Market Overview

Horizon Global Reports Financial Results for Second Quarter 2018; Updates Progress on Action Plan

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Business Update

  • Delivered progress against previously announced Action Plan, with
    Americas' workforce reductions and facility consolidation complete
  • Kansas City distribution center improved shipping volumes, resulting
    in a $9 million reduction of past due orders from peak levels of
    approximately $26 million
  • Net sales of $233.3 million, down 8.0 percent
    • Net sales declined 10.5 percent in constant currency(3)
  • Non-cash goodwill impairment of $55.7 million in Europe-Africa segment
  • Operating loss of $64.1 million, operating profit margin of (27.5)
    percent
    • Adjusted operating profit(1) of $13.8 million, adjusted
      operating profit(1) margin of 5.9 percent
  • Second quarter diluted loss per share of $2.68
    • Second quarter adjusted diluted earnings per share(2)
      of $0.36

Horizon Global Corporation (NYSE:HZN), one of the world's leading
manufacturers of branded towing and trailering equipment, today reported
second quarter results. The Company also provided an update on its
Action Plan, including the completion of the restructuring of its
Americas segment, operational improvements at its Kansas City
Aftermarket and Retail distribution facility, and business improvement
activities in its Europe-Africa segment.

"We remain encouraged that our global team continues to make solid
progress on the Action Plan even though consolidated results for the
second quarter are not in line with the prior year," said Carl Bizon,
Interim President and Chief Executive Officer of Horizon Global. "Of key
importance is the ramp up of our Kansas City distribution center and, as
of the end of last week, I am pleased to report that we are currently
exceeding our average daily shipment goal, and this facility is now
demonstrating its ability to meet the requirements of our business. We
closed the quarter with past due orders of approximately $23 million,
which significantly impacted our second quarter performance. As we
continue to reduce past due orders, we are fortunate that our customers
have largely remained resilient and stayed with us during the Kansas
City ramp-up process.

"The second quarter and beginning of the current quarter have been
marked by a number of key events -- we made key senior management
changes, including the naming of new leadership for our Company and its
two largest operating segments; we terminated the Brink acquisition;
and, just last week, we announced a successful amendment of our term
loan agreement, which included securing an incremental $50 million to
address short-term liquidity needs. As a Company, we are clearly not
standing still and are moving quickly to fix near-term operational
issues. We believe we are nearing completion in the Americas, and new
leadership in Europe-Africa will be building upon the foundation of that
business, while closely assessing the organization and its business
processes for operating and financial improvement.

"As we look across our global business, Asia-Pacific is performing well,
the Americas is working through a transitional year and we are closely
assessing and prioritizing business improvement initiatives in
Europe-Africa. I remain confident that the underlying strengths of our
Company - great brands, great products, excellent quality, strong
customer relationships, experienced and committed team members and solid
end markets - will lead us past these near-term challenges and position
our Company for long-term success."

2018 Second Quarter Segment Results

Horizon Americas. Net sales decreased 21.7 percent,
primarily driven by capacity constraints during the ramp up of the
Kansas City distribution center. The segment exited the quarter with
past due orders of approximately $23 million. Operating profit decreased
$20.2 million to a loss of $2.6 million, or 2.4 percent of net sales,
due to lower sales volumes, unfavorable input costs and severance and
restructuring costs associated with facility closures and delayering the
organization. Adjusted operating profit(1) decreased $12.1
million to $10.6 million, or 9.8 percent of net sales.

Horizon Europe-Africa. Net sales increased 4.9 percent,
but declined 2.2 percent in constant currency(3), as revenue
growth in the OE channel was more than offset by a decline in the
aftermarket channel due to limited product availability resulting from
the production shift to Braşov. Operating profit decreased $59.3 million
to a loss of $55.7 million, or 61.3 percent of net sales, attributable
to the impairment of goodwill. Adjusted operating profit(1)
decreased $2.1 million to $2.6 million, or 2.9 percent of net sales, due
primarily to the margin mix impact from the lower-margin OE business and
material cost increases in excess of realized price increases.

Horizon Asia-Pacific. Net sales increased 19.1 percent, or
17.5 percent, in constant currency(3), primarily attributable
to the Best Bars acquisition completed in the third quarter of 2017.
Operating profit increased 8.9 percent to $4.7 million, or 13.6 percent
of net sales, driven by higher sales volumes.

Action Plan

Horizon Global announced a business improvement plan on March 1, 2018,
with targeted initiatives to drive operating results in its Americas and
Europe-Africa segments. The Action Plan is expected to deliver $3.0
million to $5.0 million in consolidated cost savings in 2018, and once
implemented, $10.0 million to $12.0 million in consolidated cost savings
on a full-year run rate basis. Action Plan updates include:

  • Reduced past due orders from a peak of approximately $26 million in
    mid-July to approximately $17 million as of August 5
  • Completed closure of Mosinee, Wisconsin and Solon, Ohio facilities
  • Completed 30 percent reduction in Americas' U.S.-based salaried
    workforce
  • Reynosa targeted production levels achieved
  • Europe-Africa's low-cost-country production increased to 28 percent
    year to date

Bizon concluded, "Our global team remains focused on achieving our
Action Plan. We are pleased to have completed several initiatives
specific to the Americas; however, we know there is a good deal of work
yet to be done in Europe. The team remains committed to our success, and
we are working hard to meet, and ultimately exceed, the expectations of
our customers, the end users of our products and our shareholders."

Conference Call Details

Horizon Global will host a conference call regarding second quarter 2018
earnings on Tuesday, August 7, 2018, 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 9559399.

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 9559399. The
telephone replay will be available approximately two hours after the end
of the call and continue through August 21, 2018.

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 our
employees and create value 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 4,300 employees in 58 facilities across 21
countries.

For more information, please visit www.horizonglobal.com.

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, 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 spin-off from TriMas
Corporation; the success of our Action Plan, including the actual amount
of savings and timing thereof; 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)   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.
 
(2) 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.
 
(3) 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.
   
 

Horizon Global Corporation

Condensed Consolidated Balance Sheets

(Unaudited - dollars in thousands)

 
 
June 30,
2018
December 31,
2017
Assets
Current assets:
Cash and cash equivalents $ 28,890 $ 29,570
Receivables, net of reserves of approximately $4.3 million and $3.1
million at June 30, 2018 and December 31, 2017, respectively
128,480 91,770
Inventories 167,530 171,500
Prepaid expenses and other current assets 10,710   10,950  
Total current assets 335,610 303,790
Property and equipment, net 108,430 113,020
Goodwill 37,710 138,190
Other intangibles, net 83,770 90,230
Deferred income taxes 5,380 4,290
Other assets 9,640   11,510  
Total assets $ 580,540   $ 661,030  
Liabilities and Shareholders' Equity
Current liabilities:
Current maturities, long-term debt $ 10,170 $ 16,710
Accounts payable 140,160 138,730
Accrued liabilities 60,850   53,070  
Total current liabilities 211,180 208,510
Long-term debt 310,720 258,880
Deferred income taxes 13,840 14,870
Other long-term liabilities 29,720   38,370  
Total liabilities 565,460 520,630
Commitments and contingent liabilities
Total Horizon Global shareholders' equity 17,120 141,890
Noncontrolling interest (2,040 ) (1,490 )
Total shareholders' equity 15,080   140,400  
Total liabilities and shareholders' equity $ 580,540   $ 661,030  
     
 

Horizon Global Corporation

Condensed Consolidated Statements of Income

(Unaudited - dollars in thousands, except per share amounts)

 
 
Three months ended
June 30,
Six months ended
June 30,
2018   2017 2018   2017
Net sales $ 233,340 $ 253,590 $ 450,150 $ 456,870
Cost of sales (185,770 ) (185,920 ) (364,130 ) (343,810 )
Gross profit 47,570 67,670 86,020 113,060
Selling, general and administrative expenses (56,010 ) (43,430 ) (104,300 ) (89,480 )
Impairment (55,700 )   (99,130 )  
Operating profit (loss) (64,140 ) 24,240   (117,410 ) 23,580  
Other expense, net:
Interest expense (6,190 ) (5,220 ) (12,140 ) (11,110 )
Loss on extinguishment of debt (4,640 )
Other expense, net (6,610 ) (700 ) (7,730 ) (1,250 )
Other expense, net (12,800 ) (5,920 ) (19,870 ) (17,000 )
Income (loss) before income tax benefit (76,940 ) 18,320 (137,280 ) 6,580
Income tax benefit 9,780   1,650   12,360   3,230  
Net income (loss) (67,160 ) 19,970 (124,920 ) 9,810
Less: Net loss attributable to noncontrolling interest (230 ) (290 ) (480 ) (590 )
Net income (loss) attributable to Horizon Global $ (66,930 ) $ 20,260   $ (124,440 ) $ 10,400  
Net income (loss) per share attributable to Horizon Global:
Basic $ (2.68 ) $ 0.80 $ (4.98 ) $ 0.42
Diluted $ (2.68 ) $ 0.79 $ (4.98 ) $ 0.42
Weighted average common shares outstanding:
Basic 25,017,725 25,385,395 24,990,573 24,616,939
Diluted 25,017,725 25,743,077 24,990,573 25,044,653
   
 

Horizon Global Corporation

Condensed Consolidated Statements of Cash Flows

(Unaudited - dollars in thousands)

 
 
Six months ended
June 30,
2018   2017
Cash Flows from Operating Activities:
Net income (loss) $ (124,920 ) $ 9,810
Adjustments to reconcile net income (loss) to net cash used for
operating activities:
Net loss on dispositions of property and equipment 380
Depreciation 8,240 6,510
Amortization of intangible assets 4,140 4,960
Impairment of goodwill and intangible assets 99,130
Amortization of original issuance discount and debt issuance costs 3,870 3,240
Deferred income taxes (1,850 ) 970
Loss on extinguishment of debt 4,640
Non-cash compensation expense 1,210 1,830
Increase in receivables (40,450 ) (40,380 )
(Increase) decrease in inventories 530 (5,570 )
Decrease in prepaid expenses and other assets 1,510 970
Increase (decrease) in accounts payable and accrued liabilities 12,590 (1,460 )
Other, net 260   (110 )
Net cash used for operating activities (35,360 ) (14,590 )
Cash Flows from Investing Activities:
Capital expenditures (7,790 ) (13,340 )
Net proceeds from disposition of property and equipment 140   940  
Net cash used for investing activities (7,650 ) (12,400 )
Cash Flows from Financing Activities:
Proceeds from borrowings on credit facilities 2,630 220
Repayments of borrowings on credit facilities (8,670 ) (2,890 )
Repayments of borrowings on Term B Loan, inclusive of transaction
costs
(3,940 ) (185,800 )
Proceeds from ABL Revolving Debt 66,110 82,400
Repayments of borrowings on ABL Revolving Debt (13,510 ) (62,400 )
Proceeds from issuance of common stock, net of offering costs 79,920
Repurchase of common stock (8,360 )
Proceeds from issuance of Convertible Notes, net of issuance costs 120,950
Proceeds from issuance of Warrants, net of issuance costs 20,930
Payments on Convertible Note Hedges, inclusive of issuance costs (29,680 )
Other, net (210 ) (240 )
Net cash provided by financing activities 42,410   15,050  
Effect of exchange rate changes on cash (80 ) 1,270  
Cash and Cash Equivalents:
Decrease for the period (680 ) (10,670 )
At beginning of period 29,570   50,240  
At end of period $ 28,890   $ 39,570  
Supplemental disclosure of cash flow information:
Cash paid for interest $ 7,550   $ 7,220  
Cash paid for taxes $ 3,770   $ 4,720  
               
 

Horizon Global Corporation

Condensed Consolidated Statements of Shareholders' Equity

(Unaudited - dollars in thousands)

 
 
Common
Stock
Paid-in
Capital

Treasury
Stock

Accumulated
Deficit

Accumulated
Other
Comprehensive
Income

Total Horizon
Global
Shareholders'

Equity

Noncontrolling
Interest

Total
Shareholders'
Equity

Balance at December 31, 2017 $ 250 $ 159,490 $ (10,000 ) $ (17,860 ) $ 10,010 $ 141,890 $ (1,490 ) $ 140,400
Net loss (124,440 ) (124,440 ) (480 ) (124,920 )
Other comprehensive income, net of tax (1,330 ) (1,330 ) (70 ) (1,400 )
Shares surrendered upon vesting of employees' share based payment
awards to cover tax obligations
(210 ) (210 ) (210 )
Non-cash compensation expense   1,210         1,210     1,210  
Balance at June 30, 2018 $ 250   $ 160,490   $ (10,000 ) $ (142,300 ) $ 8,680   $ 17,120   $ (2,040 ) $ 15,080  
 
 

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 June 30, Six months ended June 30,
2018   2017 2018   2017
Horizon Americas
Net sales $ 108,080 $ 138,110 $ 204,300 $ 235,940
Operating profit (loss) $ 2,570 $ 22,750 $ (2,540 ) $ 27,910
Special Items to consider in evaluating operating profit (loss):
Severance $ 3,660 $ $ 4,350 $
Distribution center inefficiencies & fines $ 2,990 $ $ 5,100 $
Restructuring $ 1,420 $ $ 2,510 $
Adjusted operating profit $ 10,640 $ 22,750 $ 9,420 $ 27,910
 
Horizon Europe-Africa
Net sales $ 90,840 $ 86,580 $ 177,900 $ 165,120
Operating profit (loss) $ (55,690 ) $ 3,610 $ (100,780 ) $ 3,270
Special Items to consider in evaluating operating profit (loss):
Severance $ 1,180 $ 570 $ 1,560 $ 2,640
Acquisition & integration $ 240 $ 450 $ 660 $ 270
Impairment of goodwill & other intangibles $ 55,700 $ $ 99,130 $
Restructuring $ 1,000 $ 40 $ 1,450 $ 90
Brink Group transaction & termination costs $ 180 $ $ 660 $
Adjusted operating profit $ 2,610 $ 4,670 $ 2,680 $ 6,270
 
Horizon Asia-Pacific
Net sales $ 34,420 $ 28,900 $ 67,950 $ 55,810
Operating profit $ 4,670 $ 4,290 $ 9,060 $ 7,360
Special Items to consider in evaluating operating profit:
Severance $ 70 $ 270 $ 70 $ 270
Acquisition & integration costs $ 20 $ 20 $ 20 $ 20
Restructuring $ 100 $ 30 $ 100 $ 30
Adjusted operating profit $ 4,860 $ 4,610 $ 9,250 $ 7,680
 
Corporate Expenses
Operating loss $ (15,690 ) $ (6,410 ) $ (23,150 ) $ (14,960 )
Special Items to consider in evaluating operating loss:
Acquisition & integration $ (360 ) $ 250 $ 50 $ 2,580
Brink Group transaction & termination costs $ 8,940 $ $ 9,810 $
Restructuring $ $ 250 $ $ 250
CEO separation costs & severance $ 2,750 $ $ 2,750 $
Adjusted operating loss $ (4,360 ) $ (5,910 ) $ (10,540 ) $ (12,130 )
 
Total Company
Net sales $ 233,340 $ 253,590 $ 450,150 $ 456,870
Operating profit (loss) $ (64,140 ) $ 24,240 $ (117,410 ) $ 23,580
Total Special Items to consider in evaluating operating profit (loss) $ 77,890 $ 1,880 $ 128,220 $ 6,150
Adjusted operating profit $ 13,750 $ 26,120 $ 10,810 $ 29,730
 
 

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 (loss) and earnings (loss) per share
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 (loss) and
adjusted diluted earnings (loss) 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
June 30,
Six months ended
June 30,
2018   2017 2018   2017
Net income (loss) attributable to Horizon Global, as reported $ (66,930 ) $ 20,260 $ (124,440 ) $ 10,400
Impact of Special Items to consider in evaluating quality of
income (loss):
Impairment of goodwill & other intangibles 55,700 99,130
Brink Group transaction & termination costs 13,620 15,600
Severance 4,920 840 5,980 2,910
Distribution center inefficiencies & fines 2,990 5,100
CEO separation costs & severance 2,750 2,750
Restructuring 2,520 310 4,070 370
Acquisition & integration costs (110 ) 730 720 2,870
Loss on extinguishment of debt 4,640
Tax impact of Special Items (6,390 ) (450 ) (7,900 ) (3,560 )
Adjusted net income attributable to Horizon Global $ 9,070   $ 21,690   $ 1,010   $ 17,630  
 
 
Three months ended
June 30,
Six months ended
June 30,
2018 2017 2018 2017
Diluted earnings (loss) per share attributable to Horizon Global,
as reported
$ (2.68 ) $ 0.79 $ (4.98 ) $ 0.42
Impact of Special Items to consider in evaluating quality of EPS:
Impairment of goodwill & other intangibles 2.23 3.97
Brink Group transaction & termination costs 0.54 0.62
Severance 0.20 0.03 0.24 0.12
Distribution center inefficiencies & fines 0.12 0.21
CEO separation costs & severance 0.11 0.11
Restructuring 0.10 0.01 0.16 0.01
Acquisition & integration costs 0.03 0.03 0.11
Loss on extinguishment of debt 0.19
Tax impact of Special Items (0.26 ) (0.02 ) (0.32 ) (0.14 )
Impact of change in dilutive shares outstanding due to Special
Items
       
Adjusted earnings per share attributable to Horizon Global $ 0.36   $ 0.84   $ 0.04   $ 0.71  
 
Weighted average shares outstanding, diluted, as reported 25,017,725 25,743,077 24,990,573 25,044,653
Dilution effect on adjusted net income 266,876     307,834    

Diluted weighted-average shares outstanding, as adjusted

25,284,601   25,743,077   25,298,407   25,044,653  
 
 

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, 2018
Six months ended
June 30, 2018

Horizon
Americas

 

Horizon

Europe-Africa

 

Horizon

Asia-Pacific

  Consolidated

Horizon
Americas

 

Horizon
Europe-Africa

 

Horizon

Asia-Pacific

  Consolidated
Revenue growth as reported (21.7 )% 4.9 % 19.1 % (8.0 )% (13.4 )% 7.7 % 21.8 %   (1.5 )%
Less: currency impact (0.2 )% 7.1 % 1.6 % 2.5 % (0.1 )% 10.6 % 3.5 % 4.2 %
Revenue growth at constant currency (21.5 )% (2.2 )% 17.5 % (10.5 )% (13.3 )% (2.9 )% 18.3 % (5.7 )%
 
 

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.

         
Less: Add:

Year Ended
December 31,
2017

Six Months
Ended June 30,
2017

Six Months
Ended June 30,
2018

Twelve Months
Ended
June 30, 2018

Net loss attributable to Horizon Global $ (3,550 ) $ 10,400 $ (124,440 ) $ (138,390 )
Bank stipulated adjustments:
Interest expense, net (as defined) 22,410 11,110 17,270 28,570
Income tax (benefit) expense 9,750 (3,230 ) (12,360 ) 620
Depreciation and amortization 25,340 11,470 12,380 26,250
Extraordinary charges 2,520 13,740 16,260
Non-cash compensation expense(a) 3,630 1,830 1,210 3,010
Other non-cash expenses or losses 2,180 480 99,620 101,320
Pro forma EBITDA of permitted acquisition 840 840
Interest-equivalent costs associated with any Specified Vendor
Receivables Financing
1,490 620 810 1,680
Debt extinguishment costs 4,640 4,640
Items limited to a % of consolidated EBITDA(b):
Non-recurring expenses (c) 2,440 6,240 8,680
Acquisition integration costs (d) 11,210 5,580 3,140 8,770
Synergies related to permitted acquisition (e) 1,480   1,480      
Consolidated Bank EBITDA, as defined $ 84,380   $ 45,220   $ 17,610   $ 56,770  
           
June 30, 2018
Total Consolidated Indebtedness (f) $ 323,256
Consolidated Bank EBITDA, as defined 56,770  
Actual leverage ratio 5.69 x
Covenant requirement 7.00 x
_________________________________
(a)   Non-cash compensation expenses resulting from the grant of
restricted shares of common stock and common stock options.
(b) Under the Fourth Amendment effective June 30, 2018, the EBITDA
limitation for nonrecurring expenses or costs was increased from 25%
of Consolidated EBITDA for the period to 45% of Consolidated EBITDA
for the period. As such, the amounts added to Consolidated Net
Income pursuant to items b-d shall not exceed 45% of Consolidated
EBITDA, excluding these items, for such period.
(c) Under the Amended Term Loan Amendment, 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. The
Fourth Amendment has raised the annual cap to $7.5 million in any
fiscal year and $25 million in aggregate.
(d) Under the 2018 Term Loan Agreement, costs and expenses related to
the integration of the Westfalia Group acquisition, are not to
exceed $10 million in any fiscal year and $30 million in aggregate,
or other permitted acquisitions are not to exceed $7.5 million in
any fiscal year and $20 million in aggregate.
(e) Under the 2018 Term Loan 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 Group acquisition.
(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 less unrestricted
cash. Unrestricted cash included in the calculation was $28.9
million as of June 30, 2018.

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