Second Quarter
Highlights
- Net sales of $222.1 million
- $101.6 million increase compared to second quarter of 2020
- $29.4 million increase compared to second quarter of 2019
- Gross profit of $47.3 million
- $29.2 million improvement over second quarter of 2020
- $11.0 million improvement over second quarter of 2019
- Gross profit margin(4) increased to 21.3% from 15.0% and 18.8%
in second quarter of 2020 and second quarter of 2019,
respectively
- Operating profit of $11.3 million
- $19.3 million improvement over second quarter of 2020
- $8.7 million improvement over second quarter of 2019
- Net income from continuing operations of $1.0 million
- $17.7 million improvement over second quarter of 2020
- $12.1 million improvement over second quarter of 2019
- Adjusted EBITDA(1) of $18.0 million
- $18.0 million improvement over second quarter of 2020
- $5.7 million improvement over second quarter of 2019
Horizon Global Corporation (NYSE: HZN), one of the world’s
leading manufacturers of branded towing and trailering equipment,
today reported financial results for the second quarter of
2021.
“The positive momentum from the back half of 2020 and Q1 2021
continued into Q2 2021 as we once again realized significant
profitability improvement across the business,” stated Terry Gohl,
Horizon Global’s President and Chief Executive Officer. “Given the
impact of the global pandemic in 2020, we are comparing our Q2 2021
results against both Q2 2020 and Q2 2019. The Company has come a
long way in two years, and we expect this positive momentum to
continue into future periods.
Gohl continued “Our strong financial results for Q2 2021 reflect
the solid foundation we have built since we launched our turnaround
plan in late 2019. We now have the talent, business processes and
manufacturing and distribution capabilities to support profitable
growth on an accelerated timetable. During the quarter, the team
demonstrated extraordinary resilience as we encountered major
macroeconomic headwinds relating to material costs, supply chain
and logistics. While we dealt with these headwinds on a daily or
even hourly basis, we did not lose focus of our strategic plan as
we continued to identify and execute business improvement
initiatives to improve our operational and financial
performance.”
2021 Second Quarter Segment
Results
Horizon Americas. Net sales increased $19.4 million, or
17.8%, to $128.4 million when compared to the second quarter of
2019. The net sales increase was primarily driven by an $11.7
million increase in the aftermarket sales channel and a $5.3
million increase in the e-commerce sales channel. Horizon Americas
generated an operating profit of $16.8 million, an improvement of
$7.3 million compared to the second quarter of 2019, primarily
driven by higher sales volumes, favorable sales mix, product price
increases and operating efficiencies from the implementation of
operational improvement initiatives. Adjusted EBITDA(1) increased
to $18.5 million for the quarter, as compared to $12.1 million for
the second quarter of 2019.
Horizon Europe-Africa. Net sales increased $10.0 million,
or 12.0%, to $93.7 million when compared to the second quarter of
2019. The net sales increase was primarily driven by a $6.1 million
increase in the aftermarket sales channel and a $2.3 million
combined increase in the automotive OEM and automotive OES sales
channels. Horizon Europe-Africa generated an operating profit of
$1.2 million, a reduction of $(0.3) million compared to the second
quarter of 2019. Adjusted EBITDA(1) increased to $5.1 million for
the quarter, as compared to $4.4 million for the second quarter of
2019, primarily driven by higher sales volumes and favorable sales
mix, partially offset by higher selling, general and administrative
(SG&A) expenses and other support costs.
Balance Sheet and Liquidity. Cash and Availability(2) was
$62.0 million, a reduction of $21.4 million compared to December
31, 2020, and an increase of $26.3 million compared to June 30,
2019. Working Capital(3) was $101.0 million, an increase of $45.4
million compared to December 31, 2020, primarily reflecting higher
net sales during the quarter as well as an increase in inventory
levels reflecting seasonal build in order to meet the demand of the
Company’s traditional peak selling season and recent macroeconomic
factors driving rising costs of raw materials, constraints on
shipping container availability and port congestion. Working
Capital(3) improved by $13.7 million compared to June 30, 2019.
Gross debt increased $30.0 million to $296.0 million compared to
December 31, 2020, primarily reflecting additional borrowings on
the Company’s ABL as well as proceeds from the term loan
refinancing completed during the first quarter of 2021.
Summary
Gohl commented, “I want to thank the team for its resiliency and
support as the business has transformed since late 2019. Of course,
the job is not done. We have the foundation in place to accelerate
our strategic plan and set our targets on double-digit margins. We
believe this is possible through continuous operational improvement
initiatives in the Americas, the realization of significant
improvement opportunities in Europe-Africa and continuing to serve
as the supplier of choice to our customers in our core geographies.
We believe our roadmap to double-digit margins is achievable and
will generate both near- and long-term value for our employees,
customers and shareholders.”
Conference Call Details
Horizon Global will host a conference call regarding second
quarter 2021 earnings on Tuesday, August 3, 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, Horizon Global’s 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 ask to join the
Horizon Global call.
The second quarter 2021 results and supplemental materials,
including a presentation in PDF format, will be distributed before
the market opens on August 3, 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 10155616. The telephone replay will be available
approximately two hours after the end of the call and continue
through August 17, 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 4,350 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. Forward-looking statements speak only as of the
date they are made and give our current expectations or forecasts
of future events. 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,
including, without limitation, supply chain and logistics issues;
liabilities and restrictions imposed by the Company’s debt
instruments, including the Company’s ability to comply with the
applicable financial covenants related thereto; market demand;
competitive factors; supply constraints and shipping disruptions;
material, logistics and energy costs, including the increased
material costs resulting from the COVID-19 pandemic; 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; and other risks that are
discussed in Part I, Item 1A, “Risk Factors.” in the Company’s
Annual Report on Form 10-K for the twelve months ended December 31,
2020. The risks described in the Company’s Annual Report on Form
10-K 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)
June 30, 2021
December 31,
2020
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
24,680
$
44,970
Restricted cash
5,510
5,720
Receivables, net
116,240
87,420
Inventories
144,360
115,320
Prepaid expenses and other current
assets
12,100
11,510
Total current assets
302,890
264,940
Property and equipment, net
73,520
74,090
Operating lease right-of-use assets
40,400
47,310
Goodwill
—
3,360
Other intangibles, net
54,890
58,230
Deferred income taxes
1,280
1,280
Other assets
6,410
7,280
Total assets
$
479,390
$
456,490
Liabilities and Shareholders'
Equity
Current liabilities:
Short-term borrowings and current
maturities, long-term debt
$
11,990
$
14,120
Accounts payable
111,940
99,520
Short-term operating lease liabilities
11,130
12,180
Accrued liabilities
59,750
59,100
Total current liabilities
194,810
184,920
Gross long-term debt
284,040
251,960
Unamortized debt issuance costs and
discount
(31,460
)
(20,570
)
Long-term debt
252,580
231,390
Deferred income taxes
4,080
3,130
Long-term operating lease liabilities
39,410
46,340
Other long-term liabilities
11,000
14,560
Total liabilities
501,880
480,340
Total Horizon Global shareholders'
deficit
(16,660
)
(18,690
)
Noncontrolling interest
(5,830
)
(5,160
)
Total shareholders' deficit
(22,490
)
(23,850
)
Total liabilities and shareholders'
equity
$
479,390
$
456,490
Horizon Global
Corporation
Condensed Consolidated
Statements of Operations
(unaudited - dollars in
thousands, except share and per share data)
Three Months Ended June
30,
Six Months Ended June
30,
2021
2020
2021
2020
Net sales
$
222,120
$
120,490
$
421,310
$
283,740
Cost of sales
(174,830
)
(102,440
)
(333,460
)
(239,440
)
Gross profit
47,290
18,050
87,850
44,300
Selling, general and administrative
expenses
(35,960
)
(26,020
)
(69,740
)
(58,950
)
Operating profit (loss)
11,330
(7,970
)
18,110
(14,650
)
Other expense, net
(1,990
)
(450
)
(4,220
)
(2,120
)
Loss on debt extinguishment
—
—
(11,650
)
—
Interest expense
(6,980
)
(8,220
)
(14,030
)
(16,410
)
Income (loss) from continuing operations
before income tax
2,360
(16,640
)
(11,790
)
(33,180
)
Income tax expense
(1,400
)
(80
)
(2,400
)
(70
)
Net income (loss) from continuing
operations
960
(16,720
)
(14,190
)
(33,250
)
Loss from discontinued operations, net of
income tax
—
—
—
(500
)
Net income (loss)
960
(16,720
)
(14,190
)
(33,750
)
Less: Net loss attributable to
noncontrolling interest
(330
)
(380
)
(670
)
(670
)
Net income (loss) attributable to Horizon
Global
$
1,290
$
(16,340
)
$
(13,520
)
$
(33,080
)
Net income (loss) per share
attributable to Horizon Global:
Basic:
Continuing operations
$
0.05
$
(0.64
)
$
(0.50
)
$
(1.28
)
Discontinued operations
—
—
—
(0.02
)
Total
$
0.05
$
(0.64
)
$
(0.50
)
$
(1.30
)
Diluted:
Continuing operations
$
0.04
$
(0.64
)
$
(0.50
)
$
(1.28
)
Discontinued operations
—
—
—
(0.02
)
Total
$
0.04
$
(0.64
)
$
(0.50
)
$
(1.30
)
Weighted average common shares
outstanding:
Basic
27,022,652
25,618,793
26,883,818
25,509,794
Diluted
32,747,203
25,618,793
26,883,818
25,509,794
Horizon Global
Corporation
Condensed Consolidated
Statements of Cash Flows
(unaudited - dollars in
thousands)
Six Months Ended June
30,
2021
2020
Cash Flows from Operating
Activities:
Net loss
$
(14,190
)
$
(33,750
)
Less: Net loss from discontinued
operations
—
(500
)
Net loss from continuing operations
(14,190
)
(33,250
)
Adjustments to reconcile net loss from
continuing operations to net cash (used for) provided by operating
activities:
Depreciation
7,750
7,100
Amortization of intangible assets
2,970
3,430
Loss on debt extinguishment
11,650
—
Amortization of original issuance discount
and debt issuance costs
5,400
8,100
Deferred income taxes
1,120
10
Non-cash compensation expense
1,710
1,320
Paid-in-kind interest
650
3,660
Increase in receivables
(30,630
)
(16,780
)
(Increase) decrease in inventories
(31,350
)
19,270
Increase in prepaid expenses and other
assets
(440
)
(2,890
)
Increase in accounts payable and accrued
liabilities
15,960
13,460
Other, net
1,780
1,470
Net cash (used for) provided by operating
activities for continuing operations
(27,620
)
4,900
Cash Flows from Investing
Activities:
Capital expenditures
(9,940
)
(5,450
)
Other, net
10
70
Net cash used for investing activities for
continuing operations
(9,930
)
(5,380
)
Cash Flows from Financing
Activities:
Proceeds from borrowings on credit
facilities
2,190
6,290
Repayments of borrowings on credit
facilities
(1,300
)
(1,210
)
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
20,000
54,680
Repayments of borrowings on Revolving
Credit Facility
—
(19,180
)
Proceeds from ABL revolving debt, net of
issuance costs
—
8,000
Repayments of borrowings on ABL revolving
debt
—
(27,920
)
Proceeds from Paycheck Protection Program
Loan
—
8,670
Proceeds from issuance of common stock
warrants
16,300
—
Proceeds from exercise of common stock
warrants
420
—
Other, net
(640
)
(10
)
Net cash provided by financing activities
for continuing operations
17,330
29,320
Discontinued Operations:
Net cash used for discontinued
operations
—
(500
)
Effect of exchange rate changes on
cash, cash equivalents and restricted cash
(280
)
(110
)
Cash, Cash Equivalents and Restricted
Cash:
(Decrease) increase for the period
(20,500
)
28,230
At beginning of period
50,690
11,770
At end of period
$
30,190
$
40,000
Supplemental disclosure of cash flow
information:
Cash paid for interest
$
10,860
$
4,370
Cash paid for taxes, net of refunds
$
1,430
$
440
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 (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 for our operating
segments for the three months ended June 30, 2021 and 2020:
Three Months Ended June 30,
2021
Three Months Ended June 30,
2020
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
$
1,290
$
(16,340
)
$
17,630
Net loss attributable to noncontrolling
interest
(330
)
(380
)
50
Net income (loss)
$
960
$
(16,720
)
$
17,680
Interest expense
6,980
8,220
(1,240
)
Income tax expense
1,400
80
1,320
Depreciation and amortization
5,220
5,470
(250
)
EBITDA
$
15,980
$
5,040
$
(6,460
)
$
14,560
$
5,350
$
(3,250
)
$
(5,050
)
$
(2,950
)
$
17,510
Net loss attributable to noncontrolling
interest
—
330
—
330
—
380
—
380
(50
)
Restructuring, relocation and related
business disruption costs
20
90
(40
)
70
410
30
210
650
(580
)
Non-cash stock compensation
—
—
850
850
—
—
900
900
(50
)
Loss (gain) on business divestitures and
other assets
2,480
(10
)
—
2,470
240
—
40
280
2,190
Debt issuance costs
—
—
190
190
—
—
560
560
(370
)
Unrealized foreign currency remeasurement
costs
—
(340
)
(110
)
(450
)
(100
)
690
(370
)
220
(670
)
Adjusted EBITDA
$
18,480
$
5,110
$
(5,570
)
$
18,020
$
5,900
$
(2,150
)
$
(3,710
)
$
40
$
17,980
The following table summarizes Adjusted EBITDA for our operating
segments for the three months ended June 30, 2021 and 2019:
Three Months Ended June 30,
2021
Three Months Ended June 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 (loss) attributable to
Horizon Global
$
1,290
$
(8,080
)
$
9,370
Net loss attributable to noncontrolling
interest
(330
)
(60
)
(270
)
Net income (loss)
$
960
$
(8,140
)
$
9,100
Interest expense
6,980
15,320
(8,340
)
Income tax expense (benefit)
1,400
(1,040
)
2,440
Depreciation and amortization
5,220
5,310
(90
)
EBITDA
$
15,980
$
5,040
$
(6,460
)
$
14,560
$
11,220
$
5,220
$
(4,990
)
$
11,450
$
3,110
Net loss attributable to noncontrolling
interest
—
330
—
330
—
60
—
60
270
Income from discontinued operations, net
of tax
—
—
—
—
—
—
(2,990
)
(2,990
)
2,990
Severance
—
—
—
—
(270
)
20
—
(250
)
250
Restructuring, relocation and related
business disruption costs
20
90
(40
)
70
540
(10
)
—
530
(460
)
Non-cash stock compensation
—
—
850
850
—
—
600
600
250
Loss (gain) on business divestitures and
other assets
2,480
(10
)
—
2,470
430
—
1,320
1,750
720
Board transition support
—
—
—
—
—
—
760
760
(760
)
Debt issuance costs
—
—
190
190
—
—
1,300
1,300
(1,110
)
Unrealized foreign currency remeasurement
costs
—
(340
)
(110
)
(450
)
150
(680
)
(190
)
(720
)
270
Other
—
—
—
—
(10
)
(200
)
—
(210
)
210
Adjusted EBITDA
$
18,480
$
5,110
$
(5,570
)
$
18,020
$
12,060
$
4,410
$
(4,190
)
$
12,280
$
5,740
Segment Information
The following table summarizes financial information for our
operating segments for the three months ended June 30, 2021 and
2020:
Three Months Ended June
30,
Change
2021
2020
$
%
(dollars in thousands)
Net Sales
Horizon Americas
$
128,380
$
74,120
$
54,260
73.2
%
Horizon Europe-Africa
93,740
46,370
47,370
102.2
%
Total
$
222,120
$
120,490
$
101,630
84.3
%
Gross Profit
Horizon Americas
$
35,080
$
18,140
$
16,940
93.4
%
Horizon Europe-Africa
12,210
(90
)
12,300
13,666.7
%
Total
$
47,290
$
18,050
$
29,240
162.0
%
Operating Profit (Loss)
Horizon Americas
$
16,760
$
3,430
$
13,330
388.6
%
Horizon Europe-Africa
1,240
(5,970
)
7,210
120.8
%
Corporate
(6,670
)
(5,430
)
(1,240
)
(22.8
%)
Total
$
11,330
$
(7,970
)
$
19,300
242.2
%
Adjusted EBITDA
Horizon Americas
$
18,480
$
5,900
$
12,580
213.2
%
Horizon Europe-Africa
5,110
(2,150
)
7,260
337.7
%
Corporate
(5,570
)
(3,710
)
(1,860
)
(50.1
%)
Total
$
18,020
$
40
$
17,980
44,950.0
%
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
June 30, 2021
Horizon Americas
Horizon
Europe-Africa
Consolidated
Revenue growth as reported
73.2
%
102.2
%
84.3
%
Less: currency impact
—
%
17.0
%
6.5
%
Revenue growth at constant currency
73.2
%
85.1
%
77.8
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210803005332/en/
Jeff Tryka, CFA Investor Relations, Lambert & Co. (616)
295-2509 jtryka@horizonglobal.com
Horizon Global (NYSE:HZN)
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