HZN - Earnings call transcript Q2 2021

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Operator

Good morning, everyone and welcome to Horizon Global’s Second Quarter 2021 Conference Call. My name is Nick, and I’ll be your operator for today’s call. All participants will be in listen-only mode until we reach the question-and-answer session of the conference call. This call is being recorded at the request of Horizon Global. Anyone object, you may disconnect at any time. introduce to like now Mr. I’d Lambert Jeff firm. Global’s Relations Horizon Tryka with Investor IR, Mr. Tryka, proceed. you now may

Jeff Tryka

operator. morning you, XXXX Thank Good conference second Horizon call quarter Global’s and webcast. and welcome to

Global’s our well today is many Terry of Richardville, call Relations available at Global’s Officer. our on we Financial as news Investor this Chief Officer; section results. second the On quarter Horizon Gohl, Horizon XXXX in and horizonglobal.com. Chief the are website Dennis morning, announced as Earlier sites Executive The release

X, to disclosures. Investor press the which Turning to in also These of disclosures today’s on horizonglobal.com. quarterly slide presentation the Relations include section are release our GAAP both available non-GAAP and of presentation, reconciled our to are at appendices website

I statements and would could you which our materially statements. X, actual will include constitute remind to are the results in forward-looking risks to uncertainties statements about These presentation subject slide Horizon future that views like to forward-looking that to Global’s performance, our from today’s Turning cause differ statements.

filings Exchange described and all like reports disclosures Officer, Annual the said, uncertainties other risk Chief and Gohl. most factors company’s turn and the to and that call I’d in Executive on Terry risks have XX-Q other Form Horizon the Form Securities Global’s XX-K, Report these on Commission. in quarterly to With our We would with being recent over Terry?

Terry Gohl

and only who employees we today’s our a quarter those and these appreciate and on are second as will dedication. Thank On one. we in being XXXX. To work hard the are today long-term present I joining possible all team, presented results and to of you is the support my extremely for of take To today, participating value Horizon Global yet and laser-focused proudly you, Jeff results Global message that achievements the great Be and simple and proud company your sincerely Dennis through management welcome of growth to remain sustainable the to your behalf call. you shareholders, complete the of Horizon come many call creation. pride our

of team. extremely our are We proud

those earnings we to the apply call management you the the six over will this see always and team past we For that business to the the quarters, a it. been have conducted recognize state quarter who following by as theme of

no at business task the As today our completed, for terms trajectory position describe to look the stepping and than we is results of better in the future achieved theme there up.

and year the to this During do continues this up so. stepped team quarter and second has throughout

of variants. overarching of Horizon regardless up constraints material This was team drastically COVID-XX the to typhoons challenges risk the quarter ports short outpaced were and what again not increasing commodity We due opportunities they around slip. challenges supply, to world There demand as weather the fees stepped its freight of in restricted and were. and the the and emerging on to new flooding on many rail continued and didn't. congestion The overcome, driven availability pricing, met

addition the of Costello and Donna and her making financial We brings Donna tremendous already our with impact. experience huge strengthen our to is structure a to continue governance Board. operational

team. to fortunate our very are to her We welcome

emissions, energy We our continue our with to related in initiatives metrics. advance also improvements and ESG COX consumption social

improvement margins XXXX. Our we execute initiatives and generating in as continue higher significantly results XXXX to growing operational late reflect defined business our

shows. has and stepped it team up Our

X. page to Turning

of highest million adjusted Our second in its quarter level trailing years. XX-month $XX.X EBITDA reached

metric to this see the following As continued the XXXX. since emerged on has we accelerate impacted periods you from COVID page will of

and phases. launch would on our you we improvement early defined As recall, that initiatives we

our we implemented, plan. distribution first our operational operations during activities manufacturing and Americas important initiatives concentrated of the improvement global our were multiple year While initially in

in environmental we these of to XXXXX by manufacturing work forward the and I months not metric impacted systems fixing are incident of as XXX-plus results the produced, are America we effectiveness optimize a as on sites, initiatives for in of XXXXX comparables, We the to a units of throughout generating the few XX% that which number a improvements to six our results. our Reynosa we and this been produced our units have rate reduction our of defect represents at team. are and or North square performance These improvement per non-COVID a are our per XX% part beyond A our for cost on production manufacturing of absolutely yeah, gain ISO and which few the The production we processes completed methods, foot metrics, first transformation health in safety it to solid from North processes a foundational scrap XX% at units the the generate in XX% ISO deployed. systems, and most the and upon in capitalizing for XXXX, case strength produced supportive safety our pleased has during in measure continue many year extraordinary product improved XXXXX to designs, initiatives moving track year, improvement XX% for great in recent are of our workflows rate a our this systems. metrics produced other full for two certification customer Americas improvement. margin relative and hour facility; audits are PPMs XXXX, continue reduction production further and and per the controls. also our XXXX employee American produced total that's all quality Reynosa VDA but year customer achievements these robustness total period It's rate Phase plants of ISO full we report normalized consider systems production. operations in to shows optimize Metals highlight units only achieved earned Based surpassed to audits

to Turning page X.

On XX-month million. can the $XX.X quarter the As history of you see quarters. our seven of over EBITDA this in metric was two rate this past change chart the trailing referenced already, XXXX

These actions the up trailing place first meaningful in actual EBITDA immediately trajectory. as business. only a at are our upon through This periods, well another results start and building of team in margins, performance as the well. improvements stepping went up not XXXX generate be quarter shutdown significant put adjusted substantially adjusted great but was team continue to team change across work. period-over-period EBITDA, effectively the executed stepping while to us chart continuing to XX-month to the The lead terms in the drive COVID-XX of reflects one as aspects to all acted of continuous high-impact and aggressively and Our of improvement

completed in presented X in our your Turning you We is the to X to we won't review past, X. these first in the are reference. and important of detail, slide and have turnaround reminder as was year seeing the today. a of but the actions this them as XXXX, Slide fundamental it include that led presented full have for believe the results to work

continues actions completed underway the here remain been beyond few road follows. are of are As of a we the as and move some the X, our We highlighting for increase. to on we year-to-date initiatives as points velocity Significant multiyear planned have and or Page number with a improvement plan. to initiatives key map XXXX

and Africa our in We are now capacity continue our and Europe same facilities doing American to the across facilities. increase

vertical availability, We solidify quarter. improve streamlining Brazilian the integration And operations select quality our to material opportunities operations. base our the increased of with component initiated continued in our and a divestiture successfully and and operations strategy manufacturing to strategically alignment of as to capabilities during global costs. result throughout supply our increased and manage We our we

chain logistics will for and remain of further a As primary and the supply we the look solutions and to forward optimization remainder innovation. year beyond, focus

of be value. will portfolio regional of globalizing terms customer and We in certain elements where accretive our offerings

of planning integrated will deploying well. ERP state-of-the-art enterprise with inclusive We business systems systems as resource systems management warehouse be

as and to of and A We XXX% significant work has advance forward e-commerce and for will initiatives move XXXX, in as on planning we platform also XXXX XXXX. occurred through plan amount already development these testing our success. we

objectives shareholder will of assess acquisitions, where and our partnerships alliances, creation execute to the long-term to strategic and advance We value. beneficial or accelerate

to ability beyond. multifaceted based X. quarter upon net years. initiatives the executing and scheduled three the present XXXX success a EBITDA highly Page all that we confident Turn and last new at are we transformation of In demonstrated comparison business levels, We for in the at and have complex manage initiatives over adjusted all to the left, of sales the chart second historical and

material, supply navigating $XXX.X margin team three X.X% EBITDA corresponding environment quarter and and best million did headwinds. years. these to logistics result. measures second $XX million challenging great this net EBITDA to for XXXX job quarter, reflects sales of a the for despite Our a increased the over the last of performance Adjusted The chain adjusted generate

the half. show both to the comparisons, chart adjusted you sales chart, view the an left, this period. to periods this dramatic more see prior and through Only levels, improvements first against net a it Comparing even comparison. we half quarter at at when June first January first we the On as the EBITDA half look second on same for can comparison associated three-year against looking

XXXX. XXX.X% adjusted million period of of of over performance Our year whopping XXXX EBITDA $XX.X and a first entire comparable half the surpassed the in in XXXX improved the

adjusted and as demonstrated trajectory at and performance margin have We progress on the EBITDA quarter X.X%. both versus net to margin sales increased good the year-to-date X.X% second

excellent outperformed quarter quarter-to-quarter trajectory first, well. as an second The the here

to Page XX. Turning

distribution the We channel the our of by half for are sales XXXX. presenting net of first

and same in retail the was period Please a intentional to XXXX, half our partially gains cargo year viewed we we exit to beneficial the the This in company. that portion percentage as the and a channel that During total XXXX, retail decline our e-commerce down last the recall as worked the over customers offset underperforming. during of tie of portfolio, first non-core of and with experienced by aftermarket which same we strategic, period. in

dollar increased Our versus each of of XXXX. value the net comparable versus absolute the period half the the in XXXX, channel XXXX retail during comparable and in with first sales in exception in period

from trajectory each core the XXXX quarter by continue market of through new share. the supported of positive of the retail, quarter second customers in XX of channels. This sales gain American products With fourth XXXX, the was exception our North for our of addition we successful to

Page to this of to XX. on our distribution Turning efficiency. impact focus illustrate we chart, the On continue

of box Edgerton on the to per of Our our metric the have listed June them XXXX contributed the improvement $XX.XX multitude of gross year-over-year actions to improvement steady out XX.X% some in represented unit the with of Central center A distribution a sales right. in this Americas.

producing more which production a increased of increased Reynosa higher-value We our by we're with products. capacities are more. and mix sales supported favorable have these generated been products, selling plants for has

We continue to to optimize programs. our and order minimum freight quantities relative contracts

We incremental was optimization continue year. rationalization, during This pricing XXXX this and note been in to initiatives America to across third the an SKU seen in beginning of unit be drive is that Please pricing half positively impacted through late price the first market. response realized in XXXX. has of increase our initiative being with North per sales dollars the the and in commodity quarter implemented impact by to

Sales Turning XX. to controllers for brake our remain extremely customers in strong America. hitches with Page North and

are lines. for yielding higher product enabling improvements operational more and both Our product sales

chart sold to hitch year units comparable see prior our periods. the left, On you'll the versus

XX.X% XXXX XXXX. example, an period second the up comparable sales unit were quarter from As in in the

not impacted COVID a the from XXXX period, improvements expect onetime is occurrence. this would we While

For of dramatic There comparing increase the we quarter in as fourth XX.X%. a example, was XXXX, had when well. period XXXX to comparable the

road comparable American XXXX XXXX incremental in for note a To XXX.X%. as up map target to story right, the with experienced our we So refine sales and continue in sales period unit units. impact add you continuing OEM Fourth we here the period comparing chip deploying has improvement brake and as well. second quarter were product in isolated we shortages build increased is will is XXXX, of XX.X% XXXX. production in When Europe the the volumes aftermarket impact and been brake lines is This we year-over-year. are are support important Africa sales the during to same controller demand our can was a periods. not great there the quarter impacted North to bolstered controller presented a the products. the channels capacity market COVID the growth content in strong to operational the comparable This these shutdown even increase for for and It on and to compared story Similarly XXXX unit that period-over-period see XXXX. to quarter dramatic to similar by experienced in periods for over very

holding as June by increase June. The XX. end the in over is This market represents sales Turning $XX.X XXXX. are This American to June XXXX figure considering the XX.X% Page gross sales XX% up evidenced gross million booked XX.X% company exiting million quarter remained orders North that a over are strong first XXXX, or XXXX over XXXX. the and quarter impressive of June for up second $XX.X of

we record book levels. to are our order at selling more, while So continues hold

Our market it it walk Dennis update for in of initiatives now it our I'll and away. our financial turn you Dennis, some take strong. to through and position remained to go-forward before objectives. the returning over

Dennis Richardville

everyone morning, you Good Terry. you, Thank thank us. joining and for

$XX an volumes also counterbalance, from of have and the prices Gross compared disruption last meaningful rising be XXXX, well and attributable increase a XXXX. Improved second it was to improvement global the million net XXXX. million, was as global sales to XXXX, commodity XX.X%, XXXX pleased most in and as second mix, quarter realized our and comparative of net operational an to the compared results cost. our operating We in quarter are efficiencies to Due $XX.X to the made XXXX. from that of segments. mentioned. Americas review were higher intervening chain EBITDA discussing with coupled second to As pandemic second the improvement. quarter gross and will the The XXXX of economy. Please XX, logistics due increased improvement basis the quarter profit extraordinary or point such the and XXXX, industry primarily our as for XXX the consolidated the XXXX of EBITDA Adjusted this quarter to Americas business sales turnaround of compared basis previously represents profit improvement Europe-Africa of increased we company's quarter with steel, the global impacts the sales turn cost, period the savings believe a results during of mentioned, second quarter the rising of of as of primarily a related headwinds comparison to second margin in Terry economics for is X.X%, results. for the impacted initiatives. of material higher the financial as the logistics and million, EBITDA increased XXXX. performance sales to pricing second Despite as our sales, the Slide of $XX.X for macroeconomic representative primarily quarter adjusted million Consolidated quarter as view commodity to implemented, XX.X% margin the X.X% relating We to second of both reported volumes Net years, for of supply pandemic. as we to increased compared of COVID-XX result the increase which freight primarily second $XXX.X despite initiatives status second adjusted points the quarter increased over XXX of margin provides two to the

increased in net XX, The turn volume than performance increase sales let's Now attributable Transitioning net volumes XXXX. in million, margin and or to second Net increase or $XX.X $X.X quarter quarter Slide e-commerce the performance. was compared quarter $X.X increase million were The to of margin review driven aftermarket mentioned margin automotive respectively, represents increased $XXX.X of XX.X% the for channels. the $X.X XX.X%, second $XX Adjusted represents the driven million segment X.X% quarter for increase to mix support increased EBITDA improvement. $XX.X of for XXXX, second and to the higher driven Adjusted million, million, for to in the which EBITDA the sales sales Adjusted the second sales million, the by offset the million OES volumes a for due XX.X% as of $X.X to net by and net compared improved our higher of and and higher cost. increase which other operating a quarter. were for $XX.X million as the compared segment, XX% to net net $X.X in Americas higher sales by initiatives. the The margin partially XXXX. a million to quarter previously was segment and in million XXXX, second to million over gross which of Europe-Africa the XX.X% million mix quarter was increase of channel Adjusted for compared gross to The improved primarily and was channels, X.X%, sales second segment primarily as of a the was sales was EBITDA sales by increase combined XXXX. improvement. XXXX. $XX.X net an as is and $XX.X pricing operating performance, EBITDA aftermarket the variable sales sales XX.X% of OEM

cash liquidity $XX.X quarter on capital Moving an on capital, the to million of represented of increase of million, XXXX, working million in which decrease Slide to XXXX, and the XXXX. our compared flow, $XXX net leverage Freight a second to the fourth second working of quarter free quarter compared ratio XX. was and $XX.X of

from a second the days, to quarter was for profitability million liquidity, to management. of of continued increase totaled as compared compared credit $XX which increase the of by rising and million. second XXXX $XX.X address quarter Inventories and the $XX.X XXXX, which management to by sales the the or net outstanding million fourth of and of payable quarter quarter XX the second fourth days XX million, two XXXX. orders $XX $XX.X one of of sales the was Accounts on-hand macroeconomic Specifically, factors decrease to $XX.X supply inventory sales the receivables the and inventory to build $XX a decreased second use by to the $XXX.X quarter driven quarter XXXX. compared flow working over an second improved Free quarter was from mentioned increase such days of over quarter an quarter and in improved an driven a volume of over of macroeconomic million XXXX, a million day quarter million the planned sales. of net and our the momentum, million, Cash $X.X of of as second XXXX. payables of more collections days, compared was second the decrease was Days costs on-hand XXXX. Days comprised to fourth XXXX, constraints. million fourth a decrease of Day improved in was $XXX.X increase of above. offset second and XX increased the of due inventory of of reflects of management chain Inventories inventory of $XX.X of of second as XXXX. driven to increased purchasing days days increased $XX.X million, XX, under second improvement to over the commodity and increased availability an million million, of XXXX, practices, quarter quarter cash of of to XXXX, $X.X one to fourth XXXX, the XXXX, and was compared on-hand decreased despite to XXXX, from compared to address XXXX, than million, $XXX.X capital cash day availability the the quarter global XXXX booked quarter and six million, $XX.X coupled of and higher increase end XX facilities with quarter significant This a factors, at quarter fourth the of compared

XXXX. X.X our to times of the term For leverage our for agreement, the on X.X as XX-month ratio fourth trailing quarter the a second net improved quarter and as times of compared defined loan in computed to XXXX, credit basis, presentation

of $XXX of approximately Slide XX structure debt gross the review and to debt a is increase previously we term payoff second well In at quarter of the our term borrowings quarter fourth additional to business completed the XXXX, and to Total coupled loan address North as support capital Turning These liquidity, of our prior to first completed share proceeds, quarter increased of our credit increased $XXX mentioned attributable million million to the XXXX. current needs the and growth, $XX to capital by loan, by million demand during ABL increased American higher primarily from refinancing $XX end XXXX. growth. our working our as certain support the our maturities. compared million market an our of amendment million, $XX to for debt ABL working availability needs This which balance and from maximum to measures capital supplements. inventory increased to facility with

momentum we will comments. XXXX, on turn capital his management. Terry second to and earnings growth focus the over closing of we turn that, to for it continue As With back half our working and maintain I liquidity to

Terry Gohl

Thank job. Great you, Dennis.

to EBITDA consolidated We net XX. trajectory step net financial our and initiatives, we've on Page to next we margins in opportunities, sales less the ratio our goals. follows. that in Turning established greater times. And page, operation the for define achieve than are this above and have objectives of to Consolidated us, we improvement XX%, expansive along of at performance, X.X Combining achieve leverage them. our our $X off with driven billion us as in introduction highlighted front a than

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we and improvements objective of made achieve management, overriding manufacturing, theme distribution our have continue supply plan to optimization. to our financial third overhead and significant the is logistics The in portfolio with

can we year would we region this you as along in see further North during expect, As on are one. America and focused

and chart While you can completed, adjusted That work thus we to in first far margin as Americas XXXX performance of half significant each of see of with X.X% to it and on point our first more we have focus. threshold set prior area improved XXX work been a half said, from as from consolidated as had a page. depictions, we opportunities improvement pie the double-digit being to captured great basis a XXXX there great the actions performance be completed XX.X%, the mentioned the of the EBITDA has progress deal remains the the towards of

Africa, January North year embraced deployment. a this transformation lean this significant we've as in that proven is has with teams and in the Europe positive America have with the Momentum transformation For initiative in and operational recognized building taken already earnest of plan place begun and success.

just Africa's While early of the stages XX are X.X% more with XXXX, of and Europe the to in initiative half points by we much has adjusted in to EBITDA basis margin first this follow. improved

plan. halfway XX, page our are on two closing in through of So year we

across that with the track metric on by board. performance plan our improvements are as We evidenced

and continue to manage logistics significant with and We have associated economics headwinds chain supply material along with challenges constraints. weathered

a drive We meaningful a with team change to talented organization. have built each across the leaders experience of of wealth

efforts business our with and advancements. towards recognized operational to awards servicing being is customers future in technological excellence collaboration Our commitment new

markets. that you. of expansion options. accelerate both questions. increase to adjacent growth back inorganic and our including We while our And intend assessing turn broader for strategically target or defining We view accessory organic are now our options it operator to I'll expand the and to opportunities share profitable growth Thank market through to existing any into “fixed expanding focus” a

Terry Gohl

which and number following: I'll Nick, products; our Thanks the one, market number of track we two, share close number our aspects is all is and a our business. and with launching four, number growing; market we plan, improve of on finally, to are set growing; remain numbers plan is developing three, to record new our

speaking to us with Our Thank our quarter today very and you again sales are who you look our Thank and we with are up third results. to forward much. all profits joined you up.

Operator

now presentation. is you attending Thank today's concluded. conference The for

You may disconnect. now

Horizon Global (HZN) 6 Aug 212021 Q2 Earnings call transcript