Ashland (NYSE:ASH) executives said the company delivered “solid results” in its first quarter of fiscal 2026 despite ongoing demand softness in coatings and construction markets, while highlighting growth in Life Sciences and steady performance in Personal Care. Management also updated its full-year outlook to reflect a longer-than-expected startup delay at its Calvert City facility and incremental weather-related costs in the Mid-Atlantic, both expected to impact the second quarter.
Quarterly results: sales down 5% as Life Sciences grows
Chief Financial Officer William Whitaker reported first-quarter sales of $386 million, down 5% year over year. He said the previously announced Avoca divestiture accounted for roughly $10 million (about 2%) of the decline. Excluding the divestiture, sales were down 3%, reflecting what management described as a mixed demand environment.
Adjusted EBITDA totaled $58 million, down 5% year over year, including a $1 million impact from the Avoca divestiture. Adjusted EBITDA margins were 15%, which Whitaker said included more than 250 basis points of compression tied to the Calvert City outage. Adjusted operating income increased 27% from the prior year, which management attributed to underlying stability and reduced depreciation and amortization following optimization actions.
Adjusted EPS (excluding intangible amortization) was $0.26, down 7% versus the prior year.
Cash generation and balance sheet
Ashland generated $125 million of cash from operating activities and $26 million of ongoing free cash flow (excluding a previously disclosed tax refund). Whitaker said working capital improvement and lower capital expenditures supported nearly 50% free cash flow conversion in what he called a “seasonally low quarter.”
The company ended the quarter with approximately $900 million of total liquidity. Net debt was $1.1 billion, and net leverage stood at 2.7x, which management said provides flexibility to invest while maintaining disciplined capital allocation.
Segment commentary: growth in Life Sciences; Specialty Additives pressured by coatings
- Life Sciences: Sales were $139 million, up 4% year over year. Business unit leader Alessandra Faccin said results were driven by resilient pharma demand and momentum in “Innovate” and “Globalize” initiatives. She highlighted contributions from injectables, tablet coatings, and high-value cellulosic excipients. Adjusted EBITDA was $31 million, up 11%, with margin expansion to 22.3% (up 140 basis points), including a $4 million impact from the Calvert City outage.
- Intermediates: Sales were $31 million, down 6%. Faccin described “trough-like dynamics” across BDO and derivatives that pressured captive BDO transfer pricing. Merchant sales were $22 million with steady volumes and modest pricing pressure, resulting in flat year-over-year performance. Adjusted EBITDA fell to $1 million from $6 million, with margin declining to 3.2% from 18.2%.
- Personal Care: Sales were $123 million, down 8%, which segment leader Jim Minicucci said was “almost entirely” due to the Avoca divestiture (about a 7% headwind). Organic sales declined 1%, reflecting stable demand overall but also unplanned customer plant outages that weighed on volumes in core hair and skin care. Adjusted EBITDA was $26 million versus $30 million a year ago, with margin at 21.1%.
- Specialty Additives: Sales were $102 million, down 11%, led by coatings and construction. Segment leader Dago Caceres cited weakness in China coatings driven by weak demand and structural overcapacity, along with softness in certain export markets and muted North American demand. Despite lower volumes, adjusted EBITDA rose 15% to $15 million, and EBITDA margin expanded 340 basis points to 14.7%, supported by efficiencies from its consolidated HEC network.
Operational issues: Calvert City startup delay and weather disruptions
Chief Executive Officer Guillermo Novo said equipment replacement work at the Calvert City site affected costs and pressured margins across the VP&D chain, though customer supply remained uninterrupted. Management had expected the impact to be contained to the first quarter, but Novo said additional equipment issues identified during commissioning have delayed startup and will extend impacts into the second quarter. The company expects to complete fixes and bring the unit online later in the quarter.
Separately, executives said weather-related events in the Mid-Atlantic caused brief outages at multiple sites, resulting in incremental costs and downtime, again without customer disruption.
Guidance: EBITDA range narrowed as temporary impacts move into Q2
Whitaker said Ashland is narrowing its fiscal 2026 adjusted EBITDA outlook to $400 million to $420 million, with other elements of guidance unchanged. The revised outlook includes approximately $11 million of temporary impacts in the second quarter from the Calvert City startup delay and weather disruptions. Whitaker said roughly two-thirds of the impact is volume-related and “fully recoverable,” though the timing of absorption recovery is more difficult given the delayed restart.
Management reiterated its total cost savings target of approximately $30 million for fiscal 2026 and said it remains on track. Whitaker also said Ashland is tracking toward its fiscal 2026 revenue commitment of $35 million from “Globalize” and “Innovate,” noting year-to-date incremental sales of $3 million toward a $20 million Globalize goal and $6 million toward a $15 million Innovate goal.
During Q&A, executives described improving momentum exiting the quarter, with December stronger than November and January continuing the trend. Novo cautioned against overinterpreting early-season coatings patterns, noting the seasonal lift typically builds from March and is strongest from April through September.
In Personal Care, Minicucci said the unplanned customer outages occurred in the first quarter, were on the customers’ side (not supply-related), and are not believed to be demand-driven. He said customers returned online before the quarter ended and Ashland expects to recover “most” of the impact in the second quarter and through the balance of the year.
About Ashland (NYSE:ASH)
Ashland Inc is a global specialty chemicals company that develops, manufactures and supplies a broad range of performance and process-critical additives, ingredients and technologies. Its portfolio spans performance additives for coatings, adhesives and sealants; specialty ingredients for personal care and pharmaceutical applications; and process aids used in water treatment and other industrial processes. Ashland aims to address customer challenges by delivering tailored solutions that improve product performance, processing efficiency and sustainability outcomes.
Founded in 1924 as the Ashland Oil & Refining Company, the firm gradually expanded into the specialty chemicals sector over the second half of the 20th century.
