Steel Partners Holdings LP (SPLP, Financial) released its earnings report for the third quarter ended September 30, 2023, revealing a mixed financial performance. The company reported a significant increase in revenue but faced a decline in net income and adjusted EBITDA. The earnings release date was November 9, 2023.
Financial Performance Overview
For the third quarter of 2023, SPLP reported a revenue of $492.3 million, marking a 15.6% increase from the same period in the prior year. However, net income for the quarter was $27.9 million, a decrease of 23.4% year-over-year. Net income attributable to common unitholders was $25.6 million, or $1.14 per diluted common unit. Adjusted EBITDA for the quarter decreased to $44.5 million from $60.2 million in the prior year, with an Adjusted EBITDA margin of 9.0%.
Year-to-date results also reflected a similar pattern. SPLP's revenue for the first nine months of 2023 was $1,438.6 million, up 13.0% from the previous year. However, net income decreased by 16.4% to $111.3 million. Adjusted EBITDA slightly decreased to $181.2 million from $183.8 million, with a margin of 12.6%.
Segment Performance and Challenges
The company's revenue growth was primarily driven by increased revenue in the Financial Services segment and the positive impact from the newly acquired Supply Chain segment. However, the Diversified Industrial and Energy segments experienced lower sales, impacting the overall profitability.
Cost of goods sold and selling, general, and administrative expenses both saw increases, contributing to the decline in net income. The company also faced higher provisions for credit losses and finance interest expenses, particularly in the Financial Services segment.
Liquidity and Capital Resources
As of September 30, 2023, SPLP had approximately $403.5 million in availability under its senior credit agreement, along with $356.3 million in cash and cash equivalents, excluding WebBank cash, and approximately $39.4 million in long-term investments. Total debt at quarter-end was $187.2 million, while net debt was $29.5 million.
Management Commentary
Steel Partners continues to deliver strong results driven by increased revenue in our Financial Services segment and favorable impact from the newly acquired Supply Chain segment," said Executive Chairman Warren Lichtenstein. "We have seen erosion of both income and EBITDA year over year, and our management team is focused on reducing costs and expenses. We continue to strategically deploy our capital, and we are thrilled to bring online our brand new, state-of-the-art plant for Lucas Milhaupt in Cudahy, Wisconsin, which is part of our Diversified Industrial segment."
Investor Considerations
While SPLP's revenue growth indicates robust sales performance, the decline in net income and EBITDA may concern investors. The company's efforts to reduce costs and expenses, along with strategic capital deployment, are key factors to watch in the coming quarters. Additionally, the new plant for Lucas Milhaupt could signal future growth in the Diversified Industrial segment.
For detailed financial tables and further information on SPLP's non-GAAP financial measures, readers are encouraged to view the full earnings release.
Investors and potential GuruFocus.com members interested in SPLP's financials can find comprehensive data and analysis on GuruFocus.com.
Explore the complete 8-K earnings release (here) from Steel Partners Holdings LP for further details.
