SEC Filing | Steel Partners Holdings L.P.

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splp-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-35493

STEEL PARTNERS HOLDINGS L.P.

(Exact Name of Registrant as Specified in its Charter)


Delaware			13-3727655
(State or Other Jurisdiction of Incorporation or Organization)			(I.R.S. Employer Identification No.)

590 Madison Avenue, 32nd Floor
New York, New York			10022
(Address of Principal Executive Offices)			(Zip Code)

(212) 520-2300

(Registrant's Telephone Number, Including Area Code)

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, no par value	SPLP	New York Stock Exchange
6.0% Series A Preferred Units	SPLP-PRA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☐			Accelerated filer ☑
Non-accelerated filer ☐			Smaller reporting company ☑

			Emerging growth company ☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

The number of common units outstanding as of May 1, 2023 was 21,666,894.

STEEL PARTNERS HOLDINGS L.P.

TABLE OF CONTENTS


PART I — FINANCIAL INFORMATION		Page
Item 1.	Financial Statements (unaudited)

	Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	2

	Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022	3

	Consolidated Statements of Comprehensive Income for the three months ended March 31, 2023 and 2022	4

	Consolidated Statements of Changes in Capital for the three months ended March 31, 2023 and 2022	5

	Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43

Item 4.	Controls and Procedures	43

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	43

Item 1A.	Risk Factors	43

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44

Item 6.	Exhibits	45

SIGNATURES		46

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

STEEL PARTNERS HOLDINGS L.P.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except common units)



	March 31, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	305,054	$	234,448


Trade and other receivables - net of allowance for doubtful accounts of $2,315 and $2,414, respectively	199,595		183,861

Loans receivable, including loans held for sale of $694,993 and $602,675, respectively, net	1,314,173		1,131,745
Inventories, net	220,911		214,084
Prepaid expenses and other current assets	42,444		41,090

Total current assets	2,082,177		1,805,228
Long-term loans receivable, net	495,572		423,248
Goodwill	125,910		125,813
Other intangible assets, net	91,370		94,783

Other non-current assets	162,045		195,859
Property, plant and equipment, net	240,108		238,510
Operating lease right-of-use assets	49,716		42,711
Long-term investments	305,960		309,697
Total Assets	$	3,552,858	$	3,235,849
LIABILITIES AND CAPITAL
Current liabilities:
Accounts payable	$	120,080	$	109,572
Accrued liabilities	106,898		112,744

Deposits	1,572,301		1,360,477

Short-term debt	987		685
Current portion of long-term debt	67		67

Other current liabilities	67,197		65,598

Total current liabilities	1,867,530		1,649,143
Long-term deposits	281,900		208,004
Long-term debt	182,205		179,572
Other borrowings	31,692		41,682
Preferred unit liability	152,908		152,247
Accrued pension liabilities	87,864		84,948
Deferred tax liabilities	48,161		41,055
Long-term operating lease liabilities	42,756		35,512
Other non-current liabilities	38,001		42,226
Total Liabilities	2,733,017		2,434,389
Commitments and Contingencies
Capital:
Partners' capital common units: 21,667,031 and 21,605,093 issued and outstanding (after deducting 17,980,183 and 17,904,679 units held in treasury, at cost of $312,505 and $309,257), respectively	969,425		952,094
Accumulated other comprehensive loss	(150,781)		(151,874)
Total Partners' Capital	818,644		800,220
Noncontrolling interests in consolidated entities	1,197		1,240
Total Capital	819,841		801,460
Total Liabilities and Capital	$	3,552,858	$	3,235,849

See accompanying Notes to Consolidated Financial Statements

STEEL PARTNERS HOLDINGS L.P.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except common units and per common unit data)


	Three Months Ended March 31,
	2023		2022
Revenue:
Diversified Industrial net sales	$	304,426	$	327,249
Energy net revenue	48,164		38,317
Financial Services revenue	92,781		40,179
Total revenue	445,371		405,745
Costs and expenses:
Cost of goods sold	261,293		268,170
Selling, general and administrative expenses	114,954		86,124

Asset impairment charges	—		403
Finance interest expense	13,741		1,164
Provision for credit losses	7,806		1,282
Interest expense	5,986		4,524


Realized and unrealized (gains) losses on securities, net	(607)		27,726
Other income, net	(1,176)		(441)
Total costs and expenses	401,997		388,952
Income from operations before income taxes and equity method investments	43,374		16,793
Income tax provision	14,604		7,609
Loss of associated companies, net of taxes	3,967		4,643





Net income	24,803		4,541
Net loss attributable to noncontrolling interests in consolidated entities	43		24
Net income attributable to common unitholders	$	24,846	$	4,565
Net income per common unit - basic


Net income attributable to common unitholders	$	1.15	$	0.21
Net income per common unit - diluted


Net income attributable to common unitholders	$	1.09	$	0.20
Weighted-average number of common units outstanding - basic	21,685,794		22,209,071
Weighted-average number of common units outstanding - diluted	25,541,246		22,643,016

See accompanying Notes to Consolidated Financial Statements

STEEL PARTNERS HOLDINGS L.P.

Consolidated Statements of Comprehensive Income

(Unaudited)

(in thousands)


	Three Months Ended March 31,
	2023		2022
Net income	$	24,803	$	4,541
Other comprehensive income (loss), net of taxes:



Currency translation adjustments	1,093		(459)

Other comprehensive income (loss)	1,093		(459)
Comprehensive income	25,896		4,082
Comprehensive loss attributable to noncontrolling interests	43		24
Comprehensive income attributable to common unitholders	$	25,939	$	4,106

See accompanying Notes to Consolidated Financial Statements

STEEL PARTNERS HOLDINGS L.P.

Consolidated Statements of Changes in Capital

(Unaudited)

(in thousands, except common units and treasury units)


	Steel Partners Holdings L.P. Common Unitholders
	Common	Treasury Units			Partners'		Accumulated Other Comprehensive		Total Partners'		Noncontrolling Interests in Consolidated		Total
	Units	Units	Dollars		Capital		Loss		Capital		Entities		Capital
Balance as of December 31, 2022	39,509,772	(17,904,679)	$	(309,257)	$	952,094	$	(151,874)	$	800,220	$	1,240	$	801,460
Cumulative effect of change in accounting principle for current expected credit losses, net of tax	—	—	—		(3,862)		—		(3,862)		—		(3,862)
Net income (loss)	—	—	—		24,846		—		24,846		(43)		24,803
Currency translation adjustments	—	—	—		—		1,093		1,093		—		1,093
Equity compensation - restricted units	146,414	—	—		(11)		—		(11)		—		(11)
Tax withholding related to vesting of restricted units	(8,972)	—	—		(333)		—		(333)		—		(333)
Purchases of SPLP common units	—	(75,504)	(3,248)		(3,248)		—		(3,248)		—		(3,248)

Other, net	—	—	—		(61)		—		(61)		—		(61)
Balance as of March 31, 2023	39,647,214	(17,980,183)	$	(312,505)	$	969,425	$	(150,781)	$	818,644	$	1,197	$	819,841


	Steel Partners Holdings L.P. Common Unitholders
	Common	Treasury Units			Partners'		Accumulated Other Comprehensive		Total Partners'		Noncontrolling Interests in Consolidated		Total
	Units	Units	Dollars		Capital		Loss		Capital		Entities		Capital
Balance as of December 31, 2021	37,828,941	(16,810,932)	$	(264,284)	$	795,140	$	(131,803)	$	663,337	$	5,711	$	669,048
Net income (loss)	—	—	—		4,565		—		4,565		(24)		4,541

Currency translation adjustments	—	—	—		—		(459)		(459)		—		(459)
Equity compensation - restricted units	(37,315)	—	—		119		—		119		—		119
Purchases of SPLP common units	—	(268,623)	(10,418)		(10,418)		—		(10,418)		—		(10,418)
Purchases of subsidiary shares from noncontrolling interests	—	—	—		(3,942)		—		(3,942)		(4,664)		(8,606)

Balance as of March 31, 2022	37,791,626	(17,079,555)	$	(274,702)	$	785,464	$	(132,262)	$	653,202	$	1,023	$	654,225

See accompanying Notes to Consolidated Financial Statements

STEEL PARTNERS HOLDINGS L.P.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities:
Net income	24,803		4,541


Adjustments to reconcile net income from continuing operations to net cash (used in) provided by operating activities:
Provision for credit losses	7,806		1,282
Loss of associated companies, net of taxes	3,967		4,643
Realized and unrealized (gains) losses on securities, net	(607)		27,726



Derivative gains on economic interests in loans	(1,260)		(1,030)
Deferred income taxes	9,722		(1,106)
Depreciation and amortization	12,943		14,163
Non-cash lease expense	2,832		2,496
Equity-based compensation	(11)		119



Other	4,146		(1,147)
Net change in operating assets and liabilities:
Trade and other receivables	(15,398)		(36,357)
Inventories	(6,585)		(22,474)
Prepaid expenses and other assets	(13,440)		(5,443)
Accounts payable, accrued and other liabilities	15,152		53,956
Net increase in loans held for sale	(92,318)		(54,679)

Net cash used in operating activities	(48,248)		(13,310)


Cash flows from investing activities:
Purchases of investments	(5,729)		(19,015)
Proceeds from sales of investments	36		—
Proceeds from maturities of investments	36,512		5,364
Return of investment in associated companies	1,000		—
Loan originations, net of collections	(174,982)		56,879
Purchases of property, plant and equipment	(10,708)		(7,746)







Other	(92)		—
Net cash (used in) provided by investing activities	(153,963)		35,482


Cash flows from financing activities:
Net revolver borrowings (repayments)	2,953		(1,419)
Repayments of term loans	(17)		(25)




Purchases of the Company's common units	(3,248)		(10,418)

Net decrease in other borrowings	(9,950)		(117,733)


Distribution to preferred unitholders	(2,408)		(2,408)

Purchase of subsidiary shares from noncontrolling interest	—		(8,606)
Tax withholding related to vesting of restricted units	(333)		—
Net increase (decrease) in deposits	285,720		(5,255)

Net cash provided by (used in) financing activities	272,717		(145,864)


Net change for the period	70,506		(123,692)
Effect of exchange rate changes on cash and cash equivalents	100		(239)
Cash, cash equivalents and restricted cash at beginning of period	234,448		325,363
Cash, cash equivalents and restricted cash at end of period	$	305,054	$	201,432

See accompanying Notes to Consolidated Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

All amounts used in the Notes to Consolidated Financial Statements are in thousands, except common and preferred units, per common and preferred unit, share and per share data.

1. NATURE OF THE BUSINESS AND BASIS OF PRESENTATION

Nature of the Business

Steel Partners Holdings L.P. ("we," "our," "SPLP" or "Company") is a diversified global holding company that engages in multiple businesses through consolidated subsidiaries and other interests. It 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. SPLP operates through the following segments: Diversified Industrial, Energy and Financial Services, which are managed separately and offer different products and services. For additional details related to the Company's reportable segments, see Note 17 - "Segment Information." Steel Partners Holdings GP Inc. ("SPH GP"), a Delaware corporation, is the general partner of SPLP and is wholly-owned by SPLP. The Company is managed by SP General Services LLC ("Manager"), pursuant to the terms of an amended and restated management agreement ("Management Agreement") discussed in further detail in Note 16 - "Related Party Transactions."

Basis of Presentation

The accompanying unaudited consolidated financial statements as of March 31, 2023 and for the three-month periods ended March 31, 2023 and 2022, which have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") for interim periods, include the accounts of the Company and its consolidated subsidiaries. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation have been reflected herein. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the operating results for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022 ("Annual Report" or "Form 10-K"), from which the consolidated balance sheet as of December 31, 2022 has been derived.

The Company's fiscal quarter ends on the last day of the calendar quarter; however, for certain subsidiaries of the Company, the fiscal quarter periods end on the Saturday that is closest to the last day of the calendar quarter, except for the last quarterly period of the fiscal year. The Company and all its subsidiaries close their books for fiscal years on December 31. For ease of presentation, the quarterly financial statements included herein are described as ending on the last day of the calendar quarter.

Certain financial information that is normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), but is not required for interim reporting purposes, has been condensed or omitted. Management must make estimates and assumptions that affect the consolidated financial statements and the related footnote disclosures. While management uses its best judgment, actual results may differ from those estimates. Certain reclassifications have been made to the prior period financial statements and notes to conform to the current period presentation.

Adoption of New Accounting Standards

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13"). This new standard changed the impairment model for most financial assets that are measured at amortized cost and certain other instruments, including trade receivables, from an incurred loss model to an expected loss model and added certain new required disclosures. Under the expected loss model, entities recognize estimated credit losses over the entire contractual term of the instrument rather than delaying recognition of credit losses until it is probable the loss has been incurred. The Company adopted ASU 2016-13 on January 1, 2023. The guidance was applied on a modified-retrospective basis, with the cumulative-effect adjustment recorded to partners' capital on the adoption date. The adoption did not have a material effect on the Company’s trade receivables and other financial assets of its Diversified Industrial and Energy segments. The Company's Financial Services segment recognized an increase of $5,248 to its Allowance for Credit Losses and a decrease of $3,862, net of tax cumulative effect adjustment to the beginning balance of partners' capital from the adoption of ASU 2016-13.

WebBank analyzed the portfolio segments and classes of financing receivables based on the implementation of the new standard. There were no necessary changes in the portfolio segments or classes of financing receivables.

The amortized cost basis for loans is the combination of the balance, deferred fees and costs, and premium or discount. WebBank does not generally record an allowance for credit losses ("ACL") for accrued interest because uncollectible accrued interest is reversed through interest income in a timely manner in line with the nonaccrual and past due policies for loans. Accrued interest is included in other assets on the consolidated balance sheets.

As a result of the Company's adoption of ASU 2016-13, the following significant accounting policies have been updated from the policies described in the Annual Report on Form 10-K.

Loans Receivable, Including Loans Held for Sale

WebBank's loan activities include several lending arrangements with companies where it originates credit card and other loans for consumers and small businesses. These loans are classified as Loans receivable and are typically sold after origination. As part of these arrangements, WebBank earns fees that are recorded in non-interest income. Fees earned from these lending arrangements are recorded as fee income. WebBank also purchases participations in commercial and industrial loans through loan syndications. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at amortized cost. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield over the estimated life of the loan.

Loans held for sale are carried at amortized cost. Gains and losses are recorded in noninterest income based on the difference between sales proceeds and amortized cost.

Loans that are collateral-dependent are measured at the lower of amortized cost or the fair value of the collateral less the cost to sell.

Loans are reported as past due when either principal or interest is due and unpaid for a period of 30 days or more. The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent for commercial loans, 120 days for consumer loans and 180 days for small business loans unless the loan is well-secured and in process of collection. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Credit Losses

The ACL, which consist of the allowance for loan losses, reserves for unfunded loan commitments, and the allowance on held to maturity debt securities, represents managements estimate of current expected credit losses over the contractual term of WebBank’s loan portfolio, unfunded lending commitments, and held to maturity debt securities as of the balance sheet date.

The reserves for unfunded lending commitments is included in other current liabilities on the consolidated balance sheets. The allowance for held to maturity debt securities is estimated separately from loans and carried at net amortized cost included in other non-current assets on the consolidated balance sheets.

The ACL is a valuation account that is deducted from the loan's amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged against the ACL and recognized in the consolidated statements of operations when management believes the recorded loan balance is confirmed as uncollectible.

Management estimates the allowance balance using relevant information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. WebBank leverages economic projections from a third-party provider on a quarterly basis to generate macroeconomic factors for a two-year reasonable and supportable timeframe, before reverting to the baseline loss-curve implied loss expectations.

After applying historic loss experience, the quantitatively derived level of ACL is reviewed for each segment using qualitative criteria. Various risk factors are tracked that influence our judgment regarding the level of the ACL across the portfolio segments. Primary qualitative factors that may be reflected in the quantitative models include:

•Asset quality trends

•Risk management and loan administration practices

•Portfolio management and controls

•Effect of changes in the nature and volume of the portfolio

•Changes in lending policies and underwriting policies

•Existence and effect of any portfolio concentrations

•National economic business conditions and other macroeconomic adjustments

•Regional and local economic and business conditions

•Data availability and applicability

•Industry monitoring

•Value of underlying collateral

Changes in the level of the ACL reflect changes in these factors. The magnitude of the impact of each of these factors on the qualitative assessment of the ACL changes from quarter to quarter according to the extent these factors are already reflected in historic loss rates and according to the extent these factors diverge from one another. Also considered is the uncertainty inherent in the estimation process when evaluating the ACL.

Accounting Standards Not Yet Effective

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The new standard clarifies that a contractual restriction on the sale of an equity security should not be considered in measuring the fair value of the security. The new standard also requires certain disclosures related to equity securities with contractual sale restrictions. The ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The standard should be applied prospectively. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements and related disclosures.

2. REVENUES

Disaggregation of Revenues

Revenues are disaggregated at the Company's segment level since the segment categories depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. For additional details related to the Company's reportable segments, see Note 17 - "Segment Information."

The following table presents the Company's revenues disaggregated by geography for the three months ended March 31, 2023 and 2022. The Company's revenues are primarily derived domestically. Foreign revenues are based on the country in which the legal subsidiary generating the revenue is domiciled. Revenue from any single foreign country was not material to the Company's consolidated financial statements.


	Three Months Ended March 31,
	2023		2022
United States	$	426,165	$	384,270
Foreign	19,206		21,475
Total revenue	$	445,371	$	405,745

Contract Balances

Differences in the timing of revenue recognition, billings and cash collections result in billed trade receivables, unbilled receivables (contract assets) and deferred revenues (contract liabilities) on the consolidated balance sheets.

Contract Assets

Unbilled receivables arise when the timing of billings to customers differs from the timing of revenue recognition, such as when the Company recognizes revenue over time before a customer can be billed. Contract assets are classified as Prepaid expenses and other current assets on the consolidated balance sheets. As of March 31, 2023 and December 31, 2022, the contract asset balance was $11,623 and $11,937, respectively.

Contract Liabilities

The Company records deferred revenues when cash payments are received or due in advance of the Company's performance, including amounts that are refundable, which are recorded as contract liabilities. Contract liabilities are classified as Other current liabilities on the consolidated balance sheets, based on the timing of when the Company expects to recognize revenue.


	Contract Liabilities
Balance at December 31, 2022	$	4,380
Deferral of revenue	5,031
Recognition of unearned revenue	(4,687)
Balance at March 31, 2023	$	4,724

Balance at December 31, 2021	$	3,396
Deferral of revenue	431
Recognition of unearned revenue	(617)
Balance at March 31, 2022	$	3,210

3. ACQUISITION AND DIVESTITURES

WebBank Acquisition of Security Premium Finance

On August 2, 2022, the Company, through its wholly-owned subsidiary, WebBank, completed the acquisition of Security Premium Finance Company, LLC ("Security Premium Finance"), based in Coral Gables, Florida for a total purchase price of $47,280 which was financed with cash on hand. The purchase price contains a profit share interest valued at approximately $1,440, of which $190 was unpaid as of March 31, 2023. Security Premium Finance provides insurance premium financing services for commercial and consumer clients to purchase property and casualty insurance products. In connection with the acquisition, the Company recorded premium finance receivables, other intangible assets and goodwill associated with the acquisition, totaling approximately $43,124, $1,370, and $2,959, respectively, as well as other assets and liabilities. Other intangible assets primarily consist of agent relationships. The goodwill from the acquisition consists largely of the synergies expected from combining the operations of the two businesses. The goodwill of $2,959 is expected to be deductible for income tax purposes.

The purchase price and purchase price allocation of Security Premium Finance were finalized as of March 31, 2023, with no significant changes to preliminary amounts. The results of operations of Security Premium Finance are included with WebBank in the Company's Financial Services segment.

2022 Noncontrolling Interest Acquisition

On January 7, 2022, the Company entered into stock purchase agreements with certain stockholders of iGo, Inc. ("iGo") to purchase such stockholders’ shares of iGo common stock at $5.50 per share in cash. Following the acquisition of such shares, the Company owned more than 90% of iGo’s outstanding shares. On January 14, 2022, iGo merged with a subsidiary of the Company ("Merger") without a vote or meeting of iGo's stockholders pursuant to the short-form merger provisions under the Delaware General Corporation Law. All remaining shares of iGo common stock not owned by the Company immediately prior to the Merger were converted into the right to receive $5.50 per share in cash, and the Company acquired all iGo shares it previously did not own for approximately $8,606. Upon completion of the Merger, iGo became a wholly-owned subsidiary of the Company.

2022 Investment in Nonconsolidated Affiliate

On April 1, 2022, the Company acquired an interest in PCS-Mosaic Co-Invest L.P. ("PCS-Mosaic"), a private investment fund for a purchase price of approximately $23,600. The fund is primarily invested in specialized software

development and training services. The Company accounts for its investment as an equity method investment as the Company does not have a controlling financial interest. The Company has not elected the fair value option to account for PCS-Mosaic which will be carried at cost, plus or minus the Company's share of net earnings or losses of the investment, subject to certain other adjustments. The Company’s share of net earnings or losses of the investment is included in Income (loss) of associated companies, net of tax on the Company’s consolidated statements of operations. Dividends received from the investee reduce the carrying amount of the investment. Due to the timing of receiving financial information from PCS-Mosaic, the Company records its share of net earnings or losses on a three month lag basis.

2022 Divestiture of SLPE Business

On April 25, 2022, the Company completed the sale of its subsidiary, SL Power Electronics Corporation ("SLPE"), to AEI US Subsidiary LLC, a subsidiary of Advanced Energy Industries, Inc. for a sales price of $144,500, consisting entirely of cash, subject to customary closing net working capital adjustments. SLPE designed, manufactured, and marketed power conversion solutions for original equipment manufacturers in the medical, lighting, audio-visual, controls, and industrial sectors and comprised the Company’s Electrical Products business in the Diversified Industrial segment. SLPE recognized net sales of $14,686 and a loss before taxes of $120 for the three months ended March 31, 2022.

4. LOANS RECEIVABLE, INCLUDING LOANS HELD FOR SALE

Major classifications of Loans receivable, including loans held for sale, held by WebBank as of March 31, 2023 and December 31, 2022 are as follows:


	Total								Current				Non-current
	March 31, 2023		%		December 31, 2022		%		March 31, 2023		December 31, 2022		March 31, 2023		December 31, 2022
Loans held for sale	$	694,993			$	602,675			$	694,993	$	602,675	$	—	$	—

Commercial real estate loans	$	1,270	—	%	$	987	—	%	$	—	$	—	$	1,270	$	987
Commercial and industrial	1,020,600		89	%	857,817		87	%	544,523		472,934		476,077		384,883
Consumer loans	129,575		11	%	123,204		13	%	111,350		85,826		18,225		37,378
Total loans	1,151,445		100	%	982,008		100	%	655,873		558,760		495,572		423,248
Less:

Allowance for credit losses	(36,693)				(29,690)				(36,693)		(29,690)		—		—
Total loans receivable, net	$	1,114,752			$	952,318			619,180		529,070		495,572		423,248
Loans receivable, including loans held for sale (a)									$	1,314,173	$	1,131,745	$	495,572	$	423,248

(a) The amortized cost of loans receivable, including loans held for sale, is considered to be representative of fair value because the rates of interest are not significantly different from market interest rates for instruments with similar maturities. The fair value of loans receivable, including loans held for sale, was $1,808,971 and $1,548,035 as of March 31, 2023 and December 31, 2022, respectively.

Loans with an amortized cost of approximately $438,244 and $323,740 were pledged as collateral for potential borrowings as of March 31, 2023 and December 31, 2022, respectively. WebBank serviced $1,901 and $2,700 in loans for others as of March 31, 2023 and December 31, 2022, respectively.

WebBank sold loans classified as loans held for sale of $4,275,373 and $3,006,100 during the three months ended March 31, 2023 and 2022, respectively. The sold loans were derecognized from the consolidated balance sheets. Loans classified as loans held for sale primarily consist of consumer and small business loans. Amounts added to loans held for sale during the same periods were $4,388,701 and $3,072,573, respectively.

WebBank's ACL increased $7,003, or 23.6%, during the three months ended March 31, 2023. WebBank continues to monitor the impact of the current economic environment, including potential future negative impacts to its loan portfolio.

Changes in the ACL are summarized as follows:


	Commercial Real Estate Loans		Commercial & Industrial		Consumer Loans		Total




December 31, 2022	$	28	$	18,493	$	11,169	$	29,690
Impact of adopting current expected credit loss accounting guidance	1		1,144		3,597		4,742
Charge-offs	—		(3,493)		(2,539)		(6,032)
Recoveries	5		328		154		487
Provision	7		5,156		2,643		7,806
March 31, 2023	$	41	$	21,628	$	15,024	$	36,693


	Commercial Real Estate Loans		Commercial & Industrial		Consumer Loans		Total
December 31, 2021	$	23	$	9,205	$	4,697	$	13,925
Charge-offs	—		(947)		(1,273)		(2,220)
Recoveries	7		415		407		829
(Benefit) Provision	(5)		648		639		1,282
March 31, 2022	$	25	$	9,321	$	4,470	$	13,816

The ACL and outstanding loan balances are summarized as follows:


March 31, 2023	Commercial Real Estate Loans		Commercial & Industrial		Consumer Loans		Total
Allowance for credit losses:
Individually evaluated for impairment	$	8	$	876	$	—	$	884
Collectively evaluated for impairment	33		20,752		15,024		35,809
Total	$	41	$	21,628	$	15,024	$	36,693
Outstanding loan balances:
Individually evaluated for impairment	$	8	$	4,171	$	—	$	4,179
Collectively evaluated for impairment	1,262		1,016,429		129,575		1,147,266
Total	$	1,270	$	1,020,600	$	129,575	$	1,151,445


December 31, 2022	Commercial Real Estate Loans		Commercial & Industrial		Consumer Loans		Total
Allowance for loan losses:
Individually evaluated for impairment	$	8	$	825	$	—	$	833
Collectively evaluated for impairment	20		17,668		11,169		28,857
Total	$	28	$	18,493	$	11,169	$	29,690
Outstanding loan balances:
Individually evaluated for impairment	$	8	$