アシュランド（ASH）2026年度第4四半期決算説明会：2027年度見通しと利益率向上要因

アシュランド（ASH）が発表した2026年度第4四半期売上高は、ライフサイエンス部門およびパーソナルケア部門における数量増加に支えられ、前年同期比で増加しました。利益の伸びは、スペシャリティ・アディティブス部門、特にホープウェル工場での生産性低下と固定費吸収の悪化によって押し下げられました。

主なポイント

• 2026年度第4四半期の売上高は前年同期比4%増の4億9,800万ドルとなりました。販売数量が3%増加、価格が2%上昇した一方、為替変動により売上高は約300万ドル押し下げられました。
• 調整後EBITDAは前年同期比2%増の1億2,100万ドルとなりました。ライフサイエンス、パーソナルケア、中間体各部門の2桁成長は、スペシャリティ・アディティブス部門の業績低迷や未配賦全社費用の増加によって一部相殺されました。
• ライフサイエンス部門の調整後EBITDAマージンは過去最高の35.6%に達し、パーソナルケア部門のマージンも30.1%に達しました。
• 営業キャッシュフローは前年同期の4,000万ドルから9,000万ドルに増加しました。継続的なフリーキャッシュフローは7,400万ドルとなり、調整後EBITDAの61%に相当します。
• 経営陣は、2027年度の売上高を19億500万ドル〜19億7,500万ドル、調整後EBITDAを4億500万ドル〜4億3,500万ドルと見込んでいます。
• アシュランドの「Globalize」および「Innovate」プログラムは、2026年度に約5,200万ドルの純増売上高をもたらし、合計目標値である3,500万ドルを50%近く上回りました。

主要財務データ

事業および営業業績

ライフサイエンス

ライフサイエンス部門の売上高は4%増の1億8,000万ドルとなりました。医薬品売上高は約6%増加し、前年同期比での数量増加は6四半期連続となりました。VP&D、セルロース系製品、注射剤、フィルムコーティングなどの主要地域・プラットフォーム全体で広範な成長がみられました。

調整後EBITDAは16%増の6,400万ドルとなりました。販売数量の増加、良好な製品ミックス、価格設定、コスト効率改善に支えられ、マージンは380ベースポイント拡大して過去最高の35.6%となりました。

アシュランドは、経口バイオ医薬品用の吸収促進剤であるカプリン酸ナトリウム「Permexa」を発売し、60件を超える活発な顧客エンゲージメントを有していると発表しました。ニュートリション分野の売上高は、販売数量の減少と中南米における新規顧客獲得のタイミングによりわずかに減少しましたが、経営陣は2027年度中の収益貢献を見込んでいます。

パーソナルケア

パーソナルケア部門の売上高は、広範な数量増加を主因として8%増の1億6,300万ドルとなりました。バイオ機能性活性成分と微生物防護製品がそれぞれ2桁成長を記録しました。ヘアケアは2桁成長、スキンケアは1桁台後半の成長を達成しました。

調整後EBITDAは14%増の4,900万ドルとなり、マージンは160ベースポイント拡大して30.1%となりました。経営陣はこの改善要因として、数量増加、良好な製品ミックス、規律ある価格設定、コスト改善を挙げています。

オーラルケアおよび家庭用品向け用途は、北米における注文の時期のズレによりわずかに減少しました。その他の地域は前年同期比で成長しており、オーラルケアの成長は2027年度も継続すると経営陣は予想しています。

スペシャリティ・アディティブス

スペシャリティ・アディティブス部門の売上高は横ばいの1億3,000万ドルとなりました。コーティング向けは1桁台後半の伸びを示し、パフォーマンス・スペシャリティズは2桁成長を記録しました。中国市場では3四半期連続で前年同期比増収を記録しました。

これらの成長は、エネルギー・リソース向け需要の低迷や、付加価値の低い建築向け数量の意図的な縮小によって相殺されました。販売価格は約5%上昇し、原材料インフレを吸収しました。

調整後EBITDAは前年同期の2,900万ドルから2,000万ドルに減少し、マージンは15.3%に低下しました。経営陣はこの低迷の主な要因としてホープウェル工場の生産性および産出量の低下を挙げています。主要なプロセス投資は完了したものの、処理量と資産利用率の向上は2027年度の最重要課題であり続けています。

中間体

中間体部門の売上高は横ばいの3,300万ドルでした。外販売上高は販売数量がわずかに減少したものの、良好なミックスにより4%増加しました。調整後EBITDAは500万ドルから600万ドルに増加し、マージンは300ベースポイント拡大して18.2%となりました。

経営陣は、米国のバッテリー・電気自動車（EV）・蓄電向け複数年契約を含む最近獲得した顧客取引が2027年度中に本格稼働し始めると見込んでいます。立ち上がりの時期は顧客の生産スケジュールに依存します。

業績予想（ガイダンス）

アシュランドは2027年度の見通しとして以下を提示しました。

経営陣は、ライフサイエンスおよびパーソナルケア部門の需要が引き続き底堅く推移し、医薬品や高付加価値パーソナルケア用途での勢いが維持されると予想しています。コーティングおよびパフォーマンス・スペシャリティズは最近の商機拡大をさらに推し進める見込みである一方、建築およびエネルギー・リソース部門は引き続き最終市場の軟調に直面するとみられます。

2027年度の収益は、2026年度ほど顕著ではないものの、例年通り下期偏重の傾向を維持する見通しです。経営陣によると、通常下期が年間調整後EBITDAの55%〜60%を占める一方、第1四半期が季節的ボトムとなります。

リスクと注視すべきポイント

• ホープウェル工場の2026年度の操業度未達に伴う吸収不足額は、当初計画に対し約1,750万ドルに上りました。経営陣は、このうち約500万ドルの影響が2027年度第1四半期に持ち越されるものの、年度の残り期間においては業績改善がそれを補って余りある効果をもたらすと見込んでいます。
• セルロース系資産の定期修繕作業が、第1四半期におけるスペシャリティ・アディティブス部門の重荷となる見込みです。
• 業績予想は販売価格の引き上げにより予想される原材料費および物流費のインフレを相殺することを前提としていますが、経営陣はコストの変動性が続くと見込んでいます。
• ドル高の進行により、売上高および調整後EBITDAに大幅な逆風が生じると予想されています。
• 設備投資の増加および在庫の緩やかな増加に伴い、フリーキャッシュフロー転換率は2026年度の水準から低下する見通しです。
• 建築およびエネルギー・リソース部門は引き続き最終市場需要の弱さに晒されていますが、2027年度第1四半期には前年同期比での比較ハードルが和らぐと期待されています。

アナリスト質疑応答のハイライト

パーソナルケアの持続性：経営陣によると、当四半期における同部門の8%成長のうち約7ポイントは数量増によるものでした。バイオ機能性活性成分、微生物防護、ケア・イングレディエンツにわたり広範に成長しており、持続可能性に対する自信を支えています。

ライフサイエンスの利益率：経営陣は最高水準の利益率の要因として、医薬品分野の数量増加、好調な製品ミックス、価格調整、VP&Dの安定化を挙げました。同社はまた、セルロース製品や注射剤における顧客パイプラインとシェア拡大についても強調しました。

フリーキャッシュフロー：アシュランドは長期的に50%を超える正常化フリーキャッシュフロー転換率を目標とし続けています。2027年度の予想が低下しているのは、設備投資が約9,000万ドルから最大1億4,000万ドルに増加する可能性があり、在庫も緩やかに増加すると見込まれるためです。

設備投資：同社は、従来将来の年度に計画されていたHECのボトルネック解消投資を前倒ししています。経営陣は、コーティング需要が回復した際に供給能力を確保しておくことが目的であると述べました。

イノベーションによる成長：2027年度の目標である4,500万ドルのInnovate純増売上高は、主に中核的なイノベーションによってもたらされます。より新しい技術プラットフォームは、商用化と採用が進むにつれて将来の年度により大きく貢献すると予想されています。

ホープウェル工場の回復：経営陣は、2027年度に生産量が約25%増加し、2028年度も同程度の改善が続くと見込んでいます。生産量の拡大が同拠点の固定費ベースにレバレッジを効かせるため、EBITDAにより大きなプラス効果がもたらされると予想されます。

資本配分：経営陣は、医薬品およびパーソナルケア分野での補完的なボルトオン買収機会の追求を含め、優先順位に変更はないと述べました。またアシュランドは、2028年1月に迎える5億ユーロの社債満期を前に、4億8,000万ドルの現金残高と未利用のリボルビング設備があることを強調しました。

決算説明会文字起こし全文

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決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Good day, and thank you for standing by. Welcome to Ashland's Fourth Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Sandy Klugman, Director of Investor Relations. Please go ahead.

Sandy Klugman

Thank you, operator. Good morning, everyone, and welcome to Ashland's Fourth Quarter and Full Year Fiscal 2026 Earnings Conference Call and Webcast. My name is Sandy Klugman, and I'm Ashland's Director of Investor Relations. Joining me today are Guillermo Novo, Chairman CEO and William Whitaker, CFO; as well as our business unit leaders, Alessandra Assis, Life Sciences and Intermediates, Jim Minicucci, Personal Care and Dago Caceres, Specialty Additives.

Please note that we will be referencing slides during today's call. We encourage you to follow along with webcast materials available at ashland.com, under Investor Relations. Please turn to Slide 2. As a reminder, today's presentation contains forward-looking statements regarding our fiscal 2027 outlook and other matters as detailed on Slide 2 and in our Form 10-K. These statements are subject to risks and uncertainties that could cause future results to differ materially from today's projections.

We believe these statements are based on reasonable assumptions, but there can be no assurance that the expectations will be achieved. We will also reference certain adjusted financial metrics, both actual and projected, which are non-GAAP measures. We present these adjusted figures to provide additional insight into our ongoing business performance. Reconciliations are available on our website and in the appendix to the presentation. I'll now hand the call over to Guillermo for his opening remarks.

Guillermo Novo

Thank you, Sandy, and welcome to everyone joining us. I'll begin with an overview of our fourth quarter and full year fiscal 2026 performance. William, will then review our financial results, cash generation and fiscal 2027 outlook. Our business leaders will then provide additional insight into their segment performance, and then I'll return at the end to discuss our innovation platforms and priorities for the year ahead.

Please turn to Slide 5. We closed fiscal 2026 with continued strong commercial performance across our core segments, Pharma, Personal Care and Coatings and Performance Specialties within Specialty Additives. Intermediates delivered solid profitability improvement. Life Science sales increased 4%, led by broad pharma growth across major regions and technology platforms. Pharma delivered its sixth consecutive quarter of year-over-year volume growth, so supported by continued momentum of our globalized and innovate strategies.

Personal Care sales increased 8% with double-digit growth in biofunctional actives, microbial protection and hair care, along with high single-digit growth in skin care. In Specialty Additives, Coatings delivered 9% growth and Performance Specialties 14% growth. China delivered its third consecutive quarter of year-over-year sales growth. Intermediates was stable and profitability improved with favorable merchant mix, pricing and cost performance for supporting margin expansion. Despite raw material and freight volatility, our teams executed well with disciplined pricing action offsetting cost inflation across all our business units.

At Hopewell, key process improvements and critical investments are in place with our focus now on execution to increase output and productivity, and to improve specialty additives profitability. Cash generation was another area of strength with lower working capital supporting higher operating cash flow and ongoing free cash flow conversion.

Please turn to Slide 6. On the top line, sales increased 4% with volumes up 3%, led by Life Science, Personal Care, Coatings and Performance Specialties and pricing up 2%, covering cost inflation across all business units. Overall, the fourth quarter was a strong underlying earnings quarter with double-digit adjusted EBITDA growth in Life Science, Personal Care and Intermediates, partially offset by Specialty Additives operating performance.

Taken together, the quarter demonstrated strong underlying performance across much of our of the portfolio, while highlighting a clear opportunity to convert continued commercial momentum into stronger consolidated profitability through improved operating execution.

Please turn to Slide 7. Looking across the portfolio, 2 things stand out for the quarter. First, our higher gross Life Science and Personal Care businesses continue to perform well. Life Sciences delivered a record adjusted EBITDA margin of approximately 36%, while Personal Care delivered a margin above 30%. Both businesses generated strong top line growth and meaningful margin expansion supported by outperformance for our execute, globalized and innovate priorities.

Second, our core Specialty Additives businesses, Coatings and Performance Specialties continue to outperform their markets. Strong performance in these businesses was offset by the impact of the Iran War on our Energy & Resources business as well as our actions to reduce exposure to the construction segment. As expected, hopeful productivity levels impacted overall specialty additives profitability. Intermediates made good progress delivering margin expansion despite challenging market conditions.

As we enter fiscal 2027, our focus is on driving growth in our core businesses, maintaining margins and improving manufacturing operating performance. Before turning the call over to William, I wanted to step back and put our full year performance in perspective.

Please turn to Slide 8. Fiscal 2026 demonstrated the underlying strength of our portfolio with strong growth and profitability in Life Science and Personal Care and improving commercial momentum in Coatings and Performance Specialties. That momentum strengthened as the year progressed. The second half sales increased approximately 6% year-over-year. Our globalized and innovate strategies to outperform their growth targets and our teams demonstrated strong pricing discipline, recovering cost inflation across the portfolio.

Operationally, we recovered from the Calvert City outage supporting stronger operating and financial performance across the portfolio. We also delivered strong cash generation, further strengthening our financial flexibility. We enter fiscal 2027 from a position of strength with good commercial momentum, disciplined pricing and solid financial position.

Our focus is clear. The sustained growth in our high-value businesses, advance our innovation pipeline and convert improved manufacturing performance into stronger earnings and cash flow. With that, I'll turn over the call to William for a more detailed review of our fourth quarter financial performance. William?

William Whitaker

Thank you, Guillermo. Please turn to Slide 10. Fourth quarter sales were $498 million, up 4% from the prior year quarter. Volumes increased 3%, led by Life Sciences and Personal Care and continued growth in Coatings and Performance Specialties. Pricing increased 2% and covered cost inflation across the business units. Foreign currency reduced sales by approximately $3 million. Adjusted EBITDA was $121 million, up 2% from the prior year quarter. Higher volumes, favorable mix and pricing were the primary drivers of growth supporting double-digit adjusted EBITDA growth in Life Sciences, Personal Care and intermediates.

These benefits were partially offset by unfavorable absorption in specialty additives and higher unallocated corporate expense primarily incentive compensation. Foreign currency also reduced adjusted EBITDA by approximately $2 million. Adjusted operating income increased to $77 million from $71 million. Adjusted income from continuing operations, excluding intangible amortization expense was $52 million or $1.12 million per diluted share compared with $50 million or $1.08 per diluted share in the prior year quarter.

Cash flow provided from operating activities was $90 million compared with $40 million in the prior year quarter, driven primarily by lower working capital. Ongoing free cash flow was $74 million compared with $52 million representing 61% of adjusted EBITDA conversion versus 44% in the prior year quarter. As we enter fiscal 2027, we expect working capital to modestly increase from the year-end levels. We ended fiscal 2026 with $480 million of cash, $976 million of total liquidity and net leverage of 2.3x, supporting financial flexibility as we enter fiscal 2027. With that, I'll turn the call over to our business unit leaders for a closer look at segment performance. Alessandra, over to you for Life Sciences.

Alessandra Assis

Thank you, William. Good morning, everyone. Please turn to Slide 11 for Life Sciences. Life Sciences delivered another strong quarter with sales increasing 4% to $180 million. Pharma sales increased approximately 6%, representing our sixth consecutive quarter of year-over-year volume growth. Performance was broad-based across major regions and technology platforms, including VPN, cellulosics, injectables and film coating. Nutrition sales declined slightly on lower volumes, primarily reflecting the timing of new customer wins in Latin America which are expected to contribute positively during 2027.

Pricing increased approximately 1% compared with the prior year and covered cost inflation. Foreign currency, reduced segment sales by approximately $1 million. Our globalized and Innovate strategy continues to support pharma growth including strong performance in injectables and film coatings and increasing adoption of recently launched higher-value offerings. During the quarter, we launched permexa sodium caprate, a permeation enhancer for oral biologics with more than 60 active customer engagements underway advancing our strategy to build differentiated solutions for the oral delivery of biologic therapies.

Turning to profitability. Adjusted EBITDA increased 16% to $64 million, and adjusted EBITDA margin expanded 380 basis points to an all-time high of 35.6%, reflecting the continued shift towards high-value applications and strong execution across the business. The increase was driven primarily by broadly higher volumes, favorable product mix, pricing and cost performance. Life Sciences enters fiscal 2027 with strong commercial momentum, supported by sustained pharma growth and significant opportunities to expand our differentiated portfolio globally and scale recently launched high-impact innovation.

Please turn to the slide 12 for Intermediates. Intermediates sales were $33 million, in line with the prior year quarter. Merchant sales increased 4% despite slightly lower volumes, reflecting favorable mix with continued strength in N&P partially offset by lower merchant video volumes. Captive sales declined by approximately $1 million, reflecting lower downstream production requirements. Pricing covered raw material cost inflation, while foreign currency had a negligible impact on sales.

Turning to profitability. Adjusted EBITDA increased to $6 million from $5 million, and adjusted EBITDA margin expanded 300 basis points to 18.2%, the improvement reflected favorable margin mix, disciplined pricing and strong cost performance, partially offset by lower volumes. Importantly, we delivered meaningful margin improvement while broader BDO market conditions remain challenging.

Looking ahead, we expect new customer wins to start ramping during fiscal 2027 and providing an additional growth catalyst as we continue to manage the business with discipline. Now I will turn the call over to Jim to discuss Personal Care.

James Minicucci

Thank you, Alessandra. I'll now highlight our Personal Care results. Please turn to Slide 13 for Personal Care. Personal Care delivered another strong quarter with sales increasing 8% to $163 million, representing our third consecutive quarter of mid-single-digit growth. Consistent with prior quarters, performance was driven primarily by broad-based volume growth across all regions and most major markets. .

Our commercial engine continued to gain momentum with strong execution, accelerating growth throughout the year. Our globalized businesses, biofunctional actives and microbial protection both delivered double-digit growth, reflecting strong customer adoption and demand. Within biofunctional assets, Alipepto and Eternit, continued to deliver strong commercial wins. Microbial protection continued to gain share, benefiting from investments made to strengthen our regional manufacturing capabilities and cost position.

Care Ingredients sales increased approximately 7%, led by double-digit growth in Hair Care and high single-digit growth in Skin Care. While oral care and household combines declined slightly, primarily reflecting order time. Pricing covered raw material cost inflation while foreign currency reduced sales by approximately $1 million. During the quarter, we launched easy-hance, a super wetting agent designed specifically for curly hair enabling faster and more efficient way while improving detangling, fiber alignment and product performance across Livon and rinse-off applications.

Turning to profitability. Adjusted EBITDA increased 14% to $49 million, and adjusted EBITDA margin expanded 160 basis points to 30.1%. Higher volumes and favorable mix together with disciplined pricing and cost performance supported margins above 30% while we continue to invest for growth.

Personal Care enters fiscal 2027 from a position of strength. Our commercial engine is gaining momentum. Our globalized businesses are growing and our innovation pipeline continues to create new opportunities with customers. Our focus is clear, sustain the momentum, gain share and translate our innovation into durable, profitable growth. With that, I'll turn the call over to Dago to review Specialty Additives.

Dago Caceres

Thank you, Jim. Please turn to Slide 14. Specialty Additives sales were $130 million, in line with the prior year quarter. Coating sales increased by a high single-digit percentage, and Performance Specialties delivered double-digit growth with continued share gains across regions despite challenging end market conditions. China delivered its third consecutive quarter of year-over-year sales growth. These gains were offset by some in-market demand in Energy & Resources while lower construction volumes reflected deliberate portfolio choices to prioritize higher value ratios.

The team also continued to execute well on pricing. Pricing increased approximately 5% and cover raw material cost inflation, demonstrated continued discipline in a volatile cost environment. Foreign currency reduced segment sales by approximately $1 million. Turning to profitability. Adjusted EBITDA was $20 million compared with $29 million in the prior year quarter, and adjusted EBITDA margin was 15.3%. The decline primarily reflected the expected lower Hopewell productivity output. We have addressed key process gaps and completed the critical investments needed to support near-term performance.

Our focus is now on execution with the team working to increase output and productivity over the coming months. Importantly, the team continues to deliver strong commercial performance across Coatings and Performance Specialties with share gains across regions and disciplined pricing execution. With that, I'll turn the call back to William.

William Whitaker

Thanks, Dago. Please turn to Slide 16. Let me now provide a year-end update on our execute strategy and manufacturing productivity initiatives. We completed several important structural elements of execute during fiscal 2026. Our VP and optimization and small plant consolidation initiatives delivered approximately $18 million of benefits, including $15 million from VP&D and $3 million from small plant consolidation. VP&D outperformed our expectations with strong execution in several areas that contributed to margin improvement. At Hopewell, we are making progress against our comprehensive plan to improve productivity and output. Actions across people, process and assets are beginning to translate into better manufacturing performance. The plan and key investments are in place, and our focus now is execution increasing output and asset utilization will support the strong commercial opportunity across our portfolio and drive improved profitability.

In summary, our execute initiatives have reduced the structural cost base and strengthen the operating foundations. With our footprint actions complete, our focus now shifts to capture the full economic benefits.

Please turn to Slide 17. Turning to globalize and Innovate, fiscal 2026 was an important proof point for both strategies with each delivering results well ahead of the goals we established during the year. Together, globalized and Innovate generated approximately $52 million of incremental sales, nearly 50% above our combined fiscal 2026 target of $35 million. Importantly, the contribution broadened across the portfolio as our investments in new capabilities, technologies and geographic expansion increasingly translated into commercial growth.

Globalized delivered approximately $26 million of incremental sales compared with our fiscal 2026 target of $20 million. Growth was supported by continued momentum across biofunctional actives, microbial protection, injectables and tablet coatings, reflecting the investments we have made to expand our capabilities and strengthen our presence in key regions. NAV delivered approximately $26 million of incremental sales compared with our fiscal 2026 target of $15 million. Performance reflected increasing commercialization and customer adoption of differentiated technologies and recently launched products across our markets.

We are very pleased with the progress our team has made during fiscal 2026. These results demonstrate that the investments we made are translating into commercial outcomes while also giving us a broader pipeline of opportunities to build upon. As we enter fiscal 2027, our focus is on building on that momentum by scaling these opportunities with the strongest customer attraction, expanding adoption across customers and regions and continuing to advance new opportunities through the commercial pipeline.

For fiscal 2027, we are targeting approximately $20 million of incremental globalized sales as well as $45 million of incremental innovate sales, representing a 25% increase in the combined incremental sales versus 2026. And now I want to take a step back, as Guiliemo highlighted earlier. Fiscal 2026 showed that the transformative actions we've taken in recent years reshaping our portfolio, streamlining our footprint and investing in globalized and Innovate have laid a very strong foundation. We saw that in our recovery from the Calvert City outage earlier this year with adjusted EBITDA margin up roughly 400 basis points from the second quarter to the fourth and including a record margin for Life Sciences and 30-plus margins for Personal Care.

Globalized and Innovate beat their combined target by nearly 50%, VP&D optimization outperformed and our pricing actions are recovering cost inflation across the businesses. We also delivered our free cash flow conversion above our 50% commitment and brought net leverage down within our long-term target range. With that foundation in place, our focus in fiscal '27 is about execution, and converting these gains into durable earnings growth.

Please turn to Slide 18 for the outlook for fiscal 2027. Our planning reflects continued commercial momentum and improving operating performance balanced by a measured view global demand, raw material and freight volatility and a stronger U.S. dollar growth. For fiscal 2027, we expect sales of $1.905 billion to $1.975 billion and adjusted EBITDA of $405 million to $435 million. For ongoing free cash flow, we expect a conversion greater than 40% of adjusted EBITDA. This reflects an expected modest increase in inventory as well as capital expenditures of up to approximately $140 million.

Demand and Life Sciences and Personal Care is expected to remain resilient, supported by continued pharma momentum and growth across our higher-value personal care applications. Within Specialty Additives, we expect Coatings and Performance Specialties to build on recent commercial momentum. Construction and Energy & Resources continue to face soft end markets, year-over-year comparisons begin to ease in the first quarter as we lap prior year declines. We have our planned maintenance across our cellulosic assets in the first quarter this year, resulting in some additional weighting of specialty additives earnings towards the balance of the year.

In Intermediates, recent customer wins provide additional growth opportunities in fiscal 2027 with the timing and pace of new volumes dependent on customer production ramps. Across the portfolio, we expect globalized and Innovate to build on the strong progress from fiscal 2026 and continue contributing to growth. We also expect continued volatility in raw material and freight costs, we will continue to manage pricing with discipline and response to changes in input costs and our outlook assumes pricing offsets anticipated inflation over the course of the year.

For fiscal 2027, Ashland is targeting approximately $10 million of net productivity and manufacturing optimization benefits driven by continued progress across HEC and VP&D networks and full realization of the small plant consolidation initiative, partially offset by the carryover impact of lower hotel output in fiscal 2026. Hopeful we expect to continue to build on recent progress we discussed earlier with improving output and asset utilization supporting progressively stronger specialty additives performance throughout the year.

First half results are also expected to benefit from lapping the prior year Calvert City operational impacts supporting improved margins in Life Sciences, Personal Care and intermediates. Our outlook also reflects a stronger U.S. dollar based on recent spot rates, resulting in estimated headwinds of approximately $20 million to $25 million in sales and $7 million to $10 million in adjusted EBITDA. With that, I'll turn the call back over to Guillermo to discuss our innovation pipeline and our priorities for fiscal 2027. Guillermo

Guillermo Novo

Thank you, William. Please turn to Slide 19. The Innovation remains a core driver of Ashland's long-term growth and differentiation. As we discussed during our September innovation webinar, we have made significant progress advancing our technology platforms, from technical and commercial validation towards commercialization. Customer engagement remains strong and we are increasingly working with our customers to translate these technologies into specific products and applications. We have also advanced the regulatory and manufacturing capabilities needed to support commercialization and scale of these technologies. .

Across our 7 scalable technology platforms, we have filed over 50 patents and launched 23 products, including 12 launches since May of 2025. These technologies create opportunities across pharma, personal care and coatings. We're also seeing tangible commercialization progress across the portfolio. Several platforms have moved beyond validation phase into commercial launch and broader commercial adoption, giving us multiple paths to growth. Our focus is now on commercialization, customer adoption and disciplined scaling. We are prioritizing opportunities with the strongest customer validation and clearest paths to scale.

Importantly, we are taking a disciplined approach to investment. We can support the early stages of commercialization, largely through existing manufacturing capabilities and infrastructure with additional investments aligned with customer adoption and demand. The breadth of the portfolio, strong customer engagement and continued progress to towards commercialization, reinforce our confidence in innovation as an important long-term growth driver for Ashland.

Please turn to Slide 20. As we enter fiscal 2027, our priorities are clear. We will build on the differentiated growth we are seeing across Pharma, Personal Care, Coatings and Performance Specialties and continue expanding our higher-value business globally. We will advance our progress across our manufacturing network, translating our optimization actions into greater reliability, productivity and profitability with continued improvement at Hopewell remaining a key priority.

We will accelerate commercialization and customer adoption across our innovation platforms and continue scaling our globalized initiatives. And we will maintain our focus on cash generation and disciplined capital allocation, supported by our strong balance sheet and financial flexibility. Fiscal 2026 demonstrated that we can deliver even against a challenging market backdrop. We generated strong commercial momentum, made meaningful progress across our strategic initiatives and deliver strong cash generation.

As we enter fiscal 2027, our focus is on carrying that momentum and converting the progress we have made into sustained growth, improved profitability and strong cash flow. We have the right priorities, a strong portfolio and clear opportunities within our control to continue to improving performance. I want to thank our employees for their continued commitment, customer focus and execution throughout fiscal 2026. And I also want to thank our shareholders for their continued support and engagement. Operator, please open the line for Q&A.

Operator

[Operator Instructions] Your first question comes to the line of Chris Parkinson with Wolf Research.

質疑応答

Unknown Analyst

This is Reed on for Chris. I'm wondering if you could talk about personal care market. It seems like they're inflecting after some years choppiness. And I'm just wondering how sustainable you think it is and what you're hearing from your customers?

Guillermo Novo

Jim, do you want to take that question. I'd just comment, overall, it's pretty robust across all the regions and areas. And obviously, as Jim said, a lot of the growth are things that we're controlling in terms of new innovations and globalized innovate side. So there's a lot of levers that are favorable to us moving forward. But Jim, do you want to go in more detail? .

James Minicucci

Thank you for the question. So as we have shared in the prior calls and prior quarters, we continue to see growth accelerate as we move through the fiscal year. And if you unpack just the Q4 growth of 8%. I think the real point to highlight is, one, it was predominantly volume driven. So we were favorable on price versus prior year to cover cost inflation. As we've shared in the past, our ingredients are a small portion of the customer cost back. We're really the performance engine, but we took the price actions required to cover costs, but the majority of growth is roughly 7% and was volume driven.

And so that's one of the key indicators that give us confidence in the sustainability of the performance that it's volume driven. I think also when you look at the growth of 8%, it's really broad-based across the portfolio. Roughly half of it being from our globalized segments, biofunctional actives and microbial protection, each growing north of 10% and then the other half came from our care ingredients portfolio, the polymer part of the portfolio, which was a combination of the innovation launches that we've had, plus the base business. So really, really broad base.

Unknown Analyst

Got it. Okay. And then just a follow-up on Life Sciences. Could you talk about the margin improvement there? Again, how sustainable do you think it is? And overall, how excited are you about your pharma pipeline?

Guillermo Novo

Sandra, do you want to take that?

Alessandra Assis

Yes, sure. Basically, from a margin standpoint in Q4, it's what we talked about, we have strong volumes in pharma, favorable mix, so definitely, the strategy with the growth momentum focused on innovation and globalized. We are seeing the results with the top line and also unfavorable. Pricing very similar to what Jim described for Personal Care. We have implemented a price increase to cover inflation. But really, the top line -- bottom line came from the growth momentum. And yes, there is certainly excitement with pipeline. This is a business where pipeline is very important and to our customers' pipeline. So the growth momentum you're seeing, it is a reflection of that Q4 specifically, overall [indiscernible] coming on.

So definitely, we are seeing the reflection of our focus on share gains, globalized and innovate with wins in serologic [indiscernible] and injectables, as we talked about also VP&D in the third and fourth quarter has been positive. So we have seen the stabilization on VP&D, which is very good

Guillermo Novo

Operator? Can we please move to the next question.

Operator

Your next question comes from the line of Laurence Alexander with Jefferies.

Kevin Estok

This is Kevin on for Laurence. I guess -- so first 1 on free cash flow conversion. So you're calling for about 40-plus per conversion I'm just curious, I guess, what we should view as a more normalized free cash flow conversion rate beyond 2027?

Guillermo Novo

Yes. Let me just a high-level comment and will you -- can give the details. we're not really changing a lot in our CapEx side. The only thing I would say the major thing we've done is in our HEC with the network optimization. We have 2 things. One, we're just working to optimize the productivity of 1 product line, 1 plant that's been the issue this year. But if we look at longer term, we do want to make sure that we're building capacity debottlenecking for in 2030.

Right now, the macro demand in coatings has been sort of muted. We had -- as an example, this year, we expected some pickup in North America that didn't happen. For next year, we're also forecasting sort of a muted environment. The issue is there is a lot of pent-up demand in housing and real estate. There's a lot of things here, so equally, we could see a pickup in '27, '28 of demand. So rather than waiting to add those developing projects in late '27, '28, we've just decided we're going to move them forward so that we're prepared for any upside that could come in the later years of our planning process. So it's really more of a timing of the CapEx rather than anything else. Well, I don't know if you want to give any more.

William Whitaker

Kevin. In terms of the free cash flow, over time, we still expect greater than 50% free cash flow relative to adjusted EBITDA. Obviously, this year quite strong at 60%. This year, we're guiding greater than 40%. And Guillermo highlighted some of it. But on the CapEx side, it's an increase from $90 million to $140 million in the guide. I do want to underscore that the up to. We wanted to give ourselves some room on the project timing. So we'll update you as the year progresses in terms of the timing of those key projects.

But really, from a capital allocation priorities perspective, that element doesn't change maintenance CapEx discipline on that front. We've continued to have and recognize the savings from some of the asset footprint rationalization over the years. And so we've set the guide prudently on the CapEx side. And obviously, this year, there was a tailwind on the inventory side, about $85 million in terms of inventory reduction in the fiscal 2026. I expect that to have a modest bill next year and in select areas, HEC being one of them. And the combination of this too gives us greater than 40%.

But I do expect over time, as CapEx normalizes, we'll be closer to that 50% that we've guided to in the past.

Kevin Estok

Okay. Understood. And just on farmer durability, -- just kind of curious what your order books and maybe customer activity suggest about growth I guess, in 2027, whether you were seeing any customer inventory normalization that could possibly change that trajectory?

Guillermo Novo

If you look at the -- like the overall, the order book is pretty solid. Actually, I would say even in October, looks in line with our expectations. No big surprises. If you look at the inventory bills and dynamics over history, normally, customers pre-inflationary environment, maybe build up some inventory or when they're shortages, they build up some inventory. We are not the biggest -- as Jim mentioned, we're not the biggest driver of cost our things are a small portion of our overall cost. So this is not for inflation, this is not where they save money. They probably build in other higher value areas for their cost structure. So that's the driver right now.

So for additives, I don't expect that that's going to be -- we don't see it, and we don't expect that that's going to be the big driver because it's very little value for customers. What we saw was really like in 2022, when there's shortages, added as an ingredients are small volume, and you can't -- it's like a restaurant, you can't cook if you don't have the spices, you don't want to run out of that. So that's where we see the inventory build that impacts additives and ingredients, that's what we saw in '22 and then the destocking in '23. But that's nothing dynamic right now. So we don't expect that as we move forward.

Operator

Your next question comes from the line of John Roberts with Mizuho Securities.

Unknown Analyst

This is Edlain Rodriguez on behalf of John. A quick 1 on Personal Care. I mean, maybe this is for Jim. So we are seeing some softness in all care and household care anything specific going on in those markets? Or is it, as you said, just a timing thing? And does that mean we should expect to see better comps next quarter once the timing issue is resolved?

James Minicucci

Thanks for the question. Yes, exactly, as I shared in my prepared remarks, it was really just isolated to 1 region. So it was an order timing, specifically in North America. If you looked at oral care and home care across the other regions, they were all up in the other regions versus prior year. And even if you look in places like China on a full year basis, we've seen tremendous growth in oral care with local oral care companies in China through the course of the year. We had a launch this year, a new thickening polymer for toothpaste that is getting great market adoption.

So overall, a really good year for Oral Care, and we expect that to continue in 2027.

Unknown Analyst

Okay. Great. And another one on materials or Gillermo, William. Can you talk about like raw material cost increases you see in and your ability to raise prices to offset that? What's the conversation been like with your customers and also, do any of the businesses have an easier or more challenging time to pass through those costs?

Guillermo Novo

Again, let me give just a high-level question and William can give you some of the details on the inflation all that. In general, again, we're additives. We're not the biggest driver for our customers, one. Two, we're not petrochemical. Our exposure to petrochemicals is much lower. So don't expect us to do price increases like companies that are exposed to propylene, ethane, all those kinds of chains. Ours is much more muted with 1% to 3% growth depending on the business. We not only cover inflation, we can cover the margin protection for what we do.

We do not grow and drive performance by pricing because of inflationary designs. We value price, so this is more about protection. You launch, we position the product well and the volume growth is what's going to drive our performance. And this is no different. So we tend to try to go in and do this quickly, get out of the wave customers. They got bigger problems and bigger challenges with other costs and other raw materials. So we want to make sure that they understand that we're not abusing the situations. We don't do anything of that nature, and it's been pretty smooth.

Last few years, you've seen that we've been able to do this pretty well. And I think the team did a fantastic job to move quickly to do what we needed to do and just that with our customers. But William, do you want to...

William Whitaker

More detail. On the pricing side, I hope it's clear that going back a couple of earnings calls go when inflation really started to move on the space, and we committed to cover that and gave some guidance on what that could look like in terms of the impact. And ultimately, we did that. Pricing was down 2 points in Q2, up 2 points in Q4. So it's a 400 basis point swing over the last couple of quarters, and the team has done a really nice job across all business units. I would say the areas in terms of the business units that maybe have the -- all of them are experiencing it, but the one with the larger impact to date has been specialty additives and intermediates. .

And clearly, you can see that in our pricing numbers that we've been able to go out and get that. So as we look ahead to next year, what does that look like? A lot of the actions we took were based on the costs earlier this year. And so while things have been volatile, we haven't really seen things gap out well above where we were then. And so at this point, we're assuming we can do what we did this year and any incremental changes we'll go out and cover across the business units. So carryover pricing should be a modest tailwind in the first half, but you do have the raw material carryover based on where the raw material basket is today. So overall, we feel good about our ability to manage pricing in the context of a volatile environment.

Operator

Your next question comes from the line of Steven Haynes with Morgan Stanley.

Steven Haynes

I wanted to ask on the EBITDA guide. I understand that you haven't given any specific quarterly commentary, but could you help us think about the shape of the year a little bit, how you see maybe at the midpoint, first half versus second half, anything unusual to call out in that regard.

Guillermo Novo

Nothing major unusual from an external perspective. I think the timing is -- maybe you want to cover just timing of when we do turnarounds or all that, but that's more timing issues. But do you want to comment -- that's right.

William Whitaker

Some of the moving pieces, I'd say, at a high level in terms of the shape of the year. I don't expect it to be drastically different than what we've experienced in the past. Typically, second half for us is 55% to 60% of the full year EBITDA. I would say in '27, it should be less pronounced to the second half than it was this year, and that's because of one, obviously, we had the coverage City and weather impact in first half last year. That was a $20 million number, so quite sizable. So I do expect a nice margin uplift across Life Sciences, Personal Care and intermediates in the first half.

From a seasonality perspective, nothing unusual to Guillermo's point. Q1 is our seasonal low. I do expect that to remain to be the case. But we do have volume mix momentum in several areas, as you heard from the team on the globalized innovate as well as lapping some of the impact on our secondary markets, both construction as well as energy. Pricing carryover will be most pronounced in the first half of next year as well. And then the other piece to Guillermo's point, and this is typical for us. We tend to do our turnarounds on the cellulosic assets in the December quarter, and that's the seasonal low for the coating season.

So we are doing that this year. And the last piece I'd add is the Hopewell element because it is the seasonal low. This gives us an opportunity to go out and build inventory in that area. And so we do expect Holewell throughput to increase throughout the year. although we do have a negative carryover impact in Q1 based on how it ran in the second half of this year. So I hope that covers it. But those are really some of the moving pieces as we think about the shape of next year.

Operator

Your next question comes from the line of Josh Spector with UBS.

Joshua Spector

I apologize if I missed this, but I did want to ask on the CapEx step up. It kind of surprised us at least because we thought a lot of the innovation-led growth was going to be repurposing kind of lower capital intensity. So why the step up now?

Guillermo Novo

Yes. As we got that question a little bit earlier, Josh. The issue is more of a timing issue. As part of our network optimization with HEC, right now, we're focused on just stabilizing -- normalizing the productivity at Hopewell and we've made investments there. But if you look at longer term, we do need to do some debottlenecking. The plan was to do it in the outer years, more 2029, '30. We decided that we're going to move that forward and the comment I mentioned was really -- there's a lot of pent-up demand in -- especially in coatings, in the coatings space.

So this year, we expected some recovery in North America, Europe that did not happen. But there is a lot of pent-up demand in the real estate market construction around the world, especially here in the U.S. So there is a probability that is not insignificant that we could start seeing a pickup in demand after a very muted market both in the new construction in the real estate, and I would say in the DIY market. So we don't want to risk anything and we're just saying, look, let's move it up. It's just a year, 1.5 years forward. have the capacity ready and we will move on so that we have more normalcy in our production planning and we're not rushing in the last minute at capacity.

Unknown Executive

The other piece, Josh, just -- I would say, just to reinforce, we set the guide prudently, right? We are intentional up to $140 million, so we've given ourselves some room on the project timing. We'll update you as the year progresses, but I expect this to also normalize once we get through this. And normally, we probably won't be able to spend that kind of money. So they'll be flow over into the next year, that's sort of a max level if you just 100% of the project is all spent in 1 year.

Joshua Spector

Okay. I guess that makes sense. I mean follow-up later. It does seem like odd timing to be pulling forward for coatings recovery. No one seems super excited there at the moment. But I can shift gears and ask just on the innovation-led growth, $45 million how would you break that down between kind of incremental products versus some of the more, call it, new the world-type products you've had? What's that split look like? And does that change your level of confidence at all?

Guillermo Novo

So Josh, 2 things. One, just to go back on your comment on HEC and what we're doing there. Remember, our plants are running pretty well across the board in terms of the capacity utilization rates. We had an issue in 1 product line, 1 plant, but the rest is pretty well. So we want to make sure that we're in a good position from a supply perspective because any pickup, we do want to be ready for it across our network. We now have 3 plants, not 4, so that's part of the logic of that.

In terms of innovation, in the near term, still core innovation is a bigger part of the driver, just the timing of things and the nature of the portfolio. If you look at Life Science, it's a pipeline, right? And new things will take longer to come in. But equally, for the other businesses, we're launching some of these newer products, but a lot of the wins that we're getting are things that we've been working on in the last 2 years in the globalized, especially. That's a big driver. But also, if you look at coatings, a lot of the growth that they're getting is on new biology modifiers in the synthetic side, new multifunctional HECs and multifunctionality in the additive base, new additives.

So all those are more in the core area. And then obviously, the focus with the new technology is launches and commercialization. The ramp rates will come over time as these new technologies really start getting hit. So there'll be more in the outer years, but not so much in the '27.

Operator

Your next question comes to the line of David Begleiter with Deutsche Bank.

Unknown Analyst

This is Emily Fusco on for Dave. Just wondering if you could maybe provide any color on the potential sale process given some of the recent news or if there's been any developments there that you can share?

Guillermo Novo

So there's not much we can share. As usual, we don't comment on speculation and rumors and all the noise that is out there. I think as we've said, we're focused on the things that we can control on execution of our strategy. The biggest value creation driver in any scenario you want to do is performance. And that's really where we have the team focused on. It's about to execute, get the productivity going, that has been our challenge in 2026, not the external world. It's really that part and if we fix that, we'll be in a very strong position in 2027, drive to globalize and innovate and just execute our portfolio. So that's the primary focus for everybody at this point in time. .

Unknown Analyst

Got it. Okay. And then maybe just to pivot here, and sorry if I missed this, but did you -- or can you quantify the EBITDA impact from Hopewell in 2026 or Q4 and maybe how much year-over-year improvement, if any, is embedded into the 2027 guidance?

William Whitaker

Of course, Emily, it's William. So in terms of the impact for the full year in terms of operating , let me start there and then I'll translate that to the financial impact, but in terms of the operating performance, we were under absorbed versus our initial plan this year, about $17.5 million. That doesn't all sit in specialty additives, but the vast majority of it does. The key piece to keep in mind, a portion of that does roll over in the next year. So about $5 million of that $17 million will impact us in Q1 based on how the site ran in the second half. But then I think what's really important is the operational ramp for the year, right? And what we do from here in terms of driving throughput and productivity at the site to support existing sales, existing demand.

And so as we look out for '26, '27, '28, that trajectory. We expect to increase out about 25% roughly and then another order of magnitude similar in the following year. And so the plans are in place, and that's really a key part for us. And so then as you look at fiscal '27, you have the $5 million carryover. We do expect to more than offset that for the balance of the year. So it should be an incremental positive for fiscal '27, and then really where you get the EBITDA leverage is going into fiscal '28 as you're producing at that higher output on the fixed cost base. Hope that helps.

Guillermo Novo

And Emily, the other part is the other impact, the total impact was significant because there was another $20 million, if you look at the equipment filler and Calvert was about 15% and the weather was another 5%. So those 2, we've lapped and production has normalized, as William said in his comments, that one is already behind us. So the year-on-year this year, all the external things, all the execution of strategy went according to plan. The miss was in the operating side. I think we've lapped 60% of it already and now really focus on the Hopewell side on one technology that we want to increase productivity.

Operator

Your next question comes from the line of Mike Harrison with Seaport Research Partners.

Michael Harrison

In the Specialty Additives business, you noted that there have been some deliberate actions to reduce your exposure to lower-margin sales, I think, particularly in the construction market. Maybe just give us a little more detail on what you're doing there and maybe what the revenue and kind of the timing looks like as you're walking away from some of that lower margin business?

Guillermo Novo

So thanks for the question. And this is an area that we really do want to clarify. And as we said in our comments, Energy & Resource and Construction are the areas that they're the smaller businesses within the portfolio, but the movement has been significant. I would say, if you look at Energy & Resources, it's about around more. It's really disrupted a lot of demand there. Again, probably impact out small business, but impact probably around $30 million overall in the net impact. And so now we're pretty -- the business is now pretty much at the bottom. So we expect, as we move forward, that will be a recovery.

Construction is different. I mean we were at $120 million cost when we were running the business for absorption and just trying to load the plant, that is now much smaller in terms of our overall portfolio. We now -- the purpose of this is we have some very good businesses within construction, so the higher end. We're committed to those customers and we want to make sure that we have the demand and supply. But there's still a margin that we use to fill up the MC unit that we have. The priority is Pharma, so we will make sure that the volumes -- we use this as a filler, right?

So construction is never going to grow for us in a significant way. When we talk about the construction market not growing, that's not the driver. This is just going to be a sort of a steady-state business that will go up and down depending on our need to load the plant and we'll try to keep the higher-end portions of construction that we like and that we're committed to the customer base.

William Whitaker

And Guillermo, just to add, too, I think Mike another perspective here, it's not a new dynamic. I think it becomes apparent in Q4 or in Q3 because the team has been doing such a nice job in Performance Specialties and Coatings. And so you do have some offset on the construction side, clearly. But one of the things I think is important is it's not new. And so we are going to lap that impact in Q1 in terms of some of these choices because you'd asked how much are you examine it has already happened. So I would expect the construction business to be relatively stable year-on-year going into Q1 of fiscal '27. Just to be clear on that.

Michael Harrison

All right. Very helpful. And then second question is on the Personal Care margin from here. It seems like maybe we're seeing some benefits from the volume leverage from plant optimization maybe mix is getting better. But just wondering where margin can go from this kind of 30% EBITDA margin level as we're thinking about the next year or 2?

Guillermo Novo

I'll let Jim take this. I mean, obviously, as you said, mix is a big driver. There's a lot of really good stuff coming out of or biofunctionals or microbial protection and even the new projects that they're launching in the -- all those have higher than average margins. So the mix is a big part of the story as we move forward based on our strategy. But Jim, do you want to give any other color?

James Minicucci

Thank you for the question. So as you said, yes, I mean we're really happy to have 30% margins in the quarter as we've been talking for the past couple of years. That's really something that we've been working towards to get into that high 20%, 30% margin range. We still see upside and additional headroom to go from here. So clearly, in the first half of 2027, we should see some margin uplift and benefit versus prior year due to the onetime items not repeating, specific to Calvin City event and the weather event from last year.

And then going forward, as we said, our commercial engine is really taking hold. We're seeing really robust growth. Our high-margin businesses, Biofunctional Actives, Microbe Protection is growing at double digit, which we expect to continue in 2027 and beyond. So we're going to get favorable mix through volume growth that will add additional margin uplift. And so now we're focused on getting to that mid-30% range.

Operator

Your last question comes on the line of John McNulty with BMO Capital Markets.

Unknown Analyst

This is Margherita Margolis on for John. Could you provide a little bit more color on the energy -- on the new energy storage customer wins, including the size of the opportunity and maybe when you expect these volumes to ramp up?

Guillermo Novo

Yes. So I'll comment on that. I mean we don't comment on specific contracts and things of customers, but it's a big long-term contract U.S. big battery EV and energy storage. So it's a multiyear significant volume provide a lot of loading stability to our intermediate business and our integrated footprint. And the first year is the one that we'll look at it that we have our numbers of what they've given us -- the first year is usually the noisiest because of just ramp rates, which is this year. But everything is moving. It's now support the customer and what they're going to be ramping over the next 6 to 12 months.

Unknown Analyst

Got it. And just broadly on capital allocation with leverage just over 2x. Has your appetite for M&A changed heading into fiscal '27? And then separately, has anything changed with the capital allocation Advisory Committee, any updates there?

Guillermo Novo

No. Nothing has changed. We have a clear strategy. I hope everybody is seeing, everything that's happening is in line with the strategy and things that we're doing. We invest, and we're very clear on what we want in terms of bolt-ons around pharma and personal care being a priority around assets to support maybe growth of some of the new technologies in geographic growth around the world. So those are the biggest areas.

On your question on the capital allocation. I mean they're very engaged and focused and it's really, one, deeply embedded into what we're doing in our strategy around growth. So understanding where we are in terms of our execute capital allocation for our productivity initiatives, getting all our plants performing and over the long term, up on their productivity curves and contributing to the business and making us competitive.

On the globalized, it's not just capital resources, all the investments that we're doing to drive the execution of our strategy, which is delivering very well, and we want to keep that momentum. They're looking at understanding our innovation portfolio, deep diving into our technologies, understanding them, but more importantly, looking at which are the more scalable ones and what capital needs that we need in those areas and how do we make sure that we can maintain momentum and obviously, understanding our bolt-on type activities as is normal. I mean long term, we've been working on our bigger strategy on scale for us and things we're going to do over the last 2 years, the committee is deeply working on all those things as they always have been. So pretty robust and everything is around execution of our strategy and growth.

William Whitaker

And the other piece I'd add to that is very intentional this year on capital allocation, strengthening the balance sheet. And part of that is making sure that we have a full suite of options as we approach the upcoming debt maturity we have. So we have a January '28 bond tower, EUR 500 million feel really good about the cash position of $480 million plus undrawn revolver gives us a lot of flexibility as we're thinking through that. Credit spreads are still quite attractive, but base rates have obviously moved in many jurisdictions. So we like the flexibility we have with building cash on the balance sheet in advance of that and more to come as we work through what we'll do to address the bond tower.

Operator

Thank you. Thank you. I'm showing no further questions at this time. I would now like to turn it back to Guillermo Novo for closing remarks.

Guillermo Novo

Thank you. Thank you, everybody, for your questions and participation. I hope you see and feel the excitement we have, I know 2026. Actually, it's played out very well in terms of our overall strategy, commercial execution. Obviously, we had our gaps in the operating side. These are onetime issues. 60% of them are already behind us. We're working on the other ones. So these are onetime things. We made a lot of changes. But what excites us is, look, we have completed our transformation. .

The last few years have been a lot of work and a lot of moving parts of change. It's done. We've organized ourselves and change our cost structure as a company. We've driven a significant change in our portfolio focus, more in additives and ingredients and consumer. The manufacturing network we've optimized. We've identified 4 businesses to drive globalization, market share gains, and we've reset entirely our innovation portfolio, stronger toolbox new opportunities that create incremental growth for us.

All those things are done. Our team is focused on execution. And you see the results in 2026 from a commercial perspective, they align extremely well with what we have said, resilient markets, higher quality growth and all the drivers, that's why we are excited about 2027. I think the issue now is fix the things that we need to do with 1 product line, 1 plant in terms of our productivity and then just focus on execution. We have the right strategy. The teams are really advanced, and we're not starting these things we finished the transformation at a time where the rest of the industry is still in the process of starting their transformations.

So this gives us an advantage to stay focused, execute on our strategy, independent of what the external market is I think we have a lot of company-specific growth drivers that really can drive our performance moving forward, and that is our #1 priority. So I look forward to talking to everybody over the coming weeks, and I appreciate your support, and thank you.

Operator

Thank you, and thank you again for your participation in today's conference. This does conclude the program, and you may now disconnect.