Good morning, everybody. On behalf of the entire Ashland team, welcome to our 2024 strategy update. It's really great to see many familiar faces in the room today and some new ones as well. Welcome. I'm William Whitaker, Vice President of Finance and Director of Investor Relations at Ashland. We are thrilled to host you in New York City today, as well as many others from around the globe on our live webcast. We're looking forward to sharing more about our proactive approach to value creation in 2025 and beyond. But first, a few things I'd like to cover. The slide presentation is available for download on our Ashland website under the Investor Relations section. We also are recording today's live event, and a replay should be available later this evening for your use. And a couple of quick things.
We will be making forward-looking statements today, which are based on our expectations. However, they're not guarantees. Actual results may differ materially based on a variety of factors and circumstances. We also will be referencing non-GAAP financial measures, so please refer to the disclosure in our financial and the presentation, as well as our website for additional detail. We have a really full agenda for you today. You'll hear from five of our senior leaders at the company. First, Guillermo Novo, our Chair and CEO, will walk you through the transformation under his leadership, and he'll also talk through the plan for consistent, profitable growth going forward. Next, we'll change the format slightly. I'll invite the three general managers on stage with myself, where we'll have a roundtable and talk through the initiatives and opportunities for the business units.
Kevin Willis, our Senior Vice President and CFO, will then walk through the financial opportunity, as well as the capital allocation strategy associated with our plans today. We will then aim to leave plenty of time for Q&A. We'll take questions for those in the audience, and I will also be moderating any questions that come through on the webcast. So feel free to submit online as well. Following our Q&A session, you probably noticed as you got off the elevator, we do have Globalize and Innovate stations in the lobby. What those are? Those are technical and commercial leaders that are oftentimes directly driving the strategies that we'll talk about today. So I encourage you to stick around and get to know them better as well. With that, we are thrilled to have you here. We appreciate your time and attention.
I'll welcome to the stage Guillermo Novo, our Chair and CEO. Guillermo.
Thank you, William, and good morning to everyone. Welcome to New York and welcome to our Investor Day today. Just a few things before I jump into our presentation. We did make a little bit of adjustments into what we had planned to present today. We were going to focus more on the longer term, but again, being more sensitive to some of the dynamics that are going on, you're going to see a little bit more focus on the here and now, some of the things that we're doing today, but we will be talking about our longer-term growth opportunities, not just in this presentation, but as William said, outside. Talk to the teams. These are the teams.
A lot of new leaders that we brought up, experts in these areas, and they're taking a lot of these, both the Globalize and the Innovate portfolios that we have, into very different directions based on their expertise and opportunities. For today, our goal is very simple. One, we want you to meet some of the new leaders. The company has changed a lot. We'll talk about the businesses, the portfolios, and all that, but the people have changed, and I think it's important for you guys to get to know them. Second, Ashland has changed too. So we want to present what is the new portfolio of Ashland, and more importantly, as we move forward, financially speaking, what's sort of the baseline on which you can start measuring performance? Where is our performance going to go?
History is not going to be a good indicator of where we're going in the future. Third, I would say the current times, the big theme is uncertainty. I don't think it's good or bad. There's just a lot of things over the next two, three quarters that are going to happen around the world with new governments, trade policies, and all that. So it's about how you deal with uncertainty. Here at Ashland, we're focused. We have a clear agenda. We have a lot of self-help actions. You're going to hear about those. Those are absolutely critical in the near term, and we want to present those to you. And then lastly, yes, we do want to have a discussion and give you an update on our growth catalyst, which is our Globalize and Innovate.
There's a lot of exciting things going on there, and we want to give you a color of where things are going. In the future, we will do another update, more specifically on those long-term items. So key messages that I would leave with you is one, our transformation is at the last stage. We're basically done. We have one more business that we're exiting, Avoca, that was part of the pharma acquisition. That should be done within this year. Two, as I said, we have built a diverse and experienced team that really are the ones that are taking ownership to drive that. And I want you guys to meet the people, to feel the confidence, not just hear what I'm saying, but what they're saying and where they're going with the portfolios. Productivity is going to be a big theme for us, especially in 2025 and 2026.
Independent of what's happening in the outside world, we have a lot of things that we can create a lot of value in the short term for us, so that'll be a number one priority for us. If you look at the portfolio that we have right now, we have meaningful growth catalysts. For a $2 billion company, these catalysts are not targeting little opportunities. They're big opportunities that can change the company, and that's probably the biggest change you're going to see from a few years ago to today. That's a question many of you asked me a few years ago is, what's going to drive growth? You guys are innovating old stuff, just doing a lot of incremental. Things have changed. We have not a technology. We have a portfolio of opportunities for businesses that are high quality, that we can globalize. We have all the technologies.
We have everything that we need to grow them. And we have now a portfolio of new platforms. These are things that can go into multiple directions. And it's a portfolio. We're not making a bet on one technology, on one thing. Some things will work much better than we think. Other things probably won't work as well. But through a portfolio, we can manage risk and we can really drive that success. And lastly, I hope you've seen we've been very disciplined about our capital allocation. Our balance sheet is pristine. We've done that on purpose. In the last few years, we have not tried to run our operations just to pump up short-term results or just the P&L. We believe that in uncertain times, a strong balance sheet is absolutely critical to the flexibility.
So we're entering this new phase of our journey in a very strong position that we can invest in growing organically our businesses. And if opportunities come, which I think there's going to be a lot in the future, we're going to be well-positioned to explore those opportunities. So very briefly on the journey, many of you have been through it. Decades of change. And I do want to recognize the prior management. This is a company. Yesterday, we did the bell ringing, 100-year-old company, oil company, diversified commodity chemical companies, specialty chemical companies. And now we've really honed it in. So the last few decades has been a big transition, a big part of the success. And some of the prior leaders had a very strong vision of where they wanted to take it. And I want to give them credit for that.
The last four years, we've honed in within the specialty material space into what we wanted to be. Additives and ingredients, really high-end spaces where we believe we can add a lot of value. Low cost in use, high value in use, that we really can differentiate and create value, and as we presented in the last Innovation Day, it's a coherent strategy. It's not random. All these technologies, we sell them across. We modify them differently for different markets, but they do make sense as they come together, so we have now finalized that portfolio change. Our future, the Ashland of yesterday, is not the Ashland of tomorrow. There's not a lot of parallels that you can make between the two, so let's start with the financials. Where are we? What is this new company, and what have you done in the last year?
So first, in the last year, we exited two businesses that we did not have leadership position. A big part of the sales were in more commoditized markets and areas where we were player number five, number six, number seven. We were just selling out, and those created a lot of volatility. So low margin, high capital intensity, high working capital. We downsized those. We still have parts of that portfolio that are strategic to us, but that has really changed our footprint, and it gives a lot of flexibility moving forward. The pharma acquisition did not work out very well for us. We just sold the nutraceutical business that happened in August just recently, and we're in the process of exiting the Avoca business. So most of the actions are pretty much done.
What we expect from these actions is a more robust portfolio that's focused on areas where we have leadership positions, high-quality markets, and it allows us now to dedicate all our resources, our capital, our human resources to these high-quality businesses, so we don't have to start spreading our resources and time across businesses that are not core to us, so big change for us. That puts us right now at about almost $2 billion in sales, EBITDA of $430 million. EBITDA margin is around 20%-22%. Our intent as we work this was to be EBITDA and earnings neutral, so our real target was to end up at $460 million. So we should be at $2 billion, $460 million, around 24% EBITDA margins. The issue there is just timing. We just sold the businesses. We haven't had time to take all those actions.
Frankly speaking, part of the self-help actions we were planning to do them to offset. So the first $30 million is really about getting to that. But we have taken other actions. We did a recent share repurchase. And from an EPS perspective, we neutralized any impact from an EPS perspective. So it's really now we want that EBITDA back to where we wanted. Our footprint has changed. The workload has changed. And we're going to right-size our operations in line with those changes moving forward. 80% of the portfolio, as you're going to see, is focused on those high-quality markets that we want to be into. So let's talk a little bit with this portfolio. So near term, what are the things that we have to deal with as we move forward? And I think the issue is, as I said before, the word is uncertainty.
We don't exactly have a great feeling. Elections surprised people of how results were going. Europe is going through a lot of changes, and I think the next two quarters, as the new governments come in, you're really going to start seeing some of these policy, trade policies. Those are the big issues impacting our part. The consumer side, and most of our markets are focused on consumer side, are actually holding up. It's the manufacturing side, our part of the industry where you're seeing a lot of the noise. It's where are the products coming from, who's supplying, and what's happening in those areas, so two areas that I would say we're focused on: Europe and China. Europe is having its very serious challenges around the manufacturing area. The material space is very hard hit at this point in time.
We've been fortunate that that's not impacting us as much directly, but we're looking at our suppliers on what's happening over there, and the whole issue is without low-cost energy and a lot of the Russian natural gas, a lot of that industry today is not competitive, so they're struggling with that. Add to that the energy transition, the continuation of the Ukraine war, and just the general impact it has on the consumer confidence. It's trudging along. It's stable, but it really is not moving at this point in time. The other big one that's changing is China, and there it's a little bit different. China, as you know, has been growing a lot through capital investment as a big driver, building a big export manufacturing export machine, and yes, the development of its own consumer markets.
But the reality is consumer markets haven't grown fast enough to offset the other two. The property market is down significantly, and we don't see that that's going to be something that's going to be turned around very quickly. You have to restructure debt, and you got to rebuild confidence in the consumer in buying properties again. So this is probably going to be an issue of 2025 and 2026 moving forward. And for us, it's more about the construction side, the coatings market that we're going to be looking at. So these are not novel things. We have been working on it. And so we've been preparing. A lot of the things and the self-help actions, we were planning to do them anyway. We were planning them because it was going to strengthen us. Now we're making it more urgent because there's more headwinds, there's more things.
We need to move quicker to get the benefits of those actions, not just for financial improvement, but also to increase the competitive position of some of our core business. We're well underway. All the things that I'll talk about have been planned out. They're not things that we just woke up a month ago and started to work on. Specifically, I didn't want to point out three things that we're going to be doing in 2025. One, as I said, exit the Avoca business is very important for us. Two is of the $90 million of self-help that we're doing, we want to deliver at least $20 million in fiscal year 2025. We see a lot of uncertainty right now in what's going to happen over the next two quarters as the new government in the U.S. steps in and all these trade negotiations.
We don't know. It's uncertain. Positive or negative, we don't know. It really depends on what actions happen. So given that we are in our low season and we wanted to really create the maximum versatility, build resilience to be able to respond to things, we've decided to move all seven of our normal turnarounds of our plants. We moved all seven of them to this quarter. And most of them are already finalized. But that'll impact us around $20 million the quarter. It was already planned in the year, so it doesn't change our annual number. But I think it positions us well. So whatever happens in Q1 or calendar year Q1 or Q2, we'll be able to respond.
We do not want to be doing turnarounds if policy changes happen and demand goes up in a certain region or we need to take action. So building that flexibility is our number one priority. And I think that'll position us well for the year. So if we look at that, where are we today as Ashland then? As I said, $2 billion in revenue, about $430 million in EBITDA, a very, very good mix geographically. We're present in all the geographies. We have a very strong position. We have an excellent quality mix of customers, all the A-listed customers in any of the industries that we serve. 80% of our business is focused on our big three businesses. But as you can see, Life Sciences, Personal Care, Specialty Additives are the core.
These now are businesses that have a strategic coherence around the products, how we build that competitive advantage to differentiate ourselves. As I said, totally big change in our leadership team. You're going to hear about some of the leaders, the business leaders later today, so you can get a feeling for where they're coming from, how they feel about the businesses that they're running, and about the company in general, but some of our other leaders that aren't going to be presenting, they're also present here. I encourage you to connect with them and talk to them. You get a feeling in the manufacturing and some of our other operational areas. They can give you some good insights, but I want to repeat, go outside and really meet some of the people in the stands. Those are mostly a lot of new leaders in commercial, in marketing, regional leaders.
Our technology group has radically been revamped because what we see is the expertise that we need for where we're going is not the expert not only we need the expertise from the past, but we need to augment it to the things that we're going to go in the future, which are very, very different. So I feel that's a big accomplishment for us and a big change over the last few years. So today we have the portfolio that we've been talking about. There's no more excuses. There's no more talk about who we want to be. We are what we wanted to be. We're an additives and ingredients company focused on high-quality, consumer-oriented markets where we have leadership positions. We have the infrastructure, the scale in our businesses. At $2 billion, we're, if not the biggest, one of the biggest players in our industry.
We can compete with anybody in these areas. We have the focus. We have the patience. These are things that you have to be very dedicated. There's no build a plant, throw the switch, and you're selling $1 billion. These are things you're driving through innovation, through growth, and we have that portfolio. The other thing that differentiates us is the sustainability profile of our portfolio is very, very strong. It is strong, and as you're going to see, the things that we're working on are also very strong drivers around sustainability. But where we're going is not driven by sustainability. That's the benefit. That's why our customers want it. It's actually driven by cost performance. The technologies we're driving really are good for our customers because they perform equal or better than the incumbent technologies.
And that's what excites us, that now we can enable, and it's a very, very different place from where we were a few years ago. As I said, the big three, pharma, personal care, and coatings are our core businesses. These are really healthy businesses overall. Yes, in points in time, like now, you get a little bit of noise around the world. But if you look at the decades of history that we have on these businesses, they are robust, and we have a very strong position in all of them. They're all growing. The long-term growth outlooks for these businesses are great. And we see a lot of opportunity for us to grow within those big three. And hopefully, as you see the new technologies, hopefully we can now go and maybe create a big four or big five.
There are opportunities for more, but these markets really can drive growth for us. The growth trends that are driving them are very strong, all of them. Demographics play in our favor. Evolution of many of the emerging markets continue to grow. That's a lot where the youth is. We're very well positioned there as we grow. Sustainability and those trends, again, we're very well positioned to capture that and now capture it with performance. And a lot of new technologies are evolving. You hear a lot for other industries, AI driving a lot of things. We're using AI. But for us, pharma, biopharma, all the bioprocessing opens huge opportunities in injectables, in consumables for manufacturing, the manufacturing processes. So there's a lot of areas that I think we're very happy with the portfolio and the opportunities that we have to grow. So what hasn't changed? Our strategy.
Our strategy has been very, very clear. And for us, it's the execute, globalize, innovate, and invest. And you'll hear a little bit about them. But for us, that gives us a very strong roadmap of where we need to be acting in the future. And you can expect us to stay focused on that. So let's start with execute because that is really critical in this environment to drive our near-term performance. And Kevin will give you a lot more detail, financially speaking, of what that means so that you can get the magnitude of the impact. But obviously, action number one, get out of Avoca. That right now the profitability is not in a good place for us. It's not a core business for us. We're in a process right now to exit that business.
So I don't want to really talk a lot about the business, but just know that we're very clear on where we want to go with the Avoca business. Two, it's the $90 million. And you're going to hear about the $90 million of commitment that we have in our self-help actions. That is our number one priority at this point in time. For 2025 and 2026, that's the biggest mover of things. You're going to see with Kevin, other things are going to growth and globalize will impact. But that one, we see something that we can control independent of what's happening in the world. We continue to build and invest. And that's one of the good things that I feel very good about the strategy we've been executing. Our balance sheet is very strong. Our cash flow is very strong. Our profitability is still very strong.
So we can invest in our growth. And we are investing. All these new people that you've seen, you're going to hear from our general managers. We're investing in its asset light, but we're putting facilities around the world so that we can globalize these businesses. We're working on our supply chains. We're building new lab capabilities to work with our customers in some of these new technologies in this area. So we are self-help on one side, investment on the other. We're doing both. We just want to reallocate. And it goes back to that issue of capital allocation. We want to be efficient in how we allocate that capital. And then the last part that we're also working on is improve ourselves, our systems. We're using AI in R&D. We're going to start doing a lot more in manufacturing, those kinds of processes.
But even looking at our financial systems, our operational systems, we got a lot of older legacy systems. We see a lot of opportunity, especially as we empower our new business leaders. If we really want to push those teams to drive accountability and ownership, they need to have visibility for these things. So you're going to see some improvements and actions that we're doing in that area. Specifically, the self-help action, $90 million. So how is that going to play out? We have $30 million of cost reductions that we're working. We expect 50% to happen this year and the other 50% in 2026. Of the $60 million, it's productivity. This really is about not just the financial benefits. It's about improving the competitiveness of our core businesses. And the focus is HEC and our VP&D business. These are our two fundamental businesses.
We want to be the lowest cost producer. We want to be the most differentiated player in these areas. And that's where we're putting the big investments. So of the $60 million, we expect around $25 million each to come from HEC and VP&D. And you'll hear some comments from our leaders around that. And the other 10 will be just productivity areas and other parts of our portfolio. But you'll hear much more about productivity over the coming years. This is some big rocks that we're moving to get the impact that we need. We see a lot more opportunities for us to invest and create value through productivity over the coming years. And this is going to be part of the technology investment, process technology. How do we get that productivity, that yield improvement across our plants so that we can be the number one player? Globalize.
I'm going to leave it for our general managers when they come talk to you, give you a little bit more color, but the simple story is four businesses: injectables, our film tablet coatings or film coatings for pills, our Microbial Protection, and our Biofunctionals, and so two in personal care, two Life Sciences. they're 10% of the company. They have significantly higher margins than our average today for the company. They are growing already very well. They were at a small base, but they continue to grow. Some of these businesses over the last few years were growing at 30%-40%. Last year, the average of them was around 15% in a down year, so they continue to grow.
So if we just keep this momentum with them, we believe that it can generate about 150 basis points of revenue growth for us in terms of their ability to grow. The margins are higher, so the EBITDA growth would be even better than the revenue growth as we move forward. These businesses have the technology. What we've done is really add the resources for us to be able to execute. So those are going to be easier for us to track and model. Well, let me take a moment to talk about innovation. And as some of you know, this is a big passion for me. This is probably the biggest change that has happened in the company over the last four or five years. We didn't have a lot of new things. We were incrementalizing a lot of the innovation.
Last year, it's only been a year that we presented our new technology platforms. I'm happy to report, I mean, we've made a lot of progress in all of them. So you know it's the seven ones that we talked about: our transformed vegetable oil, novel cellulosics, modified multifunctional starches, pH- neutralized, super wetter, liquid cellulose, and our bioresorbable polymers. All of them are moving. Each one is taking a life of its own. And I'll share with you how they're evolving. And I think the bigger part of it you'll see really when you talk to our leadership. But again, what have we done differently? We're investing. We really have changed our ability now to drive these technologies forward. We're launching a lot of products. You'll hear about them. We're developing. The engagement with customers has been significant. The feedback has been extremely positive.
They see Ashland as one of the companies that's really trying to bring in new, game-changing, really novel technologies. And that really is an exciting place to be. But let me take you through this. This is a conversation I have with our customers and why I'm excited about the future with some of these technologies. And I'll use the TVO as an example, but it applies to some of the other ones. A lot of our push is moving towards more sustainable technologies. The issue is it's a difficult road. Replacing incumbent technology that has been there for five decades, six decades, they got to build out infrastructure to manufacture around the world. Being cost-effective is very, very difficult. That's the biggest challenge for our customers. They want to move to sustainability, but it's got to be affordable. If it's sustainable but doesn't work, I don't want it.
I'm not going to reduce the quality of the products that we make. And I cannot, there is a limit of how much I can pay for some of these things. So that's what we're excited about. Our issue now is we're focused on performance and cost performance moving forward. So I'll use the TVO as an example. For a customer to be successful, they need to get a product that works. It needs to be cost-competitive. And it's got to be a product that moves the needle from a sustainability. If it's just a little bit of improvement, why am I going to do all this work? So we take our customers through it and say, "TVO. So look at the applications now." We started in personal care with some sunscreens. Now it's going into hairstyling. It's going into color cosmetics. It's going into oral care.
It's going into skin care. Life Sciences, we're launching it now this year, end of this year, into seed coatings. For ag, we're putting it now in pill coatings. For tablet coatings, we have the probably the business that has changed the most is Specialty Additives business. we went from a rheology franchise. You'll hear from Dago, a huge opportunity for us to go into many new areas, not just in architectural, but into the industrial coating. UV curing, alkyd chemistry for replacing synthetics, microplastics in many areas. Huge area. When we look at it to our customers and say, "Look, it's not I'm working with you. I'm working with many industries. This is a technology that's going to have life, that it's going to have scale. We can build volumes around this.
So it's good for you, but we want to give you visibility to what we're doing in other areas so you can believe it." I came, for those of you, Rohm and Haas, we were big on acrylic chemistry. Somebody 60 years ago invented it, went into coatings, then leather, adhesive. I mean, it became a huge thing. And many, many other players are in the industry. For TVO, we see that kind of opportunity. It's a fundamental chemistry. And by the way, it's proven already because alkyds have been used. It was the product that acrylics and the synthetics replaced. Two is the cost. Okay, that's nice, Guillermo. It works. But can you be competitive in cost? Well, we look at this one. It's oil, vegetable oil. First, alkyds were competitive, are competitive today.
But oil, compared to acrylic acid, BA, any MDI, TDI, any of the raw materials, the raw material is available. It's cost competitive. It's local. So we can compete on a raw material basis. We say, "Okay, that's nice. But can you make it effectively?" Well, good news. We make it in the same equipment that they make their product on. Why would our product work at cost any different? So we can take our customers saying, "Look, these are things that we can get to the cost points that you want over time." Right now, we have the equipment to launch. If you want it in other parts of the world, I don't have the equipment. But the good news, the equipment's already out there. Our customers have it. Some of them are back integrated. There's a lot of assets you can buy right now very cheaply.
We can license. We can partner. There's a lot. As this technology goes, there's a lot of opportunity. So for our customers, it's like, "Hey, if I have to work with you on something and invest, this is worthwhile. This is an area that's worthwhile going." And then we show them the sustainability profile. Natural, natural derived, biodegradable. Depending on the product you want, we can tune it to whatever performance you want in the sustainability range. So it's meaningful. If you have a commitment in personal care to really transform your formulation, this is something that actually moves the needle for you. So our customers are very excited. The success of this really requires partnerships. You cannot build this out overnight. It's not, "Well, build the plants, build the network, and then I'll buy it." Well, that isn't going to happen. You have to be a part of it.
That's what excites us now, that our customers are very excited. They're very committed. They're participating with us. And you can see where all these technologies are going. I gave you the TVO, the novel cellulosics. It's cellulose. We're already in that business. We're converting old plants to the new technologies. It's going to cost more or less the same as we do today. So it's cost competitive. The pH- neutralized, same thing. So we have a lot of different and what's good for us, we're not investing a lot in capital. Repurposing assets at this point in time and assets in a cost-advantage place like the U.S. actually is a big advantage for us, especially in these early stages. And then we can invest over time in other areas.
So innovation is going to be a big, it's going to be what you're going to talk about in three years, in five years, the next 10 years. That's sort of the roadmap that we're taking. On the invest side, before we talked about M&A, it's more than M&A. Because we have growth catalysts, organic things we can invest, we don't have to do M&A, but we do want to do M&A. So M&A is still focused. It's mostly bolt-ons, pharma, personal care coatings. Pharma is anything to do with oral solid dose, but mostly in injectables, personal care. It's about sustainability, and in coatings, it's about beyond rheology, within architectural or beyond the can, as Dago will explain to you, going into industrial coatings and other areas. But what's changed is we can now also buy assets. Manufacturing now, it's a build versus buy.
We have the optionality to buy assets or partner. And like we're doing now, investing. Rather than putting a lot of money in a very risky acquisition, we're putting our money in people and making sure that we're driving this. This is more in our control, much lower risk, and higher probability of success. And the good news, it's across our four businesses. And our execute, our globalize, and innovate, all businesses are driving it. Everybody's involved. Everybody's driving it. And that also creates a very healthy portfolio for us to move. Different businesses move at different timing. We can create more momentum as we move forward. So Kevin will give you a little bit more details on the numbers and everything. But my message to you is the growth algorithm has not changed. Number one, we're in good markets. So the market growth should be robust.
You're still seeing it. Yes, our industry is getting hit a little bit now on the manufacturing side with some of these trades and some of these global dynamics, but our customers are very healthy, and that's, for me, a very important thing, and once the dust settles, our growth potential in those markets are going to be very healthy. Two, globalize. We have the businesses independent of what's happening, we can grow them around the world. They're newer products. They're higher margin, and we will continue to drive growth there, and on the innovate side, we're innovating on our core, and you'll hear some of our leaders talk about the core innovation. There's still a lot of things that we're doing that'll drive a lot of the near-term growth, but then we have a lot of the new business, the new technologies.
And those are really building about the future. We're getting momentum. We'll get commercial momentum. But really, that's a journey that's for the next 10 years that we're going to grow. I've been in other companies that have gone through this. It's one of the most exciting times when you're really developing some of these newer technologies and really changing. The industry is, and I hope you'll hear that from a lot of the people that have joined us, being part of that journey is very exciting, professionally speaking, for all of us. And then on the invest side, we're going to be ready. There are opportunities. It's not the core of what we want to do. But if the right opportunities come forward, we will take advantage of that. So with that, I hope you're seeing a very clear story, a very consistent story.
Nothing new in terms of the direction of what we're going, but a lot of new things in terms of having completed the changes, having the portfolio that we want. We are taking actions. We're not waiting. I think we've been ahead of the curve in terms of preparing ourselves through our portfolio actions, through the self-help actions, and through the investments we have put to build some strong growth catalysts for the future, so we have a healthy portfolio built on high-quality markets with leadership positions. The margin profile, the earnings profile is good, and it's improving. We're strengthening the quality of the earnings of the portfolio that we have, and we're in segments that really can drive significant growth and excitement for us for the future that we can really benefit all our stakeholders. First, our customers. We can innovate and create value for them.
If we create value for them, we create value for all our stakeholders, especially all of you, our investors. So our teams will be in a better position, our customers, the communities that we operate in, and for our investors, we'll be able to reward. So with that, let me pass it over to William and the GMs. You'll get to hear about them of a little bit more detail and color of the things that we're doing. So thank you.
Okay. In this next section of the agenda, I've brought three of our business leaders on stage for a roundtable discussion on their business units. I'm joined on stage by Alessandra Faccin, General Manager of Life Sciences and Intermediates business unit. Jim Minicucci, General Manager of our Personal Care business unit. And Dago Caceres, General Manager Specialty Additives business. guys, the first question.
Guillermo's talked a lot about enhancing the capabilities and experiences of our leadership team. Each of you are relatively new to the company. Please provide a brief introduction into yourself and the rationale for joining the company. Alessandra, let's start with you.
Yeah. So thanks, William. Good morning, everyone. It's a pleasure to be here today. I joined Ashland six months ago. And before that, I was in the specialty chemicals and also flexible packaging industry in a variety of finance leadership and general management roles in the U.S., in Latin America. And then most recently, I was in Asia-Pacific. And the reason I joined Ashland, it is the excitement about our innovation pipeline, our innovation platforms, and the opportunity we have to really transform Life Sciences business.
Jim.
Thank you, William. Good morning, everyone. It's good to see you all.
As William mentioned, Jim Minicucci, I lead our Personal Care business. I've spent my entire career in the specialty materials and chemical space. I've been fortunate to work all around the world, and I lived in Asia for nearly a decade in the consumer space, in the electronic space, and in the industrial space. I've managed businesses for a long time, extensive experience and strategy in M&A, and I got my start in the lab. I joined Ashland really because I believe in the company that we're building, the direction that we're going, and the portfolio, especially the innovation portfolio. I'm excited to be here, to be a part of it, and to positively impact it.
And Dago.
Thank you, William, and again, good morning, everyone. Truly a pleasure to be here with all of you. I'm Dago Caceres. I'm the Senior Vice President and General manager for Specialty Additives.
A little bit about myself. I have over 25 years of experience all in the specialty chemicals sector. And most of that has been on business-related roles. So I've done commercial. I've done marketing, product management, business development, strategy, and general management. And my passion has always been innovation, as I think Jim and Ali alluded to, growing the business profitably through innovation. And that's precisely why I joined Ashland as well. I do believe there are very few companies in this sector that are doing true innovation. And Ashland is one of them. So I wanted to be part of the journey. And about eight months ago, I decided to join the team. And, well, very excited about the contributions that we're going to make to the company. And a pleasure to be here again.
Thank you, team. And we're certainly happy to have you. Onto the next topic.
It's around markets. Guillermo's provided some high-level review of the markets that we participate in. But could each of you describe in more detail the end markets for your business units and where opportunities you see for growth? Alessandra.
Yeah. So when you look at Life Sciences, so Life Sciences, we have one of the broadest portfolios in our industry. It is truly we do have a global reach, a global presence in our Life Sciences business and a market-leading position in our VP&D and cellulose technologies. Pharma represents about 85% of our business. And our strategy is first on OSD. It is to maintain and grow our leadership position on OSD with our growth in film coatings and also cellulosics. Second, it is to disproportionately accelerate and resource our injectables business with a very attractive market and high growth rates.
Then, third, it is with our innovation technology to grow in adjacent markets, for example, agriculture, crop care, and then also to optimize our assets with growth in nutrition.
And, Jim.
Sure. So in Personal Care, our strategy is centered around two areas. One is accelerating growth in our core additives and then also globalizing our high-value businesses in Biofunctionals and Microbial Protection. The way we think about the market is we sell into four markets. Skin and hair represent roughly 70% of our sales. And these are more diverse, broad markets for products and customers. And then the balance of our sales are into oral care and home care, which tend to be more focused segments. If you take one segment as an example, hair, you then have subsegments under that. You can go into styling, shampoo, conditioning, coloring, treatment.
And then from there, you can further dissect it into products. So you start with hair, subsegment like styling, and then you have products, for example, spray, gel, or mousse. In this market map, we look at it on a regional basis by region, North America, LATAM by countries, APAC by countries. In terms of growth, for us, it's really important to first be in attractive markets. I believe Personal Care is an attractive market. The underlying growth is resilient. The actions we're taking in our execute priority will continue to strengthen our position in an underlying attractive space. Our globalized actions, Biofunctionals and Microbial Protection, these two markets are over $2 billion in market size. We have significant headroom to grow in these spaces. We're resourcing them. And they'll be a growth catalyst accelerator for us. The third is innovation.
Our new technology platforms intersect the key industry trends that are happening in the Personal Care space. If you think about clean beauty, clean labels, a growing middle class, a shift to more premium products, sustainability, our new technology platforms bring those solutions that the industry is looking for as they go on this journey of change where we're not only participating in this change, but we're really leading this transition in the industry.
Thank you, Jim. And Dago.
Thank you, William. And we'll probably divide the question into three areas. So number one will be who Ashland is today. Number two will be who do we want to be moving forward? What's our aspiration? And number three really is how do we get there? So if you look at who we are Specialty Additives, we're a global manufacturer of additives with heavy reliance on rheology modification.
That's our core technology and focus on architectural coatings. That's our key market. We're well diversified from the original standpoint. We're well diversified from the customer-based standpoint. We're well diversified. And we also participate in other segments like construction, energy and resources, and performance specialties. So that's who we are today. Now, who do we want to be? We want to expand where we are today. And we want to become a supplier of additives beyond architectural coatings into industrial coatings and other attractive industrial spaces. That's basically what we want to do. Beyond that, we want to develop enabling technologies, new building blocks that would allow us to disrupt existing industrial markets that we see as very attractive. And very quickly, how do we get there? That's our strategy. Our strategy is four pillars. Number one, protect our participation in core rheology today.
So that's the heavy focus on 2025. Number two is additive space in architectural coatings is a natural adjacency for us. We know the customers. We know the formulations. We know what we need to do. So that's something that we can do easily. Number three is industrial coatings. So there is a very good overlap in terms of customer base. So we can go after that one. And they are willing to pay for innovation and technology. And number four, and the one that gets us very excited, is again the transformational piece where we believe we're developing very interesting building blocks that would allow us to disrupt some existing and large segments in the industrial space.
Thank you, Dago. I'd like to shift the conversation to three of our strategic priorities: execute, globalize, and innovate. Execute has been a key focus area for today's discussion.
Dago, including that we have the $90 million commitment at the Ashland level through fiscal 2027, what are some of the areas that you see to improve how we execute on a day-to-day basis?
Thank you. I thank you, William. For us, Specialty Additives really means our cellulosic envelope, HEC. That's really what it means. I would say we're focusing on three to four areas. The number one, critical one, is to optimize our global asset footprint. There is a lot we can do. We have a very diverse footprint in several regions. There is a lot we can do to optimize it so that we serve customers well across all regions. So that's number one. Number two, it has to do with productivity improvement. I think Guillermo mentioned this. It's a really good point.
It's really about making our products in a more efficient way, lower reaction times, better yields, et cetera, et cetera. Number three, which is also, again, happening as we speak, is what I will call product management process optimization. So rationalizing our SKUs, better production cycles. By the way, I believe, Jim, you're also working on that, on SKU rationalization. That's extremely critical for us as well. Number four, I will say we continue to invest in the business. Again, rheology modification is our bread and butter. So executing on our capital programs is extremely important for us as well.
Yeah. Dago, I mean, when you talk about HEC, right, it's very similar. Guillermo mentioned, I mean, 50 out of the $90 million of our commitments for restructuring and productivity improvements is going to come from HEC and VP&D.
So, VP&D, the cost optimization, it is very critical to our success, basically for us, for Ashland, to remain competitive, to retain our share, and to grow and gain. And when you look at VP&D, we're talking about multiple different products, different grades, and also several different assets, production lines, right, in our two largest sites. It's Calvert City, Texas City. And those two larger sites, we have assets that are underutilized. So it is an opportunity for us to look at our multiple different lines. How do we optimize? How do we bring productivity? And it's a mindset shift where we're looking at productivity savings. When you look at our continuous assets as an example, right, the BLO, 2-Py, and VP, we have an opportunity to streamline, to bring cost savings and efficiencies.
And also, as we look at our batch, our continuous batch and our solutions process, there's also opportunities to bring productivity and cost efficiencies. As I said, we have assets that are underutilized. And it is a mindset shift looking at productivity. But VP&D, I mean, it goes across the three business units. It has an impact. It is our core technology. It impacts the Ashland overall. Of course, it impacts Life Sciences. But also, Personal Care is one of the core technologies.
Absolutely. So we spent most of the summer and the fall together at Calvert City, at Texas City, really mapping the process flows in our VP&D business. It's a large franchise for both Life Sciences and personal care, mapping our asset capabilities, the products that we make in the different reactors at the different plants. We've built now what we believe is the new network.
And the team is executing that going forward. And so we're very excited about how that's really going to strengthen that franchise for us and our competitiveness in the market. In addition, sourcing is another area that we're looking at very closely, especially within the Personal Care business. When you look at the different business lines we have within the Personal Care space, sourcing is a critical element for us. And we have a real concerted effort right now looking at our different raw materials and our intermediates that we're procuring. And we see opportunity there as well to be more efficient in our sourcing activities. The other area that I've spent quite a bit of time on is we've adjusted our structure to align with our strategy, accelerating growth in our core additives, plus to enable the globalization of Biofunctionals and Microbial Protection.
And with that new structure, we've also brought a lot of new people in. And I've traveled around. I met with the team. I spent a lot of time with customers. And we're changing our customer engagement model. The way we do account planning, the way we engage with customers, the way we manage our opportunity pipeline, our call reports, our call visits, being very efficient in commercial excellence is critical for us. I believe in managing from the market back, being as close as possible to the front line and managing back. And so that's another big opportunity that we have within the execute pillar is to continue to advance our refined customer engagement model.
Jim, I'd like to follow up on a point you just made. We highlighted the changes at the leadership level, but we're also investing at all levels of the company, bringing in new talent.
What are some of the early observations that you're hearing from the team that's recently joined?
Yeah. So I think first, I mean, we have a great team with highly talented and motivated people. As we execute our strategy, especially within our globalize and innovate strategy, we need to augment and add to our existing talent base with other capabilities and experiences. And I have to say, I mean, we have been really fortunate with the talent that we have been able to attract and bring into the company, people with significant experience in the markets and in the spaces that we participate in. I recently brought on a new technology director for Personal Care, somebody who has over 30 years of experience in the space, innovating in R&D in Personal Care. Dago, I know you have a similar experience.
That's exactly right.
So actually, the new technology Specialty Additives is sitting here with us. And I would very much encourage all of you to take the time to walk the stations and talk to some of them because they're truly experts in their field, and they're really making all these technologies come to life for our customers.
Yeah. Th e two of them are sitting here.
They're both here.
And others as well. We've added in technology. We've brought new general managers, and we've added to our commercial team, to our operations team. And many of them are here. Encourage you all to meet with them, talk with them during the breakout sessions, and hear from them what attracted. What we've heard is one is the empowerment, the opportunity to be part of something and really drive it and own it and build it. Innovation is another thing.
They're coming from the industry. They're coming from other companies. They are excited by what they see within our technology portfolio, and it's the direction that we're going, really, to Specialty Additives and ingredients company. I want to share, as we have gone through recruiting and interviewing, I mean, we take it very serious. We move fast, but it's a very thorough process. Candidates typically meet six to 10 people, and at the end of the process, when I've met with candidates, they've all shared the same thing. They said they had their list of questions. They asked everybody at Ashland that they met with the same questions. They got the same response from everybody they met with around our direction, our ambition, what we're committed to, our values, how we want to operate.
I think, one, it's very powerful to have that external validation around that alignment and consistency in the organization. I think it gives them, as it gave us, a lot of confidence in joining t he company.
Under our growth catalysts, our globalization strategy is one that we're really excited about. We're including a $100 million revenue commitment through fiscal 2027. We're making targeted investments in Personal Care as well as pharma. Jim, could you walk us through in more detail your globalization strategy and any actions that you're taking to catalyze that growth?
As mentioned, we're globalizing two businesses, our Biofunctionals and our Microbial Protection businesses. We view the growth here as efficient growth. That's really the theme I would leave you with, efficient growth, where we're leveraging our existing infrastructure, our existing chassis to expand these businesses. I'll share a couple of examples.
Talent. We have the organizational scale. Now it's really about aligning that organization with these businesses, and we've created dedicated and focused teams within our core additives, our cellulosics, our VP&D, and other functional polymers, focused team within our Biofunctionals business, and then also within our Microbial Protection business, so we are now focused in these business lines where we have sales and marketing team focused on really selling and driving these portfolios, so we're shifting the organization. We look at customers. Within our core additives business, we already sell to all the customers, MNCs, regionals, locals across the industry. What we're doing now is bringing the entire Personal Care portfolio to these customers.
So we have the relationships today, and we're now bringing our Biofunctionals portfolio in that team with our Microbial Protection portfolio in that team to the existing customers that we have today in those relationships, so leveraging that network. And then lastly, on our capabilities, we're building regional capabilities, whether it be manufacturing or R&D across the globe. In similar theme here, we're leveraging our existing network and infrastructure as we build these capabilities. These are more asset-light, blending, light reaction. If you look at in China, earlier this year in 2024, we commissioned a Biofunctionals plant in China. We built this facility at our Nanjing facility in China where we already have an HEC infrastructure there, leveraging an existing site and infrastructure to build a Biofunctionals manufacturer. Microbial Protection.
We're now making actives for Microbial Protection at an existing site in the U.S. using an existing reactor and infrastructure we already had in place. Similarly, in Brazil, next month, we'll start manufacturing in Brazil our Microbial Protection product line to produce and sell locally in Brazil. We've taken assets there that we already had in place. We've repurposed those assets, and we'll start making locally next month. Alessandra, I know you also have big plans.
Yeah. And also in the same site in Brazil, we are also making an investment in film coatings. It's not going to be next month, next quarter. So next quarter, we'll start the manufacturing. We'll start production of our film coatings plant in Brazil. So when you look at film coatings, there is a global large player in the market, a formidable competitor.
When we look at Ashland, we have a large network of ours and have penetrated a lot of pharma customers. We are well-known for our high quality of products, high quality of service, and also a reliable supply chain. It is an opportunity for Ashland to go into a market, film coatings, where there's an established formidable competitor. For us to globalize our business, we are making an investment in Brazil, as I mentioned. We are making investments in India. We already have established manufacturing in North America, not only with existing products, but also with differentiated solutions and innovations. We have launched recently high-solids film coatings, which is really going to bring operational savings to our customers with high throughput because of high solids, high throughput manufacturing for our customers, faster drying, and really to help us penetrate in this market with differentiation.
So it's bringing real savings to our customers. And then on injectables. Injectables is about a $1.5 billion addressable market. It's growing fast. And as we see more and more drugs being delivered via injection. And for Ashland, it represents a significant opportunity. First, I mean, we have an established network of pharma customers. And also, we bring, as an Ashland, a well-established, known high quality in our products, high quality services, our reliability from a supply chain standpoint. So it's really bringing globalizing injectables. When you look at it, we announced recently that we made an investment to expand our R&D and manufacturing facility in Ireland and also in the U.S., in Ohio, Columbus, Ohio. We are making and we'll be making investments in our injectables manufacturing in the U.S. So between U.S. and Europe, the two largest injectables markets, we have manufacturing established.
We have made investments in new business development resources across the four regions in North America, Latin America, Europe, and Asia-Pacific. So it's really taking injectables to a new level from disproportionately resourcing and investing. We launched three products in the last three years. We are going to launch four products in 2025. So we're very excited seeing the momentum with double-digit growth in the last couple of years. And I invite all of you to spend time in specifically injectables and film coatings we have in our stations. So I invite you to spend time with our colleagues and learning more about products that are commercialized, already launched, and also products that we'll be launching in the next year.
And Dago, I'd be remiss if I didn't mention Specialty Additives. we know that you're focused more on a regional deployment at this stage.
However, I would also note there is a transformational innovation opportunity afoot Specialty Additives business. so that brings me to my third pillar, the innovation strategy. The company's making a $100 million revenue commitment from core innovation as well as the new technology platforms by fiscal year 2027. Dago, what are some of the areas that you see that are ripe for innovation for Specialty Additives?
I think for Specialty Additives, really the name of the game is to have a balanced portfolio, right? And balanced basically meaning that we're looking at opportunities in the short term, in the medium term, in the long term. So I'm going to talk maybe a little bit about our core innovation. That's more shorter term. And then I'm going to talk about our transformative innovation.
So on the core innovation, I think the message number one for everyone is that there is a lot of innovation that very much can still happen, and it is happening in the rheology modification space. Just to give you a couple of examples, we are launching this year our synthetic portfolio, which is really going to expand the toolkit for our customers to formulate with our products. So that's number one on the synthetics front. On the cellulosics front, we continue to see opportunities to very much differentiate from the performance standpoint in rheology modification. So that's actually to us, that's very exciting, right? Now, if you go to the transformational piece, you go to the transformational piece, but let's stay in the topics of coatings.
Just kind of to put things into context, when you have a coating formulation, it can be a deco paint or it can be an industrial coating, you essentially have four ingredients. That's all you need in a paint. You have the binder, and the binder is really what glues your paint onto the wall or the ceiling, right? That's the binder. Then you have the titanium dioxide and the pigments that provide color and hiding, right? That's as simple as that. Number three, you have the solvent, and the solvent can be water or it can be an organic solvent. And then you have this catch-all category called additives. The biggest additive is rheology modifier. Why? Because you need the right viscosity profile. But you may actually need many other additives. So you need, for instance, a pH neutralizer to make the paint stable. You need a stable paint.
You might need a wetting agent. Why do you need a wetting agent? To make sure that the product spreads well onto the substrate. Whatever it is, it can be wood, it can be metal, etc. You might need others like defoamers, like biocides, etc. For two of those categories, wetting agents and pH neutralizers, we have developed new-to-the-world technologies in this space. So our wetting agents technology, we launched the product a year ago. We are in our maybe fourth or fifth grade that we have launched to the market, and we're seeing pretty good adoption. We're still waiting in some parts of the world for regulatory approval, but the adoption is there. In the case of pH neutralizers, this is very interesting because this is an area that has not been disrupted or changed in a long time.
The technology has been there for decades, and now we have a completely new approach, and we're going to launch in 2026. So what's very exciting is that these two technologies, just to give an example, it's not only for coatings, but it goes beyond coatings into industrial applications. The last point that I know we've mentioned TVO, Transformed Vegetable Oil, quite some time. My team is working quite a bit on TVO, but I won't have the time to do it here. I would encourage all of you, as Ali mentioned, to please go and walk the stations because there is a lot going on in TVO, but probably best for me to turn it over to Jim as Personal Care pioneer, the commercialization of TVO for Ashland.
Thank you. Yeah, I mean, we could talk about innovation for hours.
I think I really want to pick on two themes. One is around scalability and tunability. As Dago mentioned, we're developing the TVO, Transformed Vegetable Oil Specialty Additives for architectural coating. In Personal Care, we pioneered this technology. We launched a product specifically within sun care for acting as a film former, biodegradable, nature-derived film former to replace synthetics in sun care. So this shows the scalability where we're developing this technology not only across businesses, but even within a business, we can scale it across segments. We launched it in skincare for sun as a nature-derived film former, and now we're developing it in hair as a styling polymer. We're working with customers right now. We've already developed a product. We're testing it with customers. We've gotten very good feedback. We're now in that innovation development cycle with customers.
We're now [using] the Transformed Vegetable Oil is working as a styling polymer in hairspray. So not only the scalability part where we're developing it across businesses and then within a business, we can develop it across segments, but the tunability piece. If you think about sunscreen, we've all used sunscreen. If you have a bottle, you open the lid, you squeeze it, it comes out. Now using that same material in a spray, when you think about the nozzle, the dispenser, the droplet size, how is the mist coming out of the spray? To be able to tune the chemistry to work in different form factors and different product types really highlights the versatility and the tunability of the technologies. We're doing this across our innovation wheel, across the six, seven technology portfolio options. The other piece is how we're innovating.
It's not just about developing and launching a product. Launching it with who? For us, it's really this point-to-point, clear line of sight. We're developing a product, developing it with customer A, customer B. They're going to be formulating it into this brand and into this product that's going to be on the shelf, and really aligning our innovation pipeline with our customer's product development roadmap is something that we're driving right now to ensure that we're not just developing products and launching them, but it's very purposeful and aligned with our customers' product development plans in their roadmaps so that we're ready when they're coming to market. But I know TVO scales across. How is it going Life Sciences? yeah.
Life Sciences, we are very excited to share that in 2025, as Guillermo mentioned, in 2025, we'll be launching the TVO solution for seed coatings in our agricultural segment. This is a natural biodegradable, non-microplastic with an outstanding adhesion performance on seeds, better than the benchmark. We're excited about this. We will be launching that in 2025. In addition to crop care in pharma, Guillermo was also talking about that, that in pharma, we have in our innovation pipeline a project for TVO into tablet coatings. Why is this exciting? Because we're talking about a faster drying, a significantly higher throughput for our customers, and energy consumption savings for our customers. Those are meaningful, real operational savings for our customers in a sustainable manner. It is to bring performance, operational savings to our customers, and sustainability and make them win.
Alessandra, I'd like to follow up on one key point. So we're commercializing new technology platforms, which is very different than a product launch under something that exists today. So what are some of the hurdles that we're facing as we roll out the commercialization of our new technology platforms?
Yeah, good question. So we are getting our customers excited when you talk about the technology platforms. Our customers are getting excited. We are working closely with our customers. So this is different than before. You're talking about Jim talking about understanding their roadmap. So working closely with our customers. And in pharma specifically, working on our regulatory strategy in partnership and having that engaging our customers early on in our regulatory strategy. However, we're talking about pharma. We're talking about ag. So those are highly regulated markets. It takes time.
And Jim, from your perspective?
I think the regulatory component is critical in Personal Care as well, especially on the raw material side. We're starting very early in Gate 2 on making sure that we have regulatory approvals in place. It's not as extensive Life Sciences, but clearly something that we're focused on in ensuring we have REACH or China compliant or TSCA approvals. I think the time piece is really around that customer roadmap. I mean, customers, they're managing their product portfolio. They're not launching new products every week or every month. They have their roadmap when they're going to be reformulating different brands and different products in their portfolio. And so really understanding, is it going to be a 2027 launch or a 2028 launch? And then working back from that timeline is really the piece that will impact how these innovations ramp and scale.
And Dago, from your perspective?
Specialty Additives, i would say better because industrial customers tend to move faster. So the mantra for me and for the team is just, let's move fast. What we need to do, you need to put product and product prototypes in the hands of customers, and you need to get feedback. And depending on what they say, you need to change your product and put it back in the hands of customers and do it quickly, and that's how you actually monetize and sell your product. So I just take a very practical commercial approach. The only way you're going to sell anything is be in front of the customers, stay very close to them, and make it happen. So yes, we do depend a little bit on the timeline that our customers have, but it's all about the customer intimacy and moving fast.
Thanks, Dago.
And one last one. We're about to turn the calendar into 2025. We've talked about a lot of plans today. What's one thing that you're most excited about in the next 12 months, Jim?
I would say it's really advancing our innovation agenda. We have the team, we have the structure, we're engaged with customers, we have traction on the projects that we're working on. In 2025, it's all about advancing and accelerating that development.
And Dago?
Same. I mean, I think Jim well said it. What I'm excited is that the pieces of the puzzle are now together. We have the right structure, we have the right expertise. A lot of the experts are here in the room with us. We have the right capabilities. Very exciting that a year ago we had technologies at this level. Now we have product development at this level.
Now we have product prototypes that we can give to customers so that we can get going. So what I'm really looking forward to in 2025 is heavy, heavy engagement with customers and let's move, right? That's the intent. So looking forward to that.
And Alessandra?
Yeah. So for 2025, we're talking about the VP&D optimization, sorry, the VP&D cost optimization. We're talking about technology platforms, accelerating our innovation pipeline, film coatings, injectables, and also the changes we have made and are making in our organization. So 2025, it is about execution. We have growth catalysts that a lot of companies in our industry don't have. So it is about execution.
Thank you, team. And I'd now like to invite our CFO, Kevin Willis, up to highlight the financial opportunity associated with these plans. But first, a round of applause for our panelists. Thank you.
T hank you.
Thanks, William. Good morning, everybody. Good to see you. Many of you I haven't seen in person in a while, so it's great to see everybody. It's good to be here in New York today. Also, a welcome to everybody that's watching us via webcast. You've heard a lot today about execute, globalize, innovate. I want to put some financial context around that. I also want to spend a little bit of time talking about financial policy, capital deployment, just to give you a flavor for kind of where we are, where we've been, where we're going. Spoiler alert, nothing's really changed. But let's get into it. So the key messages from my standpoint are pretty simple. The work's really hard, but the messages are pretty simple. What do we have to do to achieve our financial aspirations over the next three years?
Number one, we have to execute well operationally, commercially, from a support perspective in our core business. That's critical for us going forward. We've been in a very rocky time for the past several years. I think we've done a good job executing. We need to continue to do that and actually step it up. So that's the first thing. I think the second thing, we've talked a lot about these globalized businesses. Our expectation is these businesses will grow about 15% per year over the next three years. That's not an aspiration. That's reality. That's what they've been doing by and large, some more. And so that's another critical point of the messaging and the imperative going forward. At the same time, we need to commercialize and monetize our innovation portfolio more quickly, more aggressively. And that's part of our strategy today. It's part of our strategy going forward.
And what this ultimately means is taking not only the technology platforms, we've talked a lot about those, but our core innovation portfolio, which is pretty robust right now, and actually, again, commercializing and monetizing that faster. Underpinning all of that is a strong balance sheet. It's strong, it's flexible. That's been very intentional for a long period of time. It's been a differentiator for us. It's helped us navigate really tough and uncertain times, and we're going to continue with that approach. I think another very important aspect is strong and growing free cash flow conversion. It's how we invest in the business. It's how we return capital to shareholders. Those have been key priorities for us for a long time. Those will be key priorities for us going forward.
So let's unpack this just a little bit and say, spend a little time around the outcomes we're trying to achieve. We've talked about these. There's nothing surprising on this page, but I want to give you the formula and talk a little bit about that and what that means. So first of all, by executing within the core efficiently and effectively, growing with our core end markets, plus executing well around our globalized businesses, we've invested in them, we've changed the way we operate them, and we have high expectations for these businesses, plus further commercialization, monetization of our innovation portfolio, again, core and tech platform, should yield mid-single-digit top-line growth.
Through operating leverage, we should be able to convert that to high single-digit, low double-digit EBITDA growth at margins greater than 25% and growing from an EBITDA perspective and converting at least and more than 50% of that EBITDA to free cash flow. That free cash flow can be used to invest in the business, to drive growth beyond and above at mid-single-digit level, and it can also be used, as it has been, to return capital to shareholders in the form of growing dividends and share repurchases. Let's talk a little bit more about invest. Just like a financial portfolio, a business portfolio has different parts. There are different priorities. There are different things we're trying to do with the portfolio. As you're aware, many of you are aware, we have been on a portfolio journey for a very long time, and we appreciate your patience with that.
It's been a lot of change over a lot of years. I'm one of those people that Guillermo talks about who has been here for that entire journey and more. And it's been good, but it's also good to be almost done once we get the Avoca piece accomplished. So from a priorities perspective, nothing has changed. Top right-hand quadrant, the big three, Pharma, Personal Care, Coatings. That's where we're investing our money. That's where we're investing a ton of time. It's where our globalized businesses live. You should expect us to continue to invest in those businesses for outsized growth. Second, also important, we have differentiated technologies that reside within smaller businesses like performance specialties, crop care that we are selectively investing in. These are businesses that could actually become the big four or the big five over the course of time. So we're selectively investing in those.
Last but not least, and very importantly, we are continuing to improve execution, profitability, cash flow generation in our less differentiated businesses such as nutrition, construction, etc. These businesses are important because they actually help support the top half of the page. So all parts of the portfolio are important. They all have their role to play, and they all work together to ultimately help us achieve the financial outcomes that we're looking for. So let's talk a little bit more about the numbers. On the execute piece, Guillermo talked about it. I'm going to talk about it. We'll talk more about it in a few minutes. The $90 million of self-help is imperative. It's critical. We're focused on it. Razor-focused on it internally.
I think the good news with most of what's on this page is, number one, we have a lot of control over how these things play out. As I look at the execute piece, the $90 million of self-help, for better or worse, we're really good at that. Over the course of time, we have generated a lot of value by being able to right-size the cost structure in support of the portfolio that we have had at any point in time. And I have a lot of confidence that we're going to be able to do that with this program and into the future. As we look at this, we spent a lot of time on this. The $90 million is a specific number that we have generated internally based on the analysis that we've done, the expectations that we have had.
There will be at least $30 million of cost out, general cost out, and that'll be SG&A as well as some operations cost. The $60 million of productivity improvement, again, very specific. We know where that's coming from. We know where it's coming from in the HEC portfolio. We know where it's coming from in the VP&D portfolio. We have a lot of confidence around that. And so that one, very confident. The globalized businesses, we're already on a great trajectory with these businesses. They've been good businesses for a long time, great businesses for a long time. They've been growing at an outsized clip, and we fully expect that to continue. We've made changes in how we operate these businesses. The structure has changed. The investment has also changed.
We're setting these businesses up for success by investing in regions of the world so that they can grow independent of what's going on politically, etc. And so we have a lot of confidence in our ability to grow top line of these businesses by $100 million over the next three years. That implies 15% CAGR. It's about $200 million a day. Third, last but not least, innovation. We've heard a lot about it. We've talked a lot about it. And our expectation is that over the course of the next three years, we will add incrementally $100 million of revenue from our core and technology platform innovations that we have in our portfolio today. Again, all of this underpins the outcomes that we expect to achieve. North of mid-single-digit top line, more than 25% EBITDA margin, greater than 50% free cash flow conversion.
So before I get into the numbers on the slide, I think it's important to note we have a couple of slides in the appendix related to the reset. We get a lot of questions around that. And so we've laid out some detail both from a revenue and an EBITDA perspective by business, by quarter, so that as you do your modeling and as you think about things, you can have that detail. Feel free, obviously, to contact us if you have questions. There's also a slide in the appendix that talks a bit about our China exposure, kind of lays that out for you. We tend to get a lot of questions about that, so we've included that in there already.
So as you look just at the $90 million of self-help, the impact of that over the course of the next three years, first of all, it's asymmetrical. More than $20 million this year, $60 million in fiscal 2026, $10 million in fiscal 2027. So what does that look like? Over the course, obviously, 519 is not our three-year goal, but if you just layer in the $90 million of self-help, it's about a 6.5% EBITDA growth CAGR over the next three years. We have a lot more planned than that, but again, within our control, specific plans in place. It's about executing against those plans.
On top of that, between executing in the core, continuing to grow our globalized businesses, continuing to grow top line and bottom line from our innovation platforms and core, we would expect to add another $80 million of EBITDA at least over the course of the next three years. Gets you to a $600 million EBITDA base for fiscal 2027 from where we are today. That's about a 12% growth CAGR from the baseline, the reset. So pretty compelling. A lot of cash flow generated from this, a lot of ability to invest in the business and continue to return capital to shareholders. We haven't talked a lot about quality of earnings, but I think it's important because we're at an inflection point. You look at Ashland, Guillermo mentioned it. We're a 100-year-old company, but we're really only about a 15-year-old company.
Everything we have today has been gained through acquisitions over the course of the last 15 years. With that comes a lot of intangibles. Those intangibles have a pretty big impact on our financial statements, P&L. We have a lot of amortization that's been rolling through the P&L. Two things have happened. Number one is we've adjusted the portfolio. The Pharmac hem businesses going away, CMC getting smaller, MC getting smaller. We see a lot of that amortization going out of the picture. Also, the passage of time. We also see a lot of that amortization rolling out of the picture. While you see a 12% EBITDA growth CAGR over the next three years, we would expect to see a 25% EBIT growth CAGR, approaching 20% EBIT margins. This company has never seen that. That's pretty exciting for us. RONA, return on net assets.
It's been a huge focus for us for a while. Again, portfolio adjustments along with self-help, growing the core, globalizing, innovating. We would expect RONA to grow about 50% over the course of the next three years. More than $800 million of free cash flow generated enables us to invest in the business as well as return significant capital to shareholders, which we've been doing, and last but not least, it's not on the page, but we would also expect EPS, adjusted EPS, to grow at about an 18% clip over the next three years. Very healthy, very healthy growth. Today is all about the future, but I do think it's important to level set and talk a little bit about things like financial policy, capital deployment, and to do that, I think you have to look at least a little bit at history.
I'll take you through that. First part's the balance sheet. As you can tell, we're pretty proud of it. We've been very intentional about how we have structured it, how we have managed it, and how we have maintained it over not just the last five years, but well beyond that. That's been incredibly intentional. There's just a few comments about our balance sheet. First, all of our debt is fixed rate. We have no floating rate debt. Second, all of that debt is sub 4% pre-tax, sub 3% after-tax money. Next, none of it becomes due until 2028. None of those maturity towers are more than about a year's worth of EBITDA, and they are spread out over multiple years. A lot of flexibility and a lot of certainty. We like that, especially in uncertain times. Our credit rating is stable, steady.
We're committed to that. And last but not least, leverage of two to 2.5 times net debt to EBITDA. We've made this statement multiple times, and it is our commitment still. We talked a lot about free cash flow, and the outcome has been good. It's been strong. It's been growing. It's moving in the right direction. And we're very, very focused on it. It's how we invest in the business. It's how we return capital to shareholders. And we think that it is a good measure of the overall financial strength and stability of our core businesses and where we've been and where we're going. One of the interesting points about this, if you look at 2024 and you apply $270 million of free cash flow to our current share price, that's about a 7.5% free cash flow yield.
Use the $600 million, apply the same 59%, and you get more like a 10% free cash flow yield based on where we're trading today. We think it's a compelling opportunity. This is a business that can generate a lot of cash, has generated a lot of cash. We're going to continue to remain focused on that. In addition to the growth of the core business with the self-help that's implied in that, we believe we still have opportunities on the balance sheet. We think we still have opportunities when it comes to things like working capital, how we're investing in PP&E that can further underpin and drive better free cash flow conversion on an overall basis. So we think there's self-help that remains on the balance sheet as well as just generating more EBITDA at a more efficient rate as we move forward. We've talked about disciplined capital deployment.
Nothing has changed. Asked this question five years ago, what are you focused on? Growing the business organically, taking advantage of inorganic opportunities if they're compelling. And number three, returning capital to shareholders. These are not mutually exclusive things. We've done all three over the course of time. At the same time, you should expect us to be able to do that into the future, especially as free cash flow continues to grow. So I'll start on the left-hand side, investing in the business. So of the $2.7 billion that we've deployed over the last five years, some of that's the adhesives transaction proceeds, by the way. Of that, we've invested in the business. Where? The big three. Pharma, Personal Care, Coatings, but also globalize. It's capitalized, but we put assets on the ground. You've heard the GMs and Guillermo talk about that.
I won't dwell on it, but we've put our money where we believe our focus is and should be and where our growth opportunities are and will be. So that's the first part. We've made one acquisition, the Schülke acquisition, Microbial Protection. We integrated our existing business into that. That's one of our four globalized businesses. It's the largest, frankly, of our four globalized businesses. So very important to us. It was a great acquisition. We're moving that along, and we're very happy with how that's turning out. On the right-hand side, very clear. We continue to invest in a growing dividend, and we continue to repurchase a lot of shares. Talk a little bit more about that here just in a moment. The dividend first.
Number one, we've made two commitments: to be a serial increaser, and we've done that for the last 15 years at an 18% growth CAGR on the dividend. Number two, to pay out at least 30% of earnings, which we've also done for quite some time. It's probably worth noting that we have paid out a quarterly dividend for decades. This is not anything new. In addition to the share repurchase, I think it's important to note that when we did the adhesives transaction from a balance sheet perspective, and I think from a value perspective, we retired all of our floating rate debt at that point. That was about $625 million. That happened in early 2022. But if you look over the last four years, we have repurchased $1.3 billion of shares. That represents north of 20% of our outstanding shares over the last four years.
If I were to show you the 10-year version of this chart, you would see nearly $3.5 billion of share repurchase over the last 10 years. So when we say that we believe our company is a good value, that it's undervalued, that we think it's a great investment, we've invested $3.5 billion in that belief over the last 10 years and $1.3 billion over the last four. Fiscal 2025, nothing has changed. The sales outlook we gave you during Q4 earnings is the same. The EBITDA outlook we gave you during Q4 earnings is the same, and so nothing has changed there. Just want to make that point clear. Q1, we didn't give a Q1 update when we did the Q4 call. I think it's important. Guillermo mentioned that we moved some shutdowns, big shutdowns, into Q1. It doesn't impact the full year. It's timing.
It's $20 million, but it's timing. So it doesn't impact the full year outlook. It will impact Q1. I think the second part of Q1 is we've seen softness in China. We've seen softness in Europe, kind of across the businesses, generally speaking. We've also had some of our pharma customers working on some inventory management, and they've pushed some orders out into the March quarter. We think the impact of the market piece of the equation is probably going to be around $5 million in the quarter versus what we expected. Again, the pharma piece is timing, and we don't expect that to have any impact over the full year. I think the other piece of the equation, as we do have some improved visibility, I would say, into the future. And as we look at the March quarter, demand's pretty good.
On an overall basis, demand looks pretty good for the March quarter based on where we sit right now, and so, again, these are the impacts that we see in Q1. Thought it was important to mention these, so to bring us home, our industry has seen some rocky times over the last five years. It's been a ride, and we've been on that ride the same as everybody else has. I think we've navigated it very well, especially compared to others. Again, that balance sheet has been a safety net for us, and we continue to focus on that, and we will continue to focus on that.
But as you look at it, bigger picture, we're in great businesses that serve great end markets, very consumer-focused, good growth potential in the core, extremely good growth potential from the globalized businesses, which are very high value, high margin, high growth, really important. And we have an innovation portfolio with technology platforms that actually differentiate us. You talk to most companies in our space, and you ask them, "Okay, what are your growth catalysts?" Well, they're going to have a hard time articulating that because largely they don't have much. And over the course of the past 18-24 months, we are blessed with opportunity. We have to take advantage of it. We have to commercialize it. We have to monetize it. That's the message. It's the message to you. It's the message to the team as well. No shocker there.
On top of that, self-help, $90 million of self-help over the course of the next three years should help boost our profitability in the near term, give more confidence in our ability to generate the kind of returns that we plan to generate. We don't control the environment that we operate in. None of us do. What we do control is how we react to it, how we navigate it, and how we operate the business in it. And we're very focused and very confident about our ability to do that. Really appreciate your time and attention today. Again, it's great to see everybody. Thank you so much for your support. That's all I have. Appreciate you.
I'm inviting the leadership team back on the stage for question and answers. In terms of process, we're going to have a couple of microphones in the room.
I'd ask you to raise your hand and then state your name and your company, and feel free to ask the question. So we'll start with Chris here in the front row. Here comes a microphone.
Awesome. Chris Parkinson, Wolfe Research. Going back to the tangible addressable markets and the growth rates, it seemed the pharma growth was actually a little bit higher than some of us would have presumed. Also, I'm sure you're happy with that. But just given some of the noise, I'd like to kind of address on the differences versus the last analyst day and where that enthusiasm comes from. And then on the personal care side, the 2%-3% is probably 100 basis points or so lower than what many of us would presume, especially with some of the market share gains that you've had in hair and skin.
It seems like you've actually been doing pretty well ex the destocking that's been going on in the industry, so I was just hoping to hit on kind of the variables that both of you are seeing in your businesses and what's driving that rate, and dare I say, is there some conservatism built in specifically on the personal care side? Thank you.
Just a comment. Obviously, if you look at it on EBITDA side, the self-help obviously is not hitting all the businesses proportionally, so that's where you're going to see some differences, but if you want to comment.
Yeah, so starting with pharma, right, so it's a combination. It is the high growth on injectables, right? High growth on a high value, high profit of injectables.
But also OSD is the growth of OSD, right, into populations, right, that didn't have access to, as you take Western medications into populations that didn't have access to that. So it's a combination, basically, OSD, of course, at a lower than the average, right, and the confidence and the growth we have seen on injectables.
So, Chris, thanks for the question. I would say, if we unpack that a little bit, if we look in 2024, our fiscal 2024, there were a couple of things happening in the market. I think one was the actions that we were taking to drive growth and performance. We had demand normalization that was also taking place coming out of destocking, and then also some, I would say, easier comps versus 2023.
As we now look forward, we have our core additives portfolio, and the actions we're taking around our execute priority as we strengthen that base, we believe we'll be able to participate well in that space. Core additives, it's growing GDP-like 2-3%. Obviously, we'll try to continue to do better as we execute on our portfolio optimization. And then we have the globalized actions that we're taking. As we said, these are going to grow north of 10%. We've done that in the past. In 2024, they grew at 15%, and that's what we're driving going forward. I think it's also important to just highlight we want to make sure that we're putting targets out there that are achievable. And so, obviously, we're driving with the team to continue to perform at the highest level possible. But we are going through some uncertain times, at least in 2025. And so we'll continue to refine as we move forward.
Okay. And then we had a question here in the front and center. Dave.
Thank you, Dave Begleiter, Deutsche Bank. Guillermo, Kevin, on the 2027 EBITDA target, there were no negatives highlighted. Can you quantify or talk to maybe negative pricing headwinds, normalized cost inflation, any churn or any commoditization from normal activities in the business from Asian competitors? Thank you.
Can we give you a high-level comment, and then you can go?
Sure.
I mean, we put a lot in our outlook already for the year, I think, in the $430. I think we got a lot of those questions already in the last call. And I think we were trying to be down the middle of saying, "Look, like I said, we wanted to be at $460 with the cost reductions.
We're at $430. We gave an outlook that presumes some level of growth into our portfolio, but we're factoring in price erosion carry forward already in there. We are putting in some impact, not just price erosion, but if something happens in China specifically in the near term, that could offset some of the growth that we have. The range is on the high side that we've given for this year assumes that you have growth, a normal growth, 5%, if you can do the math. That would be offset with a negative, potential negatives. We don't have certainty of that, but I think we've put most of that already in the starting base in 2025. That's probably why you don't see so much moving forward.
If anything, we expect that some of those areas will improve as our industry settles down in terms of the capacities around the world and Europe, all the dynamics in Europe and China. But I don't know if you have any.
Sure. I mean, a simple answer for me is we wanted to keep the chart pretty simple in terms of what we were showing. I mean, it's like the duck on the water. There's a lot going on underneath the water. And there's a lot going on in that bridge between 2024 and 2027 as well. But that said, our general assumption is that raw materials are going to do what they would typically do, which is be more or less stable. There will be some ups and downs. Pricing will tend to follow that.
We have proven that in times of extreme raw material cost volatility, we get price, and we tend to get it ahead of the curve so we can maintain margins. And as we've seen prices come down in some of our markets, obviously, we're reacting to that, and we're taking action either directly related to that pricing or in the form of self-help. And so that's what you should continue to see us do and expect us to do going forward.
Sure. Okay. Kilmery, upfront.
John McNulty, BMO. So when we look over the last four years, M&A was 11% of kind of the use of capital. It was an odd period. A lot of earnings way too high, way too low, kind of a hard way to think about the balance and what people are willing to sell at, what they're not.
I guess when we look out over the next three years, do you see that becoming a more meaningful contributor and use of capital? And can you speak to the pipeline that you're looking at now and if the world's kind of normalizing from an M&A perspective and maybe opening up opportunities for you?
Well, if you look at the opportunities in the past, first, we did participate in a lot of things. I think, as you said, things were not 100% rational if you see some of the valuations. I think our board has been very diligent. We're not afraid of injectables or paying a high multiple, but you have to have discipline. And the reality is some of the values, fortunately, we didn't do them because I think, as it's proven out, some of those valuations were very, very high.
So it goes back to that capital allocation discipline that we want. I think what I'll just reinforce what we said before. We want to do M&A. Strategically speaking, for what we do, the majority of it is bolt-on, so it's going to be smaller things, which means in these times, there could be now companies looking at changing their portfolio, doing actions. That's why we've maintained the balance sheet. We've been sort of balanced. We read how things are going before we do share repurchases or other things, but we feel with the cash flow, we have plenty of resources, and Kevin, you can talk a little bit of our ability to leverage up for those kinds of things, so really, it's going to be about others rather than about us, but the big message is we don't need to do it. We have what we're excited about.
Organic growth is the number one driver. We control that. We're investing. As you can see, we're restructuring. We're investing in it. So we are making the investments. But that's always an upside that we're looking at. Injectables is a high priority. We have very specific areas in there that we would like to build critical mass. And then, obviously, pharma, personal care, and coatings. I think the part that we need to look at is the asset one that I mentioned before. Do we not need to build all the if we want to accelerate some of these developments, if our customers really embrace and say, "Look, we want it, but we need to hit a certain timetable," those assets exist, and we can really look at some of those areas. So that would be a big change for us. But I don't know if you.
Yeah. John, I think as you look at not just the earnings power, but the free cash flow generation power of the business, over the next three years, north of $800 million of expected free cash flow generation at $600 million of EBITDA based upon our current net debt level, that puts us at 1.7-1.8 times net debt to EBITDA. Creates a lot of flexibility from a balance sheet perspective. And again, as Guillermo said, the things we're looking at, and we have a pipeline for each of the big three that we're focused on, and we have, and we will continue to participate in things. And we'll try to take action on things that make sense. But we feel like we're really well positioned where we are today to take advantage of opportunities if and when they come on the inorganic front.
And in the meantime, we'll continue to invest organically. We have a lot of opportunity there as well.
And we can keep it at that table with Mike.
Mike Sisson, Wells Fargo. Question for the SVPs. You all said you're pretty new to the company. So for a decade, I've heard Ashland, a lot of cost savings, a lot of optimization. I mean, what did you guys learn when you came here? Because it just seems like you've done a lot of that. So what is new, or what did you see in the businesses that you said, "Hey, I think there's a lot of cost savings, optimization"? And then the second part is, again, for a long time, we have heard Ashland can grow. And for most of the decade I've covered it, the volumes weren't there.
So what did you see from the outside that convinced you that, "You know what? I can come in here and I can grow this business"?
So, Jim, why don't you start? You've been here a little bit longer.
So Mike, thanks for the question. I would say a couple of things. I think, one, I mean, we all have a lot of experience. So the things we're talking about here, especially around the self-help, it's not academic. We've done it before. We've been at other companies. We've restructured footprints. We've restructured networks. We've moved assets around. We've closed assets. We've built assets. And in coming here and seeing the network that we have, it's very clear to see the opportunity in the VP&D and the HEC network, number one. Number two is, I mean, I spent my whole career in specialty materials, specialty chemical.
I've been in a lot of companies. I've been in electronics, which is a high-tech company. I've been in industrial, consumer, where, personally, I talked about innovation a lot, and it was the same. It was line extensions, the same synthetic product from the '70s and from the '60s. And this is really a different portfolio. These chemistries, it's not acetylenic. It's not cellulosic. These are different chemistries. It will take time. It's going to have a certain S-curve. But this is real novel technology that customers are validating is working. And then the last piece I would say is on the portfolio actions. A lot of the volatility, there has been growth. The question is, does it all come through based on how different pieces of the portfolio are moving? And we're now at the end of the portfolio actions.
And so I think we have a solid core that we're now building from.
Well, Dago, you were the second one to join us. So we'll go in order of joining. What was your impression?
Look i reall y. So to answer your question, so what did I see, number one? I did see a true commitment to innovation and to new innovation, disruptive innovation that I had not seen in a long, long time. That's what I saw. Your second question, the second part of your question is, what is different now? Why do you think you can, I guess that's where you're going with this, why do you think you can monetize this and why it's different versus in the past? I'm a big believer that if you want to monetize innovation, your DNA has to change. You keep having the same people kind of looking at it the same way.
It's just not going to happen, and we're changing the DNA, and what I mean by the DNA is the technical organization convinced that this needs to happen, the commercial organization, the market organization, management, operations, etc. I do believe we're at a point where our DNA is changing, and when I talk to my team, everybody's rowing in the same direction to get this off the ground. Maybe the other aspect that I would add here is I think the team was a little bit too timid when it came to interacting with customers in the past. What I mean by that, you want to develop the absolute perfect product before you put it in the customer's hand. I'm a big believer in just talk to the customer. They will tell you what they need. You rapid prototype, and you make it happen.
So I would say that's been a bit of a shift in the way we do things because now the sense of urgency and the importance to talk to customers is there. And separately, and your last question was more on execution and cellulosics, and I think it's more of the same. It's more of not accepting the status quo and saying, "Hey, these assets are great, but we can do even better." There's a lot of productivity. There is a lot that we can do better on optimization. And we just kind of, we're going to tackle that head-on.
Okay. Ali, any other thing?
Yeah. So just to add on innovations, also how we see the excitement of our customers when we are talking about what we're bringing. And shortly after I joined, we had an innovation day with one of the largest pharma companies in the globe.
And it was really cross-functional. They brought R&D, operations, R&D from multiple different areas, operations and procurement, and us also with our cross-functional team. And seeing their excitement and their, "Can I have a sample today? Can I leave today with a sample?" As Jim mentioned, it's new to the world. You're talking about new polymers, right? So it's going to take time. In markets, they are highly regulated. But seeing the excitement of our customers, it's definitely what makes us believe. On the productivity side, we have large assets, and the mindset has been a lot about filling cost absorption.
When we start to look at a P&L and start to look at areas where we have a product that can be made in multiple different lines and the lines are underutilized, and we start to question why and what can we do better, how do we drive productivity, how we have been driving productivity, how many people in the company we have focused on, how are we going to drive capacity improvement, 25% capacity improvement over the next five years, and that didn't exist. So that's where we see definitely it brings us confidence that there are opportunities.
The last one I would say, I mean, some of us have been fortunate to have lived through this in other companies. I go back to, in the 1990s, Rohm and Haas, rheology, Ropaque. You look at some of these concepts. Now you say, "Oh yeah, that's difficult.
They're out there." Other companies have done this. The issue is you've got to have teams. You have to commit it. They're not all going to work at the same pace. You've got to make a few bets. Right now, our issue is that we have too many opportunities. It's still early for us to get feedback from our customers, but over the next few years, you're going to see us start narrowing down which are the areas that we're really getting positive feedback that we need to add, double up in terms of our investment, so this is a journey right now, but this is what excites me personally.
And as I talk to our team, it's like, "If you want to look back 10 years from now, this is your opportunity to look back and say, 'We built this.'" There are exciting things that professionally that I think and talk to the people outside when you talk to them, that's why people are coming here because they have an opportunity to build the Ashland of the future. We're not building it. They are. And this is a unique opportunity that not many companies have at this point in time.
Thanks, Mike. We'll take one from over here, John, in the back.
Thank you. John Roberts, Mizuho. You purchased BDO in Europe. Why are you the best owner for your Intermediates and Solvents business? And if it's a really good business, Intermediates and Solvents, why not merge it Specialty Additives business that's there?
The BDO business, fortunately, we've got out from the European. Right now, what we have is more of the integrated part of it. So it's supportive. I think where we if we want to put it and hide it somewhere, we can move it around. But the reality of it is part of this productivity also impacts the continuous process. So we go to BDO, BLO, 2-Py, all the raw materials that go into VP&D. So we have a lot of opportunity to optimize there, and that's going to strengthen our position. I think it's generating, we haven't shown it here, but the amount of cash flow that business generates is very significant for us. So we're using that capital to generate a lot of the investments that we're doing.
So we're not trying to artificially create a better—we've been trying to be very transparent, putting it here, just hide it or whatever. That doesn't change the company. I think the issue is, can we run it better? And the merchant business today, we're the last big merchant player in the Western Hemisphere. So if you want an MP, you either get 100% from China or we're one of the big players here. There's a few other European players, but we have a very strong position. So we like the business. Look at the margins the business is having right now. This is the low. Typically, this would be in negative territory historically. It's one of our highest margin businesses still. So I think it's about keeping on strategy. We know where it fits.
We don't want to make it more grandiose than it is, but there's still a lot more value for us to create. Where we position it, what we do long-term, we have a lot of flexibility of how we want to manage that. But I think the issue is more the innovation side of it. As we do some of these newer products, where does this fit in? By the way, we took several products. We put more products into the portfolio. Some of the things that you see, sales, about $12 million, $15 million from other businesses, we've put now into intermediates. These are product lines that were lost, but they use the same assets. So we see there's still a lot more that we can do there. So run it well, make sure it's generating the cash that we want, and then we keep the flexibility.
It's not a critical part of our portfolio, but it's a nice value add at this point in time. Agreed.
And then Jeff in the center. Or sorry, Josh. Okay.
Charlie Rose.
Yes, sir.
Good morning .
Good morning.
I'm not trying to be mean, so I just want to ask a little tougher question. I'm sorry. You're putting $100 million of expectation on innovation and $100 million on globalization on a $2 billion business. It doesn't seem rather - and that's in 2000, excuse me, in 2027, which doesn't seem like a high hurdle. It's about 5% for a company of this size. It just seems like you're not putting a lot of meat on the bone with respect to the innovation dimension and the globalization dimension. Is that a function of just the ramp it requires, or is it just the scale of the - what is it about these numbers?
Because it just doesn't seem that you're putting a lot of meat. I mean, I'm not trying to be negative, but it's just not a lot of meat. I'm a big guy. And I'm also 72 years old, so I want to be around for the winnings. So I'm just wondering, what is it about the numbers that you're thinking about? Put a little more thought behind the numbers that you're putting on the table. And are those numbers meant to be that in the following year it goes from, how does that play out over time? Because it's not a very robust number. I'm not trying to be negative, but it's just.
No, no. I think it's a very good question. I think two things that I would say. One, it's 2027. It's three years.
If you look at what's driving it, the globalization, it's keeping at a pretty nice growth rate, and it's moving forward. I think that won't be linear. Some of these businesses were growing much more than 50%, so there's upside. But I think we also want to be realistic. So the globalized, I think it's much easier to model, and it's for at least for several years to come, as long as we're putting the resources and we're targeting the right markets, that should be easier.
Is that in certain geographies, Guillermo?
So it depends by business, but most of them were, we have a big European footprint. So our Biofunctionals started in Europe. Schülke, the preservatives, was mostly Europe. Our injectables in Ireland, mostly Europe. I think our oral solid dose is mostly the U.S. So it is about going into other markets.
So right now, preservatives, we now are manufacturing formulating in the U.S. We're going to be formulating in Brazil. So it's becoming local in a lot of those things. So I think we're very comfortable with the globalized number, and I don't think it's as relative to the 10%. It's pretty robust, and we're not overpromising. We want to make sure that we're doing it. I think on the innovation one, it is a three-year number, and I think that's the answer. Most of that number is coming from core innovation. Most of these things are going to take more time. I mean, it is an S-curve. We need to be realistic about this. We were going to put more emphasis around the long-term in this presentation. We're going to do another one that really focuses more on that longer-term innovation. What are the sizes of the markets?
Really start to dimension what this potential is. But that's sort of the explanation of what's the basis of the numbers. I think in this environment, with everything that's going on, to come here and present huge numbers and promises for the future, I don't think it's the right time to do that, frankly speaking, because nobody is the self-help. There's other things that I think are here and now, and that's what we want to focus on. And I think the credibility I hope we have is, "Look, we can act now. We can drive our performance now." But look what we've done over the last few years. We have invested. We have changed. And we're going to continue to do that in the future.
So we will cover that in a future one, probably later on this year, more focused on long-term, maybe a little bit more like we did last year, more innovation day, and really address some of these longer-term things. For us right now, so that we don't overpromise and overdeliver, if you look at what we have, five, 25, 50, and that's a minimum that we want. So if we can go more, we will try to do more. But can this portfolio, with the markets that we're in, with the globalized, with the core innovation, and with some of these newer innovations in the platforms, can we deliver that model? And that's really the commitment we're making today. We'll put more meat on the bones later on in the year as we look at some of these platforms.
It just seemed to me that John's question earlier, John McNulty's question earlier about M&A, that might be an augmented, that might be the strategy that helps the innovation process because the new sheriff in the White House might facilitate that. Maybe there's just more M&A. It opens up more. It just seems to me that
I think that's what's going to be the issue. We don't control that. So we're ready. I think that's the healthy balance sheet so that we're in a position to do that. I will say one area that definitely it would help us is injectables. Pharma is a long pipeline business. The biggest challenge that we have, and we've talked about it with several of you in the past, is when you reinvigorate, when you stop innovation and you reinvigorate, it takes time to get it moving.
I think the learning for us is, "Look, now we got it. It's moving. Don't stop. Don't stop." Because if you stop, then you're going to lose another five years, and that's not where we want to be. So that continuity is where we are. But injectables, I would say M&A would definitely be a big help because that's a 10-year pipeline.
Thanks.
Thanks, Charlie. And we'll keep it with Josh at the table.
Thanks. Josh Spector with UBS. I want to follow up on the growth again from a different angle, I guess. So talked a lot about innovation. You talked about the high growth part of the portfolio. Basically, you have 90% of the portfolio that's not in those groups that probably needs to grow 3% plus to hit your targets. Seems like an achievable number, but it's been tough for Ashland to do that. There's been pricing.
There's been some commoditization. There's been some share losses. So really, there's two questions within this. One, you're talking about some pricing pressure this year. You're conservative-ish on the volumes. How confident is that the bottom to you? Is there anything we're not seeing? And then when you look two to three years out, what's changed in the core to help enhance your visibility so that this innovation growth isn't offset by attrition in some of these other businesses or something that we're not expecting now?
Right. So if I look at the growth, and again, hopefully now you have a baseline so that we can start measuring. There's been, to some of the questions, a lot of noise, things that we got out and what really drove growth or no growth in that. So I think we have the clean portfolio now.
This is where we're sort of starting to look forward. And I think you're going to have a lot more visibility. But if you look back in our core business, forget the other businesses that we exited that were much more volatile, HEC and these things. Remember, in 2021, 2020, when I came in, many of you were saying, "Guys, you have so much capacity. How are you going to load it?" Two years later, we were sold out. Right? So we did get some gains. A lot of the noise here, if you look at share, we haven't had a lot of share shifting moving on during the last four years. It's only now that we've seen some events. And I do think it's not about the markets or the technologies. I think it's more driven by some of the disruptions that are happening in our industry.
In the VP&D, we gained a year ago when one of our competitors was out for a while. And we said, "This is going to come back." And I think it just came back a little bit stronger because a lot of these players are going through their own issues. And I think that is not a normal market dynamic. And the same thing, HEC actually has been very healthy, very growing. We're now going through a reset in China that is going to be a little bit disruptive, and we're working through. So it's two disruptive events. It's not really about the core markets and how they've been behaving over the longer term. So we will get over this. The difference now is that we are leaders in these segments. When this happened in CMC or MC, we were player number seven. So you're just going to ride away.
So we feel much more confident. And I think you can see that we're investing in our businesses. And I think that's part of the self-help. This is not just about, "Hey, we're going to do this and expand our margins or strengthen our profitability." We're going to increase the competitive strength of our portfolio. And the base that we have is very well positioned in this world today. In the VP&D, we're in the U.S. We're natural gas-based at the foundation. We got plenty of capacity. We're one of the last players here. Most of our competitors are coming out of one country, that there's going to be a lot of noise. So I think it does give us a little bit of strength there.
Okay. Take one right here.
Thanks. Mike Harrison with Seaport Research Partners.
I wanted to maybe just dig in a little bit more on that and ask Alessandra on VP&D and Dago on HEC. Do those product lines at this point fall toward the less differentiated end of the spectrum, and have we gotten to a point where you guys kind of need to compete on price, or can you speak to maybe some innovation opportunities or other sources of competitive advantage that would help you win or retain business beyond just what you're charging for pricing?
So Dago, why don't you talk a little bit of HEC, but Mike, I also want both Alessandra and Jim to talk about VP&D because I think there's a misconception that VP&D is one product line. Alessandra mentioned it. There's a lot of different product lines involved here. It's not one market.
I think there's a lot of differences in different parts of the portfolio. But if you could start.
I'll probably answer the question maybe in two parts. So part number one, I think you alluded to this. It's innovation. In rheology modification, there are still grades in our portfolio, and we still have a part of our portfolio that is differentiated. And we continue to work on that. Customers are seeing the benefits of having a differentiated product. So there are some parts of our portfolio that are more cost-sensitive, and we're seeing in China. But some parts of our portfolio are more differentiated, and we're working on that. I think the second point, and this is something that I guess COVID taught us all, is that customers are not only buying a product. Right? They buy three things, I would say.
They buy reliability of supply. It is becoming increasingly important for customers. Quality is absolutely critical, and consistency. That's the value proposition. And that's actually, by the way, what Ashland does really well: quality, reliability of supply, and consistency. Right? So price is important. Don't get me wrong. Every conversation we have, they're going to talk about price. That's their job. And our job is to keep it as high as possible. But what we're seeing with customers, and when we have those negotiations with customers, is that they pay a lot of attention now to reliability of supply based on what happened a couple of years ago, based on all the disruptions to supply chain. That's what they're paying a lot of attention to. So if you look at the package that we offer, not the product, but the package, I would say we're still in a pretty strong position.
In certain regions, do we have more of a price challenge? I think that's fair to say. We talked about China. We talked about maybe a spillover effect in other places like India. But overall, and looking forward, I do think that the strength of our value proposition, as I just mentioned, is going to allow us to compete in the long term.
Alessandra and Jim, you guys can come on VP&D.
Yeah. So on VP&D, I agree with Dago. Right? It is not just about price. It is the supply reliability of geopolitical changes. Right? Also, customers being concerned about those changes as well. Service and, of course, the high quality. But also on VP&D, it is an opportunity which we have been driving to drive the high purity, low nitrite differentiation.
But overall, if you look at our pharma, look at our portfolio, I mentioned we have an extensive portfolio in pharma. Yes, VP&D, it is the less differentiated part of our portfolio. But even on that, there are opportunities for us to drive productivity and differentiation with high purity.
And Jim, what's different in your business?
Sure. So Mike, I think good question. I would say IP protected, not IP protected, you always have to be cost competitive. And that's just table stakes, baseline. The actions we're taking to optimize the network are going to continue to ensure that we're at the lowest point of the cost curve. These products, they're franchises. There's not one VP&D or one HEC product. If you look at VP&D, you can sell it as a powder. You can sell it as a solution.
Within solutions, which mainly are sold in Personal Care, these are 30% by weight products. It's a lot of liquid. 70% is liquid. That defines your radius, your geography where you can be competitive. We're positioned in the U.S. We have a very good position in the U.S. as well as in Europe. And also, the competitive landscape is different. When you look at these materials, we're taking them and we're tailoring them for customers. It could be a different preservative. It could have a different ratio of a couple monomers. And so it is a very, I would say, diverse portfolio where it's not going to be just one product that can quickly displace another product one for one.
Maybe the other point that I will make because I think this is very interesting and very important for paints and coatings and probably also in pharmaceuticals is that the size or the cost of the additive compared to the total cost of the final product. So you think about an expensive API, active pharmaceutical ingredient. Right? If you look at how much a company pays for that and putting that at risk for an additive that is at 1% or 2% or 3%, the customers have to balance that to make sure that they are not taking a disproportionate risk to save some amount, valid, right, but putting the whole franchise at risk. In a paint formulation, it's the same. The additives are usually pretty small when it comes to percentage of addition, but they have a very important role to play.
So I would say our customers look also at our products as, "You know what? These products are enabling, enable us to have good quality final products." And making decisions on them is you have to do it in a very, very careful manner.
Thanks, Mike. We'll take Jeff in the corner.
Jeff Zekauskas from JPMorgan. If a question, I guess, both for Kevin and Guillermo may be all wrapped up together. When you think of the Ashland segments, you've got your Consumer Specialties with Pharma and Personal Care. And you also Specialty Additives, which is more of an industrial business. When you think about Ashland over time, are the Consumer Specialties more core to Ashland?
And is the evolution of the company forward both on the Personal C are and Pharmaceutical side and the industrial side, or does it make more sense over time for Ashland to be just Personal Care and just pharmaceutical in that it seems that in the background, there's a larger acquisition agenda, and that has to be funded. And over time, does it make sense to fund it by monetizing the Specialty Additives business? And for Kevin, Ashland has bought back a lot of shares, but the share price is flat over a five-year period. And even if the share price were at 90 instead of 75, it's still, versus the S&P, not a strong trajectory. And you seem to have an acquisition agenda over time to build your Personal Care business.
So does it make sense to slow your share repurchases or cut back the share repurchases in favor of a more aggressive acquisition strategy down the road?
Okay. So let me comment on the acquisition part, and then you can comment on some of the numbers. So first and foremost, and we presented this at the last, at the Innovation Day, this is about the strategic coherence of this. We can always say, "We want to just get Specialty Additives." you can't. But even there, I mean, it's the same products. If not, there's other companies that have just done some very convoluted separations, and then you don't know what you are or what you're not. I think the issue here is these are about additives and ingredients. And every segment has a role to play in what we want to do.
The issue is, are you creating value? And I think what we're excited about, one, with the existing core businesses, they're integrated. And I don't think we want to just play games to brand it just, "Hey, look, we're pharma only, and there's no real value behind it." So we're very transparent about that. We think that the additives and ingredients business is a higher multiple business. It is, if you look in the specialty segments, it's, "What do you want to be in? Electronics, Semiconductor, Pharma, Personal Care, and Additives." We're actually in all three of them because a lot of our solvents go into the semiconductor and the EV space. So there is coherence. I think the issue is some of the organic growth that we're doing is now IP protected. It's very differentiated.
So if these additives have value, I think even in the specialty areas, there's some very good companies out there. BYK-Chemie, as an example, is a company that I look at and I say, "In the additive space, industrial, they are a premier player." We look at other companies and we say, "Those are great examples that we want to learn from." And they have a great portfolio. So we're not afraid Specialty Additives side of it as long as it's differentiated. So that's one. Two, just buying to get bigger also can blow up. And quality is important. And that's why we're really focusing more on bolt-ons. I mean, there's a lot of companies in specialty chemicals. You can double your size. We just spent years trying to prune our portfolio. We don't want to go back to basics on some of these things.
I think that's part of the issue with our industry right now. Innovation has been lacking, and I think this is where we're excited about. So are there opportunities? Yes. But we need to be very strategic and stay on strategy on some of these things. But you want to comment on the value?
Sure. Yeah. In terms of the share price, I mean, point taken on the current share price, as I look at our repurchase activities over the last five years, last 10 years, I think it's relative to what's going on in the market at a point in time. And kind of how we look at success or failure around that is we don't know the future. We can't time the market. We can't do that individually. We can't do that from a company perspective.
But the way I look at success in terms of the shares we've repurchased is, over the course of time, have we done a good job of repurchasing those shares? And the answer to that question, based on our primary measure, is what we paid versus VWAP, volume-weighted average price? We're below that. We've been consistently below that. So as we have executed on the repurchases, I think we've done, again, objectively a good job of that. I think as you look at the future and even the past, we've invested in the business, certainly organically and repurchase shares at the same time, not mutually exclusive things. We've done acquisitions at the same time. I mean, most of our acquisition opportunities are small. You look at Schülke. At the time we did that acquisition, it was about a year's worth of free cash flow.
And so as we think about capital allocation, we have to strike a balance, and we will continue to do that around continuing to grow the dividend. We will fund the business organically. We will continue to look at the pipeline from an inorganic perspective. And as part of that, we'll toggle between share repurchase, M&A, etc., as the market would evolve. As we look at where we sit today, I mean, S&P 500 or S&P 7, as the case may be, personally, I think it's maybe not the right comparison for us. As we look at some of our near and peers, we've talked about these companies in terms of how we've performed versus how some of them have performed. There's a couple in particular that we have historically been compared to pretty aggressively.
And you look at those companies today, and I would say we're performing as well or better than they are. And yes, we have had to navigate, I would say, a rocky and a troubled period of time in our space, much like everybody else in our space. And I think objectively, we've done a pretty decent job of that. And our challenge is to continue to do that. And in the context of uncertainty and whatever the future may hold, to actually take advantage of the markets that we're in, the businesses that we run, the geographies that we participate in, and do better than the rest of the pack that's around us that we do compare ourselves to. So that's our challenge. That's our opportunity as we move forward. And I think it's not going to be mutually exclusive.
We're going to continue to invest in various ways based on the situation that we're in at the time.
And Jeff, just think about it. I mean, getting the portfolio where we want. We get this question from others here in the room. It's, "Make it strong. Make it better. Be in a position of strength as these changes come." I do think that in the next few years, there's going to be opportunities in our industry to do things. Make sure that we're driving our organic growth at the best pace. Be diligent on that and be positioned. When these opportunities come, we're all about creating value. So we're very open to that. But we want to make sure that we're in a position of strength. You don't want to be forced to do things.
You want to be able to do them because they create value for all of you, but also for our customers, which is ultimately how we create value for ourselves.
Okay. We'll take two final questions. One here and then Chris to wrap up. Yep.
Hi. Tom Maher from Hilton Capital. I think Jim mentioned customer engagement. And I was just going to dig in on that a little bit. I've read some criticism of Ashland in the past where it was sort of waiting around to see what customers wanted as opposed to more collaboratively finding out where to go. I'm just kind of curious for the three newer members of the management team, how much of a change or a heavy lift was that? And also, how much was simply without these new sort of innovations, there wasn't that much to sort of sell?
I'm just kind of curious because that was an interesting comment to me.
Thanks. Sure. So thanks for the question. I mean, it's just how I've always operated. I mean, I lived in Asia for almost a decade in the semiconductor electronics space. It's probably one of the fastest moving segments you can be in. It's all about customer intimacy. If you look at the electronic materials semiconductor space, customers, you've heard of Moore's Law. Every two years, they're launching a new technology. If you are not lockstep with your customer on their roadmap, and if your material is not spec'd in to what they're launching next, you're going to be on the outside looking in for a long time. So for me, that's just something I naturally bring to the business. We've brought new people in. We've worked with the team we have.
I'm excited that everyone has embraced that. We've spent a lot of time on the road, a lot meeting with customers. Customers have been very open. They want to collaborate with us. They want to engage with us. And we're making really good progress on that.
No, I agree. I mean, that's a great point. One of my good learnings when I came to Ashland is nice to see is that customers and large customers do like making business with Ashland. I believe that's not always the case. So the fact that they like to do business with Ashland actually speaks volumes. I think to your question, the proof is in the Specialty Additives, we've signed a JDA already in a very attractive segment with a large supplier. And we're only talking to leaders in those spaces to advance those technologies.
We're very serious about going after the top players and making sure that we collaborate with them in a way that we really advance this innovation. Another important point that I will make is for these types of technologies, platform technologies, honestly, you cannot start at the procurement level. I mean, you got to go all the way to the top. And what's very impressive about what we're doing is we have those connections. And so we can really mobilize the troops, and we can really make things happen relatively quick because we know who we need to talk to. We have the credibility. We have built the credibility for years. So it's much easier for us, I would say, to really get engaged in these types of strategic collaborations.
And Alessandra, you have a long pipeline business. How is the relationship with the customer?
Yeah. And it's a good point. And pharma, what I have seen is that that engagement, because we already have established a pharma business, it has been with certain levels of the organization. And what we're talking about, the greater depth, it has to be of different levels of the organization, different types of engagement. I described about having an Innovation Day and getting the right audience and getting them excited about where we're going. Because where we're going, if you're talking to the wrong players in the company, it's not going to go anywhere. So that is a change. That's a difference. Jim talked about earlier about commercial excellence, right? He talked about strategic account management, and it is about that. And also, it's having customer evidence for each one of our projects, innovation projects. What is the customer evidence, right?
Not just inside out, but how do we bring that as a checkpoint of each project.
We'll take the last question here.
Chris Parkinson from Wolfe. Alessandra, Jim, or Guillermo. A lot of your pharmaceutical business is predicated upon time release or patient adherence and just the way we generally think about it. You've had an injectables business for many years. And shout out to the people in Ireland doing a great job. How close are you to actually coming up with something from that business? I mean, you have a lot of exposure, and you've publicly disclosed you have exposure to drugs like metformin and some of the most highly prescribed, let's say, things that could prescriptions that could potentially benefit from long-time release, whether it's weekly or even monthly in some cases where you can take one shot instead of 30.
I'm not a diabetic, but I can imagine there's a huge benefit from that. This is something we've discussed for years. How much is that on the radar screen? And Guillermo, depending on her response, what's it going to take for most people in this room to kind of focus on these opportunities rather than the past?
So let me do the high-level one first, and then you can get some of the examples. Remember, in the injectables business, but in a lot of these long pipelines, when you're developing products, you have the preclinical. It's a journey. So why did we build the plant? We didn't have capacity to make samples. We had our R&D group wasn't doing R&D. They were just producing samples to sell. You don't give the samples away. You sell them.
Customers are making big investments in some of these areas, millions of dollars of samples for them to do their clinical trials and all that. So the way the model goes is you build that pipeline. That's what the team has really done well. Build that pipeline moving forward. But at different stages, we're already selling. There is a preclinical stage. That's where we're getting already a lot of revenue, and it's profitable. So what we want is as the products move through late stages, we're always going to have this preclinical because it's a good gateway to say, "Hey, if you're buying some samples and you spend $1 million-$2 million, you're serious about some of these initiatives." So it is a business model. Some of the companies we look to acquire and all that, it's pretty well established across the industry.
But do you want to talk about some of the projects?
Yep. And just a little bit, when you're talking about injectables and where our success has been, it has been as our customers were looking for a second source supplier, right? And they didn't want to be dependent on one supplier. But as we have shown the high-quality products and the reliability of supply, the high-quality of service, and the lead times that we have been able to operate thanks to the investments that Guillermo has mentioned, right? That has incredibly lowered our lead time and response time to our customers. We are now into new product developments with customers, right? Which is a shift. We came in coming into the market as a second source supplier because customers were concerned about that.
Now, I mean, we had the pleasure to have the inauguration of the expansion of our Mullingar site in Ireland. There were CEOs of pharma companies there that they told Guillermo and I that, "I have been to five or six other injectables facilities, and I have never seen a facility like yours." That gives the credibility for them to bring Ashland into their new product development as an example. Beyond the pharma, our traditional network of pharma, we are going to medical devices. We are going to dermal fillers. I invite you to spend some time outside with our team to look at what are we doing to those areas. Those are launches that are going to happen in 2025. Really exciting going beyond just the traditional pharma into other areas.
From my perspective, I've spent a fair bit of time with the Ireland team. I've been to the facility, talked to the team there. They have done an incredible job of building a portfolio of projects for their pipeline. Three years ago, it was probably half what it is today. And that actually is a really, really good indicator of the success they've had because these new projects are not just coming from new customers. They're coming from existing customers that have gone through the cycle. There's a pretty high failure rate in this process with very early-stage drugs. And even if the drug fails, they come to us for the next project and the next project and the next project.
And where you will see the power in this business, and it will take some time, is when these projects go from preclinical to stage two or three clinical. That's when the transition point will occur. And that will happen. We can't predict when. We can't predict how much. But we do know that it will be significant and meaningful for that business when it happens.
We appreciate the engagement. I'd invite you to continue the conversation out in the lobby with our globalization and innovation stations. I'll turn it over to Guillermo first, closing remarks.
So I'll make it short so that you can engage our team. First, thank you for coming, for joining us. I hope you're seeing this is a really important benchmark for us, a transition date. Our portfolio changes are over.
We have built. I think we've achieved all the things we wanted to do in terms of our portfolio change of reactivating our growth catalysts. We're in a very strong position. And our journey forward is going to be exactly the way we laid it. It's about execution. It's about having our teams driving things. And it's for the next three, for the next five, for the next 10 years. This is the roadmap that we're going. We're very excited about that. We appreciate your time. Thank you so much. And please join our team in the outside. Thank you.