|HRG GROUP, INC. filed this Form 8-K on 05/09/2016|
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Detail on Second Quarter Segment Results:
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 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.
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