Good morning, ladies and gentlemen, and welcome to the Ashland Global Holdings 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 call is being recorded. I would now like to turn the conference over to Mr. Seth Mrozek, Director of Investor Relations.

Thank you, Amanda. Good morning, everyone, and welcome to Ashland's fourth quarter fiscal 2017 earnings conference call and webcast. 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; and Kevin Willis, Senior Vice President and Chief Financial Officer. We released preliminary results for the quarter ended September 30, 2017, shortly after 05:00 PM Eastern Time yesterday, November 6. Additionally, we posted slides 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. One other note before I turn the call over to Bill. Some of you may have noticed a different approach we are taking to our quarterly earnings materials. Based on feedback from our shareholders and analysts, we have redesigned these materials with the intent of providing clearer, more concise, more consistent information about our results and business outlook. Yesterday's earnings release and accompanying slides reflect these changes and we believe that it achieves the goal of enhancing the clarity and content of the quarterly package. Based on comparisons to extensive benchmarking we conducted over the past few months, we also believe this approach is more consistent with industry best practices. As always, we welcome your feedback. And with that, I will turn the call over to Bill.

Thank you, Seth, and good morning, everyone. As Seth referenced, we've listened to investor feedback and completed extensive benchmarking in attempt to make our earnings results clearer and more concise, and we do look forward to your feedback. Moving to our results in the fourth quarter, we saw tremendous progress on a multiple fronts. Within Specialty Ingredients, Pharmachem delivered per our expectations and we have now identified synergies which exceed our original $10 million target. We grew in personal care, pharma, and other specialties end market. We also sharpened our focus on asset utilization, improving our mix, which helped us to generate 5% organic improvement in gross profit. These gains were essential as raw material prices increased more than expected and demand in coatings and adhesives was flat. The good news is we're making solid progress in raising price. We also saw adhesives and coatings volume rebound in October and expect sales demand to grow in the upcoming quarters. Put it all together, ASI increased revenue by 12% or $66 million and grew EBITDA by 12% or $15 million. The year-over-year adjusted EBITDA gains were driven both by the addition of Pharmachem as well as by year-over-year increases in the balance of the base ASI business. In Composites, we had outstanding results. The team did a great job of generating sales and earnings growth. Sales grew 35% and adjusted EBITDA climbed 64%. Adjusted EBITDA margin gained 190 basis points. These results were driven by three main levers: the first was strong sales increases in all regions which, of course, drove better asset utilization; the second is contributions from the recently acquired plant in France, which is exceeding our original expectations; and the third is continued focus on improved pricing and margins by providing new products and value-added solutions. And I…

Thank you, Bill, and good morning, everyone. Adjusted EBITDA in the quarter was $161 million compared to $143 million in the year-ago period. As a reminder, the prior-year period includes $14 million of pension income and $5 million of corporate costs related to Valvoline. In the quarter, we reported net loss from continuing operations of $0.84 per diluted share. On an adjusted basis, we reported income from continuing operations of $0.78 per diluted share compared to $0.48 in the prior year. Our effective tax rate for the fourth quarter after adjusting for key items was 6%, which was lower than expected due primary to income mix. We currently expect the effective tax rate for the first quarter of 2018 to be approximately 10%. For fiscal 2018, we expect an annual effective tax rate in the range of 8% to 13%. Capital expenditures were $73 million during the quarter compared to $82 million in the prior-year period. Free cash flow during the fourth quarter was $67 million compared to $54 million in the prior year. For the full fiscal 2017, free cash flow was $56 million, including $80 million of one-time separation and severance-related payments. For the full year, Ashland's adjusted EPS was $2.44 compared to $2.25 in fiscal 2016. These results will serve as the baseline for the fiscal year 2018 to 2021 EPS growth target that we announced at our Investor Day in early-May. It's appropriate at this point to briefly reflect on fiscal 2017. As Bill mentioned, we executed on a lot of positive actions, and as you may recall, with the execution of the Valvoline transaction, not only did we fully separate Valvoline from Ashland, but the bulk of Ashland's pension assets and liabilities moved to Valvoline, significantly reducing this key risk factor for Ashland. As you saw in the outlook summary we released last night, we have issued aggressive but achievable EBITDA, EPS and free cash flow targets for fiscal year 2018. We have a great deal of confidence that Ashland today has the people, processes, and tools in place to achieve these objectives to which the entire team is being held accountable. Specifically, full year EBITDA growth for Specialty Ingredients, excluding the impact from acquisitions, divestitures and currency, is expected to be in the mid- to high-single-digit range throughout the year beginning in Q1. Our EPS outlook for Q1 of $0.35 to $0.45 per share presumes the mid- to high-single-digit ASI EBITDA growth I just mentioned, a tax rate of approximately 10% and normal seasonality across all our businesses. Just a word about capital allocation. As we've indicated, our primary use of cash for the next couple of years will be debt reduction to reach our leverage target of gross debt at 3.5 times EBITDA. To be clear, this does not preclude allocating capital to bolt-on acquisitions and share repurchases as we have done in the past. Now, I will turn the call back over to Bill.

All right. Thank you, Kevin. It seems like a long time ago, but we started this fiscal year working to complete the full Valvoline separation. By January, much of this work was behind us, and that was a crucial turning point for Ashland as we shifted the fundamental focus of the entire organization to put in place the changes needed to fulfill our vision of becoming the premiere specialty chemical company. In early-May, we hosted our Investor Day in New York. At that time, we presented aggressive new financial targets for fiscal year 2018 through fiscal year 2021. Those targets are: to grow adjusted EPS by at least 15% in each year of the period; improve ASI's adjusted EBITDA margins to above 25%; and generate more than $1 billion of free cash flow. We shared with you the seven core levers which we are working to drive these targeted results. Since that Investor Day, we have established specific metrics, ownership targets, actions plans and a cadence of review for each of the core levers. As a result of this work, we are confident that we have the ability to deliver significantly greater EPS growth in fiscal year 2018 than the 15% conveyed during our Investor Day. Okay. So, what has changed and why are we so confident that we can deliver? Well, let's begin with organic growth and most specifically in ASI, where we're targeting 2.5% to 3.5% annual sales growth versus the 2.5% that the business grew in fiscal year 2017. To accelerate profitable growth, we have first focused on improving our ability to deliver meaningful innovations to our customers. To do this, we conducted a comprehensive review of our past product launches to determine what worked and what didn't. And as a result, we made three important changes…

Your first question comes from the line of David Begleiter from Deutsche Bank. Your line is open.

Thank you. Good morning.

Good morning.

Bill or Kevin, on ASI volumes, can you give some color on the zero percent volumes in Q4? And of your 2.5% to 3.5% growth in sales in FY 2018 in ASI, how much is organic volume growth?

So, first of all, let me speak to – as we mentioned, we did had some nice gains in personal care and pharma, and some of our specialty end markets in Q4. At the same time, the coatings market was relatively flat. And if you look at reports of the coatings manufacturers, we're not out of sync with what they're seeing. We have begun to see an improvement in demand and this is unusual, because it's our year end, and so we've already completed October, we saw that in October. And so, we expect that Q1 revenue will be up in coatings. And in Q1 or Q2, we'll see the same in adhesives. In both of those markets, we're working the price/volume equation very hard to get the right balance. Cellulosics is one of those areas where there's been a lot of raw material inflation. So, we are working to get that through. And I think that affected the – if you will, the demand pattern as well, but we're staying strong on trying to get those through. And so, the 2.5% to 3.5% that you referenced, that's organic. That's not as a result of acquisitions.

And Kevin, just on the free cash flow guidance for next year, how should we think about the use of that free cash between debt pay down, buybacks, (22:23) dividends as well?

Sure. As indicated, we are focused on reducing the level of debt. That said these aren't mutually exclusive opportunities for us. And as Bill mentioned, we do see the shares being significantly undervalued and we have an authorization in place from our board to repurchase up to $500 million of stock, and certainly, we would have no hesitation to enter the market at appropriate times. The dividend policy is something we review annually and we will do that in the normal course as we ordinarily do, and take a look at that as also an opportunity to return some capital, extra capital to shareholders. But again, we look at these in combination as opposed to being individually mutually exclusive, but primary focus will certainly be to get the balance sheet in a little better shape from a leverage perspective, but clearly these other opportunities are out there and we're not blind to those, and we'll consider them all.

Thank you.

Thank you.

Your next question comes from the line of Mike Sison from KeyBanc. Your line is open.

Hey, guys. Nice quarter.

Good morning, Mike.

Good morning, Mike.

Bill, when you think about your outlook for ASI, could you give us the put and takes of what drives you to the higher end of that range for EBITDA in 2018 and the lower end of the range?

Sure. Sure. I mean, I think this is a year where the objectives operationally are very clear. One is we need to make sure that we're driving productivity, asset utilization and pricing to fully offset raw material inflation, and we need to do that quickly. And the second is, we have growth objectives in our base plan and we have also some extra capacity that we could better utilize, and the quicker we move forward and the more impact we can have from that effort, that will be what will distinguish between the low end of the range and the high end of the range.

Okay. Great. And then, you gave us sales trends by end market for ASI as well. When you think about the growth by the end markets in 2018, where do you think you'll see the biggest opportunity, and how much of that are driven by your new product development programs that you highlighted at the Analyst Day?

Sure. I mean, the markets unfold and it's always difficult to predict exactly what will happen globally, regionally, and in specific markets. But frankly, our objective is to – within ASI – grow all of our segments or markets in proportion roughly to what we showed in our Investor Day. So, it's not unusually concentrated in one area or another, and...

Yeah. I think as you look at one of the key opportunities for us, and Bill mentioned it in his remarks, it's around pharma. We've been constrained in a variety of excipient product lines for a while. The team's done a nice job of managing through that and we've done a little bit of debottlenecking along the way. But this new Klucel capacity that's come on stream is going to be helpful. The work that's been done around Benecel and CMC will also be helpful, and should allow us to take advantage of that in the marketplace and return to more historical growth rates in pharma. Pharma grew 2% in Q4 year-over-year. If you go back to our remarks that we made at the Investor Day, the growth CAGR for pharma in 2013 to 2016 was closer to 4%. And so, it's our expectation that that business is going to return to that growth rate, and we also saw some good growth in the quarter in personal care. I think the team has done a really good job of managing and upgrading the mix there. And from a new product introduction standpoint, that's really a critical area for us is in the personal care space and both, the commercial and the R&D teams, as well as the tech service teams are very focused on driving innovation and really driving improvements in that part of the business as well.

Just one other point to add in. And we've spoken of the additive effect of Pharmachem and the targeted synergies which are essentially cost based. And what we, of course, are interested in and are getting more and more excited about is the potential to grow our business and grow their business by basically sharing our capabilities and infrastructure around the globe, and we're taking action on that front. We have just had, if you will, a substantial review and exchange in Latin America where the products that Pharmachem have provided have had limited route to market, and we have a sales team associated with that. At the same time, Pharmachem can produce a new and very advanced form of Klucel and actually use that in some of their nutraceutical markets. So, we were really careful when discussing the acquisition to net because sales synergies always are dreams until they happen, but we expect that that's going to be additive, too, as we try to drive growth in these kind of core market areas.

Great. Thank you.

Thank you.

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

Good morning. Can you tease out a little bit what you're seeing in the nutrition and other end market for ASI? And what do you think it would take to return that piece to positive comparisons as well?

I think in that market is where you see some of those more price-sensitive areas and wherever possible, we try to upgrade our mix and we don't put – the nutrition business is a good one. So, we do have, if you will, investment and focus on it. But there has been a little bit more of a commodity dynamic in that area. That's also an area where the Pharmachem may help us to really drive a different kind of strategic orientation. So, that's really I think what I would comment on there. Kevin, anything -?

Yeah. I would maybe emphasize the Pharmachem piece of this a little bit. Part of what Pharmachem brought to the table is a nice aloe business that is definitely going to be accretive to our overall nutrition business. I think the team also brings some good perspective and philosophy around serving the nutrition market that I think over time could accelerate the velocity of new products, as well as some differentiation down the line, which would be helpful for the overall nutrition business within Ashland. As we work through the integration effort, which is going along very, very well as Bill indicated, I think we'll be able to tease out some more opportunities along those lines which is – the team is very excited about that.

Thank you.

Your next question comes from the line of Christopher Parkinson from Credit Suisse. Your line is open. Kieran de Brun - Credit Suisse Securities (USA) LLC: Hey, guys. This is Kieran de Brun on for Chris Parkinson.

Good morning. Kieran de Brun - Credit Suisse Securities (USA) LLC: I just wanted to follow-up, like in your slides you mentioned the team has been working hard to drive price in both coatings and adhesives. If you could just give a little bit more detail here and walk through any changes regarding your core ASI pricing strategy since your Analyst Day, that'd be really appreciated. Thank you.

Sure. I think the net of it is, is since our Analyst or Investor Day, where we were focused a lot on – for example, we've done process specialist training to make sure that we're selling the full value. We've looked at the individual things that we're providing to customers that really perhaps we should be charging for and we're making good gains on that front. But frankly, that's been put secondary to the raw material inflation that we've seen that has really emerged over the course of the last three to six months. And that, like I said, was roughly $25 million for ASI, and it's important that we address that, and that takes a lot of time and a lot of resources. And so, we have established, as I mentioned, I think a great process to identify the raw material impact on our products, to have a global view as to the actions that we have to take to set objectives and to drive actions and results. And so, that's just a fundamental priority. But it has shifted a little bit from the Investor Day only because of increased raw material inflation, and oil prices are up, you have some lingering impact on supply chains from the hurricanes and so forth. So, perhaps as the year goes on, we'll see that go down, but that's not what we're planning on. We're planning on offsetting the raw material inflation that we're seeing today.

And to Bill's point, specifically, we have visibility by end market and by region, even down to the project level frankly, of impacts in raw material inflation and we also have strengthened our governance processes, as well as our review processes around price over cost dynamics in the business to hold our teams, I think even more accountable to this dynamic, which has changed. We have seen more inflationary activities, partly hurricane-driven I suppose, but that's been more the case in the ASI business, and the team has had to retool a bit to adjust to that. I think, frankly, they've done a nice job with it, they understand the imperative, they understand what they need to do, and they're acting accordingly. So, it just takes some time to get there, but they're very focused on it and we're holding them accountable for it.

It is interesting when you look at it, and we as a company in fiscal year 2017 had over $80 million of raw material inflation, and we haven't really talked that much about it. We've talked about pricing our way through it and that's because we're really, from a cultural standpoint, trying to focus on the things we can do to drive results, even in challenging context, but $80 million is a pretty big number. So, the team did a nice job, but we have more work we have to do. And so, we're working it hard. That, as I mentioned before, is one of our two true key success factors for the year. Kieran de Brun - Credit Suisse Securities (USA) LLC: Great. Thank you very much.

Your next question comes from the line of Jeff Zekauskas from JPMorgan. Your line is open.

Thanks very much. I think in the quarter you took $50 million in charges. How much of the $50 million were cash charges? And in the $7 million charge that you took in your Intermediates & Solvents business, is that just for the manufacturing outage or does that encompass some lost profits because your operation was down?

Perhaps I can answer the second one and Kevin can answer the first one. That was really the expenses that were related to the facility being down. We did lose some revenue opportunities, but that's – we didn't put in that $7 million number, so.

Yeah. That's what – and the $6 million of unplanned plant shutdowns that you see in the Specialty Ingredients column on page 19 of our results released last night was related to the Hurricane Harvey outage at our Texas City plant, and again, that's basically – mostly, it's lost absorption, frankly. And as indicated, there really wasn't much impact in the quarter relative to the hurricane around operating results. In terms of, call it, cash costs, probably the $23 million of separation and restructuring certainly have a cash impact to them. I mean, in the end, over some period of time, there's cash associated with all of these. I mean, unabsorbed plant cost is ultimately money that you've spent to run the plant even though you weren't producing volume. And so – but the more direct version of that would be the separation and restructuring costs of $23 million that were incurred in the quarter.

Okay. And I take it that there is no – in your Intermediates & Solvents operation in Germany, are you running at full capacity utilization rates now? Is that...

We are. We are, and have been since kind of mid to third week of September. So, that plant is back up. Go ahead.

And I take it that there is not much raw material inflation in butanediol production right now, maybe the formaldehyde, but that's about it. Is that correct?

We are not seeing as much raw material inflation. We have seen year-over-year inflation up to this point and we've worked, of course, to offset that with the price increases. And there will be some, if you will, price or raw materials (36:48) increases in that business. But I would say the dynamics are more related to supply/demand as it relates to the pricing at this point.

And then lastly in Composites, your volume I think, exclusive of acquisition, was up about 15% in the quarter. Is that because you had capacity available while others were out during the hurricane? That is – it just seemed an unusually large amount of volume growth.

Yes. I don't think 15% is the new norm for that business, and sometimes you do have some, if you will, seasonality or quarter to quarter adjustments. But I don't believe there was anything that I heard of that related to other competitors not being able to support their end customers unless the business fell to us. I think it was good hard work, and again, maybe a little bit of timing to drive that business.

Yeah. And that's supported by the fact that the Composites business for the quarter and frankly for the year grew in every region, including North America where there was hurricane impact. So, the team just did a really nice job of executing and certainly took some share. That's not a market that grows that fast obviously. So, the team's just done a really nice job of executing in that business on a number of fronts. As Bill indicated, we had over $80 million of raw material cost inflation during the year and as referenced $50 million of that plus was in the Composites space, and the team was able to more than overcome that through a combination of price and volume, and it's really just strong execution by the team throughout the year as they faced that raw material inflation.

Okay. Great. Thank you so much.

You're welcome.

Thank you.

Your next question comes from the line of John Roberts from UBS. Your line is open.

Thank you. Can you hear me?

Sure.

Again, good morning, John.

Good. I apologize, I jumped on a little bit late, but when you had your Investor Day, there was a long laundry list of operational improvement items, and they added up to a very large number and you told us not to add them together because there was some overlap between the programs. How do we track your progress against that Composites basket of operational programs that you had?

Yeah. Sure. And in the call, we did identify some of the actions we're taking and some of the related impact from facility closures and de-tolling. Ultimately, we look at the cost per unit of production as the core metric that will help us to track the improvement that we see year-over-year and going forward. So, that's an important one for us, and that has two components, one of which relates to your spend versus either plan or prior-year; and the other is the mix and quantity of units that you drive through the assets; and then the third is the, if you will, cost associated with conducting turnaround. So, those are three areas, and there is – that's very consistent with our Investor Day. There's a lot of detail there and we track it on a very comprehensive scorecard. But there are some details there which I think are important, but not maybe appropriate to communicate each call or something like that.

Okay. In your Intermediates & Solvents guidance, what oil prices are incorporated in that guidance for the full year?

We use basically the external forward look and kind of drive a stake in the ground. We don't presume inflation or deflation. So, it's basically the forward look for the year, so on kind of a weighted average basis. And there is some impact, clearly, as crude moves around to the raw materials within Intermediates & Solvents and energy as we run the rest of the business. But by and large, as Bill indicated, it's – pricing in that business is somewhat dependent upon raw material moves, but it tends to be more dependent upon supply/demand dynamics at various points in time during the year, and those are really when pricing opportunities are more likely to present themselves.

Thank you.

Your next question comes from the line of Jim Sheehan from SunTrust. Your line is open.

Thank you. I want to ask about your 2018 EPS guidance. It looks like if you calculate your EBITDA by segment and some of the other guidance you provided that it might imply a higher EPS range than you actually guided to. So, is that due to possible variance in your tax rate or what might be causing that variance?

Yeah. If you assume everything at the low end or everything at the high end, you certainly would get a broader range. And what we've tried to do is by using our best estimates arrive at a range that we think is: number one, certainly challenging; but number two, also achievable, which is how we landed at $3.20 to $3.40 a share which, keep in mind, is a 30% to 40% increase over fiscal year 2017. And in the end, tax rate certainly does have some impact on that, obviously. We've set a range of 8% to 13%. Q1, we're using 10% to arrive at our $0.35 to $0.45 per share which, as a reminder, at the midpoint of that range is nearly triple what was generated in Q1 of last year. And so, it just presumes that we hit the ranges, obviously, and we've made a commitment around ASI of mid- to high-single-digit EBITDA growth throughout the entire year, and we've talked a fair bit about the actions we've taken to ensure we achieve that, and certainly, that's what the team's being held accountable for. So, the $3.20 to $3.40 is the stake that we've driven in the ground. As we progress through the year, we will tighten up that range accordingly and provide, obviously, as much detail as we feel appropriate on why and how we may be moving the range, whether it's EBITDA or EPS, but this is where we are right now.

And on Intermediates & Solvents, it looks like the product demand has become a lot more favorable than it was, say, a year ago. Can you update us on your thoughts on the strategic options for that business?

Our strategic thought process around that business is very consistent with what we stated in our Investor Day. Just to kind of put it in perspective, roughly in our fiscal year 2017, you had in the first two quarters about $5 million of EBITDA, and in the second two quarters about $20 million. And so, with that in mind, it's – obviously, we want to be responsible stewards of the asset. That doesn't mean that we ride and try to time the whole market, but we were definitely approaching an inflection point, which is why we said we want to be responsible and it was meant to be during our strategic plan period, but with a bias towards taking action sooner rather than later.

Thank you.

Thanks, Jeff.

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

Hi. Good morning.

Good morning, Mike.

Good morning.

This is the first time that we've seen you guys break out some of the different pieces of the Specialty Ingredients business in terms of the revenue and the revenue growth there. Can you walk us through at least directionally, how we should think about the margin profile of each of those pieces as being maybe above or below or in line with the overall Specialty Ingredients segment average?

That is something that I mean, I think directionally we can speak to without getting into exactly where these things fall out. Clearly, the pharma and personal care have an attractive profile given the markets that they go into. Adhesives and coatings are really in the sweet spot of our industrial business. And then as we mentioned, some of the other things like nutrition, construction, those tend to be a little bit more – not commodity, but there are others out there that can provide those materials. So, if you're trying to put together a spectrum, that's kind of the three buckets that I would put it in. But we haven't said specifically what the stratification of that bucket or buckets would be. And so, I think that might be for another day.

No. That's helpful. And then, on the Pharmachem contribution in the quarter, you had given us if that's about $300 million in annual revenues. So, I took that to mean around $75 million a quarter. And then, you put up a quarter here that was $68 million. So, just wondering, is that business seeing some declines in volume or pricing, or is that seasonality? Just wondering if you can help put the Q4 sales number for Pharmachem in some context for us?

Yeah. Mike, that's more seasonality. There is a bit of seasonality in that business, just like there is the rest. And our overall outlook of what Pharmachem can and should produce has not changed, either from a top line or an EBITDA perspective, along with our expectations around hard synergies that we're working to capture and have been working to capture since we closed on the business.

All right. Thanks very much.

Sure.

Thank you.

There are no further questions at this time. I turn the call back over to the presenter for closing remarks.

Thank you very much, Amanda. Everyone, thank you for your time this morning, thank you for your interest in Ashland. I hope everyone has a great day.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation and have a wonderful day. You may all disconnect.