Ashland Inc. (ASH) 2019 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Ashland Global Holdings Inc. First Quarter Earnings Call.

各位女士、各位先生，大家好，歡迎參加 Ashland Global Holdings Inc.第一季財報電話會議。

(Operator Instructions) As a reminder, this conference is being recorded.

(接線員指示) 提醒各位，本次會議將被錄音。

I would now like to introduce your host for today's call, Mr. Seth Mrozek, Director of Investor Relations.

現在我很榮幸介紹今天電話會議的主持人：投資人關係總監 Seth Mrozek 先生。

Mr. Mrozek, you may begin.

Mrozek 先生，您可以開始。

Thank you, Cherrie. Good morning, everyone, and welcome to Ashland's First Quarter Fiscal 2019 Earnings Conference Call and Webcast.

謝謝你，Cherrie。各位早安，歡迎參加 Ashland 2019 會計年度第一季財報電話會議與網路直播。

My name is Seth Mrozek, Director, Ashland Investor Relations. 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.

我叫 Seth Mrozek，Ashland 投資人關係總監。今天與我一同參與電話會議的有：Ashland 董事長兼執行長 Bill Wulfsohn，以及資深副總裁兼財務長 Kevin Willis。

We released preliminary results for the quarter ended December 31, 2018, shortly after 5:00 p.m. Eastern time yesterday, February 5. Additionally, we posted slides to our website ashland.com, under the investor relations section; and have furnished each of those documents to the SEC in a Form 8-K.

我們已於昨日（2 月 5 日）美東時間下午 5 點過後不久，發布截至 2018 年 12 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簡報投影片；並已以 8-K 表格將上述各文件提交給美國證券交易委員會（SEC）。

As a reminder, during today's call, we will be making forward-looking statements on a number of matters, including our financial guidance for fiscal 2019. These forward-looking statements are subject to risks and uncertainties that could cause future results or events to differ materially from today's projections. We believe any such statements are based on reasonable assumptions but cannot assure that such expectations will be achieved. Please refer to yesterday's slide presentation for a fuller explanation of those risks and uncertainties and the limits applicable to forward-looking statements.

提醒各位，在今天的電話會議中，我們將就多項事項發表前瞻性陳述，包括我們對 2019 會計年度的財務指引。這些前瞻性陳述受到風險與不確定性影響，可能導致未來結果或事件與今日預測存在重大差異。我們相信任何此類陳述係基於合理假設，但無法保證相關預期一定能達成。請參閱昨日的投影片簡報，以取得對這些風險與不確定性以及前瞻性陳述適用限制的更完整說明。

Please also note that we will be referring to certain actual and projected financial metrics of Ashland on an adjusted basis, which are non-GAAP financial measures. We will refer to these measures as adjusted and present them in order to supplement your understanding and assessment of the financial performance of the ongoing business. Non-GAAP measures should not be considered a substitute 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 yesterday's slide presentation.

另請注意，我們將以調整後口徑（adjusted）引用 Ashland 的部分實際與預估財務指標；此等指標屬於非 GAAP 財務衡量。我們將稱之為調整後指標，並提出以補充各位對持續經營業務財務表現的理解與評估。非 GAAP 指標不應被視為依 GAAP 計算之財務指標的替代或更優指標。與之最直接可比的 GAAP 指標，以及非 GAAP 指標與該等 GAAP 指標之調節表，均可於我們網站及昨日投影片簡報的附錄中取得。

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

接下來，我把電話交給 Bill。

Thank you, Seth. And good morning, everyone. Thank you for calling in to Ashland's First Quarter Fiscal Year 2019 Earnings Call.

謝謝你，Seth。各位早安。感謝各位撥冗參加 Ashland 2019 會計年度第一季財報電話會議。

In May 2017, we shared our strategic vision to become the premier specialty chemical company. That plan had 3 core financial performance targets driven by 7 core operating levers. This is the seventh quarter since we presented our Investor Day in 2017. In each of those quarters, Specialty Ingredients has reported organic year-over-year adjusted EBITDA growth excluding any benefit of currency and acquisitions. In addition, we have improved Specialty Ingredients adjusted EBITDA margin year-over-year in each of the last 4 quarters. In fiscal year '19 Q1, we continued those trends. In the quarter, like other companies, we saw some choppy market conditions and experienced unfavorable foreign currency translation. Still we delivered solid gains relative to each of our 3 core financial deliverables.

2017 年 5 月，我們分享了成為頂尖特用化學品公司的策略願景。該計畫有 3 項核心財務績效目標，並由 7 項核心營運槓桿所驅動。自 2017 年投資人日發表以來，這是第七個季度。在上述每一個季度中，特用原料（Specialty Ingredients）在排除匯率與併購帶來的任何效益後，均呈現有機的年對年調整後 EBITDA 成長。此外，在過去 4 個季度中的每一季，我們都年對年提升了特用原料的調整後 EBITDA 利潤率。在 2019 會計年度第一季，我們延續了這些趨勢。本季如同其他公司一樣，我們看到市場狀況有些起伏，並遭遇不利的外幣換算影響。儘管如此，相較於我們 3 項核心財務交付目標，我們仍交出穩健的成績。

More specifically, we achieved significant adjusted EPS growth. We improved adjusted EBITDA margins by 140 basis points. We improved our Q1 cash flow over the prior year, consistent with our outlook for the full year, and we did so by focusing on the areas we could control to drive results.

更具體而言，我們達成顯著的調整後每股盈餘（EPS）成長。我們將調整後 EBITDA 利潤率提升了 140 個基點。我們也將第一季現金流較去年同期改善，與我們對全年展望一致；而我們是透過聚焦於可控領域以推動成果來達成。

Now beginning with Specialty Ingredients. Organically, we grew sales by 3%, excluding the impact of FX and the Colgate product reformulation that we outlined on our Fourth Quarter Earnings Call. To do so, we continued to drive double-digit growth in pharma. We've demonstrated strong growth in our innovative biofunctional ingredients for hair and skin care applications. We grew the Pharmachem business as we implemented our new market strategy for the business. And we demonstrated disciplined pricing plus share gains for our adhesive products.

接著先談特用原料。在排除外匯（FX）影響以及我們在第四季財報電話會議中提到的 Colgate 產品配方調整影響後，我們的有機銷售成長為 3%。為了達成此一成果，我們持續推動製藥（pharma）業務的雙位數成長。我們在用於護髮與護膚應用的創新生物功能性原料方面，展現強勁成長。我們在為 Pharmachem 業務導入新的市場策略之際，也推動該業務成長。同時，我們的黏著劑產品展現嚴謹的定價紀律並取得市占提升。

The Specialty Ingredients team also improved gross profit margins year-over-year by 20 basis points in spite of a stronger dollar. To do so, we capitalized on gains we have made in implementing our asset utilization program by substantially increasing plant absorption. We also succeeded in driving price over raw material cost inflation. Now as you will recall, we have made steady progress towards pricing through rapid and dramatic raw material price increases which we experienced over the last year. We have implemented disciplined pricing practices, new pricing governance, new sales incentive practices along with comprehensive account planning and value selling training. The result is that we drove price above raw material inflation in the quarter in the context of continuing and lingering year-over-year raw material inflation. And we expect the impact of our pricing actions, combined with the impact of falling oil prices which we believe will begin to benefit us in Q2, to strongly drive year-over-year gains in this important area on the remainder of the fiscal year.

特用原料團隊也在美元走強的不利因素下，仍將毛利率年對年提升 20 個基點。為此，我們把握在推動資產利用率計畫方面所取得的成果，透過大幅提升工廠吸收率來實現。我們也成功推動售價漲幅高於原物料成本通膨。各位或許記得，面對過去一年原物料價格快速且大幅上漲，我們在推動定價方面持續取得穩健進展。我們已導入嚴謹的定價作法、新的定價治理機制、新的銷售獎酬制度，並搭配全面性的客戶規劃與價值銷售訓練。其結果是，在本季於原物料年對年通膨仍持續且餘波未平的情況下，我們仍推動售價高於原物料通膨。我們預期，我們的定價行動所帶來的影響，加上油價下跌的影響（我們相信將自第二季開始對我們有利），將在本會計年度剩餘期間，強力推動此重要領域的年對年改善。

To augment these actions, the team is achieving strong results from our cost-reduction program. As you will recall, this is the effort we kicked off last year. And from a Specialty Ingredients perspective, this program had 2 core objectives. The first was to enable the Specialty Ingredients organization to become leaner, more nimble and competitive while increasing our ability to accelerate growth in our core markets. The ASI target also included reducing fixed costs by approximately 200 basis points to accelerate our achievement of our targeted 25% to 27% adjusted EBITDA margin target. In the quarter, Specialty Ingredients realized a 150 basis point reduction in SG&A as a percent of sales. To be clear: The cost-reduction program is delivering; and will be completed on time, in full.

為了強化上述行動，團隊也在成本削減計畫方面取得強勁成果。各位或許記得，這項工作是我們去年啟動的。從特用原料的角度來看，該計畫有 2 項核心目標。第一項是讓特用原料組織更精實、更敏捷且更具競爭力，同時提升我們在核心市場加速成長的能力。ASI 的目標也包括將固定成本降低約 200 個基點，以加速達成我們 25% 至 27% 的調整後 EBITDA 利潤率目標。本季，特用原料的銷售、一般及行政費用（SG&A）占銷售比重降低了 150 個基點。說清楚一點：成本削減計畫正在交付成果；並將如期、完整完成。

Putting this all together in the quarter. We increased revenue, improved gross profit margins, reduced SG&A, which resulted in a 7% improvement in adjusted ASI EBITDA; and that represents 120 basis points improvement in EBITDA margins. Now if you assume constant currency, adjusted EBITDA growth would have been 9% for ASI in the quarter.

將本季各項因素綜合來看。我們提升營收、改善毛利率、降低 SG&A，進而使 ASI 調整後 EBITDA 提升 7%；這也代表 EBITDA 利潤率提升 120 個基點。若以固定匯率假設，ASI 本季的調整後 EBITDA 成長將為 9%。

For all of Ashland, adjusted EBITDA increased 8% to $100 million. SG&A for the company was down $9 million compared to the prior year, and adjusted EBITDA margins were also up 140 basis points year-over-year. And leveraging these earnings gain in combination with disciplined capital expenditure programs, we improved cash flow performance year-over-year. So in summary, the Ashland team delivered on its commitments in quarter 1 of fiscal year '19. And these gains have given us confidence to reaffirm adjusted EBITDA, adjusted EPS and free cash flow target outlooks for fiscal year '19.

就整體 Ashland 而言，調整後 EBITDA 成長 8%，達到 1 億美元。公司 SG&A 較去年同期減少 900 萬美元，調整後 EBITDA 利潤率亦年對年提升 140 個基點。此外，藉由這些獲利提升並結合嚴謹的資本支出計畫，我們的現金流表現也較去年同期改善。總結而言，Ashland 團隊在 2019 會計年度第一季履行了承諾。而這些進展也讓我們有信心重申 2019 會計年度調整後 EBITDA、調整後 EPS 與自由現金流目標的展望。

As we head into Q2, we expect FX and demand in certain industrial markets to remain soft, but rather than focus on this, we are focused on executing on the leverage we can control. More specifically, within Specialty Ingredients we expect aggregate top line gains to be rather limited in the quarter due to negative FX and continued softness in several of our industrial markets, but that said, to ensure we deliver on our targeted EBITDA dollar and margin growth objectives, we are committed to drive positive gross profit, margin and dollar growth by continuing to drive substantial mix improvement through innovation and new product introductions. We also intend to reduce manufacturing costs resulting from our asset utilization program. And we also expect to benefit from continued price discipline in the context of a more favorable raw material pricing environment. Augmenting Specialty Ingredients gains, we expect Lima to return to year-over-year earnings growth in the quarter, with our planned Q1 shutdown being behind us. And of course, we expect lower SG&A as we drive cost reductions across the entire organization. In Q1, we achieved our targeted $50 million run rate. We expect that run rate to increase to nearly $70 million by the end of Q2.

隨著我們進入第二季（Q2），我們預期外匯（FX）以及部分工業市場的需求仍將疲弱；但我們不把重點放在這些因素上，而是專注於執行我們可控的槓桿。更具體而言，在特用成分（Specialty Ingredients）方面，我們預期本季整體營收成長將相當有限，原因在於不利的外匯影響以及我們若干工業市場持續疲弱；但即便如此，為確保達成我們鎖定的 EBITDA 金額與利潤率成長目標，我們承諾將透過持續以創新與新產品導入推動顯著的產品組合改善，來帶動毛利、毛利率以及毛利金額的正向成長。我們也打算透過資產利用計畫降低製造成本。此外，在較有利的原物料定價環境下，我們也預期將受惠於持續的價格紀律。在特用成分的成長之外，我們預期利馬（Lima）在本季將恢復年對年獲利成長，因為我們規劃的第一季停機已經結束。當然，隨著我們在整個組織推動成本降低，我們也預期 SG&A 將下降。在第一季，我們達成了我們鎖定的 5,000 萬美元年化節省（run rate）。我們預期到第二季末，該年化節省將提高至接近 7,000 萬美元。

So combined as a company, Ashland remains on track for the guidance we provided at the end of December. As part of this, we are forecasting adjusted EPS in a range of $0.80 to $0.90 in Q2. In addition, it is important to note that we continue to make strong progress to stay on track for the planned sale of the Composites business and the Marl BDO facility.

因此，合併以公司整體來看，Ashland 仍按計畫達成我們在 12 月底所提供的財測指引。其中，我們預估第二季調整後 EPS 將落在每股 0.80 至 0.90 美元的區間。此外，重要的是要指出，我們在按計畫出售 Composites 事業以及 Marl BDO 廠方面，仍持續取得強勁進展並維持在軌道上。

So in summary, we remain focused and confident on our ability to deliver our financial targets, the $120 million of cost reduction and the planned sale of the Composites business and Marl BDO facility.

總結來說，我們仍專注且有信心能夠達成我們的財務目標、1.2 億美元的成本削減，以及按計畫出售 Composites 事業與 Marl BDO 廠。

And with that, I'll turn the call over to Kevin.

接下來，我把電話會議交給 Kevin。

Thank you.

謝謝。

Thank you, Bill. And good morning, everyone.

謝謝你，Bill。各位早安。

First, let's start with Ashland's results in the first quarter.

首先，我們先從 Ashland 第一季的業績表現談起。

Sales in the quarter were $576 million, down 1% from the year-ago period and inclusive of negative 2 points from unfavorable currency. Adjusted EBITDA in the quarter was $100 million, up 8% year-over-year. In the quarter, we reported a U.S. GAAP loss from continuing operations of $1.14 per diluted share. However, on an adjusted basis we reported income from continuing operations of $0.14 per diluted share compared to $0.03 in the prior year. This compares to our outlook that we provided at the end of December of $0.05 to $0.15 per share. Remember that results from continuing operations includes the results of our Specialty Ingredients segment, plus our BDO facility in Lima, Ohio, as Composites and Marl are now being reported as discontinued operations.

本季銷售額為 5.76 億美元，較去年同期下降 1%，其中包含因不利匯率造成的 2 個百分點負面影響。本季調整後 EBITDA 為 1 億美元，年對年成長 8%。本季我們依美國通用會計準則（U.S. GAAP）認列持續營運每股稀釋虧損 1.14 美元。然而，以調整後基礎計算，我們認列持續營運每股稀釋盈餘 0.14 美元，去年同期為 0.03 美元。這與我們在 12 月底所提供的每股 0.05 至 0.15 美元展望相較。請記得，持續營運的結果包含我們特用成分（Specialty Ingredients）事業部的結果，以及我們位於俄亥俄州利馬（Lima, Ohio）的 BDO 廠；因為 Composites 與 Marl 現在已列為停業單位（discontinued operations）報導。

Free cash flow during the quarter was negative $42 million compared to negative $52 million in the prior year. These amounts include $19 million in restructuring costs in the first quarter of fiscal 2019 and $23 million of restructuring in the year-ago period.

本季自由現金流為負 4,200 萬美元，去年同期為負 5,200 萬美元。上述金額包含 2019 會計年度第一季 1,900 萬美元的重整成本，以及去年同期 2,300 萬美元的重整成本。

Our effective tax rate for the first quarter, after adjusting for key items, was 29% compared to 41% in the prior year period. This rate was higher than our original forecast due primarily to some onetime discrete items.

第一季在調整關鍵項目後的有效稅率為 29%，去年同期為 41%。該稅率高於我們原先的預測，主要是因為一些一次性（onetime）的離散項目（discrete items）。

Now for an update on the divestiture of Composites and the Marl BDO facility. As we announced in November, we signed a definitive with INEOS Enterprises to sell the business for $1.1 billion. We are working with INEOS to close the transaction by June 30. We continue to expect to use the net proceeds, roughly $1 billion, for debt reduction following the close of the transaction, which will get us to our targeted leverage ratio of approximately 2.5 turns gross debt-to-EBITDA.

接著更新 Composites 與 Marl BDO 廠的剝離進度。如同我們在 11 月宣布的，我們已與 INEOS Enterprises 簽署具約束力的最終協議（definitive agreement），以 11 億美元出售該業務。我們正與 INEOS 合作，力求在 6 月 30 日前完成交易交割。我們仍預期在交易完成後，將把約 10 億美元的淨收益用於降低負債，這將使我們達到目標槓桿比率：約 2.5 倍的總負債對 EBITDA（gross debt-to-EBITDA）。

Last night, we reaffirmed our outlook for the full fiscal year, except for an expected change to the full year effective tax rate. As we gain more clarity around the full implementation of tax reform, we do expect a slightly higher rate this year and going forward. Consistent with fiscal 2018, we plan to update these outlook ranges throughout the year.

昨晚，我們重申了全會計年度的展望，唯獨全年度有效稅率預期將有所變動。隨著我們對稅改全面落地的情況更為明朗，我們確實預期今年以及未來的稅率將略高一些。與 2018 會計年度一致，我們計畫在全年期間持續更新這些展望區間。

As we move closer to the planned divestiture of Composites and the Marl facility, we continue to evaluate the presentation of the business and its results to our investors and other constituencies. Our objective is to provide as much clarity and transparency as possible as we complete our transformation to a pure-play specialty chemicals company. We continue to evaluate the options and expect to make a decision in the nearer term.

隨著我們更接近按計畫剝離 Composites 與 Marl 廠，我們持續評估向投資人及其他利害關係人呈現該業務及其業績的方式。我們的目標是在完成轉型為純特用化學品公司（pure-play specialty chemicals company）的過程中，提供盡可能多的清晰度與透明度。我們仍在評估各種選項，並預期在較近期內做出決定。

With that, we'll open up the call for questions. Operator?

接下來，我們開放提問。接線員？

(Operator Instructions) Our first question comes from David Begleiter with Deutsche Bank.

（接線員指示）我們的第一個問題來自德意志銀行（Deutsche Bank）的 David Begleiter。

Bill, just a quick question on EPS. You did cut -- you did raise your tax rate guidance, but you didn't change your EPS guidance. How did that work out?

Bill，關於 EPS 我有個簡短問題。你們確實上調了稅率指引，但沒有調整 EPS 指引。這是怎麼做到的？

Dave, at this point, we're confident with our full year EPS range. And we do think that there's going to be a modest increase in the overall tax rate. It's pretty low, to begin with. And this increase, we will still keep this in the range we feel like. So we're very comfortable with the range as it is.

Dave，就目前而言，我們對全年度 EPS 區間仍有信心。我們也確實認為整體稅率會小幅上升。一開始它就相當低。即便有這個上升，我們仍會把它維持在我們認為合適的區間內。因此我們對目前的區間非常有把握。

And I will just add that, again in the spirit of within reason there, we expect that we will continue to work operational levers within the business and in the corporate cost structure to follow through on our commitments regardless of the fact that there is almost a little bit of an increase in the tax rate.

我再補充一點：同樣在合理範圍內，我們預期將持續在業務營運槓桿以及公司成本結構上努力，履行我們的承諾，不會因為稅率有些微上升而改變。

Got it. And just on ASI, Bill and Kevin, can you break out the 3% organic growth between volume and mix and price? And how would you expect that to trend as you get past and through Q2 and to the back half of the year?

了解。另外關於 ASI，Bill 和 Kevin，你們能否把 3% 的有機成長拆分為量（volume）、組合（mix）與價格（price）各自的貢獻？以及當你們度過第二季、進入下半年時，你們預期這個趨勢會如何發展？

So from a volume standpoint, and we reported on this, there was not significant growth. Or there really wasn't growth. From a revenue standpoint excluding FX, we saw a growth in our business. And we expect that, as we move into Q2, we will have a bigger dynamic related to FX. That will get better from a comparative standpoint, assuming that exchange rates stay the same going forward and into Q3 and Q4. And so again, we started with essentially a 2% to 3% organic growth rate for the ASI business at the start of this year, and that is our expectation as we move forward. And as I would also focus, part of what we're trying to do in that is enhance the mix of products that we're selling so as to improve our gross profit and obviously drive a higher level of earnings as well as EBITDA growth rate. So I think our outlook, other than we'll say FX, is very consistent with what we put forward at the very beginning of the year.

就出貨量而言，我們已經報告過，並沒有顯著成長。或者說其實沒有成長。從排除外匯影響的營收角度來看，我們的業務確實呈現成長。我們預期進入第二季後，外匯相關的變動會更大。若未來匯率維持不變，進入第三季與第四季時，從比較基期的角度來看會有所改善。因此再次強調，我們在今年一開始對 ASI 業務的有機成長率預期大約是 2% 到 3%，而這仍是我們往前看的預期。同時我也想強調，我們在其中一部分努力方向，是提升我們所銷售產品的組合，以改善毛利，並且顯然也推動更高水準的獲利以及 EBITDA 成長率。所以我認為，除了外匯（FX）之外，我們的展望與年初提出的內容非常一致。

And clearly pharma was a big driver in the quarter, obviously helps mix, as that is our highest-margin business from an end market perspective. And we called out adhesives as being -- as also being a really strong performer in the quarter (inaudible). Those 2 businesses were big contributors. And I think it's also worth noting that within personal care, aside from the oral care situation that we've already talked about, we saw some really nice gains, particularly in skin. So those all served to really help us put together a pretty good quarter.

而且很明顯，製藥在本季是主要驅動因素，這顯然有助於產品組合，因為從終端市場角度來看，那是我們毛利率最高的業務。我們也提到黏著劑——同樣在本季表現非常強勁（聽不清）。這兩項業務是主要貢獻者。我也認為值得一提的是，在個人護理方面，除了我們已經談過的口腔護理情況之外，我們看到一些相當不錯的成長，特別是在皮膚護理。因此，這些因素都確實幫助我們交出一個相當不錯的季度表現。

Our next question comes from Christopher Parkinson with Crédit Suisse.

下一個問題來自瑞士信貸（Crédit Suisse）的 Christopher Parkinson。

This is Kieran on for Chris. Personal care saw a mixed quarter with the impacts of FX and the loss of the Colgate business, but some of your customers have also reported pretty strong quarters and outlooks. As we think about normalized growth in personal care, can you discuss like how you think about that for the rest of the year and then any initiatives you've taken to replace the Colgate Gantrez business loss?

我是 Kieran，代替 Chris 提問。個人護理本季表現好壞參半，受到匯率影響以及失去高露潔（Colgate）業務的衝擊，但你們的一些客戶也公布了相當強勁的季度表現與展望。在思考個人護理的常態化成長時，能否談談你們對今年剩餘時間的看法，以及你們採取了哪些措施來彌補失去 Colgate Gantrez 業務的缺口？

Certainly. And as Kevin mentioned, we did have a strong performance in Q1, I'll say, in skin care. We also had growth in other parts of our consumer business or -- and personal care business. And we are targeting essentially a 4% growth rate just as we had last year across the business. We've highlighted the negative impact of the Colgate loss or their formulation really, and that would go against that 4% in this year. At the same time, I would say that we are really driving that richer mix, so focusing on improving the profitability of the business. And so we're targeting that 4% growth overall, excluding the Colgate, and really targeting a much richer mix as we move forward. And that's really driven by technology and new introductions, a lot of our biofunctional ingredients.

當然可以。如 Kevin 提到的，我們在第一季於皮膚護理方面表現強勁。我們在消費者業務的其他部分——或者說在個人護理業務的其他部分——也有成長。我們的目標基本上是整體業務維持 4% 的成長率，就像去年一樣。我們已強調高露潔流失（更準確地說是他們配方調整）的負面影響，而這會在今年對那個 4% 目標形成拖累。同時，我想說我們正積極推動更優質的產品組合，著重提升業務獲利能力。因此，我們的目標是在排除高露潔因素後，整體仍達到 4% 的成長，並在未來推動更優質的組合。這主要由技術與新品導入所驅動，包括我們許多生物功能性（biofunctional）成分。

Yes. And that 4% top line gain is really accompanied by a much stronger profitability gain because of those mix shifts, especially in areas like biofunctionals and other skin care applications.

是的。而這 4% 的營收成長，會因為這些組合轉移而伴隨更強的獲利提升，特別是在生物功能性以及其他皮膚護理應用等領域。

Great. And then, I guess, just touching quickly again on pharma. You had another strong quarter. A lot of that also was helped by like the capacity expansions would seem to have annualized at this point. How should we think about normalized growth in the pharma business going forward? And then what key levers could you pull to accelerate growth as we go throughout the rest of the year?

很好。接著，我想再快速談一下製藥。你們又交出一個強勁的季度。其中很大一部分似乎也受惠於產能擴張在此時已經年化反映。未來製藥業務的常態化成長應該如何看待？另外，今年剩餘時間你們可以透過哪些關鍵槓桿來加速成長？

We certainly have had a strong run as it relates to our pharma business. There was a great amount of pent-up demand for the product, and we've seen the benefit of that in each one of the quarters as we've had the capacity. What I would say, though, is we've also seen that our customers are -- now that the product is more readily available, interested in expanding the number of applications we have. And we're introducing new Benecel and new Klucel grades. So between technology and our overall position in the market, we are focused on seeing, if you will, gains that are at least 5% without foreign exchange. And that will be for the remainder of the year and really as we continue to move forward.

就我們的製藥業務而言，確實已經有一段很強勁的成長走勢。先前對產品存在大量被壓抑的需求，而在我們具備產能之後，每一季都看到了其帶來的效益。不過我想說的是，隨著產品供應更為充足，我們也看到客戶有興趣擴大我們產品的應用數量。我們正在推出新的 Benecel 與新的 Klucel 等級（grade）。因此，結合技術與我們在市場上的整體定位，我們專注於在不含匯率影響下，至少取得 5% 的成長。這將適用於今年剩餘時間，並且在我們持續往前推進時也是如此。

Yes. And if you look at the pharma business historically, 4% to 6% is what you would typically see over the long run for that business, 4% to 6% year-over-year growth. And we fully expect that to be the case as we move forward, so that would -- it's certainly our expectation for the rest of this year.

是的。如果你回顧製藥業務的歷史表現，長期而言通常會看到 4% 到 6% 的成長，也就是年對年 4% 到 6% 的成長。我們完全預期未來也會是這樣，因此——這當然也是我們對今年剩餘時間的預期。

Our next question comes from Jim Sheehan with SunTrust.

下一個問題來自 SunTrust 的 Jim Sheehan。

Can you talk about the tailwind you expect to get from raw materials? You mentioned that you're starting to see raws ease a bit, and this could help your margins. How would you quantify the benefit to gross margins in ASI going forward?

能否談談你們預期原物料會帶來的順風？你們提到開始看到原料價格稍微緩和，這可能有助於你們的利潤率。就 ASI 而言，未來你會如何量化對毛利率的助益？

Right, good, great question. And it is important to note that actually in our Q1 of this fiscal year, if you look at the price of oil, and we'll say that's one of the primary drivers of our raw material costs -- that actually the price in Q1 was above Q1 last year. And so when we talk about delivering price over raw material inflation, we're doing so in the context of that sustained raw material cost inflation. Now that being said, we know that the current price for oil is substantially below where it was in Q2 last year and below where it was on an average basis in Q1 for us. Now it takes roughly a quarter for that to roll through into our cost of goods sold because it rolls through our inventory. And so with that, we would expect, as we get into the second half of the year, to see strong benefit from that, assuming oil prices remain the same. And that's good because, last year, as you know, we worked hard to catch up with raw material inflation. Now we need to make that a lever that's more positive in terms of contributing to our year-over-year growth. And just, I mean, round terms, you could estimate roughly $1 million a year for $1 of lower price in oil, but again I would caution you to understand that we actually saw an increase in Q1 over last year. And it takes a little while for it to roll through, so you may think of that more in terms of kind of a half year benefit as opposed to a full year benefit.

好的，這是個很重要的問題。需要特別指出的是，其實在本會計年度第一季，如果你看油價——我們會說這是驅動原物料成本的主要因素之一——第一季的油價其實高於去年第一季。因此，當我們談到「價格漲幅高於原物料通膨」時，是在原物料成本通膨持續存在的背景下做到的。話雖如此，我們也知道目前油價明顯低於去年第二季的水準，也低於我們第一季的平均水準。不過，這大約需要一個季度才會反映到銷貨成本，因為它會透過庫存逐步傳導。因此，假設油價維持不變，我們預期進入下半年時會看到相當明顯的效益。這是好事，因為如你所知，去年我們努力追趕原物料通膨。現在我們需要讓這個槓桿在年對年成長的貢獻上變得更為正面。粗略來說，你可以估算油價每下降 1 美元，一年大約可帶來 100 萬美元的影響，但我仍要提醒你理解：我們第一季其實較去年上升。而且它需要一些時間才會傳導，所以你可能更應該把它視為「半年的效益」而不是「全年的效益」。

Yes. You need to do that based on the weighted average of crude during the quarter as well. Maybe that goes without saying, but it's not a point-in-time kind of thing. It's really focused on average costs in the quarter year-over-year in terms of doing that calculation.

是的。你也需要以該季度原油的加權平均價格來做這個計算。也許這是不言自明，但它不是某一個時間點的概念。它真正著重的是以季度平均成本來做年對年的計算。

Very helpful. And also, could you comment on where you see the health of primary demand versus any signs of destocking in some of your end markets? It seems like, certainly in this last quarter, your performance exceeded that of peers that maybe were suffering more headwinds than you did. Maybe you can discuss why you think that might be the case.

非常有幫助。另外，你能否評論一下你所看到的終端市場「一次需求」的健康狀況，與是否有任何去庫存的跡象？看起來，尤其在上一季，你們的表現超過同業，而同業可能承受了比你們更大的逆風。也許你可以談談你認為為什麼會是這樣。

Well, I think the team has done an outstanding job of going out there and selling the value and selling the technology, innovating. And ultimately we believe gaining share is a result of that. It's hard to estimate. And I really don't want to move to the destocking word if -- because I believe that we see a demand which is consistent with our customer's consumption. Yes, we can have some short-term effects as maybe they become more conservative with their inventory or [opposite builds over time]. We look at that as something that happens. And we can't control that, so we're instead going to focus on the things that we can control. And that is related to share shift, innovation, pricing, managing our manufacturing facilities and costs and lowering our SG&A. So I think that's a broader answer maybe than you were looking for specifically on the subject of destocking, but I wouldn't point to that as a word that is guiding our results or guiding our thinking.

我認為團隊在外部推廣價值、推廣技術並持續創新方面做得非常出色。最終我們相信，市占提升就是這些努力的結果。這很難精確估算。而且如果——我其實不想把話題導向「去庫存」這個詞，因為我相信我們看到的需求與客戶的實際消耗是一致的。是的，短期內可能會有一些影響，例如他們在庫存上變得更保守，或是[隨時間出現相反的補庫]。我們把那視為會發生的事情。而我們無法控制這些，所以我們會把重點放在我們能控制的事情上。也就是與市占轉移、創新、定價、管理我們的製造設施與成本，以及降低 SG&A（銷售、一般及行政費用）相關的事項。所以我想這可能是一個比你原本期待更廣泛的回答，未必是針對去庫存這個主題的具體回應，但我不會把它當作引導我們結果或引導我們思考的關鍵詞。

And I think a really good example of the team doing a really nice job is in our coatings business. The -- coatings was relatively flat year-over-year, but if you look at some of our large coatings customers who have reported results, clearly some of them have -- had struggled a bit. And in spite of that, the team was able to really make up a lot of what I think could have been a difficult quarter for coatings by just getting out there and really moving the product and selling the value. And I think they should be applauded for that.

我認為團隊表現非常出色的一個很好的例子是在我們的塗料業務。塗料業務同比相對持平，但如果你看看我們一些已公布業績的大型塗料客戶，顯然其中一些——確實遇到了一些困難。儘管如此，團隊仍能透過走出去、積極推動產品並銷售其價值，彌補了我認為本可能成為塗料業務艱難一季的很大一部分影響。我認為他們值得因此受到讚揚。

Yes. And just to add to that: If you were to look at our coatings by region, you'll see that our coatings in North America was not much different than the numbers that you heard reported. Still what we did was we focused in this particular quarter. In this case, we had double-digit growth in rest of Asia in our coatings business, and that helped us to offset the dynamic in North America. So not trying to go into the very specifics of each region, but as we run the business, we focus. If it's not strong here, we're going to focus on that. And if the top line isn't going to be as strong, then we're going to do other things that are below the line -- well, below the revenue line.

是的。再補充一點：如果你按地區來看我們的塗料業務，你會看到北美的塗料表現與你聽到的那些已報告數字差異不大。不過我們在本季度所做的是聚焦。在這種情況下，我們的塗料業務在亞洲其他地區實現了兩位數成長，這幫助我們抵消了北美的態勢。因此不打算深入到各地區非常具體的細節，但在經營業務時，我們會聚焦。如果這裡不強，我們就會把重點放在那裡。而如果營收端不會那麼強，那我們就會做其他在損益表下方的事情——嗯，在營收線以下的事情。

Your next question comes from Jeff Zekauskas with JPMorgan.

下一個問題來自摩根大通（JPMorgan）的 Jeff Zekauskas。

I imagine you benchmarked ASI versus your very strong competitors. And when you look at the really efficient companies, what's their SG&A ratio? Or is there an SG&A ratio that you target in Specialty Ingredients when you get to a full level of efficiency?

我想你們已將 ASI 與你們非常強的競爭對手做了對標。當你看那些效率很高的公司時，他們的 SG&A 比率是多少？或者在 Specialty Ingredients 達到完全效率水準時，你們是否有一個目標的 SG&A 比率？

Sure. So we do extensive benchmarking, and we discuss that with our board, of course. And as you realize, it can be a little bit challenging because companies don't match up exactly. However, we do have a strong perspective on it. What I would say is that we are very focused on executing on the $120 million cost-reduction effort right now. We have to get that done before the end of calendar 2019, and that's our focus. And we believe that, that will get us to the 25% type range for ASI, which is the lower part of the range that we've put out there from a target standpoint. And we said we would like to be 25% to 27%. So to move up that curve, obviously to achieve the additional 2 points, there's really 3 ways you can do that. You can do that through growth and volume leverage. You can do that through mix and technology, and you can do that from fixed cost reduction. And I believe that we will see a continued focus on all 3 of those. And so I think you will see between -- the volume leverage and continued programs which really have been identified and are being implemented as part of what we're doing today but won't hit before 2019 to help us lower our SG&A as a percent of sales. So I hope that gives you a sense without throwing out a very specific number on it.

當然。我們做了大量的對標分析，並且當然也會與董事會討論。而如你所知，這可能有點具挑戰性，因為公司之間並不會完全對得上。不過，我們對此確實有很強的觀點。我要說的是，我們目前非常專注於執行 1.2 億美元的成本削減計畫。我們必須在 2019 年曆年年底前完成，這就是我們的重點。我們相信，這將使 ASI 達到約 25% 的區間，這是我們從目標角度所提出區間的下緣。我們說過希望達到 25% 到 27%。因此要沿著那條曲線往上走，顯然要再達成額外 2 個百分點，基本上有 3 種方式。你可以透過成長與量的槓桿來做到。你可以透過產品組合與技術來做到，也可以透過固定成本降低來做到。我相信我們會持續聚焦於這三項。因此我認為你會看到——在量的槓桿以及持續推動的計畫之間，這些計畫其實已被識別並正在作為我們今天所做工作的一部分而落地，但在 2019 年之前不會反映出來——它們將幫助我們降低 SG&A 佔銷售額的比例。希望在不拋出一個非常具體數字的情況下，這能讓你有個概念。

And Jeff, just to maybe get a little more specific on the number itself. As you're aware and most of our investors are aware, we've got about 3.5 points of SG&A related to deal amortization that's running through the numbers. And if you set that to the side, by the time we're done with this current program, the business should be running at about 16% of sales, maybe a little better than that. A lot of that depends on what kind of growth you bake into the top line, but that's more or less where we'll be once this program is fully baked in. I think, if you -- again, comparisons can be tough and beauty is often in the eye of the beholder, but we feel like that puts us in a pretty good spot relative to a number of the peers. But as Bill said, the objective is not to be static. The objective is to continue to improve and to do so by really executing on all 3 of those levers that Bill indicated. I think we have to execute on all 3 on a continuing basis. Status quo is never going to be good enough.

Jeff，再就數字本身更具體一點。如你所知、我們多數投資人也知道，我們的數字中大約有 3.5 個百分點的 SG&A 與交易攤銷（deal amortization）相關。如果把那部分先放一邊，等我們完成目前這個計畫時，該業務的 SG&A 應該會在約佔銷售額 16% 的水準運行，甚至可能略好一些。其中很大一部分取決於你在營收端納入了什麼樣的成長假設，但大致上在這個計畫完全落地後，我們會在那個位置。我認為，如果你——再說一次，對比可能很難，而美往往見仁見智，但我們覺得相對於一些同業，這讓我們處在相當不錯的位置。但如 Bill 所說，目標不是維持不變。目標是持續改善，而且要真正透過 Bill 所指出的那三個槓桿來做到。我認為我們必須持續性地在三個方面都執行到位。維持現狀永遠不會夠好。

Okay. And what was the $30 million in unrealized securities losses?

好的。那 3,000 萬美元的未實現證券損失是什麼？

Yes, I'll take you through that. So as you may recall, we entered into a settlement arrangement with a couple of our large insurers related to our asbestos liability. And we took the majority of the proceeds from that settlement and invested those in what we refer to as an asbestos trust to basically help offset the costs of our ongoing asbestos liability. And those proceeds are invested much like a pension trust in the combination of risk assets and fixed income, approximately 60-40. And that trust experienced the same kind of downturn during the December quarter that the rest of the markets did. That's really the genesis of that $30 million. If you look at kind of where we are right now, the trust has -- I think, has recovered nearly half of that so far this month, just as the markets have recovered. And this is related to a new accounting pronouncement that we have to comply with, which previously those unrealized gains and losses ran through other comprehensive income but now they actually have to run through the P&L. And many companies are experiencing this. And so you're going to see more discussion around this and more transparency around it, which may be the point, but yes, we'll be doing the same thing. And we'll call that out specifically each quarter, whether it's a gain or a loss on those assets.

好的，我來說明一下。如你可能記得，我們就石棉責任（asbestos liability）與幾家大型保險公司達成了一項和解安排。我們將該和解的大部分款項投入我們所稱的石棉信託（asbestos trust），基本上是為了幫助抵消我們持續存在的石棉責任成本。這些款項的投資方式很像退休金信託，配置於風險資產與固定收益的組合中，約為 60/40。而該信託在 12 月季度也經歷了與其他市場相同類型的下跌。這就是那 3,000 萬美元的由來。如果你看我們目前的狀況，該信託——我認為——截至本月目前已回升了將近一半，正如市場回升一樣。這與一項我們必須遵循的新會計準則公告有關；過去這些未實現損益會計入其他綜合損益（OCI），但現在必須改為計入損益表（P&L）。許多公司都在經歷這件事。因此你會看到更多關於這方面的討論與更高的透明度——這可能就是其目的——而我們也會做同樣的事。我們會在每個季度明確揭露這一點，無論這些資產是產生收益或損失。

Our next question comes from John Roberts with UBS.

下一個問題來自瑞銀（UBS）的 John Roberts。

Do you eventually merge the now smaller I&S segment into ASI? Or can you do swaps on BDO with INEOS so that the I&S external sales and earnings go away at some point?

你們最終會把現在較小的 I&S 部門併入 ASI 嗎？或者你們能否與 INEOS 就 BDO 進行交換（swaps），使 I&S 的外部銷售與獲利在某個時點消失？

Yes, I think what we are looking at doing here is, of course, as we complete the sale of Composites and Marl, we're looking at the best way to not only manage the business but also report the business to provide the insights and clarity that you're looking for. So I would say that we will blend it into our business, and then we will share more about our business in total as we move forward.

是的，我認為我們在這裡要做的是，當然，隨著我們完成 Composites 和 Marl 的出售，我們正在尋找最佳方式，不僅是管理業務，也包括如何報告業務，以提供你所期待的洞見與清晰度。所以我會說，我們會把它整合進我們的業務中，並且在未來推進時，會分享更多關於我們整體業務的資訊。

Yes. And we're still in the analysis phase on how we're going to report going forward, but we're obviously pretty far down the path. We've got some time to think about this. And as I indicated in my comments, we should be prepared to make a decision on this and go public with that in the not-too-distant future.

是的。我們仍在分析接下來要如何進行對外報告，但顯然我們已經走到相當後面的階段。我們還有一些時間可以思考這件事。而如我在評論中所指出的，我們應該會在不久的將來準備好做出決定，並對外公布。

And then I know you don't report regionally, but are the margins substantially higher now in the U.S. ASI business because of the self-manufactured BDO and lower in the international because of the purchased BDO? Or is the market -- is the pricing that you've assumed in your transfer pricing or whatever you've done in your restated results essentially approximate market so this is no difference?

另外我知道你們不按地區揭露，但由於自製 BDO 的關係，美國 ASI 業務的利潤率現在是否顯著更高，而國際業務因採購 BDO 而更低？或者市場——也就是你們在移轉訂價或其他安排中所採用的訂價，在你們重述的結果中基本上接近市場價，因此其實沒有差異？

So the -- from a BDO perspective, the captive part of our BDO production that we use as raw material is all that manufacturing is done in Calvert City, Kentucky and Texas City, Texas. And those products, which are primarily powders, are then shipped around the world, so the margin profile is virtually the same everywhere.

所以——從 BDO 的角度來看，我們用作原料的自產 BDO 產量，其所有製造都在肯塔基州卡爾弗特城（Calvert City）以及德州德克薩斯市（Texas City）完成。而這些產品主要是粉末，之後會運往全球各地，因此毛利結構在各地幾乎都一樣。

(inaudible) your question, at least as I heard it, is the transfer pricing that we have of BDO as material. Was that one of your questions as well? (inaudible)?

(聽不清) 你的問題，至少就我聽到的，是我們將 BDO 作為原料時所採用的移轉訂價。那也是你其中一個問題嗎？(聽不清)？

Yes. Is it close enough to market? Or is there a large customer discount that's really big that you apply to your own internal use?

是的。它是否已經足夠接近市場價格？還是你們對自用的內部使用，套用了一個非常大的大客戶折扣？

No. We transfer [that] cost.

沒有。我們是以成本移轉。

[And] costs, okay.

[也就是]成本，好的。

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

下一個問題來自 BMO Capital Markets 的 John McNulty。

With regard to the improved pricing practices that you are highlighting, I guess, how much of it would you say is tied to more appropriately pricing for value versus just passing-through the raw material costs more effectively? And I guess the premise for the question is can we continue to see pricing push higher if we see raw materials start to level off or subside. How should we be thinking about that?

關於你們強調的定價作法改善，我想問，其中有多少你會說是更恰當地以價值來定價，而不是更有效地把原料成本轉嫁出去？我這個問題的前提是：如果我們看到原料開始持平或回落，價格是否仍能繼續往上推？我們應該如何看待？

Yes, so I would say that, of course, we recognized over the last year that we had a serious issue to contend with in terms of raw material inflation. But if you go back to our Investor Day materials, we actually identified the pricing and the value pricing, not only the skills but the ability to differentiate, leverage or differentiate, and drive technology as a core component of ultimately improving the growth in margins of the business. So I would say that we look at it from a value standpoint and the value that we provide to our customers. And of course, it's our customers and we need to recognize when you're in an inflationary period, as we had last year. And that helps to, if you will, [expand] the urgency associated with that, but I would say that we continue with our focus on innovation. We continue with our value selling and negotiating practices training. We have better account management tools, and we have changed sales incentive programs. So we're focused on continuing to drive and make sure we get the full value from the products that we're providing to the marketplace. And that's independent of the fact that we see some of our raw materials pricing getting softer.

是的，所以我會說，當然，我們在過去一年意識到，在原料通膨方面我們確實有一個嚴峻的問題需要面對。但如果你回頭看我們的投資人日資料，我們其實已經把定價與價值定價——不只是技能，還包括差異化的能力、運用或強化差異化，以及推動技術——視為最終提升公司毛利成長的核心要素。因此我會說，我們是從價值角度，以及我們為客戶提供的價值來看待這件事。當然，客戶是我們的客戶；而且我們必須認知到，在像去年那樣的通膨期間，這會在某種程度上（如果你願意這麼說）放大相關的急迫性，但我會說我們仍持續聚焦創新。我們持續推動價值銷售與談判實務的訓練。我們有更好的客戶管理工具，也調整了銷售獎酬方案。因此我們專注於持續推動，並確保我們能從提供給市場的產品中取得完整價值。這與我們看到部分原料價格走軟是相互獨立的。

Yes. We would expect to continue with the pricing programs that we have, and it's really consistent with the mix shifts that we're driving in the business. Those mix shifts tend to be levered toward higher-value products, and price comes along with that.

是的。我們預期會持續推動既有的定價方案，而且這與我們在業務中推動的產品組合轉移非常一致。這些組合轉移往往偏向更高價值的產品，而價格也會隨之而來。

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

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

Bill, I was wondering if you could walk through the trends that you're seeing in some of your key ASI markets as we kind of walk through the October-November time frame, into December and January. Particularly interested in the trends that you were seeing in personal care and in coatings over those 4 months.

Bill，我想請你說明一下，當我們走過 10 月到 11 月、進入 12 月與 1 月這段期間，你在一些關鍵 ASI 市場看到的趨勢。我特別關心你在這 4 個月中於個人護理與塗料所看到的趨勢。

Right. I think the trends that we saw was consistent with our end-of-quarter results. We didn't see a big dropoff. We didn't see a big pickup at the end of the quarter. I'd say that we saw fairly level demand relative to our ultimate results for the quarter.

好的。我認為我們看到的趨勢與我們季末的結果一致。我們沒有看到明顯的下滑。也沒有看到在季末有明顯的拉升。我會說，相對於我們該季最終結果，需求大致持平。

All right. And then was also wondering if you could give a little bit more detail on the gross margin performance in ASI. It was pretty decent even if the volume growth wasn't great. And just wondering if you can talk about the interplay among factors like mix, pricing versus raw materials and fixed costs absorption or asset utilization. How can we expect those pieces to trend in terms of the impact to gross margin through the rest of fiscal '19?

了解。另外也想請你更詳細說明 ASI 的毛利表現。即使銷量成長不算亮眼，毛利看起來仍相當不錯。想請你談談產品組合、定價相對原料，以及固定成本吸收或資產利用率等因素之間的交互影響。在 2019 財年剩餘期間，這些因素對毛利的影響趨勢，我們應該如何預期？

All right. So we've discussed that even though sales were -- from a volume standpoint relatively flat, that we actually did see an improvement in volume and mix in the quarter. We saw pricing that was above raw material cost. We expect that, that will expand as we go forward in the year. We did see a positive impact of absorption within our manufacturing facilities. That being said, we then saw a negative impact and a fairly substantial one as it relates to FX. And so we put those all together. That's the end GP that we had and the relative margins. It's always great to say, if it weren't for FX, I think you would have seen the GP really shine in terms of percent, but in the end it's all about the numbers. And we did drive GP gains both on a dollar and on a basis point basis even with that negative FX.

好的。我們已討論過，雖然從銷量角度來看銷售相對持平，但我們在本季確實看到銷量與組合有所改善。我們看到定價高於原料成本。我們預期隨著今年往後推進，這個差距會擴大。我們也看到製造廠內的固定成本吸收帶來正面影響。但話說回來，我們也看到匯率（FX）帶來負面影響，而且幅度相當大。因此把這些因素加總起來，就形成了我們的最終毛利（GP）以及相對的毛利率。當然你總會想說，如果不是因為匯率，我認為毛利率百分比會更亮眼；但最終還是要看數字。即使有匯率的不利影響，我們仍在金額與基點兩個層面都推動了毛利成長。

Yes. And I think, if you look at the various components, there was no what I would call real standout necessarily amongst them. It was each of those components contributed, and that really helped to make for a pretty solid quarter.

是的。而且我認為，如果你看各個組成項，沒有哪一項是我所謂特別突出的單一亮點。是每一個組成項都有所貢獻，

Yes. So when we look forward and we think about our plans for the year, we'll see some of those in a different quarter being a little stronger or a little weaker, but essentially it's those levers. It's those same levers, and we're working all of them to make them all positive this year. And that's how we'll drive the earnings growth that we're focused on in that, plus of course the SG&A cost reduction.

是的。所以當我們往前看、思考今年的計畫時，某些因素在不同季度可能會稍強或稍弱，但本質上就是這些槓桿。就是同樣的槓桿，而我們今年正同時推動所有槓桿，讓它們都能帶來正面貢獻。這就是我們將如何推動我們所聚焦的獲利成長，另外當然還包括 SG&A 費用削減。

Our next question comes from Rosemarie Morbelli with G. Research.

下一個問題來自 G. Research 的 Rosemarie Morbelli。

You mentioned that some of your industrial markets were softer. And I was wondering if you could give us a little more detail on that as well as the source -- or the location rather of growth in coatings in Asia considering that China has slowed down.

你提到你們的一些工業市場較疲弱。我想請你也更詳細說明一下，以及在中國放緩的情況下，亞洲塗料成長的來源——或者說成長所在的地區。

Sure, sure. So when you look at our business, you can see in the performance specialty area that's one where it's a mix of industrial-type applications. And that was down or relatively weak. We saw some good growth in construction and energy, so that helped us set the fairly neutral performance that we saw in coatings which we've referenced before. And when I was referring to the growth that we saw, it was in the rest of Asia. Actually we did see China from a revenue standpoint get stronger year-over-year, and that was driven primarily by substantial gains in pharma and skin care. So we did see gains in China. We also saw revenue gains in the rest of Asia which were particularly strong.

當然，當然。所以當你看我們的業務，在高性能特用（performance specialty）領域，那裡包含了多種工業型應用的組合。那部分是下滑或相對疲弱的。我們在建築與能源方面看到不錯的成長，因此有助於支撐我們先前提到的塗料相對中性的表現。而我所指的成長，是在亞洲其他地區。其實我們確實看到中國在營收方面年增轉強，主要是由製藥與護膚的大幅成長所帶動。所以我們在中國確實有成長。我們也看到亞洲其他地區的營收成長，而且表現特別強勁。

And the way we think -- I mean rest of Asia is literally all of Asia except China. And so that's pretty big -- it's pretty big region, but it's inclusive of India, Japan, etc, etc. And so we just saw really, really nice growth there, frankly, in most of the end markets that we sell into in those -- in that region.

而我們所說的——也就是說，亞洲其他地區字面上就是除中國以外的整個亞洲。所以那是一個相當大的——相當大的區域，包含印度、日本等等。因此坦白說，我們在那個地區所服務的大多數終端市場都看到非常、非常好的成長。

Okay. And then you -- focusing on the high-value products, could you talk about the percentage of the overall ASI that is high value? And what are your targets? And then linked to that, if you could talk about what you changed in the sales incentive program.

好的。接著你們——聚焦於高價值產品方面，能否談談整體 ASI 中屬於高價值的比例是多少？以及你們的目標是什麼？另外與此相關，如果可以的話，也請談談你們在銷售獎勵計畫中做了哪些改變。

Sure. So just to answer your question: The great majority of what we sell within ASI, we believe, is very high-value and differentiated materials. So I would start there. Now of course, we're trying to expand that and make sure that we stay stronger and more relevant going forward from continued innovation. And so with that, we target 30% of our sales to come from new products and that with a higher-margin profile than our average. We have a very active innovation pipeline. We have focused on moving more and more resources towards specific customer innovation activities. And just to put in perspective: We have what we call TSR, which are service requests. And those are really reformulating products to work better in an application on our customer's line. And we have over 1,800 of those that we've been working through our system. So that's a core part of what we do, and it's a bit different than what we've done in the past. It's having a very nice impact. And from a sales incentive standpoint, this is something that we put in place last year. Basically what we said was that we would reward our sales team based upon their commercial contribution. And that could come from driving incremental volume and the profitability related to it, to improving the mix and the profit profile that comes from that, from pricing relative to raw material inflation and then also factoring in the benefit of incremental absorption that comes from delivering revenue over and above their plans or conversely if they are short on their plan. And so with that in mind, the sales team has a visibility to see the activities that they focus on directly impact their incentive compensation.

當然。先回答你的問題：我們認為，在 ASI 內我們所銷售的絕大多數產品，都是非常高價值且具差異化的材料。所以我會先從這點說起。當然，我們也在努力擴大這部分，並確保透過持續創新，在未來能保持更強勢、更具相關性。因此，我們的目標是讓 30% 的銷售來自新產品，而且其毛利率結構要高於我們的平均水準。我們有非常活躍的創新管線。我們也把越來越多資源投入到特定客戶的創新活動。為了提供一些背景：我們有所謂的 TSR，也就是服務請求（service requests）。這些其實是在重新配方，讓產品在客戶產線的某個應用上表現更好。我們系統中正在處理的這類請求超過 1,800 件。所以這是我們工作的核心部分，也與我們過去做法有些不同。而且帶來了非常好的影響。就銷售獎勵而言，這是我們去年導入的。基本上我們的做法是：依據銷售團隊的商業貢獻來給予獎勵。這些貢獻可能來自推動增量銷量及其相關獲利、改善產品組合與由此帶來的獲利結構、相對於原物料通膨的定價表現，並且也會把因交付超出計畫的營收所帶來的額外吸收利益（incremental absorption）納入考量；反之，若低於計畫也會反映。因此，銷售團隊能清楚看到，他們所聚焦的活動會直接影響其獎勵性薪酬。

(Operator Instructions) Our next question comes from Laurence Alexander with Jefferies.

(接線員指示) 下一個問題來自 Jefferies 的 Laurence Alexander。

This is Dan Rizzo on for Laurence. With the changes in sales incentives, has that or increased -- or sorry. Has that increased or decreased sales force turnover over the past few months or past year?

我是代 Laurence 提問的 Dan Rizzo。關於銷售獎勵的變更，這是否在過去幾個月或過去一年，讓銷售團隊的離職率上升或下降——抱歉。這是否讓銷售團隊的流動率上升或下降？

No, I don't think that has -- if anything, I think -- from a sales team perspective, I think it's been a real positive in the respect that they have visibility and can control and see the impact of their work. And we're giving them tools to better understand that and also to sell the higher-value materials through our innovation program and so forth. So I have not noted any, well, turnover, if you will -- or I shouldn't say any but trends in that. I mean I think we've had strength in that area.

沒有，我不認為那造成——如果有的話，我認為——從銷售團隊角度來看，這其實是很正面的，因為他們有可視性，能掌控並看到自己工作的影響。我們也提供工具，讓他們更了解這些影響，同時也透過我們的創新計畫等，協助他們銷售更高價值的材料。所以我沒有注意到任何——嗯，所謂的離職——我不該說完全沒有，但至少沒有看到那方面的趨勢。我認為我們在這方面表現很穩健。

Yes. [The growth in] turnover in sales force has been pretty low. And one of the changes that we've made is to really make the sales incentive process much more individualized than it's been in the past. I mean there are still some team-based incentives out there because we have teams that service large customers, but if you look at the opportunity available to our sales force: We've actually given the sales force much more control over their destiny in that regard, which frankly I think helps with the mix shifts that we've seen, along with some of the tools that we've been able to provide them. We're a Salesforce.com company, as are many. And we've really improved the overall look and feel of our Salesforce.com front end, makes it much easier for salespeople to use and much faster for them to do their job so they can spend more time in front of customers, less time inputting stuff.

是的。銷售團隊的流動率成長一直相當低。我們做的一項改變，是讓銷售獎勵流程比過去更為個人化。當然仍有一些以團隊為基礎的獎勵，因為我們有團隊服務大型客戶；但如果你看我們銷售團隊可掌握的機會：我們其實讓銷售人員在這方面對自己的成敗有更大的掌控度，坦白說，我認為這有助於我們看到的產品組合轉移，再加上我們能提供的一些工具。我們使用 Salesforce.com，很多公司也是如此。我們大幅改善了 Salesforce.com 前端的整體介面與使用體驗，讓業務更容易使用、工作更快完成，因而能把更多時間花在客戶面前、減少輸入資料的時間。

And we've also changed our commercial organization and flattened it so that there's clearer line of sight to the particular markets and better market ownership. And I believe that the, if you will, esprit de corps and the leadership that exists is very strong in those markets and overall in the commercial area. And that's helping to drive a more -- or I'll say a better winning attitude. And it's coming through in terms of our results and most particularly in pricing as we're referencing right now.

我們也調整了商業組織並將層級扁平化，使得對特定市場的視線更清晰、也有更好的市場責任歸屬。我相信，在這些市場以及整體商業領域中所展現的——如果你願意這麼說——團隊精神（esprit de corps）與領導力都非常強。這正在推動更——或者我會說——更好的致勝心態。而這也反映在我們的成果上，尤其是在我們現在所提到的定價表現。

Okay. And then you mentioned there's extension of -- or expansion of application for some of your pharma products. And there was kind of pent-up demand. I was wondering if additional capacity is going to be needed maybe not this year but in 2020 and 2021 to meet the expansion in capacity -- sorry, expansion in application.

好的。另外你提到你們某些製藥產品的應用有延伸——或擴大。而且之前有一些被壓抑的需求。我想請問，為了滿足應用擴張所帶來的需求，是否需要新增產能——也許不是今年，但在 2020 與 2021 年？抱歉，是為了應用擴張。

Yes. I don't think in the periods of 2020 or 2021 we'll have those issues. We've really done a tremendous debottlenecking in some of our cellulosics areas that will really give us a lot of headspace. In Klucel we had a major addition to capacity. And it takes a while to put new capacity in place, so as we think about our strategies going forward, we will keep an eye to that. And it may make sense for us to engage in some expansion activities, debottlenecking or fundamental expansions in Klucel that may be relevant for the window outside of what you're referencing there. At the same time, we understand our commitment to deliver our cash flow, and to do that, we targeted CapEx plus change in working capital to be at 6.5% of sales or less. So as I mentioned that we may do some things over time to further expand our Klucel capacity, that's a longer-term view and it wouldn't change our fundamental outlook on spending and cash flow, yes.

是的。我不認為在 2020 或 2021 這些期間我們會遇到那些問題。我們在部分纖維素（cellulosics）領域做了非常大幅度的去瓶頸（debottlenecking），這會給我們很大的餘裕。在 Klucel 方面，我們做了重大的產能增加。而新增產能需要一些時間才能到位，所以在思考未來策略時，我們會持續關注。而且我們可能會進行一些擴張活動——不論是去瓶頸或 Klucel 的根本性擴產——這些可能會與你所提到期間之外的時間窗口更相關。同時，我們也理解我們對交付現金流的承諾；為了做到這點，我們將資本支出加上營運資金變動（CapEx plus change in working capital）目標設定為銷售額的 6.5% 或更低。所以如我所說，雖然我們可能會隨時間推進做一些事情來進一步擴大 Klucel 產能，但那是較長期的觀點，不會改變我們在支出與現金流方面的基本展望，是的。

And we manufacture Klucel at our Hopewell, Virginia facility. And in terms of the last expansion that we did, that is at Hopewell. And to the extent we need to make further expansions there, which we'll obviously do proactively as needed, they would also be in Hopewell. So you're really leveraging an existing facility and existing footprint when you do that, which while it takes CapEx to expand, obviously, it's much more efficient than if you had to do a whole new footprint.

我們在維吉尼亞州 Hopewell 的工廠生產 Klucel。就我們上一次的擴產而言，也是發生在 Hopewell。如果我們需要在那裡進一步擴產——我們當然會在需要時主動進行——也會同樣在 Hopewell。因此你是在利用既有的設施與既有的廠區範圍來做擴產；雖然擴產顯然需要資本支出，但相較於必須建立全新的廠區版圖，效率要高得多。

Because you're using the same facility, does that not -- make sure that you don't need to expect that new capacity in? Like if it's just a brownfield expansion of an existing line, then there's not additional qualifications that are needed, correct?

因為你們使用同一個廠房，這是否——確保你們不需要預期新增產能的導入？例如如果只是既有產線的棕地（brownfield）擴建，那就不需要額外的資格認證（qualifications），對嗎？

Well, there are qualifications. And we worked through a number of those last year on the new capacity. It -- I think what Kevin is referencing is that we have the footprint and the ability to leverage a base infrastructure to add additional lines, dryers, components of manufacturing which would increase our output without having to build a brand-new plant infrastructure which would clearly and obviously be much more expensive.

嗯，還是需要資格認證。我們去年在新產能上已經完成了其中不少項。我想 Kevin 所指的是：我們已經有既有的廠區與基礎設施，可以利用這些基礎來新增產線、乾燥設備、製造組件等，藉此提高產出，而不必去建造一座全新的工廠基礎設施；那樣顯然、也很明顯會昂貴得多。

Our next question comes from Mike Sison with KeyBanc.

我們的下一個問題來自 KeyBanc 的 Mike Sison。

In terms of your outlook for 2Q, not a lot of companies are -- [with just] calender first quarter are seeing any growth. And it looks -- I think you guys said you could see strong year-over-year EBITDA growth and positive organic growth, so can you maybe flesh out where and why you can see the growth as most are struggling a little bit here in the calendar first quarter?

就你們對第二季的展望而言，沒有太多公司——[僅以]曆年第一季來看——看到任何成長。而且看起來——我想你們提到你們可能會看到強勁的年對年 EBITDA 成長以及正向的有機成長，所以你們能否更詳細說明，在多數公司在曆年第一季有點吃力的情況下，你們在哪些地方、為什麼能看到成長？

Yes. So we [build] in those same markets, and what I would say is that there are areas where we see continued strength. We think that the pharma business will be a continued driver of growth. We think Pharmachem will be a continued driver of growth, and energy can be. We've had good growth in hair care that we think could help us as we move forward. So there are a number of markets that can help to offset some of the weakness that you might see in some of the markets that you're referencing. And so that's why we'll -- we're commenting and projecting that revenue growth, I don't think, will be the big driver of earnings growth for us in Q2. It'll be back to price, mix, costs within running our plants, SG&A reduction. And to the extent that the markets show a more favorable demand dynamic, that would be great, but we're not counting on the markets to have some substantive change, positive change to meet the targets that we're setting for ourselves in the quarter.

是的。所以我們在相同的市場中[布局]，我想說的是，有些領域我們看到持續的強勁表現。我們認為製藥業務將持續成為成長的驅動力。我們認為 Pharmachem 也將持續成為成長的驅動力，而能源也可能是。我們在護髮方面有不錯的成長，我們認為這能在我們往前推進時提供幫助。因此，有多個市場可以幫助抵消你所提到的一些市場中可能看到的疲弱。也正因如此我們才會——我們在評論並預測營收成長；我不認為第二季營收成長會是我們獲利成長的主要驅動因素。將會回到價格、產品組合、工廠營運成本、SG&A 降低。而如果市場呈現更有利的需求動態，那當然很好，但我們並未指望市場會出現實質性的變化、正向變化，來達成我們在本季為自己設定的目標。

And Mike, we -- just we see a lot of resilience in the business due to the things that we can control, the things that we can drive. And the only thing I would add to Bill's commentary other than that is we would also expect the adhesives business to be a nice contributor in Q2. That's a business that has grown consistently over the years kind of mid-single digit. And we would expect certainly on a full year basis for that to continue to be the case this year, but on an overall basis we're trying to drive the things that we can control. And part of that is to continue to have mix shift. In areas of the globe where there are opportunities, we're going to capitalize on those. We're going to take advantage of those opportunities and grow where there is growth.

Mike，我們——我們看到業務具有很強的韌性，原因在於那些我們能控制的事情、我們能推動的事情。除了 Bill 的評論之外，我唯一要補充的是，我們也預期黏著劑業務在第二季會是很好的貢獻者。這項業務多年來一直穩定成長，大約是中個位數成長。我們當然預期以全年來看，今年也會持續如此；但整體而言，我們正努力推動我們能控制的事情。其中一部分就是持續進行產品組合轉移。在全球有機會的地區，我們會把握那些機會。我們會利用那些機會，在有成長的地方成長。

Great. And then you've tended to give us a sort of view by market. And I was wondering, if you think about '19 by product, cellulosics and adhesives, PVP, Pharmachem, what your outlook looks like. And is that -- and when you think about giving us more data, as you noted, as you -- as the year unfolds, is that an area where it can be more helpful for us to think about the growth by product?

很好。接著你們往往會按市場給我們一個大致的觀點。我想請教，如果你們以 2019 年按產品來看，纖維素與黏著劑、PVP、Pharmachem，你們的展望如何？以及——當你們如你們所說，隨著年度推進提供更多數據時，按產品來思考成長是否會是對我們更有幫助的方向？

So that's -- it's a great question. And it's an important element of how we look at the business because we focus our solutions to be relevant within specific end markets, and we talk a lot about those. At the same time, as we've discussed, we do have several of these major product platforms, and so as a company we do drive across both of those dimensions. And we have asset optimization programs. So we look at the relative profitability; and the things that we can do to enhance the profitability, shifting the mix, adding capacity where we need to, managing inventory and other areas. We do that as part of our executive leadership team and we review that monthly. And I do think that -- as we talk about the business going forward, I think we will share more of that with you. I don't think that, that will drive how we would report our results in the aggregate because we tend to focus more by markets and the kind of value proposition that we have. We are planning for growth in cellulosics this year. We're planning on growth in Pharmachem and really across all of the platforms that you referenced there. And to do so, we're going to have to innovate, and we're going to have to drive growth in markets which are a little stronger to offset those which are a little softer.

所以——這是個很好的問題。而且這是我們看待業務方式中的重要要素，因為我們聚焦於讓我們的解決方案在特定終端市場中具備相關性，我們也經常談到這些。同時，如我們討論過的，我們確實有幾個主要的產品平台，因此作為一家公司，我們會在這兩個維度上推動業務。而且我們有資產最佳化計畫。因此我們會看相對獲利能力；以及我們能做哪些事情來提升獲利能力，包括調整產品組合、在需要的地方增加產能、管理庫存及其他領域。我們在高階管理團隊層級執行這些工作，並每月檢視。我確實認為——當我們往後談論業務時，我想我們會與各位分享更多這方面的內容。我不認為那會驅動我們如何彙總報告整體結果，因為我們往往更按市場以及我們所提供的價值主張來聚焦。我們今年規劃纖維素成長。我們規劃 Pharmachem 成長，並且基本上在你提到的所有平台上都規劃成長。而要做到這點，我們必須創新，並且必須在較強的市場中推動成長，以抵消較疲弱的市場。

And our final question comes from Dmitry Silversteyn with Buckingham Research.

我們最後一個問題來自 Buckingham Research 的 Dmitry Silversteyn。

Are you still on mute, Dmitry? Sorry. Dmitry, we can't hear you.

Dmitry，你還在靜音嗎？抱歉。Dmitry，我們聽不到你。

(inaudible) now?

（聽不清楚）現在呢？

Yes.

是的。

Yes, we can hear...

是的，我們聽得到……

Yes, yes, now we can, yes.

是的，是的，現在可以了，是的。

You were taking that mute thing really seriously. Now we can't hear you still.

你對那個靜音功能真的很認真。現在我們還是聽不到你。

Operator, can we connect with Dmitry, or no?

接線員，我們能和 Dmitry 接通嗎，還是不行？

Unless he unmutes his line. His line is open on our end.

除非他把他的線路取消靜音。我們這邊他的線路是開著的。

Okay, why don't we go ahead and wrap up the call, operator?

好的，那我們就先結束這通電話吧，接線員？

Yes, yes. You may -- he may just have a bad connection.

是的，是的。他——他可能只是連線不佳。

Okay, thank you. So I'll turn the call back over to you for any closing remarks.

好的，謝謝。那我把電話交回給你，請你做任何結語。

Thank you very much. Thank you all for your time this morning and for your interest in Ashland. I hope everyone has a great day.

非常感謝。感謝各位今天早上撥冗，以及對 Ashland 的關注。祝大家有美好的一天。

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may all disconnect and have a wonderful day.

各位女士、先生，感謝您參與今天的電話會議。本次議程到此結束。各位可自行掛線，祝您有美好的一天。