This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Harbinger Group Inc. Reports First Quarter Fiscal 2013 Results

Harbinger Group Inc. ("HGI"; NYSE: HRG), a diversified holding company focused on acquiring and growing attractive businesses, today announced its consolidated results for the first quarter of Fiscal 2013 ended on December 30, 2012. The results include HGI's Consumer Products Business, which consists of Spectrum Brands Holdings, Inc. (“Spectrum Brands”; NYSE: SPB), and HGI's Insurance and Financial Services Segments, which includes HGI's Fidelity & Guaranty Life Holdings, Inc. (“FGL”) and Salus Capital Partners, LLC (“Salus”) operating subsidiaries.

Philip A. Falcone, HGI Chairman and Chief Executive Officer, said, "We are very pleased with the first quarter performance, which is a testament to our ability to identify companies that will increase in value. As we take HGI to the next level, we remain sharply focused on building value for shareholders and executing on our strategy of acquiring and growing attractive businesses over the long term."

Omar Asali, President of HGI, said, “The last several months have been a watershed period in the continued growth and development of HGI. We achieved several major milestones, including refinancing our 10.625% senior secured notes at a significantly lower interest rate and on more attractive terms, giving us a strong capital structure to support growth. We completed the secondary offering of 23 million shares by our majority shareholder, increasing our public float and broadening our shareholder base with the addition of new, high-quality institutional investors. We significantly enhanced our Consumer Products business through Spectrum Brands' acquisition of HHI, adding top-level positions in North American markets for key residential hardware and home improvement products. And we announced a third operating business in Energy through a financially and strategically important joint venture with EXCO."

First Quarter Fiscal 2013 Business Highlights:

  • Refinanced $500 million aggregate principal amount 10.625% senior secured notes through issuance of $700 million aggregate principal amount of new 7.875% senior secured notes, lowering HGI's cost of capital and extending debt maturities. Remaining proceeds from debt issuance to be used for working capital and general corporate purposes.
  • Commenced registered secondary public offering of 23 million shares of HGI common stock by majority shareholder, increasing HGI's public float and broadening its shareholder base. Announced pricing of 20 million shares on December 13, 2012, with remaining 3 million shares purchased by underwriters in January of 2013.
  • Completed Spectrum Brands acquisition of Stanley Black & Decker, Inc.'s Hardware & Home Improvement Group (“HHI”), expected to enhance Spectrum Brands' top-line growth, margins and free cash flow profile, while providing added scale, greater product diversity and attractive cross-selling opportunities.
  • HGI announced an agreement to acquire a new Energy Operating Business through a joint venture with EXCO Resources, Inc., creating a private partnership holding long-life, low geological-risk conventional oil and gas assets that generate steady production and reliable cash flows. Transaction is expected to close in the second quarter of Fiscal 2013.
  • Received approval for inaugural $1.5 billion reinsurance treaty between Front Street Re and Fidelity & Guaranty Life, establishing HGI's reinsurance platform while also supporting continued growth of Fidelity & Guaranty Life.

Quarterly Results Highlights:

  • HGI recorded total revenues of $1.2 billion for the first quarter of Fiscal 2013, an increase of $56.3 million, or 4.8%.
  • Net income attributable to common and participating preferred stockholders increased to $62.0 million, or $0.31 per common share attributable to controlling interest ($0.03 diluted), compared to $23.8 million, or $0.12 per common share attributable to controlling interest ($0.06 diluted), in the Fiscal 2012 Quarter.
  • HGI's Fiscal 2013 first quarter results include $87.9 million of costs incurred by HGI and Spectrum Brands related to the extinguishment of HGI's 10.625% notes, and the financing of the HHI acquisition, respectively. Partially offsetting these expenses, HGI's stock price depreciation of 11.0% from $8.43 to $7.50 per share during the Fiscal 2013 Quarter resulted in a $68.9 million liability decrease related to the fair value of the preferred stock equity conversion feature, which represents a non-cash gain to net income. In addition, HGI realized $125.7 million of investment gains in its Insurance Segment.
  • During the quarter, HGI received dividends from FGL of $20 million. HGI received total dividends for the Trailing 12 Months Ended December 30, 2012, of $71 million, including dividends from FGL, Spectrum Brands and Salus.
  • HGI ended the quarter with corporate cash and short-term investments of approximately $489.2 million (primarily held at HGI and HGI Funding LLC), which supports HGI's business strategy and growth of existing businesses.

Quarterly Segment Highlights:

  • For the first quarter of Fiscal 2013, HGI's Consumer Products segment had record net sales of $870.3 million, a $21.5 million, or 2.5%, increase from $848.8 million for the Fiscal 2012 Quarter; excluding negative foreign exchange impact, net sales grew 3.2% versus the prior quarter.
  • Consumer Products segment operating income was $68.2 million compared to $83.7 million in the first quarter of Fiscal 2012. The decrease reflects acquisition and integration costs primarily related to the HHI acquisition. Consumer Products segment adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) increased by $5.6 million, or 4.5%, to $130.7 million versus the prior year quarter on higher sales, synergy benefits and cost reduction initiatives. Adjusted EBITDA margin represented 15.0% of sales compared to 14.7% in the first quarter of Fiscal 2012.
  • Insurance segment product sales for the first quarter of Fiscal 2013 were $254.9 million, compared to $372.5 million in the comparable period of Fiscal 2012, reflecting product and pricing changes to maintain target profitability.
  • As of December 30, 2012, the Insurance segment had a net US GAAP book value of $1.3 billion (including accumulated other comprehensive income (“AOCI”) of $422.9 million), up from $1.2 billion as of September 30, 2012. Net unrealized gains on available for sale investments were $1.0 billion on a U.S. GAAP basis.
  • Salus originated $175.0 million of new asset-based loan commitments in the first quarter of Fiscal 2013 Quarter. Salus had $207.4 million of loans outstanding as of December 30, 2012, and contributed approximately $5.1 million to HGI's consolidated earnings for the Fiscal 2013 first quarter.

Mr. Asali said, “Our Consumer Products and Insurance and Financial Services businesses performed well during the quarter and continued to successfully execute on strategic plans to drive long-term growth and profitability. HGI's Insurance segment ended the quarter with a net U.S. GAAP book value of $1.3 billion, up from $1.2 billion as of September 30, 2012, as we continued to build the value of this business. While first quarter results for the Consumer Products segment were affected by costs related to the HHI acquisition, Spectrum Brands delivered another record for first quarter net sales and adjusted EBITDA, and is well positioned for continued strong performance given the value proposition of its products and the addition of renowned, market-leading brands gained through the HHI acquisition."

1 of 9

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,156.85 +24.88 0.15%
S&P 500 2,001.57 +2.59 0.13%
NASDAQ 4,562.1890 +9.43 0.21%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs