HCHC - Earnings call transcript Q2 2020

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Operator

Greetings. Welcome to HC2 Holdings, Inc.

Second Quarter 2020 Earnings Call. [Operator Instructions]. I will now turn the conference over to your host, Garrett Edson of ICR. you. Thank

begin. may You

Garrett Edson

of good webcast to like XXXX review today in afternoon's Relations Interim With and Chief Investor Sena, for Officer. the our Financial Earnings thank website joining me This CEO Barr, Wayne us HCX's is are and afternoon. you, Mike to HCX's being We'd call you Results. HCX; on Thank section. Second HCX.com Quarter at

HCX's approximately can website, to you along our be follow is section. accessed code the which replay The will on after X-XXX-XXX-XXXX in We this also invite confirmation replay call. of A again, webcast with for IR X the call presentation, the XXXXXXXX. the with dial-in of be hour available

our any HCX involve concerning The that cause the could provisions certain like factors this business, certain discussed and and be that from pursuant results to and remind operations Before and call, condition statements. uncertainties. the with our earnings fully forward-looking among made I of and assumptions novel to historical forward-looking turn actual are filings Act everyone assumptions pandemic Private factors SEC. HCX's harbor risk and statements of I'd call risks, on government COVID-XX, facts, the and the in Securities to pandemic are Wayne, assumptions coronavirus, over safe of cause risk related in the or not impact these Reform are which expected being responses statements related more materially will are statements the others, that these could differences and differ such to to subject Litigation of potential the including, the results COVID-XX whether statements, otherwise, XXXX, forward-looking financial the of or These to forward-looking

this or to HCX this our revise statements update any in intent these forward-looking as and the as made of as call forward-looking obligation expressly date disclaims the in SEC law. addition, In reports. by only statements call except are of are conference included stated or required

including information measures will our non-GAAP press constitute adjusted management insurance not about is be information SEC company's call, or operating financial in limited otherwise website. the reminder, comparable measures, will income. GAAP available the that rules, prior earnings provide these consent. non-GAAP also adjusted with be cannot the on operating this the as available to adjusted finally, insurance, reconciliations Certain the which without most and During measures income And EBITDA, certain disclosed required recent is release, call most pretax such as to, but a duplicated taped under

Now I'd Wayne? like the to Barr. over Interim call HCX's Wayne turn to CEO,

Wayne Barr

to of Thanks, thanks you to to times Garrett, work continue tirelessly portfolio joining special challenging afternoon, hope also remain you us, serve want our across all all our your customers these who our employees at I to during to good of of for Thank HCX and give and safe businesses. our everyone. families very healthy. we and subsidiaries and and continue

appreciated. Your efforts greatly are

subsidiaries. the of director entire introduce management been I've additional since team corporate CEO, well of inception role on of HCX's opportunity interim myself. Let the me a as catch Since company. Board all quickly the I've our with to taking as up on the our had

address regarding a refinancing, discuss quarter of for second for some which business, is our and HCX's role successful completing We success. call, walk today's contribute have us and with efforts highlights, our up working a business forward team to to I key to the that our to value, long-term through to COVID and has look On continuing success. great continued unlock impact the setting strategies this significant potential long-term and in I'll

questions. Our second on quarter we'll some and performance, take our CFO, details then more provide Mike Sena, will then

the which well, That formerly to in ongoing further the helping in Southeast the by second additional Our renamed the the said, last number bright country Energy for Credit continues aided year. fueling Energy, prior acquired were stage , debt a there quarter are American we with known the Fuels tripling clearly Alternative Starting as to our [indiscernible] than overhead the COVID-XX adjusted set perform to was more which execute year segment, of HCX the compared our the U.S., Natural pandemic. quarter, by was on recently and was EBITDA, impacted XX period, its reduction. spots and of very as stations priorities Tax

of conditions the renewal strengthened have We the fueling [indiscernible] And positioning the macroeconomic been its model recent performance. acquisitions, and business in significantly [indiscernible] marketplace. station favoring very the AFTC with pleased have

over Second, past few years. EBITDA of $XX first more in over further XXXX million, evidence adjusted the our we construction generated resilient performance our doubling construction have business the and quarter than of providing built-in the quarter segment

investment $XX our of valuation the at at addition, $XX further gets from In commercialization. equity April, X post-money Life technologies in million as additional a Sciences million our received company's fund efforts Huadong an to it segment closer to

Huadong China Pacific under RX countries. devices other distribution and skin and lightning will reminder, products Asia agreement, a exclusive As an distribute in Greater

notes XX% adapted current these X completed million continue we now our reduced are sale net proceeds aiding reduce million, $XX Since as moving work management possible XX% allowing with years possible our further of closely by the to subsidiaries principal and outstanding still best to the $XX we and ensure a XX% of every also to the on of in in put option COVID-XX savings as to XX.X% notes is ownership approximately $XXX on With to annual approximately to forward. our the interest million. while that respect XXXX, realize We by exercisable to beginning of circumstances HCX, utilize impact on had them the the principal HMN, in retaining the amount in teams the us have has way. we've

provide GrayWolf, of lower continues work and affected COVID. approximately delay have be construction, At awards. to been to pandemic, want project business, in in awards and million awards COVID a delays evolving we seen enter second or to opt certain Most has new capital the maintenance situation which pre-COVID $XX we received project more update routine cancel the repair of And quarter either cause $XXX return that levels. new to project the prices defer Industrial DBM million, customers level adjusted new backlog the has Services and to substantial businesses As maintain or and those oil of active to pace we to work continue detailed by most in the gas projects. yet while see impacted on net a to X-month new continued some to of disruption and DBM's

operational deferral and undertaking the out-for-bid including the the it is targeted pressure maintaining for in Despite necessary applicable the safety call, active while projects. is also continues impact As industry-wide, we and actions also COVID on accounts to customers. compliance believe the that on these to this protect challenging term. pandemic by costs and cost period the and To certain employees. and spending receivable industrial continues a been effects XXXX, and all the guidelines posed potential DBM ensuring company and the credit be and costs, our in delays to broadcasting, noted in health There effects active the last in Rustin avoiding done as on may awards, company The expect of steps of compared year. with business, remain and potential DBM's of and to team construction's both last minimal have safety the mitigate of new slips project nicely construction which the the If to increased once advertising long-term near margins. putting the the potential markets, some remains an in processes line of efficiencies exceptional to segment's pandemic-related DBM further have in adjusted to collections, prioritizing disruptions have impact rebound a additional resulted we reductions. these positioned EBITDA of and has the adapting commercial decline job subside. top impact through we on high-quality effective challenges confident At navigating their of very

the benefits believe we our approval. ongoing distribution broad thus be timing platform continue HCX, deferred Meanwhile, expected commercial station division, given on and country. remains RX's of acceleration said, had XXXX. toward also broadcast MediBeacon's our opportunity from significant a across the of the group agreements believe geographic of continue cord That progress the revenue expected to Sciences and will cable larger to regulatory launch recent at impact also far minimal to share for has Life cutting COVID our We reach our the growth

third quarter, or launch. advance issues commence fourth COVID-related In its process to the preorder later the X are early fact, plans in any quarter of XXXX barring in

MediBeacon currently and As fully a capital RX activities we and anticipate investment need for do are not further ongoing the funded as from reminder, HCX. for a both result,

As some the half to of our XXXX, impact there we be look COVID. additional will back at results due to

been To of of to significantly past evaluating team structure are have position couple long-term over unlock near-term businesses comprehensively clear, portfolio end, for strategic and improve priorities way capital and company our the Board success. Holdco reduced our our determine best that However, and the to the cost. management months, the value our

to to execute XX.X% refinancing first will notes. goal successful aware We the is stage the This our create long-term value. keenly are set that major near-term on of the

have the appropriate outcome at the the a our a transaction XXXX and We great notes concerns, completion made million, progress and nearly far challenging regulatory HMN thanks in a these by $XXX by reducing given Global Marine to testament to of to principle thus strong an valuation. HCX ability the complete for sales, of

for the lies on Marine With us requires for groundwork to to couple laying is focus us, behind go-to-market properly next when our positioning some prepare the what we additional over best immediate HCX This of refinance. now months ahead. sale

that continue structure balance to our if our businesses the are and we sheet. more successful of and to our or all First, improve determine opportunities one of pursue capital improvement alternatives we can ensure to there strategic evaluate

discussions announced previously potential we acquirer have the away with of As from we communicated, the that Insurance. Continental stepped exclusive

again with this to options all for are business reviewing of respect our We Continental, our including the of reorganize best to actively stakeholders. how benefit

this which the simplify the any from refinancing. net options available The asset that continue time. we carrier at of to to also business of overall our all meet further in are under would our on would expect potential notes services, not an to would we conditions amount sale structure, optimize qualify PTGI as proceeds through Last either we telecom our XX.X% but announced to strategic for capital sale We were likely indenture. DBM advance month, comment further subsidiary, alternatives help a us our process unable to further seeking explore

to utilize capital expect result, proceeds a execute would for a on net working transaction As should we we there, purposes.

at level, October. to Finally, we at diligently the are segment's refinance indebtedness working due in the broadcasting, is Holdco which

with We that a and strong in coming an discussions the to relationship expect have announcement currently and lenders with them maturity extending on be are to able our the to make in end weeks. close

reduce the notes. of we noncore will stations refinancing, sell several to look part on principle As these to the

However, take there advantage of our stations, of intact will platform further XXX the our well cutting broadcasting majority it opportunities remain with out cord network to over vast remains as accelerates. of and positioned

is our to In HCX's that our options if unlocked indebtedness. our well be benefit can efforts in respect there determine as value addition, holdings refinance we to HMN to its other to evaluate continue retained with to as interest additional

the of structure position we trying new Board a last reconstitution this segments our operating annual opportunities long-term HCX to to deck no move ongoing forward and X unturned as of stone continued in our has with hands and members presented to for efforts us are With and been is success. of on our level all evaluation cost it reduce our sustained our meeting goal, Board there. achieve mid-May to company allow the The leave corporate week, at coupled by addition

we efforts embark corporate The and are comprehensive more our undertaking a costs HCX will that rationalized. liquidity of results of We upon be these attractive our and continued other refinancing. expenses make improve review can when to identify

York NAV-based a to are expect our XX% from we reduce this substantially realize space cost reduced currently for real rationalizing New to XX% million we the of of broadcasting structure to the At Once plan with completed, in its business, X will point, XXXX, with current corporate the estate historic more floor. cash lease $X savings of that working While it replacing expect executive We've have City a the space away compensation the consolidating significantly XXXX. made progress and downsizing in we floors annualized be expense needs. we still traditional moving from recently of from from our and our at savings our single will level. revised already current plan through office on logistics headquarters

get the I am and CEO, hands in was put While I things deck all interim here. on place accomplished, it's to

We all floor. of steps We've already taking our necessary the are for laser-focused consolidated onto refinancing. and successful one a employees

the terminated management HCP. agreement have We with services

We at extract looking the of a greatest stages are the portfolio. to extending at value in indebtedness final ways broadcasting, of while all from the variety the

been have act effectively, We great our able and team. to to quickly thanks

Our team known quickly the that come and hit and and ground for each to running. I other enabled have years, together us has

future we are near to the beyond. and As navigate strengthened management to look ahead, and pleased with are to need the aligned what we Board pandemic, team through in firmly we achieve that and while the refreshed we continue respect

getting We to successful creation. are generate done HCX soon as Holdco the long-term refinancing position level corporate the and outcome laser-focused a for value at expenses possible on as a and reducing

our positioned full to We the paths sheet discuss With businesses. ensuring to value be near we in to of our multiple our potential recognize the of CFO, maximize financial value will that, I'll the best to will call long-term for the will balance term, and highlights. continue while strengthen who turn some that executing Mike do opportunity. see upside pursue the Sena, the and By not we over

Michael Sena

Thank you, Wayne.

as the segment, -- our as segments $XX.X Let's stockholders $XXX eliminations, $X.XX of Construction $X as Telecommunications in from total year to period for revenues attributable revenue revenue the of year partially was income In due preferred in or to down in the Broadcasting Consolidated million performance. prior quarter second quarter XXXX compared increase second second Insurance of primarily XXXX Telecommunications, well for from income revenue and normal participating prior lower by $X.XX the million was common period. review share $XXX.X quarter an the revenue as the pressures. and compared or particular, million, were per million was net net to industry to Net variability Energy. share and net offset per

was venture. XX% more operating income to Construction, contributing at adjusted due venture which the EBITDA equity joint joint and The million net quarter which quarter second compared decline compared increase in primarily excludes core at period to contributions Energy period was Construction EBITDA, of compared from difference to Telecom. to Telecom to segment was Life segment, year project segment, from At HMN EBITDA the adjusted $XX.X the prior attributable in our per the from in by Insurance products. ramp Total $XX.X company's adjusted as profits of year income to the the was were turnkey The subsidiaries, Also other operations share. reduced EBITDA increased prior its due improvements million $XX.X losses the $XX.X lower lower HCX's adjusted the our which period comprises in of RX, and now than the driven offset in spending was includes our HMN second of by $X.XX due prior achieve prior Sciences year efforts to the work. of income from to Second segments, million year up Other the timing piece segment from the million comparable XXXX to Energy which in lower commercialization was an the period. XXXX the for quarter EBITDA in of continuing adjusted of XXXX period

take the At quarter recorded second of minutes adjusted $XX.X a segments. $XX.X our of million of the a in a to Construction, year in more compared million for of couple into prior go bit EBITDA XXXX just few we Let's to detail period.

lower XXXX by quarter with timing and project due prices. and COVID, Second contribution the repair results work commercial maintenance work, gas project from were oil depressed of impacted primarily and under industrial execution to combined

series with to $X.X of has other DBM incremental distance social employees of steps mentioned, resulted measures actions Wayne guidelines. additional have in comply safety attributable taken to that cleaning, and costs maintaining a As appropriate taken million pandemic-related in by

these are however, -- excluded to have adjusted as specifically related these they cash specific costs. at COVID-XX, to We they costs as arrive are EBITDA

XXXX, As signed takes $XXX into mainly significant awarded reported consistent which but consideration XX, $XXX of contracts adjusted not which backlog of June smaller projects with and million, to backlog, was million, construction was yet visibility. medium-sized provide

in second This prior AFTC, million $X.X not to quarter recorded we adjusted by AMG's the Fuels an beginning backlog pandemic While the projects or $XX we in impact a the for At quarter are future. some the as second we DBM said, projects XX yet as still to also we $X.X adjusted XX, timing of effect the Tax continued is through evidenced Energy, a the release, awards to quarter million quarter, Credit, year approved compared in quarter believe full the Alternative we end signed full as into significant saw renewal period. reported unawarded December the to of segment in amount stations for to in EBITDA adjusted Construction year result, of the as have XXXX. million continue year the from EBITDA net the XXXX at acquisition benefit which by quarter. of foreseeable well new in had in of That the be in been on to XXXX of AFTC below And XXXX. The of expect the continue will of XXXX. for of CNG see the EBITDA second

gasoline resulting we for conversion than on multiple gross a in rate was of activity with $XX.X credit, claims $X.XX receive income impacts typical and renewed unfavorable CNG -- additional compressed operating the would year in continues million year from to claims tax is years activity developments nonrecurring for natural equals Insurance stations. the a linear forecast the per favorable which reserves AOI forward, the an and as the our expenses is reduced in the fleets due which for current mean approved quarter as it optimistic the for prior equivalent is headcount that activity is not. activity, such, to that prior while Meanwhile, we quarter. Claims of equates nonfavorable only on the and CNG, AFTC time, normal. And million to also premium and support rather larger incurred to segment's over pretax compared claims generated but to to reserve of continue adjusted related increases for our Hill. the purposes The incentive support advance, claims specifically gallon The in is activity second period. primarily the for pretax to larger As customers reserves driven actual is by remain shared favorable periods our period, $XX volumes and to fleet increases of at Capital them gas Insurance, X-year year reminder, recognized growth. current basis, on in greater

XXXX, capital. HCX's consolidated the XX, the estimated billion, segment. end had $XXX insurance Insurance assets investments and investments an includes June and GAAP of quarter, cash At HCX equivalents adjusted of cash As with which had billion, of of and invested total $X.X associated and billion, $X.X of assets cash, cash of million total $X.X

the $XXX,XXX plans the CEO during transition. second million. decrease the quarter by bonus from cash consolidated the year for resulted expenses Excluding XXXX some the largely Corporate bonus to offset quarter prior period expense of $XX.X $X.X was in changes in as lower from million, onetime related and was were the Insurance, quarter a expenses

level, of on noted significantly Wayne in at overhead remarks, the responsibly pandemic. in and continue the Holdco particularly face we the his reducing focus As to

another redemption million. During $XX of reducing the our XX.X% we completed second principal notes, quarter, partial note our another by

with our the The of in there is us $XX $XXX stood beginning from million. XX% over outstanding XXXX. aggregate just As where annualized June decrease XX, a at of principal of on notes, million outstanding interest of reduction it principal provides savings XX.X%

liquidity our first faced half Our and significant the XXXX primary challenges refinancing. is on the world have of focus The as during of we and company remainder traverse the XXXX.

during Our well have stood times. businesses up these

we impacts and of upstream However, the cash. COVID to have our begun factors feel on unanticipated various costs included

other focused PTGI, options are This earlier, we to right such, interest. generate Wayne across with with HMN as and along the potential pursuing on purposes. our includes As portfolio our meaningful on strategies cash, on liquidity respect touched transactions our for strategic to announcement

have play in we various While these and to are our the $XX subsidiaries the into remain liquidity portfolio. able our execute ability XX can Operator? we position, near-term and to million. to keenly pursuing unlock our in level factors We in our internal liquidity of holding company on comfortable excess on I'd initiatives be such to needs we over we next measures Based provide will expense debt months. also open confident corporate the within to overall on measures, now our the reduce meet call value questions. strategic put from and plans, feel liquidity focused HCX like for further reductions we up

Operator

[Operator Instructions].

first with Our Riley. from Sarkis is B. question Sherbetchyan

Sarkis Sherbetchyan

Just start. to

trying guess I point does management segments strategic clarity some get forward? assets to core from as HCX's suppose, Or I what board So operations this today? on the or view and to

Wayne Barr

Wayne. Sure. Sarkis, it's

making -- of make as we'll made, determinations. soon of our as And is about a I be to to getting that of uniting in different commitment the -- core the we're and views kind just core, decisions those paths kind along forward, to look assets but at as is the to what be kind as the we and kind reduce all debt those think the obviously, that be corporate trying announcing you. approaches obviously been to and think are So continuing what the and management of reduce around there and there's and at to of main taking Board at those singular We're have. to from overhead a perspective and those looking fresh isn't we'll back lines, and thing different can the Board

Sarkis Sherbetchyan

level an on at had prepared the I kind expect look And if comments we point think of rate from both corporate opportunity forward, for and overhead kind overhead, corporate guess we as should remarks. kind the rate going what I the some run of costs forward? the this you run of of

Michael Sena

Mike. Yes. is Sarkis, this

down we everything looking on that can the We're continued continuing to at been this to to As our you push corporate trend. those see, across overheads. we have Board work And continue quarter, down.

I real get we're to starting think a that level. to

So try for where the down we that at million. and today, to ways we will next quarter, $X.X were continue to is find and work And over quarters. number we're the to few bring that

Sarkis Sherbetchyan

Got so highlight proxy a mentioned the specifically on one in comp recently it. what the those I above filed a the statement, maybe guess objectives, business there incentive plan successfully some moving maybe NAV changes obvious are that's need to and program. I can or to And more bonus objectives guess, goals from key over you to were based refi debt?

Wayne Barr

refinanced. that Yes. for operating key the KPI is That we're this hit head. that And XXXX, to nail the all you to. debt is the on Well, get

while so And now is and the debt. we're which primary XXXX, we across announced that for NAV Board, focus right the are on from KPI we're the is of the the reducing we've the focused that company moving away

much bonus to be when what of its for We compensation the able we'll that fulsome plan are a provide the plan. will XXXX. working description committee particular like look on finishes And more work,

Sarkis Sherbetchyan

portfolio Sciences more Got the asset. me, One to more it. so for this Life and relates

COVID of for technology is launch the on and preorder be RX some the that? of understand can sales that XQ what of expense that likely profit that from you a or challenges for mentioned up, standpoint here on kind either brought to coming think you I in or kind of operating despite maybe from kind metrics to want some that division does target guys mean share maybe XQ

Michael Sena

don't product. goes. Mike, $XX tranche the We to the help ramp-up a with That's associated their spend of that's is launching as will they launch continue This there's received Yes. second million to as guidance the But that. through get Sarkis. out that And through here. really them give far

So think spend now, on just million. I would the $XX I through right focus the

Operator

[Operator Instructions].

Longfellow. Our next Craig with question from is Carlozzi

Craig Carlozzi

give was I I asset comfort company and wondering us our bridge XXXX, could of just level you today, walk holding for the perhaps number and of, of uses sources of ideally some guess, remainder if as any sales to should the liquidity through be a delayed?

Michael Sena

the We've $X million million came We're pulled $X.X over working on deck million strategic dividend that liquidity. through for question. August. which to through up Thanks -- HCX Sure. or includes the today, options generate in date various $XX to to

However, to provide remainder take and We year, strategic than ability the the the those there. expected. comfortable longer options of we're for extent do the liquidity to have

costs continued of our payment with Our cash, sources of course, are overhead and along December. our interest in

Craig Carlozzi

Are you company? to the liquidity holding today disclose at willing the

Michael Sena

cash the pull $XX of million year. have million. the and under XX, million was of to end the we liquidity which our $X Well, additional -- we've just the We disclosed ability June through received $X.X at the from DBM, we have

Operator

have conference reached turn the end would the closing remarks. like back session. I for question-and-answer to over our We Wayne of to

Wayne Barr

that for HCX horizon that And some you. safe pandemic. like you this they're are families us Have the hope joining through things thank Thank that staying on evening. hope and nice the and your I'd you afternoon. tuned for to for everybody stay exciting a

Operator

today's This conference. concludes Thank you.

disconnect you may your this You participation. at for time, lines thank and your

INNOVATE (VATE) 10 Aug 202020 Q2 Earnings call transcript