Thank you, Josh. Hello, everyone, and welcome to Ashland's Second Quarter Fiscal Year 2022 Earnings Conference Call and Webcast. My name is Seth Mrozek, Director, Ashland Investor Relations. Joining me on the call today are Guillermo Novo, Ashland Chair and Chief Executive Officer; and Kevin Willis, Senior Vice President and Chief Financial Officer. We released preliminary results for the quarter ended March 31, 2022, at approximately 5:00 p.m. Eastern Time yesterday, April 26. The news release issued last night was furnished to the SEC in a Form 8-K. During today's call, we will reference slides that are currently being webcast on our website, ashland.com, under the Investor Relations section. 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 2022. 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. You can also review our most recent Form 10-K under Item 1A for a comprehensive discussion of the risk factors impacting our business. 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 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 reconciliation 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 an overview of Ashland's results in the second fiscal quarter. Next, Kevin will provide a more detailed review of the financial results for the quarter. Finally, Guillermo will close with key priorities and steps to advance our strategy as discussed during our Investor Day in November of last year. As you saw at the beginning of the webcast, Ashland recently launched a new award-winning innovative thickener for skin and sun care. It is nature-derived and biodegradable. For consumers, it provides a desirable skin feel that offers an alternative to poorly perceived carbomer. Nathrathix bio cellulose enables our customers to create more natural skin care creams, lotions, and gels, including organic and inorganic sunscreen formulations with the texture, skin feel, and sustainability that our consumers desire. Guillermo will provide additional commentary related to Ashland innovation and our product development progress, sustainability goals and environmental and social governance commitments. Guillermo will also provide his thoughts on important next steps and our financial outlook for fiscal year '22. We will then open the line for questions. Please turn to Slide 5, and I will turn the call over to Guillermo for his opening comments. Guillermo?

Thank you, Seth, and hello, everyone. Thank you for your interest in Ashland and for your participation today. As you will hear during the call, Ashland's financial results for the second fiscal quarter were consistent with the earnings update we issued on April 12, demonstrating strength and resilience in a world of uncertainty and accelerating change. Customer dynamics remain strong across our core end markets, and we're making significant progress in taking appropriate actions and pricing to recover costs across all segments. Supply chain challenges have not improved, especially with respect to ocean freight. Although we were able to invoice the backlog of carryover orders from last quarter, given strong demand, we ended the quarter with a larger backlog of orders that we have not yet been able to fill. Given the tightness in markets globally, our teams have taken steps to improve the mix of high-value products we're selling, which is further driving margin expansion. We continue to invest in future-forward, sustainable innovations to drive profitable growth, accelerating the pace and the impact of new product introductions. In short, Ashland has undergone a tremendous amount of change. We're a different company today, and the results this quarter and the steps we are taking are enabled by the company we have become. Our ability to respond and operate quickly and nimbly is a result of the intentional changes we have made to the company over the past 2 years. Please turn to Slide 6. Let me share with you some of the second quarter highlights. Sales of $604 million grew by 19% compared to prior year. Against a backdrop of strong global demand, all businesses contributed to our growth. Adjusted EBITDA grew by 41% to $163 million, as all our teams pursued cost recovery and mix improvement while maintaining cost discipline. Adjusted EBITDA margins reached 27%, an increase of 420 basis points compared to the prior year quarter. And our return to shareholders continued to grow, with adjusted EPS up 79% to $1.50 per share, reflecting the impact of both the earnings growth and our share repurchase program during the quarter. Please turn to Slide 7. As I noted previously, growth for the company was broad-based, with all segments returning double-digit sales growth compared to the prior year. Life Science performance remained resilient, driven by strong demand for high-value pharma ingredients. Personal Care demand continues to recover, and the business drove discipline, price recovery and mix improvement, while the results of Schülke & Mayr portfolio have exceeded our expectations for the first year. With Specialty Additives, the team has leveraged tight global supply to drive both mix improvement and cost recovery. For Intermediates, growth in sales was driven by higher volumes and transfer pricing for captive BDO sales as well as higher pricing and improved mix for our merchant business. Merchant market sales for Intermediates represents approximately 8% of Ashland sales. Ashland sales for the quarter grew by 19% to $164 million, and adjusted EBITDA grew 41% to $163 million. I'm very pleased by the progress made by the Ashland team during the quarter and look forward to discussing our outlook for the remainder of the fiscal year and reviewing broader progress by the company later in the call. In the meantime, I'll turn over the call to Kevin to review our Q2 results in more detail. Kevin?

Thank you, Guillermo, and good morning, everyone. Please turn to Slide 9. Total Ashland sales in the quarter were $604 million, up 19% versus prior year. Unfavorable foreign currency negatively impacted sales by 3% in the quarter. Gross margin improved by 500 basis points to 36.4%, reflecting cost recovery and mix improvements by the commercial teams in the face of significant cost inflation. In total, we saw approximately $48 million of inflation in the quarter versus the prior year across raw materials, energy, and freight, and as expected, we were able to recover these costs. Excluding key items, SG&A, R&D and intangible amortization costs increased to $119 million in the quarter, primarily reflecting the addition of the Schülke & Mayr business, the elimination of the INEOS transition services agreement and accrued incentive compensation. In total, Ashland's adjusted EBITDA for the quarter was $163 million, a 41% increase compared to the prior year adjusted EBITDA of $116 million. Ashland's adjusted EBITDA margin for the quarter was 27%, a 420-basis point improvement over the prior year, again, reflecting the items just discussed. Adjusted EPS, excluding acquisition amortization for the quarter, was $1.50 per share, up 79% from the prior year, reflecting both the increased earnings and a lower diluted share count following our recent share repurchase activities. I'll summarize those repurchases in a bit more detail in a few moments. Ongoing free cash flow was negative $5 million for the quarter. This essentially reflects an increase in working capital, primarily inventory and accounts receivable, given the inflation in raw material and other input costs we have seen globally. We expect ongoing free cash flow conversion to be positive in the second half of the fiscal year, though working capital levels will remain elevated, assuming continued inflationary trends. Now, let's review the results of each of our 4 operating segments. Please turn to Slide 10. I'll begin with Life Sciences. The team executed well in the face of continued supply chain disruptions and raw material inflation. Sales were $204 million, up 10% compared to the prior year quarter. Currency negatively impacted sales by 3%. Life Sciences' gross profit improved by 14%, and gross profit margin improved to 35.8% as cost recovery and mix improvements more than outpaced overall cost inflation during the quarter. In total, year-over-year Life Sciences cost inflation was approximately $15 million, including $4 million of BDO transferred to the business at market price. And adjusted EBITDA improved 16% to $58 million, and adjusted EBITDA margin in the quarter improved to 28.4%. Please turn to Slide 11. Personal Care sales were $172 million, up 26% from the prior year quarter. Sales to core Personal Care end markets were strong, reflecting cost recovery and enhanced mix amid the backdrop of improved demand for our ingredients globally, following the changes in consumer behavior caused by the pandemic. The Schülke & Mayr business was also a meaningful contributor, adding $25 million of sales to the quarter. The acquisition closed partway through the fiscal third quarter of last year, so Q3 will be the last quarter where comparisons will not be on a like-for-like basis. These gains were partially offset by the exit of roughly $10 million of low-margin product lines. Importantly, the organic growth of the Personal Care business was 16%, excluding the impact of the acquisition and the exit product lines, which follows 8% organic growth in the fiscal first quarter. We're very pleased by the progress made by the Personal Care team, demonstrating the resilience of the business in the face of challenging global macro headwinds. Gross profit increased to $67 million and gross margins increased by 320 basis points to 39%, reflecting the cost recovery and mix actions despite continued cost inflation experienced by the business. In total, Personal Care adjusted EBITDA increased by 29% to $49 million. Adjusted EBITDA margin was strong at 28.5% despite $10 million of cost inflation in the quarter.

Please turn to Slide 12. Specialty Additives had yet another nice quarter, with sales up 15% to $182 million. Demand for architectural coatings, additives, and other additives remains very strong, though shipping and logistics issues continue to be a challenge. We continue to see a normalization in DIY volumes and the shift to higher contractor paint volumes. As was the case in the last quarter, the global cellulosics network is sold out, and we are adding capacity to meet this demand. The team has taken the opportunity to improve overall product mix in the face of global supply challenges. Outside of coatings, sales to other end markets and Specialty Additives grew by double digits, reflecting improving demand for performance specialties growth platforms and stronger energy volumes. Enhanced pricing was an important contributor to sales growth and an offset to approximately $18 million of raw material, energy, and freight inflation in the quarter. As such, gross margins increased by 140 basis points to 28%, and adjusted EBITDA grew by a healthy 20% to $48 million. Adjusted EBITDA margin also expanded by 110 basis points to 26.4%. Please turn to Slide 13. Intermediates reported another very strong quarter, as pricing has continued to rise across all product lines. Sales were $66 million, up 78% compared to the prior year. Nearly half of the year-over-year sales increase, or approximately $20 million, was related to captive internal product sales primarily to the Life Sciences and Personal Care end markets. As a reminder, captive internal sales are recognized at market-based pricing and are eliminated in the consolidation of total Ashland results. Merchant sales increased by 57% in the quarter, again, driven by higher pricing across all product lines. Intermediates margins were up meaningfully during the quarter. The segment reported adjusted EBITDA of $30 million compared to $7 million in the prior year and adjusted EBITDA margin in Q4 was over 45%. Please turn to Slide 14. As we discussed at our Investor Day last November, capital allocation discipline continues to be an important component of Ashland's value creation strategy. To that end, earlier in the quarter, we closed on the sale of the Performance Adhesives business to Arkema. We received gross proceeds of $1.65 billion. Net proceeds will be in the range of $1.2 billion to $1.3 billion, following the payment of taxes and fees related to the transaction. Most of the taxes related to the transaction will be paid out during Q3 and Q4 of this year. When the cash was received, we immediately repaid approximately $625 million of floating-rate debt, the majority of which is revolving and could be reborrowed at any time. This tactical debt repayment will yield approximately $10 million of cash interest expense savings on an annual basis. Since August of 2021, Ashland has reduced its net leverage from about 3.6 times to 1.3 times of EBITDA. Following the closing of the sale, we also initiated a new $200 million open market share repurchase program and executed on approximately $155 million of repurchases during the March quarter and completed it in early April. This program is in addition to the $450 million accelerated share repurchase program we commenced in September of last year and closed just this past February. Between the two programs, Ashland has repurchased approximately $6.75 million of the company's shares, which represents about 11% of the company's equity. Finally, at the time of the Adhesives sale closing, we contributed another $35 million of cash through the environmental trust that we created last year. With all the work that has been done, I'm pleased with the capital discipline being demonstrated. We've committed $150 million to $200 million of organic growth capital investment over the next 3 years to increase the capacity of our high-value ingredients and additives portfolio. During the quarter, we continue to execute on these growth plans. Total capital expenditures in fiscal '22 should be in the range of $150 million to $170 million. The business is performing well and the balance sheet's in great shape, giving us the flexibility to make organic investments, pursue attractive bolt-on M&A acquisitions similar to Schülke & Mayr and continue to reward our shareholders with capital returns. Guillermo will spend more time discussing our overall outlook for fiscal '22 and our underlying assumptions in his closing remarks. With that, I'll turn the call back over to Guillermo to discuss our priorities and outlook for fiscal '22. Guillermo? Thank you, Kevin. Please turn to Slide 16. As I mentioned at the beginning of the call, Ashland is making excellent progress while operating in a world of significant uncertainty and accelerating change. Our teams continue to demonstrate operating resilience and are delivering strong results. Against a backdrop of global supply constraints and shipping challenges, we have demonstrated proactive pricing discipline to recover costs in a widespread inflationary environment while also improving our mix management. And while supply chain challenges have not improved, we have improved our global planning to better anticipate how we can be more responsive and efficient. Our plants continue to run well, and we have started to rebuild inventory levels. We still need to make more progress in this area to build up safety stock levels across our warehouse network. We are maintaining our strategic focus and capitalizing on things that are within our control. This quarter, we saw strong margin performance driven by cost recovery, mix management and disciplined cost management. And while free cash flow generation was below prior year levels, this was due largely to the impact of rising inflation on working capital balances. Our increased focus and discipline in innovation is paying off. We're accelerating the velocity of our investments in innovation and growth, especially for sustainable ingredients and additives. We're aligned with the evolving product requirements of our customers and the consumer and are well positioned to capitalize on these emerging trends across the globe. We have strengthened our internal innovation portfolio management to both accelerate the pace of new product launches and ensure that these launches create the most value for our customers and for Ashland. Finally, as Kevin explained in detail, we remain committed to a strategy of disciplined capital allocation. Beginning this year, we're expanding capacity in numerous high-value products globally and will continue those investments over the next couple of years. Ashland has the flexibility and discipline to execute our growth strategy and reward our shareholders. Please turn to Slide 17. Amid COVID, environmental, and geopolitical disruptions, Ashland is a company at an inflection point. Our transformation goes beyond the traditional business metrics to focus on innovation and conscious stewardship, not only through our segment in the value chain but for our suppliers, customers, and end users in turn. Under our purpose to responsibly solve for a better world, we have taken several actions and made progress under our ESG initiatives. For environmental matters, we have taken important steps related to our raw material sourcing, operations and product development. Regarding science-based targets, we are validating our emission data to ensure we have accurate targets for approval and expect these targets to be submitted for approval by the end of 2022. We have established several internal and external programs to support our social improvement agenda. In March, we established our Responsible Solvers program that brings together the company's global philanthropic commitment to science, technology, engineering, and math education with additional STEM funding and a paid employee volunteer program. Closely aligned with our purpose, the program is designed to put the power of the Ashland people and products in the hands of the communities where our employees work, live, and play. Our customizable program allows Ashland manufacturing sites and regional teams to create and support programs that address their specific communities and culture's most pressing local issues. We continue to make excellent progress in our ESG-related strategies and plan to provide updates each quarter. This is a step change that underscores the company's resilience and hones our competitive edge. Please turn to Slide 18. In April, under our Responsible Solvers program, we announced an innovative supplier partnership for sustainable, profitable growth with local farmers and small villages in India. The program is enabling us to meet customer demand and increase the volume of guar harvested annually through educational STEM programs and scientific solutions for sustainable farming, while respecting the sourcing relationship and local cultures of small village farmers in India. The pilot began with 250 small farms, and we are scaling to 5,000 farms by 2025. These relationships are critical because Ashland uses guar to formulate specialty ingredients for Personal Care, Life Science and coatings applications, including products like nathrathix bio cellulose for skin care that you saw in the opening video. These initiatives have increased farmers' yield by approximately 30%, thereby increasing their income, lowering their production costs, expanding the local economy and positively impacting the environment. Also in April, we announced our continued support to the Nature Conservancy Plant 1 Billion Trees by 2030 reforestation initiative. We also made a commitment to fund their STEM youth engagement, Nature Lab, which helps students learn how nature works while inspiring them and bringing greater equity to environmental education. We are confident that by standardizing our global program and localizing its focus, Ashland can both increase employee engagement on critical issues and focus community impact where it matters most in every region of the world. As we increase our innovation speed and impact, we are beginning to be recognized for breakthrough innovations. As an example, in April, Ashland had a very successful presence at the world's largest global cosmetics show in Paris. In addition to repositioning the business and furthering our loyalty of our customers, Ashland's nathrathix bio cellulose was awarded Bronze for the Best Functional Ingredient among nearly 200 entries. Please turn to Slide 19. New product innovations are an important tenet of our profitable, sustainable growth strategy. By narrowing our focus to markets and applications where we can have the largest impact, we are solving challenges in niche areas where our innovations really matter. As a deliberate, focused company, we know exactly where we fit and where we unlock the highest margins because we bring the greatest value to our customers. This year, we will introduce a record number of innovations, and we are reaping the benefits of our focus and speed to market. Nearly 90% of our new innovations are natural, natural-derived, biodegradable or sustainable in use. By maintaining discipline in both project and portfolio management, we are increasing the number of new product introductions as well as their expected value of impact. By meeting the evolving needs of our customers and the consumer, we expect the future revenue and margin contributions from these and future launches to improve the growth trajectory and profit contribution for Ashland. Please turn to Slide 20. Ashland is a company comprised of problem solvers, integrating issues like climate change, inclusion and diversity, corporate transparency into our business model allows us to play a critical role in some of the greatest challenges on our planet. These challenges are reshaping our markets as we speak, and our solution expertise and our Responsible Solvers program add real value. Our new product introductions demonstrate just one of the ways we're unlocking profitable growth. These innovations are also allowing us to create value for both our customers and for Ashland. We appreciate the awards and recognition we have received as they reinforce that we are on the right path. We see ESG as a business opportunity beyond doing the right thing, and here, we're demonstrating this through the execution of high-performing, sustainable innovation, enabling our customers to get ahead of mega trends and respond to the ever-dynamic needs of the global consumer. Please turn to Slide 21. As we approach each of our priorities in a disciplined way, we recognize their overlapping nature. Under our new business model, we have empowered our organization. We have driven decision-making to those closest to the customer. Each business leader and their regional teams own their business and circumstances, but all share these disciplines. Leaders adopt their priorities to circumstances that unlock profitable growth while maintaining operating discipline. Our priorities remain focused on growing our business while maintaining its quality, driving profitable growth opportunities, margin and free cash flow expansions while leveraging ESG as a core value and enabler. Please turn to Slide 23. Looking ahead is never easy, and doing so in the current environment is particularly challenging. However, the favorable factors have not changed. Demand continues to be strong, and customers still need to build or rebuild inventories, with the reopening from COVID having a positive impact in many regions. Our plants are operating well, and the availability of raw materials has started to improve. Our pricing strategies have positioned us favorably against past and current inflation pressures, and we stand ready to take further actions as necessary. Although supply chain reliability remains an issue, we are beginning to see some improvements in trucking. The challenges we face have shifted from their previous impact to how pronounced they will be. The war in Ukraine continues, China has implemented COVID lockdowns, and inflation, particularly driven by energy costs, has increased and is accelerating. It is quite difficult for us to predict the direction and impact of the war in Ukraine, the COVID lockdowns, or inflation. Please turn to Slide 24. We understand the key performance variables that are likely to impact our performance. On the revenue side, demand in our market is expected to remain resilient during our fiscal year, and we do not expect significant improvement in supply chain reliability. As such, our ability to supply will most likely drive our revenue performance, how well our plans run and our ability to rebuild safety stock to offset the low ocean freight reliability. On the profitability side, inflation is probably a given driven by energy and broad-based drivers. The issue is how much and when. The biggest risk for our fiscal year performance will be fiscal year fourth quarter because we will have less time to offset any cost inflation with pricing actions. Pricing, mix improvement and productivity will continue to drive our margin performance. Please turn to Slide 25. Given all the dynamics I've discussed, based on the information we have and the actions we've taken, we remain confident in the financial outlook we provided at the beginning of the fiscal year. We continue to expect sales in the range of $2.25 billion to $2.35 billion, representing 9% of sales over the prior year at the midpoint. We also continue to expect adjusted EBITDA in the range of $550 million to $570 million. Based on known information today, our model puts us above the midpoint of that range for the full year. However, similar to what we saw in the first half of fiscal year 2021, we recognize that there is still a lot of uncertainty from the Ukraine war, COVID lockdowns in China, inflation, and shipping reliability. Our outlook presumes that we do not see significant additional inflation in raw materials, freight, and energy, as such dynamics would require additional pricing actions beyond those that are already planned, for which we would need to recognize a lag in timing for the realization. Let me be clear. As we did in 2020 when COVID emerged and uncertainty was high, we are being pragmatic and focusing on the things that we can control and forecast. For what we cannot control, we will focus on planning and building resilience. We do not see a lot of value in being overly optimistic or pessimistic based on external factors that we cannot control or forecast, as this would only create more noise in our planning process. As external developments become clear, we will maintain our current level of transparency, and we'll communicate any changes in our outlook as appropriate. Ashland is well positioned. We have confidence in the company's business portfolio, market focus, global team and our plan and the actions that we are taking. Ashland has demonstrated its resilience during the last 2 years, and we are confident that we will maintain that resilience in 2022 and beyond. Please turn to Slide 27. Over the past decade, Ashland's journey of transformation has sharpened our focus as an additives and specialty ingredients company. We're systematically identifying and tackling the thorniest problems. We concentrate on areas of rich opportunities to innovate and drive value for our customers, where innovations and expertise in one of our businesses can be leveraged across others. In closing, I want to thank the Ashland solvers once again for their leadership and proactive ownership of their business in an uncertain environment. We create our destiny as a global additives and ingredients company with exceptional businesses that have leadership positions in resilient high-quality consumer-driven markets. I'm pleased by the resilience and execution demonstrated by our people and our businesses and look forward to the opportunities that lie ahead. Thank you. And operator, if we could move to Q&A.

Our first question comes from John McNulty with BMO Capital Markets.

Congratulations on achieving impressive results. I wanted to explore the Life Sciences sector further. There has been a significant increase in both profitability and sales, with profits reaching record levels. Considering the recent challenges with logistics, is this spike in performance a one-time occurrence due to some catch-up, or is it sustainable? If it is sustainable, what factors are contributing to this improved profitability? How should we approach this?

As mentioned in the call, we have adjusted our prices, particularly since the end of last quarter, to offset much of the inflation we've experienced. The mix impact has been quite favorable. This quarter, our Pharmaceutical segment performed very well, and we still have a significant number of orders in the pipeline globally, so our backlog remains. The weaker performance was mainly in the nutraceutical sector, where we are facing ongoing manufacturing and labor availability challenges that affect our supply capabilities in the U.S.; this led to more of a mix impact. Looking ahead, we anticipate that the Pharmaceutical sector will continue to be strong, and we are hopeful for improvements in the nutraceutical area as we approach the end of the year.

Got it, that's helpful. As a follow-up, could you provide more insight into the innovation pipeline? It seems to be quite dynamic and the progress is becoming noticeable. Regarding the 5-year revenue potential you've outlined, could you help clarify the scale of that? Is there a dollar value associated with it? Additionally, how do you envision the vitality index changing from its current levels to that projected by year five? Could you provide some guidance on this?

You're going to see us discuss this more as we progress. Currently, we're being a bit cautious because many businesses are enhancing their portfolios, particularly due to the cosmetic show in Paris. We've had numerous launches there, which are becoming increasingly public. Some other projects we are working on haven't been as public yet, so we prefer not to share specific data about one business until we are further along with our launches. However, our primary focus has not just been on speeding up launches. We had various initiatives in our pipeline, and as I previously mentioned, we want to push everything through, regardless of size, to get them launched efficiently. The time we've invested in 2020 and especially 2021 to advance new innovations is truly exciting. We're releasing many new products that are more impactful and closely aligned with our sustainability strategy, and those will come through. You can see greater value in this trend. The number of launches has significantly increased, but their value also carries a greater impact. That's our intention. I'd prefer to wait to provide more specifics once more of these initiatives are public. We have many projects that are IP protected, for which we are filing patents, and this process may take more time. We are still in the early stages. As mentioned in 2021, innovation requires time, and you are just beginning to see the initial stages of this rollout. Looking ahead to 2023 and 2024, we anticipate maintaining strong performance in new product launches while increasing their impact. This portfolio management approach is really beneficial, allowing us to focus on projects that may be interesting but not high impact compared to those that will truly drive long-term change.

Our next question comes from Chris Parkinson in Mizuho.

Awesome. So Guillermo, I understand you don't want to get too much into specifics, but you have been launching over a period of time a large portfolio of natural-based, responsibly-sourced products, a bunch of things in rheology, some of that was at the INCAS. Just broadly, top down, where you stand right here, right now with the portfolio in Personal Care with pricing and end market demand from your customer base, just a simple question. What's your best degree of conviction on the 300 to 400 basis points of subsegment outperformance?

I believe you will see growth over time. Currently, we are managing two dynamics: short-term inflation and product mix. The mix is improving, and new areas like the Schülke contributions are making a significant impact. In our previous call, we noted that pricing in Life Science and Personal Care was a bit slower, but we are beginning to see progress. Overall, we are confident about driving innovations in the longer term, which will provide greater value for our customers and offer opportunities to differentiate our products and increase margins. However, in the near term, particularly while navigating high inflation peaks, there may be fluctuations in margins due to cost flow-through and accounting issues. We aim for our margins to exceed inflation levels. For instance, certain plants are hedged, but if energy prices remain high, our hedges for next year will reflect that, leading to increased inflation. We are setting prices and taking actions based on future expectations rather than just current numbers. Our goal is to maximize both short-term performance and long-term margin improvement through a strong mix and innovation.

Our next question comes from Josh Spector with UBS.

If I examine the performance in your fiscal second quarter along with your guidance, it appears that you are essentially indicating that sales will remain at a similar level, but there may be a decrease of around $20 million in EBITDA per quarter, with margins declining by a few hundred basis points. What are the key factors contributing to this sequential decline in EBITDA?

I think there is a lot of uncertainty at this point in time. As we mentioned, our models were accounting for some additional inflation and the timing for our recovery. The lockdowns have had an impact, and we are uncertain about their duration in China. While the war in Ukraine does not directly affect our portfolio, we need to assess its potential impacts. Specifically, one of the biggest risks related to Ukraine is energy availability, not just inflation, but also in Europe. Even now, you can observe some of these concerns. We are being realistic that various factors may arise, and we cannot assume that growth will be linear. We are considering all these issues in our outlook, and we anticipate some surprises that we need to incorporate.

And Josh, I'd like to mention two additional points. First, we are expecting a significant turnaround at our Lima, Ohio facility, the BDO plant, which will likely have a $10 million to $12 million impact in Q3. We complete this about every three years, and it's time for the next one. The second point concerns currency; the euro has continued to weaken, negatively affecting our earnings as we convert euros to dollars. Therefore, these are two factors to consider. While there is some conservatism in our overall outlook, we are aware of certain factors, but there remains much that is uncertain.

Okay. That's very helpful. Appreciate that. And just when you go through the commentary on all the segments, I think you highlighted positive mix in essentially all 3 of the core segments, and you talked about your capacity constraints which has also enabled some improvement in mix. What's your ability to hold on to some of that better mix? And how do you weigh expanding capacity to meet some of the unmet demand, maybe on the lower mix products versus maintaining a higher margin mix overall?

Well, on the mix side, we're using the opportunity. This is a more constructive time, I would say. If we wanted to change the mix anyway, this is allowing us to do it in a more constructive way. I mean, I think the least constructive way is exiting businesses like we did in the low end. This is allowing us to sort of manage through that process and hone in on the market segments that we really see that long-term differentiation and ability to grow. So obviously, coating is very important to us, construction, Personal Care, Life Science. So we're shifting that portfolio and upgrading where we allocate our heels of capacity and our key raw materials as we go. And then in areas like the Intermediates, we're just trying to be smart about how we manage the short-term opportunities in some of our merchant businesses through the mix also, where we can get the most value. Most of just a reminder, most of the business there is not BDO per se, it's other derivatives, so we can look at what markets and what regions we want to position those sales in.

Our next question comes from David Begleiter with Deutsche Bank.

I apologize for that. Guillermo, in the quarter, did selling price increases offset raw material costs?

Yes. We offset raw material costs and also other costs too. So it definitely was a net positive. I think there's a part that we've tried to do is get ahead of the curve. I mean, the more delays you have in pricing, then the bigger the actions need to be later on. So moving early, I think is one of the big learnings. It's the sooner you do it, the less of the increase needs to be and the greater the impact you're going to get the benefit of time.

Very good. And just on the shipping and logistics issues, when do you think they'll get better? And what was the impact, if any, in Q2? And what's the expectation of an impact in the back half of the year?

For trucking, we are beginning to observe some level of improvement. However, depending on the region, there might still be some fluctuations. I expect that with the new developments in Europe, there will be a bit more variability in trucking, but we have seen some positive changes. I believe that as the year progresses, we should see continued improvement in this area. The impact is more short-term, related to days and delays. Unfortunately, regarding ocean freight, it appears that conditions won't improve quickly unless there is a significant drop in global demand that creates additional capacity. The forecasts suggest that improvement is more likely towards the end of 2023 and into 2024, primarily due to capacity constraints at ports, not just in shipping. Multiple factors are at play here that will require more time to resolve. As a result, we are focusing on building our inventory. Although our inventories have increased, our safety stocks are still not at the desired levels, and we will likely need to work on this throughout the year. We are currently operating at full capacity, which means we are either selling what we produce or adding to our inventory. If demand rises, it will increase the pressure on our inventory management.

Our next question comes from Laurence Alexander with Jefferies.

I have two quick questions. Regarding the negative sales trends in the nutraceuticals and nutritional ingredients categories, considering the level of inflation you're experiencing, when do you anticipate these categories will return to positive year-over-year comparisons? And please continue.

No, I'll just answer that one. The issue is supply. I mean, we're passing the cost we can. Demand is very robust. It's really more issues about our ability to produce, and a lot of our plants are on the East Coast, so labor has been the bigger issue and we're working through that. So it's really more not a demand or margin issue as much as it's about our ability to supply, and that's where we're putting a lot of our energy.

So probably more like within 3, 6 months as opposed to 12, 18. Is that fair?

Yes, it's more about our capabilities rather than market conditions. Regarding nutrition, we have a significant amount of cellulosics in that sector, which traditionally has lower margins for us. Since we are currently sold out and the global market reflects this as well, our strategy involves redirecting that material to higher margin markets. You will notice some shifts in product focus as we manage this transition. We aim to create long-term value even in the short term. Additionally, there will be changes in volume across different markets based on our capacity situation. Okay. That's very helpful. With the new product pipeline, is that net of cannibalization? Or is that intended as a growth number? There's going to be growth. I think the key priority is growth, if you look across all the businesses. If you look at some of the dynamics in Personal Care, for example, we're looking at the industry shift in sustainability. The majority are growth opportunities, replacing other products that are going to be replaced. But we're also working to replace ourselves in some of the products, moving to more biodegradable, more of this natural, natural-derived, sustainable profile. So mostly growth, but there are some areas that we're going to replace ourselves too.

Our next question comes from Mike Sison with Wells Fargo.

Really nice quarter there. Guillermo, in terms of Personal Care, you guys talked about 16% organic growth, pretty impressive. Just curious how much of that was volume and price? And I know you have some product rationalization there. And does that volume growth improve as we get into the second half?

Yes, we see many opportunities for volume growth in our business. In particular, some of the cellulosics we manage may show growth in certain segments as we adjust our strategies. Additionally, by debottlenecking and introducing new capacity, we can facilitate further growth. In Personal Care, there are various technologies that are not restricted by capacity, providing additional avenues for expansion. Notably, Schülke is performing very well. Although it is primarily a European-based company, we can assist in globalizing it, which is crucial for driving growth in that product line. This would contribute to net volume revenue growth. We are also investing in and adding capacity in China to develop products for our Asian customers, which will present more growth opportunities. For instance, nathrathix is aimed at replacing carbomers, a significant market in the Personal Care sector worth over $400 million, and many customers are seeking more sustainable alternatives to these solutions. Therefore, we have ample chances for both volume growth and ongoing improvement in our product mix across different parts of our portfolio.

And Mike, looking at Personal Care for the quarter, about 2/3 of that 16% is in the form of mix and volume, and there is some negative currency in that as well. So on a like-for-like basis, it would actually be better than that.

Got it. Just one quick follow-up. Regarding your outlook for EBITDA being at or above the midpoint, are all the segments contributing to the improved performance for the second half of the year?

Yes. So all businesses are contributing in terms of the margin and recovery and mix improvement, so we should see that. I do think, as I mentioned, the timing of flow-throughs, you're going to see some normalization. The issue of when you move on pricing versus when the costs come in or when they reflect. So there is going to be some adjustments, but all of them are improving and we're moving in our strategic direction of improving our margins. But Kevin, I don't know if you want to add anything else?

Yes. Just, again, another reminder that the Intermediates business will be negatively impacted primarily because of the Lima turnaround, and I think we're also seeing cost inflation there that's rolling through, so those results will be muted. I think the good news there is you look at the 3 core segments aside from that, they're going to more than pick up the slack.

Our next question comes from Mike Harrison with Seaport.

In the past, in your Personal Care business, when you've had some macro declines particularly in emerging markets, you've seen some trading down to lower cost Personal Care products, particularly hair care. I think that you've recently taken some steps to improve your position. But as we start to see inflation impacting consumers and maybe some changes in consumer behavior, how much of an impact could trading down to lower end products have on your Personal Care volumes?

I don't believe that has been a significant factor. It's primarily related to where we position our new products and a focus on sustainability. As the market shifts towards a more recessionary environment, it could experience some delays, but I don't anticipate any change in direction. Companies are committed to their environmental goals. I see that as the main driver of change currently. If there are any delays, the portfolio will remain balanced as it has for the past two years. Therefore, I don't expect any negative effects from moving to lower-cost options, as that would necessitate extensive reformulation efforts from customers, which they are not looking to undertake at this time. Currently, the focus is on what is driving demand. We are well positioned with our cellulosics and Aquaflow, and we are seeing strong performance in those areas. However, as we mentioned, we are operating at full capacity. Any changes in demand are not likely to be major drivers. Our goal is to maximize production and supply to our customers. The shift towards higher quality paints is beneficial for us and aligns with sustainability efforts. Higher quality products tend to last longer, which ultimately improves both cost efficiency and environmental outcomes for the industry and society as a whole. These are significant trends that are working in our favor, along with the new technologies we are introducing.

And Mike, looking at Personal Care for the quarter, about 2/3 of that 16% is in the form of mix and volume, and there is some negative currency in that as well. So on a like-for-like basis, it would actually be better than that.

And I'm not showing any further questions at this time. I would now like to turn the call back over to Guillermo Novo for any further remarks.

Okay. Well, I wanted to thank everybody for your participation and interest. I want to thank also the entire Ashland team for a great performance in the quarter. And we look forward to connecting with you in the coming weeks, and I look forward to our next call. So thank you very much, everyone.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.