Executive Summary

Q1 FY25 was mixed: sales declined 14% to $405M as portfolio optimization reduced revenue by ~$50M; Adjusted EBITDA fell 13% to $61M, while gross margin expanded to 28.1% on better production volume and mix .
GAAP EPS from continuing ops was $(3.51) driven by a non‑cash Avoca impairment; non‑GAAP Adjusted EPS excluding amortization was $0.28. Management reaffirmed FY25 guidance: sales $1.90–$2.05B and Adjusted EBITDA $430–$470M .
What changed: proactive maintenance turnarounds were pulled into Q1, adding ~$5M of extra cost and lower absorption; Europe was softer and pharma customers reduced inventories. Personal Care momentum continued; Specialty Additives improved EBITDA sharply YoY .
Potential stock catalysts: reiterated FY25 outlook despite near‑term headwinds; execution on $90M savings ($30M restructuring, $60M network optimization) with at least $20M savings targeted in FY25; Avoca sale completed March 14, 2025 simplifies portfolio and removes impairment overhang .

What Went Well and What Went Wrong

What Went Well

Personal Care delivered its fourth straight quarter of YoY revenue and EBITDA growth; Q1 sales +4% to $134M and Adjusted EBITDA +36% to $30M on higher volumes and stable pricing. “Personal Care delivered strong performance… with sales increasing four percent… Adjusted EBITDA was $30 million, up 36 percent” .
Specialty Additives EBITDA more than doubled YoY to $13M despite flat underlying sales ex‑optimization; improved volumes and narrower price declines aided margin recovery .
Gross margin expanded 290 bps to 28.1% due to production recovery and portfolio actions; Adjusted EBITDA margin ticked up ~30 bps to 15.1% despite turnarounds and stranded costs .

What Went Wrong

Life Sciences underperformed: sales -33% to $134M (ex‑optimization -12%) on softer pharma demand (especially EMEA), inventory control at customers, and 2024 carry‑over price reductions; Adjusted EBITDA -42% to $28M .
Proactive maintenance turnarounds added ~+$5M cost and lower absorption in Q1; Texas City saw a short weather‑related outage in Q2 to be recovered operationally .
Competitive pressure from China affected coatings/HEC markets (Specialty Additives) and some VP&D adjacencies; FX is a potential FY25 EBITDA headwind of ~$7–8M if rates persist .

Financial Results

Consolidated – sequential and YoY comparison

Metric	Q3 FY24	Q4 FY24	Q1 FY25
Revenue ($M)	$544	$522	$405
GAAP Diluted EPS – Continuing Ops	$0.60	$0.39	$(3.51)
Adjusted Diluted EPS ex amort.	$1.49	$1.26	$0.28
Adjusted EBITDA ($M)	$139	$124	$61
Adjusted EBITDA Margin (%)	—	—	15.1%

Notes: Q1 revenue -14% YoY; Adjusted EBITDA -13% YoY; gross margin expanded to 28.1% (+290 bps YoY) .

Segment performance – Q1 FY25 vs Q1 FY24

Segment	Sales Q1 FY24 ($M)	Sales Q1 FY25 ($M)	Adj. EBITDA Q1 FY24 ($M)	Adj. EBITDA Q1 FY25 ($M)
Life Sciences	$200	$134	$48	$28
Personal Care	$129	$134	$22	$30
Specialty Additives	$122	$115	$6	$13
Intermediates	$33	$33	$10	$6

Portfolio optimization reduced sales by ~$50M and Adjusted EBITDA by ~$8M in Q1; excluding this, sales -3% and Adjusted EBITDA -2% YoY .

KPIs and Cash

KPI	Q1 FY25
Cash from Operations ($M)	$(30)
Ongoing Free Cash Flow ($M)	$(26)
Cash & Cash Equivalents ($M)	$219
Average Diluted Shares (MM)	48
Net Debt / Leverage	Net debt ~$1.1B; ~2.4x leverage
Dividend	$0.405/share payable Mar 15, 2025

Non‑GAAP reconciliations, key items and EPS adjustments provided in Tables 4–7 of the release .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Sales	FY2025	$1.90–$2.05B (Nov 6, 2024)	$1.90–$2.05B (reiterated Jan 28)	Maintained
Adjusted EBITDA	FY2025	$430–$470M	$430–$470M	Maintained
Free Cash Flow Conversion	FY2025	—	>50% target	New emphasis
Capex	FY2025	—	~ $120M	New emphasis
Restructuring Savings	FY2025	$30M plan; 50% FY25/50% FY26	On track; at least $20M FY25 savings across programs	Executing
FX Sensitivity	FY2025	—	~$7–$8M EBITDA headwind if current FX persists	Risk highlighted
Dividend	Q1 FY25	—	$0.405/share declared Jan 20	Declared
Portfolio Actions	FY2025	Review/sell Avoca	Avoca sale completed Mar 14, 2025	Completed

Earnings Call Themes & Trends

Topic	Q3 FY24 (June qtr)	Q4 FY24 (Sep qtr)	Q1 FY25 (Dec qtr)	Trend
Pricing & Gross Margin	Softer pricing; mix/volume aided EBITDA	Softer pricing; HEC startup issues ~$5M	Pricing down ~2% YoY; gross margin to 28.1% (+290 bps)	Pricing pressure easing; margin rebuilding
Pharma/Life Sciences	VP&D/pharma weaker; share loss in EU	Pharma +6% YoY; lower pricing	LS sales -33%; pharma inventories cut; softness EMEA	Soft near term; mix of stabilization and share wins in Asia/LatAm
Personal Care	Strong recovery; +20% sales YoY	+11% sales; EBITDA +31%	+4% sales; EBITDA +36%; 4th straight QoQ YoY growth	Sustained momentum, especially Asia
Specialty Additives/HEC	Pricing lower in Asia; portfolio optimization impacts	Coatings/HEC issues; EBITDA up vs weak comp	China competition; EBITDA >2x YoY; pricing ~flat YoY (-1%)	Operational improvement; watching China
China competition/trade	—	China weakness flagged	HEC/coatings import pressure; planning for policy shifts	Competitive intensity remains a headwind
Turnarounds/absorption	—	HEC commissioning issues	Pulled major turnarounds into Q1; ~$5M extra	Absorption to recover across FY25
FX	—	—	$7–$8M potential FY25 EBITDA headwind if EUR/CNY/BRL stay weak	New headwind identified

Management Commentary

“We are nearing the final stages of our portfolio optimization… our top priority is to advance our strategy through execution discipline, globalizing four high‑quality business lines and advancing the commercialization of our new technology platforms” — CEO Guillermo Novo .
“Given the significant uncertainty surrounding trade policy… we moved major annual maintenance turnarounds to the first quarter… enhanced our operational flexibility to navigate uncertain markets” .
“Gross profit margin increased 290 bps to 28.1%… adjusted EBITDA margin for the quarter was 15.1%, up 30 bps YoY” — CFO commentary .
“We are affirming our full year sales and adjusted EBITDA outlook… several key factors are supporting this” — CEO .

Q&A Highlights

Seasonality and cadence: Q1 is seasonally weakest; bulk of volume and EBITDA pickup expected Mar–Sep; reaffirmed full‑year outlook without specific Q2 guidance .
Volume outlook: flattish to up overall; coatings stronger sequentially in North America; Europe flat; China remains challenging; Life Sciences expects growth in 2H across LatAm/Asia .
FX headwind: If EUR/CNY/BRL stay weak, FY25 EBITDA impact ~$7–$8M .
Chinese competition: Most acute in HEC (MEA/India) and certain VP&D adjacencies; core OSD pharma more stable .
Turnarounds: ~+$5M extra Q1 headwind (maintenance and absorption), concentrated in VP&D plants; expected to recover absorption through the year .
Pricing: No expectation for net pricing improvement in FY25; year‑over‑year erosion already captured in plan .

Estimates Context

Wall Street consensus from S&P Global (revenue, EPS, EBITDA) for Q1 FY25 and forward periods was unavailable due to data access limits during this session; as a result, we cannot provide definitive beat/miss vs consensus at this time (S&P Global consensus data unavailable).
On the call, one analyst referenced a Q2 EBITDA consensus of roughly $125M; management did not guide quarterly but reiterated a larger pickup through the remainder of the year .

Key Takeaways for Investors

Reaffirmed FY25 sales and EBITDA guidance despite near‑term pharma/Europe softness and Q1 turnaround costs; execution on >$20M FY25 savings is pivotal to hitting the range .
Mix is improving: Personal Care and Specialty Additives are driving EBITDA resilience; watch for continued Asia strength and coatings stabilization ex‑China .
Life Sciences headwinds should abate into 2H as pharma inventories normalize and share wins in Asia/LatAm progress; pricing headwinds are already embedded in FY25 plans .
FX and China competition are tangible swing factors; ~$7–$8M FX headwind and HEC/exports pressure could weigh if conditions persist .
Portfolio simplification is largely complete (Avoca sale closed Mar 14); impairment noise should fade, sharpening focus on core growth catalysts and innovation launches (7 products planned in 2025) .
Cash/Leverage are manageable (cash $219M; ~2.4x); capital allocation supports buybacks/dividends while funding targeted growth and optimization .
Near‑term trading: stock likely sensitive to updates on Q2 cadence, LS order normalization, and visible savings realization; medium‑term thesis centers on execution of $90M savings, globalization of four business lines, and innovation‑led mix upgrade .

Appendix: Additional facts

Q1 sales $405M (ex‑optimization -3% YoY); Adjusted EBITDA $61M (ex‑optimization -2% YoY). Portfolio optimization cut sales by ~$50M and Adjusted EBITDA by ~$8M .
Cash from operations $(30)M; ongoing FCF $(26)M; average diluted shares ~48M .
Dividend $0.405/share payable Mar 15, 2025; shares outstanding 47,182,862 as of Dec 31, 2024 .

ASHLAND INC. (ASH)·Q1 2025 Earnings Summary