STEEL PARTNERS HOLDINGS L.P.
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(Exact name of registrant as specified in its charter)
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Delaware
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001-35493
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13-3727655
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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590 Madison Avenue, 32nd Floor, New York, New York
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10022
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(Address of principal executive offices)
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(Zip Code)
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N/A
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(Former name or former address, if changed since last report.)
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☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Title of each class
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Trading Symbols
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Name of each exchange on which registered
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Common Units, $0 par
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SPLP
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New York Stock Exchange
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6.0% Series A Preferred Units
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SPLP-PRA
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New York Stock Exchange
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Item 2.02 |
Results of Operations and Financial Condition.
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Item 7.01 |
Regulation FD Disclosure.
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Item 9.01 |
Financial Statements and Exhibits.
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Exhibit No.
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Exhibits
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99.1
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Press Release issued February 28, 2020.
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99.2
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2020 Annual Letter
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February 28, 2020
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STEEL PARTNERS HOLDINGS L.P.
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By:
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Steel Partners Holdings GP Inc.
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Its General Partner
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By:
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/s/ Douglas B. Woodworth
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Douglas B. Woodworth
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Chief Financial Officer
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Exhibit No.
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Exhibits
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Press Release issued February 28, 2020.
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2020 Annual Letter
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• |
Reduce corporate overhead, lower costs, reduce complexity and improve communications,
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• |
Focus investment capital on our core businesses and make synergistic bolt-on acquisitions,
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• |
Eliminate unprofitable investments, divest non-core assets and explore strategic alternatives for some of our businesses, and
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• |
Use proceeds to pay down debt and repurchase our units
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• |
Revenue for the 2019 fourth quarter decreased to $364.2 million from $378.6 million for the same period in 2018.
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• |
Loss before income taxes and equity method investments for the 2019 fourth quarter was $37.1 million, as compared to a loss of $11.8 million for the same period in 2018.
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• |
Net loss attributable to the Company's common unitholders for the 2019 fourth quarter was $29.9 million, or $1.20 per basic and diluted common unit, as compared to a loss of $30.5 million, or $1.19 per basic and diluted common unit,
for the same period in 2018.
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The Company generated $42.8 million in Adjusted EBITDA for the quarter, as compared to $38.7 million for the same period in 2018.
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Revenue for the year ended December 31, 2019 was $1.6 billion, which was relatively flat as compared to 2018.
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Income before income taxes and equity method investments for 2019 was $27.8 million, as compared to a loss of $9.4 million in 2018.
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Net income attributable to the Company's common unitholders for the year was $4.0 million, or $0.16 per basic and diluted common unit, as compared to a loss of $32.6 million, or $1.25 per basic and diluted common unit, in 2018.
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The Company generated $185.4 million in Adjusted EBITDA for the year ended December 31, 2019, as compared to $183.8 million in 2018.
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In July 2019, the Company entered into a $30.0 million settlement of a stockholder class action related to its 2017 acquisition of the remaining outstanding shares of Handy & Harman Ltd. not already owned by the Company or its
affiliates. The settlement was approved by the court and paid in December 2019. Our insurance carriers agreed to contribute an aggregate of $17.5 million toward the settlement amount, while the Company recorded a charge of $12.5 million
during the twelve months ended December 31, 2019.
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During the fourth quarter of 2019, the Company settled the federal portion of its previously disclosed Internal Revenue Service audit associated with the Company's 2015 sale of Arlon, LLC and remitted payment in settlement of this
matter to the Internal Revenue Service of $22.4 million, including accrued interest, in February 2020.
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On January 31, 2020, the Company announced that its subsidiary, API Group Limited, and certain of its affiliates commenced administration proceedings in the United Kingdom. In the United States, API Americas Inc. voluntarily filed
for Chapter 11 proceedings in Bankruptcy Court on February 2, 2020. The purpose of these proceedings is to facilitate an orderly sale or wind-down of API's operations. API's loss before interest expense and income taxes was $93.8
million for the year ended December 31, 2019, including goodwill and other non-cash asset impairments totaling $71.5 million recorded in the Company's Diversified Industrial segment. The Company will deconsolidate the API entities on
the previously noted filing dates as it no longer holds a controlling financial interest as of those dates, and accordingly, the results of API are expected to be presented as a discontinued operation in future reporting periods.
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On February 6, 2020, the Company redeemed 1,600,000 preferred units at a price equal to $25.00 per unit, plus an amount of $0.22 per unit, equal to any accumulated and unpaid distributions up to, but excluding, the redemption date,
for a total payment of approximately $40.4 million.
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(in thousands, except per common unit)
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Three Months Ended
December 31,
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Year Ended
December 31,
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||||||||||||||
2019
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2018
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2019
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2018
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|||||||||||||
Revenue
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$
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364,173
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$
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378,613
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$
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1,561,771
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$
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1,584,614
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||||||||
Costs and expenses, excluding realized and unrealized losses (gains) on securities
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379,844
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375,890
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1,581,325
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1,531,450
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||||||||||||
Realized and unrealized losses (gains) on securities, net
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21,405
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14,557
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(47,315
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)
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62,586
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|||||||||||
Total costs and expenses
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401,249
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390,447
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1,534,010
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1,594,036
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||||||||||||
(Loss) income before income taxes and equity method investments
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(37,076
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)
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(11,834
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)
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27,761
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(9,422
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)
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|||||||||
Income tax (benefit) provision
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(15,488
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)
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3,519
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15,865
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12,559
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|||||||||||
Loss of associated companies, net of taxes
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8,451
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14,650
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8,043
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9,509
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Net (loss) income
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(30,039
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)
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(30,003
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)
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3,853
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(31,490
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)
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|||||||||
Net loss (income) attributable to noncontrolling interests in consolidated entities
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126
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(470
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)
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97
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(1,114
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)
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Net (loss) income attributable to common unitholders
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$
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(29,913
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)
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$
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(30,473
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)
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$
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3,950
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$
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(32,604
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)
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Net (loss) income per common unit - basic and diluted
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$
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(1.20
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)
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$
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(1.19
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)
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$
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0.16
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$
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(1.25
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)
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Capital expenditures
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$
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13,916
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$
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13,488
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$
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43,024
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$
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47,085
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(in thousands, except common and preferred units)
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December 31,
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|||||||
2019
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2018
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|||||||
Cash and cash equivalents
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$
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148,348
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$
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334,884
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WebBank cash and cash equivalents
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125,047
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281,566
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||||||
Cash and cash equivalents, excluding WebBank
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$
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23,301
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$
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53,318
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Marketable securities
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$
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220
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$
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1,439
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Long-term investments
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$
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275,836
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$
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258,044
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Total debt
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$
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408,541
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$
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481,989
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Preferred unit liability, including current portion of $39,782 and $0, respectively
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$
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184,029
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$
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180,340
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Common units outstanding
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25,023,128
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25,294,003
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Preferred units outstanding
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7,927,288
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7,927,288
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Adjusted EBITDA Reconciliation:
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||||||||||||||||
(in thousands)
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Three Months Ended
December 31,
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Year Ended
December 31,
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||||||||||||||
2019
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2018
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2019
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2018
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Net (loss) income
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$
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(30,039
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)
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$
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(30,003
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)
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$
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3,853
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$
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(31,490
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)
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Income tax (benefit) provision
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(15,488
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)
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3,519
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15,865
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12,559
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|||||||||||
(Loss) income before income taxes
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(45,527
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)
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(26,484
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)
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19,718
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(18,931
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)
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Add (Deduct):
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||||||||||||||||
Loss of associated companies, net of taxes
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8,451
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14,650
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8,043
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9,509
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Realized and unrealized losses (gains) on securities, net
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21,405
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14,557
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(47,315
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)
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62,586
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Interest expense
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9,323
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10,920
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41,409
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39,234
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||||||||||||
Depreciation
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12,907
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13,297
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49,914
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50,465
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Amortization
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5,604
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7,094
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22,352
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29,858
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Non-cash goodwill impairment charges
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—
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—
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41,853
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—
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Non-cash asset impairment charges
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29,591
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8,108
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30,506
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8,108
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||||||||||||
Non-cash pension expense
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2,215
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834
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8,124
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2,923
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||||||||||||
Non-cash equity-based compensation
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145
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137
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779
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644
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Amortization of fair value adjustments to acquisition-date inventories
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—
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128
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—
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1,019
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Other items, net
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(1,304
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)
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(4,584
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)
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9,990
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(1,638
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)
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Adjusted EBITDA
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$
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42,810
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$
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38,657
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$
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185,373
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$
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183,777
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(in thousands)
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Three Months Ended
December 31,
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Year Ended
December 31,
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||||||||||||||
2019
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2018
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2019
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2018
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Revenue:
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||||||||||||||||
Diversified industrial
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$
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279,285
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$
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298,078
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$
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1,226,365
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$
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1,286,665
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||||||||
Energy
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37,307
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41,942
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163,972
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175,950
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||||||||||||
Financial services
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47,581
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38,593
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171,434
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121,999
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Total revenue
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$
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364,173
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$
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378,613
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$
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1,561,771
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$
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1,584,614
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||||||||
(Loss) income before interest expense and income taxes:
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Diversified industrial
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$
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(23,285
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)
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$
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(1,921
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)
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$
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(20,430
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)
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$
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56,057
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|||||
Energy
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(2,650
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)
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(3,264
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)
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(1,850
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)
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(9,012
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)
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||||||||
Financial services
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21,166
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19,011
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68,560
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54,544
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||||||||||||
Corporate and other
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(31,435
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)
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(29,390
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)
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14,847
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(81,286
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)
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|||||||||
(Loss) income before interest expense and income taxes
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(36,204
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)
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(15,564
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)
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61,127
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20,303
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||||||||||
Interest expense
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9,323
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10,920
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41,409
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39,234
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||||||||||||
Income tax (benefit) provision
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(15,488
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)
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3,519
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15,865
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12,559
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|||||||||||
Net (loss) income
|
$
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(30,039
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)
|
$
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(30,003
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)
|
$
|
3,853
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$
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(31,490
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)
|
|||||
Loss of associated companies, net of taxes:
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||||||||||||||||
Corporate and other
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$
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(8,451
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)
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$
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(14,650
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)
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$
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(8,043
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)
|
$
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(9,509
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)
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||||
Total
|
$
|
(8,451
|
)
|
$
|
(14,650
|
)
|
$
|
(8,043
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)
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$
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(9,509
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)
|
||||
Segment depreciation and amortization:
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||||||||||||||||
Diversified industrial
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$
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13,983
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$
|
15,262
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$
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54,141
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$
|
59,582
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||||||||
Energy
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4,374
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5,002
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17,548
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20,214
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||||||||||||
Financial services
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114
|
94
|
423
|
397
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||||||||||||
Corporate and other
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40
|
33
|
154
|
130
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||||||||||||
Total depreciation and amortization
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$
|
18,511
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$
|
20,391
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$
|
72,266
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$
|
80,323
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||||||||
Segment Adjusted EBITDA:
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||||||||||||||||
Diversified industrial
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$
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23,152
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$
|
21,811
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$
|
116,432
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$
|
131,218
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||||||||
Energy
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1,500
|
1,815
|
15,436
|
11,219
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||||||||||||
Financial services
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20,360
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19,213
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65,374
|
56,202
|
||||||||||||
Corporate and other
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(2,202
|
)
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(4,182
|
)
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(11,869
|
)
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(14,862
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)
|
||||||||
Total Adjusted EBITDA
|
$
|
42,810
|
$
|
38,657
|
$
|
185,373
|
$
|
183,777
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• |
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;
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• |
Adjusted EBITDA does not reflect the Company's interest expense;
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• |
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.
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Investor contact: | Steel Partners Holdings L.P. |
Jennifer Golembeske, 212-520-2300
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jgolembeske@steelpartners.com
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STEELGROW & STEEL WELLNESS: |
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As part of our Wellness initiatives, we were able to provide each employee with a pair of custom Skechers athletic shoes to support our health and fitness goal. The shoes were decorated to celebrate the 50th anniversary of
the Apollo mission, and Steel Partners employees were challenged to walk to the moon. Over one month, we were able to walk 119,752,898 steps in our new shoes. That is six times around the world!
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