Horizon Global Corporation Reports 56 Percent Improvement in Adjusted EPS; Adjusted Operating Profit Improvement of 210 Basis Points in Third Quarter 2015

Key Highlights

• Horizon Global completed its first quarter as a stand-alone
  independent public company
• Adjusted operating profit margin improved to 7.6 percent, an increase
  of 210 basis points over the same period in 2014, excluding Special
  Items⁽¹⁾
• Net sales increased 2.6 percent over third quarter of 2014 on constant
  currency basis⁽²⁾
• Earnings per share were $0.35 per diluted share, an increase of 21
  percent versus 2014. Excluding Special Items⁽³⁾, earnings
  per share would have been $0.50 per diluted share, an increase of 56
  percent over third quarter of 2014
• Net cash provided by operations conversion from net income on a
  year-to-date basis was nearly 130 percent compared to less than 40
  percent for the same period in 2014

BLOOMFIELD HILLS, Mich.–(BUSINESS WIRE)–Horizon Global Corporation (NYSE: HZN), one of the world’s leading
manufacturers of branded towing and trailering equipment, today reported
that net sales for the third quarter ended September 30, 2015 declined
2.9 percent to $153.3 million. On a constant currency basis⁽²⁾,
net sales increased 2.6 percent, compared to the third quarter of 2014,
driven by growth in retail, eCommerce and aftermarket channels.
Operating profit increased 9.4 percent to $8.6 million, from $7.9
million in the third quarter of 2014. Excluding Special Items⁽¹⁾,
operating profit increased 35.5 percent to $11.7 million or 7.6 percent
of sales, from $8.6 million or 5.5 percent of sales in the third quarter
of 2014. Our leverage ratio in the quarter improved to 3.6 times,
reflecting our continued focus on consistent management of working
capital.

2015 Third Quarter Business Segment Highlights

• Cequent Americas net sales increased 2.6 percent, with volume
  especially strong in the retail channel. Cequent Americas operating
  profit increased to $10.7 million or 25 percent over the same period
  in 2014 due to continued productivity improvements, reduced SG&A and
  lower input costs. Excluding Special Items⁽¹⁾, Cequent
  Americas operating profit increased to $13.8 million or 54 percent
  over the same period in 2014.
• Cequent APEA net sales declined 17 percent on a reported basis, but
  remained relatively flat on a constant currency basis⁽²⁾,
  including a 9 percent increase on a constant currency basis⁽²⁾
  in Australia. Cequent APEA operating profit decreased to $1.7 million
  due to less favorable product mix and supply constraints.
• Segment operating profit margin was 8.1 percent compared to 7.4
  percent in the third quarter of 2014. Excluding Special Items⁽¹⁾,
  segment operating margin was 10.1 percent compared to 7.9 percent in
  the third quarter of 2014, an improvement of 220 basis points.

“We are proud of what we have accomplished in our first quarter
operating as a stand-alone, independent public company. Much has been
accomplished in our first 90 days, including establishing a company with
a culture, vision, and mission that aligns to our objectives for value
creation. In addition, we have made significant progress towards
execution of our three financial priorities,” said A. Mark Zeffiro,
President and Chief Executive Officer of Horizon Global. “First, we are
on track to achieve our near-term margin target of 10 percent on a
segment basis, with the third quarter segment margin improving to 10.1
percent, excluding Special Items. We continue to work on a number of
actions geared toward profitability improvement. Second, our cash
generation in the quarter coupled with our working capital management
resulted in a reduction in our leverage ratio to 3.6 times, with $28
million of cash on hand and total cash available of $98 million.
Finally, our revenues were up 2.6 percent on a constant currency basis,
driven by retail, eCommerce and aftermarket growth.”

Outlook

Guidance issued for the six months ended December 31, 2015:

• Net sales guidance updated to between $275 and $285 million,
  reflecting continued strength of U.S. dollar
• Adjusted segment operating profit increasing 200 basis points, more
  than 50 percent greater than the same period in 2014, excluding any
  future items that may be considered Special Items
• Operating cash flow between $20 and $30 million
• Full-year adjusted earnings guidance of $0.95 to $1.00 per diluted
  share, excluding any future items that may be considered Special Items

“Margin improvement remains our number one priority and we are seeing
the benefits of our continuing actions. Productivity at the Reynosa,
Mexico facilities continues to improve at nearly double-digit rates as
we consolidate our Juarez, Mexico plant into Reynosa and right-size our
manufacturing footprint. In addition, we are in the process of closing
our Tekonsha, Michigan facility in the quarter and strengthening our
engineering capabilities at our Plymouth, Michigan facility. The
integration of the Cequent Americas businesses remains on schedule and
we are focused on improving the profitability of our businesses in
Europe, South Africa and Brazil. Our culture of continuous improvement
is focused on operational excellence, which is expected to drive cost
savings longer term,” said Zeffiro.

“Our outlook through year end is positive, as we expect to benefit from
lower input costs along with continued strength in the retail and
eCommerce channels. We believe that the distributor consolidation that
impacted us in prior periods has stabilized, but expect that
distributors will continue to seek economies of scale. We will continue
to see headwinds from foreign currency translation and the evolving
customer landscape. We are leveraging our past investments, product
portfolio and manufacturing footprint to create a significant
opportunity for value creation. Our forecast for the six months ended
December 31, 2015 is for net sales to be between $275 and $285 million,
and an increase in adjusted operating profit of more than 50 percent,
resulting in a 200 basis point improvement in adjusted operating profit
margin compared to the same time period in 2014. On a full-year basis
for 2015, we expect adjusted earnings to be in a range of $0.95 to $1.00
per diluted share.”

About Horizon Global

Headquartered in Bloomfield Hills, Michigan, Horizon Global Corporation
(NYSE: HZN) is a leading designer, manufacturer and distributor of
industry leading high-quality, custom-engineered towing, trailering,
cargo management and related accessory products for original equipment,
aftermarket and retail channel customers on a global basis. Our 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. For more information,
please visit www.horizonglobal.com.

Safe Harbor Statement

Any “forward-looking” statements contained herein, including those
relating to market conditions or the Company’s financial condition and
results, expense reductions, liquidity expectations, business goals and
sales growth, involve risks and uncertainties, including, but not
limited to, the future prospects of the Company as an independent
company, risks and uncertainties with respect to general economic and
currency conditions, various conditions specific to the Company’s
business and industry, 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 ability to
successfully implement its profitability improvement measures, the
Company’s accounting policies, future trends, and other risks which are
detailed in the Company’s Registration Statement filed on Form S-1 and
the other reports that the Company files with the SEC (available at www.sec.gov).
These risks and uncertainties may cause actual results to differ
materially from those indicated by the forward-looking statements. All
forward-looking statements made herein are based on information
currently available, and the Company assumes no obligation to update any
forward-looking statements.

(1)		Please refer to “Company and Business Segment Financial Information,” which details certain costs, expenses, other charges, collectively described as ”Special Items,” that are included in the determination of operating profit under GAAP, but that management would consider important in evaluating the quality of the Company’s operating results. 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.
(2)		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 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. See Appendix II for reconciliation.
(3)		Appendix I details certain costs, expenses, and other charges, collectively described as ”Special Items,” that are included in the determination of net income under GAAP, but that management would consider important in evaluating the quality of the Company’s operating results. Accordingly, the Company presents adjusted net income and 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.

Horizon Global Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands)
		September 30, 2015				December 31, 2014
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	28,130			$	5,720
Receivables, net		73,440				63,840
Inventories		113,880				123,530
Deferred income taxes		4,840				4,840
Prepaid expenses and other current assets		6,610				5,690
Total current assets		226,900				203,620
Property and equipment, net		46,310				55,180
Goodwill		4,420				6,580
Other intangibles, net		57,820				66,510
Other assets		11,370				11,940
Total assets		$	346,820			$	343,830
Liabilities and Shareholders’ Equity
Current liabilities:
Current maturities, long-term debt		$	14,460			$	460
Accounts payable		74,670				81,980
Accrued liabilities		38,130				37,940
Total current liabilities		127,260				120,380
Long-term debt		189,280				300
Deferred income taxes		7,290				8,970
Other long-term liabilities		19,540				25,990
Total liabilities		343,370				155,640
Total shareholders’ equity		3,450				188,190
Total liabilities and shareholders’ equity		$	346,820			$	343,830

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,
		2015				2014				2015				2014
Net sales		$	153,340			$	157,860			$	454,240			$	484,210
Cost of sales		(115,580		)		(119,690		)		(343,430		)		(363,720		)
Gross profit		37,760				38,170				110,810				120,490
Selling, general and administrative expenses		(29,090		)		(30,310		)		(91,280		)		(93,330		)
Net gain (loss) on dispositions of property and equipment		(60		)		10				(1,850		)		(60		)
Operating profit		8,610				7,870				17,680				27,100
Other expense, net:
Interest expense		(4,350		)		(150		)		(4,590		)		(510		)
Other expense, net		(1,060		)		(810		)		(3,030		)		(2,290		)
Other expense, net		(5,410		)		(960		)		(7,620		)		(2,800		)
Income before income tax expense		3,200				6,910				10,060				24,300
Income tax credit (expense)		3,150				(1,700		)		(30		)		(5,890		)
Net income		$	6,350			$	5,210			$	10,030			$	18,410
Net income per share:
Basic		$	0.35			$	0.29			$	0.55			$	1.02
Diluted		$	0.35			$	0.29			$	0.55			$	1.02
Weighted average common shares outstanding:
Basic		18,098,404				18,062,027				18,073,836				18,062,027
Diluted		18,215,209				18,114,032				18,160,858				18,113,399

Horizon Global Corporation
Condensed Consolidated Statements of Cash Flows
(Unaudited – dollars in thousands)
		Nine months ended September 30,
		2015				2014
Cash Flows from Operating Activities:
Net income		$	10,030			$	18,410
Adjustments to reconcile net income to net cash provided by operating activities:
Loss on dispositions of property and equipment		1,850				60
Depreciation		7,580				8,830
Amortization of intangible assets		5,540				5,730
Amortization of original issuance discount and debt issuance costs		330				—
Deferred and other income taxes		(4,620		)		(1,100		)
Non-cash compensation expense		1,750				2,410
Increase in receivables		(16,120		)		(20,040		)
Decrease in inventories		5,330				10,370
(Increase) decrease in prepaid expenses and other assets		(1,910		)		380
Increase (decrease) in accounts payable and accrued liabilities		2,860				(17,570		)
Other, net		170				(700		)
Net cash provided by operating activities		12,790				6,780
Cash Flows from Investing Activities:
Capital expenditures		(6,400		)		(9,450		)
Net proceeds from disposition of property and equipment		1,770				260
Net cash used for investing activities		(4,630		)		(9,190		)
Cash Flows from Financing Activities:
Proceeds from borrowings on credit facilities		100,420				134,080
Repayments of borrowings on credit facilities		(95,420		)		(133,130		)
Proceeds from Term B Loan, net of issuance costs		192,920				—
Repayments of borrowings on Term B Loan		(2,500		)		—
Proceeds from ABL Revolving Debt, net of issuance costs		37,900				—
Repayments of borrowings on ABL Revolving Debt		(30,980		)		—
Net transfers from former parent		27,630				4,700
Cash dividend paid to former parent		(214,500		)		—
Net cash provided by financing activities		15,470				5,650
Effect of exchange rate changes on cash		(1,220		)		(480		)
Cash and Cash Equivalents:
Increase for the period		22,410				2,760
At beginning of period		5,720				7,880
At end of period		$	28,130			$	10,640
Supplemental disclosure of cash flow information:
Cash paid for interest		$	3,760			$	460

Horizon Global Corporation
Company and Business Segment Financial Information
(Unaudited – dollars in thousands)
		Three months ended September 30,								Nine months ended September 30,
		2015				2014				2015				2014
Cequent America
Net sales		$	116,540			$	113,580			$	342,030			$	356,660
Operating profit		$	10,700			$	8,550			$	24,400			$	31,100
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs		$	3,060			$	360			$	5,530			$	2,800
Loss on software disposal		$	—			$	—			$	1,870			$	—
Excluding Special Items, operating profit would have been		$	13,760			$	8,910			$	31,800			$	33,900
Cequent APEA
Net sales		$	36,800			$	44,280			$	112,210			$	127,550
Operating profit		$	1,730			$	3,140			$	5,650			$	7,770
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs		$	—			$	380			$	1,060			$	380
Excluding Special Items, operating profit would have been		$	1,730			$	3,520			$	6,710			$	8,150
Operating Segments
Operating profit		$	12,430			$	11,690			$	30,050			$	38,870
Special Items to consider in evaluating operating profit:
Severance and business restructuring costs		$	3,060			$	740			$	6,590			$	3,180
Loss on software disposal		$	—			$	—			$	1,870			$	—
Excluding Special Items, segment operating profit would have been		$	15,490			$	12,430			$	38,510			$	42,050
Corporate Expenses
Operating loss		$	(3,820	)		$	(3,820	)		$	(12,370	)		$	(11,770	)
Total Company
Net sales		$	153,340			$	157,860			$	454,240			$	484,210
Operating profit		$	8,610			$	7,870			$	17,680			$	27,100
Total Special Items to consider in evaluating operating profit:		$	3,060			$	740			$	8,460			$	3,180
Excluding Special Items, operating profit would have been		$	11,670			$	8,610			$	26,140			$	30,280

Appendix I
Horizon Global Corporation
Additional Information Regarding Special Items Impacting
Reported GAAP Financial Measures
(Unaudited – dollars in thousands, except per share amounts)
		Three months ended September 30,								Nine months ended September 30,
		2015				2014				2015				2014
Net Income, as reported		$	6,350			$	5,210			$	10,030			$	18,410
After-tax impact of Special Items to consider in evaluating quality of income:
Severance and business restructuring costs		2,650				570				5,220				2,160
Loss on software disposal		—				—				1,170				—
Excluding Special Items, income would have been		$	9,000			$	5,780			$	16,420			$	20,570
		Three months ended September 30,								Nine months ended September 30,
		2015				2014				2015				2014
Diluted earnings per share, as reported		$	0.35			$	0.29			$	0.55			$	1.02
After-tax impact of Special Items to consider in evaluating quality of EPS:
Severance and business restructuring costs		0.15				0.03				0.29				0.12
Loss on software disposal		—				—				0.06				—
Excluding Special Items, EPS would have been		$	0.50			$	0.32			$	0.90			$	1.14
Weighted-average shares outstanding, diluted		18,215,209				18,114,032				18,160,858				18,113,399

Appendix II
Horizon Global Corporation
Reconciliation of Reported Revenue Growth
to Constant Currency Basis
(Unaudited)
		Three months ended September 30, 2015									Nine months ended September 30, 2015
		Consolidated			Cequent Americas			Cequent APEA			Consolidated			Cequent Americas			Cequent APEA
Revenue growth as reported		(2.9	)%		2.6	%		(16.9	)%		(6.2	)%		(4.1	)%		(12.0	)%
Less: currency impact		(5.5	)%		(1.0	)%		(17.1	)%		(4.2	)%		(0.7	)%		(14.0	)%
Revenue growth at constant currency		2.6	%		3.6	%		0.2	%		(2.0	)%		(3.4	)%		2.0	%

Contacts

Horizon Global Corporation
Maria C. Duey
Vice President,
Investor Relations & Communications
(248) 593-8810
mduey@horizonglobal.com