Horizon Global has reported its third quarter results showing net sales of $227.8 million, which is down 5.1 percent compared to the same period in 2017.
The company also provided an update on its Action Plan, including activities related to its Kansas City aftermarket and retail distribution facility. With new leadership in place in its Europe-Africa segment, the company continued to identify business improvement initiatives for this region.
“Having recently been named to the permanent role of President and CEO, I am just as encouraged about our company as I was when I took over the interim role in May of this year,” said Carl Bizon, president and CEO of Horizon Global. “Our primary 2018 selling season in the Americas did not deliver the desired revenue and earnings result due mainly to ramp-up challenges in our Kansas City distribution facility. That being said, Kansas City proved during the third quarter that we now have the capabilities, processes and resources to support future growth in next year’s season. At quarter end, we had past due orders of approximately $8.5 million, down from a peak of approximately $26 million early in the quarter. With the Americas Action Plan items now complete, we have a greatly reduced cost structure to leverage in the region. We have also announced price increases to address rising input costs and tariffs. We will start to see the full impact of these actions in our financial results as volume ramps up with our normal seasonality in the second quarter of 2019.”
Net sales were substantially unchanged from the third quarter of 2017 in the Americas, with increases in aftermarket and OE offset by a decline in the retail channel, which was impacted by supply constraints from overseas vendors and the fourth quarter 2017 divestiture of the Broom and Brush business. Operating profit decreased $3.7 million to $7.3 million, or 6.3 percent of net sales, primarily as a result of unfavorable input costs in advance of pricing actions and the costs of executing the company’s Action Plan in the period.
“Operational challenges continued during the third quarter in our Europe-Africa segment and results came in below expectations. The new leadership team has made additional organizational and structural changes, and we identified further initiatives expected to improve the long-term performance of the business,” said Bizon. “With the revised view of full-year performance, we recorded a non-cash goodwill impairment for the segment of approximately $26.6 million in the quarter.
Net sales decreased 10.7 percent, primarily resulting from higher-than-normal volume of a program with a major OE customer in 2017 that did not repeat in the third quarter of 2018. The aftermarket channel declined due to limited product availability resulting from the production shift to Romania.