Horizon Global (HZN) 12 Aug 192019 Q2 Earnings call transcript

Good morning, everyone and welcome to Horizon Global's Second Quarter 2019 Conference Call. My name is Jamie, and I'll be your operator for today's call. All participants will be in a 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. If anyone has objections you may disconnect at any time.

to conference like to now would turn over the Mr. I Global's with firm. Lambert Tryka Investor IR, Jeff Horizon Relations Mr. Tryka, you may proceed.

call Thank you, Global webcast. conference Horizon welcome and and Jamie. Good second morning quarter everyone to XXXX

of are the Jamie well on announced website many is and Financial our our Carl On quarter Chief Relations in today Bizon, and the results. Horizon Pierson, morning, CEO this Earlier as available XXXX horizonglobal.com. new as President Investor Officer. second sites Global; of we section at release call This

the Turning X, to in on and and We've report performance, other Factors XX-Q risks statements Slide differ from Horizon our I'd company's to forward-looking These you Risk our like to in results reports future risks that annual today's views filings uncertainties to most the that other and statements recent which in Global's include quarterly statements. subject remind Form these constitute could and forward-looking XX-K, presentation cause described will Exchange uncertainties are disclosures Commission. actual on about our Securities and with Form the statements. materially

available section Today's presentation appendices horizonglobal.com. in of the release for press disclosures includes and disclosures. of Relations in our are reconciled website the to quarterly which Investor non-GAAP presentation are also GAAP both These at

Chief all that Carl would and With Executive over President being now I Officer like said, call Bizon. of our to turn to the Carl?

ongoing of historical our performance. call on return you Jeff update XXXX. to for levels the including provide This quarter all refine you, global our we morning operations, our on I'll to our to and will results second of Thank company our the and good operations morning, today. review efforts an

position. operational covering take appointed questions that, comments, our Pierson, to from After our performance financial we analysts. Jamie current through the Following recently CFO open will call the business and the of my will our us

the welcome to Allow formally to take moment a to me to Jamie me allow team. formally to --

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Turning to Slide X.

number progress second the of in quarter, we a made areas. During key

our bank explore As the To alternatives unit. have million. we sale address $XXX Asia this committed discussed, loan term financial business to an by retained decided to we reducing and Pacific our we first-lien previously investment commitment, review are potential to of various

have in of process number this interested and a engaged attracted are We parties.

to as and Americas Jamie right a automotive president place we an CFO, whom business the board To have experience. a on when provide for bring have our our Horizon Europe our business, both now team new we we deep Global. and With the will business COO Africa objectives, appropriate. update of in We new believe for further hired operational lead

flat prior start effectively the availability selling were to from quarter sales aftermarket Europe the the in consistent soft stock a season. improved operational year. as In prime the progress showed despite Americas,

the do post volumes by not in to customer operational driven Pacific that yet However, quarter reflect business improvement. The efficiencies. margins strong Asia continue

control corporate performed a but and Kansas costs aftermarket system to long SG&A is sales recognize opportunity operational. Americas, stock the the at the business in fully gross meaningful and new distribution continue margins more retrieval now and We In unit that term. over lies the growing automated City we center our well

labor and will gains provide on We racing enabling new on when orders system, to on delivering expect this time budget. and team the productivity, enhanced utilized, their fully efficiency in build customer

or ability to our the in well us The in lower season margins growth. second quarter ago. gross future the We're Americas a to make peak slightly in Americas the team's demand year compared confident for and position posted

As the the costs on while by we in input not often with consistent tariff-related our costs and The process high input that remain is resulting aligned. in easy end tariffs. competitive the to from to the price passing costs and balance were impact primarily offset continues not keep timing team environment. customers, Please Americas also mind pricing initiatives of increases is ever-evolving

Despite restructuring cost were to City This resulting year. operate over from was that was result the actions SG&A the the surrounding and past team decrease Kansas completed plan primarily previous able still distribution predecessor savings improvement footprint, Americas the expenses. our the of efforts than center its to more costing synergies

In is should improvements OE in sales and and were that volumes. show the adversely positive facility place, to by we costs as Gross Euro in offset leverage. Given operating impacted in high SG&A improvements results. partially restructuring efforts in result foundation any costs incremental aftermarket decreases begin volume margins in weak saw note, mix our the the business. previous Europe-Africa, impact of this improved the sales in the to now shift a On will the lower during due quarter input through

able margins efficiencies. the generate contributor Asia Pacific softer prior operating overall was to quarter to the in the solid Despite for team slightly gross the sales results our to quarter. remained a improvements for compared year, through

the to turn taking. and our initiatives next Let improvement are we steps me business now

our and expect direct and stand we alter might responsive that started recognize efforts the to over that Throughout we could might a where conditions we year path improved we changing to flexible When not that to us process, today. leading just remain we the be ago, turnaround that path. performance challenges

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continues, are moving the cost-cutting the journey customer enhancement. our enhancements beyond service to cost sales of and indirect and As we turnaround productivity evolves and

take We a and to are at what we strengthen actions relationships these customer relationships. look hard can taking our

Now stabilized working best product still and trailering in the are our supply best have market towing reassure operations, that to our customers the partner diligently the we have that are still and their we to we needs.

and their next and will We specific improvement continue to emerging and business emphasize to customers in our improving want your address goals results. financial phase of unit innovations their technologies initiatives, implement move to I and that invest of that develop continue respective and measurable leaders for products, end-users. business demands teams into the our our we the as

focus of our refine we is business. the operation of effective, singular profitable plans, our team these and As the efficient

overarching focus our is the Similar improve efforts unnecessary of European theme core our unwind our to our and the complexity simplify for all of efforts and across business, our businesses. to unprofitable all to operations

continue and our As we are challenges operating we to said on renew our efforts. focus convinced in we have ultimately business these remain consistently, fixable refine that and the turnaround

phase our growth we will in fundamentally more next the embark business the confident term. are global initiatives, of for with higher potential we that is longer on profitable the establish that a improvement we and As business stronger

Slide If will the we results. take financials segment us to X, through turn and now Jamie

Thanks, Carl everyone. good and morning,

X weeks get I take share started, want been is Before I an this organization. to of everyone at proud part simply for with such blown having to a here it have pride finish, point, been honor I are. or what distribute be only why no frontline which build are by care It's and that they and sell. engineer, and the the the they as products revered away the design, in as employees brands in wonder

as not. mean should. that doesn't performing are we that Now Obviously we we're

name with you some what actually as two me short just absolutely build. have you've This back of call We earlier need conference call foundation Jamie With operator. the swagger operator the conference we the which ago. get go Jamie like not said read. named the to already a to on preamble we did the way perform And numerical years for the Jamie. of just out what let to Carl on the However, CFO, that be by unfortunate step also an is and Pierson, rendition way, of probably

that this through mind. go you As just keep in

We the $XXX.X Page the quarter. to X the due of reported decreased million the sales sales consolidated XXXX. of reported X.X%. And quarter second $XXX.X basis, aftermarket primarily second compared consolidated in $X.X On XXXX. from primarily in million of million million the decrease to a was only the net was walk results of foreign for $X I'll quarter impacts, unfavorable lower presentation. company's constant down million of decrease sales through related currency net or This when you currency outside $XX.X translation. volumes currency to second net

comparable of $X.X of an we in XX.X operating to consolidated In prior profit year results, million loss period. of terms the operating reported an million, operating compared

quarter last and the Our period XXXX included million to of same operating profit $XX.X adjustments year. as second million $X $X.X in compared

and adjustments fees, in other operating $XX.X covered year comprised adjustments driven apex and XQ other activities. adjusted segment, savings non-recurring professional disposition to on of prior by million was year $X.X period SG&A our of in collection related mark comparable The compared restructuring primarily we've consisted previous other This $XX.X in partially million impact goodwill these a mix bank sales $XX.X million and Accounting termination debt charge $X.X the our The expenses a the offset that of another impairment decline million of costs for by primarily issuance million quarter's expenses The mainly and XXXX lower to margins, transaction Europe-Africa was support from of realized that profit costs. QX supporting items, of XXXX. in for volumes. were calls. sales million prior $X.X

net million, retail compared were period. turn to talk flat and a offset the These lower Now $X.X able million of in America lower can was $X.X the the on segment of we're million with achieve decreases same restructuring we segment X, unit when e-commerce the compared savings which essentially offset segment The XXXX. net $XX.X an to all than almost to $XXX,XXX increases Page combined in year and driven $X.X second million some respectively decline declined the was channel to mentioned performance. sales in is Net The OE higher and The increased the mostly the operating revenue sales, reported $X.X along offset industrial if XXXX. which by of segments, in by volumes. by period in to comparable were related the price Lower mainly prior Americas efforts. related aftermarket by prior I about SG&A sales year you margin basis. million impact quarter partially reported profit mix previously

the margin. The for was On content segment declined primarily company's $X.X And like X%. basis, gross revenue million to business decrease mix channel was currency a translation. XQ unfavorable the primarily related Americas, the majority in of to XXXX. million vast unfavorably currency a net a in shift The of driven by the sales principal only Europe-Africa related decrease in impacted $X.X quarter non-core decrease divestiture

in SG&A the lower restructuring second comparable operating previously activities million fundamental during the adjusted mentioned, a basis, down the content The margin was profit the reported compared sales for well. the period of The reported unfavorable shipment impacted their by currency lower initiated expense prior-year of during which primarily adjusting XXXX. to XXXX $X reported was resulting from And Europe-Africa the million quarter, $X.X gross quarter $X.X items period. translation segment the Pacific OE offset mostly on decreased segment an the from in during After of a net year this currency the I for lower result However, decrease. volumes comparable Asia as channel. net decrease when sales X.X% million,

improvements efficiency The savings operational initiatives. other net sales by cost decrease was offset and

XXXX. loss a quarter quarter. from was of the XX.X% the from margin of result, to improved operating and As in XXXX adjusted XX.X% sales operating second net mitigated $XXX,XXX down actually only this Conversely, was

time segment X. operating now on continued some strong As has margins. been case the for related moving apex to segment the And performance the from on Page balance the very to sheet deliver items operating

and lien $XXX.X to $XX.X $XXX.X this second of the at On addition an basis, at the other million at loan million from the second local of borrowings $XX end facilities of debt offset quarter. less increase year. by in million million end increase $XX a increased our Debt the $XXX.X million ABL. the on year, The million term and gross end of total this credit was our quarter the outstanding approximately reflects our of

Turning compared higher made This to increased to second to the the closing the It a when after increase end lien was DSO the and million $XX.X earlier quarter working year. driven of $XXX.X as in raise due past the year. of capital. payable payments million in by debt the end reduction we accounts some ketchup at

of was which availability end $X.X end our second liquidity year. ABL total under on and from of at the million Our was the includes the the which million, borrowing cash hand the down $XX.X quarter,

to And me close Carl, now it over few back let with before a turning thoughts.

my to honor. the taken frontline wear visiting away am say has After pride they salvo proudly brands that I that clear what of facilities, badge blown company's me a have start how it employees as by to Let become of repeating me company's they do. the the with a in opening larger couple the

is we're recent actually we've at no to but we that that at the performing past. secret only in of that It capable levels are not Secondarily, the levels performed not

Which if most will be will not a to not not know of turnarounds linear and not to reckoned you a a -- turn do will our it it's and in not say you force trajectory. to with and a this nature journey a And As a are journey absolutely battleship dime. it's industry. do on all of follow of this is stair-step almost is a the that also smooth nice but and line more is be -- be say company battleship

to locking team Finally, we do. say be forward can look thanks. them honored I'm and this a let with of me what part arms to seeing and

the for call With that, comments. turn closing to I'll his Carl back over

Thanks, Jeremy.

Slide and and brands the recognize on focused Despite to in remain long and Since control the setting year, the order is ahead us areas market to We the significant growth. team. of stage our we our in X. confident business our strategic start business, our intensely we Turning our at I the difficult accomplish conditions underlying goals. the for of have term CEO, made and challenging became progress work products team our transforming we can in managing

are We have of operating and return enhancing profitability. to historic our business, work effort simplified efficiency. company restructured removed we eliminate diligently complexity our turnaround productivity These our and costs and We the core reduce levels efforts our to of multi-year operations waste. at as to

as with aligned team Our team is goal. one one

stakeholders. overcome team We and in for and place with necessary actions term long deliver past leadership have the to of determination success all our right drive the

can I that questions will now we Operator? turn take so the our the call operator from covering analysts. over to

FBR. Please Nichols today first B.Riley from Instructions] go your Josh question. [Operator ahead question from Our comes with

my Thanks the welcome to Jamie. taking question. team, And for

-- the to about sales for Could actual Asia operating little Americas whole another the the that see quarter different and across ask in XQ trends bit XQ Pacific. the and company? in increase a seeing as the to is profit good in you're what key holding business the strong talk the you for want then given segments Just a

actually strong OE. especially aftermarket year-to-date, that the little holding the the the hell in retail which probably of softer and we're segments that So and A say in been side Europe-Africa in Asia performing as in the have areas. America well I'd place the the strong mainly equation, bit in is

but passed And mentioned ask wanted of along? the going the Could it's there's you help the you could be sure that's before you -- could but tariffs. lag term come tariffs near that you to the up new know much kind then to And about talk I I the impact? company how quantify -- I'm to a us that on

The I our we've negligible. I very piece it's Josh. already very very, incremental has coming tariffs, not impact of majority new at -- is the XX% business. wouldn't through through. or of actually say all, meaningful small it's come affected the would on a So had vast that The

inventory was bump a for Right. I I that working you little I I number going the was And that that then Could flow can but about quarter-over-quarter. the a year. up of expecting Perfect. trends and guess to remainder for -- bit impact saw the decrease there see expectations cash you little bit capital? How to talk the is

think tend season we I with inventory aware of expectations. our beginning to to Josh, at build you're align the the

we level ensure end the we we the at season inventory and will exit of what the believe time main unfolds, quarter As that correct third inventory we the constantly season ultimately fourth. an to our the have levels into appropriate selling by the back

to would So be course aligned of that next quarters. ordinary the expect in I the of couple

If I could add.

of least number tell actually on But to right by end in the of digging a we're that get year. we now. and drive getting confident going aggregate early start can that what the in too DSO I I'm If holistic you balance at down, we've number you we amount been feel root there apart fair basis as the the slide clip got say as is more see that of probably that what it's the a that the a to as DSO sheet on can a year-to-year where you're Slide is talk about shows on working off the I'd working piece, that cash what company's up. to on it's capital basis to -- cause it's just highest Shows a it capital the into and that history. going increased be X. will point is. Josh, the

Asia too talk But you since a expect alternatives sale potential I something or next the the you could business. about for detail much that that strategic And how it's think last little question At be if about Thanks. Is the you could in don't stage Pacific bit process? along it provide then that it to far you me, and early quarter? of undergoing. least, in are is the up wrapped

we've we I will it's update has think mentioned before, as off. Josh, kicked provide an process when The appropriate.

We of normal a community follow is interest that transaction that its parties attracted high-quality business that update and the appropriate. of number It an we'll business expect in number interested -- when obviously elements we have of from business. the and course community a has will a provide

then the are really is, me of But operating constant what's to great as the improving. the on And kind regarding for APAC provide continue, see currency and decrease basis last what's you for more And Great. little X% the that expected could region? business on info the question I that? a in sales margins update driving actually bit a to

through the It of through impact new market. new cycles shown vehicle pleasing. are has clear line number history bottom-line way which but Zealand and its and business gone strength result. business really to term leveraging sales That key strong team And Obviously, its top is that is has there of quite is has always underlying exposure there our of to deliver short a motor always recent one been profitability for to key the operations to a see. That positions that New of retains market performance. gets our operating its is the to Again, business sales. conditions, and environmental Australia in both seasonality, but softening vehicle is down everyone a -- towing

I think copying if some issue. add, I can of is it Josh, And a

best As that one ever has the Zealand markets of XXXX New had. probably was volume

quarter been was it's XXXX of of from think soft, second this XXXX, you the that of may second that XXXX it the second have so if So quarter not going Easter not second to this it XXXX add case was. about And was as of issue, April in of all the strong was was to in quarter XXXX. year fell that which a holiday Australia, in just which quarter

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in hop I'll that back guys. makes sense. queue, the Thanks

Josh. Thanks,

further Thank this questions. to like Carl At I'd you. Mr. conference the back call no to turn we time have over Bizon.

all to you I you. And today. you again Thank the Thank forward on call soon. speaking look with to

to Horizon three Global, third behalf today to of and for forward months. look like would I our joining quarter On us your joining we in on you conference us thank call

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