WESTFALIA AUTOMOTIVE ACQUISITION AUGUST 25, 2016 1
SAFE HARBOR STATEMENT FORWARD-LOOKING STATEMENTS This presentation may contain "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements contained herein 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 Company's leverage; liabilities imposed by the Company's debt instruments; market demand; competitive factors; supply constraints; material and energy costs; technology factors; litigation; government and regulatory actions; the Company's accounting policies; future trends; general economic and currency conditions; various conditions specific to the Company's business and industry; our ability to successfully complete the acquisition of Westfalia, including the possibility that the closing conditions to the contemplated transaction may not be satisfied or waived; delay in closing the proposed transaction; risks inherent in the achievement of cost synergies and the timing thereof, including whether the proposed acquisition will be accretive and within the expected timeframe; risks related to the disruption of the transaction to Westfalia and its management; the effect of announcement of the transaction on Westfalia s ability to retain and hire key personnel and maintain relationships with customers, suppliers and other third parties; our ability to promptly and effectively integrate the acquisition of Westfalia; the performance and costs of integration of Westfalia; and other risks that are discussed in the Company's most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K. The risks described herein 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. We caution readers not to place undue reliance on such statements, which speak only as of the date hereof. We do not undertake any obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forwardlooking statement to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. 2
AGENDA Westfalia Overview Transaction Overview Highly Complementary Combination Impact on Horizon Global 3
WESTFALIA OVERVIEW 4
WESTFALIA GROUP OVERVIEW EST. SALES BY CHANNEL 32% 16% 3% 49% EST. REVENUE BY GEOGRAPHY OEM OES IAM Other Headquartered in Rheda-Wiedenbrück, Germany and is comprised of two companies, Westfalia, founded in 1844, and Terwa, founded in 1995; collectively Westfalia Group ("WFG") European market leader Primary channels to market are OEM/OES and independent aftermarket ( IAM ) Principal manufacturing facilities in Germany, France and Romania 1,700+ towbar products ~900 employees 3% 4% 23% Germany France 45% Sweden U.K./Ireland 7% Denmark 8% Poland 10% Other Product technology: fixed towbars, detachable towbars, retractable towbars, wiring kits and rearend transport solutions TTM Revenue: ~ 220 million 5
TRANSACTION OVERVIEW 6
TRANSACTION OVERVIEW PRICE MARGINS MULTIPLE ~ 167 million; approximately 89 million in cash and 36 million in Horizon Global common stock; plus net debt Synergy achievement enhances pathway to 10/10 margin target in 2018 9.9x Westfalia s projected 2016 adjusted EBITDA Less than 4x purchase multiple after synergies FINANCING $150 million add-on to existing Term B Loan, plus Horizon Global common stock DELEVERING Achieve leverage less than 2x in 2019 TIMING Subject to satisfaction of customary closing conditions 7
STRATEGIC RATIONALE ESTABLISHES Horizon Global as a leading manufacturer of towing and trailering equipment in Europe POSITIONS the Company with increased market share and expands opportunities for revenue and margin growth DIVERSIFIES and expands an already dynamic product portfolio, while complementing current global business model ENABLES ongoing innovations in the design and manufacture of towing systems for automotive equipment manufacturers, dealers and aftermarket customers EXPANDS global OE footprint with access to new markets and new customers 8
HIGHLY COMPLEMENTARY COMBINATION 9
HIGHLY COMPLEMENTARY COMBINATION OVERALL Creates immediate scale and market leadership in Europe and across the globe FINANCIALS Margin accretive, highly synergistic transaction that positions Horizon Global for accelerated growth in market share, revenue and profit CUSTOMERS Diversifies and expands customer base to include world-class OE s across Europe and Asia BENEFITS Marries a portfolio of premium brands and high-end engineering with best-in-class operations, sourcing and sales capabilities 10
A COMBINED GLOBAL PRESENCE TO DRIVE FUTURE GROWTH HZN Presence WFG Presence Both Present BEST-IN-CLASS MANUFACTURING FOOTPRINT AND SUPPLY CHAIN EFFICIENCY RATIONALIZATION OF ENGINEERING CAPABILITIES OPTIMIZED SOURCING CROSS SELLING SYNERGIES Consolidation of logistics / warehouses Production for European OEMs in rest of world at existing Horizon plants Capacity / manufacturing rationalization Footprint optimization Exchange of technological expertise Centralized OEM engineering and project management Leverage overlapping vendor relationships to enhance the efficiency of the sourcing network Low cost country supply chain Cross selling of tailored product portfolios through existing sales channels Substantially enhanced brand value Complementary customer portfolios 11
STRONG, COMPLEMENTARY CUSTOMER BASE HZN CUSTOMERS WFG CUSTOMERS 12
SIGNIFICANT REALIZABLE SYNERGY OPPORTUNITIES Significant, identified cost synergies reduce purchase price to less than 4x Synergies, driven by multiple complementary strengths, go beyond just capacity rationalization Rationalization of manufacturing processes and facilities as well as supply-chain improvements are expected to reduce costs across the new organization both near and long term Combination of established engineering expertise and product innovation provides foundation for combined portfolio of premium brands Will serve global customers across multiple distribution channels: OEM, dealers, IAM, retailers and e-commerce Larger global footprint creates the leading market position in numerous geographies and provides a solid base for future geographic expansion Product offerings are significantly broader and differentiated through product innovation Business Dimension Relative Strength Combined AM Product Design OES Service Levels AM Operations LCC Manufacturing + LCC Sourcing Product Technology OE Customers EU OE Customers Asia OE Customers North America OE Customers Emerging Markets 13
COMPELLING COMBINATION THAT BENEFITS ALL STAKEHOLDERS HZN Shareholders Compelling Financial Benefits $800 million company (pro forma revenue) Accretive to earnings in year one Available cost synergies will drive financial performance, driving purchase multiple to <4x within 3 years Product, customer, and geographic diversity a strong platform for future growth Customers More Products, More Places Access to a wider range of products - 1,700 new products 8 new locations to serve multiple geographies Omni-channel expertise with OE, IAM, retail and e- commerce customers Larger company focused on engineering innovation HZN Employees New Businesses & Opportunities Larger company offers greater career opportunities Sharing of best practices Technological innovation across combined company operations 14
IMPACT ON HORIZON GLOBAL 15
HORIZON GLOBAL LONG-TERM STRATEGIC GOALS STRATEGIC GOALS 16
IMPACT ON THREE FINANCIAL PRIORITIES FOR VALUE CREATION 10% & 10% Less than 2x 3-5% Organic IMPROVE MARGINS IMPROVE CAPITAL STRUCTURE DRIVE SALES GROWTH Achieve 10% operating margins at the segment level; then achieve 10% operating profit at the corporate level Foster culture focused on operational excellence Execute major margin programs Leverage past investments in low-cost manufacturing Enhance product innovation Acquire margin accretive companies Achieve leverage ratio of less than 2x Increase profitability and reduce debt > 100% cash flow conversion Generate consistent cash flow through business cycle Improve working capital efficiency Acquire well-run companies Achieve 3-5% organic growth Leverage product portfolio and global footprint Expand existing distribution channels Develop new distribution channels, including e-commerce Leverage relationships with OEs across globe Expand sales to higher growth emerging markets Prioritize new product development SIGNIFICANT OPPORTUNITY FOR VALUE CREATION 17
DRIVEN TO DELIVER Enriching lives through great products Utilize forward-thinking technology to develop and deliver best-in-class products for our users, engage with our employees and realize value creation for our shareholders Socially Responsible Respectful and Open Team Integrity and Accountability Data and Results Driven Positioned to Drive Value for: ALL STAKEHOLDERS ALL CUSTOMERS ALL EMPLOYEES Global Reach Product Development Engine Multi-Channel Expertise Best-in-Class Manufacturing and Sourcing Cost Platform Talented Experienced Management Team 18
For additional information, please contact: Maria C. Duey Vice President, Corporate Development & Investor Relations mduey@horizonglobal.com 248-593-8810