Innovate Corp. · NYSE:VATE
Innovate — HC2 Holdings — Investor Presentation (May 2016)
44 slides from Innovate's investor presentation, May 26, 2016
Slide 1: HC2 Holdings, Inc. Company Overview
' HG2 Holdings, Inc. Company Overview
Slide 2: Special Note Regarding Forward-Looking Statements
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. Generally, forward-looki
Slide 3: Company Overview
Company Overview
Slide 4: HC2 Holdings, Inc. Who We Are, What We Do
HC2 Holdings, Inc. 3 Who We Are What We Do Diversified holding companyPermanent capitalStrategic and financial partnerTeam of visionaries Buy and build companies Execute business plansDeliver sustainable value for shareholders
Slide 5: Investment Highlights: Why Invest in HC2?
Investment Highlights 4 Why Invest in HC2?Leadership team has diverse network resulting in unique deal flowUnique combination of operating entities accessible through one investmentControlling stakes in leading, stable, cash flow generating businessesOption value opportunities with significant equit
Slide 6: Clear focus on delivering sustainable value for all stakeholders
Clear focus on delivering sustainable value for all stakeholdersValue operator with long-term outlookAcquire controlling equity interests in diverse industries creating value through growth in operating subsidiariesStrong capital base allows funding of subsidiary growthSpeed of execution gives HC2 a
Slide 7: HC2 Company Snapshot
HC2 Company Snapshot 6 Early Stage and Other Holdings All data as of March 31, 2016 except number of ANG fueling stations which includes two stations acquired and two stations commissioned in May 2016 Core Operating Subsidiaries One of the largest steel fabrication and erection companies in the U.S.
Slide 8: HC2 Leadership Team
HC2 Leadership Team 7 Philip A. FalconeChairman of the Board, Chief Executive Officer and President Keith M. HladekChief Operating Officer Michael SenaChief Financial Officer Paul K. VoigtSenior Managing Director Paul L. RobinsonChief Legal officer & Corporate Secretary Suzi Raftery HerbstChief Admi
Slide 9: HC2 Stock Performance & Timeline
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 2014 HRG Group acquires majority interest in "PTGi" 1/8/2014 HC2 acquires Schuff (65%) 5/29/2014 HC2 acquires Global Marin
Slide 10: Appendix: Segment Detail
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Slide 11: Schuff International – Company Snapshot
Schuff International – Company Snapshot 10 Schuff operates as an integrated fabricator and erector of structural steel and heavy steel plateThe Company fabricates and erects structural steel for commercial and industrial construction projects including high and low-rise buildings and office complexe
Slide 12: Schuff International – Company Snapshot
Schuff International – Company Snapshot 11 Schuff Steel Schuff Steel Management Company Aitken Schuff Hopsa Engineering Core Activities One of the largest steel fabricators and erectors in the U.S. Provides project management capabilities for smaller projects, often leveraging subcontractors Manufac
Slide 13: Global Marine Systems (GMSL) – Company Snapshot
Global Marine Systems (GMSL) – Company Snapshot 12 Provides offshore marine engineering and underwater services for subsea cable installation, maintenance and cable protection requirementsSeeks to position itself as a key player to drive convergence of its maintenance service offering across the tel
Slide 14: Global Marine Systems (GMSL) – Company Snapshot
Global Marine Systems (GMSL) – Company Snapshot 13 Telecom Maintenance Telecom Installation Oil & Gas Installation Offshore Power Installation Charters Core Activities Provision of vessels on standby to repair fiber optic telecom cables in defined geographic zonesLocation of fault, cutting out damag
Slide 15: American Natural Gas – Company Snapshot
American Natural Gas – Company Snapshot 14 In August 2014, HC2 acquired $15.5 million of convertible preferred which is convertible into 53% of the equity of ANGIn-depth experience in the natural gas fueling industryDesigns, builds, owns, operates and maintains compressed natural gas (“CNG”) commerc
Slide 16: PTGi International Carrier Services
PTGi International Carrier Services (“PTGi ICS”) 15 Leading international wholesale telecom servicecompany 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-generation IP soft switche
Slide 17: Continental Insurance Group – Company Snapshot
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 Financial Group’s long-term care and life i
Slide 18: Pansend Life Sciences
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 tumorsFounded by Dr. Matthew Mulvey & Dr. Ian Mohr (who
Slide 19: Nervve
Nervve 18 In October 2014, HC2 made an initial contribution of $5 millionin convertible preferred equitySubsequent financing increased the total to $6.1 millionHeadquartered in Buffalo, NY; Offices in VA and NYNervve has developed the fastest, most accurate video and image search technology in the w
Slide 20: Dusenberry Martin Racing (DMi, Inc.)
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 the NASCAR brand for interactive gaming, including mobile, console and PC gamesDMi, Inc., doing business as Dusenberry Martin Rac
Slide 21: Appendix: 1Q16 Highlights and Select Financial Data
Appendix: 1Q16 Highlights andSelect Financial Data
Slide 22: 1Q Highlights and Recent Developments
1Q Highlights and Recent Developments 21 Results and Recent Developments:Results highlight the unique value HC2 brings to the market given our diverse holdings across a number of uncorrelated industriesNet Revenue totaled $332 million in First Quarter; up ~64% increase compared prior-year-quarterAdj
Slide 23: HC2 Segment Overview
HC2 Segment Overview 22 Early Stage and Other Holdings Core Operating Subsidiaries Q1 Revenue: $119mQ1 Adjusted EBITDA: $12m Backlog of $415m at 3/31Solid long-term pipeline Manufacturing: SCHUFF Marine Services: GMSL Q1 Revenue: $32mQ1 Adjusted EBITDA: $0.5m inclusive of one-time chargeIncremental
Slide 24: Segment Financial Summary
Segment Financial Summary 23 Adjusted EBITDA for Core Operating Subsidiaries was $12.7m for Q1 2016 or $18.2m excluding one-time GMSL charge Adjusted EBITDA ($m) Q1 2016 Q1 2015 Core Operating Subsidiaries Manufacturing $11.5 $8.9 Marine Services (1) 0.5 5.0 Utilities 0.4 0.2 Telecom 0.3 (0.1) Total
Slide 25: Manufacturing: Schuff International
Manufacturing: Schuff International 24 Adjusted EBITDA: $11.5m, up 29% year-over-year Backlog: $415m as of 3/31/16; up 36% compared to $306m as of 3/31/15Continued gross margin expansion; up 440 basis points year-over-year First Quarter Update Proactively selecting the right jobs, not all jobsSolid
Slide 26: Marine Services: GMSL
Marine Services: GMSL 25 Adjusted EBITDA: $0.5.m after $5.5m one-time charge associated with telecom installation projectIncremental revenue contribution from CWind acquisitionTwo new installation contracts signed in first quarter with scheduled delivery in second half of 2016Significant potential v
Slide 27: Utilities: ANG
Utilities: ANG 26 Delivered 800,000 Gasoline Gallon Equivalents (GGE’s) in the first quarter versus 659,000 GGE’s in the fourth quarter of 2015 and 358,000 GGE’s in the first quarter of 2015Currently 15 stations owned and/or operated versus 11 stations at end of 1Q16One facility under construction i
Slide 28: Telecommunications: PTGi-ICS
Telecommunications: PTGi-ICS 27 Strong quarter with $150m in sales due to growth in wholesale traffic volumes due to expansion in scale and number of customer relationshipsAdjusted EBITDA continues positive trend as the overall restructuring plan was completed in early 2015Adjusted EBITDA for first
Slide 29: Insurance: Continental Insurance Group
Insurance: Continental Insurance Group 28 Completed the acquisition of United Teacher Associates Insurance Company (“UTA”) and Continental General Insurance Company (“CGI”) in December 2015UTA and CGI are held by Continental Insurance, Inc. (“CII”), which serves as a platform for run-off LTC books o
Slide 30: Pansend Life Sciences
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 tumorsFounded by Dr. Matthew Mulvey & Dr. Ian Mohr (who
Slide 31: Other Holdings
Other Holdings 30 Nervve: Provider of video and image search technology for information extraction and powerful analytics applicationsDusenberry Martin Racing: Owns the exclusive licensing rights to the NASCAR brand for interactive gaming platforms
Slide 32: Financial Summary
Financial Summary 31 Market capitalization on a fully diluted basis, excluding preferred equity, using a common stock price per share of $4.24 on May 6, 2016Cash, cash equivalents and short-term investmentsEnterprise Value is calculated by adding market capitalization, total debt and total preferred
Slide 33: Appendix: Biographies
Appendix: Biographies
Slide 34: HC2 Management Team
HC2 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 2014Served as a director, Chairman of the Board and Chief Executive Officer of HRG Group Inc.. (“HRG”) from July 2009 to December
Slide 35: HC2 Management Team
HC2 Management Team 34 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 2013Served as Managing Director on the High Yield sales desk at Prudential Securities from 1988 to 1996
Slide 36: HC2 Management Team
HC2 Management Team 35 Ian W. Estus Managing Director of HC2 since May 2014 Prior to joining HC2, worked in portfolio management for HRG from 2013 to 2014 and Harbinger Capital from 2002 to 2013Served in various roles at Smith Barney Asset Management from 1998 to 2002Mr. Estus received a Bachelor of
Slide 37: Appendix: Reconciliations
Appendix:Reconciliations
Slide 38: Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (Q1 2016)
Reconciliation of Adjusted EBITDA of HC2 to U.S. GAAP Net Income (Three Months Ended March 31, 2016) 37 (1) Inclusive of $5.5 million one-time charge (1)
Slide 39: Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (Q1 2015)
Reconciliation of Adjusted EBITDA of HC2 to U.S. GAAP Net Income (Three Months Ended March 31, 2015) 38
Slide 40: Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (FY2015)
Reconciliation of Adjusted EBITDA of HC2 to U.S. GAAP Net Income (Twelve Months Ended December 31, 2015) 39
Slide 41: Calculation of Latest Twelve Months Revenue
Calculation of the Latest Twelve Months Revenue Utilizing as Reported Net Revenue (Three Months Ended March 31, 2016) 40
Slide 42: Calculation of Latest Twelve Months Adjusted EBITDA
Calculation of Latest Twelve Months Adjusted EBITDA Utilizing As Reported Adjusted EBITDA(Three Months Ended March 31, 2016) 41
Slide 43: Reconciliation of Insurance AOI to U.S. GAAP Net Income
Reconciliation of Insurance AOI to U.S. GAAP Net Income (Three Months Ended March 31, 2016) 42 (in thousands)
Slide 44: Investor Relations Contact
Andrew G. Backman • ir@hc2.com • 212.235.2691 • 450 Park Avenue, 30th Floor, New York, NY 10022 Company Overview