Good day, ladies and gentlemen, and welcome to the Ashland Global Holdings, Inc. Fourth 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. As a reminder, this conference is being recorded. I would like to introduce your host for today's conference, Seth Mrozek. You may begin.

Thank you, Tiara, and good morning, everyone and welcome to Ashland's fourth quarter fiscal 2016 earnings conference call. My name is Seth Mrozek, Director, Ashland Investor Relations. Joining me on the call today are Bill Wulfsohn, Ashland's Chairman and Chief Executive Officer; Kevin Willis, Senior Vice President and Chief Financial Officer; and Luis Fernandez, Senior Vice President of Ashland and President of the Chemicals Group, which includes Ashland Specialty Ingredients and Ashland Performance Materials. We released preliminary results for the quarter ended September 30, 2016 at approximately 5:00 PM Eastern Time yesterday, November 8. Additionally, we posted slides and prepared remarks to our website, ashland.com, under the Investor Relations section and have furnished each of these documents to the SEC in a Form 8-K. As a reminder, some of the matters discussed today and included in our presentations may include forward-looking statements as such term is defined under U.S. Securities law. We believe any such statements are based on reasonable assumptions, but cannot assure that such expectations will be achieved. Please also note that we will be discussing adjusted results during this call. We believe this enhances understanding of our performance by more accurately reflecting our ongoing business. When discussing the Chemicals Group, we also refer to the following, core markets, these are the highly differentiated markets of personal care, pharma and coatings, which we identified during our November 2015 Investor Day as core platforms for targeted growth, niche markets where we deliver unique value propositions based on our technology platforms and foundational businesses that provide cash and critical mass. With that, I will turn the call over to Bill. Bill?

Thank you, Seth, and good morning, everyone. As you all recall, at this time last year, the Ashland team established four core investor priorities for fiscal year 2016. The first was to keep the team focused to deliver on our fiscal year 2016 strategic and financial objectives during this busy and transformational year. While we won't speak much to the Valvoline results on this call, I would like to acknowledge what a great job the team did. More specifically, they achieved record business results, completed the acquisition of Oil Can Henry's, continued to expand the Valvoline Instant Oil Change network and their reported strength in their international growth markets. To learn more about Valvoline's results, I encourage you to reference their release materials. Moving now to the Chemicals business, which will ultimately make up the new Ashland. As anticipated, earlier in the year, ASI faced a number of macroeconomic challenges from foreign currency and from the negative impact related to reduce oil and gas market activity in North America. That said, ASI made good progress on a number of key fronts. We added new commercial leadership which has a disciplined focus on driving results and enhancing our global leadership positions. We instituted new commercial excellence initiatives and we enhanced our R&D processes under a newly created role of Chief Technology Officer. Ultimately, as anticipated, the ASI team returned to volume growth in the fourth quarter. I will speak more to these efforts later in the call. Within APM, the Composites division proved resilient in a low-growth global environment. The team focused on controlling costs and they drove innovative solutions across their wide range of industries from automotive lightweighting to enabling the purification of drinking water across the globe. Also within the APM business is the I&S division. This business negatively…

Thank you, Bill, and good morning, everyone. I'll start with a review of our fourth quarter results. Our adjusted EBITDA was nearly in line with the prior year, as Specialty Ingredients delivered consistent performance, led by both consumer and industrial volume growth. In addition, while Valvoline and the corporate segment income both grew year-over-year, Performance Materials declined due to the unplanned outage and weak year-over-year pricing in the I&S division. Luis will spend more time discussing the segment results in a few minutes. While I don't usually focus on corporate line items during these calls, I think this quarter it might be helpful. First, adjusted interest expense increased by $9 million year-over-year. More than half of this reflects the timing associated with the separation related financing activities leading up to the Valvoline IPO. You may recall that during July, we used $370 million of proceeds from the Valvoline senior notes to repay existing Ashland bank loans. Due to the success of the financings and the IPO and since June 30, excluding Valvoline, Ashland has reduced its gross debt balance by $1.6 billion. This will result in reduced interest expense for Ashland during fiscal 2017. Our effective tax rate in the fourth quarter was 27%. While this was slightly better than we expected, it was well above the 23% effective rate in the fourth quarter of last year. This reflects the evolving regional sales mix during the quarter. After taking all of this into account, Ashland's total operating income was consistent with the prior year. I would like to turn briefly to the issue of financial reporting and consolidation now that the Valvoline IPO is complete. As you probably read in our prepared remarks, in the fourth quarter, Valvoline results on the income statement are consolidated into Ashland's results. This applies…

Thank you, Kevin, and good morning, everyone. This morning, I would like to start with Specialty Ingredients' results during the quarter. At high level, adjusted EBITDA was nearly in line with the prior year. We returned to volume growth in the quarter and continued our progress towards profitable growth. I am encouraged that the year-over-year declines we experienced earlier in the year are behind us. Under new commercial leadership, our Consumer Specialties team drove growth in a number of our key end markets including skin care, hair and nutrition. Results with our pharma customers were consistent with a strong year-ago period. I am pleased to report in late October, Ashland took a very important step to expand our global leadership position in pharmaceutical excipients. We opened a world-class production facility in Nanjing, China, to better serve China's growing pharma industry. Demand for polymer excipients is rising in China, as the industry moves to modernize oral drug manufacturing and comply with new regulatory standards that will become effective in early 2017. We are pleased to offer the production capabilities and an advanced quality control lab to our customers, as we continue to grow our global leadership position in pharma. Returning to Consumer Specialties' results, total volumes grew by 2% over the prior year. The volume improvement was offset by some lower selling prices, primarily for synthetic polymers attributed mainly to a lower raw material cost and a slightly lower mix of our higher margin products. We also drove overall volume gains within Industrial Specialties. Again, under new commercial leadership, we drove gains in each of our coatings, adhesives and other specialties end markets. Furthermore, and as you may have seen during the quarter, we announced price increases for a number of our industrial cellulosic product lines. While it is too early…

Thank you, Luis. As we look forward to fiscal year 2017, we have established three core investor priorities. The first is to complete the separation of Valvoline and establish the new Ashland as a focused specialty chemical company. As Kevin described, we are well on our way on this front. Our second core investor priority is to meet or exceed our fiscal year 2017 business plans. For ASI, we are targeting mid-single-digit growth in adjusted EBITDA. This will be in a low growth market environment and ASI will need to leverage its differentiated research, technical, and supply chain capabilities. They'll also need to price aggressively to capture the value we create. We'll need to prune less, so the positive impact of our share gains become more visible and impactful. And as in the past, we will maintain strong cost discipline. Within APM, we expect Composites results will be in line with fiscal year 2016, by driving value pricing, providing solutions to customers' needs and by continuing to reduce overhead cost. Also, within APM, in fiscal year 2017, while BDO prices appear to have stabilized, we believe the I&S division will be negative impacted by carryover price reductions experienced in fiscal year 2016. Put together, we expect overall Chemicals EBITDA growth, from the combination of ASI and APM, to be in the low single-digits in fiscal year 2017. That brings us to our third core investor priority for fiscal year 2017. We believe now is the time to pivot the company from a focus in 2016 that was heavily concentrated on the Valvoline separation to a new focus on driving the new Ashland, to achieve its full potential as the leading specialty chemical company. To achieve this objective, the Ashland team is focused on four critical success factors. The first is,…

Thank you. And our first question comes from the line of John Roberts from UBS. Your line is open.

Good morning. A quick question, Bill. I mean speaking of growth, I mean you've talked about global GDP in 2017, 3%, 3.5%. Like, do you expect ASI's growth to exceed the market? I mean can ASI grow above that for next year?

Well, certainly, I think that's a function of the segments that we operate and the geographies that we operate in. We would expect that, for example, in the pharma market, we would continue to grow at rates that are greater than that. And there are other parts of the market which, we'll say, have a little bit more cyclical component and we may grow at a slower rate in those areas. And Luis, you may want to add a few specifics to that.

Yeah, no. Thanks, Bill. And that's a perfect answer, there are areas, like obviously energy where we, at this time, are not assuming any recovery of the energy market and even though it's a small portion of our business, that's the one that we would expect to grow. But the vast majority, definitely in our core segments, we are seeing a volume growth and we expect to grow close to that GDP, slightly ahead or above that level in both pharma, personal care, coatings, some of our niche business like adhesives and so forth. And again, the areas where we're more conservative is more in energy and construction where again we still see more muted growth.

Okay. And just as a follow-up, the issues you've had in the past in ASI in terms of emerging markets or Latin American customers trading down, I mean is that still going on, like what can you do to serve those markets if this is like a longer term issue than initially expected?

No, I think that I have good news to report there. Actually, definitely, we have seen some improvement in Latin America, specifically in Brazil, where we saw both the reduction of demand as well as trading down as the new government there is stabilizing the economy. The currency has actually recovered somewhat. And actually, we're seeing both, the return of demand and return of customers back to buying the products that they really like. So although it was still a decline year-on-year, the decline was much smaller and we're starting to see a turn into Latin America. One of the things that we continue to do what we do well which is reformulate our customers' products and help them drive products that the consumers will be able to buy. So we're seeing both impacts at this time.

And Kevin and I were just in China what, a week or so ago, and the overall sentiment and mood of the team is much more blend now than it was one to two quarters ago. So we're cautiously optimistic. We'll see a stabilizing and, hopefully, ultimately an uptick in demand in those important regions for us.

Yeah, and I was in India three weeks ago, and I think it's similar in India as well.

Okay. Thank you very much.

Thank you. And our next question comes from the line of Mike Harrison from Seaport Global Securities. Your line is open.

Good morning, Mike.

Hi. Thanks for taking my question. Curious, the volume growth in Specialty Ingredients seemed to come a little bit at the expense of margins. I think some of us would have thought that as you started to see volume growth that you'd be able to leverage that to the bottom line and see better margin performance. So why do we seem to be getting less margin traction even though volumes are improving?

Yeah. That's a very good question. I'm glad that you asked it. Yes, we started to see volume growth. Fundamentally, our mix of market segments was slightly different. We had comparable sales in pharma. Pharma is definitely one of our highest margin business on the backdrop of our very strong quarter last year while some of the growth that we started to see came back in areas like personal care, like adhesives that have lower margins. So really we had a little bit of an impact of mix. As we continue to grow in all of the segments, I expect that to be more evident the fact that the growth is also driving higher margins. And again, I do want to highlight that we're working very aggressively in managing our working capital, and that also has an impact on margins.

That really relates to just the activity levels within our facilities and just to highlight also, we are taking, I think, fundamental and aggressive action as it relates to really making sure that we are very disciplined in terms of understanding, defining and ultimately pricing to value, as I mentioned earlier and so that should help us well.

And then, curious in terms of the capital deployment, what capital projects did you delay and why?

Yeah. We had a couple of expansion projects that we expected to start working on as we speak on some of our cellulosic chain. And the good thing here is throughout – last year, we had worked on productivity initiatives, now, we actually have been able to increase the capacities of our plants. So at this time, we don't see the need for those expansions, and that's true again for some of our cellulosics, some of our PVP plants, fundamentally driven by productivity initiatives that have increased the capacity of our facilities which, at this time, allow us to delay the expansions that we thought we were going to need at this time, and we will continue to work on those productivity initiatives in that regard.

All right. And then, Luis, just in terms of the BDO plant in the U.S., you have the five-week unplanned outage during this quarter, and then, you're going to be changing the catalyst during Q1. Why didn't you change the catalyst while you have the unplanned outage?

That is a good question I want to ask myself, but I'll tell you what it is. Fundamentally, this is an incredibly complex catalyst change. It's a very specific catalyst. It happens four years to five years. And both getting the catalyst in time, this is a catalyst that cannot see humidity, cannot see air. It requires months of planning. So unfortunately, even though we had the unplanned outage, it really couldn't come at a worse time, because we just couldn't do this when it's really one of the most complex operations in this plant that can only happen every four years to five years. And I will tell you the team tried hard to make and happen together, but because of the complexity of the operation, both from a safety perspective and from the type of catalyst and the type of equipment that we needed, we're just unable to do it. So it is a very unfortunate situation in that regard. The good thing is this only happens every four years or five years in that facility, and we're going to do it in the quarter, but we tried. Trust me.

All right. Thanks very much.

Thank you. And our next question comes from the line of David Begleiter from Deutsche Bank. Your line is open.

Thank you. Good morning.

Good morning.

Good morning, Dave.

Bill and Luis, just on ASI, the low end of the guidance is $480 million. What needs to occur for you to hit that number, and just how conservative is that guidance of $480 million that you put out there?

Well, at this time, we are trying to put out a number that is consistent with our expectations. I think that Bill was very clear that our target is to have mid-digits EBITDA growth, and that's what we're planning to do. What would need to happen? Obviously, lower growth, and we were expecting some slowness that we are seeing in the emerging economies to continue in a way that we're not expecting. So I think it's in the realms of the possibility, but obviously, we are trying to put a guidance where hopefully the middle is where we believe is where we're going to be. But we want to make sure that we have all of the probable (40:12) aspects. And we will continue to update the guidance throughout the year as we move forward and we did want to share where our costs were. But again, our objective is to have mid-single-digit EBITDA growth for the business.

Yeah. And I think that that's an important point Luis just made, as we do plan to provide some update as we go forward, and it would be logical that we would pull that range in a little tighter, as we begin to get quarters behind us. So as we learn this year, fiscal year can be actually a long time and many things can change. There are some surprises out there in the world, last night and this morning, the types of things like that that will have some impact on the world and it will be interesting. But we're ready. I mean I think our focus on the fundamentals, controlling the things that we can control, managing our costs, managing our price, driving productivity and, ultimately, volume through our facilities, driving share shifts, those are the things that we can control that make a difference and can help to drive our results more to the top end of that range which, ultimately, of course, would be our logical objective.

Okay, great. Just one last thing on Performance Materials, the guidance in that segment, the improvement in Q2 through Q4 versus Q1, any more color you can provide on what's driving that improvement and how much comps do you have in that being realized.

Are you referring to fiscal year 2017?

Yes.

Okay. Well, I think Luis can provide more color on it, but one of the things to note is that the BDO prices were falling throughout the fiscal – or the margin related to pricing was falling throughout the fiscal year. So when you start in Q1, you have the biggest gap between where we are today and where prices were last year. You combine that with the outage, which is significant, as Luis said, and then, ultimately, as we begin to move past those, sequentially through the year, that's where we begin to see things, if you will, improving. And we are working hard to drive prices up. It's still a challenge in this market, but we're making some progress. And while we don't talk a lot about it, this big outage that Luis is referencing related to the catalyst, it actually does change our plant productivity and our yields, and that should help us as well. So clearly, Q1 is the most difficult, as we see it, within the I&S business.

That's certainly correct, (42:42) but nothing to add.

Thank you very much.

Thank you. And our next question comes from the line of Christopher Parkinson from Credit Suisse. Your line is open. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC (Broker): Thank you. Can you just talk a little bit more about your new product pipeline, specifically in personal care and coatings? Within personal care, I believe you previously launched some new products in hair care, but you're discussing some new stuff in skin and oral care. Is there anything to consider that as we head into 2017?

Yes, definitely. Actually, as we speak, there is the in-cosmetics show in Thailand, and we have a variety of products that we're introducing there. One is the hair care. We're also introducing a fair number of biofunctionals, some of them naturally based on our Zeta Fraction technology. So that would be an example of our pipeline. Obviously, we're introducing them at the show, but that's again just to show that we're starting to move things. And the biofunctionals go mostly for skin care. And in terms of oral care, again, we have a pipeline. We're not introducing anything this quarter, but we have a couple of other products that we're working on with our customers. And that's true also for the coatings area where we are working with some of our customers moving forward. And again, some of the introductions are market-related so introduce it in the market. Some others are very specific to a customer, and we don't announce them publicly. But the example I wanted to give is, again, in in-cosmetics, we're introducing a new set of products, hair care, skin care and we've also introduced new products in nutrition. So I feel stronger about our pipeline. And then, the commercial excellence initiatives to drive that to commercialization faster.

The only thing I might just add is that as we're talking about what the lab that we established in pharma and the capabilities and the infrastructure that's been established around the globe, making sure that we take the core technology and localize those to meet the very specific needs of the local market, those are really critical and, ultimately, would fall within our definition of new products. Some of those are not headline in terms of – it's a new patented molecule, but they're relevant to the customers and enable solutions for the customers and that's why we're making the investment, and we feel very good about that global footprint to support whether they be global customers or local customers, meet their local needs. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC (Broker): That's helpful. Also, can you just give us a little more of a glimpse into your updated thought process on capital allocation, specifically buybacks versus M&A? And on the M&A front, can you just broadly discuss any key trends you've seen, whether it's geographic or from an end market perspective, and how you're thinking about targeting assets complementary to your portfolio? Thank you.

Sure. And as referenced just a few minutes ago, we really want to maintain a strong discipline, things that are very close to the core that enhance our position in our more differentiated areas, those things, I believe, where cost synergies can enable the fundamental economics, are really key to us. And yet, at the same time, and also I would mention, really more bolt-on related as opposed to very large acquisitions. But I also want to emphasize while we will be, if you will, opportunistic in that area, valuations still do remain high. And I think we feel that as we're pivoting to become the new Ashland, we have opportunities within our core business to continue to drive greater gains. And as important and valuable ultimately as acquisitions can be, we'd like to make sure that we execute at a high level on those. So we want to maintain our focus. So we'll be opportunistic, but it will be close to the core if we were to take any actions.

And I think what I would add to that is, as we indicated, we still have a $500 million share repurchase authorization that is active through the end of December and obviously, we pay a dividend. And as in the past, we don't view these things as mutually exclusive. And so, we can do any combination of these things over the course of time.

That was really a key part of creating and the way we establish the separation to two great companies is we ultimately wanted both of the companies to have the financial flexibility to ultimately pursue their strategy. So we feel good about that. Christopher S. Parkinson - Credit Suisse Securities (USA) LLC (Broker): Okay. Thank you very much.

Thank you. And our next question comes from the line of Laurence Alexander from Jefferies. Your line is open.

...Laurence (47:45). You guys mentioned changing dynamics and with the outcome of the presidential election, would you think a change in policy would have an outside effect on ASI given the relatively large exposure you guys have in that segment from the emerging markets?

Yeah, I mean your guess on that front is as good as ours in terms of what will be the net effect on, we'll say, overall GDP and the relative growth and health of the global economy, of which we're part of. We'll have to see the effect of that result on the strength of our dollar. That's an area that we'll keep a close focus on, but there's nothing specific other than what you would expect to see really with all industrial companies related to the impact of the election. So we're just like so many people waking up with interesting news to digest, and that's the only reason why I mention it.

Okay. And then, you did talk about I&S and potentially strategic alternatives. Is it large enough to be spun, or is it something where you're looking for a sale, or is it just kind of everything is on the board, so to speak?

Well, I think what's important is we do need to recognize we do need to have a truly specialty portfolio. We know that on the range of businesses within our overall company, the new Ashland that that is on the commodity end. There are different ways to reduce the volatility that's associated with I&S. And I'd rather not get into specific thoughts and specific actions and just leave at that. The company has had a good discipline and a good bias for action, and we understand the issue at hand. And so, we will probably talk more about this in the future.

All right. Thank you very much.

Thank you. And our next question comes from the line of Mike Sison from KeyBanc. Your line is open.

Hey, guys. Good morning.

Good morning, Mike.

Good morning, Mike.

When I think about your outlook for ASI, the first quarter EBITDA growth essentially flat, and I understand the seasonality on a sequential basis. But when you think about 2Q particularly, I mean what type of growth do you think you need to see in the beginning of the year to sort of get to that mid single-digits, and any particular areas of growth that you need to see on a volume basis to get there?

Yeah. I think that there's three things that we are working on that are relevant to get us to that mid single-digit EBITDA growth. Clearly, volume growth is one of those and there, commercial excellence initiatives, specifically, managing the pipeline of new opportunities and new products is key. So again, if we get volume growth in that low single-digit, that GDP number, that would be one key, but again, we're working very specifically on driving that. Secondly is the work that we're doing in our price to value initiatives, which include both our general price increases, but very specifically, driving to get the value that our products deliver to our customers will be a second element of the increase. And the third one is maintaining cost discipline. Those three things together, as we execute them, should get us to that level. So volume growth, GDP like, success on our price initiatives and cost discipline will get us there.

And I just want to highlight that and we've mentioned this before that really we've had a good history of growing in our key segments like pharma. And unfortunately, some of that growth has been obscured by some of those things that we've faced over the last year and other companies have, as well as decisions to really be pruning our portfolio and where we understand our mantra now is really more focused on growth. So I think some of the things that have been happening in the business will be more apparent as we go forward.

Got it. And then, when I think about each of the major businesses within ASI like Consumer Specialties, Industrial Specialties, in terms of their specific EBITDA growth, I know you don't look forward in that matter, but would you have Consumer Specialties growing faster in the single-digits to get to your goal and then Industrial Specialties lower?

Yeah. I think that again, we normally don't talk specifics about those, but I would say what we're trying to do is grow faster our core segments, so obviously, pharma, consumer and coatings, and we are seeing that, followed very closely by our niche businesses and within that adhesives, nutrition are businesses that are growing at a good pace. So it's very consistent with the strategy that we said in the past. Those are the areas of the business that again, if they grow faster, automatically, already that grows faster, because those are the higher margin businesses.

Great. Thank you.

Thank you. At this time, I'm showing no questions in the queue. I would like to turn the call back over to Seth Mrozek for closing remarks.

Thank you, Tiara. Thank you all for your time this morning, and thank you for your interest in Ashland. I hope everyone has a great day.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.