Third Quarter Highlights

  • $24.2 million of cash generated from operating activities; $90.0 million improvement over prior year comparable period
  • Cash and Availability(1) of $78.0 million; $17.1 million improvement over prior year comparable period
  • Refinanced First and Second Lien Term Loans into single term loan facility; extends maturity, maintains interest rate level and supports Company’s long-term strategic plan
  • Net sales of $201.6 million; increase of $23.7 million, or 13.3%, compared to prior year comparable period
  • Operating profit of $8.6 million; $21.3 million improvement compared to prior year comparable period
  • Net income from continuing operations of $1.6 million; $39.1 million improvement compared to prior year comparable period
  • Adjusted EBITDA(2) of $16.1 million; $19.1 million improvement compared to prior year comparable period

Horizon Global Corporation (NYSE: HZN), one of the world’s leading manufacturers of branded towing and trailering equipment, today reported financial results for the third quarter of 2020.

“I want to thank each and every member of our global team for the tremendous efforts and leadership demonstrated during the third quarter of 2020 as we continued to navigate our way through an unprecedented macro-economic environment,” stated Terry Gohl, Horizon Global's President and Chief Executive Officer. “We made a commitment in March to accelerate the deployment of our operational improvement initiatives to ensure that we would emerge from the crisis as a stronger company. The team rose to the occasion and, as a result, we delivered on our customer commitments in a period of increased demand, leading to significant improvements in profitability and cash flow generation. While the business continues to improve each and every day, we are beginning to see the fruits of our labor and the third quarter of 2020 marks the first time in three years that we have generated positive net income.”

2020 Third Quarter Segment Results

Horizon Americas. Net sales increased $22.9 million, or 23.8%, to $119.1 million. Net sales increased by $10.9 million combined in the retail and e-commerce sales channels, $8.5 million in the aftermarket and $4.0 million combined in the automotive OEM and automotive OES sales channels. Gross profit increased $15.7 million due to higher net sales coupled with favorable manufacturing costs and efficiencies, lower scrap costs and inventory reserves. Horizon Americas generated operating profit of $13.2 million, an increase of $15.4 million compared to the prior year comparable period, driven by favorable gross profit as described above. Adjusted EBITDA(2) increased to $15.5 million for the quarter, as compared to $0.6 million for the prior year comparable period.

Horizon Europe-Africa. Net sales increased $0.9 million, or 1.1%, to $82.5 million. Net sales increased by $4.5 million in the aftermarket sales channel, partially offset by a $3.5 million decrease in the automotive OEM and automotive OES sales channels. Gross profit decreased $0.6 million, primarily attributable to $4.1 million of material cost and labor efficiencies, which was more than offset by a $4.3 million favorable prior year expense recovery related to a product liability settlement that did not recur. Horizon Europe-Africa generated operating profit of $2.4 million, representing an increase of $0.7 million driven by $1.4 million lower SG&A costs, partially offset by the unfavorable gross profit described above. Adjusted EBITDA(2) increased to $6.1 million for the quarter, as compared to $0.7 million for the prior year comparable period.

Balance Sheet and Liquidity. Cash and Availability(1) was $78.0 million, an increase of $17.1 million compared to the prior year comparable period. Working Capital(3) was $66.6 million, a reduction of $45.1 million compared to the prior year comparable period. Gross debt increased $28.6 million to $267.8 million over the prior year comparable period, primarily reflecting increased borrowings in the first two quarters of 2020 to strengthen liquidity in response to the COVID-19 pandemic.

Summary

Gohl commented, “We are experiencing an extension of our traditional peak selling season in North America with demand continuing to outpace prior years. Increased take rates in Europe are also favorably impacting our outlook for the remainder of 2020. The increase in demand for our products has resulted in a strong open order book that we expect to capitalize on in the fourth quarter. Our laser-like focus on operational throughput and delivery through lean manufacturing principles positions us to meet heightened demand levels, solidify ourselves as the established market leader and continue to expand our market share in a profitable manner in each of the geographies we serve. We expect all these efforts to create near- and long-term value for our employees, customers and shareholders.”

Conference Call Details

Horizon Global will host a conference call regarding third quarter 2020 earnings on Thursday, November 5, 2020 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 (866) 652-5200 and from outside the U.S. at (412) 317-6060. Please use the conference identification number 10147302.

The third quarter 2020 results and supplemental materials, including a presentation in PDF format, will be distributed before the market opens on November 5, 2020 and will be available on the Company’s website at www.horizonglobal.com prior to the start of the call.

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 (877) 344-7529 and from outside the U.S. at (412) 317-0088. Please use the conference identification number 10147302. The telephone replay will be available approximately two hours after the end of the call and continue through November 19, 2020.

About Horizon Global

Headquartered in Plymouth, MI, 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 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: Draw-Tite, Reese, Westfalia, BULLDOG, Fulton and Tekonsha. Horizon Global has approximately 3,900 employees.

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

Forward-Looking Statements

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 impact of the novel coronavirus (COVID-19) pandemic on the Company’s business, results of operations, financial condition and liquidity; the Company’s ability to regain compliance with the New York Stock Exchange’s continued listing standards; the Company’s debt, including the Company’s ability to refinance any debt on commercially reasonable terms or at all; liabilities and restrictions imposed by the Company’s debt instruments; market demand; competitive factors; supply constraints; material and energy costs; technology factors; litigation; government and regulatory actions including the impact of any tariffs, quotas, or surcharges; the Company’s accounting policies; future trends; general economic and currency conditions; various conditions specific to the Company’s business and industry; the success of the Company’s action plan, including the actual amount of savings and timing thereof; the success of the Company’s business improvement initiatives in Europe-Africa, including the amount of savings and timing thereof; the Company’s exposure to product liability claims from customers and end users, and the costs associated therewith; the Company’s ability to meet its covenants in the agreements governing its debt; factors affecting the Company's business that are outside of its control, including natural disasters, pandemics, including the current COVID-19 pandemic, accidents and governmental actions; 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)

"Cash and Availability" refers to cash and cash equivalents and amounts of cash accessible but undrawn from credit facilities.

(2)

Please refer to “Company and Business Segment Financial Information” which details certain costs, expense, other charges, that are included in the determination of net income attributable to Horizon Global under GAAP, but that management would not consider important in evaluating the quality of the Company’s operating results. The Company’s management utilizes Adjusted EBITDA as the key measure of company and segment performance and for planning and forecasting purposes, as management believes this measure is most reflective of the operational profitability or loss of the Company and its operating segments and provides management and investors with information to evaluate the operating performance of its business and is representative of its performance used to measure certain of its financial covenants. Adjusted EBITDA should not be considered a substitute for results prepared in accordance with U.S. GAAP and should not be considered an alternative to net income attributable to Horizon Global, which is the most directly comparable financial measure to Adjusted EBITDA that is prepared in accordance with U.S. GAAP.

(3)

Working Capital defined as "total current assets" excluding "cash, cash equivalents and restricted cash", less "total current liabilities" excluding "current maturities, long-term debt" and "short-term operating lease liabilities".

Horizon Global Corporation

Condensed Consolidated Balance Sheets

(dollars in thousands)

 

 

 

September 30, 2020

 

December 31, 2019

 

 

(unaudited)

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

39,810

 

 

 

$

11,770

 

 

Restricted cash

 

5,840

 

 

 

 

 

Receivables, net

 

106,650

 

 

 

71,680

 

 

Inventories

 

107,120

 

 

 

136,650

 

 

Prepaid expenses and other current assets

 

9,910

 

 

 

8,570

 

 

Total current assets

 

269,330

 

 

 

228,670

 

 

Property and equipment, net

 

73,670

 

 

 

75,830

 

 

Operating lease right-of-use assets

 

47,380

 

 

 

45,770

 

 

Goodwill

 

3,120

 

 

 

4,350

 

 

Other intangibles, net

 

56,510

 

 

 

60,120

 

 

Deferred income taxes

 

390

 

 

 

430

 

 

Other assets

 

7,630

 

 

 

5,870

 

 

Total assets

 

$

458,030

 

 

 

$

421,040

 

 

Liabilities and Shareholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Short-term borrowings and current maturities, long-term debt

 

$

8,740

 

 

 

$

4,310

 

 

Accounts payable

 

97,170

 

 

 

78,450

 

 

Short-term operating lease liabilities

 

11,750

 

 

 

9,880

 

 

Accrued liabilities

 

59,890

 

 

 

48,850

 

 

Total current liabilities

 

177,550

 

 

 

141,490

 

 

Gross long-term debt

 

259,020

 

 

 

236,550

 

 

Unamortized debt issuance costs and discount

 

(23,380

)

 

 

(31,500

)

 

Long-term debt

 

235,640

 

 

 

205,050

 

 

Deferred income taxes

 

3,400

 

 

 

4,040

 

 

Long-term operating lease liabilities

 

48,070

 

 

 

48,070

 

 

Other long-term liabilities

 

15,460

 

 

 

13,790

 

 

Total liabilities

 

480,120

 

 

 

412,440

 

 

Total Horizon Global shareholders' (deficit) equity

 

(17,340

)

 

 

12,340

 

 

Noncontrolling interest

 

(4,750

)

 

 

(3,740

)

 

Total shareholders' (deficit) equity

 

(22,090

)

 

 

8,600

 

 

Total liabilities and shareholders' equity

 

$

458,030

 

 

 

$

421,040

 

 

Horizon Global Corporation

Condensed Consolidated Statements of Operations

(Unaudited - dollars in thousands, except share and per share data)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net sales

 

$

201,630

 

 

 

$

177,850

 

 

 

$

485,370

 

 

 

$

548,170

 

 

Cost of sales

 

(158,260

)

 

 

(149,560

)

 

 

(397,700

)

 

 

(460,010

)

 

Gross profit

 

43,370

 

 

 

28,290

 

 

 

87,670

 

 

 

88,160

 

 

Selling, general and administrative expenses

 

(34,820

)

 

 

(41,100

)

 

 

(93,680

)

 

 

(113,140

)

 

Net gain (loss) on dispositions of property and equipment

 

10

 

 

 

50

 

 

 

(80

)

 

 

1,500

 

 

Operating profit (loss)

 

8,560

 

 

 

(12,760

)

 

 

(6,090

)

 

 

(23,480

)

 

Other income (expense), net

 

690

 

 

 

(1,640

)

 

 

(1,430

)

 

 

(6,610

)

 

Interest expense

 

(7,560

)

 

 

(24,120

)

 

 

(23,970

)

 

 

(50,270

)

 

Income (loss) from continuing operations before income tax

 

1,690

 

 

 

(38,520

)

 

 

(31,490

)

 

 

(80,360

)

 

Income tax (expense) benefit

 

(100

)

 

 

1,020

 

 

 

(170

)

 

 

2,330

 

 

Net income (loss) from continuing operations

 

1,590

 

 

 

(37,500

)

 

 

(31,660

)

 

 

(78,030

)

 

Income (loss) from discontinued operations, net of tax

 

 

 

 

182,750

 

 

 

(500

)

 

 

189,520

 

 

Net income (loss)

 

1,590

 

 

 

145,250

 

 

 

(32,160

)

 

 

111,490

 

 

Less: Net loss attributable to noncontrolling interest

 

(340

)

 

 

(260

)

 

 

(1,010

)

 

 

(840

)

 

Net income (loss) attributable to Horizon Global

 

$

1,930

 

 

 

$

145,510

 

 

 

$

(31,150

)

 

 

$

112,330

 

 

Net income (loss) per share attributable to Horizon Global:

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.07

 

 

 

$

(1.47

)

 

 

$

(1.19

)

 

 

$

(3.05

)

 

Discontinued operations

 

 

 

 

7.21

 

 

 

(0.02

)

 

 

7.50

 

 

Total

 

$

0.07

 

 

 

$

5.74

 

 

 

$

(1.21

)

 

 

$

4.45

 

 

Diluted:

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.06

 

 

 

$

(1.47

)

 

 

$

(1.19

)

 

 

$

(3.05

)

 

Discontinued operations

 

 

 

 

7.21

 

 

 

(0.02

)

 

 

7.50

 

 

Total

 

$

0.06

 

 

 

$

5.74

 

 

 

$

(1.21

)

 

 

$

4.45

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

25,939,741

 

 

 

25,329,492

 

 

 

25,651,789

 

 

 

25,267,310

 

 

Diluted

 

33,329,106

 

 

 

25,329,492

 

 

 

25,651,789

 

 

 

25,267,310

 

 

Horizon Global Corporation

Condensed Consolidated Statements of Cash Flows

(unaudited - dollars in thousands)

 

 

 

Nine Months Ended September 30,

 

 

2020

 

2019

Cash Flows from Operating Activities:

 

 

 

 

Net (loss) income

 

$

(32,160

)

 

 

$

111,490

 

 

Less: (Loss) income from discontinued operations

 

(500

)

 

 

189,520

 

 

Net loss from continuing operations

 

(31,660

)

 

 

(78,030

)

 

 

 

 

 

 

Adjustments to reconcile net loss from continuing operations to net cash provided by (used for) operating activities:

 

 

 

 

Net loss (gain) on dispositions of property and equipment

 

80

 

 

 

(1,500

)

 

Depreciation

 

11,110

 

 

 

11,980

 

 

Amortization of intangible assets

 

5,040

 

 

 

4,800

 

 

Write off of operating lease assets

 

 

 

 

4,250

 

 

Amortization of original issuance discount and debt issuance costs

 

11,450

 

 

 

18,570

 

 

Deferred income taxes

 

(820

)

 

 

(3,390

)

 

Non-cash compensation expense

 

2,190

 

 

 

1,790

 

 

Paid-in-kind interest

 

6,280

 

 

 

7,620

 

 

Increase in receivables

 

(35,170

)

 

 

(4,680

)

 

Decrease in inventories

 

30,100

 

 

 

1,920

 

 

Increase in prepaid expenses and other assets

 

(4,080

)

 

 

(2,770

)

 

Increase (decrease) in accounts payable and accrued liabilities

 

29,800

 

 

 

(15,560

)

 

Other, net

 

(130

)

 

 

(10,800

)

 

Net cash provided by (used for) operating activities for continuing operations

 

24,190

 

 

 

(65,800

)

 

Cash Flows from Investing Activities:

 

 

 

 

Capital expenditures

 

(8,090

)

 

 

(8,460

)

 

Net proceeds from sale of business

 

 

 

 

214,570

 

 

Net proceeds from disposition of property and equipment

 

70

 

 

 

1,470

 

 

Net cash (used for) provided by investing activities for continuing operations

 

(8,020

)

 

 

207,580

 

 

Cash Flows from Financing Activities:

 

 

 

 

Proceeds from borrowings on credit facilities

 

6,440

 

 

 

13,780

 

 

Repayments of borrowings on credit facilities

 

(3,330

)

 

 

(6,520

)

 

Proceeds from Second Lien Term Loan, net of issuance costs

 

 

 

 

35,520

 

 

Repayments of borrowings on First Lien Term Loan, inclusive of transaction costs

 

 

 

 

(173,430

)

 

Proceeds from Revolving Credit Facility, net of issuance costs

 

54,680

 

 

 

 

 

Repayments of borrowings on Revolving Credit Facility

 

(28,300

)

 

 

 

 

Proceeds from ABL revolving debt, net of issuance costs

 

8,000

 

 

 

68,790

 

 

Repayments of borrowings on ABL revolving debt

 

(27,920

)

 

 

(112,510

)

 

Proceeds from Paycheck Protection Program Loan

 

8,670

 

 

 

 

 

Proceeds from issuance of Series A Preferred Stock

 

 

 

 

5,340

 

 

Proceeds from issuance of Warrants

 

 

 

 

5,380

 

 

Other, net

 

(320

)

 

 

(10

)

 

Net cash provided by (used for) financing activities for continuing operations

 

17,920

 

 

 

(163,660

)

 

Discontinued Operations:

 

 

 

 

Net cash (used for) provided by discontinued operating activities

 

(500

)

 

 

11,430

 

 

Net cash used for discontinued investing activities

 

 

 

 

(1,120

)

 

Net cash provided by discontinued financing activities

 

 

 

 

 

 

Net cash (used for) provided by discontinued operations

 

(500

)

 

 

10,310

 

 

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

290

 

 

 

280

 

 

Cash, Cash Equivalents and Restricted Cash:

 

 

 

 

Increase (decrease) for the period

 

33,880

 

 

 

(11,290

)

 

At beginning of period

 

11,770

 

 

 

27,650

 

 

At end of period

 

$

45,650

 

 

 

$

16,360

 

 

Supplemental disclosure of cash flow information:

 

 

 

 

Cash paid for interest

 

$

4,990

 

 

 

$

19,730

 

 

Cash paid for taxes, net of refunds

 

$

990

 

 

 

$

480

 

 

Appendix I

Horizon Global Corporation Company and Business Segment Financial Information (Unaudited - dollars in thousands)

The Company’s management utilizes Adjusted EBITDA(2) as the key measure of company and segment performance and for planning and forecasting purposes, as management believes this measure is most reflective of the operational profitability or loss of the Company and its operating segments and provides management and investors with information to evaluate the operating performance of its business and is representative of its performance used to measure certain of its financial covenants. Adjusted EBITDA(2) should not be considered a substitute for results prepared in accordance with U.S. GAAP and should not be considered an alternative to net income attributable to Horizon Global, which is the most directly comparable financial measure to Adjusted EBITDA(2) that is prepared in accordance with U.S. GAAP. Adjusted EBITDA(2), as determined and measured by Horizon Global, should also not be compared to similarly titled measures reported by other companies. The Company also uses operating income (loss) to measure stand-alone segment performance.

Adjusted EBITDA(2) is defined as net income attributable to Horizon Global before interest expense, income taxes, depreciation and amortization, and before certain items, as applicable such as severance, restructuring, relocation and related business disruption costs, impairment of goodwill and other intangibles, non-cash stock compensation, certain product liability recall and litigation claims, acquisition and integration costs, gains (losses) on business divestitures and other assets, board transition support and non-cash unrealized foreign currency remeasurement costs.

The following table summarizes Adjusted EBITDA(2) for our operating segments for the three months ended September 30, 2020 and 2019:

 

 

Three Months Ended September 30, 2020

 

Three Months Ended September 30, 2019

 

Variance

 

 

Horizon Americas

 

Horizon Europe- Africa

 

Corporate

 

Consolidated

 

Horizon Americas

 

Horizon Europe- Africa

 

Corporate

 

Consolidated

 

Consolidated

 

 

(dollars in thousands)

 

(dollars in thousands)

Net income attributable to Horizon Global

 

 

 

 

 

 

 

$

1,930

 

 

 

 

 

 

 

 

 

$

145,510

 

 

 

$

(143,580

)

 

Net loss attributable to noncontrolling interest

 

 

 

 

 

 

 

(340

)

 

 

 

 

 

 

 

 

(260

)

 

 

(80

)

 

Net income

 

 

 

 

 

 

 

$

1,590

 

 

 

 

 

 

 

 

 

$

145,250

 

 

 

$

(143,660

)

 

Interest expense

 

 

 

 

 

 

 

7,560

 

 

 

 

 

 

 

 

 

24,120

 

 

 

(16,560

)

 

Income tax expense (benefit)

 

 

 

 

 

 

 

100

 

 

 

 

 

 

 

 

 

(1,020

)

 

 

1,120

 

 

Depreciation and amortization

 

 

 

 

 

 

 

5,620

 

 

 

 

 

 

 

 

 

6,250

 

 

 

(630

)

 

EBITDA

 

$

13,870

 

 

$

7,490

 

 

 

$

(6,490

)

 

 

$

14,870

 

 

 

$

(1,290

)

 

 

$

3,950

 

 

 

$

171,940

 

 

 

$

174,600

 

 

 

$

(159,730

)

 

Net loss attributable to noncontrolling interest

 

 

 

340

 

 

 

 

 

 

340

 

 

 

 

 

 

260

 

 

 

 

 

 

260

 

 

 

80

 

 

Income from discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(182,750

)

 

 

(182,750

)

 

 

182,750

 

 

Severance

 

 

 

(170

)

 

 

 

 

 

(170

)

 

 

(10

)

 

 

10

 

 

 

1,620

 

 

 

1,620

 

 

 

(1,790

)

 

Restructuring, relocation and related business disruption costs

 

250

 

 

(20

)

 

 

150

 

 

 

380

 

 

 

(200

)

 

 

 

 

 

4,250

 

 

 

4,050

 

 

 

(3,670

)

 

Non-cash stock compensation

 

 

 

 

 

 

870

 

 

 

870

 

 

 

 

 

 

 

 

 

850

 

 

 

850

 

 

 

20

 

 

Loss (gain) on business divestitures and other assets

 

420

 

 

 

 

 

(20

)

 

 

400

 

 

 

320

 

 

 

 

 

 

(1,320

)

 

 

(1,000

)

 

 

1,400

 

 

Product liability and litigation claims

 

 

 

 

 

 

 

 

 

 

 

 

820

 

 

 

(4,270

)

 

 

 

 

 

(3,450

)

 

 

3,450

 

 

Debt issuance costs

 

 

 

 

 

 

530

 

 

 

530

 

 

 

 

 

 

 

 

 

1,310

 

 

 

1,310

 

 

 

(780

)

 

Unrealized foreign currency remeasurement costs

 

980

 

 

(1,580

)

 

 

(500

)

 

 

(1,100

)

 

 

240

 

 

 

650

 

 

 

300

 

 

 

1,190

 

 

 

(2,290

)

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

670

 

 

 

130

 

 

 

(530

)

 

 

270

 

 

 

(270

)

 

Adjusted EBITDA

 

$

15,520

 

 

$

6,060

 

 

 

$

(5,460

)

 

 

$

16,120

 

 

 

$

550

 

 

 

$

730

 

 

 

$

(4,330

)

 

 

$

(3,050

)

 

 

$

19,170

 

 

The following table summarizes Adjusted EBITDA(2) for our operating segments for the nine months ended September 30, 2020 and 2019:

 

 

Nine Months Ended September 30, 2020

 

Nine Months Ended September 30, 2019

 

Variance

 

 

Horizon Americas

 

Horizon Europe- Africa

 

Corporate

 

Consolidated

 

Horizon Americas

 

Horizon Europe- Africa

 

Corporate

 

Consolidated

 

Consolidated

 

 

(dollars in thousands)

 

(dollars in thousands)

Net (loss) income attributable to Horizon Global

 

 

 

 

 

 

 

$

(31,150

)

 

 

 

 

 

 

 

 

$

112,330

 

 

 

$

(143,480

)

 

Net loss attributable to noncontrolling interest

 

 

 

 

 

 

 

(1,010

)

 

 

 

 

 

 

 

 

(840

)

 

 

(170

)

 

Net (loss) income

 

 

 

 

 

 

 

$

(32,160

)

 

 

 

 

 

 

 

 

$

111,490

 

 

 

$

(143,650

)

 

Interest expense

 

 

 

 

 

 

 

23,970

 

 

 

 

 

 

 

 

 

50,270

 

 

 

(26,300

)

 

Income tax expense (benefit)

 

 

 

 

 

 

 

170

 

 

 

 

 

 

 

 

 

(2,330

)

 

 

2,500

 

 

Depreciation and amortization

 

 

 

 

 

 

 

16,150

 

 

 

 

 

 

 

 

 

16,790

 

 

 

(640

)

 

EBITDA

 

$

24,160

 

 

$

3,150

 

 

 

$

(19,180

)

 

 

$

8,130

 

 

 

$

9,960

 

 

 

$

4,550

 

 

 

$

161,710

 

 

 

$

176,220

 

 

 

$

(168,090

)

 

Net loss attributable to noncontrolling interest

 

 

 

1,010

 

 

 

 

 

 

1,010

 

 

 

 

 

 

840

 

 

 

 

 

 

840

 

 

 

170

 

 

Loss (income) from discontinued operations, net of tax

 

 

 

 

 

 

500

 

 

 

500

 

 

 

 

 

 

 

 

 

(189,520

)

 

 

(189,520

)

 

 

190,020

 

 

Severance

 

530

 

 

(150

)

 

 

(10

)

 

 

370

 

 

 

(200

)

 

 

10

 

 

 

1,620

 

 

 

1,430

 

 

 

(1,060

)

 

Restructuring, relocation and related business disruption costs

 

1,550

 

 

10

 

 

 

470

 

 

 

2,030

 

 

 

1,110

 

 

 

(1,410

)

 

 

4,250

 

 

 

3,950

 

 

 

(1,920

)

 

Non-cash stock compensation

 

 

 

 

 

 

2,190

 

 

 

2,190

 

 

 

 

 

 

 

 

 

1,820

 

 

 

1,820

 

 

 

370

 

 

Loss (gain) on business divestitures and other assets

 

1,020

 

 

(180

)

 

 

20

 

 

 

860

 

 

 

1,280

 

 

 

3,630

 

 

 

 

 

 

4,910

 

 

 

(4,050

)

 

Board transition support

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,450

 

 

 

1,450

 

 

 

(1,450

)

 

Product liability and litigation claims

 

 

 

1,510

 

 

 

 

 

 

1,510

 

 

 

820

 

 

 

50

 

 

 

 

 

 

870

 

 

 

640

 

 

Debt issuance costs

 

 

 

 

 

 

1,840

 

 

 

1,840

 

 

 

 

 

 

 

 

 

4,350

 

 

 

4,350

 

 

 

(2,510

)

 

Unrealized foreign currency remeasurement costs

 

280

 

 

860

 

 

 

(490

)

 

 

650

 

 

 

160

 

 

 

1,210

 

 

 

440

 

 

 

1,810

 

 

 

(1,160

)

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

870

 

 

 

(180

)

 

 

(630

)

 

 

60

 

 

 

(60

)

 

Adjusted EBITDA

 

$

27,540

 

 

$

6,210

 

 

 

$

(14,660

)

 

 

$

19,090

 

 

 

$

14,000

 

 

 

$

8,700

 

 

 

$

(14,510

)

 

 

$

8,190

 

 

 

$

10,900

 

 

Segment Information

The following table summarizes financial information for our operating segments for the three months ended September 30, 2020 and 2019:

 

 

Three Months Ended September 30,

 

Change

 

 

2020

 

2019

 

$

 

%

 

 

(dollars in thousands)

Net Sales

 

 

 

 

 

 

 

 

Horizon Americas

 

$

119,140

 

 

 

$

96,220

 

 

 

$

22,920

 

 

 

23.8

%

Horizon Europe-Africa

 

82,490

 

 

 

81,630

 

 

 

860

 

 

 

1.1

%

Total

 

$

201,630

 

 

 

$

177,850

 

 

 

$

23,780

 

 

 

13.4

%

Gross Profit

 

 

 

 

 

 

 

 

Horizon Americas

 

$

32,960

 

 

 

$

17,270

 

 

 

$

15,690

 

 

 

90.9

%

Horizon Europe-Africa

 

10,410

 

 

 

11,020

 

 

 

(610

)

 

 

(5.5

%)

Total

 

$

43,370

 

 

 

$

28,290

 

 

 

$

15,080

 

 

 

53.3

%

Operating Profit (Loss)

 

 

 

 

 

 

 

 

Horizon Americas

 

$

13,170

 

 

 

$

(2,230

)

 

 

$

15,400

 

 

 

690.6

%

Horizon Europe-Africa

 

2,440

 

 

 

1,730

 

 

 

710

 

 

 

41.0

%

Corporate

 

(7,050

)

 

 

(12,260

)

 

 

5,210

 

 

 

42.5

%

Total

 

$

8,560

 

 

 

$

(12,760

)

 

 

$

21,320

 

 

 

167.1

%

Adjusted EBITDA

 

 

 

 

 

 

 

 

Horizon Americas

 

$

15,520

 

 

 

$

550

 

 

 

$

14,970

 

 

 

2,721.8

%

Horizon Europe-Africa

 

6,060

 

 

 

730

 

 

 

5,330

 

 

 

730.1

%

Corporate

 

(5,460

)

 

 

(4,330

)

 

 

(1,130

)

 

 

(26.1

%)

Total

 

$

16,120

 

 

 

$

(3,050

)

 

 

$

19,170

 

 

 

628.5

%

The following table summarizes financial information for our operating segments for the nine months ended September 30, 2020 and 2019:

 

 

Nine Months Ended September 30,

 

Change

 

 

2020

 

2019

 

$

 

%

 

 

(dollars in thousands)

Net Sales

 

 

 

 

 

 

 

 

Horizon Americas

 

$

285,630

 

 

 

$

300,670

 

 

 

$

(15,040

)

 

 

(5.0

%)

Horizon Europe-Africa

 

199,740

 

 

 

247,500

 

 

 

(47,760

)

 

 

(19.3

%)

Total

 

$

485,370

 

 

 

$

548,170

 

 

 

$

(62,800

)

 

 

(11.5

%)

Gross Profit

 

 

 

 

 

 

 

 

Horizon Americas

 

$

70,720

 

 

 

$

62,080

 

 

 

$

8,640

 

 

 

13.9

%

Horizon Europe-Africa

 

16,950

 

 

 

26,080

 

 

 

(9,130

)

 

 

(35.0

%)

Total

 

$

87,670

 

 

 

$

88,160

 

 

 

$

(490

)

 

 

(0.6

%)

Operating Profit (Loss)

 

 

 

 

 

 

 

 

Horizon Americas

 

$

19,330

 

 

 

$

5,760

 

 

 

$

13,570

 

 

 

235.6

%

Horizon Europe-Africa

 

(6,040

)

 

 

120

 

 

 

(6,160

)

 

 

(5,133.3

%)

Corporate

 

(19,380

)

 

 

(29,360

)

 

 

9,980

 

 

 

34.0

%

Total

 

$

(6,090

)

 

 

$

(23,480

)

 

 

$

17,390

 

 

 

74.1

%

Adjusted EBITDA

 

 

 

 

 

 

 

 

Horizon Americas

 

$

27,540

 

 

 

$

14,000

 

 

 

$

13,540

 

 

 

96.7

%

Horizon Europe-Africa

 

6,210

 

 

 

8,700

 

 

 

(2,490

)

 

 

(28.6

%)

Corporate

 

(14,660

)

 

 

(14,510

)

 

 

(150

)

 

 

(1.0

%)

Total

 

$

19,090

 

 

 

$

8,190

 

 

 

$

10,900

 

 

 

133.1

%

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(1) 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 September 30, 2020

 

Nine Months Ended September 30, 2020

 

 

Horizon Americas

 

Horizon Europe- Africa

 

Consolidated

 

Horizon Americas

 

Horizon Europe- Africa

 

Consolidated

Revenue growth as reported

 

23.8

%

 

1.1

%

 

13.4

%

 

(5.0)

%

 

(19.3)

%

 

(11.5)

%

Less: currency impact

 

(0.5)

%

 

4.4

%

 

1.7

%

 

(0.3)

%

 

0.3

%

 

(0.1)

%

Revenue growth at constant currency

 

24.3

%

 

(3.3)

%

 

11.6

%

 

(4.7)

%

 

(19.6)

%

 

(11.4)

%

 

Jeff Tryka, CFA Investor Relations, Lambert & Co. (616) 295-2509 jtryka@horizonglobal.com

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