Harbinger Group Q3 Profit Down 47%

(RTTNews) - Diversified conglomerate Harbinger Group Inc. (HRG) on Friday reported a 47 percent decline in profit for the third quarter from last year as a double-digit increase in revenues was offset by a one-time loss related to the conversion of preferred stock into common stock.

The New York-based provider of branded consumer products said its net income attributable to common and participating preferred stockholders for the third quarter was $49.0 million, down from $91.6 million in the year-ago quarter.

However, earnings per share increased to $0.28 from $0.25 in the prior-year period, reflecting fewer number of weighted average shares outstanding in the latest quarter.

The company noted that the conversion in May 2014 of all its issued and outstanding preferred stock into common stock resulted in a non-recurring, non-cash loss of $43.9 million to the company's results in the latest quarter, primarily due to the write-off of fees and issuance discounts related to the preferred stock.

In addition, due to a 4.4 percent decrease in HGI's stock price from $12.23 at the beginning of the quarter to $11.69 per share as of the May 15th conversion date, the latest quarter's results include a $38.0 million gain to reflect the decrease in the fair value of the equity conversion feature of the preferred stock.

Consolidated operating income for the quarter grew 26 percent to $229.1 million from $182.6 million in the year-ago period. The increase was due to double-digit growth in all business segments, particularly Consumer Products and Insurance, which grew by 28.5 percent and 30.4 percent, respectively.

Total revenues for the quarter grew 13 percent to $1.60 billion from $1.41 billion in the year-ago period. The higher revenues were driven by revenue growth in all segments except Energy, which declined immaterially due to a slight decrease in oil revenues relative to the year-ago quarter.

Looking ahead, Harbinger said it expects to receive about $117.0 million of dividends during fiscal 2014. This is inclusive of the $85.1 million already received during nine months of the year, which does not give effect to the net impact from $9 million of interest payments made by HGI on behalf of HGI Energy with respect to certain intercompany notes issued by HGI Energy to other HGI subsidiaries.

HRG is trading at $12.20, up $0.04 or 0.33 percent on a volume of 54,138 shares.