Steel Partners Holdings LP — Investor Day (March 2017)
64 slides from Steel Partners Holdings LP's investor day presentation, Mar 28, 2017
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Slide 3: Agenda
Lunch with Special Guest Speaker, General Richard I. Neal Business Overview & History — Warren Lichtenstein, Executive Chairman Strategic Focus & Imperatives — Jack Howard, President The Steel Way — Jeff Svoboda, Vice Chairman Business Segment Reviews Diversified Industrial—Jeff Svoboda; Bill Fejes,
Slide 4: Forward Looking Statements
Forward Looking Statements Use of Non-GAAP Financial Measures This document may contain 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 Steel Partners Ho
Slide 5: History
History Firm founded Steel Partners SP Acquisition Listed on NYSE Acquired remaining in February Japan Strategic Holdings launched under “SPLP” shares of Steel Fund launched Excel; Proposal made to acquire remaining shares of Handy & Harman Steel Partners Il Steel Partners China Steel Partners Holdi
Slide 6: Reporting Segments & Principal Operating Entities
Reporting Segments & Principal Operating Entities Revenue: $1.28 Steel Partners Netincans (Attributable to Common Unitholders}: $7M (1%) Holdings L.P. Adjusted EBITDA‘: $149M (13%) Cash & Investments”: $624M ae. Total Debt: $304M Accrued Pension Liabilities: $285M Corporate Expense: $24M (-2%) Finan
Slide 7: Our Business: A Diversified Global Holding Company
Our Business: A Diversified Global Holding Company e Three broad segments: Diversified Industrial, Energy, Financial Services e Structured as partnership with 100%-owned businesses, controlled subsidiaries and active investments; effective use of limited partnership to maximize tax efficiencies e St
Slide 8: Steel at a Glance
Steel at a Glance Steel Partners founded in 1990 Current entity created in 2009; Listed on NYSE in April 2012 4,857 employees at 72 locations in 8 countries Inside ownership: 50% e.- Market cap: $490 million (as of March 22%) @--| Unit price: $18.75 (as of March 22") eo. Revenue: $1.2 billion @-. Ad
Slide 9: Competitive Advantages, Unique Characteristics
Competitive Advantages, Unique Characteristios e Corporate structure provides distinct competitive advantages not easy to replicate e Diversification e Tax efficiencies e Permanent capital e Economies of scale through shared services e Access to expert corporate management resources e Managementince
Slide 10: Strategy & Philosophy
Strategy & Philosophy ya Investing on the Basis of Value, Not Popularity e Investin good companies with simple business models at prices that have built-in margins of safety e Avoid complex businesses or investments that cannot be easily explained or understood e Create continuous improvement cultur
Slide 11: Deep Discount to Sum-of-the-Parts (SOTP)
Deep Discount to Sum-of-the-Parts (SOTP) WebBank (1) $319.4 $ 12.21 Handy & Harman uv 204.2 781 (MV) Quoted market price Ensray sooment 2) iee8 £3 (1) Current market value determined using the trailing API ) 84.4 3.23 twelve months net income for the period ended ; December 31, 2016 as reported in W
Slide 12: Senior Management Team
Senior Management Team Executive Chairman President Vice Chairman o>dwor Chief Financial Officer oOS0 VicG' Senior Vice President and General Counsel Senior Vice President — Corporate Development Senior Vice President — Mergers & Acquisitions Vice President— Human Resources
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Slide 14: Business Simplification Plan
Business Simplification Plan Working Toward ONE Steel 2015 — 2017: Purchased non-Steel-owned shares of API Group, JPS Industries, SL Industries, DGT Holdings, CoSine Communications and Steel Excel Implementing a Board-approved, strategic business simplification plan aimed at streamlining corporate s
Slide 15: Business Simplification Plan
Business Simplification Plan Handy & Harman ays Holding Inc nero ‘API Group ple oPSindustries industries, Inc. GenCorp inc. Cosine FH Acquisition : Websiank Barbican Group stestexcelinc. Communications torn. Nathan's Famous, Other Minority a Inc. (Fox & Hound) Aerojet Handy & Harman WebFinancial Mod
Slide 16: Other Highlights
Other Highlights Return of Capital e Board declared special, one-time cash dividend of $0.15 per unit, paid January 13, 2017, to unitholders of record as of January 3, 2017 e Approved buy-back of up to 2 million Steel Partners’ units
Slide 17: Strategic Growth Model
Strategic Growth Model Acquire Good Companies with Simple Business Models Incentivize, Focus and Empower Top Talent e Empower, hold accountable, incentivize and reward team to deliver results using the right behaviors e Acquire and operate entire businesses e Purchase with built-in margins of safety
Slide 18: SteelGrow
SteelGrow Communicate Expectations Internal Leadership Development External Senior/ Mid-Level Talent Acquisition Pipeline Co-Op and Intern Programs Ww : : ; STEELGROW Integrity Beyond Reproach Building Teams & Fostering Teamwork Achieve Process-Driven Results Continuous Improvement Mindset Analytica
Slide 19: Efficient Support Structure
Efficient Support Structure Seeks to achieve economies of scale and put into effect operational excellence and strategic programs that enable portfolio companies to implement capital allocation policies and corporate development guidelines, as well as reduce overhead costs MD \\_ STEEL PARTNERS IT C
Slide 20: Efficient Support Structure
Efficient Support Structure Steel Services e Portfolio companies are able to access centralized functional experts Collaboration 1) Knowledge Transfer & @ Quality Services Effective Communication Cost Savings e 60+ professionals providing shared corporate services, enabling operating management to f
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Slide 22: The Steel Way
The Steel Way 2 2 Steel Business System Strategy Deployment Profitable Aen 4809 Aroqueauy prog Sales Growth Tools for Growth Variation Reduction Tools Lean Tools Associate Development
Slide 23: Steel Business System
Steel Business System Value Stream Mapping (VSM) One Piece Flow Visual Management Safety — 75% Improvement in RIR Quality — 30% Scrap Reduction Delivery — 50% Lead Time Reduction Inventory — 25% Turns Improvement Setup Time Reduction (SMED) Variation Reduction Kaizen (VRK) Change over time from 6 ho
Slide 24: Steel Business System
Steel Business System e VOC Rapid Product Innovation Safety — no ladder needed Cost — one screw vs. plates Productivity e High product margin, incremental volume e Many wood to wood joints in residential construction
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Slide 26: Diversified Industrial Segment
Diversified Industrial Segment , a manufacturer and distributor of foils, films and laminates, provides exceptional brand enhancement solutions for consumer goods and printed media worldwide across a wide-range of industry sectors ‘ r , a diversified manufacturing company, owns multiple market leadi
Slide 27: API Group plc
API Group plc Gi Roots in British paper industry, founded on century-old trading history 13 locations across U.S., Europe and Asia Packaging solutions that enable companies across wide-range of sectors to empower their brands on the shelf and in the hand — Premium Drinks — Confectionery i Tobacco fe
Slide 28: API Group plc
API Group plc Amsterd. Continues focus on offering brand enhancement solutions for Met eG ar e packaging market by adding outstanding complementary products, ScaIZeCeerOCUctS|) further enhancing capability to serve customers, and providing (Dec 2016) ! : entry into attractive new sectors Acquired ce
Slide 29: API Group plc
API Group plc Holographics Tobacco Foils Cosmetics & Dominates) Healthcare Wine & Spirits
Slide 30: API Group plc
API Group plc Grow Laminates Europe Business Optimize Foils Operational, Service and Product Offering Improve service offering through new hub structure Build capacity to absorb global tobacco growth e Implement Steel Business System roadmap e Win luxury business through creative development service
Slide 31: Handy & Harman Ltd.
Handy & Harman Ltd. f Handy Harman... “I ) Nasdaq traded (HNH) 3,400+ employees; 47 locations; 8 countries Six reported business units — Joining Materials — Tubing — Building Materials - Performance Materials - Electrical Products - Kasco Vi on @ B ‘Whirlpoo! Honeywell CARLISLE ma || AN ity Pratt wn
Slide 32: Handy & Harman Ltd.
Handy & Harman Ltd. is ise Expands product portfolio into higher power Electromagnetic Electrical products, diversifies customer base, strengthens Enterprise Products brand, and brings increased value to customers (Sep 2016) (MT) through an impressive automated manufacturing capability
Slide 33: Handy & Harman Ltd.
Handy & Harman Ltd. { Handy&Harman, Tubing Building Materials Performance Materials Electrical Products Joining Materials Products and services are sold through: Direct sales force — Distributors — Manufacturer's representatives Diverse customer base: — Construction Electrical & electronics Transpor
Slide 34: Handy & Harman Ltd.
Handy & Harman Ltd. Handy Harman Build the Management Team and Ability to Promote from Within Drive Organic Growth Standardize and expand Behavioral Based Safety process through all locations Deploy poka-yoke (mistake-proof) approach to implementing safety protection on equipment e Implement talent
Slide 35: Handy & Harman Ltd.
Handy & Harman Ltd. Operating Entities © Leading global producer of metal joining products and services ing Materials © Serves HVAC, electricallelectronics, and transportation markets 9 BEAL isnynte IndianaTube” © Premier manufacturer of seamless, stainless steel tubing Premium manufacturer of welde
Slide 36: Handy & Harman Ltd.
Handy & Harman Ltd. Operating Entities @onmec GastenMaster TASTER TASTER STRONGER L oe = ROOFING 2 PRODUCTS & = © North America’s leading supplier of © Develop and introduce new products 2 commercial roof fastening products © Roofing — Leverage private label channel and = © Providing innovative deck
Slide 37: Handy & Harman Ltd.
Handy & Harman Ltd. Operating Entities n s Strategic Prioriti 3 ar ° ‘¢ Manufacturer of broad range of power © Expand product portfolio to grow and o conversions components: diversify customer base and applications = — Precision electric motors, generators, and © Increase share of wallet at key OEMs
Slide 38: Diversified Industrial Segment
Diversified Industrial Segment $1,200 $800 $400 $0 2012 mmm Revenue 9.0% 6.0% 3.0% 0.0% 2013-2014 «2015 +2016 S.|. Margin —Adj. EBITDA Margin $100 28% 7 3.0% $80 $60 $40 1.0% $20 0.0% 2012 2013 «2014 2015-2016 mmm Cash Flow from Operating Activities mmm FCF —Capex (As % of Segment Revenue)
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Slide 40: Steel Energy Services
Steel Energy Services Focused on well servicing and production services for oil and gas industries, primarily in Bakken (ND, MT) basin, Texas and New Mexico with 460 employees working on 57 rigs and 24 snubbing/flowback units STEEL X ENERGY SI we SERVICE, INC. WILLISTON, ND Black Hawk ENERGY SERVICE
Slide 41: Steel Energy Services
Steel Energy Services $300 40.0% $200 $100 $0 0.0% 2012 2013 «2014-2015 =—«-2016 mam Revenue —S1. Margin —Adj. EBITDA Margin $150 15.0% $100 10.0% $50 5.0% $0 0.0% 2012 «2013-2014. -2015 2016 mmm Cash Flow from Operating Activites mms FCF —CapEx (As a % of Revenue)
Slide 42: Steel Energy Services
sTet Steel Energy Services Snubbing & Flowback QE Rives A ax) ~ WHITING encana natural gas QASIS Q continental hess] SMA Workover DIAMONOBACK Energy
Slide 43: Steel Energy Services
Steel Energy Services Establish safety culture: “DO IT RIGHT OR NOT AT ALL” Improve safety culture across organization by investing in people, training, and supply costs Implement best-in-class safety programs and policies Strategic e Continue to opportunistically acquire businesses that pa provide
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Slide 45: Financial Services Segment | WebBank
Financial Services Segment | [W] WebBank FDIC-insured, state-chartered industrial bank that provides customized consumer and commercial financing solutions on a nationwide basis Leading provider of closed-end and revolving AL) PROSPER P private-label and bank card financing programs, Pay’ conducted
Slide 46: Financial Services Segment WebBank
Financial Services Segment {W) WebBank $120 80.0% $60 14.0% 66.5% 67.0% 7 $100 $60 120% 60.0% 10.0% $20 $40 8.0% $60 40.0% $30 6.0% $40 $20 4.0% 20.0% $20 $10 2.0% $0 0.0% $0 0.0% 2012 2013 2014-2015 2016 2012 20132014 2015-2016 mam Revenue —S|. Margin —Adj. EBITDA Margin mmm Net Income —-ROA
Slide 47: Financial Services Segment
Financial Services Segment $200 $150 $100 $50 $0 2012 2013 mmm Equity 2014 2015 2016 ROE 70% 60% 50% 40% 30% 20% 10% 0% 25% 20% 15% 10% 5% 0% 23% 22% 20%, 20% 20% 2012 2013 2014 2015 2016 —Capital Leverage Ratio
Slide 48: Financial Services Segment WebBank
Financial Services Segment [W]WebBank Total Assets Other Balance Sheet $465 $328 pa 2012 2013 2014 2015 Total Assets Strategic Partners (AFS) 2016
Slide 49: Financial Services Segment WebBank
Financial Services Segment {W] WebBank Revenue Diversification & Optimization Support Product Innovation for Increasing Balance Sheet & Regulatory Complexity Capitalize on leading market position and proven risk and regulatory management capabilities to increase market share & optimize returns Grow
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Slide 51: Consolidated Financial Performance
Consolidated Financial Performance $1,500 13.7% 13.8% 15.0% $1,200 12.0% $900 9.0% $600 6.0% $300 3.0% $0 0.0% 2012 2013 2014 2015 2016 mmm Revenue “NI. Margin —Adj. EBITDA Margin
Slide 52: Consolidated Financial Performance
Consolidated Financial Performance Total Assets $ 1,967.1 $ 1,684.8 $ 1,490.5 Cash and Investments‘ $ 623.8 $ 433.9 $ 639.4 U.S. Federal NOLs $ 512.0 $ 580.5 $ 224.2 Net Debt? $ 231.0 $ 140.0 $ 231.0 Pension Liabilities $ 284.9 §$ 276.5 $ 208.4 Partners’ Capital $ 548.7 $ 558.0 $ 494.9 Partners’ Cap
Slide 53: Financial Performance
Financial Performance $300 $200 $100 $0 2012 2013-2014. 2015-2016 2.0K 1.5K 1.0K 05x 0.0K mmm Net Debt Net Debt-to-Adj. EBITDA Leverage 2012 ©2013-2014 2015-2016 mmm Cash Flow from Operating Activities mms FCF —CapEx (As % of Total SPLP Revenue) 5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
Slide 54: 2017 Key Priorities
2017 Key Priorities e Continue to apply strategic business model — M&A: Identify accretive “bolt-on” acquisitions and acquire new, under-valued businesses and platforms for long-term growth — SteelGrow: Focus and empower top talent — Steel Business System: A set of industry leading best practices to
Slide 55: Steel Partner Holdings L.P.
Steel Partner Holdings L.P. Proven Management Team Driving Value through Accretive Acquisitions Low Market Multiple with Deep Discount to Sum-of-the-Parts High ROIC, Rigid Capital Allocations with Modest Use of Leverage Strong Free Cash Flow and Balance Sheet Diversified Revenue Mix, Market-Leading
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Slide 57: Steel Sports
Steel Sports Social impact organization that strives to provide first-class sports experience to over 120,000 youth athletes emphasizing positive experiences and instilling core values of discipline, teamwork, safety, respect and integrity with 100 employees across the U.S. and U.K. STEEL X SPORTS S
Slide 58: Steel Sports
STEEL X SPORTS
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Slide 60: Sum-of-the-Parts (in millions, except value per unit)
(in millions, except value per unit) (SPLP units outstanding 2/28/2017: 26.2 million) ‘WebBank Handy & Harman Energy Segment API Aerojet Rocketdyne ModusLink Global Solutions Other Investments Preferred Unit Liability Corporate Cash 2/28/17 Corporate Debt 2/28/17 Net Debt Total Value SPLP Unit Closi
Slide 61: Legal Entities & Associated Transactional Activity
N Legal Entities & Associated Transactional Activity Mosistink (18.3%) Stee! Partners Holdings L.P. (100%) Current enity formed | Aor BNS Holdings (100%) Stee Excel (109%) Ge eo) (Formerly CoSine ‘Steel Servings (100% Webiiank (100%) API Group (10%) ty & Harman (32.5%) jas subs Handy Toke KASCO SL I
Slide 62: Financial Performance
Financial Performance ‘SegmentIncome (GAAP) Diversified Industrial $19,175 $42,281 $65,543 $51,900 $27,437 Energy — Energy Business (2692) (25,703) 731) 10,295 30,043 Energy — Sports & Corporate (e767) (69,409) (16,523) 2346 (6,008) Financial Services 42.518 46314 24,251 17.668 12813 Corporate and O
Slide 63: Financial Performance
Financial Performance Energy Services Reconciliation 2012-2016 YEAR ENDED DECEMBER 31, Revenue: Energy - Energy Business 8 75325 § 111,397 § 191,608 § 109,624 § 90,725 Energy - Sports 18,670 21,223 18,540 10,405 2,109 Total Revenue - Energy Segment $ 93,995 $ 132,620 $ 210,148 $ 120,029 $ 92,834 ‘Se
Slide 64: Financial Performance
Financial Performance Free Cash Flow Reconciliation 2012-2016 pay az [zor [zis] aoe] ot D2 Cee ae SI) Operating Cash Flow ‘Steel Partnars Holdings LP. Diverse Insta S S521 $ S750 $ mee S$ 49102 Ss seaI0 Operating cash fou S 19490 § (16753) 5 720m S 94962 5 e6480 Energy- Frey Busines wos wasst gz aip