Sherman Oaks, CA - Signature Group Holdings, Inc. announced financial results for the third quarter ended September 30, 2013. The company's Adjusted EBITDA from continuing operations for the third quarter of 2013 was $0.3 million, compared to $1.2 million in the prior year period. As a result of the 31.9% increase in the value of Signature's common stock price per share during the quarter, the company recognized a $3.3 million noncash expense associated with the increase in the fair value of its common stock warrant liability. This noncash charge was the primary driver for the company's EBITDA from continuing operations being a negative $4.3 million, compared to a negative $0.6 million in the prior year. (See Non-GAAP Financial Measures below for more information about EBITDA and Adjusted EBITDA, and a reconciliation to the most comparable GAAP financial measures.)
The company's net loss for the third quarter of 2013 was $5.9 million, or $0.49 per share, compared to a net loss of $2.6 million, or $0.23 per share, reported for the third quarter of 2012. The previously mentioned noncash charge related to the company's common stock warrant liability contributed to the net loss by $0.28 per share during the quarter while the 2012 third quarter results included a $0.9 million, or $0.07 per share, noncash charge related to this liability. The per share results reflect the company's outstanding share count as adjusted for its one-for-ten reverse stock split, which became effective October 15, 2013.
"The last few months were noteworthy for the strategic steps taken to position the company for growth, including a $300 million Shelf Registration becoming effective, the completion of a reverse stock split and plans for our reincorporation to Delaware," stated Chairman and CEO Craig T. Bouchard. "From a financial standpoint, our third quarter results reflect cost cutting measures that were taken to streamline the business. We are continuing to manage down our SG&A costs, while supporting the consistent growth of our Industrial Supply business. We continue in our pursuit of acquisition opportunities that will reshape the company."
Quarterly Results
Operating revenues from continuing operations were $9.8 million in the third quarter of 2013, compared to $11.3 million in the third quarter of 2012. The decrease is primarily related to a $1.0 million reduction in interest income, resulting from the sale of the residential loan portfolio in the second quarter of 2013 which generated $27.1 million of cash, and a $0.6 million impairment on nonmarketable equity securities that was sold subsequent to quarter end for $1.4 million of cash.
Operating costs decreased $0.4 million year over year, primarily from a $0.3 million decrease in selling, general and administrative expenses associated with reduced compensation expense and professional fees.
The operating loss in the third quarter of 2013 was $2.4 million, compared to a $1.3 million operating loss in the third quarter of 2012.
At September 30, 2013, the Company had $74.2 million in cash and cash equivalents, $84.1 million of working capital and $44.9 million in total debt.
Key Segment Developments
Industrial Supply - This business continued to expand its geographic footprint with the opening of two new warehouse locations during the quarter - Charlotte, North Carolina on July 1, and Birmingham, Alabama on September 1. Subsequent to quarter end, Industrial Supply became an international supplier with the opening of the first warehouse location outside of the U.S. on November 1 in Toronto, Canada.
Signature Special Situations - The Company took an impairment charge relating to a non-marketable equity security interest in conjunction with a decision to sell the asset. Subsequent to quarter end, the equity interest was sold for cash proceeds of $1.4 million, which approximated the carrying value at September 30, 2013.
Corporate and Other - Corporate expenses declined during the quarter as the Company realized the benefits of previous staff reductions and other cost cutting measures.
