Ashland Inc.

Thank you for standing by, and welcome to the Ashland Global Holdings, Inc., second quarter 2021 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you will need to press star, then 1 on your telephone. Please be advised that today's call is being recorded. If you require additional assistance, press star, then 0 to reach an operator. I would now like to hand the call over to Seth and Rosie. Please go ahead.

Thank you, Michelle. Good morning, everyone, and welcome to Ashland's second quarter fiscal year 2021 earnings conference call and webcast. My name is Seth Morozek, Director, Ashland Investor Relations. Joining me on the call today are Guillermo Novo, 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 March 31st, 2021 at approximately 5 p.m. Eastern Time yesterday, April 28th. The news release issued last night was furnished to the SEC in a Form 8-K. During this morning's call, we will reference slides that are currently being webcast on our website, Ashland.com, under the Investor Relations section. The slides can also be found on the Investor Relations section of our website. We encourage you to follow along with the webcast during the call. Please turn to slide two. As a reminder during today's call, we will be making forward-looking statements on several matters, including our outlook for fiscal year 2021. These forward-looking statements are subject to risks and uncertainties that could cause future results or events to differ materially from today's projections. We believe any such statements are based on reasonable assumptions but cannot assure that such expectations will be achieved. Please refer to slide two of the presentation for a more complete explanation of those risks and uncertainties and the limits applicable to forward-looking statements. Please also note that we will be referring to certain actual and projected financial metrics of Ashland on an adjusted basis, which are non-GAAP financial measures. We will refer to these measures as adjusted and present them in order to supplement your understanding and assessment of the financial performance of our ongoing business. Non-GAAP measures should not be considered a substitute for or superior to financial measures calculated in accordance with GAAP. The most directly comparable GAAP measures as well as reconciliations of the non-GAAP measures to those GAAP measures are available on our website and in the appendix of today's slide presentation. Please turn to slide three. Guillermo will begin the call this morning with an overview of Ashland's results in the second fiscal quarter. Next, Kevin will provide a more detailed review of financial results for the quarter. Finally, Guillermo will close with key priorities and planning in this current economic environment, in addition to providing his thoughts on important next steps. We will then open the line for questions. Now, please turn to slide five, and I will turn the call over to Guillermo for his opening comments. Guillermo?

Guillermo Ramos- Thank you, Seth, and good morning to everyone. Before I begin, I'd like to thank you for your participation this morning. First and foremost, I'm pleased by the progress of our business units are making as we execute our strategy. We continue to operate safely with a clear focus on the safety and well-being of our employees as we manage through this difficult pandemic. In addition, our teams responded well to the impact of Storm Uri in the U.S. Gulf Coast in February, which resulted in two of our Texas-based facilities coming offline for several weeks. Not only did we lose production time, we also incurred additional costs of repairing pumps, pipes, and other equipment to get the facilities back online safely and as quickly as possible. The storm and subsequent freeze also impacted supply chain dynamics in the Gulf Coast. And while we have largely worked through many of these challenges, raw material availability has improved but continues to be an issue. As we will discuss in more detail, raw material demand continues to improve as the world slowly begins to merge from the global pandemic. Despite these challenges during the quarter, our business priorities remain unchanged, demonstrating organic growth, expanding margins, and improving free cash flow. For the quarter, Ashland sales declined 2 percent, inclusive of favorable currency. Excluding the planned exit of low-margin businesses, sales were flat with prior year, inclusive of favorable currency. Life science continues to perform well, with pharma sales consistent with a strong prior year period when buying patterns changed as large pharma producers as the reality of the global pandemic began to take hold. Nutraceuticals demand remains strong, and the team has demonstrated strong year-over-year growth thanks to concerted efforts to change the business trajectory. In personal care, The global pandemic continues to impact some market segments linked to consumer, social, and recreational behaviors. We have not seen the demand recovery everyone was hoping for in hair styling, sun care, and other businesses linked to grooming and wellness. For personal care, we also continue the process of exiting low margin product lines we commented on our last call. For our industrial segments, We saw continued recovery of demand. Specialty Additives continues to see strong demand recovery across all markets with global architectural coatings showing significant volume recovery as contractor business picks up globally. Our performance adhesives business also saw broad base growth across applications. In addition to improving demand dynamics, our industrial businesses executed well during the quarter to minimize the potential negative impact from the difficult supply chain dynamics caused by Storm Uri. Consistent with our strategy, lower SART expenses had a meaningful impact on Ashland's profitability. And again, we demonstrated substantial growth in free cash flow generation due largely to the disciplined balance sheet management. Please turn to slide six. As a result of the winter storm and the subsequent freeze, we incurred $14 million of higher costs, driven by $10 million in lost absorption and $4 million in repair costs. Of this total cost, $11 million impacted Q2, as reported in consumer specialties adjusted EBITDA. The storm also impacted our ability to ship and our customers' ability to receive certain orders. As such, roughly $3 million of gross profit shifted from Q2 to Q3. While there will also be the remaining $3 million of costs impacting in Q3, we expect this will be offset by the positive impact of the order shift into the June quarter. Demand trends and orders we have seen so far in April gives us confidence of this offset. So while the $11 million impact from the storm was meaningful, For our consumer specialties and Ashland overall, during the quarter, the impact is largely behind us. I would note that although our intent is to offset the loss absorption as we work to rebuild inventories, the current raw material tightness is making this work challenging. I'm very pleased with the progress by the Ashland team during the quarter. They managed well during another difficult external a challenge ensuring the safety of our employees and that our customers were supplied. Other than the freeze impact, all of our businesses are performing to expectations. Fortunately, as I stated, the impact of the storm and freeze in the golf course are behind us, and I am confident in our outlook for the remainder of the year. Let me now pass it over to Kevin for the financial update. Kevin?