UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
x☒


 
Quarterly Report Pursuant to SectionQUARTERLY REPORT PURSUANT TO SECTION 13 orOR 15(d) of the Securities Exchange Act ofOF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended SeptemberJune 30, 20172020
or


o☐


 
Transition Report Pursuant to SectionTRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) of the Securities Exchange Act ofOF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period fromto.
Commission file number 001-37427
HORIZON GLOBAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
47-3574483
(IRS Employer
Identification No.)
2600 W. Big Beaver Road,47912 Halyard Drive, Suite 555100
Troy,Plymouth, Michigan 4808448170
(Address of principal executive offices, including zip code)
(248) 593-8820(734) 656-3000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueHZNNew York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No o.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No o.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
Accelerated filer ☒
Non-accelerated filer o
Smaller reporting company ☒Emerging growth company ☒
Large accelerated filer o
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
Emerging growth company x
(Do not check if a
smaller reporting company)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes x ☒No o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐    No x☒
As of October 27, 2017,August 3, 2020, the number of outstanding shares of the Registrant’s common stock par value $0.01 per share, was 24,937,97625,791,629 shares.



HORIZON GLOBAL CORPORATION
Index
Financial Information
Part I.
Forward-Looking Statements
2
Item 1.
3
3
4
5
6
7
8
Item 2.
2230
Item 3.
3352
Item 4.
3453
Other Information
Item 1.
3554
Item 1A.
3554
Item 2.
3555
Item 3.
3656
Item 4.
3656
Item 5.
3656
Item 6.
3757
Signatures
3858



1

Forward-Looking Statements
This reportQuarterly Report on Form 10-Q may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. 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 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 integrationimpact of the Westfalia Group (“Westfalia Group” consistsnovel coronavirus (COVID-19) pandemic on the Company’s business, results of Westfalia-Automotive Holding GmbHoperations, financial condition and TeIJs Holding B.V.);liquidity; the Company’s ability to regain compliance with the New York Stock Exchange’s continued listing standards; the Company’s leverage; liabilities and restrictions imposed by the Company’s debt instruments; market demand; competitive factors; supply constraints; material and energy costs; technology factors; litigation; government and regulatory actions;actions including the impact of any tariffs, quotas, or surcharges; the Company’s accounting policies; future trends; general economic and currency conditions; various conditions specific to the Company’s business and industry; the success of the Company’s action plan, including the actual amount of savings and timing thereof; the success of the Company’s business improvement initiatives in Europe-Africa, including the amount of savings and timing thereof; the Company’s exposure to product liability claims from customers and end users, and the costs associated therewith; the Company’s ability to meet its covenants in the agreements governing its debt; factors affecting the Company’s business that are outside of its control, including natural disasters, pandemics, including the current COVID-19 pandemic, accidents and governmental actions; and other risks that are discussed in Part I, Item 1A, “Risk FactorsFactors.” and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2019, as well as in Item 1A, “Risk Factors.” of this Quarterly Report on Form 10-Q and in the Company’s other periodic reports filed with the Securities and Exchange Commission . The risks described in ourthe Company’s Annual Report on Form 10-K and elsewhere in this reportother periodic reports 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.
The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We caution readers not to place undoundue reliance on theforward-looking statements, which speak only as of the date of this report.Quarterly Report on Form 10-Q. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect the Company. 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 of this reportQuarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events, except as otherwise required by law.
We disclose important factors that could cause our actual results to differ materially from our expectations implied by our forward-looking statements under Item 2,7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this report.the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. These cautionary statements qualify all forward-looking statements attributed to us or persons acting on our behalf. When we indicate that an event, condition or circumstance could or would have an adverse effect on us, we mean to include effects upon our business, financial and other conditions, results of operations, prospects and ability to service our debt.



2

PART I. FINANCIAL INFORMATION


Item 1.  Condensed Consolidated Financial Statements
HORIZON GLOBAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited—dollars in thousands)


 September 30,
2017
December 31,
2016
 (unaudited)  June 30,
2020		December 31,
2019
Assets 
 
Assets
Current assets: 
 
Current assets:
Cash and cash equivalents $20,470

$50,240
Cash and cash equivalents$34,230  $11,770  
Receivables, net of reserves of approximately $4.1 million and $3.8 million at September 30, 2017 and December 31, 2016, respectively 112,360

77,570
Restricted cashRestricted cash5,770  —  
Receivables, netReceivables, net86,500  71,680  
Inventories 162,660

146,020
Inventories116,220  136,650  
Prepaid expenses and other current assets 10,200

12,160
Prepaid expenses and other current assets8,870  8,570  
Total current assets 305,690
 285,990
Total current assets251,590  228,670  
Property and equipment, net 110,830

93,760
Property and equipment, net73,260  75,830  
Operating lease right-of-use assetsOperating lease right-of-use assets44,130  45,770  
Goodwill 145,910

120,190
Goodwill3,200  4,350  
Other intangibles, net 92,780

86,720
Other intangibles, net56,450  60,120  
Deferred income taxes 10,790
 9,370
Deferred income taxes490  430  
Other assets 10,810

17,340
Other assets7,680  5,870  
Total assets $676,810
 $613,370
Total assets$436,800  $421,040  
Liabilities and Shareholders' Equity 
 
Liabilities and Shareholders' Equity
Current liabilities: 
 
Current liabilities:
Current maturities, long-term debt $9,510

$22,900
Short-term borrowings and current maturities, long-term debtShort-term borrowings and current maturities, long-term debt$10,060  $4,310  
Accounts payable 111,380

111,450
Accounts payable85,330  78,450  
Short-term operating lease liabilitiesShort-term operating lease liabilities10,270  9,880  
Accrued liabilities 68,060

63,780
Accrued liabilities50,890  48,850  
Total current liabilities 188,950
 198,130
Total current liabilities156,550  141,490  
Gross long-term debtGross long-term debt265,290  236,550  
Unamortized debt issuance costs and discountUnamortized debt issuance costs and discount(25,330) (31,500) 
Long-term debt 269,710

327,040
Long-term debt239,960  205,050  
Deferred income taxes 31,730

25,730
Deferred income taxes4,040  4,040  
Long-term operating lease liabilitiesLong-term operating lease liabilities46,610  48,070  
Other long-term liabilities 28,790

30,410
Other long-term liabilities15,780  13,790  
Total liabilities 519,180
 581,310
Total liabilities462,940  412,440  
Commitments and contingent liabilities —
 —
Contingencies (See Note 13)Contingencies (See Note 13)
Shareholders' equity:    Shareholders' equity:
Preferred stock, $0.01 par: Authorized 100,000,000 shares;
Issued and outstanding: None		 —
 —
Common stock, $0.01 par: Authorized 400,000,000 shares;
Issued and outstanding: 24,936,110 shares at September 30, 2017 and 20,899,959 shares at December 31, 2016		 250
 210
Preferred stock, $0.01 par: Authorized 100,000,000 shares; Issued and outstanding: NaNnePreferred stock, $0.01 par: Authorized 100,000,000 shares; Issued and outstanding: NaNne—  —  
Common stock, $0.01 par: Authorized 400,000,000 shares; 26,478,135 shares issued and 25,791,629 outstanding at June 30, 2020, and 26,073,894 shares issued and 25,387,388 outstanding at December 31, 2019Common stock, $0.01 par: Authorized 400,000,000 shares; 26,478,135 shares issued and 25,791,629 outstanding at June 30, 2020, and 26,073,894 shares issued and 25,387,388 outstanding at December 31, 2019250  250  
Common stock warrants exercisable for 6,443,910 and 6,487,674 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectivelyCommon stock warrants exercisable for 6,443,910 and 6,487,674 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively10,610  10,610  
Paid-in capital 158,270
 54,800
Paid-in capital164,550  163,240  
Treasury stock, at cost: 686,506 shares at September 30, 2017 and no shares at December 31, 2016 (10,000) —
Retained earnings (accumulated deficit) 2,980
 (14,310)
Accumulated other comprehensive income (loss) 7,330
 (8,340)
Total Horizon Global shareholders' equity 158,830
 32,360
Treasury stock, at cost: 686,506 shares at June 30, 2020 and December 31, 2019Treasury stock, at cost: 686,506 shares at June 30, 2020 and December 31, 2019(10,000) (10,000) 
Accumulated deficitAccumulated deficit(175,050) (141,970) 
Accumulated other comprehensive lossAccumulated other comprehensive loss(12,090) (9,790) 
Total Horizon Global shareholders' (deficit) equityTotal Horizon Global shareholders' (deficit) equity(21,730) 12,340  
Noncontrolling interest (1,200) (300)Noncontrolling interest(4,410) (3,740) 
Total shareholders' equity 157,630
 32,060
Total shareholders' (deficit) equityTotal shareholders' (deficit) equity(26,140) 8,600  
Total liabilities and shareholders' equity $676,810
 $613,370
Total liabilities and shareholders' equity$436,800  $421,040  
The accompanying notes are an integral part of these condensed consolidated financial statements.

3

HORIZON GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS
(unaudited—dollars in thousands, except forshare and per share amounts)data)

 Three Months Ended
June 30,		Six Months Ended
June 30,
 2020201920202019
Net sales$120,490  $192,650  $283,740  $370,320  
Cost of sales(102,440) (156,340) (239,440) (310,450) 
Gross profit18,050  36,310  44,300  59,870  
Selling, general and administrative expenses(26,000) (33,670) (58,860) (72,040) 
Net (loss) gain on dispositions of property and equipment(20) 10  (90) 1,450  
Operating (loss) profit(7,970) 2,650  (14,650) (10,720) 
Other (expense) income, net(450) 500  (2,120) (4,970) 
Interest expense(8,220) (15,320) (16,410) (26,150) 
Loss from continuing operations before income tax(16,640) (12,170) (33,180) (41,840) 
Income tax (expense) benefit(80) 1,040  (70) 1,310  
Net loss from continuing operations(16,720) (11,130) (33,250) (40,530) 
Income (loss) from discontinued operations, net of tax—  2,990  (500) 6,770  
Net loss(16,720) (8,140) (33,750) (33,760) 
Less: Net loss attributable to noncontrolling interest(380) (60) (670) (580) 
Net loss attributable to Horizon Global$(16,340) $(8,080) $(33,080) $(33,180) 
Net (loss) income per share attributable to Horizon Global:
Basic:
Continuing operations$(0.64) $(0.44) $(1.28) $(1.58) 
Discontinued operations—  0.12  (0.02) 0.27  
Total$(0.64) $(0.32) (1.30) (1.31) 
Diluted:
Continuing operations$(0.64) $(0.44) (1.28) (1.58) 
Discontinued operations—  0.12  (0.02) 0.27  
Total$(0.64) $(0.32) (1.30) (1.31) 
Weighted average common shares outstanding:
Basic25,618,793  25,282,791  25,509,794  25,235,704  
Diluted25,618,793  25,282,791  25,509,794  25,235,704  

  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



The accompanying notes are an integral part of these condensed consolidated financial statements.

4

HORIZON GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMELOSS
(unaudited—dollars in thousands)

Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
Net loss$(16,720) $(8,140) $(33,750) $(33,760) 
Other comprehensive income (loss), net of tax:
Foreign currency translation and other2,040  80  (2,300) 1,290  
Derivative instruments—  (210) —  (1,280) 
Total other comprehensive income (loss), net of tax2,040  (130) (2,300) 10  
Total comprehensive loss(14,680) (8,270) (36,050) (33,750) 
Less: Comprehensive loss attributable to noncontrolling interest(380) (60) (670) (580) 
Comprehensive loss attributable to Horizon Global$(14,300) $(8,210) $(35,380) $(33,170) 

  Three months ended
September 30,		 Nine months ended
September 30,
  2017 2016 2017 2016
Net income $6,560
 $370
 $16,370
 $9,890
Other comprehensive income (loss), net of tax:        
Foreign currency translation 2,020
 830
 15,520
 1,130
Derivative instruments (Note 8) (1,080) (30) 170
 370
Total other comprehensive income 940
 800
 15,690
 1,500
Total comprehensive income 7,500
 1,170
 32,060
 11,390
Less: Comprehensive loss attributable to noncontrolling interest (320) —
 (900) —
Comprehensive income attributable to Horizon Global
 $7,820
 $1,170
 $32,960
 $11,390



The accompanying notes are an integral part of these condensed consolidated financial statements.



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

Six Months Ended June 30,
20202019
Cash Flows from Operating Activities:
Net loss$(33,750) $(33,760) 
Less: (Loss) income from discontinued operations(500) 6,770  
Net loss from continuing operations(33,250) (40,530) 
Adjustments to reconcile net loss from continuing operations to net cash provided by (used for) operating activities:
Net loss (gain) on dispositions of property and equipment90  (1,450) 
Depreciation7,100  7,390  
Amortization of intangible assets3,430  3,130  
Amortization of original issuance discount and debt issuance costs8,100  9,900  
Deferred income taxes10  260  
Non-cash compensation expense1,320  940  
Paid-in-kind interest3,660  4,370  
Increase in receivables(16,780) (28,510) 
Decrease (increase) in inventories19,270  (7,820) 
Increase in prepaid expenses and other assets(2,890) (1,040) 
Increase in accounts payable and accrued liabilities13,460  4,270  
Other, net1,380  (13,920) 
Net cash provided by (used for) operating activities for continuing operations4,900  (63,010) 
Cash Flows from Investing Activities:
Capital expenditures(5,450) (5,680) 
Net proceeds from sale of business—  4,970  
Net proceeds from disposition of property and equipment70  1,550  
Net cash (used for) provided by investing activities for continuing operations(5,380) 840  
Cash Flows from Financing Activities:
Proceeds from borrowings on credit facilities6,290  14,100  
Repayments of borrowings on credit facilities(1,210) (840) 
Proceeds from Second Lien Term Loan, net of issuance costs—  35,520  
Repayments of borrowings on First Lien Term Loan, inclusive of transaction costs—  (10,090) 
Proceeds from Revolving Credit Facility, net of issuance costs54,680  —  
Repayments of borrowings on Revolving Credit Facility(19,180) —  
Proceeds from ABL revolving debt, net of issuance costs8,000  60,340  
Repayments of borrowings on ABL revolving debt(27,920) (72,080) 
Proceeds from Paycheck Protection Plan (PPP) Loan8,670  —  
Proceeds from issuance of Series A Preferred Stock—  5,340  
Proceeds from issuance of Warrants—  5,380  
Other, net(10) (10) 
Net cash provided by financing activities for continuing operations29,320  37,660  
Discontinued Operations:
Net cash (used for) provided by discontinued operating activities(500) 14,250  
Net cash used for discontinued investing activities—  (920) 
Net cash provided by discontinued financing activities—  —  
Net cash (used for) provided by discontinued operations(500) 13,330  
Effect of exchange rate changes on cash, cash equivalents and restricted cash(110) 290  
Cash, Cash Equivalents and Restricted Cash:
Increase (decrease) for the period28,230  (10,890) 
At beginning of period11,770  27,650  
At end of period$40,000  $16,760  
Supplemental disclosure of cash flow information:
Cash paid for interest$4,370  $11,750  
Cash paid for taxes, net of refunds$440  $910  
The accompanying notes are an integral part of these condensed consolidated financial statements.

6

HORIZON GLOBAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Nine Months Ended September 30, 2017
(unaudited—dollars in thousands)

Common StockCommon Stock WarrantsPaid-in CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Horizon Global Shareholders' Equity (Deficit)Noncontrolling InterestTotal Shareholders' Equity (Deficit)
Balance at January 1, 2020$250  $10,610  $163,240  $(10,000) $(141,970) $(9,790) $12,340  $(3,740) $8,600  
Net loss—  —  —  —  (16,740) —  (16,740) (290) (17,030) 
Other comprehensive loss, net of tax—  —  —  —  —  (4,340) (4,340) —  (4,340) 
Shares surrendered upon vesting of employees share based payment awards to cover tax obligations—  —  (60) —  —  —  (60) —  (60) 
Non-cash compensation expense—  —  420  —  —  —  420  —  420  
Balances at March 31, 2020250  10,610  163,600  (10,000) (158,710) (14,130) (8,380) (4,030) (12,410) 
Net loss—  —  —  —  (16,340) —  (16,340) (380) (16,720) 
Other comprehensive income, net of tax—  —  —  —  —  2,040  2,040  —  2,040  
Shares surrendered upon vesting of employees share based payment awards to cover tax obligations—  —  50  —  —  —  50  —  50  
Non-cash compensation expense—  —  900  —  —  —  900  —  900  
Balances at June 30, 2020$250  $10,610  $164,550  $(10,000) $(175,050) $(12,090) $(21,730) $(4,410) $(26,140) 
Common StockCommon Stock WarrantsPaid-in CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Horizon Global Shareholders' Equity (Deficit)Noncontrolling InterestTotal Shareholders' Equity (Deficit)
Balances at January 1, 2019$250  $—  $160,990  $(10,000) $(222,720) $7,760  $(63,720) $(2,500) $(66,220) 
Net loss—  —  —  —  (25,100) —  (25,100) (520) (25,620) 
Other comprehensive income, net of tax—  —  —  —  —  140  140  —  140  
Shares surrendered upon vesting of employees share based payment awards to cover tax obligations—  —  (10) —  —  —  (10) —  (10) 
Non-cash compensation expense—  —  350  —  —  —  350  —  350  
Issuance of Warrants—  5,380  —  —  —  —  5,380  —  5,380  
Balances at March 31, 2019250  5,380  161,330  (10,000) (247,820) 7,900  (82,960) (3,020) (85,980) 
Net Loss—  —  —  —  (8,080) —  (8,080) (60) (8,140) 
Other comprehensive loss, net of tax—  —  —  —  —  (130) (130) —  (130) 
Non-cash compensation expense—  —  590  —  —  —  590  —  590  
Issuance of Warrants—  5,340  —  —  —  —  5,340  —  5,340  
Balance at June 30, 2019250  10,720  161,920  (10,000) (255,900) 7,770  (85,240) (3,080) (88,320) 
  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



The accompanying notes are an integral part of these condensed consolidated financial statements.

7

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




1. Nature of Operations and Basis of Presentation
Horizon Global Corporation and its consolidated subsidiaries (“Horizon,” “Horizon Global,” “we,” or the “Company”) isare a global designer, manufacturer and distributor of a wide variety of high quality, custom-engineered towing, trailering, cargo management and other related accessories. These products are designed to support original equipment manufacturers (“OEMs”) and original equipment suppliersservicers (“OESs”) (collectively, “OEs”), aftermarket and retail customers within the agricultural, automotive, construction, horse/livestock, industrial, marine, military, recreational, trailer and utility markets. The Company groups its operating segmentsbusiness into reportableoperating segments by the region in which sales and manufacturing efforts are focused. TheAs a result of the Company’s reportablesale of its Horizon Asia-Pacific operating segment (“APAC”) in 2019, the Company’s operating segments are Horizon Americas Horizon Europe-Africa, and Horizon Asia-Pacific.Europe-Africa. See Note 9, “17, Segment Information,” for further information on each of the Company’s reportableoperating segments. Historical information has been retrospectively adjusted to reflect the classification of APAC as discontinued operations. Discontinued operations are further discussed in Note 3, Discontinued Operations.
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S.US Securities and Exchange Commission (the “SEC”) for interim financial information and should be read in conjunction with the consolidated financial statements and notes thereto included in ourthe Company’s Annual Report on Form 10-K for the year ended December 31, 2016.2019. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“U.S.US GAAP”) for complete financial statements. It is management’s opinion that these financial statements contain all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of financial position and results of operations. Results of operations for interim periods are not necessarily indicative of results for the full year.
US GAAP requires us to make certain estimates, judgments, and assumptions. Management believes that the estimates, judgments, and assumptions made when accounting for items and matters such as, but not limited to, the allowance for doubtful accounts, sales incentives, sales returns, impairment assessments, recoverability of long-lived assets, income taxes (including deferred taxes and uncertain tax positions), share-based compensation, the assessment of lower of cost or net realizable value on inventory, useful lives assigned to long-lived assets, and depreciation and amortization, are reasonable based on information available at the time they are made.
2.The full extent and impact of the coronavirus (“COVID-19”) pandemic remains unknown. However, we have made appropriate accounting estimates based on the facts and circumstances available as of the reporting date. To the extent there are differences between these estimates and actual results, our consolidated financial statements may be materially affected.
2. New Accounting Pronouncements
New accounting pronouncements not yet adopted
In August 2017,March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-12, “Derivatives and Hedging2020-04, “Reference Rate Reform (Topic 815)848): Targeted Improvements to Accounting for Hedging Activities”Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2017-12”2020-04”). ASU 2017-12 eliminates2020-04 provides temporary optional guidance to ease the requirementpotential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The relief provided by this guidance is elective and applies to separately measureall entities, subject to meeting certain criteria, that have contracts, hedging relationships, and report hedge ineffectiveness and generally requires, for qualifying hedges,other transactions that reference the entire change in the fair value of a hedging instrumentLondon Interbank Offered Rate (“LIBOR”) or another reference rate expected to be presenteddiscontinued because of reference rate reform initiatives being undertaken in the same income statement line as the hedged item.an effort to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. The optional amendments of this guidance also modifies the accounting for components excluded from the assessment of hedge effectiveness, eases documentation and assessment requirements and modifies certain disclosure requirements. ASU 2017-12 isare effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods, with earlyall entities upon adoption permitted and should be applied on a modified retrospective basis. The Company is in the process of. We are currently assessing the impact of this update on the adoption of ASU 2017-12 on itsCompany’s condensed consolidated financial statements.
In January 2017,June 2016, the FASB issued ASU 2017-04, “Intangibles2016-13, “Financial Instruments - Goodwill and OtherCredit Losses (Topic 350)326): Simplifying the Test for Goodwill Impairment”Measurement of Credit Losses on Financial Instruments” (“ASU 2017-04”2016-13”). ASU 2017-04 eliminates2016-13 replaces the requirementcurrent incurred loss model guidance with a new method that reflects expected credit losses. Under this guidance, an entity would recognize an impairment allowance equal to performits estimate of expected credit losses on financial assets measured at amortized cost. In November 2019, the FASB extended the effective date of ASU 2016-13 for smaller reporting companies. As a hypothetical purchase price allocation to measure the amount of goodwill impairment. Instead, underresult, ASU 2017-04, the goodwill impairment would be the amount by which a reporting unit’s carrying value exceeds its fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to the reporting unit. ASU 2017-042016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 20192022, with early adoption permitted. The standard is not expected to have a significant impact on the Company's condensed consolidated financial statements.
8

3. Discontinued Operations
On September 19, 2019, the Company intendscompleted the sale of its subsidiaries that comprised APAC to early adopt ASU 2017-04Hayman Pacific BidCo Pty Ltd., an affiliate of Pacific Equity Partners, for its annual goodwill impairment test during$209.6 million in net cash proceeds after payment of transaction costs, in a net debt free sale. The sale resulted in the fourth quarterrecognition of 2017.
In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfersa gain of Assets Other Than Inventory” (“ASU 2016-16”). ASU 2016-16 provides an amendment to the accounting guidance$180.5 million, of which $17.3 million was related to the recognitioncumulative translation adjustment that was reclassified to earnings, which is reflected within the income from discontinued operations, net of income tax consequencestaxes line of an intra-entity transferthe consolidated statement of an asset other than inventory. This guidance is effectiveoperations for public entitiesthe year ended December 31, 2019, refer to Note 4, Discontinued Operations, in our Annual Report on Form 10-K for fiscal years beginning afterthe year ended December 15, 2017, including interim periods within those annual periods, with early adoption permitted31, 2019.
In the first interim periodquarter of 2020, the remaining post-closing conditions of the sale were completed, including a fiscal yeartrue up to net cash proceeds, for which we recognized a loss on sale of discontinued operations of $0.5 million.
The following table presents the Company’s results from discontinued operations for the three and should be applied on a modified retrospective basis. Under the new guidance, an entity is required to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Under the current guidance, the income tax effects are deferred until the asset has been sold to an outside party. six months ended June 30, 2019:
 Three Months Ended June 30, 2019Six Months Ended June 30, 2019
 (dollars in thousands)
Net sales$30,540  $62,550  
Cost of sales(22,790) (46,280) 
Selling, general and administrative expenses(3,370) (6,530) 
Net gain on dispositions of property and equipment(10) —  
Other expense, net(50) (190) 
Interest expense(130) (230) 
Income before income tax expense4,190  9,320  
Income tax expense(1,200) (2,550) 
Income from discontinued operations, net of tax$2,990  $6,770  
9

4. Revenues
Revenue Recognition
The Company does not expectdisaggregates revenue from contracts with customers by major sales channel. The Company determined that disaggregating revenue into these categories best depicts how the adoption of ASU 2016-16 to have a material impact on its condensed consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), which supersedes the leases requirements in “Leases (Topic 840).” The objective of this update is to establish the principles that lessees and lessors shall apply to report useful information to users of financial statements about thenature, amount, timing, and uncertainty of revenue and cash flows arising fromare affected by economic factors. The automotive OEM channel represents sales to automotive vehicle manufacturers. The automotive OES channel primarily represents sales to automotive vehicle dealerships. The aftermarket channel represents sales to automotive installers and warehouse distributors. The retail channel represents sales to direct-to-consumer retailers. The industrial channel represents sales to non-automotive manufacturers and dealers of agricultural equipment, trailers, and other custom assemblies. The e-commerce channel represents sales to direct-to-consumer retailers who utilize the Internet to purchase the Company’s products. The other channel represents sales that do not fit into a lease. ASU 2016-02 is effectivecategory described above and these sales are considered ancillary to the Company’s core operating activities.
The following tables present the Company’s net sales by segments and disaggregated by major sales channel for fiscal years beginning after December 15, 2018, including interim periods within thosethe three and six months ended June 30, 2020 and 2019:

Three Months Ended June 30, 2020
Horizon AmericasHorizon Europe-AfricaTotal
(dollars in thousands)
Net Sales
Automotive OEM$9,510  $20,620  $30,130  
Automotive OES1,080  7,720  8,800  
Aftermarket22,280  16,680  38,960  
Retail22,830  —  22,830  
Industrial5,040  340  5,380  
E-commerce13,370  230  13,600  
Other10  780  790  
Total$74,120  $46,370  $120,490  
HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three Months Ended June 30, 2019
Horizon AmericasHorizon
Europe-Africa		Total
(dollars in thousands)
Net Sales
Automotive OEM$23,680  $45,780  $69,460  
Automotive OES1,810  16,040  17,850  
Aftermarket28,840  20,070  48,910  
Retail33,200  —  33,200  
Industrial6,930  860  7,790  
E-commerce14,470  560  15,030  
Other20  390  410  
Total$108,950  $83,700  $192,650  
(unaudited)
10


Six Months Ended June 30, 2020
Horizon AmericasHorizon Europe-AfricaTotal
(dollars in thousands)
Net Sales
Automotive OEM$29,870  $62,020  $91,890  
Automotive OES2,350  20,180  22,530  
Aftermarket49,050  32,390  81,440  
Retail46,400  —  46,400  
Industrial12,890  660  13,550  
E-commerce25,880  660  26,540  
Other50  1,340  1,390  
Total$166,490  $117,250  $283,740  
annual periods, with early adoption permitted. The
Six Months Ended June 30, 2019
Horizon AmericasHorizon Europe-AfricaTotal
(dollars in thousands)
Net Sales
Automotive OEM$43,920  $94,700  $138,620  
Automotive OES3,420  29,330  32,750  
Aftermarket52,990  36,360  89,350  
Retail61,630  —  61,630  
Industrial16,210  1,560  17,770  
E-commerce26,260  1,090  27,350  
Other20  2,830  2,850  
Total$204,450  $165,870  $370,320  
During the three and six months ended June 30, 2020 and 2019, adjustments to estimates of variable consideration for previously recognized revenue were immaterial. As of June 30, 2020 and 2019, total opening and closing balances of contract assets and deferred revenue were immaterial.
11

5. Goodwill and Other Intangible Assets
During the six months June 30, 2020, the Company isexperienced a decline in its current and projected future operating and financial performance as well as pressure on its near-term financial forecasts as a result of the COVID-19 pandemic and the related wide-ranging actions taken by international, federal, state, and local public health and governmental authorities to combat the pandemic and spread of COVID-19 in regions across the United States and the world. These actions include quarantines, social distancing and “stay-at-home” orders, travel restrictions, mandatory business closures, and other mandates that have substantially restricted individuals’ daily activities and curtailed or ceased many businesses’ normal operations. In response to the pandemic and these actions, we had adhered to geographical government shutdowns and operating restrictions for our facilities, which resulted in an adverse impact to our business and financial performance in the processfirst half of assessing2020, as well as on our near-term projected financial performance. Due to the impact of the adoptionCOVID-19 pandemic, the Company identified an indicator of ASU 2016-02impairment on its condensed consolidated financial statements.goodwill and indefinite-lived intangible assets in its Horizon Americas reporting unit and on its indefinite-lived intangible assets in its Horizon Europe-Africa reporting unit in the first quarter of 2020.
In July 2015,As a result of the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifyingindicator, the MeasurementCompany performed an interim quantitative impairment assessment of Inventory.” This guidance provides that inventory not measured using the last-in, first out (“LIFO”) or retail inventory methods should be measured at the lower of cost and net realizable value. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory. As of January 1, 2017, the provisions of this ASU became effectivegoodwill recorded for the Company on a prospective basisHorizon Americas reporting unit as of March 31, 2020, by considering the market and did not have a material impact on the Company’s condensed consolidated financial position orincome approaches. The results of operations.
Accounting Standards Update 2014-09
In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” This ASU supersedes most of the existing guidance on revenue recognition in ASC Topic 605, “Revenue Recognition”, and establishes a broad principle that would require an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this principle, an entity identifies the contract with a customer, identifies the separate performance obligations in the contract, determines the transaction price, allocates the transaction price to the separate performance obligations and recognizes revenue when each separate performance obligation is satisfied. The FASB has subsequently issued additional ASUs to clarify certain elements of the new revenue recognition guidance. This guidance is effective for Horizon Global beginning on January 1, 2018 and entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The Company expects to adopt the ASU using the modified retrospective approach, which would result in a cumulative-effect adjustment as of the date of adoption. While Horizon Global is continuing to assess all potential impacts of implementing this guidance, the Company does not believe this standard will have a material impact on its condensed consolidated financial statements.
There are also certain considerations related to internal control over financial reporting that are associated with implementing the new guidance under Topic 606. The Company is currently evaluating its control framework for revenue recognition and identifying any changes that may need to be made in response to the new guidance. Disclosure requirements under the new guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance. Designing and implementing the appropriate controls over gathering and reporting the information required under Topic 606 is currently in process.

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

3. Acquisitions
On July 3, 2017, the Company completed the acquisition of Best Bars Limited (“Best Bars”), within the Horizon Asia-Pacific reportable segment, for total consideration of $19.8 million, subject to a net working capital adjustment. Best Bars is a provider of towing solutions and automotive accessories to OE and aftermarket customers in New Zealand. The Company believes the acquisition will expand its opportunities for revenue and margin growth, increase its market share and further develop its global OE footprint. Supplemental pro forma disclosures are not included as the amounts are deemed immaterial. Revenues and earnings of the acquiree since the acquisition date included in the Company’s condensed consolidated statements of income are immaterial.
The following table summarizesquantitative analysis performed indicated the fair value of consideration paidthe reporting unit exceeded the carrying value. Key assumptions used in the analysis were a discount rate of 14.0%, Adjusted EBITDA (as defined below) margin and a terminal growth rate of 3.0%. The primary driver in the reduction of the fair value of the reporting unit was a reduction of expected future cash flows during the remainder of 2020 as the full impact of the COVID-19 pandemic remains uncertain. Future events and changing market conditions, including operating restrictions may, however, lead the Company to re-evaluate the assumptions that have been used to test for Best Bars,goodwill impairment, including key assumptions used in the expected Adjusted EBITDA margins, cash flows and discount rate, as well as other assumptions with respect to matters outside of the Company’s control, such as currency rates and the aforementioned geographical government shutdowns and operating restrictions.
Adjusted EBITDA is defined as net income attributable to Horizon Global before interest expense, income taxes, depreciation and amortization, and before certain items, as applicable, such as severance, restructuring, relocation and related business disruption costs, impairment of goodwill and other intangibles, non-cash stock compensation, certain product liability recall and litigation claims, acquisition and integration costs, gains (losses) on business divestitures and other assets, acquiredboard transition support and liabilities assumed:non-cash unrealized foreign currency remeasurement costs.
In addition, as a result of the indicator of impairment identified, the Company performed an interim impairment assessment of its indefinite-lived intangible assets as of March 31, 2020 in the Horizon Americas and Horizon Europe-Africa operating segments. Based on the results of our analyses, the estimated fair values of the trade names exceeded the carrying values. Key assumptions used in the analyses were a discount rate of 14.5% and royalty rates ranging from 0.5% to 1.9%.
  Acquisition Date
  (dollars in thousands)
Consideration  
Cash paid $19,800
   
Recognized amounts of identifiable assets acquired and liabilities assumed  
Receivables, net 2,100
Inventories 2,340
Other intangibles, net 7,690
Prepaid expenses and other current assets 110
Property and equipment, net 2,250
Accounts payable and accrued liabilities 1,680
Total identifiable net assets 12,810
Goodwill 6,990
  $19,800
The Company will continues to assess the impact of the COVID-19 pandemic on its business and financial performance and any other indicators of potential impairment. During the three months ended June 30, 2020, our operations began to stabilize in response to customer demand, as the jurisdictions where we conduct operations began to reduce business operating restrictions. However, it is possible that if the jurisdictions where the Company does business, or those of its customers, experience additional or future operating restrictions, a decline in results may become more than temporary, and future indicators of impairment may be identified. This may result in a future interim impairment analysis being necessary, which could result in a future impairment of goodwill, indefinite-lived intangible assets or other long-lived assets.
4. Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill for the ninesix months ended SeptemberJune 30, 20172020 are summarized as follows:
Horizon AmericasHorizon Europe-AfricaTotal
(dollars in thousands)
Balance at December 31, 2019$4,350  $—  $4,350  
Foreign currency translation(1,150) —  (1,150) 
Balance at June 30, 2020$3,200  $—  $3,200  
12
  Horizon Americas Horizon Europe-Africa Horizon
Asia-Pacific		 Total
  (dollars in thousands)
Balance at December 31, 2016 $5,370
 $114,820
 $—
 $120,190
Goodwill from acquisitions (a)
 —
   6,990
 6,990
Foreign currency translation and other 160
 18,690
 (120) 18,730
Balance at September 30, 2017 $5,530
 $133,510
 $6,870
 $145,910

__________________________
(a) Attributable to the acquisition of Best Bars, as further described in Note 3, “Acquisitions.”

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

The gross carrying amounts and accumulated amortization of the Company’s other intangibles as of September 30, 2017 and December 31, 2016intangible assets are summarized below.as follows:
As of
June 30, 2020
Intangible Category by Useful LifeGross Carrying AmountAccumulated AmortizationNet Carrying Amount
(dollars in thousands)
Finite-lived intangible assets:
Customer relationships (2 – 20 years)$163,210  $(131,530) $31,680  
Technology and other (3 – 15 years)21,740  (17,910) 3,830  
Trademark/Trade names (1 – 8 years)150  (150) —  
Total finite-lived intangible assets185,100  (149,590) 35,510  
Trademark/Trade names, indefinite-lived20,940  —  20,940  
Total other intangible assets$206,040  $(149,590) $56,450  

As of
December 31, 2019
Intangible Category by Useful LifeGross Carrying AmountAccumulated AmortizationNet Carrying Amount
(dollars in thousands)
Finite-lived intangible assets:
Customer relationships (2 – 20 years)$164,150  $(129,310) $34,840  
Technology and other (3 – 15 years)21,420  (17,260) 4,160  
Trademark/Trade names (1 – 8 years)150  (150) —  
Total finite-lived intangible assets185,720  (146,720) 39,000  
Trademark/Trade names, indefinite-lived21,120  —  21,120  
Total other intangible assets$206,840  $(146,720) $60,120  
On March 1, 2019, the Company entered into an agreement of sale of certain business assets in its Europe-Africa operating segment, via a share and asset sale (the “Sale”). Under the terms of the Sale, effective March 1, 2019, the Company disposed of certain non-automotive business assets that operated using the Terwa brand for $5.5 million, which included a $0.5 million note receivable. The Company amortizes these assets over periods ranging from threeSale resulted in a $3.6 million loss recorded in other expense, net in the condensed consolidated statements of operations, including a $3.0 million reduction of net intangibles related to 25 years.
  September 30, 2017 December 31, 2016
Intangible Category by Useful Life Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization
  (dollars in thousands)
Finite-lived intangible assets:        
   Customer relationships, 5 – 12 years $70,320
 $(31,610) $66,000
 $(28,440)
   Customer relationships, 15 – 25 years 111,680
 (88,650) 104,690
 (84,120)
Total customer relationships 182,000
 (120,260) 170,690
 (112,560)
   Technology and other, 3 – 15 years 19,520
 (15,290) 18,410
 (14,560)
   Trademark/Trade names, <1 - 8 years 730
 (170) 150
 (150)
Total finite-lived intangible assets 202,250
 (135,720) 189,250
 (127,270)
 Trademark/Trade names, indefinite-lived 26,250
 —
 24,740
 —
Total other intangible assets $228,500
 $(135,720) $213,990
 $(127,270)
customer relationships.
Amortization expense related to intangible assets as included in the accompanying condensed consolidated statements of incomeoperations is summarized as follows:
Three Months Ended June 30,Six Months Ended June 30,
2020201920202019
(dollars in thousands)
Technology and other, included in cost of sales$550  $280  $670  $720  
Customer relationships and Trademark/Trade names, included in selling, general and administrative expenses1,310  950  2,760  2,410  
Total amortization expense$1,860  $1,230  $3,430  $3,130  
13
  Three months ended
September 30,		 Nine months ended
September 30,
  2017 2016 2017 2016
  (dollars in thousands)
Technology and other, included in cost of sales $210
 $30
 $570
 $100
Customer relationships & trademark/trade names, included in selling, general and administrative expenses 2,490
 1,810
 7,090
 5,380
Total amortization expense $2,700
 $1,840
 $7,660
 $5,480

5.6. Inventories
Inventories consist of the following components:
 June 30,
2020		December 31,
2019
 (dollars in thousands)
Finished goods$62,200  $82,080  
Work in process11,970  12,820  
Raw materials42,050  41,750  
Total inventories$116,220  $136,650  

  September 30,
2017		 December 31,
2016
  (dollars in thousands)
Finished goods $94,200
 $89,410
Work in process 20,040
 16,270
Raw materials 48,420
 40,340
Total inventories $162,660
 $146,020

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

6.7. Property and Equipment, Net
Property and equipment, net consists of the following components:
 September 30,
2017		 December 31,
2016		 June 30,
2020		December 31,
2019
 (dollars in thousands) (dollars in thousands)
Land and land improvements $450
 $520
Land and land improvements$470  $470  
Buildings 24,580
 20,120
Buildings20,960  21,290  
Machinery and equipment 161,330
 138,470
Machinery and equipment124,940  121,740  
 186,360
 159,110
146,370  143,500  
Less: Accumulated depreciation 75,530
 65,350
Accumulated depreciationAccumulated depreciation(73,110) (67,670) 
Property and equipment, net $110,830
 $93,760
Property and equipment, net$73,260  $75,830  
Depreciation expense included in the accompanying condensed consolidated statements of incomeoperations is as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
(dollars in thousands)
Depreciation expense, included in cost of sales$3,260  $3,560  $6,410  $6,590  
Depreciation expense, included in selling, general and administrative expenses350  520  690  800  
Total depreciation expense$3,610  $4,080  $7,100  $7,390  

14
  Three months ended
September 30,		 Nine months ended
September 30,
  2017 2016 2017 2016
  (dollars in thousands)
Depreciation expense, included in cost of sales $3,440
 $2,060
 $9,330
 $6,310
Depreciation expense, included in selling, general and administrative expense 330
 440
 950
 1,180
Total depreciation expense $3,770
 $2,500
 $10,280
 $7,490

8. Accrued and Other Long-term Liabilities
7.Accrued liabilities consist of the following components:
June 30,
2020		December 31,
2019
(dollars in thousands)
Customer incentives$16,050  $14,270  
Accrued compensation8,920  6,760  
Customer claims3,990  7,540  
Short-term tax liabilities3,110  90  
Accrued professional services2,560  4,790  
Restructuring1,400  2,340  
Deferred purchase price580  790  
Other14,280  12,270  
Total accrued liabilities50,890  $48,850  
Other long-term liabilities consist of the following components:
 June 30,
2020		December 31,
2019
 (dollars in thousands)
Deferred purchase price$1,700  $2,370  
Restructuring1,340  1,600  
Long-term tax liabilities340  340  
Other12,400  9,480  
Total other long-term liabilities$15,780  $13,790  
15

9. Long-term Debt
The Company’s long-term debt consists of the following:
 June 30,
2020		December 31,
2019
 (dollars in thousands)
Revolving Credit Facility$37,810  $—  
ABL Facility—  20,020  
First Lien Term Loan25,530  25,210  
Second Lien Term Loan59,330  56,960  
Convertible Notes125,000  125,000  
Paycheck Protection Program Loan8,670  —  
Bank facilities, capital leases and other long-term debt19,010  13,670  
Gross debt275,350  240,860  
Less:
Current maturities, long-term debt10,060  4,310  
Gross long-term debt265,290  236,550  
Less:
Unamortized debt issuance costs and original issuance discount on First Lien Term Loan480  700  
Unamortized debt issuance costs and discount on Second Lien Term Loan10,080  12,730  
Unamortized debt issuance costs and discount on Convertible Notes14,770  18,070  
Unamortized debt issuance costs and discount25,330  31,500  
Long-term debt$239,960  $205,050  
ABL Facility
On December 22, 2015, the Company entered into an Amended and Restated Loan Agreement among the Company, Horizon Global Americas Inc. (“HGA”), Cequent UK Limited, Cequent Towing Products of Canada Ltd. (“Cequent Towing”), certain other subsidiaries of the Company party thereto as guarantors, the lenders party thereto and Bank of America, N.A., as agent for the lenders (the “ABL Loan Agreement”), under which the lenders party thereto agreed to provide the Company and certain of its subsidiaries with a committed asset-based revolving credit facility (the “ABL Facility”) providing for revolving loans up to an aggregate principal amount of $99.0 million.
The ABL Facility consisted of (i) a US sub-facility, in an aggregate principal amount of up to $85.0 million (subject to availability under a US-specific borrowing base), (ii) a Canadian sub-facility, in an aggregate principal amount of up to $2.0 million (subject to availability under a Canadian-specific borrowing base), and (iii) a UK sub-facility in an aggregate principal amount of up to $3.0 million (subject to availability under a UK-specific borrowing base).
In March 2020, the Company paid in full all outstanding debt incurred under the ABL Facility, which the Company accounted for as a debt extinguishment in accordance with guidance in Accounting Standards Codification (“ASC”) 405-20, “Extinguishment of Liabilities”. As a result of the debt extinguishment,the Company recorded $0.8 million of unamortized debt issuance costs in interest expense included in the accompanying condensed consolidated statement of operations during the six months ended June 30, 2020 in accordance with ASC 470-50, “Modifications and Extinguishments” (“ASC 470-50”). In addition, the Company recorded $0.6 million of additional costs in selling, general and administrative expenses included in the accompanying condensed consolidated statement of operations during the six months ended June 30, 2020.
The Company recognized 0 amortization of debt issuance costs and $0.4 million of amortization of debt issuance costs during the three and six months ended June 30, 2020, respectively, and $0.4 million and $0.5 million of amortization of debt issuance costs during the three and six months ended June 30, 2019, respectively, which are included in the accompanying condensed consolidated statements of operations.
16

  September 30,
2017		 December 31,
2016
  (dollars in thousands)
ABL Facility $20,000
 $—
Term B Loan 151,560
 337,000
Convertible Notes 125,000
 —
Bank facilities, capital leases and other long-term debt 19,190
 21,660
  315,750
 358,660
Less:    
Unamortized debt issuance costs and original issuance discount on Term B Loan 5,330
 8,720
Unamortized debt issuance costs and discount on the Convertible Notes 31,200
 —
Current maturities, long-term debt 9,510
 22,900
Long-term debt $269,710
 $327,040
Total letters of credit issued and outstanding under the ABL Facility were $1.2 million and $7.7 million at June 30, 2020 and December 31, 2019, respectively. The letters of credit were collateralized with a line block on the ABL Facility. As described below, as the ABL Facility was extinguished, the agreement governing the ABL Facility required cash collateral to be held until expiration of outstanding letters of credit arrangement. The cash collateral requirement is 105% of the outstanding letters of credit, for a total amount of $1.2 million as of June 30, 2020. The cash collateral will be released either because of expiration or early termination and reissuance of the letters of credit. Certain letters of credit were reissued under the Revolving Credit Facility, as defined below, with a total of $3.5 million issued and outstanding as of June 30, 2020, with no cash collateral requirement. Other letters of credit were reissued under the Revolving Credit Facility, with a cash collateral requirement, with total of $3.7 million as of June 30, 2020. The cash collateral requirement is 105% of the outstanding letters of credit, for a total amount of $4.0 million as of June 30, 2020. The Company presented the cash collateral in restricted cash in the accompanying June 30, 2020 condensed consolidated balance sheet.
Revolving Credit Facility
In March 2020, the Company, as guarantor, entered into a Loan and Security Agreement (the “Loan Agreement”) with Encina Business Credit, LLC (“Encina”), as agent for the lenders party thereto, and HGA and Cequent Towing, as borrowers (the “ABL Borrowers”). The Loan Agreement provides for an asset-based revolving credit facility (the “Revolving Credit Facility”) in the maximum aggregate principal amount of $75.0 million subject to customary borrowing base limitations contained therein, and may be increased at the ABL Borrowers’ request in increments of $5.0 million, up to a maximum of five times over the life of the Revolving Credit Facility, for a total increase of up to $25.0 million.
The interest on the loans under the Loan Agreement will be payable in cash at the interest rate of LIBOR plus 4.00% per annum, subject to a 1.00% LIBOR floor, provided that if for any reason the loans are converted to base rate loans, interest will be paid in cash at the customary base rate plus a margin of 3.00% per annum. All interest, fees, and other monetary obligations due may, in Encina’s discretion but upon prior notice to the ABL Borrowers, be charged to the loan account and thereafter be deemed to be part of the Revolving Credit Facility subject to the same interest rate. There are no amortization payments required under the Loan Agreement. Borrowings under the Loan Agreement mature on the earlier of: (i) March 13, 2023 and (ii) 90 days prior to the maturity of any portion of the debt under the Company’s First Lien Term Loan or Second Lien Term Loan, as may be in effect from time to time, unless earlier terminated. Based on the maturity dates of the Company’s First Lien Term Loan and Second Lien Term Loan, the loans under the Loan Agreement would be due on March 31, 2021. As a result of the 2020 Replacement Term Loan Amendment, as described in Note 20, Subsequent Events, the maturity of all borrowings under the Revolving Credit Facility were effectively extended to fiscal year 2022 and are presented in gross long-term debt in the accompanying condensed consolidated balance sheet as of June 30, 2020. All of the indebtedness under the Loan Agreement is and will be guaranteed by the Company and certain of the Company’s existing and future North American subsidiaries and is and will be secured by substantially all of the assets of the Company, such other guarantors, and the ABL Borrowers.
The Loan Agreement also contains a financial covenant that stipulates the ABL Borrowers and guarantors under the Loan Agreement will not make Capital Expenditures (as defined in the Loan Agreement) exceeding $30.0 million during any fiscal year.
Debt issuance costs of $2.3 million were incurred in connection with the entry into the Loan Agreement. These debt issuance costs will be amortized into interest expense over the contractual term of the Loan Agreement. The Company recognized $0.5 million and $0.7 million of amortization of debt issuance costs during the three and six months ended June 30, 2020, respectively, which are included in the accompanying condensed consolidated statement of operations. There were $1.6 million of unamortized debt issuance costs included in prepaid expenses and other current assets in the accompanying June 30, 2020 condensed consolidated balance sheet.
There was $37.8 million outstanding under the Revolving Credit Facility as of June 30, 2020 and $20.0 million outstanding under the ABL Facility as of December 31, 2019, with a weighted average interest rate of 5.0% and 5.5%, respectively. The Company had $11.3 million of availability under the Revolving Credit Facility as of June 30, 2020 and $33.1 million of availability under the ABL Facility as of December 31, 2019.
First Lien Term Loan Agreement
On June 30, 2015, the Company entered into a credit agreement among the Company, the lenders party thereto and JPMorgan Chase Bank, N.A. (the “Term Loan Agreement”) under which the Company borrowed an aggregate of $200.0 million (the “Original Term B Loan”), which matures on June 30, 2021. The Term Loan Agreement has been subsequently amended and restated on several occasions and is collectively referred to as the “First Lien Term Loan Agreement”. The Original Term B
17

Loan has also been subsequently amended on several occasions and is collectively referred to as the “First Lien Term Loan”. In conjunction with the entry into the Revolving Credit Facility referenced above, Cortland Capital Markets Services LLC is now serving as administrative agent and collateral agent for the First Lien Term Loan.
In March 2020, the Company entered into the ninth amendment to credit agreement (the “Ninth Term Amendment”) to amend the First Lien Term Loan Agreement. The Ninth Term Amendment removed the minimum liquidity covenant of $15.0 million, amended the net leverage ratio requirements to remove the December 31, 2020 leverage ratio test, amended the fixed charge coverage ratio covenant to not be below 1.0 to 1.0 beginning with the fiscal quarter ending March 31, 2021, and replaced the prior first lien leverage covenant with a secured net leverage ratio starting with the fiscal quarter ending March 31, 2021 as follows:
•March 31, 2021: 6.00 to 1.00
•June 30, 2021 and each fiscal quarter ending thereafter: 5.00 to 1.00
In May 2020, the Company entered into an amendment, limited waiver and consent to credit agreement (the “Tenth Term Amendment”) with an effective date of April 1, 2020, to amend the First Lien Term Loan Agreement and to consent to the Company’s entering into, among other things, the PPP Loan and French Loan, each as defined and described below. The Tenth Term Amendment amended the fixed coverage ratio covenant to eliminate the March 31, 2021 testing period, amended the secured net leverage ratio covenant to eliminate the March 31, 2021 testing period, and amended the secured net leverage ratio covenant levels as follows:
•June 30, 2021: 6.00 to 1.00
•September 30, 2021 and each fiscal quarter ending thereafter: 5.00 to 1.00
The Company recognized $0.5 million and $3.5 million of unamortized debt issuance costs in interest expense included in the accompanying condensed consolidated statement of operations during the three and six months ended June 30, 2019, respectively, due to the extinguishment of debt for certain lenders in the loan syndicate in connection with the Sixth, Seventh and Eighth Term Amendments to the First Lien Term Loan Agreement.
The Company recognized $0.1 million and $0.2 million of amortization of debt issuance and discount cost for the three and six months ended June 30, 2020, respectively, and $1.2 million and $2.0 million for the three and six months ended June 30, 2019, respectively, which is included in the accompanying condensed consolidated statements of operations.
The Company recognized $0.2 million and $0.4 million of paid-in-kind interest on the First Lien Term Loan for the three and six months ended June 30, 2020, respectively, and $1.9 million for both the three and six months ended June 30, 2019. The Company had an aggregate principal amount outstanding of $25.5 million and $25.2 million as of June 30, 2020 and December 31, 2019, respectively, under the First Lien Term Loan bearing cash interest at 7.0% and 8.1%, respectively. In addition to the cash interest, the First Lien Term loan has 3.0% paid-in-kind interest.
All of the indebtedness under the First Lien Term Loan is and will be guaranteed by the Company’s existing and future material domestic subsidiaries and is and will be secured by substantially all of the assets of the Company and such guarantors.
Second Lien Term Loan Agreement
In March 2019, the Company entered into a credit agreement (the “Second Lien Term Loan Agreement”) with Cortland Capital Markets Services LLC, as administrative agent and collateral agent, and Corre Partners Management L.L.C., as representative of the lenders, and the lenders party thereto. The Second Lien Term Loan Agreement provides for a term loan facility in the aggregate principal amount of $51.0 million and matures on September 30, 2021. The interest on the Second Lien Term Loan may be paid, at the Company’s election, in cash, at the customary eurocurrency rate plus a margin of 10.50% per annum, or in-kind, at the customary eurocurrency rate plus a margin of 11.50%. The Second Lien Term Loan Agreement is secured by a second lien on substantially the same collateral as the First Lien Term Loan and is subject to various affirmative and negative covenants including a secured net leverage ratio tested quarterly.
In March 2020, the Company entered into the second amendment to credit agreement (the “Second Lien Second Amendment”) to amend the Second Lien Term Loan Agreement. The Second Lien Second Amendment amended certain financial covenants as outlined in the above section, First Lien Term Loan.
18

In May 2020, the Company entered into an amendment, limited waiver and consent to credit agreement (the “Second Lien Third Amendment”), with an effective date of April 1, 2020, to amend the Second Lien Term Loan Agreement and to consent to the Company’s entering into, among other things, the PPP Loan and French Loan, each as defined and described below. The Second Lien Third Amendment amended certain financial covenants as outlined in the above section, First Lien Term Loan.
Debt issuance costs of $3.8 million and original issuance discount of $1.0 million were incurred in connection with entry into the Second Lien Term Loan Agreement. The debt issuance and original issuance discount costs will be amortized into interest expense over the contractual term of the loan using the effective interest method.
The Company recognized $1.4 million and $2.7 million of amortization of debt issuance and discount cost for the three and six months ended June 30, 2020, respectively, and $0.8 million for both the three and six months ended June 30, 2019, which is included in the accompanying condensed consolidated statements of operations.
The Company had total unamortized debt issuance and discount costs of $10.1 million, all of which are recorded as a reduction of the debt balance on the Company’s accompanying condensed consolidated balance sheet as of June 30, 2020. The Company recognized $1.9 million and $3.3 million of paid-in-kind interest on its Second Lien Term Loan for the three and six months ended June 30, 2020, respectively, and $2.5 million for both the three and six months ended June 30, 2019.
Convertible Notes
OnIn February 1, 2017, the Company completed a public offering of 2.75% Convertible Senior Notes due 2022 (the “Convertible Notes”) in an aggregate principal amount of $125.0 million. Interest is payable on January 1 and July 1 of each year, beginning on July 1, 2017. The Convertible Notes are convertible into 5,005,000 shares of the Company’s common stock, based on an initial conversion price of $24.98 per share. The Convertible Notes will mature on July 1, 2022 unless earlier converted.
The Convertible Notes are convertible at the option of the holder (i) during any calendar quarter beginning after March 31, 2017, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (ii) during the five business days after any five consecutive trading day period in which the trading price per $1,000 principal amount of the Convertible Notes for each trading day of such period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; (iii) upon the occurrence of specified corporate events; and (iv) on or after January 1, 2022 until the close of business onDuring the second scheduled trading day immediately preceding the maturity date. During the third quarter of 2017,2020, no conditions allowing holders of the Convertible Notes to convert have been met. Therefore, the Convertible Notes arewere not convertible during the fourthsecond quarter of 20172020 and are classified as long-term debt. Should conditions allowing holders of the Convertible Notes to convert be met in the fourth quarter of 2017 or a future quarter, the Convertible Notes will be convertible at their holders’ option during the immediately following quarter. As of SeptemberJune 30, 2017,2020, the if-converted value of the Convertible Notes did not exceed the principal value of those Convertible Notes.
Upon conversion by the holders, the Company may elect to settle such conversion in shares of its common stock, cash, or a combination thereof. Because the Company may elect to settle conversion in cash, the Company separated the Convertible Notes into their liability and equity components by allocating the issuance proceeds to each of those components in accordance with Accounting Standards Codification (“ASC”)ASC 470-20, “Debt-Debt“Debt-Debt with Conversion and Other Options.” The Company first determined the fair value of the liability component by estimating the value of a similar liability that does not have an associated equity component. The Company then deducted that amount from the issuance proceeds to arrive at a residual amount, which represents the equity component. The Company accounted for the equity component as a debt discount (with an offset to paid-in capital in excess of par value). The debt discount created by the equity component is being amortized as additional non-cash interest expense using the effective interest method over the contractual term of the Convertible Notes ending on July 1, 2022.
Paycheck Protection Program Loan
In April 2020, Horizon Global Company LLC (the “US Borrower”), a direct US-based subsidiary of the Company, received a loan from PNC Bank, National Association for $8.7 million, pursuant to the Paycheck Protection Program (the “PPP Loan”) under Division A, Title I of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. The PPP Loan, which is in the form of a Note dated April 18, 2020 issued by the US Borrower, matures on April 18, 2022. The PPP Loan bears interest at 1.0% per annum and is payable monthly commencing on November 15, 2020. Funds from the PPP Loan may be used for payroll, costs used to continue group health care benefits, rent and utilities. Under the terms of the PPP Loan, certain amounts may be forgiven if they are used for qualifying expenses as described in the CARES Act.
The Company allocated offering costs of $4.0 million to the debt and equity componentssubmitted its PPP Loan application in proportion to the allocation of proceeds to the components, treating them as debt issuance costs and equity issuance costs, respectively. The debt issuance costs of $3.0 million are being amortized as additional non-cash interest expense using the effective interest method over the contractual term of the Convertible Notes. The Company presents debt issuance costs as a direct deduction from the carrying value of the liability component. The carrying value of the liability component at September 30, 2017, was $93.8 million, including total unamortized debt discount and debt issuance costs of $31.2 million. The $1.0 million portion of offering costs allocated to equity issuance costs was charged to paid-in capital. The carrying amount of the equity component was $19.7 million at September 30, 2017, net of issuance costs and taxes.
Interest expense recognized relating to the contractual interest coupon, amortization of debt discount and amortization of debt issuance costs on the Convertible Notes included in the accompanying condensed consolidated statements of income are as follows:
  Three months ended
September 30,		 Nine months ended
September 30,
  2017 2016 2017 2016
  (dollars in thousands)
Contractual interest coupon on convertible debt $880
 $—
 $2,310
 $—
Amortization of debt issuance costs $130
 $—
 $350
 $—
Amortization of "equity discount" related to debt $1,190
 $—
 $3,180
 $—
In connection with the issuance of the Convertible Notes, the Company entered into convertible note hedge transactions (the “Convertible Note Hedges”) in privately negotiated transactions with certain of the underwriters or their affiliates (in this capacity, the “option counterparties”). The Convertible Note Hedges provide the Company with the option to acquire, on a net settlement basis, 5,005,000 shares of its common stock, which is equal to the number of shares of common stock that notionally underlie the Convertible Notes, at a strike price of $24.98, which corresponds to the conversion price of the Convertible Notes. The Convertible Note Hedges have an expiration date that is the same as the maturity date of the Convertible Notes, subject to earlier exercise. The Convertible Note Hedges have customary anti-dilution provisions similar to the Convertible Notes. The Convertible Note Hedges have a default settlement method of net-share settlement but may be settled in cash or shares, depending on the Company’s method of settlement for conversion of the corresponding Convertible Notes. If the Company exercises the Convertible Note Hedges, the shares of common stock it will receive from the option counterparties to the Convertible Note Hedges will cover the shares of

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

common stock that it would be required to deliver to the holders of the converted Convertible Notes in excess of the principal amount thereof. The aggregate cost of the Convertible Note Hedges was $29.0 million (or $7.5 million net of the total proceeds from the Warrants sold, as discussed below), before the allocation of issuance costs of approximately $0.7 million. The Convertible Note Hedges are accounted for as equity transactionsgood faith in accordance with ASC 815-40the CARES Act and the guidance issued by the Small Business Administration (the “SBA”), “Derivatives and Hedging-Contracts in Entity’s own Equity.”
In connection withincluding the issuanceSBA’s Paycheck Protection Program Loans Frequently Asked Questions. During the second quarter of the Convertible Notes,2020, the Company, also sold net-share-settled warrants (the “Warrants”) in privately negotiated transactions with the option counterparties for the purchase of up to 5,005,000 shares of its common stock at a strike price of $29.60 per share, for total proceeds of $21.5 million. The Company also recorded the Warrants within shareholders’ equity in accordance with ASC 815-40.the final guidance issued by the United States Department of the Treasury, met the need and sized based criteria of the program. The Warrants have customary anti-dilution provisions similarCompany plans to file its application of forgiveness in the Convertible Notes. near term and continues to use the PPP Loan proceeds on qualifying expenses; however, there is no guarantee that any portion of the PPP Loan proceeds will be forgiven.
The French Loan
19

In April 2020, S.I.A.R.R. SAS (the “French Borrower”), an indirect subsidiary of the Company, received a loan from BNP Paribas (the “French Loan”) for $5.5 million. The French Loan, issued pursuant to an agreement dated April 9, 2020, between the French Borrower and BNP Paribas, matures on April 9, 2021. The French Loan bears interest at a rate of 0.5% per annum. The French Borrower, at its election, may repay the French Loan in full on April 9, 2021 or in monthly installments for a period of five years from the date of election.
Covenant and Liquidity Matters
As a result of the issuance ofamendment entered into on July 6, 2020, as defined and described in Note 20, Subsequent Events, for the Warrants,Company’s First Lien Term Loan and Second Lien Term Loan, and our current forecast through June 30, 2021, the Company will experience dilutionbelieves it has sufficient liquidity to operate its diluted earnings per share if its average closing stock price exceeds $29.60business for any fiscal quarter. the foreseeable future.
The Warrants expire on various dates from October 2022 through February 2023 and must be net-settledCompany is in shares of the Company’s common stock. Therefore, upon exercise of the Warrants, the Company will issue sharescompliance with all of its common stock to the purchasersfinancial covenants in its debt agreements as of the Warrants that represent the value by which the price of the common stock exceeds the strike price stipulated within the particular warrant agreement.
ABL Facility
On December 22, 2015, the Company entered into an amended and restated loan agreement among the Company, Cequent Performance Products, Inc. (“Cequent Performance”), Cequent Consumer Products, Inc. (“Cequent Consumer”), Cequent UK Limited, Cequent Towing Products of Canada Ltd., certain other subsidiaries of the Company party thereto as guarantors, the lenders party thereto and Bank of America, N.A., as agent for the lenders (the “ABL Loan Agreement”), under which the lenders party thereto agreed to provide the Company and certain of its subsidiaries with a committed asset-based revolving credit facility (the “ABL Facility”) providing for revolving loans up to an aggregate principal amount of $99.0 million.
The ABL Loan Agreement provides for the increase of the U.S. sub-facility from an aggregate principal amount of $85.0 million to up to $94.0 million (subject to availability under a U.S.-specific borrowing base) (the “U.S. Facility”), and the establishment of two new sub-facilities, (i) a Canadian sub-facility, in an aggregate principal amount of up to $2.0 million (subject to availability under a Canadian-specific borrowing base) (the “Canadian Facility”), and (ii) a U.K. sub-facility in an aggregate principal amount of up to $3.0 million (subject to availability under a U.K.-specific borrowing base) (the “U.K. Facility”). The ABL Facility also includes a $20.0 million letter of credit sub-facility, which matures on June 30, 2020.
Borrowings under the ABL Facility bear interest, at the Company’s election, at either (i) the Base Rate (as defined per the credit agreement, the “Base Rate”) plus the Applicable Margin (as defined per the credit agreement “Applicable Margin”), or (ii) the London Interbank Offered Rate (“LIBOR”) plus the Applicable Margin.
The Company incurs fees with respect to the ABL Facility, including (i) an unused line fee of 0.25% times the amount by which the revolver commitments exceed the average daily revolver usage during any month, (ii) facility fees equal to the applicable margin in effect for LIBOR revolving loans, as defined per the credit agreement, times the average daily stated amount of letters of credit, (iii) a fronting fee equal to 0.125% per annum on the stated amount of each letter of credit, and (iv) customary administrative fees.
All of the indebtedness of the U.S. Facility is and will be guaranteed by the Company’s existing and future material domestic subsidiaries and is and will be secured by substantially all of the assets of the Company and such guarantors. In connection with the ABL Loan Agreement, Cequent Performance and certain other subsidiaries of the Company party to the ABL Loan Agreement entered into a foreign facility guarantee and collateral agreement (the “Foreign Collateral Agreement”) in order to secure and guarantee the obligation under the Canadian Facility and the U.K. Facility. Under the Foreign Collateral Agreement, Cequent Performance and the other subsidiaries of the Company party thereto granted a lien on certain of their assets to Bank of America, N.A., as the agent for the lenders and other secured parties under the Canadian Facility and U.K. Facility.
The ABL Loan Agreement contains customary negative covenants, and does not include any financial maintenance covenants other than a springing minimum fixed charge coverage ratio of at least 1.00 to 1.00 on a trailing twelve-month basis, which will be tested only upon the occurrence of an event of default or certain other conditions as specified in the agreement. At September 30, 2017, the Company was in compliance with its financial covenants contained in the ABL Facility.
Debt issuance costs of approximately $2.5 million were incurred in connection with the entry into and amendment of the ABL Facility. These debt issuance costs will be amortized into interest expense over the contractual term of the loan. The Company

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

recognized approximately $0.1 million and $0.4 million of amortization of debt issuance costs for the three and nine months ended September 30, 2017, respectively, and approximately $0.1 million and $0.4 million for the three and nine months ended September 30, 2016, respectively, which are included in the accompanying condensed consolidated statements of income. There were $1.4 million and $1.8 million of unamortized debt issuance costs included in other assets in the accompanying condensed consolidated balance sheets as of September 30, 2017 and December 31, 2016, respectively.
As of September 30, 2017, there was $20.0 million outstanding under the ABL Facility with a weighted average interest rate of 3.2%. As of December 31, 2016, there were no amounts outstanding under the ABL Facility. Total letters of credit issued were approximately $6.3 million and $7.0 million at September 30, 2017 and December 31, 2016, respectively. The Company had $65.0 million and $68.7 million in availability under the ABL Facility as of September 30, 2017 and December 31, 2016, respectively.
Term Loan
On June 30, 2015, the Company entered into a term loan agreement (“Original Term B Loan”) under which the Company borrowed an aggregate of $200.0 million, which matures on June 30, 2021. On September 19, 2016, the Company entered into the First Amendment to the Original Term B Loan (“Term Loan Amendment”), which amended the original Term B Loan to provide for incremental commitments in an aggregate principal amount of $152.0 million (“Incremental Term Loans”) that were extended to the Company on October 3, 2016. The Original Term B Loan and Incremental Term Loans are collectively referred to as “Term B Loan”. On March 31, 2017, the Company entered into the Third Amendment to the Term B Loan (the “Replacement Term Loan Amendment”), which amended the Term B Loan to provide for a new term loan commitment (the “Replacement Term Loan”). The proceeds from the Replacement Term Loan were used to repay in full the outstanding principal amount of the Term B Loan. As a result of the Replacement Term Loan Amendment, the interest rate was reduced by 1.5% per annum. Additionally, quarterly principal payments required under the Original Term B Loan and Term Loan Amendment of $2.5 million and $2.1 million, respectively, were reduced to an aggregate quarterly principal payment of $1.9 million. On and after the Replacement Term Loan Amendment effective date, each reference to “Term B Loan” is deemed to be a reference to the Replacement Term Loan.
The Term B Loan permits the Company to request incremental term loan facilities, subject to certain conditions, in an aggregate principal amount, together with the aggregate principal amount of incremental equivalent debt incurred by the Company, of up to $75.0 million, plus an additional amount such that the Company’s pro forma first lien net leverage ratio (as defined in the term loan agreement) would not exceed 3.50 to 1.00 as a result of the incurrence thereof.
Borrowings under the Term B Loan bear interest, at the Company’s election, at either (i) the Base Rate plus 3.5% per annum, or (ii) LIBOR, with a 1% floor, plus 4.5% per annum. Principal payments required under the Term B Loan are $1.9 million due each calendar quarter beginning June 2017. Commencing with the fiscal year ending December 31, 2017, and for each fiscal year thereafter, the Company will also be required to make prepayments of outstanding amounts under the Term B Loan in an amount up to 50.0% of the Company’s excess cash flow for such fiscal year, as defined in the Term B Loan, subject to adjustments based on the Company’s leverage ratio and optional prepayments of term loans and certain other indebtedness.
All of the indebtedness under the Term B Loan is and will be guaranteed by the Company’s existing and future material domestic subsidiaries and is and will be secured by substantially all of the assets of the Company and such guarantors. The Term B Loan contains customary negative covenants, and also contains a financial maintenance covenant which requires the Company to maintain a net leverage ratio not exceeding 5.25 to 1.00 through the fiscal quarter ending September 30, 2017, 5.00 to 1.00 through the fiscal quarter ending March 31, 2018, 4.75 to 1.00 through the fiscal quarter ending September 30, 2018; and thereafter, 4.50 to 1.00. At September 30, 2017, the Company was in compliance with its financial covenants in the Term B Loan.
During the first quarter of 2017, the Company used a portion of the net proceeds from the Convertible Notes offering as described above, along with proceeds from the Common Stock Offering as described in Note 11, “Earnings per Share”, to prepay a total of $177.0 million of the Term B Loan. In accordance with ASC 470, “Debt - Modifications and Extinguishments”, the prepayment was determined to be an extinguishment of the existing debt. As a result, the pro-rata share of the unamortized debt issuance costs and original issuance discount related to the prepayment, aggregating to $4.6 million, was recorded as a loss on the extinguishment of debt in the condensed consolidated statements of income. The remaining unamortized debt issuance costs and original issuance discount, including $2.4 million additional transactions fees incurred in connection to the Replacement Term Loan Amendment, was approximately $6.1 million. Both the aggregate debt issuance costs and the original issue discount will be amortized into interest expense over the remaining life of the Term B Loan. The Company recognized approximately $0.4 million and $1.2 million of amortization of debt issuance cost and original issue discount for the three and nine months ended September 30, 2017, respectively, and $0.3 million and $1.0 million for the three and nine months ended September 30, 2016, respectively, which is

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

included in the accompanying condensed consolidated statements of income. The Company had an aggregate principal amount outstanding of $151.6 million and $337.0 million as of September 30, 2017 and December 31, 2016, respectively, under the Term B Loan bearing interest at 5.7% and 7.0%, respectively. The Company had $5.3 million and $8.7 million as of September 30, 2017 and December 31, 2016, respectively, of unamortized debt issuance costs and original issue discount, all of which are recorded as a reduction of the debt balance on the Company’s condensed consolidated balance sheets.
The Company’s Term B Loan traded at approximately 101.4% and 101.6% of par value as of September 30, 2017 and December 31, 2016, respectively. The valuation of the Term B Loan was determined based on Level 2 inputs under the fair value hierarchy.
Bank facilities
Our Australian subsidiaries were party to a revolving debt facility with a borrowing capacity of approximately $11.7 million, which would mature on November 30, 2017, that was subject to interest at a bank-specified rate plus 1.9% and was secured by substantially all the assets of the subsidiary. No amounts were outstanding as of December 31, 2016 under this facility.
On July 3, 2017, our Australian subsidiaries entered into a new agreement (collectively, the “Australian Loans”) to provide for revolving borrowings with an aggregate principal amount of $32.0 million as of September 30, 2017. The Australian Loans include two sub-facilities: (i) Facility A, with a borrowing capacity of $20.3 million that matures on July 3, 2020 and (ii) Facility B, with a borrowing capacity of $11.7 million that matures on July 3, 2018. No amounts were outstanding as of September 30, 2017 under the Australian Loans.
Borrowings under Facility A bear interest at the Bank Bill Swap Bid Rate (“BBSY”) plus a margin determined based on the most recent net leverage ratio (as defined per the Australian credit agreement). The margin is to be determined on the first day of the period as follows: (i) 1.10% per annum if the net leverage ratio is less than 1.50 to 1.00; (ii) 1.20% per annum if the net leverage ratio is less than 2.00 to 1.00 and (iii) 1.30% if the net leverage ratio is less than 2.50 to 1.00. Borrowings under Facility B bear interest at the BBSY plus a margin of 0.9% per annum.
The Australian Loans contain financial covenants, which require our Australian subsidiaries to maintain: (i) a net leverage ratio not exceeding 2.50 to 1.00 during the period commencing on the date of the agreement and ending on the first anniversary of the date of the agreement; and 2.00 to 1.00 thereafter; (ii) a working capital coverage ratio (as defined per the Australian credit agreement) greater than 1.75 to 1.00 at all times; and (iii) a gearing ratio (defined as the ratio of senior debt to senior debt plus equity) not to exceed 50%.
8.10. Derivative Instruments
Foreign Currency Exchange Rate Risk
As of September 30, 2017,In the past, the Company was party to forward contracts to hedge changes in foreign currency exchange rates with notional amounts of approximately $17.2 million. The Company useshas used foreign currency forward contracts to mitigate the risk associated with fluctuations in currency rates impacting cash flows related to certain payments for contract manufacturing in its lower-cost manufacturing facilities. The foreign currency forward contracts hedgehedged currency exposure between the Mexican peso and the U.S. dollar, the Thai baht and the AustralianUS dollar and the U.S. dollar and the Australian dollar and maturematured at specified monthly settlement dates through June 2018.December 2019. At inception, the Company designated the foreign currency forward contracts as cash flow hedges. Upon the performance of contract manufacturing or purchase of certain inventories the Company de-designatesde-designated the foreign currency forward contract.contracts.
On October 4, 2016, the Company entered into a cross currency swap arrangement to hedge changes in foreign currency exchange rates. As of September 30, 2017, the notional amount of the cross currency swap was approximately $117.0 million. The Company usesused the cross currency swap to mitigate the risk associated with fluctuations in currency rates impacting cash flows related to a non-U.S. denominatednon-functional currency intercompany loan of €110.0 million. The cross currency swap hedgeshedged currency exposure between the Euroeuro and the U.S.US dollar and maturesmatured on January 3, 2019.2019 with a liability of $2.5 million. The Company makesentered into forward contracts to settle the cross currency swap, which resulted in a $0.9 million offset to the liability. These settlements resulted in a net realized gain reclassified from accumulated other comprehensive loss (“AOCI”) of $0.6 million. The Company made quarterly principal payments of €1.4 million, plus interest at a fixed rate of 5.4% per annum, in exchange for $1.5 million, plus interest at a fixed rate of 7.2% per annum.annum during the term of the cross currency swap arrangement. At inception, the Company designated the cross currency swap as a cash flow hedge. Changes in the currency rate resultresulted in reclassification of amounts from accumulated other comprehensive incomeAOCI to earnings to offset the re-measurement gain or loss on the non-U.S.non-US denominated intercompany loan.
Additionally, during the third quarter of 2017, the Company’s Australian subsidiary entered into a cross currency swap arrangement to hedge changes in foreign currency exchange rates. As of September 30, 2017, the notional amount of the cross currency was approximately $6.6 million. The Australian subsidiary uses the cross currency swap to mitigate the risk associated with fluctuations in currency rates related to a non-functional currency intercompany loan of NZ$10.0 million. The floating-to-floating cross currency swap hedges currency exposure between the New Zealand dollar and the Australian dollar and matures onThere were no outstanding derivatives contracts at June 30, 2020. The Australian subsidiary makes quarterly principal payments of NZ$0.8 million, plus interest at the 3-month Bank Bill Benchmark Rate ("BKBM") in New Zealand plus a margin of .31% per annum, in exchange for A$0.8 million, plus interest at the 3-month BBSY in Australia per annum. At inception, the cross currency swap was not designated as a hedging instrument.

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

2020 and December 31, 2019.
Financial Statement Presentation
As of September 30, 2017 and December 31, 2016, the fair value carrying amount of the Company’s derivative instruments were recorded as follows:
    Asset / (Liability) Derivatives
  Balance Sheet Caption September 30,
2017		 December 31,
2016
    (dollars in thousands)
Derivatives designated as hedging instruments      
Foreign currency forward contracts Prepaid expenses and other current assets $270
 $670
Foreign currency forward contracts Accrued liabilities (100) (760)
Cross currency swap Other assets —
 5,720
Cross currency swap Other long-term liabilities (7,880) —
Total derivatives designated as hedging instruments   (7,710) 5,630
Derivatives not designated as hedging instruments      
Foreign currency forward contracts Prepaid expenses and other current assets 270
 —
Foreign currency forward contracts Accrued liabilities (40) (130)
Cross currency swap Other assets 20
 —
Total derivatives de-designated as hedging instruments   250
 (130)
Total derivatives   $(7,460) $5,500
The following tables summarize the loss recognized in accumulated other comprehensive income (“AOCI”),table summarizes the amounts reclassified from AOCI into earningsearnings:
Three Months Ended
June 30, 2019		Six Months Ended
June 30, 2019
Cost of salesInterest expenseCost of salesInterest expense
Total Amounts of Expense Line Items Presented in the Statement of Operations in Which the Effects of Cash Flow Hedges are Recorded$(156,340) $(15,320) $(310,450) $(26,150) 
Amount of Gain Reclassified from AOCI into Earnings
Derivatives classified as cash flow hedges:
Foreign currency forward contracts$570  $—  $1,200  $—  
Cross currency swap$—  $—  $—  $900  

20

11. Restructuring
The Company’s restructuring activities are undertaken as necessary to execute management’s strategy and streamline operations, consolidate and take advantage of available capacity and resources, and ultimately achieve productivity improvements and net cost reductions. The Company's restructuring charges consist primarily of employee costs (principally severance and/or termination benefits) and facility closure and other costs.
To the amounts recognized directly into earningsextent these programs involve voluntary separations, no liabilities are generally recorded until offers to employees are accepted. If employees are involuntarily terminated, a liability is generally recorded at the communication date. Estimates of restructuring charges are based on information available at the time such charges are recorded. Related charges are recorded in cost of sales and selling, general and administrative expenses.
The following table provides a summary of the Company’s consolidated restructuring liabilities and related activity for each type of exit cost as of and for the three and ninesix months ended SeptemberJune 30, 20172020:
Employee CostsFacility Closure and Other CostsTotal
(dollars in thousands)
Balance at January 1, 2020$1,830  $2,110  $3,940  
Payments and other(1)
(1,080) (120) (1,200) 
Balance at June 30, 2020$750  $1,990  $2,740  
(1)Other consists primarily of changes in the liability balance due to foreign currency translation and 2016:finalization of facility closures.


12. Leases
 Amount of Gain (Loss) Recognized in
AOCI on Derivatives
(Effective Portion, net of tax)		   Amount of Gain (Loss) Reclassified
from AOCI into Earnings
    Three months ended
September 30,		 Nine months ended
September 30,
 As of
September 30, 2017		 As of December 31, 2016 Location of Gain (Loss) Reclassified from AOCI into Earnings
(Effective Portion)		 2017 2016 2017 2016
 (dollars in thousands)   (dollars in thousands)
Derivatives instruments
Foreign currency forward contracts$190
 $(320) Cost of sales $620
 $(350) $880
 $(1,120)
Cross currency swap$(950) $(610) Other expense, net $(4,100) $—
 $(13,840) $—
Over the next 12 months,On January 1, 2019, the Company expectsadopted the new accounting guidance under ASC 842, “Leases”, as issued by the FASB under ASU 2016-02. Refer to reclassify approximatelyNote 2, New Accounting Pronouncements, in our Annual Report on Form 10-K for the year ended December 31, 2019 for more information.
The Company leases certain facilities, automobiles and equipment under non-cancellable operating leases. Our leases have remaining lease terms of one year to twelve years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. Leases with an initial term of twelve months or less are not recorded on the condensed consolidated balance sheets; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company’s financing leases are immaterial.
Most leases include one or more options to renew. The exercise of lease renewal options is typically at the Company’s sole discretion; therefore, the majority of renewals to extend the lease terms are not included in the Company’s right-of-use (“ROU”) assets and lease liabilities as they are not reasonably certain of exercise. The Company regularly evaluates the renewal options and when they are reasonably certain of exercise, the Company includes the renewal period in the lease term. The Company combines lease and non-lease components which are accounted for as a single lease component as the Company has elected the practical expedient to group lease and non-lease components for all leases.
As most of the Company’s leases do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. The Company has a centrally managed treasury function; therefore, based on the applicable lease terms and the current economic environment, the Company applies a portfolio approach by operating segment for determining the incremental borrowing rate.
The following table provides additional cost and cash flow information for the Company’s leases:
21

Three Months Ended
June 30,		Six Months Ended
June 30,
 2020201920202019
 (dollars in thousands)
Operating lease cost$3,600  $4,450  $7,200  $9,000  
Operating cash flows from operating leases$4,100  $3,870  $8,110  $8,000  
ROU assets obtained in exchange for operating lease obligations$1,010  $14,280  $2,580  $14,840  

The following table provides additional balance sheet information for the Company’s leases:
          As of June 30, 2020      As of December 31, 2019
Weighted average remaining lease term (years)6.56.8
Weighted average discount rate8.6 %8.7 %

13. Contingencies
During the fourth quarter of 2018, the Company was notified by two OEM customers of potential claims related to product sold by Horizon Europe-Africa arising from potentially faulty components provided by a third-party supplier. The claims resulted from the failure of products not functioning to specifications, but the claims did not allege any damage and only sought replacement of the product. The Company performed an assessment of the facts and circumstances for all asserted and unasserted claims and considered all factors including the Company’s recall insurance. Based on this assessment through June 30, 2019, the Company recorded a $4.3 million charge for the six months ended June 30, 2019.
As of December 31, 2019, the Company had $3.9 million recorded in accrued liabilities for the remaining unpaid settlement obligations and an insurance-related asset of $0.4 million recorded in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets. In the first quarter of 2020, the Company settled its outstanding obligations related to the claim. The Company has 0 remaining liability or insurance-related asset.
On April 29, 2020, the Company agreed to a settlement (the “Settlement”) related to certain intellectual property infringement claims made against one of the Company’s subsidiaries in its Horizon Europe-Africa operating segment. The Company settled all historical and future associated claims for $4.4 million to be paid evenly in semi-annual installments on June 30 and December 31 of each year through December 31, 2024. As a result of the Settlement, the Company recorded a $1.5 million charge in cost of sales in the accompanying condensed consolidated statement of operations during the first quarter of 2020.
The Company recognized $0.2 million of pre-tax deferred gains, related to the foreign currency forward contracts, from AOCI toroyalties and $1.7 million in cost of sales asin the inventory purchases are settled. Over the next 12 months, the Company expects to reclassify approximately $1.5 million of pre-tax deferred losses, related to the cross currency swap, from AOCI to other expense, net as an offset to the re-measurement gains or losses on the non-U.S. denominated intercompany loan.

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

Derivatives not designated as hedging instruments
The gain or loss resulting from the change in fair value on de-designated forward contracts is reported within cost of sales on the Company’saccompanying condensed consolidated statementsstatement of income. There were $0.1 million of losses on de-designated derivatives for the three months ended September 30, 2017 and no gain or loss on de-designated derivatives for the nine months ended September 30, 2017. The gains on de-designated derivatives amounted to $0.1 million and $0.3 millionoperations for the three and ninesix months ended SeptemberJune 30, 2016,2020, respectively. The gain or loss resulting fromAs of June 30, 2020, the changeCompany had recorded $0.8 million in fair value onprepaid expenses and other current assets and $2.0 million in other assets related to the floating-to-floating cross currency swap is recorded withinfuture royalties to be recognized by the Company over the life of future programs related to the Settlement and $0.9 million in accrued liabilities and $3.1 million in other expense, net onlong-term liabilities in the Company’saccompanying condensed consolidated statementsbalance sheet related to the remaining semi-annual installment payments to be paid.
14. Earnings (Loss) per Share
Basic earnings (loss) per share is computed using net income (loss) attributable to Horizon Global and the number of income. weighted average shares outstanding. Diluted earnings (loss) per share is computed using net income (loss) attributable to Horizon Global and the number of weighted average shares outstanding, adjusted to give effect to the assumed exercise of outstanding stock options and warrants, vesting of restricted shares outstanding, and conversion of the Convertible Notes.
22

The gain or loss on this cross currency swap was not materialfollowing table sets forth the reconciliation of the numerator and the denominator of basic earnings (loss) per share attributable to Horizon Global and diluted earnings (loss) per share attributable to Horizon Global:
Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
(dollars in thousands, except share and per share data)
Numerator:
Net loss from continuing operations$(16,720) $(11,130) $(33,250) $(40,530) 
Add: (Loss) income from discontinued operations, net of tax—  2,990  (500) 6,770  
Less: Net loss attributable to noncontrolling interest(380) (60) (670) (580) 
Net loss attributable to Horizon Global$(16,340) $(8,080) $(33,080) $(33,180) 
Denominator:
Weighted average shares outstanding, basic25,618,793  25,282,791  25,509,794  25,235,704  
Dilutive effect of stock-based awards—  —  —  —  
Weighted average shares outstanding, diluted25,618,793  25,282,791  25,509,794  25,235,704  
Basic income (loss) per share attributable to Horizon Global
Continuing operations$(0.64) $(0.44) $(1.28) $(1.58) 
Discontinued operations—  0.12  (0.02) 0.27  
Total$(0.64) $(0.32) $(1.30) $(1.31) 
Diluted income (loss) per share attributable to Horizon Global
Continuing operations$(0.64) $(0.44) $(1.28) $(1.58) 
Discontinued operations—  0.12  (0.02) 0.27  
Total$(0.64) $(0.32) $(1.30) $(1.31) 
Due to losses from continuing operations for the three and ninesix months ended SeptemberJune 30, 2017, respectively.2020 and 2019, the effect of certain dilutive securities were excluded from the computation of weighted average diluted shares outstanding as inclusion would have resulted in anti-dilution. A summary of these anti-dilutive common stock equivalents is provided in the table below:
Fair Value Measurements
Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
Number of options18,961  55,389  18,961  65,181  
Exercise price of options$9.20 - $11.02$9.20 - $11.29$9.20 - $11.02$9.20 - $11.29
Restricted stock units2,011,211  1,259,552  1,709,598  868,263  
Convertible Notes5,005,000  5,005,000  5,005,000  5,005,000  
Convertible Notes warrants5,005,000  5,005,000  5,005,000  5,005,000  
Second Lien Term Loan warrants6,443,910  3,764,113  6,443,910  2,210,855  
The fair valueFor purposes of determining diluted earnings (loss) per share, the Company has elected a policy to assume that the principal portion of the Company’s derivatives are estimated using an income approach based on valuation techniques to convert future amounts toConvertible Notes, as described in Note 9, Long-term Debt, is settled in cash and the conversion premium is settled in shares. Therefore, the Company has adopted a single, discounted amount. Estimatespolicy of calculating the diluted earnings (loss) per share effect of the fair value ofConvertible Notes using the Company’s foreign currency forward contracts use observable inputs such as forward currency exchange rates. Fair value measurements and the fair value hierarchy level for the Company’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016 are shown below.
  Frequency Asset / (Liability) Quoted Prices in Active Markets for Identical Assets
(Level 1)		 Significant Other Observable Inputs
(Level 2)		 Significant Unobservable Inputs
(Level 3)
    (dollars in thousands)
September 30, 2017          
Foreign currency forward contracts Recurring $400
 $—
 $400
 $—
Cross currency swaps Recurring $(7,860) $—
 $(7,860) $—
December 31, 2016          
Foreign currency forward contracts Recurring $(220) $—
 $(220) $—
Cross currency swap Recurring $5,720
 $—
 $5,720
 $—
9. Segment Information
Horizon groups its operating segments into reportable segments by the region in which sales and manufacturing efforts are focused. Each operating segment has discrete financial information evaluated regularly by the Company’s chief operating decision maker in determining resource allocation and assessing performance. In the fourth quarter of 2016, as a result of the Westfalia Group acquisition, the Company realigned its executive management structure which changed the information used by our chief operating decision maker to assess performance and allocate resources.treasury stock method. As a result, the Company reportsdilutive effect of the results of its business in three reportable segments: Horizon Americas, Horizon Europe‑Africa, and Horizon Asia‑Pacific. The Company’s Brazilian operations,Convertible Notes is limited to the conversion premium, which has previously been includedis reflected in the Horizon International reportable segment, is now managedcalculation of diluted loss per share as part of its former Horizon North America segment, which has been renamed Horizon Americas. Theif it were a freestanding written call option
23

on the Company’s Horizon Europe‑Africa reportable segment is comprisedshares. Using the treasury stock method, the Warrants issued in connection with the issuance of the European and South African operations, previously includedConvertible Notes are considered to be dilutive when they are in Horizon International, and the Westfalia Group operations.money relative to the Company’s average common stock price during the period. The Company’s former Horizon International reportable segment, excludingConvertible Note Hedges purchased in connection with the Brazilian operations, was geographically divided into two separate reportable segments. The Company’s Horizon Asia‑Pacific reportable segment is comprisedissuance of the Australia, Thailand,Convertible Notes are always considered to be anti-dilutive and New Zealand operations previously included in Horizon International. The Company has recast prior period amounts to conform totherefore do not impact the way it currently manages and monitors segment performance under the new segments. See below for further information regarding the typesCompany’s calculation of products and services provided within each reportable segment.diluted earnings (loss) per share.
Horizon Americas - A market leader in the design, manufacture and distribution of a wide variety of high-quality, custom engineered towing, trailering and cargo management products and related accessories. These products are designed to support OEs, aftermarket and retail customers in the agricultural, automotive, construction, industrial, marine, military, recreational vehicle, trailer and utility end markets. Products include brake controllers, cargo management, heavy-duty towing products, jacks and couplers, protection/

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

securing systems, trailer structural and electrical components, tow bars, vehicle roof racks, vehicle trailer hitches and additional accessories.
Horizon Europe‑Africa - With a product offering similar to Horizon Americas, Horizon Europe‑Africa focuses its sales and manufacturing efforts in Europe and Africa.
Horizon Asia‑Pacific - With a product offering similar to Horizon Americas, Horizon Asia‑Pacific focuses its sales and manufacturing efforts in the Asia-Pacific region of the world.
Segment activity is as follows:
  Three months ended
September 30,		 Nine months ended
September 30,
  2017 2016 2017 2016
  (dollars in thousands)
Net Sales        
Horizon Americas $115,460
 $110,730
 $351,400
 $350,170
Horizon Europe-Africa 87,950
 13,050
 253,070
 39,600
Horizon Asia-Pacific 36,710
 27,940
 92,520
 75,820
Total $240,120
 $151,720
 $696,990
 $465,590
Operating Profit (Loss)        
Horizon Americas $10,930
 $12,910
 $38,840
 $35,630
Horizon Europe-Africa 2,680
 210
 5,950
 600
Horizon Asia-Pacific 5,880
 3,750
 13,240
 8,830
Corporate (6,200) (10,240) (21,160) (19,500)
Total $13,290
 $6,630
 $36,870
 $25,560
10.15. Equity Awards
Description of the PlanPlans
Horizon employees and non-employee directors participate in the Horizon Global Corporation 2015 Equity and Incentive Compensation Plan (as amended and restated, the “Horizon 2015 Plan”). The Horizon 2015 Plan authorizes the Compensation Committee of the Horizon Board of Directors to grant stock options (including “incentive stock options” as defined in Section 422 of the U.S.US Internal Revenue Code), restricted shares, restricted stock units, performance shares, performance stock units, cash incentive awards, and certain other awards based on or related to our common stock to Horizon employees and non-employee directors. No more than 2.04.4 million Horizon common shares may be delivered under the Horizon 2015 Plan.
On June 19, 2020, the shareholders approved the Horizon Global Corporate 2020 Equity and Incentive Compensation Plan (the “Horizon 2020 Plan”). Horizon employees and non-employee directors participate in the Horizon 2020 Plan. The Horizon 2020 Plan authorizes the Compensation Committee of the Horizon Board of Directors to grant stock options (including “incentive stock options” as defined in Section 422 of the US Internal Revenue Code), appreciation rights, restricted shares, restricted stock units, performance shares, performance stock units, cash incentive awards, dividend equivalents and certain other awards based upon terms and conditions described in the Horizon 2020 Plan. No more than 4.1 million Horizon common shares may be delivered under the Horizon 2020 Plan, plus (A) the total number of shares remaining available for awards under the Horizon 2015 Plan, as described above, as of June 19, 2020, plus (B) the shares that are subject to awards granted under the Horizon 2020 Plan or the Horizon 2015 Plan that are added (or added back, as applicable) to the aggregate number of shares available under the 2020 Horizon Plan pursuant to the share counting rules of the 2020 Horizon Plan. These shares may be shares of original issuance or treasury shares, or a combination of both.
Stock Options

The following table summarizes Horizon stock option activity from December 31, 20162019 to SeptemberJune 30, 2017:2020:

Number of Stock OptionsWeighted Average Exercise PriceAverage Remaining Contractual Life (Years)Aggregate Intrinsic Value
 Number of
Stock Options		 Weighted Average Exercise Price Average  Remaining Contractual Life (Years) Aggregate Intrinsic Value
Outstanding at December 31, 2016 347,585
 $10.37
 
  
Outstanding at December 31, 2019Outstanding at December 31, 201937,737  $10.52  
Granted —
 —
 
  Granted—  —  
Exercised (3,638) 10.40
  Exercised—  —  
Canceled, forfeited —
 —
  Canceled, forfeited(18,776) 10.61  
Expired —
 —
  Expired—  —  
Outstanding at September 30, 2017 343,947
 $10.37
 8.1 $2,499,061
Outstanding at June 30, 2020Outstanding at June 30, 202018,961  $10.43  5.4$—  
As of SeptemberJune 30, 2017, there was $0.2 million in2020, the unrecognized compensation cost related to stock options that is expected to be recognized over a weighted-average period of 0.5 years. The Company recognized approximately $0.1 millionimmaterial. For the three and $0.3 million ofsix months ended June 30, 2020 and 2019, the stock-based compensation expense recognized by the Company related to stock options duringwas immaterial. There was no aggregate intrinsic value of the three and nine months ended Septemberoutstanding options at June 30, 2017, respectively, and approximately $0.2 million and $0.6 million during the three and nine months ended September 30, 2016, respectively.2020. Stock-based compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income.operations.
24

Restricted Shares

InDuring the first ninesix months of 2017,ended June 30, 2020, the Company granted an aggregate of 185,4231,502,072 restricted stock units and performance stock units to certain key employees and non-employee directors.employees. The total grants consisted of: (i) 22,449284,859 time-based restricted stock units that vest ratablyvesting on (1)a ratable basis on March 1, 2018, (2)3, 2021, March 1, 20193, 2022 and (3) March 1, 2020;3, 2023; (ii) 50,416277,228 time-based restricted stock units that vest ratablyvesting on (1) March 1, 2018, (2) March 1, 2019, (3) March 1, 2020 and (4) March 1,June 24, 2021; (iii) 72,865 market-based21,351 time-based restricted stock units vesting on a ratable basis on April 2, 2021, March 3, 2022 and March 3, 2023 and (iv) 918,634 performance stock units that vest on March 1, 2020; (iv) 33,4263, 2023 (the “2020 PSUs”).
The performance criteria for the 2020 PSUs is based on the Company’s three-year cumulative EBITDA. The grant date fair values for the performance stock units and restricted stock units granted during 2020 are based on the closing trading price of the Company’s common stock on the date of grant.
During 2019, the Company granted an aggregate of 1,950,296 restricted stock units and performance stock units to certain key employees. The total grants consisted of: (i) 353,592 time-based restricted stock units that vest on July 1, 2018, and (v) 6,267May 15, 2020; (ii) 27,840 time-based restricted stock units that vest on July 1, 2019.September 10, 2020; (iii) 245,134 time-based restricted stock units that vest on September 19, 2020; (iv) 25,000 time-based restricted stock units that vest on November 13, 2020; (v) 25,000 time-based restricted stock units that vest on December 9, 2020; (vi) 5,000 time-based restricted stock units that vest on May 15, 2021; (vii) 411,373 time-based restricted stock units that vest on March 19, 2022 and (viii) 857,357 market-based performance stock units (the “2019 PSUs”), of which 757,357 vest on March 19, 2022 with the remaining 100,000 vesting on a ratable basis on September 23, 2020, September 23, 2021 and September 23, 2022.
TheFor the 2019 PSUs, the performance criteria for the market-based performance stock units is based on the Company’s total shareholder return (“TSR”) relative to the TSR of the common stock of a pre-defined industry peer group,group. TSR is measured over a period beginning January 1, 20172019 and ending December 31, 2019.2021. TSR is calculated as the Company’s average closing stock price for the 20-trading days at the end of the performance period plus Company dividends, divided by the Company’s average closing stock price for the 20-trading days prior to the start of the performance period. Depending on the performance achieved, the amount of shares earned can vary from 0% of the target award to a maximum of 200% of the target award. The Company estimated the grant-date fair value of the awards subject to a market condition using a Monte Carlo simulation model, using the following weighted-average assumptions: risk-free interest rate of 1.52%2.43% and annualized volatility of 38.5%84.1%. Due to the lack of adequate stock price history of Horizon common stock, the expected volatility is based on the historical volatility of the common stock of the peer group. The grant date fair value of the performanceperformance stock units was $18.41. $3.69.

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)


The grant date fair value of restricted sharesstock units is expensed over the vesting period. Restricted sharestock unit fair values are based on the closing trading price of the Company’s common stock on the date of grant. Changes in the number of restricted shares outstanding for the period ended SeptemberJune 30, 20172020 were as follows:
Number of Restricted SharesWeighted Average Grant Date Fair Value
Outstanding at December 31, 20191,393,085  $4.30  
Granted1,502,072  2.92  
Vested(413,141) 3.84  
Canceled, forfeited(357,035) 5.27  
Outstanding at June 30, 20202,124,981  $3.25  
  Number of Restricted Shares Weighted Average Grant Date Fair Value
Outstanding at December 31, 2016 557,563
 $11.89
  Granted 185,423
 17.49
  Vested (153,086) 12.52
  Canceled, forfeited —
 —
Outstanding at September 30, 2017 589,900
 $13.50
As of SeptemberJune 30, 2017,2020, there was $4.0$4.9 million in unrecognized compensation costs related to unvested restricted sharesstock units that is expected to be recognized over a weighted-average period of 0.9 year.2.3 years.
The Company recognized approximately $0.9 million and $2.5$1.3 million of stock-based compensation expense related to restricted shares during the three and ninesix months ended SeptemberJune 30, 2017,2020, respectively, and approximately $0.8$0.6 million and $2.2$1.0 million during the three and ninesix months ended Septemberand June 30, 2016,2019, respectively. Stock-based compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of income.
11. Earnings per Share
Basic earnings per share is computed using net income attributable to Horizon Global and the number of weighted average shares outstanding. On February 1, 2017, the Company completed an underwritten public offering of 4.6 million shares of common stock, which includes the exercise in full by the underwriters of their option to purchase 0.6 million shares of common stock, at a public offering price of $18.50 per share (the “Common Stock Offering”). Proceeds from the Common Stock Offering were approximately $79.9 million, net of underwriting discounts, commissions, and offering-related transaction costs. Diluted earnings per share is computed using net income attributable to Horizon Global and the number of weighted average shares outstanding, adjusted to give effect to the assumed exercise of outstanding stock options and warrants, vesting of restricted shares outstanding, and conversion of the Convertible Notes. The following table sets forth the reconciliation of the numerator and the denominator of basic earnings per share attributable to Horizon Global and diluted earnings per share attributable to Horizon Global for the three and nine months ended September 30, 2017 and 2016:operations.
25
  Three months ended
September 30,		 Nine months ended
September 30,
  2017 2016 2017 2016
  (dollars in thousands, except for per share amounts)
Numerator:        
Net income attributable to Horizon Global $6,890
 $370
 $17,290
 $9,890
Denominator:        
Weighted average shares outstanding, basic 24,948,410
 18,174,509
 24,728,643
 18,144,998
Dilutive effect of stock-based awards 430,842
 344,568
 426,157
 188,228
Weighted average shares outstanding, diluted 25,379,252
 18,519,077
 25,154,800
 18,333,226
         
Basic earnings per share attributable to Horizon Global $0.28
 $0.02
 $0.70
 $0.55
Diluted earnings per share attributable to Horizon Global $0.27
 $0.02
 $0.69
 $0.54

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

The effect of certain common stock equivalents were excluded from the computation of weighted average diluted shares outstanding for the three and nine months ended September 30, 2017 and 2016, as inclusion would have resulted in anti-dilution. A summary of these anti-dilutive common stock equivalents is provided in the table below:
  Three months ended
September 30,		 Nine months ended
September 30,
  2017 2016 2017 2016
Number of options —
 —
 —
 268,331
Exercise price of options —
 —
 —
 $10.08 - $11.02
Restricted stock units —
 —
 57,118
 53,546
Convertible Notes 5,005,000
 —
 4,418,333
 —
Warrants 5,005,000
 —
 4,418,333
 —
For purposes of determining diluted earnings per share, the Company has elected a policy to assume that the principal portion of the Convertible Notes, as described in Note 7, “Long-term Debt,” is settled in cash and the conversion premium is settled in shares. Therefore, the Company has adopted a policy of calculating the diluted earnings per share effect of the Convertible Notes using the treasury stock method. As a result, the dilutive effect of the Convertible Notes is limited to the conversion premium, which is reflected in the calculation of diluted earnings per share as if it were a freestanding written call option on the Company’s shares. Using the treasury stock method, the Warrants issued in connection with the issuance of the Convertible Notes are considered to be dilutive when they are in the money relative to the Company’s average common stock price during the period. The Convertible Note Hedges purchased in connection with the issuance of the Convertible Notes are always considered to be anti-dilutive and therefore do not impact the Company’s calculation of diluted earnings per share.
12.16. Shareholders’ Equity
Preferred Stock
The Company is authorized to issue 100,000,000 shares of Horizon Global preferred stock, par value of $0.01 per share. There were no0 preferred shares outstanding at Septemberas of June 30, 20172020 or December 31, 2016.2019.
Common Stock
The Company is authorized to issue 400,000,000 shares of Horizon Global common stock, par value of $0.01 per share. At SeptemberAs of June 30, 2017,2020, there were 24,936,11026,478,135 shares of common stock issued and outstanding, net25,791,629 shares of 686,506 in treasury shares. Atcommon stock outstanding. As of December 31, 2016,2019, there were 20,899,95926,073,894 shares of common stock issued and 25,387,388 shares of common stock outstanding.
Share Repurchase ProgramCommon Stock Warrants
In April 2017,connection with the Board of Directors authorized a share repurchase program ofSecond Lien Term Loan the Company entered into in March 2019, the Company became obligated to issue detachable warrants to purchase up to 1.56.25 million shares of its common stock, which can be exercised on a cashless basis over a five year term with an exercise price of $1.50 per share.
The Company also issued 90,667 shares of Series A Preferred Stock in March 2019 in connection with the Second Lien Term Loan that were convertible into additional warrants upon receipt of shareholder approval of the issuance of such additional warrants and the shares of common stock issuable upon exercise thereof. The Series A Preferred Stock was presented as temporary equity in the March 31, 2019 condensed consolidated balance sheet. Upon receipt of such shareholder approval on June 25, 2019, the 90,667 shares of Series A Preferred Stock were converted into warrants to purchase 2,952,248 shares of common stock. See Note 9, Long-term Debt, for additional information. As of June 30, 2020, warrants for 110,240 shares have been exercised on a net basis, resulting in the issuance of 66,476 shares of the Company’s issued and outstanding common stock during the period beginning on May 5, 2017 and ending May 5, 2020 (the “Share Repurchase Program”). The Share Repurchase Program provides for share purchases in the open market or otherwise, depending on share price, market conditions and other factors, as determined by the Company. In addition, the Company’s ABL Loan Agreement and Replacement Term Loan Amendment place certain limitations on the Company’s ability to repurchase its common stock. As of SeptemberJune 30, 2017, cumulative2020, warrants to purchase 6,443,910 shares purchased totaled 686,506 at an average purchase price per share of $14.55, excluding commissions. The repurchased shares are presented as treasurycommon stock at cost, on the condensed consolidated balance sheets.

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

were issued and remain outstanding.
Accumulated Other Comprehensive Income
Changes in AOCI by component, net of tax, for the nine months ended September 30, 2017 are summarized as follows:
   Derivative Instruments Foreign Currency Translation Total
  (dollars in thousands)
Balance at December 31, 2016 $(930) $(7,410) $(8,340)
Net unrealized gains (losses) arising during the period (a)
 (7,950) 15,500
 7,550
Less: Net realized losses reclassified to net income (b)
 (8,120) —
 (8,120)
Net current-period change 170
 15,500
 15,670
Balance at September 30, 2017 $(760) $8,090
 $7,330
__________________________
(a) Derivative instruments, net of income tax benefit of $5.2 million. See Note 8, “Derivative Instruments,” for further details.
(b) Derivative instruments, net of income tax benefit of $4.8 million. See Note 8, “Derivative Instruments,” for further details. (Loss) (“AOCI”)
Changes in AOCI by component, net of tax, for the ninesix months ended SeptemberJune 30, 20162020 are summarized as follows:
Derivative InstrumentsForeign Currency TranslationTotal
(dollars in thousands)
Balances at January 1, 2020$—  $(9,790) $(9,790) 
Net unrealized losses arising during the period—  (2,300) (2,300) 
Net current-period change—  (2,300) (2,300) 
Balances at June 30, 2020$—  $(12,090) $(12,090) 
   Derivative Instruments Foreign Currency Translation Total
  (dollars in thousands)
Balance at December 31, 2015 $(710) $3,180
 $2,470
Net unrealized gains (losses) arising during the period (a)
 (660) 1,130
 470
Less: Net realized losses reclassified to net income (b)
 (1,030) —
 (1,030)
Net current-period change 370
 1,130
 1,500
Balance at September 30, 2016 $(340) $4,310
 $3,970
Changes in AOCI by component, net of tax, for the six months ended June 30, 2019 are summarized as follows:
__________________________
Derivative InstrumentsForeign Currency TranslationTotal
(dollars in thousands)
Balances at January 1, 2019$1,960  $5,800  $7,760  
Net unrealized gains arising during the period(a)
970  1,290  2,260  
Less: Net realized gains reclassified to net loss(a)
2,250  —  2,250  
Net current-period change(1,280) 1,290  10  
Balances at June 30, 2019$680  $7,090  $7,770  
(a) Derivative instruments, net ofThere was no income tax benefit of $0.1 million.impact for derivative instruments during the six months ended June 30, 2019. See Note 8, “10, Derivative Instruments,,” for further details.
(b) Derivative instruments, net
26

17. Segment Information
The Company groups its business into operating segments by the region in which sales and manufacturing efforts are focused, which are grouped on the basis of income tax benefitsimilar product, market and operating factors. Each operating segment has discrete financial information evaluated regularly by the Company’s chief operating decision maker in determining resource allocation and assessing performance. The Company reports the results of $0.1 million.its business in 2 operating segments: Horizon Americas and Horizon Europe-Africa. Horizon Americas is comprised of the Company’s North American and South American operations. Horizon Europe-Africa is comprised of the European and South African operations. See Note 8, “Derivative Instruments,”below for further details.information regarding the types of products and services provided within each operating segment.
Previously, the Company had three operating segments. However, as a result of its sale in the third quarter of 2019, we have removed APAC as a separate operating segment and its results are presented as a discontinued operation in the accompanying condensed consolidated financial statements. Historical information has been retrospectively adjusted to reflect these changes. Please see Note 3, Discontinued Operations, for additional information.
13.Horizon Americas - A market leader in the design, manufacture and distribution of a wide variety of high-quality, custom engineered towing, trailering and cargo management products and related accessories. These products are designed to support OEMs, OESs, aftermarket and retail customers in the agricultural, automotive, construction, industrial, marine, military, recreational vehicle, trailer and utility end markets. Products include brake controllers, cargo management, heavy-duty towing products, jacks and couplers, protection/securing systems, trailer structural and electrical components, tow bars, vehicle roof racks, vehicle trailer hitches and additional accessories.
Horizon Europe‑Africa - With a product offering similar to Horizon Americas, Horizon Europe-Africa focuses its sales and manufacturing efforts in the Europe and Africa regions of the world.
The following table presents the Company’s operating segment activity:
 Three Months Ended
June 30,		Six Months Ended
June 30,
 2020201920202019
 (dollars in thousands)
Net Sales
Horizon Americas$74,120  $108,950  $166,490  $204,450  
Horizon Europe-Africa46,370  83,700  117,250  165,870  
Total$120,490  $192,650  $283,740  $370,320  
Operating Profit (Loss)
Horizon Americas$3,430  $9,490  $6,160  $7,990  
Horizon Europe-Africa(5,970) 1,580  (8,480) (1,610) 
Corporate(5,430) (8,420) (12,330) (17,100) 
Total$(7,970) $2,650  $(14,650) $(10,720) 
18. Income Taxes
At the end of each interim reporting period, the Company makes an estimate of the annual effective income tax rate. Tax items included in the annual effective income tax rate are pro-rated for the full year and tax items discrete to a specific quarter are included in the effective income tax rate for that quarter. Effective tax rates vary from period to period as separate calculations are performed for those countries where the Company's operations are profitable and whose results continue to be tax-effected and for those countries where full deferred tax valuation allowances exist and are maintained. In determining the estimated annual effective tax rate, the Company analyzes various factors, including but not limited to, forecasts of projected annual earnings, taxing jurisdictions in which the pretax income and/or pretax losses will be generated, available tax planning strategies.
The estimate used in providingeffective income tax rate was (0.5)% and (0.2)% for the three and six months ended June 30, 2020, respectively. The effective income taxes on a year-to-date basis may change in subsequent interim periods.tax rate was 8.5% and 3.1% for the three and six months ended June 30, 2019, respectively. The Company has experienced pre-tax losses2020 lower effective tax rate compared to the statutory tax rate is attributable to the valuation allowance recorded in the U.S. In light of the losses, theUS and several foreign jurisdictions, which resulted in no income tax benefit recognized for jurisdictional pretax losses.
27

The Company evaluates the realizability of its deferred tax assets on a quarterly basis. In completing this evaluation, the Company considers all available evidence in order to determine whether, based on the weight of the evidence, a valuation allowance is necessary. Full valuation allowances that are recorded for deferred tax assets in the US and certain foreign jurisdictions will be maintained until sufficient positive evidence exists to reduce or eliminate them. The factors considered by management in its determination of the probability of the realization of the deferred tax assets include, but are not limited to, recent historical financial results, historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences, tax planning strategies. If, based upon the weight of available evidence, it is more likely than not the deferred tax assets will not be realized, a valuation allowance is recorded. The Company has recently experienced pre-tax losses. As of SeptemberJune 30, 2017, we believe2020, the Company believes that it is more likely than not that the U.S.recorded deferred tax assets will be realized. If
On March 27, 2020, Congress enacted the U.S. business continuesCARES Act to experience losses through 2017, management may determineprovide certain relief as a result of the COVID-19 pandemic. The Company is currently evaluating how the CARES Act provisions will impact our consolidated financial statements, but is not currently projecting significant impacts on its income tax provision based on its domestic valuation allowance againstand historical operating performance.
19. Other Expense, Net
Other expense, net consists of the U.S. deferred tax assets is necessary,following components:
Three Months Ended
June 30,		Six Months Ended
June 30,
2020201920202019
(dollars in thousands)
Foreign currency (loss) / gain$(220) $720  $(1,750) $(620) 
Customer pay discounts(270) (410) (540) (920) 
Accretion arising from lease recovery(20) (30) (50) (70) 
Loss on sale of business—  —  —  (3,630) 
Other60  220  220  270  
Total$(450) $500  $(2,120) $(4,970) 

20. Subsequent Events
Limited Consent to Loan and Security Agreement
On July 3, 2020, the Company entered into a limited consent to the Loan Agreement with Encina, that consented to the Company’s entering into the 2020 Replacement Term Loan Amendment, as defined and described below.
Amendment to Term Loan Credit Agreement
On July 6, 2020, the Company entered into the 2020 Replacement Term Loan Amendment (the “Eleventh Term Amendment”) to amend the Term Loan Agreement. The Eleventh Term Amendment provided replacement term loans (the “Replacement Term Loans”) that refinanced and replaced the outstanding balances under the First Lien Term Loan Agreement and Second Lien Term Loan Agreement, plus any accrued interest thereon. The interest on the Replacement Term Loans will be payable at LIBOR plus 10.75% per annum, subject to a 1.00% LIBOR floor, of which would result4.00% shall be payable in significant tax expensecash and LIBOR plus 6.75% shall be payable-in-kind (PIK) interest (provided that the Company may elect on not more than one occasion to pay all interest as PIK interest). Borrowings under the Eleventh Term Amendment mature on the earlier of: (i) June 30, 2022 and (ii) April 1, 2022 if the Convertible Notes, as defined in Note 9, Long-term Debt, are not repaid or otherwise discharged prior to such date. Additionally, the Eleventh Term Amendment provided for a 1.00% PIK closing fee, which was added to the principal amount of the Replacement Term Loans on the closing date; provided for a prepayment penalty on the entire principal amount of the Replacement Term Loans in an amount equal to 3.0% of the aggregate principal amount prepaid prior to December 31, 2021; and amended the fixed charge coverage ratio covenant beginning with the fiscal quarter ending June 30, 2021, as follows:
•June 30, 2021: 1.10 to 1.00
28

•September 30, 2021: 1.25 to 1.00
•December 31. 2021 and each fiscal quarter ending thereafter: 1.40 to 1.00
The transaction will be accounted for in the period recognized, as well as subsequent periods.third quarter of 2020.
The effective income tax rate was (1.9)% and (25.7)% for the three and nine months ended September 30, 2017, respectively. For the three and nine months ended September 30, 2016, the effective income tax rates were 75.8% and 8.3%, respectively. The lower effective income tax rate in the three months ended September 30, 2017 is driven by a higher portion of income earned in jurisdictions with lower statutory rates and the recognition of additional tax credits recognized in the U.S. The lower effective income tax rate
29

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)

in the nine months ended September 30, 2017 is driven by the recognition of the income tax benefits associated with stock awards issued, the release of certain unrecognized tax positions, and the recognition of additional tax credits in the U.S.

During the nine months ended September 30, 2017 and 2016, cash paid for domestic taxes was approximately $1.9 million and $1.9 million, respectively. During the nine months ended September 30, 2017 and 2016, the Company paid cash for foreign taxes of $4.2 million and $2.2 million, respectively.
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition contains forward-looking statements regarding industry outlook and our expectations regarding the performance of our business. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under the heading “Forward-Looking Statements,” at the beginning of this report.Quarterly Report on Form 10-Q. Our actual results may differ materially from those contained in or implied by any forward-looking statements. You should read the following discussion together with the Company’s reports on file with the Securities and Exchange Commission, as well as our Annual Report on Form 10-K for the year ended December 31, 20162019 (See Item 1A. Risk Factors).
Overview
WeHeadquartered in Plymouth, Michigan, Horizon Global Corporation and its consolidated subsidiaries (“Horizon,” “Horizon Global,” “we,” or the “Company”) are a leading designer, manufacturer and distributor of a wide variety of high-quality, custom-engineered towing, trailering, cargo management and other related accessory products on a global basis, servingprimarily servicing the automotive aftermarket, retail and OE channels.
On October 4, 2016, we completede-commerce and original equipment manufacturers (“OEMs”) and original equipment servicers (“OESs”) (collectively, “OEs”) channels, supporting our acquisition of Westfalia Group. The Westfalia Group iscustomers through a leading global towing company. Headquartered in Rheda-Wiedenbrück, Germany, with operating facilities in 11 countries, it manufactures towingregional service and trailering products, including more than 1,700 different types of towbars, wiring kits and carrier systems for cars and light utility vehicles. It holds in excess of 300 issued patents and published patent applications protecting its unique line of towing and trailering products. The brands under which it markets its products include Westfalia, Terwa and Siarr. The acquisition of the Westfalia Group positions us as a leading manufacturer of towing and trailering equipment in Europe and further complements our broad portfolio.
Our business is comprised of three reportable segments: Horizon Americas, Horizon Europe-Africa, and Horizon Asia-Pacific. Horizon Americas has historically operated primarily in North America, and we believe has been a leader in towing and trailering-related products sold through retail, aftermarket, OE and e-commerce channels. In recent years, Horizon Americas expanded its geographic footprint into the South American market. Horizon Europe-Africa and Horizon Asia-Pacific focus their sales and manufacturing efforts outside of North and South America, historically operating primarily in Europe and Australia, respectively, and we believe have been leaders in towing related products sold through the OE and aftermarket channels. We have expanded our footprint into New Zealand, Thailand, the United Kingdom, and South Africa. We are in the early stages of our development in these markets, initially focusing primarily on supporting OE customers.
Our products are used in two primary categories across the world: commercial applications, or “Work”, and recreational activities, or “Play”. Some of the markets in our Work category include agricultural, automotive, construction, fleet, industrial, marine, military, mining and municipalities. Some of the markets in our Play category include equestrian, power sports, recreational vehicle, specialty automotive, truck accessory and other specialty towing applications.
Key Factors and Risks Affecting Our Reported Results.  Our products are sold into a diverse set of end-markets; the primary applications relate to automotive accessories for light and recreational vehicles. Purchases of automotive accessory parts are discretionary and we believe demand is driven by macro-economic factors including, (i) employment trends, (ii) consumer sentiment, and (iii) fuel prices, among others. We believe all of these metrics impact both our Work- and Play-related sales. In addition, we believe the Play-related sales are more sensitive to changes in these indices, given the Play-related sales tend to be more directly related to disposable income levels. In general, recent decreases in unemployment and fuel prices, coupled with increases in consumer sentiment, are positive trends for our businesses.delivery model.
Critical factors affecting our ability to succeed include: our
•Our ability to realize the expected future economic benefits of structural realignment ofresulting from the changes made to our manufacturing facilitiesoperations, distribution footprint and business units;management team during 2017 through 2019, including the operational improvement initiatives implemented in 2019;
•Our ability to continue to manage our liquidity, including continuing to deleverage our balance sheet and service our debt obligations;
•Our ability to quickly and cost-effectively introduce new products;products to our customers and end-user market with a resulting streamlined customer service model and improved operating margins;
•Our ability to acquirecontinue to successfully launch new products and integrate companiescustomer programs to expand our geographic coverage or products that supplement existing product lines, add new distribution channels and expand our geographic coverage; ourrealize desired operating efficiencies;
•Our ability to manage our cost structure more efficiently via global supply base management, internal sourcing and/or purchasing of materials, selective outsourcing and/or purchasing of support functions, working capital management and
a global approach to leverage of our administrative functions. functions; and
•Our ability to manage the business disruption and the operational and financial impacts, including temporary facility closures, liquidity and other economic and business uncertainties related to the COVID-19 pandemic as further detailed below.
If we are unable to do any of the foregoing successfully, our financial condition and results of operations could be materially and adversely impacted.
In December 2019, a novel coronavirus (“COVID-19”) outbreak occurred in China and has since spread to other parts of the world and been declared a pandemic. In connection with the COVID-19 pandemic, we have been adhering to mandates and other guidance from local governments and health authorities, as well as the World Health Organization and the Centers for Disease Control. As a result of the pandemic, we experienced, and may experience again in the future, decreases in demand and customer orders for our products in all sales channels, as well as temporary disruptions and closures of some of our facilities due to decreased demand and government mandates. The COVID-19 pandemic also impacted various aspects of the supply chain as our suppliers experienced similar business disruptions due to operating restrictions from government mandates. We experience some seasonalitycontinue to monitor procurement of raw materials and components used in the manufacturing, distribution and sale of our products, but future disruptions in the supply chain due to the COVID-19 pandemic may cause difficulty in sourcing materials or unexpected shortages or delays in delivery of raw materials and components, and may result in increased costs in our business. Salessupply chain. The extent to which we or our customers may successfully mitigate the impact of towingthe COVID-19 pandemic, if at all, is unclear. The extent and trailering productsduration of the impact of the COVID-19 pandemic and resulting effect on the Company’s operations continues to evolve and remains uncertain. However, we expect that our results of operations in future periods may be adversely impacted by the northern hemisphere, where we generateCOVID-19 pandemic and its negative effects on global economic conditions. See Part II, Item 1A, “Risk Factors,” for additional risks relating to the majorityCOVID-19 pandemic.
30

Horizon Global reports its business in two operating segments: Horizon Americas and Horizon Europe-Africa. See Note 17, Segment Information, included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” within this Quarterly Report on Form 10-Q for further description of our sales, are generally stronger in the second and third calendar quarters, as trailer OEs, distributors and retailers acquire product for the spring and summer selling seasons. Our growing businesses in the southern hemisphere are stronger in the first and fourth calendar quarters. We do not consider order backlog to be a material factor in our businesses.
We are sensitive to price movements in our raw materials supply base. Our largest material purchases are for steel, copper, and aluminum. We also consume a significant amount of energy via utilities in our facilities. Historically, when we have experienced increasing costs of steel, we have successfully worked with our suppliers to manage cost pressures and disruptions in supply. Price increases used to offset inflation or a disruption of supply in core materials have generally been successful, although sometimes delayed. Increases in price for these purposes represent a risk in execution.Company’s operating segments.
We report shipping and handling expenses associated with our Horizon Americas reportable segment’sAmericas’ distribution network as an element of selling, general and administrative expenses in our condensed consolidated statements of income.operations. As such, gross margins for the Horizon Americas reportable segment may not be comparable to those of our Horizon Europe-Africa, and Horizon Asia-Pacific segments, which primarily relyrelies on third-party distributors, for which all costs are included in cost of sales.

Supplemental Analysis and Segment Information
Non-GAAP Financial Measures
The Company’s management utilizes Adjusted EBITDA as the key measure of company and Supplemental Analysissegment 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, further discussed in the Liquidity and Capital Resources section below. Adjusted EBITDA should not be considered a substitute for results prepared in accordance with US GAAP and should not be considered an alternative to net income attributable to Horizon Global, which is the most directly comparable financial measure to Adjusted EBITDA that is prepared in accordance with US GAAP. Adjusted EBITDA, as determined and measured by Horizon Global, should also not be compared to similarly titled measures reported by other companies. The Company also uses operating profit (loss) to measure stand-alone segment performance.
Adjusted EBITDA is defined as net income attributable to Horizon Global before interest expense, income taxes, depreciation and amortization, and before certain items, as applicable, such as severance, restructuring, relocation and related business disruption costs, impairment of goodwill and other intangibles, non-cash stock compensation, certain product liability recall and litigation claims, acquisition and integration costs, gains (losses) on business divestitures and other assets, board transition support and non-cash unrealized foreign currency remeasurement costs.
The following table summarizes financial informationAdjusted EBITDA for our reportableoperating segments for the three months ended SeptemberJune 30, 20172020 (“2Q20”):
Three Months Ended
June 30, 2020
Horizon AmericasHorizon Europe-AfricaCorporateConsolidated
(dollars in thousands)
Net loss attributable to Horizon Global$(16,340) 
Net loss attributable to noncontrolling interest(380) 
Net loss$(16,720) 
Interest expense8,220  
Income tax expense80  
Depreciation and amortization5,470  
EBITDA$5,350  $(3,250) $(5,050) $(2,950) 
Net loss attributable to noncontrolling interest—  380  —  380  
Restructuring, relocation and related business disruption costs410  30  210  650  
Non-cash stock compensation—  —  900  900  
Loss on business divestitures and other assets240  —  40  280  
Debt issuance costs—  —  560  560  
Unrealized foreign currency remeasurement costs(100) 690  (370) 220  
Adjusted EBITDA$5,900  $(2,150) $(3,710) $40  

31

The following table summarizes Adjusted EBITDA for our operating segments for the three months ended June 30, 2019 (“2Q19”):
Three Months Ended
June 30, 2019
Horizon AmericasHorizon Europe-AfricaCorporateConsolidated
(dollars in thousands)
Net loss attributable to Horizon Global$(8,080) 
Net loss attributable to noncontrolling interest(60) 
Net loss$(8,140) 
Interest expense15,320  
Income tax benefit(1,040) 
Depreciation and amortization5,310  
EBITDA$11,220  $5,220  $(4,990) $11,450  
Net loss attributable to noncontrolling interest—  60  —  60  
Income from discontinued operations, net of tax—  —  (2,990) (2,990) 
Severance(270) 20  —  (250) 
Restructuring, relocation and related business disruption costs540  (10) —  530  
Non-cash stock compensation—  —  600  600  
Loss on business divestitures and other assets430  —  1,320  1,750  
Board transition support—  —  760  760  
Debt issuance costs—  —  1,300  1,300  
Unrealized foreign currency remeasurement costs150  (680) (190) (720) 
Other(10) (200) —  (210) 
Adjusted EBITDA$12,060  $4,410  $(4,190) $12,280  
Segment Information
Previously, the Company had three operating segments. However, as a result of the divestiture of Horizon Asia-Pacific (“APAC”) in the third quarter of 2019, we have removed APAC as a separate operating segment and 2016:its results are presented as a discontinued operation. Historical information has been retrospectively adjusted to reflect these changes. Please see Note 3, Discontinued Operations, and Note 17, Segment Information, included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” within this Quarterly Report on Form 10-Q for additional information.










32
  Three months ended September 30,
  2017 
As a Percentage
of Net Sales
 2016 
As a Percentage
of Net Sales
  (dollars in thousands)
Net Sales        
Horizon Americas $115,460
 48.1 % $110,730
 73.0%
Horizon Europe-Africa 87,950
 36.6 % 13,050
 8.6%
Horizon Asia-Pacific 36,710
 15.3 % 27,940
 18.4%
Total $240,120
 100.0 % $151,720
 100.0%
Gross Profit        
Horizon Americas $34,230
 29.6 % $33,590
 30.3%
Horizon Europe-Africa 14,370
 16.3 % 2,130
 16.3%
Horizon Asia-Pacific 9,820
 26.8 % 6,790
 24.3%
Total $58,420
 24.3 % $42,510
 28.0%
Selling, General and Administrative Expenses        
Horizon Americas $23,220
 20.1 % $20,690
 18.7%
Horizon Europe-Africa 11,640
 13.2 % 1,900
 14.6%
Horizon Asia-Pacific 3,860
 10.5 % 3,020
 10.8%
Corporate 6,080
 N/A
 10,240
 N/A
Total $44,800
 18.7 % $35,850
 23.6%
Net Loss on Disposition of Property and Equipment        
Horizon Americas $(200) (0.2)% $10
 —%
Horizon Europe-Africa (80) (0.1)% (250) (1.9%)
Horizon Asia-Pacific (50) (0.1)% 210
 0.8%
Corporate —
 N/A
 —
 N/A
Total $(330) (0.1)% $(30) —%
Operating Profit (Loss)        
Horizon Americas $10,930
 9.5 % $12,910
 11.7%
Horizon Europe-Africa 2,680
 3.0 % 210
 1.6%
Horizon Asia-Pacific 5,880
 16.0 % 3,750
 13.4%
Corporate (6,200) N/A
 (10,240) N/A
Total $13,290
 5.5 % $6,630
 4.4%
Depreciation and Amortization        
Horizon Americas $2,630
 2.3 % $2,910
 2.6%
Horizon Europe-Africa 2,520
 2.9 % 360
 2.8%
Horizon Asia-Pacific 1,250
 3.4 % 1,060
 3.8%
Corporate 70
 N/A
 10
 N/A
Total $6,470
 2.7 % $4,340
 2.9%


The following table summarizes financial information for our reportableoperating segments for the nine months ended September 30, 20172Q20 and 2016:2Q19:
Three Months Ended June 30,ChangeConstant Currency Change
2020As a Percentage of Net Sales2019As a Percentage of Net Sales$%$%
(dollars in thousands)
Net Sales
Horizon Americas$74,120  61.5 %$108,950  56.6 %$(34,830) (32.0 %)$(34,600) (31.8 %)
Horizon Europe-Africa46,370  38.5 %83,700  43.4 %(37,330) (44.6 %)(36,520) (43.6 %)
Total$120,490  100.0 %$192,650  100.0 %$(72,160) (37.5 %)$(71,120) (36.9 %)
Gross Profit
Horizon Americas$18,140  24.5 %$26,900  24.7 %$(8,760) (32.6 %)$(8,570) (31.9 %)
Horizon Europe-Africa(90) (0.2)%9,410  11.2 %(9,500) (101.0 %)(9,560) (101.6 %)
Total$18,050  15.0 %$36,310  18.8 %$(18,260) (50.3 %)$(18,130) (49.9 %)
Selling, General and Administrative Expenses
Horizon Americas$14,720  19.9 %$17,450  16.0 %$(2,730) (15.6 %)$(2,530) (14.5 %)
Horizon Europe-Africa5,860  12.6 %7,800  9.3 %(1,940) (24.9 %)(1,780) (22.8 %)
Corporate5,420  N/A8,420  N/A(3,000) (35.6 %)(3,000) (35.6 %)
Total$26,000  21.6 %$33,670  17.5 %$(7,670) (22.8 %)$(7,310) (21.7 %)
Operating Profit (Loss)
Horizon Americas$3,430  4.6 %$9,490  8.7 %$(6,060) (63.9 %)$(6,080) (64.1 %)
Horizon Europe-Africa(5,970) (12.9)%1,580  1.9 %(7,550) (477.8 %)(7,770) (491.8 %)
Corporate(5,430) N/A(8,420) N/A2,990  (35.5 %)2,990  (35.5 %)
Total$(7,970) (6.6)%$2,650  1.4 %$(10,620) (400.8 %)$(10,860) (409.8 %)
Capital Expenditures
Horizon Americas$900  1.2 %$3,070  2.8 %$(2,170) (70.7 %)$(2,170) (70.7 %)
Horizon Europe-Africa490  1.1 %1,050  1.3 %(560) (53.3 %)(200) (19.0 %)
Corporate—  N/A10  N/A(10) (100.0 %)(10) (100.0 %)
Total$1,390  1.2 %$4,130  2.1 %$(2,740) (66.3 %)$(2,380) (57.6 %)
Depreciation and Amortization of Intangible Assets
Horizon Americas$2,040  2.8 %$2,280  2.1 %$(240) (10.5 %)$(200) (8.8 %)
Horizon Europe-Africa3,370  7.3 %2,940  3.5 %430  14.6 %540  18.4 %
Corporate60  N/A90  N/A(30) (33.3 %)(30) (33.3 %)
Total$5,470  4.5 %$5,310  2.8 %$160  3.0 %$310  5.8 %
Adjusted EBITDA
Horizon Americas$5,900  8.0 %$12,060  11.1 %$(6,160) (51.1 %)N/AN/A
Horizon Europe-Africa(2,150) (4.6)%4,410  5.3 %(6,560) (148.8 %)N/AN/A
Corporate(3,710) N/A(4,190) N/A480  (11.5 %)N/AN/A
Total$40  0.03 %$12,280  6.4 %$(12,240) (99.7 %)N/AN/A

33
  Nine months ended September 30,
  2017 As a Percentage
of Net Sales		 2016 As a Percentage
of Net Sales
  (dollars in thousands)
Net Sales        
Horizon Americas $351,400
 50.4 % $350,170
 75.2%
Horizon Europe-Africa 253,070
 36.3 % 39,600
 8.5%
Horizon Asia-Pacific 92,520
 13.3 % 75,820
 16.3%
Total $696,990
 100.0 % $465,590
 100.0%
Gross Profit        
Horizon Americas $105,780
 30.1 % $102,290
 29.2%
Horizon Europe-Africa 42,070
 16.6 % 6,550
 16.5%
Horizon Asia-Pacific 23,630
 25.5 % 16,990
 22.4%
Total $171,480
 24.6 % $125,830
 27.0%
Selling, General and Administrative Expenses        
Horizon Americas $66,810
 19.0 % $64,190
 18.3%
Horizon Europe-Africa 36,120
 14.3 % 5,700
 14.4%
Horizon Asia-Pacific 10,310
 11.1 % 8,120
 10.7%
Corporate 21,040
 N/A
 19,500
 N/A
Total $134,280
 19.3 % $97,510
 20.9%
Net Loss on Disposition of Property and Equipment        
Horizon Americas $(240) (0.1)% $(230) (0.1%)
Horizon Europe-Africa —
 — % (270) (0.7%)
Horizon Asia-Pacific (80) (0.1)% (20) —%
Corporate (10) N/A
 —
 N/A
Total $(330) — % $(520) (0.1%)
Operating Profit (Loss)        
Horizon Americas $38,840
 11.1 % $35,630
 10.2%
Horizon Europe-Africa 5,950
 2.4 % 600
 1.5%
Horizon Asia-Pacific 13,240
 14.3 % 8,830
 11.6%
Corporate (21,160) N/A
 (19,500) N/A
Total $36,870
 5.3 % $25,560
 5.5%
Depreciation and Amortization        
Horizon Americas $8,020
 2.3 % $8,580
 2.5%
Horizon Europe-Africa 6,570
 2.6 % 1,290
 3.3%
Horizon Asia-Pacific 3,150
 3.4 % 3,070
 4.0%
Corporate 200
 N/A
 30
 N/A
Total $17,940
 2.6 % $12,970
 2.8%



Results of Operations Three Months Ended SeptemberJune 30, 20172020 Compared withto Three Months Ended SeptemberJune 30, 20162019
Overall,Consolidated net sales decreased by $72.2 million, or 37.5%, to $120.5 million in 2Q20, as compared with $192.7 million in 2Q19, driven by a decrease in net sales in Horizon Americas and Horizon Europe-Africa, attributable to the continued impacts of economic uncertainty and business disruptions in these jurisdictions associated with the COVID-19 pandemic that began during the first quarter 2020. The decrease in net sales within Horizon Americas of $34.8 million was primarily driven by declines in sales volumes in the automotive OEM, retail and aftermarket sales channels. The decrease in net sales of $37.3 million in Horizon Europe-Africa was primarily driven by declines in sales volumes in the automotive OEM, automotive OES and aftermarket sales channels. However, the Company had positive momentum as the quarter progressed as economies and our manufacturing facilities began to reopen during this time period with consolidated net sales increasing each month.
The table below summarizes consolidated net sales for each month during the months ended March-June 2020 and 2019, as compared to the prior-year month ended:
Month Ended
202020192020 as a percentage of 2019
(dollars in thousands)
March$49,160  $75,360  65.2 %
April20,030  58,370  34.3 %
May38,820  60,250  64.4 %
June61,640  74,030  83.3 %
Consolidated net sales increased approximately $88.4 million, or 58.3%, to $240.1 millionmonth-over-month in the three months ended September 30, 2017,substantially all of our sales channels in May and June 2Q20, as compared with $151.7 million into the three months ended September 30, 2016. During the third quarter of 2017,prior month’s net sales. The table below summarizes May to April and June to May net sales within our Horizon Europe-Africa reportable segment increased $74.9 million primarily driven by our fourth quarter 2016 acquisitionas percent of change over the Westfalia Group. Horizon Asia-Pacific reportable segment increased by $8.8 million attributable, in part, to a regional bolt-on acquisition in the quarter and net sales to a new customer. In our Horizon Americas reportable segment, net sales increased $4.7 million driven by increased net sales across most of our channels, except our retail channel, which remained relatively flat quarter-over-quarter.prior month:
Percentage Increase (Decrease) in Net Sales
Month-over-Month
May 2020 compared
to April 2020		June 2020 compared
to May 2020
Automotive OEM348.6 %123.7 %
Automotive OES40.8 %20.3 %
Aftermarket70.3 %72.2 %
Retail54.7 %14.2 %
Industrial54.6 %27.9 %
E-commerce87.7 %32.8 %
Total93.8 %58.8 %
Gross profit margin (gross profit as a percentage of net sales) approximated 24.3%was 15.0% and 28.0% for the three months ended September 30, 201718.8% during 2Q20 and 2016,2Q19, respectively. The overall decrease in grossGross profit margin iswas negatively impacted in both operating segments primarily due to the resultcontinued impacts of a shiftCOVID-19 and related sales volume declines.
Selling, general and administrative (“SG&A”) expenses decreased by $7.7 million, primarily attributable to lower distribution center lease, operating and support costs in the concentration of net sales from our higher margin Horizon Americas reportable segment to our lower marginAmericas. In Horizon Europe-Africa, reportable segment. Further negatively impacting gross profit marginlower administrative and personnel cost savings were unfavorable commodity prices and higher freight costs in our Horizon Americas reportable segment which resulted in a decrease in gross profit margin quarter-over-quarter. These declines were partially offset by an improvement in our Horizon Asia-Pacific reportable segment primarilyrealized as a result of prior-year restructuring and business rationalization projects, as well as the reimbursement of certain payroll costs as part of a government payroll reimbursement program. Additionally, Corporate incurred $2.8 million of higher sales volumesprofessional service fees and productivity initiatives. Gross profit margin remained relatively flatother costs incurred in our Horizon Europe-Africa reportable segment.2Q19 related to a new debt issuance, amendments, and modifications and related structure changes.
Operating profit margin (operating profit (loss) as a percentage of net sales) approximated 5.5%was (6.6)% and 4.4%1.4% in the three months ended September 30, 20172Q20 and 2016,2Q19, respectively. Operating profitloss increased approximately $6.7by $10.7 million or 100.5%, to an operating loss of $8.0 million in 2Q20, from an operating profit of $13.3$2.7 million in 2Q19, primarily as a result of the three months ended September 30, 2017, from operating profit of $6.6 million in the three months ended September 30, 2016, primarily due to higher sales volumes from the aforementioned acquisitions along with lower corporate expenses as acquisition and integration costs were lower quarter-over-quarter. These positive impacts were partially offset by a decline in our Horizon Americas reportable segment as this segment was negatively impacted by higher commodity, freight, and legal costs.operational results detailed above.
Interest expense increased approximately $1.4 million, to $5.5 million, in the three months ended September 30, 2017, as compared to $4.1 million in the three months ended September 30, 2016, primarily due to additional interest and non-cash amortization of debt discount and issuance costs related to our Convertible Notes issued during the first quarter of 2017.
34

Other expense, net increased approximately $0.3by $1.0 million to $1.3$0.5 million in the three months ended September 30, 2017,2Q20, as compared to $1.0income of $0.5 million in 2Q19, primarily attributable to a $0.2 million foreign currency loss in 2Q20 as compared to a $0.7 million foreign currency gain in 2Q19.
Interest expense decreased by $7.1 million to $8.2 million in 2Q20, compared to $15.3 million in 2Q19. Interest expense decreased primarily as a result of the three months endedpay down of principal on the Company’s First Lien Term Loan (as defined below) in September 30, 2016, primarily due2019, which resulted in lower borrowings as well as lower interest rates compared to losses on financing transactions denominated in foreign currencies within certain of our Horizon Asia-Pacific locations.2Q19.
The effective income tax rate for the three months ended September 30, 2017continuing operations for 2Q20 and 20162Q19 was (1.9)(0.5)% and 75.8%8.5%, respectively. The 2Q20 lower effective tax rate compared to the statutory tax rate is attributable to the valuation allowance recorded in the US and several foreign jurisdictions at June 30, 2020, which resulted in no income tax rate in the three months ended September 30, 2017 is driven by a higher portion of income earned in jurisdictions with lower statutory rates and the recognition of additional tax creditsbenefit recognized in the U.S.for jurisdictional pretax losses.
Net incomeloss from continuing operations increased approximately $6.2by $5.6 million to $6.6a net loss of $16.7 million in the three months ended September 30, 2017,2Q20, compared to a net loss from net incomecontinuing operations of $0.4$11.1 million in the three months ended September 30, 2016. The increase was2Q19, primarily theas a result of a $6.7 million increasethe operational results detailed above.
Income from discontinued operations, net of tax is attributable to the sale of the Company’s former APAC operating segment, which was sold in operating profit driven by higher sales volumes and lower corporate expenses.September 2019. APAC has been presented as discontinued operations in our condensed consolidated financial statements in accordance with FASB ASC 205, Discontinued Operations. See Note 3, Discontinued Operations, included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” within this Quarterly Report on Form 10-Q for further description of the Company’s discontinued operations.
See below for a discussion of operating results by segment.
35

Horizon Americas.Americas
Net sales increased approximately $4.7by sales channel, in thousands, for Horizon Americas during 2Q20 and 2Q19 are as follows:
Three Months Ended June 30,Change
20202019$%
Net Sales
Automotive OEM$9,510  $23,680  $(14,170) (59.8)%
Automotive OES1,080  1,810  (730) (40.3)%
Aftermarket22,280  28,840  (6,560) (22.7)%
Retail22,830  33,200  (10,370) (31.2)%
Industrial5,040  6,930  (1,890) (27.3)%
E-commerce13,370  14,470  (1,100) (7.6)%
Other10  20  (10) N/A
Total$74,120  $108,950  $(34,830) (32.0)%
Horizon Americas 2Q20 results continued to be negatively impacted by the COVID-19 pandemic. As a result, net sales decreased by $34.8 million, or 4.3%32.0%, to $115.5$74.1 million in the three months ended September 30, 2017,2Q20, as compared to $110.7$109.0 million in the three months ended September 30, 2016. Net sales increased induring 2Q19, primarily attributable to lower volumes across all of our marketsales channels, exceptdue to the effects of the COVID-19 pandemic in 2Q20. This decrease was partially offset by a $3.2 million decrease in sales discounts, returns and allowances in 2Q20 as compared with 2Q19. The demand for our retail channel. Netproducts remained strong and we began to see a strong rebound in our net sales in May and June 2020 as economies and our automotive OE channel increased approximately $2.0 million, primarily dueprimary manufacturing facilities began to increased volume of brake controllersreopen and heavy duty products on existing programs. Netour Edgerton, Kansas, distribution facility ramped up to meet demand during this time period.
The table below summarizes Horizon Americas net sales in our e-commerce channel increased approximately $1.2 million primarily duefor each month during the months ended March-June 2020 and 2019, as compared to higher demand as we believe the way consumers do business appears to be evolving to online research and purchasing. Partially offsetting this increase was reduced sales to certain customers who did not maintain channel pricing discipline. Net sales in our aftermarket channel increased approximately $1.0 million based on increased sales with our warehouse distribution partners. In our industrial channel,prior-year month ended:
Month Ended
202020192020 as a percentage of 2019
(dollars in thousands)
March$29,200  $41,170  70.9 %
April13,560  33,790  40.1 %
May23,760  33,710  70.5 %
June36,800  41,450  88.8 %
Horizon Americas’ net sales increased by approximately $0.6 million due to increased product availability and consumer demand for on-road trailers. Net sales were relatively flatmonth-over-month in our retail channel, with an approximate $0.1 million decrease, as higher sales in farm and fleet and auto retail were more than offset by a decrease with our mass merchant customers. The remaindersubstantially all of the change is a result of favorable currency exchangesales channels in May and June 2Q20, as the Brazilian real strengthened in relationcompared to the U.S. dollar.prior month’s net sales. The table below summarizes May to April and June to May net sales as percent of change over the prior month:
36

Percentage Increase (Decrease) in Net Sales
Month-over-Month
May 2020 compared
to April 2020		June 2020 compared
to May 2020
Automotive OEM363.7 %169.6 %
Automotive OES(27.1)%31.8 %
Aftermarket77.4 %90.1 %
Retail54.7 %14.2 %
Industrial48.0 %26.2 %
E-commerce84.0 %30.3 %
Total75.2 %54.9 %
Horizon Americas’ gross profit increased approximately $0.6decreased by $8.8 million to $34.2$18.1 million in 2Q20 compared to $26.9 million in 2Q19. The decrease in gross profit margin reflects the changes in sales detailed above. Additionally, gross profit was impacted by the following:
–$2.9 million of favorable manufacturing costs;
–$1.7 million lower scrap costs and inventory reserves; and
–$1.2 million in lower outbound freight costs.
SG&A expenses decreased by $2.8 million to $14.7 million, or 29.6%19.9% of net sales, in the three months ended September 30, 2017, from approximately $33.6 million, or 30.3% of net sales, in the three months ended September 30, 2016. The increase in gross profit was due to the higher sales volumes discussed above. The primary factors negatively impacting gross profit margin were $2.6 million of unfavorable commodity prices and higher freight costs. Partially offsetting these decreases were approximately $0.5 million of lower costs associated with the consolidation of our manufacturing facilities during the third

quarter of 2016 that did not reoccur in 2017. Also benefiting gross profit margin were improved customer and product sales mix and pricing increases we were able to pass on to customers.
Selling, general and administrative expenses increased approximately $2.5 million to $23.2 million, or 20.1% of net sales, in the three months ended September 30, 2017,2Q20, as compared to $20.7 million, or 18.7% of net sales, in the three months ended September 30, 2016. The increase is primarily due to costs associated with a project to optimize our distribution footprint, increased variable distribution costs, and higher legal costs associated with protecting our intellectual property.
Horizon Americas’ operating profit decreased approximately $2.0 million to $10.9 million, or 9.5% of net sales, in the three months ended September 30, 2017, as compared to $12.9 million, or 11.7% of net sales, in the three months ended September 30, 2016. Operating profit margin decreased due to unfavorable commodity prices and higher freight, variable distribution, and legal costs. Also contributing to the decline in operating profit were costs associated with optimizing our distribution footprint. These decreases were partially offset by increased sales levels.
Horizon Europe-Africa.    Net sales increased approximately $74.9 million, or 573.9%, to $88.0 million in the three months ended September 30, 2017, compared to $13.1 million in the three months ended September 30, 2016, primarily due to the acquisition of the Westfalia Group in the fourth quarter of 2016.
Horizon Europe-Africa’s gross profit increased approximately $12.2 million to $14.4 million, or 16.3% of net sales, in the three months ended September 30, 2017, from approximately $2.1 million, or 16.3% of net sales, in the three months ended September 30, 2016. The increase in gross profit is attributable to the Westfalia Group acquisition.
Selling, general and administrative expenses increased approximately $9.7 million to $11.6 million, or 13.2% of net sales, in the three months ended September 30, 2017, as compared to $1.9 million, or 14.6% of net sales, in the three months ended September 30, 2016. The increase is primarily attributable to the aforementioned acquisition, which includes $2.0 million of depreciation and amortization related to purchase accounting. Further contributing to the increase was approximately $1.1 million of severance and integration related costs in connection with the acquisition during the quarter.
Horizon Europe-Africa’s operating profit increased approximately $2.5 million to $2.7 million, or 3.0% of net sales, in the three months ended September 30, 2017, as compared to $0.2 million, or 1.6% of net sales, in the three months ended September 30, 2016, primarily attributable to the acquisition mentioned above.
Horizon Asia-Pacific.    Net sales increased approximately $8.8 million, or 31.4%, to $36.7 million in the three months ended September 30, 2017, compared to $27.9 million in the three months ended September 30, 2016. The increase in net sales is attributable, in part, to a regional bolt-on acquisition early in the quarter, which increased net sales by approximately $6.0 million. Excluding the impact from this acquisition, net sales in our automotive OE channel decreased $0.6 million, primarily attributable to volume from a program that did not continue into 2017. The aftermarket sales channel decreased approximately $0.5 million due to reduced sales with a customer that did not maintain market discipline. Net sales in the industrial channel increased approximately $2.5 million due to increased sales with a new customer acquired in late 2016. The remainder of the increase is primarily due to favorable currency exchange as the Australian dollar, Thai baht, and New Zealand dollar strengthened in relation to the U.S. dollar.
Horizon Asia-Pacific’s gross profit increased approximately $3.0 million to $9.8 million, or 26.8% of net sales, in the three months ended September 30, 2017, from approximately $6.8 million, or 24.3% of net sales, in the three months ended September 30, 2016. The increase in gross profit is primarily driven by the increased sales volumes, which increased gross profit by $2.1 million. Gross profit margin was positively impacted by the results of ongoing productivity initiatives in our Australian business and efficiencies realized in Thailand as a result of the restructuring of operations completed in the second quarter of 2017.
Selling, general and administrative expenses increased approximately $0.8 million to $3.9 million, or 10.5% of net sales, in the three months ended September 30, 2017, as compared to $3.0 million, or 10.8% of net sales, in the three months ended September 30, 2016. The increase in selling, general and administrative expenses is primarily due to the aforementioned acquisition, which contributed $0.4 million of acquisition-related costs. Further impacting selling, general and administrative expenses during the quarter was increased personnel costs of $0.3 million in support of growth and productivity initiatives. The balance of the increase in selling, general and administrative expenses was caused by unfavorable currency exchange.
Horizon Asia-Pacific’s operating profit increased approximately $2.1 million to $5.9$17.5 million, or 16.0% of net sales, in 2Q19. The decrease in SG&A expenses was attributable to the three months ended September 30, 2017, as comparedfollowing:
–$1.3 million of lower distribution center lease, operating and support costs; and
–$1.2 million of lower litigation and other administrative costs.
Horizon Americas’ operating margin decreased by $6.1 million to $3.8an operating profit of $3.4 million, or 13.4%4.6% of net sales, in 2Q20, as compared to an operating profit of $9.5 million, or 8.7% of net sales, in 2Q19. Operating margin declined primarily due to the threeoperational results detailed above.
Horizon Americas’ Adjusted EBITDA decreased by $6.2 million to $5.9 million in 2Q20, as compared to Adjusted EBITDA of $12.1 million in 2Q19. Adjusted EBITDA declined primarily due to the operational results above.
Horizon Europe-Africa
Net sales by sales channel, in thousands, for Horizon Europe-Africa during 2Q20 and 2Q19 are as follows:
Three Months Ended June 30,Change
20202019$%
Net Sales
Automotive OEM$20,620  $45,780  $(25,160) (55.0)%
Automotive OES7,720  16,040  (8,320) (51.9)%
Aftermarket16,680  20,070  (3,390) (16.9)%
Industrial340  860  (520) (60.5)%
E-commerce230  560  (330) (58.9)%
Other780  390  390  100.0 %
Total$46,370  $83,700  $(37,330) (44.6)%
Horizon Europe-Africa 2Q20 results continued to be negatively impacted by the COVID-19 pandemic as the Company temporarily idled certain manufacturing facilities in the first half of 2Q20, in line with customer demand and in accordance with applicable government mandated operational restrictions. As a result, net sales decreased by $37.3 million, or 44.6%, to $46.4 million in 2Q20, as compared to $83.7 million in 2Q19, primarily attributable to lower volumes in the automotive OEM, automotive OES and aftermarket sales channels. As the operational restrictions began to ease and economies of these
37

jurisdictions began to reopen, our primary manufacturing facilities also reopened with improving results as the quarter progressed.
The table below summarizes Horizon Europe-Africa net sales for each month during the months ended September 30, 2016,March-June 2020 and 2019, as compared to the prior-year month ended:
Month Ended
202020192020 as a percentage of 2019
(dollars in thousands)
March$19,960  $34,190  58.4 %
April6,470  24,580  26.3 %
May15,060  26,540  56.7 %
June24,840  32,580  76.2 %
Horizon Europe-Africa’s net sales increased month-over-month in substantially all of the sales channels in May and June 2Q20, as compared to the prior month’s net sales. The table below summarizes May to April and June to May net sales as percent of change over the prior month:
Percentage Increase (Decrease) in Net Sales
Month-over-Month
May 2020 compared
to April 2020		June 2020 compared
to May 2020
Automotive OEM343.1 %106.0 %
Automotive OES56.6 %19.0 %
Aftermarket62.4 %51.0 %
Industrial(1)
NMF153.8 %
E-commerce(1)
NMF62.3 %
Total132.8 %64.9 %
(1)NMF is defined as No Meaningful Formula.
Horizon Europe-Africa’s gross profit decreased by $9.5 million to $0.1 million in 2Q20, as compared to $9.4 million in 2Q19. The decrease in gross profit margin reflects the changes in sales detailed above. In addition, gross profit was impacted by the following:
–$1.6 million of lower outbound freight costs; and
–$2.8 million of payroll reimbursement costs received in 2Q20 under terms of government payroll reimbursement programs, which includes the KUG (as defined in the Liquidity section below).
SG&A expenses decreased by $1.9 million to $5.9 million, or 12.6% of net sales, in 2Q20, as compared to $7.8 million, or 9.3% of net sales, in 2Q19. The decrease in SG&A expenses was primarily attributable to the following:
–$1.6 million of lower personnel and compensation costs, which includes $0.4 million of payroll reimbursement costs received in 2Q20 under terms of government payroll reimbursement programs, which includes the KUG.
Horizon Europe-Africa’s operating margin decreased by $7.6 million to an operating loss of $(6.0) million, or (12.9)% of net sales, in 2Q20, as compared to an operating profit of $1.6 million, or 1.9% of net sales, in 2Q19. Operating margin declined primarily due to increased sales volumes andthe operational improvements, partially offsetresults detailed above.
Horizon Europe-Africa’s Adjusted EBITDA decreased by acquisition costs.$6.6 million to $(2.2) million in 2Q20, as compared to Adjusted EBITDA of $4.4 million in 2Q19. Adjusted EBITDA decreased primarily due to the operational results described above.

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Corporate Expenses.Expenses
Corporate expenses included in operating profitloss decreased approximately $4.0by $3.0 million to $6.2$5.4 million in the three months ended September 30, 2017,2Q20, as compared to $10.2$8.4 million in 2Q19. The decrease was primarily attributable to $2.8 million of higher professional service fees and other costs incurred in 2Q19 related to a new debt issuance, amendments, and modifications and related structure changes.
Corporate Adjusted EBITDA was $(3.7) million during 2Q20, which was an improvement of $0.5 million, as compared to Adjusted EBITDA of $(4.2) million in 2Q19. Adjusted EBITDA improved primarily due to lower discretionary and administrative support costs in 2Q20.
The following table summarizes Adjusted EBITDA for our operating segments for the threesix months ended SeptemberJune 30, 2016. 2020 (“2Q20 YTD”):
Six Months Ended
June 30, 2020
Horizon AmericasHorizon Europe-AfricaCorporateConsolidated
(dollars in thousands)
Net loss attributable to Horizon Global$(33,080) 
Net loss attributable to noncontrolling interest(670) 
Net loss$(33,750) 
Interest expense16,410  
Income tax expense70  
Depreciation and amortization10,530  
EBITDA$10,290  $(4,340) $(12,690) $(6,740) 
Net loss attributable to noncontrolling interest—  670  —  670  
Loss from discontinued operations, net of tax—  —  500  500  
Severance530  20  (10) 540  
Restructuring, relocation and related business disruption costs1,300  30  320  1,650  
Non-cash stock compensation—  —  1,320  1,320  
Loss (gain) on business divestitures and other assets600  (180) 40  460  
Product liability and litigation claims—  1,510  —  1,510  
Debt issuance costs—  —  1,310  1,310  
Unrealized foreign currency remeasurement costs(700) 2,440  10  1,750  
Adjusted EBITDA$12,020  $150  $(9,200) $2,970  



















39









The decrease is attributed to approximately $4.6 millionfollowing table summarizes Adjusted EBITDA for our operating segments for the six months ended June 30, 2019 (“2Q19 YTD”):
Six Months Ended
June 30, 2019
Horizon AmericasHorizon Europe-AfricaCorporateConsolidated
(dollars in thousands)
Net loss attributable to Horizon Global$(33,180) 
Net loss attributable to noncontrolling interest(580) 
Net loss$(33,760) 
Interest expense26,150  
Income tax benefit(1,310) 
Depreciation and amortization10,520  
EBITDA$11,250  $580  $(10,230) $1,600  
Net loss attributable to noncontrolling interest—  580  —  580  
Income from discontinued operations, net of tax—  —  (6,770) (6,770) 
Severance(190) —  —  (190) 
Restructuring, relocation and related business disruption costs1,310  (1,410) —  (100) 
Non-cash stock compensation—  —  970  970  
Loss on business divestitures and other assets960  3,630  1,320  5,910  
Board transition support—  —  1,450  1,450  
Product liability and litigation claims—  4,320  —  4,320  
Debt issuance costs—  —  3,040  3,040  
Unrealized foreign currency remeasurement costs(80) 560  140  620  
Other200  (310) (100) (210) 
Adjusted EBITDA$13,450  $7,950  $(10,180) $11,220  
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The following table summarizes financial information for our operating segments for 2Q20 YTD and 2Q19 YTD:
Six Months Ended June 30,ChangeConstant Currency Change
2020As a Percentage
of Net Sales		2019As a Percentage
of Net Sales		$%$%
(dollars in thousands)
Net Sales
Horizon Americas$166,490  58.7 %$204,450  55.2 %$(37,960) (18.6)%$(37,550) (18.4)%
Horizon Europe-Africa117,250  41.3 %165,870  44.8 %(48,620) (29.3)%(45,850) (27.6)%
Total$283,740  100.0 %$370,320  100.0 %$(86,580) (23.4)%$(83,400) (22.5)%
Gross Profit
Horizon Americas$37,760  22.7 %$44,810  21.9 %$(7,050) (15.7)%$(6,810) (15.2)%
Horizon Europe-Africa6,540  5.6 %15,060  9.1 %(8,520) (56.6)%(8,440) (56.0)%
Total$44,300  15.6 %$59,870  16.2 %$(15,570) (26.0)%$(15,250) (25.5)%
Selling, General and Administrative Expenses
Horizon Americas$31,550  19.0 %$36,860  18.0 %$(5,310) (14.4)%$(5,040) (13.7)%
Horizon Europe-Africa15,000  12.8 %18,080  10.9 %(3,080) (17.0)%(2,670) (14.8)%
Corporate12,310  N/A17,100  N/A(4,790) (28.0)%(4,790) (28.0)%
Total$58,860  20.7 %$72,040  19.5 %$(13,180) (18.3)%$(12,500) (17.4)%
Operating Profit (Loss)
Horizon Americas$6,160  3.7 %$7,990  3.9 %$(1,830) (22.9)%$(1,870) (23.4)%
Horizon Europe-Africa(8,480) (7.2)%(1,610) (1.0 %)(6,870) 426.7 %(7,200) 447.2 %
Corporate(12,330) N/A(17,100) N/A4,770  (27.9)%4,770  (27.9)%
Total$(14,650) (5.2)%$(10,720) (2.9 %)$(3,930) 36.7 %$(4,300) 40.1 %
Capital Expenditures
Horizon Americas$1,470  0.9 %$3,830  1.9 %$(2,360) (61.6)%$(2,360) (61.6)%
Horizon Europe-Africa3,980  3.4 %1,800  1.1 %2,180  121.1 %2,650  147.2 %
Corporate—  N/A50  N/A(50) (100.0)%(50) (100.0)%
Total$5,450  1.9 %$5,680  1.5 %$(230) (4.0)%$240  4.2 %
Depreciation and Amortization of Intangible Assets
Horizon Americas$4,200  2.5 %$4,310  2.1 %$(110) (2.6)%$(60) (1.4)%
Horizon Europe-Africa6,220  5.3 %6,040  3.6 %180  3.0 %370  6.1 %
Corporate110  N/A170  N/A(60) (35.3)%(60) (35.3)%
Total$10,530  3.7 %$10,520  2.8 %$10  0.1 %$250  2.4 %
Adjusted EBITDA
Horizon Americas$12,020  7.2 %$13,450  6.6 %$(1,430) (10.6)%N/AN/A
Horizon Europe-Africa150  0.1 %7,950  4.8 %(7,800) (98.1)%N/AN/A
Corporate(9,200) N/A(10,180) N/A980  (9.6)%N/AN/A
Total$2,970  1.0 %$11,220  3.0 %$(8,250) (73.5)%N/AN/A
41

Results of lower costs associated with the acquisition of the Westfalia Group which was partially offset by an increase in severance and restructuring related costs.
NineOperationsSix Months Ended SeptemberJune 30, 20172020 Compared with NineSix Months Ended SeptemberJune 30, 20162019
Overall, net sales increased approximately $231.4decreased by $86.6 million, or 49.7%23.4%, to $697.0$283.7 million for the nine months ended September 30, 2017,in 2Q20 YTD, as compared with $465.6$370.3 million in 2Q19 YTD. As noted in the nine months ended September 30, 2016. Duringfollowing segment results discussions, the first nine months of 2017,decrease in net sales in ourthe Horizon Americas and Horizon Europe-Africa reportable segment increased $213.5was attributable to the continued impacts of economic uncertainty and business disruptions in these jurisdictions associated with the COVID-19 pandemic that began during the first quarter 2020. The decrease in net sales within Horizon Americas of $38.0 million was primarily driven by our fourth quarter 2016 acquisitiondeclines in sales volumes in the automotive OEM and retail sales channels. The decrease in net sales of $48.6 million in Horizon Europe-Africa was primarily driven by declines in sales volumes in the Westfalia Group.automotive OEM and automotive OES sales channels. Net sales of Horizon Europe-Africa were also negatively impacted by the sale of its non-automotive business in our Horizon Asia-Pacific reportable segment increased $16.7 million due to a regional bolt-on acquisitionthe first quarter 2019 and net sales to a new customer. Net sales increased approximately $1.2 million in our Horizon Americas reportable segment due to increases in our e-commerce, industrial and automotive OE channels, which were partially offset by decreases in our retail and aftermarket channels.unfavorable currency translation.
Gross profit margin (gross profit as a percentage of sales) approximated 24.6%was 15.6% and 27.0% for the nine months ended September 30, 201716.2% in 2Q20 YTD and 2016,2Q19 YTD, respectively. Gross profit margin increased across allwas negatively impacted in both operating segments primarily due to the continued impacts of our reportable segments; however, an overall decline is the COVID-19 pandemic and related sales volume declines.
SG&A expenses decreased by $13.2 million primarily attributable to lower distribution center lease, operating and support costs in Horizon Americas. In Horizon Europe-Africa, lower administration and personnel cost savings were realized as a result of a shift in the concentration of net sales from our higher margin Horizon Americas reportable segment to our lower margin Horizon Europe-Africa segment. Gross profit margin improved in our Horizon Americas reportable segmentprior-year restructuring and business rationalization projects, as well as the consolidationreimbursement of our manufacturing facilities that occurredcertain payroll costs as part of a government payroll reimbursement program. Additionally, Corporate incurred $4.5 million of higher professional service fees and other costs incurred in 2016 resulted2Q19 YTD related to new debt issuance, amendments, and modifications and related structure changes.
Operating margin (operating loss as a percentage of sales) was (5.2)% and (2.9)% in lower costs2Q20 YTD and cost savings2Q19 YTD, respectively. Operating loss increased $4.0 million to an operating loss of $14.7 million in 2017, which more than offset the negative impacts2Q20 YTD, compared to an operating loss of unfavorable commodity prices. An increase$10.7 million in gross profit margin in our Horizon Asia-Pacific reportable segment is attributable to increased sales volumes and productivity initiatives. Gross profit margin in our Horizon Europe-Africa reportable segment increased2Q19 YTD, primarily as a result of the acquisitionoperational results detailed above.
Other expense, net decreased by $2.9 million to $2.1 million in 2Q20 YTD compared to $5.0 million in 2Q19 YTD, primarily attributable to the $3.6 million loss on sale related to the Company’s divestiture of the Westfalia Group.its non-automotive business in Horizon Europe-Africa in 2Q19 YTD that did not recur in 2Q20 YTD, partially offset by $1.1 million of additional foreign currency loss in 2Q20 YTD as compared to 2Q19 YTD.
Operating profit margin (operating profitInterest expense decreased by $9.7 million to $16.4 million in 2Q20 YTD, as a percentage of sales) approximated 5.3% and 5.5% for the nine months ended September 30, 2017 and 2016, respectively. Operating profit increased approximately $11.3 million, or 44.2%,compared to $36.9$26.2 million for the nine months ended September 30, 2017, compared to $25.6 million for the nine months ended September 30, 2016,2Q19 YTD. Interest expense decreased primarily as a result of an operating profit margin improvement across allthe pay down of our reportable segments,principal on the Company’s First Lien Term Loan (as defined below) in September 2019, which was offset by higher corporate expenses driven by increased professional fees and people costs.
Interest expense increased approximately $4.1 million, to $16.7 million, for the nine months ended September 30, 2017,resulted in lower borrowings as well as lower interest rates compared to $12.6 million for the nine months ended September 30, 2016, primarily due to additional interest and non-cash amortization of debt discount and issuance costs related to our Convertible Notes issued during 2017.
Other expense, net increased approximately $0.4 million to $2.6 million for the nine months ended September 30, 2017 compared to $2.2 million for the nine months ended September 30, 2016, primarily due to losses on financing transactions denominated in foreign currencies within certain of our Horizon Asia-Pacific locations.2Q19 YTD.
The effective income tax ratesrate for the nine months ended September 30, 20172Q20 YTD and 2016 were (25.7)2Q19 YTD was (0.2)% and 8.3%3.1%, respectively. The 2Q20 YTD lower effective income tax rate compared to the statutory tax rate is attributable to the valuation allowance recorded in the nine months ended SeptemberUS and several foreign jurisdictions at June 30, 2017 is driven by the recognition of the income tax benefits associated with stock awards issued, the release of certain unrecognized tax positions, and the recognition of additional tax credits2020, which resulted in the U.S.
Net income increased by approximately $6.5 million, to $16.4 million for the nine months ended September 30, 2017, compared to $9.9 million for the nine months ended September 30, 2016. The increase is primarily the result of an increase in operating profit of $11.3 million and an increase inno income tax benefit recognized for jurisdictional pretax losses.
Net loss from continuing operations decreased by $7.3 million, to a net loss of $4.3 million. Partially offsetting these increases$33.3 million for 2Q20 YTD, compared to a net loss of $40.5 million for 2Q19 YTD, primarily as a result of the operational results detailed above.
(Loss) income from discontinued operations, net of tax is attributable to the sale of the Company’s former APAC operating segment, which was sold in September 2019. During 2Q20 YTD, the remaining post-closing conditions of the sale were $4.1 million increasecompleted, including a true up to net cash proceeds, which resulted in interest expense and a $4.6 million loss on extinguishmentsale of debt duediscontinued operations of $0.5 million. As a result, APAC has been presented as discontinued operations in our condensed consolidated financial statements in accordance with FASB ASC 205, Discontinued Operations. See Note 3, Discontinued Operations, included in Part I, Item 1, “Notes to a prepayment madeCondensed Consolidated Financial Statements,” within this Quarterly Report on our Term B Loan inForm 10-Q for further description of the first quarter of 2017.Company’s discontinued operations.
See below for a discussion of operating results by segment.
42

Horizon Americas.Americas
Net sales increased approximately $1.2by sales channel, in thousands, for Horizon Americas during 2Q20 YTD and 2Q19 YTD are as follows:
Six Months Ended June 30,Change
20192018$%
Net Sales
Automotive OEM$29,870  $43,920  $(14,050) (32.0)%
Automotive OES2,350  3,420  (1,070) (31.3)%
Aftermarket49,050  52,990  (3,940) (7.4)%
Retail46,400  61,630  (15,230) (24.7)%
Industrial12,890  16,210  (3,320) (20.5)%
E-commerce25,880  26,260  (380) (1.4)%
Other50  20  30  N/A
Total$166,490  $204,450  $(37,960) (18.6)%
Horizon Americas began 2Q20 YTD with strong performance and our initial operating results for the first quarter 2020 reflected strong demand for our products. However, the COVID-19 pandemic began to negatively impact results in March 2020 as the Company flexed down operations at its manufacturing and distribution facilities in line with customer demand and in accordance with applicable government mandated operational restrictions. As a result, net sales decreased by $38.0 million or 0.4%, to $351.4$166.5 million in the nine months ended September 30, 2017,2Q20 YTD, as compared to $350.2$204.5 million in 2Q19 YTD, primarily attributable to lower volumes in the nine months ended September 30, 2016. Netautomotive OEM and retail sales in our e-commerce channel increased by approximately $3.4 million as higher demand from major e-commerce customers more than offset the decreased sales to certain customers who did not maintain channel pricing discipline. Net sales in our industrial channel increased approximately $2.1 million as product availability has increased throughout the year. Net sales in our automotive OE channel increased approximately $0.6 millionchannels, due to increased volumes on existing programs with major customers,the effects of the COVID-19 pandemic throughout 2Q20 YTD. This decrease was partially offset by higher volumesa $0.9 million decrease in 2016 due to the launch of a new programsales discounts, returns and allowances in 2Q20 YTD as compared with another major customer that did not reoccur. Partially offsetting these increases were decreases in our retail and aftermarket channels. Net sales in our retail channel decreased approximately $2.9 million. Point of sale weakness at our mass merchant retail customers, across their product lines, resulted in lower sales levels. Net sales in our aftermarket channel decreased by approximately $2.5 million primarily due to challenges faced during the integration of our ERP system in 2017, which were partially offset by increased sales within our warehouse distribution partners. The remainder of the change is due to favorable currency exchange as the Brazilian real strengthened in relation to the U.S. dollar.2Q19 YTD.
Horizon Americas’ gross profit increased approximately $3.5decreased by $7.1 million to $105.8$37.8 million or 30.1% of net sales, in the nine months ended September 30, 2017,2Q20 YTD, as compared to $102.3$44.8 million or 29.2% of net sales, in the nine months ended September 30, 2016, Positively impacting2Q19 YTD. The decrease in gross profit margin reflects the changes in sales detailed above. Additionally, gross profit was approximately $4.0impacted by the following:
–$5.1 million lower scrap costs and inventory reserves;
–$2.8 million of lower costs associated with the consolidation of Horizon Americas’favorable manufacturing facilities during 2016 that did not reoccur in 2017. 2017 also benefited from $2.6costs; and
–$2.7 million in cost savings

due to the consolidation of Horizon Americas’ manufacturing facilities in 2016. Negatively impacting gross profit margin was approximately $4.4 million of unfavorable commodity prices andlower outbound freight costs.
Selling, general and administrativeSG&A expenses increased approximately $2.6decreased by $5.3 million to $66.8$31.6 million, or 19.0% of net sales in the nine months ended September 30, 2017,2Q20 YTD, as compared to $64.2$36.9 million, or 18.3%18.0% of net sales, in 2Q19 YTD. The decrease in SG&A expenses was attributable to the nine months ended September 30, 2016. The increase is primarily due to higherfollowing:
–$3.0 million of lower distribution costscenter lease, operating and support costs;
–$1.4 million of approximately $2.1lower litigation and other administrative costs; and
–$1.2 million along with higher legal costs associated with protecting our intellectual property.of lower personnel and compensation costs.
Horizon Americas’ operating profit increased approximately $3.2margin decreased by $1.8 million to $38.8an operating profit of $6.2 million, or 11.1%3.7% of net sales, in the nine months ended September 30, 2017,2Q20 YTD, as compared to $35.6an operating profit of $8.0 million, or 10.2%3.9% of net sales, in the nine months ended September 30, 2016.2Q19 YTD. Operating profit margin increaseddeclined primarily due to the favorableoperational results detailed above.
Horizon Americas’ Adjusted EBITDA decreased by $1.4 million to $12.0 million in 2Q20 YTD, as compared to Adjusted EBITDA of $13.5 million in 2Q19 YTD. Adjusted EBITDA decreased primarily due to operational results detailed above.
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Horizon Europe-Africa
Net sales by sales channel, in thousands, for Horizon Europe-Africa during 2Q20 YTD and 2Q19 YTD are as follows:
Six Months Ended June 30,Change
20202019$%
Net Sales
Automotive OEM$62,020  $94,700  $(32,680) (34.5)%
Automotive OES20,180  29,330  (9,150) (31.2)%
Aftermarket32,390  36,360  (3,970) (10.9)%
Industrial660  1,560  (900) N/A
E-commerce660  1,090  (430) (39.4)%
Other1,340  2,830  (1,490) (52.7)%
Total$117,250  $165,870  $(48,620) (29.3)%
Horizon Europe-Africa began 2Q20 YTD with strong performance and our initial operating results for the first quarter 2020 reflected strong demand for our products. However, the COVID-19 pandemic began to negatively impact results in March 2020 as the Company temporarily idled certain manufacturing facilities in line with customer demand and in accordance with applicable government mandated operational restrictions. As a result, net sales decreased by $48.6 million to $117.3 million in 2Q20 YTD, as compared to $165.9 million in 2Q19 YTD, primarily attributable to lower volumes in the automotive OEM and automotive OES sales channels, due to the effects of approximately $4.9the COVID-19 pandemic throughout 2Q20 YTD. Net sales of Horizon Europe-Africa were also negatively impacted by $2.1 million related to the sale of its non-automotive business in the first quarter 2019 and $2.8 million of unfavorable currency translation.
Horizon Europe-Africa’s gross profit decreased by $8.5 million to $6.5 million in 2Q20 YTD, as compared to $15.1 million in 2Q19 YTD. The decrease in gross profit margin reflects the changes in sales detailed above. Additionally, gross profit was impacted by the following:
–$4.3 million of charges in 2Q19 YTD related to potential claims from product sold by Horizon Europe-Africa arising from potentially faulty components provided by a supplier that did not recur in 2Q20 YTD, see Note 13, Contingencies, included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements;”
–$3.5 million of payroll reimbursement costs received in 2Q20 YTD under terms of government payroll reimbursement programs, which includes the KUG (as defined in the Liquidity section below); partially offset by:
–$1.7 million of charges in 2Q20 YTD for royalty costs and settlement of certain intellectual property infringement claims, see Note 13, Contingencies, included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements”.
SG&A expenses decreased by $3.1 million to $15.0 million, or 12.8% of net sales in 2Q20 YTD, as compared to $18.1 million, or 10.9% of net sales, in 2Q19 YTD. The decrease in SG&A expenses was primarily attributable to the following:
–$2.3 million of lower personnel and compensation costs, associated with the consolidation of our manufacturing footprint and approximately $2.2which includes $0.5 million of lower expense relatedpayroll reimbursement costs received in 2Q20 YTD under terms of governmental payroll reimbursement programs, which includes the KUG.
Horizon Europe-Africa’s operating margin decreased by $6.9 million to the impairmentan operating loss of intangible assets during 2016. Partially offsetting these increases were unfavorable commodity prices and higher freight costs.
Horizon Europe-Africa.    Net sales increased approximately $213.5$8.5 million, or 539.1%, to $253.1 million(7.2)% of net sales in the nine months ended September 30, 2017,2Q20 YTD, as compared to $39.6an operating loss of $1.6 million, or (1.0)% of net sales, in the nine months ended September 30, 2016, which is2Q19 YTD. Operating margin declined primarily due to the Westfalia Group acquisition. Net sales were negatively impacted by approximately $0.7 million of unfavorable currency exchange as the British pound weakened in relation to the U.S. dollar.operational results described above.
Horizon Europe-Africa’s gross profit increased approximately $35.5Adjusted EBITDA decreased by $7.8 million to $42.1$0.2 million or 16.6% of net sales, in the nine months ended September 30, 2017, from approximately $6.6 million, or 16.5% of net sales, in the nine months ended September 30, 2016, driven by the Westfalia Group acquisition.
Selling, general and administrative expenses increased approximately $30.4 million to $36.1 million, or 14.3% of net sales, in the nine months ended September 30, 2017,2Q20 YTD, as compared to $5.7Adjusted EBITDA of $8.0 million or 14.4% of net sales, in the nine months ended September 30, 2016.2Q19 YTD. Adjusted EBITDA decreased primarily due to operational results detailed above.
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Corporate Expenses  Corporate expenses included in operating loss decreased by $4.8 million to $12.3 million in 2Q20 YTD, as compared to $17.1 million in 2Q19 YTD. The increase isdecrease was primarily attributable to the aforementioned acquisition, which includes $5.0$4.5 million of depreciationhigher professional service fees and amortizationother costs incurred in 2Q19 YTD related to purchase accounting. Additionally, we incurred approximately $4.0a new debt issuance, amendments, and modifications and related structure changes.
Corporate Adjusted EBITDA was $(9.2) million during 2Q20 YTD, which was an improvement of severance and integration related costs in connection with the Westfalia Group acquisition during the 2017 period.
Horizon Europe-Africa’s operating profit increased approximately $5.4$1.0 million, to approximately $6.0 million, or 2.4% of net sales, in the nine months ended September 30, 2017, as compared to $0.6 million, or 1.5%Adjusted EBITDA of net sales, in the nine months ended September 30, 2016, primarily attributable to the acquisition mentioned above.
Horizon Asia-Pacific.   Net sales increased approximately $16.7 million, or 22.0%, to $92.5$(10.2) million in the nine months ended September 30, 2017, compared to $75.8 million in the nine months ended September 30, 2016. A regional bolt-on acquisition contributed an increase of $6.0 million in net sales. Net sales in our automotive OE channel, exclusive of this acquisition, increased $1.8 million due to increased volumes on existing programs. An increase of $6.8 million in net sales in our industrial channel is primarily due programs with a new customer. The remainder of the increase is2Q19. Adjusted EBITDA improved primarily due to favorable currency exchange as the Australian dollar, Thai baht, and New Zealand dollar strengthened in relation to the U.S. dollar.
Horizon Asia-Pacific’s gross profit increased approximately $6.6 million to $23.6 million, or 25.5% of net sales, in the nine months ended September 30, 2017, from approximately $17.0 million, or 22.4% of net sales, in the nine months ended September 30, 2016. $3.7 million of the increase in gross profit is driven by the increased sales volumes mentioned above. Gross profit margin was further positively impacted by the results of productivity initiatives in our Australian business and and efficiencies realized in Thailand due to restructuring of operations completed in the second quarter of 2017.
Selling, generallower discretionary and administrative expenses increased approximately $2.2 million to $10.3 million, or 11.1% of net sales, in the nine months ended September 30, 2017, as compared to $8.1 million, or 10.7% of net sales, in the nine months ended September 30, 2016. The increase in selling, general and administrative expenses is primarily due to the timing of marketing and promotional spend, increased peoplesupport costs in support of growth initiatives, and operational restructuring costs. Additionally, selling, general and administrative expenses was increased by acquisition-related costs of $0.5 million. Further negatively impacting selling, general and administrative expenses was $0.3 million in unfavorable currency exchange.
Horizon Asia-Pacific’s operating profit increased approximately $4.4 million to $13.2 million, or 14.3% of net sales, in the nine months ended September 30, 2017, as compared to $8.8 million, or 11.6% of net sales, in the nine months ended September 30, 2016, primarily due to increased volumes and operational improvements across the region.
Corporate Expenses.  Corporate expenses increased approximately $1.7 million to $21.2 million for the nine months ended September 30, 2017, from $19.5 million for the nine months ended September 30, 2016. The increase between years is primarily attributed to an increase in professional fees for various human resource, information technology, and compliance initiatives, and increased people costs as we have continued to build out our corporate structure. These increases were2Q20 YTD, partially offset by approximately $2.0 million of lower costs associated with the acquisition of the Westfalia Group.higher personnel and compensation costs.
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Liquidity and Capital Resources
Our capital and working capital requirements are funded through a combination of cash flows from operations, cash on hand and various borrowings and factoring arrangements described below, including our ABL Facility. We utilize intercompany loans and equity contributions to fund our worldwide operations. See Note 7, “Long-term Debt” included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” within this quarterly report on Form 10-Q.asset-based revolving credit facility (as defined below). As of SeptemberJune 30, 20172020, and December 31, 2016,2019, there was $14.2$12.3 million and $20.2$8.7 million, respectively, of cash held at foreign subsidiaries. There may be country specific regulations that may restrict or result in increased costs in the repatriation of these funds.
Based onWe believe our current and anticipated levels of operations and the condition in our markets and industry, we believe thatavailable our cash on hand, cash flow from operations and availability under our Revolving Credit Facility are our most significant sources of liquidity. In response to the current uncertain economic environment resulting from the COVID-19 pandemic, the Company has pursued funding from available government programs and other sources of liquidity designed to strengthen its balance sheet and enhance financial flexibility. These sources include short-term loans, some of which are forgivable if certain conditions are met, as well as entering into or modifying other arrangements, including expanded use of receivables factoring. A summary of these actions is described below.
In April 2020, S.I.A.R.R. SAS (the “French Borrower”), an indirect subsidiary of the Company, received a loan from BNP Paribas (the “French Loan”) for $5.5 million. The French Loan, issued pursuant to an agreement dated April 9, 2020, between the French Borrower and BNP Paribas, matures on April 9, 2021. The French Loan bears interest at a rate of 0.5% per annum. The French Borrower, at its election, may repay the French Loan in full on April 9, 2021 or in monthly installments for a period of five years from the date of election.
In April 2020, Horizon Global Company LLC (the “US Borrower”), a direct US-based subsidiary of the Company, received a loan from PNC Bank, National Association for $8.7 million, pursuant to the Paycheck Protection Program (the “PPP Loan”) under Division A, Title I of the Coronavirus Aid, Relief and Economic Security (“CARES”) Act. The PPP Loan, which is in the form of a Note dated April 18, 2020 issued by the US Borrower, matures on April 18, 2022. The PPP Loan bears interest at 1.0% per annum and is payable monthly commencing on November 15, 2020. Funds from the PPP Loan may be used for payroll, costs used to continue group health care benefits, rent and utilities. Under the terms of the PPP Loan, certain amounts may be forgiven if they are used for qualifying expenses as described in the CARES Act.
The Company submitted its PPP Loan application in good faith in accordance with the CARES Act and the guidance issued by the Small Business Administration (the “SBA”), including the SBA’s Paycheck Protection Program Loans Frequently Asked Questions. During the second quarter of 2020, the Company, in accordance with the final guidance issued by the United States Department of the Treasury, met the need and sized based criteria of the program. The Company plans to file its application of forgiveness in the near term and continues to use the PPP Loan proceeds on qualifying expenses; however, there is no guarantee that any portion of the PPP Loan proceeds will be forgiven.
In March 2020, Westfalia-Automotive Gmbh (“Westfalia”), an indirect subsidiary of Horizon Global Corporation, was approved for a government payroll reimbursement program in Germany under the Kurzarbeitergeld (the “KUG”). The KUG is designed to reimburse employers for payroll costs incurred and paid to employees affected by the business disruption and government mandated operating restrictions in place due to COVID-19 for the period March 1, 2020 through August 31, 2020. Westfalia was approved to receive reimbursement of certain costs for the period March 19, 2020 through August 31, 2020. For the three and six months ended June 30, 2020, the Company recognized $2.5 million and $3.3 million, respectively, for qualifying payroll costs incurred for which the Company expects to be reimbursed under terms of the KUG. The Company estimates it will recognize future reimbursements up to $2.0 million under the terms of the KUG, provided the aforementioned local operating restrictions remain in place.
The Company is also taking the following measures to reduce costs and ensure appropriate liquidity:
–pursuing additional governmental grant or loan programs in the jurisdictions in which it operates;
–participating in payroll or payroll tax deferral programs such as those enacted by the CARES Act;
–undertaking negotiations with landlords to defer short-term rent payments;
–assessing its supplier base and related payment terms to determine if supplier payment timing may be amended, extended and/or retimed;
–reducing or retiming investments, including capital expenditures, that will not materially impact future business opportunities or our organic growth; and
–reducing reliance on temporary employees in both administrative and operations functions.
Additionally, in the United States, the Company has not furloughed or otherwise voluntarily reduced its workforce during the crisis. To protect the continued employment of its US-based employees, the Company, in addition to the other cost savings measures described above, implemented a temporary 20% wage reduction for all employees in the United States. In some cases, employees outside of the United States have been furloughed in response to government mandated operational restrictions and
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fluctuations in customer demand. To the extent available, the Company availed itself of local government programs to support furloughed employees, such as those described above.
In March 2020, the Company, as guarantor, entered into a Loan and Security Agreement (the “Loan Agreement”) with Encina Business Credit, LLC (“Encina”), as agent for the lenders party thereto, and Horizon Global Americas Inc. and Cequent Towing Products of Canada Ltd., as borrowers (the “ABL Borrowers”). The Loan Agreement provides for an asset-based revolving credit facility (the “Revolving Credit Facility”) in the maximum aggregate principal amount of $75.0 million subject to customary borrowing base limitations contained therein, and may be increased at the ABL Borrowers’ request in increments of $5.0 million, up to a maximum of five times over the life of the Revolving Credit Facility, for a total increase of up to $25.0 million. In March 2020, the Company drew down $19.0 million from its Revolving Credit Facility to strengthen liquidity and supplement the Company’s cash position in United States. As of June 30, 2020, the Company had availability of $11.3 million under the Revolving Credit Facility and $27.7 million of cash in the United States.
Refer to Note 9, Long-term Debt, included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” included within this Quarterly Report on Form 10-Q for additional information.
We believe the combination of these sources will enable us to meet our working capital, capital expenditures debt service and other funding requirements for at least the next twelve months. However, ourrequirements. Our ability to fund our working capital needs, debt payments and other obligations, and to comply with financial covenants, including borrowing base limitations under our ABLRevolving Credit Facility, depends on our future operating performance and cash flow and many factors outside of our control, including the costs of raw materials, the state of the automotive accessories market and financial and economic conditions and other factors. Any future acquisitions, joint ventures or other similar transactions will likely require additional capitalthe extent and there can be no assurance that any such capital will be available to us on acceptable terms, if at all.
duration of the impact of the COVID-19 pandemic.
Cash Flows - Operating Activities
Net cash provided by and used for operating activities during 2Q20 YTD and 2Q19 YTD was approximately $2.3$4.9 million during nine months ended September 30, 2017 compared to a source of approximately $27.5and $(63.0) million, during the nine months ended September 30, 2016.respectively. During the nine months ended September 30, 2017,2Q20 YTD, the Company generated $47.9used $8.2 million in cash flows, based on the reported net incomeloss of $16.4$33.3 million and after considering the effects of non-cash items related to gains and losses on dispositions of property and equipment, depreciation, amortization stock compensation, amortization of inventory step-up recorded as part of purchase accounting, changes in deferred income taxes, loss on extinguishment of debt,intangible assets, amortization of original issueissuance discount and debt issuance costs, deferred income taxes, stock compensation, paid-in-kind interest, and other, net. During the nine months ended September 30, 2016,2Q19 YTD, the Company generated $27.6used $29.9 million in cash flows, based on the reported net incomeloss of $9.9$40.5 million and after considering the effects of similar non-cash items.
Changes in operating assets and liabilities used approximately $50.2sourced $13.1 million and $0.1used $(33.1) million of cash during the nine months ended September 30, 20172Q20 YTD and 2016,2Q19 YTD, respectively. Increases in accounts receivable resulted in a net use of cash of $28.4$16.8 million and $8.3$28.5 million during the nine months ended September 30, 20172Q20 YTD and 2016,2Q19 YTD, respectively. The increase in accounts receivable for both periods is lower in 2Q20 YTD as compared with 2Q19 YTD as a result of thelower sales activity in 2Q20 due to impacts of COVID-19 while 2Q19 experienced higher sales activity, duringwhen compared with the third quarter compared to therespective fourth quarter due to the seasonality of the business. The higher increase in accounts receivable for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 is due to increased sales levels in 2017, which is partially attributable to the Westfalia acquisition.periods.
Changes in inventory resulted in a source of cash of $19.3 million during 2Q20 YTD and use of cash of approximately $7.9$(7.8) million during the nine months ended September 30, 2017 and a source of cash of approximately $19.9 million2Q19 YTD. The decrease in inventory during the nine months ended September 30, 2016.2Q20 YTD was due to improved inventory management. The increase in inventory during the nine months ended September 30, 2017 is2Q19 YTD was due to efforts to maintain higher stock levelssoftening of our highest volume products on hand, as well as additional inventory built as safety stock in anticipation of projects being completed indemand at the fourth quarter in our Horizon Americas reportable segment. We also maintained lower levels of inventory in December 2016 in Horizon Americas in anticipationstart of the new ERP system going live. The inventory decline in 2016 is a result of the seasonality of our business.typically strong selling season.
ChangesIncreases in accounts payable and accrued liabilities resulted in a usesource of cash of approximately $17.4 million and $10.0$13.5 million during the nine months ended September 30, 20172Q20 YTD and 2016, respectively.$4.3 million during 2Q19 YTD. The decrease in accounts payable and accrued liabilities during the nine months ended September 30, 2017 is primarily related to the release of liabilities related to certain unrecognized tax positions and decreases to certain compensation accruals primarily related to bonus payments, as well as a decrease in liabilities associated with the acquisition of Westfalia from December 31, 2016. These decreases were partially offset by higher accounts payable related to maintaining higher inventory levels as described above. The usesource of cash for nine months ended September 30, 20162Q20 YTD as compared to 2Q19 YTD is primarily relateddue to the timingmix of payments made to suppliers mix ofand vendors and the related terms, as well as decreases in certain compensation accruals primarily related to bonus and severance payments.

terms.
Cash Flows - Investing Activities
Net cash used for investing activities during the nine months ended September 30, 2017 and 20162Q20 YTD was approximately $39.0$(5.4) million and $9.9net cash provided by investing activities was $0.8 million respectively. During the third quarter of 2017, we acquired the assets of Best Barsduring 2Q19 YTD. Capital expenditures for total cash consideration of $19.8 million. In addition, during the nine months ended September 30, 2017, we invested approximately $20.32Q20 YTD and 2Q19 YTD were $5.5 million in capital expenditures, as we have continued our investment inand $5.7 million, respectively, with both periods related to growth, capacity and productivity-related capital projects, including several projects in the newly acquired Westfalia Group. Cash received from the disposition of property and equipment was approximately $1.1 million primarily due to the sale of assets in Romania.within Horizon Europe-Africa. During the nine months ended September 30, 2016, we incurred approximately $10.1 million in capital expenditures and received cash from the disposition of property and equipment of approximately $0.2 million resulting2Q19 YTD, net proceeds from the sale of assets in Brazil and South Africa.the non-automotive business were $5.0 million.
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Cash Flows - Financing Activities
Net cash provided by financing activities was approximately $9.6$29.3 million and $0.2$37.7 million during the nine months ended September 30, 20172Q20 YTD and 2016,2Q19 YTD, respectively. During the nine months ended September 30, 2017, we received2Q20 YTD, net proceeds of $121.1 million from the issuance of our Convertible Notes,Revolving Credit Facility, net of issuance costs; $79.9 millioncosts, were $35.5 million. During 2Q20 YTD, proceeds from the issuance of common stock,PPP Loan were $8.7 million. During 2Q20 YTD and 2Q19 YTD, net of offering costs; $20.9 million fromrepayments on the issuance of Warrants; and our net borrowings from our ABL Facility totaled $20.0 million. We used$19.9 million and $11.7 million, respectively. During 2Q19 YTD, net proceeds from borrowings on our Second Lien Term Loan were $35.5 million, and cash of approximately $187.8$10.1 million was used for repayments on our First Lien Term B Loan, $29.7 million for payments on Convertible Note Hedges, net of issuance costs, and approximately $10.0 million to repurchase shares as part of our Share Repurchase Program. During the nine months ended September 30, 2016, our net borrowings from our ABL Facility totaled $6.8 million. We also used net cash amount of approximately $7.5 million for repayments on our Term B Loan.
Factoring Arrangements
We have factoring arrangements with financial institutions to sell certain accounts receivable under non-recourse agreements. Total receivables sold during the year under the factoring arrangements was approximately $23.9were $94.6 million and $133.2 million as of SeptemberJune 30, 2017. The Company had no factoring arrangements for the nine months ended September 30, 2016.2020 and 2019, respectively. We utilize factoring arrangements as part of our financing forbusiness funding to meet the Company’s working capital.capital needs. The costs of participating in these arrangements are immaterial to our results.
Our Debt and Other Commitments
We and certain of our subsidiaries are party toIn March 2019, the ABL Facility, an asset-based revolving credit facility,Company entered into the Second Lien Term Loan Agreement that provides for $99.0 million of funding on a revolving basis, as well as a Term B Loan under which we borrowed an aggregate of $352.0 million. The ABL Facility matures in June 2020 and bears interest on outstanding balances at variable rates as outlinedterm loan facility in the agreement, while the Term B Loan matures in June 2021 and bears interest at variable rates in accordance with the credit agreement.
During the first quarter of 2017, we completed an underwritten public offering of $125.0 million aggregate principal amount of Convertible Notes.$51.0 million and matures on September 30, 2021. The Convertible Notesinterest on the Second Lien Term Loan may be paid, at the Company’s election, in cash, at the customary eurocurrency rate plus a margin of 10.50% per annum, or in-kind, at the customary eurocurrency rate plus a margin of 11.50%. The Second Lien Term Loan Agreement is subject to various affirmative and negative covenants including a secured net leverage ratio tested quarterly further detailed below.
In September 2019, the Company amended the existing First Lien Term Loan Agreement (“Eighth Term Amendment”) to provide consent for the sale of the Company’s APAC segment, provide consent for the Company to meet its prepayment obligation of the First Lien Term Loan, remove prepayment penalties and make certain negative covenants less restrictive. In September 2019, the Company paid down a portion of its First Lien Term Loan’s outstanding principal plus fees and paid-in-kind interest in the amount of $172.9 million.
In September 2019, the Company amended the existing Second Lien Term Loan Agreement (“Second Lien Amendment”) to remove the prepayment requirement related to the use of APAC sale proceeds and made certain negative covenants less restrictive.
In March 2020, the Company amended the existing First Lien Term Loan Agreement (the “Ninth Term Amendment”) to remove the minimum liquidity covenant of $15.0 million, amend the net leverage ratio requirements to remove the December 31, 2020 leverage ratio test, and amend the fixed charge coverage ratio covenant to not be below 1.0 to 1.0 beginning with the fiscal quarter ending March 31, 2021, and replace the prior first lien leverage covenant with a secured net leverage ratio starting with the fiscal quarter ending March 31, 2021 as follows:
•March 31, 2021: 6.00 to 1.00
•June 30, 2021 and each fiscal quarter ending thereafter: 5.00 to 1.00
In March 2020, the Company amended the existing Second Lien Term Loan Agreement (the “Second Lien Second Amendment”) to amend certain financial covenants as outlined above.
In March 2020, the Company entered into the Loan Agreement, as defined above. The interest on the loans under the Loan Agreement are payable in cash at the interest rate of LIBOR plus 4.00% per annum, subject to a 1.00% LIBOR floor. All interest, fees, and other monetary obligations due may, in Encina’s discretion but upon prior notice to the Company, be charged to the loan account and thereafter be deemed to be part of the Revolving Credit Facility subject to the same interest rate. Borrowings under the Loan Agreement mature on July 1, 2022the earlier of: (i) March 13, 2023 and (ii) 90 days prior to the maturity of any portion of the debt under the Company’s First Lien Term Loan or Second Lien Term Loan, as may be in effect from time to time, unless earlier converted in accordance withterminated. Based on the terms prior to such date, and bears interest at a rate of 2.75% per annum. We used net proceeds from the Convertible Notes offering, along with proceeds from the issuance of common stock, also completed in the first quarter of 2017, to prepay $177.0 millionmaturity dates of the Company’s First Lien Term B Loan. Additionally,Loan and Second Lien Term Loan, the loans under the Loan Agreement would be due on March 31, 2017, we entered into2021. As a result of the Third Amendment to the Term B Loan. This amendment allowed us to repay the existing Original Term B Loan and Incremental Term Loans and provided for the2020 Replacement Term Loan Amendment, as defined below, the maturity of all borrowings under the Revolving Credit Facility were effectively extended to fiscal year 2022 and are presented in gross long-term debt in the accompanying condensed consolidated balance sheet as of June 30, 2020. With the proceeds of the Revolving Credit Facility, the Company paid in full all outstanding debt incurred under the ABL Facility, which reduced the required principal payments by $2.7 million per quarter and reduced the interest rate by 1.5% per annum. Refer to Note 7, “Long-term Debt,” in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” included within this quarterly report on Form 10-QCompany accounted for additional information.as a debt extinguishment.
As of SeptemberJune 30, 2017, approximately $20.02020, $37.8 million was outstanding on the ABLRevolving Credit Facility bearing interest at a weighted average rate of 3.2%5.0% and $151.6$25.5 million was outstanding on the First Lien Term B Loan bearing interest at 5.7%7.0%. The Company had $65.0$11.3 million inof availability under the ABLRevolving Credit Facility as of SeptemberJune 30, 2017.2020.
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The agreements governing the ABL Facility and Term B Loan containAgreement contains various negative and affirmative covenants and other requirements affecting us and our subsidiaries, including restrictions on incurrence of debt, liens, mergers, investments, loans, advances, guarantee obligations, acquisitions, asset dispositions, sale-leaseback transactions, hedging agreements, dividends and other restricted payments, transactions with affiliates, restrictive agreements and amendments to charters, bylaws, and other material documents. The ABLRevolving Credit Facility does not include any financial maintenance covenants other than a springing minimumfinancial covenant that stipulates the Company will not make Capital Expenditures (as defined in the Loan Agreement) exceeding $30.0 million during any fiscal year.
In May 2020, the Company entered into amendments, limited waivers and consents in connection with its Loan Agreement and the First Lien Term Loan Agreement (the “Tenth Term Amendment”) and the Second Lien Term Loan Agreement (“the Second Lien Third Amendment”), with an effective date of April 1, 2020, that, among other things, consented to the Company’s applying for, obtaining and incurring the PPP Loan and French Loan, each as defined and described above. The Tenth Term Amendment and Second Lien Third Amendment amended the fixed charge coverage ratio of at least 1.00covenant to 1.00 on a trailing twelve-month basis, which will be tested only uponeliminate the occurrence of an event of default or certain other conditions as specified inMarch 31, 2021 testing period, amended the agreement. The Term B Loan contains customary negative covenants, and also contains a financial maintenance covenant which requires us to maintain asecured net leverage ratio not exceeding 5.25covenant to eliminate the March 31, 2021 testing period, and amended the secured net leverage ratio levels as follows:
•June 30, 2021: 6.00 to 1.00 through the
•September 30, 2021 and each fiscal quarter ending September 30, 2017,thereafter: 5.00 to 1.00 through the fiscal quarter ending March 31, 2018, 4.75 to 1.00 through the fiscal quarter ending September 30, 2018; and thereafter, 4.50 to 1.00. As of September 30, 2017, we were in compliance with our financial covenants contained in the ABL Facility and the Term B Loan, respectively.

On July 3, 2017, our Australia subsidiary entered into a new agreement to provide for revolving borrowings up to an aggregate amount of $32.0 million. The agreement includes two sub-facilities: (i) Facility A has a borrowing capacity of $20.3 million, matures on July 3, 2020, and is subject to interest at Bank Bill Swap rate plus a margin determined based on the most recent net leverage ratio; (ii) Facility B has a borrowing capacity of $11.7 million, matures on July 3, 2018 and is subject to interest at Bank Bill Swap rate plus 0.9% per annum. Borrowings under this arrangement are subject to financial and reporting covenants. Financial covenants include maintaining a net leverage ratio not exceeding 2.50 to 1.00 during the period commencing on the date of the agreement and ending on the first anniversary of the date of the agreement; and 2.00 to 1.00 thereafter; working capital coverage ratio (working capital over total debt) greater than 1.75 to 1.00 and a gearing ratio (senior debt to senior debt plus equity) not exceeding 50%. As of September 30, 2017 we were in compliance with all covenants.
We are subject to variable interest rates on our First Lien Term B Loan and ABLRevolving Credit Facility. At SeptemberJune 30, 2017, 1-Month2020, one-month LIBOR and 3-Monththree-month LIBOR approximated 1.23%0.17% and 1.33%0.30%, respectively.
Principal payments requiredOn July 3, 2020, the Company entered into a limited consent to the Loan Agreement with Encina, that consented to the Company’s entering into the 2020 Replacement Term Loan Amendment, as defined and described below.
On July 6, 2020, the Company entered into the 2020 Replacement Term Loan Amendment (the “Eleventh Term Amendment”) to amend the Term Loan Agreement. The Eleventh Term Amendment provided replacement term loans (the “Replacement Term Loans”) that refinanced and replaced the outstanding balances under the First Lien Term B Loan are $1.9 million due each calendar quarter, withAgreement and Second Lien Term Loan Agreement, plus any accrued interest thereon. The interest on the remaining principal dueReplacement Term Loans will be payable at LIBOR plus 10.75% per annum, subject to a 1.00% LIBOR floor, of which 4.00% shall be payable in cash and LIBOR plus 6.75% shall be payable-in-kind (PIK) interest (provided that the Company may elect on maturity,not more than one occasion to pay all interest as PIK interest). Borrowings under the Eleventh Term Amendment mature on the earlier of: (i) June 30, 2021. Commencing2022 and (ii) April 1, 2022 if the Convertible Notes, as defined in Note 9, Long-term Debt, in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” included within this Quarterly Report on Form 10-Q, are not repaid or otherwise discharged prior to such date. Additionally, the Eleventh Term Amendment provided for a 1.00% PIK closing fee, which was added to the principal amount of the Replacement Term Loans on the closing date;provided for a prepayment penalty on the entire principal amount of the Replacement Term Loans in an amount equal to 3.0% of the aggregate principal amount prepaid prior to December 31, 2021; and amended the fixed charge coverage ratio covenant beginning with the fiscal yearquarter ending June 30, 2021, as follows:
•June 30, 2021: 1.10 to 1.00
•September 30, 2021: 1.25 to 1.00
•December 31, 2017,31. 2021 and for each fiscal year thereafter,quarter ending thereafter: 1.40 to 1.00
As a result of the amendment entered into on July 6, 2020, for the Company’s First Lien Term Loan and Second Lien Term Loan, and our current forecast through June 30, 2021, the Company will also be requiredbelieves it has sufficient liquidity to make prepaymentsoperate its business for the foreseeable future.
The Company is in compliance with all of outstanding term loans under the Term B Loanits financial covenants in an amount upits debt agreements as of June 30, 2020. Refer to 50.0% of our excess cash flowNote 9, Long-term Debt, in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” included within this Quarterly Report on Form 10-Q for such fiscal year, as defined, subject to adjustments based on our leverage ratio and optional prepayments of term loans and certain other indebtedness.additional information.
In addition to our long-term debt, we have other cash commitments related to leases. We account for these lease transactions as operating leases and annual rent expense related thereto approximated $16.8 million for the year ended December 31, 2016.2Q20 YTD was $7.2 million. We expect to continue to utilize leasing as a financing strategy in the future to meet capital expenditure needs and to reduce debt levels.

The following is a reconciliation of net income (loss), as reported, which is a U.S. GAAP measure of our operating results, to Consolidated Bank EBITDA, as defined in our credit agreement, for the twelve months ended September 30, 2017. We present Consolidated Bank EBITDA to show our performance under our financial covenants.
    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
  (dollars in thousands)
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
  (dollars in thousands)
Total Consolidated Indebtedness, as defined $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 units of common stock and common stock options.
(b)Under our credit agreement, cost 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 Group 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 Group acquisition.
(e)The amounts added to Consolidated Net Income pursuant to items in notes (b)-(d) shall not exceed 25% of Consolidated EBITDA, excluding these items, for such period.
Refer to Note 7, “Long-term Debt,”12, Leases, in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” included within this quarterly reportQuarterly Report on Form 10-Q for additional information.

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Consolidated EBITDA
Consolidated EBITDA (defined as “Consolidated EBITDA” in our First Lien Term Loan Agreement and Second Lien Term Loan Agreement, collectively “Term Loan Agreements”) is a comparable measure to how the Company assesses performance. As discussed further in the Segment Information and Supplemental Analysis section of above, we use certain non-GAAP financial measures to assess performance and measure our covenants compliance in accordance with the Term Loan Agreements, which includes Adjusted EBITDA at the operating segment level. For the measurement of our Term Loan Agreements financial covenants, the definition of Consolidated EBITDA limits the amount of non-recurring expenses or costs including restructuring, moving and severance that can be excluded to $10 million in any cumulative four fiscal quarter period. Similarly, the definition limits the amount of fees, costs and expenses incurred in connection with any proposed asset sale that can be excluded to $5 million in any cumulative four fiscal quarter period.
The leverage ratios asreconciliations of March 31, 2017net income (loss) attributable to Horizon Global to EBITDA, EBITDA to Adjusted EBITDA and Adjusted EBITDA to Consolidated EBITDA for the three months ended June 30, 2017 were calculated based upon2020 and 2019; the U.S. GAAP definition of debt for our previously disclosed Convertible Note issuance during the first quarter of 2017. Based on discussions with the administrative agent under our credit agreement, the leverage ratio will be presented based on a U.S. GAAP exception outlined in the credit agreement, which provides our investors and lenders a clearer view of our total leverage position. Based upon this U.S. GAAP exception, our leverage ratio would have been 4.37x and 3.86x as of March 31, 2017 andsix months ended June 30, 2017, respectively. The restated ratios2020 and 2019; and the last twelve months ended June 30, 2020 and 2019 are stillas follows:
Three Months Ended June 30,Six Months Ended June 30,Last Twelve Months Ended June 30,
20202019Change20202019Change20202019Change
(dollars in thousands)(dollars in thousands)(dollars in thousands)
Net (loss) income attributable to Horizon Global$(16,340) $(8,080) $(8,260) $(33,080) $(33,180) $100  $80,720  $(112,700) $193,420  
Net loss attributable to noncontrolling interest(380) (60) (320) (670) (580) (90) (1,320) (1,040) (280) 
Net (loss) income$(16,720) $(8,140) $(8,580) $(33,750) $(33,760) $10  $79,400  $(113,740) $193,140  
Interest expense8,220  15,320  (7,100) 16,410  26,150  (9,740) 48,530  41,610  6,920  
Income tax expense (benefit)80  (1,040) 1,120  70  (1,310) 1,380  (9,320) 1,520  (10,840) 
Depreciation and amortization5,470  5,310  160  10,530  10,520  10  21,680  21,120  560  
EBITDA$(2,950) $11,450  $(14,400) $(6,740) $1,600  $(8,340) $140,290  $(49,490) $189,780  
Net loss attributable to noncontrolling interest380  60  320  670  580  90  1,320  1,040  280  
(Income) loss from discontinued operations, net of tax—  (2,990) 2,990  500  (6,770) 7,270  (182,240) (14,000) (168,240) 
EBITDA from continuing operations$(2,570) $8,520  $(11,090) $(5,570) $(4,590) $(980) $(40,630) $(62,450) $21,820  
Adjustments pursuant to Term Loan Agreements:
Losses on sale of receivables250  430  (180) 540  960  (420) 1,170  1,840  (670) 
Non-cash equity grant expenses900  600  300  1,320  970  350  2,500  1,310  1,190  
Other non-cash expenses or losses220  600  (380) 1,750  5,570  (3,820) 1,210  36,790  (35,580) 
Term Loans related fees, costs and expenses—  1,300  (1,300) —  3,040  (3,040) (120) 3,040  (3,160) 
Lender agent related professional fees, costs, and expenses270  910  (640) 380  910  (530) 320  910  (590) 
Non-recurring expenses or costs(a)
970  180  790  4,480  6,030  (1,550) 17,080  25,630  (8,550) 
Non-cash losses on asset sales20  (20) 40  90  (1,460) 1,550  1,240  340  900  
Other(20) (240) 220  (20) (210) 190  660  (1,720) 2,380  
Adjusted EBITDA$40  $12,280  $(12,240) $2,970  $11,220  $(8,250) $(16,570) $5,690  $(22,260) 
Non-recurring expense limitation(a)(b)
N/AN/AN/AN/AN/AN/A(7,080) (15,630) 8,550  
Other20  240  (220) 20  210  (190) (660) 1,720  (2,380) 
Consolidated EBITDA$60  $12,520  $(12,460) $2,990  $11,430  $(8,440) $(24,310) $(8,220) $(16,090) 
(a) Non-recurring expenses or costs including severance, restructuring and relocation are not to, in complianceaggregate, exceed $10 million in adjustments in determining Consolidated EBITDA in any four fiscal quarter period.
(b) Fees, costs and expenses incurred in connection with our covenant level of 5.25x for each quarter.any proposed asset sale are not to, in aggregate, exceed $5 million in adjustments in determining Consolidated EBITDA in any four fiscal quarter period.

Credit Rating
WeThe Company’s debt agreements do not require that we maintain a credit rating.
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Outlook
The Company began 2020 with a strong performance and certain of our outstanding debt obligations are rated by Standard & Poor’s and Moody’s. On January 30, 2017, Moody’s upgraded our prior rating of B2 to B1operating results demonstrated strong demand for our $146 million ($352 million atproducts. However, the COVID-19 pandemic has caused significant business and economic disruption globally and resulted in economic uncertainty and challenges, both in the short term and long term. At this time, the Company’s main priority is the health of rating,its employees and others in the communities where it does business and we are taking actions in response to the current environment. The Company has implemented risk mitigation plans across the enterprise to reduce the risk of spreading COVID-19 while continuing to operate to the extent possible. In accordance with mandates and other guidance from local governments and health authorities, as well as the World Health Organization and the Centers for Disease Control, the Company has taken the following measures:
–requiring administrative employees to work remotely;
–temporarily eliminating domestic and international travel;
–gating measures defined and implemented for essential workers to enter facilities;
–providing and requiring the use of personal protective equipment by all employees during working hours;
–requiring essential on-site employees to practice social distancing, including refraining from handshaking, hugging or other forms of physical greeting and maintaining 6 feet of distance from coworkers where possible;
–professionally sanitizing each facility on a regular basis;
–sanitizing equipment between uses;
–requiring frequent hand washing, including before and after the $152 million add-on) Term B Loan, as presented in Note 7, “Long-term Debt” included in Part I, Item I, “Notes to Condensed Consolidated Financial Statements” within this quarterly reportuse of shared equipment;
–conducting temperature checks on Form 10-Q. Moody’s also maintained a B2 to our corporate family rating and our outlook as stable. On January 26, 2017, Standard & Poor’s raised its corporate credit rating from B to B+ for our $146 million ($352 millionemployees at the timestart of the rating, including the $152 million add-on) senior secured term loan. Standard & Poor’s also maintained our B corporate credit ratingeach shift;
–ensuring availability of hand sanitizer at each facility and outlook as stable, while assigning a B- ratingencouraging frequent application; and
–requiring employees to our then proposed (at time of rating) Convertible Notes. If our credit ratings were to decline, ourstay home if they are experiencing cold or flu-like symptoms.
The Company has the ability to access certain financial markets may become limited, our costmanufacture and distribute its products across its various sales channels, and continues to operate and fill customer orders. The Company adhered to government mandated operational restrictions and flexed its operations in line with current and anticipated customer demand, and will continue to do so while prioritizing the health and safety of borrowings may increase, the perception of usits employees and others in the viewcommunities where it operates. The customers in our original equipment manufacturers and original equipment servicers sales channels were those most affected by government mandated operational restrictions. However, substantially all of our customers suppliersresumed operational status, resulting in increasing demand with each successive month during the second quarter 2020.
The Company continues to operate its distribution facilities in the United States, including its facility in Edgerton, Kansas and security holders may worsenhas reopened its primary manufacturing facilities in North America and Europe, with substantially all of those facilities operating at or above 90%. We currently expect the operations of our remaining facilities to continue to improve in the near term as a result,government mandated operating restrictions continue to be eased.
The extent and duration of the COVID-19 pandemic remains uncertain, as does the impact on our business. The level of economic recovery we may be adversely affected.
Market Risk
We conduct business in various locations throughoutexperience as we look forward is also unclear and we will continue to assess the worldoperational and are subject to market risk due to changes infinancial impacts of the value of foreign currencies. The functional currencies of our foreign subsidiaries are primarily the local currency in the country of domicile. We manage these operating activities at the local level and revenues and costs are generally denominated in local currencies; however, results of operations and assets and liabilities reported in U.S. dollars will fluctuate with changes in exchange rates between such local currencies and the U.S. dollar.
We use derivative financial instruments to manage currency risks associated with our procurement activities denominated in currencies other than the functional currency of our subsidiaries and the impact of currency rate volatilitypandemic on our earnings. Asbusiness.
Impact of September 30, 2017, we were party to forward contracts and cross currency swaps, to hedge changes in foreign currency exchange rates, with notional amounts of approximately $17.2 million and $123.6 million, respectively. New Accounting Standards
See Note 8, “Derivative Instruments2, New Accounting Pronouncements,” included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” within this quarterly reportQuarterly Report on Form 10-Q.
We are also subject to interest risk as it relates to our long-term debt. We may in the future use interest rate swap agreements to fix the variable portion of our debt to manage this risk.
Outlook
Our global business remains susceptible to economic conditions that could adversely impact our business. While the U.S. and Asia-Pacific economies impacting our demand remain strong, and the European economy shows indications of improvement, global economic sentiment remains cautious given continued geopolitical uncertainty and foreign currency volatility. Additionally, we continue to evaluate the trade and tax policy discussions taking place in Washington, D.C. and the impact the ultimate legislation could have on our current operations. We believe the unique global footprint we enjoy in our market space will continue to benefit us as our OE customers continue to demonstrate a preference for stronger relationships with few suppliers. Additionally, while we believe that the continued consolidation in aftermarket distribution presents long-term opportunities for us given our strong brand positions, portfolio of product offerings, and existing customer relationships, our results of operations may be impacted by the closure and consolidation of customer warehouses in the short term.
We attempt to mitigate challenging external factors by executing productivity projects across our businesses which we believe will drive future margin expansion, including leveraging recent investments made to expand our European manufacturing footprint, global customer relationships and global manufacturing and distribution capabilities. We believe these initiatives will carry through 2017 and beyond and enhance our margins and business portfolio over time.
Our strategic priorities are to improve margins, reduce our leverage, and drive top line growth.
Impact of New Accounting Standards
See Note 2, “New Accounting Pronouncements,” included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” within this quarterly report on Form 10-Q.
Critical Accounting Policies
Our financial statements are prepared in accordance with U.S. GAAP.accounting principles generally accepted within the United States of Americas (“US GAAP”). Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates that affect both the amounts and timing of the recording of assets, liabilities, net sales and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, our evaluation of business and macroeconomic trends, and information from other outside sources, as appropriate.

During the quarter ended September 30, 2017, thereThere were no material changes to the items that we disclosed as our critical accounting policies in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2016.2019.
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Emerging Growth Company
The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, establishes a class of company called an “emerging growth company,” which generally is a company whose initial public offering was completed after December 8, 2011 and had total annual gross revenues of less than $1$1.07 billion during its most recently completed fiscal year. We currently qualify as an emerging growth company.
As an emerging growth company, we are eligible to take advantage of certain exemptions from various reporting requirements that are not available to public reporting companies that do not qualify for this classification, including without limitation the following:
▪An emerging growth company is exempt from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and financial statements, commonly known as an “auditor discussion and analysis.”
▪An emerging growth company is not required to hold a nonbinding advisory stockholder vote on executive compensation or any golden parachute payments not previously approved by stockholders.
▪
An emerging growth company is not required to comply with the requirement of auditor attestation of management’s assessment of internal control over financial reporting, which is required for other public reporting companies by Section 404 of the Sarbanes-Oxley Act.
▪An emerging growth company is exempt from any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and financial statements, commonly known as an “auditor discussion and analysis.”
▪An emerging growth company is not required to hold a nonbinding advisory stockholder vote on executive compensation or any golden parachute payments not previously approved by stockholders.
▪An emerging growth company is not required to comply with the requirement of auditor attestation of management’s assessment of internal control over financial reporting, which is required for other public reporting companies by Section 404 of the Sarbanes-Oxley Act.
▪An emerging growth company is eligible for reduced disclosure obligations regarding executive compensation in its periodic and annual reports, including without limitation exemption from the requirement to provide a compensation discussion and analysis describing compensation practices and procedures.
▪A company that is an emerging growth company is eligible for reduced financial statement disclosure in registration statements, which must include two years of audited financial statements rather than the three years of audited financial statements that are required for other public reporting companies.
▪An emerging growth company is eligible for reduced disclosure obligations regarding executive compensation in its periodic and annual reports, including without limitation exemption from the requirement to provide a compensation discussion and analysis describing compensation practices and procedures.
▪A company that is an emerging growth company is eligible for reduced financial statement disclosure in registration statements, which must include two years of audited financial statements rather than the three years of audited financial statements that are required for other public reporting companies.
For as long as we continue to be an emerging growth company, we expect that we will take advantage of the reduced disclosure obligations available to us as a result of this classification. We will remain an emerging growth company until the earlier of (i) December 31, 2020, the last day of the fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act; (ii) the last day of the fiscal year in which we have total annual gross revenues of $1$1.07 billion (subject to further adjustment for inflation) or more; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under applicable SEC rules. WeBased on the foregoing, we expect that we will remain an emerging growth company for the foreseeable future, but cannot retain our emerging growth company status indefinitely and will no longer qualify as an emerging growth company on or beforeas of December 31, 2020.
Emerging growth companies may elect to take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to “opt out” of such extended transition period, and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for companies that are not “emerging growth companies.” Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.
Item 3.    Quantitative and Qualitative Disclosures About Market Risk
In the normal course of business, we are exposed to market risk associated with fluctuations in interest rates, commodity prices, insurable risks due to property damage, employee and liability claims, and other uncertainties in the financial and credit markets, which may impact demand for our products.Not applicable.
We conduct business in various locations throughout the world and are subject to market risk due to changes in the value of foreign currencies. The functional currencies of our foreign subsidiaries are primarily the local currency in the country of domicile. We manage these operating activities at the local level and revenues and costs are generally denominated in local currencies; however, results of operations and assets and liabilities reported in U.S. dollars will fluctuate with changes in exchange rates between the local currencies and the U.S. dollar. A 10% change in average exchange rates versus the U.S. dollar would have resulted in an approximate $35.3 million change to our revenues for the nine months ended September 30, 2017.
52

We are exposed to market risk from changes in the interest rates on a significant portion of our outstanding debt. Outstanding balances under our Term B Loan, at the Company’s election, bear interest at variable rates based on a margin over defined LIBOR. Based on the amount outstanding on the Term B Loan as of September 30, 2017, a 100 basis point change in LIBOR would result in an approximate $1.5 million change to our annual interest expense.

We use derivative financial instruments to manage our currency risks. We are also subject to interest risk as it relates to long-term debt. See Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” for details about our primary market risks, and the objectives and strategies used to manage these risks. Also see Note 7, “Long-term Debt,” and Note 8, “Derivative Instruments,” in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” included within this quarterly report on Form 10-Q for additional information.
Item 4.    Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Evaluation of disclosure controls and procedures
As of SeptemberJune 30, 2017,2020, an evaluation was carried out by management, with the participation of the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) pursuant to Rule 13a-15 of the Exchange Act. The Company’s disclosure controls and procedures are designed only to provide reasonable assurance that they will meet their objectives. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of SeptemberJune 30, 2017,2020, the Company’s disclosure controls and procedures are effective to provide reasonable assurance that they would meet their objectives.
Changes in internal control over financial reportingInternal Control Over Financial Reporting
During the Company’s most recent fiscal quarter, there have beenThere were no changes in the Company’s internal control over financial reporting that occurred during the three months ended June 30, 2020, that have materially affected, or areis reasonably likely to materially affect, the Company’sits internal control over financial reporting. As a result of the COVID-19 pandemic, certain employees of the Company began working remotely in March 2020. Management has taken measures to ensure that our internal control over financial reporting remained effective and were not materially affected during the period. We are continually monitoring and assessing the COVID-19 situation on our internal controls to minimize the impact on their design and operating effectiveness.

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PART II. OTHER INFORMATION
Item 1.    Legal Proceedings
We are subject to claims and litigation in the ordinary course of business, but we do not believe that any such claim or litigation is likely to have a material adverse effect on our financial position, and results of operations, or cash flows. For additional information regarding legal proceedings, refer to Note 13,Contingencies, included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” within this Quarterly Report on Form 10-Q.
Item 1A.    Risk Factors
AFor a discussion of our risks and uncertainties, see the risk factors can bebelow and the information found in the section entitled “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2016. 2019.
The information below includes additional risks relatingnovel coronavirus (“COVID-19”) pandemic has disrupted, and may continue to our issuance of Convertible Notes and our transactions in Convertible Note Hedges and Warrants. The risks described below could materially affectdisrupt, our business, financial condition or future results.
The conditional conversion features of our 2.75% Convertible Senior Notes due 2022, if triggered, may adversely affect our financial condition.
In the event the conditional conversion features of the Convertible Notes are triggered, holders of the Convertible Notes will be entitled to convert the Convertible Notes at any time during specified periods at their option.  If one or more holders elect to convert their Convertible Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock, we would be required to make cash payments to satisfy all or a portion of our conversion obligation based on the conversion rate, which could adversely affect our liquidity.  In addition, even if holders do not elect to convert their Convertible Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Convertible Notes as a current rather than long-term liability, which could result in a material reductionadverse impact to our business, results of operations, cash flow, liquidity and financial condition.
In December 2019, the COVID-19 outbreak occurred in China and has since spread to other parts of the world. On March 11, 2020, the World Health Organization declared COVID-19 to be a global pandemic and recommended containment and mitigation measures. On March 13, 2020, the United States declared a national emergency concerning the outbreak. Along with these declarations, extraordinary and wide-ranging actions were taken by international, federal, state, and local public health and governmental authorities to contain and combat the outbreak and spread of COVID-19 in regions across the United States and the world, including quarantines, social distancing and “stay-at-home” orders, travel restrictions, mandatory business closures and other mandates that substantially restricted individuals’ daily activities and curtailed or ceased many businesses’ normal operations.
New and changing government actions to address the COVID-19 pandemic continue to occur regularly. Certain jurisdictions in which we operate have had to re-establish restrictions due to a resurgence in COVID-19 cases. Additionally, although many of our net working capital.customers have begun to reopen, restart operations or increase operating levels, they may be forced to close or limit operations as any new COVID-19 outbreaks occur.
In response to the pandemic and these actions, we began implementing changes in our business in March 2020 to protect our employees and customers and support appropriate social distancing and other health and safety protocols. We have flexed the workforce in our distribution centers and manufacturing operations based on business needs, including the implementation of remote, alternate and flexible work arrangements where possible and remote work options for non-essential on-site functions and have adhered to geographical government mandates and operating restrictions for other facilities. Additionally, we have enhanced cleaning and sanitary procedures; eliminated domestic and international travel; restricted access to our facilities to only employees and implemented return to work screening protocols for when our facilities are reopened. While all of these measures have been necessary and appropriate, they have resulted in additional costs and may adversely impact our business and financial performance. As our response to the pandemic evolves, we expect to incur additional costs and will potentially experience adverse impacts to our business, each of which may be significant. In addition, an extended period of remote work arrangements could impair our ability to effectively manage our business, and introduce additional operational risks, including, but not limited to, cybersecurity risks and increased vulnerability to security breaches, cyber attacks, computer viruses, ransomware, or other similar events and intrusions.
To date, the COVID-19 pandemic has surfaced in nearly all regions around the world and has negatively impacted the global economy, disrupted consumer spending and global supply chains, and created significant volatility and disruption of financial markets. As a result, we have experienced, and may continue to experience, decreases in demand and customer orders for our products in all sales channels, as well as temporary disruptions and closures of some of our facilities due to decreased demand and government mandates. The convertible note hedge and warrant transactions that we entered into in connection with the offeringCOVID-19 pandemic has also impacted various aspects of the Convertible Senior Notessupply chain as our suppliers experience similar business disruptions due 2022to operating restrictions from government mandates. We continue to monitor procurement of raw materials and components used in the manufacturing, distribution and sale of our products, but continued disruptions in the supply chain due to the COVID-19 pandemic may affectcause difficulty in sourcing materials or unexpected shortages or delays in delivery of raw materials and components, and may result in increased costs in our supply chain. We have implemented plans to reduce spending in certain areas of our business, including flexing variable labor, involuntary leave programs, reductions or delays in variable costs and investments, including capital expenditures, and may need to take additional actions to reduce spending in the future.
We are closely monitoring and assessing the impact of the pandemic on our business, the extent of the impact on our liquidity to meet our short-term obligations and fund our business needs and growth, and our ability to meet financial covenants within our credit agreements. While we are closely monitoring the impact of the pandemic on all aspects of our business, the extent of
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the impact on our results of operations, cash flow, liquidity, and financial performance, as well as our ability to execute near- and long-term business strategies and initiatives, will depend on numerous evolving factors and future developments, which are highly uncertain and cannot be reasonably predicted, including: (a) the duration, severity and scope of the pandemic; (b) rapidly-changing governmental and public health mandates and guidance to contain and combat the outbreak; (c) the extent and duration of the pandemic’s adverse effect on economic and social activity, consumer confidence, discretionary spending and preferences, labor and healthcare costs, and unemployment rates, any of which may reduce demand for some of our products and impair the ability of those with whom we do business to satisfy their obligations to us; (d) our ability to sell and provide our services and products, including as a result of continued travel restrictions, mandatory business closures, and stay-at home or similar orders; (e) any temporary reduction in our workforce, closures of our offices and facilities and our ability to adequately staff and maintain our operations; (f) the ability of our customers and suppliers to continue their operations, which could result in terminations of contracts, losses of revenue, and further adverse effects to our supply chain; (g) any impairment in value of our tangible or intangible assets, which could be recorded as a result of weaker economic conditions; and (h) the Convertible Notespotential effects on our internal controls, including as a result of changes in working environments and observing stay-at-home and similar orders that are applicable to our common stock.employees and business partners, among others. In addition, if the pandemic continues to create disruptions or turmoil in the credit or financial markets, or impacts our credit ratings, it could adversely affect our ability to access capital on favorable terms and continue to meet our liquidity needs.
In connection withGiven the offeringinherent uncertainty surrounding the COVID-19 pandemic, we expect the pandemic may continue to have an adverse impact on our business in the near term. Should these conditions persist for a prolonged period, the COVID-19 pandemic, including any of the Convertible Notes, we entered into convertible note hedge transactions with certain option counterparties.  The Convertible Note Hedgesabove factors and others that are expected generally to reduce the potential dilution upon conversion of the Convertible Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Convertible Notes, as the casecurrently unknown, may be.  We also entered into warrant transactions with each option counterparty.  The Warrants could separately have a dilutivematerial adverse effect on our common stockbusiness, results of operations, cash flow, liquidity, and financial condition. Even as restrictions are lifted and economies gradually reopen, the shape of the economic recovery is uncertain and may continue to negatively impact our cash flow, liquidity, and financial condition.
We are currently out of compliance with the extent thatNYSE's minimum market capitalization requirement and are at risk of the market price per share ofNYSE delisting our common stock, exceedswhich would have an adverse impact on the strike price of the Warrants.  In connection with establishing its initial hedge of the Convertible Note Hedgestrading volume, liquidity and Warrants, each option counterparty or an affiliate thereof may have entered into various derivative transactions with respect to our common stock concurrently with or shortly after the pricing of the Convertible Notes.  This activity could increase (or reduce the size of any decrease in) the market price of our common stock orstock.
On April 30, 2020, we were notified (the “Notice”) by the Convertible Notes atNew York Stock Exchange (the “NYSE”) that time.  In addition, each option counterparty or an affiliate thereof may modify its hedge position by entering into or unwinding various derivativeswe were not in compliance with respectthe continued listing standard set forth in Section 802.01B of the NYSE Listed Company Manual because our average market capitalization was less than $50 million over a consecutive 30 trading-day period and our stockholders’ equity was less than $50 million. We are taking actions to meet the continued listing standards of the NYSE to cure the market capitalization condition which we expect will ultimately lead to a recovery of our common stock and/or purchasing or sellingprice and market capitalization. Our common stock could also be delisted if our average market capitalization over a consecutive 30 day-trading period is less than $15 million, in which case we would not have an opportunity to cure the deficiency, our common stock would be suspended from trading on the NYSE immediately, and the NYSE would begin the process to delist our common stock, subject to our right to appeal under NYSE rules. We cannot assure you that any appeal we undertake in these or other securities of ours in secondary market transactions priorcircumstances will be successful. While we are working to the maturitycure this deficiency and regain compliance with this continued listing standard, there can be no assurance that we will be able to cure this deficiency or if we will cease to comply with another continued listing standard of the Convertible Notes (and isNYSE.
A delisting of our common stock from the NYSE could negatively impact us as it would likely to do so during any observation period related to a conversion ofreduce the Convertible Notes).  This activity could also cause or avoid an increase or a decrease in theliquidity and market price of our common stock; reduce the number of investors willing to hold or acquire our common stock; and negatively impact our ability to access equity markets and obtain financing.
If we fail to meet the necessary requirements for our common stock to remain listed on the NYSE or other similar markets, then we will be obligated to offer to repurchase all of our outstanding Convertible Notes. Our failure to make such an offer or repurchase any tendered Convertible Notes will result in an event of default under the indentures governing the Convertible Notes. In addition, ifAny such default will trigger a cross-default on our other debt obligations, including the First Lien Term Loan, Second Lien Term and Revolving Credit Facility. Our inability to cure any such Convertible Note Hedges and Warrants fail to become effective, each option counterparty may unwind its hedge position with respect to our common stock, which could adversely affectdefaults, including the valuepayment of our common stockdebt obligations, would have a material adverse effect on our financial position and the valueresults of the Convertible Notes.operations.
We are subject to counterparty risk with respect to the convertible note hedge transactions.
Each option counterparty to the Convertible Note Hedges is a financial institution, and we will be subject to the risk that it might default under the Convertible Note Hedges.  Our exposure to the credit risk of an option counterparty will not be secured by any collateral.  Global economic conditions have from time to time resulted in the actual or perceived failure or financial difficulties of many financial institutions.  If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under our transactions with the option counterparty.  Our exposure will depend on many factors but, generally, the increase in our exposure will be correlated to the increase in the market price and in the volatility of our common stock.  In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock.  We can provide no assurances as to the financial stability or viability of any option counterparty.
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
In April 2017, the Board of Directors authorized the Share Repurchase Program, which provides for the purchase of up to 1.5 million shares of the Company’s issued and outstanding common stock. The Share Repurchase Program provides for share purchases in the open market or otherwise, including pursuant to Rule 10b5-1 plans, depending on share price, market conditions and other

factors, as determined by the Company. Total shares purchased as of September 30, 2017 through the Share Repurchase Program were 686,506 at a total cost of $10.0 million for an average purchase price per share of $14.55, excluding commissions.
The Company’s purchases of its shares of common stock during the third quarter of 2017three months ended June 30, 2020 were as follows:
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Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (a)
July 1 - 31, 2017 116,141
 $14.09
 116,141
 813,494
August 1 - 31, 2017 —
   —
 813,494
September 1 - 30, 2017 —
   —
 813,494
Total 116,141
 $14.09
 116,141
  
PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs (a)
April 1 - 30, 2020— — 813,494 
May 1 - 31, 2020— — — 
June 1 - 30, 2020— — — 
Total— — — 
__________________________
(a) On The Company has a share repurchase program that was announced in May 3, 2017 the Company announced that its Board of Directors had approved the Share Repurchase Program. The Share Repurchase Program allows the Company to repurchasepurchase up to 1.5 million shares of itsthe Company’s common stock. As of June 30, 2020, there were no shares of common stock remaining to be purchased under this program. The Share Repurchase Program expiresshare repurchase program expired on May 5, 2020.
Item 3.    Defaults Upon Senior Securities
Not applicable.
Item 4.    Mine Safety Disclosures
Not applicable.
Item 5.    Other Information
Not applicable.None.

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Item 6.    Exhibits.
Exhibits Index:
3.1(b)
3.2(a)
31.110.1*
10.2
10.3
10.4
10.5
31.1
31.2
32.1
32.2
101.INS
Inline XBRL Instance Document. (not part of filing)
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File (embedded within the Inline XBRL document).

(a)Incorporated by reference to the ExhibitsExhibit filed with our Registration StatementCurrent Report on Form S-1/A8-K filed on June 11, 2015 (Reg.February 20, 2019 (File No. 333-203138)001-37427).
(b)Incorporated by reference to the ExhibitsExhibit filed with our Quarterly Report on Form 10-Q filed on August 11, 20158, 2019 (File No. 001-37427).



* Certain exhibits and schedules are omitted pursuant to Item 601(a)(5) of Regulation S-K, and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request.

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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HORIZON GLOBAL CORPORATION (Registrant)
HORIZON GLOBAL CORPORATION (Registrant)/s/ DENNIS E. RICHARDVILLE
Date:August 7, 2020By:/s/ DAVID G. RICE
Date:October 31, 2017By:
David G. RiceDennis E. Richardville
Chief Financial Officer


Exhibits Index:
58
3.1(b)
Amended and Restated Certificate of Incorporation of Horizon Global Corporation.
3.2(a)
Amended and Restated By-laws of Horizon Global Corporation.
31.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSXBRL Instance Document.
101.SCHXBRL Taxonomy Extension Schema Document.
101.CALXBRL Taxonomy Extension Calculation Linkbase Document.
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.
101.LABXBRL Taxonomy Extension Label Linkbase Document.
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.

(a)Incorporated by reference to the Exhibits filed with our Registration Statement on Form S-1/A filed on June 11, 2015 (Reg. No. 333-203138).
(b)Incorporated by reference to the Exhibits filed with our Quarterly Report on Form 10-Q filed on August 11, 2015 (File No. 001-37427).


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