Ashland Inc. (ASH) 2017 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Ashland Global Holdings Inc. Second Quarter Earnings Call. (Operator Instructions)

各位女士、各位先生，大家好，歡迎參加 Ashland Global Holdings Inc.第二季財報電話會議。(接線員指示)

As a reminder, this call is being recorded.

提醒各位，本次電話會議將被錄音。

I would now like to turn the call over to Mr. Seth Mrozek. You may begin.

現在我想把電話會議交給 Seth Mrozek 先生。您可以開始了。

Thank you, Michelle. Good morning, everyone, and welcome to Ashland's Second Quarter Fiscal 2017 Earnings Conference Call and Webcast. My name is Seth Mrozek, Director, Ashland Investor Relations.

謝謝你，Michelle。各位早安，歡迎參加 Ashland 2017 會計年度第二季財報電話會議與網路直播。我是 Seth Mrozek，Ashland 投資人關係總監。

Joining me on the call today are Bill Wulfsohn, Ashland's Chairman and Chief Executive Officer; and Kevin Willis, Senior Vice President and Chief Financial Officer.

今天與我一同參與電話會議的有：Ashland 董事長暨執行長 Bill Wulfsohn，以及資深副總裁暨財務長 Kevin Willis。

We released preliminary results for the quarter ended March 31, 2017, at approximately 5 p.m. Eastern Time yesterday, April 25. Additionally, we posted slides and prepared remarks to our website, ashland.com, under the Investor Relations section and have furnished each of these documents to the SEC in a Form 8-K.

我們已於昨日 4 月 25 日美東時間約下午 5 點，發布截至 2017 年 3 月 31 日之季度初步結果。此外，我們也在網站 ashland.com 的投資人關係專區上傳投影片與事先準備的講稿，並已以 Form 8-K 形式將上述文件提交給美國證券交易委員會（SEC）。

As a reminder, some of the matters discussed today and included in our presentations may include forward-looking statements as such term is defined under U.S. securities law. We believe any such statements are based on reasonable assumptions but cannot assure that such expectations will be achieved.

提醒各位，今天討論的部分事項以及我們簡報中所包含的內容，可能包含依美國證券法定義之「前瞻性陳述」。我們相信任何此類陳述係基於合理假設，但無法保證這些預期一定能夠達成。

Please also note that we will be discussing adjusted results during this call. We believe this enhances the understanding of our performance by more accurately reflecting our ongoing business.

也請注意，我們將在本次電話會議中討論調整後（adjusted）結果。我們認為這有助於更準確反映我們持續經營的業務，從而提升對公司表現的理解。

With that, I will turn the call over to Bill. Bill?

接下來，我把電話會議交給 Bill。Bill？

Thank you, Seth, and good morning, everyone. Yesterday was a momentous day as we announced the final step in the Valvoline separation. And as you may have read, on May 12, just a few weeks away, we will be distributing all of Ashland's remaining interest in Valvoline to Ashland shareholders. This represents the final step in our journey to create 2 great companies, both positioned for success with the flexibility, strategic focus and financial resources needed to generate revenue and earnings growth. It also represents the beginning of exciting new chapters for both the new Ashland and Valvoline.

謝謝你，Seth，各位早安。昨天是重要的一天，因為我們宣布了 Valvoline 分拆的最後一步。如各位可能已讀到的消息，5 月 12 日，也就是再過幾週，我們將把 Ashland 持有的 Valvoline 剩餘全部權益分配給 Ashland 股東。這代表我們打造兩家卓越公司的旅程邁出最後一步；兩家公司都將具備所需的彈性、策略聚焦與財務資源，以推動營收與獲利成長。這也代表全新 Ashland 與 Valvoline 令人振奮的新篇章正式展開。

From a new Ashland perspective, we are focused on Ashland's 2 core priorities for the year. The first is to position Ashland to deliver against our fiscal year 2017 plan, and the second core priority is to pivot Ashland to reach its full potential as the premier specialty chemical company.

從全新 Ashland 的角度來看，我們聚焦於本年度的兩項核心優先事項。第一是讓 Ashland 能夠依照 2017 會計年度計畫交付成果；第二項核心優先事項是推動 Ashland 發揮其全部潛力，成為首屈一指的特用化學品公司。

I'd like to first speak to the subject of building the premier specialty chemical company. As a core part of that objective, it relates to continuing to upgrade and enhance our portfolio. And to that end, last month, we announced an agreement to acquire Pharmachem Laboratories, a leading provider of quality ingredients to the global health and wellness industries with high-value, differentiated products offered also to fragrance and flavor houses. With this acquisition, we see a number of exciting growth opportunities as it will strengthen our specialty product portfolio, particularly in high-margin end markets. It also enhances our position in fast-growing nutraceutical end markets, it opens new opportunities within flavors and fragrance and it strengthens Ashland's food ingredients business by adding customized functional solutions. We believe that by combining Pharmachem and Ashland, we can leverage our extensive sales channels, technical service network and global application labs to accelerate Pharmachem's growth while also generating significant cash flow. We expect to complete this transaction by the end of June and look forward to welcoming Pharmachem's talented employees to the Ashland team.

我想先談談打造首屈一指的特用化學品公司這個主題。作為該目標的核心部分之一，這與持續升級並強化我們的產品組合相關。為此，我們上個月宣布已達成協議，將收購 Pharmachem Laboratories；該公司是全球健康與保健產業高品質原料的領先供應商，並以高價值、差異化產品同時供應香精香料與風味公司。透過這項收購，我們看到多項令人振奮的成長機會，因為它將強化我們的特用產品組合，特別是在高毛利終端市場。它也提升我們在快速成長的營養保健品終端市場的布局，開啟風味與香精香料領域的新機會，並透過加入客製化功能性解決方案，強化 Ashland 的食品原料業務。我們相信結合 Pharmachem 與 Ashland 後，可運用我們廣泛的銷售通路、技術服務網絡與全球應用實驗室，加速 Pharmachem 的成長，同時創造可觀的現金流。我們預期將於 6 月底前完成此交易，並期待歡迎 Pharmachem 優秀的員工加入 Ashland 團隊。

Returning now to our performance in the quarter. Ashland's overall financial performance reflects significant progress in a number of key areas. Within Ashland Specialty Ingredients, the team delivered volume growth of approximately 4%. Sales were up 3% to $544 million, driven by increased sales in most of ASI's key end markets.

現在回到本季的表現。Ashland 整體財務表現反映出我們在多個關鍵領域取得顯著進展。在 Ashland Specialty Ingredients（ASI）方面，團隊實現約 4% 的銷量成長。銷售額成長 3% 至 5.44 億美元，主要由 ASI 多數關鍵終端市場的銷售增加所帶動。

Consumer Specialties grew 2% year-over-year in sales, with the strongest growth coming from personal care. And it is important to note that the personal care team generated stronger results across all of their end markets this quarter.

Consumer Specialties 的銷售額年增 2%，其中以個人護理的成長最為強勁。值得注意的是，本季個人護理團隊在其所有終端市場均交出更強勁的成果。

In pharma, the team worked to optimize our sales mix. And to be more specific, what we're doing is we're migrating production assets away from lower-margin products to higher-margin products. And next week when we meet at our Investor Day, we're going to speak more to this type of product mix upgrade activity.

在製藥領域，團隊致力於最佳化我們的銷售組合。更具體地說，我們正將生產資產從較低毛利產品轉移至較高毛利產品。下週在投資人日與各位見面時，我們將進一步說明這類產品組合升級的活動。

Within ASI's industrial division, the team drove strong volume gains across all of their end markets. And from a regional perspective, ASI saw strong customer demand in China.

在 ASI 的工業事業部中，團隊在所有終端市場都帶動了強勁的銷量成長。從區域角度來看，ASI 在中國看到強勁的客戶需求。

It's important to note the team also did a great job in controlling SG&A, which was down in ASI by about $1 million year-over-year.

值得一提的是，團隊在控管銷售、一般及行政費用（SG&A）方面也做得非常出色；ASI 的 SG&A 較去年同期約減少 100 萬美元。

Now despite these gains, overall ASI EBITDA was flat versus prior year, and that was due to negative impact of rising raw materials and currency in the quarter. Later in the call, I'm going to speak to the actions ASI is taking to sustain revenue growth while improving its profit trajectory.

然而，儘管有上述成長，ASI 整體 EBITDA 與去年同期持平，原因在於本季原物料上漲與匯率因素帶來的負面影響。稍後在電話會議中，我將說明 ASI 正採取哪些行動，以在維持營收成長的同時改善獲利走勢。

Moving now to Ashland's Performance Materials. The team delivered sales of $262 million, which represents a 10% increase over the same period prior year. And adjusted EBITDA was $23 million, which was consistent with the outlook provided at the beginning of the quarter. This was a good result and a good outcome as the Composites team generated 5% volume growth during the quarter, driven by solid demand from customers in North America and China.

接著談 Ashland 的 Performance Materials。團隊實現 2.62 億美元的銷售額，較去年同期成長 10%。調整後 EBITDA 為 2,300 萬美元，符合本季初所提供的展望。這是一項良好的成果與表現，因為 Composites 團隊本季銷量成長 5%，主要受北美與中國客戶的穩健需求所帶動。

And I'd like to note that shortly after our January earnings call, a major supplier of one of our key raw materials for Composites, styrene, announced a force majeure, which resulted in dramatic cost increases. The Composites team responded quickly and aggressively. And their first priority was to ensure continuity of supply to their customers. And at the same time, the Composites team is focused on driving price increases to offset these increases in raw material costs. Both of these efforts were successful, although there is a lag in the quarter between the timing of raw material price increases, which were immediate, and finished good pricing, which followed 30 to 60 days later. And that did have a negative impact on Composites margins in Q2.

另外我想指出，在我們 1 月財報電話會議後不久，Composites 其中一項關鍵原料——苯乙烯（styrene）——的主要供應商宣布不可抗力（force majeure），導致成本大幅上升。Composites 團隊迅速且積極地回應。他們的首要任務是確保對客戶的供應不中斷。同時，Composites 團隊也專注於推動漲價，以抵銷原物料成本上升。這兩項努力都取得成功，但在本季存在時間差：原物料價格上漲是立即發生，而成品定價則在 30 至 60 天後才跟進。因此，這對第二季的 Composites 利潤率造成了負面影響。

Net-net, the Composites business drove 10% sales growth, which was more than offset by the increased raw material pricing in the quarter. The good news is that based upon the price increases put in place, the impact of raw material inflation in Composites is expected to be fully offset in the second half of our fiscal year.

總體而言，複合材料業務帶動銷售成長10%，但本季原物料價格上漲的影響已超過並抵銷了這項成長。好消息是，基於已實施的漲價措施，預期複合材料的原物料通膨影響將在本財政年度下半年完全被抵銷。

Moving to the Intermediates and Solvents portion of APM. The Intermediate and Solvents team grew volume by 21% and sales by 8% as improved demand offset substantially lower selling prices. As anticipated, I&S earnings were below the prior year as BDO pricing was down versus last year. The good news is that during the quarter, the I&S team increased prices substantially and now expects year-over-year pricing to more than offset raw material inflation in the second half of the year. And we are optimistic that this is the beginning of the market recovery we've been anticipating for some time.

接著談APM的中間體與溶劑業務。中間體與溶劑團隊在需求改善抵銷了大幅降低的售價之下，出貨量成長21%，銷售額成長8%。如預期所示，由於BDO價格較去年下滑，I&S獲利低於去年。好消息是，本季I&S團隊大幅調漲價格，並預期下半年年對年價格提升將足以且超過原物料通膨的影響。我們也樂觀認為，這是我們期待已久的市場復甦的開端。

Finally, moving to Valvoline. This will be the last quarter that we'll be referencing Valvoline's performance, and I encourage you to read their earnings release where they profile good gains in lubricant sales on both a sales and gallons basis. I'd like to congratulate the Valvoline team on another strong quarter but most specifically thank the team for all their many contributions to Ashland over the years.

最後，談到Valvoline。這將是我們最後一季提及Valvoline的表現；我建議各位閱讀他們的財報新聞稿，其中說明潤滑油銷售在金額與加侖數兩個面向皆有不錯的成長。我要祝賀Valvoline團隊再度交出強勁的一季，並特別感謝該團隊多年來對Ashland的諸多貢獻。

I'll now turn the call over to Kevin to discuss some corporate items.

接下來我把電話會議交給Kevin，請他說明一些公司層面的事項。

Thank you, Bill, and good morning, everyone.

謝謝你，Bill，各位早安。

In the quarter, we reported GAAP earnings from continuing operations attributable to Ashland of $1.42 per diluted share. When adjusted for key items, earnings per share attributable to Ashland were $1.71 and adjusted EBITDA was $247 million.

本季，我們報告Ashland持續營運業務之GAAP每股稀釋盈餘為1.42美元。在調整關鍵項目後，歸屬於Ashland的每股盈餘為1.71美元，調整後EBITDA為2.47億美元。

While these amounts are below the prior year, remember that they do not include the Valvoline net income attributable to Ashland's noncontrolling 17% interest, which totaled $0.21 per share on a diluted basis a year ago and $24 million of adjusted EBITDA.

雖然這些數字低於去年，但請記得其中不包含Valvoline淨利中歸屬於Ashland之非控制性17%權益的部分；一年前按稀釋基礎計為每股0.21美元，且調整後EBITDA為2,400萬美元。

As Bill just mentioned, ASI delivered sales and volume growth. And overall, APM earnings were consistent with our outlook as both Composites and I&S delivered solid volume growth.

如Bill剛才提到，ASI實現了銷售與出貨量成長。整體而言，APM獲利符合我們的展望，因為複合材料與I&S皆交出穩健的出貨量成長。

With respect to Pharmachem and the balance sheet, as Bill just mentioned, we expect to close the transaction by the end of the June quarter. We intend to finance the transaction through a combination of bank debt and cash on the balance sheet. We expect the incremental interest expense to be approximately $20 million per year, and paying down debt will be our primary use of free cash flow until we achieve our targeted leverage ratio of 3.5x gross debt-to-EBITDA. Based on current projections, we think it will take a couple of years to reach that target. Furthermore, Ashland's liquidity remains strong. As of March 31, and excluding Valvoline, we had cash and borrowing capacity of nearly $1.3 billion.

關於Pharmachem與資產負債表，如Bill剛才提到，我們預期將在6月季度末前完成交易。我們計畫以銀行借款與資產負債表上的現金相結合來為該交易融資。我們預期新增利息費用約為每年2,000萬美元；在達到我們目標槓桿比率（總負債對EBITDA為3.5倍）之前，償還債務將是自由現金流的主要用途。依據目前預測，我們認為達到該目標約需兩年左右。此外，Ashland的流動性仍然強勁。截至3月31日，且不含Valvoline，我們的現金與可動用借款額度合計接近13億美元。

Our effective tax rate for the second quarter after adjusting for key items was 24%. This was below our estimate of 28% to 29% due primarily to discrete items and income mix during the quarter. For the third quarter of fiscal '17, Ashland expects an adjusted annual effective tax rate of 10% to 15%, reflecting Ashland's global footprint and the full separation of Valvoline.

第二季在調整關鍵項目後的有效稅率為24%。這低於我們原先估計的28%至29%，主要是因為本季的一次性（離散）項目與所得組合所致。對於2017財年第三季，Ashland預期調整後的年度有效稅率為10%至15%，反映Ashland的全球布局以及Valvoline的完全分拆。

In looking at cash taxes, we estimate that post separation, Ashland's cash tax rate would land in the low to mid-20% range. The biggest difference between the book and tax rate -- and cash tax rate is related to intangibles that run through the effective tax rate but are not deductible for cash tax purposes. However, cash taxes will also be influenced by income mix and discrete items, not unlike the book tax rate.

就現金稅而言，我們估計分拆後Ashland的現金稅率將落在20%出頭至20%中段區間。帳面稅率與稅務稅率——以及現金稅率——之間最大的差異，與無形資產相關：其會反映在有效稅率中，但在現金稅計算上不可扣抵。不過，現金稅也會受到所得組合與一次性（離散）項目的影響，與帳面稅率類似。

Our current estimate for free cash flow, excluding Valvoline, for fiscal '17 is now $90 million to $100 million, including $60 million to $70 million of onetime separation- and severance-related payments. The reduction is being driven primarily by investments into working capital related to the increase in raw material costs. We should get this back through pricing actions over the course of time. While the team is working to mitigate these effects, it will take some time to do so.

我們目前對2017財年（不含Valvoline）自由現金流的估計，現為9,000萬至1億美元，其中包含6,000萬至7,000萬美元的一次性分拆與資遣相關付款。下修主要是因原物料成本上升而增加的營運資金投資所致。我們應可隨時間透過定價行動把這部分回收。雖然團隊正努力減輕這些影響，但仍需要一些時間。

Now I'll turn the call back over to Bill.

現在我把電話會議交回給Bill。

Well, thank you, Kevin. Turning now to our outlook for the third quarter and full fiscal year 2017. Within ASI, we see continued sales growth in the second half of the year. For the third quarter, ASI sales are expected to be in the range of $535 million to $565 million. The team is working hard to offset raw material inflation, which is expected to represent approximately $9 million of incremental cost in Q3 and $16 million for the second half of the fiscal year. More specifically, the team is working to accelerate sales of new product introductions such as N-DurHance, which we'll talk about next week at our Investor Day but was recently recognized with the Gold medal at the in-Cosmetics show. The team is also reducing SG&A spending. And most specifically, they're working to realize the impact of our price-to-value initiatives, which we'll also discuss next week at our Investor Day. As a result, we estimate ASI's adjusted EBITDA in Q3 to be roughly equal to prior year, which is at the center of our outlook range.

謝謝你，Kevin。接著談我們對第三季與2017財年全年的展望。在ASI方面，我們看到下半年銷售將持續成長。第三季ASI銷售預期介於5.35億至5.65億美元。團隊正努力抵銷原物料通膨，預期其在第三季將帶來約900萬美元的新增成本、在本財年下半年合計約1,600萬美元。更具體而言，團隊正加速推動新產品上市的銷售，例如N-DurHance；我們將在下週的投資人日進一步說明，而該產品近期在in-Cosmetics展獲得金牌肯定。團隊也在降低SG&A支出。尤其重要的是，他們正致力於實現我們「價格對價值」（price-to-value）計畫的成效，我們也將在下週投資人日討論。因此，我們估計ASI第三季調整後EBITDA將與去年大致相當，位於我們展望區間的中位數。

Beginning in Q4, we expect to see the positive impact of Pharmachem, which could be, in Q4, $10 million to $15 million. With this addition for the full year, we are narrowing our outlook range for ASI adjusted EBITDA to $485 million to $500 million.

自第四季起，我們預期將看到Pharmachem帶來的正面影響；在第四季可能為1,000萬至1,500萬美元。納入此項對全年影響後，我們將ASI全年調整後EBITDA展望區間縮窄至4.85億至5.00億美元。

For APM, we expect to see the result of our pricing initiatives having a positive impact in the quarter. APM expects third quarter sales to be in the range of $260 million to $280 million and adjusted EBITDA in the range of $27 million to $33 million versus $30 million in the year ago period. Perhaps more importantly, we are increasing our full year APM forecast and now expect full year EBITDA for the segment to be in the range of $100 million to $110 million.

在APM方面，我們預期本季將看到定價措施帶來的正面效果。APM預期第三季銷售介於2.60億至2.80億美元，調整後EBITDA介於2,700萬至3,300萬美元，相較去年同期為3,000萬美元。更重要的是，我們上調APM全年預測，現預期該事業部全年EBITDA介於1.00億至1.10億美元。

Before leaving APM, I'd like to make a quick note on another acquisition we announced earlier this month. In early April, Ashland announced that we have made a binding offer to acquire a composites resin manufacturing facility in Etain, France from Reichhold. This facility manufactures unsaturated polyester resins, or UPR, and they're used in a variety of end markets such as transportation and construction. And the transaction, which is expected to be completed by the end of June, is really a unique opportunity for us to strengthen our cost competitiveness and position the European composites market at a highly attractive price with very compelling terms and conditions related to the purchase.

在離開 APM 之前，我想就我們本月稍早宣布的另一項收購做個簡短說明。4 月初，Ashland 宣布我們已向 Reichhold 提出具約束力的收購要約，擬收購其位於法國 Étain 的複合材料樹脂製造工廠。該工廠生產不飽和聚酯樹脂（UPR），並用於運輸、建築等多元終端市場。而這筆交易預計將於 6 月底前完成，對我們而言確實是一次獨特的機會，可在極具吸引力的價格、且購買相關條款與條件相當有利的情況下，強化我們的成本競爭力，並鞏固我們在歐洲複合材料市場的地位。

So now in summary. Thus far this fiscal year, we have really made some great progress in key areas. I think yesterday's separate announcement that Ashland will be distributing all of its remaining interest in Valvoline to Ashland shareholders on May 12 represents an important and final step in our journey to create 2 companies.

現在做個總結。截至本會計年度目前為止，我們在幾個關鍵領域確實取得了相當大的進展。我認為，昨天另行宣布 Ashland 將於 5 月 12 日把其在 Valvoline 的所有剩餘權益分配給 Ashland 股東，代表我們打造兩家公司的旅程中一個重要且最後的步驟。

Within ASI, we are driving sales and volume growth in the majority of our key end markets, and we must build on that momentum in the second half of the year and fully offset raw material inflation with pricing actions.

在 ASI 內部，我們在多數關鍵終端市場推動銷售與出貨量成長；我們必須在下半年延續這股動能，並透過定價措施完全抵銷原物料通膨。

Within APM, both the Composites and I&S teams have raised prices already to help offset the expected impact of raw material inflation in the second half of 2017.

在 APM 內部，Composites 與 I&S 團隊都已調漲價格，以協助抵銷 2017 年下半年預期的原物料通膨影響。

And it's worth noting that we've also been taking aggressive actions across the globe to hold our year-over-year SG&A constant through various cost savings initiatives.

另外值得注意的是，我們也在全球範圍內採取積極行動，透過各項成本節省計畫，讓我們的 SG&A 年對年維持不變。

Now we have a lot more to share with you about our strategies and performance targets when we hold our Investor Day next Monday, and I encourage you to attend or participate by webcast.

下週一我們將舉辦投資人日，屆時會與各位分享更多關於我們策略與績效目標的內容，我也鼓勵各位親自出席或透過網路直播參與。

Thank you for your interest in Ashland, and I will now turn the call over to the operator to take your questions.

感謝各位對 Ashland 的關注，接下來我將把電話會議交給接線生，開始進行提問。

(Operator Instructions) Our first question comes from Laurence Alexander of Jefferies.

（接線生指示）我們的第一個問題來自 Jefferies 的 Laurence Alexander。

This is Jeff Schnell on for Laurence. If I take the midpoint of the EBITDA range for ASI at $492 million and Performance Materials at $105 million, take out corporate overhead at $30 million, layer in Pharmachem at, say, $60 million and adjust for restructuring to fully offset costs related to the spin, is it fair to peg that EBITDA floor for building a bridge to 2018 at roughly $650 million before allowing for organic growth and FX? And as a follow-on, what core competency does Pharmachem give you? Or is it more of a matter of a broader distribution job?

我是代替 Laurence 的 Jeff Schnell。如果我以 ASI EBITDA 區間的中位數 4.92 億美元，以及 Performance Materials 的 1.05 億美元為基礎，扣除 3,000 萬美元的公司管理費用，再加入 Pharmachem（例如）6,000 萬美元，並就重整費用進行調整以完全抵銷與分拆相關的成本，那麼在不考慮有機成長與匯率（FX）之前，把用來銜接到 2018 年的 EBITDA 底線估在約 6.5 億美元，這樣是否合理？另外追問，Pharmachem 能帶給你們什麼核心能力？還是說，這更多是為了更廣泛的通路／分銷布局？

Yes, I'll take the first question. And I think it's too early to actually be talking about fiscal '18. We've got a lot of moving parts right now. And as we move through the remainder of fiscal '17, we'll provide more color around what we expect '18 to look like, and we'll also be talking about broader performance targets over the coming several years next Monday at the Investor Day. And so rather than providing what would be or could be a pretty specific number, I'd prefer to hold off on that for a while. It's just too early.

好的，我先回答第一個問題。我認為現在談 2018 會計年度其實還太早。我們目前有很多變動因素。隨著我們走完 2017 會計年度剩餘期間，我們會提供更多細節，說明我們預期 2018 年會是什麼樣子；同時，下週一在投資人日，我們也會談到未來幾年更廣泛的績效目標。因此，與其現在提供一個可能會相當具體的數字，我寧可先暫緩一段時間。現在真的還太早。

And as for the addition of Pharmachem, clearly there is a very complementary component of the business. The overlap of the business in terms of augmenting the range of solutions that we can provide to customers, taking our excipients technology and working in the nutraceuticals area, they have very advanced manufacturing capability in granulation and coal processing, which is very beneficial to us and actually will allow us to do certain activities in-house that we've had to toll in the past. In the flavors and fragrance, that's really brings some new chemistries that will augment our existing portfolio where we offer, for example, encapsulation technology that also helps within that broader realm. So I think their specific technologies that they bring, and they do have very specific chemistry technology they're bringing, along with their know-how and advanced manufacturing capabilities will be very complementary to the businesses that we have, most specifically in the personal care and pharma nutrition.

至於納入 Pharmachem，顯然其業務有非常互補的部分。就業務重疊而言，它能擴充我們可提供給客戶的解決方案範圍；我們可以把賦形劑（excipients）技術延伸到營養保健品（nutraceuticals）領域。他們在造粒與煤炭加工方面具備非常先進的製造能力，這對我們非常有利，並且實際上能讓我們把過去必須委外代工（toll）的某些活動改為內部生產。在香精香料方面，他們帶來一些新的化學技術，可補強我們既有的產品組合；例如我們提供的包覆（encapsulation）技術，也能在更廣泛的應用領域中發揮作用。因此，我認為他們帶來的特定技術——而且確實是非常具體的化學技術——再加上其專業知識與先進製造能力，將與我們現有業務高度互補，尤其是在個人護理與醫藥營養方面。

Our next question comes from John Roberts of UBS.

我們的下一個問題來自 UBS 的 John Roberts。

Could you talk about some of the ASI raw materials? You transferred BDO into ASI and buy cellulose and propylene and some other derivatives there.

能否談談 ASI 的一些原物料？你們把 BDO 轉入 ASI，並在那裡採購纖維素、丙烯以及其他一些衍生物。

Yes, sure, sure. In the quarter, we did see some increase in costs related to BDO transfer from within our own company because, as we described, the raw material costs in that business went up. That represented about $1.5 million worth of the increase. Some other areas where we're seeing some increases really are around cotton linters, which are up a bit due to supply and demand and some activities within China and, in general, dynamics that are going in polypropylene. So we do have some things that are going in our favor. I would describe the raw material market as being a little more volatile. The fact that crude oil is up by about 7.5% versus where we were at the end of the calendar year, those are things that are impacting the raw materials for the business. But what's most important is it's our responsibility, and we are taking actions to offset that raw material inflation, some of which is through pricing, others through cost. And of course, we're trying to drive a premium mix. So I hope that answers your question.

好的，當然可以。在本季，我們確實看到因公司內部 BDO 轉撥而帶來的成本上升，因為如我們所述，該業務的原物料成本上升了。這部分約占增加額的 150 萬美元。另外一些我們看到上升的領域，主要是在棉短絨（cotton linters），由於供需以及中國境內的一些活動而略有上漲；此外，聚丙烯（polypropylene）的整體市場動態也在變化。因此，我們也確實有一些有利因素。我會把原物料市場形容為波動性更高。原油價格較日曆年年底上漲約 7.5%，這些因素都在影響本業務的原物料。但最重要的是，這是我們的責任；我們正在採取行動來抵銷原物料通膨，其中一部分透過定價，另一部分透過成本措施。當然，我們也在努力推動更高溢價的產品組合。希望這回答了你的問題。

Yes. Secondly, does the French deal position Composites as capable of being a core specialty business longer term? Or it just improves its position, but you still, at some point, need to address its role in the portfolio?

是的。第二個問題，這筆法國交易是否讓 Composites 在長期更有能力成為核心的特殊化學品業務？或者它只是改善其競爭地位，但你們仍然在某個時間點需要重新檢視它在投資組合中的角色？

So I'll try to respond to your question, but I would encourage you to -- if you can participate in next week's investor meeting because we will specifically talk to the role of each parts of our portfolio. And I think what's important, first of all, on the acquisition that we're making, again it was very -- under very attractive terms and it provides some really great synergies as we try to drive that business more efficiently and -- while serving our customers. So we believe it'll be very positive or have a very impact -- positive impact on our overall Composites network. As for the role of Composites, I think we've been very clear that the team there actually does a really great job of seeking out specialty portions of the marketplace like the vinyl ester resins that are used in flue gas desulfurization and other activities. We also recognize that there is a volatility or, if you will, there aren't the same margin profile that you have in a specialty chemical company. At the same time, the team has done a really good job of managing their costs down, and so they've been able to improve their contributions to our company. And our focus really is to take that business, which, by the way, also has strong cash generation, and really focus on driving greater, if you will, growth from earnings. We're not looking to make it a more sizable business. It may grow a bit, but we're not looking to make it more sizable per se. But we are -- we do see it as a valuable part of our portfolio. And down the road, we'll assess what makes sense across our entire portfolio. But for today and for the foreseeable future, we see it as an important part of what we do. And again, I wouldn't underestimate the role that they have in terms of providing cash and cash -- a significant portion of that in the U.S. here, where we have some pretty strong cash needs, so.

所以我會嘗試回應你的問題，但我也鼓勵你——如果可以的話——參加下週的投資人會議，因為我們將會特別談到我們投資組合中各個部分各自扮演的角色。而我認為重要的是，首先，關於我們正在進行的這項收購，再次強調，它是在非常——非常有吸引力的條件下完成的，並且在我們努力更有效率地推動該業務、同時服務客戶的過程中，能帶來一些非常好的協同效益。因此我們相信，這將非常正面，或是對我們整體複合材料（Composites）網絡帶來非常——正面的重大影響。至於複合材料的角色，我想我們一直很清楚：那裡的團隊確實非常擅長在市場中尋找專業利基領域，例如用於煙氣脫硫以及其他用途的乙烯基酯樹脂。我們也認知到其存在波動性，或者說，它不像專業化學品公司那樣擁有相同的利潤率結構。同時，該團隊在降低成本方面做得非常好，因此他們已能提升對我們公司的貢獻。而我們的重點確實是把這項業務——順帶一提，它也具有強勁的現金創造能力——聚焦在推動更高的、如果你願意這麼說的話、由獲利帶動的成長。我們並不打算把它做成更大規模的業務。它可能會成長一些，但我們並不是要把它本質上做得更大。但我們——確實把它視為我們投資組合中有價值的一部分。而在未來某個時點，我們會評估在整體投資組合範圍內什麼是合理的。但就今天以及可預見的未來而言，我們認為它是我們所做事情中的重要一環。而且再次強調，我不會低估他們在提供現金與現金——其中相當大一部分是在美國這裡——所扮演的角色；在這裡我們有相當強的現金需求，所以。

And the only other thing that I would add to that is that the business also covers a certain amount of somewhat fixed corporate costs that would have to be otherwise managed out if it weren't in the portfolio. So there's a pretty strong contribution to the overall financial health of the business with regard to that as well.

我唯一還想補充的是，這項業務也承擔了一定程度、某種程度上相對固定的公司總部成本；如果它不在投資組合中，這些成本就必須以其他方式被管理掉。因此，就這一點而言，它對公司整體財務健康也有相當強的貢獻。

Yes, I would just -- and I would just add because you were referencing, I wouldn't -- we're going to share next week a definition of what we think is a true specialty business. And the Composites business has some attributes of it, not all attributes of what we would consider to be a true specialty chemical company business. But I will say that the team is one that has really done a good job of focusing on trying to expand the role of differentiated product sales, which have a higher margin profile within their business. And so they go at it the right way. And I don't think it's -- to me, it's not your average UPR business. I think we've got something that performs at a higher level.

是的，我只是——我也再補充一下，因為你剛才提到，我不會——我們下週會分享我們認為「真正的專業化業務」的定義。而複合材料業務具備其中一些特徵，但並非具備我們認為真正專業化學品公司業務的所有特徵。但我要說的是，這個團隊確實做得很好，專注於努力擴大差異化產品銷售的比重，而這些在其業務內具有較高的利潤率結構。因此他們採取的是正確的做法。而我認為——對我來說——這不是一般的 UPR 業務。我認為我們擁有的是一個表現水準更高的業務。

Our next question comes from David Begleiter of Deutsche Bank.

我們的下一個問題來自德意志銀行（Deutsche Bank）的 David Begleiter。

Bill, in ASI, is it taking longer than you have expected to get pricing through to offset the higher raw material costs?

Bill，在 ASI 方面，把價格調整落實以抵銷較高的原物料成本，是否比你預期花更久的時間？

Well, I mean, first of all, the raw material inflation that we saw and are referencing, really they -- it popped up primarily after the earnings call that we had in January. So it takes a bit of a time to respond. We have annual contracts and other things. We do expect to fully offset the impact of raw material inflation. Some of that will be through pricing and others will be through other cost activities. One of the things that we'll touch on next week is there are areas where we have, we'll say, more pricing leverage within our portfolio and we can move things along more quickly. Pharma and nutrition, personal care would be those areas and certainly, select segments in the industrial market. And then there are some other areas where the reality is that we have to work harder, and the industry as a whole has to see that inflation ultimately ending in raw materials or price increases. So we've got a good split with the majority of what we do, driven by those things where we have some pricing leverage. But like we're going to explain next week, there are pockets where we are somewhat subject to what's going on within our broader industry. As you can imagine, where you use cellulosics -- and I'm getting into some stuff we plan to talk about next week, but where we sell some of that for specialty grade and pharmaceutical materials, it's a lot easier than when we're providing maybe some MC that goes into concrete applications. So that's the scenario or the broader picture. At the same time, we see opportunities, and especially in some of those more price-sensitive areas, to price to value, which I will wait until next week to go into, and, frankly, to make sure that we are running our network very efficiently so that they are not only very competitive, but we can offset inflation of raw materials and make sure we continue to deliver profit growth. So I think that was probably more than you're looking for. We're all geared up for our Investor Day, and these are some of the themes. But to the -- a great extent, we do expect to offset it. Most of that will be through pricing; some will be through some other activities.

嗯，我的意思是，首先，我們看到並且正在提到的原物料通膨，其實——它主要是在我們一月那次財報電話會議之後才突然上升的。所以回應需要一點時間。我們有年度合約以及其他安排。我們確實預期能完全抵銷原物料通膨的影響。其中一部分會透過定價來達成，另一部分則會透過其他成本相關措施。我們下週會提到的一點是：在我們的投資組合中，有些領域我們可以說擁有更大的定價槓桿，因此能更快推動進展。製藥與營養、個人護理會是這些領域，當然還包括工業市場中的特定細分領域。然後還有一些其他領域，現實是我們必須更努力，而整個產業也必須看到這種通膨最終反映在原物料結束上漲或是價格上調上。因此我們的組合分布良好，我們大多數業務是由那些我們具備一定定價槓桿的因素所驅動。但就像我們下週要解釋的，也有一些區塊我們在某種程度上會受到更廣泛產業狀況的影響。你可以想像，當你使用纖維素類產品——我有點講到我們計畫下週要談的內容——但當我們把其中一些賣到專用等級與製藥材料時，這要容易得多；相較之下，當我們提供可能用於混凝土應用的一些 MC 時就沒那麼容易。所以這就是那個情境或更宏觀的圖像。同時，我們也看到機會，特別是在一些對價格更敏感的領域，去做「按價值定價」（price to value）——這部分我會留到下週再深入說明——而且坦白說，也要確保我們的網絡運行得非常有效率，讓它們不僅非常具競爭力，也能抵銷原物料通膨，並確保我們持續交付獲利成長。所以我想這可能比你想要的資訊還多。我們都在為投資人日做準備，這些就是其中一些主題。但在——很大程度上——我們確實預期能把它抵銷掉。其中大部分會透過定價；一部分會透過其他一些措施。

Very clear. And just lastly on ASI, Bill, 4% volume growth in Q2. It was a strong Q1 as well. Is that the type of volume growth sustainable in the back half of the year for ASI?

非常清楚。最後再問 ASI，Bill，第二季銷量成長 4%。第一季也很強。這種銷量成長在今年下半年對 ASI 來說是可持續的嗎？

Well, certainly, we are -- we have seen the growth. And one of the things we'll show next week is that in our core segments, they have been growing. We've talked about this over the years. And now that we have a lot of the static of other items behind us, really I think you'll continue to see volume growth in the aggregate for the business. So yes, I won't say it's going to be 4%. It could be more. It could be less. But we do expect to see volume growth in the second half of the year.

嗯，當然，我們——已經看到這樣的成長。而我們下週會展示的一件事是，在我們的核心細分領域，它們一直在成長。我們多年來一直在談這件事。而現在，當其他事項帶來的許多雜音都已經在我們身後，我認為你會繼續看到整體業務的總體銷量成長。所以是的，我不會說一定會是 4%。可能更高。也可能更低。但我們確實預期在今年下半年會看到銷量成長。

Our next question comes from Chris Parkinson of Credit Suisse.

我們的下一個問題來自瑞士信貸（Credit Suisse）的 Chris Parkinson。

Can you just give us a quick update on your ambitions for a new core product growth across personal care, pharma and coatings? I think you already had a few things in personal care specifically haircare, and I guess coatings last year. But just anything else you're looking at which could benefit the end of the fiscal year or into even a fiscal year '18?

您能否簡要更新一下，您對於在個人護理、製藥與塗料領域推動新核心產品成長的企圖與目標？我想你們在個人護理方面，特別是護髮，已經有一些布局，另外我猜塗料是去年。但還有沒有其他你們正在關注、可能在本財年年底或甚至到 2018 財年帶來助益的項目？

Yes, you bet, Chris. And again, I apologize if I'm -- and I'm not pushing off these questions. Next week, you're going to hear from each one of the business leaders. And in their presentations, you're going to hear about some specific products which are having an impact on our sales today and will in the future. I mean, ultimately, we need to drive and we're targeting 30% of our sales from new and proprietary products. And we believe that that's essential to allowing us to offset, if you will, other elements of the portfolio that just naturally mature over time. And so I would say since we have specific case examples next week, I'd rather talk to them there. But the opportunity I referenced before where -- N-DurHance, where we were able to introduce a product which is based upon our hybrid technology, something we've been talking about, and really is unique, unique in the terms that it penetrates the hair and actually heals from within, this is different technology, a different approach than other materials which tend to deal with issues on the surface of the hair. And we have a number of large end customers who are actively working to formulate that into their end products. So if I can, I'll defer more specific detail because that'll be a, I think, a pretty important part of our presentation next week, and you'll get that granularity that I think you're looking for.

是的，當然，Chris。再次說明，如果我——我也先致歉；我並不是在迴避這些問題。下週你們會聽到每一位事業部領導人的分享。在他們的簡報中，你們會聽到一些具體產品，這些產品目前已對我們的銷售產生影響，未來也會持續。我的意思是，最終我們需要推動並且目標是讓 30% 的銷售來自新產品與自有專有產品。我們相信這對於讓我們抵銷（如果你願意這麼說）投資組合中其他隨時間自然成熟的部分，是不可或缺的。因此我會說，既然下週有具體案例，我寧可到那時再談。不過我先前提到的機會——N-DurHance，我們能夠推出一項基於我們混合技術的產品，這也是我們一直在談的，而且確實是獨特的；其獨特之處在於它能滲透進髮絲並從內部修護，這是不同的技術、不同於其他材料的做法，後者往往只處理頭髮表面的問題。我們有多家大型終端客戶正積極將其配方導入他們的終端產品中。所以如果可以的話，我先保留更具體的細節，因為我認為那會是我們下週簡報中相當重要的一部分，你也會得到你所尋求的那種細緻程度。

Still fair. And also just very quickly on your M&A strategy, can you just give any broad highlights without spoiling anything for next week regarding your new F&F exposure gain from Pharmachem, as well as elaborate on your previous comments regarding the pharma end market. I guess that's also been a focus? I'm sure you're always searching across your entire portfolio, but these 2 seem like they could be an area of focus. So do you have any general thoughts as we progress forward?

了解。另外也想很快問一下你們的併購（M&A）策略：在不影響下週內容的前提下，能否概括說明一下，透過收購 Pharmachem 你們在香精香料（F&F）曝險/布局的提升，以及也請進一步說明你先前對製藥終端市場的評論。我猜那也是你們的重點？我相信你們一直在整個投資組合中尋找機會，但這兩個看起來可能會是重點領域。所以隨著我們往前推進，你有沒有一些整體性的看法？

Well, certainly, and it's important to note that as we complete the acquisition of Pharmachem, one of our first and foremost priorities is to onboard that business smoothly to make sure, of course, we sustain safe and responsible operations as they have. And it's important to us that we keep our customers happy and that we keep our employees engaged. And we have lots of ideas for, if you will, commercial synergies, technology synergies where the businesses can complement each other. But I'd also emphasize that as we justify the acquisition, the criteria that we use didn't include any of those potential benefits. It was really based upon cost and tax base synergies and feel very good about the associated returns because of that. So in the pharma market, I think what you'll hear is that there really are some new pockets leveraging some of our core technologies. For example, we've really grown our cellulosics portion of our portfolio in the pharma sales, giving new functionality in the market space. We do see emerging mega trends, which allow us to move forward with a variety of new, very close adjacent technologies, which we're working on and, frankly, Pharmachem will help us with. In the personal care area, biofunctionals are becoming a more and more important part of what we do, and we think we're very well positioned with the work that's been done over the course of the last several years. So I hope I got your question there. And if not, please clarify and I'll try to clarify for you.

當然可以，而且需要強調的是，當我們完成對 Pharmachem 的收購後，我們首要且最重要的優先事項之一，是讓該業務順利導入（onboard），以確保——當然——我們能如同他們以往一樣，維持安全且負責任的營運。對我們而言，讓客戶滿意、讓員工保持投入都很重要。我們對於（如果你願意這麼說）商業協同、技術協同有很多想法，讓兩個事業能彼此互補。但我也要強調，當我們論證這項收購時，所使用的評估標準並未包含任何這些潛在效益。它真正是基於成本與稅基協同，因此我們對相關報酬非常有信心。至於製藥市場，我想你們會聽到的是：確實存在一些新的利基領域，正在運用我們的核心技術。例如，我們在製藥銷售中大幅擴充了投資組合中的纖維素（cellulosics）部分，為市場空間帶來新的功能性。我們也看到正在浮現的巨型趨勢（mega trends），使我們能以多種新的、非常相鄰的技術向前推進；我們正在投入，而坦白說，Pharmachem 也會在這方面協助我們。在個人護理領域，生物功能性成分（biofunctionals）正成為我們工作中愈來愈重要的一部分，我們認為憑藉過去幾年的努力，我們已處於非常有利的位置。希望我有回答到你的問題。如果沒有，請再釐清一下，我也會再為你說明。

Our next question comes from Jim Sheehan of SunTrust Robinson Humphrey.

我們的下一個問題來自 SunTrust Robinson Humphrey 的 Jim Sheehan。

With respect to ASI raw materials, looks like you've got some exposure there to propylene and butane as well as cotton linters that have moved up on you. But the propylene and butane prices seem to have fallen in the last few weeks here and maybe, that cost pressure is dissipating. Can you talk about just the overall cost pressure you're seeing and whether in the current quarter, if that has eased considerably since last quarter?

就 ASI 原材料而言，看起來你們對丙烯與丁烷，以及近期上漲的棉短絨（cotton linters）都有一些曝險。但丙烯與丁烷價格在過去幾週似乎下跌了，或許成本壓力正在消退。你能談談你們看到的整體成本壓力，以及在本季是否相較上季已明顯緩解嗎？

Certainly. And that is good news. I'll point out another one that we -- last year, the euro was at $1.13. And when we started a month ago, it was down at about $1.05, $1.06. We've seen a nice recovery, which is reflected in our forecast here. But from a raw material standpoint, we have projected forward, and we just had a detailed review, what we think is a balanced view as to those prices going forward, and reflected that in our outlook. Like you, we would love to see some of these raw materials continue to go down and have that work its way through the -- through to the raw material. And we hope that, that will be the case, but we also use a phrase here that hope is not a strategy. So we're going with the best information we have right now, and it would be great if we could see some upside and it's possible. But there has been volatility. I mean, in January, a lot of what we're talking about wasn't as prominent. And so we've seen some big spikes up and then we've seen some relief. Certainly, with the butane, that reduction is helping. That's part of what we were referencing in terms of the BDO business. That will help the BDO business as it goes forward and was part of what allowed us or made us feel more comfortable raising our outlook for that part of the business. So...

當然。而這是個好消息。我再指出另一點：去年歐元在 1.13 美元。而我們一個月前開始時，歐元跌到大約 1.05、1.06 美元。我們看到不錯的回升，這也反映在我們這裡的預測中。但就原材料而言，我們已向前推估，並且剛做過一次詳細檢視；我們認為這是對未來價格的平衡看法，並已反映在我們的展望中。和你一樣，我們也很希望其中一些原材料能持續下跌，並讓這個影響一路傳導——傳導到原材料成本上。我們希望如此，但我們這裡也常用一句話：希望不是策略。所以我們會依據目前掌握的最佳資訊來做判斷；如果能看到一些上行驚喜會很棒，而且也有可能。但確實存在波動。我的意思是，在一月時，我們現在談的很多事情還沒那麼明顯。因此我們看到一些大幅上衝，之後也看到一些緩解。當然，丁烷的下降正在帶來幫助。這也是我們在談到 BDO 業務時所提及的一部分。這將在 BDO 業務後續發展中提供助益，也正是其中一部分原因，使我們能夠——或讓我們更有信心——上調該業務部分的展望。所以……

And ultimately, if those lower prices sustain over time, they'll -- they will work through inventory, as Bill indicated. It's been the volatility of some of those raws up and down that caused us to, I guess, be perhaps a bit cautious in terms of the second half of the year.

而且最終，如果那些較低的價格能在一段時間內維持，它們——正如 Bill 所指出的——會透過庫存逐步反映出來。正是某些原料價格上下波動的情況，讓我們在談到下半年時，我想，可能會稍微保守一些。

In cellulosics, do you have any ability to switch from using cotton linters to wood pulp?

在纖維素材料方面，你們是否有能力從使用棉短絨改為木漿？

We do have some flexibility. And to a great degree, it depends upon the specific applications that we're working with in some of the very high-performance areas. You're really limited to a specific set of raw materials that you've qualified in the product. Other areas, we do have more flexibility, and that -- as we're referencing, that's part of making sure that even with the type of volatility that you can see in raw materials, that we find effective ways to offset it. So that's certainly something the team is looking at. And we're also engaging our research team, which is very capable in terms of developing new technologies, but it also has really great capabilities to, if you will, evolve our formulations. And they're spending more time and energy trying to help us improve our manufacturing processes and the related costs and look at raw material substitutions that can optimize our formula from a cost standpoint. And we think that's an important component of success going forward.

我們確實有一些彈性。而且在很大程度上，這取決於我們在某些高性能領域所合作的特定應用。在那些情況下，你確實會受限於你已在產品中完成認證的一組特定原料。在其他領域，我們的彈性更大；而且——如我們所提到的——這也是確保即使原料出現你可能看到的那種波動，我們仍能找到有效方式加以抵消的一部分。所以這當然是團隊正在評估的事項。我們也正在與研發團隊合作；他們在開發新技術方面能力很強，同時也具備非常出色的能力來（如果你願意這麼說）演進我們的配方。他們投入更多時間與精力，協助我們改善製造流程與相關成本，並評估可替代的原料，以從成本角度優化我們的配方。我們認為這是未來成功的一個重要組成部分。

Finally, are you seeing any rebound in your energy business?

最後，你們的能源業務有看到任何回升嗎？

We are. We are. That business was up pretty substantially, if you will, over the prior year. I'm just taking a quick look in quarter 2. If you give me just one second here because I have it. I believe it's around 9% that we saw an increase in energy. So -- right, it's up. I'm just taking a look here. More like 5%, 6% in energy. And so that's great to see. And it's not the portion of our portfolio that it once was. And frankly, because of the cyclicality, we're not trying to make it front and center in our strategic focus. On the other hand, it's really great to help on the volume side. And when you see that demand increases, it not only helps us because we get additional revenue. But when you look at cellulosics' capability around the globe, a significant part of that goes to energy applications. And so when demand picks up, that means that there's greater utilization of those assets. And when there's greater utilization of those assets, that does affect supply-demand dynamics in some of these areas which are a little bit more price sensitive. So it's a good trend. And I wouldn't say it materially moved the needle for us, but as it continues, it could have a healthy effect on our business in total.

有的。有的。如果你願意這麼說，該業務相較於前一年有相當顯著的成長。我快速看一下第二季的數字。請給我一秒鐘，因為我手上有資料。我相信能源業務的增幅大約在9%左右。所以——對，確實上升了。我再看一下。更像是能源業務成長了5%、6%。所以看到這點很棒。而且它已不再是我們投資組合中曾經那麼大的部分。坦白說，因為其循環性，我們並不打算把它放在策略重點的最前端。另一方面，它在出貨量（volume）方面確實很有幫助。當你看到需求增加時，不僅因為我們獲得額外營收而對我們有利。而且當你看纖維素業務在全球的產能時，其中相當大一部分用於能源應用。因此當需求回升，就意味著那些資產的利用率更高。而當那些資產的利用率更高時，確實會影響某些領域的供需動態，而那些領域對價格更敏感。所以這是一個好的趨勢。我不會說它對我們有實質性地改變局面，但如果這種趨勢持續下去，可能會對我們整體業務帶來正面的影響。

And just to put it in perspective, on a trailing 12 basis, energy is about 2% of ASI revenue.

另外補充一下作為參考，以過去12個月（trailing 12）計算，能源約占ASI營收的2%。

Our next question comes from Mike Harrison of Seaport Global Securities.

下一個問題來自Seaport Global Securities的Mike Harrison。

Bill, I was wondering if you could talk a little bit about the integration process within -- with Pharmachem. If you look back, it predates your time with the company. But when Ashland acquired the ISP business, the integration with the Hercules assets was expected to be kind of a home run. And really, I think the execution, you could say, didn't go very well. So I was wondering if you could talk a little bit about what lessons were learned during that process and how you're going to avoid some of the mistakes of the past, particularly as we look at new product commercialization in that process.

Bill，我想請你談談與Pharmachem之間的整合流程。回頭看，這件事發生在你加入公司之前。但當Ashland收購ISP業務時，原本預期與Hercules資產的整合會是一個「全壘打」。但實際上，我認為你可以說執行得並不理想。所以我想請你談談在那個過程中學到了哪些教訓，以及你們將如何避免過去的一些錯誤，特別是當我們看該流程中的新產品商業化時。

Sure, sure. What I would say is-- and I'm -- I wasn't here, so I really don't have anything. Perhaps Kevin could comment on the ISP integration. But what I can tell you in this case, and I referenced our priorities going forward, we think that the businesses that we're acquiring are strong with strong leadership. And we recognize that while they're very complementary, that their imperatives are a bit different than the imperatives that we have for success in some of our other markets. And so we will have an integration manager, of course, and we will be, if you will, setting really clear guidelines that our goal is to not make any major adjustments in the business for at least a 6-month period. And then after that, once the Pharmachem team knows Ashland a little better and we know Pharmachem a little better, then we'll think of what steps make sense and what the appropriate timing is to get at some of the synergies that we'd like to see, whether they be cost or revenue based. But I think we start from a position -- and again, this isn't in contrast to ISP, it's just in general -- of respecting the team and their business and not coming in with the hubris to think that we know their business better and we can drive lots of fast synergies. We want to be very methodical about this, and the business is a healthy business. We're not looking to overwhelm it and make it Ashlanized. I mean, we feel very good about what that means, what Ashland means. I don't mean to imply anything bad, but we've got to make sure we support what has made this business have a really strong track record of continued growth and success. And so I can't comment so much before, but, hopefully, you pick up from that attitude the way we're going at it. And I think that's a real key to success in this particular case.

當然，當然。我想說的是——而且我——我當時不在這裡，所以我其實沒有什麼（第一手）資訊。也許Kevin可以評論一下ISP的整合。但就這個案例而言，我可以告訴你的是——我也提到我們未來的優先事項——我們認為我們正在收購的業務本身很強，且具備強而有力的領導團隊。我們也認知到，雖然它們彼此非常互補，但它們的當務之急與我們在其他市場取得成功所需的當務之急略有不同。因此我們當然會設置一位整合經理；同時我們也會（如果你願意這麼說）訂定非常清楚的指引：我們的目標是在至少6個月內不對該業務做任何重大調整。之後，當Pharmachem團隊更了解Ashland、而我們也更了解Pharmachem之後，我們再來思考哪些步驟是合理的，以及要在什麼適當的時點去實現我們希望看到的一些協同效益，不論是成本面或營收面。但我認為我們是從一個立場出發——再次強調，這不是在對比ISP，只是一般原則——就是尊重團隊與他們的業務，不帶著自負地認為我們更懂他們的業務，並且可以快速推動大量協同效益。我們希望非常有條不紊、循序漸進地進行，而這是一個健康的業務。我們不打算用過度的方式去壓垮它，讓它被「Ashland化」。我的意思是，我們對「Ashland代表什麼」感到非常良好。我不是要暗示任何不好的意思，但我們必須確保我們支持那些讓這項業務擁有非常強勁、持續成長與成功紀錄的因素。所以我無法太多評論過去，但希望你能從我們的態度看出我們將如何推進。我認為這在這個特定案例中是成功的關鍵。

Yes, and I'll comment on the ISP piece. I think if I would probably have one item to put on the table, I think we underclubbed the cultural aspects of the integration. And the amount of time and effort perhaps that was put into that was less than it should have been. Part of that, I think, had to do with the fact that we were still moving down a transformation path, and that was very much the culture of Ashland at the time. And one of the things that I think is very encouraging about where we sit today is we've done a lot of work over the past year, 1.5 years around really looking at what we want the new Ashland to be culturally as one organization, one team all rowing, pulling in the same direction with the same objectives. And I think that we're in a much, much better position today from a cultural aspect than we were 5, 6 years ago when we pulled ISP into the company. So that's -- if I would chalk it up to one item, that would be it.

是的，我來評論一下ISP的部分。如果要我提出一點放到檯面上，我想我們低估了整合中的文化面向。而且在那方面投入的時間與精力，可能比應該投入的還要少。我認為部分原因在於，當時我們仍在推動轉型路徑，而那在當時非常是Ashland的文化。我覺得很令人鼓舞的一點是，就我們今天所處的位置而言，過去一年到一年半，我們做了很多工作，真正去檢視我們希望「新的Ashland」在文化上成為什麼樣子：作為一個組織、一個團隊，大家同心協力、朝同一個方向划槳、拉動，並且有相同的目標。我認為就文化面而言，我們今天所處的位置，比起5、6年前把ISP納入公司時要好得多、好得多。所以——如果要我把它歸結為一個項目，那就是這一點。

And then just curious on the pricing approach in ASI. I was wondering if you can give a little more detail on how that's changed. I think it's been a few years since you had to go out and get pricing. You've had some changes in some of the competitive dynamics, particularly in personal care. And then, obviously, internally, there's an increasing drive to -- toward more specialty products. Can you just talk about how much traction and how confident you are that you're going to be able to get the pricing that you need? And is it something that's going to take a 3- to 6-month-type time frame? Or could it be a longer-term time frame?

接著我只是好奇 ASI 的定價策略。我想請你再多提供一些細節，說明這方面有哪些改變。我認為你們已經有好幾年不需要出去爭取定價了。你們在競爭態勢上也有一些變化，特別是在個人護理領域。另外，顯然在內部也越來越推動——朝向更多特用產品。你能否談談你們目前取得進展的程度，以及你們有多有信心能拿到所需要的價格？這會是大約 3 到 6 個月的時間框架嗎？還是可能是更長期的時間框架？

Yes. So first of all, I would say that as we more or less referenced a few minutes ago, that we have a range of products and value propositions. And in those areas which are most differentiated we think that we can reasonably pass along price increases. I think in -- that fits pharma. That fits personal care well or at least a great majority of it. And I think it also impacts the industrial business. But in the industrial business, I think you do have some more price-sensitive areas where we are part of the market. We're a leader in the market. We've announced price increases, and we're working hard to get them. I guess from my perspective, our job, ultimately, is to get those price increases or, in those areas where there's more sensitivity and we see inflation, to drive the costs so that we offset anything we can't pass along. Or we look at -- and this will be part of what we discussed -- things that were offerings that we've done more of in the past because they were extreme premium markets where we can focus on making sure that customers pay for specific services that we used to get for free. And so there are a variety of techniques that we can use to sustain and grow the profitability much easier where you've got pricing leverage, but I think it's the whole equation as it relates to our business. And so I think the pricing activities, you'll -- we should see impact over the next 3 to 6 months. And in the cost area and how we operate the business, as you'll hear next week, we're working hard on those today, and we think we've got some real action levers in those areas. And it's not just cutting SG&A, it's really how we operate the business.

是的。首先，我會說，正如我們幾分鐘前或多或少提到的，我們有一系列產品與價值主張。在差異化程度最高的領域，我們認為可以合理地把漲價轉嫁出去。我想——這適用於製藥。這也很適用於個人護理，或至少其中絕大多數。我認為這也會影響工業業務。但在工業業務中，我認為確實有一些對價格更敏感的領域，而我們也在那個市場中。我們是市場領導者。我們已宣布漲價，並且正努力爭取落實。以我的角度來看，我們的工作最終就是要拿到這些漲價；或者在那些敏感度較高、且我們看到通膨的領域，推動成本改善，以抵消任何我們無法轉嫁的部分。或者我們會看——這也會是我們討論的一部分——一些我們過去做得更多的方案，因為那是極高溢價的市場，我們可以聚焦在確保客戶為特定服務付費，而這些服務以前我們是免費提供的。因此，我們有多種技巧可以用來維持並提升獲利；在有定價槓桿的地方會容易得多，但我認為這是與我們業務相關的整體方程式。所以我認為，定價行動的效果，你們應該會在接下來 3 到 6 個月看到影響。而在成本面以及我們如何營運業務方面，正如你們下週會聽到的，我們今天就在努力推進，我們認為在那些領域有一些真正可採取行動的槓桿。而且不只是削減 SG&A，而是更關乎我們如何營運這門生意。

(Operator Instructions) Our next question comes from Dmitry Silversteyn of Longbow Research.

(接線員指示) 我們的下一個問題來自 Longbow Research 的 Dmitry Silversteyn。

A couple of questions, if I may. First of all, just looking at the growth that you guys are delivering in Composites, mid-single-digit volume growth. I think you talked about -- you mentioned the sort of the flue exhaust as one of the areas of growth and rolling out vinyl resins. Can you talk about sort of what other industries or end markets are driving the Composites growth? My understanding is the wind market is not being particularly strong this year, and I think that was an area of growth for you. So what is it your team doing in terms of broadening the approach or getting deeper into the markets that's leading to this mid-single-digit growth?

如果可以的話，我有幾個問題。首先，看看你們在複合材料（Composites）交出的成長，中個位數的銷量成長。我想你們談到——你提到煙道廢氣（flue exhaust）是成長領域之一，以及推出乙烯基樹脂（vinyl resins）。你能否談談還有哪些產業或終端市場在推動複合材料的成長？我的理解是今年風電市場並不是特別強，而我認為那曾是你們的成長領域。所以你們團隊在拓寬策略或更深入市場方面做了什麼，才帶來這樣的中個位數成長？

Sure, sure. And I guess I would -- while you're asking about end markets, and those do add up and matter, in this particular business, we've really seen some nice growth year-over-year in China and the rest of Asia. And so I think that that's an important area or region where we're seeing greater strength and activity. In addition, we are a leader and an innovator in the area of providing materials for the engineered stone, the countertops we got to pay premium for in the marketplace, and we really work and develop a range of solutions to enable our manufacturers. And it's interesting because initially, that technology that we provided helped to create the product. And then now, it's focused on things like stain resistant, getting more production through existing assets. So really trying to stay ahead and continue to add value in that segment. So that's one where I think we can point and say we've seen some growth. We've seen some growth in transportation-related applications, and that's not just because they're creating more vehicles but because the work we're expecting on some really interesting applications we'll talk about next week. And again, those are areas where we're more differentiated in terms of what we offer. So between the regional component and some of those niche growth markets that the team has innovated in, I think that covers the 5% we've seen. And of course, the revenue growth also includes some impact of increasing prices. So that's why there's a differential there.

當然，當然。我想——雖然你在問終端市場，而那些確實加總起來很重要——但在這個特定業務中，我們確實看到中國以及亞洲其他地區的年對年成長相當不錯。所以我認為那是一個重要的領域或區域，我們在那裡看到更強的動能與活動。此外，我們在提供工程石材（engineered stone）材料方面是領導者也是創新者——也就是市場上檯面（countertops）需要付溢價的那種——我們確實投入並開發一系列解決方案來協助我們的製造商。很有意思的是，一開始我們提供的技術是用來創造這個產品。而現在則聚焦在例如抗汙（stain resistant）、在既有資產下提升產出等。所以是在那個區隔中努力保持領先並持續增加價值。因此這是一個我們可以指出並說我們看到一些成長的領域。我們也在運輸相關應用看到一些成長，這不只是因為他們在生產更多車輛，而是因為我們在一些非常有趣的應用上所期待的工作——我們下週會談到。同樣地，這些都是我們在供應內容上更具差異化的領域。所以在區域因素加上一些團隊創新出的利基成長市場之間，我想這就涵蓋了我們看到的 5% 成長。當然，營收成長也包含了部分漲價帶來的影響。所以這就是為什麼兩者之間會有差異。

Got you, got you. That's very helpful. And then just a broader question, I guess, on the quarterly results. Your revenues in both segments sort of exceeded at the high end of the guidance that you provided heading into the next quarter, but your EBITDA margins were below the low end of the guidance that you provided for the quarter. Is it all just a function of raw material pricing timing? Or is there some mix or, I don't know, inefficiencies or yields or something creeping in why the results were what they were?

了解，了解。這很有幫助。接著我想問一個更宏觀的問題，關於季度結果。你們兩個事業部的營收都超過了你們在進入下一季前所提供指引的高端，但你們的 EBITDA 利潤率卻低於你們對該季度指引的低端。這完全只是原物料價格時點的因素嗎？還是有一些產品組合、或我不知道，效率不彰或良率之類的因素在浮現，導致結果會是這樣？

Yes, I mean, I certainly would point to raw materials and FX as being important drivers of what we do. But I also just say we want to talk about the actions that we take to overcome the challenges that come before us. So yes, we can provide you a bridge and show you that those were things that offset the impact of volume or at least significantly. But we have other levers that we need to pull, and that's really what we're focused on.

是的，我的意思是，我當然會指出原物料與匯率（FX）是我們表現的重要驅動因素。但我也想說，我們希望談談我們為了克服眼前挑戰所採取的行動。所以是的，我們可以提供你一個調節表（bridge），並向你展示那些因素確實抵消了銷量的影響，或至少在很大程度上抵消。但我們還有其他需要拉動的槓桿，而那才是我們真正聚焦的地方。

Okay. All right, fair enough. And then final question on the EMEA ASI segment. I haven't heard you guys talk about the adhesives business. The adhesives business you have. That was an area of strength in the past. Can you sort of talk to what's going on there now and what's your -- kind of how does it work in your outlook and for the second half of the year?

好的。好吧，合理。最後一個問題關於 EMEA 的 ASI 事業部。我沒有聽到你們談到黏著劑（adhesives）業務。你們有的那個黏著劑業務。那在過去是一個強項領域。你能否談談現在那邊的情況，以及它在你們展望中——尤其是今年下半年——是如何反映與運作的？

Yes, certainly. And when we go through the market section next week of our businesses, we're going to share our broader thesis and then go a little deeper into the respective markets. We'll break out adhesives because it really is different than a lot of the other things we do within the industrial business. And this is a business that has had and/or we anticipate having continued sales growth. So we're continuing to grow. It's been a good growth story, which you'll see. And it faces its own challenges when it comes to raw material inflation. There's some raw material inflation. We have to make sure that that's fully digested and appreciated, that dynamic with our customers. But they continue to grow their sales and do it through -- we break it into market growth and share gain. And the markets are growing, but we also see us picking up some share in those spaces as well.

是的，當然。而當我們下週在業務的市場章節中逐一檢視時，我們將分享更廣泛的投資論點，並進一步更深入探討各個市場。我們會把黏著劑業務單獨拆出來，因為它確實不同於我們在工業業務中所做的許多其他事情。而這是一項過去已經、且/或我們預期將持續實現銷售成長的業務。因此我們會持續成長。這一直是個不錯的成長故事，你們會看到的。而在原物料通膨方面，它也面臨自身的挑戰。確實存在一些原物料通膨。我們必須確保這一點能被我們的客戶充分消化並理解這種動態。但他們仍持續提升銷售，而且是透過——我們把它拆分為市場成長與市占提升。市場在成長，但我們也看到自己在那些領域同樣正在取得一些市占。

Our next question comes from Mike Sison of KeyBanc.

我們的下一個問題來自 KeyBanc 的 Mike Sison。

When you think about ASI, the guidance has, I guess, turned a little bit despite pretty good volume growth. Is that more a function that you'll sort of get what you need in pricing and would have picked that up in the December quarter or maybe in early parts of fiscal '18?

當你談到 ASI 時，儘管銷量成長相當不錯，但我想指引似乎有點轉弱。這是否更多是因為你們在定價上會拿到所需的幅度，而這原本會在 12 月季度或可能在 2018 財年初期反映出來？

Yes. So I think in that area, we obviously for the year took the bottom end of the range up, but we're including what we think will be some contribution from Pharmachem in the fourth quarter. We, like you, would have anticipated being more towards the middle of our range, right, which we put out earlier in the quarter. And as we mentioned, we have -- we've had some dynamics that have gone against us. Some of those are a little less prominent now. It's good to see the dollar strengthening even though for the -- this quarter, this calendar quarter last year, the euro average, I believe, was $1.13. And so we're still a bit below that. And so yes, I mean, our actions are to drive things we've talked about, including pricing, and offset those. We didn't see it in this quarter. We're going to have some impact next quarter more than we have this quarter. I think it'll take 1 quarter or 2 if we look just on the pricing front to kind of work that through the whole equation. But the other dynamic is it could come a little quicker if -- what we're talking about earlier, if raw materials start to fall a little bit because of these other dynamics. That takes that pricing challenge -- it's a little bit different in terms of the degree. And I'd emphasize sometimes, when you don't move these things forward day 1, it's because a lot of our business is done through quarterly contracts or annual contracts. And they're not spot purchases, which you know. So we can't -- I mean in the extreme, I suppose we can go to consumers, but it's hard to go in and say, "well, we've got an increase today, and so tomorrow your price is going up." And it takes real work, real work, hard work, to -- and to justify it because there are always competitors out there who, for whatever reason, are hungry to be opportunistic because it's incremental to them. So yes, I think it will build, and it's our job to offset it, so.

是的。所以我認為在那個領域，我們顯然把全年區間的下緣上調了，但我們也納入了我們認為 Pharmachem 在第四季會帶來的一些貢獻。我們和你一樣，原本預期會更接近我們區間的中位數，對吧，也就是我們在本季稍早提出的那個區間。而如我們提到的，我們有——我們遇到了一些對我們不利的動態因素。其中一些現在已不那麼明顯。很高興看到美元走強，儘管就——去年這個日曆季度，歐元平均匯率我相信是 1.13 美元。因此我們仍略低於那個水準。所以是的，我的意思是，我們的行動就是推動我們談過的事項，包括定價，並加以抵銷那些影響。我們在本季沒有看到它反映出來。我們在下一季會受到的影響會比本季更大。我認為如果只看定價面，可能需要 1 季或 2 季，才能把它在整個方程式中消化完。但另一個動態是，如果——如我們先前談到的，如果因為這些其他因素使原物料開始稍微下跌，可能會更快一些。那會讓定價的挑戰——在程度上會有些不同。我也要強調，有時候你沒有在第 1 天就把這些往前推，是因為我們很多業務是透過季度合約或年度合約來進行。而不是即期採購，你也知道。所以我們不能——我的意思是，在極端情況下，我想我們可以去找消費者，但很難走進去說：「嗯，我們今天漲價，所以明天你的價格就要上調。」而這需要真正的努力，真正的努力、辛苦的努力——並且要能合理化，因為總是會有競爭對手出現，他們不管出於什麼原因，都很渴望趁機而為，因為對他們而言那是增量。所以是的，我認為它會逐步累積，而我們的工作就是把它抵銷掉，就這樣。

Okay, great. And as a quick follow-up, the $10 million to $15 million, I think you talked about for Pharmachem, is that a good run rate on an annualized basis for the additions?

好的，很棒。再快速追問一下，你提到 Pharmachem 的 1,000 萬到 1,500 萬美元，我想那是新增部分按年化計算的一個合理的運行水準（run rate）嗎？

Yes, we've sized that to be around $60 million at this point based on our diligence and the things that went into us ultimately agreeing to buy the business. We don't feel like there's, number one, cyclicality and, frankly, number two, not much seasonality in the business either. And so we'll give more color on that as we move forward with closing it and getting to know it much, much better. But that's probably the way you should think about it at this point.

是的，根據我們的盡職調查以及最終促使我們同意收購該業務的各項因素，我們目前把它的規模估在大約 6,000 萬美元。我們認為，第一，它沒有景氣循環性；坦白說，第二，這項業務也沒有太多季節性。因此，隨著我們完成交割並更深入、更充分地了解它，我們會提供更多細節。但就目前而言，你大概可以這樣來看待。

There are no further questions. I'd like to turn the call back over to Seth Mrozek for any closing remarks.

目前沒有其他問題。我想把電話交回給 Seth Mrozek，請他做任何結語。

Thank you very much, Michelle. Thank you very much, everyone, for your time this morning, and thank you for your interest in Ashland. I hope everyone has a great day. Bye-bye.

非常感謝你，Michelle。也非常感謝各位今天早上的時間，並感謝各位對 Ashland 的關注。祝大家有美好的一天。再見。

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.

各位女士、先生，感謝各位參與今天的電話會議。本次議程到此結束，各位可以掛線。祝大家有美好的一天。