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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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