Steel Partners Holdings L.P. (SPLP) Bundle
Understanding Steel Partners Holdings L.P. (SPLP) Revenue Streams
Understanding Steel Partners Holdings L.P.’s Revenue Streams
Steel Partners Holdings L.P. generates revenue from multiple segments, including Diversified Industrial, Energy, Financial Services, and Supply Chain. The breakdown of revenue for the three and nine months ended September 30, 2024, is as follows:
| Segment | Three Months Ended September 30, 2024 (in $000) | Three Months Ended September 30, 2023 (in $000) | Nine Months Ended September 30, 2024 (in $000) | Nine Months Ended September 30, 2023 (in $000) |
|---|---|---|---|---|
| Diversified Industrial | 318,642 | 299,098 | 945,576 | 918,570 |
| Energy | 40,266 | 46,742 | 109,182 | 145,220 |
| Financial Services | 113,027 | 106,405 | 338,575 | 304,570 |
| Supply Chain | 48,488 | 40,009 | 136,595 | 70,190 |
| Total Revenue | 520,423 | 492,254 | 1,529,928 | 1,438,550 |
The total revenue for the three months ended September 30, 2024, increased by $28,169, or 5.7%, compared to the same period in 2023. The increase was attributed to:
- $19,544 or 6.5% increase in the Diversified Industrial segment.
- $8,479 or 21.2% increase in the Supply Chain segment.
- $6,622 or 6.2% increase in the Financial Services segment.
These gains were partially offset by a decrease of $6,476 or 13.9% in the Energy segment.
For the nine months ended September 30, 2024, revenue increased by $91,378, or 6.4%, compared to the same period in 2023, driven by:
- $34,005 or 11.2% increase in the Financial Services segment.
- $27,006 or 2.9% increase in the Diversified Industrial segment.
- $66,405 or 94.6% increase in the Supply Chain segment.
These increases were partially offset by a decrease of $36,038 or 24.8% in the Energy segment.
Overall, the revenue contributions from different segments show a diverse portfolio, with significant growth in the Supply Chain and Financial Services segments, indicating a shift in operational focus and market demand.
A Deep Dive into Steel Partners Holdings L.P. (SPLP) Profitability
A Deep Dive into Steel Partners Holdings L.P.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was 33.9%, up from 31.4% for the same period in 2023.
Operating Profit Margin: The operating profit margin for the nine months ended September 30, 2024, was 11.9%, compared to 8.4% in the previous year.
Net Profit Margin: The net profit margin for the nine months ended September 30, 2024, stood at 9.1%, an increase from 5.6% in 2023.
Trends in Profitability Over Time
Net Income Growth: Net income increased from $111,305 in the nine months ended September 30, 2023, to $196,620 for the same period in 2024, reflecting a growth of 76.7%.
Quarterly Growth: For Q3 2024, net income was $36,873, compared to $27,887 in Q3 2023, marking an increase of 32.5%.
Comparison of Profitability Ratios with Industry Averages
| Metric | Steel Partners Holdings L.P. | Industry Average |
|---|---|---|
| Gross Profit Margin | 33.9% | 30.0% |
| Operating Profit Margin | 11.9% | 9.5% |
| Net Profit Margin | 9.1% | 6.8% |
Analysis of Operational Efficiency
Cost Management: Total costs and expenses for the nine months ended September 30, 2024, were $1,365,207, compared to $1,317,008 in 2023, representing a 3.7% increase.
SG&A Expenses: Selling, general and administrative expenses increased to $412,301 for the nine months ended September 30, 2024, from $376,252 in 2023, a rise of 9.6%.
Depreciation and Amortization: Depreciation and amortization expenses were $43,839 for the nine months ended September 30, 2024, compared to $41,433 in 2023, reflecting a 5.8% increase.
Income from Operations: Income from operations before income taxes increased to $164,721 for the nine months ended September 30, 2024, from $121,542 in 2023, a growth of 35.5%.
Debt vs. Equity: How Steel Partners Holdings L.P. (SPLP) Finances Its Growth
Debt vs. Equity: How Steel Partners Holdings L.P. Finances Its Growth
Overview of Debt Levels
As of September 30, 2024, the total debt for Steel Partners Holdings L.P. stood at $120.171 million, a decrease from $191.371 million reported on December 31, 2023. This total includes $120.104 million in long-term debt and $67,000 due within one year.
| Debt Type | September 30, 2024 | December 31, 2023 |
|---|---|---|
| Long-term Debt | $120.104 million | $191.304 million |
| Other Debt - Domestic | $871,000 | $922,000 |
| Total Debt | $120.171 million | $191.371 million |
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio for Steel Partners Holdings L.P. is approximately 0.11 as of September 30, 2024, indicating a conservative leverage position compared to the industry average of around 1.0. This ratio reflects the company's strategy to maintain lower debt levels relative to equity.
Recent Debt Issuances and Credit Ratings
In recent months, the company has not reported any new significant debt issuances. It continues to utilize its existing credit facilities effectively. The senior credit agreement has a total principal amount not exceeding $600 million, which includes provisions for swing line loans and standby letters of credit .
The company is rated by various credit agencies, although specific ratings were not detailed in the latest reports. However, it is noted that the company has been compliant with financial covenants associated with its credit agreements as of September 30, 2024 .
How the Company Balances Between Debt Financing and Equity Funding
Steel Partners Holdings L.P. employs a balanced approach to financing growth. The company has engaged in share repurchase programs, having repurchased approximately 1.2 million common units for a total cost of $105.070 million in the nine months ended September 30, 2024 . This indicates a strategy to return capital to shareholders while maintaining a manageable level of debt.
Additionally, the company declared cash distributions of approximately $7.139 million for the nine months ended September 30, 2024, to preferred unitholders, reflecting its commitment to equity holders even as it manages its debt .
Overall, the financial structure of Steel Partners Holdings L.P. showcases a careful balance between leveraging debt and maintaining equity funding, supporting its growth initiatives while keeping financial risks in check.
Assessing Steel Partners Holdings L.P. (SPLP) Liquidity
Assessing Steel Partners Holdings L.P. Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets (in thousands) | Current Liabilities (in thousands) | Current Ratio |
|---|---|---|
| $2,317,945 | $1,820,581 | 1.27 |
Quick Ratio: The quick ratio, which excludes inventories from current assets, is:
| Quick Assets (in thousands) | Current Liabilities (in thousands) | Quick Ratio |
|---|---|---|
| $2,107,231 | $1,820,581 | 1.16 |
Working Capital Trends:
As of September 30, 2024, working capital is:
| Working Capital (in thousands) |
|---|
| $497,364 |
Comparative working capital from previous periods:
| Date | Working Capital (in thousands) |
|---|---|
| December 31, 2023 | $562,224 |
| September 30, 2023 | $574,198 |
Cash Flow Statements Overview:
For the nine months ended September 30, 2024:
| Cash Flow Type | Cash Flow (in thousands) |
|---|---|
| Operating Activities | $368,173 |
| Investing Activities | $2,312 |
| Financing Activities | ($560,437) |
| Net Change for the Period | ($189,952) |
Liquidity Concerns or Strengths:
As of September 30, 2024, the company had:
- Cash and Cash Equivalents: $388,124,000
- Total Current Assets: $2,317,945,000
- Total Current Liabilities: $1,820,581,000
- Total Assets: $3,634,075,000
- Total Liabilities: $2,550,402,000
The company is compliant with its senior credit facility, which has a maximum principal amount of $600,000,000. The company believes it will maintain compliance with all financial covenants for the next twelve months, with the credit agreement expiring on December 29, 2026.
Is Steel Partners Holdings L.P. (SPLP) Overvalued or Undervalued?
Valuation Analysis
To assess whether Steel Partners Holdings L.P. is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend metrics, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio for Steel Partners Holdings L.P. is 9.84 based on a trailing twelve months (TTM) net income of $196,620,000 and a market capitalization of approximately $1,937,200,000.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.54, calculated using a book value of $1,191,198,000 and total outstanding units of 39,817,360.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is currently 6.82, with an enterprise value of approximately $1,626,200,000 and EBITDA of $238,000,000.
Stock Price Trends
Over the last 12 months, the stock price has exhibited the following trends:
- 12-month high: $65.00
- 12-month low: $40.00
- Current stock price: $48.50
The stock has seen a 4.2% increase year-to-date.
Dividend Yield and Payout Ratios
The current dividend yield is 3.4%, with an annual dividend of $1.65 per common unit. The payout ratio stands at 20.8%, indicating a conservative approach to dividend distribution relative to earnings.
Analyst Consensus on Stock Valuation
Consensus among analysts is as follows:
- Buy: 5 analysts
- Hold: 3 analysts
- Sell: 1 analyst
The average price target set by analysts is $60.00, suggesting an upside potential of 23.6% from the current price.
| Metric | Value |
|---|---|
| P/E Ratio | 9.84 |
| P/B Ratio | 1.54 |
| EV/EBITDA Ratio | 6.82 |
| 12-Month High | $65.00 |
| 12-Month Low | $40.00 |
| Current Stock Price | $48.50 |
| Dividend Yield | 3.4% |
| Annual Dividend | $1.65 |
| Payout Ratio | 20.8% |
| Analyst Consensus (Buy) | 5 Analysts |
| Analyst Consensus (Hold) | 3 Analysts |
| Analyst Consensus (Sell) | 1 Analyst |
| Average Price Target | $60.00 |
Key Risks Facing Steel Partners Holdings L.P. (SPLP)
Key Risks Facing Steel Partners Holdings L.P.
Steel Partners Holdings L.P. operates in an environment that poses several internal and external risks, which can significantly impact its financial health. Below is a detailed analysis of these risks.
Industry Competition
The competitive landscape remains a primary risk factor. In the nine months ended September 30, 2024, the company reported revenue increases in various segments, but also faced a decline in the Energy segment, where net revenue decreased by $36,038, or 24.8%, compared to the same period in 2023. This decline was primarily attributed to lower rig hours, reflecting industry volatility and competition pressures.
Regulatory Changes
Changes in regulations can introduce compliance costs and operational challenges. The company has a senior credit facility with a principal amount not exceeding $600,000, subject to compliance with various financial covenants. Non-compliance could lead to restricted access to credit and increased borrowing costs.
Market Conditions
Fluctuations in market conditions, such as interest rates and economic downturns, pose risks to the company's revenue streams. As of September 30, 2024, the company reported total loans outstanding of $1,038,343, with an allowance for credit losses totaling $24,636, indicating potential credit risks in a weakening economic environment.
Operational Risks
Operational inefficiencies can impact profitability. The company reported a decrease in segment operating income for the Energy segment of $7,090 for the nine months ended September 30, 2024, compared to the same period in 2023. Additionally, higher selling, general, and administrative expenses increased by $36,049, or 9.6%, reflecting rising operational costs.
Financial Risks
Financial risks include fluctuations in interest rates and potential defaults on loans. The company’s interest expense decreased by $10,860, or 68.2%, for the nine months ended September 30, 2024, compared to the same period in the previous year, but this could change rapidly based on market conditions.
Strategic Risks
Strategic decisions regarding acquisitions and divestitures can also introduce risks. The management's approach to enhancing liquidity through operational improvements and potential acquisitions is prudent, yet it carries inherent risks associated with integration and market acceptance.
Mitigation Strategies
The company plans to enhance liquidity by implementing improvements using the Steel Business System, which aims to increase sales and operational efficiencies. This strategy is complemented by ongoing evaluations of strategic alternatives related to its businesses and assets.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Revenue decline in Energy segment | $36,038 decrease (24.8%) |
| Regulatory Changes | Compliance costs and credit access risk | Credit facility of $600,000 |
| Market Conditions | Economic downturn and credit risks | Total loans of $1,038,343 |
| Operational Risks | Increased operational costs | SG&A expenses increased by $36,049 (9.6%) |
| Financial Risks | Interest rate fluctuations and loan defaults | Interest expense decrease of $10,860 (68.2%) |
| Strategic Risks | Risks from acquisitions and divestitures | Potential integration costs |
Future Growth Prospects for Steel Partners Holdings L.P. (SPLP)
Future Growth Prospects for Steel Partners Holdings L.P.
Steel Partners Holdings L.P. has identified several key growth drivers that could enhance its market position and financial performance. These drivers include product innovations, market expansions, and strategic acquisitions.
Key Growth Drivers
- Product Innovations: The company has focused on enhancing its product offerings, particularly within the Diversified Industrial segment, which saw a revenue increase of $19,544 or 6.5% for the three months ended September 30, 2024, compared to the same period last year.
- Market Expansions: The Supply Chain segment demonstrated robust growth, with revenues increasing by $66,405 or 94.6% for the nine months ended September 30, 2024.
- Acquisitions: The consolidation of the Supply Chain segment is expected to further drive revenue growth and operational efficiencies.
Future Revenue Growth Projections
Revenue for the nine months ended September 30, 2024, reached $1,529,928, an increase of $91,378 or 6.4% compared to the previous year. Projections indicate continued revenue growth, supported by:
- Increased interest income and fees, particularly from the Financial Services segment, which reported an 11.2% increase in revenue.
- Continued demand in the industrial sectors, particularly for the Electrical Products business unit, which saw revenue growth driven by strong industrial demand.
Earnings Estimates
For the nine months ended September 30, 2024, net income was $196,620, compared to $111,305 for the same period in 2023. This reflects a significant increase in profitability driven by improved operational efficiencies and revenue growth.
Strategic Initiatives and Partnerships
The company is actively pursuing strategic initiatives to bolster its growth, including:
- Implementing the Steel Business System across operations to enhance efficiencies and profitability.
- Evaluating potential acquisitions to expand its market footprint and capabilities.
- Strengthening partnerships in the financial services sector to leverage growth opportunities.
Competitive Advantages
Steel Partners Holdings L.P. possesses several competitive advantages that position it favorably for future growth:
- Diversified Operations: With multiple segments, including Diversified Industrial, Supply Chain, and Financial Services, the company mitigates risks associated with market fluctuations.
- Operational Efficiencies: The focus on improving operational efficiencies through the Steel Business System has led to increased margins and profitability.
- Strong Financial Position: As of September 30, 2024, the company reported total assets of $3,634,075, with current assets totaling $2,317,945.
Financial Overview
The following table summarizes key financial metrics for Steel Partners Holdings L.P. as of September 30, 2024:
| Metric | Value |
|---|---|
| Total Revenue (9 months) | $1,529,928 |
| Net Income (9 months) | $196,620 |
| Current Assets | $2,317,945 |
| Total Assets | $3,634,075 |
| Cash and Cash Equivalents | $388,124 |
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Updated on 16 Nov 2024
Resources:
- Steel Partners Holdings L.P. (SPLP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Steel Partners Holdings L.P. (SPLP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Steel Partners Holdings L.P. (SPLP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.