RESTRUCTURING CHARGES

3 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

NOTE 3. RESTRUCTURING CHARGES

As a result of weak global resin demand and higher cost structures within the European region, we began a review of our global Epoxy asset footprint to optimize the most productive and cost effective assets to support our strategic operating model. As part of this review we announced operational cessations in the fourth quarter of 2022 and the first quarter of 2023 (collectively, Epoxy Optimization Plan).

On March 21, 2023, we announced we had made the decision to cease operations at our Cumene facility in Terneuzen, Netherlands and solid epoxy resin production at our facilities in Gumi, South Korea and Guaruja, Brazil. The closures were completed in the first quarter 2023. During the fourth quarter of 2022, we committed to and completed a plan to close down one of our bisphenol (BisA) production lines at our Stade, Germany site. For the three months ended March 31, 2023, we recorded pretax restructuring charges of $55.9 million for contract termination costs, the write-off of equipment and facility costs and facility exit costs related to the first quarter 2023 cessations. For the three months ended March 31, 2023, we recorded additional pretax restructuring charges of $1.9 million for facility exit costs related to the fourth quarter 2022 BisA closure. We expect to incur additional restructuring charges through 2026 of approximately $30 million related to these actions.

During 2021, we announced that we had made the decision to permanently close our diaphragm-grade chlor alkali capacity, representing 400,000 tons, at our McIntosh, AL facility(McIntosh Plan). The closure was completed during third

quarter of 2022. For the three months ended March 31, 2023 and 2022, we recorded pretax restructuring charges of $1.4 million and $0.9 million, respectively, for write-off of equipment and facility costs, lease and other contract termination costs and for facility exit costs related to this action. We expect to incur additional restructuring charges through 2027 of approximately $30 million related to these actions.

On January 18, 2021, we announced we had made the decision to permanently close our trichloroethylene and anhydrous hydrogen chloride liquefaction facilities in Freeport, TX (collectively, Freeport 2021 Plan), which were completed in the fourth quarter of 2021. For the three months ended March 31, 2023 and 2022, we recorded pretax restructuring charges of $0.7 million and $0.3 million, respectively, for facility exit costs related to these actions. We expect to incur additional restructuring charges through 2024 of approximately $15 million related to these actions.

On December 11, 2019, we announced that we had made the decision to permanently close a chlor alkali plant with a capacity of 230,000 tons and our vinylidene chloride (VDC) production facility, both in Freeport, TX (collectively, Freeport 2019 Plan). The VDC facility and related chlor alkali plant were closed during the fourth quarter of 2020 and second quarter of 2021, respectively. For the three months ended March 31, 2023 and 2022, we recorded pretax restructuring charges of $1.0 million and $1.7 million, respectively, for facility exit costs related to these actions. We expect to incur additional restructuring charges through 2026 of approximately $30 million related to these actions.

On March 21, 2016, we announced that we had made the decision to close a combined total of 433,000 tons of chlor alkali capacity across three separate locations (collectively, Chlor Alkali 2016 Plan). For the three months ended March 31, 2022, we recorded pretax restructuring charges of $0.2 million for facility exit costs and lease and other contract termination costs related to these actions. We do not expect to incur additional restructuring charges related to these capacity reductions.

The following table summarizes the 2023 and 2022 activities by major component of these restructuring actions and the remaining balances of accrued restructuring costs as of March 31, 2023 and 2022:


	Employee severance and related benefit costs		Lease and other contract termination costs		Facility exit costs		Write-off of equipment and facility		Total
	($ in millions)
Balance at January 1, 2022	$	6.9	$	5.4	$	—	$	—	$	12.3

Restructuring charges	—		0.1		2.6		0.4		3.1


Amounts utilized	(2.0)		(0.2)		(2.6)		(0.4)		(5.2)
Balance at March 31, 2022	$	4.9	$	5.3	$	—	$	—	$	10.2
Balance at January 1, 2023	$	9.4	$	4.2	$	—	$	—	$	13.6

Restructuring charges	—		39.7		8.4		12.8		60.9


Amounts utilized	(0.7)		(3.5)		(8.4)		(12.8)		(25.4)
Balance at March 31, 2023	$	8.7	$	40.4	$	—	$	—	$	49.1

The following table summarizes the cumulative restructuring charges of these restructuring actions by major component through March 31, 2023:


	Chlor Alkali Products and Vinyls								Epoxy		Corporate/other		Total
	McIntosh Plan		Freeport 2021 Plan		Freeport 2019 Plan		Chlor Alkali 2016 Plan		Epoxy Optimization Plan		Productivity Plan
	($ in millions)
Write-off of equipment and facility	$	2.7	$	—	$	58.9	$	78.1	$	13.4	$	—	$	153.1
Employee severance and related benefit costs	—		—		2.1		6.7		7.4		10.3		26.5
Facility exit costs	6.2		9.8		12.6		53.2		5.8		—		87.6
Employee relocation costs	—		—		—		1.7		—		—		1.7
Lease and other contract termination costs	6.4		—		—		43.0		39.2		—		88.6
Total cumulative restructuring charges	$	15.3	$	9.8	$	73.6	$	182.7	$	65.8	$	10.3	$	357.5

As of March 31, 2023, we have incurred cash expenditures of $155.3 million and non-cash charges of $153.1 million related to these restructuring actions. The remaining balance of $49.1 million is expected to be paid out through 2028.