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Exhibit
HRG Group, Inc. Reports Second Quarter Results Achieves Solid Consolidated Operating Income for the Second Quarter of 2017
NEW YORK, May 5, 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 second quarter of fiscal 2017 ended on March 31, 2017 (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”). |
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 reconciliation to comparable GAAP metrics. Second Quarter Fiscal 2017 Consolidated Highlights:
| | • | The Company recorded total revenues of $1.22 billion for the Fiscal 2017 Quarter, a decrease of $51.2 million, or 4.0%, as compared to the $1.27 billion recorded
in the second quarter of fiscal 2016 (the “Fiscal 2016 Quarter”). The decrease was primarily due to lower revenues from our Consumer Products segment driven by lower sales in lawn and garden control products and repellents due to timing of seasonal inventory sales, reduction in distribution from retail inventory management initiatives and higher demand driven by Zika concerns in the prior period coupled with lower revenues generated by Salus Capital Partners, LLC (“Salus”) as a result of the continued wind-down of its operations and run-off of its loan portfolio. |
| | • | Operating income of $143.5 million in the Fiscal 2017 Quarter increased $1.0 million as compared to $142.5 million reported in the Fiscal 2016 Quarter. The increase was primarily due to lower impairments and loan loss provision expense in our Corporate and Other segment, partially offset by lower operating income from our Consumer Products and Insurance segments. |
| | • | Results reflect a $6.1 million decrease in interest expense relative to the Fiscal 2016 Quarter, which was primarily due to the effect of refinancing activities to lower interest rates at Spectrum Brands. |
| | • | The Company recorded tax expense of $50.2 million, or a 94.4% effective tax rate, in the Fiscal 2017 Quarter primarily impacted by U.S. pretax losses in the Company’s Corporate and Other and Insurance segments where the tax benefits were not more-likely-than-not to be realized resulting in the recording of valuation allowance. For the Fiscal 2016 Quarter, the Company recorded a $15.4 million tax benefit, or a (32.0)% effective tax rate principally due to the expected utilization of a portion of Spectrum Brands’ U.S. net operating losses that were previously recorded with valuation allowance against Spectrum Brands’ earnings during the fiscal year 2016, the effects of the adoption of ASU 2016-09 that resulted in the recognition of excess tax benefits in the Company’s provision for income taxes rather than paid-in capital, partially offset by current year losses from our Corporate and Other segment in the U.S. that were not more-likely-than-not to be realized. |
| | • | Net loss from continuing operations attributable to common stockholders was $21.3 million, or $0.11 per common share attributable to controlling interest during the Fiscal 2017 Quarter, as compared to a net income from continuing operations attributable to common stockholders of $24.5 million, or $0.12 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 lower interest expense, as discussed above. |
| | • | In the six months ended March 31, 2017 (the “Fiscal 2017 Six Months”), HRG received dividends of $33.6 million from its subsidiaries, comprised of $27.5 million from Spectrum Brands and $6.1 million from Fidelity & Guaranty Life (“FGL”; NYSE: FGL), which is reported as discontinued operations. |
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