Innovate Corp. · NYSE:VATE
Innovate — HC2 Holdings — Investor Presentation (November 2018)
58 slides from Innovate's investor presentation, Nov 8, 2018
Slide 1: HC2 Holdings, Inc. Corporate Overview
HC2 HOLDINGS, INC. Corporate Overview © HC2 Holdings, Inc. 2018 November 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: Company Overview
Company Overview
Slide 5: HC2 Holdings, Inc. Who We Are, What We Do
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 In
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 Founder, Chairman and Chief Executive Officer of HRG Group I
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 26. 11/06 – Continental General Insurance Announces CWind 2. 04/14 – Company Renamed “HC2” Acquisition of Humana LTC Business 15.
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 Centers Infrastructure In-house structural
Slide 14: GrayWolf Industrial Inc. Business Description
GrayWolf Industrial Inc. (“GrayWolf”) Business Description Blue Chip Customer Base GrayWolf, which DBM Global is under contract to acquire, is a leader in industrial services focusing on highly complex, labor-intensive specialty maintenance, repair and installation services to diverse end markets
Slide 15: GrayWolf Industrial Inc. Strategic Rationale
GrayWolf Industrial Inc. (“GrayWolf”) Strategic Rationale: GrayWolf Industrial provides DBM Global with an entry into the heavy maintenance and repair industry, diversifying its revenue stream from large commercial construction projects while capitalizing on strong customer relationships with prim
Slide 16: 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 17: Global Marine Group 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 18: 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 19: PTGi International Carrier Services
PTGi International Carrier Services (“PTGi ICS”) Business Description: 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-generation
Slide 20: Continental Insurance Group Business Description
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 21: 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); $8m total investment 76% equity ownership of company focused on immuno
Slide 22: HC2 Broadcasting Holdings Inc.
HC2 Broadcasting Holdings Inc. Business Description* Broadcast Television Stations: Key Metrics** HC2 Broadcasting Holdings Inc., a subsidiary of HC2 Holdings, has Operational Stations: 164 strategically acquired broadcast assets across the United States – Full-Power Stations: 14 HC2’s broadca
Slide 23: Appendix: Third Quarter 2018 Highlights & Select Financial Data
Appendix: Third Quarter 2018 Highlights & Select Financial Data
Slide 24: Segment Financial Summary
Segment Financial Summary ($m) Q3 2018 Q3 2017 YTD 2018 YTD 2017 Core Operating Subsidiaries Construction $16.0 $16.8 $41.5 $36.5 Marine Services 7.9 8.8 25.8 28.8 Energy 1.0 0.3 4.7 2.5 Telecom 1.5 1.5 3.9 5.3 Total Core Operating $26.3 $27.3 $75.8 $73.0 Adjusted Early Stage and Other Holdings EBIT
Slide 25: Third Quarter 2018 Highlights
Third Quarter 2018 Highlights 3Q18 Adjusted EBITDA $16.0m vs. $16.8m for 3Q17; YTD18 Adjusted EBITDA $41.5m vs. $36.5m for YTD17 $615m reported backlog; $632m backlog taking into consideration awarded, but not yet signed contracts; Acquiring GrayWolf Industrial, a specialty maintenance, repair
Slide 26: Third Quarter 2018 Highlights (con't)
Third Quarter 2018 Highlights (con’t) Completed Acquisition of Humana’s ~$2.4 billion long-term care insurance business – (Closed 8/9/18) 3Q18 Pretax Insurance AOI ($11.3) million vs. $17.0 million 3Q17 YTD18 Pretax Insurance AOI ($8.7) million vs. $20.6 million YTD17 As of September 30, 201
Slide 27: 2018 Focus and Priorities – Update
2018 Focus and Priorities – Update Monetization / Value Creation Within Diverse HC2 Portfolio – Sold BeneVir to Janssen Biotech (Johnson & Johnson) for up to $1.04 billion [2Q18] – Closed on the acquisition of Humana’s $2.4 billion long-term care insurance business; Combined Total Adjusted Capit
Slide 28: Appendix
Appendix:
Slide 29: 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 3Q18 Revenue: $195.4m 3Q18 Revenue: $44.8m 3Q18 Revenue: $4.6m 3Q18 Revenue: $187.8m
Slide 30: Consolidated Financial Summary
Consolidated Financial Summary ($m) Q3 2018 Q3 2017 YTD 2018 YTD 2017 Total Net Revenue $501.4 $406.4 $1,451.8 $1,175.6 Total Operating Expenses 525.7 395.8 1,495.5 1,175.3 Income (Loss) From Operations (24.4) 10.6 (43.6) 0.3 Statement of Interest Expense (17.5) (13.2) (54.0) (39.4) Operations Incom
Slide 31: Segment Financial Summary
Segment Financial Summary ($m) Q3 2018 Q2 2018 Q1 2018 FY 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY 2016 Core Operating Subsidiaries Construction $16.0 $15.5 $10.0 $51.6 $15.1 $16.8 $11.1 $8.6 $59.9 Marine Services 7.9 20.4 (2.4) 44.0 15.3 8.8 3.6 16.3 41.2 Energy 1.0 3.0 0.7 2.9 0.4 0.3 1.0 1.2 2.5 T
Slide 32: Construction: DBM Global Inc. Third Quarter Update
Construction: DBM Global Inc. Third Quarter Update 3Q18 Net Income: $9.2m vs. $7.1m in 3Q17; YTD18 Net Income $20.1m vs. $14.5m for YTD17 3Q18 Adjusted EBITDA: $16.0m vs. $16.8m in 3Q17 YTD18 Adjusted EBITDA: $41.5m vs. $36.5m for the comparable 2017 YTD period Backlog of $615m at end of 3Q1
Slide 33: Marine Services: Global Marine Group Third Quarter Update
Marine Services: Global Marine Group Third Quarter Update 3Q18 Net Income (Loss): Net (Loss) ($0.5)m vs. Net Income $0.8m in 3Q17; YTD18 Net Income $4.1m vs. $8.9m for YTD17 3Q18 Adjusted EBITDA: $7.9m vs. $8.8m in 3Q17; Strong 3Q18 performance from Huawei Marine equity investment, offset by som
Slide 34: Energy: American Natural Gas Third Quarter Update
Energy: American Natural Gas (ANG) Third Quarter Update 3Q18 Net Income (Loss): Net (Loss) ($0.6)m vs. ($0.9)m in 3Q17; YTD18 Net (Loss) of ($0.6)m vs. ($2.0)m for YTD17 3Q18 Adjusted EBITDA: $1.0m vs. $0.3m in 3Q17 YTD18 Adjusted EBITDA: $4.7m vs. $2.5m for the comparable 2017 YTD period De
Slide 35: Telecommunications: PTGi-ICS Third Quarter Update
Telecommunications: PTGi-ICS Third Quarter Update 3Q18 Net Income: $1.3m vs. $1.3m in 3Q17; YTD18 Net Income of $3.4m vs. $4.9m for YTD17 3Q18 Adjusted EBITDA: $1.5m vs. $1.5m in 3Q17 YTD18 Adjusted EBITDA: $3.9m vs. $5.3m for the comparable 2017 YTD period ICS Group to acquire Go2Tel.com In
Slide 36: Insurance: Continental Insurance Group Third Quarter Update
Insurance: Continental Insurance Group Third 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 37: 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 38: 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 39: 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: 14 HC2’s broadca
Slide 40: Notable Financial and Other Updates
Notable Financial and Other Updates Collateral Coverage Ratio Exceeded 2.00x at Quarter End (3Q18) $82.5 million in Consolidated Cash (excluding Insurance segment) at Quarter End (3Q18) – $44.4 million Corporate Cash at Quarter End 2018 Key Priorities: – Monetization / value creation within di
Slide 41: Reconciliations
Reconciliations
Slide 42: Reconciliation of Net Income to Adjusted EBITDA: Three Months Ended Sept 30, 2018
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended September 30, 2018 (in thousands) Three Months Ended September 30, 2018 Core Operating Subsidiaries Early Stage & Other Non- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Broadcasting E
Slide 43: Reconciliation of Net Income to Adjusted EBITDA: Three Months Ended Sept 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- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Broadcasting E
Slide 44: Reconciliation of Net Income to Adjusted EBITDA: Nine Months Ended Sept 30, 2018
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Nine Months Ended September 30, 2018 (in thousands) Nine Months Ended September 30, 2018 Core Operating Subsidiaries Early Stage & Other Non- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Broadcasting Eli
Slide 45: Reconciliation of Net Income to Adjusted EBITDA: Nine Months Ended Sept 30, 2017
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Nine Months Ended September 30, 2017 (in thousands) Nine Months Ended September 30, 2017 Core Operating Subsidiaries Early Stage & Other Non- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Broadcasting Eli
Slide 46: Reconciliation of Net Income to 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 47: Reconciliation of Net Income to 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 48: Reconciliation of Net Income to Adjusted EBITDA: Full Year 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 49: Reconciliation of Net Income to Adjusted EBITDA: Three Months Ended Dec 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 50: Reconciliation of Net Income to 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 51: Reconciliation of Net Income to 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 52: Reconciliation of Net Income to Adjusted EBITDA: Full Year 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 53: 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") YTD 2018 Q3 2018 Q2 2018 Q1 2018 FY 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY 2016 Net Income (loss) - Insurance segment $ 142,878 $ 141,068 $ 565
Slide 54: Biographies
Biographies
Slide 55: 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 56: HC2 Executive Leadership Team: Michael J. Sena
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 57: 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 58: 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 November 2018