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 September 30, 20172021
orOR

o
☐


 
Transition Report Pursuant to SectionTRANSITION REPORT PURSUANT TO SECTION 13 orOR 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 o
Non-accelerated filer ☒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,November 1, 2021, the number of outstanding shares of the Registrant’s common stock par value $0.01 per share, was 24,937,97627,286,647 shares.



HORIZON GLOBAL CORPORATION
Index
Financial Information
Part I.
Forward-Looking Statements
2
Item 1.
3
3
4
45
5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 20172021 and 20162020
6
7
8
Item 2.
2229
Item 3.
3349
Item 4.
3450
Other Information
Item 1.
3551
Item 1A.
3551
Item 2.
3551
Item 3.
3651
Item 4.
3651
Item 5.
3651
Item 6.
3752
Signatures
3853



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” consistsCOVID-19 pandemic on the Company’s business, results of Westfalia-Automotive Holding GmbHoperations, financial condition and TeIJs Holding B.V.); leverage;liquidity; the overall impact of global supply chain complexities on the Company and its business, including delays in sourcing key components and other supply constraints, longer transport times, especially for container ships and U.S. trucking, and increased transportation costs; liabilities and restrictions imposed by the Company’s debt instruments;instruments, including the Company’s ability to comply with the applicable financial covenants related thereto; market demand; competitive factors; supply constraints;material, logistics and energy costs, including the increased material and energy costs;logistics costs resulting from the COVID-19 pandemic; 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; 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 yeartwelve months ended December 31, 2016.2020. The risks described in ourthe Company’s Annual Report and elsewhere in this reporton Form 10-K 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 twelve months ended December 31, 2020. 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)  September 30, 2021December 31, 2020
Assets 
 
Assets
Current assets: 
 
Current assets:
Cash and cash equivalents $20,470

$50,240
Cash and cash equivalents$17,350 $44,970 
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 cash5,500 5,720 
Receivables, netReceivables, net96,320 87,420 
Inventories 162,660

146,020
Inventories164,270 115,320 
Prepaid expenses and other current assets 10,200

12,160
Prepaid expenses and other current assets13,510 11,510 
Total current assets 305,690
 285,990
Total current assets296,950 264,940 
Property and equipment, net 110,830

93,760
Property and equipment, net72,940 74,090 
Operating lease right-of-use assetsOperating lease right-of-use assets38,290 47,310 
Goodwill 145,910

120,190
Goodwill— 3,360 
Other intangibles, net 92,780

86,720
Other intangibles, net52,870 58,230 
Deferred income taxes 10,790
 9,370
Deferred income taxes1,220 1,280 
Other assets 10,810

17,340
Other assets6,060 7,280 
Total assets $676,810
 $613,370
Total assets$468,330 $456,490 
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$5,940 $14,120 
Accounts payable 111,380

111,450
Accounts payable111,270 99,520 
Short-term operating lease liabilitiesShort-term operating lease liabilities11,120 12,180 
Accrued liabilities 68,060

63,780
Accrued liabilities53,340 59,100 
Total current liabilities 188,950
 198,130
Total current liabilities181,670 184,920 
Gross long-term debtGross long-term debt290,340 251,960 
Unamortized debt issuance costs and discountUnamortized debt issuance costs and discount(29,000)(20,570)
Long-term debt 269,710

327,040
Long-term debt261,340 231,390 
Deferred income taxes 31,730

25,730
Deferred income taxes3,650 3,130 
Long-term operating lease liabilitiesLong-term operating lease liabilities36,970 46,340 
Other long-term liabilities 28,790

30,410
Other long-term liabilities10,630 14,560 
Total liabilities 519,180
 581,310
Total liabilities494,260 480,340 
Commitments and contingent liabilities —
 —
Contingencies (See Note 10)Contingencies (See Note 10)00
Shareholders' equity:    Shareholders' equity:
Preferred stock, $0.01 par: Authorized 100,000,000 shares;
Issued and outstanding: None		 —
 —
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
Common stock, $0.01 par: Authorized 400,000,000 shares; 27,973,153 shares issued and 27,286,647 outstanding at September 30, 2021, and 27,089,673 shares issued and 26,403,167 outstanding at December 31, 2020Common stock, $0.01 par: Authorized 400,000,000 shares; 27,973,153 shares issued and 27,286,647 outstanding at September 30, 2021, and 27,089,673 shares issued and 26,403,167 outstanding at December 31, 2020270 260 
Common stock warrants issued, outstanding and exercisable for 9,231,146 and 5,815,039 shares of common stock at September 30, 2021 and December 31, 2020, respectivelyCommon stock warrants issued, outstanding and exercisable for 9,231,146 and 5,815,039 shares of common stock at September 30, 2021 and December 31, 2020, respectively25,010 9,510 
Paid-in capital 158,270
 54,800
Paid-in capital170,050 166,610 
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 September 30, 2021 and December 31, 2020Treasury stock, at cost: 686,506 shares at September 30, 2021 and December 31, 2020(10,000)(10,000)
Accumulated deficitAccumulated deficit(194,520)(178,530)
Accumulated other comprehensive lossAccumulated other comprehensive loss(10,610)(6,540)
Total Horizon Global shareholders' deficitTotal Horizon Global shareholders' deficit(19,800)(18,690)
Noncontrolling interest (1,200) (300)Noncontrolling interest(6,130)(5,160)
Total shareholders' equity 157,630
 32,060
Total shareholders' deficitTotal shareholders' deficit(25,930)(23,850)
Total liabilities and shareholders' equity $676,810
 $613,370
Total liabilities and shareholders' equity$468,330 $456,490 
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 September 30,Nine Months Ended September 30,
 2021202020212020
Net sales$196,540 $201,630 $617,850 $485,370 
Cost of sales(157,780)(158,260)(491,240)(397,700)
Gross profit38,760 43,370 126,610 87,670 
Selling, general and administrative expenses(32,430)(34,810)(102,170)(93,760)
Operating profit (loss)6,330 8,560 24,440 (6,090)
Other (expense) income, net(1,720)690 (5,940)(1,430)
Loss on debt extinguishment— — (11,650)— 
Interest expense(6,970)(7,560)(21,000)(23,970)
(Loss) income from continuing operations before income tax(2,360)1,690 (14,150)(31,490)
Income tax expense(410)(100)(2,810)(170)
Net (loss) income from continuing operations(2,770)1,590 (16,960)(31,660)
Loss from discontinued operations, net of income tax— — — (500)
Net (loss) income(2,770)1,590 (16,960)(32,160)
Less: Net loss attributable to noncontrolling interest(300)(340)(970)(1,010)
Net (loss) income attributable to Horizon Global$(2,470)$1,930 $(15,990)$(31,150)
Net (loss) income per share attributable to Horizon Global:
Basic:
Continuing operations$(0.09)$0.07 $(0.59)$(1.19)
Discontinued operations— — — (0.02)
Total$(0.09)$0.07 $(0.59)$(1.21)
Diluted:
Continuing operations$(0.09)$0.06 $(0.59)$(1.19)
Discontinued operations— — — (0.02)
Total$(0.09)$0.06 $(0.59)$(1.21)
Weighted average common shares outstanding:
Basic27,286,600 25,939,741 27,019,554 25,651,789 
Diluted27,286,600 33,329,106 27,019,554 25,651,789 
  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 (LOSS) INCOME
(unaudited—dollars in thousands)

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net (loss) income$(2,770)$1,590 $(16,960)$(32,160)
Other comprehensive (loss) income, net of tax:
Foreign currency translation and other(1,650)1,900 (4,070)(400)
Total other comprehensive (loss) income, net of tax(1,650)1,900 (4,070)(400)
Total comprehensive (loss) income(4,420)3,490 (21,030)(32,560)
Less: Comprehensive loss attributable to noncontrolling interest(300)(340)(970)(1,010)
Comprehensive (loss) income attributable to Horizon Global$(4,120)$3,830 $(20,060)$(31,550)
  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
 $11,180
Nine Months Ended September 30,
20212020
Cash Flows from Operating Activities:
Net loss$(16,960)$(32,160)
Less: Net loss from discontinued operations— (500)
Net loss from continuing operations(16,960)(31,660)
Adjustments to reconcile net loss from continuing operations to net cash (used for) provided by operating activities:
Depreciation11,710 11,110 
Amortization of intangible assets4,220 5,040 
Loss on debt extinguishment11,650 — 
Amortization of original issuance discount and debt issuance costs8,010 11,450 
Deferred income taxes730 (820)
Non-cash compensation expense2,590 2,190 
Paid-in-kind interest650 6,280 
Increase in receivables(12,360)(35,170)
(Increase) decrease in inventories(52,700)30,100 
Increase in prepaid expenses and other assets(1,910)(4,080)
Increase in accounts payable and accrued liabilities11,820 29,800 
Other, net1,910 (50)
Net cash (used for) provided by operating activities from continuing operations(30,640)24,190 
Cash Flows from Investing Activities:
Capital expenditures(14,730)(8,090)
Other, net20 70 
Net cash used for investing activities from continuing operations(14,710)(8,020)
Cash Flows from Financing Activities:
Proceeds from borrowings on credit facilities2,870 6,440 
Repayments of borrowings on credit facilities(1,960)(3,330)
Proceeds from Senior Term Loan, net of issuance costs75,300 — 
Repayments of borrowings on Replacement Term Loan, including transaction fees(94,940)— 
Proceeds from Revolving Credit Facility, net of issuance costs28,680 54,680 
Repayments of borrowings on Revolving Credit Facility(8,000)(28,300)
Proceeds from ABL revolving debt, net of issuance costs— 8,000 
Repayments of borrowings on ABL revolving debt— (27,920)
Proceeds from Paycheck Protection Program Loan— 8,670 
Proceeds from issuance of common stock warrants16,300 — 
Proceeds from exercise of common stock warrants420 — 
Other, net(650)(320)
Net cash provided by financing activities from continuing operations18,020 17,920 
Discontinued Operations:
Net cash used for discontinued operations— (500)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(510)290 
Cash, Cash Equivalents and Restricted Cash:
(Decrease) increase for the period(27,840)33,880 
At beginning of period50,690 11,770 
At end of period$22,850 $45,650 
Supplemental disclosure of cash flow information:
Cash paid for interest$16,130 $4,990 
Cash paid for taxes, net of refunds$2,010 $990 


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 (Loss)Total Horizon Global Shareholders' Equity (Deficit)Noncontrolling InterestTotal Shareholders' Equity (Deficit)
Balances at January 1, 2021$260 $9,510 $166,610 $(10,000)$(178,530)$(6,540)$(18,690)$(5,160)$(23,850)
Net loss— — — — (14,810)— (14,810)(340)(15,150)
Other comprehensive loss, net of tax— — — — — (2,290)(2,290)— (2,290)
Shares surrendered upon vesting of employees share based payment awards to cover tax obligations— — (650)— — — (650)— (650)
Non-cash compensation expense— — 960 — — — 960 — 960 
Issuance of common stock warrants— 16,300 — — — — 16,300 — 16,300 
Exercise of common stock warrants10 (800)1,210 — — — 420 — 420 
Balances at March 31, 2021270 25,010 168,130 (10,000)(193,340)(8,830)(18,760)(5,500)(24,260)
Net income (loss)— — — — 1,290 — 1,290 (330)960 
Other comprehensive loss, net of tax— — — — — (130)(130)— (130)
Shares surrendered upon vesting of employees share based payment awards to cover tax obligations— — 10 — — — 10 — 10 
Non-cash compensation expense— — 930 — — — 930 — 930 
Balances at June 30, 2021270 25,010 169,070 (10,000)(192,050)(8,960)(16,660)(5,830)(22,490)
Net loss— — — — (2,470)— (2,470)(300)(2,770)
Other comprehensive loss, net of tax— — — — — (1,650)(1,650)— (1,650)
Shares surrendered upon vesting of employees share based payment awards to cover tax obligations— — (10)— — — (10)— (10)
Non-cash compensation expense— — 990 — — — 990 — 990 
Balances at September 30, 2021$270 $25,010 $170,050 $(10,000)$(194,520)$(10,610)$(19,800)$(6,130)$(25,930)

  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
Common StockCommon Stock WarrantsPaid-in CapitalTreasury StockAccumulated DeficitAccumulated Other Comprehensive (Loss) IncomeTotal Horizon Global Shareholders' Equity (Deficit)Noncontrolling InterestTotal Shareholders' Equity (Deficit)
Balances 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, 2020250 10,610 164,550 (10,000)(175,050)(12,090)(21,730)(4,410)(26,140)
Net income (loss)— — — — 1,930 — 1,930 (340)1,590 
Other comprehensive income, net of tax— — — — — 1,900 1,900 — 1,900 
Shares surrendered upon vesting of employees share based payment awards to cover tax obligations— — (310)— (310)— (310)
Non-cash compensation expense— — 870 — — — 870 — 870 
Exercise of common stock warrants10 (810)800 — — — — — — 
Balances at September 30, 2020$260 $9,800 $165,910 $(10,000)$(173,120)$(10,190)$(17,340)$(4,750)$(22,090)



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,” “our”, or the “Company”) isare a globalleading designer, manufacturer and distributor of a wide variety of high quality, custom-engineered towing, trailering, cargo management and other related accessories.accessory products, primarily in the North American, European and African markets. These products are designed to support aftermarket, automotive original equipment manufacturers (“automotive OEMs”) and automotive original equipment suppliersservicers (“automotive OESs”) (collectively, “OEs”), aftermarketretail, e-commerce and retailindustrial customers within the agricultural, automotive, construction, horse/livestock, industrial, marine, military, recreational, trailer and utility markets. The Company groups its business into operating segments into reportable segmentsgenerally by the region in which sales and manufacturing efforts are focused. The Company’s reportableoperating segments are Horizon Americas Horizon Europe-Africa, and Horizon Asia-Pacific.Europe-Africa. See Note 9, “14, Segment Information,” for further information on each of the Company’s reportableoperating segments.
The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. 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 yeartwelve months ended December 31, 2016.2020. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. It is management’s opinion that these condensed consolidated 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.
U.S. GAAP requires the Company 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 assessment of indefinite-lived intangible assets, 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. To the extent there are differences between these estimates and actual results, our consolidated financial statements may be materially affected.
2.
8

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. New Accounting Pronouncements
New accounting pronouncements not yet adopted
In August 2017,May 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-12, “Derivatives2021-04, “Earnings Per Share (Topic 260), Debt - Modifications and Extinguishments (Subtopic 470-50), Compensation - Stock Compensation (Topic 718), and Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”- Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2017-12”2021-04”). ASU 2017-12 eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires, for qualifying hedges, the entire change in the fair value2021-04 provides guidance on modifications or exchanges of a hedging instrument to be presented infreestanding equity-classified written call option that is not within the same income statement line as the hedged item. Thescope of other accounting standards. Under 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 is effective for fiscal years beginning after December 15, 2018, including interim periods within those annual periods, with early adoption permitted andan entity should be applied ontreat a modified retrospective basis. The Company is in the process of assessing the impactmodification of the adoptionterms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument. ASU 2017-122021-04 provides further guidance on its condensed consolidated financial statements.
In January 2017,measuring the FASB issuedeffect of a modification or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange. ASU 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). ASU 2017-04 eliminates the requirement to perform a hypothetical purchase price allocation to measure the amount of goodwill impairment. Instead, under 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 2017-042021-04 is effective for fiscal years, and interim periods within those years, beginning after December 15, 20192021, with early adoption permitted. We are currently assessing the impact of this update on the Company’s condensed consolidated financial statements. The Company intendsstandard is not expected to early adopt ASU 2017-04 for its annual goodwill impairment test duringhave a significant impact on the fourth quarter of 2017.Company's condensed consolidated financial statements.
In October 2016,August 2020, the FASB issued ASU 2016-16, “Income Taxes (Topic 740)2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Intra-Entity Transfers of Assets Other Than Inventory”Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2016-16”2020-06”). ASU 2016-16 provides an amendment to2020-06 simplifies the accounting guidance relatedfor convertible instruments by removing certain separation models in Accounting Standards Codification (“ASC”) 470-20, “Debt—Debt with Conversion and Other Options,” (“ASC 470-20”) for convertible instruments. Under ASU 2020-06, the embedded conversion features no longer are separated from the host contract for convertible instruments with conversion features that are not required to the recognition of income tax consequences of an intra-entity transfer of an asset other than inventory. This guidancebe accounted for as derivatives under ASC 815, “Derivatives and Hedging,” or that do not result in substantial premiums accounted for as paid-in capital. For smaller reporting companies, ASU 2020-06 is effective for public entitiesfiscal years, and interim periods within those years, beginning after December 15, 2023, with early adoption permitted for fiscal years beginning after December 15, 2017, including interim periods within those annual periods, with early adoption permitted2020. We are currently assessing the first interim periodimpact of a fiscal year and should be appliedthis update 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. The Company does not expect the adoption of ASU 2016-16 to have a material impact on itsCompany’s condensed consolidated financial statements.
In FebruaryMarch 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). ASU 2020-04 provides temporary optional guidance to ease the potential burden in accounting for (or recognize the effects of) reference rate reform on financial reporting. The relief provided by this guidance is elective and applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of reference rate reform initiatives being undertaken in 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 are effective for all entities upon adoption. We are currently assessing the impact of this update on the Company’s condensed consolidated financial statements.
In June 2016, the FASB issued ASU 2016-02, “Leases2016-13, “Financial Instruments - Credit Losses (Topic 842)326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-02”2016-13”), which supersedes. ASU 2016-13 replaces the leases requirements in “Leases (Topic 840).”current incurred loss model guidance with a new method that reflects expected credit losses. Under this guidance, an entity would recognize an allowance for credit losses equal to its 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 result, ASU 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2022, with early adoption permitted. The objective of this updatestandard is not expected to establishhave a significant impact on the principlesCompany's condensed consolidated financial statements.
Accounting pronouncements recently adopted
There were no new accounting pronouncements adopted during the nine months ended September 30, 2021.
3. Revenues
The Company disaggregates net sales from contracts with customers by major sales channel. The Company determined that lessees and lessors shall apply to report useful information to users of financial statements aboutdisaggregating its net sales into these categories best depicts how the nature, 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 e-commerce channel represents sales to retailers whose customers utilize the Internet to purchase the Company’s products. The industrial channel represents sales to non-automotive manufacturers and dealers of agricultural equipment, trailers, and other custom assemblies. The other channel represents sales that do not fit into a lease. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, including interim periods within thosecategory described above and these sales are considered ancillary to the Company’s core operating activities.

9

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)The Company’s net sales by segment and disaggregated by major sales channel are as follows:
Three Months Ended September 30, 2021
Horizon AmericasHorizon Europe-AfricaTotal
(dollars in thousands)
Net Sales
Aftermarket$35,390 $22,400 $57,790 
Automotive OEM24,690 34,590 59,280 
Automotive OES3,570 20,790 24,360 
Retail26,460 — 26,460 
E-commerce16,970 1,950 18,920 
Industrial8,770 480 9,250 
Other— 480 480 
Total$115,850 $80,690 $196,540 
Three Months Ended September 30, 2020
Horizon AmericasHorizon Europe-AfricaTotal
(dollars in thousands)
Net Sales
Aftermarket$35,390 $24,360 $59,750 
Automotive OEM24,010 42,400 66,410 
Automotive OES2,980 13,820 16,800 
Retail34,290 — 34,290 
E-commerce15,240 630 15,870 
Industrial7,230 550 7,780 
Other— 730 730 
Total$119,140 $82,490 $201,630 
Nine Months Ended September 30, 2021
Horizon AmericasHorizon Europe-AfricaTotal
(dollars in thousands)
Net Sales
Aftermarket$107,640 $70,950 $178,590 
Automotive OEM74,860 127,340 202,200 
Automotive OES11,670 56,820 68,490 
Retail81,650 — 81,650 
E-commerce51,220 5,340 56,560 
Industrial27,020 1,660 28,680 
Other— 1,680 1,680 
Total$354,060 $263,790 $617,850 

10

annual periods, with early adoption permitted. The Company is in the process of assessing the impact of the adoption of ASU 2016-02 on its condensed consolidated financial statements.
In July 2015, the FASB issued ASU 2015-11, “Inventory (Topic 330): Simplifying the Measurement 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 effective for the Company on a prospective basis and did not have a material impact on the Company’s condensed consolidated financial position or 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)

Nine Months Ended September 30, 2020
Horizon AmericasHorizon
Europe-Africa		Total
(dollars in thousands)
Net Sales
Aftermarket$84,440 $56,750 $141,190 
Automotive OEM53,880 104,420 158,300 
Automotive OES5,330 34,000 39,330 
Retail80,690 — 80,690 
E-commerce41,120 1,290 42,410 
Industrial20,120 1,210 21,330 
Other50 2,070 2,120 
Total$285,630 $199,740 $485,370 
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 summarizes the fair value of consideration paid for Best Bars, and the assets acquired and liabilities assumed:
  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
4.4. Goodwill and Other Intangible Assets
Changes in the carrying amount of goodwill for the nine months ended September 30, 2017are summarized as follows:
Horizon AmericasHorizon Europe-AfricaTotal
(dollars in thousands)
Balance at January 1, 2021$3,360 $— $3,360 
Divestiture of business(3,340)— (3,340)
Foreign currency translation(20)— (20)
Balance at September 30, 2021$— $— $— 
  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
Brazil Sale
__________________________
(a) Attributable toOn June 8, 2021, the acquisitionCompany divested its Brazil business via a share sale (the “Brazil Sale”). Under the terms of Best Bars, as further describedthe Brazil Sale, the Company disposed all assets and liabilities of its Brazil business, including $3.3 million of goodwill within the Horizon Americas operating segment, for nominal consideration. As a result of the Brazil Sale, the Company recorded a $2.2 million loss during the second quarter of 2021 in Note 3, “Acquisitions.”

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

other expense, net in the accompanying condensed consolidated statements of operations.
The gross carrying amounts and accumulated amortization of the Company’s other intangibles as of September 30, 2017 and December 31, 2016 are summarized below. The Company amortizes these assets over periods ranging from three 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)
Amortization expense related to intangible assets as included in the accompanying condensed consolidated statements of income is summarizedare as follows:
September 30, 2021
Intangible Category by Useful LifeGross Carrying AmountAccumulated AmortizationNet Carrying Amount
(dollars in thousands)
Finite-lived intangible assets:
Customer relationships (2 – 20 years)$162,970 $(136,640)$26,330 
Technology and other (3 – 15 years)22,760 (17,280)5,480 
Sub-total185,730 (153,920)31,810 
Trademark/Trade names, indefinite-lived21,060 — 21,060 
Total$206,790 $(153,920)$52,870 
  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. Inventories
Inventories consist of the following components:
11
  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)
December 31, 2020
Intangible Category by Useful LifeGross Carrying AmountAccumulated AmortizationNet Carrying Amount
(dollars in thousands)
Finite-lived intangible assets:
Customer relationships (2 – 20 years)$166,420 $(135,140)$31,280 
Technology and other (3 – 15 years)22,250 (16,710)5,540 
Trademark/Trade names (1 – 8 years)150 (150)— 
Sub-total188,820 (152,000)36,820 
Trademark/Trade names, indefinite-lived21,410 — 21,410 
Total$210,230 $(152,000)$58,230 

Amortization expense related to other intangible assets is as follows:
Three Months Ended September 30,Nine Months Ended
September 30,
2021202020212020
(dollars in thousands)
Technology and other, included in cost of sales$210 $280 $990 $950 
Customer relationships, included in selling, general and administrative expenses1,040 1,330 3,230 4,090 
Total$1,250 $1,610 $4,220 $5,040 

5. Inventories
Inventories consist of the following components:
 September 30,
2021		December 31,
2020
 (dollars in thousands)
Finished goods$89,640 $58,600 
Work in process15,870 13,070 
Raw materials58,760 43,650 
Total$164,270 $115,320 

12


HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. Property and Equipment, Net
Property and equipment, net consists of the following components:
 September 30,
2021		December 31,
2020
 (dollars in thousands)
Land and land improvements$490 $520 
Buildings and improvements22,760 23,040 
Machinery and equipment142,390 134,750 
Gross property and equipment165,640 158,310 
Accumulated depreciation(92,700)(84,220)
Total$72,940 $74,090 
  September 30,
2017		 December 31,
2016
  (dollars in thousands)
Land and land improvements $450
 $520
Buildings 24,580
 20,120
Machinery and equipment 161,330
 138,470
  186,360
 159,110
Less: Accumulated depreciation 75,530
 65,350
Property and equipment, net $110,830
 $93,760

Depreciation expense included in the accompanying condensed consolidated statements of income is as follows:
Three Months Ended September 30,Nine Months Ended
September 30,
2021202020212020
(dollars in thousands)
Depreciation expense, included in cost of sales$3,720 $3,920 $10,850 $10,330 
Depreciation expense, included in selling, general and administrative expenses240 90 860 780 
Total$3,960 $4,010 $11,710 $11,110 

13
  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

HORIZON GLOBAL CORPORATION
7.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
7. Accrued and Other Long-term Liabilities
Accrued liabilities consist of the following components:
September 30,
2021		December 31,
2020
(dollars in thousands)
Customer incentives$14,730 $15,870 
Accrued compensation11,020 12,130 
Short-term tax liabilities4,920 5,570 
Customer claims3,830 6,520 
Accrued professional services1,760 1,510 
Litigation settlements1,150 1,600 
Restructuring120 650 
Deferred purchase price— 1,370 
Other15,810 13,880 
Total$53,340 $59,100 
Other long-term liabilities consist of the following components:
 September 30,
2021		December 31,
2020
 (dollars in thousands)
Litigation settlements$2,320 $2,930 
Long-term tax liabilities330 130 
Deferred purchase price— 1,650 
Restructuring— 1,070 
Other7,980 8,780 
Total$10,630 $14,560 
14

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. Long-term Debt
The Company’s long-term debt consists of the following:following components:
 September 30,
2021		December 31,
2020
 (dollars in thousands)
Revolving Credit Facility$44,910 $24,230 
Senior Term Loan100,000 — 
Replacement Term Loan— 90,210 
Convertible Notes125,000 125,000 
Paycheck Protection Program Loan8,670 8,670 
Bank facilities, capital leases and other long-term debt17,700 17,970 
Gross debt296,280 266,080 
Less:
Short-term borrowings and current maturities, long-term debt5,940 14,120 
   Gross long-term debt290,340 251,960 
Unamortized debt issuance costs and discount:
Unamortized debt issuance costs and original issuance discount on Senior Term Loan(22,870)— 
Unamortized debt issuance costs and original issuance discount on Replacement Term Loan— (9,100)
Unamortized debt issuance costs and discount on Convertible Notes(6,130)(11,470)
   Total(29,000)(20,570)
Long-term debt$261,340 $231,390 
ABL Facility
In December 2015, the Company entered into an Amended and Restated Loan Agreement with certain subsidiaries of the Company party thereto as guarantors, the lenders party thereto and Bank of America, N.A., as agent for the lenders, 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. The Amended and Restated Loan Agreement was subsequently amended on several occasions and as a result, the effective facility size was $80.0 million.
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 ASC 405-20, “Extinguishment of Liabilities”. As a result of the debt extinguishment,during the nine months ended September 30, 2020, the Company recognized $0.8 million of unamortized debt issuance costs in interest expense and $0.6 million of additional costs in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations, in accordance with ASC 470-50, “Modifications and Extinguishments” (“ASC 470-50”).
During the three and nine months ended September 30, 2021, the Company recognized no amortization of debt issuance costs and during the three and nine months ended September 30, 2020, the Company recognized no amortization of debt issuance costs and $0.4 million amortization of debt issuance costs, respectively, in the accompanying condensed consolidated statements of operations.
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 Horizon Global Americas Inc. and Cequent Towing Products of Canada Ltd., as borrowers (the “ABL Borrowers”).

15

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
  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
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 May 2020, the Company entered into amendments, limited waivers and consents in connection with the Loan Agreement, 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, as defined and described below.
In February 2021, the Company entered into a limited consent of the Loan Agreement, that among other modifications, consented to the Company’s entering into the Senior Term Loan Credit Agreement, as defined and described below.
In April 2021, the Company entered into an amendment to the Loan Agreement, that among other modifications, increased the maximum amount of credit available under the Revolving Credit Facility to $85.0 million. The amendment also increased sub-limits relating to the Company’s ability to borrow against in-transit inventory as well as inventory located in the Company’s Mexico facilities.
On September 17, 2021, the Company entered into an amendment to the Loan Agreement, that among other modifications, increased the maximum amount of credit available under the Revolving Credit Facility to $95.0 million. The amendment also increased the Company’s ability to borrow against receivables and sub-limits relating to in-transit inventory and inventory located in the Company’s Mexico facilities. The increased borrowing capacity against receivables and inventory is effective through December 31, 2021.
Interest on the loans under the Loan Agreement is 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, at 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. All outstanding borrowings under the Loan Agreement mature on March 13, 2023.
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 exceeding $30.0 million during any fiscal year.
Debt issuance costs of $2.3 million were incurred in connection with the Loan Agreement. These debt issuance costs will be amortized into interest expense over the contractual term of the Loan Agreement.
During the three and nine months ended September 30, 2021, the Company recognized $0.1 million and $0.4 million of amortization of debt issuance costs, respectively, and during the three and nine months ended September 30, 2020, the Company recognized $0.2 million and $0.9 million of amortization of debt issuance costs, respectively, in the accompanying condensed consolidated statements of operations.
As of September 30, 2021 and December 31, 2020, there was $1.0 million and $1.1 million, respectively, of unamortized debt issuance costs included in other assets in the accompanying condensed consolidated balance sheets.
As of September 30, 2021 and December 31, 2020, there was $44.9 million and $24.2 million outstanding, respectively, under the Revolving Credit Facility, with a weighted average interest rate of 5.3% and 5.0%, respectively. As of September 30, 2021 and December 31, 2020, the Company had $37.5 million and $38.4 million of availability, respectively, under the Revolving Credit Facility.
As of September 30, 2021 and December 31, 2020, the Company had $2.1 million and $3.1 million, respectively, of letters of credit issued and outstanding, under the Revolving Credit Facility with no cash collateral requirement. As of September 30, 2021 and December 31, 2020, respectively, the Company also had $4.2 million and $4.9 million of other letters of credit issued and outstanding, under the Revolving Credit Facility with a cash collateral requirement. The cash collateral requirement is 105% of the outstanding letters of credit. As of September 30, 2021 and December 31, 2020, the Company had cash collateral, of $4.9 million and $5.1 million, respectively. Cash collateral is presented in restricted cash in the accompanying condensed consolidated balance sheets.
16

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


First Lien Term Loan Agreement
In June 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”). The Term Loan Agreement was subsequently amended and restated on several occasions and is collectively referred to as the “First Lien Term Loan Agreement”. The Original Term B Loan was also subsequently amended on several occasions and is collectively referred to as the “First Lien Term Loan”.
In May 2020, the Company entered into an amendment, limited waiver and consent to credit agreement 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, as defined and described below.
As a result of the Replacement Term Loan Amendment, as defined and described below, the outstanding balance and any accrued interest was replaced by the Replacement Term Loan, as defined and described below.
During the three and nine months ended September 30, 2021, the Company recognized no amortization of debt issuance costs and during the three and nine months ended September 30, 2020, the Company recognized no and $0.2 million amortization of debt issuance costs, respectively, in the accompanying condensed consolidated statements of operations.
During the three and nine months ended September 30, 2021, the Company recognized no paid-in-kind (“PIK”) interest and during the three and nine months ended September 30, 2020, the Company recognized no and $0.4 million of PIK interest, respectively, in the accompanying condensed consolidated statements of operations.
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 provided for a term loan facility in the aggregate principal amount of $51.0 million.
In May 2020, the Company entered into an amendment, limited waiver and consent to credit agreement 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, as defined and described below.
As a result of the Replacement Term Loan Amendment, as defined and described below, the outstanding balance and any accrued interest was replaced by the Replacement Term Loan, as defined and described below.
During the three and nine months ended September 30, 2021, the Company recognized no amortization of debt issuance costs and during the three and nine months ended September 30, 2020, the Company recognized no and $2.7 million amortization of debt issuance costs, respectively, in the accompanying condensed consolidated statements of operations.
During the three and nine months ended September 30, 2021, the Company recognized no PIK interest and during the three and nine months ended September 30, 2020, the Company recognized $0.1 million and $3.4 million of PIK interest, respectively, in the accompanying condensed consolidated statements of operations.
Replacement Term Loan
In July 2020, the Company entered into the 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 Loan”) 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.
17

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The interest on the Replacement Term Loan was LIBOR plus 10.75% per annum, subject to a 1.00% LIBOR floor, of which 4.00% was payable in cash and the remainder of which was PIK interest (provided that the Company may elect on not more than one occasion to pay all interest as PIK interest). The Eleventh Amendment provided for a 1.00% PIK closing fee, which was added to the principal amount of the Replacement Term Loan on the closing date and provided for a prepayment penalty on the entire principal amount of the Replacement Term Loan in an amount equal to 3.0% of the aggregate principal amount prepaid prior to December 31, 2021.
In February 2021, the Company entered into the Senior Term Loan Credit Agreement, as defined and described below. The proceeds received from the initial borrowings under the Senior Term Loan Credit Agreement were used to repay in full all outstanding debt and accrued interest on the Company’s Replacement Term Loan. As a result of the repayment, the Term Loan Agreement was terminated and is no longer in effect. During the nine months ended September 30, 2021, the Company recognized $11.7 million as loss on debt extinguishment in the accompanying condensed consolidated statements of operations, in accordance with ASC 470-50. Included in the loss was $8.9 million of unamortized debt issuance and other costs and a $2.8 million prepayment penalty.
During the three and nine months ended September 30, 2020, the Company recognized $0.2 million of additional costs in selling, general and administrative expense in the accompanying condensed consolidated statements of operations, in accordance with ASC 470-50.
During the three and nine months ended September 30, 2021, the Company recognized 0 amortization of debt issuance costs and $0.4 million amortization of debt issuance costs, respectively, and during the three and nine months ended September 30, 2020, the Company recognized $1.2 million amortization of debt issuance costs in the accompanying condensed consolidated statements of operations.
As of December 31, 2020, the Company had total unamortized debt issuance and discount costs of $9.1 million, all of which were recorded as a reduction of long-term debt in the accompanying condensed consolidated balance sheets.
During the three and nine months ended September 30, 2021, the Company recognized 0 PIK interest and $0.7 million of PIK interest, respectively, and during the three and nine months ended September 30, 2020, the Company recognized $2.5 million PIK interest in the accompanying condensed consolidated statements of operations.
As of December 31, 2020, the Company had $90.2 million of aggregate principal outstanding.
Senior Term Loan Credit Agreement
On February 2, 2021, the Company entered into a credit agreement (the “Senior Term Loan Credit Agreement”) with Atlantic Park Strategic Capital Fund, L.P. (“Atlantic Park”), as administrative agent and collateral agent, and the lenders party thereto (collectively, the “Lenders”). The Senior Term Loan Credit Agreement provides for an initial term loan facility in the aggregate principal amount of $100.0 million, all of which has been borrowed by the Company and was used to repay the Replacement Term Loan, as described above, and a delayed draw term loan facility in the aggregate principal amount of up to $125.0 million, which may be drawn by the Company in up to three separate borrowings through June 30, 2022. A ticking fee of 25 basis points per annum will accrue on the undrawn portion of the delayed draw term loan facility.
Interest on the Senior Term Loan Credit Agreement is payable in cash on a quarterly basis at the interest rate of LIBOR plus 7.50% per annum, subject to a 1.00% LIBOR floor. The Senior Term Loan Credit Agreement includes customary affirmative and negative covenants, including a maximum total net leverage ratio requirement tested quarterly, commencing with the fiscal quarter ending March 31, 2023, not to exceed: 6.50 to 1.00. The Senior Term Loan Credit Agreement also contains a financial covenant that stipulates the Company will not make capital expenditures exceeding $27.5 million during any fiscal year. To the extent that the amount of capital expenditures is less than $27.5 million in any fiscal year, up to 50% of the difference may be carried forward and used for capital expenditures in the immediately succeeding fiscal year.
Following a one-year no-call period, the Senior Term Loan Credit Agreement provides for a 2.5% call premium for years two through five and no premium thereafter. All outstanding borrowings under the Senior Term Loan Credit Agreement mature on February 2, 2027.
All of the indebtedness under the Senior Term Loan Credit Agreement is and will be guaranteed by the Company’s existing and future United States, Canadian and Mexican subsidiaries and certain other foreign subsidiaries and is and will be secured by substantially all of the assets of the Company and such guarantors.
18

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Pursuant to the Senior Term Loan Credit Agreement, the Company issued warrants (the “Senior Term Loan Warrants”) to Atlantic Park to purchase in the aggregate up to 3,905,486 shares of the Company’s common stock, with an exercise price of $9.00 per share, subject to adjustment as provided in the Senior Term Loan Warrants. The Senior Term Loan Warrants are exercisable at any time prior to February 2, 2026.
In accordance with guidance in ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging”, the Senior Term Loan Credit Agreement and the Senior Term Loan Warrants are each freestanding instruments and proceeds were allocated to each instrument on a relative fair value basis of $82.4 million and $17.6 million, respectively.
The Senior Term Loan Warrants are not within the scope of ASC 480 and do not meet the criteria for liability classification. However, the Senior Term Loan Warrants are determined to be indexed to the Company’s common stock and meet the requirements for equity classification pursuant to ASC 815-40, “Derivatives and Hedging - Contracts in Entity’s Own Equity”. The $17.6 million allocated to the Senior Term Loan Warrants was determined using an option pricing method and is recorded in common stock warrants in the accompanying condensed consolidated balance sheets.
Debt issuance costs of $5.4 million and original issue discount of $3.0 million were incurred in connection with entry into the Senior Term Loan Credit Agreement. The total costs of $8.4 million were allocated to each instrument on a relative fair value basis. The $7.1 million allocated to the Senior Term Loan Credit Agreement will be amortized into interest expense over the contractual term of the loan using the effective interest method and the $1.3 million allocated to the Senior Term Loan Warrants was recorded as a reduction of equity.
The Company determined the fair value of the Senior Term Loan Credit Agreement using a discount rate build up approach. The debt discount of $17.6 million created by the relative fair value allocation of the equity component is being amortized as additional non-cash interest expense using the effective interest method over the contractual term of the loan. The debt discount is recorded as a reduction of long-term debt in the accompanying condensed consolidated balance sheets.
During the three and nine months ended September 30, 2021, the Company recognized $0.7 million and $1.8 million, respectively, of amortization of debt issuance and discount costs in the accompanying condensed consolidated statements of operations.
As of September 30, 2021, the Company had total unamortized debt issuance and discount costs of $22.9 million, all of which were recorded as a reduction of long-term debt in the accompanying condensed consolidated balance sheets.
As of September 30, 2021, the Company had $100.0 million aggregate principal outstanding.
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 on the second scheduled trading day immediately preceding the maturity date. During the third quarter of 2017, no conditions allowing holders of the Convertible Notes to convert have been met. Therefore, the Convertible Notes are not convertible during the fourth quarter of 2017 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 September 30, 2017, 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”) 470-20, “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.
The Company allocated offering costs of $4.0 million to the debt and equity components 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 methodNotes were not convertible during the third quarter of net-share settlement but may be settled in cash or shares, depending on the Company’s method of settlement for conversion2021, as no conditions allowing holders of the correspondingConvertible Notes to convert have been met. Should conditions allowing holders of the Convertible Notes to convert be met in a future quarter, the Convertible Notes will be convertible at their holders’ option during the immediately following quarter. As of September 30, 2021, the if-converted value of the Convertible Notes did not exceed the principal value of those 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

19

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

common stock that it would be required to deliver toUpon conversion by 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 transactions in accordance with ASC 815-40, “Derivatives and Hedging-Contracts in Entity’s own Equity.”
In connection with the issuance of the Convertible Notes, the Company also sold net-share-settled warrants (the “Warrants”)may elect to settle such conversion in privately negotiated transactions with the option counterparties for the purchase of up to 5,005,000 shares of its common stock, atcash, or a strike pricecombination 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 $29.60 per share, for total proceeds of $21.5 million. The Company also recorded the Warrants within shareholders’ equitythose components in accordance with ASC 815-40.470-20. The Warrants have customary anti-dilution provisions similar toCompany first determined the Convertible Notes. As a resultfair value of the issuance of the Warrants, the Company will experience dilution to its diluted earnings per share if its average closing stock price exceeds $29.60 for any fiscal quarter. The Warrants expire on various dates from October 2022 through February 2023 and must be net-settled in shares of the Company’s common stock. Therefore, upon exercise of the Warrants, the Company will issue shares of its common stock to the purchasers of the Warrants that representliability component by estimating the value byof 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 price of the common stock exceeds the strike price stipulated within the particular warrant agreement.
ABL Facility
On December 22, 2015, theequity component. 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 agentaccounted for the lenders (the “ABL Loan Agreement”), under which the lenders party thereto agreedequity component as a debt discount (with an offset to provide the Company and certainpaid-in capital in excess 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”)par value). 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 guaranteeddebt discount created by the Company’s existing and future material domestic subsidiaries andequity component is and will be secured by substantially all ofbeing amortized as additional non-cash interest expense using 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 intoeffective interest expensemethod over the contractual term of the loan.Convertible Notes ending on July 1, 2022.
During the three and nine months ended September 30, 2021, the Company recognized total interest expense of $2.6 million and $7.9 million and during the three and nine months ended September 30, 2020, the Company recognized total interest expense of $2.5 million and $7.6 million, respectively, in the accompanying condensed consolidated statements of operations. The Companyinterest expense recognized consists of contractual interest coupon, amortization of debt discount and amortization of debt issuance costs on the Convertible Notes, and is as follows:

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
(dollars in thousands)
Contractual interest coupon on convertible debt$860 $860 $2,580 $2,600 
Amortization of debt issuance costs130 130 400 400 
Amortization of "equity discount" related to debt1,640 1,510 4,940 4,550 
Total$2,630 $2,500 $7,920 $7,550 

As a result of the Company’s Senior Term Loan Agreement entered into in February 2021, which includes the delayed draw term loan facility described above, the Company has the ability and intent to refinance the Convertible Notes, which mature on July 1, 2022.
As of September 30, 2021 and December 31, 2020, the Company had total unamortized debt issuance and discount costs of $6.1 million and $11.5 million, respectively, which were recorded as a reduction of long-term debt in the accompanying condensed consolidated balance sheets.
As of September 30, 2021 and December 31, 2020, the Company had $125.0 million of aggregate principal outstanding.
Paycheck Protection Program Loan
In April 2020, Horizon Global Company LLC (the “U.S. Borrower”), a direct U.S.-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 U.S. Borrower, matures on April 18, 2022. 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’s Frequently Asked Questions. During 2020, the Company, in accordance with the final guidance issued by the United States Department of the Treasury (the “Treasury”), met the need and sized based criteria of the program.
20

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 $20.02021, the Company’s application of loan forgiveness of $7.1 million outstanding underof the ABL Facility$8.7 million of funds originally received is subject to the SBA’s final determination of forgiveness, which we expect to receive in the fourth quarter of 2021, based on the review timelines once a borrower has submitted its application in accordance with a weighted averagethe issued regulations. The potential loan forgiveness is determined, subject to limitations, based on the use of loan proceeds for payment of qualifying expenses over the 24 weeks after the loan proceeds were disbursed. The unforgiven portion of the loan has an interest rate of 3.2%. As of December 31, 2016, there were no amounts outstanding under1.0% per annum. In July 2021, 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.note was amended to make the unforgiven portion payable over five years on a monthly basis. The Company had $65.0has deferred interest payments until the Company’s application for forgiveness is completed in accordance with the guidance issued by the SBA and Treasury and the terms of the Company’s PPP Loan. While we currently believe that our use of the loan proceeds will meet the conditions for forgiveness of $7.1 million of our PPP Loan, there can be no assurance that forgiveness for any portion of the PPP Loan will be obtained.
Covenant and $68.7 millionLiquidity Matters
The Company is in availability under the ABL Facilitycompliance with all of its financial covenants as of September 30, 20172021.
9. Leases
The Company leases certain facilities, automobiles and December 31, 2016, respectively.
Term Loan
On June 30, 2015,equipment under non-cancellable operating leases. Our leases have remaining lease terms of one to seven 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 entered intorecognizes lease expense for these leases on a term loan agreement (“Original Term B Loan”) under whichstraight-line basis over the Company borrowed an aggregatelease term.
Most leases include one or more options to renew. The exercise 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”lease renewal options 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,typically at the Company’s election, at either (i)sole discretion; therefore, the Base Rate plus 3.5% per annum,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. The Company’s lease agreements do not contain any material residual value guarantees or (ii) LIBOR, with a 1% floor, plus 4.5% per annum. Principal payments required undermaterial restrictive covenants. Refer to Note 3, Summary of Significant Accounting Policies, in the Term B Loan are $1.9 million due each calendar quarter beginning June 2017. Commencing withCompany’s Annual Report on Form 10-K for the fiscal year endingtwelve months ended December 31, 2017, and2020, 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% ofmore information.
Supplemental information for the Company’s excess cash flow for such fiscal year,leases is 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.follows:
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.
Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 (dollars in thousands)
Operating lease cost$3,040 $4,260 $10,670 $11,460 
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

Nine Months Ended September 30,
 20212020
Operating cash flows from operating leases$9,980 $12,060 
ROU assets obtained in exchange for operating lease obligations$910 $4,080 

 September 30,
2021		December 31,
2020
Weighted average remaining lease term (years)5.26.0
Weighted average discount rate8.4 %8.4 %
21

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

10. Contingencies
includedIn April 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 during the first quarter of 2020 in cost of sales of 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. Derivative Instruments
Foreign Currency Exchange Rate Risk
As of September 30, 2017, 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 uses 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 hedge currency exposure between the Mexican peso and the U.S. dollar, the Thai baht and the Australian dollar and the U.S. dollar and the Australian dollar and mature at specified monthly settlement dates through June 2018. At inception, the Company designated the foreign currency forward contracts as cash flow hedges. Upon purchase of certain inventories, the Company de-designates the foreign currency forward contract.
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 uses the cross currency swap to mitigate the risk associated with fluctuations in currency rates impacting cash flows related to a non-U.S. denominated intercompany loan of €110.0 million. The cross currency swap hedges currency exposure between the Euro and the U.S. dollar and matures on January 3, 2019. The Company makes 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. At inception, the Company designated the cross currency swap as a cash flow hedge. Changes in the currency rate result in reclassification of amounts from accumulated other comprehensive income to earnings to offset the re-measurement gain or loss on the non-U.S. 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 on 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)

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”), the amounts reclassified from AOCI into earnings and the amounts recognized directly into earnings as of and foroperations. During the three and nine months ended September 30, 2017 and 2016:
 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,2021, the Company expects to reclassify approximatelyrecorded $0.2 million of pre-tax deferred gains, related to the foreign currency forward contracts, from AOCI to cost of sales as the inventory purchases are settled. Over the next 12 months, the Company expects to reclassify approximately $1.5and $0.5 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’s condensed consolidated statements of income. There were $0.1 million of losses on de-designated derivatives for the three months ended September 30, 2017royalties, respectively, 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 million for the three and nine months ended September 30, 2016, respectively. The gain or loss resulting from the change in fair value on the floating-to-floating cross currency swap is recorded within other expense, net on the Company’s condensed consolidated statements of income. The gain or loss on this cross currency swap was not material for the three and nine months ended September 30, 2017, respectively.
Fair Value Measurements
The fair value of the Company’s derivatives are estimated using an income approach based on valuation techniques to convert future amounts to a single, discounted amount. Estimates of the fair value of 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. As a result, the Company reports the results of its business in three reportable segments: Horizon Americas, Horizon Europe‑Africa, and Horizon Asia‑Pacific. The Company’s Brazilian operations, which has previously been included in the Horizon International reportable segment, is now managed as part of its former Horizon North America segment, which has been renamed Horizon Americas. The Company’s Horizon Europe‑Africa reportable segment is comprised of the European and South African operations, previously included in Horizon International, and the Westfalia Group operations. The Company’s former Horizon International reportable segment, excluding the Brazilian operations, was geographically divided into two separate reportable segments. The Company’s Horizon Asia‑Pacific reportable segment is comprised of the Australia, Thailand, and New Zealand operations previously included in Horizon International. The Company has recast prior period amounts to conform to the way it currently manages and monitors segment performance under the new segments. See below for further information regarding the types of products and services provided within each reportable segment.
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. Equity Awards
Description of the Plan
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. Internal Revenue Code), restricted shares, restricted stock units, performance shares, performance 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 2.0 million Horizon common shares may be delivered under the Horizon 2015 Plan.
Stock Options

The following table summarizes Horizon stock option activity from December 31, 2016 to September 30, 2017:

  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
 
  
  Granted —
 —
 
  
  Exercised (3,638) 10.40
    
  Canceled, forfeited —
 —
    
  Expired —
 —
    
Outstanding at September 30, 2017 343,947
 $10.37
 8.1 $2,499,061
As of September 30, 2017, there was $0.2 million in 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 million and $0.3 million of stock-based compensation expense related to stock options during the three and nine months ended September 30, 2017, respectively, and approximately2020, the Company recorded $0.2 million and $0.6$0.4 million during the three and nine months ended September 30, 2016, respectively. Stock-based compensation expense is includedof royalties, respectively, all of which were recorded in selling, general and administrative expensescost of sales in the accompanying condensed consolidated statements of income.operations.
Restricted Shares

In the first nine monthsAs of 2017,September 30, 2021 and December 31, 2020, the Company granted an aggregate of 185,423 restricted stock units and performance stock units to certain key employees and non-employee directors. The total grants consisted of: (i) 22,449 time-based restricted stock units that vest ratably on (1) March 1, 2018, (2) March 1, 2019 and (3) March 1, 2020; (ii) 50,416 time-based restricted stock units that vest ratably on (1) March 1, 2018, (2) March 1, 2019, (3) March 1, 2020 and (4) March 1, 2021; (iii) 72,865 market-based performance stock units that vest on March 1, 2020; (iv) 33,426 time-based restricted stock units that vest on July 1, 2018, and (v) 6,267 time-based restricted stock units that vest on July 1, 2019.
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, measured over a period beginning January 1, 2017 and ending December 31, 2019. 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% and annualized volatility of 38.5%. 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 performance stock units was $18.41.

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


The grant date fair value of restricted shares is expensed over the vesting period. Restricted share 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 September 30, 2017 were as follows:
  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 September 30, 2017, there was $4.0 million in unrecognized compensation costs related to unvested restricted shares that is expected to be recognized over a weighted-average period of 0.9 year.
The Company recognized approximatelyhad recorded $0.9 million and $2.5$0.9 million, of stock-based compensation expense related to restricted shares during the threerespectively, in prepaid expenses and nine months ended September 30, 2017, respectively,other current assets and approximately $0.8$1.2 million and $2.2$1.8 million, during the three and nine months ended September 30, 2016, respectively. Stock-based compensation expense is includedrespectively, in selling, general and administrative expensesother assets, in the accompanying condensed consolidated statementsbalance sheets related to the royalties to be recognized by the Company over the life of income.future programs connected to the Settlement. In addition, as of September 30, 2021 and December 31, 2020, the Company had $0.9 million and $1.0 million, respectively, in accrued liabilities and $2.3 million and $2.9 million, respectively, in other long-term liabilities, in the accompanying condensed consolidated balance sheets related to the remaining semi-annual installment payments.
11. Earnings (Loss) per Share
Basic earnings (loss) per share is computed using net income (loss) 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 (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. The following table sets forth theNotes, where dilutive to earnings per share.
A reconciliation of the numerator and the denominator of basic earningsincome (loss) per share attributable to Horizon Global and diluted earningsincome (loss) per share attributable to Horizon Global for the three and nine months ended September 30, 2017 and 2016:is as follows:
22
  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)

Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
(dollars in thousands, except for per share amounts)
Numerator:
Net (loss) income from continuing operations$(2,770)$1,590 $(16,960)$(31,660)
Add: Loss from discontinued operations, net of income tax— — — (500)
Less: Net loss attributable to noncontrolling interest(300)(340)(970)(1,010)
Net (loss) income attributable to Horizon Global$(2,470)$1,930 $(15,990)$(31,150)
Denominator:
Weighted average shares outstanding, basic27,286,600 25,939,741 27,019,554 25,651,789 
Dilutive effect of common stock equivalents— 7,389,365 — — 
Weighted average shares outstanding, diluted27,286,600 33,329,106 27,019,554 25,651,789 
Basic (loss) income per share attributable to Horizon Global
Continuing operations$(0.09)$0.07 $(0.59)$(1.19)
Discontinued operations— — — (0.02)
Total$(0.09)$0.07 $(0.59)$(1.21)
Diluted (loss) income per share attributable to Horizon Global
Continuing operations$(0.09)$0.06 $(0.59)$(1.19)
Discontinued operations— — — (0.02)
Total$(0.09)$0.06 $(0.59)$(1.21)
TheAs a result of the net loss from continuing operations for the three months ended September 30, 2021 and nine months ended September 30, 2021 and 2020, the effect of certain common stock equivalents weredilutive securities was 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:are as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Number of options18,961 18,961 18,961 18,961 
Exercise price of options$9.20 - $11.02$9.20 - $11.02$9.20 - $11.02$9.20 - $11.02
Restricted stock units1,761,463 — 1,863,498 1,820,186 
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 
Common stock warrants9,231,146 — 8,810,164 6,376,519 
  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 earningsloss per share, the Company has elected a policy to assume that the principal portion of the Convertible Notes, as described in Note 7, “8, 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 earningsloss 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 earningsloss per share as if it were a freestanding written call option on the Company’s shares. Using the treasury stock method, the Warrantswarrants 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 earningsloss per share.
23

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

12. Equity Awards
Description of the Plans
In June 2020, the shareholders approved the Horizon Global Corporation 2020 Equity and Incentive Compensation Plan (the “Horizon 2020 Plan”). Horizon employees, non-employee directors and certain consultants 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 U.S. 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 defined and described below, 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 Horizon 2020 Plan pursuant to the share counting rules of the Horizon 2020 Plan. These shares may be shares of original issuance or treasury shares, or a combination of both.
Prior to the Horizon 2020 Plan, employees and non-employee directors participated in the Horizon Global Corporation 2015 Equity and Incentive Compensation Plan (as amended and restated, the “Horizon 2015 Plan”). The Horizon 2015 Plan authorized 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. 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.
Stock Options
Horizon’s stock option activity is as follows:
Number of Stock OptionsWeighted Average Exercise PriceAverage Remaining Contractual Life (Years)Aggregate Intrinsic Value
Outstanding at December 31, 202018,961 $10.43 
Granted— — 
Exercised— — 
Canceled, forfeited— — 
Expired— — 
Outstanding at September 30, 202118,961 $10.43 4.2$— 
As of September 30, 2021, there was no unrecognized compensation cost related to stock options. During the three and nine months ended September 30, 2021 and 2020, there was no stock-based compensation expense recognized by the Company related to stock options. As of September 30, 2021, the aggregate intrinsic value of outstanding stock options was immaterial. Stock-based compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.
Restricted Stock Units
During the nine months ended September 30, 2021, the Company granted an aggregate of 532,899 restricted stock units (“RSUs”) and performance stock units (“PSUs”) to certain key employees and non-employee directors. The total grants consisted of: (i) 83,482 RSUs that vested during the period; (ii) 153,563 time-based RSUs vesting on a ratable basis on March 1, 2022, March 1, 2023 and March 1, 2024; (iii) 230,350 PSUs vesting on April 1, 2024 and (iv) 65,504 time-based RSUs vesting on May 28, 2022.
During 2020, the Company granted an aggregate of 1,502,072 RSUs and PSUs to certain key employees and non-employee directors. The total grants consisted of: (i) 284,859 time-based RSUs vesting on a ratable basis on March 3, 2021, March 3, 2022 and March 3, 2023; (ii) 277,228 time-based RSUs vesting on June 24, 2021; (iii) 21,351 time-based RSUs vesting on a ratable basis on April 2, 2021, March 3, 2022 and March 3, 2023 and (iv) 918,634 PSUs vesting on March 3, 2023.
24

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The performance criteria for the PSUs granted is based on the Company’s three-year cumulative EBITDA. The grant date fair values for the PSUs and RSUs are based on the closing trading price of the Company’s common stock on the date of grant.
The grant date fair value of RSUs is expensed over the vesting period. Changes in the number of RSUs outstanding for the nine months ended September 30, 2021 are as follows:
Number of Restricted Stock Units(a)
Weighted Average Grant Date Fair Value
Outstanding at December 31, 20201,800,682 $3.14 
Granted532,899 8.98 
Vested(499,826)2.64 
Canceled, forfeited(71,669)5.00 
Outstanding at September 30, 20211,762,086 $4.97 
(a)Includes PSUs at 100% attainment.
As of September 30, 2021, there was $4.8 million in unrecognized compensation costs related to unvested RSUs that is expected to be recognized over a weighted-average period of 2.0 years.
During the three and nine months ended September 30, 2021, the Company recognized $0.9 million and $2.6 million, respectively, of stock-based compensation expense related to RSUs, and during the three and nine months ended September 30, 2020, the Company recognized $0.9 million and $2.2 million, respectively, of stock-based compensation expense related to RSUs. Stock-based compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.
25

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. 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. ThereAs of September 30, 2021 and December 31, 2020, there were no preferred shares outstanding at September 30, 2017 or December 31, 2016.outstanding.
Common Stock
The Company is authorized to issue 400,000,000 shares of Horizon Global common stock, par value of $0.01 per share. AtAs of September 30, 2017,2021, there were 24,936,11027,973,153 shares of common stock issued and outstanding, net27,286,647 shares of 686,506 in treasury shares. Atcommon stock outstanding. As of December 31, 2016,2020, there were 20,899,95927,089,673 shares of common stock issued and 26,403,167 shares of common stock outstanding.
Share Repurchase ProgramCommon Stock Warrants
In April 2017,March 2019, in connection with the Board of Directors authorized a share repurchase program ofSecond Lien Term Loan, the Company became obligated to issue detachable warrants to purchase up to 1.56.25 million shares of the Company’s issued and outstanding common stock, duringwhich can be exercised on a cashless basis over a five year term with an exercise price of $1.50 per share.
In February 2021, in connection with the period beginningSenior Term Loan Credit Agreement, the Company issued the Senior Term Loan Warrants to purchase up to 3,905,486 shares of the Company’s common stock, which can be exercised on May 5, 2017 and ending May 5, 2020 (the “Share Repurchase Program”). The Share Repurchase Program providesa cashless basis over a five year term with an exercise price of $9.00 per share. See Note 8, Long-term Debt, for share purchasesadditional information.
As of September 30, 2021, warrants to purchase 1,228,490 shares of the Company’s common stock have been exercised, resulting in the open market or otherwise, depending on share price, market conditions and other factors, as determined byissuance of 972,924 shares of 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 September 30, 2017, cumulative2021, warrants to purchase 9,231,146 shares purchased totaled 686,506 at an average purchase price per share of $14.55, excluding commissions. The repurchased shares are presented as treasurythe Company’s common stock at cost, onwere issued and remain outstanding. During the condensed consolidated balance sheets.

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

Accumulated Other Comprehensive Income
Changes in AOCI by component, net of tax, for the nine months ended September 30, 2017 are summarized as follows:2021, a related-party entity, JKI Holdings, LLC, an entity owned by the chair of our board of directors, exercised in full the warrants that it originally received in connection with the March 2019 issuance described above, and paid the exercise price in cash and received 278,283 shares of common stock. During the nine months ended September 30, 2021, the Company recognized $0.3 million of non-cash transactions in connection with warrants exercised.
Accumulated Other Comprehensive Income (Loss) (“AOCI”)
   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 $4.8 million. See Note 8, “Derivative Instruments,” for further details.
ChangesThe change in AOCI attributable to Horizon Global by component, net of tax, for the nine months ended September 30, 2016 are summarized2021 is as follows:
Foreign Currency Translation and Other
(dollars in thousands)
Balance at January 1, 2021$(6,540)
Net unrealized losses arising during the period(4,070)
Net change(4,070)
Balance at September 30, 2021$(10,610)
   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
 $3,970
__________________________
(a) Derivative instruments,The change in AOCI attributable to Horizon Global by component, net of income tax, benefitfor the nine months ended September 30, 2020 is as follows:
Foreign Currency Translation and Other
(dollars in thousands)
Balance at January 1, 2020$(9,790)
Net unrealized losses arising during the period(400)
Net change(400)
Balance at September 30, 2020$(10,190)
26

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. Segment Information
The Company groups its business into operating segments generally by the region in which sales and manufacturing efforts are focused, which are grouped on the basis of $0.1 million.similar 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 its business in 2 operating segments: Horizon Americas and Horizon Europe-Africa. Horizon Americas is comprised of the Company’s North American operations, and prior to the Brazil Sale also included the Company’s South American operations. Horizon Europe-Africa is comprised of the Company’s 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.
(b) Derivative instruments,The Company previously had a third operating segment, Horizon Asia-Pacific (“APAC”); however, the APAC segment was sold on September 19, 2019, and is presented as a discontinued operation in the accompanying condensed consolidated financial statements. During the first quarter of 2020, the remaining post-closing conditions of the sale were completed, resulting in a true up to net cash proceeds, which were recognized as a loss on sale of income tax benefitdiscontinued operations of $0.1 million. See Note 8,$0.5 million in accordance with Accounting Standards Codification 205, “Derivative Instruments,” for further details.Discontinued Operations”.
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 automotive OEMs, automotive 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.
13.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 Company’s operating segment activity is as follows:
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
 (dollars in thousands)
Net Sales
Horizon Americas$115,850 $119,140 $354,060 $285,630 
Horizon Europe-Africa80,690 82,490 263,790 199,740 
Total$196,540 $201,630 $617,850 $485,370 
Operating Profit (Loss)
Horizon Americas$12,400 $13,170 $41,000 $19,330 
Horizon Europe-Africa(150)2,440 2,550 (6,040)
Corporate(5,920)(7,050)(19,110)(19,380)
Total$6,330 $8,560 $24,440 $(6,090)
27

HORIZON GLOBAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
15. 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.
During the three and nine months ended September 30, 2021, the effective income tax rate was (17.4)% and (19.9)%, respectively. During the three and nine months ended September 30, 2020, the effective income tax rate was 5.9% and (0.5)%, respectively. The estimate useddifferences in providing for income taxes on a year-to-date basis may change in subsequent interim periods. The Company has experienced pre-tax lossesthe effective tax rate compared to the statutory tax rate is attributable to the valuation allowance recorded in the U.S. In light ofand several foreign jurisdictions, which resulted in no income tax benefit recognized for jurisdictional pretax losses, and therefore, are excluded from the losses, theestimated effective tax rate.
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 U.S. 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 September 30, 2017, we believe2021, the Company believes that it is more likely than not that the U.S.recorded deferred tax assets will be realized. If the U.S. business continues to experience losses through 2017, management may determine a valuation allowance against the U.S. deferred tax assets is necessary, which would result in significant tax expense in the period recognized, as well as subsequent periods.
The effective
16. Other (Expense) Income, Net
Other (expense) 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

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

in the nine months ended September 30, 2017 is driven by the recognitionnet consists 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.following components:
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 $2.2 million, respectively.
Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
(dollars in thousands)
Foreign currency (loss) gain$(1,370)$1,080 $(3,020)$(670)
Customer pay discounts(280)(420)(780)(960)
Loss on sale of business— — (2,230)— 
Other, net(70)30 90 200 
Total$(1,720)$690 $(5,940)$(1,430)

28

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 yeartwelve months ended December 31, 20162020 (See Item 1A. Risk Factors).
Overview
WeHeadquartered in Plymouth, Michigan, Horizon Global Corporation and its consolidated subsidiaries (“Horizon,” “Horizon Global,” “we,” “our,” 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, serving the automotive aftermarket, retail and OE channels.
On October 4, 2016, we completed our acquisition of Westfalia Group. The Westfalia Group is a leading global towing company. Headquartered in Rheda-Wiedenbrück, Germany, with operating facilities in 11 countries, it manufactures towing 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 the North America,American, European and we believe has beenAfrican markets, primarily servicing the aftermarket, automotive original equipment manufacturers (“automotive OEMs”) and automotive original equipment servicers (“automotive OESs”) (collectively, “OEs”), retail, e-commerce and industrial channels, supporting our customers generally through a leader in towingregional service 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 management team in recent years, including the operational improvement initiatives implemented in 2019-2020, which are continuously ongoing to support margin expansion;
•Our ability to continue to manage our liquidity, including continuing to service our debt obligations and comply with the applicable financial covenants thereto, especially given our recent debt refinancing and capital structure alignment to support business units; ourgrowth and the Company’s long-term strategic plan;
•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 or products that supplement existing product lines, add newrealign our geographic coverage or distribution channels and expand our geographic coverage; ourrealize desired operating efficiencies and product line or customer content penetration;
•Our ability to manage our cost structure more efficiently via global supply base management, internal sourcing and/or purchasing of materials, freight and logistics management, 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 liquidity and other economic and business uncertainties related to the COVID-19 pandemic that may result in future business disruption, including any mandated operating restrictions such as temporary facility closures.
If we are unable to do any of the foregoing successfully, our financial condition and results of operations could be materially and adversely impacted.
We experience some seasonalityHorizon Global reports its business in two operating segments: Horizon Americas and Horizon Europe-Africa. See Note 14, 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 the Company’s operating segments.
Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and are included in cost of sales in our business. Salescondensed consolidated statements of towing and trailering products in the northern hemisphere, where we generate the majority 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.
We reportoperations. Other shipping and handling expenses, associated with ourwhich primarily relate to Horizon Americas reportable segment’sAmericas’ distribution network, as an element ofare included in selling, general and administrative expenses in our condensed consolidated statements of income. As such, gross marginsoperations.
29


Supplemental Analysis and Segment Information
Non-GAAP Financial Measures
The Company’s management utilizes Adjusted EBITDA as the key measure of company and segment performance and for planning and forecasting purposes, as management believes this measure is most reflective of the Horizon Americas reportable segment mayoperational 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 U.S. GAAP and should not be considered an alternative to net income attributable to Horizon Global, which is the most directly comparable financial measure to thoseAdjusted EBITDA that is prepared in accordance with U.S. 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 (loss) 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, gains (losses) on debt extinguishment, impairment of our Horizon Europe-Africagoodwill and Horizon Asia-Pacific segments, which primarily relyother intangibles, non-cash stock compensation, certain product liability and litigation claims, acquisition and integration costs, gains (losses) on third-party distributors, for which allbusiness divestitures and other assets, debt issuance costs, are included in cost of sales.board transition support and non-cash unrealized foreign currency remeasurement costs.

Segment Information and Supplemental Analysis
The following table summarizes financial informationAdjusted EBITDA for our reportableoperating segments for the three months ended September 30, 2017 and 2016:2021:
Three Months Ended September 30, 2021
Horizon AmericasHorizon Europe-AfricaCorporateConsolidated
(dollars in thousands)
Net loss attributable to Horizon Global$(2,470)
Net loss attributable to noncontrolling interest(300)
Net loss$(2,770)
Interest expense6,970 
Income tax expense410 
Depreciation and amortization5,210 
EBITDA$14,050 $2,030 $(6,260)$9,820 
Net loss attributable to noncontrolling interest— 300 — 300 
Severance50 — — 50 
Restructuring, relocation and related business disruption costs60 30 10 100 
Non-cash stock compensation— — 880 880 
Loss on business divestitures and other assets300 10 10 320 
Debt issuance costs— 70 100 170 
Unrealized foreign currency remeasurement costs(10)950 400 1,340 
Adjusted EBITDA$14,450 $3,390 $(4,860)$12,980 






30

  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 informationAdjusted EBITDA for our reportableoperating segments for the ninethree months ended September 30, 20172020:
Three Months Ended September 30, 2020
Horizon AmericasHorizon Europe-AfricaCorporateConsolidated
(dollars in thousands)
Net income attributable to Horizon Global$1,930 
Net loss attributable to noncontrolling interest(340)
Net income$1,590 
Interest expense7,560 
Income tax expense100 
Depreciation and amortization5,620 
EBITDA$13,870 $7,490 $(6,490)$14,870 
Net loss attributable to noncontrolling interest— 340 — 340 
Severance— (170)— (170)
Restructuring, relocation and related business disruption costs250 (20)150 380 
Non-cash stock compensation— — 870 870 
Loss (gain) on business divestitures and other assets420 — (20)400 
Debt issuance costs— — 530 530 
Unrealized foreign currency remeasurement costs980 (1,580)(500)(1,100)
Adjusted EBITDA$15,520 $6,060 $(5,460)$16,120 
31

Segment Information
Financial information for our operating segments for the three months ended September 30, 2021 and 2016:2020 is as follows:
Three Months Ended September 30,ChangeConstant Currency Change
2021As a Percentage of Net Sales2020As a Percentage of Net Sales$%$%
(dollars in thousands)
Net Sales
Horizon Americas$115,850 58.9 %$119,140 59.1 %$(3,290)(2.8 %)$(3,290)(2.8 %)
Horizon Europe-Africa80,690 41.1 %82,490 40.9 %(1,800)(2.2 %)(2,930)(3.6 %)
Total$196,540 100.0 %$201,630 100.0 %$(5,090)(2.5 %)$(6,220)(3.1 %)
Gross Profit
Horizon Americas$29,310 25.3 %$32,960 27.7 %$(3,650)(11.1 %)$(3,800)(11.5 %)
Horizon Europe-Africa9,450 11.7 %10,410 12.6 %(960)(9.2 %)(930)(8.9 %)
Total$38,760 19.7 %$43,370 21.5 %$(4,610)(10.6 %)$(4,730)(10.9 %)
Selling, General and Administrative Expenses
Horizon Americas$16,910 14.6 %$19,780 16.6 %$(2,870)(14.5 %)$(2,970)(15.0 %)
Horizon Europe-Africa9,600 11.9 %7,960 9.6 %1,640 20.6 %1,460 18.3 %
Corporate5,920 N/A7,070 N/A(1,150)(16.3 %)(1,150)(16.3 %)
Total$32,430 16.5 %$34,810 17.3 %$(2,380)(6.8 %)$(2,660)(7.6 %)
Operating Profit (Loss)
Horizon Americas$12,400 10.7 %$13,170 11.1 %$(770)(5.8 %)$(830)(6.3 %)
Horizon Europe-Africa(150)(0.2)%2,440 3.0 %(2,590)(106.1 %)(2,390)(98.0 %)
Corporate(5,920)N/A(7,050)N/A1,130 16.0 %1,130 16.0 %
Total$6,330 3.2 %$8,560 4.2 %$(2,230)(26.1 %)$(2,090)(24.4 %)
Capital Expenditures
Horizon Americas$2,170 1.9 %$1,180 1.0 %$990 83.9 %$990 83.9 %
Horizon Europe-Africa2,620 3.2 %1,460 1.8 %1,160 79.5 %1,510 103.4 %
Corporate— N/A— N/A— — %— — %
Total$4,790 2.4 %$2,640 1.3 %$2,150 81.4 %$2,500 94.7 %
Depreciation of Property and Equipment and Amortization of Intangibles
Horizon Americas$1,990 1.7 %$2,100 1.8 %$(110)(5.2 %)$(110)(5.2 %)
Horizon Europe-Africa3,180 3.9 %3,470 4.2 %(290)(8.4 %)(340)(9.8 %)
Corporate40 N/A50 N/A(10)(20.0 %)(10)(20.0 %)
Total$5,210 2.7 %$5,620 2.8 %$(410)(7.3 %)$(460)(8.2 %)
Adjusted EBITDA
Horizon Americas$14,450 12.5 %$15,520 13.0 %$(1,070)(6.9 %)N/AN/A
Horizon Europe-Africa3,390 4.2 %6,060 7.3 %(2,670)(44.1 %)N/AN/A
Corporate(4,860)N/A(5,460)N/A600 11.0 %N/AN/A
Total$12,980 6.6 %$16,120 8.0 %$(3,140)(19.5 %)N/AN/A
32
  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 September 30, 20172021 Compared with Three Months Ended September 30, 20162020
Overall,Consolidated net sales increased approximately $88.4decreased $5.0 million, or 58.3%2.5%, to $240.1$196.5 million induring the three months ended September 30, 2017,2021, as compared with $151.7to $201.6 million induring the three months ended September 30, 2016. During2020. Net sales for Horizon Americas decreased $3.2 million, driven primarily by a decrease in sales volumes in the third quarter of 2017, netaftermarket, OE and retail sales within ourchannels, partially offset by pricing recovery initiatives driven by commodity and input cost increases. Net sales for Horizon Europe-Africa reportable segment increased $74.9decreased $1.8 million, driven primarily by a decrease in sales volumes in the aftermarket and automotive OEM sales channels, partially offset by higher sales volumes in the automotive OES and e-commerce sales channels. The decrease was also partially offset by pricing recovery initiatives driven by our fourth quarter 2016 acquisition of the Westfalia Group. Horizon Asia-Pacific reportable segment increased by $8.8 million attributable, in part, to a regional bolt-on acquisition in the quartercommodity 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.input cost increases and favorable currency translation.
Gross profit margin (gross profit as a percentage of net sales) approximated 24.3%was 19.7% and 28.0%21.5% during the three months ended September 30, 2021 and 2020, respectively. The decline in gross profit margin is primarily due to lower net sales in Horizon Americas and Horizon Europe-Africa as detailed above.
Selling, general and administrative (“SG&A”) expenses decreased $2.4 million, primarily attributable to $2.0 million lower personnel and other variable compensation costs combined across the Company.
Operating margin (operating profit (loss) as a percentage of net sales) was 3.2% and 4.2% during the three months ended September 30, 2021 and 2020, respectively. Operating profit decreased $2.3 million to $6.3 million during the three months ended September 30, 2021, from an operating profit of $8.6 million during the three months ended September 30, 2020. The decline in operating profit and operating margin were primarily due to the operational results detailed above.
Other (expense) income, net was $(1.7) million of expense during the three months ended September 30, 2021, as compared to $0.7 million of income during the three months ended September 30, 2020. The $2.4 million change is primarily attributable to $(1.4) million of foreign currency loss during the three months ended September 30, 2021 as compared to $1.1 million of foreign currency gain during the three months ended September 30, 2020.
Interest expense decreased $0.6 million to $7.0 million during the three months ended September 30, 2021, as compared to $7.6 million during the three months ended September 30, 2020, primarily as a result of the Company’s February 2021 refinancing, which resulted in a new term loan agreement and replaced the Company’s existing term loan agreement. The new term loan included a lower interest rate and removed paid-in-kind interest, resulting in lower interest expense for the three months ended September 30, 2017 and 2016, respectively. The overall decrease in gross profit margin is primarily the result of a shift in the concentration of net sales from our higher margin Horizon Americas reportable segment2021, as compared to our lower margin Horizon Europe-Africa reportable segment. Further negatively impacting gross profit margin 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 primarily as a result of higher sales volumes and productivity initiatives. Gross profit margin remained relatively flat in our Horizon Europe-Africa reportable segment.
Operating profit margin (operating profit as a percentage of net sales) approximated 5.5% and 4.4% in the three months ended September 30, 2017 and 2016, respectively. Operating profit increased approximately $6.7 million, or 100.5%2020. Refer to Note 8, Long-term Debt, in Part I, Item 1, “Notes to an operating profitCondensed Consolidated Financial Statements,” included within this Quarterly Report on Form 10-Q for additional information of $13.3 million in 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.
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.
Other expense, net increased approximately $0.3 million to $1.3 million in the three months ended September 30, 2017, as compared to $1.0 million in the three months ended September 30, 2016, primarily due to losses on financing transactions denominated in foreign currencies within certain of our Horizon Asia-Pacific locations.Company’s February 2021 refinancing.
The effective income tax rate for the three months ended September 30, 20172021 and 20162020 was (1.9)(17.4)% and 75.8%5.9%, respectively. The lowerincrease in tax expense and related impacts on the effective income tax rate infor the three months ended September 30, 20172021 is driven by a higher portion ofattributable to projected jurisdictional income earnedmix in jurisdictions not in a valuation allowance, coupled with lower statutory rates and the recognitionutilization limitations on usage of additionalU.S. tax credits recognizedattributes. The difference in the effective tax rate compared to the statutory tax rate for both periods is attributable to the valuation allowance recorded in the U.S. and several foreign jurisdictions, which resulted in no income tax benefit recognized for jurisdictional pretax losses, and therefore, are excluded from the estimated effective tax rate.
Net income(loss) from continuing operations increased approximately $6.2$4.4 million to $6.6$(2.8) million induring the three months ended September 30, 2017, from2021, compared to net income from continuing operations of $0.4$1.6 million induring the three months ended September 30, 2016.2020. The increasechange in net (loss) income from continuing operations was primarilyattributable to the result of a $6.7 million increase in operating profit driven by higher sales volumes and lower corporate expenses.operational results detailed above.
See below for a discussion of operating results by segment.
33

Horizon Americas.Americas
Net sales increased approximately $4.7by sales channel, in thousands, for Horizon Americas are as follows:
Three Months Ended September 30,Change
20212020$%
Net Sales
Aftermarket$35,390 $35,390 $— — %
Automotive OEM24,690 24,010 680 2.8 %
Automotive OES3,570 2,980 590 19.8 %
Retail26,460 34,290 (7,830)(22.8)%
E-commerce16,970 15,240 1,730 11.4 %
Industrial8,770 7,230 1,540 21.3 %
Total$115,850 $119,140 $(3,290)(2.8)%
Net sales decreased $3.2 million, or 4.3%2.8%, to $115.5$115.9 million in the three months ended September 30, 2017, as compared to $110.7 million in the three months ended September 30, 2016. Net sales increased in all of our market channels, except for our retail channel. Net sales in our automotive OE channel increased approximately $2.0 million, primarily due to increased volume of brake controllers and heavy duty products on existing programs. Net sales in our e-commerce channel increased approximately $1.2 million primarily due 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, net sales increased by approximately $0.6 million due to increased product availability and consumer demand for on-road trailers. Net sales were relatively flat 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 remainder of the change is a result of favorable currency exchange as the Brazilian real strengthened in relation to the U.S. dollar.
Horizon Americas’ gross profit increased approximately $0.6 million to $34.2 million, or 29.6% of net sales, induring the three months ended September 30, 2017, from approximately $33.62021, as compared to $119.1 million or 30.3% of net sales, induring the three months ended September 30, 2016.2020, primarily attributable to lower sales volumes in the aftermarket, OE and retail sales channels, as well as $1.3 million impact attributable to the Company’s sale of its Brazil business in the second quarter of 2021. The increasedecrease in net sales was partially offset by $13.0 million of pricing recovery initiatives implemented, primarily in the aftermarket, OE, retail and e-commerce sales channels, to recover increased material and input costs. The decrease was also partially offset by a $2.5 million decrease in sales returns and allowances.
Horizon Americas’ 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 $23.2decreased $3.7 million, or 20.1%11.1%, to $29.3 million, or 25.3% of net sales, induring the three months ended September 30, 2017,2021, as compared to $20.7$33.0 million, or 18.7%27.7% of net sales, induring the three months ended September 30, 2016.2020. The increase isdecrease in gross profit and gross profit margin reflects the changes in net sales detailed above, coupled with unfavorable cost performance, primarily dueattributable to unfavorable material, supply chain and other manufacturing input costs associated with a projectglobal macroeconomic factors.
SG&A decreased $2.9 million to optimize our$16.9 million, or 14.6% of net sales, during the three months ended September 30, 2021, as compared to $19.8 million, or 16.6% of net sales, during the three months ended September 30, 2020. The decrease in SG&A is primarily attributable to the following:
–$1.4 million lower distribution footprint, increasedcenter lease, operating and support costs; and
–$1.3 million lower personnel and other variable distribution costs, and higher legal costs associated with protecting our intellectual property.compensation costs.
Horizon Americas’ operating profit decreased approximately $2.0$0.8 million to $10.9$12.4 million, or 9.5%10.7% of net sales, induring the three months ended September 30, 2017,2021, as compared to $12.9$13.2 million, or 11.1% of net sales, during the three months ended September 30, 2020. Decreased operating profit and operating margin were primarily due to the operational results detailed above.
Horizon Americas’ Adjusted EBITDA decreased $1.0 million to $14.5 million during the three months ended September 30, 2021, as compared to Adjusted EBITDA of $15.5 million during the three months ended September 30, 2020. Adjusted EBITDA declined primarily due to the operational results detailed above.
34

Horizon Europe-Africa
Net sales by sales channel, in thousands, for Horizon Europe-Africa are as follows:
Three Months Ended September 30,Change
20212020$%
Net Sales
Aftermarket$22,400 $24,360 $(1,960)(8.0)%
Automotive OEM34,590 42,400 (7,810)(18.4)%
Automotive OES20,790 13,820 6,970 50.4 %
E-commerce1,950 630 1,320 209.5 %
Industrial480 550 (70)(12.7)%
Other480 730 (250)(34.2)%
Total$80,690 $82,490 $(1,800)(2.2)%
Net sales decreased $1.8 million, or 2.2%, to $80.7 million during the three months ended September 30, 2021, as compared to $82.5 million, during the three months ended September 30, 2020, primarily attributable to lower sales volumes in the aftermarket and automotive OEM sales channels, partially offset by higher sales volumes in the automotive OES and e-commerce sales channels. The decrease was also partially offset by $5.8 million of pricing recovery initiatives implemented, primarily in the OE sales channels, to recover increased material and input costs. The decrease was also partially offset by $1.1 million of favorable currency translation.
Horizon Europe-Africa’s gross profit decreased $0.9 million, or 9.2%, to $9.5 million, or 11.7% of net sales, induring 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 $74.92021, from $10.4 million, or 573.9%, to $88.0 million in12.6% of net sales, during the three months ended September 30, 2017, compared2020. The decrease in gross profit and gross profit margin reflects the changes in net sales detailed above, coupled with unfavorable cost performance, primarily attributable to $13.1unfavorable material, supply chain and other manufacturing input costs associated with global macroeconomic factors.
SG&A increased $1.6 million into $9.6 million, or 11.9% of net sales, during the three months ended September 30, 2016, primarily due2021, as compared 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$8.0 million, or 16.3%9.6% of net sales, induring the three months ended September 30, 2017, from approximately $2.12020. The increase in SG&A is primarily attributable to the following:
–$0.6 million increased allowance for doubtful accounts; and
–$0.5 million of higher personnel and other variable compensation costs.
Horizon Europe-Africa’s operating (loss) increased $2.6 million to an operating (loss) of $(0.2) million, or 16.3%(0.2)% of net sales, induring the three months ended September 30, 2016. The increase in gross2021, as compared to operating profit is attributable to the Westfalia Group acquisition.
Selling, general and administrative expenses increased approximately $9.7 million to $11.6of $2.4 million, or 13.2%3.0% of net sales, induring the three months ended September 30, 2017, as compared2020. The change in operating (loss) profit and operating margin were primarily due to $1.9the operational results detailed above.
Horizon Europe-Africa’s Adjusted EBITDA decreased $2.7 million or 14.6% of net sales, into $3.4 million during the three months ended September 30, 2016. The increase is primarily attributable2021, as compared to the aforementioned acquisition, which includes $2.0Adjusted EBITDA of $6.1 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 is2020. Adjusted EBITDA declined 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.operational results detailed above.
Horizon Asia-Pacific’s operating profit increased approximately $2.1 million to $5.9 million, or 16.0% of net sales, in the three months ended September 30, 2017, as compared to $3.8 million, or 13.4% of net sales, in the three months ended September 30, 2016, due to increased sales volumes and operational improvements, partially offset by acquisition costs.

Corporate Expenses
Corporate Expenses.Corporate expenses included in operating profit decreased approximately $4.0$1.2 million to $6.2$5.9 million in the three months ended September 30, 2017, as compared to $10.2 million induring the three months ended September 30, 2016.2021, as compared to $7.1 million during the three months ended September 30, 2020. The decrease is attributedwas primarily attributable to approximately $4.6the following:
–$1.2 million lower personnel and other variable compensation costs.
Corporate Adjusted EBITDA was $(4.9) million during the three months ended September 30, 2021, as compared to Adjusted EBITDA of lower costs associated with$(5.5) million during the acquisitionthree months ended September 30, 2020. The change in Adjusted EBITDA was primarily due to the operational results detailed above.
35

The following table summarizes Adjusted EBITDA for our operating segments for the nine months ended September 30, 2021:
Nine Months Ended September 30, 2021
Horizon AmericasHorizon Europe-AfricaCorporateConsolidated
(dollars in thousands)
Net loss attributable to Horizon Global$(15,990)
Net loss attributable to noncontrolling interest(970)
Net loss$(16,960)
Interest expense21,000 
Income tax expense2,810 
Depreciation and amortization15,930 
EBITDA$43,230 $10,860 $(31,310)$22,780 
Net loss attributable to noncontrolling interest— 970 — 970 
Severance50 — — 50 
Restructuring, relocation and related business disruption costs(780)50 (30)(760)
Loss on debt extinguishment— — 11,650 11,650 
Non-cash stock compensation— — 2,590 2,590 
Loss on business divestitures and other assets3,020 — 10 3,030 
Debt issuance costs— 70 290 360 
Unrealized foreign currency remeasurement costs260 1,900 820 2,980 
Adjusted EBITDA$45,780 $13,850 $(15,980)$43,650 

The following table summarizes Adjusted EBITDA for our operating segments for the nine months ended September 30, 2020:
Nine Months Ended September 30, 2020
Horizon AmericasHorizon Europe-AfricaCorporateConsolidated
(dollars in thousands)
Net loss attributable to Horizon Global$(31,150)
Net loss attributable to noncontrolling interest(1,010)
Net loss$(32,160)
Interest expense23,970 
Income tax expense170 
Depreciation and amortization16,150 
EBITDA$24,160 $3,150 $(19,180)$8,130 
Net loss attributable to noncontrolling interest— 1,010 — 1,010 
Loss from discontinued operations, net of tax— — 500 500 
Severance530 (150)(10)370 
Restructuring, relocation and related business disruption costs1,550 10 470 2,030 
Non-cash stock compensation— — 2,190 2,190 
Loss (gain) on business divestitures and other assets1,020 (180)20 860 
Product liability and litigation claims— 1,510 — 1,510 
Debt issuance costs— — 1,840 1,840 
Unrealized foreign currency remeasurement costs280 860 (490)650 
Adjusted EBITDA$27,540 $6,210 $(14,660)$19,090 
36

The following table summarizes financial information for our operating segments for the nine months ended September 30, 2021 and 2020:
Nine Months Ended September 30,ChangeConstant Currency Change
2021As a Percentage
of Net Sales		2020As a Percentage
of Net Sales		$%$%
(dollars in thousands)
Net Sales
Horizon Americas$354,060 57.3 %$285,630 58.8 %$68,430 24.0 %$68,880 24.1 %
Horizon Europe-Africa263,790 42.7 %199,740 41.2 %64,050 32.1 %48,090 24.1 %
Total$617,850 100.0 %$485,370 100.0 %$132,480 27.3 %$116,970 24.1 %
Gross Profit
Horizon Americas$93,660 26.5 %$70,720 24.8 %$22,940 32.4 %$22,650 32.0 %
Horizon Europe-Africa32,950 12.5 %16,950 8.5 %16,000 94.4 %14,250 84.1 %
Total$126,610 20.5 %$87,670 18.1 %$38,940 44.4 %$36,900 42.1 %
Selling, General and Administrative Expenses
Horizon Americas$52,660 14.9 %$51,400 18.0 %$1,260 2.5 %$1,150 2.2 %
Horizon Europe-Africa30,400 11.5 %22,980 11.5 %7,420 32.3 %5,530 24.1 %
Corporate19,110 N/A19,380 N/A(270)(1.4)%(270)(1.4)%
Total$102,170 16.5 %$93,760 19.3 %$8,410 9.0 %$6,410 6.8 %
Operating Profit (Loss)
Horizon Americas$41,000 11.6 %$19,330 6.8 %$21,670 112.1 %$21,490 111.2 %
Horizon Europe-Africa2,550 1.0 %(6,040)(3.0)%8,590 142.2 %8,700 144.0 %
Corporate(19,110)N/A(19,380)N/A270 1.4 %270 1.4 %
Total$24,440 4.0 %$(6,090)(1.3)%$30,530 501.3 %$30,460 500.2 %
Capital Expenditures
Horizon Americas$6,550 1.8 %$2,650 0.9 %$3,900 147.2 %$3,890 146.8 %
Horizon Europe-Africa8,180 3.1 %5,440 2.7 %2,740 50.4 %2,230 41.0 %
Corporate— N/A— N/A— — %— — %
Total$14,730 2.4 %$8,090 1.7 %$6,640 82.1 %$6,120 75.6 %
Depreciation of Property and Equipment and Amortization of Intangibles
Horizon Americas$5,680 1.6 %$6,300 2.2 %$(620)(9.8)%$(620)(9.8)%
Horizon Europe-Africa10,110 3.8 %9,690 4.9 %420 4.3 %(180)(1.9)%
Corporate140 N/A160 N/A(20)(12.5)%(20)(12.5)%
Total$15,930 2.6 %$16,150 3.3 %$(220)(1.4)%$(820)(5.1)%
Adjusted EBITDA
Horizon Americas$45,780 12.9 %$27,540 9.6 %$18,240 66.2 %N/AN/A
Horizon Europe-Africa13,850 5.3 %6,210 3.1 %7,640 123.0 %N/AN/A
Corporate(15,980)N/A(14,660)N/A(1,320)(9.0)%N/AN/A
Total$43,650 7.1 %$19,090 3.9 %$24,560 128.7 %N/AN/A
37

Results of the Westfalia Group which was partially offset by an increase in severance and restructuring related costs.Operations

Nine Months Ended September 30, 20172021 Compared with Nine Months Ended September 30, 20162020
Overall,Consolidated net sales increased approximately $231.4$132.5 million, or 49.7%27.3%, to $697.0$617.9 million during the nine months ended September 30, 2021, as compared to $485.4 million during the nine months ended September 30, 2020. The impact was driven by an increase in net sales in Horizon Americas and Horizon Europe-Africa primarily attributable to the impacts of economic uncertainty and business disruptions of the COVID-19 pandemic that impacted the Company, most significantly in the first and second quarters of 2020. Net sales for Horizon Americas increased $68.4 million, driven by increases in sales volumes as well as pricing recovery initiatives driven by commodity and input cost increases. Net sales for Horizon Europe-Africa increased $64.1 million, driven by increases in sales volumes as well as favorable currency translation.
Gross profit margin was 20.5% and 18.1% during the nine months ended September 30, 2021 and 2020, respectively. The improved gross profit margin is primarily due to higher net sales in Horizon Americas and Horizon Europe-Africa as detailed above, coupled with favorable net sales channel mix, as well as improved operating efficiency during the nine months ended September 30, 2021, as compared to nine months ended September 30, 2020, as a result of the impacts of the COVID-19 pandemic experienced during the nine months ended September 30, 2020.
SG&A increased $8.4 million primarily attributable to $5.8 million higher personnel and other variable compensation costs combined across the Company, driven primarily by temporary salary reductions in the U.S. and the Company’s participation in certain payroll reimbursement programs during the nine months ended September 30, 2020 in response to the impacts of the COVID-19 pandemic. Unfavorable currency translation in Horizon Europe-Africa of $1.9 million also contributed to the increase.
Operating margin was 4.0% and (1.3)% during the nine months ended September 30, 2021 and 2020, respectively. Operating profit improved $30.5 million to an operating profit of $24.4 million during the nine months ended September 30, 2021, from an operating (loss) of $(6.1) million during the nine months ended September 30, 2020. Improved operating profit and operating margin were primarily due to the operational results detailed above.
Other expense, net increased $4.5 million to $5.9 million during the nine months ended September 30, 2021, as compared to $1.4 million during the nine months ended September 30, 2020, primarily attributable to $2.4 million of higher foreign currency loss during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020. The increase was also due to the $2.2 million loss on the sale of the Company’s Brazil business completed during the second quarter of 2021. Refer to Note 4, Goodwill and Other Intangible Assets, in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” included within this Quarterly Report on Form 10-Q for additional information of the sale of the Company’s Brazil business.
Interest expense decreased $3.0 million to $21.0 million during the nine months ended September 30, 2021, as compared to $24.0 million during the nine months ended September 30, 2020, primarily as a result of the Company’s February 2021 refinancing, which resulted in a new term loan agreement and replaced the Company’s existing term loan agreement. The new term loan included a lower interest rate and removed paid-in-kind interest, resulting in lower interest expense for the nine months ended September 30, 2021. Additionally, as a result of the refinancing, the Company incurred an $11.7 million loss on debt extinguishment related to the termination of the existing term loan agreement during the nine months ended September 30, 2021. Refer to Note 8, Long-term Debt, in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” included within this Quarterly Report on Form 10-Q for additional information.
The effective income tax rate for the nine months ended September 30, 2021 and 2020 was (19.9)% and (0.5)%, respectively. The increase in tax expense and related impacts on the effective income tax rate for the nine months ended September 30, 2021 is attributable to projected jurisdictional income mix in jurisdictions not in a valuation allowance, coupled with utilization limitations on usage of U.S. tax attributes. The difference in the effective tax rate compared to the statutory tax rate for both periods is attributable to the valuation allowance recorded in the U.S. and several foreign jurisdictions, which resulted in no income tax benefit recognized for jurisdictional pretax losses, and therefore, are excluded from the estimated effective tax rate.
Net loss from continuing operations improved $14.7 million, to a net loss of $(17.0) million for the nine months ended September 30, 2017, as2021, compared with $465.6 million in the nine months ended September 30, 2016. During the first nine months of 2017, net sales in our Horizon Europe-Africa reportable segment increased $213.5 million primarily driven by our fourth quarter 2016 acquisition of the Westfalia Group. Net sales in our Horizon Asia-Pacific reportable segment increased $16.7 million due to a regional bolt-on acquisition 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.
Gross profit margin (gross profit as a percentageloss from continuing operations of sales) approximated 24.6% and 27.0% for the nine months ended September 30, 2017 and 2016, respectively. Gross profit margin increased across all of our reportable segments; however, an overall decline is the 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 segment as the consolidation of our manufacturing facilities that occurred in 2016 resulted in lower costs and cost savings in 2017, which more than offset the negative impacts of unfavorable commodity prices. An increase 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 increased primarily as a result of the acquisition of the Westfalia Group.
Operating profit margin (operating profit 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%, to $36.9$(31.7) million for the nine months ended September 30, 2017, compared2020. The improvement was attributable to $25.6 million forthe operational results detailed above.
Loss 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 the nine months ended September 30, 2016, as a result of an operating profit margin improvement across all of our reportable segments, 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, for2020, the nine months ended September 30, 2017, as 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.
The effective income tax rates for the nine months ended September 30, 2017 and 2016 were (25.7)% and 8.3%, respectively. The lower effective income tax rate in the nine months ended September 30, 2017 is driven by the recognitionremaining post-closing conditions of the income tax benefits associated with stock awards issued, the release of certain unrecognized tax positions, and the recognition of additional tax creditssale were completed, including a true up to net cash proceeds, 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 in income tax benefit of $4.3 million. Partially offsetting these increases were $4.1 million increase in interest expense and a $4.6 million loss on extinguishmentsale of debt due to a prepayment made on our Term B Loandiscontinued operations of $0.5 million, in the first quarter of 2017.accordance with Accounting Standards Codification 205-20, “Discontinued Operations”.
38

See below for a discussion of operating results by segment.
39

Horizon Americas.Americas
Net sales by sales channel, in thousands, for Horizon Americas are as follows:
Nine Months Ended September 30,Change
20212020$%
Net Sales
Aftermarket$107,640 $84,440 $23,200 27.5 %
Automotive OEM74,860 53,880 20,980 38.9 %
Automotive OES11,670 5,330 6,340 118.9 %
Retail81,650 80,690 960 1.2 %
E-commerce51,220 41,120 10,100 24.6 %
Industrial27,020 20,120 6,900 34.3 %
Other— 50 (50)N/A
Total$354,060 $285,630 $68,430 24.0 %
Net sales increased approximately $1.2$68.5 million, or 0.4%24.0%, to $351.4$354.1 million induring the nine months ended September 30, 2017,2021, as compared to $350.2$285.6 million induring the nine months ended September 30, 2016.2020, primarily attributable to higher sales volumes. The increased volumes are primarily attributable to the impacts of economic uncertainty and business disruptions of the COVID-19 pandemic that impacted the Company, most significantly in the first and second quarters of 2020. Net sales in our e-commerce channelalso 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$26.1 million due to pricing recovery initiatives implemented, primarily in the aftermarket, OE, retail and e-commerce sales channels, to recover increased volumes on existing programs with major customers,material and input costs. The increase was partially offset by higher volumesa $1.2 million increase in 2016 due to the launch of a new program with another major customer that did not reoccur. Partially offsetting these increases were decreases in our retailsales returns 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.allowances.
Horizon Americas’ gross profit increased approximately $3.5 million to $105.8$23.0 million, or 30.1%32.4%, to $93.7 million, or 26.5% of net sales, induring the nine months ended September 30, 2017,2021, as compared to $102.3$70.7 million, or 29.2%24.8% of net sales, induring the nine months ended September 30, 2016, Positively impacting2020. The increase in gross profit and gross profit margin was approximately $4.0 million of lowerreflects the changes in net sales detailed above, coupled with unfavorable cost performance, primarily attributable to unfavorable material, supply chain and other manufacturing input costs associated with the consolidation of Horizon Americas’ manufacturing facilities during 2016 that did not reoccur in 2017. 2017 also benefited from $2.6 million in cost savingsglobal macroeconomic factors.

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 and freight costs.
Selling, general and administrative expensesSG&A increased approximately $2.6$1.3 million to $66.8$52.7 million, or 19.0%14.9% of net sales induring the nine months ended September 30, 2017,2021, as compared to $64.2$51.4 million, or 18.3%18.0% of net sales, induring the nine months ended September 30, 2016.2020. The increase in SG&A was primarily attributable to the cost saving initiatives implemented by the Company and corresponding savings realized during the nine months ended September 30, 2020 in response to the impacts of the COVID-19 pandemic. As a result, the increase in SG&A is attributable to the following:
–$2.5 million higher personnel and other variable compensation costs, primarily dueas a result of temporary salary reductions in the U.S. and other compensation and benefit cost reductions in the second quarter of 2020 in response to higher distribution coststhe impacts of approximately $2.1the COVID-19 pandemic; partially offset by:
–$1.1 million along with higher legal costs associated with protecting our intellectual property.lower depreciation and amortization.
Horizon Americas’ operating profit increased approximately $3.2$21.7 million to $38.8$41.0 million, or 11.1%11.6% of net sales, induring the nine months ended September 30, 2017,2021, as compared to $35.6$19.3 million, or 10.2%6.8% of net sales, induring the nine months ended September 30, 2016. Operating2020. Improved operating profit and operating margin increasedwere primarily due to the favorable impact of approximately $4.9operational results detailed above.
Horizon Americas’ Adjusted EBITDA increased $18.3 million of lower costs associated with the consolidation of our manufacturing footprint and approximately $2.2to $45.8 million of lower expense related to the impairment 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 million, or 539.1%, to $253.1 million in the nine months ended September 30, 2017, as compared to $39.6 million in the nine months ended September 30, 2016, which is primarily due2021, as compared to the Westfalia Group acquisition. Net sales were negatively impacted by approximately $0.7Adjusted EBITDA of $27.5 million of unfavorable currency exchange as the British pound weakened in relation to the U.S. dollar.
Horizon Europe-Africa’s gross profit increased approximately $35.5 million to $42.1 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, induring the nine months ended September 30, 2016, driven2020. Adjusted EBITDA improved primarily due to operational results detailed above.
40

Horizon Europe-Africa
Net sales by the Westfalia Group acquisition.sales channel, in thousands, for Horizon Europe-Africa are as follows:
Selling, general and administrative expenses
Nine Months Ended September 30,Change
20212020$%
Net Sales
Aftermarket$70,950 $56,750 $14,200 25.0 %
Automotive OEM127,340 104,420 22,920 21.9 %
Automotive OES56,820 34,000 22,820 67.1 %
E-commerce5,340 1,290 4,050 314.0 %
Industrial1,660 1,210 450 37.2 %
Other1,680 2,070 (390)(18.8)%
Total$263,790 $199,740 $64,050 32.1 %
Net sales increased approximately $30.4 million to $36.1$64.1 million, or 14.3% of net sales, in the nine months ended September 30, 2017, as compared32.1%, to $5.7$263.8 million or 14.4% of net sales, in the nine months ended September 30, 2016. The increase is primarily attributable to the aforementioned acquisition, which includes $5.0 million of depreciation and amortization related to purchase accounting. Additionally, we incurred approximately $4.0 million 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 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% of net sales, in the nine months ended September 30, 2016, primarily attributable2021, as compared to the acquisition mentioned above.
Horizon Asia-Pacific.   Net sales increased approximately $16.7$199.7 million or 22.0%, to $92.5 million induring the nine months ended September 30, 2017, compared2020, primarily attributable to $75.8higher sales volumes. The increased volumes are primarily attributable to the impacts of economic uncertainty and business disruptions of the COVID-19 pandemic that impacted the Company, most significantly in the first and second quarters of 2020. Net sales also increased by $5.9 million due to pricing recovery initiatives implemented, primarily in the OE sales channels, to recover increased material and input costs. The increase was also partially attributable to $16.0 million of favorable currency translation.
Horizon Europe-Africa’s gross profit increased $16.0 million, or 94.4%, to $33.0 million, or 12.5% of net sales, during 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 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 $6.6 million to $23.62021, from $17.0 million, or 25.5%8.5% of net sales, induring the nine months ended September 30, 2017, from approximately $17.02020. The increase in gross profit margin reflects the changes in sales detailed above, coupled with unfavorable cost performance, primarily attributable to unfavorable material, supply chain and other manufacturing input costs associated with global macroeconomic factors.
SG&A increased $7.4 million to $30.4 million, or 22.4%11.5% of net sales induring 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 due2021, as compared to restructuring of operations completed in the second quarter of 2017.
Selling, general and administrative expenses increased approximately $2.2 million to $10.3$23.0 million, or 11.1%11.5% of net sales, induring the nine months ended September 30, 2017, as compared2020. The increase in SG&A was primarily attributable to $8.1 million, or 10.7% of net sales, inthe cost saving initiatives implemented by the Company and corresponding savings realized during the nine months ended September 30, 2016. The2020 in response to the impacts of the COVID-19 pandemic. As a result, the increase in selling, general and administrative expensesSG&A is primarily dueattributable to the timingfollowing:
–$2.2 million higher personnel and other variable compensation cost, partially as a result of marketingpayroll costs reimbursed in the prior year under terms of certain government payroll reimbursement programs;
–$1.3 million of higher outside professional fees and promotional spend, increased people costs in supportother administrative costs; and
–$1.9 million 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.translation.
Horizon Asia-Pacific’sEurope-Africa’s operating profit increased approximately $4.4$8.6 million to $13.2an operating profit of $2.6 million, or 14.3%1.0% of net sales induring the nine months ended September 30, 2017,2021, as compared to $8.8an operating (loss) of $(6.0) million, or 11.6%(3.0)% of net sales, induring the nine months ended September 30, 2016,2020. Improved operating profit (loss) and operating margin were primarily due to the operational results described above.
Horizon Europe-Africa’s Adjusted EBITDA increased volumes and operational improvements across$7.7 million to $13.9 million during the region.
Corporate Expenses.  Corporate expenses increased approximately $1.7 million to $21.2 million for the nine months ended September 30, 2017, from $19.52021, as compared to Adjusted EBITDA of $6.2 million for during the nine months ended September 30, 2016.2020. Adjusted EBITDA improved primarily due to operational results detailed above.
41

Corporate Expenses
Corporate expenses included in operating profit decreased $0.3 million to $19.1 million during the nine months ended September 30, 2021, as compared to $19.4 million during the nine months ended September 30, 2020. The increase between years isdecrease was primarily attributedattributable to an increase inthe following:
–$1.6 million lower costs incurred related to professional service 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 were partially offset by approximately $2.0 million of lowerother costs associated with new debt issuance, amendments, and modifications and related structure changes; partially offset by:
–$1.1 million higher personnel and other variable compensation costs, primarily as a result of temporary salary reductions in the acquisitionU.S. and other compensation and benefit cost reductions in the second quarter of 2020 in response to the impacts of the Westfalia Group.COVID-19 pandemic.
Corporate Adjusted EBITDA was $(16.0) million during the nine months ended September 30, 2021, as compared to Adjusted EBITDA of $(14.7) million during the nine months ended September 30, 2020. The change in Adjusted EBITDA was primarily due to the higher personnel and compensation costs described above.
42

Liquidity and Capital Resources
Our capital and working capital requirements are funded through a combination of cash on hand, 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 September 30, 20172021, and December 31, 2016, there was $14.22020, we had $10.4 million and $20.2$18.2 million, respectively, of cash and cash equivalents held at foreign subsidiaries. There may be country specific regulations, thatwhich may restrict or result in increased costs in the repatriation of these funds.
BasedIn 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. The Loan Agreement has subsequently been amended, as described below, to among other modifications, increase the maximum amount of credit available under the Revolving Credit Facility to $95.0 million. As of September 30, 2021, the Company had availability of $37.5 million under the Revolving Credit Facility and $7.0 million of cash and cash equivalents in the United States.
As of September 30, 2021 and December 31, 2020, total cash and availability was $54.9 million and $83.4 million, respectively. The Company defines cash and availability as cash and cash equivalents and amounts of cash accessible but undrawn from credit facilities.
During 2020, in response to the initial uncertain economic environment caused in part from the COVID-19 pandemic, the Company pursued funding from available government programs and other sources of liquidity designed to strengthen its balance sheet and enhance financial flexibility. These sources included short-term loans, some of which are forgivable if certain conditions are met as well as entering into or modifying other arrangements. A summary of these actions is described below.
In April 2020, Horizon Global Company LLC (the “U.S. Borrower”), a direct U.S.-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 U.S. Borrower, matures on our currentApril 18, 2022. Funds from the PPP Loan may be used for payroll, costs used to continue group health care benefits, rent and anticipated levelsutilities. Under the terms of operationsthe 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 conditionguidance issued by the Small Business Administration (the “SBA”), including the SBA’s Paycheck Protection Program’s Frequently Asked Questions. During 2020, the Company, in our marketsaccordance with the final guidance issued by the United States Department of the Treasury (the “Treasury”), met the need and industry,sized based criteria of the program.
As of September 30, 2021, the Company’s application of loan forgiveness of $7.1 million of the $8.7 million of funds originally received is subject to the SBA’s final determination of forgiveness, which we expect to receive in the fourth quarter of 2021, based on the review timelines once a borrower has submitted its application in accordance with the issued regulations. The potential loan forgiveness is determined, subject to limitations, based on the use of loan proceeds for payment of qualifying expenses over the 24 weeks after the loan proceeds were disbursed. The unforgiven portion of the loan has an interest rate of 1.0% per annum. In July 2021, the note was amended to make the unforgiven portion payable over five years on a monthly basis. The Company has deferred interest payments until the Company’s application for forgiveness is completed in accordance with the guidance issued by the SBA and Treasury and the terms of the Company’s PPP Loan. While we currently believe that our cash on hand, cash flow from operationsuse of the loan proceeds will meet the conditions for forgiveness of $7.1 million of our PPP Loan, there can be no assurance that forgiveness for any portion of the PPP Loan will be obtained.
In March 2020, Westfalia-Automotive GmbH (“Westfalia”), an indirect subsidiary of the Company, 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 availabilitypaid to employees affected by the business disruption and government mandated operating restrictions in place due to the COVID-19 pandemic 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. The Company was reimbursed $3.3 million for qualifying payroll costs under terms of the KUG for the twelve months ended December 31, 2020.

43

We believe the combination of these sources, as well as the changes to our ABL Facilitycapital structure following our recent refinancing activities, as fully summarized below, 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 used for and provided by operating activities was approximately $2.3 million during nine months ended September 30, 2017 compared to a source of approximately $27.5 million during the nine months ended September 30, 2016. 2021 and 2020 was $(30.6) million and $24.2 million, respectively.
During the nine months ended September 30, 2017,2021, the Company generated $47.9$24.5 million in cash flows, based on the reported net incomeloss of $16.4$(17.0) million and after considering the effects of non-cash items related to 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,intangible assets, loss on debt extinguishment, of debt, amortization of original issueissuance discount and debt issuance costs, deferred income taxes, non-cash compensation expense, paid-in-kind interest, and other, net. During the nine months ended September 30, 2016,2020, the Company generated $27.6$3.5 million in cash flows, based on the reported net incomeloss of $9.9$(31.7) million and after considering the effects of similar non-cash items.items previously described.
Changes in operating assets and liabilities used approximately $50.2$(55.2) million and $0.1sourced $20.7 million of cash during the nine months ended September 30, 20172021 and 2016,2020, respectively. Increases
Changes in accounts receivable resulted in a net use of cash of $28.4$(12.4) million and $8.3$(35.2) million during the nine months ended September 30, 20172021 and 2016,2020, respectively. The increase in accounts receivable for both periods is a result of the higher sales activity during the third quarter compared to the fourth quarter due to the seasonality of the business. The higher increasewas lower in accounts receivable for the nine months ended September 30, 20172021 as compared to the nine months ended September 30, 2016 is due to2020 primarily as a result of increased sales levels in 2017, which is partially attributable tocollections over the Westfalia acquisition.prior year.
Changes in inventory resulted in a use of cash of approximately $7.9$(52.7) million during the nine months ended September 30, 20172021 and a source of cash of approximately $19.9$30.1 million during the nine months ended September 30, 2016.2020. The increase in inventory during the nine months ended September 30, 2017 is2021 was due in part to recent macroeconomic factors, such as rising costs of raw materials, constraints on shipping container availability and port congestion leading to higher inventory costs and levels of in-transit inventory. The decrease in inventory during the nine months ended September 30, 2020 was due to efforts to maintain higher stock levels of our highest volume products on hand, as well as additionalimproved inventory built as safety stock in anticipation of projects being completed inmanagement coupled with an extended selling season during the fourth quarter in our Horizon Americas reportable segment. We also maintained lower levels of inventory in December 2016 in Horizon Americas in anticipation of the new ERP system going live. The inventory decline in 2016 is a result of the seasonality of our business.nine months ended September 30, 2020.
Changes in accounts payable and accrued liabilities resulted in a usesource of cash of approximately $17.4$11.8 million and $10.0$29.8 million during the nine months ended September 30, 20172021 and 2016,2020, respectively. The decrease in accounts payable and accrued liabilities duringlower source of cash for the nine months ended September 30, 2017 is primarily related2021 as compared 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 use of cash for nine months ended September 30, 20162020 is primarily relateddue to the timing of payments made to suppliers, mix of vendors and 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, 20172021 and 20162020 was approximately $39.0$(14.7) million and $9.9$(8.0) million, respectively.
During the third quarternine months ended September 30, 2021 and 2020, capital expenditures were $(14.7) million and $(8.1) million, respectively, and related to growth, capacity and productivity-related projects within Horizon Americas and Horizon Europe-Africa. The increase in capital expenditures is primarily due to the Company’s curtailment or retiming of 2017, we acquired the assets of Best Bars for total cash consideration of $19.8 million. In addition,certain projects during the nine months ended September 30, 2017, we invested approximately $20.3 million2020, in capital expenditures, as we have continued our investment in 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 dueresponse to the saleimpacts and business disruptions of assets in Romania. 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 resulting from the sale of assets in Brazil and South Africa.COVID-19 pandemic.
Cash Flows - Financing Activities
Net cash provided by financing activities was approximately $9.6$18.0 million and $0.2$17.9 million during the nine months ended September 30, 20172021 and 2016,2020, respectively.
During the nine months ended September 30, 2021 and 2020, net proceeds from the Revolving Credit Facility, net of issuance costs, were $20.7 million and $26.4 million, respectively. During the nine months ended September 30, 2017, we received proceeds of $121.1 million from the issuance of our Convertible Notes,2020, net of issuance costs; $79.9 million from the issuance of common stock, net of offering costs; $20.9 million from the issuance of Warrants; and our net borrowings from our ABL Facility totaled $20.0 million. We used cash of approximately $187.8 million for repayments on our 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. the Company’s former asset based lending facility totaled $(19.9) million.
During the nine months ended September 30, 2016, our2021, proceeds from the Company’s new term loan, net of issuance costs and related issuance of common stock warrants were $75.3 million and $16.3 million, respectively. During the nine months ended September 30, 2021, repayments of borrowings on Replacement Term Loan, as defined below, including transaction fees were $(94.9) million.
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Additionally, during the nine months ended September 30, 2020, proceeds from our ABL Facility totaled $6.8the PPP Loan were $8.7 million. We also used net cash amount of approximately $7.5 million for repayments on our Term B Loan.
Factoring Arrangements
We haveThe Company has factoring arrangements with financial institutions to sell certain accounts receivable under non-recourse agreements. Total receivables sold under the factoring arrangements was approximately $23.9 million as of September 30, 2017. The Company had no factoring arrangements forreceivable. During the nine months ended September 30, 2016.2021 and 2020, total receivables sold under certain non-recourse factoring arrangements was $225.1 million and $166.1 million, respectively. We utilize factoring arrangements as part of our financing for working capital.capital needs. The costs of participating in these arrangements are immaterial to our results. Refer to Note 3, Summary of Significant Accounting Policies, in Item 8, “Financial Statements and Supplementary Data,” included within our Annual Report on Form 10-K for the twelve months ended December 31, 2020, for additional information.
45

Our Debt and Other Commitments
We and certain of our subsidiaries are party to the ABLasset-based Revolving Credit Facility, an asset-based revolving credit facility, thatas defined and described above. The Revolving Credit Facility provides for $99.0$75.0 million of funding, which has been subsequently increased as described below, on a revolving basis, as well as a Term B Loan under which we borrowed an aggregate of $352.0 million. The ABL Facilitysubject to borrowing base availability, and matures in June 2020 and bears interest on outstanding balances at variable rates as outlined 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. The Convertible Notes mature on July 1, 2022 unless earlier converted in accordance with 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 million of the Term B Loan. Additionally, on March 31, 2017, we entered into 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 the Replacement Term Loan 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-Q for additional information.
13, 2023. As of September 30, 2017, approximately $20.02021, there was $44.9 million was outstanding on the ABLRevolving Credit Facility bearing interest at a weighted average rate of 3.2%5.3%.
In February 2021, the Company entered into a limited consent to the Loan Agreement governing its Revolving Credit Facility, that among other modifications, consented to the Company’s entering into the Senior Term Loan Credit Agreement, as defined and $151.6described below.
In April 2021, the Company entered into an amendment to the Loan Agreement governing its Revolving Credit Facility, that among other modifications, increased the maximum amount of credit available under the Revolving Credit Facility to $85.0 million. The amendment also increased sub-limits relating to the Company’s ability to borrow against in-transit inventory as well as inventory located in the Company’s Mexico facilities.
On September 17, 2021, the Company entered into an amendment to the Loan Agreement governing its Revolving Credit Facility, that among other modifications, increased the maximum amount of credit available under the Revolving Credit Facility to $95.0 million. The amendment also increased the Company’s ability to borrow against receivables and sub-limits relating to in-transit inventory and inventory located in the Company’s Mexico facilities. The increased borrowing capacity against receivables and inventory is effective through December 31, 2021.
In addition, the Company and certain of its subsidiaries, have been or are parties to other long-term credit agreements, including the Senior Term Loan Credit Agreement, as defined and described below. As of September 30, 2021, there was $100.0 million was outstanding on the Senior Term B Loan Credit Agreement bearing cash interest at 5.7%7.50%.
In February 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.
First Lien Term Loan Agreement and Second Lien Term Loan Agreement
In March 2019, the Company amended and restated the existing term loan agreement (the “First Lien Term Loan Agreement”) to permit the Company to, among other things, enter into the Second Lien Term Loan Agreement, as defined and described below.
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.
In May 2020, the Company entered into amendments, limited waivers and consents in connection with the Loan Agreement governing its Revolving Credit Facility, the First Lien Term Loan Agreement, and the Second Lien Term Loan Agreement, each 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, as defined and described above.
As a result of the Replacement Term Loan Amendment, as defined and described below, the outstanding balance and any accrued interest under the First Lien Term Loan Agreement and Second Lien Term Loan Agreement was replaced by the Replacement Term Loan, as defined and described below.
Replacement Term Loan
In July 2020, the Company entered into a limited consent to the Loan Agreement governing its Revolving Credit Facility and the Replacement Term Loan Amendment (the “Eleventh Term Amendment”) to amend the First Lien Term Loan Agreement and Second Lien Term Loan Agreement. The Eleventh Term Amendment provided replacement term loans (the “Replacement Term Loan”) 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.
In February 2021, the Company entered into the Senior Term Loan Credit Agreement, as defined and described below. The proceeds received from the initial borrowings under the Senior Term Loan Credit Agreement were used to repay in full all outstanding debt and accrued interest on the Company’s Replacement Term Loan. As a result of the repayment, the credit agreement governing the Company’s Replacement Term Loan was terminated and is no longer in effect.

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Senior Term Loan Credit Agreement
On February 2, 2021, the Company entered into a credit agreement (the “Senior Term Loan Credit Agreement”) with Atlantic Park Strategic Capital Fund, L.P. (“Atlantic Park”), as administrative agent and collateral agent, and the lenders party thereto (collectively, the “Lenders”). The Senior Term Loan Credit Agreement provides for an initial term loan facility in the aggregate principal amount of $100.0 million, all of which has been borrowed by the Company had $65.0and used to repay the Replacement Term Loan, as described above, and a delayed draw term loan facility in the aggregate principal amount of up to $125.0 million, which may be drawn by the Company in up to three separate borrowings through June 30, 2022. A ticking fee of 25 basis points per annum will accrue on the undrawn portion of the delayed draw term loan facility.
Interest on the Senior Term Loan Credit Agreement is payable in cash on a quarterly basis at the interest rate of LIBOR plus 7.50% per annum, subject to a 1.00% LIBOR floor. The Senior Term Loan Credit Agreement includes customary affirmative and negative covenants, including a maximum total net leverage ratio requirement tested quarterly, commencing with the fiscal quarter ending March 31, 2023, not to exceed: 6.50 to 1.00. The Senior Term Loan Credit Agreement also contains a financial covenant that stipulates the Company will not make capital expenditures exceeding $27.5 million during any fiscal year. To the extent that the amount of capital expenditures is less than $27.5 million in availabilityany fiscal year, up to 50% of the difference may be carried forward and used for capital expenditures in the immediately succeeding fiscal year.
Following a one-year no-call period, the Senior Term Loan Credit Agreement provides for a 2.5% call premium for years two through five and no premium thereafter. All outstanding borrowings under the ABL Facility asSenior Term Loan Credit Agreement mature on February 2, 2027.
All of September 30, 2017.the indebtedness under the Senior Term Loan Credit Agreement is and will be guaranteed by the Company’s existing and future United States, Canadian and Mexican subsidiaries and certain other foreign subsidiaries and is and will be secured by substantially all of the assets of the Company and such guarantors.
Covenant and Liquidity Matters
The agreementsLoan Agreement governing the ABLour Revolving Credit Facility and Term B Loan containcontains 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 minimum fixed charge coverage ratio of at least 1.00 to 1.00 on a trailing twelve-month basis, whichfinancial covenant that stipulates the Company will be tested only upon the occurrence of an event of default or certain other conditions as specified in the agreement. The Term B Loan contains customary negative covenants, and also contains a financial maintenance covenant which requires us to maintain a net leverage ratio not make capital expenditures exceeding 5.25 to 1.00 through the$30.0 million during any 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. 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.year.
We are subject to variable interest rates on our Senior Term B Loan Credit Agreement and ABLRevolving Credit Facility. At September 30, 2017,2021, 1-Month LIBOR and 3-Month LIBOR approximated 1.23%0.08% and 1.33%0.13%, respectively.
Principal payments required under the Term B Loan are $1.9 million due each calendar quarter,The Company is in compliance with the remaining principal due on maturity, Juneall of its financial covenants as of September 30, 2021. 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 term loans under the Term B Loan in an amount up to 50.0% of our excess cash flow for such fiscal year, as defined, subject to adjustments based on our leverage ratio and optional prepayments of term loans and certain other indebtedness.
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 yearnine months ended December 31, 2016.September 30, 2021 and 2020 was $10.7 million and $11.5 million, respectively. 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, “8, Long-term Debt”, and Note 9, 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 Senior Term Loan Agreement) is a comparable measure to how the Company assesses performance. As discussed further in the Segment Information and Supplemental Analysis section above, we use certain non-GAAP financial measures to assess performance and measure our covenant compliance in accordance with the Senior Term Loan Agreement, which includes Adjusted EBITDA at the operating segment level. For the measurement of our Senior Term Loan Agreement 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, offering of equity interests or any indebtedness, lender agent fees, and fees in connection with the maintenance and/or forgiveness of the PPP Loan, in aggregate, that can be excluded to $8 million in any cumulative four fiscal quarter period.
The leverage ratiosreconciliations of net income (loss) attributable to Horizon Global to EBITDA, EBITDA to Adjusted EBITDA and Adjusted EBITDA to Consolidated EBITDA are as follows:
Three Months Ended September 30,Nine Months Ended September 30,Last Twelve Months Ended September 30,
20212020Change20212020Change20212020Change
(dollars in thousands)(dollars in thousands)(dollars in thousands)
Net (loss) income attributable to Horizon Global$(2,470)$1,930 $(4,400)$(15,990)$(31,150)$15,160 $(21,400)$(62,730)$41,330 
Net loss attributable to noncontrolling interest(300)(340)40 (970)(1,010)40 (1,380)(1,410)30 
Net (loss) income$(2,770)$1,590 $(4,360)$(16,960)$(32,160)$15,200 $(22,780)$(64,140)$41,360 
Interest expense6,970 7,560 (590)21,000 23,970 (2,970)28,710 31,970 (3,260)
Income tax expense (benefit)410 100 310 2,810 170 2,640 1,060 (8,320)9,380 
Depreciation and amortization5,210 5,620 (410)15,930 16,150 (220)22,690 21,050 1,640 
EBITDA$9,820 $14,870 $(5,050)$22,780 $8,130 $14,650 $29,680 $(19,440)$49,120 
Net loss attributable to noncontrolling interest300 340 (40)970 1,010 (40)1,380 1,410 (30)
Loss from discontinued operations, net of tax— — — — 500 (500)— 500 (500)
EBITDA from continuing operations$10,120 $15,210 $(5,090)$23,750 $9,640 $14,110 $31,060 $(17,530)$48,590 
Adjustments pursuant to Senior Term Loan Agreement:
Losses on sale of receivables280 420 (140)780 960 (180)1,230 1,270 (40)
Debt extinguishment losses— — — 11,650 — 11,650 11,650 — 11,650 
Non-cash equity grant expenses880 870 10 2,590 2,190 400 3,400 2,520 880 
Other non-cash expenses or losses (gains)1,400 (1,080)2,480 5,320 670 4,650 3,840 (1,180)5,020 
Lender agent related professional fees, costs, and expenses(a)
30 — 30 130 380 (250)130 460 (330)
Non-recurring expenses or costs(b)
250 700 (450)(570)5,180 (5,750)(340)16,640 (16,980)
Non-cash losses (gains) on asset sales20 (10)30 30 80 (50)40 (70)110 
Other— 10 (10)(30)(10)(20)(40)480 (520)
Adjusted EBITDA$12,980 $16,120 $(3,140)$43,650 $19,090 $24,560 $50,970 $2,590 $48,380 
Non-recurring expense limitation(a)(b)
N/AN/AN/AN/AN/AN/AN/A(6,640)6,640 
Other— (10)10 30 10 20 40 (480)520 
Consolidated EBITDA$12,980 $16,110 $(3,130)$43,680 $19,100 $24,580 $51,010 $(4,530)$55,540 
(a) Fees, costs and expenses incurred in connection with any proposed asset sale, offering of March 31, 2017equity interests or any indebtedness, lender agent fees, and June 30, 2017 were calculated based upon the U.S. GAAP definition of debt for our previously disclosed Convertible Note issuance during the first quarter of 2017. Based on discussionsfees in connection with the administrative agent under our credit agreement,maintenance and/or forgiveness of the leverage ratio will be presented based on a U.S. GAAP exception outlinedPPP Loan are not to, in the credit agreement, which provides our investorsaggregate, exceed $8 million in adjustments in determining Consolidated EBITDA in any four fiscal quarter period.
(b) Non-recurring expenses or costs including restructuring, moving and lenders a clearer view of our total leverage position. Based upon this U.S. GAAP exception, our leverage ratio would have been 4.37x and 3.86x as of March 31, 2017 and June 30, 2017, respectively. The restated ratiosseverance are stillnot to, in compliance with our covenant level of 5.25x for each quarter.aggregate, exceed $10 million in adjustments in determining Consolidated EBITDA in any four fiscal quarter period.

Credit Rating
We 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 B1 for our $146 million ($352 million at time of rating, including 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 report on Form 10-Q. Moody’s also maintainedThe Company’s credit agreements do not require that we maintain 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 million at the time of the rating, including the $152 million add-on) senior secured term loan. Standard & Poor’s also maintained our B corporate credit rating and outlook as stable, while assigning a B- rating to our then proposed (at time of rating) Convertible Notes. If our credit ratings were to decline, our ability to access certain financial markets may become limited, our cost of borrowings may increase, the perception of us in the view of our customers, suppliers and security holders may worsen and as a result, we may be adversely affected.rating.
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Market Risk
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 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 volatility on our earnings. As 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. See Note 8, “Derivative Instruments,” included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” within this quarterly 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 impactaffect our business. Whileresults, including potential negative impacts of the U.S. and Asia-PacificCOVID-19 pandemic. The trend of customer orders in the economies impactingthat most significantly affect our demand remainhas been strong, including the United States and Europe. However, we have experienced rising pricing for certain raw materials, including steel, and while the Company endeavors to recover incremental input costs through pricing actions, the recoveries generally occur over time and are not guaranteed. In addition, recent macroeconomic factors, such as constraints on shipping container availability, port congestion and the European economy shows indicationsglobal microchip shortage have resulted in a delay of improvement, global economic sentiment remains cautious given continued geopolitical uncertainty and foreign currency volatility. Additionally, wereceiving raw materials by the Company or some of our OE customers, which has resulted in retiming some customer orders to future periods. We continue to evaluatemonitor these supply constraints and remain committed to fulfilling and delivering our customers’ orders driven by the tradestrong product demand we have experienced.
We also remain focused on maintaining liquidity to fund our operations, while considering future maturities in our capital structure, which have been addressed and tax policy discussions takingwill continue to be addressed as the Company continues to execute upon its business plan and operational improvement initiatives in 2021. These initiatives were put in place in Washington, D.C.to streamline and the impact the ultimate legislation could have onsimplify its operations and provide a roadmap to achieve our current operations. strategic priorities of margin expansion, liquidity management and organic business growth.
We believe the unique globalstrategic 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 weWe 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 present a long-term opportunity for us and provide leverage to see balanced growth in OE, aftermarket and retail businesses. That position and brand recognition allows us flexibility to bring our results of operations may be impacted by the closure and consolidation of customer warehousesproducts to market in the short term.
We attempt to mitigate challenging external factors by executing productivity projects across our businesses whichvarious channels that we believe will drive future margin expansion, including leveraging recent investments madeprovide us the ability to expandleverage our European manufacturingcurrent operational footprint globalto meet or exceed our 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.demands.
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 reportQuarterly Report on Form 10-Q.
Critical Accounting Policies
Our condensed consolidated financial statements are prepared in accordance with U.S. 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 yeartwelve months ended December 31, 2016.2020.
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 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 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 billion 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. 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 before 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.
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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’sU.S. Securities and Exchange Commission’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 September 30, 2017,2021, 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 September 30, 2017,2021, 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 September 30, 2021, that have materially affected, or are reasonably likely to materially affect, the Company’sits internal control over financial reporting.

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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 10,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
A discussion of our risk factors, which could materially affect our business, financial condition or future results, can be found in the section entitled “Risk Factors,” in our Annual Report on Form 10-K for the yeartwelve months ended December 31, 2016. The information below includes additional risks relating to our issuance of Convertible Notes and our transactions in Convertible Note Hedges and Warrants. The risks described below could materially affect 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 reduction of our net working capital.
The convertible note hedge and warrant transactions that we entered into in connection with the offering of the Convertible Senior Notes due 2022 may affect the value of the Convertible Notes and our common stock.
In connection with the offering of the Convertible Notes, we entered into convertible note hedge transactions with certain option counterparties.  The Convertible Note Hedges 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 case may be.  We also entered into warrant transactions with each option counterparty.  The Warrants could separately2020. There have a dilutive effect on our common stock to the extent that the market price per share of our common stock exceeds the strike price of the Warrants.  In connection with establishing its initial hedge of the Convertible Note Hedges 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 or the Convertible Notes at that time.  In addition, each option counterparty or an affiliate thereof may modify its hedge position by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Convertible Notes (and is likely to do so during any observation period related to a conversion of the Convertible Notes).  This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Convertible Notes.  In addition, if 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 affect the value of our common stock and the value of the Convertible Notes.
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 increasebeen no significant changes in our exposure will be correlated to the increaserisk factors disclosed 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.2020 Form 10-K.
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 otherNot applicable.

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 2017 were as follows:
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
  
__________________________
(a) On 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 repurchase up to 1.5 million shares of its common stock. The Share Repurchase Program expires 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*
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:November 4, 2021By:/s/ DAVID G. RICE
Date:October 31, 2017By:
David G. RiceDennis E. Richardville
Chief Financial Officer


Exhibits Index:
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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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