Portfolio Optimization Plan

3 Months Ended

Mar. 31, 2025

Portfolio Optimization Plan [Abstract]

3.	Portfolio Optimization Plan

During the fourth quarter of 2023, the Board of Directors of the Company approved a plan to undertake an effort to optimize certain production facilities and improve efficiencies within the Company (Portfolio Optimization Plan). As part of the Portfolio Optimization Plan, in the Flavors & Extracts segment, the Company evaluated the closure of its manufacturing facility in Felinfach, Wales, United Kingdom, the closure of its sales office in Granada, Spain, and the centralization and elimination of certain selling and administrative positions. In addition, in the Color segment, the Company evaluated the closure of a manufacturing facility in Delta, British Columbia, Canada, the closure of a sales office in Argentina, and centralizing and eliminating certain production positions and selling and administrative positions. The Company reports all costs associated with the Portfolio Optimization Plan in the Corporate & Other segment.

The Company’s Felinfach site will continue to operate until all production activities have successfully transferred to other locations, and then will be closed. The Company has substantially completed all other actions contemplated under the Portfolio Optimization Plan in accordance with local laws.

The Company recorded $2.5 million of accrued liabilities in Other Accrued Expenses on the Company’s Consolidated Balance Sheet related to this plan as of both March 31, 2025 and December 31, 2024. The Company expects this plan will cost approximately $40 million, of which $37.3 million has been incurred through March 31, 2025, primarily related to non-cash impairment charges and proposed employee separation costs, and upon completion would reduce annual operating costs by approximately $8 million to $10 million, with the full benefit expected to be achieved after 2025. The Company anticipates it would reduce headcount by approximately 90 positions, primarily in the Flavors & Extracts and Color segments, related to certain production and selling and administrative positions.

The following table summarizes the Portfolio Optimization Plan expenses by segment for the three months ended March 31, 2025:

(In thousands)	Flavors & Extracts		Color		Consolidated
Non-cash charges – Cost of products sold	$	855	$	-	$	855
Employee separation – Selling and administrative expenses		246		8		254
Other production costs – Cost of products sold		959		-		959
Other costs – Selling and administrative expenses⁽¹⁾		791		5		796
Total	$	2,851	$	13	$	2,864

⁽¹⁾

Other costs include professional services and other related costs.

The following table summarizes the Portfolio Optimization Plan expenses by segment for the three months ended March 31, 2024:

(In thousands)	Flavors & Extracts		Color			Corporate & Other		Consolidated
Non-cash impairment charges – Selling and administrative expenses	$	-	$	975		$	-	$	975
Non-cash charges – Cost of products sold		125		(18	)		-		107
Employee separation – Selling and administrative expenses		611		491			28		1,130
Other costs – Selling and administrative expenses⁽¹⁾		316		284			-		600
Total	$	1,052	$	1,732		$	28	$	2,812

⁽¹⁾

Other costs include professional services, accelerated depreciation, accelerated lease costs, and other related costs.