HCHC - Earnings call transcript Q2 2021

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Operator

Good morning. And welcome to HC2 Holdings Second Quarter 2021 Earnings Conference Call. Today’s call is being recorded and we have allocated one hour for prepared remarks and Q&A. At this time, I’d like to turn the conference over to Anthony Rozmus, Investor Relations for HC2. Thank you.

begin. may You

Anthony Rozmus

you second Thank with to us Good XXXX for earnings HCX’s quarter results. review morning. being

We are HCX’s joined Barr by Avie Glazer, Chairman of and Officer. Jr., of HCX; Mike Financial Sena, Chief CEO HCX; Wayne

usual on website presentation have our our our release at earnings As and we slide hcX.com. posted

be on is will simulcast also to prepared and begin our Q&A a will with call by We archived website. being session. our be remarks followed This call

Now for disclaimers. some brief

statement assumptions the and management which be Private call, During and provisions of risk more cause XX-K could may these such looking subject Act these looking presentation, fact, statements. differ are and actual could statements and and in a XXXX. certain of Reform not make discussed risk SEC. will with uncertainties, to forward fully other are and are to this differences our in is statements forward being certain historical forward slide made Safe further the and our the risks, looking results involve Litigation cause factors that and assumptions detailed Any pursuant Securities that cautionary to included Harbor assumptions factors in that The earnings are release filings materially from HCX’s our

that and allow forward-looking review or to transparency as expressly as for our measures the provide SEC the obligation as HCX forward-looking of greater included of certain addition, while reports. financial call data such or these EBITDA. also in our adjusted We statements call to as refer law. supplemental these made substitute for conference believe update performance. in stated financial In GAAP not any statements, a will the in operational required non-GAAP this Management by are only this measures useful measures and date of revise disclaims except intent

periods. was analysis insurance it At Finally, performance for segment, results Xst, turn pleasure comparable and to over discussion which Glazer. the of excluded is things from my Avie sold today’s July the this on for to are point,

Avie Glazer

Spectrum everyone. We thank some excellent morning, believe us our backlog like the record of DBM, in to preview progress of record today and company’s Sciences commercial long-term including strong all progress. strategic potential launch at we provide are Glacial Life of you on I’d results, plan. joining for EBITDA Good adjusted the that our RX power and of exciting quarter our second updates on as a

key expanding industry our was Banker milestone First, closing companies steel U.S. let’s the company and DBM, of erection of of for was the A and leader acquisition to geographic size talk fabrication an largest in added the which about recent one footprint Infrastructure. our Steel, already

even of Banker that backlog the With contracts yet signed, another does reported which officially the makes end been DBM have addition Steel, include $X.X and a of of this total project $X.X billion at billion. of quarter adjusted awarded, backlog million $XXX verbally the record not our but

$X.X ahead. in it new geographic posted was this this of we of start erection was size home project of you awarded Please additional of in on the [ph] In progress the in the asset, that good for end the and backlog the outstanding positioned the to new well NBA the an to a planned very included expanded record and Clippers. this reach, Event Basketball keeping last look forward capitalize Angeles with project billion its DBM a is arena. was to to have Inglewood on is with Deal backlog. summer quarters for projects this contract just after the note of DBM some everyone today. fact, quarter, I is week Center, award share of the Los adjusted not news given XXXX

only can we addition, potential In believe Bill as Congress the a Spending positive. be before viewed Infrastructure

Second, the let’s coming end, first in offering Technologies, our launch Glacial increased recently our portfolio. in second RX and Spa Life product commercial launched Sciences quarter months. which Pansend about after talk we stake its is in Shortly working towards

those and to removing lighten technology devices RX’s spots. $XX conventional market. in laser first of what RX which who the side heat don’t treatment skin melanin the cause based RX other removal disrupts cooling at know makes revolutionary aesthetic patented you soothing system does, For RX’s skin spot and uses age freeze revolutionary is effects. brighten the Glacial billion dermatology often age Rx to source, product while inflammation treatments, painful effectively that

team and them. about optimistic the tremendously these product are new supports We that developments

the excited other prospects about We are the Pansend for long-term in also portfolio. innovative companies

homes new the we plan name record performance the broadcaster to Corporation during INNOVATE a across $X.X involved as is the which dramatic for adjusted assets, change in And beginning had you in in we the third to best-in-class along reap reversal of just or of is finally, stockholders group to a the quarter an expansion benefits and all continued INNOVATE INNOVATE station reporting to everyone drive employees, this same assets, position adjusted Spectrum of from year customers. also the revenues company, poised negative the over-the-air the for OTA a are are access we increased with growth Third, in country. rise in are platform quarter. one with million of the million OTA economy. believe This we what to station Operational is ago. EBITDA, INNOVATE construction, new know, we and who EBITDA $X.X do. our alongside improvements time and business exciting footprint thrive is broadcast

all our to growing HCX. pleased turn the on INNOVATE energized and to color as next begin Wayne call are businesses, chapter our CEO more Jr., over am of I for to Barr We

Wayne Barr

for us Thanks, Avie, and thank you all today. joining

our quarter strength strategy. set continued results, with company’s our the potential long-term succeed the we which and We along path to are pleased us of demonstrate assets, our believe with evolution second and our which further

excited today’s we work made opportunities to and Our engaged. value grow meaningful segments value team our to a quarter and goal unique in strategic But of grow done economy, business quarter we that and number second unlock that objective. identify in there’s the to know more is market is and be decisions evolving advanced for The that have stockholders. will

highlighted you Importantly, goals the last quarter. achieved near-term for we we

Avie mentioned, of our acquisition closed As we level our Banker increasing record Steel, billion. $X.X to backlog

and on enhanced We also were businesses. our and milestones provide our ramp our These steps support up liquidity closed us sale two forward transactional Continental. of strategy with significant to

of million Additionally, completion used DBM’s to West well concurrent three existing a debt we will into repaid HX, acquisition, which the and Steel products, by Spa, of and DBM improvements dermatological the edge working focus fairly doubles significant. other further in the credit facility, the more continue our Banker contracted under cutting on and in East fully primarily update of obligations Infrastructure, the AI Steel’s Coast Steel Steel of of backlog capacity. RX we Banker was C the the acquisition other of we additional rollout RX you announced each addition Pansend, DBM’s recently, segments. will development entered and part to Banker as capital through of provide our and allow is Technologies size with our an facilitated liquidity the to new Glacial acquisition of our complement footprint Glacial investment as Sciences on enhanced to an business than portion in funding I now of At the fund aesthetic May. leading Banker completed provided Series More segment. provide the Steel new products. Banker Coast an Life additional to ideal additional presence that The portfolio $XX

Our COVID Steel. Infrastructure end, legacy backlog with grown to The $XXX was backlog at backlog backlog DBM has expectations we comprised disruptions. in total and $X.X line rebound Banker billion at million DBM for see $XXX of the our as at adjusted market are million quarter starting from of in

seen are provides industrial the services advantage commercial, We visibility as projects, runway evolve good years. and of of to recovery sector current and environment our that and public backlog next the the economic believe continues for taking couple in

new catalyst Infrastructure associated the to significant on the as a final opportunity Bills see are anticipate DBM. and XX-month potential various keeping bill we in passage. for We an of XX-month also projects We following would period the impact eye Federal with the

an impacts emphasis will to industry to we of generally given and DBM size, believe benefit Infrastructure demand that the expertise a expect DBM, our Bill’s addition on occurs. current business, on the the and increased from construction for In experience services Infrastructure for direct be DBM would any we boom

elevated industry-wide of in challenges including supply short-term, and prices, the We chain labor the issues. constraints steel also presence acknowledge

seen development have from not significant continue our efforts. operational a we find in However, and to these challenges impact efficiencies and business successes we

to RX fuel will growth fund to we plan RX. and commercialization development remains our The Turning of at an now million business. to investment on U.S. global grow Life additional be innovation infused $XX in also and product further will track RX. The funds that used accelerate Glacial and Sciences, further

the we and to support resources revenue pleased technologies being growth accelerate position phase class the the of tremendous by development Given financial of the very pursued innovative to launch team. and global provide be RX, of additional in to to expansion were Glacial commercial the potential a world driving more RX, this following broadly,

successful that important launch Glacial Glacial and number the the insights will of the gained place now year. We half of China. this of in expect are to applying lessons Glacial of to manufacturing We Spa, Spa ensure we to second launch help the launch during from shipping a take learned RX a which around

are prospects dialogue to the track need in We with are MediBeacon. doing pivotal begin we also everything we we study to is remain on the and begin to constant time. study excited about The in U.S. FDA on the ensure quarter fourth at

optimistic At across quarter level growth to with We this and improved adjusted opportunities $X.X results. cutting our cost we ability portfolio to in the the operations, improvements, of station the contributing Spectrum, ongoing and progress about and group of Pansend both the happy with network straight EBITDA EBITDA business. adjusted million, and saw are third operations our capitalize we achieved positive revenue on made record

the of which their to side, using meaningful comprise revenue represent today. XXX with XX nine annual channels the On for XX nine broadcasting. an Scripps our networks group all of and on agreement station the stations, networks of Networks we platform reached These programming broadcast networks contribution

as the providers we on advantage our in to platform diginets We with extensive interest seek in take and about are providers of exhibiting additional content ongoing these distribution increased our are content broadcasting other discussions platform. Scripps

broadcasting a believe agreement provided Scripps is structure fixed deals as rate revenue we to this environment is more which arrangement, present the lease revenue upside. also with more shares, opportunities While business our

previously stations in portfolio construction of of We the process disclosed our the broadcasting constructing using new is have permits.

stations will for station are fund as sales quarter entered completed. new which new the business to proceeds the life the confident permits, focus we in the three of ahead. cycles These value from on of are All well XXX as station we including benefits and of creation businesses their end milestones to meaningful are operations. seeing cash us XX asset XXXX. in construction plan years construction from strong to builds, once operating new on reach a of bring our remain As continue in the the deliver of we targeting innovate and and quarter their growth group sharpen segments ability in three Overall, today, third by schedule the with momentum. important these the we stations to XX first of stations total completion We

businesses assets from Mike and and capital our With financials are catalysts the review to for We confident current part that turn over believe we the emerging of highly as structure. our growth exceptionally are benefit it a that, our of that in economy. new of I’ll the are to value well-positioned

Mike Sena

as have in will review and of or second spend decrease to The I Sciences higher $XX.X participating million with XXXX. for increased work capital of and transactions per our I’ll increase Wayne. period. execution the half timing to of revenue to continuing offset million, under $X.XX $XX.X due was revenues quarter that mix. well backlog changes was net Net project the acquisition offerings million year an $XXX.X to quarter key This Steel, EBITDA as quarter driven walk increase through service adjusted you preferred was period. work bridge of the place recent DBM our financial Thanks, Infrastructure adjusted was discontinued at the in the attributable and year period. by of Life primarily of first to of share, The XX.X%, first second our XXXX, second our the XXXX our share stockholders Consolidated to then total segment. combined timing help Total prior and key driven in XXXX the attributable performance structure by or prior year the million prior from was compared income $X.X compared in and for DBM’s segment, under from in quarter execution taken $X.XX to Infrastructure and common $XXX.X across by EBITDA, excludes was of million compression which the per Spectrum in $XX.X operations million at down the segment. improvement of loss margin Bankers

Now onto XX.X% our prior each million of color in $XXX.X three to At from the Infrastructure, some quarter. increased $XXX segments. for million operating revenue

to project $XX.X As adjusted decrease period as impact is in cross pressures higher due of well EBITDA as contribution Steel, the discussed service Banker of decreased mix, partially the prior in including the of in quarter and from under margins is change the period, Banker earlier, to by The for second work $XX.X year increase offset of this on acquisition market Infrastructure offerings. the by timing the execution current million year from million. revenues the the backlog DBM point-of-sale driven Steel. XXXX

previously new have during margins the putting fourth we the height of we’re to backlog uncertainty the during signed discussed released the off work due quarter, burning pandemic. being point-of-sale peak lack the was on As and in pandemic of of pressure downward our

strategies. to Larger into While more margin to us of the large give through signed continue we in backlog, long-term comply excluded our number Infrastructure larger, greater optimization experience EBITDA. projects have projects measures opportunity have we the adjusted improve of come a additional quarter million into do to projects market. continued related and $X during to complex them protocols execution see our segment to of with consistent COVID The certain from periods costs with we prior

minimal second the the add be costs While expect in of COVID-related the remained elevated we remainder backs costs for these quarter, to year.

up of contracts was end last of million June billion, acquisition quarter takes reported of but XX, backlog. end at XXXX. year. As from the XXXX, million from $XXX the backlog which $X.X roughly signed fourth $XXX Adjusted Banker added backlog billion, the awarded, consideration yet at $XXX was into of $X.X million Steel not up

wins We and backlog DBM, acquisition, continued exclusive We second we of mentioned are backlog. to over to into beginning capture for in strength project XXXX expect backlog of level a past as the in the the running half some generated record million by be of capacity Wayne and quarters the by larger quarter at XXXX pipeline. off into two nearly Banker the burn added of $XXX sales the the Steel which our highlights high

RX offset we marketing operations including as the we increase more as efforts, at improvements an see adjusted scaling spend being sales for as of as To growth awarded. and the providing its to with were continue At pivotal revenue $XX.X driven in the commercialization revenue driven expenses. study. they as XX.X% revenues, in the their product MediBeacon increase Spectrum, for by stations Non-operating projects the increase and Chairman, proposal exiting Technologies, visibility of Results more addition, to to largely greater as prepare station prior business adjusted million, of primarily President high see increase support platform the reflect stations the adjusted reductions, Life future. $X.X cost of high are we in the by At are well SG&A and revenue $X.X revenue EBITDA in into former combined utilization second of point-of-sale by adjusted and sales EBITDA corporate to continue increased company. backlog further above. construction final quarter, existing at of development million. from in non-core robust prospect, $X.X million mediators’ starting and the is and by we quarter a increase the the losses EBITDA In looked in regarding Sciences, sale margins of combined This and CEO the the million million which second with The losses network both continued EBITDA with from separation from of described in cost improvements the cost across more second an quarter year non-core loss of XXXX, savings quarter. business delivered from stations. compared $X.X driven our a were Spectrum customers, new up than loss acceptance XXXX the

XX, accruals period, quarter, addition, In changes second prior bonus went which and company compensation employees from basis, million compared $XX.X to million, XXXX. XXXX, previous recorded effect XXXX. plan end year the the $XX.X had in of million $X standalone On of June as December quarter million the the a executives segment second cash $XX.X cash to of the had reflected comparable the XX, periods. equivalents, benefit cash and at in end At of the the executive that corporate cash compared of into of reversed equivalents and as to a

$XX of a acquisition. quarter, the the million fund During cash portion of Steel Banker we to used

were Insurance extended and requires on we preferred revolver, HCX million approximately owned shares we an cash, of on closed million our redeem use cash $XX the In as Xst, the exchange to with of Subsequent with by hand Continental, a balance AX stock. minimum on million on initial the million to XXXX. to sale of along classes of July and well received made of addition, draw in preferred proceeds which A $XX.X Series as $XX an our preferred maturity the an new Continental quarter, $X shares, and the remaining of which

our our across Infrastructure ability remain asset the our to expected business we segments. confident first line, and with segment, our million execute credit of in strategy our proceeds under combined to $XX and from cash availability from sale Continental indenture capital for working the Our us allows the flows use

indebtedness to total outstanding $XXX.X million end acquisition. driven HCX As million, XXXX, $XXX Banker principal XX, primarily from million $XXX.X June at the Infrastructure related XXXX, of by up of the of financing had

the borrowing mentioned DBM’s of with of Infrastructure facility, concurrently second with capacity acquisition, recent credit good will operate $XXX will amount in million on This a agreement Wayne May business Banker which million, new that million of the total the In XX, conclusion, capital on reduces and will new secured and revolving working earlier, loan, comprised $XXX provide XX, As of DBM significantly to meet debt support agreement additional efficiently. entered mature credit will credit May XXXX, and quarter provides for into us capital senior which and a mature forward. $XXX results will and growth. The continued XXXX. of requirements continued liquidity the provide milestones cost flexibility momentum going more term

still done, value to there’s last our our While more happy a be the across over accomplished in progress work we’re have with and lot building segments. very we year

and We’re up back we looking branding third the launch optimistic of half Operator, questions. for forward to like open call to new remain and quarter year of a and beyond. With about now name the the in that, the the we’d

Operator

you. Pressrich. first R.W. Instructions] and line Thank proceed Please comes Charles Thank with you. of Brian question. our [Operator the question Ladies from gentlemen, with your

Brian Charles

I had point-of-sale second forward how going up there just EBITDA congratulations at it very maybe as Thanks. and of or Thanks trend give Is delays? might though. that you Infrastructure you on how congratulations this question us color acquisition and a that on and you of your as taking it a clearing me also got and I is on looking as other quarter is questions, see that Good nice be to contracts, for is how Steel Banker that context the quarter. more progress construction and my EBITDA I forward? kind or on bit the little quarter going a Could know might couple well be backlog. looking on market imagine pressures backlog? down give can going a was the a in of comments, the

Mike Sena

into question. is margins coming of couple Mike. that’s market. the say is that. point-to-sale based points coming would on I Thanks couple to that see for work Yeah. the back, One that a on we starting This are just a level

the So comes when -- that backlog and positive you that’s at And look sign. when look a at you in.

the of -- billion you up off projects. burn stage and is around of backlog If $X XX ramping going we’re months that the to early over in next these

complex that sign also find bigger, years, the -- of on medium-sized couple some we’ve As to the projects. you we see over last opportunities as of working to these been versus about, we’ve the the and talked execution small improvements projects larger more start over to projects longer,

Brian Charles

Okay.

in that? that and I EBITDA Okay. rate any with sort years, I thinking I of I million about about run backlog comfortable this even past, and there. guess over talked I think still of you and I’m next it growing am $XX a from of with to something am had know of the inclined have a couple we’ve if maybe guidance that’s don’t the on

Mike Sena

last perspective really besides done what you Well, the can DBM Steel Banker at there. about, we combined, when we’ve and XX are can has we’ve roughly DBM done you and what historically just is talk you EBITDA over that get months, also from half said looking

Brian Charles

Thanks. enough. in housekeeping. I’ll next My right. back Good then just Okay. question queue, get for All

broadcast With is so press I if securities, or the as am… also remainder, you million, of a understand of $XX $XX I think is cash I sale preferred, release insurance HCX mentioned I were and $XX that don’t combination correct of securities there that that know the of subsidiary, in HCX characterized million think million the a

Wayne Barr

Mike, what…

Mike Sena

Yeah.

Wayne Barr

It’s for you.

Mike Sena

That’s right.

that back were about to You the to press right. there There in company returned. some some talked -- down securities The same also pref the you was the July, that virtually came we that with have May exchange date early also insurance there date the broadcasting. into it or and was holds so preferred pref, the release We if entered maturity common HCX related We that in that had was XXXX. to look out we at XX, terms extended a of redemption filed the -- set X redemption in X-K XXXX. agreements

Wayne Barr

come back broadcasting DBM though that Brian, it’s hey, But pref. was Wayne. did The pref the --

Brian Charles

Okay.

Good enough. Okay.

Wayne Barr

I’m sorry…

Brian Charles

you. Thank Okay.

Wayne Barr

pref. sorry, am the Yeah. broadcasting HCX I

Sorry.

Brian Charles

All enough. again. Thanks right. Good

Wayne Barr

Sorry.

Brian Charles

it for That’s me.

Operator

[Operator Thank you. Instructions] you. Thank

of proceed question. from comes the Wenger Concise your with Our question Capital. next line with Derrick Please

Derrick Wenger

I drill of paid down Yes. delineate off? Thank could that are those got, securities second you you. the they how just $XX what question, million If be on can will you Brian’s and

Wayne Barr

are was HCX, underlying the insurance They those -- broadcasting. by were those company held they up being our securities the owned to and being. -- at HCX of they’re so time right received So securities level subs now transferred that for were and

Derrick Wenger

And what is breakdown of million. the $XX the

Wayne Barr

It’s preferred primarily HCX shares. be

Derrick Wenger

off Which bullet XXXX or? in will be paid

Wayne Barr

not, intercompany. We have it’s

from in So a consolidated consolidation all basis within for HCX and eliminated it’s all same house. the

Derrick Wenger

you. Thank Okay.

Operator

Thank you. concludes the and Instructions] Mr. gentlemen, that back Ladies final Glazer our comments question-and-answer to any I’ll floor turn [Operator session. for

Avie Glazer

morning. Thanks. sure with and for I future us INNOVATE for the I thank as next everyone of want we you again on call. joining excited want the to, this I our forward look excuse joining as are to call us. are on speaking you to me, I’m about Thanks

Operator

concludes conference. Thank you. This today’s

participation. this disconnect your for may you Thank time. your lines at You

INNOVATE (VATE) 6 Aug 212021 Q2 Earnings call transcript