Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CONDENSED CONSOLIDATED COMPREHENSIVE INCOME (LOSS)
Three months ended
December 31
(In millions except per share data - unaudited)
2025
2024
Sales - Note P
$
386
$
405
Cost of sales - Note Q
281
294
Gross profit
105
111
Selling, general and administrative expense - Note Q
86
78
Research and development expense
13
13
Intangibles amortization expense - Note G
15
17
Equity and other income
1
1
Income (loss) on divestitures, net - Note B
2
( 183
)
Operating loss
( 6
)
( 179
)
Net interest and other expense
8
28
Other net periodic benefit loss - Note K
1
2
Loss from continuing operations before income taxes
( 15
)
( 209
)
Income tax benefit - Note J
( 1
)
( 43
)
Loss from continuing operations
( 14
)
( 166
)
Income from discontinued operations, net of income taxes - Note C
2
1
Net loss
$
( 12
)
$
( 165
)
PER SHARE DATA
Basic earnings (loss) per share - Note M
Loss from continuing operations
$
( 0.30
)
$
( 3.51
)
Income from discontinued operations
0.04
0.01
Net loss
$
( 0.26
)
$
( 3.50
)
Diluted earnings (loss) per share - Note M
Loss from continuing operations
$
( 0.30
)
$
( 3.51
)
Income from discontinued operations
0.04
0.01
Net loss
$
( 0.26
)
$
( 3.50
)
COMPREHENSIVE INCOME (LOSS)
Net loss
$
( 12
)
$
( 165
)
Other comprehensive income (loss), net of tax
Unrealized translation gain (loss)
2
( 94
)
Unrealized gain on commodity hedges
—
1
Other comprehensive income (loss) - Note N
2
( 93
)
Comprehensive loss
$
( 10
)
$
( 258
)
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
2
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions - unaudited)
December 31
2025
September 30
2025
ASSETS
Current assets
Cash and cash equivalents
$
304
$
215
Accounts receivable, net (a) - Note H
190
242
Inventories - Note F
565
568
Other assets
95
180
Total current assets
1,154
1,205
Noncurrent assets
Property, plant and equipment
Cost
3,363
3,355
Accumulated depreciation
2,182
2,154
Net property, plant and equipment
1,181
1,201
Goodwill - Note G
707
705
Intangibles - Note G
548
563
Operating lease assets, net - Note I
100
103
Restricted investments - Note E
297
297
Asbestos insurance receivable, net (b) - Note L
124
127
Deferred income taxes
157
157
Other assets
251
253
Total noncurrent assets
3,365
3,406
Total assets
$
4,519
$
4,611
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables
$
167
$
189
Accrued expenses and other liabilities
180
213
Current operating lease obligations - Note I
19
21
Total current liabilities
366
423
Noncurrent liabilities
Long-term debt - Note H
1,387
1,384
Asbestos litigation reserves - Note L
372
389
Deferred income taxes
31
31
Employee benefit obligations - Note K
99
96
Operating lease obligations - Note I
83
85
Other liabilities
303
299
Total noncurrent liabilities
2,275
2,284
Commitments and contingencies - Note I and L
Equity - Note N
1,878
1,904
Total liabilities and equity
$
4,519
$
4,611
(a) Accounts receivable, net includes an allowance for credit losses of $ 3 million and $ 2 million at December 31, 2025 and September 30, 2025 , respectively.
(b) Asbestos insurance receivable, net includes an allowance for credit losses of $ 2 million at both December 31, 2025 and September 30, 2025 .
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
3
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF CONDENSED CONSOLIDATED CASH FLOWS
Three months ended
December 31
(In millions - unaudited)
2025
2024
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
Net loss
$
( 12
)
$
( 165
)
Income from discontinued operations, net of income taxes
( 2
)
( 1
)
Adjustments to reconcile loss from continuing operations to cash flows from operating activities:
Depreciation and amortization
48
51
Original issue discount and debt issuance costs amortization
2
2
Deferred income taxes
1
( 3
)
Gain from sales of property, plant and equipment
( 2
)
—
Income from affiliates
( 1
)
( 1
)
Stock based compensation expense
4
4
Loss from excess tax deduction on stock based compensation
( 2
)
—
(Income) loss from restricted investments
( 7
)
12
Loss on divestitures, net
—
183
Pension contributions
( 2
)
( 4
)
Loss on pension and other postretirement plan remeasurements
—
1
Change in operating assets and liabilities
98
( 109
)
Total cash flows provided (used) by operating activities from continuing operations
125
( 30
)
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES FROM CONTINUING OPERATIONS
Additions to property, plant and equipment
( 14
)
( 23
)
Proceeds from disposal of property, plant and equipment
4
—
Proceeds from settlement of Company-owned life insurance contracts
5
—
Company-owned life insurance payments
( 1
)
( 1
)
Funds restricted for specific transactions
( 7
)
—
Reimbursements from restricted investments
15
6
Proceeds from sale of securities
12
5
Purchases of securities
( 12
)
( 5
)
Total cash flows provided (used) by investing activities from continuing operations
2
( 18
)
CASH FLOWS USED BY FINANCING ACTIVITIES FROM CONTINUING OPERATIONS
Cash dividends paid
( 19
)
( 19
)
Stock based compensation employee withholding taxes paid in cash
( 2
)
( 3
)
Total cash flows used by financing activities from continuing operations
( 21
)
( 22
)
CASH PROVIDED (USED) BY CONTINUING OPERATIONS
106
( 70
)
CASH USED BY DISCONTINUED OPERATIONS
Operating cash flows
( 16
)
( 10
)
Total cash used by discontinued operations
( 16
)
( 10
)
Effect of currency exchange rate changes on cash and cash equivalents
( 1
)
( 1
)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
89
( 81
)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
215
300
CASH AND CASH EQUIVALENTS - END OF PERIOD
$
304
$
219
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
4
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE A – SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with United States ("U.S.") generally accepted accounting principles for interim financial reporting ("U.S. GAAP") and U.S. Securities and Exchange Commission ("SEC") regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. These Condensed Consolidated Financial Statements omit certain information and footnote disclosures required for complete annual financial statements and, therefore, should be read in conjunction with the Ashland Inc. and consolidated subsidiaries ("Ashland" or the "Company") Annual Report on Form 10-K for the fiscal year ended September 30, 2025, filed with the SEC on November 20, 2025. Results of operations for the three months ended December 31, 2025, are not necessarily indicative of the expected results for the remainder of the fiscal year.
Ashland is comprised of the following reportable segments: Life Sciences, Personal Care, Specialty Additives and Intermediates. Unallocated and Other includes corporate governance activities and certain legacy matters. For additional information about Ashland's reportable segments, see Note Q.
Use of estimates, risks and uncertainties
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, revenues 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, environmental remediation, asbestos litigation, accounting for goodwill and other indefinite-lived intangible assets and income taxes. 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.
Ashland’s results are affected by domestic and international economic, political, legislative, regulatory and legal actions. 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. While Ashland maintains reserves for anticipated liabilities and carries various levels of insurance, Ashland could be affected by civil, criminal, regulatory or administrative actions, claims or proceedings relating to asbestos, environmental remediation, income taxes or other matters.
New accounting pronouncements
A description of new U.S. GAAP accounting standards issued or adopted during the current quarter is required in interim financial reporting. A detailed listing of new accounting standards relevant to Ashland is included in the Annual Report on Form 10-K for the fiscal year ended September 30, 2025 . There were no new accounting pronouncements recently adopted or issued that are expected to have a material impact on the Condensed Consolidated Financial Statements.
NOTE B – DIVESTITURES
Avoca business sale
On March 31, 2025, Ashland completed the sale its Avoca business to Mane SA (Ashland signed the definitive agreement to sell substantially all of the net assets of Avoca in December 2024). Proceeds from the sale were $ 16 million, net of transaction costs. 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) within the income (loss) on divestitures, net caption of the Statement of Condensed Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2024.
The impairment charge includes the impact of the related inside tax basis differences associated with the impaired assets. The tax benefit associated with the sale is included within the income tax benefit caption of the Statement of Condensed Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2024.
5
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.
Other corporate assets
During the three months ended December 31, 2025, Ashland completed the sale of an excess land property with a net book value of $ 2 million. Ashland received net proceeds of $ 4 million and recorded a pre-tax gain of $ 2 million within the income (loss) on divestitures, net caption of the Statement of Condensed Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2025.
NOTE C – DISCONTINUED OPERATIONS
Ashland has divested certain businesses that have qualified as discontinued operations. The operating results from these divested businesses and subsequent adjustments related to ongoing assessments of certain retained liabilities and income tax items have been recorded within the income from discontinued operations, net of income taxes caption in the Statements of Condensed Consolidated Comprehensive Income (Loss) for all periods presented.
Due to the ongoing assessment of certain matters associated with previous divestitures, subsequent adjustments to these divestitures may continue in future periods in the income from discontinued operations, net of income taxes caption in the Statements of Condensed Consolidated Comprehensive Income (Loss).
The following divested businesses represent disposal groups that qualified as discontinued operations in previous periods and impacted discontinued operations for the three months ended December 31, 2025 and 2024:
• The sale of Ashland Water Technologies (Water Technologies) business divested in 2014; and
• Ashland is subject to liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims result primarily from indemnification obligations undertaken in 1990 in connection with the sale of Riley Stoker Corporation ("Riley"), a former subsidiary, which qualified as a discontinued operation and from the acquisition during 2009 of Hercules LLC (formerly Hercules Incorporated) ("Hercules"), an indirect wholly-owned subsidiary of Ashland. Adjustments to the recorded asbestos litigation reserves and related insurance receivables are recorded within the income from discontinued operations, net of income taxes caption within the Statements of Condensed Consolidated Comprehensive Income (Loss). See Note L for more information related to the adjustments on asbestos litigation reserves and receivables.
Components of amounts reflected in the Statements of Condensed Consolidated Comprehensive Income (Loss) related to discontinued operations are presented in the following table:
Three months ended
December 31
(In millions)
2025
2024
Water Technologies
$
2
$
—
Asbestos-related litigation
—
1
$
2
$
1
NOTE D – RESTRUCTURING ACTIVITIES
Ashland periodically implements restructuring programs related to acquisitions, divestitures and other cost reduction programs in order to enhance profitability through streamlined operations and an improved overall cost structure.
Restructuring costs
During fiscal 2025, Ashland initiated a restructuring plan to offset the impact from the Nutraceuticals business sale completed in fiscal 2024, the Avoca business sale completed in fiscal 2025, and other portfolio optimization actions ("2025 Restructuring Program"). As a part of this program, Ashland is also advancing a multi-year manufacturing network optimization to improve operational cost and strengthen its competitive position. This program continued into fiscal 2026.
During fiscal 2023, Ashland implemented targeted organizational restructuring actions to reduce costs. This program is now completed.
6
The following tables detail the amount of restructuring severance expense related to these programs.
Three months ended December 31, 2025
Three months ended December 31, 2024
(In millions)
Severance expense (a)
Utilization (cash paid)
Severance expense (a)
Utilization (cash paid)
2025 Restructuring program
$
1
$
( 2
)
$
4
$
( 1
)
2023 Restructuring program
1
( 2
)
( 2
)
( 1
)
Total
$
2
$
( 4
)
$
2
$
( 2
)
(a) Severance expense is recorded within the selling, general and administrative expense caption of the Statements of Condensed Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2025 and 2024.
The following table details at December 31, 2025, the amount of restructuring severance liabilities related to these programs.
(In millions)
2025 Restructuring Program
2023 Restructuring Program
Balance at September 30, 2025 (a)
$
5
$
1
Restructuring reserve
1
1
Utilization (cash paid)
( 2
)
( 2
)
Balance at December 31, 2025 (a)
$
4
$
—
(a) The restructuring severance liabilities associated with these programs is recorded within accrued expenses and other liabilities in the Condensed Consolidated Balance Sheets at December 31, 2025 and September 30, 2025 .
Plant optimization actions
Ashland's portfolio optimization actions have included manufacturing network optimization projects associated with carboxymethylcellulose ("CMC"), industrial methylcellulose ("MC"), vinyl pyrrolidone and derivatives ("VP&D") and hydroxyethylcellulose ("HEC").
During the three months ended December 31, 2025, Ashland incurred $ 3 million of accelerated depreciation for product line optimization activities associated with a Specialty Additives manufacturing facility, which was recorded within the cost of sales caption of the Statement of Condensed Consolidated Comprehensive Income (Loss).
NOTE E – FAIR VALUE MEASUREMENTS
As required by U.S. GAAP, Ashland uses applicable guidance for defining fair value, the initial recording and periodic remeasurement of certain assets and liabilities measured at fair value and related disclosures for instruments measured at fair value. Fair value accounting guidance establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. The three levels within the fair value hierarchy are described as follows.
Level 1 – Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3 – Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date. Unobservable inputs reflect Ashland’s own assumptions about what market participants would use to price the asset or liability. The inputs are developed based on the best information available in the circumstances, which might include Ashland’s own financial data such as internally developed pricing models, discounted cash flow methodologies, as well as instruments for which the fair value determination requires significant management judgment.
For assets that are measured using quoted prices in active markets (Level 1), the total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs (Level 2) are primarily valued by reference to
7
quoted prices of similar assets or liabilities in active markets, adjusted for any terms specific to that asset or liability. For all other assets and liabilities for which unobservable inputs are used (Level 3), fair value is derived through the use of fair value models, such as a discounted cash flow model or other standard pricing models that Ashland deems reasonable.
The following table summarizes financial instruments subject to recurring fair value measurements as of December 31, 2025:
(In millions)
Carrying value
Total
fair value
Level 1
Level 2
Level 3
Assets
Cash and cash equivalents
$
304
$
304
$
304
$
—
$
—
Restricted investments (a)(b)
347
347
347
—
—
Investment of captive insurance company (c)
6
6
6
—
—
Foreign currency derivatives (d)
1
1
—
1
—
Total assets at fair value
$
658
$
658
$
657
$
1
$
—
Liabilities
Commodity derivatives (e )
$
1
$
1
$
—
$
1
$
—
Total liabilities at fair value
$
1
$
1
$
—
$
1
$
—
(a) Includes $ 297 million within restricted investments and $ 50 million within other current assets in the Condensed Consolidated Balance Sheet .
(b) Includes $ 225 million related to the Asbestos trust and $ 122 million related to the Environmental trust.
(c) Included in other noncurrent assets in the Condensed Consolidated Balance Sheet.
(d) Included in accounts receivable, net in the Condensed Consolidated Balance Sheet.
(e) Included in accrued expenses and other liabilities in the Condensed Consolidated Balance Sheet.
The following table summarizes financial instruments subject to recurring fair value measurements as of September 30, 2025:
(In millions)
Carrying value
Total
fair value
Level 1
Level 2
Level 3
Assets
Cash and cash equivalents
$
215
$
215
$
215
$
—
$
—
Restricted investments (a)(b)
347
347
347
—
—
Investment of captive insurance company (c)
5
5
5
—
—
Commodity derivatives (d)
1
1
—
1
—
Total assets at fair value
$
568
$
568
$
567
$
1
$
—
Liabilities
Foreign currency derivatives (e)
$
1
$
1
$
—
$
1
$
—
Commodity derivatives (e)
1
1
—
1
—
Total liabilities at fair value
$
2
$
2
$
—
$
2
$
—
(a) Includes $ 297 million within restricted investments and $ 50 million within other current assets in the Condensed Consolidated Balance Sheet.
(b) Includes $ 231 million related to the Asbestos trust and $ 116 million related to the Environmental trust .
(c) Included in other noncurrent assets in the Condensed Consolidated Balance Sheet.
(d) Included in accounts receivable, net in the Condensed Consolidated Balance Sheet.
(e) Included in accrued expenses and other liabilities in the Condensed Consolidated Balance Sheet.
Restricted investments
Ashland maintains certain investments in Company restricted renewable annual trusts for the purpose of paying future asbestos indemnity and defense costs and future environmental remediation and related litigation costs. The financial instruments are designated as investment securities, classified as Level 1 measurements within the fair value hierarchy. These investment securities were classified primarily as noncurrent restricted investment assets, with $ 50 million classified within other current assets, in the Condensed Consolidated Balance Sheets at both December 31, 2025 and September 30, 2025.
8
The following table presents gross unrealized gains and losses for the restricted investments as of:
Gross
Gross
(In millions)
Adjusted Cost
Unrealized Gain
Unrealized Loss
Fair Value
December 31, 2025
Demand deposit
$
4
$
—
$
—
$
4
Equity mutual fund
102
68
—
170
Fixed income mutual fund
205
—
( 32
)
173
Fair value
$
311
$
68
$
( 32
)
$
347
September 30, 2025
Demand deposit
$
3
$
—
$
—
$
3
Equity mutual fund
103
67
—
170
Fixed income mutual fund
205
—
( 31
)
174
Fair value
$
311
$
67
$
( 31
)
$
347
The following table presents the investment income, net gains and losses realized, funds restricted for specific transactions, and disbursements related to restricted investments:
Three months ended
December 31
(In millions)
2025
2024
Investment income (a)
$
6
$
5
Net gains (losses) (a)
2
( 17
)
Funds restricted for specific transactions
7
—
Disbursements
( 15
)
( 6
)
(a) Included in the net interest and other expense caption within the Statements of Condensed Consolidated Comprehensive Income (Loss).
Foreign currency derivatives
Ashland conducts business in a variety of foreign currencies. Accordingly, Ashland regularly uses foreign currency derivative instruments to manage exposure on certain transactions denominated in foreign currencies to curtail potential earnings volatility effects of certain assets and liabilities, including short-term intercompany loans, denominated in currencies other than Ashland’s functional currency of an entity. These derivative contracts generally require exchange of one foreign currency for another at a fixed rate at a future date and generally have maturities of less than twelve months. All contracts are valued at fair value with net changes in fair value recorded within the selling, general and administrative expense caption within the Statements of Condensed Consolidated Comprehensive Income (Loss). The impacts of these contracts were largely offset by gains and losses resulting from the impact of changes in exchange rates on transactions denominated in non-functional currencies. The following table summarizes the gains recognized within the Statements of Condensed Consolidated Comprehensive Income (Loss):
Three months ended
December 31
(In millions)
2025
2024
Foreign currency derivative gains (losses)
$
1
$
( 15
)
The following table summarizes the fair values of the outstanding foreign currency derivatives included in accounts receivable, net and accrued expenses and other liabilities of the Condensed Consolidated Balance Sheets as of:
December 31
September 30
(In millions)
2025
2025
Foreign currency derivative assets
$
1
$
—
Notional contract values
135
44
Foreign currency derivative liabilities
$
—
$
1
Notional contract values
33
128
9
Commodity derivatives
To manage its exposure to the market price volatility of natural gas consumed by its U.S. plants during the manufacturing process, Ashland regularly enters into forward contracts that are designated as cash flow hedges.
The following table summarizes the net losses recognized within the cost of sales caption of the Statements of Condensed Consolidated Comprehensive Income (Loss):
Three months ended
December 31
(In millions)
2025
2024
Commodity derivative losses
$
—
$
( 1
)
The following table summarizes the fair values of the outstanding commodity derivatives included in accounts receivable, net and accrued expenses and other liabilities of the Condensed Consolidated Balance Sheets as of:
December 31
September 30
(In millions)
2025
2025
Commodity derivative assets
$
—
$
1
Notional contract values
3
6
Commodity derivative liabilities
$
1
$
1
Notional contract values
7
7
Other financial instruments
At December 31, 2025 and September 30, 2025 , Ashland's long-term debt (including the current portion and excluding debt issuance cost discounts) had a carrying value of $ 1,397 million and $ 1,394 million, respectively, compared to a fair value of $ 1,383 million and $ 1,366 million, respectively. The fair values of long-term debt are based on quoted market prices (level 1 of the fair value hierarchy).
NOTE F – INVENTORIES
Inventories are carried at the lower of cost or net realizable value. Inventories are stated at cost using the weighted-average cost method. This method values inventories using average costs for raw materials and most recent production costs for labor and overhead.
The following table summarizes Ashland’s inventories as of:
December 31
September 30
(In millions)
2025
2025
Finished products
$
421
$
421
Raw materials, supplies and work in process
144
147
$
565
$
568
NOTE G – GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Ashland tests goodwill and other indefinite-lived intangible assets for impairment annually as of July 1 or whenever events and circumstances indicate an impairment may have occurred.
No indicators of impairment were identified during the three months ended December 31, 2025.
The following is a progression of goodwill by reportable segment for the three months ended December 31, 2025:
Life
Personal
Specialty
(In millions)
Sciences
Care
Additives
Intermediates
Total
Balance at September 30, 2025 (a)
$
466
$
127
$
112
$
—
$
705
Currency translation
1
—
1
—
2
Balance at December 31, 2025 (a)
$
467
$
127
$
113
$
—
$
707
10
(a) As of both December 31, 2025 and September 30, 2025, there were accumulated impairments of $ 375 million, $ 356 million, $ 505 million and $ 90 million related to the Life Sciences, Personal Care, Specialty Additives and Intermediates reportable segments, respectively.
Other intangible assets
Other intangible assets principally consist of trademarks and trade names, intellectual property and customer lists. Intangible assets classified as finite are amortized on a straight-line basis over their estimated useful lives. The cost of trademarks and trade names is amortized principally over 3 to 20 years , intellectual property over 3 to 20 years , and customer lists over 10 to 24 years .
Ashland annually reviews, as of July 1, indefinite-lived intangible assets for possible impairment or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable.
No indicators of impairment were identified for indefinite-lived trademarks and trade names during the three months ended December 31, 2025 .
Other intangible assets were comprised of the following as of:
December 31, 2025
September 30, 2025
Gross
Net
Gross
Net
carrying
Accumulated
carrying
carrying
Accumulated
carrying
(In millions)
amount
amortization
amount
amount
amortization
amount
Definite-lived intangible assets
Trademarks and trade names
$
75
$
( 40
)
$
35
$
75
$
( 39
)
$
36
Intellectual property
683
( 646
)
37
683
( 638
)
45
Customer lists
615
( 417
)
198
614
( 410
)
204
Total definite-lived intangible assets
1,373
( 1,103
)
270
1,372
( 1,087
)
285
Indefinite-lived intangible assets
Trademarks and trade names
278
—
278
278
—
278
Total indefinite-lived intangible assets
$
1,651
$
( 1,103
)
$
548
$
1,650
$
( 1,087
)
$
563
Amortization expense recognized on other intangible assets was $ 15 million and $ 17 million for the three months ended December 31, 2025 and 2024 , respectively, and is included within the intangibles amortization expense caption of the Statements of Condensed Consolidated Comprehensive Income (Loss). Estimated amortization expense for future periods is $ 59 million in 2026 (includes three months actual and nine months estimated), $ 37 million in 2027, $ 35 million in 2028, $ 27 million in 2029 and $ 19 million in 2030. Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions and divestitures, potential impairment, accelerated amortization, or other events.
NOTE H – DEBT AND OTHER FINANCING ACTIVITIES
The following table summarizes Ashland’s long-term debt as of:
(In millions)
December 31, 2025
September 30, 2025
3.375 % Senior Notes, due 2031
$
450
$
450
2.00 % Senior Notes, due 2028 (Euro 500 million principal)
588
586
6.875 % Notes, due 2043
282
282
6.50 % Junior Subordinated Notes, due 2029
73
72
Other (a)
( 6
)
( 6
)
Long-term debt (less debt issuance costs)
$
1,387
$
1,384
(a) Other includes $ 9 million and $ 10 million of debt issuance costs as of December 31, 2025 and September 30, 2025 , respectively. The current portion of the long-term debt was zero for both December 31, 2025 and September 30, 2025 .
The scheduled aggregate maturities for long-term debt by year (excluding debt issuance costs) are as follows as of December 31, 2025 : zero in 2026, $ 4 million in 2027, $ 588 million in 2028, $ 97 million in 2029, zero in 2030 and $ 450 million in 2031.
Accounts receivable facilities and off-balance sheet arrangements
Ashland continues to maintain its U.S. Accounts Receivable Sales Program, which was entered into during fiscal 2021, and its Foreign Accounts Receivable Sales Program, which was entered into during fiscal 2024. Under these
11
programs, Ashland accounts for the accounts receivable transferred to buyers as sales. Ashland recognizes any gains or losses based on the excess of proceeds received net of buyer’s discounts and fees compared to the carrying value of the accounts receivable. Proceeds received, net of buyer’s discounts and fees, are recorded within the operating activities of the Statements of Condensed Consolidated Cash Flows. Losses on sale of accounts receivable, including related transaction expenses are recorded within the net interest and other expense caption of the Statements of Condensed Consolidated Comprehensive Income (Loss). Ashland regularly assesses its servicing obligations and records them as assets or liabilities when appropriate. Ashland also monitors its obligation with regards to the limited guarantee and records the resulting guarantee liability when warranted. When applicable, Ashland discloses the amount of the accounts receivable that serves as over-collateralization as a restricted asset.
U.S. Accounts Receivable Sales Program
Ashland recognized a loss of less than $ 1 million and $ 1 million within the Statements of Condensed Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2025 and 2024, respectively, within the net interest and other expense caption associated with sales under the program. Ashland has recorded $ 59 million in sales at December 31, 2025 , against the buyer’s limit, which was $ 59 million at December 31, 2025 compared to $ 59 million of sales at September 30, 2025 against the buyer's limit, which was $ 59 million at September 30, 2025 . Ashland transferred $ 71 million and $ 75 million in accounts receivable to the special purpose entity as of December 31, 2025 and September 30, 2025, respectively. Ashland recorded liabilities related to its service obligations and limited guarantee as of both December 31, 2025 and September 30, 2025 , of less than $ 1 million.
For the three months ended December 31, 2025 and 2024 , the year-to-date gross cash proceeds received for accounts receivable transferred and derecognized were $ 31 million and $ 95 million, respectively, of which $ 31 million and $ 102 million were collected, which includes collections from sales in prior years transferred to the buyer. The difference between accounts receivable transferred and derecognized versus collected of zero and $ 7 million for the three months ended December 31, 2025 and 2024, respectively, represents the impact of a net offset and a net reduction in accounts receivable sales volume during each period, respectively.
Foreign Accounts Receivable Sales Program
Ashland recognized a loss of less than $ 1 million within the Statements of Condensed Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2025 and 2024, respectively, within the net interest and other expense caption associated with sales under the program. Ashland has recorded $ 91 million in sales at December 31, 2025 against the buyer’s limit, which was $ 91 million at December 31, 2025 compared to $ 103 million o f sales at September 30, 2025 against the buyer's limit, which was $ 103 million at September 30, 2025 . Ashland transferred $ 135 million and $ 142 million in accounts receivable to the special purpose entity as of December 31, 2025 and September 30, 2025, respectively. Ashland recorded liabilities related to its service obligations and limited guarantee as of both December 31, 2025 and September 30, 2025 of less than $ 1 million.
For the three months ended December 31, 2025 and 2024 , the year-to-date gross cash proceeds received for accounts receivable transferred and derecognized were $ 38 million and $ 71 million, respectively, of which $ 45 million and $ 84 million were collected. The difference between accounts receivable transferred and derecognized versus collected of $ 7 million and $ 13 million for the three months ended December 31, 2025 and 2024, respectively, represents the impact of a net reduction in accounts receivable sales volume during each period, respectively.
Supply Chain Finance Program
During April 2024, Ashland authorized a financing program offered through JP Morgan and Taulia Alliance. Under this program, JP Morgan and its affiliates may purchase certain confirmed receivables directly from suppliers pursuant to the terms of a separate arrangement entered into between JPMorgan and 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 December 31, 2025 and September 30, 2025 , participation in the program was not significant. There were $ 5 million of confirmed invoices, of which $ 1 million were paid during the three months ended December 31, 2025 . There were $ 4 million and less than $ 1 million of confirmed invoices remaining under this program at December 31, 2025 and September 30, 2025, respectively.
12
Available borrowing capacity and liquidity
The borrowing capacity remaining under current credit agreement (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 as of December 31, 2025.
Ashland had no available liquidity under its current U.S. and Foreign Accounts Receivable Sales Programs as of December 31, 2025.
Covenants related to current Ashland debt agreements
Ashland's debt 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 December 31, 2025, Ashland is in compliance with all debt agreement covenant restrictions.
The maximum consolidated net leverage ratio permitted under Ashland’s most recent credit agreement (the 2022 Credit Agreement) is 4.0 . At December 31, 2025 , Ashland’s calculation of the consolidated net leverage ratio was 2.7 .
The minimum required consolidated interest coverage ratio under the 2022 Credit Agreement is 3.0 . At December 31, 2025 , Ashland’s calculation of the consolidated interest coverage ratio was 6.5 .
NOTE I – LEASING ARRANGEMENTS
The components of lease cost recognized within the Statements of Condensed Consolidated Comprehensive Income (Loss) are as follows:
Three months ended
December 31
(In millions)
Location
2025
2024
Lease cost:
Operating lease cost
Selling, general & administrative
$
3
$
3
Operating lease cost
Cost of sales
3
3
Variable lease cost
Selling, general & administrative
2
1
Variable lease cost
Cost of sales
1
2
Short-term leases
Cost of sales
—
1
Total lease cost
$
9
$
10
Right-of-use assets exchanged for new operating lease obligations were $ 1 million and zero for the three months ended December 31, 2025 and 2024, respectively.
The following table provides cash paid for amounts included in the measurement of lease liabilities:
Three months ended
December 31
(In millions)
2025
2024
Operating cash flows from operating leases
$
7
$
7
NOTE J – INCOME TAXES
Current fiscal year
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 7 % f or the three months ended December 31, 2025. The tax rate for the three months ended December 31, 2025 , was primarily impacted by jurisdictional income mix, as well as a net $ 2 million from unfavorable tax discrete items primarily related to equity compensation adjustments and changes in uncertain tax positions.
13
Prior fiscal year
The overall effective tax rate was a benefit of 21 % for the three months ended December 31, 2024. The tax rate for the three months ended December 31, 2024, was impacted by jurisdictional income mix, as well as a net $ 8 million from unfavorable tax discrete items primarily related to final regulations issued in the U.S. during the three months ended December 31, 2024, impacting the recognition of deferred taxes on certain unrealized foreign exchange gains and losses.
Unrecognized tax benefits
There were no changes in unrecognized tax benefits for the three months ended December 31, 2025 . The balance of unrecognized tax benefits was $ 65 million at both December 31, 2025 and September 30, 2025.
From a combination of statute expirations and audit settlements in the next twelve months, Ashland expects a decrease in the amount of accrual for uncertain tax positions between zero and $ 1 million for continuing operations. For the remaining balance as of December 31, 2025 , it is reasonably possible that there could be material changes to the amount of uncertain tax positions due to activities of the taxing authorities, settlement of audit issues, reassessment of existing uncertain tax positions or the expiration of applicable statute of limitations; however, Ashland is not able to estimate the impact of these items at this time.
NOTE K - EMPLOYEE BENEFIT PLANS
Restructuring and plan remeasurement
During the three months ended December 31, 2024, as part of its fiscal 2024 restructuring activities, Ashland terminated approximately 40 employees in its Doel, Belgium facility. The post-retirement benefits for these employees, all of whom participated in a non-contributory defined benefit plan in Belgium, were frozen. This resulted in a decrease in total expected future years of service within the plan and required Ashland to remeasure the plan during the three months ended December 31, 2024. As a result, Ashland recorded a $ 1 million curtailment loss within the other net periodic benefit loss caption of the Statement of Condensed Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2024.
Plan contributions
For the three months ended December 31, 2025 , Ashland contributed $ 1 million to its U.S. pension plans and $ 1 million to its non-U.S. pension plans. Ashland expects to make additional contributions of $ 4 million to its U.S. pension plans and $ 5 million to its non-U.S. pension plans during the remainder of fiscal 2026.
Components of net periodic benefit costs
The following table summarizes the components of pension and other postretirement benefit costs for continuing operations for the three months ended December 31:
Pension benefits
Other postretirement
benefits
(In millions)
2025
2024
2025
2024
Service cost
$
1
$
1
$
—
$
—
Interest cost
3
3
1
—
Expected return on plan assets
( 3
)
( 2
)
—
—
Curtailment loss
—
1
—
—
Total net periodic benefit costs
$
1
$
3
$
1
$
—
For segment reporting purposes, service cost is proportionately allocated to each segment, excluding Unallocated and other, and is recorded within the selling, general and administrative expense and cost of sales captions on the Statements of Condensed Consolidated Comprehensive Income (Loss). All other components are recorded within the other net periodic benefit loss caption on the Statements of Condensed Consolidated Comprehensive Income (Loss), which netted to expense of $ 1 million and $ 2 million for the three months ended December 31, 2025 and 2024 , respectively.
14
NOTE L – LITIGATION, CLAIMS AND CONTINGENCIES
Asbestos litigation
Ashland is subject to liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims result from indemnification obligations undertaken in 1990 in connection with the sale of Riley and the acquisition of Hercules in November 2008. Although Riley, a former subsidiary, was neither a producer nor a manufacturer of asbestos, its industrial boilers contained some asbestos-containing components provided by other companies. Hercules, an indirect wholly-owned subsidiary of Ashland, has liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products sold by one of Hercules’ former subsidiaries to a limited industrial market.
To assist in developing and annually updating independent reserve estimates for future asbestos claims and related costs given various assumptions for Ashland and Hercules asbestos claims, Ashland retained third party actuarial experts Gnarus. The methodology used by Gnarus to project future asbestos costs is based largely on recent experience, including claim-filing and settlement rates, disease mix, open claims and litigation defense. The claim experience of Ashland and Hercules are separately compared to the results of previously conducted third party epidemiological studies estimating the number of people likely to develop asbestos-related diseases. Those studies were undertaken in connection with national analyses of the population expected to have been exposed to asbestos. Using that information, Gnarus estimates a range of the number of future claims that may be filed, as well as the related costs that may be incurred in resolving those claims. Changes in asbestos litigation reserves and receivables are recorded on an after-tax basis within the income from discontinued operations, net of income taxes caption in the Statements of Condensed Consolidated Comprehensive Income (Loss).
Ashland asbestos-related litigation
The claims alleging personal injury caused by exposure to asbestos asserted against Ashland result primarily from indemnification obligations undertaken in 1990 in connection with the sale of Riley. The amount and timing of settlements and number of open claims can fluctuate from period to period. A summary of Ashland asbestos claims activity, excluding Hercules claims, is as follows:
Three months ended
December 31
Years ended September 30
(In thousands)
2025
2024
2025
2024
2023
Open claims - beginning of year
40
41
41
42
44
New claims filed
1
1
2
2
2
Claims settled
—
—
—
( 1
)
( 1
)
Claims dismissed
( 1
)
( 1
)
( 3
)
( 2
)
( 3
)
Open claims - end of period
40
41
40
41
42
Ashland asbestos-related liability
From the range of estimates, Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs. Ashland reviews this estimate and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of Gnarus.
Total reserves for asbestos claims were $ 246 million and $ 258 million at December 31, 2025 and September 30, 2025, respectively.
15
A progression of activity in the asbestos litigation reserves is presented in the following table.
Three months ended
December 31
Years ended September 30
(In millions)
2025
2024
2025
2024
2023
Asbestos litigation reserves - beginning of year
$
258
$
274
$
274
$
281
$
305
Reserve adjustment
—
—
16
24
9
Amounts paid
( 12
)
( 10
)
( 32
)
( 31
)
( 33
)
Asbestos litigation reserves - end of period (a)
$
246
$
264
$
258
$
274
$
281
(a) Includes $ 29 million classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets as of December 31, 2025 and September 30, 2025 .
Ashland asbestos-related receivables
Ashland has insurance coverage for certain litigation defense and claim settlement costs incurred in connection with its asbestos claims, and coverage-in-place agreements exist with the insurance companies that provide substantially all of the coverage that will be accessed.
For the Ashland asbestos-related obligations, Ashland has estimated the value of probable insurance recoveries associated with its asbestos litigation reserves based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. Substantially all of the estimated receivables from insurance companies are expected to be due from domestic insurers, all of which are solvent.
At December 31, 2025 and September 30, 2025 , Ashland’s receivable for recoveries of litigation defense and claim settlement costs from insurers amounted to $ 92 million (excluding the Hercules receivable for asbestos claims discussed below) and $ 95 million, respectively.
A progression of activity in the Ashland insurance receivable is presented in the following table.
Three months ended
December 31
Years ended September 30
(In millions)
2025
2024
2025
2024
2023
Insurance receivable - beginning of year
$
95
$
97
$
97
$
95
$
101
Receivable adjustment
—
—
5
11
3
Amounts collected
( 3
)
( 1
)
( 7
)
( 9
)
( 9
)
Insurance receivable - end of period (a)(b)
$
92
$
96
$
95
$
97
$
95
(a) The total allowance for credit losses was $ 1 m illion at both December 31, 2025 and September 30, 2025 .
(b) Includes $ 10 million classified in accounts receivable, net on the Condensed Consolidated Balance Sheets at both December 31, 2025 and September 30, 2025 .
Hercules asbestos-related litigation
Hercules has liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products which were sold by one of Hercules’ former subsidiaries to a limited industrial market. The amount and timing of settlements and number of open claims can fluctuate from period to period. A summary of Hercules’ asbestos claims activity follows:
Three months ended
December 31
Years ended September 30
(In thousands)
2025
2024
2025
2024
2023
Open claims - beginning of year
11
12
12
11
12
New claims filed
—
—
1
1
1
Claims dismissed
—
( 1
)
( 2
)
—
( 2
)
Open claims - end of period
11
11
11
12
11
16
Hercules asbestos-related liability
From the range of estimates, Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs. Ashland reviews this estimate, and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of Gnarus. Total reserves for asbestos claims were $ 172 million and $ 177 million at December 31, 2025 and September 30, 2025, respectively.
A progression of activity in the asbestos litigation reserves is presented in the following table.
Three months ended
December 31
Years ended September 30
(In millions)
2025
2024
2025
2024
2023
Asbestos litigation reserves - beginning of year
$
177
$
185
$
185
$
191
$
213
Reserve adjustments
—
—
10
14
( 2
)
Amounts paid
( 5
)
( 3
)
( 18
)
( 20
)
( 20
)
Asbestos litigation reserves - end of period (a)
$
172
$
182
$
177
$
185
$
191
(a) Includes $ 17 million classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets at both December 31, 2025 and September 30, 2025 .
Hercules asbestos-related receivables
For the Hercules asbestos-related obligations, certain reimbursement obligations pursuant to coverage-in-place agreements with insurance carriers exist. As a result, any increases in the asbestos reserve have been partially offset by probable insurance recoveries. Ashland has estimated the value of probable insurance recoveries associated with its asbestos reserve based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. The estimated receivable consists exclusively of solvent domestic insurers.
As of December 31, 2025 and September 30, 2025, Ashland’s receivable for recoveries of litigation defense and claims costs from insurers with respect to Hercules amounted to $ 48 million each.
A progression of activity in the Hercules insurance receivable is presented in the following table.
Three months ended
December 31
Years ended September 30
(In millions)
2025
2024
2025
2024
2023
Insurance receivable - beginning of year
$
48
$
50
$
50
$
47
$
52
Receivable adjustment
—
—
4
6
( 3
)
Amounts collected
—
( 2
)
( 6
)
( 3
)
( 2
)
Insurance receivable - end of period (a)(b)
$
48
$
48
$
48
$
50
$
47
(a) The total allowance for credit losses was $ 1 million at both December 31, 2025 and September 30, 2025 .
(b) Includes $ 6 million classified in accounts receivable, net on the Condensed Consolidated Balance Sheets at December 31, 2025 and September 30, 2025 .
Asbestos litigation cost projection
Projecting future asbestos costs is subject to numerous variables that are difficult to predict. In addition to the uncertainties surrounding the number of claims that might be received, other variables include the type and severity of the disease alleged by each claimant and the related costs incurred in resolving those claims, mortality rates, dismissal rates, and uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case. Furthermore, any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. In light of these inherent uncertainties, Ashland believes that the asbestos reserves for Ashland and Hercules represent the best estimate within a range of possible outcomes. As a part of the process to develop these estimates of future asbestos costs, a range of long-term cost models was developed. These models are based on national studies that predict the number of people likely to develop asbestos-related diseases and are heavily influenced by assumptions regarding long-term inflation rates for indemnity payments and legal defense costs, as well as other variables mentioned previously. Ashland has currently estimated in various models ranging from approximately 40 year periods that it is reasonably possible that total future li tigation defense and claim settlement costs on an inflated and undiscounted basis could range as high as approximately $ 382 million for the
17
Ashland asbestos-related litigation (current reserve of $ 246 million) and approximately $ 262 million for the Hercules asbestos-related litigation (current reserve of $ 172 million), depending on the combination of assumptions selected in the various models. While the timeframe used in Ashland’s models for projecting asbestos litigation reserves generally decreases over time based on the expected lifetime of the reserves, these models have been consistently applied between all periods presented. If actual experience is worse than projected, relative to the number of claims filed, the severity of alleged disease associated with those claims or costs incurred to resolve those claims, or actuarial refinement or improvements to the assumptions used within these models are initiated, Ashland may need to further increase the estimates of the costs associated with asbestos claims and these increases could be material over time.
Environmental remediation
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. At December 31, 2025, such locations include d 53 sit es where Ashland has been identified as a potentially responsible party under Superfund or similar state laws, 107 current and former operating facilities and about 1,225 service station properties, of which 14 are being actively remediated.
Ashland’s reserves for environmental remediation and related environmental litigation amounted to $ 226 million at both December 31, 2025 and September 30, 2025 , of which $ 179 million at both December 31, 2025 and September 30, 2025, were classified in other noncurrent liabilities on the Condensed Consolidated Balance Sheets. The remaining reserves were classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets.
The following table provides a reconciliation of the changes in the environmental remediation reserves:
Three months ended
December 31
(In millions)
2025
2024
Environmental remediation reserves - beginning of period
$
226
$
221
Disbursements
( 10
)
( 6
)
Revised obligation estimates and accretion
10
1
Environmental remediation reserves - end of period
$
226
$
216
The total reserves for environmental remediation reflect Ashland’s estimates of the most likely costs that will be incurred over an extended period to remediate identified conditions for which the costs are reasonably estimable, without regard to any third-party recoveries. Engineering studies, historical experience and other factors are used to identify and evaluate remediation alternatives and their related costs in determining the estimated reserves for environmental remediation. Ashland regularly adjusts its reserves as environmental remediation continues. Ashland has estimated the value of its probable insurance recoveries associated with its environmental reserve based on management’s interpretations and estimates surrounding the available or applicable insurance coverage. At December 31, 2025 and September 30, 2025, Ashland’s recorded receivables for these probable insurance recoveries w ere $ 12 million and $ 14 million, respectively, of which $ 11 million and $ 12 million at December 31, 2025 and September 30, 2025 , respectively, were classified in other noncurrent assets on the Condensed Consolidated Balance Sheets.
18
Components of environmental remediation expense included within the selling, general and administrative expense caption of the Statements of Condensed Consolidated Comprehensive Income (Loss) are presented in the following table:
Three months ended
December 31
(In millions)
2025
2024
Environmental expense
$
10
$
1
Legal expense
—
1
Total expense
10
2
Insurance receivable
—
( 1
)
Total expense, net of receivable activity (a)
$
10
$
1
(a) Net expense of less than $ 1 million for each of the three months ended December 31, 2025 and 2024 , relates to divested businesses which qualified for treatment as discontinued operations for which certain environmental remediation reserves were retained by Ashland. These amounts are classified within the income from discontinued operations, net of income taxes caption of the Statements of Condensed Consolidated Comprehensive Income (Loss).
Environmental remediation reserves are subject to uncertainties that affect Ashland’s ability to estimate its share of the costs. Such uncertainties involve the nature and extent of contamination at each site and the extent of required cleanup efforts under existing environmental regulations. Although it is not possible to predict with certainty the ultimate costs of environmental remediation, Ashland currently estimates that the upper end of the reasonably possible range of future costs for identified sites could be as high as approximate ly $ 485 milli on. The largest reserve for any site is 21 % of t he environmental remediation reserves as of December 31, 2025.
Other legal proceedings and claims
In addition to the matters described above, there are other various claims, lawsuits and administrative proceedings pending or threatened against Ashland and its current and former subsidiaries. Such actions are with respect to commercial matters, product liability, toxic tort liability, and other environmental matters, which seek remedies or damages, some of which are for substantial amounts. While Ashland cannot predict with certainty the outcome of such actions, it believes that adequate reserves have been recorded and losses already recognized with respect to such actions were immaterial as of December 31, 2025. There is a reasonable possibility that a loss exceeding amounts already recognized may be incurred related to these actions; however, Ashland believes that such potential losses were immaterial as of December 31, 2025 .
19
NOTE M – EARNINGS (LOSS) PER SHARE
The following is the computation of basic and diluted earnings (loss) per share ("EPS") from continuing operations attributable to Ashland. Stock appreciation rights and warrants available to purchase shares outstanding for each reporting period whose exercise price was greater than the average market price of Ashland common stock for each applicable period were not included in the computation of loss from continuing operations per diluted share because the effect of these instruments would be antidilutive. The total number of these shares outstanding was approximately 2 million and 1 million at December 31, 2025 and 2024 , respectively. The majority of these shares are for warrants with a strike price of $ 128.66 .
Three months ended
December 31
(In millions, except per share data)
2025
2024
Numerator
Numerator for basic and diluted EPS - Loss from continuing operations, net of tax
$
( 14
)
$
( 166
)
Denominator
Denominator for basic EPS - Weighted-average common shares outstanding
46
47
Share based awards convertible to common shares (a)
—
—
Denominator for diluted EPS - Adjusted weighted-average shares and assumed conversions
46
47
EPS from continuing operations
Basic
$
( 0.30
)
$
( 3.51
)
Diluted (a)
( 0.30
)
( 3.51
)
(a) As a result of the loss from continuing operations attributable to Ashland during the three months ended December 31, 2025 and 2024, the effect of the share-based awards convertible to common stock would be antidilutive and have been excluded from the diluted EPS calculation.
NOTE N – EQUITY ITEMS
2023 Stock repurchase program
On June 28, 2023, Ashland's board of directors authorized a new evergreen $ 1 billion common share repurchase program ("2023 Stock Repurchase Program"). As of December 31, 2025 , $ 520 million remained available for repurchase under the 2023 Stock Repurchase Program.
There was no stock repurchase activity during the three months ended December 31, 2025 and 2024.
Stockholder dividends
Dividends of 41.5 cents and 40.5 cents per share were paid in the first quarters of fiscal 2026 and 2025, respectively.
Accumulated other comprehensive loss
Components of other comprehensive income (loss) recorded in the Statements of Condensed Consolidated Comprehensive Income (Loss) are presented below, before tax and net of tax effects for the three months ended December 31:
2025
2024
(In millions)
Before
tax
Tax expense
Net of
tax
Before
tax
Tax benefit
Net of
tax
Other comprehensive income (loss)
Unrealized translation gain (loss)
$
3
$
( 1
)
$
2
$
( 95
)
$
1
$
( 94
)
Unrealized gain on commodity hedges
—
—
—
1
—
1
Total other comprehensive income (loss)
$
3
$
( 1
)
$
2
$
( 94
)
$
1
$
( 93
)
20
Summary of stockholders’ equity
A reconciliation of changes in stockholders’ equity are as follows:
Three months ended
December 31
(In millions, except per share data)
2025
2024
Common stock and paid in capital
Balance, beginning of period
$
7
$
1
Common shares issued under stock incentive and other plans (a)
2
1
Balance, end of period
9
2
Retained earnings
Balance, beginning of period
2,298
3,315
Net loss
( 12
)
( 165
)
Regular dividends
( 19
)
( 19
)
Other
1
—
Balance, end of period
2,268
3,131
Accumulated other comprehensive loss
Balance, beginning of period
( 401
)
( 448
)
Unrealized translation gain (loss)
2
( 94
)
Unrealized gain (loss) on commodity hedges
—
1
Balance, end of period
( 399
)
( 541
)
Total stockholders' equity
$
1,878
$
2,592
Cash dividends declared per common share
$
0.415
$
0.405
(a) Common stock issued were 52,626 and 75,408 for the three months ended December 31, 2025 and 2024 , respectively. Includes $ 2 million and $ 3 million for the three months ended December 31, 2025 and 2024 , respectively, associated with stock-based compensation employee withholding taxes.
NOTE O – STOCK INCENTIVE PLANS
The components of Ashland’s pre-tax stock-based compensation expense included in continuing operations are as follows:
Three months ended
December 31
(In millions)
2025 (a)
2024 (b)
Nonvested stock awards
$
3
$
3
Performance share awards
2
1
$
5
$
4
(a) Included $ 1 million of expense related to cash-settled nonvested restricted stock awards during the three months ended December 31, 2025 , and less than $ 1 million expense related to cash-settled performance units during the three months ended December 31, 2025 .
(b) Included $ 1 million of expense related to cash-settled nonvested restricted stock awards during the three months ended December 31, 2024, and $ 1 million income related to cash-settled performance units during the three months ended December 31, 2024 .
21
NOTE P – REVENUE
Disaggregation of revenue
Ashland disaggregates its revenue by reportable segment and geographical region as Ashland believes these categories best depict how management reviews the financial performance of its operations. Ashland includes only U.S. and Canada in its North America designation and includes Europe, the Middle East and Africa in its Europe designation. See the following tables for details. See Note Q for additional information.
Sales by geography
Three months ended
December 31
(In millions)
2025
2024
Life Sciences
North America
$
27
$
23
Europe
49
50
Asia Pacific
46
46
Latin America & other
17
15
$
139
$
134
Three months ended
December 31
(In millions)
2025
2024
Personal Care
North America
$
30
$
40
Europe
46
45
Asia Pacific
31
31
Latin America & other
16
18
$
123
$
134
Three months ended
December 31
(In millions)
2025
2024
Specialty Additives
North America
$
36
$
40
Europe
32
34
Asia Pacific
28
34
Latin America & other
6
7
$
102
$
115
Three months ended
December 31
(In millions)
2025
2024
Intermediates
North America
$
19
$
23
Europe
5
5
Asia Pacific
5
3
Latin America & other
2
2
$
31
$
33
22
Ashland has two product categories that represent 10 % or greater of Ashland's total consolidated sales, which were cellulosics and polyvinylpyrrolidones ("PVP"). The following table summarizes the percentage of Ashland's total consolidated sales by product:
Sales by product
Three months ended
December 31
(In millions)
2025
2024
Cellulosics
39
%
38
%
PVP
26
%
25
%
65
%
63
%
Trade receivables
Trade receivables are defined as receivables arising from contracts with customers and are recorded within the accounts receivable, net caption within the Condensed Consolidated Balance Sheets. Ashland’s trade receivables were $ 145 million and $ 200 million as of December 31, 2025 and September 30, 2025 , respectively. See Note H for additional information on Ashland’s programs to sell certain accounts receivables on a revolving basis to third party banks up to an aggregate purchase limit (U.S and Foreign Accounts Receivable Sales Programs).
NOTE Q – REPORTABLE SEGMENT INFORMATION
Ashland determines its reportable segments based on how operations are managed internally for the products and services sold to customers, including how the results are reviewed by Guillermo Novo, Chair and Chief Executive Officer of the Company, which includes determining resource allocation methodologies used for reportable segments. Operating loss before income taxes, depreciation and amortization ("EBITDA") are the primary measures of performance that are reviewed by the chief operating decision maker in assessing each reportable segment's financial performance. Ashland does not aggregate operating segments to arrive at these reportable segments.
Reportable segment business descriptions
Life Sciences is comprised of pharmaceuticals, nutrition, agricultural chemicals, diagnostic films (formerly known as advanced materials) and fine chemicals. Pharmaceutical solutions include controlled release polymers, disintegrants, tablet coatings, thickeners, solubilizers and tablet binders. 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 manufacturers.
Personal Care is comprised of biofunctionals, microbial protectants (preservatives), skin care, sun care, oral care, hair care and household. 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. See Note B for additional information.
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, but are not limited to, global paint manufacturers, electronics and automotive manufacturers, textile mills, the construction industry and welders.
23
Intermediates is comprised of the production of 1,4 butanediol ("BDO") and related derivatives, including n-methylpyrrolidone. These products are used as chemical intermediates in the production of engineering polymers and polyurethanes, and as specialty process solvents in a wide array of applications including electronics, agriculture, pharmaceuticals, water filtration membranes and more. BDO is also supplied to Life Sciences, Personal Care, and Specialty Additives for use as a raw material.
Unallocated and other generally includes items such as certain significant company-wide restructuring activities, corporate governance costs and legacy costs or activities that relate to divested businesses that are no longer operated by Ashland.
Reportable segment results
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 comparable companies. Ashland allocates all 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 of the Statements of Condensed Consolidated Comprehensive Income (Loss). Ashland refines its expense allocation methodologies to the reportable segments from time to time as more refined information becomes available and the industry or market changes. Significant revisions to Ashland’s methodologies are adjusted for all reportable segments on a retrospective basis. There were no material changes in methodology for the three months ended December 31, 2025 or 2024.
Ashland determined that disclosing sales by specific product was impracticable due to the highly customized and extensive portfolio of products offered to customers and since no one product or a small group of products could be aggregated together to represent a majority of revenue within a reportable segment.
The following table presents various financial information for each reportable segment:
24
Three months ended
December 31
(In millions - unaudited)
2025
2024
Sales
Life Sciences
$
139
$
134
Personal Care
123
134
Specialty Additives
102
115
Intermediates
31
33
Intersegment sales (a)
( 9
)
( 11
)
$
386
$
405
Cost of sales
Life Sciences
$
94
$
91
Personal Care
79
87
Specialty Additives
88
99
Intermediates
29
28
Intersegment sales
( 9
)
( 11
)
$
281
$
294
Selling, general and administrative expense
Life Sciences
$
20
$
20
Personal Care
20
21
Specialty Additives
16
16
Intermediates
2
2
Total operating segments
58
59
Unallocated and other
28
19
$
86
$
78
Research and development expense
Life Sciences
$
4
$
4
Personal Care
5
6
Specialty Additives
3
3
Intermediates
—
—
Total operating segments
12
13
Unallocated and other
1
—
$
13
$
13
Amortization expense
Life Sciences
$
5
$
5
Personal Care
8
10
Specialty Additives
2
2
Intermediates
—
—
Total operating segments
15
17
Unallocated and other
—
—
$
15
$
17
Equity and other income
Life Sciences
$
—
$
—
Personal Care
1
1
Specialty Additives
—
—
Intermediates
—
—
Total operating segments
1
1
Unallocated and other
—
—
$
1
$
1
25
Three months ended
December 31
(In millions - unaudited)
2025
2024
Income (loss) on divestitures, net
Life Sciences
$
—
$
—
Personal Care
—
—
Specialty Additives
—
—
Intermediates
—
—
Total operating segments
—
—
Unallocated and other
2
( 183
)
$
2
$
( 183
)
Operating income (loss)
Life Sciences
$
17
$
14
Personal Care
11
11
Specialty Additives
( 8
)
( 5
)
Intermediates
—
3
Total operating segments
20
23
Unallocated and other (b)
( 26
)
( 202
)
Total operating loss
$
( 6
)
$
( 179
)
Net interest and other expense
8
28
Other net periodic benefit loss
1
2
Loss from continuing operations before income taxes
$
( 15
)
$
( 209
)
EBITDA (c)
Life Sciences
$
31
$
28
Personal Care
26
29
Specialty Additives
10
11
Intermediates
1
6
Total operating segments
68
74
Unallocated and other
( 26
)
( 202
)
Total EBITDA
$
42
$
( 128
)
Depreciation expense
33
34
Amortization expense
15
17
Net interest and other expense
8
28
Other net periodic benefit loss
1
2
Loss from continuing operations before income taxes
$
( 15
)
$
( 209
)
Depreciation expense
Life Sciences
$
9
$
9
Personal Care
7
8
Specialty Additives
16
14
Intermediates
1
3
Total operating segments
33
34
Unallocated and other
—
—
$
33
$
34
26
December 31
September 30
(In millions - unaudited)
2025
2025
Assets
Life Sciences
$
1,462
$
1,498
Personal Care
723
751
Specialty Additives
990
1,020
Intermediates
110
116
Unallocated and other
1,234
1,226
$
4,519
$
4,611
Property, plant and equipment - net
Life Sciences
$
477
$
481
Personal Care
97
101
Specialty Additives
473
484
Intermediates
30
30
Unallocated and other
104
105
$
1,181
$
1,201
(a) Intersegment sales from Intermediates are accounted for at prices that approximate market value. All other intersegment sales are accounted for at cost.
(b) Includes a $ 2 million gain on sale of excess corporate property and $ 183 million impairment charge related to the Avoca business for the three months ended December 31, 2025 and 2024, respectively, within the income (loss) on divestitures, net caption of the Statements of Condensed Consolidated Income (Loss).
(c) Excludes income 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.
27
ASHLAND INC. AND CONSOLIDATED SUBSIDIARIES
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements including, without limitation, statements made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation” (“MD&A”), within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Ashland has identified some of these forward-looking statements with words such as “anticipates,” “believes,” “expects,” “estimates,” “is likely,” “predicts,” “projects,” “forecasts,” “objectives,” “may,” “will,” “should,” “plans” and “intends” and the negative of these words or other comparable terminology. Ashland may from time to time make forward-looking statements in its Annual Report to Stockholders, quarterly reports and other filings with the Securities and Exchange Commission ("SEC"), news releases and other written and oral communications. These forward-looking statements are based on Ashland’s expectations and assumptions, as of the date such statements are made, regarding Ashland’s future operating performance and financial condition, as well as the economy and other future events or circumstances. The risks and uncertainties we face which may cause our actual results to differ materially from the results expressed, projected, or implied in these forward-looking statements include, but are not limited to: Ashland’s aggressive growth goals and the extent to which such goals may be impacted by a failure to optimize our tangible and intangible assets, a failure to identify and integrate acquisition targets, any unexpected costs and liabilities associated with such acquisitions, and goodwill impairment; business disruptions stemming from natural, operational, and other catastrophic events, including disruptions to supply and logistics functions, manufacturing delays, and information technology system and network failures; climate change and related resource impacts; changes in consumer preferences and a reduction in demand for Ashland’s products; risks inherent in operating a global business, including tariffs and other trade policies, geopolitical instability and armed conflict, and challenges associated with hiring and managing a diverse workforce across countries with differing laws, regulations, and cultural practices; economic downturns and disruptions in the financial markets; Ashland’s substantial indebtedness, including the possibility that such indebtedness and related restrictive covenants may adversely affect our future cash flows, limit our ability to repay debt and obtain future financing, place Ashland at a competitive disadvantage, and make us more vulnerable to interest rate increases; our ability to develop and market new products and remain competitive in the markets in which we operate; our ability to pass increases in the costs of energy and raw materials to customers and to fulfill our contractual requirements with customers and vendors; downward pressures on prices and margins; the ability to attract and retain key employees and to provide for effective succession planning; cybersecurity risks, including disruptions to or failures in Ashland’s information technology systems and networks, malicious cyberattacks, and the inadvertent or accidental disclosure or loss of proprietary or sensitive information; Ashland’s ability to effectively protect and enforce its intellectual property rights; exposure to products liability claims; risks related to compliance with environmental, health, and safety regulations, including the potential for costly litigation, remediation, and settlement actions; exposure to pending and threatened asbestos-related litigation; changes in the legal and regulatory landscapes in which we operate; changes in taxation or adverse tax rulings; and without limitation, risks and uncertainties affecting Ashland that are contained in “Use of estimates, risks and uncertainties” in Note A of Notes to Consolidated Financial Statements and in Item 1A of its most recent Form 10-K filed with SEC. Ashland believes its expectations and assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. Unless legally required, Ashland undertakes no obligation to update any forward-looking statements made in this Form 10-Q whether as a result of new information, future events or otherwise. Information on Ashland’s website is not incorporated into or a part of this Form 10-Q.
28
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.