Ingevity to reduce costs, staffing in response to coronavirus
By: ICN Bureau
Last updated : June 03, 2020 9:39 pm
The company stated that the cost reductions should enable it to remain within the revised guidance range it set forth in its first quarter 2020 earnings release.
Ingevity Corporation has announced a cost-reduction initiative to realign its cost structure in response to reduced demand for some of its products as a result of the coronavirus.
“The strategic actions we are taking will not only enable us to better weather the difficult times ahead, but will strengthen and bolster our performance going forward,” said Rick Kelson, chairman of the board, and interim president and CEO.
Kelson said the company will:
- Streamline manufacturing processes, including the temporary furlough of certain production employees;
- Decrease outside spending on consultants and services;
- Reduce certain benefits for salaried employees, including the suspension of matches to employee 401(k) retirement and deferred compensation programs; and
- Reduce and restructure headcount through an early retirement initiative and other employment reductions.
“These programs will lower both our cost of goods sold (COGS) and selling, general & administrative (SG&A) costs,” said Kelson. “Some of these measures are temporary, but many are permanent; and as such will give us a leaner cost basis for the future.”
The company stated that the cost reductions should enable it to remain within the revised guidance range it set forth in its first quarter 2020 earnings release. Ingevity stated on April 29, 2020, that it expects fiscal year 2020 sales of between $1.10 billion and $1.20 billion and adjusted EBITDA of between $310 million and $350 million. Kelson stated on the April 30, 2020, conference call that the company expects more significant impacts from the coronavirus to begin in the second quarter.
“We’re working from a platform of financial strength, and we’re working to control what we can control in a tumultuous environment,” said Kelson. “These steps – in combination with the focused execution by our businesses – in the long run will make Ingevity a more efficient, and more profitable company coming out of the current economic downturn.”
The company will record a pre-tax charge in the company’s second quarter 2020 financial results as part of the restructuring.