8-K: Steel Partners Holdings Reports Strong 2024 Results, Driven by Strategic Acquisitions and Operational Efficiencies

Steel Partners Holdings L.P. announces increased revenue and net income for 2024, fueled by strategic acquisitions and the implementation of the Steel Business System.

Summary

• Steel Partners Holdings L.P. reported increased revenue and net income for the year ended December 31, 2024.
• Revenue increased to $2 billion, compared to $1.9 billion in 2023.
• Income before income taxes and equity method investments was $223.5 million, compared with $161.2 million in 2023.
• Net income attributable to the Company's common unitholders was $261.6 million, or $11.38 per diluted common unit, compared with $150.8 million, or $6.43 per diluted common unit in 2023.
• Adjusted EBITDA was $303 million in 2024, compared to $240.6 million in 2023.
• As of December 31, 2024, total debt was $119.7 million and net cash totaled $62.2 million, an increase of $5.9 million compared to December 31, 2023.
• The book value per unit was $59.36 on December 31, 2024, compared to $45.01 as of December 31, 2023.
• The company repurchased 2,360,634 common units for $109.4 million in 2024.
• From January 1, 2025 through March 3, 2025, the Company repurchased 1,999 common units for $0.08 million.
• The company repurchased 589,693 preferred units for $14.4 million from January 1, 2024 through March 3, 2025.
• Steel Partners now owns over 90% of the outstanding common stock of Steel Connect.
• ModusLink, a division of Steel Connect, is now a standalone business unit within Steel Partners.

Sentiment

Score: 8

Explanation: The document presents a positive outlook with strong financial results, strategic acquisitions, and a focus on long-term value creation. The company's commitment to its core values and community engagement further enhances the positive sentiment.

Positives

• Revenue and net income increased significantly in 2024.
• Adjusted EBITDA showed substantial growth.
• The company successfully reduced its net pension liability from $46.2 million to $10.5 million.
• Strategic acquisitions, such as Steel Connect, were completed.
• Several business units, including Dunmore and HandyTube, achieved record performance.
• WebBank continues to deliver strong financial results and is recognized for its workplace culture.
• The Steel Business System is driving efficiency and continuous improvement across the organization.
• Steel Sports is making a positive impact on youth through its programs.
• The company is actively repurchasing common and preferred units, indicating confidence in its financial position.

Negatives

• ITC experienced significant reductions in the Automotive and Agriculture market segments due to economic conditions and the UAW strike.
• Steel Energy experienced a moderate downturn in activity levels due to merger and acquisition activity among Top-Tier Oil and Gas operators.
• DMC Global board of directors has rejected Steel Partners' offers to acquire the company.

Risks

• Economic downturns could disrupt the company's business.
• Volatility in crude oil and commodity prices poses a risk.
• Rising interest rates could negatively impact financial performance.
• Pension plan obligations could require future cash flow.
• Compliance with legal and regulatory requirements is essential.
• Risks associated with WebBank's FDIC status and lending programs exist.
• The company's ability to meet obligations under its senior credit facility is crucial.
• Losses in the investment portfolio could impact financial results.
• The company faces risks inherent to conducting business outside of the U.S.
• The loss of significant customer contracts could adversely affect profitability.
• The company's tax treatment and its subsidiaries' ability to utilize tax benefits are important.

Future Outlook

Steel Partners remains committed to creating long-term value for its stakeholders through operational excellence, strategic growth, and disciplined capital allocation, with a focus on the Steel Business System and the Kids First purpose.

Management Comments

• Our commitment to innovation, operational excellence, and strategic acquisitions has driven our success, enabling us to deliver consistent value to our stakeholders.
• The Steel Way is the foundation of our culture and the driving force behind our success.
• We intend to continue to make strategic investments in public and private companies where we believe we can create value over long periods of time.

Industry Context

Steel Partners' diversified portfolio allows it to navigate various industry trends, with specific units benefiting from growth in aerospace, data centers, and fintech. The company's strategic investments in DMC Global, XP Power, and Green Dot Corp reflect its active approach to capitalizing on opportunities in different sectors.

Comparison to Industry Standards

• WebBank's pre-tax return on equity of 32.1% and a pre-tax return on assets of 5.2% in 2024 are strong compared to industry averages for banks of similar size.
• Dunmore's record profitability, driven by margin expansion and volume growth, indicates a strong competitive position compared to other companies in the performance-coated films industry.
• HandyTube's successful operational turnaround and expansion into aerospace applications demonstrate its ability to adapt and compete effectively in the seamless tubing market, similar to companies like Sandvik and Tenaris.
• Steel Sports' impact on nearly 100,000 kids and its focus on character development through youth sports position it as a leader in the social impact sector, comparable to organizations like the YMCA and Boys & Girls Clubs of America.

Management Changes

Stakeholder Impact

• Shareholders benefit from increased revenue, net income, and unit repurchases.
• Employees benefit from the SteelGrow initiative and a positive workplace culture.
• Customers benefit from improved products and services through operational excellence.
• Communities benefit from Steel Sports' youth programs and community engagement.

Next Steps

• Continue to focus on operational excellence and strategic growth.
• Make strategic investments in public and private companies.
• Continue to implement the Steel Business System across all business units.
• Further develop the SteelGrow initiative for employee engagement and talent development.
• Continue to support the Kids First purpose through Steel Sports and community engagement.

Key Dates