Company: NOTV
Filing Date: 2025-05-08
Form Type: 10-Q
Source: 0001628280-25-023370
Chunk: 65

Company: Inotiv, Inc.
Filing Date: 2025-05-08
Form: 10-Q
Item: Part I, Item 1
Chunk 65
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 continued to make progress integrating and improving our North American transportation and distribution systems, which we brought in house during fiscal 2024. This has provided an improved client experience and improved our operational efficiency. 

From fiscal year 2022 through the end of fiscal year 2024, we executed on our restructuring and site optimization plans. These plans included the sale of our Israeli businesses in fiscal year 2023 in addition to the closure and relocation of multiple RMS facilities ("Phase One"). As of September 30, 2024, Phase One of the Company's restructuring and site optimization plan was complete. By the end of fiscal year 2025, we believe that, as a result of Phase One and the integration of our North American transportation and distribution systems, we will have achieved approximately $17,000 - $19,000 in net annual cost savings. 

During the first quarter of fiscal 2025, we announced that we would continue our site optimization plan for the RMS business ("Phase Two"). Initially, we estimated Phase Two would require a $5,000 investment, which would have included the use of tenant improvement dollars along with proceeds from the sale of owned facilities. We also estimated that Phase Two would not change production capacity and would provide annual savings of approximately $4,000 to $5,000 from reduced repair and maintenance expense on facilities and lower cost of production, along with improved service for clients.

We have continued to refine our plans for Phase Two and now anticipate that Phase Two will require a capital investment of approximately $6,500, which will include the use of tenant improvement dollars and a portion of the settlement payment received during March 2025. The plan now indicates that Phase Two will reduce capacity and create operating efficiencies, while supporting our animal welfare objectives, and provide net annual savings of $6,000 to $7,000. Additionally, we believe Phase Two will allow us to remain agile and to increase capacity in the future, if needed. We are in the process of executing Phase Two, which we now plan to complete by March 2026, approximately six months earlier than we originally planned. Further, we anticipate beginning to see savings benefits as early as the fourth quarter of fiscal 2025.

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In connection with Phase Two, we have two properties under contract to be sold for which the net proceeds will be used to repay principal on our term loans. 

Refer to Note 8 – Restructuring and Assets Held for Sale in our condensed consolidated financial statements contained in Part I, Item 1 for more