Horizon Global Tops Expectations
Horizon Global (NYSE: HZN), a leading provider of towing and trailering equipment, reported its third-quarter earnings results on Oct. 31. Revenue and profits soared, thanks in large part to last year's Westfalia acquisition. The upbeat results enabled management to reaffirm full-year guidance.
Let's take a closer look at how the quarter progressed.
Image source: Getty Images.
Horizon Global Q3: The raw results
Metric | Q3 2017 | Q3 2016 | Year-Over-Year Change |
|---|---|---|---|
Revenue | $240.1 million | $151.7 million | 58% |
Adjusted net income | $9.7 million | $5.7 million | 70% |
Adjusted earnings per share | $0.38 | $0.30 | 27% |
Data source: Horizon Global.
What happened this quarter?
The eye-popping revenue growth continues to be driven primarily by acquisitions (though the company did see pockets of organic revenue growth, too). Sales in the Europe-Africa segment skyrocketed 576% to $87.9 million thanks to the inclusion of Westfalia sales. Acquisitions also helped sales in Asia-Pacific grow 31%. Revenue in Americas -- the company's largest geographic region by sales -- grew 4%.
Total revenue of $240 million came in $5 million ahead of management's guidance range and also bested Wall Street's estimate by nearly $15 million.
Management stated that organic growth helped offset the impact of the hurricanes and "softness in the U.S. retail channel."
Horizon Americas' e-commerce sales grew at a "double-digit pace."
Adjusted EPS of $0.38 came in at the high end of management's guidance and a penny ahead of expectations.
What management had to say
CEO Mark Zeffiro called the company's quarterly results "solid" and stated that Horizon remains focused on delivering on its key objectives:
We continue to execute on our 2017 initiatives, highlighted by the continued achievement of synergies in Europe, and we are confident we will achieve the previously stated [9 million euro] target for the year. Horizon Asia-Pacific continued its trend of strong performance, delivering a third consecutive quarter of double-digit revenue growth.
He later stated that the company's business prospects continue to look great given the global sales boom for trucks, SUVs, and CUVs.
Looking forward
Management offered investors the following guidance for full-year 2017:
Revenue is expected to grow between 38% and 41%.
Adjusted operating profit is projected to land between $53 million and $59 million.
Adjusted diluted earnings per share is expected to come in between $1.04 and $1.14.
These figures largely matched what management had previously predicted.
Investors knocked down Horizon's stock price by a few percent following the earnings release. Given the upbeat quarterly results, it is possible shareholders were disappointed that management didn't raise full-year profit guidance once again.
Short-term movements aside, Zeffiro did his best to paint a rosy picture for the upcoming year: "As we look toward 2018, we believe the momentum from our revenue and margin initiatives supports double-digit earnings per share growth. We expect to continue driving our business forward in all of our geographies, as we also focus on our key strategic priorities and continuing to build the best team in our industry."
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Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool recommends Horizon Global. The Motley Fool has a disclosure policy.
