Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 12, 2019

STEEL PARTNERS HOLDINGS L.P.
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
001-35493
13-3727655
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
 
 
 
590 Madison Avenue, 32nd Floor, New York, New York
10022
(Address of principal executive offices)
(Zip Code)

Registrant's telephone number, including area code: (212) 520-2300

N/A
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbols
Name of each exchange on which registered
Common Units, $0 par
SPLP
New York Stock Exchange
6.0% Series A Preferred Units
SPLP-PRA
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o





Item 2.02 Results of Operations and Financial Condition.

On November 12, 2019, Steel Partners Holdings L.P., a Delaware limited partnership (the "Company"), issued a press release announcing its financial results for the quarter and nine months ended September 30, 2019 and other financial information. A copy of the press release is being furnished as Exhibit 99.1 hereto and is incorporated herein by reference.

The information in this Item 2.02, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of such section. The information in this Current Report, including the exhibit, shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any incorporation by reference language in any such filing, unless the Company expressly sets forth in such future filing that such information is to be considered "filed" or incorporated by reference therein.

Item 9.01 Financial Statements and Exhibits.

(d)    Exhibits

Exhibit No.
Exhibits





SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

November 12, 2019
STEEL PARTNERS HOLDINGS L.P.
 
 
 
By:
Steel Partners Holdings GP Inc.
 
 
Its General Partner
 
 
 
 
 
 
By:
/s/ Douglas B. Woodworth
 
 
Douglas B. Woodworth
 
 
Chief Financial Officer





Exhibits

Exhibit No.
Exhibits



Exhibit



EXHIBIT 99.1

PRESS RELEASE
Source: Steel Partners Holdings L.P.


Steel Partners Holdings Reports Third Quarter Financial Results and Outlook

NEW YORK, N.Y., November 12, 2019 - Steel Partners Holdings L.P. (NYSE: SPLP), a diversified global holding company, today announced operating results for the third quarter and nine months ended September 30, 2019.

Revenue for the 2019 third quarter decreased to $396.3 million from $405.3 million for the same period in 2018. Income before income taxes and equity method investments for the 2019 third quarter was $12.8 million, as compared to a loss of $7.7 million for the same period in 2018. Net loss attributable to the Company's common unitholders for the 2019 third quarter was $2.9 million, or $0.12 per common unit, as compared to a loss of $6.1 million, or $0.23 per common unit, for the same period in 2018.

Revenue for the nine months ended September 30, 2019 decreased to $1,197.6 million from $1,206.0 million for the same period in 2018. Income before income taxes and equity method investments for the nine months ended September 30, 2019 was $64.8 million, as compared to $2.4 million for the same period in 2018. Net income attributable to the Company's common unitholders for the nine months ended September 30, 2019 was $33.9 million, or $1.08 per diluted common unit, as compared to a loss of $2.1 million, or $0.08 per common unit, for the same period in 2018.

The Company generated $53.2 million and $142.6 million adjusted EBITDA for the three and nine months ended September 30, 2019, respectively, as compared to $46.3 million and $145.1 million for the same periods in 2018, respectively. The Company is presenting Adjusted EBITDA to assist investors with their understanding of Steel Partners' results of operations and financial condition. See "Note Regarding Use of Non-GAAP Financial Measurements" below for the definition of Adjusted EBITDA.

As a result of continued declines in the performance of its Packaging business, the Company recorded non-cash goodwill impairment charges totaling $41.9 million during the three months ended September 30, 2019. The Company, in consultation with its Board of Directors, continues to review strategic alternatives with respect to the Packaging business. Accordingly, the Company may be required to record further non-cash impairment and related charges in future periods.

"Our Financial Services and Energy segments continue to provide consistently good gains," said Warren Lichtenstein, Executive Chairman of Steel Partners. "With the continued challenges and significant deterioration in market conditions we face within our Packaging business, we are focused on immediate actions to reduce costs and improve cash flows. Our remaining Diversified Industrial businesses continue to perform well, with an especially strong performance during the third quarter in our Joining Materials and Building Materials businesses. We remain focused on improvements to deliver long term sustainable growth to all our stakeholders and expect to see results from our cost reduction and facility rationalization initiatives as we look forward to 2020."

2019 Outlook

Based on current information, Steel Partners expects full 2019 year revenue between $1.5 billion and $1.6 billion and Adjusted EBITDA between $178 million and $186 million, which has been adjusted downward from our prior guidance of $185 million and $196 million. The revised outlook reflects our lower expectations, primarily within our Packaging business.











(Financial Tables on Following Pages)






Financial Tables

Financial Summary (unaudited)
(in thousands, except per common unit)
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Revenue
$
396,342

 
$
405,319

 
$
1,197,598

 
$
1,206,001

Costs and expenses, excluding realized and unrealized (gains) losses on securities
413,811

 
390,589

 
1,201,481

 
1,155,560

Realized and unrealized (gains) losses on securities, net
(30,234
)
 
22,416

 
(68,720
)
 
48,029

Total costs and expenses
383,577

 
413,005

 
1,132,761

 
1,203,589

Income (loss) before income taxes and equity method investments
12,765

 
(7,686
)
 
64,837

 
2,412

Income tax provision
13,674

 
104

 
31,353

 
9,040

Loss (income) of associated companies, net of taxes
1,855

 
(1,599
)
 
(408
)
 
(5,141
)
Net (loss) income
(2,764
)
 
(6,191
)
 
33,892

 
(1,487
)
Net (income) loss attributable to noncontrolling interests in consolidated entities
(114
)
 
96

 
(29
)
 
(644
)
Net (loss) income attributable to common unitholders
$
(2,878
)
 
$
(6,095
)
 
$
33,863

 
$
(2,131
)
 
 
 
 
 
 
 
 
Net (loss) income per common unit - basic
$
(0.12
)
 
$
(0.23
)
 
$
1.36

 
$
(0.08
)
Net (loss) income per common unit - diluted
$
(0.12
)
 
$
(0.23
)
 
$
1.08

 
$
(0.08
)
Capital expenditures
$
10,928

 
$
11,618

 
$
29,108

 
$
33,597


Balance Sheet Data (September 30, 2019 unaudited)
(in thousands, except common and preferred units)
September 30,
 
December 31,
 
2019
 
2018
Cash and cash equivalents
$
112,133

 
$
334,884

WebBank cash and cash equivalents
97,499

 
281,566

Cash and cash equivalents, excluding WebBank
14,634

 
53,318

Marketable securities
1,097

 
1,439

Long-term investments
311,511

 
258,044

Total debt
418,777

 
481,989

Preferred unit liability, including current portion of $38,898 and $0, respectively
183,703

 
180,340

Common units outstanding
25,011,142

 
25,294,003

Preferred units outstanding
7,927,288

 
7,927,288








Supplemental Non-GAAP Disclosures (unaudited)
Adjusted EBITDA Reconciliation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Net (loss) income
$
(2,764
)
 
$
(6,191
)
 
$
33,892

 
$
(1,487
)
Income tax provision
13,674

 
104

 
31,353

 
9,040

Income (loss) before income taxes
10,910

 
(6,087
)
 
65,245

 
7,553

Add (Deduct):
 
 
 
 
 
 
 
Loss (income) of associated companies, net of taxes
1,855

 
(1,599
)
 
(408
)
 
(5,141
)
Realized and unrealized (gains) losses on securities, net
(30,234
)
 
22,416

 
(68,720
)
 
48,029

Interest expense
10,323

 
10,615

 
32,086

 
28,314

Depreciation
12,720

 
14,020

 
37,007

 
37,168

Amortization
5,644

 
7,591

 
16,748

 
22,764

Non-cash goodwill impairment charges
41,853

 

 
41,853

 

Non-cash asset impairment charges
725

 

 
915

 

Non-cash pension expense
2,167

 
309

 
5,909

 
2,089

Non-cash equity-based compensation
243

 
137

 
634

 
507

Amortization of fair value adjustments to acquisition-date inventories

 

 

 
891

Other items, net
(3,025
)
 
(1,119
)
 
11,294

 
2,946

Adjusted EBITDA
$
53,181

 
$
46,283

 
$
142,563

 
$
145,120








Segment Results (unaudited)
(in thousands)
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2019
 
2018
 
2019
 
2018
Revenue:
 
 
 
 
 
 
 
Diversified industrial
$
306,382

 
$
322,571

 
$
947,080

 
$
988,587

Energy
44,147

 
50,343

 
126,665

 
134,008

Financial services
45,813

 
32,405

 
123,853

 
83,406

Total revenue
$
396,342

 
$
405,319

 
$
1,197,598

 
$
1,206,001

 
 
 
 
 
 
 
 
(Loss) income before interest expense and income taxes:
 
 
 
 
 
 
 
Diversified industrial
$
(26,536
)
 
$
14,274

 
$
2,855

 
$
57,978

Energy
1,378

 
(1,144
)
 
800

 
(5,748
)
Financial services
20,230

 
13,923

 
47,394

 
35,533

Corporate and other
26,161

 
(22,525
)
 
46,282

 
(51,896
)
Income before interest expense and income taxes
21,233

 
4,528

 
97,331

 
35,867

Interest expense
10,323

 
10,615

 
32,086

 
28,314

Income tax provision
13,674

 
104

 
31,353

 
9,040

Net (loss) income
$
(2,764
)
 
$
(6,191
)
 
$
33,892

 
$
(1,487
)
 
 
 
 
 
 
 
 
Loss (income) of associated companies, net of taxes:
 
 
 
 
 
 
 
Corporate and other
$
1,855

 
$
(1,599
)
 
$
(408
)
 
$
(5,141
)
Total
$
1,855

 
$
(1,599
)
 
$
(408
)
 
$
(5,141
)
 
 
 
 
 
 
 
 
Segment depreciation and amortization:
 
 
 
 
 
 
 
Diversified industrial
$
13,904

 
$
16,370

 
$
40,158

 
$
44,320

Energy
4,309

 
5,107

 
13,174

 
15,212

Financial services
110

 
102

 
309

 
303

Corporate and other
41

 
32

 
114

 
97

Total depreciation and amortization
$
18,364

 
$
21,611

 
$
53,755

 
$
59,932

 
 
 
 
 
 
 
 
Segment Adjusted EBITDA:
 
 
 
 
 
 
 
Diversified industrial
$
32,250

 
$
31,902

 
$
93,280

 
$
109,407

Energy
5,591

 
4,020

 
13,936

 
9,404

Financial services
17,725

 
14,050

 
45,014

 
36,989

Corporate and other
(2,385
)
 
(3,689
)
 
(9,667
)
 
(10,680
)
Total Adjusted EBITDA
$
53,181

 
$
46,283

 
$
142,563

 
$
145,120


During the three and nine months ended September 30, 2019, the Company's investment gains and losses, including income or loss of associated companies, have been classified in its Corporate and Other segment and interest expense, excluding the Financial Services segment's finance interest expense, has been removed from the measurement of segment results. Comparable 2018 balances have been reclassified to conform with the current year presentation.

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 U.S. Securities and Exchange Commission ("SEC"), including "Adjusted EBITDA." The Company is presenting Adjusted EBITDA because it believes that it provides useful information to investors about SPLP, its business and its financial condition. The Company defines Adjusted EBITDA as net income or loss 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 investments and excludes certain non-recurring and non-cash items. The Company believes Adjusted EBITDA is useful to investors because it is one of the measures used by the Company's Board of Directors and management to evaluate its business, including in internal management reporting, budgeting and forecasting processes, in comparing operating results across the business, as an internal profitability measure, as a component in evaluating the ability and the desirability of making capital expenditures and significant acquisitions and as an element in determining executive compensation.

However, Adjusted EBITDA is not a measure of financial performance under generally accepted accounting principles in the U.S. ("U.S. GAAP"), and the items excluded from Adjusted EBITDA are significant components in understanding and assessing financial performance. Therefore, Adjusted EBITDA should not be considered a substitute for net income or loss, 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; and
Adjusted EBITDA does not include certain other non-recurring and non-cash items.

The Company compensates for these limitations by relying primarily on its U.S. GAAP financial measures and by using Adjusted EBITDA only as supplemental information. The Company believes that consideration of Adjusted EBITDA, together with a careful review of its U.S. GAAP financial measures, is the most informed method of analyzing SPLP.

The Company reconciles Adjusted EBITDA to net income or loss, which does not include amounts reported under U.S. GAAP related to noncontrolling interests in consolidated entities, and that reconciliation is set forth above. Because Adjusted EBITDA is not a measurement determined in accordance with U.S. GAAP and is susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. Revenues and expenses are measured in accordance with the policies and procedures described in the Company's Annual Report on Form 10-K for the year ended December 31, 2018, except for changes made in accordance with the new accounting pronouncements adopted during 2019, as discussed in Note 1 - "Nature of the Business and Basis of Presentation" and Note 3 - "Leases" to the Company's Form 10-Q filed with the SEC.

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 leading companies in various industries, including diversified industrial products, energy, defense, supply chain management and logistics, direct marketing, banking and youth sports.

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 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 risks, uncertainties and other factors that could cause its actual results, performance, prospects or opportunities in 2019 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements. These factors include, without limitation, SPLP'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 and its affiliates will not be able to compete successfully, the possible volatility of the Company's common or preferred unit price and the potential






fluctuation in its operating results. Although SPLP 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, 2018 and Form 10-Q for the quarterly period ended September 30, 2019, for information regarding risk factors that could affect the Company's results. Except as otherwise required by federal securities laws, SPLP 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 L.P.
Jennifer Golembeske, 212-520-2300
jgolembeske@steelpartners.com