Innovate Corp. · NYSE:VATE
Innovate — HC2 Holdings — Investor Presentation (September 2019)
36 slides from Innovate's investor presentation, Sep 26, 2019
Slide 1: HC2 Holdings, Inc. Investor Presentation
HC2 HOLDINGS, INC. Investor Presentation © HC2 Holdings, Inc. 2019 September 2019
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 release, HC2 refers to certain financial measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”), including Adjusted EBITDA (excluding the Insurance segment) and Adjusted Operating Income (“
Slide 4: Long-Term Strategic Vision
Long-Term Strategic Vision Opportunistically acquire assets and companies to grow businesses, ultimately delivering and unlocking sustainable value © 2 0 1 9 H C 2 H OLDINGS , I NC . 3
Slide 5: Investment Highlights
Investment Highlights Unique combination of operating entities in multiple industries Diverse Portfolio Diversification provides counterbalance against challenges Controlling stakes in leading, stable, cash flow generators Consistent Cash Flow such as Construction and Insurance Generation Pr
Slide 6: Unique Portfolio of Value-Generating Assets
Unique Portfolio of Value-Generating Assets Broadcasting Construction Life Sciences Insurance Marine Services Energy © 2 0 1 9 H C 2 H OLDINGS , I NC . 5
Slide 7: Hybrid, Diversified Long-Term Strategy
Hybrid, Diversified Long-Term Strategy Driving Growth, Strong Cash Flow Unlocking Value Generation with Strategic Investments © 2 0 1 9 H C 2 H OLDINGS , I NC . 6
Slide 8: Building Value
Building Value Opportunistically acquire controlling equity stakes in diverse industries, creating value through growth in operating subsidiaries Infuse resources and talent to support portfolio companies and their management teams to grow market value Value operator with long-term outlook Cre
Slide 9: Deeply Experienced Management
Deeply Experienced Management Philip A. Falcone – Chairman of the Board, Chief Executive Officer and President Chairman of the Board, Chief Executive Officer and President of HC2 since 2014 Founder, Chairman and Chief Executive Officer of HRG Group Inc. (2009 - 2014) Founder, Chief Investment
Slide 10: Construction – DBM Global
Construction – DBM Global Diversified Industrial Entity DBM Global Inc. delivers world-class, sustainable projects to its clients Offers one-source integrated steel construction services and ancillary professional services Highly collaborative portfolio of companies provide better designs, eff
Slide 11: Construction: Consistent and Growing Cash Flows
Construction: Consistent and Growing Cash Flows Greater Recurring Revenue Longer Term Initiatives Acquisition of GrayWolf Industrial Further integrate GrayWolf into DBM Global provides additional asset-light business model that requires minimal capital Build relationships and find additional c
Slide 12: Continental Insurance – Value-Creation Opportunity
Continental Insurance – Compelling Value-Creation Opportunity Capitalizing on Dislocation in the Long-Term Care Insurance Market Overview Platform for run-off Long-Term Care (“LTC”) books of business Acquired Humana’s ~$2.4 billion LTC Insurance block (KMG) in 2018 – Significantly grew the platf
Slide 13: Generating Additional Yield Through Insurance
Generating Additional Yield Through Insurance Sizable and Growing Investment Portfolio Investment portfolio designed to contribute stable earnings and balance risk across diverse asset classes Invested in a variety of instruments, including fixed income, perpetual preferred stocks, asset-backed
Slide 14: Energy: ANG Betting on Long-Term CNG Growth
Energy: ANG Betting on Long-Term CNG Growth Designs, builds, owns, operates and maintains compressed natural gas (CNG) commercial fueling stations for transportation Building premier nationwide network of publically accessible heavy duty CNG fueling stations throughout U.S., designed and located
Slide 15: HC2 Broadcasting – Long-Term Growth Vehicle
HC2 Broadcasting – Long-Term Growth Vehicle Broadcast Strategy Capitalize on dynamically changing media landscape Create alternative distribution platform to bring valuable content to over-the-air (OTA) viewers © 2 0 1 9 H C 2 H OLDINGS , I NC . 14
Slide 16: HC2 Broadcasting: Growing Demand, Limited Licenses Available
HC2 Broadcasting Growing Demand, Limited Licenses Available More U.S. OTA Households Limited TV Spectrum Available (in millions) U.S. OTA Households* After the most recent auction of 20 Broadcast spectrum, available broadcast channels in a single DMA were reduced from 49 to 35 licenses. 15 Each
Slide 17: HC2 Broadcasting Multiple Paths to Growth
HC2 Broadcasting Multiple Paths to Growth Three-Prong Strategy for Revenue & Adjusted EBITDA Expansion 1. Lease capacity to third-party content providers, collect an ongoing fee - Believe platform can attract major content providers once it covers 75% of US population - OTA lease rates are on an upw
Slide 18: HC2 Broadcasting Current Status and Near-Term Priorities
HC2 Broadcasting Current Status and Near-Term Priorities Significant Opportunities Our OTA Platform* Near-term priorities: Operational Stations: 177 – Complete financing at – Full-Power Stations: 10 Broadcasting segment level – Class A Stations: 60 – Add broadcast assets where – LPTV Stations: 1
Slide 19: Broadcasting – Longer-Term Expansion Plans
Broadcasting – Longer-Term Expansion Plans Longer-Term Strategic Goals Continue to identify and procure quality content providers for nationwide OTA platform Generate premium pricing for longer-term leases Adapt to emerging technology (mobile, ATSC 3.0, etc.) to provide multiple new methods of
Slide 20: Life Sciences – Unlocking Value Through Innovation
Life Sciences – Unlocking Value Through Innovation Pansend Developing Innovative Healthcare Technologies and Products Small to Mid-Size Investments – Significant Potential for Value Creation Equity ownership* = ~49.9% ; Fully diluted* = ~41.5% Total investment-to-date = $24.9M U.S. patents gra
Slide 21: Life Sciences – Unlocking Value Through Innovation
Life Sciences – Unlocking Value Through Innovation Equity ownership* = ~63.4% ; Fully diluted* = ~57.6% Investment-to-date = $27.5M Two distinct medical devices based on unique patented technology, representing addressable markets in Asia and the rest of the world in excess of $20B Contact d
Slide 22: Case Study: BeneVir – Minor Investment, Major Value
Case Study: BeneVir – Minor Investment, Major Value BeneVir founded by Dr. Matthew Mulvey & Dr. Ian Mohr (who co-developed T-Vec); Biovex (owner of T-Vec) acquired by Amgen for ~$1 billion Investment Owned 76% fully diluted equity (controlling interest) of company Total investment of $8 millio
Slide 23: Debt Capital Structure
Debt Capital Structure Cash and Collateral Coverage – June 30, 2019 Collateral Coverage Ratio1 exceeded 2.00x $53.9 million in Consolidated Cash (excluding Insurance segment) (in millions) 11.5% senior secured notes due December 2021 $470.0 7.5% convertible senior notes due June 2022 55.0 LIBOR
Slide 24: Corporate Liquidity & Key Priorities
Corporate Liquidity & Key Priorities Liquidity Levers Key Priorities Ability to upstream dividends and tax Reduce HC2 Corporate debt share from Construction segment and dividends from Telecom segment Pursuing multiple paths to maximize value with Global Marine Collect investment management f
Slide 25: Investment Highlights
Investment Highlights Unique combination of operating entities in multiple industries Diverse Portfolio Diversification provides counterbalance against challenges Controlling stakes in leading, stable, cash flow generators Consistent Cash Flow such as Construction and Insurance Generation Pr
Slide 26: Appendix
Appendix
Slide 27: 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 1H19 Revenue: $387.8m 1H19 Revenue: $81.8m 1H19 Revenue: $10.6m 1H19 Revenue: $344.8m
Slide 28: Consolidated Financial Summary
Consolidated Financial Summary (in millions) Three Months Ended June 30, Six Months Ended June 30, Increase / Increase / 2019 2018 (Decrease) 2019 2018 (Decrease) Net revenue $ 518.6 $ 496.8 $ 21.8 1,010.0 950.5 59.5 Total operating expenses 487.7 502.3 (14.6) 957.5 969.8 (12.3) Income (loss) from o
Slide 29: Segment Financial Summary
Segment Financial Summary (in millions) Three Months Ended June 30, Six Months Ended June 30, Increase / Increase / 2019 2018 (Decrease) 2019 2018 (Decrease) Core Operating Subsidiaries Construction $ 23.1 $ 15.5 $ 7.6 35.5 25.5 10.0 Marine Services 9.6 20.4 (10.8) 9.7 18.0 (8.3) Energy 1.3 3.0 (1.7
Slide 30: Appendix: Reconciliations
Appendix: Reconciliations
Slide 31: Reconciliation of Net Income to Adjusted EBITDA, Three Months Ended June 30, 2019
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended June 30, 2019 (in millions) Three Months Ended June 30, 2019 Core Operating Subsidiaries Early Stage & Other Non- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Broadcasting Elimination
Slide 32: 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 millions) 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 33: Reconciliation of Net Income to Adjusted EBITDA, Six Months Ended June 30, 2019
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Six Months Ended June 30, 2019 (in millions) Six Months Ended June 30, 2019 Core Operating Subsidiaries Early Stage & Other Non- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Broadcasting Elimination Corp
Slide 34: Reconciliation of Net Income to 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 millions) 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 Corp
Slide 35: Reconciliation of Net Income to Insurance Pre-Tax Adjusted Operating Income
Reconciliation of U.S. GAAP Net Income (Loss) to Insurance Pre-Tax Adjusted Operating Income (in millions) Pre-tax Adjusted Operating Income - Insurance ("Pre-tax Insurance AOI") Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Net income (loss) - Insurance segment $ 30.3 $
Slide 36: HC2 Holdings, Inc. Contact
HC2 HOLDINGS, INC. ir@hc2.com • 212.235.2691 • 450 Park Avenue, 30 t h Floor, New York, NY 10022 © HC2 Holdings, Inc. 2019
HC2 Holdings — Investor Presentation (September 2019) on 6ix