NEW YORK, Feb. 9, 2018
/PRNewswire/ -- HRG Group, Inc. ("HRG" or the "Company"; NYSE: HRG)
today announced its consolidated results for the first quarter of
Fiscal 2018 ended on December 31, 2017 (the "Fiscal 2018
Quarter").
The results include HRG's two segments: (i) Consumer Products,
which consists of Spectrum Brands Holdings, Inc. and its
subsidiaries ("Spectrum Brands"; NYSE: SPB); and (ii) Corporate and
Other, which includes Salus Capital Partners, LLC, ("Salus"), which
was created for the purpose of serving as an asset-based lender,
NZCH Corporation ("NZCH"), a public shell company, HGI Funding, LLC
("HGI Funding") and HGI Energy Holdings, LLC ("HGI Energy"), which
are subsidiaries that manage a portion of the Company's available
cash and engage in other activities.
As described further herein, Spectrum Brands' Global Battery and
Appliance ("GBA") business and our Insurance Operations, which
consist of Fidelity & Guaranty Life and its subsidiaries
("FGL"; NYSE: FGL) and Front Street Re (Delaware) Ltd. and its subsidiaries are
presented as discontinued operations. See additional information
under "Certain Other Items" below.
As discussed further below, this press release includes
non-GAAP metrics such as organic net sales, Adjusted EBITDA,
Adjusted EBITDA margin and organic Adjusted EBITDA. See the
supplemental information for a reconciliation to comparable GAAP
metrics.
First Quarter Fiscal 2018 Consolidated Highlights:
- HRG recorded total revenues of $646.5
million for the Fiscal 2018 Quarter, an increase of
$44.2 million, or 7.3%, from the
first quarter of fiscal 2017 (the "Fiscal 2017 Quarter"), driven by
higher net sales from our Consumer Products segment. Excluding the
impact of $7.5 million of favorable
foreign exchange and acquisition sales of $24.8 million, organic net sales grew 2.0%.
- Consolidated operating income for the Fiscal 2018 Quarter
decreased $14.7 million, or 35.6%, to
$26.6 million from $41.3 million for the Fiscal 2017 Quarter. The
$14.7 million decrease was primarily
driven by an $18.2 million increase
in restructuring and related charges primarily attributable to
restructuring initiatives in the hardware and home improvement and
global auto care product lines and incremental costs of
$7.3 million from the rawhide safety
recall in our Consumer Products segment, partially offset by a
$12.8 million decrease in operating
expenses in the Corporate and Other segment.
- Interest expense decreased $3.2
million to $75.5 million for
the Fiscal 2018 Quarter from $78.7
million for the Fiscal 2017 Quarter primarily attributable
to the decrease in interest cost associated with Spectrum Brands'
6.375% Notes due November 15, 2020
(the "6.375% Notes") that were fully paid down during the Fiscal
2017 Quarter along with the incremental non-recurring financing
costs in the Fiscal 2017 Quarter for the refinancing of the 6.375%
Notes.
- The Company recorded an income tax benefit of $126.0 million, or a 263.0% effective tax rate,
in the Fiscal 2018 Quarter compared to a $5.6 million income tax expense, or (15.4)%, in
the Fiscal 2017 Quarter. The decrease in income tax expense was
primarily due to the impact of the Tax Cuts and Jobs Act on our
Consumer Products segment. Spectrum Brands recorded a provisional
$206.7 million tax benefit related to
the remeasurement of its net deferred tax liability partially
offset by $78.8 million of
provisional income tax expense for the one-time deemed mandatory
repatriation on post-1986 undistributed foreign subsidiary earnings
and profits.
- Net income from continuing operations attributable to
controlling interest increased to $28.8
million, or $0.14 per basic
and diluted common share attributable to controlling interest in
the Fiscal 2018 Quarter, compared to net loss from continuing
operations attributable to controlling interest of $47.2 million, or $0.24 per basic and diluted common share
attributable to controlling interest in the Fiscal 2017
Quarter.
- HRG ended the Fiscal 2018 Quarter with corporate cash and
investments of $1.5 billion.
- In the Fiscal 2018 Quarter, HRG received dividends of
$17.5 million from its subsidiaries,
including $14.4 million and
$3.1 million from Spectrum Brands and
FGL, respectively.
Detail on First Quarter Segment Results:
Consumer Products:
Our Consumer Products segment reported consolidated net sales of
$646.5 million for the Fiscal 2018
Quarter, an increase of $44.2
million, or 7.3%, as compared to the $602.3 million reported in the Fiscal 2017
Quarter. The increase was primarily due to higher organic net sales
in the hardware and home improvement product line due to increased
market share and promotional volumes with traditional retail,
increased volumes through e-commerce channels with Amazon
promotions, and expanded distribution through the home builder
channel. The increase was partially offset by the decreases in the
global pet supplies product line mainly due to the pet safety
recall and lower point-of-sale.
Gross profit, representing net sales minus cost of goods sold,
increased $2.5 million, or 1.0%, from
the Fiscal 2017 Quarter to $242.7
million in the Fiscal 2018 Quarter. Gross profit margin,
representing gross profit as a percentage of net sales, decreased
to 37.5% in the Fiscal 2018 Quarter from 39.9% for the Fiscal 2017
Quarter, primarily due to unfavorable mix, the negative impact of
the pet U.S. rawhide safety recall and operating start-up
inefficiencies in the hardware and home improvement and global auto
care product lines from U.S. facility consolidations.
Selling, acquisition, operating and general expenses increased
$30.0 million from $178.7 million in the Fiscal 2017 Quarter, or
16.8%, to $208.7 million in the
Fiscal 2018 Quarter primarily due to increased restructuring and
related charges, acquisitions made in the prior year, the pet
safety recall, and acquisition and integration charges due to
integration of companies acquired in the prior year.
Operating income decreased $27.5
million, or 44.7%, to $34.0
million in the Fiscal 2018 Quarter, as compared to the
$61.5 million reported in the Fiscal
2017 Quarter as a result of incremental restructuring costs and
higher operating expenses.
Net income from continuing operations was $120.1 million in the Fiscal 2018 Quarter, an
increase of $107.3 million as
compared to $12.8
million reported in the Fiscal 2017 Quarter. The increase was
primarily due to lower interest expense and a net income tax
benefit during the Fiscal 2018 Quarter attributable to the recently
enacted U.S. tax reform.
Our Consumer Products segment's adjusted earnings before
interest, taxes, depreciation and amortization ("Adjusted EBITDA -
Consumer Products") increased by $0.5
million, or 0.5%, to $105.7
million compared to the Fiscal 2017 Quarter. The increase
was driven by the increases in the global pet supplies and hardware
and home improvement product lines, offset by a decrease in the
global auto care product line. A reconciliation of net income to
Adjusted EBITDA for our Consumer Products segment is included
elsewhere in this release.
Adjusted EBITDA margin of 16.3% in the Fiscal 2018 Quarter
decreased compared to 17.5% in the Fiscal 2017 Quarter, primarily
due to unfavorable product mix, operating inefficiencies and input
cost inflation.
After the close of the Fiscal 2018 Quarter, on January 29, 2018, Spectrum Brands announced that
its Board of Directors declared a quarterly dividend of
$0.42 per share on Spectrum Brands'
common stock.
Corporate and Other:
Our Corporate and Other segment's operating loss for the Fiscal
2018 Quarter decreased $12.8 million,
to $7.4 million from $20.2 million for the Fiscal 2017 Quarter. The
decrease in loss was primarily due to a decrease in payroll and
bonus expenses, a decrease in stock-based compensation expense and
a decrease in impairments and loan loss provision expenses on the
asset-based loan portfolio.
Certain Other Items:
In addition, we continued to streamline our business and
simplify our holding company structure and also continued to review
and evaluate strategic alternatives available to us with a view
towards maximizing shareholder value. We believe that HRG is an
excellent company that owns great businesses that have generated
strong performance over a long period of time. We believe that we
are well-positioned to take advantage of the opportunities that may
be available to us through the review of strategic alternatives.
Strategic alternatives may include, but are not limited to, a
merger, sale or other business combination involving the Company
and/or its assets. As part of this strategic review process, HRG
has made/received, and may in the future make/receive, one or more
proposals to/from third parties and/or Spectrum Brands, its
management, its board of directors, its stockholders and other
persons, including discussions and proposals that may include, but
are not limited to, a merger or a sale and/or a business
combination of the Company and Spectrum Brands. In connection
therewith, the Spectrum Brands board of directors has formed a
special committee of independent directors and has hired
independent financial and legal advisors. We have not set a
definitive schedule to complete our review of strategic
alternatives and do not intend to provide any further updates until
such time as it determines in its sole discretion or as required by
law. The strategic review process may be suspended or terminated at
any time without notice. There can be no assurance that any such
process will result in a transaction, or if a transaction is
undertaken, as to its terms or timing.
On November 30, 2017, FGL
completed its merger (the "FGL Merger") with CF Corporation and its
related entities (collectively, the "CF Entities") pursuant to its
previously disclosed Agreement and Plan of Merger (the "FGL Merger
Agreement"). Pursuant to the FGL Merger Agreement, except for
certain shares specified in the FGL Merger Agreement, each issued
and outstanding share of common stock of FGL was automatically
cancelled and converted into the right to receive $31.10 in cash. In addition, pursuant to a Share
Purchase Agreement, on November 30,
2017, Front Street Re (Delaware) Ltd. sold to the CF Entities (such
sale, the "Front Street Sale") all of the issued and outstanding
shares of its former wholly-owned subsidiaries, Front Street Re
Cayman Ltd. and Front Street Re Ltd (collectively, "Front Street",
and together with FGL, the "Insurance Operations"). The purchase
price for the Front Street Sale was $65.0
million, subject to reduction for customary transaction
expenses. In addition, $6.5 million
of the purchase price was deposited in escrow for a period of 15
months to support any indemnification claims that might be made (if
any) by the CF Entities. Pursuant to the Share Purchase Agreement,
on December 5, 2017, the Company
repaid the $92.0 million of notes
(such notes, the "HGI Energy Notes") issued by HGI Energy, which
were held directly and indirectly by Front Street and FGL.
Following the completion of the FGL Merger and the Front Street
Sale, HRG no longer has any equity interest in FGL or Front Street
and our former Insurance Operations segment is presented as
discontinued operations for prior periods.
Also, as previously disclosed, HRG, FS Holdco II Ltd. ("FS
Holdco") and the CF Entities entered into an agreement (the "338
Agreement") on May 24, 2017 pursuant
to which the CF Entities agreed that FS Holdco may, at its option,
cause the relevant CF Entity and FS Holdco to make a joint election
under Section 338(h)(10) of the Internal Revenue Code of 1986, as
amended, with respect to the FGL Merger and the deemed share
purchases of FGL's subsidiaries (the "338 Tax Election"). Pursuant
to the 338 Agreement, if FS Holdco elects to make the 338 Tax
Election, FS Holdco and/or CF Corporation will be required to make
a payment for the election to the other. As of December 31, 2017, HRG expects to receive an
estimated $26.6 million net payment
from CF Corporation, which has been included in the estimated
consideration HRG expects to receive from the FGL Merger. Pursuant
to the 338 Agreement, FS Holdco may elect to exercise the 338 Tax
Election at any time until 10 business days after final calculation
of such incremental tax costs or savings, as the case may be, and
it currently expects to exercise such election within such period.
Nonetheless, there can be no assurance that FS Holdco will make the
election and/or that HRG will receive the expected benefits of such
election. In addition, the estimated payment described herein is
preliminary as of December 31, 2017
and subject to change, and HRG does not undertake any obligation to
update such estimate.
Also on December 16, 2017, HRG
issued a notice of redemption to redeem all $864.4 million outstanding principal amount of
its 7.875% Senior Secured Notes due 2019 (the "7.875% Notes") at a
redemption price equal to 100.0% of the principal amount thereof,
plus accrued and unpaid interest to the redemption date. The 7.875%
Notes were redeemed on January 16,
2018.
Effective December 29, 2017,
Spectrum Brands' Board of Directors approved a plan to explore
strategic options for its GBA businesses with the intention to sell
the units during the fiscal year ending September 30, 2018. As a result, the GBA segment
has been reclassified as held for sale and reported as discontinued
operations for the Fiscal 2018 Quarter and the prior-year period.
On January 15, 2018, subsequent to
the end of the Fiscal 2018 Quarter, Spectrum Brands entered into a
definitive acquisition agreement with Energizer Holdings, Inc.
("Energizer") where Energizer has agreed to acquire from Spectrum
Brands its Global Battery and Lighting business for an aggregate
purchase price of $2.0 billion in
cash, subject to customary purchase price adjustments.
First Quarter Results of Discontinued Operations:
Income from discontinued operations, net of tax for the Fiscal
2018 Quarter was $500.8 million
compared to $302.8 million for the
Fiscal 2017 Quarter. The $198.0
million increase was driven by a $209.5 million increase related to the Insurance
Operations offset by a $11.5 million
decrease related to the GBA business. The $209.5 million increase related to the Insurance
Operations was driven by the reclassification of $445.9 million of accumulated other comprehensive
income related to FGL, partially offset by a $158.7 million increase in the write-down of the
carrying value of the assets of businesses held for sale to fair
value less cost to sell and a $77.7
million decrease in income attributable to the Insurance
Operations.
The Company recorded $14.2 million
of write-downs on FGL and Front Street during the Fiscal 2018
Quarter. Following the completion of the FGL Merger, the Company
recorded a $445.9 million adjustment
to reclassify the accumulated other comprehensive income related to
FGL that was previously included in the Company's stockholders
equity, which resulted in an increase in net income from
discontinued operations. There was no net effect on the total
stockholders equity as a result of this adjustment.
Additional Information:
Spectrum Brands, an HRG subsidiary, files reports with the SEC
and makes certain information available on its respective website.
For more information on Spectrum Brands, including information in
addition to that included in our reports and public announcements,
interested parties should read Spectrum Brands' announcements and
public filings with the Securities and Exchange Commission,
including Spectrum Brands' most recent earnings announcement, which
may be accessed at www.spectrumbrands.com.
About HRG Group, Inc.:
HRG Group, Inc. is a holding company that conducts its
operations through its operating subsidiaries. As of
December 31, 2017, the Company's principal operating
subsidiary was Spectrum Brands, a global branded consumer products
company. 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 evaluation of strategic alternatives by HRG, and any
expected or anticipated benefits therefrom, as applicable. There
can be no assurance that HRG's evaluation of strategic alternatives
will result in a transaction, or that any transaction, if pursued,
will be consummated. The evaluation of strategic alternatives by
HRG may be terminated at any time with or without notice. Neither
HRG nor any of its affiliates intends to disclose any developments
with respect to the foregoing until such time that it
determines otherwise in its sole discretion or as required by
applicable law. Forward-looking statements also 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. Factors that could cause actual results, events
and developments to differ include, without limitation: that the
review of strategic alternatives at HRG will result in a
transaction, or if a transaction is undertaken, as to its terms or
timing; the ability of HRG's subsidiaries to close previously
announced transactions, such as Spectrum Brands' ability to
consummate the announced sale of its Global Battery and Lighting
business on the expected terms and within the anticipated time
period, or at all, which is dependent on the parties' ability to
satisfy certain closing conditions, including receipt of regulatory
approvals, and Spectrum Brands' ability to realize the expected
benefits of such transaction and to successfully separate such
business; the outcome of Spectrum Brands' exploration of strategic
options for its Personal Care and Small Appliances businesses,
including uncertainty regarding consummation of any such
transaction or transactions and the terms of such transaction or
transactions, if any, and, if consummated, Spectrum Brands' ability
to realize the expected benefits of such transaction or
transactions and potential disruption to Spectrum Brands' business
or diverted management attention as a result of the exploration or
negotiation of such transaction or transactions; whether HRG
determines to exercise the 338 Tax Election and realizes the
expected benefits from such election; the ability of HRG's
subsidiaries to generate sufficient net income and cash flows to
make upstream cash distributions; the decision of the boards of
HRG's subsidiaries 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 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 and the timetable for completing applicable financial
reporting requirements; litigation; potential and contingent
liabilities; management's plans; changes in regulations including
recent tax reform; taxes; and the risks identified under the
caption "Risk Factors" in HRG's most recent Annual Report on Form
10-K filed with the Securities and Exchange Commission. We claim
the protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995
for all forward-looking statements. 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-GAAP Measurements:
Spectrum Brands' management believes that certain non-GAAP
financial measures may be useful in certain instances to provide
additional meaningful comparison between current results and
results in prior operating periods. Spectrum Brands' management
believes that organic net sales provides for a more complete
understanding of underlying business trends of regional and segment
performance by excluding the impact of currency exchange rate
fluctuations and the impact of acquisitions. In addition, within
this release, including the supplemental information attached
hereto, reference is made to Adjusted EBITDA and Adjusted EBITDA
Margin. Adjusted EBITDA is a metric used by Spectrum Brands'
management to evaluate segment performance and frequently used by
the financial community which provides insight into an
organization's operating trends and facilitates comparison 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
is also one of the measures used for determining Spectrum Brands'
debt covenant compliance. Adjusted EBITDA excludes certain items
that are unusual in nature or not comparable from period to period.
Adjusted EBITDA margin reflects Adjusted EBITDA as a percentage of
net sales of Spectrum Brands. Organic Adjusted EBITDA excludes the
impact of currency exchange rate fluctuations and the impact of
acquisitions. Spectrum Brands provides this information to
investors to assist in comparison of past, present and future
operating results and to assist in highlighting the results of
ongoing operations. While Spectrum Brands' management believes that
non-GAAP measurements are useful supplemental information, such
adjusted results are not intended to replace Spectrum Brands' GAAP
financial results and should be read in conjunction with those GAAP
results. Other Supplemental Information has been provided to
reconcile the non-GAAP measurements discussed above to the most
relevant GAAP financial results.
For further information contact:
HRG Group, Inc.
Investor Relations
Tel: 212.906.8555
Email: investorrelations@HRGgroup.com
(Tables Follow)
HRG GROUP, INC.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
|
|
December
31,
2017
|
|
September
30,
2017
|
ASSETS
|
(Unaudited)
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
1,647.6
|
|
|
$
|
270.1
|
|
Trade receivables,
net
|
278.4
|
|
|
266.0
|
|
Other receivables,
net
|
83.0
|
|
|
19.7
|
|
Inventories,
net
|
580.7
|
|
|
496.3
|
|
Prepaid expenses and
other current assets
|
56.6
|
|
|
54.8
|
|
Current assets of
businesses held for sale
|
1,990.6
|
|
|
28,929.2
|
|
Total current
assets
|
4,636.9
|
|
|
30,036.1
|
|
Property, plant and
equipment, net
|
506.7
|
|
|
504.4
|
|
Goodwill
|
2,276.4
|
|
|
2,277.1
|
|
Intangibles,
net
|
1,598.6
|
|
|
1,612.0
|
|
Deferred charges and
other assets
|
61.4
|
|
|
43.7
|
|
Noncurrent assets of
businesses held for sale
|
—
|
|
|
1,376.4
|
|
Total
assets
|
$
|
9,080.0
|
|
|
$
|
35,849.7
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt
|
$
|
934.5
|
|
|
$
|
161.4
|
|
Accounts
payable
|
321.3
|
|
|
373.1
|
|
Accrued wages and
salaries
|
31.5
|
|
|
56.1
|
|
Accrued
interest
|
104.5
|
|
|
78.0
|
|
Other current
liabilities
|
120.6
|
|
|
125.8
|
|
Current liabilities
of businesses held for sale
|
608.2
|
|
|
26,850.6
|
|
Total current
liabilities
|
2,120.6
|
|
|
27,645.0
|
|
Long-term debt, net
of current portion
|
4,888.4
|
|
|
5,544.0
|
|
Employee benefit
obligations
|
40.0
|
|
|
38.6
|
|
Deferred tax
liabilities
|
298.2
|
|
|
493.2
|
|
Other long-term
liabilities
|
105.2
|
|
|
26.2
|
|
Noncurrent
liabilities of businesses held for sale
|
—
|
|
|
155.8
|
|
Total
liabilities
|
7,452.4
|
|
|
33,902.8
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
HRG Group,
Inc. shareholders' equity:
|
|
|
|
Common
stock
|
2.0
|
|
|
2.0
|
|
Additional paid-in capital
|
1,363.7
|
|
|
1,372.9
|
|
Accumulated deficit
|
(418.5)
|
|
|
(925.9)
|
|
Accumulated other comprehensive (loss) income
|
(126.8)
|
|
|
309.0
|
|
Total
HRG Group, Inc. shareholders' equity
|
820.4
|
|
|
758.0
|
|
Noncontrolling interest
|
807.2
|
|
|
1,188.9
|
|
Total
shareholders' equity
|
1,627.6
|
|
|
1,946.9
|
|
Total
liabilities and equity
|
$
|
9,080.0
|
|
|
$
|
35,849.7
|
|
HRG GROUP, INC.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In millions,
except per share data)
|
|
|
Three months ended
December 31,
|
|
2017
|
|
2016
|
|
(Unaudited)
|
Revenues:
|
|
|
|
Net sales
|
$
|
646.5
|
|
|
$
|
602.3
|
|
Operating costs
and expenses:
|
|
|
|
Cost of goods
sold
|
403.8
|
|
|
362.1
|
|
Selling, acquisition,
operating and general expenses
|
216.1
|
|
|
198.9
|
|
Total operating costs
and expenses
|
619.9
|
|
|
561.0
|
|
Operating
income
|
26.6
|
|
|
41.3
|
|
Interest
expense
|
(75.5)
|
|
|
(78.7)
|
|
Other income,
net
|
1.0
|
|
|
1.0
|
|
Loss from continuing
operations before income taxes
|
(47.9)
|
|
|
(36.4)
|
|
Income tax (benefit)
expense
|
(126.0)
|
|
|
5.6
|
|
Net income (loss)
from continuing operations
|
78.1
|
|
|
(42.0)
|
|
Income from
discontinued operations, net of tax
|
500.8
|
|
|
302.8
|
|
Net income
|
578.9
|
|
|
260.8
|
|
Less: Net income
attributable to noncontrolling interest
|
71.5
|
|
|
48.6
|
|
Net income
attributable to controlling interest
|
$
|
507.4
|
|
|
$
|
212.2
|
|
|
|
|
|
Amounts attributable
to controlling interest:
|
|
|
|
Net income (loss)
from continuing operations
|
$
|
28.8
|
|
|
$
|
(47.2)
|
|
Net income from
discontinued operations
|
478.6
|
|
|
259.4
|
|
Net income
attributable to controlling interest
|
$
|
507.4
|
|
|
$
|
212.2
|
|
|
|
|
|
Net income per common
share attributable to controlling interest:
|
|
|
|
Basic income (loss)
from continuing operations
|
$
|
0.14
|
|
|
$
|
(0.24)
|
|
Basic income from
discontinued operations
|
2.39
|
|
|
1.30
|
|
Basic
|
$
|
2.53
|
|
|
$
|
1.06
|
|
|
|
|
|
Diluted income (loss)
from continuing operations
|
$
|
0.14
|
|
|
$
|
(0.24)
|
|
Diluted income from
discontinued operations
|
2.37
|
|
|
1.30
|
|
Diluted
|
$
|
2.51
|
|
|
$
|
1.06
|
|
HRG GROUP, INC.
AND SUBSIDIARIES
|
RESULTS OF
OPERATIONS BY SEGMENT
|
(In
millions)
|
|
|
|
Fiscal
Quarter
|
|
|
2018
|
|
2017
|
|
|
(Unaudited)
|
Revenues:
|
|
|
|
|
Consumer
Products
|
|
$
|
646.5
|
|
|
$
|
602.3
|
|
Corporate and
Other
|
|
—
|
|
|
—
|
|
Total
revenues
|
|
$
|
646.5
|
|
|
$
|
602.3
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
Consumer
Products
|
|
$
|
34.0
|
|
|
$
|
61.5
|
|
Corporate and Other
and eliminations
|
|
(7.4)
|
|
|
(20.2)
|
|
Consolidated
operating income
|
|
26.6
|
|
|
41.3
|
|
Interest
expense
|
|
(75.5)
|
|
|
(78.7)
|
|
Other income,
net
|
|
1.0
|
|
|
1.0
|
|
Loss from continuing
operations before income taxes
|
|
$
|
(47.9)
|
|
|
$
|
(36.4)
|
|
HRG GROUP, INC. AND
SUBSIDIARIES
OTHER SUPPLEMENTAL INFORMATION
(Unaudited)
(In millions)
Sales and Organic Net Sales — Consumer Products
The following is a summary of net sales by product line for the
Fiscal 2018 Quarter, compared to net sales for the Fiscal 2017
Quarter, respectively (unaudited):
|
|
Fiscal
Quarter
|
|
Variance
|
|
|
2018
|
|
2017
|
|
$
|
|
%
|
Hardware and home
improvement products
|
|
$
|
325.9
|
|
|
$
|
288.8
|
|
|
$
|
37.1
|
|
|
12.8
|
%
|
Global pet
supplies
|
|
202.4
|
|
|
194.2
|
|
|
8.2
|
|
|
4.2
|
%
|
Global auto
care
|
|
68.9
|
|
|
69.5
|
|
|
(0.6)
|
|
|
(0.9)
|
%
|
Home and garden
control products
|
|
49.3
|
|
|
49.8
|
|
|
(0.5)
|
|
|
(1.0)
|
%
|
Total net sales to
external customers
|
|
$
|
646.5
|
|
|
$
|
602.3
|
|
|
$
|
44.2
|
|
|
7.3
|
%
|
This release contains financial information regarding organic
net sales, which Spectrum Brands defines as net sales excluding the
effect of changes in foreign currency exchange rates and
acquisitions. Spectrum Brands' management believes this non-GAAP
measure provides useful information to investors because it
reflects regional and operating performance from Spectrum Brands'
activities without the effect of changes in currency exchange rates
and/or acquisitions. Spectrum Brands 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 period. Net sales are attributed to the geographic
regions based on the country of destination. Spectrum Brands
excluded net sales from acquired businesses in the current year for
which there are no comparable sales in the prior period.
The tables below represent a reconciliation of reported net
sales to organic net sales by product line for the Fiscal 2018
Quarter compared to net sales for the Fiscal 2017 Quarter
(unaudited):
|
|
Net Sales
Fiscal
2018
Quarter
|
|
Effect of
changes
in
Currency
|
|
Net Sales
Excluding
Effect of
Changes
in
Currency
|
|
Effect of
Acquisitions
|
|
Organic
Net Sales
Fiscal
2018
Quarter
|
|
Net Sales
Fiscal
2017
Quarter
|
|
$
Variance
|
|
%
Variance
|
Hardware and home
improvement products
|
|
$
|
325.9
|
|
|
$
|
(2.1)
|
|
|
$
|
323.8
|
|
|
$
|
—
|
|
|
$
|
323.8
|
|
|
$
|
288.8
|
|
|
$
|
35.0
|
|
|
12.1
|
%
|
Global pet
supplies
|
|
202.4
|
|
|
(4.8)
|
|
|
197.6
|
|
|
(24.8)
|
|
|
172.8
|
|
|
194.2
|
|
|
(21.4)
|
|
|
(11.0)
|
%
|
Global auto
care
|
|
68.9
|
|
|
(0.6)
|
|
|
68.3
|
|
|
—
|
|
|
68.3
|
|
|
69.5
|
|
|
(1.2)
|
|
|
(1.7)
|
%
|
Home and garden
control products
|
|
49.3
|
|
|
—
|
|
|
49.3
|
|
|
—
|
|
|
49.3
|
|
|
49.8
|
|
|
(0.5)
|
|
|
(1.0)
|
%
|
Total
|
|
$
|
646.5
|
|
|
$
|
(7.5)
|
|
|
$
|
639.0
|
|
|
$
|
(24.8)
|
|
|
$
|
614.2
|
|
|
$
|
602.3
|
|
|
$
|
11.9
|
|
|
2.0
|
%
|
Adjusted EBITDA
This release contains financial information regarding Adjusted
EBITDA, Adjusted EBITDA Margin, and organic Adjusted EBITDA, which
are non-GAAP earnings. Adjusted EBITDA is a metric used by Spectrum
Brands and this non-GAAP measure provides useful information to
investors because it reflects ongoing operating performance and
trends, excluding certain non-cash based expenses and/or
non-recurring items during each of the comparable periods. It also
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 is also used for determining compliance
with Spectrum Brands' debt covenant. EBITDA is calculated by
excluding Spectrum Brands' income tax expense, interest expense,
depreciation expense and amortization expense (from intangible
assets) from net income. Adjusted EBITDA further excludes: (1)
stock based compensation expense as it is a non-cash based
compensation cost; (2) acquisition and integration costs that
consist of transaction costs from acquisition transactions during
the period, or subsequent integration related project costs
directly associated with the acquired business; (3) restructuring
and related charges, which consist of project costs associated with
restructuring initiatives; (4) non-cash purchase accounting
inventory adjustments recognized in earnings subsequent to an
acquisition; (5) non-cash asset impairments or write-offs realized;
(6) and other adjustments. During the Fiscal 2018 Quarter, other
adjustments consisted of estimated costs for a non-recurring
voluntary recall of rawhide products and professional fees
associated with non-acquisition based strategic initiatives of
Spectrum Brands.
The table below shows a reconciliation of net income to Adjusted
EBITDA for the Consumer Products segment (unaudited):
|
|
Fiscal
Quarter
|
Reconciliation to
reported net income:
|
|
2018
|
|
2017
|
Reported net income -
Consumer Products segment
|
|
$
|
120.1
|
|
|
$
|
12.8
|
|
Interest
expense
|
|
38.6
|
|
|
43.0
|
|
Income tax (benefit)
expense
|
|
(126.0)
|
|
|
6.7
|
|
Depreciation of
properties
|
|
18.0
|
|
|
14.6
|
|
Amortization of
intangibles
|
|
15.0
|
|
|
15.4
|
|
EBITDA - Consumer
Products segment
|
|
65.7
|
|
|
92.5
|
|
Stock-based
compensation
|
|
3.8
|
|
|
7.2
|
|
Acquisition and
integration costs
|
|
5.2
|
|
|
3.3
|
|
Restructuring and
related charges
|
|
20.4
|
|
|
2.2
|
|
Pet safety
recall
|
|
7.3
|
|
|
—
|
|
Inventory acquisition
step-up
|
|
0.8
|
|
|
—
|
|
Other
|
|
2.5
|
|
|
—
|
|
Adjusted EBITDA -
Consumer Products segment
|
|
$
|
105.7
|
|
|
$
|
105.2
|
|
Net Sales
|
|
646.5
|
|
|
602.3
|
|
Adjusted EBITDA
Margin
|
|
16.3
|
%
|
|
17.5
|
%
|
View original
content:http://www.prnewswire.com/news-releases/hrg-group-inc-reports-fiscal-2018-first-quarter-results-300596593.html
SOURCE HRG Group, Inc.