What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-04-29 compared with 2026-02-03 · 401 added, 244 removed, 444 unchanged (59% of the section changed)

8 unchanged sentences

With approximately 2,900 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 months ended December 31, 2025 and 2024, respectively.

Sales by region expressed as a percentage of total consolidated sales for the three months ended December 31, were as follows:

Ashland’s sales generated outside of North America were 73% for both the three and six months ended March 31, 2026, and 72% for both the three and six months ended March 31, 2025.

Sales by region expressed as a percentage of total consolidated sales were as follows:

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Sales by Geography

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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 for the three months ended December 31, were as follows:

The contribution to sales by each reportable segment expressed as a percentage of total consolidated sales were as follows:

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Sales by Reportable Segment

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Uncertainty related to tariffs and global trade policy changes

The three months ended December 31, 2025 saw continuing regulatory activity involving notable changes to U.S.

The three months ended March 31, 2026, saw continuing regulatory activity involving notable changes to U.S.

and foreign trade policy, leading to significant uncertainty in the macroeconomic and geopolitical environments.

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The ultimate impact of these recent tariffs and trade disputes on general economic conditions, and on Ashland’s business, financial performance, and results of operations, is uncertain and depends on various factors, including the duration of the tariffs and disputes, negotiations between the U.S.

and affected countries, whether additional or

incremental tariffs are imposed and the responses of other countries or regions, and the potential for trade restriction-related exemptions.

and affected countries, whether additional or incremental tariffs are imposed and the responses of other countries or regions, and the potential for trade restriction-related exemptions including recent tariff reversal developments.

Given the dynamic nature of the situation, Ashland continues to monitor tariff developments as well as the broader global trade landscape and is working to mitigate potential impacts on its business.

Uncertainty relating to the ongoing Israel/Iran, Ukraine/Russia and Israel/Hamas conflicts and other political events

Business disruptions, including those related to the ongoing conflicts between Israel/Iran, Ukraine/Russia and Israel/Hamas, as well as the recent political events in Venezuela, continue to impact businesses around the globe.

Uncertainty relating to the ongoing United States, Israel/Iran, Ukraine/Russia and Israel/Hamas conflicts and other political events

Business disruptions, including those related to the ongoing conflicts between the United States, Israel/Iran, Ukraine/Russia and Israel/Hamas, as well as the recent political events in Venezuela, 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.

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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).

Ashland has no sales activity with Iran.

Restructuring programs

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Ashland also executed its portfolio 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 (collectively, "Portfolio Optimization").

Overall, these Portfolio Optimization actions reduced sales and Adjusted EBITDA by approximately $10 million and $1 million, respectively, for the three months ended December 31, 2025, compared to the prior year quarter.

Operating loss was positively impacted by $2 million compared to the prior year quarter.

These previously announced actions include initiatives focused on carboxymethylcellulose ("CMC"), methylcellulose ("MC"), the Nutraceuticals business sale and the Avoca business sale (collectively, "Portfolio Optimization").

Overall, these Portfolio Optimization actions reduced sales and Adjusted EBITDA by approximately $2 million and zero, respectively, for the three months ended March 31, 2026, and approximately $11 million and $1 million, respectively, for the six months ended March 31, 2026, compared to the prior year periods.

Operating income (loss) was positively impacted by $2 million and $4 million for the three and six months ended March 31, 2026, respectively, compared to the prior year periods.

Ashland is also advancing a multi-year manufacturing network optimization to improve operational cost and strengthen its competitive position.

This optimization plan is expected to generate pre-tax savings of $50 million to $55 million with $60 million being achievable as market conditions improve, particularly within China.

Ashland realized savings of approximately $5 million during the three months ended December 31, 2025.

The following table summarizes the expense impact of these actions for the three months ended December 31:

Ashland realized savings of approximately $10 million and $15 million during the three and six months ended March 31, 2026, compared to the prior year periods.

The following table summarizes the expense impact of these actions:

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(In millions)

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Three months ended

Six months ended

(In millions except per share data)

Diluted earnings per share (EPS) net loss (a)

Loss from continuing operations

Diluted EPS loss from continuing operations (a)

Operating loss

Net income (loss)

Diluted earnings per share (EPS) net income (loss) (a)

Income (loss) from continuing operations

Diluted EPS income (loss) from continuing operations (a)

Operating income (loss)

Adjusted EBITDA (b)

Adjusted Diluted EPS from Continuing Operations Excluding Intangibles Amortization Expense (b)

(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.

(a) As a result of the loss from continuing operations attributable to Ashland during the six months ended March 31, 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.

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Business results

Ashland's net loss of $12 million (loss of $0.26 diluted EPS) and $165 million (loss of $3.50 diluted EPS) included income from discontinued operations of $2 million ($0.04 diluted EPS) and $1 million ($0.01 diluted EPS) in the three months ended December 31, 2025 and 2024, respectively.

Results for Ashland’s continuing operations, diluted EPS from continuing operations and operating loss for the three months ended December 31, 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 $18 million and $208 million for the three months ended December 31, 2025 and 2024, respectively, impacting continuing operations.

Continuing operations was also impacted by unfavorable tax specific key items for discrete tax items totaling zero and $8 million for the three months ended December 31, 2025 and 2024, respectively.

Excluding these key items, the decrease in continuing operations, diluted EPS from continuing operations and operating loss was primarily driven by portfolio optimization actions, lower sales volume and modest pricing pressure offset by favorable product mix, lower selling, general and administrative expenses and lower intangibles amortization expense.

Ashland's net income of $16 million ($0.34 diluted EPS) and $31 million ($0.65 diluted EPS) included income from discontinued operations of $1 million ($0.02 diluted EPS) and $1 million ($0.02 diluted EPS) in the three months ended March 31, 2026 and 2025, respectively.

Results for Ashland’s continuing operations, diluted EPS from continuing operations and operating income for the three months ended March 31, 2026 and 2025, 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 $20 million and $6 million for the three months ended March 31, 2026 and 2025, respectively, impacting continuing operations.

Continuing operations was also impacted by favorable tax specific key items for discrete tax items totaling zero and $1 million for the three months ended March 31, 2026 and 2025, respectively.

Excluding these key items, the decrease in continuing operations, diluted EPS from continuing operations and operating income was primarily driven by softer pricing, the Calvert City startup delay and weather-related operational disruptions during the quarter, partially offset by favorable foreign exchange currency and lower selling, general and administrative expenses.

In addition, diluted EPS 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 47 million diluted shares at December 31, 2024 to 46 million diluted shares at December 31, 2025.

Ashland’s Adjusted EBITDA was $58 million for the three months ended December 31, 2025 compared to $61 million for the three months ended December 31, 2024 (see U.S.

GAAP reconciliation under “Use of Non-GAAP Financial Measures” below).

The $3 million decrease in Adjusted EBITDA was primarily driven by portfolio optimization actions, lower sales volume and modest pricing pressure offset by favorable product mix, lower selling, general and administrative expenses and lower intangibles amortization expense.

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.

These common stock repurchases reduced the number of weighted average shares from 47 million diluted shares at March 31, 2025 to 46 million diluted shares at March 31, 2026.

Ashland’s Adjusted EBITDA was $98 million for the three months ended March 31, 2026 compared to $108 million for the three months ended March 31, 2025 (see U.S.

GAAP reconciliation under “Use of Non-GAAP Financial

Measures” below).

The $10 million decrease in Adjusted EBITDA was primarily driven by softer pricing, the Calvert City startup delay and weather-related operational disruptions during the quarter, offset by favorable foreign exchange currency and lower selling, general and administrative expenses.

Adjusted Diluted EPS from Continuing Operations (non-GAAP) Excluding Intangibles Amortization Expense was also impacted by these 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.

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A comparative analysis of the Statements of Condensed Consolidated Comprehensive Income (Loss) by caption is provided as follows:

Three months ended December 31

Three months ended March 31

Six months ended March 31

(In millions)

The following table provides a reconciliation of the change in sales for the three months ended December 31, 2025 and 2024:

The following table provides a reconciliation of the change in sales:

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(In millions)

December 31, 2025

March 31, 2026

Avoca business

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Change in sales

Sales for the three months ended December 31, 2025 decreased $19 million compared to the three months ended December 31, 2024.

The decrease was driven by lower volume and unfavorable pricing which was partially offset by favorable foreign currency exchange.

Portfolio Optimization initiatives had approximately $10 million impact on sales in the three months ended December 31, 2025.

Three months ended December 31

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Sales for the three months ended March 31, 2026 increased $3 million compared to the three months ended March 31, 2025.

The increase was driven by favorable foreign currency exchange which was partially offset by unfavorable pricing.

Portfolio Optimization initiatives had a negative $2 million impact on sales in the three months ended March 31, 2026.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Sales for the six months ended March 31, 2026 decreased $16 million compared to the six months ended March 31, 2025.

The decrease was driven by unfavorable pricing, lower volume and the impact of the Avoca business sale, which was partially offset by favorable foreign currency exchange.

Portfolio Optimization initiatives had a negative $11 million impact on sales in the six months ended March 31, 2026.

Three months ended March 31

Six months ended March 31

(In millions)

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Gross profit as a percent of sales

The following table provides a reconciliation of the change in cost of sales between the three months ended December 31, 2025 and 2024:

The following table provides a reconciliation of the change in cost of sales:

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(In millions)

December 31, 2025

March 31, 2026

Cost of sales change

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Change in cost of sales

Cost of sales for the three months ended December 31, 2025, decreased $13 million compared to the three months ended December 31, 2024.

The decrease was primarily driven by lower sales volume, including the impact of the Avoca business sale, and favorable price/mix, partially offset by unfavorable foreign exchange currency and higher operating costs.

The three months ended December 31, 2025, operating costs were affected by $3 million of accelerated depreciation for product line optimization activities at manufacturing facilities within Specialty Additives reportable segment and $5 million of other plant optimization costs while the three months ended December 31, 2024 included $3 million of other plant optimization costs.

Gross profit as a percentage of sales decreased 0.2% primarily due to lower sales volume, higher operating costs and increased accelerated depreciation and other plant optimization costs compared to the three months ended December 31, 2024.

Three months ended December 31

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Cost of sales for the three months ended March 31, 2026, increased $3 million compared to the three months ended March 31, 2025.

The increase was primarily driven by a $10 million negative combined impact from the Calvert City startup delay and weather-related operational disruptions during the quarter as well as unfavorable foreign exchange currency, partially offset by favorable price/mix.

The three months ended March 31, 2026, operating costs were affected by $10 million of other plant optimization costs while the three months ended March 31, 2025 included $13 million of accelerated depreciation for product line optimization activities at manufacturing facilities within Life Sciences reportable segment and $6 million of other plant optimization costs.

Gross profit as a percentage of sales decreased 0.2% primarily due to higher operating costs compared to the three months ended March 31, 2025.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Cost of sales for the six months ended March 31, 2026, decreased $10 million compared to the six months ended March 31, 2025.

The decrease was primarily driven by the impact of the Avoca business sale, favorable price/mix and lower sales volume, partially offset by unfavorable foreign exchange currency and unfavorable operating costs.

The six months ended March 31, 2026, operating costs were affected by $3 million of accelerated depreciation for product line optimization activities at manufacturing facilities within Specialty Additives reportable segment and $15 million of other plant optimization costs while the six months ended March 31, 2025 included $13 million of accelerated depreciation for product line optimization activities at manufacturing facilities within Life Sciences reportable segment and $9 million of other plant optimization costs.

Gross profit as a percentage of sales decreased 0.2% primarily due to lower sales volume, higher operating costs and other plant optimization costs compared to the six months ended March 31, 2025.

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Six months ended March 31

(In millions)

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As a percent of sales

Selling, general and administrative expense for the three months ended December 31, 2025, increased $8 million compared to the three months ended December 31, 2024, with expenses as a percent of sales increasing 3.0%.

Key drivers of the fluctuation in selling, general and administrative expense compared to the three months ended December 31, 2024 were:

• $10 million and $1 million in net environmental-related expenses during the three months ended December 31, 2025 and 2024, respectively (see Note L of the Notes to Condensed Consolidated Financial Statements for more information);

• Expense of $4 million and $3 million comprised of key items for severance, lease abandonment and other restructuring costs during the three months ended December 31, 2025 and 2024, respectively;

• Higher variable compensation expense and unfavorable currency exchange partially offset by realized cost reductions, including the Avoca business sale, associated with restructuring actions.

Three months ended December 31

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Selling, general and administrative expense for the three months ended March 31, 2026, decreased $6 million compared to the three months ended March 31, 2025, with expenses as a percent of sales decreasing 1.3%.

Key drivers of the fluctuation in selling, general and administrative expense compared to the three months ended March 31, 2025, were:

• $2 million in net environmental-related expenses during both the three months ended March 31, 2026 and 2025 (see Note L of the Notes to Condensed Consolidated Financial Statements for more information);

• Expense of $3 million and $8 million comprised of key items for severance, lease abandonment and other restructuring costs during the three months ended March 31, 2026 and 2025, respectively;

• Increased income associated with company-owned life insurance contracts and realized cost reductions associated with restructuring actions partially offset by increased bad debt expense, higher variable compensation expense and lower transition services income.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Selling, general and administrative expense for the six months ended March 31, 2026, increased $3 million compared to the six months ended March 31, 2025, with expenses as a percent of sales increasing 0.7%.

Key drivers of the fluctuation in selling, general and administrative expense compared to the six months ended March 31, 2025 were:

• $12 million and $3 million in net environmental-related expenses during the six months ended March 31, 2026 and 2025, respectively (see Note L of the Notes to Condensed Consolidated Financial Statements for more information);

• Expense of $7 million and $11 million comprised of key items for severance, lease abandonment and other restructuring costs during the six months ended March 31, 2026 and 2025, respectively;

• Higher variable compensation expense, increased bad debt expense, lower transition services income and unfavorable currency exchange partially offset by increased income associated with company-owned life insurance contracs and realized cost reductions, including the Avoca business sale, associated with restructuring actions.

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Six months ended March 31

(In millions)

Research and development expense

Research and development expense is generally consistent between the three months ended December 31, 2025 and 2024.

Three months ended December 31

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Research and development expense is generally consistent between the three months ended March 31, 2026 and 2025.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Research and development expense is generally consistent between the six months ended March 31, 2026 and 2025.

Three months ended March 31

Six months ended March 31

(In millions)

Intangibles amortization expense

The lower intangibles amortization expense in the three months ended December 31, 2025, is driven by the impact of amortization related to the divested Avoca business in the prior year.

Three months ended December 31

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Intangibles amortization expense is generally consistent between the three months ended March 31, 2026 and 2025.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

The lower intangibles amortization expense in the six months ended March 31, 2026, is driven by the impact of amortization related to the divested Avoca business in the six months ended March 31, 2025.

Three months ended March 31

Six months ended March 31

(In millions)

Equity and other income

Equity and other income is generally consistent between the three months ended December 31, 2025 and 2024.

Three months ended December 31

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Equity and other income was zero in both three months ended March 31, 2026 and 2025.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Equity and other income is generally consistent between the six months ended March 31, 2026 and 2025.

Three months ended March 31

Six months ended March 31

(In millions)

Income (loss) on divestitures, net

Income (loss) on divestitures, net for the three months ended December 31, 2025, primarily relates to a pre-tax gain on sale of excess corporate real estate while the three months ended December 31, 2024, primarily relates to a $183 million of impairment related to the Avoca business.

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Income (loss) on divestitures, net for the three months ended March 31, 2025, primarily relates to a pre-tax gain on sale of $8 million associated with the Avoca business and a pre-tax gain on sale of excess corporate real estate of $11 million, partially offset by $1 million adjustment related to the Nutraceuticals business sale completed in fiscal 2024.

See Note B of the Notes to Condensed Consolidated Financial Statements for more information.

Three months ended December 31

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Income (loss) on divestitures, net for the six months ended March 31, 2026, primarily relates to a pre-tax gain on sale of excess corporate real estate while the three months ended March 31, 2025, primarily relates to a $183 million impairment charge, a pre-tax gain on sale of $8 million associated with the Avoca business and a pre-tax gain on sale of excess corporate real estate of $11 million, partially offset by $1 million adjustment related to the Nutraceuticals business sale completed in fiscal 2024.

See Note B of the Notes to Condensed Consolidated Financial Statements for more information.

Three months ended March 31

Six months ended March 31

(In millions)

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Other financing costs

Net interest and other expense decreased by $20 million during the three months ended December 31, 2025 compared to the three months ended December 31, 2024.

Interest expense and interest income are generally consistent between the three months ended December 31, 2025 and 2024.

Investment securities income of $7 million and expense of $12 million included realized gains of $2 million compared to realized losses of $17 million for the three months ended December 31, 2025 and 2024, respectively, and was the primary change.

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Net interest and other expense increased by $7 million during the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

Interest expense and interest income are generally consistent between the three months ended March 31, 2026 and 2025.

Investment securities expense of $2 million and income of $6 million included realized losses of $5 million and gains of $3 million for the three months ended March 31, 2026 and 2025, respectively, and was the primary change.

See Note E of the Notes to Condensed Consolidated Financial Statements for more information.

Three months ended December 31

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Net interest and other expense decreased by $13 million during the six months ended March 31, 2026, compared to the six months ended March 31, 2025.

Interest expense and interest income are generally consistent between the six months ended March 31, 2026 and 2025.

Investment securities income of $5 million and expense of $7 million included realized losses of $3 million and $14 million for the six months ended March 31, 2026 and 2025, respectively, and was the primary change.

See Note E of the Notes to Condensed Consolidated Financial Statements for more information.

Three months ended March 31

Six months ended March 31

(In millions)

Other net periodic benefit loss

Other net periodic benefit loss for the three months ended December 31, 2025, primarily included interest cost of $4 million which was partially offset by expected return on plan assets of $3 million.

Other net periodic benefit loss for the three months ended December 31, 2024, primarily included interest cost of $3 million and loss on curtailment of $1 million, which was partially offset by expected return on plan assets of $2 million.

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Other net periodic benefit loss for the three months ended March 31, 2026, 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 March 31, 2025, primarily included interest cost of $4 million, which was partially offset by expected return on plan assets of $3 million.

See Note K of the Notes to Condensed Consolidated Financial Statements for more information.

Three months ended December 31

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Other net periodic benefit loss for the six months ended March 31, 2026, primarily included interest cost of $7 million, which was partially offset by expected return on plan assets of $5 million.

Other net periodic benefit loss for the six months ended March 31, 2025, primarily included interest cost of $7 million and a $1 million curtailment loss, which was partially offset by expected return on plan assets of $5 million.

See Note K of the Notes to Condensed Consolidated Financial Statements for more information.

Three months ended March 31

Six months ended March 31

(In millions)

Income tax benefit

Income tax expense (benefit)

Effective tax rate

Three months ended March 31, 2026 compared to three months ended March 31, 2025

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% for the three months ended December 31, 2025, and was primarily impacted by jurisdictional income mix and a net $2 million from unfavorable tax discrete items primarily related to equity compensation adjustments and changes in uncertain tax positions.

The overall effective tax rate was a benefit of 21% for the three months ended December 31, 2024, and was primarily impacted by jurisdictional income mix, as well as a net unfavorable tax discrete items of $8 million 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.

The effective tax rate was 25% for the three months ended March 31, 2026,

and was primarily impacted by jurisdictional income mix and a net $1 million from favorable tax discrete items primarily related to equity compensation adjustments and changes in uncertain tax positions.

The effective tax rate was 23% for the three months ended March 31, 2025, and was primarily impacted by jurisdictional income mix.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

The effective tax rate was 80% for the six months ended March 31, 2026, and was primarily impacted by jurisdictional income mix and a net $1 million from unfavorable tax discrete items primarily related to equity compensation adjustments and changes in uncertain tax positions.

The effective tax rate was 20% for the six months ended March 31, 2025, and was primarily impacted by jurisdictional income mix as well as a net $7 million from unfavorable tax discrete items primarily related to final regulations issued in the U.S.

during the six months ended March 31, 2025, impacting the recognition of deferred taxes on certain unrealized foreign exchange gains and losses.

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 loss and/or operating loss which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends.

Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income (loss) and/or operating income (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.

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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 months ended December 31, 2024 was significantly impacted by the following tax specific key items:

The effective tax rate during the three and six months ended March 31, 2025 was significantly impacted by the following tax specific key items:

• Uncertain tax position – Includes the impact from the settlement of uncertain tax positions with various tax authorities;

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Three months ended

Six months ended

(In millions)

Loss from continuing operations before income taxes

Income (loss) from continuing operations before income taxes

Key items (pre-tax) (a)

Adjusted income (loss) from continuing operations before income taxes

Income tax benefit

Adjusted income from continuing operations before income taxes

Income tax expense (benefit)

Income tax rate adjustments:

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Total income tax rate adjustments

Adjusted income tax expense (benefit)

Adjusted income tax expense

Effective tax rate

Effective Tax Rate, Excluding Key Items (Non-GAAP) (d)

Not meaningful

(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.

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(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 December 31

Three months ended March 31

Six months ended March 31

(In millions)

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Water Technologies

Asbestos-related litigation

The activity for Water Technologies during the three months ended December 31, 2025, represents subsequent adjustments that were made in conjunction with post-closing adjustments related to tax reserves.

Asbestos activity during the three months ended December 31, 2024, primarily relates to after-tax net adjustments to the asbestos litigation reserves and receivables.

Performance Adhesives

Three months ended March 31, 2026 compared to three months ended March 31, 2025

The activity for Performance Adhesives and Valvoline represents subsequent adjustments that were made in conjunction with tax related reserves.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

The activity for Water Technologies, Performance Adhesives and Valvoline represents represents subsequent adjustments that were made in conjunction with environmental and tax related reserves.

Other comprehensive income (loss)

Three months ended December 31

Three months ended March 31

Six months ended March 31

(In millions)

1 unchanged sentence

Unrealized translation gain (loss)

Unrealized gain (loss) on commodity hedges

Total other comprehensive income (loss), net of tax, for the three months ended December 31, 2025, increased $95 million compared to the three months ended December 31, 2024, primarily as a result of the following:

• For the three months ended December 31, 2025 and 2024, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in gains of $2 million and losses of $94 million, respectively.

Unrealized gain on commodity hedges

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Total other comprehensive income (loss), net of tax, for the three months ended March 31, 2026, decreased $63 million compared to the three months ended March 31, 2025, primarily as a result of the following:

• For the three months ended March 31, 2026 and 2025, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in losses of $12 million and gains of $49 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.

• For the three months ended December 31, 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 zero and $1 million for the three months ended December 31, 2025 and 2024, respectively.

• For the three months ended March 31, 2026 and 2025, 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 zero and $2 million for the three months ended March 31, 2026 and 2025, respectively.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Total other comprehensive income (loss), net of tax, for the six months ended March 31, 2026, increased $32 million compared to the six months ended March 31, 2025, primarily as a result of the following:

• For the six months ended March 31, 2026 and 2025, the change in unrealized gain (loss) from foreign currency translation adjustments resulted in losses of $10 million and $45 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.

• For the six months ended March 31, 2026 and 2025, 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 zero and $3 million for the six months ended March 31, 2026 and 2025, respectively.

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 loss or cash flows from operating activities as a measure of operating performance or cash flows:

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 loss, plus income tax benefit, net interest and other expense, and depreciation and amortization.

EBITDA is defined as net income (loss), plus income tax expense (benefit), net interest and other expense, and depreciation and amortization.

Adjusted EBITDA is EBITDA adjusted for discontinued operations and key items.

1 unchanged sentence

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 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 loss and operating loss and which Ashland does not consider to be the fundamental attributes or primary drivers of its business.

The adjustments Ashland makes to derive the non-GAAP financial measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in net income (loss) and operating income (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.

12 unchanged sentences

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.

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.

11 unchanged sentences

EBITDA and Adjusted EBITDA

EBITDA totaled $40 million and ($129) million for the three months ended December 31, 2025 and 2024, respectively.

EBITDA totaled $84 million and $100 million for the three months ended March 31, 2026 and 2025, respectively, and income of $124 million and loss of $30 million for the six months ended March 31, 2026 and 2025, 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.

1 unchanged sentence

These operating key items for the applicable periods are summarized as follows:

• Other plant optimization costs – Ashland incurred inventory adjustments and production costs associated with product line optimization actions;

• 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.

1 unchanged sentence

See Note L of the Notes to Condensed Consolidated Financial Statements for more information;

• Other plant optimization costs – During the three months ended December 31, 2025 and 2024, Ashland incurred inventory adjustments and production costs associated with product line optimization actions;

• 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.

1 unchanged sentence

See Note D of the Notes to Condensed Consolidated Financial Statements for further information;

• Accelerated depreciation – As a result of product line optimization activities at manufacturing facilities within the Specialty Additives reportable segment, Ashland recorded accelerated depreciation due to changes in the expected useful life of certain property, plant and equipment during the three months ended December 31, 2025.

• Accelerated depreciation – As a result of product line optimization activities at manufacturing facilities within the Life Sciences and Specialty Additives reportable segment, Ashland recorded accelerated depreciation due to changes in the expected useful life of certain property, plant and equipment during the six months ended March 31, 2026 and during the three and six months ended March 31, 2025.

See Note D of the Notes to Condensed Consolidated Financial Statements for more information;

• Avoca business impairment – During the three months ended December 31, 2024, Ashland entered into an agreement to sell substantially all of the net assets of its Avoca business.

As a result, Ashland recorded an impairment charge 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.

• 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 a gain on sale within the income (loss) on divestitures, net caption of the Statements of Condensed Consolidated Comprehensive Income (Loss) for the three and six months ended March 31, 2025.

See Note B of the Notes to Condensed Consolidated Financial Statements for more information;

• Income on divestitures, net – Ashland recorded income of $2 million during the three months ended December 31, 2025.

The income was related to the pre-tax gains in connection with the sale of excess corporate property.

• Held for sale depreciation and amortization – Represents the depreciation and amortization for the Avoca business assets during the six months ended March 31, 2025.

See Note B of the Notes to the Condensed Consolidated Financial Statements for more information;

• Income (loss) on divestitures, net – Ashland recorded income of zero and $2 million during the three and six months ended March 31, 2026, respectively, and income of $10 million during both the three and six months ended March 31, 2025.

The income was related to the pre-tax gains in connection with the sale of excess corporate properties.

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.

During the current and prior years, there were certain key items that were not included in operating income (loss) but were excluded to arrive at Adjusted EBITDA.

These non-operating key items for the applicable periods are summarized as follows:

• Loss on pension plan remeasurements – During the three months ended December 31, 2024, Ashland recognized a curtailment loss for pension plan remeasurement for defined benefit pension plan.

• Loss on pension plan remeasurements – During the six months ended March 31, 2025, Ashland recognized a curtailment loss for pension plan remeasurement for defined benefit pension plan.

See Note K of the Notes to Condensed Consolidated Financial Statements for more information.

Three months ended

Six months ended

(In millions)

Income tax benefit

Net income (loss)

Income tax expense (benefit)

Net interest and other expense

2 unchanged sentences

Key items included in EBITDA:

Environmental reserve adjustments

Other plant optimization costs

Environmental reserve adjustments

Restructuring, separation and other costs

Accelerated depreciation

Avoca business impairment

Avoca business impairment and sale

Loss on pension plan remeasurements

Held for sale depreciation and amortization

Income on divestitures, net

2 unchanged sentences

Total key items included in EBITDA

Unrealized (gains) losses on securities

Unrealized losses (gains) on securities

Total key items, before tax

(a) Depreciation and amortization excludes accelerated depreciation of $3 million for Specialty Additives reportable segment for the three months ended December 31, 2025, which is included as a key item within this table as a component of Adjusted EBITDA.

(a) Depreciation and amortization excludes accelerated depreciation of $3 million for Specialty Additives reportable segment for the six months ended March 31, 2026, and $13 million for Life Sciences for both the three and six months ended March 31, 2025, 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 for both the three and six months ended March 31, 2025, which is included as a key item within this table as a component of Adjusted EBITDA.

Diluted EPS and Adjusted Diluted EPS

The following table reflects the U.S.

GAAP calculation for the 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.

The Adjusted Diluted EPS for the 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.

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.

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) losses on securities – represents (gains) or losses recognized on restricted investments related to the Asbestos trust and Environmental trust for each period.

• Unrealized losses (gains) on securities – represents (gains) or losses 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 months ended December 31, 2024;

• Other and tax reform related activity – primarily represents tax specific key items associated with final tax regulations and tax reform related activity for the three months ended December 31, 2024.

• Uncertain tax positions – represents the impact from the settlement of uncertain tax positions with various tax authorities for the three and six months ended March 31, 2025;

• Other and tax reform related activity – primarily represents tax specific key items associated with final tax regulations and tax reform related activity for the three and six months ended March 31, 2025.

Three months ended

Six months ended

Diluted EPS from continuing operations (as reported)

Key items, before tax:

Environmental reserve adjustments

Other plant optimization costs

Environmental reserve adjustments

Restructuring, separation and other costs

Unrealized losses (gains) on securities

Accelerated depreciation

Avoca business impairment

Avoca business impairment and sale

Loss on pension plan remeasurements

Held for sale depreciation and amortization

Income on divestitures, net

Unrealized (gains) losses on securities

Key items, before tax

11 unchanged sentences

(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 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 months ended December 31, 2025 and 2024, respectively.

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% for both the three and six months ended March 31, 2026, and 21% for both the three and six months ended March 31, 2025.

RESULTS OF OPERATIONS – REPORTABLE SEGMENT REVIEW

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Significant revisions to Ashland’s methodologies are adjusted for all segments on a retrospective basis.

There were no material changes in methodology for the three months ended December 31, 2025 or 2024.

The following table discloses sales, operating loss, depreciation and amortization and EBITDA by reportable segment:

There were no material changes in methodology for the three and six months ended March 31, 2026 or 2025.

The following table discloses sales, operating income (loss), depreciation and amortization and EBITDA by reportable segment:

Three months ended

Six months ended

(In millions - unaudited)

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DEPRECIATION EXPENSE

Life Sciences

Life Sciences (c)

Personal Care

Specialty Additives

Specialty Additives (d)

Intermediates

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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).

(b) Includes a $2 million gain on sale of excess corporate property for the six months ended March 31, 2026, a $8 million gain on sale of excess corporate property for both the three and six months ended March 31, 2025, and a $183 million impairment charge related to the Avoca business for the six months ended March 31, 2025, within the income (loss) on divestitures, net caption of the Statements of Condensed Consolidated Income (Loss).

(c) Depreciation includes accelerated depreciation of $13 million for Life Sciences for both the three and six months ended March 31, 2025.

(d) Depreciation includes accelerated depreciation of $3 million for Specialty Additives for the six months ended March 31, 2026.

(e) 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.

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Three months ended

Six months ended

(In millions)

December 31, 2025

Foreign Currency

March 31, 2026

Foreign currency exchange

The following table provides a reconciliation of the change in operating income for the Life Sciences reportable segment.

Three months ended

Six months ended

(In millions)

December 31, 2025

March 31, 2026

Operating income change

Foreign Currency

Foreign currency exchange

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.

Life Sciences had no key items in the three months ended December 31, 2025 or 2024.

Life Sciences had key items in the three and six months ended March 31, 2026 and 2025.

These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above.

Life Sciences

Three months ended December 31

Three months ended March 31

Six months ended March 31

(In millions)

Operating income

Depreciation and amortization

Depreciation and amortization (a)

Accelerated depreciation

Other plant optimization costs

Adjusted EBITDA

Operating income as a percent of sales

EBITDA as a percent of sales

Three months ended December 31, 2025 compared to three months ended December 31, 2024

Life Sciences' sales, operating income and EBITDA increased in the current quarter primarily due to higher volume, favorable foreign currency exchange, and lower costs, partially offset by unfavorable price/mix.

Adjusted EBITDA as a percent of sales

(a) Depreciation and amortization for Life Sciences excludes accelerated depreciation of $13 million for both the three and six months ended March 31, 2025, which is included as a key item within this table as a component of Adjusted EBITDA.

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Life Sciences' sales remained consistent compared to the prior quarter.

Operating income increased in the current quarter primarily due to lower costs associated with plant optimization and favorable foreign currency exchange partially offset by unfavorable price/mix.

Adjusted EBITDA decreased in the current quarter primarily due to higher costs, including the Calvert City startup delay and weather-related operational disruptions during the quarter and unfavorable price/mix, partially offset by favorable foreign currency exchange.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Life Sciences' sales increased primarily due to favorable foreign currency exchange.

Operating income increased in the current period primarily due to lower costs associated with plant optimization and favorable foreign currency exchange partially offset by unfavorable price/mix.

Adjusted EBITDA decreased in the current period primarily due to higher costs, including the Calvert City startup delay and weather-related operational disruptions during the period and unfavorable price/mix, partially offset by favorable foreign currency exchange.

Personal Care

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Three months ended

Six months ended

(In millions)

December 31, 2025

March 31, 2026

Foreign currency exchange

Avoca business

Foreign Currency

The following table provides a reconciliation of the change in operating income for the Personal Care reportable segment.

Three months ended

Six months ended

(In millions)

December 31, 2025

March 31, 2026

Operating income change

Avoca business

Foreign Currency

Foreign currency exchange

EBITDA and Adjusted EBITDA reconciliation

Personal Care.

There were key items in the three months ended December 31, 2024.

There were key items in the three and six months ended March 31, 2026 and 2025.

These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above.

Personal Care

Three months ended December 31

Three months ended March 31

Six months ended March 31

(In millions)

Operating income

Depreciation and amortization

Depreciation and amortization (a)

Held for sale depreciation and amortization

Other plant optimization costs

2 unchanged sentences

Adjusted EBITDA as a percent of sales

Three months ended December 31, 2025 compared to three months ended December 31, 2024

Personal Care's sales, EBITDA and Adjusted EBITDA decreased in the current quarter due to lower volume, the impact of the Avoca business sale and unfavorable price/mix partially offset favorable foreign currency exchange.

Operating income remained consistent compared to prior year quarter.

(a) Depreciation and amortization includes $2 million for Personal Care associated with the Avoca business assets for both the three and six months ended March 31, 2025, which is included as a key item within this table as a component of Adjusted EBITDA.

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Personal Care's sales increased in the current quarter primarily due to higher volume and favorable foreign currency exchange, partially offset by unfavorable price/mix and the divestiture of the Avoca business in the prior period.

Operating income and Adjusted EBITDA remained relatively consistent compared to prior year quarter.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Personal Care's sales decreased primarily due to the Avoca business sale in the prior period.

Operating income and Adjusted EBITDA decreased in the current period primarily due to higher costs, including the continued effects of other plant optimization costs, and unfavorable price/mix partially offset by higher volume and favorable foreign currency exchange.

Specialty Additives

6 unchanged sentences

Three months ended

Six months ended

(In millions)

December 31, 2025

Foreign Currency

The following table provides a reconciliation of the change in operating loss for the Specialty Additives reportable segment.

March 31, 2026

Foreign currency exchange

The following table provides a reconciliation of the change in operating income (loss) for the Specialty Additives reportable segment.

Three months ended

Six months ended

(In millions)

December 31, 2025

Operating loss change

March 31, 2026

Operating income (loss) change

Foreign currency exchange

EBITDA and Adjusted EBITDA reconciliation

There were key items in the three months ended December 31, 2025 and 2024.

There were key items in the three and six months ended March 31, 2026 and 2025.

These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above.

Specialty Additives

Three months ended December 31

Three months ended March 31

Six months ended March 31

(In millions)

Operating loss

Operating income (loss)

Depreciation and amortization (a)

2 unchanged sentences

Adjusted EBITDA

Operating loss as a percent of sales

Operating income (loss) as a percent of sales

Adjusted EBITDA as a percent of sales

(a) Depreciation and amortization for Specialty Additives excludes accelerated depreciation of $3 million for the three months ended December 31, 2025, which is included as a key item within this table as a component of Adjusted EBITDA.

Three months ended December 31, 2025 compared to three months ended December 31, 2024

Specialty Additives sales, operating loss and EBITDA for the quarter decreased as a result of lower volume and unfavorable price/mix, partially offset by favorable foreign currency exchange.

Adjusted EBITDA increased compared to the prior year quarter primarily due to improved cost performance that offset lower sales volumes and pricing.

(a) Depreciation and amortization for Specialty Additives excludes accelerated depreciation of $3 million for the six months ended March 31, 2026, which is included as a key item within this table as a component of Adjusted EBITDA.

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Specialty Additives' sales remained consistent compared to the prior quarter.

Operating loss and Adjusted EBITDA for the current quarter decreased as a result of higher costs, including the continued effects of other plant optimization costs, and unfavorable price/mix.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Specialty Additives sales, operating loss and Adjusted EBITDA for the current period decreased as a result of higher costs, including the continued effects of plant optimization costs, lower volume, and unfavorable price/mix, partially offset by favorable foreign currency exchange.

Intermediates

4 unchanged sentences

Three months ended

Six months ended

(In millions)

December 31, 2025

The following table provides a reconciliation of the change in operating income for the Intermediates reportable segment.

March 31, 2026

Foreign currency exchange

The following table provides a reconciliation of the change in operating income (loss) for the Intermediates reportable segment.

Three months ended

Six months ended

(In millions)

December 31, 2025

Operating income change

March 31, 2026

Operating income (loss) change

Foreign currency exchange

EBITDA reconciliation

Intermediates had no key items for the three months ended December 31, 2025 or 2024.

Intermediates had no key items for the three or six months ended March 31, 2026 or 2025.

Intermediates

Three months ended December 31

Three months ended March 31

Six months ended March 31

(In millions)

Operating income

Operating income (loss)

Depreciation and amortization

Operating income as a percent of sales

Not meaningful

Operating income (loss) as a percent of sales

EBITDA as a percent of sales

Three months ended December 31, 2025 compared to three months ended December 31, 2024

Intermediates' sales, operating income and EBITDA decreased primarily due to lower volume and higher costs partially offset by favorable price/mix.

Three months ended March 31, 2026 compared to three months ended March 31, 2025

Intermediates' sales decreased in the current quarter primarily due to lower volume while operating income and EBITDA increased primarily due to lower costs.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

Intermediates' sales and EBITDA decreased in the current period primarily due to lower volume while operating income increased primarily due to favorable price/mix.

Unallocated and other

The following table summarizes the key components of the Unallocated and other’s operating loss between the three months ended December 31, 2025 and 2024.

The following table summarizes the key components of the Unallocated and other’s operating loss.

Unallocated and other

Three months ended December 31

Three months ended March 31

Six months ended March 31

(In millions)

1 unchanged sentence

Environmental expenses

Income (loss) on acquisitions and divestitures, net

Income (loss) on divestitures, net

Other expenses (primarily governance and legacy expenses)

Total expense

Three months ended December 31, 2025 compared to three months ended December 31, 2024

Three months ended March 31, 2026 compared to three months ended March 31, 2025

The current and prior year quarter included expense of $3 million and $8 million, respectively, for restructuring activities mainly comprised of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs.

The current and prior year quarter included $10 million and $1 million for environmental expenses, respectively.

The current year included a $2 million income on the sale of excess corporate property.

The current and prior year quarter both included $2 million for environmental expenses.

The prior year quarter included gains of $18 million from divestitures primarily related to the sale of the Avoca business and excess corporate land property.

See Note B of the Notes to the Condensed Consolidated Financial Statements for more information.

Other expenses between quarters were driven by changes in governance and legacy expenses primarily associated with fluctuations in foreign currency, deferred compensation, company-owned life insurance contracts and variable incentive compensation.

Six months ended March 31, 2026 compared to six months ended March 31, 2025

The current and prior year period included expense of $7 million and $11 million, respectively, for restructuring activities mainly comprised of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs.

The current and prior year period included $12 million and $3 million for environmental expenses, respectively.

The current year period included a $2 million income on the sale of excess corporate property.

See Note B of the Notes to Condensed Consolidated Financial Statements for more information.

The prior year quarter included losses of $183 million, related to the Avoca business impairment.

The prior year period included a loss on divestiture of $165 million, primarily related to the $183 million impairment of the Avoca business, $8 million pre-tax gain on the final sale of the Avoca business, and $11 million gain on the sale of a property.

See Note B of the Notes to 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.

Other expenses between periods were driven by changes in governance and legacy expenses primarily associated with fluctuations in foreign currency, deferred compensation, company-owned life insurance contracts and variable incentive compensation, including stock compensation expense in the current period.

FINANCIAL POSITION

7 unchanged sentences

The program was implemented during June 2025 and has been actively offered to suppliers.

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.

There were $5 million and $10 million, respectively, of confirmed invoices, of which $4 million and $5 million, respectively, were paid during the three and six months ended March 31, 2026.

There were $5 million and less than $1 million of confirmed invoices remaining under this program at March 31, 2026 and September 30, 2025, respectively.

Ashland’s cash flows from operating, investing and financing activities, as reflected in the Statements of Condensed Consolidated Cash Flows, are summarized as follows:

Three months ended

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(In millions)

4 unchanged sentences

Discontinued operations

Effect of currency exchange rate changes on cash and cash equivalents

Effect of currency exchange rate changes on cash and cash equivalents (a)

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents increased $89 million for the three months ended December 31, 2025 and decreased $81 million for the three months ended December 31, 2024.

The $89 million increase for the three months ended December 31, 2025, was primarily driven by favorable changes in working capital (fluctuations within accounts receivable, inventory, trade payables and accrued expenses) and other operating cash flows from continuing operations which amounted to inflows of $125 million primarily related to the receipt of a federal tax refund of $103 million.

These inflows were partially offset from outflows from payment of cash dividends and discontinued operations primarily related to retained liabilities for asbestos and environmental claims of $19 million and $16 million, respectively.

The $81 million decrease for the three months ended December 31, 2024, was primarily driven by payment of cash dividends and additions to property, plant and equipment of $19 million and $23 million, respectively.

(a) Zero denotes less than $1 million of activity.

Cash and cash equivalents increased $128 million for the six months ended March 31, 2026 and decreased $132 million for the six months ended March 31, 2025.

The $128 million increase for the six months ended March 31, 2026, was primarily driven by favorable changes in working capital (fluctuations within accounts receivable, inventory, trade payables and accrued expenses) and other operating cash flows from continuing operations which amounted to inflows of $175 million.

The current period was also affected by inflows of $20 million for the settlement of company-owned life insurance policies and $33 million of reimbursements from restricted investments.

These inflows were partially offset from outflows from payment of cash dividends, additions to property, plant and equipment and discontinued operations primarily related to retained liabilities for asbestos and environmental claims of $38 million, $31 million and $25 million, respectively.

The $132 million decrease for the six months ended March 31, 2025, was primarily driven by payment of cash dividends, additions to property, plant and equipment and stock repurchase activity of $38 million, $44 million and $100 million, respectively.

Operating cash flows from continuing operations were outflows of $21 million, while discontinued operations cash flows were outflows of $18 million.

These outflows were partially offset by inflows from short-term debt, proceeds from the sale of the Avoca business, and proceeds from the sale of a land proprerty of $50 million, $16 million and $11 million, respectively.

The change in cash flows from operating activities from continuing operations was primarily driven by favorable working capital, including the favorable impact between periods of the U.S.

and Foreign Accounts Receivable Sales Program activity, and the receipt of a federal tax refund of $103 million.

and Foreign Accounts Receivable Sales Program activity.

See the Statements of Condensed Consolidated Cash Flows for additional information.

2 unchanged sentences

Free Cash Flow does not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments.

Three months ended

Six months ended

(In millions)

3 unchanged sentences

Tax refund (a)

Cash outflows from U.S.

Cash (inflows) outflows from U.S.

Accounts Receivable Sales Program (b)

3 unchanged sentences

Ongoing Free Cash Flow

Net income (loss)

Adjusted EBITDA (f)

1 unchanged sentence

Not meaningful

Ongoing Free Cash Flow Conversion (h)

(a) Represents receipt of the tax refund related to the capital loss carryback from the Nutraceutical divestiture.

(b) Represents activity associated with the U.S.

(b) Represents receipt of tax refund related to the capital loss carryback from the Nutraceutical divestiture.

Accounts Receivable Sales Program impacting each period presented.

(d) Restructuring payments incurred during each period.

(e) Represents cash outflows associated with environmental and related litigation payments which will be reimbursed by the environmental trust.

(f) See Adjusted EBITDA reconciliation.

(g) Operating Cash Flow Conversion is defined as Cash flows provided (used) by operating activities from continuing operations divided by Net loss.

(h) 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 $788 million and $782 million as of December 31, 2025 and September 30, 2025, respectively.

Liquid assets (cash, cash equivalents and accounts receivable) amounted to 135% and 108% of current liabilities as of December 31, 2025 and September 30, 2025, respectively.

(d) Represents activity associated with the Foreign Accounts Receivable Sales Program impacting each period presented.

(e) Restructuring payments incurred during each period.

(f) Represents cash outflows associated with environmental and related litigation payments which will be reimbursed by the environmental trust.

(g) See Adjusted EBITDA reconciliation.

(h) Operating Cash Flow Conversion is defined as Cash flows provided (used) by operating activities from continuing operations divided by net income (loss).

(i) 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 $814 million and $782 million as of March 31, 2026 and September 30, 2025, respectively.

Liquid assets (cash and cash equivalents and accounts receivable) amounted to 149% and 108% of current liabilities as of March 31, 2026 and September 30, 2025, respectively.

The increase in Ongoing Free Cash Flows was primarily a result of favorable working capital, lower additions to property, plant and equipment and lower variable compensation payouts between periods.

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Foreign Accounts Receivable Sales Program

(a) Includes $225 million and $231 million related to the Asbestos trust and $122 million and $116 million related to the Environmental trust as of December 31, 2025 and September 30, 2025, respectively.

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 December 31, 2025.

In total, Ashland’s available liquidity position, which includes cash and cash equivalents and the revolving credit facility, was $900 million at December 31, 2025, compared to $811 million at September 30, 2025.

(a) Includes $213 million and $231 million related to the Asbestos trust and $113 million and $116 million related to the Environmental trust as of March 31, 2026 and September 30, 2025, respectively.

In total, Ashland’s available liquidity position, which includes cash and cash equivalents and the revolving credit facility, was $939 million at March 31, 2026, compared to $811 million at September 30, 2025.

Ashland had no available liquidity under the U.S.

and Foreign Accounts Receivable Sales Programs as of December 31, 2025.

Ashland also maintained $347 million of restricted investments at December 31, 2025 to pay for future asbestos claims and environmental remediation and related litigation.

and Foreign Accounts Receivable Sales Programs as of March 31, 2026.

Ashland also maintained $326 million of restricted investments at March 31, 2026, to pay for future asbestos claims and environmental remediation and related litigation.

Capital resources

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Long-term debt (less debt issuance cost discounts) (a)

(a) Includes $9 million and $10 million of debt issuance cost discounts as of December 31, 2025 and September 30, 2025 , respectively.

Debt as a percent of capital employed was 42% at both December 31, 2025 and September 30, 2025.

At December 31, 2025, Ashland’s total debt had an outstanding principal balance of $1,420 million, discounts of $24 million, and debt issuance costs of $9 million.

(a) Includes $9 million and $10 million of debt issuance cost discounts as of March 31, 2026 and September 30, 2025 , respectively.

Debt as a percent of capital employed was 42% at both March 31, 2026 and September 30, 2025.

At March 31, 2026, Ashland’s total debt had an outstanding principal balance of $1,405 million, discounts of $22 million, and debt issuance costs of $9 million.

Ashland has no long-term debt (excluding debt issuance costs) maturing within 2026, $4 million in 2027, $573 million due in fiscal 2028, $97 million due in 2029, zero in 2030, and $450 million in 2031.

Ashland credit ratings

Ashland’s corporate credit rating by Standard & Poor’s remained unchanged, while Moody’s Investor Services was downgraded to Ba2 during the three months ended December 31, 2025.

As of December 31, 2025, both Moody’s Investor Services and Standard & Poor's outlook remained at stable.

Ashland’s corporate credit rating by Standard & Poor’s was downgraded to BB during the three months ended March 31, 2026, and Moody’s Investor Services was downgraded to Ba2 during the six months ended March 31, 2026.

As of March 31, 2026, 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.

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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 December 31, 2025, Ashland is in compliance with all debt agreement covenant restrictions under the 2022 Credit Agreement.

As of March 31, 2026, 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 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 loss.

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 December 31, 2025, Ashland’s calculation of the consolidated net leverage ratio was 2.7.

At March 31, 2026, Ashland’s calculation of the consolidated net leverage ratio was 2.6.

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 December 31, 2025, Ashland’s calculation of the consolidated interest coverage ratio was 6.5.

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 March 31, 2026, Ashland’s calculation of the consolidated interest coverage ratio was 6.5.

Any change in Covenant Adjusted EBITDA of $100 million would have an approximate 0.5x effect on the consolidated net leverage ratio and a 1.6x effect on the consolidated interest coverage ratio.

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Additional capital resources

Total equity decreased by $26 million since September 30, 2025 to $1,878 million at December 31, 2025.

The decrease of $26 million was due to net loss of $12 million and dividends of $19 million partially offset by $2 million of deferred translation gains and $3 million of common stock issued and other.

Total equity decreased by $38 million since September 30, 2025 to $1,866 million at March 31, 2026.

The decrease of $38 million was due to dividends of $38 million and $10 million of translation losses partially offset by $6 million of common stock issued and $4 net income.

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").

As of December 31, 2025, $520 million remained available for repurchase under the 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 March 31, 2026, $520 million remained available for repurchase under the 2023 Stock Repurchase Program.

Stock repurchase program agreements

There was no stock repurchase activity during the three months ended December 31, 2025 and 2024.

The following table provides the common stock repurchase activity:

Three months ended

Six months ended

(In millions, except per share data)

Number of shares repurchased

Weighted-average price per share (a)

Aggregate purchase price (a)

(a) Includes transaction costs.

Stockholder dividends

Ashland paid dividends of 41.5 cents per share for the first quarter of fiscal 2026 and 40.5 cents per share in the first quarter of fiscal 2025.

Ashland paid dividends of 41.5 cents per share for the first and second quarters of fiscal 2026 and 40.5 cents per share in the first and second quarters of fiscal 2025.

Capital expenditures

Capital expenditures were $14 million for the three months ended December 31, 2025, compared to $23 million for the three months ended December 31, 2024.

Capital expenditures were $31 million for the six months ended March 31, 2026, compared to $44 million for the six months ended March 31, 2025.

CRITICAL ACCOUNTING POLICIES

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Significant items that are subject to such estimates and assumptions include, but are not limited to, environmental remediation, asbestos litigation, the accounting for goodwill and other indefinite-lived intangible assets and income taxes.

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 year ended September 30, 2025.

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, 2025.

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 three months ended December 31, 2025.

Ashland is narrowing its full year fiscal 2026 Adjusted EBITDA guidance to a range of $400 to $420 million.

The updated outlook reflects approximately $11 million of temporary impacts from the Calvert City startup delay and recent weather-related disruptions, all isolated to the second quarter.

While the Company expects these impacts to be recoverable over time, the timing of absorption recovery remains uncertain and is reflected in the revised guidance range.

All other elements of the Company’s full-year guidance remain unchanged.

While the broader macro environment remains mixed, Ashland’s core end markets in Personal Care and Life Sciences continue to demonstrate resilience, supported by stable fundamentals and ongoing traction across innovation-driven and globalized product lines.

The Company’s cost savings actions are progressing and continue to support improved visibility into achieving the full-year framework.

Early second quarter sales trends have been encouraging, reflecting momentum in several consumer-focused markets.

Ashland continues to expect the year to follow a typical seasonal cadence with stronger performance in the second half as commercial activity and operational efficiencies build.

Narrowing prior guidance

$1,835 million to $1,905 million, supported by continued momentum in innovation-driven and globalized product lines;

No material changes have been made to the valuation techniques during the three and six months ended March 31, 2026.

Ashland is updating its full-year fiscal 2026 sales guidance to a range of $1,835 to $1,870 million and its Adjusted EBITDA guidance to a range of $385 to $400 million.

The updated outlook reflects productivity challenges associated with the Hopewell scale-up, as well as softer energy-related demand tied to the Middle East conflict and

reduced EV driven demand for BDO based derivatives.

These impacts are partially offset by resilient demand in core end markets, ongoing pricing actions, and continued growth across the globalize and innovate platforms.

Despite a mixed macroeconomic backdrop, Ashland’s core Personal Care and Life Sciences end markets continue to show resilience, underpinned by stable fundamentals and sustained momentum in innovation‑led and globalized product offerings.

Second quarter sales trends were encouraging, reflecting solid momentum across several consumer‑focused markets, with early third quarter activity showing a continuation of this commercial strength.

While cost‑savings initiatives remain in progress, a slower‑than‑anticipated productivity ramp‑up associated with the Hopewell HEC manufacturing site is delaying the pace of benefit realization.

Ashland continues to expect the year to follow a typical seasonal cadence, with stronger performance anticipated in the second half as commercial activity builds and operational stability improves.

Updating prior guidance

$1,835 to $1,870 million

• Adjusted EBITDA:

$385 million to $400 million

prior guidance $400 million to $430 million;

• Adjusted Diluted Earnings Per Share Excluding Intangibles Amortization:

double digit plus growth reflecting operating improvement and progress in Portfolio Optimization;

mid-to-high single-digit growth

• Ongoing Free Cash Flow Conversion:

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• Portfolio Optimization initiatives completed last year continue to support mix improvement and structural margin resiliency

• Demand in Life Sciences and Personal Care is expected to remain resilient, supported by stable fundamentals and progress across innovation-driven product lines;

• Specialty Additives and Intermediates markets remain mixed, with a coatings recovery expected to be regionally uneven until broader industrial and housing activity improves;

• Demand in Life Sciences and Personal Care is expected to remain resilient, supported by stable fundamentals and progress across innovation-driven and globalized product lines

• Specialty Additives and Intermediates markets remain stable at trough levels, with a coatings recovery expected to be regionally uneven until broader industrial and housing activity improves.

In Specialty Additives the company is expanding its coatings product offering to shift momentum to overall growth.

Against this backdrop, the outlook differs across key end markets, with specific areas under pressure:

o Construction is expected to remain a year‑over‑year headwind as the company actively manages product mix toward higher‑value, pharma‑grade applications.

o Energy, a smaller end market exposure, is expected to decline in the second half due to the evolving conflict in the Middle East.

o EV battery manufacturing build‑outs continue to be delayed amid softer demand.

• Growth in high-value globalized platforms including biofunctional actives, microbial protection, injectables, and tablet coatings is expected to outpace underlying markets

• Manufacturing assumptions reflect approximately $11 million of temporary impacts from the Calvert City startup delay and recent weather-related disruptions, all isolated to the second quarter, with absorption recovery expected over time as visibility improves;

• The manufacturing optimization program remains on track, and the associated benefits are expected to strengthen as the year progresses;

the company continues to expect approximately $30 million in cost savings under the $90 million dollar program for fiscal 2026;

• HEC network performance continues to improve as post consolidation cost escalation moderates and productivity initiatives advance, with additional operational stability and cost benefits expected to build through the year;

• Raw material costs are assumed to remain generally stable to positive with supply chains performing reliably, in line with recent trends;

• The manufacturing optimization program is progressing;

however, fiscal 2026 savings expectations have been reduced by approximately $10 to $12 million, reflecting delayed benefit realization driven primarily by a slower‑than‑anticipated productivity ramp‑up at the Hopewell HEC site.

Corrective actions are underway, with gradual improvement expected as operational stability is restored over time

• Raw material and freight costs are expected to trend higher amid geopolitically related supply pressures in the Middle East

• Ashland believes it is favorably positioned on the global cost curve and has implemented recent pricing actions that are expected to substantially offset these impacts

• Tariff-related uncertainty remains elevated, and the outlook assumes no material incremental impacts beyond known exposures, with mitigation actions aligned to current regulatory expectations

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Ashland’s market risk exposure at December 31, 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, 2025.

Ashland’s market risk exposure at March 31, 2026 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, 2025.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis