ASH - Earnings call transcript Q3 2019

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Operator

Good day, ladies and gentlemen, and welcome to the Ashland Global Holdings, Inc.

Third Quarter Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.

to Investor host Relations like Mrozek, conference now of Director at would introduce today’s your Seth I Ashland. Sir, you may begin.

Seth Mrozek

Good XXXX and Thank third Investor Relations. Seth Justin. morning welcome Ashland and you, to Mrozek, quarter Director, fiscal My earnings webcast. call conference name is everyone Ashland's

Joining the Chief and Financial are call Bill and Ashland's Chairman President me Executive Senior Officer; Vice on Chief and today Wulfsohn, Kevin Willis, Officer.

yesterday, X:XX July the quarter ended XXth, PM preliminary Eastern released after Time results for We XXth. XXXX June shortly

posted these we website a under the Additionally, to slides ashland.com, have in the our and section furnished Investor Form SEC documents Relations X-K. each of to

XXXX. be that cannot As and future will of These be are cause today's reasonable a We subject a we believe financial number differ today's or matters, on based reminder, call, that making such to including assure forward-looking assumptions, such year guidance projections. events on forward-looking could uncertainties to are during will statements risks statements statements our achieved. any fiscal but materially from results expectations for

of to explanation for are we statements. adjusted non-GAAP also be projected and that yesterday's presentation certain and which financial limits to risks to actual a referring slide on Please note and fuller on metrics forward-looking Ashland will refer applicable basis, uncertainties Please the those an financial measures.

our financial of them to supplement order performance in your business. refer will present assessment as these to of and and We the adjusted measures understanding ongoing

non-GAAP GAAP available well website as in in of for GAAP as directly with of the most superior presentation. our Non-GAAP the GAAP. comparable slide not measures to financial a should accordance on measures measures measures calculated considered yesterday's or and be those substitute measures appendix are to reconciliation The

the turn will Bill. over call I to that With

Bill Wulfsohn

this Thank and In like I themes morning would you, remarks there to my cover. good three morning, are key everyone. Seth,

to stabilize very environment. to taken earnings offset of outside have difficult we in a action First, areas our control

the plan, annual by we the reformulation. established and strengthening As of dollar anticipated we oral our U.S. the to impacted have largely when Colgate-Gantrez related care been loss the

others, market in Now materials was and specifically, sunscreen by impacted products U.S. The unlike season sunscreen tariffs also XX% the products impacting and impact China. weakness of more negative recently, dynamics. new certain we Europe exported other out and been More our for demand the a export we competitiveness of trade have weak U.S. and into demand of tariffs the for

factors we also impacted formulations. ASIs approximately EBITDA that New impacted certain demand could have aggregate, the year-over-year. on In requirements China basis, by XX% year-to-date regulatory estimate preservative negatively these for a

this have meaningful In sales context, our More we nutraceuticals, action. Coatings and than the at market team taken or the has faster specifically, Pharma, in grown Nutrition.

and over basis on by we plant footprint by above also prices Ashland's improving and reliability FX-neutral raised system. cost reduced fixed SG&A we have reduced an raw have reducing year-to-date X% the spend implementation material production consolidating costs have with We of inflation, by and production and our

Ashland, a year, earnings have for year-to-date basis improvement margins on margins versus the we XX result while and is a essentially earlier what basis. And we prior Ingredients not EBITDA achieved adjusted flat expected point in year-to-date growth Specialty this EBITDA year net

levels actions periods. that and of portfolio Importantly, led evolution our much to than our demonstrate has these results lower prior in cyclicality

Ashland's to our a year EPS made have Second, date. same operating In by XXXX, 'XX adjusted adjusted our by The future. fiscal and impact on XX%. strategy we and year confident grew results XX% are our EBITDA in meaningful we fiscal levers

early very fiscal a year take beyond factors negative XXXX, we lessen look substantially. at the our should As control

short-term reformulation. FX exact And the terms to timing, believe, is market QX, impact Colgate the track and nature. negative We of current to we predict weakness are in on difficult largely while lap of in in

drive to to negative results and action new are improved related approval supply tariff cost More to launches, program lastly, our of gaining driving impacts, contracts year. strong end we plant the we aggressive share new including, chain the million our continue to adapting product for out regulations, offset impact in through the gain increase focus calendar in new importantly, response reformulating on $XXX by gains of achieving ingredient renegotiating make we reliability. taking products our lean manufacturing and as And full

Personal faced share the in preference as and consumer while an ultimately skills to this we to to ongoing picture enable changes customer back innovation Stepping we our leverage challenges perspective, opportunity trends our grow position. from partnering an Ashland in innovation view Care year, core and bigger regulatory

made to have is two resource significant size pipeline years. product new an increase last product impact new the our the over deployment changes in the result and We our sales. of process and of innovation The

note our mix additional meeting and redeploy are We important to and XX% additional activities actions, ASI a that committed focus remain volume currently cost instead focus pricing EBITDA new through working technical maintenance product resources leverage to business XX% to less margin actions of development. improvements, existing to It we is on on initiatives. targets, to also combination more productivity

the we Marl late business close anticipated. track summer this on Composites remain sale and as Thirdly, to

Maleic all $X.XXX discussions continued sale. retain The Maleic Ashland business be the will the billion, price including to the we of proceeds. sale agreement rights to with and Anhydride will adjusted announced INEOS business FTC, any from subsequent Following to an retention purchase the with exclude the

annual of facility consists Virginia and revenues Neal, Maleic The one of $XX West in million. approximately business generates

to shortly by late close work regulatory to preparations and track. transaction, the on We expect continue receiving remaining INEOS with transaction summer. the anticipate the remain divestiture and to close for approvals We

now commitment to X.X We transaction and repayment the for use following turns. close at the our about proceeds leverage of reduce expect roughly debt reduction estimated support the net $XXX in of to our continue to million to

So in for others, significant year. our had we expectations have growth had of summary, factors fiscal Like we this strong outside control.

less our market actions helping are than earnings stability. offset we Gains year-over-year We strategy. what is current the are from targeting while have action the are and operating result, implementing taken to our dynamics,

recovers growth, intend this complete We market a strong and and the when the we expect a We clear portfolio results. team earnings business, we sales year. to to summer, demand strategy likely on driving believe focused more return later have great to this and transformation a normalized

call Kevin turn now more for discussion the results. will over detailed a third to I our of quarter

Kevin Willis

Thanks, morning Bill and everyone. good

the ago negative including First, $X currency. the from results million, with EBITDA from year quarter points in million in including Ashland's Adjusted Sales X% X $XXX foreign currency third let's start the unfavorable quarter. in a year-over-year million, the were negative down and was $XXX period flat essentially impact. quarter

stronger as throughout case there year year. this also in led which has been impact impact than by from prior was lower The and was euro, Negative U.S. $X.XX the than prior dollar period the regions. the currencies was certain fiscal emerging remained currency an in the

of $X.XX In share, income continuing we per compares an On our diluted million share. per year results. continuing the to which with of quarter, provided from reported or mid-July prior we was revised income GAAP per $X.XX share. adjusted operations $X.XX we operations to $XX from diluted consistent This reported U.S. basis, in $X.XX of outlook

results BDO several from in facility now continuing and in XX% since which favorable discontinued due tax the of that Specialty from earnings effective was Lima, Ingredients as and Composites being to operations Ohio you'll expectation our recall rate operations. mix income Marl discrete largely reported X%, includes plus below tax our are our items, was quarter Our segment,

and Free million quarter flow compared was we of cash $XX the now in Including in restructuring $X of the prior and the payments year. restructuring quarter XXXX ago the free $XX $XX expect cash These flow during this in related fiscal year million year. range $XXX in transaction of$XXX approximately million period. million, $XX fiscal to million restructuring of third million to include the in amounts costs million

cash of due and year The the approximately half the is the reduction of earnings and change primarily the expected transaction payments., from previous $XX plus million the outlook second of related to restructuring in acceleration

Turning to Bill you temporary for demand factors that XXXX reflect Specialty the have in our We have believe Ingredients, nature. market outlook weakness mentioned. are to just seen, fiscal financial revised we as these

normalized September percent weak, in When conditions book EBITDA quarter growth current with our order single-digit more on While is we growth mid-to-high July improve, sales to sales line a in market return basis. should were outlook. and

update I'd will million announced on program quarter. we the May, we during In retired to provide final an August. expect be the is $XXX program we accelerated the approximately the in like conclude per and when shares share share repurchase The June price to program Finally, completed. million X.X average determined

commitment program no of in to think our X.X impacts about reducing divestiture. way the it's closing times I leverage toward following the to that Composites-Marl reemphasize this important

the At this operator call I'll we'll over back turn and questions. your take to point, the

Operator

to Instructions] from come first Parkinson [Operator Our you. going Credit from is Thank Suisse. Christopher question

now line open. Your is

Christopher Parkinson

good morning, -- few You've been a facing gentlemen.

or market an facing reformulation reformulations, just past and markets oral you're Care, you your ultimate quarter. hopefully to in Gantrez loss volume this You've ability trends growth, just sunscreen X% year Can the some positioning Personal in top-line Bioactives your been to X% few unexpected magnitude in speak challenges sustainably care, not care there to skin specifically whether a additional facing of higher. in past the of the and headwinds over achieve

hit be above reach just margins, success If helpful. XX% that integral you Thank on would how to you. is and could that very PCs

Bill Wulfsohn

you good and very question. Well, thank Great.

or have less every the As as just attrition -- it terms the you products improved from relates to have overall mix. the discussed maturing to in in a product amount new we business, past, new relevant less product certain to as down Personal and of of Care go year

Sometimes than that happens other quickly years. more

if that year back, through were or for half if to efforts will, of gains you that And fiscal first R&D the than came we of reformulations strong pace from 'XX, and have and regulatory consumer We look preferences. 'XX ultimately those fiscal example, had and you the the greater outpace dynamics. in offset attrition, really the year

consistent of investment for Care. development market, our We expanding that essential growth in the believe that's the maintain to and more Care within Personal are Personal we solutions a pattern sustainable

through you important see a XXXX, clearly, the Personal part go around We think great profile, that business It's fiscal of portfolio. we'll our overall look the when at that, attractive that. and is momentum building as margin has margins. happen year we very an Care will into and And

from we that for is XX% mix Personal come continuing have plans will good at improvement, it tell Energy Care of targeting like and to a look and the I our improvements Coatings overall to we that part only and of Care overall things that, is when into Construction like a of part from Personal move margin and Pharma move that but you What get the in gains are of is mix, is part and obviously growth to equation. areas about

in year as upon on able good now. been going just outgrow a a that have it We market the feel the What's way Colgate have doing very that all at been we've products they to make meeting we're to we're item. this right that, China have reformulate expectations hard we've that, faster right import we of products for do we than their significant was So new are based reformulation particularly sure matured rate our and the now? that doing hit, to introducing through

So targeting. we're were rates it we very time, will growth confident but of can take little a bit sustain the

Kevin Willis

because And, a Care certainly business part growth is That run a also of sustainability in and Personal a should perspective would also fiscal our would middle pull-through but on rate a product a we around of business, expect be they XXXX. actives to important good of result to of in question not a amount lot one. your really certain which Chris, we'll other only make basis X%, trajectory. functionality Care. provide they That's -- I hit biofunctionals return down the that customers, Personal intention categories that perspective, this from from the Personal in really in our X% Care are our that

very and very Personal -- it's business on small, Care it's it because focused biofunctionals part relatively So important a especially is that we're of -- while skincare.

on very So we're -- focused to be business. continue that continue to going

Christopher Parkinson

still comment your but quick structure just follow-up, what regarding also you global moving are direction can do out? should -- as where think of just your current just the could and team to your you're targets the think cost costs, Thanks. given broader pricing how well? the in you. the further views you feel you and -- to be, production updated on another needs top given better in just do you years And a moving right normalized environment, from you're to two three we ASH portfolio, potentially doing on about What bottom, Thank just

Bill Wulfsohn

Sure, sure.

through with are the expenditures support to range groups reducing in of I start sure this reduction to So, not bottom, XX% program, we, kind you how $XXX XX%. million but of define the cost by, those corporate if top overall

that aggressive be this So of complete we'll sales. this of calendar We XX% run to area. in actions the we're clearly year, see without will we amortization our end to at taking XX% rate which at around program, when be

business, in of in very the of operations. productivity we volume a And it of the costs we lot note done it's XXX on cost that we or the another leverage stranded clearly an on opportunity much do still execution to that will further are, current earnings, reduction we're continuing that and efforts. can made interesting is think theory, in focus so. program have, what down on the on discontinued in or through be getting that we We're there infrastructure And to progress be while that and engaged albeit the basis driving -- reducing what can have we've focus terms because also points

would making company corporate focus the for I want So we the drive commercial making. we engine In I enhance continuing good the and impact to drive but think to productivity, from and to drive that's course, and making that progress, that the but And want of the productivity. stronger. from we're our we we're think standpoint, -- I you technical that always have on area, that investments say grow would

Also, that in really asset the to I that need floor, making. we leverage driving better reduce plants, and can then from it's cost should just run just can you or SG&A way don't sizable job is in of think will finally, nice most manufacturing necessarily that, so consolidations. the the our the will, the we've types but make environment, on the we a that infrastructure And combining, done productivity, costs. We our investments not regions not our through area we're if say plant sure also we're that we while we plant go getting to reductions. for

I opportunity think there move for as forward. us is we And more that in area

but So I do. think think have good to still work I progress, more making we're there's we and opportunity

Kevin Willis

of margin Yes, the going cost to it's I to would a in getting that, and consumer-oriented XX% and require markets, XX% solid to end combination good focus on is to in require business especially that target going agree with continued a discipline also profitable end the Ingredients more productivity. our but growth markets, real driving

going we overall we the to Those to improving to structure So go. things in have concert are cost us work as two get where be. need to

Operator

our comes from And from you. next question Roberts UBS. Thank John

now is Your line open.

John Roberts

When you about is you something think else temporary a talk on? correction mean do chain supply inventory you do going issues, temporary or

Bill Wulfsohn

a coming soon. specifically the sunscreens will of referencing Europe some weak close Well, the our U.S., is the the the both here that -- and season things been Personal and in has to look It what you year and in be more results in at Care area, quarter. when for profile the impacted I'm demand a this fairly

that they've tariffs as competitiveness export into that for the affects by XX% that tariffs, been China hit addition, sunscreens from mentioned example, the say, on U.S., we those of we products. In and

what portion and a just we've able the substantial on actually base. that's part negotiate sell been of tariffs of to our already through customer Now, a increased we

So dynamics we'll through that our customers, the supply that. on chain through with by our adjusting get we working and anticipate

to into to get can have takes not that we comes for those it those China, but sure takes it those, and a it to to in I are commercialize approvals confident we're also might that when issues nature. make innovate opportunities while and And structural view requirements those a for us while new as solutions for mentioned, provide to import as like we preservatives, ultimately, that

John Roberts

do a Maleic to business be output And it goes you think how of hard the to fair of and value get for the much will the plant sold? being how plant Composites that

Kevin Willis

$XX top ultimately past approach terms million think Yes, based difficult [indiscernible]. relatively Composites line's as it's going we're I in it But achieve through how we're but development, to and commodity -- you business, a of be the business M&A, about John, real-time it's connectivity third-party on this marketplace it's to don't the still business. to the I integrated going we're new somewhat with sales is today still business, that's a mean a and and of sale around and our history, that evaluating know, to

John Roberts

us Could you inter-company give to the gross sales including sales Composites? the

Kevin Willis

Yes, frankly. Yes, is the that million. number, $XX

John Roberts

gross. the That's

Kevin Willis

the That's gross.

John Roberts

Okay, got you. it. Thank

Operator

from Capital. Thank McNulty And John next our comes BMO question you. from

open. now is line Your

Bhavesh Lodaya

Lodaya early for I looking This for Hey, XQ. fiscal is Bhavesh the like an book sounds if heard good are order it improvement correctly commentary, John, indications morning. in on

few you a quarters, over savings, the pieces trying business the think get few but can part color on is there next sense some current you the benefit the get quarters. moving as about just cost to of of macro, you in of obviously, add no the additional the So assuming change will next the earnings the

Bill Wulfsohn

Okay.

So environment assumed see would say QX. we that enter as in don't substantial I the and we macro we improvements are overall assuming that have into

taking we our We started referenced is of actions weak. the as But are way, that with consistent July which fairly about. to in up a the Kevin fill talked month outlook. order book off also began

that. about So we feel good

in In us. in that in some but the moving year our of call comment that terms of we 'XX, more will forward things into as next on have of course, detail, we fiscal referenced impacted

our substantial and way addressing of lap on less results. there'll in things terms believe other a that will be we we will in We impact be

aggressive it inventory difficult come may more general may predict predict and we'll timing update. sooner, conditions business we'll to such, the right now. in buying It's an or behavior more confidence globe, take around provide and so to more an terms What's few stocking the a for of of And as say quarters. demand and really difficult is

that. it leave we'll at So,

Bhavesh Lodaya

And then renegotiating can focused as how remarks, mentioned give you've in, color has contracts so us which far, they businesses to you prepared been? the in some you are some what reflection your of done the

Bill Wulfsohn

Yes, the case, from I related was in exports dealing with China. referencing from particular specifically tariff to that and sunscreens

a place pass -- As you costs can course, -- it's objective those into standpoint, imagine, and issue from customer it's and of on. big a to when came our to that that's pretty -- appropriately a

product terms progress And both customers supply that some role time the with passing supply been play and in so, not assess innovation of to just of situation, their so work their we've in making taken terms as that through. we it's in they chain, but

let's able so of impact that been the We've to tariff to level and we've pass through, we're working half that to roughly chain, say can apply we or the change is supply the so on the had as bring appropriate far, up period.

Bhavesh Lodaya

the you. I it. Thank Got appreciate color.

Operator

Thank you.

from David Deutsche Bank. comes question next Our Begleiter from

Your line now open. is

David Begleiter

can of wouldn't EBITDA the -- on one-offs single-digits base XXXX, XXXX above Bill, growth some in the just be depressed the year? why saw past this you we mid-to-high given potential in in ASI

Kevin Willis

from the that XXXX program. of will in cost-out one we have things Well, is the carryover

full of this Some year. year won't we that benefit have --

year what that for would where that end have likely next would I and the be full we basis year. will cost lot fiscal are growth so now, A right We out benefit above over and year. of call initial where we'll

the overall what an have areas our look going and mix do figure to of you is like Care end like improve of what a of from more market to part Pharma. going driving consumer top through and we at really on manage look work to to perspective kind facing is Personal out and XXXX the toward and basis, As line what demand, can we're

some a front, deal on from some are -- sunscreen talked about we As to that. to have on going -- perspective have to but reformulation with tariff and team's and Bill that of the

certainly about mid think the I to growth of end be achievable as really rest and and should we digit XXXX, single see it's what dynamics depend there. on going So the market

pushing market share profile, And new from so perspective growth, that more to it's higher the products margin etc. with come a on gains, we're hard end whether on that, certainly but growth driving team

David Begleiter

based just, And seeing backlash consumer clear. any Are to this you Very back against again. chemical sunscreen sunscreen from formulations? sorry, impact

Bill Wulfsohn

now. it -- some I those the and in a limited couple fundamental think they areas that's and say, as areas. will not course referenced does it's a think I affect, part, factors in in It's But which have demand our we've results as limits why of of

point So issue have an I that we to. the as in driver for it's, sunscreen quarter. obviously primary results to stay we want the important that the out close But, wouldn't

Operator

Thank you.

Bill Wulfsohn

quick sorry. really I'm A it's that, that dynamic primarily important is also reference dynamic. U.S.-centric a that think I referencing because we're

So driven business global we about factors, sunscreen to that referencing -- have dynamics some and it's you're and demand. we as talk of U.S. a these

Operator

Thank you.

Sheehan Our Jim next question from from SunTrust. comes

Your line is now open.

Jim Sheehan

Good question. morning, my thanks taking for

difficult increases fronts, demand expect On price you the to finding pricing pricing are do forward? given the on more more achieve lackluster and versus you going raw how to materials environment execute

Bill Wulfsohn

Sure.

rationale. easier, a solutions So value not surprisingly, step to back selling the terms with along defining say, and to that have been when focusing we you're understanding on the to inflationary pass that we though, accordingly. and our and strong those it's provide continue customers environment, in If in of price need marketplace I'll that the really in from better

there's As new products, se does positively introduce impact not overall per our mix. that pricing we while

are focused on we so pricing actions. sustaining And

relevant of as output really but filling we see not that in up that standpoint sales some good parts Pharma is actual I we've dynamic again I X% done we're into places especially supply that a in this would system from about for our up like and demand move of our say year, you system. terms quite may of from that as example more, on, a HEC it's job think business,

in look that what to a puts us that And at position the also upgrade is opportunities to mix. does

we view dynamic, but commodity in as right as a we're it's commercial for It's a it clearly a let's leave always -- challenge the it So not focus. now team, that.

Jim Sheehan

in fourth orders in how to you have in quarter, do forward be you some looks see Pharmachem? And changes up of that orders Very that giving the reference shaping pulled some you on to Pharmachem, like or some may fiscal it you timing are going back helpful. order made there,

Bill Wulfsohn

in is, QX. of we there that and see so. QX same timing and that growth making in in And think really mind, the the aggregate, you that that we business orders won't progress do been but can with were continue it of I and we've -- type we'll expect some would have some saw in Yes, to we

Jim Sheehan

you. Thank

Operator

our Mike next Sison comes you. KeyBanc. question from And from Thank

Your line open. is now

Mike Sison

little each I I'm curious Bill, was businesses, market each us if just the operating these walk end of how Personal that Care, -- through, kind you the own information Pharma its going structure and Care wondering sales, us reporting maybe you're managing and going you're business meaning accounting now giving can is set of how your kind forward the more up have of Ingredients? forward, Specialty of now units you're by yes does these finance how just from the structure's teams and of coming of

Bill Wulfsohn

Sure. Good question.

Okay.

those and which imperatives all aligned into has So functional leaders responsible that the leverage responsibility across the Officer who if end Consiglio, spaces. -- across our also respective goes in ultimately will, end focus -- those resources, technical have on is we from we for of business their are Chief leadership have, to the markets, company markets you have markets. our across to example, They and succeed our of Vito technology Commercial and course of the for they

the infrastructure whole at and it's will, more Care, financial you limited, help around those but really like assess each have if has Pharma for example, one Vito group Personal of level. we him build financial markets resources a to his resources They don't business,

well-utilized focus So sure the we the in strong also and of to very driving have focus absorption terms have clear versus in material strong that a accountabilities on inflation commercial terms are revenue, commercial needed pricing of make contribution, and we facilities. raw

basis a core have addition -- of review we profitability our we that as our that, as team run executive them some our the of platforms run from regular operations, more we other. that -- of we to make that platforms to a operations We have or leadership network. Below take are with But the that track facilities a or each have we HEC on teams we course and the different one each -- can actions the in Klucel technology them profitable. and of are PVP

And, strong those all of resources. over a we that with course, we more markets are need relevant for because of marketplace. on tried focus leadership driving our the really solutions which in resources to end have the closely tactical central much the we time, an have We've to in specific function while leaders R&D aligned deploy

And we've also built because are as is, technology standpoint. than regional appreciate out in have different of can another that region network, you one And broader was detail then might managed. and infrastructure centrally behind we needs we really or that chain, the that much. supply central too a from part call but I more that that forth the corporate is our purchasing so not hope enough

Mike Sison

line for guess, your the of a midpoint, kind can to get sales don't of Kevin, growth lot sort economic of get of XXXX, to Yes, Thank on like it minimal in framework such to soft upside then you I you to could And you. growth, given your to you that's some come you've sounds cost terms a how -- of if framework? need use and and is great. there savings recovery, and drive and lot that bottom the much down does that got that right initial potentially sales

Kevin Willis

platform. the the initiatives cost-out from nice will base help provide cost Yes, certainly Mike, a -- carryover

put -- just If we to see if a the probably macro mid it of case, on environment things going going middle would for more weak us were we see we to demand you'd don't to the in growth were we yes, normalized based to and be that all fiscal to to if high single-digit I be there, is the kind think -- that. XXXX. is be full believe single-digits return weak that the but a low-double of if somewhere in out potentially demand outcome the growth continue normalized happen likely persist, persist, which were EBITDA in low to -- the If environment year, to more

and perspective our perspective much a mean operations SG&A I an on still very perspective. we're XXXX working commercial plan from and

And got our when we've and EBITDA that. a it this the to it. just so still earnings to a we like and expectation comes be drive to with -- macro that and XXXX to over above we wood continue there have nice to feel we the in tailwind it's chop do that to see the of would to grow But be -- macro lot we'll cost-out ability higher -- obviously help extent leverage

Operator

our next from question And Laurence Jefferies. from you. comes Thank Alexander

now is line open. Your

Dan Rizzo

for on Hi Laurence. everyone, Dan this Rizzo is are How you?

Bill Wulfsohn

Good. Good morning, Dan.

Dan Rizzo

ever product how And you use you Good at pipeline pipeline, vitality is? you that the morning. One two, question, big product quantified all? index a have mentioned do

Bill Wulfsohn

Yes.

we we what over close of from internally. have we have that and of is that -- coming differentiated one-third significant, we say new products will sales is XX% our developed a So to said

of the from are have qualify. that type that comes where that a technology market our cycle, enhance example them to takes proprietary base products Pharma of that we longer and some make acquisitions Some places while a in very say for patented it or

at of that, impact track we've details. actually call. look be this We And areas. our look the improvements technical we we've our not to what expectations those productivity. little really a made at look of our only each shared we have but system. a relative look -- project to across the sales an equation hit growing we We that hard it rate. takes drive It'll and our the been are, at But we the And that specific to we index haven't more pipeline, size use the at in one do and we through to at vitality time look

our to fiscal faster think key to making tell grow enhance continue that drive things have with systems that as we we we're I of buffer think deal to allow that or to have the think this and in faced need accelerate will team a capabilities us we we're our and of types future also working that and help the is is of and year. for our innovation to that over the I course I potential, progress, us the real this we've better that good and growth and a will impact do we full feel you that reach we So sales the mix that to but

Dan Rizzo

sustainable means you offer of you give the kind it? what of an of you what example Personal how illustrate or sustainability, kind a it -- growth the guys of you in just solutions kind is us mentioned Can fit driver. -- of and into sustainability one And Care just

Bill Wulfsohn

Yes.

things there that as are lots materials thought the we're of In natural-based the -- materials source starting it's degradibility kind those one of do great, is the as when imagine, because a and HEC you other they So broader of wood linters starting so sourced dimension, you the will, area, you and Care definitions, materials, with different has talk with matrix, to if with like the imagine. whether is process there are biodegradability you can or a about can of pulp, naturally and and you're cotton material. Personal

in greater specific to overall, only allowing These our it to position been are We important big the have those really are of or focused help interest of has broader to it importantly and it a extensively we'll business, products. the not customers on Zeta for, to and business. in more it that our biofunctionals a of but drive partner our Fraction areas, business keen but the us us does involves our that portion makes customers, the say, areas Vincience, a range grow relevant us growth our sales involves

products from the products. natural-based I or those that sourced So stronger biodegradability of our say great focused materials natural-based really efforts research and development and from on would majority have are are

Operator

Thank from Securities. is from to Global you. Seaport next Harrison [Operator Instructions] come going question Our Mike

Your now line is open.

Mike Harrison

wondering decline? that XX% care oral the context can out between overall or decline in revenue and Personal the of was you break Care care if skincare, growth year-on-year in hair I

Bill Wulfsohn

course, we about, and Care specific, we'll product rule solutions. than not referenced been environment previous I'd quarters we've as it with is we've that and skincare, well, that of will in say the to surprisingly general some seen challenge has really oral and just think Yes, did care a a of some weaker and the of demand challenges we also this Colgate we've had that, business need as overall and some see in we sunscreen. talked -- a and thumb year relates in say, customer Personal

Mike Harrison

of, up was And or was, right. care sort care down? All hair hair

Bill Wulfsohn

driven quarter by really L'Oreal Hair care customers. in the a have of been would Henkel down demand. couple and

Kevin Willis

in Rest hair China world general, included. the actually in though. definitely care Asia demand of We was strong weaker saw

Bill Wulfsohn

QX. Yes. in growth had positive And we

we So this had space. growth in

Mike Harrison

in are Ingredients position improve they where pay are efforts to not for to mid-tier also was But better also to consumers you've to Care, of expensive happening in be And past I that very products. trading then intensively. more up Personal made or your some tend products wondering I down you within positioned seeing know any you've willing the some use you downturns, your the seen tend

it So, how weather to and talk of seeing are phenomenon, that about you're you to that maybe were positioned happen? if type trading down

Bill Wulfsohn

Yes.

just look seen say, I past skin change of referenced much have rest as when in in that, some growth maybe on So We've a Asia Care is -- tried Personal softer we've in been would really good we the the of as side. to bit hair seen has and we've we in you care. seen seen we've Kevin some say care, what China. as, little growth as not Latin our and in that mix America

improve growth that dynamic little spoken really results that I to identified to about of So primary you're really back targeting. our but may and of results the we referencing our the that and get a driven be then are we're bit drivers the the the we have what's and that items opportunities think there,

Mike Harrison

where on quarter? inventory and of that we been a third there, North last the I'm the I improvement business, just weak Fiscal your and relatively the -- Thanks. Okay. And sense improvements has one do America Coatings come seeing customer know as wondering are then levels out if of you of one have kind you're some

Bill Wulfsohn

Sure. QX been Well, about the order stronger so growth I from our market. talk standpoint has an year-to-date much believe with that every they're and forth actually we and and day than in team the seeing pretty what

had upon we've really efforts that's that based been of Some in Asia.

We're making China, in globe. to manufacturers manufacturers the U.S. really which supply good outstanding primary progress the parts of our positions gaining growth and drive and other have helping coatings share there overall, architectural coatings in defined within with with of we us Nippon the is

is other a say group There what optimism that a we're fall we're parts is builds more demand. will of that's would bit cautiously about pickup order I of a that a bring in little seeing that our the sense the of that, business. And more at little than maybe optimistic seeing, least from

Operator

to next going is from our And you. Research. Buckingham Silversteyn Thank from Dmitry come question

Your open. line now is

Dmitry Silversteyn

taking of was of A the negative of industrial in was you Adhesives well. that sort if we actually It my a line, couple things, Good morning, for particularly, quarter. consumer, thanks the will that one question. noticed in grower for was business businesses, border doing you this the

seeing of can what So changed adhesives that half that markets we about your you're business talk should about end think for for the you your how year? has here in the second and

Bill Wulfsohn

also it. used dynamic which together, that to adhesives do pressure boards a Sure, so that, -- into QX. sandwich yes, the if be materials a boards is a some a bit the you food year. of our nice put see sensitive like that provide construction. what end think automotive broad construction, will, about you We applications And to don't sell tend base the in are in markets had we had and QX in growth packaging we've I transportation, like into cyclical of We growth we and got flattened X% last go have that and are and in that that, adhesives

stabilizes to not believe starts that, to and little the will grow. of So, we primarily are get and -- negative back we'll saw as normalized weakness more we're comes the and bit I market think demand a sustain we areas equilibrium again, in the that once the driving seeing that performance areas itself, those that demand that to little those a are bit,

So, of really negative the is transportation business drove the percent. those and what portions building adhesives

Dmitry Silversteyn

Got ASI you. or more overall? U.S.-centric business your European-centric more the Is adhesives to business compared

Bill Wulfsohn

Much position really North more globalize Europe. U.S.-centric, we've But it in been American we have a business. a it's and seeking to primarily

Dmitry Silversteyn

Got you.

new was more year okay. that provided it's been may, then or maybe thank Okay, something you a reduced or -- over getting I it if something one at you. worse, you if the little just look And time so guidance question, every the past just bit

demand, of was of end market we get back so? about impact past you of If XXXX. sort you a exchange, cost, us was whether and the look of, the should or that we it for size kind experienced sort it and kind whether how of was over look XXXX on coiled slowdown you this sort have headwinds in into about it think itself whether Can spring as of year you've headwinds the to foreign rank at these reversing of particular each

Bill Wulfsohn

Yes.

we ended didn't the I to the so -- in of through the as recast within we last a look any year, and for revised had last to guidance 'XX, me was Kevin middle in if correct and started misstating. fiscal beginning at So of But here the up the year range narrowed no right there I'm year. range, we actually ASI. was that we year year went provide We

not sure specifically So referencing there. you're I'm what

pardon referencing... You're me? probably

Dmitry Silversteyn

three last As at the quarters.

Bill Wulfsohn

the Well last Yes. two-- right. Yes,

that reduced driven the I is what's and has think that which we of we've lot about, That's been overall that we've demand to and that trade what things talking enough specifically those. talked fair it's been have companies dissimilar seen. not the the the revisions, Okay, other about a seen have

end you by impact half look to roughly year you FX When negative that basis the we half at is market we here. really is related overall Colgate drove QX, of of really as that and a went at And QX the the demand portion from that's made year-to-date weakened end and that from what and market of have the way, on. anticipated in the our change the came the -- which, demand outlook other

Dmitry Silversteyn

Got you.

have that to of last the that's recovery the exchange foreign and lack Colgate issue other it's versus anticipated companies revisions basically obviously, of So, you've anticipated sort behind able you're bracket perhaps two that appropriately. and the

Kevin Willis

Dmitry. That's correct. right, That's

Dmitry Silversteyn

you. Thank I Okay. appreciate it.

Bill Wulfsohn

you. Thank

Operator

Ashland Investor Thank further you. like remarks. no to call I showing any Mrozek, And I'm turn Seth at would questions. Relations to back Director now for further the of

Seth Mrozek

a have Hope your you great We'll for you this Thank day. speak all morning. Justin. you, time soon. Thank

Operator

for in includes This conference. thank program. gentlemen, today's participating and Ladies you today's

may disconnect. You great have day. all a Everyone

Ashland (ASH) 31 Jul 192019 Q3 Earnings call transcript