Steel Excel Inc. Reports Fourth Quarter and Year End 2012 Financial Results and Outlook for 2013

Steel Excel Inc. Reports Fourth Quarter and Year End 2012 Financial Results and Outlook for 2013

SAN RAMON, Calif.--(BUSINESS WIRE)-- Steel Excel Inc. (Other OTC: SXCL) ("Steel Excel", "SXCL" or the "Company"), which operates in two reportable segments, Steel Energy and Steel Sports, today announced operating results for the fourth quarter and year ended December 31, 2012. They are summarized in the following paragraphs. For a full discussion of the results, please see the Company's Form 10-K, which can be found at www.steelexcel.com.

Fourth Quarter Results


Steel Excel reported aggregate revenues of $26.9 million for the quarter, as compared to $1.8 million for the same period of 2011. The loss from continuing operations before tax was $0.3 million in the fourth quarter of 2012, as compared to a loss of $1.3 million in the 2011 period. The net loss for the fourth quarter of 2012 was $0.1 million, or $0.01 per diluted common share, as compared to a net loss of $1.7 million, or $0.15 per diluted common share for the same period in 2011. For the quarter, Steel Energy net revenues were $26.4 million, compared to $1.4 million in 2011, while Steel Sports had net revenues of $0.5 million, versus $0.4 million in 2011.

Twelve Month Results

For the year, Steel Excel reported net revenues of $100.1 million, as compared to $2.5 million in 2011. Income from continuing operations before tax was $6.5 million, versus a loss of $0.2 million in 2011. Net income for the year was $20.7 million or $1.71 per diluted common share, which included a net loss from discontinued operations of $1.9 million, or $0.16 per share, as compared to net income of $6.8 million, or $0.62 per diluted common share in 2011, which included net income from discontinued operations of $6.6 million, or $0.61 per share.

Steel Energy reported net revenues for the year of $97.2 million, as compared to $1.4 million the prior year. Steel Sports reported revenues of $2.9 million compared to $1.1 million in 2011.

The principal reason for the increase in revenue and net income for both the fourth quarter and full year was related to the acquisitions completed in 2012 for Steel Energy and the release of $15.1 million of a deferred tax valuation allowance as a result of acquired deferred tax liabilities.

Adjusted EBITDA

Steel Excel generated Adjusted EBITDA of $5.3 million for the fourth quarter of 2012, as compared to a loss of $1.3 million in the 2011 quarter, an improvement of $6.6 million. For the year, the Company generated Adjusted EBITDA of $22.8 million, as compared to a loss of $7.6 million in 2011, an improvement of $30.4 million. See "Note Regarding Use of Non-GAAP Financial Measurements" below for the definition of Adjusted EBITDA.

2013 Guidance

The Company currently anticipates, based on current information, full-year 2013 net revenues and Adjusted EBITDA in the ranges of $114 million to $127 million and $31 million to $35 million, respectively. The Company's outlook for the first quarter of 2013 is for net revenues between $24 million and $27 million and Adjusted EBITDA between $4.5 million and $5.5 million.

Financial Condition

Steel Excel's Balance Sheet at December 31, 2012 reflected net working capital of $276.2 million, which included $270.7 million of cash and marketable securities.

The cash and marketable securities balance, net of debt, at December 31, 2012 was $257.7 million, or $21.24 per share.

Financial Summary

Quarter Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

(in thousands, except per share amounts)

Net revenues

$

26,915

$

1,795

$

100,104

$

2,502

Cost of revenues

20,247

1,283

66,064

1,459

Gross margin

6,668

512

34,040

1,043

Operating expenses

Selling, general and administrative

6,965

2,094

28,031

9,554

Impairment of goodwill

192

-

192

-

Total operating expenses

7,157

2,094

28,223

9,554

Income (loss) from continuing operations

(489

)

(1,582

)

5,817

(8,511

)

Interest and other income, net

159

244

650

8,353

Income (loss) from continuing operations before taxes

(330

)

(1,338

)

6,467

(158

)

Benefit from (provision for) income taxes

334

(111

)

15,712

226

Income (loss) from continuing operations, net of taxes

4

(1,449

)

22,179

68

Income (loss) from discontinued operations, net of taxes

51

(286

)

(1,935

)

1,624

Gain on disposal of discontinued operations, net of taxes

-

-

-

5,005

Income (loss) from discontinued operations, net of taxes

51

(286

)

(1,935

)

6,629

Net income (loss)

55

(1,735

)

20,244

6,697

Net income (loss) attributable to non-controlling interest in consolidated entities

131

(72

)

(449

)

(72

)

Net income (loss) attributable to Steel Excel Inc.

$

(76

)

$

(1,663

)

$

20,693

$

6,769

Net income (loss) per share attributable to Steel Excel Inc.

Basic

$

(0.01

)

$

(0.15

)

$

1.71

$

0.62

Diluted

$

(0.01

)

$

(0.15

)

$

1.71

$

0.62

Shares used in computing income (loss) per share:

Basic

12,984

10,887

12,110

10,882

Diluted

13,007

10,905

12,133

10,897

Segment Results

Quarter Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

(in thousands)

Net revenues

Steel Energy

$

26,403

$

1,417

$

97,191

$

1,417

Steel Sports

512

378

2,913

1,085

Total net revenues

$

26,915

$

1,795

$

100,104

$

2,502

Segment Operating income (loss):

Steel Energy

$

2,287

$

165

$

16,836

$

165

Steel Sports

(670

)

(676

)

(2,062

)

(354

)

Total segment operating income (loss)

1,617

(511

)

14,774

(189

)

Unallocated corporate expenses and nonoperating units

(2,106

)

(1,071

)

(8,957

)

(8,322

)

Operating income (loss)

(489

)

(1,582

)

5,817

(8,511

)

Interest and other income, net

159

244

650

8,353

Income (loss) from continuing operations before taxes

$

(330

)

$

(1,338

)

$

6,467

$

(158

)

Supplemental Non-GAAP Disclosures:

EBITDA Calculation

Quarter Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

(in thousands, except percentages)

Reconciliation of Net Income to Adjusted EBITDA:

Net income (loss) attributable to Steel Excel Inc.

$

(76

)

$

(1,663

)

$

20,693

$

6,769

Non-controlling interest

131

(72

)

(449

)

(72

)

Net income (loss)

55

(1,735

)

20,244

6,697

Income (loss) from discontinued operations, net

(51

)

286

1,935

(6,629

)

Interest and other income, net

(159

)

(244

)

(650

)

(8,353

)

Provision for (benefit from) income taxes

(334

)

111

(15,712

)

(226

)

Operating income (loss)

(489

)

(1,582

)

5,817

(8,511

)

Depreciation and amortization

5,137

279

15,458

369

Stock-based compensation

631

33

1,487

523

Adjusted EBITDA

$

5,279

$

(1,270

)

$

22,762

$

(7,619

)

Calculation of Adjusted EBITDA Margin:

Adjusted EBITDA

$

5,279

$

(1,270

)

$

22,762

$

(7,619

)

Net revenues