Horizon Global (HZN) 12 Nov 192019 Q3 Earnings call transcript

Good morning, and welcome to Horizon Global's Third Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions].

I would now like to turn the conference over to Jeff Tryka, Investor Relations. Please go ahead.

operator. you, Thank welcome and and third XXXX quarter Good to call webcast. conference morning, our

call C. Global's On Horizon are Horizon today the John Officer. Financial of and Pierson, Terry Global's Officer; Chief Global's Kennedy, Directors; Gohl, Executive Horizon Chief Jamie our Board of Chairman

this announced website Investor the quarter Relations of our our Earlier horizonglobal.com. XXXX is release in This morning, well many on as we at available new third results. sites as section

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

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

being that Horizon the call Global's now said, over of all like With to Kennedy. C. Board would I to John? turn Chair, John

context and the some to call lead formally to provide Gohl why Terry able new the to join Jeff. be CEO happy team. Thanks, I'm introduce Terry we Horizon our to of chose

large fully acquisition, of which had of Americas, in the in in had XXXX, substantial repeatedly saw company a of board Europeanic underperformed unsuccessful integrate bounds mass a the appointed new great market challenges was a early the efforts to debt amount When expectations. operational we

felt way Pacific the the knew needed do we was a rapidly of business. to decrease to Asia sale this best we and We that

great management on brought us team absolutely and this tirelessly process an result. Our worked sale

and management the oversight the maintained company. process, board sale the the operations strong over During of

of perform the required business operational this execute back reduced these APAC was just to to pace identified few operational our order to operations we strong significantly their to debt capability. to were sale Many get at but faster continuing years in business a Horizon leadership initiatives a The full but where data-driven needed it our ago. initiatives improvement

profitability The operational CEO Gohl can he of same the at do board excellence proven identified Global. Terry Horizon a a Horizon of and we and significant culture restoring of turnaround leader the that another confident capable at creating served as Global. successful Terry are and operational as in

in excellence for this in of what our Terry's him, I and in which and he Terry's passion priorities are has for operational will clear. turn believe operates the to turnaround deep already the Terry work need. dug accelerate From change. the travelling exactly our driving tirelessly speed stakeholders. his of employees, maximize shareholders, in business with we long-term benefit value of He and all is

XXXX. As optimistic show the progress on fixable our tell about all Terry identified through are you, ability to issues are these and will significant of we

that to intro, to welcome over I call the will you. with Terry, Horizon. turn now

the positive I've that thanks and its kind customers honored very and for and entrusted lead the of Horizon to to has reception John also everyone, morning Good employees support women and received the my thus Global far. that our for introduction. gratitude suppliers the to the like express company men Board to to I'm X,XXX sincere our truly me into I that and would future.

fully implement to organizing our become executed while of destiny already, some we've to clear. only are We own Even for all. that. and for company relative you the the days, XX though been them available about to this we Thank here magnitude these opportunities on control majority I've of opportunities and planning have

Early yielding results. actions are

We plans aggressive have begun. dug our Improvement American We for of operations each in site all onsite aspects identified seven our of business. manufacturing Europe. the has and our North reviews past we've been conducted have work had as an into of at sites schedule weeks and most

Let’s walk and sale our debt critical points segment the through with and been to state progress and debt bringing several the direction highlighting to amendments down of American Europe of promote has subsequent further business Pacific Asia goal accomplished the of our The business. covenants. providing North runway the in

on making us squarely production is improvement of business. the keys and to increasing flow is the allowing now growth for our the Cost across cash focus opportunities to capture while demand that new generating Europe capacity leader improving our the overall for operations, we as good seeing our improving progress. performance balancing operations see The is region. business our improvements and are

disappointing. American North performance remains

While the certain have in assessments improvement. fresh eye more place identified for and progress, elements our were of strategy are others in areas many

Some of there as follows. these examples

recent the Marine, fully in inventory in of inventory season and secured. slow impacting weather, impacted to have internal timing deficiencies Pricing ability for actions our the the benefit however, of initiatives, we've have the adjustments been customer performance our availability recognize reduction implemented, RVs pricing

since has middle assessment immediately management has work and our plans that upgraded day operational cost has been improvement the some started the operations sales. increased core reviewed method upon and plans throughput day almost our We on day. three been manufacturing Reno's deployed, know my We start excellence and operations

significantly equipment capacity Past two have has to and orders refurbishment. lean and increased been principles driven down

for and by the upcoming initiated with this insourcing A the plan of year. target We roadmap the have the outsource will actions reversing completing comprehensive location throughout been continuous it implemented improvement also of year. the be end in has developed

continues will relative and shipping are deployment. that believe penalties improvement. performance issues permanent fees present driving we identification improving [true] action and address to opportunities Would the to defined corrective effectiveness while for now and center these Distribution cost continuous aggressively

respect improvement in we well for identified our With supply strategy have overall as chain management, to opportunities execution. as purchasing

plan area a in importance prime base remains the company is the complete being to the addressed accordingly. being and Maximizing and effectiveness continuous results. While generating fluid, executed is this roadmap is is improvement our TPD

for table and have inventory competitors. due the at did products not the We our in improved items lost demand in our of stock right are right shape revised openings will right Reno's on taking that locations. to performance operational and left planning the We in of improvements the sales result inability time orders certain sustain and right to the inventory processes performance.

to show being responses Favorable week and are at customers reinforced I actions from that initial those our last met appreciated. recognized CEMA us

inefficient We model touch with points many routes in inefficient too have resulting and waste. an logistics

transportation modes freight network We the are deploy it. to our to currently support and working optimize

to working inefficient, forward. business to beginning has as improvement place contract freight we been our of or have in are that The practices favorable ineffective, our is Operational negotiations both. some team hard improvements have procedures, in we and will also actions. going in cases we factor into lock improvements and operational identified result performance what and Relative a

Standardization and structure. improvement have which this more will leaner initiatives organization a area and begun lead cost to significantly in affective yet

We functions are structured are properly on detailed ensure SG&A our and a our we to level efficient to performance competitiveness. and cost examining improve effective and

provide do this of one we to stop will do shop that to and with taken share Many we actions us. our We our value. forward. move as and considerable products the customers presenting our customers We view continue in so capability have

Our cases properly not some value our relationships we proposition valued believe beneficial is recognized. that with customers needs in to or be and mutually

increasingly are as would growing asking say to the difficult. fair this prove for expanding to We profitability lightly do we more the road provide our not market our on we a share and return be focused topline value back but

topline will but We service of products ensure continuously our review our at improving not the expense with our bottom-line alignment performance. of and our to objective

With further that around for the comments it comments. I'll for back some at important to and over turn end his Jamie come

for events. XXXX thank the that the to CEO paying morning are it and on million good us. stage to company you And its in debt of fact goes next joining saying into quarter trust over From over the that several APAC $XXX Terry. transformational third million a new to a lead the that selling hiring everyone journey. to $XXX for Thanks, that appreciates I of

do annual early [indiscernible] $XX service ended of the is highest trivialize save which the to side, in this million over These lose with quarter want transformation fact XXXX. the not are debt since level of forecasting liquidity over and I in million that we or sight $XX

remind jumping before reported to-date back going like that what be excluding and And to will APAC about APAC into we on and America's everyone forward. results all we're and on to result period usually review will want basis. directly, do, ops only has I forma for I would i.e. Europe-Africa exhibited discontinued focus Said pro our

now I get let's that, try it. that we'll to With

currency constant $XX.X unfavorable impacts, quarter On million basis, third the million $XXX.X has reported $X.X million of reported in moving million X.X%. sale of or XXXX, down sales currency consolidated decreased $XXX a XQ'XX. For net million, $XX.X from translation net of from we

impacts XQ'XX aftermarket Africa, by business XQ'XX $X.X lower partially primarily and the After XQ'XX. in million Japanese rates related its just net adjusting Europe for compared removing currency these volumes decreased decrease from business to is related in sales divestiture X.X%. increased core to XQ'XX non-automotive of the by fill to and transaction OE offset volumes

compared an an million to we million reported $XX.X a $XX.X million which $XX.X $X.X $XX.X included adjusted million loss which impairment basis, is charge. of million loss in lower we've EBITDA XQ'XX income/loss, On XQ'XX. than operating an operating of goodwill operating terms In as a reported of loss

tariffs sales lower by as the year-over-year mentioned, mix continued in margin and basis. volumes in other versus XXXX. in products the driven sales pressure on higher And from words primarily previously was operational decline period a sales margins, lower costs The impact in cost other and comparable

in lower the million due than Americas Moving in Net non-OE million were $XX.X as to volumes our to from channels. which sales the primarily $XX.X shipping XQ'XX consolidated lower results segments. the individual is

Our $XX.X aftermarket, a OEM million, volumes of $X.X channels decline inversely, respectively $XX.X the and [indiscernible] lower volumes million the retailer industrial, XQ'XX, $X million up compared million were which in million, drove to decrease. $XX.X or and a were slightly

efforts which in combined reported segment hold decrease in margin cost decline million million inefficiencies mix operating adjusted driven discussed, late all manufacturing years related mainly the take lower last impacts The cost material This by to year. tariffs a is restructuring a the offset and $XX.X partially pressures began and that savings I with to the previously $XX.X by SG&A prior related $XXX,XXX XQ'XX. other was revenue in sales, reported America EBITDA, than in which

Moving constant to by to on Europe hampered net On sales sales net a million an the but million XQ'XX in $XX.X Africa increased by X.X%. by translation. unfavorable to $X segment basis, million currency to or compared currency Europe, be continued $X.X increased

primarily the the $X.X related the company's of million of $X.X XQ'XX. million decrease volumes year-over-year business impacts divestiture sales a OE by to higher to offset This partially in increase on increase related is based a in related non-automotive

reported the commercial but Americas were by to the margin benefit liability results Like OEM channel impacted mix a from shift unfavorably million settlement of the our by $X.X favorably claim segment, made related customers. products impacted growth a one potential

important to quarter as general selling during benefit relative and incurred that expense EBITDA However, impact XXXX and and on adjusted the originally of we've last initiated to [purpose]. under the we there same expense is no restructuring headwinds same when experienced note from some excluded Lower it's we've excluding year. the activity administrative the quarter resulting the the we're offset defined in

compared and Europe adjusted loss previously I've sales an increase $XXX,XXX attributable volumes of higher that in Africa to to was the SG&A XQ'XX. reported This $XXX,XXX a an mentioned. $XX,XXX EBITDA decreased of

comparable XQ'XX, million segment $X.X as to on at of $XXX.X capital balance And increase working our refinancing million XQ'XX. represented the XQ'XX results which July has the on an remained which sheet. caught Since to our increase compared versus few from of periods. past XXXX relatively of million to an a capital Working the up compared end moving totaled $X.X flat payables, and we

comparable days, one million was prior a outstanding the million the by comparable sales accounts days, eight prior outstanding from from prior Day decreased a period. that million $X.X days comparable Specifically, our period. $XXX.X of increase and an $XX.X year with XXX of to a inventory prior day year receivable to period. XX from Inventory days from increased $XX.X period decrease

decreased payable $XX.X $XX.X outstanding XX prior five decreased by comparable with days compared when payable, accounts million period. the Ending day's days to million to and it to

a APAC at $XXX.X million the end gross to recent Turning of management liquidity a million $XXX which decreased and XQ'XX pay on lien by loan efforts and out to XQ'XX down outstanding. capitalization, of the result $XXX.X our leverage of included end $XXX.X liquidity, a term a at in of the at million million from $XXX first massive as debt as transaction the million the

first second we our by addition sizeable million in decreased a on Also offset included quarter fills, year-over-year loan a balance a again the in placed of of basis. this reduction lien by $XXX All over leverage ABL term the year.

million the availability XQ'XX, As highest comprised hand and facility cash totaled level million. XXXX. it of end our for liquidity, on $XX.X is of was our of ABL since $XX.X at early This million under liquidity $XX.X which at

take a low funding still and my I now. about think share on we're the hit of a I and and talk this all to they let and forward back you light in items so only is the sometimes second basis. I'll cadence, to every were in points like Horizon, make tune our we even earnings few a quarter generally the Now, that points breath, you high a grounded guys certain Since with go are call few meaningful hear

another forward our Terry's the of by would liquidity balance sheet with XXX expectations. part for appointment we X) are deliver over stand and rates, one my associated back in and No○ even So, end their million trust no to pleased and one. service results. areas one looking exceeded in the months The we without to coming to further their fill focus. ado, win a field Thus recent and With as The quarters our APAC and ability attributable renewed to mean XX is million additional I commitment business. on customers our X) us. point X)

ultimately and efficiency, But one we're this And back exciting step, customer couple blows finally, of on roads that body XXXX an the be know my in a accountability off of for And and service a swagger a delivering getting and perspective, getting new our will area busy focus our us. process, assuring of one. from own.

since priority back would that this business is home welcome leader Terry and it market to together, look to closing, profitable to was. forward earnings him return like we once also with to I as this shoulder-to-shoulder In our first work once and call the and

businesses been linear fashion. past this personally years, thinking in will been I I've such the involved as want anyone large a XX don’t turning complex to results the in for around that XX improve

two again. Sometimes, times and one degree a a XX it's in time then cloud is some even or three steps yards it dust, in other angle upward backwards other progressing some at it's of before

right Horizon Terry back it Regardless, new I'll that in battleship the time is closing With make that the that, needs to just organization his necessarily a there team estimated is little blood the changes Global. to to for turn the comments. over

closing, and that past. most through as liquidity APAC Thank sale company the been and our you, refinancing, operations. lot successful board, a the recently In Jamie. management as has in Acquisitions, recent crisis, and the changes to leadership of well

this care operational now completely XXXX. and of our of for to customers availability, us, XXXX it products, highest the management. levels our is With effective taking during focus this us of All with effectiveness channel time and efforts and behind

position Global our operational product of the and aggressively throughout and for customers reemphasizing promotion to supplier of of driving our Horizon are objective its returning improvements are choice brands current company We all of a new. as and the to achieve iconic clear our

do grateful committed to our and continued to as the entire see suppliers we our and investors, objectives achieving has to much support. you your customers, have for but We are can team

With that, it to turn operator I'd to the for like back questions.

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

good all, welcome have you. hi, Yes of first to team, the to And Horizon Terry.

Josh. Thanks,

information the little rightsizing quarters a regarding segment ask want last the distribution facility. operations that from, the the historically of bit bit in you provide Now to the could over on been I -- KC after little improving Americas, a quarter like some like more several has given if softness

that long the caused the regarding items inventory actual correct? to What shortfall how the to take is that and are of going really some

and we again We the you'd mentioned was of statement. at right termed look in you the I softness as as Josh, wounds and some what when Well didn’t this inventory at right self-inflected opening locations. have my

have pretty work aggressively we So, gone in operations. our Mexico to

production capacity we've and weeks. our improved last XX% so the our in far improved hedge We've seven by

up, forward. effectively can So, means is that feed we more our going throughput

going not say of let's first next continue on we top XX% year. into look quarter that will the that efforts, as another We those again add of

heavy-duty the to sizeable So, be well. in our in particular well our Mexico as fifth and same as doing as products going throughput thing there there wheels increase in we're

message the from is gotten responses with our products. favorable very get to to products the the let's going we're show that So, we've provide met we CEMA the the field, independence that saying me

we we're We're or if that, to forced you. locations other searching to do other your it's want for so stick not like directions, available we products, to don’t with go

our to inventory our operations by have So, our available fix we're felicitations is and make for clean sure that effort to customers.

making. that moves we’re Big

Thanks, talk what and quarters? Europe the about could more bit expectations little in seeing, operating Terry. how performance improve for company's one a Africa macro in And you're and as also the then far could coming you that in as environment the

Yes. haven’t to And of that, been there's the year. phone for right all, as we've that before to the location. our far and that end if apologize the from as been on people the on France Europe, going I've location to France some mentioned not we're that I I

But is have opportunities position they to what we operations is creating that efficiencies utilize volume and capacity while have them, associated seen our opportunities the we that with growth operational is our Driving facilities. focus. have more seen we've

have we that the So, contain from of to operations that we manufacturing we operations and we to by more opportunities business. a To to have walls into driving so look grow currently grow within four efficiency need position the we business have. profitable that that and do effectively that current the

leveraging mostly have. we investment but Selective currently that just

the been speaking? you've you retail seeing the aftermarket some little also a the talk that across could about like probably like companies and And of OE trends vertical bit

different regions, to we we look if got in differently right. Between -- at Yes. them

North we're to and produce. to practices practices it's XX/XX say OE and we America about associated that OE just aftermarket So, by buying products in Europe with just that reversed and now

our we the North America grow business North success really we're in selective, market expand America? North palms, No, in for we we that on here that Have OE we that been to we capitalized is market I selective address us there mean, to expanding in America. and like -- there would haven’t. believe so has opportunities

by The taken and what consists about of talking products has and European OE associated the OE business. we're with based capacities up primarily the there has business the volumes been

and pushed growth haven’t really Europe. we segment point a So, haven’t this the aftermarket in on up significant to in mode we been

That opportunity provides opportunity, that provides us pretty Europe. significant in

then, from And Thanks. last me. question

that shifts only slower are should the job thinking about working seasonally on like Given like we year-over-year think but is about here to that I enter going changes? as been on you relative that basis you've these all start on, XQ XQ XQ and appreciate of what a typically implement to how kind or six the weeks period you're

Jamie. is this Hey Josh,

Let we've I unemployment in announce about a there. to like is me guidance restructuring or XX year remains and low. going times year we at Obviously you jump that got macro give would say from we're on. especially going environment, But say what some a maybe don’t XX during that low

high is that part industrial aftermarket that of maybe being question. down and with I a level kind with comparing retail say have sales that an which down The that portfolio probably I can RV you're we are of think sales the the consumer about XX% sentiment incredibly index answers that would from but remains products good number of even an trust XX

of But good that kind floor OES offering and fetch us of or products. with we the OE, supplement OEM the a

about steps rates but focused focusing in of events future, we that customer, there is terms fill can is events cannot their we So, which the control exaggerations control and excellence XQ concerned the in and operational driving. less Terry that on are the the the really XQ, on and

make timing given with some you build flow least the guess working at you specific restructuring don’t just, through provide have guidance can I cash But from inventory of high now. perspective any associated may some it. any and a commentary expectations this appreciate you expenses but also level about

is years, flow. my focus tell I'll a have Well, of free cash having demonstrated a you couple we renewed from perspective on

accounts, not it's on mobilized are accounts what working are receivable, we primary just is inventories accounts EBITDA focusing adjusted thereof, things and EBITDA So, the we have capital or incredibly focused that I hard, payable. call

that think the longer $XXX to around bit I with can see and skews most a continue a fairly little not can minus million manage in line get guess in little coming what Inventory accounts XX,XXX we want. aggressively months receivable the a a arguably in to inventory longer you'll take near plus with bit take globe, us I or if term. the

that Josh, out that we stock rate from not very we customers items that not inventory make of high don’t those move that that C&D guess the of basis, I into only because these want rationalize use use supply all to and items we don’t FBE that and often But to that at certain To actually velocity. fill our of range. a need they're cash A&B to with we

flow would aggressively you on even EBITDA. cash is I continuing myopic tell adjusted what to a with manage overall working So, free primary focus capital

ago, Josh, our then, have you ascertain DSO, DIO the mean seven statement skew to the skews in this on I and mentioned DPO, with pretty initiated we and where weeks have attention going of XX,XXX that. analysis our our can just focus performance. you Jamie we're and matrix much And

There be as rationalize we'll go we year nine we'll through forecast was XX,XXX, about end we'll of be of further and XXXX at X,XXX. that the

addressing that we're complexity move as well issue So, as forward. we

guys. thanks Great,

over closing for to management now would back turn call the to like I remarks.

Jamie's closing, out like a there. to to Prior we'd clarification got put

closer compare And $XXX Yes, it thanks quick you $XXX.X, debt current fees, to that so to in gross XQ'XX real include portion XQ'XX, actually XQ'XX gross the you debt was XQ'XX the if apples-to-apples million. yes, was Jeff. on

debt of that. to portion a closer the when is year-over-basis So, a gross million $XXX include in you the reduction on current

set when a on in to see to debt exact I want at just in You'll was be level balance look the sheets. reduction the it year-over-year the you on release press make sure basis. able everyone that

for like would to say today. that, I thanks everybody with then joining to And

we we deep have in tell, very we're company. in aggressively the challenges into to are have we that dug the we that organizing have. focused, that you the pretty deficiencies opportunities of As within address We've that very can elements

We'll continue address do wisely very aggressively and to these. acting but so we're to

think the taking fill actions our and planning focus we're And principle that tailored Our that but investors. at are made the those moment. and that our both in that statements rates the also we shareholders are customers we're that margins towards reinforce addressing issues, support I our really

So with that, and the call. joining for thank you thanks

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

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