Earnings call transcript Q2 2023

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Operator

Good afternoon, and welcome to INNOVATE Corp.'s Second 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 second Thank with to us Good XXXX for earnings INNOVATE's quarter results. review afternoon. being

We are INNOVATE's joined Paul today by Avie Glazer, Interim and Officer. Voigt, Chairman CEO; Mike Financial Sena, Chief INNOVATE's of INNOVATE;

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

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

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

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

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

Avie Glazer

afternoon. Good

and focused all revenue of profitability with driving on adjusted operating EBITDA remain across million. INNOVATE achieved $XX.X strong second results our growth of by segments. increasing We of $XXX.X quarter million

quarter X.X% points basis approximately $XXX.X approximately XX.X% second and EBITDA of Our and and gross expanded by respectively. points to delivered by XXX revenue million basis XXX margin DBM DBM adjusted Global infrastructure business margin

for the saw margins above gross low indicated, as come XXXX. in the business As have in we

This However, of we commercial in have of half seen by part lower office sector XXXX. western delays country. primarily the the the credit have revenue project far the in to the buildings tightening due is driven in markets, which impacted so in

the impacted the of a also by industrials in into quarter the top-line markets. project as DBM's in was with it start delays new business new expands

in work it out this the of this project, took about first excited to opportunities longer we this details While project and are space. future

utilize to to its continue DBM's into capabilities on capitalize expertise opportunities. market pivot We to different

gross as last margins, expect better year, our XXXX. to versus the way balance we When delivered looking DBM margins of earned which continue at we work through

strong some remains providing converting second market backlog. to in the opportunities focused from a of right at on see control may reminder, project opportunities timing see the we does end are are out sizable and -- these quarter, experience awarded of continues the $X.X periods. future visibility revenue to sizable the one adjusted whether another. That push recognition DBM quarter the always said, total to or delays not a ultimately projects DBM that backlog when billion into at into As

throughout & Sciences, Life Aesthetic In have five RX penetration. Medicine the an to with and shift; market and social utilization Spa unit awareness the RX and to addition quarter, in Society make for notable for also Aesthetic in media increase Turning to worldwide Vegas Cosmetic Surgery, the Surgery, International major and Show. Technologies Esthetics American Plastic experienced continues RX's increases Society second Surgery, Cosmetics Rx Conference, the American showcased in Shows: indicating Trade The Glacial progress Laser presence growth XXXX the

FDA in Transdermal the of X other clinical reviewed module information Phase study module report was the review. completion to MediBeacon, included submission. full For package conducting Phase related now for pivotal completeness is and and final the subsequent GFR substantive X the study, submission FDA the

program visualization. applications Steve in MediBeacon by FDA their on formal company plans for Miller feedback management ophthalmology, Medical other and surgical The provided Dr. of May the platform expanded as appointing the addition, team Officer. In clinical Chief in fluorescent gastroenterology, technology

are on to clinical initiatives We drive of MediBeacon. and a him range excited strategic to have at Board

in We these are to value further the believe portfolio; of innovative progress key pleased are with solutions and Sciences executing the our to well-positioned strategy leveraging we by long-term we our meet Life generate needs market.

from channels, broadcast dollars from the FAST TVs. diginets particularly have TV a pressure falling and smart experiencing face networks in streaming competition been linear Spectrum, including ad and mounting At networks economy increased of software

now the in We diginets and quarter. a Most looking stabilization are seeing XXXX. anticipating stronger indications second of are ahead market

other in looking and emerging are opportunities business FAST including areas, networks from for religious over-the-air New distribution. channels

in revenue data We are of discussions the and which for moving forward. in opportunities also are housing midst new casting, light

realizing the Spectrum start to of is use. revenues in and utilization expanded of expect current We beyond XXXX believe beginning the those in this

Matt President Sales a business joins Lastly, Paramount our as point streaming CEO Matt programmatic and of Katrosar to Vice Spectrum we was the from July. he were of in where us leading Global pleased functions. sales

for help on continue to business excited Spectrum to the him numerous market. opportunities the execute are our in We

Investments Voigt. of Managing we until years From a corporate of INNOVATE Paul appointment announced Director four previously our perspective, Senior Interim the served at Paul for recently XXXX. CEO, as

in of opportunities. knowledge business Given we ability our our segments, on his are confident and execute Paul's experience to prior near-term three

turn tribute Barr. Before to pay the Paul, to like I I'd to Wayne call

our was instrumental grateful by and to Wayne's passing in helping plus We for three over our deeply all colleague INNOVATE up person greatly be leadership. are for be we his guiding have the last contributions His company segments tighten who'll Wayne the setting forever transformation, will saddened an years at focus been missed and success. future outstanding to by incredible and an our INNOVATE. three on

the turn that, call Voigt. over With to Paul I

Paul Voigt

Thanks, Avie.

and transition entire very INNOVATE Sena. time have to extend say to a and gratitude Suzi, Mike for of First, this you Herbst thank this the Avie, opportunity seamless Board team. Avie, like and Suzi difficult for I’d my the made Directors, Mike in

with and INNOVATE, entire equityholder majority will I the is in are team committed As of value to best to know partner decisions Avie ensuring future for unlock and of the them investors shareholders. interest our being closely made the I

three is have and engaged Cherine Global, working them Across forward the DBM we having I a most Katrosar to David teams closely Levy Life Rustin strong value Pansend drive important Hill trait believe world the to Roach management experience, place. INNOVATE. at alongside Platform. Sciences, all business successful management and Matt at my at look future Plumaker Present class at and and segments, Spectrum in Lex of and in In Mike INNOVATE's I for business

into or INNOVATE segments. business not that stepping this position assured Rest with unacquainted I'm its

I them As Avie businesses am tenure explained previous INNOVATE. the having very worked my at familiar with with during

the a reiterate excited commentary, some on touch three strong to To the three with all and of prior briefly I'm foundation. with Avie's work having operating businesses extremely segments

billion the to Global a has and rest in $X.X management markets. opportunities. is of DBM the opportunities Infrastructure -- their capitalize full on At those team Rustin have backlog I sizable in and confidence

markets. At RX continues Pansend their MediBeacon, Life our is and reach momentum Sciences, to kidney in critical strong in gaining milestones machine,

UHF lineup. over as that X.X prospects And approximately lastly, exploring of XX% valuable XXX spectrum included States future in billion stations will a TV with very covering Spectrum and United XXX opportunities be XG with broadcast spectrum Band POP, the megahertz is the

businesses. short-term we flowing more to one taking are perform sheet challenges continue businesses company. of steps and our to evaluate or will address for ahead, substantial In liquidity, the potential company's non-cash and have opportunities the liquidity divestitures strategically balance well address strengthen to While the order we of

We an on will provide update share we additional have information when to this front.

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

Mike Sena

Paul. Thanks,

Consolidated of prior compared was $XXX.X year of extent, was Spectrum primarily period. The in by Infrastructure lesser the and XXXX million total million, to revenue quarter a second our for decrease segment. driven our to the a segment X% $XXX.X decrease

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

the which investment XXXX. the an our increase year in sold $XX.X was the quarter of partially prior was in Sciences, Total by from equity $XX.X which XXXX, Infrastructure segments, was The method Life period. elimination HMN, primarily March by adjusted in EBITDA Spectrum of was from million million of the increase income in offset and second driven

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

primarily increase Banker projects business, in backlog. decrease this was projects and and earlier, business size by partially fabrication to by timing maintenance Steel lower and driven the of of offset and at discussed at revenue of and As an which was revenue timing size the steel due DBMG's repair

business. at projects increase by million was adjusted to Banker by for from of in timing second as timing quarter repair Infrastructure the the in maintenance and period. due Steel prior $XX.X an increased steel year well the XXXX driven SG&A. contributions and primarily as The fabrication higher was partially size $XX.X of offset and This million to increase margin business of in the projects, lower EBITDA

but of end XX, contracts takes was XXXX. at and yet billion As of awarded $X.X adjusted XXXX, not to June consideration billion backlog, reported into signed which $X.X backlog compared the

opportunities remains As market on those Avie and into converting meaningful backlog. see to the DBM explained earlier, focused opportunities we in continue

an was is part amortization repayment DBMG partial year-end the of from quarter increase of payments driven debt credit with a ended a the and by and debt, decrease which facility. normal $XXX.X million in in million XXXX $X.X by note offset

losses the current EBITDA due adjusted SG&A in being investment was the of carrying no to its resulted well MediBeacon losses Pansend's decrease in expense RX. additional primarily in in in at amount in being decrease the as Sciences, Life which zero, our investment equity At as net MediBeacon period, in recognized

revenue the launched of offset driven which the markets XXXX. customers million, in to of quarter end revenues of XXXX, operations $X.X decrease by new the with at and At an Azteca, networks was advertising was elimination current its at compared by Spectrum, period. primarily $X.X increase station This which revenues, in ceased partially in the million a second

of adjusted losses the compared was delivered elimination of was $XXX,XXX second an in and the quarter to partially EBITDA increase primarily offset increase of by networks The group, benefits. by driven of the in station quarter. EBITDA which the revenues the comparable in in EBITDA result Spectrum period $XXX,XXX adjusted salaries year as termination an of prior and a at increase network in

were EBITDA with losses the million of second year. adjusted $X.X for was XXXX, which consistent quarter prior corporate Non-operating

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

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

million, was $XXX.X driven of of $XX.X $XXX.X Corporate's off As indebtedness end with up INNOVATE Lancer XXXX, principal June new of had total and which the primarily borrowing partially Corporate's XXXX, was from RX's -- at in million which CGIC line. XX, and by by credit Capital, principal offset Infrastructure's payments decrease the note from outstanding million additional net unsecured

on debt Additionally, work over respective extension while the few longer-term Spectrum months. its a solution reached we next a short-term on

end liquidity address additional that recognize options Subsequent liquidity on as and structure. to $X we the to to million We work the an the strategic of capital segments borrowed value various of also the we quarter, remains in each three tight the build in credit explore line.

several that He Wayne's fortunate all to years. family and I dearly. all I'd and Wayne. INNOVATE to worked INNOVATE, tremendous On like Barr's our to Before call to turn of many operator, as excellent past contributions friends. extend person over known acknowledge leader I'd we Wayne have over CEO We to with were the an condolences and the a behalf miss the was to like

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

Operator

Thank you. [Operator Instructions].

first And Pressprich. be Please Charles ahead. at Brian your from would RW go question

Brian Charles

my good I'd on Hi, call. my as well. condolences to passing like Thanks real yes, extend first loss. taking for afternoon. Wayne's That's a And

Couple second meet I of him. questions was So of forward Paul, XXXX if and welcome, I But XXXX. to lucky half strong can. quick to let's a look

in bit but the of it Is business, timing, did from of effect how first pace positively in just a might that year I at transpired? you have quarter on have quarter. little is the any of the the that EBITDA generation? half second pop guidance EBITDA Infrastructure the what like Regarding there in terms guess second the it

Mike Sena

back seen few the stronger Brian, and of historically for similar back half. I Yes, numbers. the what year to to question, lot first past we've And the Thanks the we've DBM, strong historical mean tends in and the what the to than seen do Yes. a with half similar the condolences. prior we be over years expect a half years

Brian Charles

a more at all Okay. on color that is Do down you backlog and the the like have the being Good of The now? any market selective? state opportunities you looking enough. come bit, you're has

Paul Voigt

Thanks, Yes. the look margins, say Paul. is you the This at to is expanding. would are Brian. margins What you I if

lot backlog to Our still are there and opportunities we're be had of is that there at big a still $X.X out pursuing. billion

we're is confident market very strong. So that still the very

Brian Charles

the affect extent people recent what in terms expecting might That's I wonder, Would office what occupancy down just potential passed. and call. just offset office tailwind guess one road. I've are Infrastructure have for But the question business to on thoughts thought like that I the of the particularly from the think I so. you're Okay. I what that Yes, given construction on Do demand the heard. you CBD, any -- decline in Bill about expecting your much

Mike Sena

I question component where seeing and on opportunities touched -- earlier we of Avie first areas we've a sector. are we mean seen the there's it's are there so but on a in a thing the such other lot this outside the office the seen part Vegas are it -- what seeing arenas, in the things that tightening, out in opportunities the from not as there part such, of same stadiums, of of call have

Brian Charles

it's just If Good okay, then question Okay. I'll queue. in enough. the get last one back

are segments, that sure segments thinking strategic, within exploration within about potentially Spectrum, them are you divestitures the your regarding selling stations but liquidity, address to of selling or initiatives, I potential you some Just like like segment thinking about I'm call itself? not or is across

Paul Voigt

the What presentation, during non-cash said to assets. I we're divest looking flowing

we the path, read So closer you as and everybody you can into keep down abreast. that we'll get what may,

Operator

Instructions]. [Operator

at proceed other questions. And time, remarks. with this we closing have Please no

Paul Voigt

everyone call to on for Thanks conference the time Yes. their today.

We that chess to shareholder think value all we moves you five for vision Thank have look the contact keeping in have look we here. plan benefiting forward we to communications and open a to into have I shareholders. four unlock with on implement you. and forward or to company and value

Operator

time, again, indeed please Ladies your does at and you you. call Thank today. this ask for this we attending. your you And disconnect conference thank for conclude gentlemen, do Once lines. that

INNOVATE (VATE) 9 Aug 232023 Q2 Earnings call transcript