discontinued operations, net of income taxes 23 25 22 27 Key items included in EBITDA: Goodwill impairment 706 — 706 — Avoca business impairment and sale — — 175 — Accelerated depreciation 27 8 40 56 Environmental reserve adjustments 30 35 33 41 Restructuring, separation and other costs 7 3 18 28 Other plant optimization costs 3 4 12 5 Loss on pension plan remeasurements — — 1 — Nutraceuticals impairment and sale — 99 — 99 Argentina currency devaluation impact — — — 5 Held for sale depreciation and amortization — (1 ) (2 ) (1 ) Income on divestitures, net — — (10 ) — Total key items included in EBITDA 773 148 973 233 Adjusted EBITDA $ 113 $ 139 $ 282 $ 336 Total key items included in EBITDA $ 773 $ 148 $ 973 $ 233 Unrealized gains on securities (19 ) (1 ) (5 ) (39 ) Total key items, before tax $ 754 $ 147 $ 968 $ 194 (a) Depreciation and amortization excludes accelerated depreciation of $8 million and $21 million for Life Sciences for the three and nine months ended June 30, 2025, respectively, $19 million for Specialty Additives for both the three and nine months ended June 30, 2025, $7 million and $55 million for Specialty Additives for the three and nine months ended June 30, 2024, respectively, and $1 million for Personal Care for both the three and nine months ended June 30, 2024, which is included as a key item within this table as a component of Adjusted EBITDA. Depreciation and amortization includes $2 million for Personal Care associated with the Avoca business assets for the nine months ended June 30, 2025, and $1 million for Life Sciences associated with the Nutraceuticals business assets for both the three and nine months ended June 30, 2024, which is included as a key item within this table as a component of Adjusted EBITDA. 43 Diluted EPS and Adjusted Diluted EPS The following table reflects the U.S. GAAP calculation for the income (loss) from continuing operations adjusted for the cumulative diluted EPS effect for key items after tax that have been identified in the Adjusted EBITDA table in the previous section. Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income (loss) and/or operating loss which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends. The Adjusted Diluted EPS for the income (loss) from continuing operations in the following table has been prepared to illustrate the ongoing effects of Ashland’s operations. Management believes investors and analysts use this financial measure in assessing Ashland's business performance and that presenting this non-GAAP financial measure on a consolidated basis assists investors in better understanding Ashland’s ongoing business performance and enhances their ability to compare period-to-period financial results. In addition to the operating key items previously described, additional non-operating key items for the applicable periods are summarized as follows: • Unrealized gains on securities – represents gains recognized on restricted investments related to the Asbestos trust and Environmental trust for each period. See Note E of the Notes to Condensed Consolidated Financial Statements for more information; • Uncertain tax positions – represents the impact from the settlement of uncertain tax positions with various tax authorities for the three and nine months ended June 30, 2025 and 2024; • 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 – primarily impacted by jurisdictional income mix, the tax impact of cash repatriation, and changes in uncertain tax positions for the three and nine months ended June 30, 2025, while the three and nine months ended June 30, 2024 were mostly impacted by foreign tax reform related activity. 44 Three months ended Nine months ended June 30 June 30 2025 2024 2025 2024 Diluted EPS from continuing operations (as reported) $ (15.70 ) $ 0.60 $ (18.39 ) $ 3.53 Key items, before tax: Goodwill impairment 15.41 — 15.19 — Avoca business impairment and sale — — 3.73 — Accelerated depreciation 0.59 0.16 0.85 1.10 Environmental reserve adjustments 0.65 0.69 0.71 0.80 Restructuring, separation and other costs 0.15 0.06 0.38 0.55 Other plant optimization costs 0.07 0.08 0.26 0.10 Loss on pension plan remeasurements — — 0.02 — Nutraceuticals impairment and sale — 1.94 — 1.94 Argentina currency devaluation impact — — — 0.10 Held for sale depreciation and amortization — (0.02 ) (0.04 ) (0.02 ) Unrealized gains on securities (0.41 ) (0.02 ) (0.10 ) (0.76 ) Income on divestitures, net — — (0.21 ) — Key items, before tax 16.46 2.89 20.79 3.81 Tax effect of key items (a) (0.26 ) (0.24 ) (1.36 ) (0.48 ) Key items, after tax 16.20 2.65 19.43 3.33 Tax specific key items: Uncertain tax positions 0.11 0.18 0.03 0.18 Restructuring, separation and other costs — (2.25 ) — (2.25 ) Other and tax reform related activity 0.17 — 0.40 (2.54 ) Tax specific key items (b) 0.28 (2.07 ) 0.43 (4.61 ) Total key items 16.48 0.58 19.86 (1.28 ) Adjusted Diluted EPS from Continuing Operations (non-GAAP) $ 0.78 $ 1.18 $ 1.47 $ 2.25 Amortization expense adjustment (net of tax) (c) $ 0.26 $ 0.31 $ 0.83 $ 0.94 Adjusted Diluted EPS from Continuing Operations (non-GAAP) Excluding Intangibles Amortization Expense $ 1.04 $ 1.49 $ 2.30 $ 3.19 (a) Represents the diluted EPS impact from the tax effect of the key items that are identified above. (b) Represents the diluted EPS impact from tax specific financial transactions, tax law changes or other matters that fall within the definition of tax specific key items. For additional explanation of these tax specific key items, see the income tax expense (benefit) discussion within the Statements of Condensed Consolidated Comprehensive Income (Loss) caption review section above. (c) Amortization expense adjustment (net of tax) tax rates were 20% and 21% for the three and nine months ended June 30, 2025, respectively, and 20% for both the three and nine months ended June 30, 2024. RESULTS OF OPERATIONS – REPORTABLE SEGMENT REVIEW Ashland’s reportable segments include Life Sciences, Personal Care, Specialty Additives, and Intermediates. Unallocated and Other includes corporate governance activities and certain legacy matters. Results of Ashland’s reportable segments are presented based on its management and internal accounting structure. The structure is specific to Ashland; therefore, the financial results of Ashland’s reportable segments are not necessarily comparable with similar information for other companies. Ashland allocates all significant costs to its reportable segments except for certain significant company-wide restructuring activities, certain corporate governance costs and other costs or activities that relate to former businesses that Ashland no longer operates. The service cost component of pension and other postretirement benefits costs is allocated to each reportable segment on a ratable basis; while the remaining components of pension and other postretirement benefits costs are recorded within the other net periodic benefit loss caption on the Statements of Condensed Consolidated Comprehensive Income (Loss). Ashland refines its expense allocation methodologies to the reportable segments from time to time as internal accounting practices are improved, more refined information becomes available and the industry or market changes. Significant revisions to Ashland’s methodologies are adjusted for all segments on a retrospective basis. 45 The following table discloses sales, operating income (loss), depreciation and amortization and EBITDA by reportable segment: Three months ended Nine months ended June 30 June 30 (In millions - unaudited) 2025 2024 Change 2025 2024 Change SALES Life Sciences $ 162 $ 195 $ (33 ) $ 468 $ 617 $ (149 ) Personal Care 147 175 (28 ) 426 473 (47 ) Specialty Additives 131 150 (19 ) 380 429 (49 ) Intermediates 33 36 (3 ) 104 108 (4 ) Intersegment sales (a) (10 ) (12 ) 2 (31 ) (36 ) 5 $ 463 $ 544 $ (81 ) $ 1,347 $ 1,591 $ (244 ) OPERATING INCOME (LOSS) Life Sciences (b) $ (343 ) $ 43 $ (386 ) $ (301 ) $ 125 $ (426 ) Personal Care 25 31 (6 ) 64 59 5 Specialty Additives (c) (345 ) 10 (355 ) (343 ) (40 ) (303 ) Intermediates 4 6 (2 ) 6 22 (16 ) Unallocated and other (d) (49 ) (151 ) 102 (262 ) (223 ) (39 ) $ (708 ) $ (61 ) $ (647 ) $ (836 ) $ (57 ) $ (779 ) DEPRECIATION EXPENSE Life Sciences (e) $ 17 $ 9 $ 8 $ 48 $ 29 $ 19 Personal Care (f) 7 10 (3 ) 23 27 (4 ) Specialty Additives (g) 34 20 14 60 97 (37 ) Intermediates 3 3 — 9 9 — $ 61 $ 42 $ 19 $ 140 $ 162 $ (22 ) AMORTIZATION EXPENSE Life Sciences $ 5 $ 6 $ (1 ) $ 13 $ 18 $ (5 ) Personal Care 8 10 (2 ) 26 32 (6 ) Specialty Additives 2 3 (1 ) 7 8 (1 ) Intermediates — — — 1 1 — $ 15 $ 19 $ (4 ) $ 47 $ 59 $ (12 ) EBITDA (h) Life Sciences $ (321 ) $ 58 $ (379 ) $ (240 ) $ 172 $ (412 ) Personal Care 40 51 (11 ) 113 118 (5 ) Specialty Additives (309 ) 33 (342 ) (276 ) 65 (341 ) Intermediates 7 9 (2 ) 16 32 (16 ) Unallocated and other (49 ) (151 ) 102 (262 ) (223 ) (39 ) $ (632 ) $ — $ (632 ) $ (649 ) $ 164 $ (813 ) (a) Intersegment sales from Intermediates are accounted for at prices that approximate fair value. All other intersegment sales are accounted for at cost. (b) Includes goodwill impairment of $375 million for Life Sciences for the three and nine months ended June 30, 2025. (c) Includes goodwill impairment of $331 million for Specialty Additives for the three and nine months ended June 30, 2025. (d) Includes a $8 million gain on sale and a $183 million impairment charge related to the sale of the Avoca business for the nine months ended June 30, 2025, and a $99 million impairment charge related to the sale of the Nutraceuticals business for the three and nine months ended June 30, 2024, within the loss on acquisitions and divestitures, net caption of the Statements of Condensed Consolidated Income (Loss). (e) Depreciation includes accelerated depreciation of $8 million and $21 million for Life Sciences for the three and nine months ended June 30, 2025, respectively. (f) Depreciation includes accelerated depreciation of $1 million for Personal Care for both the three and nine months ended June 30, 2024. (g) Depreciation includes accelerated depreciation of $19 million for Specialty Additives for both the three and nine months ended June 30, 2025, respectively, and $7 million and $55 million for the three and nine months ended June 30, 2024. (h) Excludes loss from discontinued operations, net of income taxes and other net periodic benefit loss. See the Statements of Condensed Consolidated Comprehensive Income (Loss) for applicable amounts excluded. 46 Life Sciences Life Sciences is comprised of pharmaceuticals, nutrition, agricultural chemicals, diagnostic films (formerly known as advanced materials) and fine chemicals. Pharmaceutical solutions include controlled release polymers, disintegrants, tablet coating, thickeners, solubilizers, and tablet binders. Nutrition solutions include thickeners, stabilizers, emulsifiers and additives for enhancing mouthfeel, controlling moisture migration, reducing oil uptake and binding structured foods. Customers include pharmaceutical, food, beverage, hospitals and radiologists and industrial manufacturers. The Nutraceuticals business was sold in August 2024. The following table provides a reconciliation of the change in sales for the Life Sciences reportable segment. Three months ended Nine months ended (In millions) June 30, 2025 June 30, 2025 Sales change Divestiture $ (25 ) $ (95 ) Volume (5 ) (37 ) Price/mix (5 ) (16 ) Foreign Currency 2 (1 ) $ (33 ) $ (149 ) The following table provides a reconciliation of the change in operating income (loss) for the Life Sciences reportable segment. Three months ended Nine months ended (In millions) June 30, 2025 June 30, 2025 Operating income (loss) change Goodwill impairment $ (375 ) $ (375 ) Cost (8 ) (18 ) Price/mix (5 ) (17 ) Volume — (10 ) Divestiture — (7 ) Foreign Currency 2 1 $ (386 ) $ (426 ) 47 EBITDA and Adjusted EBITDA reconciliation The following EBITDA presentation is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Life Sciences. There were key items in the three and nine months ended June 30, 2025 and 2024. These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above. Life Sciences Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Operating income (loss) $ (343 ) $ 43 $ (386 ) $ (301 ) $ 125 $ (426 ) Depreciation and amortization (a) 14 16 (2 ) 40 48 (8 ) EBITDA $ (329 ) $ 59 (388 ) $ (261 ) $ 173 (434 ) Goodwill impairment 375 — 375 375 — 375 Accelerated depreciation 8 — 8 21 — 21 Environmental reserve adjustments — 1 (1 ) — 1 (1 ) Held for sale depreciation and amortization — (1 ) 1 — (1 ) 1 Other plant optimization costs — — — 2 — 2 Adjusted EBITDA $ 54 $ 59 $ (5 ) $ 137 $ 173 $ (36 ) Operating income (loss) as a percent of sales -211.7 % 22.1 % Not meaningful -64.3 % 20.3 % Not meaningful Adjusted EBITDA as a percent of sales 33.3 % 30.3 % 300 bps 29.3 % 28.0 % 130 bps (a) Depreciation and amortization excludes accelerated depreciation of $8 million and $21 million for Life Sciences for the three and nine months ended June 30, 2025, respectively, and includes $1 million associated with the Nutraceuticals business held for sale assets for both the three and nine months ended June 30, 2024, which is included as a key item within this table as a component of Adjusted EBITDA. Three months ended June 30, 2025 compared to three months ended June 30, 2024 Life Sciences' sales, operating income (loss) and Adjusted EBITDA decreased in the current quarter primarily due to the divestiture of the Nutraceuticals business, higher costs, including the effects of portfolio optimization activities and accelerated depreciation, and unfavorable pricing, partially offset by favorable foreign currency exchange. The three months ended June 30, 2025 included a goodwill impairment charge of $375 million. Fiscal 2025 year-to-date compared to fiscal 2024 year-to-date Life Sciences' sales, operating income (loss) and Adjusted EBITDA decreased in the current period primarily due to the divestiture of the Nutraceuticals business, higher costs, including the effects of portfolio optimization activities and accelerated depreciation, lower volume and unfavorable price/mix actions partially offset by favorable foreign currency exchange. The nine months ended June 30, 2025 included a goodwill impairment charge of $375 million. Personal Care Personal Care is comprised of biofunctionals, microbial protectants (preservatives), skin care, sun care, oral care, hair care and household solutions. These businesses have a broad range of natural, nature-derived, biodegradable, and high-performance ingredients for customer driven solutions to help protect, renew, moisturize and revitalize skin and hair, and provide solutions for toothpastes, mouth washes and rinses, denture cleaning and care for teeth. Personal Care supplies nature-derived rheology ingredients, biodegradable surface wetting agents, performance encapsulates, and specialty polymers for household, industrial and institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies. The Avoca business was sold in March 2025. 48 The following table provides a reconciliation of the change in sales for the Personal Care reportable segment. Three months ended Nine months ended (In millions) June 30, 2025 June 30, 2025 Sales change Divestiture $ (17 ) $ (27 ) Volume (10 ) (16 ) Price/mix (4 ) (5 ) Foreign Currency 3 1 $ (28 ) $ (47 ) The following table provides a reconciliation of the change in operating income for the Personal Care reportable segment. Three months ended Nine months ended (In millions) June 30, 2025 June 30, 2025 Operating income change Price/mix $ (4 ) $ (6 ) Volume (4 ) (4 ) Divestiture (site closure) (2 ) — Cost 3 14 Foreign Currency 1 1 $ (6 ) $ 5 EBITDA and Adjusted EBITDA reconciliation The following EBITDA presentation is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Personal Care. There were key items in the three and nine months ended June 30, 2025 and 2024. These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above. Personal Care Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Operating income $ 25 $ 31 $ (6 ) $ 64 $ 59 $ 5 Depreciation and amortization 15 19 (4 ) 51 58 (7 ) EBITDA $ 40 $ 50 (10 ) $ 115 $ 117 (2 ) Accelerated depreciation — 1 (1 ) — 1 (1 ) Held for sale depreciation and amortization — — — (2 ) — (2 ) Other plant optimization costs 1 — 1 3 — 3 Adjusted EBITDA $ 41 $ 51 $ (10 ) $ 116 $ 118 $ (2 ) Operating income as a percent of sales 17.0 % 17.7 % -70 bps 15.0 % 12.5 % 250 bps Adjusted EBITDA as a percent of sales 27.9 % 29.1 % -120 bps 27.2 % 24.9 % 230 bps (a) Depreciation and amortization includes zero and $2 million for Personal Care associated with the Avoca business assets for the three and nine months ended June 30, 2025, respectively, and excludes accelerated depreciation of $1 million for both the three and nine months ended June 30, 2024, which is included as a key item within this table as a component of Adjusted EBITDA. Three months ended June 30, 2025 compared to three months ended June 30, 2024 Personal Care's sales, operating income and Adjusted EBITDA decreased in the current quarter due to lower volume, including the divestiture of the Avoca business and other portfolio optimization actions, and unfavorable price/mix partially offset by lower costs and favorable foreign currency exchange. Fiscal 2025 year-to-date compared to fiscal 2024 year-to-date Personal Care's sales decreased in the current period primarily due to lower volume, including the divestiture of the Avoca business and other portfolio optimization actions, while operating income increased primarily due to lower costs partially offset by unfavorable price/mix. Adjusted EBITDA remained relatively consistent compared to the prior period. 49 Specialty Additives Specialty Additives is comprised of rheology- and performance-enhancing additives serving the architectural coatings, construction, energy, automotive and various industrial markets. Solutions include coatings additives for architectural paints, finishes and lacquers, cement- and gypsum- based dry mortars, ready-mixed joint compounds, synthetic plasters for commercial and residential construction, and specialty materials for industrial applications. Products include rheology modifiers (cellulosic and associative thickeners), foam control agents, surfactants and wetting agents, pH neutralizers, advanced ceramics used in catalytic converters, and environmental filters, ingredients that aid the manufacturing process of ceramic capacitors, plasma display panels and solar cells, ingredients for textile printing, thermoplastic metals and alloys for welding. Products help improve desired functional outcomes through rheology modification and control, water retention, workability, adhesive strength, binding power, film formation, deposition and suspension and emulsification. Customers include global paint manufacturers, electronics and automotive manufacturers, textile mills, the construction industry, and welders. The following table provides a reconciliation of the change in sales for the Specialty Additives reportable segment. Three months ended Nine months ended (In millions) June 30, 2025 June 30, 2025 Sales change Volume $ (20 ) $ (43 ) Price/mix (1 ) (6 ) Foreign Currency 2 — $ (19 ) $ (49 ) The following table provides a reconciliation of the change in operating income (loss) for the Specialty Additives reportable segment. Three months ended Nine months ended (In millions) June 30, 2025 June 30, 2025 Operating income (loss) change Goodwill impairment $ (331 ) $ (331 ) Costs (19 ) 39 Volume (5 ) (9 ) Price/mix — (2 ) $ (355 ) $ (303 ) EBITDA and Adjusted EBITDA reconciliation The following EBITDA presentation is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Specialty Additives. There were key items in the three and nine months ended June 30, 2025 and 2024. These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above. Specialty Additives Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Operating income (loss) $ (345 ) $ 10 $ (355 ) $ (343 ) $ (40 ) $ (303 ) Depreciation and amortization (a) 17 16 1 48 50 (2 ) EBITDA (328 ) 26 (354 ) (295 ) 10 (305 ) Goodwill impairment 331 — 331 331 — 331 Accelerated depreciation 19 7 12 19 55 (36 ) Environmental reserve adjustments 2 1 1 2 1 1 Other plant optimization costs 2 4 (2 ) 7 5 2 Adjusted EBITDA $ 26 $ 38 $ (12 ) $ 64 $ 71 $ (7 ) Operating income (loss) as a percent of sales -263.4 % 6.7 % Not meaningful -90.3 % -9.3 % Not meaningful Adjusted EBITDA as a percent of sales 19.8 % 25.3 % -550 bps 16.8 % 16.6 % 20 bps 50 (a) Depreciation and amortization for Specialty Additives excludes accelerated depreciation of $19 million for the three and nine months ended June 30, 2025, and $7 million and $55 million for the three and nine months ended June 30, 2024, respectively, which is included as a key item within this table as a component of Adjusted EBITDA. Three months ended June 30, 2025 compared to three months ended June 30, 2024 Specialty Additives sales, operating income (loss) and Adjusted EBITDA for the quarter decreased as a result of lower volume, higher costs, including the effects of portfolio optimization activities and accelerated depreciation partially offset by favorable foreign currency exchange. The three months ended June 30, 2025 included a goodwill impairment charge of $331 million. Fiscal 2025 year-to-date compared to fiscal 2024 year-to-date Specialty Additives sales, operating income (loss) and Adjusted EBITDA for the current period decreased primarily due to lower volume offset by lower costs, including the effects of portfolio optimization activities and accelerated depreciation. The nine months ended June 30, 2025 included a goodwill impairment charge of $331 million. Intermediates Intermediates is comprised of the production of 1,4 butanediol (BDO) and related derivatives, including nmethylpyrrolidone. These products are used as chemical intermediates in the production of engineering polymers and polyurethanes, and as specialty process solvents in a wide array of applications including electronics, pharmaceuticals, water filtration membranes and more. BDO is also supplied to Life Sciences, Personal Care, and Specialty Additives for use as a raw material. The following table provides a reconciliation of the change in sales for the Intermediates reportable segment. Three months ended Nine months ended (In millions) June 30, 2025 June 30, 2025 Sales change Price/mix $ (3 ) $ (12 ) Foreign Currency (1 ) — Volume 1 8 $ (3 ) $ (4 ) The following table provides a reconciliation of the change in operating income for the Intermediates reportable segment. Three months ended Nine months ended (In millions) June 30, 2025 June 30, 2025 Operating income change Cost $ (2 ) $ — Price/mix (1 ) (20 ) Volume — 3 Foreign Currency 1 1 $ (2 ) $ (16 ) EBITDA reconciliation The following EBITDA presentation is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Intermediates. Intermediates had no key items for the three and nine months ended June 30, 2025 or 2024. Intermediates Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Operating income $ 4 $ 6 $ (2 ) $ 6 $ 22 $ (16 ) Depreciation and amortization 3 3 — 10 10 — EBITDA $ 7 $ 9 $ (2 ) $ 16 $ 32 $ (16 ) Operating income as a percent of sales 12.1 % 16.7 % -460 bps 5.8 % 20.4 % -1460 bps EBITDA as a percent of sales 21.2 % 25.0 % -380 bps 15.4 % 29.6 % -1420 bps 51 Three months ended June 30, 2025 compared to three months ended June 30, 2024 Intermediates' sales, operating income and EBITDA decreased primarily due to unfavorable price/mix and higher costs. Fiscal 2025 year-to-date compared to fiscal 2024 year-to-date Intermediates' sales, operating income and EBITDA for the current period decreased primarily due to unfavorable price/mix partially offset by higher volume. Unallocated and other The following table summarizes the key components of the Unallocated and other’s operating loss between the three and nine months ended June 30, 2025 and 2024. Unallocated and other Three months ended June 30 Nine months ended June 30 (In millions) 2025 2024 Change 2025 2024 Change Restructuring activities $ (7 ) $ (3 ) $ (4 ) $ (18 ) $ (28 ) $ 10 Environmental expenses (28 ) (33 ) 5 (31 ) (40 ) 9 Loss on acquisitions and divestitures, net — (99 ) 99 (165 ) (100 ) (65 ) Argentina currency devaluation impact — — — — (5 ) 5 Other expenses (primarily governance and legacy expenses) (14 ) (16 ) 2 (48 ) (50 ) 2 Total expense $ (49 ) $ (151 ) $ 102 $ (262 ) $ (223 ) $ (39 ) Three months ended June 30, 2025 compared to three months ended June 30, 2024 Unallocated and other recorded expense of $49 million and $151 million for the three months ended June 30, 2025 and 2024, respectively. The current and prior year quarter included expense of $7 million and $3 million, respectively, for restructuring activities mainly comprised of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs during the current and prior year quarter, respectively. The current and prior year quarter included $28 million and $33 million for environmental expenses, respectively. The prior year quarter included a $99 million loss on acquisitions and divestitures, net due to an impairment charge within the Nutraceuticals business. See Note B of the Notes to the Condensed Consolidated Financial Statements for more information. Other expenses between periods were driven by changes in governance and legacy expenses primarily associated with fluctuations in foreign currency, deferred compensation and variable incentive compensation. Fiscal 2025 year-to-date compared to fiscal 2024 year-to-date Unallocated and other recorded expense of $262 million and $223 million for the nine months ended June 30, 2025 and 2024, respectively. The current and prior year period included expense of $18 million and $28 million, respectively, for restructuring activities mainly comprised of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs during the current and prior year period, respectively. The current and prior year period included $31 million and $40 million for environmental expenses, respectively. The current year period included a loss on divestiture of $165 million, primarily related to the $183 million impairment of the Avoca business during the December quarter, $8 million pre-tax gain on the final sale of the Avoca business, and $11 million gain on the sale of a property, compared to a $99 million loss on acquisitions and divestitures, net due to an impairment charge within the Nutraceuticals business during the prior year period. The prior year period also included expense of $5 million related to the devaluation of the currency in Argentina during the prior year. Other expenses between periods were driven by changes in governance and legacy expenses primarily associated with fluctuations in foreign currency, deferred compensation and variable incentive compensation, including stock compensation expense in the current period. 52 FINANCIAL POSITION Liquidity Ashland believes that cash flow from operations, availability under existing credit facilities and arrangements, current cash and investment balances and the ability to obtain other financing, if necessary, will provide adequate cash funds for Ashland’s foreseeable working capital needs, capital expenditures at existing facilities, dividend payments and debt service obligations. Ashland’s cash requirements are subject to change as business conditions warrant and opportunities arise. The timing and size of any new business ventures or acquisitions that the Company may complete may also impact its cash requirements. During April 2024, Ashland authorized a financing program offered through JP Morgan and Taulia Alliance. Under this program, JP Morgan and its affiliates may purchase certain confirmed receivables directly from suppliers pursuant to the terms of a separate arrangement entered into between JPMorgan and Taulia Alliance and such Suppliers. There were no changes to Ashland's standard payment terms with its suppliers in connection with this program. Ashland provides no guarantees to JP Morgan and Taulia Alliance under this program. The program was implemented during June 2025 and has been actively offered to suppliers. As of June 30, 2025 participation in the program was not significant. Cash flows Ashland’s cash flows from operating, investing and financing activities, as reflected in the Statements of Condensed Consolidated Cash Flows, are summarized as follows: Nine months ended June 30 (In millions) 2025 2024 Cash provided (used) by: Operating activities from continuing operations $ 94 $ 382 Investing activities from continuing operations — (54 ) Financing activities from continuing operations (161 ) (310 ) Discontinued operations (27 ) (38 ) Effect of currency exchange rate changes on cash and cash equivalents 1 2 Net decrease in cash and cash equivalents $ (93 ) $ (18 ) Cash and cash equivalents decreased $93 million for the nine months ended June 30, 2025 and $18 million for the nine months ended June 30, 2024. The $93 million decrease for the nine months ended June 30, 2025 was primarily driven by payment of cash dividends, additions to property, plant and equipment and stock repurchase activity of $57 million, $64 million and $100 million, respectively, while discontinued operations cash flows were outflows of $27 million. These outflows were partially offset by inflows from operating activities from continuing operations, proceeds from the sale of Avoca and proceeds from the sale of a land property of $94 million, $16 million and $11million, respectively. The $18 million decrease for the nine months ended June 30, 2024 was primarily driven by payment of cash dividends, additions to property, plant and equipment, and stock repurchase activity of $59 million, $99 million, and $230 million, respectively. Operating cash flows from continuing operations were inflows of $382 million. The change in cash flows from operating activities from continuing operations was primarily driven by U.S. and Foreign Accounts Receivable Sales Program activity, $132 million negative impact between periods, as well as unfavorable working capital, primarily related to changes in inventory and incentive compensation payouts between periods. See the Statements of Condensed Consolidated Cash Flows for additional details. 53 Free Cash Flow and other liquidity resources The following represents Ashland’s calculation of Free Cash Flow and Ongoing Free Cash Flow for the disclosed periods. Free Cash Flow does not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments. Nine months ended June 30 (In millions) 2025 2024 Total cash flows provided by operating activities from continuing operations $ 94 $ 382 less: Additions to property, plant and equipment (64 ) (99 ) Free Cash Flow 30 283 Cash (inflows) outflows from U.S. Accounts Receivable Sales Program (a) 11 (11 ) Cash inflows from Foreign Accounts Receivable Sales Program (b) (13 ) (123 ) Restructuring-related payments (c) 23 10 Environmental and related litigation payments (d) 24 23 Ongoing Free Cash Flow $ 75 $ 182 Net income (loss) $ (877 ) $ 153 Adjusted EBITDA (e) $ 282 $ 336 Operating Cash Flow Conversion (f) Not meaningful 250 % Ongoing Free Cash Flow Conversion (g) 27 % 54 % (a) Represents activity associated with the U.S. Accounts Receivable Sales Program impacting each period presented. (b) Represents activity associated with the Foreign Accounts Receivable Sales Program impacting each period presented. (c) Restructuring payments incurred during each period. (d) Represents cash outflows associated with environmental and related litigation payments which will be reimbursed by the environmental trust. (e) See Adjusted EBITDA reconciliation. (f) Operating Cash Flow Conversion is defined as Cash flows provided by operating activities from continuing operations divided by Net income (loss). (g) Ongoing Free Cash Flow Conversion is defined as Ongoing Free Cash Flow divided by Adjusted EBITDA. Working capital (current assets minus current liabilities, excluding long-term debt due within one year) amounted to $704 million and $705 million as of June 30, 2025 and September 30, 2024, respectively. Liquid assets (cash, cash equivalents and accounts receivable) amounted to 97% and 111% of current liabilities as as of June 30, 2025 and September 30, 2024, respectively. The decrease in Ongoing Free Cash Flows was driven by lower Adjusted EBITDA, higher variable compensation payouts, increased inventory, and inventory reductions in the prior year due to inventory control measures during that period offset by lower additions to property, plant and equipment. The following summary reflects Ashland’s cash and cash equivalents, unused borrowing capacity and liquidity as of: June 30 September 30 (In millions) 2025 2024 Cash and investment securities Cash and cash equivalents $ 207 $ 300 Restricted investments (a) 350 368 Unused borrowing capacity and liquidity Revolving credit facility 596 596 U.S. Accounts Receivable Sales Program — — Foreign Accounts Receivable Sales Program — — (a) Includes $228 million and $248 million related to the Asbestos trust and $122 million and $120 million related to the Environmental trust as of June 30, 2025 and September 30, 2024, respectively. 54 The borrowing capacity remaining under the 2022 Credit Agreement was $596 million, which reflects the full $600 million revolving credit facility less a reduction of $4 million for letters of credit outstanding at June 30, 2025. In total, Ashland’s available liquidity position, which includes cash and cash equivalents and the revolving credit facility, was $803 million at June 30, 2025, compared to $896 million at September 30, 2024. Ashland had no available liquidity under the U.S. and Foreign Accounts Receivable Sales Programs as of June 30, 2025. Ashland also maintained $350 million of restricted investments to pay for future asbestos claims and environmental remediation and related litigation. Capital resources Debt The following summary reflects Ashland’s debt as of: June 30 September 30 (In millions) 2025 2024 Short-term debt $ — $ — Long-term debt (less debt issuance cost discounts) (a) 1,382 1,349 Total debt $ 1,382 $ 1,349 (a) Includes $10 million and $12 million of debt issuance cost discounts as of June 30, 2025 and September 30, 2024 , respectively. Debt as a percent of capital employed was 42% and 32% at June 30, 2025 and September 30, 2024, respectively. At June 30, 2025, Ashland’s total debt had an outstanding principal balance of $1,418 million, discounts of $26 million, and debt issuance costs of $10 million. Ashland has no long-term debt (excluding debt issuance costs) maturing within 2025 and 2026, $4 million due in fiscal 2027, $586 million due in 2028, $97 million in 2029, and zero in 2030. Ashland credit ratings Ashland’s corporate credit ratings remained unchanged at BB+ by Standard & Poor’s and Ba1 by Moody’s Investor Services. As of June 30, 2025, both Moody’s Investor Services and Standard & Poor's outlook remained at stable. Subsequent changes to these ratings or outlook may have an effect on Ashland’s borrowing rate or ability to access capital markets in the future. Ashland debt covenant restrictions Ashland's 2022 credit agreement contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional subsidiary indebtedness, restrictions on subsidiary distributions, investments, mergers, sale of assets and restricted payments and other customary limitations. As of June 30, 2025, Ashland is in compliance with all debt agreement covenant restrictions under the 2022 Credit Agreement. The maximum consolidated net leverage ratio permitted under the 2022 Credit Agreement is 4.0. The 2022 Credit Agreement defines the consolidated net leverage ratio as the ratio of consolidated indebtedness minus unrestricted cash and cash equivalents to consolidated EBITDA (Covenant Adjusted EBITDA) for any measurement period. In general, the 2022 Credit Agreement defines Covenant Adjusted EBITDA as net income (loss) plus consolidated interest charges, taxes, depreciation and amortization expense, fees and expenses related to capital market transactions and proposed or actual acquisitions and divestitures, restructuring and integration charges, noncash stock and equity compensation expense, and any other nonrecurring expenses or losses that do not represent a cash item in such period or any future period; less any noncash gains or other items increasing net income (loss). The computation of Covenant Adjusted EBITDA differs from the calculation of EBITDA and Adjusted EBITDA, which have been reconciled above in the “consolidated review” section. In general, consolidated indebtedness includes debt plus all purchase money indebtedness, banker’s acceptances and bank guaranties, deferred purchase price of property or services, attributable indebtedness and guarantees. At June 30, 2025, Ashland’s calculation of the consolidated net leverage ratio was 2.9. 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 June 30, 2025, Ashland’s calculation of the consolidated interest coverage ratio was 6.5. 55 Any change in Covenant Adjusted EBITDA of $100 million would have an approximate 0.6x effect on the consolidated net leverage ratio and a 1.6x effect on the consolidated interest coverage ratio. The change in consolidated indebtedness of $100 million would affect the consolidated leverage ratio by approximately 0.3x. Additional capital resources Total equity Total equity decreased by $979 million since September 30, 2024 to $1,889 million at June 30, 2025. The decrease of $979 million was due to net loss of $877 million, stock repurchase activity of $101 million (includes $1 million in excise tax), and dividends of $57 million partially offset by $46 million of deferred translation gains, $8 million of common stock issued, and $2 million for unrealized gains on commodity hedges. 2023 Stock Repurchase program On June 28, 2023, Ashland's board of directors authorized a new evergreen $1 billion common share repurchase program (the "2023 Stock Repurchase Program"). The new authorization terminated and replaced the 2022 Stock Repurchase Program, which had $200 million outstanding at the date of termination. As of June 30, 2025, $520 million remained available for repurchase under the 2023 Stock Repurchase Program. Stock repurchase program agreements The following table provides the common stock repurchase activity for the three and nine months ended June 30, 2025 and 2024: Three months ended Nine months ended June 30 June 30 (In millions, except per share data) 2025 2024 2025 2024 Number of shares repurchased — 1.30 1.50 2.60 Weighted-average price per share (a) $ — $ 98.92 $ 64.90 $ 90.12 Aggregate purchase price (a) $ — $ 130 $ 100 $ 230 Program NA 2023 Stock Repurchase Program 2023 Stock Repurchase Program 2023 Stock Repurchase Program (a) Includes transactions costs. Stockholder dividends On May 6, 2025, Ashland's Board declared a quarterly cash dividend of 41.5 cents per share on the company's common stock representing a 2.5 percent increase from the previous quarter. The dividend was paid in the third quarter of fiscal 2025. Dividends of 40.5 cents per share were paid in the first and second quarters of fiscal 2024 and the third quarter of fiscal 2024 and 38.5 cents per share in the first and second quarters of fiscal 2024. Capital expenditures Capital expenditures were $64 million for the nine months ended June 30, 2025, compared to $99 million for the nine months ended June 30, 2024. CRITICAL ACCOUNTING POLICIES The preparation of Ashland’s Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses, and the disclosures of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets (including goodwill and other intangible assets), income taxes, other liabilities and receivables associated with asbestos litigation and environmental remediation. These accounting policies are discussed in detail in “Management’s Discussion and Analysis – Critical Accounting Policies” in Ashland’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions. Management has reviewed the estimates affecting these items with the Audit Committee of Ashland’s Board of Directors. No material changes have been made to the valuation techniques during the nine months ended June 30, 2025. 56 Goodwill Ashland reviews goodwill for impairment annually as of July 1 or when events and circumstances indicate an impairment may have occurred. Ashland tests goodwill for impairment by comparing the estimated fair value of the reporting units to the related carrying value. If the fair value of the reporting unit is lower than its carrying amount, goodwill is written down for the amount by which the carrying amount exceeds fair value. However, the loss recognized cannot exceed the carrying amount of goodwill. Reporting units are defined as either operating segments or one level below the operating segments for which discrete financial information is available and reviewed by the business management. Ashland determined that its reporting units are Life Sciences, Personal Care, Specialty Additives and Intermediates. Ashland makes various estimates and assumptions in determining the estimated fair value of each reporting unit using a combination of discounted cash flow models and valuations based on earnings multiples for guideline public companies in each reporting unit’s industry peer group, when externally quoted market prices are not readily available. Discounted cash flow models are reliant on various assumptions, including projected business results, long-term growth factors and weighted-average cost of capital. Management judgment is involved in estimating these variables, and they include uncertainties since they are forecasting future events. Ashland performs sensitivity analyses by using a range of inputs to confirm the reasonableness of the long-term growth rate and weighted average cost of capital estimates. Additionally, Ashland compares the indicated equity value to Ashland’s market capitalization and evaluates the resulting implied control premium/discount to determine if the estimated enterprise value is reasonable. During the third quarter fiscal 2025, Ashland experienced a continued decline in the market price of its Common Stock. Ashland also experienced slowing growth due to weakening macroeconomic environment that is dampening consumer sentiment and demand globally which resulted in lower growth and lower margins for the Life Sciences and Specialty Additives reporting units then what was previously forecasted. These factors led Ashland to determine that triggering events occurred, and a quantitative goodwill impairment assessment was performed as of June 30, 2025. Following the completion of this quantitative analysis, Ashland concluded that the fair value of Personal Care reporting unit exceeded its carrying value by more than 100%. The Intermediates reporting unit has no associated goodwill. The carrying values of the Life Sciences and Specialty Additives reporting units exceeded their respective fair values, resulting in non-cash goodwill impairment charges of $375 million and $331 million, respectively, for a total goodwill impairment charge of $706 million, which was recorded within the goodwill impairment caption of the Statements of Condensed Consolidated Comprehensive Income (Loss) for the both three and nine months ended June 30, 2025. Remaining goodwill after impairment was $466 million for Life Sciences and $112 million for Specialty Additives. For further information, see Note G of the Notes to the Condensed Consolidated Financial Statements. The below table provides a sensitivity analysis for Life Sciences and Specialty Additives reporting units remaining goodwill, utilizing reasonably possible changes in the assumptions for the shorter term and residual growth rates and the discount rate, to demonstrate the potential impacts to the estimated fair values. The below table provides, in isolation, the estimated fair value impacts related to a 25-basis point increase to discount rate or a 25-basis point decrease to residual growth rates, both of which would result in incremental impairment charges to the Life Sciences and Specialty Additives reporting units. Approximate Percent Change in Estimated Fair Value +25 bps -25 bps Discount Rate Growth Rate Life Sciences -2.5% -1.3% Specialty Additives -2.6% -1.5% Assumptions inherent in the valuation methodologies include estimates of future projected business results (principally sales and EBITDA), long-term growth rates, and the weighted-average cost of capital. Ashland performed sensitivity analyses by using a range of inputs to confirm the reasonableness of long-term growth rate and weighted average cost of capital estimates. Significant assumptions utilized in the impairment analysis included the weighted-average cost of capital, ranging between 12.50% and 13.75%, and terminal growth rate, ranging between 2.0% and 4.0% depending on the reporting unit. Based on sensitivity analysis performed on two key 57 assumptions in the discounted cash flow model at June 30, 2025, a 1% decrease in the long-term growth factor assumption or a 1% increase in the weighted average cost of capital assumption for the Personal Care reporting unit would not have resulted in a fair value below the carrying value. For further information, see Note G of the Notes to the Condensed Consolidated Financial Statements. OUTLOOK Ashland is updating its full-year fiscal 2025 outlook to reflect a stable but subdued macroeconomic environment and continued caution across customer channels. Demand trends remain mixed: pharma continues to recover and show resilience, Personal Care is stable with early signs of company-specific momentum, while Specialty Additives and Intermediates remain under pressure. Ashland maintains a measured outlook, supported by innovation tracking ahead of plan, early signs of recovery in its “globalize” platforms, and the execution of high-impact self-help initiatives. These strategic levers are helping to mitigate near-term volume pressure and position the company for improved performance going forward. Tariff-related uncertainty persists, and the company continues to monitor the evolving regulatory landscape. While long-term rules are still being finalized, Ashland does not expect a material direct impact to fiscal year 2025. At the same time, Ashland is benefiting from an FX tailwind, while other input costs and pricing dynamics remain stable. Raw material costs are steady, and year-over-year pricing pressure is easing as the company laps prior actions. These conditions are expected to support margin performance through the fourth quarter. Ashland continues to prioritize controllable levers. The company’s $30 million restructuring program is expected to generate approximately $7.5 million in savings in the fourth quarter. Progress continues on the $60 million manufacturing network optimization initiative. These efforts, combined with strong execution, are expected to support continued margin strength. Free Cash Flow generation was strong in the third quarter, and Ashland expects continued healthy conversion in the fourth quarter. Based on these factors, Ashland now expects full-year fiscal 2025 sales of approximately $1.825 billion to $1.850 billion and Adjusted EBITDA in the range of $400 million to $410 million. While the company has narrowed its guidance to reflect muted near-term growth, current assumptions are weighted toward the lower end of the range, reflecting a prudent base-case stance amid ongoing uncertainty, while underscoring the resilience of Ashland’s business model. 58 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Ashland’s market risk exposure at June 30, 2025 is generally consistent with the types of market risk exposures presented in Ashland’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024.