Visteon (VC) withdraws financial guidance

Visteon Corporation (NASDAQ: VC) today outlined various actions it is taking in response to the global coronavirus pandemic.

Operational Business Actions

The company has taken decisive actions to manage costs and preserve liquidity, including effective cost management and the previously disclosed drawdown of its revolving credit facility.

As of March 31, Visteon had approximately $825 million of cash and roughly $785 million of debt, which includes the $400 million draw down of the revolving credit facility. Visteon has no significant near-term debt maturities.

“Visteon has a solid balance sheet and the necessary liquidity to withstand the storm while continuing to position the company for future growth,” said Visteon President and CEO Sachin Lawande. “We have seized the challenge as an opportunity to emerge stronger as a company and continue to lead the evolution of automotive digital cockpits and safety solutions with a strong technology roadmap.”

Visteon has temporarily suspended or significantly reduced production at certain facilities in the Americas, Europe and most of Asia outside of China in response to governmental requirements and production rollbacks taken by many of its customers. As its operations resume in China, Visteon is implementing best practices to protect the health and safety of its workforce, including requiring cleaning and sanitation protocols, employee wellness checks and social distancing.

In addition to the restructuring plan previously announced in January, the company will further reduce the number of employees at various sites. The new restructuring program is estimated to cost between approximately $11-15 million and will be substantially completed by the middle of 2021. The plans are expected to lower the company’s cost base, improve its financial performance and cash flow generation, and create a streamlined organization best positioned to deliver on its key financial and operational priorities.

Temporary Global Compensation Actions

Visteon today announced a temporary four-month global salary reduction program; CEO salary will be reduced by 40%, the company’s Executive Committee by 30%, and non-employee Directors’ cash compensation by 30%. Subject to local laws and regulations, all other employee salaries will be reduced by 20%.

Guidance Withdrawn

Given the uncertainty created by the growing impact of COVID-19 on the global automotive market, the company also announced that it is withdrawing the financial guidance provided in February 2020.

Protective Face Shield Donations

The company is assisting the global battle against COVID-19 by using production lines at its state-of-the-art Palmela manufacturing facility in Portugal, usually dedicated to automotive cockpit electronics, to produce protective face shields. Visteon will donate the much-needed personal protective equipment to the community medical facilities in which our employees and their families live.

“Nothing is more important to Visteon than the health and safety of our 11,000 employees who work and reside in 18 countries around the world,” said Visteon President and CEO Sachin Lawande. “The battle against COVID-19 will be won through innovation and I’m proud that our global teams have pulled together to find ways to help protect those in the medical community who tirelessly and selflessly commit themselves to protecting us and our loved ones.”

At scale, the company hopes to deliver up to 50,000 protective face shields and other personal protective equipment (PPE) to doctors and nurses in its communities. The company has also donated face masks it received from its China operations to the University of Michigan Hospital donation center.

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