Steel Connect Inc (STCN) Reports Significant Increase in Net Income and Adjusted EBITDA for Q4 ...
Q4 net income from continuing operations soared to $8.1 million, up from $2.9 million year-over-year.
Adjusted EBITDA for Q4 increased to $10.6 million, a significant rise from $4.7 million in the prior year.
Fiscal Year 2023 net income attributable to common stockholders turned positive at $13.5 million, recovering from a net loss of $13.1 million in the prior year.
Despite a decrease in net revenue, the company achieved a substantial improvement in profitability metrics.
On November 8, 2023, Steel Connect Inc (NASDAQ:STCN) released its earnings report for the fourth quarter and fiscal year ended July 31, 2023. The company witnessed a remarkable increase in profitability, with net income from continuing operations for Q4 jumping to $8.1 million from $2.9 million in the previous year. This performance was echoed in the fiscal year results, where net income attributable to common stockholders turned around from a net loss of $13.1 million to a gain of $13.5 million.
Financial Performance Overview
Steel Connect Inc (NASDAQ:STCN) reported a decrease in net revenue from continuing operations for the fourth quarter, totaling $40.8 million compared to $53.0 million in the prior year. The full fiscal year also saw a decline in net revenue to $189.1 million from $203.3 million. Despite the revenue challenges, the company significantly improved its profitability. Adjusted EBITDA for the fourth quarter was $10.6 million, a substantial increase from $4.7 million in the prior year. For the fiscal year, Adjusted EBITDA climbed to $27.7 million from $8.0 million.
Income Statement and Balance Sheet Highlights
The company's gross profit margin improved in both the fourth quarter and the fiscal year, with a notable increase from 22.6% to 27.1% in Q4. Selling, general, and administrative expenses decreased by 25.7% in the fourth quarter, contributing to the improved bottom line. The balance sheet reflects a strong cash position, with cash and cash equivalents reported at $121.4 million as of July 31, 2023.
Operational and Strategic Developments
Steel Connect Inc (NASDAQ:STCN) completed a reverse/forward stock split on June 21, 2023, and disposed of all its interest in Aerojet common stock, resulting in net proceeds of $207.8 million. The company also reported a net cash provided by operating activities of $8.5 million for the quarter and $17.5 million used for the fiscal year.
Analysis of Company's Performance
The company's performance in the fourth quarter and fiscal year 2023 demonstrates a strong ability to manage costs and improve operational efficiency, leading to increased profitability despite lower revenues. The strategic disposal of Aerojet common stock and the reverse/forward stock split are indicative of management's proactive approach to capital structure optimization and shareholder value enhancement.
Steel Connect Inc (NASDAQ:STCN) has shown resilience in a challenging market environment, with its end-to-end global supply chain solutions and e-commerce provider subsidiary, ModusLink Corporation, continuing to serve key markets effectively. The company's focus on improving speed to market, product customization, flexibility, cost, quality, and service remains a cornerstone of its strategy.
For a more detailed analysis and financial tables, investors and interested parties are encouraged to view the full earnings report on the company's website or SEC filings.
Investors seeking further information can contact Jennifer Golembeske at 914-461-1276 or investorrelations@steelconnectinc.com.
Explore the complete 8-K earnings release (here) from Steel Connect Inc for further details.
This article first appeared on GuruFocus.
