PolyOne Announces North American Manufacturing Asset Realignment
- Reduction of redundant capacity through closure of six facilities acquired in the March 2013 purchase of Spartech Corporation.
- Actions planned to improve customer service, quality and on-time delivery.
- Realignment expected to generate pre-tax savings of approximately $25 million on an annualized basis.
CLEVELAND, July 16, 2013 /PRNewswire/ -- PolyOne Corporation (NYSE: POL), a leading global provider of specialized polymer materials, services and solutions, today announced it will realign its North American manufacturing assets to better serve customers, improve efficiency, and deliver previously announced synergy-related cost savings in connection with its March 2013 acquisition of Spartech Corporation.
Over the next several months, the company will close six manufacturing plants and relocate production to other PolyOne facilities. These actions are expected to be completed by the end of 2014 and generate annualized pre-tax savings of approximately $25 million in 2015. Cash costs are expected to approximate $45 million over the next 12-18 months, primarily related to severance, asset relocation and additional capital investment.
"These actions are entirely consistent with our previously announced plans to integrate PolyOne and Spartech and to accelerate our specialty transformation," said Stephen D. Newlin, chairman, president and CEO. "By combining our resources, we expect to better serve our customers with a more competitive cost structure, improved product quality and on-time delivery with increasingly innovative technologies."
Production at the closing North American facilities will be shifted to other PolyOne locations, and these actions are expected to result in a net reduction of approximately 250 employees.
"Our exceptional management team has the experience and proven track record of transforming and integrating businesses with specialty potential through the execution of our four-pillar strategy," Mr. Newlin added. "We are committed to delivering at least $65 million of synergies from the Spartech acquisition and $0.50 of EPS accretion upon full synergy capture."
"While the business case for these actions was clear, we understand the impact this announcement will have on affected employees, their families and local communities, and we will handle these moves with great sensitivity and dignity for everyone affected," Mr. Newlin said.
PolyOne expects to recognize estimated charges of $35 million related to this realignment over the next 12-18 months. This includes approximately $20 million in cash charges, primarily associated with severance and asset relocation costs, and approximately $15 million in non-cash charges, primarily associated with accelerated depreciation of exited facilities and equipment.
PolyOne Corporation, with 2012 revenues of $2.9 billion, is a premier provider of specialized polymer materials, services and solutions. The company is dedicated to serving customers in diverse industries around the globe, by creating value through collaboration, innovation and an unwavering commitment to excellence. Guided by its Core Values, Sustainability Promise and No Surprises PledgeSM, PolyOne is committed to its customers, employees, communities and shareholders through ethical, sustainable and fiscally responsible principles. For more information, visit www.polyone.com.
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In this press release, statements that are not reported financial results or other historical information are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give current expectations or forecasts of future events and are not guarantees of future performance. They are based on management's expectations that involve a number of business risks and uncertainties, any of which could cause actual results to differ materially from those expressed in or implied by the forward-looking statements. They use words such as "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," and other words and terms of similar meaning in connection with any discussion of future operating or financial condition, performance and/or sales. Factors that could cause actual results to differ materially from those implied by these forward-looking statements include, but are not limited to: our ability to realize anticipated savings and operational benefits from the realignment of assets, including the planned closure of six North American manufacturing facilities; the timing of closings and shifts of production to new facilities related to the planned North American asset realignment and any unforeseen disruptions of service or quality caused by such closings and/or production shifts; separation and severance amounts that differ from original estimates, including because of the timing of employee terminations; amounts for non-cash charges related to the planned North American asset realignment relating to inventories and property, plant and equipment that differ from original estimates because of the final assessed fair market value of such inventories and property, plant and equipment; our ability to achieve the strategic and other objectives relating to the acquisition of Spartech Corporation, including any expected synergies; our ability to successfully integrate Spartech Corporation and achieve the expected results of the acquisition, including, without limitation, the acquisition being accretive; disruptions, uncertainty or volatility in the credit markets that could adversely impact the availability of credit already arranged and the availability and cost of credit in the future; the financial condition of our customers, including the ability of customers (especially those that may be highly leveraged and those with inadequate liquidity) to maintain their credit availability; the speed and extent of an economic recovery, including the recovery of the housing market; our ability to achieve new business gains; the effect on foreign operations of currency fluctuations, tariffs, and other political, economic and regulatory risks; changes in polymer consumption growth rates where we conduct business; changes in global industry capacity or in the rate at which anticipated changes in industry capacity come online; fluctuations in raw material prices, quality and supply and in energy prices and supply; production outages or material costs associated with scheduled or unscheduled maintenance programs; unanticipated developments that could occur with respect to contingencies such as litigation and environmental matters; an inability to achieve or delays in achieving or achievement of less than the anticipated financial benefit from initiatives related to working capital reductions, cost reductions, and employee productivity goals; an inability to raise or sustain prices for products or services; an inability to maintain appropriate relations with unions and employees; the inability to achieve expected results from our acquisition activities; our ability to continue to pay cash dividends; the amount and timing of repurchases of our common shares, if any; and other factors affecting our business beyond our control, including, without limitation, changes in the general economy, changes in interest rates and changes in the rate of inflation. The above list of factors is not exhaustive.
We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any further disclosures we make on related subjects in our reports on Form 10-Q, 8-K and 10-K that we provide to the Securities and Exchange Commission.
SOURCE PolyOne Corporation