Earnings call transcript Q1 2023

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Operator

Good afternoon, and welcome to INNOVATE Corp.'s First Quarter 2023 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.

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

Anthony Rozmus

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

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

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

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

Act be are materially of factors management provisions Any call, statements forward-looking these from risk make actual and that not subject pursuant are assumptions historical made will statements will Securities of involve INNOVATE's XXXX. Litigation harbor forward-looking which uncertainties this During statements. Reform and and to and and facts, certain forward-looking such certain could differ Private assumptions to to safe cause being are assumptions, risks, results the the

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

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

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

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

Avi Glazer

in we our during progress capture opportunities on focus and new to the the two and emerging our and economy, transformation across company on the market. exposure we areas maximize Since company quarter their assets make best-in-class over to continue the afternoon. Good rightsized evolve continue we generated INNOVATE to attractive momentum and ago. time, started of three have to the that the to years business solid segments

insulate the are come to fuel and the We growth from macroeconomic changing in focused conditions to years on downturns value optimal market from of to each extract company profitability, businesses. increase and order ways for

infrastructure the team by the was In continues we're its impacted in to upon for DBM to these only revenue backlog It strong end is delays, their of but projects and quarter, shifted build project the at first timing the note that still in have important quarter. foundation.

FDA ahead. both MediBeacon plans, future. their three announced Life new on RX April in submission and track positive MediBeacon's study pivotal RX and along continue clearances growth anticipated toward near with final In the in milestones Sciences, progress regulatory for remains

of legacy Wayne, channels Azteca the innovation Fort our are these has on variety demonstrate initial success LPTV the experiments quarter. designing a for this Spectrum, to frequencies Indiana, opportunities in of In Also began use of first our second occupied Spectrum and we potential with programming been phase the applications continue the intended using space. to filled in experiment channels in by largely previously and in

turn to pleased Wayne call over am I the that, to With Barr.

Wayne Barr

I segments. joining our of Thanks, thank highlights for today. for Avi, you would quarter each start all and first sharing operating to by us like

XX but Adjusted XX% from from expanded XXX of quarter. first which however, the points margin, for lower still in for $XXX.X year XX% revenue quarter was quarter X.X%, was was points EBITDA impacted the decrease delivered Global by million revenues a first DBM Gross quarter margin the a basis year-over-year. same higher the ago. basis which the to

due we project We as timing. to anticipate fluctuations continue to improve expect But to prior margins the generally reminder, year. quarter-over-quarter over a

the the from construction, the first one in quarter, revenue lumpy be at another. and can cause explained have commercial we as and push times contractor-driven In projects delays and markets from larger end, certain that customer past, to by our the sizable To a the quarter projects DBM to general to results. industrial to in total billion, quarterly visibility in of see performed the business and continues $X.X providing reported resulted delayed, work its backlog future. impacting for be has pipeline, DBM the in market and

However, they to more beginning and the bids. market project somewhat are tighten competition see on

Turning to Sciences. its to and XXX newly RX Life accelerate growth. implemented program sales shipped globally its now has Glacial devices subscription continues

launch when Avi delivering paired Allies sites, reduced three reducing treatments multi-patient company, provide relief include patient new injection of and FDA treatments which dermatological discomfort. thermal kit, and Skin, packaging. earlier, backbar inflammation less recently clearances, renowned RX pain, to and topical a care skin and with of with more As has RX announced anesthetic treatment mentioned with minimizing also laser partnered injury waste

of At audits study, U.S. completed for submission and submission. pivotal preparation enrollment clinical the quarter. final Final MediBeacon, following completed being in the in study of regulatory second anticipated are regulatory the FDA reconciliations the is report

we are believe we well to in and Sciences long-term Life strategy we these leveraging by making our We solutions. portfolio. pleased innovative the generate are the progress are executing value further positioned with And

customers running. backfill previously are occupied new the stations Spectrum, At added the Azteca to up and

expect programming lead the several expected Spectrum to in over going their gross will long profitability to be January greater of term that begin to forward. programming which higher until first margins results. start did were the as quarter However, The the additive impacted March we not channels new to

in the trends positive The and advertising in more looking is and Among shortfalls popular networks has revenues broadcast only Industry-wide, by launched of to ahead available of XXXX. streaming networks was News, channels. in cable. ABC Law a face live from Abrams a broadcasting Dan weaker Prime, trial the television on industry previously economy founded experienced new on increased fast network, & competition

the of Indiana. LPTV As quarter, we last initial using two-way Wayne, certain were with happy experiment results reported channels we our our in Fort of

maintaining linear of currently quality consultants are and continuing service. the with while the we additional spectrum our expand our We to LPTV working as legacy see positive design and to expect experiments to engineering of results seek uses broadcast

of occur. they apprised keep to as developments continue will We you

results impacted remain excellence were segments of results delays, and each we quarters. and operational overall achieving on are through operating execution our by seasonality by the fundamentals encouraged focused the across While coming and in our

yesterday, in consummated of of issued was million A Insurance held purchase the DBM Intermediate The General million, stock consisting that price $XX unsecured by Inc. for $X $XX note rate Series by Finally, Global Continental purchase a of we Series and preferred Company. subordinated all is preferred perpetual million XXXX. Holdco, the A the due and of cash fixed-to-floating

second has certain substantially has precipitated CGIC, will issuance on partial was circumstances and The preferred. to notice purchase received payments of a the make such notice first by be certain and under terms an anniversaries that note events of permitted the qualified A to the redemption increase which The CGIC raise. was delivered Series and by a from rate equity as requirements interest under unsecured

not purchase The aligned cash structure of preferred A the option, strategic our board believes with is the redemption full Series and short- that was an in planning. while a this medium-term to

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

Michael Sena

segment a decrease by customer work and of current Wayne. fabrication the segment. for of network DBMG's the be primarily Spectrum to $XXX.X in our Consolidated was performed end revenue million Infrastructure and first maintenance of to delayed primarily period. last $XXX.X driven compared year. America network erection of by encounter in in DBMG Spectrum at and period. businesses associated total as termination content year and of general decrease and Thanks, timing our a the contractor-driven Revenues HCX its the delays, in lesser decreased the repair million, The was XX% and quarter resulted prior XXXX a segment to our extent, of the result Azteca

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

prior in method period. EBITDA of Sciences adjusted quarter first from was $XX.X in decrease by an well decrease EBITDA Total The was a equity as the our $X.X as in segments Spectrum HMN. a million in from Infrastructure, investment the driven million of XXXX, our decrease Life the income year and primarily adjusted

lower XX% our March the XXXX. corporate the segment. HMN of closed sale by nonoperating disclosed, investment decrease losses the As The remaining offset EBITDA previously of was partially of in at

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

driven As projects DBMG to of general delays several and earlier, of DBMG's maintenance and this in contractor-driven JFK. and erection performed including was and by timing encountered repair timing fabrication customer the at by discussed decrease of which be primarily at resulting projects, and both businesses, delayed work

from of decreased discussed as largely XXXX decrease EBITDA $XX.X year million and in million prior first to decrease SG&A. was Infrastructure period. in for previously increase in revenue The the driven the $XX.X by slight quarter a adjusted the

the in adjusted margin comparable replaced the was period in business current by margins erection and the period during impacted in the market offset that due revenue, completed to recent which decrease delays the COVID-XX margins markets improvement lower had period. While in pandemic the higher the project on fabrication point-of-sale with a were with partially projects current as projects experienced pressure EBITDA more point-of-sale

SG&A lower margin largely project costs. up EBITDA a EBITDA was the margin While the fixed caused profit result lower and slightly year-over-year, delays as sequentially was of contribution by

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

our successful exceed sales for quarters, a in of if While past pursuing the we DBMG bid the have our the would now impact revenues quarters, is the size backlog process. in the that market on have backlog seen their two upcoming in projects meaningful

$XXX a $X from debt is with driven which quarter and year-end the reduction in small million XXXX, amortization of facility. debt, of by a credit the ended DBMG normal decrease million payments

losses of to the million in of investment shares primarily exchange In of in preferred preferred stock. MediBeacon by adjusted Huadong Sciences, MediBeacon. our XXXX, equity stock At increase Life from EBITDA additional February for higher losses in issued method driven $X.X

losses result to equity of recognized method a investment transaction, $X.X of reduced million previously equity been as have this in unrecognized amount carrying of zero. MediBeacon its As

or of primarily ceased last period. decreased an in the the end operations XX.X% to revenue increase revenues, of which by current advertising at at elimination revenues offset $X.X customers This $X.X in Spectrum, by million, was year. Azteca launched driven At partially new million which the station

The decrease $X.X group. EBITDA increases and million of in first in prior to by to performed was quarter by of primarily the year the the responsibilities adjusted million network quarter. the of network adjusted satisfy HCX EBITDA driven $X.X SG&A compared previously termination in delivered Spectrum

the were channels Our for and broadcasting quarter. that the of backfilled revenue several channels spectrum the of has launched end until contribution quarter thus Azteca and not the back the content, their impacted were

the to million $X.X quarter of driven the period with improvement first former down the in losses and by for employee EBITDA unrepeated expenses by in adjusted corporate related first was were XXXX from The a and prior Non-operating settlement $X.X XXXX, the costs. of quarter million. the recorded accounting decrease CEO mostly

the million funding and million intercompany closed of credit DBMG HMN sale in to interest working first received quarter. provide XX% in and proceeds. repay the capital The line company of fund proceeds million normal During in the quarter, the first on and $XX were its overhead $XX used corporate $XX the through of to costs

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

elevated the cash as due the working the call, the at of prior balance As was receivables to to a collected result previous in capital year. temporary of year-end end mentioned a reduction in

at As XXXX, driven end outstanding primarily of had XXXX, down line principal the of $XX.X repayment million, $XXX.X INNOVATE infrastructure's was offset March from total million by from principal additional Capital. borrowings by which payments, of credit partially corporate's million RX's $XXX.X indebtedness XX, and

into quarter, million the entered a yesterday. new $XX after above, unsecured note mentioned Wayne As also we

May and pushed Additionally, the company amended the materially million the credit March additional XX, subsequent with majority X. corporate other agreement, unchanged an on borrowed the to on credit quarter, -- line terms XXXX, agreement $X credit the the which date to

draw discussed. to DBMG was the part, most purchase For previously preferred stock the the

now operator, the up we'd to like that, With call for questions. open

Operator

comes Thank will R.W. we you. of now question Brian Charles session. the from [Operator from first Ladies line and the begin Pressprich. question-and-answer Instructions] gentlemen, your And

Your is open. line now

Brian Charles

which delays sort into we in EBITDA I make might environment wondering, just guess, the second for course I'm catch-up Is would forward over of the sort quarter. we are taking Hi, of the guess, headwinds Thanks quarter The first the the the revenue, -- quarter? over Or that that the delayed that the I see some a in for the pushed -- a second year? of some going course trend call. I am afternoon. about just and affected infrastructure of year. good quarter

Michael Sena

We is of the project delays the they were completing -- year-end, with thinking I -- work up that expecting right in to start the wouldn't shifts, largely expect add-back. just of are I case are projects or in the now, think quarter. say in they by that the current these gets in in the certain Everything But what we made right? it line So still happen. all delays

Brian Charles

Okay.

discussing were in today? Fair year-end can sort to on enough. Okay. you're of bidding large-scale that improved are competitive, margin I looking a reasonably you're that the bit you getting and you're projects other saying at -- area be that is more would guess see that you guess, still -- margin but you the expect projects And at that environment land, still now, there I some

Michael Sena

mean -- were -- able see tightening I were areas his we're that some and around. better said, we I we margins. previously in like to think still team certain We starting to Ruston Yeah. see negotiate were

margins Ruston has us. what the told this haven't in point been the really impacted process from So at

Brian Charles

Okay.

By signed Another for I what kind run all had you you maybe EBITDA Azteca. guidance guess this us said quick think had on quarter can like question is once signed bandwidth you dictated rate up space any you about give that be there I might the of end, now -- the -- up? the is broadcasting. by

Michael Sena

exceeded we'll what more to stations from those were a largely -- and space think intercompany I charging an have on perspective, we We've Azteca mean filled at to I we've space. fill Yeah. broadcast still continue sell.

when then end slight think the go was small when to a impact quarter quarters of bit to out sell third we helped into shut quarter quarter, about four, think to were we of down. to and but the progressed decision things by one to the little profitable There XXXX Azteca and It you started first those XXXX. that continue should continue good full I the how fourth last really new year, we quarter space. some in the made to guys, the loss flat the as improvement the a onetime see in the customers of get for

going But getting course gradually increase. see I jump the to impact to to you're going have increase thinking decent of far in a sudden you it's be pretty But all significantly. as what up in full over cautioned should think a -- of by It's quarter the to I as time. not going bump We QX. think it's gradually

Brian Charles

one And to unsecured Thanks. Okay. just about question the last Continental. note issue

You over pay annual jump I years. Well, with you plans Or while? for a of to next up, coupon that? try on less later? say Would going guess, sooner is your basis of kind are couple to the it than for an off outstanding the dealing what

Wayne Barr

Yeah.

the make into board good decisions wanted so that to of bit not have forced little we flexibility because or think continue having and I something can do be maturities. timing a bit and little runway a to of a of to

our plan And opportunities definitely entirety a look different. at that to debt to the no the note we're so of across be holding the take the would and looking And different to refinance at debt subordinated and it company. obviously is handle

Michael Sena

a inside senior we're a we get I the time to the -- mature. year well anniversary, that's already notes secured our when think second by of

take same time. obviously would to the have So we care in

So process that's broad the there.

Brian Charles

all I back queue. I'll That's jump got. Okay. in now Thanks.

Michael Sena

you. Thank

Operator

of Nut [Operator Andrew next proceed. Instructions] comes your And from the question Tree. line you. Thank from Please White

Andrew White

the is issued guys. if DBM you by note clarify you. Can HoldCo? Thank Hey, or by new issued that

Michael Sena

Go head.

Wayne Barr

owns now the well. HoldCo HoldCo it issued the as Bancorp. So preferred stock And we by that -- was

Michael Sena

subordinated So the notes in it's unsecured convert.

Wayne Barr

Correct.

Andrew White

team. Thanks, it. Got

Michael Sena

Thank you.

Operator

no at Thank further you. this continue. There are time. questions Please

Wayne Barr

good. thank today. Very We'd like joining to everybody us for

look will as forward to keep you We Thank speaking apprised you to you. We next continue developments quarter. to warrant.

Operator

does Thank you Thank conference that all for you. And conclude participating. our for today.

disconnect. may now You

INNOVATE (VATE) 10 May 232023 Q1 Earnings call transcript