Innovate Corp. · NYSE:VATE

Innovate — HC2 Holdings — Investor Presentation (October 2018)

43 slides from Innovate's investor presentation, Oct 22, 2018

  1. Slide 1: HC2 Holdings, Inc. Investor Presentation

    HC2 HOLDINGS, INC. Investor Presentation © HC2 Holdings, Inc. 2018 October 2018

  2. Slide 2: Company Overview

    Company Overview

  3. Slide 3: 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

  4. Slide 4: 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  Active management methodology

  5. Slide 5: 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

  6. Slide 6: 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  Inte

  7. Slide 7: Significant Value Creation

    Significant Value Creation  Since inception in 2014, HC2: – Increased market capitalization from ~$46 million to ~$240 million and increased revenues from ~$230 million to ~$1.6 billion – Received ~$200 million in total dividends, distributions, tax share and asset management fees from subsidiaries

  8. Slide 8: Recent Developments

    Recent Developments Overview:  DBM Global  DBM Global recently announced the pending acquisition of GrayWolf Industrial for a purchase price of $135.0 million at ~6.9x EBITDA multiple. Benefits of the acquisition include:  Strategic entry into the heavy maintenance and repair industry, providing

  9. Slide 9: Preliminary Third Quarter 2018 Financial Highlights

    Preliminary Third Quarter 2018 Financial Highlights* Overview:  Net Revenue  We expect to record net revenue for the third quarter of 2018 consistent with our previously reported net revenue for the second quarter of 2018  Our net revenue attributable to our Core Operating Subsidiaries for the th

  10. Slide 10: Segment Detail

    Segment Detail

  11. Slide 11: 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

  12. Slide 12: 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

  13. Slide 13: DBM Global Historical Financial Summary

    DBM Global Historical Financial Summary ($USD millions) Revenue Adjusted EBITDA $700.0 $663.2 $70.0 20.0% $59.9 18.0% $600.0 $579.0 $60.0 $57.4 16.0% $502.7 $51.6 $500.0 $50.0 14.0% 11.9% 12.0% $400.0 $40.0 8.9% 8.7% 10.0% $300.0 $30.0 8.0% $200.0 $20.0 6.0% 4.0% $100.0 $10.0 2.0% $0.0 $0.0 0.0% 201

  14. Slide 14: GrayWolf Industrial Inc.

    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

  15. 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

  16. 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

  17. Slide 17: Maintenance, Wind Farm, Trenching

    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

  18. Slide 18: Historical Financial Summary

    Historical Financial Summary ($USD millions) Revenue Adjusted EBITDA $194.0 $200.0 $60.0 60.0% $169.5 $161.9 $59.8 $50.0 50.0% $44.0 $150.0 $42.0 $37.0 $51.1 $41.2 $40.0 40.0% $42.4 $38.4 $27.2 $100.0 $30.0 25.4% 26.0% 30.0% 21.6% $20.0 20.0% $50.0 $86.5 $91.2 $91.8 $10.0 10.0% $0.0 $0.0 0.0% 2016 2

  19. Slide 19: American Natural Gas

    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

  20. Slide 20: 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

  21. Slide 21: Continental Insurance Group

    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

  22. Slide 22: Pansend Life Sciences

    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

  23. Slide 23: 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: 13  HC2’s broadca

  24. Slide 24: Financial Overview

    Financial Overview

  25. Slide 25: Segment Financial Summary

    Segment Financial Summary ($m) Q2 2018 Q1 2018 FY 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY 2016 Core Operating Subsidiaries Construction $15.5 $10.0 $51.6 $15.1 $16.8 $11.1 $8.6 $59.9 Marine Services 20.4 (2.4) 44.0 15.3 8.8 3.6 16.3 41.2 Energy 3.0 0.7 2.9 0.4 0.3 1.0 1.2 2.5 Telecom 1.3 1.1 6.9 1.6

  26. Slide 26: Historical Consolidated Revenue and Adjusted EBITDA

    Historical Consolidated Revenue and Adjusted EBITDA ($USD millions) Core Operating Revenue Core Operating Adjusted EBITDA(1) $1,700 $1,619.2 $120 $19.6 $109.1 $109.2 $1,466.8 $105.5 $1,500 $194.0 $2.5 $4.3 $1,406.0 $16.4 $2.9 $6.4 $100 $169.5 $1,300 $161.9 $41.2 $42.0 $80 $44.0 $1,100 $663.2 $502.7

  27. Slide 27: Appendix

    Appendix:

  28. Slide 28: Free Cash Flow Generation

    Free Cash Flow Generation ($USD millions) LTM 6/30/18 Core Operating Adj. EBITDA $ 109.2 Less: Non-Operating Corporate Adj. EBITDA 29.0 Less: DBM Global Maintenance Capex 2.2 Less: GMSL Maintenance Capex 12.0 Less: ANG Maintenance Capex 1.5 Less: Broadcasting Maintenance Capex 0.1 Less: HC2 Capex 0.

  29. Slide 29: Reconciliation of Net Revenue

    Reconciliation of Net Revenue Last Twelve Months Ended June 30, 2018 (in thousands) Net revenue Twelve Months Ended Six Months Ended Latest Twelve Months December 31, June 30, June 30, June 30, 2017 2017 2018 2018 Construction $ 578,989 $ 251,628 $ 335,851 $ 663,212 Marine Services 169,453 80,565 10

  30. Slide 30: Reconciliation of Adjusted EBITDA

    Reconciliation of Adjusted EBITDA Last Twelve Months Ended June 30, 2018 (in thousands) Adjusted EBITDA Twelve Months Ended Six Months Ended Latest Twelve Months December 31, June 30, June 30, September 30, 2017 2017 2018 2017 Construction $ 51,588 $ 19,688 $ 25,502 $ 57,402 Marine Services 44,027 1

  31. Slide 31: 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

  32. Slide 32: 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

  33. Slide 33: 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 thousands) 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 Cor

  34. Slide 34: Reconciliation of Net Income to Adjusted EBITDA, Six Months Ended June 30, 2017

    Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA Six Months Ended June 30, 2017 (in thousands) Six Months Ended June 30, 2017 Core Operating Subsidiaries Early Stage & Other Non- Life Other & operating Total HC2 Construction Marine Energy Telecom Sciences Broadcasting Elimination Cor

  35. Slide 35: 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

  36. Slide 36: Reconciliation of Net Income to Adjusted EBITDA, Three Months Ended December 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

  37. Slide 37: Reconciliation of Net Income to Adjusted EBITDA, Three Months Ended September 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- operating Total HC2 Life Other & Corporate Construction Marine Energy Telecom Sciences Broa

  38. Slide 38: 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

  39. Slide 39: 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

  40. Slide 40: 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

  41. Slide 41: 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 Q2 2018 Q1 2018 FY 2017 Q4 2017 Q3 2017 Q2 2017 Q1 2017 FY 2016 Q4 2016 Net Income (loss) - Insurance segment $ 1,810 $ 565 $ 1,245 $ 7

  42. Slide 42: Reconciliation of Net Income to Normalized Adjusted EBITDA – GrayWolf

    Reconciliation of Net Income (Loss) to Normalized Adjusted EBITDA Full Year Ended December 31, 2017 – GrayWolf (in thousands) GrayWolf Normalized Adjusted EBITDA for the Year Ended December 31, 2017 GrayWolf (1) Net Income $8,570 Adjustments to reconcile net income (loss) to Adjusted EBITDA: Depreci

  43. Slide 43: HC2 Holdings, Inc. 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 October 2018

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