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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Non-GAAP Measurements
Our Consumer Products segment results contain non-GAAP metrics such as organic net sales and adjusted EBITDA. While we believe organic net sales and adjusted EBITDA are useful supplemental information, such adjusted results are not intended to replace the Company’s financial results prepared in accordance with generally accepted accounting principles (“GAAP”) or the GAAP financial results of our Consumer Products segment and should be read in conjunction with those GAAP results.
Organic Net Sales — Consumer Products
Organic net sales is defined as net sales excluding the effect of changes in foreign currency exchange rates and/or impact from acquisitions (when applicable). Our Consumer Products segment believes this non-GAAP measure provides useful information to investors because it reflects regional and operating performance from our Consumer Products segment’s activities without the effect of changes in currency exchange rate and/or acquisitions. The Consumer Products segment 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 period. 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 comparative period. Net sales are attributed to the geographic regions based on the country of destination. Our Consumer Products segment excludes net sales from acquired businesses in the current period for which there are no comparable sales in the prior period.
The following is a reconciliation of reported net sales to organic net sales for the Fiscal 2017 Quarter compared to net sales for the Fiscal 2016 Quarter:
 
 
Net Sales Fiscal 2017 Quarter
 
Effect of Changes in Currency
 
Organic Net Sales
Fiscal 2017 Quarter
 
Net Sales Fiscal 2016 Quarter
 
Variance
 
% Variance
Hardware and home improvement products
 
$
313.7

 
$
(1.4
)
 
$
312.3

 
$
301.6

 
$
10.7

 
3.5
 %
Global pet supplies
 
191.8

 
3.4

 
195.2

 
208.5

 
(13.3
)
 
(6.4
)%
Consumer batteries
 
185.2

 
2.0

 
187.2

 
178.2

 
9.0

 
5.1
 %
Home and garden control products
 
131.9

 
—

 
131.9

 
155.0

 
(23.1
)
 
(14.9
)%
Small appliances
 
123.6

 
3.5

 
127.1

 
138.3

 
(11.2
)
 
(8.1
)%
Global auto care
 
119.0

 
0.1

 
119.1

 
119.6

 
(0.5
)
 
(0.4
)%
Personal care products
 
104.7

 
2.0

 
106.7

 
108.4

 
(1.7
)
 
(1.6
)%
Total
 
$
1,169.9

 
$
9.6

 
$
1,179.5

 
$
1,209.6

 
$
(30.1
)
 
(2.5
)%
The following is a reconciliation of reported net sales to organic net sales for the Fiscal 2017 Six Months compared to net sales for the Fiscal 2016 Six Months:
 
 
Net Sales Fiscal 2017 Six Months
 
Effect of changes in Currency
 
Organic Net Sales
Fiscal 2017 Six Months
 
Net Sales Fiscal 2016 Six Months
 
Variance
 
% Variance
Hardware and home improvement products
 
$
602.5

 
$
(1.1
)
 
$
601.4

 
$
584.3

 
$
17.1

 
2.9
 %
Consumer batteries
 
445.7

 
6.5

 
452.2

 
430.8

 
21.4

 
5.0
 %
Global pet supplies
 
386.0

 
6.2

 
392.2

 
411.9

 
(19.7
)
 
(4.8
)%
Small appliances
 
310.0

 
10.9

 
320.9

 
328.2

 
(7.3
)
 
(2.2
)%
Personal care products
 
267.3

 
5.7

 
273.0

 
277.2

 
(4.2
)
 
(1.5
)%
Global auto care
 
188.5

 
0.2

 
188.7

 
193.3

 
(4.6
)
 
(2.4
)%
Home and garden control products
 
181.7

 
—

 
181.7

 
202.7

 
(21.0
)
 
(10.4
)%
Total
 
$
2,381.7

 
$
28.4

 
$
2,410.1

 
$
2,428.4

 
$
(18.3
)
 
(0.8
)%
Adjusted EBITDA
Adjusted EBITDA is a metric used by our Consumer Products segment and one of the non-GAAP measures that 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 and 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 Spectrum Brands’ debt covenant compliance. See Note 9, Debt, to our Condensed Consolidated Financial Statements included in Part I - Item 1. Financial Statements for additional details.
EBITDA is calculated by excluding income tax expense, interest expense, depreciation expense and amortization expense (from intangible assets) from our Consumer Products segment’s net income. Adjusted EBITDA further excludes: (1) stock-based

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