Source: Meritor announcement excerpt
TROY, Mich. — Meritor, Inc. (NYSE:MTOR) has announced actions designed to enhance the financial position of the company in light of current market conditions resulting from the COVID-19 pandemic.
“It remains too early to forecast the long-term impact of this crisis on the industry, but the actions we are announcing today reflect a set of coordinated steps toward finalizing our business plan for fiscal year 2021 and 2022,” said Jay Craig, CEO and president of Meritor.
Cost Savings Initiatives
Meritor is taking actions to right-size the company and align with current market forecasts for global truck and trailer production. These restructuring actions represent approximately an eight-percent reduction in global salaried positions. The company expects the vast majority of these actions to be completed by the end of fiscal year 2020. Meritor anticipates incurring approximately $25 million in employee severance costs related to this restructuring plan.
Meritor Provides COVID-19 Related Update
Effective June 16, 2020, the base salaries of the company’s salaried employees in the United States and Canada will be partially restored, but remain reduced from original levels as follows:
- CEO/Board of Directors: 20-percent reduction (from 60-percent reduction)
- Other officers: 15-percent reduction (from 50-percent reduction)
- Executives (vice presidents and directors): 15-percent reduction (from 25-percent reduction)
- All other salaried employees in the United States and Canada: 10-percent reduction (from 20-percent reduction)
Proposed Offering of Notes
Meritor announced today that it intends, subject to market and other conditions, to offer $300 million aggregate principal amount of unsecured senior notes.
The company currently expects to use the net proceeds from the offering of the notes to repay a portion of the outstanding balance under its senior secured credit facility.
Outlook for Third Quarter Fiscal Year 2020
Meritor is reaffirming its financial guidance for the third quarter of fiscal 2020 as follows:
- Revenue to be in the range of $400 million to $500 million
- Cash flow from operations to be in the range of negative $150 million to negative $225 million, inclusive of the one-time impact from receivable factoring programs of negative $125 million to negative $175 million
“We moved quickly during the pandemic to stabilize cash flow for the third and fourth quarter so that we could focus on the long-term health of the company, which includes rightsizing the organization,” added Craig. “As we have begun to see the benefits of our cost preservation actions, we are pleased that we were able to lessen the salary
The entire announcement can be viewed by clicking HERE.