NORTH CHARLESTON, S.C. (News release) - Ingevity Corporation announced additional steps to advance the company's strategic repositioning of its Performance Chemicals segment for sustained improved profitability. Actions include consolidating segment operations at the company's North Charleston, South Carolina, facility by moving oleo chemical refining to the North Charleston site's secondary refinery. This consolidation will include closing its Crossett, Arkansas facility in August.
Today's announcement further simplifies the segment's manufacturing footprint by consolidating oleo-based and crude tall oil-based chemical refinery operations at one facility with opportunities for future expansion to accommodate growth.
These actions represent necessary steps in the company's previously announced repositioning of the Performance Chemicals segment to improve business performance.
"We continue to assess various strategic options to maximize the profitability of our Performance Chemicals segment, and today's announcement is another positive step toward that objective," said Ingevity president and CEO, John Fortson. "Transitioning oleo chemical refining to our North Charleston facility rationalizes our manufacturing footprint, creates significant cost savings with no anticipated impact on commercial operations and maintains future growth optionality as the oleo chemicals market evolves."
The company expects to realize net savings related to the closure of its Crossett facility of approximately $20 million to $25 million per year beginning in 2025.
"The pace of growth in our oleo markets has been impacted by a slow industrial recovery," said Ingevity senior vice president and president, Performance Chemicals, Rich White. "We originally piloted oleo chemical refining at our North Charleston facility, and subsequent to our repositioning actions we have confirmed it has the capability to deliver both the oleo-based and crude tall oil-based chemistries we need to meet current customer demand as well as supply the new business we forecast to have over the next several years. The site also has the ability to expand capacity at nominal cost to meet additional market growth."
The company also announced corporate and business-related cost reduction actions expected to yield approximately $10 million in annual savings beginning in 2025.
"These actions are necessary to better position Ingevity for future success and return the Performance Chemicals segment to profitable, sustained growth," continued Fortson. "This was a difficult decision given the impact on our employees and the surrounding community, and I want to thank all employees for their service and commitment to Ingevity."
As a result of today's announced restructuring actions, Ingevity expects to incur aggregate charges of approximately $100 million, consisting of approximately $65 million in non-cash asset-related charges, approximately $10 million in severance and other employee-related costs and approximately $25 million in other cash restructuring costs, which include decommissioning, dismantling and removal charges and contract termination costs. 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 2025.
