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Steel Partners Holdings L.P. Reports First Quarter Financial Results

May 15, 2012 at 5:32 PM EDT

NEW YORK, May 15, 2012 /PRNewswire/ -- Steel Partners Holdings L.P. (NYSE: SPLP) ("SPH" or the "Company") reported revenue of $186.0 million for the period ending March 31, 2012 as compared to $175.1 million for the same period of 2011. Net income attributable to the Company's common unitholders for the first quarter of 2012 was $46.0 million, or $1.83 per diluted common unit, as compared to $12.5 million, or $0.43 per diluted common unit, for the same period of 2011.

Warren Lichtenstein, Chairman & Chief Executive Officer of Steel Partners Holdings GP Inc., SPH's general partner, stated, "The first quarter saw solid revenue growth in our diversified industrial segment and a strong rise in revenue in the financial services segment.  It was also an important quarter for the Company as we completed the process of registering our units with the SEC, and in April listed our units on the NYSE."

Financial Summary ($000s)      


Three Months Ended March 31,

2012

2011




Revenues

$

186,022

$

175,100

Costs and Expenses

186,143

159,713

(Loss) income before taxes and equity method investments

(121)

15,387

Income tax (provision) benefit

(1,872)

5,607

Income from associated companies

50,540

1,858

Loss from other investments - related party

(10,800)

(8,284)

Income (loss) from investments held at fair value

8,638

(1,564)

Income from continuing operations

46,385

13,004

Income from discontinued operations

3,753

2,127

Net income

50,138

15,131

Income attributable to noncontrolling interests

(4,168)

(2,640)

Net income attributable to common unit holders

$

45,970

$

12,491




Net income per common unit – basic

$

1.83

$

0.49

Net income per common unit – diluted

$

1.83

$

0.43

 

Performance Overview

The Diversified Industrial segment saw revenue of $179.5 million, as compared to $158.4 million in the prior year period, a 13.3% increase.  Handy & Harman Ltd. ("HNH") saw increased sales volume in most of its segments, driven by higher demand for its products, resulting in 7.0% sales growth over the prior year.

Revenues for the first quarter of 2012 include $4.0 million for the Financial Services segment, a 23.8% increase over the 2011 period, due primarily to a new lending program at WebBank.

In addition, the 2012 period reflects a full three months of operations for SWH, Inc. ("SWH"), which was acquired by BNS Holding, Inc. on February 2, 2011 and DGT Holdings Corp., which was acquired on July 5, 2011.

Income from continuing operations of $46.4 million includes income from equity method investments in associated companies of $50.5 million, which primarily relates to net changes in the market value of the investments held by the Company.

Meanwhile, income from investments held at fair value was $8.6 million in the quarter, compared with a loss of $1.6 million in the same period of 2011.

Loss from other investments - related party totaled $10.8 million, compared with a loss of $8.3 million in the same period of 2011. The figure primarily represents changes in the market value of the investments held by the SPII Liquidating Series Trust during the period. The Company has a 43.75% interest in the SPII Liquidating Series Trust.

Noncontrolling interests primarily represent the minority ownership's share of the net income relating to HNH. As of March 31, 2012, the Company owned 53.7% of HNH.

Liquidity

In addition to cash and cash equivalents, SPH, excluding its operating subsidiaries (the "Holding Company") considers investments at fair value included in its consolidated balance sheet as being generally available to meet its liquidity needs.  Investments at fair value are not as liquid as cash and cash equivalents, but they are generally convertible into cash within a reasonable period of time.  As of March 31, 2012, the Holding Company had cash and cash equivalents of $27.1 million and investments at fair value of $110.8 million.  

Our Company

SPH is a global diversified holding company that engages in multiple businesses through consolidated subsidiaries, associated companies and other interests.  We own and operate businesses and have significant interests in leading companies in various industries, including diversified industrial products, energy, defense, banking, insurance, food products and services, oilfield services, sports, training, education, and the entertainment and lifestyle industries.

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 SPH's current expectations and projections about its future results, performance, prospects and opportunities.  SPH has tried to identify these forward-looking statements by using words such as "may", "should," "expect," "hope," "anticipate," "believe," "intend," "plan," "estimate" and similar expressions.  These forward-looking statements are based on information currently available to the Company and are subject to a number of risks, uncertainties and other factors that could cause its actual results, performance, prospects or opportunities in 2012 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements.  These factors include, without limitation, SPH's need for additional financing and the terms and conditions of any financing that is consummated, customers' acceptance of its new and existing products, the risk that the Company will not be able to compete successfully, and the possible volatility of the Company's stock price and the potential fluctuation in its operating results.  Although SPH believes that the expectations reflected in these forward-looking statements are reasonable and achievable, such 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, 2011 for information regarding risk factors that could affect the Company's results.  Except as otherwise required by Federal securities laws, SPH 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.

Investor contact: Steel Partners Holdings GP Inc.
James F. McCabe, Jr., Chief Financial Officer
212-520-2300


STEEL PARTNERS HOLDINGS L.P.
Consolidated Balance Sheets
(in thousands except common units)

March 31,
2012

December 31,
2011

ASSETS

(unaudited)

Current assets:


Cash and cash equivalents

$

171,042

$

127,027

Restricted cash

26,736

23,736

Trade and other receivables (net of allowance for doubtful accounts of
     $2,555 in 2012 and $2,504 in 2011)

106,553

90,239

Receivable from related parties

3,479

116

Loans receivable, net

26,060

34,820

Inventories

58,317

53,776

Deferred income taxes

20,147

20,038

Prepaid and other current assets

16,144

16,123

Assets of discontinued operations

—

35,387

Total current assets

428,478

401,262

Long-term loans receivable, net

8,855

8,942

Goodwill

42,806

42,797

Other intangibles, net

133,147

135,341

Deferred income taxes

67,913

70,625

Other non-current assets

19,615

22,143

Investments at fair value

146,327

150,020

Property, plant and equipment, net

130,294

127,842

Investments in associated companies

189,683

128,218

Other investments at fair value - related party

31,853

42,653

Total Assets

$

1,198,971

$

1,129,843

 

STEEL PARTNERS HOLDINGS L.P.
Consolidated Balance Sheets
(in thousands except common units)
(continued)

 

March 31,
2012

December 31, 2011

LIABILITIES AND CAPITAL

(unaudited)

Current liabilities:


Accounts payable

$

49,620

$

37,843

Accrued liabilities

39,528

40,944

Financial instruments

24,314

23,736

Deposits

40,985

38,293

Payable to related parties

5,912

4,930

Current portion of deferred fee liability to related party

—

1,107

Short-term debt

37,824

24,168

Current portion of long-term debt

8,531

8,531

Deferred income taxes

943

736

Other current liabilities

3,631

3,239

Liabilities of discontinued operations

—

15,310

Total current liabilities

211,288

198,837

Long-term deposits

49,981

56,589

Deferred fee liability to related party

70,508

57,640

Long-term debt

129,965

130,955

Accrued pension liability

182,546

186,212

Deferred income taxes

4,061

6,231

Other liabilities

16,282

12,959

Total Liabilities

664,631

649,423

Commitments and Contingencies

—

—

Capital:


Partners' capital (common units:  25,183,039 issued and outstanding after deducting 2,808,725 held in treasury, at cost of $48,099 at March 31, 2012 and December 31, 2011).

471,555

427,534

Accumulated other comprehensive loss

(6,870)

(11,737)

Total Partners' Capital

464,685

415,797

Noncontrolling interests in consolidated entities

69,655

64,623

Total Capital

534,340

480,420

Total Liabilities and Capital

$

1,198,971

$

1,129,843

 


STEEL PARTNERS HOLDINGS L.P.
Consolidated Statements of Operations
(unaudited)
(in thousands except units and per unit data)

 

Three Months Ended

March 31,

2012

2011

Revenue


Diversified industrial net sales

$

179,531

$

158,407

Financial services revenue

4,036

3,261

Investment and other income

116

374

Net investment gains

2,339

13,058

Total revenue

186,022

175,100

Costs and expenses


Diversified industrial cost of goods sold

128,811

117,360

Selling, general and administrative expenses

41,506

32,482

Finance interest expense

320

346

(Recovery of) provision for loan losses

(145)

116

Interest expense

3,308

3,215

Realized and unrealized (gain) loss on derivatives

(571)

3,538

Management fees - related party

1,559

2,167

Increase in deferred fee liability to related party

11,762

489

Other income

(407)

—

Total costs and expenses

186,143

159,713

(Loss) Income from continuing operations before income taxes
and equity method income (loss)

(121)

15,387

Income tax (provision) benefit

(1,872)

5,607

Income (loss) from equity method investments and investments held at fair value:


Income of associated companies, net of taxes

50,540

1,858

Loss from other investments - related party

(10,800)

(8,284)

Income (loss) from investments held at fair value

8,638

(1,564)

Net income from continuing operations

46,385

13,004

Discontinued operations:


Income (Loss) from discontinued operations, net of taxes

601

(607)

Gain on sale of discontinued operations, net of taxes

3,152

2,734

Income from discontinued operations

3,753

2,127

Net income

50,138

15,131

Net (income) loss attributable to noncontrolling interests in consolidated entities:


Continuing operations

(2,347)

(1,619)

Discontinued operations

(1,821)

(1,021)

(4,168)

(2,640)

Net income attributable to common unitholders

$

45,970

$

12,491

Net income per common unit – basic


Net income from continuing operations

$

1.75

$

0.45

Net income from discontinued operations

0.08

0.04

Net income attributable to common unitholders

$

1.83

$

0.49

Net income per common unit – diluted


Net income from continuing operations

$

1.75

$

0.39

Net income from discontinued operations

0.08

0.04

Net income attributable to common unitholders

$

1.83

$

0.43






Weighted average number of common units outstanding - basic

25,183,039

25,253,287

Weighted average number of common units outstanding - diluted

25,210,214

30,492,331

 

STEEL PARTNERS HOLDINGS L.P.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)

 

Three Months Ended

March 31,

2012

2011

Cash flows from operating activities:


Net income

$

50,138

$

15,131

Adjustments to reconcile net income to net cash provided by (used in) operating activities:


Net investment gains

(2,339)

(13,058)

(Recovery of) Provision for loan losses

(145)

116

Income of associated companies

(50,540)

(1,858)

Loss from other investments - related party

10,800

8,284

(Income) Loss from investments held at fair value

(8,638)

1,564

Gain on sale of discontinued operations

(3,152)

(2,734)

Depreciation and amortization

6,392

6,191

Reclassification of net cash settlements on derivative instruments

(22)

2,794

Stock based compensation

1,775

929

Unrealized loss on derivatives

—

808

Income tax benefit from release of deferred tax valuation allowance

—

(7,957)

Other

(406)

1,466

Net change in operating assets and liabilities:


Receivables

(15,646)

(21,324)

Receivables from related parties

(2,889)

—

Inventories

(4,453)

(7,599)

Prepaid and other assets

(799)

267

Accounts payable, accrued and other liabilities

10,823

(1,137)

Payable to related parties

314

781

Increase in deferred fee liability to related party

11,762

489

Net decrease (increase) in loans held for sale

8,539

(7,630)

Net cash provided by (used in) operating activities of discontinued operations

610

(2,654)

Net cash provided by (used in) operating activities

12,124

(27,131)




Cash flows from investing activities:


Purchases of investments

(6,656)

(62,761)

Proceeds from sales of investments

29,829

83,117

Net decrease (increase) in loans receivable

452

(690)

Purchases of property and equipment

(6,554)

(3,911)

Reclassification of restricted cash

(578)

(5,692)

Net cash settlements on derivative instruments

22

(2,794)

Acquisitions, net of cash acquired

488

(57,414)

Purchase of subsidiary shares from noncontrolling interests

(414)

(628)

Investments in associated companies

(10,923)

(207)

Proceeds from sales of discontinued operations

22,761

26,543

Other

577

85

Net cash provided by (used in) investing activities

29,004

(24,352)

 

STEEL PARTNERS HOLDINGS L.P.
Consolidated Statements of Cash Flows (continued)
(unaudited)
(in thousands)

 

Three Months Ended

March 31,

2012

2011

Cash flows from financing activities:


Net revolver borrowings

13,473

3,727

Net borrowings of term loans - foreign

548

758

Repayments of term loans - domestic

(1,134)

(1,460)

Deferred finance charges

—

(204)

Net change in overdrafts

(2,808)

2,804

Net decrease in deposits

(4,031)

(3,180)

Other

(3,329)

1,141

Net cash provided by financing activities

2,719

3,586

Net change for the period

43,847

(47,897)

Effect of exchange rate changes on cash and cash equivalents

168

178

Cash and cash equivalents at beginning of period

127,027

180,684

Cash and cash equivalents at end of period

$

171,042

$

132,965

Cash paid during the period for:


Interest

$

3,920

$

2,661

Taxes

$

728

$

1,154

Non-cash investing activities:


Net (increase) decrease in restricted cash from purchase of foreign currency financial instruments

$

(578)

$

31,451

Non-cash financing activities:


Common units issued for directors compensation

$

—

$

275

 

 

SOURCE Steel Partners Holdings L.P.

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