Horizon Global Corp. has reported its financial results for the first quarter of 2019, showing net sales of $209.7 million, down 3.3 percent. The company also had an operating loss of $8 million, or 3.8 percent of sales, an improvement of $45.3 million. The company also provided an update on operating improvement initiatives underway in its Europe-Africa segment.
“Over the past year, our team has put in a substantial effort to advance our business improvement initiatives, and we are pleased to see gains in our operating results,” said Carl Bizon, president and CEO of Horizon Global. “Although revenue was modestly lower compared to the prior year quarter, driven by a late spring in the U.S. and pull-forward programs in the Americas that did not repeat, we were able to generate higher operating margins across all of our business segments. While we experienced a somewhat slower start to the year than we hoped, we remain confident that our business will deliver better results in 2019. … We have largely completed the operational improvement initiatives in the Americas segment and are fully prepared for the prime selling season with the right set of products to meet the demands of our customers. Our Kansas City distribution center is operating as planned, enhanced by the recent initiation of our automated stock retrieval system on a limited basis, and providing greater productivity and efficiency for customer orders.”
In Horizon Americas, net sales decreased by 0.7 percent to $95.5 million. A slow ramp-up of the warm weather selling season caused by unusually wet and cold weather in North America led to decreases in the retail, aftermarket and industrial channels, which were $7 million lower than the prior year quarter on a combined basis. These decreases were partially offset by increases in eCommerce and OE net sales of $5.8 million and $0.9 million, respectively. The improvement in the eCommerce channel was supported, in part, by promotional spot buys during the period and follows the trend in consumer buying patterns impacting many industries.
The segment incurred an operating loss of $1.5 million during the first quarter of 2019, which represented an improvement from an operating loss of $5.1 million during the first quarter of 2018. These amounts included non-recurring expenses of $0.8 million and $3.9 million during the 2019 and 2018 periods, respectively.
This decrease in non-recurring expenses reflects a significantly reduced level of restructuring activities as we completed the action plan put in place during 2018 to improve operational performance.
“In Europe-Africa, we continued to make sure and steady progress toward our ongoing business improvement initiatives,” said Bizon. “The team is making strides to improve its sourcing activities, enabling us to focus on driving margin improvement in various product offerings. We will continue to move forward other initiatives to further advance operating efficiency, increase profitability and enhance the value we provide our customers, but these efforts will take time to accomplish. From a market perspective, we faced some headwinds in the U.K. as vehicle sales slowed due to uncertainty surrounding Brexit, while the German market remained more stable. Ultimately, our success will depend on our team’s ability to provide the right products to both our OE and aftermarket customers in the region.”
In Horizon Europe-Africa, net sales decreased 5.6 percent to $82 million due to unfavorable foreign currency translation. On a constant currency basis, net sales increased by 2.7 percent, primarily resulting from higher volume in the OE channel, which improved by $6.3 million in constant currency. This increase was partially offset by lower aftermarket revenues of $3 million in constant currency and a decrease of $1 million related to the divestiture of a non-automotive business during the quarter.
Operating loss in the 2019 first quarter was $3.2 million, which represented a $41.9 million improvement from operating loss totaling $45.1 million during the first quarter of 2018. These amounts included non-recurring items of $2.9 million and $45.2 million during the first quarter of 2019 and 2018, respectively.
