Cover Page
Cover Page - shares | 3 Months Ended | |
Oct. 31, 2021 | Dec. 01, 2021 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Oct. 31, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-35319 | |
Entity Registrant Name | Steel Connect, Inc. | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0000914712 | |
Current Fiscal Year End Date | --07-31 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 04-2921333 | |
Entity Address, Address Line One | 2000 Midway Ln | |
Entity Address, City or Town | Smyrna | |
Entity Address, State or Province | TN | |
Entity Address, Postal Zip Code | 37167 | |
City Area Code | 914 | |
Local Phone Number | 461-1276 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 60,437,654 | |
Common Stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | STCN | |
Security Exchange Name | NASDAQ | |
Series D Preferred Stock | ||
Entity Information [Line Items] | ||
No Trading Symbol | true | |
Title of 12(b) Security | Rights to Purchase Series D Junior Participating Preferred Stock | |
Security Exchange Name | NASDAQ |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Oct. 31, 2021 | Jul. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 81,330 | $ 96,931 |
Accounts receivable, trade, net of allowance for doubtful accounts of $44 and $49 at October 31, 2021 and July 31, 2021, respectively | 74,841 | 69,805 |
Inventories, net | 18,166 | 16,228 |
Funds held for clients | 6,531 | 8,212 |
Prepaid expenses and other current assets | 18,491 | 22,222 |
Total current assets | 199,359 | 213,398 |
Property and equipment, net | 54,710 | 58,862 |
Goodwill | 231,470 | 231,470 |
Other intangible assets, net | 110,823 | 115,005 |
Operating lease right-of-use assets | 49,941 | 50,836 |
Other assets | 6,851 | 6,810 |
Total assets | 653,154 | 676,381 |
Current Liabilities | ||
Accounts payable | 51,920 | 55,517 |
Accrued expenses | 109,382 | 106,871 |
Funds held for clients | 6,531 | 8,212 |
Current portion of long-term debt | 5,611 | 5,602 |
Current lease obligations | 13,259 | 13,690 |
Other current liabilities | 29,366 | 28,101 |
Total current liabilities | 216,069 | 217,993 |
Convertible note payable | 9,729 | 9,343 |
Long-term debt, excluding current portion | 356,783 | 358,189 |
Long-term lease obligations | 38,338 | 38,927 |
Other long-term liabilities | 10,486 | 10,537 |
Total long-term liabilities | 415,336 | 416,996 |
Total liabilities | 631,405 | 634,989 |
Contingently redeemable preferred stock, $0.01 par value per share. 35,000 shares authorized, issued and outstanding at October 31, 2021 and July 31, 2021 | 35,180 | 35,180 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value per share. 4,965,000 shares authorized at October 31, 2021 and July 31, 2021; zero shares issued and outstanding at October 31, 2021 and July 31, 2021 | 0 | 0 |
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 60,437,654 issued and outstanding shares at October 31, 2021; 63,099,496 issued and outstanding shares at July 31, 2021 | 605 | 632 |
Additional paid-in capital | 7,478,855 | 7,478,638 |
Accumulated deficit | (7,500,251) | (7,480,220) |
Accumulated other comprehensive income | 7,360 | 7,162 |
Total stockholders' (deficit) equity | (13,431) | 6,212 |
Total liabilities, contingently redeemable preferred stock and stockholders' (deficit) equity | $ 653,154 | $ 676,381 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Oct. 31, 2021 | Jul. 31, 2021 |
Accounts receivable, trade, allowance for doubtful accounts | $ 44 | $ 49 |
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 4,965,000 | 4,965,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,400,000,000 | 1,400,000,000 |
Common stock, shares issued (in shares) | 60,437,654 | 63,099,496 |
Common stock, shares outstanding (in shares) | 60,437,654 | 63,099,496 |
Contingent Redeemable Preferred Stock | ||
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 35,000 | 35,000 |
Preferred stock, shares issued (in shares) | 35,000 | 35,000 |
Preferred stock, shares outstanding (in shares) | 35,000 | 35,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Condensed Income Statements, Captions [Line Items] | ||
Net revenue | $ 125,413 | $ 169,934 |
Cost of revenue | 110,133 | 129,466 |
Gross profit | 15,280 | 40,468 |
Operating expenses: | ||
Selling, general and administrative | 22,005 | 26,858 |
Amortization of intangible assets | 4,182 | 6,535 |
Total operating expenses | 26,187 | 33,393 |
Operating (loss) income | (10,907) | 7,075 |
Other income (expense): | ||
Interest income | 4 | 20 |
Interest expense | (7,795) | (7,823) |
Other losses, net | (481) | (2,019) |
Total other expense, net | (8,272) | (9,822) |
Loss before income taxes | (19,179) | (2,747) |
Income tax expense | 315 | 804 |
Net loss | (19,494) | (3,551) |
Less: Preferred dividends on redeemable preferred stock | (537) | (537) |
Net loss attributable to common stockholders | $ (20,031) | $ (4,088) |
Basic net loss per share attributable to common stockholders (in usd per share) | $ (0.33) | $ (0.07) |
Diluted net loss per share attributable to common stockholders (in usd per share) | $ (0.33) | $ (0.07) |
Weighted average common shares used in: | ||
Basic loss per share (in shares) | 60,307 | 61,893 |
Diluted loss per share (in shares) | 60,307 | 61,893 |
Products | ||
Condensed Income Statements, Captions [Line Items] | ||
Net revenue | $ 81,059 | $ 105,708 |
Cost of revenue | 75,185 | 81,192 |
Services | ||
Condensed Income Statements, Captions [Line Items] | ||
Net revenue | 44,354 | 64,226 |
Cost of revenue | $ 34,948 | $ 48,274 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (19,494) | $ (3,551) |
Other comprehensive (loss) income: | ||
Foreign currency translation adjustment | 198 | 2,973 |
Other comprehensive income | 198 | 2,973 |
Comprehensive loss | $ (19,296) | $ (578) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income |
Beginning balance (in shares) at Jul. 31, 2020 | 62,787,919 | ||||
Beginning balance at Jul. 31, 2020 | $ 48,818 | $ 628 | $ 7,478,047 | $ (7,433,700) | $ 3,843 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (3,551) | (3,551) | |||
Preferred dividends | (537) | (537) | |||
Issuance of common stock pursuant to employee stock purchase plan (in shares) | 6,982 | ||||
Issuance of common stock pursuant to employee stock purchase plan | 3 | 3 | |||
Restricted stock forfeitures, net of issuance (in shares) | (932) | ||||
Share-based compensation | 188 | 188 | |||
Other comprehensive items | 2,973 | 2,973 | |||
Ending balance (in shares) at Oct. 31, 2020 | 62,793,969 | ||||
Ending balance at Oct. 31, 2020 | $ 47,894 | $ 628 | 7,478,238 | (7,437,788) | 6,816 |
Beginning balance (in shares) at Jul. 31, 2021 | 63,099,496 | 63,099,496 | |||
Beginning balance at Jul. 31, 2021 | $ 6,212 | $ 632 | 7,478,638 | (7,480,220) | 7,162 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (19,494) | (19,494) | |||
Preferred dividends | (537) | (537) | |||
Issuance of common stock pursuant to employee stock purchase plan (in shares) | 168 | ||||
Restricted stock grants (in shares) | 87,990 | ||||
Restricted stock grants | 0 | $ 1 | (1) | ||
Restricted stock forfeitures, net of issuance (in shares) | (2,750,000) | ||||
Restricted stock forfeitures | 0 | $ (28) | 28 | ||
Share-based compensation | 190 | 190 | |||
Other comprehensive items | $ 198 | 198 | |||
Ending balance (in shares) at Oct. 31, 2021 | 60,437,654 | 60,437,654 | |||
Ending balance at Oct. 31, 2021 | $ (13,431) | $ 605 | $ 7,478,855 | $ (7,500,251) | $ 7,360 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (19,494) | $ (3,551) |
Adjustments to reconcile net loss to cash flows from operating activities: | ||
Depreciation | 8,607 | 5,780 |
Amortization of intangible assets | 4,182 | 6,535 |
Amortization of deferred financing costs | 137 | 148 |
Accretion of debt discount | 386 | 292 |
Share-based compensation | 190 | 188 |
Non-cash lease expense | 3,439 | 3,613 |
Other losses, net | 392 | 3,622 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (5,059) | 12,839 |
Inventories, net | (1,978) | 514 |
Prepaid expenses and other current assets | 3,660 | (4,473) |
Accounts payable and accrued expenses | (482) | 6,416 |
Refundable and accrued income taxes, net | (268) | 503 |
Other assets and liabilities | (4,137) | (6,699) |
Net cash (used in) provided by operating activities | (10,425) | 25,727 |
Cash flows from investing activities: | ||
Additions of property and equipment | (4,742) | (1,059) |
Proceeds from the disposition of property and equipment | 61 | 0 |
Net cash used in investing activities | (4,681) | (1,059) |
Cash flows from financing activities: | ||
Long-term debt repayments | (1,500) | (1,500) |
Preferred dividend payments | (537) | (537) |
Repayments on capital lease obligations | (18) | (17) |
Proceeds from issuance of common stock | 0 | 3 |
Net cash used in financing activities | (2,055) | (2,051) |
Net effect of exchange rate changes on cash, cash equivalents and restricted cash | (121) | (269) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (17,282) | 22,348 |
Cash, cash equivalents and restricted cash, beginning of period | 105,143 | 94,642 |
Cash, cash equivalents and restricted cash, end of period | 87,861 | 116,990 |
Cash and cash equivalents, end of period | 81,330 | 104,522 |
Funds held for clients, end of period | $ 6,531 | $ 12,468 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 3 Months Ended |
Oct. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS Steel Connect, Inc., together with its consolidated subsidiaries (the "Company"), operates through its wholly-owned subsidiaries, IWCO Direct Holdings, Inc. ("IWCO Direct" or "Direct Marketing") and ModusLink Corporation ("ModusLink" or "Supply Chain"). IWCO Direct delivers data-driven marketing solutions for its customers. Its full range of services includes strategy, creative and execution for omnichannel marketing campaigns, along with postal logistics programs for direct mail. Through its Mail-Gard® division, IWCO Direct also offers business continuity and disaster recovery services to protect against unexpected business interruptions, along with providing print and mail outsourcing services. ModusLink is a supply chain business process management company serving clients in markets such as consumer electronics, communications, computing, medical devices, software and retail. ModusLink designs and executes elements in its clients' global supply chains to improve speed to market, product customization, flexibility, cost, quality and service. The Company also produces and licenses an entitlement management solution for activation, provisioning, entitlement subscription and data collection from physical goods (connected products) and digital products. Historically, the Company has financed its operations and met its capital requirements primarily through funds generated from operations, the sale of its securities, borrowings from lending institutions and sale of facilities that were not fully utilized. The Company believes it has access to adequate resources to meet its needs for normal operating costs, capital expenditures, mandatory debt redemptions and working capital for its existing business for at least twelve months from the date of this filing. These resources include current cash and cash equivalents, ModusLink's credit agreement with MidCap Financial Trust ("MidCap"), IWCO's revolving credit facility with Cerberus Business Finance, LLC ("Cerberus"), and cash, if any, provided by operating activities. The Company's expectations regarding its ability to use its existing cash and available credit facilities to continue funding its operations are based on assumptions that may prove to be inaccurate, and the Company may require capital resources sooner than currently expected. While the Company believes it will be able to access this additional liquidity based on existing information, the assumptions underlying this belief may also later prove to be inaccurate. As of October 31, 2021 and July 31, 2021, the Company had cash and cash equivalents of $81.3 million and $96.9 million, respectively. As of October 31, 2021, the Company had a working capital deficit of $16.7 million, which includes accrued pricing liabilities and certain tax related liabilities, which the Company believes will not require a significant cash outlay in the next twelve months. As of October 31, 2021, IWCO Direct had $25.0 million available borrowing capacity under its Cerberus Credit Facility. During the three months ended October 31, 2021, IWCO Direct did not trigger any of the financial covenants in the Cerberus Credit Facility. In order to maintain compliance with the Cerberus Credit Facility’s required liquidity covenant for the next twelve months, the Company has the ability and wherewithal to execute certain actions that may include, but are not limited to, reducing or delaying capital and strategic investments, and deferral of certain operating expenditures. While IWCO Direct currently expects to be in compliance in the next twelve months with all of the financial covenants, there can be no assurance that these covenants will continue to be met if the Company does not achieve its earnings and operating cash flow projections. Certain of IWCO Direct’s lease agreements contain financial covenants that would require IWCO Direct to issue a letter of credit (“LOC”) to the landlord in the event that IWCO Direct incurs debt that on a pro forma basis would result in IWCO Direct's net leverage exceeding 6.00x of IWCO Direct's Adjusted EBITDA. As of October 31, 2021, and through the date of this filing, IWCO Direct was in compliance with the net leverage ratio such that no LOC issuance is currently required. However, based upon IWCO Direct's covenant compliance as of the most recent balance sheet date, if IWCO Direct incurs additional debt, it would be required to issue an LOC of approximately $3.2 million . As of October 31, 2021, ModusLink had readily available borrowing capacity under its revolving credit facility of $8.5 million. The Company believes it will generate sufficient cash to meet its debt covenants under its credit facilities to which certain of its subsidiaries are a party and that it will be able to obtain cash through its current and future credit facilities, if needed. Impact of COVID-19 The ongoing COVID-19 pandemic has adversely impacted, and is likely to further adversely impact, nearly all aspects of our business and markets, including our workforce and the operations of our clients, suppliers, and business partners. Beginning in March 2020, when 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, we experienced impacts to our customers' demand, facility operations, supply chain, availability and productivity of personnel, while also working to comply with rapidly evolving international, federal, state and local restrictions and recommendations on travel and workplace health and safety. We experienced disruptions to our business continuity as a result of temporary closures of certain of ModusLink’s facilities in the third and fourth quarters of fiscal year 2020, as well as the fourth quarter of fiscal year 2021. However, these temporary closures did not have a significant impact on ModusLink’s operations. Additionally, although IWCO Direct operated as an essential business, it had reduced operating levels and labor shifts due to lower sales volume during the third quarter of fiscal year 2020. To help combat these impacts and mitigate the financial impact of the COVID-19 pandemic on our business, during fiscal year 2020 we took proactive measures by initiating cost reduction actions, including the waiver of board fees, hiring freezes, staffing and force reductions, company-wide salary reductions, bonus payment deferrals and temporary 401(k) match suspension. The temporary waiver of board fees and company-wide salary reduction actions taken in the prior fiscal year were fully restored prior to the beginning of fiscal year 2021, and the majority of salary reductions were repaid prior to the fiscal quarter ended January 31, 2021.We continue our focus on cash management and liquidity, which includes aggressive working capital management. In addition, we aim to closely monitor the impact of COVID-19 on all aspects of our business and geographies, including its impact on our clients, employees, suppliers, vendors, business partners and distribution channels. We believe that such impacts could include, but are not limited to, the extent and severity of the impact on our customers and suppliers; the continued disruption to the demand for our businesses' products and services; the impact of the global business and economic environment on liquidity and the availability of capital; delays in payments of outstanding receivables beyond normal payment terms; supply chain disruptions; uncertain demand; and the effect of any initiatives or programs that we may undertake to address financial and operational challenges faced by our customers. The full extent to which the pandemic will directly or indirectly impact our business, results of operations and financial condition, is difficult to predict and will depend on the duration and spread of the ongoing COVID-19 pandemic (including new variants of COVID-19), its severity, the actions to contain the virus or address its impact, the timing, distribution, and efficacy of vaccines and other treatments, U.S. and foreign government actions to respond to the reduction in global economic activity, and how quickly and to what extent normal economic and operating conditions can resume. As of the filing of this Form 10-Q, all of our facilities were open and able to operate at normal capacities. We will evaluate further actions if circumstances warrant while continuing to strategically support the Company’s future growth initiatives (including its Competitive Improvement Plan for IWCO Direct), sales and marketing activities and supply chain solutions and services. Steel Holdings Expression of Interest On November 19, 2020, the Company's Board of Directors (the "Board") received a preliminary, non-binding expression of interest (the "Expression of Interest") from Steel Partners Holdings L.P. ("Steel Holdings") to acquire all of the outstanding shares of common stock not already owned by Steel Holdings or its affiliates for a combination of cash and Steel Holdings 6% Series A Preferred Units, which would imply a value per share of common stock in the range of $0.65 to $0.72 per share. The Board has established a special committee comprised solely of independent directors (the "Acquisition Proposal Special Committee") authorized to retain independent legal and financial advisors and to review, evaluate, negotiate and approve or disapprove the Expression of Interest, and to explore alternative strategies or transactions. The Acquisition Proposal Special Committee announced on January 11, 2021 that it had retained financial advisors and legal counsel. As set forth in the Expression of Interest, the proposed transaction will be subject to the approval of the Acquisition Proposal Special Committee, as well as a non-waivable condition requiring approval of a majority of the shares outstanding of the Company not owned by Steel Holdings and its affiliates and related parties. The Board resolutions establishing the Acquisition Proposal Special Committee expressly provide that the Board will not approve the proposed transaction contemplated by the Expression of Interest or any alternative thereto without a prior favorable recommendation by the Acquisition Proposal Special Committee. The Board has only received a proposal, which it continues to negotiate with Steel Holdings. The proposal under negotiation does not constitute a definitive offer capable of acceptance, and may be withdrawn at any time and in any manner. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that the transaction proposed in the Expression of Interest or any other transaction will be approved or completed. The Company is not obligated to disclose any further developments or updates on the progress of the proposed transaction until either the Company enters into a definitive agreement or the Acquisition Proposal Special Committee determines no such transaction will be approved. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Oct. 31, 2021 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATIONThe accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of a normal recurring nature) considered necessary for fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes for the year ended July 31, 2021 (Fiscal Year 2021), which are contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on October 29, 2021. The results for the three months ended October 31, 2021 are not necessarily indicative of the results to be expected for the full fiscal year. The year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. All significant intercompany transactions and balances have been eliminated in consolidation. The Company considers events or transactions that occur after the balance sheet date but before the issuance of financial statements to provide additional evidence relative to certain estimates or to identify matters that require additional disclosure. For the three months ended October 31, 2021, the Company evaluated subsequent events for potential recognition and disclosure through the date these financial statements were filed. Reclassification Certain reclassifications have been made to the prior year balances to conform with current reporting. On the statement of cash flows for the three months ended October 31, 2021, the Company reclassified the non-cash portion of lease expense which totaled $3.6 million from Other Assets and Liabilities to Non-cash Lease Expense. These reclassifications had no impact on net loss or stockholder’s equity. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Oct. 31, 2021 | |
Accounting Policies [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Adoption of New Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which amends the existing guidance relating to the accounting for income taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of U.S. GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. The new guidance was effective for the Company's first quarter of the fiscal year ending July 31, 2022 (Fiscal Year 2022). The adoption of this new guidance did not have a material impact on the Company's consolidated financial statements. Accounting Standards Issued and Not Yet Implemented In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Loses on Financial Instruments , an ASU that requires measurement and recognition of expected credit losses for financial instruments, including trade receivables, based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The ASU will be effective for the Company beginning in the first quarter of the fiscal year ending July 31, 2024 on a modified retrospective basis, which requires a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating this guidance to determine the impact it may have on its 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, which 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 optional 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 this guidance to determine the impact it may have on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40) . The amendment in this update simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock. This update also amends the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share. The update also requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity's financial statements and information about events, conditions and circumstances that can affect the assessment of the amount or timing of an entity's future cash flows related to those instruments. The guidance is effective for interim and annual periods beginning in our fiscal year ending July 31, 2025, with early adoption permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. |
INVENTORIES, NET
INVENTORIES, NET | 3 Months Ended |
Oct. 31, 2021 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | INVENTORIES, NET The table below presents the components of Inventories, net: October 31, July 31, (In thousands) Raw materials $ 17,206 $ 15,484 Work-in-process 175 76 Finished goods 785 668 $ 18,166 $ 16,228 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended |
Oct. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS The Company's goodwill of $231.5 million as of October 31, 2021 and July 31, 2021, respectively, relates to the Company's Direct Marketing reporting unit, which is the only reporting unit in the Direct Marketing reportable segment. The carrying value of goodwill is not amortized, but is tested for impairment annually as of June 30, and, additionally on an interim basis, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Other intangible assets, net, as of October 31, 2021, include customer relationships. The trademarks and tradenames intangible assets were fully amortized as of January 31, 2021. A summary of other intangible assets, net are reflected in the table below: October 31, 2021 July 31, 2021 Weighted Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (in years) (In thousands) Customer relationships 15 $ 192,730 $ 81,907 $ 110,823 $ 192,730 $ 77,725 $ 115,005 Trademarks and tradenames 3 20,520 20,520 — 20,520 20,520 — Total $ 213,250 $ 102,427 $ 110,823 $ 213,250 $ 98,245 $ 115,005 The table below presents amortization expense recorded by the Company for other intangible assets: Three Months Ended 2021 2020 (In thousands) Customer relationships $ 4,182 $ 4,825 Trademarks and trade names — 1,710 Total $ 4,182 $ 6,535 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 3 Months Ended |
Oct. 31, 2021 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIESThe following tables reflect the components of "Accrued expenses" and "Other current liabilities": October 31, July 31, Accrued Expenses (In thousands) Accrued taxes $ 56,509 $ 57,152 Accrued compensation 27,458 22,987 Accrued worker's compensation 1,805 1,818 Accrued audit, tax and legal 3,840 3,674 Accrued contract labor 1,119 930 Accrued interest 190 476 Accrued other 18,461 19,834 $ 109,382 $ 106,871 October 31, July 31, Other Current Liabilities (In thousands) Accrued pricing liabilities $ 10,295 $ 10,295 Customer postage deposits 15,370 13,452 Other 3,701 4,354 $ 29,366 $ 28,101 As of October 31, 2021 and July 31, 2021, the Company had accrued taxes of $56.5 million and $57.2 million, respectively, which reflected the Company's estimate for certain tax related liabilities. As of both October 31, 2021 and July 31, 2021, the Company had accrued pricing liabilities of approximately $10.3 million. As previously reported by the Company, several principal adjustments were made to its historic financial statements for periods ending on or before January 31, 2012, the most significant of which related to the treatment of vendor rebates in its pricing policies. Where the retention of a rebate or a mark-up was determined to have been inconsistent with a client contract, the Company concluded that these amounts were not properly recorded as revenue. Accordingly, revenue was reduced by an equivalent amount for the period that the rebate was estimated to have been affected. A corresponding liability for the same amount was recorded in that period (referred to as accrued pricing liabilities). The Company believes that it may not ultimately be required to pay all or any of the accrued pricing liabilities based upon the expiration of statutes of limitations, and due in part to the nature of the interactions with its clients. The remaining accrued pricing liabilities as of October 31, 2021 will be derecognized when there is sufficient information for the Company to conclude that such liabilities are not subject to escheatment and have been extinguished, which may occur through payment, legal release, or other legal or factual determination. The Company has not provided for any provision for interest and or penalties related to escheatment as it has concluded that such is not probable to occur, and any potential interest and penalties cannot be reasonably estimated. |
RESTRUCTURING
RESTRUCTURING | 3 Months Ended |
Oct. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING | RESTRUCTURING IWCO Direct Restructuring Activities On June 2, 2021, the Board approved a Competitive Improvement Plan (“CIP”) for IWCO Direct, which addresses the changing requirements of its customers and markets it serves, as well as the current competitive landscape. The CIP seeks to expand IWCO Direct’s marketing services capabilities, and upgrade its production platform to new digital and inserting technology, while reducing its overall production costs to enhance its competitive pricing capabilities. The CIP contemplates a total investment of approximately $54 million primarily over a 24-month period. The Company estimates the CIP cost will consist of approximately: (1) $38 million for digital press and insertion equipment, and technology build out cost (of which approximately $34 million in lease/purchase agreements were entered into subsequent to the year ended July 31, 2021), and (2) $16 million for severance, employee retention, facilities optimization, and other implementation costs. In addition, the Company expects to incur approximately $12 million for non-cash accelerated depreciation expense. The cost estimates do not include amounts for potential non-cash asset impairment charges relating to facilities and equipment optimization. The timing and amount of the future costs incurred will depend on a number of factors. Accelerated depreciation costs primarily relate to operating facilities and equipment to be sold or closed as part of the programs. Accelerated depreciation costs represent the difference between the depreciation expense to be recognized over the revised useful life of the asset, based upon the anticipated date the site will be closed or divested or the equipment disposed of, and depreciation expense as determined utilizing the useful life prior to the restructuring actions. As part of the CIP, the Company announced on August 23, 2021 that it will be optimizing its manufacturing footprint by closing IWCO Direct’s Little Falls, Minnesota facility. The facility is expected to close in January of 2022. The Company recognized approximately $6.6 million of cost during the three months ended October 31, 2021 and did not incur any material costs during the fiscal year ended July 31, 2021 associated with these restructuring activities. ModusLink Restructuring Activities During the fiscal year ended July 31, 2021, ModusLink implemented a strategic plan to reorganize its sales function and the e-Business operations. The restructuring charges associated with this plan were incurred during the fiscal year ended July 31, 2021 and were primarily composed of employee termination costs. ModusLink did not incur any restructuring charges during the three months ended October 31, 2021. In November 2021, ModusLink amended its strategic plan to include reorganizing its supply chain operations and expects to record a restructuring charge of approximately $1.0 million in the three months ending January 31, 2022. The tables below present restructuring charges by type of cost for the three months ended October 31, 2021: (in thousands) Direct Marketing Accelerated depreciation $ 4,395 Impairment of long-lived assets 70 Employee termination costs 1,985 Contractual obligations 195 Total restructuring charges $ 6,645 (in thousands) Direct Marketing Cost of revenue $ 6,343 Selling, general and administrative 302 $ 6,645 Changes to the restructuring liability during the three months ended October 31, 2021 were as follows: (in thousands) Employee Termination Costs Contractual Obligations Asset Impairment Restructuring Liability Balance as of July 31, 2021 $ 1,055 $ — $ — $ 1,055 Costs incurred 1,985 195 4,465 6,645 Non-cash relief of accrual — — (4,465) (4,465) Change in estimates (14) — — (14) Balance as of October 31, 2021 $ 3,026 $ 195 $ — $ 3,221 |
LEASES
LEASES | 3 Months Ended |
Oct. 31, 2021 | |
Leases [Abstract] | |
LEASES | LEASESThe table below presents the components of the Company's lease expense: Three Months Ended 2021 2020 (In thousands) Operating lease cost $ 4,001 $ 4,228 Short-term lease expense 349 407 Variable lease cost 11 8 Interest on finance lease liabilities 1 2 $ 4,362 $ 4,645 Supplemental Cash Flow Information Supplemental cash flow information related to the Company's leases was as follows: Three Months Ended 2021 2020 (In thousands) Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 3,930 $ 4,239 Operating cash flows from finance leases $ 1 $ 2 Financing cash flows from finance leases $ 18 $ 17 |
LEASES | LEASESThe table below presents the components of the Company's lease expense: Three Months Ended 2021 2020 (In thousands) Operating lease cost $ 4,001 $ 4,228 Short-term lease expense 349 407 Variable lease cost 11 8 Interest on finance lease liabilities 1 2 $ 4,362 $ 4,645 Supplemental Cash Flow Information Supplemental cash flow information related to the Company's leases was as follows: Three Months Ended 2021 2020 (In thousands) Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 3,930 $ 4,239 Operating cash flows from finance leases $ 1 $ 2 Financing cash flows from finance leases $ 18 $ 17 |
DEBT
DEBT | 3 Months Ended |
Oct. 31, 2021 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The components of debt and a reconciliation to the carrying amount of long-term debt is presented in the table below: October 31, July 31, (In thousands) Secured Cerberus Term Loan due December 15, 2022 $ 362,830 $ 364,330 Unsecured 7.50% Convertible Senior Note due March 1, 2024 14,940 14,940 Credit Facilities Cerberus Revolving Facility — — MidCap Credit Facility — — Less: unamortized discounts and issuance costs (5,647) (6,136) Total debt, net 372,123 373,134 Less: current portion of debt, net (5,611) (5,602) Total long-term debt, net $ 366,512 $ 367,532 7.50% Convertible Senior Note On February 28, 2019, the Company entered into a 7.50% Convertible Senior Note Due 2024 Purchase Agreement (the "SPHG Note Purchase Agreement") with SPH Group Holdings LLC ("SPHG Holdings"), whereby SPHG Holdings agreed to loan the Company $14.9 million in exchange for a 7.50% Convertible Senior Note due 2024 (the "SPHG Note"). SPHG Holdings has the right, at its option, prior to the close of business on the business day immediately preceding the SPHG Note Maturity Date, to convert the SPHG Note or a portion thereof that is $1,000 or an integral multiple thereof, into shares of common stock (if the Company has not received a required stockholder approval) or cash, shares of common stock or a combination of cash and shares of common stock, as applicable (if the Company has received a required stockholder approval), at an initial conversion rate of 421.2655 shares of common stock, which is equivalent to an initial conversion price of approximately $2.37 per share (subject to adjustment as provided in the SPHG Note) per $1,000 principal amount of the SPHG Note, subject to, and in accordance with, the settlement provisions of the SPHG Note. As of October 31, 2021, the if-converted value of the SPHG Note did not exceed the principal value of the SPHG Note. As of October 31, 2021, the remaining period over which the unamortized discount will be amortized is 28 months. As of October 31, 2021 and July 31, 2021, the net carrying value of the SPHG Note was $9.7 million and $9.3 million, respectively. The effective interest rate on the SPHG Note, including accretion of the discount, is 27.8%. The following tables reflect the components of the SPHG Note: October 31, July 31, (In thousands) Carrying amount of equity component $ 8,200 $ 8,200 Principal amount of note $ 14,940 $ 14,940 Unamortized debt discount (5,211) (5,597) Net carrying amount $ 9,729 $ 9,343 Three Months Ended 2021 2020 (In thousands) Interest expense related to contractual interest coupon $ 286 $ 286 Interest expense related to accretion of the discount 386 292 $ 672 $ 578 |
CONTINGENCIES
CONTINGENCIES | 3 Months Ended |
Oct. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES On April 13, 2018, a purported shareholder, Donald Reith, filed a verified complaint, Reith v. Lichtenstein, et al., 2018-277 (Del. Ch.) in the Delaware Court of Chancery. The complaint alleges class and derivative claims for breach of fiduciary duty and/or aiding and abetting breach of fiduciary duty and unjust enrichment against the Board, Warren G. Lichtenstein, Glen M. Kassan, William T. Fejes, Jack L. Howard, Jeffrey J. Fenton, Philip E. Lengyel and Jeffrey S. Wald; and stockholders Steel Holdings, Steel Partners, Ltd., SPHG Holdings, Handy & Harman Ltd. ("Handy & Harman") and WHX CS Corp. (collectively, the "Steel Parties") in connection with the acquisition of $35.0 million of the Series C Convertible Preferred Stock by SPHG Holdings and equity grants made to Messrs. Lichtenstein, Howard and Fejes on December 15, 2017 (collectively, the "Challenged Transactions"). The Company is named as a nominal defendant. The complaint alleges that although the Challenged Transactions were approved by a Special Committee consisting of the independent members of the Board (Messrs. Fenton, Lengyel and Wald), the Steel Parties dominated and controlled the Special Committee, who approved the Challenged Transactions in breach of their fiduciary duty. Plaintiff alleges that the Challenged Transactions unfairly diluted shareholders and therefore unjustly enriched Steel Holdings, SPHG Holdings and Messrs. Lichtenstein, Howard and Fejes. The complaint also alleges that the Board made misleading disclosures in the Company's proxy statement for the 2017 Annual Meeting of Stockholders in connection with seeking approval to amend the 2010 Incentive Award Plan to authorize the issuance of additional shares to accommodate certain shares underlying the equity grants. Remedies requested include rescission of the Series C Convertible Preferred Stock and equity grants, disgorgement of any unjustly obtained property or compensation and monetary damages. On June 8, 2018, defendants moved to dismiss the complaint for failure to plead demand futility and failure to state a claim. On June 28, 2019, the Court denied most of the motion to dismiss allowing the matter to proceed. On August 13, 2021, the Company, together with certain of its current and former directors of the Board, Warren Lichtenstein, Glen Kassan, William Fejes, Jr., Jack Howard, Jeffrey Fenton and Jeffrey Wald, as well as other named defendants (collectively, the “Defendants”), entered into a memorandum of understanding (the “MOU”) with Donald Reith (the “Plaintiff”) in connection with the settlement of the Reith v. Lichtenstein, et al., C.A. No. 2018-0277-MTZ (Del. Ch. 2018) class and derivative action. Pursuant to the MOU, the Defendants agreed to cause their directors’ and officers’ liability insurance carriers to pay to the Company $2.75 million in cash. The payment shall be paid into an escrow account within 14 business days of the later of (i) the entry of the scheduling order in connection with the stipulation of the settlement; or (ii) the date on which Plaintiff’s counsel provides to the Defendants’ counsel written payment and wire instructions. Additionally, under the MOU and separate letter agreements between the Company and such individuals (the “Surrender Agreements”), Messrs. Lichtenstein, Howard and Fejes agreed to surrender to the Company an aggregate 3.3 million shares which they had initially received in December 2017 in consideration for services to the Company. The surrenders and cancellations are in the following amounts: for Mr. Lichtenstein, 1,833,333 vested shares and 300,000 unvested shares; for Mr. Howard, 916,667 |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Oct. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION Disaggregation of Revenue The following table presents the Company's revenues from contracts with customers disaggregated by major good or service line and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the reportable segments. Three Months Ended October 31, 2021 Three Months Ended October 31, 2020 Direct Supply Chain Consolidated Direct Supply Chain Consolidated (In thousands) Major Goods/Service Lines Marketing solutions offerings $ 81,059 $ — $ 81,059 $ 105,708 $ — $ 105,708 Supply chain management services — 43,942 43,942 — 63,787 63,787 Other — 412 412 — 439 439 $ 81,059 $ 44,354 $ 125,413 $ 105,708 $ 64,226 $ 169,934 Timing of Revenue Recognition Goods transferred over time $ 81,059 $ — $ 81,059 $ 105,708 $ — $ 105,708 Services transferred over time — 44,354 44,354 — 64,226 64,226 $ 81,059 $ 44,354 $ 125,413 $ 105,708 $ 64,226 $ 169,934 Marketing Solutions Offerings IWCO's revenue is generated through the provision of data-driven marketing solutions, primarily through providing direct mail products to customers. Revenue related to the majority of IWCO's marketing solutions contracts, which typically consist of a single integrated performance obligation, is recognized over time as the Company performs because the products have no alternative use to the Company. Supply Chain Management Services ModusLink's revenue primarily comes from the sale of supply chain management services to its clients. Amounts billed to customers under these arrangements include revenue attributable to the services performed as well as for materials procured on the customer's behalf as part of its service to them. The majority of these arrangements consist of two distinct performance obligations (i.e., warehousing/inventory management service and a separate kitting/packaging/assembly service), revenue related to each of which is recognized over time as services are performed using an input method based on the level of efforts expended. Other Other revenue consists of cloud-based software subscriptions, software maintenance and support service contracts, and fees for professional services. Revenue related to these arrangements is recognized on a straight-line basis over the term of the agreement or over the term of the agreement in proportion to the costs incurred in satisfying the obligations under the contract. Contract Balances Timing of revenue recognition may differ from timing of invoicing to customers. The Company records contract assets and liabilities related to its contracts with customers as follows: • Accounts receivable when revenue is recognized prior to receipt of cash payments and if the right to such amounts is unconditional and solely based on the passage of time. • Contract asset when the Company recognizes revenue based on efforts expended but the right to such amount is conditional upon satisfaction of another performance obligation. Contract assets are primarily comprised of fees related to marketing solutions offerings and supply chain management services. The Company's contract assets are all short-term in nature and are included in prepaid expenses and other current assets in the condensed consolidated balance sheets. • Deferred revenue when cash payments are received or due in advance of performance. Deferred revenue is primarily comprised of fees related to supply chain management services, cloud-based software subscriptions and software maintenance and support service contracts, which are generally billed in advance. Deferred revenue also includes other offerings for which we have been paid in advance and earn the revenue when we transfer control of the product or service. The deferred revenue balance is classified as a component of other current liabilities and other long-term liabilities on the Company's condensed consolidated balance sheets. The table below presents information for the Company's contract balances: October 31, July 31, (In thousands) Accounts receivable, trade, net $ 74,841 $ 69,805 Contract assets $ 11,657 $ 14,458 Deferred revenue - current $ 2,735 $ 2,562 Deferred revenue - long-term 126 108 Total deferred revenue $ 2,861 $ 2,670 Remaining Performance Obligations Remaining performance obligations are comprised of deferred revenue. Changes in deferred revenue during the three months ended October 31, 2021 and October 31, 2020, were as follows: Three Months Ended 2021 2020 (In thousands) Balance at beginning of period $ 2,670 $ 2,945 Deferral of revenue 685 1,096 Recognition of deferred amounts upon satisfaction of performance obligation (494) (853) Balance at end of period $ 2,861 $ 3,188 We expect to recognize approximately $2.7 million of the deferred revenue over the next twelve months and the remaining $0.1 million beyond that time period. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Oct. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company operates in multiple taxing jurisdictions, both within and outside of the United States. For the three months ended October 31, 2021, the Company was profitable in certain jurisdictions, resulting in an income tax expense using enacted rates in those jurisdictions. As of both October 31, 2021 and July 31, 2021, the total amount of the liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $2.5 million. On March 27, 2020, the President of the United States signed the Coronavirus Aid, Relief, and Economic Security ("CARES") Act into law, which is intended to respond to the COVID-19 pandemic and its impact on the economy, public health, state and local governments, individuals and businesses. The CARES Act contains numerous tax provisions, including temporary changes to the future limitations on interest deductions related to Section 163(j) of the U.S. Internal Revenue Code (the “IRC”). The Company elected to defer the employer-paid portion of social security taxes, which is expected to provide the Company with approximately $5.3 million of additional liquidity during the current calendar year, with 50% of the deferral due December 31, 2021 and the remaining 50% due December 31, 2022. The Company does not expect the provisions of the CARES Act to have a significant impact on the income tax provision, income tax payable or deferred income tax positions of the Company. Uncertain Tax Positions In accordance with the Company's accounting policy, interest related to unrecognized tax benefits is included in the income tax expense line of the condensed consolidated statements of operations. As of October 31, 2021 and July 31, 2021, the liabilities for interest expense related to uncertain tax positions were $0.4 million and $0.3 million, respectively. The Company has accrued $0.4 million for penalties related to income tax positions. The Company expects $0.7 million of unrecognized tax benefits and related interest to reverse in the next twelve months. The Company is subject to U.S. federal income tax and various state, local and international income taxes in numerous jurisdictions. The federal and state tax returns are generally subject to tax examinations for the tax years ended July 31, 2018 through July 31, 2021. To the extent the Company has tax attribute carryforwards, the tax year in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service or state tax authorities to the extent utilized in a future period. In addition, a number of tax years remain subject to examination by the appropriate government agencies for certain countries in the Europe and Asia regions. In Europe, the Company's 2013 through 2020 tax years remain subject to examination in most locations, while the Company's 2009 through 2020 tax years remain subject to examination in most Asia locations. |
LOSS PER SHARE
LOSS PER SHARE | 3 Months Ended |
Oct. 31, 2021 | |
Earnings Per Share [Abstract] | |
LOSS PER SHARE | LOSS PER SHARE The following table reconciles (loss) earnings per share for the three and three months ended October 31, 2021 and 2020: Three Months Ended 2021 2020 (In thousands, except per share data) Net loss $ (19,494) $ (3,551) Less: Preferred dividends on redeemable preferred stock (537) (537) Net loss attributable to common stockholders $ (20,031) $ (4,088) Weighted average common shares outstanding 60,307 61,893 Basic net loss per share attributable to common stockholders $ (0.33) $ (0.07) Diluted net loss per share attributable to common stockholders $ (0.33) $ (0.07) Basic net loss per common share is calculated using the weighted average number of common shares outstanding during the period. Diluted net earnings per common share, if any, gives effect to diluted stock options (calculated based on the treasury stock method), non-vested restricted stock shares purchased under the employee stock purchase plan and shares issuable upon debt or preferred stock conversion (calculated using an as-if converted method). For the three months ended October 31, 2021 and 2020, approximately 24.2 million and 24.3 million, respectively, common stock equivalent shares (including those related to convertible debt and preferred stock) were excluded from the denominator in the calculation of diluted net loss per share as their inclusion would have been antidilutive. |
COMPREHENSIVE INCOME (LOSS)
COMPREHENSIVE INCOME (LOSS) | 3 Months Ended |
Oct. 31, 2021 | |
Equity [Abstract] | |
COMPREHENSIVE INCOME (LOSS) | COMPREHENSIVE INCOME (LOSS)Comprehensive income (loss) combines net income (loss) and other comprehensive items. Other comprehensive items represent certain amounts that are reported as components of stockholders' equity in the accompanying condensed consolidated balance sheets. Accumulated other comprehensive items consist of the following: Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) as of July 31, 2021 $ 9,762 $ (2,600) $ 7,162 Foreign currency translation adjustment 198 — 198 Net current-period other comprehensive income 198 — 198 Accumulated other comprehensive income (loss) as of October 31, 2021 $ 9,960 $ (2,600) $ 7,360 Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) as of July 31, 2020 $ 5,025 $ (1,182) $ 3,843 Foreign currency translation adjustment 2,973 — 2,973 Net current-period other comprehensive income 2,973 — 2,973 Accumulated other comprehensive income (loss) as of October 31, 2020 $ 7,998 $ (1,182) $ 6,816 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Oct. 31, 2021 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Company has two operating segments which are the same as its reportable segments: Direct Marketing and Supply Chain. The Company also has Corporate-level activity, which consists primarily of costs associated with certain corporate administrative functions such as legal, finance and share-based compensation, which are not allocated to the Company's reportable segments. The Corporate-level balance sheet information includes cash and cash equivalents, debt and other assets and liabilities which are not identifiable to the operations of the Company's operating segments. All significant intra-segment amounts have been eliminated. Management evaluates segment performance based on segment net revenue and operating income (loss). Summarized financial information by operating segment is as follows: Three Months Ended 2021 2020 (In thousands) Net revenue: Direct Marketing $ 81,059 $ 105,708 Supply Chain 44,354 64,226 $ 125,413 $ 169,934 Operating (loss) income: Direct Marketing $ (11,478) $ 4,937 Supply Chain 1,973 5,151 Total segment operating (loss) income (9,505) 10,088 Corporate-level activity (1,402) (3,013) Total operating (loss) income (10,907) 7,075 Total other expense, net (8,272) (9,822) Loss before income taxes $ (19,179) $ (2,747) October 31, July 31, (In thousands) Total assets: Direct Marketing $ 514,997 $ 530,944 Supply Chain 93,395 101,159 Sub-total—segment assets 608,392 632,103 Corporate 44,762 44,278 $ 653,154 $ 676,381 Summarized financial information of the Company's net revenue from external customers by group of services is as follows: Three Months Ended 2021 2020 (In thousands) Products: Direct Marketing $ 81,059 $ 105,708 Services: Supply Chain 44,354 64,226 $ 125,413 $ 169,934 Summarized financial information of the Company's net revenue by geographic location is as follows: Three Months Ended 2021 2020 (In thousands) United States $ 91,506 $ 121,483 China 15,966 19,640 Netherlands 5,649 7,795 Other 12,292 21,016 $ 125,413 $ 169,934 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Oct. 31, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS As of October 31, 2021, SPHG Holdings and its affiliates, including Steel Holdings, Handy & Harman Ltd. and Steel Partners Ltd., beneficially owned approximately 53.4% of our outstanding capital stock, including the if-converted value of the SPHG Note and shares of Series C Convertible Preferred Stock that vote on an as-converted basis together with our common stock. Warren G. Lichtenstein, our Interim Chief Executive Officer and the Executive Chairman of our Board, is also the Executive Chairman of Steel Holdings GP Inc. ("Steel Holdings GP"), the manager of Steel Holdings. Jack L. Howard, the President and a director of Steel Holdings GP, was appointed to the Board upon the closing of the Preferred Stock Transaction described below. SPHG Note Transaction On February 28, 2019, the Company entered into a SPHG Note Purchase Agreement with SPHG Holdings, whereby SPHG Holdings agreed to loan the Company $14.9 million in exchange for the SPHG Note. As of both October 31, 2021 and July 31, 2021, SPHG Holdings held $14.9 million principal amount of the SPHG Note. As of October 31, 2021 and July 31, 2021, the net carrying value of the SPHG Note was $9.7 million and $9.3 million, respectively. Preferred Stock Transaction On December 15, 2017, the Company entered into a Preferred Stock Purchase Agreement with SPHG Holdings, pursuant to which the Company issued 35,000 shares of the Company's newly created Series C Convertible Preferred Stock to SPHG Holdings at a price of $1,000 per share, for an aggregate purchase consideration of $35.0 million. The terms, rights, obligations and preferences of the Series C Convertible Preferred Stock are set forth in the Series C Certificate of Designations, which has been filed with the Secretary of State of the State of Delaware. Management Services Agreement On June 14, 2019, the Company entered into an agreement (the "Management Services Agreement") with Steel Services Ltd. ("Steel Services"), an indirect wholly-owned subsidiary of Steel Holdings. The Management Services Agreement was effective as of June 1, 2019. Total expenses incurred related to the Management Services Agreement for the three months ended October 31, 2021 and 2020 were $0.8 million and $0.8 million, respectively. As of both October 31, 2021 and July 31, 2021, amounts due to Steel Services was $0.9 million. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Oct. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS ASC 820 provides that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows: Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs Level 3: Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants would price the assets or liabilities The carrying value of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, current liabilities and the revolving line of credit approximate fair value because of the short maturity of these instruments. We believe that the carrying value of our long-term debt approximates fair value because the stated interest rates of this debt is consistent with current market rates. The carrying value of capital lease obligations approximates fair value, as estimated by using discounted future cash flows based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. Assets and Liabilities that are Measured at Fair Value on a Recurring Basis The following tables present the Company's financial assets measured at fair value on a recurring basis as of October 31, 2021 and July 31, 2021, classified by fair value hierarchy: Fair Value Measurements at Reporting Date Using (In thousands) October 31, 2021 Level 1 Level 2 Level 3 Assets: Money market funds $ 42,327 $ 42,327 $ — $ — Fair Value Measurements at Reporting Date Using (In thousands) July 31, 2021 Level 1 Level 2 Level 3 Assets: Money market funds $ 42,327 $ 42,327 $ — $ — There were no transfers between Levels 1, 2 or 3 during any of the periods presented. When available, quoted prices are used to determine fair value. When quoted prices in active markets are available, investments are classified within Level 1 of the fair value hierarchy. When quoted prices in active markets are not available, fair values are determined using pricing models, and the inputs to those pricing models are based on observable market inputs. The inputs to the pricing models are typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads and benchmark securities, among others. Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis The Company reviews the carrying amounts of these assets whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. An impairment loss is recognized when the carrying amount of the asset group or reporting unit is not recoverable and exceeds its fair value. The Company estimates the fair values of assets subject to impairment based on the Company's own judgments about the assumptions that market participants would use in pricing the assets and on observable market data, when available. Fair Value of Financial Instruments The Company's financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, customer deposits, accounts payable, restricted cash and debt, and are reflected in the consolidated financial statements at carrying value. With the exception of the SPHG Note and long-term debt, carrying value approximates fair value for these items due to their short-term nature. The Company believes that the carrying value of the liability component of the SPHG Note and our long-term debt approximates fair value because the stated interest rates of this debt is consistent with current market rates. Included in cash and cash equivalents in the accompanying condensed consolidated balance sheets are money market funds. These are valued at quoted market prices in active markets. |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 3 Months Ended |
Oct. 31, 2021 | |
Accounting Policies [Abstract] | |
Basis of Accounting | The accompanying condensed consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of a normal recurring nature) considered necessary for fair presentation have been included. These unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes for the year ended July 31, 2021 (Fiscal Year 2021), which are contained in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on October 29, 2021. The results for the three months ended October 31, 2021 are not necessarily indicative of the results to be expected for the full fiscal year. The year-end condensed consolidated balance sheet data was derived from audited consolidated financial statements, but does not include all disclosures required by U.S. GAAP. |
Consolidation | All significant intercompany transactions and balances have been eliminated in consolidation. |
Reclassification, Comparability Adjustment | Reclassification Certain reclassifications have been made to the prior year balances to conform with current reporting. On the statement of cash flows for the three months ended October 31, 2021, the Company reclassified the non-cash portion of lease expense which totaled $3.6 million from Other Assets and Liabilities to Non-cash Lease Expense. These reclassifications had no impact on net loss or stockholder’s equity. |
Adoption of New Accounting Standards and Accounting Standards Issued and Not Yet Implemented | Adoption of New Accounting Standards In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which amends the existing guidance relating to the accounting for income taxes. This ASU is intended to simplify the accounting for income taxes by removing certain exceptions to the general principles of accounting for income taxes and to improve the consistent application of U.S. GAAP for other areas of accounting for income taxes by clarifying and amending existing guidance. The new guidance was effective for the Company's first quarter of the fiscal year ending July 31, 2022 (Fiscal Year 2022). The adoption of this new guidance did not have a material impact on the Company's consolidated financial statements. Accounting Standards Issued and Not Yet Implemented In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Loses on Financial Instruments , an ASU that requires measurement and recognition of expected credit losses for financial instruments, including trade receivables, based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The ASU will be effective for the Company beginning in the first quarter of the fiscal year ending July 31, 2024 on a modified retrospective basis, which requires a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating this guidance to determine the impact it may have on its 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, which 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 optional 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 this guidance to determine the impact it may have on its consolidated financial statements. In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40) . The amendment in this update simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock. This update also amends the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share. The update also requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity's financial statements and information about events, conditions and circumstances that can affect the assessment of the amount or timing of an entity's future cash flows related to those instruments. The guidance is effective for interim and annual periods beginning in our fiscal year ending July 31, 2025, with early adoption permitted. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements. |
Fair Value of Financial Instruments | ASC 820 provides that fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based on the highest and best use of the asset or liability. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. ASC 820 requires the Company to use valuation techniques to measure fair value that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized as follows: Level 1: Observable inputs such as quoted prices for identical assets or liabilities in active markets Level 2: Other inputs that are observable directly or indirectly, such as quoted prices for similar assets or liabilities or market-corroborated inputs Level 3: Unobservable inputs for which there is little or no market data and which require the Company to develop its own assumptions about how market participants would price the assets or liabilities The carrying value of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, current liabilities and the revolving line of credit approximate fair value because of the short maturity of these instruments. We believe that the carrying value of our long-term debt approximates fair value because the stated interest rates of this debt is consistent with current market rates. The carrying value of capital lease obligations approximates fair value, as estimated by using discounted future cash flows based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories, net | The table below presents the components of Inventories, net: October 31, July 31, (In thousands) Raw materials $ 17,206 $ 15,484 Work-in-process 175 76 Finished goods 785 668 $ 18,166 $ 16,228 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of finite-lived intangible assets | A summary of other intangible assets, net are reflected in the table below: October 31, 2021 July 31, 2021 Weighted Average Amortization Period Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (in years) (In thousands) Customer relationships 15 $ 192,730 $ 81,907 $ 110,823 $ 192,730 $ 77,725 $ 115,005 Trademarks and tradenames 3 20,520 20,520 — 20,520 20,520 — Total $ 213,250 $ 102,427 $ 110,823 $ 213,250 $ 98,245 $ 115,005 |
Finite-lived intangible assets amortization expense | The table below presents amortization expense recorded by the Company for other intangible assets: Three Months Ended 2021 2020 (In thousands) Customer relationships $ 4,182 $ 4,825 Trademarks and trade names — 1,710 Total $ 4,182 $ 6,535 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Payables and Accruals [Abstract] | |
Components of accrued expenses | The following tables reflect the components of "Accrued expenses" and "Other current liabilities": October 31, July 31, Accrued Expenses (In thousands) Accrued taxes $ 56,509 $ 57,152 Accrued compensation 27,458 22,987 Accrued worker's compensation 1,805 1,818 Accrued audit, tax and legal 3,840 3,674 Accrued contract labor 1,119 930 Accrued interest 190 476 Accrued other 18,461 19,834 $ 109,382 $ 106,871 |
Components of other current liabilities | October 31, July 31, Other Current Liabilities (In thousands) Accrued pricing liabilities $ 10,295 $ 10,295 Customer postage deposits 15,370 13,452 Other 3,701 4,354 $ 29,366 $ 28,101 |
RESTRUCTURING (Tables)
RESTRUCTURING (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Restructuring and Related Activities [Abstract] | |
Schedule of restructuring and related costs | The tables below present restructuring charges by type of cost for the three months ended October 31, 2021: (in thousands) Direct Marketing Accelerated depreciation $ 4,395 Impairment of long-lived assets 70 Employee termination costs 1,985 Contractual obligations 195 Total restructuring charges $ 6,645 (in thousands) Direct Marketing Cost of revenue $ 6,343 Selling, general and administrative 302 $ 6,645 Changes to the restructuring liability during the three months ended October 31, 2021 were as follows: (in thousands) Employee Termination Costs Contractual Obligations Asset Impairment Restructuring Liability Balance as of July 31, 2021 $ 1,055 $ — $ — $ 1,055 Costs incurred 1,985 195 4,465 6,645 Non-cash relief of accrual — — (4,465) (4,465) Change in estimates (14) — — (14) Balance as of October 31, 2021 $ 3,026 $ 195 $ — $ 3,221 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Leases [Abstract] | |
Lease cost | The table below presents the components of the Company's lease expense: Three Months Ended 2021 2020 (In thousands) Operating lease cost $ 4,001 $ 4,228 Short-term lease expense 349 407 Variable lease cost 11 8 Interest on finance lease liabilities 1 2 $ 4,362 $ 4,645 Supplemental cash flow information related to the Company's leases was as follows: Three Months Ended 2021 2020 (In thousands) Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 3,930 $ 4,239 Operating cash flows from finance leases $ 1 $ 2 Financing cash flows from finance leases $ 18 $ 17 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Debt Disclosure [Abstract] | |
Components of debt and reconciliation | The components of debt and a reconciliation to the carrying amount of long-term debt is presented in the table below: October 31, July 31, (In thousands) Secured Cerberus Term Loan due December 15, 2022 $ 362,830 $ 364,330 Unsecured 7.50% Convertible Senior Note due March 1, 2024 14,940 14,940 Credit Facilities Cerberus Revolving Facility — — MidCap Credit Facility — — Less: unamortized discounts and issuance costs (5,647) (6,136) Total debt, net 372,123 373,134 Less: current portion of debt, net (5,611) (5,602) Total long-term debt, net $ 366,512 $ 367,532 |
Net carrying value of SPG note | The following tables reflect the components of the SPHG Note: October 31, July 31, (In thousands) Carrying amount of equity component $ 8,200 $ 8,200 Principal amount of note $ 14,940 $ 14,940 Unamortized debt discount (5,211) (5,597) Net carrying amount $ 9,729 $ 9,343 Three Months Ended 2021 2020 (In thousands) Interest expense related to contractual interest coupon $ 286 $ 286 Interest expense related to accretion of the discount 386 292 $ 672 $ 578 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Summary of reconciliation of the disaggregated revenue | The following table presents the Company's revenues from contracts with customers disaggregated by major good or service line and timing of revenue recognition. The table also includes a reconciliation of the disaggregated revenue with the reportable segments. Three Months Ended October 31, 2021 Three Months Ended October 31, 2020 Direct Supply Chain Consolidated Direct Supply Chain Consolidated (In thousands) Major Goods/Service Lines Marketing solutions offerings $ 81,059 $ — $ 81,059 $ 105,708 $ — $ 105,708 Supply chain management services — 43,942 43,942 — 63,787 63,787 Other — 412 412 — 439 439 $ 81,059 $ 44,354 $ 125,413 $ 105,708 $ 64,226 $ 169,934 Timing of Revenue Recognition Goods transferred over time $ 81,059 $ — $ 81,059 $ 105,708 $ — $ 105,708 Services transferred over time — 44,354 44,354 — 64,226 64,226 $ 81,059 $ 44,354 $ 125,413 $ 105,708 $ 64,226 $ 169,934 |
Summary of changes in deferred revenue | The table below presents information for the Company's contract balances: October 31, July 31, (In thousands) Accounts receivable, trade, net $ 74,841 $ 69,805 Contract assets $ 11,657 $ 14,458 Deferred revenue - current $ 2,735 $ 2,562 Deferred revenue - long-term 126 108 Total deferred revenue $ 2,861 $ 2,670 Remaining Performance Obligations Remaining performance obligations are comprised of deferred revenue. Changes in deferred revenue during the three months ended October 31, 2021 and October 31, 2020, were as follows: Three Months Ended 2021 2020 (In thousands) Balance at beginning of period $ 2,670 $ 2,945 Deferral of revenue 685 1,096 Recognition of deferred amounts upon satisfaction of performance obligation (494) (853) Balance at end of period $ 2,861 $ 3,188 |
LOSS PER SHARE (Tables)
LOSS PER SHARE (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Earnings Per Share [Abstract] | |
Reconciliation of (loss) earnings per share | The following table reconciles (loss) earnings per share for the three and three months ended October 31, 2021 and 2020: Three Months Ended 2021 2020 (In thousands, except per share data) Net loss $ (19,494) $ (3,551) Less: Preferred dividends on redeemable preferred stock (537) (537) Net loss attributable to common stockholders $ (20,031) $ (4,088) Weighted average common shares outstanding 60,307 61,893 Basic net loss per share attributable to common stockholders $ (0.33) $ (0.07) Diluted net loss per share attributable to common stockholders $ (0.33) $ (0.07) |
COMPREHENSIVE INCOME (LOSS) (Ta
COMPREHENSIVE INCOME (LOSS) (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Equity [Abstract] | |
Accumulated other comprehensive items | Accumulated other comprehensive items consist of the following: Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) as of July 31, 2021 $ 9,762 $ (2,600) $ 7,162 Foreign currency translation adjustment 198 — 198 Net current-period other comprehensive income 198 — 198 Accumulated other comprehensive income (loss) as of October 31, 2021 $ 9,960 $ (2,600) $ 7,360 Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) as of July 31, 2020 $ 5,025 $ (1,182) $ 3,843 Foreign currency translation adjustment 2,973 — 2,973 Net current-period other comprehensive income 2,973 — 2,973 Accumulated other comprehensive income (loss) as of October 31, 2020 $ 7,998 $ (1,182) $ 6,816 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Segment Reporting [Abstract] | |
Summarized financial information of continuing operations | Summarized financial information by operating segment is as follows: Three Months Ended 2021 2020 (In thousands) Net revenue: Direct Marketing $ 81,059 $ 105,708 Supply Chain 44,354 64,226 $ 125,413 $ 169,934 Operating (loss) income: Direct Marketing $ (11,478) $ 4,937 Supply Chain 1,973 5,151 Total segment operating (loss) income (9,505) 10,088 Corporate-level activity (1,402) (3,013) Total operating (loss) income (10,907) 7,075 Total other expense, net (8,272) (9,822) Loss before income taxes $ (19,179) $ (2,747) |
Total assets of continuing operations | October 31, July 31, (In thousands) Total assets: Direct Marketing $ 514,997 $ 530,944 Supply Chain 93,395 101,159 Sub-total—segment assets 608,392 632,103 Corporate 44,762 44,278 $ 653,154 $ 676,381 |
Summarized financial information of net revenue from external customers by group of services | Summarized financial information of the Company's net revenue from external customers by group of services is as follows: Three Months Ended 2021 2020 (In thousands) Products: Direct Marketing $ 81,059 $ 105,708 Services: Supply Chain 44,354 64,226 $ 125,413 $ 169,934 Summarized financial information of the Company's net revenue by geographic location is as follows: Three Months Ended 2021 2020 (In thousands) United States $ 91,506 $ 121,483 China 15,966 19,640 Netherlands 5,649 7,795 Other 12,292 21,016 $ 125,413 $ 169,934 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Oct. 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Financial assets measured at fair value on recurring basis and classified by fair value hierarchy | The following tables present the Company's financial assets measured at fair value on a recurring basis as of October 31, 2021 and July 31, 2021, classified by fair value hierarchy: Fair Value Measurements at Reporting Date Using (In thousands) October 31, 2021 Level 1 Level 2 Level 3 Assets: Money market funds $ 42,327 $ 42,327 $ — $ — Fair Value Measurements at Reporting Date Using (In thousands) July 31, 2021 Level 1 Level 2 Level 3 Assets: Money market funds $ 42,327 $ 42,327 $ — $ — |
NATURE OF OPERATIONS - Nature o
NATURE OF OPERATIONS - Nature of Operations (Details) $ / shares in Units, $ in Millions | Oct. 31, 2021USD ($)$ / shares | Jul. 31, 2021USD ($)$ / shares | Nov. 19, 2020$ / shares |
Nature Of Operations [Line Items] | |||
Cash and cash equivalents | $ 81.3 | $ 96.9 | |
Working capital deficit | $ 16.7 | ||
Preferred stock, par value (in usd per share) | $ / shares | $ 0.01 | $ 0.01 | |
Minimum | Common Stock | |||
Nature Of Operations [Line Items] | |||
Preferred stock, par value (in usd per share) | $ / shares | $ 0.65 | ||
Maximum | Common Stock | |||
Nature Of Operations [Line Items] | |||
Preferred stock, par value (in usd per share) | $ / shares | $ 0.72 | ||
Cerberus Term Loan due December 15, 2022 | |||
Nature Of Operations [Line Items] | |||
Credit facility, readily available borrowing capacity | $ 25 | ||
Adjusted EBITDA | 6 | ||
Line of credit facility, fair value of amount outstanding | $ 3.2 | ||
PNC bank credit facility | |||
Nature Of Operations [Line Items] | |||
Credit facility, readily available borrowing capacity | $ 8.5 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Other assets and liabilities | $ (4,137) | $ (6,699) |
Non-cash lease expense | 3,439 | $ 3,613 |
Revision of prior period, reclassification, adjustment | Reclassification adjustment to confirm with current reporting | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||
Other assets and liabilities | 3,600 | |
Non-cash lease expense | $ 3,600 |
INVENTORIES, NET - Components o
INVENTORIES, NET - Components of Inventories (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Jul. 31, 2021 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 17,206 | $ 15,484 |
Work-in-process | 175 | 76 |
Finished goods | 785 | 668 |
Inventories, net | $ 18,166 | $ 16,228 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Jul. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 231,470 | $ 231,470 |
Gross Carrying Amount | 213,250 | 213,250 |
Accumulated Amortization | 102,427 | 98,245 |
Net Carrying Amount | $ 110,823 | 115,005 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period | 15 years | |
Gross Carrying Amount | $ 192,730 | 192,730 |
Accumulated Amortization | 81,907 | 77,725 |
Net Carrying Amount | $ 110,823 | 115,005 |
Trademarks and tradenames | ||
Finite-Lived Intangible Assets [Line Items] | ||
Weighted Average Amortization Period | 3 years | |
Gross Carrying Amount | $ 20,520 | 20,520 |
Accumulated Amortization | 20,520 | 20,520 |
Net Carrying Amount | 0 | 0 |
Direct Marketing | ||
Finite-Lived Intangible Assets [Line Items] | ||
Goodwill | $ 231,500 | $ 231,500 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Schedule of Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 4,182 | $ 6,535 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | 4,182 | 4,825 |
Trademarks and trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of intangible assets | $ 0 | $ 1,710 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Components of Accrued Expenses (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Jul. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued taxes | $ 56,509 | $ 57,152 |
Accrued compensation | 27,458 | 22,987 |
Accrued worker's compensation | 1,805 | 1,818 |
Accrued audit, tax and legal | 3,840 | 3,674 |
Accrued contract labor | 1,119 | 930 |
Accrued interest | 190 | 476 |
Accrued other | 18,461 | 19,834 |
Accrued expenses | $ 109,382 | $ 106,871 |
ACCRUED EXPENSES AND OTHER CU_4
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Components of Other Current Liabilities (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Jul. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued pricing liabilities | $ 10,295 | $ 10,295 |
Customer postage deposits | 15,370 | 13,452 |
Other | 3,701 | 4,354 |
Other current liabilities | $ 29,366 | $ 28,101 |
ACCRUED EXPENSES AND OTHER CU_5
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Narrative (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Jul. 31, 2021 |
Payables and Accruals [Abstract] | ||
Accrued taxes | $ 56,509 | $ 57,152 |
Accrued pricing liabilities | $ 10,295 | $ 10,295 |
RESTRUCTURING - Narrative (Deta
RESTRUCTURING - Narrative (Details) - USD ($) $ in Thousands | Jun. 02, 2021 | Oct. 31, 2021 | Nov. 30, 2021 |
IWCO Direct's Competitive Improvement Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Total expected costs of business development | $ 54,000 | ||
Expected term of investment | 24 months | ||
Costs incurred | $ 6,645 | ||
IWCO Direct's Competitive Improvement Plan | Digital Press and Insertion Equipment | |||
Restructuring Cost and Reserve [Line Items] | |||
Total expected costs of business development | $ 38,000 | ||
IWCO Direct's Competitive Improvement Plan | Lease/Purchase Agreements | |||
Restructuring Cost and Reserve [Line Items] | |||
Total expected costs of business development | 34,000 | ||
IWCO Direct's Competitive Improvement Plan | Employee-Related, Facilities Optimization, and Other Implementation Costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Total expected costs of business development | 16,000 | ||
IWCO Direct's Competitive Improvement Plan | Accelerated Depreciation | |||
Restructuring Cost and Reserve [Line Items] | |||
Total expected costs of business development | $ 12,000 | ||
ModusLink | Subsequent Event | |||
Restructuring Cost and Reserve [Line Items] | |||
Expected restructuring charges | $ 1,000 |
RESTRUCTURING - Schedule of Res
RESTRUCTURING - Schedule of Restructuring Charges by Type (Details) - IWCO Direct's Competitive Improvement Plan $ in Thousands | 3 Months Ended |
Oct. 31, 2021USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Costs incurred | $ 6,645 |
Employee termination costs | |
Restructuring Cost and Reserve [Line Items] | |
Costs incurred | 1,985 |
Contractual obligations | |
Restructuring Cost and Reserve [Line Items] | |
Costs incurred | 195 |
Direct Marketing | |
Restructuring Cost and Reserve [Line Items] | |
Costs incurred | 6,645 |
Direct Marketing | Cost of revenue | |
Restructuring Cost and Reserve [Line Items] | |
Costs incurred | 6,343 |
Direct Marketing | Selling, general and administrative | |
Restructuring Cost and Reserve [Line Items] | |
Costs incurred | 302 |
Direct Marketing | Accelerated depreciation | |
Restructuring Cost and Reserve [Line Items] | |
Costs incurred | 4,395 |
Direct Marketing | Impairment of long-lived assets | |
Restructuring Cost and Reserve [Line Items] | |
Costs incurred | 70 |
Direct Marketing | Employee termination costs | |
Restructuring Cost and Reserve [Line Items] | |
Costs incurred | 1,985 |
Direct Marketing | Contractual obligations | |
Restructuring Cost and Reserve [Line Items] | |
Costs incurred | $ 195 |
RESTRUCTURING - Restructuring L
RESTRUCTURING - Restructuring Liability Rollforward (Details) - IWCO Direct's Competitive Improvement Plan $ in Thousands | 3 Months Ended |
Oct. 31, 2021USD ($) | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | $ 1,055 |
Costs incurred | 6,645 |
Non-cash relief of accrual | (4,465) |
Change in estimates | (14) |
Ending balance | 3,221 |
Employee termination costs | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 1,055 |
Costs incurred | 1,985 |
Non-cash relief of accrual | 0 |
Change in estimates | (14) |
Ending balance | 3,026 |
Contractual obligations | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 0 |
Costs incurred | 195 |
Non-cash relief of accrual | 0 |
Change in estimates | 0 |
Ending balance | 195 |
Asset Impairment | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 0 |
Costs incurred | 4,465 |
Non-cash relief of accrual | (4,465) |
Change in estimates | 0 |
Ending balance | $ 0 |
LEASES - Lease Costs (Details)
LEASES - Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Lease, Cost [Abstract] | ||
Operating lease cost | $ 4,001 | $ 4,228 |
Short-term lease expense | 349 | 407 |
Variable lease cost | 11 | 8 |
Interest on finance lease liabilities | 1 | 2 |
Total lease cost | $ 4,362 | $ 4,645 |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Cash paid for amounts included in measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 3,930 | $ 4,239 |
Operating cash flows from finance leases | 1 | 2 |
Financing cash flows from finance leases | $ 18 | $ 17 |
DEBT - Component of Debt and Re
DEBT - Component of Debt and Reconciliation (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Jul. 31, 2021 |
Line of Credit Facility [Line Items] | ||
Less: unamortized discounts and issuance costs | $ (5,647) | $ (6,136) |
Total debt, net | 372,123 | 373,134 |
Less: current portion of debt, net | (5,611) | (5,602) |
Total long-term debt, net | 366,512 | 367,532 |
7.50% Convertible Senior Note due March 1, 2024 | ||
Line of Credit Facility [Line Items] | ||
Principal amount of long term debt | 14,940 | 14,940 |
Cerberus Term Loan due December 15, 2022 | ||
Line of Credit Facility [Line Items] | ||
Principal amount of long term debt | 362,830 | 364,330 |
Cerberus Revolving Facility | ||
Line of Credit Facility [Line Items] | ||
Revolving credit facility | 0 | 0 |
MidCap Credit Facility | ||
Line of Credit Facility [Line Items] | ||
Revolving credit facility | $ 0 | $ 0 |
DEBT - Additional Information (
DEBT - Additional Information (Details) | Feb. 28, 2019USD ($)$ / shares | Oct. 31, 2021USD ($) | Jul. 31, 2021USD ($) |
Debt Instrument [Line Items] | |||
Long-term debt | $ 372,123,000 | $ 373,134,000 | |
Debt instrument, interest rate, effective percentage | 27.80% | ||
SPHG Holdings | |||
Debt Instrument [Line Items] | |||
Conversion to common stock | $ 1,000 | ||
Conversion ratio (shares) | 0.4212655 | ||
Initial conversion price (in usd per share) | $ / shares | $ 2.37 | ||
SPHG Holdings | 7.50% Convertible Senior Note due March 1, 2024 | |||
Debt Instrument [Line Items] | |||
Debt instrument, stated interest rate | 7.50% | ||
Principal amount of note | $ 14,900,000 | $ 14,940,000 | 14,940,000 |
Debt instrument amortization period | 28 months | ||
Long-term debt | $ 9,729,000 | $ 9,343,000 |
DEBT - Net Carrying Value of th
DEBT - Net Carrying Value of the Notes (Details) - USD ($) | Oct. 31, 2021 | Jul. 31, 2021 | Feb. 28, 2019 |
Debt Instrument [Line Items] | |||
Carrying amount of equity component | $ 8,200,000 | $ 8,200,000 | |
Total debt, net | 372,123,000 | 373,134,000 | |
SPHG Holdings | 7.50% Convertible Senior Note due March 1, 2024 | |||
Debt Instrument [Line Items] | |||
Principal amount of note | 14,940,000 | 14,940,000 | $ 14,900,000 |
Unamortized debt discount | (5,211,000) | (5,597,000) | |
Total debt, net | $ 9,729,000 | $ 9,343,000 |
DEBT - Summary of Interest Expe
DEBT - Summary of Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Interest Expense, Debt [Line Items] | ||
Debt instrument, interest expense | $ 672 | $ 578 |
SPHG Holdings | Interest expense related to contractual interest coupon | ||
Interest Expense, Debt [Line Items] | ||
Debt instrument, interest expense | 286 | 286 |
SPHG Holdings | Interest expense related to accretion of the discount | ||
Interest Expense, Debt [Line Items] | ||
Debt instrument, interest expense | $ 386 | $ 292 |
CONTINGENCIES - Additional Info
CONTINGENCIES - Additional Information (Details) - USD ($) $ in Thousands | Dec. 15, 2017 | Aug. 31, 2021 |
Reith v. Lichtenstein | ||
Contingencies [Line Items] | ||
Cash paid to plaintiff | $ 2,750 | |
Reith v. Lichtenstein | Director | Restricted Stock | ||
Contingencies [Line Items] | ||
Number of shares surrendered | 3,300,000 | |
Reith v. Lichtenstein | Director | Restricted Stock | Warren Lichtenstein | ||
Contingencies [Line Items] | ||
Number of vested shares surrendered | 1,833,333 | |
Number of nonvested shares surrendered | 300,000 | |
Reith v. Lichtenstein | Director | Restricted Stock | Jack Howard | ||
Contingencies [Line Items] | ||
Number of vested shares surrendered | 916,667 | |
Number of nonvested shares surrendered | 150,000 | |
Reith v. Lichtenstein | Director | Restricted Stock | William Fejes | ||
Contingencies [Line Items] | ||
Number of vested shares surrendered | 100,000 | |
Purchase agreement | SPHG Holdings | Series C convertible preferred stock | ||
Contingencies [Line Items] | ||
Proceeds from issuance of preferred stock | $ 35,000 |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregated Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 125,413 | $ 169,934 |
Marketing solutions offerings | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 81,059 | 105,708 |
Supply chain management services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 43,942 | 63,787 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 412 | 439 |
Products | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 81,059 | 105,708 |
Products | Transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 81,059 | 105,708 |
Services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 44,354 | 64,226 |
Services | Transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 44,354 | 64,226 |
Direct Marketing | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 81,059 | 105,708 |
Direct Marketing | Marketing solutions offerings | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 81,059 | 105,708 |
Direct Marketing | Supply chain management services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 0 | 0 |
Direct Marketing | Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 0 | 0 |
Direct Marketing | Products | Transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 81,059 | 105,708 |
Direct Marketing | Services | Transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 0 | 0 |
Supply Chain | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 44,354 | 64,226 |
Supply Chain | Marketing solutions offerings | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 0 | 0 |
Supply Chain | Supply chain management services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 43,942 | 63,787 |
Supply Chain | Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 412 | 439 |
Supply Chain | Products | Transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 0 | 0 |
Supply Chain | Services | Transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 44,354 | $ 64,226 |
REVENUE RECOGNITION - Additiona
REVENUE RECOGNITION - Additional Information (Detail) - USD ($) $ in Thousands | Oct. 31, 2021 | Jul. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||||
Accounts receivable, trade, net | $ 74,841 | $ 69,805 | ||
Contract assets | 11,657 | 14,458 | ||
Deferred revenue - current | 2,735 | 2,562 | ||
Deferred revenue - long-term | 126 | 108 | ||
Total deferred revenue | $ 2,861 | $ 2,670 | $ 3,188 | $ 2,945 |
REVENUE RECOGNITION - Summary o
REVENUE RECOGNITION - Summary of Changes in Deferred Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Change in Deferred Revenue | ||
Balance at beginning of period | $ 2,670 | $ 2,945 |
Deferral of revenue | 685 | 1,096 |
Recognition of deferred amounts upon satisfaction of performance obligation | (494) | (853) |
Balance at end of period | $ 2,861 | $ 3,188 |
REVENUE RECOGNITION - Performan
REVENUE RECOGNITION - Performance Obligations (Details) $ in Millions | Oct. 31, 2021USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-11-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations | $ 2.7 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-11-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations | $ 0.1 |
Revenue, remaining performance obligation, expected timing of satisfaction, period |
INCOME TAXES - Additional Infor
INCOME TAXES - Additional Information (Detail) - USD ($) $ in Millions | Oct. 31, 2021 | Jul. 31, 2021 |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits related to federal, state and foreign taxes | $ 2.5 | $ 2.5 |
Deferred employer-paid portion of social security taxes | 5.3 | |
Liabilities for interest expense related to uncertain tax positions | 0.4 | $ 0.3 |
Income tax penalties accrued | 0.4 | |
Expected unrecognized tax benefits to reverse in the next twelve months | $ 0.7 |
LOSS PER SHARE - Reconciliation
LOSS PER SHARE - Reconciliation of (Loss) Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (19,494) | $ (3,551) |
Less: Preferred dividends on redeemable preferred stock | (537) | (537) |
Net loss attributable to common stockholders | $ (20,031) | $ (4,088) |
Weighted average common shares outstanding (in shares) | 60,307 | 61,893 |
Basic net loss per share attributable to common stockholders (in usd per share) | $ (0.33) | $ (0.07) |
Diluted net loss per share attributable to common stockholders (in usd per share) | $ (0.33) | $ (0.07) |
LOSS PER SHARE - Additional Inf
LOSS PER SHARE - Additional Information (Details) - shares shares in Millions | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Earnings Per Share [Abstract] | ||
Common stock equivalent shares excluded from the denominator in the calculation of diluted loss per share (in shares) | 24.2 | 24.3 |
COMPREHENSIVE INCOME (LOSS) - A
COMPREHENSIVE INCOME (LOSS) - Accumulated Other Comprehensive Income Items (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | $ 6,212 | $ 48,818 |
Foreign currency translation adjustment | 198 | 2,973 |
Other comprehensive income | 198 | 2,973 |
Ending balance | (13,431) | 47,894 |
Accumulated Other Comprehensive Income | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | 7,162 | 3,843 |
Foreign currency translation adjustment | 198 | 2,973 |
Other comprehensive income | 198 | 2,973 |
Ending balance | 7,360 | 6,816 |
Foreign Currency Items | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | 9,762 | 5,025 |
Foreign currency translation adjustment | 198 | 2,973 |
Other comprehensive income | 198 | 2,973 |
Ending balance | 9,960 | 7,998 |
Pension Items | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | (2,600) | (1,182) |
Foreign currency translation adjustment | 0 | 0 |
Other comprehensive income | 0 | 0 |
Ending balance | $ (2,600) | $ (1,182) |
SEGMENT INFORMATION - Additiona
SEGMENT INFORMATION - Additional Information (Details) | 3 Months Ended |
Oct. 31, 2021segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Number of reportable segments | 2 |
SEGMENT INFORMATION - Summarize
SEGMENT INFORMATION - Summarized Financial Information of Continuing Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Segment Reporting Information [Line Items] | ||
Revenue from contracts with customers | $ 125,413 | $ 169,934 |
Operating (loss) income | (10,907) | 7,075 |
Total other expense, net | (8,272) | (9,822) |
Loss before income taxes | (19,179) | (2,747) |
Direct Marketing | ||
Segment Reporting Information [Line Items] | ||
Revenue from contracts with customers | 81,059 | 105,708 |
Supply Chain | ||
Segment Reporting Information [Line Items] | ||
Revenue from contracts with customers | 44,354 | 64,226 |
Operating segments | ||
Segment Reporting Information [Line Items] | ||
Operating (loss) income | (9,505) | 10,088 |
Operating segments | Direct Marketing | ||
Segment Reporting Information [Line Items] | ||
Revenue from contracts with customers | 81,059 | 105,708 |
Operating (loss) income | (11,478) | 4,937 |
Operating segments | Supply Chain | ||
Segment Reporting Information [Line Items] | ||
Revenue from contracts with customers | 44,354 | 64,226 |
Operating (loss) income | 1,973 | 5,151 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Operating (loss) income | $ (1,402) | $ (3,013) |
SEGMENT INFORMATION - Total Ass
SEGMENT INFORMATION - Total Assets of Continuing Operations (Details) - USD ($) $ in Thousands | Oct. 31, 2021 | Jul. 31, 2021 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 653,154 | $ 676,381 |
Operating segments | ||
Segment Reporting Information [Line Items] | ||
Total assets | 608,392 | 632,103 |
Operating segments | Direct Marketing | ||
Segment Reporting Information [Line Items] | ||
Total assets | 514,997 | 530,944 |
Operating segments | Supply Chain | ||
Segment Reporting Information [Line Items] | ||
Total assets | 93,395 | 101,159 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 44,762 | $ 44,278 |
SEGMENT INFORMATION - Summari_2
SEGMENT INFORMATION - Summarized Financial Information of Net Revenue from External Customers by Group of Services (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2021 | Oct. 31, 2020 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | $ 125,413 | $ 169,934 |
United States | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | 91,506 | 121,483 |
China | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | 15,966 | 19,640 |
Netherlands | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | 5,649 | 7,795 |
Other | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | 12,292 | 21,016 |
Direct Marketing | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | 81,059 | 105,708 |
Supply Chain | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | $ 44,354 | $ 64,226 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Dec. 15, 2017 | Oct. 31, 2021 | Oct. 31, 2020 | Jul. 31, 2021 | Feb. 28, 2019 |
Related Party Transaction [Line Items] | |||||
Long-term debt | $ 372,123,000 | $ 373,134,000 | |||
Preferred stock, shares issued (in shares) | 0 | 0 | |||
SPHG Holdings | 7.50% Convertible Senior Note due March 1, 2024 | |||||
Related Party Transaction [Line Items] | |||||
Principal amount convertible senior notes held of | $ 14,940,000 | $ 14,940,000 | $ 14,900,000 | ||
Long-term debt | 9,729,000 | 9,343,000 | |||
Steel Holdings | Convertible debt | |||||
Related Party Transaction [Line Items] | |||||
Principal amount convertible senior notes held of | 14,900,000 | 14,900,000 | $ 14,900,000 | ||
SPHG Holdings | Purchase agreement | Series C convertible preferred stock | |||||
Related Party Transaction [Line Items] | |||||
Preferred stock, shares issued (in shares) | 35,000 | ||||
Price per share (in usd per share) | $ 1,000 | ||||
Proceeds from issuance of preferred stock | $ 35,000,000 | ||||
Steel Services Ltd. | Management Services Agreement | |||||
Related Party Transaction [Line Items] | |||||
Total expenses incurred related to Management Services Agreement and Transfer Agreement | 800,000 | $ 800,000 | |||
SP Corporate Services Llc and Steel Services Limited | Management Services Agreement | |||||
Related Party Transaction [Line Items] | |||||
Amount due to related parties | $ 900,000 | $ 900,000 | |||
Steel Connect, Inc. | SPHG Holdings | |||||
Related Party Transaction [Line Items] | |||||
Ownership percentage in capital stock | 53.40% |
FAIR VALUE MEASUREMENTS - Finan
FAIR VALUE MEASUREMENTS - Financial Assets Measured at Fair Value on Recurring Basis and Classified by Fair Value Hierarchy (Details) - Fair value, measurements, recurring - Money market funds - USD ($) $ in Thousands | Oct. 31, 2021 | Jul. 31, 2021 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure, recurring | $ 42,327 | $ 42,327 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure, recurring | 42,327 | 42,327 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure, recurring | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure, recurring | $ 0 | $ 0 |