Reportable Segment Information

9 Months Ended

Jun. 30, 2022

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.

Change in reportable segments

On February 28, 2022, Ashland completed the sale of its Performance Adhesives segment. The operating results and cash flows for the Performance Adhesives segment have been classified as discontinued operations within the Consolidated Financial Statements for all periods presented. As a result, Ashland's reportable segments include Life Sciences, Personal Care, Specialty Additives and Intermediates.

Unallocated and Other includes corporate governance activities and certain legacy matters. The historical segment information has been recast to conform to the current segment structure.

Reportable segment business descriptions

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 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 (formerly 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 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 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 (formerly 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 as a feedstock 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, 2022 and 2021.

	Three months ended						Nine months ended
	June 30						June 30
(In millions - unaudited)	2022			2021			2022			2021
SALES
Life Sciences	$	228		$	193		$	602		$	548
Personal Care		172			147			490			409
Specialty Additives		194			169			532			474
Intermediates		73			49			192			118
Intersegment sales (a)		(23	)		(15	)		(57	)		(29	)
	$	644		$	543		$	1,759		$	1,520
OPERATING INCOME (LOSS)
Life Sciences	$	51		$	37		$	115		$	101
Personal Care		25			16			67			49
Specialty Additives (b)		35			15			79			36
Intermediates		30			11			72			17
Unallocated and other		(64	)		(34	)		(121	)		(92	)
	$	77		$	45		$	212		$	111
DEPRECIATION EXPENSE
Life Sciences	$	9		$	9		$	25		$	26
Personal Care		10			10			28			29
Specialty Additives		16			16			48			49
Intermediates		2			4			9			10
Unallocated and other		—			1			1			1
	$	37		$	40		$	111		$	115
AMORTIZATION EXPENSE
Life Sciences	$	7		$	7		$	21		$	21
Personal Care		11			11			35			30
Specialty Additives		5			5			14			14
Intermediates		1			—			1			—
	$	24		$	23		$	71		$	65
EBITDA (c)
Life Sciences	$	67		$	53		$	161		$	148
Personal Care		46			37			130			108
Specialty Additives		56			36			141			99
Intermediates		33			15			82			27
Unallocated and other		(64	)		(33	)		(120	)		(91	)
	$	138		$	108		$	394		$	291

	June 30		September 30
(In millions - unaudited)	2022		2021
TOTAL ASSETS
Life Sciences	$	1,938	$	1,945
Personal Care		1,087		1,145
Specialty Additives		1,601		1,636
Intermediates		185		160
Unallocated and other		1,601		1,726
	$	6,412	$	6,612

(a)Intersegment sales from Intermediates are accounted for at prices that approximate fair value. All other intersegment transfers 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 income (loss) on acquisitions and divestitures, net. See the Statement of Consolidated Comprehensive Income (Loss) for applicable amounts excluded.