Horizon Global Reports Financial Results for the Fourth Quarter and Full Year 2019

Company successfully refinances ABL and names Dennis E. Richardville as Chief Financial Officer

Fourth Quarter Highlights

  • Successful amendment of our ABL to stabilize liquidity and support future operating flexibility
  • Net sales of $142.3 million; increase of $4.5 million, or 3.3%, over prior-year comparable period
  • Operating loss of $33.7 million, or (23.7)% of net sales; improvement of $0.6 million over prior-year comparable period
  • Net loss from continuing operations of $32.0 million; improvement of $18.1 million over prior-year comparable period
  • Adjusted EBITDA(2) of $(16.5) million; down $1.2 million from prior-year comparable period

Full Year Highlights

  • Completed sale of Horizon Asia-Pacific business segment ("APAC"); significantly improved leverage and provided additional liquidity and operating flexibility
  • Completed refinancing of debt structure to support business realignment and allow for increased covenant flexibility
  • Net sales of $690.5 million; decrease of $23.5 million, or 3.3%, from prior year
  • Operating loss of $57.2 million, or (8.3)% of net sales; improvement of $133.4 million over prior year
  • Net loss from continuing operations of $110.0 million; improvement of $109.4 million over prior year
  • Adjusted EBITDA(2) of $(8.3) million; down $16.0 million from prior year

Dateline:

PLYMOUTH, Mich.

PLYMOUTH, Mich.--(BUSINESS WIRE)--Horizon Global Corporation (NYSE: HZN), one of the world’s leading manufacturers of branded towing and trailering equipment, today reported fourth quarter and full year financial results for 2019, closing a year of strategic business realignment and management refocus to drive its operational improvement initiatives.

“Since my appointment as CEO in September 2019, I am encouraged by the progress we have made," stated Terry Gohl, Horizon Global's President and Chief Executive Officer. "We are executing our operational improvement initiatives across all facets of the business and we continue to identify new opportunities every day. We are moving with speed and purpose to improve our underlying operations and service to our customers. We expect that our progress will result in substantially improved margins and free cash flow, and, importantly, create value for our shareholders in 2020 and beyond."

Gohl added, "Horizon Global undertook a competitive process to refinance our ABL. The process demonstrated significant lender confidence in our operational improvement initiatives plan and the operating and financial results that we expect to deliver. On March 13, 2020, The Company entered into an agreement with Encina Business Credit, LLC that will provide the Company with the liquidity and financial flexibility necessary to drive our operational improvement initiatives in 2020."

Gohl continued, "I am also pleased to announce the appointment of Dennis Richardville as our Chief Financial Officer. Dennis is a proven leader with extensive automotive experience. Dennis was instrumental in the success of our recent refinancing and we look forward to his significant contribution to our short- and long-term strategic initiatives."

2019 Fourth Quarter Segment Results

Horizon Americas . Net sales were $72.1 million, representing an increase of $1.2 million, or 1.6%, over prior-year comparable period. Net sales in the automotive OEM and e-commerce sales channels were up a combined $5.3 million, partially offset by a combined $4.2 million decrease in sales in the retail, industrial and aftermarket sales channels. Gross profit increased $3.4 million, in part due to reduced fines and penalties in the retail sales channel, partially offset by $3.5 million of increased scrap costs and inventory reserves. Operating loss was $(16.2) million as compared to $(11.6) million during the prior-year comparable period, with gross profit improvement more than offset by a one-time $6.5 million SG&A expense due to the abandonment of an automated stock retrieval system operating lease. Adjusted EBITDA(2) decreased to $(5.6) million as compared to $(1.8) million during the prior-year comparable period, attributable to overall operational underperformance after adjustments for special items.

Horizon Europe-Africa . Net sales were $70.2 million, representing an increase of $3.4 million, or 5.1%, over prior-year comparable period. Net sales in the automotive OEM, automotive OES and aftermarket sales channels were up a combined $7.0 million. The increase in net sales was partially offset by a $3.2 million decrease attributable to sales in 2018 from a non-automotive business that was divested in the first quarter of 2019. After removing the impacts of currency translation, net sales on a constant currency(1) basis increased $5.7 million, or 8.6%. Gross profit decreased $0.7 million, due to an unfavorable shift in sales mix to lower margin automotive OEM business, coupled with $2.6 million of increased scrap costs and inventory reserves. Operating loss was $(12.2) million as compared to $(16.5) million during the prior-year comparable period. Adjusted EBITDA(2) increased to $(5.9) million as compared to $(8.5) million during the prior-year comparable period, attributable to higher sales and cost savings.

Balance Sheet and Liquidity . Gross debt decreased to $236.6 million, a $145.7 million reduction from December 31, 2018. Total liquidity, which includes borrowing availability under the ABL and cash on-hand, was $44.9 million, an increase of $20.7 million over prior year end, after removing any prior-year impacts related to the APAC discontinued operations reporting.

Refinancing of Revolving Credit Facility

On March 13, 2020, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Encina Business Credit, LLC, as agent for the lenders party thereto. The Loan Agreement provides for an asset-based revolving credit facility in the maximum aggregate principal amount of $75,000,000, subject to customary borrowing base limitations contained therein, which amount may be increased at the Company’s request by up to $25,000,000. A portion of the proceeds received by the Company under the Loan Agreement were used to pay in full all outstanding debt incurred under the Amended and Restated Loan Agreement, dated as of June 30, 2015, with Bank of America, N.A., as administrative agent, and the lenders party thereto.

The interest on the loans under the Loan Agreement will be payable in cash at the interest rate of LIBOR plus a margin of 4.00% per annum, subject to a 1.00% LIBOR floor. There are no amortization payments required under the Loan Agreement. Borrowings under the Loan Agreement have a maturity of up to three years, subject to the maturity of certain of the Company's other debt facilities. Indebtedness under the Loan Agreement is and will be secured by the inventory and receivables of the Company's U.S. and Canadian subsidiaries.

Appointment of Chief Financial Officer

The Company today announced that Dennis Richardville has been named the Company’s Chief Financial Officer, effective immediately.

Mr. Richardville has served as Vice President and Corporate Treasurer for the Company since January 2020. Prior to joining the Company, Mr. Richardville served as chief financial officer of Dura Automotive Systems, LLC, from August 2019 to September 2019. Mr. Richardville served as executive vice president and chief financial officer of International Automotive Components Group, SA (“IAC”), a leading global supplier of automotive components and systems, including interior and exterior trim, from 2012 to 2019. From 2007 to 2012, Mr. Richardville served as vice president and global corporate controller for IAC. Prior to joining IAC, Mr. Richardville held various finance positions with Lear Corporation, Wesley Industries, Inc., MSX International, Inc. and Hayes Lemmerz International Inc. from 1999 to 2007.

The Company also announced that Richard Jok, who is currently on medical leave and has been serving as the Company’s interim Chief Financial Officer since December 13, 2019, will return to his role as the Company’s Vice President, Financial Planning and Analysis.

Summary

Gohl commented, “Horizon Global's 2019 results reflect the many challenges we faced during the year. We are not satisfied with this performance, we expect this company to be an industry leader and we are confident that we have the team, brands and focus to solidify ourselves as the supplier of choice across the markets we serve. We will continue to execute our well defined operational improvement initiatives and capitalize on new opportunities. Our focus will continue to be on operational excellence, margin expansion and free cash flow. In 2020, we are optimistic that Horizon Global will deliver on its initiatives, meet and exceed customer expectations and create value for our shareholders."

Conference Call Details

Horizon Global will host a conference call regarding fourth quarter and full year 2019 earnings on Monday, March 16, 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 10139596.

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 (877) 344-7529 and from outside the U.S. at (412) 317-0088. Please use the conference identification number 10139596. The telephone replay will be available approximately two hours after the end of the call and continue through March 30, 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 3,600 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 Company’s leverage; 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 our 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; the Company's ability to refinance its debt, on commercially acceptable terms or at all; the Company’s ability to maintain compliance with the New York Stock Exchange’s continued listing standards; factors affecting the Company's business that are outside of its control, including natural disasters, pandemics (such as the coronavirus (COVID-19)), 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)

 

We evaluate results 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 results, 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.

(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.

 

Horizon Global Corporation

Condensed Consolidated Balance Sheets

(Dollars in thousands)

 

 

 

December 31,
2019

 

December 31,
2018

 

 

(unaudited)

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

11,770

 

 

$

27,650

 

Receivables, net

 

71,680

 

 

95,170

 

Inventories

 

136,650

 

 

152,200

 

Prepaid expenses and other current assets

 

8,570

 

 

8,270

 

Current assets held-for-sale

 

 

 

36,080

 

Total current assets

 

228,670

 

 

319,370

 

Property and equipment, net

 

75,830

 

 

86,500

 

Operating lease right-of-use assets

 

45,770

 

 

 

Goodwill

 

4,350

 

 

4,500

 

Other intangibles, net

 

60,120

 

 

69,400

 

Deferred income taxes

 

430

 

 

660

 

Non-current assets held-for-sale

 

 

 

34,790

 

Other assets

 

5,870

 

 

6,130

 

Total assets

 

$

421,040

 

 

$

521,350

 

Liabilities and Shareholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

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

 

$

4,310

 

 

$

13,860

 

Accounts payable

 

78,450

 

 

102,350

 

Short-term operating lease liabilities

 

9,880

 

 

 

Current liabilities held-for-sale

 

 

 

28,080

 

Accrued liabilities

 

48,850

 

 

58,520

 

Total current liabilities

 

141,490

 

 

202,810

 

Gross long-term debt

 

236,550

 

 

382,220

 

Unamortized debt issuance costs and discount

 

(31,500

)

 

(31,570

)

Long-term debt

 

205,050

 

 

350,650

 

Deferred income taxes

 

4,040

 

 

12,620

 

Long-term operating lease liabilities

 

48,070

 

 

 

Non-current liabilities held-for-sale

 

 

 

1,740

 

Other long-term liabilities

 

13,790

 

 

19,750

 

Total liabilities

 

412,440

 

 

587,570

 

Total Horizon Global shareholders' equity (deficit)

 

12,340

 

 

(63,720

)

Noncontrolling interest

 

(3,740

)

 

(2,500

)

Total shareholders' equity (deficit)

 

8,600

 

 

(66,220

)

Total liabilities and shareholders' equity

 

$

421,040

 

 

$

521,350

 

Horizon Global Corporation

Consolidated Statements of Operations (unaudited)

(Dollars in thousands, except per share amounts)

 

 

 

Three months ended
December 31,

 

Twelve months ended
December 31,

 

 

2019

 

2018

 

2019

 

2018

Net sales

 

$

142,280

 

 

$

137,760

 

 

$

690,450

 

 

$

714,010

 

Cost of sales

 

(134,210

)

 

(132,410

)

 

(594,220

)

 

(604,530

)

Gross profit

 

8,070

 

 

5,350

 

 

96,230

 

 

109,480

 

Selling, general and administrative expenses

 

(41,040

)

 

(36,920

)

 

(154,180

)

 

(171,130

)

Impairment of goodwill and intangible assets

 

 

 

(1,000

)

 

 

 

(126,770

)

Net gain (loss) on dispositions of property and equipment

 

(720

)

 

(1,690

)

 

780

 

 

(2,210

)

Operating loss

 

(33,690

)

 

(34,260

)

 

(57,170

)

 

(190,630

)

Other income (expense), net

 

1,220

 

 

(3,710

)

 

(5,390

)

 

(12,800

)

Interest expense

 

(8,000

)

 

(7,870

)

 

(58,270

)

 

(27,450

)

Loss from continuing operations before income tax

 

(40,470

)

 

(45,840

)

 

(120,830

)

 

(230,880

)

Income tax benefit (expense)

 

8,490

 

 

(4,250

)

 

10,820

 

 

11,520

 

Net loss from continuing operations

 

(31,980

)

 

(50,090

)

 

(110,010

)

 

(219,360

)

Income from discontinued operations, net of income taxes

 

 

 

3,110

 

 

189,520

 

 

14,460

 

Net (loss) income

 

(31,980

)

 

(46,980

)

 

79,510

 

 

(204,900

)

Less: Net loss attributable to noncontrolling interest

 

(400

)

 

(220

)

 

(1,240

)

 

(940

)

Net (loss) income attributable to Horizon Global

 

$

(31,580

)

 

$

(46,760

)

 

$

80,750

 

 

$

(203,960

)

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

Basic:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(1.24

)

 

$

(1.98

)

 

$

(4.30

)

 

$

(8.72

)

Discontinued operations

 

 

 

0.12

 

 

7.49

 

 

0.58

 

Total

 

$

(1.24

)

 

$

(1.86

)

 

$

3.19

 

 

$

(8.14

)

Diluted:

 

 

 

 

 

 

 

 

Continuing operations

 

$

(1.24

)

 

$

(1.98

)

 

$

(4.30

)

 

$

(8.72

)

Discontinued operations

 

 

 

0.12

 

 

7.49

 

 

0.58

 

Total

 

$

(1.24

)

 

$

(1.86

)

 

$

3.19

 

 

$

(8.14

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

25,387,388

 

 

25,127,022

 

 

25,297,576

 

 

25,053,013

 

Diluted

 

25,387,388

 

 

25,127,022

 

 

25,297,576

 

 

25,053,013

 

Horizon Global Corporation

Consolidated Statements of Cash Flows (unaudited)

(Dollars in thousands)

 

 

 

Twelve months ended
December 31,

 

 

2019

 

2018

Cash Flows from Operating Activities:

 

 

 

 

Net income (loss)

 

$

79,510

 

 

$

(204,900

)

Less: Net income from discontinued operations

 

189,520

 

 

14,460

 

Net loss from continuing operations

 

(110,010

)

 

(219,360

)

 

 

 

 

 

Adjustments to reconcile net loss from continuing operations to net cash used for operating activities:

 

 

 

 

Net (gain) loss on dispositions of property and equipment

 

(780

)

 

2,210

 

Depreciation

 

15,940

 

 

12,330

 

Amortization of intangible assets

 

5,750

 

 

8,250

 

Write off of operating lease assets

 

10,780

 

 

 

Impairment of goodwill and intangible assets

 

 

 

126,770

 

Amortization of original issuance discount and debt issuance costs

 

22,060

 

 

8,330

 

Deferred income taxes

 

(7,280

)

 

1,120

 

Non-cash compensation expense

 

2,150

 

 

1,550

 

Paid-in-kind interest

 

9,720

 

 

 

Decrease (increase) in receivables

 

19,290

 

 

(22,590

)

Decrease (increase) in inventories

 

8,380

 

 

(6,940

)

(Increase) decrease in prepaid expenses and other assets

 

(2,990

)

 

6,230

 

Decrease in accounts payable and accrued liabilities

 

(30,140

)

 

(9,520

)

Other, net

 

(11,350

)

 

(3,990

)

Net cash used for operating activities

 

(68,480

)

 

(95,610

)

Cash Flows from Investing Activities:

 

 

 

 

Capital expenditures

 

(9,720

)

 

(11,260

)

Net proceeds from sale of business

 

214,570

 

 

 

Net proceeds from disposition of property and equipment

 

1,620

 

 

80

 

Net cash provided by (used for) investing activities

 

206,470

 

 

(11,180

)

Cash Flows from Financing Activities:

 

 

 

 

Net cash (used for) provided by financing activities

 

(164,710

)

 

82,360

 

Discontinued Operations:

 

 

 

 

Net cash provided by discontinued operating activities

 

11,430

 

 

25,110

 

Net cash used for discontinued investing activities

 

(1,120

)

 

(2,490

)

Net cash provided by discontinued financing activities

 

 

 

 

Net cash provided by discontinued operations

 

10,310

 

 

22,620

 

Effect of exchange rate changes on cash and cash equivalents

 

530

 

 

(110

)

Cash and Cash Equivalents:

 

 

 

 

Decrease for the year

 

(15,880

)

 

(1,920

)

At beginning of year

 

27,650

 

 

29,570

 

At end of year

 

$

11,770

 

 

$

27,650

 

Supplemental disclosure of cash flow information:

 

 

 

 

Cash paid for interest

 

$

20,060

 

 

$

18,630

 

Cash paid for taxes, net of refunds

 

$

80

 

 

$

650

 

Segment Information

The following table summarizes financial information for our operating segments for the three and twelve months ended December 31, 2019 and 2018:

 

 

Three months ended
December 31,

 

Change

 

 

2019

 

2018

 

$

 

%

 

 

(unaudited, dollars in thousands)

Net Sales

 

 

 

 

 

 

 

 

Horizon Americas

 

$

72,050

 

 

$

70,930

 

 

$

1,120

 

 

1.6

%

Horizon Europe‑Africa

 

70,230

 

 

66,830

 

 

3,400

 

 

5.1

%

Total

 

$

142,280

 

 

$

137,760

 

 

$

4,520

 

 

3.3

%

Gross Profit

 

 

 

 

 

 

 

 

Horizon Americas

 

$

9,560

 

 

$

6,180

 

 

$

3,380

 

 

54.7

%

Horizon Europe‑Africa

 

(1,490

)

 

(830

)

 

(660

)

 

79.5

%

Total

 

$

8,070

 

 

$

5,350

 

 

$

2,720

 

 

50.8

%

Operating Loss

 

 

 

 

 

 

 

 

Horizon Americas

 

$

(16,150

)

 

$

(11,570

)

 

$

(4,580

)

 

39.6

%

Horizon Europe‑Africa

 

(12,220

)

 

(16,480

)

 

4,260

 

 

(25.8

)%

Corporate

 

(5,320

)

 

(6,210

)

 

890

 

 

(14.3

)%

Total

 

$

(33,690

)

 

$

(34,260

)

 

$

570

 

 

(1.7

)%

Adjusted EBITDA

 

 

 

 

 

 

 

 

Horizon Americas

 

$

(5,570

)

 

$

(1,810

)

 

$

(3,760

)

 

207.7

%

Horizon Europe-Africa

 

(5,930

)

 

(8,490

)

 

2,560

 

 

(30.2

)%

Corporate

 

(5,000

)

 

(5,040

)

 

40

 

 

(0.8

)%

Total

 

$

(16,500

)

 

$

(15,340

)

 

$

(1,160

)

 

7.6

%

 

 

Twelve months ended
December 31,

 

Change

 

 

2019

 

2018

 

$

 

%

 

 

(unaudited, dollars in thousands)

Net Sales

 

 

 

 

 

 

 

 

Horizon Americas

 

$

372,720

 

 

$

390,750

 

 

$

(18,030

)

 

(4.6

)%

Horizon Europe‑Africa

 

317,730

 

 

323,260

 

 

(5,530

)

 

(1.7

)%

Total

 

$

690,450

 

 

$

714,010

 

 

$

(23,560

)

 

(3.3

)%

Gross Profit

 

 

 

 

 

 

 

 

Horizon Americas

 

$

71,640

 

 

$

79,930

 

 

$

(8,290

)

 

(10.4

)%

Horizon Europe‑Africa

 

24,590

 

 

29,550

 

 

(4,960

)

 

(16.8

)%

Total

 

$

96,230

 

 

$

109,480

 

 

$

(13,250

)

 

(12.1

)%

Operating Loss

 

 

 

 

 

 

 

 

Horizon Americas

 

$

(10,390

)

 

$

(6,840

)

 

$

(3,550

)

 

51.9

%

Horizon Europe‑Africa

 

(12,100

)

 

(148,630

)

 

136,530

 

 

(91.9

)%

Corporate

 

(34,680

)

 

(35,160

)

 

480

 

 

(1.4

)%

Total

 

$

(57,170

)

 

$

(190,630

)

 

$

133,460

 

 

(70.0

)%

Adjusted EBITDA

 

 

 

 

 

 

 

 

Horizon Americas

 

$

8,430

 

 

$

26,050

 

 

$

(17,620

)

 

(67.6

)%

Horizon Europe-Africa

 

2,770

 

 

200

 

 

2,570

 

 

1,285.0

%

Corporate

 

(19,510

)

 

(18,570

)

 

(940

)

 

5.1

%

Total

 

$

(8,310

)

 

$

7,680

 

 

$

(15,990

)

 

(208.2

)%

Appendix I

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

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. Adjusted EBITDA, 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 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 for our operating segments for the three and twelve months ended December 31, 2019 and 2018:

 

 

Twelve months ended December 31, 2019

 

Twelve months ended December 31, 2018

 

Variance

 

 

Horizon
Americas

 

Horizon
Europe-
Africa

 

Corporate

 

Consolidated

 

Horizon
Americas

 

Horizon
Europe-
Africa

 

Corporate

 

Consolidated

 

Consolidated

 

 

(dollars in thousands)

 

(dollars in thousands)

 

 

Net income (loss) attributable to Horizon Global

 

 

 

 

 

 

 

$

80,750

 

 

 

 

 

 

 

 

$

(203,960

)

 

$

284,710

 

Net loss attributable to noncontrolling interest

 

 

 

 

 

 

 

(1,240

)

 

 

 

 

 

 

 

(940

)

 

(300

)

Net income (loss)

 

 

 

 

 

 

 

79,510

 

 

 

 

 

 

 

 

(204,900

)

 

284,410

 

Interest expense

 

 

 

 

 

 

 

58,270

 

 

 

 

 

 

 

 

27,450

 

 

30,820

 

Income tax benefit

 

 

 

 

 

 

 

(10,820

)

 

 

 

 

 

 

 

(11,520

)

 

700

 

Depreciation and amortization

 

 

 

 

 

 

 

21,690

 

 

 

 

 

 

 

 

20,580

 

 

1,110

 

EBITDA

 

(4,320

)

 

(3,370

)

 

156,340

 

 

148,650

 

 

(5,770

)

 

(136,610

)

 

(26,010

)

 

(168,390

)

 

317,040

 

Net loss attributable to noncontrolling interest

 

 

 

1,240

 

 

 

 

1,240

 

 

 

 

940

 

 

 

 

940

 

 

300

 

Income from discontinued operations, net of tax

 

 

 

 

 

(189,520

)

 

(189,520

)

 

 

 

 

 

(14,460

)

 

(14,460

)

 

(175,060

)

Severance

 

(200

)

 

1,330

 

 

2,050

 

 

3,180

 

 

5,050

 

 

3,060

 

 

3,950

 

 

12,060

 

 

(8,880

)

Restructuring, relocation and related business disruption costs

 

9,500

 

 

(1,190

)

 

3,990

 

 

12,300

 

 

19,690

 

 

3,200

 

 

 

 

22,890

 

 

(10,590

)

Impairment of goodwill and intangible assets

 

 

 

 

 

 

 

 

 

 

 

126,770

 

 

 

 

126,770

 

 

(126,770

)

Non-cash stock compensation

 

 

 

 

 

2,150

 

 

2,150

 

 

 

 

 

 

1,550

 

 

1,550

 

 

600

 

Acquisition and integration costs

 

 

 

 

 

 

 

 

 

 

 

1,390

 

 

15,870

 

 

17,260

 

 

(17,260

)

Loss on business divestitures and other assets

 

2,070

 

 

3,630

 

 

 

 

5,700

 

 

6,690

 

 

 

 

 

 

6,690

 

 

(990

)

Board transition support

 

 

 

 

 

1,450

 

 

1,450

 

 

 

 

 

 

 

 

 

 

1,450

 

Product liability and litigation claims

 

820

 

 

1,760

 

 

 

 

2,580

 

 

 

 

1,340

 

 

 

 

1,340

 

 

1,240

 

Debt issuance costs

 

 

 

 

 

4,070

 

 

4,070

 

 

 

 

 

 

 

 

 

 

4,070

 

Unrealized foreign currency remeasurement costs

 

 

 

(180

)

 

130

 

 

(50

)

 

50

 

 

330

 

 

490

 

 

870

 

 

(920

)

Other

 

560

 

 

(450

)

 

(170

)

 

(60

)

 

340

 

 

(220

)

 

40

 

 

160

 

 

(220

)

Adjusted EBITDA

 

$

8,430

 

 

$

2,770

 

 

$

(19,510

)

 

$

(8,310

)

 

$

26,050

 

 

$

200

 

 

$

(18,570

)

 

$

7,680

 

 

$

(15,990

)

 

 

Three months ended December 31, 2019

 

Three months ended December 31, 2018

 

Variance

 

 

Horizon
Americas

 

Horizon
Europe-
Africa

 

Corporate

 

Consolidated

 

Horizon
Americas

 

Horizon
Europe-
Africa

 

Corporate

 

Consolidated

 

Consolidated

 

 

(dollars in thousands)

 

(dollars in thousands)

 

 

Net loss attributable to Horizon Global

 

 

 

 

 

 

 

$

(31,580

)

 

 

 

 

 

 

 

$

(46,760

)

 

$

15,180

 

Net loss attributable to noncontrolling interest

 

 

 

 

 

 

 

(400

)

 

 

 

 

 

 

 

(220

)

 

(180

)

Net loss

 

 

 

 

 

 

 

(31,980

)

 

 

 

 

 

 

 

(46,980

)

 

15,000

 

Interest expense

 

 

 

 

 

 

 

8,000

 

 

 

 

 

 

 

 

7,870

 

 

130

 

Income tax (benefit) expense

 

 

 

 

 

 

 

(8,490

)

 

 

 

 

 

 

 

4,250

 

 

(12,740

)

Depreciation and amortization

 

 

 

 

 

 

 

4,900

 

 

 

 

 

 

 

 

5,510

 

 

(610

)

EBITDA

 

(14,280

)

 

(7,920

)

 

(5,370

)

 

(27,570

)

 

(13,530

)

 

(12,440

)

 

(3,380

)

 

(29,350

)

 

1,780

 

Net loss attributable to noncontrolling interest

 

 

 

400

 

 

 

 

400

 

 

 

 

220

 

 

 

 

220

 

 

180

 

Income from discontinued operations, net of tax

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,120

)

 

(3,120

)

 

3,120

 

Severance

 

 

 

1,320

 

 

430

 

 

1,750

 

 

40

 

 

1,500

 

 

1,200

 

 

2,740

 

 

(990

)

Restructuring, relocation and related business disruption costs

 

8,390

 

 

220

 

 

(260

)

 

8,350

 

 

7,860

 

 

380

 

 

 

 

8,240

 

 

110

 

Impairment of goodwill and other intangibles

 

 

 

 

 

 

 

 

 

 

 

1,000

 

 

 

 

1,000

 

 

(1,000

)

Non-cash stock compensation

 

 

 

 

 

330

 

 

330

 

 

 

 

 

 

110

 

 

110

 

 

220

 

Acquisition and integration costs

 

 

 

 

 

 

 

 

 

 

 

 

 

(260

)

 

(260

)

 

260

 

Loss on business divestitures and other assets

 

790

 

 

 

 

 

 

790

 

 

3,130

 

 

 

 

 

 

3,130

 

 

(2,340

)

Product liability and litigation claims

 

 

 

1,710

 

 

 

 

1,710

 

 

 

 

1,340

 

 

 

 

1,340

 

 

370

 

Debt issuance costs

 

 

 

 

 

(280

)

 

(280

)

 

 

 

 

 

 

 

 

 

(280

)

Unrealized foreign currency remeasurement costs

 

(160

)

 

(1,390

)

 

(310

)

 

(1,860

)

 

(60

)

 

(420

)

 

290

 

 

(190

)

 

(1,670

)

Other

 

(310

)

 

(270

)

 

460

 

 

(120

)

 

750

 

 

(70

)

 

120

 

 

800

 

 

(920

)

Adjusted EBITDA

 

$

(5,570

)

 

$

(5,930

)

 

$

(5,000

)

 

$

(16,500

)

 

$

(1,810

)

 

$

(8,490

)

 

$

(5,040

)

 

$

(15,340

)

 

$

(1,160

)

 

Appendix II

Horizon Global Corporation
Reconciliation of Reported Revenue Growth
to Constant Currency Basis
(Unaudited)

We evaluate results 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 results, 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 December 31, 2019

 

Twelve months ended December 31, 2019

 

 

Horizon
Americas

 

Horizon
Europe-Africa

 

Consolidated

 

Horizon Americas

 

Horizon
Europe-Africa

 

Consolidated

Revenue growth as reported

 

1.6

%

 

5.1

%

 

3.3

%

 

(4.6

)%

 

(1.7

)%

 

(3.3

)%

Less: currency impact

 

(0.1

)%

 

(3.5

)%

 

(1.8

)%

 

(0.1

)%

 

(5.8

)%

 

(2.7

)%

Revenue growth at constant currency

 

1.7

%

 

8.6

%

 

5.1

%

 

(4.5

)%

 

4.1

%

 

(0.6

)%

 

Multimedia Files:

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Contact:

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

Related Materials:

Horizon Global Reports Financial Results for the Fourth Quarter and Full Year 2019 (download992.17 KB)
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