EX-99.1 2 hzn_093017xexhibit991.htm EXHIBIT 99.1 PRESS RELEASE Exhibit


horizonlogoscmya02.jpg
FOR IMMEDIATE RELEASE
 
 
CONTACT:
Christi Cowdin
 
 
 
Director, Corporate Communications & Investor Relations
 
 
 
(248) 593-8810
 
 
 
ccowdin@horizonglobal.com


HORIZON GLOBAL REPORTS FINANCIAL RESULTS FOR THIRD QUARTER 2017 AND REAFFIRMS FULL-YEAR 2017 EARNINGS PER SHARE GUIDANCE


Business Update
▪
Third quarter diluted earnings per share of $0.27
*
Third quarter adjusted diluted earnings per share(1) of $0.38
▪
Net sales increased from $151.7 million to $240.1 million, up 58.3%
▪
Westfalia integration and synergies on track
▪
Full-year 2017 earnings per share guidance reaffirmed
*
Diluted earnings per share between $0.50 and $0.60
*
Adjusted diluted earnings per share(2) between $1.04 and $1.14

Troy, Michigan, October 31, 2017 — Horizon Global Corporation (NYSE: HZN), the world’s leading manufacturer of branded towing and trailering equipment, today reported third quarter results, which demonstrated a strong commitment to driving progress against the Company’s key financial priorities.
“We delivered solid results. Our revenue and earnings per share met our expectations for third quarter, with organic growth offsetting the impact of the recent hurricanes and softness in the U.S. retail channel,” said Mark Zeffiro, President and Chief Executive Officer of Horizon Global. “Total Company revenue grew over 58% during the quarter, supported by growth in every region plus the acquired revenue attributable to Westfalia. Horizon Americas e-commerce grew at a double-digit pace and our OE business continued to expand on a global scale.
“We continue to execute on our 2017 initiatives, highlighted by the continued achievement of synergies in Europe, and we are confident we will achieve the previously stated €9 million target for the year. Horizon Asia-Pacific continued its trend of strong performance, delivering a third consecutive quarter of double-digit revenue growth.
“Our team’s focus on global collaboration is driving operational efficiency and product innovation, which improve our business prospects, create growth opportunities and increase profitability. As our global business continues to evolve, we see many positive trends continuing in our industry, including increasing truck, SUV and CUV global sales, from which we expect to benefit.”

2017 Third Quarter Segment Highlights
Horizon Americas. Net sales increased 4.3 percent, with contributions coming from OE, e-commerce and aftermarket channels. Operating profit decreased $2.0 million to $10.9 million, or 9.5 percent of net sales, due to higher material costs in advance of fully realized pricing actions and costs associated with protecting the Company’s intellectual property, which more than offset a favorable product mix.
Horizon Europe-Africa. Net sales increased by $74.9 million, driven by the acquisition of Westfalia. Strong growth in the OE channel offset challenges in the aftermarket channel. The Company continues to realign its strategy in the aftermarket channel in this region. Operating profit increased $2.5 million to $2.7 million, or 3.0 percent of net sales,

1


primarily attributable to the acquisition of Westfalia and related integration savings. Adjusted operating profit(3) increased to $4.0 million, or 4.5 percent of net sales.
Horizon Asia-Pacific. Net sales increased 31.4 percent, or 27.2 percent on a constant currency basis(4), attributable, in part, to a regional bolt-on acquisition and increased volume in the industrial channel. Operating profit increased $2.1 million to $5.9 million, or 16.0 percent of net sales, as higher sales and operational improvements in the region’s manufacturing facilities more than offset acquisition-related costs.

Outlook

For full-year 2017, the Company expects:
▪Revenue growth of 38 to 41 percent; increased
▪Operating profit between $38.2 million and $44.2 million, up 320 to 380 basis points; revised
*
Adjusted operating profit(3) between $53 million and $59 million; unchanged, and up 20 to 70 basis points; revised
▪Operating cash flow between $40.0 million and $50.0 million; unchanged
▪Diluted earnings per share between $0.50 and $0.60; unchanged
*Adjusted diluted earnings per share(3) between $1.04 and $1.14; unchanged
Zeffiro concluded, “As we look toward 2018, we believe the momentum from our revenue and margin initiatives supports double-digit earnings per share growth. We expect to continue driving our business forward in all of our geographies, as we also focus on our key strategic priorities and continuing to build the best team in our industry.”
Conference Call Details
Horizon Global will host a conference call regarding third quarter 2017 earnings on Tuesday, October 31, 2017 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 (844) 711-8052 and from outside the U.S. at (832) 900-4641. Please use the conference identification number 97868808.
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 (800) 585-8367 and from outside the U.S. at (404) 537-3406. Please use the conference identification number 97868808. The telephone replay will be available approximately two hours after the end of the call and continue through November 14, 2017.
About Horizon Global
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, Australia 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: BULLDOG, Draw-Tite, Fulton, Hayman Reese, Reese, ROLA, Tekonsha, and Westfalia. Horizon Global has approximately 4,700 employees in 67 facilities across 21 countries.
For more information, please visit www.horizonglobal.com.

2


Safe Harbor Statement
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 imposed by the Company’s debt instruments; market demand; competitive factors; supply constraints; material and energy costs; technology factors; litigation; government and regulatory actions; the Company’s accounting policies; future trends; general economic and currency conditions; various conditions specific to the Company’s business and industry; the spin-off from TriMas Corporation; risks inherent in the achievement of cost synergies and timing thereof in connection with the Westfalia acquisition, including whether the acquisition will be accretive; the Company’s ability to promptly and effectively integrate Westfalia; the performance and costs of integration of Westfalia; the timing and amount of repurchases of the Company’s common stock, if any; 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)
Appendix I details certain costs, expenses, other charges, gains or income, collectively described as “Special Items,” that are included in the determination of net income under GAAP, but that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company presents adjusted net income and adjusted diluted earnings per share excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends.
(2)
The Company provides guidance for adjusted operating profit and adjusted diluted earnings per share, which exclude “Special Items,” that are included in the determination of operating profit and diluted earnings per share under GAAP. “Special Items” are certain costs, expenses, other charges, gains or income, that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. See Appendix IV for reconciliation of the non-GAAP financial measures the Company provides guidance on to the most comparable GAAP measure.
(3)
Please refer to “Company and Business Segment Financial Information,” which details certain costs, expenses, other charges, gains or income, collectively described as ‘’Special Items,’’ that are included in the determination of operating profit under GAAP, but that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company presents adjusted operating profit excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends.  Further, the Company presents adjusted operating profit excluding these Special Items to provide investors with a better understanding of the Company’s view of our results as compared to prior periods.
(4)
We evaluate growth 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 growth, 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.


3


Horizon Global Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands)


 
 
September 30,
2017
 
December 31,
2016
 
 
(unaudited)
 
 
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
20,470

 
$
50,240

Receivables, net
 
112,360

 
77,570

Inventories
 
162,660

 
146,020

Prepaid expenses and other current assets
 
10,200

 
12,160

Total current assets
 
305,690

 
285,990

Property and equipment, net
 
110,830

 
93,760

Goodwill
 
145,910

 
120,190

Other intangibles, net
 
92,780

 
86,720

Deferred income taxes
 
10,790

 
9,370

Other assets
 
10,810

 
17,340

Total assets
 
$
676,810

 
$
613,370

Liabilities and Shareholders' Equity
 
 
 
 
Current liabilities:
 
 
 
 
Current maturities, long-term debt
 
$
9,510

 
$
22,900

Accounts payable
 
111,380

 
111,450

Accrued liabilities
 
68,060

 
63,780

Total current liabilities
 
188,950

 
198,130

Long-term debt
 
269,710

 
327,040

Deferred income taxes
 
31,730

 
25,730

Other long-term liabilities
 
28,790

 
30,410

Total liabilities
 
519,180

 
581,310

Commitments and contingent liabilities
 
—

 
—

Total Horizon Global shareholders' equity
 
158,830

 
32,360

Noncontrolling interest
 
(1,200
)
 
(300
)
Total shareholders' equity
 
157,630

 
32,060

Total liabilities and shareholders' equity
 
$
676,810

 
$
613,370




4


 
Horizon Global Corporation
Condensed Consolidated Statements of Income
(Unaudited - dollars in thousands, except per share amounts)


 
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
Net sales
 
$
240,120

 
$
151,720

 
$
696,990

 
$
465,590

Cost of sales
 
(181,700
)
 
(109,210
)
 
(525,510
)
 
(339,760
)
Gross profit
 
58,420

 
42,510

 
171,480

 
125,830

Selling, general and administrative expenses
 
(44,800
)
 
(35,850
)
 
(134,280
)
 
(97,510
)
Impairment of intangible assets
 
—

 
—

 
—

 
(2,240
)
Net loss on dispositions of property and equipment
 
(330
)
 
(30
)
 
(330
)
 
(520
)
Operating profit
 
13,290

 
6,630

 
36,870

 
25,560

Other expense, net:
 
 
 
 
 
 
 
 
Interest expense
 
(5,540
)
 
(4,100
)
 
(16,650
)
 
(12,600
)
Loss on extinguishment of debt
 
—

 
—

 
(4,640
)
 
—

Other expense, net
 
(1,310
)
 
(1,000
)
 
(2,560
)
 
(2,170
)
Other expense, net
 
(6,850
)
 
(5,100
)
 
(23,850
)
 
(14,770
)
Income before income tax benefit (expense)
 
6,440

 
1,530

 
13,020

 
10,790

Income tax benefit (expense)
 
120

 
(1,160
)
 
3,350

 
(900
)
Net income
 
6,560

 
370

 
16,370

 
9,890

Less: Net loss attributable to noncontrolling interest
 
(330
)
 
—

 
(920
)
 
—

Net income attributable to Horizon Global
 
$
6,890

 
$
370

 
$
17,290

 
$
9,890

Net income per share attributable to Horizon Global:
 
 
 
 
 
 
 
 
Basic
 
$
0.28

 
$
0.02

 
$
0.70

 
$
0.55

Diluted
 
$
0.27

 
$
0.02

 
$
0.69

 
$
0.54

Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
24,948,410

 
18,174,509

 
24,728,643

 
18,144,998

Diluted
 
25,379,252

 
18,519,077

 
25,154,800

 
18,333,226



5


Horizon Global Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited - dollars in thousands)

 
 
Nine months ended
September 30,
 
 
2017
 
2016
Cash Flows from Operating Activities:
 
 
 
 
Net income
 
$
16,370

 
$
9,890

Adjustments to reconcile net income to net cash provided by (used for) operating activities:
 
 
 
 
Net loss on dispositions of property and equipment
 
330

 
520

Depreciation
 
10,280

 
7,490

Amortization of intangible assets
 
7,660

 
5,480

Impairment of intangible assets
 
—

 
2,240

Amortization of original issuance discount and debt issuance costs
 
5,090

 
1,390

Deferred income taxes
 
840

 
(1,500
)
Loss on extinguishment of debt
 
4,640

 
—

Non-cash compensation expense
 
2,760

 
2,840

Amortization of purchase accounting inventory step-up
 
420

 
—

Increase in receivables
 
(28,360
)
 
(8,260
)
(Increase) decrease in inventories
 
(7,920
)
 
19,920

(Increase) decrease in prepaid expenses and other assets
 
3,490

 
(1,670
)
Decrease in accounts payable and accrued liabilities
 
(17,440
)
 
(10,040
)
Other, net
 
(480
)
 
(790
)
Net cash provided by (used for) operating activities
 
(2,320
)
 
27,510

Cash Flows from Investing Activities:
 
 
 
 
Capital expenditures
 
(20,270
)
 
(10,090
)
Acquisition of businesses, net of cash acquired
 
(19,800
)
 
—

Net proceeds from disposition of property and equipment
 
1,080

 
240

Net cash used for investing activities
 
(38,990
)
 
(9,850
)
Cash Flows from Financing Activities:
 
 
 
 
Proceeds from borrowings on credit facilities
 
36,970

 
40,160

Repayments of borrowings on credit facilities
 
(41,630
)
 
(39,030
)
Repayments of borrowings on Term B Loan, inclusive of transaction costs
 
(187,820
)
 
(7,500
)
Proceeds from ABL Revolving Debt
 
114,500

 
105,230

Repayments of borrowings on ABL Revolving Debt
 
(94,500
)
 
(98,430
)
Proceeds from issuance of common stock, net of offering costs
 
79,920

 
—

Repurchase of common stock
 
(10,000
)
 
—

Proceeds from issuance of Convertible Notes, net of issuance costs
 
121,130

 
—

Proceeds from issuance of Warrants, net of issuance costs
 
20,930

 
—

Payments on Convertible Note Hedges, inclusive of issuance costs
 
(29,680
)
 
—

Other, net
 
(240
)
 
(230
)
Net cash provided by financing activities
 
9,580

 
200

Effect of exchange rate changes on cash
 
1,960

 
40

Cash and Cash Equivalents:
 
 
 
 
Increase (decrease) for the period
 
(29,770
)
 
17,900

At beginning of period
 
50,240

 
23,520

At end of period
 
$
20,470

 
$
41,420

Supplemental disclosure of cash flow information:
 
 
 
 
Cash paid for interest
 
$
10,090

 
$
11,180


6


Horizon Global Corporation
Condensed Consolidated Statements of Shareholders’ Equity
(Unaudited - dollars in thousands)


 
Common
Stock
 
Paid-in
Capital
 
Treasury Stock
 
Retained Earnings (Accumulated Deficit)
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total Horizon Global Shareholders’ Equity
 
Noncontrolling Interest
 
Total Shareholders’ Equity
Balance at December 31, 2016
$
210

 
$
54,800

 
$
—

 
$
(14,310
)
 
$
(8,340
)
 
$
32,360

 
$
(300
)
 
$
32,060

Net income (loss)
—

 
—

 
—

 
17,290

 
—

 
17,290

 
(920
)
 
16,370

Other comprehensive income, net of tax
—

 
—

 
—

 
—

 
15,670

 
15,670

 
20

 
15,690

Issuance of common stock, net of issuance costs
40

 
79,880

 
—

 
—

 
—

 
79,920

 
 
 
79,920

Repurchase of common stock
—

 
—

 
(10,000
)
 
—

 
—

 
(10,000
)
 
—

 
(10,000
)
Shares surrendered upon vesting of employees' share based payment awards to cover tax obligations
—

 
(240
)
 
—

 
—

 
—

 
(240
)
 
—

 
(240
)
Non-cash compensation expense
—

 
2,760

 
—

 
—

 
—

 
2,760

 
—

 
2,760

Issuance of Warrants, net of issuance costs
—

 
20,930

 
—

 
—

 
—

 
20,930

 
—

 
20,930

Initial equity component of the 2.75% Convertible Senior Notes due 2022, net of issuance costs and tax
—

 
19,690

 
—

 
—

 
—

 
19,690

 
—

 
19,690

Convertible Note Hedges, net of issuance costs and tax
—

 
(19,550
)
 
—

 
—

 
—

 
(19,550
)
 
—

 
(19,550
)
Balance at September 30, 2017
$
250

 
$
158,270

 
$
(10,000
)
 
$
2,980

 
$
7,330

 
$
158,830

 
$
(1,200
)
 
$
157,630



7


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

We evaluate certain costs, expenses, other charges, gains or income, collectively described as “Special Items,” that are included in the determination of operating profit under GAAP, but that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company presents adjusted operating profit excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends.
 
 
Three months ended September 30,
 
Nine months ended September 30,
 
 
2017
 
2016
 
2017
 
2016
Horizon Americas
 
 
 
 
 
 
 
 
Net sales
 
$
115,460

 
$
110,730

 
$
351,400

 
$
350,170

Operating profit
 
$
10,930

 
$
12,910

 
$
38,840

 
$
35,630

Special Items to consider in evaluating operating profit:
 
 
 
 
 
 
 
 
Severance and business restructuring costs
 
$
780

 
$
580

 
$
780

 
$
4,910

Impairment of intangible assets
 
$
—

 
$
50

 
$
—

 
$
2,330

Adjusted operating profit
 
$
11,710

 
$
13,540

 
$
39,620

 
$
42,870

 
 
 
 
 
 
 
 
 
Horizon Europe-Africa
 
 
 
 
 
 
 
 
Net sales
 
$
87,950

 
$
13,050

 
$
253,070

 
$
39,600

Operating profit
 
$
2,680

 
$
210

 
$
5,950

 
$
600

Special Items to consider in evaluating operating profit:
 
 
 
 
 
 
 
 
Severance and business restructuring costs
 
$
1,290

 
$
40

 
$
4,020

 
$
320

Acquisition and integration costs
 
$
—

 
$
—

 
$
270

 
$
—

Adjusted operating profit
 
$
3,970

 
$
250

 
$
10,240

 
$
920

 
 
 
 
 
 
 
 
 
Horizon Asia-Pacific
 
 
 
 
 
 
 
 
Net sales
 
$
36,710

 
$
27,940

 
$
92,520

 
$
75,820

Operating profit
 
$
5,880

 
$
3,750

 
$
13,240

 
$
8,830

Special Items to consider in evaluating operating profit:
 
 
 
 
 
 
 
 
Severance and business restructuring costs
 
$
—

 
$
—

 
$
300

 
$
—

Acquisition and integration costs
 
$
980

 
$
—

 
$
1,000

 
$
—

Adjusted operating profit
 
$
6,860

 
$
3,750

 
$
14,540

 
$
8,830

 
 
 
 
 
 
 
 
 
Corporate Expenses
 
 
 
 
 
 
 
 
Operating loss
 
$
(6,200
)
 
$
(10,240
)
 
$
(21,160
)
 
$
(19,500
)
Special Items to consider in evaluating operating loss:
 
 
 
 
 
 
 
 
Acquisition costs
 
$
120

 
$
4,570

 
$
2,700

 
$
4,570

Severance and business restructuring costs
 
$
530

 
$
—

 
$
780

 
$
—

Adjusted operating loss
 
$
(5,550
)
 
$
(5,670
)
 
$
(17,680
)
 
$
(14,930
)
 
 
 
 
 
 
 
 
 
Total Company
 
 
 
 
 
 
 
 
Net sales
 
$
240,120

 
$
151,720

 
$
696,990

 
$
465,590

Operating profit
 
$
13,290

 
$
6,630

 
$
36,870

 
$
25,560

Total Special Items to consider in evaluating operating profit
 
$
3,700

 
$
5,240

 
$
9,850

 
$
12,130

Adjusted operating profit
 
$
16,990

 
$
11,870

 
$
46,720

 
$
37,690




8


Appendix I

Horizon Global Corporation
Additional Information Regarding Special Items Impacting
Reported GAAP Financial Measures
(Unaudited - dollars in thousands, except per share amounts)


This appendix details certain costs, expenses, other charges, gains or income, collectively described as ‘’Special Items,’’ that are included in the determination of net income under GAAP, but that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company presents adjusted net income and adjusted diluted earnings per share excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends.

 
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
Net income attributable to Horizon Global, as reported
 
$
6,890

 
$
370

 
$
17,290

 
$
9,890

Impact of Special Items to consider in evaluating quality of net income:
 
 
 
 
 
 
 
 
Severance and business restructuring costs
 
2,710

 
620

 
5,990

 
5,230

Impairment of intangible assets
 
—

 
50

 
—

 
2,330

Acquisition and integration costs
 
1,250

 
4,580

 
4,120

 
4,580

Loss on extinguishment of debt
 
—

 
—

 
4,640

 
—

Tax impact of Special Items
 
(1,180
)
 
60

 
(4,740
)
 
(1,920
)
Adjusted net income
 
$
9,670

 
$
5,680

 
$
27,300

 
$
20,110

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
 
2017
 
2016
 
2017
 
2016
Diluted earnings per share attributable to Horizon Global, as reported
 
$
0.27

 
$
0.02

 
$
0.69

 
$
0.54

Impact of Special Items to consider in evaluating quality of earnings per share:
 
 
 
 
 
 
 
 
Severance and business restructuring costs
 
0.11

 
0.03

 
0.24

 
0.29

Impairment of intangible assets
 
—

 
—

 
—

 
0.13

Acquisition and integration costs
 
0.05

 
0.25

 
0.16

 
0.25

Loss on extinguishment of debt
 
—

 
—

 
0.18

 
—

Tax impact of Special Items
 
(0.05
)
 
—

 
(0.19
)
 
(0.10
)
Adjusted diluted earnings per share
 
$
0.38

 
$
0.30

 
$
1.08

 
$
1.11

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, diluted, as reported
 
25,379,252

 
18,519,077

 
25,154,800

 
18,333,226




9


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
September 30, 2017
 
Nine months ended
September 30, 2017
 
 
Horizon Americas
 
Horizon
Europe-Africa
 
Horizon
Asia-Pacific
 
Consolidated
 
Horizon Americas
 
Horizon Europe-Africa
 
Horizon
Asia-Pacific
 
Consolidated
Revenue growth as reported
 
4.3
%
 
573.9
%
 
31.4
%
 
58.3
%
 
0.4
%
 
539.1
 %
 
22.0
%
 
49.7
%
Less: currency impact
 
0.1
%
 
3.7
%
 
4.2
%
 
1.1
%
 
0.2
%
 
(1.7
)%
 
3.5
%
 
0.6
%
Revenue growth at constant currency
 
4.2
%
 
570.2
%
 
27.2
%
 
57.2
%
 
0.2
%
 
540.8
 %
 
18.5
%
 
49.1
%



10


Appendix III

Horizon Global Corporation
LTM Bank EBITDA as Defined in Credit Agreement
(Unaudited - dollars in thousands)

This appendix reconciles net income to “Consolidated Bank EBITDA” as defined in our credit agreement.  We believe this reconciliation provides valuable supplemental information regarding our capital structure, consistent with how we evaluate our performance. The leverage ratios as of March 31, 2017 and June 30, 2017 were calculated based upon the U.S. GAAP definition of debt for our previously disclosed Convertible Note issuance during the first quarter of 2017. Based on discussions with the administrative agent under our credit agreement, the leverage ratio will be presented based on a U.S. GAAP exception outlined in the credit agreement, which provides our investors and lenders a clearer view of our total leverage position. Based upon this U.S. GAAP exception, our leverage ratio would have been 4.37x and 3.86x as of March 31, 2017 and June 30, 2017, respectively. The restated ratios are still in compliance with our covenant level of 5.25x for each quarter.

 
 
 
 
Less:
 
Add:
 
 
 
 
Year Ended December 31, 2016
 
Nine Months Ended September 30, 2016
 
Nine Months Ended September 30, 2017
 
Twelve Months Ended
September 30, 2017
Net income (loss) attributable to Horizon Global
 
$
(12,360
)
 
$
9,890

 
$
17,290

 
$
(4,960
)
Bank stipulated adjustments:
 
 
 
 
 
 
 
 
Interest expense, net (as defined)
 
20,080

 
12,600

 
16,650

 
24,130

Income tax (benefit) expense
 
(3,730
)
 
900

 
(3,350
)
 
(7,980
)
Depreciation and amortization
 
18,220

 
12,970

 
17,940

 
23,190

Extraordinary charges
 
6,830

 
4,120

 
—

 
2,710

Non-cash compensation expense(a)
 
3,860

 
2,840

 
2,760

 
3,780

Other non-cash expenses or losses
 
16,460

 
3,410

 
1,050

 
14,100

Pro forma EBITDA of permitted acquisition
 
13,910

 
13,910

 
1,090

 
1,090

Interest-equivalent costs associated with any Specified Vendor Receivables Financing
 
1,200

 
940

 
960

 
1,220

Debt extinguishment costs
 
—

 
—

 
4,640

 
4,640

Items limited to 25% of consolidated EBITDA:
 
 
 
 
 
 
 
 
Non-recurring expenses (b)
 
4,190

 
4,860

 
1,310

 
640

Acquisition integration costs (c)
 
4,290

 
—

 
8,230

 
12,520

Synergies related to permitted acquisition (d)
 
12,500

 
—

 
(8,330
)
 
4,170

EBITDA limitation for non-recurring expenses (e)
 
(4,860
)
 
—

 
2,620

 
(2,240
)
Consolidated Bank EBITDA, as defined
 
$
80,590

 
$
66,440

 
$
62,860

 
$
77,010

 
 
September 30, 2017
Total Consolidated Indebtedness (f)
 
$
278,330

Consolidated Bank EBITDA, as defined
 
77,010

Actual leverage ratio
 
3.61
 x
Covenant requirement
 
5.25
 x
_________________________________
(a)
Non-cash compensation expenses resulting from the grant of restricted shares of common stock and common stock options.
(b)
Under our credit agreement, costs and expenses related to cost savings projects, including restructuring and severance expenses, are not to exceed $5 million in any fiscal year and $20 million in aggregate, commencing on or after January 1, 2015.
(c)
Under our credit agreement, costs and expenses related to the integration of the Westfalia acquisition, are not to exceed $10 million in any fiscal year and $30 million in aggregate.
(d)
Under our credit agreement, the add back for the amount of reasonably identifiable and factually supportable “run rate” cost savings, operating expense reductions, and other synergies cannot exceed $12.5 million for the Westfalia acquisition.
(e)
The amounts added to Consolidated Net Income pursuant to items in notes (b), (c), and (d) shall not exceed 25% of Consolidated EBITDA, excluding these items, for such period.
(f)
“Total Consolidated Indebtedness” refers to the sum of “long-term debt” and “current maturities, long-term debt”, with our Convertible Notes at their face value of $125.0 million and excluding certain credit facilities as defined in our Credit Agreement less domestic cash of $6.3 million and 65% of foreign cash, or $9.2 million, as of September 30, 2017

11


Appendix IV

Horizon Global Corporation
2017 Guidance Reconciliation
(Unaudited - dollars in thousands, except per share amounts)

The Company provides guidance for adjusted operating profit and adjusted diluted earnings per share, which exclude “Special Items,” that are included in the determination of operating profit and diluted earnings per share under GAAP. “Special Items” are certain costs, expenses, other charges, gains or income, that management would not consider important in evaluating the quality of the Company’s operating results as they are not indicative of the Company’s core operating results or may obscure trends useful in evaluating the Company’s continuing activities. Accordingly, the Company provides guidance for adjusted operating profit and adjusted diluted earnings per share, excluding these Special Items to help investors evaluate our operating performance and trends in our business consistent with how management evaluates such performance and trends. The following appendix reconciles the non-GAAP financial measures the Company provides guidance on to the most comparable GAAP measure.
Per share guidance provided below includes the impact of all common shares repurchased as part of the share repurchase program through October 31, 2017. The impact of any common shares repurchased subsequent to October 31, 2017 is not included and may impact the guidance provided below.
Full Year Guidance:
 
 
Year ending on December 31, 2017
 
Year ended
December 31, 2016
 
 
Low End of Guidance
 
High End of Guidance
 
 
 
 
Revenue
 
$
900,000

 
 
 
$
915,000

 
 
 
$
649,200

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating profit
 
$
38,200

 
4.2
%
 
$
44,200

 
4.8
%
 
$
6,300

 
1.0
%
Estimated Special Items
 
14,800

 
1.6
%
 
14,800

 
1.6
%
 
30,860

 
4.8
%
Adjusted operating profit
 
$
53,000

 
5.9
%
 
$
59,000

 
6.4
%
 
$
37,160

 
5.7
%
Basis point improvement
 
 
 
20 bps

 
 
 
70 bps

 
 
 
 
 
 
Year ending on December 31, 2017
 
 
Low End of Guidance
 
High End of Guidance
Diluted earnings per share
 
$
0.50

 
$
0.60

Impact of Special Items (including tax impact)
 
0.54

 
0.54

Adjusted diluted earnings per share
 
$
1.04

 
$
1.14

 
 
 
 
 
Estimated diluted weighted average common shares outstanding
 
25,300,000

 
25,300,000


Fourth Quarter 2017 Guidance:
 
 
Three months ending on December 31, 2017
 
 
Low End of Guidance
 
High End of Guidance
Diluted earnings per share
 
$
(0.20
)
 
$
(0.12
)
Impact of Special Items (including tax impact)
 
0.16

 
0.16

Adjusted diluted earnings per share
 
$
(0.04
)
 
$
0.04


 
 
 
 
Estimated diluted weighted average common shares outstanding
 
25,400,000

 
25,400,000



12