UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 001-35493

STEEL PARTNERS HOLDINGS L.P.

(Exact Name of Registrant as Specified in its Charter)

Delaware	13-3727655
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
590 Madison Avenue, 32nd Floor
New York, New York	10022
(Address of Principal Executive Offices)	(Zip Code)

(212) 520-2300

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbols	Name of Each Exchange on which Registered
Common Units, no par value	SPLP	New York Stock Exchange
6.0% Series A Preferred Units	SPLP-PRA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☑	Smaller reporting company ☑
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

The number of common units outstanding as of May 10, 2021 was 22,247,927.

STEEL PARTNERS HOLDINGS L.P.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION		Page
Item 1.	Financial Statements (unaudited)
	Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	2
	Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020	3
	Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020	4
	Consolidated Statements of Changes in Capital for the three months ended March 31, 2021 and 2020	5
	Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 6.	Exhibits	51
SIGNATURES		52

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

STEEL PARTNERS HOLDINGS L.P.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except common units)

	March 31, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	200,238	$	135,788
Marketable securities	126		106
Trade and other receivables - net of allowance for doubtful accounts of $3,345 and $3,368, respectively	186,071		164,106
Receivables from related parties	2,883		2,073
Loans receivable, including loans held for sale of $91,316 and $88,171, respectively, net	340,136		306,091
Inventories, net	151,573		137,086
Prepaid expenses and other current assets	56,165		58,053
Total current assets	937,192		803,303
Long-term loans receivable, net	2,549,961		2,183,017
Goodwill	148,030		150,852
Other intangible assets, net	133,416		138,581
Deferred tax assets	52,211		66,553
Other non-current assets	40,829		42,068
Property, plant and equipment, net	221,768		228,992
Operating lease right-of-use assets	28,677		29,715
Long-term investments	273,776		291,297
Total Assets	$	4,385,860	$	3,934,378
LIABILITIES AND CAPITAL
Current liabilities:
Accounts payable	$	136,442	$	100,759
Accrued liabilities	57,661		69,967
Deposits	347,518		285,393
Payables to related parties	4,083		4,080
Short-term debt	853		397
Current portion of long-term debt	10,323		10,361
Other current liabilities	45,468		46,044
Total current liabilities	602,348		517,001
Long-term deposits	85,665		70,266
Long-term debt	283,446		323,392
Other borrowings	2,467,657		2,090,223
Preferred unit liability	147,553		146,892
Accrued pension liabilities	145,458		183,462
Deferred tax liabilities	2,148		2,169
Long-term operating lease liabilities	20,755		21,845
Other non-current liabilities	38,120		39,906
Total Liabilities	3,793,150		3,395,156
Commitments and Contingencies
Capital:
Partners' capital common units: 22,949,392 and 22,920,804 issued and outstanding (after deducting 14,916,635 and 14,916,635 units held in treasury, at cost of $219,245 and $219,245), respectively	760,623		707,309
Accumulated other comprehensive loss	(172,866)		(172,649)
Total Partners' Capital	587,757		534,660
Noncontrolling interests in consolidated entities	4,953		4,562
Total Capital	592,710		539,222
Total Liabilities and Capital	$	4,385,860	$	3,934,378

See accompanying Notes to Consolidated Financial Statements

2

STEEL PARTNERS HOLDINGS L.P.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except common units and per common unit data)

	Three Months Ended March 31,
	2021		2020
Revenue:
Diversified Industrial net sales	$	248,489	$	261,610
Energy net revenue	32,086		38,602
Financial Services revenue	33,918		46,998
Total revenue	314,493		347,210
Costs and expenses:
Cost of goods sold	208,685		220,848
Selling, general and administrative expenses	68,800		75,928
Asset impairment charges	—		617
Finance interest expense	2,232		3,434
(Benefit from) provision for loan losses	(715)		26,137
Interest expense	5,466		8,627
Realized and unrealized losses on securities, net	23,249		18,002
Other income, net	(35,039)		(967)
Total costs and expenses	272,678		352,626
Income (loss) from continuing operations before income taxes and equity method investments	41,815		(5,416)
Income tax provision (benefit)	14,594		(3,444)
(Income) loss of associated companies, net of taxes	(26,121)		34,507
Net income (loss) from continuing operations	53,342		(36,479)
Discontinued operations (see Note 3)
Loss from discontinued operations, net of taxes	—		(2,301)
Net loss on deconsolidation of discontinued operations	—		(21,968)
Net loss from discontinued operations, net of taxes	—		(24,269)
Net income (loss)	53,342		(60,748)
Net income attributable to noncontrolling interests in consolidated entities (continuing operations)	(391)		(130)
Net income (loss) attributable to common unitholders	$	52,951	$	(60,878)
Net income (loss) per common unit - basic
Net income from continuing operations	$	2.34	$	(1.46)
Net loss from discontinued operations	—		(0.97)
Net income (loss) attributable to common unitholders	$	2.34	$	(2.43)
Net income (loss) per common unit - diluted
Net income from continuing operations	$	1.60	$	(1.46)
Net loss from discontinued operations	—		(0.97)
Net income (loss) attributable to common unitholders	$	1.60	$	(2.43)
Weighted-average number of common units outstanding - basic	22,619,764		25,020,854
Weighted-average number of common units outstanding - diluted	34,930,146		25,020,854

See accompanying Notes to Consolidated Financial Statements

3

STEEL PARTNERS HOLDINGS L.P.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(in thousands)

	Three Months Ended March 31,
	2021		2020
Net income (loss)	$	53,342	$	(60,748)
Other comprehensive loss, net of taxes:
Currency translation adjustments	(217)		(2,936)
Other comprehensive loss	(217)		(2,936)
Comprehensive income (loss)	53,125		(63,684)
Comprehensive income attributable to noncontrolling interests	(391)		(130)
Comprehensive income (loss) attributable to common unitholders	$	52,734	$	(63,814)

See accompanying Notes to Consolidated Financial Statements

4

STEEL PARTNERS HOLDINGS L.P.

Consolidated Statements of Changes in Capital

(Unaudited)

(in thousands, except common units and treasury units)

	Steel Partners Holdings L.P. Common Unitholders
	Common	Treasury Units			Partners'		Accumulated Other Comprehensive		Total Partners'		Noncontrolling Interests in Consolidated		Total
	Units	Units	Dollars		Capital		Loss		Capital		Entities		Capital
Balance as of December 31, 2020	37,837,439	(14,916,635)	$	(219,245)	$	707,309	$	(172,649)	$	534,660	$	4,562	$	539,222
Net (loss) income	—	—	—		52,951		—		52,951		391		53,342
Currency translation adjustments	—	—	—		—		(217)		(217)		—		(217)
Equity compensation - restricted units	28,588	—	—		363		—		363		—		363
Balance as of March 31, 2021	37,866,027	(14,916,635)	$	(219,245)	$	760,623	$	(172,866)	$	587,757	$	4,953	$	592,710

	Steel Partners Holdings L.P. Common Unitholders
	Common	Treasury Units			Partners'		Accumulated Other Comprehensive		Total Partners'		Noncontrolling Interests in Consolidated		Total
	Units	Units	Dollars		Capital		Loss		Capital		Entities		Capital
Balance as of December 31, 2019	37,670,992	(12,647,864)	$	(198,781)	$	654,249	$	(191,422)	$	462,827	$	3,806	$	466,633
Net income (loss)	—	—	—		(60,878)		—		(60,878)		130		(60,748)
Currency translation adjustments	—	—	—		—		(2,936)		(2,936)		—		(2,936)
Equity compensation - restricted units	(9,854)	—	—		104		—		104		—		104
Deconsolidation of API (see Note 3)	—	—	—		—		17,481		17,481		—		17,481
Other, net	—	—	—		(2)		—		(2)		60		58
Balance as of March 31, 2020	37,661,138	(12,647,864)	$	(198,781)	$	593,473	$	(176,877)	$	416,596	$	3,996	$	420,592

See accompanying Notes to Consolidated Financial Statements

5

STEEL PARTNERS HOLDINGS L.P.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Three Months Ended March 31,
	2021		2020
Cash flows from operating activities:
Net income (loss)	$	53,342	$	(60,748)
Loss from discontinued operations	—		(24,269)
Net income (loss) from continuing operations	53,342		(36,479)
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:
(Benefit from) provision for loan losses	(715)		26,137
(Income) loss of associated companies, net of taxes	(26,121)		34,507
Realized and unrealized losses (gains) on securities, net	23,249		18,002
Gain on sale of Edge business	(8,096)		—
Gain on sale of property, plant and equipment	(6,646)		—
Derivative gains on economic interests in loans	(1,453)		(2,980)
Deferred income taxes	10,626		(4,647)
Depreciation and amortization	15,129		16,235
Non-cash lease expense	3,025		2,285
Equity-based compensation	363		206
Asset impairment charges	—		617
Other	(181)		59
Net change in operating assets and liabilities:
Trade and other receivables	(24,633)		(21,556)
Inventories	(16,246)		(3,275)
Prepaid expenses and other assets	1,074		3,028
Accounts payable, accrued and other liabilities	(12,343)		(22,350)
Net (increase) decrease in loans held for sale	(3,145)		156,257
Net cash provided by operating activities - continuing operations	7,229		166,046
Net cash used in operating activities - discontinued operations	—		(1,391)
Total cash provided by operating activities	7,229		164,655
Cash flows from investing activities:
Purchases of investments	(1,000)		(4,925)
Proceeds from sales of investments	24,086		1,191
Proceeds from maturities of investments	2,005		15,739
Loan originations, net of collections	(397,129)		(10,398)
Purchases of property, plant and equipment	(4,901)		(6,994)
Proceeds from sale of property, plant and equipment	6,979		452
Proceeds from sale of Edge business	16,000		—
Acquisition, net of cash acquired	—		(3,500)
Net cash used in investing activities - continuing operations	(353,960)		(8,435)
Net cash used in investing activities - discontinued operations	—		—
Net cash used in investing activities	(353,960)		(8,435)
Cash flows from financing activities:
Net revolver borrowings	(36,994)		230,300
Repayments of term loans	(2,538)		(2,846)
Repayments of other borrowings	(237,749)		—
Proceeds from other borrowings	613,960		—
Distribution to preferred unitholders	(2,408)		(40,000)
Deferred finance charges	—		(1,474)
Net increase (decrease) in deposits	77,524		(85,826)
Net cash provided by financing activities - continuing operations	411,795		100,154
Net cash provided by financing activities - discontinued operations	—		—
Net cash provided by financing activities	411,795		100,154
Net change for the period	65,064		256,374
Effect of exchange rate changes on cash and cash equivalents	(614)		(19)
Cash, cash equivalents and restricted cash at beginning of period	135,788		137,948
Cash, cash equivalents and restricted cash at end of period	$	200,238	$	394,303

See accompanying Notes to Consolidated Financial Statements

6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

All amounts used in the Notes to Consolidated Financial Statements are in thousands, except common and preferred units, per common and preferred unit, share and per share data.

1. NATURE OF THE BUSINESS AND BASIS OF PRESENTATION

Nature of the Business

Steel Partners Holdings L.P. ("SPLP" or "Company") is a diversified global holding company that engages in multiple businesses through consolidated subsidiaries and other interests. It owns and operates businesses and has significant interests in various companies, including diversified industrial products, energy, defense, supply chain management and logistics, direct marketing, banking and youth sports. SPLP operates through the following segments: Diversified Industrial, Energy and Financial Services, which are managed separately and offer different products and services. For additional details related to the Company's reportable segments, see Note 18 - "Segment Information." Steel Partners Holdings GP Inc. ("SPH GP"), a Delaware corporation, is the general partner of SPLP and is wholly-owned by SPLP. The Company is managed by SP General Services LLC ("Manager"), pursuant to the terms of an amended and restated management agreement ("Management Agreement") discussed in further detail in Note 17 - "Related Party Transactions."

Impact of COVID-19

In March 2020, the World Health Organization categorized COVID-19 as a pandemic, and the President of the United States declared the COVID-19 outbreak a national emergency. The spread of the outbreak has caused significant disruptions in the U.S. and global economies and the Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The Company continues to actively monitor the COVID-19 pandemic and its potential impacts on the Company's employees, customers, suppliers and financial results. During the year ended December 31, 2020, as the COVID-19 pandemic progressed, the Company initiated many cost reducing actions to help mitigate the financial impact of the pandemic. The Company continues to evaluate further or continued actions as circumstances warrant.

The COVID-19 pandemic has adversely affected our consolidated financial results for the first three months of 2021. As the situation surrounding the COVID-19 pandemic remains fluid, it is expected to continue having a negative impact to the Company; however, it is difficult to predict the duration of the pandemic and its continued impact on the Company's business, operations, financial condition and cash flows. There is no certainty that federal, state or local regulations regarding safety measures to address the spread of COVID-19 will not adversely impact the Company's operations. While the Company developed and implemented, and continues to develop and implement, health and safety protocols, business continuity plans and crisis management protocols in an effort to try to mitigate the negative impact of the COVID-19 pandemic to its employees and business, the severity of its impact on the Company's business in 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, governmental actions that have been taken, or may be taken in the future, in response to the pandemic, and the extent and severity of the impact on the Company's customers and suppliers, all of which are uncertain and cannot be predicted. The Company's future results of operations and liquidity could be adversely impacted by delays in payments of outstanding receivable amounts beyond normal payment terms, supply chain disruptions and uncertain demand, and the impact of any initiatives or programs that the Company may undertake to address financial and operations challenges faced by its customers. As of the date of issuance of these consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact the Company's financial condition, liquidity or results of operations is uncertain.

Basis of Presentation

The accompanying unaudited consolidated financial statements as of March 31, 2021 and for the three-month periods ended March 31, 2021 and 2020, which have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") for interim periods, include the accounts of the Company and its consolidated subsidiaries. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation have been reflected herein. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the operating results for the full year. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements on Form 10-K for the year ended December 31, 2020, from which the consolidated balance sheet as of December 31, 2020 has been derived.

7

The Company’s fiscal quarter ends on the last day of the calendar quarter; however, for certain subsidiaries of the Company, the fiscal quarter periods end on the Saturday that is closest to the last day of the calendar quarter, except for the last quarterly period of the fiscal year. The Company and all its subsidiaries close their books for fiscal years on December 31. For ease of presentation, the quarterly financial statements included herein are described as ending on the last day of the calendar quarter.

Certain financial information that is normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), but is not required for interim reporting purposes, has been condensed or omitted. Management must make estimates and assumptions that affect the consolidated financial statements and the related footnote disclosures. While management uses its best judgment, actual results may differ from those estimates. Certain reclassifications have been made to the prior period financial statements and notes to conform to the current period presentation.

Restatement For Correction of Immaterial Errors in Previously Issued Consolidated Financial Statements

As previously disclosed in the Company’s Form 10-K for the year ended December 31, 2020, during the fourth quarter of 2020, in connection with the preparation of the consolidated financial statements for the year ended December 31, 2020, the Company identified errors in its previously filed annual consolidated financial statements and unaudited quarterly consolidated financial statements. The errors were not material to any individual prior quarterly or annual period. The prior period errors are related primarily to a division of the Company's Electrical Products business within the Diversified Industrial segment ("Electrical Products Misstatements") and were primarily the result of: (1) divisional management override of internal controls, (2) improper segregation of duties, including failure to obtain independent review of recorded accounting entries and accounting analyses and (3) inadequate documentation and support for and/or untimely preparation of account reconciliations. The Electrical Products Misstatements resulted in: (1) improper valuation of inventories and trade receivables, including the related allowance for doubtful accounts; (2) improper recognition of revenue on contracts performed over time; (3) accounts payable and associated expenses not recorded accurately or in the appropriate period; and (4) other errors.

The Company assessed the materiality of the errors in its historical annual consolidated financial statements in accordance with SEC Staff Accounting Bulletin ("SAB") Topic 1.M, Materiality, codified in Accounting Standards Codification ("ASC") 250, Accounting Changes and Error Corrections, and concluded that the errors were not material to the previously filed annual consolidated financial statements or corresponding unaudited interim periods but would be material in the aggregate if corrected solely in the consolidated financial statements as of and for the year ended December 31, 2020. In accordance with ASC 250 (SAB Topic 1.N, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements), the Company corrected for these errors by revising previously filed 2019 annual consolidated financial statements, including the impact to beginning Partners' capital, in connection with the filing of its 2020 Annual Report on Form 10-K. The revised annual consolidated financial statements also included adjustments to correct certain other immaterial errors, including errors that had previously been adjusted for and disclosed as out of period corrections in the period identified.

Additionally, in connection with the filing of this Quarterly Report on Form 10-Q, the Company has disclosed the impact of the restatement to the consolidated interim financial statements as of and for the three months ended March 31, 2020 to correct for the errors. The accompanying footnotes have also been corrected to reflect the impact of the revisions of the previously filed 2020 interim consolidated financial statements. Refer to Note 21 - "Restatement of Previously Issued Consolidated Financial Statements" for reconciliations between as reported and as revised quarterly amounts.

Discontinued Operations

On January 31, 2020, the Company announced that API Group Limited and certain of its affiliates commenced administration proceedings in the United Kingdom. The purpose of the administration proceedings was to facilitate an orderly sale or wind-down of its United Kingdom operations, which include API Laminates Limited and API Foils Holdings Limited. In the United States, API Americas Inc. voluntarily filed for Chapter 11 proceedings in Bankruptcy Court on February 2, 2020, in order to facilitate the sale or liquidation of its U.S. assets. The API Americas Inc. Chapter 11 bankruptcy proceedings were closed by the Bankruptcy Court on December 21, 2020. The API entities (collectively, "API") were wholly-owned subsidiaries of the Company and were included in the Diversified Industrial segment. The Company deconsolidated API on January 31, 2020 as it no longer held a controlling financial interest as of that date.

All references made to financial data in this Quarterly Report on Form 10-Q are to the Company's continuing operations, unless specifically noted. See Note 3 - "Discontinued Operations" for additional information.

8

Adoption of New Accounting Standards

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 removes specific exceptions to the general principles in Topic 740 in order to reduce the complexity of its application. ASU 2019-12 also improves consistency and simplifies existing guidance by clarifying and amending certain specific areas of Topic 740. The Company adopted ASU 2019-12 on January 1, 2021 and the adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. ASU 2020-01 clarifies the interaction between accounting standards related to equity securities, equity method investments and certain derivatives, and is expected to reduce diversity in practice and increase comparability of the accounting for these interactions. The Company adopted ASU 2020-01 on January 1, 2021, and the adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Accounting Standards Not Yet Effective

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This new standard changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments, including trade receivables, from an incurred loss model to an expected loss model and adds certain new required disclosures. Under the expected loss model, entities will recognize estimated credit losses over the entire contractual term of the instrument rather than delaying recognition of credit losses until it is probable the loss has been incurred. In May 2019, the FASB issued ASU 2019-05, Financial Instruments-Credit Losses (Topic 326): Targeted Transition Relief. ASU 2019-05 provides entities with an option to irrevocably elect the fair value option, applied on an instrument-by-instrument basis for eligible instruments, that are within the scope of Subtopic 326-20, upon the adoption of Topic 326. The fair value option election does not apply to held-to-maturity debt securities. The new standards were to be effective for the Company's 2020 fiscal year. In November 2019, the FASB issued ASU 2019-10, Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates. This new standard amended the effective date of Topic 326 for smaller reporting companies until January 1, 2023. A company's determination about whether it is eligible to be a smaller reporting company is based on its most recent determination as of November 15, 2019, in accordance with SEC regulations. As of this date, the Company met the SEC definition of a smaller reporting company. Therefore, the Company will not be required to adopt Topic 326 until January 1, 2023. The Company is currently evaluating the potential impact of this new guidance; however, it expects that it could have a significant impact on the Company's allowance for loan losses ("ALLL").

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20): Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans. ASU 2018-14 modifies the disclosure requirements for employers that sponsor defined benefit pension and other post-retirement plans. The amendments in ASU 2018-14 are effective for the Company's 2021 fiscal year end. Because ASU 2018-14 affects disclosure only, management does not expect that the adoption of this standard will have a material impact on the Company's consolidated financial statements.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 is intended to provide temporary optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by the discontinuation of the London Interbank Offered Rate, known as LIBOR, or by another reference rate expected to be discontinued. This guidance is effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.

2. REVENUES

Disaggregation of Revenues

Revenues are disaggregated at the Company's segment level since the segment categories depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. For additional details related to the Company's reportable segments, see Note 18 - "Segment Information."

9

The following table presents the Company's revenues disaggregated by geography for the three months ended March 31, 2021 and 2020. The Company's revenues are primarily derived domestically. Foreign revenues are based on the country in which the legal subsidiary generating the revenue is domiciled. Revenue from any single foreign country was not material to the Company's consolidated financial statements.

	Three Months Ended March 31,
	2021		2020
United States	$	295,868	$	327,599
Foreign	18,625		19,611
Total revenue	$	314,493	$	347,210

Contract Balances

Differences in the timing of revenue recognition, billings and cash collections result in billed trade receivables, unbilled receivables (contract assets) and deferred revenue (contract liabilities) on the consolidated balance sheets.

Contract Assets

Unbilled receivables arise when the timing of billings to customers differs from the timing of revenue recognition, such as when the Company recognizes revenue over time before a customer can be billed. Contract assets are classified as Prepaid expenses and other current assets on the consolidated balance sheets. As of March 31, 2021 and December 31, 2020, the contract asset balance was $10,203 and $17,119, respectively.

Contract Liabilities

The Company records deferred revenues when cash payments are received or due in advance of the Company's performance, including amounts that are refundable, which are recorded as contract liabilities. Contract liabilities are classified as Other current liabilities on the consolidated balance sheets, based on the timing of when the Company expects to recognize revenue.

	Contract Liabilities
Balance at December 31, 2020	$	7,707
Deferral of revenue	6,044
Recognition of unearned revenue	(5,649)
Balance at March 31, 2021	$	8,102
Balance at December 31, 2019	$	6,820
Deferral of revenue	4,030
Recognition of unearned revenue	(147)
Balance at March 31, 2020	$	10,703

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3. DISCONTINUED OPERATIONS

On January 31, 2020, the Company announced that API Group Limited and certain of its affiliates commenced administration proceedings in the U.K. The purpose of the administration proceedings is to facilitate an orderly sale or wind-down of its U.K. operations, which include API Laminates Limited and API Foils Holdings Limited. In the U.S., API Americas Inc. voluntarily filed for Chapter 11 proceedings in Bankruptcy Court on February 2, 2020, in order to facilitate the sale or liquidation of its U.S. assets. The API Americas Inc. Chapter 11 bankruptcy proceedings were closed by the Bankruptcy Court on December 21, 2020. The API entities were wholly-owned subsidiaries of the Company and part of the Diversified Industrial segment. The Company deconsolidated API on January 31, 2020 as it no longer held a controlling financial interest as of that date. On the date of the deconsolidation, the Company believed that API became a variable interest entity. The Company determined at deconsolidation that it was not the primary beneficiary of API as the Company no longer held a controlling financial interest in API and the Company lacked significant decision-making ability.

The components of Net loss from discontinued operations, net of taxes in the accompanying consolidated statements of operations are:

	Three Months Ended March 31, 2020
Loss from operations of discontinued operation	$	(2,301)
Gain upon initial deconsolidation of API	30,515
Loss from guarantee liability	(52,483)
Net loss from discontinued operations, net of taxes	$	(24,269)

All amounts associated with API have been removed from the Company's financial statements and footnotes, and reported in discontinued operations as described herein.

The following represents the detail of Loss from discontinued operations, net of taxes in the accompanying consolidated statements of operations:

	Three Months Ended March 31, 2020
Revenue	$	6,388
Costs and expenses:
Cost of goods sold	6,085
Selling, general and administrative expenses	2,219
Other expenses, net	385
Total costs and expenses	8,689
Loss before income taxes	(2,301)
Income tax benefit	—
Loss from discontinued operations, net of taxes	$	(2,301)

4. ACQUISITIONS AND DIVESTITURES

Acquisition

On January 23, 2020, the Company, through its wholly-owned subsidiary, OMG, Inc. ("OMG"), completed the acquisition of Metallon, Inc. ("Metallon"), which is in the business of manufacturing plugs for the composite exterior deck market, for a cash purchase price of $3,500. The assets acquired included goodwill of $2,300, other intangible assets, primarily unpatented technology, of $800 and property, plant and equipment of $400. No liabilities or contingent consideration were included in the acquisition. Prior to the acquisition, Metallon was the exclusive supplier of plugs to OMG for composite exterior decks, and this acquisition will provide OMG with additional control of its supply chain, production costs and overall product margin. OMG is included in the Company's Diversified Industrial segment. The goodwill of $2,300 is expected to be deductible for income tax purposes. The final purchase price and purchase price allocation of Metallon were finalized as of September 30, 2020, with no significant changes to preliminary amounts.

Divestiture

On February 1, 2021, the Company completed the sale of its Edge business for a sales price of $16,000, subject to a working capital adjustment. The Company recognized a pre-tax gain of $8,096 which is presented in Other income, net in the consolidated statement of operations during the three months ended March 31, 2021. Edge provided roofing edge products and

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components utilized in the securement of perimeter roof edges and was part of the Company's OMG business in the Diversified Industrial segment. Edge recognized net sales of $17,534 and operating income of $1,250 for the year ended December 31, 2020.

5. LOANS RECEIVABLE, INCLUDING LOANS HELD FOR SALE

Major classifications of Loans receivable, including loans held for sale, held by WebBank as of March 31, 2021 and December 31, 2020 are as follows:

	Total								Current				Non-current
	March 31, 2021		%		December 31, 2020		%		March 31, 2021		December 31, 2020		March 31, 2021		December 31, 2020
Loans held for sale	$	91,316			$	88,171			$	91,316	$	88,171	$	—	$	—
Commercial real estate loans	$	727	—	%	$	672	—	%	—		—		727		672
Commercial and industrial	2,690,403		95	%	2,279,672		94	%	187,242		221,469		2,503,161		2,058,203
Consumer loans	127,635		5	%	147,652		6	%	81,562		23,510		46,073		124,142
Total loans	2,818,765		100	%	2,427,996		100	%	268,804		244,979		2,549,961		2,183,017
Less:
Allowance for loan losses	(19,984)				(27,059)				(19,984)		(27,059)		—		—
Total loans receivable, net	$	2,798,781			$	2,400,937			248,820		217,920		2,549,961		2,183,017
Loans receivable, including loans held for sale (a)									$	340,136	$	306,091	$	2,549,961	$	2,183,017

(a)    The carrying value is considered to be representative of fair value because the rates of interest are not significantly different from market interest rates for instruments with similar maturities. The fair value of loans receivable, including loans held for sale, was $2,886,872 and $2,498,218 as of March 31, 2021 and December 31, 2020, respectively.

Loans with a carrying value of approximately $56,818 and $15,849 were pledged as collateral for potential borrowings as of March 31, 2021 and December 31, 2020, respectively. WebBank serviced $2,814 and $2,828 in loans for others as of March 31, 2021 and December 31, 2020, respectively.

WebBank sold loans classified as loans held for sale of $2,208,754 and $5,124,275 during the three months ended March 31, 2021 and 2020, respectively. The sold loans were derecognized from the consolidated balance sheets. Loans classified as loans held for sale primarily consist of consumer and small business loans. Amounts added to loans held for sale during the same periods were $2,213,886 and $4,969,689, respectively. The reduction in loans held for sale as of March 31, 2021 reflects the impact of reduced lending by WebBank's partners due to the economic impact of the COVID-19 pandemic. Such factors include lower sales volumes at WebBank's partners as well as tightening their credit policies due to the increase in the U.S. unemployment rates and other factors. This in turn has reduced the volume of loans being initiated by, and then sold by, WebBank.

Allowance for Loan Losses

The ALLL represents an estimate of probable and estimable losses inherent in the loan portfolio as of the balance sheet date. Losses are charged to the ALLL when incurred. Generally, commercial loans are charged off or charged down when they are determined to be uncollectible in whole or in part. Consumer term loans are charged off at 120 days past due and open-end consumer and small and medium business loans are charged off at 180 days past due unless the loan is well secured and in the process of collection. The amount of the ALLL is established by analyzing the portfolio at least quarterly, and a provision for or reduction of loan losses is recorded so that the ALLL is at an appropriate level at the balance sheet date. The methodologies used to estimate the ALLL depend upon the impairment status and portfolio segment of the loan. Loan groupings are created for each loan class and are then graded against historical and industry loss rates.

After applying historic loss experience, the quantitatively derived level of ALLL is reviewed for each segment using qualitative criteria. Various risk factors are tracked that influence our judgment regarding the level of the ALLL across the portfolio segments. Primary qualitative factors that may be reflected in the quantitative models include:

•Asset quality trends

•Risk management and loan administration practices

•Portfolio management and controls

•Effect of changes in the nature and volume of the portfolio

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•Changes in lending policies and underwriting policies

•Existence and effect of any portfolio concentrations

•National economic business conditions and other macroeconomic adjustments

•Regional and local economic and business conditions

•Data availability and applicability

•Industry monitoring

•Value of underlying collateral

Changes in the level of the ALLL reflect changes in these factors. The magnitude of the impact of each of these factors on the qualitative assessment of the ALLL changes from quarter to quarter according to the extent these factors are already reflected in historic loss rates and according to the extent these factors diverge from one another. Also considered is the uncertainty inherent in the estimation process when evaluating the ALLL. WebBank's ALLL decreased $7,075, or 26%, during the three months ended March 31, 2021. This decrease was driven by lower than expected losses related to COVID-19 and higher paydowns, and, as a result, WebBank released a portion of the allowance for COVID-19 related qualitative and environmental factors. WebBank continues to monitor the impact of the COVID-19 pandemic on its loan portfolio and anticipates potential future economic disruption associated with the pandemic. WebBank believes there remains a potential for broad negative impact on the macro-economy that may cause estimated credit losses to materially differ from historical loss experience.

Changes in the ALLL are summarized as follows:

	Commercial Real Estate Loans		Commercial & Industrial		Consumer Loans		Total
December 31, 2020	$	22	$	9,293	$	17,744	$	27,059
Charge-offs	—		(3,607)		(3,669)		(7,276)
Recoveries	6		514		396		916
(Benefit) Provision	(6)		1,038		(1,747)		(715)
March 31, 2021	$	22	$	7,238	$	12,724	$	19,984

	Commercial Real Estate Loans		Commercial & Industrial		Consumer Loans		Total
December 31, 2019	$	24	$	10,920	$	25,738	$	36,682
Charge-offs	—		(3,898)		(7,301)		(11,199)
Recoveries	1		149		653		803
(Benefit) Provision	(2)		11,945		14,194		26,137
March 31, 2020	$	23	$	19,116	$	33,284	$	52,423

The ALLL and outstanding loan balances according to the Company's impairment method are summarized as follows:

March 31, 2021	Commercial Real Estate Loans		Commercial & Industrial		Consumer Loans		Total
Allowance for loan losses:
Individually evaluated for impairment	$	10	$	92	$	—	$	102
Collectively evaluated for impairment	12		7,146		12,724		19,882
Total	$	22	$	7,238	$	12,724	$	19,984
Outstanding loan balances:
Individually evaluated for impairment	$	10	$	1,202	$	—	$	1,212
Collectively evaluated for impairment	717		2,689,201		127,635		2,817,553
Total	$	727	$	2,690,403	$	127,635	$	2,818,765

December 31, 2020	Commercial Real Estate Loans		Commercial & Industrial		Consumer Loans		Total
Allowance for loan losses:
Individually evaluated for impairment	$	10	$	129	$	—	$	139
Collectively evaluated for impairment	12		9,164		17,744		26,920
Total	$	22	$	9,293	$	17,744	$	27,059
Outstanding loan balances:
Individually evaluated for impairment	$	10	$	1,283	$	—	$	1,293
Collectively evaluated for impairment