Intertape Polymer (ITP.TO) said Tuesday that it plans to close its Richmond, Kentucky facility that manufactures tape products and transfer the shrink film production business from the company's Truro, Nova Scotia facility to its Tremonton, Utah plant.
The company believes this will allow it to further optimize its manufacturing footprint and generate significant annual savings.
Intertape's President and CEO Greg Yull said, "With this plant closure and transfer of production, we expect a positive contribution to Adjusted EBITDA of more than $5 million in 2013 and approximately $6 million in each subsequent year. The process will be seamless to customers and we do not anticipate any significant impact on our revenues."
The Richmond facility will be closed in part due to productivity improvements in other production facilities. The majority of production will be transferred to Intertape's Carbondale, Illinois facility.
The shrink film business in Truro will be transferred to Tremonton while woven fabric products will continue to be produced at Truro. These changes are expected to be completed in late 2012 and early 2013.
As a result of these initiatives and other smaller aspects of the company's manufacturing rationalization plan, a charge of $14-$16 million is expected to be recorded in the second quarter of 2012 primarily related to property, plant and equipment, and severance. Around $1.5 million of this charge relates to cash items and the remainder is non-cash.
Additional costs of about $3.5 million will also be incurred and paid throughout the second half of 2012 and in early 2013. This initiative will require approximately $5.5 million in capital expenditures, with total company 2012 capital expenditures expected to be $20-23 million.
For comments and feedback: editorial@rttnews.com