UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): August 9, 2017
HC2 HOLDINGS, INC.
Delaware | 001-35210 | 54-1708481 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
450 Park Avenue, 30th Floor | ||
New York, NY 10022 | ||
(Address of principal executive offices) | ||
(212) 235-2690 | ||
(Registrant’s telephone number, including area code) | ||
Not Applicable | ||
(Former name or former address, if changed since last report.) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company | ☐ | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Item 7.01 Regulation FD Disclosure
On August 9, 2017, HC2 Holdings, Inc. (the “Company”) posted an updated Company Overview presentation to its Investor Relations section of the Company’s website at http://www.hc2.com, a copy of which is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information set forth in (and incorporated by reference into) this Item 7.01 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or otherwise subject to the liabilities of that Section. The information in this Item 7.01 shall not be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
Item No. | Description |
99.1 | HC2 Holdings, Inc. Company Overview dated August 9, 2017. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
HC2 Holdings, Inc. | ||
August 9, 2017 | By: | /s/ Michael J. Sena |
Name: Michael J. Sena | ||
Title: Chief Financial Officer | ||
Exhibit Index
Item No. | Description |
99.1 | HC2 Holdings, Inc. Company Overview dated August 9, 2017. |
HC2 HOLDINGS, INC.
© HC2 Holdings, Inc. 2017
Corporate Overview
August 2017
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Special Note Regarding Forward-Looking Statements. Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This presentation 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. The forward-looking statements in this presentation include without limitation statements regarding our expectation regarding building shareholder value. Such
statements are based on the beliefs and assumptions of HC2's management and the management of HC2's subsidiaries and portfolio companies. 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 or
implied 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. Such important factors include, without limitation, issues related to the restatement of our financial statements; the fact that we have historically identified material weaknesses in our internal
control over financial reporting, and any inability to remediate future material weaknesses; capital market conditions; the ability of HC2's subsidiaries and portfolio companies to generate
sufficient net income and cash flows to make upstream cash distributions; volatility in the trading price of HC2 common stock; the ability of HC2 and its subsidiaries and portfolio companies 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; difficulties related to the integration of financial reporting of acquired or target businesses; difficulties completing pending and future acquisitions and dispositions;
effects of litigation, indemnification claims, and other contingent liabilities; changes in regulations and tax laws; and risks that may affect the performance of the operating subsidiaries and
portfolio companies of HC2. 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 Securities and
Exchange Commission (“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
presentation .
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.
Non-GAAP Financial Measures
In this presentation, HC2 refers to certain financial measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”), including Core Operating
Subsidiary Adjusted EBITDA, Total Adjusted EBITDA (excluding Insurance) and Insurance AOI.
Management believes that Adjusted EBITDA measures provide investors with meaningful information for gaining an understanding of certain 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, because interest, taxes, depreciation, amortization and the other
items for which adjustments are made as noted 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. In addition, management uses Adjusted EBITDA measures in evaluating certain of the Company’s
segments performance because they eliminate the effects of considerable amounts of noncash depreciation and amortization and items not within the control of the Company’s operations
managers. While management believes that these non-US GAAP measurements are useful as supplemental information, such adjusted results are not intended to replace our US GAAP financial
results and should be read together with HC2’s results reported under GAAP.
Management defines Adjusted EBITDA as Net income (loss) adjusted to exclude the impact of depreciation and amortization; amortization of equity method fair value adjustments at
acquisition; (gain) loss on sale or disposal of assets; lease termination costs; asset impairment expense; (gain) loss on early extinguishment or restructuring of debt; interest expense; net gain (loss)
on contingent consideration; other (income) expense, net; foreign currency transaction (gain) loss included in cost of revenue; income tax (benefit) expense; (gain) loss from discontinued
operations; noncontrolling interest; bonus to be settled in equity; share-based compensation expense; acquisition and nonrecurring items. Adjusted EBITDA excludes results of our Insurance
segment. A reconciliation of Adjusted EBITDA to Net income (loss) is included in the financial tables at the end of this release.
Management recognizes that 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 these non-GAAP measures exclude 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 do not purport to be alternatives to net income (loss) or other U.S. GAAP financial measures as a measure of our operating performance.
Management believes that Insurance AOI measures, used frequently in the insurance industry, provide investors with meaningful information for gaining an understanding of certain results and
provides insight into an organization’s operating trends and facilitates comparisons between peer companies.
Management defines Insurance AOI as Net income (loss) for the Insurance segment adjusted to exclude the impact of net investment gains (losses), including other-than-temporary impairment
losses recognized in operations; asset impairment; intercompany elimination and acquisition and non-recurring items. Management believes that Insurance AOI provides a meaningful financial
metric that helps investors understand certain results and profitability. While these adjustments are an integral part of the overall performance of the Insurance segment, market conditions
impacting these items can overshadow the underlying performance of the business. Accordingly, we believe using a measure which excludes their impact is effective in analyzing the trends of
our operations.
By accepting this document, each recipient agrees to and acknowledges the foregoing terms and conditions.
Safe Harbor Disclaimers
1
Company Overview
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
HC2 Holdings, Inc.
3
W ho W e Are
W ha t W e Do
Di v ers i f i ed h o l d i n g c omp a n y
Pe r man ent c a p i ta l
S t r a teg ic a n d f i n a n c i a l p a r tne r
Te a m o f v i s ion ar ie s
B u y a n d b u i l d c omp a n ies
E x e cute b u s in es s p l a n s
De l i v e r s u s ta i nab l e v a l ue f o r
s h a reh o lders
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Investment Highlights
4
Why Invest in HC2?
Leadership team has diverse network resulting in unique deal flow
Unique combination of operating entities accessible through one
investment
– Controlling stakes in leading, stable, cash flow generating businesses
– Option value opportunities with significant equity upside potential
Long-term strategy allows management teams the ability to
execute business plans
Diversification across a number of industries
Financial flexibility
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Clear focus on delivering sustainable value for all stakeholders
Value operator with long-term outlook
Acquire controlling equity interests in diverse industries creating value through growth in operating
subsidiaries
Strong capital base allows funding of subsidiary growth
Speed of execution gives HC2 a competitive advantage over traditional private equity firms
Env i s ion
Execute Empower
– Seek to build value over the long-term
– Expansive network results in unique deal flow
– Target a barbell investment strategy
• Stable cash flow generation
• Early-stage companies with option value
Env i s ion
– Partner with experienced
management teams
– Establish specific operating objectives
– Provide financial expertise
– Help execute strategy
E m p o w e r M a n a g e m e nt
– Focus on speed of execution
– Capitalize on opportunities
– Deliver sustainable value
Execute
HC2 Value Philosophy
5
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
HC2 Company Snapshot
6
Early Stage and Other Holdings
Core Operating Subsidiaries
One of the largest steel
fabrication and erection
companies in the U.S.
Recently changed name to
DBM Global Inc.
Offers full suite of integrated
steel construction and
professional services
92% ownership
Construction:
DBM GLOBAL (SCHUFF)
Leading provider of subsea
cable installation,
maintenance and
protection in telecom,
offshore power and oil & gas
JV’s with Huawei Marine
Networks & S.B. Submarine
Systems (China Telecom)
Acquired 100% interest in
offshore renewables
specialist CWind
95% ownership
Marine Services:
GMSL
Premier distributor of natural
gas motor fuel throughout
the U.S.
Currently own or operate
~40 natural gas fueling
stations throughout United
States; Up from two stations
since HC2’s initial
investment in August 2014
49.9% ownership
Energy:
ANG
Telecom:
PTGI ICS
One of the largest
International wholesale
telecom service companies
Global sales presence
Internal and scalable
offshore back office
operations
100% ownership
Life Sciences: PANSEND
MediBeacon: Unique non-invasive real-time monitoring of kidney function
R2 Dermatology: Medical device to brighten skin based on Mass. General Hospital technology
BeneVir: Oncolytic viral immunotherapy for treatment of solid cancer tumors
Genovel: Novel, Patented, “Mini Knee” and “Anatomical Knee” replacements
Triple Ring Technologies: R&D engineering company specializing in medical devices,
homeland security, imaging, sensors, optics, fluidics, robotics & mobile healthcare
Core Financial
Services Subsidiaries
Executive Chair:
James P. Corcoran
Acquisition of American
Financial Group’s long-term
care and life insurance
businesses
100% ownership
~$69m of statutory surplus
~$79m total adjusted capital
~$2.1b in total GAAP assets
Insurance:
CIG
All data as of June 30, 2017 unless otherwise noted
Construction formerly Manufacturing; Energy formerly Utilities
704Games (Formerly DMR)
Owns worldwide exclusive
licensing rights to NASCAR®
simulation style racing titles
on interactive
entertainment
platforms
Other:
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
HC2 Executive Leadership Team
7
Philip A. Falcone
Chairman of the Board,
Chief Executive Officer and President
Michael J. Sena
Chief Financial Officer
Paul K. Voigt
Senior Managing Director
Paul L. Robinson
Chief Legal Officer & Corporate Secretary
Suzi Raftery Herbst
Chief Administrative Officer
Andrew G. Backman
Managing Director
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
$0
$2
$4
$6
$8
$10
$12
$14
HC2 Stock Performance & Timeline
8
Note: As a result of the Schuff Tender, HC2’s ownership increased to 89% and
subsequently through open market share purchases increased to 92%
*Pending Federal Communications Communication approval
5/29/2014
HC2 Acquires
Schuff (65%)
HC2 Acquires
Global Marine (97%)
9/22/2014
HC2 Announces
Results of Schuff
Tender Offer
10/7/2014
$250M Senior
Secured Notes
Offering
Closing
11/20/2014
NYSE MKT Listing
Announced
12/23/2014
HC2 Forms Continental
Insurance Group
4/14/2015
$50M Tack-On to
Senior Secured Notes
3/23/2015
HC2 Acquires
Interest in
Gaming Nation
6/10/2015
HC2 closes LTC and Life
Insurance Acquisition
12/24/2015
Global Marine Acquires
Majority Interest in CWind
2/3/2016
R2 Dermatology
Receives FDA Approval
10/5/2016
2014 2015 2016 2017
$55M Tack-
On Senior
Secured
Notes
1/31/2017
Company
Renamed "HC2"
4/14/2014
HRG Group
Acquires
Majority Interest
in "PTGi“
1/8/2014
8/01/2014
HC2 Initial
Investment in ANG
MediBeacon
Awarded Gates
Foundation grant
10/18/2016
MediBeacon Completes
Pilot Two Testing
3/2/2017
ANG Adds 18
CNG Stations
Through Two
Transactions
12/15/2016
BeneVir Granted New Oncolytic
Immunotherapy Patent
4/15/2017
$59M Equity Offering
11/9/2015
Transfer Listing to NYSE
5/16/2017
$38M Tack-On
Senior Secured Notes
6/27/2017
HC2 Announces Acquisition of
Majority Interest in DTV America*
6/27/2017
R2 Dermatology Receives
2nd FDA Approval
7/12/17
Segment Detail
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Sacramento Kings Arena
DBM Global Inc. (Schuff Intl.) – Company Snapshot
10
DBM Global Inc. is focused on delivering world class, sustainable value to its clients through a
highly collaborative portfolio of companies which provide better designs, more efficient
construction and superior asset management solutions
The Company offers integrated steel construction services from a single source and
professional services which include design-assist, design-build, engineering, BIM
participation, 3D steel modeling/detailing, fabrication, advanced field erection, project
management and state-of-the-art steel management systems
Major market segments include commercial, healthcare, convention centers, stadiums,
gaming and hospitality, mixed use and retail, industrial, public works, bridges, transportation
and international projects
Business Description:
Rustin Roach – President and CEO
Michael Hill – CFO and Treasurer
Scott Sherman – VP, General Counsel
Select Management:
Apple World Headquarters
Select Customers:
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
DBM Global Inc. (Schuff Intl.) – Company Snapshot
11
Core
Activities
The largest structural
steel fabricator and
erector in the U.S.
In-house structural &
design engineering
expertise
Provides structural steel
fabrication & erection
services for smaller
projects leveraging
subcontractors and in-
house project
managers
Manufactures
equipment for use in
the petrochemical oil
& gas industries, such
as: pollution control
scrubbers, tunnel liners,
pressure vessels,
strainers, filters &
separators
A highly experienced
global Detailing and
3D BIM Modelling
company
A global Building
Information Modelling
(BIM), Steel Detailing
and Rebar Detailing
firm
Products
and Service
Offerings
Structural Steel
fabrication
Steel erection services
Structural engineering
& design services
Preconstruction
engineering services
BIM (Building
Information Modeling)
Project Management
(proprietary SIMS plat.)
Structural Steel
fabrication
(subcontracted)
Steel erection services
(subcontracted)
Project Management
(proprietary SIMS
platform)
Design engineering
Fabrication services
Steel Detailing
3D BIM Modelling
BIM Management
Integrated Project
Delivery (IPD)
3D Animation and
Visualization
Steel Detailing
Rebar Detailing
3D BIM Modelling
Connection Design
Forensic Modelling &
Animation
Industries
Served
Commercial
Conv. & Event Centers
Energy
Government
Healthcare
Industrial & Mining
Infrastructure
Leisure
Retail
Transportation
Commercial
Government
Healthcare
Leisure
Retail
Transportation
Petrochemical
Oil & gas infrastructure
Pipelines
Commercial
Conv. & Event Centers
Energy
Government
Healthcare
Industrial & Mining
Infrastructure
Leisure
Retail
Transportation
Commercial
Conv. & Event Centers
Energy
Government
Healthcare
Industrial & Mining
Infrastructure
Leisure
Retail
Transportation
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Global Marine Group – Company Snapshot
12
“Engineering a Clean and Connected Future”
Leading provider of offshore marine engineering delivered via two business units:
Global Marine: Focusing on the telecommunications sector
CWind: Focused on offshore renewables and power
Founded in 1850 - Headquartered in UK with major regional hub in Singapore and an
established European base in Germany
Global Marine Group - Business Description:
Select Customers:
Installed roughly 21% of the world's
subsea fiber optic cable, amounting to
300,000km
In maintenance, Global Marine benefits
from long-term contracts with high
renewal rates; Responsible for 385,000km
of the total 1,200,000km of global in-
service cable
Significant opportunities in Telecom
through 49% owned strategic joint
ventures with Huawei Technologies
(HMN) and China Telecom (SBSS)
Global Marine Highlights:
Responsible for the Global Marine Group’s
power cable capabilities
CWind delivers a broad spectrum of
topside and subsea services to developers
and has experience at over 40 wind farms
to date
CWind is strongly differentiated as the only
integrated service provider
CWind is recognized for having the most
fuel efficient Crew Transport Vessel (CTV)
fleet in the market
CWind Highlights:
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Global Marine Group – Company Snapshot
13
Core
Activities
Maintenance
Provision of vessels on
standby to repair fiber optic
telecom cables in defined
geographic zones
Location of fault, cable
recovery, jointing and re-
deployment of cables
Operation of depots storing
cable and spare parts across
the globe
Management of customer
data through the life of the
cable system
Installation
Provision of turnkey repeated
telecom systems via Huawei
Marine Networks (“HMN”)
joint-venture
Installation contracts for
telecom customers
Services include route
planning, route survey, cable
mapping, route engineering,
laying, trenching and burial
at all depths
Fiber optic communications
and power infrastructure to
offshore platforms
Permanent Reservoir
Monitoring (“PRM”) systems
Wind Farm
Offshore wind planning,
construction and operations
& maintenance support
services
Fleet of Crew Transfer Vessels
(CTVs) which have a
historically high utilisation and
are positioned 4th in the overall
CTV market
Over 250 certified &
experienced personnel
including technicians, riggers,
slingers, lifting supervisors &
foremen
Offshore training facility
Power Cable
Installation for inter-array
power cables for offshore
wind market
Maintenance provision,
including cable storage,
power joint development and
vessel availability
Offshore wind planning,
Interconnector installation
Services include route
planning, route survey, cable
mapping, route engineering,
laying, trenching and burial at
all depths
Vessels
Cable Retriever
Pacific Guardian
Wave Sentinel
Cable Innovator
CS Sovereign
CS Recorder
Networker
18 Crew Transfer Vessels in
CWind Fleet
CS Sovereign
Joint
Venture
Sino British Submarine Systems
in Asia (SBSS); Joint venture
(49%) with China Telecom
International Cableship Pte
Ltd (“ICPL”)
Joint venture (30%) with
SingTel and ASEAN Cableship
SCDPL; Joint venture (40%)
with SingTel
Huawei Marine Networks;
Joint venture (49%) with
Huawei Technologies
Sino British Submarine Systems
in Asia (SBSS); Joint venture
(49%) with China Telecom
National Wind Farm Training
Centers (100%)
Sino British Submarine Systems
in Asia; Joint venture (49%)
with China Telecom
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
American Natural Gas – Company Snapshot
14
Designs, builds, owns, operates and maintains compressed
natural gas commercial fueling stations for transportation
Current ownership 49.9% with ability to increase to 63%
In-depth experience in the natural gas fueling industry
Building a premier nationwide network of publically accessible heavy duty CNG
fueling stations throughout the United States designed and located to serve fleet
customers
– Acquired 18 CNG stations from Questar Fueling Co. and Constellation CNG (4Q16)
– Currently ~40 stations owned and/or operated in 15 states across the United States*
– Expect to expand station footprint via organic and select M&A opportunities
American transportation sector is rapidly converting from foreign-dependent
diesel fuel to clean burning natural gas:
– Dramatically reduces emissions
– Extends truck life
– Significantly reduces fuel cost
Given the cost effectiveness of CNG, its environmental friendliness and the
abundance of natural gas reserves in the United States, CNG is the best candidate
for alternatives to gasoline and diesel for the motor vehicle market
All data as of June 30, 2017 unless otherwise noted
*Including stations under development
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
PTGi International Carrier Services (“PTGi ICS”)
15
Leading international wholesale telecom
service company providing voice and data
call termination to the telecom industry worldwide
Provides transit and termination of telephone calls through its own global
network of next-generation IP soft switches and media gateways,
connecting the networks of incumbent telephone companies, mobile
operators and OTT companies worldwide
Restructured in 2014 PTGi ICS now delivers industry leading technology via
best of breed sales and operational support teams
– 2Q17: Ninth consecutive quarter of positive Adjusted EBITDA
In business since 1997, recognized as a trusted business partner globally
Headquartered in Herndon, Virginia with representation across North
America, South America, the Middle East and Europe
All data as of June 30, 2017 unless otherwise noted
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Continental Insurance Group – Company Snapshot
16
April 2015: HC2 established Continental Insurance Group (“CIG”) as its insurance platform
led by industry veteran Jim Corcoran, as Executive Chairman
December 2015: HC2 completed the acquisition of American Financial Group’s long-term
care and life insurance businesses, United Teacher Associates Insurance Company and
Continental General Insurance Company
The formation of Continental Insurance Group (“CIG”) to invest in the long-term care
and life insurance sector is consistent with HC2’s overall strategy of taking advantage
of dislocated and undervalued operating businesses
Through CIG, HC2 intends to build an attractive platform of insurance businesses
James P. Corcoran, Executive Chair, has extensive experience in the insurance
industry on both the corporate and regulatory side as the former Superintendent of
Insurance of the State of New York
Combined measures as of June 30, 2017:
– Statutory Surplus ~$69 million
– Total Adjusted Capital ~$79 million
– GAAP Assets of ~$2.1 billion
Completed merging CGI and UTA into one legal entity (12/16)
– Beneficial to statutory capital
All data as of June 30, 2017 unless otherwise noted
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Pansend
17
All data as of June 30, 2017 unless otherwise noted
HC2’s Pansend Life Sciences Segment Is Focused on the
Development of Innovative Healthcare Technologies and Products
80% equity ownership of company focused on immunotherapy; Oncolytic virotherapy for treatment of solid
cancer tumors
Founded by Dr. Matthew Mulvey & Dr. Ian Mohr (who co-developed T-Vec); Biovex (owner of T-Vec) acquired
by Amgen for ~$1billion
Benevir’s T-Stealth is a second generation oncolytic virus with new features and new intellectual property
BeneVir holds exclusive worldwide license to develop BV-2711 (T-Stealth)
Granted new patent entitled “Oncolytic Herpes Simplex Virus and Therapeutic Uses Thereof”, covering the composition of
matter for Stealth-1H, BeneVir’s lead oncolytic immunotherapy, as well as other platform assets (2Q17)
75% equity ownership of dermatology company focused on lightening and brightening skin
Founded by Pansend in partnership with Mass. General Hospital and inventors Dr. Rox Anderson,
Dieter Manstein and Dr. Henry Chan
Over $20 billion global market
Received Food and Drug Administration approval for the R2 Dermal Cooling System (4Q16)
Received Food and Drug Administration approval for second generation R2 Dermal Cooling System (2Q17)
80% equity ownership in company with unique knee replacements based on technology from Dr. Peter Walker, NYU Dept.
of Orthopedic Surgery and one of the pioneers of the original Total Knee.
“Mini-Knee” for early osteoarthritis of the knee; “Anatomical Knee” – A Novel Total Knee Replacement
Strong patent portfolio
50% equity ownership in company with unique technology and device for monitoring of real-time kidney function
Current standard diagnostic tests measure kidney function are often inaccurate and not real-time
MediBeacon’s Optical Renal Function Monitor will be first and only, non-invasive system to enable real-time, direct monitoring
of renal function at point-of-care
$3.5 billion potential market
Successfully completed a key clinical study of its unique, real-time kidney monitoring system on subjects with impaired kidney
function at Washington University in St. Louis. (1Q17)
Profitable technology and product development company
Areas of expertise include medical devices, homeland security, imaging systems, sensors, optics, fluidics, robotics and mobile
healthcare
Located in Silicon Valley and Boston area with over 90,000 square feet of working laboratory and incubator space
Contract R&D market growing rapidly
Customers include Fortune 500 companies and start-ups
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
704Games
(Formerly Dusenberry Martin Racing (DMi, Inc.))
18
On December 31, 2014, HC2 / DMR (re-branded 704Games)
completed a $6 million asset purchase agreement to acquire
worldwide exclusive licensing rights to NASCAR® simulation
style racing titles on interactive entertainment platforms
Owns all the code, artwork and animation previously developed for legacy games
Headquartered in Charlotte, NC in NASCAR® Headquarters building (NASCAR ® Plaza)
License also extends to NASCAR® racetracks and all the leading NASCAR® race teams and drivers
Since inception, 704Games developed an all-new NASCAR® racing simulation game, NASCAR Heat
Evolution, for PlayStations 4, Xbox One and PC, as well as NASCAR-themed mobile trivia and slots
games
In April, 2016, DMR secured $8.0m in additional equity growth capital from consortium of
new investors including superstar drivers Joey Logano and Brad Keselowski
NASCAR® Heat Evolution successfully released on September 13, 2016
NASCAR® Heat Evolution announced 2017 Team Update available February 21, 2017
– Team & Roster Updates, New Drivers, New Paint Schemes, 2017 NASCAR® Schedule, etc.
DMR Re-brands to 704Games – Appoints racing industry veteran Paul Brooks as CEO
and Brad Keselowski to Board of Directors (March 2017)
NASCAR® Heat Mobile game released (May 2017)
NASCAR® Heat 2 scheduled for release on September 12, 2017
All data as of June 30, 2017 unless otherwise noted
Appendix:
2Q17 Highlights /
Select Financial Data
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
2Q17 Highlights and Recent Developments
20
Second quarter performance once again highlight the unique value HC2 brings to the
market with our diverse, uncorrelated industry holdings
– Construction: $590 million backlog; >$800 million inclusive of contracts awarded, but not yet
signed; >$400 million of additional potential opportunities that could be awarded including
sporting arenas/stadiums, healthcare facilities, commercial office buildings and convention
centers
– Marine Services: Continued strong joint venture performance, in particular Huawei Marine;
Long-term offshore power, telecom install and telecom maintenance fundamentals remain
strong
– Telecommunications: Continued focus on higher margin wholesale traffic mix and improved
operating efficiencies
– Energy: Continued growth due to increase in number of fueling stations owned and/or
operated
Adjusted EBITDA for Core Operating Subsidiaries*
– $17.9 million in second quarter, as compared to $27.1 million in the year-ago quarter
– $45.7 million year-to-date, as compared to $39.8 million for the year-ago period
Cash and Investments as of June 30, 2017:
– $1.7 billion of consolidated cash, cash equivalents and investments, which includes
the Insurance segment
– $104.6 million in Consolidated Cash (excluding Insurance segment)
Cumulative outstanding Preferred Equity of $26.7 million at June 30, 2017;
Down significantly from $55.0 million of total Preferred issued
* Core Operating Subsidiaries include Construction, Marine Services,
Telecommunications and Energy. Construction formerly Manufacturing: Energy
formerly Utilities
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
HC2 Segment Overview
21
Early Stage and Other Holdings
Core Operating Subsidiaries
2Q17 Revenue: $138.9m
2Q17 Adjusted EBITDA: $11.1m
YTD Adjusted EBITDA: $19.7m
Backlog $590m; >$800m with
contracts awarded, but not
yet signed
Solid long-term pipeline with
additional >$400m in
potential project value that
could be awarded over next
several quarters
Construction:
DBM GLOBAL (SCHUFF)
2Q17 Revenue: $36.4m
2Q17 Adjusted EBITDA: $3.6m
YTD Adjusted EBITDA: $20.0m
Continued strong joint
venture performance; Solid
long term telecom and
offshore power maintenance
& install opportunities
Marine Services:
GMSL
2Q17 Revenue: $4.1m
2Q17 Adjusted EBITDA: $1.0m
YTD Adjusted EBITDA: $2.2m
Delivered 2,814,000 Gasoline
Gallon Equivalents (GGEs) in
2Q17 vs. 828,000 GGEs in
2Q16
~40 stations currently owned
and / or operated vs. two
stations at time of HC2’s initial
investment in 3Q14
Energy:
ANG
Telecom:
PTGI ICS
2Q17 Revenue: $160.6m
2Q17Adjusted EBITDA: $2.2m
YTD Adjusted EBITDA: $3.8m
Continued focus on higher
margin wholesale traffic mix
and improved operating
efficiencies
Life Sciences: PANSEND
MediBeacon: Completed “Pilot Two” Clinical Study at Washington University in St. Louis (1Q17)
R2 Dermatology: Received FDA Approval for second generation R2 Dermal Cooling System (2Q17)
BeneVir: Granted additional patent protecting oncolytic immunotherapy Stealth-1H & other assets (2Q17)
Genovel: Novel, Patented, “Mini Knee” and “Anatomical Knee” replacements
Triple Ring Technologies: R&D engineering company specializing in medical devices,
homeland security , imaging, sensors, optics, fluidics, robotics & mobile healthcare
Core Financial
Services Subsidiaries
~$69m of statutory surplus
~$79m total adjusted capital
~$2.1b in total GAAP assets
Completed merging CGI
and UTA into one legal entity;
meaningful cost savings,
lower required statutory
capital (4Q16)
Platform for growth through
additional M&A
Insurance:
CIG
All data as of June 30, 2017 unless otherwise noted
Construction formerly Manufacturing; Energy formerly Utilities
704Games (Formerly DMR)
Owns worldwide exclusive
licensing rights to NASCAR®
simulation style racing titles
on interactive
entertainment
platforms
Other:
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Segment Financial Summary
22
All data as of June 30, 2017 unless otherwise noted
Construction formerly Manufacturing; Energy formerly Utilities
($m) Q2 2017 Q2 2016 YTD 2017 YTD 2016
Adjusted
EBITDA
Core Operating Subsidiaries
Construction $11.1 $13.2 $19.7 $24.7
Marine Services 3.6 11.8 $20.0 $12.3
Energy 1.0 0.5 $2.2 $0.9
Telecom 2.2 1.5 $3.8 $1.8
Total Core Operating $17.9 $27.1 $45.7 $39.8
Early Stage and Other Holdings
Life Sciences ($4.9) ($2.7) ($9.0) ($5.3)
Other (2.2) (3.3) ($3.3) ($7.3)
Total Early Stage and Other ($7.1) ($6.0) ($12.3) ($12.6)
Non-Operating Corporate ($6.3) ($5.9) ($12.2) ($11.6)
Total HC2 (excluding Insurance) $4.6 $15.2 $21.3 $15.5
Adjusted
Operating Income
Core Financial Services
Insurance $2.6 ($4.7) $1.6 ($7.3)
Note: Reconciliations of Adjusted EBITDA and Adjusted Operating Income to U.S. GAAP Net Income in appendix. Table may not foot due to rounding. Adjusted Operating Income for Q1 2016 has been
adjusted to exclude certain intercompany eliminations to better reflect the results of the Insurance segment, and remain consistent with internally reported metrics. Additional details in appendix. Q1 2016
benefitted from the release of valuation allowance impacting the net tax provision
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Construction: DBM Global Inc. (Schuff)
23
2Q17 Net Income1: $4.2m vs. $9.4m for 2Q16; YTD17 Net Income $7.4m vs. $13.7m for YTD16
2Q17 Adjusted EBITDA: $11.1m vs. $13.2m for 2Q16 driven in part by better than bid performance on commercial projects in
2Q16 (Apple Headquarters and Wilshire Grand)
YTD Adjusted EBITDA: $19.7m vs. $24.7m for the comparable 2016 year-to-date period, due primarily to timing associated
with design changes on certain existing projects in 1Q17 backlog and better-than bid performance on Apple
Headquarters and Wilshire Grand in 2Q16
Expect to remain on track for solid full year 2017 performance based on current backlog and 2H17 projected workflow
Recorded backlog of $590m at end of 2Q17
Taking into consideration awarded, but not yet signed contracts, backlog would have been >$800m
Continue to see large opportunities totaling >$400 million that could be awarded over next several quarters including new
sporting arenas or stadiums, healthcare facilities, commercial office buildings and convention centers
Second Quarter Update
Continue to select profitable, strategic and “core competency” jobs, not all jobs
Solid long-term pipeline of prospective projects; No shortage of transactions to evaluate
Commercial / Stadium / Healthcare sectors remain strong
Opportunities to add higher margin, value added services to overall product offering
Strategic Initiatives
Mile High Stadium Loma Linda Hospital
$45.8
$52.0
$59.9
$526.1
$513.8
$502.7
2014PF 2015A 2016A
Historical Performance
Adjusted EBITDA Revenue
All data as of June 30, 2017 unless otherwise noted
Construction formerly Manufacturing
10.1%
11.9%
8.7%
(1) Second quarter 2016 inclusive of a $1.3 million prior period beneficial adjustment to depreciation & amortization expense
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Marine Services: Global Marine Group
24
Joint Venture established in 1995 with China Telecom
China’s leading provider of submarine cable installation
Located in Shanghai and possesses a fleet of advanced purpose-built cable ships
Currency Exchange: CNY:USD 1:0.129
All data as of June 30, 2017 unless otherwise noted
2Q17 Net (Loss): $(3.1)m vs. Net Income of $6.0m for 2Q16; YTD17 Net Income $8.1m vs. $0.1m for YTD16
2Q17 Adjusted EBITDA: $3.6m vs. $11.8m for 2Q16 due primarily to higher costs associated with two off shore
power installation & repair projects in 2Q17 and very strong joint venture performance from Huawei Marine in 2Q16
YTD17 Adjusted EBITDA: $20.0m vs. $12.3m for the comparable 2016 year-to-date period due primarily to higher total joint
venture income in 1H17, in particular Huawei Marine, and a one-time telecom charge in 1Q16
Huawei Marine backlog at record levels at end of 2Q17
Expect to remain on track for solid full year 2017 performance based on current backlog and 2H17 projected workflow
Positioned well for solid long-term telecom maintenance & install opportunities
Positioned well for significant long-term offshore power maintenance & install opportunities
Second Quarter Update
Strategic Initiatives
Total HMN* 2016 2015 2014
Revenue ~$207m ~$203m ~$88m
Profit ~$25m ~$14m ~$2m
Cash / Equivalents ~$48m ~$27m ~$16m
$50.0
$42.1 $41.2
$163.6
$134.9
$161.9
2014PF 2015A 2016A
Historical Performance
Adjusted EBITDA Revenue
Note: 2014 PF Adj. EBITDA inclusive of approx. $10m offshore power installation vs. minimal contribution in 2015 & 1H16 as a result of Prysmian agreement which expired in 4Q15
29.8%
31.2% 25.4%
49% ownership 49% ownership
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
2Q17 Net (Loss): $(0.4)m vs. Net Income of $0.1m for 2Q16; YTD17 Net (Loss) of $(1.1)m vs. Income of $0.04m for YTD16
2Q17 Adjusted EBITDA: $1.0m vs. $0.5m for 2Q16
YTD17 Adjusted EBITDA: $2.2m vs. $0.9m for the comparable 2016 year-to-date period
Delivered 2,814,000 Gasoline Gallon Equivalents (GGEs) in the second quarter vs. 828,000 GGEs in the year-ago quarter,
due primarily to newly developed and acquired CNG fueling stations
~40 stations currently owned and / or operated or under development vs. 2 stations at time of initial investments (3Q14)
Focused on increasing volumes at existing stations, while also expanding geographic footprint through both internal /
organic growth and strategic M&A opportunities
Second Quarter Update
-$0.4
$0.9
$2.5
$1.8
$6.8
$6.4
2014A 2015A 2016A
Historical Performance
Adjusted EBITDA
Revenue
Energy: American Natural Gas (ANG)
25
All data as of June 30, 2017 unless otherwise noted
Energy formerly Utilities
39.6%
12.8%
(14.1%)
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Strong quarterly results again due to continued focus on higher margin wholesale traffic mix and improved
operational efficiencies
– 2Q17 Net Income: $2.1m vs. $1.0m for 2Q16; YTD17 Net Income of $3.6m vs. $2.2m for YTD16
– 2Q17 Adjusted EBITDA: $2.2m vs. $1.5m for 2Q16
– YTD17 Adjusted EBITDA: $3.8m vs. $1.8m for the comparable 2016 year-to-date period
– Fourth consecutive quarter of cash dividend to HC2
One of the key objectives: leverage the infrastructure and management expertise within PTGi-ICS
– Over 800+ wholesale interconnections globally provides HC2 the opportunity to leverage the existing cost effective
infrastructure by bolting on higher margin products and M&A opportunities
– A focused strategic initiative has been launched within PTGi-ICS to identify potential M&A opportunities
Second Quarter Update
Telecommunications: PTGi-ICS
26
$(1.2)
$2.0
$5.6
$162.0
$460.4
$735.0
2014A 2015A 2016A
Historical Performance
Adjusted EBITDA
Revenue
All data as of June 30, 2017 unless otherwise noted
0.8%
0.4%
(0.1%)
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Insurance: Continental Insurance Group
27
Note: Reconciliation of Adjusted Operating Income to U.S. GAAP Net Income in
appendix. All data as of June 30, 2017 unless otherwise noted
Continental Insurance Group serves as a platform for run-off Long Term Care (“LTC”) books of business and for acquiring
additional run-off LTC businesses
– 2Q17 Net Income: $0.2m vs. Net (Loss) of $(2.3)m for 2Q16; YTD17 Net (Loss) of $(0.6)m vs. $(9.8)m for YTD16
– 2Q17 Adjusted Operating Income: $2.6m vs. $(4.7)m for 2Q16
– YTD17 Adjusted Operating Income: $1.6m vs. $(7.3)m for comparable 2016 period
– ~$69m statutory surplus at end of second quarter
– ~$79m total adjusted capital at end of second quarter
– ~$2.1b in total GAAP assets at June 30, 2017
– Completed merging CGI and UTA into one legal entity; Beneficial to statutory capital (12/16)
Strategy:
– A concentrated focus on LTC and acquisitions of additional books of run-off LTC business
– A platform to provide a vehicle for multi-line insurers who do not consider LTC a core business segment
to exit the market
– Enhancing efficiency and effectiveness through scale and a concentrated focus on LTC
Second Quarter Update
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Pansend
28
All data as of June 30, 2017 unless otherwise noted
HC2’s Pansend Life Sciences Segment Is Focused on the
Development of Innovative Healthcare Technologies and Products
80% equity ownership of company focused on immunotherapy; Oncolytic virotherapy for treatment of solid
cancer tumors
Founded by Dr. Matthew Mulvey & Dr. Ian Mohr (who co-developed T-Vec); Biovex (owner of T-Vec) acquired
by Amgen for ~$1billion
Benevir’s T-Stealth is a second generation oncolytic virus with new features and new intellectual property
BeneVir holds exclusive worldwide license to develop BV-2711 (T-Stealth)
Granted new patent entitled “Oncolytic Herpes Simplex Virus and Therapeutic Uses Thereof”, covering the composition of
matter for Stealth-1H, BeneVir’s lead oncolytic immunotherapy, as well as other platform assets (2Q17)
75% equity ownership of dermatology company focused on lightening and brightening skin
Founded by Pansend in partnership with Mass. General Hospital and inventors Dr. Rox Anderson,
Dieter Manstein and Dr. Henry Chan
Over $20 billion global market
Received Food and Drug Administration approval for the R2 Dermal Cooling System (4Q16)
Received Food and Drug Administration approval for second generation R2 Dermal Cooling System (2Q17)
80% equity ownership in company with unique knee replacements based on technology from Dr. Peter Walker, NYU Dept.
of Orthopedic Surgery and one of the pioneers of the original Total Knee.
“Mini-Knee” for early osteoarthritis of the knee; “Anatomical Knee” – A Novel Total Knee Replacement
Strong patent portfolio
50% equity ownership in company with unique technology and device for monitoring of real-time kidney function
Current standard diagnostic tests measure kidney function are often inaccurate and not real-time
MediBeacon’s Optical Renal Function Monitor will be first and only, non-invasive system to enable real-time, direct monitoring
of renal function at point-of-care
$3.5 billion potential market
Successfully completed a key clinical study of its unique, real-time kidney monitoring system on subjects with impaired kidney
function at Washington University in St. Louis. (1Q17)
Profitable technology and product development company
Areas of expertise include medical devices, homeland security, imaging systems, sensors, optics, fluidics, robotics and mobile
healthcare
Located in Silicon Valley and Boston area with over 90,000 square feet of working laboratory and incubator space
Contract R&D market growing rapidly
Customers include Fortune 500 companies and start-ups
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Notable Financial and Other Updates
29
Collateral Coverage Ratio at Quarter End Exceeded 2.0x
$104.6 million in Consolidated Cash (excluding Insurance segment)
– $56.0 million Corporate Cash
$11.5 million Received in Dividends and Tax Share from DBM Global and PTGi ICS in Second Quarter
Cumulative Outstanding Amount of Preferred Equity $26.7 million at June 30, 2017
– Reduced a total of $28.5 million from $55.0 million of total preferred issued
$38 million Private Placement of 11% Senior Secured Notes Completed in Second Quarter
– Net proceeds for working capital, general corporate purposes, as well as the financing of
acquisitions and investments;
– Notes issued at an issue price of 101.000% plus accrued interest from June 1, 2017
Entered into a series of transactions that, if certain conditions are met and approved by the Federal
Communications Commission, will result in HC2 and its subsidiaries owning over 50% of shares of
common stock of DTV America Corporation (“DTVA”)
– DTVA is an aggregator and operator of low power television licenses and stations across the United
States. DTVA currently owns and operates >50 LPTV stations in more than 40 U.S. cities
All data as of June 30, 2017 unless otherwise noted
(1) Market capitalization on a fully diluted basis, excluding preferred equity, using a common stock price per share of $5.98 on August 8, 2017
(2) Cash and cash equivalents
(3) Enterprise Value is calculated by adding market capitalization, total preferred equity and total debt amounts, less Corporate cash
($m) Balance Sheet (at June 30, 2017)
Market Cap(1) $257.1
Preferred Equity $26.7
Total Debt $400.0
Corporate Cash(2) $56.0
Enterprise Value(3) $627.8
Appendix:
Reconciliations
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA
Three Months Ended June 30, 2017
31
(in thousands)
Three Months Ended June 30, 2017
Construction
Marine
Services
Energy Telecom
Life
Sciences
Other &
Elimination
Net Income (loss) attributable to HC2 Holdings, Inc. $ (17,911)
Less: Net Incom e (loss) attributable to HC2 Holdings Insurance Segm ent 164
Net Income (loss) attributable to HC2 Holdings, Inc., excluding
Insurance Segment 4,179$ (3,053)$ (365)$ 2,060$ (4,106)$ (3,757)$ (13,033)$ (18,075)$
Adjustm ents to reconcile net incom e (loss) to Adjusted EBITDA:
Depreciation and amortization 1,240 5,255 1,381 94 41 331 16 8,358
Depreciation and amortization (included in cost of revenue) 1,302 - - - - - - 1,302
Amortization of equity method fair value adjustment at acquisition - (325) - - - - - (325)
Asset impairment expense - - - - - 1,810 - 1,810
(Gain) loss on sale or disposal of assets (145) - 18 - - - - (127)
Lease termination costs - 55 - - - - - 55
Interest expense 174 1,040 154 14 - 16 10,675 12,073
Net loss on contingent consideration - - - - - - 88 88
Other (income) expense, net 28 490 255 (9) (11) 803 214 1,770
Foreign currency (gain) loss (included in cost of revenue) - 83 - - - - - 83
Income tax (benefit) expense 3,232 (134) (1) - (0) 0 (6,543) (3,446)
Noncontrolling interest 369 (156) (492) - (911) (1,372) - (2,562)
Bonus to be settled in equity - - - - - - 585 585
Shar -based payment expense - 394 91 - 76 18 527 1,106
Acquisition and nonrecurring items 701 - - - - - 1,168 1,869
Adjusted EBITDA 11,080$ 3,649$ 1,041$ 2,159$ (4,911)$ (2,151)$ (6,303)$ 4,564$
Total Core Operating Subsidiaries 17,929$
Non-
operating
Corporate
HC2
Early Stage & OtherCore Operating Subsidiaries
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA
Three Months Ended June 30, 2016
32
(in thousands)
Construction
Marine
Services
Telecom Energy
Life
Sciences
Other &
Elimination
Net Income (loss) attributable to HC2 Holdings, Inc. 1,935$
Less: Net Incom e (loss) attributable to HC2 Holdings Insurance Segm ent (2,293)
Net Income (loss) attributable to HC2 Holdings, Inc., excluding
Insurance Segment 9,364$ 6,002$ 68$ 1,009$ (2,004)$ (2,608)$ (7,603)$ 4,228$
Adjustm ents to reconcile net incom e (loss) to Adjusted EBITDA:
Depreciation and amortization 303 6,084 468 140 36 336 - 7,367
Depreciation and amortization (included in cost of revenue) (206) - - - - - - (206)
Amortization of equity method fair value adjustment at acquisition - (359) - - - - - (359)
(Gain) loss on sale or disposal of assets (1,845) 7 - - - 1 - (1,837)
Lease termination costs - - - 338 - - - 338
Interest expense 303 1,285 14 - - 1 8,966 10,569
Net gain on contingent consideration - (192) - - - - - (192)
Other (income) expense, net (32) 403 (344) 29 - (10) 465 511
Foreign currency (gain) loss (included in cost of revenue) - (1,540) - - - - - (1,540)
Income tax (benefit) expense 4,524 (212) - - - 1 (9,404) (5,091)
N nc ntrolling interest 768 200 244 - (812) (1,044) - (644)
Share-base payment expense - 152 90 - 34 40 1,359 1,675
Acquisition and nonrecurring items - - - 18 - - 313 331
Adjusted EBITDA 13,179$ 11,830$ 540$ 1,534$ (2,746)$ (3,283)$ (5,904)$ 15,150$
Total Core Operating Subsidiaries 27,083$
Core Operating Subsidiaries Early Stage & Other
Non-
operating
Corporate
HC2
Three Months Ended June 30, 2016
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA
Six Months Ended June 30, 2017
33
(in thousands)
Six Months Ended June 30, 2017
Construction
Marine
Services
Energy Telecom
Life
Sciences
Other &
Elimination
Net Income (loss) attributable to HC2 Holdings, Inc. $ (32,407)
Less: Net Incom e (loss) attributable to HC2 Holdings Insurance Segm ent (597)
Net Income (loss) attributable to HC2 Holdings, Inc., excluding
Insurance Segment 7,382$ 8,099$ (1,062)$ 3,562$ (7,516)$ (9,187)$ (33,088)$ (31,810)$
Adjustm ents to reconcile net incom e (loss) to Adjusted EBITDA:
Depreciation and amortization 2,880 10,340 2,629 191 79 661 33 16,813
Depreciation and amortization (included in cost of revenue) 2,542 - - - - - - 2,542
Amortization of equity method fair value adjustment at acquisition - (650) - - - - - (650)
Asset impairment expense - - - - - 1,810 - 1,810
(Gain) loss on sale or disposal of assets (393) (3,500) 14 - - - - (3,879)
Lease termination costs - 249 - - - - - 249
Interest expense 381 2,342 290 23 - 2,407 20,745 26,188
Net loss on contingent consideration - - - - - - 319 319
Other (income) expense, net 7 1,555 1,375 65 (15) 2,918 258 6,163
Foreign currency (gain) loss (included in cost of revenue) - 107 - - - - - 107
Income tax (benefit) expense 5,311 376 12 - (0) 0 (4,366) 1,333
Noncontrolling interest 632 338 (1,239) - (1,702) (1,977) - (3,948)
Bonus to be settled in equity - - - - - - 585 585
Shar -based payment expense - 739 182 - 168 47 1,489 2,625
Acquisition and nonrecurring items 946 - - - - - 1,861 2,807
Adjusted EBITDA 19,688$ 19,995$ 2,201$ 3,841$ (8,986)$ (3,321)$ (12,164)$ 21,254$
Total Core Operating Subsidiaries 45,725$
HC2
Early Stage & OtherCore Operating Subsidiaries
Non-
operating
Corporate
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Reconciliation of U.S. GAAP Net Income (Loss) to Adjusted EBITDA
Six Months Ended June 30, 2016
34
(in thousands)
Construction
Marine
Services
Telecom Energy
Life
Sciences
Other &
Elimination
Net Income (loss) attributable to HC2 Holdings, Inc. (28,527)$
Less: Net Incom e (loss) attributable to HC2 Holdings Insurance Segm ent (9,789)
Net Income (loss) attributable to HC2 Holdings, Inc., excluding
Insurance Segment 13,748$ 84$ 41$ 2,211$ (706)$ (13,104)$ (21,012)$ (18,738)$
Adjustm ents to reconcile net incom e (loss) to Adjusted EBITDA:
Depreciation and amortization 832 11,239 897 246 55 672 - 13,941
Depreciation and amortization (included in cost of revenue) 1,727 - - - - - - 1,727
Amortization of equity method fair value adjustment at acquisition - (717) - - - - - (717)
(Gain) loss on sale or disposal of assets (941) (10) - - - 1 - (950)
Lease termination costs - - - 338 - - - 338
Interest expense 613 2,355 23 - - 1 17,903 20,895
Net gain on contingent consideration - (192) - - - - - (192)
Other (income) expense, net (76) 1,015 (375) (996) (3,221) 5,996 (1,146) 1,197
Foreign currency (gain) loss (included in cost of revenue) - (1,687) - - - - - (1,687)
Income tax (benefit) expense 7,969 (852) - - - - (13,630) (6,513)
N nc ntrolling interest 829 45 222 - (1,532) (1,088) - (1,524)
Share-based payment expense - 761 104 - 56 200 3,745 4,866
Acquisition and nonrecurring items - 266 27 18 - - 2,514 2,825
Adjusted EBITDA 24,701$ 12,307$ 939$ 1,817$ (5,348)$ (7,322)$ (11,626)$ 15,468$
Total Core Operating Subsidiaries 39,764$
Early Stage & Other
Non-
operating
Corporate
HC2
Six Months Ended June 30, 2016
Core Operating Subsidiaries
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
Reconciliation of U.S. GAAP Net Income (Loss) to Insurance AOI
Three and Six Months Ended June 30, 2017 and 2016
35
The calculation of Insurance Net Loss has been revised to exclude adjustments for intercompany eliminations as they are not considered relevant in evaluating the performance of our
Insurance segment. For first quarter 2016, this resulted in a change to the previously reported Insurance loss of ($12.3) million for the quarter to a loss of ($7.5) million.
The calculation of Insurance AOI has been revised to exclude adjustments for intercompany eliminations as they are not considered relevant in evaluating the performance of our
Insurance segment. For first quarter 2016, this resulted in a change to the previously reported Insurance AOI loss of ($3.6) million for the quarter to a loss of ($2.6) million.
(in thousands)
2017 2016
Increase/
(Decrease)
2017 2016
Increase/
(Decrease)
Net Income (loss) - Insurance segment 164$ (2,293)$ 2,457$ (597)$ (9,789)$ 9,192$
Effect of inv estment (gains) losses (1,095) (2,418) 1,323 (1,876) 2,457 (4,333)
Asset impairment expense 2,842 - 2,842 3,364 - 3,364
Acquisition and non-recurring items 736 - 736 736 - 736
Insurance AOI 2,647$ (4,711)$ 7,358$ 1,627$ (7,332)$ 8,959$
Adjusted Operating Income - Insurance ("Insurance AOI")
Three Months Ended June 30, Six Months Ended June 30,
Appendix:
Biographies
© 2 0 1 7 H C 2 H O L D I N G S , I N C .
HC2 Executive Leadership Team
37
Philip A. Falcone Served as a director of HC2 since January 2014 and Chairman of the Board, Chief
Executive Officer and President of HC2 since May 2014
Served as a director, Chairman of the Board and Chief Executive Officer of HRG Group
Inc. (“HRG”) from July 2009 to December 2014
From July 2009 to June 2011, served as the President of HRG
Chief Investment Officer and Chief Executive Officer of Harbinger Capital Partners, LLC
(“Harbinger Capital”)
Before founding Harbinger Capital in 2001, managed the High Yield and Distressed
trading operations for Barclays Capital from 1998 to 2000
Received an A.B. in Economics from Harvard University
Chairman of the Board
Chief Executive Officer
President
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Michael J. Sena Chief Financial Officer of HC2 since June 2015
Served as the Chief Accounting Officer of HRG from November 2012 to May 2015
From January 2009 to November 2012, held various accounting and financial reporting
positions with the Reader’s Digest Association, Inc., last serving as Vice President and
North American Controller
Served as Director of Reporting and Business Processes for Barr Pharmaceuticals from
July 2007 until January 2009
Held various positions with PricewaterhouseCoopers
Mr. Sena is a Certified Public Accountant and holds a Bachelor of Science in
Accounting from Syracuse University
Chief Financial Officer
Paul K. Voigt Senior Managing Director of HC2 since May 2014
Prior to joining HC2, served as Executive Vice President on the sales and trading desk at
Jefferies from 1996 to 2013
Served as Managing Director on the High Yield sales desk at Prudential Securities from
1988 to 1996
Mr. Voigt received an MBA from the University of Southern California in 1988 after
playing professional baseball. Graduated from the University of Virginia where he
received a Bachelor of Science in Electrical Engineering
Senior Managing Director
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Paul L. Robinson Chief Legal Officer & Corporate Secretary of HC2 since March 2016
Served as Executive Vice President, Chief Legal Officer and Corporate Secretary for
SEACOR Holdings Inc. for nearly nine years prior to HC2
Held various positions at Comverse Technology, Inc., including Chief Operating Officer,
Executive Vice President, General Counsel and Corporate Secretary
Served as associate attorney at Kramer, Levin, Naftalis & Frankel, LLP.; Counsel to the
United States Senate Committee on Governmental Affairs and associate attorney at
Skadden, Arps, Slate, Meagher & Flom LLP
Mr. Robinson earned a Bachelor of Arts degree in Political Science and was Phi Beta
Kappa from State University of New York at Binghamton and a J.D., cum laude, from
Boston University School of Law
Chief Legal Officer &
Corporate Secretary
Andrew G. Backman Managing Director of Investor Relations & Public Relations of HC2 since April 2016
Prior to joining HC2, served as Managing Director of Investor Relations and Public
Relations for RCS Capital and AR Capital (now AR Global) from 2014 to 2016
Founder and Chief Executive Officer of InVisionIR, a New York-based advisory and
consulting firm from 2011 to 2014
Served as Senior Vice President, Investor Relations & Marketing of iStar Financial from
2004 to 2010
Served as Vice President, Investor Relations and Marketing Communications for Corvis
Corporation / Broadwing Communications from 2000 to 2004
Spent first 10 years of career at Lucent Technologies and AT&T Corp.
Mr. Backman earned a Bachelor of Arts degree in Economics from Boston College and
graduated from AT&T / Lucent Technologies’ prestigious Financial Leadership Program
Managing Director
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Suzi Raftery Herbst
Chief Administrative Officer of HC2 since March 2015 with over 17 years of diverse
human resources, recruiting, equity and foreign exchange sales experience
Prior to joining HC2, served as Senior Vice President and Director
of Human Resources of Harbinger Capital and HRG
Previously served as Head of Recruiting at Knight Capital Group
Previously held various positions in Human Resources, as well as Foreign Exchange Sales
at Cantor Fitzgerald after beginning her career in Equity Sales at Merrill Lynch
Ms. Herbst earned a Bachelor of Arts degree in Communications and Studio Art from
Marist College
Chief Administrative
Officer
HC2 HOLDINGS, INC.
© HC2 Holdings, Inc. 2017
A n d r e w G . B a c k m a n • i r @ h c 2 . c om • 2 1 2 . 2 3 5 . 2 6 9 1 • 4 5 0 P a r k A v e n u e , 3 0 t h F l o o r , N e w Y o r k , N Y 1 0 0 2 2
August 2017