Reportable Segment Information

9 Months Ended

Jun. 30, 2023

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 segment business descriptions

Life Sciences is comprised of pharmaceuticals, nutrition, nutraceuticals, agricultural chemicals, diagnostic films (formerly known as 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 provide 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 is comprised of biofunctionals, microbial protectants (preservatives), skin care, sun care, oral care, hair care and household. These businesses have a broad range of natural, nature-derived, biodegradable, and high-performance 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.

Specialty Additives is comprised of rheology and performance-enhancing additives serving the architectural 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.

Intermediates 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 supplied 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 loss 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, 2023 and 2022.

	Three months ended						Nine months ended
	June 30						June 30
(In millions - unaudited)	2023			2022			2023			2022
SALES
Life Sciences	$	219		$	228		$	666		$	602
Personal Care		146			172			452			490
Specialty Additives		152			194			456			532
Intermediates		43			73			148			192
Intersegment sales (a)		(14	)		(23	)		(48	)		(57	)
	$	546		$	644		$	1,674		$	1,759
OPERATING INCOME (LOSS)
Life Sciences	$	49		$	51		$	141		$	115
Personal Care		14			25			38			67
Specialty Additives		5			35			22			79
Intermediates		13			30			50			72
Unallocated and other		(19	)		(29	)		(69	)		(79	)
	$	62		$	112		$	182		$	254
DEPRECIATION EXPENSE
Life Sciences	$	11		$	9		$	31		$	25
Personal Care		9			10			28			28
Specialty Additives		15			16			43			48
Intermediates		3			2			9			9
Unallocated and other		—			—			—			1
	$	38		$	37		$	111		$	111
AMORTIZATION EXPENSE
Life Sciences	$	7		$	7		$	20		$	21
Personal Care		12			11			35			35
Specialty Additives		5			5			14			14
Intermediates		—			1			1			1
	$	24		$	24		$	70		$	71
EBITDA (b)
Life Sciences	$	67		$	67		$	192		$	161
Personal Care		35			46			101			130
Specialty Additives		25			56			79			141
Intermediates		16			33			60			82
Unallocated and other		(19	)		(64	)		(69	)		(120	)
	$	124		$	138		$	363		$	394

	June 30		September 30
(In millions - unaudited)	2023		2022
TOTAL ASSETS
Life Sciences	$	1,938	$	1,905
Personal Care		1,044		1,073
Specialty Additives		1,642		1,567
Intermediates		160		170
Unallocated and other		1,245		1,498
	$	6,029	$	6,213

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

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