~~On May 12, 2017,~~

Ashland ~~completed the distribution of its remaining 170 million shares of common stock of Valvoline Inc. which represented approximately 83%~~is comprised of the ~~total outstanding shares of Valvoline Inc.'s common stock. This separation from Valvoline represented a strategic shift in Ashland's business~~following reportable segments: Life Sciences, Personal Care, Specialty Additives and ~~qualified as a discontinued operation. Accordingly, Valvoline's operating results~~Intermediates. Unallocated and ~~cash flows for the three months ended December 31, 2016 have been classified as discontinued operations within the Condensed Consolidated Financial Statements. See Note B for~~Other includes corporate governance activities and certain legacy matters. For additional information, ~~on the separation of Valvoline Inc.~~see Note Q.

The preparation of Ashland’s Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, ~~revenues~~sales and expenses, and the disclosures of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include, but are not limited to, ~~long-lived assets (including~~environmental remediation, asbestos litigation, the accounting for goodwill and other intangible ~~assets),~~assets, and income ~~taxes and liabilities and receivables associated with asbestos litigation and environmental remediation.~~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 or other matters.

pronouncements

A description of new U.S. GAAP accounting standards issued or adopted during the current year is required in interim financial reporting. A detailed listing of new accounting standards relevant to Ashland is included in the Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017. The following~~2022. There were no new standards ~~relevant to Ashland~~that were either issued or adopted in the current ~~period, or~~fiscal year that will ~~become effective in~~have a ~~subsequent period.~~

In May 2014, the FASB issued accounting guidance outlining a single comprehensive five step model for entities to use in accounting for revenue arising from contracts with customers (ASC 606 Revenue from Contracts with Customers). The new guidance supersedes most current revenue recognition guidance, in an

effort to converge the revenue recognition principles within U.S. GAAP. This new guidance also requires entities to disclose certain quantitative and qualitative information regarding the nature, amount, timing and uncertainty of qualifying revenue and cash flows arising from contracts with customers. Entities have the option of using a full retrospective or a modified retrospective approach to adopt the new guidance. Ashland has identified an implementation team that is currently evaluating thematerial impact ~~of the new standard~~ on ~~the~~Ashland's Condensed Consolidated Financial ~~Statements and~~Statements.

In March 2017, the FASB issued accounting guidance that will change how employers who sponsor defined benefit pension and/or postretirement benefit plans present the net periodic benefit cost in the Statement of Consolidated Comprehensive Income (Loss). This guidance requires employers to present the service cost component of net periodic benefit cost in the same caption within the Statement of Consolidated Comprehensive Income (Loss) as other employee compensation costs from services rendered during the period. All other components of the net periodic benefit cost will be presented separately outside of the operating income caption. This guidance must be applied retrospectively. Ashland elected to early adopt this guidance on October 1, 2017, which resulted in a reclassification of $2 million in income from the selling, general and administrative expense and cost of sales captions to the other net periodic benefit income caption in the Statement of Consolidated Comprehensive Income (Loss) for the ~~three~~nine months ended ~~December 31, 2016.~~ June 30, 2022.

The ~~components of net periodic benefits income (costs) reclassified primarily relate to interest cost, expected return~~transaction represented a strategic shift in Ashland’s business and had a major effect on ~~assets, curtailments, settlements~~Ashland’s operations and ~~actuarial gains~~financial results. Accordingly, the operating results and losses. Ashland did not have to adjust the classification of service cost since it previously was recorded within the caption required by the new guidance. See Note J for additional information on net periodic benefit costs.

~~In March 2016, the FASB issued new accounting guidance for certain aspects of share-based payments to employees. This guidance requires all excess tax benefits and tax deficiencies~~cash flows related to ~~share-based payments to be recognized~~Performance Adhesives have been reflected as ~~income tax expense~~discontinued operations in the Statements of Consolidated Comprehensive Income (Loss) ~~instead of additional paid-in capital,~~ and ~~changes the classification of excess tax benefits from a financing activity to an operating activity within the~~ Statements of Condensed Consolidated Cash Flows. This guidance also allows entities to make an accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. In addition, this guidance increases the amount an employer can withhold to cover income taxes on awards and still qualify for equity classification and requires that cash paid by an employer when directly withholding shares for tax-withholding purposes be classified as a financing activity within the Statements of Condensed Consolidated Cash Flows. The guidance became effective for Ashland and was adopted on October 1, 2017. The guidance specifically related to the Statements of Consolidated Comprehensive Income (Loss) was adopted prospectively while the guidance related to the Statements of Condensed Consolidated Cash Flows was adopted retrospectively, as required by the guidance.

~~Upon adoption, the overall impact on Ashland's Condensed Consolidated Financial Statements was not significant.~~

On September 22, 2015, Ashland announced that the Board of Directors approved proceeding with a plan to separate Ashland into two independent, publicly traded companies comprising of the new Ashland (now known as Ashland Global Holdings Inc.) and Valvoline Inc. The initial step of the separation, the initial public offering (IPO) of Valvoline Inc., closed on September 28, 2016. As discussed further within the Final Separation section of thisSee Note Ashland completed the distribution of its remaining shares in Valvoline Inc. on May 12, 2017. The new Ashland is a premier global leader in providing specialty chemical solutions to customers in a wide range of consumer and industrial markets. Key markets and applications include pharmaceutical, personal care, food and beverage, architectural coatings, adhesives, automotive, construction and energy.

After completing the IPO on September 28, 2016 and before the distribution of its remaining shares on May 12, 2017, Ashland owned 170 million shares of Valvoline Inc.’s common stock which represented approximately 83% of the total outstanding shares of Valvoline Inc.’s common stock. As a result, Ashland continued to consolidate Valvoline within the Condensed Consolidated Financial Statements up until the distribution of the remaining shares. The resulting outside stockholders’ interests in Valvoline Inc., which was approximately 17%, was presented separately as a noncontrolling interest within Ashland’s equity in the Condensed Consolidated Balance Sheets up until the distribution of the remaining shares. The amount of consolidated net income attributable to these minority holders is presented as a separate caption on the Statement of Consolidated Comprehensive Income (Loss)C for the ~~three months ended December 31, 2016.~~

~~Ashland completed the distribution~~results of its remaining 170 million shares of common stock of Valvoline Inc. as a pro rata dividend on shares of Ashland common stock outstanding at the close of business on the record date of May 5, 2017. Based on the shares of Ashland common stock outstanding as of May 5, 2017, the record dateoperations for the distribution, each share of Ashland common stock received 2.745338 shares of Valvoline common stock in the distribution. The distribution was recorded at the carrying amount of Valvoline Inc.'s net assets which was a deficit of $187 million as of May 12, 2017, as follows:

A Tax Matters Agreement between Ashland and Valvoline Inc. governs the rights and obligations after the separation regarding certain income taxes and other taxes, including certain tax liabilities and benefits, attributes, returns and contests.

~~Valvoline met the criteria to qualify as a discontinued operation and accordingly, its operating results and cash flows~~Performance Adhesives for ~~the three months ended December 31, 2016 have been classified as discontinued operations within the Condensed Consolidated Financial Statements. See Note D for more information.~~

~~Ashland recognized separation~~all affected periods.

Certain indirect corporate costs ~~of $6 million and $28 million for the three months ended December 31, 2017 and 2016, respectively. Of these amounts, $6 million of separation costs directly related to Valvoline and were~~ included ~~within the discontinued operations caption of the Statement of Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2016. Otherwise, separation costs are recorded~~ within the selling, general and administrative expense caption of the Statements of Consolidated Comprehensive Income (Loss).

~~On May 17, 2017,~~ that were previously allocated to the Performance Adhesives segment do not qualify for classification within discontinued operations and are now reported as selling, general and administrative expense within continuing operations on a consolidated basis and within the Unallocated and other segment. There were no such costs for the three and nine months ended June 30, 2023 and $1 million and $8 million for the three and nine months ended June 30, 2022, respectively.

Other manufacturing facility sales

During the December 2022 quarter, Ashland entered into a definitive sale agreement to sell a Specialty Additives manufacturing facility for less than $1 million. The net asset value related to these sites was $4 million at September 30, 2022. During the three and nine months ended June 30, 2023, no impairment and $4 million of impairment charges, respectively, were recorded within the selling, general and administrative expense caption of the Statement of Consolidated Comprehensive Income (Loss) for this manufacturing facility.

During the current quarter, Ashland completed ~~its~~the sale of this facility, received proceeds of less than $1 million, and recorded a loss of less than $1 million within the income on acquisition and divestitures, net caption of the ~~stock~~Statement of ~~Pharmachem Laboratories, Inc. (Pharmachem),~~ a ~~leading provider~~Consolidated Comprehensive Income (Loss) for the three and nine months ended June 30, 2023.

Other corporate assets

During the three and nine months ended June 30, 2022, Ashland completed the sale of ~~quality ingredients to the global health and wellness industries and high-value differentiated products to fragrance and flavor houses. With annual revenues~~two excess land properties. Ashland received net proceeds of approximately ~~$300~~$50 million and 14 manufacturing facilities in the United States and Mexico, New Jersey-based Pharmachem develops, manufactures and supplies custom and branded nutritional and fragrance products. Ashland has included Pharmachemrecorded a pre-tax gain of $35 million within the ~~Specialty Ingredients reporting segment.~~

~~The acquisition was recorded by Ashland using the purchase method of accounting in accordance with applicable U.S. GAAP whereby the total purchase price was allocated to tangible~~Income on acquisitions and ~~intangible assets and liabilities acquired based on respective fair values.~~

~~The all-cash purchase price of Pharmachem was $680 million which included working capital adjustments of approximately $20 million. The following table summarizes the current preliminary values~~divestitures, net caption of the ~~assets acquired and liabilities assumed at the date~~Statements of ~~acquisition.~~

~~As of December 31, 2017, the purchase price allocation~~Consolidated Comprehensive Income (Loss) for the ~~acquisition was preliminary. Adjustments to the current fair value estimates in the above table may occur as the process conducted for various valuations~~three and assessments, including certain tangible and intangible assets, are finalized. Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the estimated future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The factors contributing to the recognition of goodwill were based on strategic benefits that are expected to be realized from the acquisition. None of the goodwill is expected to be deductible for income tax purposes.nine months ended June 30, 2022.

The purchase price allocation included $330 million of certain definite-lived intangible assets which are being amortized over the estimated useful life in proportion to the economic benefits consumed. The determination of the useful lives is based upon various industry studies, historical acquisition experience, economic factors, and future cash flows of the combined company. In addition, Ashland reviewed certain technological trends and also considered the relative stability in the current Pharmachem customer base.

~~The following details the total intangible assets identified as of May 17, 2017.~~

Components of amounts reflected in the Statements of Consolidated Comprehensive Income (Loss) related to discontinued operations are presented in the following table for the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~.2022.


	Three months ended						Nine months ended
	June 30						June 30
(In millions)	2023			2022			2023			2022
Income (loss) from discontinued operations (net of tax)
Performance Adhesives	$	(1	)	$	4		$	(1	)	$	38
Composites/Marl facility		—			—			(1	)		—
Valvoline		15			—			15			—
Asbestos		(4	)		(13	)		(4	)		(13	)
Water Technologies		—			(1	)		—			(1	)
Distribution		(2	)		(5	)		(3	)		(7	)
Gain on disposal of discontinued operations (net of tax)
Performance Adhesives		—			—			—			732
	$	8		$	(15	)	$	6		$	749

The following table presents a reconciliation of the ~~historically reported~~ captions within Ashland's Statements of Consolidated Comprehensive Income (Loss) for the income (loss) from discontinued operations attributable to ~~Valvoline~~Performance Adhesives for the three and nine months ended June 30, 2022. This disclosure was not applicable for the three and nine months ended June 30, 2023 as a result of the sale in fiscal 2022.


	Three months ended			Nine months ended
	June 30			June 30
(In millions)	2022			2022
Income (loss) from discontinued operations attributable to Performance Adhesives
Sales	$	—		$	171
Cost of sales		—			(122	)
Selling, general and administrative expense		(1	)		(12	)
Research and development expense		—			(3	)
Pretax income of discontinued operations		(1	)		34
Income tax (expense) benefit		5			4
Income from discontinued operations	$	4		$	38

~~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 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~~using fair value models, such as a discounted cash flow model or other standard pricing models that Ashland deems reasonable.

~~During 2015, Ashland and Hercules entered into a comprehensive settlement agreement~~ related to the Asbestos trust and $129 million related to the Environmental trust.

The following table presents gross unrealized gains and losses for the restricted ~~investment available-for-sale~~ securities as of ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017:~~2022:


			Gross		Gross
(In millions)	Adjusted Cost		Unrealized Gain		Unrealized Loss			Fair Value
As of June 30, 2023
Demand deposit	$	8	$	—	$	—		$	8
Equity mutual fund		158		33		—			191
Fixed income mutual fund		232		—		(39	)		193
Fair value	$	398	$	33	$	(39	)	$	392

As of September 30, 2022
Demand deposit	$	6	$	—	$	—		$	6
Equity mutual fund		186		20		(25	)		181
Fixed income mutual fund		234		—		(47	)		187
Fair value	$	426	$	20	$	(72	)	$	374

9

~~The unrealized gains and losses as~~ of December 31, 2017 and September 30, 2017 were recognized within AOCI. Ashland invests in highly-rated investment grade mutual funds. No other-than-temporary impairment was recognized in AOCI during the three months ended December 31, 2017 and 2016.

The following table presents the investment income, net gains and losses realized, funds restricted for specific transactions, and disbursements related to the investments within the portfolio for the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016.~~

~~Deferred compensation investments consist of Level 2 measurements within~~Included in the ~~fair value hierarchy which are comprised primarily of a guaranteed~~net interest ~~fund, a common stock index fund~~ and ~~an intermediate government bond fund. Gains and losses related to deferred compensation investments are immediately recognized~~other expense (income) caption within the Statements of Consolidated Comprehensive Income (Loss).

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 on certain assets and liabilities, including short-term inter-company 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. The following table summarizes the net gains ~~and/or~~and losses recognized during the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~2022 within the Statements of Consolidated Comprehensive Income (Loss).


	Three months ended					Nine months ended
	June 30					June 30
(In millions)	2023		2022			2023		2022
Foreign currency derivative gains (losses)	$	1	$	(12	)	$	10	$	(21	)

Three months ended
December 31
(In millions) 2017
2016
Foreign currency derivative loss $ (11 ) $ (8 )

The following table summarizes the fair values of the outstanding foreign currency derivatives as of ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017~~2022 included in accounts receivable and accrued expenses and other liabilities of the Condensed Consolidated Balance Sheets.


	June 30		September 30
(In millions)	2023		2022
Foreign currency derivative assets	$	1	$	1
Notional contract values		123		133

Foreign currency derivative liabilities	$	1	$	9
Notional contract values		145		535

Commodity derivatives

To manage its exposure to the market price volatility of natural gas consumed by its U.S. plants during the manufacturing process, Ashland regularly enters into forward contracts that are designated as cash flow hedges.

The following table summarizes the net gains and losses recognized during the three and nine months ended June 30, 2023 and 2022 within the cost of sales caption of the Statements of Consolidated Comprehensive Income (Loss).


	Three months ended					Nine months ended
	June 30					June 30
(In millions)	2023			2022		2023			2022
Commodity derivative gains (losses)	$	(2	)	$	2	$	(2	)	$	6

10

December 31
September 30
(In millions) 2017
2017
Foreign currency derivative assets $ 4
$ 2
Notional contract values 425
79

Foreign currency derivative liabilities $ 13
$ 36
Notional contract values 810
1,601

~~Other financial instruments~~

~~At December 31, 2017~~

The following table summarizes the fair values of the outstanding commodity derivatives as of June 30, 2023, and September 30, ~~2017,~~2022 included in accounts receivable and accrued expenses and other liabilities of the Condensed Consolidated Balance Sheets.


	June 30		September 30
(In millions)	2023		2022
Commodity derivative assets	$	—	$	4
Notional contract values		1		13

Commodity derivative liabilities	$	5	$	1
Notional contract values		18		9

Other financial instruments

At June 30, 2023 and September 30, 2022, Ashland's long-term debt (including the current portion and excluding debt issuance cost discounts) had a carrying value of ~~$2,614~~$1,342 million and ~~2,615~~$1,284 million, respectively, compared to a fair value of ~~$2,755~~$1,195 million and ~~$2,768~~$1,102 million, respectively. The fair values of long-term debt are based on quoted market prices or, if market prices are not available, the present values of the underlying cash flows discounted at Ashland’s incremental borrowing rates, which are deemed to be Level 2 measurements within the fair value hierarchy.

Inventories are carried at the lower of cost or ~~market.~~net realizable value. Inventories are ~~primarily~~ stated at cost using the weighted-average cost method. ~~In addition, certain~~This method values inventories ~~are valued at cost~~ using ~~the last-in, first-out (LIFO) method.~~

Ashland ~~reviews~~tests goodwill and other indefinite-lived intangible assets for impairment annually oras of July 1 and when events and circumstances indicate an impairment may have occurred. ~~This annual assessment is performed as~~

No indicators of ~~July 1~~impairment were identified in the three and consists of Ashland determining each reporting unit’s current fair value compared to its current carrying value. For its July 1, 2017 assessment, Ashland determined that its reporting units for the allocation of goodwill are its three reportable segments: Specialty Ingredients, Composites and Intermediates and Solvents. At that time, Ashland determined no additional impairment existed.nine months ended June 30, 2023.

Amortization expense recognized on intangible assets was ~~$24~~$24 million and ~~$19~~$23 million for the three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016,~~2022, respectively, and $70 million and $71 million for the nine months ended June 30, 2023 and 2022, respectively, and is included in the ~~selling, general and administrative~~intangibles amortization expense caption of the Statements of Consolidated Comprehensive Income (Loss). Estimated amortization expense for future periods is ~~$94~~$93 million in ~~2018~~2023 (includes ~~three~~nine months actual and ~~nine~~three months estimated), ~~$90~~$80 million in ~~2019, $89~~2024, $76 million in ~~2020, $89~~2025, $74 million in ~~2021~~2026 and ~~$87~~$53 million in ~~2022. The amortization expense for future periods is an estimate.~~2027. 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.

The scheduled aggregate maturities ofto 2027 for long-term debt by year (including the current portion and excluding debt issuance costs) are as ~~follows: $5 million remaining~~follows as of June 30, 2023: zero in ~~2018, $11~~the next 4 years and $4 million in ~~2019, $269 million in 2020, $56 million in 2021~~2027.

Accounts Receivable Facilities and ~~$1,279 million in 2022.~~

~~On May 17, 2017, in conjunction with the closing of the Pharmachem acquisition, Ashland~~continues to maintain its U.S. Accounts Receivable Sales Program entered into ~~a secured credit agreement (the 2017 Credit Agreement) with a group of lenders. The 2017 Credit Agreement provided~~during fiscal 2021. Ashland accounts for ~~(i) a $250 million three-year term loan A facility (the Three-Year TLA Facility), (ii) a $250 million five-year term loan A facility (the Five-Year TLA Facility and together with~~ the Three-Year TLA Facility, the TLA Facilities) and (iii) a $680 million five-year revolving credit facility (including a $125 million letter of credit sublimit) (the 2017 Revolving Credit Facility). Proceeds of borrowings under the TLA Facilities were used solelyreceivables transferred to finance the acquisition of Pharmachem, while the proceeds of the 2017 Revolving Credit Facility were used to finance, in part, the acquisition of Pharmachem, to refinance the 2015 Senior Credit Agreement and for general corporate purposes. On May 19, 2017,buyers as sales. Ashland ~~entered into Amendment No. 1 to the 2017 Credit Agreement, which increased the aggregate commitments under the 2017 Revolving Credit Facility from $680 million to $800 million.~~

~~At Ashland’s option, loans issued under the 2017 Credit Agreement bear interest at either LIBOR~~recognizes any gains or an alternate base rate, in each case plus the applicable interest rate margin. Loans bear interest at LIBOR plus 1.75% per annum, in the case of LIBOR borrowings, or at the alternate base rate plus 0.75%, in the alternative, through and including the date of delivery of a quarterly compliance certificate and thereafter the interest rate will fluctuate between LIBOR plus 1.375% per annum and LIBOR plus 2.500% per annum (or between the alternate base rate plus 0.375% per annum and the alternate base rate plus 1.500% per annum),losses based upon Ashland’s secured facilities ratings or the consolidated net leverage ratio (as defined in the 2017 Credit Agreement) (whichever yields a lower applicable interest rate margin) at such time. In addition, Ashland was required to pay fees of 0.25% per annum on the ~~daily unused amount~~excess of ~~the 2017 Revolving Credit Facility through~~proceeds received net of buyer’s discounts and including the date of delivery of a compliance certificate, and thereafter the fee rate will fluctuate between 0.175% and 0.40% per annum, based upon Ashland’s secured facilities rating or the consolidated net leverage ratio (whichever yields a lower applicable rate). The TLA Facilities may be prepaid at any time without

premium. The Three-Year TLA Facility will not amortize and will be due on May 17, 2020. The Five-Year TLA Facility will not amortize in each of the first, second and third years and will amortize at a rate of 20% per annum in each of the fourth and fifth years (payable in equal quarterly installments), with the outstanding balance of the Five-Year TLA Facilityfees compared to ~~be paid on May 17, 2022.~~

On June 14, 2017, Ashland entered into Amendment No. 2 to the 2017 Credit Agreement, which provided for a new $600 million seven-year senior secured term loan B facility (the 2017 TLB Facility). At Ashland’s option, loans issued under the 2017 TLB Facility bear interest at either (x) LIBOR plus 2.00% per annum or (y) an alternate base rate plus 1.00% per annum. The 2017 TLB Facility may be prepaid at any time. The 2017 TLB Facility amortizes at a rate of 1.00% per annum (payable in equal quarterly installments) with the outstanding balance to be paid on May 17, 2024.

and liquidity

The borrowing capacity remaining under the ~~2017~~2022 Credit Agreement was $593 million, which reflects the full $600 million Revolving Credit Facility ~~was $467 million due to an outstanding balance of $285 million, as well as~~less a reduction of ~~$48~~$7 million for letters of credit outstanding ~~at December 31, 2017.~~as of June 30, 2023. Ashland's total borrowing capacity at ~~December 31, 2017~~June 30, 2023 was ~~$498~~$702 million, which included ~~$31~~$109 million of available capacity from the ~~accounts receivable securitization facility.~~

Ashland's debt contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional subsidiary indebtedness, restrictions on subsidiary distributions, investments, mergers, sale of assets and restricted payments and other customary limitations. As of ~~December 31, 2017,~~June 30, 2023, Ashland is in compliance with all debt agreement covenant restrictions.

The maximum consolidated net leverage ratio permitted under Ashland's ~~most recent~~current credit agreement (the ~~2017~~2022 Credit Agreement) is ~~4.5.~~4.0. At ~~December 31, 2017,~~June 30, 2023, Ashland’s calculation of the consolidated net leverage ratio was ~~3.9.~~

1.8.

The minimum required consolidated interest coverage ratio under the ~~2017~~2022 Credit Agreement during its entire duration is ~~3.0.~~3.0. At ~~December 31, 2017,~~June 30, 2023, Ashland’s calculation of the interest coverage ratio was ~~4.6.~~9.9.

The ~~Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017. The Tax Act reduces~~components of lease cost recognized within the ~~U.S. federal corporate tax rate from 35% to 21%, requires companies to pay a one-time transition tax on earnings~~Statements of ~~certain foreign subsidiaries that~~Consolidated Comprehensive Income (Loss) were ~~previously tax deferred and creates new taxes on certain foreign sourced earnings. At December 31, 2017, Ashland has not completed the internal accounting assessment~~as follows:


		Three months ended				Nine months ended
		June 30				June 30
(In millions)	Location	2023		2022		2023		2022
Lease cost:
Operating lease cost	Selling, General & Administrative (a)	$	3	$	5	$	10	$	12
Operating lease cost	Cost of Sales		3		3		11		10
Variable lease cost	Selling, General & Administrative		1		1		3		3
Variable lease cost	Cost of Sales		2		1		4		3
Short-term leases	Cost of Sales		—		1		2		2
Total lease cost		$	9	$	11	$	30	$	30

(a)

Includes $2 million lease termination fee for the ~~tax effects of enactment of the Tax Act; however, Ashland determined a reasonable estimate of the effects on our existing deferred tax balances~~three and ~~the one-time transition tax. Ashland recognized a provisional amount~~nine months ended June 30, 2022.

~~Ashland remeasured certain deferred tax assets and liabilities based on the rates at which they are expected to reverse~~ in ~~the future, which is generally 21%. However, Ashland is still analyzing certain aspects of the Tax Act and refining certain calculations, which could potentially affect~~ the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to the remeasurement of the deferred tax balance was a favorable tax adjustment of $126 million.operating lease liabilities:


	Three months ended				Nine months ended
	June 30				June 30
(In millions)	2023		2022		2023		2022
Operating cash flows from operating leases	$	8	$	9	$	21	$	23

14

The one-time transition tax is based on Ashland's total post-1986 earnings and profits (E&P) of foreign subsidiaries that were previously deferred from U.S. income taxes. Ashland recorded a provisional amount for this one-time transition tax liability of $142 million. Ashland has not yet completed its calculation of the total post-1986 E&P for these foreign subsidiaries. In addition, the transition tax is based in part on the amount of those earnings held in cash and other specified assets. This amount may change when Ashland finalizes the calculation of post-1986 foreign E&P previously deferred from U.S. federal taxation and finalize the amounts held in cash or other specified assets. No additional income taxes have been provided for any remaining undistributed foreign earnings not subject to the transition tax, or any additional outside basis difference inherent in these entities, as these amounts continue to be indefinitely reinvested in foreign operations. Ashland determined that the amount of unrecognized deferred tax liability related to any remaining undistributed foreign earnings not subject to the transition tax and additional outside basis difference in these entities (i.e., basis difference in excess of that subject to the one-time transition tax) is not practicable at this time.

Ashland’s effective tax rate in any interim period is subject to adjustments related to discrete items and the mix of domestic and foreign operating results. The overall effective tax rate was ~~200%~~26% and 11% for the three and nine months ended ~~December 31, 2017 and~~June 30, 2023.

The currentquarter's tax rate was ~~primarily~~ impacted by jurisdictional income mix, as well as net $4 million from favorable tax discrete items primarily related to changes in uncertain tax positions and adjustments to valuation allowances. The current nine month tax rate was impacted by jurisdictional income mix, as well as net $27 million from favorable tax discrete items primarily related to changes in uncertain tax positions.

Prior fiscal year

The overall effective tax rate was 2% and 17% for the three and nine months ended June 30, 2022. The prior year quarter's tax rate was impacted by jurisdictional income mix, as well as a net $1 million benefit primarily from favorable return to provision adjustments for certain jurisdictions. The nine month tax rate was impacted by jurisdictional income mix as well as $3 million from net unfavorable tax discrete ~~adjustments of $16 million~~items primarily related to ~~the Tax Act.~~

~~The overall effective~~restructuring and separation activity partially offset by a favorable valuation adjustment for certain foreign tax ~~benefit rate was 39% for the three months ended December 31, 2016~~credits and ~~was primarily impacted by income mix.~~

Plan contributions

For the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2023, Ashland contributed $2$4 million to its non-U.S. pension plans and ~~zero~~$3 million to its U.S. pension plans. Ashland expects to make additional contributions of ~~approximately $5~~less than $1 million to both its ~~non-U.S.~~U.S. pension plans and ~~$1 million to its U.S.~~non-U.S. pension plans during the remainder of ~~2018.~~

For segment reporting purposes, service cost ~~for continuing operations~~ is proportionately allocated to each segment, excluding the Unallocated and other segment, ~~while all~~and is recorded within the selling, general and administrative expense and cost of sales captions on the Statements of Consolidated Comprehensive Income (Loss). All other ~~costs for continuing operations~~components are recorded within the other net periodic benefit ~~income~~loss caption on the Statements of Consolidated Comprehensive Income (Loss)., which netted to a loss of $2 million and $6 million for the three and nine months ended June 30, 2023, respectively, and a loss of $1 million and zero for the three and nine months ended June 30, 2022.

Hercules has liabilities from claims alleging personal injury caused by exposure to asbestos. Such claims typically arise from alleged exposure to asbestos fibers from resin encapsulated pipe and tank products which were sold by one of Hercules’ former subsidiaries to a limited industrial market. The amount and timing of settlements and number of open claims can fluctuate from period to period. A summary of Hercules’ asbestos claims activity follows.


	Nine months ended
	June 30					Years ended September 30
(In thousands)	2023		2022			2022			2021			2020
Open claims - beginning of year		11		12			12			12			13
New claims filed		1		1			1			1			1
Claims dismissed		—		(1	)		(2	)		(1	)		(2	)
Open claims - end of period		12		12			11			12			12

Three months ended
December 31
Years ended September 30
(In thousands) 2017
2016
2017
2016
2015
Open claims - beginning of period 12
15
15
20
21
New claims filed —
—
1
1
1
Claims dismissed —
—
(4 ) (6 ) (2 )
Open claims - end of period 12
15
12
15
20

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, which generally approximates the mid-point of the estimated range of exposure from model results.~~costs. Ashland reviews this estimate, and related assumptions quarterly and annually updates the results of a non-inflated, non-discounted approximate ~~50-year~~40-year model developed with the assistance of ~~HR&A. As a result of~~Gnarus. During the most recent ~~annual~~ update ~~of this estimate,~~ completed ~~during the~~in June ~~2017 quarter,~~2023, it was determined that the liability for Hercules asbestos-related claims should be ~~increased~~decreased by ~~$16~~$2 million. Total reserves for asbestos claims were ~~$315~~$197 million at ~~December 31, 2017~~June 30, 2023 compared to $~~323~~213 million at September 30, ~~2017~~.

2022.

A progression of activity in the asbestos reserve is presented in the following table.


	Nine months ended
	June 30						Years ended September 30
(In millions)	2023			2022			2022			2021			2020
Asbestos reserve - beginning of year	$	213		$	217		$	217		$	229		$	252
Reserve adjustments		(2	)		15			15			8			(3	)
Amounts paid		(14	)		(12	)		(19	)		(20	)		(20	)
Asbestos reserve - end of period (a)	$	197		$	220		$	213		$	217		$	229

(a)

Included $17 million and $18 million classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets as of June 30, 2023 and September 30, 2022, respectively.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE K – LITIGATION, CLAIMS AND CONTINGENCIES (continued)~~

Three months ended
December 31 Years ended September 30
(In millions) 2017
2016
2017
2016
2015
Asbestos reserve - beginning of period $ 323
$ 321
$ 321
$ 311
$ 329
Reserve adjustment —
—
16
25
4
Amounts paid (8 ) (3 ) (14 ) (15 ) (22 )
Asbestos reserve - end of period (a) $ 315
$ 318
$ 323
$ 321
$ 311


~~(a)~~	~~Included $14 million classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets as of December 31, 2017 and September 30, 2017.~~

18

Hercules asbestos-related receivables

For the Hercules asbestos-related obligations, certain reimbursement obligations pursuant to coverage-in-place agreements with insurance carriers exist. As a result, any increases in the asbestos reserve have been partially offset by probable insurance recoveries. Ashland has estimated the value of probable insurance recoveries associated with its asbestos reserve based on management’s interpretations and estimates surrounding the available or applicable insurance coverage, including an assumption that all solvent insurance carriers remain solvent. The estimated receivable consists exclusively of solvent domestic insurers.

As of ~~December 31, 2017~~June 30, 2023, Ashland’s receivable for recoveries of litigation defense and claims costs from insurers with respect to Hercules amounted to $47 million compared to $52 million at September 30, ~~2017, the receivables from insurers amounted to $68 million. During the~~2022. In June ~~2017 quarter,~~2023, the annual update of the model used for purposes of valuing the asbestos reserve and its impact on valuation of future recoveries from insurers was completed. This model update resulted in a $5decrease of $3 million ~~increase~~ in the receivable for probable insurance recoveries.

A progression of activity in the Hercules insurance receivable is presented in the following table.


	Nine months ended
	June 30						Years ended September 30
(In millions)	2023			2022			2022			2021			2020
Insurance receivable - beginning of year	$	52		$	47		$	47		$	47		$	49
Receivable adjustment (a)		(3	)		7			7			1			(2	)
Amounts collected		(2	)		(1	)		(2	)		(1	)		—
Insurance receivable - end of period (b)	$	47		$	53		$	52		$	47		$	47

(a)

2021 includes a $1 million reserve adjustment related to allowances for credit losses as a result of Ashland's adoption of the new credit measurement standard. The total allowance for credit losses was $1 million as of June 30, 2023 and September 30, 2022.

Three months ended
December 31 Years ended September 30
(In millions) 2017
2016
2017
2016
2015
Insurance receivable - beginning of period $ 68
$ 63
$ 63
$ 56
$ 77
Receivable adjustment —
—
5
7
1
Insurance settlement —
—
—
—
(22 )
Insurance receivable - end of period $ 68
$ 63
$ 68
$ 63
$ 56
(b)

Includes $4 million and $3 million classified in accounts receivable on the Condensed Consolidated Balance Sheets as of June 30, 2023 and September 30, 2022.

Asbestos litigation cost projection

Projecting future asbestos costs is subject to numerous variables that are ~~extremely~~ difficult to predict. In addition to the ~~significant~~ 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 ~~long latency period associated with asbestos exposure,~~related costs incurred in resolving those claims, mortality rates, dismissal rates, ~~costs of medical treatment, the impact of bankruptcies of other companies that are co-defendants in claims,~~ uncertainties surrounding the litigation process from jurisdiction to jurisdiction and from case to ~~case, and the impact of potential changes in legislative or judicial standards.~~case. Furthermore, any predictions with respect to these variables are subject to even greater uncertainty as the projection period lengthens. In light of these inherent uncertainties, Ashland believes that the asbestos reserves for Ashland and Hercules represent the best estimate within a range of possible outcomes. As a part of the process to develop these estimates of future asbestos costs, a range of long-term cost models was developed. These models are based on national studies that predict the number of people likely to develop asbestos-related diseases and are heavily influenced by assumptions regarding long-term inflation rates for indemnity payments and legal defense costs, as well as other variables mentioned previously. Ashland has currently estimated in various models ranging from approximately 40 ~~to 50~~ 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 ~~$660~~$422 million for the Ashland asbestos-related litigation (current reserve of ~~$409~~$285 million) and approximately ~~$510~~$288 million for the Hercules asbestos-related litigation (current reserve of ~~$315~~$197 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 between all periods presented. If actual experience is worse than projected, relative to the number of claims filed, the severity of alleged disease associated with those claims or costs incurred to resolve those claims, or actuarial refinement or improvements to the assumptions used within these models are initiated, Ashland may need to further increase the estimates of the costs associated with asbestos claims and these increases could be material over time.

Ashland is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively environmental remediation) at multiple locations. At ~~December 31, 2017~~, June 30, 2023,

19

such locations included ~~82 waste treatment or disposal~~57 sites where Ashland has been identified as a potentially responsible party under Superfund or similar state laws, ~~118~~108 current and former operating facilities ~~(including certain operating facilities conveyed as part of the MAP Transaction)~~ and about 1,225 service station properties, of which 3614 are being actively remediated.

Ashland’s reserves for environmental remediation and related environmental litigation amounted to ~~$168~~$204 million at ~~December 31, 2017~~June 30, 2023 compared to ~~$163~~$211 million at September 30, ~~2017,~~2022, of which ~~$125~~$155 million at ~~December 31, 2017~~June 30, 2023 and ~~$121~~$157 million at September 30, ~~2017~~2022 were classified in other noncurrent liabilities on the Condensed Consolidated Balance Sheets. The remaining reserves were classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets.

The 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, ~~probability techniques,~~ 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 continues to discount certain environmental sites and regularly adjusts its reserves as environmental remediation continues. Ashland has estimated the value of its probable insurance recoveries associated with its environmental reserve based on management’s interpretations and estimates surrounding the available or applicable insurance coverage. At ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017,~~2022, Ashland’s recorded receivable for these probable insurance recoveries was ~~$14~~$21 million, ~~and $15 million, respectively,~~ of which ~~$13 million and $14~~$17 million at ~~December 31, 2017~~June 30, 2023 andSeptember 30, ~~2017, respectively,~~2022 were classified in other noncurrent assets on the Condensed Consolidated Balance Sheets.

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 three and nine ended June 30, 2023 and 2022.


	Three months ended						Nine months ended
	June 30						June 30
(In millions)	2023			2022			2023			2022
Environmental expense	$	22		$	45		$	32		$	60
Accretion		—			1			1			1
Legal expense		1			1			3			3
Total expense		23			47			36			64
		—						—
Insurance receivable		(2	)		(2	)		(2	)		(5	)
Total expense, net of receivable activity (a)	$	21		$	45		$	34		$	59

Subsequent to completing the separation from Valvoline Inc. on May 12, 2017, Ashland's operations are managed by the chief operating decision maker within the following three reportable segments: Specialty Ingredients, Composites and Intermediates and Solvents. As a result, the financial information for the new reportable segments (Composites and Intermediates and Solvents) has been disclosed for all periods presented. Prior to the separation from Valvoline Inc., Composites and Intermediates and Solvents were reporting units included within the previous Ashland Performance Materials reportable segment.

Unallocated and Other generally includes items such as certain significant company-wide restructuring activities, ~~including internal separation~~corporate governance costs and legacy costs or ~~adjustments~~activities that relate to divested businesses that are no longer operated by Ashland.

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 significant costs to its reportable segments except for certain significant company-wide restructuring activities, certain corporate governance costs and other costs or ~~adjustments~~activities that relate to former businesses that Ashland no longer operates. The service cost component of pension and other postretirement benefits costs is allocated to each reportable segment on a ratable basis; while the remaining components of pension and other postretirement benefits costs are recorded within the other net periodic benefit ~~income~~loss caption on the Statements of Consolidated Comprehensive Income (Loss). Ashland refines its expense allocation methodologies to the reportable segments from time to time as internal accounting practices are improved, more refined information becomes available and the industry or market changes. Significant revisions to Ashland’s methodologies are adjusted for all segments on a retrospective basis.

The following discussion should be read in conjunction with the Condensed Consolidated Financial Statements and the accompanying Notes to Condensed Consolidated Financial Statements herein.

Ashland is a ~~premier~~ global ~~leader in providing~~additives and specialty ~~chemical solutions to~~ingredients company with a conscious and proactive mindset for environment, social and governance (ESG). The Company serves customers in a wide range of consumer and industrial markets, including ~~adhesives,~~ architectural coatings, construction, energy, food and beverage, nutraceuticals, personal care and pharmaceutical. With approximately ~~6,500~~3,900 employees worldwide, Ashland serves customers in more than 100 countries.

Ashland’s sales generated outside of North America were ~~60%~~69% and 70% for ~~both~~ the three and nine months ended ~~December 31, 2017~~June 30, 2023, respectively, and ~~2016.~~67% for the three and nine months ended June 30, 2022. Sales by region expressed as a percentage of total consolidated sales for the three and nine months ended ~~December 31~~June 30 were as follows:

~~Subsequent to completing the separation from Valvoline Inc., Ashland's businesses are managed within the following three~~

Ashland’s reportable ~~segments:~~segments include Life Sciences, Personal Care, Specialty ~~Ingredients, Composites~~Additives and ~~Intermediates~~Intermediates. Unallocated and ~~Solvents. For further descriptions of each reportable segment, see “Results of Operations – Reportable Segment Review” beginning on page 45.~~

Other includes corporate governance activities and certain legacy matters. The contribution to sales by each reportable segment expressed as a percentage of total consolidated sales for the three and nine months ended ~~December 31 were~~June 30 was as follows:

~~Ashland’s~~ current quarter

Ashland recorded net ~~loss was $4~~income of $50 million (income of $42 million in continuing operations and income of $8 million in discontinued operations) and net income of $36 million (income of $51 million in continuing operations and loss of $15 million in discontinued operations) in the current and prior year quarters, respectively. Ashland’s EBITDA of $130 million decreased by $27 million for the current quarter while Ashland’s Adjusted EBITDA of $133 million decreased by $41 million for the current quarter, compared to the prior year quarter (see U.S. GAAP reconciliation below under consolidated review). The decrease was primarily driven by lower sales volumes from customer de-stocking and higher costs primarily associated with inventory control actions, partially offset by improved pricing and favorable selling, general and administrative expense primarily driven by lower incentive compensation expense.

Uncertainty relating to the Ukraine and Russia conflict

Business disruptions, including those related to the ongoing conflict between Ukraine and Russia continue to impact businesses around the globe. While it is impossible to predict the effects of the conflict such as possible escalating geopolitical tensions (including the imposition of existing and additional sanctions by the U.S and the European Union on Russia), worsening macroeconomic and general business conditions, supply chain interruptions and unfavorable energy markets, the impact could be material. Ashland is closely monitoring the situation and maintains business continuity plans that are intended to continue operations or mitigate the effects of events that could disrupt its business.

Ashland does not have manufacturing operations in 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 wellbeing 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 Ukraine, Russia, and Belarus represent less than 1% of total consolidated sales and less than 1% of total consolidated assets (related to accounts receivable).

Uncertainty relating to the COVID-19 pandemic

Ashland continues to successfully navigate the uncertain environment associated with the COVID-19 pandemic. Through the third quarter of fiscal 2023, Ashland has not experienced any additional major operating surprises related to the COVID-19 pandemic, continues to maintain supply chains in a challenging environment, had strong safety performance in the face of unprecedented pressures and improved operating discipline across each of its businesses. Ashland's businesses continued to show resiliency in the face of difficult economic circumstances. The COVID-19 impact related to the China re-opening did negatively impact demand during the first and second quarters of fiscal 2023 for both the Specialty Additives and Personal Care business segments. Additionally, Specialty Additives was also impacted by extended unplanned plant shutdowns at its Nanjing, China, facility as a result of these same dynamics during the first half of this fiscal year. Ashland’s overall liquidity remains strong and Ashland is more than able to meet its operating cash needs and other investing and financing cash requirements at this time, including those necessary to grow the business as economic conditions improve.

Other items

2023 Stock Repurchase program

On June 28, 2023, Ashland's board of directors authorized a new evergreen $1 billion common share repurchase program (2023 stock repurchase program). The new authorization terminates and replaces the company's 2022 stock repurchase program, which had $200 million outstanding at the date of termination.

30

Stock Repurchase program agreements

During May 2023, under the 2022 stock repurchase program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $100 million of its outstanding shares. The program was completed during June 2023, when Ashland paid a total of $100 million and received a delivery of 1.1 million shares of common stock.

During March 2023, under the 2022 stock repurchase program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $100 million of its outstanding shares. The program was completed during April 2023, when Ashland paid a total of $100 million and received a delivery of 1.0 million shares of common stock.

During February 2023, under the existing 2022 stock repurchase program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $100 million of its outstanding shares. The program was completed in February 2023, when Ashland paid a total of $100 million and received a delivery of 1.0 million shares of common stock.

RESULTS OF OPERATIONS – CONSOLIDATED REVIEW

Consolidated review

Net income

Ashland’s net income is primarily affected by results within operating income, net interest and other expense (income), income taxes, discontinued operations and other significant events or transactions that are unusual or nonrecurring.

Current Quarter - Key financial results for the three months ended June 30, 2023 and 2022 included the following:

•

Ashland’s net income amounted to $50 million compared to $36 million for the three months ended June 30, 2023 and 2022, respectively, or income of ~~$10~~$0.94 and $0.65 diluted earnings per share, respectively.

•

Discontinued operations, which are reported net of taxes, resulted in income of $8 million and a loss of $15 million during the three months ended June 30, 2023 and 2022, respectively.

•

Income from continuing operations, which excludes results from discontinued operations, amounted to income of $42 million and $51 million for the three months ended June 30, 2023 and 2022, respectively.

•

The effective income tax rates were expense of 26% and 2% for the three months ended June 30, 2023 and 2022, respectively, and were significantly impacted by certain tax discrete items in both the current and prior year quarters.

•

Ashland incurred pretax net interest and other expense of $3 million and $59 million for the three months ended June 30, 2023 and 2022, respectively. This includes a gain of $6 million and a loss of $48 million on restricted investments, respectively, for the current and prior year quarters.

•

Other net periodic benefit loss resulted in losses of $2 million and $1 million during the three months ended June 30, 2023 and 2022, respectively.

•

Operating income was $62 million and $112 million for the three months ended June 30, 2023 and 2022, respectively.

Year-to-date - Key financial results for the nine months ended June 30, 2023 and 2022 included the following:

•

Ashland’s net income amounted to $182 million compared to $870 million for the nine months ended June 30, 2023 and 2022, respectively, or income of $3.35 and $15.28 diluted earnings per share, respectively.

•

Discontinued operations, which are reported net of taxes, resulted in income of $6 million and $749 million during the nine months ended June 30, 2023 and 2022, respectively. The prior year period includes a $732 million gain on the sale of the Performance Adhesives business segment.

•

Income from continuing operations, which excludes results from discontinued operations, amounted to income of $176 million and $121 million for the nine months ended June 30, 2023 and 2022, respectively.

31

•

The effective income tax rates were an expense of 11% and 17% for the nine months ended June 30, 2023 and 2022, respectively, and were significantly impacted by certain tax discrete items in both the current and prior year periods.

•

Ashland incurred pretax net interest and other income of $21 million and expense $108 million for the nine months ended June 30, 2023 and 2022, respectively. This includes a gain of $47 million and a loss of $72 million on restricted investments, respectively, for the current and prior year periods.

•

Other net periodic benefit loss resulted in a loss of $6 million during the nine months ended June 30, 2023, and zero for the prior year period. See Note K for more information.

•

Operating income was $182 million and $254 million for the nine months ended June 30, 2023 and 2022, respectively.

For further information on the items reported above, see the discussion in the comparative Statements of Consolidated Comprehensive Income (Loss) caption review analysis.

Operating income

Current Quarter - Operating income amounted to $62 million and $112 million for the three months ended June 30, 2023 and 2022, respectively. The current and prior year quarters’ operating income included certain key items that were excluded to arrive at Adjusted EBITDAand are quantified in the table below in the “EBITDA and Adjusted EBITDA” section. These operating key items for the applicable periods are summarized as follows:

•

Restructuring, separation and other costs – Ashland periodically implements cost reduction programs related to acquisitions, divestitures and other cost reduction programs in order to enhance profitability through streamlined operations and an improved overall cost structure. Ashland often incurs severance, facility and integration costs associated with these programs. See Note D in the Notes to Condensed Consolidated Financial Statements for further information on the restructuring activities.

•

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 the current and prior year quarters to its environmental liabilities and receivables primarily related to previously divested businesses or non-operational sites. See Note L of the Notes to Condensed Consolidated Financial Statements for more information.

•

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 L of the Notes to Condensed Consolidated Financial Statements for more information.

•

Gain on acquisitions and divestitures – Ashland recorded income of $35 million during the three months ended June 30, 2022, related to the sale of excess land during the three months ended June 30, 2022. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.

Operating income for the three months ended June 30, 2023 and 2022 included depreciation and amortization of $62 million and $61 million, respectively.

Year-to-date - Operating income amounted to $182 million and $254 million for the nine months ended June 30, 2023 and 2022, respectively. The current and prior year periods' operating income included certain key items that were excluded to arrive at Adjusted EBITDAand are quantified in the table below in the “EBITDA and Adjusted EBITDA” section. These operating key items for the applicable periods are summarized as follows:

•

Restructuring, separation and other costs – Ashland periodically implements cost reduction programs related to acquisitions, divestitures and other cost reduction programs in order to enhance profitability through streamlined operations and an improved overall cost structure. Ashland often incurs severance, facility and

32

integration costs associated with these programs. See Note D in the Notes to Condensed Consolidated Financial Statements for further information on the restructuring activities.

•

Asset impairments - During the nine months ended June 30, 2023, Ashland incurred an impairment charge associated with the sale of a Specialty Additives manufacturing facility. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.

•

Environmental reserve adjustments – Ashland is subject to various federal, state and local environmental laws and regulations that require environmental assessment or remediation efforts (collectively environmental remediation) at multiple locations. As a result of these activities, Ashland recorded adjustments during the current and prior year periods to its environmental liabilities and receivables primarily related to previously divested businesses or non-operational sites. See Note L of the Notes to Condensed Consolidated Financial Statements for more information.

•

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 L of the Notes to Condensed Consolidated Financial Statements for more information.

•

Gain on acquisitions and divestitures – Ashland recorded income of $42 million during the nine months ended June 30, 2022, related to the sale of excess land during the nine months ended June 30, 2022. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.

Operating income for the nine months ended June 30, 2023 and 2022 included depreciation and amortization of $181 million and $182 million, respectively.

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 three and nine months ended June 30, 2023 and 2022.


	Three months ended June 30							Nine months ended June 30
(In millions)	2023		2022		Change			2023		2022		Change
Sales	$	546	$	644	$	(98	)	$	1,674	$	1,759	$	(85	)

The following table provides a reconciliation of the change in sales for the three and nine months ended June 30, 2023 and 2022.


	Three months ended			Nine months ended
(In millions)	June 30, 2023			June 30, 2023
Volume	$	(134	)	$	(221	)
Pricing		33			170
Foreign currency exchange		3			(34	)
Change in sales	$	(98	)	$	(85	)

Current Quarter - Sales for the current quarter decreased $98 million compared to the prior year quarter. Lower sales volume primarily from customer de-stocking of $134 million was partially offset by favorable product pricing associated with cost inflation pricing actions and favorable foreign currency exchange, which increased sales by $33 million and $3 million, respectively.

Year-to-date - Sales for the current year decreased $85 million compared to the prior year period. Lower sales volume primarily from customer de-stocking of $221 million and unfavorable foreign currency exchange of $34 million were partially offset by favorable product pricing associated with cost inflation pricing actions which increased sales by $170 million.

33


	Three months ended June 30									Nine months ended June 30
(In millions)	2023			2022			Change			2023			2022			Change
Cost of sales	$	368		$	404		$	(36	)	$	1,134		$	1,139		$	(5	)
Gross profit as a percent of sales		32.6	%		37.3	%					32.3	%		35.2	%

The following table provides a reconciliation of the change in cost of sales between the three and nine months ended June 30, 2023 and 2022.


	Three months ended			Nine months ended
(In millions)	June 30, 2023			June 30, 2023
Changes in:
Volume	$	(86	)	$	(151	)
Price/mix		4			32
Foreign currency exchange		1			(15	)
Operating Costs		45			129
Change in cost of sales	$	(36	)	$	(5	)

Current Quarter - Cost of sales for the current quarter decreased $36 million compared to the prior year quarter. Lower volume primarily from customer de-stocking decreased cost of sales by $86 million. This decrease was partially offset by higher product pricing associated with cost inflation, unfavorable foreign currency exchange and higher operating costs primarily associated with inventory control actions, which increased cost of sales by $4 million, $1 million, and $45 million, respectively. Gross profit as a percentage of sales decreased 4.7% primarily as a result of lower sales volume and higher operating costs.

Year-to-date - Cost of sales for the current year decreased $5 million compared to the prior year period. Lower volume primarily from customer de-stocking and favorable foreign currency exchange decreased cost of sales by $151 million and $15 million, respectively. This decrease was partially offset by higher product pricing associated with cost inflation, and higher operating costs, which includes costs associated with inventory control actions and inflation associated with plant manufacturing and shipping costs (as well as planned and unplanned plant shutdowns and maintenance), increased cost of sales by $32 million and $129 million, respectively. Gross profit as a percentage of sales decreased 2.9% primarily as a result of lower sales volume and higher operating costs.


	Three months ended June 30									Nine months ended June 30
(In millions)	2023			2022			Change			2023			2022			Change
Selling, general and administrative expense	$	84		$	127		$	(43	)	$	256		$	299		$	(43	)
As a percent of sales		15.4	%		19.7	%					15.3	%		17.0	%

Current Quarter - Selling, general and administrative expense for the current quarter decreased $43 million compared to the prior year quarter with expenses as a percent of sales decreasing 4.3 percentage points. Key drivers of the fluctuation in selling, general and administrative expense compared to the prior year quarter were:

•

Expense of $3 million and $1 million during the three months ended June 30, 2023 and 2022, respectively, comprised of key items for severance, lease abandonment and other restructuring costs;

•

$12 million gain associated with ICMS Brazil tax credit (see Note L for more information);

•

$17 million and $36 million in net environmental-related expenses during the current and prior year quarter, respectively (see Note L for more information); and

•

Decreased incentive accruals primarily making up the remaining change.

Year-to-date - Selling, general and administrative expense for the current period decreased $43 million compared to the prior year period with expenses as a percent of sales decreasing 1.7 percentage points. Key drivers of the fluctuation in selling, general and administrative expense compared to the prior year period were:

•

Expense of $4 million and $3 million comprised of key items for severance, lease abandonment and other restructuring costs during the nine months ended June 30, 2023 and 2022, respectively;

•

$4 million impairment charge in the current year associated with the sale of a Specialty Additives manufacturing facility.

34

•

$12 million gain associated with ICMS Brazil tax credit;

•

$28 million and $48 million in net environmental-related expenses during the current and prior year period, respectively (see Note L for more information); and

•

Decreased incentive accruals primarily making up the remaining change.


	Three months ended June 30							Nine months ended June 30
(In millions)	2023		2022		Change			2023		2022		Change
Research and development expense	$	12	$	14	$	(2	)	$	37	$	40	$	(3	)

Current Quarter - Research and development expense decreased primarily due to lower incentive accruals.

Year-to-date - Research and development expense decreased primarily due to lower incentive accruals.


	Three months ended June 30						Nine months ended June 30
(In millions)	2023		2022		Change		2023		2022		Change
Intangibles amortization expense	$	24	$	23	$	1	$	70	$	71	$	(1	)

Current Quarter - Intangibles amortization expense is primarily consistent with the prior year quarter.

Year-to-date - Intangibles amortization expense is primarily consistent with the prior year quarter.


	Three months ended June 30						Nine months ended June 30
(In millions)	2023		2022		Change		2023		2022		Change
Equity and other income
Other income	$	4	$	1	$	3	$	5	$	2	$	3
	$	4	$	1	$	3	$	5	$	2	$	3

Current Quarter - Other income increased $3 million primarily related to China financial cash subsidies.

Year-to-date - Other income increased $3 million primarily related to China financial cash subsidies.


	Three months ended June 30							Nine months ended June 30
(In millions)	2023			2022	Change			2023			2022	Change
Income on acquisitions and divestitures, net	$	—	$	35	$	(35	)	$	—	$	42	$	(42	)

Current Quarter - The activity in the prior year ~~quarter. Ashland’s Adjusted EBITDA increased by 25%~~quarter was related to ~~$136 million (see U.S. GAAP reconciliation~~a gain on ~~page 41).~~the sale of excess land.

Year-to-date - The ~~increase in Adjusted EBITDA was primarily due to growth~~activity in the ~~Intermediates~~prior year was related to a gain on the sale of excess land. See Note B of the Notes to Condensed Consolidated Financial Statements for more information.


	Three months ended June 30								Nine months ended June 30
(In millions)	2023			2022		Change			2023			2022		Change
Net interest and other expense (income)
Interest expense	$	14		$	14	$	—		$	41		$	47	$	(6	)
Interest income		(2	)		—		(2	)		(9	)		—		(9	)
Loss (income) from restricted investments		(10	)		45		(55	)		(57	)		59		(116	)
Other financing costs		1			—		1			4			2		2
	$	3		$	59	$	(56	)	$	(21	)	$	108	$	(129	)

Current Quarter - Net interest and ~~Solvents and Specialty Ingredients reportable segments, which reported increases to Adjusted EBITDA of $16~~other expense decreased by $56 million ~~and $10 million, respectively. The significant improvement in the performance of Intermediates and Solvents was primarily driven by improved product pricing and reduced costs in~~during the current quarter compared to the prior year quarter. ~~Excluding~~Interest expense is primarily consistent during the ~~acquisition~~current quarter compared to the prior year quarter. Interest income increased $2 million due to higher investment yields and higher cash balances. Restricted investments income of ~~Pharmachem,~~$10 million and losses of $45 million included realized gains of $6 million compared to losses $48 million for the ~~increase~~three months ended June 30, 2023 and 2022, respectively. See Note E for more information on the restricted investments.

Year-to-date - Net interest and other expense decreased by $129 million during the current period compared to the prior year period. Interest expense decreased $6 million primarily due to lower debt levels during the current year compared to the prior year period. Interest income increased $9 million due to higher investment yields and higher cash balances. Restricted investments income of $57 million and losses of $59 million included realized gains of

35

$47 million compared to losses of $72 million for the nine months ended June 30, 2023 and 2022, respectively. See Note E for more information on the restricted investments.


	Three months ended June 30						Nine months ended June 30
(In millions)	2023		2022		Change		2023		2022		Change
Other net periodic benefit loss (income)	$	2	$	1	$	1	$	6	$	—	$	6

Current Quarter - Other net periodic benefit loss for the three months ended June 30, 2023 primarily included interest cost of $4 million which was partially offset by expected return on plan assets of $2 million. See Note K for more information.

Year-to-date - Other net periodic benefit loss for the nine months ended June 30, 2023 primarily included interest cost of $11 million which was partially offset by expected return on plan assets of $5 million. Other net periodic benefit income included a $1 million actuarial gain on the remeasurement of a pension plan during the prior year period. See Note K for more information.


	Three months ended June 30								Nine months ended June 30
(In millions)	2023			2022			Change		2023			2022			Change
Income tax expense (benefit)	$	15		$	1		$	14	$	21		$	25		$	(4	)
Effective tax rate		26	%		2	%				11	%		17	%

Current Quarter - Ashland’s effective tax rate in ~~profitability~~any interim period is subject to adjustments related to discrete items and the mix of domestic and foreign operating results. The overall effective tax rate was 26% for ~~Specialty Ingredients~~the three months ended June 30, 2023 and was impacted by jurisdictional income mix, as well as net favorable discrete items of $4 million primarily related to changes in uncertain tax positions and adjustments to valuation allowances.

The overall effective tax rate was 2% for the three months ended June 30, 2022 and was impacted by jurisdictional income mix, as well as a net $1 million benefit primarily from favorable return to provision adjustments for certain jurisdictions.

Year-to-date - Ashland’s effective tax rate in any interim period is subject to adjustments related to discrete items and the mix of domestic and foreign operating results. The overall effective tax rate was 11% for the nine months ended June 30, 2023 and was impacted by jurisdictional income mix, as well as net favorable discrete items of $27 million primarily related to changes in uncertain tax positions.

The overall effective tax rate was 17% for the nine months ended June 30, 2022 and was impacted by jurisdictional income mix, as well as net unfavorable discrete items of $3 million, primarily related to restructuring and separation activity partially offset by a favorable valuation allowance for certain foreign tax credits and adjustments to uncertain tax positions.

Adjusted income tax expense (benefit)

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

36

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 rate during the three and nine months ended June 30, 2023 and 2022 was significantly impacted by the following tax specific key items:

•

Uncertain tax positions - 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; and

•

Restructuring and separation activity - Includes the impact from company-wide cost reduction programs during 2022.

The following table is a calculation of the effective tax rate, excluding these key items.


	Three months ended						Nine months ended
	June 30						June 30
(In millions)	2023				2022		2023				2022
Income from continuing operations before income taxes	$	57		$	52		$	197		$	146
Key items (pre-tax) (a)		5			50			(19	)		79
Adjusted income from continuing operations
before income taxes	$	62		$	102		$	178		$	225

Income tax expense	$	15		$	1		$	21		$	25
Income tax rate adjustments:
Tax effect of key items		(3	)		16			(8	)		22
Tax specific key items: (b)
Uncertain tax positions		3			—			23			—
Valuation allowance		1			—			1			4
Restructuring and separation activity		—			—			—			(10	)
Total income tax rate adjustments		1			16			16			16
Adjusted income tax expense	$	16		$	17		$	37		$	41

Effective tax rate, excluding key items (Non-GAAP) (c)		26	%		16	%		21	%		18	%

(a)

See Adjusted EBITDA reconciliation table disclosed in this MD&A for a summary of the key items, before tax.

(b)

For additional information on the effect that these tax specific key items had on EPS, see the Adjusted Diluted EPS table disclosed in this MD&A.

(c)

Due to rounding conventions, the effective tax rate presented may not recalculate precisely based on the numbers disclosed within this table.


	Three months ended June 30									Nine months ended June 30
(In millions)	2023			2022			Change			2023			2022			Change
Income (loss) from discontinued operations (net of tax)
Performance Adhesives	$	(1	)	$	4		$	(5	)	$	(1	)	$	38		$	(39	)
Composites/Marl facility		—			—			—			(1	)		—			(1	)
Valvoline		15			—			15			15			—			15
Asbestos		(4	)		(13	)		9			(4	)		(13	)		9
Water Technologies		—			(1	)		1			—			(1	)		1
Distribution		(2	)		(5	)		3			(3	)		(7	)		4
Gain on disposal of discontinued operations (net of tax)
Performance Adhesives		—			—			—			—			732			(732	)
	$	8		$	(15	)	$	23		$	6		$	749		$	(743	)

Current Quarter - The activity for Composites/Marl facility, Water Technologies and Distribution during the current and prior year quarter was related to post-closing adjustments. The Valvoline activity for the three months ended June 30, 2023 primarily represents cash proceeds related to subsequent adjustments that were made in conjunction

37

with post-closing disputes and Tax Matters Agreement. Asbestos activity in each quarter primarily relates to Ashland's annual update.

Year-to-date - The activity for Composites/Marl facility, Water Technologies and Distribution during the current and prior year periods was related to post-closing adjustments. The Performance Adhesives segment sales and pre-tax operating income included in discontinued operations were $171 million and $34 million for the prior year period. A $732 million gain on disposal was recorded in the prior year period associated with the February 28, 2022 closing of the Performance Adhesives business segment divestiture. The Valvoline activity for the nine months ended June 30, 2023 primarily represents cash proceeds related to subsequent adjustments that were made in conjunction with post-closing disputes and Tax Matters Agreement. Asbestos activity in each period primarily relates to Ashland's annual update.

Other comprehensive income (loss)

A comparative analysis of the components of other comprehensive income is provided below for the three and nine months ended June 30, 2023 and 2022.


	Three months ended June 30								Nine months ended June 30
(In millions)	2023			2022			Change		2023			2022			Change
Other comprehensive income (loss) (net of taxes)
Unrealized translation gain (loss)	$	(4	)	$	(86	)	$	82	$	105		$	(107	)	$	212
Unrealized gain (loss) on commodity hedges		1			(3	)		4		(6	)		(2	)		(4	)
	$	(3	)	$	(89	)	$	86	$	99		$	(109	)	$	208

Current Quarter - Total other comprehensive income (loss), net of tax, for the current quarter increased $86 million compared to the prior year quarter ~~was~~ primarily ~~driven by improvements~~as a result of the following:

•

For the three months ended June 30, 2023 and 2022, the change in ~~volume and mix and favorable~~unrealized gain (loss) from foreign currency ~~exchange.~~translation adjustments resulted in losses of $4 million and $86 million, respectively. The fluctuations in unrealized translation gains and losses are primarily due to translating foreign subsidiary financial statements from local currencies to U.S. Dollars.

~~Tax law changes~~

•

~~The Tax Cuts~~For the three months ended June 30, 2023 and ~~Jobs Act (Tax Act) was enacted on December 22, 2017. The Tax Act reduces~~2022, the ~~U.S. federal corporate tax rate from 35%~~change in commodity hedges is primarily due to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes on certain foreign sourced earnings. At December 31, 2017, Ashland has not completed the ~~internal accounting assessment for the tax effects of enactment~~fluctuations of the ~~Tax Act; however, Ashland determined a reasonable estimate~~market prices of the ~~effects on our existing deferred tax balances~~underlying commodities. Commodity hedges resulted in unrealized gains of $1 million and ~~the one-time transition tax. Ashland recognized a provisional amount~~losses of $3 million for the three months ended ~~December 31, 2017, which is included~~June 30, 2023 and 2022, respectively.

operating expenses, providing a perspective not immediately apparent from net income and operating income. The adjustments Ashland makes to derive the non-GAAP measures of EBITDA and Adjusted EBITDA exclude items which may cause short-term fluctuations in net income and operating income 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 business units and provide continuity to investors for comparability purposes.

The Adjusted diluted EPS metric enables Ashland to demonstrate what effect key items have on an earnings per diluted share basis by taking income (loss) from continuing operations, adjusted for key items after tax that have been identified in the Adjusted EBITDA table, and dividing by the average outstanding diluted shares for the applicable period. Ashland’s management believes this presentation is helpful to illustrate how the key items have impacted this metric during the applicable period.

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.

The free cash flow ~~metric enables~~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, ~~has~~ongoing free cash flow and ongoing 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 producing cash from regular business activities. Free cash flow, ongoing free cash flow and ongoing free cash flow conversion have certain limitations, including that ~~it does~~they do not reflect ~~adjustment~~adjustments for certain non-discretionary cash flows such as mandatory debt repayments. The amount of mandatory versus discretionary expenditures can vary significantly between periods.

39

Although Ashland ~~provides~~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 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 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 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 ~~2017~~2022 Credit Agreement are based on similar non-GAAP measures and are defined further in the sections that reference this metric.

~~In accordance with U.S. GAAP, Ashland recognizes actuarial gains~~

EBITDA and ~~losses for defined benefit pension and other postretirement benefit plans annually in the fourth quarter~~Adjusted EBITDA

EBITDA totaled income 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 on page 41 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 M of the Notes to Consolidated Financial Statements within the 2017 Form 10-K.

Ashland’s net income is primarily affected by results within operating income, net interest and other financing expense, income taxes, discontinued operations and other significant events or transactions that are unusual or nonrecurring.

~~Key financial results for the three months ended December 31, 2017 and 2016 included the following:~~

~~For further information on the items reported above, see the discussion in the comparative Statements of Consolidated Comprehensive Income caption review analysis.~~

Operating income amounted to $39 million and $15 million for the three months ended December 31, 2017 and 2016, respectively. The current and prior year quarters' operating income included certain key items that were excluded to arrive at Adjusted EBITDA. These key items are summarized as follows:

Operating income for the three months ended December 31, 2017 and 2016 included depreciation and amortization of $73 million and $68 million, respectively (which excluded accelerated depreciation of $6 million for the three months ended December 31, 2017).

~~EBITDA totaled $114 million and $159 million for the three months ended December 31, 2017 and 2016,~~2022, respectively. EBITDA and Adjusted EBITDA results in the table below have been prepared to illustrate the ongoing effects of Ashland’s operations, which exclude certain key items previously described. Management believes the use of such non-GAAP measures on a consolidated and reportable segment basis assists investors in understanding the ~~impact of Ashland's previous noncontrolling interest in Valvoline Inc.~~

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 and/or operating income which Ashland believes do not accurately reflect Ashland’s underlying business performance and trends. The Adjusted diluted EPS for the income ~~(loss)~~ from continuing operations in the following table has been prepared to illustrate the ongoing effects of Ashland’s ~~operations since management~~operations. Management believes ~~the~~investors and analysts use ofthis financial measure in assessing Ashland's business performance and that presenting this non-GAAP ~~measures~~measure on a consolidated ~~and reportable segment~~ basis assists investors in better understanding Ashland’s ongoing business performance and enhances their ability to compare period-to-period financial results.


	Three months ended						Nine months ended
	June 30						June 30
	2023			2022			2023				2022
Diluted EPS from continuing operations (as reported)	$	0.79		$	0.93		$	3.24		$	2.12
Key items, before tax:
Restructuring, separation and other costs		0.09			0.02			0.09			0.06
Environmental reserve adjustments		0.36			0.65			0.58			0.81
Asset impairments		—			—			0.07			—
ICMS Brazil tax credit		(0.23	)		—			(0.22	)
Unrealized (gain) loss on securities		(0.12	)		0.87			(0.87	)		1.26
Income on acquisitions and divestitures, net		—			(0.63	)		—			(0.73	)
Key items, before tax		0.10			0.91			(0.35	)		1.40
Tax effect of key items (a)		0.06			(0.29	)		0.15			(0.39	)
Key items, after tax		0.16			0.62			(0.20	)		1.01
Tax specific key items:
Restructuring and separation activity		—			—			—			0.18
Valuation allowance		(0.02	)		—			(0.02	)		(0.07	)
Uncertain tax positions		(0.06	)		—			(0.42	)		—
Tax specific key items (b)		(0.08	)		—			(0.44	)		0.11
Total key items		0.08			0.62			(0.64	)		1.12
Adjusted diluted EPS from continuing operations (non-GAAP)	$	0.87		$	1.55		$	2.60		$	3.24
Amortization expense adjustment (net of tax) (c)	$	0.36		$	0.34		$	1.03		$	1.00
Adjusted diluted EPS from continuing operations (non-GAAP) excluding intangibles amortization expense	$	1.23		$	1.89		$	3.63		$	4.24

(a)

Represents the ~~ongoing operating performance by presenting~~diluted EPS impact from the ~~financial results between periods on a more comparable basis.~~

tax effect of the key items that are identified above.

Three months ended
December 31
2017
2016
Diluted EPS from continuing operations (as reported) $ (0.12 ) $ (1.05 )
Key items 0.54
1.19
Adjusted diluted EPS from continuing operations (non-GAAP) $ 0.42
$ 0.14

(b)

~~Statements~~Represents the diluted EPS impact from tax specific financial transactions, tax law changes or other matters that fall within the definition of ~~Consolidated Comprehensive Income – caption review~~

~~A comparative analysis~~key items. For additional explanation of these tax specific key items, see the income tax expense discussion within the Statements of Consolidated Comprehensive Income by(Loss) caption ~~is provided as follows~~review section above.

(c)

Amortization expense adjustment (net of tax) tax rates were 20% for the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016.~~

2022.

Three months ended December 31
(In millions) 2017
2016
Change

Sales $ 842
$ 704
$ 138

~~The following table provides a reconciliation of the change in sales between the three months ended December 31, 2017 and 2016.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Three months ended
(In millions) December 31, 2017
Acquisitions and divestitures $ 63
Pricing 30
Currency exchange 20
Volume 18
Product mix 7
Change in sales $ 138

Sales for the current quarter increased $138 million compared to the prior year quarter. The acquisition of Pharmachem within the Specialty Ingredients reportable segment increased sales by $58 million, or 8%, while the net impact of other acquisitions and divestitures increased sales by $5 million. Improvements in pricing increased sales by $30 million, or 4%, while favorable foreign currency exchange increased sales by $20 million, or 3%. Higher volumes and changes in product mix increased sales by $18 million and $7 million, respectively.

Three months ended December 31
(In millions) 2017
2016
Change
Cost of sales $ 613
$ 515
$ 98
Gross profit as a percent of sales 27.2 % 26.8 %

Fluctuations in cost of sales are driven primarily by raw material prices, volume and changes in product mix, currency exchange, acquisitions and divestitures and other certain charges incurred as a result of changes or events within the businesses or restructuring activities. The following table provides a quantified reconciliation of the changes in cost of sales between the three months ended December 31, 2017 and 2016.

Three months ended
(In millions) December 31, 2017
Changes in:
Acquisitions and divestitures $ 50
Production costs 20
Currency exchange 15
Volume 8
Product mix 4
Severance and other restructuring costs 1
Change in cost of sales $ 98

Cost of sales for the current quarter increased $98 million compared to the prior year quarter. The Pharmachem acquisition increased cost of sales by $44 million, or 9%, while the net impact of other acquisitions and divestitures increased cost of sales by $6 million. Unfavorable production costs and foreign currency exchange increased cost of sales by $20 million, or 4%, and $15 million, or 3%, respectively. Higher volumes and changes in product mix increased cost of sales by $8 million and $4 million, respectively, while the current quarter also included $1 million of severance and other restructuring charges related to a plant closure.

Three months ended December 31
(In millions) 2017
2016
Change
Selling, general and administrative expense $ 171
$ 157
$ 14
As a percent of sales 20.3 % 22.3 %

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Selling, general and administrative expense for the current quarter increased $14 million compared to the prior year quarter with expenses as a percent of sales decreasing 2.0 percentage points. Key drivers of the fluctuation in selling, general and administrative expense compared to the prior year quarter were:

~~$10 million of incremental costs related to Pharmachem’s operations and $1 million of Pharmachem integration costs during the current quarter;~~

~~$14 million and $6 million in net environmental-related expenses during the current and prior year quarters, respectively;~~

~~an increase of $7 million due to higher employee-related costs in the current quarter;~~

~~an increase of $5 million due to unfavorable foreign currency exchange in the current quarter;~~

~~$4 million of accelerated depreciation related to the planned closure of an office building during the current quarter;~~

~~$6 million of costs related to the separation of Valvoline during the current quarter compared to $22 million in the prior year quarter; and~~

~~a $5 million charge for a legal reserve during the prior year quarter.~~

Three months ended December 31
(In millions) 2017
2016
Change
Research and development expense $ 21
$ 20
$ 1

~~Research and development expense remained relatively consistent with the prior year quarter.~~

Three months ended December 31
(In millions) 2017
2016
Change
Equity and other income

Equity income (a)
$ —
$ —
$ —
Other income 2
3
(1 )
$ 2
$ 3
$ (1 )


~~(a)~~	~~Activity of $0 denotes value less than $1 million.~~

~~Equity and other income remained relatively consistent with the prior year quarter.~~

Three months ended December 31
(In millions) 2017
2016
Change
Net interest and other financing expense (income)
Interest expense $ 34
$ 126
$ (92 )
Interest income (1 ) (1 ) —
Available-for-sale securities income (3 ) (3 ) —
Other financing costs 1
—
1
$ 31
$ 122
$ (91 )

Net interest and other financing expense decreased $91 million during the current quarter compared to the prior year quarter. The current quarter decrease in interest expense was primarily due to the prior year quarter including $92 million of accelerated accretion related to the December 2016 tender offer of the 2029 notes. Available-for-sale securities income of $3 million during both the current and the prior year quarters represents investment income and realized gains related to restricted investments discussed in Note E of the Notes to Condensed Consolidated Financial Statements.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Three months ended December 31
(In millions) 2017
2016
Change
Other net periodic benefit income $ —
$ 2
$ (2 )

~~The income in the prior year quarter primarily related to a $2 million gain on the remeasurement of certain post-employment health and life insurance benefit plans that were discontinued.~~

Three months ended December 31
(In millions) 2017
2016
Change
Net loss on divestitures $ 1
$ 1
$ —

~~The activity in the current and prior year quarters primarily related to post-closing adjustments for certain divestitures.~~

Three months ended December 31
(In millions) 2017
2016
Change
Income tax expense (benefit) $ 14
$ (41 ) $ 55
Effective tax rate 200 % 39 %

The overall effective tax expense rate was 200% for the three months ended December 31, 2017 and was primarily impacted by the current quarter income mix and net unfavorable tax discrete adjustments of $16 million related to the enactment of the Tax Act. These net unfavorable adjustments primarily included deferred tax rate changes and a one-time transition tax assessed on foreign cash and unremitted earnings.

~~The overall effective tax benefit rate was 39% for the three months ended December 31, 2016 and was primarily impacted by income mix.~~

Three months ended December 31
(In millions) 2017
2016
Change
Income from discontinued operations (net of tax)
Valvoline $ 3
$ 75
$ (72 )

As a result of the full separation of Valvoline Inc. on May 12, 2017, the operating results related to Valvoline Inc., including the operating results of the former Valvoline reportable segment, have been reflected as discontinued operations (net of tax) within the Statement of Consolidated Comprehensive Income (Loss). The activity within the current quarter represents subsequent adjustments that were made in conjunction with the Tax Matters Agreement. See Note B for more information on the Tax Matters Agreement. During the prior year quarter, Valvoline's sales and pre-tax operating income included in discontinued operations were $489 million and $120 million, respectively.

Three months ended December 31
(In millions) 2017
2016
Change
Net income attributable to noncontrolling interest $ —
$ 11
$ (11 )

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Since Ashland's ownership interest in Valvoline Inc. was approximately 83% until the final separation on May 12, 2017, the amount of net income attributable to the outside stockholders' approximately 17% noncontrolling interest in Valvoline Inc. is presented within this caption on the Statement of Consolidated Comprehensive Income (Loss) for the three months ended December 31, 2016.

~~Other comprehensive income (loss)~~

~~A comparative analysis of the components of other comprehensive income (loss) is provided below for the three months ended December 31, 2017 and 2016.~~

Three months ended December 31
(In millions) 2017
2016
Change
Other comprehensive income (loss) (net of taxes)
Unrealized translation gain (loss) $ 3
$ (146 ) $ 149
Net change in available-for-sale securities 8
—
8
Pension and postretirement obligation adjustment —
(1 ) 1
$ 11
$ (147 ) $ 158

~~Total other comprehensive income, net of tax, for the current quarter increased $158 million compared to the prior year quarter as a result of the following components:~~

For the three months ended December 31, 2017, the change in unrealized gain (loss) from foreign currency translation adjustments was a gain of $3 million compared to a loss of $146 million for the three months ended December 31, 2016. The fluctuations in unrealized translation gains and losses are primarily due to translating foreign subsidiary financial statements from local currencies to U.S. Dollars.

~~Gains on available-for-sale securities related to restricted investments amounted to $8 million, net of tax, during the three months ended December 31, 2017.~~

Pension and postretirement obligation adjustment was $1 million for the three months ended December 31, 2016. This amount related to amortization of unrecognized prior services credits for pension and other postretirement benefit plans and was reclassified into net income during the prior year quarter.

RESULTS OF OPERATIONS – REPORTABLE SEGMENT REVIEW

~~Subsequent to completing the separation from Valvoline Inc. on May 12, 2017, Ashland's operations are managed within the following three~~

Ashland’s reportable ~~segments:~~segments include Life Sciences, Personal Care, Specialty ~~Ingredients, Composites~~Additives, and ~~Intermediates~~Intermediates. Unallocated and ~~Solvents.~~

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 ~~comparable~~ 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 ~~adjustments~~activities that relate to former businesses that Ashland no longer operates. The service cost component of pension and other postretirement benefits costs is allocated to each reportable segment on a ratable basis; while the remaining components of pension and other postretirement benefits costs are recorded within the other net periodic benefit ~~income~~loss caption on the Statements of Consolidated Comprehensive Income (Loss). Ashland refines its expense allocation methodologies to the reportable segments from time to time as internal accounting practices are improved, more refined information becomes available and the industry or market changes. Significant revisions to Ashland’s methodologies are adjusted for all segments on a retrospective basis.

41

The following table discloses sales, operating income, depreciation and amortization and EBITDA by reportable segment for the three and nine months ended June 30, 2023 and 2022.


	Three months ended						Nine months ended
	June 30						June 30
(In millions - unaudited)	2023			2022			2023			2022
SALES
Life Sciences	$	219		$	228		$	666		$	602
Personal Care		146			172			452			490
Specialty Additives		152			194			456			532
Intermediates		43			73			148			192
Intersegment sales (a)		(14	)		(23	)		(48	)		(57	)
	$	546		$	644		$	1,674		$	1,759
OPERATING INCOME (LOSS)
Life Sciences	$	49		$	51		$	141		$	115
Personal Care		14			25			38			67
Specialty Additives		5			35			22			79
Intermediates		13			30			50			72
Unallocated and other		(19	)		(29	)		(69	)		(79	)
	$	62		$	112		$	182		$	254
DEPRECIATION EXPENSE
Life Sciences	$	11		$	9		$	31		$	25
Personal Care		9			10			28			28
Specialty Additives		15			16			43			48
Intermediates		3			2			9			9
Unallocated and other		—			—			—			1
	$	38		$	37		$	111		$	111
AMORTIZATION EXPENSE
Life Sciences	$	7		$	7		$	20		$	21
Personal Care		12			11			35			35
Specialty Additives		5			5			14			14
Intermediates		—			1			1			1
	$	24		$	24		$	70		$	71
EBITDA (b)
Life Sciences	$	67		$	67		$	192		$	161
Personal Care		35			46			101			130
Specialty Additives		25			56			79			141
Intermediates		16			33			60			82
Unallocated and other		(19	)		(64	)		(69	)		(120	)
	$	124		$	138		$	363		$	394

(a)

Intersegment sales from Intermediates are accounted for at prices that approximate fair value. All other intersegment transfers are accounted for at cost.

(b)

Excludes income (loss) from discontinued operations, other net periodic benefit loss. See the Statement of Consolidated Comprehensive Income (Loss) for applicable amounts excluded.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

42

Life Sciences

Life Sciences is comprised of pharmaceuticals, nutrition, nutraceuticals, agricultural chemicals, advanced materials and fine chemicals. Pharmaceutical solutions include controlled release polymers, disintegrants, film coatings, solubilizers, and tablet binders. Nutrition solutions include thickeners, stabilizers, emulsifiers and additives for enhancing mouthfeel, controlling moisture migration, reducing oil uptake and controlling color. Nutraceutical solutions include products for weight management, joint comfort, stomach and intestinal health, sports nutrition and general wellness, and providing custom formulation, toll processing and particle engineering solutions. Customers include pharmaceutical, food, beverage, nutraceuticals and supplements manufacturers, hospitals and radiologists and industrial manufacturers.

June 2023 quarter compared to June 2022 quarter

Life Sciences’ sales decreased $9 million to $219 million in the current quarter. Lower volume decreased sales by $32 million while favorable product pricing and foreign currency exchange increased sales by $22 million and $1 million, respectively.

Operating income decreased $2 million to income of $49 million for the current quarter. Lower volume and higher costs (including restructuring and environmental costs incurred during the current quarter) decreased operating income by $9 million and $16 million, respectively. These decreases were partially offset by favorable price/mix and foreign currency exchange which increased operating income by $22 million and $1 million, respectively. Current quarter EBITDA remained consistent at $67 million while Adjusted EBITDA increased $5 million to $72 million. Adjusted EBITDA margin increased 3.5 percentage points in the current quarter to 32.9%.

Fiscal 2023 year-to-date compared to fiscal 2022 year-to-date

Life Sciences’ sales increased $64 million to $666 million in the current period. Favorable pricing increased sales by $82 million while lower volume and unfavorable foreign currency exchange decreased sales by $5 million and $13 million, respectively. Life Sciences experienced strong global demand for pharmaceutical ingredients throughout the current period.

Operating income increased $26 million to income of $141 million for the current period. Favorable price/mix and higher volume increased operating income by $81 million and $5 million, respectively, while unfavorable foreign currency exchange and higher costs (including restructuring and environmental costs incurred during the current year) decreased operating income by $9 million and $51 million, respectively. Current period EBITDA increased $31 million to $192 million while Adjusted EBITDA increased $37 million to $198 million. Adjusted EBITDA margin increased 3.0 percentage points in the current period to 29.7%.

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 measures is defined as follows: EBITDA (operating income ~~(loss)~~ plus depreciation and amortization), Adjusted EBITDA (EBITDA adjusted for key items, which may include pro forma effects for significant acquisitions or divestitures, as applicable), and Adjusted EBITDA margin (Adjusted EBITDA, which may include pro forma adjustments, divided by sales or sales adjusted for pro forma results). Ashland does not allocate items to each reportable segment below operating income, such as interest expense and income taxes. As a result, reportable segment EBITDA and Adjusted EBITDA are reconciled directly to operating income since it is the most directly comparable ~~caption to the~~ Statements of Consolidated Comprehensive ~~Income.~~

Income (Loss) caption.

43

The following ~~table discloses sales, operating income, depreciation and amortization and statistical operating information by reportable segment~~EBITDA presentation for the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016.~~

Three months ended
December 31
(In millions) 2017
2016
Sales
Specialty Ingredients $ 550
$ 482
Composites 218
165
Intermediates and Solvents 74
57
$ 842
$ 704
Operating income (loss)

Specialty Ingredients $ 42
$ 40
Composites 18
15
Intermediates and Solvents 8
(7 )
Unallocated and other (29 ) (33 )
$ 39
$ 15
Depreciation and amortization

Specialty Ingredients $ 62
$ 55
Composites 5
6
Intermediates and Solvents 8
7
Unallocated and other 4
—
$ 79
$ 68
Operating information

Specialty Ingredients

Sales per shipping day $ 9.0
$ 7.9
Metric tons sold (thousands) 73.0
72.6
Gross profit as a percent of sales (a)
31.5 % 32.0 %
Composites

Sales per shipping day $ 3.6
$ 2.7
Metric tons sold (thousands) 91.2
78.4
Gross profit as a percent of sales (a)
18.4 % 21.1 %
Intermediates and Solvents

Sales per shipping day $ 1.2
$ 0.9
Metric tons sold (thousands) 32.7
32.2
Gross profit as a percent of sales (a)
21.3 % (0.9 )%


~~(a)~~	~~Gross profit is defined as sales, less cost of sales divided by sales.~~

~~Sales by region expressed~~2022 is provided as a ~~percentage~~means to enhance the understanding of ~~reportable segment sales~~financial measurements that Ashland has internally determined to be relevant measures of comparison for the results of Life Sciences. The key items during the three and nine months ended June 30, 2023 related to charges of $3 million and $4 million for restructuring programs, and $2 million each, for environmental reserve adjustments for the three and nine months ended ~~December 31, 2017~~June 30, 2023.


	Life Sciences
	Three months ended June 30				Nine months ended June 30
(In millions)	2023		2022		2023		2022
Operating income	$	49	$	51	$	141	$	115
Depreciation and amortization		18		16		51		46
EBITDA	$	67	$	67		192		161
Restructuring and other costs		3		—		4		—
Environmental reserve adjustments		2		—		2		—
Adjusted EBITDA	$	72	$	67	$	198	$	161

Personal Care

Personal Care is comprised of biofunctionals, microbial protectants (preservatives), skin care, sun care, oral care, hair care and ~~2016 were as follows. Ashland includes only U.S.~~household solutions. These businesses have a broad range of natural, nature-derived, biodegradable, and ~~Canada in its North American designation.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Three months ended December 31, 2017

Sales by Geography
Specialty Ingredients Composites Intermediates and Solvents
North America 41 % 45 % 21 %
Europe 30 % 34 % 59 %
Asia Pacific 19 % 14 % 17 %
Latin America & other 10 % 7 % 3 %
100 % 100 % 100 %

Three months ended December 31, 2016

Sales by Geography
Specialty Ingredients Composites Intermediates and Solvents
North America 39 % 48 % 23 %
Europe 29 % 28 % 57 %
Asia Pacific 22 % 16 % 17 %
Latin America & other 10 % 8 % 3 %
100 % 100 % 100 %

~~Specialty Ingredients~~

~~Specialty Ingredients is a global leader in cellulose ethers, vinyl pyrrolidones~~high-performance ingredients for customer driven solutions to help protect, renew, moisturize and ~~biofunctionals. It offers industry-leading products, technologies~~revitalize skin and ~~resources for solving formulation~~hair, and product-performance challenges. Specialty Ingredients uses natural, synthetic and semisynthetic polymers derived from cellulose ethers, vinyl pyrrolidones, acrylic polymers, polyester and polyurethane-based adhesives, and plant and seed extract. Specialty Ingredients’ end markets offer comprehensive and innovativeprovide solutions for ~~today’s demanding~~toothpastes, mouth washes and rinses, denture cleaning and care for teeth. Household 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 industrial applications. Key customers include: pharmaceutical companies; makers of personal care products, food and beverages; makers of nutraceuticals and supplements; manufacturers of paint, coatings and construction materials; packaging and converting; and oilfield servicesmaller, independent boutique companies.

On May 17, 2017, Ashland completed its acquisition of the stock of Pharmachem, a leading provider of quality ingredients to the global health and wellness industries and high-value differentiated products to fragrance and flavor houses. With annual revenues of approximately $300 million and 14 manufacturing facilities in the United States and Mexico, New Jersey-based Pharmachem develops, manufactures and supplies custom and branded nutritional and fragrance products. See Note C within the Notes to Condensed Consolidated Financial Statements for more information.

~~Additionally, Ashland completed the transfer of its ownership interest in a consolidated joint venture during the third quarter of fiscal 2017.~~

~~December 2017~~

June 2023 quarter compared to ~~December 2016~~June 2022 quarter

~~Specialty Ingredients’~~

Personal Care's sales ~~increased $68~~decreased $26 million to ~~$550~~$146 million in the current quarter. ~~The acquisition of Pharmachem increased~~Lower volume decreased sales by ~~$58~~$40 million ~~or 12%. Favorable~~while favorable product pricing and foreign currency exchange increased sales by $13 million and $1 million, respectively.

Operating income decreased $11 million to income of $14 million for the current quarter. Lower volume and higher operating costs decreased operating income by $15 million and $10 million, ~~while~~respectively. These decreases were partially offset by favorable price/mix and foreign currency exchange which increased operating income by $13 million and $1 million, respectively. Current quarter EBITDA decreased $11 million to $35 million. EBITDA margin decreased 2.7 percentage points in the current quarter to 24.0%.

Fiscal 2023 year-to-date compared to fiscal 2022 year-to-date

Personal Care's sales decreased $38 million to $452 million in the current year period. Lower volume and ~~mix combined to increase~~unfavorable foreign currency exchange decreased sales by $72 million and $9 ~~million. In addition, improved~~million, respectively, while favorable product pricing increased sales by $2$43 million. ~~These increases were partially offset by a decrease~~

Operating income decreased $29 million to income of ~~$11~~$38 million ~~from divestitures which was primarily related to the transfer of ownership interest in a consolidated joint venture.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

~~Gross profit during~~for the current ~~quarter increased $19 million compared to the prior~~ year ~~quarter. The acquisition of Pharmachem increased gross profit by $14 million while improved~~period. Lower volume, and mix combined to increase gross profit by $9 million. Favorable foreign currency exchange increased gross profit by $4 million. These increases were partially offset by the net impact of pricing and costs which decreased gross profit by $6 million and the joint venture divestiture which decreased gross profit by $2 million. In total, gross profit margin during the current quarter decreased 0.5 percentage points as compared to the prior year quarter to 31.5%.

Selling, general and administrative expenses (which include research and development expenses throughout the reportable segment discussion and analysis) increased $15 million in the current quarter as compared to the prior year quarter largely due to incremental costs of $10 million related to Pharmachem’s operations. The remaining increase in selling, general and administrative expenses was primarily due to higher ~~employee-related~~operating costs and unfavorable foreign currency ~~exchange. Equity~~exchange decreased operating income by $27 million, $35 million and ~~other~~$3 million, respectively. These decreases were partially offset by favorable price/mix which increased operating income by $36 million. Current year EBITDA decreased $29 million to $101 million. EBITDA margin decreased 4.2 percentage points in the current period to 22.3%.

44

EBITDA and Adjusted EBITDA reconciliation

The following EBITDA presentation for the three and nine months ended June 30, 2023 and 2022 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. Personal Care had no key items for the three and nine months ended June 30, 2023 or 2022.


	Personal Care
	Three months ended June 30				Nine months ended June 30
(In millions)	2023		2022		2023		2022
Operating income	$	14	$	25	$	38	$	67
Depreciation and amortization		21		21		63		63
EBITDA	$	35	$	46		101		130

Specialty Additives

Specialty Additives is comprised of rheology- and performance-enhancing additives serving the coatings, construction, energy, automotive and various industrial markets. Solutions include coatings additives for architectural paints, finishes and lacquers, cement- and gypsum- based dry mortars, ready-mixed joint compounds, synthetic plasters for commercial and residential construction, and specialty materials for industrial applications. Products include rheology modifiers (cellulosic and associative thickeners), foam-control agents, surfactants and wetting agents, pH neutralizers, advanced ceramics used in catalytic converters, and environmental filters, ingredients that aid the manufacturing process of ceramic capacitors, plasma display panels and solar cells, ingredients for textile printing, thermoplastic metals and alloys for welding. Products help improve desired functional outcomes through rheology modification and control, water retention, workability, adhesive strength, binding power, film formation, deposition and suspension and emulsification. Customers include global paint manufacturers, electronics and automotive manufacturers, textile mills, the construction industry, and welders.

June 2023 quarter compared to June 2022 quarter

Specialty Additives’ sales decreased $42 million to $152 million in the current quarter. Lower volume decreased sales by $47 million which was partially offset by favorable product pricing which increased sales by $5 million.

Operating income decreased $2$30 million ~~compared~~ to ~~the prior year quarter.~~

~~Operating~~ income ~~totaled $42~~of $5 million for the current ~~quarter compared to $40~~quarter. Lower volume and higher operating costs (including increased environmental costs) decreased operating income by $15 million ~~in the prior year quarter.~~and $16 million, respectively. These decreases were partially offset by favorable pricing/mix which increased operating income by $1 million. Current quarter EBITDA ~~increased $7~~decreased $31 million to ~~$102~~$25 million while Adjusted EBITDA ~~increased $10~~decreased $28 million to ~~$105~~$29 million. Adjusted EBITDA margin decreased ~~0.6~~10.3 percentage points in the current quarter to 19.1%.

Fiscal 2023 year-to-date compared to fiscal 2022 year-to-date

Specialty Additives’ sales decreased $76 million to $456 million in the current year period. Lower volume and unfavorable foreign currency exchange decreased sales by $108 million and $11 million, respectively. Those decreases were partially offset by favorable product pricing which increased sales by $43 million. Specialty Additives sales were negatively impacted by the COVID-19 impact related to the China re-opening (particularly in the first and second quarter of the current period) and the general economic slowdown in Europe in the current period.

Operating income decreased $57 million to income of $22 million for the current year period. Lower volume, higher operating costs (including increased environmental costs), asset impairments, and unfavorable foreign currency exchange decreased operating income by $31 million, $43 million, $4 million, and $1 million, respectively. Operating costs were negatively impacted by COVID-19 dynamics in China which resulted in additional extended unplanned plant shutdowns, that were in addition to planned plant maintenance shutdowns. These decreases were partially offset by favorable pricing/mix which increased operating income by $22 million. Current year EBITDA decreased $62 million to $79 million while Adjusted EBITDA decreased $55 million to $87 million. Adjusted EBITDA margin decreased 7.6 percentage points in the current period to 19.1%.

45

EBITDA and Adjusted EBITDA reconciliation

The following EBITDA presentation for the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016 below~~2022 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 ~~Ingredients. Adjusted EBITDA results have been prepared to illustrate the ongoing effects of Ashland's operations, which exclude certain key items.~~Additives. The key items ~~within~~during the ~~current quarter relate~~nine months ended June 30, 2023 related to $2an impairment charge of $4 million ~~of accelerated depreciation for the termination of a contract at~~associated with a manufacturing facility, and $1environmental reserve adjustments of $4 million, ~~of severance and other restructuring charges for the closure of a manufacturing plant. There were no unusual or key items that affected comparability for EBITDA during the prior year quarter.~~

Three months ended
December 31
(In millions) 2017
2016
Operating income $ 42
$ 40
Depreciation and amortization (a)
60
55
EBITDA 102
95
Accelerated depreciation 2
—
Severance and other restructuring costs 1
—
Adjusted EBITDA $ 105
$ 95


~~(a)~~	~~Excludes $2 million of accelerated depreciation for the three months ended December 31, 2017.~~

~~Composites~~

Composites is a global leader in unsaturated polyester resins, vinyl ester resins and gelcoats. The Composites business manufactures and sells a broad range of general-purpose and high-performance grades of unsaturated polyester and vinyl ester resins, gelcoats and low-profile additives for the reinforced plastics industry. The products in the Composites business provide an array of functional properties including corrosion resistance, fire retardance, ultraviolet resistance, water and chemical resistance, high mechanical strength, impact and scratch resistance and high strength-to-weight ratios. Key end markets include transportation, construction, marine and infrastructure. In addition, the business manufactures and sells molten maleic anhydride for the manufacture of a variety of products such as unsaturated polyester resins, copolymers, lubricating oil additives,

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

~~alkenyl succinic anhydrides, malic acid, fumaric acid and numerous derivative chemicals. Key markets include composites, personal care, dispersants and paper sizing.~~

~~December 2017 quarter compared to December 2016 quarter~~

~~Composites’ sales increased~~$53 million to $218 million in the current quarter. Improved product pricing increased sales by $19 million, or 12%. The acquisition of an unsaturated polyester resins manufacturing facility in the third of quarter of fiscal 2017 increased sales by $16 million, or 10%. Improved volume and mix increased sales by $12 million, or 7%, as metric tons sold increased to 91.2 thousand in the current quarter, while favorable foreign currency exchange increased sales by $6 million, or 4%.

Gross profit increased $5 million in the current quarter compared to the prior year quarter. Changes in volume and mix combined to increase gross profit by $3 million, while the facility acquisition and favorable foreign currency exchange each increased gross profit by $1 million. The net effects of pricing and raw material increases did not impact gross profit in the current quarter. In total, gross profit margin decreased 2.7 percentage points as compared to the prior year quarter to 18.4%.

Selling, general and administrative expenses during the current quarter increased $3 million compared to the prior year quarter primarily due to higher employee-related costs and unfavorable foreign currency exchange. Equity and other income increased $1 million compared to the prior year quarter.

Operating income totaled $18 million in the current quarter compared to $15 million in the prior year quarter. EBITDA increased $2 million to $23 million in the current quarter, while EBITDA margin decreased 2.1 percentage points in the current quarter to 10.6%.

~~EBITDA and Adjusted EBITDA reconciliation~~

~~The following EBITDA presentation~~ for the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~ ~~below is provided as a means to enhance the understanding of financial measurements that Ashland has internally determined to be relevant measures of comparison~~$1 million, each for the ~~results~~three and nine months ended June 30, 2022.


	Specialty Additives
	Three months ended June 30				Nine months ended June 30
(In millions)	2023		2022		2023		2022
Operating income	$	5	$	35	$	22	$	79
Depreciation and amortization		20		21		57		62
EBITDA		25		56		79		141
Environmental reserve adjustments		4		1		4		1
Impairments		—		—		4		—
Adjusted EBITDA	$	29	$	57	$	87	$	142

Intermediates

Intermediates is comprised of ~~Composites. There were no unusual or key items that affected comparability for EBITDA during~~ the ~~current and prior year quarters.~~

Three months ended
December 31
(In millions) 2017
2016
Operating income $ 18
$ 15
Depreciation and amortization 5
6
EBITDA $ 23
$ 21

~~Intermediates and Solvents~~

~~Intermediates and Solvents is a leading producer~~production of 1,4 butanediol (BDO) and related derivatives, including ~~tetrahydrofuran and~~ 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, pharmaceuticals, water filtration membranes and more. Butanediol is also ~~supplied~~provided to ~~Ashland’s~~Life Sciences, Personal Care, and Specialty ~~Ingredients business~~Additives for use as a raw material.

~~December 2017~~

June 2023 quarter compared to ~~December 2016~~June 2022 quarter

~~Intermediates and Solvents’~~

Intermediates’ sales ~~increased $17~~decreased $30 million to ~~$74~~$43 million in the current quarter. ~~Higher~~Unfavorable product pricing ~~increased~~and lower volume decreased sales by $17 million and $13 million, respectively.

Operating income decreased $17 million to $13 million for the current quarter. Unfavorable price/mix, lower volume and higher production costs decreased operating income by $7 million, $9 million, ~~while higher volumes~~ and ~~favorable foreign currency exchange each increased sales by $4~~$1 million, respectively. Current quarter EBITDA decreased $17 million to $16 million.

~~Gross profit increased $16 million during the current quarter compared to the prior year quarter. Lower facility turn around costs~~ EBITDA margin decreased 8.0 percentage points in the current quarter ~~resulted in an $8 million increase in gross profit as a result of a significant~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

~~planned plant shutdown that occurred in the prior year quarter. The net impact of pricing and costs increased gross profit by $7 million primarily due~~ to ~~improvements in product pricing. Higher volumes contributed to a $1 million increase in gross profit. In total, gross profit margin increased 22.2 percentage points as~~37.2%.

Fiscal 2023 year-to-date compared to ~~the prior year quarter~~fiscal 2022 year-to-date

Intermediates’ sales decreased $44 million to ~~21.3%.~~

~~Selling, general and administrative expenses increased by $1 million compared to the prior year quarter.~~

~~Operating income totaled $8~~$148 million in the current ~~quarter as compared to a loss of~~period. Unfavorable product pricing, lower volume and unfavorable foreign currency exchange decreased sales by $7 million, in$36 million and $1 million, respectively.

Operating income decreased $22 million to $50 million for the ~~prior~~current period. Unfavorable price/mix, lower volume, higher production costs and unfavorable foreign currency exchange decreased operating income by $2 million, $16 million, $3 million and $1 million, respectively. Current year ~~quarter.~~ EBITDA ~~and~~decreased $22 million to $60 million. EBITDA margin decreased 2.2 percentage points in the current ~~quarter increased~~period to ~~$16 million and 21.6%, respectively.~~

40.5%.

EBITDA and Adjusted EBITDA reconciliation

The following EBITDA presentation (as defined and described in the section above) for the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016~~2022 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 ~~and Solvents. There were~~had no ~~unusual or~~ key items ~~that affected comparability~~ for ~~EBITDA during~~ the ~~current~~three and ~~prior year quarters.~~

Three months ended
December 31
(In millions) 2017
2016
Operating income (loss) $ 8
$ (7 )
Depreciation and amortization 8
7
EBITDA $ 16
$ —

nine months ended June 30, 2023 or 2022.


	Intermediates
	Three months ended June 30				Nine months ended June 30
(In millions)	2023		2022		2023		2022
Operating income	$	13	$	30	$	50	$	72
Depreciation and amortization		3		3		10		10
EBITDA	$	16	$	33	$	60	$	82

46

Unallocated and other

The following table summarizes the key components of the Unallocated and other ~~segment's~~segment’s operating ~~loss~~income (loss) for the three and nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016.~~

Three months ended
December 31
(In millions) 2017
2016
Restructuring activities (includes separation, severance, integration
and stranded divestiture costs) $ 14
$ 24
Environmental expense for divested businesses 13
4
Legal reserve —
5
Other expense 2
—
Total expense $ 29
$ 33

~~December 2017~~2022.


	Unallocated and Other
	Three months ended June 30						Nine months ended June 30
(In millions)	2023			2022			2023			2022
Restructuring activities	$	(3	)	$	(2	)	$	(5	)	$	(11	)
Environmental expenses		(12	)		(34	)		(24	)		(45	)
ICMS Brazil tax credit		12			—			12			—
Income on acquisitions and divestitures, net		—			35			—			42
Other expenses (primarily governance and legacy expenses)		(16	)		(28	)		(52	)		(65	)
Total expense	$	(19	)	$	(29	)	$	(69	)	$	(79	)

June 2023 quarter compared to ~~December 2016~~June 2022 quarter

Unallocated and other recorded expense of ~~$29~~$19 million and ~~$33~~$29 million for the three months ended ~~December 31, 2017~~June 30, 2023 and ~~2016,~~2022, respectively. The ~~unallocated items for the~~ current and prior year ~~quarters~~quarter included charges for restructuring activities of $14 million and $24 million, respectively. Restructuring activities included $6 million and $22 million of costs related to the separation of Valvoline and stranded divestiture costsexpense of $3 million and $2 million, respectively, for restructuring activities mainly comprised of severance, lease abandonment and other restructuring costs related to company-wide cost reduction programs during the current and prior year ~~quarters,~~quarter, respectively, which included stranded costs of $1 million for prior year quarter associated with the Performance Adhesives divestiture.

The current quarter and prior year quarter included $12 million and $34 million for environmental expenses, respectively. The prior year quarter also included income of $35 million from acquisitions and divestitures. See income on acquisitions and divestitures caption review above for additional details.

The current quarter also included $4income of $12 million ICMS tax credits in Brazil (see Note L for more information).

Other expenses between periods were driven by decreases in governance and legacy expenses primarily associated with fluctuations in foreign currency, deferred compensation and incentive compensation.

Fiscal 2023 year-to-date compared to fiscal 2022 year-to-date

Unallocated and other recorded expense of ~~accelerated depreciation~~$69 million and $79 million for the nine months ended June 30, 2023 and 2022, respectively. The current and prior year period included expense of $5 million and $11 million, respectively, for restructuring activities mainly comprised of severance, lease abandonment and other restructuring costs related to ~~the planned closure of an office building and $1 million of integration charges related to the acquisition of Pharmachem.~~

~~The remaining unallocated items~~company-wide cost reduction programs during the current ~~quarter primarily~~and prior year period, respectively, which included ~~$13~~stranded costs of $8 million for ~~environmental-related expenses while the remaining items during~~ the prior year ~~quarter primarily~~associated with the Performance Adhesives divestiture.

The current period and prior year period included $5$24 million ~~of expense for a legal reserve~~ and $4$45 million for environmental ~~reserve adjustments.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

expenses, respectively. The prior year period also included income of $42 million from acquisitions and divestitures. See income on acquisitions and divestitures caption review above for additional details.

The current period also included income of $12 million ICMS tax credits in Brazil (see Note L for more information).

Other expenses between periods were driven by decreases in governance and legacy expenses primarily associated with fluctuations in foreign currency, deferred compensation and incentive compensation.

FINANCIAL POSITION

Liquidity

Ashland ~~had $601 million in~~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 ~~equivalents~~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

47

warrant and opportunities arise. The timing and size of ~~December 31, 2017, of which $581 million was held by foreign subsidiaries and had no significant limitations~~any new business ventures or acquisitions that ~~would prohibit remitting~~ the funds to satisfy corporate obligations. In certain circumstances, if such amounts were repatriated to the United States, additional 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. However, due to the recent Tax Act, Ashland will be reassessing this position in future quarters.

Company may complete may also impact its cash requirements.

Cash flows

Ashland’s cash flows from operating, investing and financing activities, as reflected in the Statements of Condensed Consolidated Cash Flows, are summarized as follows for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2023 and ~~2016.~~

Three months ended
December 31
(In millions) 2017
2016
Cash provided (used) by:
Operating activities from continuing operations $ (24 ) $ (60 )
Investing activities from continuing operations (24 ) (31 )
Financing activities from continuing operations 99
(434 )
Discontinued operations (16 ) 50
Effect of currency exchange rate changes on cash and cash equivalents —
(9 )
Net increase (decrease) in cash and cash equivalents $ 35
$ (484 )

~~Operating activities~~

~~The following discloses the~~2022.


	Nine months ended
	June 30
(In millions)	2023			2022
Cash provided (used) by:
Operating activities from continuing operations	$	163		$	14
Investing activities from continuing operations		(57	)		(60	)
Financing activities from continuing operations		(366	)		(876	)
Discontinued operations		(43	)		1,348
Effect of currency exchange rate changes on cash and cash equivalents		6			(7	)
Net increase (decrease) in cash and cash equivalents	$	(297	)	$	419

Cash and cash ~~flows associated with Ashland’s operating activities~~equivalents decreased $297 million for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2023 compared to a $419 million increase for the nine months ended June 30, 2022.

The $297 million decrease for the nine months ended June 30, 2023 was primarily driven by payment of cash dividends, additions to property, plant and ~~2016.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Three months ended
December 31
(In millions) 2017
2016
Cash flows provided (used) by operating activities from continuing operations
Net income (loss) $ (4 ) $ 10
Income from discontinued operations (net of tax) (3 ) (75 )
Adjustments to reconcile income from continuing operations to

cash flows from operating activities

Depreciation and amortization 79
68
Original issue discount and debt issuance cost amortization 2
94
Deferred income taxes 8
2
Stock based compensation expense 7
5
Gain on early retirement of debt —
(3 )
Realized gain and investment income on available-for-sale securities (3 ) (3 )
Net loss on divestitures 1
1
Pension contributions (2 ) (1 )
Gain on post-employment plan remeasurement —
(2 )
Change in operating assets and liabilities (a)
(109 ) (156 )
Total cash flows used by operating activities from continuing operations $ (24 ) $ (60 )

~~(a)Excludes changes resulting from operations acquired or sold.~~

~~Cash~~equipment, and stock repurchase activity of $56 million, $101 million, and $300 million, respectively. Operating cash flows ~~used from operating activities~~ from continuing operations ~~a major source of Ashland’s liquidity, amounted to cash~~were inflows of ~~$24~~$163 million.

The $419 million ~~and $60 million in~~increase for the ~~current and prior year quarters, respectively.~~

~~Operating Activities - Operating Assets and Liabilities~~

~~The cash results during each quarter are~~nine months ended June 30, 2022 was primarily driven by the proceeds of the sale of the Performance Adhesives business segment of approximately $1.7 billion, net ~~income (loss), excluding~~of transaction costs within discontinued operation results, adjusted for certain non-cash items including depreciation and amortization (including original issue discount and debt issuance cost amortization), as well as changes in working capital, which are fluctuations within accounts receivable, inventory, trade payables and accrued expenses. Ashland continues to emphasize working capital management as a high priority and focus.

~~Changes in net working capital accounted for outflows of $96 million and $71 million for the three months ended December 31, 2017 and 2016, respectively, and were driven by the following:~~

Accounts receivable - There were cash inflows of $15 million and $9 million during the current and prior year quarters, respectively, which were primarily due to collections in excess of sales during the first quarter of each fiscal year.

Inventory - The current quarter had a cash outflow of $39 million compared to a cash inflow of $15 million during the prior year quarter, which were primarily due to sales volumes and inventory management strategies.

Trade and other payables - There were cash outflows of $72 million and $95 million during the current and prior year quarters, respectively, which were primarily driven by seasonal fluctuations in trade payables and incentive compensation payouts from the prior year paid during the first quarter of each fiscal year. Additionally, the prior year quarter included the payment of certain Valvoline separation costs that were incurred in the preceding fiscal year.

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

The remaining outflows within changes in operating assets and liabilities of $13 million and $85 million in the current and prior year quarters, respectively, relate primarily to adjustments to certain accruals and long term assets and liabilities as well as income taxes received and paid.

~~Operating Activities - Summary~~

~~Operating~~operations cash flows, ~~for the current quarter included a loss~~and $14 million of operating cash flows from continuing operations offset by short-term debt repayments of $7$365 million, ~~noncash adjustments~~long-term debt repayments of ~~$79~~$250 million, ~~for depreciation and amortization and $2~~$247 million ~~for debt issuance cost amortization.~~

~~Operating~~of cash tax payment within discontinued operations cash flows for the prior year quarter included a loss from continuing operations of $65 million and noncash adjustments of $68 million for depreciation and amortization and $94 million for original issue discount and debt issuance cost amortization, including $92 million of accelerated accretion related to the ~~tender offer~~sale of Performance Adhesives, and $200 million of stock repurchase activity.

See the ~~2029 notes.~~

~~Investing activities~~

~~The following discloses the cash flows associated with Ashland’s investing activities~~Statements of Condensed Consolidated Cash Flows for ~~the three months ended December 31, 2017 and 2016.~~

Three months ended
December 31
(In millions) 2017
2016
Cash flows provided (used) by investing activities from continuing operations
Additions to property, plant and equipment $ (24 ) $ (33 )
Proceeds from disposal of property, plant and equipment 1
—
Proceeds from sale of operations 1
—
Net purchase of funds restricted for specific transactions (5 ) (2 )
Reimbursements from restricted investments 5
—
Proceeds from sales of available-for-sale securities 5
—
Purchases of available-for-sale securities (5 ) —
Proceeds from the settlement of derivative instruments —
4
Payments for the settlement of derivative instruments (2 ) —
Total cash flows used by investing activities from continuing operations $ (24 ) $ (31 )

Cash used by investing activities was $24 million and $31 million for the current and prior year quarters, respectively. The significant cash investing activities for the current quarter primarily related to cash outflows of $24 million for property additions compared to $33 million in the prior year quarter.

~~Financing activities~~

~~The following discloses the cash flows associated with Ashland’s financing activities for the three months ended December 31, 2017 and 2016.~~

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

Three months ended
December 31
(In millions) 2017
2016
Cash flows provided (used) by financing activities from continuing operations
Repayment of long-term debt $ (2 ) $ (239 )
Premium on long-term debt repayment —
(5 )
Proceeds (repayment) from short-term debt 120
(154 )
Debt issuance costs —
(4 )
Cash dividends paid (14 ) (24 )
Stock based compensation employee withholding taxes paid in cash (5 ) (8 )
Total cash flows provided (used) by financing activities from continuing operations $ 99
$ (434 )

~~Cash flows generated by financing activities was $99 million for the current quarter as compared to cash used of $434 million for the prior year quarter.~~

Significant cash financing activities for the current quarter included short-term debt net cash inflows of $120 million related to debt outstanding on the 2017 Revolving Credit Facility and the accounts receivable securitization. The current quarter included cash dividends paid of $0.225 per share, for a total of $14 million.

Significant cash financing activities for the prior year quarter included cash outflows of $239 million related to the repayments of a portion of the 2029 notes, 2022 notes and 2018 notes. Additionally, the prior year quarter included short-term debt net repayments of $154 million, which was primarily related to the $150 million full repayment of a term loan held by a foreign subsidiary. The prior year quarter included cash dividends paid of $0.39 per share, for a total of $24 million.

~~The following discloses the cash flows associated with Ashland’s discontinued operations for the three months ended December 31, 2017 and 2016.~~

Three months ended
December 31
(In millions) 2017
2016
Cash used by discontinued operations
Operating cash flows $ (16 ) $ 70
Investing cash flows —
(10 )
Financing cash flows —
(10 )
Total cash provided (used) by discontinued operations $ (16 ) $ 50

~~Cash flows for discontinued operations in the current quarter primarily related to previously divested businesses, including net payments of asbestos and environmental liabilities.~~

Cash flows for discontinued operations in the prior year quarter primarily relate to net cash inflows of $62 million related to the activity of Valvoline Inc. The remaining cash flows in the prior year quarter related to other previously divested businesses, including net payments of asbestos and environmental liabilities.

additional details.

Free cash flow and other liquidity resources

The following represents Ashland’s calculation of free cash flow and ongoing free cash flows for the disclosed ~~quarters.~~periods. Free cash flow does not reflect adjustments for certain non-discretionary cash flows such as mandatory debt repayments.

48


	Nine months ended
	June 30
(In millions)	2023				2022
Total cash flows provided by operating activities from continuing operations	$	163		$	14
less:
Additions to property, plant and equipment		(101	)		(67	)
Free cash flows		62			(53	)
Cash outflows from U.S. Accounts Receivable Sales Program (a)		14			42
Restructuring-related payments (b)		3			9
Environmental and related litigation payments (c)		34			36
Ongoing free cash flow	$	113		$	34

Net Income		182			870
Adjusted EBITDA (d)		386			443

Operating cash flow conversion (e)		90	%		2	%
Ongoing free cash flow conversion (f)		29	%		8	%

(a)

Represents activity associated with the U.S. Accounts Receivable Sales Program impacting each period presented.

(b)

Restructuring payments incurred during each period.

(c)

~~ASHLAND GLOBAL HOLDINGS INC. AND CONSOLIDATED SUBSIDIARIES~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS~~

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

(d)

See adjusted EBITDA reconciliation.

Three months ended
December 31
(In millions) 2017
2016
Cash flows provided by operating activities from continuing operations $ (24 ) $ (60 )
Adjustments:

Additions to property, plant and equipment (24 ) (33 )
Free cash flows (a)
$ (48 ) $ (93 )

(e)

Operating cash flow conversion is defined Cash flows provided by operating activities from continuing operations divided by Net income.


~~(a)~~	~~Includes $23 million and $29 million of restructuring payments for the three months ended December 31, 2017 and 2016, respectively.~~

~~At December 31, 2017, working~~(f)

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 ~~$967~~$1,094 million and $1,215 million as of June 30, 2023 and September 30, 2022, respectively. The $121 million decrease in working capital was driven by a reduction in cash and cash equivalents, primarily associated with repurchases of common stock, offset by higher trade working capital (accounts receivable and inventories minus trade and other payables and accrued expenses and other liabilities). The $79 million increase in ongoing free cash flows between periods was primarily a result of reduced trade working capital additions compared to ~~$941~~the prior year offset by $34 million ~~at September 30, 2017.~~in higher additions to property, plant and equipment. Liquid assets (cash, cash equivalents and accounts receivable) amounted to ~~119%~~161% and ~~122%~~190% of current liabilities ~~at December 31, 2017~~as as of June 30, 2023 and September 30, ~~2017,~~2022, respectively.

The following summary reflects Ashland’s cash, ~~and~~ unused borrowing capacity and liquidity as of ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017~~.

2022.


	June 30		September 30
(In millions)	2023		2022
Cash and investment securities
Cash and cash equivalents	$	349	$	646
Restricted investments (a)		392		374

Unused borrowing capacity and liquidity
Revolving credit facility		593		581
2018 accounts receivable securitization (foreign)		109		99
Accounts receivable sales program (U.S.)		—		—

(a)

Includes $265 million and $245 million related to the Asbestos trust and $127 million and $129 million related to the Environmental trust as of June 30, 2023 and September 30, 2022, respectively.

December 31
September 30
(In millions) 2017
2017
Cash and cash equivalents $ 601
$ 566

Unused borrowing capacity

2017 Revolving Credit Facility $ 467
$ 579
Accounts receivable securitization facility 31
35

49

The borrowing capacity remaining under the ~~2017~~2022 Credit Agreement was $593 million, which reflects the full $600 million Revolving Credit Facility ~~was $467 million due to an outstanding balance of $285 million, as well as~~less a reduction of ~~$48~~$7 million for letters of credit outstanding at ~~December 31, 2017.~~June 30, 2023. In total, Ashland’s available liquidity position, which includes cash, the revolving credit facility and ~~the~~foreign accounts receivable securitization facility, was ~~$1,099~~$1,051 million at ~~December 31, 2017,~~June 30, 2023, compared to ~~$1,180~~$1,326 million at September 30, ~~2017.~~

2022. Ashland had zero available liquidity under the U.S. Accounts Receivable Sales Program as of June 30, 2023. Ashland also maintained $392 million of restricted investments to pay for future asbestos claims and environmental remediation and related litigation.

Capital resources

Debt

The following summary reflects Ashland’s debt as of ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017~~.

2022.


	June 30		September 30
(In millions)	2023		2022
Short-term debt (includes current portion of long-term debt)	$	—	$	—
Long-term debt (less current portion and debt issuance cost discounts) (a)		1,328		1,270
Total debt	$	1,328	$	1,270

(a)

December 31
September 30
(In millions) 2017
2017
Short-term debt (includes current portion of long-term debt) $ 355
$ 235
Long-term debt (including current portion and debt issuance cost discounts) (a)
2,584
2,584
Total debt $ 2,939
$ 2,819

~~(a)~~Includes ~~$24 million and $25~~$14 million of debt issuance cost discounts as of ~~December 31, 2017~~June 30, 2023 and September 30, ~~2017,~~ 2022, respectively.

~~The current portion of long-term debt was $6 million at December 31, 2017.~~

Debt as a percent of capital employed was ~~46%~~30% and 28% at ~~December 31, 2017~~June 30, 2023 and ~~45%~~ at September 30, ~~2017.~~2022, respectively. At ~~December 31, 2017,~~June 30, 2023, Ashland’s total debt had an outstanding principal balance of ~~$3,015~~$1,376 million, discounts of ~~$52~~$34 million, and debt issuance costs of ~~$24~~$14 million. ~~The scheduled aggregate maturities of~~Ashland had no long-term debt ~~by year (including the current portion and excluding~~(excluding debt issuance costs) ~~are as follows: $5 million remaining in 2018, $11 million in 2019, $269 million in 2020, $56 million in 2021 and $1,279 million in 2022.~~

~~On May 17, 2017, in conjunction with~~maturing within the closing of the Pharmachem acquisition, Ashland entered into a secured credit agreement (the 2017 Credit Agreement) with a group of lenders. The 2017 Credit Agreement provided for (i) a $250 million three-year term loan A facility (the Three-Year TLA Facility), (ii) a $250 million five-year term loan A facility (the Five-Year TLA Facility and together with the Three-Year TLA Facility, the TLA Facilities) and (iii) a $680 million five-year revolving credit facility (including a $125 million letter of credit sublimit) (the 2017 Revolving Credit Facility). Proceeds of borrowings under the TLA Facilities were used solely to finance the acquisition of Pharmachem, while the proceeds of the 2017 Revolving Credit Facility were used to finance, in part, the acquisition of Pharmachem, to refinance the 2015 Senior Credit Agreement and for general corporate purposes. On May 19, 2017, Ashland entered into Amendment No. 1 to the 2017 Credit Agreement, which increased the aggregate commitments under the 2017 Revolving Credit Facility from $680 million to $800 million.

At Ashland’s option, loans issued under the 2017 Credit Agreement bear interest at either LIBOR or an alternate base rate, in each case plus the applicable interest rate margin. Loans bear interest at LIBOR plus 1.75% per annum, in the case of LIBOR borrowings, or at the alternate base rate plus 0.75%, in the alternative, through and including the date of delivery of a quarterly compliance certificate and thereafter the interest rate will fluctuate between LIBOR plus 1.375% per annum and LIBOR plus 2.500% per annum (or between the alternate base rate plus 0.375% per annum and the alternate base rate plus 1.500% per annum), based upon Ashland’s secured facilities ratings or the consolidated net leverage ratio (as defined in the 2017 Credit Agreement) (whichever yields a lower applicable interest rate margin) at such time. In addition, Ashland was required to pay fees of 0.25% per annum on the daily unused amount of the 2017 Revolving Credit Facility through and including the date of delivery of a compliance certificate, and thereafter the fee rate will fluctuate between 0.175% and 0.40% per annum, based upon Ashland’s secured facilities rating or the consolidated net leverage ratio (whichever yields a lower applicable rate). The TLA Facilities may be prepaid at any time without premium. The Three-Year TLA Facility will not amortize and will be due on May 17, 2020. The Five-Year TLA Facility will not amortize in each of the first, second and thirdnext 4 years and ~~will amortize at a rate of 20% per annum~~$4 million due in ~~each of the fourth and fifth years (payable in equal quarterly installments), with the outstanding balance of the Five-Year TLA Facility to be paid on May 17, 2022.~~

On June 14, 2017, Ashland entered into Amendment No. 2 to the 2017 Credit Agreement, which provided for a new $600 million seven-year senior secured term loan B facility (the 2017 TLB Facility). At Ashland’s option, loans issued under the 2017 TLB Facility bear interest at either (x) LIBOR plus 2.00% per annum or (y) an alternate base rate plus 1.00% per annum. The 2017 TLB Facility may be prepaid at any time. The 2017 TLB Facility amortizes at a rate of 1.00% per annum (payable in equal quarterly installments) with the outstanding balance to be paid on May 17, 2024.

Ashland's ~~most recent~~current credit agreement (the ~~2017~~2022 Credit Agreement) contains usual and customary representations, warranties and affirmative and negative covenants, including financial covenants for leverage and interest coverage ratios, limitations on liens, additional subsidiary indebtedness, restrictions on subsidiary distributions, investments, mergers, sale of assets and restricted payments and other customary limitations. As of ~~December 31, 2017,~~June 30, 2023, Ashland is in compliance with all debt agreement covenant restrictions under the ~~2017~~2022 Credit Agreement.

The maximum consolidated net leverage ratio permitted under the ~~2017~~2022 Credit Agreement is ~~4.5.~~4.0. The ~~2017~~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 ~~2017~~2022 Credit Agreement defines Covenant Adjusted EBITDA as net income plus consolidated interest charges, taxes, depreciation and amortization expense, fees and expenses related to capital market transactions and proposed or actual acquisitions and divestitures, restructuring and integration charges, noncash stock and equity compensation expense, and any other nonrecurring expenses or losses that do not represent a cash item in such period or any future period; less any noncash gains or other items increasing net income. The computation of Covenant Adjusted EBITDA differs from the calculation of EBITDA and Adjusted EBITDA, which have been reconciled ~~on page 41.~~above in the “consolidated review” section. In general, consolidated indebtedness includes debt plus all purchase money indebtedness, banker’s acceptances and bank guaranties, deferred purchase price of property or services, attributable indebtedness and guarantees.

At June 30, 2023, Ashland’s calculation of the consolidated net leverage ratio was 1.8.

The minimum required consolidated interest coverage ratio under the ~~2017~~2022 Credit Agreement is 3.0. The ~~2017~~2022 Credit Agreement defines the consolidated interest coverage ratio as the ratio of Covenant Adjusted EBITDA to consolidated interest charges for any measurement period.

At December 31, 2017, Ashland’s calculation of the consolidated net leverage ratio was 3.9, which is below the maximum consolidated ratio permitted under the 2017 Credit Agreement of 4.5. At December 31, 2017,June 30, 2023, Ashland’s calculation of the consolidated interest coverage ratio was ~~4.6, which exceeds the minimum required consolidated ratio of 3.0.~~

~~The average~~9.9.

50

Any change in Covenant Adjusted EBITDA of $100 million would have an approximate ~~0.7x~~0.3x effect on the consolidated net leverage ratio and a ~~0.8x~~1.8x effect on the consolidated interest coverage ratio. The ~~average~~ change in consolidated indebtedness of $100 million would affect the consolidated leverage ratio by approximately 0.2x.

During the March 31, 2023 quarter, Ashland projects that cash flow from operations and other available financial resources such as cash on hand and revolving credit should be sufficient to meet investing and financing requirements to enable Ashland to complyentered into a new, ten year raw materials contract with the ~~covenants~~option to terminate in year five. The purchase obligations under the contract are estimated to be roughly $12 million for fiscal 2023, and ~~other terms~~$209 million thereafter for a total of its financing obligations. These projections are based on various assumptions that include, but are not limited to: operational results, capital expenditures, working capital needs and tax payments and receipts.

~~In April 2015, Ashland's Board of Directors approved a $1 billion share repurchase authorization that was set to expire on December 31, 2017 (the 2015~~ (2023 stock repurchase program). ~~This~~The new authorization allows for Ashland’s common shares to be repurchased in open market transactions, privately negotiated transactions or pursuant to one or more accelerated stock repurchase programs or Rule 10b5-1 plans.

~~During 2017, Ashland's Board of Directors extended~~terminates and replaces the ~~2015~~company's 2022 stock repurchase program, ~~indefinitely. As~~which had $200 million outstanding at the date of ~~December 31, 2017, $500~~termination.

Stock repurchase program agreements

During May 2023, under the 2022 stock repurchase program, Ashland initiated a Rule 10b5-1 trading plan agreement to repurchase up to $100 million of ~~share repurchase authorization remains~~its outstanding shares. The program was completed during June 2023, when Ashland paid a total of $100 million and received a delivery of 1.1 million shares of common stock.

During March 2023, under the ~~2015~~2022 stock repurchase ~~program.~~

In

On May ~~2017, subsequent to the final distribution of Valvoline Inc.'s common stock, the~~11, 2023, Ashland's Board ~~of Directors of Ashland announced~~declared a quarterly cash dividend of ~~22.5 cents~~$0.385 per share ~~to eligible shareholders at record which~~on the company's common stock representing a 15 percent increase from the previous quarter. The dividend was paid ~~for quarterly dividends~~ in the ~~first~~third quarter of fiscal ~~2018 and the third and fourth quarters~~2023. Dividends of ~~fiscal 2017. This represented a reduction from the previous quarterly dividend of 39 cents~~$0.335 per share ~~which was~~were paid ~~for quarterly dividends~~ in the first and second quarters of fiscal ~~2017.~~

2023 and the third quarter of fiscal 2022 and $0.30 per share were paid in the first and second quarters of fiscal 2022.

Capitalexpenditures

Capital expenditures were ~~$24~~$101 million for the ~~three~~nine months ended ~~December 31, 2017 and averaged approximately $217~~June 30, 2023 compared to $67 million ~~during~~for the ~~last three fiscal years.~~

As a result of the Tax Act that was enacted during December 2017, Ashland has currently estimated and identified that the one-time transition tax related to the new law is estimated to be approximately $160 million payable over eight years, with the first payment of approximately $13 million due during the first quarter of fiscal year 2019. Ashland will continue to reassess this estimate in future periods.

In addition, during January 2018, Ashland repatriated approximately $300 million in cash that was used to repay existing debt. There were no other significant changes to the contractual obligations table as presented at Septembernine months ended June 30, ~~2017.~~

The preparation of Ashland’s Condensed Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, sales and expenses, and the disclosures of contingent assets and liabilities. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets (including goodwill and other intangible assets), income taxes, other liabilities and receivables associated with asbestos litigation and environmental remediation. These accounting policies are discussed in detail in “Management’s Discussion and Analysis – Critical Accounting Policies” in Ashland’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017~~.2022. 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

51

different assumptions or conditions. Management has reviewed the estimates affecting these items with the Audit Committee of Ashland’s Board of Directors. No material changes have been made to the valuation techniques during the ~~three~~nine months ended ~~December 31, 2017~~.

~~For the second quarter of fiscal 2018, Ashland expects Adjusted diluted EPS~~would expect sales to be in the range of ~~$0.80-$0.90 per diluted share. This estimate assumes an effective tax rate~~$2.2 billion and Adjusted EBITDA to be in the range of ~~18% based on~~$500 million for fiscal year 2023.

Ashland is unable to reconcile forward-looking adjusted EBITDA to forward-looking net income, the ~~new U.S. tax legislation.~~

Ashland’s market risk exposure at ~~December 31, 2017~~June 30, 2023 is generally consistent with the types of market risk exposures presented in Ashland’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2017~~.

Disclosure Controls and Procedures - As of the end of the period covered by this quarterly report, Ashland, under the supervision and with the participation of its management, including Ashland’s Chief Executive Officer and its Chief Financial Officer, evaluated the effectiveness of Ashland’s disclosure controls and procedures pursuant to Rule 13a-15(b) and 15d-15(b) promulgated under the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of ~~December 31, 2017.~~

June 30, 2023.

Changes in Internal Control over Financial Reporting - During the three months ended ~~December 31, 2017,~~June 30, 2023, there were no significant changes in ~~Ashland’s~~Ashland's internal control over financial reporting, or in other factors, that occurred during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, ~~Ashland’s~~Ashland's internal control over financial reporting.

During the June 2017 quarter, Ashland completed its purchase of Pharmachem. Although management believes appropriate internal controls and procedures have been maintained, Pharmachem’s controls and procedures for the recording, processing, and summarizing of financial information have not been fully evaluated by Ashland’s management as of December 31, 2017. As such, there is a risk that deficiencies may exist and not yet be identified that could constitute significant deficiencies or in the aggregate, a material weakness related to Pharmachem's businesses.


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $.01 per share	ASH	New York Stock Exchange



Large Accelerated Filerþ	☑			Accelerated Filero		☐
Non-Accelerated Filero	☐			Smaller Reporting Companyo		☐
		~~(Do not check if a smaller reporting company.)~~	Emerging Growth Companyo		☐


(In millions - unaudited)	June 30 2023		September 30 2022
ASSETS
Current assets
Cash and cash equivalents	$	349	$	646
Accounts receivable (a) - Note H		345		402
Inventories - Note F		712		629
Other assets		120		91
Total current assets		1,526		1,768
Noncurrent assets
Property, plant and equipment
Cost		3,191		3,050
Accumulated depreciation		1,837		1,712
Net property, plant and equipment		1,354		1,338
Goodwill - Note G		1,383		1,312
Intangibles - Note G		916		963
Operating lease assets, net - Note I		126		107
Restricted investments - Note E		321		313
Asbestos insurance receivable (b) - Note L		129		138
Deferred income taxes		20		20
Other assets		254		254
Total noncurrent assets		4,503		4,445
Total assets	$	6,029	$	6,213

LIABILITIES AND EQUITY
Current liabilities
Trade and other payables	$	210	$	265
Accrued expenses and other liabilities		201		269
Current operating lease obligations - Note I		21		19
Total current liabilities		432		553
Noncurrent liabilities
Long-term debt - Note H		1,328		1,270
Asbestos litigation reserve - Note L		437		472
Deferred income taxes		176		176
Employee benefit obligations - Note K		108		103
Operating lease obligations - Note I		109		94
Other liabilities		290		325
Total noncurrent liabilities		2,448		2,440
Commitments and contingencies - Note L
Stockholders’ equity - Note N		3,149		3,220

Total liabilities and stockholders' equity	$	6,029	$	6,213



	December 31		September 30
(In millions - unaudited)	2017		2017

ASSETS
Current assets
Cash and cash equivalents	$	601	$	566
Accounts receivable (a)	597		612
Inventories - Note F	674		634
Other assets	92		91
Total current assets	1,964		1,903
Noncurrent assets
Property, plant and equipment
Cost	3,795		3,762
Accumulated depreciation	1,850		1,792
Net property, plant and equipment	1,945		1,970
Goodwill - Note G	2,475		2,465
Intangibles - Note G	1,298		1,319
Restricted investments - Note E	315		302
Asbestos insurance receivable - Note K	205		209
Deferred and other income taxes	28		28
Other assets	425		422
Total noncurrent assets	6,691		6,715
Total assets	$	8,655	$	8,618

LIABILITIES AND EQUITY
Current liabilities
Short-term debt - Note H	$	355	$	235
Trade and other payables	382		409
Accrued expenses and other liabilities	266		324
Total current liabilities	1,003		968
Noncurrent liabilities
Long-term debt - Note H	2,584		2,584
Asbestos litigation reserve - Note K	676		694
Deferred and other income taxes	390		375
Employee benefit obligations - Note J	194		191
Other liabilities	409		400
Total noncurrent liabilities	4,253		4,244
Commitments and contingencies - Note K
Stockholders' equity	3,399		3,406

Total liabilities and stockholders' equity	$	8,655	$	8,618



(In millions - unaudited)	Common stock		Paid-in capital		Retained earnings			Accumulated other comprehensive income (loss)			(a)	Total
BALANCE AT SEPTEMBER 30, 2017	$	1	$	931	$	2,696		$	(222	)		$	3,406
Total comprehensive income (loss)
Net loss					(4		)					(4		)
Other comprehensive income								11				11
Regular dividends, $0.225 per common share					(14		)					(14		)
Common shares issued under stock incentive and other plans (b)			—									—
BALANCE AT DECEMBER 31, 2017	$	1	$	931	$	2,678		$	(211	)		$	3,399



	þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐	o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Three months ended
	December 31
(In millions except per share data - unaudited)	2017			2016
Sales	$	842		$	704
Cost of sales	613			515
Gross profit	229			189

Selling, general and administrative expense	171			157
Research and development expense	21			20
Equity and other income	2			3
Operating income	39			15

Net interest and other financing expense	31			122
Other net periodic benefit income	—			2
Net loss on divestitures	1			1
Income (loss) from continuing operations before income taxes	7			(106		)
Income tax expense (benefit) - Note I	14			(41		)
Loss from continuing operations	(7		)	(65		)
Income from discontinued operations (net of tax) - Note D	3			75
Net income (loss)	(4		)	10
Net income attributable to noncontrolling interest (a)	—			11
Net loss attributable to Ashland	$	(4	)	$	(1	)

PER SHARE DATA
Basic earnings per share - Note L
Loss from continuing operations	$	(0.12	)	$	(1.05	)
Income from discontinued operations attributable to Ashland	0.05			1.04
Net loss attributable to Ashland	$	(0.07	)	$	(0.01	)

Diluted earnings per share - Note L
Loss from continuing operations	$	(0.12	)	$	(1.05	)
Income from discontinued operations attributable to Ashland	0.05			1.04
Net loss attributable to Ashland	$	(0.07	)	$	(0.01	)

COMPREHENSIVE INCOME (LOSS)
Net income (loss)	$	(4	)	$	10
Other comprehensive income (loss), net of tax - Note M
Unrealized translation gain (loss)	3			(146		)
Net change in available-for-sale securities	8			—
Pension and postretirement obligation adjustment	—			(1		)
Other comprehensive income (loss)	11			(147		)
Comprehensive income (loss)	$	7		$	(137	)
Comprehensive income attributable to noncontrolling interest	—			10
Comprehensive income (loss) attributable to Ashland	$	7		$	(147	)


~~(a)~~	~~Accounts receivable includes an allowance for doubtful accounts of $9 million at~~ ~~December 31, 2017~~ ~~and~~ ~~September 30, 2017~~.


~~(b)~~	~~Common shares issued were 111,400 for the~~ ~~three~~ ~~months ended~~ ~~December 31, 2017~~.


~~(a)~~	~~Excludes changes resulting from operations acquired or sold.~~



	May 12
(In millions)	2017
ASSETS
Current assets
Cash	179
Accounts receivable, net	385
Inventories	153
Other current assets	24
Total current assets	741
Noncurrent assets
Net property, plant and equipment	357
Goodwill	329
Equity and other unconsolidated investments	31
Deferred income taxes	391
Other noncurrent assets	93
Total noncurrent assets	1,201
Total assets	$	1,942
LIABILITIES AND EQUITY
Current liabilities
Short-term debt	75
Current portion of long-term debt	16
Trade and other payables	353
Other current liabilities	34
Total current liabilities	478
Noncurrent liabilities
Long-term debt	662
Employee benefit obligations	826
Other long-term liabilities	163
Total noncurrent liabilities	1,651
Total liabilities	$	2,129
Net deficit	$	(187	)



	At
	May 17, 2017
Preliminary purchase price allocation (in millions)	As Adjusted
Assets:
Accounts receivable	52
Inventory	74
Other current assets	4
Intangible assets	330
Goodwill	287
Property, plant and equipment	97
Other noncurrent assets	20
Liabilities:
Accounts payable	(32		)
Deferred tax - net	(138		)
Other noncurrent liabilities	(14		)
Total purchase price	$	680



			Weighted-average
			amortization period
Intangible asset type (in millions)	Value		(years)
Trademarks and trade names	$	26	15
Intellectual property	68		22
Customer and supplier relationships	236		20
Total	$	330



	Three months ended
(In millions)	December 31, 2016
Income from discontinued operations
attributable to Valvoline
Sales	$	489
Cost of sales	(293		)
Selling, general and administrative expense	(82		)
Research and development expense	(3		)
Equity and other income	9
Operating income of discontinued operations	120
Net interest and other financing expense	(10		)
Pretax income of discontinued operations	110
Income tax expense	(35		)
Income from discontinued operations	$	75



~~(Mark One)~~


	Carrying		Total fair		Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs
(In millions)	value		value		Level 1		Level 2		Level 3
Assets
Cash and cash equivalents	$	349	$	349	$	349	$	—	$	—
Restricted investments (a) (b)		392		392		392		—		—
Investment of captive insurance company (c)		4		4		4		—		—
Foreign currency derivatives (d)		1		1		—		1		—
Total assets at fair value	$	746	$	746	$	745	$	1	$	—

Liabilities
Foreign currency derivatives (e)	$	1	$	1	$	—	$	1	$	—
Commodity derivatives (e)		5		5		—		5		—
Total liabilities at fair value	$	6	$	6	$	—	$	6	$	—



(In millions)	Carrying value		Total fair value		Quoted prices in active markets for identical assets Level 1		Significant other observable inputs Level 2		Significant unobservable inputs Level 3
Assets
Cash and cash equivalents	$	601	$	601	$	601	$	—	$	—
Restricted investments (a)	345		345		345		—		—
Deferred compensation investments (b)	160		160		—		160		—
Investments of captive insurance company (b)	3		3		3		—		—
Foreign currency derivatives	4		4		—		4		—
Total assets at fair value	$	1,113	$	1,113	$	949	$	164	$	—

Liabilities
Foreign currency derivatives	$	13	$	13	$	—	$	13	$	—


~~(a)~~	~~Included in restricted investments is $30 million classified in the other current assets caption on the Condensed Consolidated Balance Sheets.~~


~~(b)~~	~~Included in other noncurrent assets in the Condensed Consolidated Balance Sheets.~~


~~(a)~~	~~The accumulated adjustments include investment income, realized gains, disbursements and settlements recorded in previous periods.~~


~~(b)~~	~~Investment income for the demand deposit includes interest income as well as dividend income transferred from the equity and corporate bond mutual funds.~~


	Life		Personal		Specialty
(In millions)	Sciences		Care (a)		Additives (a)		Intermediates (a)		Total
Balance at September 30, 2022	$	787	$	118	$	407	$	—	$	1,312
Currency translation		45		5		21		—		71
Balance at June 30, 2023	$	832	$	123	$	428	$	—	$	1,383


~~(a)~~	~~As of December 31, 2017, there was accumulated impairment of $171 million related to the Intermediates and Solvents reportable segment.~~


	September 30, 2022
	Gross					Net
	carrying		Accumulated			carrying
(In millions)	amount		amortization			amount
Definite-lived intangibles
Trademarks and trade names	$	95	$	(37	)	$	58
Intellectual property		718		(523	)		195
Customer and supplier relationships		801		(369	)		432
Total definite-lived intangibles		1,614		(929	)		685

Indefinite-lived intangibles
Trademarks and trade names		278		—			278
Total intangible assets	$	1,892	$	(929	)	$	963



	December 31, 2017
	Gross					Net
	carrying		Accumulated			carrying
(In millions)	amount		amortization			amount
Definite-lived intangible assets
Trademarks and trade names	$	67	$	(22	)	$	45
Intellectual property	758		(340		)	418
Customer and supplier relationships	780		(246		)	534
Total definite-lived intangible assets	1,605		(608		)	997

Indefinite-lived intangible assets
Trademarks and trade names	301		—			301
Total intangible assets	$	1,906	$	(608	)	$	1,298



	September 30, 2017
	Gross					Net
	carrying		Accumulated			carrying
(In millions)	amount		amortization			amount
Definite-lived intangible assets
Trademarks and trade names	$	67	$	(22	)	$	45
Intellectual property	757		(326		)	431
Customer and supplier relationships	777		(235		)	542
Total definite-lived intangible assets	1,601		(583		)	1,018

Indefinite-lived intangible assets
Trademarks and trade names	301		—			301
Total intangible assets	$	1,902	$	(583	)	$	1,319


~~(a)~~	~~Other includes $24 million and $25 million of debt issuance cost discounts as of December 31, 2017 and September 30, 2017, respectively.~~


(In millions)
Balance at October 1, 2022	$	84
Increases related to positions taken in prior years		1
Decreases related to positions taken in prior years		(27	)
Increases related to positions taken in the current year		3
Lapse of statute of limitations		(4	)
Balance at June 30, 2023	$	57



(In millions)
Balance at October 1, 2017	$	194
Increases related to positions taken on items from prior years	2
Increases related to positions taken in the current year	3
Balance at December 31, 2017	$	199


	Pension benefits						Other postretirement benefits
(In millions)	2023			2022			2023		2022
Three months ended June 30
Service cost	$	—		$	1		$	1	$	—
Interest cost		4			2			—		—
Expected return on plan assets		(2	)		(1	)		—		—
Actuarial (gain)		—			—			—		—
Total net periodic benefit costs	$	2		$	2		$	1	$	—
Nine months ended June 30
Service cost	$	2		$	3		$	1	$	—
Interest cost		10			5			1		1
Expected return on plan assets		(5	)		(5	)		—		—
Actuarial (gain)		—			(1	)		—		—
Total net periodic benefit costs	$	7		$	2		$	2	$	1



							Other postretirement
	Pension benefits						benefits
(In millions)	2017			2016			2017		2016
Three months ended December 31
Service cost (a)	$	2		$	2		$	1	$	—
Interest cost (b)	3			2			—		1
Expected return on plan assets (b)	(3		)	(3		)	—		—
Actuarial gain (b)	—			—			—		(2		)
Total net periodic benefit costs (income)	$	2		$	1		$	1	$	(1	)


~~(a)~~	Service cost was not impacted by new accounting guidance adopted in the current quarter and is therefore still classified within the selling, general and administrative expense and cost of sales captions on the Statements of Consolidated Comprehensive Income (Loss). See Note A for additional information.


~~(b)~~	These components are now classified within the other net periodic benefit income caption on the Statements of Consolidated Comprehensive Income (Loss) due to the adoption of new accounting guidance in the current quarter. See Note A for additional information.


~~(a)~~	~~Included $34 million classified in accrued expenses and other liabilities on the Condensed Consolidated Balance Sheets as of December 31, 2017 and September 30, 2017.~~



	Three months ended
	December 31
(In millions except per share data)	2017			2016
Numerator
Numerator for basic and diluted EPS –
Loss from continuing operations	$	(7	)	$	(65	)
Denominator
Denominator for basic EPS – Weighted-average
common shares outstanding	62			62
Share-based awards convertible to common shares (a)	—			—
Denominator for diluted EPS – Adjusted weighted-
average shares and assumed conversions	62			62

EPS from continuing operations attributable to Ashland
Basic	$	(0.12	)	$	(1.05	)
Diluted	(0.12		)	(1.05		)