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The Shareholder Forumtm

support for fair value realization

of stock investments in

DBM Global Incorporated

(f/k/a Schuff International Inc.)

 

 

Support of Minority Shareholder Interests

The Shareholder Forum had offered to support Appraised Value Rights ("AVR") of DBM (f/k/a Schuff International) minority shareholders in 2014 following a $31.50 per share tender offer by the company's controlling shareholder, HC2 Holdings, Inc., with the stated intent to proceed with a short-form merger "as soon as practicable.”

HC2 acquired DBM shares in the 2014 tender offer and other purchases bringing its total holdings to 92% of outstanding DBM shares, but has not proceeded with a merger. The Forum has continued to support the minority shareholder interests of its AVR participants in this context.

 

     

 

 

The company's detailed report of quarterly results had not yet been filed with the SEC as of 4pm on November 3, 2015.

 

Source: HC2 Holdings, Inc. (published by Globe NewsWire): November 2, 2015 press release

 

HC2 Holdings Reports Third Quarter 2015 Results


November 02, 2015 07:03 ET | Source: HC2 Holdings, Inc.


Net Revenue of $277.5 Million for the Third Quarter 2015 and $760.3 Million for the 9 Months Ended September 30, 2015

Adjusted EBITDA of $24.7 Million From Our Primary Operating Subsidiaries

NEW YORK, Nov. 02, 2015 (GLOBE NEWSWIRE) -- HC2 Holdings, Inc. (“HC2”) (NYSE MKT:HCHC), a diversified holding company that focuses on acquiring, investing in and operating businesses that it considers to be under or fairly valued and growing its acquired businesses, today announced its consolidated results for the third quarter of fiscal 2015, which ended on September 30, 2015.

“We are very pleased with our third quarter execution, especially the continued strength of Schuff and Global Marine, two of HC2's key operating companies,” said Philip Falcone, HC2’s Chairman, President and Chief Executive Officer. “We are encouraged by the 16% increase in Schuff’s backlog of projects during the quarter and the company's ongoing execution of building a solid revenue pipeline. In Marine Services, our outlook remains positive as Global Marine, a company that has been in business for more than 120 years, continues to perform as expected as their maintenance sector remains robust and continues to underpin results. We are also very excited about the progress at our Telecommunications segment which is now Adjusted EBITDA positive as a result of the past year’s restructuring of the PTGi ICS business. Looking forward, we will continue to pursue highly attractive, cash flow positive businesses and will remain committed to building long-term value in these businesses, which we believe will offer a significant value added proposition to our shareholders.”

Third Quarter 2015 Financial Highlights:

Net revenue: HC2 recorded consolidated total net revenues of $277.5 million for the third quarter of 2015, an increase of $98.0 million, or 54.6%, as compared to the third quarter of 2014 as reported and up $53.5 million, or 23.9%, from the third quarter of 2014 on a pro-forma basis. Net revenue for the third quarter of 2015 decreased $3.5 million, or 1%, when compared to the seasonally high second quarter of $281.0 million, primarily driven by decreases in our Manufacturing segment due to a reduction in industrial projects in the Gulf Coast region and our Marine Services segment due to lower installation projects during the quarter. The decrease was largely offset by continued improvement in our Telecom segment due to continued expansion into emerging markets.

HC2 recorded consolidated total net revenue of $760.3 million for the nine months ended September 30, 2015, an increase of $440.9 million, or 138%, as compared to the same period last year as reported and an increase of $130.2 million, or 20.7%, for the same period of 2014 on a pro-forma basis.

Operating Income: Income from operations for the third quarter was $2.4 million compared to $3.3 million during the second quarter of 2015. The decrease in operating profit was largely the result of an increase in acquisition costs as we look to close the insurance transaction in the fourth quarter along with lease termination costs in our Telecom segment as they continue to consolidate operations to low cost countries offset in part by cost savings in our Pacific region and favorable mix in higher margin projects in our Manufacturing segment.

Adjusted EBITDA: HC2 reported total Adjusted EBITDA of $14.1 million and $39.4 million for the three and nine month period ended September 30, 2015, respectively, up from $8.4 million and $9.0 million from the three and nine month periods ended September 30, 2014, respectively, as reported.

Adjusted EBITDA for HC2’s primary operating subsidiaries, Schuff and Global Marine, was a combined $24.7 million for the third quarter of 2015 and $69.8 million for the first nine months of the year. Schuff continued to grow its Adjusted EBITDA during the quarter to $14.4 million as the company continued to profit from improved margins in the Pacific division. In the Telecommunications segment, PTGi ICS enjoyed positive Adjusted EBITDA for the second consecutive quarter.

Adjusted EBITDA growth during the first nine months of the year was largely the result of our ability to subcontract work at lower costs in our Manufacturing segment along with an increased level of installation work in our Marine Services segment. This was offset, in part by, early stage investments and increases in deal related diligence expenses in Corporate and Other segments.

Balance sheet: As of September 30, 2015, HC2 had consolidated cash, cash equivalents and short-term investments of $84.7 million.

Additional Third Quarter Highlights and Recent Developments:

  • HC2 has received $16.2 million in total dividends year-to-date from its primary subsidiaries, including $8.2 million from Schuff and $8.0 million from Global Marine.
  • Schuff’s backlog was $381.6 million as of September 30, 2015, compared to $329.3 million as of June 30, 2015. We expect to continue to add backlog during the fourth quarter. Notable ongoing projects include the Wilshire Grand Center in Los Angeles, the Sacramento Kings Arena, and the new Apple headquarters in Cupertino, CA.
  • Global Marine completed a major fiber optic project in the Gulf of Guinea and had its first installation of the R2 repeater following successful sea trials. In addition, Huawei Marine, a Global Marine joint venture company, announced it will construct the Cameroon-Brazil Cable System, connecting Africa to Latin America.
  • HC2’s acquisition of long-term care and life insurance businesses, United Teacher Associates Insurance Company and Continental General Insurance Company, is expected to close during the fourth quarter of 2015, subject to receipt of required governmental approvals.
  • American Natural Gas (“ANG”) completed a new compressed natural gas (“CNG”) facility at the Tops Friendly Markets distribution center in Lancaster, New York. ANG is also building CNG stations near Rochester, New York and in Georgetown, Kentucky where Bestway Express, a truckload carrier, will be the anchor tenant.
  • Pansend Life Sciences, LLC has entered into an agreement to provide $22.4 million in staged financing with MediBeacon, Inc., maker of a proprietary noninvasive real-time monitoring system for kidney function.
  • On October 9, 2015, HC2 announced that one of its shareholders, HGI Funding, LLC (“HGI”), a subsidiary of HRG Group, Inc., entered into a definitive stock purchase agreement for the sale of 4,678,395 shares of common stock at $7.50 per share. HC2 did not receive any of the proceeds from the sale. The purchasers included Philip Falcone, HC2’s Chairman, President and Chief Executive Officer, who purchased 540,000 shares and Paul Voigt, HC2’s Senior Managing Director, who purchased 100,000 shares.

Non-GAAP Financial Measures and Other Information

Pro forma net revenue gives effect to revenues from our 2014 acquisitions of Schuff and Global Marine as if they had occurred on January 1, 2014.

Management believes that presenting pro forma net revenue is important to understanding HC2’s financial performance, providing better analysis of trends in our underlying businesses as it allows for comparability to prior period results.

The calculation of Adjusted EBITDA, as defined by us, consists of Net income (loss) as adjusted for gain (loss) on sale or disposal of assets; lease termination costs; interest expense; amortization of debt discount; other income (expense), net; foreign currency transaction gain (loss); income tax (benefit) expense; loss from discontinued operations; noncontrolling interest; share-based compensation expense; acquisition related costs, other costs and depreciation and amortization expense.

Management believes that Adjusted EBITDA is significant to gaining an understanding of HC2’s 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 other adjustments 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-US GAAP measurements are useful supplemental information, such adjusted results are not intended to replace HC2’s US GAAP financial results.

Conference Call

HC2 Holdings, Inc. will host a live conference call to discuss its results on Monday, November 2, 2015 at 10:00 a.m. Eastern Time. To join the event, participants may call 1.866.395.3893 (U.S. callers) or 1.678.509.7540 (international callers), using conference ID number 53945900. Alternatively, a live webcast of the conference call can be accessed by interested parties through the Investor Relations section of the HC2 Website, www.HC2.com.

Cautionary Statement Regarding Forward-Looking Statements

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This 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. These statements are based on the beliefs and assumptions of HC2's management and the management of HC2's subsidiaries. The Company believes these judgments are reasonable, but you should understand that these statements are not guarantees of performance or results, and the Company’s actual results could differ materially from those expressed in the forward-looking statements due to a variety of important factors, both positive and negative, that may be revised or supplemented in subsequent reports on Forms 10-K, 10-Q and 8-K. Factors that could cause actual results, events and developments to differ include, without limitation, capital market conditions, the ability of HC2's subsidiaries to generate sufficient net income and cash flows to make upstream cash distributions, trading characteristics of the HC2 common stock, the ability of HC2 and its subsidiaries to identify any suitable future acquisition opportunities, our ability to realize efficiencies, cost savings, income and margin improvements, growth, economies of scale and other anticipated benefits of strategic transactions, integrating financial reporting of acquired or target businesses, completing pending and future acquisitions, including our pending acquisition of United Teacher Associates Insurance Company and Continental General Insurance Company, and dispositions, litigation and other contingent liabilities, changes in regulations, taxes and risks that may affect the performance of the operating subsidiaries of HC2. Additional information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to HC2 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 HC2 undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

About HC2

HC2 Holdings, Inc. is a publicly traded (NYSE MKT:HCHC) diversified holding company, which seeks opportunities to acquire and grow businesses that can generate long-term sustainable free cash flow and attractive returns in order to maximize value for all stakeholders. HC2 has a diverse array of operating subsidiaries across six reportable segments, including Manufacturing, Marine Services, Utilities, Telecommunications, Life Sciences and Other. Currently, HC2’s largest operating subsidiaries are Schuff International, Inc., a leading structural steel fabricator and erector in the United States, and Global Marine Systems Limited, a leading provider of engineering and underwater services on submarine cables. Founded in 1994, HC2 is headquartered in Herndon, Virginia.

 

HC2 HOLDINGS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

(in thousands, except per share amounts)

 

 

Three Months Ended
September 30,

Nine Months Ended
September 30,

 

2015

2014

2015

2014

Services revenue

$

151,933

 

$

41,267

 

$

373,492

 

$

126,731

 

Sales revenue

 

125,534

 

 

138,166

 

 

386,765

 

 

192,642

 

Net revenue

 

277,467

 

 

179,433

 

 

760,257

 

 

319,373

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue - services

 

138,099

 

 

39,464

 

 

334,608

 

 

120,101

 

Cost of revenue - sales

 

103,375

 

 

119,175

 

 

324,820

 

 

162,505

 

Selling, general and administrative

 

27,830

 

 

20,246

 

 

77,359

 

 

40,482

 

Depreciation and amortization

 

6,593

 

 

921

 

 

16,835

 

 

1,475

 

Gain on sale or disposal of assets

 

(1,957

)

 

(448

)

 

(986

)

 

(81

)

Lease termination costs

 

1,124

 

 

—

 

 

1,124

 

 

—

 

Total operating expenses

 

275,064

 

 

179,358

 

 

753,760

 

 

324,482

 

Income (loss) from operations

 

2,403

 

 

75

 

 

6,497

 

 

(5,109

)

Interest expense

 

(10,343

)

 

(2,103

)

 

(28,992

)

 

(3,116

)

Amortization of debt discount

 

(40

)

 

(805

)

 

(216

)

 

(1,381

)

Loss on early extinguishment or restructuring of debt

 

—

 

 

(6,947

)

 

—

 

 

(6,947

)

Other income (expense), net

 

1,216

 

 

(1,092

)

 

(3,528

)

 

524

 

Foreign currency transaction gain

 

1,099

 

 

170

 

 

2,150

 

 

573

 

Loss from continuing operations before income (loss) from equity investees and income tax benefit (expense)

 

(5,665

)

 

(10,702

)

 

(24,089

)

 

(15,456

)

Income (loss) from equity investees

 

535

 

 

(288

)

 

(724

)

 

(288

)

Income tax benefit (expense)

 

649

 

 

(4,515

)

 

4,018

 

 

(6,470

)

Loss from continuing operations

 

(4,481

)

 

(15,505

)

 

(20,795

)

 

(22,214

)

Loss from discontinued operations

 

(24

)

 

(106

)

 

(44

)

 

(62

)

Gain (loss) from sale of discontinued operations

 

—

 

 

663

 

 

—

 

 

(121

)

Net loss

 

(4,505

)

 

(14,948

)

 

(20,839

)

 

(22,397

)

Less: Net income attributable to noncontrolling interest

 

(65

)

 

(931

)

 

(8

)

 

(1,990

)

Net loss attributable to HC2 Holdings, Inc.

 

(4,570

)

 

(15,879

)

 

(20,847

)

 

(24,387

)

Less: Preferred stock dividends and accretion

 

1,035

 

 

1,004

 

 

3,212

 

 

1,204

 

Net loss attributable to common stock and participating preferred stockholders

$

(5,605

)

$

(16,883

)

$

(24,059

)

$

(25,591

)

Basic loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations attributable to HC2 Holdings, Inc.

$

(0.22

)

$

(0.75

)

$

(0.96

)

$

(1.38

)

Gain (loss) from sale of discontinued operations

 

—

 

 

0.03

 

 

—

 

 

(0.01

)

Net loss attributable to HC2 Holdings, Inc.

$

(0.22

)

$

(0.72

)

$

(0.96

)

$

(1.39

)

Diluted loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Loss from continuing operations attributable to HC2 Holdings, Inc.

$

(0.22

)

$

(0.75

)

$

(0.96

)

$

(1.38

)

Gain (loss) from sale of discontinued operations

 

—

 

 

0.03

 

 

—

 

 

(0.01

)

Net loss attributable to HC2 Holdings, Inc.

$

(0.22

)

$

(0.72

)

$

(0.96

)

$

(1.39

)

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

25,592

 

 

23,372

 

 

25,093

 

 

18,348

 

Diluted

 

25,592

 

 

23,372

 

 

25,093

 

 

18,348

 

 

HC2 HOLDINGS, INC.

 

CONDENSED CONSOLIDATED BALANCE SHEET

 

(in thousands, except share and per share amounts)

 

 

September 30,
2015

December 31,
2014

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

$

81,066

 

$

107,978

 

Short-term investments

 

3,625

 

 

4,867

 

Accounts receivable (net of allowance for doubtful accounts receivable of $1,576 and $2,760 at September 30, 2015 and December 31, 2014, respectively)

 

187,474

 

 

151,558

 

Costs and recognized earnings in excess of billings on uncompleted contracts

 

37,266

 

 

28,098

 

Deferred tax asset - current

 

1,701

 

 

1,701

 

Inventories

 

14,408

 

 

14,975

 

Prepaid expenses and other current assets

 

27,835

 

 

22,455

 

Assets held for sale

 

6,349

 

 

3,865

 

Total current assets

 

359,724

 

 

335,497

 

Restricted cash

 

7,196

 

 

6,467

 

Long-term investments

 

77,154

 

 

48,674

 

Property, plant and equipment, net

 

221,842

 

 

239,851

 

Goodwill

 

30,665

 

 

27,990

 

Other intangible assets, net

 

26,674

 

 

31,144

 

Deferred tax asset - long-term

 

23,571

 

 

15,811

 

Other assets

 

18,201

 

 

18,614

 

Total assets

$

765,027

 

$

724,048

 

Liabilities, temporary equity and stockholders' equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

$

65,573

 

$

79,794

 

Accrued interconnection costs

 

36,689

 

 

9,717

 

Accrued payroll and employee benefits

 

22,127

 

 

20,023

 

Accrued expenses and other current liabilities

 

48,338

 

 

34,042

 

Billings in excess of costs and recognized earnings on uncompleted contracts

 

20,045

 

 

41,959

 

Accrued income taxes

 

1,470

 

 

512

 

Accrued interest

 

11,567

 

 

3,125

 

Current portion of long-term debt

 

13,454

 

 

10,444

 

Current portion of pension liability

 

—

 

 

5,966

 

Total current liabilities

 

219,263

 

 

205,582

 

Long-term debt

 

374,404

 

 

332,927

 

Pension liability

 

27,664

 

 

31,244

 

Other liabilities

 

8,151

 

 

1,617

 

Total liabilities

 

629,482

 

 

571,370

 

Commitments and contingencies

 

 

 

 

 

 

Temporary equity

 

 

 

 

 

 

Preferred stock, $0.001 par value – 20,000,000 shares authorized; Series A - 30,000 shares issued and outstanding at September 30, 2015 and December 31, 2014; Series A-1 - 10,000 and 11,000 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively; Series A-2 - 14,000 and 0 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively

 

53,403

 

 

39,845

 

Stockholders' equity:

 

 

 

 

 

 

Common stock, $0.001 par value – 80,000,000 shares authorized; 25,623,982 and 23,844,711 shares issued and 25,592,356 and 23,813,085 shares outstanding at September 30, 2015 and December 31, 2014, respectively

 

26

 

 

24

 

Additional paid-in capital

 

151,662

 

 

147,081

 

Accumulated deficit

 

(62,727

)

 

(41,880

)

Treasury stock, at cost – 31,626 shares at September 30, 2015 and December 31, 2014, respectively

 

(378

)

 

(378

)

Accumulated other comprehensive loss

 

(28,273

)

 

(15,178

)

Total HC2 Holdings, Inc. stockholders' equity before noncontrolling interest

 

60,310

 

 

89,669

 

Noncontrolling interest

 

21,832

 

 

23,164

 

Total stockholders' equity

 

82,142

 

 

112,833

 

Total liabilities, temporary equity and stockholders' equity

$

765,027

 

$

724,048

 

 

HC2 HOLDINGS, INC.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

 

 

Nine Months Ended September 30,

 

 

2015

 

 

2014

 

Cash flows from operating activities:

 

 

Net loss

$

  (20,839

)

$

  (22,397

)

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

Provision for doubtful accounts receivable

 

  325

 

 

  (114

)

Share-based compensation expense

 

  6,943

 

 

  1,725

 

Depreciation and amortization

 

  22,570

 

 

  4,071

 

Amortization of deferred financing costs

 

  1,030

 

 

  288

 

Lease termination costs

 

  1,124

 

 

—

 

(Gain) loss on sale or disposal of assets

 

  (986

)

 

  635

 

(Gain) loss on sale of investments

 

  (399

)

 

  (437

)

Equity investment (income)/loss

 

  724

 

 

  288

 

Amortization of debt discount

 

  216

 

 

  1,381

 

Unrealized (gain) loss on investments

 

  (32

)

 

—

 

Loss on early extinguishment of debt

 

—

 

 

  6,947

 

Deferred income taxes

 

  (8,143

)

 

  1

 

Other, net

 

  225

 

 

 —

 

Unrealized foreign currency transaction (gain) loss on intercompany and foreign debt

 

  90

 

 

  57

 

Changes in assets and liabilities, net of acquisitions:

 

 

(Increase) decrease in accounts receivable

 

  (36,099

)

 

  6,037

 

(Increase) decrease in costs and recognized earnings in excess of billings on uncompleted contracts

 

  (9,253

)

 

  522

 

(Increase) decrease in inventories

 

  455

 

 

  (1,984

)

(Increase) decrease in prepaid expenses and other current assets

 

  (4,799

)

 

  25,539

 

(Increase) decrease in other assets

 

  1,483

 

 

  1,558

 

Increase (decrease) in accounts payable

 

  (15,675

)

 

  1,751

 

Increase (decrease) in accrued interconnection costs

 

  26,915

 

 

  (2,618

)

Increase (decrease) in accrued payroll and employee benefits

 

  2,936

 

 

  3,055

 

Increase (decrease) in accrued expenses and other current liabilities

 

  18,406

 

 

  (3,785

)

Increase (decrease) in billings in excess of costs and recognized earnings on uncompleted contracts

 

  (21,933

)

 

  (7,695

)

Increase (decrease) in accrued income taxes

 

  2,060

 

 

  (2,198

)

Increase (decrease) in accrued interest

 

  8,442

 

 

  502

 

Increase (decrease) in other liabilities

 

  (720

)

 

  (1,371

)

Increase (decrease) in pension liability

 

  (8,665

)

 

—

 

Net cash (used in) provided by operating activities

 

  (33,599

)

 

  11,758

 

Cash flows from investing activities:

 

 

Purchase of property, plant and equipment

 

  (16,751

)

 

  (4,064

)

Sale of property and equipment and other assets

 

  4,994

 

 

  3,696

 

Purchase of equity investments

 

  (11,506

)

 

  (15,363

)

Sale of equity investments

 

  1,026

 

 

—

 

Sale of assets held for sale

 

  1,479

 

 

 —

 

Purchase of available-for-sale securities

 

  (10,857

)

 

  (3,277

)

Sale of available-for-sale securities

 

  5,850

 

 

  24

 

Investment in debt securities

 

  (19,347

)

 

  (250

)

Sale of investments

 

—

 

 

  1,111

 

Cash paid for business acquisitions, net of cash acquired

 

  (568

)

 

  (163,510

)

Purchase of noncontrolling interest

 

  (239

)

 

  (6,978

)

Contribution by noncontrolling interest

 

—

 

 

  15,500

 

Receipt of dividends from equity investees

 

  2,448

 

 

 —

 

(Increase) decrease in restricted cash

 

  (727

)

 

—

 

Net cash used in investing activities

 

  (44,198

)

 

  (173,111

)

Cash flows from financing activities:

 

 

Proceeds from long-term obligations

 

  425,527

 

 

  492,068

 

Principal payments on long-term obligations

 

  (379,037

)

 

  (294,237

)

Payment of fees on restructuring of debt

 

—

 

 

  (837

)

Payment of deferred financing costs

 

  (1,137

)

 

—

 

Proceeds from sale of common stock, net

 

—

 

 

  6,000

 

Proceeds from sale of preferred stock, net

 

  14,033

 

 

  39,765

 

Proceeds from the exercise of warrants and stock options

 

 —

 

 

  24,344

 

Payment of dividends

 

  (3,855

)

 

  (750

)

Taxes paid in lieu of shares issued for share-based compensation

 

—

 

 

  (41

)

Net cash provided by financing activities

 

  55,531

 

 

  266,312

 

Effects of exchange rate changes on cash and cash equivalents

 

  (4,646

)

 

  (2,217

)

Net change in cash and cash equivalents

 

  (26,912

)

 

  102,742

 

Cash and cash equivalents, beginning of period

 

  107,978

 

 

  8,997

 

Cash and cash equivalents, end of period

$

  81,066

 

$

  111,739

 

 

HC2 HOLDINGS, INC.

 

PRO FORMA NET REVENUE

 

(in thousands)

 

Three Months Ended September 30,

 

2015

2014 Actual

2014 Pro Forma

2015 Compared to 2014
Pro Forma

(in thousands)

Net
Revenue

% of
Total

Net
Revenue

% of
Total

Net
Revenue

% of
Total

Variance

Variance %

Telecommunications

$

116,872

 

 

42.1

%

$

41,267

 

 

23.0

%

$

41,267

 

 

18.4

%

$

75,605

 

 

183.2

%

Manufacturing

 

122,932

 

 

44.3

%

 

137,706

 

 

76.7

%

 

137,706

 

 

61.5

%

 

(14,774

)

 

(10.7

)%

Marine Services

 

35,062

 

 

12.6

%

 

—

 

 

—

%

 

44,393

 

 

19.8

%

 

(9,331

)

 

(21.0

)%

Utilities

 

1,841

 

 

0.7

%

 

460

 

 

0.3

%

 

561

 

 

0.3

%

 

1,280

 

 

228.2

%

Other

 

760

 

 

0.3

%

 

—

 

 

—

%

 

—

 

 

—

%

 

760

 

 

100.0

%

Total Net Revenue

$

277,467

 

 

100.0

%

$

179,433

 

 

100.0

%

$

223,927

 

 

100.0

%

$

53,540

 

 

23.9

%

Less net revenue from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marine Services

 

 

 

 

 

 

 

 

 

 

 

 

 

(44,393

)

 

 

 

 

 

 

 

 

 

Utilities

 

 

 

 

 

 

 

 

 

 

 

 

 

(101

)

 

 

 

 

 

 

 

 

 

Total Net Revenue - Actual

 

 

 

 

 

 

 

 

 

 

 

 

$

179,433

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

2015

2014 Actual

2014 Pro Forma

2015 Compared to 2014
Pro Forma

(in thousands)

Net
Revenue

% of
Total

Net
Revenue

% of
Total

Net
Revenue

% of
Total

Variance

Variance %

Telecommunications

$

267,554

 

 

35.2

%

$

126,731

 

 

39.7

%

$

126,731

 

 

20.1

%

$

140,823

 

 

111.1

%

Manufacturing

 

380,783

 

 

50.1

%

 

192,182

 

 

60.2

%

 

369,923

 

 

58.7

%

 

10,860

 

 

2.9

%

Marine Services

 

105,939

 

 

13.9

%

 

—

 

 

—

%

 

132,215

 

 

21.0

%

 

(26,276

)

 

(19.9

)%

Utilities

 

4,432

 

 

0.6

%

 

460

 

 

0.1

%

 

1,166

 

 

0.2

%

 

3,266

 

 

280.1

%

Other

 

1,549

 

 

0.2

%

 

—

 

 

—

%

 

—

 

 

—

%

 

1,549

 

 

100.0

%

Total Net Revenue

$

760,257

 

 

100.0

%

$

319,373

 

 

100.0

%

$

630,035

 

 

100.0

%

$

130,222

 

 

20.7

%

Less net revenue from:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manufacturing

 

 

 

 

 

 

 

 

 

 

 

 

 

(177,741

)

 

 

 

 

 

 

 

 

 

Marine Services

 

 

 

 

 

 

 

 

 

 

 

 

 

(132,215

)

 

 

 

 

 

 

 

 

 

Utilities

 

 

 

 

 

 

 

 

 

 

 

 

 

(706

)

 

 

 

 

 

 

 

 

 

Total Net Revenue - Actual

 

 

 

 

 

 

 

 

 

 

 

 

$

319,373

 

 

 

 

 

 

 

 

 

 

 

HC2 HOLDINGS, INC.

 

ADJUSTED EBITDA

 

(in thousands)

 

 

Three Months Ended September 30, 2015

 

Manufacturing

Marine
Services

Manufacturing
and Marine
Services

Telecommunications

Corporate

Other (1)

HC2

Net income (loss)

$

7,116

 

$

8,016

 

$

15,132

 

$

(362

)

$

(12,549

)

$

(6,791

)

$

(4,570

)

Adjustments to reconcile net income (loss) to Adjusted EBIT:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Gain) loss on sale or disposal of assets

 

(990

)

 

(968

)

 

(1,958

)

 

—

 

 

—

 

 

1

 

 

(1,957

)

Lease termination costs

 

—

 

 

—

 

 

—

 

 

1,124

 

 

—

 

 

—

 

 

1,124

 

Interest expense

 

354

 

 

929

 

 

1,283

 

 

—

 

 

9,050

 

 

10

 

 

10,343

 

Amortization of debt discount

 

—

 

 

—

 

 

—

 

 

—

 

 

40

 

 

—

 

 

40

 

Other (income) expense, net

 

(141

)

 

(214

)

 

(355

)

 

1

 

 

(873

)

 

11

 

 

(1,216

)

Foreign currency transaction (gain) loss

 

—

 

 

(937

)

 

(937

)

 

(163

)

 

1

 

 

—

 

 

(1,099

)

Income tax (benefit) expense

 

5,284

 

 

130

 

 

5,414

 

 

—

 

 

(6,063

)

 

—

 

 

(649

)

Loss from discontinued operations

 

—

 

 

—

 

 

—

 

 

—

 

 

—

 

 

24

 

 

24

 

Noncontrolling interest

 

383

 

 

—

 

 

383

 

 

—

 

 

—

 

 

(318

)

 

65

 

Share-based payment expense

 

—

 

 

—

 

 

—

 

 

—

 

 

2,322

 

 

22

 

 

2,344

 

Acquisition related costs

 

—

 

 

—

 

 

—

 

 

—

 

 

2,732

 

 

—

 

 

2,732

 

Other costs

 

—

 

 

—

 

 

—

 

 

109

 

 

—

 

 

—

 

 

109

 

Adjusted EBIT

 

12,006

 

 

6,956

 

 

18,962

 

 

709

 

 

(5,340

)

 

(7,041

)

 

7,290

 

Depreciation and amortization

 

513

 

 

5,085

 

 

5,598

 

 

98

 

 

—

 

 

897

 

 

6,593

 

Depreciation and amortization (included in cost of revenue)

 

1,928

 

 

—

 

 

1,928

 

 

—

 

 

—

 

 

—

 

 

1,928

 

Foreign currency (gain) loss (included in cost of revenue)

 

—

 

 

(1,739

)

 

(1,739

)

 

—

 

 

—

 

 

—

 

 

(1,739

)

Adjusted EBITDA

$

14,447

 

$

10,302

 

$

24,749

 

$

807

 

$

(5,340

)

$

(6,144

)

$

14,072

 

 

(1) Other includes Utilities, Life Sciences and income (loss) from equity investees not included in our Marine Services segment.

 

 

Nine Months Ended September 30, 2015

 

Manufacturing

Marine
Services

Manufacturing and
Marine Services

Telecommunications

Corporate

Other (1)

HC2

Net income (loss)

$

16,182

 

$

19,983

 

$

36,165

 

$

(299

)

$

(39,083

)

$

(17,630

)

$

(20,847

)

Adjustments to reconcile net income (loss) to Adjusted EBIT:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Gain) loss on sale or disposal of assets

 

(69

)

 

(968

)

 

(1,037

)

 

50

 

 

—

 

 

1

 

 

(986

)

Lease termination costs

 

—

 

 

—

 

 

—

 

 

1,124

 

 

—

 

 

—

 

 

1,124

 

Interest expense

 

1,064

 

 

2,888

 

 

3,952

 

 

—

 

 

25,007

 

 

33

 

 

28,992

 

Amortization of debt discount

 

—

 

 

—

 

 

—

 

 

—

 

 

216

 

 

—

 

 

216

 

Other (income) expense, net

 

(164

)

 

(251

)

 

(415

)

 

(5

)

 

3,941

 

 

7

 

 

3,528

 

Foreign currency transaction (gain) loss

 

—

 

 

(1,842

)

 

(1,842

)

 

(309

)

 

1

 

 

—

 

 

(2,150

)

Income tax (benefit) expense

 

12,188

 

 

142

 

 

12,330

 

 

—

 

 

(16,348

)

 

—

 

 

(4,018

)

Loss from discontinued operations

 

20

 

 

—

 

 

20

 

 

—

 

 

—

 

 

24

 

 

44

 

Noncontrolling interest

 

967

 

 

—

 

 

967

 

 

—

 

 

—

 

 

(959

)

 

8

 

Share-based payment expense

 

—

 

 

—

 

 

—

 

 

—

 

 

6,921

 

 

22

 

 

6,943

 

Acquisition related costs

 

—

 

 

—

 

 

—

 

 

—

 

 

4,701

 

 

—

 

 

4,701

 

Other costs

 

—

 

 

—

 

 

—

 

 

109

 

 

—

 

 

—

 

 

109

 

Adjusted EBIT

 

30,188

 

 

19,952

 

 

50,140

 

 

670

 

 

(14,644

)

 

(18,502

)

 

17,664

 

Depreciation and amortization

 

1,490

 

 

13,196

 

 

14,686

 

 

294

 

 

—

 

 

1,855

 

 

16,835

 

Depreciation and amortization (included in cost of revenue)

 

5,735

 

 

—

 

 

5,735

 

 

—

 

 

—

 

 

—

 

 

5,735

 

Foreign currency (gain) loss (included in cost of revenue)

 

—

 

 

(804

)

 

(804

)

 

—

 

 

—

 

 

—

 

 

(804

)

Adjusted EBITDA

$

37,413

 

$

32,344

 

$

69,757

 

$

964

 

$

(14,644

)

$

(16,647

)

$

39,430

 

 

(1) Other includes Utilities, Life Sciences and income (loss) from equity investees not included in our Marine Services segment.

 

 

Three Months Ended

Nine Months Ended

 

September 30, 2014

Net income (loss)

$

(15,879

)

$

(24,387

)

Adjustments to reconcile net income (loss) to Adjusted EBIT:

 

 

 

 

 

 

(Gain) loss on sale or disposal of assets

 

(448

)

 

(81

)

Lease termination costs

 

—

 

 

—

 

Interest expense

 

2,103

 

 

3,116

 

Amortization of debt discount

 

805

 

 

1,381

 

Loss on early extinguishment or restructuring of debt

 

6,947

 

 

6,947

 

Other (income) expense, net

 

1,092

 

 

(524

)

Foreign currency transaction (gain) loss

 

(170

)

 

(573

)

Income tax (benefit) expense

 

4,515

 

 

6,470

 

Loss from discontinued operations

 

106

 

 

62

 

(Gain) loss from sale of discontinued operations

 

(663

)

 

121

 

Noncontrolling interest

 

931

 

 

1,990

 

Share-based payment expense

 

719

 

 

1,725

 

Acquisition related costs

 

5,345

 

 

8,663

 

Other costs

 

—

 

 

—

 

Adjusted EBIT

 

5,403

 

 

4,910

 

Depreciation and amortization

 

921

 

 

1,475

 

Depreciation and amortization (included in cost of revenue)

 

2,107

 

 

2,589

 

Foreign currency (gain) loss (included in cost of revenue)

 

—

 

 

—

 

Adjusted EBITDA

$

8,431

 

$

8,974

 

 

For More Information on HC2 Holdings, Inc., Please Contact:

 

Ashleigh Douglas

ir@HC2.com

212-339-5875

 

 

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