NEW YORK, Aug. 9, 2016 /PRNewswire/ -- HRG Group, Inc.
("HRG" or the "Company"; NYSE: HRG), a diversified holding company
focused on owning businesses that it believes can, in the long
term, generate sustainable free cash flow or attractive returns on
investment, today announced its consolidated results for the third
quarter of Fiscal 2016 ended on June 30, 2016 (the "Fiscal
2016 Quarter"). The results include HRG's four segments:
- Consumer Products, which consists of Spectrum Brands Holdings,
Inc. and its subsidiaries ("Spectrum Brands"; NYSE: SPB);
- Insurance, which consists of Front Street Re (Delaware) Ltd. and its subsidiaries ("Front
Street");
- Energy, which consists of Compass Production Partners, LP and
its subsidiaries ("Compass"); and
- Asset Management, which consists of Salus Capital Partners, LLC
("Salus"), Energy & Infrastructure Capital, LLC and CorAmerica
Capital, LLC.
"HRG reported very strong results this quarter, including the
second consecutive quarter of a double digit increase in revenue
and a substantial increase in consolidated operating income, which,
over the first nine months of this year, has increased almost
$830 million as compared to the first
nine months of Fiscal 2015," said Omar
Asali, President and Chief Executive Officer of HRG.
"Spectrum Brands reported record third quarter results, with a
9.1% increase in reported net sales, 3.7% growth in organic,
currency-consistent sales and an 18.2% increase in Adjusted EBITDA,
and we continue to anticipate record levels of annual revenue,
Adjusted EBITDA and free cash flow from Spectrum in Fiscal 2016,"
continued Asali. "In the Energy segment, our recent agreement
to sell Compass to a third party eliminates our exposure to the
volatility of commodity prices in a transaction that we expect to
close before the end of the fiscal year, while over in Asset
Management, we continue to simplify its structure and substantially
reduce the amount of the receivables outstanding in the Salus loan
portfolio.
"With respect to the FGL merger with Anbang, we continue to work
closely with Anbang and are engaged with the regulators to secure
the required approvals to complete the transaction. Closing
this transaction continues to be a priority and we remain committed
to closing once the regulatory approval process concludes."
Important Note Regarding the Presentation of our Insurance
Segment:
On November 8, 2015, Fidelity
& Guaranty Life ("FGL"; NYSE: FGL) and Anbang Insurance Group
Co., Ltd. and certain of its subsidiaries ("Anbang") entered into a
definitive merger agreement pursuant to which Anbang, subject to
satisfaction of applicable closing conditions, will acquire FGL for
$26.80 per share in cash. The
Company owns 47 million shares in FGL, representing an
approximately 80.4% interest as of June
30, 2016. As a result of this agreement, the Company's
investment in FGL has been classified as held for sale on the
balance sheet and FGL's operations have been classified as
discontinued operations. Results for all periods have been
reclassified accordingly. FGL's results were previously
reflected in the Insurance segment; however, all segment
information has been adjusted to exclude FGL's results from this
segment. Accordingly, the commentary for the Insurance
segment in this release no longer reflects the performance of FGL
in either the current or prior year quarters.
Third Quarter Fiscal 2016 Consolidated Highlights:
- HRG recorded total revenues of $1.4
billion for the Fiscal 2016 Quarter, an increase of
$219.9 million, or 17.9%, as compared
to the $1.2 billion recorded in the
third quarter of fiscal 2015 (the "Fiscal 2015 Quarter"), as higher
Consumer Products revenues, driven primarily by an acquisition
completed within the past year and organic revenue growth, as well
as higher realized net investment gains, more than offset the
impact of both unfavorable foreign exchange as well as lower Energy
revenues due to declines in commodity prices and the impact of
previously-announced asset sales.
- Consolidated operating income of $208.7
million in the Fiscal 2016 Quarter increased $283.2 million as compared to the $74.5 million of operating loss reported in the
Fiscal 2015 Quarter. The increase was due primarily to a lesser
amount of impairments and bad debt expense in the current quarter,
as described further in the Additional Items section. Excluding the
impact of impairments and bad debt expense, operating income of
$224.4 million in the Fiscal 2016
Quarter increased $186.3 million, due
to the impact of the higher revenues as well as lower selling,
acquisition, operating and general expenses.
- Results reflect a $50.7 million
decrease in interest expense relative to the Fiscal 2015 Quarter,
due primarily to one-time costs incurred in the Fiscal 2015 Quarter
related to the financing of an accretive acquisition in Consumer
Products and refinancing activities, which were partially offset by
higher overall debt levels, due primarily to the financing of the
acquisition in Consumer Products.
- HRG recorded a tax benefit of $8.4
million, or a (7.9)% effective tax rate, in the Fiscal 2016
Quarter as compared to a $37.8
million tax benefit, or a 20.8% effective tax rate, in the
Fiscal 2015 Quarter . The decrease in tax benefit in the current
quarter was principally due to the improved profitability in the
current period partially offset by the reversal of a portion of
Spectrum Brands' U.S. valuation allowance on deferred tax
assets.
- Net loss from continuing operations attributable to common
stockholders of $77.4 million, or
$0.39 per common share attributable
to controlling interest during the Fiscal 2016 Quarter, as compared
to a net loss from continuing operations attributable to common
stockholders of $161.9 million, or
$0.82 per common share attributable
to controlling interest during the Fiscal 2015 Quarter. The
reduction in loss was due primarily to the higher operating income
as well as the reduction in interest expense.
- For the nine months ended June 30,
2016 (the "Fiscal 2016 Nine Months"), HRG had corporate cash
and investments of approximately $210.3
million (primarily held at HRG and HGI Funding LLC), a
decrease of $27.1 million from the
comparable balance of $237.4 million
held as of March 31, 2016 due
primarily to funding provided during the quarter to Energy.
- In the Fiscal 2016 Nine Months, HRG received dividends of
$47.0 million from its subsidiaries,
comprised of $37.3 million and
$0.4 million from the Consumer
Products and Asset Management segments, respectively, as well as
$9.3 million from FGL.
Additional Items:
Non-Cash Impairments and Bad Debt Expense
Insurance and Asset
Management
During the Fiscal 2016 Quarter, the Company
received a partial repayment of an aggregate $65.1 million on the previously reported loan
Salus made to RadioShack Corporation. Of this amount,
$21.7 million relates to FGL's
participation in the loan and is reflected in discontinued
operations, and the balance is reflected in the Asset Management
and Insurance segments. As a result of this higher than
expected recovery rate, the repayment triggered a reversal of
$18.0 million in previously recorded
allowance for bad debt (which does not include $9.0 million reflected in discontinued operations
for FGL's participation in the loan) in the Fiscal 2016 Quarter,
and the Asset Management segment recorded a benefit of $0.9 million in net impairments and bad-debt
expense in the Fiscal 2016 Quarter.
Energy
Pursuant to SEC
reporting requirements, Compass performed a ceiling test at the end
of the quarter utilizing the simple average first day of the month
spot prices for the trailing twelve month period for proved
reserves, which may not be indicative of actual market values or
forward strip prices for those reserves. As a result of this
test, Compass recorded a non-cash impairment of $17.6 million to its proved oil and natural gas
properties during the quarter, due primarily to the ongoing decline
in oil and natural gas prices. This impairment is reflected
in the operating income of the Energy segment for the Fiscal 2016
Quarter, and, if oil and gas prices do not increase and the Compass
sale transaction, as described below, is not completed, additional
non-cash impairments to Compass' properties may be required in
Fiscal 2016. In the Fiscal 2015 Quarter, Compass recorded
$102.8 million of impairments.
Discontinued Operations
During the Fiscal 2016 Quarter,
the Company recorded a $208.4 million
loss from discontinued operations, driven primarily by a write-down
of the asset held for sale to its fair value less cost to sell, in
accordance with US GAAP.
Compass Sale
On July 1,
2016, the Company, through its wholly-owned subsidiary, HGI
Energy Holdings, LLC ("HGI Energy"), entered into an agreement to
sell its equity interest in Compass to a third party for
$145.0 million in cash, subject to
customary closing adjustments. The purchase price will be
reduced at closing by the balance of Compass' credit facility
outstanding at close. As of June 30,
2016, the Compass credit facility had $125.0 million outstanding. The closing,
which is subject to the satisfaction of customary closing
conditions, is expected during the quarter ending September 30, 2016. As the agreement was
signed on July 1, 2016, following the
close of the Fiscal 2016 Quarter, the transaction had no impact on
the Company's results for the current period. The Company
expects to report Compass as discontinued operations in the fourth
quarter.
Detail on Third Quarter Segment Results:
Consumer Products:
Note: Organic net sales, as
described below, is a non-U.S. GAAP measure defined as net sales
excluding the effect of changes in foreign currency exchange rates
and impact from acquisitions. Adjusted EBITDA-Consumer
Products, as described below, is a non-U.S. GAAP measure that
excludes interest, income tax expense, certain purchase accounting
fair value adjustments, restructuring and related charges,
acquisition and integration related charges, depreciation and
amortization expenses and stock-based compensation. See
"Non-U.S. GAAP Measures" and the reconciliation of Reported Net
Sales to Organic Net Sales and Adjusted EBITDA-Consumer Products to
the Consumer Product segment's net income or loss in the tables
accompanying this release.
Consumer Products reported consolidated net sales of
$1,361.6 million for the Fiscal 2016
Quarter, an increase of $114.1
million, or 9.1%, as compared to the $1,247.5 million reported in the Fiscal 2015
Quarter. The increase was due primarily to the impact of the
newly acquired global auto care business as well as organic growth
in certain product categories, including record third quarter
results in both hardware and home improvement as well as in home
and garden products.
These increases more than offset the negative impact of
$15.8 million from unfavorable
foreign exchange. Excluding the net impact of foreign
exchange, sales increased $129.9
million, or 10.4%, as compared to the Fiscal 2015
Quarter.
Excluding the impacts of both foreign exchange and $84.1 million in revenue from businesses acquired
in Fiscal 2015, Consumer Products revenue increased $45.7 million, or 3.7%, on an organic basis over
the Fiscal 2015 Quarter, with higher currency-consistent sales in
all product categories as compared to Fiscal 2015 except small
appliances, which declined due to softer North American category
performance, and pet supplies, which declined due to unfavorable
weather in Europe and the planned
exit of certain low-margin business in North America.
Gross profit, representing net Consumer Products sales minus
Consumer Products cost of goods sold, increased $72.7 million, or 15.9%, to $530.7 million in the Fiscal 2016 Quarter.
The increase was driven by the same factors that affected revenue,
as well as a shift toward higher margin products. Gross
profit margin, representing gross profit as a percentage of
Consumer Products net sales, was 39.0% in the Fiscal 2016 Quarter,
an increase of 230 basis points over the Fiscal 2015 Quarter.
Operating income increased $71.1
million, or 52%, to $206.8
million in the Fiscal 2016 Quarter, as compared to
$135.7 million in the Fiscal 2015
Quarter, due primarily to higher profitability in the acquired
global auto care business.
Consumer Products adjusted earnings before interest, taxes,
depreciation and amortization ("Adjusted EBITDA-Consumer Products")
was $279.2 million for the Fiscal
2016 Quarter, as compared to $236.3
million for the Fiscal 2015 Quarter, an increase of
$42.9 million, or 18.2%.
After the close of the Fiscal 2016 Quarter, on July 26, 2016, Spectrum Brands announced that its
Board of Directors declared a quarterly dividend of $0.38 per share on Spectrum Brands' common
stock. This is a 15.2% increase in the quarterly dividend
declared as compared to the $0.33
quarterly dividend paid per share in connection with the comparable
period in Fiscal 2015. Over the past three years, the
quarterly dividend Spectrum Brands has paid to its common
stockholders has increased 52%.
For more information on HRG's Consumer Products segment,
interested parties should read Spectrum Brands' announcements and
public filings with the Securities and Exchange Commission,
including Spectrum Brands' most recent quarterly earnings
announcement, which may be accessed at www.spectrumbrands.com.
Insurance:
Insurance segment revenues of $70.2 million in the Fiscal 2016 Quarter
increased $138.2 million from a
$68.0 million loss recorded in the
Fiscal 2015 Quarter. The increase was due primarily to an
increase in the fair value of the underlying securities included in
the funds withheld receivables, as well as a lesser impact in the
current period from credit impairment losses. This increase
in fair value was driven by decreasing risk-free interest rates and
tightening credit spreads during the quarter, which resulted in
higher valuations of the fixed maturity securities in Front
Street's funds withheld receivables.
The operating income of $3.6
million for the Fiscal 2016 Quarter reflected an improvement
of $32.2 million from the operating
loss of $28.6 million reported for
the Fiscal 2015 Quarter. The improvement was due primarily to
the absence in the current period of credit impairment losses that
were recorded in the Fiscal 2015 Quarter.
Energy:
Note: Adjusted EBITDA-Energy is a non-U.S.
GAAP measure that excludes interest expense, depreciation,
amortization and depletion, accretion of discount on asset
retirement obligations, non-cash write-downs of assets, gain on
remeasurement of investment to fair value, gain on sale of oil and
gas properties, non-recurring other operating items, non-cash
changes in the fair value of derivatives, cash settlements on
derivative financial instruments and stock-based compensation - see
"Non-U.S. GAAP Measures" and a reconciliation of Adjusted
EBITDA-Energy to the Energy segment's operating income in the
tables accompanying this release.
Oil and natural gas revenues of $9.7
million for the Fiscal 2016 Quarter reflected a decrease of
$14.6 million, or 60.1%, from the
$24.3 million of revenues reported in
the Fiscal 2015 Quarter. The decline was due primarily to
lower prices for oil, natural gas and natural gas liquids, as the
average sales price per barrel for oil and natural gas declined by
21% and 30%, respectively, in Fiscal 2016 as compared to Fiscal
2015 Quarter. Revenue was further affected by natural
declines in production as well as Compass' disposition of its
Holly, Waskom and Danville assets as of December 1, 2015.
Operating loss for the Fiscal 2016 Quarter was $22.0 million, an improvement of $92.3 million from the operating loss of
$114.3 million recorded in the Fiscal
2015 Quarter. The improvement was due primarily to a lesser
amount of ceiling test impairment in the current quarter as
discussed in the "Additional Items" section. Excluding
impairments, the operating loss of $4.4
million in the Fiscal 2016 Quarter compared to an operating
loss of $11.5 million in the Fiscal
2015 Quarter, with the improvement due primarily to a 63% reduction
in selling, acquisition, operating and general expenses.
Energy segment adjusted earnings before interest, taxes,
depreciation and amortization ("Adjusted EBITDA-Energy") was
$0.7 million for the Fiscal 2016
Quarter, a decrease of $5.1 million
from the $5.8 million of income
recorded in the Fiscal 2015 Quarter due primarily to the impact of
the lower oil and natural gas prices.
For the Fiscal 2016 Quarter, the Energy segment's production was
63 Mbbl of oil, 90 Mbbl of natural gas liquids and 3,215 Mmcf of
natural gas. In the current period, average daily production at
Compass was 45 Mmcfe as compared to 87 Mmcfe in the Fiscal 2015
Quarter, with the decrease due primarily to Compass' disposition of
its Holly, Waskom and Danville assets as of December 1, 2015, as well as the impact of
natural production declines.
Asset Management:
The Asset Management segment reported revenues of $1.2 million for the Fiscal 2016 Quarter, a
decrease of $6.0 million, or 83.3%,
from the $7.2 million reported in the
Fiscal 2015 Quarter. The decrease was due primarily to a
lower amount of interest income generated at Salus, which is in the
process of winding down its operations and maximizing the recovery
of capital from its existing loan portfolio. As of
June 30, 2016, Salus, together with its affiliated co-lender
Front Street Re, had $48.2 million of
loans outstanding, net of allowance for credit losses of
$33.8 million. This compares to
$226.7 million of loans outstanding,
net of allowance for credit losses of $47.9
million, as of September 30,
2015. The portfolio balances reflected here do not include
amounts due to FGL for its direct participations in loans
originated by Salus, as those amounts are reflected in discontinued
operations.
The Asset Management segment reported an operating loss of
$1.7 million for the Fiscal 2016
Quarter, an improvement of $12.5
million as compared to the operating loss of $14.2 million reported in the Fiscal 2015
Quarter. The reduction in the operating loss was due
primarily to a lower amount of impairments and bad debt expense in
the current period, as described in the Additional Items
section. Excluding the impact of impairments and bad debt
expense from both periods, operating loss of $2.6 million in the Fiscal 2016 Quarter improved
$2.0 million from the Fiscal 2015
Quarter, due primarily to a reduction in operating expenses at
Salus.
Conference Call
HRG Group, Inc. will host a live conference call to discuss its
results on Tuesday, August 9, 2016 at
10:00 a.m. Eastern Daylight
Time. To join the event, participants may call
1.844.856.8663 (U.S. callers) or 1.779.232.4737 (international
callers), using conference ID number 79310350. Alternatively,
a live webcast of the conference call can be accessed by interested
parties through the Investor Relations section of the HRG Website,
www.HRGgroup.com.
For those unable to listen to the live broadcast of the
conference call, a telephonic replay of the call will be available
through midnight August 11, 2016 by
dialing 1.855.859.2056 (U.S. callers) or 1.404.537.3406
(international callers), ID number 79310350. A replay will
also be available on the Company's website.
About HRG Group, Inc.
HRG Group, Inc. is a diversified holding company focused on
owning businesses that the Company believes can, in the longer
term, generate sustainable free cash flow or attractive returns on
investment. The Company's principal operations are conducted
through businesses that: offer branded consumer products (such as
consumer batteries, residential locksets, residential builders'
hardware, faucets, shaving and grooming products, personal care
products, small household appliances, specialty pet supplies, lawn,
garden and home pest control products, personal insect repellents,
and auto care products); offer life insurance and annuity products;
provide asset-backed loans; and own energy assets. HRG is
headquartered in New York and
traded on the New York Stock Exchange under the symbol HRG.
For more information on HRG, visit: www.HRGgroup.com.
Forward Looking Statements
"Safe Harbor" Statement Under the Private Securities
Litigation Reform Act of 1995: This document contains, and
certain oral statements made by our representatives from time to
time may contain, forward-looking statements, including those
statements regarding the completion of the merger between FGL and
Anbang, the Company's use of proceeds from the FGL merger, the
completion of the sale of Compass, the use of proceeds from the
sale of Compass, any expected or anticipated benefits from the
merger between FGL and Anbang and/or the sale of Compass, expected
dividends from our subsidiaries, our or our subsidiaries' capital
needs and potential acquisitions, dispositions or other
transactions by us or our subsidiaries, and expectations with
respect to foreign exchange rates and commodity prices. Generally,
forward-looking statements include information concerning possible
or assumed future distributions from subsidiaries, other actions,
events, results, strategies and expectations and are identifiable
by use of the words "believes," "expects," "intends,"
"anticipates," "plans," "seeks," "estimates," "projects," "may,"
"will," "could," "might," or "continues" or similar expressions.
Such forward-looking statements are subject to risks and
uncertainties that could cause actual results, events and
developments to differ materially from those set forth in or
implied by such statements. These statements are based on the
beliefs and assumptions of HRG's management and the management of
HRG's subsidiaries (including target businesses). Factors that
could cause actual results, events and developments to differ
include, without limitation: the ability of HRG's subsidiaries to
close previously announced transactions; the ability of HRG's
subsidiaries to generate sufficient net income and cash flows to
make upstream cash distributions; the decision of HRG subsidiaries'
boards to make upstream cash distributions, which is subject to
numerous factors such as restrictions contained in applicable
financing agreements, state and regulatory restrictions and other
relevant considerations as determined by the applicable board;
HRG's liquidity, which may be impacted by a variety of factors,
including the capital needs of HRG's current and future
subsidiaries; capital market conditions; commodity market
conditions; foreign exchange rates; HRG's and its subsidiaries'
ability to identify, pursue or complete any suitable future
acquisition or disposition opportunities, including realizing such
transaction's expected benefits, efficiencies/cost avoidance or
savings, income and margins, growth, economies of scale,
streamlined/combined operations, economic performance and
conditions to, and the timetable for, completing applicable
financial reporting requirements; litigation; potential and
contingent liabilities; management's plans; changes in regulations;
taxes; and the risks that may affect the performance of the
operating subsidiaries of HRG and those factors listed under the
caption "Risk Factors" in HRG's most recent Annual Report on Form
10-K and subsequent Quarterly Reports on Form 10-Q, filed with the
Securities and Exchange Commission. All forward-looking
statements described herein are qualified by these cautionary
statements and there can be no assurance that the actual results,
events or developments referenced herein will occur or be
realized. Neither HRG nor any of its affiliates undertake any
obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events
or changes to future operation results, except as required by
law.
Non-U.S. GAAP Measures
Management believes that certain non-U.S. GAAP financial
measures may be useful in certain instances to provide additional
meaningful comparisons between current results and results in prior
operating periods. Reconciliations of such measures to the most
comparable U.S. GAAP measures are included herein.
Adjusted EBITDA is a non-GAAP financial measure used in our
Consumer Products ("Adjusted EBITDA - Consumer Products") and
Energy ("Adjusted EBITDA - Energy") segments and one of the
measures used for determining Spectrum Brands and Compass' debt
covenant compliance. Earnings before interest, taxes,
depreciation and amortization ("EBITDA") represent net income
adjusted to exclude interest expense, income taxes and
depreciation, depletion and amortization. Adjusted EBITDA excludes
certain items that are unusual in nature or not comparable from
period to period and other non-recurring operating items, accretion
of discount on asset retirement obligations, non-cash changes in
the fair value of derivatives, non-cash write-downs of assets, and
stock-based compensation. Adjusted EBITDA is a metric used by
management and frequently used by the financial community and
provides insight into an organization's operating trends and
facilitates comparisons between peer companies, since interest,
taxes, depreciation and amortization can differ greatly between
organizations as a result of differing capital structures and tax
strategies. Adjusted EBITDA can also be a useful measure of a
company's ability to service debt. Computations of EBITDA and
Adjusted EBITDA may differ from computations of similarly titled
measures of other companies due to differences in the inclusion or
exclusion of items in our computations as compared to those of
others.
While management believes that non-U.S. GAAP measurements are
useful supplemental information, such adjusted results are not
intended to replace U.S. GAAP financial results and should be read
in conjunction with those U.S. GAAP results.
Our Consumer Products segment results contain financial
information regarding organic net sales, which we define as net
sales excluding the effect of changes in foreign currency exchange
rates and impact from acquisitions. We believe this non-GAAP
measure provides useful information to investors because it
reflects operating performance from our Consumer Products segment's
activities without the effect of changes in currency exchange rate
and/or acquisitions. The Consumer Products segment uses organic net
sales as one measure to monitor and evaluate their regional and
segment performance. Organic growth is calculated by comparing
organic net sales to net sales in the prior year. The effect of
changes in currency exchange rates is determined by translating the
period's net sales using the currency exchange rates that were in
effect during the prior comparative period. Net sales are
attributed to the geographic regions based on the country of
destination. We exclude net sales from acquired businesses in the
current year for which there are no comparable sales in the prior
period.
For further information contact:
HRG Group, Inc.
James Hart, SVP Communications
Tel: 212.906.8542
Email: jhart@HRGgroup.com
(Tables
Follow)
|
|
|
|
|
|
HRG GROUP, INC.
AND SUBSIDIARIES
CONDENSED
CONSOLIDATED BALANCE SHEETS
(In
millions)
|
|
|
June 30,
2016
|
|
September 30,
2015
|
|
(Unaudited)
|
|
(As
Adjusted)
|
ASSETS
|
|
|
|
Investments
|
$
|
50.7
|
|
$
|
278.9
|
Cash and cash
equivalents
|
487.5
|
|
695.2
|
Funds withheld
receivables
|
1,661.0
|
|
1,710.1
|
Receivables,
net
|
658.3
|
|
632.9
|
Inventories,
net
|
842.3
|
|
780.8
|
Deferred tax
assets
|
279.3
|
|
51.2
|
Properties, including
oil and natural gas properties, net
|
639.1
|
|
798.4
|
Goodwill
|
2,479.7
|
|
2,487.4
|
Intangibles
|
2,399.6
|
|
2,480.3
|
Other
assets
|
148.4
|
|
134.3
|
Assets of business
held for sale
|
26,164.9
|
|
24,984.5
|
Total
assets
|
$
|
35,810.8
|
|
$
|
35,034.0
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Insurance
reserves
|
$
|
1,752.1
|
|
$
|
1,856.0
|
Debt
|
5,944.5
|
|
6,310.5
|
Accounts payable and
other current liabilities
|
902.4
|
|
1,095.6
|
Employee benefit
obligations
|
87.5
|
|
92.9
|
Deferred tax
liabilities
|
815.3
|
|
574.5
|
Other
liabilities
|
64.3
|
|
95.5
|
Liabilities of
business held for sale
|
24,556.1
|
|
23,420.9
|
Total
liabilities
|
34,122.2
|
|
33,445.9
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
HRG Group,
Inc. shareholders' equity:
|
|
|
|
Common
stock
|
2.0
|
|
2.0
|
Additional paid-in
capital
|
1,447.1
|
|
1,458.5
|
Accumulated
deficit
|
(1,024.6)
|
|
(833.1)
|
Accumulated other
comprehensive income (loss)
|
130.9
|
|
(40.7)
|
Total HRG Group, Inc.
shareholders' equity
|
555.4
|
|
586.7
|
Noncontrolling interest
|
1,133.2
|
|
1,001.4
|
Total shareholders'
equity
|
1,688.6
|
|
1,588.1
|
Total liabilities and
equity
|
$
|
35,810.8
|
|
$
|
35,034.0
|
HRG GROUP, INC.
AND SUBSIDIARIES
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions,
except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31,
|
|
Nine months ended
June 30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Unaudited)
|
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
|
|
Net consumer and
other product sales
|
$
|
1,361.6
|
|
$
|
1,249.7
|
|
$
|
3,790.0
|
|
$
|
3,425.0
|
Oil and natural
gas
|
9.7
|
|
24.3
|
|
36.0
|
|
84.6
|
Net investment
income
|
16.3
|
|
21.5
|
|
53.3
|
|
65.4
|
Net investment gains
(losses)
|
57.4
|
|
(70.2)
|
|
64.6
|
|
(65.4)
|
Insurance and
investment product fees and other
|
2.1
|
|
1.9
|
|
6.2
|
|
5.1
|
Total
revenues
|
1,447.1
|
|
1,227.2
|
|
3,950.1
|
|
3,514.7
|
Operating costs
and expenses:
|
|
|
|
|
|
|
|
Cost of consumer
products and other goods sold
|
830.9
|
|
791.3
|
|
2,355.8
|
|
2,210.3
|
Oil and natural gas
direct operating costs
|
9.1
|
|
22.3
|
|
35.4
|
|
66.1
|
Benefits and other
changes in policy reserves
|
30.5
|
|
(16.4)
|
|
74.3
|
|
33.9
|
Selling, acquisition,
operating and general expenses
|
328.7
|
|
369.6
|
|
947.8
|
|
1,030.0
|
Impairments and bad
debt expense
|
15.7
|
|
112.6
|
|
106.5
|
|
577.0
|
Amortization of
intangibles
|
23.5
|
|
22.3
|
|
70.5
|
|
64.0
|
Total operating costs
and expenses
|
1,238.4
|
|
1,301.7
|
|
3,590.3
|
|
3,981.3
|
Operating income
(loss)
|
208.7
|
|
(74.5)
|
|
359.8
|
|
(466.6)
|
Interest
expense
|
(98.4)
|
|
(149.1)
|
|
(291.7)
|
|
(306.6)
|
Gain on sale of oil
and gas properties
|
—
|
|
—
|
|
105.6
|
|
—
|
Gain on
deconsolidation of subsidiary
|
—
|
|
38.5
|
|
—
|
|
38.5
|
Gain upon gaining
control of equity method investment
|
—
|
|
—
|
|
—
|
|
141.2
|
Other (expense)
income, net
|
(3.3)
|
|
3.0
|
|
(1.7)
|
|
49.9
|
Income (loss) from
continuing operations before income taxes
|
107.0
|
|
(182.1)
|
|
172.0
|
|
(543.6)
|
Income tax
benefit
|
(8.4)
|
|
(37.8)
|
|
(15.0)
|
|
(32.6)
|
Net income (loss)
from continuing operations
|
115.4
|
|
(144.3)
|
|
187.0
|
|
(511.0)
|
(Loss) income from
discontinued operations, net of tax
|
(208.4)
|
|
102.9
|
|
(257.1)
|
|
125.7
|
Net loss
|
(93.0)
|
|
(41.4)
|
|
(70.1)
|
|
(385.3)
|
Less: Net income
attributable to noncontrolling interest
|
39.9
|
|
34.2
|
|
121.4
|
|
28.4
|
Net loss attributable
to controlling interest
|
$
|
(132.9)
|
|
$
|
(75.6)
|
|
$
|
(191.5)
|
|
$
|
(413.7)
|
|
|
|
|
|
|
|
|
Amounts attributable
to controlling interest:
|
|
|
|
|
|
|
|
Net income (loss)
from continuing operations
|
$
|
77.4
|
|
$
|
(161.9)
|
|
$
|
78.7
|
|
$
|
(522.3)
|
Net (loss) income
from discontinued operations
|
(210.3)
|
|
86.3
|
|
(270.2)
|
|
108.6
|
Net loss attributable
to controlling interest
|
$
|
(132.9)
|
|
$
|
(75.6)
|
|
$
|
(191.5)
|
|
$
|
(413.7)
|
|
|
|
|
|
|
|
|
Net loss per common
share attributable to controlling interest:
|
|
|
|
|
|
|
|
Basic income (loss)
from continuing operations
|
$
|
0.39
|
|
$
|
(0.82)
|
|
$
|
0.40
|
|
$
|
(2.64)
|
Basic (loss) income
from discontinued operations
|
(1.06)
|
|
0.44
|
|
(1.37)
|
|
0.55
|
Basic
|
$
|
(0.67)
|
|
$
|
(0.38)
|
|
$
|
(0.97)
|
|
$
|
(2.09)
|
|
|
|
|
|
|
|
|
Diluted income (loss)
from continuing operations
|
$
|
0.38
|
|
$
|
(0.82)
|
|
$
|
0.39
|
|
$
|
(2.64)
|
Diluted (loss) income
from discontinued operations
|
(1.04)
|
|
0.44
|
|
(1.34)
|
|
0.55
|
Diluted
|
$
|
(0.66)
|
|
$
|
(0.38)
|
|
$
|
(0.95)
|
|
$
|
(2.09)
|
HRG GROUP, INC.
AND SUBSIDIARIES
RESULTS OF
OPERATIONS BY SEGMENT
(In
millions)
|
|
|
|
Fiscal
Quarter
|
|
Fiscal Nine
Months
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
Consumer
Products
|
|
$
|
1,361.6
|
|
$
|
1,247.5
|
|
$
|
3,790.0
|
|
$
|
3,382.3
|
Insurance
|
|
70.2
|
|
(68.0)
|
|
99.8
|
|
(72.4)
|
Energy
|
|
9.7
|
|
24.3
|
|
36.0
|
|
84.6
|
Asset
Management
|
|
1.2
|
|
7.2
|
|
8.8
|
|
20.3
|
Intersegment
elimination
|
|
4.4
|
|
14.0
|
|
15.5
|
|
57.2
|
Consolidated segment
revenues
|
|
1,447.1
|
|
1,225.0
|
|
3,950.1
|
|
3,472.0
|
Corporate and
Other
|
|
—
|
|
2.2
|
|
—
|
|
42.7
|
Total
revenues
|
|
$
|
1,447.1
|
|
$
|
1,227.2
|
|
$
|
3,950.1
|
|
$
|
3,514.7
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
Consumer
Products
|
|
$
|
206.8
|
|
$
|
135.7
|
|
$
|
497.8
|
|
$
|
339.7
|
Insurance
|
|
3.6
|
|
(28.6)
|
|
1.8
|
|
(79.3)
|
Energy
|
|
(22.0)
|
|
(114.3)
|
|
(113.2)
|
|
(470.6)
|
Asset
Management
|
|
(1.7)
|
|
(14.2)
|
|
(20.0)
|
|
(82.7)
|
Intersegment
elimination
|
|
39.0
|
|
(12.0)
|
|
33.2
|
|
15.7
|
Total segment
operating income (loss)
|
|
225.7
|
|
(33.4)
|
|
399.6
|
|
(277.2)
|
Corporate and Other
and eliminations
|
|
(17.0)
|
|
(41.1)
|
|
(39.8)
|
|
(189.4)
|
Consolidated
operating income (loss)
|
|
208.7
|
|
(74.5)
|
|
359.8
|
|
(466.6)
|
Interest
expense
|
|
(98.4)
|
|
(149.1)
|
|
(291.7)
|
|
(306.6)
|
Gain on sale of oil
and gas properties
|
|
—
|
|
—
|
|
105.6
|
|
—
|
Gain on
deconsolidation of subsidiary
|
|
—
|
|
38.5
|
|
—
|
|
38.5
|
Gain upon gaining
control of equity method investment
|
|
—
|
|
—
|
|
—
|
|
141.2
|
Other (expense)
income, net
|
|
(3.3)
|
|
3.0
|
|
(1.7)
|
|
49.9
|
Income (loss) from
continuing operations before income taxes
|
|
$
|
107.0
|
|
$
|
(182.1)
|
|
$
|
172.0
|
|
$
|
(543.6)
|
HRG GROUP, INC.
AND SUBSIDIARIES
ADJUSTED EBITDA
AND ORGANIC NET SALES RECONCILIATIONS
(In
millions)
|
|
Adjusted EBITDA —
Consumer Products
|
|
The table below shows
the adjustments made to the reported net income of the Consumer
Products segment to calculate its Adjusted EBITDA
(unaudited):
|
|
|
|
Fiscal
Quarter
|
|
Fiscal Nine
Months
|
Reconciliation to
reported net income:
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Reported net income -
Consumer Products segment
|
|
$
|
102.2
|
|
$
|
44.9
|
|
$
|
268.6
|
|
$
|
122.8
|
Add back:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
59.9
|
|
112.9
|
|
175.8
|
|
206.5
|
Income tax expense
(benefit)
|
|
42.5
|
|
(23.8)
|
|
46.9
|
|
4.8
|
Depreciation of
properties
|
|
21.8
|
|
21.6
|
|
66.2
|
|
58.7
|
Amortization of
intangibles
|
|
23.5
|
|
22.3
|
|
70.5
|
|
64.0
|
EBITDA - Consumer
Products segment
|
|
249.9
|
|
177.9
|
|
628.0
|
|
456.8
|
Stock-based
compensation
|
|
15.8
|
|
16.9
|
|
47.4
|
|
36.3
|
Restructuring and
related charges
|
|
5.4
|
|
10.5
|
|
8.2
|
|
22.3
|
Acquisition and
integration related charges
|
|
8.0
|
|
24.2
|
|
31.2
|
|
44.2
|
Purchase accounting
inventory adjustment
|
|
—
|
|
4.7
|
|
—
|
|
7.7
|
Other
|
|
0.1
|
|
2.1
|
|
1.1
|
|
3.9
|
Adjusted EBITDA -
Consumer Products segment
|
|
$
|
279.2
|
|
$
|
236.3
|
|
$
|
715.9
|
|
$
|
571.2
|
Organic Net Sales
— Consumer Products
|
|
The tables below
represent a reconciliation of reported net sales to organic net
sales, by product line for the Fiscal 2016 Quarter and compared to
net sales for the Fiscal 2015 Quarter, respectively
(unaudited):
|
|
Three months
ended June 30, 2016
|
|
Net
Sales
|
|
Effect of
changes in
Currency
|
|
Net Sales
Excluding
Effect of
Changes in
Currency
|
|
Effect of
Acquisitions
|
|
Organic
Net Sales
|
|
Net Sales
June 30,
2015
|
|
$
Variance
|
|
%
Variance
|
Hardware and home
improvement products
|
|
$
|
328.6
|
|
$
|
3.3
|
|
$
|
331.9
|
|
$
|
—
|
|
$
|
331.9
|
|
$
|
313.5
|
|
$
|
18.4
|
|
5.9
|
%
|
Home and garden
control products
|
|
212.0
|
|
—
|
|
212.0
|
|
—
|
|
212.0
|
|
202.3
|
|
9.7
|
|
4.8
|
%
|
Global pet
supplies
|
|
207.1
|
|
(0.7)
|
|
206.4
|
|
—
|
|
206.4
|
|
208.4
|
|
(2.0)
|
|
(1.0)
|
%
|
Consumer
batteries
|
|
187.2
|
|
3.9
|
|
191.1
|
|
—
|
|
191.1
|
|
178.3
|
|
12.8
|
|
7.2
|
%
|
Global auto
care
|
|
159.8
|
|
0.4
|
|
160.2
|
|
(84.1)
|
|
76.1
|
|
64.4
|
|
11.7
|
|
18.2
|
%
|
Small
appliances
|
|
151.1
|
|
5.8
|
|
156.9
|
|
—
|
|
156.9
|
|
161.3
|
|
(4.4)
|
|
(2.7)
|
%
|
Personal care
products
|
|
115.8
|
|
3.1
|
|
118.9
|
|
—
|
|
118.9
|
|
119.3
|
|
(0.4)
|
|
(0.3)
|
%
|
Total
|
|
$
|
1,361.6
|
|
$
|
15.8
|
|
$
|
1,377.4
|
|
$
|
(84.1)
|
|
$
|
1,293.3
|
|
$
|
1,247.5
|
|
$
|
45.8
|
|
3.7
|
%
|
Adjusted EBITDA —
Energy
|
|
|
The table below shows
the adjustments made to the reported net income (loss) of the
Energy segment to calculate its Adjusted EBITDA
(unaudited):
|
|
|
|
|
Fiscal
Quarter
|
|
Fiscal Nine
Months
|
Reconciliation to
reported net loss
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Reported net loss -
Energy Segment
|
|
$
|
(28.2)
|
|
$
|
(121.9)
|
|
$
|
(19.7)
|
|
$
|
(321.9)
|
Interest
expense
|
|
|
3.9
|
|
5.2
|
|
12.1
|
|
14.1
|
Depreciation,
amortization and depletion
|
|
|
3.1
|
|
9.7
|
|
13.2
|
|
35.7
|
EBITDA - Energy
segment
|
|
|
(21.2)
|
|
(107.0)
|
|
5.6
|
|
(272.1)
|
Accretion of discount
on asset retirement obligations
|
|
|
0.4
|
|
0.8
|
|
1.4
|
|
2.1
|
Impairments and bad
debt expense
|
|
|
17.6
|
|
102.8
|
|
93.2
|
|
439.4
|
Gain on sale of oil
and gas properties
|
|
|
—
|
|
—
|
|
(105.6)
|
|
—
|
Gain on remeasurement
of investment to fair value
|
|
|
—
|
|
—
|
|
—
|
|
(141.2)
|
Non-recurring other
operating items
|
|
|
1.2
|
|
0.3
|
|
2.7
|
|
2.6
|
Loss (gain) on
derivative financial instruments
|
|
|
2.2
|
|
2.7
|
|
(0.3)
|
|
(21.3)
|
Cash settlements on
derivative financial instruments
|
|
|
0.5
|
|
6.2
|
|
9.5
|
|
14.1
|
Stock based
compensation expense
|
|
|
—
|
|
—
|
|
—
|
|
0.6
|
Adjusted EBITDA -
Energy segment
|
|
$
|
0.7
|
|
$
|
5.8
|
|
$
|
6.5
|
|
$
|
24.2
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/hrg-group-inc-reports-third-quarter-results-300311010.html
SOURCE HRG Group, Inc.