INNOVATE Corp. (“INNOVATE” or the “Company”) (NYSE: VATE) announced
today its consolidated results for the fourth quarter and full
year.
Financial Summary
(in millions, except per share amounts) |
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2023 |
|
2022 |
|
Increase / (Decrease) |
|
2023 |
|
2022 |
|
Increase / (Decrease) |
Revenue |
$ |
361.0 |
|
|
$ |
409.3 |
|
|
(11.8)% |
|
$ |
1,423.0 |
|
|
$ |
1,637.3 |
|
|
(13.1) |
% |
Net loss attributable to common stockholders |
$ |
(9.6 |
) |
|
$ |
(7.0 |
) |
|
(37.1)% |
|
$ |
(37.6 |
) |
|
$ |
(40.8 |
) |
|
7.8 |
% |
Basic and Diluted loss per share - Net loss attributable to common
stockholders |
$ |
(0.12 |
) |
|
$ |
(0.09 |
) |
|
(33.3)% |
|
$ |
(0.48 |
) |
|
$ |
(0.53 |
) |
|
9.4 |
% |
Total Adjusted EBITDA(1) |
$ |
21.5 |
|
|
$ |
28.1 |
|
|
(23.5)% |
|
$ |
65.0 |
|
|
$ |
68.1 |
|
|
(4.6) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Reconciliation of GAAP to Non-GAAP measures
follows
Commentary“2023 was another
successful year for INNOVATE, with a number of exciting
developments across the three operating segments,” said Avie
Glazer, Chairman of INNOVATE. “The Infrastructure segment continues
to deliver strong results and finished the year with Net Income of
$28.7 million and Adjusted EBITDA of $100.6 million. At
Life Sciences, MediBeacon and R2 achieved significant milestones in
2023. And at Spectrum, our refocused strategy is in the early
innings and we remain excited about the future growth prospects in
that business.”
“We are pleased with INNOVATE's 2023 results,”
said Paul Voigt, INNOVATE's interim CEO. “Despite a challenging
market backdrop, DBM delivered strong results while expanding
margin throughout the year. At Pansend, MediBeacon made significant
progress towards FDA approval, while R2 has experienced strong
North America unit sales growth. Finally, Broadcasting launched new
networks, is entering into agreements with public broadcast
networks and are actively exploring broadcasting 5G opportunities
in the United States.”
Fourth Quarter 2023
Highlights
Infrastructure
- DBM Global Inc. ("DBMG") reported
fourth quarter 2023 revenue of $353.8 million, a decrease of 10.9%,
compared to $397.3 million in the prior year quarter. Net Income
was $8.9 million, compared to $5.9 million for the prior year
quarter. Adjusted EBITDA decreased to $30.0 million from
$32.7 million in the prior year quarter.
- DBM Global grew gross margin to
16.4% in the fourth quarter, an expansion of approximately 200
basis points year-over-year and Adjusted EBITDA margin to 8.5% in
the fourth quarter, an expansion of approximately 25 basis points
year-over-year.
- The tightening in the credit
markets continued to impact the commercial space, however, DBM
remained focused on protecting margins and delivered sequential
Adjusted EBITDA margin expansion for the last three quarters in
2023.
- DBM Global’s reported backlog and
adjusted backlog, which takes into consideration awarded but not
yet signed contracts, was $1.1 billion and $1.2 billion
as of December 31, 2023, respectively, compared to reported and
adjusted backlog of $1.8 billion as of December 31, 2022.
Life Sciences
- R2 Technologies, Inc. ("R2") once
again achieved record growth in North America for both system sales
and number of patients treated.
- R2 sold out of all Glacial fx
inventory in the fourth quarter.
- R2 received market approval in
Saudi Arabia and United Arab Emirates ("UAE").
- MediBeacon remains optimistic
regarding the FDA approval as it continues to answer outstanding
questions from the FDA. As these final questions are resolved,
MediBeacon’s goal is to achieve full FDA approval status and gain
agreement on product labeling in 2024.
- On November 30, 2023, the Company sold
a portion of its ownership in Triple Ring and received
$5.0 million in cash proceeds and shares of Scaled Cell valued
at $0.9 million.
Spectrum
- Gaining considerable traction with
new network launches across the platform as evidenced by the launch
of FreeTV and three large sport networks.
- Entered into agreements with PBS
stations to provide ATSC 3.0 "lighthousing" along with commercial
joint ventures in datacasting and other areas.
- Actively exploring 5G broadcasting
opportunities in the U.S. and have filled an application with the
Federal Communications Commission to convert an existing station to
5G broadcast in order to participate in Phase 2 proof of
concept.
- For the fourth quarter of 2023,
Broadcasting reported revenue of $5.7 million, compared to
$10.7 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 during 2023.
- For the fourth quarter of 2023,
Broadcasting reported a Net Loss of $5.4 million compared to $2.8
million in the prior year quarter. Adjusted EBITDA was
$1.1 million, compared to $2.5 million in the prior year
quarter.
Fourth Quarter 2023 Financial
Highlights
- Revenue: For the
fourth quarter of 2023, INNOVATE's consolidated revenue was $361.0
million, a decrease of 11.8%, compared to $409.3 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, which was
partially offset by increases at the industrial maintenance and
repair business and at Banker Steel, 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 December 31, |
|
Year Ended December 31, |
|
2023 |
|
2022 |
|
Increase / (Decrease) |
|
2023 |
|
2022 |
|
Increase / (Decrease) |
Infrastructure |
$ |
353.8 |
|
$ |
397.3 |
|
$ |
(43.5 |
) |
|
$ |
1,397.2 |
|
$ |
1,594.3 |
|
$ |
(197.1 |
) |
Life Sciences |
|
1.5 |
|
|
1.3 |
|
|
0.2 |
|
|
|
3.3 |
|
|
4.3 |
|
|
(1.0 |
) |
Spectrum |
|
5.7 |
|
|
10.7 |
|
|
(5.0 |
) |
|
|
22.5 |
|
|
38.7 |
|
|
(16.2 |
) |
Consolidated INNOVATE |
$ |
361.0 |
|
$ |
409.3 |
|
$ |
(48.3 |
) |
|
$ |
1,423.0 |
|
$ |
1,637.3 |
|
$ |
(214.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Net Loss: For the
fourth quarter of 2023, INNOVATE reported a Net Loss attributable
to common stockholders of $9.6 million, or $0.12 per fully
diluted share, compared to a Net Loss of $7.0 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, an increase in net loss from our Life
Sciences segment primarily as a result of higher equity method
losses recognized from Pansend's investment in MediBeacon due to
additional investments during 2023, which resulted in previously
suspended losses being recognized as the investment's carrying
amount was reduced to zero, an increase in net loss from our
Spectrum segment related to a one-time benefit from the termination
of Azteca in the comparable period, an increase in tax expense as a
result of current state tax expense at certain tax paying entities
due to increase in taxable income, an increase in net loss from our
Other segment as a result of a write-off of prepaid rent, and an
impairment of leasehold improvements as a result of unutilized
space at our Non-Operating Corporate segment. The increase in Net
Loss was partially offset by a decrease in selling, general and
administrative expenses ("SG&A"), and decrease in depreciation
and amortization. The overall decrease in SG&A was primarily
driven by the unrepeated internal operational restructuring project
in the comparable period at our Infrastructure segment, as well as
decreases in SG&A at our Non-Operating Corporate segment and
our Life Sciences segment driven primarily by R2 as a result of
cost reduction initiatives. The overall decrease in depreciation
and amortization was driven by Banker Steel, as certain intangibles
were fully amortized subsequent to the comparable period.
NET INCOME (LOSS) by OPERATING SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2023 |
|
2022 |
|
Increase / (Decrease) |
|
2023 |
|
2022 |
|
Increase / (Decrease) |
Infrastructure |
$ |
8.9 |
|
|
$ |
5.9 |
|
|
$ |
3.0 |
|
|
$ |
28.7 |
|
|
$ |
29.2 |
|
|
$ |
(0.5 |
) |
Life Sciences |
|
(6.2 |
) |
|
|
(4.3 |
) |
|
|
(1.9 |
) |
|
|
(15.5 |
) |
|
|
(19.2 |
) |
|
|
3.7 |
|
Spectrum |
|
(5.4 |
) |
|
|
(2.8 |
) |
|
|
(2.6 |
) |
|
|
(22.2 |
) |
|
|
(13.3 |
) |
|
|
(8.9 |
) |
Non-Operating Corporate |
|
(5.4 |
) |
|
|
(4.9 |
) |
|
|
(0.5 |
) |
|
|
(33.2 |
) |
|
|
(35.3 |
) |
|
|
2.1 |
|
Other and eliminations |
|
(1.2 |
) |
|
|
0.4 |
|
|
|
(1.6 |
) |
|
|
7.0 |
|
|
|
2.7 |
|
|
|
4.3 |
|
Net loss attributable to INNOVATE Corp. |
$ |
(9.3 |
) |
|
$ |
(5.7 |
) |
|
|
(3.6 |
) |
|
$ |
(35.2 |
) |
|
$ |
(35.9 |
) |
|
$ |
0.7 |
|
Less: Preferred dividends |
|
0.3 |
|
|
|
1.3 |
|
|
|
(1.0 |
) |
|
|
2.4 |
|
|
|
4.9 |
|
|
|
(2.5 |
) |
Net loss attributable to common stockholders |
$ |
(9.6 |
) |
|
$ |
(7.0 |
) |
|
$ |
(2.6 |
) |
|
$ |
(37.6 |
) |
|
$ |
(40.8 |
) |
|
$ |
3.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Adjusted EBITDA:
For the fourth quarter of 2023, total Adjusted EBITDA, was $21.5
million, compared to total Adjusted EBITDA of $28.1 million
for the prior year quarter. The decrease in Adjusted EBITDA was
primarily driven by an increase in recurring SG&A expenses at
our Infrastructure segment and by our Life Sciences segment
primarily as a result of higher equity method losses recognized
from Pansend's investment in MediBeacon due to additional
investments during 2023 resulting in previously suspended losses
being recognized as the investment's carrying amount was reduced to
zero. Additionally contributing to the decrease in Adjusted EBITDA
was our Spectrum segment as a result of a one-time benefit from the
termination of Azteca in the comparable period and by our Other
segment from the elimination of equity method income from our
investment in HMN, which was sold on March 6, 2023. The decrease
was partially offset by our Non-Operating Corporate segment due to
a decrease in SG&A expenses and our Life Sciences segment
driven by R2 due to a decrease in SG&A expenses as a result of
cost reduction initiatives.
ADJUSTED EBITDA by OPERATING SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2023 |
|
2022 |
|
Increase / (Decrease) |
|
2023 |
|
2022 |
|
Increase/ (Decrease) |
Infrastructure |
$ |
30.0 |
|
|
$ |
32.7 |
|
|
$ |
(2.7 |
) |
|
$ |
100.6 |
|
|
$ |
101.7 |
|
|
$ |
(1.1 |
) |
Life Sciences |
|
(7.1 |
) |
|
|
(4.5 |
) |
|
|
(2.6 |
) |
|
|
(23.1 |
) |
|
|
(25.4 |
) |
|
|
2.3 |
|
Spectrum |
|
1.1 |
|
|
|
2.5 |
|
|
|
(1.4 |
) |
|
|
2.0 |
|
|
|
4.5 |
|
|
|
(2.5 |
) |
Non-Operating Corporate |
|
(2.5 |
) |
|
|
(3.7 |
) |
|
|
1.2 |
|
|
|
(13.5 |
) |
|
|
(16.7 |
) |
|
|
3.2 |
|
Other and eliminations |
|
— |
|
|
|
1.1 |
|
|
|
(1.1 |
) |
|
|
(1.0 |
) |
|
|
4.0 |
|
|
|
(5.0 |
) |
Total Adjusted EBITDA |
$ |
21.5 |
|
|
$ |
28.1 |
|
|
$ |
(6.6 |
) |
|
$ |
65.0 |
|
|
$ |
68.1 |
|
|
$ |
(3.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Balance Sheet: As
of December 31, 2023, INNOVATE had cash and cash equivalents,
excluding restricted cash, of $80.8 million compared to $80.4
million as of December 31, 2022. On a stand-alone basis, as of
December 31, 2023, our Non-Operating Corporate segment had
cash and cash equivalents of $2.5 million compared to $9.1 million
at December 31, 2022.
New York Stock Exchange Continued
Listing Standards Notice
On February 26, 2024, the Company received
written notice (the “Notice”) from the New York Stock Exchange
(“NYSE”) that it does not presently meet NYSE’s continued listing
standard requiring a minimum average closing price of $1.00 per
share over 30 consecutive trading days. The Notice does not result
in the immediate delisting of the Company’s stock from the
NYSE.
The Company plans to notify the NYSE that it
intends to regain compliance and is considering all available
options that are in the best interests of the Company and its
shareholders. The Company has six months ("the Cure Period")
following receipt of the notice to regain compliance with the
minimum share price requirement. The Company can regain compliance
at any time during the Cure Period if on the last trading day of
any calendar month during the Cure Period the Company has a closing
share price of at least $1.00 per share and an average closing
share price of at least $1.00 over the 30 trading-day period ending
on the last trading day of that month.
Under NYSE rules, the Company’s common stock
will continue to be listed on the NYSE during the Cure Period,
subject to the Company’s compliance with other NYSE continued
listing requirements.
The Notice does not affect the Company’s
business operations, or its Securities and Exchange Commission
reporting requirements, and does not conflict with or trigger any
violation under the Company’s material debt or other
agreements.
Conference Call
INNOVATE will host a live conference call to
discuss its fourth quarter and full year 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: 25925635
- Conference Replay*
- Dial-in: 1-844-512-2921 (Domestic Toll Free) / 1-412-317-6671
(Toll/International)
- Conference Number: 25925635
*Available approximately two hours after the end of
the conference call through March 18, 2024.
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 4,000 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 expense; restructuring and exit
costs; 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,
anticipated agreements in the Spectrum segment with public
broadcast networks, anticipated 5G broadcasting opportunities in
the Spectrum segment, anticipated developments regarding Federal
Communications Commission approval to convert existing station to
5G broadcast, our intentions to regain compliance with the NYSE's
continued listing standards, 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; 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. |
CONSOLIDATED STATEMENTS OF OPERATIONS |
(in millions, except per share amounts) |
|
|
|
|
|
|
|
(Unaudited) |
|
(Unaudited) |
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Revenue |
$ |
361.0 |
|
|
$ |
409.3 |
|
|
$ |
1,423.0 |
|
|
$ |
1,637.3 |
|
Cost of revenue |
|
299.9 |
|
|
|
346.4 |
|
|
|
1,207.0 |
|
|
|
1,415.9 |
|
Gross profit |
|
61.1 |
|
|
|
62.9 |
|
|
|
216.0 |
|
|
|
221.4 |
|
Operating expenses: |
|
|
|
|
|
|
|
Selling, general and administrative |
|
41.4 |
|
|
|
49.8 |
|
|
|
168.0 |
|
|
|
180.1 |
|
Depreciation and amortization |
|
4.3 |
|
|
|
6.6 |
|
|
|
20.2 |
|
|
|
27.2 |
|
Other operating loss |
|
1.4 |
|
|
|
— |
|
|
|
1.3 |
|
|
|
0.7 |
|
Income from operations |
|
14.0 |
|
|
|
6.5 |
|
|
|
26.5 |
|
|
|
13.4 |
|
Other (expense) income: |
|
|
|
|
|
|
|
Interest expense |
|
(19.2 |
) |
|
|
(13.6 |
) |
|
|
(68.2 |
) |
|
|
(52.0 |
) |
(Loss) income from equity investees |
|
(3.6 |
) |
|
|
0.8 |
|
|
|
(9.4 |
) |
|
|
(1.3 |
) |
Other (expense) income, net |
|
(0.5 |
) |
|
|
(1.7 |
) |
|
|
16.7 |
|
|
|
(1.2 |
) |
Loss from operations before income taxes |
|
(9.3 |
) |
|
|
(8.0 |
) |
|
|
(34.4 |
) |
|
|
(41.1 |
) |
Income tax (expense) benefit |
|
(1.3 |
) |
|
|
0.7 |
|
|
|
(4.5 |
) |
|
|
(0.9 |
) |
Net loss |
|
(10.6 |
) |
|
|
(7.3 |
) |
|
|
(38.9 |
) |
|
|
(42.0 |
) |
Net loss attributable to non-controlling interests and redeemable
non-controlling interests |
|
1.3 |
|
|
|
1.6 |
|
|
|
3.7 |
|
|
|
6.1 |
|
Net loss attributable to INNOVATE Corp. |
|
(9.3 |
) |
|
|
(5.7 |
) |
|
|
(35.2 |
) |
|
|
(35.9 |
) |
Less: Preferred dividends |
|
0.3 |
|
|
|
1.3 |
|
|
|
2.4 |
|
|
|
4.9 |
|
Net loss attributable to common stockholders |
$ |
(9.6 |
) |
|
$ |
(7.0 |
) |
|
$ |
(37.6 |
) |
|
$ |
(40.8 |
) |
|
|
|
|
|
|
|
|
Loss per share - basic and diluted |
$ |
(0.12 |
) |
|
$ |
(0.09 |
) |
|
$ |
(0.48 |
) |
|
$ |
(0.53 |
) |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted |
|
78.5 |
|
|
|
77.6 |
|
|
|
78.1 |
|
|
|
77.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INNOVATE CORP. |
CONSOLIDATED BALANCE SHEETS |
(in millions, except share amounts) |
|
(Unaudited) |
|
|
|
December 31,2023 |
|
December 31,2022 |
|
|
Assets |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
80.8 |
|
|
$ |
80.4 |
|
Accounts receivable, net |
|
278.4 |
|
|
|
254.9 |
|
Contract assets |
|
118.6 |
|
|
|
165.1 |
|
Inventory |
|
22.4 |
|
|
|
18.9 |
|
Assets held for sale |
|
3.1 |
|
|
|
— |
|
Other current assets |
|
14.6 |
|
|
|
17.1 |
|
Total current assets |
|
517.9 |
|
|
|
536.4 |
|
Investments |
|
1.8 |
|
|
|
59.5 |
|
Deferred tax asset |
|
2.0 |
|
|
|
1.7 |
|
Property, plant and equipment, net |
|
154.6 |
|
|
|
165.0 |
|
Goodwill |
|
127.1 |
|
|
|
127.1 |
|
Intangibles, net |
|
178.9 |
|
|
|
190.1 |
|
Other assets |
|
61.3 |
|
|
|
71.9 |
|
Total assets |
$ |
1,043.6 |
|
|
$ |
1,151.7 |
|
Liabilities, temporary equity and stockholders’
deficit |
|
|
|
Current liabilities |
|
|
|
Accounts payable |
$ |
142.9 |
|
|
$ |
202.5 |
|
Accrued liabilities |
|
70.8 |
|
|
|
65.4 |
|
Current portion of debt obligations |
|
30.5 |
|
|
|
30.6 |
|
Contract liabilities |
|
153.5 |
|
|
|
98.6 |
|
Other current liabilities |
|
16.1 |
|
|
|
20.1 |
|
Total current liabilities |
|
413.8 |
|
|
|
417.2 |
|
Deferred tax liability |
|
4.1 |
|
|
|
9.1 |
|
Debt obligations |
|
679.3 |
|
|
|
683.8 |
|
Other liabilities |
|
82.7 |
|
|
|
71.2 |
|
Total liabilities |
|
1,179.9 |
|
|
|
1,181.3 |
|
Commitments and contingencies |
|
|
|
Temporary equity |
|
|
|
Preferred stock Series A-3 and Series A-4, $0.001 par value |
|
16.4 |
|
|
|
17.6 |
|
Shares authorized: 20,000,000 as of both December 31, 2023 and
2022 |
|
|
|
Shares issued and outstanding: 6,125 of Series A-3 and 10,000 of
Series A-4 as of both December 31, 2023 and 2022 |
|
|
|
Redeemable non-controlling interest |
|
(1.0 |
) |
|
|
43.4 |
|
Total temporary equity |
|
15.4 |
|
|
|
61.0 |
|
Stockholders’ deficit |
|
|
|
Common stock, $0.001 par value |
|
0.1 |
|
|
|
0.1 |
|
Shares authorized: 160,000,000 as of both December 31, 2023
and 2022 |
|
|
|
Shares issued: 80,722,983 and 80,216,028 as of December 31,
2023 and 2022, respectively |
|
|
|
Shares outstanding: 79,234,991 and 78,787,768 as of
December 31, 2023 and 2022, respectively |
|
|
|
Additional paid-in capital |
|
328.2 |
|
|
|
330.1 |
|
Treasury stock, at cost: 1,487,992 and 1,428,260 shares as of
December 31, 2023 and 2022, respectively |
|
(5.4 |
) |
|
|
(5.3 |
) |
Accumulated deficit |
|
(487.3 |
) |
|
|
(452.1 |
) |
Accumulated other comprehensive (loss) income |
|
(1.1 |
) |
|
|
5.9 |
|
Total INNOVATE Corp. stockholders’ deficit |
|
(165.5 |
) |
|
|
(121.3 |
) |
Non-controlling interest |
|
13.8 |
|
|
|
30.7 |
|
Total stockholders’ deficit |
|
(151.7 |
) |
|
|
(90.6 |
) |
Total liabilities, temporary equity and stockholders’
deficit |
$ |
1,043.6 |
|
|
$ |
1,151.7 |
|
|
|
|
|
|
|
|
|
INNOVATE
CORP. |
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
EBITDA |
(Unaudited) |
|
|
(in millions) |
Three Months Ended December 31, 2023 |
|
Infrastructure |
|
Life Sciences |
|
Spectrum |
|
Non-OperatingCorporate |
|
Other andEliminations |
|
INNOVATE |
Net income (loss) attributable to INNOVATE Corp. |
$ |
8.9 |
|
$ |
(6.2 |
) |
|
$ |
(5.4 |
) |
|
$ |
(5.4 |
) |
|
$ |
(1.2 |
) |
|
$ |
(9.3 |
) |
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
2.8 |
|
|
0.2 |
|
|
|
1.3 |
|
|
|
— |
|
|
|
— |
|
|
|
4.3 |
|
Depreciation and amortization (included in cost of revenue) |
|
4.0 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4.0 |
|
Other operating (income) loss |
|
— |
|
|
— |
|
|
|
(0.2 |
) |
|
|
0.5 |
|
|
|
1.1 |
|
|
|
1.4 |
|
Interest expense |
|
3.5 |
|
|
0.8 |
|
|
|
3.4 |
|
|
|
11.5 |
|
|
|
— |
|
|
|
19.2 |
|
Other (income) expense, net |
|
— |
|
|
— |
|
|
|
2.2 |
|
|
|
(1.8 |
) |
|
|
0.1 |
|
|
|
0.5 |
|
Income tax expense (benefit) |
|
9.2 |
|
|
— |
|
|
|
0.3 |
|
|
|
(8.2 |
) |
|
|
— |
|
|
|
1.3 |
|
Non-controlling interest |
|
0.9 |
|
|
(1.7 |
) |
|
|
(0.5 |
) |
|
|
— |
|
|
|
— |
|
|
|
(1.3 |
) |
Share-based compensation expense |
|
— |
|
|
(0.3 |
) |
|
|
— |
|
|
|
0.5 |
|
|
|
— |
|
|
|
0.2 |
|
Acquisition and disposition costs |
|
0.7 |
|
|
0.1 |
|
|
|
— |
|
|
|
0.4 |
|
|
|
— |
|
|
|
1.2 |
|
Adjusted EBITDA |
$ |
30.0 |
|
$ |
(7.1 |
) |
|
$ |
1.1 |
|
|
$ |
(2.5 |
) |
|
$ |
— |
|
|
$ |
21.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Three Months Ended December 31, 2022 |
|
Infrastructure |
|
Life Sciences |
|
Spectrum |
|
Non-Operating Corporate |
|
Other and Eliminations |
|
INNOVATE |
Net income (loss) attributable to INNOVATE Corp. |
$ |
5.9 |
|
$ |
(4.3 |
) |
|
$ |
(2.8 |
) |
|
$ |
(4.9 |
) |
|
$ |
0.4 |
|
|
$ |
(5.7 |
) |
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
5.1 |
|
|
0.1 |
|
|
|
1.4 |
|
|
|
— |
|
|
|
— |
|
|
|
6.6 |
|
Depreciation and amortization (included in cost of revenue) |
|
3.8 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
3.8 |
|
Interest expense |
|
3.1 |
|
|
0.6 |
|
|
|
1.3 |
|
|
|
8.6 |
|
|
|
— |
|
|
|
13.6 |
|
Other expense (income), net |
|
0.9 |
|
|
0.8 |
|
|
|
2.1 |
|
|
|
(1.9 |
) |
|
|
(0.2 |
) |
|
|
1.7 |
|
Income tax expense (benefit) |
|
5.1 |
|
|
— |
|
|
|
(0.1 |
) |
|
|
(6.4 |
) |
|
|
0.7 |
|
|
|
(0.7 |
) |
Non-controlling interest |
|
0.5 |
|
|
(1.9 |
) |
|
|
(0.4 |
) |
|
|
— |
|
|
|
0.2 |
|
|
|
(1.6 |
) |
Share-based compensation expense |
|
— |
|
|
0.2 |
|
|
|
— |
|
|
|
0.5 |
|
|
|
— |
|
|
|
0.7 |
|
Restructuring and exit costs |
|
6.4 |
|
|
— |
|
|
|
0.7 |
|
|
|
— |
|
|
|
— |
|
|
|
7.1 |
|
Acquisition and disposition costs |
|
1.9 |
|
|
— |
|
|
|
0.3 |
|
|
|
0.4 |
|
|
|
— |
|
|
|
2.6 |
|
Adjusted EBITDA |
$ |
32.7 |
|
$ |
(4.5 |
) |
|
$ |
2.5 |
|
|
$ |
(3.7 |
) |
|
$ |
1.1 |
|
|
$ |
28.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INNOVATE CORP. |
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
EBITDA |
(Unaudited) |
|
|
(in millions) |
Year Ended December 31, 2023 |
|
Infrastructure |
|
Life Sciences |
|
Spectrum |
|
Non-OperatingCorporate |
|
Other andEliminations |
|
INNOVATE |
Net income (loss) attributable to INNOVATE Corp. |
$ |
28.7 |
|
|
$ |
(15.5 |
) |
|
$ |
(22.2 |
) |
|
$ |
(33.2 |
) |
|
$ |
7.0 |
|
|
$ |
(35.2 |
) |
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
14.4 |
|
|
|
0.5 |
|
|
|
5.2 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
20.2 |
|
Depreciation and amortization (included in cost of revenue) |
|
15.7 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15.8 |
|
Other operating (income) loss |
|
(0.2 |
) |
|
|
— |
|
|
|
(0.1 |
) |
|
|
0.5 |
|
|
|
1.1 |
|
|
|
1.3 |
|
Interest expense |
|
13.8 |
|
|
|
2.9 |
|
|
|
13.4 |
|
|
|
38.1 |
|
|
|
— |
|
|
|
68.2 |
|
Other (income) expense, net |
|
(1.2 |
) |
|
|
(4.1 |
) |
|
|
7.7 |
|
|
|
(6.7 |
) |
|
|
(12.4 |
) |
|
|
(16.7 |
) |
Income tax expense (benefit) |
|
20.2 |
|
|
|
— |
|
|
|
0.3 |
|
|
|
(14.8 |
) |
|
|
(1.2 |
) |
|
|
4.5 |
|
Non-controlling interest |
|
2.8 |
|
|
|
(7.3 |
) |
|
|
(2.5 |
) |
|
|
— |
|
|
|
3.3 |
|
|
|
(3.7 |
) |
Share-based compensation expense |
|
— |
|
|
|
0.2 |
|
|
|
— |
|
|
|
2.0 |
|
|
|
— |
|
|
|
2.2 |
|
Legacy accounts receivable expense |
|
2.2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.2 |
|
Restructuring and exit costs |
|
2.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
2.2 |
|
Acquisition and disposition costs |
|
2.1 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.5 |
|
|
|
1.2 |
|
|
|
4.0 |
|
Adjusted EBITDA |
$ |
100.6 |
|
|
$ |
(23.1 |
) |
|
$ |
2.0 |
|
|
$ |
(13.5 |
) |
|
$ |
(1.0 |
) |
|
$ |
65.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Year Ended December 31, 2022 |
|
Infrastructure |
|
Life Sciences |
|
Spectrum |
|
Non-Operating Corporate |
|
Other and Eliminations |
|
INNOVATE |
Net income (loss) attributable to INNOVATE Corp. |
$ |
29.2 |
|
|
$ |
(19.2 |
) |
|
$ |
(13.3 |
) |
|
$ |
(35.3 |
) |
|
$ |
2.7 |
|
|
$ |
(35.9 |
) |
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
21.0 |
|
|
|
0.3 |
|
|
|
5.8 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
27.2 |
|
Depreciation and amortization (included in cost of revenue) |
|
15.0 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
15.0 |
|
Other operating (income) loss |
|
(0.6 |
) |
|
|
— |
|
|
|
1.3 |
|
|
|
— |
|
|
|
— |
|
|
|
0.7 |
|
Interest expense |
|
10.1 |
|
|
|
0.8 |
|
|
|
7.4 |
|
|
|
33.7 |
|
|
|
— |
|
|
|
52.0 |
|
Other (income) expense, net |
|
(1.0 |
) |
|
|
0.4 |
|
|
|
3.9 |
|
|
|
(1.9 |
) |
|
|
(0.2 |
) |
|
|
1.2 |
|
Income tax expense (benefit) |
|
16.5 |
|
|
|
— |
|
|
|
(0.1 |
) |
|
|
(16.2 |
) |
|
|
0.7 |
|
|
|
0.9 |
|
Non-controlling interest |
|
2.8 |
|
|
|
(8.2 |
) |
|
|
(1.9 |
) |
|
|
— |
|
|
|
1.2 |
|
|
|
(6.1 |
) |
Share-based compensation expense |
|
— |
|
|
|
0.5 |
|
|
|
— |
|
|
|
1.9 |
|
|
|
— |
|
|
|
2.4 |
|
Restructuring and exit costs |
|
6.5 |
|
|
|
— |
|
|
|
0.7 |
|
|
|
— |
|
|
|
— |
|
|
|
7.2 |
|
Acquisition and disposition costs |
|
2.2 |
|
|
|
— |
|
|
|
0.7 |
|
|
|
1.0 |
|
|
|
(0.4 |
) |
|
|
3.5 |
|
Adjusted EBITDA |
$ |
101.7 |
|
|
$ |
(25.4 |
) |
|
$ |
4.5 |
|
|
$ |
(16.7 |
) |
|
$ |
4.0 |
|
|
$ |
68.1 |
|
INNOVATE (NYSE:VATE)
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INNOVATE (NYSE:VATE)
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