Steel Connect Reports Fourth Quarter Fiscal 2022 Financial Results
Fourth Quarter 2022 Results
- Net revenue from continuing operations totaled $53.0 million, as compared to $47.7 million in the prior year.
- Net income from continuing operations was $2.9 million, as compared to net loss from continuing operations of $0.4 million in the prior year.
- Net income attributable to common stockholders was $0.8 million, as compared to net loss attributable to common stockholders of $11.6 million in the prior year.
- Adjusted EBITDA* was $4.7 million, as compared to $(2.5) million in the prior year.
- Net cash provided by operating activities was $2.1 million.
- Free Cash Flow* totaled $1.8 million.
- Total debt, net of unamortized discounts and issuance costs, was $11.0 million; Net Debt* totaled $(38.2) million.
Fiscal Year 2022 Financial Results
- Net revenue from continuing operations totaled $203.3 million, as compared to $226.3 million in the prior year.
- Net loss from continuing operations was $9.3 million, as compared to net loss from continuing operations of $11.8 million in the prior year.
- Net loss attributable to common stockholders was $13.1 million as compared to net loss attributable to common stockholders of $46.5 million in the prior year.
- Adjusted EBITDA* was $8.0 million, as compared to $6.3 million in the prior year.
- Net cash used in operating activities was $3.1 million.
- Free Cash Flow* totaled $(4.6) million.
SMYRNA, Tenn.--(BUSINESS WIRE)--Steel Connect, Inc. (the "Company") (NASDAQ: STCN) today announced financial results for its fourth quarter and fiscal year ended July 31, 2022.
Results of Operations
The financial information and discussion that follows below are for the Company's operations.
|
|
Three Months Ended July 31, |
|
Fiscal Year Ended July 31, |
||||||||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
(in thousands) |
||||||||||||||
Net revenue |
|
$ |
53,049 |
|
|
$ |
47,705 |
|
|
$ |
203,272 |
|
|
$ |
226,256 |
|
Net income (loss) from continuing operations |
|
|
2,909 |
|
|
|
(354 |
) |
|
|
(9,256 |
) |
|
|
(11,835 |
) |
Net income (loss) attributable to common stockholders |
|
$ |
767 |
|
|
$ |
(11,552 |
) |
|
$ |
(13,097 |
) |
|
$ |
(46,520 |
) |
Adjusted EBITDA* |
|
$ |
4,696 |
|
|
$ |
(2,491 |
) |
|
$ |
8,012 |
|
|
$ |
6,308 |
|
Adjusted EBITDA margin* |
|
|
8.9 |
% |
|
|
(5.2 |
)% |
|
|
3.9 |
% |
|
|
2.8 |
% |
Net cash provided by (used in) operating activities |
|
$ |
2,133 |
|
|
$ |
(3,147 |
) |
|
$ |
(3,134 |
) |
|
$ |
(8,110 |
) |
Additions to property and equipment |
|
|
(343 |
) |
|
|
(315 |
) |
|
|
(1,485 |
) |
|
|
(1,217 |
) |
Free cash flow* |
|
$ |
1,790 |
|
|
$ |
(3,462 |
) |
|
$ |
(4,619 |
) |
|
$ |
(9,327 |
) |
| * | See reconciliations of these non-GAAP measurements to the most directly comparable GAAP measures included in the financial tables. See also "Note Regarding Use of Non-GAAP Financial Measurements" below for the definitions of these non-GAAP measures. |
Results of Operations
Comparison of the Fourth Quarter and Fiscal Year Ended July 31, 2022 and 2021
|
Three Months Ended July 31, |
|
|
|
|
||
|
2022 |
|
2021 |
|
Fav (Unfav) ($) |
|
% Change |
|
(unaudited, $ in thousands) |
|
|
|
|
||
Net revenue |
$53,049 |
|
$47,705 |
|
$5,344 |
|
11.2% |
Cost of revenue |
(41,064) |
|
(39,290) |
|
(1,774) |
|
(4.5)% |
Gross profit |
11,985 |
|
8,415 |
|
3,570 |
|
42.4% |
Gross profit margin |
22.6% |
|
17.6% |
|
— |
|
5.0% |
Selling, general and administrative |
(11,474) |
|
(12,521) |
|
1,047 |
|
8.4% |
Interest expense |
(761) |
|
(702) |
|
(59) |
|
(8.4)% |
Other gains, net |
2,477 |
|
5,167 |
|
(2,690) |
|
(52.1)% |
Total costs and expenses |
(50,822) |
|
(47,346) |
|
(3,476) |
|
(7.3)% |
Income from continuing operations before income taxes |
2,227 |
|
359 |
|
1,868 |
|
520.3% |
Income tax (benefit) expense |
(682) |
|
713 |
|
1,395 |
|
195.7% |
Net income (loss) from continuing operations |
$2,909 |
|
$(354) |
|
$3,263 |
|
921.8% |
|
Fiscal Year Ended July 31, |
|
|
|
|
||
|
2022 |
|
2021 |
|
Fav (Unfav) ($) |
|
% Change |
|
(unaudited, $ in thousands) |
|
|
|
|
||
Net revenue |
$203,272 |
|
$226,256 |
|
(22,984) |
|
(10.2)% |
Cost of revenue |
(161,736) |
|
(178,552) |
|
16,816 |
|
9.4% |
Gross profit |
41,536 |
|
47,704 |
|
(6,168) |
|
(12.9)% |
Gross profit margin |
20.4% |
|
21.1% |
|
— |
|
(0.7)% |
Selling, general and administrative |
(40,373) |
|
(49,274) |
|
8,901 |
|
18.1% |
Interest expense |
(3,120) |
|
(2,615) |
|
(505) |
|
(19.3)% |
Other gains, net |
4,089 |
|
1,187 |
|
2,902 |
|
244.5% |
Total costs and expenses |
(201,140) |
|
(229,254) |
|
28,114 |
|
12.3% |
Income (loss) from continuing operations before income taxes |
2,132 |
|
(2,998) |
|
5,130 |
|
171.1% |
Income tax (benefit) expense |
11,388 |
|
8,837 |
|
(2,551) |
|
(28.9)% |
Net loss from continuing operations |
$(9,256) |
|
$(11,835) |
|
$2,579 |
|
21.8% |
Net Revenue
Net revenue from continuing operations for the fourth quarter increased $5.3 million, or 11.2%, as compared to the same period in the prior year. This increase in net revenue was primarily driven by higher volume associated with clients in the computing and consumer electronics markets. Fluctuations in foreign currency exchange rates had an insignificant impact on the Supply Chain segment's net revenues for the fourth quarter, as compared to the same period in the prior year.
Net revenue from continuing operations for the year ended July 31, 2022 decreased $23.0 million, or 10.2%, as compared to the same period in the prior year, primarily due to lower volume associated with clients in the computing and consumer electronics markets, which have been negatively impacted by global market shortage of semiconductor and other electrical component supplies. Fluctuations in foreign currency exchange rates had an insignificant impact on the Supply Chain segment's net revenues for the fiscal year ended July 31, 2022, as compared to the prior fiscal year.
Cost of Revenue
Cost of revenue from continuing operations for the fourth quarter increased $1.8 million, or 4.5%, as compared to the same period in the prior year, primarily due to increased material and labor costs from higher sales volume. The Company's gross margin percentage increased by 495 basis points to 22.6%, as compared to 17.6% for the same period in the prior year, primarily due to higher revenues driven by higher volumes. Fluctuations in foreign currency exchange rates had an insignificant impact on the Supply Chain segment's cost of revenue for the fourth quarter, as compared to the same period in the prior year.
Cost of revenue from continuing operations for the fiscal year ended July 31, 2022 decreased $16.8 million, or 9.4%, as compared to the same period in the prior year, primarily due to decreased material and labor costs from lower sales volume associated with clients in the computing and consumer electronics markets. The Company's gross margin percentage decreased by 70 basis points to 20.4%, as compared to 21.1% for the same period in the prior year, primarily due to lower revenues and higher labor costs. Fluctuations in foreign currency exchange rates had an insignificant impact on the Supply Chain segment's cost of revenue for the fiscal year ended July 31, 2022, as compared to the prior fiscal year.
Selling, General and Administrative
Selling, general and administrative ("SG&A") expenses for the fourth quarter decreased $1.0 million, or 8.4%, as compared to the same period in the prior year. The decrease in SG&A expenses is primarily due to lower costs associated with the information technology function for the Supply Chain segment. Fluctuations in foreign currency exchange rates had an insignificant impact on SG&A expenses for the fourth quarter, as compared to the same period in the prior year.
SG&A expenses for the fiscal year ended July 31, 2022 decreased by approximately $8.9 million or 18.1%, as compared to the same period in the prior year. Supply Chain's SG&A expenses decreased by $10.7 million primarily due to lower costs associated with the information technology function for the Supply Chain segment. Corporate-level activity increased by $1.8 million, primarily due to an increase in legal fees. Fluctuations in foreign currency exchange rates had an insignificant impact on SG&A expenses for the fiscal year ended July 31, 2022, as compared to the prior fiscal year.
Interest Expense
Total interest expense for the fourth quarter did not change significantly as compared to the same period in the prior year.
Total interest expense for the year ended July 31, 2022 increased by approximately $0.5 million primarily due to higher interest expense related to accretion of the discount on the Company’s outstanding 7.50% Convertible Note due March 1, 2024.
Other Gains, Net
Other gains, net for the fourth quarter were approximately $2.5 million. Other gains, net included gains of $0.9 million from the derecognition of accrued pricing liabilities in the Supply Chain segment, as well as net realized and unrealized foreign exchange gains of $1.3 million in the Supply Chain segment. Other gains, net for the three months ended July 31, 2021 were approximately $5.2 million, which included gains of $3.2 million from the derecognition of accrued pricing liabilities in the Supply Chain segment, and $1.7 million in net realized and unrealized foreign exchange gains in the Supply Chain segment.
Other gains, net for the fiscal year ended July 31, 2022 were approximately $4.1 million. Other gains, net, primarily included gains of $0.9 million from the derecognition of accrued pricing liabilities in the Supply Chain segment, as well as net realized and unrealized foreign exchange gains of $2.4 million and sublease income of $0.7 million in the Supply Chain segment. Other gains, net for the fiscal year ended July 31, 2021 were approximately $1.2 million. Other gains, net included gains of $3.2 million from the derecognition of accrued pricing liabilities in the Supply Chain segment, partially offset by $1.9 million in net realized and unrealized foreign exchange losses in the Supply Chain segment.
Income Tax (Benefit) Expense
Income tax benefit for the fourth quarter was $0.7 million, as compared to an expense of $0.7 million for the same period in the prior year. Income tax expense for the fiscal year ended July 31, 2022 increased $2.6 million, or 28.9%, as compared to the same period in the prior year. The decrease in income tax expense for the three months ended July 31, 2022 was primarily due to the change to the valuation allowance as a result of the IWCO Direct disposal. The increase in income tax expenses for the year ended July 31, 2022 is primarily due to the income tax expense associated with an increase in the valuation allowance recorded on deferred tax assets as a result of the IWCO Direct disposal.
Net Income (Loss) From Continuing Operations
Net income from continuing operations for the fourth quarter increased $3.3 million, as compared to net loss from continuing operations for the same period in the prior year. The increase in net income from continuing operations is primarily due to the increase in operating income due to higher sales.
Net loss from continuing operations for the year ended July 31, 2022 decreased $2.6 million, as compared to the same period in the prior year. The decrease in net loss from continuing operations is primarily due an increase in foreign exchange gains and an increase in operating income, partially offset by an increase in income taxes.
Additions to Property and Equipment (Capital Expenditures)
Capital expenditures for the fourth quarter totaled $0.3 million, or 0.6% of net revenue, as compared to $0.3 million, or 0.7% of net revenue, for the same period in the prior year. Capital expenditures increased to $1.5 million, or 0.7% of net revenue for the fiscal year ended July 31, 2022, from $1.2 million, or 0.5% of net revenue, for the same period in the prior year.
Adjusted EBITDA
Adjusted EBITDA increased $7.2 million, or 288.5%, for the fourth quarter as compared to the same period in the prior year, primarily due to an increase in net income from continuing operations of $3.3 million, and a decrease in foreign exchange net gains and other non-cash gains of $2.4 million and $1.6 million, respectively.
Adjusted EBITDA increased $1.7 million, or 27.0%, for the fiscal year ended July 31, 2022, as compared to the same period in the prior year, primarily due to a decrease in net loss from continuing operations of $2.6 million, increases in income taxes expense and professional fees of $2.6 million and $1.0 million, respectively, and a decrease in other non-cash gains of $1.5 million, partially offset by an increase in unrealized foreign exchange gains of $5.7 million for the full fiscal year.
Liquidity and Capital Resources
As of July 31, 2022, the Company had cash and cash equivalents of $53.1 million and ModusLink had readily available borrowing capacity of $11.9 million under its revolving credit facility with Umpqua Bank.
As of July 31, 2022, total debt outstanding, net of unamortized discounts and issuance costs, was $11.0 million, which was comprised of $14.9 million outstanding on the 7.50% Convertible Senior Note due March 1, 2024, less associated unamortized discounts and issuance costs.
About Steel Connect, Inc.
Steel Connect, Inc. is a holding company whose wholly-owned subsidiary, ModusLink Corporation, serves the supply chain management market.
ModusLink is an end-to-end global supply chain solutions and e-commerce provider serving clients in markets such as consumer electronics, communications, computing, medical devices, software and retail. ModusLink designs and executes critical elements in its clients' global supply chains to improve speed to market, product customization, flexibility, cost, quality and service. These benefits are delivered through a combination of industry expertise, innovative service solutions, and integrated operations, proven business processes, an expansive global footprint and world-class technology. ModusLink also produces and licenses an entitlement management solution powered by its enterprise-class Poetic software, which offers a complete solution for activation, provisioning, entitlement subscription, and data collection from physical goods (connected products) and digital products. ModusLink has an integrated network of strategically located facilities in various countries, including numerous sites throughout North America, Europe and Asia.
– Financial Tables Follow –
Steel Connect, Inc. and Subsidiaries |
||||||
Condensed Consolidated Balance Sheets |
||||||
(in thousands) |
||||||
|
July 31, 2022 |
|
July 31, 2021 |
|||
ASSETS |
|
|
|
|||
Current assets: |
|
|
|
|||
Cash and cash equivalents |
$ |
53,142 |
|
|
$ |
58,117 |
Accounts receivable, trade, net |
|
40,083 |
|
|
|
36,547 |
Inventories, net |
|
8,151 |
|
|
|
9,043 |
Funds held for clients |
|
4,903 |
|
|
|
8,212 |
Prepaid expenses and other current assets |
|
3,551 |
|
|
|
4,958 |
Current assets of discontinued operations |
|
— |
|
|
|
96,522 |
Total current assets |
|
109,830 |
|
|
|
213,399 |
Property and equipment, net |
|
3,534 |
|
|
|
4,616 |
Operating lease right-of-use assets |
|
19,655 |
|
|
|
18,253 |
Other assets |
|
4,730 |
|
|
|
5,692 |
Long-term assets of discontinued operations |
|
— |
|
|
|
434,421 |
Total assets |
$ |
137,749 |
|
|
$ |
676,381 |
|
|
|
|
|||
LIABILITIES, CONTINGENTLY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY |
|
|
|
|||
Current liabilities: |
|
|
|
|||
Accounts payable |
$ |
30,553 |
|
|
$ |
29,829 |
Accrued expenses |
|
28,396 |
|
|
|
32,653 |
Funds held for clients |
|
4,903 |
|
|
|
8,212 |
Current lease obligations |
|
6,466 |
|
|
|
9,630 |
Other current liabilities |
|
13,482 |
|
|
|
14,277 |
Current liabilities of discontinued operations |
|
— |
|
|
|
123,392 |
Total current liabilities |
|
83,800 |
|
|
|
217,993 |
Convertible note payable |
|
11,047 |
|
|
|
9,343 |
Long-term lease obligations |
|
12,945 |
|
|
|
8,719 |
Other long-term liabilities |
|
3,983 |
|
|
|
3,863 |
Long-term liabilities of discontinued operations |
|
— |
|
|
|
395,071 |
Total long-term liabilities |
|
27,975 |
|
|
|
416,996 |
Total liabilities |
|
111,775 |
|
|
|
634,989 |
|
|
|
|
|||
Contingently redeemable preferred stock |
|
35,180 |
|
|
|
35,180 |
|
|
|
|
|||
Total stockholders' (deficit) equity |
|
(9,206 |
) |
|
|
6,212 |
|
|
|
|
|||
Total liabilities, contingently redeemable preferred stock and stockholders' equity |
$ |
137,749 |
|
|
$ |
676,381 |
Steel Connect, Inc. and Subsidiaries |
|||||||||||||||
Condensed Consolidated Statements of Operations |
|||||||||||||||
(in thousands, except per share amounts) |
|||||||||||||||
|
Three Months Ended July 31, |
|
Fiscal Year Ended July 31, |
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net revenue |
$ |
53,049 |
|
|
$ |
47,705 |
|
|
$ |
203,272 |
|
|
$ |
226,256 |
|
Cost of revenue |
|
41,064 |
|
|
|
39,290 |
|
|
|
161,736 |
|
|
|
178,552 |
|
Gross profit |
|
11,985 |
|
|
|
8,415 |
|
|
|
41,536 |
|
|
|
47,704 |
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Selling, general and administrative |
|
11,474 |
|
|
|
12,521 |
|
|
|
40,373 |
|
|
|
49,274 |
|
Total operating expenses |
|
11,474 |
|
|
|
12,521 |
|
|
|
40,373 |
|
|
|
49,274 |
|
Operating income (loss) |
|
511 |
|
|
|
(4,106 |
) |
|
|
1,163 |
|
|
|
(1,570 |
) |
Other income (expense): |
|
|
|
|
|
|
|
||||||||
Interest income |
|
50 |
|
|
|
1 |
|
|
|
58 |
|
|
|
11 |
|
Interest expense |
|
(761 |
) |
|
|
(702 |
) |
|
|
(3,120 |
) |
|
|
(2,615 |
) |
Other gains, net |
|
2,427 |
|
|
|
5,166 |
|
|
|
4,031 |
|
|
|
1,176 |
|
Total other income (expense) |
|
1,716 |
|
|
|
4,465 |
|
|
|
969 |
|
|
|
(1,428 |
) |
Income (loss) from continuing operations before income taxes |
|
2,227 |
|
|
|
359 |
|
|
|
2,132 |
|
|
|
(2,998 |
) |
Income tax (benefit) expense |
|
(682 |
) |
|
|
713 |
|
|
|
11,388 |
|
|
|
8,837 |
|
Net income (loss) from continuing operations |
|
2,909 |
|
|
|
(354 |
) |
|
|
(9,256 |
) |
|
|
(11,835 |
) |
Net loss from discontinued operations |
|
(1,605 |
) |
|
|
(10,661 |
) |
|
|
(1,712 |
) |
|
|
(32,556 |
) |
Net income (loss) |
|
1,304 |
|
|
|
(11,015 |
) |
|
|
(10,968 |
) |
|
|
(44,391 |
) |
Less: Preferred dividends on redeemable preferred stock |
|
(537 |
) |
|
|
(537 |
) |
|
|
(2,129 |
) |
|
|
(2,129 |
) |
Net income (loss) attributable to common stockholders |
$ |
767 |
|
|
$ |
(11,552 |
) |
|
$ |
(13,097 |
) |
|
$ |
(46,520 |
) |
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common unit - basic |
|
|
|
|
|
|
|
||||||||
Continuing operations |
$ |
0.04 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.23 |
) |
Discontinued operations |
|
(0.03 |
) |
|
|
(0.17 |
) |
|
|
(0.03 |
) |
|
|
(0.52 |
) |
Net income (loss) attributable to common unitholders |
$ |
0.01 |
|
|
$ |
(0.18 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.75 |
) |
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per common unit - diluted |
|
|
|
|
|
|
|
||||||||
Continuing operations |
$ |
0.04 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.19 |
) |
|
$ |
(0.23 |
) |
Discontinued operations |
|
(0.03 |
) |
|
|
(0.17 |
) |
|
|
(0.03 |
) |
|
|
(0.52 |
) |
Net income (loss) attributable to common unitholders |
$ |
0.01 |
|
|
$ |
(0.18 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.75 |
) |
|
|
|
|
|
|
|
|
||||||||
Weighted-average number of common units outstanding - basic |
|
59,945 |
|
|
|
62,321 |
|
|
|
59,964 |
|
|
|
62,142 |
|
Weighted-average number of common units outstanding - diluted |
|
60,319 |
|
|
|
62,321 |
|
|
|
59,964 |
|
|
|
62,142 |
|
Steel Connect, Inc. and Subsidiaries |
|||||||
Condensed Consolidated Statements of Cash Flows |
|||||||
(in thousands) |
|||||||
|
Fiscal Year Ended July 31, |
||||||
|
|
2022 |
|
|
|
2021 |
|
Cash flows from operating activities: |
|
|
|
||||
Net loss |
$ |
(10,968 |
) |
|
$ |
(44,391 |
) |
Loss from discontinued operations, net of tax |
|
1,712 |
|
|
|
32,556 |
|
Loss from continuing operations |
|
(9,256 |
) |
|
|
(11,835 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
Depreciation |
|
2,220 |
|
|
|
3,403 |
|
Amortization of deferred financing costs |
|
102 |
|
|
|
137 |
|
Accretion of debt discount |
|
1,704 |
|
|
|
1,289 |
|
Share-based compensation |
|
701 |
|
|
|
591 |
|
Deferred taxes |
|
9,041 |
|
|
|
7,230 |
|
Non-cash lease expense |
|
9,425 |
|
|
|
9,953 |
|
Other (gains) losses, net |
|
(4,087 |
) |
|
|
439 |
|
Changes in operating assets and liabilities: |
|
|
|
||||
Accounts receivable, net |
|
(5,256 |
) |
|
|
13,548 |
|
Inventories, net |
|
323 |
|
|
|
1,628 |
|
Prepaid expenses and other current assets |
|
1,065 |
|
|
|
(484 |
) |
Accounts payable and accrued expenses |
|
801 |
|
|
|
(18,726 |
) |
Refundable and accrued income taxes, net |
|
(471 |
) |
|
|
15,667 |
|
Other assets and liabilities |
|
(9,446 |
) |
|
|
(30,950 |
) |
Net cash used in operating activities |
|
(3,134 |
) |
|
|
(8,110 |
) |
Cash flows from investing activities: |
|
|
|
||||
Additions to property and equipment |
|
(1,485 |
) |
|
|
(1,217 |
) |
Proceeds from the disposition of property and equipment |
|
— |
|
|
|
182 |
|
Net cash used in investing activities |
|
(1,485 |
) |
|
|
(1,035 |
) |
Cash flows from financing activities: |
|
|
|
||||
Payments of preferred dividends |
|
(2,129 |
) |
|
|
(2,129 |
) |
Payment of deferred financing costs |
|
(95 |
) |
|
|
||
Repayments on capital lease obligations |
|
(73 |
) |
|
|
(70 |
) |
Proceeds from issuance of common stock |
|
— |
|
|
|
4 |
|
Net cash used in financing activities |
|
(2,297 |
) |
|
|
(2,195 |
) |
Net effect of exchange rate changes on cash and cash equivalents |
|
(1,368 |
) |
|
|
597 |
|
Net increase in cash, cash equivalents and restricted cash |
|
(8,284 |
) |
|
|
(10,743 |
) |
Cash, cash equivalents and restricted cash, beginning of period |
|
66,329 |
|
|
|
77,072 |
|
Cash, cash equivalents and restricted cash, end of period |
$ |
58,045 |
|
|
$ |
66,329 |
|
|
|
|
|
||||
Cash flows from discontinued operations: |
|
|
|
||||
Operating activities |
$ |
(6,738 |
) |
|
$ |
31,176 |
|
Investing activities |
|
625 |
|
|
|
(2,291 |
) |
Financing activities |
|
4,230 |
|
|
|
(7,642 |
) |
Net cash (used in) provided by discontinued operations |
$ |
(1,883 |
) |
|
$ |
21,243 |
|
Steel Connect, Inc. and Subsidiaries |
|||||||||||||||
Segment Data |
|||||||||||||||
(in thousands) |
|||||||||||||||
|
Three Months Ended July 31, |
|
Fiscal Year Ended July 31, |
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
(Unaudited) |
|
|
|
|
||||||||||
Net revenue: |
|
|
|
|
|
|
|
||||||||
Supply Chain |
$ |
53,049 |
|
|
$ |
47,705 |
|
|
$ |
203,272 |
|
|
$ |
226,256 |
|
|
$ |
53,049 |
|
|
$ |
47,705 |
|
|
$ |
203,272 |
|
|
$ |
226,256 |
|
Operating income (loss): |
|
|
|
|
|
|
|
||||||||
Supply Chain |
|
5,424 |
|
|
|
(2,745 |
) |
|
|
11,318 |
|
|
|
6,827 |
|
Total segment operating income (loss) |
|
5,424 |
|
|
|
(2,745 |
) |
|
|
11,318 |
|
|
|
6,827 |
|
Corporate-level activity |
|
(4,913 |
) |
|
|
(1,361 |
) |
|
|
(10,155 |
) |
|
|
(8,397 |
) |
Total operating income (loss) |
|
511 |
|
|
|
(4,106 |
) |
|
|
1,163 |
|
|
|
(1,570 |
) |
Total other income (expense) |
|
1,716 |
|
|
|
4,465 |
|
|
|
969 |
|
|
|
(1,428 |
) |
Income (loss) before income taxes |
$ |
2,227 |
|
|
$ |
359 |
|
|
$ |
2,132 |
|
|
$ |
(2,998 |
) |
Steel Connect, Inc. and Subsidiaries |
|||||||||||||||
Reconciliation of Non-GAAP Measures to GAAP Measures |
|||||||||||||||
(in thousands) |
|||||||||||||||
(unaudited) |
|||||||||||||||
EBITDA and Adjusted EBITDA Reconciliations: |
|||||||||||||||
|
Three Months Ended July 31, |
|
Fiscal Year Ended July 31, |
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income (loss) from continuing operations |
$ |
2,909 |
|
|
$ |
(354 |
) |
|
$ |
(9,256 |
) |
|
$ |
(11,835 |
) |
|
|
|
|
|
|
|
|
||||||||
Interest income |
|
(50 |
) |
|
|
(1 |
) |
|
|
(59 |
) |
|
|
(11 |
) |
Interest expense |
|
761 |
|
|
|
702 |
|
|
|
3,120 |
|
|
|
2,615 |
|
Income tax (benefit) expense |
|
(682 |
) |
|
|
713 |
|
|
|
11,388 |
|
|
|
8,837 |
|
Depreciation |
|
522 |
|
|
|
783 |
|
|
|
2,220 |
|
|
|
3,403 |
|
EBITDA |
|
3,460 |
|
|
|
1,843 |
|
|
|
7,413 |
|
|
|
3,009 |
|
|
|
|
|
|
|
|
|
||||||||
Strategic consulting and other related professional fees |
|
1,834 |
|
|
|
164 |
|
|
|
2,343 |
|
|
|
1,294 |
|
Executive severance and employee retention |
|
81 |
|
|
|
— |
|
|
|
495 |
|
|
|
— |
|
Restructuring and restructuring-related expense |
|
539 |
|
|
|
837 |
|
|
|
1,513 |
|
|
|
1,755 |
|
Share-based compensation |
|
182 |
|
|
|
153 |
|
|
|
701 |
|
|
|
596 |
|
Loss on sale of long-lived assets |
|
— |
|
|
|
(110 |
) |
|
|
3 |
|
|
|
(113 |
) |
Impairment of long-lived assets |
|
— |
|
|
|
19 |
|
|
|
— |
|
|
|
19 |
|
Unrealized foreign exchange (gains) losses, net |
|
(626 |
) |
|
|
(3,065 |
) |
|
|
(3,557 |
) |
|
|
2,118 |
|
Other non-cash (gains) losses, net |
|
(774 |
) |
|
|
(2,332 |
) |
|
|
(899 |
) |
|
|
(2,370 |
) |
Adjusted EBITDA |
$ |
4,696 |
|
|
$ |
(2,491 |
) |
|
$ |
8,012 |
|
|
$ |
6,308 |
|
|
|
|
|
|
|
|
|
||||||||
Net revenue |
$ |
53,049 |
|
|
$ |
47,705 |
|
|
$ |
203,272 |
|
|
$ |
226,256 |
|
Adjusted EBITDA margin |
|
8.9 |
% |
|
|
(5.2 |
)% |
|
|
3.9 |
% |
|
|
2.8 |
% |
Free Cash Flow Reconciliation: |
|||||||||||||||
|
Three Months Ended July 31, |
|
Fiscal Year Ended July 31, |
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net cash provided by (used in) operating activities |
$ |
2,133 |
|
|
$ |
(3,147 |
) |
|
$ |
(3,134 |
) |
|
$ |
(8,110 |
) |
Additions to property and equipment |
|
(343 |
) |
|
|
(315 |
) |
|
|
(1,485 |
) |
|
|
(1,217 |
) |
Free cash flow |
$ |
1,790 |
|
|
$ |
(3,462 |
) |
|
$ |
(4,619 |
) |
|
$ |
(9,327 |
) |
Net Debt Reconciliation: |
|||||||
|
July 31, 2022 |
|
July 31, 2021 |
||||
Total debt, net |
$ |
10,968 |
|
|
$ |
9,147 |
|
Unamortized discounts and issuance costs |
|
3,972 |
|
|
|
5,793 |
|
Cash and cash equivalents |
|
(53,142 |
) |
|
|
(58,117 |
) |
Net debt |
$ |
(38,202 |
) |
|
$ |
(43,177 |
) |
Note Regarding Use of Non-GAAP Financial Measurements
In addition to the financial measures prepared in accordance with generally accepted accounting principles, the Company uses EBITDA, Adjusted EBITDA, Free Cash Flow and Net Debt, all of which are non-GAAP financial measures, to assess its performance. EBITDA represents earnings (loss) from continuing operations before interest income, interest expense, income tax expense, depreciation and amortization of intangible assets. We define Adjusted EBITDA as net income (loss) from continuing operations excluding net charges related to interest income, interest expense, income tax expense (benefit), depreciation, strategic consulting and other related professional fees, executive severance and employee retention, restructuring and restructuring-related expense, share-based compensation, (gain) loss on sale of long-lived assets, impairment of long-lived assets, unrealized foreign exchange (gains) losses, net, and other non-cash (gains) losses, net.
Contacts
Investor Relations Contact
Jennifer Golembeske
914-461-1276
investorrelations@steelconnectinc.com
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Editor Details
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Company:
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