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YoY shift: Lean -
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is -0.27pp more bearish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-
Not scored
Net-tone change vs last year's 10-K.
MD&A
-0.27pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
No section text extracted for this filing. The 10-K may use a non-standard template that the parser doesn't recognize - the original doc is still linked in the Stats tab.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
impairment+84
loss+57
litigation+20
restructuring+7
divestitures+7
Positive rising
benefit+17
alliance+6
transparency+3
gain+1
effective+1
MD&A (Item 7)
53,054 words
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements for the years ended September 30, 2025, 2024 and 2023.
BUSINESS OVERVIEW
Ashland profile
Ashland is a global additives and specialty ingredients company with a conscious and proactive mindset for sustainability. The Company serves customers in a wide range of consumer and industrial markets, including architectural coatings, construction, energy, food and beverage, personal care and pharmaceutical. With approximately 2,900 employees worldwide, Ashland serves customers in more than 100 countries.
Ashland’s sales generated outside of North America were 73%, 69% and 69% in 2025, 2024 and 2023, respectively. Sales by region expressed as a percentage of total consolidated sales for the years ended September 30, were as follows:
Sales by Geography
North America (a)
Europe (a)
Asia Pacific
Latin America & other
Ashland includes only U.S. and Canada in its North America designation and includes Europe, the Middle East and Africa in its Europe designation.
Reportable segments
Ashland’s reportable segments include Life Sciences, Personal Care, Specialty Additives and Intermediates. Unallocated and Other includes corporate governance activities and certain legacy matters. The contribution to sales by each reportable segment expressed as a percentage of total consolidated sales for the years ended September 30, were as follows:
Uncertainty related to tariffs and global trade policy changes
Fiscal 2025 saw increased and continuing regulatory activity involving notable changes to U.S. and foreign trade policy, leading to significant uncertainty in the macroeconomic and geopolitical environments. Beginning in the second quarter of 2025, the U.S. instituted a series of tariffs on imports from China, the E.U., India, and other countries which has resulted in the imposition of retaliatory measures against U.S. goods. As a global business, we are exposed to risks associated with tariffs and other trade conflicts. Such risks may include, but are not limited to, (i) changes to and strains on the global supply chain and our ability to source materials; (ii) increased sourcing and manufacturing costs; (iii) decreased demand for Ashland’s products in affected markets; and (iv) other impacts on Ashland’s ability to operate optimally.
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. 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 conflict
Business disruptions, including those related to the ongoing conflicts between Israel/Iran, Ukraine/Russia, and Israel/Hamas continue to impact businesses around the globe. While it is impossible to predict the effects of the conflicts, they may include escalating geopolitical tensions (including the imposition of existing and additional sanctions by the U.S. and the EU on Russia), worsening macroeconomic and general business conditions, supply chain interruptions and unfavorable energy markets, and the impact to Ashland could be material. Ashland is closely monitoring these situations and maintains business continuity plans that are intended to continue operations and mitigate the effects of events that could disrupt its business.
Ashland does not have manufacturing operations in Israel, Russia, Ukraine, or Belarus. Ashland sells (or previously sold) additives and specialty ingredients to manufacturers in these countries for their use in pharmaceuticals, personal care, and coatings applications. Sales to Russia and Belarus were previously limited and our products were primarily used in products and applications that are essential to the population's well-being and currently support our customers' humanitarian efforts. We have sales controls in place to ensure that future potential sales into the region are only to support critical pharmaceutical or personal hygiene products which are essential for the general population and in accordance with any applicable sanctions. Sales to Israel, Ukraine, Russia, and Belarus represent less than 1% of total consolidated sales and less than 1% of total consolidated assets (related to accounts receivable).
Other significant items
Stock repurchase program agreements
During fiscal 2025, under the Company's current common share repurchase program (the "2023 Stock Repurchase Program"), Ashland initiated and completed a number of Rule 10b5-1 trading plan agreements. Ashland paid a total of $100 million and repurchased a total of 1.5 million shares. During the most recent three fiscal years, Ashland paid a total of $780 million and received a total of 8.9 million shares. See Note N of the Notes to Consolidated Financial Statements for more information.
Restructuring programs
As previously announced, Ashland initiated a new $30 million pre-tax restructuring plan to offset the impact from the Nutraceuticals business sale, completed in fiscal 2024, and other portfolio optimization actions, which were expected to be realized 50 percent in fiscal 2025 and 50 percent in fiscal 2026. Ashland realized approximately $20 million or 67% of the total targeted savings in fiscal 2025.
Ashland is also advancing a multi-year manufacturing optimization restructuring plan to improve operational cost and strengthen its competitive position. This optimization plan is expected to generate pre-tax savings of $50 million to $55 million with $60 million being achievable as market conditions improve, particularly within China. Ashland realized approximately $5 million in savings in fiscal 2025.
Ashland is also continuing to execute its fiscal 2024 portfolio and plant optimization actions to further strengthen Ashland’s resilience and improve margins and returns. These previously announced actions include initiatives focused on carboxymethylcellulose (CMC), methylcellulose (MC), Nutraceuticals and Avoca Portfolio Optimization (collectively, Portfolio Optimization). Overall, these Portfolio Optimization actions reduced sales and operating income (loss) by approximately $208 million and $29 million, respectively, for fiscal 2025, as compared to the prior year. Adjusted EBITDA was also reduced by $45 million in fiscal 2025, as compared to the prior year.
The following table summarizes the expense impact of the Portfolio Optimization actions for the years ended September 30:
(In millions)
Accelerated Depreciation
Restructuring, separation and other costs
Other plant optimization costs
Avoca business sale
During fiscal 2025, Ashland completed the sale of its Avoca business to Mane SA. Proceeds from the sale were $16 million, net of transaction costs. The Avoca business was included within Ashland's Personal Care reportable segment. Ashland determined this transaction did not qualify for discontinued operations treatment since it neither represented a strategic shift nor did it have a major effect on Ashland's operations and financial results.
Ashland recorded an impairment charge of $183 million ($1 million allocated to goodwill, $134 million to other intangible assets, $33 million to property, plant and equipment, $14 million to operating lease assets, net and $1 million to other current assets) during the year ended September 30, 2025, within the income (loss) on acquisitions and divestitures, net caption of the Statement of Consolidated Comprehensive Income (Loss). The tax benefit associated with the sale is included within the income tax expense (benefit) caption of the Statement of Consolidated Comprehensive Income (Loss) for the year ended September 30, 2025. See Note K of the Notes to Consolidated Financial Statements for tax details associated with the transaction. Ashland also recorded a pre-tax gain on sale of $8 million following the completion of this sale, mainly related to working capital movements, within the income (loss) on acquisitions and divestitures, net caption of the Statement of Consolidated Comprehensive Income (Loss) during the year ended September 30, 2025.
Goodwill impairment
During the third quarter of fiscal 2025, Ashland experienced a continued decline in the market price of its Common Stock. Ashland also experienced slowing growth due to a weakening macroeconomic environment that is dampening consumer sentiment and demand globally which resulted in lower growth and lower margins for the Life Sciences and Specialty Additives reportable segments (and reporting units) than what was previously expected. These factors led Ashland to determine that triggering events occurred, and a quantitative goodwill impairment assessment was performed during the third quarter of fiscal 2025. Following the aforementioned quantitative analysis, the carrying value of the Life Sciences and the Specialty Additives reporting units exceeded their fair value, resulting in non-cash goodwill impairment charges of $375 million and $331 million, respectively, for a total goodwill impairment charge of $706 million, which was recorded during the year ended September 30, 2025, within the goodwill impairment caption of the Statement of Consolidated Comprehensive Income (Loss). No subsequent indicators of impairment have been identified.
RESULTS OF OPERATIONS – CONSOLIDATED REVIEW
Consolidated review
Overview
Key financial results for fiscal 2025, 2024 and 2023 included the following:
(In millions except per share data)
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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)
As a result of the loss from continuing operations attributable to Ashland during fiscal 2025, the effect of the share-based awards convertible to common stock would be antidilutive and have been excluded from the diluted EPS calculation.
These are non-GAAP financial measures. See "Use of Non-GAAP Financial Measures" section below for reconciliations to U.S. GAAP.
Ashland’s net loss of $845 million (loss of $18.23 diluted earnings per share) in 2025, and net income of $169 million ($3.36 diluted earnings per share) in 2024 and $178 million ($3.31 diluted earnings per share) in 2023 included a loss from discontinued operations of $23 million, (loss of $0.49 diluted earnings per share) in 2025, and $30 million ($0.59 diluted earnings per share) in 2024, and a net income from discontinued operations of $10 million ($0.18 diluted earnings per share) in 2023.
Results for Ashland’s continuing operations, diluted earnings (loss) per share from continuing operations and operating income (loss) for fiscal 2025, 2024 and 2023 included certain key items that were excluded to arrive at Adjusted EBITDA and are quantified in the “Use of Non-GAAP Financial Measures” section of this Annual Report on Form 10-K. These pre-tax key items totaled expense of $959 million, $227 million and $21 million in fiscal 2025, 2024 and 2023, respectively, impacting continuing operations, including a non-cash goodwill impairment charge of $706 million in fiscal 2025 ($375 million for the Life Sciences and $331 million for the Specialty Additives reportable segments). Continuing operations was also impacted by unfavorable discrete tax items totaling $31 million in 2025 and favorable discrete items totaling $234 million and $44 million in 2024 and 2023, respectively, for various tax specific key items for uncertain tax positions, valuation allowances, restructuring and separation activity and tax reform related activity. The pre-tax key items impacting operating income (loss) totaled expense of $982 million, $273 million, and $52 million in fiscal 2025, 2024 and 2023, respectively. Excluding these key items, continuing operations, diluted earnings per share from continuing operations and operating income (loss) decreased from fiscal 2024 to 2025, driven by Portfolio Optimization actions, reduced volume, and lower pricing. This was partially offset by lower selling, administrative, research and development costs. The increase in income from continuing operations, diluted earnings per share from continuing operations and operating income (loss) from fiscal 2023 to 2024 was primarily due to deflationary raw materials offset by unfavorable pricing and lower volume. In addition, diluted earnings per share from continuing operations was also impacted by common share reductions from repurchases of Ashland common stock in the amount of $100 million in 2025, $380 million in 2024 and $300 million in 2023. These common stock repurchases reduced the number of weighted average shares from 54 million diluted shares in 2023 to 50 million diluted shares in 2024 and to 47 million diluted shares in 2025.
Ashland’s Adjusted EBITDA was $401 million for 2025 and $459 for both 2024 and 2023 (see U.S. GAAP reconciliation under “Use of Non-GAAP Financial Measures” below). Adjusted EBITDA decreased from fiscal 2024 to 2025 primarily due to Portfolio Optimization actions, reduced volume, and lower pricing. This was partially offset by lower selling, administrative, research and development costs. Adjusted EBITDA remained consistent from fiscal 2023 to 2024 primarily due to deflationary raw materials, unfavorable product mix and favorable foreign exchange currency, offset by unfavorable pricing and lower volume. Adjusted Diluted EPS from Continuing Operations (non-GAAP) Excluding Intangibles Amortization Expense was also impacted by these key factors along with the impact of common share repurchases noted above.
For further information on the items reported above, see the discussion in the comparative Statements of Consolidated Comprehensive Income (Loss) caption review.
Statements of Consolidated Comprehensive Income (Loss) – caption review
A comparative analysis of the Statements of Consolidated Comprehensive Income (Loss) by caption is provided as follows for the years ended September 30:
(In millions)
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Sales
The following table provides a reconciliation of the change in sales between fiscal years 2025 and 2024 and between fiscal years 2024 and 2023.
(In millions)
2025 change
2024 change
Sales change
Divestitures
Volume
Price/mix
Foreign currency exchange
Change in sales
Sales for 2025 decreased $289 million, or 14%, compared to 2024. The decrease was driven by the unfavorable impact of divestitures, lower volume, and unfavorable pricing, which was partially offset by favorable foreign currency exchange. Portfolio optimization initiatives had an approximate $208 million impact on sales in the current year compared to the prior year, primarily within divestitures and volume caption changes.
Sales for 2024 decreased $78 million, or 4%, compared to 2023 primarily from unfavorable pricing. Pricing was softer as compared to the prior year in a moderately deflationary raw material environment. CMC and MC portfolio optimization initiatives and the Nutraceuticals business sale reduced sales by approximately $30 million during fiscal year 2024.
(In millions)
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Cost of sales
Gross profit as a percent of sales
Fluctuations in cost of sales were impacted by product line and plant optimization costs in 2025 and 2024 and the effects of challenges in shipping and logistics in 2023. In addition, divestitures and other certain charges incurred relating to restructuring activities contributed to a significant impact in 2025.
The following table provides a reconciliation of the changes in cost of sales between fiscal years 2025 and 2024 and between fiscal years 2024 and 2023.
(In millions)
2025 change
2024 change
Cost of sales change
Divestiture
Volume
Operating costs
Foreign currency exchange
Price/mix
Change in cost of sales
Cost of sales for 2025 decreased $220 million compared to 2024. The decrease was primarily driven by the favorable impact of divestitures, lower sales volume, and lower operating costs, partially offset by unfavorable pricing and unfavorable foreign exchange currency. The current year operating costs were affected by $41 million of accelerated depreciation for product line optimization activities at manufacturing facilities within the Life Sciences, Personal Care and Specialty Additives reportable segments and $22 million of other plant optimization costs while the prior year period included $57 million of accelerated depreciation for product line optimization activities at two Specialty Additives manufacturing plants and one Personal Care manufacturing plant, and $10 million of other plant optimization costs. Gross profit as a percentage of sales increased 0.9 percentage points primarily due to production volume recovery versus inventory corrective actions and decreased accelerated depreciation compared to the prior year period.
Cost of sales for 2024 decreased $28 million compared to 2023. Favorable product price/mix was the primary factor for the decrease. This decrease was partially offset by higher operating costs driven by higher unit manufacturing costs associated with decreased plant loading to produce to demand in the first half of fiscal 2024, $57 million of accelerated depreciation for product line optimization activities associated with two Specialty Additives manufacturing facilities and one Personal Care manufacturing facility, $10 million of other plant optimization costs, and higher volume compared to inventory control measures in the prior year. Gross profit as a percentage of sales decreased 1.3 percentage points primarily as a result of higher operating costs including higher unit manufacturing cost and product line optimization activities.
(In millions)
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Selling, general and administrative expense
As a percent of sales
Selling, general and administrative expense for 2025 decreased $60 million compared to 2024, while expenses as a percent of sales decreased 0.2 percentage points. Key drivers of the fluctuation in selling, general and administrative expense compared to 2024 were:
Expense of $22 million and $30 million comprised of key items for severance, lease abandonment and other restructuring costs during 2025 and 2024, respectively;
$34 million and $45 million in net environmental-related expenses during 2025 and 2024, respectively (see Note M of the Notes to Consolidated Financial Statements for more information);
$11 million capital project impairment charge in 2024;
A $5 million charge associated with the impact of a currency devaluation in Argentina during 2024;
A $4 million legal settlement during 2024;
A $3 million benefit related to domestic tax credits in 2025; and
Decreases associated with the following:
Lower variable compensation and stock based compensation expense;
The favorable impact of divestitures in the current year;
The realized cost reductions associated with restructuring actions ; and
Favorable foreign currency exchange of $2 million.
Selling, general and administrative expense for 2024 increased $39 million compared to 2023, while expenses as a percent of sales increased 2.4 percentage points. Key drivers of the fluctuation in selling, general and administrative expense compared to 2023 were:
Expense of $30 million and $9 million comprised of key items for severance, lease abandonment and other restructuring costs during 2024 and 2023, respectively;
$45 million and $54 million in net environmental-related expenses during 2024 and 2023, respectively (see Note M of the Notes to Consolidated Financial Statements for more information);
$11 million capital project impairment charge in 2024 and a $4 million impairment charge in 2023 associated with the sale of a Specialty Additives manufacturing facility;
$12 million gain associated with ICMS Brazil tax credit in 2023;
A $5 million charge associated with the impact of a currency devaluation in Argentina during 2024;
A $4 million legal settlement during 2024; and
Increases associated with the following:
Higher variable compensation expense, partially offset by lower stock based compensation;
Higher salary, benefits and travel expenses of $10 million; and
Partially offset by favorable foreign currency exchange of $5 million.
(In millions)
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Research and development expense
Research and development expense decreased $1 million in 2025 compared to 2024 primarily due to lower compensation costs. In 2024, the $4 million increase compared to 2023 was primarily due to higher compensation costs.
(In millions)
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Intangibles amortization expense
Amortization expense decreased $13 million in 2025 compared to 2024 primarily due to the impact of fully amortized intangibles in prior periods and the impact of the Avoca business divested during 2025. Amortization expense decreased $17 million in 2024 compared to 2023 primarily due to the impact of fully amortized intangibles in prior periods and the impact of the Nutraceuticals business divested during 2024.
(In millions)
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Equity and other income
Equity and other income decreased in 2025 compared to 2024 primarily related to lower China financial cash subsidies in 2025. Equity and other income remained relatively consistent in 2024 compared to 2023.
(In millions)
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Goodwill impairment
Ashland recorded a $706 million goodwill impairment charge in 2025. See Note G of the Notes to Consolidated Financial Statements for more information.
(In millions)
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Income (loss) on acquisitions and divestitures, net
Income (loss) on acquisitions and divestitures, net during 2025 primarily relates to a net $175 million impairment and sale of the Avoca business. In addition, Ashland recorded a pre-tax gain on sale of excess corporate real estate of $14 million during 2025. See Note B of the Notes to Consolidated Financial Statements for more information.
Income (loss) on acquisitions and divestitures, net during 2024 primarily relates to $107 million impairment charge and loss on sale associated with the divestiture of the Nutraceuticals business. In addition, a $7 million reserve for foreign VAT taxes was also recorded in 2024 associated with the divested Nutraceuticals business legal entities. See Note B of the Notes to Consolidated Financial Statements for more information.
Income (loss) on acquisitions and divestitures, net during 2023 primarily relates to a $7 million gain on the sale of excess corporate real estate.
(In millions)
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Net interest and other expense (income)
Interest expense
Interest income
Loss on the accounts receivable sale programs
Investment securities income
Other financing costs
Net interest and other expense (income) increased by $57 million during 2025 compared to 2024. Interest expense increased primarily related to lower capitalized interest on capital projects in 2025 while interest income decreased primarily due to the decrease in cash equivalents during the 2025 compared to 2024. Restricted investments gains of $33 million and $75 million included realized gains of $20 million compared to $60 million for 2025 and 2024, respectively. See Note E of the Notes to Consolidated Financial Statements for more information on the restricted investments.
Net interest and other expense (income) decreased by $30 million in 2024 compared to 2023. Interest expense and interest income remained primarily consistent to the prior year. Restricted investments gains of $75 million and $42 million included
realized gains of $60 million compared to $29 million for 2024 and 2023, respectively. See Note E of the Notes to Consolidated Financial Statements for more information on the restricted investments.
(In millions)
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Other net periodic benefitloss
Other net periodic benefit expense during 2025 primarily included interest cost of $14 million offset by expected return on plan assets of $10 million and a $3 million gain on pension postretirement plan remeasurements.
Other net periodic benefit expense during 2024 primarily included interest cost of $16 million and a $14 million loss on pension postretirement plan remeasurements offset by expected return on plan assets of $8 million.
Other net periodic benefit expense during 2023 primarily included interest cost of $15 million offset by expected return on plan assets of $7 million and a $2 million gain on pension and other postretirement plan remeasurements.
(In millions)
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Income tax expense (benefit)
Effective tax rate
The 2025 effective tax rate was impacted by jurisdictional income mix, nondeductible goodwill impairment of $706 million, as well as unfavorable discrete items of $36 million primarily related changes in state and foreign tax activity and uncertain tax positions.
The 2024 effective tax rate was impacted by jurisdictional income mix, as well as favorable discrete items of $231 million primarily related to changes in foreign tax activity and the tax impact of the Nutraceuticals business divestiture.
The 2023 effective tax rate was impacted by jurisdictional income mix, as well as favorable discrete items of $49 million primarily related to uncertain tax positions.
Adjusted income tax expense
Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income (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. The Effective Tax Rate, Excluding Key Items, which is a non-GAAP measure, has been prepared to illustrate the ongoing tax effects of Ashland’s operations. Management believes investors and analysts use this financial measure in assessing Ashland's business performance and that presenting this non-GAAP measure on a consolidated basis assists investors in better understanding Ashland’s ongoing business performance and enhancing their ability to compare period-to-period financial results.
The effective tax rates during 2025, 2024 and 2023 were 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;
Valuation allowances – Includes the impact from the release of certain foreign tax credit valuation allowances;
Restructuring and separation activity – Includes the tax impact of the Nutraceuticals business divestiture and company-wide restructuring activities; and
Other and tax reform related activity – Includes miscellaneous state and foreign statute adjustments.
The following table is a calculation of the effective tax rate, excluding the impact of these key items for the years ended September 30:
(In millions)
Income (loss) from continuing operations before income taxes
Key items (pre-tax) (a)
Adjusted income from continuing operations before income taxes
See Adjusted EBITDA reconciliation table disclosed below in this Management, Discussion and Analysis of Financial Condition and Results of Operation for a summary of the key items, before tax.
The tax rate specific to the jurisdiction in which the key item originates is used to calculate the tax effect of key items.
For additional information on the effect that these tax specific key items had on EPS, see the Adjusted Diluted EPS table disclosed below in this Management Discussion and Analysis of Financial Condition and Results of Operation.
Due to rounding conventions, the effective tax rate presented may not recalculate precisely based on the numbers disclosed within this table.
The following table provides a reconciliation of tax specific key items within the statutory federal income tax with the provision for income taxes summary disclosed in Note K of the Notes to Consolidated Financial Statements for the years ended September 30:
(In millions)
Tax effect of key items computed at applicable statutory rate (a)
Uncertain tax positions
Valuation allowance changes
Basis difference on stock sale
Tax law changes
Non US restructuring
Deemed inclusions, foreign dividends and other restructuring
The tax rate specific to the jurisdiction in which the key item originates is used to calculate the tax effect of key items.
(In millions)
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Income (loss) from discontinued operations, net of income taxes
Performance Adhesives
Composites/Marl Facility
Asbestos-related litigation
Water Technologies
Distribution
Valvoline
In 2025, 2024 and 2023, the Performance Adhesives activity represents subsequent adjustments that were made in conjunction with the post-closingdisputes and tax reserves.
Asbestos-related activity during 2025, 2024 and 2023 included after-tax net expense adjustments to the asbestos reserves and receivables including the adjustments for the annual update for each of these years.
The Valvoline activity within 2025, 2024 and 2023 primarily represents subsequent adjustments that were made in conjunction with post-closingdisputes and the Tax Matters Agreement with Valvoline.
The activity for Water Technologies, Composites/Marl Facility and Distribution were primarily related to post-closing adjustments associated with environmental remediation reserves associated with these businesses.
See Note C of the Notes to Consolidated Financial Statements for more information related to discontinued operations.
Other comprehensive income (loss)
A comparative analysis of the components of other comprehensive income (loss) is provided below for the years ended September 30:
(In millions)
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Other comprehensive income (loss), net of tax
Unrealized translation gain
Unrealized gain (loss) on commodity hedges
Total other comprehensive income (loss), net of tax, decreased $8 million in 2025 as compared to 2024, as a result of the following components:
In 2025, the change in unrealized gain from foreign currency translation adjustments resulted in a gain of $45 million, compared to a gain of $54 million during 2024. The fluctuations in unrealized translation gains and losses were primarily due to translating foreign subsidiary financial statements from local currencies to U.S. Dollars; and
In 2025, a $2 million unrealized gain on commodity hedges was recorded compared to a gain of $1 million during 2024. See Note E of the Notes to Consolidated Financial Statements for more information.
Total other comprehensive income (loss), net of tax, decreased $11 million in 2024 as compared to 2023 as a result of the following components:
In 2024, the change in unrealized gain from foreign currency translation adjustments resulted in a gain of $54 million, compared to a gain of $72 million during 2023. The fluctuations in unrealized translation gains and losses were primarily due to translating foreign subsidiary financial statements from local currencies to U.S. Dollars; and
In 2024, a $1 million unrealized gain on commodity hedges was recorded compared to a loss of $6 million during 2023. See Note E of the Notes to Consolidated Financial Statements for more information.
Use of Non-GAAP Financial Measures
Ashland has included within this document the following non-GAAP financial measures, on both a consolidated and reportable segment basis, which are not defined within U.S. GAAP and do not purport to be alternatives to net income (loss) or cash flows from operating activities as a measure of operating performance or cash flows:
EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin
EBITDA is defined as net income (loss), plus income tax expense (benefit), net interest and other expense (income), and depreciation and amortization. Adjusted EBITDA is EBITDA adjusted for discontinued operations and key items (including
remeasurement gains and losses related to pension and other postretirement plans). Adjusted EBITDA margin is Adjusted EBITDA divided by sales.
Management believes the use of EBITDA and Adjusted EBITDA measures on a consolidated and reportable segment basis assists investors in understanding the ongoing operating performance by presenting comparable financial results between periods. Ashland believes that by removing the impact of depreciation and amortization and excluding certain non-cash charges, amounts spent on interest and taxes and certain other charges that are highly variable from year to year, EBITDA and Adjusted EBITDA provide Ashland’s investors with performance measures that reflect the impact to operations from trends in changes in sales, margin and operating expenses, providing a perspective not immediately apparent from net income (loss) and operating income (loss). The adjustments Ashland makes to derive the non-GAAP financial measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in net income (loss) and operating 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.
Adjusted Diluted Earnings Per Share (EPS)
Adjusted Diluted EPS is defined as income (loss) from continuing operations, adjusted for key items, net of tax, divided by the average outstanding diluted shares for the applicable period. The Adjusted Diluted EPS metric enables Ashland to demonstrate what effect key items have on EPS by taking income (loss) from continuing operations, adjusted for key items after tax that have been identified in the Adjusted EBITDA table, and dividing by the average outstanding diluted shares for the applicable period. Ashland’s management believes this presentation is helpful to illustrate how the key items have impacted this metric during the applicable period.
Adjusted Diluted Earnings Per Share (EPS) Excluding Intangibles Amortization Expense
The Adjusted Diluted EPS Excluding Intangible Amortization Expense is Adjusted Diluted EPS adjusted for intangibles amortization expense net of tax, divided by the average outstanding diluted shares for the applicable period. The Adjusted Diluted EPS, Excluding Intangibles Amortization Expense metric enables Ashland to demonstrate the impact of non-cash intangibles amortization expense on EPS, in addition to the key items previously mentioned. Ashland’s management believes this presentation is helpful to illustrate how previous acquisitions impact applicable period results.
Free Cash Flow is defined as operating cash flows less capital expenditures while Ongoing Free Cash Flow is operating cash flows less capital expenditures and certain other adjustments as applicable. Ongoing Free Cash Flow Conversion is Ongoing Free Cash Flow divided by Adjusted EBITDA. These Free Cash Flow metrics enable Ashland to provide a better indication of the ongoing cash being generated that is ultimately available for both debt and equity holders as well as other investment opportunities. Unlike cash flow provided by operating activities, Free Cash Flow and Ongoing Free Cash Flow includes 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 Ongoing Free Cash Flow Conversion have certain limitations, including that they do not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments. The amount of mandatory versus discretionary expenditures can vary significantly between periods.
Other disclosures on non-GAAP financial measures
Although Ashland may provide forward-looking guidance for Adjusted EBITDA, Adjusted Diluted EPS and Ongoing Free Cash Flow, Ashland is not reaffirming or providing forward-looking guidance for U.S. GAAP-reported financial measures or a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable U.S. GAAP measure because
it is unable to predict with reasonable certainty the ultimate outcome of certain significant items that affect these metrics such as domestic and international economic, political, legislative, regulatory and legal actions. In addition, certain economic conditions, such as recessionary trends, inflation, interest and monetary exchange rates, government fiscal policies and changes in the prices of certain key raw materials, can have a significant effect on operations and are difficult to predict with certainty.
These non-GAAP financial measures should be considered supplemental in nature and should not be construed as more significant than comparable measures defined by U.S. GAAP. Limitations associated with the use of these non-GAAP financial measures include that these measures do not present all of the amounts associated with our results as determined in accordance with U.S. GAAP. The non-GAAP financial measures provided are used by Ashland management and may not be determined in a manner consistent with the methodologies used by other companies. EBITDA and Adjusted EBITDA provide a supplemental presentation of Ashland’s operating performance on a consolidated and reportable segment basis. Adjusted EBITDA generally includes adjustments for items that impact comparability between periods. In addition, certain financial covenants related to Ashland’s 2022 Credit Agreement are based on similar non-GAAP financial measures and are defined further in the sections that reference this metric.
In accordance with U.S. GAAP, Ashland recognizes actuarial gains and losses for defined benefit pension and other postretirement benefit plans annually in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for a remeasurement during a fiscal year. Actuarial gains and losses occur when actual experience differs from the estimates used to allocate the change in value of pension and other postretirement benefit plans to expense throughout the year or when assumptions change, as they may each year. Significant factors that can contribute to the recognition of actuarial gains and losses include changes in discount rates used to remeasure pension and other postretirement obligations on an annual basis or upon a qualifying remeasurement, differences between actual and expected returns on plan assets and other changes in actuarial assumptions, for example, the life expectancy of plan participants. Management believes Adjusted EBITDA, which includes the expected return on pension plan assets yet excludes both the actual return on pension plan assets and the impact of actuarial gains and losses, provides investors with a meaningful supplemental presentation of Ashland’s operating performance (see the Adjusted EBITDA reconciliation table for additional details on exact amounts included within this non-GAAP measure related to pension and other postretirement plans). Management believes these actuarial gains and losses are primarily financing activities that are more reflective of changes in current conditions in global financial markets (and in particular interest rates) that are not directly related to the underlying business. For further information on the actuarial assumptions and plan assets referenced above, see Note L of the Notes to Consolidated Financial Statements.
EBITDA and Adjusted EBITDA
EBITDA totaled loss of $601 million for 2025, and income of $142 million and $419 million for 2024 and 2023, respectively. EBITDA and Adjusted EBITDA results in the following table have been prepared to illustrate the ongoing effects of Ashland’s operations, which exclude certain key items previously described. Management believes the use of such non-GAAP financial measures on a consolidated and reportable segment basis assists investors in understanding the ongoing operating performance by presenting the financial results between periods on a more comparable basis.
These operating key items for the applicable periods are summarized as follows:
Goodwill impairment – Ashland recorded a non-cash goodwill impairment charge of $706 million within the goodwill impairment caption of the Statement of Consolidated Comprehensive Income (Loss) in 2025. See Note G of the Notes to Consolidated Financial Statements for more information;
Avoca business impairment and sale – During 2025, Ashland sold substantially all of the net assets of its Avoca business. As a result, Ashland recorded an impairment charge and gain on sale within the income (loss) on acquisitions and divestitures, net caption of the Statement of Consolidated Comprehensive Income (Loss) in 2025. See Note B of the Notes to Consolidated Financial Statements for more information;
Accelerated depreciation – As a result of product line optimization activities at manufacturing facilities within the Life Sciences, Specialty Additives and Personal Care reportable segments, Ashland recorded accelerated depreciation due to changes in the expected useful life of certain property, plant and equipment during 2025 and 2024. See Note D of the Notes to Consolidated Financial Statements for more information;
Environmental reserve adjustments – Ashland is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively environmental remediation) at multiple locations. As a result of these activities, Ashland recorded adjustments during each year to its environmental remediation reserves and receivables primarily related to previously divested businesses or non-operational sites. See Note M of the Notes to Consolidated Financial Statements for more information;
Restructuring, separation and other costs – Ashland periodically implements company-wide and targeted cost reduction programs related to acquisitions, divestitures and other cost reduction programs in order to enhanceprofitability through streamlined operations and an improved overall cost structure. Ashland often incurs severance, facility and integration costs associated with these programs. See Note D of the Notes to Consolidated Financial Statements for further information on the restructuring activities;
Other plant optimization costs – During 2025 and 2024, Ashland incurred inventory adjustment and production costs associated with product line optimization actions;
Nutraceuticals business impairment and sale – During 2024, Ashland sold substantially all of the net assets of its Nutraceuticals business. As a result, Ashland recorded an impairment charge and loss on sale within the income (loss) on acquisitions and divestitures, net caption of the Statements of Consolidated Comprehensive Income (Loss) in 2024 and post-closing adjustments in 2025. See Note B of the Notes to Consolidated Financial Statements for more information;
Asset impairments – Ashland recognized impairment charges to certain assets during 2024 and 2023. See Note D of the Notes to Consolidated Financial Statements for more information;
Nutraceuticals VAT reserve – During 2024, Ashland incurred a Value-Added Tax ("VAT") reserve associated with the sale of the Nutraceuticals business;
Argentina foreign currency devaluation – Following the enactment by the Argentina government of a 50% peso devaluation against the dollar, Ashland recorded a currency devaluation charge within the selling, general and administrative expense caption of the Statement of Consolidated Comprehensive Income (Loss) during 2024;
Legal settlement – During 2024, Ashland incurred $4 million in costs associated with a legal settlement;
ICMS Brazil tax credit – In 2017, the Federal Supreme Court of Brazil ruled in a leading case that a Brazil value-added tax (ICMS) should not be included in the base used to calculate a taxpayer's federal contribution on total revenue known as PIS/COFINS (2017 Decision). Following favorable court rulings from lawsuits previously filed by two of Ashland's Brazilian subsidiaries challenging the inclusion of ICMS in Ashland's calculation of PIS/COFINS, Ashland received acknowledgment from the Brazilian tax authorities that allows Ashland to begin the process to recover the taxes. See Note M of the Notes to Consolidated Financial Statements for more information;
Held for sale depreciation and amortization – Represents the depreciation and amortization for the Avoca business assets during fiscal 2025 and the Nutraceuticals business assets during fiscal 2024. See Note B of the Notes to Consolidated Financial Statements for more information;
Tax credit – During 2025, Ashland recorded a $3 million benefit related to domestic tax credits; and
Income on divestitures, net – Ashland recorded income of $14 million and $6 million during 2025 and 2023, respectively. The income was related to the pre-tax gains in connection with the sale of excess corporate property.
Non-operating key items affecting EBITDA
During the current and prior years, there were certain key items that were not included in operating income (loss) but were excluded to arrive at Adjusted EBITDA. These non-operating key items for the applicable periods are summarized as follows:
Loss (gain) on pension and other postretirement plan remeasurements – Ashland recognized actuarial gains and losses for defined benefit pension and other postretirement benefit plans annually in the fourth quarter of each fiscal year and
whenever a plan is determined to qualify for a remeasurement during a fiscal year. See Note L of the Notes to Consolidated Financial Statements for more information.
(In millions)
Net income (loss)
Income tax expense (benefit)
Net interest and other financing expense (income)
Depreciation and amortization (a)
EBITDA
Loss (income) from discontinued operations, net of income taxes
Key items included in EBITDA:
Goodwill impairment
Avoca business impairment and sale
Accelerated depreciation
Environmental reserve adjustments
Restructuring, separation and other costs
Other plant optimization costs
Nutraceuticals business impairment and sale
Asset impairments
Nutraceuticals VAT reserve
Argentina currency devaluation impact
Legal settlement
ICMS Brazil tax credit
Loss (gain) on pension and other postretirement plan remeasurements (b)
Held for sale depreciation and amortization
Tax credit
Income on divestitures, net
Total key items included in EBITDA
Adjusted EBITDA (b)
Total key items included in EBITDA
Unrealized gains on securities
Total key items, before tax
Depreciation and amortization excludes accelerated depreciation of $21 million for Life Sciences for fiscal 2025, $1 million and $2 million for Personal Care for fiscal 2025 and 2024, respectively, and $19 million and $55 million for Specialty Additives for fiscal 2025 and 2024, respectively, which is included as a key item within this table as a component of Adjusted EBITDA. Depreciation and amortization includes $2 million for Personal Care associated with the Avoca business assets for fiscal 2025 and $3 million for Life Sciences associated with the Nutraceuticals business assets for fiscal 2024, which is included as a key item within this table as a component of Adjusted EBITDA.
Includes $7 million during 2025, and $12 million each during 2024 and 2023, respectively, of net periodic pension and other postretirement expense recognized ratably through the fiscal year. These expenses are comprised of service cost, interest cost, expected return on plan assets, and amortization of prior service credit and are disclosed in further detail in Note L of the Notes to Consolidated Financial Statements.
Diluted EPS and Adjusted Diluted EPS
The following table reflects the U.S. GAAP calculation for the income (loss) from continuing operations adjusted for the cumulative diluted EPS effect for key items after tax that have been identified in the Adjusted EBITDA table in the previous section. Key items are defined as the financial effects from significant transactions that may have caused short-term fluctuations in net income (loss) and/or operating income (loss) which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends. The Adjusted Diluted EPS for the income (loss) from continuing operations and Adjusted Diluted EPS from Continuing Operations Excluding Intangibles Amortization Expense in the following table have been prepared to illustrate these ongoing effects on Ashland’s operations. Management believes investors and analysts use this financial measure in assessing Ashland's business performance and that presenting this non-GAAP measure on a consolidated basis assists investors in better understanding Ashland’s ongoing business performance and enhancing their ability to compare period-to-period financial results.
In addition to the operating key items previously described, additional non-operating key items for the applicable periods are summarized as follows:
Unrealized gains on securities – represents gains recognized on restricted investments related to the Asbestos trust and Environmental trust for each period. See Note E of the Notes to Consolidated Financial Statements for more information;
Uncertain tax positions – represents the impact from the settlement of uncertain tax positions with various tax authorities for fiscal 2025, 2024 and 2023;
Valuation allowance – represents the impact from the release of certain foreign tax credit valuation allowances;
Restructuring and separation activity – represents the tax impact of the held for sale classification for the Nutraceuticals business; and
Other and tax reform related activity – represents tax specific key items associated with foreign tax related activity for fiscal 2025 and 2024.
Diluted EPS from continuing operations (as reported)
Key items, before tax:
Goodwill impairment
Avoca business impairment and sale
Accelerated depreciation
Environmental reserve adjustments
Restructuring, separation and other costs
Other plant optimization costs
Nutraceuticals business impairment and sale
Asset impairments
Nutraceuticals VAT reserve
Argentina currency devaluation impact
Legal settlement
ICMS Brazil tax credit
Loss (gain) on pension and other postretirement plan remeasurements
Held for sale depreciation and amortization
Tax credit
Income on divestitures, net
Unrealized gains on securities
Key items, before tax
Tax effect of key items (a)
Key items, after tax
Tax specific key items:
Uncertain tax positions
Valuation allowance
Restructuring and separation activity
Other tax reform related activity
Tax specific key items (b)
Total key items
Adjusted Diluted EPS from Continuing Operations (non-GAAP)
Represents the diluted EPS impact from the tax effect of the key items that are previously identified above.
Represents the diluted EPS impact from tax specific financial transactions, tax law changes or other matters that fall within the definition of tax specific key items. For additional explanation of these tax specific key items, see the income tax expense (benefit) discussion within the following caption review section.
Amortization expense adjustment (net of tax) tax rates were 20% for each of the fiscal years 2025, 2024 and 2023.
RESULTS OF OPERATIONS – REPORTABLE SEGMENT REVIEW
Ashland's reportable segments include Life Sciences, Personal Care, Specialty Additives, and Intermediates. Unallocated and Other includes corporate governance activities and certain legacy matters.
Results of Ashland’s reportable segments are presented based on its management and internal accounting structure. The structure is specific to Ashland; therefore, the financial results of Ashland’s reportable segments are not necessarily comparable with similar information for other companies. Ashland allocates all significant costs to its reportable segments except for certain significant company-wide restructuring activities, certain corporate governance costs and other costs or activities that relate to former businesses that Ashland no longer operates. The service cost component of pension and other postretirement benefits costs is allocated to each reportable segment on a ratable basis; while the remaining components of pension and other postretirement benefits costs are recorded within the other net periodic benefitloss caption on the Statements of Consolidated Comprehensive Income (Loss). Ashland refines its expense allocation methodologies to the reportable segments from time to time as more refined information becomes available and the industry or market changes. Significant revisions to Ashland’s methodologies are adjusted for all reportable segments on a retrospective basis. There were no material changes in methodology for the years ended September 30, 2025, 2024 or 2023.
The following table shows sales, operating income (loss), depreciation expense, amortization expense and EBITDA by reportable segment for the years ended September 30:
(In millions)
change
change
Sales
Life Sciences
Personal Care
Specialty Additives
Intermediates
Intersegment sales (a)
Operating income (loss)
Life Sciences (b)
Personal Care (c)
Specialty Additives (d)
Intermediates
Unallocated and Other (e)
Depreciation expense
Life Sciences (f)
Personal Care (g)
Specialty Additives (h)
Intermediates
Unallocated and Other
Amortization expense
Life Sciences
Personal Care
Specialty Additives
Intermediates
Unallocated and Other
EBITDA (i)
Life Sciences
Personal Care
Specialty Additives
Intermediates
Unallocated and Other
Intersegment sales from Intermediates are accounted for at prices that approximate market value. All other intersegment sales are accounted for at cost.
Includes goodwill impairment of $375 million for Life Sciences in 2025.
Includes a capital project impairment charge of $11 million for Personal Care in 2024.
Includes goodwill impairment of $331 million in 2025 and a $4 million impairment charge related to a facility in 2023 for Specialty Additives.
Includes a $8 million gain on sale and a $183 million impairment charge related to the divestiture of the Avoca business in 2025, and a $8 million loss on sale and a $99 million impairment charge related to the divestiture of the Nutraceuticals business in 2024 within the income (loss) on acquisitions and divestitures, net.
Depreciation includes accelerated depreciation of $21 million for Life Sciences in 2025.
Depreciation includes accelerated depreciation of $1 million and $2 million for Personal Care in 2025 and 2024, respectively.
Depreciation includes accelerated depreciation of $19 million and $55 million for Specialty Additives in 2025 and 2024, respectively.
Excludes income (loss) from discontinued operations, net of income taxes and other net periodic benefitloss. See the Statements of Consolidated Comprehensive Income (Loss) for applicable amounts excluded.
Life Sciences
Life Sciences is comprised of pharmaceuticals, nutrition, agricultural chemicals, diagnostic films (formerly known as advanced materials) and fine chemicals. Pharmaceutical solutions include controlled release polymers, disintegrants, tablet coatings, thickeners, solubilizers and tablet binders. Nutrition solutions include thickeners, stabilizers, emulsifiers and additives for enhancing mouthfeel, controlling moisture migration, reducing oil uptake and binding structured foods. Customers include pharmaceutical, food, beverage, hospitals and radiologists manufacturers. The Nutraceuticals business was sold in August 2024. See Note B of the Notes to Consolidated Financial Statements for more information.
The following table provides a reconciliation of the change in sales for Life Sciences between fiscal years 2025 and 2024 and between fiscal years 2024 and 2023.
(In millions)
2025 change
2024 change
Sales change
Divestiture
Volume
Price/mix
Foreign Currency
The following table provides a reconciliation of the change in operating income (loss) for Life Sciences between fiscal years 2025 and 2024 and between fiscal years 2024 and 2023.
(In millions)
2025 change
2024 change
Operating income (loss) change
Goodwill impairment
Cost
Price/mix
Volume
Divestiture
Foreign Currency
EBITDA and Adjusted EBITDA reconciliation
The EBITDA and Adjusted EBITDA amounts presented within this business section are provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for each segment. Each of these non-GAAP financial measures is defined as follows: EBITDA (operating income (loss) plus depreciation and amortization), Adjusted EBITDA (EBITDA adjusted for key items as applicable), and Adjusted EBITDA margin (Adjusted EBITDA divided by sales). Ashland does not allocate items to each reportable segment below operating income (loss), such as interest expense and income taxes. As a result, reportable segment EBITDA and Adjusted EBITDA are reconciled directly to operating income (loss) since it is the most directly comparable Statements of Consolidated Comprehensive Income (Loss) caption.
The following EBITDA presentation for the years ended September 30, 2025, 2024 and 2023, is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Life Sciences. There were key items for the years ended September 30, 2025, 2024 and 2023. These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above.
(In millions)
change
change
Operating income (loss)
Depreciation and amortization (a)
EBITDA
Goodwill impairment
Accelerated depreciation
Other plant optimization costs
Restructuring and other costs
Environmental reserve adjustments
Held for sale depreciation and amortization
Adjusted EBITDA
Operating income (loss) as a percent of sales
Not meaningful
90 bps
Adjusted EBITDA as a percent of sales
170 bps
0 bps
Depreciation and amortization for Life Sciences excludes accelerated depreciation of $21 million in 2025 and includes $3 million associated with the Nutraceuticals business held for sale assets in 2024 which is included as a key item within this table as a component of Adjusted EBITDA.
2025 compared to 2024
Life Sciences' sales, operating income (loss) and Adjusted EBITDA decreased in 2025 primarily due to the divestiture of the Nutraceuticals business, lower volume, and unfavorable pricing, partially offset by favorable foreign currency exchange. Operating income (loss) for 2025 also included a goodwill impairment charge of $375 million and higher costs of $26 million for portfolio optimization activities.
2024 compared to 2023
Life Sciences' sales decreased in 2024 due to lower volume and pricing, while operating income and Adjusted EBITDA decreased in 2024 due to lower volume partially offset by favorable product price/mix, deflationary raw materials, and favorable foreign currency exchange. The CMC portfolio optimization initiative and the Nutraceuticals business sale had an approximate $12 million negative sales impact during the year.
Personal Care
Personal Care is comprised of biofunctionals, microbial protectants (preservatives), skin care, sun care, oral care, hair care and household solutions. These businesses have a broad range of natural, nature-derived, biodegradable, and high-performance ingredients for customer driven solutions to help protect, renew, moisturize and revitalize skin and hair, and provide solutions for toothpastes, mouth washes and rinses, denture cleaning and care for teeth. Personal Care supplies nature-derived rheology ingredients, biodegradable surface wetting agents, performance encapsulates, and specialty polymers for household, industrial and institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies. The Avoca business was sold in March 2025. See Note B of the Notes to Consolidated Financial Statements for more information.
The following table provides a reconciliation of the change in sales for Personal Care between fiscal years 2025 and 2024 and between fiscal years 2024 and 2023.
(In millions)
2025 change
2024 change
Sales change
Divestiture
Price/mix
Volume
Foreign Currency
The following table provides a reconciliation of the change in operating income for Personal Care between fiscal years 2025 and 2024 and between fiscal years 2024 and 2023.
(In millions)
2025 change
2024 change
Operating income change
Costs
Foreign Currency
Price/mix
Volume
Divestiture (site closure)
EBITDA and Adjusted EBITDA reconciliation
The following EBITDA presentation (as defined and described in the section above) for the years ended September 30, 2025, 2024 and 2023, is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Personal Care. There were key items for the years ended September 30, 2025, 2024 and 2023. These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above.
(In millions)
change
change
Operating income
Depreciation and amortization (a)
EBITDA
Other plant optimization costs
Accelerated depreciation
Held for sale depreciation and amortization
Asset impairment
Adjusted EBITDA
Operating income as a percent of sales
410 bps
280 bps
Adjusted EBITDA as a percent of sales
150 bps
300 bps
Depreciation and amortization for Personal Care includes $2 million associated with the Avoca business assets in 2025 and excludes accelerated depreciation of $1 million in 2025 and $2 million in 2024, which is included as a key item within this table as a component of Adjusted EBITDA.
2025 compared to 2024
Personal Care's sales and Adjusted EBITDA decreased in 2025 primarily due to lower volume, including the divestiture of the Avoca business and other portfolio optimization actions, and unfavorable price/mix, partially offset by lower costs and favorable foreign exchange currency. Operating income increased due to lower costs and favorable foreign exchange currency, partially offset by unfavorable price/mix.
2024 compared to 2023
Personal Care's sales increased in 2024 primarily due to higher volume partially offset by unfavorable pricing. Sales growth for Personal Care reflects improved demand in most regions for skin care and hair care. Personal Care’s globalization initiatives for biofunctionals and microbial protection also contributed to sales growth. As expected, oral care sales were adversely impacted by order timing with a key customer. Operating income and Adjusted EBITDA increased primarily due to higher volume, favorable product mix and foreign currency exchange, partially offset by higher cost including $11 million for a capital impairment charge and $2 million of accelerated depreciation for product line optimization activities associated with a manufacturing facility. The CMC portfolio optimization initiative had an approximate $7 million negative sales impact during the year.
Specialty Additives
Specialty Additives is comprised of rheology and performance-enhancing additives serving the architectural coatings, construction, energy, automotive and various industrial markets. Solutions include coatings additives for architectural paints, finishes and lacquers, cement- and gypsum-based dry mortars, ready-mixed joint compounds, synthetic plasters for commercial and residential construction, and specialty materials for industrial applications. Products include rheology modifiers (cellulosic and associative thickeners), foam control agents, surfactants and wetting agents, pH neutralizers, advanced ceramics used in catalytic converters, and environmental filters, ingredients that aid the manufacturing process of ceramic capacitors, plasma display panels and solar cells, ingredients for textile printing, thermoplastic metals and alloys for welding. Products help improvedesired functional outcomes through rheology modification and control, water retention, workability, adhesive strength, binding power, film formation, deposition and suspension and emulsification. Customers include, but are not limited to, global paint manufacturers, electronics and automotive manufacturers, textile mills, the construction industry and welders.
The following table provides a reconciliation of the change in sales for Specialty Additives between fiscal years 2025 and 2024 and between fiscal years 2024 and 2023.
(In millions)
2025 change
2024 change
Sales change
Volume
Price/mix
Foreign Currency
Divestiture
The following table provides a reconciliation of the change in operating income for Specialty Additives between fiscal years 2025 and 2024 and between fiscal years 2024 and 2023.
(In millions)
2025 change
2024 change
Operating income (loss) change
Goodwill impairment
Price/mix
Volume
Foreign Currency
Costs
Divestiture
EBITDA and Adjusted EBITDA reconciliation
The following EBITDA presentation (as defined and described in the section above) for the years ended September 30, 2025, 2024 and 2023 below is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Specialty Additives. There were key items for the years ended September 30, 2025, 2024 and 2023. These items are listed below and described within the "Use of Non-GAAP Financial Measures" section above.
(In millions)
change
change
Operating income (loss)
Depreciation and amortization (a)
EBITDA
Goodwill impairment
Accelerated depreciation
Other plant optimization costs
Environmental reserve adjustments
Asset impairment
Adjusted EBITDA
Operating income (loss) as a percent of sales
Not meaningful
-730 bps
Adjusted EBITDA as a percent of sales
110 bps
160 bps
Depreciation and amortization for Specialty Additives excludes accelerated depreciation of $19 million and $55 million in 2025 and 2024, respectively, which is included as a key item within this table as a component of Adjusted EBITDA.
2025 compared to 2024
Specialty Additives sales and EBITDA in 2025 decreased primarily due to lower volume and unfavorable price/mix partially offset by favorable foreign exchange currency. Operating income (loss) and Adjusted EBITDA in 2025 decreased primarily due to lower volume and unfavorable price/mix partially offset by lower costs, including the effects of portfolio optimization activities and accelerated depreciation. Operating income (loss) for 2025 included a goodwill impairment charge of $331 million.
2024 compared to 2023
Specialty Additives' sales in 2024 decreased primarily due to unfavorable pricing, while operating income (loss) and EBITDA decreased primarily due to higher costs, including $55 million of accelerated depreciation and $9 million of other costs for product line optimization activities associated with two Specialty Additives manufacturing facilities, and unfavorable price/mix partially offset by higher volume and favorable foreign currency exchange. The unfavorable pricing was primarily in coatings with the largest impact related to China. The CMC and MC portfolio optimization initiatives had an approximate $11 million negative sales impact during the year.
Intermediates
Intermediates is comprised of the production of 1,4 butanediol ("BDO") and related derivatives, including n-methylpyrrolidone. These products are used as chemical intermediates in the production of engineering polymers and polyurethanes, and as specialty process solvents in a wide array of applications including electronics, agriculture, pharmaceuticals, water filtration membranes and more. BDO is also supplied to Life Sciences, Personal Care, and Specialty Additives for use as a raw material.
The following table provides a reconciliation of the change in sales for Intermediates between fiscal years 2025 and 2024 and between fiscal years 2024 and 2023.
(In millions)
2025 change
2024 change
Sales change
Price/mix
Volume
Foreign Currency
The following table provides a reconciliation of the change in operating income for Intermediates between fiscal years 2025 and 2024 and between fiscal years 2024 and 2023.
(In millions)
2025 change
2024 change
Operating income change
Price/mix
Cost
Volume
EBITDA reconciliation
The following EBITDA presentation (as defined and described in the section above) for the years ended September 30, 2025, 2024 and 2023 is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Intermediates. Intermediates had no key items for the years ended September 30, 2025, 2024 and 2023.
(In millions)
change
change
Operating income
Depreciation and amortization
EBITDA
Operating income as a percent of sales
-1430 bps
-690 bps
EBITDA as a percent of sales
-1390 bps
-490 bps
2025 compared to 2024
Intermediates' sales, operating income and EBITDA for 2025 decreased primarily due to unfavorable price/mix partially offset by higher volume.
2024 compared to 2023
Intermediates' sales, operating income and EBITDA for 2024 decreased primarily due to unfavorable pricing and lower volume, partially offset by lower costs.
Unallocated and other
The following table summarizes the key components of the Unallocated and other's operating income (loss) for each of the years ended September 30:
(In millions)
change
change
Restructuring activities
Environmental expenses
ICMS Brazil tax credit
Income (loss) on acquisitions and divestitures, net
Argentina currency devaluation impact
Tax credit
Other expenses (primarily governance and legacy expenses)
Total expense
Unallocated and other included expense of $273 million, $264 million and $112 million for 2025, 2024 and 2023, respectively. The charges for restructuring activities of $22 million, $30 million and $9 million during 2025, 2024 and 2023, respectively, were primarily comprised of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs.
Environmental expenses of $32 million, $43 million and $49 million during 2025, 2024 and 2023, respectively, primarily driven by specific remediation site reserve increases during the period.
The remaining items included: loss on divestitures of $161 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 $14 million gain on sale of a property) and a tax credit of $3 million in 2025, expense of $5 million related to the devaluation of the currency in Argentina and loss on divestiture of $115 million (primarily related to the $107 million impairment charge and loss on sale associated with the Nutraceuticals business as well as a $7 million charge related to Nutraceutical VAT reserves) in 2024, and income of $6 million on acquisitions and divestitures related to excess corporate property sales and income of $12 million for ICMS tax credits in Brazil in 2023.
Other expenses between periods were driven by increases and decreases in governance and legacy expenses associated with foreign currency, deferred compensation, stock compensation and incentive compensation.
FINANCIAL POSITION
Liquidity
Ashland had $215 million in cash and cash equivalents as of September 30, 2025, of which $194 million was held by foreign subsidiaries and had no significant limitations that would prohibit remitting the funds to satisfy corporate obligations. In certain circumstances, if such amounts were repatriated to the United States, additional withholding taxes might need to be accrued and paid depending on the source of the earnings remitted. Ashland currently has no plans to repatriate any amounts for which additional taxes would need to be accrued.
Ashland has taken actions and may continue to take actions intended to increase its cash and cash equivalents position and preserve financial flexibility. At September 30, 2025, Ashland has total remaining borrowing capacity of $596 million available under the Revolving Credit Facility. Ashland had no available liquidity under the U.S. and Foreign Accounts Receivable Sales Program, as of September 30, 2025. Ashland has no maturities related to revolving credit facilities or bonds until fiscal 2027.
On October 19, 2023, Ashland entered, through an Ireland based, wholly-owned, bankruptcy-remote consolidated special purpose entity (SPE), into a three-year agreement with a group of entities (buyers) to sell certain trade receivables, without recourse beyond the pledged receivables, of certain wholly-owned Ashland subsidiaries (Foreign Accounts Receivable Sales Program) primarily in Europe. Under the agreement, Ashland can transfer whole receivables up to a limit established by the buyer, which is currently set at a maximum of €125 million subject to other limitations as applicable. Ashland accounts for receivables transferred to buyers as part of this agreement as sales. See Note H of the Notes to Consolidated Financial Statements for more information on the Foreign Accounts Receivables Sale Program.
During April 2024, Ashland authorized a financing program offered through JP Morgan and Taulia Alliance. Under this program, JP Morgan and its affiliates may purchase certain confirmed receivables directly from suppliers pursuant to the terms of a separate arrangement entered into between JPMorgan and Taulia Alliance and such suppliers. There were no changes to Ashland's standard payment terms with its suppliers in connection with this program. Ashland provides no guarantees to JP Morgan and Taulia Alliance under this program. The program was implemented during June 2025 and has been actively offered to suppliers. As of September 30, 2025, participation in the program was not significant. There were less than $1 million of confirmed invoices under this program for the year ended September 30, 2025.
Ashland believes that cash flow from operations, availability under existing credit facilities and arrangements, current cash and investment balances and the ability to obtain other financing, if necessary, will provide adequate cash funds for Ashland’s foreseeable working capital needs, capital expenditures at existing facilities, dividend payments and debt service obligations. Ashland’s cash requirements are subject to change as business conditions warrant and opportunities arise. The timing and size of any new business ventures or acquisitions that the Company may complete may also impact its cash requirements.
Ashland’s cash flows from operating, investing and financing activities, as reflected in the Statements of Consolidated Cash Flows, are summarized as follows, for the years ended September 30:
(In millions)
Cash provided (used) by:
Operating activities from continuing operations
Investing activities from continuing operations
Financing activities from continuing operations
Discontinued operations
Effect of currency exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Ashland paid income taxes of $33 million during 2025 compared to $53 million in 2024 and $63 million in 2023 (of which $16 million related to discounted operations). Cash receipts for interest income were $5 million in 2025, $10 million in 2024, and $12 million in 2023, respectively, while cash payments for interest expense amounted to $54 million in 2025, $52 million in 2024 and $53 million in 2023.
Operating activities
The following summarizes the cash flows associated with Ashland’s operating activities for the years ended September 30:
(In millions)
Cash flows provided by operating activities from continuing operations
Net income (loss)
Loss (income) from discontinued operations, net of income taxes
Adjustments to reconcile income (loss) from continuing operations to cash flows from operating activities
Depreciation and amortization
Original issue discount and debt issuance cost amortization
Deferred income taxes
Gain from sales of property and equipment
Stock based compensation expense
Benefit (loss) from excess tax deduction on stock based compensation
Income from restricted investments
Loss (income) on acquisitions and divestitures, net
Goodwill impairment
Asset impairments
Pension contributions
Loss (gain) on pension and other postretirement plan remeasurements
Change in operating assets and liabilities (a)
Total cash flows provided by operating activities from continuing operations
Excludes changes resulting from operations acquired or sold.
Operating Activities - Operating Assets and Liabilities
The cash results during each year were primarily driven by net income (loss), excluding discontinued operation results, adjusted for certain non-cash items including depreciation and amortization (including debt issuance cost amortization), income (loss) on acquisitions and divestitures, net as well as changes in working capital, which are fluctuations within accounts receivable, inventory, trade payables and accrued expenses.
The following details certain changes in key operating assets and liabilities for the years ended September 30:
(In millions)
Cash flows from assets and liabilities (a)
Accounts receivable
Inventories
Trade and other payables
Other assets and liabilities
Change in operating assets and liabilities
Excludes changes resulting from operations acquired or sold.
Changes in net working capital accounted for outflows of $94 million in 2025, inflows of $231 in 2024, and outflows of $61 million in 2023, and were driven by the following:
Accounts receivable – Changes in accounts receivable resulted in outflows of $3 million, and inflows of $96 million and $58 million in 2025, 2024 and 2023, respectively. The U.S. Accounts Receivable Sales Program contributed to outflows of $12 million, inflows of $1 million, and outflows of $40 million 2025, 2024 and 2023, respectively. The Foreign Accounts Receivable Sales Program contributed to outflows of $6 million and inflows of $104 million in 2025 and 2024, respectively. Sales volumes in each period and activity from the U.S. and Foreign Accounts Receivable Sales Program were the main drivers of changes between periods.
Inventory – Changes in inventory resulted in cash outflows of $28 million in 2025, inflows of $79 million in 2024 and outflows of $7 million in 2023 and were primarily driven by inventory production levels and volumes.
Trade and other payables – Changes in trade and other payables resulted in cash outflows of $63 million in 2025, cash inflows of $56 million in 2024, and outflows of $112 million in 2023, respectively, and primarily related to restructuring activity, divestitures and the timing of certain other payments, most notably lower incentive plan payments for 2023 paid in 2024.
The remaining cash outflows of $97 million and $4 million, and inflows of $3 million in 2025, 2024 and 2023, respectively, were primarily due to income taxes paid or income tax refunds, interest paid, and adjustments to certain accruals and other long-term assets and liabilities such as payments associated with environmental remediation. 2025 includes the impact of refundable income taxes recorded within the current year that will be received in early fiscal 2026 in the amount of $103 million.
Investing activities
The following summarizes the cash flows associated with Ashland’s investing activities for the years ended September 30:
(In millions)
Cash flows provided (used) by investing activities from continuing operations
Additions to property, plant and equipment
Proceeds from disposal of property, plant and equipment
Proceeds from sale or restructuring of operations
Proceeds from settlement of company-owned life insurance contracts
Company-owned life insurance payments
Funds restricted for specific transactions
Reimbursement from restricted investments
Proceeds from sale of securities
Purchase of securities
Other investing cash flows
Total cash flows used by investing activities from continuing operations
The significant cash investing activities for 2025 primarily related to cash outflows of $98 million for capital expenditures and $8 million restricted for investment trust purposes for environmental remediation. Additionally, there were inflows of $16 million from proceeds from the sale of the Avoca business, $16 million of proceeds from the sale of land property, $12 million of proceeds from settlement of company-owned life insurance contracts and reimbursements of $62 million from the restricted renewable annual investment trusts.
The significant cash investing activities for 2024 primarily related to cash outflows of $137 million for capital expenditures, $10 million for lease asset acquisition and $5 million restricted for investment trust purposes for environmental remediation. Additionally, there were inflows of $26 million from the sale of the Nutraceuticals business and reimbursements of $79 million from the restricted renewable annual investment trusts.
The significant cash investing activities for 2023 primarily related to cash outflows of $170 million for capital expenditures and $9 million restricted for investment trust purposes for environmental remediation. Additionally, there were inflows of $11 million from the disposal of excess corporate property, which were used to provide additional funding to the environmental trust, and reimbursements of $58 million from the restricted renewable annual investment trusts.
Financing activities
The following summarizes the cash flows associated with Ashland’s financing activities for the years ended September 30:
(In millions)
Cash flows provided (used) by financing activities from continuing operations
Proceeds from (repayment of) short-term debt
Repurchase of common stock
Cash dividends paid
Stock based compensation employee withholding taxes paid in cash
Total cash flows used by financing activities from continuing operations
Significant cash financing activities for 2025 included outflows of $100 million for common stock repurchases and cash dividends paid of $1.64 per share, for a total of $76 million. See Note N of the Notes to Consolidated Financial Statements for additional information.
Significant cash financing activities for 2024 included outflows of $380 million for common stock repurchases, short-term debt repayment of $16 million, and cash dividends paid of $1.58 per share, for a total of $78 million. See Note N of the Notes to Consolidated Financial Statements for additional information.
Significant cash financing activities for 2023 included outflows of $300 million for common stock repurchases and cash dividends paid of $1.44 per share, for a total of $76 million. See Note N of the Notes to Consolidated Financial Statements for additional information.
Cash provided (used) by discontinued operations
The following summarizes the cash flows associated with Ashland’s discontinued operations for the years ended September 30:
(In millions)
Cash provided (used) by discontinued operations
Operating cash flows
Total cash provided (used) by discontinued operations
Cash outflows for discontinued operations in 2025, 2024 and 2023 primarily related to retained liabilities for asbestos and environmental claims directly related to divested businesses that have qualified as discontinued operations. Asbestos net payments were $36 million, $39 million and $42 million in 2025, 2024 and 2023, respectively. Environmental net payments were $4 million, $6 million and $7 million, respectively. The remaining net cash outflows in each period primarily relate to tax and other post closing adjustments.
Free Cash Flow and other liquidity resources
The following represents Ashland’s calculation of Free Cash Flow and Ongoing Free Cash Flow for the periods presented. Free Cash Flow does not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments.
Years Ended September 30
(In millions)
Total cash flows provided by operating activities from continuing operations
Less:
Additions to property, plant and equipment
Free Cash Flow
Cash (inflows) outflows from U.S. Accounts Receivable Sales Program (a)
Cash (inflows) outflows from Foreign Accounts Receivable Sales Program (b)
Restructuring-related payments (c)
Environmental and related litigation payments (d)
Ongoing Free Cash Flow
Net income (loss)
Adjusted EBITDA (e)
Operating Cash Flow Conversion (f)
Not meaningful
Ongoing Free Cash Flow Conversion (g)
Represents activity associated with the U.S. Accounts Receivable Sales Program impacting each period presented.
Represents activity associated with the Foreign Accounts Receivable Sales Program impacting each period presented.
Restructuring payments incurred during each period.
Represents cash outflows associated with environmental and related litigation payments which will be reimbursed by the environmental trust.
See Adjusted EBITDA reconciliation.
Operating Cash Flow Conversion is defined as Cash flows provided by operating activities from continuing operations divided by net income (loss).
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 $782 million and $705 million as of September 30, 2025 and 2024, respectively. The $77 million increase in working capital was driven by a higher trade working capital (accounts receivable and inventories minus trade and other payables and accrued expenses and other liabilities), including sales of foreign accounts receivables under the Foreign Accounts Receivable Sales Program, and other assets, partially offset by a reduction in cash and cash equivalent. The $143 million decrease in Ongoing Free Cash Flows between periods was primarily a result of increased trade working capital compared to the prior year. Liquid assets (cash, cash equivalents and accounts receivable) amounted to 108% and 111% of current liabilities as of September 30, 2025 and 2024, respectively.
The following summary reflects Ashland’s cash, cash equivalents, investment securities and unused borrowing capacity as of:
September 30
(In millions)
Cash, cash equivalents and investment securities
Cash and cash equivalents
Restricted investments (a)
Unused borrowing capacity
Revolving credit facility
2018 accounts receivable securitization (foreign)
U.S Accounts Receivable Sales Program
Foreign Accounts Receivable Sales Program
Includes $231 million, $248 million and $243 million related to the Asbestos trust and $116 million, $120 million and $124 million related to the Environmental trust as of September 30, 2025, 2024 and 2023 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 September 30, 2025. In total, Ashland’s available liquidity position, which includes cash and cash equivalents, the revolving credit facility, and accounts receivable securitization facilities, was $811 million at September 30, 2025, $896 million at September 30, 2024, and $1,115 million at September 30, 2023. Ashland had zero available liquidity under the U.S. and Foreign Accounts Receivable Sales Program as of September 30, 2025. Ashland also maintained $347 million of restricted investments at September 30, 2025 to pay for future asbestos claims and environmental remediation and related litigation.
Capital resources
Debt
The following summary reflects Ashland’s debt as of:
Includes $10 million and $12 million of debt issuance cost discounts as of September 30, 2025 and 2024, respectively.
Ashland continues to maintain the 2022 Credit Agreement which provides for a $600 million five-year revolving credit facility. Proceeds of borrowings under the 2022 Revolving Credit Facility provide ongoing working capital and are used for other general corporate purposes.
Debt as a percent of capital employed was 42% at September 30, 2025 and 32% at September 30, 2024. At September 30, 2025, Ashland’s total debt had an outstanding principal balance of $1,419 million, discounts of $25 million and debt issuance costs of $10 million. Ashland has no long-term debt (excluding debt issuance costs) maturing within the next year, $4 million due in fiscal 2027, $586 million due in fiscal 2028, $97 million in 2029, and zero in 2030.
Credit Agreements and Refinancing
2022 Credit Agreement
During July 2022, Ashland, through two of its subsidiaries, enacted an amendment to the 2020 credit agreement. The amended credit agreement (the 2022 Credit Agreement) provides for a $600 million five-year revolving credit facility (the 2022 Revolving Credit Facility). The 2022 Credit Agreement and the obligations of Ashland Services B.V. under the 2022 Revolving Credit Facility are guaranteed by Ashland.
At Ashland’s option, loans issued under the 2022 Credit Agreement will bear interest at (a) in the case of loans denominated in U.S. dollars, either Term SOFR or an alternate base rate and (b) in the case of loans denominated in Euros, EURIBOR, in each case plus the applicable interest rate margin. Loans will initially bear interest at Term SOFR or EURIBOR plus 1.250% per annum, in the case of Term SOFR borrowings or EURIBOR borrowings, respectively, or at the alternate base rate plus 0.250% per annum, in the case of alternate base rate borrowings, through and including the date of delivery of a quarterly compliance certificate and thereafter the interest rate will fluctuate between Term SOFR or EURIBOR plus 1.250% per annum and Term SOFR or EURIBOR plus 1.750% per annum (or between the alternate base rate plus 0.250% per annum and the alternate base rate plus 0.750% per annum), based upon the Consolidated Net Leverage Ratio (as defined in the 2022 Credit Agreement) at such time. Term SOFR borrowings are subject to a credit spread adjustment of 0.10% per annum. In addition, the Company will initially be required to pay fees of 0.125% per annum on the daily unused amount of the 2022 Revolving Credit Facility through and including the date of delivery of a quarterly compliance certificate, and thereafter the fee rate will fluctuate between 0.125% and 0.275% per annum, based upon the Consolidated Net Leverage Ratio. Borrowings under the 2022 Credit Agreement may be prepaid at any time without premiums.
The 2022 Credit Agreement contains financial covenants for leverage and interest coverage ratios akin to those in effect under the 2020 Credit Agreement. The 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 indebtedness, further negative pledges, investments, mergers, sale of assets and restricted payments, and other customary limitations.
Debt repayments and repurchases
Cash repatriation
During 2025 and 2024, Ashland repatriated approximately $403 million and $305 million, respectively, in cash.
Accounts receivable facilities and off-balance sheet arrangements
U.S. accounts receivable sales program
On March 17, 2021, a wholly-owned, bankruptcy-remote special purpose entity and consolidated Ashland subsidiary (SPE) entered into an agreement with a group of entities (buyers) to sell certain trade receivables, without recourse beyond the pledged receivables, of two other U.S. based Ashland subsidiaries. On April 14, 2023, Ashland entered into Second and Third Amendments associated with this current program, whereby the scheduled termination date was extended to April 14, 2025 and the buyer's limits were reduced to allow for transfer of whole receivables up to a limit set at $115 million between February and October of each year and up to $100 million all other times (a level 1 fair value measurement). On September 13, 2024, Ashland entered into a Fourth Amendment associated with this current program, whereby the scheduled termination date was extended to September 11, 2026 and the buyer's limits were reduced to allow for transfer of whole receivables up to a limit set at $80 million between September 13, 2024 to (and including) December 31, 2024 and up to $70 million from January 1, 2025 through the termination date of the agreement. Ashland’s continuing involvement is limited to servicing the accounts receivable, including billing, collections and remittance of payments to the buyers as well as a limited guarantee on over-collateralization.
Ashland determined that any accounts receivable transferred under this agreement are put presumptively beyond the reach of Ashland and its creditors, even in bankruptcy or other receivership. Ashland received a true sale at law and non-consolidation opinions to support the legal isolation of these accounts receivable. Ashland accounts for the accounts receivable transferred to buyers as sales. Ashland recognizes any gains or losses based on the excess of proceeds received net of buyer’s discounts and fees compared to the carrying value of the assets. Proceeds received, net of buyer’s discounts and fees, are recorded within the operating activities of the Statements of Consolidated Cash Flows. Losses on sale of assets, including related transaction expenses are recorded within the net interest and other expense (income) caption of the Statements of Consolidated Comprehensive Income (Loss). Ashland regularly assesses its servicing obligations and records them as assets or liabilities when appropriate. Ashland also monitors its obligation with regards to the limited guarantee and records the resulting guarantee liability when warranted. When applicable, Ashland discloses the amount of the receivable that serves as over-collateralization as a restricted asset.
Ashland recognized a loss of $3 million within the Statements of Consolidated Comprehensive Income (Loss) for 2025, 2024 and 2023, respectively, within the net interest and other expense (income) caption associated with sales under the program. Ashland has recorded $59 million of sales against the buyer’s limit, which was $59 million at September 30, 2025, compared to $71 million of sales against the buyer's limit, which was $71 million at September 30, 2024. Ashland transferred $75 million and $85 million in accounts receivable to the SPE as of September 30, 2025 and 2024, respectively. Ashland recorded liabilities related to its service obligations and limited guarantee as of September 30, 2025 and 2024 of less than $1 million.
For the years ended September 30, 2025, 2024, and 2023, the gross cash proceeds received for accounts receivable transferred and derecognized were $388 million, $323 million, and $217 million, respectively, of which $400 million, $322 million, $241 million, were collected by Ashland in our capacity as a servicer of the accounts receivable and remitted to the buyer. The difference between accounts receivable transferred and derecognized versus collected of $12 million, $1 million and $24 million for the years ended September 30, 2025, 2024, and 2023, respectively, represents the impact of a net reduction in account receivable sales volume during 2025, a net increase in 2024, and a net decrease during 2023.
Foreign Accounts Receivable Sales Program
On October 19, 2023, Ashland entered, through an Ireland based, wholly-owned, bankruptcy-remote consolidated special purpose entity (the "SPE"), into a three-year agreement with a group of entities (buyers) to sell certain trade receivables, without recourse beyond the pledged receivables, of certain wholly-owned Ashland subsidiaries (Foreign Accounts Receivable Sales Program) primarily in Europe. Under the agreement, Ashland can transfer whole receivables up to a limit established by the buyer, which is currently set at €125 million (a level 1 fair value measurement). Ashland’s continuing involvement is limited to servicing the accounts receivable, including billing, collections and remittance of payments to the buyers as well as a limited guarantee on over-collateralization.
Ashland determined that any accounts receivable transferred under this agreement are put presumptively beyond the reach of Ashland and its creditors, even in bankruptcy or other receivership. Ashland received true sale at law and non-consolidation opinions from independent qualified legal advisors in the jurisdiction of each originating subsidiary to support the legal isolation of these accounts receivable. Consequently, Ashland accounts for accounts receivable transferred to buyers as part of this agreement as sales.
Ashland recognized a loss of $5 million and $3 million within the Statements of Consolidated Comprehensive Income (Loss) for 2025 and 2024, respectively, within the net interest and other expense (income) caption associated with sales under the program. Ashland has recorded $103 million of sales against the buyer’s limit, which was $103 million at September 30, 2025, compared to $104 million of sales against the buyer's limit, which was $104 million at September 30, 2024. Ashland transferred $142 million and $155 million in accounts receivable to the SPE as of September 30, 2025 and 2024, respectively. Ashland recorded liabilities related to its service obligations and limited guarantee as of September 30, 2025 and 2024 of less than $1 million.
For the years ended September 30, 2025 and 2024, the gross cash proceeds received for accounts receivable transferred and derecognized were $528 million and $104 million, respectively, of which $534 million and zero were collected by Ashland in our capacity as a servicer of the accounts receivable and remitted to the buyer. The difference between accounts receivable transferred and derecognized versus collected of $6 million and $104 million for the years ended September 30, 2025 and 2024, respectively, represents the impact of a net reduction and a net increase in accounts receivable sales volume during each year, respectively.
Supply Chain Finance Program
During April 2024, Ashland authorized a financing program offered through JP Morgan and Taulia Alliance. Under this program, JP Morgan and its affiliates may purchase certain confirmed receivables directly from suppliers pursuant to the terms of a separate arrangement entered into between JPMorgan and Taulia Alliance and such suppliers. There were no changes to Ashland's standard payment terms with its suppliers in connection with this program. Ashland provides no guarantees to JP Morgan and Taulia Alliance under this program. The program was implemented during June 2025 and has been actively offered to suppliers. As of September 30, 2025, participation in the program was not significant. There were less than $1 million of confirmed invoices under this program for the year ended September 30, 2025.
Other debt
At September 30, 2025 and 2024, Ashland held other debt totaling $76 million and $71 million, respectively, comprised primarily of the 6.50% notes due 2029 and other notes.
Available borrowing capacity and liquidity
The borrowing capacity remaining under the $600 million 2022 Revolving Credit Facility was $596 million due to a reduction of $4 million for letters of credit outstanding at September 30, 2025. Ashland's total borrowing capacity at September 30, 2025 was $596 million.
Additionally, Ashland has no available liquidity under its current U.S. and Foreign Accounts Receivable Sales Program.
Covenants related to current Ashland debt agreements
Ashland’s debt contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional subsidiary indebtedness, restrictions on subsidiary distributions, investments, mergers, sale of assets and restricted payments and other customary limitations. As of September 30, 2025, Ashland was in compliance with all debt agreement covenant restrictions.
The maximum consolidated net leverage ratio permitted under the 2022 Credit Agreement is 4.0. The 2022 Credit Agreement defines the consolidated net leverage ratio as the ratio of consolidated indebtedness minus unrestricted cash and cash equivalents to consolidated EBITDA (Covenant Adjusted EBITDA) for any measurement period. In general, the 2022 Credit Agreement defines Covenant Adjusted EBITDA as net income (loss) plus consolidated interest charges, taxes, depreciation and amortization expense, fees and expenses related to capital market transactions and proposed or actual acquisitions and divestitures, restructuring and integration charges, certain environmental charges, non-cash stock and equity compensation expense, and any other nonrecurring expenses or losses that do not represent a cash item in such period or any future period; less any non-cash gains or other items increasing net income (loss). The computation of Covenant Adjusted EBITDA differs from the calculation of EBITDA and Adjusted EBITDA, which have been reconciled in the "Use of Non-GAAP Financial Measures" 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 September 30, 2025, Ashland’s calculation of the consolidated net leverage ratio was 2.8.
The minimum required consolidated interest coverage ratio under the 2022 Credit Agreement is 3.0. The 2022 Credit Agreement defines the consolidated interest coverage ratio as the ratio of Covenant Adjusted EBITDA to consolidated interest charges for any measurement period. At September 30, 2025, 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. Any change in consolidated indebtedness of $100 million would affect the consolidated net leverage ratio by approximately 0.2x.
Ashland credit ratings
Ashland’s corporate credit ratings remained unchanged at BB+ by Standard & Poor’s and Ba1 by Moody’s Investor Services. As of September 30, 2025, both Moody’s Investor Services and Standard & Poor’s outlook remained at stable. Subsequent changes to these ratings or outlook may have an effect on Ashland’s borrowing rate or ability to access capital markets in the future.
Additional capital resources
Ashland cash projection
Ashland believes that cash flow from operations, availability under existing credit facilities and arrangements, current cash, cash equivalents, investment balances and the ability to obtain other financing, if necessary, will provide adequate cash funds for the Company’s foreseeable working capital needs, capital expenditures at existing facilities, pending acquisitions, dividend payments and debt service obligations. The Company’s cash requirements are subject to change as business conditions warrant and opportunities arise. The timing and size of any new business ventures or acquisitions that the Company may complete may also impact its cash requirements.
Ashland expects the following material cash funding requirements from known contractual obligations at September 30, 2025:
Less than
More than
(In millions)
Total
1 year
1 year
Raw material and service contract purchase obligations (a)
Employee benefit obligations (b)
Operating lease obligations (c)
Interest payments (d)
Unrecognized tax benefits (e)
One-time transition tax (f)
Total contractual obligations
Other commitments
Letters of credit (g)
Includes raw material and service contracts where minimal committed quantities and prices are fixed.
Includes estimated funding of Ashland’s qualified U.S. and non-U.S. pension plans for 2025 as well as projected benefit payments through 2031 under Ashland’s unfunded pension and other postretirement benefit plans. Excludes the benefit payments from the pension plan trust funds. See Note L of the Notes to Consolidated Financial Statements for additional information.
Includes leases for office buildings, transportation equipment, warehouses and storage facilities and other equipment. For further information, see Note J of the Notes to Consolidated Financial Statements.
Includes interest expense on both variable and fixed rate debt assuming no prepayments. Variable interest rates have been assumed to remain constant through the end of the term at rates that existed as of September 30, 2025.
Due to uncertainties in the timing of the effective settlement of tax positions with respect to taxing authorities, Ashland is unable to determine the timing of payments related to noncurrent unrecognized tax benefits, including interest and penalties. Therefore, these amounts were included in the “More than 1 year” column.
As a result of the Tax Act enacted during fiscal year 2017, Ashland has currently recorded a $13 million liability for the one-time transition tax.
Ashland issues various types of letters of credit as part of its normal course of business.
Total Equity
Total equity was $1,904 million and $2,868 million at September 30, 2025 and September 30, 2024, respectively. During 2025, there were decreases of $845 million for net income (loss), $101 million for repurchases of common stock (which includes $1 million in excise tax on stock repurchases), and $77 million for dividends paid during 2025. The decreases were partially offset by increases of $45 million for deferred translation gains, $12 million for common shares issued under stock incentive plans, and $2 million increase for unrealized gains on commodity hedges.
2023 Stock repurchase program
On June 28, 2023, Ashland's board of directors ("the Board") authorized a new evergreen $1 billion common share repurchase program ("2023 Stock Repurchase Program"). The new authorization terminated and replaced the 2022 Stock Repurchase Program, which had $200 million outstanding at the date of termination. As of September 30, 2025, $520 million remained available for repurchase under the 2023 Stock Repurchase Program
The following table provides the stock repurchase activity for years ended September 30:
(In millions, except per share amounts)
Number of shares repurchased
Weighted-average price per share (a)
Aggregate purchase price (a)
Program
2023 Stock Repurchase Program
2023 Stock Repurchase Program
2022 Stock Repurchase Program
Includes transactions costs.
Stockholder dividends
Ashland paid dividends per common share of $1.64, $1.58 and $1.44 during 2025, 2024 and 2023, respectively.
In May 2025, the Board announced a quarterly cash dividend of 41.5 cents per share to eligible stockholders at record, which represented an increase from the previous quarterly cash dividend of 40.5 cents per share. The dividend was paid in the third and fourth quarter of fiscal 2025.
In May 2024, the Board announced a quarterly cash dividend of 40.5 cents per share to eligible stockholders at record, which represented an increase from the previous quarterly cash dividend of 38.5 cents per share. The dividend was paid in the third and fourth quarter of fiscal 2024.
In May 2023, the Board announced a quarterly cash dividend of 38.5 cents per share to eligible stockholders at record, which represented an increase from the previous quarterly cash dividend of 33.5 cents per share. The dividend was paid in the third and fourth quarter of fiscal 2023.
In May 2022, the Board announced a quarterly cash dividend of 33.5 cents per share to eligible stockholders at record, which represented an increase from the previous quarterly cash dividend of 30.0 cents per share. This dividend was paid in the third and fourth quarters of fiscal 2022 and the first and second quarters of fiscal 2023.
Capital expenditures
Capital expenditures were $98 million for 2025 and averaged $135 million during the last three years. Ashland expects capital expenditures over the next three years to average approximately $100 million per year. A summary of capital expenditures by reportable segment during the years ended September 30, are as follows:
(In millions)
Life Sciences
Personal Care
Specialty Additives
Intermediates
Unallocated and Other
Total capital expenditures
A summary of the capital employed in Ashland’s current operations, which is calculated by adding equity to capital investment, as of September 30 is as follows.
(In millions)
Capital employed (a)
Life Sciences
Personal Care
Specialty Additives
Intermediates
Excludes the assets and liabilities classified within unallocated and other which primarily includes debt and other long-term liabilities such as asbestos and pension. The net liability in unallocated and other was $1,175 million and $1,162 million as of September 30, 2025 and 2024, respectively.
OFF-BALANCE SHEET ARRANGEMENTS
As part of its normal course of business, Ashland is a party to various financial guarantees and other commitments. These arrangements involve elements of performance and credit risk that are not included in the Consolidated Balance Sheets. The possibility that Ashland would have to make actual cash expenditures in connection with these obligations is largely dependent on the performance of the guaranteed party, or the occurrence of future events that Ashland is unable to predict. The fair value of these guarantees is not significant.
NEW ACCOUNTING PRONOUNCEMENTS
For a discussion and analysis of recently issued accounting pronouncements and its impact on Ashland, see Note A of the Notes to Consolidated Financial Statements.
CRITICAL ACCOUNTING ESTIMATES
The preparation of Ashland’s Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses, and the disclosures of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include, but are not limited to, environmental remediation, asbestos litigation, the accounting for goodwill and other indefinite-lived intangible assets and income taxes. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions. Management has reviewed the estimates affecting these items with the Audit Committee of Ashland’s Board of Directors.
Environmental remediation
Ashland is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively environmental remediation) at multiple locations. At September 30, 2025, such locations included 53 sites where Ashland has been identified as a potentially responsible party under Superfund or similar state laws, 107 current and former operating facilities and about 1,225 service station properties, of which 14 are being actively remediated.
Ashland’s reserves for environmental remediation and related environmental litigation amounted to $226 million at September 30, 2025 compared to $221 million at September 30, 2024, of which $179 million at September 30, 2025 and $164 million at September 30, 2024, were classified in other noncurrent liabilities on the Consolidated Balance Sheets. The remaining reserves were classified in accrued expenses and other liabilities on the Consolidated Balance Sheets.
The total reserves for environmental remediation reflect Ashland’s estimates of the most likely costs that will be incurred over an extended period to remediate identified conditions for which the costs are reasonably estimable, without regard to any third-party recoveries. Engineering studies, historical experience and other factors are used to identify and evaluate remediation alternatives and their related costs in determining the estimated reserves for environmental remediation. Ashland regularly adjusts its reserves as environmental remediation continues. Ashland has estimated the value of its probable insurance recoveries associated with its environmental remediation reserves based on management’s interpretations and estimates surrounding the available or applicable insurance coverage. At September 30, 2025 and 2024, Ashland’s recorded receivable for these probable insurance recoveries was $14 million and $13 million, respectively, of which $12 million and $11 million was classified in other noncurrent assets on the Consolidated Balance Sheets.
During 2025, 2024 and 2023, Ashland recognized $50 million, $54 million and $56 million of expense, respectively, for certain environmental liabilities related to normal ongoing remediation cost estimate updates for sites, which is consistent with Ashland’s historical environmental accounting policy. See Note M of the Notes to Consolidated Financial Statements for additional information.
Environmental remediation reserves are subject to uncertainties that affect Ashland’s ability to estimate its share of the costs. Such uncertainties involve the nature and extent of contamination at each site and the extent of required cleanup efforts under existing environmental regulations. Although it is not possible to predict with certainty the ultimate costs of environmental remediation, Ashland currently estimates that the upper end of the reasonably possible range of future costs for identified sites could be as high as approximately $495 million. The largest reserve for any site is 21% of the total environmental remediation reserves as of September 30, 2025.
Asbestos litigation
Ashland and Hercules have liabilities from claimsalleging personal injury caused by exposure to asbestos. To assist in developing and annually updating independent reserve estimates for future asbestos claims and related costs, Ashland has retained third party actuarial experts Gnarus Advisors, LLC ("Gnarus"). The methodology used by Gnarus to project future asbestos costs is based largely on recent experience, including claim-filing and settlement rates, disease mix, open claims and litigation defense. The claim experience of Ashland and Hercules are separately compared to the results of previously conducted third party epidemiological studies estimating the number of people likely to develop asbestos-related diseases. Those studies were undertaken in connection with national analyses of the population expected to have been exposed to asbestos. Using that information, Gnarus estimates a range of the number of future claims that may be filed, as well as the related costs that may be incurred in resolving those claims. Changes in asbestos litigation reserves liabilities and receivables are recorded on an after-tax basis within the discontinued operations caption in the Statements of Consolidated Comprehensive Income (Loss). See Note M of the Notes to Consolidated Financial Statements for additional information.
Ashland asbestos-related litigation
The claimsalleging personal injury caused by exposure to asbestos asserted against Ashland result primarily from indemnification obligations undertaken in 1990 in connection with the sale of Riley, a former subsidiary. The amount and timing of settlements and number of open claims can fluctuate from period to period.
Ashland asbestos-related liability
From the range of estimates, Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs. Ashland reviews this estimate and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of Gnarus.
During the most recent update completed during 2025, it was determined that the liability for Ashland asbestos-related claims should be increased by $16 million. Total reserves for asbestos claims were $258 million at September 30, 2025 compared to $274 million at September 30, 2024.
Ashland asbestos-related receivables
Ashland has insurance coverage for certain litigation defense and claim settlement costs incurred in connection with its asbestos claims, and coverage-in-place agreements exist with the insurance companies that provide substantially all of the coverage that will be accessed.
For the Ashland asbestos-related obligations, Ashland has estimated the value of probable insurance recoveries associated with its asbestos litigation reserves based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. Substantially all of the estimated receivables from insurance companies are expected to be due from domestic insurers, all of which are solvent.
At September 30, 2025, Ashland’s receivable for recoveries of litigation defense and claim settlement costs from insurers amounted to $95 million (excluding the Hercules receivable for asbestos claims). Receivables from insurers amounted to $97 million at September 30, 2024. During 2025, the annual update of the model used for purposes of valuing the asbestos litigation reserves and its impact on valuation of future recoveries from insurers, was completed. This model update resulted in a $5 million increase in the receivable for probable insurance recoveries.
Hercules asbestos-related litigation
Hercules has liabilities from claimsalleging personal injury caused by exposure to asbestos. Such claims typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products which were sold by one of Hercules’ former subsidiaries to a limited industrial market. The amount and timing of settlements and number of open claims can fluctuate from period to period.
Hercules asbestos-related liability
From the range of estimates, Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs. Ashland reviews this estimate and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of Gnarus. As a result of the most recent annual update of this estimate completed during 2025, it was determined that the liability for Hercules asbestos-related claims should be increased by $10 million. Total reserves for asbestos claims were $177 million at September 30, 2025 compared to $185 million at September 30, 2024.
Hercules asbestos-related receivables
For the Hercules asbestos-related obligations, certain reimbursement obligations pursuant to coverage-in-place agreements with insurance carriers exist. As a result, any increases in the asbestos litigation reserves have been partially offset by probable insurance recoveries. Ashland has estimated the value of probable insurance recoveries associated with its asbestos litigation reserves based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. The estimated receivable consists exclusively of solvent domestic insurers.
As of September 30, 2025 and 2024, the receivables from insurers amounted to $48 million and $50 million, respectively. During 2025, the annual update of the model used for purposes of valuing the asbestos litigation reserves and its impact on valuation of future recoveries from insurers was completed. This model update resulted in a $4 million increase in the receivable for probable insurance recoveries.
Asbestos litigation cost projection
Projecting future asbestos costs is subject to numerous variables that are difficult to predict. In addition to the uncertainties surrounding the number of claims that might be received, other variables include the type and severity of the disease alleged by each claimant and the related costs incurred in resolving those claims, mortality rates, dismissal rates, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case. Furthermore, any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. In light of these inherent uncertainties, Ashland believes that the asbestos litigation reserves for Ashland and Hercules represent the best estimate within a range of possible outcomes. As a part of the process to develop these estimates of future asbestos costs, a range of long-term cost models was developed. These models are based on national studies that predict the number of people likely to develop asbestos-related diseases and are heavily influenced by assumptions regarding long-term inflation rates for indemnity payments and legal defense costs, as well as other variables mentioned previously. Ashland has currently estimated in various models ranging from approximately 40 year periods that it is reasonably possible that total future litigation defense and claim settlement costs on an inflated and undiscounted basis could range as high as approximately $382 million for the Ashland asbestos-related litigation (current reserve of $258 million) and approximately $262 million for the Hercules asbestos-related litigation (current reserve of $177 million), depending on the combination of assumptions selected in the various models. While the timeframe used in Ashland's models for projecting asbestos liabilities generally decreases over time based on the expected lifetime of the liabilities, these models have been consistently applied within all periods presented. If actual experience is worse than projected, relative to the number of claims filed, the severity of alleged disease associated with those claims or costs incurred to resolve those claims, or actuarial refinement or improvements to the assumptions used within these models are initiated, Ashland may need to further increase the estimates of the costs associated with asbestos claims and these increases could be material over time.
Accounting for goodwill and other indefinite-lived intangible assets
Ashland accounts for goodwill and other indefinite-lived intangible assets acquired in a business combination in conformity with current accounting guidance which does not allow for goodwill and indefinite-lived intangible assets to be amortized.
Goodwill
Ashland reviews goodwill for impairment annually as of July 1 or when events and circumstances indicate an impairment may have occurred. Ashland tests goodwill for impairment by comparing the estimated fair value of its reporting units to the related carrying value. If the fair value of the reporting unit is lower than its carrying amount, goodwill is written down for the amount by which the carrying amount exceeds fair value. However, the loss recognized cannot exceed the carrying amount of goodwill. Reporting units are defined as either operating segments or one level below the operating segments for which discrete financial information is available and reviewed by management. Ashland determined that its reporting units are Life Sciences, Personal Care, Specialty Additives and Intermediates, which is consistent with prior years.
Ashland makes various estimates and assumptions in determining the estimated fair value of each reporting unit using a combination of discounted cash flow models and valuations based on earnings multiples for guideline public companies in each reporting unit’s industry peer group. Discounted cash flow models are reliant on various assumptions, including projected business results, long-term growth factors and weighted-average cost of capital. Management judgment is involved in estimating these variables, and they include uncertainties since they are forecasting future events. Ashland performs sensitivity analyses by using a range of inputs to confirm the reasonableness of the long-term growth rate and weighted average cost of capital estimates. Additionally, Ashland compares the indicated equity value to Ashland’s market capitalization and evaluates the resulting implied control premium/discount to determine if the estimated enterprise value is reasonable.
During the third quarter of fiscal 2025, Ashland experienced a continued decline in the market price of its common stock. Ashland also experienced slowing growth due to weakening macroeconomic environment that is dampening consumer sentiment and demand globally which resulted in lower growth and lower margins for the Life Sciences and Specialty Additives reporting units than what was previously forecasted. These factors led Ashland to determine that triggering events occurred, and a quantitative goodwill impairment assessment was performed during the third quarter of fiscal 2025.
Following the completion of this quantitative analysis, Ashland concluded that the fair value of Personal Care reporting unit exceeded its carrying value by more than 100%. The Intermediates reporting unit has no associated goodwill. The carrying value of the Life Sciences and the Specialty Additives reporting units exceeded their fair value, resulting in non-cash goodwill impairment charges of $375 million and $331 million, respectively, for a total goodwill impairment charge of $706 million, which was recorded within the goodwill impairment caption of the Statement of Consolidated Comprehensive Income (Loss) for the year ended September 30, 2025.
On July 1, 2025, the date of our annual goodwill impairment assessment, Ashland evaluated each reporting unit using a qualitative approach focusing on any additional changes in market conditions, performances versus forecast and strategic initiatives. Particular attention was given to forward looking macroeconomic trends and forecasts, recent financial results, earnings multiples for guideline public companies in each reporting unit's industry peer group and sensitivity analysis for each reporting units discounted cash flow model. There was no additional impairment identified as part of the July 1, 2025 annual goodwill impairment assessment. No subsequent indicators of impairment had been identified during the fourth quarter of fiscal 2025. For further information, see Note G of the Notes to Consolidated Financial Statements.
The below table provides a sensitivity analysis for Life Sciences and Specialty Additives reporting units remaining goodwill, utilizing reasonably possible changes in the assumptions for the shorter term and residual growth rates and the discount rate, to demonstrate the potential impacts to the estimated fair values. The below table provides, in isolation, the estimated fair value impacts related to a 25-basis point increase to discount rate or a 25-basis point decrease to residual growth rates, both of which would result in incremental impairment charges to the Life Sciences and Specialty Additives reporting units.
Approximate Percent Change in Estimated Fair Value
+25 bps
-25 bps
Discount Rate
Growth Rate
Life Sciences
Specialty Additives
Assumptions inherent in the valuation methodologies include estimates of future projected business results (principally sales and EBITDA), long-term growth rates, and the weighted-average cost of capital. Significant assumptions utilized in the impairment analysis included the weighted-average cost of capital, ranging between 12.50% and 13.75%, and terminal growth rates, ranging between 2.0% and 4.0% depending on the reporting unit. For further information, see Note G of the Notes to Consolidated Financial Statements.
Other indefinite-lived intangible assets
Other indefinite-lived intangible assets include certain trademarks and trade names. Ashland reviews these intangible assets for possible impairment annually as of July 1 or whenever events or changes in circumstances indicate that carrying amounts may not be recoverable. If the carrying value of an individual indefinite-lived intangible asset exceeds its fair value, the asset is written down to its fair value and the amount of the write down is the impairment charge.
Ashland tests these assets using a “relief-from-royalty” valuation method to determine the fair value. Assumptions inherent in the valuation methodologies include, but are not limited to, future projected business results, growth rates, the weighted-average cost of capital for a market participant, and royalty rates. In conjunction with the triggering events described above for goodwill, Ashland tested its indefinite-lived intangible assets for impairment during the third quarter of fiscal 2025. Ashland’s quantitative approach models did not indicate any impairment, as each indefinite-lived intangible asset’s fair value exceeded its carrying values. Ashland has two indefinite-lived intangible assets related to trademarks and trade names. Significant assumptions utilized in the impairment analysis included the weight-average cost of capital, ranging between 13.5% and 14.0%, royalty rates of 2.0%, and terminal growth rates, ranging between 3.2% and 3.3%. One of the two indefinite-lived intangible assets fair value exceeded its carrying value by more than 75%, while the second had a fair value slightly above the carrying value. A 25-basis point increase to the discount rate or a 25-basis point decrease to the residual growth rate would have resulted in an impairment for the second indefinite-lived intangible asset.
On July 1, 2025, the date of our annual impairment assessment, Ashland evaluated its indefinite-lived intangible assets for impairment using a qualitative approach focusing on the key assumptions used as part of the third quarter quantitative approach. There was no impairment identified as part of the July 1, 2025 annual other indefinite-lived intangible asset impairment assessment. No subsequent indicators of impairment had been identified during the fourth quarter of fiscal 2025.
Ashland’s assessment of an impairment on any of these assets classified currently as having indefinite lives, including goodwill, could change in future periods if significant events happen and/or circumstances change that affect the previously mentioned assumptions. Assumptions inherent in the valuation methodologies include, but are not limited to, such estimates as future projected business results, growth rates, the weighted average cost of capital for a market participant, and royalty rates. For further information, see Note G of the Notes to Consolidated Financial Statements.
Income taxes
Ashland is subject to income taxes in the United States and numerous foreign jurisdictions. Judgment in the forecasting of taxable income using historical and projected future operating results is required in determining Ashland’s provision for income taxes and the related assets and liabilities. The provision for income taxes includes income taxes paid, currently payable or receivable, and deferred taxes. Under U.S. GAAP, deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax loss and credit carryforwards. The effect on deferred taxes of changes in tax rates is recognized in the period in which the enactment date occurs. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts expected to be realized. Deferred taxes are not provided on the unremitted earnings of subsidiaries outside of the United States when it is expected that these earnings are indefinitely reinvested. In the event that the actual outcome of future tax consequences differs from Ashland’s estimates and assumptions due to changes or future events such as tax legislation, geographic mix of earnings, completion of tax audits or earnings repatriation plans, the resulting change to the provision for income taxes could have a material effect on the Statements of Consolidated Comprehensive Income (Loss) and Consolidated Balance Sheets.
The recoverability of deferred tax assets and the recognition and measurement of uncertain tax positions are subject to various assumptions and judgment by Ashland. If actual results differ from the estimates made by Ashland in establishing or maintaining valuation allowances against deferred tax assets, the resulting change in the valuation allowance would generally impact earnings or other comprehensive income depending on the nature of the respective deferred tax asset. Additionally, the positions taken with regard to tax contingencies may be subject to audit and review by tax authorities, which may result in future taxes, interest and penalties. Positive and negative evidence is considered in determining the need for a valuation allowance against deferred tax assets, which includes such evidence as historical earnings, projected future earnings, tax planning strategies and expected timing of reversal of existing temporary differences.
In determining the recoverability of deferred tax assets, Ashland gives consideration to all available positive and negative evidence including reversals of deferred tax liabilities (other than those with an indefinite reversal period), projected future taxable income, tax planning strategies and recent financial operations. Ashland attaches the most weight to historical earnings due to their verifiable nature. In evaluating the objective evidence that historical results provide, Ashland considers three years of cumulative income or loss. In addition, Ashland has reflected increases and decreases in our valuation allowance based on the overall weight of positive versus negative evidence on a jurisdiction by jurisdiction basis.
EFFECTS OF INFLATION AND CHANGING PRICES
Ashland’s consolidated financial statements are prepared on the historical cost method of accounting in accordance with U.S. GAAP and, as a result, do not reflect changes in the purchasing power of the U.S. dollar. Monetary assets (such as cash, cash equivalents and accounts receivable) lose purchasing power as a result of inflation, while monetary liabilities (such as accounts payable and indebtedness) result in a gain, because they can be settled with dollars of diminished purchasing power. As of September 30, 2025, Ashland’s monetary assets exceed its monetary liabilities, leaving it currently more exposed to the effects of future inflation. While inflation rose significantly during 2022, it has to gradually decreased from fiscal 2023 to fiscal 2025. See Item 1A - Risk Factors for additional information.
Certain of the industries in which Ashland operates are capital-intensive, and replacement costs for its plant and equipment generally would substantially exceed their historical costs. Accordingly, depreciation and amortization expense would be greater if it were based on current replacement costs. However, because replacement facilities would reflect technological improvements and changes in business strategies, such facilities would be expected to be more productive than existing facilities, mitigating at least part of the increased expense.
OUTLOOK
Ashland is issuing the following guidance for fiscal 2026, Ashland intends to deliver against these commitments with a focus on execution, consistency, and credibility.
Full-year fiscal 2026 guidance
S ales: $1,835 million to $1,905 million, reflecting organic growth of approximately one to five percent over the prior year.
Adjusted EBITDA: $400 million to $430 million.
Adjusted Diluted Earnings Per Share Excluding Intangibles Amortization Expense growth: double-digit-plus; reflecting operating improvement and Portfolio Optimization.
Ongoing Free Cash Flow Conversion: approximately 50 percent of Adjusted EBITDA; capital expenditures of approximately $100 million.
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains forward-looking statements including, without limitation, statements made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation” ("MD&A"), within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Ashland has identified some of these forward-looking statements with words such as “anticipates,” “believes,” “expects,” “estimates,” “is likely,” “predicts,” “projects,” “forecasts,” “objectives,” “may,” “will,” “should,” “plans” and “intends” and the negative of these words or other comparable terminology. Ashland may from time to time make forward-looking statements in its Annual Report to Stockholders, quarterly reports and other filings with the Securities and Exchange Commission (SEC), news releases and other written and oral communications. These forward-looking statements are based on Ashland’s expectations and assumptions, as of the date such statements are made, regarding Ashland’s future operating performance and financial condition, as well as the economy and other future events or circumstances.
The risks and uncertainties we face which may cause our actual results to differ materially from the results expressed, projected, or implied in these forward-looking statements include, but are not limited to: Ashland’s aggressive growth goals and the extent to which such goals may be impacted by a failure to optimize our tangible and intangible assets, a failure to identify and integrate acquisition targets, any unexpected costs and liabilities associated with such acquisitions, and goodwill impairment; business disruptions stemming from natural, operational, and other catastrophic events, including disruptions to supply and logistics functions, manufacturing delays, and information technology system and network failures; climate change and related resource impacts; changes in consumer preferences and a reduction in demand for Ashland’s products; risks inherent in operating a global business, including tariffs and other trade policies, geopolitical instability and armed conflict, and challenges associated with hiring and managing a diverse workforce across countries with differing laws, regulations, and cultural practices; economic downturns and disruptions in the financial markets; Ashland’s substantial indebtedness, including the possibility that such indebtedness and related restrictive covenants may adversely affect our future cash flows, limit our ability to repay debt and obtain future financing, place Ashland at a competitive disadvantage, and make us more vulnerable to interest rate increases; our ability to develop and market new products and remain competitive in the markets in which we operate; our ability to pass increases in the costs of energy and raw materials to customers and to fulfill our contractual requirements with customers and vendors; downward pressures on prices and margins; the ability to attract and retain key employees and to provide for effective succession planning; cybersecurity risks, including disruptions to or failures in Ashland’s information technology systems and networks, maliciouscyberattacks, and the inadvertent or accidental disclosure or loss of proprietary or sensitive information; Ashland’s ability to effectively protect and enforce its intellectual property rights; exposure to products liability claims; risks related to compliance with environmental, health, and safety regulations, including the potential for costlylitigation, remediation, and settlement actions; exposure to pending and threatened asbestos-related litigation; changes in the legal and regulatory landscapes in which we operate; and changes in taxation or adverse tax rulings. These risks and uncertainties also include, but are not limited to, the risk factors set forth in Item 1A. “Risk Factors” to this Annual Report on Form 10-K, elsewhere in this Annual Report on Form 10-K, and in our other periodic reports filed with the SEC. Ashland believes its expectations and
assumptions are reasonable, but there can be no assurance that the expectations reflected herein will be achieved. Unless legally required, Ashland undertakes no obligation to update publicly any forward-looking statements made in this Annual Report on Form 10-K whether as a result of new information, future events or otherwise. Information on Ashland’s website is not incorporated into or a part of this Annual Report on Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITA TIVE DISCLOSURES ABOUT MARKET RISK
Ashland conducts business in a variety of foreign currencies. Accordingly, Ashland regularly uses foreign currency derivative instruments to manage exposure on certain transactions denominated in foreign currencies to curtail potential earnings volatility effects of certain assets and liabilities, including short-term intercompany loans, denominated in currencies other than Ashland’s functional currency of an entity. These derivative contracts generally require exchange of one foreign currency for another at a fixed rate at a future date and generally have maturities of less than twelve months. All contracts are valued at fair value with net changes in fair value recorded within the selling, general and administrative expense caption. The impacts of these contracts were largely offset by gains and losses resulting from the impact of changes in exchange rates on transactions denominated in non-functional currencies.
As of September 30, 2025 and 2024, Ashland had not identified any significant credit risk on open derivative contracts. The potential loss from a hypothetical 10% adverse change in foreign currency rates on Ashland’s open foreign currency derivative instruments would be largely offset by gains resulting from the impact of changes in exchange rates on transactions denominated in non-functional currencies. Ashland did not have any significant open hedging contracts with respect to commodities or any related raw material requirements as of and for the year ended September 30, 2025.
ITEM 8. FINANCIAL STATEME NTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Management's report on internal control over financial reporting
Reports of independent registered public accounting firm (Ernst & Young LLP; PCAOB ID: 42 )
Consolidated Financial Statements:
Statements of Consolidated Comprehensive Income (Loss)
Consolidated Balance Sheets
Statements of Consolidated Equity
Statements of Consolidated Cash Flows
Notes to Consolidated Financial Statements
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for the preparation and integrity of the Consolidated Financial Statements and other financial information included in this Annual Report on Form 10-K. Such financial statements are prepared in accordance with accounting principles generally accepted in the United States. Accounting principles are selected, and information is reported which, using management’s best judgment and estimates, present fairly Ashland’s consolidated financial position, results of operations and cash flows. The other financial information in this Annual Report on Form 10-K is consistent with the Consolidated Financial Statements.
Ashland’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Ashland’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Ashland’s Consolidated Financial Statements. Ashland’s internal control over financial reporting is supported by a code of business conduct which summarizes our guiding values such as obeying the law, adhering to high ethical standards and acting as responsible members of the communities where we operate. Compliance with that Code forms the foundation of our internal control systems, which are designed to provide reasonable assurance that Ashland’s assets are safeguarded, and its records reflect, in all material respects, transactions in accordance with management’s authorization. The concept of reasonable assurance is based on the recognition that the cost of a system of internal control should not exceed the related benefits. Management believes that adequate internal controls are maintained by the selection and training of qualified personnel, by an appropriate division of responsibility in all organizational arrangements, by the establishment and communication of accounting and business policies, and by internal audits.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements and even when determined to be effective, can only provide reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
The Board, subject to stockholder ratification, selects and engages the independent auditors based on the recommendation of the Audit Committee. The Audit Committee, composed of directors who are not members of management, reviews the adequacy of Ashland’s policies, procedures, controls and risk management strategies, the scope of auditing and other services performed by the independent auditors, and the scope of the internal audit function. The Audit Committee holds meetings with Ashland’s internal auditor and independent auditors, with and without management present, to discuss the findings of their audits, the overall quality of Ashland’s financial reporting and their evaluation of Ashland’s internal controls. The report of Ashland’s Audit Committee can be found in Ashland’s Proxy for its 2026 Annual Meeting.
Management assessed the effectiveness of Ashland’s internal control over financial reporting as of September 30, 2025. Management conducted its assessment utilizing the framework described in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this assessment, management believes that Ashland maintained effective internal control over financial reporting as of September 30, 2025.
Ernst & Young LLP, an independent registered public accounting firm, has audited and reported on the Consolidated Financial Statements of Ashland Inc. and Consolidated Subsidiaries as of and for the year ended September 30, 2025, and the effectiveness of Ashland’s internal control over financial reporting as of September 30, 2025. The reports of the independent registered public accounting firm are contained in this Annual Report on Form 10-K.
/s/ Guillermo Novo
Guillermo Novo
Chair of the Board and Chief Executive Officer
/s/ William C. Whitaker
William C. Whitaker
Senior Vice President and Chief Financial Officer
November 20, 2025
Report of Independe nt Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Ashland Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Ashland Inc. and Consolidated Subsidiaries’ internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Ashland Inc. and Consolidated Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of September 30, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of September 30, 2025 and 2024, the related statements of consolidated comprehensive income (loss), consolidated equity and consolidated cash flows for each of the three years in the period ended September 30, 2025, and the related notes and our report dated November 20, 2025, expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Grandview Heights, Ohio
November 20, 2025
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Ashland Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Ashland Inc. and Consolidated Subsidiaries (the Company) as of September 30, 2025 and 2024, the related statements of consolidated comprehensive income (loss), consolidated equity and consolidated cash flows, for each of the three years in the period ended September 30, 2025, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated November 20, 2025, expressed an unqualified opinion thereon.
Company's Disclosure of an Additional Measure of Segment Profit or Loss
In Note Q to the consolidated financial statements, the Company has elected to disclose earnings before income taxes, depreciation and amortization (EBITDA) as an additional segment profit or loss measure as permitted pursuant to ASC 280, Segment Reporting, and that the U.S. Securities and Exchange Commission (SEC) defines as a non-GAAP measure. Accordingly, we express no opinion on whether the additional segment profit or loss measure complies with SEC Regulation S-K, Item 10(e) and Regulation G, Item 101.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of Environmental Remediation Reserves
Description of the Matter
At September 30, 2025, the environmental remediation reserves amounted to $226 million. As discussed within Note M of the consolidated financial statements, the environmental remediation reserves reflect the Company’s estimates of the most likely costs that will be incurred over an extended period to remediate identified conditions for which the costs are reasonably estimable and probable of being incurred, without regard to any third-party recoveries. The Company uses engineering studies, historical experience and other factors to identify and evaluate remediation alternatives and their related costs in determining the estimated reserves for environmental remediation. The Company regularly adjusts its reserves as environmental remediation continues.
Auditing the environmental remediation reserves was complex due to inherent uncertainties that affect the Company’s ability to estimate probable costs. Such uncertainties include the nature and extent of contamination at each site, and the nature and extent of required cleanup efforts.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant internal controls over the Company’s environmental remediation reserves process. For example, we tested internal controls over the Company’s annual reserve setting training process, management’s monitoring of sites, and management’s development of the environmental remediation reserves estimates. We also tested management’s internal controls over the completeness and accuracy of the underlying data used in the environmental remediation reserves estimates.
To test the environmental remediation reserves, we performed audit procedures that included, among others: assessing the appropriateness of the Company’s policies and procedures and testing management’s development of the environmental remediation reserves estimates. We obtained an understanding of the nature and extent of contamination at each site, the nature and extent of required cleanup efforts, and the corresponding environmental remediation reserves through discussions with the Company’s remediation project managers. We also involved our environmental remediation subject matter specialists to evaluate the reasonableness of management’s estimates, including consideration of information available on regulatory databases in the public domain that was assessed for possible contrary evidence. With the support of our environmental remediation subject matter specialists, we evaluated whether the environmental remediation reserves estimates were appropriate based on engineering studies and historical experience.
Valuation of Asbestos Litigation Reserves
Description of the Matter
At September 30, 2025, the asbestos litigation reserves amounted to $435 million. As discussed within Note M of the consolidated financial statements, the Company has liabilities from claimsalleging personal injury caused by exposure to asbestos. The Company retained third-party actuarial experts to assist in developing and annually updating independent reserve estimates for future asbestos claims and related costs given various assumptions. The methodology used by the actuarial experts to project future asbestos costs is based largely on recent experience, including claim-filing and settlement rates, disease mix, open claims and litigation defense costs. Further, the claim experience identified is compared to the results of previously conducted third-party epidemiological studies estimating the number of people likely to develop asbestos-related diseases. Using that information, the Company estimates a range of the number of future claims that may be filed, as well as the related costs that may be incurred in resolving those claims. Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs using the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of the Company’s third-party actuarial experts.
Auditing the Company’s asbestos litigation reserves was complex due to uncertainty associated with the estimate of projected future asbestos costs. The methodology employed by management to develop the estimate of projected future asbestos costs is subject to assumptions such as the number of claims that may be received in the future, the type and severity of disease alleged by claimant, the related costs incurred in resolving those claims, and the dismissal rates. These assumptions have a significant effect on the asbestos litigation reserves.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls over the asbestos litigation reserves process. These include internal controls over management's assessment of the assumptions utilized within the estimate, management’s oversight of asbestos trends including claims movement and costs incurred, and the completeness and accuracy of the underlying claims data utilized to project future costs.
To evaluate the reasonableness of the asbestos litigation reserves, our audit procedures included testing the completeness and accuracy of the underlying claims data provided to management's actuarial experts utilized to project future costs. Additionally, we evaluated the claims and spend activity from legal letters obtained from internal and external legal counsel. Furthermore, we involved our actuarial subject matter specialists to assist in the evaluation of the methodologies and assumptions applied by management's actuarial experts as described above to determine the appropriateness of the asbestos litigation reserves, and to independently prepare an estimated range of the liability. We then assessed the reasonableness of the Company's recorded asbestos litigation reserves against our independently calculated range.
Evaluation of Goodwill Impairment for the Life Sciences and Specialty Additives Reporting Units
Description of the Matter
At September 30, 2025, the Company’s goodwill was $705 million, of which $466 million relates to the Life Sciences reporting unit, and $112 million relates to the Specialty Additives reporting unit. As discussed in Note G to the consolidated financial statements, goodwill is tested for impairment annually on July 1st, or whenever events and circumstances indicate an impairment may have occurred. During the third quarter of fiscal 2025, Ashland determined that triggering events occurred, and a quantitative goodwill impairment assessment was performed during the three months ended June 30, 2025. As a result of the interim impairment assessment, the Company recorded a $375 million and $331 million goodwill impairment charge related to the Life Sciences reporting unit and Specialty Additives reporting unit, respectively. The Company’s annual impairment assessment in the fourth quarter of fiscal 2025 did not result in an impairment of goodwill for any of the Company’s reporting units. There were no impairment indicators identified in the fourth quarter of fiscal 2025 which had not been considered as part of the July 1, 2025 annual impairment assessment.
Auditing management’s interim goodwill impairment test in the third quarter of fiscal 2025 related to the Life Sciences and Specialty Additives reporting units was challenging due to the complexity of forecasting the long-term cash flows of these reporting units and the significant estimation uncertainty of certain assumptions included within such forecasts. The significant estimation uncertainty was primarily due to the sensitivity of the reporting units’ fair value to changes in the significant assumptions used in the income approach, including forecasted sales, EBITDA margins, and discount rates. These significant assumptions require a high degree of estimation and judgment based on an evaluation of historical performance, current and forecasted industry trends, and macroeconomic conditions.
How We Addressed the Matter in Our Audit
We obtained an understanding, evaluated the design, and tested the operating effectiveness of internal controls over the Company’s goodwill impairment process, including internal controls over management’s review of the significant assumptions described above as well as internal controls over management’s review of its financial forecasts and carrying values of its reporting units.
To test the estimated fair value of the Life Sciences and Specialty Additives reporting units, we performed audit procedures that included, among others, using an internal valuation specialist to assist in our evaluation of the methodologies and certain significant assumptions used by the Company, specifically the discount rates. We assessed the reasonableness of the Company’s assumptions around forecasted sales, EBITDA margins, and discount rates by comparing those assumptions to recent historical performance, financial forecasts, and current and forecasted economic and industry trends. We also assessed the reasonableness of estimates included in the Company’s financial forecasts by evaluating such assumptions compared to economic, industry, and peer expectations. We evaluated management’s historical accuracy of forecasting sales and EBITDA margins by comparing past financial forecasts to subsequent actual activity. We performed various sensitivity analyses around these significant assumptions to understand the impact on the reporting units’ fair value calculations.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2014.
Grandview Heights, Ohio
November 20, 2025
Ashland Inc. and Consolidated Subsidiaries
Statements of Consolidated Comprehensive Income (Loss)
Years Ended September 30
(In millions except per share data)
Sales - Note P
Cost of sales - Note Q
Gross profit
Selling, general and administrative expense - Note Q
Research and development expense
Intangibles amortization expense - Note G
Equity and other income
Goodwill impairment - Note G
Income (loss) on acquisitions and divestitures, net - Note B
Operating income (loss)
Net interest and other expense (income) - Note H
Other net periodic benefitloss - Note L
Income (loss) from continuing operations before income taxes
Income tax expense (benefit) - Note K
Income (loss) from continuing operations
Income (loss) from discontinued operations, net of income taxes - Note C
Net income (loss)
PER SHARE DATA - NOTE A
Basic earnings (loss) per share
Income (loss) from continuing operations
Income (loss) from discontinued operations
Net income (loss)
Diluted earnings (loss) per share
Income (loss) from continuing operations
Income (loss) from discontinued operations
Net income (loss)
COMPREHENSIVE INCOME (LOSS)
Net income (loss)
Other comprehensive income (loss), net of tax
Unrealized translation gain
Unrealized gain (loss) on commodity hedges
Other comprehensive income
Comprehensive income (loss)
See Notes to Consolidated Financial Statements.
Ashland Inc. and Consolidated Subsidiaries
Consolidated B alance Sheets
At September 30
(In millions)
ASSETS
Current assets
Cash and cash equivalents
Accounts receivable, net (a) - Notes A and H
Inventories - Note A
Other assets
Total current assets
Noncurrent assets
Property, plant and equipment - Note F
Cost
Accumulated depreciation
Net property, plant and equipment
Goodwill - Note G
Intangibles - Note G
Operating lease assets, net - Note J
Restricted investments - Note E
Asbestos insurance receivable, net (b) - Notes A and M
Deferred income taxes - Note K
Other assets - Note I
Total noncurrent assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Trade and other payables
Accrued expenses and other liabilities
Current operating lease obligations - Note J
Total current liabilities
Noncurrent liabilities
Long-term debt - Note H
Asbestos litigation reserves - Note M
Deferred income taxes - Note K
Employee benefit obligations - Note L
Operating lease obligations - Note J
Other liabilities - Note I
Total noncurrent liabilities
Commitments and contingencies - Notes J and M
Equity - Notes N and O
Common stock, par value $ .01 per share, 200 million shares authorized
Issued 46 million and 47 million shares in 2025 and 2024
Paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total equity
Total liabilities and equity
Accounts receivable, net includes an allowance for credit losses of $ 2 million at both September 30, 2025 and 2024 .
Asbestos insurance receivable, net includes an allowance for credit losses of $ 2 million at both September 30, 2025 and 2024 .
See Notes to Consolidated Financial Statements.
Ashland Inc. and Consolidated Subsidiaries
Statements of Con solidated Equity
Accumulated
other
Common
Paid-in
Retained
comprehensive
(In millions)
stock
capital
earnings
loss (a)
Total
Balance at September 30, 2022
Total comprehensive income
Net income
Other comprehensive income
Dividends, $ 1.44 per common share
Compensation expense and common shares issued under stock incentive and other plans (b)(c)
Repurchase of common stock (d)(e)
Balance at September 30, 2023
Total comprehensive income
Net income
Other comprehensive income
Dividends, $ 1.58 per common share
Compensation expense and common shares issued under stock incentive and other plans (b)(c)
Repurchase of common stock (d)(e)
Balance at September 30, 2024
Total comprehensive income (loss)
Net loss
Other comprehensive income
Dividends, $ 1.64 per common share
Compensation expense and common shares issued under stock incentive and other plans (b)(c)
Repurchase of common stock (d)(e)
Balance at September 30, 2025
At September 30, 2025 and 2024 , the net of tax accumulated other comprehensive loss of $ 401 million and $ 448 million, respectively, was comprised of net unrealized translation losses of $ 400 million and $ 445 million, respectively, unrecognized prior service costs as a result of certain employee benefit plan amendments of $ 1 million and $ 1 million, respectively, and net unrealized losses on commodity hedges of zero and $ 2 million, respectively.
Includes a benefit of $ 3 million, $ 5 million and $ 11 million for stock based compensation employee withholding taxes paid in cash for 2025, 2024 and 2023 , respectively,
Common shares issued were 143,631 , 137,799 and 193,767 for 2025, 2024 and 2023 , respectively.
Common shares repurchased were 1,541,320 , 4,285,194 and 3,082,928 for 2025, 2024 and 2023 , respectively.
Includes $ 1 million, $ 3 million and $ 3 million of accrued excise taxes on stock repurchases for 2025, 2024 and 2023, respectively.
See Notes to Consolidated Financial Statements.
Ashland Inc. and Consolidated Subsidiaries
Statements of Conso lidated Cash Flows
Years Ended September 30
(In millions)
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES FROM CONTINUING OPERATIONS
Net income (loss)
Loss (income) from discontinued operations, net of income taxes
Adjustments to reconcile income (loss) from continuing operations to cash flows from operating activities
Depreciation and amortization
Original issue discount and debt issuance cost amortization
Deferred income taxes
Gain from sales of property and equipment
Stock based compensation expense - Note O
Benefit (loss) from excess tax deduction on stock based compensation
Income from restricted investments
Loss (income) on acquisitions and divestitures, net - Notes B
Goodwill impairment
Asset impairments
Pension contributions
Loss (gain) on pension and other postretirement plan remeasurements
Change in operating assets and liabilities (a)
Total cash flows provided by operating activities from continuing operations
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES FROM CONTINUING OPERATIONS
Additions to property, plant and equipment
Proceeds from disposal of property, plant and equipment
Proceeds from sale or restructuring of operations
Proceeds from settlement of company-owned life insurance contracts
Company-owned life insurance payments
Funds restricted for specific transactions
Reimbursement from restricted investments
Proceeds from sale of securities
Purchase of securities
Other investing cash flows
Total cash flows used by investing activities from continuing operations
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES FROM CONTINUING OPERATIONS
Proceeds from (repayment of) short-term debt
Repurchase of common stock
Cash dividends paid
Stock based compensation employee withholding taxes paid in cash
Total cash flows used by financing activities from continuing operations
CASH USED BY CONTINUING OPERATIONS
Cash used by discontinued operations
Operating cash flows
Total cash used by discontinued operations
Effect of currency exchange rate changes on cash and cash equivalents
DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS - END OF YEAR
CHANGES IN ASSETS AND LIABILITIES (a)
Accounts receivable
Inventories
Trade and other payables
Other assets and liabilities
CHANGE IN OPERATING ASSETS AND LIABILITIES
SUPPLEMENTAL DISCLOSURES
Interest paid
Income taxes paid (including discontinued operations)
(a) Excludes changes resulting from operations sold.
See Notes to Consolidated Financial Statements.
NOTE A – SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation and basis of presentation
The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and U.S. Securities and Exchange Commission ("SEC") regulations. The Consolidated Financial Statements include the accounts of Ashland Inc. ("Ashland") and its majority owned subsidiaries and, when applicable, entities for which Ashland has a controlling financial interest or is the primary beneficiary. Investments in joint ventures and 20 % to 50 % owned affiliates where Ashland has the ability to exert significant influence are accounted for under the equity method. Ashland had no significant equity method investments for any of the periods presented. All intercompany transactions and balances have been eliminated.
Ashland is comprised of the following reportable segments: Life Sciences, Personal Care, Specialty Additives and Intermediates. Unallocated and Other includes corporate governance activities and certain legacy matters. See Note Q for more information.
Use of estimates, risks and uncertainties
The preparation of Ashland’s Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include, but are not limited to, environmental remediation, asbestos litigation, the accounting for goodwill and other indefinite-lived intangible assets and income taxes. Although management bases its estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, actual results could differ significantly from the estimates under different assumptions or conditions.
Ashland’s results are affected by domestic and international economic, political, legislative, regulatory and legal actions. Economic conditions, such as recessionary trends, inflation, interest and monetary exchange rates, government fiscal policies and changes in the prices of certain key raw materials, can have a significant effect on operations. While Ashland maintains reserves for anticipated liabilities and carries various levels of insurance, Ashland could be affected by civil, criminal, regulatory or administrative actions, claims or proceedings relating to asbestos, environmental remediation, income taxes or other matters.
Cash and cash equivalents
Cash and cash equivalents include cash on hand and highly liquid investments maturing within three months after purchase.
Allowance for credit losses on accounts receivable
Ashland records an allowance for credit losses using the expected credit loss model. Ashland estimates expected credit losses based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. When measuring expected credit losses, Ashland pools assets with similar country risk and credit risk characteristics. Each period, the allowance for credit losses is adjusted through earnings to reflect expected credit losses over the remaining lives of the assets. No significant credit losses were incurred in 2025, 2024 and 2023.
A progression of activity in the allowance for credit losses is presented in the following table for the years ended September 30:
(In millions)
Allowance for credit losses - beginning of year
Adjustments to allowances for credit losses (a)
Reserves utilized
Allowance for credit losses - end of year
Adjustments to allowances for credit loses were less than $ 1 million for fiscal 2024.
Inventories
Inventories are carried at the lower of cost or net realizable value. Inventories are stated at cost using the weighted-average cost method. This method values inventories using average costs for raw materials and most recent production costs for labor and overhead.
The following summarizes Ashland’s inventories as of September 30:
(In millions)
Finished products
Raw materials, supplies and work in process
A progression of activity in the inventory reserves for obsolete and slow moving inventories, which reduce the amounts of finished products and raw materials, supplies and work in process reported, is presented in the following table, for the years ended September 30:
(In millions)
Inventory reserves - beginning of year
Adjustments to inventory reserves
Reserves utilized
Inventory reserves - end of year
Property, plant and equipment
The cost of property, plant and equipment is depreciated by the straight-line method over the estimated useful lives of the assets. Buildings are depreciated principally over 12 to 35 years and machinery and equipment principally over 2 to 25 years . Such costs are periodically reviewed for recoverability when impairment indicators are present. Such indicators include, among other factors, operating losses, unused capacity, market value declines and technological obsolescence. Recorded values of asset groups of property, plant and equipment that are not expected to be recovered through undiscounted future net cash flows are written down to current fair value, which generally is determined from estimated discounted future net cash flows (assets held for use) or net realizable value (assets held for sale). See Note F for additional information related to property, plant and equipment.
Leasing arrangements
Ashland determines if an arrangement contains a lease at inception based on whether or not it has the right to control the asset during the contract period and other facts and circumstances.
Operating lease right-of-use assets represent Ashland’s right to use an underlying asset for the lease term and lease liabilities represent Ashland’s obligation to make lease payments arising from the lease, both of which are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. Leases with a lease term of 12 months or less at inception are not recorded within the Consolidated Balance Sheets and are expensed on a straight-line basis over the lease term within the Statements of Consolidated Comprehensive Income (Loss). The lease term is determined by assuming the exercise of renewal options that are reasonably certain. As most leases do not provide an implicit interest rate, Ashland used its incremental borrowing rate based on the information available at commencement date in determining the present value of future lease payments. When contracts contain lease and non-lease components, Ashland generally accounts for both components as a single lease component. For additional information on leasing arrangements, see Note J.
Goodwill and other indefinite-lived intangible assets
Ashland tests goodwill and other indefinite-lived intangible assets for impairment annually as of July 1 and when events and circumstances indicate an impairment may have occurred. Ashland reviews goodwill for impairment based on its identified reporting units. Ashland determined that its reporting units are Life Sciences, Personal Care, Specialty Additives and Intermediates. Ashland tests goodwill for impairment by comparing the carrying value to the estimated fair value of its reporting units. If the fair value of the reporting unit is lower than its carrying amount, goodwill is written down for the amount by which the carrying amount exceeds the fair value. However, the loss recognized cannot exceed the carrying amount of goodwill.
Using the quantitative approach, Ashland makes various estimates and assumptions in determining the estimated fair value of each reporting unit using a combination of discounted cash flow models and valuations based on earnings multiples for guideline public companies in each reporting unit’s industry peer group. Discounted cash flow models are reliant on various assumptions, including projected business
results, long-term growth factors and weighted-average cost of capital. Management judgment is involved in estimating these variables, and they include uncertainties since they are forecasting future events. Ashland performs sensitivity analyses by using a range of inputs to confirm the reasonableness of the long-term growth rate and weighted average cost of capital. Additionally, Ashland compares the indicated equity value to Ashland’s market capitalization and evaluates the resulting implied control premium/discount to determine if the estimated enterprise value is reasonable.
Ashland tests at least annually its indefinite-lived intangible assets, principally trademarks and trade names. If the carrying value of an individual indefinite-lived intangible asset exceeds its fair value, such individual indefinite-lived intangible asset is written down by an amount equal to such excess. Ashland performs a quantitative impairment test for the trademarks and trade names during which, trademarks and trade names are valued using a “relief-from-royalty” valuation method compared to the carrying value. Assumptions inherent in the valuation methodologies include, but are not limited to, such estimates as future projected business results, growth rates, the weighted-average cost of capital for a market participant, and royalty rates. For further information on goodwill and other indefinite-lived intangible assets, see Note G.
Finite-lived intangible assets
Finite-lived intangible assets principally consist of certain trademarks and trade names, intellectual property, and customer lists. These intangible assets are amortized on a straight-line basis over their estimated useful lives. The cost of trademarks and trade names is amortized principally over 3 to 20 years , intellectual property over 3 to 20 years and customer and supplier relationships over 10 to 24 years . Ashland reviews finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Ashland monitors these changes and events on at least a quarterly basis. The intangibles amortization expense caption within the Statements of Consolidated Comprehensive Income (Loss) includes amortization expense related to trademarks and trade names, intellectual property and customer and supplier relationships. Intangible assets classified as finite are amortized on a straight-line basis over their estimated useful lives. For further information on finite-lived intangible assets, see Note G.
Derivative instruments
Ashland regularly uses derivative instruments to manage its exposure to fluctuations in foreign currencies and certain commodities. All derivative instruments are recognized as either assets or liabilities on the Consolidated Balance Sheets and are measured at fair value. Changes in the fair value of all derivatives are recognized immediately in the Statements of Consolidated Comprehensive Income (Loss) unless the derivative qualifies as a hedge of future cash flows or a hedge of a net investment in a foreign operation. Gains and losses related to an instrument that qualifies for hedge accounting are either recognized in the Statements of Consolidated Comprehensive Income (Loss) immediately to offset the gain or loss on the hedged item, or deferred and recorded in the stockholders’ equity section of the Consolidated Balance Sheets as a component of accumulated other comprehensive loss and subsequently recognized in the Statements of Consolidated Comprehensive Income (Loss) when the hedged item affects net income (loss). For additional information on derivative instruments, see Note E.
Restricted investments
During 2015, Ashland placed $ 335 million of insurance proceeds into a renewable annual trust for asbestos (Asbestos trust) that Ashland determined is restricted for the purpose of paying ongoing and future litigation defense and claim settlement costs incurred in conjunction with asbestos claims. As of September 30, 2025 and 2024 , the funds within the Asbestos trust had a balance of $ 231 million and $ 248 million, respectively, and were primarily invested in publicly traded mutual funds with diversified asset allocations with a portion maintained in demand deposits. These funds are presented primarily as noncurrent assets within the restricted investments caption of the Consolidated Balance Sheets, with $ 30 million and $ 36 million classified within other current assets in the Consolidated Balance Sheets as of September 30, 2025 and 2024, respectively.
During 2021, Ashland established a renewable annual trust for environmental remediation (Environmental trust) that Ashland determined is restricted for ongoing and future environmental remediation and related litigation costs. As of September 30, 2025 and 2024 , the funds within the Environmental trust had a balance of $ 116 million and $ 120 million, respectively, and were primarily invested in publicly traded mutual funds with diversified asset allocations with a portion maintained in demand deposits. These funds are presented primarily as noncurrent assets within the restricted investments caption of the Consolidated Balance Sheets, with $ 20 million and $ 37 million classified within other current assets in the Consolidated Balance Sheets as of September 30, 2025 and 2024, respectively.
The funds within these trusts are classified as investment securities reported at fair value. Interest income and gains and losses (realized and unrealized) on the investment securities are reported in the net interest and other expense (income) caption in the Statements of Consolidated Comprehensive Income (Loss). See Note E for additional information regarding the fair value of these investments within the trusts.
Revenue recognition
Ashland’s sales are measured as the amount of consideration it expects to receive in exchange for transferring goods and are recognized when performance obligations are satisfied under the terms of contracts or purchase orders with customers. Ashland generally utilizes standardized language for the terms of contracts or purchase orders.
A performance obligation is deemed to be satisfied by Ashland when control of the product or service is transferred to the customer. The transaction price of a contract or purchase order, or the amount Ashland expects to receive upon satisfaction of all performance obligations, is determined by reference to the applicable terms. Ashland generally collects the cash from its customers within 60 days of the product delivery date. Sales and other similar taxes collected from customers on behalf of third parties are excluded from the contract price.
All of Ashland’s sales are derived from contracts or purchase orders with customers, and nearly all contracts or purchase orders with customers contain a single performance obligation for the transfer of goods where such performance obligation is satisfied at a point in time. Control of a product is deemed to be transferred to the customer generally upon shipment or delivery. Costs for shipping and handling activities, whether performed before or after the customer obtains control of the goods, are accounted for as fulfillment costs when not reimbursed.
Costs incurred to obtain contracts with customers are not significant and are expensed immediately as the period of performance is generally one year or less. Ashland records credit losses in specific situations when it is determined that the customer is unable to meet its financial obligation.
Expense recognition
Cost of sales include material and production costs, as well as the costs of inbound freight, purchasing and receiving, inspection, warehousing, internal transfers and all other distribution network costs. Selling, general and administrative expense includes sales and marketing costs, advertising, customer support, environmental remediation, corporate and divisional administrative and other costs. Advertising costs ($ 1 million in 2025 , $ 1 million in 2024 and $ 2 million in 2023) and research and development costs ( $ 54 million in 2025, $ 55 million in 2024 and $ 51 million in 2023 ) are expensed as incurred.
Income taxes
Ashland is subject to income taxes in the United States and numerous foreign jurisdictions. The provision for income taxes includes income taxes paid, currently payable or receivable, and deferred taxes. Ashland recognizes the income tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. Ashland evaluates and adjusts these accruals based on changing facts and circumstances. Deferred tax assets and liabilities are determined based on differences between financial reporting and tax basis of assets and liabilities, and are measured using enacted tax rates and laws that are expected to be in effect when the differences reverse. Deferred tax assets are also recognized for the estimated future effects of tax loss and credit carryforwards. The effect on deferred taxes of changes in tax rates is recognized in the period in which the enactment date occurs. Taxes due on Global Intangible Low-Taxed Income ("GILTI") inclusions in U.S. are recognized as a current period expense when incurred. Valuation allowances are established when necessary on a jurisdictional basis to reduce deferred tax assets to the amounts expected to be realized. In the event that the actual outcome of tax consequences differs from Ashland’s estimates and assumptions due to changes or future events such as tax legislation, geographic mix of earnings, completion of tax audits or earnings repatriation plans, the resulting change to the provision for income taxes could have a material effect on the Statements of Consolidated Comprehensive Income (Loss) and Consolidated Balance Sheets. For additional information on income taxes, see Note K.
The Organization for Economic Co-operation and Development (“OECD”) introduced Global Anti-Base Erosion and Profit Shifting (“BEPS”) Pillar 2 rules under which multi-national entities would pay a minimum level of tax on the income arising in each of the jurisdictions in which they operate. Numerous countries, including EU member states, have enacted or are expected to enact legislation to effectuate the new rules. In addition, several non-EU countries have proposed and/or adopted legislation consistent with the global minimum tax framework. Important details of these minimum tax developments are still to be determined and, in some cases, enactment and timing remain uncertain. Based on current legislation and available guidance, Ashland implemented these rules during the year ended September 30, 2025. Ashland
treated the Pillar Two global minimum tax as a period cost. These Pillar Two minimum tax rules did not have a material impact on Ashland’s financial condition, results of operations, or cash flows during the fiscal year ended September 30, 2025.
On July 4, 2025, “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14” – commonly referred to as the One Big Beautiful Bill Act ("OBBBA") – was signed into law. OBBBA includes several changes to the U.S. federal income tax system, including modifications to the deduction for domestic research and development costs, expensing of certain business property, and changes to the limitation on business interest. Ashland recorded the impact of the applicable provisions of OBBBA, which were not material to the Consolidated Financial Statements, during the year ended September 30, 2025.
A progression of activity in the tax valuation allowances is presented in the following table for the years ended September 30:
(In millions)
Tax valuation allowances - beginning of year
Adjustments to valuation allowances
Reserves utilized
Tax valuation allowances - end of year
Asbestos-related litigation
Ashland is subject to liabilities from claimsalleging personal injury caused by exposure to asbestos. Such claims result from indemnification obligations undertaken in 1990 in connection with the sale of Riley Stoker Corporation ("Riley") and the acquisition of Hercules (formerly Hercules Incorporated) in November 2008. Although Riley, a former subsidiary, was neither a producer nor a manufacturer of asbestos, its industrial boilers contained some asbestos-containing components provided by other companies. Hercules, an indirect wholly-owned subsidiary of Ashland, has liabilities from claimsalleging personal injury caused by exposure to asbestos. Such claims typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products sold by one of Hercules’ former subsidiaries to a limited industrial market.
Ashland retained Gnarus Advisors LLC ("Gnarus") to assist in developing and annually updating independent reserve estimates for future asbestos claims and related costs given various assumptions. The methodology used to project future asbestos costs is based largely on Ashland’s recent experience, including claim-filing and settlement rates, disease mix, open claims, and litigation defense. Ashland’s claim experience is compared to the results of previously conducted epidemiological studies estimating the number of people likely to develop asbestos-related diseases. Those studies were undertaken in connection with national analyses of the population expected to have been exposed to asbestos. Using that information, Gnarus estimates a range of the number of future claims that may be filed, as well as the related costs that may be incurred in resolving those claims. Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs using the results of a non-inflated, non-discounted approximate 40-year model. For additional information on asbestos-related litigation, see Note M.
Environmental remediation
Accruals for environmental remediation are recognized when it is probable a liability has been incurred and the amount of that liability can be reasonably estimated. Such costs are charged to expense if they relate to the remediation of conditions caused by past operations or are not expected to mitigate or prevent contamination from future operations. Accruals for environmental remediation reflect Ashland's estimates of the most likely costs that will be incurred over an extended period of time to remediate identified conditions for which costs are reasonably estimable and probable of being incurred, without regard to any third-party recoveries, and are regularly adjusted as environmental assessments and remediation efforts continue. For additional information on environmental remediation, see Note M.
Pension and other postretirement benefits
The funded status of Ashland’s pension and other postretirement benefit plans is recognized in the Consolidated Balance Sheets. The funded status is measured as the difference between the fair value of plan assets and the benefit obligation at September 30, the measurement date. For defined benefit pension plans, the benefit obligation is the projected benefit obligation ("PBO") and for the other postretirement benefit plans, the benefit obligation is the accumulated postretirement benefit obligation ("APBO"). The PBO represents the actuarial present value of benefits expected to be paid upon retirement based on estimated future compensation levels. The APBO represents the actuarial present value of postretirement benefits attributed to employee services already rendered. The measurement of the benefit obligation is based on Ashland’s estimates and actuarial valuations. These valuations reflect the terms of the plans and use participant-specific information such as compensation, age and years of service, as well as certain assumptions that require judgment, including, but not limited to, estimates of discount rates, rate of compensation increases, interest rates and mortality rates. The fair value of plan assets represents the current market value of assets held by an irrevocable trust fund for the sole benefit of participants. For additional information regarding plan assumptions and the current financial position of the pension and other postretirement plans, see Note L.
Ashland recognizes the change in the fair value of plan assets and net actuarial gains and losses annually in the fourth quarter of each fiscal year and whenever a plan is determined to qualify for a remeasurement. The remaining components of pension and other postretirement benefits expense are recorded ratably on a quarterly basis. Pension and other postretirement benefits adjustments charged directly to cost of sales that are applicable to inactive participants are excluded from inventoriable costs. The service cost component of pension and other postretirement benefits costs is allocated to each reportable segment; while the remaining components of pension and other postretirement benefits costs are recorded within the other net periodic benefitloss caption on the Statements of Consolidated Comprehensive Income (Loss).
Foreign currency translation
Subsidiaries outside the United States primarily use the local currency as the functional currency. Upon consolidation, the results of operations of the subsidiaries and affiliates whose functional currency is other than the U.S. dollar are translated into U.S. dollars at the average exchange rates for the year while assets and liabilities are translated at year-end exchange rates. Adjustments to translate assets and liabilities into U.S. dollars are recorded in the stockholders’ equity section of the Consolidated Balance Sheets as a component of accumulated other comprehensive loss and are included in net income (loss) only upon sale or substantial liquidation of the underlying foreign subsidiary or affiliated company.
During 2024, following the enactment by the Argentina government of a 50 % peso devaluation against the U.S. dollar, Ashland recorded a $ 5 million currency devaluation charge within the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income (Loss).
Stock incentive plans
Ashland recognizes compensation expense for stock incentive plans awarded to key employees and directors over the requisite service period based upon the grant-date fair value. Stock incentive awards are primarily in the form of restricted stock and restricted stock units, performance shares and other non-vested stock awards. Ashland utilizes several industry accepted valuation models to determine grant-date fair value. For further information concerning stock incentive plans, see Note O.
Earnings (loss) per share
The following is the computation of basic and diluted earnings (loss) per share ("EPS") from continuing operations attributable to Ashland for the years ended September 30. EPS is reported under the treasury stock method. Stock Appreciation Rights ("SARs") and warrants for each reported year whose grant price was greater than the market price of Ashland Common Stock at the end of each fiscal year were not included in the computation of EPS from continuing operations per diluted share because the effect of these instruments would be antidilutive. The total number of these shares outstanding was 1.6 million for 2025 and 1.2 million for both 2024 and 2023 . The majority of these shares are for warrants with a strike price of $ 128.66 .
(In millions except per share data)
Numerator
Numerator for basic and diluted EPS - Income (loss) from continuing operations, net of tax
Denominator
Denominator for basic EPS - Weighted-average common shares outstanding
Share based awards convertible to common shares (a)
Denominator for diluted EPS - Adjusted weighted - average shares and assumed conversions
EPS from continuing operations
Basic
Diluted (a)
As a result of the loss from continuing operations attributable to Ashland during fiscal 2025, the effect of the share-based awards convertible to common stock would be antidilutive and have been excluded from the diluted EPS calculation.
Other accounting pronouncements
In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") ASU No. 2024-03 “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures” which was subsequently updated by ASU No. 2025-01 "Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures" clarifying the effective date. The ASU was issued to enhance disclosure of income statement expenses. For each relevant expense caption presented on the face of the income statement, the following expense components must be presented in a tabular format within the Notes to Consolidated Financial Statements: purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion expense. Certain amounts already required to be disclosed under current GAAP requirements must also be presented in the same disclosure as the new disaggregation requirements. The new guidance also requires disclosure of a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. Additionally, the total amount of selling expenses must be disclosed at each interim and annual reporting periods. Finally, the Company’s description of selling expenses must be defined in annual reporting periods. The amendments in this ASU are effective for fiscal years beginning after December 15, 2027, and for interim periods beginning after December 15, 2027. The Company is currently evaluating the impact of adopting this guidance on our Consolidated Financial Statements.
In December 2023, the FASB issued ASU No. 2023-09 "Income Taxes (Topic 740): Improvements to Income Tax Disclosures". The ASU was issued to improvetransparency and disclosure requirements for the rate reconciliation, income taxes paid and other tax disclosures. The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and may be applied either prospectively or retrospectively. The Company is currently evaluating the impact of adopting this guidance.
In November 2023, the FASB issued ASU No. 2023-07 "Segment Reporting (Topic 280): Improvements to Reporting Segment Disclosures." The ASU was issued to improve reportable segment disclosure requirements, primarily through enhanced disclosures of significant segment expenses that are regularly provided to the chief operating decision maker and included within segment profit and loss. This guidance was effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted, and applied retrospectively to all prior periods presented in the financial statements. The Company adopted the annual guidance during the year ended September 30, 2025. See Note Q for disclosures.
In October 2023, the FASB issued ASU No. 2023-06 "Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative". The amendments in this ASU represent changes to clarify or improve disclosures and presentation requirements of a variety of topics by aligning them with the SEC's regulations. The amendments to the various topics should be applied prospectively, and the effective date will be determined for each individual disclosure based on the effective date of the SEC's removal of the related disclosure. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, then this ASU will not become effective. Early adoption is prohibited. The Company does not expect the amendments in this ASU to have a material impact on the Consolidated Financial Statements.
NOTE B – DIVESTITURES
Avoca business sale
On March 31, 2025, Ashland completed the sale of its Avoca business to Mane SA. Proceeds from the sale were $ 16 million, net of transaction costs. Ashland recorded an impairment charge of $ 183 million ($ 1 million allocated to goodwill, $ 134 million to other intangible assets, $ 33 million to property, plant and equipment, $ 14 million to operating lease assets, net and $ 1 million to other current assets) within the income (loss) on acquisitions and divestitures, net caption of the Statement of Consolidated Comprehensive Income (Loss) for the year ended September 30, 2025. The impairment charge includes the impact of the related inside tax basis differences associated with the impaired assets. The tax benefit associated with the sale is included within the income tax expense (benefit) caption of the Statement of Consolidated Comprehensive Income (Loss) for the year ended September 30, 2025. See Note K for tax details associated with the transaction. Ashland also recorded a pre-tax gain on sale of $ 8 million following the completion of this divestiture, mainly related to working capital movements, within the income (loss) on acquisitions and divestitures, net caption of Statement of Consolidated Comprehensive Income (Loss) for the year ended September 30, 2025.
The Avoca business was included within Ashland's Personal Care reportable segment.
Ashland determined this transaction did not qualify for discontinued operations treatment since it neither represented a strategic shift nor did it have a major effect on Ashland's operations and financial results.
Nutraceuticals business sale
On August 30, 2024, Ashland completed the sale of its Nutraceuticals business to Turnspire Capital Partners LLC ("Turnspire"). Proceeds from the sale were $ 26 million, net of transaction costs. Ashland recorded a $ 99 million impairment charge primarily related to allocated goodwill of $ 17 million, other intangible assets of $ 69 million and property, plant and equipment of $ 13 million within the income (loss) on acquisitions and divestitures, net caption of the Statement of Consolidated Comprehensive Income (Loss) for the year ended September 30, 2024. The impairment charge includes the impact of the related inside tax basis differences associated with the impaired assets. The tax benefit associated with the expected disposition is included within the income tax expense (benefit) caption of the Statement of Consolidated Comprehensive Income (Loss) for the year ended September 30, 2025. See Note K for tax details associated with the transaction. Ashland also recorded a pre-tax loss on sale of $ 8 million following the completion of this divestiture, mainly related to working capital movements, within the income (loss) on acquisitions and divestitures, net caption of Statement of Consolidated Comprehensive Income (Loss) for the year ended September 30, 2024. The income (loss) on acquisitions and divestitures, net caption also includes a reserve of $ 7 million for foreign VAT taxes associated with the entities transferred within the Statement of Consolidated Comprehensive Income (Loss) for the year ended September 30, 2024.
The Nutraceuticals business was included within Ashland's Life Sciences reportable segment and served the broader nutrition market.
Ashland determined this transaction did not qualify for discontinued operations treatment since it neither represented a strategic shift nor did it have a major effect on Ashland's operations and financial results.
Other manufacturing facility sales
During 2023, Ashland entered into and completed a definitive sale agreement to sell a Specialty Additives manufacturing facility for less than $ 1 million. The net asset value related to this site was $ 4 million at September 30, 2022. Ashland recorded a $ 4 million impairment charge
within the selling, general and administrative expense caption of the Statement of Consolidated Comprehensive Income (Loss) during the year ended September 30, 2023, related to this site.
Ashland determined this transaction did not qualify for discontinued operations treatment since it neither represented a strategic shift nor did it have a major effect on Ashland’s operations and financial results.
Other corporate assets
During 2025, Ashland completed the sale of two excess land properties with a net book value of zero . Ashland received net proceeds and recorded a pre-tax gain of $ 15 million within the income (loss) on acquisitions and divestitures, net caption of the Statement of Consolidated Comprehensive Income (Loss) during the year ended September 30, 2025.
During 2023, Ashland completed the sale of two excess land properties with a net book value of $ 2 million. Ashland received net proceeds of $ 9 million and recorded a pre-tax gain of $ 7 million within the income (loss) on acquisitions and divestitures, net caption of the Statement of Consolidated Comprehensive Income (Loss) for during the year ended September 30, 2023.
NOTE C – DISCONTINUED OPERATIONS
Ashland has divested certain businesses that have qualified as discontinued operations. The operating results from these divested businesses and subsequent adjustments related to ongoing assessments and activities of certain retained liabilities and tax items have been recorded within the discontinued operations caption in the Statements of Consolidated Comprehensive Income (Loss) for all periods presented and are discussed further within this note.
Due to the ongoing assessment of certain matters associated with previous divestitures, subsequent adjustments to these divestitures may continue in future periods in the discontinued operations caption in the Statements of Consolidated Comprehensive Income (Loss).
The following divested businesses represent disposal groups that qualified as discontinued operations in previous periods and impacted discontinued operations:
The Performance Adhesives business divested in 2022;
The Composites business and Marl facility (Composites/Marl facility) divested in 2019;
The separation of Valvoline Inc. (Valvoline) business divested in 2017;
The sale of Ashland Water Technologies (Water Technologies) business divested in 2014; and
The sale of the Ashland Distribution (Distribution) business divested in 2011.
Additionally, Ashland is subject to liabilities from claimsalleging personal injury caused by exposure to asbestos. Such claims result primarily from indemnification obligations undertaken in 1990 in connection with the sale of Riley, which qualified as a discontinued operation and from the acquisition during 2009 of Hercules. Adjustments to the recorded asbestos litigation reserves and related insurance receivables are recorded within the discontinued operations caption. See Note M for more information related to the adjustments on asbestos litigation reserves and receivables.
Components of amounts reflected in the Statements of Consolidated Comprehensive Income (Loss) related to discontinued operations are presented in the following table for the years ended September 30:
(In millions)
Income (loss) from discontinued operations
Performance Adhesives
Composites/Marl facility
Valvoline
Water Technologies
Distribution
Asbestos-related litigation
Income (loss) before taxes
Income tax benefit (expense)
Benefit (expense) related to income (loss) from discontinued operations
Performance Adhesives
Composites/Marl facility
Water Technologies
Distribution
Asbestos-related litigation
Income (loss) from discontinued operations, net of income taxes
NOTE D – RESTRUCTURING ACTIVITIES
Restructuring activities
Ashland periodically implements company-wide and targeted restructuring programs related to acquisitions, divestitures and other cost reduction programs in order to enhanceprofitability through streamlined operations and an improved overall cost structure.
Fiscal 2025, 2024 and 2023 restructuring costs
During fiscal 2025, Ashland initiated a restructuring plan to offset the impact from the Nutraceuticals business sale completed in fiscal 2024 and other portfolio optimization actions ("2025 Restructuring Program"). As a part of this program, Ashland is also advancing a multi-year manufacturing optimization restructuring plan to improve operational cost and strengthen its competitive position.
During fiscal 2023, Ashland implemented targeted organizational restructuring actions to reduce costs ("2023 Restructuring Program"). This program continued into fiscal 2024.
Ashland recorded severance expense of $ 13 million, $ 25 million and $ 5 million during the years ended September 30, 2025, 2024 and 2023, respectively, within the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income (Loss).
The following table details at September 30, 2025, the amount of restructuring severance liabilities related to these programs.
(In millions)
2025 Restructuring Program
2023 Restructuring Program
Balance at September 30, 2023 (a)
Restructuring reserve
Utilization (cash paid)
Balance at September 30, 2024 (a)
Restructuring reserve
Utilization (cash paid)
Balance at September 30, 2025 (a)
The restructuring severance liability associated with these programs is recorded within accrued expenses and other liabilities in the Consolidated Balance Sheets at September 30, 2025 and 2024 .
Plant optimization actions
Ashland's portfolio optimization actions have included projects associated with carboxymethylcellulose ("CMC"), industrial methylcellulose ("MC"), vinyl pyrrolidone and derivatives ("VP&D") and hydroxyethylcellulose ("HEC") as well as manufacturing productivity initiatives.
During 2025, Ashland incurred $ 21 million, $ 1 million and $ 19 million of accelerated depreciation for product line optimization activities associated with manufacturing facilities within the Life Sciences, Personal Care and Specialty Additives reportable segments, respectively, which was recorded within the cost of sales caption of the Statements of Consolidated Comprehensive Income (Loss).
During 2024, Ashland incurred $ 55 million of accelerated depreciation for product line optimization activities associated with two Specialty Additives manufacturing facilities, which was recorded within the cost of sales caption of the Statements of Consolidated Comprehensive Income (Loss).
During 2024, Ashland incurred $ 2 million of accelerated depreciation for product line optimization activities associated with a Personal Care manufacturing facility in Summerville, South Carolina, which was recorded within the cost of sales caption of the Statements of Consolidated Comprehensive Income (Loss).
NOTE E – FAIR VALUE MEASUREMENTS
As required by U.S. GAAP, Ashland uses applicable guidance for defining fair value, the initial recording and periodic remeasurement of certain assets and liabilities measured at fair value and related disclosures for instruments measured at fair value. Fair value accounting guidance establishes a fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). An instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the instrument’s fair value measurement. The three levels within the fair value hierarchy are described as follows.
Level 1 – Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
Level 3 – Unobservable inputs for the asset or liability for which there is little, if any, market activity at the measurement date. Unobservable inputs reflect Ashland’s own assumptions about what market participants would use to price the asset or liability. The inputs are developed based on the best information available in the circumstances, which might include Ashland’s own financial data such as internally developed pricing models, discounted cash flow methodologies, as well as instruments for which the fair value determination requires significant management judgment.
For assets that are measured using quoted prices in active markets (Level 1), the total fair value is the published market price per unit multiplied by the number of units held without consideration of transaction costs. Assets and liabilities that are measured using significant other observable inputs (Level 2) are primarily valued by reference to quoted prices of similar assets or liabilities in active markets, adjusted for any terms specific to that asset or liability. For all other assets and liabilities for which unobservable inputs are used (Level 3), fair value is derived through the use of fair value models, such as a discounted cash flow model or other standard pricing models that Ashland deems reasonable.
The following table summarizes financial instruments subject to recurring fair value measurements as of September 30, 2025. For additional information on fair value hierarchy measurements of pension plan assets, see Note L.
(In millions)
Carrying value
Total fair value
Level 1
Level 2
Level 3
Assets
Cash and cash equivalents
Restricted investments (a)(b)
Investments of captive insurance company (c)
Commodity derivatives (d)
Total assets at fair value
Liabilities
Foreign currency derivatives (e)
Commodity derivatives (e )
Total liabilities at fair value
Includes $ 297 million within restricted investments and $ 50 million within other current assets in the Consolidated Balance Sheets.
Includes $ 231 million related to the Asbestos trust and $ 116 million related to the Environmental trust. See Note A for additional details.
Included in other noncurrent assets in the Consolidated Balance Sheets.
Included in accounts receivable, net in the Consolidated Balance Sheets.
Included in accrued expenses and other liabilities in the Consolidated Balance Sheets.
The following table summarizes financial instruments subject to recurring fair value measurements as of September 30, 2024:
(In millions)
Carrying value
Total fair value
Level 1
Level 2
Level 3
Assets
Cash and cash equivalents
Restricted investments (a)(b)
Investments of captive insurance company (c)
Foreign currency derivatives (d)
Total assets at fair value
Liabilities
Foreign currency derivatives (e)
Commodity derivatives (e )
Total liabilities at fair value
Includes $ 295 million within restricted investments and $ 73 million within other current assets in the Consolidated Balance Sheets.
Includes $ 248 million related to the Asbestos trust and $ 120 million related to the Environmental trust. See Note A for additional details.
Included in other noncurrent assets in the Consolidated Balance Sheets.
Included in accounts receivable, net in the Consolidated Balance Sheets.
Included in accrued expenses and other liabilities in the Consolidated Balance Sheets.
Restricted investments
As discussed in Note A, Ashland maintains certain investments in a company restricted renewable annual trusts for the purpose of paying future asbestos indemnity and defense costs and future environmental remediation and related litigation costs. The financial instruments are designated as investment securities, classified as Level 1 measurements within the fair value hierarchy. These investment securities were classified primarily as noncurrent restricted investment assets, with $ 50 million and $ 73 million classified within other current assets, in the Consolidated Balance Sheets at September 30, 2025 and 2024, respectively.
The following table presents gross unrealized gains and losses for the restricted investments as of:
Gross
Gross
(In millions)
Adjusted Cost
Unrealized Gain
Unrealized Loss
Fair Value
September 30, 2025
Demand deposit
Equity mutual fund
Fixed income mutual fund
Fair value
September 30, 2024
Demand deposit
Equity mutual fund
Fixed income mutual fund
Fair value
The following table presents the investment income, net gains and losses realized, funds restricted for specific transactions, and disbursements related to restricted investments for the years ended September 30:
(In millions)
Investment income (a)
Net gains (a)
Funds restricted for specific transactions
Disbursements
Included in the net interest and other expense (income) caption within the Statements of Consolidated Comprehensive Income (Loss).
Foreign currency derivatives
Ashland conducts business in a variety of foreign currencies. Accordingly, Ashland regularly uses foreign currency derivative instruments to manage exposure on certain transactions denominated in foreign currencies to curtail potential earnings volatility effects of certain assets and liabilities, including short-term intercompany loans denominated in currencies other than Ashland’s functional currency of an entity. These derivative contracts generally require exchange of one foreign currency for another at a fixed rate at a future date and generally have maturities of less than twelve months. All contracts are valued at fair value with net changes in fair value recorded within the selling, general and administrative expense caption of the Statements of Comprehensive Income (Loss). The impacts of these contracts were largely offset by gains and losses resulting from the impact of changes in exchange rates on transactions denominated in non-functional currencies.
The following table summarizes the gains and losses recognized within the Statements of Consolidated Comprehensive Income (Loss) for the years ended September 30:
(In millions)
Foreign currency derivative gains
The following table summarizes the fair values of the outstanding foreign currency derivatives included in accounts receivable, net and accrued expenses and other liabilities of the Consolidated Balance Sheets at September 30:
(In millions)
Foreign currency derivative assets
Notional contract values
Foreign currency derivative liabilities
Notional contract values
Commodity derivatives
To manage its exposure to the market price volatility of natural gas consumed by its U.S. plants during the manufacturing process, Ashland regularly enters into forward contracts that are designated as cash flow hedges. See Note A for more information.
The following table summarizes the gains and losses recognized within the cost of sales caption of the Statements of Consolidated Comprehensive Income (Loss) for the years ended September 30:
(In millions)
Commodity derivative losses
The following table summarizes the fair values of the outstanding commodity derivatives included in accounts receivable, net and accrued expenses and other liabilities of the Consolidated Balance Sheets at September 30:
(In millions)
Commodity derivative assets
Notional contract values
Commodity derivative liabilities
Notional contract values
Other financial instruments
At September 30, 2025 and 2024 , Ashland’s long-term debt (including the current portion and excluding debt issuance cost discounts) had carrying values of $ 1,394 million and $ 1,361 million, respectively, compared to a fair value of $ 1,366 million and $ 1,327 million, respectively. The fair values of long-term debt are based on quoted market prices (level 1 of the fair value hierarchy).
NOTE F – PROPERTY, PLANT AND EQUIPMENT
The following table describes the various components of property, plant and equipment within the Consolidated Balance Sheets as of September 30:
(In millions)
Land (a)
Buildings
Machinery and equipment
Construction in progress
Total property, plant and equipment (gross)
Accumulated depreciation
Total property, plant and equipment (net)
Includes $ 10 million of finance lease asset as of September 30, 2025 and 2024 .
The following table summarizes various property, plant and equipment activity within the Statements of Consolidated Comprehensive Income (Loss) during the years ended September 30:
(In millions)
Depreciation (a)
Capitalized interest
Includes $ 41 million and $ 57 million of accelerated depreciation during 2025 and 2024, respectively, related to plant optimization actions. See Note D for additional details.
NOTE G – GOODWILL AND OTHER INTANGIBLES
Goodwill
During the third quarter of fiscal 2025, Ashland experienced a continued decline in the market price of its common stock. Ashland also experienced slowing growth due to a weakening macroeconomic environment that is dampening consumer sentiment and demand globally which resulted in lower growth and lower margins for the Life Sciences and Specialty Additives reporting units than what was previously forecasted. These factors led Ashland to determine that triggering events occurred, and a quantitative goodwill impairment assessment was performed during the third quarter of fiscal 2025.
Following the aforementioned quantitative analysis, the carrying value of the Life Sciences and the Specialty Additives reporting units exceeded their fair value, resulting in non-cash goodwill impairment charges of $ 375 million and $ 331 million, respectively, for a total goodwill impairment charge of $ 706 million, which was recorded within the goodwill impairment caption of the Statement of Consolidated Comprehensive Income (Loss) for the year ended September 30, 2025. The pre-impairment goodwill balance for the Life Sciences and Specialty Additives reporting units were $ 841 million and $ 443 million, respectively. The goodwill impairment charges are nondeductible for tax purposes.
On July 1, 2025, the date of our annual goodwill impairment assessment, Ashland evaluated each reporting unit using a qualitative approach focusing on any additional changes in market conditions, performances versus forecast and strategic initiatives. Particular attention was given to forward looking macroeconomic trends and forecasts, recent financial results, earnings multiples for guideline public companies in each reporting unit's industry peer group and sensitivity analysis for each reporting unit's discounted cash flow model. There was no additional impairment identified as part of the July 1, 2025 annual goodwill impairment assessment. No subsequent indicators of impairment had been identified during the fourth quarter of fiscal 2025.
The valuation used to test goodwill for impairment is dependent upon a number of significant estimates and assumptions, including macroeconomic conditions, growth rates, competitive activities, cost containment, margin expansion, and Ashland's business plans. Ashland believes these estimates and assumptions are reasonable. However, future changes in the judgments, assumptions, and estimates that are used in the impairment testing for goodwill, including discount rates or future cash flow projections, could result in significantly different estimates of the fair values. As a result of these factors and other factors discussed above and the limited or no cushion (or headroom as commonly referred) for the Life Sciences and Specialty Additives reporting units, goodwill is more susceptible to impairment risk.
Ashland is required to provide additional disclosures about fair value measurements as part of the Consolidated Financial Statements for each major category of assets and liabilities measured at fair value on a non-recurring basis (including impairment assessments). Goodwill was valued using Level 3 inputs, which are unobservable by nature, and included internal estimates of future cash flows (income approach). Significant increases (decreases) in any of those unobservable inputs in isolation would result in a significantly higher (lower) fair value measurement. The most significant assumptions used in the determination of the estimated fair value of reporting units are sales and EBITDA growth rates (including terminal growth rates) and the discount rate. The terminal growth rate represents the rate at which the reporting unit is expected to grow beyond the shorter-term business planning period. The terminal growth rate utilized in Ashland’s fair value estimate is consistent with the reporting unit operating plans and approximates expected long-term category market growth rates and inflation. The discount rate, which is consistent with a weighted-average cost of capital that is likely to be expected by a market participant, is based upon industry required rates of return, including consideration of both debt and equity components of the capital structure. The discount rates may be impacted by adverse changes in the macroeconomic environment, volatility in the equity and debt markets, or other factors. While Ashland can implement and has implemented certain strategies to address the events that triggered the interim impairment assessment, future changes in operating plans or other adverse changes could result in a further decline in fair value that would trigger a future material impairment charge of the reporting unit’s goodwill balance.
The following is a progression of goodwill by reportable segment for the years ended September 30, 2025 and 2024.
(In millions)
Life
Sciences
Personal Care
Specialty
Additives
Intermediates
Total
Balance at September 30, 2023
Currency translation and other
Nutraceuticals business - divestiture (a)
Balance at September 30, 2024 (b)
Impairment
Currency translation and other
Avoca business - divestiture (c)
Balance at September 30, 2025 (d)
Ashland allocated $ 17 million to the Nutraceuticals business during 2024. See Note B for additional details.
As of September 30, 2024, there were accumulated impairme nts of zero , $ 356 million, $ 174 million and $ 90 million rel ated to the Life Sciences, Personal Care, Specialty Additives and Intermediates reportable segments, respectively.
Ashland allocated $ 1 million to the Avoca business during 2025. See Note B for additional details.
As of September 30, 2025, there were accumulated impairme nts of $ 375 million, $ 356 million, $ 505 million and $ 90 million rel ated to the Life Sciences, Personal Care, Specialty Additives and Intermediates reportable segments, respectively.
Other intangible assets
In conjunction with the triggering events described above for goodwill, Ashland tested its indefinite-lived intangible assets for impairment during the third quarter of fiscal 2025. Ashland's quantitative assessment did not indicate any impairment, as each indefinite-lived intangible asset's fair value exceeded its carrying values. Trademarks and trade names are valued using a “relief-from-royalty” valuation method compared to the carrying value. On July 1, 2025, the date of our annual impairment assessment, Ashland evaluated its indefinite-lived intangible assets for impairment using a qualitative approach focusing on key assumptions used as part of the third quarter quantitative approach. There was no impairment identified as part of the July 1, 2025 annual other indefinite-lived intangible asset impairment assessment. No subsequent indicators of impairment had been identified during the fourth quarter of fiscal 2025. However, similar to the factors discussed with respect to goodwill above and limited cushion, certain indefinite-lived intangible assets are more susceptible to impairment risk. See Note B for further information with respect to other intangible assets related to the Avoca business.
Other intangible assets were comprised of the following as of:
September 30, 2025
September 30, 2024
Gross
Net
Gross
Net
carrying
Accumulated
carrying
carrying
Accumulated
carrying
(In millions)
amount
amortization
amount
amount
amortization
amount
Definite-lived intangible assets
Trademarks and trade names (a)
Intellectual property (b)
Customer and supplier relationships (c)
Total definite-lived intangible assets
Indefinite-lived intangible assets
Trademarks and trade names
Total intangible assets
Ashland allocated $ 7 million to the Avoca business during 2025 and $ 7 million to the Nutraceuticals business during 2024. See Note B for additional details.
Ashland allocated $ 29 million to the Avoca business during 2025 and $ 17 million to the Nutraceuticals business during 2024. See Note B for additional details.
Ashland allocated $ 98 million to the Avoca business during 2025 and $ 45 million to the Nutraceuticals business during 2024. See Note B for additional details.
Amortization expense recognized on other intangible assets was $ 63 million for 2025 , $ 76 million for 2024 and $ 93 million for 2023, and is included in the intangibles amortization expense caption of the Statements of Consolidated Comprehensive Income (Loss). As of September 30, 2025 , all of Ashland’s intangible assets that had a carrying value were being amortized except for certain trademarks and trade names that have been determined to have indefinite lives. Estimated amortization expense for future periods is $ 58 million in 2026, $ 37 million in 2027, $ 34 million in 2028, $ 27 million in 2029 and $ 19 million in 2030. The amortization expense for future periods is an estimate. Actual amounts may change from such estimated amounts due to fluctuations in foreign currency exchange rates, additional intangible asset acquisitions and divestitures, potential impairment, accelerated amortization, or other events.
Goodwill and other intangible assets
Ashland’s assessment of an impairment on any of these assets classified currently as having indefinite lives, including goodwill, could change in future periods if significant events happen and/or circumstances change that effect the previously mentioned assumptions such as: a significant change in projected business results, a divestiture decision, increase in Ashland’s weighted-average cost of capital rates, decrease in growth rates or assumptions, economic deterioration that is more severe or of a longer duration than anticipated, or another significant economic event.
NOTE H – DEBT
The following table summarizes Ashland’s current and long-term debt at September 30:
(In millions)
3.375 % Senior Notes, due 2031
2.00 % Senior Notes, due 2028 (Euro 500 million principal)
6.875 % notes, due 2043
6.50 % junior subordinated notes, due 2029
Other (a)
Long-term debt (less debt issuance costs)
Other includes $ 10 million and $ 12 million of debt issuance costs as of September 30, 2025 and 2024 , respectively. The current portion of the long-term debt was zero for both September 30, 2025 and 2024 .
At September 30, 2025 , Ashland’s total debt had an outstanding principal balance of $ 1,419 million, discounts of $ 25 million and debt issuance costs of $ 10 million. As of September 30, 2025 , Ashland had no long-term debt (excluding debt issuance costs) maturing in 2026, $ 4 million due in fiscal 2027, $ 586 million in 2028, $ 97 million in 2029, and zero in 2030.
Credit Agreements and Refinancing
2022 Credit Agreement
During July 2022, Ashland, through two of its subsidiaries, enacted an amendment to the 2020 credit agreement. The amended credit agreement (the 2022 Credit Agreement) provides for a $ 600 million five-year revolving credit facility (the 2022 Revolving Credit Facility). The 2022 Credit Agreement and the obligations of Ashland Services B.V. under the 2022 Revolving Credit Facility are guaranteed by Ashland. The borrowing capacity remaining under the 2022 Credit Agreem ent was $ 596 million, which reflec ts the full $ 600 million 2022 Revolving Credit Facility less a red uction of $ 4 million for let ters of credit outstanding at September 30, 2025.
At Ashland’s option, loans issued under the 2022 Credit Agreement bears interest at (a) in the case of loans denominated in U.S. dollars, either Term SOFR or an alternate base rate and (b) in the case of loans denominated in Euros, EURIBOR, in each case plus the applicable interest rate margin. Loans will initially bear interest at Term SOFR or EURIBOR plus 1.250 % per annum, in the case of Term SOFR borrowings or EURIBOR borrowings, respectively, or at the alternate base rate plus 0.250 % per annum, in the case of alternate base rate borrowings, through and including the date of delivery of a quarterly compliance certificate and thereafter the interest rate will fluctuate between Term SOFR or EURIBOR plus 1.250 % per annum and Term SOFR or EURIBOR plus 1.750 % per annum (or between the alternate base rate plus 0.250 % per annum and the alternate base rate plus 0.750 % per annum), based upon the Consolidated Net Leverage Ratio (as defined in the 2022 Credit Agreement) at such time. Term SOFR borrowings are subject to a credit spread adjustment of 0.10 % per annum. In addition, the Company is required to pay fees of 0.125 % per annum on the daily unused amount of the 2022 Revolving Credit Facility through and including the date of delivery of a quarterly compliance certificate, and thereafter the fee rate fluctuates between 0.125 % and 0.275 % per annum, based upon the Consolidated Net Leverage Ratio. Borrowings under the 2022 Credit Agreement may be prepaid at any time without premiums.
The 2022 Credit Agreement contains financial covenants for leverage and interest coverage ratios. The 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 indebtedness, further negative pledges, investments, mergers, sale of assets and restricted payments, and other customary limitations.
Debt repayments and repurchases
Cash repatriation
During 2025 and 2024, Ashland repatriated $ 403 million a nd $ 305 million, respectively, in cash.
Accounts receivable facilities and off-balance sheet arrangements
U.S. Accounts Receivable Sales Program
On March 17, 2021, a wholly-owned, bankruptcy-remote special purpose entity and consolidated Ashland subsidiary ("SPE") entered into an agreement with a group of entities (buyers) to sell certain trade receivables, without recourse beyond the pledged receivables, of two other U.S. based Ashland subsidiaries. Under the agreement, Ashland can transfer whole accounts receivable up to a limit established by the buyer, which was set at $ 125 million between February and October of each year and up to $ 100 million all other times (a level 1 fair value measurement). Ashland’s continuing involvement is limited to servicing the accounts receivable, including billing, collections and remittance of payments to the buyers as well as a limited guarantee on over-collateralization. The arrangement was set to terminate on May 31, 2023.
On April 14, 2023, Ashland entered into a Second and Third Amendments associated with this current program. As part of this amendment the buyer's limit wa s reduced to $ 115 million between April and October of each year, and up to $ 100 million at all other times. Additionally, the scheduled termination date was extended from May 31, 2023 to April 14, 2025.
On September 13, 2024, Ashland entered into a Fourth Amendment associated with this current program. As part of this amendment the buyer's limits were reduced to $ 80 million between September 13, 2024 to (and including) December 31, 2024 and up to $ 70 million from January 1, 2025 through the termination date of the agreement. Additionally, the scheduled termination date was extended from April 14, 2025 to September 11, 2026.
Ashland determined that any accounts receivable transferred under this agreement are put presumptively beyond the reach of Ashland and its creditors, even in bankruptcy or other receivership. Ashland received a true sale at law and non-consolidation opinions to support the legal isolation of these accounts receivable. Ashland accounts for the accounts receivable transferred to buyers as sales. Ashland recognizes any gains or losses based on the excess of proceeds received net of buyer’s discounts and fees compared to the carrying value of the assets. Proceeds received, net of buyer’s discounts and fees, are recorded within the operating activities of the Statements of Consolidated Cash Flows. Losses on sale of assets, including related transaction expenses are recorded within the net interest and other expense (income) caption of the Statements of Consolidated Comprehensive Income (Loss). Ashland regularly assesses its servicing obligations and records them as assets or liabilities when appropriate. Ashland also monitors its obligation with regards to the limited guarantee and records the resulting guarantee liability when warranted. When applicable, Ashland discloses the amount of the accounts receivable that serves as over-collateralization as a restricted asset.
Ashland recognized a loss of $ 3 million within the Statements of Consolidated Comprehensive Income (Loss) for 2025, 2024 and 2023 within the net interest and other expense (income) caption associated with sales under the program. Ashland has recorded $ 59 million of sales against the buyer’s limit, which was $ 59 million at September 30, 2025, compared to $ 71 million of sales against the buyer's limit, which was $ 71 million at September 30, 2024. Ashland transferred $ 75 million and $ 85 million in accounts receivable to the SPE as of September 30, 2025 and 2024, respectively. Ashland recorded liabilities related to its service obligations and limited guarantee as of September 30, 2025 and 2024 of less than $ 1 million.
For the years ended September 30, 2025, 2024, and 2023, the gross cash proceeds received for accounts receivable transferred and derecognized were $ 388 million, $ 323 million, and $ 217 million, respectively, of which $ 400 million, $ 322 million, $ 241 million, were collected by Ashland in our capacity as a servicer of the accounts receivable and remitted to the buyer. The difference between accounts receivable transferred and derecognized versus collected of $ 12 million, $ 1 million and $ 24 million for the years ended September 30, 2025, 2024, and 2023, respectively, represents the impact of a net reduction in account receivable sales volume during 2025, a net increase in 2024, and a net decrease during 2023.
Foreign Accounts Receivable Sales Program
On October 19, 2023, Ashland entered, through an Ireland based, wholly-owned, bankruptcy-remote consolidated special purpose entity (the "SPE"), into a three-year agreement with a group of entities (buyers) to sell certain accounts receivable, without recourse beyond the pledged receivables, of certain wholly-owned Ashland subsidiaries (Foreign Accounts Receivable Sales Program) primarily in Europe. Under the agreement, Ashland can transfer whole accounts receivable up to a limit established by the buyer, which is currently set at € 125 million (a level 1 fair value measurement). Ashland’s continuing involvement is limited to servicing the accounts receivable, including billing, collections and remittance of payments to the buyers as well as a limited guarantee on over-collateralization.
Ashland determined that any accounts receivable transferred under this agreement are put presumptively beyond the reach of Ashland and its creditors, even in bankruptcy or other receivership. Ashland received true sale at law and non-consolidation opinions from independent qualified legal advisors in the jurisdiction of each originating subsidiary to support the legal isolation of these accounts receivable. Consequently, Ashland accounts for accounts receivable transferred to buyers as part of this agreement as sales.
Ashland recognized a loss of $ 5 million and $ 3 million within the Statements of Consolidated Comprehensive Income (Loss) for 2025 and 2024 , respectively, within the net interest and other expense (income) caption associated with sales under the program. Ashland has recorded $ 103 million of sales against the buyer’s limit, which was $ 103 million at September 30, 2025 , compared to $ 104 million of sales against the buyer's limit, which was $ 104 million at September 30, 2024 . Ashland transferred $ 142 million and $ 155 million in accounts receivable to the SPE as of September 30, 2025 and 2024, respectively. Ashland recorded liabilities related to its service obligations and limited guarantee as of September 30, 2025 and 2024 of less than $ 1 million.
For the years ended September 30, 2025 and 2024 , the gross cash proceeds received for accounts receivable transferred and derecognized were $ 528 million and $ 104 million, respectively, of which $ 534 million and zero were collected by Ashland in our capacity as a servicer of the accounts receivable and remitted to the buyer. The difference between accounts receivable transferred and derecognized versus collected of $ 6 million and $ 104 million for the periods ended September 30, 2025 and 2024, respectively, represents the impact of a net reduction and a net increase in accounts receivable sales volume during each period, respectively.
Supply Chain Finance Program
During April 2024, Ashland authorized a financing program offered through JP Morgan and Taulia Alliance. Under this program, JP Morgan and its affiliates may purchase certain confirmed receivables directly from suppliers pursuant to the terms of a separate arrangement entered into between JPMorgan and Taulia Alliance and such suppliers. There were no changes to Ashland's standard payment terms with its suppliers in connection with this program. Ashland provides no guarantees to JP Morgan and Taulia Alliance under this program. The program was implemented during June 2025 and has been actively offered to suppliers. As of September 30, 2025 , participation in the program was not significant. There were less than $ 1 million of confirmed invoices under this program for the year ended September 30, 2025.
Other debt
At September 30, 2025 and 2024 , Ashland held other debt totaling $ 76 million and $ 71 million, respectively, comprised primarily of the 6.50 % notes due 2029 and other notes.
Covenants related to current Ashland debt agreements
Ashland’s debt contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional subsidiary indebtedness, restrictions on subsidiary distributions, investments, mergers, sale of assets and restricted payments and other customary limitations. As of September 30, 2025, Ashland was in compliance with all debt agreement covenant restrictions.
The maximum consolidated net leverage ratio permitted under Ashland’s most recent credit agreement (the 2022 Credit Agreement) is 4.0 . The 2022 Credit Agreement defines the consolidated net leverage ratio as the ratio of consolidated indebtedness minus unrestricted cash and cash equivalents to consolidated EBITDA (Covenant Adjusted EBITDA) for any measurement period. In general, the 2022 Credit Agreement defines Covenant Adjusted EBITDA as net income (loss) plus consolidated interest charges, taxes, depreciation and amortization expense, fees and expenses related to capital market transactions and proposed or actual acquisitions and divestitures, restructuring and integration charges, certain environmental charges, non-cash stock and equity compensation expense, and any other nonrecurring expenses or losses that do not represent a cash item in such period or any future period; less any non-cash gains or other items increasing net income (loss). 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 September 30, 2025 , Ashland’s calculation of the consolidated net leverage ratio was 2.8 .
The minimum required consolidated interest coverage ratio under the 2022 Credit Agreement is 3.0 . The 2022 Credit Agreement defines the consolidated interest coverage ratio as the ratio of Covenant Adjusted EBITDA to consolidated interest charges for any measurement period. At September 30, 2025 , Ashland’s calculation of the consolidated interest coverage ratio was 6.5 .
Net interest and other expense (income)
(In millions)
Interest expense
Interest income
Loss on the accounts receivable sale programs
Investment securities income (a)
Other financing costs
Represents investment income related to the restricted investments discussed in Note E.
The following table details the debt issuance cost and original issue discount amortization included in interest expense during the years ended September 30:
(In millions)
Normal amortization
NOTE I – OTHER NONCURRENT ASSETS AND LIABILITIES
The following table summarizes the components of other noncurrent assets as of September 30:
(In millions)
Deferred compensation investments
Tax and tax indemnity receivables
Life insurance policies
Manufacturing catalyst supplies
Defined benefit plan assets
Equity and other unconsolidated investments
Land use rights
Environmental insurance receivables
Debt issuance costs
Other
Deferred compensation investments
Deferred compensation investments consist of insurance policies valued at cash surrender value. Gains and losses related to deferred compensation investments are immediately recognized within the selling, general and administrative expense caption on the Statements of Consolidated Comprehensive Income (Loss). These investments had gains of $ 5 million, $ 8 million, and $ 5 million during 2025, 2024 and 2023 , respectively. These cash inflows exclude company-owned life insurance death benefits of $ 12 million, $ 1 million and $ 6 million for 2025, 2024 and 2023, respectively.
The following table provides the components of other noncurrent liabilities as of September 30:
(In millions)
Tax liabilities
Environmental remediation reserves
Deferred compensation
Other
NOTE J – LEASING ARRANGEMENTS
Ashland leases certain office buildings, transportation equipment, warehouses and storage facilities, and equipment. Substantially all of Ashland’s leases are operating leases or short-term leases. Real estate leases represented over 85 % of the total lease liability at both September 30, 2025 and 2024. See Note A for additional information related to Ashland’s leasing arrangements.
The components of lease cost recognized within the Statements of Consolidated Comprehensive Income (Loss) for the years ended September 30, were as follows:
(In millions)
Location
Lease cost:
Operating lease cost
Selling, General & Administrative
Operating lease cost
Cost of Sales
Variable lease cost
Selling, General & Administrative
Variable lease cost
Cost of Sales
Short-term leases
Cost of Sales
Total lease cost
The following table summarizes Ashland’s lease assets and liabilities at September 30:
(In millions)
Assets
Finance lease assets (a)
Operating lease assets, net
Total lease assets
Liabilities
Current operating lease obligations
Non-current operating lease obligations
Total lease liabilities
Included in property, plant and equipment. See Note F.
The weighted average remaining lease term for operating leases as of September 30, 2025 and 2024 was approximately 10 years and 19 years , respectively. The sale of the Avoca business in fiscal 2025 was the driver for the reduction of the average.
The weighted average discount rate used to measure operating lease liabilities as of both September 30, 2025 and 2024 was 3.8 %. There are no leases that have not yet commenced but that create significant rights and obligations for Ashland.
Right-of-use assets exchanged for new operating lease obligations was $ 7 million and $ 6 million for the years ended September 30, 2025 and 2024 , respectively. During the second quarter of fiscal 2024, Ashland acquired a favorable lease asset for $ 10 million, which was recorded in the property, plant and equipment caption of the Consolidated Balance Sheet at September 30, 2024.
The following table provides cash paid for amounts included in the measurement of operating lease liabilities for the years ended September 30:
(In millions)
Operating cash flows from operating leases
Investing cash flows from finance lease
The following table summarizes Ashland's maturities of lease liabilities as of September 30, 2025:
(In millions)
Thereafter
Total lease payments
Less amount of lease payment representing interest
Total present value of lease payments
NOTE K – INCOME TAXES
Income Tax Provision
A summary of the provision for income taxes related to continuing operations for the years ended September 30 is as follows:
(In millions)
Current
Federal
State
Foreign
Deferred
Income tax expense (benefit)
Temporary differences that give rise to significant deferred tax assets and liabilities as of September 30 are presented in the following table.
(In millions)
Deferred tax assets
Foreign net operating loss carryforwards (a)
Employee benefit obligations
Environmental, self-insurance and litigation reserves (net of receivables)
State net operating loss carryforwards (net of unrecognized tax benefits) (b)
Capital loss carryback/carryforward
Compensation accruals
Credit carryforwards (net of unrecognized tax benefits) (c)
Other items
Lease liability
Goodwill and other intangibles (e)
Valuation allowances (d)
Total deferred tax assets
Deferred tax liabilities
Property, plant and equipment
Right of use assets
Total deferred tax liabilities
Net deferred tax asset (liability)
Gross net operating loss carryforwards of $ 99 million will expire in future years beyond 2026 or have no expiration, and primarily relate to European and Asian subsidiaries.
Apportioned net operating loss carryforwards generated of $ 443 million will expire in future years as follows: $ 44 million in 2026, and the remaining balance in other future years.
Credit carryforwards consist primarily of foreign tax credits of $ 23 million expiring in future years, and state tax credits of $ 3 million that will expire in 2026 and other future years.
Valuation allowances primarily relate to certain state and foreign net operating loss carryforwards and certain federal credit carryforwards.
The total gross amount of goodwill as of September 30, 2025 and 2024 expected to be deductible for tax purposes was $ 33 million and $ 36 million, respectively.
The U.S. and foreign components of income (loss) from continuing operations before income taxes and a reconciliation of the statutory federal income tax with the provision for income taxes for the years ended September 30 is as follows. The foreign components of income (loss) from continuing operations disclosed in the following table exclude any allocations of certain corporate expenses incurred in the U.S.
(In millions)
Income (loss) from continuing operations before income taxes
United States
Foreign
Income (loss) from continuing operations before income taxes
Income taxes computed at U.S. statutory rate
Increase (decrease) in amount computed resulting from
Tax law changes
Non U.S. restructuring
Uncertain tax positions
Deemed inclusions, foreign dividends and other restructuring (a)
Foreign tax credits
Valuation allowance changes (b)
Research and development credits
State taxes
International rate differential
Goodwill impairment
Basis difference on stock sale
Other items
Income tax expense (benefit)
2025 includes $ 12 million related to GILTI permanent adju stments and $ 15 million related to Subpart F. 2024 includes $ 17 million related to GILTI permanent adjustments and $ 11 million related to Subpart F. 2023 includes $ 19 million related to GILTI permanent adjustment and $ 12 million related to Subpart F.
2025 includes net $ 10 million related to state NOL's, deferred taxes and foreign tax credi ts. 2024 includes net $ 10 million related to state NOL's, deferred taxes and foreign tax credits. 2023 includes net $ 2 million related to deferred taxes and foreign tax credits.
Unrecognized tax benefits
U.S. GAAP prescribes a recognition threshold and measurement attribute for the accounting and financial statement disclosure of tax positions taken or expected to be taken in a tax return. The evaluation of a tax position is a two-step process. The first step requires Ashland to determine whether it is more likely than not that a tax position will be sustained upon examination based on the technical merits of the position. The second step requires Ashland to recognize in the financial statements each tax position that meets the more likely than not criteria, measured at the amount of benefit that has a greater than 50% likelihood of being realized. Ashland had $ 65 million of unrecognized tax benefits at both September 30, 2025 and 2024, recorded within other noncurrent liabilities. As of September 30, 2025 , the total amount of unrecognized tax benefits that, if recognized, would affect the tax rate for continuing and discontinued operations was $ 60 million. The remaining unrecognized tax benefits relate to tax positions for which ultimate deductibility is highly certain but for which there is uncertainty as to the timing of such deductibility. Recognition of these tax benefits would not have an impact on the effective tax rate.
Ashland recognizes interest and penalties related to uncertain tax positions as a component of income tax expense (benefit) in the Statements of Consolidated Comprehensive Income (Loss). Such interest and penalties totaled $ 4 million expense in 2025 , $ 3 million expense in 2024 and $ 1 million benefit in 2023 . Ashland had $ 19 million and $ 14 million in interest and penalties related to unrecognized tax benefits accrued as of September 30, 2025 and 2024, respectively.
Changes in unrecognized tax benefits were as follows:
(In millions)
Balance at September 30, 2023
Decreases related to positions taken on items from prior years
Increases related to positions taken in the current year
Increases related to positions taken in the prior year
Settlements
Lapse of statute of limitations
Balance at September 30, 2024
Decreases related to positions taken on items from prior years
Increases related to positions taken in the current year
Increases related to positions taken in the prior year
Lapse of statute of limitations
Balance at September 30, 2025
From a combination of statute expirations and audit settlements in the next twelve months, Ashland expects a decrease in the amount of accrual for uncertain tax positions of between zero and $ 1 million for continuing operations. For the remaining balance as of September 30, 2025, it is reasonably possible that there could be material changes to the amount of uncertain tax positions due to activities of the taxing authorities, settlement of audit issues, reassessment of existing uncertain tax positions or the expiration of applicable statute of limitations; however, Ashland is not able to estimate the impact of these items at this time.
Ashland or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. Foreign taxing jurisdictions significant to Ashland include Belgium, Brazil, China, Germany, India, Italy, Mexico, Netherlands, Spain, Switzerland and the United Kingdom. Ashland is subject to U.S. federal income tax examinations by tax authorities for periods after September 30, 2021 and U.S. state income tax examinations by tax authorities for periods after September 30, 2018. With respect to countries outside of the United States, with certain exceptions, Ashland’s foreign subsidiaries are subject to income tax audits for years after 2019. In October 2025, Ashland received a $ 103 million tax refund related to the capital loss carryback from the Nutraceuticals business divestiture which was included within other current assets in the Consolidated Balance Sheet at September 30, 2025.
NOTE L – EMPLOYEE BENEFIT PLANS
Pension plans
Ashland and its subsidiaries have several contributory and noncontributory qualified defined benefit pension plans that generally cover international employees and a small portion of certain U.S. manufacturing union employees. Pension obligations for applicable employees of non-U.S. consolidated subsidiaries are provided for in accordance with local practices and regulations of the respective countries. The majority of these foreign pension plans are closed to new participants while those that remain open relate to areas where jurisdictions require plans to operate within the applicable country.
Benefits for those eligible for Ashland’s U.S. pension plans generally are based on employees’ years of service and compensation during the years immediately preceding their retirement. The remaining U.S. pension plans are still open for enrollment for qualifying union employees within certain manufacturing sites.
Other postretirement benefit plans
Ashland and its subsidiaries maintain limited health care for certain eligible employees in the U.S. who are retired or disabled. Ashland shares the costs of providing health care coverage with certain eligible retired employees through premiums, deductibles and coinsurance provisions. Ashland funds its share of the costs of the postretirement benefit plans as the benefits are paid.
Postretirement health care plans include a limit on Ashland’s share of costs for recent and future retirees. The assumed pre-65 health care cost increase trend rate as of September 30, 2025 was 7.1 % and continues to be reduced to 4.0 % in 2049 and thereafter. The assumptions used to project the liability anticipate future cost-sharing changes to the written plans that are consistent with the increase in health care costs.
Net periodic benefitloss allocation
Consistent with Ashland’s historical accounting policies, service cost for continuing operations is allocated to each reportable segment, excluding the Unallocated and other, while all other costs for continuing operations are recorded within Unallocated and other.
Restructuring and plan remeasurement
During the first quarter of fiscal 2025, as part of its fiscal 2024 restructuring activities, Ashland terminated approximately 40 employees in its Doel, Belgium facility. The post-retirement benefits for these employees, all of whom participated in a non-contributory defined benefit plan in Belgium, were frozen. This resulted in a decrease in total expected future years of service within the plan and required Ashland to remeasure the plan as of December 31, 2024. As a result, Ashland recorded a $ 1 million curtailmentloss within the other net periodic benefitloss caption of the Statement of Consolidated Comprehensive Income (Loss) during the year ended September 30, 2025.
The following table summarizes the components of pension and other postretirement benefit costs for continuing operations and the assumptions used to determine net periodic benefitloss for the plans for the years ended September 30:
Pension benefits
Other postretirement benefits
(In millions)
Service cost (a)
Interest cost (b)
Expected return on plan assets (b )
Actuarial (gain) loss (b)
Weighted-average plan assumptions (c)
Discount rate for service cost
Discount rate for interest cost
Rate of compensation increase
Expected long-term rate of return on plan assets
Service cost is classified within the selling, general and administrative expense and cost of sales captions on the Statements of Consolidated Comprehensive Income (Loss).
These components are classified within the other net periodic benefitloss caption on the Statements of Consolidated Comprehensive Income (Loss). Actuarial (gain) loss includes net actuarial gains and losses as well as the change in the fair value of plan assets recognized in the fourth quarter. The change in the fair value of plan assets recognized in the fourth quarter was a loss of $ 15 million, gain of $ 12 million and a loss of $ 9 million for the years ended September 30, 2025, 2024 and 2023, respectively.
The plan assumptions discussed are a blended weighted-average rate for Ashland’s U.S. and non-U.S. plans.
The changes in prior service credit recognized in accumulated other comprehensive loss during the years ended September 30, 2025 and 2024 were less than $ 1 million each. At September 30, 2025 , Ashland expects to recognize less than $ 1 million of the prior service credit in accumulated other comprehensive loss as net periodic benefitloss during the next fiscal year.
The amounts included in accumulated other comprehensive loss at September 30, are shown in the following table.
Pension
Postretirement
(In millions)
Prior service cost
Obligations and funded status
Actuarial valuations are performed for the pension and other postretirement benefit plans to determine Ashland’s obligation for each plan. In accordance with U.S. GAAP, Ashland recognizes the status of the plans in the Consolidated Balance Sheets. Ashland maintains a defined benefits plan in the U.K. that is overfunded by $ 12 million, all of which is recorded in the other noncurrent assets caption of the Consolidated Balance Sheets.
Summaries of the change in benefit obligations, plan assets, funded status of the plans, amounts recognized in the Consolidated Balance Sheets, and assumptions used to determine the benefit obligations at September 30, are as follows:
Other postretirement
Pension plans
benefit plans
(In millions)
Change in benefit obligations
Benefit obligations at October 1
Service cost
Interest cost
Benefits paid
Actuarial (gain) loss
Curtailments
Foreign currency exchange rate changes
Settlements
Benefit obligations at September 30
Change in plan assets
Value of plan assets at October 1
Actual (loss) return on plan assets
Employer contributions
Benefits paid
Foreign currency exchange rate changes
Settlements
Value of plan assets at September 30
Net unfunded status of the plans
Amounts recognized in the Consolidated Balance Sheets
Other noncurrent assets
Accrued expenses and other liabilities
Employee benefit obligations
Net amount recognized
Weighted-average plan assumptions
Discount rate
Rate of compensation increase
The accumulated benefit obligation for all pension plans was $ 271 million and $ 284 million at September 30, 2025 and 2024, respectively. All Ashland pension plans are either qualified U.S. or non-US plans. Information for pension plans with an accumulated benefit obligation in excess of plan assets follows at September 30:
(In millions)
Projected benefit obligation
Accumulated benefit obligation
Fair value of plan assets
Plan assets
The expected long-term rate of return on pension plan assets was 4.78 % and 4.99 % for the years ended September 30, 2025 and 2024, respectively. The basis for determining the expected long-term rate of return is a combination of future return assumptions for various asset classes in Ashland’s investment portfolio, historical analysis of previous returns, market indices and a projection of inflation.
The following table summarizes the various investment categories that the pension plan assets are invested in and the applicable fair value hierarchy that the pension plan assets are classified in as of September 30, 2025. For additional information and a detailed description of each level within the fair value hierarchy, see Note E.
Total fair
(In millions)
value
Level 1
Level 2
Level 3
Cash and cash equivalents
Common collective trusts:
U.S. Government securities
Corporate debt instruments
Listed real assets
Corporate stocks
Insurance contracts
Total assets at fair value
The following table summarizes the various investment categories that the pension plan assets are invested in and the applicable fair value hierarchy that the pension plan assets are classified in as of September 30, 2024.
Total fair
(In millions)
value
Level 1
Level 2
Level 3
Cash and cash equivalents
Common collective trusts:
U.S. Government securities
Corporate debt instruments
Listed real assets
Corporate stocks
Insurance contracts
Total assets at fair value
Ashland’s defined benefit pension plans hold a variety of investments that are designed to diversity risk. Ashland’s pension plan assets are generally classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices in active markets, broker or dealer quotations, or alternative pricing sources, primarily matrix pricing, with reasonable levels of price transparency, however, certain pension plan assets are classified within Level 3 of the fair value hierarchy if they have significant unobservable inputs. The types of financial instruments based on quoted market prices in active markets include cash and cash equivalents (money market securities). Such instruments are classified within Level 1 of the fair value hierarchy. Ashland does not adjust the quoted market price for such financial instruments. The types of financial instruments valued based on quoted market prices in markets that are not active, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency include common collective trust funds (“CCTs”) and insurance contracts at or near inception. Such financial instruments are generally classified within Level 2 for the fair value hierarchy. Insurance contracts after inception based on values from third-party insurers with limited level of transparency, are generally classified within Level 3 of the fair value hierarchy.
The CCTs are valued at net asset value ("NAV") provided by the respective fund administrators as there is not an active market for CCTs. The Company has determined that the NAV is an appropriate estimate of the fair value of the CCTs at September 30, 2025 and 2024, because the CCTs are audited and accounted for at fair value by the administrators of the respective CCTs. The underlying assets in the CCTs consist primarily of marketable debt and equity securities based on the respective fund administrator’s investment strategy. Given there are no significant liquidity restrictions on any of the CCTs as of September 30, 2025 or 2024, the Company has determined that the CCTs are classified within Level 2 of the fair value hierarchy.
Insurance contracts represent qualified insurance contracts (“buy in”) with a third-party insurer that were executed by Ashland for certain non-US defined benefit pension plans. The buy in insurance contracts replaced certain assets historically held by the defined benefit pension plans and as a result the longevity and investments risks for certain of these non-US defined benefit pension plans have been transferred to the respective insurers. The projected benefit obligations related to these non-US defined benefit pension plans remain on the Consolidated Balance Sheets but are insured through these buy in insurance contracts.
The fair value of the insurance contracts is initially based on the purchase price (premium) of the insurance contact which is based on a competitive quoted price in a market that is not active (i.e. among multiple insurance companies) and not less than the Company’s actuarially determined projected benefit obligation, which is consistent with a Level 2 measurement of the fair value hierarchy (and was the case at September 30, 2024). Subsequent fair value measurements, including at September 30, 2025, of the insurance contracts are based on the insurance contracts exit value (the amount at which the insurance contracts could be sold to another third-party insurer). The exit price, or fair value, is determined by the third-party insurers using assumptions similar to that of the related projected benefit obligations and include significant unobservable inputs such as the defined benefit pension plans demographic data, internal insurance company determined margin requirements and proprietary discount rates. As a result, and after the period in which the buy in insurance contracts are entered into, the Company has determined that the insurance contracts are classified with Level 3 of the fair value hierarchy. The fair value of the insurance contracts at September 30, 2024 was $ 157 million. During the year ended September 30, 2025, cash payments made under the insurance contracts were $ 9 million, additional employer contributions were $ 6 million and the change in fair value based on the insurers internally developed valuation models was $ 9 million, which represented a decrease in the actual return on plan assets, resulting in fair value of the insurance contracts of $ 145 million at September 30, 2025.
Investments and Strategy
In developing an investment strategy for its defined benefit pension plans, Ashland has considered the following factors: the nature of the plans’ liabilities, the allocation of liabilities between active, deferred and retired members, the funded status of the plans, the applicable investment horizon, the respective size of the plans and historical and expected capital market returns. Ashland’s U.S. pension plan assets are managed by outside investment managers, which are monitored against investment return benchmarks and Ashland’s established investment strategy. Investment managers are selected based on an analysis of, among other things, their investment process, historical investment results, frequency of management turnover, cost structure and assets under management. Assets are periodically reallocated between investment managers to maintain an appropriate asset mix and diversification of investments and to optimize returns.
The current asset allocation for the U.S. plans is 51 % fixed income, 36 % equity and 13 % other. Fixed income primarily includes long duration corporate debt obligations and U.S. government debt obligations. Equity primarily includes public equity investments. Investment managers may employ a limited use of derivatives to gainefficient exposure to markets.
Ashland’s investment strategy and management practices relative to pension plan assets of non-U.S. plans generally are consistent with those for U.S. plans, except in those countries where investment of pension plan assets is dictated by applicable regulations. Although the investment allocation may vary based on funding percentages and whether plans are still accruing additional liabilities, the weighted-average asset allocations for Ashland’s U.S. and non-U.S. plans at September 30 by asset category follow.
Actual
(In millions)
Target
Equity
Fixed income
Other
Cash flows
During the years ended September 30, 2025 and 2024 , Ashland contributed $ 6 million and $ 7 million to its U.S. pension plans, respectively, and $ 6 million and $ 8 million to its non-U.S. pension plans, respectively. Ashland expects to contribute approximately $ 5 million to its U.S. pension plans and expects to contribute approximately $ 6 million to its non-U.S. pension plans during 2026.
The following benefit payments, which reflect future service expectations, are projected to be paid from plan assets in each of the next five years and in aggregate for five years thereafter.
Other
Pension
postretirement
(In millions)
benefits
benefits
Other plans
Ashland sponsors savings plans to assist eligible employees in providing for retirement or other future needs. Under such plans, Company contributions amounted to $ 21 million in both 2025 and 2024 , and $ 23 million 2023 , respectively. These contributions are expensed according to the consolidated financial statement line based on the employee's role within Ashland, which is either cost of sales, selling, general and administrative expense, or research and development expense within the Statements of Consolidated Comprehensive Income (Loss). Ashland also sponsors various other employee benefit plans, some of which are required by different countries. The total noncurrent liabilities associated with these plans was $ 4 million for both September 30, 2025 and 2024 .
NOTE M – LITIGATION, CLAIMS AND CONTINGENCIES
Asbestos litigation
Ashland and Hercules have liabilities from claimsalleging personal injury caused by exposure to asbestos. To assist in developing and annually updating independent reserve estimates for future asbestos claims and related costs, Ashland has retained third party actuarial experts Gnarus. The methodology used by Gnarus to project future asbestos costs is based largely on recent experience, including claim-filing and settlement rates, disease mix, open claims and litigation defense. The claim experience of Ashland and Hercules are separately compared to the results of previously conducted third party epidemiological studies estimating the number of people likely to develop asbestos-related diseases. Those studies were undertaken in connection with national analyses of the population expected to have been exposed to asbestos. Using that information, Gnarus estimates a range of the number of future claims that may be filed, as well as the related costs that may be incurred in resolving those claims. Changes in asbestos litigation reserves and receivables are recorded on an after-tax basis within the discontinued operations caption in the Statements of Consolidated Comprehensive Income (Loss).
Ashland asbestos-related litigation
The claimsalleging personal injury caused by exposure to asbestos asserted against Ashland result primarily from indemnification obligations undertaken in 1990 in connection with the sale of Riley, a former subsidiary. The amount and timing of settlements and number of open claims can fluctuate from period to period. A summary of Ashland asbestos claims activity, excluding Hercules claims, is as follows for the years ended September 30:
(In thousands)
Open claims - beginning of year
New claims filed
Claims settled
Claimsdismissed
Open claims - end of year
Ashland asbestos-related liability
From the range of estimates, Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs. Ashland reviews this estimate and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of Gnarus.
During the most recent update completed during 2025 , it was determined that the liability for Ashland asbestos-related claims should be increased by $ 16 million. Total reserves for asbestos claims w ere $ 258 million at September 30, 2025 compared to $ 274 million at September 30, 2024.
A progression of activity in the asbestos litigation reserves for the years ended September 30, is as follows:
(In millions)
Asbestos reserve - beginning of year
Reserve adjustment
Amounts paid
Asbestos reserve - end of year (a)
Includes $ 29 million and $ 28 million classified in accrued expenses and other liabilities on the Consolidated Balance Sheets as of September 30, 2025 and 2024 , respectively.
Ashland asbestos-related receivables
Ashland has insurance coverage for certain litigation defense and claim settlement costs incurred in connection with its asbestos claims, and coverage-in-place agreements exist with the insurance companies that provide substantially all of the coverage that will be accessed.
For the Ashland asbestos-related obligations, Ashland has estimated the value of probable insurance recoveries associated with its asbestos litigation reserves based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. Substantially all of the estimated receivables from insurance companies are expected to be due from domestic insurers, all of which are solvent.
At September 30, 2025, Ashland’s receivable for recoveries of litigation defense and claim settlement costs from insurers amounted to $ 95 million (excluding the Hercules receivable for asbestos claims discussed below). Receivables from insurers amounted to $ 97 million at September 30, 2024. During 2025 , the annual update of the model used for purposes of valuing the asbestos litigation reserves and its impact on valuation of future recoveries from insurers was completed. This model update resulted in a $ 5 million increase in the receivable for probable insurance recoveries.
A progression of activity in the Ashland insurance receivable for the years ended September 30, is as follows:
(In millions)
Insurance receivable - beginning of year
Receivable adjustment (a)
Amounts collected
Insurance receivable - end of year (b)
The total allowance for credit losses was $ 1 million at both September 30, 2025 and 2024 .
Includes $ 10 million and $ 9 million classified in accounts receivable on the Consolidated Balance Sheets as of September 30, 2025 and 2024 , respectively.
Hercules asbestos-related litigation
Hercules has liabilities from claimsalleging personal injury caused by exposure to asbestos. Such claims typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products which were sold by one of Hercules’ former subsidiaries to a limited industrial market. The amount and timing of settlements and number of open claims can fluctuate from period to period. A summary of Hercules’ asbestos claims activity for the years ended September 30, is as follows:
(In thousands)
Open claims - beginning of year
New claims filed
Claimsdismissed
Open claims - end of year
Hercules asbestos-related liability
From the range of estimates, Ashland records the amount it believes to be the best estimate of future payments for litigation defense and claim settlement costs. Ashland reviews this estimate and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate 40-year model developed with the assistance of Gnarus. As a result of the most recent annual update of this estimate completed during 2025 , it was determined that the liability for Hercules asbestos-related claims should be increased by $ 10 million. Total reserves for asbestos claims wer e $ 177 million at September 30, 2025 compared to $ 185 million at September 30, 2024.
A progression of activity in the asbestos litigation reserves for the years ended September 30, is as follows:
(In millions)
Asbestos reserve - beginning of year
Reserve adjustments
Amounts paid
Asbestos reserve - end of year (a)
Included $ 17 million classified in accrued expenses and other liabilities on the Consolidated Balance Sheets as of September 30, 2025 and 2024 .
Hercules asbestos-related receivables
For the Hercules asbestos-related obligations, certain reimbursement obligations pursuant to coverage-in-place agreements with insurance carriers exist. As a result, any increases in the asbestos litigation reserves have been partially offset by probable insurance recoveries. Ashland has estimated the value of probable insurance recoveries associated with its asbestos litigation reserves based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. The estimated receivable consists exclusively of solvent domestic insurers.
As of September 30, 2025 and 2024, the receivables from insurers amounted to $ 48 million and $ 50 million, respectively. During 2025 , the annual update of the model used for purposes of valuing the asbestos litigation reserves and its impact on valuation of future recoveries from insurers was completed. This model update resulted in a $ 4 million increase in the receivable for probable insurance recoveries.
A progression of activity in the Hercules insurance receivable for the years ended September 30, is as follows:
(In millions)
Insurance receivable - beginning of year
Receivable adjustment (a)
Amounts collected
Insurance receivable - end of year (b)
The total allowance for credit losses was $ 1 million at both September 30, 2025 and 2024 .
Includes $ 6 million classified in accounts receivable on the Consolidated Balance Sheets at both September 30, 2025 and 2024 .
Asbestos litigation cost projection
Projecting future asbestos costs is subject to numerous variables that are difficult to predict. In addition to the uncertainties surrounding the number of claims that might be received, other variables include the type and severity of the disease alleged by each claimant and the related costs incurred in resolving those claims, mortality rates, dismissal rates, uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to case. Furthermore, any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. In light of these inherent uncertainties, Ashland believes that the asbestos litigation reserves for Ashland and Hercules represent the best estimate within a range of possible outcomes. As a part of the process to develop these estimates of future asbestos costs, a range of long-term cost models was developed. These models are based on national studies that predict the number of people likely to develop asbestos-related diseases and are heavily influenced by assumptions regarding long-term inflation rates for indemnity payments and legal defense costs, as well as other variables mentioned previously. Ashland has currently estimated in various models ranging from approximately 40 year periods that it is reasonably possible that total future litigation defense and claim settlement costs on an inflated and undiscounted basis could range as high as approximately $ 382 million for the Ashland asbestos-related litigation (current reserve of $ 258 million) and approximately $ 262 million for the Hercules asbestos-related litigation (current reserve of $ 177 million), depending on the combination of assumptions selected in the various models. While the timeframe used in Ashland's models for projecting asbestos liabilities generally decreases over time based on the expected lifetime of the liabilities, these models have been consistently applied within all periods presented. If actual experience is worse than projected, relative to the number of claims filed, the severity of alleged disease associated with those claims or costs incurred to resolve those claims, or actuarial refinement or improvements to the assumptions used within these models are initiated, Ashland may need to further increase the estimates of the costs associated with asbestos claims and these increases could be material over time.
Environmental remediation
Ashland is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively environmental remediation) at multiple locations. At September 30, 2025 , such locations included 53 sites where Ashland has been identified as a potentially responsible party under Superfund or similar state laws, 107 current and former operating facilities and about 1,225 service station properties, of which 14 are being actively remediated.
Ashland’s reserves for environmental remediation and related environmental litigation amounted to $ 226 million at September 30, 2025 compared to $ 221 million at September 30, 2024 , of which $ 179 million at September 30, 2025 and $ 164 million at September 30, 2024, were classified in other noncurrent liabilities on the Consolidated Balance Sheets. The remaining reserves were classified in accrued expenses and other liabilities on the Consolidated Balance Sheets.
The following table provides a reconciliation of the changes in the environmental remediation reserves the years ended September 30:
(In millions)
Environmental remediation reserve - beginning of year
Disbursements
Revised obligation estimates and accretion
Environmental remediation reserve - end of year
The total reserves for environmental remediation reflect Ashland’s estimates of the most likely costs that will be incurred over an extended period to remediate identified conditions for which the costs are reasonably estimable, without regard to any third-party recoveries. Engineering studies, historical experience and other factors are used to identify and evaluate remediation alternatives and their related costs in determining the estimated reserves for environmental remediation. Ashland regularly adjusts its reserves as environmental remediation continues. Ashland
has estimated the value of its probable insurance recoveries associated with its environmental remediation reserves based on management’s interpretations and estimates surrounding the available or applicable insurance coverage. At September 30, 2025 and 2024 , Ashland’s recorded receivable for these probable insurance recoveries was $ 14 million and $ 13 million, respectively, of which $ 12 million and $ 11 million was classified in other noncurrent assets on the Consolidated Balance Sheets.
During 2025, 2024 and 2023 , Ashland recognized $ 50 million, $ 54 million and $ 56 million of expense, respectively, for certain environmental liabilities related to normal ongoing remediation cost estimate updates for sites, which is consistent with Ashland’s historical environmental accounting policy.
Components of environmental remediation expense included within the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income (Loss) are presented in the following table for the years ended September 30:
(In millions)
Environmental expense
Accretion
Legal expense
Total expense
Insurance receivable
Total expense, net of receivable activity (a)
Net expense of $ 14 million, $ 11 million and $ 5 million for the years ended September 30, 2025, 2024 and 2023 , respectively, related to divested businesses which qualified for treatment as discontinued operations and for which certain environmental liabilities were retained by Ashland. These amounts are classified within the income (loss) from discontinued operations caption of the Statements of Consolidated Comprehensive Income (Loss).
Environmental remediation reserves are subject to uncertainties that affect Ashland’s ability to estimate its share of the costs. Such uncertainties involve the nature and extent of contamination at each site and the extent of required cleanup efforts under existing environmental regulations. Although it is not possible to predict with certainty the ultimate costs of environmental remediation, Ashland currently estimates that the upper end of the reasonably possible range of future costs for identified sites could be as high as approximately $ 495 million. The largest reserve for any site is 21 % of the total environmental remediation reserves as of September 30, 2025.
Brazil tax credits
In March 2017, the Federal Supreme Court of Brazil (Brazil Supreme Court) ruled in a leading case that a Brazilian value-added tax ("ICMS") should not be included in the base used to calculate a taxpayer’s federal contribution on total revenue known as PIS/COFINS ("2017 Decision"). As a result, two of Ashland’s Brazilian subsidiaries filed lawsuits challenging the inclusion of ICMS in Ashland’s calculation of PIS/COFINs, seeking recovery of excess taxes paid plus interest.
In response to the 2017 Decision, the Brazilian tax authority filed an appeal of the 2017 Decision seeking clarification of the amount of ICMS tax to exclude from the calculation of PIS/COFINS. In May 2021, the Brazil Supreme Court ruled that the ICMS tax be excluded from the calculation of PIS/COFINS. In May 2023, Law 14592/23 was passed in Brazil, converting the 2017 Decision provisional measure effective for PIS/COFINS legislation excluding ICMS from the calculation basis.
As of September 30, 2025 , Ashland had received all favorable court rulings for previously filed suits, completed its analysis of certain prior year overpayments related to ICMS and received acknowledgment from the Brazilian tax authority that allows Ashland to begin the process to recover the taxes. As a result, Ashland recorded a pre-tax gain of $ 12 million during the year ended September 30, 2023 for certain excess PIS/COFINS paid from 2012 to February 2023 plus interest. The gain was recognized within the selling, general and administrative expense caption of the Statem ent of Consolidated Comprehensive Income (Loss). Ashland started utilizing these credits in December 2023. As of September 30, 2025 , Ashland had remaining credits for a total of $ 7 million available for future use ($ 3 million within other current assets and $ 4 million within other noncurrent assets in the Consolidated Balance Sheets, respectively).
Other legal proceedings and claims
In addition to the matters described above, there are other various claims, lawsuits and administrative proceedings pending or threatenedagainst Ashland and its current and former subsidiaries. Such actions are with respect to commercial matters, product liability, toxic tort liability, and other environmental matters, which seek remedies or damages, some of which are for substantial amounts. While Ashland cannot predict with certainty the outcome of such actions, it believes that adequate reserves have been recorded and losses already recognized with respect to such actions were immaterial as of September 30, 2025 and 2024. There is a reasonable possibility that a loss exceeding amounts already
recognized may be incurred related to these actions; however, Ashland believes that such potential losses were immaterial as of September 30, 2025 .
NOTE N – EQUITY ITEMS
Stock repurchase program
On June 28, 2023, Ashland's board of directors ("the Board") authorized a new evergreen $ 1 billion common share repurchase program ("2023 Stock Repurchase Program"). The new authorization terminated and replaced the 2022 Stock Repurchase Program, which had $ 200 million outstanding at the date of termination. As of September 30, 2025 , $ 520 million remained available for repurchase under the 2023 Stock Repurchase Program.
The following table provides the stock repurchase activity for the years ended September 30:
(In millions, except per share amounts)
Number of shares repurchased
Weighted-average price per share (a)
Aggregate purchase price (a)
Program
2023 Stock Repurchase Program
2023 Stock Repurchase Program
2022 Stock Repurchase Program
Includes transactions costs.
Stockholder dividends
Ashland paid dividends per common share of $ 1.64 , $ 1.58 and $ 1.44 during 2025, 2024 and 2023, respectively.
In May 2025, the Board announced a quarterly cash dividend of 41.5 cents per share to eligible stockholders at record, which represented an increase from the previous quarterly cash dividend of 40.5 cents per share. The dividend was paid in the third and fourth quarter of fiscal 2025.
In May 2024, the Board announced a quarterly cash dividend of 40.5 cents per share to eligible stockholders at record, which represented an increase from the previous quarterly cash dividend of 38.5 cents per share. The dividend was paid in the third and fourth quarter of fiscal 2024 and the first and second quarters of fiscal 2025.
In May 2023, the Board announced a quarterly cash dividend of 38.5 cents per share to eligible stockholders at record, which represented an increase from the previous quarterly cash dividend of 33.5 cents per share. The dividend was paid in the third and fourth quarter of fiscal 2023 and the first and second quarters of fiscal 2024.
In May 2022, the Board announced a quarterly cash dividend of 33.5 cents per share to eligible stockholders at record, which represented an increase from the previous quarterly cash dividend of 30.0 cents per share. This dividend was paid in the third and fourth quarters of fiscal 2022 and the first and second quarters of fiscal 2023.
Shares reserved for issuance
At September 30, 2025 , 16.4 million common shares were reserved for issuance under stock incentive and deferred compensation plans.
Other comprehensive income (loss)
Components of other comprehensive income (loss) recorded in the Statements of Consolidated Comprehensive Income (Loss) are presented in the following table, before tax and net of tax effects.
Tax
Before
(expense)
Net of
(In millions)
tax
benefit
tax
Year ended September 30, 2025
Other comprehensive income (loss)
Unrealized translation gain
Unrealized gain on commodity hedges
Total other comprehensive income (loss)
Year ended September 30, 2024
Other comprehensive income (loss)
Unrealized translation gain
Unrealized gain on commodity hedges
Total other comprehensive income
Year ended September 30, 2023
Other comprehensive income (loss)
Unrealized translation gain
Unrealized loss on commodity hedges
Total other comprehensive income
Summary of Stockholders’ Equity
A reconciliation of changes in stockholders’ equity for the years ended September 30, are as follows:
(In millions)
Common stock and paid in capital
Balance, beginning of period
Common shares issued under stock incentive and other plans (a)
Common shares purchased under repurchase program (b)(c)
Balance, end of period
Retained earnings
Balance, beginning of period
Common shares purchased under repurchase program (b)
Net income (loss)
Dividends
Balance, end of period
Accumulated other comprehensive loss
Balance, beginning of period
Unrealized translation gain
Unrealized gain (loss) on commodity hedges
Balance, end of period
Total stockholders' equity
Cash dividends declared per common share
Common shares issued were 143,631 , 137,799 and 193,767 for 2025, 2024 and 2023 , respectively.
Common shares repurchased were 1,541,320 , 4,285,194 and 3,082,928 for 2025, 2024 and 2023 , respectively.
Includes $ 1 million in 2025 and $ 3 million in both 2024 and 2023 in excise tax on stock repurchases.
NOTE O – STOCK INCENTIVE PLANS
Ashland has stock incentive plans under which key employees or directors are granted performance share awards or nonvested stock awards. Each program is typically a long-term incentive plan designed to link employee compensation with increased shareholder value or rewardsuperior performance and encourage continued employment with Ashland. Ashland recognizes compensation expense for the grant date fair value of stock-based awards over the requisite service period and accounts for forfeitures when they occur across all stock-based awards.
The components of Ashland's pretax compensation expense for stock-based awards (net of forfeitures) and associated income tax benefits for the years ended September 30, are as follows.
(In millions)
Nonvested stock awards
Performance share awards
Income tax benefit
The year ended September 30, 2025 included $ 1 million of expense and $ 1 million of income related to cash-settled nonvested restricted stock awards and cash-settled performance units, respectively.
The year ended September 30, 2024 included $ 2 million and less than $ 1 million of expense related to cash-settled nonvested restricted stock awards and cash-settled performance units, respectively.
The year ended September 30, 2023 included $ 1 million of expense and $ 1 million of income related to cash-settled nonvested restricted stock awards and cash-settled performance units, respectively.
Stock Appreciation Rights ("SARs")
SARs were granted to employees or directors at a price equal to the fair market value of the stock on the date of grant and typically become exercisable over periods of one to three years . Unexercised SARs lapse ten years after the date of grant. Ashland estimated the fair value of SARs granted using the Black-Scholes option-pricing model. Ashland has not granted any SARs since August 2020.
A progression of activity and various other information relative to SARs and previously issued and vested stock options is presented in the following table for the years ended September 30:
Number
Weighted-
Number
Weighted-
Number
Weighted-
average
average
average
(In thousands except per
common
exercise price
common
exercise price
common
exercise price
share data)
shares
per share
shares
per share
shares
per share
Outstanding - beginning of year
Exercised
Forfeitures and expirations
Outstanding - end of year (a)
Exercisable - end of year
Exercise prices per share for SARs outstanding at September 30, 2025 ranged from $ 57.96 to $ 67.16 for 588 thousand shares and from $ 76.76 to $ 82.34 for 158 thousand shares. The weighted-average remaining contractual life of outstanding and exercisable SARs and stock options was 2.0 years.
The total intrinsic value of SARs exercised was less than $ 1 million in 2025 , $ 6 million in 2024 and $ 6 million in 2023 . The actual tax benefit realized from the exercised SARs was zero in 2025 , $ 1 million in 2024 and $ 1 million in 2023. The total grant date fair value of SARs that vested during 2025, 2024 and 2023 was zero , zero and $ 1 million, respectively. As of September 30, 2025 , there was zero unrecognized compensation costs related to SARs. As of September 30, 2025 , the aggregate intrinsic value of outstanding and exercisable SARs was zero .
Nonvested stock awards
Nonvested stock awards are granted to employees or directors at a price equal to the fair market value of the stock on the date of grant and generally vest over a one -to- three-year period. However, such shares or units are subject to forfeiture upon termination of service before the vesting period ends. Beginning in 2016, these awards were primarily granted as stock units that will convert to shares upon vesting, while the grants in prior years were generally made in nonvested shares. Only nonvested stock awards granted in the form of shares entitle employees or directors to vote the shares. Dividends on nonvested stock awards granted are in the form of additional units or shares of nonvested stock awards, which are subject to vesting and forfeiture provisions.
A progression of activity and various other information relative to nonvested stock awards is presented in the following table for the years ended September 30:
Number
Weighted-
Number
Weighted-
Number
Weighted-
average
average
average
(In thousands except per
common
grant date
common
grant date
common
grant date
share data)
shares
fair value
shares
fair value
shares
fair value
Nonvested - beginning of year
Granted
Vested
Forfeitures
Nonvested - end of year
The total grant date fair value of nonvested stock awards that vested during 2025, 2024 and 2023 was $ 10 million, $ 9 million and $ 8 million, respectively. As of September 30, 2025 , there was $ 5 million of total unrecognized compensation costs related to nonvested stock awards. That cost is expected to be recognized over a weighted-average period of 1.6 years.
Cash-settled nonvested stock awards
Certain nonvested stock awards are granted to employees and are settled in cash upon vesting. As of September 30, 2025 , 43 thousand cash-settled nonvested stock awards were outstanding. The value of these cash-settled nonvested stock awards changes in connection with changes in the fair market value of the Ashland Common Stock. These awards generally vest over a period of three years . The expense recognized related to cash-settled nonvested stock awards was zero , $ 2 million, and zero during 2025, 2024 and 2023, respectively.
Performance awards
Ashland sponsors a long-term incentive plan that awards performance shares/units to certain key employees that are tied to Ashland’s overall financial performance relative to the financial performance of selected industry peer groups and/or internal targets. Awards are granted annually, with each award covering a three-year measurement period and vesting over a one to three year period. Nonvested performance shares/units do not entitle employees to vote the shares or to receive any dividends thereon.
Each awarded performance share is convertible to one share of Ashland Common Stock and recorded as a component of stockholders’ equity. For fiscal year 2025, performance measures used to determine the actual number of performance shares issuable upon vesting include 60 :20:20 weighting of Ashland’s total shareholder return ("TSR") performance, return on net assets ("RONA"), and Ashland’s EPS as compared to internal targets. TSR relative to peers is considered a market condition while EPS and RONA are considered performance conditions in accordance with U.S. GAAP. Beginning in 2025, each award includes a dividend equivalent feature that accrue dividends and are reinvested from the date of grant until the applicable vesting date. If the award is forfeited the employee is not entitled to the accrued reinvested dividends on those awards.
For fiscal years 2024 and 2023, performance measures used to determine the actual number of performance shares issuable upon vesting includes 60 :40 weighting of Ashland’s TSR performance and Ashland’s RONA performance as compared to internal targets. TSR relative to peers is considered a market condition while RONA is considered a performance condition in accordance with U.S. GAAP.
The following table shows the performance shares/units granted:
Weighted-
Target
average
(In thousands except per
shares/units
fair value per
share data)
Vesting period
granted (a)
share/unit (a)
Fiscal Year 2025
October 1, 2024 - September 30, 2027
Fiscal Year 2024
October 1, 2023 - September 30, 2026
Fiscal Year 2023
October 1, 2022 - September 30, 2025
At the end of the performance period, the actual number of shares/units awarded can range from zero to 200 % of the target shares/units granted, which is assumed to be 100 %. Both the shares granted and weighted-average fair value per share/unit are as of the grant date.
For these awards, the fair value of the performance unit awards is equal to the fair market value of Ashland’s Common Stock as of the end of each reporting period. Compensation cost is recognized over the requisite service period if it is probable that the performance condition will be satisfied.
The fair values of the TSR portion of the performance share awards and TSR modifier of the performance unit awards are calculated using a Monte Carlo simulation valuation model using key assumptions for the years ended September 30, included in the following table. Compensation cost is recognized over the requisite service period regardless of whether the market condition is satisfied.
Risk-free interest rate
Expected dividend yield
Expected life (in years)
Expected volatility
The following table shows changes in nonvested performance shares/units for the years ended September 30:
Weighted-
Weighted-
Weighted-
average
average
average
(In thousands except per
Shares/
grant date
Shares/
grant date
Shares/
grant date
share data)
Units
fair value
Units
fair value
Units
fair value
Nonvested - beginning of year
Granted
Reinvested dividends
Vested
Forfeitures
Nonvested - end of year
As of September 30, 2025 , there was $ 5 million of total unrecognized compensation costs related to nonvested performance share/unit awards. That cost is expected to be recognized over a weighted-average period of approximately 1.9 years.
NOTE P – REVENUE
Trade receivables
Trade receivables are defined as receivables arising from contracts with customers and are recorded within the accounts receivable, net caption within the Consolidated Balance Sheets. Ashland’s trade receivables were $ 200 million and $ 206 million as of September 30, 2025 and 2024, respectively. See Note H for additional information on Ashland's program to sell certain accounts receivable on a revolving basis to third party banks up to an aggregate purchase limit.
Disaggregation of revenue
Ashland disaggregates its revenue from contracts with customers by reportable segment and geographical region, as Ashland believes these categories best depict how management reviews the financial performance of its operations for the years ended September 30, 2025, 2024 and 2023. Ashland includes only U.S. and Canada in its North America designation and includes Europe, the Middle East and Africa in its Europe designation. See the following tables for details (Intersegment sales eliminations have been excluded, see Note Q for additional information) for the years ended September 30:
Sales by geography
(In millions)
Life Sciences
North America
Europe
Asia Pacific
Latin America & other
(In millions)
Personal Care
North America
Europe
Asia Pacific
Latin America & other
(In millions)
Specialty Additives
North America
Europe
Asia Pacific
Latin America & other
(In millions)
Intermediates
North America
Europe
Asia Pacific
Latin America & other
Ashland has two product categories that represented 10 % or greater of Ashland's total consolidated sales, which were cellulosics and polyvinylprrolidones (PVP). The following table summarizes the percentage of Ashland's total consolidated sales by product:
Sales by product
(In millions)
Cellulosics
PVP
NOTE Q – REPORTABLE SEGMENT INFORMATION
Ashland determines its reportable segments based on how operations are managed internally for the products and services sold to customers, including how the results are reviewed by Guillermo Novo, Chair and Chief Executive Officer of the Company , which includes determining resource allocation methodologies used for reportable segments. Operating income (loss) and EBITDA are the primary measures of performance that are reviewed by the chief operating decision maker in assessing each reportable segment's financial performance. Ashland does not aggregate operating segments to arrive at these reportable segments.
Reportable segment business descriptions
Life Sciences is comprised of pharmaceuticals, nutrition, agricultural chemicals, diagnostic films (formerly known as advanced materials) and fine chemicals. Pharmaceutical solutions include controlled release polymers, disintegrants, tablet coatings, thickeners, solubilizers and tablet binders. Nutrition solutions include thickeners, stabilizers, emulsifiers and additives for enhancing mouthfeel, controlling moisture
migration, reducing oil uptake and binding structured foods. Customers include pharmaceutical, food, beverage, hospitals and radiologists manufacturers. The nutraceuticals business was sold in August 2024. See Note B for additional details.
Personal Care is comprised of biofunctionals, microbial protectants (preservatives), skin care, sun care, oral care, hair care and household. These businesses have a broad range of natural, nature-derived, biodegradable, and high-performance ingredients for customer-driven solutions to help protect, renew, moisturize and revitalize skin and hair, and provide solutions for toothpastes, mouth washes and rinses, denture cleaning and care for teeth. Personal Care supplies nature-derived rheology ingredients, biodegradable surface wetting agents, performance encapsulates, and specialty polymers for household, industrial and institutional cleaning products. Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies. The Avoca business was sold in March 2025. See Note B for additional details.
Specialty Additives is comprised of rheology and performance-enhancing additives serving the architectural coatings, construction, energy, automotive and various industrial markets. Solutions include coatings additives for architectural paints, finishes and lacquers, cement- and gypsum-based dry mortars, ready-mixed joint compounds, synthetic plasters for commercial and residential construction, and specialty materials for industrial applications. Products include rheology modifiers (cellulosic and associative thickeners), foam control agents, surfactants and wetting agents, pH neutralizers, advanced ceramics used in catalytic converters, and environmental filters, ingredients that aid the manufacturing process of ceramic capacitors, plasma display panels and solar cells, ingredients for textile printing, thermoplastic metals and alloys for welding. Products help improvedesired functional outcomes through rheology modification and control, water retention, workability, adhesive strength, binding power, film formation, deposition and suspension and emulsification. Customers include, but are not limited to, global paint manufacturers, electronics and automotive manufacturers, textile mills, the construction industry and welders.
Intermediates is comprised of the production of 1,4 butanediol ("BDO") and related derivatives, including n-methylpyrrolidone. These products are used as chemical intermediates in the production of engineering polymers and polyurethanes, and as specialty process solvents in a wide array of applications including electronics, agriculture, pharmaceuticals, water filtration membranes and more. BDO is also supplied to Life Sciences, Personal Care, and Specialty Additives for use as a raw material.
Unallocated and Other generally includes items such as certain significant company-wide restructuring activities, corporate governance costs and legacy costs or activities that relate to divested businesses that are no longer operated by Ashland.
International data
Information about Ashland’s domestic and international operations for the years ended September 30, are as follows. Ashland has no operations in any individual international country or single customer that represented more than 10% of sales in 2025, 2024 and 2023.
Sales to external
customers
Net assets
(liabilities)
Property, plant and
equipment - net
(In millions)
United States
International
Reportable segment results
Results of Ashland’s reportable segments are presented based on its management and internal accounting structure. The structure is specific to Ashland; therefore, the financial results of Ashland’s reportable segments are not necessarily comparable with similar information for other comparable companies. Ashland allocates all costs to its reportable segments except for certain significant company-wide restructuring activities, certain corporate governance costs and other costs or activities that relate to former businesses that Ashland no longer operates. The service cost component of pension and other postretirement benefits costs is allocated to each reportable segment on a ratable basis; while the remaining components of pension and other postretirement benefits costs are recorded within the other net periodic benefitloss caption of the Statements of Consolidated Comprehensive Income (loss). Ashland refines its expense allocation methodologies to the reportable segments from time to time as more refined information becomes available and the industry or market changes. Significant revisions to Ashland’s methodologies are adjusted for all reportable segments on a retrospective basis. There were no material changes in methodology for the years ended September 30, 2025, 2024 or 2023.
Ashland determined that disclosing sales by specific product was impracticable due to the highly customized and extensive portfolio of products offered to customers and since no one product or a small group of products could be aggregated together to represent a majority of revenue within a reportable segment.
The following table presents various financial information for each reportable segment for the years ended September 30:
(In millions)
Sales
Life Sciences
Personal Care
Specialty Additives
Intermediates
Intersegment sales (a)
Cost of sales
Life Sciences
Personal Care
Specialty Additives
Intermediates
Intersegment sales
Selling, general and administrative expense
Life Sciences
Personal Care
Specialty Additives
Intermediates
Total operating segments
Unallocated and other
Research and development expense
Life Sciences
Personal Care
Specialty Additives
Intermediates
Total operating segments
Unallocated and other
Amortization expense
Life Sciences
Personal Care
Specialty Additives
Intermediates
Equity and other income
Life Sciences
Personal Care
Specialty Additives
Intermediates
Total operating segments
Unallocated and other
Goodwill impairment and (income) loss on acquisitions and divestitures, net
Life Sciences
Personal Care
Specialty Additives
Intermediates
Total operating segments
Unallocated and other
(In millions)
Operating income (loss)
Life Sciences (b)
Personal Care (c)
Specialty Additives (d)
Intermediates
Total operating segments
Unallocated and other (e)
Total operating income (loss)
Net interest and other expense (income)
Other net periodic benefitloss
Income (loss) from continuing operations before income taxes
EBITDA (f)
Life Sciences
Personal Care
Specialty Additives
Intermediates
Total operating segments
Unallocated and other
Total EBITDA
Depreciation expense
Amortization expense
Net interest and other expense (income)
Other net periodic benefitloss
Income (loss) from continuing operations before income taxes
Depreciation expense
Life Sciences (g)
Personal Care (h)
Specialty Additives (i)
Intermediates
Additions to property, plant and equipment
Life Sciences
Personal Care
Specialty Additives
Intermediates
Unallocated and other
(In millions)
Assets
Life Sciences
Personal Care
Specialty Additives
Intermediates
Unallocated and other
Property, plant and equipment - net
Life Sciences
Personal Care
Specialty Additives
Intermediates
Unallocated and other
Intersegment sales from Intermediates are accounted for at prices that approximate market value. All other intersegment sales are accounted for at cost.
Includes goodwill impairment of $ 375 million for Life Sciences in 2025.
Includes a capital project impairment charge of $ 11 million for Personal Care in 2024.
Includes goodwill impairment of $ 331 million in 2025 and a $ 4 million impairment charge related to a facility in 2023 for Specialty Additives.
Includes a $ 8 million gain on sale and a $ 183 million impairment charge related to the divestiture of the Avoca business in 2025, and a $ 8 million loss on sale and a $ 99 million impairment charge related to the divestiture of the Nutraceuticals business in 2024 within the income (loss) on acquisitions and divestitures, net.
Excludes income (loss) from discontinued operations, net of income taxes and other net periodic benefitloss. See the Statements of Consolidated Comprehensive Income (Loss) for applicable amounts excluded.
Depreciation includes accelerated depreciation of $ 21 million for Life Sciences in 2025.
Depreciation includes accelerated depreciation of $ 1 million and $ 2 million for Personal Care in 2025 and 2024, respectively.
Depreciation includes accelerated depreciation of $ 19 million and $ 55 million for Specialty Additives in 2025 and 2024, respectively.
