Innovate Corp. · NYSE:VATE

Innovate — HC2 Holdings — Investor Presentation (August 2016)

43 slides from Innovate's investor presentation, Aug 11, 2016

  1. Slide 1: HC2 Holdings Company Overview

    HC2 HOLDINGS, INC. © HC2 Holdings, Inc. 2016 Company Overview

  2. Slide 2: Special Note Regarding Forward-Looking Statements

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Special Note Regarding Forward-Looking Statements. Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This presentation contains, and certain oral statements made by our representatives from time to time may contain, forward-lo

  3. Slide 3: Company Overview

    Company Overview

  4. Slide 4: HC2 Holdings: Who We Are, What We Do

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Holdings, Inc. 3 W ho W e Are W ha t W e Do  D i v e r s i f i e d h o l d i n g c o m p a n y  P e r m a n e n t c a p i t a l  S t r a t e g i c a n d f i n a n c i a l p a r t n e r  T e a m o f v i s i o n a r i e s  B u y a n d b u i l d c o m

  5. Slide 5: Investment Highlights: Why Invest in HC2?

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Investment Highlights 4 Why Invest in HC2?  Leadership team has diverse network resulting in unique deal flow  Unique combination of operating entities accessible through one investment – Controlling stakes in leading, stable, cash flow generating business

  6. Slide 6: Clear focus on delivering sustainable value for all stakeholders

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Clear focus on delivering sustainable value for all stakeholders  Value operator with long-term outlook  Acquire controlling equity interests in diverse industries creating value through growth in operating subsidiaries  Strong capital base allows funding

  7. Slide 7: HC2 Company Snapshot

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Company Snapshot 6 Early Stage and Other Holdings Core Operating Subsidiaries  One of the largest steel fabrication and erection companies in the U.S.  91% ownership Manufacturing: SCHUFF Marine Services: GMSL  Leading provider of subsea cable install

  8. Slide 8: HC2 Leadership Team

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Leadership Team 7 Philip A. Falcone Chairman of the Board, Chief Executive Officer and President Keith M. Hladek Chief Operating Officer Michael Sena Chief Financial Officer Paul K. Voigt Senior Managing Director Paul L. Robinson Chief Legal officer & Co

  9. Slide 9: HC2 Stock Performance & Timeline

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Note: As a result of the Schuff Tender, HC2’s ownership increased to 89% and subsequently through open market share purchases increased to 91% HC2 Stock Performance & Timeline 8 0 2 4 6 8 10 12 14 2014 HRG Group acquires majority interest in "PTGi" 1/8/2014

  10. Slide 10: Segment Detail

    Segment Detail

  11. Slide 11: Schuff International – Company Snapshot

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Select Customers: Schuff International – Company Snapshot 10  Schuff International operates primarily as an integrated fabricator and erector of structural steel and heavy steel plate, as well as a manufacturer of equipment for the oil & gas industry throug

  12. Slide 12: Schuff International – Company Snapshot

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Schuff International – Company Snapshot 11 CORE ACTIVITIES  The largest structural steel fabricator and erector in the U.S.  In-house structural & design engineering expertise  Provides structural steel fabrication & erection services for smaller projects

  13. Slide 13: Global Marine Systems (GMSL) – Company Snapshot

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Global Marine Systems (GMSL) – Company Snapshot 12  Leading provider of offshore marine engineering for subsea cable installation, maintenance and cable protection requirements  Seeks to position itself as a key player driving convergence of its maintenanc

  14. Slide 14: Global Marine Systems (GMSL) – Company Snapshot

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Global Marine Systems (GMSL) – Company Snapshot 13 TELECOM MAINTENANCE TELECOM INSTALLATION OFFSHORE POWER OIL & GAS CORE ACTIVITIES  Provision of vessels on standby to repair fiber optic telecom cables in defined geographic zones  Location of fault, cable

  15. Slide 15: American Natural Gas – Company Snapshot

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . American Natural Gas – Company Snapshot 14 Designs, builds, owns, operates and maintains compressed natural gas commercial fueling stations for transportation  Current ownership 49.9% with ability to increase to 56%  In-depth experience in the natural gas

  16. Slide 16: PTGi International Carrier Services

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . PTGi International Carrier Services (“PTGi ICS”) 15 Leading international wholesale telecom service company providing voice and data call termination to the telecom industry worldwide  Provides transit and termination of telephone calls through its own glob

  17. Slide 17: Continental Insurance Group – Company Snapshot

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Continental Insurance Group – Company Snapshot 16 April 2015: HC2 established Continental Insurance Group (“CIG”) as its insurance platform led by industry veteran Jim Corcoran, as Executive Chairman December 2015: HC2 completed the acquisition of American F

  18. Slide 18: Pansend Life Sciences

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Pansend Life Sciences 17 HC2’s Life Sciences Segment Is Focused on the Development of Innovative Healthcare Technologies and Products  52% equity ownership of company focused on immunotherapy; Oncolytic virotherapy for treatment of solid cancer tumors  Fou

  19. Slide 19: Nervve

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Nervve 18 In October 2014, HC2 made an initial contribution of $5 million in convertible preferred equity Subsequent financing increased the total to $6.8 million  Headquartered in Buffalo, NY; Offices in VA and NY  Nervve has developed the fastest, most a

  20. Slide 20: Dusenberry Martin Racing (DMi, Inc.)

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Dusenberry Martin Racing (DMi, Inc.) 19 On December 31, 2014, HC2 / DMR completed a $6 million asset purchase agreement to acquire worldwide exclusive licensing rights to NASCAR® simulation style racing titles on interactive entertainment platforms  DMi, In

  21. Slide 21: Appendix: 2Q16 Highlights and Select Financial Data

    Appendix: 2Q16 Highlights and Select Financial Data

  22. Slide 22: 2Q16 Highlights and Recent Developments

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . 2Q16 Highlights and Recent Developments 21 Results and Recent Developments  Solid second quarter results again highlight the unique value HC2 brings to the market with our diverse holdings across a number of uncorrelated industries – Manufacturing: Continue

  23. Slide 23: HC2 Segment Overview

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Segment Overview 22 Early Stage and Other Holdings Core Operating Subsidiaries  Q2 Revenue: $124.3m  Q2 Adjusted EBITDA: $13.2m  Backlog $344m; Over $500m inclusive of contracts awarded, not yet signed  Solid long-term pipeline Manufacturing: SCHUFF

  24. Slide 24: Segment Financial Summary

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Segment Financial Summary 23 Adjusted EBITDA for Core Operating Subsidiaries $27.1m for Q2 2016 ADJUSTED EBITDA ($m) Q2 2016 Q1 2016 Core Operating Subsidiaries Manufacturing $13.2 $11.5 Marine Services 11.8 0.5 Utilities 0.5 0.4 Telecom 1.5 0.3 Total Core O

  25. Slide 25: Manufacturing: Schuff International

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Manufacturing: Schuff International 24 Net Income1: $9.4m versus $4.4m for the first quarter 2016 Adjusted EBITDA: $13.2m versus $11.5m in the first quarter 2016 Continued gross margin expansion due to better than bid performance Backlog $344m; Over $500m in

  26. Slide 26: Marine Services: GMSL

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Marine Services: GMSL 25  Net Income: $6.0m versus Net Loss of ($5.9)m for the first quarter 2016  Adjusted EBITDA: $11.8m versus $0.5m in the first quarter 2016  Incremental revenue contribution from CWind acquisition  Joint ventures up significantly fr

  27. Slide 27: Utilities: ANG

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Utilities: ANG 26  Delivered 848,000 Gasoline Gallon Equivalents (GGEs) in the second quarter versus 800,000 GGEs in the first quarter of 2016 and 330,000 GGEs in the second quarter of 2015  17 stations currently owned and / or operated  Opened fueling st

  28. Slide 28: Telecommunications: PTGi-ICS

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Telecommunications: PTGi-ICS 27  Strong quarterly results due to continued growth in wholesale traffic volumes, in part delivered by the religious holidays and resulting increase in traffic in the Middle East region – Net Income: $1.0m versus $1.2m for the

  29. Slide 29: Insurance: Continental Insurance Group

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Insurance: Continental Insurance Group 28  Continental Insurance, Inc. (CII) serves as a platform for run-off LTC books of business and for acquiring additional run-off LTC businesses – Net Loss: ($2.3)m versus ($7.5)m for the first quarter 2016 – Adjusted

  30. Slide 30: Pansend Life Sciences

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Pansend Life Sciences 29 HC2’s Life Sciences Segment Is Focused on the Development of Innovative Healthcare Technologies and Products  52% equity ownership of company focused on immunotherapy; Oncolytic virotherapy for treatment of solid cancer tumors  Fou

  31. Slide 31: Other Holdings

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Other Holdings 30 Nervve  Provider of video and image search technology for information extraction and powerful analytics applications  Focused markets include: – Sports Marketing: Brand recognition, exposure measurement & analytics, insights, brand evalua

  32. Slide 32: Notable Financial Updates

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Notable Financial Updates 31  Collateral Coverage Ratio at quarter end exceeded 2.0x – Minimum liquidity reduced to six months from twelve months – Incremental $19 million of available cash and cash equivalents  $105.6 million Consolidated Cash (excluding

  33. Slide 33: Appendix: Biographies

    Appendix: Biographies

  34. Slide 34: HC2 Executive Management Team

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Executive Management Team 33 Philip A. Falcone  Served as a director of HC2 since January 2014 and Chairman of the Board, Chief Executive Officer and President of HC2 since May 2014  Served as a director, Chairman of the Board and Chief Executive Offic

  35. Slide 35: HC2 Executive Management Team

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Executive Management Team 34 Keith M. Hladek  Chief Operating Officer of HC2 since May 2014  Chief Financial Officer and Chief Operating Officer of Harbinger Capital since September 2009  From October 2009 to December 2014, served as a director of HRG

  36. Slide 36: HC2 Executive Management Team

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Executive Management Team 35 Paul K. Voigt  Senior Managing Director of HC2 since May 2014  Prior to joining HC2, served as Executive Vice President on the sales and trading desk at Jefferies from 1996 to 2013  Served as Managing Director on the High

  37. Slide 37: HC2 Executive Management Team

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Executive Management Team 36 Suzi Raftery Herbst  Chief Administrative Officer of HC2 since March 2015 with over 17 years of diverse human resources, recruiting, equity and foreign exchange sales experience  Prior to joining HC2, served as Senior Vice

  38. Slide 38: Appendix: Reconciliations

    Appendix: Reconciliations

  39. Slide 39: Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (Q2 2016)

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA of HC2 to U.S. GAAP Net Income (Three Months Ended June 30, 2016) 38 (in thousands) Three Months Ended June 30, 2016 Core Operating Early Stage & Other Non- operating Corporate HC2** Manufactur ing Marine Services Telecom Ut

  40. Slide 40: Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (Q2 2015)

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA of HC2 to U.S. GAAP Net Income (Three Months Ended June 30, 2015) 39 (in thousands) Three Months Ended June 30, 2015 Core Operating Early Stage & Other Non- operating Corporate HC2** Manufactur ing Marine Services Telecom Ut

  41. Slide 41: Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (Q1 2016)

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA of HC2 to U.S. GAAP Net Income (Three Months Ended March 31, 2016) 40 (in thousands) Three Months Ended March 31, 2016 Core Operating Early Stage & Other Non- operating Corporate HC2** Manufactu ring Marine Services Telecom

  42. Slide 42: Reconciliation of Insurance AOI to U.S. GAAP Net Income

    © 2 0 1 6 H C 2 H O L D I N G S , I N C . Reconciliation of Insurance AOI to U.S. GAAP Net Income (Three Months Ended June 30, 2016) 41 Three Months Ended June 30, 2016 Six Months Ended June 30, 2016 Net loss - Insurance Segment $ (2,293 ) $ (9,789 ) Effect of investment (gains) losses (2,418 ) 2,45

  43. Slide 43: Investor Relations Contact

    HC2 HOLDINGS, INC. © HC2 Holdings, Inc. 2016 A n d r e w G . B a c k m a n • i r @ h c 2 . c om • 2 1 2 . 2 3 5 . 2 6 9 1 • 4 5 0 P a r k A v e n u e , 3 0 t h F l o o r , N e w Y o r k , N Y 1 0 0 2 2

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