ASHLAND Q3 FY26 earnings call ASH

Ashland delivered a strong third quarter with sales up 7% year-over-year to $497 million, driven by broad-based volume growth across all business units. The company reported adjusted EBITDA of $109 million, down from $113 million in the prior year, primarily due to lower production rates earlier in the year and normalization of incentive compensation. Management noted sequential improvement in profitability and expects a further step-up in Q4 as operational performance improves and pricing actions gain traction.

The Globalize and Innovate strategies continue to be key drivers of growth, with both initiatives exceeding their full-year targets through the first nine months of the fiscal year. Innovation highlights include momentum in high-purity excipients, skin longevity technologies, and formulated rheology solutions. Investments in regional manufacturing, such as the new public coatings facility in India and the microbial protection plant in Europe, are strengthening the company's regional presence and increasing exposure to higher-value applications.

Pricing actions contributed approximately 1% to sales year-over-year, reflecting a sequential improvement of 300 basis points. Management expects continued sequential improvement in Q4, with the full-year run rate for pricing actions anticipated to be at the midpoint of the 3% to 8% range. The company's focus is on recovering inflation and maintaining margins, rather than expanding them, given its reduced exposure to petrochemicals and high-energy raw materials.

Life Sciences delivered 11% sales growth to $180 million, with pharma achieving its fifth consecutive quarter of volume gains, driven by high-purity excipients and injectables. The company is benefiting from the growth of GLP-1 drugs, both through chemicals used in API production and excipients for oral solid doses. A new permeation enhancer, designed to aid absorption of biologics in oral format, is being launched in August, with positive pre-launch momentum.

Personal Care sales increased 5% to $155 million, with biofunctional actives growing double-digits and microbial protection seeing double-digit volume gains across all regions. The segment is leveraging strong technology and customer engagement, with new ingredients like Eternight gaining early commercial wins. The successful commissioning of the European microbial protection facility has reduced cost structure and enabled market share gains, contributing to mid-single-digit growth and margin expansion.

Specialty Additives sales grew 4% to $136 million, driven by share gains and pricing in Coatings and Performance Specialties, despite continued weakness in Construction and Energy & Resources. The Hopewell facility turnaround was successfully completed, with new equipment and process controls implemented to improve productivity. While end markets remain mixed, commercial execution and innovation, including novel additives, are supporting expectations for improved profitability over time^⏳.

Ashland announced a cooperation agreement with Ancora, welcoming Peter Thomas and Allen Spizzo to the Board as Independent Directors. A Capital Allocation Advisory Committee is being formed to enhance rigor and objectivity in capital allocation strategy. Management emphasized that the primary focus remains on executing the strategy to drive performance and create value, with the Board regularly reviewing all strategic options.