Signature Group Holdings Sees Net Loss For 2013

The industrial supply segment's operations expanded with the opening of four new warehouse distribution locations to provide overnight ground delivery to more of its customers.

Sherman Oaks, CA - Signature Group Holdings, Inc. reported financial results for the fourth quarter and full year ended December 31, 2013. The company also announced that its Annual Meeting of Stockholders will be held on April 29, 2014.

The company's net earnings for the fourth quarter of 2013 was $0.5 million, or $0.04 per share, an increase of $6.4 million from the $5.9 million net loss, or $0.49 per share, reported for the third quarter of 2013. Fourth quarter of 2013 was also an improvement of $0.2 million from the $0.3 million net income, or $0.02 per share, reported for the fourth quarter of 2012.

The company's net loss for the full year 2013 was $10.0 million, or $0.85 per share. The loss was largely driven by a $6.9 million noncash expense related to the increase in the fair value of the common stock warrant liability caused by the 162% appreciation in our common stock price during the year. Excluding the impact of the warrant liability, the net loss in 2013 was $3.1 million, compared to a $6.6 million net loss (similarly adjusted) in 2012.

The overall improvement in results for 2013 was due to a reduction of certain corporate expenses, increased earnings in Industrial Supply, one-time gains generated in Special Situations, and the resolution of legacy litigation matters in discontinued operations.

"I am pleased to report a profitable fourth quarter," stated Signature's Chairman and CEO Craig Bouchard. "The Company achieved many milestones in 2013, which will have a meaningful impact in 2014. Particularly noteworthy are the cost cutting efforts at the corporate holding company, which include the reduction of eight full-time employees, and the interest expense savings from the payoff of the 9.0% Notes Payable, as well as our new foundation as a Delaware holding company that provides a stronger organizational structure for future acquisitions and management of existing operations. The Company will also relocate to a smaller headquarters space this month. I am very much looking forward to addressing our stockholders on April 29, 2014 at our Annual Meeting."

Fourth Quarter 2013 Results

Loss from continuing operations was $0.4 million in the fourth quarter of 2013, compared to earnings of $0.7 million in the fourth quarter of 2012.  Excluding the impact of the change in our warrant liability, the loss from continuing operations in the fourth quarter of 2013 was $1.9 million, compared to $0.8 million in earnings in 2012. The reduction in earnings from continuing operations was driven by lower interest income in Special Situations after the sale of the residential mortgage portfolio and increased operating costs, largely due to increased professional costs associated with the various corporate initiatives undertaken during the period including the registration statement filing, the reverse stock split, the reincorporation and our Sarbanes-Oxley compliance efforts, many of which are nonrecurring.

Earnings from discontinued operations was $0.9 million in the fourth quarter a $1.3 million improvement over the prior year, driving net earnings of $0.5 million in the fourth quarter of 2013, compared to $0.3 million in the fourth quarter of 2012.

EBITDA and Adjusted EBITDA from continuing operations were $1.1 million and $(37) thousand, respectively, for the fourth quarter of 2013, compared to $2.9 million in both instances for the fourth quarter of 2012. (See Non-GAAP Financial Measures below for more information about EBITDA and Adjusted EBITDA, and a reconciliation to the most comparable GAAP measures.) As of December 31, 2013, the Company had $48.0 million in cash and cash equivalents, and $55.7 million of working capital. Total debt was $17.7 million, down from $48.1 million as of December 31, 2012.

Full Year 2013 Results

Loss from continuing operations was $10.1 million in 2013, compared to $4.0 million in 2012. Excluding the impact of the change in our warrant liability, the loss from continuing operations in 2013 was $3.2 million, compared to $3.0 million in 2012. Earnings from discontinued operations of $0.1 million during the year improved by $3.6 million over the prior year.

EBITDA and Adjusted EBITDA from continuing operations were $(4.3) million and $2.1 million, respectively, in 2013, compared to $3.2 million and $4.6 million, respectively, in 2012.

Key Segment Developments

  • Industrial Supply's operations expanded with the opening of four new warehouse distribution locations to provide overnight ground delivery to more of its customers.
  • Four asset classes in Special Situations were monetized during the year as part of management's decision to focus on acquisition opportunities and growing Industrial Supply, which, in the aggregate, resulted in more than $30.0 million of cash proceeds in 2013.
  • In December 2013, the Company redeemed the 9.0% Notes Payable at par, which will reduce interest expense by $3.4 million annually.
  • Management continued to wind down the legacy discontinued operation, successfully resolving numerous  outstanding litigation cases and reducing professional fees by $2.5 million in 2013.
More in Home