Cover Page
Cover Page - shares | 3 Months Ended | |
Oct. 31, 2023 | Dec. 01, 2023 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Oct. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-35319 | |
Entity Registrant Name | Steel Connect, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 04-2921333 | |
Entity Address, Address Line One | 590 Madison Avenue | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10022 | |
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 | 6,267,230 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q1 | |
Entity Central Index Key | 0000914712 | |
Current Fiscal Year End Date | --07-31 | |
Common Stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | STCN | |
Security Exchange Name | NASDAQ | |
Series D Preferred Stock | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Rights to Purchase Series D Junior Participating Preferred Stock | |
Security Exchange Name | NASDAQ | |
No Trading Symbol | true |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Oct. 31, 2023 | Jul. 31, 2023 |
Current Assets | ||
Cash and cash equivalents | $ 276,705,000 | $ 121,372,000 |
Accounts receivable, trade, net of allowance for credit losses of $211 and $219 at October 31, 2023 and July 31, 2023, respectively | 27,974,000 | 28,616,000 |
Inventories, net | 6,756,000 | 8,569,000 |
Funds held for clients | 1,946,000 | 2,031,000 |
Prepaid expenses and other current assets | 4,402,000 | 158,686,000 |
Total current assets | 317,783,000 | 319,274,000 |
Property and equipment, net | 3,724,000 | 3,698,000 |
Operating lease right-of-use assets | 25,997,000 | 27,098,000 |
Investments | 3,443,000 | 0 |
Other intangible assets, net | 33,714,000 | 34,589,000 |
Goodwill | 22,785,000 | 22,785,000 |
Other assets | 3,149,000 | 3,737,000 |
Total assets | 410,595,000 | 411,181,000 |
Current Liabilities | ||
Accounts payable | 24,889,000 | 26,514,000 |
Accrued expenses | 26,198,000 | 26,774,000 |
Funds held for clients | 1,902,000 | 1,949,000 |
Current lease obligations | 8,680,000 | 7,973,000 |
Convertible note payable | 12,327,000 | 0 |
Other current liabilities | 3,902,000 | 4,544,000 |
Total current liabilities | 77,898,000 | 67,754,000 |
Convertible note payable | 0 | 12,461,000 |
Long-term lease obligations | 17,818,000 | 19,161,000 |
Other long-term liabilities | 5,475,000 | 5,442,000 |
Total long-term liabilities | 23,293,000 | 37,064,000 |
Total liabilities | 101,191,000 | 104,818,000 |
Contingently redeemable preferred stock | 237,739,000 | 237,739,000 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value per share. 4,965,000 shares authorized at October 31, 2023 and July 31, 2023; zero shares issued and outstanding at October 31, 2023 and July 31, 2023 | 0 | 0 |
Common stock, $0.01 par value per share. Authorized 1,400,000,000 shares; 6,267,230 issued and outstanding shares at October 31, 2023; 6,250,493 issued and outstanding shares at July 31, 2023 | 65,000 | 65,000 |
Additional paid-in capital | 61,671,000 | 61,534,000 |
Accumulated earnings | 11,512,000 | 7,612,000 |
Accumulated other comprehensive loss | (1,583,000) | (587,000) |
Total stockholders' equity | 71,665,000 | 68,624,000 |
Total liabilities, contingently redeemable preferred stock and stockholders' equity | 410,595,000 | 411,181,000 |
Series C Contingently Redeemable Preferred Stock | ||
Current Liabilities | ||
Contingently redeemable preferred stock | 35,006,000 | 35,006,000 |
Series E Contingently Redeemable Preferred Stock | ||
Current Liabilities | ||
Contingently redeemable preferred stock | $ 202,733,000 | $ 202,733,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Oct. 31, 2023 | Jul. 31, 2023 |
Accounts receivable, trade, allowance for doubtful accounts | $ 211 | $ 219 |
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) | 6,267,230 | 6,250,493 |
Common stock, shares outstanding (in shares) | 6,267,230 | 6,250,493 |
Series C Contingently 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 |
Series E Contingently Redeemable Preferred Stock | ||
Preferred stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 3,500,000 | 3,500,000 |
Preferred stock, shares issued (in shares) | 3,500,000 | 3,500,000 |
Preferred stock, shares outstanding (in shares) | 3,500,000 | 3,500,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Income Statement [Abstract] | ||
Net revenue | $ 41,341 | $ 51,359 |
Cost of revenue | 29,866 | 37,094 |
Gross profit | 11,475 | 14,265 |
Operating expenses: | ||
Selling, general and administrative | 8,795 | 10,386 |
Amortization | 875 | 0 |
Total operating expenses | 9,670 | 10,386 |
Operating income | 1,805 | 3,879 |
Other income (expense): | ||
Interest income | 3,219 | 144 |
Interest expense | (247) | (826) |
Other gains, net | 330 | 2,886 |
Total other income, net | 3,302 | 2,204 |
Income before income taxes | 5,107 | 6,083 |
Income tax expense | 671 | 1,126 |
Net income | 4,436 | 4,957 |
Less: Preferred dividends on Series C redeemable preferred stock | (536) | (537) |
Net income attributable to common stockholders | $ 3,900 | $ 4,420 |
Net income per common shares - basic (in usd per share) | $ 0.15 | $ 0.69 |
Net income per common shares - diluted (in usd per share) | $ 0.15 | $ 0.59 |
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | ||
Weighted-average number of common shares outstanding - basic (in shares) | 6,199 | 6,434 |
Weighted-average number of common shares outstanding - basic (in shares) | 26,066 | 8,403 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 4,436 | $ 4,957 |
Other comprehensive loss: | ||
Foreign currency translation adjustment | (996) | (2,837) |
Pension liability adjustments | 0 | (1,078) |
Other comprehensive loss | (996) | (3,915) |
Comprehensive income | $ 3,440 | $ 1,042 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Earnings | Accumulated Other Comprehensive Income (Loss) |
Beginning balance (in shares) at Jul. 31, 2022 | 6,485,309 | ||||
Beginning balance at Jul. 31, 2022 | $ (9,206) | $ 65 | $ 7,479,906 | $ (7,493,317) | $ 4,140 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 4,957 | 4,957 | |||
Preferred dividends | (537) | (537) | |||
Restricted stock forfeitures, net of issuance (in shares) | 13,712 | ||||
Share-based compensation | 177 | 177 | |||
Other comprehensive items | (3,915) | (3,915) | |||
Ending balance (in shares) at Oct. 31, 2022 | 6,499,021 | ||||
Ending balance at Oct. 31, 2022 | $ (8,524) | $ 65 | 7,480,083 | (7,488,897) | 225 |
Beginning balance (in shares) at Jul. 31, 2023 | 6,250,493 | 6,250,493 | |||
Beginning balance at Jul. 31, 2023 | $ 68,624 | $ 65 | 61,534 | 7,612 | (587) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 4,436 | 4,436 | |||
Preferred dividends | (536) | (536) | |||
Restricted stock grants (in shares) | 16,737 | ||||
Share-based compensation | 137 | 137 | |||
Other comprehensive items | $ (996) | (996) | |||
Ending balance (in shares) at Oct. 31, 2023 | 6,267,230 | 6,267,230 | |||
Ending balance at Oct. 31, 2023 | $ 71,665 | $ 65 | $ 61,671 | $ 11,512 | $ (1,583) |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 4,436 | $ 4,957 |
Adjustments to reconcile net income to cash flows from operating activities: | ||
Depreciation | 435 | 459 |
Amortization of finite-lived intangible assets | 875 | 0 |
Amortization of deferred financing costs | 0 | 12 |
Accretion of debt discount | 0 | 510 |
Share-based compensation | 137 | 177 |
Non-cash lease expense | 2,197 | 2,230 |
Bad debt (recovery) expense | (8) | 960 |
Other gains, net | (330) | (2,885) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 238 | 3,026 |
Inventories, net | 1,525 | (1,077) |
Prepaid expenses and other current assets | (367) | (168) |
Accounts payable, accrued restructuring and accrued expenses | (1,351) | 1,553 |
Refundable and accrued income taxes, net | 312 | 118 |
Other assets and liabilities | (1,516) | (1,620) |
Net cash provided by operating activities | 6,583 | 8,252 |
Cash flows from investing activities: | ||
Purchases of investments | (3,890) | 0 |
Proceeds from disposition of securities | 154,526 | 0 |
Additions of property and equipment | (552) | (548) |
Proceeds from the disposition of property and equipment | 0 | 16 |
Net cash provided by (used in) investing activities | 150,084 | (532) |
Cash flows from financing activities: | ||
Preferred dividend payments | (536) | (537) |
Repayments on capital lease obligations | 0 | (19) |
Net cash used in financing activities | (536) | (556) |
Net effect of exchange rate changes on cash, cash equivalents and restricted cash | (884) | (405) |
Net increase in cash, cash equivalents and restricted cash | 155,247 | 6,759 |
Cash, cash equivalents and restricted cash, beginning of period | 123,404 | 58,045 |
Cash, cash equivalents and restricted cash, end of period | 278,651 | 64,804 |
Cash and cash equivalents, end of period | 276,705 | 59,948 |
Restricted cash for funds held for clients, end of period | 1,946 | 4,856 |
Cash, cash equivalents and restricted cash, end of period | $ 278,651 | $ 64,804 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 3 Months Ended |
Oct. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NATURE OF OPERATIONS Steel Connect, Inc. (the "Company" or "Steel Company"), is a holding company which operates through its wholly-owned subsidiary ModusLink Corporation ("ModusLink" or "Supply Chain"). 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. Steel Partners and Steel Connect Exchange Transaction On April 30, 2023, Steel Partners Holdings L.P., (“Steel Holdings”) and the Company executed a series of agreements in which Steel Holdings and certain of its affiliates (the “Steel Partners Group”) agreed to transfer certain marketable securities held by the Steel Partners Group to the Company in exchange for 3.5 million shares of Series E Convertible Preferred Stock of the Company (the “Series E Convertible Preferred Stock”, and, such transfer and related transactions, the “Exchange Transaction”). The Exchange Transaction closed on May 1, 2023, which is the date that the consideration was exchanged between Steel Holdings and the Company. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Oct. 31, 2023 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION 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, 2023 (Fiscal Year 2023), which are contained in the Company's Fiscal Year 2023 Form 10-K filed. The results for the three months ended October 31, 2023 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. Predecessor/Successor Reporting On May 1, 2023, the Exchange Transaction resulted in Steel Holdings obtaining control of the Company for financial statement consolidation purposes. Steel Holdings does not consolidate the Company for Federal income tax purposes because the ownership in the Company is dispersed between different federal tax consolidation groups within Steel Holdings. As of May 1, 2023, the Company elected pushdown accounting in which it used Steel Holdings' basis of accounting, which reflected the fair market value of the Company’s assets and liabilities at the date of the Exchange Transaction. As a result, the Company has reflected the required pushdown accounting adjustments in its consolidated financial statements. Due to the application of pushdown accounting, the Company’s consolidated financial statements and certain footnote disclosures include a black line division between the two distinct periods to indicate the application of two different bases of accounting, which may not be comparable, between the periods presented. The pre- exchange period through April 30, 2023 is referred to as the "Predecessor" period. The post-exchange period, May 1, 2023 and onward, includes the impact of pushdown accounting and is referred to as the "Successor" period. As such for purposes of this quarterly report, all references to the three months ended October 31, 2023 are for the Successor period, and all references to the three months ended October 31, 2022 are for the Predecessor period. See Note 4 - "Exchange Transaction" for further information regarding the Exchange Transaction and the application of pushdown accounting. Reverse/Forward Stock Split At the special stockholders meeting held on June 6, 2023, the stockholders approved proposals to amend the Company’s restated certificate of incorporation (the “Charter”), to effect a 1-for-3,500 reverse stock split of the common stock (the “Reverse Stock Split”), followed immediately by a 375-for-1 forward stock split of the common stock (the “Forward Stock Split,” and, together with the Reverse Stock Split, the “Reverse/Forward Stock Split”). On June 7, 2023, Steel Connect's Board of Directors ("the Board") approved the Reverse/Forward Stock Split, and as such, the Board directed the Company to file with the State of Delaware certificates of amendment to our Charter to effectuate the Reverse/Forward Stock Split. The Reverse/Forward Stock Split was effective on June 21, 2023 (the “Effective Date”). The Company’s common stock began trading on a Reverse/Forward Stock Split-adjusted basis on the Nasdaq Capital Market when the market opened on June 22, 2023. The trading symbol for the Company’s common stock remains “STCN.” Accordingly, all share and per-share amounts for the current period and prior periods have been adjusted to reflect the Reverse/Forward Stock Split. 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, 2023, the Company evaluated subsequent events for potential recognition and disclosure through the date these financial statements were filed. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 3 Months Ended |
Oct. 31, 2023 | |
Accounting Policies [Abstract] | |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS Accounting Standards Issued and Not Yet Implemented In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. We are currently evaluating the impacts of the new standard. 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 how to assess 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. Other new pronouncements issued but not effective until after October 31, 2023 are not expected to have a material impact on our financial condition, results of operations or liquidity. |
EXCHANGE TRANSACTION
EXCHANGE TRANSACTION | 3 Months Ended |
Oct. 31, 2023 | |
Related Party Transactions [Abstract] | |
EXCHANGE TRANSACTION | EXCHANGE TRANSACTION Steel Partners and Steel Connect Exchange Transaction On April 30, 2023, the Company and Steel Holdings executed a series of agreements, in which Steel Holdings and the Steel Partners Group transferred an aggregate of 3.6 million shares of common stock, par value $0.10 per share, of Aerojet Rocketdyne Holdings, Inc. ("Aerojet") held by the Steel Partners Group to the Company in exchange for 3.5 million shares of newly created Series E Convertible Preferred Stock of Steel Connect (the “Series E Convertible Preferred Stock” and such transfer and related transactions, the "Exchange Transaction"). Following approval by the Company's stockholders pursuant to the rules of The Nasdaq Stock Market LLC at a special meeting of stockholders held on June 6, 2023, the Series E Convertible Preferred Stock is convertible into an aggregate of 19.8 million shares of the Company's common stock, par value $0.01 per share (the “common stock” or “Common Stock”), and votes together with the Company's common stock and participates in any dividends paid on the Company's common stock, in each case on an as-converted basis. Upon conversion of the Series E Convertible Preferred Stock, the Steel Partners Group would hold approximately 84.0% of the outstanding equity interests of the Company as of May 1, 2023, and the Company became a consolidated subsidiary of Steel Holdings for financial statement purposes. The Company is not consolidated by Steel Holdings for Federal income tax purposes because Steel Holdings' ownership in the Company is dispersed between different federal tax consolidation groups. The Exchange Transaction closed on May 1, 2023, the date that the consideration was exchanged between the Company and Steel Holdings. The Company's assets and liabilities have been included in Steel Holdings' consolidated balance sheet as of May 1, 2023, with a related noncontrolling interest of 16.0% of the Company's common stock. Prior to May 1, 2023, Steel Holdings held a 49.6% ownership interest in the Company and accounted for its investment in the Company in accordance with the equity method of accounting. As of the date of the Exchange Transaction, Steel Holdings remeasured the previously held equity method investment to its fair value based upon a valuation of the Company. The Exchange Transaction accomplishes Steel Holdings' objective, which is to increase ownership in the Company in order to benefit from future earnings and growth and strengthens the Company's balance sheet to permit it to do acquisitions. The Exchange Transaction was accounted for in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations , and, accordingly, the Company's results of operations were consolidated in Steel Holdings' financial statements on the date of the Exchange Transaction. Steel Holdings recorded a preliminary allocation of the Exchange Transaction to assets acquired and liabilities assumed based on their estimated fair values as of May 1, 2023. The final Exchange Transaction allocation, which is expected to be completed by December 31, 2023, will be based on final appraisals and other analysis of fair values of acquired assets and liabilities. Steel Holdings does not expect that differences between the preliminary and final Exchange Transaction allocation will have a material impact on its results of operations or financial position. As discussed in Note 2 - "Basis of Presentation", the Company elected pushdown accounting in which it uses Steel Holdings' basis of accounting, which reflects the fair market value of the Company’s assets and liabilities at the date of the Exchange Transaction. The following table summarizes the total Exchange Transaction consideration: (in thousands) May 1, 2023 Fair value of Aerojet common stock $ 202,733 Fair value of Steel Holdings' previously held interests in Steel Connect and Steel Holdings' noncontrolling interest 111,816 Less: cash acquired from Steel Connect (65,896) Total estimated consideration, less cash acquired $ 248,653 The following represents the initial calculation of goodwill and fair value amounts recognized. The Company notes that there were no measurement period adjustments made in the current period that would result in an updated preliminary fair value allocation. (in thousands) May 1, 2023 Assets Accounts receivable, trade $ 36,900 Inventories, net 6,900 Prepaid expenses and other current assets 4,957 Other intangible assets 35,500 Other assets 3,900 Property and equipment, net 3,400 Operating lease right-of-use assets 29,250 Investments 202,733 Estimated fair value of total assets acquired by Steel Holdings 323,540 Liabilities Accounts payable 26,300 Accrued expenses 29,100 Current lease obligations 7,994 Other current liabilities 7,236 Long-term lease obligations 21,300 Other long-term liabilities 5,742 Estimated fair value of total liabilities assumed by Steel Holdings 97,672 Fair value of identifiable net assets 225,868 Goodwill attributable to Steel Connect $ 22,785 As part of pushdown accounting, the Company calculated the amount of goodwill recognized based on the excess of the Exchange Transaction consideration over the fair value of net identifiable assets acquired and liabilities assumed. Goodwill is primarily attributable to expected synergies and the assembled workforce of the Company. The goodwill recognized will not be deductible for income tax purposes. Identifiable intangible assets were recognized at their estimated fair value as of the date of the Exchange Transaction. The fair value of the trade name asset was determined using the relief-from-royalty method and the fair value of the customer relationships asset was determined using the excess earnings method. These income-based approaches included assumptions such as the amount and timing of projected cash flows, growth rates, customer attrition rates, discount rates, and the assessment of the asset’s life cycle. The estimated fair value and estimated remaining useful lives of identifiable intangible assets as of the Exchange Transaction date were as follows: (in thousands) Useful Life (Years) Amount Customer relationships 7 $ 25,000 Trade name Indefinite 10,500 Estimated fair value of identifiable intangible assets $ 35,500 |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | 3 Months Ended |
Oct. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS, NET | GOODWILL AND OTHER INTANGIBLE ASSETS, NET In connection with the application of pushdown accounting, the Company recorded intangible assets for goodwill, customer relationships and tradenames. A reconciliation of the change in the carrying amount of goodwill by reportable segment is as follows: Supply Chain Balance at July 31, 2023 (Successor) Gross goodwill $ 22,785 Accumulated impairments — Net goodwill $ 22,785 Balance at October 31, 2023 (Successor) Gross goodwill $ 22,785 Accumulated impairments — Net goodwill $ 22,785 A summary of Other intangible assets, net is as follows: Successor October 31, 2023 July 31, 2023 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Customer relationships $ 25,000 $ 1,786 $ 23,214 $ 25,000 $ 911 $ 24,089 Trade name 10,500 — 10,500 10,500 — 10,500 Total $ 35,500 $ 1,786 $ 33,714 $ 35,500 $ 911 $ 34,589 The trade name intangible asset has an indefinite useful life. Customer relationships are amortized on a straight-line basis. Amortization expense related to intangible assets was $0.9 million for the three months ended October 31, 2023. The Exchange Transaction closed on May 1, 2023, and as such, there was no intangible assets or related amortization expense for the three months ended October 31, 2022. Based on gross carrying amounts at October 31, 2023, the Company's estimate of amortization expense for identifiable intangible assets for the remainder of fiscal year ending July 31, 2024, and fiscal years 2025 through 2028 and thereafter is presented in the table below: Fiscal Year Ending July 31, 2024 2025 2026 2027 2028 Thereafter Estimated amortization expense $ 2,679 $ 3,571 $ 3,571 $ 3,571 $ 3,571 $ 6,251 |
INVENTORIES, NET
INVENTORIES, NET | 3 Months Ended |
Oct. 31, 2023 | |
Inventory Disclosure [Abstract] | |
INVENTORIES, NET | INVENTORIES, NET The table below presents the components of Inventories, net: Successor October 31, July 31, (In thousands) Raw materials $ 3,680 $ 4,805 Work-in-process 71 239 Finished goods 3,005 3,525 $ 6,756 $ 8,569 |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Oct. 31, 2023 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS Long-term investments consist of debt and equity securities. The Company determines the appropriate classifications of its investments at the acquisition date and re-evaluates the classifications at each balance sheet date. Equity securities that do not result in consolidation and are not accounted for under the equity method are measured at fair value, with any changes recognized in Other gains (losses), net in the consolidated statements of operations in accordance with ASC Topic 321, Investments - Equity Securities . The Company uses quoted market prices to determine the fair value of equity securities with readily determinable fair value. Available-for-sale debt securities are reported at fair value, with unrealized gains and losses recognized in accumulated other comprehensive income or loss as a separate component of the Company's stockholders' equity in accordance with ASC Topic 320, Investments - Debt Securities . To the extent that debt securities meet the definition of a hybrid security under ASC 815, Derivatives and Hedging , the Company may elect the fair value option under ASC 825, Financial Instruments to measure the entire hybrid instrument, with changes in fair value recorded in the Company's consolidated statements of operations. Interest income is recognized when earned. The following table summarizes the Company's investments as of October 31, 2023. There were no investments as of July 31, 2023. Successor October 31, 2023 Convertible loan note investment (a) $ 1,227 Other investments (b) 2,216 Total $ 3,443 (a) The Company entered into a new convertible loan note on October 13, 2023, which matures on March 31, 2025. The Company paid 1.0 million GBP (approximately $1.2 million) to subscribe for an amount of £1.0 million (the "loan principal") of 11.0% 2025 unsecured convertible loan notes issued by the investee (the "CLN Instrument Agreement"). Contemporaneous with the execution of the CLN Instrument Agreement, the Company executed the Equity Warrant Instrument Agreement (“Warrant Agreement”), which provides the Company with the option to convert the outstanding balance into equity shares of the investee at any time before repayment of the outstanding loan principal balance. The Company’s £1.0 million investment in the £20.0 million GBP 11.0% unsecured convertible loan notes provides it with an approximate 5.0% ownership interest on an if-converted basis. The cost basis of the convertible loan note investment was $1.2 million as of October 31, 2023, which also approximates its fair value. Changes in fair value will be recorded in the Company's consolidated statements of operations as the Company elected the fair value option under ASC 825 to account for this investment. (b) The balance consists of multiple common stock investments of public companies. All were accounted for under ASC 321. The amount of net unrealized losses for the three months ended October 31, 2023 that relate to equity securities still held as of October 31, 2023 are as follows: Successor Three months ended October 31, 2023 Unrealized losses recognized during the period on equity securities still held at the end of the period $ 447 Unrealized losses are recorded in Other gains, net on the condensed consolidated statements of operations. There was no investment activity for the three months ended October 31, 2022. |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 3 Months Ended |
Oct. 31, 2023 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES The following tables reflect the components of "Accrued expenses" and "Other current liabilities". Successor October 31, July 31, Accrued Expenses (In thousands) Accrued compensation $ 8,500 $ 6,891 Accrued audit, tax and legal 4,577 5,696 Accrued price concessions 2,740 2,981 Accrued taxes 2,715 2,811 Accrued occupancy costs 1,345 1,412 Accrued IT costs 871 831 Accrued other 5,450 6,152 Total accrued expenses $ 26,198 $ 26,774 Successor October 31, July 31, Other Current Liabilities (In thousands) Deferred revenue - current 2,540 2,574 Other 1,362 1,970 Total other current liabilities $ 3,902 $ 4,544 |
LEASES
LEASES | 3 Months Ended |
Oct. 31, 2023 | |
Leases [Abstract] | |
LEASES | LEASES The table below presents the components of the Company's lease expense: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Operating lease cost $ 2,546 $ 2,405 Short-term lease expense 451 438 Variable lease cost — 4 Sublease income (167) (273) Total lease expense $ 2,830 $ 2,574 Supplemental Cash Flow Information Supplemental cash flow information related to the Company's leases was as follows: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 2,292 $ 2,207 Financing cash flows from finance leases $ — $ 19 |
LEASES | LEASES The table below presents the components of the Company's lease expense: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Operating lease cost $ 2,546 $ 2,405 Short-term lease expense 451 438 Variable lease cost — 4 Sublease income (167) (273) Total lease expense $ 2,830 $ 2,574 Supplemental Cash Flow Information Supplemental cash flow information related to the Company's leases was as follows: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 2,292 $ 2,207 Financing cash flows from finance leases $ — $ 19 |
DEBT
DEBT | 3 Months Ended |
Oct. 31, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT The components of debt are presented in the table below: Successor October 31, July 31, (In thousands) Unsecured 7.50% Convertible Senior Note due September 1, 2024 $ 12,327 $ 12,461 Credit Facilities Umpqua Revolver — — Total debt, net $ 12,327 $ 12,461 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"). On March 9, 2023 (the "Amendment Date"), the Company and SPHG Holdings entered into an amendment to the SPHG Note (the “SPHG Note Amendment”). Pursuant to the SPHG Note Amendment, the maturity date of the SPHG Note was extended to September 1, 2024 from its original maturity date of March 1, 2024. In addition, the Company repaid $1.0 million in principal amount of the SPHG Note on the Amendment Date, and repaid an additional $1.0 million principal amount of the note on June 9, 2023. In connection with the SPHG Note Amendment, the Company paid SPHG Holdings a cash amendment fee of $0.1 million, and derecognized $0.2 million of the debt discount in proportion to the reduction of the principal balance in the third quarter of fiscal year 2023. No other changes were made to the terms of the SPHG Note besides the items discussed. SPHG Holdings has the right, at its option, prior to the close of business on the business day immediately preceding the maturity date of the SPHG Note, 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 45.1356 shares of common stock, which is equivalent to an initial conversion price of approximately $22.16 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, 2023, the if-converted value of the SPHG Note did not exceed the principal value of the SPHG Note. As of May 1, 2023, or the date of the Exchange Transaction, the Company accounts for the SPHG Note under the fair value option in order to conform with Steel Holdings' basis of accounting, with changes in fair value recognized in earnings. Refer to Note 18 - "Fair Value Measurements" for further information. The below discusses the components of the SPHG Note as of October 31, 2023 and July 31, 2023: As of October 31, 2023 and July 31, 2023, the principal amount of the note was $12.9 million, respectively. As of October 31, 2023 and July 31, 2023, the fair value of the SPHG Note was $12.3 million and $12.5 million, respectively. The fair value of the SPHG Note was reported as a current liability on the condensed consolidated balance sheets as of October 31, 2023, as its maturity is less than twelve months as of October 31, 2023. Below is a reconciliation of interest expense related to the SPHG Note to total interest expense: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Interest expense related to contractual interest coupon on the SPHG Note $ 247 $ 286 Interest expense related to accretion of the discount on the SPHG Note (a) — 510 Interest expense related to revolving credit facilities (see below) — 11 Other — 19 Total interest expense $ 247 $ 826 (a) Prior to the date of the Exchange Transaction, the discount on the SPHG Note was amortized using the effective interest rate method. The effective interest rate on the SPHG Note was 27.80% prior to the SPHG Note Amendment. Umpqua Revolver On March 16, 2022, ModusLink, as borrower, entered into a new credit agreement with Umpqua Bank as lender and as agent. The Umpqua Revolver provides for a maximum credit commitment of $12.5 million and a sublimit of $5.0 million for letters of credit and expires on March 31, 2025. On March 13, 2023, ModusLink and Umpqua Bank entered into an amendment to the Umpqua Revolver (the "Umpqua Revolver Amendment") to extend the expiration date of the facility to March 31, 2025 from its original expiration date of March 16, 2024. There were no fees associated with the extension. As of October 31, 2023, ModusLink was in compliance with the Umpqua Revolver's covenants, and believes it will remain in compliance with the Umpqua Revolver’s covenants for the next twelve months from the filing of this Form 10-Q. As of October 31, 2023, ModusLink had available borrowing capacity of $11.9 million and there was $0.6 million available for letters of credit. |
CONTINGENCIES
CONTINGENCIES | 3 Months Ended |
Oct. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
CONTINGENCIES | CONTINGENCIES Donald Reith v. Warren G. Lichtenstein, et al. 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 “Reith litigation”). 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 of Directors, 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. 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 of Directors (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 stockholders and therefore unjustly enriched Steel Holdings, SPHG Holdings and Messrs. Lichtenstein, Howard and Fejes. The complaint also alleges that the Board of Directors 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. The defendants answered the complaint on September 6, 2019, denying all liability. 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. A definitive Stipulation of Settlement (the “Stipulation”) incorporating the terms of the MOU was filed with the Court on February 18, 2022. Pursuant to the MOU and Stipulation, and contingent on approval of the terms by the court, the Defendants agreed to cause their directors’ and officers’ liability insurance carriers to pay to the Company $2.75 million in cash. 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 353,571 shares that 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, 196,429 vested shares and 32,143 unvested shares; for Mr. Howard, 98,214 vested shares and 16,071 unvested shares; and for Mr. Fejes, 10,714 vested shares. On August 17, 2021, Mr. Lichtenstein and Mr. Howard surrendered the shares required under the MOU, the Stipulation and their respective Surrender Agreements, and in December 2021 Mr. Fejes did the same. All such shares were subsequently cancelled. Pursuant to the MOU and Stipulation, the Company also agreed to pay the Plaintiff’s counsel legal fees for this matter in an amount up to $2.05 million, if approved by the court. After the parties filed papers in support of court approval of the settlement, and an objector filed papers in opposition to approval of the settlement, and after hearings held on August 12 and August 18, 2022, the parties submitted an amendment to the Stipulation: (i) increasing the proposed total contribution of the insurers to $3.0 million, (ii) reducing Plaintiff’s counsel’s fee request to $1.6 million, and (iii) providing that if the then pending proposed Merger was consummated, the $3.0 million, minus fees awarded to Plaintiff’s counsel and costs of distribution of up to $125,000, would be distributed to the holders of eligible shares of Common Stock (as defined in the Merger Agreement governing the Merger), other than the Defendants; provided, however, that no distribution would be required to be made to any holder whose proportionate share of the distribution would be less than $1.00. On September 23, 2022, the court ruled that it was denying approval of the settlement. On September 12, 2023, the court approved a stipulated pretrial and trial schedule culminating in a trial scheduled for September 2024. The possible liability, if any, with respect to this matter cannot be determined. On June 6, 2023, the Company received a books and records demand from Reith under Delaware General Corporation Law Section 220 which requests an array of documents for the purported purposes of investigating potential wrongdoing in connection with the April 30, 2023 transaction between Steel Holdings and Steel Connect. The Company is responding to this demand. The possible liability, if any, with respect to this matter cannot be determined. Mohammad Ladjevardian v. Warren G. Lichtenstein, et al. On September 1, 2023, a purported stockholder, Mohammad Ladjevardian, filed a verified complaint alleging a single direct claim for breach of fiduciary duty against members of Steel Connect’s Board of Directors, Steel Holdings, Steel Excel, Inc., and WebFinancial Corporation in connection with the Exchange Transaction. Directors named in the complaint are Warren Lichtenstein, Glen Kassan, and Jack Howard. The complaint alleges that although the challenged transaction was approved by the independent Strategic Planning Committee, the committee failed to obtain a “control premium” or to consider the dilutive effect that the Series E issuance had on the plaintiff’s holdings. Remedies requested include rescission of the Series E shares and a judicially imposed requirement that all future transactions involving Steel Holdings and its affiliates be subject to minority stockholder approval. On September 27, 2023, the entity defendants moved to dismiss the complaint. On October 5, 2023, the individual defendants moved to dismiss the complaint. The possible liability, if any, with respect to this matter cannot be determined as of this date. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Oct. 31, 2023 | |
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. Successor Predecessor Three Months Ended October 31, Three Months Ended October 31, 2023 2022 (In thousands) Major Goods/Service Lines Supply chain management services $ 41,005 $ 50,931 Other 336 428 $ 41,341 $ 51,359 Timing of Revenue Recognition Services transferred over time $ 41,341 $ 51,359 $ 41,341 $ 51,359 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 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: Successor Predecessor October 31, July 31, August 1, (In thousands) Accounts receivable, trade, net $ 27,974 $ 28,616 $ 40,083 Contract assets 464 439 369 Deferred revenue - current $ 2,540 $ 2,574 $ 2,705 Deferred revenue - long-term 108 144 134 Total deferred revenue $ 2,648 $ 2,718 $ 2,839 Remaining Performance Obligations Remaining performance obligations are comprised of deferred revenue. Changes in deferred revenue during the three months ended October 31, 2023 and October 31, 2022, were as follows: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Balance at beginning of period $ 2,718 $ 2,839 Deferral of revenue 301 271 Recognition of deferred amounts upon satisfaction of performance obligation (371) (641) Balance at end of period $ 2,648 $ 2,469 The Company expects to recognize approximately $2.5 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, 2023 | |
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, 2023, the Company was profitable in certain jurisdictions, resulting in an income tax expense using enacted rates in those jurisdictions. As of both October 31, 2023 and July 31, 2023, the total amount of the liability for unrecognized tax benefits related to federal, state and foreign taxes was approximately $0.4 million. 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 both October 31, 2023 and July 31, 2023, the liabilities for interest expense related to uncertain tax positions was $0.1 million. The Company expects $0.3 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, 2020 through July 31, 2023. 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 2015 through 2022 tax years remain subject to examination in most locations, while the Company's 2010 through 2021 tax years remain subject to examination in most Asia locations. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Oct. 31, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE As discussed in Note 2 - "Basis of Presentation", the Reverse/Forward Stock Split was effective on June 21, 2023. The Company’s shares of outstanding common stock and earnings per share amounts have been retroactively restated for all periods presented for the Reverse/Forward Stock Split. The following table reconciles net earnings per share for the three months ended October 31, 2023 and 2022: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands, except per share data) Reconciliation of net income to net income attributable to common stockholders after assumed conversions: Net income $ 4,436 $ 4,957 Less: Preferred dividends on Series C redeemable preferred stock (536) (537) Net income available to common stockholders 3,900 4,420 Less: Undistributed earnings allocated to participating securities (2,970) — Net income attributable to common stockholders $ 930 $ 4,420 Effect of dilutive securities: Dividends on Series C preferred stock — 537 Undistributed earnings allocated to Series E preferred stock 2,970 — Net income attributable to common stockholders - assuming dilution $ 3,900 $ 4,957 Net income per common share - basic $ 0.15 $ 0.69 Net income per common share - diluted $ 0.15 $ 0.59 Weighted average common shares outstanding - basic 6,199 6,434 Effect of dilutive securities: Common stock equivalents - Restricted stock and restricted stock shares 57 56 Common stock equivalents - Series C Preferred stock — 1,913 Common stock equivalents - Series E Preferred stock 19,810 — Weighted average common shares outstanding - diluted 26,066 8,403 For the three months ended October 31, 2023, the Company calculated basic and diluted net income per common share using the two-class method, as the Series E Convertible Preferred Stock meets the definition of a participating security. The two-class method is an allocation formula that determines net income per common share for each share of common stock and Series E Convertible Preferred Stock, a participating security, according to dividends declared and participation rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated to common shares and Series E Convertible Preferred Stock based on their respective rights to receive dividends. The holders of Series E Convertible Preferred Stock are entitled to participate equally and ratably with the holders of shares of Common Stock in all dividends or other distributions on the shares of Common Stock as if, immediately prior to each record date for payment of dividends or other distributions on the Common Stock, shares of Series E Preferred Stock then outstanding were converted into shares of Common Stock. Basic net income per common share is computed by dividing net income allocated to common stockholders for the period by the weighted average number of common shares outstanding for the period. Net income available to common stockholders for the period includes dividends paid to common stockholders during the period plus a proportionate share of undistributed net income allocable to common stockholders for the period; the proportionate share of undistributed net income allocable to common stockholders for the period is based on the proportionate share of total weighted-average common shares and participating securities outstanding during the period. Diluted net income per common share is computed based on the weighted average number of shares of common stock outstanding during each period, plus potential common shares considered outstanding during the period, as long as the inclusion of such awards is not antidilutive. Potential common shares consist of restricted common stock (calculated based on the treasury stock method) and shares issuable upon debt or preferred stock conversion (calculated using an as-if converted method), using the more dilutive of either the two-class method or as-converted stock method. The Company was not required to apply the two-class method during the Predecessor Period as there were no participating securities, and as such, there were no changes to the Predecessor Period other than the retrospective restatement for the Reverse/Forward Stock Split discussed previously. For the three months ended October 31, 2023, $0.2 million of interest expense, net of tax related to the SPHG Note, and $0.5 million of Series C preferred dividends were excluded from the numerator in the calculation of diluted net income per share as their inclusion would have been antidilutive. For the three months ended October 31, 2022, $0.8 million of interest expense, net of tax impact related to the SPHG Note was excluded from the numerator in the calculation of diluted net income per share as their inclusion would have been antidilutive. For the three months ended October 31, 2023, 2.5 million common stock equivalent shares (including those related to the SPHG Note and the Series C Preferred stock) were excluded from the denominator in the calculation of diluted net income per share as their inclusion would have been antidilutive. For the three months ended October 31, 2022, 0.7 million common stock equivalent shares (including those related to the SPHG Note) were excluded from the denominator in the calculation of diluted net income per share as their inclusion would have been antidilutive. |
COMPREHENSIVE (LOSS) INCOME
COMPREHENSIVE (LOSS) INCOME | 3 Months Ended |
Oct. 31, 2023 | |
Equity [Abstract] | |
COMPREHENSIVE (LOSS) INCOME | COMPREHENSIVE (LOSS) INCOME Comprehensive (loss) income combines net income 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 (loss) income as of 7/31/2023 (Successor) $ (623) $ 36 $ (587) Foreign currency translation adjustment (996) — (996) Net current-period other comprehensive loss (996) — (996) Accumulated other comprehensive (loss) income as of 10/31/2023 (Successor) $ (1,619) $ 36 $ (1,583) Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) as of 7/31/2022 (Predecessor) $ 6,063 $ (1,923) $ 4,140 Foreign currency translation adjustment (2,837) — (2,837) Pension liability adjustments, net of tax — (1,078) (1,078) Net current-period other comprehensive loss (2,837) (1,078) (3,915) Accumulated other comprehensive income (loss) as of 10/31/2022 (Predecessor) $ 3,226 $ (3,001) $ 225 During the year ended July 31, 2020, a Netherlands defined benefit pension plan was amended, so that active participants no longer accrued benefits as of January 1, 2020, which resulted in a pre-tax curtailment gain of $2.4 million recognized in accumulated other comprehensive income (loss). At that time, the active plan participants were moved into a new defined benefit contribution pension plan. During the three months ended October 31, 2022, the Company recorded an increase of approximately $1.1 million to accrued pension liabilities for the defined benefit pension plan as it was determined plan participants are entitled to unconditional indexation of benefits for as long as they remain in active service with the Company. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Oct. 31, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION The Company has one reportable segment: 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 segment. The Corporate-level balance sheet information includes cash and cash equivalents, debt and other assets and liabilities which are not allocated to the operations of the Company's operating segment. All significant intra-segment amounts have been eliminated. Management evaluates segment performance based on segment net revenue and operating income (loss). Summarized financial information of the Company's continuing operations by operating segment is as follows: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Net revenue: Supply Chain $ 41,341 $ 51,359 Total segment net revenue 41,341 51,359 Operating income: Supply Chain 2,675 5,851 Total segment operating income 2,675 5,851 Corporate-level activity (870) (1,972) Total operating income 1,805 3,879 Total other income, net 3,302 2,204 Income before income taxes $ 5,107 $ 6,083 Successor October 31, July 31, (In thousands) Total assets: Supply Chain $ 143,654 $ 146,614 Corporate 266,941 264,567 Total assets $ 410,595 $ 411,181 Summarized financial information of the Company's capital expenditures and depreciation expense for the Supply Chain reportable segment is as follows: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Capital expenditures $ 552 $ 548 Depreciation expense $ 435 $ 459 Summarized financial information of the Company's net revenue by geographic location is as follows: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) United States $ 15,197 $ 12,172 Mainland China 14,384 17,965 Netherlands 5,298 5,351 Czech Republic 2,630 5,760 Singapore 1,460 5,132 Other 2,372 4,979 Total consolidated net revenue $ 41,341 $ 51,359 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Oct. 31, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS As of October 31, 2023, SPHG Holdings and its affiliates, including Steel Holdings, Handy & Harman Ltd. and Steel Partners Ltd., beneficially owned approximately 85.9% of our outstanding capital stock, including the if-converted value of the SPHG Note and shares of Series C Convertible Preferred Stock and Series E 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. Glen Kassan, our Vice Chairman of the Board of Directors and former Chief Administrative Officer, is an employee of Steel Services. Jack L. Howard, the President and a director of Steel Holdings GP, is also a director. Upon closing of the Exchange Transaction on May 1, 2023, the Company became a consolidated subsidiary of Steel Holdings as described in Note 1 - "Nature of Operations", Note 2 - "Basis of Presentation", and Note 4 - "Exchange Transaction". After May 1, 2023, transactions between Steel Holdings and the Company are eliminated in consolidation by Steel Holdings. 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. On March 9, 2023 (the "Amendment Date"), the Company and SPHG Holdings entered into an amendment to the SPHG Note. Pursuant to the SPHG Note Amendment, the maturity date of the SPHG Note was extended six months from March 1, 2024 to September 1, 2024. The Company repaid $1.0 million in principal amount of the SPHG Note on the Amendment Date, and repaid an additional $1.0 million principal amount of the note on June 9, 2023. In connection with the SPHG Note Amendment, the Company also paid SPHG Holdings a cash amendment fee of $0.1 million, and derecognized $0.2 million of the debt discount in proportion to the reduction of the principal balance on the Amendment Date in the third quarter of fiscal year 2023. No other changes were made to the terms of the SPHG Note besides the items discussed. As of both October 31, 2023 and July 31, 2023, SPHG Holdings held $12.9 million principal amount of the SPHG Note. As of October 31, 2023 and July 31, 2023, the fair value of the SPHG Note was $12.3 million and $12.5 million, respectively. During the three months ended October 31, 2023 and 2022, the Company recognized interest expense of $0.2 million and $0.8 million, respectively, associated with the SPHG Note. Series C 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. During each of the three months ended October 31, 2023 and 2022, the Company paid dividends of $0.5 million associated with the Series C Convertible Preferred Stock. On or after December 15, 2022, each holder of Preferred Stock can also require the Company to redeem its Preferred Stock in cash at a price equal to the Liquidation Preference (as defined in Series C Certificate of Designations). Series E Preferred Stock Transaction On May 1, 2023, the Company and Steel Holdings executed a series of agreements in which the Steel Partners Group agreed to transfer certain marketable securities held by the Steel Partners Group to Steel Connect in exchange for 3.5 million shares of Series E Convertible Preferred Stock of Steel Connect (the “Series E Convertible Preferred Stock”, and, such transfer the “Transfer and Exchange Agreement”). Pursuant to the Transfer and Exchange Agreement, the Company held a special stockholders’ meeting on June 6, 2023 (the “Special Meeting”) to consider and vote upon the rights of the Series E Preferred Stock to vote and receive dividends together with the Common Stock on an as-converted basis and the issuance of the Company's common stock (the "Common Stock") upon conversion of the Series E Preferred Stock by the holders at their option, pursuant to the rules and regulations of Nasdaq (the “Nasdaq Proposal”). Following approval of the Nasdaq Proposal by the Steel Connect stockholders (the “Stockholder Approval”), the Series E Convertible Preferred Stock became convertible into an aggregate of 19.8 million shares of the Common Stock, and votes together with the Common Stock and participates in any dividends paid on the Common Stock, in each case on an as-converted basis. The terms, rights, obligations and preferences of the Series E Convertible Preferred Stock are set forth in a Certificate of Designations, Preferences and Rights of Series E Convertible Preferred Stock of the Company (the “Series E Certificate of Designations”). Stockholders' Agreement Concurrently with the execution of the Transfer and Exchange Agreement, the Company, Steel Holdings, Steel Excel, WebFinancial, WHX CS, LLC, WF Asset Corp., Steel Partners Ltd., Warren G. Lichtenstein and Jack L. Howard (together, the "SP Investors") entered into a Stockholders' Agreement dated as of April 30, 2023 (the "Stockholders' Agreement"). Pursuant to the Stockholders' Agreement, the parties agreed to certain aspects of the Company's governance, including the maintenance of the Board size at seven directors and the creation of an audit committee consisting of at least three independent directors under SEC and applicable stock exchange rules (an "Independent Audit Committee") or one consisting of at least three directors, at least one of whom qualifies as independent under SEC and applicable stock exchange rules and the remainder of whom are not affiliated, as described in the Stockholders’ Agreement, with the Company or the SP Investors or their subsidiaries or affiliates (the “Disinterested Audit Committee”). The Stockholders' Agreement further provides that (a) prior to September 1, 2025 the prior approval of the Independent Audit Committee or the Disinterested Audit Committee, as applicable, is required for the following: (i) a voluntary delisting of the common stock from the applicable stock exchange or a transaction (including a merger, recapitalization, stock split or otherwise) which results in the delisting of the common stock, Steel Connect ceasing to be an SEC reporting company, or Steel Connect filing a Form 25 or Form 15 or any similar form with the SEC; (ii) an amendment to the terms of the STCN Management Services Agreement (the "Services Agreement") dated June 14, 2019, by and between Steel Connect and Steel Services Ltd.; and (iii) any related party transaction between Steel Connect and the SP Investors and their subsidiaries and affiliates; (b) prior to September 1, 2028, the prior approval of the Independent Audit Committee or the Disinterested Audit Committee, as applicable, is required for the Board to approve a going private transaction pursuant to which Steel Holdings or its subsidiaries or affiliates acquires the outstanding shares of common stock they do not own (or any alternative transaction that would have the same impact); and (c) until the Final Sunset Date, the prior approval of the Independent Audit Committee or the Disinterested Audit Committee, as applicable, is required (i) for the Board to approve a short-form or squeeze-out merger between Steel Connect and the SP Investors; or (ii) prior to any transfer of equity interests in Steel Connect by the members of the SP Group (as defined in the Stockholders' Agreement) if such transfers would result in 80% of the voting power and value of the equity interests in Steel Connect that are held by the members of the SP Group being held by one corporate entity. The Stockholders' Agreement also provides that 70% of the net proceeds received by the Company upon resolution of the Reith litigation will be distributed to the Company’s stockholders with the SP Investors agreeing to waive their portion of any such distribution to the extent of any shares of common stock held as of the date of the Stockholders’ Agreement or issuable upon conversion of the Series E Convertible Preferred Stock held by the SP Investors and the Series C Convertible Preferred Stock of Steel Connect, and the SPHG Note. Any amendment to the Stockholders’ Agreement by the Company prior to the date that any person or group of related persons owns 100% of the equity securities of the Company requires the prior approval of the Independent Audit Committee or the Disinterested Audit Committee, as applicable. Steel Connect Management Services Agreement On June 14, 2019, the Company entered into an agreement (the "STCN Management Services Agreement") with Steel Services Ltd. ("Steel Services"), an indirect wholly-owned subsidiary of Steel Holdings. The STCN Management Services Agreement was effective as of June 1, 2019. Pursuant to the STCN Management Services Agreement, Steel Services provides the Company and its subsidiaries with the non-exclusive services of certain employees, including certain executive officers (including chief financial officer and general counsel services) and other corporate services. Total expenses incurred related to the STCN Management Services Agreement for the three months ended October 31, 2023 and 2022 were $0.6 million and $0.6 million, respectively. As of October 31, 2023 and July 31, 2023, amounts due to Steel Services was $0.2 million and $0.7 million, respectively, and are recorded within the consolidated balance sheets as a component of Accounts payable. On October 25, 2023, in Amendment No. 2 to the STCN Management Services Agreement, the parties agreed to increase the monthly fee to $0.1 million effective as of January 1, 2024, primarily to increase the business development and mergers and acquisition staffing needed to originate, analyze and pursue strategic acquisitions and investments with the additional liquidity resulting from the Exchange Transaction. ModusLink Management Services Agreement On October 25, 2023, ModusLink entered into a management services agreement (as amended, the “ModusLink Management Services Agreement”) with Steel Services, an indirect wholly-owned subsidiary of Steel Holdings, effective as of January 1, 2024. Pursuant to the ModusLink Management Services Agreement, Steel Services provides ModusLink with the non-exclusive services of a person or people to serve in various positions or functions and to perform duties normally associated with those specific to (or substantially equivalent positions or functions for) ModusLink based on its particular needs, including legal and environmental, health and safety, management (including chief financial officer and general counsel services), finance, tax and treasury, human resources, “lean,” internal audit, mergers and acquisitions, and information technology (the “Services”). SEC and Nasdaq reporting services and M&A business development services, among other services, are provided only under the STCN Management Services Agreement. The ModusLink Management Services Agreement provides that ModusLink will pay Steel Services a fixed monthly fee of $80.0 thousand in consideration of the Services and will reimburse Steel Services and its representatives for all reasonable expenses incurred in providing the Services. The ModusLink Management Services Agreement will automatically renew for successive one th day following the date of such termination); (iii) immediately upon the bankruptcy or dissolution of Steel Services; (iv) promptly by ModusLink upon a material breach of the ModusLink Management Services Agreement by Steel Services; or (v) immediately by ModusLink for Cause (as defined in the ModusLink Management Services Agreement). The ModusLink Management Services Agreement provides that ModusLink will reimburse Steel Services and its representatives for all reasonable expenses incurred in providing the Services. Air Travel The Company reimburses SP General Services, LLC (an affiliate of Steel Holdings), rather than Steel Services, for expenses for business-related air travel, which relates to services provided to the Company by Warren G. Lichtenstein as Interim Chief Executive Officer as well as certain of the Company’s executive officers whose services are provided to the Company under the STCN Management Services Agreement. For the three months ended October 31, 2023 and October 31, 2022, SP General Services, LLC did not incur any reportable expenses for such business-related air travel. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Oct. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS ASC 820, Fair Value Measurement , 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 under the Umpqua Revolver approximate fair value because of the short maturity of these instruments. 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 and liability measured at fair value on a recurring basis as of October 31, 2023 and July 31, 2023, classified by fair value hierarchy: Successor Fair Value Measurements at Reporting Date Using (In thousands) October 31, 2023 Level 1 Level 2 Level 3 Assets: Money market funds $ 238,090 $ 238,090 $ — $ — Convertible loan note investment $ 1,227 $ — $ — $ 1,227 Other investments $ 2,216 $ 2,216 $ — $ — Liabilities: SPHG Note $ 12,327 $ — $ — $ 12,327 Successor Fair Value Measurements at Reporting Date Using (In thousands) July 31, 2023 Level 1 Level 2 Level 3 Assets: Money market funds $ 85,269 $ 85,269 $ — $ — Liabilities: SPHG Note $ 12,461 $ — $ — $ 12,461 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, and restricted cash, and are reflected in the consolidated financial statements at carrying value. Carrying value approximates fair value for these items due to their short-term nature. 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. Subsequent to the issuance of fiscal year 2023 financial statements, the Company determined that the money market funds balance as of July 31, 2023 in the above table, was understated by $54.2 million. The Company corrected this immaterial error in the table above as of July 31, 2023. This disclosure change did not have any impact to amounts recognized in the consolidated balance sheets. Prior to the date of the Exchange Transaction, the Company did not measure the fair value of the SPHG Note on a recurring basis, as the assumption was that the carrying value of the liability component of the SPHG Note approximated fair value because the stated interest rate of this debt was consistent with current market rates. In conjunction with the application of pushdown accounting, the Company now measures the fair value of the SPHG on a recurring basis. Refer to Note 10 - "Debt" for further details. The Company estimates the value of the SPHG Note using a Binomial Lattice Model. Key inputs in the valuation include the trading price and volatility of Steel Connect's common stock, the risk-free rate of return, as well as the dividend rate, conversion price, and maturity date. The Company recognized $0.1 million in unrealized gains in Other gains, net within the consolidated statements of operations for the Successor Period as a result of the fair value measurement performed at October 31, 2023. Following is a summary of changes in the SPHG Note measured using Level 3 inputs: Balance as of July 31, 2023 (Successor) $ 12,461 Change in fair value (134) Balance as of October 31, 2023 (Successor) $ 12,327 As discussed in Note 7 - "Investments", the Company elected the fair value option to account for their convertible loan note investment. The Company believes the cost basis of the investment to approximate its fair value as of October 31, 2023. As such, there were no unrealized gains or losses recorded to the consolidated statement of operations for the Successor Period. There were no unrealized gains or losses recorded to the consolidated statement of operations for the Predecessor Period, as the convertible loan note investment was a new investment in October 2023. |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Policies) | 3 Months Ended |
Oct. 31, 2023 | |
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, 2023 (Fiscal Year 2023), which are contained in the Company's Fiscal Year 2023 Form 10-K filed. The results for the three months ended October 31, 2023 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. |
Accounting Standards Issued and Not Yet Implemented | Accounting Standards Issued and Not Yet Implemented In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. We are currently evaluating the impacts of the new standard. 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 how to assess 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, Fair Value Measurement , 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 under the Umpqua Revolver approximate fair value because of the short maturity of these instruments. 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. |
EXCHANGE TRANSACTION (Tables)
EXCHANGE TRANSACTION (Tables) | 3 Months Ended |
Oct. 31, 2023 | |
Related Party Transactions [Abstract] | |
Schedule of Exchange Transaction Consideration | The following table summarizes the total Exchange Transaction consideration: (in thousands) May 1, 2023 Fair value of Aerojet common stock $ 202,733 Fair value of Steel Holdings' previously held interests in Steel Connect and Steel Holdings' noncontrolling interest 111,816 Less: cash acquired from Steel Connect (65,896) Total estimated consideration, less cash acquired $ 248,653 |
Summary of Preliminary Fair Value of Assets Acquired and Liabilities Assumed | The following represents the initial calculation of goodwill and fair value amounts recognized. The Company notes that there were no measurement period adjustments made in the current period that would result in an updated preliminary fair value allocation. (in thousands) May 1, 2023 Assets Accounts receivable, trade $ 36,900 Inventories, net 6,900 Prepaid expenses and other current assets 4,957 Other intangible assets 35,500 Other assets 3,900 Property and equipment, net 3,400 Operating lease right-of-use assets 29,250 Investments 202,733 Estimated fair value of total assets acquired by Steel Holdings 323,540 Liabilities Accounts payable 26,300 Accrued expenses 29,100 Current lease obligations 7,994 Other current liabilities 7,236 Long-term lease obligations 21,300 Other long-term liabilities 5,742 Estimated fair value of total liabilities assumed by Steel Holdings 97,672 Fair value of identifiable net assets 225,868 Goodwill attributable to Steel Connect $ 22,785 |
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Exchange Transaction | The estimated fair value and estimated remaining useful lives of identifiable intangible assets as of the Exchange Transaction date were as follows: (in thousands) Useful Life (Years) Amount Customer relationships 7 $ 25,000 Trade name Indefinite 10,500 Estimated fair value of identifiable intangible assets $ 35,500 |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended |
Oct. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | A reconciliation of the change in the carrying amount of goodwill by reportable segment is as follows: Supply Chain Balance at July 31, 2023 (Successor) Gross goodwill $ 22,785 Accumulated impairments — Net goodwill $ 22,785 Balance at October 31, 2023 (Successor) Gross goodwill $ 22,785 Accumulated impairments — Net goodwill $ 22,785 |
Schedule of Indefinite-Lived Intangible Assets | A summary of Other intangible assets, net is as follows: Successor October 31, 2023 July 31, 2023 Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net Customer relationships $ 25,000 $ 1,786 $ 23,214 $ 25,000 $ 911 $ 24,089 Trade name 10,500 — 10,500 10,500 — 10,500 Total $ 35,500 $ 1,786 $ 33,714 $ 35,500 $ 911 $ 34,589 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Based on gross carrying amounts at October 31, 2023, the Company's estimate of amortization expense for identifiable intangible assets for the remainder of fiscal year ending July 31, 2024, and fiscal years 2025 through 2028 and thereafter is presented in the table below: Fiscal Year Ending July 31, 2024 2025 2026 2027 2028 Thereafter Estimated amortization expense $ 2,679 $ 3,571 $ 3,571 $ 3,571 $ 3,571 $ 6,251 |
INVENTORIES, NET (Tables)
INVENTORIES, NET (Tables) | 3 Months Ended |
Oct. 31, 2023 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories, Net | The table below presents the components of Inventories, net: Successor October 31, July 31, (In thousands) Raw materials $ 3,680 $ 4,805 Work-in-process 71 239 Finished goods 3,005 3,525 $ 6,756 $ 8,569 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 3 Months Ended |
Oct. 31, 2023 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment | The following table summarizes the Company's investments as of October 31, 2023. There were no investments as of July 31, 2023. Successor October 31, 2023 Convertible loan note investment (a) $ 1,227 Other investments (b) 2,216 Total $ 3,443 (a) The Company entered into a new convertible loan note on October 13, 2023, which matures on March 31, 2025. The Company paid 1.0 million GBP (approximately $1.2 million) to subscribe for an amount of £1.0 million (the "loan principal") of 11.0% 2025 unsecured convertible loan notes issued by the investee (the "CLN Instrument Agreement"). Contemporaneous with the execution of the CLN Instrument Agreement, the Company executed the Equity Warrant Instrument Agreement (“Warrant Agreement”), which provides the Company with the option to convert the outstanding balance into equity shares of the investee at any time before repayment of the outstanding loan principal balance. The Company’s £1.0 million investment in the £20.0 million GBP 11.0% unsecured convertible loan notes provides it with an approximate 5.0% ownership interest on an if-converted basis. The cost basis of the convertible loan note investment was $1.2 million as of October 31, 2023, which also approximates its fair value. Changes in fair value will be recorded in the Company's consolidated statements of operations as the Company elected the fair value option under ASC 825 to account for this investment. (b) The balance consists of multiple common stock investments of public companies. All were accounted for under ASC 321. |
Unrealized Gain (Loss) on Investments | The amount of net unrealized losses for the three months ended October 31, 2023 that relate to equity securities still held as of October 31, 2023 are as follows: Successor Three months ended October 31, 2023 Unrealized losses recognized during the period on equity securities still held at the end of the period $ 447 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 3 Months Ended |
Oct. 31, 2023 | |
Payables and Accruals [Abstract] | |
Components of Accrued Expenses | The following tables reflect the components of "Accrued expenses" and "Other current liabilities". Successor October 31, July 31, Accrued Expenses (In thousands) Accrued compensation $ 8,500 $ 6,891 Accrued audit, tax and legal 4,577 5,696 Accrued price concessions 2,740 2,981 Accrued taxes 2,715 2,811 Accrued occupancy costs 1,345 1,412 Accrued IT costs 871 831 Accrued other 5,450 6,152 Total accrued expenses $ 26,198 $ 26,774 |
Components of Other Current Liabilities | Successor October 31, July 31, Other Current Liabilities (In thousands) Deferred revenue - current 2,540 2,574 Other 1,362 1,970 Total other current liabilities $ 3,902 $ 4,544 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Oct. 31, 2023 | |
Leases [Abstract] | |
Lease Cost | The table below presents the components of the Company's lease expense: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Operating lease cost $ 2,546 $ 2,405 Short-term lease expense 451 438 Variable lease cost — 4 Sublease income (167) (273) Total lease expense $ 2,830 $ 2,574 Supplemental cash flow information related to the Company's leases was as follows: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Cash paid for amounts included in measurement of lease liabilities: Operating cash flows from operating leases $ 2,292 $ 2,207 Financing cash flows from finance leases $ — $ 19 |
DEBT (Tables)
DEBT (Tables) | 3 Months Ended |
Oct. 31, 2023 | |
Debt Disclosure [Abstract] | |
Summary of Components of Debt and Reconciliation to Carrying Amount | The components of debt are presented in the table below: Successor October 31, July 31, (In thousands) Unsecured 7.50% Convertible Senior Note due September 1, 2024 $ 12,327 $ 12,461 Credit Facilities Umpqua Revolver — — Total debt, net $ 12,327 $ 12,461 |
Net carrying value of SPG note | Below is a reconciliation of interest expense related to the SPHG Note to total interest expense: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Interest expense related to contractual interest coupon on the SPHG Note $ 247 $ 286 Interest expense related to accretion of the discount on the SPHG Note (a) — 510 Interest expense related to revolving credit facilities (see below) — 11 Other — 19 Total interest expense $ 247 $ 826 (a) Prior to the date of the Exchange Transaction, the discount on the SPHG Note was amortized using the effective interest rate method. The effective interest rate on the SPHG Note was 27.80% prior to the SPHG Note Amendment. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Oct. 31, 2023 | |
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. Successor Predecessor Three Months Ended October 31, Three Months Ended October 31, 2023 2022 (In thousands) Major Goods/Service Lines Supply chain management services $ 41,005 $ 50,931 Other 336 428 $ 41,341 $ 51,359 Timing of Revenue Recognition Services transferred over time $ 41,341 $ 51,359 $ 41,341 $ 51,359 |
Summary of Changes in Deferred Revenue | The table below presents information for the Company's contract balances: Successor Predecessor October 31, July 31, August 1, (In thousands) Accounts receivable, trade, net $ 27,974 $ 28,616 $ 40,083 Contract assets 464 439 369 Deferred revenue - current $ 2,540 $ 2,574 $ 2,705 Deferred revenue - long-term 108 144 134 Total deferred revenue $ 2,648 $ 2,718 $ 2,839 Remaining Performance Obligations Remaining performance obligations are comprised of deferred revenue. Changes in deferred revenue during the three months ended October 31, 2023 and October 31, 2022, were as follows: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Balance at beginning of period $ 2,718 $ 2,839 Deferral of revenue 301 271 Recognition of deferred amounts upon satisfaction of performance obligation (371) (641) Balance at end of period $ 2,648 $ 2,469 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Oct. 31, 2023 | |
Earnings Per Share [Abstract] | |
Reconciliation of Net Income (Loss) Per Share | The following table reconciles net earnings per share for the three months ended October 31, 2023 and 2022: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands, except per share data) Reconciliation of net income to net income attributable to common stockholders after assumed conversions: Net income $ 4,436 $ 4,957 Less: Preferred dividends on Series C redeemable preferred stock (536) (537) Net income available to common stockholders 3,900 4,420 Less: Undistributed earnings allocated to participating securities (2,970) — Net income attributable to common stockholders $ 930 $ 4,420 Effect of dilutive securities: Dividends on Series C preferred stock — 537 Undistributed earnings allocated to Series E preferred stock 2,970 — Net income attributable to common stockholders - assuming dilution $ 3,900 $ 4,957 Net income per common share - basic $ 0.15 $ 0.69 Net income per common share - diluted $ 0.15 $ 0.59 Weighted average common shares outstanding - basic 6,199 6,434 Effect of dilutive securities: Common stock equivalents - Restricted stock and restricted stock shares 57 56 Common stock equivalents - Series C Preferred stock — 1,913 Common stock equivalents - Series E Preferred stock 19,810 — Weighted average common shares outstanding - diluted 26,066 8,403 |
COMPREHENSIVE (LOSS) INCOME (Ta
COMPREHENSIVE (LOSS) INCOME (Tables) | 3 Months Ended |
Oct. 31, 2023 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income, Net of Income Taxes | Accumulated other comprehensive items consist of the following: Foreign Pension Total (In thousands) Accumulated other comprehensive (loss) income as of 7/31/2023 (Successor) $ (623) $ 36 $ (587) Foreign currency translation adjustment (996) — (996) Net current-period other comprehensive loss (996) — (996) Accumulated other comprehensive (loss) income as of 10/31/2023 (Successor) $ (1,619) $ 36 $ (1,583) Foreign Pension Total (In thousands) Accumulated other comprehensive income (loss) as of 7/31/2022 (Predecessor) $ 6,063 $ (1,923) $ 4,140 Foreign currency translation adjustment (2,837) — (2,837) Pension liability adjustments, net of tax — (1,078) (1,078) Net current-period other comprehensive loss (2,837) (1,078) (3,915) Accumulated other comprehensive income (loss) as of 10/31/2022 (Predecessor) $ 3,226 $ (3,001) $ 225 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Oct. 31, 2023 | |
Segment Reporting [Abstract] | |
Summarized Financial Information of Continuing Operations by Operating Segment and Corporate-Level Activity | Summarized financial information of the Company's continuing operations by operating segment is as follows: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Net revenue: Supply Chain $ 41,341 $ 51,359 Total segment net revenue 41,341 51,359 Operating income: Supply Chain 2,675 5,851 Total segment operating income 2,675 5,851 Corporate-level activity (870) (1,972) Total operating income 1,805 3,879 Total other income, net 3,302 2,204 Income before income taxes $ 5,107 $ 6,083 Summarized financial information of the Company's capital expenditures and depreciation expense for the Supply Chain reportable segment is as follows: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) Capital expenditures $ 552 $ 548 Depreciation expense $ 435 $ 459 |
Total Assets of Continuing Operations | Successor October 31, July 31, (In thousands) Total assets: Supply Chain $ 143,654 $ 146,614 Corporate 266,941 264,567 Total assets $ 410,595 $ 411,181 |
Summarized Financial Information of Net Revenue from External Customers by Group of Services | Summarized financial information of the Company's net revenue by geographic location is as follows: Successor Predecessor Three Months Ended Three Months Ended 2023 2022 (In thousands) United States $ 15,197 $ 12,172 Mainland China 14,384 17,965 Netherlands 5,298 5,351 Czech Republic 2,630 5,760 Singapore 1,460 5,132 Other 2,372 4,979 Total consolidated net revenue $ 41,341 $ 51,359 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Oct. 31, 2023 | |
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 and liability measured at fair value on a recurring basis as of October 31, 2023 and July 31, 2023, classified by fair value hierarchy: Successor Fair Value Measurements at Reporting Date Using (In thousands) October 31, 2023 Level 1 Level 2 Level 3 Assets: Money market funds $ 238,090 $ 238,090 $ — $ — Convertible loan note investment $ 1,227 $ — $ — $ 1,227 Other investments $ 2,216 $ 2,216 $ — $ — Liabilities: SPHG Note $ 12,327 $ — $ — $ 12,327 Successor Fair Value Measurements at Reporting Date Using (In thousands) July 31, 2023 Level 1 Level 2 Level 3 Assets: Money market funds $ 85,269 $ 85,269 $ — $ — Liabilities: SPHG Note $ 12,461 $ — $ — $ 12,461 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | Following is a summary of changes in the SPHG Note measured using Level 3 inputs: Balance as of July 31, 2023 (Successor) $ 12,461 Change in fair value (134) Balance as of October 31, 2023 (Successor) $ 12,327 |
NATURE OF OPERATIONS (Details)
NATURE OF OPERATIONS (Details) - shares | Oct. 31, 2023 | Jul. 31, 2023 | Apr. 30, 2023 |
Nature Of Operations [Line Items] | |||
Preferred stock, shares issued (in shares) | 0 | 0 | |
Exchange Transaction Agreement | Steel Partners Group | Series E Preferred Stock | |||
Nature Of Operations [Line Items] | |||
Preferred stock, shares issued (in shares) | 3,500,000 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - Common Stock | Jun. 06, 2023 |
Significant Of Accounting Policies [Line Items] | |
Reverse stock split, conversion ratio | 0.00029 |
Stockholders' equity note, forward stock split, conversion ratio | 375 |
EXCHANGE TRANSACTION - Addition
EXCHANGE TRANSACTION - Additional Information (Details) - $ / shares | Oct. 31, 2023 | Jul. 31, 2023 | Jun. 06, 2023 | May 01, 2023 |
Related Party Transaction [Line Items] | ||||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 | ||
Preferred stock, shares issued (in shares) | 0 | 0 | ||
Equity ownership, excluding consolidated entity and equity method investee, percentage | 84% | |||
Ownership percentage, noncontrolling interest, threshold percentage | 16% | |||
Ownership percentage, prior approval of equity securities, threshold percentage | 49.60% | |||
Series E Preferred Stock | ||||
Related Party Transaction [Line Items] | ||||
Preferred stock, convertible, shares issuable (in shares) | 19,800,000 | |||
Common Stock | ||||
Related Party Transaction [Line Items] | ||||
Common stock, par value (in usd per share) | $ 0.01 | |||
Exchange Transaction Agreement | Steel Partners | Aerojet Share | Exchanging Parties | ||||
Related Party Transaction [Line Items] | ||||
Common stock, shares exchanged (in shares) | 3,600,000 | |||
Common stock, par value (in usd per share) | $ 0.10 | |||
Exchange Transaction Agreement | Steel Partners | Series E Preferred Stock | ||||
Related Party Transaction [Line Items] | ||||
Preferred stock, shares issued (in shares) | 3,500,000 |
EXCHANGE TRANSACTION - Schedule
EXCHANGE TRANSACTION - Schedule of Exchange Transaction Consideration (Details) - SPLP $ in Thousands | May 01, 2023 USD ($) |
Related Party Transaction [Line Items] | |
Less: cash acquired from Steel Connect | $ (65,896) |
Total estimated consideration, less cash acquired | 248,653 |
Aerojet Share | |
Related Party Transaction [Line Items] | |
Business combination, consideration transferred, equity interests issued and issuable | 202,733 |
Common Stock | |
Related Party Transaction [Line Items] | |
Business combination, consideration transferred, equity interests issued and issuable | $ 111,816 |
EXCHANGE TRANSACTION - Summary
EXCHANGE TRANSACTION - Summary of Preliminary Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Jul. 31, 2023 | May 01, 2023 |
Related Party Transaction [Line Items] | |||
Goodwill | $ 22,785 | $ 22,785 | |
SPLP | |||
Related Party Transaction [Line Items] | |||
Accounts receivable, trade | $ 36,900 | ||
Inventories, net | 6,900 | ||
Prepaid expenses and other current assets | 4,957 | ||
Other intangible assets | 35,500 | ||
Other assets | 3,900 | ||
Property and equipment, net | 3,400 | ||
Operating lease right-of-use assets | 29,250 | ||
Investments | 202,733 | ||
Estimated fair value of total assets acquired by Steel Holdings | 323,540 | ||
Accounts payable | 26,300 | ||
Accrued expenses | 29,100 | ||
Current lease obligations | 7,994 | ||
Other current liabilities | 7,236 | ||
Long-term lease obligations | 21,300 | ||
Other long-term liabilities | 5,742 | ||
Estimated fair value of total liabilities assumed by Steel Holdings | 97,672 | ||
Fair value of identifiable net assets | 225,868 | ||
Goodwill | $ 22,785 |
EXCHANGE TRANSACTION - Finite-L
EXCHANGE TRANSACTION - Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Exchange Transaction (Details) - SPLP $ in Thousands | May 01, 2023 USD ($) |
Related Party Transaction [Line Items] | |
Estimated fair value of identifiable intangible assets | $ 35,500 |
Trade name | |
Related Party Transaction [Line Items] | |
Trade name | 10,500 |
Customer relationships | |
Related Party Transaction [Line Items] | |
Customer relationships | $ 25,000 |
Acquired finite-lived intangible assets, weighted average useful life | 7 years |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Schedule of Goodwill (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Jul. 31, 2023 |
Goodwill [Line Items] | ||
Net goodwill | $ 22,785 | $ 22,785 |
Supply Chain | ||
Goodwill [Line Items] | ||
Gross goodwill | 22,785 | 22,785 |
Accumulated impairments | 0 | 0 |
Net goodwill | $ 22,785 | $ 22,785 |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Schedule of Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Jul. 31, 2023 |
Goodwill [Line Items] | ||
Intangible assets, gross (excluding goodwill) | $ 35,500 | $ 35,500 |
Accumulated Amortization | 1,786 | 911 |
Total | 33,714 | 34,589 |
Trade name | ||
Goodwill [Line Items] | ||
Indefinite-lived intangible assets (excluding goodwill) | 10,500 | 10,500 |
Customer relationships | ||
Goodwill [Line Items] | ||
Finite-lived intangible assets, gross | 25,000 | 25,000 |
Accumulated Amortization | 1,786 | 911 |
Net | $ 23,214 | $ 24,089 |
GOODWILL AND OTHER INTANGIBLE_5
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of finite-lived intangible assets | $ 875 | $ 0 |
GOODWILL AND OTHER INTANGIBLE_6
GOODWILL AND OTHER INTANGIBLE ASSETS, NET - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense (Details) $ in Thousands | Oct. 31, 2023 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2024 | $ 2,679 |
2025 | 3,571 |
2026 | 3,571 |
2027 | 3,571 |
2028 | 3,571 |
Thereafter | $ 6,251 |
INVENTORIES, NET - Components o
INVENTORIES, NET - Components of Inventories (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Jul. 31, 2023 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 3,680 | $ 4,805 |
Work-in-process | 71 | 239 |
Finished goods | 3,005 | 3,525 |
Inventories, net | $ 6,756 | $ 8,569 |
INVESTMENTS - Narrative (Detail
INVESTMENTS - Narrative (Details) - USD ($) | Oct. 31, 2023 | Jul. 31, 2023 |
Investments, Debt and Equity Securities [Abstract] | ||
Investments | $ 3,443,000 | $ 0 |
INVESTMENTS - Schedule of Inves
INVESTMENTS - Schedule of Investment (Details) £ in Millions | Oct. 13, 2023 GBP (£) | Oct. 31, 2023 USD ($) | Jul. 31, 2023 USD ($) |
Investments, Debt and Equity Securities [Abstract] | |||
Convertible loan note investment | £ 1 | $ 1,227,000 | |
Other investments | $ | 2,216,000 | ||
Investments | $ | $ 3,443,000 | $ 0 | |
Payments to acquire debt securities, available-for-sale | £ | £ 1 | ||
Debt securities, available-for-sale, interest rate, stated percentage | 11% | ||
Debt securities, available-for-sale, loan principal | £ | £ 20 | ||
Debt securities, available-for-sale, ownership interest percentage | 5% |
INVESTMENTS - Schedule of Unrea
INVESTMENTS - Schedule of Unrealized Gain (Loss) on Investments (Details) $ in Thousands | 3 Months Ended |
Oct. 31, 2023 USD ($) | |
Investments, Debt and Equity Securities [Abstract] | |
Equity securities, FV-NI, unrealized loss | $ 447 |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES - Components of Accrued Expenses (Detail) - USD ($) $ in Thousands | Oct. 31, 2023 | Jul. 31, 2023 |
Payables and Accruals [Abstract] | ||
Accrued compensation | $ 8,500 | $ 6,891 |
Accrued audit, tax and legal | 4,577 | 5,696 |
Accrued price concessions | 2,740 | 2,981 |
Accrued taxes | 2,715 | 2,811 |
Accrued occupancy costs | 1,345 | 1,412 |
Accrued IT costs | 871 | 831 |
Accrued other | 5,450 | 6,152 |
Total accrued expenses | $ 26,198 | $ 26,774 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Components of Other Current Liabilities (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Jul. 31, 2023 | Aug. 01, 2022 |
Payables and Accruals [Abstract] | |||
Deferred revenue - current | $ 2,540 | $ 2,574 | $ 2,705 |
Other | 1,362 | 1,970 | |
Total other current liabilities | $ 3,902 | $ 4,544 |
LEASES - Lease Costs (Details)
LEASES - Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Lease, Cost [Abstract] | ||
Operating lease cost | $ 2,546 | $ 2,405 |
Short-term lease expense | 451 | 438 |
Variable lease cost | 0 | 4 |
Sublease income | (167) | (273) |
Total lease expense | $ 2,830 | $ 2,574 |
LEASES - Supplemental Cash Flow
LEASES - Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Cash paid for amounts included in measurement of lease liabilities: | ||
Operating cash flows from operating leases | $ 2,292 | $ 2,207 |
Financing cash flows from finance leases | $ 0 | $ 19 |
DEBT - Summary of Components of
DEBT - Summary of Components of Debt and Reconciliation to Carrying Amount (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Jul. 31, 2023 | Feb. 28, 2019 |
Line of Credit Facility [Line Items] | |||
Total debt, net | $ 12,327 | $ 12,461 | |
Convertible note investment | |||
Line of Credit Facility [Line Items] | |||
Principal amount of long term debt | 12,327 | 12,461 | |
Convertible note investment | SPHG Holdings | |||
Line of Credit Facility [Line Items] | |||
Total debt, net | 12,300 | 12,500 | |
Debt instrument, stated interest rate | 7.50% | ||
Umpqua Revolver | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility | $ 0 | $ 0 |
DEBT - Additional Information (
DEBT - Additional Information (Details) | Mar. 09, 2023 USD ($) | Feb. 28, 2019 USD ($) $ / shares | Oct. 31, 2023 USD ($) | Jul. 31, 2023 USD ($) | Mar. 16, 2022 USD ($) |
Debt Instrument [Line Items] | |||||
Long-term debt | $ 12,327,000 | $ 12,461,000 | |||
Umpqua Revolver | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility, maximum credit commitment | $ 12,500,000 | ||||
Line of credit facility, sublimit borrowing capacity | $ 5,000,000 | ||||
Revolving credit facility | 600,000 | ||||
MidCap Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Credit facility, readily available borrowing capacity | 11,900,000 | ||||
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 | $ 22.16 | ||||
Convertible note investment | SPHG Holdings | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, stated interest rate | 7.50% | ||||
Debt instrument, face amount | $ 14,900,000 | 12,900,000 | 12,900,000 | ||
Debt instrument, repaid, principal | $ 1,000,000 | ||||
Debt instrument, periodic payment, principal | 1,000,000 | ||||
Long-term debt, cash amendment fee amount | 100,000 | ||||
Long-term debt, derecognized debt discount amount | $ 200,000 | ||||
Long-term debt | $ 12,300,000 | $ 12,500,000 |
DEBT - Summary of Interest Expe
DEBT - Summary of Interest Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Interest Expense, Debt [Line Items] | ||
Debt instrument, interest expense | $ 247 | $ 826 |
Debt instrument, interest rate, effective percentage | 27.80% | |
Umpqua Revolver | ||
Interest Expense, Debt [Line Items] | ||
Debt instrument, interest expense | $ 0 | 11 |
Other | ||
Interest Expense, Debt [Line Items] | ||
Debt instrument, interest expense | 0 | 19 |
SPHG Holdings | Interest expense related to contractual interest coupon on the SPHG Note | ||
Interest Expense, Debt [Line Items] | ||
Debt instrument, interest expense | 247 | 286 |
SPHG Holdings | Interest expense related to accretion of the discount on the SPHG Note(a) | ||
Interest Expense, Debt [Line Items] | ||
Debt instrument, interest expense | $ 0 | $ 510 |
CONTINGENCIES - Additional Info
CONTINGENCIES - Additional Information (Details) - USD ($) | Aug. 18, 2022 | Feb. 18, 2022 | Aug. 13, 2021 | Dec. 15, 2017 |
Reith v. Lichtenstein | ||||
Contingencies [Line Items] | ||||
Cash paid to plaintiff | $ 2,750,000 | |||
Legal fees | $ 1,600,000 | $ 2,050,000 | ||
Litigation settlement, amount awarded from other party | 3,000,000 | |||
Litigation settlement, expense | 125,000 | |||
Litigation settlement, distribution amount | $ 1 | |||
Reith v. Lichtenstein | Director | Restricted Stock | ||||
Contingencies [Line Items] | ||||
Number of shares surrendered | 353,571 | |||
Reith v. Lichtenstein | Director | Restricted Stock | Warren Lichtenstein | ||||
Contingencies [Line Items] | ||||
Number of vested shares surrendered | 196,429 | |||
Number of nonvested shares surrendered | 32,143 | |||
Reith v. Lichtenstein | Director | Restricted Stock | Jack Howard | ||||
Contingencies [Line Items] | ||||
Number of vested shares surrendered | 98,214 | |||
Number of nonvested shares surrendered | 16,071 | |||
Reith v. Lichtenstein | Director | Restricted Stock | William Fejes | ||||
Contingencies [Line Items] | ||||
Number of vested shares surrendered | 10,714 | |||
Series C convertible preferred stock | Purchase agreement | SPHG Holdings | ||||
Contingencies [Line Items] | ||||
Proceeds from issuance of preferred stock | $ 35,000,000 |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregated Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 41,341 | $ 51,359 |
Supply chain management services | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 41,005 | 50,931 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | 336 | 428 |
Services transferred over time | Transferred over time | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 41,341 | $ 51,359 |
REVENUE RECOGNITION - Contract
REVENUE RECOGNITION - Contract Balances (Detail) - USD ($) $ in Thousands | Oct. 31, 2023 | Jul. 31, 2023 | Oct. 31, 2022 | Aug. 01, 2022 | Jul. 31, 2022 |
Disaggregation of Revenue [Line Items] | |||||
Contract assets | $ 464 | $ 439 | $ 369 | ||
Deferred revenue - current | 2,540 | 2,574 | 2,705 | ||
Deferred revenue - long-term | 108 | 144 | 134 | ||
Total deferred revenue | 2,648 | 2,718 | $ 2,469 | 2,839 | $ 2,839 |
Trade Accounts Receivable | |||||
Disaggregation of Revenue [Line Items] | |||||
Accounts receivable, trade, net | $ 27,974 | $ 28,616 | $ 40,083 |
REVENUE RECOGNITION - Summary o
REVENUE RECOGNITION - Summary of Changes in Deferred Revenue (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Change in Deferred Revenue | ||
Balance at beginning of period | $ 2,718 | $ 2,839 |
Deferral of revenue | 301 | 271 |
Recognition of deferred amounts upon satisfaction of performance obligation | (371) | (641) |
Balance at end of period | $ 2,648 | $ 2,469 |
REVENUE RECOGNITION - Performan
REVENUE RECOGNITION - Performance Obligations (Details) $ in Millions | Oct. 31, 2023 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-11-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations | $ 2.5 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-11-01 | |
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, 2023 | Jul. 31, 2023 |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits related to federal, state and foreign taxes | $ 0.4 | $ 0.4 |
Liabilities for interest expense related to uncertain tax positions | 0.1 | $ 0.1 |
Expected unrecognized tax benefits to reverse in the next twelve months | $ 0.3 |
EARNINGS PER SHARE - Reconcilia
EARNINGS PER SHARE - Reconciliation of (Loss) Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Class of Stock [Line Items] | ||
Net income | $ 4,436 | $ 4,957 |
Less: Preferred dividends on Series C redeemable preferred stock | (536) | (537) |
Net income attributable to common stockholders | 3,900 | 4,420 |
Less: Undistributed earnings allocated to participating securities | (2,970) | 0 |
Net income attributable to common stockholders | 930 | 4,420 |
Dividends on Series C preferred stock | 0 | 537 |
Undistributed earnings allocated to Series E preferred stock | 2,970 | 0 |
Net income attributable to common stockholders - assuming dilution | $ 3,900 | $ 4,957 |
Net income per common share - basic (in usd per share) | $ 0.15 | $ 0.69 |
Net income per common share - diluted (in usd per share) | $ 0.15 | $ 0.59 |
Weighted-average number of common shares outstanding - basic (in shares) | 6,199 | 6,434 |
Common stock equivalents - Restricted stock and restricted stock shares (in shares) | 57 | 56 |
Weighted average common shares outstanding, diluted (in shares) | 26,066 | 8,403 |
Series C Preferred Stock | ||
Class of Stock [Line Items] | ||
Common stock equivalents - Preferred stock (in shares) | 0 | 1,913 |
Series E Preferred Stock | ||
Class of Stock [Line Items] | ||
Common stock equivalents - Preferred stock (in shares) | 19,810 | 0 |
EARNINGS PER SHARE - Additional
EARNINGS PER SHARE - Additional Information (Details) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Preferred dividends | $ 536 | $ 537 |
Antidilutive securities excluded from computation of earnings per share, amount | 2.5 | 0.7 |
Convertible debt | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Interest expense excluded from computation of earnings, amount | $ 200 | $ 800 |
COMPREHENSIVE (LOSS) INCOME - A
COMPREHENSIVE (LOSS) INCOME - Accumulated Other Comprehensive Income, Net of Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | $ 68,624 | $ (9,206) |
Foreign currency translation adjustment | (996) | (2,837) |
Pension liability adjustments | 0 | (1,078) |
Other comprehensive loss | (996) | (3,915) |
Ending balance | 71,665 | (8,524) |
Accumulated Other Comprehensive Income (Loss) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | (587) | 4,140 |
Pension liability adjustments | (1,078) | |
Ending balance | (1,583) | 225 |
Foreign Currency Items | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | (623) | 6,063 |
Foreign currency translation adjustment | (996) | (2,837) |
Pension liability adjustments | 0 | |
Other comprehensive loss | (996) | (2,837) |
Ending balance | (1,619) | 3,226 |
Pension Items | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||
Beginning balance | 36 | (1,923) |
Foreign currency translation adjustment | 0 | 0 |
Pension liability adjustments | (1,078) | |
Other comprehensive loss | 0 | (1,078) |
Ending balance | $ 36 | $ (3,001) |
COMPREHENSIVE (LOSS) INCOME -_2
COMPREHENSIVE (LOSS) INCOME - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Oct. 31, 2023 | Jul. 31, 2021 | |
Equity [Abstract] | ||
Other comprehensive income (loss), defined benefit plan, settlement and curtailment gain (loss), before tax | $ 2.4 | |
Increase of accrued pension liability | $ 1.1 |
SEGMENT INFORMATION - Additiona
SEGMENT INFORMATION - Additional Information (Details) | 3 Months Ended |
Oct. 31, 2023 segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
SEGMENT INFORMATION - Summarize
SEGMENT INFORMATION - Summarized Financial Information of Continuing Operations by Operating Segment and Corporate-Level Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Segment Reporting Information [Line Items] | ||
Revenue from contracts with customers | $ 41,341 | $ 51,359 |
Operating income | 1,805 | 3,879 |
Total other income, net | 3,302 | 2,204 |
Income before income taxes | 5,107 | 6,083 |
Operating segments | ||
Segment Reporting Information [Line Items] | ||
Operating income | 2,675 | 5,851 |
Operating segments | Supply Chain | ||
Segment Reporting Information [Line Items] | ||
Revenue from contracts with customers | 41,341 | 51,359 |
Operating income | 2,675 | 5,851 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Operating income | $ (870) | $ (1,972) |
SEGMENT INFORMATION - Total Ass
SEGMENT INFORMATION - Total Assets of Continuing Operations (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Jul. 31, 2023 |
Segment Reporting Information [Line Items] | ||
Total assets | $ 410,595 | $ 411,181 |
Operating segments | Supply Chain | ||
Segment Reporting Information [Line Items] | ||
Total assets | 143,654 | 146,614 |
Corporate | ||
Segment Reporting Information [Line Items] | ||
Total assets | $ 266,941 | $ 264,567 |
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, 2023 | Oct. 31, 2022 | |
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 552 | $ 548 |
Depreciation | 435 | 459 |
Operating segments | Supply Chain | ||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 552 | 548 |
Depreciation | $ 435 | $ 459 |
SEGMENT INFORMATION - Summari_3
SEGMENT INFORMATION - Summarized Financial Information of Net Revenue from External Customers by Group of Services (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | |
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | $ 41,341 | $ 51,359 |
United States | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | 15,197 | 12,172 |
Mainland China | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | 14,384 | 17,965 |
Netherlands | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | 5,298 | 5,351 |
Czech Republic | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | 2,630 | 5,760 |
Singapore | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | 1,460 | 5,132 |
Other | ||
Segment Reporting, Revenue Reconciling Item [Line Items] | ||
Revenue from contracts with customers | $ 2,372 | $ 4,979 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 3 Months Ended | |||||||||
May 01, 2023 director shares | Apr. 30, 2023 corporateEntity | Mar. 09, 2023 USD ($) | Dec. 15, 2017 USD ($) $ / shares shares | Oct. 31, 2023 USD ($) shares | Oct. 31, 2022 USD ($) | Oct. 25, 2023 USD ($) | Jul. 31, 2023 USD ($) shares | Jun. 06, 2023 shares | Feb. 28, 2019 USD ($) | |
Related Party Transaction [Line Items] | ||||||||||
Long-term debt | $ 12,327,000 | $ 12,461,000 | ||||||||
Interest expense | $ 247,000 | $ 826,000 | ||||||||
Preferred stock, shares issued (in shares) | shares | 0 | 0 | ||||||||
Preferred dividends | $ 536,000 | 537,000 | ||||||||
Ownership percentage, prior approval of equity securities, threshold percentage | 49.60% | |||||||||
Series E Contingently Redeemable Preferred Stock | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Preferred stock, shares issued (in shares) | shares | 3,500,000 | 3,500,000 | ||||||||
Series E Preferred Stock | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Preferred stock, convertible, shares issuable (in shares) | shares | 19,800,000 | |||||||||
Steel Partners Group | Series E Contingently Redeemable Preferred Stock | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Conversion of stock, shares converted (in shares) | shares | 3,500,000 | |||||||||
Purchase agreement | SPHG Holdings | Series C convertible preferred stock | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Preferred stock, shares issued (in shares) | shares | 35,000 | |||||||||
Share Price | $ / shares | $ 1,000 | |||||||||
Proceeds from issuance of preferred stock | $ 35,000,000 | |||||||||
Stockholders' Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Board of directors, number of directors | director | 7 | |||||||||
Board of directors, number of directors under SEC | director | 3 | |||||||||
Board of directors, number of directors in independent audit committee | director | 3 | |||||||||
Board of directors, number of directors in disinterested audit committee | director | 1 | |||||||||
Litigation settlement, proceeds required to be distributed to stockholders, percentage | 70% | |||||||||
Ownership percentage, prior approval of equity securities, threshold percentage | 100% | |||||||||
Related Party | Steel Services Ltd. | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
General and administrative expense | $ 600,000 | 600,000 | ||||||||
Management Services Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Increase (decrease) on monthly fee | $ 100,000 | |||||||||
Monthly fixed fee | $ 80,000 | |||||||||
Management services agreement, duration | 1 year | |||||||||
Management services agreement, notice duration | 90 days | |||||||||
Management services agreement, termination fee payment percentage | 125% | |||||||||
Management Services Agreement | SP Corporate Services Llc and Steel Services Limited | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Other receivables, net, current | 200,000 | $ 700,000 | ||||||||
SPHG Holdings | Purchase agreement | Series C convertible preferred stock | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Preferred dividends | 500,000 | 500,000 | ||||||||
SPHG Holdings | Convertible note investment | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Debt instrument, face amount | 12,900,000 | 12,900,000 | $ 14,900,000 | |||||||
Debt instrument, repaid, principal | $ 1,000,000 | |||||||||
Debt instrument, periodic payment, principal | 1,000,000 | |||||||||
Long-term debt, cash amendment fee amount | 100,000 | |||||||||
Long-term debt, derecognized debt discount amount | $ 200,000 | |||||||||
Long-term debt | 12,300,000 | 12,500,000 | ||||||||
Interest expense | 200,000 | $ 800,000 | ||||||||
Steel Holdings | Convertible debt | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Debt instrument, face amount | $ 12,900,000 | $ 12,900,000 | $ 14,900,000 | |||||||
Steel Connect, Inc. | Steel Connect, Inc. | SPHG Holdings | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Equity method investment, ownership percentage | 85.90% | |||||||||
Steel Connect, Inc. | Steel Connect, Inc. | SP Group | Stockholders' Agreement | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Ownership percentage, prior approval required for transfer of equity interests, threshold percentage | 80% | |||||||||
Number of corporate entity | corporateEntity | 1 |
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 - USD ($) $ in Thousands | Oct. 31, 2023 | Jul. 31, 2023 |
SPHG Note | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | $ 12,327 | |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 238,090 | $ 85,269 |
Convertible note investment | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 1,227 | |
Other investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 2,216 | |
SPHG Note | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 12,461 | |
Level 1 | SPHG Note | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 0 | |
Level 1 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 238,090 | 85,269 |
Level 1 | Convertible note investment | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | |
Level 1 | Other investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 2,216 | |
Level 1 | SPHG Note | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 0 | |
Level 2 | SPHG Note | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 0 | |
Level 2 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Level 2 | Convertible note investment | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | |
Level 2 | Other investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | |
Level 2 | SPHG Note | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 0 | |
Level 3 | SPHG Note | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | 12,327 | |
Level 3 | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 0 | 0 |
Level 3 | Convertible note investment | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | 1,227 | |
Level 3 | Other investments | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets, fair value disclosure | $ 0 | |
Level 3 | SPHG Note | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liabilities, fair value disclosure | $ 12,461 |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Oct. 31, 2023 | Oct. 31, 2022 | Jul. 31, 2023 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt securities, available-for-sale, unrealized gain (loss) | $ 0 | $ 0 | |
Money market funds | Fair value, measurements, recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Assets, fair value disclosure, understated amount | $ 54,200 | ||
Long-Term Debt | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Change in fair value | $ 134 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation (Details) - Long-Term Debt $ in Thousands | 3 Months Ended |
Oct. 31, 2023 USD ($) | |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance as of July 31, 2023 (Successor) | $ 12,461 |
Change in fair value | (134) |
Balance as of October 31, 2023 (Successor) | $ 12,327 |