Polaris furloughs to take effect in Q2 due to COVID-19 impact
Polaris Inc. on Tuesday announced several additional actions in response to the COVID-19 pandemic. These actions will help the company navigate the current environment by reducing expenses and improving its cash position and financial flexibility.
“This is an unprecedented crisis with a sudden and stark impact on our business, but in difficult times Polaris has always responded with agility and proved our resilience,” said Scott Wine, Polaris Chairman and CEO. “While the immediate future is uncertain, what is crystal clear is that Polaris must act judiciously but decisively to win both during this situation and after it is resolved. The measures we are taking today are necessary responses to a dynamic environment that compels us to bolster our liquidity and rapidly adapt to extraordinary circumstances.”
Temporary Measures on Employee Compensation
In response to continued uncertainty in market demand and the escalating near-term impact of COVID-19, Polaris made the necessary decision to enact several temporary changes related to employee compensation and hiring practices for exempt and nonexempt employees, including:
• Delaying merit increases for exempt and nonexempt employees through the end of the year
• Implementing a hiring freeze on exempt and nonexempt positions
• Furloughing most exempt and non-exempt Polaris employees for two weeks in the second quarter. Employees will not be paid but will maintain their health care benefits and may be eligible for unemployment benefits, subject to federal, state, and local regulations
• Exempt and non-exempt employees, including Polaris’ Executive Leadership Team, who are not furloughed will have their pay reduced by approximately 20 percent beginning April 13 through the end of the second quarter
In addition, Polaris Chairman and CEO, Scott Wine, will forgo his salary for the remainder of 2020.
Update on Plant Operations
Following the temporary production halt instituted on March 23, Polaris continues to carefully calibrate its manufacturing operations with anticipated product demand. Production will restart this week on select manufacturing lines for products with adequate demand and supply chain coverage. Polaris continues to ship finished vehicles to dealers, and to produce products that are consistent with governing federal, state and local directives.
Increasing Financial Flexibility
In addition to the steps listed above, the company is taking further action to increase financial flexibility and liquidity, including reviewing all operating expenses, postponing non-essential capital expenditures, and suspending share repurchases.
The company has also elected to draw down an incremental $150 million under its current revolving credit facility. As of March 31, Polaris has more than $420 million in cash-on-hand to help weather the current COVID-19 crisis.
The company will continue to evaluate its operations and make adjustments based on the safety of its employees, demand signals, the health of its supply chain and distribution network, and government mandates and local orders.
