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8-K
HRG GROUP, INC. filed this Form 8-K on 02/07/2017
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Exhibit


HRG Group, Inc. Reports First Quarter Results
Achieves Consolidated Operating Income Growth of 17.9% Over the First Quarter of 2016

NEW YORK, February 7, 2017 -- HRG Group, Inc. (“HRG” or the “Company”; NYSE: HRG), a holding company that conducts its operations principally through its operating subsidiaries, today announced its consolidated results for the first quarter of Fiscal 2017 ended on December 31, 2016 (the “Fiscal 2017 Quarter”). The results include HRG’s two segments:
Consumer Products, which consists of Spectrum Brands Holdings, Inc. (“Spectrum Brands”; NYSE: SPB) and its subsidiaries; and
Insurance, which consists of Front Street Re (Delaware) Ltd. and its subsidiaries (“Front Street”).
“In the first quarter of Fiscal 2017, HRG reported very strong results, highlighted by solid operating income growth at HRG overall driven by another strong performance from the Consumer Products segment, which maintained its momentum from fiscal 2016 and is well positioned for another great year in fiscal 2017. Subsequent to the quarter-end, Spectrum Brands also increased its quarterly dividend by 10.5% to $0.42 per Spectrum Brands share and authorized a new three-year, $500 million common stock repurchase program.” said Omar Asali, President and Chief Executive Officer of HRG.
“With respect to the pending merger between Fidelity & Guaranty Life and Anbang, we are continuing our discussions with Anbang regarding an extension of the outside termination date beyond February 8, 2017,” continued Asali. “We expect that Fidelity & Guaranty Life will make an announcement on or about February 9, 2017 regarding the outcome of those discussions.”
First Quarter Fiscal 2017 Consolidated Highlights:
HRG recorded total revenues of $1.19 billion for the Fiscal 2017 Quarter, a decrease of $19.8 million, or 1.6%, as compared to the $1.21 billion recorded in the first quarter of fiscal 2016 (the “Fiscal 2016 Quarter”). The decrease was primarily due to lower net sales from our Consumer Products segment mainly as a result of the effect of foreign exchange rates; lower revenues generated by Salus Capital Partners, LLC (“Salus”) as a result of the continued run-off of the asset-backed loan portfolio; and a decrease in fair value of the funds withheld receivables with third parties in the Insurance segment due to higher interest rates and wider credit spreads.
Consolidated operating income of $117.7 million in the Fiscal 2017 Quarter increased $17.9 million as compared to $99.8 million reported in the Fiscal 2016 Quarter. The increase was primarily due to increased profitability in our Consumer Products segment and lower impairments and loan loss provision expense in our Corporate and Other segment.
Results reflect a $3.5 million decrease in interest expense relative to the Fiscal 2016 Quarter, which was primarily due to the effect of refinancing activities at Spectrum Brands.
HRG recorded a tax expense of $25.4 million, or a 92.7% effective tax rate, in the Fiscal 2017 Quarter compared to a $5.6 million tax benefit, or a (143.6)% effective tax rate, in the Fiscal 2016 Quarter. The increase in tax expense in the Fiscal 2017 Quarter was principally due to higher taxes in our Consumer Products segment, which benefited from the valuation allowance release in the Fiscal 2016 Quarter, coupled with the recognition on tax benefits of a portion of current year losses recognized in our Corporate and Other segment in the Fiscal 2016 Quarter.
Net loss from continuing operations attributable to common stockholders was $25.5 million, or $0.13 per common share attributable to controlling interest during the Fiscal 2017 Quarter, as compared to a net loss from continuing operations attributable to common stockholders of $21.8 million, or $0.11 per common share attributable to controlling interest during the Fiscal 2016 Quarter. The increase in loss was primarily due to higher effective income tax rate during the Fiscal 2017 Quarter, partially offset by increased operating income.
In the Fiscal 2017 Quarter, HRG received dividends of $16.1 million from its subsidiaries, comprised of $13.0 million from Spectrum Brand and $3.1 million from Fidelity & Guaranty Life (“FGL”; NYSE: FGL), which is reported as discontinued operations.

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