Innovate Corp. · NYSE:VATE
Innovate — HC2 Holdings — Investor Presentation (May 2018)
57 slides from Innovate's investor presentation, May 10, 2018
Slide 1: HC2 Holdings, Inc. Corporate Overview
HC2 HOLDINGS, INC. Corporate Overview © HC2 Holdings, Inc. 2018 May 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 Adjusted EBITDA 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 EBI
Slide 4: Company Overview
Company Overview
Slide 5: HC2 Holdings, Inc. Who We Are
HC2 Holdings, Inc. (NYSE: HCHC) W h o W e A r e P u b l i c l y t r a d e d 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 w i t h p o r t f o l i o o f u n c o r r e l a t e d a s s e t s a n d i n v e s t m e n t s 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
Slide 6: Why Invest in the HC2 Approach?
Why Invest in the HC2 Approach? Diverse portfolio of uncorrelated assets and investments across multiple industries Unique combination of operating entities accessible through one investment – Controlling stakes in leading, stable, cash flow generating businesses – Option value opportunities wit
Slide 7: How HC2 Builds Value
How HC2 Builds Value 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 of subsidiary growth
Slide 8: 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 One of the largest steel Leading provider of subsea Premier distributor of natural On
Slide 9: HC2's Experienced Executive Team
HC2’s Experienced Executive Team Philip A. Falcone – Chairman of the Board, Chief Executive Officer and President Director of HC2 since January 2014 and Chairman of the Board, Chief Executive Officer and President of HC2 since May 2014 Director, Chairman of the Board and Chief Executive Officer
Slide 10: HC2 Stock Performance & Timeline
HC2 Stock Performance & Timeline 2014 2016 2017 (cont’d) 1. 01/08 – HRG Group Acquires Majority Interest in “PTGi” 14. 02/03 – Global Marine Acquires Majority Interest in 25. 09/13 – HC2 Announces Purchase of Assets of Mako 2. 04/14 – Company Renamed “HC2” CWind Communications 15. 10/05 – R2 Dermato
Slide 11: Segment Detail
Segment Detail
Slide 12: DBM Global Inc. Business Description
DBM Global Inc. Business Description: DBM Global Inc. is focused on delivering world class, sustainable value to its clients through a highly collaborative portfolio of companies which provide better designs, more efficient construction and superior asset management solutions The Company offers
Slide 13: DBM Global Inc. Core Activities
DBM Global Inc. Core Activities Products & Service Offerings Industries Served The largest structural steel fabricator and Structural Steel fabrication Commercial Industrial & Mining erector in the U.S. Steel erection services Conv. & Event Infrastructure In-house structural & design
Slide 14: Global Marine Group Business Description
Global Marine Group - Business Description: “Engineering a Clean and Connected Future” Leading provider of offshore marine engineering delivered via three business units Founded in 1850 - Headquartered in UK with major regional hub in Singapore Select Management: Dick Fagerstal – Executive Cha
Slide 15: Global Marine Maintenance, Wind Farm and Trenching Services
Maintenance Wind Farm Trenching Provision of vessels on standby to repair fiber optic Offshore wind planning, construction and Trenching of cables, rigid & flexible pipelines telecom cables in defined geographic zones operations & maintenance support services and umbilicals Location of fault
Slide 16: American Natural Gas Business Description
American Natural Gas Business Description: Designs, builds, owns, operates and maintains compressed natural gas commercial fueling stations for transportation Building a premier nationwide network of publically accessible heavy duty CNG fueling stations throughout the United States designed and
Slide 17: PTGi International Carrier Services
PTGi International Carrier Services (“PTGi ICS”) Business Description: 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 global network of next-ge
Slide 18: Continental Insurance Group
Continental Insurance Group Business Description: The formation of Continental Insurance Group (“CIG”) in April 2015 to invest in the insurance sector is consistent with HC2’s overall strategy of taking advantage of dislocated and undervalued operating businesses Through CIG, HC2 intends to buil
Slide 19: Pansend Life Sciences Segment
Pansend HC2’s Pansend Life Sciences Segment Is Focused on the Development of Innovative Healthcare Technologies and Products 80% equity ownership of company focused on immunotherapy; Oncolytic virotherapy for treatment of solid cancer tumors Founded by Dr. Matthew Mulvey & Dr. Ian Mohr (who co-d
Slide 20: 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: 150 strategically acquired broadcast assets across the United States – Full-Power Stations: 10 HC2’s broadca
Slide 21: 704Games
704Games (Formerly Dusenberry Martin Racing (DMi, Inc.)) Business Description: Owns worldwide exclusive licensing rights to NASCAR® simulation style racing titles on interactive entertainment platforms – Owns all the code, artwork and animation previously developed for legacy games – License also
Slide 22: Appendix: First Quarter 2018 Highlights & Select Financial Data
Appendix: First Quarter 2018 Highlights & Select Financial Data
Slide 23: Segment Financial Summary Q1 2018 vs Q1 2017
Segment Financial Summary ($m) Q1 2018 Q1 2017 Core Operating Subsidiaries Construction $10.0 $8.6 Marine Services (2.4) 16.3 Energy 0.7 1.2 Telecom 1.1 1.7 Total Core Operating $9.3 $27.8 Adjusted Early Stage and Other Holdings EBITDA Life Sciences ($4.4) ($4.1) Broadcasting (5.1) - Other (0.2) (1.
Slide 24: First Quarter 2018 Highlights
First Quarter 2018 Highlights $718 million near record backlog provides significant visibility [~18 – 24 months] $759 million backlog taking into consideration awarded, but not yet signed contracts Continue to see opportunities in commercial sector totaling approximately $300m Construction C
Slide 25: First Quarter 2018 Highlights (cont'd)
First Quarter 2018 Highlights (con’t) $1.2 million Net Income for 1Q18; ($1.0) million Adjusted Operating Income for 1Q18 Insurance Acquisition of Humana’s ~$2.3 billion long-term care insurance business expected to close 3Q18; Will increase insurance investment platform to ~$3.5 billion of cash
Slide 26: 2018 Focus and Priorities – Update
2018 Focus and Priorities – Update Optimization of HC2 Capital Structure – Completed $110m tack-on to refinance senior secured bridge loans at 102.0% (5/7/18) – Global refinancing of 11% Secured Notes to reduce cost of debt capital remains focus – Continue to reduce cumulative outstanding of prefe
Slide 27: Appendix
Appendix:
Slide 28: 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 1Q18 Revenue: $158.9m 1Q18 Revenue: $36.7m 1Q18 Revenue: $4.5m 1Q18 Revenue: $202.3m
Slide 29: Consolidated Financial Summary
Consolidated Financial Summary ($m) Q1 2018 Q1 2017 Total Net Revenue $453.7 $390.6 Total Operating Expenses $467.4 $389.6 Income Loss From Operations ($13.8) $1.0 Statement of Operations Interest Expense ($19.3) ($14.1) (Selected Financial Data) Income From Equity Investees ($5.2) $7.7 Income (loss
Slide 30: Segment Financial Summary
Segment Financial Summary ($m) Q1 2018 FY 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY 2016 Core Operating Subsidiaries Construction $10.0 $51.6 $15.1 $16.8 $11.1 $8.6 $59.9 Marine Services (2.4) 44.0 15.3 8.8 3.6 16.3 41.2 Energy 0.7 2.9 0.4 0.3 1.0 1.2 2.5 Telecom 1.1 6.9 1.6 1.5 2.2 1.7 5.6 Total Core
Slide 31: Construction: DBM Global First Quarter Update
Construction: DBM Global Inc. First Quarter Update 1Q18 Net Income: $3.5m versus $3.2m in 1Q17 1Q18 Adjusted EBITDA: $10.0m versus $8.6m in 1Q17 Near record backlog of $718m at end of 1Q18, an increase of over 44% vs. $498m in year-ago quarter – ~$759m taking into consideration awarded, but no
Slide 32: Marine Services: Global Marine Group First Quarter Update
Marine Services: Global Marine Group First Quarter Update 1Q18 Net (Loss): ($6.3)m versus Net Income $11.2m in 1Q17 1Q18 Adjusted EBITDA (Loss): ($2.4)m versus Income $16.3m in 1Q17 Near record Global Marine backlog of $430m at 1Q18 quarter-end 1Q18 Adjusted EBITDA impacted by timing associa
Slide 33: Energy: American Natural Gas First Quarter Update
Energy: American Natural Gas (ANG) First Quarter Update 1Q18 Net Loss: ($0.7)m versus ($0.7)m in 1Q17 1Q18 Adjusted EBITDA: $0.7m versus $1.2m in 1Q17 Delivered 2,974,000 Gasoline Gallon Equivalents (GGEs) in 1Q18 vs. 2,791,000 GGEs in 1Q17 Completed integration & upgrade fueling stations in
Slide 34: Telecommunications: PTGi-ICS First Quarter Update
Telecommunications: PTGi-ICS First Quarter Update Steady quarterly results again due to continued focus on customer relationship management, smaller global accounts, and improved operational efficiencies – 1Q18 Net Income: $1.1m versus $1.5m in 1Q17 – 1Q18 Adjusted EBITDA: $1.1m versus $1.7m in 1Q
Slide 35: Insurance: Continental Insurance Group First Quarter Update
Insurance: Continental Insurance Group First 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 – 1Q18 Net Income: $1.2m versus N
Slide 36: Pansend Life Sciences Segment
Pansend HC2’s Pansend Life Sciences Segment Is Focused on the Development of Innovative Healthcare Technologies and Products 80% equity ownership of company focused on immunotherapy; Oncolytic virotherapy for treatment of solid cancer tumors Founded by Dr. Matthew Mulvey & Dr. Ian Mohr (who co-d
Slide 37: Pansend: BeneVir / Janssen Acquisition Summary
Pansend: BeneVir / Janssen Acquisition Summary BeneVir: BeneVir is 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 is the owner of all of BeneVir's outstanding
Slide 38: 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: 150 strategically acquired broadcast assets across the United States – Full-Power Stations: 10 HC2’s broadca
Slide 39: Notable Financial and Other Updates
Notable Financial and Other Updates Collateral Coverage Ratio Exceeded 2.00x at Quarter End (1Q18) $69.1 million in Consolidated Cash (excluding Insurance segment) at Quarter End (1Q18) – $32.4 million Corporate Cash at Quarter End $5.8 million received in Dividends and Tax Share from DBM Glob
Slide 40: Reconciliations
Reconciliations
Slide 41: Reconciliation of Net Income to Adjusted EBITDA, Q1 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 42: Reconciliation of Net Income to Adjusted EBITDA, FY 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 43: Reconciliation of Net Income to Adjusted EBITDA, Q4 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 44: Reconciliation of Net Income to Adjusted EBITDA, Q3 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 45: Reconciliation of Net Income to Adjusted EBITDA, Q2 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 46: Reconciliation of Net Income to Adjusted EBITDA, Q1 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 47: Reconciliation of Net Income to Adjusted EBITDA, FY 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 48: Reconciliation of Net Income to Adjusted EBITDA, Q4 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 49: Reconciliation of Net Income to Adjusted EBITDA, Q3 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 50: Reconciliation of Net Income to Adjusted EBITDA, Q2 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 51: Reconciliation of Net Income to Adjusted EBITDA, Q1 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 52: Reconciliation of Net Income to 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") Q1 2018 FY 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY 2016 Q4 2016 Net Income (loss) - Insurance segment $ 1,245 $ 7,066 $ 3,381 $ 4,282 $ 164 $ (7
Slide 53: Biographies
Biographies
Slide 54: HC2 Executive Leadership Team: Philip A. Falcone
HC2 Executive Leadership Team 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 Chairman of the Board Chief Executive Officer Served as a director, Chairman of the Board and Chief Executive Offi
Slide 55: HC2 Executive Leadership Team: Michael J. Sena and Joseph A. Ferraro
HC2 Executive Leadership Team Michael J. Sena Chief Financial Officer of HC2 since June 2015 Chief Financial Officer Served as the Chief Accounting Officer of HRG from November 2012 to May 2015 From January 2009 to November 2012, held various accounting and financial reporting positions with t
Slide 56: HC2 Executive Leadership Team: Andrew G. Backman
HC2 Executive Leadership Team Managing Director of Investor Relations & Public Relations of HC2 since April 2016 Andrew G. Backman Prior to joining HC2, served as Managing Director of Investor Relations and Public Managing Director Relations for RCS Capital and AR Capital (now AR Global) from 20
Slide 57: 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 , N Y 1 0 0 2 2 © HC2 Holdings, Inc. 2018 May 2018