hzn-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 10-Q


(Mark One)
☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2022
OR
☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to .

Commission file number 001-37427

HORIZON GLOBAL CORPORATION

(Exact name of registrant as specified in its charter)



Delaware (State or other jurisdiction of incorporation or organization)						47-3574483 (IRS Employer Identification No.)

47912 Halyard Drive, Suite 100

Plymouth, Michigan 48170

(Address of principal executive offices, including zip code)

(734) 656-3000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.01 par value

HZN

New York Stock Exchange

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer ☒

Non-accelerated filer o

Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes ☐ No ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 4, 2022, the number of outstanding shares of the Registrant’s common stock was 27,676,025 shares.

HORIZON GLOBAL CORPORATION

Index

Part I.

Financial Information

Forward-Looking Statements

Item 1.

Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2022 and 2021

Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended June 30, 2022 and 2021

Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021

Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30 2022 and 2021

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 30, 2022 and 2021

Notes to Condensed Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Item 4.

Controls and Procedures

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Forward-Looking Statements

This Quarterly Report on Form 10-Q may contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements speak only as of the date they are made and give our current expectations or forecasts of future events. These forward-looking statements can be identified by the use of forward-looking words, such as “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan” or other comparable words, or by discussions of strategy that may involve risks and uncertainties.

These forward-looking statements are subject to numerous assumptions, risks and uncertainties which could materially affect our business, financial condition or future results including, but not limited to, risks and uncertainties with respect to: the impact of the COVID-19 pandemic on the Company’s business, results of operations, financial condition and liquidity, including, without limitation, supply chain and logistics issues and inflationary pressures; interest rate volatility; liabilities and restrictions imposed by the Company’s debt instruments, including the Company’s ability to comply with the applicable financial covenants related thereto or obtain any necessary amendments or waivers with respect to such financial covenants; market demand; competitive factors; supply constraints and shipping disruptions; material, logistics and energy costs, including the increased material costs resulting from the COVID-19 pandemic; inflation and deflation rates; the impact the conflict between Russia and Ukraine has on our business, financial condition or future results, including the duration and scope of such conflict, its impact on disruptions and inefficiencies in our supply chain and our ability to procure certain raw materials, as well as on our energy supply in Europe; technology factors; litigation; government and regulatory actions including the impact of any tariffs, quotas, or surcharges; the Company’s accounting policies; future trends; general economic and currency conditions, including recessionary conditions; various conditions specific to the Company’s business and industry; the success of the Company’s action plan, including the actual amount of savings and timing thereof; the success of the Company’s business improvement initiatives in Europe-Africa, including the amount of savings and timing thereof; the Company’s exposure to product liability claims from customers and end users, and the costs associated therewith; factors affecting the Company’s business that are outside of its control, including natural disasters and severe weather conditions (including those caused by climate change), pandemics, including the current COVID-19 pandemic, accidents and governmental actions; our ability to regain and remain in compliance with the New York Stock Exchange’s (“NYSE”) minimum market capitalization requirement; and other risks that are discussed in Part I, Item 1A, “Risk Factors.” in the Company’s Annual Report on Form 10-K for the twelve months ended December 31, 2021. The risks described in the Company’s Annual Report on Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deemed to be immaterial also may materially adversely affect our business, financial position and results of operations or cash flows.

The cautionary statements set forth above should be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. We caution readers not to place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect the Company. We do not undertake any obligation to review or confirm analysts’ expectations or estimates or to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events, except as otherwise required by law.

We disclose important factors that could cause our actual results to differ materially from our expectations implied by our forward-looking statements under Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in the Company’s Annual Report on Form 10-K for the twelve months ended December 31, 2021. These cautionary statements qualify all forward-looking statements attributed to us or persons acting on our behalf. When we indicate that an event, condition or circumstance could or would have an adverse effect on us, we mean to include effects upon our business, financial and other conditions, results of operations, prospects and ability to service our debt.

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

HORIZON GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited—dollars in thousands, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net sales	$	181,220	$	222,120	$	362,080	$	421,310
Cost of sales	(160,500)		(174,830)		(321,150)		(333,460)
Gross profit	20,720		47,290		40,930		87,850
Selling, general and administrative expenses	(31,030)		(35,960)		(64,800)		(69,740)
Operating (loss) profit	(10,310)		11,330		(23,870)		18,110
Interest expense	(8,310)		(6,980)		(15,980)		(14,030)
Loss on debt extinguishment of Replacement Term Loan	—		—		—		(11,650)
Other expense, net	(3,360)		(1,990)		(8,850)		(4,220)
(Loss) income before income tax	(21,980)		2,360		(48,700)		(11,790)
Income tax expense	(450)		(1,400)		(680)		(2,400)
Net (loss) income	(22,430)		960		(49,380)		(14,190)
Less: Net loss attributable to noncontrolling interest	(230)		(330)		(500)		(670)
Net (loss) income attributable to Horizon Global	$	(22,200)	$	1,290	$	(48,880)	$	(13,520)
Net (loss) income per share:
Basic	$	(0.80)	$	0.05	$	(1.78)	$	(0.50)
Diluted	$	(0.80)	$	0.04	$	(1.78)	$	(0.50)

The accompanying notes are an integral part of these condensed consolidated financial statements.

HORIZON GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(unaudited—dollars in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net (loss) income	$	(22,430)	$	960	$	(49,380)	$	(14,190)
Other comprehensive loss, net of tax:
Foreign currency translation and other	(2,280)		(130)		(390)		(2,420)
Total other comprehensive loss, net of tax	(2,280)		(130)		(390)		(2,420)
Total comprehensive (loss) income	(24,710)		830		(49,770)		(16,610)
Less: Comprehensive loss attributable to noncontrolling interest	(230)		(330)		(500)		(670)
Comprehensive (loss) income attributable to Horizon Global	$	(24,480)	$	1,160	$	(49,270)	$	(15,940)

The accompanying notes are an integral part of these condensed consolidated financial statements.

HORIZON GLOBAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited—dollars in thousands)


	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	26,440	$	11,780
Restricted cash	92,130		5,490
Receivables, net	98,880		80,720
Inventories	165,030		162,830
Prepaid expenses and other current assets	15,110		12,340
Total current assets	397,590		273,160
Property and equipment, net	69,660		71,610
Operating lease right-of-use assets	37,040		37,810
Other intangibles, net	44,310		48,910
Deferred income taxes	1,720		1,750
Other assets	4,490		5,680
Total assets	$	554,810	$	438,920
Liabilities and Shareholders' Deficit
Current liabilities:
Short-term borrowings and current maturities, long-term debt	$	4,440	$	3,780
Accounts payable	125,490		102,190
Short-term operating lease liabilities	11,190		11,010
Accrued liabilities	47,380		44,870
Total current liabilities	188,500		161,850
Gross long-term debt	395,270		297,070
Unamortized debt issuance costs and discount	(27,630)		(26,520)
Long-term debt	367,640		270,550
Redeemable preferred stock, $0.01 par: Authorized 100,000,000 shares; Issued and outstanding: 41,000 and 0 shares at June 30, 2022 and December 31, 2021, respectively	41,040		—
Deferred income taxes	1,740		1,920
Long-term operating lease liabilities	33,550		35,930
Other long-term liabilities	7,900		8,920
Total liabilities	640,370		479,170
Commitments and Contingencies
Shareholders' deficit:
Common stock, $0.01 par: Authorized 400,000,000 shares; 28,362,531 shares issued and 27,676,025 outstanding at June 30, 2022, and 27,973,153 shares issued and 27,286,647 outstanding at December 31, 2021	280		270
Common stock warrants issued, outstanding and exercisable for 10,206,146 and 9,231,146 shares of common stock at June 30, 2022 and December 31, 2021, respectively	28,050		25,010
Paid-in capital	172,400		170,990
Treasury stock, at cost: 686,506 shares at June 30, 2022 and December 31, 2021	(10,000)		(10,000)
Accumulated deficit	(259,130)		(210,250)
Accumulated other comprehensive loss	(10,100)		(9,710)
Total Horizon Global shareholders' deficit	(78,500)		(33,690)
Noncontrolling interest	(7,060)		(6,560)
Total shareholders' deficit	(85,560)		(40,250)
Total liabilities and shareholders' deficit	$	554,810	$	438,920

The accompanying notes are an integral part of these condensed consolidated financial statements.

HORIZON GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited—dollars in thousands)


	Six Months Ended June 30,
	2022		2021
Cash Flows from Operating Activities:
Net loss	$	(49,380)	$	(14,190)

Adjustments to reconcile net loss to net cash used for operating activities:
Depreciation	6,760		7,750
Amortization of intangible assets	2,180		2,970
Amortization of original issuance discount and debt issuance costs	5,860		5,400
Deferred income taxes	(40)		1,120
Non-cash compensation expense	2,050		1,710
Paid-in-kind interest	—		650

Loss on debt extinguishment of Replacement Term Loan	—		11,650
Increase in receivables	(23,090)		(30,630)
Increase in inventories	(6,260)		(31,350)
Increase in prepaid expenses and other assets	(2,510)		(440)
Increase in accounts payable and accrued liabilities	34,560		15,960
Other, net	5,450		1,780
Net cash used for operating activities	(24,420)		(27,620)
Cash Flows from Investing Activities:
Capital expenditures	(8,930)		(9,940)
Other, net	—		10
Net cash used for investing activities	(8,930)		(9,930)
Cash Flows from Financing Activities:
Proceeds from borrowings on credit facilities	2,100		2,190
Repayments of borrowings on credit facilities	(2,650)		(1,300)
Proceeds from Senior Term Loan, net of issuance costs	118,200		75,300
Repayments of borrowings on Replacement Term Loan, including transaction fees	—		(94,940)
Proceeds from Revolving Credit Facility, net of issuance costs	15,800		20,000


Proceeds from issuance of common stock warrants	3,040		16,300
Proceeds from exercise of common stock warrants	—		420
Other, net	(810)		(640)
Net cash provided by financing activities	135,680		17,330
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,030)		(280)
Cash, Cash Equivalents and Restricted Cash:
Increase (decrease) for the period	101,300		(20,500)
At beginning of period	17,270		50,690
At end of period	$	118,570	$	30,190
Supplemental disclosure of cash flow information:
Cash paid for interest	$	10,590	$	10,860
Cash paid for taxes, net of refunds	$	860	$	1,430

The accompanying notes are an integral part of these condensed consolidated financial statements.

HORIZON GLOBAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(unaudited—dollars in thousands)


	Common Stock		Common Stock Warrants		Paid-in Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Horizon Global Shareholders' Equity (Deficit)		Noncontrolling Interest		Total Shareholders' Equity (Deficit)
Balances at January 1, 2022	$	270	$	25,010	$	170,990	$	(10,000)	$	(210,250)	$	(9,710)	$	(33,690)	$	(6,560)	$	(40,250)
Net loss	—		—		—		—		(26,680)		—		(26,680)		(270)		(26,950)
Other comprehensive income, net of tax	—		—		—		—		—		4,990		4,990		—		4,990
Shares surrendered upon vesting of employee stock compensation awards to cover tax obligations	—		—		(640)		—		—		—		(640)		—		(640)
Non-cash compensation expense	10		—		1,250		—		—		—		1,260		—		1,260
Issuance of common stock warrants	—		3,040		—		—		—		—		3,040		—		3,040
Amounts reclassified from AOCI	—		—		—		—		—		(3,100)		(3,100)		—		(3,100)
Balances at March 31, 2022	280		28,050		171,600		(10,000)		(236,930)		(7,820)		(54,820)		(6,830)		(61,650)
Net loss	—		—		—		—		(22,200)		—		(22,200)		(230)		(22,430)
Other comprehensive loss, net of tax	—		—		—		—		—		(2,280)		(2,280)		—		(2,280)
Non-cash compensation expense	—		—		800		—		—		—		800		—		800
Balances at June 30, 2022	$	280	$	28,050	$	172,400	$	(10,000)	$	(259,130)	$	(10,100)	$	(78,500)	$	(7,060)	$	(85,560)


	Common Stock		Common Stock Warrants		Paid-in Capital		Treasury Stock		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Horizon Global Shareholders' Equity (Deficit)		Noncontrolling Interest		Total Shareholders' Equity (Deficit)
Balances at January 1, 2021	$	260	$	9,510	$	166,610	$	(10,000)	$	(178,530)	$	(6,540)	$	(18,690)	$	(5,160)	$	(23,850)
Net loss	—		—		—		—		(14,810)		—		(14,810)		(340)		(15,150)
Other comprehensive loss, net of tax	—		—		—		—		—		(2,290)		(2,290)		—		(2,290)
Shares surrendered upon vesting of employee stock compensation awards to cover tax obligations	—		—		(650)		—		—		—		(650)		—		(650)
Non-cash compensation expense	—		—		960		—		—		—		960		—		960
Issuance of common stock warrants	—		16,300		—		—		—		—		16,300		—		16,300
Exercise of common stock warrants	10		(800)		1,210		—		—		—		420		—		420
Balances at March 31, 2021	270		25,010		168,130		(10,000)		(193,340)		(8,830)		(18,760)		(5,500)		(24,260)
Net income (loss)	—		—		—		—		1,290		—		1,290		(330)		960
Other comprehensive loss, net of tax	—		—		—		—		—		(130)		(130)		—		(130)
Shares surrendered upon vesting of employee stock compensation awards to cover tax obligations	—		—		10		—		—		—		10		—		10
Non-cash compensation expense	—		—		930		—		—		—		930		—		930
Balances at June 30, 2021	$	270	$	25,010	$	169,070	$	(10,000)	$	(192,050)	$	(8,960)	$	(16,660)	$	(5,830)	$	(22,490)

The accompanying notes are an integral part of these condensed consolidated financial statements.

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of Operations and Basis of Presentation

Horizon Global Corporation and its consolidated subsidiaries (“Horizon Global,” “we,” “our,” or the “Company”) are a designer, manufacturer and distributor of a wide variety of high quality, custom-engineered towing, trailering, cargo management and other related accessory products in the North American, European and African markets. These products are designed to support aftermarket, automotive original equipment manufacturers (“automotive OEMs”) and automotive original equipment servicers (“automotive OESs”) (collectively, “OEs”), retail, e-commerce and industrial customers within the agricultural, automotive, construction, horse/livestock, industrial, marine, military, recreational, trailer and utility markets. The Company groups its business into operating segments generally by the region in which sales and manufacturing efforts are focused. The Company’s operating segments are Horizon Americas and Horizon Europe-Africa. See Note 13, Segment Information, for further information on the Company’s operating segments.

The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission for interim financial information and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the twelve months ended December 31, 2021. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete financial statements. It is management’s opinion that these condensed consolidated financial statements contain all adjustments, including adjustments of a normal and recurring nature, necessary for a fair presentation of financial position and results of operations. Results of operations for interim periods are not necessarily indicative of results for the full year.

The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates, judgments, and assumptions also affect the reported amounts of revenues and expenses during the reporting periods. The Company believes estimates, judgments and assumptions made when accounting for items and matters such as, but not limited to, the allowance for doubtful accounts, sales incentives, sales returns, impairment assessment of indefinite-lived intangible assets, recoverability of long-lived assets, income taxes (including deferred taxes and uncertain tax positions), stock compensation, the assessment of lower of cost or net realizable value on inventory, useful lives assigned to long-lived assets, depreciation and amortization, estimates related to lease liability and operating lease right-of-use (“ROU”) asset valuations, estimated future unrecoverable lease costs, legal and product liability matters, valuation of debt instruments and warrants, assets and obligations related to employee benefits, and the respective allocation methods, are reasonable based on information available at the time they are made. To the extent there are differences between these estimates and actual results, our consolidated financial statements may be materially affected.

Discussion of Going Concern

The accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has a history of recurring net operating losses and cash outflows from operations. As of June 30, 2022, the Company was in compliance with all applicable covenants in agreements governing its debt. However, based on the Company’s projected financial performance for the twelve-month period subsequent to the date of the filing of this Quarterly Report on Form 10-Q, the Company projects that it will not be in compliance with a financial covenant under the Company’s Senior Term Loan Credit Agreement, as defined in Note 7, Long-term Debt, as of March 31, 2023, which would result in an event of default. Such a default would allow the lender under the Senior Term Loan Credit Agreement to accelerate the maturity of the debt, which carries a balance of $225.0 million as of June 30, 2022, making it due and payable at that time. This would, in turn, result in cross-default of the Company’s Revolving Credit Facility, as defined in Note 7, Long-term Debt, which carries a balance of $73.9 million as of June 30, 2022. The Company does not have sufficient cash on hand or available liquidity that can be utilized to repay these outstanding amounts in the event of default.

In response to the potential covenant breach, the Company is in discussions with its lender to amend the terms of its financial covenant under the Senior Term Loan Credit Agreement. The Company has a history of successfully amending and extending credit agreements with its current lenders and believes it is probable such amendment will be completed. We believe that these actions will allow the Company to continue as a going concern and remain in compliance with our financial covenants for the twelve months from the issuance of these condensed consolidated financial statements.

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2. New Accounting Pronouncements

As of June 30, 2022, there have been no new accounting pronouncements recently issued or adopted that have had or are reasonably likely to have a material impact on the Company’s condensed consolidated financial statements.

3. Inventories

Inventories consist of the following components:


	June 30, 2022		December 31, 2021
	(dollars in thousands)
Finished goods	$	91,040	$	85,770
Work in process	14,470		15,570
Raw materials	59,520		61,490
Total	$	165,030	$	162,830

4. Property and Equipment, Net

Property and equipment, net consists of the following components:


	June 30, 2022		December 31, 2021
	(dollars in thousands)
Land and land improvements	$	440	$	480
Buildings and building improvements	20,880		22,210
Machinery and equipment	137,520		135,110
Gross property and equipment	158,840		157,800
Accumulated depreciation	(89,180)		(86,190)
Total	$	69,660	$	71,610

During the three months ended June 30, 2022 and 2021, depreciation expense was $3.4 million and $3.6 million, respectively. During the six months ended June 30, 2022 and 2021, depreciation expense was $6.8 million and $7.8 million, respectively.

5. Other Intangible Assets

Gross carrying amounts and accumulated amortization of other intangible assets are as follows:


	June 30, 2022
Intangible Category by Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(dollars in thousands)
Finite-lived intangible assets:
Customer relationships (2 – 20 years)	$	159,700	$	(137,990)	$	21,710
Technology and other (3 – 15 years)	23,520		(21,080)		2,440
Sub-total	183,220		(159,070)		24,150
Trademark/Trade names, indefinite-lived	20,160		—		20,160
Total	$	203,380	$	(159,070)	$	44,310

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	December 31, 2021
Intangible Category by Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(dollars in thousands)
Finite-lived intangible assets:
Customer relationships (2 – 20 years)	$	162,390	$	(137,420)	$	24,970
Technology and other (3 – 15 years)	23,870		(20,830)		3,040
Sub-total	186,260		(158,250)		28,010
Trademark/Trade names, indefinite-lived	20,900		—		20,900
Total	$	207,160	$	(158,250)	$	48,910

During the three months ended June 30, 2022 and 2021, amortization expense related to other intangible assets was $0.9 million and $1.7 million, respectively. During the six months ended June 30, 2022 and 2021, amortization expense related to other intangible assets was $2.2 million and $3.0 million, respectively.

6. Accrued and Other Long-term Liabilities

Accrued liabilities consist of the following components:


	June 30, 2022		December 31, 2021
	(dollars in thousands)
Customer incentives	$	14,050	$	13,030
Accrued compensation	9,370		7,520
Accrued transportation costs	7,030		5,600
Short-term tax liabilities	3,320		3,530
Accrued interest	2,900		3,430
Customer claims	2,830		2,900
Litigation settlements	1,050		1,290
Accrued professional services	860		1,700
Other	5,970		5,870
Total	$	47,380	$	44,870

Other long-term liabilities consist of the following components:


	June 30, 2022		December 31, 2021
	(dollars in thousands)
Litigation settlements	$	1,260	$	1,820
Long-term tax liabilities	130		130
Other	6,510		6,970
Total	$	7,900	$	8,920

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

7. Long-term Debt

Long-term debt consists of the following components:


	June 30, 2022		December 31, 2021
	(dollars in thousands)
Revolving Credit Facility	$	73,850	$	58,050
Senior Term Loan	225,000		100,000
Convertible Notes	85,000		125,000

Bank facilities, finance leases and other long-term debt	15,860		17,800
Gross debt	399,710		300,850
Less:
Short-term borrowings and current maturities, long-term debt	4,440		3,780
Gross long-term debt	395,270		297,070
Unamortized debt issuance costs and discount:
Unamortized debt issuance costs and original issuance discount on Senior Term Loan	(27,130)		(22,170)
Unamortized debt issuance costs and discount on Convertible Notes	(500)		(4,350)
Total	(27,630)		(26,520)
Long-term debt	$	367,640	$	270,550

Revolving Credit Facility

In March 2020, the Company, as guarantor, entered into a Loan and Security Agreement (the “Loan Agreement”) with Eclipse Business Capital LLC, formerly known as Encina Business Credit, LLC, as agent for the lenders party thereto, and Horizon Global Americas Inc. and Cequent Towing Products of Canada Ltd., as borrowers (the “ABL Borrowers”). The Loan Agreement provides for an asset-based revolving credit facility (the “Revolving Credit Facility”) in the maximum aggregate principal amount of $75.0 million subject to customary borrowing base limitations contained therein, and may be increased at the ABL Borrowers’ request in increments of $5.0 million, up to a maximum of five times over the life of the Revolving Credit Facility, for a total increase of up to $25.0 million. The Loan Agreement has been amended on several occasions that, among other things, increased the maximum credit available under the Revolving Credit Facility to $95.0 million. All outstanding borrowings on the Loan Agreement mature on March 13, 2024.

Effective March 31, 2022, the Company entered into an amendment to the Loan Agreement that temporarily increased the Company’s ability to borrow against receivables and in-transit inventory as well as inventory located in the Company’s Mexico facilities, which was initially effective through June 30, 2022. On June 30, 2022, the Loan Agreement was amended to extend the effective date of the temporary borrowing capacity through September 30, 2022. The March 31, 2022 amendment also replaced the London Interbank Offered Rate (“LIBOR”) based interest rate with the Adjusted Term Secured Overnight Financing Rate (“SOFR”). As a result of the amendment, interest on loans under the Loan Agreement is payable in cash at the interest rate of SOFR plus 4.00% per annum, subject to a 1.00% SOFR floor. Beginning September 30, 2022, the interest rate on all loans under the Loan Agreement will be SOFR plus 3.50% to 4.00% per annum, subject to a 1.00% SOFR floor and certain conditions defined in the Loan Agreement.

During the three and six months ended June 30, 2022, the Company recognized $0.1 million and $0.2 million of amortization of debt issuance costs, respectively, and during the three and six months ended June 30, 2021, the Company recognized $0.1 million and $0.3 million of amortization of debt issuance costs, respectively, in interest expense in the accompanying condensed consolidated statements of operations.

As of June 30, 2022 and December 31, 2021, there was $0.6 million and $0.8 million, of unamortized debt issuance costs, respectively, included in other assets in the accompanying condensed consolidated balance sheets.

As of June 30, 2022 and December 31, 2021, the Company had $20.1 million and $27.4 million of availability, respectively, under the Revolving Credit Facility.

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As of June 30, 2022 and December 31, 2021, the Company had $0.8 million and $2.1 million of letters of credit issued and outstanding, respectively, under the Revolving Credit Facility with no cash collateral requirement. As of June 30, 2022 and December 31, 2021, the Company also had $4.1 million and $4.2 million of other letters of credit issued and outstanding, respectively, under the Revolving Credit Facility with a cash collateral requirement. The cash collateral requirement is 105% of the outstanding letters of credit. As of June 30, 2022 and December 31, 2021, the Company had cash collateral of $4.9 million. Cash collateral is included in restricted cash in the accompanying condensed consolidated balance sheets.

Senior Term Loan Credit Agreement

In February 2021, the Company entered into a credit agreement (the “Senior Term Loan Credit Agreement”) with Atlantic Park Strategic Capital Fund, L.P. (“Atlantic Park”), as administrative agent and collateral agent, and the lenders party thereto. The Senior Term Loan Credit Agreement provided for an initial term loan facility (the “2021 Senior Term Loan”) in the aggregate principal amount of $100.0 million, all of which was borrowed by the Company and was used to repay the Company’s former term loan. The Senior Term Loan Credit Agreement also provided for a delayed draw term loan facility in the aggregate principal amount of up to $125.0 million, which may be drawn by the Company in up to three separate borrowings through June 30, 2022.

In February 2022, the Company entered into an amendment to its Senior Term Loan Credit Agreement with Atlantic Park. The amendment provided for a $35.0 million delayed draw facility, which the Company borrowed in full (the “February 2022 Delayed Draw Term Loan”) under the Company’s existing delayed draw term loan facility and allowed the net proceeds to be used for working capital purposes and to fund low-cost country expansion in the Company’s Horizon Europe-Africa operating segment.

The Company accounted for the February 2022 Delayed Draw Term Loan as a debt modification in accordance with guidance in Accounting Standards Codification (“ASC”) 470-50, “Modifications and Extinguishments”.

In connection with the February 2022 Delayed Draw Term Loan, the Company issued warrants (“Senior Term Loan Amendment Warrants”) to Atlantic Park to purchase up to 975,000 shares of the Company’s common stock, with an exercise price of $9.00 per share. On May 24, 2022, shareholders approved the proposal to issue common shares upon the exercise of the warrants, making the Senior Term Loan Amendment Warrants exercisable at any time prior to February 10, 2027.

In accordance with guidance in ASC 480, “Distinguishing Liabilities from Equity” (“ASC 480”), and ASC 815, “Derivatives and Hedging”, the February 2022 Delayed Draw Term Loan and Senior Term Loan Amendment Warrants issued are each freestanding instruments and proceeds were allocated to each instrument on a relative fair value basis of $31.9 million and $3.1 million, respectively.

The Senior Term Loan Amendment Warrants are not within the scope of ASC 480 and do not meet the criteria for liability classification. However, the Senior Term Loan Amendment Warrants are determined to be indexed to the Company’s common stock and meet the requirements for equity classification pursuant to ASC 815-40, “Derivatives and Hedging - Contracts in Entity’s Own Equity”. The $3.1 million allocated to the Senior Term Loan Amendment Warrants was determined using an option pricing method and is recorded in common stock warrants in the accompanying condensed consolidated balance sheets.

Debt issuance costs of $0.5 million and original issuance discount of $1.1 million were incurred in connection with the February 2022 Delayed Draw Term Loan. During the six months ended June 30, 2022, the $0.5 million of debt issuance costs were included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. The $1.1 million original issuance discount was allocated to each instrument on a relative fair value basis. The $1.0 million allocated to the February 2022 Delayed Draw Term Loan will be amortized into interest expense over the contractual term of the loan using the effective interest method and the $0.1 million allocated to the Senior Term Loan Amendment Warrants was recorded as a reduction of equity.

The Company determined the fair value of the February 2022 Delayed Draw Term Loan using a discount rate build up approach. The debt discount of $3.1 million created by the relative fair value allocation of the equity component is being amortized as additional non-cash interest expense using the effective interest method over the contractual term of the loan. The debt discount is recorded as a reduction of long-term debt in the accompanying condensed consolidated balance sheets.

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On June 27, 2022, the Company borrowed the remaining $90.0 million under the Company’s existing delayed draw term loan facility (the “June 2022 Delayed Draw Term Loan”). The proceeds of the June 2022 Delayed Draw Term Loan were used by the Company to repay $85.0 million of principal and $1.7 million of accrued interest on the Company’s Convertible Notes, as defined below, which matured on July 1, 2022. Original issuance discount of $2.7 million was incurred in connection with the June 2022 Delayed Draw Term Loan and will be amortized into interest expense over the contractual term of the loan using the effective interest method.

Following the full draw on the delayed draw term loans as of June 30, 2022, the February 2022 Delayed Draw Term Loan, the June 2022 Delayed Draw Term Loan and the 2021 Senior Term Loan are collectively referred to as the Senior Term Loan. Interest on the Senior Term Loan is payable in cash on a monthly or quarterly basis, at the election of the Company, at the interest rate of LIBOR plus 7.50% per annum, subject to a 1.00% LIBOR floor. All outstanding borrowings under the Senior Term Loan Credit Agreement mature on February 2, 2027.

During the three and six months ended June 30, 2022, the Company recognized $1.0 million and $1.8 million of amortization of debt issuance and discount costs, respectively. During the three and six months ended June 30, 2021 the Company recognized $0.7 million and $1.1 million of amortization of debt issuance and discount costs, respectively. Amortization of debt issuance and discount costs is included in interest expense in the accompanying condensed consolidated statements of operations.

Convertible Notes

In February 2017, the Company completed a public offering of 2.75% Convertible Senior Notes (the “Convertible Notes”) in an aggregate principal amount of $125.0 million. During the second quarter of 2022, the Company issued Series B Preferred Stock, as defined below, in exchange for $40.0 million of the outstanding principal balance of the Convertible Notes. On July 1, 2022, the proceeds of the June 2022 Delayed Draw Term Loan were used to repay $85.0 million of principal and $1.7 million of accrued interest. As of June 30, 2022, the combined $86.7 million was held in restricted cash in the accompanying condensed consolidated balance sheets.

During the three and six months ended June 30, 2022, the Company recognized interest expense of $2.8 million and $5.6 million, respectively, and during the three and six months ended June 30, 2021, the Company recognized interest expense of $2.7 million and $5.3 million, respectively, in the accompanying condensed consolidated statements of operations. The interest expense recognized consists of contractual interest coupon, amortization of debt discount and amortization of debt issuance costs.

Replacement Term Loan

As a result of the Company’s entering into the Senior Term Loan Credit Agreement in the first quarter of 2021, the Company’s former term loan (the “Replacement Term Loan”) was terminated and is no longer in effect. As of June 30, 2022 and December 31, 2021, the Company had no aggregate principal outstanding and no unamortized debt issuance and discount costs.

During the three and six months ended June 30, 2022, the Company recognized no amortization of debt issuance costs and no paid-in-kind (“PIK”) interest. During the three and six months ended June 30, 2021, the Company recognized no amortization of debt issuance costs and $0.4 million amortization of debt issuance costs, respectively, in interest expense in the accompanying condensed consolidated statements of operations. During the three and six months ended June 30, 2021, the Company recognized no PIK interest and $0.7 million of PIK interest, respectively, in interest expense in the accompanying condensed consolidated statements of operations.

8. Redeemable Preferred Stock

In February 2022, the Company executed a commitment letter with Corre Partners Management, LLC, acting on behalf of certain investment funds for which it acts as investment manager (collectively, the “Corre Funds”), to issue, solely at the Company’s option, up to $40.0 million of a new series of the Company’s preferred stock, the proceeds of which would be used by the Company to repay a portion of the Company’s Convertible Notes and for working capital and general corporate purposes.

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On June 27, 2022, the Company entered into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) with the Corre Funds pursuant to which the Corre Funds purchased 40,000 shares of the Company’s Series B Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”), in exchange for $40.0 million aggregate principal amount of the Company’s Convertible Notes, which were cancelled by the Company. Pursuant to the terms of the Purchase Agreement, the Company also issued the Corre Funds an additional 1,000 shares of Series B Preferred Stock in satisfaction of its obligation to pay Corre Funds a commitment fee pursuant to the terms of the commitment letter. During the six months ended June 30, 2022, the Company recognized the $1.0 million commitment fee in other expense, net in the accompanying condensed consolidated statements of operations.

The Series B Preferred Stock accrue dividends in kind at a rate of 11.0% per annum, subject to increase to a maximum of 16.0% per annum upon the occurrence of certain events, including if the Series B Preferred Stock is not redeemed on or prior to the first anniversary of a repayment of the Senior Term Loan or refinancing of borrowings outstanding under the Senior Term Loan Credit Agreement. Dividends on each share of Series B Preferred Stock accrue based on the liquidation value of the Series B Preferred Stock, which is the stated value of $1,000 per share plus accrued and unpaid dividends (the “Liquidation Value”).

The Series B Preferred Stock is subject to voluntary redemption by the Company at its option and subject to mandatory redemption upon the first to occur of a change in control and the one-year anniversary of the maturity of the Senior Term Loan, which is February 2, 2028. The redemption price with respect to each share of Series B Preferred Stock is payable in cash and is equal to (i) 102.0% of the Liquidation Value if the redemption occurs on or before December 31, 2022, (ii) 105.0% of the Liquidation Value if the redemption occurs after December 31, 2022 but on or before December 31, 2023 and (iii) 106.0% of the Liquidation Value if the redemption occurs after December 31, 2023; provided that, in any event, the cash consideration a holder of Series B Preferred Stock will be entitled to receive from the Company (including the redemption price commitment fees, dividends and other distributions) will be no less than 110.0% of the consideration paid to the Company in connection with the purchase of such Series B Preferred Stock.

The Series B Preferred Stock will be convertible into shares of the Company’s common stock, par value, at the option of the Corre Funds and subject to shareholder approval, if the Company’s total net leverage ratio (as defined in the Senior Term Loan Credit Agreement), commencing with the fiscal quarter ending March 31, 2023, exceeds 6.50 to 1.00 or all of the outstanding Series B Preferred Stock is not redeemed on or before the earlier of the 91st day after a repayment of the Senior Term Loan and February 10, 2025. If the Series B Preferred Stock becomes convertible, each share of Series B Preferred Stock would be convertible into a number of shares of the Company’s common stock equal to the conversion value divided by 90% of the volume-weighted average price of the common stock over a period of 30 trading days prior to such conversion, with the conversion value being equal to (i) 102.0% of the Liquidation Value if the conversion occurs on or before December 31, 2022, (ii) 105.0% of the Liquidation Value if the conversion occurs after December 31, 2022 but on or before December 31, 2023 and (iii) 106.0% of the Liquidation Value if the conversion occurs after December 31, 2023.

In accordance with guidance in ASC 480, the Series B Preferred Stock met the definition of a mandatorily redeemable financial instrument and criteria for liability classification and is recorded in long-term debt in the accompanying condensed consolidated balance sheets. The Company determined the fair value of the Series B Preferred Stock to be $41.0 million. The Series B Preferred Stock will be accreted up to its mandatory redemption value and into interest expense using the effective interest method.

9. Leases

The Company leases certain facilities, automobiles and equipment under non-cancellable operating leases. Our leases have remaining lease terms of one to seven years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. Leases with an initial term of twelve months or less are not recorded on the condensed consolidated balance sheets; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Supplemental information for the Company’s leases is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(dollars in thousands)
Operating lease cost	$	3,570	$	3,760	$	7,240	$	7,630


	Six Months Ended June 30,
	2022		2021
Operating cash flows from operating leases	$	7,170	$	6,120
ROU assets obtained in exchange for operating lease obligations	$	2,930	$	540


	June 30, 2022		December 31, 2021
Weighted average remaining lease term (years)	4.8		5.1
Weighted average discount rate	8.3	%	8.4	%

10. Earnings (Loss) per Share

Basic earnings (loss) per share is computed using net income (loss) attributable to Horizon Global and the number of weighted average shares outstanding. Diluted earnings (loss) per share is computed using net income (loss) attributable to Horizon Global and the number of weighted average shares outstanding, adjusted to give effect to the assumed exercise of outstanding stock options and warrants, vesting of restricted shares outstanding, and conversion of the Convertible Notes, where dilutive to earnings per share.

A reconciliation of the numerator and the denominator of basic income (loss) per share attributable to Horizon Global and diluted income (loss) per share attributable to Horizon Global is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(dollars in thousands, except for per share amounts)
Numerator:
Net (loss) income	$	(22,430)	$	960	$	(49,380)	$	(14,190)
Less: Net loss attributable to noncontrolling interest	(230)		(330)		(500)		(670)
Net (loss) income attributable to Horizon Global	$	(22,200)	$	1,290	$	(48,880)	$	(13,520)
Denominator:
Weighted average shares outstanding, basic	27,633,375		27,022,652		27,488,062		26,883,818
Dilutive effect of common stock equivalents	—		5,724,551		—		—
Weighted average shares outstanding, diluted	27,633,375		32,747,203		27,488,062		26,883,818

Basic (loss) income per share attributable to Horizon Global	$	(0.80)	$	0.05	$	(1.78)	$	(0.50)
Diluted (loss) income per share attributable to Horizon Global	$	(0.80)	$	0.04	$	(1.78)	$	(0.50)

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

As a result of the net loss for the three months ended June 30, 2022 and six months ended June 30, 2022 and 2021, the effect of certain dilutive securities was excluded from the computation of weighted average diluted shares outstanding, as inclusion would have resulted in anti-dilution. A summary of these anti-dilutive common stock equivalents are as follows:


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Number of options	18,961	18,961	18,961	18,961
Exercise price of options	$9.20 - $11.02	$9.20 - $11.02	$9.20 - $11.02	$9.20 - $11.02
Restricted stock units	2,228,826	—	2,124,218	1,915,451
Convertible Notes (a)	5,005,000	5,005,000	5,005,000	5,005,000
Convertible Notes warrants	5,005,000	5,005,000	5,005,000	5,005,000
Common stock warrants	10,206,146	3,905,486	9,985,290	8,596,184

(a) Represents the dilutive impact of 125.0 million of Convertible Notes outstanding. See Note 7, Long-term Debt, for additional information on the retirement of the Company’s Convertible Notes.

11. Equity Awards

Horizon Global employees, non-employee directors and certain consultants participate in the Horizon Global Corporation 2020 Equity and Incentive Compensation Plan (the “Horizon 2020 Plan”). The Horizon 2020 Plan authorizes the Compensation Committee of the Horizon Global Board of Directors to grant stock options (including “incentive stock options” as defined in Section 422 of the U.S. Internal Revenue Code), appreciation rights, restricted shares, restricted stock units, performance shares, performance stock units, cash incentive awards, dividend equivalents and certain other awards based upon terms and conditions described in the Horizon 2020 Plan. The Company generally awards grants on an annual basis.

In March 2022, the Company granted restricted stock units (“RSUs”) and performance stock units (“PSUs”) to certain key employees and non-employee directors. The grant date fair values for the RSUs and PSUs are based on the closing trading price of the Company’s common stock on the date of grant. The RSUs vest ratably over a three-year period, while the PSUs cliff vest after a three-year period, upon achieving the performance criteria. The performance criteria for the PSUs is based on the Company’s three-year cumulative EBITDA.

During the three and six months ended June 30, 2022, the Company recognized $0.8 million and $2.1 million of stock compensation expense, respectively, related to RSUs and PSUs and for the three and six months ended June 30, 2021, the Company recognized $0.9 million and $1.7 million of stock compensation expense, respectively, related to RSUs and PSU. Stock compensation expense is included in selling, general and administrative expenses in the accompanying condensed consolidated statements of operations.

12. Shareholders’ Equity

Common Stock Warrants

In February 2022, in connection with the February 2022 Delayed Draw Term Loan, the Company issued the Senior Term Loan Amendment Warrants to purchase up to 975,000 shares of the Company’s common stock, with an exercise price of $9.00 per share. See Note 7, Long-term Debt, for additional information.

During the six months ended June 30, 2022, no warrants were exercised. During the six months ended June 30, 2021, a related-party entity, JKI Holdings, LLC, an entity owned by the chair of our board of directors, exercised in full the warrants that it originally received in connection with warrants issued in March 2019, and paid the exercise price in cash and received 278,283 shares of common stock.

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

13. Segment Information

The Company groups its business into operating segments generally by the region in which sales and manufacturing efforts are focused, which are grouped on the basis of similar product, market and operating factors. Each operating segment has discrete financial information evaluated regularly by the Company’s chief operating decision maker in determining resource allocation and assessing performance. The Company reports the results of its business in two operating segments: Horizon Americas and Horizon Europe-Africa. Horizon Americas is comprised of the Company’s North American operations. Horizon Europe-Africa is comprised of the Company’s European and South African operations. See below for further information regarding the types of products and services provided within each operating segment and the disaggregation of sales channels within each operating segment.

Horizon Americas - A market leader in the design, manufacture and distribution of a wide variety of high-quality, custom engineered towing, trailering and cargo management products and related accessories. These products are designed to support aftermarket, automotive OEMs, automotive OESs, industrial and retail customers in the agricultural, automotive, construction, industrial, marine, military, recreational vehicle, trailer and utility end markets. Products include vehicle trailer hitches, brake controllers, cargo management, heavy-duty towing products, jacks and couplers, protection/securing systems, trailer structural and electrical components, tow bars, vehicle roof racks and additional accessories.

Horizon Europe‑Africa - With a product offering similar to Horizon Americas, Horizon Europe-Africa focuses its sales and manufacturing efforts in the Europe and Africa regions of the world.

The Company’s operating segment activity is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(dollars in thousands)
Net Sales
Horizon Americas	$	110,920	$	128,380	$	212,860	$	238,210
Horizon Europe-Africa	70,300		93,740		149,220		183,100
Total	$	181,220	$	222,120	$	362,080	$	421,310
Operating Profit (Loss)
Horizon Americas	$	1,390	$	16,760	$	(2,910)	$	28,600
Horizon Europe-Africa	(4,250)		1,240		(5,790)		2,700
Corporate	(7,450)		(6,670)		(15,170)		(13,190)
Total	$	(10,310)	$	11,330	$	(23,870)	$	18,110

Disaggregation of Sales

The Company disaggregates net sales from contracts with customers by major sales channel. The Company determined that disaggregating its net sales into these categories best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The aftermarket channel represents sales to automotive installers and warehouse distributors. The automotive OEM channel represents sales to automotive vehicle manufacturers. The automotive OES channel primarily represents sales to automotive vehicle dealerships. The retail channel represents sales to direct-to-consumer retailers. The e-commerce channel represents sales to retailers whose customers utilize the Internet to purchase the Company’s products. The industrial channel represents sales to non-automotive manufacturers and dealers of agricultural equipment, trailers, and other custom assemblies. The other channel represents sales that do not fit into a category described above and these sales are considered ancillary to the Company’s core operating activities.

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The Company’s net sales by segment and disaggregated by major sales channel are as follows:


	Three Months Ended June 30, 2022
	Horizon Americas		Horizon Europe-Africa		Total
	(dollars in thousands)
Net Sales
Aftermarket	$	23,680	$	17,190	$	40,870
Automotive OEM	27,040		36,280		63,320
Automotive OES	4,420		13,430		17,850
Retail	27,710		—		27,710
E-commerce	17,980		2,930		20,910
Industrial	10,090		240		10,330
Other	—		230		230
Total	$	110,920	$	70,300	$	181,220


	Three Months Ended June 30, 2021
	Horizon Americas		Horizon Europe-Africa		Total
	(dollars in thousands)
Net Sales
Aftermarket	$	40,560	$	26,130	$	66,690
Automotive OEM	22,650		44,190		66,840
Automotive OES	4,240		19,970		24,210
Retail	32,610		—		32,610
E-commerce	19,730		1,960		21,690
Industrial	8,590		630		9,220
Other	—		860		860
Total	$	128,380	$	93,740	$	222,120


	Six Months Ended June 30, 2022
	Horizon Americas		Horizon Europe-Africa		Total
	(dollars in thousands)
Net Sales
Aftermarket	$	52,120	$	36,360	$	88,480
Automotive OEM	49,590		76,200		125,790
Automotive OES	8,150		30,210		38,360
Retail	47,530		—		47,530
E-commerce	34,050		4,610		38,660
Industrial	21,420		650		22,070
Other	—		1,190		1,190
Total	$	212,860	$	149,220	$	362,080

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)


	Six Months Ended June 30, 2021
	Horizon Americas		Horizon Europe-Africa		Total
	(dollars in thousands)
Net Sales
Aftermarket	$	72,250	$	48,550	$	120,800
Automotive OEM	50,170		92,750		142,920
Automotive OES	8,100		36,030		44,130
Retail	55,190		—		55,190
E-commerce	34,250		3,390		37,640
Industrial	18,250		1,180		19,430
Other	—		1,200		1,200
Total	$	238,210	$	183,100	$	421,310

14. Income Taxes

At the end of each interim reporting period, the Company makes an estimate of the annual effective income tax rate. Tax items included in the annual effective income tax rate are pro-rated for the full year and tax items discrete to a specific quarter are included in the effective income tax rate for that quarter. Effective tax rates vary from period to period as separate calculations are performed for those countries where the Company's operations are profitable and whose results continue to be tax-effected and for those countries where full deferred tax valuation allowances exist and are maintained. In determining the estimated annual effective tax rate, the Company analyzes various factors, including but not limited to, forecasts of projected annual earnings, taxing jurisdictions in which the pretax income and/or pretax losses will be generated, and available tax planning strategies.

During the three and six months ended June 30, 2022, the effective income tax rate was (2.0)% and (1.4)%, respectively. During the three and six months ended June 30, 2021, the effective income tax rate was 59.3% and (20.4)%, respectively. The differences in the effective tax rate compared to the statutory tax rate are attributable to the valuation allowance recorded in the U.S. and several foreign jurisdictions, which resulted in no income tax benefit recognized for jurisdictional pretax losses, and therefore, are excluded from the estimated effective tax rate.

The Company evaluates the realizability of its deferred tax assets on a quarterly basis. In completing this evaluation, the Company considers all available evidence in order to determine whether, based on the weight of the evidence, a valuation allowance is necessary. Full valuation allowances that are recorded for deferred tax assets in the U.S. and certain foreign jurisdictions will be maintained until sufficient positive evidence exists to reduce or eliminate them. The factors considered by management in its determination of the probability of the realization of the deferred tax assets include, but are not limited to, recent historical financial results, historical taxable income, projected future taxable income, the expected timing of the reversals of existing temporary differences, and tax planning strategies. If, based upon the weight of available evidence, it is more likely than not the deferred tax assets will not be realized, a valuation allowance is recorded. The Company has recently experienced pre-tax losses. As of June 30, 2022, the Company believes that it is more likely than not that the recorded deferred tax assets will be realized.

HORIZON GLOBAL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

15. Other Expense, Net

Other expense, net consists of the following components:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
	(dollars in thousands)
Foreign currency (loss) gain	$	(2,810)	$	460	$	(4,160)	$	(1,650)
Customer early pay discounts	(410)		(260)		(660)		(500)
Net loss on disposition of business	—		(2,230)		(3,090)		(2,230)
Series B commitment fee	—		—		(1,000)		—
Other, net	(140)		40		60		160
Total	$	(3,360)	$	(1,990)	$	(8,850)	$	(4,220)

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition contains forward-looking statements regarding industry outlook and our expectations regarding the performance of our business. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under the heading “Forward-Looking Statements,” at the beginning of this Quarterly Report on Form 10-Q. Our actual results may differ materially from those contained in or implied by any forward-looking statements.

You should read the following discussion together with the Company’s reports on file with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the twelve months ended December 31, 2021 (See Item 1A. Risk Factors).

Overview

Headquartered in Plymouth, Michigan, Horizon Global Corporation and its consolidated subsidiaries (“Horizon Global,” “we,” “our,” or the “Company”) are a leading designer, manufacturer and distributor of a wide variety of high-quality, custom-engineered towing, trailering, cargo management and other related accessory products in the North American, European and African markets, primarily servicing the aftermarket, automotive original equipment manufacturers (“automotive OEMs”) and automotive original equipment servicers (“automotive OESs”) (collectively, “OEs”), retail, e-commerce and industrial channels, supporting our customers generally through a regional service and delivery model.

Critical factors affecting our ability to succeed include:

•Our ability to realize the expected future economic benefits resulting from the changes made to our manufacturing operations, distribution footprint and management team in recent years, including the implementation of operational improvement initiatives, which are continuously ongoing to support margin expansion;

•Our ability to continue to manage our liquidity, including continuing to service our debt obligations and comply with the applicable financial covenants thereto, especially given our recent debt refinancing activities and capital structure alignment to support business growth and our long-term strategic plan;

•Our ability to quickly and cost-effectively introduce new products to our customers and end-user market with a resulting streamlined customer service model and improved operating margins;

•Our ability to continue to successfully launch new products and customer programs to expand or realign our geographic coverage or distribution channels and realize desired operating efficiencies and product line or customer content penetration;

•Our ability to efficiently manage our cost structure via global supply base management, internal sourcing and/or purchasing of materials, freight and logistics management, selective outsourcing of support functions, working capital management and a global approach to leverage our administrative functions; and

•Our ability to manage liquidity and other economic and business uncertainties that may result in future business disruption, including inflation and deflation rates, interest rate volatility, the ongoing global semiconductor shortage, transportation and other logistic constraints and the COVID-19 pandemic.

If we are unable to do any of the foregoing successfully, our financial condition and results of operations could be materially and adversely impacted.

Horizon Global reports its business in two operating segments: Horizon Americas and Horizon Europe-Africa. See Note 13, Segment Information, included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” within this Quarterly Report on Form 10-Q for further description of the Company’s operating segments.

Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and are included in cost of sales in our condensed consolidated statements of operations. Other shipping and handling expenses, which primarily relate to Horizon Americas’ distribution network, are included in selling, general and administrative expenses in our condensed consolidated statements of operations.

Supplemental Analysis and Segment Information

Non-GAAP Financial Measures

The Company’s management utilizes Adjusted EBITDA as the key measure of company and segment performance and for planning and forecasting purposes, as management believes this measure is most reflective of the operational profitability or loss of the Company and its operating segments and provides management and investors with information to evaluate the operating performance of its business and is representative of its performance used to measure certain of its financial covenants, further discussed in the Liquidity and Capital Resources section below. Adjusted EBITDA should not be considered a substitute for results prepared in accordance with U.S. GAAP and should not be considered an alternative to net income attributable to Horizon Global, which is the most directly comparable financial measure to Adjusted EBITDA that is prepared in accordance with U.S. GAAP. Adjusted EBITDA, as determined and measured by Horizon Global, should also not be compared to similarly titled measures reported by other companies. The Company also uses operating profit (loss) to measure stand-alone segment performance.

Adjusted EBITDA is defined as net income (loss) attributable to Horizon Global before interest expense, income taxes, depreciation and amortization, and before certain items, as applicable, such as severance, restructuring, relocation and related business disruption costs, gains (losses) on extinguishment of debt, impairment of goodwill and other intangibles, non-cash stock compensation, certain product liability and litigation claims, acquisition and integration costs, gains (losses) on business divestitures and other assets, debt issuance costs, board transition support and non-cash unrealized foreign currency remeasurement costs.

Adjusted EBITDA for our operating segments for the three months ended June 30, 2022 is as follows:


	Three Months Ended June 30, 2022
	Horizon Americas		Horizon Europe-Africa		Corporate		Consolidated
	(dollars in thousands)
Net loss attributable to Horizon Global							$	(22,200)
Net loss attributable to noncontrolling interest							(230)
Net loss							$	(22,430)
Interest expense							8,310
Income tax expense							450
Depreciation and amortization							4,320
EBITDA	$	3,190	$	(4,340)	$	(8,200)	$	(9,350)
Net loss attributable to noncontrolling interest	—		230		—		230
Severance	—		50		480		530
Restructuring, relocation and related business disruption costs	320		20		40		380
Non-cash stock compensation	—		—		800		800
Loss (gain) on business divestitures and other assets	440		(20)		—		420
Debt issuance costs	—		—		290		290
Unrealized foreign currency remeasurement costs	(550)		2,550		850		2,850
Adjusted EBITDA	$	3,400	$	(1,510)	$	(5,740)	$	(3,850)

Adjusted EBITDA for our operating segments for the three months ended June 30, 2021 is as follows:


	Three Months Ended June 30, 2021
	Horizon Americas		Horizon Europe-Africa		Corporate		Consolidated
	(dollars in thousands)
Net income attributable to Horizon Global							$	1,290
Net loss attributable to noncontrolling interest							(330)
Net income							$	960
Interest expense							6,980
Income tax expense							1,400
Depreciation and amortization							5,220
EBITDA	$	15,980	$	5,040	$	(6,460)	$	14,560
Net loss attributable to noncontrolling interest	—		330		—		330
Restructuring, relocation and related business disruption costs	20		90		(40)		70
Non-cash stock compensation	—		—		850		850
Loss (income) on business divestitures and other assets	2,480		(10)		—		2,470
Debt issuance costs	—		—		190		190
Unrealized foreign currency remeasurement costs	—		(340)		(110)		(450)
Adjusted EBITDA	$	18,480	$	5,110	$	(5,570)	$	18,020

Segment and Other Supplemental Information

A summary of operating segment and other supplemental financial information for the three months ended June 30, 2022 and 2021 is as follows:


	Three Months Ended June 30,								Change				Constant Currency Change
	2022		As a Percentage of Net Sales		2021		As a Percentage of Net Sales		$		%		$		%
	(dollars in thousands)
Net Sales
Horizon Americas	$	110,920	61.2	%	$	128,380	57.8	%	$	(17,460)	(13.6	%)	$	(17,470)	(13.6	%)
Horizon Europe-Africa	70,300		38.8	%	93,740		42.2	%	(23,440)		(25.0	%)	(14,770)		(15.8	%)
Total	$	181,220	100.0	%	$	222,120	100.0	%	$	(40,900)	(18.4	%)	$	(32,240)	(14.5	%)
Gross Profit
Horizon Americas	$	17,220	15.5	%	$	35,080	27.3	%	$	(17,860)	(50.9	%)	$	(17,880)	(51.0	%)
Horizon Europe-Africa	3,500		5.0	%	12,210		13.0	%	(8,710)		(71.3	%)	(8,240)		(67.5	%)
Total	$	20,720	11.4	%	$	47,290	21.3	%	$	(26,570)	(56.2	%)	$	(26,120)	(55.2	%)
Selling, General and Administrative Expenses
Horizon Americas	$	15,830	14.3	%	$	18,320	14.3	%	$	(2,490)	(13.6	%)	$	(2,510)	(13.7	%)
Horizon Europe-Africa	7,750		11.0	%	10,970		11.7	%	(3,220)		(29.4	%)	(2,270)		(20.7	%)
Corporate	7,450		N/A		6,670		N/A		780		11.7	%	780		11.7	%
Total	$	31,030	17.1	%	$	35,960	16.2	%	$	(4,930)	(13.7	%)	$	(4,000)	(11.1	%)
Operating Profit (Loss)
Horizon Americas	$	1,390	1.3	%	$	16,760	13.1	%	$	(15,370)	(91.7	%)	$	(15,370)	(91.7	%)
Horizon Europe-Africa	(4,250)		(6.0)	%	1,240		1.3	%	(5,490)		(442.7	%)	(5,970)		(481.5	%)
Corporate	(7,450)		N/A		(6,670)		N/A		(780)		(11.7	%)	(780)		(11.7	%)
Total	$	(10,310)	(5.7)	%	$	11,330	5.1	%	$	(21,640)	(191.0	%)	$	(22,120)	(195.2	%)
Capital Expenditures
Horizon Americas	$	510	0.5	%	$	2,880	2.2	%	$	(2,370)	(82.3	%)	$	(2,370)	(82.3	%)
Horizon Europe-Africa	3,420		4.9	%	3,700		3.9	%	(280)		(7.6	%)	540		14.6	%
Corporate	—		N/A		—		N/A		—		—	%	—		—	%
Total	$	3,930	2.2	%	$	6,580	3.0	%	$	(2,650)	(40.3	%)	$	(1,830)	(27.8	%)
Depreciation of Property and Equipment and Amortization of Intangibles
Horizon Americas	$	1,950	1.8	%	$	1,780	1.4	%	$	170	9.6	%	$	170	9.6	%
Horizon Europe-Africa	2,350		3.3	%	3,390		3.6	%	(1,040)		(30.7	%)	(770)		(22.7	%)
Corporate	20		N/A		50		N/A		(30)		(60.0	%)	(30)		(60.0	%)
Total	$	4,320	2.4	%	$	5,220	2.4	%	$	(900)	(17.2	%)	$	(630)	(12.1	%)
Adjusted EBITDA
Horizon Americas	$	3,400	3.1	%	$	18,480	14.4	%	$	(15,080)	(81.6	%)	N/A		N/A
Horizon Europe-Africa	(1,510)		(2.1)	%	5,110		5.5	%	(6,620)		(129.5	%)	N/A		N/A
Corporate	(5,740)		N/A		(5,570)		N/A		(170)		(3.1	%)	N/A		N/A
Total	$	(3,850)	(2.1)	%	$	18,020	8.1	%	$	(21,870)	(121.4	%)	N/A		N/A

Results of Operations

Three Months Ended June 30, 2022 Compared with Three Months Ended June 30, 2021

Consolidated net sales decreased $40.9 million, or 18.4%, to $181.2 million during the three months ended June 30, 2022, as compared to $222.1 million during the three months ended June 30, 2021. Net sales for Horizon Americas decreased $17.5 million, driven primarily by lower sales volumes in the aftermarket sales channel, partially offset by customer pricing recovery initiatives put in place in response to commodity and input cost increases. Net sales for Horizon Europe-Africa decreased $23.4 million, driven primarily by lower sales volumes in the aftermarket and OE sales channels and unfavorable currency translation, partially offset by customer pricing recovery initiatives put in place in response to commodity and input cost increases.

Gross profit margin (gross profit as a percentage of net sales) was 11.4% and 21.3% during the three months ended June 30, 2022 and 2021, respectively. The decline in gross profit margin is primarily due to lower net sales in Horizon Americas and Horizon Europe-Africa as detailed above, coupled with unfavorable cost performance, primarily attributable to unfavorable material, supply chain and other manufacturing input costs associated with global macroeconomic factors experienced during the second quarter of 2022.

Selling, general and administrative (“SG&A”) expenses decreased $4.9 million, primarily attributable to $2.0 million lower personnel and other variable compensation costs across the Company and favorable currency translation in Horizon Europe-Africa.

Operating margin (operating (loss) profit as a percentage of net sales) was (5.7)% and 5.1% during the three months ended June 30, 2022 and 2021, respectively. Operating profit declined $21.6 million to an operating loss of $10.3 million during the three months ended June 30, 2022, as compared to an operating profit of $11.3 million during the three months ended June 30, 2021. The changes in operating profit and operating margin were primarily due to the gross profit performance decline detailed above.

Other expense, net increased $1.4 million to $3.4 million during the three months ended June 30, 2022, as compared to $2.0 million during the three months ended June 30, 2021, primarily attributable to $3.3 million of higher foreign currency loss during the three months ended June 30, 2022, as compared to the three months ended June 30, 2021. The loss during the three months ended June 30, 2021, was primarily attributable to the $2.2 million loss on the sale of the Company’s Brazil business, which did not recur in 2022.

Interest expense increased $1.3 million to $8.3 million during the three months ended June 30, 2022, as compared to $7.0 million during the three months ended June 30, 2021, primarily as a result of the Company’s amendment to its Senior Term Loan Credit Agreement, as defined below, in February 2022, which resulted in additional borrowings and increased interest expense for the three months ended June 30, 2022, as compared to the three months ended June 30, 2021. Interest expense also increased as a result of additional borrowings on the Company’s Revolving Credit Facility, as defined below. Refer to Note 7, Long-term Debt, in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” included within this Quarterly Report on Form 10-Q for additional information of the Company’s long-term debt.

The effective income tax rate for the three months ended June 30, 2022 and 2021 was (2.0)% and 59.3%, respectively. The effective income tax rate for both periods is attributable to the Company’s valuation allowance recorded in the U.S. and certain foreign jurisdictions, which resulted in no income tax benefit recognized for jurisdictional pretax losses, and therefore, are excluded from the estimated effective tax rate.

Net loss increased $23.4 million to $22.4 million during the three months ended June 30, 2022, compared to net income of $1.0 million during the three months ended June 30, 2021. The change in net loss was attributable to the operational results detailed above.

See below for a discussion of operating results by segment.

Horizon Americas

Net sales by sales channel, in thousands, for Horizon Americas are as follows:


	Three Months Ended June 30,				Change
	2022		2021		$		%
Net Sales
Aftermarket	$	23,680	$	40,560	$	(16,880)	(41.6)	%
Automotive OEM	27,040		22,650		4,390		19.4	%
Automotive OES	4,420		4,240		180		4.2	%
Retail	27,710		32,610		(4,900)		(15.0)	%
E-commerce	17,980		19,730		(1,750)		(8.9)	%
Industrial	10,090		8,590		1,500		17.5	%

Total	$	110,920	$	128,380	$	(17,460)	(13.6)	%

Net sales decreased $17.5 million, or 13.6%, to $110.9 million during the three months ended June 30, 2022, as compared to $128.4 million during the three months ended June 30, 2021, primarily attributable to lower sales volumes in the aftermarket and retail sales channels. The decrease in net sales was partially offset by $16.9 million of customer pricing recoveries, primarily in the aftermarket, OE, retail and e-commerce sales channels, to recover increased material and input costs. The decrease was also partially offset by a $1.9 million reduction in sales returns and allowances.

Horizon Americas’ gross profit decreased $17.9 million, or 50.9%, to $17.2 million, or 15.5% of net sales, during the three months ended June 30, 2022, as compared to $35.1 million, or 27.3% of net sales, during the three months ended June 30, 2021. The decrease in gross profit and gross profit margin reflects the changes in net sales detailed above, inclusive of a significant mix shift from higher margin sales channels to lower margin sales channels, and is net of customer pricing recoveries discussed above. Gross profit and gross profit margin were also negatively impacted in the second quarter of 2022 by increased material, supply chain and other manufacturing input costs attributable to significant commodity and logistics cost increases in the Company’s supply chain due to global macroeconomic factors. These global macroeconomic factors impacted business performance and were not able to be fully passed through to our customers during the second quarter of 2022, given there is generally a delay in such recoveries due to market pressures and restrictions within certain customer contracts.

SG&A expenses decreased $2.5 million to $15.8 million, or 14.3% of net sales, during the three months ended June 30, 2022, as compared to $18.3 million, or 14.3% of net sales, during the three months ended June 30, 2021. The decrease in SG&A expenses is primarily attributable to the following:

–$1.2 million lower personnel and other variable compensation costs; and

–$0.4 million lower outside professional fees and other administrative costs.

Horizon Americas’ operating profit decreased $15.4 million to $1.4 million, or 1.3% of net sales, during the three months ended June 30, 2022, as compared to $16.8 million, or 13.1% of net sales, during the three months ended June 30, 2021. The decline in operating profit and operating margin were primarily due to the operational results detailed above.

Horizon Americas’ Adjusted EBITDA was $3.4 million during the three months ended June 30, 2022, as compared to Adjusted EBITDA of $18.5 million during the three months ended June 30, 2021. Adjusted EBITDA declined due to the operational results detailed above.

Horizon Europe-Africa

Net sales by sales channel, in thousands, for Horizon Europe-Africa are as follows:


	Three Months Ended June 30,				Change
	2022		2021		$		%
Net Sales
Aftermarket	$	17,190	$	26,130	$	(8,940)	(34.2)	%
Automotive OEM	36,280		44,190		(7,910)		(17.9)	%
Automotive OES	13,430		19,970		(6,540)		(32.7)	%
E-commerce	2,930		1,960		970		49.5	%
Industrial	240		630		(390)		(61.9)	%
Other	230		860		(630)		(73.3)	%
Total	$	70,300	$	93,740	$	(23,440)	(25.0)	%

Net sales decreased $23.4 million, or 25.0%, to $70.3 million during the three months ended June 30, 2022, as compared to $93.7 million, during the three months ended June 30, 2021, primarily attributable to lower sales volumes in the aftermarket and OE sales channels. The decrease includes $8.7 million of unfavorable currency translation. The decrease was partially offset by $8.1 million of customer pricing recoveries, primarily in the aftermarket and OE sales channels, to recover increased material and input costs.

Horizon Europe-Africa’s gross profit decreased $8.7 million, or 71.3%, to $3.5 million, or 5.0% of net sales, during the three months ended June 30, 2022, as compared to $12.2 million, or 13.0% of net sales, during the three months ended June 30, 2021. The decrease in gross profit and gross profit margin reflects the changes in net sales detailed above, coupled with the unfavorable impact of increased material, supply chain and other manufacturing input costs, net of customer pricing recoveries. Gross profit and gross profit margin were also negatively impacted in the second quarter of 2022 by the inability to flex costs efficiently resulting from OEM customer production schedule changes. The input cost increases were not able to be fully passed through to our customers during the second quarter of 2022, given there is generally a delay in such recoveries due to market pressures and restrictions within certain customer contracts.

SG&A expenses decreased $3.2 million to $7.8 million, or 11.0% of net sales, during the three months ended June 30, 2022, as compared to $11.0 million, or 11.7% of net sales, during the three months ended June 30, 2021. The decrease in SG&A expenses is primarily attributable to the following:

–$1.0 million of favorable currency translation; and

–$0.8 million of lower outside professional fees and other administrative costs.

Horizon Europe-Africa’s operating profit decreased $5.5 million to an operating loss of $4.3 million, or (6.0)% of net sales, during the three months ended June 30, 2022, as compared to an operating profit of $1.2 million, or 1.3% of net sales, during the three months ended June 30, 2021. The decline in operating profit and operating margin were primarily due to the operational results detailed above.

Horizon Europe-Africa’s Adjusted EBITDA was $(1.5) million during the three months ended June 30, 2022, as compared to Adjusted EBITDA of $5.1 million during the three months ended June 30, 2021. Adjusted EBITDA declined due to the operational results detailed above.

Corporate Expenses

Corporate expenses included in operating loss increased $0.8 million to $7.5 million during the three months ended June 30, 2022, as compared to $6.7 million during the three months ended June 30, 2021. The increase was primarily attributable to $0.5 million of additional severance costs in the three months ended June 30, 2022.

Corporate Adjusted EBITDA was $(5.7) million during the three months ended June 30, 2022, as compared to Adjusted EBITDA of $(5.6) million during the three months ended June 30, 2021. The change in Adjusted EBITDA was driven by insignificant changes to Corporate expenses.

The following table summarizes Adjusted EBITDA for our operating segments for the six months ended June 30, 2022:


	Six Months Ended June 30, 2022
	Horizon Americas		Horizon Europe-Africa		Corporate		Consolidated
	(dollars in thousands)
Net loss attributable to Horizon Global							$	(48,880)
Net loss attributable to noncontrolling interest							(500)
Net loss							$	(49,380)
Interest expense							15,980
Income tax expense							680
Depreciation and amortization							8,940
EBITDA	$	360	$	(3,730)	$	(20,410)	$	(23,780)
Net loss attributable to noncontrolling interest	—		500		—		500
Severance	—		50		460		510
Restructuring, relocation and related business disruption costs	380		40		20		440
Non-cash stock compensation	—		—		2,050		2,050
Loss (gain) on business divestitures and other assets	690		(80)		3,160		3,770
Debt issuance costs	—		—		1,860		1,860
Unrealized foreign currency remeasurement costs	(280)		3,200		1,260		4,180
Adjusted EBITDA	$	1,150	$	(20)	$	(11,600)	$	(10,470)

The following table summarizes Adjusted EBITDA for our operating segments for the six months ended June 30, 2021:


	Six Months Ended June 30, 2021
	Horizon Americas		Horizon Europe-Africa		Corporate		Consolidated
	(dollars in thousands)
Net loss attributable to Horizon Global							$	(13,520)
Net loss attributable to noncontrolling interest							(670)
Net loss							$	(14,190)
Interest expense							14,030
Income tax expense							2,400
Depreciation and amortization							10,720
EBITDA	$	29,180	$	8,830	$	(25,050)	$	12,960
Net loss attributable to noncontrolling interest	—		670		—		670
Restructuring, relocation and related business disruption costs	(840)		20		(40)		(860)
Loss on debt extinguishment	—		—		11,650		11,650
Non-cash stock compensation	—		—		1,710		1,710
Loss (gain) on business divestitures and other assets	2,720		(10)		—		2,710
Debt issuance costs	—		—		190		190
Unrealized foreign currency remeasurement costs	270		950		420		1,640
Adjusted EBITDA	$	31,330	$	10,460	$	(11,120)	$	30,670

The following table summarizes financial information for our operating segments for the six months ended June 30, 2022 and 2021:


	Six Months Ended June 30,								Change				Constant Currency Change
	2022		As a Percentage of Net Sales		2021		As a Percentage of Net Sales		$		%		$		%
	(dollars in thousands)
Net Sales
Horizon Americas	$	212,860	58.8	%	$	238,210	56.5	%	$	(25,350)	(10.6)	%	$	(25,360)	(10.6)	%
Horizon Europe-Africa	149,220		41.2	%	183,100		43.5	%	(33,880)		(18.5)	%	(19,540)		(10.7)	%
Total	$	362,080	100.0	%	$	421,310	100.0	%	$	(59,230)	(14.1)	%	$	(44,900)	(10.7)	%
Gross Profit
Horizon Americas	$	30,100	14.1	%	$	64,350	27.0	%	$	(34,250)	(53.2)	%	$	(34,270)	(53.3)	%
Horizon Europe-Africa	10,830		7.3	%	23,500		12.8	%	(12,670)		(53.9)	%	(11,610)		(49.4)	%
Total	$	40,930	11.3	%	$	87,850	20.9	%	$	(46,920)	(53.4)	%	$	(45,880)	(52.2)	%
Selling, General and Administrative Expenses
Horizon Americas	$	33,010	15.5	%	$	35,750	15.0	%	$	(2,740)	(7.7)	%	$	(2,750)	(7.7)	%
Horizon Europe-Africa	16,620		11.1	%	20,800		11.4	%	(4,180)		(20.1)	%	(2,620)		(12.6)	%
Corporate	15,170		N/A		13,190		N/A		1,980		15.0	%	1,980		15.0	%
Total	$	64,800	17.9	%	$	69,740	16.6	%	$	(4,940)	(7.1)	%	$	(3,390)	(4.9)	%
Operating (Loss) Profit
Horizon Americas	$	(2,910)	(1.4)	%	$	28,600	12.0	%	$	(31,510)	(110.2)	%	$	(31,520)	(110.2)	%
Horizon Europe-Africa	(5,790)		(3.9)	%	2,700		1.5	%	(8,490)		(314.4)	%	(8,990)		(333.0)	%
Corporate	(15,170)		N/A		(13,190)		N/A		(1,980)		(15.0)	%	(1,980)		(15.0)	%
Total	$	(23,870)	(6.6)	%	$	18,110	4.3	%	$	(41,980)	(231.8)	%	$	(42,490)	(234.6)	%
Capital Expenditures
Horizon Americas	$	1,020	0.5	%	$	4,380	1.8	%	$	(3,360)	(76.7)	%	$	(3,360)	(76.7)	%
Horizon Europe-Africa	7,910		5.3	%	5,560		3.0	%	2,350		42.3	%	3,160		56.8	%
Corporate	—		N/A		—		N/A		—		—	%	—		—	%
Total	$	8,930	2.5	%	$	9,940	2.4	%	$	(1,010)	(10.2)	%	$	(200)	(2.0)	%
Depreciation of Property and Equipment and Amortization of Intangibles
Horizon Americas	$	3,880	1.8	%	$	3,690	1.5	%	$	190	5.1	%	$	190	5.1	%
Horizon Europe-Africa	5,010		3.4	%	6,930		3.8	%	(1,920)		(27.7)	%	(1,460)		(21.1)	%
Corporate	50		N/A		100		N/A		(50)		(50.0)	%	(50)		(50.0)	%
Total	$	8,940	2.5	%	$	10,720	2.5	%	$	(1,780)	(16.6)	%	$	(1,320)	(12.3)	%
Adjusted EBITDA
Horizon Americas	$	1,150	0.5	%	$	31,330	13.2	%	$	(30,180)	(96.3)	%	N/A		N/A
Horizon Europe-Africa	(20)		—	%	10,460		5.7	%	(10,480)		(100.2)	%	N/A		N/A
Corporate	(11,600)		N/A		(11,120)		N/A		(480)		(4.3)	%	N/A		N/A
Total	$	(10,470)	(2.9)	%	$	30,670	7.3	%	$	(41,140)	(134.1)	%	N/A		N/A

Results of Operations

Six Months Ended June 30, 2022 Compared with Six Months Ended June 30, 2021

Consolidated net sales decreased $59.2 million, or 14.1%, to $362.1 million during the six months ended June 30, 2022, as compared to $421.3 million during the six months ended June 30, 2021. Net sales for Horizon Americas decreased $25.3 million, driven primarily by lower sales volumes in the aftermarket and retail sales channels, partially offset by customer pricing recovery initiatives put in place in response to commodity and input cost increases. Net sales for Horizon Europe-Africa decreased $33.9 million, driven primarily by lower sales volumes in the aftermarket and OE sales channels and unfavorable currency translation, partially offset by customer pricing recovery initiatives put in place in response to commodity and input cost increases.

Gross profit margin was 11.3% and 20.9% during the six months ended June 30, 2022 and 2021, respectively. The decline in gross profit margin is primarily due to lower net sales in Horizon Americas and Horizon Europe-Africa as detailed above, coupled with unfavorable cost performance, primarily attributable to unfavorable material, supply chain and other manufacturing input costs associated with global macroeconomic factors experienced during 2022.

SG&A expenses decreased $4.9 million primarily attributable to $2.7 million lower personnel and other variable compensation costs across the Company and favorable currency translation in Horizon Europe-Africa.

Operating margin was (6.6)% and 4.3% during the six months ended June 30, 2022 and 2021, respectively. Operating profit declined $42.0 million to an operating loss of $23.9 million during the six months ended June 30, 2022, from an operating profit of $18.1 million during the six months ended June 30, 2021. The changes in operating profit and operating margin were primarily due to the gross profit performance decline detailed above.

Other expense, net increased $4.7 million to $8.9 million during the six months ended June 30, 2022, as compared to $4.2 million during the six months ended June 30, 2021, primarily attributable to $2.5 million of higher foreign currency loss during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The increase was also due to a $1.0 million commitment fee per the terms of the commitment letter associated with the Company’s Series B Preferred Stock, as defined below, during the six months ended June 30, 2022. Refer to Note 8, Redeemable Preferred Stock, in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” included within this Quarterly Report on Form 10-Q for additional information on the Company’s Series B Preferred Stock.

Interest expense increased $2.0 million to $16.0 million during the six months ended June 30, 2022, as compared to $14.0 million during the six months ended June 30, 2021, primarily as a result of the Company’s amendment to its Senior Term Loan Credit Agreement in February 2022, which resulted in additional borrowings as well as increased interest expense for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021. Refer to Note 7, Long-term Debt, in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” included within this Quarterly Report on Form 10-Q for additional information of the Company’s long-term debt.

The effective income tax rate for the six months ended June 30, 2022 and 2021 was (1.4)% and (20.4)%, respectively. The effective income tax rate for both periods is attributable to the Company’s valuation allowance recorded in the U.S. and certain foreign jurisdictions, which resulted in no income tax benefit recognized for jurisdictional pretax losses, and therefore, are excluded from the estimated effective tax rate.

Net loss increased $35.2 million, to $49.4 million during the six months ended June 30, 2022, compared to a net loss of $14.2 million during the six months ended June 30, 2021. The change in net loss was attributable to the operational results detailed above.

See below for a discussion of operating results by segment.

Horizon Americas

Net sales by sales channel, in thousands, for Horizon Americas are as follows:


	Six Months Ended June 30,				Change
	2022		2021		$		%
Net Sales
Aftermarket	$	52,120	$	72,250	$	(20,130)	(27.9)	%
Automotive OEM	49,590		50,170		(580)		(1.2)	%
Automotive OES	8,150		8,100		50		0.6	%
Retail	47,530		55,190		(7,660)		(13.9)	%
E-commerce	34,050		34,250		(200)		(0.6)	%
Industrial	21,420		18,250		3,170		17.4	%

Total	$	212,860	$	238,210	$	(25,350)	(10.6)	%

Net sales decreased $25.3 million, or 10.6%, to $212.9 million during the six months ended June 30, 2022, as compared to $238.2 million during the six months ended June 30, 2021, primarily attributable to lower sales volumes in the aftermarket and retail sales channels. The decrease in net sales was partially offset by $29.5 million of customer pricing recoveries, primarily in the aftermarket, OE, retail and e-commerce sales channels, to recover increased material and input costs. The decrease was also partially offset by a $4.6 million reduction in sales returns and allowances.

Horizon Americas’ gross profit decreased $34.3 million, or 53.2%, to $30.1 million, or 14.1% of net sales, during the six months ended June 30, 2022, as compared to $64.4 million, or 27.0% of net sales, during the six months ended June 30, 2021. The decrease in gross profit and gross profit margin reflects the changes in net sales detailed above, inclusive of a significant mix shift from higher margin sales channels to lower margin sales channels, and is net of customer pricing recoveries discussed above. Gross profit and gross profit margin were also negatively impacted during the first half of 2022 by increased material, supply chain and other manufacturing input costs attributable to significant commodity and logistics cost increases in the Company’s supply chain due to global macroeconomic factors. These global macroeconomic factors impacted business performance and were not able to be fully passed through to our customers during the first half of 2022, given there is generally a delay in such recoveries due to market pressures and restrictions within certain customer contracts.

SG&A expenses decreased $2.8 million to $33.0 million, or 15.5% of net sales during the six months ended June 30, 2022, as compared to $35.8 million, or 15.0% of net sales, during the six months ended June 30, 2021. The decrease in SG&A expenses is primarily attributable to the following:

–$1.3 million lower personnel and other variable compensation costs; and

–$0.5 million lower distribution center lease, operating and support costs.

Horizon Americas’ operating profit decreased $31.5 million to an operating loss of $2.9 million, or (1.4)% of net sales, during the six months ended June 30, 2022, as compared to an operating profit of $28.6 million, or 12.0% of net sales, during the six months ended June 30, 2021. The decline in operating profit and operating margin were primarily due to the operational results detailed above.

Horizon Americas’ Adjusted EBITDA decreased $30.1 million to $1.2 million during the six months ended June 30, 2022, as compared to Adjusted EBITDA of $31.3 million during the six months ended June 30, 2021. Adjusted EBITDA declined due to operational results detailed above.

Horizon Europe-Africa

Net sales by sales channel, in thousands, for Horizon Europe-Africa are as follows:


	Six Months Ended June 30,				Change
	2022		2021		$		%
Net Sales
Aftermarket	$	36,360	$	48,550	$	(12,190)	(25.1)	%
Automotive OEM	76,200		92,750		(16,550)		(17.8)	%
Automotive OES	30,210		36,030		(5,820)		(16.2)	%
E-commerce	4,610		3,390		1,220		36.0	%
Industrial	650		1,180		(530)		(44.9)	%
Other	1,190		1,200		(10)		(0.8)	%
Total	$	149,220	$	183,100	$	(33,880)	(18.5)	%

Net sales decreased $33.9 million, or 18.5%, to $149.2 million during the six months ended June 30, 2022, as compared to $183.1 million during the six months ended June 30, 2021, primarily attributable to lower sales volumes in the aftermarket and OE sales channels. The decrease also includes $14.3 million of unfavorable currency translation. The decrease was partially offset by $14.6 million of customer pricing recoveries, primarily in the aftermarket and OE sales channels, to recover increased material and input costs.

Horizon Europe-Africa’s gross profit decreased $12.7 million, or 53.9%, to $10.8 million, or 7.3% of net sales, during the six months ended June 30, 2022, from $23.5 million, or 12.8% of net sales, during the six months ended June 30, 2021. The decrease in gross profit and gross profit margin reflects the changes in net sales detailed above, coupled with the unfavorable impact of increased material, supply chain and other manufacturing input costs, and is net of customer pricing recoveries. Gross profit and gross profit margin were also negatively impacted in the first half of 2022 by the inability to flex costs efficiently resulting from OEM customer production schedule changes. The input cost increases were not able to be fully passed through to our customers during the first half of 2022, given there is generally a delay in such recoveries due to market pressures and restrictions within certain customer contracts.

SG&A decreased $4.2 million to $16.6 million, or 11.1% of net sales during the six months ended June 30, 2022, as compared to $20.8 million, or 11.4% of net sales, during the six months ended June 30, 2021. The decrease in SG&A expenses is primarily attributable to the following:

–$1.6 million of favorable currency translation; and

–$0.8 million of lower outside professional fees and other administrative costs.

Horizon Europe-Africa’s operating profit decreased $8.5 million to an operating loss of $5.8 million, or (3.9)% of net sales during the six months ended June 30, 2022, as compared to an operating profit of $2.7 million, or 1.5% of net sales, during the six months ended June 30, 2021. The decline in operating profit and operating margin were primarily due to the operational results detailed above.

Horizon Europe-Africa’s Adjusted EBITDA decreased by $10.5 million during the six months ended June 30, 2022 from $10.5 million during the six months ended June 30, 2021. Adjusted EBITDA declined due to the operational results detailed above.

Corporate Expenses

Corporate expenses included in operating loss increased $2.0 million to $15.2 million during the six months ended June 30, 2022, as compared to $13.2 million during the six months ended June 30, 2021. The increase was primarily attributable to the following:

–$1.3 million higher outside professional fees and other administrative costs; and

–$0.7 million higher costs incurred related to professional service fees and other costs associated with new debt issuance, amendments, and modifications and related structure change.

Corporate Adjusted EBITDA was $(11.6) million during the six months ended June 30, 2022, as compared to Adjusted EBITDA of $(11.1) million during the six months ended June 30, 2021. The change in Adjusted EBITDA was primarily due to the higher outside professional fees and other administrative costs discussed above and was partially offset by lower personnel and other variable compensation costs.

Liquidity and Capital Resources

Our capital and working capital requirements are funded through a combination of cash on hand, cash flows from operations, and various borrowings and factoring arrangements described below, including our asset-based Revolving Credit Facility. As of June 30, 2022 and December 31, 2021, we had $10.4 million and $8.2 million, respectively, of cash and cash equivalents held at foreign subsidiaries. There may be country specific regulations, which may restrict or result in increased costs in the repatriation of these funds.

In March 2020, the Company, as guarantor, entered into a Loan and Security Agreement (the “Loan Agreement”) with Eclipse Business Capital LLC, formerly known as Encina Business Credit, LLC, as agent for the lenders party thereto, and Horizon Global Americas Inc. and Cequent Towing Products of Canada Ltd., as borrowers (the “ABL Borrowers”). The Loan Agreement provides for an asset-based revolving credit facility (the “Revolving Credit Facility”) in the maximum aggregate principal amount of $75.0 million subject to customary borrowing base limitations contained therein, and may be increased at the ABL Borrowers’ request in increments of $5.0 million, up to a maximum of five times over the life of the Revolving Credit Facility, for a total increase of up to $25.0 million. The Loan Agreement has been amended on several occasions that, among other things, increased the maximum credit available under the Revolving Credit Facility to $95.0 million. As of June 30, 2022, we had availability of $20.1 million under the Revolving Credit Facility and $16.0 million of cash and cash equivalents in the United States.

As of June 30, 2022 and December 31, 2021, total cash and availability was $46.5 million and $39.2 million, respectively. We define cash and availability as cash and cash equivalents and amounts of cash accessible but undrawn from credit facilities.

We believe the combination of these sources, as well as the changes to our capital structure following our recent refinancing activities described below, provides us with sources of both short-term and long-term liquidity that will enable the Company to meet material cash obligations as well as our working capital, capital expenditures and other funding requirements for at least the next twelve months and for the foreseeable future thereafter. Our ability to fund our working capital needs, debt payments and other obligations, including borrowing base limitations under our Revolving Credit Facility, depends on our future operating performance and cash flow and many factors outside of our control, including the costs of raw materials, the state of the automotive accessories market and other macroeconomic conditions.

Discussion of Going Concern

The Company’s condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has a history of recurring net operating losses and cash outflows from operations. As of June 30, 2022, the Company was in compliance with all applicable covenants in agreements governing its debt. However, based on the Company’s projected financial performance for the twelve-month period subsequent to the date of the filing of this Quarterly Report on Form 10-Q, the Company projects that it will not be in compliance with a financial covenant under the Company’s Senior Term Loan Credit Agreement, as defined below, as of March 31, 2023, which would result in an event of default. Such a default would allow the lender under the Senior Term Loan Credit Agreement to accelerate the maturity of the debt, which carries a balance of $225.0 million as of June 30, 2022, making it due and payable at that time. This would, in turn, result in cross-default of the Company’s Revolving Credit Facility, which carries a balance of $73.9 million as of June 30, 2022. The Company does not have sufficient cash on hand or available liquidity that can be utilized to repay these outstanding amounts in the event of default.

Cash Flows - Operating Activities

Net cash used for operating activities during the six months ended June 30, 2022 and 2021 was $24.4 million and $27.6 million, respectively.

During the six months ended June 30, 2022, we used $27.1 million in cash flows, based on the reported net loss of $49.4 million and after considering the effects of non-cash items related to depreciation, amortization of intangible assets, amortization of original issuance discount and debt issuance costs, deferred income taxes, non-cash compensation expense, paid-in-kind interest, and other, net. During the six months ended June 30, 2021, we generated $18.8 million in cash flows, based on the reported net loss of $14.2 million and after considering the effects of similar non-cash items previously described, in addition to the loss on debt extinguishment of the Company’s former term loan during the first quarter of 2021.

Changes in operating assets and liabilities sourced $2.7 million and used $46.5 million of cash during the six months ended June 30, 2022 and 2021, respectively.

Changes in accounts receivable resulted in a net use of cash of $23.1 million and $30.6 million during the six months ended June 30, 2022 and 2021, respectively. The increase in accounts receivable was lower in the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 driven primarily by lower net sales activity in the current year.

Changes in inventories resulted in a use of cash of $6.3 million and $31.4 million during the six months ended June 30, 2022 and 2021, respectively. The increase in inventories during the six months ended June 30, 2022 was primarily due to a continuation of macroeconomic factors, including elevated costs of raw materials, and contributed to higher inventory costs, including inventory in-transit. The increase is also attributable to reduced volumes compared to our seasonal inventory build in order to meet anticipated demand of a traditional selling season. The increase in inventories during the six months ended June 30, 2021 was primarily due to macroeconomic factors resulting in increased costs of raw materials, constraints on shipping container availability and port congestion leading to higher inventory costs as well as seasonal inventory build in order to meet the demand of our traditional selling season.

Changes in prepaid expenses and other assets resulted in a net use of cash of $2.5 million and $0.4 million during the six months ended June 30, 2022 and 2021, respectively. The increase in prepaid expenses and other assets during the six months ended June 30, 2022 and 2021 was primarily due to the mix of invoicing from vendors and subsequent payments.

Changes in accounts payable and accrued liabilities resulted in a source of cash of $34.6 million and $16.0 million during the six months ended June 30, 2022 and 2021, respectively. The higher source of cash for the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 is primarily due to the timing of payments made to suppliers, mix of vendors and related terms.

Cash Flows - Investing Activities

Net cash used for investing activities during the six months ended June 30, 2022 and 2021 was $8.9 million and $9.9 million, respectively.

During the six months ended June 30, 2022 and 2021, capital expenditures were $8.9 million and $9.9 million, respectively, related to growth, capacity and productivity-related projects within Horizon Americas and Horizon Europe-Africa. The net decrease in capital expenditures during the six months ended June 30, 2022 is attributable to lower spending in Horizon Americas, partially offset by increased capital expenditures in Horizon Europe-Africa to support growth and capacity expenditures associated with our planned low-cost country expansion.

Cash Flows - Financing Activities

Net cash provided by financing activities was $135.7 million and $17.3 million during the six months ended June 30, 2022 and 2021, respectively.

During the six months ended June 30, 2022 and 2021, net proceeds from the Revolving Credit Facility, net of issuance costs, were $15.8 million and $20.0 million, respectively.

During the six months ended June 30, 2022, proceeds from borrowings on our term loan, net of issuance costs, and related issuance of common stock warrants were $118.2 million and $3.0 million, respectively. During the six months ended June 30, 2021, proceeds from our term loan, net of issuance costs, and related issuance of common stock warrants were $75.3 million and $16.3 million, respectively. During the six months ended June 30, 2021, repayments of borrowings on our former term loan, including transaction fees, were $94.9 million.

Factoring Arrangements

We have factoring arrangements with financial institutions to sell certain accounts receivable. During the six months ended June 30, 2022 and 2021, total receivables sold under certain non-recourse factoring arrangements were $127.5 million and $158.2 million, respectively. We utilize factoring arrangements as part of our working capital needs. The costs of participating in these arrangements are immaterial to our results. Refer to Note 3, Summary of Significant Accounting Policies, in Item 8,

“Financial Statements and Supplementary Data,” included within our Annual Report on Form 10-K for the twelve months ended December 31, 2021, for additional information.

Our Debt and Other Commitments

Revolving Credit Facility

We and certain of our subsidiaries are party to the asset-based Revolving Credit Facility governed by the Loan Agreement. The Revolving Credit Facility provides $95.0 million of funding on a revolving basis, subject to borrowing base availability, and matures on March 13, 2024. As of June 30, 2022, there was $73.9 million outstanding on the Revolving Credit Facility.

Effective March 31, 2022, we entered into an amendment to the Loan Agreement that temporarily increased our ability to borrow against receivables and in-transit inventory as well as inventory located in the our Mexico facilities, which was initially effective through June 30, 2022. On June 30, 2022, the Loan Agreement was amended to extend the effective date of the temporary borrowing capacity through September 30, 2022. The March 31, 2022 amendment also replaced the London Interbank Offered Rate (“LIBOR”) based interest rate with the Adjusted Term Secured Overnight Financing Rate (“SOFR”). As a result of the amendment, interest on loans under the Loan Agreement is payable in cash at the interest rate of SOFR plus 4.00% per annum, subject to a 1.00% SOFR floor. Beginning September 30, 2022, the interest rate on all loans under the Loan Agreement will be SOFR plus 3.50% to 4.00% per annum, subject to a 1.00% SOFR floor and certain conditions defined in the Loan Agreement.

Senior Term Loan Credit Agreement

We and certain of our subsidiaries, have been or are parties to other long-term credit agreements, including a credit agreement (the “Senior Term Loan Credit Agreement”) that we entered into in February 2021, with Atlantic Park Strategic Capital Fund, L.P. (“Atlantic Park”), as administrative agent and collateral agent, and the lenders party thereto. The Senior Term Loan Credit Agreement provides for an initial term loan facility (the “2021 Senior Term Loan”) in the aggregate principal amount of $100.0 million, all of which was borrowed by the Company and was used to repay our former term loan. The Senior Term Loan Credit Agreement also provided for a delayed draw term loan facility in the aggregate principal amount of up to $125.0 million, which may be drawn by the Company in up to three separate borrowings through June 30, 2022. All outstanding borrowings under the Senior Term Loan Credit Agreement mature on February 2, 2027.

In February 2022, we entered into an amendment to our Senior Term Loan Credit Agreement with Atlantic Park. The amendment provided for a $35.0 million delayed draw facility, which we borrowed in full (the “February 2022 Delayed Draw Term Loan”) under our existing delayed draw term loan facility and allowed the net proceeds to be used for working capital purposes and to fund low-cost country expansion in our Horizon Europe-Africa operating segment.

In connection with the February 2022 Delayed Draw Term Loan, we issued warrants (“Senior Term Loan Amendment Warrants”) to Atlantic Park to purchase up to 975,000 shares of our common stock, with an exercise price of $9.00 per share. The Senior Term Loan Amendment Warrants are exercisable at any time prior to February 10, 2027. On May 24, 2022, shareholders approved the proposal to issue common shares upon the exercise of the issued warrants.

On June 27, 2022, we borrowed the remaining $90.0 million under our existing delayed draw term loan facility (the “June 2022 Delayed Draw Term Loan”). The proceeds of the June 2022 Delayed Draw Term Loan were used by the Company to repay $85.0 million of principal and $1.7 million of accrued interest on our Convertible Notes, as defined below, which matured on July 1, 2022. Following the full draw on the delayed draw term loans as of June 30, 2022, the February 2022 Delayed Draw Term Loan, the June 2022 Delayed Draw Term Loan and the 2021 Senior Term Loan are collectively referred to as the Senior Term Loan. As of June 30, 2022, there was $225.0 million outstanding on the Senior Term Loan bearing cash interest at the interest rate of LIBOR plus 7.50% per annum, subject to a 1.00% LIBOR floor.

Convertible Notes

In February 2017, we completed a public offering of 2.75% Convertible Senior Notes (the “Convertible Notes”) in an aggregate principal amount of $125.0 million. During the second quarter of 2022, we issued Series B Preferred Stock, as defined below, in exchange for $40.0 million of the outstanding principal balance of the Convertible Notes. On July 1, 2022, the proceeds of the June 2022 Delayed Draw Term Loan were used to repay $85.0 million of principal and $1.7 million of accrued interest. As of June 30, 2022, the combined $86.7 million was held as restricted cash.

Series B Preferred Stock

In February 2022, the Company executed a commitment letter with Corre Partners Management, LLC, acting on behalf of certain investment funds for which it acts as investment manager (collectively, the “Corre Funds”), to issue, solely at the Company’s option, up to $40.0 million of a new series of our preferred stock, the proceeds of which would be used by the Company to repay a portion of our Convertible Notes and for working capital and general corporate purposes.

On June 27, 2022, we entered into a Preferred Stock Purchase Agreement (the “Purchase Agreement”) with the Corre Funds pursuant to which the Corre Funds purchased 40,000 shares of our Series B Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”), in exchange for $40.0 million aggregate principal amount of our Convertible Notes, which were cancelled by us. Pursuant to the terms of the Purchase Agreement, we also issued the Corre Funds an additional 1,000 shares of Series B Preferred Stock in satisfaction of our obligation to pay Corre Funds a commitment fee pursuant to the terms of the commitment letter described above.

The Series B Preferred Stock accrue dividends in kind at a rate of 11.0% per annum, subject to increase to a maximum of 16.0% per annum upon the occurrence of certain events. The Series B Preferred Stock is subject to voluntary redemption by the Company at our option and subject to mandatory redemption upon the first to occur of a change in control and the one-year anniversary of the maturity of the Senior Term Loan, which is February 2, 2028. The Series B Preferred Stock, after the occurrence of certain events, will be convertible into shares of our common stock, par value $0.01 per share, at Corre’s option and subject to shareholder approval.

Other Matters

We are subject to variable interest rates on our Senior Term Loan Credit Agreement and Revolving Credit Facility. At June 30, 2022, 1-Month LIBOR and 3-Month LIBOR approximated 1.79% and 2.29%, respectively. At June 30, 2022, the Adjusted Term SOFR approximated 1.09%.

In addition to our long-term debt, we have other cash commitments related to leases. For the six months ended June 30, 2022 and 2021 rent expense on our operating leases was $7.2 million and $7.6 million, respectively. We expect to continue to utilize leasing as a financing strategy in the future to support our business and operational needs as well as reduce debt levels.

Refer to Note 7, Long-term Debt, Note 8, Redeemable Preferred Stock, and Note 9, Leases, in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” included within this Quarterly Report on Form 10-Q for additional information.

Consolidated EBITDA

Consolidated EBITDA (defined as “Consolidated EBITDA” in our Senior Term Loan Agreement) is a comparable measure to how the Company assesses performance. As discussed further in the Segment Information and Supplemental Analysis section above, we use certain non-GAAP financial measures to assess performance and measure our covenant compliance in accordance with the Senior Term Loan Agreement, which includes Adjusted EBITDA at the operating segment level. For the measurement of our Senior Term Loan Agreement financial covenants, the definition of Consolidated EBITDA limits the amount of non-recurring expenses or costs including restructuring, moving and severance that can be excluded to $10 million in any cumulative four fiscal quarter period. Similarly, the definition limits the amount of fees, costs and expenses incurred in connection with any proposed asset sale, offering of equity interests or any indebtedness, lender agent fees, and fees in connection with the maintenance and/or forgiveness of the loan from PNC Bank, National Association for $8.7 million, pursuant to the Paycheck Protection Program (the “PPP Loan”) under Division A, Title I of the Coronavirus Aid, Relief and Economic Security Act, in the aggregate, that can be excluded to $8 million in any cumulative four fiscal quarter period.

The reconciliations of net income (loss) attributable to Horizon Global to EBITDA, EBITDA to Adjusted EBITDA and Adjusted EBITDA to Consolidated EBITDA are as follows:


	Three Months Ended June 30,						Six Months Ended June 30,						Last Twelve Months Ended June 30,
	2022		2021		Change		2022		2021		Change		2022		2021		Change
	(dollars in thousands)						(dollars in thousands)						(dollars in thousands)
Net (loss) income attributable to Horizon Global	$	(22,200)	$	1,290	$	(23,490)	$	(48,880)	$	(13,520)	$	(35,360)	$	(67,080)	$	(17,000)	$	(50,080)
Net loss attributable to noncontrolling interest	(230)		(330)		100		(500)		(670)		170		(1,230)		(1,420)		190
Net (loss) income	$	(22,430)	$	960	$	(23,390)	$	(49,380)	$	(14,190)	$	(35,190)	$	(68,310)	$	(18,420)	$	(49,890)
Interest expense	8,310		6,980		1,330		15,980		14,030		1,950		29,920		29,300		620
Income tax expense (benefit)	450		1,400		(950)		680		2,400		(1,720)		(1,880)		750		(2,630)
Depreciation and amortization	4,320		5,220		(900)		8,940		10,720		(1,780)		20,220		23,100		(2,880)
EBITDA	$	(9,350)	$	14,560	$	(23,910)	$	(23,780)	$	12,960	$	(36,740)	$	(20,050)	$	34,730	$	(54,780)
Net loss attributable to noncontrolling interest	230		330		(100)		500		670		(170)		1,230		1,420		(190)
EBITDA attributable to Horizon Global	$	(9,120)	$	14,890	$	(24,010)	$	(23,280)	$	13,630	$	(36,910)	$	(18,820)	$	36,150	$	(54,970)
Adjustments pursuant to Senior Term Loan Agreement:
Losses on sale of receivables	410		270		140		660		500		160		1,120		1,370		(250)
Debt extinguishment losses	—		—		—		—		11,650		(11,650)		—		11,650		(11,650)
Non-cash equity grant expenses	800		850		(50)		2,050		1,710		340		3,860		3,390		470
Other non-cash expenses or losses	2,870		1,790		1,080		7,310		3,920		3,390		10,130		1,360		8,770
Fees, costs and expenses in connection with the term loan and ABL credit agreements	120		—		120		120		—		120		120		—		120
Lender agent related professional fees, costs, and expenses(a)	70		90		(20)		80		100		(20)		160		100		60
Non-recurring expenses or costs(b)	990		130		860		2,580		(820)		3,400		4,020		110		3,910
Non-cash losses on asset sales	50		10		40		50		10		40		1,510		10		1,500
Debt extinguishment gains	—		—		—		—		—		—		(7,530)		—		(7,530)
Other	(40)		(10)		(30)		(40)		(30)		(10)		(40)		(30)		(10)
Adjusted EBITDA	$	(3,850)	$	18,020	$	(21,870)	$	(10,470)	$	30,670	$	(41,140)	$	(5,470)	$	54,110	$	(59,580)
Non-recurring expense limitation(a)(b)	N/A		N/A		N/A		N/A		N/A		N/A		N/A		N/A		N/A
Other	40		10		30		40		30		10		40		30		10
Consolidated EBITDA	$	(3,810)	$	18,030	$	(21,840)	$	(10,430)	$	30,700	$	(41,130)	$	(5,430)	$	54,140	$	(59,570)

(a) Fees, costs and expenses incurred in connection with any proposed asset sale, offering of equity interests or any indebtedness, lender agent fees, and fees in connection with the maintenance and/or forgiveness of the PPP Loan are not to, in aggregate, exceed $8 million in adjustments in determining Consolidated EBITDA in any four fiscal quarter period.

(b) Non-recurring expenses or costs including restructuring, moving and severance are not to, in aggregate, exceed $10 million in adjustments in determining Consolidated EBITDA in any four fiscal quarter period.

Credit Rating

The Company’s credit agreements do not require that we maintain a credit rating.

Outlook

Our business remains susceptible to macroeconomic conditions that may adversely affect our future results, including the current inflationary environment and increased energy prices, volatile interest rates, ongoing global semiconductor shortage, as well as transportation and other logistic constraints. The conflict between Russia and Ukraine has also placed added constraints on the global automotive supply chain that may adversely impact our business. These factors have contributed to a delay in receiving certain critical components required to fulfill orders by the Company or some of our OE customers, which has resulted in retiming some customer orders to future periods. We also continue to experience elevated costs for certain raw materials, including steel, and while we endeavor to recover incremental input costs through pricing recovery initiatives, the recoveries generally occur over time and are not guaranteed. We also continue to monitor the ongoing COVID-19 pandemic and potential impacts to our operations, employees, customers and other stakeholders, as well as prioritizing the health and safety of our employees. We continue to monitor these macroeconomic factors and implement mitigating actions where possible, and remain committed to fulfilling customer orders.

We also remain focused on maintaining liquidity to fund our operations, while considering future maturities in our capital structure, which have been addressed and will continue to be addressed as the Company continues to execute our business plan and operational improvement initiatives which are continuously ongoing. These initiatives were put in place to streamline and simplify our operations and provide a roadmap to achieve our strategic priorities of margin expansion, liquidity management and organic business growth.

We believe the unique strategic footprint we enjoy in our market space will benefit the Company as our OE customers continue to demonstrate a preference for stronger relationships with few suppliers. We believe our brand recognition, portfolio of product offerings, and existing customer relationships present a long-term opportunity for the Company and provide leverage to see balanced growth in OE, aftermarket and retail businesses. That position and brand recognition allows the Company flexibility to bring our products to market in various channels that we believe provide the Company the ability to leverage our current operational footprint to meet customer demand.

Impact of New Accounting Standards

See Note 2, New Accounting Pronouncements, included in Part I, Item 1, “Notes to Condensed Consolidated Financial Statements,” within this Quarterly Report on Form 10-Q.

Critical Accounting Policies

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates that affect both the amounts and timing of the recording of assets, liabilities, net sales and expenses. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, our evaluation of business and macroeconomic trends, and information from other outside sources, as appropriate.

There were no material changes to the items that we disclosed as our critical accounting policies in Item 8, “Financial Statements and Supplementary Data,” in our Annual Report on Form 10-K for the twelve months ended December 31, 2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, as amended, or the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Evaluation of disclosure controls and procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, an evaluation was carried out by management, with the participation of the Chief Executive Officer and Principal Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) pursuant to Rule 13a-15 of the Exchange Act. The Company’s disclosure controls and procedures are designed only to provide reasonable assurance that they will meet their objectives. Based upon that evaluation, the Chief Executive Officer and Principal Financial Officer concluded that, as of June 30, 2022, the Company’s disclosure controls and procedures are effective to provide reasonable assurance that they would meet their objectives.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the three months ended June 30, 2022, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to claims and litigation in the ordinary course of business, but we do not believe that any such claim or litigation is likely to have a material adverse effect on our financial position, results of operations, or cash flows. For a description of risks related to various legal proceedings and claims, see the section entitled “Risk Factors,” in our Annual Report on Form 10-K for the twelve months ended December 31, 2021. For additional information regarding legal proceedings, refer to Note 11, Contingencies, in our Annual Report on Form 10-K for the twelve months ended December 31, 2021.

Item 1A. Risk Factors

A discussion of our risk factors, which could materially affect our business, financial condition or future results, can be found in the section entitled “Risk Factors,” in our Annual Report on Form 10-K for the twelve months ended December 31, 2021, which risk factors are supplemented with the disclosure below.

We are currently out of compliance with the New York Stock Exchange’s (“NYSE”) minimum market capitalization requirement and are at risk of the NYSE delisting our common stock, which would have an adverse impact on the trading volume, liquidity and market price of our common stock.

On July 25, 2022, we were notified by the NYSE that we were not in compliance with the continued listing standard set forth in Section 802.01B of the NYSE Listed Company Manual because our average market capitalization was less than $50 million over a consecutive 30 trading-day period and our stockholders’ equity was less than $50 million. We are taking actions to meet the continued listing standards of the NYSE to cure the market capitalization condition, which we expect will ultimately lead to a recovery of our common stock price and market capitalization. Our common stock could also be delisted if our average market capitalization over a consecutive 30 day-trading period is less than $15 million, in which case we would not have an opportunity to cure the deficiency, our common stock would be suspended from trading on the NYSE immediately, and the NYSE would begin the process to delist our common stock, subject to our right to appeal under NYSE rules. We cannot assure you that any appeal we undertake in these or other circumstances will be successful. While we are working to cure this potential deficiency and remain in compliance with this continued listing standard, there can be no assurance that we will be able to cure this potential deficiency or if we will cease to comply with another continued listing standard of the NYSE.

A delisting of our common stock from the NYSE could negatively impact us as it would likely reduce the liquidity and market price of our common stock; reduce the number of investors willing to hold or acquire our common stock; and negatively impact our ability to access equity markets and obtain financing.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits.

Exhibits Index:


3.1(b)			Amended and Restated Certificate of Incorporation of Horizon Global Corporation, as amended.
3.2(a)			Amended and Restated By-laws of Horizon Global Corporation.
3.3(c)			Series B Preferred Stock Certificate of Designations.
10.1(d)*			Eighth Amendment to Loan and Security Agreement dated April 4, 2022, by and among Horizon Global Americas Inc. and Cequent Towing Products of Canada Ltd., as borrowers, Horizon Global Corporation, Horizon Global Company LLC, Cequent Electrical Products de Mexico, S. de R.L. de C.V., and Cequent Sales Company de Mexico, S. de R.L. de C.V., as guarantors, the lenders party thereto and Eclipse Business Capital LLC (f/k/a Encina Business Credit, LLC), as agent for the Lenders.
10.2			Preferred Stock Purchase Agreement dated June 27, 20 2 2 between Horizon Global Corporation and the Purchasers named in Schedule I thereto.
10.3*			Ninth Amendment to Loan and Security Agreement dated June 30, 2022, by and among Horizon Global Americas Inc. and Cequent Towing Products of Canada Ltd., as borrowers, Horizon Global Corporation, Horizon Global Company LLC, Cequent Electrical Products de Mexico, S. de R.L. de C.V., and Cequent Sales Company de Mexico, S. de R.L. de C.V., as guarantors, the lenders party thereto and Eclipse Business Capital LLC (f/k/a Encina Business Credit, LLC), as agent for the Lenders.
31.1			Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2			Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1			Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2			Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS			Inline XBRL Instance Document. (not part of filing)
101.SCH			Inline XBRL Taxonomy Extension Schema Document.
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104			Cover Page Interactive Data File (embedded within the Inline XBRL document).


(a)						Incorporated by reference to the Exhibit filed with our Current Report on Form 8-K filed on February 20, 2019 (File No. 001-37427).
(b)						Incorporated by reference to the Exhibit filed with our Quarterly Report on Form 10-Q filed on August 8, 2019 (File No. 001-37427).
(c)						Incorporated by reference to the Exhibit filed with our Current Report on Form 8-K filed on June 30, 2022 (File No. 001-37427).
(d)						Incorporated by reference to the Exhibit filed with our Quarterly Report on Form 10-Q filed on May 5, 2022 (File No. 001-37427).

* Certain exhibits and schedules are omitted pursuant to Item 601(a)(5) of Regulation S-K, and the Company agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted exhibits and schedules upon request.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HORIZON GLOBAL CORPORATION (Registrant)

/s/ DENNIS E. RICHARDVILLE

Date:

August 9, 2022

By:

Dennis E. Richardville

Principal Financial Officer

Document

Exhibit 10.2

Execution Version

PREFERRED STOCK PURCHASE AGREEMENT

BETWEEN

HORIZON GLOBAL CORPORATION

AND PREFERRED STOCK PURCHASE AGREEMENT

BETWEEN

HORIZON GLOBAL CORPORATION

AND

THE PURCHASERS NAMED IN SCHEDULE 1

Dated as of June 27, 2022


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TABLE OF CONTENTS


Article I DEFINITIONS			1
Section 1.1 Definitions			1
Section 1.2 Construction			4
Article II PRIVATE PLACEMENT			5
Section 2.1 The Private Placement			5
Section 2.2 Payment			5
Section 2.3 Closing			6
Section 2.4 Restrictions on Transferability of Preferred Stock			6
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY			7
Section 3.1 Organization and Qualification			7
Section 3.2 Capitalization.			7
Section 3.3 Authorization, Execution and Delivery			8
Section 3.4 No Conflict			8
Section 3.5 Consents and Approvals			8
Section 3.6 Issuance; Valid Issuance			8
Section 3.7 Investment Company Act			9
Section 3.8 Compliance with SEC Filings.			9
Section 3.9 Financial Statements			10
Section 3.10 No Undisclosed Liabilities			10
Section 3.11 Absence of Certain Changes or Events			10
Section 3.12 Litigation and Regulatory Proceedings			10
Section 3.13 Compliance with Law			10
Section 3.14 No Broker’s Fees			11
Article IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS			11
Section 4.1 Organization, Authority, Execution and Delivery			11
Section 4.2 No Conflict			11
Section 4.3 Consents and Approvals			11
Section 4.4 No Registration			12
Section 4.5 Purchasing Intent			12
Section 4.6 Sophistication; Investigation			12
Section 4.7 Title to Exchanged Convertible Notes			13
Section 4.8 No Broker’s Fees			13
Article V REGISTRATION RIGHTS			13
Section 5.1 Registration Statement			13
Article VI GENERAL PROVISIONS			14
Section 6.1 Notices			14
Section 6.2 Assignment; Third Party Beneficiaries			14
Section 6.3 Prior Negotiations; Entire Agreement			15
Section 6.4 Governing Law; Venue			15


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Section 6.5 Counterparts			15
Section 6.6 Waivers and Amendments; Rights Cumulative; Consent			15
Section 6.7 Headings			16
Section 6.8 Specific Performance			16


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PREFERRED STOCK PURCHASE AGREEMENT

THIS PREFERRED STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of June 27, 2022, is made by and among Horizon Global Corporation, a Delaware corporation (the “Company”), and each of the purchasers listed on Schedule 1 hereof (each, a “Purchaser” and, collectively, the “Purchasers”). The Company and the Purchasers are referred to herein, individually, as a “Party,” and, collectively, as the “Parties.” Capitalized terms that are used but not otherwise defined in this Agreement shall have the meanings given to them in Section 1.1 hereof.

RECITALS

WHEREAS, the Board of Directors of the Company (the “Board”) has deemed it advisable and has authorized (i) the issuance and sale of 40,000 shares (the “Purchased Preferred Shares”) of the Company’s Series B Preferred Stock, par value of $0.01 per share (the “Series B Preferred Stock”), to the Purchasers (as defined below) and (ii) the issuance of 1,000 shares (the “Commitment Preferred Shares”) of Series B Preferred Stock to the Purchasers;

WHEREAS, subject to the terms and conditions contained in this Agreement, the Company has agreed to issue and sell, and each of the Purchasers has severally agreed to purchase, the Purchased Preferred Shares, upon the terms and conditions set forth herein; and

WHEREAS, subject to the terms of the Commitment Letter (as defined below), the Company has agreed to issue the Commitment Preferred Shares.

NOW, THEREFORE, in consideration of the mutual promises, agreements, representations, warranties and covenants contained herein, the Company and the Purchasers hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Definitions. Except as otherwise expressly provided in this Agreement, whenever used in this Agreement, the following terms shall have the respective meanings specified below:

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly, Controls or is Controlled by or is under common Control with such Person. “Affiliated” has a correlative meaning.

“Agreement” has the meaning set forth in the Preamble.

“Authorized Preferred Stock” has the meaning set forth in Section 3.2(a).

“Board” has the meaning set forth in the Recitals.

“Bylaws” means the Amended and Restated Bylaws of the Company, as in effect on the date hereof.

“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by Law or other governmental action to close.

“Certificate of Incorporation” means the Amended and Restated Certificate of Incorporation of the Company, as amended, as in effect on the date hereof.

“Closing” has the meaning set forth in Section 2.3(a).


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“Code” means the Internal Revenue Code of 1986, as amended.

“Commitment Letter” has the meaning set forth in Section 2.2(c).

“Commitment Preferred Shares” has the meaning set forth in the Recitals.

“Common Stock” means the common stock, par value $0.01 per share, of the Company.

“Company” has the meaning set forth in the Preamble.

“Company SEC Documents” has the meaning set forth in Section 3.8(a).

“Contract” means any agreement, contract or instrument, including any loan, note, bond, mortgage, indenture, guarantee, deed of trust, license, franchise, commitment, lease, franchise agreement, letter of intent, memorandum of understanding or other obligation, and any amendments thereto, whether written or oral.

“Control” means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by Contract or agency or otherwise. “Controlled” has a correlative meaning.

“Convertibility Requirement” has the meaning set forth in the Certificate of Incorporation.

“Corre” means Corre Partners Management, LLC, a Delaware limited liability company and the appointed investment manager of each of the Purchasers.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Exchanged Convertible Notes” has the meaning set forth in Section 2.2(a).

“GAAP” has the meaning set forth in Section 3.9.

“Governmental Entity” means any federal, state, or local governmental or quasi-governmental instrumentality, agency, board, commission, department, court or tribunal; or any regulatory agency, bureau, commission, or authority.

“Law” means any law (statutory or common), statute, regulation, rule, code or ordinance enacted, adopted, issued or promulgated by any Governmental Entity.

“Legal Proceedings” means any legal, governmental, administrative, judicial or regulatory investigations, audits, actions, suits, claims, arbitrations, demands, demand letters, notices of noncompliance or violations, or proceedings.

“Legend” has the meaning set forth in Section 2.4(a).

“Lien” means any lien, adverse claim, charge, option, right of first refusal, servitude, security interest, mortgage, pledge, deed of trust, easement, encumbrance, restriction on transfer, conditional sale or other title retention agreement, defect in title, lien or judicial lien or other restrictions of a similar kind.

“Order” means any judgment, order, award, injunction, writ, permit, license or decree of any Governmental Entity or arbitrator of applicable jurisdiction.

“Party” and “Parties” have the meanings set forth in the Preamble.


NAI-1527894887v8

“Person” means an individual, firm, corporation (including any non-profit corporation), partnership, limited liability company, joint venture, association, trust, Governmental Entity or other entity or organization.

“Preferred Shares” means, collectively, the Purchased Preferred Shares and the Commitment Preferred Shares.

“Private Placement” means, collectively, (i) the purchase by each of the Purchasers of the Purchased Preferred Shares for the Purchase Amount on the terms reflected in this Agreement and (ii) the issuance by the Company of the Commitment Preferred Shares to the Purchasers.

“Purchase Amount” means, with respect to a particular Purchaser, the amount set forth opposite such Purchaser’s name under the column entitled “Purchase Amount” set forth on Schedule 1 hereof, and with respect to the Purchasers collectively, the aggregate purchase price of $40,000,000 for the Purchased Preferred Shares.

“Purchased Preferred Shares” has the meaning set forth in the Recitals.

“Registration Statement” means any registration statement of the Company filed with, or to be filed with, the SEC under the Securities Act, including the related prospectus, amendments and supplements to such registration statement, including pre- and post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement other than a registration statement (and related prospectus) filed on Form S-4 or Form S-8 or any successor form thereto.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Series B Preferred Stock” has the meaning set forth in the Recitals.

“Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture or other legal entity as to which such Person (either alone or through or together with any other subsidiary), (a) owns, directly or indirectly, more than 50% of the stock or other equity interests, (b) has the power to elect a majority of the board of directors or similar governing body, or (c) has the power to direct the business and policies.

“Taxes” means all taxes, assessments, duties, levies or other mandatory governmental charges paid to a Governmental Entity, including all federal, state, local, foreign and other income, franchise, profits, gross receipts, capital gains, capital stock, transfer, property, sales, use, value-added, occupation, excise, severance, windfall profits, stamp, payroll, social security, withholding and other taxes, assessments, duties, levies or other mandatory governmental charges of any kind whatsoever paid to a Governmental Entity (whether payable directly or by withholding and whether or not requiring the filing of a return), all estimated taxes, deficiency assessments, additions to tax, penalties and interest thereon and shall include any liability for such amounts as a result of being a member of a combined, consolidated, unitary or affiliated group.

“Transfer” means to voluntarily or involuntarily sell, transfer, assign, pledge, hypothecate, participate, donate or otherwise encumber or dispose of, directly or indirectly. “Transfer” used as a noun has a correlative meaning.

Section 1.2 Construction. In this Agreement, unless the context otherwise requires:

(a)references in this Agreement to “writing” or comparable expressions include a reference to a written document transmitted by means of electronic mail in portable document format (pdf), facsimile transmission or comparable means of communication;


NAI-1527894887v8

(b)words expressed in the singular number shall include the plural and vice versa; words expressed in the masculine shall include the feminine and neuter gender and vice versa;

(c)the words “hereof,” “herein,” “hereto” and “hereunder,” and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole, including all Exhibits and Schedules attached to this Agreement, and not to any provision of this Agreement;

(d)the term “this Agreement” shall be construed as a reference to this Agreement as the same may have been, or may from time to time be, amended, modified, varied, novated or supplemented;

(e)“include,” “includes” and “including” are deemed to be followed by “without limitation” whether or not they are in fact followed by such words;

(f)references to “day” or “days” are to calendar days;

(g)references to “the date hereof” means the date of this Agreement;

(h)unless otherwise specified, references to a statute means such statute as amended from time to time and includes any successor legislation thereto and any rules or regulations promulgated thereunder in effect from time to time; and

(i)references to “dollars” or “$” refer to currency of the United States of America, unless otherwise expressly provided.

ARTICLE II

PRIVATE PLACEMENT

Section 2.1 The Private Placement. On and subject to the terms and conditions hereof, (a) each of the Purchasers severally agrees to purchase, and the Company agrees to issue and sell to each of the Purchasers, on the date hereof for the Purchase Amount, the Purchased Preferred Shares, and (b) subject to the issuance of the Purchased Preferred Shares as contemplated by Section 2.3(b), the Company agrees to issue the Commitment Preferred Shares to the Purchasers in satisfaction of its obligation to pay a commitment fee pursuant to the terms of the Commitment Letter, in each case free and clear of any Liens or other restrictions on transfer (other than applicable federal and state securities Law restrictions or as set forth herein or in the Preferred Stock Amendment). The offer, sale and issuance of the Preferred Shares to the Purchasers pursuant to this Agreement will be made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act or another available exemption from registration under the Securities Act.

Section 2.2 Payment by Exchange of Exchanged Convertible Notes.

(a) On the date hereof, and subject to the issuance of the Purchased Preferred Shares as contemplated by Section 2.3(b), each of the Purchasers shall deliver and pay its respective portion of the Purchase Amount by delivery of the Company’s 2.75% Convertible Senior Notes due 2022 beneficially owned by such Purchaser (collectively for all Purchasers, the “Exchanged Convertible Notes”), free and clear of all Taxes, Liens and similar interests, in an aggregate principal amount set forth opposite such Purchaser’s name under the column titled “Exchanged Convertible Notes” on Schedule 1 hereof, all in satisfaction of the respective Purchaser’s obligation to purchase the Purchased Preferred Shares. For the avoidance of doubt, apart from the Exchanged Convertible Notes, any and all other 2.75% Convertible Senior Notes due 2022 of the Company beneficially owned by the Purchasers shall not be so delivered and exchanged and shall not be subject to this Agreement.

(b) The Parties intend and agree to use their respective reasonable best efforts to structure the purchase of Purchased Preferred Shares made by exchange of the Exchanged Convertible


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Notes in such a way that, to the maximum extent possible, such exchange and purchase shall be a recapitalization pursuant to Section 368(a)(1)(E) of the Code for United States federal and applicable state and local tax purposes, and none of the Parties has taken or will take any action (or fail to take any action), if such action (or failure to act), whether before or after the Closing, would reasonably be expected to prevent or impede such exchange and purchase from qualifying as such a recapitalization.

(c) The Parties intend and agree that the purchase of Purchased Preferred Shares made by the exchange of the Exchanged Convertible Notes shall satisfy the obligation to fund the “Total Commitment Amount”, as defined in and provided by that certain Commitment Letter (the “Commitment Letter”) dated February 10, 2022 by and between the Company and Corre, as investment manager of the Purchasers.

Section 2.3 Closing. The closing of the Private Placement (the “Closing”) shall take place at the offices of Jones Day, 901 Lakeside Avenue, Cleveland, Ohio 44114, or such other place as shall be agreed to by the Parties, on the date hereof.

(a) At the Closing, (i) issuance of the Purchased Preferred Shares will be made by the Company to each of the Purchasers against delivery of the Exchanged Convertible Notes in accordance with Section 2.2 and (ii) subject to the issuance of the Purchased Preferred Shares, issuance of the Commitment Preferred Shares will be made by the Company to each of the Purchasers. The Preferred Shares to be delivered pursuant to this Section 2.3(b) shall be represented by physical certificates, which shall be delivered to the Purchasers promptly following the Closing.

(b) It is agreed that, at the Closing, the respective Purchasers will not be entitled to any accrued and unpaid interest on the Exchanged Convertible Notes. It is understood that the respective Purchasers shall receive accrued and unpaid interest on the Exchanged Convertible Notes in connection with the scheduled interest payment to be made with respect to the Company’s 2.75% Convertible Senior Notes due 2022 on July 1, 2022, in accordance with the Indenture governing such Convertible Senior Notes.

Section 2.4 Restrictions on Transferability of Preferred Stock.

(a) Legends. Each certificate evidencing securities issued hereunder and each certificate issued in exchange for or upon the Transfer of any such securities, shall be stamped or otherwise imprinted with a legend (the “Legend”) in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY OTHER APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN AVAILABLE EXEMPTION FROM REGISTRATION THEREUNDER.

THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING, DIVIDEND, OPTIONAL OR OTHER SPECIAL RIGHTS OF THE SHARES OF PREFERRED STOCK OF THE CORPORATION AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH POWERS, DESIGNATIONS, PREFERENCES AND/OR RIGHTS ARE SET FORTH IN THE CERTIFICATE OF INCORPORATION OF THE CORPORATION, A COPY OF WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE CORPORATION’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.”

(b) Restrictions on Transfer. The Purchasers may not Transfer the Preferred Shares to any other Person except with the prior written consent of the Company in its sole discretion, and, in the case of any such Transfer, subject to compliance with applicable Law. Notwithstanding anything to the contrary in the foregoing, a Purchaser may Transfer Preferred Shares to any of its Affiliates so long


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as any such Affiliate shall agree in writing that it shall, upon such Transfer, assume with respect to such Preferred Shares such Purchaser’s obligations under this Agreement and become a Party for such purpose, and, in the case of any such Transfer, subject to compliance with applicable Law.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to each of the Purchasers (unless otherwise set forth herein, as of the date hereof) as set forth below.

Section 3.1 Organization and Qualification. The Company has been duly incorporated and is validly existing as a corporation in good standing under the Laws of the State of Delaware, has the corporate power and authority to own, lease or operate its property and to conduct its business in which it is currently engaged and presently proposes to engage and is qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that any such failure to be so qualified or be in good standing would not, individually or in the aggregate, reasonably be expected to materially and adversely affect the Company’s business, financial condition or results of operations or the Company’s ability to perform its obligations under this Agreement.

Section 3.2 Capitalization.

(a)The authorized stock of the Company consists of 400,000,000 shares of Common Stock and 100,000,000 shares of preferred stock, $0.01 par value (“Authorized Preferred Stock”). As of June 15, 2022, (i) 27,676,025 shares of Common Stock were issued and outstanding, (ii) 686,506 shares of Common Stock were held in treasury, (iii) 2,365,881 shares of Common Stock were issuable upon exercise in respect of options to purchase shares of Common Stock and other equity awards granted under any equity compensation plan of the Company, whether vested or unvested, (iv) 10,206,146 shares of Common Stock were issuable in respect of outstanding warrants to purchase shares of Common Stock and (v) no shares of Authorized Preferred Stock were outstanding.

(b)Except as contemplated by this Agreement, the Preferred Shares or as disclosed in the Company SEC Documents or with respect to securities issued or issuable under existing equity compensation plans of the Company, there are no outstanding subscriptions, options, warrants, calls, convertible securities or other contracts relating to the issuance or repurchase of capital stock, or other equity interests of the Company to which the Company is a party, or by which it is bound, obligating the Company to (A) issue, transfer or sell or cause to be issued, transferred or sold, any shares of capital stock or other equity interests of the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares of capital stock or other equity interests, (B) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or contract, or (C) redeem or otherwise acquire any number of such shares of capital stock or other equity interests.

(c)Except as disclosed in the Company SEC Documents or as contemplated by this Agreement, there are no voting trusts or other contracts to which the Company is a party with respect to voting or registration of the capital stock or other equity interests of the Company.

(d)The Company or one or more of its direct or indirect Subsidiaries owns the common stock, membership interests or other ownership interests, as applicable, in each of its Subsidiaries free and clear of all Liens, encumbrances and adverse claims, except for Liens securing the Company’s existing indebtedness and such Liens, encumbrances and adverse claims as would not, individually or in the aggregate, reasonably be expected to materially and adversely affect the Company’s business, financial condition or results of operations or the Company’s ability to perform its obligations under this Agreement.


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Section 3.3 Authorization, Execution and Delivery. The Company has requisite corporate power and authority to enter into this Agreement, to perform its obligations hereunder and to consummate the Private Placement. The execution and delivery of this Agreement and the consummation of the Private Placement have been duly authorized by the Board and no other corporate proceedings on the part of the Company are necessary to authorize the Private Placement. This Agreement has been duly and validly executed and delivered by the Company and constitutes the legal, valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except that such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereinafter in effect, relating to creditors’ rights generally or equitable considerations.

Section 3.4 No Conflict. Neither the offer and sale of the Preferred Shares nor the execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement will result in a violation or default of, or the imposition of any Lien upon any property or assets of the Company or any of its Subsidiaries pursuant to (a) any provision of applicable Law, (b) the Certificate of Incorporation or Bylaws, as the case may be, or other organizational documents, each as amended, of the Company or any Subsidiary of the Company, (c) any agreement or other instrument binding upon the Company or any Subsidiary of the Company or (d) any Order any Governmental Entity, agency or court having jurisdiction over the Company or any Subsidiary of the Company or any of their properties, except in the case of clauses (a), (c) and (d) for any such violation, default or Lien that would not, individually or in the aggregate, reasonably be expected to materially and adversely affect the Company’s business, financial condition or results of operations or the Company’s ability to perform its obligations under this Agreement.

Section 3.5 Consents and Approvals. No consent, approval, authorization, Order, registration, qualification or filing of or with any Governmental Entity by the Company is required in connection with the transactions contemplated herein, except such as may be required under the Exchange Act, the Securities Act or “Blue Sky” Laws.

Section 3.6 Issuance; Valid Issuance. The Preferred Shares to be issued in connection with the consummation of the Private Placement and pursuant to the terms of this Agreement will, when issued and delivered on the date hereof and any time thereafter, be duly and validly authorized, issued and delivered and shall be fully paid and non-assessable, and such Preferred Shares will be free and clear of all Taxes, Liens (other than transfer restrictions imposed hereunder, under the Certificate of Incorporation or by applicable Law), preemptive rights, subscription and similar rights. Assuming the accuracy of the representations and warranties of the Purchasers set forth in Article IV, it is not necessary in connection with the issuance and sale of the Preferred Shares to the Purchasers in the manner contemplated by this Agreement to register such Preferred Shares under the Securities Act.

Section 3.7 Investment Company Act. The Company is not required to register as an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

Section 3.8 Compliance with SEC Filings.

(a) The Company has filed or furnished all forms, documents and reports required to be filed or furnished by it with the SEC since January 1, 2020 (such documents together with all other forms, documents and reports filed or furnished by the Company with the SEC, including the exhibits thereto and documents incorporated by reference therein, the “Company SEC Documents”). As of their respective dates or, if amended, as of the date of such amendment, the Company SEC Documents complied in all material respects with the requirements of the Securities Act, Exchange Act and the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations promulgated thereunder, and none of the Company SEC Documents included any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(b) The Company maintains (x) a system of “internal control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that complies with the requirements of the


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Exchange Act and has been designed by, or under the supervision of, its principal executive and principal financial officers, or persons performing similar functions, sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (y) a system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in reports that it files with the SEC pursuant to the SEC’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure, and such disclosure controls and procedures were effective as of the times indicated in the Company SEC Documents. The Company’s internal control over financial reporting was effective as of the times indicated in the Company SEC Documents and, at such times, the Company was not aware of any material weaknesses in its internal control over financial reporting.

Section 3.9 Financial Statements. The audited consolidated financial statements and unaudited consolidated financial statements (including all related notes and schedules) of the Company included in the Company SEC Documents complied as to form in all material respects with the rules and regulations of the SEC then in effect, fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries, as of the respective dates thereof, and the consolidated results of their operations and their consolidated cash flows for the respective periods then ended (subject, in the case of the unaudited statements, to normal recurring year-end audit adjustments that were not or are not expected to be, individually or in the aggregate, materially adverse to the Company), and were prepared in accordance with United States generally accepted accounting principles (“GAAP”) applied on a consistent basis during the periods involved, except as otherwise disclosed in the Company SEC Documents.

Section 3.10 No Undisclosed Liabilities. Except (a) as reflected or reserved against in the Company’s most recent consolidated balance sheets (or stated in the notes thereto) included in the Company SEC Documents and (b) for liabilities and obligations incurred since December 31, 2021 in the ordinary course of business, neither the Company nor any of its Subsidiaries, taken as a whole, has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that would be required by GAAP to be reflected on a consolidated balance sheet of the Company and its consolidated Subsidiaries (or in the notes thereto) other than those which would not, individually or in the aggregate, reasonably be expected to materially and adversely affect the Company’s business, financial condition or results of operations or the Company’s ability to perform its obligations under this Agreement.

Section 3.11 Absence of Certain Changes or Events. Since the date of the Company’s most recent consolidated balance sheet included in the Company SEC Documents, there has not occurred any change, event or development that has, individually or in the aggregate, materially and adversely affected the Company’s business, financial condition or results of operations or the Company’s ability to perform its obligations under this Agreement, or would, individually or in the aggregate, reasonably be expected to do so.

Section 3.12 Litigation and Regulatory Proceedings. Other than as disclosed in the Company SEC Documents, there are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened, to which the Company or any Subsidiary of the Company is a party or to which any of the properties of the Company or any Subsidiary of the Company are subject wherein an unfavorable decision, ruling or finding would, individually or in the aggregate, reasonably be expected to materially and adversely affect the Company’s business, financial condition or results of operations or the Company’s ability to perform its obligations under this Agreement.

Section 3.13 Compliance with Law. The Company and each of its Subsidiaries are, and since January 1, 2020 have been, in compliance with and not in default under or in violation of any Law, except where such non-compliance would not, individually or in the aggregate, reasonably be


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expected to materially and adversely affect the Company’s business, financial condition or results of operations or the Company’s ability to perform its obligations under this Agreement. Within the past three years, neither the Company nor any of its Subsidiaries has received any notice or other communication from any Governmental Entity regarding any actual or possible violation of, or failure to comply with, any Law, except as would not, individually or in the aggregate, reasonably be expected to materially and adversely affect the Company’s business, financial condition or results of operations or the Company’s ability to perform its obligations under this Agreement.

Section 3.14 No Broker’s Fees. The Company is not a party to any Contract with any Person that would give rise to a valid claim against any Purchaser or Corre for a brokerage commission, finder’s fee or like payment in connection with the Private Placement or the issuance of the Preferred Shares.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

Each Purchaser hereby severally represents and warrants to the Company as set forth below.

Section 4.1 Organization, Authority, Execution and Delivery. Such Purchaser (a) is a legal entity organized, validly existing and, if applicable, in good standing (or the equivalent thereof) under the Laws of its jurisdiction of incorporation or organization, (b) has the requisite power and authority (corporate or otherwise) to enter into this Agreement, perform its obligations under this Agreement and to consummate the Private Placement (c) has duly authorized the execution and delivery of this Agreement and no other corporate proceedings on the part of such Purchaser are necessary to authorizing the Private Placement and (d) has duly and validly executed and delivered this Agreement. This Agreement constitutes the legal, valid and binding agreement of such Purchaser, enforceable against such Purchaser in accordance with its terms, except that such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws, now or hereinafter in effect, relating to creditors’ rights generally or equitable considerations.

Section 4.2 No Conflict. The execution and delivery by such Purchaser of this Agreement, the compliance by such Purchaser with all of the provisions hereof and the consummation of the transactions contemplated herein (a) will not conflict with, or result in breach, modification, termination or violation of, any of the terms or provisions of, or constitute a default under (with or without notice or lapse of time or both), or result in the acceleration of, or the creation of any Lien under, any Contract to which such Purchaser is party or is bound or to which any of the property or assets of such Purchaser are subject, (b) will not result in any violation of the provisions of the certificate of incorporation or bylaws (or comparable organizational documents) of such Purchaser and (c) will not result in any violation of any Law or Order applicable to such Purchaser or any of its properties, except in each of the cases described in clauses (a) or (c), for any conflict, breach, modification, termination, violation, default, acceleration or Lien which would not reasonably be expected, individually or in the aggregate, to prohibit or materially and adversely impact such Purchaser’s performance of its obligations under this Agreement.

Section 4.3 Consents and Approvals. No consent, approval, authorization, Order, registration, qualification or filing of or with any Governmental Entity having jurisdiction over such Purchaser or any of its properties is required for the execution and delivery by such Purchaser of this Agreement, the compliance by such Purchaser with the provisions hereof and the consummation of the transactions contemplated herein.

Section 4.4 No Registration. Such Purchaser understands that (a) the Preferred Shares, as well as any shares of Common Stock into which the Preferred Shares may be converted, have not been registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends on, among other things, the bona fide nature of the investment intent and the accuracy of such Purchaser’s representations as expressed herein or otherwise made pursuant hereto and (b) the foregoing Preferred Shares, as well as any shares of


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Common Stock into which the Preferred Shares may be converted, cannot be sold unless subsequently registered under the Securities Act or an exemption from registration is available.

Section 4.5 Purchasing Intent. Such Purchaser is acquiring the Preferred Shares for its own account or accounts or funds over which it holds voting discretion, not otherwise as a nominee or agent, and not otherwise with the view to, or for resale in connection with, any distribution thereof not in compliance with applicable securities Laws, and such Purchaser has no present intention of selling, granting any other participation in, or otherwise distributing the same, except in compliance with applicable securities Laws and subject to compliance with the provisions hereof.

Section 4.6 Sophistication; Investigation.

(a) Such Purchaser has such knowledge and experience in financial and business matters such that it is capable of evaluating the merits and risks of its investment in the Preferred Shares. Such Purchaser is an “accredited investor” within the meaning of Rule 501(a) of the Securities Act or a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act. Such Purchaser understands and is able to bear any economic risks associated with its investment in the Preferred Shares (including the necessity of holding such shares for an indefinite period of time and including an entire loss of its investment in the Preferred Shares and any shares of Common Stock into which the Preferred Shares may be converted). Except for the representations and warranties expressly set forth in this Agreement, such Purchaser has independently evaluated the merits and risks of its decision to enter into this Agreement, is consummating the transactions contemplated by this Agreement with a full understanding, based exclusively on its own independent review, of all of the terms, conditions and risks and willingly assumes those terms, conditions and risks, and disclaims reliance on any representations or warranties, either expressed or implied, by or on behalf of the Company.

(b) Such Purchaser acknowledges and understands that the Company has not been requested to provide, and has not provided, such Purchaser with any information or advice with respect to the Preferred Shares (or any shares of Common Stock into which the Preferred Shares may be converted), and such information or advice is neither necessary nor desired.

(c) Such Purchaser acknowledges and understands that the Company may possess material nonpublic information regarding the Company or its Subsidiaries not known to such Purchaser that may impact the value of the Preferred Shares and any shares of Common Stock into which the Preferred Shares may be converted, and that the Company is not disclosing such information to such Purchaser. Such Purchaser understands, based on its experience, the disadvantage to which such Purchaser is subject due to the disparity of information between the Company and such Purchaser. Notwithstanding such disparity, such Purchaser has deemed it appropriate to enter into this Agreement and to consummate transactions contemplated hereby. Accordingly, in the light of such Purchaser’s experience and sophistication, such Purchaser agrees that the Company shall have no liability to such Purchaser whatsoever due to or in connection with the Company’s use or non-disclosure of material nonpublic information regarding the Company or its Subsidiaries not known to such Purchaser, including, without limitation, if and to the extent such information affects any representation, warranty or covenant of the Company hereunder, and such Purchaser irrevocably waives any claim that it might have based on the failure of the Company to disclose such information.

Section 4.7 Title to Exchanged Convertible Notes. Such Purchaser is the sole beneficial owner of its Exchanged Convertible Notes (including any accrued and unpaid interest), which are registered in the name of The Depository Trust Company or its nominee, and such Purchaser has full power and authority to tender, sell, assign, and transfer such Exchanged Convertible Notes, including full power and authority to exchange them as provided in this Agreement. Such Purchaser has good, valid and marketable title to its ownership interest in its Exchanged Convertible Notes, free and clear of any Taxes, Liens and similar interests. Such Purchaser has not, in whole or in part, (a) assigned, transferred, hypothecated, pledged, exchanged or otherwise disposed of any of its Exchanged Convertible Notes or its rights in its Exchanged Convertible Notes or (b) given any person or entity any transfer order, power of attorney or other authority of any nature whatsoever with respect to its Exchanged Convertible Notes, except as may be required to consummate the transactions contemplated by this Agreement. Upon such


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Purchaser’s delivery of its Exchanged Convertible Notes to the Company pursuant to Section 2.2, such Exchanged Convertible Notes shall be free and clear of all Liens created by such Purchaser.

Section 4.8 No Broker’s Fees. Neither Corre or such Purchaser is a party to any Contract with any Person that would give rise to a valid claim against the Company for a brokerage commission, finder’s fee or like payment in connection with the Private Placement or the issuance of the Preferred Shares or payment of the Purchase Amount.

ARTICLE V

REGISTRATION RIGHTS

Section 5.1 Registration Statement; Registration Rights Agreement.

(a) Not later than 60 days after the satisfaction of the Convertibility Requirement, the Company shall file a Registration Statement on Form S-3 (or, in the event that the Company is not eligible to file a Registration Statement on Form S-3 as of the date of such satisfaction, a Registration Statement on Form S-1) covering the resale by the Purchasers of all of the shares of Common Stock issuable upon conversion of the Preferred Shares on a delayed or continuous basis.

(b) In connection with filing a Registration Statement covering the resale by the Purchasers of all of the shares of Common Stock issuable upon conversion of the Preferred Shares, the Parties shall enter into a customary registration rights agreement, to be negotiated and finalized subsequent to the satisfaction of the Convertibility Requirement.

ARTICLE VI
GENERAL PROVISIONS

Section 6.1 Notices. All notices and other communications in connection with this Agreement shall be in writing and shall be deemed given if delivered personally, sent via electronic facsimile or email (with confirmation), mailed by registered or certified mail (return receipt requested) or delivered by an express courier (with confirmation) to the Parties at the following addresses (or at such other address for a Party as may be specified by like notice):

(a) If to the Company:

Horizon Global Corporation
47912 Halyard Drive, Suite 100
Plymouth, Michigan 48170
Attention: Jay Goldbaum
Email: jgoldbaum@horizonglobal.com

with copies (which shall not constitute notice) to:

Jones Day

North Point

901 Lakeside Avenue

Cleveland, OH 44114

Attention: Michael J. Solecki, Esq.

Email: mjsolecki@jonesday.com

(b) If to the Purchasers:

Corre Partners Management, LLC

12 East 49th Street, 40th Floor

New York, NY 10017

Attention: Saurabh Kapadia


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Email: operations@corre.com

Section 6.2 Assignment; Third Party Beneficiaries. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned by any Party (whether by operation of Law or otherwise) without the prior written consent of the Company and the Purchasers, except that a Purchaser may assign and transfer, without the prior consent of the Company or the other Purchasers, as applicable, its rights pursuant to Article V hereof to a transferee to whom a Transfer of Preferred Shares is permitted pursuant to this Agreement with respect to Preferred Shares being Transferred. Any assignment in violation of this Section 6.2 shall be void ab initio. This Agreement (including the documents and instruments referred to in this Agreement) is not intended to and does not confer upon any Person any rights or remedies under this Agreement other than the Parties and permitted assigns.

Section 6.3 Prior Negotiations; Entire Agreement. This Agreement constitutes the entire agreement of the Parties and supersedes all prior agreements, arrangements or understandings, whether written or oral, among the Parties with respect to the subject matter of this Agreement.

Section 6.4 Governing Law; Venue. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CHOICE OF LAW PROVISIONS WHICH WOULD REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER JURISDICTION. BY ITS EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY IRREVOCABLY AND UNCONDITIONALLY AGREES FOR ITSELF THAT ANY LEGAL ACTION, SUIT, OR PROCEEDING AGAINST IT WITH RESPECT TO ANY MATTER ARISING UNDER OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT RENDERED IN ANY SUCH ACTION, SUIT, OR PROCEEDING, MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK LOCATED IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH OF THE PARTIES IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE EXCLUSIVE JURISDICTION OF SUCH COURT, GENERALLY AND UNCONDITIONALLY, WITH RESPECT TO ANY SUCH ACTION, SUIT OR PROCEEDING. THE PARTIES HEREBY AGREE THAT MAILING OF PROCESS OR OTHER PAPERS IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING TO AN ADDRESS PROVIDED IN WRITING BY THE RECIPIENT OF SUCH MAILING, OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW, SHALL BE VALID AND SUFFICIENT SERVICE THEREOF AND HEREBY WAIVE ANY OBJECTIONS TO SERVICE ACCOMPLISHED IN THE MANNER HEREIN PROVIDED.

Section 6.5 Counterparts. This Agreement may be executed in any number of counterparts, all of which will be considered one and the same agreement and will become effective when counterparts have been signed by each of the Parties and delivered to each other Party (including via facsimile or other electronic transmission), it being understood that each Party need not sign the same counterpart.

Section 6.6 Waivers and Amendments; Rights Cumulative; Consent. This Agreement may be amended, restated, modified or changed only upon the written consent of the Company and the Purchasers. Any amendment, restatement, modification or change effected in accordance with this Section 6.6 shall be binding upon each of the Purchasers, each transferee or future holder of the Preferred Shares, and the Company. No delay on the part of any Party in exercising any right, power or privilege pursuant to this Agreement will operate as a waiver thereof, nor will any waiver on the part of any Party of any right, power or privilege pursuant to this Agreement, nor will any single or partial exercise of any right, power or privilege pursuant to this Agreement, preclude any other or further exercise thereof or the exercise of any other right, power or privilege pursuant to this Agreement.

Section 6.7 Headings. The headings in this Agreement are for reference purposes only and will not in any way affect the meaning or interpretation of this Agreement.


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Section 6.8 Specific Performance. Each of the Parties hereto agrees that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that each of the Parties hereto shall be entitled to an injunction or injunctions without the necessity of posting a bond to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which they are entitled at law or in equity. Unless otherwise expressly stated in this Agreement, no right or remedy described or provided in this Agreement is intended to be exclusive or to preclude a Party hereto from pursuing other rights and remedies to the extent available under this Agreement, at law or in equity.

[Signature pages follow]


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IN WITNESS WHEREOF, the undersigned Parties have duly executed this Agreement as of the date first above written.

HORIZON GLOBAL CORPORATION

By: /s/ Jay Goldbaum
Name: Jay Goldbaum
Title: General Counsel, Chief Compliance Officer and Corporate Secretary

CORRE OPPORTUNITIES QUALIFIED MASTER FUND, LP

By: /s/ John Barrett
Name: John Barrett
Title:Authorized Signatory

CORRE HORIZON FUND, LP

By: /s/ John Barrett
Name: John Barrett
Title: Authorized Signatory


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Schedule 1 – List of Purchasers


Purchaser	Purchased Preferred Shares	Exchanged Convertible Notes	Purchase Amount	Commitment Preferred Shares
Corre Opportunities Qualified Master Fund, LP	29,301.00	$29,301,000	$29,301,000	732.52
Corre Horizon Fund, LP (Series A)	8,024.25	8,024,250	8,024,250	200.61
Corre Horizon Fund, LP (Series B)	2,674.75	2,674,750	2,674,750	66.87
Total	40,000.00	$40,000,000	$40,000,000	1,000.00


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Document

Exhibit 10.3

NINTH AMENDMENT

TO LOAN AND SECURITY AGREEMENT

This Ninth Amendment to Loan and Security Agreement (this “Ninth Amendment”) is made this 30th day of June, 2022, by and among HORIZON GLOBAL AMERICAS INC., a Delaware corporation (“Horizon Americas”), CEQUENT TOWING PRODUCTS OF CANADA LTD., a company formed under the laws of the Province of Ontario (“Cequent Canada”; together with Horizon Americas, each a “Borrower” and collectively the “Borrowers”), HORIZON GLOBAL CORPORATION, a Delaware corporation (“Parent”), HORIZON GLOBAL COMPANY LLC, a Delaware limited liability company (“Horizon Global”) CEQUENT ELECTRICAL PRODUCTS DE MÉXICO, S. de R.L. de C.V., a Mexican limited liability company (sociedad de responsabilidad limitada de capital variable) (“Cequent Electrical MX”), CEQUENT SALES COMPANY DE MÉXICO, S. de R.L. de C.V., a Mexican limited liability company (sociedad de responsabilidad limitada de capital variable) (“Cequent Sales MX”, and together with Parent, Horizon Global and Cequent Electrical MX, each a “Guarantor” and collectively the “Guarantors”; the Borrowers and Guarantors are referred to herein as, collectively, jointly and severally, the “Loan Parties” and each a “Loan Party”), the Lenders party hereto and ECLIPSE BUSINESS CAPITAL LLC (f/k/a Encina Business Credit, LLC), as agent for the Lenders (in such capacity, the “Agent”).

BACKGROUND

A.The Loan Parties, Lenders and the Agent entered into that certain Loan and Security Agreement dated as of March 13, 2020 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”) to reflect certain financing arrangements between the parties thereto. The Loan Agreement, as in effect immediately prior to the date hereof, and all other Loan Documents executed in connection therewith prior to the date hereof are collectively referred to as the “Existing Financing Agreements”.

B.The Loan Parties have informed the Agent that the Loan Parties desire to make certain modifications to the Loan Agreement, and, subject to the terms and conditions of this Ninth Amendment, the Lenders and the Agent have agreed to amend certain provisions of the Loan Agreement as set forth in this Ninth Amendment.

NOW THEREFORE, with the foregoing background hereinafter deemed incorporated by reference herein and made a part hereof, the parties hereto, intending to be legally bound, promise and agree as follows:

1.Defined Terms. Capitalized terms used herein but not otherwise defined herein shall have the meanings attributed thereto in the Loan Agreement, as amended by this Eighth Amendment.

2.Amendments to Loan Agreement. Subject to the satisfaction (or waiver) of the conditions precedent specified in Section 4 below, the Loan Agreement (including the Annexes attached thereto) is hereby amended in its entirety to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the changed pages to the conformed Loan Agreement attached as Annex I hereto.

3.Representations and Warranties. Each Loan Party hereby:

(a)after giving effect to this Ninth Amendment, reaffirms all representations and warranties made to the Lenders and the Agent under the Loan Agreement and all of the other Existing

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Financing Agreements and represents and warrants that after giving effect to this Ninth Amendment and the transactions contemplated hereby all such representations and warranties are true and correct in all material respects (unless otherwise qualified by materiality or the occurrence of a Material Adverse Effect, in which case such representation and warranty is true and correct in all respects) on and as of the date hereof (or, to the extent any representations or warranties are expressly made solely as of an earlier date, such representations and warranties are true and correct as of such earlier date);

(b)as of the date hereof, reaffirms all covenants contained in the Loan Agreement (as amended hereby) and all of the other Existing Financing Agreements and covenants to comply with all such covenants until the Termination Date; and

(c)as of the date hereof, represents and warrants that:

(i)no Default or Event of Default has occurred and is continuing under the Loan Agreement or any of the other Existing Financing Agreements;

(ii)such Loan Party has all requisite power and authority to execute and deliver, and to perform all of its obligations under, this Ninth Amendment;

(iii)the execution, delivery and performance by such Loan Party of this Ninth Amendment have been duly and validly authorized and do not violate such Loan Party’s Governing Documents or any law or any material agreement or instrument (including, without limitation, the Term Loan Agreement) or any court order which is binding upon such Loan Party or its property, do not constitute grounds for acceleration of any Indebtedness or obligation under any material agreement or instrument which is binding upon such Loan Party or its property, and do not require the consent of any Person (including, without limitation, the Term Loan Agent);

(iv)this Ninth Amendment has been duly executed and delivered by, and is enforceable against, each of the Loan Parties party hereto, in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, moratorium or other similar laws affecting creditors’ rights generally and by general equitable principles; and

(v)no Loan Party is required to obtain any government approval, consent, or authorization from, or to file any declaration or statement with, any Governmental Authority in connection with or as a condition to the execution, delivery or performance of this Ninth Amendment.

4.Conditions Precedent. This Ninth Amendment shall become effective on the date on which the following conditions have been fulfilled to the satisfaction of the Agent (the “Ninth Amendment Effective Date”):

(a)this Ninth Amendment shall be duly executed by all parties thereto and delivered to the Agent, in form and substance satisfactory to the Agent, and shall be in full force and effect;

(b)the amendment to Fee Letter shall be duly executed by all parties thereto and delivered to the Agent, in form and substance staisfactory to the Agent, and shall be in full force and effect;

(c)the Borrowers shall have paid to the Agent all fees due on the Ninth Amendment Effective Date and shall have paid or reimbursed Agent for all of Agent’s costs, charges and expenses incurred through the Ninth Amendment Effective Date for which invoices have been presented to the Loan

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10916490

Parties prior to the date hereof payable to the extent required by Section 15.7 of the Loan Agreement (including, without limitation, reasonable and documented attorneys’ fees and expenses incurred in connection with the preparation, negotiation and execution of this Ninth Amendment and the documents provided for herein or related hereto); and

(d)after giving effect to this Ninth Amendment, all representations and warranties contained in Section 3 above shall be true and correct in all respects.

5.Further Assurances. Each Loan Party hereby agrees to take all such actions and to execute and/or deliver to the Agent all such documents, assignments, financing statements and other documents, as the Agent may reasonably require from time to time, to effectuate and implement the purposes of this Ninth Amendment.

6.Reaffirmation of Loan Documents; No Novation. Each Loan Party, as debtor, grantor, pledgor, guarantor, assignor, or in other any other similar capacity in which such Loan Party grants liens or security interests in its property or otherwise acts as accommodation party or guarantor, as the case may be, hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise, under each of the Loan Documents to which it is a party and (ii) to the extent such Loan Party granted liens on or security interests in any of its property pursuant to any such Loan Document as security for or otherwise guaranteed any Obligations, ratifies and reaffirms such guarantee and grant of security interests and liens and confirms and agrees that such security interests and liens hereafter secure all of such Obligations as amended hereby. Each Loan Party hereby consents to this Ninth Amendment and acknowledges that each of the Loan Documents remains in full force and effect and is hereby ratified and reaffirmed. The execution of this Ninth Amendment shall not serve to effect a novation of any Indebtedness under the Loan Documents or any other Obligations.

7.No Modification. Except as expressly set forth herein, nothing contained in this Ninth Amendment shall be deemed to constitute a waiver of compliance with any term or condition contained in the Loan Agreement or any other Loan Document or constitute a course of conduct or dealing among the parties. Except as expressly stated herein, the Agent reserves all rights, privileges and remedies under the Loan Documents. Except as amended or consented to hereby, the Loan Agreement and other Loan Documents remain unmodified and in full force and effect. All references in the Loan Documents to the Loan Agreement shall be deemed to be references to the Loan Agreement as modified hereby.

8.Release of Claims. In consideration of the Agent’s and Lenders’ agreements contained in this Ninth Amendment, each Loan Party hereby irrevocably releases and forever discharges the Agent, Lenders and their respective affiliates, subsidiaries, successors, assigns, directors, officers, employees, agents, consultants and attorneys (each, a “Released Person”) of and from any and all claims, suits, actions, investigations or proceedings, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute or common law of any kind or character, known or unknown, which such Loan Party ever had or now has against the Agent, any Lender or any other Released Person which relates, directly or indirectly, to any acts or omissions of the Agent or any other Released Person relating to the Loan Agreement or any other Loan Document on or prior to the date hereof.

9.Miscellaneous.

(a)Headings; Construction. Section and subsection headings are used in this Ninth Amendment only for convenience and do not affect the meanings of the provisions that they precede.

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10916490

(b)Modifications. No modification hereof or of any agreement referred to herein shall be binding or enforceable unless in writing and signed on behalf of the party against whom enforcement is sought.

(c)Governing Law; Loan Document. THIS NINTH AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. FURTHER, THE LAW OF THE STATE OF NEW YORK SHALL APPLY TO ALL DISPUTES OR CONTROVERSIES ARISING OUT OF OR CONNECTED TO OR WITH THIS NINTH AMENDMENT WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES. This Ninth Amendment is a Loan Document and is subject to and has the benefit of all the provisions in the Loan Agreement applicable to Loan Documents.

(d)Counterparts; Fax/Email Signatures. This Ninth Amendment may be executed in any number of counterparts, all of which shall constitute one and the same agreement. This Ninth Amendment may be executed by signatures delivered by facsimile or electronic mail, each of which shall be fully binding on the signing party.

[Signature Pages Follow]

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10916490

IN WITNESS WHEREOF, the parties have caused this Ninth Amendment to be executed and delivered by their duly authorized officers as of the date first above written.

HORIZON GLOBAL AMERICAS INC.,

as a Borrower

By: /s/ Jay Goldbaum

Name: Jay Goldbaum

Title: Vice President and Secretary

CEQUENT TOWING PRODUCTS OF CANADA LTD., as a Borrower

By: /s/ Jay Goldbaum

Name: Jay Goldbaum

Title: Vice President and Director

HORIZON GLOBAL CORPORATION,

as a Guarantor

By: /s/ Jay Goldbaum

Name: Jay Goldbaum

Title: General Counsel, Corporate Secretary & CCO

HORIZON GLOBAL COMPANY LLC,

as a Guarantor

By: /s/ Jay Goldbaum

Name: Jay Goldbaum

Title: Vice President and Secretary

CEQUENT ELECTRICAL PRODUCTS DE MÉXICO, S. DE R.L. DE C.V., as a Guarantor

By: /s/ Jay Goldbaum

Name: Jay Goldbaum

Title: Vice President and Director

CEQUENT SALES COMPANY DE MÉXICO, S. DE R.L. DE C.V., as a Guarantor

By: /s/ Jay Goldbaum

Name: Jay Goldbaum

Title: Vice President and Director

[Signature Page to Ninth Amendment to Loan and Security Agreement]

ECLIPSE BUSINESS CAPITAL LLC, as Agent

By: /s/ Kevin Trout

Name: Kevin Trout

Title: Authorized Signatory

ECLIPSE BUSINESS CAPITAL SPV, LLC,

as a Lender

By: /s/ Kevin Trout

Name: Kevin Trout

Title: Authorized Signatory

[Signature Page to Ninth Amendment to Loan and Security Agreement]

Annex I

See attached.

Conformed through EighthNinth Amendment dated April 4June 30, 2022

LOAN AND SECURITY AGREEMENT

Dated as of March 13, 2020 by and among

HORIZON GLOBAL AMERICAS INC. AND

CEQUENT TOWING PRODUCTS OF CANADA, LTD.,

any other Borrower party hereto from time to time, as Borrowers,

HORIZON GLOBAL CORPORATION AND HORIZON GLOBAL COMPANY LLC

any other Guarantor party hereto from time to time, as Guarantors,

any other Loan Party party hereto from time to time, as Loan Parties,

the Lenders from time to time party hereto, and

ECLIPSE BUSINESS CAPITAL LLC,

as Agent

10916507v1

Loan and Security Agreement

This Loan and Security Agreement (as it may be amended, restated, supplemented or otherwise modified from time to time, this "Agreement") is entered into on March 13, 2020, by and among HORIZON GLOBAL AMERICAS INC., a Delaware corporation (“Horizon Americas”), CEQUENT TOWING PRODUCTS OF CANADA, LTD., a company formed under the laws of the Province of Ontario ("Cequent Canada"; together with Horizon Americas, each a "Borrower" and together with any other Borrower party hereto from time to time, collectively the "Borrowers"), HORIZON GLOBAL CORPORATION, a Delaware corporation (“Parent”), HORIZON GLOBAL COMPANY LLC, a Delaware limited liability company (“Horizon Global”) CEQUENT ELECTRICAL PRODUCTS DE MÉXICO, S. DE R.L. DE C.V., a Mexican limited liability company (sociedad de responsabilidad limitada de capital variable) (“Cequent Electrical MX”), CEQUENT SALES COMPANY DE MÉXICO, S. DE R.L. DE C.V., a Mexican limited liability company (sociedad de responsabilidad limitada de capital variable) (“Cequent Sales MX”, and together with Parent, Horizon Global and Cequent Electrical MX, each a “Guarantor” and together with any other Guarantor party hereto from time to time, collectively the “Guarantors”) and together with any other Loan Party party hereto from time to time, as Loan Parties (as defined herein), the Lenders party hereto from time to time and ECLIPSE BUSINESS CAPITAL LLC (f/k/a Encina Business Credit, LLC, as agent for the Lenders (in such capacity, "Agent"). The Annexes, Exhibits and Schedules to this Agreement, as well as the Perfection Certificate attached to this Agreement, are an integral part of this Agreement and are incorporated herein by reference.

1.DEFINITIONS.

1.1 Certain Defined Terms.

Unless otherwise defined herein, the following terms are used herein as defined in the UCC from time to time: Accounts, Account Debtor, As-Extracted Collateral, Certificated Security, Chattel Paper, Commercial Tort Claims, Debtor, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Farm Products, Financing Statement, Fixtures, General Intangibles, Goods, Health-Care-Insurance Receivables, Instruments, Inventory, Letter-of-Credit Rights, Money, Payment Intangible, Proceeds, Secured Party, Securities Accounts, Security Agreement, Supporting Obligations and Tangible Chattel Paper; provided, however, that (a) as such terms relate to any Collateral of any Canadian Borrower, such terms shall refer to such Collateral as defined in the PPSA, to the extent applicable and (b) as such terms relate to any such Collateral encumbered by or to be encumbered by a Mexican Security Document, such terms shall have the meanings assigned to them in such Mexican Security Document, to the extent applicable.

As used in this Agreement, the following terms have the following meanings:

“ABL Priority Collateral” means as defined in the Intercreditor Agreement (it being understood and agreed that any time the Term Loan Debt is not in effect, the term “ABL Priority Collateral” shall mean all Collateral).

"ABLSoft" means the electronic and/or internet-based system approved by Agent for the purpose of making notices, requests, deliveries, communications and for the other purposes contemplated in this Agreement or otherwise approved by Agent, whether such system is owned, operated or hosted by Agent, any of its Affiliates or any other Person.

10916507v1

Revolving Loans and the Letter of Credit Balance during the immediately preceding month (or part thereof), which fee shall be fully earned as it accrues and shall be due and payable, in arrears, on the first day of each month until the Termination Date.

(d)Letter of Credit Fees. A fee, for the ratable benefit of the Lenders, equal to Applicable Margin for SOFR Loans of the face amount of each Letter of Credit (the "Letter of Credit Fees"), which fee shall be deemed to be fully earned and payable, in arrears, on the first day of each month until the Termination Date, plus all costs and fees charged from time to time by the issuer, payable as and when such costs and fees are charged.

(e)Early Termination Fee.

(i)If, on or before December 31June 30, 20222023, the Revolving Loan Commitment is reduced or terminated for any reason (including any voluntary, mandatory or automatic reduction or termination, regardless of whether an Event of Default has occurred and is then continuing, and including by reason of acceleration, automatic acceleration or otherwise), in each case pursuant to Section 2.6(d), Section 11.2 or otherwise, then in each such case, in addition to any required payment of principal and unpaid accrued interest and other amounts due thereon, Borrowers immediately shall be required to pay to Agent, for the ratable benefit of the Lenders, a premium (each, an “Early Termination Fee”) (as liquidated damages and compensation for the cost of the Lenders being prepared to make funds available under the Revolving Loan Commitment during the scheduled term of this Agreement) in an amount equal to the Applicable Early Termination Fee Percentage (as defined below) of the amount of the Revolving Loan Commitment or portion thereof so reduced or terminated. The "Applicable Percentage" shall be (A) two percent (2.0%), if such event occurs on or before the first anniversary of the Closing Date, (B) one percent (1.0%) if such event occurs after the first anniversary of the Closing Date, but on or before the second anniversary of the Closing Date or (c) one-half percent (0.50%) if such event occurs after the second anniversary of the Closing Date, but on or before December 31June 30, 20222023.

(ii)The Early Termination Fee shall be calculated, earned and due and payable on and as of the date of the applicable reduction or termination of the Revolving Loan Commitment.

(iii)The Loan Parties acknowledge and agree that (A) the Lenders will have suffered damages on account of any of the foregoing events and that, in view of the difficulty in ascertaining the amount of such damages, the Early Termination Fee constitutes reasonable compensation and liquidated damages to compensate the Lenders on account thereof, and (B) payment of the Early Termination Fee due hereunder is reasonable under the circumstances currently existing. TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE LOAN PARTIES HEREBY EXPRESSLY WAIVES THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE OR LAW THAT PROHIBITS OR MAY PROHIBIT THE COLLECTION OF THE FOREGOING EARLY TERMINATION FEES, INCLUDING IN CONNECTION WITH ANY ACCELERATION AND TERMINATION OF THE REVOLVING LOAN COMMITMENT, INCLUDING IN CONNECTION WITH ANY VOLUNTARY OR INVOLUNTARY ACCELERATION AND THE TERMINATION OF THE REVOLVING LOAN COMMITMENT AS A RESULT OF ANY BANKRUPTCY OR INSOLVENCY PROCEEDING OR OTHER PROCEEDING PURSUANT TO ANY DEBTOR RELIEF LAWS OR PURSUANT TO A PLAN OF REORGANIZATION. Each of the Loan Parties hereby expressly agrees that: (x) the Early Termination Fee is reasonable and is the product of an arm’s length transaction between sophisticated business people, ably represented by counsel; (y) the Early Termination Fee shall be payable notwithstanding the then prevailing market rates at the time payment is made; and (z) the Loan Parties shall be estopped hereafter from claiming differently than as agreed to in this paragraph. Each of the Loan Parties hereby expressly acknowledges that the agreement to pay the Early

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10916507v1

Annex I

Description of Certain Terms


1. Loan Limits for Revolving Loans and Letters of Credit
(a) Maximum Revolving Facility Amount			$95,000,000 (as increased from time to time in accordance with Section 2.1(c))
(b) Advance Rates
(i) Accounts Advance Rate
a. Eligible Receivables of Investment Grade Account Debtors			(x) on and after the Fifth Amendment Effective Date through JuneSeptember 30, 2022, ninety-two and one half percent (92.5%) and (y) after JuneSeptember 30, 2022, ninety percent (90%); provided, that if Dilution exceeds five percent (5%), Agent may, at its option, (A) reduce such advance rate by the number of full or partial percentage points comprising such excess or (B) establish a Reserve on account of such excess (the "Dilution Reserve").
b. Eligible Receivables of Non-Investment Grade Account Debtors			(x) on and after the Fifth Amendment Effective Date through JuneSeptember 30, 2022, ninety percent (90%) and (y) after JuneSeptember 30, 2022, eighty-five percent (85%); provided, that if Dilution exceeds five percent (5%), Agent may, at its option, (A) reduce such advance rate by the number of full or partial percentage points comprising such excess or (B) establish a Dilution Reserve on account of such excess.
(ii) Inventory Advance Rate(s)
Lower of cost or net realizable value:			Seventy percent (70% )
NOLV:			(x) on and after the Fifth Amendment Effective Date through JuneSeptember 30, 2022, ninety-two and one half percent (92.5%) and (y) after JuneSeptember 30, 2022, eighty-five percent (85%)
(c) Letter of Credit Limit:			$3,500,000
(d) Inventory Sublimit(s)
i. Overall			$55,000,000.00
ii. Mexican Inventory Sublimit			(x) on and after the Fifth Amendment Effective Date through JuneSeptember 30, 2022, $7,500,000 and (y) after JuneSeptember 30, 2022, $5,000,000
iii. In-Transit Sublimit			(x) on and after the Fifth Amendment Effective Date through JuneSeptember 30, 2022, $12,500,000 and (y) after JuneSeptember 30, 2022, $7,500,000
(e) Temporary Incremental Availability			With respect to each of clauses 1(b)(i)(a), 1(b)(i)(b), 1(d)(ii) and 1(d)(iii) herein and the NOLV referenced in clause 1(b)(ii) herein (each, an “Availability Clause”), the difference between (x) the Availability generated under clause (x) of such Availability Clause and (y) the Availability that would have been generated under clause (y) of such Availability Clause if clause (y) had been in effect at such time, shall be referred to herein as the “Temporary Incremental Availability”; provided, however, that at no time shall the Temporary Incremental Availability result in more than $12,500,000 in the aggregate to be included in the Borrowing Base.
Annex II-1

10916507v1



(f) Reserved
2. Availability Block			$5,000,000
3. Interest Rates
(a) Applicable Margins			(x) at all times before the first Adjustment Date, (A) four percent (4.00%) per annum in excess of the Adjusted Term SOFR Rate and (B) three percent (3.00%) per annum in excess of the Base Rate and (y) on and after the first Adjustment Date and on each Adjustment Date thereafter:

			“Adjustment Date” is the first date following the date the Agent receives (or, if earlier, is required to receive) the monetary financial statements and related Compliance Certificate, beginning with the month ending JuneSeptember 30, 2022. The Applicable Margin shall be determined on a monthly basis, based on the (x) with respect to the Fixed Charge Coverage Ratio, then most recent monthly financial statements and corresponding Compliance Certificate delivered to Agent in accordance with Section 7.15(b) of this Agreement and (y) with

______________________________

1 Average Excess Availability is, for any period, an amount equal to the sum of Excess Availability for each day of such fiscal period, divided by the actual number of days in such fiscal period.

2 Fixed Charge Coverage Ratio shall be calculated as follows: for March 31, 2022, as of the immediately preceding three month period; for April 30, 2022, as of the immediately preceding four month period; for May 31, 2022, as of the immediately preceding five month period; for June 30, 2022, as of the immediately preceding six month period; for July 31, 2022, as of the immediately preceding seven month period; for August 31, 2022, as of the immediately preceding eight month

10916507v1 Annex II-2

10916507v1

Document

Exhibit 31.1

Certification

Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

(Chapter 63, Title 18 U.S.C. Section 1350(A) and (B))

I, Terrence G. Gohl, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Horizon Global Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 9, 2022


			/s/ TERRENCE G. GOHL
			Terrence G. Gohl Chief Executive Officer

Document

Exhibit 31.2

Certification

Pursuant to Section 302 of The Sarbanes-Oxley Act of 2002

(Chapter 63, Title 18 U.S.C. Section 1350(A) and (B))

I, Dennis E. Richardville, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Horizon Global Corporation;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 9, 2022


			/s/ DENNIS E. RICHARDVILLE
			Dennis E. Richardville Principal Financial Officer

Document

Exhibit 32.1

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Horizon Global Corporation (the "Company") on Form 10-Q for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Terrence G. Gohl, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2022


			/s/ TERRENCE G. GOHL
			Terrence G. Gohl Chief Executive Officer

Document

Exhibit 32.2

Certification Pursuant to

18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report of Horizon Global Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dennis E. Richardville, Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes‑Oxley Act of 2002, that to the best of my knowledge:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 9, 2022


			/s/ DENNIS E. RICHARDVILLE
			Dennis E. Richardville Principal Financial Officer