Ingevity announces further repositioning of its Performance Chemicals business, including the closure of its DeRidder, Louisiana, facility and additional company-wide cost reduction actions
01 Noviembre 2023 - 2:15PM
Business Wire
- Company taking next steps in executing strategy that focuses on
higher margin and higher growth specialty products, diversifies
feedstocks and optimizes manufacturing network
- Exiting certain commodity-oriented markets that are primarily
rosin-based
- Reducing exposure to structurally more expensive crude tall oil
(CTO) raw material that is being dramatically impacted by the
biofuels market; company plans to sell excess CTO
- Closing DeRidder facility by the end of the first half of
2024
- Company will operate a dual CTO and Alternative Fatty Acid
(AFA) refinery network to maximize profitability and reduce raw
material cost volatility
- Total estimated business and corporate savings of $65-75
million, inclusive of approximately $35 million in savings
previously announced, are expected to be fully realized in
2024
- Company expects to record charges associated with the DeRidder
closure and restructuring of approximately $280 million, with
approximately $180 million of the total charges to be non-cash
- Actions taken are expected to result in a steady state
Performance Chemicals segment EBITDA margin of 15-20% and total
Ingevity margin of 25-30%
- Company will continue to evaluate its portfolio and
manufacturing network to drive the execution of its corporate
strategy and maximize profitability
Ingevity Corporation (NYSE: NGVT) president and CEO, John
Fortson today announced a number of strategic actions designed to
further reposition the company’s Performance Chemicals segment.
“What we are doing today is an important step toward achieving our
strategic objectives of improving the profitability and reducing
the cyclicality of the Performance Chemicals business and the
company as a whole,” said Fortson. “Today’s actions increase our
focus on growing our most profitable Performance Chemicals
businesses such as Pavement Technologies and accelerate our
transition to non-crude tall oil (CTO)-based fatty acids (AFA). Our
decision is the result of a careful evaluation of various strategic
options to address the cyclicality of our rosin-based end markets,
as well as the significant structural changes and elevated pricing
of CTO due to the biofuels market. Going forward, we will continue
to strengthen and diversify the Performance Chemicals business
through the introduction and expansion of complementary and new
product offerings based on alternative chemistries, such as soy and
canola-based fatty acids.”
Today’s announcement includes the permanent closure of the
company’s DeRidder, Louisiana, production facility that
manufactures a range of CTO-based products that are primarily for
the Industrial Specialties business, which is reported within
Ingevity’s Performance Chemicals segment. Ingevity expects to close
the DeRidder facility by the end of the first half of 2024. The
company also announced additional corporate and business cost
reduction actions, which combined with those previously announced,
are expected to result in total annual savings of $65-75 million
beginning in 2024.
As a result of the Performance Chemicals repositioning, Ingevity
expects to incur aggregate charges of approximately $280 million,
consisting of approximately $180 million in asset-related charges,
approximately $15 million in severance and other employee-related
costs and approximately $85 million in other restructuring costs,
which include decommissioning, dismantling and removal charges and
contract termination costs. The company expects approximately $180
million of the total charges to be non-cash. The majority of
non-cash charges and 50-60% of cash charges are expected to be
recognized by the end of the first half of 2024.
Employees affected by today’s announcement include approximately
180 people at the DeRidder facility and approximately 120 people in
business and support functions. Together with the actions taken
earlier in 2023, headcount reductions represent almost 20% of
Ingevity’s global workforce.
“We are committed to working with our customers to minimize any
disruption caused by this decision and remain focused on offering a
broader portfolio of products in the future,” said Ingevity senior
vice president and president, Performance Chemicals, Rich
White.
Fortson added, “Ingevity’s DeRidder operation played a key role
in Ingevity’s history. Today’s announcement is a difficult but
necessary step that the company must take as we continue to execute
our strategic objectives to position Ingevity for long-term
success. I want to thank all current and former employees for their
service and commitment to Ingevity.”
The company will provide additional detail and commentary as
part of its third quarter earnings webcast and conference call at
10:00 am (Eastern) on November 2, 2023. The webcast can be accessed
here or on the investors section of Ingevity’s website.
Ingevity: Purify, Protect and Enhance
Ingevity provides products and technologies that purify, protect
and enhance the world around us. Through a team of talented and
experienced people, we develop, manufacture and bring to market
solutions that help customers solve complex problems and make the
world more sustainable. We operate in three reporting segments:
Performance Chemicals, which includes specialty chemicals and
pavement technologies; Advanced Polymer Technologies, which
includes biodegradable plastics and polyurethane materials; and
Performance Materials, which includes activated carbon. Our
products are used in a variety of demanding applications, including
adhesives, agrochemicals, asphalt paving, bioplastics, coatings,
elastomers, lubricants, pavement markings, publication inks, oil
exploration and production and automotive components. Headquartered
in North Charleston, South Carolina, Ingevity operates from 31
countries around the world and employs approximately 1,900 people.
The company’s common stock is traded on the New York Stock Exchange
(NYSE:NGVT). For more information, visit Ingevity.com. Follow
Ingevity on LinkedIn.
About Forward-Looking Statements
This press release contains “forward-looking statements” within
the meaning of the Securities Exchange Act of 1934, as amended, and
the Private Securities Litigation Reform Act of 1995. Such
statements generally include the words “will,” “plans,” “intends,”
“targets,” “expects,” “outlook,” “guidance,” “believes,”
“anticipates” or similar expressions. Forward-looking statements
may include, without limitation, anticipated timing, charges and
costs of the closure of our DeRidder, Louisiana plant; the
potential benefits of any acquisition or investment transaction,
expected financial positions, guidance, results of operations and
cash flows; financing plans; business strategies and expectations;
operating plans; impact of COVID-19; capital and other
expenditures; competitive positions; growth opportunities for
existing products; benefits from new technology and cost-reduction
initiatives, plans and objectives; litigation related strategies
and outcomes; and markets for securities. Actual results could
differ materially from the views expressed. Factors that could
cause actual results to materially differ from those contained in
the forward-looking statements, or that could cause other
forward-looking statements to prove incorrect, include, without
limitation, charges, costs or actions, including adverse legal or
regulatory actions resulting from, or in connection with, the
closure of our DeRidder, Louisiana plant; losses due to resale of
CTO at less than we paid for it; adverse effects from general
global economic, geopolitical and financial conditions beyond our
control, including inflation and the Russia-Ukraine war and
Israel-Gaza war; risks related to our international sales and
operations; adverse conditions in the automotive market;
competition from substitute products, new technologies and new or
emerging competitors; worldwide air quality standards; a decrease
in government infrastructure spending; adverse conditions in
cyclical end markets; the limited supply of or lack of access to
sufficient raw materials, or any material increase in the cost to
acquire such raw materials; issues with or integration of future
acquisitions and other investments; the provision of services by
third parties at several facilities, including the impact of
WestRock’s shutdown of its North Charleston paper mill; adverse
effects from the COVID-19 pandemic; supply chain disruptions;
natural disasters and extreme weather events; or other
unanticipated problems such as labor difficulties (including work
stoppages), equipment failure or unscheduled maintenance and
repair; attracting and retaining key personnel; dependence on
certain large customers; legal actions associated with our
intellectual property rights; protection of our intellectual
property and other proprietary information; information technology
security breaches and other disruptions; complications with
designing or implementing our new enterprise resource planning
system; government policies and regulations, including, but not
limited to, those affecting the environment, climate change, tax
policies, tariffs and the chemicals industry; and losses due to
lawsuits arising out of environmental damage or personal injuries
associated with chemical or other manufacturing processes, and the
other factors detailed from time to time in the reports we file
with the Securities and Exchange Commission (the “SEC”), including
those described in Part I, Item 1A. Risk Factors in our most recent
Annual Report on Form 10-K as well as in our other filings with the
SEC. These forward-looking statements speak only to management’s
beliefs as of the date of this press release. Ingevity assumes no
obligation to provide any revisions to, or update, any projections
and forward-looking statements contained in this press release.
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version on businesswire.com: https://www.businesswire.com/news/home/20231101148303/en/
Caroline Monahan 843-740-2068 caroline.monahan@ingevity.com
Investors: John E. Nypaver, Jr. 843-740-2002
investors@ingevity.com
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