Thank you, Terry. Good morning, everyone, and welcome to Ashland's Second Quarter Fiscal 2020 Earnings Conference Call and Webcast. My name is Seth Mrozek, 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 31, 2020, at approximately 5:00 p.m. Eastern Time yesterday, May 5. The news release issued last night was furnished to the SEC in 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 2. As a reminder, during today's call, we will be making forward-looking statements on several matters, including our outlook for fiscal year 2020. 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 2 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 on 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 3. Guillermo will begin the call this morning with a review of Ashland's priorities in the current environment and provide an overview of results in the second fiscal quarter. Next, Kevin will provide a more detailed review of financial results for the second fiscal quarter. Guillermo will then discuss the Ashland portfolio and the business unit realignment that was completed during the quarter, in addition to the strategies for each of the business units. Guillermo and Kevin will then review the scenario planning that Ashland has implemented in the wake of the COVID-19 pandemic. Finally, Guillermo will close with key accomplishments that have been achieved over the past few months, in addition to providing his thoughts on important next steps. We will then open the line for your questions. Now please turn to Slide 5, and I will turn the call over to Guillermo for his opening comments. Guillermo?

Thank you, Seth, and good morning to everyone. Before I begin, I'd like to thank everyone for your participation this morning. I hope that everyone is safe and healthy in these unprecedented times. Since the emergence of the coronavirus in China in January, the Ashland team has worked tirelessly to address the impact of the pandemic. First and foremost, this has meant protecting the health and safety of our employees. Second, we have continued to supply our customers and the critical industries we serve. And third, we have worked to ensure that Ashland is well positioned even in the event of prolonged impact from the pandemic. Despite all the challenges presented over the last few months, we have maintained a strong focus on advancing our strategic initiatives to restructure Ashland. We have heightened our sense of urgency in executing our transformation as it is doing more than just positioning us for future growth and performance. It is also helping us navigate better through this COVID-19 environment. We have operationalized our new business unit model, and the teams have worked to improve performance across the portfolio. The teams have also refreshed their respective strategies in order to best serve our customers and profitably grow our businesses. We are continuing to drive our self-help actions to improve Ashland's cost structure, performance and cash generation. Kevin will provide additional commentary regarding these efforts a bit later in the call. Please turn to Slide 6. In summary, Q2 results were generally consistent with our expectations as we experienced a limited impact on demand from the COVID-19 pandemic. While sales were down year-over-year, more than half the decline was due to past known issues, which we are continuing to address. And while the global industrial markets were generally weaker during the quarter, our more resilient consumer-focused businesses performed well. This reflects the more defensive nature of our portfolio. But the Q2 results are not only reflective of the customers and markets we serve, the entire Ashland team demonstrated tremendous leadership in helping us navigate through a challenging global environment. Our global incident management team demonstrated rapid engagement and active management to address real-time issues in health and safety protection, production and supply chain management. They leveraged our COVID-19 learnings from China and applied these best practices across the company in all regions, ensuring our plants operate with minimal disruption and helping implement our work-from-home protocols. We continue to take action to reduce costs, working capital and capital spending in order to conserve cash and maintain flexibility in this environment. I'm incredibly pleased by the team's response during these times, and I'm confident we are well positioned to weather the current storm and emerge a stronger Ashland in the months to come. Let me now pass the call over to Kevin to review our Q2 results in more detail. Kevin?

Thank you, Guillermo, and good morning, everyone. Please turn to Slide 8. Total Ashland sales in the quarter were $610 million, down 9% from the year ago period due to lower sales in all three business groups, which represented one point of this decline. SG&A and R&D costs again declined significantly in the quarter as we realized the positive impact of the cost reduction program as well as new cost actions. In total, Ashland's adjusted EBITDA was $142 million, equal to results in the prior year quarter. Adjusted EPS was $0.84 per share, up $0.01 from the prior year. Adjusted EPS, excluding acquisition amortization, was $1.12 per share, up 4% from the prior year. Adjusted EPS, excluding acquisition amortization, is a new financial metric we are introducing this quarter. While it had been our historical practice to quantify the per share impact of acquisition amortization on after-tax earnings, we are now taking the additional step of reporting our per share earnings excluding this non-cash expense. We are making this change based on our own internal analysis and feedback from many of our investors. We believe this metric provides a better understanding of our underlying results as it excludes the impact of past acquisitions on current quarter results. Please note that in the 8-K we filed last week with the SEC, we disclosed earnings for the four quarters of fiscal 2019 and the first quarter of fiscal 2020 in this manner. We will continue to utilize this metric going forward in our quarterly reporting. Please turn to Slide 9. As you can see from our financial reporting, we completed the business unit and reporting segment realignment during the March quarter. Going forward, we will be reporting and discussing results for our three business groups: Consumer Specialties, Industrial Specialties and Intermediates and Solvents. First, I'll begin with Consumer Specialties. Sales were $343 million, down 9% from the prior year quarter. Much of this decline was due to the Pharmachem and oral care business losses we experienced last year. More specifically, sales for the life sciences business unit declined by 6%, while sales for personal care and household declined by 13%. Excluding those known business losses, the life sciences and personal care and household businesses performed well. Price/mix was favorable during the quarter, which drove strong improvements in both gross profit margin and adjusted EBITDA margins. Adjusted EBITDA margin in life sciences improved to 28%, while in personal care and household, adjusted EBITDA margin improved to 25%. In total, Consumer Specialties' adjusted EBITDA margin improved by 220 basis points to 26.5%. Please also note that as a part of the business unit realignment process, we were required to conduct goodwill impairment testing at the new reporting segment level. The outcome of this testing was a noncash impairment expense of $356 million in the personal care and household business unit, reflecting impairment related primarily to Avoca and our oral care business. Please turn to Slide 10. Turning to Industrial Specialties. Sales were $240 million, down 7% from the prior year quarter. Sales for the Performance Adhesives business unit declined by 4%, while sales for the Specialty Additives business unit declined by 8%. Much of this decline was due to reduced demand in construction, automotive and several performance specialties end markets. Stronger-than-expected coatings demand in North America and EMEA was offset by weakness in Asia, especially China. Price/mix was favorable during the quarter, though unfavorable fixed cost absorption drove margins below prior year levels. Adjusted EBITDA margin in Performance Adhesives improved to 24%, while in Specialty Additives, adjusted EBITDA margin declined to 21%. In total, Industrial Specialties' adjusted EBITDA margin declined by 80 basis points to 22.1%. As part of the business unit realignment, we also conducted goodwill impairment testing for Industrial Specialties. The outcome of this testing was a noncash impairment expense of $174 million in the Specialty Additives business unit, reflecting impairment primarily related to our global construction and energy additives businesses. Please turn to Slide 11. Turning to Intermediates and Solvents. Sales were $37 million, down 16% from the year-ago period. Please note that I&S sales now reflect intercompany sales of BDO to Consumer Specialties, which totaled $10 million in the March quarter. These sales are recorded at market pricing and are eliminated in the consolidation of total Ashland sales. Lower volumes were mostly driven by lower intercompany demand resulting from lower oral care demand and inventory management initiatives within Consumer Specialties. The lower sales also reflected lower market pricing. Merchant volumes increased by 1% in the quarter. Price/mix was unfavorable. Gross profit and adjusted EBITDA declined during the quarter. I will now turn the call back over to Guillermo for his thoughts on the Ashland portfolio and our new business units. Guillermo?

Thank you, Kevin. As you all know, Ashland has undergone a dramatic transformation over the past decade. I thought it would be helpful to take a step back and review the portfolio in its current state through the lens of our new business unit structure. Please turn to Slide 13. As Kevin referenced in his financial review, Ashland now consists of three business groups: Consumer Specialty, Industrial Specialties and Intermediates and Solvents with five operating segments: life sciences, personal care and household, Specialty Additives and Performance Adhesives and I&S. Across the portfolio, we hold strong leadership positions, particularly within our core franchise businesses, pharma, personal care, coatings and solvent-based pressure-sensitive adhesives. The demand in these core businesses tend to be more defensive or semi-defensive in nature given the markets we serve. Given the additive or niche nature of these businesses, they are more innovation-driven with greater ability to sustain differentiation. The growth dynamic in some of these end markets also tend to be less tied to overall GDP growth, both in the U.S. and globally. These defensive or semi-defensive end markets represent a significant part of our sales and even greater contribution to profitability. We also serve industrial end markets, which are more impacted by cyclical economic GDP-related dynamics. These end markets include transportation, building and construction and energy, though they represent a smaller percent of our overall portfolio. With roughly 40% of the production volume consumed internally, I&S remains focused on providing the back integration benefits to our consumer business while maximizing value through merchant sales. Please turn to Slide 14. In terms of end markets, much of the portfolio skews to the defensive or semi-defensive position. The portfolio exhibited these characteristics during the second quarter even as uncertainty and disruptions from the COVID-19 pandemic impacted the globe. We are confident that our strong leadership position in these end markets positions us well for the uncertainty that lies ahead. I'd like to spend a few minutes now discussing the profiles and priorities of the five businesses. Please turn to Slide 15. Let me start with the Consumer Specialties business group, which includes our life science and our personal care and household units. Within life sciences, we maintained a strong pharmaceutical franchise. This is a large and important business line, and our intention is to invest to grow this franchise. We have deep customer relationships, and our team is actively working to expand our leading oral solid dose excipient platform. We are also investing to expand our market position in the biopharma space with several exciting developments in the injectable space. We're pursuing both organic and inorganic growth avenues to strengthen and grow in this business. Our food and nutrition business leverages our broad additive portfolio to help us grow and gain scale. Our current focus is on pursuing strategies that improve our profitability and allow us to continue to grow globally. As we have discussed in prior calls, our nutraceutical business is a U.S.-centric business. Our objectives here are clear. First and foremost, we want to stabilize and improve this business following the business losses we experienced last year. Second, the team is working to define the long-term strategy for this business to position it for profitable growth. Like life sciences, in personal care and household, we maintain a strong personal care franchise. Our leadership position is highlighted by the rich ESG-driven innovation portfolio centered around natural and naturally derived products, biodegradability, responsibly sourced raw materials and products addressing clean beauty formulation needs. As an example, the team is working to expand our highly successful biofunctional and natural-based sustainable technologies into new and innovative personal care applications. And to further improve profitability, we're working to rebalance our portfolio to focus on our high-end differentiated products. Next, we want to elevate our focus within household. First, we're stabilizing the Avoca business, which was also impacted by business losses during the last fiscal year. Second, we're working to expand our focus on home and personal hygiene, where we see great opportunities in the years to come. Finally, within personal care, we want to leverage our biotech capabilities across the broader Ashland portfolio. We have tremendous capabilities and expertise in extraction, fermentation and purification which can be expanded into other end markets and geographies. This will allow us to grow our product offering and leverage our capabilities into adjacent high-value markets. These capabilities will also be of great value to our Life Science business as we expand our biopharma activities. Please turn to Slide 16. Our next business group is Industrial Specialties, which includes our Specialty Additives and Performance Adhesives business units. Our Specialty Additives business has its strong foundation in our coatings franchise based on rheology control. While we enjoy leadership positions across the globe, the team is working to strengthen our share in high-growth regions such as Asia, especially with our high-performance products. To fuel additional growth, we're also working on innovative solutions for industrial coatings applications, while also expanding our product and technology portfolio. Similar to food and nutrition, the other industries we serve, namely, construction, energy and performance specialties, the team is pursuing opportunities to leverage our existing product portfolio to expand our scale via broad market access to drive growth and improved profitability. And finally, working to improve the overall margin profile of our specialty additives by continuing to upgrade our product mix towards high-value applications and markets. We continue to look for opportunities to broaden our additive portfolio. Our Performance Adhesives business primarily serves customers in North America. We maintain a strong pressure-sensitive adhesive franchise with leadership positions in high-performance solvent-based pressure-sensitive adhesives. The team's priority is to expand our solvent-based pressure-sensitive adhesive position in Asia, where growth opportunities are appealing given the long-term growth and demand. We also supply structural assembly adhesives for building, construction and automotive applications. While more GDP-sensitive, these products are built on a differentiated technology platform. We're working to grow our composite adhesive portfolio as vehicle lightweighting continues to be a long-term trend within the transportation industry. We see opportunities to grow this business globally as we follow our customers. We also have a strong position in the U.S. construction market. Finally, we're pursuing additional growth opportunities within laminating adhesives and coatings to accelerate profitable growth in this business. Please turn to Slide 17. The final business unit is Intermediates and Solvents. This business produces butanediol or BDO and related derivatives. BDO is produced at our facility in Lima, Ohio, and is a key raw material used in the production of many specialty polymers within our Consumer Specialties business units. Roughly 40% of the volume produced at Lima is used internally for these applications. With the sale of the Marl BDO assets, our merchant business is now more focused on downstream derivatives, mostly NMP and BLO, used in industries such as pharmaceutical, agricultural and electronics, mostly for batteries and semiconductors. Given I&S' role in both back integration and stand-alone value creation, we will continue to assess our long-term strategies for this business. Please turn to Slide 18. Some key takeaways from our new business model structure. We are one of the largest specialty additives players with global scale and infrastructure. Our new business unit model facilitates clear BU ownership and accountability for both strategy and operating performance. Additives tend to be a complex and profitable space in the specialty materials industry. The challenge here in this space is in building scale. As I just reviewed, we have leadership positions in many large core businesses and can leverage both global scale and infrastructure of our specialty additive-centric portfolio across many important markets and geographies. We have room to improve our margins, new products, mix improvement, productivity, reducing costs and redeploying resources for growth. Innovation is at the center of our culture, our capabilities and our strategy. We see a healthy portfolio of opportunities, ESG-driven, performance-driven, productivity-driven and expansion-driven. We are resetting our priorities and redeploying resources to go after them. Despite all the challenges we faced in these uncertain times, Ashland is very well positioned to capitalize on a wide array of exciting and critical new opportunities to improve our performance and drive profitable growth. We will leverage our new structure to help us both navigate through this period of uncertainty and build the foundations to achieve our long-term goals. Please turn to Slide 20. With that, let me shift back to the here and now. Kevin and I will take you through some of the work we have been doing to ensure we're well positioned to continue addressing the COVID-19 challenges the world is facing. Let me take you through some of the scenario planning work and our key takeaways. We had each business build bottoms-up scenarios with focus on two variables. The world's ability to contain COVID-19 and the impact of all the economic policy response on stimulating the economy. We went through a number of scenarios, but one thing is certain. There remains a tremendous amount of uncertainty in the global marketplace with respect to how the virus will be contained and how effective long-lasting government response will be to combat the impact. Based on our portfolio, we are more confident that our overall demand should remain stable. We view the biggest risk coming from supply chain and operational disruptions across our value chain, impacting our suppliers, us or our customers. Please turn to Slide 21. Several takeaways. At the enterprise level, we should benefit from our more defensive portfolio. Most of the demand impact-driven scenarios will impact our business differently. Responding to them will require business-specific actions. Supply chain risks could impact more of our businesses and is a high-priority focus for us. Under all scenarios, and especially in the current environment persists for a long period of time, our self-help actions are critical to both strengthening our company at this time of crisis as well as repositioning us for the future. We will stay focused on executing our plan with urgency. Given the high level of uncertainty, it's almost impossible to predict the future based on any of these scenarios. As a result of the high level of uncertainty, we shifted our focus from just scenario planning to stress testing. Rather than predicting the future, we're looking at stress cases to ensure corporate financial stability and to identify levers to improve our performance. Our focus is to ensure we're prepared and can respond quickly to both the threats and opportunities we cannot forecast. Planning ahead but building resilience and agility. Let me ask Kevin to take you through some of the stress tests and actions. Kevin?

Thanks, Guillermo. Please turn to Slide 22. First, I'd like to address our key takeaways from our stress testing. Our stress cases looked at significant demand impact in the event of a prolonged economic downturn or failure to contain the spread of COVID-19. Accelerating self-help actions help improve all scenarios, as Guillermo indicated. We would expect more muted demand impact within Consumer Specialties and would anticipate more stressed demand impact within Industrial Specialties, namely transportation, building and construction and energy. Although our portfolio is generally more defensive, we recognize that our business units will be impacted differently. Our responses to demand changes would be business unit specific and supported by additional corporate actions as necessary. Supply chain-driven impacts could have broader company impact but would likely have a shorter duration. We are also confident that our new business unit structure, business unit structure, allows for enhanced flexibility and tailoring our actions to how the global pandemic continues to unfold. They are key to building resilience and agility. In the event of a prolonged impact, although we could see demand-driven EBITDA erosion due to volume loss and cost absorption issues, we would expect to harvest cash from working capital as was the case during the 2008, 2009 downturn. This cash generation, combined with our substantial available liquidity, makes us confident that if a longer-term downturn comes, we're prepared to weather that. We have identified and would also take further actions to reduce cost, conserve cash and focus on continuing to maintain a strong balance sheet and liquidity position. Finally, we are building contingency plans to access when and if necessary, including plans that are specific to each of the business units and further corporate-level actions that can be implemented if necessary. We recognize that we can prepare for these stressed cases, but we cannot forecast them. As such, we're focused on operating to maximize performance based on base case planning though ensuring stability in the event of a downside. And we are building resilience and agility through our new structure as well as identifying leading indicators and triggers that could signal increased risk or upside opportunities. Please turn to Slide 23. As we plan and prepare for uncertainty, we are focused on the things we can control, focusing on our restructuring, reducing cost and driving growth. Our self-help actions are ever more important and urgent in this environment. We have identified new cost savings opportunities well in excess of $40 million on an annual basis and are targeting run rate savings of approximately $40 million by the end of this fiscal year. For the additional savings above $40 million, we plan to retain optionality to redeploy these savings to support our growth initiatives or if needed respond to unexpected developments. We are also executing near-term inventory management initiatives which are expected to impact fixed cost absorption by at least $25 million in the second half of fiscal 2019. These initiatives will help to generate additional cash in the second half of the year while also rightsizing our inventory position. We expect the dollar impact of the cost reduction and inventory management activities to largely offset one another in the second half of the year. I will now turn the call back over to Guillermo for his final remarks, and please turn to Slide 24.

Thank you, Kevin. In summary, I am confident that Ashland is well positioned for these uncertain times. We have a strong foundation for success based on high-value technologies, leading market positions in critical industries, and deep customer relationships. Our structure is optimized to enhance the opportunities for each of our focused business units. We are taking steps to reduce working capital, capital spending, and operating costs to improve profitability and generate cash. We will maintain a strong balance sheet with over $1 billion in available cash and liquidity, a portfolio with resilient cash flow, and a capital structure that provides flexibility even in challenging scenarios. Additionally, we are committed to maintaining our dividend during these uncertain times. Please turn to Slide 25. I want to provide some high-level commentary on our forward-looking insights. We continue to expect a muted but stable environment in our defensive end markets. We anticipate weaker demand and increased uncertainty for much of the Industrial Specialties portfolio. Specifically, there is uncertainty on how demand in the more seasonal end markets, such as coatings, building, and construction, will react in the second half of the year. Given these dynamics and the actions customers are taking to mitigate supply chain risks, we expect some shifts in order timing across quarters. While we expect to gain from lower raw material prices, changes in price and raw materials are likely to remain balanced. As Kevin mentioned earlier, we expect the overall impact of our cost improvement actions to offset any short-term negative effects from inventory management initiatives. To be clear, we are focused on demonstrating improved momentum for the business despite the challenges of the COVID-19 pandemic. Please turn to Slide 27. In conclusion, I want to thank the Ashland team for their leadership and proactive participation in this uncertain environment. We are fortunate to be a premier specialty materials company with a high-quality business that has leadership in defensive markets. I appreciate the resilience shown by our people and businesses and look forward to the opportunities that lie ahead. Thank you very much. And Terry, can we open the call for Q&A?

Okay. We have our first question from Chris Parkinson.

I hope everybody is doing well. On the pharmaceutical front, can you just comment and remind us of your Klucel capabilities, growth trajectory and just the potential for new capacity over the long term? And can you also speak to the potential for pharma supply chains potentially coming back to the U.S. and Europe. I believe there's some preliminary bills even on the House and the Senate floor on the matter. But just what are you hearing from your customers?

A lot of our focus right now has been on the here and now, just managing our supply chain, very open discussions so that we can ensure supply, both from our side and their side. So I'm really pleased with how the supply chain teams and the business teams are handling all that. On Klucel and all our more differentiated cellulosic products, we are supporting, obviously, a lot of the growth and capacity. We have invested in the recent past on capacity expansion, so we're very well positioned. But obviously, hopefully, as this continues to grow, we will continue to support through added investments. Regarding the industry coming back or shifting around the world, closer to home in the U.S. and Europe and other parts of the world, I think, obviously, there's a very active discussion going on. This is going to take a little bit of time. But in essence, given our footprint is heavy U.S., Europe-driven, we're well positioned to supply all the customers as they change their supply chain. So that can only be upside for us.

Great. Can you speak to some of the non-pharma substrates within consumer? Also, could you highlight key initiatives in skincare, such as bio-based products, rheology modifiers, and coatings? What is your perceived market positioning in those areas and the opportunity for market share? Additionally, what are the secular tailwinds supporting those businesses?

Thank you for the question, Chris. Regarding personal care, as I mentioned earlier, our biofunctionals in skin applications are experiencing significant growth, contributing positively to our portfolio. Not only are we seeing top-line growth, but these products are also highly profitable, which has us quite excited. As we've restructured our operations, we've become more aware of the capabilities we possess that weren't fully coordinated before. For instance, in Avoca, we have strong abilities in the fragrance sector, particularly in extraction from natural products, and our core biofunctional operations in France. We also have many other facilities with substantial capabilities, including in Pharmachem. Our goal is to integrate these capabilities not only to broaden our product offerings but also to explore different cost structures. The production at Avoca focuses on high volume, while some facilities have a niche focus, enabling us to quickly introduce new products. We are pursuing numerous short-term initiatives but believe it's too early to outline all specific plans. Nonetheless, we recognize considerable growth opportunities in both the pharmaceutical and personal care sectors. In terms of trends, personal care is experiencing both tailwinds and headwinds. The skin sector continues to perform well, with strong sales, especially in hygiene products where our rheology modifiers are seeing significant growth tied to hand sanitizers and similar items. This trend presents more opportunities to leverage our formulation capabilities. However, we've observed some persistent headwinds; for instance, sunscreen sales have softened due to fewer outdoor activities, though it wasn't a high-margin segment for us. Additionally, hair styling has remained a softer market, particularly with salon closures.

Next question comes from John Roberts.

The new alignment makes a lot of sense to me. Is the capital intensity similar between the Consumer and Industrial segments? And is the return on capital roughly similar between the two?

What we're examining is that the product portfolios differ somewhat across the board. The acetylenics are primarily targeted towards consumers, while the cellulosics have a more balanced approach. However, the volume is greater on the additive side of the portfolio. When we look beyond these two, the variation is significant across different businesses. The functional additives, for instance, are generally less capital intensive and require more specialized capital, though not at the same level as other areas. As we move beyond the acetylenics and cellulosics, the mix starts to shift. Each business now has ownership over their core plants, which they drive. As part of our ongoing work, we are evaluating our capital needs, including what is necessary for maintenance and where we should focus our investments for growth. We are identifying our growth priorities, with some businesses receiving higher priority than others. This assessment is part of our strategic review process.

And then you disclosed the intersegment sales from I&S to Consumer. Why aren't the cellulosic sales by consumer handled as intersegment as well? Or is the consumer segment actually manufacturing cellulosics or guaranteeing those assets?

Yes. When we examine cellulosics, there is substantial core production, along with derivative productions such as Klucel and Benecel. Each business may have its own production units, but they are interconnected. The core of our portfolio is additives, which is central to our franchise and relies on scale. Therefore, I believe that in the additive sector, we will maintain some degree of integration across our products. Our approach is to optimize the allocation of our capacity among the various portfolios. While some segments clearly show stronger growth potential, we must also cater to the rest of the markets we serve to ensure a balanced capacity. As we increase capacity, we will also manage the utilization of our new plants.

John, the way to think about it is Lima provides a raw material to the Consumer business, whereas the other businesses are making finished products either for the Consumer or the Industrial businesses. That's really the biggest difference.

Next question comes from David.

This is Dave Begleiter. Guillermo, just how should we think about decremental margins in the back half of the year for both Consumer as well as Industrial?

There are two challenges we are facing. As mentioned, the businesses will perform differently. We do not anticipate significant changes in the pricing core margin, although there may be slight erosion in some areas of the specialty portfolio due to supply-demand adjustments across the industry. However, for the more differentiated and defensive segments, we expect the core margin to remain stable. The impact for us will come from loading and how it affects cost absorption. We will closely monitor demand as well as the self-help measures we are implementing regarding inventory, which are influencing this situation. Our goal is to address these issues this year to establish a solid foundation for next year.

Very helpful. And just on the $40 million of additional cost savings, is that all permanent structural? And if it is, are you taking additional temporary discretionary spending cutbacks as well?

Currently, most of this is driven by selling, general, and administrative expenses. As Kevin mentioned, we have identified what is significantly above $40 million. We want to emphasize that this is not solely about reducing costs; it's about aligning our business with our current models and the size of the company we are now. Our long-term goal is focused on growth, so we intend to channel some of those savings into new growth areas. There may be some delays in this process, and given the current circumstances, you may notice a slight decrease in our costs on a run rate basis. However, as you consider your long-term projections, we aim to repurpose those savings for growth. We still need to make further improvements on the cost of goods sold and production side. Right now, we are concentrating on inventory and managing demand, but there are also opportunities we plan to pursue, though these will be discussed in more specific terms related to individual business units and strategies rather than a general approach.

Next question comes from Mike Harrison.

Guillermo, I was wondering if you could talk a little bit. You mentioned the opportunity that you're seeing in industrial coatings. And as we think about your architectural franchise, you guys really benefited, if we go back several years from the transition, especially in emerging markets, from solvent-based coatings to water-based architectural coatings. To some extent, that's happening a little bit in industrial coatings as well, that transition from solvent-based to water-based. So is that part of what you guys are positioning to capture? Can you maybe talk about the opportunity that you're seeing there in some more detail?

Yes, exactly. If you look at our existing product and technology portfolio in the rheology space, we see many opportunities. This includes not just cellulosic materials but also some of the higher-end synthetic rheology modifiers, particularly our Aquaflow line, which has a lot of new products coming in. These are primarily for high-end coatings, especially in architectural applications. As the industrial market continues to grow, we see opportunities for these rheology modifiers as well. I would say that we are one of the leaders, likely the top leader, in rheology control within coatings, and we have substantial capabilities. We are exploring ways to expand our additive portfolio because we can maximize the infrastructure and capabilities we already possess. Part of our strategy is to expand the rheology franchise while also leveraging it to enter other additive markets as we move forward.

All right. And then the other question I had on those slides that relate to the path forward is within personal care, you referenced you're rebalancing of the portfolio of lower-margin buy and resell. And I was just wondering, can you give us a sense of what portion the buy and resell business accounts for of the personal care business right now?

We haven't provided that level of detail before. As we rebalance, we need to address many factors with our customers and our future direction. Therefore, I prefer not to make specific comments at this moment. The key takeaway is that as we make changes, our focus is on enhancing the quality of our portfolio and driving growth rather than just pursuing profitable growth. We are making tough decisions, evident in our inventory management, and we will apply the same approach across various segments of our portfolio to allocate our resources and capabilities to the strategic areas where we see future success.

Next question comes from John McNulty.

I wanted to follow up on the working capital aspect. Guillermo, you mentioned last quarter that this was an area with potential for improvement. Given the current downturn, I would anticipate that the working capital release could be even more significant. Have you quantified that? What do you estimate the working capital relief could be? How much of that stems from aligning Ashland with your initial expectations, and how much is related to the recessionary environment and the natural reduction in working capital? What are your thoughts on this?

Let me provide some general comments before passing it over to Kevin for more specifics. One area of focus is our overall inventory levels, which are currently high, and we are taking steps to address this. The challenge lies in managing different product lines and each business separately. Given the COVID situation, we are being a bit more cautious in how quickly we approach this, as we want to conserve cash while also ensuring we can meet our customers' needs. We are making progress, and we are being more cautious about our management going forward. However, we now have significantly clearer insights into how we will operate our plants and where the resources will come from. Kevin, would you like to add some more details?

Sure. Sure. The $25 million I mentioned has reduced fixed cost absorption. We would expect and typically have seen about a 2x cash generation for that type of activity. So we'd expect to generate an incremental $50 million in cash from reduced working capital as a result of that. And we've baked in some other reduced fixed cost absorption into our overall forecast and estimates in our base case around reduced demand, which would be incrementally positive to that $50 million. So net-net, we would definitely expect to benefit from that from a cash flow perspective.

Got it. That's helpful. Yes, that definitely helps to clear it up. And then I guess the other thing, Kevin, you kind of commented that there is some work to be done on the manufacturing side. Obviously, the COVID stuff makes it a little bit more complicated. But I guess, can you share some of your thoughts in terms of where you see some of the more obvious things that can be either dialed back or improved in terms of efficiencies and maybe some of the numbers that might be behind those?

No. I think as we finished and we just completed our strategy reviews with all the different business units, I think we have clarity of which are the priority areas, not everything is created the same. So I think prioritizing and changing where we're allocating our resource and capital. And I think in our manufacturing environment, what areas are going to get to the capacity that we have and areas that are tighter, which are the ones that we want to prioritize, where we want to invest. I do think, looking at our footprint, we know the areas that are going to grow, we're going to continue investing in. As an example, within our cellulosic franchise, that is one that we're going to be growing. So we're planning that out on where we want to grow. But then we have all these other smaller product lines, and I think there is opportunities to optimize our footprint and network in those kinds of products where we have multiproduct facilities to make sure that we're being as efficient as possible. And I will comment, the part that we're also being careful is, as we said in the call, this is not going to be one reaction to a COVID-19 drop. We probably will feel things very differently in different parts of our portfolio. And we want to be surgical about what we do. This is not just do across the board cost actions and things like that. What you'll see is probably we will take actions on reducing on one side, and we might be taking actions to increase on the other.

One thing I think that I think is important to add here is within four months of the calendar year, we completely reorganized the company. We have a business unit structure that previously didn't exist. We've gone from horizontal to vertical. Each business unit has a fully formed leadership team. Each business unit has completed its first round of strategy work in terms of how they want to grow, what their cost structure wants to look like. It's really been not only a tremendous amount of effort, but a tremendous accomplishment really for the entire team during this short period of time. And never mind the fact that a lot of this work has been done while people are working in their home offices. And I think it's important not to lose sight of that because we're really just now at the beginning of what should be a long and exciting road for these businesses. They have a lot of opportunity ahead of them. They still have a lot of work to do. But they've made tremendous progress in an incredibly short period of time. And coming from the guy who's been here for a really long time, I've found it pretty remarkable at how each business has really dug in, formed their teams and made a ton of progress in the face of something we've never seen in our lifetime. And that's been really encouraging for me, and I think really for the entire executive team. So I just wanted to make that point.

Next question comes from Laurence Alexander.

I have a few requests for clarification. Regarding David's question about loading, in the past, it was approximately a 500 to 1,000 basis point decremental factor. Is that still how you approach it? Regarding fermentation, are you considering building your own fermentation capacity or collaborating with existing tools? Lastly, considering the current uncertainty and the realignment mid-year, what specific KPIs or goals are your division heads being evaluated on that could significantly impact their personal outcomes this year? What are the targets for the remaining six months?

Let me address a few points. Kevin can comment on some loading areas. Loading will vary by product line. We see loading issues primarily in cellulosics and acetylenics as we progress. However, the acetylenics issues mostly involve self-help actions, and demand is stable in that segment of our portfolio. For cellulosics, it's largely about the product mix. We may experience some loading impact on high volume, but higher quality mixes will continue to grow. Therefore, we expect some variations in absorption and mix going forward, making it challenging to provide a straightforward estimate of net margins. Regarding your question on biofunctional and leveraging our capabilities, our extraction processes are already in place. For example, our Avoca operations for clary sage and fragrance carriers utilize natural-based extraction with high volumes, making it an efficient high-end operation. Although we faced challenges on the Avoca side, we are seeking to use those assets in new applications, such as oil extraction and purification. Our Pharmachem sites also engage in fermentation. We have specific growth initiatives in biopharma, biofunctional, and personal care. The current challenge lies in expanding our product offerings across different segments and effectively utilizing our capabilities. We are exploring opportunities for higher volume applications that offer differentiation. While there is much work ahead, we have the necessary capabilities. In the pharmaceutical sector, we hold a small position in injectables, having made an acquisition in this arena two years ago, which involves many trials. Changes in the pharma sector won’t happen overnight; these are long-term initiatives. We have a pipeline in place and aim to expand it while bringing in new technologies, both organically and through external opportunities. Our pharma franchise is substantial and of high quality. Our goal is to grow that portfolio further to achieve strong growth rates that consistently outpace the market. With our critical mass, this growth will have a significant impact. Kevin, do you want to discuss absorption?

Yes, sure. There will clearly be some noise in the EBITDA margin for the business as we execute on these inventory control measures. And we'll try to be helpful and carve that out for you as we do it, so that you'll understand the impact and have a better understanding of the underlying performance of the business. So we'll call that out for you as we work through the balance of the year. You asked about the realignment in KPIs. I mean we tried to simplify that for each of our business units. And their primary focus is EBITDA driven. That's how they get paid. And at an overall level, we're also very focused on cash, both generating it and conserving it. And again, setting COVID aside, I think one of the things that we're already very much more focused on is internal capital deployment. That's a huge focus for Guillermo and I in terms of how we're going to invest in these businesses. Guillermo mentioned that earlier. Rightsizing takes on many forms. And while the businesses are focused on EBITDA growth through selling more or spending less, which are their two primary levers, we're focused at a corporate level on how we're going to allocate scarce resources within our businesses, which obviously are not all created equally. And certainly for the situation we're in now with COVID, we've identified a number of capital projects that we can slow down or stop to conserve cash throughout the balance of the fiscal year. And a focus going forward is going to be to operationalize that so that we can create much tighter control over capital deployment internal to the business. It's not been a huge issue in the past, but it can be a source of more growth capital for us while not spending any more money. And so that will definitely be a continued focus going forward.

Next question comes from Jim Sheehan.

So you referenced earlier about stay-at-home orders having effects on hair salons and your haircare business. Wondering if you could comment on how that might be affecting your skincare products? I know the cosmetics demand is way down. What is your overall exposure to skincare? And also if you could give us a sense of the size of your biofunctional products business.

In the cosmetic sector, particularly beyond just skin, high-end cosmetics are facing challenges. There are certain categories, like lipstick and eye products, that we aren't heavily involved in, so the impact on us is less significant. In skincare, particularly with high-end creams, there is some effect, but we’re observing strong demand for many other products. People are staying home, yet they continue to use a variety of those products. The biofunctional segment has been a major growth area, introducing new differentiated products aligned with the ESG-driven agenda, and we're very pleased. Although we haven't disclosed detailed growth figures, this space is highly competitive, and it's unlikely we'll share that level of detail in the near future. However, it is substantial and expanding. Over the last few years, we've seen impressive growth rates of 10%, 20%, 40%, and 30%. Each successful product launch significantly contributes to both growth and profitability. The volumes we're dealing with in these areas are quite different compared to some of our other assets. So in summary, I'm confident that Ashland is well positioned for these uncertain times. We have a strong foundation for success built upon high-value technologies, leading market positions in critical industries with deep customer relationships. We also have a structure that is optimized to enhance the opportunities available to each of our focused business units. We're pursuing self-help actions to reduce working capital, capital spending and operating costs to improve profitability and generate cash. We will maintain a strong balance sheet with more than $1 billion in available cash and liquidity, a portfolio with resilient cash flow and a capital structure that provides ample flexibility even in the most stressed scenarios. Finally, we're committed to maintaining our dividend even in these uncertain times. Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.