INNOVATE Corp. (“INNOVATE” or the “Company”) (NYSE: VATE) announced
today its consolidated results for the third quarter.
Financial Summary
(in millions, except per share amounts) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Increase / (Decrease) |
|
|
2023 |
|
|
|
2022 |
|
|
Increase / (Decrease) |
Revenue |
$ |
375.3 |
|
|
$ |
423.0 |
|
|
(11.3)% |
|
$ |
1,062.0 |
|
|
$ |
1,228.0 |
|
|
(13.5)% |
Net loss attributable to common stockholders |
$ |
(7.3 |
) |
|
$ |
(6.6 |
) |
|
(10.6)% |
|
$ |
(28.0 |
) |
|
$ |
(33.8 |
) |
|
17.2 |
% |
Basic and Diluted loss per share - Net loss attributable to common
stockholders |
$ |
(0.09 |
) |
|
$ |
(0.09 |
) |
|
— |
% |
|
$ |
(0.36 |
) |
|
$ |
(0.44 |
) |
|
18.2 |
% |
Total Adjusted EBITDA(1) |
$ |
22.1 |
|
|
$ |
16.4 |
|
|
34.8 |
% |
|
$ |
43.5 |
|
|
$ |
40.0 |
|
|
8.7 |
% |
(1) Reconciliation of GAAP to Non-GAAP measures
follows
Commentary“INNOVATE delivered
third quarter revenue of $375.3 million and experienced strong
Adjusted EBITDA growth of 34.8%, which was primarily driven by our
Infrastructure and Life Sciences operating segments," said Avie
Glazer, Chairman of INNOVATE. “All of our operating segments
continue to make progress and maintain strong positioning in their
respective markets. We are pleased with the results across the
board and look forward to capitalize on new opportunities and
partnerships as they materialize."
"The third quarter results were highlighted by
our Adjusted EBITDA strength," said Paul Voigt, INNOVATE's interim
CEO. "DBM had another great quarter driven by solid margin
expansion. While DBM is experiencing some tightening in the
commercial space, the team has been steadfast in both focusing on
end markets that are rich in opportunities, as well as being
strategic in their selection for projects to pursue. We remain
excited about the progress at MediBeacon as they progress down
their path for FDA regulatory approval. And at Broadcasting, we are
excited to be exploring strategic partnerships that open the
business to new avenues for revenue that should lead to future
growth."
Third Quarter 2023
Highlights
Infrastructure
- DBM Global Inc. ("DBMG") reported
third quarter 2023 revenue of $369.3 million, a decrease of 10.5%,
compared to $412.7 million in the prior year quarter. Net Income
was $10.8 million, compared to $10.4 million for the prior
year quarter. Adjusted EBITDA increased to $30.8 million from
$27.6 million in the prior year quarter.
- Continue to see good opportunities
in the market for larger projects; however, tightening in the
credit markets has continued to impact the commercial space. The
team at DBM remains selective when bidding projects to protect
margins.
- DBM Global grew Adjusted EBITDA
margin to 8.3% in the third quarter, an expansion of approximately
170 basis points year-over-year.
- DBM Global’s reported backlog and
adjusted backlog, which takes into consideration awarded but not
yet signed contracts, was $1.3 billion as of September 30,
2023, compared to $1.8 billion as of December 31, 2022.
Life Sciences
- R2 Technologies, Inc. ("R2") has
now shipped 304 Glacial® devices globally
- R2 commercially launched Glacial®
fx, a new skin wellness device.
- R2 launched two new product
enhancements for its Glacial® Rx device, a larger-sized disposable
treatment tip and a colder advanced clinical protocol called Glide
Rx.
- R2 experienced record high growth
both in U.S. unit sales and number of patient treatments.
- MediBeacon continues to work
through regulatory approval with the FDA.
- MediBeacon submitted the
Transdermal GFR Medical Device Regulation application in Europe and
continues to work through the device approval process in
China.
Spectrum
- Partnering with Hewlett Packard
Enterprise (HPE), one of the leaders in data transmission
architecture, to deploy datacasting.
- Finalizing operating and revenue share
agreements with large-market Public Broadcast stations beginning
with Sacramento (PBS station KVIE) and Dallas (station KERA) to
provide ATSC 3.0 "lighthousing" and datacasting.
- For the third quarter of 2023,
Broadcasting reported revenue of $5.4 million, compared to
$9.1 million in the prior year quarter. The decrease was
primarily driven by the elimination of advertising revenues at
Azteca America network ("Azteca"), which ceased operations on
December 31, 2022. This was partially offset by an increase in
station revenues, which launched new markets and networks with its
customers in the current period.
- For the third quarter of 2023,
Broadcasting reported Net Loss of $6.5 million compared to $1.4
million in the prior year quarter. Adjusted EBITDA loss was
$0.3 million, compared to Adjusted EBITDA income of
$0.3 million in the prior year quarter.
Third Quarter 2023 Financial
Highlights
- Revenue: For the
third quarter of 2023, INNOVATE's consolidated revenue was $375.3
million, a decrease of 11.3%, compared to $423.0 million for the
prior year quarter. The decrease was primarily driven by our
Infrastructure segment, and, to a lesser extent, our Spectrum
segment. The decline at our Infrastructure segment was driven by
timing and size of projects, mostly from DBMG's commercial
structural steel fabrication and erection business, as well as the
industrial maintenance and repair business, while revenues at our
Spectrum segment decreased primarily as a result of the termination
of HC2 Network, Inc. ("Network") and its associated Azteca content
on December 31, 2022.
REVENUE by OPERATING SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
2022 |
|
Increase / (Decrease) |
|
|
2023 |
|
|
2022 |
|
Increase / (Decrease) |
Infrastructure |
|
$ |
369.3 |
|
$ |
412.7 |
|
$ |
(43.4 |
) |
|
$ |
1,043.4 |
|
$ |
1,197.0 |
|
$ |
(153.6 |
) |
Life Sciences |
|
|
0.6 |
|
|
1.2 |
|
|
(0.6 |
) |
|
|
1.8 |
|
|
3.0 |
|
|
(1.2 |
) |
Spectrum |
|
|
5.4 |
|
|
9.1 |
|
|
(3.7 |
) |
|
|
16.8 |
|
|
28.0 |
|
|
(11.2 |
) |
Consolidated INNOVATE |
|
$ |
375.3 |
|
$ |
423.0 |
|
$ |
(47.7 |
) |
|
$ |
1,062.0 |
|
$ |
1,228.0 |
|
$ |
(166.0 |
) |
- Net Loss: For the
third quarter of 2023, INNOVATE reported a Net Loss attributable to
common stockholders of $7.3 million, or $0.09 per fully
diluted share, compared to a Net Loss of $6.6 million, or
$0.09 per fully diluted share, for the prior year quarter. The
increase in Net Loss was primarily due to an increase in interest
expense from higher interest rates, increased amortization of debt
issuance costs on the debt, and higher outstanding principal
balances at all segments, as a result of new debt issued subsequent
to the comparable period, and from the unrepeated net tax savings
in the prior period of $2.9 million from the Continental General
Insurance Company ("CGIC") consolidation on the 2021 tax return.
The increase in Net Loss was partially offset by a decrease in
depreciation and amortization and a decrease in selling, general
and administrative expenses ("SG&A"). The overall decrease in
depreciation and amortization was driven by Banker Steel, as
certain intangibles were fully amortized subsequent to the
comparable period. The overall decrease in SG&A was primarily
driven by the decreases in bonus expense, salaries and benefits, as
well as research and development costs and marketing costs as a
result of cost reduction initiatives at our Life Sciences segment,
as well as decreases at Spectrum from the termination of Network in
December 2022, which were partially offset by an accounts
receivable write-off of $2.2 million related to a customer
bankruptcy, and a foreign office closure in the current period at
our Infrastructure segment.
NET INCOME (LOSS) by OPERATING SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
Increase / (Decrease) |
|
|
2023 |
|
|
|
2022 |
|
|
Increase / (Decrease) |
Infrastructure |
|
$ |
10.8 |
|
|
$ |
10.4 |
|
|
$ |
0.4 |
|
|
$ |
19.8 |
|
|
$ |
23.3 |
|
|
$ |
(3.5 |
) |
Life Sciences |
|
|
(3.6 |
) |
|
|
(5.5 |
) |
|
|
1.9 |
|
|
|
(9.3 |
) |
|
|
(14.9 |
) |
|
|
5.6 |
|
Spectrum |
|
|
(6.5 |
) |
|
|
(1.4 |
) |
|
|
(5.1 |
) |
|
|
(16.8 |
) |
|
|
(10.5 |
) |
|
|
(6.3 |
) |
Non-operating Corporate |
|
|
(7.7 |
) |
|
|
(9.6 |
) |
|
|
1.9 |
|
|
|
(27.8 |
) |
|
|
(30.4 |
) |
|
|
2.6 |
|
Other and eliminations |
|
|
— |
|
|
|
0.7 |
|
|
|
(0.7 |
) |
|
|
8.2 |
|
|
|
2.3 |
|
|
|
5.9 |
|
Net loss attributable to INNOVATE Corp. |
|
$ |
(7.0 |
) |
|
$ |
(5.4 |
) |
|
|
(1.6 |
) |
|
$ |
(25.9 |
) |
|
$ |
(30.2 |
) |
|
$ |
4.3 |
|
Less: Preferred dividends |
|
|
0.3 |
|
|
|
1.2 |
|
|
|
(0.9 |
) |
|
|
2.1 |
|
|
|
3.6 |
|
|
|
(1.5 |
) |
Net loss attributable to common stockholders |
|
$ |
(7.3 |
) |
|
$ |
(6.6 |
) |
|
$ |
(0.7 |
) |
|
$ |
(28.0 |
) |
|
$ |
(33.8 |
) |
|
$ |
5.8 |
|
- Adjusted EBITDA:
For the third quarter of 2023, total Adjusted EBITDA, was $22.1
million, compared to total Adjusted EBITDA of $16.4 million
for the prior year quarter. The increase in Adjusted EBITDA was
primarily driven by timing of higher margin projects at the
commercial structural steel fabrication and erection business at
our Infrastructure segment and by our Life Science segment
primarily due to a decrease in SG&A expenses at R2, driven by a
decrease in compensation-related expenses, research and development
and marketing costs as a result of cost reduction initiatives, as
well as lower equity method losses recognized from Pansend's
investment in MediBeacon as a result of suspended losses due to the
investment's carrying amount being reduced to zero. Additionally
contributing to the increase in Adjusted EBITDA was our
Non-operating Corporate segment due to a decrease in SG&A
expenses. The increase in Adjusted EBITDA was partially offset by
our Infrastructure segment driven by lower contributions from
Banker Steel due to timing and size of projects. The increase was
also partially offset by the elimination of equity method income
from our investment in HMN, which was sold on March 6, 2023.
ADJUSTED EBITDA by OPERATING SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2023 |
|
|
|
2022 |
|
|
Increase / (Decrease) |
|
|
2023 |
|
|
|
2022 |
|
|
Increase/(Decrease) |
Infrastructure |
$ |
30.8 |
|
|
$ |
27.6 |
|
|
$ |
3.2 |
|
|
$ |
70.6 |
|
|
$ |
69.0 |
|
|
$ |
1.6 |
|
Life Sciences |
|
(4.3 |
) |
|
|
(7.6 |
) |
|
|
3.3 |
|
|
|
(16.0 |
) |
|
|
(20.9 |
) |
|
|
4.9 |
|
Spectrum |
|
(0.3 |
) |
|
|
0.3 |
|
|
|
(0.6 |
) |
|
|
0.9 |
|
|
|
2.0 |
|
|
|
(1.1 |
) |
Non-operating Corporate |
|
(4.1 |
) |
|
|
(5.0 |
) |
|
|
0.9 |
|
|
|
(11.0 |
) |
|
|
(13.0 |
) |
|
|
2.0 |
|
Other and eliminations |
|
— |
|
|
|
1.1 |
|
|
|
(1.1 |
) |
|
|
(1.0 |
) |
|
|
2.9 |
|
|
|
(3.9 |
) |
Total Adjusted EBITDA |
$ |
22.1 |
|
|
$ |
16.4 |
|
|
$ |
5.7 |
|
|
$ |
43.5 |
|
|
$ |
40.0 |
|
|
$ |
3.5 |
|
- Balance Sheet: As
of September 30, 2023, INNOVATE had cash and cash equivalents,
excluding restricted cash, of $55.7 million compared to $80.4
million as of December 31, 2022. On a stand-alone basis, as of
September 30, 2023, our Non-operating Corporate segment had
cash and cash equivalents of $1.5 million compared to $9.1 million
at December 31, 2022.Subsequent to quarter end, on November 9,
2023, HC2 Broadcasting Holdings, Inc. entered into a Ninth
Amendment to its Secured Notes with its lenders which extended the
maturity date of its Senior Secured Notes aggregate principal
amount of $69.7 million, from August 15, 2024 to August 15,
2025. In exchange, INNOVATE has agreed to utilize proceeds
from the sale of any of its existing operations, as allowable under
the Company's current agreements and after all other required
payments, for repayment of a portion of HC2 Broadcasting Holdings,
Inc.'s Senior Secured Notes, plus an additional exit fee upon such
a repayment of $1.0 million if repayment occurs by November 9,
2024, and $2.0 million if repayment occurs after that date.
Upon payment of the exit fee, the lenders also agree to return
their equity interests in HC2 Broadcasting Holdings, Inc. and its
subsidiary equity interests.
Conference Call
INNOVATE will host a live conference call to
discuss its third quarter 2023 financial results and operations
today at 4:30 p.m. ET. The Company will post an earnings
supplemental presentation in the Investor Relations section of the
INNOVATE website at innovate-ir.com to accompany the
conference call. Dial-in instructions for the conference call and
the replay follows.
- Live Webcast
and Call. A live webcast of the
conference call can be accessed by interested parties through the
Investor Relations section of the INNOVATE website at
innovate-ir.com.
- Dial-in: 1-888-886-7786 (Domestic Toll
Free) / 1-416-764-8658 (Toll/International)
- Participant Entry Number:
87775635
-
Conference Replay*
- Dial-in: 1-844-512-2921 (Domestic
Toll Free) / 1-412-317-6671 (Toll/International)
- Conference Number: 87775635
*Available approximately two hours after the end of
the conference call through November 23, 2023.
About INNOVATE Corp.
INNOVATE Corp., is a portfolio of best-in-class
assets in three key areas of the new economy – Infrastructure, Life
Sciences and Spectrum. Dedicated to stakeholder capitalism,
INNOVATE employs approximately 4,100 people across its
subsidiaries. For more information, please visit:
www.INNOVATECorp.com.
Contacts
Investor Contact:Anthony
Rozmusir@innovatecorp.com (212) 235-2691
Non-GAAP Financial Measures
In this press release, INNOVATE refers to
certain financial measures that are not presented in accordance
with U.S. generally accepted accounting principles (“GAAP”),
including Total Adjusted EBITDA (excluding discontinued operations,
if applicable) and Adjusted EBITDA for its operating segments. In
addition, other companies may define Adjusted EBITDA differently
than we do, which could limit its usefulness.
Adjusted EBITDA
Management believes that Adjusted EBITDA
provides investors with meaningful information for gaining an
understanding of our results as it is frequently used by the
financial community to provide insight into an organization’s
operating trends and facilitates comparisons between peer
companies, since interest, taxes, depreciation, amortization and
the other items listed in the definition of Adjusted EBITDA below
can differ greatly between organizations as a result of differing
capital structures and tax strategies. Adjusted EBITDA can also be
a useful measure of a company’s ability to service debt. While
management believes that non-U.S. GAAP measurements are useful
supplemental information, such adjusted results are not intended to
replace our U.S. GAAP financial results. Using Adjusted EBITDA as a
performance measure has inherent limitations as an analytical tool
as compared to net income (loss) or other U.S. GAAP financial
measures, as this non-GAAP measure excludes certain items,
including items that are recurring in nature, which may be
meaningful to investors. As a result of the exclusions, Adjusted
EBITDA should not be considered in isolation and does not purport
to be an alternative to net income (loss) or other U.S. GAAP
financial measures as a measure of our operating performance.
The calculation of Adjusted EBITDA, as defined
by us, consists of Net income (loss) attributable to INNOVATE
Corp., excluding discontinued operations, if applicable;
depreciation and amortization; other operating (income) loss, which
is inclusive of (gain) loss on sale or disposal of assets, lease
termination costs, asset impairment expense and FCC reimbursements;
interest expense; other (income) expense, net; income tax expense
(benefit); non-controlling interest; share-based compensation
expense; legacy accounts receivable write-off; restructuring and
exit costs; non-recurring items; and acquisition and disposition
costs.
Cautionary Statement Regarding
Forward-Looking Statements
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995: This press release
contains, and certain oral statements made by our representatives
from time to time may contain, "forward-looking statements."
Generally, forward-looking statements include information
describing actions, events, results, strategies and expectations
and are generally identifiable by use of the words “believes,”
“expects,” “intends,” “anticipates,” “plans,” “seeks,” “estimates,”
“projects,” “may,” “will,” “could,” “might,” or “continues” or
similar expressions. Such forward-looking statements are based on
current expectations and inherently involve certain risks,
assumptions and uncertainties. The forward-looking statements in
this press release include, without limitation, any statements
regarding INNOVATE’s plans and expectations for future growth and
ability to capitalize on potential opportunities, the achievement
of INNOVATE’s strategic objectives, expectations for performance of
new projects and realization of revenue from the backlog at DBM
Global, anticipated success from the continued sale of new products
in the Life Sciences segment, anticipated developments regarding
the FDA approval process at MediBeacon, anticipated performance of
new channels and LPTV frequencies, expanded uses for LPTV channels
in the Spectrum segment and the deployment of datacasting, and
changes in macroeconomic and market conditions and market
volatility (including developments and volatility arising from the
COVID-19 pandemic), including interest rates, the value of
securities and other financial assets, and the impact of such
changes and volatility on INNOVATE’s financial position. Such
statements are based on the beliefs and assumptions of INNOVATE’s
management and the management of INNOVATE’s subsidiaries and
portfolio companies.
The Company believes these judgments are
reasonable, but you should understand that these statements are not
guarantees of performance, results or the creation of stockholder
value and the Company’s actual results could differ materially from
those expressed or implied in the forward-looking statements due to
a variety of important factors, both positive and negative,
including those that may be identified in subsequent statements and
reports filed with the Securities and Exchange Commission (“SEC”),
including in our reports on Forms 10-K, 10-Q, and 8-K. Such
important factors include, without limitation: our dependence on
distributions from our subsidiaries to fund our operations and
payments on our obligations; the impact on our business and
financial condition of our substantial indebtedness and the
significant additional indebtedness and other financing obligations
we may incur; our dependence on key personnel; volatility in the
trading price of our common stock; the impact of recent supply
chain disruptions, labor shortages and increases in overall price
levels, including in transportation costs; interest rate
environment; developments relating to the ongoing hostilities in
Ukraine and Israel; increased competition in the markets in which
our operating segments conduct their businesses; our ability to
successfully identify any strategic acquisitions or business
opportunities; uncertain global economic conditions in the markets
in which our operating segments conduct their businesses; changes
in regulations and tax laws; covenant noncompliance risk; tax
consequences associated with our acquisition, holding and
disposition of target companies and assets; our ability to remain
in compliance with the listing standards of the New York Stock
Exchange; the ability of our operating segments to attract and
retain customers; our expectations regarding the timing, extent and
effectiveness of our cost reduction initiatives and management’s
ability to moderate or control discretionary spending; our
expectations and timing with respect to any strategic dispositions
and sales of our operating subsidiaries, or businesses; the
possibility of indemnification claims arising out of divestitures
of businesses; and our possible inability to raise additional
capital when needed or refinance our existing debt, on attractive
terms, or at all.
Although INNOVATE believes its expectations and
assumptions regarding its future operating performance are
reasonable, there can be no assurance that the expectations
reflected herein will be achieved. These risks and other important
factors discussed under the caption “Risk Factors” in our most
recent Annual Report on Form 10-K filed with the SEC, and our other
reports filed with the SEC could cause actual results to differ
materially from those indicated by the forward-looking statements
made in this press release.
You should not place undue reliance on
forward-looking statements. All forward-looking statements
attributable to INNOVATE or persons acting on its behalf are
expressly qualified in their entirety by the foregoing cautionary
statements. All such statements speak only as of the date made, and
unless legally required, INNOVATE undertakes no obligation to
update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.
INNOVATE CORP. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(in millions, except per share amounts) |
(Unaudited) |
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenue |
|
$ |
375.3 |
|
|
$ |
423.0 |
|
|
$ |
1,062.0 |
|
|
$ |
1,228.0 |
|
Cost of revenue |
|
|
316.6 |
|
|
|
364.6 |
|
|
|
907.1 |
|
|
|
1,069.5 |
|
Gross profit |
|
|
58.7 |
|
|
|
58.4 |
|
|
|
154.9 |
|
|
|
158.5 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
43.8 |
|
|
|
45.6 |
|
|
|
126.6 |
|
|
|
130.3 |
|
Depreciation and amortization |
|
|
4.0 |
|
|
|
6.8 |
|
|
|
15.9 |
|
|
|
20.6 |
|
Other operating loss (income) |
|
|
0.2 |
|
|
|
(0.6 |
) |
|
|
(0.1 |
) |
|
|
0.7 |
|
Income from operations |
|
|
10.7 |
|
|
|
6.6 |
|
|
|
12.5 |
|
|
|
6.9 |
|
Other (expense) income: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(17.1 |
) |
|
|
(13.3 |
) |
|
|
(49.0 |
) |
|
|
(38.4 |
) |
Loss from equity investees |
|
|
(1.5 |
) |
|
|
(1.1 |
) |
|
|
(5.8 |
) |
|
|
(2.1 |
) |
Other income (expense), net |
|
|
0.4 |
|
|
|
(0.9 |
) |
|
|
17.2 |
|
|
|
0.5 |
|
Loss from operations before income taxes |
|
|
(7.5 |
) |
|
|
(8.7 |
) |
|
|
(25.1 |
) |
|
|
(33.1 |
) |
Income tax (expense) benefit |
|
|
(1.1 |
) |
|
|
2.0 |
|
|
|
(3.2 |
) |
|
|
(1.6 |
) |
Net loss |
|
|
(8.6 |
) |
|
|
(6.7 |
) |
|
|
(28.3 |
) |
|
|
(34.7 |
) |
Net loss attributable to non-controlling interests and redeemable
non-controlling interests |
|
|
1.6 |
|
|
|
1.3 |
|
|
|
2.4 |
|
|
|
4.5 |
|
Net loss attributable to INNOVATE Corp. |
|
|
(7.0 |
) |
|
|
(5.4 |
) |
|
|
(25.9 |
) |
|
|
(30.2 |
) |
Less: Preferred dividends |
|
|
0.3 |
|
|
|
1.2 |
|
|
|
2.1 |
|
|
|
3.6 |
|
Net loss attributable to common stockholders |
|
$ |
(7.3 |
) |
|
$ |
(6.6 |
) |
|
$ |
(28.0 |
) |
|
$ |
(33.8 |
) |
|
|
|
|
|
|
|
|
|
Loss per share - basic and diluted |
|
$ |
(0.09 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.36 |
) |
|
$ |
(0.44 |
) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted |
|
|
78.4 |
|
|
|
77.6 |
|
|
|
78.0 |
|
|
|
77.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INNOVATE CORP. |
CONDENSED CONSOLIDATED BALANCE SHEET |
(in millions, except share amounts) |
(Unaudited) |
|
|
September 30,2023 |
|
December 31,2022 |
|
|
|
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
55.7 |
|
|
$ |
80.4 |
|
Accounts receivable, net |
|
|
290.8 |
|
|
|
254.9 |
|
Contract assets |
|
|
171.0 |
|
|
|
165.1 |
|
Inventory |
|
|
18.6 |
|
|
|
18.9 |
|
Restricted cash |
|
|
— |
|
|
|
0.3 |
|
Other current assets |
|
|
16.4 |
|
|
|
16.8 |
|
Total current assets |
|
|
552.5 |
|
|
|
536.4 |
|
Investments |
|
|
7.0 |
|
|
|
59.5 |
|
Deferred tax asset |
|
|
1.6 |
|
|
|
1.7 |
|
Property, plant and equipment, net |
|
|
160.2 |
|
|
|
165.0 |
|
Goodwill |
|
|
126.8 |
|
|
|
127.1 |
|
Intangibles, net |
|
|
180.8 |
|
|
|
190.1 |
|
Other assets |
|
|
67.2 |
|
|
|
71.9 |
|
Total assets |
|
$ |
1,096.1 |
|
|
$ |
1,151.7 |
|
Liabilities, temporary equity and stockholders’
deficit |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
149.2 |
|
|
$ |
202.5 |
|
Accrued liabilities |
|
|
66.4 |
|
|
|
65.4 |
|
Current portion of debt obligations |
|
|
162.8 |
|
|
|
30.6 |
|
Contract liabilities |
|
|
162.2 |
|
|
|
98.6 |
|
Other current liabilities |
|
|
17.1 |
|
|
|
20.1 |
|
Total current liabilities |
|
|
557.7 |
|
|
|
417.2 |
|
Deferred tax liability |
|
|
3.7 |
|
|
|
9.1 |
|
Debt obligations |
|
|
586.8 |
|
|
|
683.8 |
|
Other liabilities |
|
|
74.8 |
|
|
|
71.2 |
|
Total liabilities |
|
|
1,223.0 |
|
|
|
1,181.3 |
|
Commitments and contingencies |
|
|
|
|
Temporary equity |
|
|
|
|
Preferred stock Series A-3 and Series A-4, $0.001 par value |
|
|
16.7 |
|
|
|
17.6 |
|
Shares authorized: 20,000,000 as of both September 30, 2023
and December 31, 2022 |
|
|
|
|
Shares issued and outstanding: 6,125 of Series A-3 and 10,000 of
Series A-4 as of both September 30, 2023 and December 31,
2022 |
|
|
|
|
Redeemable non-controlling interest |
|
|
(8.4 |
) |
|
|
43.4 |
|
Total temporary equity |
|
|
8.3 |
|
|
|
61.0 |
|
Stockholders’ deficit |
|
|
|
|
Common stock, $0.001 par value |
|
|
0.1 |
|
|
|
0.1 |
|
Shares authorized: 160,000,000 as of both September 30, 2023
and December 31, 2022 |
|
|
|
|
Shares issued: 80,722,983 and 80,216,028 as of September 30,
2023 and December 31, 2022, respectively |
|
|
|
|
Shares outstanding: 79,234,991 and 78,787,768 as of
September 30, 2023 and December 31, 2022, respectively |
|
|
|
|
Additional paid-in capital |
|
|
327.8 |
|
|
|
330.1 |
|
Treasury stock, at cost: 1,487,992 and 1,428,260 shares as of
September 30, 2023 and December 31, 2022, respectively |
|
|
(5.4 |
) |
|
|
(5.3 |
) |
Accumulated deficit |
|
|
(478.0 |
) |
|
|
(452.1 |
) |
Accumulated other comprehensive (loss) income |
|
|
(2.4 |
) |
|
|
5.9 |
|
Total INNOVATE Corp. stockholders’ deficit |
|
|
(157.9 |
) |
|
|
(121.3 |
) |
Non-controlling interest |
|
|
22.7 |
|
|
|
30.7 |
|
Total stockholders’ deficit |
|
|
(135.2 |
) |
|
|
(90.6 |
) |
Total liabilities, temporary equity and stockholders’
deficit |
|
$ |
1,096.1 |
|
|
$ |
1,151.7 |
|
|
|
|
|
|
|
|
|
|
INNOVATE CORP. |
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
EBITDA |
(Unaudited) |
|
(in millions) |
|
Three Months Ended September 30, 2023 |
|
|
Infrastructure |
|
Life Sciences |
|
Spectrum |
|
Non-operating Corporate |
|
Other and Eliminations |
|
INNOVATE |
Net income (loss) attributable to INNOVATE Corp. |
|
$ |
10.8 |
|
|
$ |
(3.6 |
) |
|
$ |
(6.5 |
) |
|
$ |
(7.7 |
) |
|
$ |
— |
|
$ |
(7.0 |
) |
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2.6 |
|
|
|
0.1 |
|
|
|
1.3 |
|
|
|
— |
|
|
|
— |
|
|
4.0 |
|
Depreciation and amortization (included in cost of revenue) |
|
|
3.8 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
3.8 |
|
Other operating (income) loss |
|
|
(0.2 |
) |
|
|
— |
|
|
|
0.4 |
|
|
|
— |
|
|
|
— |
|
|
0.2 |
|
Interest expense |
|
|
3.5 |
|
|
|
0.9 |
|
|
|
3.4 |
|
|
|
9.3 |
|
|
|
— |
|
|
17.1 |
|
Other (income) expense, net |
|
|
(0.7 |
) |
|
|
(0.1 |
) |
|
|
1.8 |
|
|
|
(1.4 |
) |
|
|
— |
|
|
(0.4 |
) |
Income tax expense (benefit) |
|
|
6.1 |
|
|
|
— |
|
|
|
— |
|
|
|
(5.0 |
) |
|
|
— |
|
|
1.1 |
|
Non-controlling interest |
|
|
1.0 |
|
|
|
(1.8 |
) |
|
|
(0.8 |
) |
|
|
— |
|
|
|
— |
|
|
(1.6 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
0.2 |
|
|
|
— |
|
|
|
0.6 |
|
|
|
— |
|
|
0.8 |
|
Legacy accounts receivable write-off |
|
|
2.2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
2.2 |
|
Restructuring and exit costs |
|
|
1.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
1.2 |
|
Acquisition and disposition costs |
|
|
0.6 |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
0.7 |
|
Adjusted EBITDA |
|
$ |
30.8 |
|
|
$ |
(4.3 |
) |
|
$ |
(0.3 |
) |
|
$ |
(4.1 |
) |
|
$ |
— |
|
$ |
22.1 |
|
(in millions) |
|
Three Months Ended September 30, 2022 |
|
|
Infrastructure |
|
Life Sciences |
|
Spectrum |
|
Non-operating Corporate |
|
Other and Eliminations |
|
INNOVATE |
Net income (loss) attributable to INNOVATE Corp. |
|
$ |
10.4 |
|
|
$ |
(5.5 |
) |
|
$ |
(1.4 |
) |
|
$ |
(9.6 |
) |
|
$ |
0.7 |
|
$ |
(5.4 |
) |
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
5.3 |
|
|
|
0.1 |
|
|
|
1.4 |
|
|
|
— |
|
|
|
— |
|
|
6.8 |
|
Depreciation and amortization (included in cost of revenue) |
|
|
3.9 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
3.9 |
|
Other operating income |
|
|
— |
|
|
|
— |
|
|
|
(0.6 |
) |
|
|
— |
|
|
|
— |
|
|
(0.6 |
) |
Interest expense |
|
|
2.6 |
|
|
|
0.2 |
|
|
|
2.2 |
|
|
|
8.3 |
|
|
|
— |
|
|
13.3 |
|
Other (income) expense, net |
|
|
(0.6 |
) |
|
|
(0.3 |
) |
|
|
(1.1 |
) |
|
|
2.9 |
|
|
|
— |
|
|
0.9 |
|
Income tax expense (benefit) |
|
|
5.0 |
|
|
|
— |
|
|
|
— |
|
|
|
(7.0 |
) |
|
|
— |
|
|
(2.0 |
) |
Non-controlling interest |
|
|
1.0 |
|
|
|
(2.2 |
) |
|
|
(0.4 |
) |
|
|
— |
|
|
|
0.3 |
|
|
(1.3 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
0.3 |
|
|
|
— |
|
|
0.4 |
|
Acquisition and disposition costs |
|
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
0.4 |
|
Adjusted EBITDA |
|
$ |
27.6 |
|
|
$ |
(7.6 |
) |
|
$ |
0.3 |
|
|
$ |
(5.0 |
) |
|
$ |
1.1 |
|
$ |
16.4 |
|
(in millions) |
|
Nine Months Ended September 30, 2023 |
|
|
Infrastructure |
|
Life Sciences |
|
Spectrum |
|
Non-operating Corporate |
|
Other and Eliminations |
|
INNOVATE |
Net income (loss) attributable to INNOVATE Corp. |
|
$ |
19.8 |
|
|
$ |
(9.3 |
) |
|
$ |
(16.8 |
) |
|
$ |
(27.8 |
) |
|
$ |
8.2 |
|
|
$ |
(25.9 |
) |
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
11.6 |
|
|
|
0.3 |
|
|
|
3.9 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
15.9 |
|
Depreciation and amortization (included in cost of revenue) |
|
|
11.7 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11.8 |
|
Other operating (income) loss |
|
|
(0.2 |
) |
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
Interest expense |
|
|
10.3 |
|
|
|
2.1 |
|
|
|
10.0 |
|
|
|
26.6 |
|
|
|
— |
|
|
|
49.0 |
|
Other (income) expense, net |
|
|
(1.2 |
) |
|
|
(4.1 |
) |
|
|
5.5 |
|
|
|
(4.9 |
) |
|
|
(12.5 |
) |
|
|
(17.2 |
) |
Income tax expense (benefit) |
|
|
11.0 |
|
|
|
— |
|
|
|
— |
|
|
|
(6.6 |
) |
|
|
(1.2 |
) |
|
|
3.2 |
|
Non-controlling interest |
|
|
1.9 |
|
|
|
(5.6 |
) |
|
|
(2.0 |
) |
|
|
— |
|
|
|
3.3 |
|
|
|
(2.4 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
0.5 |
|
|
|
— |
|
|
|
1.5 |
|
|
|
— |
|
|
|
2.0 |
|
Legacy accounts receivable write-off |
|
|
2.2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.2 |
|
Restructuring and exit costs |
|
|
2.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
2.2 |
|
Acquisition and disposition costs |
|
|
1.4 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
1.2 |
|
|
|
2.8 |
|
Adjusted EBITDA |
|
$ |
70.6 |
|
|
$ |
(16.0 |
) |
|
$ |
0.9 |
|
|
$ |
(11.0 |
) |
|
$ |
(1.0 |
) |
|
$ |
43.5 |
|
(in millions) |
|
Nine Months Ended September 30, 2022 |
|
|
Infrastructure |
|
Life Sciences |
|
Spectrum |
|
Non-operating Corporate |
|
Other and Eliminations |
|
INNOVATE |
Net income (loss) attributable to INNOVATE Corp. |
|
$ |
23.3 |
|
|
$ |
(14.9 |
) |
|
$ |
(10.5 |
) |
|
$ |
(30.4 |
) |
|
$ |
2.3 |
|
|
$ |
(30.2 |
) |
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
15.9 |
|
|
|
0.2 |
|
|
|
4.4 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
20.6 |
|
Depreciation and amortization (included in cost of revenue) |
|
|
11.2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11.2 |
|
Other operating (income) loss |
|
|
(0.6 |
) |
|
|
— |
|
|
|
1.3 |
|
|
|
— |
|
|
|
— |
|
|
|
0.7 |
|
Interest expense |
|
|
7.0 |
|
|
|
0.2 |
|
|
|
6.1 |
|
|
|
25.1 |
|
|
|
— |
|
|
|
38.4 |
|
Other (income) expense, net |
|
|
(1.9 |
) |
|
|
(0.4 |
) |
|
|
1.8 |
|
|
|
— |
|
|
|
— |
|
|
|
(0.5 |
) |
Income tax expense (benefit) |
|
|
11.4 |
|
|
|
— |
|
|
|
— |
|
|
|
(9.8 |
) |
|
|
— |
|
|
|
1.6 |
|
Non-controlling interest |
|
|
2.3 |
|
|
|
(6.3 |
) |
|
|
(1.5 |
) |
|
|
— |
|
|
|
1.0 |
|
|
|
(4.5 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
0.3 |
|
|
|
— |
|
|
|
1.4 |
|
|
|
— |
|
|
|
1.7 |
|
Non-recurring items |
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
Acquisition and disposition costs |
|
|
0.3 |
|
|
|
— |
|
|
|
0.4 |
|
|
|
0.6 |
|
|
|
(0.4 |
) |
|
|
0.9 |
|
Adjusted EBITDA |
|
$ |
69.0 |
|
|
$ |
(20.9 |
) |
|
$ |
2.0 |
|
|
$ |
(13.0 |
) |
|
$ |
2.9 |
|
|
$ |
40.0 |
|
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