Horizon Global Corp., a supplier of branded towing and trailering equipment, reported first quarter results while also detailing providing an update on its targeted action plan, focused on the restructuring of its Americas segment and business improvement activities in its Europe-Africa segment.
Highlights from the report showed:
• Net sales increased from $203.3 million to $216.8 million, up 6.6 %.
• Operating loss of $53.3 million, operating margin of 24.6%.
• Non-cash goodwill impairment of $43.4 million in the Europe-Africa segment negatively impacted consolidated operating results.
• Adjusted operating profit of $2.9 million, adjusted operating profit margin of 1.4%.
• First quarter diluted earnings per share of $2.30.
• First quarter adjusted diluted earnings per share of 32 cents.
Net sales decreased 1.6% in its Horizon Americas segment, primarily driven by inefficiencies in the ramp up of the company’s Kansas City distribution center and the wind-down of its Dallas distribution center. Operating profit decreased $10.3 million to a loss of $5.1 million, or 5.3% of net sales, due to higher material costs that more than offset price increases.
“Our consolidated results for the first quarter were consistent with our expectations, as we continued to address the previously identified challenges in the business,” said Mark Zeffiro, president and CEO of Horizon Global. “We made progress against our targeted action as many initiatives moved forward, but there is still work to be done. The consolidation of our distribution network is a top priority and we are making early progress on addressing ongoing challenges.
“To date, progress on our action plan includes the recent announcement of a restructuring plan for the Americas segment, which includes a 30% reduction of its U.S.-based salaried workforce. Additionally, performance levels continue to improve at our Reynosa, Mexico metals facility.
Horizon Global detailed a business improvement plan on March 1 to drive $3 million to $5 million in consolidated cost savings in 2018. Once implemented, the action plan is expected to result in $10 million to $12.0 million in consolidated cost savings on a full-year run rate basis.
Zeffiro concluded, “We continue to advance our action plan and are focused on implementing our initiatives with a sense of urgency as we head into the important second and third quarters. We are reaffirming our guidance for the year, on an adjusted basis, as we continue to make the changes necessary to improve our performance and increase shareholder value.”
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