WK Kellogg Co has announced it plans to make capital investments of up to $500 million to modernize its supply chain. The company said it will invest $390 million and also expects to incur one-time cash restructuring and non-restructuring costs of approximately $110 million.

In August 2023, the company unveiled its strategy and three-year financial targets, which included expected adjusted EBITDA margin expansion of approximately 500bps, resulting in expected adjusted EBITDA margin growth from approximately 9% to approximately 14% exiting 2026. The centerpiece of the margin improvement strategy was the plan to modernize the supply chain, which includes investing in new technology and infrastructure, as well costs related to network consolidation.

Plant locations receiving new infrastructure, equipment, technology, and capabilities include Battle Creek, Michigan; Belleville, Ontario; and Lancaster, Pennsylvania. The company also plans to increase production at these locations.

Also part of its strategy, the company also plans to consolidate its manufacturing footprint by closing its Omaha, Nebraska, plant, with a phased reduction in production beginning in late 2025 and full closure toward the end of 2026. Production will also be scaled back at the Memphis, Tennessee, facility, commencing late 2025, resulting in a more focused, streamlined facility. These actions, the company said, will reduce headcount by approximately 550 people, including estimated headcount additions at the plants where production would increase.

“Actions that impact our people and the communities where we operate are challenging and are made with thoughtful consideration,” said Pilnick. “We recognize and appreciate the tremendous contributions of our WK teams in Omaha and Memphis, and we are committed to providing them support throughout this transition.”