Steel Partners(SPLP) - 2021 Q3 - Quarterly Report

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].