HZN Horizon Global Corporation

Business Update

• Second quarter diluted earnings per share of $0.79
  • Second quarter adjusted diluted earnings per share(1) of $0.84
• Net sales increased from $167.8 million to $253.6 million, up 51.1%
• Operating profit margin increased to 9.6%, up 300 basis points
  • Adjusted operating profit margin(2) of 10.3%, flat from prior year quarter
• Westfalia integration and synergies on track
• Repurchased 570,365 shares of common stock
• Third quarter 2017 earnings per share guidance
  • Diluted earnings per share guidance between $0.24 and $0.29
  • Adjusted diluted earnings per share(3) between $0.35 and $0.40
• Full-year 2017 earnings per share guidance increased
  • Diluted earnings per share increased to between $0.54 and $0.64
  • Adjusted diluted earnings per share(3) increased to between $1.04 and $1.14

Horizon Global Corporation (NYSE: HZN), the world’s leading manufacturer of branded towing and trailering equipment, today reported second quarter results, which demonstrated a continued focus on execution, operational excellence and a commitment to drive growth across the enterprise.

“We observed our two-year anniversary as a public company in the second quarter and delivered solid revenue growth and margin expansion,” said A. Mark Zeffiro, President and Chief Executive Officer of Horizon Global. “Total company revenues grew over 51%, predominantly as a result of the addition of Westfalia. Regionally, Horizon Americas delivered strong growth in e-commerce and aftermarket channels as sales recovered from order delays in the first quarter of 2017. Horizon Asia-Pacific experienced double-digit organic growth by expanding into industrial products. As a whole, the Company’s operating profit more than doubled as a result of leverage from increased sales and operational improvements.”

“We reiterate our confidence in achieving €9 million in expected synergies during 2017 due to our Westfalia integration efforts. The momentum in Horizon Europe-Africa continues to build, and we expect to realize ongoing benefits from the business in the back half of 2017 and beyond.

“We are also pleased to announce our recently completed acquisition of Best Bars Limited, an established leader in the towing and trailering industry in New Zealand. Best Bars is now part of Horizon Asia-Pacific, and we expect this acquisition to support the growth of our global OE business.”

Best Bars primarily serves the OE channel with towing solutions and a wide range of vehicle accessories. Its global customers include Toyota, FCA (Jeep) and Volkswagen in New Zealand.

2017 Second Quarter Segment Highlights

Horizon Americas. Net sales increased 7.2 percent, driven by gains in the aftermarket, OE and e-commerce channels. Operating profit increased $10.1 million to $22.8 million, or 16.5 percent of net sales, primarily due to higher sales, favorable product mix and cost reductions.

Horizon Europe-Africa. Net sales increased by $72.8 million, driven by the acquisition of Westfalia. Operating profit increased $3.5 million to $3.6 million, or 4.2 percent of net sales, primarily attributable to the acquisition of Westfalia. Adjusted operating profit(2) increased to $4.7 million, or 5.4 percent of net sales.

Horizon Asia-Pacific. Net sales increased 15.1 percent, or 13.3 percent on a constant currency basis(4), driven by increases in the OE and industrial channels. Operating profit increased $1.4 million to $4.3 million, or 14.9 percent of net sales, on increased sales volumes and operational improvements across the region.

Outlook

“We continue to drive progress on our key financial priorities - expanding our operating margin, improving our capital structure and growing the business to extract maximum value for our shareholders. Given our performance in the second quarter and our forecast for the balance of the year, we are raising our full-year earnings per share guidance,” said Zeffiro.

For third quarter 2017, the Company expects:

• Revenues between $225 million to $235 million
• Diluted earnings per share between $0.24 and $0.29
  • Adjusted diluted earnings per share(3) between $0.35 and $0.40

For full-year 2017, the Company expects:

• Revenue growth of 30 to 35 percent; unchanged
• Operating profit between $40 million and $46 million, up 370 to 420 basis points; unchanged
  • Adjusted operating profit(3) between $53 million and $59 million, up 60 to 100 basis points; unchanged
• Operating cash flow between $40.0 million and $50.0 million; unchanged
• Diluted earnings per share between $0.54 and $0.64; increased
  • Adjusted diluted earnings per share(3) between $1.04 and $1.14; increased

Conference Call Details

Horizon Global will host a conference call regarding second quarter 2017 earnings on Tuesday, August 1, 2017 at 8:30 a.m. Eastern Time. Participants in the call are asked to register five to ten minutes prior to the scheduled start time by dialing (844) 711-8052 and from outside the U.S. at (832) 900-4641. Please use the conference identification number 48185691.

The conference call will be webcast simultaneously and in its entirety through the Horizon Global website. An earnings presentation will also be available on the Horizon Global website at the time of the conference call. Shareholders, media representatives and others may participate in the webcast by registering through the investor relations section on the Company’s website.

A replay of the call will be available on Horizon Global’s website or by phone by dialing (800) 585-8367 and from outside the U.S. at (404) 537-3406. Please use the conference identification number 48185691. The telephone replay will be available approximately two hours after the end of the call and continue through August 15, 2017.

About Horizon Global

Horizon Global is the #1 designer, manufacturer and distributor of a wide variety of high-quality, custom-engineered towing, trailering, cargo management and other related accessory products in North America, Australia and Europe. The Company serves OEMs, retailers, dealer networks and the end consumer as the category leader in the automotive, leisure and agricultural market segments. Horizon provides its customers with outstanding products and services that reflect the Company’s commitment to market leadership, innovation and operational excellence. The Company’s mission is to utilize forward-thinking technology to develop and deliver best-in-class products for our customers, engage with our employees and realize value creation for our shareholders.

Horizon Global is home to some of the world’s most recognized brands in the towing and trailering industry, including: BULLDOG, Draw-Tite, Fulton, Hayman Reese, Reese, ROLA, Tekonsha, and Westfalia. Horizon Global has approximately 4,300 employees in 64 facilities across 20 countries.

For more information, please visit www.horizonglobal.com.

Safe Harbor Statement

This release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements contained herein speak only as of the date they are made and give our current expectations or forecasts of future events. These forward-looking statements can be identified by the use of forward-looking words, such as “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan” or other comparable words, or by discussions of strategy that may involve risks and uncertainties. These forward-looking statements are subject to numerous assumptions, risks and uncertainties which could materially affect our business, financial condition or future results including, but not limited to, risks and uncertainties with respect to: the Company’s leverage; liabilities imposed by the Company’s debt instruments; market demand; competitive factors; supply constraints; material and energy costs; technology factors; litigation; government and regulatory actions; the Company’s accounting policies; future trends; general economic and currency conditions; various conditions specific to the Company’s business and industry; the spin-off from TriMas Corporation; risks inherent in the achievement of cost synergies and timing thereof in connection with the Westfalia acquisition, including whether the acquisition will be accretive; the Company’s ability to promptly and effectively integrate Westfalia; the performance and costs of integration of Westfalia; the timing and amount of repurchases of the Company’s common stock, if any; and other risks that are discussed in the Company’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. The risks described herein are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deemed to be immaterial also may materially adversely affect our business, financial position and results of operations or cash flows. We caution readers not to place undue reliance on such statements, which speak only as of the date hereof. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

  (1) Appendix I details certain costs, expenses, other charges, gains or income, collectively described as “Special Items,” that are included in the determination of net income under GAAP, but that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company presents adjusted net income and adjusted diluted earnings per share excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends.   (2) Please refer to “Company and Business Segment Financial Information,” which details certain costs, expenses, other charges, gains or income, collectively described as ‘’Special Items,’’ that are included in the determination of operating profit under GAAP, but that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company presents adjusted operating profit excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends. Further, the Company presents adjusted operating profit excluding these Special Items to provide investors with a better understanding of the Company’s view of first quarter results as compared to prior periods.   (3) The Company provides guidance for adjusted operating profit and adjusted diluted earnings per share, which exclude “Special Items,” that are included in the determination of operating profit and diluted earnings per share under GAAP. “Special Items” are certain costs, expenses, other charges, gains or income, that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. See Appendix IV for reconciliation of the non-GAAP financial measures the Company provides guidance on to the most comparable GAAP measure.   (4) We evaluate growth in our operations on both an as reported basis and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our growth, consistent with how we evaluate our performance. Constant currency revenue results are calculated by translating current period revenue in local currency using the prior period’s currency conversion rate. This non-GAAP measure has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. Our use of this term may vary from the use of similarly-titled measures by other issuers due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation. See Appendix II for reconciliation.     Horizon Global Corporation Condensed Consolidated Balance Sheets (Dollars in thousands)   June 30, December 31, 2017 2016 (unaudited) Assets Current assets: Cash and cash equivalents $ 39,570 $ 50,240 Receivables, net 121,600 77,570 Inventories 156,620 146,020 Prepaid expenses and other current assets 13,680   12,160   Total current assets 331,470 285,990 Property and equipment, net 104,550 93,760 Goodwill 134,380 120,190 Other intangibles, net 85,770 86,720 Deferred income taxes 9,270 9,370 Other assets 10,060   17,340   Total assets $ 675,500   $ 613,370   Liabilities and Shareholders' Equity Current liabilities: Current maturities, long-term debt $ 11,720 $ 22,900 Accounts payable 121,240 111,450 Accrued liabilities 63,640   63,780  

Total current liabilities

196,600 198,130 Long-term debt 269,170 327,040 Deferred income taxes 29,390 25,730 Other long-term liabilities 29,510   30,410   Total liabilities 524,670 581,310 Commitments and contingent liabilities — — Total Horizon Global shareholders' equity 151,710 32,360 Noncontrolling interest (880 ) (300 ) Total shareholders' equity 150,830   32,060   Total liabilities and shareholders' equity $ 675,500   $ 613,370       Horizon Global Corporation Condensed Consolidated Statements of Income (Loss) (Unaudited - dollars in thousands, except per share amounts)   Three months ended Six months ended June 30, June 30, 2017   2016 2017   2016 Net sales $ 253,590 $ 167,760 $ 456,870 $ 313,870 Cost of sales (185,920 ) (122,050 ) (343,810 )   (230,550 ) Gross profit 67,670 45,710 113,060 83,320 Selling, general and administrative expenses (43,360 ) (31,970 ) (89,480 ) (61,660 ) Impairments — (2,240 ) — (2,240 ) Net loss on dispositions of property and equipment (70 ) (380 ) —     (490 ) Operating profit 24,240   11,120   23,580     18,930   Other expense, net: Interest expense (5,220 ) (4,230 ) (11,110 ) (8,500 ) Loss on extinguishment of debt — — (4,640 ) — Other expense, net (700 ) (560 ) (1,250 )   (1,170 ) Other expense, net (5,920 ) (4,790 ) (17,000 )   (9,670 ) Income before income tax benefit 18,320 6,330 6,580 9,260 Income tax benefit 1,650   1,000   3,230     260   Net income 19,970 7,330 9,810 9,520 Less: Net loss attributable to noncontrolling interest (290 ) —   (590 )   —   Net income attributable to Horizon Global $ 20,260   $ 7,330   $ 10,400     $ 9,520   Net income per share attributable to Horizon Global: Basic $ 0.80 $ 0.40 $ 0.42 $ 0.53 Diluted $ 0.79 $ 0.40 $ 0.42 $ 0.52 Weighted average common shares outstanding: Basic 25,385,395 18,162,451 24,616,939 18,130,081 Diluted 25,743,077 18,319,068 25,044,653 18,260,246   Horizon Global Corporation Condensed Consolidated Statements of Cash Flows (Unaudited - dollars in thousands)   Six months ended June 30, 2017   2016 Cash Flows from Operating Activities: Net income $ 9,810 $ 9,520 Adjustments to reconcile net income to net cash provided by (used for) operating activities: Net loss on dispositions of property and equipment — 490 Depreciation 6,510 4,990 Amortization of intangible assets 4,960 3,640 Impairment of intangible assets — 2,240 Amortization of original issuance discount and debt issuance costs 3,240 930 Deferred income taxes 970 (370 ) Loss on extinguishment of debt 4,640 — Non-cash compensation expense 1,830 1,830 Increase in receivables (40,380 ) (23,870 ) (Increase) decrease in inventories (5,570 ) 12,540 (Increase) decrease in prepaid expenses and other assets 970 (1,580 ) Decrease in accounts payable and accrued liabilities (1,460 ) (2,680 ) Other, net (110 ) (270 ) Net cash provided by (used for) operating activities (14,590 ) 7,410   Cash Flows from Investing Activities: Capital expenditures (13,340 ) (6,670 ) Net proceeds from disposition of property and equipment 940   240   Net cash used for investing activities (12,400 ) (6,430 ) Cash Flows from Financing Activities: Proceeds from borrowings on credit facilities 220 39,160 Repayments of borrowings on credit facilities (2,890 ) (37,280 ) Repayments of borrowings on Term B Loan, inclusive of transaction costs (185,800 ) (5,000 ) Proceeds from ABL Revolving Debt 82,400 81,930 Repayments of borrowings on ABL Revolving Debt (62,400 ) (71,930 ) Proceeds from issuance of common stock, net of offering costs 79,920 — Repurchase of common stock (8,360 ) — Proceeds from issuance of Convertible Notes, net of issuance costs 120,950 — Proceeds from issuance of Warrants, net of issuance costs 20,930 — Payments on Convertible Note Hedges, inclusive of issuance costs (29,680 ) — Other, net (240 ) (260 ) Net cash provided by financing activities 15,050   6,620   Effect of exchange rate changes on cash 1,270   (80 ) Cash and Cash Equivalents: Increase (decrease) for the period (10,670 ) 7,520 At beginning of period 50,240   23,520   At end of period $ 39,570   $ 31,040   Supplemental disclosure of cash flow information: Cash paid for interest $ 7,220   $ 7,510                   Horizon Global Corporation Condensed Consolidated Statements of Shareholders’ Equity (Unaudited - dollars in thousands)   Accumulated Total Horizon Other Global Total Common Paid-in Treasury Accumulated Comprehensive

Shareholders’

 

Noncontrolling

 

Shareholders Stock Capital Stock Deficit Income (Loss) Equity Interest Equity Balance at December 31, 2016 $ 210 $ 54,800 $ — $ (14,310 ) $ (8,340 ) $ 32,360 $ (300 ) $ 32,060 Net income (loss) — — — 10,400 — 10,400 (590 ) 9,810 Other comprehensive income, net of tax — — — — 14,740 14,740 10 14,750 Issuance of common stock, net of issuance costs 40 79,880 — — — 79,920

—

79,920 Repurchase of common stock — — (8,360 ) — — (8,360 )

—

 

 

(8,360 ) Shares surrendered upon vesting of employees' share based payment awards to cover tax obligations — (240 ) — — — (240 ) — (240 ) Non-cash compensation expense — 1,830 — — — 1,830 — 1,830 Issuance of Warrants, net of issuance costs — 20,930 — — — 20,930 — 20,930 Initial equity component of the 2.75% Convertible Senior Notes due 2022, net of issuance costs and tax — 19,680 — — — 19,680 — 19,680 Convertible Note Hedges, net of issuance costs and tax —   (19,550 ) —   —   —   (19,550 ) —   (19,550 ) Balance at June 30, 2017 $ 250   $ 157,330   $ (8,360 ) $ (3,910 ) $ 6,400   $ 151,710   $ (880 ) $ 150,830    

Horizon Global Corporation

Company and Business Segment Financial Information

(Unaudited - dollars in thousands)

 

We evaluate certain costs, expenses, other charges, gains or income, collectively described as “Special Items,” that are included in the determination of operating profit under GAAP, but that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company presents adjusted operating profit excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends.

    Three months ended June 30, Six months ended June 30, 2017   2016 2017   2016 Horizon Americas

Net sales

$ 138,110 $ 128,820 $ 235,940 $ 239,440 Operating profit $ 22,750 $ 12,700 $ 27,910 $ 22,720 Special Items to consider in evaluating operating profit: Severance and business restructuring costs $ — $ 3,620 $ — $ 4,330 Impairment of intangible assets $ — $ 2,280 $ — $ 2,280 Adjusted operating profit $ 22,750 $ 18,600 $ 27,910 $ 29,330   Horizon Europe-Africa Net sales $ 86,580 $ 13,840 $ 165,120 $ 26,550 Operating profit $ 3,610 $ 80 $ 3,270 $ 390 Special Items to consider in evaluating operating profit: Severance and business restructuring costs $ 600 $ 270 $ 2,730 $ 280 Acquisition and integration costs $ 460 $ — $ 270 $ — Adjusted operating profit $ 4,670 $ 350 $ 6,270 $ 670   Horizon Asia-Pacific Net sales $ 28,900 $ 25,100 $ 55,810 $ 47,880 Operating profit $ 4,290 $ 2,850 $ 7,360 $ 5,080 Special Items to consider in evaluating operating profit: Severance and business restructuring costs $ 300 $ — $ 300 $ — Acquisition and integration costs $ 20 $ — $ 20 $ — Adjusted operating profit $ 4,610 $ 2,850 $ 7,680 $ 5,080   Corporate Expenses Operating loss $ (6,410 ) $ (4,510 ) $ (14,960 ) $ (9,260 ) Special Items to consider in evaluating operating loss: Acquisition costs $ 250 $ — $ 2,580 $ — Severance and business restructuring costs $ 250 $ — $ 250 $ — Adjusted operating loss $ (5,910 ) $ (4,510 ) $ (12,130 ) $ (9,260 )   Total Company Net sales $ 253,590 $ 167,760 $ 456,870 $ 313,870 Operating profit $ 24,240 $ 11,120 $ 23,580 $ 18,930 Total Special Items to consider in evaluating operating profit $ 1,880 $ 6,170 $ 6,150 $ 6,890 Adjusted operating profit $ 26,120 $ 17,290 $ 29,730 $ 25,820  

Appendix I

 

Horizon Global Corporation

Additional Information Regarding Special Items Impacting

Reported GAAP Financial Measures

(Unaudited - dollars in thousands, except per share amounts)

 

This appendix details certain costs, expenses, other charges, gains or income, collectively described as ‘’Special Items,’’ that are included in the determination of net income under GAAP, but that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company presents adjusted net income and adjusted diluted earnings per share excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends.

    Three months ended Six months ended June 30, June 30, 2017   2016 2017   2016 Net income attributable to Horizon Global, as reported $ 20,260 $ 7,330 $ 10,400 $ 9,520 Impact of Special Items to consider in evaluating quality of net income: Severance and business restructuring costs 1,150 3,890 3,280 4,610 Impairment of intangible assets — 2,280 — 2,280 Acquisition and integration costs 730 — 2,870 — Loss on extinguishment of debt — — 4,640 — Tax impact of Special Items (450 ) (1,850 ) (3,560 ) (1,980 ) Adjusted net income $ 21,690   $ 11,650   $ 17,630   $ 14,430                 Three months ended Six months ended June 30, June 30, 2017 2016 2017 2016 Diluted earnings per share attributable to Horizon Global, as reported $ 0.79 $ 0.40 $ 0.42 $ 0.52 Impact of Special Items to consider in evaluating quality of earnings per share: Severance and business restructuring costs 0.04 0.21 0.13 0.25 Impairment of intangible assets — 0.13 — 0.13 Acquisition and integration costs 0.03 — 0.11 — Loss on extinguishment of debt — — 0.19 — Tax impact of Special Items (0.02 ) (0.10 ) (0.14 ) (0.11 ) Adjusted diluted earnings per share $ 0.84   $ 0.64   $ 0.71   $ 0.79     Weighted average common shares outstanding, diluted, as reported 25,743,077 18,319,068 25,044,653 18,260,246  

Appendix II

 

Horizon Global Corporation

Reconciliation of Reported Revenue Growth

to Constant Currency Basis

(Unaudited)

 

We evaluate growth in our operations on both an as reported and a constant currency basis. The constant currency presentation, which is a non-GAAP measure, excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our growth, consistent with how we evaluate our performance. Constant currency revenue results are calculated by translating current year revenue in local currency using the prior year's currency conversion rate. This non-GAAP measure has limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of our results as reported under GAAP. Our use of this term may vary from the use of similarly-titled measures by other issuers due to the potential inconsistencies in the method of calculation and differences due to items subject to interpretation.

    Three months ended Six months ended June 30, 2017 June 30, 2017 Horizon   Horizon   Horizon   Horizon   Horizon   Horizon   Americas Europe-Africa   Asia-Pacific Consolidated Americas Europe-Africa Asia-Pacific   Consolidated Revenue growth as reported 7.2 % 527.5 % 15.1 % 51.1 % (1.5 )% 520.7 % 16.5 % 45.6 % Less: currency impact 0.1 % (2.5 )% 1.8 % 0.2 % 0.3 % (3.7 )% 3.2 % 0.4 % Revenue growth at constant currency 7.1 % 530.0 % 13.3 % 50.9 % (1.8 )% 524.4 % 13.3 % 45.2 %  

Appendix III

 

Horizon Global Corporation

LTM Bank EBITDA as Defined in Credit Agreement

(Unaudited - dollars in thousands)

 

This appendix reconciles net income to “Consolidated Bank EBITDA” as defined in our credit agreement. We believe this reconciliation provides valuable supplemental information regarding our capital structure, consistent with how we evaluate our performance.

        Less: Add:

Year EndedDecember 31, 2016

Six MonthsEnded June 30, 2016

Six MonthsEnded June 30, 2017

Twelve Months EndedJune 30, 2017

(dollars in thousands) Net income (loss) attributable to Horizon Global $ (12,360 ) $ 9,520 $ 10,400 $ (11,480 ) Bank stipulated adjustments: Interest expense, net (as defined) 20,080 8,500 11,110 22,690 Income tax benefit (3,730 ) (260 ) (3,230 ) (6,700 ) Depreciation and amortization 18,220 8,630 11,470 21,060 Extraordinary charges 6,830 — — 6,830 Non-cash compensation expense(a) 3,860 1,830 1,830 3,860 Other non-cash expenses or losses 16,460 3,180 480 13,760 Pro forma EBITDA of permitted acquisition 13,910 14,310 — (400 ) Interest-equivalent costs associated with any Specified Vendor Receivables Financing 1,200 530 500 1,170 Debt extinguishment costs — — 4,640 4,640 Items limited to 25% of consolidated EBITDA: Non-recurring expenses (b) 4,190 4,250 — (60 ) Acquisition integration costs (c) 4,290 — 5,580 9,870 Synergies related to permitted acquisition (d) 12,500 — (3,570 ) 8,930 EBITDA limitation for non-recurring expenses (e) (4,860 ) —   (20 ) (4,880 ) Consolidated Bank EBITDA, as defined $ 80,590   $ 50,490   $ 39,190   $ 69,290       June 30, 2017 (dollars in thousands) Total Consolidated Indebtedness (f) $ 234,980 Consolidated Bank EBITDA, as defined 69,290   Actual leverage ratio 3.39 x Covenant requirement 5.25 x  

__________________________________

(a)   Non-cash compensation expenses resulting from the grant of restricted shares of common stock and common stock options. (b) Under our credit agreement, costs and expenses related to cost savings projects, including restructuring and severance expenses, are not to exceed $5 million in any fiscal year and $20 million in aggregate, commencing on or after January 1, 2015. (c) Under our credit agreement, costs and expenses related to the integration of the Westfalia acquisition, are not to exceed $10 million in any fiscal year and $30 million in aggregate. (d) Under our credit agreement, the add back for the amount of reasonably identifiable and factually supportable “run rate” cost savings, operating expense reductions, and other synergies cannot exceed $12.5 million for the Westfalia acquisition. (e) The amounts added to Consolidated Net Income pursuant to items in notes (b), (c), and (d) shall not exceed 25% of Consolidated EBITDA, excluding these items, for such period. (f) “Total Consolidated Indebtedness” refers to the sum of “long-term debt” and “current maturities, long-term debt”, excluding certain credit facilities as defined in our Credit Agreement less domestic cash of $10.6 million and 65% of foreign cash, or $18.8 million, as of June 30, 2017  

Appendix IV

 

Horizon Global Corporation

2017 Guidance Reconciliation

(Unaudited - dollars in thousands, except per share amounts)

 

The Company provides guidance for adjusted operating profit and adjusted diluted earnings per share, which exclude “Special Items,” that are included in the determination of operating profit and diluted earnings per share under GAAP. “Special Items” are certain costs, expenses, other charges, gains or income, that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company provides guidance for adjusted operating profit and adjusted diluted earnings per share, excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends. The following appendix reconciles the non-GAAP financial measures the Company provides guidance on to the most comparable GAAP measure.

Per share guidance provided below includes the impact of all common shares repurchased as part of the share repurchase program through July 31, 2017. The impact of any common shares repurchased subsequent to July 31, 2017 is not included and may impact the guidance provided below.

Full Year Guidance:

    Year ended Year ending on December 31, 2017 December 31, 2016 Low End of Guidance   High End of Guidance     Revenue $ 844,000     $ 876,400     $ 649,200   Operating profit $ 40,000 4.7 % $ 46,000 5.2 % $ 6,300 1.0 % Estimated Special Items 13,000   1.5 % 13,000   1.5 % 30,860   4.8 % Adjusted operating profit $ 53,000 6.3 % $ 59,000 6.7 % $ 37,160 5.7 % Basis point improvement 60 bps 100 bps   Year ending on December 31, 2017 Low End of Guidance   High End of Guidance Diluted earnings per share $ 0.54 $ 0.64 Impact of Special Items (including tax impact) 0.50   0.50 Adjusted diluted earnings per share $ 1.04   $ 1.14   Estimated diluted weighted average common shares outstanding 25,300,000 25,300,000  

Third Quarter 2017 Guidance:

  Three months ending on September 30, 2017 Low End of Guidance   High End of Guidance Diluted earnings per share $ 0.24 $ 0.29 Impact of Special Items (including tax impact) 0.11   0.11 Adjusted diluted earnings per share $ 0.35   $ 0.40   Estimated diluted weighted average common shares outstanding 25,400,000 25,400,000

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Horizon Global CorporationMaria C. DueyVice President, Corporate Development & Investor Relations(248) 593-8810mduey@horizonglobal.com