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INNOVATE Corp. Announces First Quarter 2024 Results

– Infrastructure: DBM Global achieved first quarter revenue of $307.9 million
– Life Sciences: R2 delivered record North America system sales in the first quarter 2024 –
– Spectrum: Broadcasting’s revenue growth driven by launch of new networks –

NEW YORK, May 07, 2024 (GLOBE NEWSWIRE) — INNOVATE Corp. (“INNOVATE” or the “Company”) (NYSE: VATE) announced today its consolidated results for the first quarter.

Financial Summary

(in millions, except per share amounts) Three Months Ended March 31,
    2024       2023     Increase / (Decrease)
Revenue $ 315.2     $ 317.9     (0.8)%
Net loss attributable to common stockholders $ (17.7 )   $ (10.2 )   (73.5)%
Basic and Diluted loss per share attributable to common stockholders $ (0.22 )   $ (0.13 )   (69.2)%
Total Adjusted EBITDA(1) $ 12.8     $ 4.9     161.2 %
                     

(1) Reconciliation of GAAP to Non-GAAP measures follows

Commentary
“INNOVATE delivered $315.2 million in revenue in the first quarter as the three business segments experienced a strong start to 2024,” said Avie Glazer, Chairman of INNOVATE. “Infrastructure’s first quarter top line results were better than expected while also achieving year-over-year growth for Adjusted EBITDA. At Life Sciences, MediBeacon and R2 continue to make progress and look to keep momentum from last year. At Spectrum, the business expanded profitability and delivered strong results in the first quarter.”

“We delivered strong first quarter financial results driven by continued momentum across our three business segments,” said Paul Voigt, INNOVATE’s Interim CEO. “The macro backdrop for DBM remained relatively unchanged; however, the business still delivered strong results and expanded margins further. At Pansend, MediBeacon is engaged with ongoing discussion with the FDA and R2 experienced strong North America unit sales growth, again, this quarter. Finally, Broadcasting’s network distribution revenues grew as they launched new networks, driving a record result this quarter.”

First Quarter 2024 and Recent Highlights

Infrastructure

Life Sciences

Spectrum

First Quarter 2024 Financial Highlights

REVENUE by OPERATING SEGMENT
             
(in millions)   Three Months Ended March 31,
      2024     2023   Increase / (Decrease)
Infrastructure   $ 307.9   $ 311.7   $ (3.8 )
Life Sciences     1.0     0.5     0.5  
Spectrum     6.3     5.7     0.6  
Consolidated INNOVATE   $ 315.2   $ 317.9   $ (2.7 )
                     
NET INCOME (LOSS) by OPERATING SEGMENT
             
(in millions)   Three Months Ended March 31,
      2024       2023     Increase / (Decrease)
Infrastructure   $ 4.4     $ 2.0     $ 2.4  
Life Sciences     (4.5 )     (2.8 )     (1.7 )
Spectrum     (4.8 )     (5.0 )     0.2  
Non-Operating Corporate     (12.5 )     (11.9 )     (0.6 )
Other and eliminations           8.7       (8.7 )
Net loss attributable to INNOVATE Corp.   $ (17.4 )   $ (9.0 )     (8.4 )
Less: Preferred dividends     0.3       1.2       (0.9 )
Net loss attributable to common stockholders   $ (17.7 )   $ (10.2 )   $ (7.5 )
                         
ADJUSTED EBITDA by OPERATING SEGMENT  
           
(in millions) Three Months Ended March 31,
    2024       2023     Increase / (Decrease)
Infrastructure $ 18.3     $ 16.3     $ 2.0
Life Sciences   (4.2 )     (7.8 )     3.6
Spectrum   1.6       0.4       1.2
Non-Operating Corporate   (2.9 )     (3.5 )     0.6
Other and eliminations         (0.5 )     0.5
Total Adjusted EBITDA $ 12.8     $ 4.9     $ 7.9
                     

Conference Call

INNOVATE will host a live conference call to discuss its first 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.

*Available approximately two hours after the end of the conference call through May 21, 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 Rozmus
ir@innovatecorp.com 
(212) 235-2691

Non-GAAP Financial Measures

In this press release, INNOVATE refers to certain financial measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”), including Total Adjusted EBITDA (excluding discontinued operations, if applicable) and Adjusted EBITDA for its operating segments. In addition, other companies may define Adjusted EBITDA differently than we do, which could limit its usefulness.

Adjusted EBITDA

Management believes that Adjusted EBITDA provides investors with meaningful information for gaining an understanding of our results as it is frequently used by the financial community to provide insight into an organization’s operating trends and facilitates comparisons between peer companies, since interest, taxes, depreciation, amortization and the other items listed in the definition of Adjusted EBITDA below can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA can also be a useful measure of a company’s ability to service debt. While management believes that non-U.S. GAAP measurements are useful supplemental information, such adjusted results are not intended to replace our U.S. GAAP financial results. Using Adjusted EBITDA as a performance measure has inherent limitations as an analytical tool as compared to net income (loss) or other U.S. GAAP financial measures, as this non-GAAP measure excludes certain items, including items that are recurring in nature, which may be meaningful to investors. As a result of the exclusions, Adjusted EBITDA should not be considered in isolation and does not purport to be an alternative to net income (loss) or other U.S. GAAP financial measures as a measure of our operating performance.

The calculation of Adjusted EBITDA, as defined by us, consists of Net income (loss) attributable to INNOVATE Corp., excluding: discontinued operations, if applicable; depreciation and amortization; other operating (income) loss, which is inclusive of (gain) loss on sale or disposal of assets, lease termination costs, asset impairment expense and FCC reimbursements; interest expense; other (income) expense, net; income tax expense (benefit); non-controlling interest; share-based compensation expense; 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 intentions to regain 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; 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 acquisition, holding and disposition of target companies and assets; the ability of our operating segments to attract and retain customers; our expectations regarding the timing, extent and effectiveness of our cost reduction initiatives and management’s ability to moderate or control discretionary spending; our expectations and timing with respect to any strategic dispositions and sales of our operating subsidiaries, or businesses; the possibility of indemnification claims arising out of divestitures of businesses; and our possible inability to raise additional capital when needed or refinance our existing debt, on attractive terms, or at all.

Although INNOVATE believes its expectations and assumptions regarding its future operating performance are reasonable, there can be no assurance that the expectations reflected herein will be achieved. These risks and other important factors discussed under the caption “Risk Factors” in our most recent Annual Report on Form 10-K filed with the SEC, and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release.

You should not place undue reliance on forward-looking statements. All forward-looking statements attributable to INNOVATE or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. All such statements speak only as of the date made, and unless legally required, INNOVATE undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

INNOVATE CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in millions, except per share amounts)

    Three Months Ended March 31,
      2024       2023  
Revenue   $ 315.2     $ 317.9  
Cost of revenue     266.6       274.3  
Gross profit     48.6       43.6  
Operating expenses:        
Selling, general and administrative     39.5       41.7  
Depreciation and amortization     4.4       6.3  
Other operating loss (income)     1.9       (0.4 )
Income (loss) from operations     2.8       (4.0 )
Other (expense) income:        
Interest expense     (17.2 )     (15.6 )
Loss from equity investees     (1.2 )     (4.0 )
Other (expense) income, net     (1.2 )     16.5  
Loss from operations before income taxes     (16.8 )     (7.1 )
Income tax expense     (3.3 )     (0.9 )
Net loss     (20.1 )     (8.0 )
Net loss (income) attributable to non-controlling interests and redeemable non-controlling interests     2.7       (1.0 )
Net loss attributable to INNOVATE Corp.     (17.4 )     (9.0 )
Less: Preferred dividends     0.3       1.2  
Net loss attributable to common stockholders   $ (17.7 )   $ (10.2 )
         
Loss per share – basic and diluted   $ (0.22 )   $ (0.13 )
         
Weighted average common shares outstanding – basic and diluted     78.7       77.7  
                 

INNOVATE CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited, in millions, except share amounts)

    March 31,
2024
  December 31,
2023
     
Assets        
Current assets        
Cash and cash equivalents   $ 38.4     $ 80.8  
Accounts receivable, net     269.3       278.4  
Contract assets     82.2       118.6  
Inventory     21.8       22.4  
Assets held for sale     3.8       3.1  
Other current assets     13.1       14.6  
Total current assets     428.6       517.9  
Investments     1.8       1.8  
Deferred tax asset     1.9       2.0  
Property, plant and equipment, net     146.8       154.6  
Goodwill     126.9       127.1  
Intangibles, net     177.1       178.9  
Other assets     60.4       61.3  
Total assets   $ 943.5     $ 1,043.6  
Liabilities, temporary equity and stockholders’ deficit        
Current liabilities        
Accounts payable   $ 122.9     $ 142.9  
Accrued liabilities     50.5       70.8  
Current portion of debt obligations     34.2       30.5  
Contract liabilities     125.4       153.5  
Other current liabilities     16.0       16.1  
Total current liabilities     349.0       413.8  
Deferred tax liability     4.2       4.1  
Debt obligations     641.5       679.3  
Other liabilities     83.4       82.7  
Total liabilities     1,078.1       1,179.9  
Commitments and contingencies        
Temporary equity        
Preferred Stock Series A-3, Preferred Stock Series A-4, and Preferred Stock Series C, $0.001 par value     39.8       16.4  
Shares authorized: 20,000,000 as of both March 31, 2024 and December 31, 2023        
Shares issued and outstanding: 6,125 of Series A-3, 10,000 of Series A-4 and 25,000 of Series C as of March 31, 2024; and 6,125 of Series A-3, 10,000 of Series A-4 and zero of Series C as of December 31, 2023        
Redeemable non-controlling interest     (1.2 )     (1.0 )
Total temporary equity     38.6       15.4  
Stockholders’ deficit        
Common stock, $0.001 par value     0.1       0.1  
Shares authorized: 160,000,000 as of both March 31, 2024 and December 31, 2023        
Shares issued: 81,373,919 and 80,722,983 as of March 31, 2024 and December 31, 2023, respectively        
Shares outstanding: 79,885,927 and 79,234,991 as of March 31, 2024 and December 31, 2023, respectively        
Additional paid-in capital     327.7       328.2  
Treasury stock, at cost: 1,487,992 shares as of both March 31, 2024 and December 31, 2023     (5.4 )     (5.4 )
Accumulated deficit     (504.7 )     (487.3 )
Accumulated other comprehensive loss     (2.1 )     (1.1 )
Total INNOVATE Corp. stockholders’ deficit     (184.4 )     (165.5 )
Non-controlling interest     11.2       13.8  
Total stockholders’ deficit     (173.2 )     (151.7 )
Total liabilities, temporary equity and stockholders’ deficit   $ 943.5     $ 1,043.6  
                 

INNOVATE CORP.
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA
(Unaudited)

(in millions)   Three Months Ended March 31, 2024
    Infrastructure   Life Sciences   Spectrum   Non-Operating
Corporate
  Other and
Eliminations
  INNOVATE
Net income (loss) attributable to INNOVATE Corp.   $ 4.4     $ (4.5 )   $ (4.8 )   $ (12.5 )   $   $ (17.4 )
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)     4.0                             4.0  
Other operating loss     1.6                   0.3           1.9  
Interest expense     2.7       0.9       3.4       10.2           17.2  
Other (income) expense, net     (0.8 )     2.0       2.0       (2.0 )         1.2  
Income tax expense     2.5                   0.8           3.3  
Non-controlling interest     0.4       (2.8 )     (0.3 )               (2.7 )
Share-based compensation expense           0.1             0.3           0.4  
Restructuring and exit costs     0.5                             0.5  
Adjusted EBITDA   $ 18.3     $ (4.2 )   $ 1.6     $ (2.9 )   $   $ 12.8  
                                               
(in millions)   Three Months Ended March 31, 2023
    Infrastructure   Life Sciences   Spectrum   Non-Operating
Corporate
  Other and
Eliminations
  INNOVATE
Net income (loss) attributable to INNOVATE Corp.   $ 2.0     $ (2.8 )   $ (5.0 )   $ (11.9 )   $ 8.7     $ (9.0 )
Adjustments to reconcile net income (loss) to Adjusted EBITDA:                        
Depreciation and amortization     4.9       0.1       1.3                   6.3  
Depreciation and amortization (included in cost of revenue)     3.9                               3.9  
Other operating income     (0.1 )           (0.3 )                 (0.4 )
Interest expense     3.4       0.5       3.2       8.5             15.6  
Other (income) expense, net     (0.2 )     (3.9 )     1.8       (1.6 )     (12.6 )     (16.5 )
Income tax expense (benefit)     1.1                   1.0       (1.2 )     0.9  
Non-controlling interest     0.2       (1.9 )     (0.6 )           3.3       1.0  
Share-based compensation expense           0.2             0.3             0.5  
Restructuring and exit costs     0.5                               0.5  
Acquisition and disposition costs     0.6                   0.2       1.3       2.1  
Adjusted EBITDA   $ 16.3     $ (7.8 )   $ 0.4     $ (3.5 )   $ (0.5 )   $ 4.9  


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