Innovate Corp. · NYSE:VATE
Innovate — HC2 Holdings — Q2 2018 Earnings Presentation
40 slides from Innovate's earnings presentation, Aug 8, 2018
Slide 1: Second Quarter 2018 Conference Call
HC2 HOLDINGS, INC. Second Quarter 2018 Conference Call © HC2 Holdings, Inc. 2018
Slide 2: Safe Harbor Disclaimers: Forward-Looking Statements
Safe Harbor Disclaimers 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-looking statements. G
Slide 3: Safe Harbor Disclaimers: Non-GAAP Financial Measures
Safe Harbor Disclaimers Non-GAAP Financial Measures In this presentation, HC2 refers to certain financial measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”), including Core Operating Subsidiary Adjusted EBITDA, Total Adjusted EBITDA (excluding t
Slide 4: Agenda
Agenda OVERVIEW AND Philip Falcone Chairman, President and CEO FINANCIAL HIGHLIGHTS Philip A. Falcone Chairman, President and CEO Michael J. Sena Chief Financial Officer Q AND A Andrew G. Backman Managing Director © 2 0 1 8 H C 2 H O L D I N G S , I NC. 3
Slide 5: Quarterly Overview
Quarterly Overview
Slide 6: Segment Financial Summary ($m)
Segment Financial Summary ($m) Q2 2018 Q2 2017 YTD 2018 YTD 2017 Core Operating Subsidiaries Construction $15.5 $11.1 $25.5 $19.7 Marine Services 20.4 3.6 18.0 20.0 Energy 3.0 1.0 3.6 2.2 Telecom 1.3 2.2 2.4 3.8 Total Core Operating $40.2 $17.9 $49.5 $45.7 Adjusted Early Stage and Other Holdings EBI
Slide 7: Second Quarter 2018 Highlights
Second Quarter 2018 Highlights 2Q18 Adjusted EBITDA $15.5m vs. $11.1m for 2Q17; 1H18 Adjusted EBITDA $25.5m vs, $19.7m for 1H17 $656m backlog, up 11% year-over-year, provides significant visibility $675m backlog taking into consideration awarded, but not yet signed contracts Construction Con
Slide 8: Second Quarter 2018 Highlights (con't)
Second Quarter 2018 Highlights (con’t) 2Q18 Pretax Insurance AOI $0.5 million vs. $4.1 million 2Q17 1H18 Pretax Insurance AOI $2.7 million vs. $3.6 million 1H17 Acquisition of Humana’s ~$2.4 billion long-term care insurance business expected to close imminently Insurance – Increases CIG insura
Slide 9: 2018 Focus and Priorities – Update
2018 Focus and Priorities – Update Optimization of HC2 Capital Structure – Global refinancing of 11% Secured Notes to reduce cost of debt capital remains top priority – Continue to reduce cumulative outstanding of preferred equity – Explore alternative financing structures at subsidiary level – Ex
Slide 10: Questions and Answers
Questions and Answers
Slide 11: Appendix
Appendix:
Slide 12: HC2's Diversified Portfolio
HC2’s Diversified Portfolio Core Financial Core Operating Subsidiaries Services Subsidiaries Construction: Marine Services: Energy: Telecommunications: Insurance: DBM GLOBAL (SCHUFF) GMSL ANG PTGI ICS CIG 2Q18 Revenue: $176.9m 2Q18 Revenue: $68.4m 2Q18 Revenue: $7.1m 2Q18 Revenue: $190.5m
Slide 13: Consolidated Financial Summary ($m)
Consolidated Financial Summary ($m) Q2 2018 Q2 2017 YTD 2018 YTD 2017 Total Net Revenue $496.8 $378.7 $950.5 $769.2 Total Operating Expenses 502.3 389.8 969.7 779.4 Income Loss From Operations (5.5) (11.2) (19.3) (10.2) Statement of Interest Expense 17.2 12.1 36.5 26.2 Operations 10.8 4.0 5.5 11.7 (
Slide 14: Segment Financial Summary ($m)
Segment Financial Summary ($m) Q2 2018 Q1 2018 FY 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY 2016 Core Operating Subsidiaries Construction $15.5 $10.0 $51.6 $15.1 $16.8 $11.1 $8.6 $59.9 Marine Services 20.4 (2.4) 44.0 15.3 8.8 3.6 16.3 41.2 Energy 3.0 0.7 2.9 0.4 0.3 1.0 1.2 2.5 Telecom 1.3 1.1 6.9 1.6
Slide 15: Construction: DBM Global Inc. Second Quarter Update
Construction: DBM Global Inc. Second Quarter Update 2Q18 Net Income: $7.4m versus $4.2m in 2Q17; YTD18 Net Income $10.9m vs. $7.4m for YTD17 2Q18 Adjusted EBITDA: $15.5m versus $11.1m in 2Q17; YTD Adjusted EBITDA: $25.5m vs. $19.7m for the comparable 2017 YTD period Backlog of $656m at end of
Slide 16: Marine Services: Global Marine Group Second Quarter Update
Marine Services: Global Marine Group Second Quarter Update 2Q18 Net Income (Loss): Net Income $10.9m versus Net (Loss) ($3.1)m in 2Q17; YTD18 Net Income $4.6m vs. $8.1m for YTD17 2Q18 Adjusted EBITDA: $20.4m versus $3.6m in 2Q17; Very strong 2Q18 performance from Huawei Marine Joint Venture, tel
Slide 17: Energy: American Natural Gas (ANG) Second Quarter Update
Energy: American Natural Gas (ANG) Second Quarter Update 2Q18 Net Income (Loss): Net Income $0.7m versus Net (Loss) ($0.4)m in 2Q17; YTD18 Net (Loss) of $(0.02)m vs. ($1.1)m for YTD17 2Q18 Adjusted EBITDA: $3.0m versus $1.0m in 2Q17 YTD18 Adjusted EBITDA: $3.6m vs. $2.2m for the comparable 201
Slide 18: Telecommunications: PTGi-ICS Second Quarter Update
Telecommunications: PTGi-ICS Second Quarter Update Steady quarterly results again due to continued focus on customer relationship management, smaller global accounts, and improved operational efficiencies – 2Q18 Net Income: $1.0m versus $2.1m in 2Q17; YTD18 Net Income of $2.1m vs. $3.6m for YTD17
Slide 19: Insurance: Continental Insurance Group Second Quarter Update
Insurance: Continental Insurance Group Second Quarter Update Continental Insurance Group serves as HC2’s insurance platform and through its wholly owned subsidiary, Continental LTC Inc. (“CLI”), offers a platform for run-off Long Term Care (“LTC”) books of business “Ring Fenced” Liabilities – No
Slide 20: Pansend Life Sciences Segment
Pansend HC2’s Pansend Life Sciences Segment Is Focused on the Development of Innovative Healthcare Technologies and Products Recently completed sale to Janssen Biotech, Inc. (Johnson & Johnson) for up to $1.04 billion (2Q18); $8m total investment 76% equity ownership of company focused on immuno
Slide 21: Pansend: BeneVir / Janssen Acquisition Summary
Pansend: BeneVir / Janssen Acquisition Summary BeneVir: BeneVir was a portfolio company of Pansend, our Life Sciences segment – Focused on the development of a patent-protected oncolytic virus, BV-2711, for the treatment of solid cancer tumors Pansend was the owner of all of BeneVir's outstandin
Slide 22: HC2 Broadcasting Holdings Inc.
HC2 Broadcasting Holdings Inc. Business Description* Broadcast Television Stations: Key Metrics** HC2 Broadcasting Holdings Inc., a subsidiary of HC2 Holdings, has Operational Stations: 164 strategically acquired broadcast assets across the United States – Full-Power Stations: 13 HC2’s broadca
Slide 23: Notable Financial and Other Updates
Notable Financial and Other Updates Collateral Coverage Ratio Exceeded 2.00x at Quarter End (2Q18) $86.4 million in Consolidated Cash (excluding Insurance segment) at Quarter End (2Q18) – $53.7 million Corporate Cash at Quarter End 2018 Key Priorities: – Optimize HC2 capital structure – Moneti
Slide 24: s
Reconciliations
Slide 25: Adjusted EBITDA Three Months Ended June 30, 2018
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended June 30, 2018 (in thousands) Three Months Ended June 30, 2018 Core Operating Subsidiaries Early Stage & Other Non- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Broadcasting Elimination
Slide 26: Adjusted EBITDA Three Months Ended March 31, 2018
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended March 31, 2018 (in thousands) Three Months Ended March 31, 2018 Core Operating Subsidiaries Early Stage & Other Non- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Broadcasting Eliminati
Slide 27: Adjusted EBITDA Six Months Ended June 30, 2018
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Six Months Ended June 30, 2018 (in thousands) Six Months Ended June 30, 2018 Core Operating Subsidiaries Early Stage & Other Non- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Broadcasting Elimination Cor
Slide 28: Adjusted EBITDA Six Months Ended June 30, 2017
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Six Months Ended June 30, 2017 (in thousands) Six Months Ended June 30, 2017 Core Operating Subsidiaries Early Stage & Other Non- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Broadcasting Elimination Cor
Slide 29: Adjusted EBITDA Full Year Ended December 31, 2017
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Full Year Ended December 31, 2017 (in thousands) Year Ended December 31, 2017 Core Operating Subsidiaries Early Stage & Other Non- operating Total HC2 Life Other & Corporate Construction Marine Energy Telecom Sciences Broadcasting Elim
Slide 30: Adjusted EBITDA Three Months Ended December 31, 2017
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended December 31, 2017 (in thousands) Three Months Ended December 31, 2017 Core Operating Subsidiaries Early Stage & Other Non- operating Total HC2 Life Other & Corporate Construction Marine Energy Telecom Sciences Broadc
Slide 31: Adjusted EBITDA Three Months Ended September 30, 2017
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended September 30, 2017 (in thousands) Three Months Ended September 30, 2017 Core Operating Subsidiaries Early Stage & Other Non- operating Total HC2 Life Other & Corporate Construction Marine Energy Telecom Sciences Broa
Slide 32: Adjusted EBITDA Three Months Ended June 30, 2017
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended June 30, 2017 (in thousands) Three Months Ended June 30, 2017 Core Operating Subsidiaries Early Stage & Other Non- operating Total HC2 Life Other & Corporate Construction Marine Energy Telecom Sciences Broadcasting E
Slide 33: Adjusted EBITDA Three Months Ended March 31, 2017
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended March 31, 2017 (in thousands) Three Months Ended March 31, 2017 Core Operating Subsidiaries Early Stage & Other Non- operating Total HC2 Life Other & Corporate Construction Marine Energy Telecom Sciences Broadcasting
Slide 34: Adjusted EBITDA Full Year Ended December 31, 2016
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Full Year Ended December 31, 2016 (in thousands) Year Ended December 31, 2016 Core Operating Subsidiaries Early Stage & Other Non- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Elimination Corporate Net l
Slide 35: Adjusted EBITDA Three Months Ended December 31, 2016
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended December 31, 2016 (in thousands) Three Months Ended December 31, 2016 Core Operating Subsidiaries Early Stage & Other Non- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Elimination Corp
Slide 36: Adjusted EBITDA Three Months Ended September 30, 2016
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended September 30, 2016 (in thousands) Three Months Ended September 30, 2016 Core Operating Subsidiaries Early Stage & Other Non- Marine Life Other & operating Total HC2 Construction Services Energy Telecom Sciences Elimi
Slide 37: Adjusted EBITDA Three Months Ended June 30, 2016
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended June 30, 2016 (in thousands) Three Months Ended June 30, 2016 Core Operating Subsidiaries Early Stage & Other Non- Marine Life Other and operating Total HC2 Construction Services Energy Telecom Sciences Eliminations
Slide 38: Adjusted EBITDA Three Months Ended March 31, 2016
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended March 31, 2016 (in thousands) Three Months Ended March 31, 2016 Core Operating Subsidiaries Early Stage & Other Non- Marine Life Other and operating Total HC2 Construction Services Energy Telecom Sciences Elimination
Slide 39: Insurance Adjusted Operating Income
Reconciliation of U.S. GAAP Net Income (Loss) to Insurance Adjusted Operating Income (in thousands) Adjusted Operating Income - Insurance ("Insurance AOI") YTD 2018 Q2 2018 Q1 2018 FY 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY 2016 Q4 2016 Net Income (loss) - Insurance segment $ 1,810 $ 565 $ 1,245 $ 7
Slide 40: HC2 Holdings, Inc. Investor Relations Contact
HC2 HOLDINGS, INC. A n d r e w G . B a c k m a n • i r @ h c 2 . c o m • 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 th F l o o r , N e w Y o r k , © HC2 Holdings, Inc. 2018 N Y 1 0 0 2 2 August 2018