Reportable Segment Information

9 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Reportable Segment Information

NOTE Q – REPORTABLE SEGMENT INFORMATION

Ashland determines its reportable segments based on how operations are managed internally for the products and services sold to customers, including how the results are reviewed by the chief operating decision maker, which includes determining resource allocation methodologies used for reportable segments. Operating income and EBITDA are the primary measures of performance that are reviewed by the chief operating decision maker in assessing each reportable segment's financial performance. Ashland does not aggregate operating segments to arrive at these reportable segments.

Reportable Segments

Ashland’s reportable segments include Life Sciences, Personal Care & Household, Specialty Additives, Performance Adhesives and Intermediates and Solvents. Unallocated and Other includes corporate governance activities and certain legacy matters. Ashland has also provided subtotals by its consumer and industrial businesses to reflect the end markets served by each reportable segment.

Reportable segment business descriptions

Consumer Specialties

The Consumer Specialties business is comprised of the following reportable segments:

Life Sciences is comprised of pharmaceuticals, nutrition, nutraceuticals, agricultural chemicals, advanced materials and fine chemicals. Pharmaceutical solutions include controlled release polymers, disintegrants, film coatings, solubilizers, and tablet binders. Nutrition solutions include thickeners, stabilizers, emulsifiers and additives for enhancing mouthfeel, controlling moisture migration, reducing oil uptake and controlling color. Nutraceutical solutions include products for weight management, joint comfort, stomach and intestinal health, sports nutrition and general wellness, and providing custom formulation, toll processing and particle engineering solutions. Customers include pharmaceutical, food, beverage, nutraceuticals and supplements manufacturers, hospitals and radiologists and industrial manufacturers.

Personal Care & Household is comprised of biofunctionals, preservatives, skin care, sun care, oral care, hair care and household. These businesses have a broad range of nature-based, biodegradable, and performance-enhancing ingredients for customer-driven solutions to help protect, renew, moisturize and revitalize skin and hair, and provide solutions for toothpastes, mouth washes and rinses, denture cleaning and care for teeth. Household supplies nature-derived rheology ingredients, biodegradable surface wetting agents, performance encapsulates, and specialty polymers for household, industrial and institutional cleaning products.  Customers include formulators at large multinational branded consumer products companies and smaller, independent boutique companies. On April 30, 2021, Ashland completed its acquisition of the Schülke personal care business. The business, results and cash flows of Schülke have been integrated within the Personal Care & Household operating segment. See Note B for more information.

Industrial Specialties

The Industrial Specialties business is comprised of the following reportable segments:

Specialty Additives is comprised of rheology- and performance-enhancing additives serving the coatings, construction, energy, automotive and various industrial markets. Solutions include coatings additives for architectural paints, finishes and lacquers, cement- and gypsum- based dry mortars, ready-mixed joint compounds, synthetic plasters for commercial and residential construction, and specialty materials for industrial applications. Products include rheology modifiers (cellulosic and associative thickeners), foam-control agents, surfactants and wetting agents, pH neutralizers, advanced ceramics used in catalytic converters, and environmental filters, ingredients that aid the manufacturing process of ceramic capacitors, plasma display panels and solar cells, ingredients for textile printing, thermoplastic metals and alloys for welding. Products help improve desired functional outcomes through rheology modification and control, water retention, workability, adhesive strength, binding power, film formation, deposition and suspension and emulsification. Customers include global paint manufacturers, electronics and automotive manufacturers, textile mills, the construction industry, and welders.

Performance Adhesives is comprised of adhesives used in packaging, converting and structural applications. Packaging adhesives has an extensive line of pressure sensitive adhesives, functional coatings and primers combined with innovative technology solutions for narrow-, mid- and wide-web applications. Products meet stringent requirements in food and beverage safety, shipping, transportation, health and beauty, industrial, postage and security printing. Structural adhesives include light weighting vehicles and eliminating VOCs in buildings. Customers include converters of packaging materials, manufacturers of building materials and tier one suppliers to transportation industry.

Other

Intermediates and Solvents is comprised of the production of 1,4 butanediol (BDO) and related derivatives, including n-methylpyrrolidone. These products are used as chemical intermediates in the production of engineering polymers and polyurethanes, and as specialty process solvents in a wide array of applications including electronics, pharmaceuticals, water filtration membranes and more. Butanediol is also provided to Life Sciences, Personal Care, and Specialty Additives for use as a raw material.

Unallocated and Other generally includes items such as certain significant company-wide restructuring activities, corporate governance costs and legacy costs or activities that relate to divested businesses that are no longer operated by Ashland.

Reportable segment results

Results of Ashland’s reportable segments are presented based on its management and internal accounting structure. The structure is specific to Ashland; therefore, the financial results of Ashland’s reportable segments are not necessarily comparable with similar information for other comparable companies. Ashland allocates all significant costs to its reportable segments except for certain significant company-wide restructuring activities, certain corporate governance costs and other costs or activities that relate to former businesses that Ashland no longer operates. The service cost component of pension and other postretirement benefits costs is allocated to each reportable segment on a ratable basis; while the remaining components of pension and other postretirement benefits costs are recorded within the other net periodic benefit income caption on the Statements of Consolidated Comprehensive Income (Loss). Ashland refines its expense allocation methodologies to the reportable segments from time to time as internal accounting practices are improved, more refined information becomes available and the industry or market changes. Significant revisions to Ashland’s methodologies are adjusted for all segments on a retrospective basis.

The following table presents various financial information for each reportable segment for the three and nine months ended June 30, 2021 and 2020.

	Three months ended						Nine months ended
	June 30						June 30
(In millions - unaudited)	2021			2020			2021			2020
SALES
Life Sciences	$	193		$	189		$	548		$	528
Personal Care & Household		147			155			409			451
Consumer Specialties		340			344			957			979
Specialty Additives		169			135			474			429
Performance Adhesives		94			70			267			229
Industrial Specialties		263			205			741			658
Intermediates and Solvents		49			37			118			102
Intersegment sales (a)
Intermediates and Solvents		(15	)		(12	)		(30	)		(22	)
	$	637		$	574		$	1,786		$	1,717
OPERATING INCOME (LOSS)
Life Sciences	$	37		$	40		$	101		$	97
Personal Care & Household		16			16			49			(309	)
Consumer Specialties		53			56			150			(212	)
Specialty Additives (b)		15			15			36			(137	)
Performance Adhesives		13			13			52			40
Industrial Specialties		28			28			88			(97	)
Intermediates and Solvents		11			7			17			(7	)
Unallocated and other		(30	)		(43	)		(81	)		(87	)
	$	62		$	48		$	174		$	(403	)
DEPRECIATION EXPENSE
Life Sciences	$	9		$	8		$	26		$	24
Personal Care & Household		10			10			29			30
Consumer Specialties		19			18			55			54
Specialty Additives		16			15			49			46
Performance Adhesives		2			4			9			10
Industrial Specialties		18			19			58			56
Intermediates and Solvents		4			4			10			10
	$	41		$	41		$	123		$	120
AMORTIZATION EXPENSE
Life Sciences	$	7		$	7		$	21		$	21
Personal Care & Household		11			9			30			27
Consumer Specialties		18			16			51			48
Specialty Additives		5			5			14			14
Performance Adhesives		1			—			1			1
Industrial Specialties		6			5			15			15
Intermediates and Solvents		—			—			—			—
	$	24		$	21		$	66		$	63
EBITDA (c)
Life Sciences	$	53		$	55		$	148		$	142
Personal Care & Household		37			35			108			(252	)
Consumer Specialties		90			90			256			(110	)
Specialty Additives		36			35			99			(77	)
Performance Adhesives		16			17			62			51
Industrial Specialties		52			52			161			(26	)
Intermediates and Solvents		15			11			27			3
Unallocated and other		(30	)		(43	)		(81	)		(87	)
	$	127		$	110		$	363		$	(220	)

	June 30		September 30
(In millions - unaudited)	2021		2020
TOTAL ASSETS
Life Sciences	$	1,941	$	1,974
Personal Care & Household (d)		1,204		939
Consumer Specialties		3,145		2,913
Specialty Additives		1,646		1,666
Performance Adhesives		599		591
Industrial Specialties		2,245		2,257
Intermediates and Solvents		154		161
Unallocated and other		1,222		1,546
	$	6,766	$	6,877

(a)Intersegment sales from Intermediates and Solvents are accounted for at prices that approximate fair value. All other intersegment sales are accounted for at cost.

(b)Includes a capital project impairment of $9 million for the nine months ended June 30, 2021 relating to a long-term capital project plan change at a plant facility.

(c)Excludes income (loss) from discontinued operations, other net periodic benefit income (expense) and net income (loss) on divestitures. See the Statement of Consolidated Comprehensive Income (Loss) for applicable amounts excluded.

(d)See Note B for acquired assets associated with the Schülke personal care business on April 30, 2021.