Business Update
- Company withdraws guidance for 2018 due
to short-term operational challenges impacting Horizon Global’s
revenue and profitability coupled with multiple initiatives
underway as part of Company’s Action Plan
- Revised outlook for 2018 based on
updated assessment of operational performance:
- Distribution challenges in Americas
business driving lower-than-expected second quarter 2018 results;
improvements in Kansas City distribution center gaining momentum
late in second quarter
- Europe-Africa business behind plan;
segment leadership change and new operational initiatives
underway
- Asia-Pacific continues to perform
in-line with expectations
- Company continues to move initiatives
forward as part of business's Action Plan
- Triggering events during second quarter
may result in additional non-cash goodwill impairment in
Europe-Africa.
Horizon Global Corporation (NYSE: HZN), one of the world’s
leading manufacturers of branded towing and trailering equipment,
today provided a revised business outlook and an update on its
Action Plan, including actions to improve performance in its
Americas and Europe-Africa segments.“I have been closely involved
with the operational challenges and related solutions in the
Americas since late January of this year, and I have spent the past
month evaluating our global operations and meeting with the
management teams of each business segment,” said Carl Bizon,
Interim President and Chief Executive Officer of Horizon Global.
“Following this initial evaluation, I am pleased to confirm there
are many underlying strengths of our Company – Horizon Global has
excellent brands, a loyal customer base, experienced and committed
team members, excellent quality and solid end markets. These
foundational strengths support my confidence in the long-term
success of Horizon Global. However, my initial evaluation of our
global operations highlighted a number of near-term operational
issues that must be addressed promptly.
“In March, we announced a series of immediate and longer-term
steps to improve performance, which are now part of the Company’s
overall Action Plan. We have identified additional initiatives,
primarily in Europe-Africa, to expand the Action Plan and ensure
that the Company is moving in a positive direction. A good deal of
my leadership experience includes fixing operational issues within
companies, and I am pleased to report that the issues I see today
at Horizon Global are operational in nature, not structural. We are
taking swift action, with the support of our Board of Directors, to
address these operational challenges, including leadership changes
in the Americas and Europe-Africa segments and a renewed focus on
integrated business planning processes to align our global team and
prioritize operational initiatives.
“Additionally, we recently announced the termination of the
Brink Group acquisition. While the Company firmly believed in the
rationale underlying the acquisition, terminating the agreement is
currently in the best interests of the Company and allows complete
management focus on our existing business. Absolute attention to
our operations, core brands, customers and distribution channels is
necessary at this time.”
Commented David Rice, Chief Financial Officer of Horizon Global,
“Although we are making solid progress against our Action Plan
initiatives in the Americas related to restructuring and
consolidating the organization, the delayed financial realization
of our operational improvements and persistent headwinds in
Europe-Africa are expected to result in performance that is below
our expectations in the quarter. In response to these challenges,
we are tightly managing discretionary and non-core SG&A
expenses across the organization. While we did not provide guidance
for the second quarter, we expect our upcoming quarterly results to
fall below current analyst consensus.
“In spite of showing steady improvement through much of the
second quarter, our Kansas City distribution center did not begin
approaching its daily shipment goals until well into the month of
June. As such, we are expecting to exit the second quarter with
more that $20 million in past-due orders. Additionally, we expect
that the performance of our Europe-Africa segment relative to our
expectations, as well as the further decline in our market
capitalization as compared to the end of the first quarter, will
trigger the need to perform an interim impairment test of goodwill
and other intangible assets, which may result in an additional
non-cash impairment.”
Action Plan
Horizon Global announced a business improvement plan on March 1,
2018 with targeted initiatives to drive operating results in each
of its business segments. Action Plan updates include:
- Reynosa production facility performing
at desired production levels with process improvements well
established under new leadership
- Kansas City average daily shipments
increased over 70 percent from start of second quarter through late
June
- Americas consolidation and
organizational delayering is on track with 90 percent completion
expected by the end of Q2; new leadership in the areas of sales,
engineering, distribution and manufacturing
- Europe-Africa low-cost-country
production increased 59 percent year to date
After the recent evaluation of Horizon’s global operations, the
following actions have been added to the Action Plan:
- Jason Kieseker named President of
Europe-Africa, maintaining responsibility for Asia-Pacific with
support of new general manager for the region
- Newly created position for Vice
President of Operations for Europe-Africa
- New leadership and process improvements
in Europe-Africa to alleviate over-reliance on third-party
consultants
Bizon concluded, “We fully grasp the magnitude of the work we
have ahead of us. Given our focus on correcting the operational
issues facing Horizon Global, we believe it is appropriate to
withdraw our previous financial guidance for full year 2018. The
decision to withdraw our guidance in no way takes away from our
commitment to move quickly to deliver improved performance. We have
not lost sight of and remain committed to our longer-term financial
goals for our business. Although it may take longer than we
planned, we believe that our long-term goals of 3- to 5-percent
revenue growth and 10-percent operating margins are achievable. We
will continue to update investors on our progress against achieving
our operating and process improvement goals and will re-evaluate
our approach to annual guidance in the future.”
Conference Call Details
Horizon Global will host a conference call to discuss these
items today, Wednesday, June 20, 2018 at 8:30 a.m. Eastern Time.
Participants in the call are asked to register five to 10 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 9257629.
The conference call will be webcast simultaneously and in its
entirety through the Horizon Global website. 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 9257629. The telephone replay will be available
approximately two hours after the end of the call and continue
through July 3, 2018.
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 58
facilities across 21 countries.
For more information, please visit www.horizonglobal.com.
Safe Harbor Statement
This release may contain "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 the 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 Company's ability to successfully
implement the Company's Action Plan, including realizing the
expected cost savings within the anticipated time frame or at all;
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.
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Horizon Global CorporationChristi CowdinDirector, Corporate
Communications & Investor Relations(248)
593-8810ccowdin@horizonglobal.com
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