PharmiWeb.com - Global Pharma News & Resources
10-Mar-2021

Steel Connect Reports Second Quarter Financial Results

Second Quarter 2021 Results

  • Net revenue totaled $156.0 million, as compared to $215.5 million in the prior year
  • Net loss was $2.2 million, as compared to a loss of $3.6 million in the prior year
  • Net loss attributable to common stockholders was $2.7 million, as compared to a loss of $4.1 million in the prior year
  • Adjusted EBITDA* was $21.2 million, as compared to $22.5 million in the prior year
  • Net cash used in operating activities was $20.5 million
  • Free Cash Flow* totaled $(21.6) million
  • Total debt, net of unamortized discounts and issuance costs, was $376.9 million; Net Debt* totaled $296.3 million

Six-Month Financial Results

  • Net revenue totaled $326.0 million, as compared to $440.6 million in the prior year
  • Net loss was $5.7 million, as compared to income of $1.2 million in the prior year
  • Net loss attributable to common stockholders was $6.8 million, as compared to income of $0.2 million in the prior year
  • Adjusted EBITDA* was $43.7 million, as compared to $45.4 million in the prior year
  • Net cash provided by operating activities was $5.2 million
  • Free Cash Flow* totaled $3.0 million

SMYRNA, Tenn.--(BUSINESS WIRE)--Steel Connect, Inc. (the "Company") (NASDAQ: STCN) today announced financial results for its second quarter ended January 31, 2021.

 

 

Three Months Ended
January 31,

 

Six Months Ended
January 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

(in thousands)

Net revenue

 

$

156,047

 

 

$

215,452

 

 

$

325,981

 

 

$

440,605

 

Net (loss) income

 

 

(2,196

)

 

 

(3,557

)

 

 

(5,747

)

 

 

1,235

 

Net (loss) income attributable to common stockholders

 

 

(2,726

)

 

 

(4,088

)

 

 

(6,814

)

 

 

168

 

Adjusted EBITDA*

 

 

21,211

 

 

 

22,532

 

 

 

43,747

 

 

 

45,365

 

Adjusted EBITDA margin*

 

 

13.6

%

 

 

10.5

%

 

 

13.4

%

 

 

10.3

%

Net cash (used in) provided by operating activities

 

 

(20,541

)

 

 

(7,537

)

 

 

5,186

 

 

 

14,873

 

Additions to property and equipment

 

 

1,101

 

 

 

6,298

 

 

 

2,160

 

 

 

10,370

 

Free cash flow*

 

 

(21,642

)

 

 

(13,835

)

 

 

3,026

 

 

 

4,503

 

*

 

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.

The Company continues to evaluate the global risks and the slowdown in business activity related to COVID-19, including the potential impacts on its employees, customers, suppliers and financial results. The severity of the impact on the Company's business for the remainder of calendar 2021 and beyond will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic, the extent and severity of the impact on the Company's customers and suppliers, the continued disruption to demand for our businesses' products and services, and the impact of the global business and economic environment on liquidity and the availability of capital, all of which are uncertain and cannot be predicted. The Company continues to focus on cash management and liquidity, which includes reduction of discretionary spending, aggressive working capital management, strict approvals for capital expenditures and other actions. The Company will evaluate further actions if circumstances warrant.

Results of Operations

Comparison of the Second Quarter and Six Months Ended January 31, 2021 and 2020

 

Three Months Ended
January 31,

 

Six Months Ended
January 31,

 

2021

 

2020

 

2021

 

2020

 

(unaudited, in thousands)

Net revenue:

 

 

 

 

 

 

 

Products

$

91,155

 

 

$

123,117

 

 

$

196,863

 

 

$

256,120

 

Services

 

64,892

 

 

 

92,335

 

 

 

129,118

 

 

 

184,485

 

Total net revenue

 

156,047

 

 

 

215,452

 

 

 

325,981

 

 

 

440,605

 

Cost of revenue

 

120,197

 

 

 

170,203

 

 

 

249,663

 

 

 

351,110

 

Gross profit margin

 

23.0

%

 

 

21.0

%

 

 

23.4

%

 

 

20.3

%

Selling, general and administrative

 

21,810

 

 

 

31,165

 

 

 

48,668

 

 

 

53,392

 

Amortization of intangible assets

 

5,359

 

 

 

6,911

 

 

 

11,894

 

 

 

14,188

 

Interest expense

 

7,825

 

 

 

8,733

 

 

 

15,648

 

 

 

17,902

 

All other expenses, net

 

2,161

 

 

 

809

 

 

 

4,160

 

 

 

235

 

Total costs and expenses

 

37,155

 

 

 

47,618

 

 

 

80,370

 

 

 

85,717

 

(Loss) income before income taxes

 

(1,305

)

 

 

(2,369

)

 

 

(4,052

)

 

 

3,778

 

Income tax expense

 

891

 

 

 

1,188

 

 

 

1,695

 

 

 

2,543

 

Net (loss) income

$

(2,196

)

 

$

(3,557

)

 

$

(5,747

)

 

$

1,235

 

Net Revenue

Total net revenue for the second quarter decreased $59.4 million, or 27.6%, as compared to the same period in the prior year. Net revenue for the Direct Marketing segment decreased by $32.0 million, primarily driven by lower volume, partially offset by a higher average price per package mailed. Within the Supply Chain segment, net revenues decreased by $27.4 million due to lower volume.

Total net revenue for the six months ended January 31, 2021 decreased $114.6 million, or 26.0%, as compared to the same period in the prior year. Net revenue for the Direct Marketing segment decreased by $59.3 million, primarily driven by lower volume, partially offset by a higher average price per package mailed. Within the Supply Chain segment, net revenues decreased by $55.4 million due to lower volume.

Cost of Revenue

Cost of revenue for the second quarter decreased $50.0 million, or 29.4%, as compared to the same period in the prior year, primarily due to decreased material and labor costs in both the Direct Marketing and Supply Chain segments. The increase in gross profit margin during the second quarter is attributable to a change in customer mix, our focus on customer rationalization to improve profitability, as well as cost reduction initiatives in both segments to offset the impact of COVID-19.

Cost of revenue for the six months ended January 31, 2021 decreased $101.4 million, or 28.9%, as compared to the same period in the prior year, primarily due to decreased material and labor costs in both the Direct Marketing and Supply Chain segments. The increase in gross profit margin during the current year period is also attributable to a change in customer mix, our focus on customer rationalization to improve profitability, as well as cost reduction initiatives in both segments to offset the impact of COVID-19.

Selling, General and Administrative

Selling, general and administrative expenses for the second quarter decreased $9.4 million, or 30.0%, as compared to the same period in the prior year, primarily due to decreases in employee-related, sales and marketing, and outsourced services costs as a result of the COVID-19 pandemic, as well as decreases in restructuring and other expenses.

Selling, general and administrative expenses for the six months ended January 31, 2021 decreased $4.7 million, or 8.8%, as compared to the same period in the prior year, primarily due to decreases in employee-related, sales and marketing, and outsourced services costs, as well as other expenses, as a result of the COVID-19 pandemic, partially offset by an increase in accrued taxes.

Amortization of Intangible Assets

Amortization of intangibles assets for the second quarter decreased $1.6 million, or 22.5%, as compared to the same period in the prior year. Amortization of intangibles assets for the six months ended January 31, 2021 decreased $2.3 million, or 16.2%, as compared to the same period in the prior year. Amortization expense decreased in both periods as our trademarks and tradenames were fully amortized in December 2020, and our customer relationships are amortized using an accelerated method, which reflects the pattern in which we receive the economic benefit of the asset.

Interest Expense

Interest expense for the second quarter decreased $0.9 million, or 10.4%, as compared to the same period in the prior year. Interest expense for the six months ended January 31, 2021 decreased $2.3 million, or 12.6%, as compared to the same period in the prior year. The decrease in interest expense for both periods was primarily due to lower variable interest rates on outstanding debt.

All Other Expenses, Net

All other expenses, net for the second quarter increased $1.4 million, as compared to the same period in the prior year. All other expenses, net for the six months ended January 31, 2021 increased $3.9 million, as compared to the same period in the prior year. The increase in all other expenses for both periods was primarily due to increases in foreign exchange losses in the Supply Chain segment.

Income Tax Expense

Income tax expense for the second quarter decreased $0.3 million, 25.0%, as compared to the same period in the prior year. Income tax expense for the six months ended January 31, 2021 decreased $0.8 million, 33.3%, as compared to the same period in the prior year. The decrease in income tax expense for both periods was primarily due to lower taxable income in foreign jurisdictions.

Additions to Property and Equipment (Capital Expenditures)

Capital expenditures for the second quarter totaled $1.1 million, or 0.7% of net revenue, as compared to $6.3 million, or 2.9% of net revenue, for the same period in the prior year. Capital expenditures for the six months ended January 31, 2021 totaled $2.2 million, or 0.7% of net revenue, as compared to $10.4 million, or 2.4% of net revenue, for the same period in the prior year. The decrease in capital expenditures for both periods was primarily due to reduced spending as the result of the COVID-19 pandemic.

Adjusted EBITDA

Adjusted EBITDA for the second quarter decreased $1.3 million, or 5.9%, as compared to the same period in the prior year, primarily due to reduced gross profit, offset partially by a reduction in certain operating expenses.

Adjusted EBITDA for the six months ended January 31, 2021 decreased $1.6 million, or 3.6%, as compared to the same period in the prior year, primarily due to reduced gross profit, offset partially by a reduction in certain operating expenses.

Liquidity and Capital Resources

As of January 31, 2021, the Company had cash and cash equivalents of $87.6 million. As of January 31, 2021, IWCO Direct and ModusLink had a readily available borrowing capacity of $25.0 million and $8.8 million, respectively, under their credit facilities.

As of January 31, 2021, total debt outstanding, net of unamortized discounts and issuance costs, was $376.9 million, which was comprised of a $369.0 million term loan due December 15, 2022 and a $14.9 million 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 diversified holding company with two wholly-owned subsidiaries, IWCO Direct Holdings, Inc. and ModusLink Corporation, that serve the direct marketing and supply chain management markets, respectively.

IWCO Direct delivers highly-effective data-driven marketing solutions for its customers, which represent some of the largest and most respected brands in the world in markets such as insurance, financial services and multiple system operators (cable or direct broadcasting satellite TV systems). Its full range of services includes strategy, creative and execution for omnichannel marketing campaigns, along with one of the industry's most sophisticated postal logistics programs for direct mail. Through its Mail-Gard® division, IWCO Direct also offers business continuity and disaster recovery services to protect against unexpected business interruptions, along with providing print and mail outsourcing services. IWCO Direct was named one of the largest direct mail production providers in North America, with the largest platform of continuous digital print technology and a growing direct marketing agency service. IWCO Direct's solutions enable customers to improve customer lifetime value, which, in turn, has led to longer customer relationships. The company is ISO/IEC 27001 Information Security Management System (ISMS) certified through BSI, reflecting its commitment to data security.

ModusLink is a leader in global supply chain business process management, 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 with sites in various countries, including numerous sites throughout North America, Europe and Asia.

Steel Connect, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands)

 

 

January 31,
2021

 

July 31,
2020

 

(unaudited)

 

 

Assets:

Cash and cash equivalents

$

87,649

 

 

$

75,887

 

Accounts receivable, trade, net

86,455

 

 

93,072

 

Inventories, net

13,942

 

 

15,354

 

Funds held for clients

6,604

 

 

18,755

 

Prepaid expenses and other current assets

24,680

 

 

20,475

 

Total current assets

219,330

 

 

223,543

 

Property and equipment, net

70,684

 

 

79,678

 

Goodwill

257,128

 

 

257,128

 

Other intangible assets, net

123,369

 

 

135,263

 

Operating lease right-of-use assets

48,903

 

 

56,140

 

Other assets

6,482

 

 

7,420

 

Total assets

$

725,896

 

 

$

759,172

 

 

 

 

 

Liabilities:

Accounts payable

$

56,779

 

 

$

70,002

 

Accrued expenses

111,251

 

 

111,380

 

Funds held for clients

6,604

 

 

18,755

 

Current portion of long-term debt

5,582

 

 

5,527

 

Current lease obligations

13,246

 

 

14,318

 

Other current liabilities

29,843

 

 

29,950

 

Total current liabilities

223,305

 

 

249,932

 

Convertible note payable

8,659

 

 

8,054

 

Long-term debt, excluding current portion

362,638

 

 

365,468

 

Long-term lease obligations

37,181

 

 

43,211

 

Other long-term liabilities

11,186

 

 

8,509

 

Total liabilities

642,969

 

 

675,174

 

 

 

 

 

Contingently redeemable preferred stock

35,180

 

 

35,180

 

 

 

 

 

Total stockholders' equity

47,747

 

 

48,818

 

 

 

 

 

Total liabilities, contingently redeemable preferred stock and stockholders' equity

$

725,896

 

 

$

759,172

 

Steel Connect, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)

 

 

Three Months Ended
January 31,

 

 

 

Six Months Ended
January 31,

 

 

 

2021

 

2020

 

Fav (Unfav)

 

2021

 

2020

 

Fav (Unfav)

Net revenue:

 

 

 

 

 

 

 

 

 

 

 

Products

$

91,155

 

 

$

123,117

 

 

(26.0

)%

 

$

196,863

 

 

$

256,120

 

 

(23.1

)%

Services

 

64,892

 

 

 

92,335

 

 

(29.7

)%

 

 

129,118

 

 

 

184,485

 

 

(30.0

)%

Total net revenue

 

156,047

 

 

 

215,452

 

 

(27.6

)%

 

 

325,981

 

 

 

440,605

 

 

(26.0

)%

Cost of revenue

 

120,197

 

 

 

170,203

 

 

29.4

%

 

 

249,663

 

 

 

351,110

 

 

28.9

%

Gross profit

 

35,850

 

 

 

45,249

 

 

(20.8

)%

 

 

76,318

 

 

 

89,495

 

 

(14.7

)%

Gross profit margin

 

23.0

%

 

 

21.0

%

 

 

 

 

23.4

%

 

 

20.3

%

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

21,810

 

 

 

31,165

 

 

30.0

%

 

 

48,668

 

 

 

53,392

 

 

8.8

%

Amortization of intangible assets

 

5,359

 

 

 

6,911

 

 

22.5

%

 

 

11,894

 

 

 

14,188

 

 

16.2

%

Total operating expenses

 

27,169

 

 

 

38,076

 

 

28.6

%

 

 

60,562

 

 

 

67,580

 

 

10.4

%

Operating income

 

8,681

 

 

 

7,173

 

 

21.0

%

 

 

15,756

 

 

 

21,915

 

 

(28.1

)%

Total other expense

 

(9,986

)

 

 

(9,542

)

 

(4.7

)%

 

 

(19,808

)

 

 

(18,137

)

 

(9.2

)%

(Loss) income before income taxes

 

(1,305

)

 

 

(2,369

)

 

44.9

%

 

 

(4,052

)

 

 

3,778

 

 

(207.3

)%

Income tax expense

 

891

 

 

 

1,188

 

 

25.0

%

 

 

1,695

 

 

 

2,543

 

 

33.3

%

Net (loss) income

 

(2,196

)

 

 

(3,557

)

 

38.3

%

 

 

(5,747

)

 

 

1,235

 

 

(565.3

)%

Less: Preferred dividends on redeemable preferred stock

 

(530

)

 

 

(531

)

 

0.2

%

 

 

(1,067

)

 

 

(1,067

)

 

%

Net (loss) income attributable to common stockholders

$

(2,726

)

 

$

(4,088

)

 

33.3

%

 

$

(6,814

)

 

$

168

 

 

(4,156.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

Basic net (loss) earnings per share attributable to common stockholders

$

(0.04

)

 

$

(0.07

)

 

 

 

$

(0.11

)

 

$

0.00

 

 

 

Diluted net (loss) earnings per share attributable to common stockholders

$

(0.04

)

 

$

(0.07

)

 

 

 

$

(0.11

)

 

$

0.00

 

 

 

Weighted average common shares used in:

 

 

 

 

 

 

 

 

 

 

 

Basic (loss) earnings per share

 

62,028

 

 

 

61,538

 

 

 

 

 

61,961

 

 

 

61,469

 

 

 

Diluted (loss) earnings per share

 

62,028

 

 

 

61,538

 

 

 

 

 

61,961

 

 

 

61,482

 

 

 

Steel Connect, Inc. and Subsidiaries

Segment Data

(in thousands)

(unaudited)

 

 

Three Months Ended
January 31,

 

Six Months Ended
January 31,

 

2021

 

2020

 

2021

 

2020

Net revenue:

 

 

 

 

 

 

 

Direct Marketing

$

91,155

 

 

$

123,117

 

 

$

196,863

 

 

$

256,120

 

Supply Chain

 

64,892

 

 

 

92,335

 

 

 

129,118

 

 

 

184,485

 

 

$

156,047

 

 

$

215,452

 

 

$

325,981

 

 

$

440,605

 

Operating income:

 

 

 

 

 

 

 

Direct Marketing

$

5,769

 

 

$

4,217

 

 

$

10,706

 

 

$

15,420

 

Supply Chain

 

4,957

 

 

 

5,763

 

 

 

10,108

 

 

 

12,273

 

Total segment operating income

 

10,726

 

 

 

9,980

 

 

 

20,814

 

 

 

27,693

 

Corporate-level activity

 

(2,045

)

 

 

(2,807

)

 

 

(5,058

)

 

 

(5,778

)

Total operating income

 

8,681

 

 

 

7,173

 

 

 

15,756

 

 

 

21,915

 

Total other expense

 

(9,986

)

 

 

(9,542

)

 

 

(19,808

)

 

 

(18,137

)

(Loss) income before income taxes

$

(1,305

)

 

$

(2,369

)

 

$

(4,052

)

 

$

3,778

 

Steel Connect, Inc. and Subsidiaries

Reconciliation of Non-GAAP Measures to GAAP Measures

(in thousands)

(unaudited)

 

EBITDA and Adjusted EBITDA Reconciliations:

 

Three Months Ended
January 31,

 

Six Months Ended
January 31,

 

2021

 

2020

 

2021

 

2020

Net (loss) income

$

(2,196

)

 

$

(3,557

)

 

$

(5,747

)

 

$

1,235

 

 

 

 

 

 

 

 

 

Interest income

 

 

 

 

(14

)

 

 

(20

)

 

 

(30

)

Interest expense

 

7,825

 

 

 

8,733

 

 

 

15,648

 

 

 

17,902

 

Income tax expense

 

891

 

 

 

1,188

 

 

 

1,695

 

 

 

2,543

 

Depreciation

 

5,337

 

 

 

5,785

 

 

 

11,117

 

 

 

11,374

 

Amortization of intangible assets

 

5,359

 

 

 

6,911

 

 

 

11,894

 

 

 

14,188

 

EBITDA

 

17,216

 

 

 

19,046

 

 

 

34,587

 

 

 

47,212

 

 

 

 

 

 

 

 

 

Strategic consulting and other related professional fees

 

102

 

 

 

 

 

 

165

 

 

 

 

Executive severance and employee retention

 

 

 

 

62

 

 

 

 

 

 

372

 

Restructuring and restructuring-related expense

 

37

 

 

 

922

 

 

 

1,218

 

 

 

922

 

Share-based compensation

 

158

 

 

 

196

 

 

 

346

 

 

 

372

 

Loss on sale of long-lived assets

 

37

 

 

 

8

 

 

 

40

 

 

 

38

 

Unrealized foreign exchange losses, net

 

2,712

 

 

 

371

 

 

 

4,773

 

 

 

561

 

Other non-cash (gains) losses, net

 

(314

)

 

 

36

 

 

 

(10

)

 

 

(58

)

Adjustments related to certain tax liabilities

 

1,263

 

 

 

1,891

 

 

 

2,628

 

 

 

(4,054

)

Adjusted EBITDA

$

21,211

 

 

$

22,532

 

 

$

43,747

 

 

$

45,365

 

 

 

 

 

 

 

 

 

Net revenue

$

156,047

 

 

$

215,452

 

 

$

325,981

 

 

$

440,605

 

Adjusted EBITDA margin

 

13.6

%

 

 

10.5

%

 

 

13.4

%

 

 

10.3

%

Free Cash Flow Reconciliation:

 

Three Months Ended
January 31,

 

Six Months Ended
January 31,

 

2021

 

2020

 

2021

 

2020

Net cash (used in) provided by operating activities

$

(20,541

)

 

$

(7,537

)

 

$

5,186

 

 

$

14,873

 

Additions to property and equipment

 

(1,101

)

 

 

(6,298

)

 

 

(2,160

)

 

 

(10,370

)

Free cash flow

$

(21,642

)

 

$

(13,835

)

 

$

3,026

 

 

$

4,503

 

Net Debt Reconciliation:

 

January 31,
2021

 

July 31,
2020

Total debt, net

$

376,879

 

 

$

379,049

 

Unamortized discounts and issuance costs

 

7,033

 

 

 

7,863

 

Cash and cash equivalents

 

(87,649

)

 

 

(75,887

)

Net debt

$

296,263

 

 

$

311,025

 

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, non-GAAP financial measures, to assess its performance. EBITDA represents earnings (loss) before interest income, interest expense, income tax expense, depreciation and amortization of intangible assets. We define Adjusted EBITDA as net income (loss) excluding net charges related to interest income, interest expense, income tax expense, depreciation, amortization of intangible assets, 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, other non-cash (gains) losses, net, adjustments related to certain tax liabilities and (gains) losses on investments in affiliates. The Company defines Free Cash Flow as net cash provided by (used in) operating activities less additions to property and equipment, and defines Net Debt as the sum of total debt, excluding reductions for unamortized discounts and issuance costs, less cash and cash equivalents.

We believe that providing these non-GAAP measurements to investors is useful, as these measures provide important supplemental information of our performance to investors and permit investors and management to evaluate the operating performance of our business. These measures provide useful supplemental information to management and investors regarding our operating results as they exclude certain items whose fluctuation from period-to-period do not necessarily correspond to changes in the operating results of our business. We use EBITDA and Adjusted EBITDA in internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to our Board of Directors, determining a component of certain incentive compensation for executive officers and other key employees based on operating performance, determining compliance with certain covenants in the Company's credit facilities, and evaluating short-term and long-term operating trends in our core business segments. We use Free Cash Flow to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe it is a useful measure of cash flows since purchases of property and equipment are a necessary component of ongoing operations, and similar to the use of Net Debt, assists management with its capital planning and financing considerations.

We believe that these non-GAAP financial measures assist in providing an enhanced understanding of our underlying operational measures to manage our core businesses, to evaluate performance compared to prior periods and the marketplace, and to establish operational goals. Further, we believe that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in our financial and operational decision-making. These non-GAAP financial measures should not be considered in isolation or as a substitute for financial information provided in accordance with U.S. GAAP. These non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies.

Some of the limitations of EBITDA and Adjusted EBITDA include:

  • EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
  • EBITDA and Adjusted EBITDA do not reflect our interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;
  • EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;
  • EBITDA and Adjusted EBITDA do not reflect historical capital expenditures or future requirements for capital expenditures or contractual commitments;
  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements; and
  • other companies in our industry may calculate EBITDA and Adjusted EBITDA differently, limiting their usefulness as comparative measures.

Contacts

Investor Relations

Jennifer Golembeske
914-461-1276
investorrelations@steelconnectinc.com


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Last Updated: 11-Mar-2021