NEW YORK, May 4, 2018
/PRNewswire/ -- HRG Group, Inc. ("HRG" or the "Company"; NYSE:
HRG) today announced its consolidated results for the second
quarter of Fiscal 2018 ended on March 31, 2018 (the "Fiscal
2018 Quarter").
The results include HRG's two segments: (i) Consumer Products,
which consists of Spectrum Brands Holdings, Inc. and its
subsidiaries ("Spectrum Brands"; NYSE: SPB); and (ii) Corporate and
Other, which includes the holding company at HRG and other
subsidiaries of HRG.
As described further herein, Spectrum Brands' Global Battery and
Appliance ("GBA") business and our former Insurance Operations,
which consist of our former subsidiaries, Fidelity & Guaranty
Life and its subsidiaries ("FGL"; NYSE: FGL) and Front Street Re
(Delaware) Ltd. and its
subsidiaries, are presented as discontinued operations. See
additional information under "Certain Other Items"
below.
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 a reconciliation to comparable GAAP
metrics.
Second Quarter Fiscal 2018 Consolidated Highlights:
- HRG recorded total revenues of $766.1
million for the Fiscal 2018 Quarter, an increase of
$8.7 million, or 1.1%, from the
second quarter of fiscal 2017 (the "Fiscal 2017 Quarter"), driven
by higher net sales from our Consumer Products segment. Excluding
the impact of $12.3 million of
favorable foreign exchange and acquisition sales of $25.2 million, organic net sales declined by 3.7%
during the Fiscal 2018 Quarter as compared to the Fiscal 2017
Quarter.
- Consolidated operating income for the Fiscal 2018 Quarter
decreased $66.4 million, or 69.7%, to
$28.9 million from $95.3 million for the Fiscal 2017 Quarter. The
$66.4 million decrease was primarily
driven by an $15.2 million increase
in restructuring and related charges and $11.6 million costs associated with costs and
expenses incurred in connection with the Merger Agreement ("Merger
Agreement") between HRG and Spectrum Brands, which provides for the
acquisition of Spectrum Brands by HRG in exchange for the issuance
of HRG shares to Spectrum Brands shareholders ("Merger").
- Interest expense decreased $10.1
million to $67.6 million for
the Fiscal 2018 Quarter from $77.7
million for the Fiscal 2017 Quarter primarily attributable
to the redemption of the 7.875% Senior Secured Notes due 2019 (the
"7.875% Notes") during the Fiscal 2018 Quarter.
- The Company recorded an income tax benefit of $1.2 million, or a 3.1% effective tax rate, in
the Fiscal 2018 Quarter compared to a $24.0
million income tax expense, or 148.1%, in the Fiscal 2017
Quarter. The decrease in income tax expense was primarily due to
the impact of the Tax Cuts and Jobs Act on our Consumer Products
segment, which reduced the U.S. corporate tax rate from a maximum
of 35.0% to a flat 21.0% rate effective January 1, 2018. Spectrum Brands also recognized
a $10.4 million tax benefit
associated with the release of valuation allowance during the
Fiscal 2018 Quarter.
- Net loss from continuing operations attributable to controlling
interest increased to $37.5 million,
or $0.18 per basic and diluted common
share attributable to controlling interest in the Fiscal 2018
Quarter, compared to $24.4 million,
or $0.12 per basic and diluted common
share attributable to controlling interest in the Fiscal 2017
Quarter.
- HRG ended the Fiscal 2018 Quarter with corporate cash and cash
equivalents of $616.8 million.
- In the six months ended March 31,
2018 (the "Fiscal 2018 Six Months"), HRG received dividends
of $31.9 million from its
subsidiaries, including $28.8 million
and $3.1 million from Spectrum Brands
and FGL, respectively.
Detail on Second Quarter Segment Results:
Consumer Products:
Our Consumer Products segment reported consolidated net sales of
$766.1 million for the Fiscal 2018
Quarter, an increase of $9.7 million,
or 1.3%, as compared to the $756.4
million reported in the Fiscal 2017 Quarter. The increase
was primarily due to higher organic net sales in the hardware and
home improvement product line due to new product introductions and
promotional volumes with retail partners, increased volumes through
e-commerce channels with Amazon promotions, and expanded
distribution through Spectrum Brands' home builder channel. The
increase was partially offset by the decreases in the global pet
supplies and home and garden control product lines mainly due to
the pet safety recall and lower point-of-sale.
Gross profit, representing net sales minus cost of goods sold,
decreased $39.5 million, or 12.7%,
from $310.8 million in the Fiscal
2017 Quarter to $271.3 million in the
Fiscal 2018 Quarter. Gross profit margin, representing gross profit
as a percentage of net sales, decreased to 35.4% in the Fiscal 2018
Quarter from 41.1% for the Fiscal 2017 Quarter, primarily due to
incremental costs, inflation in raw material costs, and operating
inefficiencies from restructuring initiatives in global auto care
and hardware and home improvement product lines along with
increased production costs associated with startup costs on
facilities, weather-driven unfavorable mix and the negative impact
by the PET U.S. rawhide product safety recall.
Selling, acquisition, operating and general expenses increased
$22.2 million from $206.0 million in the Fiscal 2017 Quarter, or
10.8%, to $228.2 million in the
Fiscal 2018 Quarter primarily due to increased transaction costs
associated with the Merger, increased restructuring and related
charges and acquisition and integration related costs due to
integration of the PetMatrix acquisition.
Operating income decreased $61.7
million, or 58.9%, to $43.1
million in the Fiscal 2018 Quarter, as compared to the
$104.8 million reported in the Fiscal
2017 Quarter as a result of lower gross margin, incremental
restructuring costs and higher operating expenses.
Net income from continuing operations was $0.9 million in the Fiscal 2018 Quarter, a
decrease of $38.7 million as compared
to $39.6 million reported in the
Fiscal 2017 Quarter. The decrease was primarily due to higher
production costs and higher operating expenses from incremental
transaction costs and restructuring expenses.
Our Consumer Products segment's adjusted earnings before
interest, taxes, depreciation and amortization ("Adjusted EBITDA -
Consumer Products") decreased by $44.6
million, or 27.8%, to $115.6
million compared to the Fiscal 2017 Quarter. The decrease
was driven by decreases in the global auto care, hardware and home
improvement and home and garden product lines, partially offset by
an increase in the global pet supplies product line. A
reconciliation of net income to Adjusted EBITDA for our Consumer
Products segment is included elsewhere in this release.
Adjusted EBITDA margin of 15.1% in the Fiscal 2018 Quarter
decreased compared to 21.2% in the Fiscal 2017 Quarter, primarily
due to unfavorable product mix, operating inefficiencies and input
cost inflation.
After the close of the Fiscal 2018 Quarter, on April 23, 2018, Spectrum Brands announced that
its Board of Directors declared a quarterly dividend of
$0.42 per share on Spectrum Brands'
common stock.
Corporate and Other:
Our Corporate and Other segment's operating loss for the Fiscal
2018 Quarter increased $4.7 million,
to $14.2 million from $9.5 million for the Fiscal 2017 Quarter. The
increase in loss was primarily due to an increase of $3.6 million in transaction costs associated with
the Merger Agreement.
Certain Other Items:
Also, as previously disclosed, HRG, FS Holdco II Ltd. ("FS
Holdco") and the CF Corporation and its related entities
(collectively, the "CF Entities") entered into an agreement (the
"338 Agreement") on May 24, 2017
pursuant to which the CF Entities agreed that FS Holdco may, at its
option, cause the relevant CF Entity and FS Holdco to make a joint
election under Section 338(h)(10) of the Internal Revenue Code of
1986, as amended, with respect to the merger by the CF Entities and
FGL (the "FGL Merger") and the deemed share purchases of FGL's
subsidiaries (the "338 Tax Election"). On March 8, 2018, FS Holdco exercised the 338 Tax
Election. In connection with such election, the CF Entities are
required to pay FS Holdco $26.6
million on or before May 21,
2018.
On January 15, 2018, Spectrum
Brands entered into a definitive acquisition agreement with
Energizer Holdings, Inc. ("Energizer") where Energizer has agreed
to acquire from Spectrum Brands its Global Battery and Lighting
business for an aggregate purchase price of $2.0 billion in cash, subject to customary
purchase price adjustments.
On January 16, 2018, HRG redeemed
all $864.4 million outstanding
principal amount of its 7.875% Notes at a redemption price equal to
100.0% of the principal amount thereof, plus accrued and unpaid
interest to the redemption date.
On February 24, 2018, the Company
and Spectrum Brands entered into the Merger Agreement.
Second Quarter Results of Discontinued Operations:
Income from discontinued operations, net of tax for the Fiscal
2018 Quarter was $0.7 million
compared to $43.6 million loss for
the Fiscal 2017 Quarter. The $44.3
million increase was driven by a $62.7 million increase related to the Insurance
Operations offset by a $18.4 million
decrease related to the GBA business. The $62.7 million increase related to the Insurance
Operations was driven by the completion of the FGL Merger and the
Front Street Sale on November 30,
2017. The $18.4 million
decrease related to the Consumer Products segment was primarily
driven by the incremental transaction costs of $22.3 million related to the GBA sale.
Additional Information:
Spectrum Brands, an HRG subsidiary, files reports with the SEC
and makes certain information available on its respective website.
For more information on Spectrum Brands, including information in
addition to that included in our reports and public announcements,
interested parties should read Spectrum Brands' announcements and
public filings with the Securities and Exchange Commission,
including Spectrum Brands' most recent earnings announcement, which
may be accessed at www.spectrumbrands.com.
About HRG Group, Inc.:
HRG Group, Inc. is a holding company that conducts its
operations through its operating subsidiaries. As of March 31,
2018, the Company's principal operating subsidiary was Spectrum
Brands, a global branded consumer products company. HRG is
headquartered in New York and
traded on the New York Stock Exchange under the symbol HRG. For
more information on HRG, visit: www.HRGgroup.com.
Forward Looking Statements:
"Safe Harbor" Statement Under the Private Securities
Litigation Reform Act of 1995: This document contains, and certain
oral statements made by our representatives from time to time may
contain, forward-looking statements, including those statements
regarding the Merger and/or sale of the GBA business, and any
expected or anticipated benefits therefrom, as applicable. There
can be no assurance that any such transaction will be consummated.
Neither HRG nor any of its affiliates intends to disclose any
developments with respect to the foregoing until such time that it
determines otherwise in its sole discretion or as required by
applicable law. Forward-looking statements also include information
concerning possible or assumed future distributions from
subsidiaries, other actions, events, results, strategies and
expectations and are identifiable by use of the words "believes,"
"expects," "intends," "anticipates," "plans," "seeks," "estimates,"
"projects," "may," "will," "could," "might," or "continues" or
similar expressions. Such forward-looking statements are subject to
risks and uncertainties that could cause actual results, events and
developments to differ materially from those set forth in or
implied by such statements. These statements are based on the
beliefs and assumptions of HRG's management and the management of
HRG's subsidiaries. Factors that could cause actual results, events
and developments to differ include, without limitation: the ability
to complete the Merger with Spectrum Brands in a timely manner or
at all; the ability of HRG and its subsidiaries to close previously
announced transactions, such as the Merger and/or Spectrum Brands'
ability to consummate the announced sale of its GBA business, each
on the expected terms and within the anticipated time period, or at
all, and in the case of the sale of the GBA business on Spectrum
Brands' ability to realize the expected benefits of such
transaction and to successfully separate such business; the outcome
of Spectrum Brands' exploration of strategic options for its
Personal Care and Small Appliances businesses, including
uncertainty regarding consummation of any such transaction or
transactions and the terms of such transaction or transactions, if
any, and, if consummated, Spectrum Brands' ability to realize the
expected benefits of such transaction or transactions and potential
disruption to Spectrum Brands' business or diverted management
attention as a result of the exploration or negotiation of such
transaction or transactions; the ability of HRG's subsidiaries to
generate sufficient net income and cash flows to make upstream cash
distributions; the decision of the boards of HRG's subsidiaries to
make upstream cash distributions, which is subject to numerous
factors such as restrictions contained in applicable financing
agreements, and other relevant considerations and restrictions;
HRG's liquidity, which may be impacted by a variety of factors,
including the capital needs of HRG's subsidiaries; capital market
conditions; commodity market conditions; foreign exchange rates;
HRG's and its subsidiaries' ability to identify, pursue or complete
any suitable future acquisition or disposition opportunities,
including realizing such transaction's expected benefits and the
timetable for completing applicable financial reporting
requirements; litigation; potential and contingent liabilities;
management's plans; changes in regulations including recent tax
reform; taxes; and the risks identified under the caption "Risk
Factors" in HRG's most recent Annual Report on Form 10-K filed with
the Securities and Exchange Commission, and any amendments thereto,
as such risks may be updated or supplemented in the Company's
subsequently filed Quarterly Reports on Form 10-Q or Current
Reports on Form 8-K. We claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995 for all forward-looking statements.
All forward-looking statements described herein are qualified by
these cautionary statements and there can be no assurance that the
actual results, events or developments referenced herein will occur
or be realized. Neither HRG nor any of its affiliates undertake any
obligation to update or revise forward-looking statements to
reflect changed assumptions, the occurrence of unanticipated events
or changes to future operation results, except as required by
law.
Non-GAAP Measurements:
Spectrum Brands' management believes that certain non-GAAP
financial measures may be useful in certain instances to provide
additional meaningful comparison between current results and
results in prior operating periods. Spectrum Brands' management
believes that organic net sales provides for a more complete
understanding of underlying business trends of regional and segment
performance by excluding the impact of currency exchange rate
fluctuations and the impact of acquisitions. In addition, within
this release, including the supplemental information attached
hereto, reference is made to Adjusted EBITDA and Adjusted EBITDA
Margin. Adjusted EBITDA is a metric used by Spectrum Brands'
management to evaluate segment performance and frequently used by
the financial community which provides insight into an
organization's operating trends and facilitates comparison 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 one of the measures used for determining Spectrum Brands'
debt covenant compliance. Adjusted EBITDA excludes certain items
that are unusual in nature or not comparable from period to period.
Adjusted EBITDA margin reflects Adjusted EBITDA as a percentage of
net sales of Spectrum Brands. Organic Adjusted EBITDA excludes the
impact of currency exchange rate fluctuations and the impact of
acquisitions. Spectrum Brands provides this information to
investors to assist in comparison of past, present and future
operating results and to assist in highlighting the results of
ongoing operations. While Spectrum Brands' management believes that
non-GAAP measurements are useful supplemental information, such
adjusted results are not intended to replace Spectrum Brands' GAAP
financial results and should be read in conjunction with those GAAP
results. Other Supplemental Information has been provided to
reconcile the non-GAAP measurements discussed above to the most
relevant GAAP financial results.
For further information contact:
HRG Group, Inc.
Investor Relations
Tel: 212.906.8555
Email: investorrelations@HRGgroup.com
(Tables Follow)
HRG GROUP, INC.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(In
millions)
|
|
|
March 31,
2018
|
|
September 30,
2017
|
ASSETS
|
(Unaudited)
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
758.8
|
|
|
$
|
270.1
|
|
Trade
receivables, net
|
337.6
|
|
|
266.0
|
|
Other
receivables, net
|
62.2
|
|
|
19.7
|
|
Inventories,
net
|
610.5
|
|
|
496.3
|
|
Prepaid
expenses and other current assets
|
60.2
|
|
|
54.8
|
|
Current assets
of businesses held for sale
|
1,976.0
|
|
|
28,929.2
|
|
Total current
assets
|
3,805.3
|
|
|
30,036.1
|
|
Property, plant and
equipment, net
|
504.5
|
|
|
503.9
|
|
Goodwill
|
2,280.2
|
|
|
2,277.1
|
|
Intangibles,
net
|
1,589.5
|
|
|
1,612.0
|
|
Deferred charges and
other assets
|
60.8
|
|
|
43.7
|
|
Noncurrent assets of
businesses held for sale
|
—
|
|
|
1,376.9
|
|
Total assets
|
$
|
8,240.3
|
|
|
$
|
35,849.7
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion
of long-term debt
|
$
|
70.3
|
|
|
$
|
161.4
|
|
Accounts
payable
|
360.7
|
|
|
373.1
|
|
Accrued wages
and salaries
|
41.3
|
|
|
55.4
|
|
Accrued
interest
|
62.6
|
|
|
78.0
|
|
Other current
liabilities
|
129.0
|
|
|
125.8
|
|
Current
liabilities of businesses held for sale
|
558.6
|
|
|
26,851.3
|
|
Total
current liabilities
|
1,222.5
|
|
|
27,645.0
|
|
Long-term debt, net
of current portion
|
5,248.4
|
|
|
5,543.7
|
|
Employee benefit
obligations
|
38.8
|
|
|
38.6
|
|
Deferred tax
liabilities
|
285.8
|
|
|
493.2
|
|
Other long-term
liabilities
|
101.1
|
|
|
26.2
|
|
Noncurrent
liabilities of businesses held for sale
|
—
|
|
|
156.1
|
|
Total liabilities
|
6,896.6
|
|
|
33,902.8
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
HRG Group,
Inc. shareholders' equity:
|
|
|
|
Common
stock
|
2.1
|
|
|
2.0
|
|
Additional
paid-in capital
|
1,270.4
|
|
|
1,372.9
|
|
Accumulated
deficit
|
(455.6)
|
|
|
(925.9)
|
|
Accumulated
other comprehensive (loss) income
|
(125.3)
|
|
|
309.0
|
|
Total
HRG Group, Inc. shareholders' equity
|
691.6
|
|
|
758.0
|
|
Noncontrolling interest
|
652.1
|
|
|
1,188.9
|
|
Total shareholders' equity
|
1,343.7
|
|
|
1,946.9
|
|
Total
liabilities and equity
|
$
|
8,240.3
|
|
|
$
|
35,849.7
|
|
HRG GROUP, INC.
AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(In millions,
except per share data)
|
|
|
Three months ended
March 31,
|
|
Six months ended
March 31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
(Unaudited)
|
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
|
|
Net sales
|
$
|
766.1
|
|
|
$
|
756.4
|
|
|
$
|
1,412.6
|
|
|
$
|
1,358.7
|
|
Net investment
income
|
—
|
|
|
1.0
|
|
|
—
|
|
|
1.0
|
|
Total
revenues
|
766.1
|
|
|
757.4
|
|
|
1,412.6
|
|
|
1,359.7
|
|
Operating costs
and expenses:
|
|
|
|
|
|
|
|
Cost of goods
sold
|
494.8
|
|
|
445.6
|
|
|
898.6
|
|
|
807.7
|
|
Selling, acquisition,
operating and general expenses
|
242.4
|
|
|
216.5
|
|
|
458.5
|
|
|
415.4
|
|
Total operating costs
and expenses
|
737.2
|
|
|
662.1
|
|
|
1,357.1
|
|
|
1,223.1
|
|
Operating
income
|
28.9
|
|
|
95.3
|
|
|
55.5
|
|
|
136.6
|
|
Interest
expense
|
(67.6)
|
|
|
(77.7)
|
|
|
(143.1)
|
|
|
(156.4)
|
|
Other income
(expense), net
|
0.2
|
|
|
(1.4)
|
|
|
1.2
|
|
|
(0.4)
|
|
(Loss) income from
continuing operations before income taxes
|
(38.5)
|
|
|
16.2
|
|
|
(86.4)
|
|
|
(20.2)
|
|
Income tax (benefit)
expense
|
(1.2)
|
|
|
24.0
|
|
|
(127.2)
|
|
|
29.6
|
|
Net (loss) income
from continuing operations
|
(37.3)
|
|
|
(7.8)
|
|
|
40.8
|
|
|
(49.8)
|
|
Income (loss) from
discontinued operations, net of tax
|
0.7
|
|
|
(43.6)
|
|
|
501.5
|
|
|
259.2
|
|
Net (loss)
income
|
(36.6)
|
|
|
(51.4)
|
|
|
542.3
|
|
|
209.4
|
|
Less: Net income
attributable to noncontrolling interest
|
0.5
|
|
|
30.7
|
|
|
72.0
|
|
|
79.3
|
|
Net (loss) income
attributable to controlling interest
|
$
|
(37.1)
|
|
|
$
|
(82.1)
|
|
|
$
|
470.3
|
|
|
$
|
130.1
|
|
|
|
|
|
|
|
|
|
Amounts attributable
to controlling interest:
|
|
|
|
|
|
|
|
Net loss from
continuing operations
|
$
|
(37.5)
|
|
|
$
|
(24.4)
|
|
|
$
|
(8.7)
|
|
|
$
|
(71.6)
|
|
Net income (loss)
from discontinued operations
|
0.4
|
|
|
(57.7)
|
|
|
479.0
|
|
|
201.7
|
|
Net (loss) income
attributable to controlling interest
|
$
|
(37.1)
|
|
|
$
|
(82.1)
|
|
|
$
|
470.3
|
|
|
$
|
130.1
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
common share attributable to controlling interest:
|
|
|
|
|
|
|
|
Basic loss from
continuing operations
|
$
|
(0.18)
|
|
|
$
|
(0.12)
|
|
|
$
|
(0.04)
|
|
|
$
|
(0.36)
|
|
Basic (loss) income
from discontinued operations
|
—
|
|
|
(0.29)
|
|
|
2.38
|
|
|
1.01
|
|
Basic
|
$
|
(0.18)
|
|
|
$
|
(0.41)
|
|
|
$
|
2.34
|
|
|
$
|
0.65
|
|
|
|
|
|
|
|
|
|
Diluted loss from
continuing operations
|
$
|
(0.18)
|
|
|
$
|
(0.12)
|
|
|
$
|
(0.04)
|
|
|
$
|
(0.36)
|
|
Diluted (loss) income
from discontinued operations
|
—
|
|
|
(0.29)
|
|
|
2.38
|
|
|
1.01
|
|
Diluted
|
$
|
(0.18)
|
|
|
$
|
(0.41)
|
|
|
$
|
2.34
|
|
|
$
|
0.65
|
|
HRG GROUP, INC.
AND SUBSIDIARIES
|
RESULTS OF
OPERATIONS BY SEGMENT
|
(In
millions)
|
|
|
|
Fiscal
Quarter
|
|
Fiscal Six
Months
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
(Unaudited)
|
|
(Unaudited)
|
Revenues:
|
|
|
|
|
|
|
|
|
Consumer
Products
|
|
$
|
766.1
|
|
|
$
|
756.4
|
|
|
$
|
1,412.6
|
|
|
$
|
1,358.7
|
|
Corporate and
Other
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
1.0
|
|
Total
revenues
|
|
$
|
766.1
|
|
|
$
|
757.4
|
|
|
$
|
1,412.6
|
|
|
$
|
1,359.7
|
|
|
|
|
|
|
|
|
|
|
Operating
income:
|
|
|
|
|
|
|
|
|
Consumer
Products
|
|
$
|
43.1
|
|
|
$
|
104.8
|
|
|
$
|
77.1
|
|
|
$
|
166.3
|
|
Corporate and
Other and eliminations
|
|
(14.2)
|
|
|
(9.5)
|
|
|
(21.6)
|
|
|
(29.7)
|
|
Consolidated
operating income
|
|
28.9
|
|
|
95.3
|
|
|
55.5
|
|
|
136.6
|
|
Interest
expense
|
|
(67.6)
|
|
|
(77.7)
|
|
|
(143.1)
|
|
|
(156.4)
|
|
Other income
(expense), net
|
|
0.2
|
|
|
(1.4)
|
|
|
1.2
|
|
|
(0.4)
|
|
(Loss) income from
continuing operations before income taxes
|
|
$
|
(38.5)
|
|
|
$
|
16.2
|
|
|
$
|
(86.4)
|
|
|
$
|
(20.2)
|
|
HRG GROUP, INC. AND
SUBSIDIARIES
OTHER SUPPLEMENTAL INFORMATON
(Unaudited)
(In millions)
Sales and Organic Net Sales — Consumer Products
The following is a summary of net sales by product line for the
Fiscal 2018 Quarter and Fiscal 2018 Six Months, compared to net
sales for the Fiscal 2017 Quarter and the six months ended
March 31, 2017 (the "Fiscal 2017 Six
Months"), respectively (unaudited):
|
|
Fiscal
Quarter
|
|
Variance
|
|
Fiscal Six
Months
|
|
Variance
|
|
|
2018
|
|
2017
|
|
$
|
|
%
|
|
2018
|
|
2017
|
|
$
|
|
%
|
Hardware and home
improvement
products
|
|
$
|
318.5
|
|
|
$
|
313.7
|
|
|
$
|
4.8
|
|
|
1.5
|
%
|
|
$
|
644.4
|
|
|
$
|
602.5
|
|
|
$
|
41.9
|
|
|
7.0
|
%
|
Global pet
supplies
|
|
211.2
|
|
|
191.8
|
|
|
19.4
|
|
|
10.1
|
%
|
|
413.6
|
|
|
386.0
|
|
|
27.6
|
|
|
7.2
|
%
|
Home and garden
control products
|
|
118.1
|
|
|
131.9
|
|
|
(13.8)
|
|
|
(10.5)
|
%
|
|
167.4
|
|
|
181.7
|
|
|
(14.3)
|
|
|
(7.9)
|
%
|
Global Auto
Care
|
|
118.3
|
|
|
119.0
|
|
|
(0.7)
|
|
|
(0.6)
|
%
|
|
187.2
|
|
|
188.5
|
|
|
(1.3)
|
|
|
(0.7)
|
%
|
Total net sales to
external
customers
|
|
$
|
766.1
|
|
|
$
|
756.4
|
|
|
$
|
9.7
|
|
|
1.3
|
%
|
|
$
|
1,412.6
|
|
|
$
|
1,358.7
|
|
|
$
|
53.9
|
|
|
4.0
|
%
|
This release contains financial information regarding organic
net sales, which Spectrum Brands defines as net sales excluding the
effect of changes in foreign currency exchange rates and
acquisitions. Spectrum Brands' management believes this non-GAAP
measure provides useful information to investors because it
reflects regional and operating performance from Spectrum Brands'
activities without the effect of changes in currency exchange rates
and/or acquisitions. Spectrum Brands 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 year. 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 period. Net sales are attributed to the geographic
regions based on the country of destination. Spectrum Brands
excluded net sales from acquired businesses in the current year for
which there are no comparable sales in the prior period.
The tables below represent a reconciliation of reported net
sales to organic net sales by product line for the Fiscal 2018
Quarter compared to net sales for the Fiscal 2017 Quarter
(unaudited):
|
|
Net Sales
Fiscal
2018
Quarter
|
|
Effect of
changes
in
Currency
|
|
Net Sales
Excluding
Effect of
Changes
in
Currency
|
|
Effect of
Acquisitions
|
|
Organic
Net Sales
Fiscal
2018
Quarter
|
|
Net Sales
Fiscal
2017
Quarter
|
|
$
Variance
|
|
%
Variance
|
Hardware and home
improvement products
|
|
$
|
318.5
|
|
|
$
|
(2.5)
|
|
|
$
|
316.0
|
|
|
$
|
—
|
|
|
$
|
316.0
|
|
|
$
|
313.7
|
|
|
$
|
2.3
|
|
|
0.7
|
%
|
Global pet
supplies
|
|
211.2
|
|
|
(8.5)
|
|
|
202.7
|
|
|
(25.2)
|
|
|
177.5
|
|
|
191.8
|
|
|
(14.3)
|
|
|
(7.5)
|
%
|
Home and garden
control products
|
|
118.1
|
|
|
—
|
|
|
118.1
|
|
|
—
|
|
|
118.1
|
|
|
131.9
|
|
|
(13.8)
|
|
|
(10.5)
|
%
|
Global auto
care
|
|
118.3
|
|
|
(1.3)
|
|
|
117.0
|
|
|
—
|
|
|
117.0
|
|
|
119.0
|
|
|
(2.0)
|
|
|
(1.7)
|
%
|
Total
|
|
$
|
766.1
|
|
|
$
|
(12.3)
|
|
|
$
|
753.8
|
|
|
$
|
(25.2)
|
|
|
$
|
728.6
|
|
|
$
|
756.4
|
|
|
$
|
(27.8)
|
|
|
(3.7)
|
%
|
The following is a reconciliation of reported net sales to
organic net sales for the Fiscal 2018 Six Months compared to net
sales for the Fiscal 2017 Six Months:
|
|
Net Sales
Fiscal
2018 Six
Months
|
|
Effect of
Changes
in
Currency
|
|
Net Sales
Excluding
Effect of
Changes in
Currency
|
|
Effect of
Acquisitions
|
|
Organic
Net Sales
Fiscal
2018
Quarter
|
|
Net Sales
Fiscal 2017
Six Months
|
|
Variance
|
|
%
Variance
|
Hardware and home
improvement
products
|
|
$
|
644.4
|
|
|
$
|
(4.6)
|
|
|
$
|
639.8
|
|
|
$
|
—
|
|
|
$
|
639.8
|
|
|
$
|
602.5
|
|
|
$
|
37.3
|
|
|
6.2
|
%
|
Global pet
supplies
|
|
413.6
|
|
|
(13.3)
|
|
|
400.3
|
|
|
(50.0)
|
|
|
350.3
|
|
|
386.0
|
|
|
(35.7)
|
|
|
(9.2)
|
%
|
Global auto
care
|
|
187.2
|
|
|
(1.9)
|
|
|
185.3
|
|
|
—
|
|
|
185.3
|
|
|
188.5
|
|
|
(3.2)
|
|
|
(1.7)
|
%
|
Home and garden
control products
|
|
167.4
|
|
|
—
|
|
|
167.4
|
|
|
—
|
|
|
167.4
|
|
|
181.7
|
|
|
(14.3)
|
|
|
(7.9)
|
%
|
Total
|
|
$
|
1,412.6
|
|
|
$
|
(19.8)
|
|
|
$
|
1,392.8
|
|
|
$
|
(50.0)
|
|
|
$
|
1,342.8
|
|
|
$
|
1,358.7
|
|
|
$
|
(15.9)
|
|
|
(1.2)
|
%
|
Adjusted EBITDA
This release contains financial information regarding Adjusted
EBITDA, Adjusted EBITDA Margin, and organic Adjusted EBITDA, which
are non-GAAP earnings. Adjusted EBITDA is a metric used by Spectrum
Brands and this non-GAAP measure 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. It also
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 compliance
with Spectrum Brands' debt covenant. EBITDA is calculated by
excluding Spectrum Brands' income tax expense, interest expense,
depreciation expense and amortization expense (from intangible
assets) from net income. Adjusted EBITDA further excludes: (1)
stock based compensation expense as it is a non-cash based
compensation cost; (2) acquisition and integration costs that
consist of transaction costs from acquisition transactions during
the period, or subsequent integration related project costs
directly associated with the acquired business; (3) restructuring
and related charges, which consist of project costs associated with
restructuring initiatives; (4) non-cash purchase accounting
inventory adjustments recognized in earnings subsequent to an
acquisition; (5) non-cash asset impairments or write-offs realized;
(6) and other adjustments. During the Fiscal 2018 Quarter and
Fiscal 2018 Six Months, other adjustments consisted of costs for a
non-recurring voluntary recall of rawhide products and transaction
costs associated with the Merger. During the Fiscal 2017 Quarter
and Fiscal 2017 Six Months, other adjustments consisted of
transaction costs associated with the Merger.
The table below shows a reconciliation of net income to Adjusted
EBITDA for the Consumer Products segment (unaudited):
|
|
Fiscal
Quarter
|
|
Fiscal Six
Months
|
Reconciliation to
reported net income:
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Reported net income -
Consumer Products segment
|
|
$
|
0.9
|
|
|
$
|
39.6
|
|
|
$
|
121.0
|
|
|
$
|
52.4
|
|
Interest
expense
|
|
42.0
|
|
|
38.9
|
|
|
80.6
|
|
|
81.9
|
|
Income tax (benefit)
expense
|
|
(1.2)
|
|
|
24.4
|
|
|
(127.2)
|
|
|
31.1
|
|
Depreciation of
properties
|
|
19.7
|
|
|
16.2
|
|
|
37.7
|
|
|
30.8
|
|
Amortization of
intangibles
|
|
14.4
|
|
|
15.1
|
|
|
29.4
|
|
|
30.5
|
|
EBITDA - Consumer
Products segment
|
|
75.8
|
|
|
134.2
|
|
|
141.5
|
|
|
226.7
|
|
Stock-based
compensation
|
|
(3.4)
|
|
|
12.3
|
|
|
0.4
|
|
|
19.5
|
|
Acquisition and
integration costs
|
|
4.5
|
|
|
3.2
|
|
|
9.7
|
|
|
6.5
|
|
Restructuring and
related charges
|
|
23.2
|
|
|
8.0
|
|
|
43.6
|
|
|
10.2
|
|
Pet safety
recall
|
|
3.8
|
|
|
—
|
|
|
11.1
|
|
|
—
|
|
Inventory acquisition
step-up
|
|
—
|
|
|
—
|
|
|
0.8
|
|
|
—
|
|
Other
|
|
11.7
|
|
|
2.5
|
|
|
14.2
|
|
|
2.5
|
|
Adjusted EBITDA -
Consumer Products segment
|
|
$
|
115.6
|
|
|
$
|
160.2
|
|
|
$
|
221.3
|
|
|
$
|
265.4
|
|
Net Sales
|
|
$
|
766.1
|
|
|
$
|
756.4
|
|
|
$
|
1,412.6
|
|
|
$
|
1,358.7
|
|
Adjusted EBITDA
Margin
|
|
15.1
|
%
|
|
21.2
|
%
|
|
15.7
|
%
|
|
19.5
|
%
|
View original
content:http://www.prnewswire.com/news-releases/hrg-group-inc-reports-fiscal-2018-second-quarter-results-300642675.html
SOURCE HRG Group, Inc.