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Steel Excel Inc. Reports 2016 First Quarter Financial Results

WHITE PLAINS, N.Y.--(BUSINESS WIRE)--May 2, 2016-- Steel Excel Inc. (Other OTC:SXCL) (“Steel Excel” or the “Company”), which operates Energy and Sports segments, today announced operating results for the three months ended March 31, 2016.

Steel Excel reported net revenues of $20.0 million for the first quarter of 2016, as compared to $38.9 million for the same period of 2015. The Company incurred a loss before income taxes and equity method income of $9.7 million in the first quarter of 2016, as compared to a loss of $5.9 million in the 2015 period. The net loss attributable to Steel Excel for the first quarter of 2016 was $2.1 million, or $0.18 per diluted common share, as compared to a net loss of $7.3 million, or $0.63 per diluted common share, for the same period in 2015. At March 31, 2016, the Company had cash and marketable securities totaling $143.8 million.

For the first quarter of 2016, net revenues in the Energy segment were $18.0 million as compared to $37.1 million in the 2015 quarter; net revenues in the Sports segment were $2.0 million in the 2016 quarter, as compared to $1.8 million in the comparable 2015 period.

The net loss for the first quarter of 2016 includes an impairment charge of $1.5 million related to marketable securities. The net loss for the first quarter of 2016 also includes a benefit from income taxes of $1.0 million, primarily from the allowable benefit recognizable on unrealized gains on marketable securities included in other comprehensive income.

On March 21, 2016, and April 13, 2016, the Company's Board of Directors authorized stock repurchase programs to acquire up to an additional 250,000 shares and 1,000,000 shares, respectively, of the Company's common stock under the previously approved repurchase program. Any repurchases under the repurchase programs will be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market in compliance with applicable laws and regulations. The repurchase programs are expected to continue indefinitely, unless shortened by the Board of Directors. The Company repurchased 471,917 shares of its common stock during the three months ended March 31, 2016. The maximum number of shares that may yet be repurchased under the programs was 1,059,708 as of April 30, 2016.

About Steel Excel

Steel Excel, through its two business segments, Energy and Sports, is committed to acquiring, strengthening and growing profitable businesses. The Energy segment provides drilling and production services to the oil and gas industry. The Sports segment is a social impact organization that strives to provide a first-class youth sports experience emphasizing positive experiences and instilling the core values of discipline, teamwork, safety, respect, and integrity.

The Company is based in White Plains, N.Y. (Other OTC: SXCL). Website: www.steelexcel.com.

Forward-Looking Statements

This press release contains certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect the Company's current expectations and projections about its future results, performance, prospects, and opportunities. The Company has tried to identify these forward-looking statements by using words such as "may," "should," "expect," "hope," "anticipate," "believe," "intend," "plan," "estimate," and similar expressions. These forward-looking statements are based on information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause its actual results, performance, prospects, or opportunities in 2016 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements. These risks include, but are not limited to, our ability to deploy our capital in a manner that maximizes stockholder value; the ability to identify suitable acquisition candidates or business and investment opportunities; the inability to realize the benefits of our net operating losses; the ability to consolidate and manage our newly acquired businesses; fluctuations in the price of oil and other factors resulting in volatility for the demand for our services, especially in our Energy segment; the hazardous nature of operations in the oilfield services industry, which could result in personal injury, property damage or damage to the environment; environmental and other health and safety laws and regulations, including those relating to climate change, and general economic conditions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable and achievable, such statements involve significant risks and uncertainties, and no assurance can be given that the actual results will be consistent with these forward-looking statements. Except as otherwise required by Federal securities laws, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances, or any other reason.

 
Steel Excel Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
 
        Three Months Ended March 31,
2016     2015
(in thousands, except per-share data)
Net revenues $   19,998 $   38,885
 
Cost of revenues 17,718   31,640  
 
Gross profit 2,280   7,245  
 
Operating expenses:
Selling, general and administrative expenses 9,384 8,587
Amortization of intangibles 1,482   2,162  
Total operating expenses 10,866   10,749  
 
Operating loss (8,586 ) (3,504 )
 
Interest expense (377 ) (642 )
Impairment of marketable securities (1,470 )
Other income (expense), net 723   (1,729 )
 
Loss before income taxes and equity method income (9,710 ) (5,875 )
 
Benefit from income taxes 1,005 372
Income (loss) from equity method investees, net of taxes 6,310   (2,110 )
 
Net loss (2,395 ) (7,613 )
 
Net loss attributable to non-controlling interests in consolidated entities 319   363  
 
Net loss attributable to Steel Excel Inc. $   (2,076 ) $   (7,250 )
 
Basic income (loss) per share attributable to Steel Excel Inc.:
Net loss $ (0.18 ) $ (0.63 )
 
Diluted income (loss) per share attributable to Steel Excel Inc.:
Net loss $ (0.18 ) $ (0.63 )
 
Shares used in computing income (loss) per share:
Basic 11,309 11,475
Diluted 11,309 11,475
 
 
Steel Excel Inc.
CONSOLIDATED BALANCE SHEETS
(unaudited)
 
       

March 31,
2016

     

December 31,
2015

(in thousands, except par value)
Assets:
Current assets:
Cash and cash equivalents $       50,451 $   31,707
Restricted cash 11,425 21,639
Marketable securities 93,367 96,189
Receivable from securities sales not settled 23,229
Accounts receivable (net of allowance for doubtful accounts of $38 in 2016 and 2015) 11,474 10,614
Prepaid expenses and other current assets 4,932   3,937  
Total current assets 171,649 187,315
Property and equipment, net 92,178 95,793
Goodwill 12,594 12,594
Intangible assets, net 18,737 20,219
Other long-term investments 3,549 3,555
Investments in equity method investees ($28,236 in 2016 and $21,954 in 2015 reported at fair value) 31,125 24,815
Deferred income taxes 247
Other long-term assets 529   531  
Total assets $       330,608   $   344,822  
 
Liabilities and Stockholders' Equity:
Current liabilities:
Accounts payable $ 2,165 $ 2,781
Accrued expenses and other liabilities 9,129 8,458
Financial instrument obligations 11,425 21,639
Current liabilities of discontinued operations 450   450  
Total current liabilities 23,169 33,328
Long-term debt (net of unamortized debt issuance costs of $251 in 2016 and $280 in 2015) 42,695 42,666
Deferred income taxes 737 737
Other long-term liabilities 255   236  
Total liabilities 66,856   76,967  
 
Commitments and contingencies
 
Stockholders' equity:

Common stock ($0.001 par value, 18,000 shares authorized; 14,383 and 14,392 shares issued in 2016
     and 2015, respectively; 10,867 and 11,347 shares outstanding in 2016 and 2015, respectively)

14 14
Additional paid-in capital 270,859 270,516
Accumulated other comprehensive loss (2,811 ) (5,546 )
Retained earnings 87,153 89,229
Treasury stock, at cost (3,517 and 3,045 shares in 2016 and 2015, respectively) (90,971 ) (85,967 )
Total Steel Excel Inc. stockholders' equity 264,244 268,246
Non-controlling interest (492 ) (391 )
Total stockholders' equity 263,752   267,855  
Total liabilities and stockholders' equity $       330,608   $   344,822  
 
 
Steel Excel Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
        Three Months Ended March 31,
2016       2015
(in thousands)
Cash Flows From Operating Activities:
Net loss $   (2,395 ) $   (7,613 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Loss (income) from equity method investees (6,310 ) 2,110
Stock-based compensation expense 625 539
Depreciation and amortization 5,313 5,994
Impairment of marketable securities 1,470
Deferred income tax benefit (1,811 ) (598 )
Loss (gain) on sales of marketable securities 1,328 (135 )
Loss (gain) on financial instrument obligations (1,113 ) 186
Loss on change to equity method at fair value 2,807
Other (95 ) 434
Changes in operating assets and liabilities:
Accounts receivable (860 ) 10,167
Prepaid expenses and other assets (1,040 ) (3,152 )
Accounts payable and other liabilities 9   4,583  
Net cash provided by (used in) operating activities (4,879 ) 15,322  
 
Cash Flows From Investing Activities:
Purchases of property and equipment (187 ) (1,304 )
Proceeds from sale of property and equipment 38 27
Purchases of marketable securities (12,989 ) (5,058 )
Sales of marketable securities 31,497 6,773
Proceeds from issuance of financial instrument obligations 75 89
Repayments of financial instrument obligations (21 ) (278 )
Reclassification of restricted cash 10,214   3  
Net cash provided by investing activities 28,627   252  
 
Cash Flows From Financing Activities:
Repurchases of common stock - treasury shares (5,004 )
Repayments of capital lease obligations (107 )
Repayments of long-term debt   (3,303 )
Net cash used in financing activities (5,004 ) (3,410 )
 
Net increase in cash and cash equivalents 18,744 12,164
Effect of foreign currency translation on cash and cash equivalents 2
Cash and cash equivalents at beginning of period 31,707   51,910  
 
Cash and cash equivalents at end of period $   50,451   $   64,076  
 
 

Source: Steel Excel Inc.

Steel Excel Inc.
James F. McCabe, Jr., 212-520-2300
Chief Financial Officer
jmccabe@steelpartners.com


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