NEW YORK, May 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 second quarter of Fiscal 2016 ended on
March 31, 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 ("EIC") and
CorAmerica Capital, LLC ("CorAmerica").
"We are pleased to report another solid quarter at HRG,
highlighted by strong growth on our topline as well as a
substantial increase in consolidated operating income, which has
increased in the first half of the year by more than half a billion
dollars as compared to the first half of Fiscal 2015," said
Omar Asali, President and Chief
Executive Officer of HRG.
"Spectrum Brands delivered yet another excellent quarter,
achieving organic sales growth of 4.9% and higher Adjusted EBITDA,
on a currency-consistent basis, from each of its major product
categories, 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, we continue
to maintain a focus on the leverage and liquidity profile at
Compass, while in Asset Management, we have achieved a significant
reduction in that segment's general and administrative costs as the
wind down of Salus moves closer to completion.
"Elsewhere this quarter, FGL moved closer to completing its
transaction with Anbang and received clearance from the Committee
on Foreign Investment in the United
States. FGL continues to make progress securing the
remaining regulatory approvals and we expect FGL to close this
transaction in the third quarter of calendar year 2016. We remain
committed to using a portion of the proceeds from the FGL
transaction to meaningfully delever at HRG Group and will consider
other strategies that maximize shareholder value. We will outline a
more specific plan for how we will use the proceeds after the
close."
Important Note Regarding the Presentation of our Insurance
Segment:
Fidelity & Guaranty Life ("FGL"; NYSE: FGL) has reached a
definitive merger agreement under which Anbang Insurance Group Co.,
Ltd. and certain of its subsidiaries 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 March
31, 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.
Second Quarter Fiscal 2016 Consolidated Highlights:
- HRG recorded total revenues of $1.3
billion for the Fiscal 2016 Quarter, an increase of
$125.7 million, or 11.0%, as compared
to the $1.1 billion recorded in the
second quarter of fiscal 2015 (the "Fiscal 2015 Quarter"), as
higher Consumer Products revenues, driven primarily by acquisitions
completed within the past year and organic revenue growth, more
than offset the impact of unfavorable foreign exchange and lower
Energy revenues resulting primarily from declines in commodity
prices.
- Consolidated operating income of $115.8
million in the Fiscal 2016 Quarter increased $292.9 million as compared to the $177.1 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 $143.4
million in the Fiscal 2016 Quarter increased $105.9 million, due to the impact of the higher
revenues as well as lower selling, acquisition, operating and
general expenses.
- Results reflect a $14.7 million
increase in interest expense relative to the Fiscal 2015 Quarter
associated with higher overall debt levels, due primarily to
financing activities completed in connection with accretive
acquisitions.
- HRG incurred a tax expense of $8.9
million in the Fiscal 2016 Quarter and a 43.4% effective tax
rate as compared to a $0.8 million
tax benefit in the Fiscal 2015 Quarter and a 0.3% effective tax
rate. The increase in tax expense in the current quarter was
principally due to an increase in pre-tax income at Consumer
Products and Insurance, partially offset by a decrease in Consumer
Products' effective tax rate as a result of realization of tax
benefits that were previously covered by a valuation
allowance. In addition, HRG recognized partial tax benefits
expected to be realized as a result of the expected gain from the
sale of FGL.
- Net loss from continuing operations attributable to common
stockholders of $19.9 million, or
$0.10 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 $236.9 million, or
$1.20 per common share attributable
to controlling interest during the Fiscal 2015 Quarter. The
reduction in loss was due primarily to the higher operating
income.
- For the six months ended March 31,
2016 (the "Fiscal 2016 Six Months"), HRG had corporate cash
and investments of approximately $237.4
million (primarily held at HRG and HGI Funding LLC), a
decrease of $58.0 million from the
comparable balance of $295.4 million
held as of December 31, 2015 due
primarily to the payment of semi-annual interest made during the
quarter on the Company's notes.
- In the Fiscal 2016 Six Months, HRG received dividends of
$30.9 million from its subsidiaries,
comprised of $24.3 million and
$0.4 million from the Consumer
Products and Asset Management segments, respectively, as well as
$6.2 million from FGL.
Additional Items:
Non-Cash Impairments and Bad Debt Expense
Energy
Pursuant to SEC reporting requirements, Compass
performed a ceiling test at the end of the quarter utilizing 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 $21.2 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, additional, non-cash impairments to
Compass' properties may be required in Fiscal 2016. In the
Fiscal 2015 Quarter, Compass recorded $146.6
million of impairments.
Asset Management
During the Fiscal 2016 Quarter,
$6.7 million of impairments and
bad-debt expense were recorded. As of March 31, 2016, Salus' portfolio of asset-based
loans receivable, net of allowance for credit losses, was
$136.8 million, a decline of
$89.9 million from the comparable
balance as of September 30,
2015, as Salus continues to execute the orderly wind down of
its operations.
Discontinued Operations
During the Fiscal 2016 Quarter, the Company recorded a
$13.1 million loss from discontinued
operations, reflecting $10.4 million
of a gain on FGL's operations in the quarter, offset by a 23.5
million reduction in the carrying value of FGL to fair value.
Detail on Second Quarter Segment Results:
Consumer Products:
Note: 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 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
$1,209.6 million for the Fiscal 2016
Quarter, an increase of $142.6
million, or 13.4%, as compared to the $1,067.0 million reported in the Fiscal 2015
Quarter. The increase was due primarily to the impact of
newly acquired businesses, primarily in global auto care, and
organic growth in certain product categories, including record
second quarter hardware and home improvement results. These
increases more than offset the negative impact of $32.1 million from unfavorable foreign
exchange. Excluding the net impact of foreign exchange, sales
increased $174.7 million, or 16.4%,
as compared to 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
competitor discounting, softer North American category performance
and the exit of unprofitable business. Excluding the impacts
of both foreign exchange and $122.8
million in revenue from businesses acquired in Fiscal 2015,
Consumer Products revenue increased $51.9
million, or 4.9%, on an organic basis over the Fiscal 2015
Quarter.
Gross profit, representing net Consumer Products sales minus
Consumer Products cost of goods sold, increased $88.1 million, or 23.5%, to $462.8 million in the Fiscal 2016 Quarter.
The increase was driven by the same factors that affected
revenue. Gross profit margin, representing gross profit as a
percentage of Consumer Products net sales, was 38.3% in the Fiscal
2016 Quarter, an increase of 320 basis points over the Fiscal 2015
Quarter, due, in part, to a shift toward higher margin products and
the impact of cost improvement initiatives.
Operating income increased $60.1
million, or 68%, to $148.5
million in the Fiscal 2016 Quarter, as compared to
$88.4 million in the Fiscal 2015
Quarter, due primarily to higher profitability in acquired
businesses.
Consumer Products adjusted earnings before interest, taxes,
depreciation and amortization ("Adjusted EBITDA-Consumer Products")
was $229.6 million for the Fiscal
2016 Quarter, as compared to $159.1
million for the Fiscal 2015 Quarter, an increase of
$70.5 million, or 44.3%.
Excluding the negative impact of $17.7
million in unfavorable foreign exchange in the current
quarter, as well as acquisition-related EBITDA of $49.1 million, Adjusted EBITDA-Consumer Products
increased 24.6%, or $39.2 million, to
$198.2 million, with increases in all
of the segment's product categories.
After the close of the Fiscal 2016 Quarter, on April 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 $39.6 million in the Fiscal 2016 Quarter
increased $78.5 million from a
$38.9 million loss recorded in the
Fiscal 2015 Quarter. The increase was due primarily to the
absence in 2016 of realized losses and impairments which negatively
affected the 2015 results, as well as an increase in the fair value
of the underlying securities included in the funds withheld
receivable. 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
receivable.
The operating loss of $1.8 million
for the Fiscal 2016 Quarter reflected an improvement of
$54.5 million from the operating loss
of $56.3 million reported for the
Fiscal 2015 Quarter. The improvement was due primarily to the
same factors affecting revenue. In addition, selling,
acquisition, operating and general expenses were reduced
substantially as compared to the prior year.
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 $9.5
million for the Fiscal 2016 Quarter reflected a decrease of
$16.5 million, or 63.5%, from the
$26.0 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 liquids
declined by 36% and 31%, respectively, in Fiscal 2016 as compared
to Fiscal 2015 Quarter. Revenue was further affected by
natural declines in production as well as the disposition of the
Holly, Waskom and Danville assets as of December 1, 2015.
Operating loss for the Fiscal 2016 Quarter was $26.7 million, an improvement of $134.6 million from the operating loss of
$161.3 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 $5.5
million in the Fiscal 2016 Quarter compared to an operating
loss of $14.7 million in the Fiscal
2015 Quarter, with the improvement due primarily to a 67% reduction
in selling, acquisition, operating and general expenses.
Energy segment adjusted earnings before interest, taxes,
depreciation and amortization ("Adjusted EBITDA-Energy") was a loss
of $0.6 million for the Fiscal 2016
Quarter, a decrease of $6.1 million
from the $5.5 million of income
recorded in the Fiscal 2015 Quarter due primarily to the impact of
the lower pricing.
For the Fiscal 2016 Quarter, the Energy segment's production was
73 Mbbl of oil, 94 Mbbl of natural gas liquids and 3,420 Mmcf of
natural gas. In the Fiscal 2016 Quarter, average daily
production at Compass was 49 Mmcfe as compared to 90 Mmcfe in the
Fiscal 2015 Quarter, with the decrease due primarily to the
disposition of the 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 $1.6 million for
the Fiscal 2016 Quarter, a decrease of $3.5
million, or 68.6%, from the $5.1
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 March 31, 2016, Salus, together
with its affiliated co-lender Front Street Re, had $136.8 million of loans outstanding, net of
allowance for credit losses of $47.8
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 Asset Management segment reported an operating loss of
$9.2 million for the Fiscal 2016
Quarter, an improvement of $58.1
million as compared to the operating loss of $67.3 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 $2.5 million in the Fiscal 2016 Quarter improved
$1.8 million from for 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 Monday, May 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 79310346. 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 May 12, 2016 by
dialing 1.855.859.2056 (U.S. callers) or 1.404.537.3406
(international callers), ID number 79310346. 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, 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 (including, target businesses following their
acquisition) 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.
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)
|
|
|
March 31,
2016
|
|
September 30,
2015
|
|
(Unaudited)
|
|
(As
Adjusted)
|
|
ASSETS
|
|
|
|
Investments
|
$
|
139.3
|
|
|
$
|
278.9
|
|
Cash and cash
equivalents
|
465.6
|
|
|
695.2
|
|
Funds withheld
receivables
|
1,679.4
|
|
|
1,710.1
|
|
Receivables,
net
|
662.3
|
|
|
632.9
|
|
Inventories,
net
|
924.4
|
|
|
780.8
|
|
Deferred tax
assets
|
299.8
|
|
|
51.2
|
|
Properties, including
oil and natural gas properties, net
|
664.7
|
|
|
798.4
|
|
Goodwill
|
2,494.1
|
|
|
2,487.4
|
|
Intangibles
|
2,432.4
|
|
|
2,480.3
|
|
Other
assets
|
149.1
|
|
|
134.3
|
|
Assets of business
held for sale
|
25,544.0
|
|
|
24,984.5
|
|
Total
assets
|
$
|
35,455.1
|
|
|
$
|
35,034.0
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Insurance
reserves
|
$
|
1,824.8
|
|
|
$
|
1,856.0
|
|
Debt
|
6,232.0
|
|
|
6,310.5
|
|
Accounts payable and
other current liabilities
|
847.5
|
|
|
1,095.6
|
|
Employee benefit
obligations
|
87.6
|
|
|
92.9
|
|
Deferred tax
liabilities
|
895.6
|
|
|
574.5
|
|
Other
liabilities
|
71.6
|
|
|
95.5
|
|
Liabilities of
business held for sale
|
23,988.1
|
|
|
23,420.9
|
|
Total
liabilities
|
33,947.2
|
|
|
33,445.9
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
HRG Group,
Inc. shareholders' equity:
|
|
|
|
Common
stock
|
2.0
|
|
|
2.0
|
|
Additional paid-in
capital
|
1,437.7
|
|
|
1,458.5
|
|
Accumulated
deficit
|
(901.8)
|
|
|
(833.1)
|
|
Accumulated other
comprehensive loss
|
(72.8)
|
|
|
(40.7)
|
|
Total HRG Group, Inc.
shareholders' equity
|
465.1
|
|
|
586.7
|
|
Noncontrolling interest
|
1,042.8
|
|
|
1,001.4
|
|
Total shareholders'
equity
|
1,507.9
|
|
|
1,588.1
|
|
Total liabilities and
equity
|
$
|
35,455.1
|
|
|
$
|
35,034.0
|
|
HRG GROUP, INC.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In millions,
except per share data)
|
|
|
Three months ended
March 31,
|
|
Six months ended
March 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
(Unaudited)
|
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
|
|
Net consumer and
other product sales
|
$
|
1,209.6
|
|
|
$
|
1,086.5
|
|
|
$
|
2,428.4
|
|
|
$
|
2,175.3
|
|
Oil and natural
gas
|
9.5
|
|
|
26.0
|
|
|
26.3
|
|
|
60.3
|
|
Net investment
income
|
15.5
|
|
|
19.5
|
|
|
37.0
|
|
|
43.9
|
|
Net investment
gains
|
33.1
|
|
|
9.7
|
|
|
7.2
|
|
|
4.8
|
|
Insurance and
investment product fees and other
|
1.8
|
|
|
2.1
|
|
|
4.1
|
|
|
3.2
|
|
Total
revenues
|
1,269.5
|
|
|
1,143.8
|
|
|
2,503.0
|
|
|
2,287.5
|
|
Operating costs
and expenses:
|
|
|
|
|
|
|
|
Cost of consumer
products and other goods sold
|
746.8
|
|
|
707.0
|
|
|
1,524.9
|
|
|
1,419.0
|
|
Oil and natural gas
direct operating costs
|
9.2
|
|
|
23.3
|
|
|
26.3
|
|
|
43.8
|
|
Benefits and other
changes in policy reserves
|
35.7
|
|
|
30.6
|
|
|
43.8
|
|
|
50.3
|
|
Selling, acquisition,
operating and general expenses
|
311.0
|
|
|
324.2
|
|
|
619.1
|
|
|
660.4
|
|
Impairments and bad
debt expense
|
27.6
|
|
|
214.6
|
|
|
90.8
|
|
|
464.4
|
|
Amortization of
intangibles
|
23.4
|
|
|
21.2
|
|
|
47.0
|
|
|
41.7
|
|
Total operating costs
and expenses
|
1,153.7
|
|
|
1,320.9
|
|
|
2,351.9
|
|
|
2,679.6
|
|
Operating income
(loss)
|
115.8
|
|
|
(177.1)
|
|
|
151.1
|
|
|
(392.1)
|
|
Interest
expense
|
(95.8)
|
|
|
(81.1)
|
|
|
(193.3)
|
|
|
(157.5)
|
|
Gain on sale of oil
and gas properties
|
|
|
|
|
105.6
|
|
|
—
|
|
Gain upon gaining
control of equity method investment
|
—
|
|
|
—
|
|
|
—
|
|
|
141.2
|
|
Other income,
net
|
0.5
|
|
|
14.1
|
|
|
1.6
|
|
|
46.9
|
|
Income (loss) from
continuing operations before income taxes
|
20.5
|
|
|
(244.1)
|
|
|
65.0
|
|
|
(361.5)
|
|
Income tax expense
(benefit)
|
8.9
|
|
|
(0.8)
|
|
|
10.8
|
|
|
5.2
|
|
Net income (loss)
from continuing operations
|
11.6
|
|
|
(243.3)
|
|
|
54.2
|
|
|
(366.7)
|
|
(Loss) income from
discontinued operations, net of tax
|
(13.1)
|
|
|
5.8
|
|
|
(48.7)
|
|
|
22.8
|
|
Net (loss)
income
|
(1.5)
|
|
|
(237.5)
|
|
|
5.5
|
|
|
(343.9)
|
|
Less: Net income
(loss) attributable to noncontrolling interest
|
33.3
|
|
|
(9.2)
|
|
|
74.2
|
|
|
(5.8)
|
|
Net loss attributable
to controlling interest
|
$
|
(34.8)
|
|
|
$
|
(228.3)
|
|
|
$
|
(68.7)
|
|
|
$
|
(338.1)
|
|
|
|
|
|
|
|
|
|
Amounts attributable
to controlling interest:
|
|
|
|
|
|
|
|
Net loss from
continuing operations
|
$
|
45.0
|
|
|
$
|
(123.5)
|
|
|
$
|
(8.8)
|
|
|
$
|
(360.4)
|
|
Net (loss) income
from discontinued operations
|
(45.0)
|
|
|
13.7
|
|
|
(59.9)
|
|
|
22.3
|
|
Net loss attributable
to controlling interest
|
$
|
(34.8)
|
|
|
$
|
(228.3)
|
|
|
$
|
(68.7)
|
|
|
$
|
(338.1)
|
|
|
|
|
|
|
|
|
|
Net loss per common
share attributable to controlling interest:
|
|
|
|
|
|
|
|
Basic loss from
continuing operation
|
$
|
(0.10)
|
|
|
$
|
(1.20)
|
|
|
$
|
(0.05)
|
|
|
$
|
(1.82)
|
|
Basic (loss) income
from discontinued operations
|
(0.08)
|
|
|
0.04
|
|
|
(0.30)
|
|
|
0.11
|
|
Basic
|
$
|
(0.18)
|
|
|
$
|
(1.16)
|
|
|
$
|
(0.35)
|
|
|
$
|
(1.71)
|
|
|
|
|
|
|
|
|
|
Diluted loss from
continuing operation
|
$
|
(0.10)
|
|
|
$
|
(1.20)
|
|
|
$
|
(0.05)
|
|
|
$
|
(1.82)
|
|
Diluted (loss) income
from discontinued operations
|
(0.08)
|
|
|
0.04
|
|
|
(0.30)
|
|
|
0.11
|
|
Diluted
|
$
|
(0.18)
|
|
|
$
|
(1.16)
|
|
|
$
|
(0.35)
|
|
|
$
|
(1.71)
|
|
HRG GROUP, INC.
AND SUBSIDIARIES
|
RESULTS OF
OPERATIONS BY SEGMENT
|
(In
millions)
|
|
|
|
Fiscal
Quarter
|
|
Fiscal Six
Months
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
|
|
|
Consumer
Products
|
|
$
|
1,209.6
|
|
|
$
|
1,067.0
|
|
|
$
|
2,428.4
|
|
|
$
|
2,134.8
|
|
Insurance
|
|
39.6
|
|
|
(38.9)
|
|
|
29.6
|
|
|
(4.4)
|
|
Energy
|
|
9.5
|
|
|
26.0
|
|
|
26.3
|
|
|
60.3
|
|
Asset
Management
|
|
1.6
|
|
|
5.1
|
|
|
7.6
|
|
|
13.1
|
|
Intersegment
elimination
|
|
9.2
|
|
|
65.1
|
|
|
11.1
|
|
|
43.2
|
|
Consolidated segment
revenues
|
|
1,269.5
|
|
|
1,124.3
|
|
|
2,503.0
|
|
|
2,247.0
|
|
Corporate and
Other
|
|
—
|
|
|
19.5
|
|
|
—
|
|
|
40.5
|
|
Total
revenues
|
|
$
|
1,269.5
|
|
|
$
|
1,143.8
|
|
|
$
|
2,503.0
|
|
|
$
|
2,287.5
|
|
|
|
|
|
|
|
|
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
|
Consumer
Products
|
|
$
|
148.5
|
|
|
$
|
88.4
|
|
|
$
|
291.0
|
|
|
$
|
204.0
|
|
Insurance
|
|
(1.8)
|
|
|
(56.3)
|
|
|
(1.8)
|
|
|
(50.7)
|
|
Energy
|
|
(26.7)
|
|
|
(161.3)
|
|
|
(91.2)
|
|
|
(356.3)
|
|
Asset
Management
|
|
(9.2)
|
|
|
(67.3)
|
|
|
(18.3)
|
|
|
(68.5)
|
|
Intersegment
elimination
|
|
13.2
|
|
|
43.9
|
|
|
(5.8)
|
|
|
27.7
|
|
Total segment
operating income (loss)
|
|
124.0
|
|
|
(152.6)
|
|
|
173.9
|
|
|
(243.8)
|
|
Corporate and Other
and eliminations
|
|
(8.2)
|
|
|
(24.5)
|
|
|
(22.8)
|
|
|
(148.3)
|
|
Consolidated
operating income (loss)
|
|
115.8
|
|
|
(177.1)
|
|
|
151.1
|
|
|
(392.1)
|
|
Interest
expense
|
|
(95.8)
|
|
|
(81.1)
|
|
|
(193.3)
|
|
|
(157.5)
|
|
Gain on sale of oil
and gas properties
|
|
—
|
|
|
—
|
|
|
105.6
|
|
|
—
|
|
Gain upon gaining
control of equity method investment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
141.2
|
|
Other income,
net
|
|
0.5
|
|
|
14.1
|
|
|
1.6
|
|
|
46.9
|
|
Income (loss) from
continuing operations before income taxes
|
|
$
|
20.5
|
|
|
$
|
(244.1)
|
|
|
$
|
65.0
|
|
|
$
|
(361.5)
|
|
HRG GROUP, INC.
AND SUBSIDIARIES
|
ADJUSTED EBITDA
AND ADJUSTED OPERATING INCOME RECONCILIATIONS
|
(In
millions)
|
|
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 Six
Months
|
Reconciliation to
reported net income:
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Reported net income -
Consumer Products segment
|
|
$
|
75.3
|
|
|
$
|
27.9
|
|
|
$
|
149.0
|
|
|
$
|
77.9
|
|
Add back:
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
57.5
|
|
|
49.2
|
|
|
115.9
|
|
|
93.6
|
|
Income tax
expense
|
|
14.9
|
|
|
8.1
|
|
|
21.8
|
|
|
28.6
|
|
Depreciation and
amortization, net of accelerated depreciation
|
|
|
|
|
|
|
|
|
Depreciation of
properties
|
|
21.3
|
|
|
18.7
|
|
|
44.4
|
|
|
37.1
|
|
Amortization of
intangibles
|
|
23.4
|
|
|
21.2
|
|
|
47.0
|
|
|
41.7
|
|
EBITDA - Consumer
Products segment
|
|
192.4
|
|
|
125.1
|
|
|
378.1
|
|
|
278.9
|
|
Stock-based
compensation
|
|
21.5
|
|
|
13.8
|
|
|
31.6
|
|
|
19.4
|
|
Restructuring and
related charges
|
|
1.6
|
|
|
4.4
|
|
|
2.8
|
|
|
11.8
|
|
Acquisition and
integration related charges
|
|
13.3
|
|
|
11.9
|
|
|
23.2
|
|
|
20.0
|
|
Purchase accounting
inventory adjustment
|
|
—
|
|
|
2.2
|
|
|
—
|
|
|
3.0
|
|
Other
|
|
0.8
|
|
|
1.7
|
|
|
1.0
|
|
|
1.8
|
|
Adjusted EBITDA -
Consumer Products segment
|
|
$
|
229.6
|
|
|
$
|
159.1
|
|
|
$
|
436.7
|
|
|
$
|
334.9
|
|
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 Six
Months
|
Reconciliation to
reported net (loss) income
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Reported net (loss)
income - Energy Segment
|
|
$
|
(29.8)
|
|
|
$
|
(160.5)
|
|
|
$
|
8.5
|
|
|
$
|
(200.0)
|
|
Interest
expense
|
|
3.6
|
|
|
4.4
|
|
|
8.2
|
|
|
8.9
|
|
Depreciation,
amortization and depletion
|
|
3.6
|
|
|
12.5
|
|
|
10.1
|
|
|
26.0
|
|
EBITDA - Energy
segment
|
|
(22.6)
|
|
|
(143.6)
|
|
|
26.8
|
|
|
(165.1)
|
|
Accretion of discount
on asset retirement obligations
|
|
0.4
|
|
|
0.7
|
|
|
1.0
|
|
|
1.3
|
|
Impairments and bad
debt expense
|
|
21.2
|
|
|
146.6
|
|
|
75.6
|
|
|
336.6
|
|
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
|
|
0.5
|
|
|
1.3
|
|
|
1.5
|
|
|
2.3
|
|
Gain on derivative
financial instruments
|
|
(0.8)
|
|
|
(5.3)
|
|
|
(2.5)
|
|
|
(24.0)
|
|
Cash settlements on
derivative financial instruments
|
|
0.7
|
|
|
5.5
|
|
|
9.0
|
|
|
7.9
|
|
Stock based
compensation expense
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
0.6
|
|
Adjusted EBITDA -
Energy segment
|
|
$
|
(0.6)
|
|
|
$
|
5.5
|
|
|
$
|
5.8
|
|
|
$
|
18.4
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/hrg-group-inc-reports-second-quarter-results-300264898.html
SOURCE HRG Group, Inc.