Innovate Corp. · NYSE:VATE
Innovate — HC2 Holdings — Investor Presentation (March 2017)
46 slides from Innovate's investor presentation, Mar 9, 2017
Slide 1: Corporate Overview March 2017
HC2 HOLDINGS, INC. © HC2 Holdings, Inc. 2017 Corporate Overview March 2017
Slide 2: Special Note Regarding Forward-Looking Statements
© 2 0 1 7 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: Who We Are, What We Do
© 2 0 1 7 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 Di v ers i f i ed h o l d i n g c omp a n y Pe r man ent c a p i ta l S t r a teg ic a n d f i n a n c i a l p a r tne r Te a m o f v i s ion ar ie s B u y a n d b u i l d c omp a n ies E x e cute b
Slide 5: Investment Highlights: Why Invest in HC2?
© 2 0 1 7 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 7 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 7 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 Executive Leadership Team
© 2 0 1 7 H C 2 H O L D I N G S , I N C . HC2 Executive Leadership Team 7 Philip A. Falcone Chairman of the Board, Chief Executive Officer and President Michael J. Sena Chief Financial Officer Paul K. Voigt Senior Managing Director Paul L. Robinson Chief Legal Officer & Corporate Secretary Suzi Raft
Slide 9: HC2 Stock Performance & Timeline
© 2 0 1 7 H C 2 H O L D I N G S , I N C . HC2 Stock Performance & Timeline 8 Note: As a result of the Schuff Tender, HC2’s ownership increased to 89% and subsequently through open market share purchases increased to 92%. $- $2 $4 $6 $8 $10 $12 $14 2014 5/29/2014 HC2 Acquires Schuff (65%) HC2 Acquire
Slide 10: Segment Detail
Segment Detail
Slide 11: DBM Global Inc. (Schuff Intl.) – Company Snapshot
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Sacramento Kings Arena 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 effi
Slide 12: DBM Global Inc. (Schuff Intl.) – Core Activities
© 2 0 1 7 H C 2 H O L D I N G S , I N C . DBM Global Inc. (Schuff Intl.) – Company Snapshot 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 smalle
Slide 13: Global Marine Systems (GMSL) – Company Snapshot
© 2 0 1 7 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 – Maintenance and Installation
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Global Marine Systems (GMSL) – Company Snapshot 13 Maintenance Installation Core Activities 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
Slide 15: American Natural Gas – Company Snapshot
© 2 0 1 7 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 63% In-depth experience in the natural gas
Slide 16: PTGi International Carrier Services
© 2 0 1 7 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 7 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 – Platform Snapshot
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Pansend Life Sciences – Platform Snapshot 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
Slide 19: Nervve
© 2 0 1 7 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 7 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: 4Q/FY16 Highlights / Select Financial Data
Appendix: 4Q/FY16 Highlights / Select Financial Data
Slide 22: 4Q16 and FY16 Highlights and Recent Developments
© 2 0 1 7 H C 2 H O L D I N G S , I N C . 4Q16 and FY16 Highlights and Recent Developments 21 Solid fourth quarter results again highlight the unique value HC2 brings to the market with our diverse, uncorrelated industry holdings – Construction: Continued margin improvement; Record backlog and dea
Slide 23: HC2 Segment Overview
© 2 0 1 7 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 FY16 Revenue: $502.7m FY16 Adjusted EBITDA: $59.9m Record Backlog $503m Solid long-term pipeline with additional [~$300-$400] million in potential project value that c
Slide 24: Segment Financial Summary
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Segment Financial Summary 23 Adjusted EBITDA for Core Operating Subsidiaries $37.9m for Q4 2016 All data as of December 31, 2016 Construction formerly Manufacturing; Energy formerly Utilities. ($m) FY 2016 Q4 2016 Q3 2016 Q2 2016 Q1 2016 Adjusted EBITDA Core
Slide 25: Construction: DBM Global Inc. (Schuff)
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Construction: DBM Global Inc. (Schuff) 24 4Q16 Net Income: $7.3m; FY16 Net Income: $28.0m versus $24.5m in FY15 4Q16 Adjusted EBITDA: $20.7m; FY16 Adjusted EBITDA: $59.9m versus $52.0m in FY15 Continued strong gross margins due to better than bid performance
Slide 26: Marine Services: GMSL
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Marine Services: GMSL 25 S. B. Submarine Systems (SBSS – China Telecom) – 49% ownership 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
Slide 27: Energy: ANG Recent Performance
© 2 0 1 7 H C 2 H O L D I N G S , I N C . -$0.4 $0.9 $2.5 $1.8 $6.8 $6.4 2014A 2015A 2016A Recent Performance Adjusted EBITDA Revenue Energy: ANG 26 All data as of December 31, 2016. Energy formerly Utilities. 4Q16 Net Loss: ($0.06)m; FY16 Net Income: $0.01m versus ($0.27)m in FY15 4Q16 Adjusted EBI
Slide 28: Telecommunications: PTGi-ICS
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Telecommunications: PTGi-ICS 27 $(1.2) $2.0 $5.6 $162.0 $460.4 $735.0 2014A 2015A 2016A Recent Performance Adjusted EBITDA Revenue All data as of December 31, 2016. Strong quarterly results again due to continued growth in wholesale traffic volumes, in par
Slide 29: Insurance: Continental Insurance Group
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Insurance: Continental Insurance Group 28 Note: Reconciliation of Adjusted Operating Income to U.S. GAAP Net Income in appendix. All data as of December 31, 2016. Continental Insurance, Inc. (CII) serves as a platform for run-off LTC books of business and
Slide 30: Pansend Life Sciences
© 2 0 1 7 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: Notable Financial Updates
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Notable Financial Updates 30 Collateral Coverage Ratio at quarter end exceeded 2.0x $90.9 million in Consolidated Cash (excluding Insurance segment) – $21.7 million Corporate Cash $41.4 million in Tax Share and Dividends received in 2016 – Subsequent t
Slide 32: Appendix: Reconciliations
Appendix: Reconciliations
Slide 33: Reconciliation of Adjusted EBITDA – Twelve Months Ended December 31, 2016
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (Loss) Twelve Months Ended December 31, 2016 32 (in thousands) Construction Marine Services Telecom Energy Life Sciences Other and Eliminations Net Income (loss) attributable to HC2 Holdings, Inc. $ (
Slide 34: Reconciliation of Adjusted EBITDA – Twelve Months Ended December 31, 2015
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (Loss) Twelve Months Ended December 31, 2015 33 (in thousands) Construction Marine Services Telecom Energy Life Sciences Other and Eliminations Net Income (loss) attributable to HC2 Holdings, Inc. $ (
Slide 35: Reconciliation of Adjusted EBITDA – Twelve Months Ended December 31, 2014
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (Loss) Twelve Months Ended December 31, 2014 34 (in thousands) Construction Marine Services Telecom Energy Total Life Sciences Other Total As Reported Net income (loss) (14,391)$ 19,278$ 17,718$ (1,06
Slide 36: Reconciliation of Adjusted EBITDA – Three Months Ended December 31, 2016
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (Loss) Three Months Ended December 31, 2016 35 (in thousands) Construction Marine Services Telecom Energy Life Sciences Other and Eliminations Net Income (loss) attributable to HC2 Holdings, Inc. $ (6
Slide 37: Reconciliation of Adjusted EBITDA – Three Months Ended September 30, 2016
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (Loss) Three Months Ended September 30, 2016 36 (in thousands) Construction Marine Services Telecom Energy Life Sciences Other and Eliminations Net Income (loss) attributable to HC2 Holdings, Inc. $ (
Slide 38: Reconciliation of Adjusted EBITDA – Three Months Ended June 30, 2016
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (Loss) Three Months Ended June 30, 2016 37 (in thousands) Construction Marine Services Telecom Energy Life Sciences Other and Eliminations Net Income (loss) attributable to HC2 Holdings, Inc. $ 1,935
Slide 39: Reconciliation of Adjusted EBITDA – Three Months Ended March 31, 2016
© 2 0 1 7 H C 2 H O L D I N G S , I N C . Reconciliation of Adjusted EBITDA to U.S. GAAP Net Income (Loss) Three Months Ended March 31, 2016 38 (in thousands) Construction Marine Services Telecom Energy Life Sciences Other and Eliminations Net Income (loss) attributable to HC2 Holdings, Inc. $ (30,4
Slide 40: Reconciliation of Insurance AOI to U.S. GAAP Net Income (Loss)
© 2 0 1 7 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) Quarterly and Full Year 2016 39 The calculation of Insurance Net Loss has been revised to exclude adjustments for intercompany eliminations as they are not considered relevant in evaluating the p
Slide 41: Appendix: Biographies
Appendix: Biographies
Slide 42: HC2 Executive Leadership Team – Philip A. Falcone
© 2 0 1 7 H C 2 H O L D I N G S , I N C . HC2 Executive Leadership Team 41 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 43: HC2 Executive Leadership Team – Michael J. Sena, Paul K. Voigt
© 2 0 1 7 H C 2 H O L D I N G S , I N C . HC2 Executive Leadership Team 42 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 44: HC2 Executive Leadership Team – Paul L. Robinson, Andrew G. Backman
© 2 0 1 7 H C 2 H O L D I N G S , I N C . HC2 Executive Leadership Team 43 Paul L. Robinson Chief Legal Officer & Corporate Secretary of HC2 since March 2016 Served as Executive Vice President, Chief Legal Officer and Corporate Secretary for SEACOR Holdings Inc. for nearly nine years prior to HC
Slide 45: HC2 Executive Leadership Team – Suzi Raftery Herbst
© 2 0 1 7 H C 2 H O L D I N G S , I N C . HC2 Executive Leadership Team 44 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 46: Investor Relations Contact
HC2 HOLDINGS, INC. © HC2 Holdings, Inc. 2017 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 March 2017