Innovate Corp. · NYSE:VATE
Innovate — HC2 Holdings — Investor Presentation (November 2016)
44 slides from Innovate's investor presentation, Nov 10, 2016
Slide 1: Corporate Overview November 2016
HC2 HOLDINGS, INC. © HC2 Holdings, Inc. 2016 Corporate Overview November 2016
Slide 2: Special Note Regarding Forward-Looking Statements
© 2 0 1 6 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-lo
Slide 3: Company Overview
Company Overview
Slide 4: HC2 Holdings, Inc. Who We Are, What We Do
© 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Holdings, Inc. 3 W ho W e Are W ha t W e Do 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 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 p a r t n e r T e a m o f v i s i o n a r i e s B u y a n d b u i l d c o m
Slide 5: Investment Highlights: Why Invest in HC2?
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Investment Highlights 4 Why Invest in HC2? Leadership team has diverse network resulting in unique deal flow Unique combination of operating entities accessible through one investment – Controlling stakes in leading, stable, cash flow generating business
Slide 6: Clear focus on delivering sustainable value for all stakeholders
© 2 0 1 6 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 7: HC2 Company Snapshot
© 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Company Snapshot 6 Early Stage and Other Holdings Core Operating Subsidiaries One of the largest steel fabrication and erection companies in the U.S. Recently changed name to DBM Global Inc. Offers full suite of integrated steel construction and pr
Slide 8: HC2 Leadership Team
© 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Leadership Team 7 Philip A. Falcone Chairman of the Board, Chief Executive Officer and President Keith M. Hladek Chief Operating Officer Michael Sena Chief Financial Officer Paul K. Voigt Senior Managing Director Paul L. Robinson Chief Legal Officer & Co
Slide 9: HC2 Stock Performance & Timeline
© 2 0 1 6 H C 2 H O L D I N G S , I N C . 2014 HRG Group acquires majority interest in "PTGi" 1/8/2014 HC2 acquires Schuff (65%) 5/29/2014 HC2 acquires Global Marine (97%) 9/22/2014 HC2 announces results of Schuff Tender Offer Company renamed "HC2" 4/14/2014 10/7/2014 $250M Senior Secured Notes Offe
Slide 10: Segment Detail
Segment Detail
Slide 11: DBM Global Inc. (Schuff Intl.) – Company Snapshot
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Select Customers: DBM Global Inc. (Schuff Intl.) – Company Snapshot 10 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
Slide 12: DBM Global core activities and service offerings
© 2 0 1 6 H C 2 H O L D I N G S , I N C . 11 CORE ACTIVITIES The largest structural steel fabricator and erector in the U.S. In-house structural & design engineering expertise Provides structural steel fabrication & erection services for smaller projects leveraging subcontractors and in-house
Slide 13: Global Marine Systems (GMSL) – Company Snapshot
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Global Marine Systems (GMSL) – Company Snapshot 12 Leading provider of offshore marine engineering for subsea cable installation, maintenance and cable protection requirements Seeks to position itself as a key player driving convergence of its maintenanc
Slide 14: Global Marine Systems core activities
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Global Marine Systems (GMSL) – Company Snapshot 13 TELECOM MAINTENANCE TELECOM INSTALLATION OFFSHORE POWER OIL & GAS CORE ACTIVITIES Provision of vessels on standby to repair fiber optic telecom cables in defined geographic zones Location of fault, cable
Slide 15: American Natural Gas – Company Snapshot
© 2 0 1 6 H C 2 H O L D I N G S , I N C . American Natural Gas – Company Snapshot 14 Designs, builds, owns, operates and maintains compressed natural gas commercial fueling stations for transportation Current ownership 49.9% with ability to increase to 56% In-depth experience in the natural gas
Slide 16: PTGi International Carrier Services
© 2 0 1 6 H C 2 H O L D I N G S , I N C . PTGi International Carrier Services (“PTGi ICS”) 15 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 glob
Slide 17: Continental Insurance Group – Company Snapshot
© 2 0 1 6 H C 2 H O L D I N G S , I N C . 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 F
Slide 18: Pansend Life Sciences
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Pansend Life Sciences 17 HC2’s Life Sciences Segment Is Focused on the Development of Innovative Healthcare Technologies and Products 80% equity ownership of company focused on immunotherapy; Oncolytic virotherapy for treatment of solid cancer tumors Fou
Slide 19: Nervve
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Nervve 18 In October 2014, HC2 made an initial contribution of $5 million in convertible preferred equity Subsequent financing increased the total to $7.2 million Headquartered in Buffalo, New York Nervve has developed the fastest, most accurate video an
Slide 20: Dusenberry Martin Racing (DMi, Inc.)
© 2 0 1 6 H C 2 H O L D I N G S , I N C . 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 NASCAR® simulation style racing titles on interactive entertainment platforms DMi, In
Slide 21: Appendix: 3Q16 Highlights and Select Financial Data
Appendix: 3Q16 Highlights and Select Financial Data
Slide 22: 3Q16 Highlights and Recent Developments
© 2 0 1 6 H C 2 H O L D I N G S , I N C . 3Q16 Highlights and Recent Developments 21 Results and Recent Developments Solid third quarter results again highlight the unique value HC2 brings to the market with our diverse holdings across a number of uncorrelated industries – Manufacturing: Continued
Slide 23: HC2 Segment Overview
© 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Segment Overview 22 Early Stage and Other Holdings Core Operating Subsidiaries Q3 Revenue: $129.6.m Q3 Adjusted EBITDA: $14.5m Backlog $318m; Over $500m inclusive of contracts awarded, not yet signed Solid long-term pipeline Marine Services: GMSL
Slide 24: Segment Financial Summary
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Segment Financial Summary 23 Adjusted EBITDA for Core Operating Subsidiaries $31.5m for Q3 2016 ADJUSTED EBITDA ($m) Q3 2016 Q2 2016 Q1 2016 Core Operating Subsidiaries Manufacturing $14.5 $13.2 $11.5 Marine Services 14.1 11.8 0.5 Utilities 0.7 0.5 0.4 Telec
Slide 25: Manufacturing: DBM Global Inc. (Schuff)
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Manufacturing: DBM Global Inc. (Schuff) 24 Net Income: $7.0m versus $9.4m for the second quarter 2016 Adjusted EBITDA: $14.5m versus $13.2m in the second quarter 2016 Continued strong gross margins due to better than bid performance - Pacific region remains
Slide 26: Marine Services: GMSL
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Marine Services: GMSL 25 Net Income: $8.7m versus $6.0m for the second quarter 2016 Adjusted EBITDA: $14.1m versus $11.8m in the second quarter 2016 and $0.5m in the first quarter 2016 Strong telecom and off shore power install revenues in third quarte
Slide 27: Utilities: ANG
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Utilities: ANG 26 Net Income: $0.03m versus $0.07m for the second quarter 2016 Adjusted EBITDA: $0.73m versus $0.54m in the second quarter 2016 Delivered 937,000 Gasoline Gallon Equivalents (GGEs) in the third quarter versus 848,000 GGEs in the second quar
Slide 28: Telecommunications: PTGi-ICS
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Telecommunications: PTGi-ICS 27 Strong quarterly results due to continued growth in wholesale traffic volumes, in part delivered by the changing regulatory environment throughout the European market combined with the religious holidays in the Middle East r
Slide 29: Insurance: Continental Insurance Group
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Insurance: Continental Insurance Group 28 Continental Insurance, Inc. (CII) serves as a platform for run-off LTC books of business and for acquiring additional run-off LTC businesses – Net Loss: ($2.2)m versus ($2.3)m for the second quarter 2016 – Adjusted
Slide 30: Pansend Life Sciences
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Pansend Life Sciences 29 HC2’s Life Sciences Segment Is Focused on the Development of Innovative Healthcare Technologies and Products 80% equity ownership of company focused on immunotherapy; Oncolytic virotherapy for treatment of solid cancer tumors Fou
Slide 31: Other Non-Core Investments
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Other Non-Core Investments 30 Nervve Provider of video and image search technology for information extraction and powerful analytics applications Dusenberry Martin Racing Owns worldwide exclusive licensing rights to NASCAR® simulation style racing titles
Slide 32: Notable Financial Updates
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Notable Financial Updates 31 Collateral Coverage Ratio at quarter end exceeded 2.0x $93.0 million in Consolidated Cash (excluding Insurance segment) – $29.4 million Corporate Cash Cumulative outstanding value of Preferred Equity reduced to $30.0 millio
Slide 33: Appendix: Reconciliations
Appendix: Reconciliations
Slide 34: Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income, Q3 2016
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA of HC2 to U.S. GAAP Net Income (Loss) Three Months Ended September 30, 2016 33 (in thousands) (*) Includes depreciation adjustments from purchase accounting. (**) Excludes net loss from Insurance segment in the amount of $2.
Slide 35: Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income, Q3 2015
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA of HC2 to U.S. GAAP Net Income (Loss) Three Months Ended September 30, 2015 34 (in thousands) (*) Includes depreciation adjustments from purchase accounting. (**) Excludes net loss from Insurance segment in the amount of $0.
Slide 36: Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income, Q2 2016
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA of HC2 to U.S. GAAP Net Income (Loss) Three Months Ended June 30, 2016 35 (in thousands) (**) Excludes net loss from Insurance segment in the amount of $2.3 million for the three months ended June 30, 2016. Three Months Ende
Slide 37: Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income, Q1 2016
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA of HC2 to U.S. GAAP Net Income (Loss) Three Months Ended March 31, 2016 36 (in thousands) Three Months Ended March 31, 2016 Core Operating Early Stage & Other Non- operating Corporate HC2** Manufactu ring Marine Services Tel
Slide 38: Reconciliation of Insurance AOI to U.S. GAAP Net Income (Loss)
© 2 0 1 6 H C 2 H O L D I N G S , I N C . Reconciliation of Insurance AOI to U.S. GAAP Net Income (Loss) Three Months Ended September 30, June 30 and March 31, 2016 37 The calculation of Insurance Net Loss has been revised to exclude adjustments for intercompany eliminations as they are not consider
Slide 39: Appendix: Biographies
Appendix: Biographies
Slide 40: HC2 Executive Management Team: Philip A. Falcone
© 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Executive Management Team 39 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 41: HC2 Executive Management Team: Hladek and Sena
© 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Executive Management Team 40 Keith M. Hladek Chief Operating Officer of HC2 since May 2014 Chief Financial Officer and Chief Operating Officer of Harbinger Capital since September 2009 From October 2009 to December 2014, served as a director of HRG
Slide 42: HC2 Executive Management Team: Voigt and Robinson
© 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Executive Management Team 41 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 2013 Served as Managing Director on the High
Slide 43: HC2 Executive Management Team: Herbst and Backman
© 2 0 1 6 H C 2 H O L D I N G S , I N C . HC2 Executive Management Team 42 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 44: HC2 Holdings, Inc. Investor Relations Contact
HC2 HOLDINGS, INC. © HC2 Holdings, Inc. 2016 A n d r e w G . B a c k m a n • i r @ h c 2 . c om • 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 November 2016