Elah (ELLH) 8-K Signature Group Holdings, Inc. Reports Third Quarter 2012 Results

Exhibit 99.1

Signature Group Holdings, Inc. Reports Third Quarter 2012 Results

— Sequential Quarterly Improvement in Loss Per Share —

— Record Sales at NABCO —

SHERMAN OAKS, Calif., November 9, 2012 — Signature Group Holdings, Inc. (OTCQX: SGGH), a diversified business and financial services enterprise with current principal activities in industrial distribution and special situations financings, today announced financial results for the third quarter ended September 30, 2012.

The Company’s net loss for the third quarter of 2012 was $2.6 million, or $0.02 per share, a reduction from the second quarter net loss of $3.9 million, or $0.03 per share, but a decrease of $3.9 million from the $1.3 million net earnings, or $0.01 per share, reported for the third quarter of 2011. Total revenues from continuing operations rose to a record $11.3 million in the third quarter of 2012, compared to $9.8 million in the second quarter of 2012 and $7.3 million in the third quarter of 2011.

“The third quarter was most noteworthy for the continuing strong growth and financial performance of NABCO, our industrial distribution subsidiary, the remediation of the previously reported material weakness in internal controls, as well as our progress toward resolving outstanding litigation and reducing reliance on outside consultants,” stated Craig Noell, CEO of Signature Group Holdings. “Additionally, with the proxy contest now behind us, management and our new Board have been able to focus much more of our collective efforts on seeking acquisitions to grow the business and to take advantage of our unique tax situation.”

Quarterly Results

Total revenues from continuing operations rose to $11.3 million in the third quarter of 2012, compared to $7.3 million in the third quarter of 2011, primarily due to the inclusion of NABCO as an operating segment for the full quarter in 2012, as compared to the period from July 29, 2011, the acquisition date, to September 30, 2011. On a sequential basis, total revenues increased $1.5 million, or 15.9%, from the second quarter of 2012, primarily due to a seasonally strong performance by NABCO.

Cost of goods sold increased to $6.5 million during the third quarter of 2012, as compared to $3.8 million in the third quarter of 2011, primarily due to NABCO’s full quarter. On a sequential basis, cost of goods sold increased $0.8 million, or 13.2%, from the second quarter of 2012 due to higher sales at NABCO.

Selling, general and administrative expenses were $0.9 million in the third quarter of 2012, in line with the previous quarter and a more normalized level than the $1.5 million reported for the third quarter in 2011.

Compensation expense was $2.2 million in the third quarter of 2012, as compared to $2.0 million in the third quarter of 2011 and the sequential quarter.

Professional fees decreased to $1.6 million in the third quarter of 2012, as compared to $1.9 million in the third quarter of 2011 and $2.1 million reported in the second quarter of 2012. The decrease is primarily related to substantially lower accounting, legal and other compliance expenses associated with SEC filings and transaction costs, partially offset by $0.6 million of costs related to the Company’s 2012 proxy contest.

Other expense was $0.8 million in the third quarter of 2012, as compared to other income of $4.6 million in the third quarter of 2011, primarily due to a $3.6 million swing in the valuation of the common stock warrant liability due to the increase in Signature’s common stock price and also a nonrecurring $1.4 million gain on sale of premises.

The loss from continuing operations was $2.3 million in the third quarter of 2012, as compared to earnings of $3.8 million in the third quarter of 2011. Loss from discontinued operations, net of income taxes was $0.3 million in the third quarter compared to $2.5 million in the third quarter of 2011.

At the end of the third quarter, the Company had $50.5 million in cash and cash equivalents as compared to $52.4 million at December 31, 2011. Total debt was $47.8 million, a reduction of $7.9 million from the $56.7 million reported at December 31, 2011. Additionally, Signature has federal net operating loss tax carryforwards of approximately $882 million.

Operating Segment Review

NABCO

NABCO demonstrated solid organic growth in the third quarter, generating quarterly net sales of $10.2 million, an increase of $1.1 million over the second quarter of 2012. Although NABCO was only partially included in Signature’s operations in the third quarter of 2011, the Company estimates that NABCO’s third quarter sales increased by 11.7% compared to last year. NABCO’s strongest quarters historically have been the second and third due to increased circuit breaker sales activity during the summer season.

Gross margin in the third quarter of 2012 was 37.1%, in line with NABCO’s gross margin of 37.8% reported in the second quarter of 2012.

Net earnings for the third quarter of 2012 were $0.9 million and Adjusted EBITDA was $2.6 million, reflecting an improvement from net earnings of $0.7 and Adjusted EBITDA of $2.2 million reported in the previous quarter. Given certain changes in cost structure at NABCO since Signature’s acquisition in July 2011, year-over-year comparisons of net earnings and Adjusted EBITDA are not meaningful.

NABCO’s strong operating performance enabled it to reduce its debt by $2.9 million during the third quarter of 2012. NABCO fully paid off its revolving line of credit and maintains ongoing borrowing capacity of $7.5 million.

Signature Special Situations

Signature Special Situations generated net income of $0.3 million in the third quarter of 2012, a decrease of $1.4 million from the third quarter of 2011, primarily as a result of a $0.5 million decrease in revenue and other income and a $0.9 million increase associated with a change in its internal allocation of interest and income tax expense.

Discontinued Operations

Loss from discontinued operations, net of income taxes was $0.3 million, a decrease of $2.2 million from the third quarter of 2011, primarily as a result of a $1.4 million decrease in total expenses, a $0.2 million decrease in reorganization items, net, and a $0.6 million decrease in income tax expense.

About Signature Group Holdings, Inc.

Signature is a diversified business and financial services enterprise with current principal activities in industrial distribution and special situations financings. Signature has significant capital resources and is actively seeking both acquisitions and growth opportunities for its existing businesses. Signature has federal net operating loss tax carryforwards of approximately $882 million. For more information about Signature, visit its corporate website atwww.signaturegroupholdings.com.

Cautionary Statement Regarding Forward-Looking Statements

This news release may include forward-looking statements. These forward-looking statements are based on current expectations that involve risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may differ materially. These risks include: changes in business or other market conditions; the difficulty of keeping expense growth at modest levels while increasing revenues; and other risks detailed from time to time in the Company’s Securities and Exchange Commission reports, including but not limited to the Annual Report on Form 10-K for the most recent year ended. Pursuant to the Private Securities Litigation Reform Act of 1995, the Company does not undertake to update forward-looking statements contained within this news release.

Source

Signature Group Holdings, Inc.

Contact

Signature Group Holdings, Inc.

Jeff Crusinberry, SVP and Treasurer

(805) 435-1255

invrel@signaturegroupholdings.com

(Tables to follow)

* * *

Signature Group Holdings, Inc.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended
	September 30,
(Dollars in thousands, except per share amounts)	2012			2011
Revenues:
Net sales	$	10,280		$	6,309
Interest		1,058			1,024
Total revenues		11,338			7,333
Expenses:
Cost of goods sold		6,482			3,772
Selling, general and administrative		941			1,498
Compensation		2,239			1,954
Professional fees		1,559			1,945
Amortization of intangibles		605			649
Interest		1,012			952
Total expenses		12,838			10,770
Other income (expense):
Discount recognized on payoff of loans receivable, net		60			—
Change in market valuation allowance on loans held for sale, net		—			421
Change in fair value of common stock warrant liability		(850	)		2,803
Gain (loss) on investment securities, available for sale		—			71
Gain on sale of premises		—			1,388
Other income (expense)		(56	)		(47	)
Total other income (expense)		(846	)		4,636
Earnings (loss) from continuing operations before reorganization items, net and income taxes		(2,346	)		1,199
Reorganization items, net		—			63
Earnings (loss) from continuing operations before income taxes		(2,346	)		1,136
Income tax benefit		(60	)		(2,650	)
Earnings (loss) from continuing operations		(2,286	)		3,786
Loss from discontinued operations, net of income taxes		(342	)		(2,542	)
Net earnings (loss)		(2,628	)		1,244
Loss attributable to noncontrolling interest		—			(31	)
Net earnings (loss) attributable to Signature Group Holdings, Inc.	$	(2,628	)	$	1,275
EARNINGS (LOSS) PER SHARE:
Basic and diluted:
Earnings (loss) from continuing operations	$	(0.02	)	$	0.03
Loss from discontinued operations, net of income taxes		—			(0.02	)
Net earnings (loss) attributable to Signature Group Holdings, Inc.	$	(0.02	)	$	0.01

Signature Group Holdings, Inc.

Consolidated Balance Sheets

	September 30,		December 31,
(Dollars in thousands, except per share amounts)	2012		2011
	(Unaudited)
ASSETS
Cash and cash equivalents	$	50,537	$	52,439
Investment securities, available for sale		5,497		4,991
Loans held for sale, net		26,168		3,750
Loans receivable, net		—		20,317
Trade and other receivables, net		4,678		4,112
Inventories		8,947		8,681
Intangible assets, net		5,139		6,978
Goodwill		18,180		18,180
Other assets		4,646		2,754
Assets of discontinued operations		3,237		20,816
TOTAL ASSETS	$	127,029	$	143,018
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Lines of credit	$	—	$	5,116
Accrued expenses and other liabilities		4,512		5,916
Contingent consideration		3,822		3,597
Long-term debt		47,828		51,613
Common stock warrant liability		2,850		1,403
Liabilities of discontinued operations		10,387		11,536
TOTAL LIABILITIES		69,399		79,181
TOTAL SHAREHOLDERS’ EQUITY		57,630		63,837
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	127,029	$	143,018

Signature Group Holdings, Inc.

Segment Statements of Operations

(Unaudited)

	Continuing Operations
(Dollars in thousands)	Signature Special Situations		NABCO			Cosmed			Corporate and Other			Eliminations			Total			Discontinued Operations			Total
Three Months Ended September 30, 2012
Net sales	$	—	$	10,203		$	77		$	—		$	—		$	10,280		$	—		$	10,280
Interest		1,202		—			—			287			(431	)		1,058			3			1,061
Gain on loans held for sale		—		—			—			—			—			—			110			110
Other, net		—		—			—			—			—			—			569			569
Total revenues		1,202		10,203			77			287			(431	)		11,338			682			12,020
Cost of goods sold		—		6,416			66			—			—			6,482			—			6,482
Selling, general and administrative		34		430			37			440			—			941			97			1,038
Compensation		—		623			59			1,557			—			2,239			—			2,239
Professional fees		1		158			17			1,383			—			1,559			1,137			2,696
Amortization of intangibles		—		587			18			—			—			605			—			605
Interest		270		276			59			838			(431	)		1,012			—			1,012
Total expenses		305		8,490			256			4,218			(431	)		12,838			1,234			14,072
Other income (expense)		80		(76	)		—			(850	)		—			(846	)		—			(846	)
Earnings (loss) before reorganization items, net and income taxes		977		1,637			(179	)		(4,781	)		—			(2,346	)		(552	)		(2,898	)
Reorganization items, net		—		—			—			—			—			—			(210	)		(210	)
Earnings (loss) before income taxes and loss attributable to noncontrolling interest		977		1,637			(179	)		(4,781	)		—			(2,346	)		(342	)		(2,688	)
Income tax expense (benefit)		664		741			—			(1,465	)		—			(60	)		—			(60	)
Net earnings (loss)		313		896			(179	)		(3,316	)		—			(2,286	)		(342	)		(2,628	)
Loss attributable to noncontrolling interest		—		—			—			—			—			—			—			—
Net earnings (loss) attributable to Signature Group Holdings, Inc.	$	313	$	896		$	(179	)	$	(3,316	)	$	—		$	(2,286	)	$	(342	)	$	(2,628	)

Signature Group Holdings, Inc.

Segment Balance Sheets

(Unaudited)

	Continuing Operations
(Dollars in thousands)	Signature Special Situations			NABCO		Cosmed		Corporate and Other		Eliminations			Total		Discontinued Operations
September 30, 2012
Cash and cash equivalents	$	3,071		$	522	$	36	$	46,908	$	—		$	50,537	$	111
Investment securities, available for sale		5,497			—		—		—		—			5,497		—
Loans receivable, net		26,168			—		—		—		—			26,168		—
Trade and other receivables, net		—			4,632		7		39		—			4,678		—
Inventories		—			8,238		709		—		—			8,947		—
Intangible assets, net		—			4,924		215		—		—			5,139		—
Goodwill		—			17,780		400		—		—			18,180		—
Deferred tax assets		—			—		—		2,437		(2,437	)		—		—
Loans held for sale, net		—			—		—		—		—			—		93
Real estate owned, net		—			—		—		—		—			—		870
Intercompany receivable		6,874			—		—		22,918		(29,792	)		—		—
Other assets		3,701			577		8		4,164		(3,804	)		4,646		2,163
Total assets	$	45,311		$	36,673	$	1,375	$	76,466	$	(36,033	)	$	123,792	$	3,237
Accrued expenses and other liabilities	$	7		$	5,395	$	42	$	2,861	$	(3,804	)	$	4,501	$	2,637
Contingent consideration		—			3,822		—		—		—			3,822		—
Long-term debt		—			10,582		—		37,246		—			47,828		—
Common stock warrant liability		—			—		—		2,850		—			2,850		—
Repurchase reserve		—	��		—		—		—		—			—		7,750
Deferred tax liabilities		1,133			1,315		—		—		(2,437	)		11		—
Intercompany payable		22,110			4,425		2,467		790		(29,792	)		—		—
Total liabilities	$	23,250		$	25,539	$	2,509	$	43,747	$	(36,033	)	$	59,012	$	10,387

NON-GAAP FINANCIAL MEASURES

A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with GAAP in the balance sheets, statements of operations, or statements of cash flows (or equivalent statements); or includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measures so calculated and presented. EBITDA and Adjusted EBITDA are not measures computed in accordance with GAAP. EBITDA and Adjusted EBITDA are presented and discussed in Management’s Discussion and Analysis of Financial Condition and Results of Operations because management believes they enhance the understanding of the financial performance of certain of the Company’s operating segments by investors and lenders. As a complement to financial measures provided in accordance with GAAP, management believes that EBITDA and Adjusted EBITDA assist investors who follow the practice of some investment analysts who adjust GAAP financial measures to exclude items that may obscure underlying performance and distort comparability. Because EBITDA and Adjusted EBITDA are not measures computed in accordance with GAAP, they are not intended to be presented herein as a substitute for net earnings (loss) as indicators of operating performance. EBITDA and Adjusted EBITDA are primary performance measurements used by our senior management and the Company’s Board of Directors (“Board”) to evaluate certain operating results.

We calculate EBITDA and Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, or EBITDA, which is then adjusted to remove or add back certain items. These items are identified below in the reconciliation of net earnings (loss) to EBITDA and Adjusted EBITDA. Net earnings (loss) is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA.

Our calculation of EBITDA and Adjusted EBITDA may be different from the calculation used by other companies; therefore, they may not be comparable to other companies.

The following table presents our reconciliation of net earnings (loss) to EBITDA and Adjusted EBITDA for NABCO and Cosmed for the three months ended September 30, 2012:

(Dollars in thousands)	NABCO		Cosmed
Net earnings (loss)	$	896	$	(179	)
Plus:
Interest		276		59
Taxes		741		—
Depreciation		16		1
Amortization of intangibles		587		18
EBITDA		2,516		(101	)
Adjustments:
Change in fair value of contingent consideration		76		—
Adjusted EBITDA	$	2,592	$	(101	)