Steel Connect Reports Fourth Quarter Fiscal 2023 Financial Results
Fourth Quarter 2023 Results
- Net revenue from continuing operations totaled $40.8 million, as compared to $53.0 million in the prior year.
- Net income from continuing operations was $8.1 million, as compared to $2.9 million in the prior year.
- Net income attributable to common stockholders was $7.6 million, as compared to $0.8 million in the prior year.
- Adjusted EBITDA* was $10.6 million, as compared to $4.7 million in the prior year.
- Net cash provided by operating activities was $8.5 million.
- Free Cash Flow* totaled $5.3 million.
- Total debt was $12.5 million; Net Debt* totaled $(108.9) million.
Fiscal Year 2023 Financial Results
- Net revenue from continuing operations totaled $189.1 million, as compared to $203.3 million in the prior year.
- Net income from continuing operations was $15.6 million, as compared to net loss from continuing operations of $9.3 million in the prior year.
- Net income attributable to common stockholders was $13.5 million as compared to net loss attributable to common stockholders of $13.1 million in the prior year.
- Adjusted EBITDA* was $27.7 million, as compared to $8.0 million in the prior year.
- Net cash used in operating activities was $17.5 million.
- Free Cash Flow* totaled $15.4 million.
Other Developments
- On June 21, 2023 the previously announced reverse/forward stock split was effective. The split effected a 1-for-3,500 reverse stock split of the common stock (the “Reverse Stock Split”), followed immediately by a 375-for-1 forward stock split of the common stock (the “Forward Stock Split,” and, together with the Reverse Stock Split, the “Reverse/Forward Stock Split”). Accordingly, all share and per-share amounts for the current period and prior periods have been adjusted to reflect the Reverse/Forward Stock Split.
- As of July 31, 2023, the Company had disposed of all its interest in Aerojet common stock. The majority of Aerojet common stock was purchased when L3 Harris closed its merger with Aerojet. The Company received total net proceeds of $207.8 million in exchange for all of its Aerojet shares. As of July 31, 2023, the Company had received $53.3 million in cash and had a receivable of $154.5 million for proceeds receivable, which was received in August 2023.
NEW YORK--(BUSINESS WIRE)--Steel Connect, Inc. (the "Company") (NASDAQ: STCN) today announced financial results for its fourth quarter and fiscal year ended July 31, 2023.
Results of Operations
The financial information and discussion that follows below are for the Company's operations. References herein to the "three months ended July 31, 2023" or the "fourth quarter" are the Successor period, May 1, 2023 through July 31, 2023. References herein to the “fiscal year ended July 31, 2023” or the “fiscal year 2023” combine the operational results before and after May 1, 2023 to enhance the comparability of such information to the prior fiscal year.
The Company elected to apply pushdown accounting as of May 1, 2023 as a result of the Exchange Transaction (the "Exchange Transaction") with Steel Partners ("Steel Partners", "SPLP"). The application of pushdown accounting uses Steel Partners' basis of accounting, which reflects the fair market value of the Company’s assets and liabilities at the date of the Exchange Transaction. As a result, the Company has reflected the required pushdown accounting adjustments in its consolidated financial statements. Due to the application of pushdown accounting, the Company’s consolidated financial statements include a black line division between the two distinct periods to indicate the application of two different bases of accounting, which may not be comparable, between the periods presented. The pre-exchange period through April 30, 2023 is referred to as the "Predecessor" period. The post-exchange period, May 1, 2023 through July 31, 2023, includes the impact of pushdown accounting and is referred to as the "Successor" period.
| Successor |
| Predecessor |
| Predecessor |
| Combined- |
| Predecessor | |||||
|
Three Months
|
|
Three Months
|
|
August 1, 2022
|
|
Period from
|
|
Fiscal Year
| |||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2023 |
|
| 2022 |
| (in thousands) | |||||||||||||
Net revenue | $ | 40,804 |
| $ | 53,049 |
| $ | 148,283 |
| $ | 189,087 |
| $ | 203,272 |
Net income (loss) from continuing operations |
| 8,149 |
|
| 2,909 |
|
| 7,460 |
|
| 15,609 |
|
| (9,256) |
Net income (loss) attributable to common stockholders | $ | 7,612 |
| $ | 767 |
| $ | 5,867 |
| $ | 13,480 |
| $ | (13,097) |
Adjusted EBITDA* | $ | 10,560 |
| $ | 4,696 |
| $ | 17,145 | $ | 27,706 |
| $ | 8,012 | |
Adjusted EBITDA margin* |
| 25.9 % |
|
| 8.9 % |
|
| 11.6 % |
|
| 14.7 % |
|
| 3.9 % |
Net cash provided by (used in) operating activities | $ | 8,523 |
| $ | 2,133 |
| $ | 9,000 |
| $ | 17,523 |
| $ | (3,134) |
Additions to property and equipment |
| (807) |
|
| (343) |
|
| (1,311) |
|
| (2,118) |
|
| (1,485) |
Free cash flow* | $ | 5,250 |
| $ | 1,790 |
| $ | 7,689 |
| $ | 15,405 |
| $ | (4,619) |
* 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, 2023 and 2022
|
Three Months Ended
|
|
|
|
| |||||
|
| 2023 |
|
| 2022 |
| Fav (Unfav) ($) |
| % Change | |
| (unaudited, $ in thousands) |
|
|
|
| |||||
Net revenue | $ | 40,804 |
| $ | 53,049 |
| $ | (12,245) |
| (23.1)% |
Cost of revenue |
| (29,749) |
|
| (41,064) |
|
| 11,315 |
| 27.6% |
Gross profit |
| 11,055 |
|
| 11,985 |
|
| (930) |
| (7.8)% |
Gross profit margin |
| 27.1% |
|
| 22.6% |
|
| — |
| 4.5% |
Selling, general and administrative |
| (8,523) |
|
| (11,474) |
|
| 2,951 |
| 25.7% |
Amortization |
| (911) |
|
| — |
|
| (911) |
| (100.0)% |
Interest expense |
| (265) |
|
| (761) |
|
| 496 |
| 65.2% |
Other gains, net |
| 6,395 |
|
| 2,477 |
|
| 3,918 |
| 158.2% |
Total costs and expenses |
| (33,053) |
|
| (50,822) |
|
| 17,769 |
| 35.0% |
Income from continuing operations before income taxes |
| 7,751 |
|
| 2,227 |
|
| 5,524 |
| 248.0% |
Income tax benefit |
| 398 |
|
| 682 |
|
| (284) |
| (41.6)% |
Net income from continuing operations | $ | 8,149 |
| $ | 2,909 |
| $ | 5,240 |
| 180.1% |
|
Fiscal Year Ended
|
|
|
|
| |||||
|
| 2023 |
|
| 2022 |
| Fav (Unfav) ($) |
| % Change | |
| (unaudited, $ in thousands) |
|
|
|
| |||||
Net revenue | $ | 189,087 |
| $ | 203,272 |
|
| (14,185) |
| (7.0)% |
Cost of revenue |
| (137,780) |
|
| (161,736) |
|
| 23,956 |
| 14.8% |
Gross profit |
| 51,307 |
|
| 41,536 |
|
| 9,771 |
| 23.5% |
Gross profit margin |
| 27.1% |
|
| 20.4% |
|
| — |
| 6.7% |
Selling, general and administrative |
| (41,986) |
|
| (40,373) |
|
| (1,613) |
| (4.0)% |
Amortization |
| (911) |
|
| — |
|
| (911) |
| (100.0)% |
Interest expense |
| (2,853) |
|
| (3,120) |
|
| 267 |
| 8.6% |
Other gains, net |
| 11,284 |
|
| 4,089 |
|
| 7,195 |
| 176.0% |
Total costs and expenses |
| (172,246) |
|
| (201,140) |
|
| 28,894 |
| 14.4% |
Income from continuing operations before income taxes |
| 16,841 |
|
| 2,132 |
|
| 14,709 |
| 689.9% |
Income tax expense |
| (1,232) |
|
| (11,388) |
|
| 10,156 |
| 89.2% |
Net income (loss) from continuing operations | $ | 15,609 |
| $ | (9,256) |
| $ | 24,865 |
| 268.6% |
Net Revenue
Net revenue from continuing operations for the fourth quarter decreased $12.2 million, or 23.1%, as compared to the same period in the prior year. This decrease in net revenue was primarily driven by lower volumes associated with clients in the computing and consumer electronics markets. Also contributing to the decrease was the exit of a customer in the medical devices electronics market. 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 fiscal year ended July 31, 2023 decreased $14.2 million, or 7.0%, as compared to the same period in the prior year, primarily driven by lower volumes, lower demand and loss of certain programs in the medical devices electronics markets. Fluctuations in foreign currency exchange rates had an insignificant impact on the net revenue for the combined fiscal year ended July 31, 2023, as compared to the same period in the prior year.
Cost of Revenue
Cost of revenue from continuing operations for the fourth quarter decreased $11.3 million, or 27.6%, as compared to the same period in the prior year, primarily due to a $9.9 million decrease in materials procured on behalf of clients as a result of lower sales volume. The Company's gross margin percentage increased by 450 basis points to 27.1%, as compared to 22.6% for the same period in the prior year, primarily due to a higher percentage of value added revenue in comparison to total net revenue. 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, 2023 decreased $24.0 million, or 14.8%, as compared to the same period in the prior year, primarily due to a $22.4 million decrease in materials procured on behalf of clients. The Company's gross margin percentage increased by 670 basis points to 27.1% from 20.4% in the fiscal year ended July 31, 2023, primarily due to an increase in value added revenue of $8.2 million, driven by clients in the computing and consumer electronics markets. 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, 2023, as compared to the prior fiscal year.
Selling, General and Administrative
Selling, general and administrative ("SG&A") expenses for the fourth quarter decreased $3.0 million, or 25.7%, as compared to the same period in the prior year. The decrease in SG&A expenses is primarily due to lower Corporate-activity costs of $3.2 million, as a result of the majority of the Corporate-activity costs associated with the Exchange Transaction being incurred prior to the fourth quarter in fiscal year 2023. 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, 2023 increased by approximately $1.6 million or 4.0%, as compared to the same period in the prior year, primarily due to Corporate-level activity. Corporate-level activity increased by $1.3 million, primarily due to an increase in professional and legal fees related to the Exchange Transaction. Fluctuations in foreign currency exchange rates had an insignificant impact on SG&A expenses for the fiscal year ended July 31, 2023, as compared to the prior fiscal year.
Amortization Expense
Amortization expense for the fourth quarter and for the fiscal year ended July 31, 2023 was $0.9 million and was driven by the recognition of intangible assets in connection with the application of pushdown accounting as a result of the Exchange Transaction. The Exchange Transaction closed on May 1, 2023, and as such, there was no activity for the fourth quarter or fiscal year ended July 31, 2022.
Interest Expense
Total interest expense for the fourth quarter decreased by $0.5 million or 65.2% as compared to the same period in the prior year. The decrease is a result of no discount amortization booked to interest expense on the Company’s outstanding 7.50% Convertible Note due September 1, 2024 (the "SPHG Note") in the fourth quarter. As a result of the Exchange Transaction, the Company will measure the SPHG Note at fair value on a recurring basis prospectively.
Total interest expense for the fiscal year ended July 31, 2023 remained relatively flat compared to the fiscal year ended July 31, 2022.
Other Gains, Net
Other gains, net for the fourth quarter were approximately $6.4 million. Other gains, net included gains of $5.1 million realized gains on the disposition of the Aerojet shares received in the Exchange Transaction, as well as $0.7 million of interest income received on money market funds. Other gains, net for the three months ended July 31, 2022 were approximately $2.5 million, which included gains of $0.9 million from the derecognition of accrued pricing liabilities in the Supply Chain segment, and $1.3 million in net realized and unrealized foreign exchange gains in the Supply Chain segment.
Other gains, net for the fiscal year ended July 31, 2023 and the fiscal year ended July 31, 2022 were $11.3 million and $4.1 million, respectively. Other gains, net for the fiscal year ended July 31, 2023 was primarily due to: (1) $5.1 million realized gains on the disposition of the Aerojet shares received in the Exchange Transaction, (2) $2.3 million gain from proceeds received from the sale of an investment in Tallan, Inc., (3) $1.6 million interest income on money market funds, (4) $1.4 million settlement with a client, and (5) $1.0 million sublease income. This activity was partially offset by $0.5 million unrealized loss on the fair value remeasurement of the SPHG Note. Other gains, net for the fiscal year ended July 31, 2022 included: (1) net realized and unrealized foreign exchange gains of $2.4 million, (2) gains of $0.9 million from the derecognition of accrued pricing liabilities, and (3) $0.7 million of sublease income.
Income Tax Benefit (Expense)
Income tax benefit for the fourth quarter was $0.4 million, as compared to $0.7 million for the same period in the prior year. Income tax expense for the fiscal year ended July 31, 2023 decreased $10.2 million, or 89.2%, as compared to the same period in the prior year. The change in income tax benefit for the three months ended July 31, 2023 as compared to the prior year period was primarily due to the mix of earnings from our U.S. and foreign jurisdictions. The decrease in income tax expense for the fiscal year ended July 31, 2023 is primarily due to the income tax benefit incurred during the fiscal year ended July 31, 2022 associated with an increase in the valuation allowance recorded on deferred tax assets as a result of the IWCO Direct disposal.
Net Income From Continuing Operations
Net income from continuing operations for the fourth quarter increased $5.2 million, as compared to the same period in the prior year. The increase in net income from continuing operations is primarily due to: (1) increase in other gains, net of $3.9 million and (2) lower SG&A expenses of $3.0 million. This activity was partially offset by (1) $0.3 million unfavorable change in income tax benefit and (2) $0.9 million in amortization expense incurred in the fourth quarter as a result of pushdown accounting, with no comparable activity in the prior year period. See above explanation for further details.
Net income from continuing operations for the year ended July 31, 2023 increased $24.9 million, as compared to the same period in the prior year. The increase in net income from continuing operations is primarily due to: (1) $9.8 million increase in gross profit primarily driven by lower cost of materials and an increase in value added revenue, (2) $7.2 million increase in other gains, net, and (3) $10.2 million decrease in income tax expense. This activity was partially offset by $1.6 million increase in SG&A expenses and $0.9 million in amortization expense incurred as a result of pushdown accounting, with no comparable activity in the prior year period.. See above explanations for further details.
Additions to Property and Equipment (Capital Expenditures)
Capital expenditures for the fourth quarter totaled $0.8 million, or 2.0% of net revenue, as compared to $0.3 million, or 0.6% of net revenue, for the same period in the prior year. Capital expenditures increased to $2.1 million, or 1.1% of net revenue for the fiscal year ended July 31, 2023, from $1.5 million, or 0.7% of net revenue, for the same period in the prior year.
Adjusted EBITDA
Adjusted EBITDA increased $5.9 million, or 124.9%, for the fourth quarter as compared to the same period in the prior year, primarily due to (1) an increase in net income from continuing operations of $5.2 million, (2) a $1.4 million change from $0.6 million unrealized foreign exchange gains to $0.7 million unrealized foreign exchange losses, and (3) $0.9 million in amortization expense recognized in the fourth quarter as a result of intangible assets booked as part of pushdown accounting. This activity was partially offset by (1) $0.7 million increase in interest income, (2) $0.6 million decrease in restructuring-related expenses due to disposition of IWCO in fiscal 2022, and $0.5 million decrease in interest expense.
Adjusted EBITDA increased $19.7 million, or 245.8%, for the fiscal year ended July 31, 2023, as compared to the same period in the prior year, primarily due to: (1) an increase in net income from continuing operations of $24.9 million, (2) a $7.9 million change from unrealized foreign exchange gains of $3.6 million to $4.3 million unrealized foreign exchange losses, and (3) a $3.7 million increase in strategic consulting and other related professional fees, primarily due to the Exchange Transaction with SPLP. This activity was partially offset by (1) a decrease in income tax expense of $10.2 million, (2) increases in other non-cash gains of $3.1 million, (3) increases in interest income of $1.6 million and (4) decreases of $1.5 million in restructuring-related expenses.
Liquidity and Capital Resources
As of July 31, 2023, the Company had cash and cash equivalents of $121.4 million and ModusLink Corporation ("ModusLink") had readily available borrowing capacity of $11.9 million under its revolving credit facility with Umpqua Bank.
As of July 31, 2023, total debt outstanding was $12.5 million, which was the fair value of the 7.50% Convertible Senior Note due September 1, 2024.
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) | ||||
| Successor | Predecessor | ||
| July 31, 2023 | July 31, 2022 | ||
ASSETS |
|
| ||
Current assets: |
|
| ||
Cash and cash equivalents | $ | 121,372 | $ | 53,142 |
Accounts receivable, trade, net |
| 28,616 |
| 40,083 |
Inventories, net |
| 8,569 |
| 8,151 |
Funds held for clients |
| 2,031 |
| 4,903 |
Prepaid expenses and other current assets |
| 158,686 |
| 3,551 |
Total current assets |
| 319,274 |
| 109,830 |
Property and equipment, net |
| 3,698 |
| 3,534 |
Operating lease right-of-use assets |
| 27,098 |
| 19,655 |
Other intangible assets, net |
| 34,589 |
| — |
Goodwill |
| 22,785 |
| — |
Other assets |
| 3,737 |
| 4,730 |
Total assets | $ | 411,181 | $ | 137,749 |
|
|
| ||
LIABILITIES, CONTINGENTLY REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY | ||||
Current liabilities: |
|
| ||
Accounts payable | $ | 26,514 | $ | 30,553 |
Accrued expenses |
| 26,774 |
| 28,396 |
Funds held for clients |
| 1,949 |
| 4,903 |
Current lease obligations |
| 7,973 |
| 6,466 |
Other current liabilities |
| 4,544 |
| 13,482 |
Total current liabilities |
| 67,754 |
| 83,800 |
Convertible note payable |
| 12,461 |
| 11,047 |
Long-term lease obligations |
| 19,161 |
| 12,945 |
Other long-term liabilities |
| 5,442 |
| 3,983 |
Total long-term liabilities |
| 37,064 |
| 27,975 |
Total liabilities |
| 104,818 |
| 111,775 |
|
|
| ||
Contingently redeemable preferred stock |
|
| ||
Series C contingently redeemable preferred stock |
| 35,006 |
| 35,180 |
Series E contingently redeemable preferred stock |
| 202,733 |
| — |
Total contingently redeemable preferred stock |
| 237,739 |
| 35,180 |
|
|
| ||
Total stockholders' equity (deficit) |
| 68,624 |
| (9,206) |
Total liabilities, contingently redeemable preferred stock and stockholders' equity | $ | 411,181 | $ | 137,749 |
Steel Connect, Inc. and Subsidiaries | ||||||||||||||
Condensed Consolidated Statements of Operations | ||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||
|
|
| (Unaudited) |
|
|
| (Unaudited) |
|
| |||||
| Successor |
| Predecessor |
| Predecessor |
| Combined- |
| Predecessor | |||||
|
Three Months
|
|
Three Months
|
|
August 1, 2022
|
|
Period from
|
|
Fiscal Year
| |||||
|
| 2023 |
|
| 2022 |
|
| 2023 |
|
| 2023 |
|
| 2022 |
|
|
|
|
|
|
|
|
|
| |||||
Net revenue | $ | 40,804 |
| $ | 53,049 |
| $ | 148,283 |
| $ | 189,087 |
| $ | 203,272 |
Cost of revenue |
| 29,749 |
|
| 41,064 |
|
| 108,031 |
|
| 137,780 |
|
| 161,736 |
Gross profit |
| 11,055 |
|
| 11,985 |
|
| 40,252 |
|
| 51,307 |
|
| 41,536 |
Operating expenses: |
|
|
|
|
|
|
|
|
| |||||
Selling, general and administrative |
| 8,523 |
|
| 11,474 |
|
| 33,463 |
|
| 41,986 |
|
| 40,373 |
Amortization |
| 911 |
|
| — |
|
| — |
|
| 911 |
|
| — |
Total operating expenses |
| 9,434 |
|
| 11,474 |
|
| 33,463 |
|
| 42,897 |
|
| 40,373 |
Operating income |
| 1,621 |
|
| 511 |
|
| 6,789 |
|
| 8,410 |
|
| 1,163 |
Other income (expense): |
|
|
|
|
|
|
|
|
| |||||
Interest income |
| 707 |
|
| 50 |
|
| 928 |
|
| 1,635 |
|
| 58 |
Interest expense |
| (265) |
|
| (761) |
|
| (2,588) |
|
| (2,853) |
|
| (3,120) |
Other gains, net |
| 5,688 |
|
| 2,427 |
|
| 3,961 |
|
| 9,649 |
|
| 4,031 |
Total other income |
| 6,130 |
|
| 1,716 |
|
| 2,301 |
|
| 8,431 |
|
| 969 |
Income from continuing operations before income taxes |
| 7,751 |
|
| 2,227 |
|
| 9,090 |
|
| 16,841 |
|
| 2,132 |
Income tax (benefit) expense |
| (398) |
|
| (682) |
|
| 1,630 |
|
| 1,232 |
|
| 11,388 |
Net income (loss) from continuing operations |
| 8,149 |
|
| 2,909 |
|
| 7,460 |
|
| 15,609 |
|
| (9,256) |
Net loss from discontinued operations |
| — |
|
| (1,605) |
|
| — |
|
| — |
|
| (1,712) |
Net income (loss) |
| 8,149 |
|
| 1,304 |
|
| 7,460 |
|
| 15,609 |
|
| (10,968) |
Less: Preferred dividends on redeemable preferred stock |
| (537) |
|
| (537) |
|
| (1,593) |
|
| (2,129) |
|
| (2,129) |
Net income (loss) attributable to common stockholders | $ | 7,612 |
| $ | 767 |
| $ | 5,867 |
| $ | 13,480 |
| $ | (13,097) |
|
|
|
|
|
|
|
|
|
| |||||
Basic net income (loss) per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
| |||||
Continuing operations | $ | 0.29 |
| $ | 0.37 |
| $ | 0.91 |
| $ | 0.52 |
| $ | (1.77) |
Discontinued operations |
| — |
|
| (0.25) |
|
| — |
|
| — |
|
| (0.27) |
Basic net income (loss) per share | $ | 0.29 |
| $ | 0.12 |
| $ | 0.91 |
| $ | 0.52 |
| $ | (2.04) |
|
|
|
|
|
|
|
|
|
| |||||
Diluted net income (loss) per share attributable to common stockholders: |
|
|
|
|
|
|
|
|
| |||||
Continuing operations | $ | 0.29 |
| $ | 0.37 |
| $ | 0.89 |
| $ | 0.52 |
| $ | (1.77) |
Discontinued operations |
| — |
|
| (0.25) |
|
| — |
|
| — |
|
| (0.27) |
Diluted net income (loss) per share | $ | 0.29 |
| $ | 0.12 |
| $ | 0.89 |
| $ | 0.52 |
| $ | (2.04) |
|
|
|
|
|
|
|
|
|
| |||||
Weighted-average number of common units outstanding - basic |
| 6,177 |
|
| 6,423 |
|
| 6,449 |
|
| 6,027 |
|
| 6,425 |
Weighted-average number of common units outstanding - diluted |
| 27,960 |
|
| 6,463 |
|
| 8,417 |
|
| 25,894 |
|
| 6,425 |
Steel Connect, Inc. and Subsidiaries | ||||||
Condensed Consolidated Statements of Cash Flows | ||||||
(in thousands) | ||||||
| Successor | Predecessor | ||||
|
May 1 to
|
August 1, 2022
|
Fiscal Year
| |||
|
| 2023 |
| 2023 |
| 2022 |
Cash flows from operating activities: |
|
|
| |||
Net income (loss) | $ | 8,149 | $ | 7,460 | $ | (10,968) |
Loss from discontinued operations, net of tax |
| — |
| — |
| 1,712 |
Income (loss) from continuing operations |
| 8,149 |
| 7,460 |
| (9,256) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
| |||
Depreciation |
| 456 |
| 1,427 |
| 2,220 |
Amortization of intangible assets |
| 911 |
| — |
| — |
Amortization of deferred financing costs |
| — |
| 36 |
| 102 |
Accretion of debt discount |
| — |
| 1,688 |
| 1,704 |
Share-based compensation |
| 236 |
| 529 |
| 701 |
Deferred taxes |
| (250) |
| — |
| 9,041 |
Non-cash lease expense |
| 2,208 |
| 6,760 |
| 9,425 |
Bad debt expense (recovery) |
| (297) |
| 1,136 |
| (5) |
Other (gains) losses, net |
| (5,687) |
| (3,962) |
| (4,087) |
Non-cash impact of application of pushdown accounting |
| 8,079 |
| — |
| — |
Changes in operating assets and liabilities: |
|
|
| |||
Accounts receivable, net |
| 8,409 |
| 2,933 |
| (5,251) |
Inventories, net |
| (1,567) |
| 1,440 |
| 323 |
Prepaid expenses and other current assets |
| 905 |
| (1,237) |
| 1,065 |
Accounts payable and accrued expenses |
| (1,690) |
| (3,886) |
| 801 |
Refundable and accrued income taxes, net |
| (214) |
| (829) |
| (471) |
Other assets and liabilities |
| (11,125) |
| (4,495) |
| (9,446) |
Net cash provided by (used in) operating activities |
| 8,523 |
| 9,000 |
| (3,134) |
Cash flows from investing activities: |
|
|
| |||
Additions to property and equipment |
| (807) |
| (1,311) |
| (1,485) |
Proceeds from the disposition of property and equipment |
| 1 |
| 166 |
| — |
Proceeds from the sale of securities |
| 53,644 |
| 1,881 |
| — |
Net cash provided by (used in) investing activities |
| 52,838 |
| 736 |
| (1,485) |
Cash flows from financing activities: |
|
|
| |||
Series C redeemable preferred stock dividend payments |
| (537) |
| (1,593) |
| (2,129) |
Payment of deferred financing costs |
| — |
| (149) |
| (95) |
Repayments on capital lease obligations |
| — |
| (38) |
| (73) |
Repayments on debt |
| (1,000) |
| (1,000) |
| — |
Payments for fractional shares resulting from the Reverse/Forward stock split |
| (2,288) |
| — |
| — |
Net cash used in financing activities |
| (3,825) |
| (2,780) |
| (2,297) |
Net effect of exchange rate changes on cash and cash equivalents |
| (29) |
| 895 |
| (1,368) |
Net increase (decrease) in cash, cash equivalents and restricted cash |
| 57,507 |
| 7,851 |
| (8,284) |
Cash, cash equivalents and restricted cash, beginning of period |
| 65,896 |
| 58,045 |
| 66,329 |
Cash, cash equivalents and restricted cash, end of period | $ | 123,403 | $ | 65,896 | $ | 58,045 |
|
|
|
| |||
Cash flows from discontinued operations: |
|
|
| |||
Operating activities | $ | — | $ | — | $ | (6,738) |
Investing activities |
| — |
| — |
| 625 |
Financing activities |
| — |
| — |
| 4,230 |
Net cash (used in) provided by discontinued operations | $ | — | $ | — | $ | (1,883) |
Contacts
Investor Relations
Jennifer Golembeske
914-461-1276
investorrelations@steelconnectinc.com
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Editor Details
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Company:
- Businesswire
