Lear Corporation (NYSE: LEA), a global automotive technology leader in Seating and E-Systems, today announced it is undertaking several decisive actions in response to the coronavirus pandemic. These actions include instituting additional employee safety measures and enhancing the Company’s financial flexibility in light of the substantial impact COVID-19 is having on the global automotive industry and the global economy more broadly.
Employee-Related Actions
Over the past several weeks, in response to COVID-19, Lear has implemented measures to protect the health and safety of employees globally. These actions include:
- Requiring non-essential administrative staff to work from home
- Preventing visitors from entering Company buildings
- Managing shift changes and staggering lunch breaks to thoroughly disinfect common areas and promote social distancing
- Installing additional hand sanitizer dispensers and more frequently cleaning often-touched surfaces
- Adhering to safety guidelines provided by the World Health Organization and Centers for Disease Control and Prevention, as well as all orders and directives regarding business operations issued by Federal, State and local authorities
Balance Sheet and Liquidity Actions
Lear has ample liquidity and no significant near-term debt maturities. However, in light of the highly uncertain environment, the Company believes it is prudent to take a series of preemptive actions to further strengthen its balance sheet and enhance its financial flexibility. Therefore, the Board of Directors has authorized the following actions:
- Drawing down $1.0 billion from the Company’s $1.75 billion revolving credit facility, which matures in August 2024
- Temporarily suspending share repurchases
- Temporarily suspending quarterly dividend
The $1.0 billion of funds from the drawdown of the credit facility will supplement the Company’s strong cash position, which, as of December 31, 2019, was approximately $1.5 billion. Following the drawdown, the Company will have remaining availability of $750 million on its revolver.
The Company also is taking swift action to aggressively manage operating costs, capital expenditures and working capital, including eliminating discretionary spending and adjusting production activity in response to rapid declines in industry volumes.
“Lear has a strong balance sheet, which positions us to weather significant industry downturns and uncertain conditions,” said Lear President and CEO Ray Scott. “During this challenging time, our top priority is the health and safety of our employees, and we have instituted new safety protocols at all our facilities globally. We also have dedicated teams working to ensure we will be fully prepared to ramp up our manufacturing operations safely and efficiently when automotive industry production recovers. At the same time, we are proactively managing operating costs and cash flow to minimize the impact of sudden production declines on our profitability and financial position. I am proud of the dedication and resolve our employees have shown during this difficult period and am confident we will emerge from this crisis in a strong financial and competitive position.”
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SOURCE: Lear
