About HC2
HC2 Holdings, Inc. is a publicly traded (NYSE MKT:HCHC) diversified holding company, which seeks opportunities to acquire and grow businesses that can generate long-term sustainable free cash flow and attractive returns in order to maximize value for all stakeholders. HC2 has a diverse array of operating subsidiaries across seven reportable segments, including Construction, Marine Services, Energy, Telecommunications, Life Sciences, Insurance and Other. HC2’s largest operating subsidiaries include DBM Global Inc., a family of companies providing fully integrated structural and steel construction services, and Global Marine Systems Limited, a leading provider of engineering and underwater services on submarine cables. Founded in 1994, HC2 is headquartered in New York, New York.
Latest News
HC2 Holdings Reports Fourth Quarter and Full Year 2016 Results Posted 3/8/2017 4:09:00 PM

NEW YORK, March 08, 2017 (GLOBE NEWSWIRE) -- HC2 Holdings, Inc. ("HC2") (NYSE MKT:HCHC), a diversified holding company that focuses on acquiring, operating and growing businesses that it considers to be under or fairly valued, today announced its consolidated results for the fourth quarter and full year 2016, which ended on December 31, 2016.

"We closed out a year of very strong performance in 2016, with steadily improving Adjusted EBITDA from our operating subsidiaries, as each achieved significant individual milestones and executed transactions during the year that contributed to their respective successes," said Philip Falcone, HC2's Chairman, President and Chief Executive Officer. "Among the 2016 highlights: DBM Global further positioned itself for continued growth through the accretive cash acquisitions of the detailing and building information modeling business of PDC Global and of BDS VirCon, and finished the year with a record backlog of projects and solid pipeline of opportunities; Global Marine continued to experience solid performance from its maintenance business, including revenue contributions from the acquisition of CWind, and better than expected performance from joint ventures; American Natural Gas gained a national footprint through the acquisitions of Questar Fueling Company and Constellation CNG; Pansend Life Sciences company R2 Dermatology received FDA approval for the R2 Dermal Cooling System and most recently, MediBeacon completed its successful Pilot Two clinical study of its groundbreaking kidney function monitor; in our insurance business we merged United Teacher Associates Insurance Company and Continental General Insurance Company into one entity, creating operational and administrative efficiencies and meaningfully improving the regulatory capital efficiency of the business, and ended the year with approximately $2.0 billion in GAAP assets and $76.9 million in statutory surplus; and PTGi-ICS experienced a record year of Adjusted EBITDA growth."

Mr. Falcone continued, "At the corporate level during 2016, we strengthened our executive management team, and focused on managing the capital structure to increase financial flexibility.  As we continue to seek out opportunities to acquire controlling interests in stable cash flowing businesses, we believe we are well positioned to continue generating long-term value for shareholders."

Fourth Quarter and Full Year 2016 Financial Highlights

Net Revenue: For the fourth quarter of 2016, HC2 recorded consolidated total net revenue of $454.0 million, an increase of $40.9 million or 9.9% as compared to the third quarter of 2016, and an increase of $93.5 million, or 25.9% as compared to the year-ago quarter, primarily driven by growth in the Marine Services and Telecom segments, as well as contribution from the Company's Continental Insurance business, which was acquired in December 2015.

HC2 recorded consolidated total net revenue of $1,558.1 million for the full year ended December 31, 2016, an increase of $437.3 million, or 39.0%, as compared to $1,120.8 million for the full year 2015, due to substantial growth in the Telecom segment, a year-over-year increase in the Marine Services segment, due primarily to the addition of CWind revenues, as well as contributions from the Insurance segment.

Net Income / (Loss): For the fourth quarter of 2016, HC2 reported a Net (Loss) attributable to common and participating preferred stockholders of ($67.3) million or ($1.62) per fully diluted share, as compared to Net (Loss) of ($7.5) million or ($0.20) per fully diluted share for the third quarter of 2016, and a Net (Loss) of ($12.5) million or ($0.41) per fully diluted share compared to the year ago quarter.  Fourth quarter 2016 Net (Loss) attributable to common and participating preferred stockholders included a ($47.6) million or ($1.15) per fully diluted share non-cash valuation allowance recorded against HC2's deferred tax asset. 

For the full year ended December 31, 2016, HC2 reported a Net (Loss) attributable to common and participating preferred stock holders of ($105.4) million or ($2.83) per fully diluted share, as compared to a Net (Loss) of ($39.9) million or ($1.50) per fully diluted share for the full year 2015. The year-over-year decline was primarily due to the fourth quarter non-cash valuation allowance noted above. 

Adjusted EBITDA: For the fourth quarter of 2016, Adjusted EBITDA for "Core Operating Subsidiaries", which includes HC2's Construction (formerly Manufacturing), Marine Services, Energy (formerly Utilities) and Telecom segments, was a combined $37.9 million, as compared to $31.5 million in the third quarter of 2016 and $26.5 million in the year-ago quarter. Core Operating Subsidiary results for the fourth quarter were driven primarily by solid performance in the Construction and Marine Services segments. 

For the full year ended December 31, 2016, Adjusted EBITDA for Core Operating Subsidiaries was $109.1 million, as compared to $97.1 million for the full year 2015, the increase was driven primarily by the Construction, Telecom and Energy segments.  For the fourth quarter of 2016, Total Adjusted EBITDA (excluding the Insurance segment), which includes results from Core Operating Subsidiaries, Early-Stage and Other, and Non-Operating Corporate segments, was $26.5 million, as compared to $18.2 million in the third quarter of 2016 and $12.3 million for the year-ago quarter.  
For the full year ended December 31, 2016, Total Adjusted EBITDA (excluding the Insurance Segment) was $60.2 million, as compared to $52.1 million for the full year 2015.

Balance Sheet: As of December 31, 2016, HC2 had consolidated cash, cash equivalents and investments of $1.5 billion, which includes cash and investments associated with HC2's Insurance segment. Excluding the Insurance segment, consolidated cash and cash equivalents was $90.9 million, of which $21.7 million was at the corporate level.

Fourth Quarter and Full Year 2016 Select Segment Highlights

Construction - For the fourth quarter of 2016, HC2's Construction segment (DBM Global, previously Schuff International) reported Net Income of $7.3 million, as compared to $7.0 million for the third quarter and $8.3 million for the year-ago quarter.  For the full year ended December 31, 2016, Net Income was $28.0 million, as compared to $24.5 million for the full year 2015. 

For the fourth quarter of 2016, Adjusted EBITDA was $20.7 million, driven by strong performance, including better-than bid-performance on key projects in the Pacific & Midwest regions, as compared to $14.5 million for the third quarter and $14.6 million for the year-ago quarter.  For the full year ended December 31, 2016, Adjusted EBITDA was $59.9 million, as compared to $52.0 million for the full year 2015. 

Backlog at the end of the fourth quarter was a record $503 million, as compared to approximately $320 million in the prior-quarter.  DBM Global said it continues to see a number of large opportunities in the commercial sector totaling approximately $400 million in potential new projects that could be awarded over the next several quarters, which are not reflected in the $503 million backlog noted above. These projects include a number of new sporting arenas or stadiums, as well as new healthcare facilities and commercial office buildings.

Marine Services - For the fourth quarter of 2016, Global Marine reported Net Income of $8.7 million, as compared to $8.7 million for the third quarter and $2.9 million for the year-ago quarter.  For the full year ended December 31, 2016, Net Income was $17.4 million, as compared to $20.9 million for the full year 2015.

For the fourth quarter of 2016, Adjusted EBITDA was $14.8 million, as compared to $14.1 million for the third quarter and $10.6 million for the year-ago quarter.  The improved performance in the quarter was driven in part by continued strong performance from the Global Marine joint ventures, in particular its Huawei Marine and SBSS, and contribution from Global Marine's recent re-entry into the offshore power market.  For the full year ended December 31, 2016, Adjusted EBITDA was $41.2 million, as compared to $42.1 million for the full year 2015.

Energy - For the fourth quarter of 2016, American Natural Gas (ANG) reported a Net (Loss) of ($0.06) million, as compared to Net Income of $0.03 million for the third quarter and a Net Income of $0.06 million for the year-ago quarter.  For the full year ended December 31, 2016, Net Income (Loss) was $0.01 million, as compared to ($0.27) million for the full year 2015.  For the fourth quarter of 2016, Adjusted EBITDA was $0.87 million, as compared to $0.73 million for the third quarter and $0.27 million for the year-ago quarter.  For the full year ended December 31, 2016, Adjusted EBITDA was $2.54 million, as compared to $0.87 million for the full year 2015, due primarily to an increase in the number of fueling stations owned and/or operated. 

ANG currently owns and/or operates approximately 40 natural gas fueling stations, including stations under development, in 13 states and is focused on expanding the station footprint through both internal / organic transactions, as well as various M&A opportunities.  During the fourth quarter, ANG acquired 18 compressed natural gas fueling stations as a result of its acquisition of Questar Fueling Company and Constellation CNG providing ANG with a true, nationwide footprint.

Telecommunications - For the fourth quarter of 2016, Net Income (Loss) for PTGi-ICS was ($2.6) million, as compared to $1.8 million for the third quarter and $3.1 million for the year-ago quarter.  For the full year ended December 31, 2016, Net Income was $1.4 million compared to $2.8 million for the full year 2015. 

For the fourth quarter of 2016, Adjusted EBITDA was $1.5 million, as compared to $2.2 million for the third quarter and $1.0 million for the year-ago quarter. The fourth quarter of 2016 marked the seventh consecutive quarter of positive Adjusted EBITDA for PTGi-ICS, driven primarily by growth in wholesale traffic volumes, in part delivered by the changing regulatory environment throughout the European market, combined with continued business growth in the Middle East region. For the full year ended December 31, 2016, Adjusted EBITDA was $5.6 million, as compared to $2.0 million for the full year 2015.

Insurance - As of December 31, 2016, the Insurance companies had approximately $76.9 million of statutory surplus and $2.0 billion in total GAAP assets.

HC2 Corporate - During the fourth quarter, the Company reduced the cumulative outstanding accreted value of the Company's Series A, A-1 and A-2 Convertible Participating Preferred Stock (the "Preferred Stock") to approximately $30.0 million from $42.7 million at the beginning of the fourth quarter.  Since the end of September 30, 2014, on a gross basis, the Company has reduced over $92 million in preferred obligations, debt and pension liabilities at the corporate and subsidiary level. In addition, during the fourth quarter, the company received $17.5 million from DBM Global as part of the Company's tax sharing agreement with DBM Global. For full year 2016, the Company received $39.9 million from DBM Global as part of the tax sharing agreement.

Recent Developments

Construction - As announced on December 29, 2016, DBM Global paid a cash dividend of $2.59 per share on January 23, 2017 to DBM Global stockholders of record at the close of business on January 9, 2017, of which HC2 received $9.2 million of the total $10.0 million dividend payout.

Marine Services - On January 18, 2017, GMSL announced that it was awarded a five-year contract extension for the Atlantic Cable Maintenance Agreement ("ACMA").  The new contract began January 1, 2017, and runs for five years, through to December 2021.  Global Marine currently delivers maintenance support in three of the six maintenance zone agreements globally.  In addition, GMSL recently entered into a five-year operating lease agreement, with various options to purchase, the Maersk Recorder (now renamed the CS Recorder), a primarily telecom installation vessel capable of undertaking operations in offshore wind and oil and gas, to support expected growth in Huawei Marine joint venture.  The CS Recorder replaces the Cable Innovator, which is now supporting the GMSL's seven year, North American Zone ("NAZ") maintenance contract announced last year.

Pansend Life Sciences - On March 2, 2017, MediBeacon™ Inc., announced that it had successfully completed a real-time, point of care renal function clinical study on subjects with impaired kidney function at Washington University in St. Louis.  During the Pilot Two clinical study, kidney function was measured in subjects ranging from normal to impaired Stage 4 Chronic Kidney Disease (CKD).  The Company notes that this is a significant milestone that further reinforces its confidence in the investment in MediBeacon and its ability to use innovative technology to improve patient care and reduce costs to the healthcare system.

HC2 Corporate - On January 26, 2017, the Company announced the pricing of $55 million aggregate principal amount of 11.000% Senior Secured Notes due 2019 (the "Notes"), representing an increase from a previously announced proposed offering of $45 million aggregate principal amount.  The Company used the net proceeds from the issuance to refinance the 11.000% Senior Secured Bridge Note due 2019 (the "Bridge Note") issued by HC2 Holdings 2, Inc. ("HC2 2"), for working capital for the Company and its subsidiaries and for general corporate purposes, including the financing of potential future acquisitions and investments.  The Notes were issued at an issue price of 100.0% plus accrued interest from December 1, 2016.  The offering closed on January 31, 2017.  The net proceeds of the issuance of the Bridge Note were used by HC2 2 to purchase convertible debt of ANG, which is 49.9% owned by HC2, and for general corporate purposes.  ANG used such cash proceeds, together with available capacity under its existing credit facilities, to fund the acquisition of Questar Fueling Company and Constellation CNG, LLC, in two separate transactions, which closed on December 16, 2016 and December 20, 2016, respectively.

Conference Call

HC2 Holdings, Inc. will host a live conference call to discuss its fourth quarter and full year 2016 financial results and operations today, Wednesday, March 8, 2017, at 5:00 p.m. ET.

Dial-in instructions for the conference call and the replay are as follows:

Live Call

Dial-In (Toll Free): 1-866-395-3893

International Dial-In: 1-678-509-7540

Participant Entry Number: 71926737

Alternatively, a live webcast of the conference call can be accessed by interested parties through the Investor Relations section of the HC2 Website, www.HC2.com.

Conference Replay*

Domestic Dial-In (Toll Free): 1-855-859-2056

International Dial-In: 1-404-537-3406

Conference Number: 71926737

*Available approximately two hours after the end of the conference call through April 7, 2017.

About HC2

HC2 Holdings, Inc. is a publicly traded (NYSE MKT:HCHC) diversified holding company, which seeks opportunities to acquire and grow businesses that can generate long-term sustainable free cash flow and attractive returns in order to maximize value for all stakeholders.  HC2 has a diverse array of operating subsidiaries across seven reportable segments, including Construction (formerly Manufacturing), Marine Services, Energy (formerly Utilities), Telecommunications, Life Sciences, Insurance and Other.  HC2's largest operating subsidiaries include DBM Global Inc., a family of companies providing fully integrated structural and steel construction services, and Global Marine Systems Limited, a leading provider of engineering and underwater services on submarine cables. Founded in 1994, HC2 is headquartered in New York, New York.  Learn more about HC2 and its portfolio companies at www.hc2.com.

For information on HC2 Holdings, Inc., please contact Andrew G. Backman - Managing Director - Investor Relations & Public Relations - abackman@hc2.com - 212-339-5836

Non-GAAP Financial Measures

In this release, 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 the Insurance segment) and Adjusted EBITDA for its operating segments.  Management believes that Adjusted EBITDA measures provide investors with meaningful information for gaining an understanding of the Company's results as it is frequently used by the financial community to provide insight into an organization's operating trends and facilitates comparisons between peer companies, 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. 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 non-cash depreciation and amortization and items not within the control of the Company's operations managers. While management believes that these non-GAAP measurements are useful as supplemental information, such adjusted results are not intended to replace our 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; loss on early extinguishment or restructuring of debt; interest expense; 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; non-controlling interest; bonus to be settled in equity; share-based compensation expense and acquisition related and other non-recurring items. 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 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 GAAP financial measures as a measure of our operating performance.

Cautionary Statement Regarding Forward-Looking Statements

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This release contains, and certain oral statements made by our representatives from time to time may contain, forward-looking statements. Generally, forward-looking statements include information describing actions, events, results, strategies and expectations and are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans," "seeks," "estimates," "projects," "may," "will," "could," "might," or "continues" or similar expressions. The forward-looking statements in this press release 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 press release.

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.

 
HC2 HOLDINGS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
(Unaudited)
 
    Years Ended December 31,
    2016   2015   2014
Services revenue   $ 897,055     $ 595,280     $ 197,280  
Sales revenue   518,614     522,661     350,158  
Life, accident and health earned premiums, net   79,406     1,578      
Net investment income   58,032     1,031      
Net realized gains on investments   5,019     256      
Net revenue   1,558,126     1,120,806     547,438  
Operating expenses            
Cost of revenue - services   842,977     544,655     177,812  
Cost of revenue - sales   411,064     437,968     296,530  
Policy benefits, changes in reserves, and commissions   123,182     2,245      
Selling, general and administrative   152,890     108,527     80,239  
Depreciation and amortization   24,493     24,796     6,719  
(Gain) loss on sale or disposal of assets   2,362     170     (162 )
Lease termination costs   179     1,185      
Asset impairment expense   2,400     547     291  
Total operating expenses   1,559,547     1,120,093     561,429  
Income (loss) from operations   (1,421 )   713     (13,991 )
Interest expense   (43,375 )   (39,017 )   (12,347 )
Loss on early extinguishment or restructuring of debt           (11,969 )
Net loss on contingent consideration   (8,929 )        
Income (loss) from equity investees   10,768     (1,499 )   3,050  
Other income (expense), net   (2,836 )   (6,820 )   702  
Loss from continuing operations before income taxes   (45,793 )   (46,623 )   (34,555 )
Income tax (expense) benefit   (51,638 )   10,882     22,869  
Loss from continuing operations   (97,431 )   (35,741 )   (11,686 )
Loss from discontinued operations       (21 )   (146 )
Net loss   (97,431 )   (35,762 )   (11,832 )
Less: Net (income) loss attributable to noncontrolling interest and redeemable noncontrolling interest   2,882     197     (2,559 )
Net loss attributable to HC2 Holdings, Inc.   (94,549 )   (35,565 )   (14,391 )
Less: Preferred stock and deemed dividends from conversions

  10,849     4,285     2,049  
Net loss attributable to common stock and participating preferred stockholders   $ (105,398 )   $ (39,850 )   $ (16,440 )
             
Basic loss per common share:            
Loss from continuing operations   $ (2.83 )   $ (1.50 )   $ (0.82 )
Loss from discontinued operations           (0.01 )
Basic loss per share   $ (2.83 )   $ (1.50 )   $ (0.83 )
             
Diluted loss per common share:            
Loss from continuing operations   $ (2.83 )   $ (1.50 )   $ (0.82 )
Loss from discontinued operations           (0.01 )
Diluted loss per share   $ (2.83 )   $ (1.50 )   $ (0.83 )
             
Weighted average common shares outstanding:            
Basic   37,260     26,482     19,729  
Diluted   37,260     26,482     19,729  
                   


HC2 HOLDINGS, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except per share amounts)
(Unaudited)
 
  December 31,
  2016   2015
Assets      
Investments:      
Fixed maturities, available-for-sale at fair value $ 1,278,958     $ 1,231,841  
Equity securities, available-for-sale at fair value 51,519     49,682  
Mortgage loans 16,831     1,252  
Policy loans 18,247     18,476  
Other invested assets 62,363     53,119  
Total investments 1,427,918     1,354,370  
Cash and cash equivalents 115,371     158,624  
Restricted cash 498     538  
Accounts receivable (net of allowance for doubtful accounts of $3,619 and $794 at December 31, 2016 and 2015, respectively) 267,598     210,853  
Costs and recognized earnings in excess of billings on uncompleted contracts 15,188     39,310  
Inventory 9,648     12,120  
Recoverable from reinsurers 524,201     522,562  
Accrued investment income 15,948     15,300  
Deferred tax asset 1,108     52,511  
Property, plant and equipment, net 286,458     214,466  
Goodwill 98,086     61,178  
Intangibles 39,722     29,409  
Other assets 33,024     65,206  
Assets held for sale 508     6,065  
Total assets $ 2,835,276     $ 2,742,512  
Liabilities, temporary equity and stockholders' equity      
Life, accident and health reserves $ 1,648,565     $ 1,591,937  
Annuity reserves 251,270     260,853  
Value of business acquired 47,613     50,761  
Accounts payable and other current liabilities 251,733     225,389  
Billings in excess of costs and recognized earnings on uncompleted contracts 43,221     21,201  
Deferred tax liability 15,304     4,281  
Long-term obligations 428,496     371,876  
Pension liability 22,252     25,156  
Other liabilities 27,398     17,793  
Total liabilities 2,735,852     2,569,247  
Commitments and contingencies      
Temporary equity:      
Preferred stock, $.001 par value - 20,000,000 shares authorized; Series A - 14,808 and 29,172 shares issued and outstanding at December 31, 2016 and 2015, respectively; Series A-1 - 1,000 and 10,000 shares issued and outstanding at December 31, 2016 and 2015, respectively; Series A-2 - 14,000 shares issued and outstanding at December 31, 2016 and 2015, respectively 29,459     52,619  
Redeemable noncontrolling interest 2,526     3,122  
Total temporary equity 31,985     55,741  
Stockholders' equity:      
Common stock, $.001 par value - 80,000,000 shares authorized; 42,070,675 and 35,281,375 shares issued and 41,811,288 and 35,249,749 shares outstanding at December 31, 2016 and 2015, respectively 42     35  
Additional paid-in capital 241,485     209,477  
Treasury stock, at cost -  259,387 and 31,626 shares at December 31, 2016 and 2015, respectively (1,387 )   (378 )
Accumulated deficit (174,278 )   (79,729 )
Accumulated other comprehensive loss (21,647 )   (35,375 )
Total HC2 Holdings, Inc. stockholders' equity before noncontrolling interest 44,215     94,030  
Noncontrolling interest 23,224     23,494  
Total stockholders' equity 67,439     117,524  
Total liabilities, temporary equity and stockholders' equity $ 2,835,276     $ 2,742,512  
               


HC2 HOLDINGS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(in thousands)
(Unaudited)
 
    Year Ended December 31, 2016
    Core Operating Subsidiaries   Early Stage & Other                
    Construction   Marine
Services
  Telecom   Energy   Life
Sciences
  Other and
Eliminations
  Non-
operating
Corporate
  HC2
Net Income (loss) attributable to HC2 Holdings, Inc.                               $ (94,549 )
Less: Net Income (loss) attributable to HC2 Holdings Insurance Segment                               (14,028 )
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance Segment   $ 28,002     $ 17,447     $ 1,435     $ 7     $ (7,646 )   $ (24,800 )   $ (94,966 )   $ (80,521 )
Adjustments to reconcile net income (loss) to Adjusted EBITDA:                                
Depreciation and amortization   1,892     22,007     504     2,248     124     1,480     9     28,264  
Depreciation and amortization (included in cost of revenue)   4,370                             4,370  
Amortization of equity method fair value adjustments at acquisition       (1,371 )                       (1,371 )
(Gain) loss on sale or disposal of assets   1,663     (9 )   708                     2,362  
Lease termination costs           179                     179  
Interest expense   1,239     4,774         211         1,164     35,987     43,375  
Net loss on contingent consideration       (2,482 )                   11,411     8,929  
Other (income) expense, net   (163 )   (2,424 )   (87 )   (8 )   (3,213 )   9,987     (1,277 )   2,815  
Foreign currency (gain) loss (included in cost of revenue)       (1,106 )                       (1,106 )
Income tax (benefit) expense   18,727     1,394     2,803     (535 )   1,558     3,250     11,245     38,442  
Noncontrolling interest   1,834     974         (4 )   (3,111 )   (2,575 )       (2,882 )
Bonus to be settled in equity                           2,503     2,503  
Share-based payment expense       1,682         597     251     273     5,545     8,348  
Acquisition and nonrecurring items   2,296     290     18     27             3,825     6,456  
Adjusted EBITDA   $ 59,860     $ 41,176     $ 5,560     $ 2,543     $ (12,037 )   $ (11,221 )   $ (25,718 )   $ 60,163  
                                 
Total Core Operating Subsidiaries   $ 109,139                              


HC2 HOLDINGS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(in thousands)
(Unaudited)
 
    Year Ended December 31, 2015
    Core Operating Subsidiaries   Early Stage & Other                
    Construction   Marine
Services
  Telecom   Energy   Life
Sciences
  Other and
Eliminations
  Non-
operating
Corporate
  HC2
Net Income (loss) attributable to HC2 Holdings, Inc.                               $ (35,565 )
Less: Net Income (loss) attributable to HC2 Holdings Insurance Segment                               1,327  
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance Segment   $ 24,451     $ 20,855     $ 2,779     $ (274 )   $ (4,575 )   $ (18,276 )   $ (61,852 )   $ (36,892 )
Adjustments to reconcile net income (loss) to Adjusted EBITDA:                                
Depreciation and amortization   2,016     18,772     417     1,635     20     1,934         24,794  
Depreciation and amortization (included in cost of revenue)   7,659                             7,659  
Amortization of equity method fair value adjustments at acquisition       (1,516 )                       (1,516 )
(Gain) loss on sale or disposal of assets   257     (138 )   50             1         170  
Lease termination costs           1,184             1         1,185  
Asset impairment expense       547                         547  
Interest expense   1,379     3,803         42             33,793     39,017  
Other (income) expense, net   (443 )   (1,340 )   (2,304 )   (42 )   (1 )   5,764     5,242     6,876  
Foreign currency (gain) loss (included in cost of revenue)       (2,039 )                       (2,039 )
Income tax (benefit) expense   15,572     400     (237 )   (347 )   (1,037 )   (7,733 )   (16,052 )   (9,434 )
Loss from discontinued operations   20                     1         21  
Noncontrolling interest   1,136     616         (267 )   (1,681 )   (1 )       (197 )
Share-based payment expense               49     71         10,982     11,102  
Acquisition and nonrecurring items       2,181     121     70     23         8,362     10,757  
Adjusted EBITDA   $ 52,047     $ 42,141     $ 2,010     $ 866     $ (7,180 )   $ (18,309 )   $ (19,525 )   $ 52,050  
                                 
Total Core Operating Subsidiaries   $ 97,064                              


HC2 HOLDINGS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(in thousands)
(Unaudited)
 
    Three Months Ended December 31, 2016
    Core Operating Subsidiaries   Early Stage & Other                
    Construction   Marine
Services
  Telecom   Energy   Life
Sciences
  Other and
Eliminations
  Non-
operating
Corporate
  HC2
Net Income (loss) attributable to HC2 Holdings, Inc.                               $ (61,464 )
Less: Net Income (loss) attributable to HC2 Holdings Insurance Segment                               (2,049 )
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance Segment   $ 7,292     $ 8,667     $ (2,572 )   $ (61 )   $ (4,655 )   $ (3,536 )   $ (64,549 )   $ (59,414 )
Adjustments to reconcile net income (loss) to Adjusted EBITDA:                                
Depreciation and amortization   629     5,214     115     769     37     430     5     7,199  
Depreciation and amortization (included in cost of revenue)   1,322                             1,322  
Amortization of equity method fair value adjustments at acquisition       (325 )                       (325 )
(Gain) loss on sale or disposal of assets   2,626     1     708                     3,335  
Interest expense   322     1,091         69         1,163     9,116     11,761  
Net loss on contingent consideration       (2,482 )                   11,411     8,929  
Other (income) expense, net   (75 )   (1,234 )   487     391     10     99     (966 )   (1,288 )
Foreign currency (gain) loss (included in cost of revenue)       864                         864  
Income tax (benefit) expense   6,086     2,150     2,803     (535 )   1,558     3,250     32,726     48,038  
Noncontrolling interest   594     464         (253 )   (809 )   (513 )       (517 )
Bonus to be settled in equity                           2,503     2,503  
Share-based payment expense       375         490     67     35     712     1,679  
Acquisition and nonrecurring items   1,868     24                     490     2,382  
Adjusted EBITDA   $ 20,664     $ 14,809     $ 1,541     $ 870     $ (3,792 )   $ 928     $ (8,552 )   $ 26,468  
                                 
Total Core Operating Subsidiaries   $ 37,884                              


HC2 HOLDINGS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(in thousands)
(Unaudited)
 
    Three Months Ended September 30, 2016
    Core Operating Subsidiaries   Early Stage & Other                
    Construction   Marine
Services
  Telecom   Energy   Life
Sciences
  Other and
Eliminations
  Non-
operating
Corporate
  HC2
Net Income (loss) attributable to HC2 Holdings, Inc.                               $ (4,558 )
Less: Net Income (loss) attributable to HC2 Holdings Insurance Segment                               (2,189 )
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance Segment   $ 6,962     $ 8,696     $ 1,796     $ 27     $ (2,285 )   $ (8,160 )   $ (9,404 )   $ (2,368 )
Adjustments to reconcile net income (loss) to Adjusted EBITDA:                                
Depreciation and amortization *   431     5,554     144     582     32     380     4     7,127  
Depreciation and amortization (included in cost of revenue)   1,321                             1,321  
Amortization of equity method fair value adjustments at acquisition       (329 )                       (329 )
(Gain) loss on sale or disposal of assets   (23 )                           (23 )
Lease termination costs           (159 )                   (159 )
Interest expense   304     1,328         119             8,969     10,720  
Other (income) expense, net   (12 )   (2,013 )   422     (24 )   (2 )   3,892     835     3,098  
Foreign currency (gain) loss (included in cost of revenue)       (283 )                       (283 )
Income tax (benefit) expense   4,672     96                     (7,851 )   (3,083 )
Noncontrolling interest   411     465         27     (770 )   (974 )       (841 )
Share-based payment expense       546         3     128     37     1,088     1,802  
Acquisition and nonrecurring items   429                         821     1,250  
Adjusted EBITDA   $ 14,495     $ 14,060     $ 2,203     $ 734     $ (2,897 )   $ (4,825 )   $ (5,538 )   $ 18,232  
                                 
Total Core Operating Subsidiaries   $ 31,492                              


HC2 HOLDINGS, INC.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(in thousands)
(Unaudited)
 
    Three Months Ended December 31, 2015
    Core Operating Subsidiaries   Early Stage & Other                
    Construction   Marine
Services
  Telecom   Energy   Life
Sciences
  Other and
Eliminations
  Non-
operating
Corporate
  HC2
Net Income (loss) attributable to HC2 Holdings, Inc.                               $ (11,441 )
Less: Net Income (loss) attributable to HC2 Holdings Insurance Segment                               1,618  
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance Segment   $ 8,269     $ 2,891     $ 3,078     $ 55     $ (545 )   $ (24,044 )   $ (2,762 )   $ (13,058 )
Adjustments to reconcile net income (loss) to Adjusted EBITDA:                                
Depreciation and amortization   526     4,644     123     429     12     1,292         7,026  
Depreciation and amortization (included in cost of revenue)   1,924                             1,924  
Amortization of equity method fair value adjustments at acquisition       (365 )                       (365 )
Asset impairment expense       547                         547  
(Gain) loss on sale or disposal of assets   326     (21 )               1         306  
Lease termination costs           60             1         61  
Interest expense   315     914         10             8,570     9,809  
Other (income) expense, net   (279 )   (1,090 )   (1,990 )   (10 )       6,774     251     3,656  
Foreign currency (gain) loss (included in cost of revenue)       608                 (1 )       607  
Income tax (benefit) expense   3,384     222     (237 )   (347 )   (1,037 )   8,616     (18,203 )   (7,602 )
Loss from discontinued operations                       (23 )       (23 )
Noncontrolling interest   169     52         43     (468 )   (1 )       (205 )
Share-based payment expense               26     71         3,602     3,698  
Acquisition and non-recurring items       2,181     12     70     23         3,660     5,946  
Adjusted EBITDA   $ 14,634     $ 10,585     $ 1,046     $ 274     $ (1,944 )   $ (7,383 )   $ (4,882 )   $ 12,330  
                                 
Total Core Operating Subsidiaries   $ 26,539                              

 

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HC2 Portfolio Company MEDIBEACON™ Inc. Completes Successful Clinical Study of Groundbreaking Kidney Function Monitor Posted 3/2/2017 8:35:04 AM

NEW YORK, March 02, 2017 (GLOBE NEWSWIRE) -- HC2 Holdings, Inc. (“HC2”) (NYSE MKT:HCHC), a diversified holding company, announced today that MediBeacon Inc., a portfolio company within HC2’s Pansend Life Sciences subsidiary, successfully completed a real-time, point of care renal function clinical study on subjects with impaired kidney function at Washington University in St. Louis.  During the Pilot Two study, kidney function was measured in subjects ranging from normal to impaired Stage 4 Chronic Kidney Disease (CKD). The study also included subjects at St. Louis University Hospital.

MediBeacon Transdermal GFR Monitor
The Transdermal GFR Monitor is MediBeacon’s first product platform. This innovative system is focused on real-time, easy to use, and cost-effective monitoring of kidney function. [Note: The tracer agent and GFR monitor are not yet approved for sale.]


A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/daa7caaf-6c7f-421b-af21-8df3a0bf3883

“We are extremely excited by the continued progress MediBeacon has made in validating their technology,” said Phil Falcone, HC2’s Chairman, Chief Executive Officer and President.  “This is a significant milestone that further reinforces our confidence in our investment in MediBeacon and its ability to use innovative technology to improve patient care and reduce costs to the healthcare system.”

MediBeacon’s proposed Transdermal Glomerular Filtration Rate (“GFR”) Monitor uses an optical skin sensor combined with a proprietary fluorescent tracer agent that glows in the presence of light.  The system has been designed to provide clinicians continuous real-time monitoring of kidney function with no need for blood sampling.

“Completion of our Pilot Two study on patients with impaired kidney function represents an important milestone,” said Steve Hanley, MediBeacon CEO.  “We anticipate beginning our multicenter clinical study including sites in the United States and Europe during the fourth quarter 2017.”

Blood samples taken in clinical practice today provide only time-delayed estimates and suffer from variability that may lead to inaccuracies. “Methods to assess kidney function have not changed in 25 years,” said Dr. Richard Solomon, Patrick Professor of Medicine and Director, Division of Nephrology and Hypertension at The University of Vermont College of Medicine. “MediBeacon’s point of care system could represent a major breakthrough in measuring kidney function.”

Other Recent Developments

Current MediBeacon technology applications are being investigated in the fields of kidney health, gastrointestinal permeability and optical angiography. The company’s Intellectual Property (IP) portfolio has grown to 29 granted U.S. patents, with 17 pending patent applications.

In September 2016, MediBeacon was awarded a grant from the National Eye Institute (NEI) of the National Institutes of Health (NIH) under Award Number R43EY027207.  With this support, the company is pursuing research into the use of a MediBeacon fluorescent tracer agent to visualize vasculature in the eye.

In October 2016, MediBeacon, in collaboration with Washington University, was awarded a $1.1 million grant from the Bill & Melinda Gates Foundation for a research project aimed at improving the understanding of childhood malnutrition and its related problems, including stunted growth.

About HC2

HC2 Holdings, Inc. is a publicly traded (NYSE MKT:HCHC) diversified holding company, which seeks opportunities to acquire and grow businesses that can generate long-term sustainable free cash flow and attractive returns in order to maximize value for all stakeholders. HC2 has a diverse array of operating subsidiaries across seven reportable segments, including Manufacturing, Marine Services, Utilities, Telecommunications, Life Sciences, Insurance and Other. HC2's largest operating subsidiaries include DBM Global Inc., a family of companies providing fully integrated structural and steel construction services, and Global Marine Systems Limited, a leading provider of engineering and underwater services on submarine cables. Founded in 1994, HC2 is headquartered in New York, New York.

Learn more about HC2 and its portfolio companies at www.hc2.com

About MediBeacon Inc.

MediBeacon’s mission is to commercialize biocompatible optical diagnostic agents for physiological monitoring, surgical guidance, and imaging of pathological disease in the human population. Several product concepts in these arenas are contained in the MediBeacon Intellectual Property estate. MediBeacon’s portfolio includes a renal function system that uses an optical skin sensor combined with a proprietary fluorescent tracer agent that glows in the presence of light. This system, currently in human trials, provides clinicians continuous real-time monitoring of a patient’s kidney function.

Learn more about MediBeacon at www.medibeacon.com

Cautionary Statement Regarding Forward-Looking Statements

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: This release contains, and certain oral statements made by our representatives from time to time may contain, forward-looking statements, including statements regarding the commencement or completion of the offering. Generally, forward-looking statements include information describing the offering and other 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 press release 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, the ability of our subsidiaries (including, target businesses following their acquisition) to generate sufficient net income and cash flows to make upstream cash distributions, capital market conditions, our and our subsidiaries’ ability to identify any suitable future acquisition opportunities, efficiencies/cost avoidance, cost savings, income and margins, growth, economies of scale, combined operations, future economic performance, conditions to, and the timetable for, completing the integration of financial reporting of acquired or target businesses with HC2 or the applicable subsidiary of HC2, completing future acquisitions and dispositions, litigation, potential and contingent liabilities, management’s plans, changes in regulations and taxes.

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 press release.

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.

The photo is also available at Newscom, www.newscom.com, and via AP PhotoExpress.

For information on HC2 Holdings, Inc., please contact:

Andrew G. Backman
Managing Director
Investor Relations & Public Relations
abackman@hc2.com
212-339-5836

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