Earnings call transcript Q4 2022

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Operator

Good afternoon. And welcome to INNOVATE Corp.’s Fourth Quarter and Full Year 2022 Earnings Conference Call. All participants will be in a listen-only mode. After prepared remarks and presentation, there will be a question-and-answer session. Please note this event is being recorded.

to Relations. conference like Rozmus to now Investor with would turn over the Anthony I you. Thank go Please ahead.

Anthony Rozmus

Good us fourth results. to Thank review afternoon. you INNOVATE’s quarter for XXXX being with earnings

Barr, Glazer, INNOVATE’s Sena, Financial Officer. of Avi and Chief by today of INNOVATE; joined INNOVATE; We’re Wayne Jr., CEO Mike Chairman

We our and earnings our our presentation on have at innovatecorp.com. posted website release slide

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

During may facts, assumptions, be Harbor made management Private this are forward-looking which XXXX. the of the to being and call, Securities statements certain make Act Litigation are not Safe will historical of pursuant Reform provisions and

certain results assumptions INNOVATE’s risk could forward-looking cause differ statements. that to and such involve and statements uncertainties to Any factors actual from assumptions risks, these materially forward-looking and subject are

these further could statement release more Risk and presentation that cause our the filings SEC. included with disclosed cautionary and in is factors differences our earnings XX-K and detailed in slide the other are that in the fully

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

greater supplemental our for Management will allow while financial useful certain financial data substitute believe provide GAAP and to measures non-GAAP measures, that, such also the We performance. not refer in measXures as adjusted review operational these EBITDA. for transparency a of

to it’s turn over Glazer. Avi pleasure to point, this my At things

Avi Glazer

quarter all the of have achieved over years record XXXX results heading XXXX. strong a segments. transformation was each note our That with financial and we INNOVATE year it’s chief afternoon. Good the business INNOVATE ago, upon significant in across momentum our finished success in into announced built two of on and

has business on focus sharpened best-in-class record growth. to INNOVATE’s years back-to-back company of allowed segments the Our deliver

a That levels. backlog over construction the runway sustained benefit for of by business in industrial for from XXXX, billion has XXXX $X.X growing strength revenue achieved supported in and continues growth Infrastructure and XX% billion. commercial, to $X.X markets, its

Sciences, RX’s sequentially half upside direction recently In indicators and is final quarter the the and MediBeacon China both business positive are enrollment studies U.S. we and in about Pansend encouraged topline are which in in that of remain are the portfolio its grew year. first and every the both in this MediBeacon RX excited XXXX its the Life completed seeing FDA in targeting pivotal of its submission headed. and we by

and four adjusted Broadcasting for all to Fort Wayne successfully our achieved positive in initial market. quarters a EBITDA demonstration XXXX completed Spectrum its in

we enhanced drive the to Towards the forward. profitability shutdown made of going end Azteca, strategic in year, decision which segment the the will

build we plan XXXX We focused are to our results with and see We our and the on in growth this in pleased future value as in of excited about assets future remain our business each remain each maximizing best-in-class segments. of prospects. progress on three

Barr. call turn With that over I’m to to Wayne the pleased

Wayne Barr

was another XXXX year strategy. we Thanks, our to Avi, continue strong execute today. for joining INNOVATE all and for you us thank as

For of XX%. the achieved revenue full year growth and of XXXX, adjusted EBITDA XX% we growth

are well. in direction the perspective, trending results quarterly a right From our as

our growth topline quarter EBITDA delivered fact, In we year-over-year both of each on XXXX. and in adjusted

adjusted and strong year-over-year on and profitability. testament of a on delivered execution quarterly adjusted this believe XXXX, to we fourth Specifically, growing for consolidated growth throughout EBITDA XXXX that of We $XX.X initiatives quarter trend that deliver focus million. operational our revenues is and the $XXX.X basis million a EBITDA

fourth results. deliver XX.X%, quarter X.X% segments. DBM grew in each and respectively for year-over-year Global continues some and will strong financial share now EBITDA of I fourth Revenue the operating to highlights adjusted of quarter XXXX. our

was larger quarter margin and and driven fourth XXX by Adjusted basis X.X% in quarter the saw basis improvement We of margin significant fourth year-over-year for XX projects pandemic-related points the expansion the and roll sequentially. points EBITDA of jobs. off

to the lows is with margins margins, expect pleased worth are we to XXXX over in that due timing quarterly noting of pandemic see gradual the fluctuate quarters’ these margins rise and While continue we it a throughout jobs. to

The continues to see put our measures backlog favorable and to industrial the at DBM of be take opportunities beyond. DBM believe are $X.X strong and pipeline XXXX end a continues visibility into advantage to in will to and provide robust construction, continues strong billion position in evaluating we the we DBM markets commercial market. year of and at that

period. a globally. to shipped is few program, market now the topline delivered as Glacial short in well products, receptivity past as strong implementation a time sales quarters subscription their which RX over has result Life for RX now the of of Turning as devices in Sciences. XXX growth growth fuel a good has accelerated the new Glacial helped

and key both submission which expect pivotal studies. next U.S. milestones is the take final FDA, achieved MediBeacon its to completing in China place half for file first enrollment of the XXXX. to by its MediBeacon step we with The of

focus the see at Finally, last profitability result on we as to decision already the XXXX. of we’ve improvement profitability Azteca to that end by at made right-size a of America in business quarter strategic exiting Spectrum, begun and

backfill the occupied stations. to been to customers pleased previously new able add have are Azteca to We

America new new with we new programming higher launched year have that America margin three the gross compared Azteca revenues the contracts will programming At major Azteca and networks signed content. since content. The to replaces end, have

the for growth by Azteca Our revenues offset however, station decreased, result in at was that the group. the were Revenues at Spectrum flat a Azteca quarter as shutdown. of

to forward. near-term, will business profitable that generate adjusted in be revenue cash the EBITDA revenue While will in the more and and decrease we backfield expect flow improved going

in a business television multicast in represent our portion no response, Softness XXXX, which were in new network launches. the market and of the direct station slowed advertising particularly networks, in large growth group there

in markets has and clients very declines pricing pressure full impacted network several large many XXXX, power competitive our saw profitability, demand in in In of sharp also broadcast leasing. QX stations from

our initial and we fully channels Indiana. carrier to As comparable Avi network in LPTV networks report Fort with mobile are capability a worldwide. using based in of on today Spectrum, United the the in mentioned, pleased States demonstrated Wayne, X.X mobile success to we experiment use Paired our

believe service streaming that time at the LPTV connectivity same experiment content, LPTV We mobile while to proved our definition can be the conclusively used and that media enhanced public. the making providing broadcast to offer calls frequencies for high

to network. was XG experiment initial of necessity as The operating limited a

experiments, linear continue successful variety a the course of LPTV, transform use the the of several Broadcastings additional Over demonstrating conducting of testing step believe is and in greater months that we television. we HCX intend while services. to The broadcast process first a the of preserving initial next will value two-way

of final Global our add Outside balance March HMN HMN, and International approximately on an as Co. and step operating received flexibility cash in operating affiliate company of subsidiaries our in sheet. sale $XX to we’re or confirmation to transaction segments, the Xth, proceeds proceeds the greater our of in Marine disposition our from a million the Hengtong closing. pleased interest of The XX% Optic-Electric our this to sales the segment Co. The of remaining announce the result was

of financial as in INNOVATE successful operating for another results record delivered year spite we was difficult environment. a XXXX

revenue We into throughout strong quarter financial EBITDA results translated initiatives, in the strong operational continue each and to expansion. execute is headlined on our which by and year, strategic

We continue across portfolio on plan segments. to focus our performance our and our refining sharp driving operating

have momentum to quarter pleased in another and are with to generating We XXXX XXXX. capped continued off strong look forward

ways we of seeing variety We these are and are push meet to segments capital businesses operating our opportunities and working about on the actively forward excited their all of of each at needs. are

that will these are us take enable are any to there believe advantage opportunities. as commitments initiatives several we today, no While of we to particular investigating

capital I’ll review our Mike turn that, it With for to over and of structure. financials a

Mike Sena

quarter fourth total Steel Infrastructure market Banker X.X%, increase Wayne. the prior revenue million, an million year our to increase demand. was by The in $XXX.X an Thanks, led was compared of Consolidated driven Infrastructure and the segment, of XXXX by for increase in $XXX.X period. the

of stockholders year the preferred quarter attributable compared share Net in and or net share, of per loss fourth per million $X.XX prior loss XXXX for $X.XX to $X.X a $X was common to period. million the participating or

the operations adjusted a sale in XX% and by an of was Sciences, of adjusted XXXX. $XX.X $XX.X of The increase Life EBITDA in discussed, remaining million driven excludes partially discontinued Spectrum Infrastructure which method increase non-operating was corporate investment million This primarily XXXX, decrease HMN, the in the from segments. March in the EBITDA, from previously as our by period. year of fourth quarter segment, in an which Total prior closed income the was offset equity

in to At $XXX.X Infrastructure, million prior the quarter. X.X% million year revenue $XXX.X increased from

they are as by discussed XXX work this increase driven full earlier, is Banker Park. into Steel As swing in at

the the steel construction, increase including in We detailed and offset XXXX, Indiana. wins as was work The fabrication maintenance repair, erection part some and is structural saw business also plant of arena increase industrial a which from they including IBEC lithium-ion larger from Clippers’ larger wins an production battery Stellantis, in XXXX modeling Kokomo, businesses. commercial DBM’s through and in and by

are working the $XX.X XXXX as million structural of fabrication construction improvement million up. and of period. of erection, in driven $XX.X maintenance way EBITDA commercial are prior through their and largely businesses, The subsequently the fourth project repair in from first modeling XXXX projects and increase margin was the steel the to adjusted for and sold in to at half increased earlier sold beginning system the and now and the Infrastructure second industrial quarter half XXXX by in ramp year detail

decrease in from contributing offset expenses, was a a Steel. the Banker which Additionally, to decrease partially contribution by increase is G&A the in

EBITDA what our the we XXXX. will improvement full full delivered be strong expectations margin the year margin was improvement fourth a for of for slight While to experienced adjusted XXXX year in in the quarter

but $X.X from of XXXX was of December billion, reported Adjusted which not of $X.X XXXX. billion, backlog $X.X end to billion takes into was December awarded, as XXXX. December signed at backlog billion compared the XX, As contracts consideration $X.X yet up

Team business is $XXX DBMG to end from driven an increase line quarter XXXX, of growth. at working debt, topline capital robust in DBMG the with from of pipe continues year which million $XX.X XXXX. see a movements million ended resulting by

Pansend’s EBITDA investment investment carrying as Sciences, losses MediBeacon, of adjusted driven basis resulting in was MediBeacon. the method period. current net in zero to the from in amount in recorded its equity exceeded losses reduced incurred comparable our MediBeacon in in a losses losses net Life primarily than fewer Pansend’s decrease in the decrease At in was year, by recognized

are pivotal the studies. we company encouraged above, completing by of and the in U.S. enrollment both discussed progress as the MediBeacon However, China with

and programming included $XX.X by in operating drivers paid revenue decreased stations. at decrease Spectrum, as customers an in its network launched and station increase Azteca million. new At advertising grew offsetting driven a remained they revenues of year-over-year the revenue Offsetting declines footprint consistent at and the in number

to the salary delivered and Spectrum adjusted revenues fees, compared $X.X $X.X prior partially and the of increase of legal as was the in in expenses. is in fourth EBITDA station by driven of higher decrease million higher expenses a result offset adjusted EBITDA quarter. This station by newly a million stations. benefit professional The and quarter, costs built

X-K with an XXXX, the May in seg amendment to to senior fourth entered SEC, notes disclosed filed our previously segment XXXX. quarter Spectrum of extend XX, -- during its an the secured our As

The was was of balance. of terms $XX.X $XX.X the after notes accrued and remain XX.X% million refinancing the notes same. million. outstanding increased were X.X% The fees and interest Total interest the to of capitalized the the principal into XX.XX% the principal the rate

the the lenders of exercise amended secured senior the the to by XX.X% notes, and price share per second time of of the segment Spectrum penny. held for the the part XXXX notes As the to warrants a extending by extending reducing exercise consideration half our

down offset $X.X quarter EBITDA quarter decrease mostly for fourth of driven in $XXX,XXX, professional expense, was which fees. XXXX partially XXXX, in Non-operating corporate fourth by by adjusted million an the bonus losses by the a of were from increase

XXXX. million the segment of On end as XXXX. a XXXX, had at million, and cash of quarter, corporate as compared $XX.X cash standalone compared company million cash the basis, December to end December $X.X XX, the $XX.X of XX, of and cash of At equivalents to $XX equivalents, of fourth had the the million

was consummated The As we and holds XX% supplemental the a approximately by closed XXXX. The [ph] ending controlling INNOVATE by the HMN. to of remaining which LLC, of held HMN sale terms entered the in recently Marine Wayne agreement Global into parties stake was the interest. sale XX% in Holdings, interest June XX% mentioned, of pursuant

the would and be capital. debt approximately repayment, general cash, which and $XX credit After taxes $XX line specifically used fees, transaction million of million for INNOVATE outstanding working reinvestment, in received the

$XXX.X from total working INNOVATE Infrastructure’s a quarter from million, $XXX.X credit line As indebtedness credit at up in of third remaining end the result increase million of of Capital. XXXX, had the refinancing, as million utilization movements, the principal driven by and of $XX.X Lancer XXXX, its Spectrum’s primarily line outstanding corporate’s XX, of borrowing capital in RX’s December

it XXXX Pansend’s revenue MediBeacon sale continues submit in proud to all with continues and the as of INNOVATE three and segments. is topline in the to across with deliver into visibility are made of trial the RX to reliable on year. trending Glacial business achieved track this the the its benefit growth products, future their for beyond. also Infrastructure from right progress We growth is results direction of our runway while in FDA XXXX

as operational of immediately build Spectrum made value to As XXXX are of improved business, results strong as momentum upon expanding well-positioned we benefits Spectrum’s the changes to to the profitability result We through XXXX. explore of the in to our next-gen a technology. in we recent continue are the look the seeing continue and

that, call questions. the for up With like to open now we’d Operator,

Operator

Thank Brian proceed. Please is question Pressprich. you. Charles R.W. [Operator with Instructions] first from Our

Brian Charles

as Hi. I’ve of back business other understand, get Thanks completely is signing of But the like and kind taking the just Azteca? I for you signed that first that congratulations the question can the customers you quarter. were to replaced some seized To such. you are business or business as in the of America getting Good almost my doing with replacing on guess, want what business extent and queue. networks and that? you a XXst, Azteca questions and by have of the just of out all what’s with couple that progress Have up afternoon. left I December on one, I you and got

Wayne Barr

Azteca content one providers completed to quickly Yeah. on Those was large programming. estate for We’ve able and typically, replace real so substantially and so putting were content the that were very be previously were we that to dot channels programmers in it additional markets considered dedicated to channels content. favorable and

Mike Sena

thing equal also revenue when revenues that, It’s while fairly one doing out is point at. the profitable is you’re that to very The were that.

So goes revenues Azteca essence as cost drop bottomline. channels network away and those can because you’re that the adding flow had that you big imagine, in a structure, on there are will to

Brian Charles

cash the Okay. year. at enough. total balance $XX.X guess and million, the of And probably that Where Thanks. most the at or is one the right. of is of level. versus? Fair secondly, did really your guess, corporate All end cash then, bounce I of at the I the improvement the a subsidiary it most of about the

Mike Sena

they’re moves good, that up, things that ramping like last swing it around. And And swinging, would that. where that saw DBM will but Yeah. think collections of jobs, on just you You really see right? and I year be kind it depend were capital really, that dipped, working finishing

significantly in you move they collections sort capital had resulted favorable day-to-day the in so trying -- the see will around in But bit working you’re quite that and of cash. end throughout a pretty at to, some year. the it that of year increase moves And

Brian Charles

Okay. Good enough.

Thanks. will Okay. in get I That’s back queue. it.

Avi Glazer

you. Thank

Wayne Barr

you. Thank

Operator

comments. closing [Operator to Barr With would conference like over at time, the back no for to Wayne this Instructions] hand further questions I

Wayne Barr

We this hope Thank This evening. you. you joining all you night. concludes nice Thank Good for afternoon. our call a us. have

Operator

for your you participation. Thank

lines time. may at You disconnect your this

INNOVATE (VATE) 14 Mar 232022 Q4 Earnings call transcript