First Quarter Highlights
- Net sales of $199.2 million; increase of $35.9 million, or
22.0%, compared to prior year comparable period
- Gross profit of $40.6 million; increase of $14.3 million over
prior year comparable period. Gross profit margin(4) of 20.4%
compared to 16.1% gross profit margin(4) during prior year
comparable period
- Operating profit of $6.8 million; $13.5 million improvement
compared to prior year comparable period
- Net loss from continuing operations of $15.2 million; $1.3
million improvement compared to prior year comparable period,
inclusive of one-time $11.7 million loss on debt extinguishment
related to February term loan refinancing
- Adjusted EBITDA(1) of $12.7 million; $9.8 million
improvement compared to prior year comparable period
- Completed term loan refinancing with $225.0 million term loan
facility, including $125.0 million delayed draw facility with
nominal ticking fee; reduced interest rate and provides significant
financial flexibility
Horizon Global Corporation (NYSE: HZN), one of the world’s
leading manufacturers of branded towing and trailering equipment,
today reported financial results for the first quarter of 2021.
“We carried our positive momentum from 2020 into the first
quarter of 2021, with our continued operational improvement
initiatives driving significantly improved financial performance,”
stated Terry Gohl, Horizon Global’s President and Chief Executive
Officer. “Our global team has shown great tenacity as the Company
continues to thrive in this unprecedented macro-economic
environment. Our first quarter financial results reflect
improvement across the board, from sales to profitability, as we
continued to execute to our plan and received outstanding support
from our customers and suppliers across the globe.”
Gohl continued, “While a proportion of our period-over-period
net sales increase is attributable to the COVID-impacted
environment in the back half of March 2020, demand levels in
January and February 2021 far exceeded those from the prior year
periods. The sales increase is even more impactful when considering
industry-wide logistics and supply chain headwinds. In addition to
elevated sales across the business, our order book increased each
month during the first quarter and continues to grow.”
2021 First Quarter Segment
Results
Horizon Americas. Net sales increased $17.4 million, or
18.8%, to $109.8 million. The net sales increase was primarily
driven by a $9.8 million combined increase in the automotive OEM
and automotive OES sales channels as well as a $4.9 million
increase in the aftermarket sales channels driven by higher sales
volumes as compared to the prior year comparable period that was
impacted by business disruptions due to the COVID-19 global
pandemic beginning in the second half of March 2020. Gross profit
increased $9.7 million primarily related to higher net sales
coupled with operational improvements and manufacturing
efficiencies recognized across the operating segment, partially
offset by higher outbound freight costs related to higher sales
volumes. Horizon Americas generated an operating profit of $11.8
million, an improvement of $9.1 million compared to the prior year
comparable period, driven by the segment's favorable gross profit.
Adjusted EBITDA(1) increased to $12.9 million during the first
quarter of 2021, as compared to $6.1 million for the prior year
comparable period.
Horizon Europe-Africa. Net sales increased $18.5 million,
or 26.1%, to $89.4 million. The net sales increase was primarily
driven by a $10.8 million combined increase in the automotive OEM
and automotive OES sales channels, as well as a $6.7 million
increase in the aftermarket sales channel driven by higher sales
volumes as compared to the prior year comparable period that was
impacted by business disruptions due to the COVID-19 global
pandemic beginning in the second half of March 2020. Gross profit
increased $4.7 million, due to higher net sales coupled with
favorable manufacturing costs. Horizon Europe-Africa generated an
operating profit of $1.5 million, an improvement of $4.0 million
compared to the prior year comparable period, driven by the
segment's favorable gross profit. Adjusted EBITDA(1) increased to
$5.4 million for the quarter, as compared to $2.3 million for the
prior year comparable period.
Balance Sheet and Liquidity. Cash and Availability(2) was
$63.4 million, a reduction of $20.0 million compared to December
31, 2020, and an increase of $12.6 million compared to March 31,
2020. Working Capital(3) was $81.8 million, an increase of $26.2
million compared to December 31, 2020, primarily reflecting
strategic build of inventory in preparation to meet significant
open order and customer demand in anticipation of traditional peak
selling season. Gross debt increased $14.3 million to $280.4
million compared to December 31, 2020, primarily reflecting
proceeds from the term loan refinancing completed during the first
quarter of 2021.
Summary
Gohl commented, “As we enter the traditional peak selling season
in North America, we have strong order book momentum and a focused
operation plan expected to expand our market share in a profitable
manner. Also, as planned, we are now proceeding to the execution
phase of our operational excellence measures across our
Europe-Africa segment. This will result in a more efficient and
flexible manufacturing footprint enabling us to optimize our sales
mix and realize profitable growth in the segment. We expect our
global efforts to generate both near- and long-term value for our
employees, customers and shareholders.”
Conference Call Details
Horizon Global will host a conference call regarding first
quarter 2021 earnings on Thursday, May 6, 2021 at 8:30 a.m. Eastern
Time. The conference call will be hosted by Horizon Global's
President and Chief Executive Officer, Terry Gohl, and Dennis
Richardville, Chief Financial Officer. Participants on the call are
asked to register five to ten minutes prior to the scheduled start
time by dialing (844) 825-9786 and from outside the U.S. at (412)
902-4185. Please use the conference identification number
10153880.
The first quarter 2021 results and supplemental materials,
including a presentation in PDF format, will be distributed before
the market opens on May 6, 2021 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 10153880. The telephone replay will be available
approximately two hours after the end of the call and continue
through May 20, 2021.
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 4,000 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 COVID-19 pandemic on the Company’s
business, results of operations, financial condition and liquidity;
liabilities and restrictions imposed by the Company’s debt
instruments; market demand; competitive factors; supply constraints
and shipping disruptions; 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; 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; the Company’s ability to
maintain compliance with the New York Stock Exchange’s continued
listing standards; and other risks that are discussed in the
Company’s most recent Annual Report on Form 10-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)
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.
(2)
"Cash and Availability" refers to “cash
and cash equivalents” and amounts of cash accessible but undrawn
from credit facilities.
(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".
(4)
“Gross Profit Margin” refers to “gross
profit” as a percentage of “net sales”.
Horizon Global
Corporation
Condensed Consolidated Balance
Sheets
(dollars in thousands)
March 31, 2021
December 31,
2020
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
24,560
$
44,970
Restricted cash
5,700
5,720
Receivables, net
111,870
87,420
Inventories
134,360
115,320
Prepaid expenses and other current
assets
12,900
11,510
Total current assets
289,390
264,940
Property and equipment, net
70,720
74,090
Operating lease right-of-use assets
41,480
47,310
Goodwill
3,100
3,360
Other intangibles, net
55,990
58,230
Deferred income taxes
1,230
1,280
Other assets
6,240
7,280
Total assets
$
468,150
$
456,490
Liabilities and Shareholders'
Equity
Current liabilities:
Short-term borrowings and current
maturities, long-term debt
$
11,230
$
14,120
Accounts payable
113,870
99,520
Short-term operating lease liabilities
11,880
12,180
Accrued liabilities
63,450
59,100
Total current liabilities
200,430
184,920
Gross long-term debt
269,140
251,960
Unamortized debt issuance costs and
discount
(33,920)
(20,570)
Long-term debt
235,220
231,390
Deferred income taxes
3,460
3,130
Long-term operating lease liabilities
40,580
46,340
Other long-term liabilities
12,720
14,560
Total liabilities
492,410
480,340
Total Horizon Global shareholders'
deficit
(18,760)
(18,690)
Noncontrolling interest
(5,500)
(5,160)
Total shareholders' deficit
(24,260)
(23,850)
Total liabilities and shareholders'
equity
$
468,150
$
456,490
Horizon Global
Corporation
Condensed Consolidated
Statements of Operations
(unaudited - dollars in
thousands, except share and per share data)
Three Months Ended
March 31,
2021
2020
Net sales
$
199,190
$
163,250
Cost of sales
(158,630)
(137,000)
Gross profit
40,560
26,250
Selling, general and administrative
expenses
(33,780)
(32,930)
Operating profit (loss)
6,780
(6,680)
Other expense, net
(2,230)
(1,670)
Loss on debt extinguishment
(11,650)
—
Interest expense
(7,050)
(8,190)
Loss from continuing operations before
income tax
(14,150)
(16,540)
Income tax (expense) benefit
(1,000)
10
Net loss from continuing operations
(15,150)
(16,530)
Loss from discontinued operations, net of
income tax
—
(500)
Net loss
(15,150)
(17,030)
Less: Net loss attributable to
noncontrolling interest
(340)
(290)
Net loss attributable to Horizon
Global
$
(14,810)
$
(16,740)
Net loss per share attributable to
Horizon Global:
Basic:
Continuing operations
$
(0.55)
$
(0.64)
Discontinued operations
—
(0.02)
Total
$
(0.55)
$
(0.66)
Diluted:
Continuing operations
$
(0.55)
$
(0.64)
Discontinued operations
—
(0.02)
Total
$
(0.55)
$
(0.66)
Weighted average common shares
outstanding:
Basic
26,743,441
25,393,668
Diluted
26,743,441
25,393,668
Horizon Global
Corporation
Condensed Consolidated
Statements of Cash Flows
(unaudited - dollars in
thousands)
Three Months Ended March
31,
2021
2020
Cash Flows from Operating
Activities:
Net loss
$
(15,150)
$
(17,030)
Less: Net loss from discontinued
operations
—
(500)
Net loss from continuing operations
(15,150)
(16,530)
Adjustments to reconcile net loss from
continuing operations to net cash provided by (used for) operating
activities:
Depreciation
4,200
3,490
Amortization of intangible assets
1,300
1,570
Loss on debt extinguishment
11,650
—
Amortization of original issuance discount
and debt issuance costs
2,810
4,400
Deferred income taxes
470
(40)
Non-cash compensation expense
860
420
Paid-in-kind interest
650
1,570
Increase in receivables
(26,870)
(15,610)
(Increase) decrease in inventories
(20,950)
15,350
Increase in prepaid expenses and other
assets
(940)
(2,060)
Increase in accounts payable and accrued
liabilities
23,120
11,550
Other, net
600
1,600
Net cash (used for) provided by operating
activities for continuing operations
(18,250)
5,710
Cash Flows from Investing
Activities:
Capital expenditures
(3,360)
(4,060)
Net proceeds from disposition of property
and equipment
—
70
Net cash used for investing activities for
continuing operations
(3,360)
(3,990)
Cash Flows from Financing
Activities:
Proceeds from borrowings on credit
facilities
1,530
580
Repayments of borrowings on credit
facilities
(720)
(630)
Proceeds from Senior Term Loan, net of
issuance costs
75,300
—
Repayments of borrowings on Replacement
Term Loan, including transaction fees
(94,940)
—
Proceeds from Revolving Credit Facility,
net of issuance costs
4,450
54,680
Proceeds from ABL revolving debt, net of
issuance costs
—
8,000
Repayments of borrowings on ABL revolving
debt
—
(27,920)
Proceeds from issuance of common stock
warrants
16,300
—
Proceeds from exercise of common stock
warrants
420
—
Other, net
(650)
(60)
Net cash provided by financing activities
for continuing operations
1,690
34,650
Discontinued Operations:
Net cash used for discontinued
operations
—
(500)
Effect of exchange rate changes on
cash, cash equivalents and restricted cash
(510)
(230)
Cash, Cash Equivalents and Restricted
Cash:
(Decrease) increase for the period
(20,430)
35,640
At beginning of period
50,690
11,770
At end of period
$
30,260
$
47,410
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
7,270
$
3,150
Cash paid for taxes, net of refunds
$
530
$
200
Appendix I
Horizon Global Corporation Company and
Business Segment Financial Information (Unaudited - dollars in
thousands)
The Company’s management utilizes Adjusted EBITDA(1) 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(1) 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(1) that is prepared
in accordance with U.S. GAAP. Adjusted EBITDA(1), 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(1) is defined as net income (loss) 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, gains (losses) on debt
extinguishment, impairment of goodwill and other intangibles,
non-cash stock compensation, certain product liability and
litigation claims, acquisition and integration costs, gains
(losses) on business divestitures and other assets, debt issuance
costs, board transition support and non-cash unrealized foreign
currency remeasurement costs.
The following table summarizes Adjusted EBITDA(1) for our
operating segments for the three months ended March 31, 2021 and
2020:
Three Months Ended March 31,
2021
Three Months Ended March 31,
2020
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
$
(14,810)
$
(16,740)
$
1,930
Net loss attributable to noncontrolling
interest
(340)
(290)
(50)
Net loss
$
(15,150)
$
(17,030)
$
1,880
Interest expense
7,050
8,190
(1,140)
Income tax expense (benefit)
1,000
(10)
1,010
Depreciation and amortization
5,500
5,060
440
EBITDA
$
13,200
$
3,790
$
(18,590)
$
(1,600)
$
4,940
$
(1,090)
$
(7,640)
$
(3,790)
$
2,190
Net loss attributable to noncontrolling
interest
—
340
—
340
—
290
—
290
50
Loss from discontinued operations, net of
tax
—
—
—
—
—
—
500
500
(500)
Severance
—
—
—
—
530
20
(10)
540
(540)
Restructuring, relocation and related
business disruption costs
(860)
(70)
—
(930)
890
—
110
1,000
(1,930)
Loss on debt extinguishment
—
—
11,650
11,650
—
—
—
—
11,650
Non-cash stock compensation
—
—
860
860
—
—
420
420
440
Loss (gain) on business divestitures and
other assets
240
—
—
240
360
(180)
—
180
60
Product liability and litigation
claims
—
—
—
—
—
1,510
—
1,510
(1,510)
Debt issuance costs
—
—
—
—
—
—
750
750
(750)
Unrealized foreign currency remeasurement
costs
270
1,290
530
2,090
(600)
1,750
380
1,530
560
Adjusted EBITDA
$
12,850
$
5,350
$
(5,550)
$
12,650
$
6,120
$
2,300
$
(5,490)
$
2,930
$
9,720
Segment Information
The following table summarizes financial information for our
operating segments for the three months ended March 31, 2021 and
2020:
Three Months Ended March
31,
Change
2021
2020
$
%
(dollars in thousands)
Net Sales
Horizon Americas
$
109,830
$
92,370
$
17,460
18.9
%
Horizon Europe-Africa
89,360
70,880
18,480
26.1
%
Total
$
199,190
$
163,250
$
35,940
22.0
%
Gross Profit
Horizon Americas
$
29,270
$
19,620
$
9,650
49.2
%
Horizon Europe-Africa
11,290
6,630
4,660
70.3
%
Total
$
40,560
$
26,250
$
14,310
54.5
%
Operating Profit (Loss)
Horizon Americas
$
11,840
$
2,730
$
9,110
333.7
%
Horizon Europe-Africa
1,460
(2,510)
3,970
158.2
%
Corporate
(6,520)
(6,900)
380
5.5
%
Total
$
6,780
$
(6,680)
$
13,460
201.5
%
Adjusted EBITDA
Horizon Americas
$
12,850
$
6,120
$
6,730
110.0
%
Horizon Europe-Africa
5,350
2,300
3,050
132.6
%
Corporate
(5,550)
(5,490)
(60)
(1.1
%)
Total
$
12,650
$
2,930
$
9,720
331.7
%
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
March 31, 2021
Horizon Americas
Horizon Europe-Africa
Consolidated
Revenue growth as reported
18.9
%
26.1
%
22.0
%
Less: currency impact
(0.5)
%
9.8
%
4.0
%
Revenue growth at constant currency
19.4
%
16.3
%
18.0
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210506005334/en/
Jeff Tryka, CFA Investor Relations, Lambert & Co. (616)
295-2509 jtryka@horizonglobal.com
Horizon Global (NYSE:HZN)
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