Horizon Global Reports Financial Results for Third Quarter 2021
Horizon Global Corporation (NYSE: HZN) reported third quarter 2021 net sales of $196.5 million, down $5.0 million from Q3 2020. Gross profit fell to $38.8 million, reflecting a 19.7% margin, down from 21.5% last year. The operating profit was $6.3 million, a decrease of $2.3 million. The company reported a net loss of $2.8 million, worsening by $4.4 million from last year. Adjusted EBITDA also decreased to $13.0 million, down $3.1 million. Cash availability decreased to $54.9 million, while gross debt rose to $296.3 million.
- Implemented targeted actions to counteract macroeconomic challenges.
- Increased e-commerce and industrial sales channels by $3.3 million in Horizon Americas.
- Operational improvement initiatives continue to progress toward double-digit margins.
- Net sales decline due to rising commodity costs and supply chain constraints.
- Gross profit decreased by $4.6 million year-over-year.
- Operating loss in Horizon Europe-Africa of $0.2 million indicates ongoing challenges.
Third Quarter Highlights
-
Net sales of
$196.5 million -
$5.0 million
-
-
Gross profit of
$38.8 million -
$4.6 million
-
-
Gross profit margin(4) decreased to
19.7% from21.5% in the third quarter of 2020 -
Operating profit of
$6.3 million -
$2.3 million
-
-
Net loss from continuing operations of
$2.8 million -
$4.4 million
-
-
Adjusted EBITDA(1) of
$13.0 million -
$3.1 million
-
“When we launched our turnaround plan in late 2019, we set out to build a strong global organization that would not waver regardless of the external business climate,” stated
2021 Third Quarter Segment Results
Horizon
Horizon
Balance Sheet and Liquidity. Cash and Availability(2) was
Summary
Gohl commented, “I want to thank the global team for its extraordinary efforts so far in 2021. We have delivered exceptional year-to-date results and, despite a challenging macroeconomic environment, continue to improve this business day in and day out. Our sights remain on double-digit margins, and we believe this target is achievable through the continued execution of operational improvement initiatives across our global operations, the optimization of our
Conference Call Details
The third quarter 2021 results and supplemental materials, including a presentation in PDF format, will be distributed before the market opens on
The conference call will be webcast simultaneously and in its entirety through the
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
About
Headquartered in
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; the overall impact of global supply chain complexities on the Company and its business, including delays in sourcing key components and other supply constraints, longer transport times, especially for container ships and
(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 |
(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”. |
|
||||||||
Condensed Consolidated Balance Sheets |
||||||||
(dollars in thousands) |
||||||||
|
|
|
|
|
||||
|
|
(unaudited) |
|
|
||||
Assets |
|
|
|
|
||||
Current assets: |
|
|
|
|
||||
Cash and cash equivalents |
|
$ |
17,350 |
|
|
$ |
44,970 |
|
Restricted cash |
|
5,500 |
|
|
5,720 |
|
||
Receivables, net |
|
96,320 |
|
|
87,420 |
|
||
Inventories |
|
164,270 |
|
|
115,320 |
|
||
Prepaid expenses and other current assets |
|
13,510 |
|
|
11,510 |
|
||
Total current assets |
|
296,950 |
|
|
264,940 |
|
||
Property and equipment, net |
|
72,940 |
|
|
74,090 |
|
||
Operating lease right-of-use assets |
|
38,290 |
|
|
47,310 |
|
||
|
|
— |
|
|
3,360 |
|
||
Other intangibles, net |
|
52,870 |
|
|
58,230 |
|
||
Deferred income taxes |
|
1,220 |
|
|
1,280 |
|
||
Other assets |
|
6,060 |
|
|
7,280 |
|
||
Total assets |
|
$ |
468,330 |
|
|
$ |
456,490 |
|
Liabilities and Shareholders' Equity |
|
|
|
|
||||
Current liabilities: |
|
|
|
|
||||
Short-term borrowings and current maturities, long-term debt |
|
$ |
5,940 |
|
|
$ |
14,120 |
|
Accounts payable |
|
111,270 |
|
|
99,520 |
|
||
Short-term operating lease liabilities |
|
11,120 |
|
|
12,180 |
|
||
Accrued liabilities |
|
53,340 |
|
|
59,100 |
|
||
Total current liabilities |
|
181,670 |
|
|
184,920 |
|
||
Gross long-term debt |
|
290,340 |
|
|
251,960 |
|
||
Unamortized debt issuance costs and discount |
|
(29,000 |
) |
|
(20,570 |
) |
||
Long-term debt |
|
261,340 |
|
|
231,390 |
|
||
Deferred income taxes |
|
3,650 |
|
|
3,130 |
|
||
Long-term operating lease liabilities |
|
36,970 |
|
|
46,340 |
|
||
Other long-term liabilities |
|
10,630 |
|
|
14,560 |
|
||
Total liabilities |
|
494,260 |
|
|
480,340 |
|
||
Total |
|
(19,800 |
) |
|
(18,690 |
) |
||
Noncontrolling interest |
|
(6,130 |
) |
|
(5,160 |
) |
||
Total shareholders' deficit |
|
(25,930 |
) |
|
(23,850 |
) |
||
Total liabilities and shareholders' equity |
|
$ |
468,330 |
|
|
$ |
456,490 |
|
|
||||||||||||||||
Condensed Consolidated Statements of Operations |
||||||||||||||||
(unaudited - dollars in thousands, except share and per share data) |
||||||||||||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
||||||||
Net sales |
|
$ |
196,540 |
|
|
$ |
201,630 |
|
|
$ |
617,850 |
|
|
$ |
485,370 |
|
Cost of sales |
|
(157,780 |
) |
|
(158,260 |
) |
|
(491,240 |
) |
|
(397,700 |
) |
||||
Gross profit |
|
38,760 |
|
|
43,370 |
|
|
126,610 |
|
|
87,670 |
|
||||
Selling, general and administrative expenses |
|
(32,430 |
) |
|
(34,810 |
) |
|
(102,170 |
) |
|
(93,760 |
) |
||||
Operating profit (loss) |
|
6,330 |
|
|
8,560 |
|
|
24,440 |
|
|
(6,090 |
) |
||||
Other (expense) income, net |
|
(1,720 |
) |
|
690 |
|
|
(5,940 |
) |
|
(1,430 |
) |
||||
Loss on debt extinguishment |
|
— |
|
|
— |
|
|
(11,650 |
) |
|
— |
|
||||
Interest expense |
|
(6,970 |
) |
|
(7,560 |
) |
|
(21,000 |
) |
|
(23,970 |
) |
||||
(Loss) income from continuing operations before income tax |
|
(2,360 |
) |
|
1,690 |
|
|
(14,150 |
) |
|
(31,490 |
) |
||||
Income tax expense |
|
(410 |
) |
|
(100 |
) |
|
(2,810 |
) |
|
(170 |
) |
||||
Net (loss) income from continuing operations |
|
(2,770 |
) |
|
1,590 |
|
|
(16,960 |
) |
|
(31,660 |
) |
||||
Loss from discontinued operations, net of income tax |
|
— |
|
|
— |
|
|
— |
|
|
(500 |
) |
||||
Net (loss) income |
|
(2,770 |
) |
|
1,590 |
|
|
(16,960 |
) |
|
(32,160 |
) |
||||
Less: Net loss attributable to noncontrolling interest |
|
(300 |
) |
|
(340 |
) |
|
(970 |
) |
|
(1,010 |
) |
||||
Net (loss) income attributable to |
|
$ |
(2,470 |
) |
|
$ |
1,930 |
|
|
$ |
(15,990 |
) |
|
$ |
(31,150 |
) |
Net (loss) income per share attributable to |
|
|
|
|
|
|
|
|
||||||||
Basic: |
|
|
|
|
|
|
|
|
||||||||
Continuing operations |
|
$ |
(0.09 |
) |
|
$ |
0.07 |
|
|
$ |
(0.59 |
) |
|
$ |
(1.19 |
) |
Discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
(0.02 |
) |
||||
Total |
|
$ |
(0.09 |
) |
|
$ |
0.07 |
|
|
$ |
(0.59 |
) |
|
$ |
(1.21 |
) |
Diluted: |
|
|
|
|
|
|
|
|
||||||||
Continuing operations |
|
$ |
(0.09 |
) |
|
$ |
0.06 |
|
|
$ |
(0.59 |
) |
|
$ |
(1.19 |
) |
Discontinued operations |
|
— |
|
|
— |
|
|
— |
|
|
(0.02 |
) |
||||
Total |
|
$ |
(0.09 |
) |
|
$ |
0.06 |
|
|
$ |
(0.59 |
) |
|
$ |
(1.21 |
) |
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
||||||||
Basic |
|
27,286,600 |
|
|
25,939,741 |
|
|
27,019,554 |
|
|
25,651,789 |
|
||||
Diluted |
|
27,286,600 |
|
|
33,329,106 |
|
|
27,019,554 |
|
|
25,651,789 |
|
||||
|
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(unaudited - dollars in thousands) |
||||||||
|
|
Nine Months Ended |
||||||
|
|
2021 |
|
2020 |
||||
Cash Flows from Operating Activities: |
|
|
|
|
||||
Net loss |
|
$ |
(16,960 |
) |
|
$ |
(32,160 |
) |
Less: Net loss from discontinued operations |
|
— |
|
|
(500 |
) |
||
Net loss from continuing operations |
|
(16,960 |
) |
|
(31,660 |
) |
||
|
|
|
|
|
||||
Adjustments to reconcile net loss from continuing operations to net cash (used for) provided by operating activities: |
|
|
|
|
||||
Depreciation |
|
11,710 |
|
|
11,110 |
|
||
Amortization of intangible assets |
|
4,220 |
|
|
5,040 |
|
||
Loss on debt extinguishment |
|
11,650 |
|
|
— |
|
||
Amortization of original issuance discount and debt issuance costs |
|
8,010 |
|
|
11,450 |
|
||
Deferred income taxes |
|
730 |
|
|
(820 |
) |
||
Non-cash compensation expense |
|
2,590 |
|
|
2,190 |
|
||
Paid-in-kind interest |
|
650 |
|
|
6,280 |
|
||
Increase in receivables |
|
(12,360 |
) |
|
(35,170 |
) |
||
(Increase) decrease in inventories |
|
(52,700 |
) |
|
30,100 |
|
||
Increase in prepaid expenses and other assets |
|
(1,910 |
) |
|
(4,080 |
) |
||
Increase in accounts payable and accrued liabilities |
|
11,820 |
|
|
29,800 |
|
||
Other, net |
|
1,910 |
|
|
(50 |
) |
||
Net cash (used for) provided by operating activities from continuing operations |
|
(30,640 |
) |
|
24,190 |
|
||
Cash Flows from Investing Activities: |
|
|
|
|
||||
Capital expenditures |
|
(14,730 |
) |
|
(8,090 |
) |
||
Other, net |
|
20 |
|
|
70 |
|
||
Net cash used for investing activities from continuing operations |
|
(14,710 |
) |
|
(8,020 |
) |
||
Cash Flows from Financing Activities: |
|
|
|
|
||||
Proceeds from borrowings on credit facilities |
|
2,870 |
|
|
6,440 |
|
||
Repayments of borrowings on credit facilities |
|
(1,960 |
) |
|
(3,330 |
) |
||
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 |
|
28,680 |
|
|
54,680 |
|
||
Repayments of borrowings on Revolving Credit Facility |
|
(8,000 |
) |
|
(28,300 |
) |
||
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 |
|
(650 |
) |
|
(320 |
) |
||
Net cash provided by financing activities from continuing operations |
|
18,020 |
|
|
17,920 |
|
||
Discontinued Operations: |
|
|
|
|
||||
Net cash used for discontinued operations |
|
— |
|
|
(500 |
) |
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(510 |
) |
|
290 |
|
||
Cash, Cash Equivalents and Restricted Cash: |
|
|
|
|
||||
(Decrease) increase for the period |
|
(27,840 |
) |
|
33,880 |
|
||
At beginning of period |
|
50,690 |
|
|
11,770 |
|
||
At end of period |
|
$ |
22,850 |
|
|
$ |
45,650 |
|
Supplemental disclosure of cash flow information: |
|
|
|
|
||||
Cash paid for interest |
|
$ |
16,130 |
|
|
$ |
4,990 |
|
Cash paid for taxes, net of refunds |
|
$ |
2,010 |
|
|
$ |
990 |
|
Appendix I
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
Adjusted EBITDA is defined as net income (loss) attributable to
The following table summarizes Adjusted EBITDA for our operating segments for the three months ended
|
|
Three Months Ended |
|
Three Months Ended |
|
Variance |
||||||||||||||||||||||||||||
|
|
Horizon
|
|
Horizon
|
|
Corporate |
|
Consolidated |
|
Horizon
|
|
Horizon
|
|
Corporate |
|
Consolidated |
|
Consolidated |
||||||||||||||||
|
|
(dollars in thousands) |
|
(dollars in thousands) |
||||||||||||||||||||||||||||||
Net (loss) income attributable to |
|
|
|
|
|
|
|
$ |
(2,470 |
) |
|
|
|
|
|
|
|
$ |
1,930 |
|
|
$ |
(4,400 |
) |
||||||||||
Net loss attributable to noncontrolling interest |
|
|
|
|
|
|
|
(300 |
) |
|
|
|
|
|
|
|
(340 |
) |
|
40 |
|
|||||||||||||
Net (loss) income |
|
|
|
|
|
|
|
$ |
(2,770 |
) |
|
|
|
|
|
|
|
$ |
1,590 |
|
|
$ |
(4,360 |
) |
||||||||||
Interest expense |
|
|
|
|
|
|
|
6,970 |
|
|
|
|
|
|
|
|
7,560 |
|
|
(590 |
) |
|||||||||||||
Income tax expense |
|
|
|
|
|
|
|
410 |
|
|
|
|
|
|
|
|
100 |
|
|
310 |
|
|||||||||||||
Depreciation and amortization |
|
|
|
|
|
|
|
5,210 |
|
|
|
|
|
|
|
|
5,620 |
|
|
(410 |
) |
|||||||||||||
EBITDA |
|
$ |
14,050 |
|
|
$ |
2,030 |
|
$ |
(6,260 |
) |
|
$ |
9,820 |
|
|
$ |
13,870 |
|
$ |
7,490 |
|
|
$ |
(6,490 |
) |
|
$ |
14,870 |
|
|
$ |
(5,050 |
) |
Net loss attributable to noncontrolling interest |
|
— |
|
|
300 |
|
— |
|
|
300 |
|
|
— |
|
340 |
|
|
— |
|
|
340 |
|
|
(40 |
) |
|||||||||
Severance |
|
50 |
|
|
— |
|
— |
|
|
50 |
|
|
— |
|
(170 |
) |
|
— |
|
|
(170 |
) |
|
220 |
|
|||||||||
Restructuring, relocation and related business disruption costs |
|
60 |
|
|
30 |
|
10 |
|
|
100 |
|
|
250 |
|
(20 |
) |
|
150 |
|
|
380 |
|
|
(280 |
) |
|||||||||
Non-cash stock compensation |
|
— |
|
|
— |
|
880 |
|
|
880 |
|
|
— |
|
— |
|
|
870 |
|
|
870 |
|
|
10 |
|
|||||||||
Loss (gain) on business divestitures and other assets |
|
300 |
|
|
10 |
|
10 |
|
|
320 |
|
|
420 |
|
— |
|
|
(20 |
) |
|
400 |
|
|
(80 |
) |
|||||||||
Debt issuance costs |
|
— |
|
|
70 |
|
100 |
|
|
170 |
|
|
— |
|
— |
|
|
530 |
|
|
530 |
|
|
(360 |
) |
|||||||||
Unrealized foreign currency remeasurement costs |
|
(10 |
) |
|
950 |
|
400 |
|
|
1,340 |
|
|
980 |
|
(1,580 |
) |
|
(500 |
) |
|
(1,100 |
) |
|
2,440 |
|
|||||||||
Adjusted EBITDA |
|
$ |
14,450 |
|
|
$ |
3,390 |
|
$ |
(4,860 |
) |
|
$ |
12,980 |
|
|
$ |
15,520 |
|
$ |
6,060 |
|
|
$ |
(5,460 |
) |
|
$ |
16,120 |
|
|
$ |
(3,140 |
) |
Segment Information
The following table summarizes financial information for our operating segments for the three months ended
|
|
Three Months Ended |
|
Change |
|||||||||||
|
|
2021 |
|
2020 |
|
$ |
|
% |
|||||||
|
|
(dollars in thousands) |
|||||||||||||
|
|
|
|
|
|
|
|
|
|||||||
Horizon |
|
$ |
115,850 |
|
|
$ |
119,140 |
|
|
$ |
(3,290 |
) |
|
(2.8 |
%) |
Horizon |
|
80,690 |
|
|
82,490 |
|
|
(1,800 |
) |
|
(2.2 |
%) |
|||
Total |
|
$ |
196,540 |
|
|
$ |
201,630 |
|
|
$ |
(5,090 |
) |
|
(2.5 |
%) |
Gross Profit |
|
|
|
|
|
|
|
|
|||||||
Horizon |
|
$ |
29,310 |
|
|
$ |
32,960 |
|
|
$ |
(3,650 |
) |
|
(11.1 |
%) |
Horizon |
|
9,450 |
|
|
10,410 |
|
|
(960 |
) |
|
(9.2 |
%) |
|||
Total |
|
$ |
38,760 |
|
|
$ |
43,370 |
|
|
$ |
(4,610 |
) |
|
(10.6 |
%) |
Operating Profit (Loss) |
|
|
|
|
|
|
|
|
|||||||
Horizon |
|
$ |
12,400 |
|
|
$ |
13,170 |
|
|
$ |
(770 |
) |
|
(5.8 |
%) |
Horizon |
|
(150 |
) |
|
2,440 |
|
|
(2,590 |
) |
|
(106.1 |
%) |
|||
Corporate |
|
(5,920 |
) |
|
(7,050 |
) |
|
1,130 |
|
|
16.0 |
% |
|||
Total |
|
$ |
6,330 |
|
|
$ |
8,560 |
|
|
$ |
(2,230 |
) |
|
(26.1 |
%) |
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|||||||
Horizon |
|
$ |
14,450 |
|
|
$ |
15,520 |
|
|
$ |
(1,070 |
) |
|
(6.9 |
%) |
Horizon |
|
3,390 |
|
|
6,060 |
|
|
(2,670 |
) |
|
(44.1 |
%) |
|||
Corporate |
|
(4,860 |
) |
|
(5,460 |
) |
|
600 |
|
|
11.0 |
% |
|||
Total |
|
$ |
12,980 |
|
|
$ |
16,120 |
|
|
$ |
(3,140 |
) |
|
(19.5 |
%) |
Appendix II
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
|
|
Three Months Ended
|
|||||||
|
|
Horizon
|
|
Horizon
|
|
Consolidated |
|||
Revenue growth as reported |
|
(2.8 |
)% |
|
(2.2 |
)% |
|
(2.5 |
)% |
Less: currency impact |
|
— |
% |
|
1.4 |
% |
|
0.6 |
% |
Revenue growth at constant currency |
|
(2.8 |
)% |
|
(3.6 |
)% |
|
(3.1 |
)% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20211104005288/en/
Investor
(616) 295-2509
jtryka@horizonglobal.com
Source:
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