Innovate Corp. · NYSE:VATE

Innovate — HC2 Holdings — Q3 2018 Earnings Presentation

37 slides from Innovate's earnings presentation, Nov 7, 2018

1. Slide 1: Third Quarter 2018 Conference Call

   HC2 HOLDINGS, INC. Third Quarter 2018 Conference Call © HC2 Holdings, Inc. 2018

2. 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

3. 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

4. Slide 4: Agenda

   Agenda OVERVIEW AND Philip A. 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

5. Slide 5: Quarterly Overview

   Quarterly Overview

6. Slide 6: Segment Financial Summary ($m)

   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

7. Slide 7: 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

8. Slide 8: 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

9. Slide 9: 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

10. Slide 10: Questions and Answers

    Questions and Answers

11. Slide 11: Appendix

    Appendix:

12. 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  3Q18 Revenue: $195.4m  3Q18 Revenue: $44.8m  3Q18 Revenue: $4.6m  3Q18 Revenue: $187.8m 

13. Slide 13: Consolidated Financial Summary ($m)

    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

14. Slide 14: Segment Financial Summary ($m)

    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

15. Slide 15: 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

16. Slide 16: 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

17. Slide 17: Energy: American Natural Gas (ANG) 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

18. Slide 18: 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

19. Slide 19: 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

20. 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

21. 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

22. 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

23. Slide 23: 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

24. Slide 24: Reconciliations

    Reconciliations

25. Slide 25: Reconciliation of (Loss) to Adjusted EBITDA – Three Months Ended Q3 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

26. Slide 26: Reconciliation of (Loss) 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

27. Slide 27: Reconciliation of (Loss) to Adjusted EBITDA – Nine Months Ended 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

28. Slide 28: Reconciliation of (Loss) 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

29. Slide 29: Reconciliation of (Loss) 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

30. Slide 30: Reconciliation of (Loss) 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

31. Slide 31: Reconciliation of (Loss) 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

32. Slide 32: Reconciliation of (Loss) 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

33. Slide 33: Reconciliation of (Loss) 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

34. Slide 34: Reconciliation of (Loss) 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

35. Slide 35: Reconciliation of (Loss) 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

36. Slide 36: Reconciliation of (Loss) 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

37. Slide 37: 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

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