ION outlines $18 million cost reduction plan to mitigate adverse macroeconomic forces while maintaining business continuity
ION's priority remains the health and wellbeing of all our employees and the communities in which we operate and, earlier this week, we described the steps we had taken to rapidly shift 95% of our workforce to remote working and enhance protocols in accordance with CDC recommendations for the remaining 5% of exempted essential employees onsite.
We have now also assessed the related impact of E&P budget reductions to our business and, while the duration and extent of coronavirus is difficult to predict, we are taking decisive action to proactively manage our business. We are implementing the following initiatives to reduce costs by
- We are reducing personnel expenses
~$13 millionthrough a variety of furlough programs and reduced compensation arrangements. ION executives are taking a 20% base salary reduction and a tiered reduction scheme is being cascaded to the rest of the worldwide workforce. These temporary reductions go into effect no later than April 10th and will last until market conditions improve. The Board of Directors will also be taking a cut to compensation in alignment with all stakeholders. In addition, we will eliminate the modest 2019 bonus payout that had been approved prior. We believe we were right-sized for our vision and business plans as we entered 2020, and that this response significantly reduces costs while retaining our talented workforce and preserves their access to benefits through this challenging time.
- We are further decreasing SG&A costs by
~$5 million. We will continue curtailing the use of external contractors and narrow our supply chain, while implementing new systems and processes that more efficiently support our business. We slashed spending on physical trade shows and quickly pivoted to new digital go-to-market strategies. T&E has been cut by over 80% through the end of the year.
In addition to the aforementioned cost reductions, we are also scaling back capital expenditure estimates for the year to
"The combination of our business continuity plans and cost reduction initiatives enable ION to remain agile and support clients while navigating these uncertain times," said
Leveraging innovative technologies, ION delivers powerful data-driven decision-making to offshore energy, ports and defense industries, enabling our clients to optimize operations and deliver superior returns. Learn more at iongeo.com.
ION (Investor relations)
Executive Vice President and Chief Financial Officer
ION (Media relations)
Vice President, Communications
The information herein contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements may include information and other statements that are not of historical fact. Actual results may vary materially from those described in these forward-looking statements. All forward-looking statements reflect numerous assumptions and involve a number of risks and uncertainties. These risks and uncertainties include the risks associated with the timing and development of