Ashland Q4 Sales Rise 4%, FY2027 Outlook Targets Higher EBITDA

Ashland Inc. (NYSE: ASH) reported higher fiscal fourth-quarter sales and adjusted earnings as growth in Life Sciences and Personal Care offset weaker plant performance in Specialty Additives. The specialty materials company also projected fiscal 2027 sales of $1.905 billion to $1.975 billion and adjusted EBITDA of $405 million to $435 million, while identifying manufacturing productivity and commercial expansion as key priorities.

For the quarter ended September 30, 2026, sales increased 4% year over year to $498 million. Volumes rose 3%, led by pharmaceutical, personal-care, coatings and performance-specialties products, while pricing increased 2% and covered raw-material inflation across the company’s business units.

Adjusted EBITDA rose 2% to $121 million, though the adjusted EBITDA margin narrowed by 60 basis points to 24.3%. Adjusted operating income increased 8% to $77 million, and adjusted diluted earnings per share excluding intangible amortization advanced 4% to $1.12. Gross margin improved by 70 basis points to 36.5%, while combined selling, general and administrative, research and development, and intangible-amortization costs increased 7% to $109 million.

On a U.S. GAAP basis, Ashland recorded a $17 million loss from continuing operations, compared with income of $33 million a year earlier. Reported diluted loss per share from continuing operations was $0.36. The quarter included items related to asset impairments, the liquidation of an Argentina entity, restructuring and environmental reserve adjustments.

Life Sciences and Personal Care lead growth

Life Sciences sales increased 4% to $180 million, supported by mid-single-digit pharmaceutical growth, partly offset by a low-single-digit decline in nutrition and other products. Pharmaceutical volumes grew year over year for a sixth consecutive quarter, with gains across major regions and technology platforms.

The segment’s adjusted EBITDA increased 16% to $64 million, and its margin expanded by 380 basis points to a record 35.6%. Ashland attributed the improvement to stronger volumes, favorable product mix, pricing and cost performance.

Personal Care posted the strongest sales growth among Ashland’s reporting segments. Revenue rose 8% to $163 million, reflecting broad-based gains across products and regions. Biofunctional actives and microbial protection delivered double-digit growth, while care ingredients benefited from double-digit growth in hair care and high-single-digit growth in skin care.

Personal Care adjusted EBITDA increased 14% to $49 million, with the margin rising by 160 basis points to 30.1%. Higher volumes, favorable mix and pricing discipline supported the result.

Intermediates sales were unchanged at $33 million. Merchant sales, which account for about 70% of the segment, increased 4% as favorable mix offset lower volumes. Adjusted EBITDA rose 20% to $6 million, and the margin expanded by 300 basis points to 18.2%. Ashland said new customer wins in energy-storage applications provide an opportunity for additional fiscal 2027 growth, although the timing of customer volumes remains uncertain.

Specialty Additives offsets gains elsewhere

Specialty Additives sales remained flat at $131 million despite high-single-digit growth in coatings and double-digit growth in performance specialties. Construction and energy-related sales declined by double digits, with the company citing soft energy and resources markets and portfolio actions affecting construction.

Adjusted EBITDA for the segment fell 31% to $20 million, while its margin contracted by 680 basis points to 15.3%. Ashland said output and productivity at its Hopewell facility weighed on profitability. Key process gaps have been addressed, according to the presentation, and management is now focused on increasing production rates and output.

Cash generation and fiscal 2027 outlook

Fourth-quarter ongoing free cash flow increased 42% to $74 million, helped by lower working capital, and represented 61% of adjusted EBITDA. For the full fiscal year, ongoing free cash flow totaled $232 million, compared with $127 million in fiscal 2025. Ashland ended September with $480 million of cash, total liquidity of $976 million and net debt of $891 million, equivalent to net leverage of 2.3 times.

Ashland’s fiscal 2027 plan targets approximately $10 million of incremental cost savings and productivity improvements, $20 million of incremental sales from its globalization initiatives and $45 million of innovation-driven sales. The company expects resilient demand in Life Sciences and Personal Care and continued commercial momentum in coatings and performance specialties, while other markets remain soft.

Management expects pricing actions to offset raw-material and freight inflation, but said a stronger U.S. dollar would create a headwind to sales and adjusted EBITDA. Ashland is targeting ongoing free cash flow conversion of more than 40% of adjusted EBITDA and capital spending of up to approximately $140 million.

The outlook remains subject to global demand and geopolitical uncertainty, foreign-exchange volatility, the pace of productivity improvements at Hopewell, continued momentum in coatings and performance specialties, and the timing of new Intermediates customer volumes. The company also highlighted inflation, supply and logistics disruptions, indebtedness, cybersecurity, regulatory exposure and environmental and litigation matters among its broader risks.