Innovate Corp. · NYSE:VATE
Innovate — HC2 Holdings — Investor Presentation (March 2018)
51 slides from Innovate's investor presentation, Mar 15, 2018
Slide 1: Corporate Overview March 2018
HC2 HOLDINGS, INC. © HC2 Holdings, Inc. 2018 Corporate Overview March 2018
Slide 2: Special Note Regarding Forward-Looking Statements
© 2 0 1 8 H C 2 H O L D I N G S , I N C . 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-loo
Slide 3: Non-GAAP Financial Measures
© 2 0 1 8 H C 2 H O L D I N G S , I N C . 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,
Slide 4: Company Overview
Company Overview
Slide 5: HC2 Holdings, Inc. Who We Are, What We Do
© 2 0 1 8 H C 2 H O L D I N G S , I N C . HC2 Holdings, Inc. (NYSE: HCHC) 4 Who We Are What We Do P ub 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 un 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
Slide 6: Why Invest in the HC2 Approach?
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Why Invest in the HC2 Approach? 5 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
Slide 7: Clear focus on delivering sustainable value for all stakeholders
© 2 0 1 8 H C 2 H O L D I N G S , I N C . 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
Slide 8: HC2's Diversified Portfolio
© 2 0 1 8 H C 2 H O L D I N G S , I N C . HC2’s Diversified Portfolio 7 Early Stage and Other Holdings Life Sciences: PANSEND MediBeacon: Unique non-invasive real-time monitoring of kidney function R2 Dermatology: Medical device to brighten skin based on Mass. General Hospital technology BeneV
Slide 9: HC2's Experienced Executive Team
© 2 0 1 8 H C 2 H O L D I N G S , I N C . HC2’s Experienced Executive Team 8 Chief Accounting Officer of HRG (NYSE: HRG) Various accounting and financial reporting positions with Reader’s Digest Association, Inc., last serving as Vice President and North American Controller Director of Reporti
Slide 10: HC2 Stock Performance & Timeline
© 2 0 1 8 H C 2 H O L D I N G S , I N C . $0 $2 $4 $6 $8 $10 $12 $14 HC2 Stock Performance & Timeline 9 Note: As a result of the Schuff Tender, HC2’s ownership increased to 89% and subsequently through open market share purchases increased to 92% 5/29/2014 HC2 Acquires Schuff (65%) HC2 Acquires Glob
Slide 11: Segment Detail
Segment Detail
Slide 12: DBM Global Inc.
© 2 0 1 8 H C 2 H O L D I N G S , I N C . DBM Global Inc. 11 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 solution
Slide 13: DBM Global Inc. Core Activities
© 2 0 1 8 H C 2 H O L D I N G S , I N C . DBM Global Inc. 12 Core Activities Products & Service Offerings Industries Served The largest structural steel fabricator and erector in the U.S. In-house structural & design engineering expertise Assets of Mountain States Steel became part of Schuff S
Slide 14: Global Marine Group
© 2 0 1 8 H C 2 H O L D I N G S , I N C . 13 “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 and an established European base in Germany Global
Slide 15: Global Marine Core Activities
© 2 0 1 8 H C 2 H O L D I N G S , I N C . 14 C o re A cti v it ie s Maintenance Provision of vessels on standby to repair fiber optic telecom cables in defined geographic zones Location of fault, cable recovery, jointing and re-deployment of cables Operation of depots storing cable and spare p
Slide 16: American Natural Gas
© 2 0 1 8 H C 2 H O L D I N G S , I N C . American Natural Gas 15 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 Unit
Slide 17: PTGi International Carrier Services
© 2 0 1 8 H C 2 H O L D I N G S , I N C . PTGi International Carrier Services (“PTGi ICS”) 16 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 gl
Slide 18: Continental Insurance Group
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Continental Insurance Group 17 The formation of Continental Insurance Group (“CIG”) in April 2015 to invest in the long-term care and life insurance sector is consistent with HC2’s overall strategy of taking advantage of dislocated and undervalued operatin
Slide 19: Pansend
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Pansend 18 All data as of December 31, 2017 unless otherwise noted 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 viro
Slide 20: 704Games
© 2 0 1 8 H C 2 H O L D I N G S , I N C . 704Games (Formerly Dusenberry Martin Racing (DMi, Inc.)) 19 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 legac
Slide 21: HC2 Broadcasting Holdings Inc.
© 2 0 1 8 H C 2 H O L D I N G S , I N C . HC2 Broadcasting Holdings Inc. 20 Operational Stations: 135 – Full-Power Stations: 4 – Class A Stations: 34 – LPTV Stations: 97 Silent Licenses & Construction Permits: 476 U.S. Markets: >110 Total Footprint, Excluding Construction Permits, Covers App
Slide 22: Fourth Quarter & Year End 2017 Highlights & Select Financial Data
Fourth Quarter & Year End 2017 Highlights & Select Financial Data
Slide 23: Segment Financial Summary
© 2 0 1 8 H C 2 H O L D I N G S , I N C . ($m) FY 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY 2016 Adjusted EBITDA Core Operating Subsidiaries Construction $51.6 $15.1 $16.8 $11.1 $8.6 $59.9 Marine Services 44.0 15.3 8.8 3.6 16.3 41.2 Energy 2.9 0.4 0.3 1.0 1.2 2.5 Telecom 6.9 1.6 1.5 2.2 1.7 5.6 Total
Slide 24: Fourth Quarter and Full Year 2017 Highlights
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Fourth Quarter and Full Year 2017 Highlights 23 Construction $723 million record backlog provides significant visibility [~18 – 24 months] $772 million backlog taking into consideration awarded, but not yet signed contracts Continue to see opportunitie
Slide 25: HC2 Broadcasting Holdings Inc.
© 2 0 1 8 H C 2 H O L D I N G S , I N C . HC2 Broadcasting Holdings Inc. 24 Operational Stations: 135 – Full-Power Stations: 4 – Class A Stations: 34 – LPTV Stations: 97 Silent Licenses & Construction Permits: 476 U.S. Markets: >110 Total Footprint, Excluding Construction Permits, Covers App
Slide 26: Looking Ahead - 2018 Focus and Priorities
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Looking Ahead - 2018 Focus and Priorities 25 Optimization of HC2 Capital Structure – Global refinancing of 11% Secured Notes to reduce cost of debt capital – Continue to reduce cumulative outstanding of preferred equity – Explore alternative financing stru
Slide 27: Appendix
Appendix:
Slide 28: HC2's Diversified Portfolio
© 2 0 1 8 H C 2 H O L D I N G S , I N C . HC2’s Diversified Portfolio 27 Early Stage and Other Holdings Life Sciences: PANSEND MediBeacon: Completed “Pilot Two” Clinical Study at Washington University in St. Louis (1Q17) R2 Dermatology: Received FDA Approval for second generation R2 Dermal Cooli
Slide 29: Consolidated Financial Summary
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Consolidated Financial Summary 28 ($m) Q4 2017 Q4 2016 FY 2017 FY 2016 Statement of Operations (Selected Financial Data) Total Net Revenue $458.5 $454.0 $1,634.1 $1,558.1 Total Operating Expenses $460.0 $449.0 $1,635.3 $1,559.5 Income Loss From Operations ($
Slide 30: Construction: DBM Global Inc.
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Construction: DBM Global Inc. 29 4Q17 Net Income: $9.2m; FY17 Net Income: $23.6m versus $28.0m in FY16 4Q17 Adjusted EBITDA: $15.1m; FY17 Adjusted EBITDA: $51.6m versus $59.9m in FY16 Record backlog of $723m at end of 4Q17, an increase of over 44% vs. $503m
Slide 31: Marine Services: Global Marine Group
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Marine Services: Global Marine Group 30 Joint Venture established in 1995 with China Telecom China’s leading provider of submarine cable installation Located in Shanghai and possesses a fleet of advanced purpose-built cable ships Currency Exchange: CNY
Slide 32: Energy: American Natural Gas
© 2 0 1 8 H C 2 H O L D I N G S , I N C . 4Q17 Net Income: $1.5m; FY17 Net (Loss): ($0.5)m versus Net Income $0.01m in FY16 4Q17 Adjusted EBITDA: $0.4m; FY17 Adjusted EBITDA: $2.9m versus $2.5m in FY16 Signed first renewable natural gas supply agreement in 4Q17 Alternative Fuel Energy Tax Credit (“A
Slide 33: Telecom: PTGi ICS
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Steady quarterly results again due to continued focus on higher margin wholesale traffic mix, smaller global accounts, and improved operational efficiencies – 4Q17 Net Income: $1.3m; FY17 Net Income: $6.2m versus $1.4m in FY16 – 4Q17 Adjusted EBITDA: $1.6m
Slide 34: Insurance: Continental Insurance Group
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Insurance: Continental Insurance Group 33 Note: Reconciliation of Adjusted Operating Income to U.S. GAAP Net Income in appendix. All data as of December 31, 2017 unless otherwise noted Continental Insurance Group serves as a platform for run-off Long Term
Slide 35: Pansend
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Pansend 34 All data as of December 31, 2017 unless otherwise noted 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 viro
Slide 36: Notable Financial and Other Updates
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Notable Financial and Other Updates 35 Collateral Coverage Ratio Exceeded 2.0x at Quarter End (4Q17) $72.7 million in Consolidated Cash (excluding Insurance segment) – $29.4 million Corporate Cash $11.5 million Received in Dividends and Tax Share from
Slide 37: Reconciliations
Reconciliations
Slide 38: Reconciliation to Adjusted EBITDA, Full Year 2017
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Full Year Ended December 31, 2017 37 (in thousands) Construction Marine Energy Telecom Life Sciences Other & Elimination Net loss attributable to HC2 Holdings, Inc. (46,911)$ Less: Net Incom e
Slide 39: Reconciliation to Adjusted EBITDA, Full Year 2016
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Full Year Ended December 31, 2016 38 (in thousands) Year Ended December 31, 2016 Construction Marine Energy Telecom Life Sciences Other & Elimination Net loss attributable to HC2 Holdings, Inc.
Slide 40: Reconciliation to Adjusted EBITDA, Q4 2017
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended December 31, 2017 39 (in thousands) Construction Marine Energy Telecom Life Sciences Other & Elimination Net loss attributable to HC2 Holdings, Inc. (8,537)$ Less: Net Incom
Slide 41: Reconciliation to Adjusted EBITDA, Q3 2017
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended September 30, 2017 40 (in thousands) Construction Marine Energy Telecom Life Sciences Other & Elimination Net loss attributable to HC2 Holdings, Inc. (5,967)$ Less: Net Incom
Slide 42: Reconciliation to Adjusted EBITDA, Q2 2017
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended June 30, 2017 41 (in thousands) Construction Marine Energy Telecom Life Sciences Other & Elimination Net loss attributable to HC2 Holdings, Inc. (17,911)$ Less: Net Incom e a
Slide 43: Reconciliation to Adjusted EBITDA, Q1 2017
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended March 31, 2017 42 (in thousands) Construction Marine Energy Telecom Life Sciences Other & Elimination Net loss attributable to HC2 Holdings, Inc. (14,496)$ Less: Net loss att
Slide 44: Reconciliation to Adjusted EBITDA, Q4 2016
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Three Months Ended December 31, 2016 43 (in thousands) Construction Marine Energy Telecom Life Sciences Other & Elimination Net loss attributable to HC2 Holdings, Inc. (61,464)$ Less: Net loss
Slide 45: Reconciliation to Insurance Adjusted Operating Income
© 2 0 1 8 H C 2 H O L D I N G S , I N C . Reconciliation of U.S. GAAP Net Income (Loss) to Insurance Adjusted Operating Income 44 (in thousands) Adjusted Op rating Income - Insurance ("Insurance AOI") FY 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY 2016 Q4 2016 Net Income (loss) - Insurance segment 7,066
Slide 46: Biographies
Biographies
Slide 47: HC2 Executive Leadership Team
© 2 0 1 8 H C 2 H O L D I N G S , I N C . HC2 Executive Leadership Team 46 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 Served as a director, Chairman of the Board and Chief Executive Offic
Slide 48: HC2 Executive Leadership Team
© 2 0 1 8 H C 2 H O L D I N G S , I N C . HC2 Executive Leadership Team 47 Michael J. Sena Chief Financial Officer of HC2 since June 2015 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 repor
Slide 49: HC2 Executive Leadership Team
© 2 0 1 8 H C 2 H O L D I N G S , I N C . HC2 Executive Leadership Team 48 Joseph A. Ferraro Chief Legal Officer & Corporate Secretary of HC2 since September 2017 Served as General Counsel of Prospect Administration LLC, the administrator for Prospect Capital Corporation (NASDAQ: PSEC) for nearl
Slide 50: HC2 Executive Leadership Team
© 2 0 1 8 H C 2 H O L D I N G S , I N C . HC2 Executive Leadership Team 49 Suzi Raftery Herbst Chief Administrative Officer of HC2 since March 2015 with over 17 years of diverse human resources, recruiting, equity and foreign exchange sales experience Prior to joining HC2, served as Senior Vice
Slide 51: Investor Relations Contact
HC2 HOLDINGS, INC. © HC2 Holdings, Inc. 2018 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 t h F l o o r , N e w Y o r k , N Y 1 0 0 2 2 March 2018