Steel Partners(US:SPLP)2024-05-08 11:14Revenue Performance - Revenue for the three months ended March 31, 2024, increased by $30,975, or 7.0%, compared to the same period last year, driven by a $42,030 favorable impact from the consolidation of the Supply Chain segment and an 18.5% increase in the Financial Services segment [171]. - Total revenue for the three months ended March 31, 2024, was $476,346, an increase of 6.5% compared to $445,371 for the same period in 2023 [180]. - The Financial Services segment reported a revenue increase of $17,174, or 18.5%, contributing positively to overall revenue growth [171]. - Financial Services segment revenue increased by $17,174, or 18.5%, to $109,955 for the three months ended March 31, 2024, driven by higher interest income and fees [184]. - Energy segment net revenue decreased by $16,243, or 33.7%, to $31,921 for the three months ended March 31, 2024, primarily due to lower rig hours [183]. - Diversified Industrial segment net sales decreased by $11,986, or 3.9%, to $292,440 for the three months ended March 31, 2024, mainly due to lower sales volume in Tubing and Building Materials business units [181]. Expenses and Costs - Cost of goods sold for the same period increased by $12,863, or 4.9%, primarily due to the consolidation of the Supply Chain segment, partially offset by lower revenue volume from the Energy segment and lower sales from the Diversified Industrial segment [172]. - Selling, general and administrative expenses rose by $20,338, or 17.7%, mainly due to higher expenses in the Financial Services segment and the impact of the Supply Chain segment consolidation [173]. - Interest expense decreased significantly by $4,592, or 76.7%, due to lower average debt outstanding [174]. Net Income and Gains - Net income for the three months ended March 31, 2024, was $34,801, compared to $24,803 for the same period in 2023, reflecting improved operational performance [170]. - The Company recorded net gains of $4,068 for the three months ended March 31, 2024, compared to gains of $607 in the same period of 2023, attributed to mark-to-market adjustments on the securities portfolio [175]. - Net income for the three months ended March 31, 2024, was $34,801, compared to $24,803 for the same period in 2023, reflecting a year-over-year increase of 40.3% [180]. Tax and Financial Position - The effective tax rate for the three months ended March 31, 2024, was 23.8%, down from 33.7% in the same period last year, primarily due to tax incentives and the inclusion of Steel Connect tax attributes [177]. - The Company’s working capital decreased to $448,284 as of March 31, 2024, from $562,224 as of December 31, 2023 [195]. Cash Flow and Capital Expenditures - Cash provided by operating activities for the three months ended March 31, 2024, was $197,460, a significant improvement from cash used of $48,248 in the same period of 2023 [188]. - Capital expenditures for the three months ended March 31, 2024, were $10,066, compared to $10,708 for the same period in 2023 [195]. - The Company plans to continue capital expenditures in the range of $42,000 to $52,000 for the full year 2024, compared to $51,451 in 2023 [195]. Goodwill and Impairment - As of March 31, 2024, the goodwill for the Electrical Products reporting unit was $46,641 million, slightly down from $46,682 million as of December 31, 2023 [201]. - The fair value of the Electrical Products reporting unit exceeded its net book value by 11% as of December 1, 2023 [201]. - The Company did not identify indicators of impairment for the Electrical Products reporting unit as of March 31, 2024 [201]. - Goodwill at the Electrical Products reporting unit is at risk for future impairment if ongoing cash flow projections are not met [201]. Accounting Policies and Estimates - There were no material changes to critical accounting policies during the three months ended March 31, 2024 [202]. - Actual results could differ from estimates made in preparing the financial statements [202]. - There have been no material changes to quantitative and qualitative disclosures about market risk compared to the 2023 Annual Report [203].