Ashland Inc. (ASH) Q3 2026 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Ashland Third Quarter Conference Earnings Call. At this time, all participants are in a listen-only mode. To ask a question during the session, you will need to press *11 on your telephone. You will hear an automated message advising that your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Sandy Klugman, Director of Investor Relations.

Thank you, Sandy. Thank you. Hello, everyone, and welcome to Ashland's third quarter fiscal year 26 Earnings Conference Call and Webcast. My name is Sandy Klugman, and I am Ashland's Director of Investor Relations. Joining me on the call today are Guillermo Novo, Chairman and CEO; William Whittaker, CFO; as well as our business unit leaders. Alessandra Faccin, life sciences and Intermediates; James 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 26 outlook, and other matters as detailed on Slide 2, And in our Form 10 Q. These statements are subject to risks and uncertainties that could cause future results to differ materially from today's projections. We believe any such statements are based on reasonable assumptions, but there is no assurance these expectations will be achieved. We will also reference certain adjusted financial metrics. Both actual and projected, which are non GAAP measures. Present these adjusted figures to provide additional insight into our ongoing business performance. GAAP reconciliations are available on our website and in the appendix of these slides.

I will now hand the call over to Guillermo for his opening remarks. Thanks, Sandy, and welcome to everyone joining us. Please turn to slide 5. Overall, we delivered a strong third quarter that reflected strong demand, disciplined commercial execution and healthy free cash flow generation. James increased across all business units and our performance was in line with the expectations we outlined at the beginning of the quarter. These results reflect the team's strong execution and reinforce the momentum we are building across the businesses. Life Sciences delivered double digit sales growth, benefiting from broad contributions across pharma end markets and ongoing momentum within our Globalize and Innovate strategies. Pharma achieved its 5th consecutive quarter of volume growth supported by strength in high purity excipients, injectables, and innovation growth momentum. Personal care generated another quarter of solid performance. Led by biofunctionals actives, high single digits growth in skincare, and favorable contributions from haircare and microbial protection. Performance reflected healthy growth across end markets and major regions supported by strong customer engagement and innovation adoption. Specialty Additives delivered encouraging sales growth in line with our expectations. Strength in coatings and performance specialties, was primarily driven by market share gains, reflecting strong commercial execution by the team. Regionally, most markets improved compared to prior year. Intermediates delivered higher sales supported by improving merchant sales driven by higher NMP demand in North America EV battery, and energy storage applications. Operationally, our third quarter results reflected continued progress on manufacturing performance, with further opportunities to improve. We remain focused on targeted investments and disciplined execution and expect continued progress in the fourth quarter as the benefits of these actions build. We also generated strong cash flow during the quarter through disciplined working capital management and ended the quarter with a net leverage of 2.4x returning to our long term target range and strengthening our ability to invest in growth and innovation. Please turn to Slide 6. Our results demonstrated the strength of our execution and the benefit of the actions we have taken across the portfolio. Sales increased 7% year over year, reflecting broad based growth across the portfolio. Profitability was impacted by production challenges encountered earlier in the fiscal year. Results improved sequentially and were largely in line with our expectations. We continue to make steady progress across the manufacturing network and on our strategic priorities. Our teams remain focused on commercial execution, pricing realization and cost discipline. Pricing actions continue to gain traction, offsetting higher raw material costs while maintaining strong customer relationships. Please turn to slide 7. Slide 7 illustrates the breadth of our growth and the quality of our earnings profile. First, our consumer focused businesses Life Sciences and Personal Care, continue to generate attractive margins supported by resilient demand. Innovation, and favorable mix. Second, Innovate and Globalize strategies continue to deliver measurable results with accelerating momentum in higher value application across the portfolio. For the first 9 months of the year, Innovate has exceeded its full year target, and Globalize has already achieved its full year target. And continues to deliver strong results across the platforms. Third, while margins continue to reflect earlier production rate challenges, and cost pressures, the actions we have taken across pricing, manufacturing, and commercial executions continue to gain traction. As a result, we are well positioned for further profitability improvement in the fourth quarter. Before turning the call over to William, I also want to take a moment to share that yesterday, we announced a cooperation agreement with Ancora, an Ashland shareholder, with whom we have had constructive dialogue. Under this agreement, we are welcoming Peter Thomas and Alan Spizzo to the Ashland board as independent directors. Both bring significant executive and financial experience in specialty chemicals, and we believe their perspectives will support our continued focus on creating value for our shareholders. The board is also forming a capital allocation advisory committee to bring additional rigor and objectivity to our capital allocation strategy and planning. We value ongoing engagement with our shareholders and look forward to working collaboratively with Peter, Alan, and the rest of the board as we continue to execute our strategy. Now let me leave you with 3 key takeaways before we get into the financials. Demand remained healthy across our core businesses. Our innovate and globalize initiatives continue to generate meaningful growth and we continue to make progress in addressing the operational challenges we have discussed throughout the year. These are encouraging signs for the business and reinforce our confidence in the opportunities ahead. Now I would like to turn the call over to William to provide more detailed view of third-quarter financial performance.

Thank you, William. Please turn to slide 9. Third quarter sales were $497 million, up 7% versus the prior year driven primarily by volume growth across all business units. Volumes increased 6% across the portfolio, led by continued strength in life sciences and personal care, while specialty additives return to growth and intermediates benefited from improving merchant demand. Pricing increased approximately 1% year over year led by life sciences and specialty additives reflecting sequential improvement of approximately 300 basis points. Foreign exchange contributed approximately $3 million or 1% to sales. Adjusted EBITDA was $109 million compared to $113 million in the prior-year quarter. Growth in life sciences and personal care was more than offset by lower earnings in specialty additives and intermediates. Profitability continued to reflect the impact of lower production rates earlier in the year, and the normalization of incentive compensation from a low base in the prior year. These factors were partially offset by higher volumes, favorable mix and pricing actions. Sequentially, profitability improved as operating performance gradually improved and commercial actions gained traction across the portfolio. We expect a further step up in profitability during the fourth quarter. Adjusted EBITDA margin was 21.9% compared to 24.4% in the prior-year quarter, reflecting these dynamics. Adjusted earnings per share, excluding amortization expense, was $1.20 compared to $1.40 in the prior-year quarter. Cash generation remained a significant strength during the quarter. Ongoing free cash flow totaled $103 million compared with $108 million in the prior-year quarter, or representing conversion above 90%. Inventory is down nearly $80 million fiscal year to date supporting strong cash generation, and positioning us for improved absorption and reduced inventory related margin headwinds going forward. We ended the quarter with $936 million of available liquidity and net leverage of 2.4x, returning to our long term target range. During the quarter, we also refinanced our credit agreement. Extending maturities on attractive terms and further strengthening our financial flexibility. The balance sheet remains a competitive advantage. Providing flexibility to support operations, invest in strategic priorities, and maintain disciplined capital allocation. With that, I will turn the call over to our business unit leaders for a closer look at segment performance.

Thank you, William. Alessandra, over to you for Life Sciences. Good morning, everyone. Please turn to slide 10 for life sciences. Life sciences delivered another strong quarter. With sales of $180 million, up 11% versus the prior-year period. Performance was driven by higher sales volumes, led by broad-based strength across pharma applications. Pharma achieved double digit sales growth and delivered its 5th consecutive quarter of year over year volume gain. Demand remained healthy across all regions and product categories, including continued strength in high purity excipients and injectables. We also benefited from customer order timing and supply chain normalization during the quarter, Adjusting for those factors, underlying demand trends remain strong and consistent with our expectations. Pricing contributed positively to results as commercial actions begin to gain traction during the quarter with full run rate realization expected in the fourth quarter. Foreign exchange contributed approximately $1 million to sales during the quarter. Injectables continued to outperform in the third quarter delivering exceptional growth aligned with our globalized strategy. Performance was driven by accelerating adoption of Ashland's high purity differentiated excipient portfolio. Strong customer demand a growing development pipeline and increasing new product adoption support a strong outlook. We also announced the groundbreaking of our new tablet coating manufacturing facility in India, another important step in our globalized strategy. Following recent investments in Brazil, this expansion continues to strengthen our regional manufacturing footprint and position us to better serve customers in some of the fastest growing farmer markets in the world. Turning to innovation, our recently launched products continue to drive above market growth led by low-nitrite oral solid dosage excipients and high purity injectable and bioprocessing products. Strong customer adoption validates Ashland's strategy of investing in differentiated technologies that address increasingly complex formulation and regulatory requirements. Turning to profitability, adjusted EBITDA increased 11% to $60 million compared to $54 million in the prior-year quarter. Adjusted EBITDA margin was 33.0% consistent with the prior year. Increased volumes, favorable pricing and product mix offset the impact of lower production rates and higher SAR expense. Volume growth remained a primary driver of earnings improvement. While disciplined commercial execution and favorable mix also contributed to results. As we look ahead, life sciences continues to benefit from the resilient pharmaceutical demand and increasing traction from our Globalize and Innovate strategies. Combined with pricing realization and ongoing innovation adoption, These trends support our confidence in the long term opportunities ahead. Please turn to Slide 11 for Intermediates. Intermediates delivered a solid quarter with sales of $37 million, up 12% versus the prior-year period, driven by improved merchant demand. Merchant sales increased to $26 million from $23 million in the prior-year quarter supported by higher NMP demand from North American EV battery and energy storage customers. Ahead of a planned fourth-quarter shutdown. Captive BDO sales were $11 million, up modestly from the prior year, reflecting stable internal demand and market based transfer pricing. Foreign currency had a negligible impact on sales during the quarter. Turning to profitability, adjusted EBITDA $4 million compared to $7 million in the prior-year quarter. The year over year decline primarily reflected lower advanced manufacturing tax credits benefits compared to the prior year quarter while underlying operating performance remained relatively stable. Pricing realization and improving demand in electronics a key merchant application. Helped offset a portion of this headwind during the quarter. While conditions across the broader BDO value chain remain below historical levels, we are seeing soft yet encouraging improvement. In NMP demand mostly for energy storage related applications. Given the volatility we have experienced in this market, we remain measured in our near term outlook. However, our long term view remains unchanged and we continue to believe EV battery and energy storage applications represent an attractive growth opportunity for the business. Now I will turn the call over to Jim to discuss personal care.

Thank you, Alessandra. I will now highlight our personal care results. Please turn to slide 12 for personal care. Personal care delivered another quarter of growth reflecting broad based performance across end markets and continued strength in our higher value applications. Sales were $155 million, up 5% year over year. Driven by robust volume growth across the portfolio new commercial wins, and favorable mix. Biofunctional actives delivered another quarter of double digit growth supported by an expanding customer base. Colipepto continues to experience accelerated adoption due to its multifunctional benefits and ability to instantly improve skin radiance, hydration, elasticity, and provide visible wrinkle correction. Building on this momentum, Biofunctional actives is also starting to see early commercial wins with Essernonite, our 2026 flagship ingredient. Microbial protection also delivered solid growth driven by double digit volume gains across all regions. In the third quarter, we inaugurated and commissioned our new microbial protection production facility in Europe. This investment strengthens our regional manufacturing capabilities, improves supply chain resilience in the region and represents another major step in globalizing microbial protection. Within care ingredients, the portfolio delivered solid gains with positive momentum across hair and skincare markets. Overall, skincare delivered high-single-digit growth, haircare delivered mid-single-digit growth, and oral and home care generated low-single-digit growth. On a regional basis, growth was led by the Americas and China. Pricing improved sequentially. As commercial actions continued to gain traction during the quarter. While modestly below the prior year. To clarify on pricing, price actions more than offset cost inflation. Specifically, in microbial protection, our globalized investments have reduced our cost structure enabling share gains. Foreign currency contributed approximately $1 million to segment sales. Turning to innovation. In the third quarter, we successfully executed our first industrial production of multifunctional starch. Marking a pivotal step toward our planned calendar 2026 launch. Personal care continues to make strong progress across our Globalize and Innovate strategies. Supported by strong customer engagement and innovation focus. Turning to profitability. Adjusted EBITDA increased to $45 million from $41 million in the prior-year quarter, And EBITDA margin expanded 110 basis points to 29.0%. Reflecting broad based growth across all business lines. Improved profitability was driven by higher sales volume and favorable product mix. In summary, personal care delivered both mid-single-digit growth and margin expansion in the quarter, demonstrating disciplined execution, strong customer focus, and continued adoption of differentiated and innovative technologies. With that, I will turn the call over to Dago to review the results of Specialty Additives.

Thank you, Jim. Please turn to slide 13. Specialty additives delivered sales growth in the quarter, despite continued mixed demand conditions across end markets and regions. Sales increased 4% year over year to $136 million, driven by share gains, pricing realization, and strong commercial execution in coatings and performance specialties, our most strategic industrial segments. Coatings' recovery was driven by higher volumes from share gains across all regions, successful innovation, implementation, and pricing discipline. Performance specialties also delivered year over year growth. Supported by the favorable demand trends and commercial execution. These gains were partially offset by continued weakness in construction and energy and resources. Where market conditions remain challenged and generally in line with recent trends. Construction volumes continue to reflect both softer end market demand and the impact of deliberate portfolio management actions to preferentially serve more attractive regulated segments. Regionally, growth was broad based. With nearly every region delivering year over year improvement. Worth highlighting is that the Middle East, Africa, India, and China delivered growth despite challenging market conditions and supply chain disruptions. Pricing actions continue to gain traction during the quarter, and together with favorable product mix supported growth despite a muted demand environment. Foreign exchange contributed approximately $1 million to sales. Turning to profitability. Adjusted EBITDA was $20 million compared to $26 million in the prior-year quarter. While adjusted EBITDA margin was 14.7% compared to 19.8% in the prior-year quarter. The results were generally in line with expectations and reflected lower fixed cost absorption associated with earlier and reduced production rates at our Hopewell facility. These headwinds were partially offset by favorable pricing and product mix. From an operation standpoint, we successfully completed the planned turnaround at our Hopewell facility. And implemented a number of process control, productivity, and operational robustness improvements. While we are encouraged by the trajectory, we view this as an operational improvement journey. To achieve our long term productivity targets. The performance of our broader cellulosics acid base remains solid. And we are leveraging our unique global manufacturing network to increase supply flexibility, optimize production, and strengthen overall supply reliability. We are also making solid progress across our balanced innovation portfolio. From regional solution designed for local customer needs to core innovations that strengthen and expand our existing product lines to transformative technologies such as our novel additives, which continue to advance to our commercialization and represent a significant long term growth opportunity for Ashland. Overall, while end market conditions remain mixed, we are encouraged by the progress being made across the business. Continued price organization, strong commercial execution, and ongoing operational improvements support our expectation for improved profitability over time. I would like to recognize the team's strong execution and cost discipline in what remains a challenging market environment.

And with that, I will turn the call back to Guillermo. Thanks, Dago. Please turn to slide 15. Let me briefly update you on our Execute strategy and manufacturing optimization initiatives. As Dago just discussed, progress across our HEC network optimization has been slower than originally planned. That said, quarter unfolded largely as expected, operating performance improved, and we continue to advance the actions needed to improve productivity, reliability, and network performance. Beyond HEC, our manufacturing optimization initiatives remain on track. VP&D optimization efforts are now expected to deliver approximately $12 million of benefits this fiscal year. We also completed the final phase of our small plant consolidation initiative during the third quarter, delivering approximately $3 million of EBITDA benefit this year and further simplifying our manufacturing footprint. In total, VP&D optimization and small plant consolidation are expected to deliver $15 million this year, Importantly, these are structural run rate savings rather than onetime gains, and they position us to enter next year with a leaner, more competitive cost base. Execute remains a core component of our strategy. While we still have work to do, the broader portfolio of manufacturing initiatives is delivering results, and we remain confident in the long term value and profitability improvement these actions can generate Please turn to slide 16. Our Globalize and Innovate initiatives continue to generate meaningful results and remain an important driver of growth across the portfolio. Through the first 9 months of the fiscal year, Globalize has already achieved its full year growth target, with Innovate, having exceeded its full year objective. Innovation highlights include continued momentum in high purity excipients within life sciences, skin longevity technologies in personal care, and formulated rheology solutions for stone paint within specialty additives. As you heard from Alessandra and Jim, we are seeing tangible returns from the investments we have made to expand capabilities and strengthen our regional presence. These initiatives are increasing our exposure to higher value applications, strengthening customer relationships, and improving the quality and durability of our growth profile. Just as important, the opportunity pipeline supporting both initiatives remains strong. Reinforcing our confidence that Globalize and Innovate will remain meaningful contributors to growth and value creation in the years ahead. Please turn to Slide 17.

Turning to our outlook. Which remains largely unchanged. We continue to see growth across the portfolio, ongoing momentum in higher value applications, increasing realization of pricing actions, and strong cash generation, expect another step up in profitability during the fourth quarter, While operating performance remains below historical levels, the impact on profitability should be less pronounced than in the third quarter as operational trends improve and pricing actions continue to gain traction. As a result, we are reaffirming our fiscal 26 sales and adjusted EBITDA guidance. We continue to expect sales of $1.835 billion to $1.870 billion and adjusted EBITDA of $385 million to $400 million We are revising our adjusted EPS outlook to low- to mid single digit growth from mid to high single digit growth reflecting a higher tax rate associated with unfavorable discrete items. We continue to expect ongoing free cash flow conversion of greater than 50% of adjusted EBITDA for the fiscal year. With that, I will turn the call back over to Guillermo to discuss how our technology platforms are creating value across the portfolio before we open the line for questions.

Thank you, William, and please turn to Slide 18. Innovation remains a core driver of long term value creation and an important differentiator across our portfolio. The progress we have made across our globalized and innovate strategy is a direct reflection of the strength of our technology platforms, customer partnerships, and R&D capabilities. We are very excited about the progress we are making, on our new technology platforms. These new technologies have strong value propositions and target large scalable growth opportunities. With strong customer engagement and validation, we feel very confident in the profitable growth potential. of these platforms. With over 52 patents filed, they also present a great opportunity to build sustained differentiation. We are also expanding the range of products and applications these technology platforms can target. We are accelerating the commercialization of new products. To provide investors with a deeper look at these opportunities, we will be hosting an innovation webinar on September 17 During that event, we will provide additional insight into our innovation strategy, our progress in developing and commercializing them, and the opportunities we see to create long term shareholder value. We believe these technology platforms represent a meaningful source of future growth. Margin expansion and value creation beyond our current planning. Please turn to Slide 19. As we conclude today's call, I would like to reiterate what gives us confidence in the opportunities ahead. First, growth is returning across the portfolio. As the actions we have taken to optimize the business and improve the quality of our mix continue to gain traction. We delivered broad based sales growth across all business units and regions, supported primarily by volume growth strong customer engagement, and disciplined commercial execution. We expect that momentum to continue through the fourth quarter. Second, we remain focused on disciplined pricing execution. Pricing actions are gaining traction across the portfolio, helping address cost inflation while maintaining strong customer relationships. I would also like to recognize the efforts of our team who have managed through a dynamic environment. Third, our globalized and innovative strategy is working. Globalize and Innovate continue to generate meaningful results and we are seeing increased returns from the investments that we have made to expand our capabilities, strengthen our regional footprint, and accelerate growth in higher value applications. This is the type of high quality growth that enhances the long term strength of our portfolio. Fourth, operational performance remains an area of focus. While we are not yet where we want to be, we are making progress and remain committed to improving our performance. We continue to see meaningful opportunities to strengthen profitability, as these efforts advance. And finally, we are extremely excited about the progress we are making on our new technology platforms. We look forward to sharing more about customer validation in the coming weeks. But we remain encouraged by the progress we are seeing across our innovation pipeline and the opportunities it creates across the portfolio. Ashland is a company with resilient end markets, leading technology positions, strong customer relationships, and a growing pipeline of innovation opportunities. The combination of improving demand trends, increasing pricing realization, advancing technology platforms, and ongoing operational improvements reinforces our confidence in the opportunities ahead. I would like to thank our employees for their continued commitment and thank our shareholders for their ongoing support and engagement. Operator, please open the line for q and a.

Thank you, Guillermo. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Our first question comes from John McNulty with BMO Capital Markets. John, please go ahead.

Yes. Good morning. Thanks for taking my question. Wanted to get a better understanding of the pricing that you are seeing and how we should be thinking about it going into Q4 and maybe early fiscal 27? Do you expect it to largely accelerate from here? Should it-- is it going to vary depending on the segment? I guess how should we be thinking about it? And the and the realization of what you need to cover costs, raw material inflation, other inflation, etcetera.

Thanks, John, for the question. Let me first recap just to remind everybody what all this inflation means to Ashland. You know, we are not a petrochemical link anymore. After we sold our adhesive business, so we have less exposure to petrochemicals and to high energy raw materials that require high energy for production. So we do. We are not immune. We do have some impact that we need to capture, but, you know, we it is a much lower. So do not expect the pricing movements that you see with commodity companies Ours is we our intent is to recover inflation, maintain margins, We are a specialty company, additives company. Our focus is value pricing through the products, through the technology. that is how we expand. We do not use these moments to expand margins. We just want to make sure that we are holding it. So that is sort of the basis. The team has done very well. We have captured all the inflation. Both raw material and freight and all the pricing we have implemented. Obviously, there is a flow through effect. I think next quarter, we will see bigger benefits in terms of just the pricing ramp rate versus the inflation that we have already seen. But we are basically covering everything that has impacted us, and we will-- you will see that in the next quarter flowing through. After that, you know, we will we will see how markets evolve. Mike, in 2022, I think the our focus is on moving fast so that we maximize or minimize the impact and maximize the benefits for us, and the team has done that. So we feel very confident this at this point. But William, do you want to add anything else?

Yeah. Just a couple other specifics. Thanks for the question, John. The important marker for us this quarter is that we swung from down 2% year over year in Q2 to up 1%. In Q3. We expect that to continue. To Guillermo's point, sequential improvement Q4. As we get the pricing fully realized. In terms of order of magnitude, I would Expect that to be nearly as large as the sequential improvement we just saw in Q3. And I think, you know, overall, as you look to kind of pre pricing actions to run rate exiting the year, it is going to be in line with what Guillermo cited on the last earnings call of 3 to 8. it is going to be roughly it depends by region, depends by product line, of course, but we are tracking at the midpoint overall for the company.

Just 1 other point, John, that I wanna make in the prepared remarks, Jim made a comment just so that it does not get lost in the translation. For personal care, actually, they moved on pricing to recover raw materials All that has gone through. I think, you know, the team has done a lot in terms of the globalized as we regionalize our business our infrastructure manufacturing. We are changing our cost structure. that is allowed us a lot to do a lot of things. We are getting a lot of share. But Jim, do you want to comment just to clarify you know, the lower, quote, lower pricing? Is it really lower pricing in part of your business? So if you could comment on that.

Yeah. Thanks, Guillermo. Thanks, John. So, John, as William mentioned, sequentially, we are seeing an improvement and an increase in price. We took actions. We worked through it in March when the conflict started. We started communicating with customers. The actions we have taken are price increases as opposed to surcharges. And so there is flow through that came through in the third quarter, but we took the necessary actions to cover the cost inflation. In the majority of the portfolio. As we said, specifically in microbial protection, we just commissioned our facility in Europe that is now the last step in globalizing the business. Now have assets in all regions to provide regional supply, and that is really reduced our cost structure. And that is really enabled the share gains. And so that is a bit of a mix as you look at the overall price impact.

Okay. Got it. No, that is all very helpful color. And just as a second question, just can you speak to the manufacturing optimization, as well as Hopewell, which I guess is lumped into that. How that it sounds like you are seeing some decent progress maybe not where you had hoped it would be originally, but seeing some decent progress there. I guess, how should we think about how you end your fiscal year and the tailwinds into 2027 from some of these optimization and cost out plans?

So I think overall, and I would differentiate the network optimization impact If we look at the headwinds that we have had, there is 2 different types of things. What happened in Calvert City at the beginning, equipment failure that and the weather was the biggest impact. that is I would put that on a side. If you actually look at the network optimization, what is worked well, and where are some of the gaps that we are addressing now. Overall, it worked very well. If you look at our BPD network, we are reducing costs. We have streamlined assets. We are getting much better productivity. I think it is still on the early stage. We are we are doing some cost optimization, but the real productivity work is going forward. So we still see the opportunity to further improve in those areas. All the small plants consolidation is done. Basically, those we just moved production units into our bigger sites. So that we can leverage our overall cost structure. All of that is there. Specifically on HEC, I mean, it is 2 stories. We eliminated a plant. So you know, 25, 30 million are gone. That Those costs are out. I think how it is flowed through is 2 issues. Part of the benefit we are getting but it is not an upside anymore. We have used that to fill our plants in China. You know, the during this period of time as we executed, the market in China did go down, so we have rebalanced the network. So that we export now from China. So the benefit is you are seeing the benefit in terms of sustained margins and improvement. So it was not a headwind for us. On the rest of the things that are supposed to be more positive, I think really now it is a timing issue. We made a shift in production of a different product mix that we brought to Hopewell. it is not just, you know, turn it on and start producing. it is different process technology. You know, we have stopped the plant. We did not we were not getting the production rates that we wanted. We did a turnaround, as Dago mentioned. That turnaround has been successful. We put in new equipment, process controls, so that we can drive that productivity. it is just started up. it is running well. I think the product-- the product we are producing, the production rates are still not where we want them to be, and that is what we are working to ramp up. The benefit of that will take a quarter or 2. it is not just when we hit the performance with recap and all that. It will flow through into the P and L. Over time. But that is the biggest issue that we have. If I step back for the year, between the Calvert and weather are the 200 basis points of margin. Overall. Year should have been 200 basis points higher. In terms of EBITDA and EBITDA margins, and that is the bogey that we wanted to, you know, start next year and try to make sure that we are in a good place. Great. Thanks very much for the color.

Thank you so much. Please stand by for our next caller. Our next caller is David Begleiter from Deutsche Bank. Please go ahead. Your line is open.

Thank you. Good morning. Guillermo, just on the Q4 guidance, it is about a $15 million range. Is there a bias to at this point in time, to either the midpoint or the upper end or the range as we see here now?

Let me make a comment also. I will have William comment on each of them. I think if you look at revenue and EBITDA, just at a high level, I would say on the revenue side, we feel really good. I mean, first, the markets are improving. The core markets have behaved resiliently, and they have been for a while. Our personal care, our Life Sciences, specifically pharma. are doing well. Our Globalize and Innovate is going well. We are getting all pricing over inflation that we wanted. To get. So on the revenue side, the teams are focused, and customer relationships are great. And, you know, even in uncertain times, we are performing well in the field. Confident. So from my side, personally, the revenue side, we feel very, very good about. I think in the EBITDA side, it is really about the operating performance. You know, we did communicate in the last call that we were having issues. I think from my side, I am gonna be more careful in terms of how much we want to promise the rate of improvement, 1, because we have got to drive that improvement over a period of time and, 2, the flow through. As we have talked about before, is not straightforward. So we want to make sure that we are a little bit more cautious on that side. But, William, do you wanna make any comments?

Yeah. I do. So we intentionally did not move them the midpoint. Of the EBITDA guide. And so just to give you some of the parts and pieces on our comfort there. So, 1, to deliver the EBITDA midpoint, we will need stronger outcome on the sales range. that is actually where our internal modeling does sit today. So there is a few reasons we have been constructive. First of all, June was a strong exit. And then July and August order builder encouraging. As you heard from the team, Q3 was volume led, and I would expect Q4 to be more of a balanced delivery across both volume as well as some of the pricing actions we just spoke to. So, as you break it down by business, life sciences, I would expect quarter over quarter stability in terms of sales and earnings, which means, by the way, another solid and resilient quarter. Personal Care, we do continue to see broad based momentum both in sales mix and lifting margins. I would say overall, and you heard in our prepared remarks, we are a bit more cautiously optimistic on the additives side, but we are encouraged by the commercial execution of the team. And then just elaborating on Guillermo's point, I would say we are, again, cautiously optimistic on the manufacturing side. it is very much a key focus area for us. it is a real opportunity for improvement. And we do expect gradual progress in Q4. So what is driving the margin lift into Q4? it is the pricing realization. it is continued momentum on the sales volume with a healthy mix, globalize and innovate continues to be an outperformer for us year to date, and then gradual improvement on the operations side.

Very helpful.

And, Guillermo, just on Globalize and Innovate, again, congrats on the success, year to date. Any early thoughts on some targets for 2027 for Globalize and Innovate?

Yeah. We will be talking I think we will update. We as we in the past, we, in the past, want to be transparent on the progress that we are making. Specifically on Globalize. We have made a lot of investments. We just have a few that have come on stream. So we want to continue to spotlight on our performance, just for you, but internally, it also puts a lot more pressure with greater visibility on what we wanna do. So that is going well. On the innovation side, we are gonna update in September. I think the biggest issue that we are looking at now each of the business, I think Dago mentioned it in his comments, we are getting a lot more traction, not just in the new technology platforms, but the businesses. You know, once you focus on innovation, it changes everybody, everybody's focus. there is a lot more work even on the core innovation, creating new things that we are doing with new cellulosics and all that, modifying them, in the different businesses. So there is a lot more going on. So we are gonna probably expand over time, maybe not in September yet. We have on it is not just new technology platforms. it is which are the scalable innovations where we really see an opportunity to drive growth, to drive margin expansion, and most importantly, it is to drive differentiation. I think this is 1 of the challenges our industry is having of, you know, a hypercompetitive commoditization, all that kind of thing. I think driving that is gonna be a critical area. So we will give you in September, we want to give you a little bit more color on what are the key technologies that are more scalable what are the markets that we are targeting and dimensioning those markets, the potential, Obviously, the commitments, it is gonna be a range. So we want to make sure we show the pathway that we are taking, but these are all gonna be scalable. And again, what excites me is it is a portfolio. it is not 1 project that we are betting everything on. it is a number of exciting projects that have significant growth potential for a company our size. Thank you.

Thank you. you. Our next question comes from Reed Halbert with Wolfe Research. Please go ahead. Your line is open.

This is actually Christopher. Switching over to the life sciences segment. I would just like to drill down to the sustainability of the pharma volume growth. Seems like things have been picking up the last couple of quarters. You have been investing in both OSD as well as injectables. Is there anything on the horizon that kind of underscores a greater degree of conviction, specifically on the OSD side? Anything with GLP-1s? Any new products? I know there could be smaller times, but it seems like things are moving in the right direction. Thank you.

Bruce, thanks for thanks for the question. Just a quick comment and I will ask Alessandra if you could comment. But no, the momentum in life science and specifically pharma, it is not, you know, innovation on it, but Execute has been a very important part. You know, getting our cost structure, improving our competitiveness. In our in our core businesses is a big area of focus. So that gives us confidence that you know, it is the base business. Demand grows or stabilizes, and we are gonna do well. Obviously, there, then there is a lot of the new innovations that the team is doing. But Alessandra, you want to comment a little bit?

Yeah. Definitely. So Chris, just a comment overall with target to grow at mid single digits in life science. And that is what we expect for 2026. So that is how we should look at that across the quarters. As Guillermo mentioned on and on oral solid dose, we saw BDP stabilizing. So that is good. We also saw the momentum with our globalizing innovation strategies. Going very well with injectables, bioresorbable polymers, sugars, and cellulosics. So we are also excited with launches in other areas, the TVO in crop care, are seeing the customer adoption and the feedback being positive. Not revenue yet in 2026, but that is that shows the momentum for going forward. When specific on your-- on your question about GLP-1. So Ashland is benefiting and will benefit materially from the GLP-1 drugs' growth that we are seeing we expect to see continued upside Going forward, both through the chemicals that are used on the API, production as well as the excipients that are used in oral solid. So you will see in the coming weeks, we are launching a permeation enhancer and we are seeing the prelaunch momentum with. So that is a launch that we will happen in the month of August. But overall, we see the momentum from globalize, Innovate, and then, of course, in a stable market.

Alessandra, can you just comment on permeation enhancers? What is it for the investors that maybe are not as familiar with that?

Yeah. So, basically, with biologics, it is it helps with the absorption of the biologics into an oral format. So, basically, that is what we are launching in the month of August. And as I mentioned, a good momentum with pre launch sales already.

Got it. And just as a quick follow-up, similar question on personal care. Obviously, portfolio has gone through a lot. There have been a lot of adjustments, restructurings, outages, which obviously have been distributed periodically throughout some of the segments. It seems like you are also building a decent momentum here specifically in skin and hair. I was kind of curious in terms of your outlook there, how much of that is just you know, a lack of destocking? Some of your customers have gone through their own restructurings. In some cases, several restructurings. Just in terms of your outlook and your degree of confidence in that portfolio, you know, kind of where do you stand versus the last, you know, 6, 12, 18 months? Is this, you know, sustainable in fiscal 27? And, you know, if so, what is underscoring that the most? Thank you.

Hey, Christopher. Thanks for the call. So I think if you if you zoom out and you look at the year, right, I mean, in Q1, we had highlighted that there were some customer specific outages that occurred mainly in North America. Adjusting for those in Q1. We were low single digit growth. In Q2, mid single digit growth This quarter, again, mid single digit growth. All driven primarily, but only by volume. And then as we look into the next quarter, we expect to be in the same ZIP code mid single digit growth. So, for the full year, we expect to land mid single digit versus prior year. And I think we have built that momentum, right? If you look at biofunctional actives, in Q3, we delivered almost 30% growth in biofunctional actives. We have been very bullish on the technology. We have a great technology. do we have to do? We have to build the team. We have to build the pipeline. Engage with customers, and then convert that pipeline. And that is exactly what is happening. And that model is flowing through all of the business lines. Great technology. We built the team. We engaged with customers. We built the pipeline. And now we are starting to see the benefit of that. And there is that lead time building the pipeline, which we did last year. And then this year is really, really converting on that pipeline, and it is coming through in the volume growth. And I think the really exciting part is that it is broad based. I mean, if you look at biofunctional actives, 30% growth in the quarter We are both on trends with exosomes PDRN but then we are setting trends. And developing a new ingredient in Biofunctional actives We will share a bit more. We are still filing the IP on that. But this is really going to be the next blockbuster hit in this segment. Microbial protection double digit growth on a volume basis across all regions. Our investments are all in place now to globalize that business regionalize our supply footprint We are gaining share and then in our care ingredients, we are doing really well with our guars, with our cellulosics, our BPD. So it is really broad-based, and we expect to continue to carry this momentum. Into next year. Thank you very much.

Thank you. you. Our next question comes from John Roberts with Mizuho Securities. Please go ahead. Your line is open.

Thank you. I believe the activists wanted Ashland to run a formal sales process. Was there an agreement to run a formal sales process, or is that still yet to be determined by the new committee of the board with the 2 new board members?

John, thanks for the question. Obviously, that is sort of the elephant in the room that everybody's asking about. Look. You know, first and foremost, our team is focused on driving the execution of our strategy. I think the 1 thing that is clear from all the communications, ours, even from the Ancora level letter and from our discussion with a lot of other investors is this is a very valuable portfolio. We got a lot of great fundamentals that are gonna drive our future value creation. And, frankly, that is the number 1 priority. Everybody agrees to execute and drive performance, and that is what is gonna create the maximum value and alternatives. You know, what our strategy is, our board, just to be clear, we have a very good board already. We have been changing the board for many years now. We have experts from every business that we are in. The board regularly reviews all our strategy. You know, we have not woken up now because, you know, we have an activist or any investor We have been doing a lot of our work, and I have had these discussions with all of you. In terms of our views on the market, on the industry, industry changes that are going and that are happening and the opportunities that may lie ahead in the coming years. So none of that has changed. I think what is changed is we engaged Ancora. We had actually a very constructive discussion. They were constructive. We were constructive. I think everybody understands the businesses, the issues. They came forward with 2 very strong directors. That can add value to our business. They have relevant experience to what we are doing. So we saw that as a great opportunity to reinforce the board We will have new views that will come into our strategy work. The committee will be reinforced now with some other new views. And I am gonna let you know, we are gonna let them do the work that they have been doing and continue to do. We are not gonna speculate on what they want to do or not. I think that is their job to make recommendations to the full board of what that process is gonna be like. But the number 1 priority that we all agree on is execute, drive the performance, you know, and create the optionality of value, organic or inorganic, We wanna make sure that we have all options. This is not something that you wanna be forced to do 1 thing. We want to make sure that we have options to create value in multiple directions with our shareholders.

Okay. And then second, just a clarification question. I do not think I have heard about the advanced manufacturing tax credits before in the in discussing the intermediate segment. So I do not think NMP itself qualifies there. So this is a derivative effect you are seeing from the battery customers downstream?

William, you want to-- yeah. No, John. This is something that we spoke actually this time last year on it. So just as a reminder, it is an incentive around domestic production in some key sectors, 1 of which is battery. It does improve our cost position. It helps make domestic producers more competitive. The concept itself was introduced a couple years ago, but it was the eligibility was more defined in Q3 last year. And so as you look year over year, it is about a $3 million headwind for the Intermediates business, but sequentially, it is stable. This is something we would expect to continue to have and be eligible for through at least 2029, and then it continues to phase out from there. Great. Thank you.

Our next question comes from Joshua Spector with UBS. Please go ahead. Your line is now open.

Hey, good morning, guys. I wanted to just follow-up on actually 1 of John's earlier questions around the cost savings and the flow through to 2027 I mean, you are pretty clear in your answer. You thought this year could be 200 basis points higher from a margin perspective. So, you know, about $40 million in EBITDA there. Your comments on Hopewell actually seem a little bit more encouraging. This quarter than maybe the last couple quarters. I guess, would you expect more of that $40 million to now flow through in 2027 or is that still kind of a 2 year path I think before, it was more flow through might come in 2028.

I think we will start seeing the flow through you know, on a you know, I would say, let's talk in quarters. We will we should start seeing that probably in the second-- starting the second quarter. I think this fourth quarter and even first quarter, just the way recap works, you are gonna have a little bit of noise. that is why we are being a little bit more cautious, and it is not just what we do, but how it flows through the P and L. Today. But after that, I think we should start seeing that flow through. Now there are parts of like, look like the Calvert you know, downtime and all that. That you will see quicker because we are already in operation. So $40 million, parts of it will take a bit longer. Parts of it will come, but you will you will start seeing some of the benefits. Our biggest issue right now focusing on is Hopewell getting the productivity, and it is really kilos per hour production of a certain part of our product line. That we wanna make sure that we are getting, you know, the right throughput, the right cost structure. As we move forward. Okay. Thanks.

And if I could just follow-up quickly on specialty additives. I mean, it seems like you are more comfortable or at least confident around volumes there. and we have been talking about new wins for a while, but I feel like we have not seen them. And I mean architectural coatings demand is not incredibly strong. So what is inspiring confidence now for why we will see stronger volumes over the next kind of few quarters or year?

So quick comment. Dago, maybe you can comment. The good news there is the bar you know, from what happened in 2024, the markets have stabilized. I mean, they are not at the highest level. I would say, but at least they are stable. We are starting to see share gains, and Doug will comment on that. So there is a lot of actions now that we can start getting that momentum back. But Dago, why do not you go region by region and just give us a sort of a view of what is happening?

Sure. So yeah. If I go region by region because of course, architectural coatings is a very regional market. I mean, what you will see in China market is still pretty stable. I would actually say that it is declining on the new construction space. Now having said that, in the other industrial applications like electronics are actually doing quite well for us. But, really, the secret sauce when it comes to China is team execution. So we have been able to really convert into dollars of the regional innovation that we are doing in the region. So that is really driven by the team Europe is Europe is flat. There is no signs of recovery. This is driven by Germany and by France. But, again, here, we have been very disciplined, especially when it comes to market share, execution. The other big region for us, of course, is North America, and North America remains the million dollar question. New construction still pretty slow. But we know there is pent up demand. So it will depend on interest rates. So, of course, number 1, it will depend on consumer sentiment for us to determine when we are going to see that inflection point. Now the good news about all the regions is that innovation is advancing. that is a big part of the growth that we are seeing now. Commercial discipline is high. So we are being very careful on how we price our products. We are buying pricing our products. And then pipeline execution that is critical for us to out the market. So that is overall where we are. I will say the markets are stable. Architectural coatings is really nothing to report. Performance specialty is doing better than expected. Thank you.

Thank you. Our next question comes from Jeffrey Zekauskas with JPMorgan.

Thanks very much. It sounds like you have tried to optimize your cash flows this year by reducing your operating rates. How much did that penalize your EBITDA so far this year or for the entire year?

Hey, Jeffrey. Good morning. it is a good question. It builds actually on what Guillermo cited on that 200 basis points comment. So I would anchor that about $80 million of inventory drawdown if you point to how much of that is absorption related, impacting EBITDA, it is probably 30 million to 35 million And so, really, as we look going into next year, this is the clearest line of sight we have into a margin recovery. is producing to demand. And I mean, it is related to how Guillermo positioned it, but it is very similar. So you are right. It did bolster the balance sheet, meaningful inventory drawdown. We do not expect at the Ashland level meaningful inventory swings going forward. Of course, you know, the details matter. So by product line, we could have some areas that we rebuild and some areas we have inventory above target. But in general, the big inventory fluctuations is what is happened year to date. And from here, I would expect it to be stable. And, Jeffrey, I mean, this is an area of discipline that we are really changing, and you know the history and just inventory took. We do not wanna drive performance by building inventory. So we are gonna be much more disciplined on build as demand goes up. I do think there is upside potential for us given that we have we have brought it down. But we are we are just not gonna start producing just artificially to create absorption. We are we are gonna balance our actions based on informed views of demand.

Earlier in the call, did you did you say that there was a turnaround in the intermediates and solvents business in the fourth quarter? And if there is 1, is that a meaningful event for you? On an EBITDA basis?

The turnaround we did was in Hopewell. That we shut down for a period of time because we made investments. Equipment, to help with some of the process issues that we were having. So the plant's back online and producing, and we are we are monitoring now the production rates as they come up.

And then and then lastly, in the capital allocation committee that has been formed, when would you expect that committee to make a recommendation, or is there no time frame for that committee?

You know, I am not going to speculate on this but we have 2 new directors that just got named. We got to onboard them. there is a lot of work that we need to do to, you know, bring them up to speed. Now the board has been working on our strategy a long time now. So we are not gonna we are not gonna stop at this point in time. it is really bring them up to speed and let them do their work. But I am not gonna speculate on, you know, how fast or that is up to them. And what their views, what their recommendations to the board will be. Okay. Great. Thank you.

Thank you. Our next call comes from Laurence Alexander with Jeffries. Please go ahead. Your line is now open.

Hi. I wanted to ask about kind of the feedback you are getting from your customers about the different innovation platforms and not so much as the kind of the near term trends with technology per se. But what are they saying about the size of the potential applications and what you would need to deliver for there to perhaps be discussions about either a more aggressive you know, they would help fund capacity or establishment of JVs in some areas where it is appropriate. Or is the overall strategy just for Ashland to try and do everything on its own?

I think that is a great question. I am not gonna steal the thunder of our September 17 event. So if everybody wants to hear the full answer, that is the event that you should participate. But, you know, we feel very excited Personally, I feel much more confident. I have been on the road visiting our major customers around the world, and we are meeting we are getting access to a lot more people technology, marketing people. The whole engagement has changed. Because now we are we are we validated, I think, the technology. Now the issue is can we get the right product or the right formulation that they want to launch? And can we fall into their reformulation plans whenever they do their big brands, be it in personal care, be it in coatings? Or even some of the of the life science. So the feedback has been very positive. I can say, hey. The silicone replacement in personal care is looking really exciting. the now expanding the novel, the modified multifunctional starch Extremely exciting. Work that we are we are seeing the feedback very strong and beyond We were focusing on carbon replacement. So microplastic acrylic based thickeners and all that. But now the sartorial. there is a lot of other benefits there that people are excited about. So skin, it is not just for her hair, but now also in skin. We got both of those markets really moving well. The super wetter is now going into a lot of different markets. You know, 1 area that we were not thinking of moving that quickly was in personal care, and actually now we found a home in terms of ethnic care. For applications to be able to wet and condition hair much faster. I think as Alessandra mentioned in the TVO for ag, We have it in the seed coatings. They are working now in the oil dispersants. that is also very, very exciting. The super wetter is doing well over there. I am personally and I am biased. I am really excited by the work that coatings is doing. That really is more of my prior history. the-- the TiO 2 spacer technology we are working very well received by customers. We have not sampled that 1 yet because we were getting all the IP. That process is going, but I will say, I mean, extremely exciting Those just those examples that I mentioned we are talking about a very big market potential, and that will be the theme of the meeting. Silicones in personal care is an $800 million market. there is a lot of opportunity. This is not a $34 million up to we are to target some big opportunities. If you look at rheology, you know, acrylic type chemistry, synthetic chemistries, being able to replace that huge. I mean, that is $4.5 billion of business that were going up. TiO2 replacement, if we can get 10% to 20% TiO2 efficiency, You can do the math on how much TiO2 you know, in different types of paints and architectural. So ag, also very, very large market. So that is the issue here is scale. And what I would add that I am excited about is you know, we for the external world, we have been talking about the new technology platforms. In the future, you are gonna hear us talk about technology platforms because there is a lot of other things now that we are going into our old technology and we see opportunities to also go after scalable especially in the cellulosics area, I think, you know, change the game over the next couple of years. How do we move on to new things that we can bring to the technology Not a lot of innovation in that space for a long time, and I am very excited about that. Thank you.

Thank you. Our next question comes from Stephen Haines with Morgan Stanley. Please go ahead. Your line is now open.

Hey, good morning, everyone. Thanks for taking my question. Lots been covered, so maybe just a quick 1 on life sciences. I think somewhere in the materials, talked about customer order timing benefiting the quarter. Just to clarify, was that capturing something that was pushed out of the second quarter, or was that pulling forward something from Q4?

Oh, sorry. You wanna comment? Yeah. So to some extent from the second quarter, And but as I mentioned, if you are looking across second, third, fourth quarter, we target mid single digit growth, and that is what we expect looking across the year and across those quarters. that is and we are talking about the fundamentals, right, the market is stable. We are seeing great momentum with GlobalEye. Innovate, with the growth on injectables, cellulosics portfolios. Definitely, it is the underlying fundamentals are there.

And it the order pattern was not was not no material.

Okay. Thank you. Appreciate it.

Thank you. Our next call comes from Abigail Eberts with Wells Fargo. Please go ahead. Your line is now open.

Hi, there. Thanks for taking my question. Just wondering if you could speak more regarding the end fundamental that you are seeing, end demand fundamentals you are seeing in the nutrition business and what led to that decline for you specifically.

So nutrition. We are talking about the projects we have and working with customers on new applications with a focus on improving our mix as well. More towards an improved mix. And then new wins are coming, but they are coming lower than what we anticipated. So we see we see the momentum of the new applications is just coming slower than what we anticipated. And, basically, as we are talking about nutrition in the past, right, the from a you know, the non meat applications. This is a market that has not materialized, right? It is yet the growth is not there. So we definitely focus on other applications with our nutrition portfolio. We are seeing that. it is just the winds are coming is lower than what we anticipated. But in third quarter specifically, just looking at nutrition, the revenue was stable. It was not a decline. Okay. Thank you.

Our final question of the day comes from Mike Harrison. With Seaport Research Partners. Please go ahead. Your line is now open.

Hi. Good morning. Just 1 for me. I am curious, in the globalized portion of your strategy, it looks like you are getting good traction with the current round of investment I believe you made those going back a couple years. So I am curious. Do you still see that there are some gaps or areas that are gonna be in need of further investments And what could the timing look like on an additional round of globalized investments? Thanks.

I think we have made a lot of the big investments. If you look at it. And if I go by business, so microbial protection, now we have, as Jim said, every region in Brazil, North America, Europe, and Asia, we have local supply. And that changes. it is not just the act that we back integrated also on some of the key actives we got a better cost structure as we go forward. So it puts us in a much more competitive position and allows us to formulate locally using local raw materials. So there is a lot of benefits to that. Biofunctionals, we now have in Europe, we have capabilities that we are going to add up, you know, in Brazil, we have capabilities. And in China, I think The US, that would be 1 that we want to bring in production here too. So that we can work and be closer to our customers. Those are not big investments, but we will bring in that capability at the right time. I think in tablet coatings, as Alessandra mentioned in her comments, India is that is a big market for us. So we should have the new plant. They did the groundbreaking. So middle of next year, we should be in production. Customers are very excited about, you know, some of the products that we have been introducing and, you know, but you have got to be local to really to play that in that area. And I would say in we made most of the investments already the injectable side. I think, you know, the in Ireland, we the investment we made was oversized so that we can continue to build samples, but now we are we are already getting our first commercial sales, and that started to ramp up. So we are well positioned there. And in the high purity excipients for injectables, sugars, and other products that cyclodextra we made the investment here in The US in Columbus Ohio, and we are ramping up production there. So we are in a good place. I mean, that is something as we grow, we could put in another region in the future, but that would be further out. So I would say biofunctionals and the tablet coatings would be the areas that I would see some investments there. Hopefully, I think the issue is gonna be with new technologies coming in. I think that is the 1 that we will probably look at investments to globalize those product lines as they commercialize. Okay. Thank you.

This concludes the question and answer session. I would now like to turn the call back to Guillermo for any closing remarks. Guillermo?

Thank you, everyone, for your participation and questions. We look forward to connecting with everybody, over the coming weeks. And most importantly, I look forward to updating you on September 17 On the webinar on innovation update on progress that we have made on those new technologies. So look forward to seeing you in the near future. Thank you.

Thank you for your participation in today's conference. This does now conclude the program. You may now disconnect.