INNOVATE Corp. (“INNOVATE” or the “Company”) (NYSE: VATE) announced
today its consolidated results for the third quarter.
Financial Summary
(in millions, except per share amounts) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2024 |
|
|
|
2023 |
|
|
Increase / (Decrease) |
|
|
2024 |
|
|
|
2023 |
|
|
Increase / (Decrease) |
Revenue |
$ |
242.2 |
|
|
$ |
375.3 |
|
|
(35.5)% |
|
$ |
870.5 |
|
|
$ |
1,062.0 |
|
|
(18.0)% |
Net loss attributable to common stockholders and participating
preferred stockholders |
$ |
(15.3 |
) |
|
$ |
(7.3 |
) |
|
(109.6)% |
|
$ |
(18.9 |
) |
|
$ |
(28.0 |
) |
|
32.5 |
% |
Basic and Diluted loss per share attributable to common
stockholders(1) |
$ |
(1.18 |
) |
|
$ |
(0.93 |
) |
|
(26.9)% |
|
$ |
(1.69 |
) |
|
$ |
(3.59 |
) |
|
52.9 |
% |
Total Adjusted EBITDA(2) |
$ |
16.8 |
|
|
$ |
22.1 |
|
|
(24.0)% |
|
$ |
56.3 |
|
|
$ |
43.5 |
|
|
29.4 |
% |
(1) Basic and Diluted loss per common share for
the three and nine months ended September 30, 2023, have been
retroactively adjusted to reflect the 1-for-10 reverse stock split
effected on August 8, 2024.(2) Reconciliation of GAAP to Non-GAAP
measures follows
Commentary“INNOVATE continued
its momentum in the third quarter, delivering solid third quarter
financial results while achieving key milestones across our
business segments,” said Avie Glazer, Chairman of INNOVATE.
“Despite lower-than-expected sales at the Infrastructure segment,
DBMG experienced a strong booking quarter, indicating they are well
positioned to execute given the current market backdrop. At Life
Sciences, R2 once again achieved record high Glacial system unit
sales in North America in the third quarter, a 247% increase in
units sold over the same period last year, while MediBeacon remains
focused on working with the U.S. Food and Drug Administration
("FDA") as they conduct their substantive review of the kidney
monitoring system. At Spectrum, we continue to see significant
growth in both sales and profitability during the third quarter, as
well as year-to-date.”
“The performance within our three operating
segments drove our third quarter financial results,” said Paul
Voigt, INNOVATE's Interim CEO. “At DBM, while sales were lower in
the quarter due to project timing, the Company delivered strong
margin performance and a strong bookings performance. At Pansend,
R2 unit sales in North America maintained their strong momentum,
achieving significant growth again this quarter. Broadcasting
continues to expand its platform by adding new networks, which
drove top and bottom line results in that business.”
Third Quarter 2024 and Recent
Highlights Infrastructure
- DBM Global reported third quarter
2024 revenue of $232.8 million, a decrease of 37.0%, compared to
$369.3 million in the prior year quarter. Net Income attributable
to INNOVATE was $6.2 million, compared to $10.8 million for
the prior year quarter. Adjusted EBITDA decreased to
$20.9 million from $30.8 million in the prior year
quarter.
- Despite the fact that projects have
not yet been released, bidding activity in the commercial market
remains strong. Meanwhile, the industrial markets have shown robust
performance, with projects progressing into 2024, a trend we
anticipate will persist into 2025.
- DBM Global grew gross margin to
18.8% in the third quarter, an expansion of approximately 360 basis
points year-over-year and Adjusted EBITDA margin to 9.0% in the
third quarter, an expansion of approximately 70 basis points
year-over-year.
- DBM Global’s reported backlog and
adjusted backlog, which takes into consideration awarded but not
yet signed contracts, was $0.9 billion and $1.1 billion,
respectively, as of September 30, 2024, compared to reported and
adjusted backlog of $1.1 billion and $1.2 billion,
respectively, as of December 31, 2023.
Life Sciences
- R2 Technologies, Inc. ("R2") once
again broke sales records in North America.
- R2 experienced record worldwide system
unit sales growth in the third quarter of 416% over same period in
the prior year, and year-to-date growth of 294%
year-over-year.
- Both patient treatment counts and
average usage per account continue to increase, closing out Q3 with
another record high for both metrics.
- MediBeacon continues to work
through their substantive review of the kidney monitoring program
with the FDA.
Spectrum
- Broadcasting reported third quarter
2024 revenue of $6.4 million, compared to $5.4 million in the
prior year quarter. Net Loss attributable to INNOVATE was $5.6
million compared to $6.5 million in the prior year quarter.
Adjusted EBITDA was $1.7 million, compared to an Adjusted
EBITDA loss of $0.3 million in the prior year quarter. The
improvement in financial results was once again a result of revenue
growth driven by the launch of new networks and expanded coverage
with existing customers.
- New launches in 2024 are driving
higher revenue growth. Of note, FreeTV's network, Defy, launched in
the third quarter. Broadcasting continues to see many OTA network
opportunities on the horizon for 2025 as streaming networks explore
"over-the-air" coverage.
- Progress on discussions with
prospective strategic partners in pursuit of new spectrum-related
revenue opportunities in ATSC 3.0 light housing, datacasting and 5G
Broadcasting.
Third Quarter 2024 Financial
Highlights
- Revenue: For the
third quarter of 2024, INNOVATE's consolidated revenue was $242.2
million, a decrease of 35.5%, compared to $375.3 million for the
prior year quarter. The decrease was driven by our Infrastructure
segment, which was partially offset by increases at our Life
Sciences and Spectrum segments. The decrease at our Infrastructure
segment was primarily driven by the timing and size of projects,
including the effect of changes in estimated costs to complete
those projects recognized in the ordinary course of business, at
Banker Steel and DBMG's commercial structural steel fabrication and
erection business, both of which had increased activity in the
comparable period on certain large commercial construction projects
that are now at or near completion in the current period. This was
partially offset by an increase at the industrial maintenance and
repair business as a result of an increase in project work. The
increase at our Life Sciences segment was attributable to R2,
primarily driven by an increase in sales in North America and
worldwide of all R2's products, including Glacial fx systems,
consumables, Glacial Spa systems and Glacial Rx systems. The
increase at our Spectrum segment was primarily driven by network
launches and expanded coverage with existing customers.
REVENUE by OPERATING SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
2023 |
|
Increase / (Decrease) |
|
|
2024 |
|
|
2023 |
|
Increase / (Decrease) |
Infrastructure |
|
$ |
232.8 |
|
$ |
369.3 |
|
$ |
(136.5 |
) |
|
$ |
845.9 |
|
$ |
1,043.4 |
|
$ |
(197.5 |
) |
Life Sciences |
|
|
3.0 |
|
|
0.6 |
|
|
2.4 |
|
|
|
5.7 |
|
|
1.8 |
|
|
3.9 |
|
Spectrum |
|
|
6.4 |
|
|
5.4 |
|
|
1.0 |
|
|
|
18.9 |
|
|
16.8 |
|
|
2.1 |
|
Consolidated INNOVATE |
|
$ |
242.2 |
|
$ |
375.3 |
|
$ |
(133.1 |
) |
|
$ |
870.5 |
|
$ |
1,062.0 |
|
$ |
(191.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Net Loss: For the
third quarter of 2024, INNOVATE reported a Net Loss attributable to
common stockholders and participating preferred stockholders of
$15.3 million, or $1.18 per fully diluted share, compared to
$7.3 million, or $0.93 per fully diluted share, for the prior
year quarter, which has been retroactively adjusted to reflect the
1-for-10 reverse stock split effected on August 8, 2024. The
increase in Net Loss was primarily due to a net decrease in gross
profit of $10.5 million, a $4.1 million increase in
interest expense and a $2.0 million increase in tax expense,
which was partially offset by a decrease in selling, general and
administrative ("SG&A") expenses of $6.4 million, a
$1.8 million increase in other income, net and a decrease of
$1.5 million in the loss from equity investees. The decrease
in gross profit was primarily driven by our Infrastructure segment
due to timing and size of projects that are now at or near
completion in the current period, including the effect of changes
in estimated costs to complete those projects recognized in the
ordinary course of business, partially offset by increases at our
Spectrum segment driven by network launches and expanded coverage
with existing customers and at our Life Sciences segment due to an
increase in systems and consumables sales at R2. The overall
increase in interest expense was primarily attributable to
increases in exit fees and a higher outstanding principal balance
at our Life Sciences segment as a result of new debt issued and
capitalization of unpaid interest into principal balances
subsequent to the comparable period. The overall increase in tax
expense was driven by the tax expense of INNOVATE Corp's U.S.
consolidated group utilizing its remaining unlimited NOLs in 2024
and due to the Tax Cut and Jobs Act's 80 percent limitation on net
operating losses incurred after 2017, resulting in the annual
effective tax rate for the current period being applied to the U.S.
consolidated group's 2024 year-to-date income as calculated under
ASC 740. The overall decrease in SG&A expenses was primarily
driven by an unrepeated accounts receivable write-off of
$2.2 million related to a customer bankruptcy in the
comparable period and reductions in compensation-related expenses
at our Infrastructure segment, unrepeated severance and reductions
in compensation-related expenses at both our Non-Operating
Corporate and our Spectrum segments. The overall increase in other
income, net was primarily driven by a $1.9 million gain on
debt repurchase at our Non-Operating Corporate segment related to
the partial repurchase of the 2026 Convertible Notes. The overall
decrease in loss from equity investees was primarily due to a
decrease in losses recognized from MediBeacon, as Pansend had no
basis in MediBeacon against which to recognize any losses, and
Pansend's carrying amount of its MediBeacon investment remained at
zero. During the comparable period, Pansend made a
$1.0 million convertible note investment in MediBeacon,
allowing Pansend to recognize previously unrecognized unrealized
equity method losses due to an increase in basis in the
investment.
NET INCOME (LOSS) by OPERATING SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
Increase / (Decrease) |
|
|
2024 |
|
|
|
2023 |
|
|
Increase / (Decrease) |
Infrastructure |
|
$ |
6.2 |
|
|
$ |
10.8 |
|
|
$ |
(4.6 |
) |
|
$ |
31.6 |
|
|
$ |
19.8 |
|
|
$ |
11.8 |
|
Life Sciences |
|
|
(6.0 |
) |
|
|
(3.6 |
) |
|
|
(2.4 |
) |
|
|
(14.3 |
) |
|
|
(9.3 |
) |
|
|
(5.0 |
) |
Spectrum |
|
|
(5.6 |
) |
|
|
(6.5 |
) |
|
|
0.9 |
|
|
|
(15.4 |
) |
|
|
(16.8 |
) |
|
|
1.4 |
|
Non-Operating Corporate |
|
|
(9.6 |
) |
|
|
(7.7 |
) |
|
|
(1.9 |
) |
|
|
(20.0 |
) |
|
|
(27.8 |
) |
|
|
7.8 |
|
Other and eliminations |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
|
|
8.2 |
|
|
|
(8.1 |
) |
Net loss attributable to INNOVATE Corp. |
|
$ |
(15.0 |
) |
|
$ |
(7.0 |
) |
|
|
(8.0 |
) |
|
$ |
(18.0 |
) |
|
$ |
(25.9 |
) |
|
$ |
7.9 |
|
Less: Preferred dividends |
|
|
0.3 |
|
|
|
0.3 |
|
|
|
— |
|
|
|
0.9 |
|
|
|
2.1 |
|
|
|
(1.2 |
) |
Net loss attributable to common stockholders and participating
preferred stockholders |
|
$ |
(15.3 |
) |
|
$ |
(7.3 |
) |
|
$ |
(8.0 |
) |
|
$ |
(18.9 |
) |
|
$ |
(28.0 |
) |
|
$ |
9.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Adjusted EBITDA:
For the third quarter of 2024, total Adjusted EBITDA, was $16.8
million compared to total Adjusted EBITDA of $22.1 million for
the prior year quarter. The decrease in Adjusted EBITDA was driven
by our Infrastructure segment due to lower revenue at both DBMG's
commercial structural steel fabrication and erection business and
Banker Steel, partially offset by higher margins, due to timing of
completion of certain large commercial construction projects that
are now at or near completion in the current period, including the
effect of changes in estimated costs to complete those projects
recognized in the ordinary course of business, as well as lower
margins at the construction modeling and detailing business. This
decrease in Adjusted EBITDA was partially offset by an increase in
revenue and margins at Infrastructure's industrial maintenance and
repair business, a decrease in timing of compensation-related
expenses at our Infrastructure segment, unrepeated severance at our
Non-Operating Corporate and Spectrum segments, an increase in
revenue at our Spectrum segment driven by network launches and
expanded coverage with existing customers, fewer equity method
losses recognized from MediBeacon as well as an increase in gross
profit at R2 driven by an increase in sales in North America and
worldwide of all R2's products, including Glacial fx systems,
consumables, Glacial Spa systems and Glacial Rx systems.
ADJUSTED EBITDA by OPERATING SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2024 |
|
|
|
2023 |
|
|
Increase / (Decrease) |
|
|
2024 |
|
|
|
2023 |
|
|
Increase/(Decrease) |
Infrastructure |
$ |
20.9 |
|
|
$ |
30.8 |
|
|
$ |
(9.9 |
) |
|
$ |
71.7 |
|
|
$ |
70.6 |
|
|
$ |
1.1 |
Life Sciences |
|
(3.0 |
) |
|
|
(4.3 |
) |
|
|
1.3 |
|
|
|
(12.0 |
) |
|
|
(16.0 |
) |
|
|
4.0 |
Spectrum |
|
1.7 |
|
|
|
(0.3 |
) |
|
|
2.0 |
|
|
|
4.8 |
|
|
|
0.9 |
|
|
|
3.9 |
Non-Operating Corporate |
|
(2.8 |
) |
|
|
(4.1 |
) |
|
|
1.3 |
|
|
|
(8.2 |
) |
|
|
(11.0 |
) |
|
|
2.8 |
Other and eliminations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1.0 |
) |
|
|
1.0 |
Total Adjusted EBITDA |
$ |
16.8 |
|
|
$ |
22.1 |
|
|
$ |
(5.3 |
) |
|
$ |
56.3 |
|
|
$ |
43.5 |
|
|
$ |
12.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Balance Sheet: As
of September 30, 2024, INNOVATE had cash and cash equivalents,
excluding restricted cash, of $51.0 million compared to $80.8
million as of December 31, 2023. On a stand-alone basis, as of
September 30, 2024, our Non-Operating Corporate segment had
cash and cash equivalents of $20.2 million compared to $2.5 million
as of December 31, 2023.
Conference Call
INNOVATE will host a live conference call to
discuss its third quarter 2024 financial results and operations
today at 4:30 p.m. ET. The Company will post an earnings
supplemental presentation in the Investor Relations section of the
INNOVATE website at innovate-ir.com to accompany the conference
call. Dial-in instructions for the conference call and the replay
follows.
- Live Webcast
and Call. A live webcast of the
conference call can be accessed by interested parties through the
Investor Relations section of the INNOVATE website at
innovate-ir.com.- Dial-in: 1-800-717-1738 (Domestic Toll Free) /
1-646-307-1865 (Toll/International)
-
Conference Replay*- Dial-in: 1-844-512-2921
(Domestic Toll Free) / 1-412-317-6671 (Toll/International)-
Conference Number: 1192054
*Available approximately two hours after the end of the
conference call through November 20, 2024.
About INNOVATE Corp.
INNOVATE Corp., is a portfolio of best-in-class
assets in three key areas of the new economy – Infrastructure, Life
Sciences and Spectrum. Dedicated to stakeholder capitalism,
INNOVATE employs approximately 4,000 people across its
subsidiaries. For more information, please visit:
www.INNOVATECorp.com.
Contacts
Investor Contact:Anthony
Rozmusir@innovatecorp.com(212) 235-2691
Non-GAAP Financial Measures
In this press release, INNOVATE refers to
certain financial measures that are not presented in accordance
with U.S. generally accepted accounting principles (“GAAP”),
including Total Adjusted EBITDA (excluding discontinued operations,
if applicable) and Adjusted EBITDA for its operating segments. In
addition, other companies may define Adjusted EBITDA differently
than we do, which could limit its usefulness.
Adjusted EBITDA
Management believes that Adjusted EBITDA
provides investors with meaningful information for gaining an
understanding of our results as it is frequently used by the
financial community to provide insight into an organization’s
operating trends and facilitates comparisons between peer
companies, since interest, taxes, depreciation, amortization and
the other items listed in the definition of Adjusted EBITDA below
can differ greatly between organizations as a result of differing
capital structures and tax strategies. Adjusted EBITDA can also be
a useful measure of a company’s ability to service debt. While
management believes that non-U.S. GAAP measurements are useful
supplemental information, such adjusted results are not intended to
replace our U.S. GAAP financial results. Using Adjusted EBITDA as a
performance measure has inherent limitations as an analytical tool
as compared to net income (loss) or other U.S. GAAP financial
measures, as this non-GAAP measure excludes certain items,
including items that are recurring in nature, which may be
meaningful to investors. As a result of the exclusions, Adjusted
EBITDA should not be considered in isolation and does not purport
to be an alternative to net income (loss) or other U.S. GAAP
financial measures as a measure of our operating performance.
The calculation of Adjusted EBITDA, as defined
by us, consists of Net income (loss) attributable to INNOVATE
Corp., excluding: discontinued operations, if applicable;
depreciation and amortization; other operating (income) loss, which
is inclusive of (gain) loss on sale or disposal of assets, lease
termination costs, (gains) losses on lease modifications, asset
impairment expense and FCC reimbursements; interest expense; other
(income) expense, net; income tax expense (benefit);
non-controlling interest; share-based compensation expense; legacy
accounts receivable write-offs; restructuring and exit costs; and
acquisition and disposition costs.
Cautionary Statement Regarding
Forward-Looking Statements
Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995: This press release
contains, and certain oral statements made by our representatives
from time to time may contain, "forward-looking statements."
Generally, forward-looking statements include information
describing actions, events, results, strategies and expectations
and are generally identifiable by use of the words “believes,”
“expects,” “intends,” “anticipates,” “plans,” “seeks,” “estimates,”
“projects,” “may,” “will,” “could,” “might,” or “continues” or
similar expressions. Such forward-looking statements are based on
current expectations and inherently involve certain risks,
assumptions and uncertainties. The forward-looking statements in
this press release include, without limitation, any statements
regarding INNOVATE’s plans and expectations for future growth and
ability to capitalize on potential opportunities, the achievement
of INNOVATE’s strategic objectives, expectations for performance of
new projects and realization of revenue from the backlog at DBM
Global, anticipated success from the continued sale of new products
in the Life Sciences segment, possible developments regarding the
FDA approval process at MediBeacon, anticipated performance of new
channels and LPTV frequencies, expanded uses for LPTV channels in
the Spectrum segment and the potential deployment of datacasting,
anticipated agreements in the Spectrum segment with public
broadcast networks, anticipated 5G broadcasting opportunities in
the Spectrum segment, anticipated developments regarding Federal
Communications Commission approval to convert existing station to
5G broadcast, our ability to remain in compliance with the NYSE's
continued listing standards, and changes in macroeconomic and
market conditions and market volatility, including interest rates,
the value of securities and other financial assets, and the impact
of such changes and volatility on INNOVATE’s financial position.
Such statements are based on the beliefs and assumptions of
INNOVATE’s management and the management of INNOVATE’s subsidiaries
and portfolio companies.
The Company believes these judgments are
reasonable, but these statements are not guarantees of performance,
results or the creation of stockholder value and the Company’s
actual results could differ materially from those expressed or
implied in the forward-looking statements due to a variety of
important factors, both positive and negative, including those that
may be identified in subsequent statements and reports filed with
the Securities and Exchange Commission (“SEC”), including in our
reports on Forms 10-K, 10-Q, and 8-K. Such important factors
include, without limitation: our dependence on distributions from
our subsidiaries to fund our operations and payments on our
obligations; our inability to continue operating as a going
concern; the impact on our business and financial condition of our
substantial indebtedness and any significant additional
indebtedness and other financing obligations we may incur; our
dependence on the retaining and recruitment of key personnel;
volatility in the trading price of our common stock; the impact of
potential supply chain disruptions, labor shortages and increases
in overall price levels, including in transportation costs;
interest rate environment; developments relating to the ongoing
hostilities in Ukraine and Israel; increased competition in the
markets in which our operating segments conduct their businesses;
our ability to successfully identify any strategic acquisitions or
business opportunities; uncertain global economic conditions in the
markets in which our operating segments conduct their businesses;
changes in regulations and tax laws; covenant noncompliance risk;
tax consequences associated with our acquisitions, holding and
disposition of target companies and assets; the ability of our
operating segments to attract and retain customers; our
expectations regarding the timing, extent and effectiveness of any
cost reduction initiatives and management’s ability to moderate or
control discretionary spending; our expectations and timing with
respect to any strategic dispositions and sales of our operating
subsidiaries, or businesses; the possibility of indemnification
claims arising out of divestitures of businesses; and our possible
inability to raise additional capital when needed or refinance our
existing debt, on attractive terms, or at all.
Although INNOVATE believes its expectations and
assumptions regarding its future operating performance are
reasonable, there can be no assurance that the expectations
reflected herein will be achieved. These risks and other important
factors discussed under the caption “Risk Factors” in our most
recent Annual Report on Form 10-K filed with the SEC, and our other
reports filed with the SEC could cause actual results to differ
materially from those indicated by the forward-looking statements
made in this press release.
You should not place undue reliance on
forward-looking statements. All forward-looking statements
attributable to INNOVATE or persons acting on its behalf are
expressly qualified in their entirety by the foregoing cautionary
statements. All such statements speak only as of the date made, and
unless legally required, INNOVATE undertakes no obligation to
update or revise publicly any forward-looking statements, whether
as a result of new information, future events or otherwise.
INNOVATE CORP.CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited,
in millions, except shares and per share amounts)
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Revenue |
|
$ |
242.2 |
|
|
$ |
375.3 |
|
|
$ |
870.5 |
|
|
$ |
1,062.0 |
|
Cost of revenue |
|
|
194.0 |
|
|
|
316.6 |
|
|
|
708.1 |
|
|
|
907.1 |
|
Gross profit |
|
|
48.2 |
|
|
|
58.7 |
|
|
|
162.4 |
|
|
|
154.9 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Selling, general and administrative |
|
|
37.4 |
|
|
|
43.8 |
|
|
|
119.8 |
|
|
|
126.6 |
|
Depreciation and amortization |
|
|
4.4 |
|
|
|
4.0 |
|
|
|
13.2 |
|
|
|
15.9 |
|
Other operating loss (income) |
|
|
0.5 |
|
|
|
0.2 |
|
|
|
(8.1 |
) |
|
|
(0.1 |
) |
Income from operations |
|
|
5.9 |
|
|
|
10.7 |
|
|
|
37.5 |
|
|
|
12.5 |
|
Other (expense) income: |
|
|
|
|
|
|
|
|
Interest expense |
|
|
(21.2 |
) |
|
|
(17.1 |
) |
|
|
(54.9 |
) |
|
|
(49.0 |
) |
Loss from equity investees |
|
|
— |
|
|
|
(1.5 |
) |
|
|
(2.3 |
) |
|
|
(5.8 |
) |
Other income, net |
|
|
2.2 |
|
|
|
0.4 |
|
|
|
1.2 |
|
|
|
17.2 |
|
Loss from operations before income taxes |
|
|
(13.1 |
) |
|
|
(7.5 |
) |
|
|
(18.5 |
) |
|
|
(25.1 |
) |
Income tax expense |
|
|
(3.1 |
) |
|
|
(1.1 |
) |
|
|
(3.9 |
) |
|
|
(3.2 |
) |
Net loss |
|
|
(16.2 |
) |
|
|
(8.6 |
) |
|
|
(22.4 |
) |
|
|
(28.3 |
) |
Net loss attributable to non-controlling interests and redeemable
non-controlling interests |
|
|
1.2 |
|
|
|
1.6 |
|
|
|
4.4 |
|
|
|
2.4 |
|
Net loss attributable to INNOVATE Corp. |
|
|
(15.0 |
) |
|
|
(7.0 |
) |
|
|
(18.0 |
) |
|
|
(25.9 |
) |
Less: Preferred dividends |
|
|
0.3 |
|
|
|
0.3 |
|
|
|
0.9 |
|
|
|
2.1 |
|
Net loss attributable to common stockholders and
participating preferred stockholders |
|
$ |
(15.3 |
) |
|
$ |
(7.3 |
) |
|
$ |
(18.9 |
) |
|
$ |
(28.0 |
) |
|
|
|
|
|
|
|
|
|
Loss per common share - basic and diluted (1) |
|
$ |
(1.18 |
) |
|
$ |
(0.93 |
) |
|
$ |
(1.69 |
) |
|
$ |
(3.59 |
) |
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and
diluted(1) |
|
|
12,966,322 |
|
|
|
7,841,847 |
|
|
|
9,928,679 |
|
|
|
7,801,240 |
|
(1) Basic and Diluted loss per common share and
weighted average common shares outstanding for the three and nine
months ended September 30, 2023, have been retroactively adjusted
to reflect the 1-for-10 reverse stock split effected on August 8,
2024.
INNOVATE CORP.CONDENSED
CONSOLIDATED BALANCE SHEETS(Unaudited, in
millions, except share amounts)
|
|
September 30,2024 |
|
December 31,2023 |
|
|
|
Assets |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
51.0 |
|
|
$ |
80.8 |
|
Accounts receivable, net |
|
|
190.8 |
|
|
|
278.4 |
|
Contract assets |
|
|
113.8 |
|
|
|
118.6 |
|
Inventory |
|
|
21.0 |
|
|
|
22.4 |
|
Assets held for sale |
|
|
7.3 |
|
|
|
3.1 |
|
Other current assets |
|
|
16.0 |
|
|
|
14.6 |
|
Total current assets |
|
|
399.9 |
|
|
|
517.9 |
|
Investments |
|
|
1.8 |
|
|
|
1.8 |
|
Deferred tax asset |
|
|
2.0 |
|
|
|
2.0 |
|
Property, plant and equipment, net |
|
|
132.6 |
|
|
|
154.6 |
|
Goodwill |
|
|
127.1 |
|
|
|
127.1 |
|
Intangibles, net |
|
|
173.4 |
|
|
|
178.9 |
|
Other assets |
|
|
60.4 |
|
|
|
61.3 |
|
Total assets |
|
$ |
897.2 |
|
|
$ |
1,043.6 |
|
Liabilities, temporary equity and stockholders’
deficit |
|
|
|
|
Current liabilities |
|
|
|
|
Accounts payable |
|
$ |
83.7 |
|
|
$ |
142.9 |
|
Accrued liabilities |
|
|
93.3 |
|
|
|
70.8 |
|
Current portion of debt obligations |
|
|
189.2 |
|
|
|
30.5 |
|
Contract liabilities |
|
|
85.5 |
|
|
|
153.5 |
|
Other current liabilities |
|
|
16.3 |
|
|
|
16.1 |
|
Total current liabilities |
|
|
468.0 |
|
|
|
413.8 |
|
Deferred tax liability |
|
|
4.3 |
|
|
|
4.1 |
|
Debt obligations |
|
|
502.4 |
|
|
|
679.3 |
|
Other liabilities |
|
|
47.8 |
|
|
|
82.7 |
|
Total liabilities |
|
|
1,022.5 |
|
|
|
1,179.9 |
|
Commitments and contingencies |
|
|
|
|
Temporary equity |
|
|
|
|
Preferred Stock Series A-3 and Preferred Stock Series A-4, $0.001
par value |
|
|
16.1 |
|
|
|
16.4 |
|
Shares authorized: 20,000,000 as of both September 30, 2024,
and December 31, 2023 |
|
|
|
|
Shares issued and outstanding: 6,125 of Series A-3 and 10,000 of
Series A-4 as of both September 30, 2024, and December 31,
2023 |
|
|
|
|
Redeemable non-controlling interest |
|
|
(0.3 |
) |
|
|
(1.0 |
) |
Total temporary equity |
|
|
15.8 |
|
|
|
15.4 |
|
Stockholders’ deficit |
|
|
|
|
Common stock, $0.001 par value |
|
|
— |
|
|
|
0.1 |
|
Shares authorized: 250,000,000 and 160,000,000 as of
September 30, 2024, and December 31, 2023, respectively |
|
|
|
|
Shares issued: 13,314,857 and 8,072,300 as of September 30,
2024, and December 31, 2023, respectively(1) |
|
|
|
|
Shares outstanding: 13,166,057 and 7,923,500 as of
September 30, 2024, and December 31, 2023,
respectively(1) |
|
|
|
|
Additional paid-in capital |
|
|
348.4 |
|
|
|
328.2 |
|
Treasury stock, at cost: 148,800 shares as of both
September 30, 2024, and December 31, 2023(1) |
|
|
(5.4 |
) |
|
|
(5.4 |
) |
Accumulated deficit |
|
|
(505.3 |
) |
|
|
(487.3 |
) |
Accumulated other comprehensive loss |
|
|
(0.8 |
) |
|
|
(1.1 |
) |
Total INNOVATE Corp. stockholders’ deficit |
|
|
(163.1 |
) |
|
|
(165.5 |
) |
Non-controlling interest |
|
|
22.0 |
|
|
|
13.8 |
|
Total stockholders’ deficit |
|
|
(141.1 |
) |
|
|
(151.7 |
) |
Total liabilities, temporary equity and stockholders’
deficit |
|
$ |
897.2 |
|
|
$ |
1,043.6 |
|
(1) Shares issued and shares outstanding as of
December 31, 2023, have been retroactively adjusted to reflect the
1-for-10 reverse stock split effected on August 8, 2024.
INNOVATE
CORP.RECONCILIATION OF NET INCOME (LOSS) TO
ADJUSTED EBITDA(Unaudited)
(in millions) |
|
Three Months Ended September 30, 2024 |
|
|
Infrastructure |
|
Life Sciences |
|
Spectrum |
|
Non-Operating Corporate |
|
Other and Eliminations |
|
INNOVATE |
Net income (loss) attributable to INNOVATE Corp. |
|
$ |
6.2 |
|
$ |
(6.0 |
) |
|
$ |
(5.6 |
) |
|
$ |
(9.6 |
) |
|
$ |
— |
|
$ |
(15.0 |
) |
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
3.0 |
|
|
0.1 |
|
|
|
1.3 |
|
|
|
— |
|
|
|
— |
|
|
4.4 |
|
Depreciation and amortization (included in cost of revenue) |
|
|
3.7 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
3.7 |
|
Other operating loss |
|
|
0.1 |
|
|
— |
|
|
|
0.4 |
|
|
|
— |
|
|
|
— |
|
|
0.5 |
|
Interest expense |
|
|
3.0 |
|
|
4.5 |
|
|
|
3.8 |
|
|
|
9.9 |
|
|
|
— |
|
|
21.2 |
|
Other expense (income), net |
|
|
0.3 |
|
|
(0.5 |
) |
|
|
2.2 |
|
|
|
(4.2 |
) |
|
|
— |
|
|
(2.2 |
) |
Income tax expense |
|
|
2.3 |
|
|
— |
|
|
|
— |
|
|
|
0.8 |
|
|
|
— |
|
|
3.1 |
|
Non-controlling interest |
|
|
0.6 |
|
|
(1.3 |
) |
|
|
(0.5 |
) |
|
|
— |
|
|
|
— |
|
|
(1.2 |
) |
Share-based compensation expense |
|
|
— |
|
|
0.1 |
|
|
|
— |
|
|
|
0.2 |
|
|
|
— |
|
|
0.3 |
|
Restructuring and exit costs |
|
|
1.4 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
1.4 |
|
Acquisition and disposition costs |
|
|
0.3 |
|
|
0.1 |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
— |
|
|
0.6 |
|
Adjusted EBITDA |
|
$ |
20.9 |
|
$ |
(3.0 |
) |
|
$ |
1.7 |
|
|
$ |
(2.8 |
) |
|
$ |
— |
|
$ |
16.8 |
|
(in millions) |
|
Three Months Ended September 30, 2023 |
|
|
Infrastructure |
|
Life Sciences |
|
Spectrum |
|
Non-Operating Corporate |
|
Other and Eliminations |
|
INNOVATE |
Net income (loss) attributable to INNOVATE Corp. |
|
$ |
10.8 |
|
|
$ |
(3.6 |
) |
|
$ |
(6.5 |
) |
|
$ |
(7.7 |
) |
|
$ |
— |
|
$ |
(7.0 |
) |
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
2.6 |
|
|
|
0.1 |
|
|
|
1.3 |
|
|
|
— |
|
|
|
— |
|
|
4.0 |
|
Depreciation and amortization (included in cost of revenue) |
|
|
3.8 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
3.8 |
|
Other operating (income) loss |
|
|
(0.2 |
) |
|
|
— |
|
|
|
0.4 |
|
|
|
— |
|
|
|
— |
|
|
0.2 |
|
Interest expense |
|
|
3.5 |
|
|
|
0.9 |
|
|
|
3.4 |
|
|
|
9.3 |
|
|
|
— |
|
|
17.1 |
|
Other (income) expense, net |
|
|
(0.7 |
) |
|
|
(0.1 |
) |
|
|
1.8 |
|
|
|
(1.4 |
) |
|
|
— |
|
|
(0.4 |
) |
Income tax expense (benefit) |
|
|
6.1 |
|
|
|
— |
|
|
|
— |
|
|
|
(5.0 |
) |
|
|
— |
|
|
1.1 |
|
Non-controlling interest |
|
|
1.0 |
|
|
|
(1.8 |
) |
|
|
(0.8 |
) |
|
|
— |
|
|
|
— |
|
|
(1.6 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
0.2 |
|
|
|
— |
|
|
|
0.6 |
|
|
|
— |
|
|
0.8 |
|
Legacy accounts receivable write-off |
|
|
2.2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
2.2 |
|
Restructuring and exit costs |
|
|
1.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
1.2 |
|
Acquisition and disposition costs |
|
|
0.6 |
|
|
|
— |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
0.7 |
|
Adjusted EBITDA |
|
$ |
30.8 |
|
|
$ |
(4.3 |
) |
|
$ |
(0.3 |
) |
|
$ |
(4.1 |
) |
|
$ |
— |
|
$ |
22.1 |
|
INNOVATE
CORP.RECONCILIATION OF NET INCOME (LOSS) TO
ADJUSTED EBITDA(Unaudited)
(in millions) |
|
Nine Months Ended September 30, 2024 |
|
|
Infrastructure |
|
Life Sciences |
|
Spectrum |
|
Non-Operating Corporate |
|
Other and Eliminations |
|
INNOVATE |
Net income (loss) attributable to INNOVATE Corp. |
|
$ |
31.6 |
|
|
$ |
(14.3 |
) |
|
$ |
(15.4 |
) |
|
$ |
(20.0 |
) |
|
$ |
0.1 |
|
|
$ |
(18.0 |
) |
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
8.9 |
|
|
|
0.3 |
|
|
|
3.9 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
13.2 |
|
Depreciation and amortization (included in cost of revenue) |
|
|
11.5 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11.6 |
|
Other operating (income) loss |
|
|
(8.8 |
) |
|
|
— |
|
|
|
0.5 |
|
|
|
0.2 |
|
|
|
— |
|
|
|
(8.1 |
) |
Interest expense |
|
|
7.7 |
|
|
|
6.4 |
|
|
|
10.6 |
|
|
|
30.2 |
|
|
|
— |
|
|
|
54.9 |
|
Other (income) expense, net |
|
|
(0.8 |
) |
|
|
1.2 |
|
|
|
6.3 |
|
|
|
(7.8 |
) |
|
|
(0.1 |
) |
|
|
(1.2 |
) |
Income tax expense (benefit) |
|
|
15.7 |
|
|
|
— |
|
|
|
— |
|
|
|
(11.8 |
) |
|
|
— |
|
|
|
3.9 |
|
Non-controlling interest |
|
|
3.0 |
|
|
|
(6.1 |
) |
|
|
(1.3 |
) |
|
|
— |
|
|
|
— |
|
|
|
(4.4 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
0.3 |
|
|
|
— |
|
|
|
0.8 |
|
|
|
— |
|
|
|
1.1 |
|
Restructuring and exit costs |
|
|
2.6 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.6 |
|
Acquisition and disposition costs |
|
|
0.3 |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
0.7 |
|
Adjusted EBITDA |
|
$ |
71.7 |
|
|
$ |
(12.0 |
) |
|
$ |
4.8 |
|
|
$ |
(8.2 |
) |
|
$ |
— |
|
|
$ |
56.3 |
|
(in millions) |
|
Nine Months Ended September 30, 2023 |
|
|
Infrastructure |
|
Life Sciences |
|
Spectrum |
|
Non-Operating Corporate |
|
Other and Eliminations |
|
INNOVATE |
Net income (loss) attributable to INNOVATE Corp. |
|
$ |
19.8 |
|
|
$ |
(9.3 |
) |
|
$ |
(16.8 |
) |
|
$ |
(27.8 |
) |
|
$ |
8.2 |
|
|
$ |
(25.9 |
) |
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
11.6 |
|
|
|
0.3 |
|
|
|
3.9 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
15.9 |
|
Depreciation and amortization (included in cost of revenue) |
|
|
11.7 |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
11.8 |
|
Other operating (income) loss |
|
|
(0.2 |
) |
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
Interest expense |
|
|
10.3 |
|
|
|
2.1 |
|
|
|
10.0 |
|
|
|
26.6 |
|
|
|
— |
|
|
|
49.0 |
|
Other (income) expense, net |
|
|
(1.2 |
) |
|
|
(4.1 |
) |
|
|
5.5 |
|
|
|
(4.9 |
) |
|
|
(12.5 |
) |
|
|
(17.2 |
) |
Income tax expense (benefit) |
|
|
11.0 |
|
|
|
— |
|
|
|
— |
|
|
|
(6.6 |
) |
|
|
(1.2 |
) |
|
|
3.2 |
|
Non-controlling interest |
|
|
1.9 |
|
|
|
(5.6 |
) |
|
|
(2.0 |
) |
|
|
— |
|
|
|
3.3 |
|
|
|
(2.4 |
) |
Share-based compensation expense |
|
|
— |
|
|
|
0.5 |
|
|
|
— |
|
|
|
1.5 |
|
|
|
— |
|
|
|
2.0 |
|
Legacy accounts receivable write-off |
|
|
2.2 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2.2 |
|
Restructuring and exit costs |
|
|
2.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
— |
|
|
|
2.2 |
|
Acquisition and disposition costs |
|
|
1.4 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
0.1 |
|
|
|
1.2 |
|
|
|
2.8 |
|
Adjusted EBITDA |
|
$ |
70.6 |
|
|
$ |
(16.0 |
) |
|
$ |
0.9 |
|
|
$ |
(11.0 |
) |
|
$ |
(1.0 |
) |
|
$ |
43.5 |
|
INNOVATE (NYSE:VATE)
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From Nov 2024 to Dec 2024
INNOVATE (NYSE:VATE)
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From Dec 2023 to Dec 2024