Harbinger Group Inc.
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SEC Filings

10-Q
HRG GROUP, INC. filed this Form 10-Q on 05/05/2017
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Results of Operations
Presented below is a table that summarizes our results of operations and compares the amount of the change between the fiscal periods (in millions):
 
Fiscal Quarter
 
Fiscal Six Months
 
2017
 
2016
 
Increase / (Decrease)
 
2017
 
2016
 
Increase / (Decrease)
Revenues:
 
 
 
 
 
 
 
 
 
 
 
Consumer Products
$
1,169.9

 
$
1,209.6

 
$
(39.7
)
 
$
2,381.7

 
$
2,428.4

 
$
(46.7
)
Insurance
41.0

 
40.1

 
0.9

 
12.3

 
30.1

 
(17.8
)
Intersegment adjustments and eliminations
4.5

 
16.0

 
(11.5
)
 
10.7

 
10.6

 
0.1

Consolidated segment revenues
1,215.4

 
1,265.7

 
(50.3
)
 
2,404.7

 
2,469.1

 
(64.4
)
Corporate and Other
0.7

 
1.6

 
(0.9
)
 
1.0

 
7.6

 
(6.6
)
Total revenues
$
1,216.1

 
$
1,267.3

 
$
(51.2
)
 
$
2,405.7

 
$
2,476.7

 
$
(71.0
)
Operating income:
 
 
 
 
 
 
 
 
 
 
 
Consumer Products
$
144.2

 
$
148.5

 
$
(4.3
)
 
$
295.2

 
$
291.0

 
$
4.2

Insurance
(4.1
)
 
(1.4
)
 
(2.7
)
 
(19.5
)
 
(1.4
)
 
(18.1
)
Intersegment adjustments and eliminations (a)
13.5

 
12.8

 
0.7

 
15.8

 
(6.2
)
 
22.0

Total segment operating income
153.6

 
159.9

 
(6.3
)
 
291.5

 
283.4

 
8.1

Corporate and Other
(10.1
)
 
(17.4
)
 
7.3

 
(30.3
)
 
(41.1
)
 
10.8

Consolidated operating income
143.5

 
142.5

 
1.0

 
261.2

 
242.3

 
18.9

Interest expense
(88.3
)
 
(94.4
)
 
6.1

 
(180.0
)
 
(189.6
)
 
9.6

Other expense, net
(2.0
)
 
—

 
(2.0
)
 
(0.6
)
 
(0.7
)
 
0.1

Income from continuing operations before income taxes
53.2

 
48.1

 
5.1

 
80.6

 
52.0

 
28.6

Income tax expense (benefit)
50.2

 
(15.4
)
 
65.6

 
75.6

 
(21.0
)
 
96.6

Net income from continuing operations
3.0

 
63.5

 
(60.5
)
 
5.0

 
73.0

 
(68.0
)
(Loss) income from discontinued operations, net of tax
(54.4
)
 
(47.6
)
 
(6.8
)
 
204.4

 
(50.1
)
 
254.5

Net (loss) income
(51.4
)
 
15.9

 
(67.3
)
 
209.4

 
22.9

 
186.5

Less: Net income attributable to noncontrolling interest
30.7

 
40.6

 
(9.9
)
 
79.3

 
81.5

 
(2.2
)
Net (loss) income attributable to controlling interest
$
(82.1
)
 
$
(24.7
)
 
$
(57.4
)
 
$
130.1

 
$
(58.6
)
 
$
188.7

(a) For its stand-alone reporting purposes, Front Street elected, since inception, to apply the fair value option to account for its funds withheld receivables, non-funds withheld assets and future policyholder benefits reserves related to its assumed reinsurance. For the Company’s consolidated reporting, the results from Front Street’s assumed reinsurance business with FGL is reported on FGL’s historical basis. Accordingly, in order to align the Company’s consolidated reporting, we have recorded a net intersegment adjustment to operating income (loss) of $13.1 million and $13.9 million for the Fiscal 2017 Quarter and the Fiscal 2016 Quarter, respectively, and $9.9 million and $(3.2) million for the Fiscal 2017 Six Months and the Fiscal 2016 Six Months, respectively. Upon the completion of any disposition resulting from the FGL Strategic Evaluation Process, the Company’s consolidated results will reflect all reinsurance business on the fair value option.
Revenues. Revenues for the Fiscal 2017 Quarter decreased $51.2 million, or 4.0%, to $1,216.1 million from $1,267.3 million for 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 as a result of the continued run-off of the asset-backed loan portfolio.
Revenues for the Fiscal 2017 Six Months decreased $71.0 million, or 2.9%, to $2,405.7 million from $2,476.7 million for the Fiscal 2016 Six Months. 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 and decrease in home and garden products as discussed above; lower revenues generated by 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. Consolidated operating income for the Fiscal 2017 Quarter increased $1.0 million, or 0.7%, to $143.5 million from $142.5 million for 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.
Consolidated operating income for the Fiscal 2017 Six Months increased $18.9 million, or 7.8%, to $261.2 million from $242.3 million for the Fiscal 2016 Six Months. The increase was primarily due to lower impairments and loan loss provision expense in our Corporate and Other segment and increased profitability in our Consumer Products segment.

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