Thank you, Victor. Hello, everyone, and welcome to Ashland's Third Quarter Fiscal Year 2023 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 results for the quarter ended June 30, 2023, at approximately 5:00 P.M. Eastern Time yesterday, July 25. 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 2023. 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 an 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 on Ashland on an adjusted basis, which are non-GAAP financial measures. We will refer to those 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 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 an overview of Ashland's performance and results in the third quarter. Kevin will then provide a more detailed review of financial results in the quarter. Guillermo will then provide additional commentary related to Ashland's financial outlook for fiscal year 2023. We'll then open the line for your questions. Now please turn to Slide 5. And I'd like to 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. Results in the June quarter were consistent with the pre-announcement that we issued in late June. Total sales for the quarter declined 15% compared to the prior year. Our Pharma business continued to perform well and the inflation recovery actions taken last year and early this year continue to benefit overall results. However, the unprecedented reset impact from customer destocking actions across many supply chains continues to materially impact many of the markets we serve. As we stated in late June, our previous expectations that destocking would conclude during the fiscal third quarter proved to be optimistic. There's still significant uncertainty as to when these dynamics will end. Until the inventory control actions taken by our customers have subsided, it will remain difficult for us to gauge the true end market demand. Based on information from our customers, sales volumes as well as global retailers of consumer products, we do not believe current customer order dynamics are representative of the underlying consumer demand for the high-value products in which our ingredients are used. While this uncertain environment presents near-term challenges, it does not change our longer-term opportunities or priorities. I will discuss these in more detail at the end of the call. Please turn to Slide 6. As you can see in the chart on the left, sales declined in each of our segments due to the factors I referenced earlier. As a consequence, we pursued our own internal actions to control inventories. These actions impacted our margins during the quarter and are continuing into the current quarter. Kevin will discuss how these actions impacted each of our segments in a few moments. On the positive side, it is good to see that consumer demand remains resilient for the core markets we serve. Unfortunately, it's also clear that destocking dynamics will continue to persist for longer across the supply chains of the industries we serve. While there are many global uncertainties on the horizon, the Ashland team is performing well and executing on the actions that are within our control, while not losing focus on the longer-term opportunities for innovation and profitable growth. Let me turn over the call to Kevin to review our Q3 results in more detail, and then I'll be back. Kevin?

Thank you, Guillermo. Good morning, everyone. Please turn to Slide 8. Total Ashland sales in the quarter were $546 million, down 15% compared to the prior year. Continued customer destocking dynamics resulted in reduced volumes for all segments. These volume declines were partially offset by sales growth within our Pharmaceutical business and continued inflation recovery, which is carried over from last year. Foreign currency had a negligible impact on sales. Gross margin declined to 33.3%, driven primarily by lower absorption since we ran our plants slower to be in line with lower sales volumes across the segments due to customer destocking. As a consequence of the continued customer destocking we saw throughout the quarter, we slowed production for a number of products in order to control our own finished goods inventory levels. These intentional actions negatively impacted gross profit by approximately $15 million. When excluding key items, SG&A, R&D and intangible amortization costs, were $113 million and down from $127 million in the prior year, largely reflecting lower incentive compensation accruals. In total, Ashland's adjusted EBITDA for the quarter was $133 million, down 24% from $174 million in the prior year and in line with our expectations in late June. Ashland's adjusted EBITDA margin for the quarter was 24.4%, down from 27% in the prior year, again, reflecting the factors I just discussed. Adjusted EPS, excluding acquisition amortization for the quarter was $1.23 per share, down 35% from the prior year quarter. Ongoing free cash flow was $97 million for the quarter, a significant improvement from the prior year, primarily reflecting changes in working capital stemming from our internal inventory control actions and lower sales. Now let's review the results for each of our 4 operating segments. Please turn to Slide 9. Within Life Sciences, our Pharmaceutical business delivered mid-single-digit sales growth, pricing held up well and mix was strong despite volumes being down compared to a solid prior year period. Overall, Life Sciences sales declined by 4% to $219 million, while adjusted EBITDA increased by 7% to $72 million.

Thank you, Kevin. Please turn to Slide 15. As we look ahead into Q4 and fiscal year 2024, the major question is the volume outlook. As we mentioned earlier, the good news is that customer sales volume tends to indicate continued customer resilience for the markets we serve. Clearly, there is a big disconnect between our customer sales volumes, our sales volumes and our suppliers' sales volumes. To state the obvious, the challenge for us, our peers in the industry and our suppliers is continued impact of destocking actions across our supply chain. The big question is, when will destocking end? When will our customers' volume demand be in line with their sales and production volumes? Please turn to Slide 16. We do not have a clear view on when destocking will end. For our June update, if our Q4 performs in line with Q3, we expect to have sales of $2.2 billion and EBITDA of around $500 million. Although the global consumer remains resilient as evidenced by our customers' sales volumes, preliminary July results indicate continued destocking. Reported inventory levels by some of our customers would indicate further destocking actions may be expected if demand does not pick up. We currently anticipate about $25 million of internal inventory control actions in fiscal Q4. Global demand trends will drive potential further actions. Risk to the outlook in Q4 come from extended customer destocking, which continues in specific end markets or regions and the need for added inventory control actions impacting our own absorption. There's a potential for global recession impact on consumer demand, price versus cost balances if something changes, growth in China and the escalation of the Russia-Ukraine War. As I've said before, this is the time for caution. We will continue to operate with strong capital allocation discipline so that we're in a strong financial position to invest and grow our core businesses. On the positive side, what we see is that our consumer demand remains resilient, and that is more in line with our customers' sales volumes. We will remain focused on the things in our control, driving innovation, maintaining operating discipline, managing pricing, mix, cost, productivity and capital allocation. In spite of the near-term challenges, our long-term growth drivers remain unchanged. First, we're expanding the capacity of our key technologies where we have leadership positions. HEC, Klucel, Benecel, and Aquaflow, all segments where we were sold out over the last two years. We're going to globalize our high-value businesses, our preservatives, our biofunctionals, our oral solid dose coatings business and our injectables business. Innovation will be central to our growth. And as Kevin said, bolt-on M&A opportunities. We will continue to take actions to maximize near-term performance while not losing focus on our longer-term growth opportunities. In many cases, our focus is on accelerating these exciting long-term initiatives. Innovation will be a central point of our growth focus. I want to thank the Ashland team again for their leadership and proactive ownership of their business in an uncertain environment. Thank you for your attention today. And Victor, let's move to Q&A.

Guillermo, as destocking ends, how should we think about operating leverage and earnings power of the company heading to '24?

Thank you for the question, Dave. The main concern, as I mentioned, is the volume and where demand lies. There's a significant difference between our customers' sales volumes and ours compared to all suppliers in the industry. When we stabilize and the destocking ceases, the trend should return to our customers' volumes and production demand. There is considerable leverage here. The negative aspects you're observing today will turn into positives for the future. In our next call, we'll discuss 2024 and address the reset, including items like incentive compensation that will be adjusted for the full year. The key assumption will rely on the volume outlook. This quarter will be crucial for observing how things develop. There is a lot of leverage regarding the return of volume, impacting both gross profit and absorption.

Very good. And just for you and Kevin, how should we think about share buybacks in both Q4 and perhaps next year?

Go ahead, Guillermo.

We are going to maintain a balanced approach to rewarding our shareholders. Our primary focus is on innovation and growth, along with the initiatives I outlined. In terms of capital expenditures, we have a clear direction. We are also investing in our oral solid dosing coatings and biofunctionals in China, Brazil, and India, which are part of our existing plan and are relatively asset-light. The main topic we will address in September is innovation. We have an exciting portfolio of scalable technologies that are not merely products but technologies that can generate multiple products for various markets. As we introduce these technologies over the next 3, 5, and 10 years, there is significant growth potential. We are considering whether we need to invest more and whether to increase our research and development investments, which is our top priority for capital allocation as it promises high returns for our shareholders. Given our current cash flows, we are well-positioned to both reward our shareholders and invest in the business. Kevin, do you have anything else to add?

Yes, just a little bit. We've done $300 million this year so far. Over the last 10 years, we've done over $3 billion of share repurchase. And I think the important point is we can do that along with all of what Guillermo just mentioned, and we've demonstrated that in the past, and you can expect us to demonstrate that into the future as well. We're going to strike a balance. We don't think it's wise to lever the balance sheet up per share repurchase, but we do think that our shares remain undervalued, and we'll continue to invest in them as well as promote a strong dividend policy now and in the future.

Guillermo, on Slide 15, you gave a very helpful breakdown. I want to focus on personal care. Just given everything in your portfolio right here, right now and given the market dynamics with your customer volume trends down mid-single digits. Just a very simple question. How comfortable are you that you ultimately have the right portfolio, specifically in skin and hair across bioactives, biofunctionals, Schulke? I would love an update there. But just in terms of that normalization process and thinking about fiscal year '24 and '25, everything your long-term holders are looking at. Just what gives you the confidence that you ultimately have the right tools to snap back and ultimately gain share in that portfolio and grow over time?

Thank you, Chris, for joining us and for your question. It's important to differentiate between the short-term and long-term situations, which I've highlighted over the past two quarters. They exhibit different dynamics. Reflecting on last year, we performed exceptionally well, improving our pricing and achieving a strong year. However, that success has not translated into advancements in innovation or growth opportunities. Additionally, we face challenges with destocking that we need to address in the short term, but these challenges do not diminish our long-term opportunities. I believe these short-term issues are widespread, affecting everyone in the industry across all segments, not just specific products or categories. Our customers' volume compared to ours clearly reflects this industry-wide destocking event, which is unprecedented, but we will eventually overcome it. Innovation will be a key topic in our September discussion. We are thrilled about the scalable innovations we are developing. If you recall our November 2021 Investor Day, we discussed the model of additives and ingredients. By innovating and then scaling by creating more products or applications for different markets, we are genuinely excited about these prospects. Nearly all of our new launches—99%—will focus on greener chemistries, including natural, naturally derived, or biodegradable options that provide functional performance advantages. This approach is not just about being environmentally friendly; we can achieve both enhanced performance and better ESG solutions. From a manufacturing standpoint, the processes are very clean compared to other technologies, resulting in minimal waste and efficient production. Importantly, we can utilize existing assets without needing significant additional investment. We plan to use some of the capacity that has been idle since 2019 for these new technologies. We believe these innovations will fit well not only in personal care but also in coatings and pharmaceuticals, showing a broad relevance. This represents a separate growth opportunity beyond our traditional market growth and typical innovation through product improvements. These new platforms have the potential to significantly boost our growth over the next decade.

Got it. As a quick follow-up to your response, how should the market view the ultimate portfolio? In November '21, you outlined your core businesses, and clearly, the pharmaceutical sector is performing well. However, regarding areas of your business that haven't met expectations and the potential to repurpose assets, could you elaborate on that? It appears that the current situation presents an opportunity to shift focus more toward those core end markets and away from some areas that you've been managing primarily for cash. Any additional insights would be appreciated.

No. If you consider the technologies and businesses we have, and look back at our Investor Day, we showcased two businesses that were related but not integrated with our core Additive and Ingredients. Most of our current Additives and Ingredients are sold across multiple segments, which we want to maintain as our core integration. We have our Intermediates business that supports our back integration strategy for PVP resins, but it operates as a separate entity. We are continuously seeking improvements in this area. We can choose how we want to proceed as we maintain flexibility. The past few years have generated significant value for us, and if we decide to make changes in the future, we are well equipped to do so. An exciting aspect of our Intermediates business is that the merchant market we have does not primarily focus on BDO, as we sell very little of that. Instead, as Kevin mentioned, we deal with NMP, BLO, and other products that cater to the EV sector, semiconductors, agricultural and pharmaceutical active ingredients, as well as coatings, particularly in the U.S. and European markets. We are one of the few merchants with available capacity. As the EV investments ramp up, NMP will be necessary for battery production, and we are currently the only ones equipped to meet that demand. There is a lot of positivity surrounding this. We previously had a significant focus on BDO, and we adjusted our pricing to reflect that, but now we recognize these as distinct markets and technologies, and we are pricing them appropriately. Despite the current downturn, this business has shown much better performance than in the past. We are optimistic about it and appreciate the flexibility we have. The second business is nutraceuticals, which we have stabilized and improved. The main consideration is how it fits into our long-term portfolio, and we aim to enhance its value. We are making investments to strengthen this business, and we will determine our next steps. Regarding our integrated portfolio, we are evaluating all our businesses to identify underperforming assets. When we look at metrics like sales growth and margin relative to our peers, we have made significant improvements. However, we have not performed as well in terms of return on capital and some investments, and we are addressing those areas. We have two businesses that are underperforming our expectations. Even during their peak performance last year, they did not meet our standards; those are our CMC business and MC Industrial business. We are assessing our strategy for these businesses because the assets involved are very valuable. As you will hear during our Innovation Day, we are considering how to repurpose some of these assets; many of which are located in the U.S. These assets hold significant value, and as part of our capital allocation strategy, it is crucial to manage existing capital effectively, not just focus on new investments. We have experienced teams at our sites, and we can repurpose them to generate significant earnings growth. You'll hear more about this in the September call. We also have new technologies that we can apply to these assets, similar to those we will be launching in September, which will utilize resources from the business we exited in 2019. This should positively impact our returns.

Could you help us consider how to build on the $500 million you are projected to achieve this year? It doesn’t have to happen in 2024, but if the destocking comes to an end, how do you plan to recover that EBITDA? What other strategies can help you get back on track since we were close to $600 million at the beginning of this year? Could you share your thoughts on how to gradually move back up over time?

Right. So Mike, as I mentioned, the question revolves around volume and its implications for the future. We will discuss this in more detail in the next call, including our insights on 2024. As we analyze the numbers, there’s an adjustment in incentive compensation that we need to highlight. The destocking process has progressed in an unexpected manner, lasting longer and being more significant than anticipated. Initially, many believed that once we took certain actions, the situation would improve quickly. However, it has proven to be more extended and complex. We are operating our plants at lower capacities, contributing to this noise. The focus should be on our actual volume rather than the individual events that occur. The key question is what our volume looks like for this year. If our volumes aligned with our customers, it would result in a very different outcome. When volume stabilizes, that will give us clearer insight. We also need to consider when the destocking phase will conclude and the monthly implications of that. This is a major concern for the entire industry right now: the recovery of volume and the timing of that growth.

And then just a quick follow-up. Pharma has continued to do well. Any thoughts on how your customers' inventory is doing? Could there be a destocking event going forward? How do you feel about that business in the near term?

As we mentioned last quarter and anticipated this fourth quarter, demand is beginning to normalize, and we are observing that trend. Moving forward, we expect growth rates to return to normal levels. I don’t believe the industry has significantly increased their safety stocks; they can make some adjustments, but it’s not comparable to what we see in other sectors. This is evident as they have continued operations while other industries have made changes. Therefore, we anticipate some moderation, but we do not expect the same level of actions that we’ve observed in other sectors.

So with the level of destocking that you're seeing and the volume pressure, I guess can you speak to the pricing trends quarter-over-quarter? Have they been kind of solid still? Are they up? Are they down? Can you give us a little bit of color on that?

Pricing remains stable. When you look at our customers' earnings comments, you'll notice that our performance mirrors theirs in terms of volume and pricing dynamics, although our cost dynamics differ somewhat since we rely less on petrochemicals. Petrochemical producers are likely to experience greater fluctuations as these volumes affect their downstream suppliers. As I mentioned earlier, we communicate regularly with our suppliers because they are vital to our supply chain, and they are feeling the pressure more acutely than we are. We are collaborating with them on this front. The prices for cotton and cellulosics are relatively stable and show slight improvement. Petrochemical prices are also declining a bit, but not dramatically. In the case of acetylenics, we're observing a decrease in natural gas prices. While there is variation, we are not in the same situation as others who are maintaining prices while raw material costs significantly drop. Instead, our pricing remains stable. A common question is whether prices will decrease alongside volumes, but the reality is that there isn't much volume available. Reducing prices does not make sense if there is no volume to attract. Until we finish destocking, if someone has existing products, there is little incentive to purchase more at any price. Therefore, our focus is on navigating through the destocking phase. We are confident in our ability to maintain prices, which tend to be more resistant to change. While we observe some fluctuations that come as raw material costs adjust, we are optimistic about sustaining our margins moving forward. Ultimately, the volume question remains the most critical challenge for the upcoming months.

Got it. Fair enough. I know you had been sold out in several product lines, and you're increasing capacity for HEC, Benecel, Klucel, and others. Given the current destocking challenge, can you discuss whether these expansions are largely supported by customer demand? If not, do you consider delaying the start-up of these expansions or pushing it out a few quarters? How should we approach this situation?

Several points to address. First, regarding our investments, we're focusing on growth in globalization and we will not halt these initiatives. They are asset-light and centered around genuine growth, unaffected by certain dynamics. Our investments in China, Brazil, and India will continue. As for our core assets, we have Benecel coming online and we're managing through that process. HEC is well advanced after being sold out, and we're moving forward with it. In Aquaflow, we've opted for a slower pace due to a downturn in that market, so its launch will be postponed a few quarters. The Klucel project is ongoing, as it plays a critical role in pharma with high value, and we must maintain its production to support our customers. It's essential to emphasize the volume aspect; addressing destocking is a significant challenge for all of us, but it is temporary. What excites me is the resilience of our customers' volumes. The key takeaway is that as long as our customers are thriving, we will eventually return to prior levels. To your inquiry about HEC, if HEC and coatings represent the largest volume and are trending upwards even slightly, given that the industry was sold out, that capacity will be necessary. We need to distinguish between destocking and actual demand. According to genuine demand, that capacity will be required, while destocking may cause us to lag by a quarter or two, which is difficult to predict with precision.

I was wondering if you could separate some of the line between mix and volumes. So I think one of the challenges here is that Ashland never really saw a big volume uplift over the last couple of years, but we've talked a little bit about a lot of mix improvement. So is there a way to frame maybe how many tons or volumes went from a lower-margin product to a higher-margin product? And is that where there has been some inventory built? And just if I look at this relative to personal care, as an example, my math is your volumes there might be down 25%, 30%, versus 2019, full year basis for this year. So is there some percent of that volume that you've walked away from as a part of the mix improvement, which means we don't get all that volume back, but we might come back at a higher margin because the mix is better?

It's quite complex due to the variety of products and technologies, so there isn't a straightforward explanation. We need to analyze it technology by technology. Overall, our improvements in mix, particularly in pharmaceuticals, personal care, and architectural coatings, represent higher margins, which is not where we faced negative outlooks in certain product categories. The destocking of volume has affected our secondary and lower-margin businesses more than our high-value businesses, which tend to be high absorption. Unfortunately, this is where we have seen negative effects. CMC was disproportionately impacted; this is relevant to our previous discussions about which assets we want to repurpose. CMC contributes to nutrition and has been significantly affected, also serving various energy markets, yet its margins are well below the company average, as are its returns. Our MC Industrial, mostly in construction in Europe, has similarly suffered under the circumstances, with margins again falling below our average. The absorption effects in these areas outweigh the margin impacts. In terms of intermediates, our BDO plants have faced the heaviest impact, while HEC has experienced some effects, but it's manageable and not as concerning as the other areas. Volumes are expected to rebound quickly in their core markets, particularly for CMC and MC, where we've focused on improving our mix.

Yes. And just on Life Sciences margins within the quarter, I mean, obviously, a bit of a bright spot. Just curious how much of that is just mix of pharma holding in better versus the nutraceutical down versus structural improvement there?

Pharma has been performing well and is expected to continue doing so. Our sales of nutrition and nutraceuticals have decreased, and this lower margin segment has been affected. As a result, you're observing an improvement in the mix towards our core pharma business.

Personal care business looks like it didn't have any earnings hit from your own destocking. Why was that?

I'm sorry, could you repeat the question? Is that personal care?

Yes. It looked like it didn't have any earnings hit from your own destocking?

Yes, I want to highlight one specific point. They were affected in certain areas, but as we've mentioned in the last two earnings calls, it's important to note that our Specialty Additives business operates differently. They own most of the cellulosic plants, so the effects of CMC and HEC absorption are all reflected in Specialty Additives. While some of this would typically be attributed to other businesses, we categorize it under Specialty Additives. Thus, there is an impact, but it’s recorded in a different business segment according to our structure.

It was probably a couple of million dollars that flowed through the Personal Care P&L from an absorption perspective.

And then are customers pulling back on any of the new product initiatives because of this correction and could you talk a little bit about new win rates?

Yes. We're really excited. You'll hear some of the stories. We've been trying to be very transparent with everybody, with videos on the conferences and all that; we'll do more of these, but we're getting awards. We're getting a lot of these products qualified to launch a product. A lot of these new innovations, we've started to launch at the end of last 2022. So we're getting that momentum. People are coding them, qualifying them. We're very excited about all of the new technologies. It just takes time. And what we want to show is visibility of what we're doing so that you as investors have a little bit of indicators that it's not just the revenue, but what's happening with some of these products. But personal care specifically, all the innovations have been very well received, feedback from customers were being one of the more innovative players, especially when it comes to ESG, natural, naturally derived, biodegradable. Our portfolio itself lends itself to some of these technologies. But that will be a central part of our discussion in September. And you'll see some of the newer technologies that we're looking at that if you look at it over the next decade, really, they can generate significant growth opportunities. When we say scalable, we're not just launching a nice product that can sell $5 million, $10 million, $15 million. We're looking at platforms that are targeting $300 million, $400 million, $600 million markets that we can get significant share. And if only part of the portfolio impacts, it will really provide a very nice growth engine and more profitable than our current technologies.

Great. How are your cash flows looking this year, either cash flow from operations or free cash flows?

Sure, sure. It was strong in the quarter, Jeff, and a lot of that was working capital driven. Unfortunately, part of it is from lower sales, which drives lower receivables. As our terms really haven't changed, but our receivable numbers are going down. For the full year, we're probably looking at 45%, 50% free cash flow to EBITDA conversion. As things normalize, we would expect that number to creep back up to, call it, 55% to 60% or maybe a little better percent over the course of time, which is more in line with our target. As you'll recall, last year, it was probably in the 20s due to pretty significant working capital build just because of inflation. So it has bounced around some just due to the external environment. But we'd expect it to normalize as demand and volumes normalize.

For my follow-up, if your operations were running efficiently, where would your inventories be? Given that you're at $712 million, would they be at $600 million, $550 million, or $500 million? What do you think is the appropriate figure?

Yes. The main issue right now is not the dollar value but the number of days. It's not about how much we're producing or how our plants are operating; it's about demand. We base our operations on the demand outlook and the inventory days required, which varies significantly by technology. For instance, with some global assets like HEC, we're producing in specific locations and shipping worldwide. We consider how long shipping takes and the safety stock needed in other countries. This gives us a number, and essentially, our days of sales are high. That's the key issue driving all the production and adjustments.

If you normalize everything back to where demand and volumes were, the number is probably in the $650 million range, give or take $25 million on either side. As Guillermo mentioned, we do a significant portion of our manufacturing in the U.S., but we operate globally. This results in us having slightly longer days of sales compared to some of our competitors. We believe that's the correct figure, but it will fluctuate based on inflation and other factors.

Just wanted to follow up on the capacity addition that you guys have talked about. In some of those product lines where you are moving forward near term, you guys haven't really given us a whole lot of detail about the magnitude of those additional volumes. So I guess how much additional volume should we be thinking about coming in, in areas like Benecel, where you are moving forward, and that's going to contribute, presumably early in '24?

Yes. So this one is coming in at early '24, and the HEC will be finished coming on stream also Q1, Q2 of '24, probably early part of the calendar year. I think the HEC about 10% capacity improvement, 10,000 metric tonnes? So we can just follow up with you, Mike, and share a little bit more on some of the specifics there. The Aquaflow is a new plant, and we put it in a different site. Some of our customers wanted also just to make sure that they were more from a supply security, more sites since it's an important product for them. So it's not just volume. It's also where we're locating some of these assets. I will say also, all these investments are in existing facilities. So we're not building a new, new plant. They're just production units within plants. So that will also bring productivity to these plants.

All right. And then I apologize if I missed this, but kind of a broad question about whether you're taking any additional cost actions as a response to some of the weakness that you're seeing right now? And I guess maybe more specifically, as you talk about CMC and the MC Industrial business being below expected returns or where you want the margins to be? What specific actions can you take in those businesses that would help near-term? Or is it not that simple?

We are currently focusing on two main areas. First, we are addressing our cost structure by not only reducing expenses but also reallocating resources. We aim to increase our investments, particularly in research and development as well as marketing for new platforms. Rather than simply adding resources to our assets, we are considering which initiatives are less critical and can accommodate a resource shift. We have begun restructuring and realigning our business units. For instance, we have merged the Intermediates division with the leadership of the Life Sciences business so that the entire supply chain is managed by one team, allowing for better visibility into our operations. We are consolidating some management and resources to enhance efficiency and support for growth in new technologies related to Personal Care and Specialty Additives. Additionally, we are forming a dedicated team to oversee our portfolio, which will assist in coordinating across multiple business areas to ensure we develop robust business plans aimed at scaling our technologies. This strategy is expected to deliver cost savings while enabling resource reallocation. The second area we're addressing is our assets. We recognize the value these assets hold and are not solely focused on shutting them down. We plan to leverage them; for example, we will launch a new high-end technology in September that will compete with silicones and be produced using assets previously utilized for oral care products, which we lost in 2019. We are not constrained by limited assets; we are already marketing products in personal care and will expand into other areas such as oil and vegetable oil-based polymers, tapping into a new category of products applicable to all our segments. This exciting technology will utilize our existing infrastructure, and as we expand, we will explore additional options. You will hear about technologies we can implement using our CMC or MC assets, focusing on cellulosics and starches, and we have a wide range of technologies under consideration. Our approach will be structured; we won't simply shut down operations and relocate resources. Instead, we see a significant opportunity for value creation if we proceed with discipline, which we plan to communicate to all of you, with the timing influenced by our innovation agenda.

This is Kevin Estok filling in for Alexander. Most of the questions have already been addressed, but could you provide some insights into the regional differences in destocking, particularly between Europe, Asia, and North America, as well as any specifics regarding certain customers?

Europe is currently experiencing the weakest demand, particularly in coatings, which indicates a downturn. My focus is on our customers and their sales, which likely reflect end market demand trends. This is evident in their financial results, showing that Europe is softer than expected. China has not bounced back as quickly as many had hoped, and we observe considerable differences among customers. For instance, larger companies in China are outperforming smaller ones in terms of volume and market share in this challenging environment. The pharmaceutical sector remains consistent globally, with both major pharmaceutical firms and generics exhibiting similar patterns worldwide. Ultimately, the dynamics affecting our business seem to be more customer-specific and concentrated in Europe. Thank you very much, Victor. Thank you all for participating. I want to highlight two key points. First, we are aware of the destocking dynamics and will navigate through them. The good news is that our customers’ sales volumes are stronger and demonstrate greater resilience in the end markets we serve, which excites us. This resilience will ultimately drive our demand in the mid to long term. While we manage the short term, it's encouraging to note that the markets remain healthy. Second, despite the current short-term challenges, our long-term growth opportunities remain unchanged, and we are very enthusiastic about them. Our focus will be on managing the short term to optimize immediate performance while maintaining progress on important long-term initiatives. Thank you for your attention, and we look forward to seeing many of you in September in Wilmington. Thank you, everyone.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.