Second Quarter 2023 Results
- Revenue was $500.9 million, an increase of 13.5% as compared to
the same period in the prior year
- Net income was $58.6 million, a decrease of 36.4% as compared
to the same period in the prior year
- Net income attributable to common unitholders was $59.2
million, or $2.44 per diluted common unit
- Adjusted EBITDA* increased to $73.6 million from $59.0 million
for the same period in the prior year; Adjusted EBITDA margin* was
14.7%
- Net cash used in operating activities was $6.3 million
- Adjusted free cash flow* totaled $29.5 million
- Total debt at quarter-end was $185.1 million; net debt,* which
includes, among other items, pension and preferred unit
liabilities, and long-term investments was $78.6 million
First Half 2023 Results
- Revenue was $946.3 million, an increase of 11.7% as compared to
the same period in the prior year
- Net income was $83.4 million, a decrease of 13.7% as compared
to the same period in the prior year
- Net income attributable to common unitholders was $84.0
million, or $3.53 per diluted common unit
- Adjusted EBITDA* increased to $136.7 million from $123.6
million for the same period in the prior year; Adjusted EBITDA
margin* was 14.4%
- Net cash used in operating activities was $54.5 million
- Adjusted free cash flow* was $62.9 million
Steel Partners Holdings L.P. (NYSE: SPLP), a diversified global
holding company, today announced operating results for the second
quarter ended June 30, 2023. The financial results of Steel
Connect, Inc. ("Steel Connect" or "STCN") have been included in the
Company's consolidated financial statements since the exchange
transaction on May 1, 2023.
Q2 2023
Q2 2022
($ in thousands)
YTD 2023
YTD 2022
$500,925
$441,408
Revenue
$946,296
$847,153
58,615
92,113
Net income
83,418
96,654
59,150
92,078
Net income attributable to common
unitholders
83,996
96,643
73,606
59,048
Adjusted EBITDA*
136,737
123,618
14.7%
13.4%
Adjusted EBITDA margin*
14.4%
14.6%
12,843
10,724
Purchases of property, plant and
equipment
23,551
18,470
29,495
34,378
Adjusted free cash flow*
62,857
68,001
*See reconciliations to the
nearest GAAP measure included in the financial tables. See "Note
Regarding Use of Non-GAAP Financial Measurements" below for the
definition of these non-GAAP measures.
"Our Financial Services and Energy segments have continued to
deliver favorable results," said Executive Chairman Warren
Lichtenstein. "With the current economic headwinds, we are focused
on reducing costs, paying down debt, and strategically investing
our capital to ensure we deliver quality products and services to
our customers and long-term value to our stakeholders."
Results of Operations
Comparison of the Three and Six Months
Ended June 30, 2023 and 2022 (unaudited)
(Dollar amounts in table and commentary in
thousands,
unless otherwise indicated)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Revenue
$ 500,925
$ 441,408
$ 946,296
$ 847,153
Cost of goods sold
289,399
288,813
550,692
556,983
Selling, general and administrative
expenses
136,364
100,841
251,318
186,965
Asset impairment charges
329
32
329
435
Interest expense
5,833
4,818
11,819
9,342
Realized and unrealized losses (gains) on
securities, net
3,121
(1,515)
2,514
26,211
Gain from sale of business
—
(85,185)
—
(85,185)
All other expense, net*
17,757
4,315
38,128
6,320
Total costs and expenses
452,803
312,119
854,800
701,071
Income from operations before income
taxes and equity
method investments
48,122
129,289
91,496
146,082
Income tax (benefit) provision
(15,330)
39,436
(726)
47,045
Loss (income) of associated companies, net
of taxes
4,837
(2,260)
8,804
2,383
Net income
$ 58,615
$ 92,113
$ 83,418
$ 96,654
* includes finance interest, provision for
loan losses, and other expense from the consolidated statements of
operations
Revenue
Revenue for the three months ended June 30, 2023 increased
$59,517, or 13.5%, as compared to the same period last year, as a
result of higher revenue from both Financial Services and Energy
segments, as well as favorable impact from the newly acquired
Supply Chain segment, partially offset by lower sales from the
Diversified Industrial segment.
Revenue for the six months ended June 30, 2023 increased
$99,143, or 11.7%, as compared to the same period last year, as a
result of higher revenue from both Financial Services and Energy
segments, as well as favorable impact of the newly acquired Supply
Chain segment, partially offset by lower sales from the Diversified
Industrial segment including the impact from the divestiture of the
SLPE business in April 2022.
Cost of Goods Sold
Cost of goods sold for the three months ended June 30, 2023
increased $586, or 0.2%, as compared to the same period last year,
resulting from newly acquired Supply Chain segment and higher
revenue volume from the Energy segment, largely offset by lower
sales from the Diversified Industrial segment, primarily from its
Building Materials business unit.
Cost of goods sold for the six months ended June 30, 2023
decreased $6,291 , or 1.1%, as compared to the same period last
year, primarily driven by lower sales discussed above from the
Diversified Industrial segment, partially offset by the impact of
newly acquired Supply Chain segment and higher revenue from the
Energy segment.
Selling, General and Administrative Expenses
Selling, general and administrative expenses ("SG&A") for
the three months ended June 30, 2023 increased $35,523, or 35.2%,
as compared to the same period last year. The increase was
primarily due to higher expenses from the Financial Services
segment of $29,700 and impact of newly acquired Supply Chain
segment of $8,900. The increase for the Financial Services segment
was primarily due to higher credit performance fees due to higher
credit risk transfer ("CRT") balances and higher personnel expenses
related to incremental headcount.
SG&A for the six months ended June 30, 2023 increased
$64,353, or 34.4%, as compared to the same period last year. The
increase was primarily driven by higher SG&A expenses from the
Financial Services segment of $51,000 and newly acquired Supply
Chain segment of $8,900 as mentioned above. SG&A expenses for
the Diversified Industrial segment also increased by approximately
$11,700, primarily due to higher personnel costs for the six months
ended June 30, 2023, despite the impact of the divestiture of SLPE
business of $5,000.
Asset Impairment Charges
An impairment charge of $329 was recognized for the three and
six months ended June 30, 2023, primarily related to a piece of
unused equipment in the Building Materials business unit from the
Diversified Industrial segment. An impairment charge of $435 was
recognized during the six months ended June 30, 2022, primarily
related to an idle piece of equipment in the Joining Materials
business unit from the Diversified Industrial segment.
Interest Expense
Interest expense increased $1,015, or 21.1% and $2,477 or 26.5%
for the three and six months ended June 30, 2023, respectively, as
compared to the same periods last year. The increases were
primarily due to higher average interest rates, partially offset by
lower average debt level, as compared to the same periods of
2022.
Realized and Unrealized Losses (Gains) on Securities,
Net
The Company recognized losses of $3,121 for the three months
ended June 30, 2023, as compared to gains of $1,515 in the same
period of 2022. The Company recorded losses of $2,514 for the six
months ended June 30, 2023, as compared to losses of $26,211 in the
same period of 2022. These gains and losses were due to unrealized
gains and losses related to the mark-to-market adjustments on the
Company's portfolio of securities.
All Other Expense, Net
All other expense, net was $17,757 for the three months ended
June 30, 2023, as compared to $4,315 in the same period of 2022.
Higher all other expense, net for the three months ended June 30,
2023 was primarily due to higher finance interest expense related
to the Financial Service segment, as compared to the same period of
2022.
All other expense, net was $38,128 for the six months ended June
30, 2023, as compared to $6,320 in the same period of 2022. Higher
all other expense, net for the six months ended June 30, 2023 was
primarily due to higher finance interest expense and provisions for
credit losses related to the Financial Services segment, as
compared to the same period of 2022.
Income Tax (Benefit) Provision
The Company recorded income tax benefit of $15,330 for the three
months ended June 30, 2023 and income tax provision of $39,436 for
the same period in 2022. The Company recorded income tax benefit of
$726 for the six months ended June 30, 2023 and income tax
provision of $47,045 for the same period in 2022. The Company's
effective tax rate was (0.8)% and 32.2% for the six months ended
June 30, 2023 and 2022, respectively. The lower effective tax rate
for the six months ended June 30, 2023 is primarily due to the
change in U.S. income tax expense related to unrealized gains and
losses on investments and the deferred tax movements resulting from
the acquisition of Steel Connect. As a limited partnership, the
Company is generally not responsible for federal and state income
taxes, and its profits and losses are passed directly to its
limited partners for inclusion in their respective income tax
returns. Provisions have been made for federal, state, local or
foreign income taxes on the results of operations generated by our
consolidated subsidiaries that are taxable entities. Significant
differences between the statutory rate and the effective tax rate
include partnership losses for which no tax benefit is recognized,
tax expense related to unrealized gains and losses on investment,
state taxes, changes in deferred tax valuation allowances, deferred
tax movements resulting from the acquisition of Steel Connect in an
exchange transaction and other permanent differences.
Loss (Income) of Associated Companies, Net of Taxes
The Company recorded losses from associated companies, net of
taxes, of $4,837 and $8,804 for the three and six months ended June
30, 2023, respectively, as compared to income from associated
companies, net of taxes, of $2,260 and loss from associated
companies, net of taxes, of $2,383 for the three and six months
ended June 30, 2022, respectively. The fluctuations for these
periods were primarily due to the changes in fair value of the
Company's investment in Steel Connect.
Purchases of Property, Plant and Equipment (Capital
Expenditures)
Capital expenditures for the three and six months ended June 30,
2023 totaled $12,843, or 2.6% of revenue and $23,551, or 2.5% of
revenue, respectively as compared to $10,724, or 2.4% of revenue
and $18,470, or 2.2% of revenue, respectively, in the same periods
of 2022.
Common Units Repurchase Program
During the three months ended June 30, 2023, the Company
repurchased 267,994 common units for $11,588. From the inception of
the Repurchase Program the Company has purchased 7,689,490 common
units for an aggregate price of approximately $159,194. As of June
30, 2023, there were approximately 1,080,750 common units that may
yet be purchased under the Repurchase Program.
Additional Non-GAAP Financial Measures
Adjusted EBITDA was $73,606 for the three months ended June 30,
2023, as compared to $59,048 for the same period of 2022 and
$136,737 for the six months ended June 30, 2023, as compared to
$123,618 for the same period of 2022. Adjusted EBITDA increased by
$14,558 and $13,119 for the three and six months ended June 30,
2023, respectively. The increase for the three month period was
primarily due to 1) higher revenue at the Financial Services
segment that was partially offset by higher finance interest and
higher personnel costs; and 2) strong revenue at the Energy segment
primarily resulting from higher volume and favorable pricing,
favorable impact from the newly acquired Supply Chain segment,
partially offset by decreases in the Diversified Industrial segment
primarily driven by lower sales. The increase for the six month
period was primarily due to 1) higher revenue at the Financial
Services segment that was partially offset by higher finance
interest and credit loss provisions, as well as higher personnel
costs; and 2) strong revenue at the Energy segment primarily
resulting from higher volume and favorable pricing, favorable
impact from the newly acquired Supply Chain segment, partially
offset by decreases in the Diversified Industrial segment primarily
driven by lower sales. For the three and six months ended June 30,
2023, adjusted free cash flow were $29,495 and $62,857, as compared
to $34,378 and $68,001, respectively for the same periods in
2022.
Liquidity and Capital Resources
As of June 30, 2023, the Company had approximately $405,700 in
availability under its senior credit agreement, as well as $110,289
in cash and cash equivalents, excluding WebBank cash, and
approximately $239,842 in long-term investments.
As of June 30, 2023, total debt was $185,138, an increase of
approximately $4,814, as compared to December 31, 2022. As of June
30, 2023, net debt totaled $78,636, an increase of approximately
$31,005 primarily driven by the change of long term investments for
the 2023 period. Total leverage (as defined in the Company's senior
credit agreement) was approximately 1.4x as of both June 30, 2023
and December 31, 2022.
Quarterly Cash Distribution on Series A Preferred
Units
On August 9, 2023, the Company's board of directors declared a
regular quarterly cash distribution of $0.375 per unit, payable
September 15, 2023, to unitholders of record as of September 1,
2023, on its 6% Series A Preferred Units, no par value ("Series A
Preferred").
Any future determination to declare distributions on its units
of Series A Preferred, and any determination to pay such
distributions in cash or in kind, or a combination thereof, will
remain at the discretion of Steel Partners' board of directors and
will be dependent upon a number of factors, including the Company's
results of operations, cash flows, financial position, and capital
requirements, among others.
About Steel Partners Holdings L.P.
Steel Partners Holdings L.P. (www.steelpartners.com) is a
diversified global holding company that owns and operates
businesses and has significant interests in various companies,
including diversified industrial products, energy, defense, supply
chain management and logistics, banking and youth sports. At Steel
Partners, our culture and core values of Teamwork, Respect,
Integrity, and Commitment guide our Kids First purpose, which is to
forge a path of success for the next generation by instilling
values, building character, and teaching life lessons through
sports.
(Financial Tables Follow)
Consolidated Balance Sheets
(unaudited)
(in thousands, except common
units)
June 30, 2023
December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
353,157
$
234,448
Trade and other receivables - net of
allowance for doubtful accounts of $2,425 and $2,414,
respectively
254,986
183,861
Loans receivable, including loans held for
sale of $743,594 and $602,675, respectively, net
1,428,283
1,131,745
Inventories, net
224,102
214,084
Prepaid expenses and other current
assets
44,396
41,090
Total current assets
2,304,924
1,805,228
Long-term loans receivable, net
462,729
423,248
Goodwill
148,027
125,813
Other intangible assets, net
123,347
94,783
Other non-current assets
165,980
195,859
Property, plant and equipment, net
246,503
238,510
Operating lease right-of-use assets
75,531
42,711
Long-term investments
239,842
309,697
Total Assets
$
3,766,883
$
3,235,849
LIABILITIES AND CAPITAL
Current liabilities:
Accounts payable
$
135,932
$
109,572
Accrued liabilities
136,082
112,744
Deposits
1,613,022
1,360,477
Short-term debt
283
685
Current portion of long-term debt
67
67
Other current liabilities
90,012
65,598
Total current liabilities
1,975,398
1,649,143
Long-term deposits
304,809
208,004
Long-term debt
184,788
179,572
Other borrowings
25,715
41,682
Preferred unit liability
153,576
152,247
Accrued pension liabilities
90,053
84,948
Deferred tax liabilities
15,956
41,055
Long-term operating lease liabilities
61,736
35,512
Other non-current liabilities
38,970
42,226
Total Liabilities
2,851,001
2,434,389
Commitments and Contingencies
Capital:
Partners' capital common units: 21,413,749
and 21,605,093 issued and outstanding (after deducting
18,248,177
and 17,904,679 units held in treasury, at
cost of $324,093 and $309,257), respectively
1,017,276
952,094
Accumulated other comprehensive loss
(150,956
)
(151,874
)
Total Partners' Capital
866,320
800,220
Noncontrolling interests in consolidated
entities
49,562
1,240
Total Capital
915,882
801,460
Total Liabilities and Capital
$
3,766,883
$
3,235,849
Consolidated Statements of Operations
(unaudited)
(in thousands, except common units and
per common unit
data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2023
2022
2023
2022
Revenue:
Diversified Industrial net sales
$
315,046
$
346,664
$
619,472
$
673,913
Energy net revenue
50,314
47,024
98,478
85,341
Financial Services revenue
105,384
47,720
198,165
87,899
Supply Chain revenue
30,181
—
30,181
—
Total revenue
500,925
441,408
946,296
847,153
Costs and expenses:
Cost of goods sold
289,399
288,813
550,692
556,983
Selling, general and administrative
expenses
136,364
100,841
251,318
186,965
Asset impairment charges
329
32
329
435
Finance interest expense
18,382
1,672
32,123
2,836
Provision for credit losses
3,204
3,883
11,010
5,165
Gain from sale of business
—
(85,185
)
—
(85,185
)
Interest expense
5,833
4,818
11,819
9,342
Realized and unrealized losses (gains) on
securities, net
3,121
(1,515
)
2,514
26,211
Other income, net
(3,829
)
(1,240
)
(5,005
)
(1,681
)
Total costs and expenses
452,803
312,119
854,800
701,071
Income from operations before income
taxes and equity
method investments
48,122
129,289
91,496
146,082
Income tax (benefit) provision
(15,330
)
39,436
(726
)
47,045
Loss (income) of associated companies, net
of taxes
4,837
(2,260
)
8,804
2,383
Net income
58,615
92,113
83,418
96,654
Net loss (income) attributable to
noncontrolling interests
in consolidated entities
535
(35
)
578
(11
)
Net income attributable to common
unitholders
$
59,150
$
92,078
$
83,996
$
96,643
Net income per common unit -
basic
Net income attributable to common
unitholders
$
2.75
$
4.03
$
3.89
$
4.29
Net income per common unit -
diluted
Net income attributable to common
unitholders
$
2.44
$
3.52
$
3.53
$
3.82
Weighted-average number of common units
outstanding -
basic
21,506,699
22,846,677
21,595,730
22,529,635
Weighted-average number of common units
outstanding -
diluted
25,462,813
27,061,579
25,501,513
26,931,547
Supplemental Balance Sheet Data (June
30, 2023 unaudited)
(in thousands, except common and
preferred units)
June 30,
December 31,
2023
2022
Cash and cash equivalents
$
353,157
$
234,448
WebBank cash and cash equivalents
242,868
174,257
Cash and cash equivalents, excluding
WebBank
$
110,289
$
60,191
Common units outstanding
21,413,749
21,605,093
Preferred units outstanding
6,422,128
6,422,128
Supplemental Non-GAAP Disclosures
(unaudited)
Adjusted EBITDA Reconciliation:
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net income
$
58,615
$
92,113
$
83,418
$
96,654
Income tax (benefit) provision
(15,330
)
39,436
(726
)
47,045
Income before income taxes
43,285
131,549
82,692
143,699
Add (Deduct):
Loss (income) of associated companies, net
of taxes
4,837
(2,260
)
8,804
2,383
Realized and unrealized losses (gains) on
securities, net
3,121
(1,515
)
2,514
26,211
Interest expense
5,833
4,818
11,819
9,342
Depreciation
9,612
9,619
18,967
19,518
Amortization
4,185
3,729
7,773
7,993
Asset impairment charge
329
32
329
435
Non-cash pension expense (income)
2,989
(1,705
)
5,969
(3,606
)
Non-cash equity-based compensation
419
354
408
473
Gain from sale of business
—
(85,185
)
—
(85,185
)
Other items, net
(1,004
)
(388
)
(2,538
)
2,355
Adjusted EBITDA
$
73,606
$
59,048
$
136,737
$
123,618
Total revenue
$
500,925
$
441,408
$
946,296
$
847,153
Adjusted EBITDA margin
14.7
%
13.4
%
14.4
%
14.6
%
Net Debt Reconciliation:
(in thousands)
June 30,
December 31,
2023
2022
Total debt
$
185,138
$
180,324
Accrued pension liabilities
90,053
84,948
Preferred unit liability
153,576
152,247
Cash and cash equivalents, excluding
WebBank
(110,289
)
(60,191
)
Long-term investments
(239,842
)
(309,697
)
Net debt
$
78,636
$
47,631
Adjusted Free Cash Flow
Reconciliation:
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net cash used in operating activities
$
(6,263
)
$
(87,551
)
$
(54,511
)
$
(100,861
)
Purchases of property, plant and
equipment
(12,843
)
(10,724
)
(23,551
)
(18,470
)
Net increase in loans held for sale
48,601
132,653
140,919
187,332
Adjusted free cash flow
$
29,495
$
34,378
$
62,857
$
68,001
Segment Results (unaudited)
(in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue:
Diversified Industrial
$
315,046
$
346,664
$
619,472
$
673,913
Energy
50,314
47,024
98,478
85,341
Financial Services
105,384
47,720
198,165
87,899
Supply Chain
$
30,181
$
—
$
30,181
$
—
Total revenue
$
500,925
$
441,408
$
946,296
$
847,153
Income (loss) before interest expense
and income taxes:
Diversified Industrial
$
25,121
$
121,952
$
46,259
$
156,034
Energy
4,031
3,677
9,271
7,629
Financial Services
24,982
13,709
50,834
27,636
Supply Chain
1,835
—
1,835
—
Corporate and other
(6,851
)
(2,971
)
(13,688
)
(38,258
)
Income before interest expense and
income taxes:
49,118
136,367
94,511
153,041
Interest expense
5,833
4,818
11,819
9,342
Income tax (benefit) provision
(15,330
)
39,436
(726
)
47,045
Net income
$
58,615
$
92,113
$
83,418
$
96,654
Loss (income) of associated companies,
net of taxes:
Corporate and other
$
4,837
$
(2,260
)
$
8,804
$
2,383
Total
$
4,837
$
(2,260
)
$
8,804
$
2,383
Segment depreciation and
amortization:
Diversified Industrial
$
10,061
$
10,392
$
20,076
$
21,753
Energy
2,452
2,643
4,992
5,164
Financial Services
209
133
425
261
Supply Chain
910
—
910
—
Corporate and other
165
180
337
333
Total depreciation and amortization
$
13,797
$
13,348
$
26,740
$
27,511
Segment Adjusted EBITDA:
Diversified Industrial
$
34,866
$
44,413
$
66,789
$
91,977
Energy
7,225
7,046
14,546
12,665
Financial Services
25,773
13,471
51,985
27,199
Supply Chain
2,871
—
2,871
—
Corporate and other
2,871
(5,882
)
546
(8,223
)
Total Adjusted EBITDA
$
73,606
$
59,048
$
136,737
$
123,618
Note Regarding Use of Non-GAAP Financial Measurements
The financial data contained in this press release includes
certain non-GAAP financial measurements as defined by the SEC,
including "Adjusted EBITDA," "Net Debt" and "Adjusted Free Cash
Flow." The Company is presenting these non-GAAP financial
measurements because it believes that these measures provide useful
information to investors about the Company's business and its
financial condition. The Company defines Adjusted EBITDA as net
income or loss from continuing operations before the effects of
income or loss from investments in associated companies and other
investments held at fair value, interest expense, taxes,
depreciation and amortization, non-cash pension expense or income,
and realized and unrealized gains or losses on securities, and
excludes certain non-recurring and non-cash items. The Company
defines Net Debt as the sum of total debt, accrued pension
liabilities and preferred unit liability, less the sum of cash and
cash equivalents (excluding those used in WebBank's banking
operations), and long-term investments. The Company defines
Adjusted Free Cash Flow as net cash provided by or used in
operating activities of continuing operations less the sum of
purchases of property, plant and equipment, and net increases or
decreases in loans held for sale. The Company believes these
measures are useful to investors because they are measures used by
the Company's Board of Directors and management to evaluate its
ongoing business, including in internal management reporting,
budgeting and forecasting processes, in comparing operating results
across the business, as internal profitability measures, as
components in assessing liquidity and evaluating the ability and
the desirability of making capital expenditures and significant
acquisitions, and as elements in determining executive
compensation.
However, the measures are not measures of financial performance
under generally accepted accounting principles in the U.S. ("U.S.
GAAP"), and the items excluded from these measures are significant
components in understanding and assessing financial performance.
Therefore, these non-GAAP financial measurements should not be
considered substitutes for net income or loss, total debt, or cash
flows from operating, investing or financing activities. Because
Adjusted EBITDA is calculated before recurring cash charges,
including realized losses on investments, interest expense, and
taxes, and is not adjusted for capital expenditures or other
recurring cash requirements of the business, it should not be
considered as a measure of discretionary cash available to invest
in the growth of the business. There are a number of material
limitations to the use of Adjusted EBITDA as an analytical tool,
including the following:
- Adjusted EBITDA does not reflect the Company's tax provision or
the cash requirements to pay its taxes;
- Adjusted EBITDA does not reflect income or loss from the
Company's investments in associated companies and other investments
held at fair value;
- Adjusted EBITDA does not reflect the Company's interest
expense;
- Although depreciation and amortization are non-cash expenses in
the period recorded, the assets being depreciated and amortized may
have to be replaced in the future, and Adjusted EBITDA does not
reflect the cash requirements for such replacement;
- Adjusted EBITDA does not reflect the Company's net realized and
unrealized gains and losses on its investments;
- Adjusted EBITDA does not include non-cash charges for pension
expense and equity-based compensation;
- Adjusted EBITDA does not include amounts related to
noncontrolling interests in consolidated entities;
- Adjusted EBITDA does not include certain other non-recurring
and non-cash items; and
- Adjusted EBITDA does not include the Company's discontinued
operations.
In addition, Net Debt assumes the Company's cash and cash
equivalents (excluding those used in WebBank's banking operations),
marketable securities and long-term investments are immediately
convertible in cash and can be used to reduce outstanding debt
without restriction at their recorded fair value, while Adjusted
Free Cash Flow excludes net increases or decreases in loans held
for sale, which can vary significantly from period-to-period since
these loans are typically sold after origination and thus represent
a significant component in WebBank's operating cash flow
requirements.
The Company compensates for these limitations by relying
primarily on its U.S. GAAP financial measures and using these
measures only as supplemental information. The Company believes
that consideration of Adjusted EBITDA, Net Debt and Adjusted Free
Cash Flow, together with a careful review of its U.S. GAAP
financial measures, is a well-informed method of analyzing SPLP.
Because Adjusted EBITDA, Net Debt and Adjusted Free Cash Flow are
not measurements determined in accordance with U.S. GAAP and are
susceptible to varying calculations, Adjusted EBITDA, Net Debt and
Adjusted Free Cash Flow, as presented, may not be comparable to
other similarly titled measures of other companies.
Forward-Looking Statements
This press release contains certain "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, that reflect SPLP's current expectations and projections
about its future results, performance, prospects and opportunities.
SPLP identifies these forward-looking statements by using words
such as "expect," "anticipate," "intend," "plan," "believe,"
"seek," "estimate," and similar expressions. These forward-looking
statements are only predictions based upon the Company's current
expectations and projections about future events, and are based on
information currently available to the Company and are subject to
risks, uncertainties, and other factors that could cause its actual
results, performance, prospects, or opportunities in 2023 and
beyond to differ materially from those expressed in, or implied by,
these forward-looking statements. These factors include, without
limitation: disruptions to the Company’s business as a result of
economic downturns; the significant volatility of crude oil and
commodity prices; the effects of rising interest rates; the
Company’s subsidiaries’ sponsor defined pension plans, which could
subject the Company to future cash flow requirements; the ability
to comply with legal and regulatory requirements, including
environmental, health and safety laws and regulations, banking
regulations and other extensive requirements to which the Company
and its businesses are subject; risks associated with the Company’s
wholly-owned subsidiary, WebBank, as a result of its Federal
Deposit Insurance Corporation ("FDIC") status, highly-regulated
lending programs, and capital requirements; the ability to meet
obligations under the Company's senior credit facility through
future cash flows or financings; the risk of recent events
affecting the financial services industry, including the closures
or other failures of several large banks; the risk of management
diversion, increased costs and expenses, and impact on
profitability in connection with the Company's business strategy to
make acquisitions; the impact of losses in the Company's investment
portfolio; the Company’s ability to protect its intellectual
property rights and obtain or retain licenses to use others'
intellectual property on which the Company relies; the Company’s
exposure to risks inherent to conducting business outside of the
U.S.; the impact of any changes in U.S. trade policies; the adverse
impact of litigation or compliance failures on the Company's
profitability; a significant disruption in, or breach in security
of, the Company’s technology systems or protection of personal
data; the loss of any significant customer contracts; the Company’s
ability to maintain effective internal control over financial
reporting; adverse impacts of the ongoing COVID-19 pandemic on
business, results of operations, financial condition, and cash
flows; the rights of unitholders with respect to voting and
maintaining actions against the Company or its affiliates;
potential conflicts of interest arising from certain interlocking
relationships amount us and affiliates of the Company’s Executive
Chairman; the Company’s dependence on the Manager and impact of the
management fee on the Company’s total partners’ capital; the impact
to the development of an active market for the Company’s units due
to transfer restrictions and other factors; the Company’s tax
treatment and its subsidiaries’ ability to fully utilize their tax
benefits; the loss of essential employees; and other risks detailed
from time to time in filings we make with the SEC. These statements
involve significant risks and uncertainties, and no assurance can
be given that the actual results will be consistent with these
forward-looking statements. Investors should read carefully the
factors described in the "Risk Factors" section of the Company's
filings with the SEC, including the Company's Form 10-K for the
year ended December 31, 2022 and subsequent quarterly reports on
Form 10-Q and annual reports on Form 10-K, for information
regarding risk factors that could affect the Company's results. Any
forward-looking statement made in this press release speaks only as
of the date hereof, and investors should not rely upon
forward-looking statements as predictions of future events. Except
as otherwise required by law, the Company undertakes no obligation
to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, changed
circumstances, or any other reason.
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version on businesswire.com: https://www.businesswire.com/news/home/20230808324245/en/
Investor Relations
Jennifer Golembeske 212-520-2300
jgolembeske@steelpartners.com
Steel Partners (NYSE:SPLP)
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