Business Segments - Steel Partners Holding L.P. operates through four segments: Diversified Industrial, Energy, Financial Services, and Supply Chain, focusing on long-term corporate value enhancement [23]. - The Diversified Industrial segment includes businesses that manufacture engineered niche industrial products, with significant market positions across various regions including North America, Europe, and Asia [25]. - The Energy segment provides drilling and production services primarily in the Bakken, Niobrara, Permian, and San Juan basins, emphasizing well completion and maintenance services [34]. - WebBank, a subsidiary of Steel Partners, engages in a full range of banking activities, including originating loans and issuing credit cards, and is subject to FDIC regulation [37]. - ModusLink Corporation, part of the Supply Chain segment, offers end-to-end global supply chain solutions, serving markets such as consumer electronics and medical devices [38]. Workforce and Operations - As of December 31, 2023, the company employed approximately 5,100 employees worldwide, indicating a robust workforce to support its operations [44]. - The company has not experienced significant issues in obtaining necessary raw materials, which are generally available from multiple sources [41]. - The company is exposed to risks from epidemics and public health emergencies, which could disrupt operations and financial performance [133]. - The loss of essential employees could significantly affect Steel Connect's operations and financial condition [136]. Financial Performance - Revenue for the year ended December 31, 2023, increased by $210,016, or 12.4%, to $1,905,457 compared to $1,695,441 in 2022, driven by higher revenue from the Financial Services segment and the newly added Supply Chain segment [202]. - Selling, general and administrative expenses (SG&A) rose by $121,583, or 31.7%, to $504,960 in 2023, primarily due to increased costs in the Financial Services and Supply Chain segments [204]. - Net income attributable to common unitholders for 2023 was $150,829, a decrease of $55,143, or 26.8%, from $205,972 in 2022 [201]. - The Financial Services segment generated revenue of $416,911 in 2023, an increase of $188,947, or 82.9%, compared to $227,964 in 2022 [214]. - The Supply Chain segment, added on May 1, 2023, reported revenue of $115,144 and operating income of $8,726 [218]. Market and Economic Conditions - Economic downturns in sectors such as transportation, oil and gas exploration, and construction could disrupt revenues, which are cyclical and sensitive to national and global economic conditions [56]. - Revenues in the Supply Chain segment depend on customer traffic and demand, which may decline due to macroeconomic uncertainties, impacting future growth prospects [57]. - Inflation and supply chain disruptions have increased costs, which may not be fully recoverable through price adjustments, adversely affecting financial results [59]. - Significant volatility in crude oil prices has materially affected the Diversified Industrial and Energy segments, with ongoing geopolitical tensions exacerbating this instability [60]. - Customer demand is sensitive to oil and gas price fluctuations, with recent OPEC+ production cuts leading to demand loss and price volatility [61]. Regulatory and Compliance Risks - Steel Partners is committed to compliance with evolving regulations across various jurisdictions, ensuring adherence to environmental, labor, and financial laws [51]. - The company is subject to substantial cash funding requirements for defined benefit pension plans, which may increase due to market performance and interest rate changes [67]. - Compliance with environmental, health, and safety regulations may incur substantial costs for the company, impacting financial performance [68]. - The company may incur substantial additional compliance costs if proposed SEC rules on climate-related disclosures are adopted [75]. - The company faces significant risks related to climate change regulations that could increase costs and reduce demand for its Energy segment services [73]. Credit and Financial Risks - Rising interest rates could increase borrowing costs and adversely impact the company's ability to raise funds, affecting overall financial condition [66]. - The company may face increased scrutiny from regulators due to ongoing legislative and regulatory actions affecting its lending programs [83]. - Credit risk on PPP loans may arise if the SBA determines deficiencies in loan origination or servicing, potentially leading to loss recovery claims against WebBank [120]. - Recent events in the financial services industry, including bank failures, have raised liquidity concerns that could adversely affect the company's operations [124]. Cybersecurity and Technology Risks - The company’s cybersecurity program includes comprehensive incident response and recovery plans to address potential cybersecurity threats [176]. - The Audit Committee oversees the company's cybersecurity risk management, ensuring effective controls and strategies are in place [177]. - Disruptions or breaches in technology systems could result in operational delays and financial losses, affecting competitive position [102]. Tax and Partnership Considerations - Common unitholders may be subject to U.S. federal, state, and local income tax on their share of taxable income, regardless of cash distributions received [153]. - Changes in tax laws, such as the reduction of the U.S. corporate income tax rate from 35% to 21%, could negatively impact the company's financial results [158]. - The company is subject to partnership audit rules that could result in tax liabilities for current unitholders due to adjustments in prior year tax returns [156]. - If taxed as a corporation, the company would face a 21% corporate income tax rate, significantly reducing profitability and cash available for distribution [161]. Client and Revenue Concentration - For the fiscal year ended July 31, 2023, Steel Connect's 10 largest clients accounted for approximately 83% of consolidated net revenue, up from 78% in 2022 [127]. - Two customers contributed approximately 41% and 13% of consolidated net revenue for the fiscal year ended July 31, 2023, compared to 31% and 12% in 2022 [127]. - Steel Connect's revenue is subject to demand variability, with no long-term contracts obligating clients to purchase services, which could lead to significant revenue fluctuations [128]. Strategic Initiatives - The company’s business strategy includes acquisitions, which entail risks such as management diversion and increased costs [87]. - The Management Fee for the Manager is set at an annual rate of 1.5% of total partners' capital, which could vary significantly based on business performance [145]. - The company has approved a repurchase program for up to 8,770,240 common units, with 462,628 units purchased in 2023 for an aggregate price of $20,040 [191].

Revenue Growth - Revenue for the three months ended September 30, 2023, increased by $66,581, or 15.6%, compared to the same period last year, driven by higher revenue from Financial Services and the newly added Supply Chain segment [188]. - Revenue for the nine months ended September 30, 2023, increased by $165,724, or 13.0%, compared to the same period last year, attributed to higher revenue from both Financial Services and Energy segments, along with the Supply Chain segment [189]. - Total revenue for the three months ended September 30, 2023 was $492,254, an increase from $425,673 in the same period of 2022, while total revenue for the nine months ended September 30, 2023 was $1,438,550, up from $1,272,826 in the same period of 2022 [202]. - Financial Services revenue increased by $44,341, or 71.4%, for the three months ended September 30, 2023, and by $154,607, or 103.1%, for the nine months ended September 30, 2023 compared to the same periods of 2022 [209][210]. Expenses and Costs - Cost of goods sold for the three months ended September 30, 2023, increased by $9,628, or 3.5%, primarily due to the Supply Chain segment, partially offset by lower sales from the Diversified Industrial segment [190]. - Selling, general and administrative expenses (SG&A) for the three months ended September 30, 2023, increased by $31,300, or 33.4%, mainly due to higher expenses in the Financial Services segment and the newly added Supply Chain segment [192]. - SG&A for the nine months ended September 30, 2023, increased by $95,653, or 34.1%, primarily driven by higher expenses in the Financial Services segment and the Supply Chain segment, despite the impact of the divestiture of the SLPE business [193]. - Total costs and expenses for the three months ended September 30, 2023, were $462,208, compared to $380,650 for the same period last year [187]. Income and Impairments - Net income for the three months ended September 30, 2023, was $27,887, a decrease from $36,428 in the same period last year [187]. - The Company’s income from operations before income taxes and equity method investments for the three months ended September 30, 2023, was $30,046, compared to $45,023 for the same period last year [187]. - The Company recorded a non-cash impairment charge of approximately $3,140 related to other-than-temporary impairment on its equity method investment in PCS-Mosaic for the three months ended September 30, 2023 [185]. - The Company recognized an impairment charge of $329 related to unused equipment in the Building Materials business unit for the nine months ended September 30, 2023 [194]. - The Company recorded losses from associated companies of $3,140 and $11,944 for the three and nine months ended September 30, 2023, respectively, compared to income and losses in the same periods of 2022 [200]. - The Company recognized an other-than-temporary impairment charge of $3,140 for its equity method investment in PCS-Mosaic for the nine months ended September 30, 2023 [227]. Cash Flow and Financing - The Company generated $11,675 of cash from operating activities for the nine months ended September 30, 2023, compared to a cash usage of $58,524 in the same period of 2022 [216]. - The Company used $168,692 of cash in investing activities during the nine months ended September 30, 2023, primarily due to loan originations of $242,667 and purchases of investments of $204,611 [217]. - Cash generated from financing activities was $486,419 during the nine months ended September 30, 2023, mainly from an increase in deposits of $531,006 [218]. Financial Position and Expectations - As of September 30, 2023, the Company's working capital was $410,043, up from $156,085 as of December 31, 2022 [222]. - The Company expects full-year capital expenditures in the range of $52,000 to $57,000 for 2023, compared to $47,541 in 2022 [222]. - WebBank had total cash, lines of credit, and access to the Federal Reserve Bank discount window of $618,344 as of September 30, 2023, representing approximately 24.7% of its total assets [223]. - The Company’s total availability under the Credit Agreement was approximately $403,500 as of September 30, 2023 [222]. - The Company was in compliance with all financial covenants of its Credit Agreement as of September 30, 2023, and expects to remain compliant for the next twelve months [220]. Economic Outlook - The Company anticipates economic disruption and loan performance deterioration in its Financial Services segment due to inflation and rising interest rates [181]. - The effective tax rate for the nine months ended September 30, 2023 was (1.4)%, significantly lower than 29.4% for the same period in 2022, primarily due to changes in U.S. income tax expense related to unrealized gains and losses [199]. - Interest expenses decreased by $995, or 19.5%, for the three months ended September 30, 2023, but increased by $1,482, or 10.3%, for the nine months ended September 30, 2023 compared to the same periods last year [195].

Revenue Growth - Revenue for the three months ended June 30, 2023, increased by $59,517, or 13.5%, compared to the same period last year, driven by higher revenue from the Financial Services and Energy segments, along with contributions from the newly acquired Supply Chain segment [180]. - Revenue for the six months ended June 30, 2023, increased by $99,143, or 11.7%, compared to the same period last year, attributed to higher revenue from Financial Services and Energy segments, and the newly acquired Supply Chain segment, partially offset by lower sales from the Diversified Industrial segment [181]. - Total revenue for the six months ended June 30, 2023 was $946,296, an increase from $847,153 in the same period of 2022, driven by significant growth in the Financial Services segment [194]. - Financial Services revenue for the three months ended June 30, 2023 increased by $57,664, or 120.8%, and by $110,266, or 125.4%, for the six months ended June 30, 2023, compared to the same periods in 2022 [203][204]. - The Supply Chain segment, acquired on May 1, 2023, generated revenue of $30,181 and operating income of $1,835 for the three and six months ended June 30, 2023 [206]. Cost and Expenses - Cost of goods sold for the three months ended June 30, 2023, increased by $586, or 0.2%, primarily due to the newly acquired Supply Chain segment and higher revenue volume from the Energy segment [182]. - Cost of goods sold for the six months ended June 30, 2023, decreased by $6,291, or 1.1%, mainly driven by lower sales from the Diversified Industrial segment, partially offset by the impact of the newly acquired Supply Chain segment [183]. - Selling, general and administrative expenses for the three months ended June 30, 2023, increased by $35,523, or 35.2%, primarily due to higher expenses from the Financial Services segment and the newly acquired Supply Chain segment [184]. - SG&A expenses for the six months ended June 30, 2023 increased by $64,353, or 34.4%, primarily due to higher expenses from the Financial Services segment and newly acquired Supply Chain segment [185]. - Interest expenses increased by $1,015, or 21.1%, for the three months ended June 30, 2023, and by $2,477, or 26.5%, for the six months ended June 30, 2023, due to higher average interest rates [187]. Income and Losses - The Company’s net income for the three months ended June 30, 2023, was $58,615, compared to $92,113 for the same period last year [179]. - The Company’s income from operations before income taxes for the three months ended June 30, 2023, was $48,122, down from $129,289 in the same period last year [179]. - Net income for the three months ended June 30, 2023 was $58,615, compared to $92,113 in the same period of 2022, reflecting a decrease in operating income [194]. - The Company recorded losses from associated companies of $4,837 and $8,804 for the three and six months ended June 30, 2023, respectively, compared to income in the same periods of 2022 [193]. Cash Flow and Capital - Cash used in operating activities for the six months ended June 30, 2023 was $54,511, an improvement from $100,861 in the same period of 2022 [209]. - Cash used in investing activities for the six months ended June 30, 2023 was $143,902, primarily due to loan originations [210]. - Cash generated from financing activities for the six months ended June 30, 2023 was $318,175, significantly higher than the cash used of $6,967 in the same period of 2022 [211]. - As of June 30, 2023, the Company's working capital increased to $329,526 from $156,085 as of December 31, 2022 [216]. - Capital expenditures for the six-month period ended June 30, 2023, were $23,551, compared to $18,470 for the same period in 2022 [216]. - The Company expects full-year capital expenditures in the range of $58,000 to $68,000 for 2023, up from $47,541 in 2022 [216]. Financial Position and Compliance - As of June 30, 2023, total PPP loans and associated liabilities amounted to $31,829 and $25,715, respectively, included in Long-term loans receivable and Other borrowings in the consolidated balance sheet [175]. - The Company was in compliance with all financial covenants of its Credit Agreement as of June 30, 2023, and expects to remain compliant for the next twelve months [214]. - The total availability under the Credit Agreement was approximately $405,700 as of June 30, 2023 [216]. - WebBank had $242,868 in cash and cash equivalents as of June 30, 2023, compared to $174,257 as of December 31, 2022 [217]. - WebBank's total cash, lines of credit, and access to the Federal Reserve Bank discount window amounted to $639,164 as of June 30, 2023, representing approximately 27.7% of its total assets [217]. - ModusLink had available borrowing capacity of $11,890 under its revolving credit agreement as of June 30, 2023 [218]. Economic Conditions - The Financial Services segment, primarily through WebBank, is experiencing economic disruption and loan performance deterioration due to inflation, rising interest rates, and recession risks, which may negatively impact credit losses [174]. - The adoption of ASU No. 2016-13 resulted in an increase of $5,248 to the Allowance for Credit Losses in the Financial Services segment [222].

Company Overview - Steel Partners Holdings L.P. (SPLP) operates through three segments: Diversified Industrial, Energy, and Financial Services, with significant interests in various industries[168]. WebBank Operations - WebBank, a wholly-owned subsidiary, is an FDIC-insured bank that engages in a full range of banking activities, including originating loans and issuing credit cards, and has observed economic disruption due to inflation and rising interest rates[172]. - As of March 31, 2023, WebBank's total Paycheck Protection Program (PPP) loans amounted to $36,013,000, with associated liabilities of $31,692,000[173]. - WebBank had total cash, lines of credit, and access to the Federal Reserve Bank discount window amounting to $642,556 as of March 31, 2023, representing approximately 28.9% of its total assets[215]. Financial Performance - Revenue for the three months ended March 31, 2023, increased by $39,626, or 9.8%, compared to the same period last year, driven by higher revenue from Financial Services and Energy segments[186]. - Net income from continuing operations for the three months ended March 31, 2023, was $24,803, compared to $4,541 in the same period of 2022[186]. - Revenue from the Financial Services segment increased by $52,602, or 130.9%, primarily due to higher interest income and fees[203]. - Energy segment revenue increased by $9,847, or 25.7%, driven by higher demand and favorable pricing[200]. - Adjusted EBITDA for the three months ended March 31, 2023, was $63,131, a decrease of $1,439 from $64,570 in the same period of 2022[195]. - Segment operating income for Q1 2023 increased by $11,925 compared to Q1 2022, primarily due to higher revenue, partially offset by increased SG&A costs and provision for credit losses[204]. - Segment Adjusted EBITDA for Q1 2023 rose by $12,484 compared to the same period in 2022, driven by higher revenue[205]. Expenses and Costs - Cost of goods sold decreased by $6,877, or 2.6%, primarily due to lower sales from the Diversified Industrial segment, partially offset by higher material costs[187]. - Selling, general and administrative expenses increased by $28,830, or 33.5%, mainly due to higher expenses in the Financial Services segment[188]. - Interest expense increased by $1,462, or 32.3%, due to higher average interest rates[190]. Cash Flow and Capital Management - Net cash used in operating activities for Q1 2023 was $(48,248), a significant increase from $(13,310) in Q1 2022[207]. - Net cash used in investing activities for Q1 2023 was $(153,963), compared to cash generated of $35,482 in Q1 2022[209]. - Net cash provided by financing activities for Q1 2023 was $272,717, contrasting with $(145,864) in Q1 2022[210]. - As of March 31, 2023, working capital was $214,647, up from $156,085 as of December 31, 2022[214]. - Capital expenditures for Q1 2023 were $10,708, compared to $7,746 in Q1 2022, with full-year expectations set between $54,000 to $67,000[214]. - The Company plans to contribute $5,814 to its pension plans during the remainder of 2023, following a $2,000 contribution made on April 13, 2023[214]. - The Company’s total availability under the Credit Agreement was approximately $408,300 as of March 31, 2023[214]. Risks and Governance - SPLP's financial condition and results of operations are subject to various risks, including economic downturns and volatility in crude oil prices[167]. - The Company emphasizes the importance of maintaining effective internal control over financial reporting to mitigate risks associated with its operations[167]. - A Stockholders' Agreement was executed concurrently with the Exchange Agreement, establishing governance aspects for STCN, including the creation of an Independent Audit Committee[177]. - The Stockholders' Agreement stipulates that 70% of net proceeds from the resolution of the Reith litigation will be distributed to STCN's stockholders, with SP Investors waiving their portion[179]. - The SP Investors, owning a majority of STCN's voting power, have agreed to vote in favor of the Nasdaq Proposal, ensuring its approval[180]. Share Exchange and Stockholder Actions - On April 30, 2023, SPLP exchanged 3,597,744 shares of Aerojet for 3,500,000 shares of newly created Series E convertible preferred stock of STCN, with a liquidation preference of $58.1087 per share[175]. - The Series E Preferred Stock will be convertible into approximately 184,891,318 shares of common stock of STCN upon stockholder approval[176]. - Loss from associated companies, net of taxes, decreased to $3,967 for the three months ended March 31, 2023, from $4,643 in the same period of 2022[194]. - The effective tax rate for the three months ended March 31, 2023, was 33.7%, down from 45.3% in the same period of 2022[193].

Economic Risks and Financial Condition - The company faces significant risks related to economic downturns, inflation, and supply chain disruptions, which could materially affect its financial condition and results of operations[18]. - Rising interest rates have increased borrowing costs, potentially impacting the company's ability to raise funds and affecting its financial condition[66]. - The company is subject to substantial cash funding requirements for defined benefit pension plans, which could adversely impact its financial condition due to market performance and interest rate changes[68]. - The company’s investment portfolio may suffer losses due to market volatility, which could adversely affect its financial results[18]. - Future cash flows may not be sufficient to meet obligations under the senior credit facility, potentially affecting liquidity and financial condition[87]. - The company’s investment portfolio may sustain losses due to adverse economic conditions, impacting results of operations and liquidity[94]. Regulatory and Compliance Risks - Compliance with environmental, health, and safety regulations may require substantial costs, impacting the company's operations and financial results[69]. - The company is exposed to risks associated with climate change legislation, which could increase operational costs and reduce demand for services in its Energy segment[74]. - The company faces increased regulatory compliance burdens due to extensive regulations, including the Dodd-Frank Act, which impacts all financial institutions[82]. - The company’s ability to comply with extensive regulations may impact its liquidity and financial condition, particularly through its subsidiary WebBank[18]. - The company may incur substantial additional compliance costs if new climate-related regulations are adopted[76]. - Regulatory scrutiny may increase due to enforcement actions against marketing partners, impacting the company's operations[85]. - The company may experience significant legal and investigatory fees due to compliance failures with extensive regulations[80]. - Compliance with evolving data protection regulations, such as the GDPR, may increase operational costs and legal liabilities[110]. Operational and Market Risks - The company is at risk of significant disruptions from global trade issues and changes in trade policies, which could impact its operations and financial performance[18]. - Global trade issues, including tariffs and trade sanctions, may increase operational costs and disrupt supply chains, negatively impacting financial results[100]. - Cybersecurity threats pose a risk to the company's technology systems, potentially leading to operational disruptions and financial losses[104]. - Labor disputes and unionization efforts could disrupt operations and increase labor costs, adversely affecting business performance[111]. - The COVID-19 pandemic has had adverse effects on business operations, including reduced customer demand and supply chain disruptions[125]. - The ongoing conflict in Ukraine has caused volatility in crude oil and natural gas prices, potentially impacting the global economy and the company's business[126]. Strategic and Management Risks - The company’s acquisition strategy entails risks, including management diversion and increased costs, which could negatively affect profitability[89]. - The company has identified material weaknesses in internal controls over financial reporting, which were addressed through a remediation plan[124]. - Loss of essential employees could negatively impact business operations and financial performance[154]. - High demand for skilled employees may lead to challenges in attracting and retaining necessary personnel, affecting operational efficiency[155]. Financial Structure and Taxation Risks - The Partnership Agreement limits unitholder recourse against the General Partner and Board of Directors, potentially affecting shareholder rights[127]. - The Management Fee is set at an annual rate of 1.5% of total partners' capital, which may significantly impact the company's results of operations depending on business performance and capital changes[134]. - The company may issue additional common or preferred units without unitholder consent, potentially leading to a decline in market prices due to perceived dilution risks[137]. - Changes in U.S. tax laws, such as the Tax Cuts and Jobs Act, could adversely affect the company's business, including a reduction in the corporate income tax rate from 35% to 21%[144]. - The company operates as a partnership for U.S. federal income tax purposes, and any change in this status could lead to significant reductions in profitability and cash flow available for distribution[146]. - If taxed as a corporation, the company would face a corporate income tax rate of 21%, which would substantially reduce cash available for unitholders[147]. - The IRS may challenge the company's tax treatment, leading to potential reallocations of income, gain, loss, and deduction that could adversely affect unitholders[149]. - Tax-exempt entities may face U.S. federal income taxation on unrelated business taxable income (UBTI) from common units[150]. - Non-U.S. persons may be subject to withholding taxes at the highest applicable effective tax rate on distributions if engaged in a U.S. trade or business[151]. - Subsidiaries have generated significant net operating losses (NOLs) that could provide tax savings if fully utilized in future periods[152]. - Valuation allowances against NOLs may limit the ability of subsidiaries to utilize these tax benefits, potentially increasing future tax payments[153]. WebBank Specific Risks - Challenges to WebBank's lending practices could impact its business operations and compliance with interest rate regulations[113]. - WebBank's two highest grossing contractual lending programs accounted for approximately 18% of total net revenue in 2022, up from 7% in 2021[118]. - WebBank is required to maintain a Common Equity Tier 1 ratio of 4.5%, a Tier 1 capital ratio of 6%, and a total capital ratio of 8% as per FDIC regulations[116]. - The Capital Conservation Buffer for WebBank is set at 2.5% above the new regulatory minimum capital requirements, impacting its ability to make distributions if not maintained[116]. - WebBank's lending programs are heavily reliant on Marketing Partners, and limited capital availability for these partners has resulted in decreased loan volume[118]. - The Paycheck Protection Program (PPP) included a $349 million loan program, exposing WebBank to litigation risks regarding its processing of loans[119]. - WebBank faces credit risk on PPP loans if the SBA determines deficiencies in loan origination or servicing, which could lead to loss recovery claims[121].

Company Overview - Steel Partners Holdings L.P. operates through three segments: Diversified Industrial, Energy, and Financial Services, with significant interests in various industries [164]. Mergers and Acquisitions - WebBank, a wholly-owned subsidiary, completed the acquisition of Security Premium Finance for a purchase price of $35,298, which includes a premium of approximately $1,593 and a profit share interest valued at approximately $1,250 [178]. - The proposed merger with Steel Connect involves converting each share of Steel Connect's common stock into $1.35 in cash and a contingent value right, with the merger expected to close in Q4 2022, subject to shareholder approvals [171][177]. Financial Performance - Revenue for the three months ended September 30, 2022 increased by $33,560, or 8.6%, compared to the same period last year, driven by higher sales across all reportable segments [187]. - Revenue for the nine months ended September 30, 2022 increased by $179,787, or 16.4%, compared to the same period last year, due to higher sales across all reportable segments [187]. - Total revenue for the three months ended September 30, 2022 was $425,673, an increase of 8.5% from $392,113 in the same period of 2021 [203]. - Financial Services revenue for the three months ended September 30, 2022 increased by $22,284, or 56.0%, compared to the same period of 2021 [213]. - Adjusted EBITDA for the three months ended September 30, 2022 was $60,167, compared to $72,491 for the same period last year [185]. - Adjusted EBITDA for the nine months ended September 30, 2022 was $183,785, compared to $196,631 for the same period last year [185]. - Adjusted EBITDA for the nine months ended September 30, 2022 was $183,785, a decrease of $12,846 from $196,631 in the same period of 2021 [202]. Costs and Expenses - Cost of goods sold for the three months ended September 30, 2022 increased by $20,838, or 8.2%, primarily due to higher sales and increased material and labor costs [188]. - Cost of goods sold for the nine months ended September 30, 2022 increased by $118,539, or 16.6%, driven by higher sales and increased material and labor costs [189]. - Selling, general and administrative expenses for the three months ended September 30, 2022 increased by $13,229, or 16.5%, primarily due to higher expenses in the Financial Services segment [190][191]. - Selling, general and administrative expenses for the nine months ended September 30, 2022 increased by $56,806, or 25.4%, driven by higher expenses in the Financial Services segment [192]. - The company recorded asset impairment charges of $2,449 for the three months ended September 30, 2022, primarily related to an ERP project [193]. Cash Flow and Capital Expenditures - Net cash used in operating activities during the nine months ended September 30, 2022 was $58,524, a decrease of $117,408 compared to $58,884 generated in the same period of 2021 [220]. - Net cash used in investing activities for the nine months ended September 30, 2022 was $85,649, primarily due to purchases of investments totaling $284,884 [222]. - Net cash provided by financing activities during the nine months ended September 30, 2022 was $181,923, primarily due to an increase in deposits of $606,626 [223]. - Capital expenditures for the nine-month period ended September 30, 2022, were $30,188, compared to $19,556 for the same period in 2021 [228]. - The Company expects full year capital expenditures in the range of $46,000 to $52,000 for 2022, down from $52,326 in 2021 [228]. Economic and Regulatory Environment - WebBank has observed economic disruption and loan performance deterioration due to inflation, rising interest rates, and recession risks, which may negatively impact credit losses [168]. - The ongoing COVID-19 pandemic continues to disrupt the U.S. and global economies, affecting business operations and economic recovery [179][180]. - The company is subject to significant regulatory requirements, including those related to environmental laws and banking regulations, which could impact future cash flows [163]. - The company has significant exposure to risks associated with conducting business outside the U.S., including changes in trade policies and economic downturns [163]. Internal Controls and Financial Health - The company has a material weakness identified in its internal control over financial reporting, which could affect its financial results [163]. - The Company believes it has adequate resources to meet its operating costs and obligations for at least the next twelve months [226]. - As of September 30, 2022, the Company's working capital was $267,196, a decrease from $569,090 as of December 31, 2021 [227]. - Total availability under the Credit Agreement was approximately $413,000 as of September 30, 2022 [227]. - WebBank had $321,959 in cash and cash equivalents as of September 30, 2022, an increase from $308,589 as of December 31, 2021 [229]. - WebBank's total cash, lines of credit, and access to the Federal Reserve Bank discount window amounted to $541,671 as of September 30, 2022, representing approximately 30.7% of its total assets [229]. - The Credit Agreement, which includes a senior secured revolving credit facility of up to $600,000, is subject to financial covenants that the Company was in compliance with as of September 30, 2022 [225]. Segment Performance - Net sales for the Diversified Industrial segment for the three months ended September 30, 2022 increased by $5,729, or 1.9%, compared to the same period of 2021 [204]. - Net revenue for the Energy segment for the three months ended September 30, 2022 increased by $5,547, or 12.1%, compared to the same period of 2021 [210]. - Segment operating income for the Financial Services segment for the three months ended September 30, 2022 decreased by $2,941 compared to the same period of 2021 [215]. Goodwill and Fair Value - The Electrical Products reporting unit had goodwill of $46,445 as of September 30, 2022, with a fair value exceeding its net book value by 15% as of December 31, 2021 [232].

Financial Performance - Revenue for the three months ended June 30, 2022, increased by $54,975, or 14.2%, compared to the same period last year, driven by higher sales across all reportable segments[196]. - Revenue for the six months ended June 30, 2022, increased by $146,227, or 20.9%, compared to the same period last year, also due to higher sales across all reportable segments[196]. - Total revenue for the three months ended June 30, 2022, was $441,408, an increase of 14.2% compared to $386,433 for the same period in 2021[211]. - Net income from continuing operations for the three months ended June 30, 2022, was $92,113, compared to $27,435 for the same period in 2021, representing a significant increase[211]. - Financial Services revenue for the three months ended June 30, 2022, increased by $8,814, or 22.7%, compared to the same period in 2021[221]. - Diversified Industrial segment net sales for the three months ended June 30, 2022, increased by $40,905, or 13.4%, compared to the same period in 2021[212]. - Energy segment net revenue for the three months ended June 30, 2022, increased by $5,256, or 12.6%, compared to the same period in 2021[218]. Expenses and Costs - Cost of goods sold for the three months ended June 30, 2022, increased by $38,216, or 15.2%, primarily due to higher material and labor costs[197]. - Cost of goods sold for the six months ended June 30, 2022, increased by $97,701, or 21.3%, driven by similar factors as the quarterly increase[198]. - Selling, general and administrative expenses for the three months ended June 30, 2022, increased by $26,253, or 35.2%, primarily due to higher expenses in the Financial Services segment[199]. - Selling, general and administrative expenses for the six months ended June 30, 2022, increased by $43,577, or 30.4%, reflecting trends similar to the quarterly increase[200]. Gains and Losses - The Company recorded a pre-tax gain of $85,185 for the three and six months ended June 30, 2022, related to the divestiture of the SLPE business[203]. - Corporate and Other segment operating losses for the three months ended June 30, 2022, were $2,971, compared to income of $5,158 for the same period in 2021, primarily due to higher legal fees[226]. Cash Flow and Liquidity - Cash used in operating activities for the six months ended June 30, 2022, was $100,861, a decrease of $115,858 compared to cash generated in the same period of 2021[228]. - As of June 30, 2022, the Company generated $6,967 in cash from financing activities, primarily due to an increase in deposits of $360,620, offset by various repayments and acquisitions[230]. - The Company's working capital decreased to $305,659 as of June 30, 2022, down from $569,090 as of December 31, 2021[235]. - WebBank had $345,208 in cash, lines of credit, and access to the Federal Reserve Bank discount window as of June 30, 2022, representing approximately 23.7% of its total assets[237]. - The Company believes it has adequate resources to meet its financial obligations for at least the next twelve months[234]. Capital Expenditures and Debt - Capital expenditures for the six months ended June 30, 2022, were $18,470, compared to $13,925 for the same period in 2021, with full-year expectations ranging from $45,000 to $53,000[235]. - The Company made debt repayments of $129,900 on its Credit Agreement using proceeds from the sale of its SLPE business[236]. - The Credit Agreement, which includes a senior secured revolving credit facility of up to $600,000, is subject to financial covenants, and the Company was in compliance as of June 30, 2022[232]. Strategic Initiatives - The proposed merger with Steel Connect includes cash consideration of $1.35 per share, representing a premium of approximately 12.5% over the closing price on May 31, 2022, and about 90.1% over the price on November 19, 2020[179]. - The Merger Agreement with Steel Connect is subject to approval from a majority of stockholders and other customary closing conditions[182]. - The Company plans to enhance liquidity through operational improvements, supporting profitable sales growth, and evaluating strategic alternatives[231]. Economic Outlook - WebBank anticipates significant economic disruption and loan performance deterioration due to inflation, rising interest rates, and looming recession[175]. - The Energy segment's profitability is highly sensitive to crude oil price fluctuations, indicating potential risks if prices decline[174].

Revenue and Income - Total revenue for the three months ended March 31, 2022, was $405,745, a 29% increase from $314,493 in the same period of 2021[29] - Net income for the three months ended March 31, 2022, was $4.541 million, a decrease of 91.5% compared to $53.342 million in the same period of 2021[152] - The Diversified Industrial segment generated revenue of $327.249 million, up 31.7% from $248.489 million year-over-year[152] - The Energy segment reported revenue of $38.317 million, an increase of 19.0% from $32.086 million year-over-year[152] - The Financial Services segment's revenue increased to $40.179 million, up 18.4% from $33.918 million in the prior year[152] Assets and Liabilities - The contract asset balance as of March 31, 2022, was $12,619, up from $12,014 as of December 31, 2021[32] - Contract liabilities decreased to $3,210 as of March 31, 2022, from $3,396 as of December 31, 2021[34] - Loans held for sale increased to $253,311 as of March 31, 2022, compared to $198,632 as of December 31, 2021[41] - Total loans receivable, net, was $784,179 as of March 31, 2022, down from $842,341 as of December 31, 2021[41] - The total outstanding loan balances as of March 31, 2022, were $797,995 million, a decrease from $856,266 million on December 31, 2021[47] - The company recorded liabilities of $10,095 million in accrued liabilities and $23,874 million in other non-current liabilities as of March 31, 2022, compared to $2,043 million and $23,801 million respectively as of December 31, 2021[119] Loan and Credit Information - The allowance for loan losses (ALLL) decreased by $109, or 1%, during the three months ended March 31, 2022[45] - As of March 31, 2022, the total allowance for loan losses (ALLL) was $13,816 million, a decrease from $13,925 million on December 31, 2021[46] - Commercial and industrial loans past due 90 days or more and still accruing interest were $4,050 million as of March 31, 2022, compared to $3,037 million on December 31, 2021[48] - The company had no nonaccrual loans as of March 31, 2022, and December 31, 2021[48] - The Company granted loan modifications on $5,485 million of loans, representing 0.69% of total loan balances as of March 31, 2022[54] Inventory and Investments - Total inventory as of March 31, 2022, was $196,989 million, an increase from $184,271 million as of December 31, 2021[55] - The Company reported a total of $228,226 million in long-term investments as of March 31, 2022, down from $261,080 million as of December 31, 2021[64] - The fair value of precious metal and commodity inventories is based on quoted market prices and is considered a Level 1 measurement[110] - The company reported unrealized losses of $764 million in long-term investments as of March 31, 2022[112] Environmental and Legal Matters - The estimated range of potential losses for environmental liabilities is between $10,500 million and $17,500 million, with a reserve of $14,000 million recorded for future remediation costs[124] - The Company has established a reserve of approximately $1,000 for its expected 25% share of anticipated costs related to environmental remediation in New Jersey, based on a recent final remedy selection and ongoing operations[125] - The Company recorded a charge of $12,500 in Selling, General and Administrative expenses for a legal settlement related to a stockholder class action, with insurance carriers contributing $17,500 towards the settlement amount[129] - The Company intends to assert all legal and procedural defenses available in ongoing litigation matters, including environmental claims and stockholder lawsuits[126][129] Financial Ratios and Capital - As of March 31, 2022, the total capital to risk-weighted assets ratio was 23.90%, with total capital amounting to $264,964 million[155] - Tier 1 capital to risk-weighted assets ratio was 22.70%, with Tier 1 capital amounting to $251,148 million[155] - Common Equity Tier 1 capital to risk-weighted assets ratio was 22.70%, with Common Equity Tier 1 capital also at $251,148 million[155] Other Financial Activities - The company repurchased 268,623 common units for a total cost of $10,418,000 during the three months ended March 31, 2022, with a total of 6,520,868 common units repurchased since the program's inception[92] - The company declared cash distributions of approximately $2,408,000 to preferred unitholders for both the three months ended March 31, 2022, and 2021[94] - The company received forgiveness payments from the SBA totaling $114,843 million during the three months ended March 31, 2022[53] - The company acquired an interest in PCS-Mosaic Co-Invest L.P. for approximately $24,000 million on April 1, 2022[157]

Financial Risks - The company faces significant volatility in crude oil prices, which could materially affect its financial condition and results of operations[18]. - The company’s investment portfolio may suffer losses due to rising interest rates and market volatility[18]. - The company’s ability to meet obligations under its senior credit facility may be impacted by future cash flows and credit market volatility[18]. - Future cash flows may not be sufficient to meet obligations under the senior credit facility, which could materially affect the company's financial condition[85]. - Rising interest rates could negatively impact the company's investments and increase borrowing costs, affecting financial results[94]. - The company may experience losses in its investment portfolio, which could adversely affect its financial condition and liquidity[92]. - Economic downturns in sectors such as transportation and oil and gas exploration could materially harm the company's revenues and profitability[122]. Regulatory Compliance - The company is subject to extensive regulations, including environmental, health, and safety laws, which may require substantial compliance costs[69]. - The company may incur significant costs due to compliance with extensive regulations, including banking regulations[76]. - The company is subject to various regulatory compliance burdens, increasing its regulatory risk[81]. - The company may face increased regulatory scrutiny and potential enforcement actions due to violations by its Marketing Partners, which could adversely affect its business[83]. - Compliance with various international laws and regulations, including data privacy and labor relations, poses a risk of inadvertent breaches that could lead to fines and penalties[100]. - Regulatory compliance related to personal data protection, such as the GDPR, may increase operational costs and liability risks[110]. - WebBank's lending programs are subject to extensive federal and state regulations, which could impact liquidity and financial condition if not complied with[79]. - WebBank's lending practices face legal challenges that could affect its business model and compliance with state and federal regulations[115]. Operational Challenges - The company is exposed to risks related to climate change legislation, which could increase costs and reduce demand for its services in the Energy segment[73]. - The company maintains multiple sources of supply for major raw materials to mitigate dependence on a few suppliers, but higher commodity prices could disrupt supply and increase production costs[67]. - The company could face increased liability and costs due to labor disputes or unionization of its workforce and suppliers[18]. - Labor disruptions due to federal vaccine mandates could adversely affect business operations, especially in areas with low vaccination rates among employees[101]. - Labor disputes and potential unionization could result in work stoppages, impacting the company's ability to deliver products on time[112]. - The company experienced reduced customer demand for its products, which led to disruptions in manufacturing operations in 2020, although all facilities were operational at normal capacities by the end of 2021[133]. Financial Structure and Capital - As of December 31, 2021, the company had $321,000 available under its senior credit facility and $269,850 of outstanding indebtedness under this credit facility[85]. - The company may need to seek additional financing if cash needs exceed expectations or if market conditions deteriorate[86]. - The company may be required to infuse additional capital into WebBank if it fails to meet capital requirements set by regulatory bodies[116]. - SPLP could be required to infuse additional capital into WebBank if it fails to meet its capital requirements, potentially affecting SPLP's ability to meet other obligations[118]. - WebBank's minimum capital requirements include a 4.5% Common Equity Tier 1 ratio and a total capital ratio of 8%[117]. Management and Governance - The company has identified material weaknesses in its internal control over financial reporting, which could result in material misstatements in financial statements[124]. - The Management Fee is set at an annual rate of 1.5% of total partners' capital, which could significantly impact the Company's results of operations depending on performance and capital changes[138]. - The Partnership Agreement limits the voting rights of unitholders who acquire beneficial ownership of 10% or more of the common units without prior approval[132]. - The Company may issue additional common or preferred units without unitholder consent, potentially causing a decline in market prices due to perceived dilution risks[141]. - Transfer restrictions in the Company's Partnership Agreement may hinder the development of an active market for its common and preferred units, set to expire on February 7, 2023[142]. Taxation and Financial Implications - Changes in tax laws, including the U.S. Tax Cuts and Jobs Act, could adversely affect the Company's business operations and profitability[145]. - The Company operates under complex provisions of U.S. federal income tax law, which may lead to material adverse impacts on common unitholders due to potential modifications in the Partnership Agreement[149]. - If the Qualifying Income Exception is not available, the Company would be taxed as a corporation, significantly reducing profitability and affecting distributions to common unitholders[148]. - Tax-exempt entities may face U.S. federal income taxation on unrelated business taxable income (UBTI) from common units[151]. - Subsidiaries may not fully utilize their net operating losses (NOLs), potentially leading to increased cash tax payments in future periods[152]. - Valuation allowances are maintained against NOLs due to uncertainty in generating sufficient taxable income[153]. Workforce and Human Resources - Loss of essential employees could significantly negatively impact the company's business and financial condition[154]. - The company relies on a skilled workforce, which is in high demand, affecting its ability to operate efficiently[155]. - High employee turnover rates or widespread dissatisfaction could adversely affect the company's financial performance[155]. Cybersecurity - The company is subject to evolving cybersecurity threats, which could lead to operational disruptions and financial losses if systems are compromised[106]. - The company has implemented various cybersecurity measures, but the unpredictability of cyber threats remains a concern for its operational integrity[109]. COVID-19 Impact - The COVID-19 pandemic had significant adverse impacts on the company's consolidated financial results for the fiscal year ended December 31, 2020[128]. - The company continues to monitor and comply with COVID-19 guidelines, but has not experienced significant disruptions to its businesses as of the fiscal year ended December 31, 2021[127]. - The severity of the impact of the COVID-19 pandemic on the company's business in 2022 and beyond remains uncertain and depends on various factors[130].

Financial Performance - Revenue for the three months ended September 30, 2021 increased by $61,780, or 18.7%, compared to the same period last year, driven by higher sales volume across all segments due to economic recovery from COVID-19[194]. - Revenue for the nine months ended September 30, 2021 increased by $121,123, or 12.5%, compared to the same period last year, due to higher sales volume across all segments[194]. - Total revenue for the three months ended September 30, 2021 was $392,113 million, an increase of $61,780 million or 18.7% compared to the same period in 2020[211]. - Net income from continuing operations for the nine months ended September 30, 2021 was $102,875 million, compared to a net loss of $1,795 million in the same period of 2020[211]. Segment Performance - The Company operates through three segments: Diversified Industrial, Energy, and Financial Services, each with its own management team[177]. - Diversified Industrial net sales for the three months ended September 30, 2021 increased by $32,051 million, or 11.7%, primarily due to higher sales volume from Building Materials and Joining Material businesses[212]. - Energy net revenue for the three months ended September 30, 2021 increased by $23,484 million, or 104.9%, driven by higher rig hours due to increased demand from the energy sector[217]. - Financial Services revenue for the three months ended September 30, 2021 increased by $6,245 million, or 18.6%, primarily due to an increase in interest income and fees[220]. Adjusted EBITDA - Adjusted EBITDA for the three months ended September 30, 2021 was $72,491, an increase of $3,206 from $69,285 in the same period of 2020, primarily due to improved profitability from Diversified Industrials and Energy segments[209]. - Adjusted EBITDA for the nine months ended September 30, 2021 was $196,631, an increase of $49,974 from $146,657 in the same period of 2020, driven by improved profitability from both Diversified Industrial and Energy segments[210]. Costs and Expenses - Cost of goods sold for the three months ended September 30, 2021 increased by $32,186, or 14.6%, compared to the same period last year, mainly due to increases in the Diversified Industrial and Energy segments[195]. - Selling, general and administrative expenses for the three months ended September 30, 2021 increased by $13,006, or 19.3%, compared to the same period last year, primarily driven by higher sales volume[197]. - Interest expense for the three months ended September 30, 2021 decreased by $1,899, or 27.2%, compared to the same period last year, due to lower interest rates and lower average debt levels[200]. - The income tax provision for the three months ended September 30, 2021 was $6,428, compared to $13,533 for the same period in 2020, with an effective tax rate of 20.6%[206]. Cash Flow and Financing - Net cash provided by operating activities for the nine months ended September 30, 2021 was $58,884 million, a decrease of $237,346 million compared to the same period in 2020[231]. - Net cash provided by investing activities for the nine months ended September 30, 2021 was $1,340,547 million, significantly improved from a net cash used of $2,010,224 million in the same period of 2020[234]. - Net cash used in financing activities for the nine months ended September 30, 2021 was $1,402,274, including PPP loan repayments of $2,476,640 and net revolver payments of $63,013[236]. - Working capital increased to $495,689 as of September 30, 2021, compared to $286,302 as of December 31, 2020[243]. Compliance and Risk - The Company was in compliance with all financial covenants as of September 30, 2021, and expects to remain compliant for the next twelve months[239]. - The Company is in the process of refinancing its Credit Agreement, which is expected to be completed in Q4 2021[239]. - Goodwill related to the Electrical Products reporting unit was at risk of future impairment, with a carrying value of $46,445 as of September 30, 2021[246]. - The Company recorded a $1,100 charge for goodwill impairment in the Performance Materials reporting unit for the year ended December 31, 2020, with ongoing risks of further impairment[247]. COVID-19 Impact - WebBank anticipates significant economic disruption and loan performance deterioration due to the COVID-19 pandemic, impacting credit losses[180]. - The Company continues to monitor the impacts of COVID-19 on its operations and has initiated cost-reducing actions to mitigate financial impacts[183]. - The Company experienced sales growth during the second half of 2020 and continued this trend for the first three quarters of 2021[183].