Financial Data and Key Metrics Changes - INNOVATE reported total revenue of $375.3 million in Q3 2023, a decrease of 11.3% compared to $423 million in the prior year period [25] - Adjusted EBITDA increased by 34.8% to $22.1 million from $16.4 million in the prior year period [8][26] - Net loss attributable to common stockholders was $7.3 million or $0.09 per share, compared to a net loss of $6.6 million or $0.09 per share in the prior year [25] Business Line Data and Key Metrics Changes - Infrastructure revenue decreased by 10.5% to $369.3 million from $412.7 million in the prior year quarter, while adjusted EBITDA increased to $30.8 million from $27.6 million [27][28] - Life Sciences segment saw a decrease in adjusted EBITDA losses due to reduced SG&A expenses at R2 [30] - Spectrum revenue was $5.4 million, a decrease of $3.7 million compared to the third quarter of 2022, with adjusted EBITDA losses of $0.3 million [31][32] Market Data and Key Metrics Changes - The reported backlog and adjusted backlog was $1.3 billion at the end of Q3 2023, down from $1.8 billion at the end of 2022 [29] - R2 technologies experienced a record number of patient treatments, with over 15,000 treatments worldwide, representing 167% growth over the same period in 2022 [15] Company Strategy and Development Direction - The company is focused on profitability across all operating segments and has achieved year-over-year adjusted EBITDA improvement in multiple segments [8] - INNOVATE is exploring strategic partnerships in Life Sciences to unlock value and drive further growth [10] - The company is also looking to capitalize on larger, more complex projects, particularly in the Western U.S. [13] Management's Comments on Operating Environment and Future Outlook - Management noted tightening credit markets impacting the commercial space but still sees sizable opportunities in the market [39] - The backlog is expected to remain flat year-over-year, with potential for growth if large projects in the West are secured [41] Other Important Information - As of September 30, 2023, the company had $55.7 million in cash and cash equivalents, down from $80.4 million at the end of 2022 [34] - Total principal outstanding indebtedness was $756.8 million, an increase of $31.5 million from the end of 2022 [35] Q&A Session Summary Question: Backlog and Margin Outlook - Analyst inquired about the declining backlog and its implications for margins in 2024 [37] - Management confirmed continued margin improvement and expected improved margins for 2023 over 2022 [38] Question: Impact of Credit Market Tightening - Analyst asked if tightening credit markets were affecting customer project selections or the company's project evaluations [38] - Management indicated that the team is pivoting to markets with suitable work despite credit market challenges [39] Question: Future Backlog Growth - Analyst questioned whether the backlog would grow, stabilize, or decline in 2024 [40] - Management projected the backlog would be flat year-over-year but noted potential for significant projects in the West [41]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended September 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission File No. 001-35210 INNOVATE CORP. (Exact name of registrant as specified in its charter) Delaware 54-1708481 (State or other jurisdiction of incorporation or organization) 222 Lakevie ...

INNOVATE Corp. INNOVATE Q2 2023 Earnings Release Supplement August 9, 2023 INNOVATE Corp. ™ 2023 Safe Harbor Disclaimers Cautionary Statement Regarding Forward-Looking Statements Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This presentation contains, and certain oral statements made by our representatives from time to time may contain, "forward-looking statements." Generally, forward-looking statements include information describing actions, events, results, strategies ...

INNOVATE Corp. (NYSE:VATE) Q2 2023 Earnings Conference Call August 9, 2023 4:30 PM ET Company Participants Anthony Rozmus - IR Avie Glazer - Chairman Paul Voigt - Interim CEO Mike Sena - CFO Conference Call Participants Brian Charles - RW Pressprich Operator Good afternoon, and welcome to INNOVATE Corp.'s Second Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. After prepared remarks and presentation, there will be a question-and-answer session. Please note, this event i ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission File No. 001-35210 INNOVATE CORP. (Exact name of registrant as specified in its charter) Delaware 54-1708481 (State or other jurisdiction of incorporation or organization) 222 Lakeview Ave ...

INNOVATE Corp. (NYSE:VATE) Q1 2023 Earnings Conference Call May 10, 2023 4:30 PM ET Company Participants Anthony Rozmus - IR Avi Glazer - Chairman Wayne Barr - CEO Michael Sena - CFO Conference Call Participants Brian Charles - RW Pressprich Andrew White - Nut Tree Capital Operator Good afternoon, and welcome to INNOVATE Corp.'s First Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. After prepared remarks and presentation, there will be a question-and-answer session. ...

Filing Information INNOVATE Corp. filed its Q1 2023 10-Q, reporting **79 million** common shares outstanding and listing on the New York Stock Exchange - INNOVATE Corp. filed a Quarterly Report on Form 10-Q for the period ended March 31, 2023[2](index=2&type=chunk) Securities Registered on Exchange | Title of each class | Trading Symbol | Name of each exchange on which registered | | :------------------ | :------------- | :---------------------------------------- | | Common Stock, par value $0.001 per share | VATE | New York Stock Exchange | | Preferred Stock Purchase Rights | N/A | New York Stock Exchange | - As of May 8, 2023, **79,049,423 shares of common stock**, par value **$0.001**, were **outstanding**[5](index=5&type=chunk) Item 1. Financial Statements (Unaudited) This section presents INNOVATE Corp.'s unaudited condensed consolidated financial statements and accompanying notes for the reporting period [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) INNOVATE Corp. reported a **net loss** of **$8.0 million** for Q1 2023, an improvement from **$14.1 million net loss** in the prior year period, despite **revenue decreased significantly** to **$317.9 million** from **$412.8 million** Condensed Consolidated Statements of Operations (in millions, except per share) | Metric (in millions, except per share) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $317.9 | $412.8 | | Gross profit | $43.6 | $49.8 | | (Loss) income from operations | $(4.0) | $0.7 | | Interest expense | $(15.6) | $(12.6) | | Net loss | $(8.0) | $(14.1) | | Net loss attributable to INNOVATE Corp. | $(9.0) | $(12.4) | | Loss per share - basic and diluted | $(0.13) | $(0.18) | - **Revenue decreased** by **$94.9 million**, primarily driven by the Infrastructure segment and, to a lesser extent, the Spectrum segment[11](index=11&type=chunk) - **Net loss attributable to common stockholders improved** to **$(10.2) million** from **$(13.6) million** year-over-year[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) INNOVATE Corp. reported a **comprehensive loss** of **$18.1 million** for the three months ended March 31, 2023, an **increase** from **$13.4 million** in the prior year, primarily due to **dispositions of investments** and foreign currency translation adjustments Condensed Consolidated Statements of Comprehensive Loss (in millions) | Metric (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(8.0) | $(14.1) | | Other comprehensive (loss) income | | | | Foreign currency translation adjustment, net of tax | $(1.0) | $0.7 | | Dispositions of investments, net of tax | $(9.1) | — | | Other comprehensive (loss) income | $(10.1) | $0.7 | | Comprehensive loss | $(18.1) | $(13.4) | | Comprehensive loss attributable to INNOVATE Corp. | $(16.4) | $(11.8) | - The **increase** in **comprehensive loss** was significantly impacted by a **$9.1 million loss** from **dispositions of investments** in the current period[14](index=14&type=chunk) [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2023, INNOVATE Corp.'s **total assets decreased** to **$1,044.1 million** from **$1,151.7 million** at December 31, 2022, primarily driven by a significant reduction in **cash and cash equivalents** and **investments** Condensed Consolidated Balance Sheets (in millions) | Metric (in millions) | March 31, 2023 | December 31, 2022 | | :------------------- | :------------- | :---------------- | | Cash and cash equivalents | $16.6 | $80.4 | | Total current assets | $486.5 | $536.4 | | Investments | $7.7 | $59.5 | | Total assets | $1,044.1 | $1,151.7 | | Total current liabilities | $374.5 | $417.2 | | Total liabilities | $1,150.1 | $1,181.3 | | Total stockholders' deficit | $(118.1) | $(90.6) | - **Cash and cash equivalents** saw a substantial **decrease** from **$80.4 million** to **$16.6 million**[17](index=17&type=chunk) - **Investments decreased significantly** from **$59.5 million** to **$7.7 million**[17](index=17&type=chunk) [Condensed Consolidated Statements of Stockholders' Deficit](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Deficit) The company's **total stockholders' deficit increased** from **$(90.6) million** at December 31, 2022, to **$(118.1) million** at March 31, 2023, primarily due to **net loss**, **distributions to noncontrolling interests**, and **other comprehensive losses**, partially offset by **share-based compensation** Condensed Consolidated Statements of Stockholders' Deficit (in millions) | Metric (in millions) | December 31, 2022 | March 31, 2023 | | :------------------- | :---------------- | :------------- | | Total Stockholders' (Deficit) | $(90.6) | $(118.1) | | Net loss | — | $(9.0) | | Distributions to noncontrolling interests | — | $(10.7) | | Other comprehensive (loss) | — | $(9.6) | | Share-based compensation | $0.5 | $0.5 | - **Net loss attributable to INNOVATE Corp.** for the three months ended March 31, 2023, was **$(9.0) million**[19](index=19&type=chunk) - **Distributions to noncontrolling interests** amounted to **$(10.7) million** during the quarter[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the three months ended March 31, 2023, **cash used in operating activities increased** to **$77.0 million**, **cash provided by investing activities significantly improved** to **$51.2 million**, and **cash used in financing activities increased** to **$38.0 million** Condensed Consolidated Statements of Cash Flows (in millions) | Metric (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------- | :-------------------------------- | :-------------------------------- | | Cash used in operating activities | $(77.0) | $(63.4) | | Cash provided by (used in) investing activities | $51.2 | $(7.4) | | Cash (used in) provided by financing activities | $(38.0) | $51.2 | | Net decrease in cash and cash equivalents, including restricted cash | $(64.2) | $(19.1) | | Cash, cash equivalents and restricted cash, end of period | $18.0 | $28.4 | - **Proceeds** from the **sale of equity method investments contributed $54.2 million** to **investing activities** in Q1 2023[22](index=22&type=chunk) - **Financing activities** were impacted by a **$57.0 million payment** on the **line of credit** and **$15.9 million** in **payments to noncontrolling interests**[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed notes to the unaudited condensed consolidated financial statements, covering accounting policies, revenue, assets, liabilities, and equity [1. Organization and Business](index=8&type=section&id=(1)%20Organization%20and%20Business) INNOVATE Corp. is a **diversified holding company** with three **reportable segments**: Infrastructure (DBM Global Inc.), Life Sciences (Pansend Life Sciences, LLC), and Spectrum (HC2 Broadcasting Holdings Inc.), plus an 'Other' segment, aiming to grow these businesses for **long-term free cash flow** and **stakeholder value** - INNOVATE Corp. operates as a **diversified holding company** with a portfolio of subsidiaries across various **operating segments**[24](index=24&type=chunk) - The company has three **reportable segments**: Infrastructure (DBM Global Inc.), Life Sciences (Pansend Life Sciences, LLC), and Spectrum (HC2 Broadcasting Holdings Inc.), in addition to an 'Other' segment[25](index=25&type=chunk) - The Infrastructure segment, primarily DBM Global Inc., provides industrial construction, structural steel, and facility maintenance services, with INNOVATE maintaining approximately a **91% controlling interest**[26](index=26&type=chunk) [2. Summary of Significant Accounting Policies](index=9&type=section&id=(2)%20Summary%20of%20Significant%20Accounting%20Policies) The financial statements are prepared in accordance with U.S. GAAP, with certain information condensed for interim reporting, and the company adopted ASU 2016-13 (Credit Loss Standard) on January 1, 2023, which had no material effect on the financial statements, and believes it can meet **liquidity requirements** for the next twelve months through available cash, **credit lines**, and **subsidiary distributions** - The company adopted ASU 2016-13, Financial Instruments - Credit Losses (Topic 326), on January 1, 2023, which did not have any **material effect** on the Condensed Consolidated Financial Statements[36](index=36&type=chunk) - Management believes the company will meet its **liquidity requirements** for at least the next twelve months through available cash, its **Revolving Credit Line**, and **distributions from subsidiaries**[34](index=34&type=chunk) - The company has instruments referencing LIBOR, including DBMGi's **$41.8 million Series A Preferred Stock** and INNOVATE's **$5.0 million line of credit**, but ASU 2020-04 and ASU 2022-06 are not expected to have a **material effect** due to customary LIBOR replacement language[38](index=38&type=chunk) [3. Revenue and Contracts in Process](index=10&type=section&id=(3)%20Revenue%20and%20Contracts%20in%20Process) **Total revenue** for the three months ended March 31, 2023, was **$317.9 million**, a **decrease** from **$412.8 million** in the prior year, with the Infrastructure segment accounting for the majority of **revenue** but experiencing a significant decline, and **remaining unsatisfied performance obligations** totaling **$1,581.6 million** as of March 31, 2023 Revenue by Segment (in millions) | Segment | Three Months Ended March 31, 2023 (in millions) | Three Months Ended March 31, 2022 (in millions) | | :------------- | :-------------------------------------------- | :-------------------------------------------- | | Infrastructure | $311.7 | $402.2 | | Life Sciences | $0.5 | $0.8 | | Spectrum | $5.7 | $9.8 | | Total revenue | $317.9 | $412.8 | Infrastructure Segment Revenue by Market (in millions) | Market (Infrastructure Segment) | Three Months Ended March 31, 2023 (in millions) | Three Months Ended March 31, 2022 (in millions) | | :------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Commercial | $112.5 | $238.2 | | Industrial | $91.3 | $89.2 | | Transportation | $41.5 | $10.0 | Remaining Unsatisfied Performance Obligations (in millions) | Remaining Unsatisfied Performance Obligations (in millions) | Within One Year | Within Five Years | Total | | :-------------------------------------------------------- | :-------------- | :---------------- | :---- | | Total | $1,200.2 | $381.4 | $1,581.6 | [4. Accounts Receivable, Net](index=13&type=section&id=(4)%20Accounts%20Receivable,%20Net) **Accounts receivable, net**, totaled **$253.7 million** as of March 31, 2023, a slight **decrease** from **$254.9 million** at December 31, 2022, with the **allowance for expected credit losses** remaining stable at **$(0.4) million** Accounts Receivable, Net (in millions) | Metric (in millions) | March 31, 2023 | December 31, 2022 | | :------------------- | :------------- | :---------------- | | Contracts in progress | $245.6 | $244.8 | | Trade receivables | $4.0 | $5.9 | | Allowance for expected credit losses | $(0.4) | $(0.5) | | Total | $253.7 | $254.9 | - The company recognized a **$0.1 million reversal** of provisions for **expected credit losses** for the three months ended March 31, 2023, compared to **$0.2 million** in provisions for doubtful accounts in the prior year[52](index=52&type=chunk) [5. Inventory](index=13&type=section&id=(5)%20Inventory) **Total inventory increased** to **$21.3 million** as of March 31, 2023, from **$18.9 million** at December 31, 2022, primarily driven by an **increase** in **raw materials and consumables** Inventory (in millions) | Metric (in millions) | March 31, 2023 | December 31, 2022 | | :------------------- | :------------- | :---------------- | | Raw materials and consumables | $18.5 | $15.7 | | Work in process | $0.8 | $1.2 | | Finished goods | $2.0 | $2.0 | | Total inventory | $21.3 | $18.9 | [6. Investments](index=15&type=section&id=(6)%20Investments) **Total investments decreased significantly** to **$7.7 million** as of March 31, 2023, from **$59.5 million** at December 31, 2022, primarily due to the **sale of the 19% interest in HMN**, and the company recognized a **$12.3 million gain** on the **sale of HMN** and a **$3.8 million gain** from an equity transaction in MediBeacon Investments by Type (in millions) | Investment Type (in millions) | March 31, 2023 | December 31, 2022 | | :---------------------------- | :------------- | :---------------- | | Common stock | $3.1 | $3.0 | | Preferred stock and fixed maturities | $4.6 | $4.6 | | Put option | — | $11.3 | | Investment in securities | — | $40.6 | | Total | $7.7 | $59.5 | - On March 6, 2023, the company sold its remaining **19% interest in HMN** for **gross proceeds** of **$54.2 million**, recognizing a **gain on sale** of **$12.3 million**[60](index=60&type=chunk) - Pansend recognized a **$3.8 million gain** in **Other income (expense), net**, due to MediBeacon issuing preferred stock to Huadong, which **increased** Pansend's basis in MediBeacon[59](index=59&type=chunk) [7. Property, Plant and Equipment, Net](index=16&type=section&id=(7)%20Property,%20Plant%20and%20Equipment,%20Net) **Property, plant and equipment, net**, remained relatively stable at **$164.0 million** as of March 31, 2023, compared to **$165.0 million** at December 31, 2022, with **depreciation expense** for the quarter at **$6.3 million** Property, Plant and Equipment, Net (in millions) | Metric (in millions) | March 31, 2023 | December 31, 2022 | | :------------------- | :------------- | :---------------- | | Equipment, furniture and fixtures, and software | $202.7 | $196.0 | | Building and leasehold improvements | $45.5 | $44.8 | | Land | $26.1 | $26.1 | | Construction in progress | $6.0 | $8.4 | | Total | $288.3 | $283.5 | | Less: Accumulated depreciation | $124.3 | $118.5 | | Total PP&E, net | $164.0 | $165.0 | - **Depreciation expense** for the three months ended March 31, 2023, was **$6.3 million**, including **$3.9 million** recognized within **cost of revenue**[62](index=62&type=chunk) [8. Goodwill and Intangibles, Net](index=16&type=section&id=(8)%20Goodwill%20and%20Intangibles,%20Net) **Goodwill** remained stable at **$127.0 million** as of March 31, 2023, with the Infrastructure segment holding the majority, **indefinite-lived intangible assets**, primarily FCC licenses, were **$106.3 million**, and **definite-lived intangible assets, net**, **decreased** to **$79.8 million**, with **amortization expense** of **$3.9 million** for the quarter Goodwill by Segment (in millions) | Segment (in millions) | December 31, 2022 | March 31, 2023 | | :-------------------- | :---------------- | :------------- | | Infrastructure | $105.7 | $105.6 | | Spectrum | $21.4 | $21.4 | | Total Goodwill | $127.1 | $127.0 | Indefinite-lived Intangible Assets (in millions) | Indefinite-lived Intangible Assets (in millions) | March 31, 2023 | December 31, 2022 | | :----------------------------------------------- | :------------- | :---------------- | | FCC licenses | $106.3 | $106.3 | | Total | $106.3 | $106.3 | Definite-lived Intangible Assets (in millions) | Definite Lived Intangible Assets (in millions) | March 31, 2023 Net | December 31, 2022 Net | | :--------------------------------------------- | :----------------- | :-------------------- | | Trade names | $17.0 | $17.4 | | Customer relationships and contracts | $48.8 | $52.2 | | Total | $79.8 | $83.8 | [9. Leases](index=18&type=section&id=(9)%20Leases) **Total right-of-use assets** were **$67.2 million** and **total lease liabilities** were **$71.9 million** as of March 31, 2023, with **total lease cost** for the quarter at **$5.9 million**, primarily from operating leases, and the company has significant future minimum lease commitments, including new office leases in Florida expected to commence in 2024 Right-of-Use Assets and Lease Liabilities (in millions) | Metric (in millions) | March 31, 2023 | December 31, 2022 | | :------------------- | :------------- | :---------------- | | Operating lease ROU assets | $64.5 | $65.8 | | Finance lease ROU assets | $2.7 | $2.1 | | Total ROU assets | $67.2 | $67.9 | | Operating lease liability (current) | $15.6 | $17.1 | | Operating lease liability (non-current) | $53.6 | $53.8 | | Finance lease liability | $2.7 | $2.1 | | Total lease liabilities | $71.9 | $73.0 | Lease Cost (in millions) | Lease Cost (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------- | :-------------------------------- | :-------------------------------- | | Operating lease cost | $5.9 | $5.9 | | Total lease cost | $5.9 | $5.8 | - Future minimum operating lease commitments (undiscounted) total **$84.7 million**, with **$14.5 million** due in 2023[72](index=72&type=chunk) [10. Other Assets, Accrued Liabilities and Other Liabilities](index=21&type=section&id=(10)%20Other%20Assets,%20Accrued%20Liabilities%20and%20Other%20Liabilities) **Other non-current assets** totaled **$71.1 million**, primarily consisting of **right-of-use assets**, **accrued liabilities decreased** to **$45.0 million**, mainly due to reductions in accrued payroll and interest, **other current liabilities increased** to **$24.7 million**, while **other non-current liabilities increased** to **$107.6 million**, largely due to **redeemable preferred stock Series A** Other Assets and Liabilities (in millions) | Metric (in millions) | March 31, 2023 | December 31, 2022 | | :------------------- | :------------- | :---------------- | | Other assets (non-current) | $71.1 | $71.9 | | Accrued liabilities | $45.0 | $65.4 | | Other current liabilities | $24.7 | $20.1 | | Other liabilities (non-current) | $107.6 | $71.2 | - Accrued payroll and employee benefits **decreased** from **$30.8 million** to **$21.7 million**, and accrued interest **decreased** from **$15.3 million** to **$6.7 million**[74](index=74&type=chunk) - **Redeemable preferred stock Series A** was reclassified, contributing **$7.0 million** to **other current liabilities** and **$34.8 million** to **other non-current liabilities** as of March 31, 2023[74](index=74&type=chunk) [11. Debt Obligations](index=22&type=section&id=(11)%20Debt%20Obligations) **Total outstanding principal debt decreased** to **$706.5 million** as of March 31, 2023, from **$725.3 million** at December 31, 2022, primarily due to a **$15.0 million repayment** on the Non-Operating Corporate Revolving Credit Line, and the company has various **debt instruments** across its segments with different **interest rates** and maturities, and subsequent to quarter-end, the **Revolving Credit Agreement** was extended and an additional **$8.0 million** was drawn Outstanding Principal Debt by Segment/Type (in millions) | Segment/Type (in millions) | March 31, 2023 | December 31, 2022 | | :------------------------- | :------------- | :---------------- | | Infrastructure | $237.0 | $243.0 | | Spectrum | $69.7 | $69.7 | | Life Sciences | $13.0 | $10.8 | | Non-Operating Corporate | $386.8 | $401.8 | | Total outstanding principal | $706.5 | $725.3 | - **Aggregate finance lease and debt payments**, including **interest**, total **$833.4 million**, with **$62.7 million** due in 2023 and **$253.5 million** in 2024[75](index=75&type=chunk) - Subsequent to quarter-end, the **Revolving Credit Agreement** was extended to March 16, 2025, and an additional **$8.0 million** was drawn, **increasing** the **outstanding balance** to **$13.0 million**[87](index=87&type=chunk)[89](index=89&type=chunk) [12. Income Taxes](index=25&type=section&id=(12)%20Income%20Taxes) **Income tax expense** for the three months ended March 31, 2023, was **$0.9 million**, a **decrease** from **$1.6 million** in the prior year, and the company utilized the Annual Effective Tax Rate approach and recognized a **$1.1 million tax benefit** related to the **sale of HMN**, consisting of a foreign **tax payment** and a **deferred tax liability reversal**, and the company has significant U.S. **net operating loss carryforwards** Income Tax Expense (in millions) | Metric (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------- | :-------------------------------- | :-------------------------------- | | Income tax expense | $0.9 | $1.6 | - The 2023 first quarter interim **tax provision** included a **$1.1 million tax benefit** related to the **sale of HMN**, comprising a **$4.4 million current tax expense** for foreign **tax payment** and a **$5.5 million deferred tax benefit** from the reversal of a **deferred tax liability**[91](index=91&type=chunk) - At December 31, 2022, the company had gross U.S. **net operating loss carryforwards** of **$226.3 million**, with approximately **$162.9 million** expected to be available in 2023[92](index=92&type=chunk) [13. Commitments and Contingencies](index=26&type=section&id=(13)%20Commitments%20and%20Contingencies) The company is involved in various **legal proceedings**, including the Fair Value Investments Litigation and DTV Derivative Litigation, which it intends to vigorously defend, and DBMG also has significant **outstanding performance bonds** totaling **$871.2 million** as of March 31, 2023 - The company is subject to claims and **legal proceedings** in the ordinary course of business, including the FVI Action and DTV Derivative Litigation, which it believes are without merit and intends to vigorously defend[98](index=98&type=chunk)[102](index=102&type=chunk)[106](index=106&type=chunk) - DBMG had **outstanding performance bonds** of **$871.2 million** as of March 31, 2023, which partially secure its obligations under contracts[108](index=108&type=chunk) - The Marin Hospital Replacement Litigation involves claims against DBMG's subsidiary, Schuff Steel Company, for alleged failures in fabrication, erection, welding, and quality control[107](index=107&type=chunk) [14. Share-Based Compensation](index=28&type=section&id=(14)%20Share-Based%20Compensation) **Total share-based compensation expense** was **$0.5 million** for the three months ended March 31, 2023, a **decrease** from **$0.8 million** in the prior year, and as of March 31, 2023, **unrecognized stock-based compensation expense** related to unvested restricted stock awards was **$2.5 million**, expected to be recognized over **2.1 years** Share-Based Compensation Expense (in millions) | Metric (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------- | :-------------------------------- | :-------------------------------- | | Share-based compensation expense | $0.5 | $0.8 | Restricted Stock Activity | Restricted Stock Activity | Shares (in thousands) | Weighted Average Grant Date Fair Value | | :------------------------ | :-------------------- | :------------------------------------- | | Unvested - December 31, 2022 | 1,141.8 | $2.56 | | Granted | 321.4 | $2.93 | | Vested | (260.3) | $3.64 | | Unvested - March 31, 2023 | 1,202.9 | $2.42 | - As of March 31, 2023, there were no unvested stock options and no **unrecognized stock-based compensation expense** related to unvested stock options[112](index=112&type=chunk) [15. Preferred Stock and Equity](index=29&type=section&id=(15)%20Preferred%20Stock%20and%20Equity) The company has **Series A-3 and A-4 Preferred Stock** classified as temporary equity, with a combined **fair value** of **$17.3 million** as of March 31, 2023, accruing **cumulative quarterly cash dividends** at **7.50%**, and DBMGi's **Series A Preferred Stock** was subject to a redemption notice and subsequently purchased by the company for **$7.1 million cash** and a **$35.1 million subordinated unsecured promissory note**, and the company also adopted a new **Tax Benefits Preservation Plan** on April 1, 2023 Preferred Shares Outstanding | Preferred Shares | March 31, 2023 | December 31, 2022 | | :--------------- | :------------- | :---------------- | | Series A-3 shares issued and outstanding | 6,125 | 6,125 | | Series A-4 shares issued and outstanding | 10,000 | 10,000 | - The **Series A-3** and **Series A-4 Preferred Stock** accrue a **cumulative quarterly cash dividend** at an annualized **rate of 7.50%** and are convertible into common stock at specified conversion prices[116](index=116&type=chunk)[118](index=118&type=chunk) - On May 9, 2023, the company purchased all **outstanding DBMGi Preferred Stock** for **$7.1 million cash** and issued a **$35.1 million subordinated unsecured promissory note** to CGIC[133](index=133&type=chunk) - A new **Tax Benefits Preservation Plan** was adopted on April 1, 2023, to protect the company's ability to use its **tax net operating losses** by deterring an '**ownership change**'[138](index=138&type=chunk) [16. Related Parties](index=34&type=section&id=(16)%20Related%20Parties) The company has various **related party transactions**, including lease agreements for office space and planes with entities owned by Donald Banker (CEO of Banker Steel), and R2 Technologies entered into **additional notes** totaling **$0.9 million** with Lancer Capital, LLC, a **related party** controlled by INNOVATE's Chairman, **increasing** the **total outstanding principal** to **$13.0 million** with a **20% interest rate** - Banker Steel, a DBMG subsidiary, leases office spaces and a plane from entities owned by Donald Banker, its CEO, incurring **lease expenses** of **$25 thousand** and **$0.3 million**, respectively, for Q1 2023[144](index=144&type=chunk)[145](index=145&type=chunk) - R2 Technologies closed on **additional 18% notes** totaling **$0.9 million** with Lancer Capital, LLC, a **related party**, in February 2023[147](index=147&type=chunk) - On March 31, 2023, R2 Technologies exchanged all prior **outstanding notes** with Lancer for a new **$13.0 million note** at a **20% interest rate**, maturing by June 30, 2023, or upon **$20.0 million debt/equity financing**[147](index=147&type=chunk) [17. Operating Segments and Related Information](index=34&type=section&id=(17)%20Operating%20Segments%20and%20Related%20Information) The company's **revenue decreased** across all segments in Q1 2023 compared to Q1 2022, with **Infrastructure** seeing the largest decline, **overall loss from operations increased**, while **capital expenditures decreased**, and **total assets also decreased** across all segments Operating Segment Results (in millions) | Segment (in millions) | Revenue (Q1 2023) | Revenue (Q1 2022) | (Loss) income from operations (Q1 2023) | (Loss) income from operations (Q1 2022) | | :-------------------- | :---------------- | :---------------- | :-------------------------------------- | :-------------------------------------- | | Infrastructure | $311.7 | $402.2 | $6.3 | $11.9 | | Life Sciences | $0.5 | $0.8 | $(4.4) | $(5.0) | | Spectrum | $5.7 | $9.8 | $(0.5) | $(0.4) | | Other | — | — | $(1.4) | $(0.1) | | Non-operating Corporate | — | — | $(4.0) | $(5.7) | | Total | $317.9 | $412.8 | $(4.0) | $0.7 | Operating Segment Depreciation, Amortization, and Capital Expenditures (in millions) | Segment (in millions) | Depreciation and Amortization (Q1 2023) | Depreciation and Amortization (Q1 2022) | Capital Expenditures (Q1 2023) | Capital Expenditures (Q1 2022) | | :-------------------- | :-------------------------------------- | :-------------------------------------- | :----------------------------- | :----------------------------- | | Infrastructure | $8.8 | $9.0 | $3.0 | $2.9 | | Life Sciences | $0.1 | $0.1 | $0.1 | $0.1 | | Spectrum | $1.3 | $1.5 | $0.3 | $1.6 | | Non-operating Corporate | — | — | $0.3 | — | | Total | $10.2 | $10.6 | $3.7 | $4.6 | Operating Segment Total Assets (in millions) | Segment (in millions) | Total Assets (March 31, 2023) | Total Assets (December 31, 2022) | | :-------------------- | :---------------------------- | :------------------------------- | | Infrastructure | $832.7 | $879.3 | | Life Sciences | $15.0 | $15.4 | | Spectrum | $182.7 | $188.2 | | Other | $1.0 | $53.6 | | Non-operating Corporate | $12.7 | $15.2 | | Total | $1,044.1 | $1,151.7 | [18. Basic and Diluted Loss Per Common Share](index=38&type=section&id=(18)%20Basic%20and%20Diluted%20Loss%20Per%20Common%20Share) For the three months ended March 31, 2023, **basic and diluted loss per common share** was **$(0.13)**, an improvement from **$(0.18)** in the prior year, with no dilutive common share equivalents included due to the **net loss** Basic and Diluted Loss Per Common Share (in millions, except per share) | Metric (in millions, except per share) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss attributable to common stockholders | $(10.2) | $(13.6) | | Weighted average common shares outstanding | 77.7 | 77.3 | | Loss per share - basic and diluted | $(0.13) | $(0.18) | - **1,145,796 common stock equivalents** from unvested restricted stocks were excluded from diluted EPS calculation as their inclusion would have been anti-dilutive[158](index=158&type=chunk) [19. Fair Value of Financial Instruments](index=39&type=section&id=(19)%20Fair%20Value%20of%20Financial%20Instruments) The **fair value** of the company's **debt obligations** not measured at **fair value** on a recurring basis was estimated at **$643.1 million** as of March 31, 2023, compared to a **carrying value** of **$694.5 million**, and these **fair values** are classified as **Level 2** Fair Value of Debt Obligations (in millions) | Metric (in millions) | Carrying Value (March 31, 2023) | Estimated Fair Value (March 31, 2023) | | :------------------- | :------------------------------ | :------------------------------------ | | Debt obligations | $694.5 | $643.1 | - The **fair value** of **long-term debt obligations** is determined using reporting from Citadel Securities, combining direct market observations with quantitative pricing models, and is classified as **Level 2**[160](index=160&type=chunk) [20. Supplementary Financial Information](index=39&type=section&id=(20)%20Supplementary%20Financial%20Information) **Other income (expense), net**, significantly **increased** to **$16.5 million** in Q1 2023 from an **expense** of **$0.1 million** in Q1 2022, driven by a **$12.3 million gain** on the **sale of an equity method investment** and a **$3.8 million step-up gain**, and **cash paid for interest** was **$19.5 million**, and **cash paid for taxes** was **$5.0 million** for the quarter Other Income (Expense), Net (in millions) | Metric (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------- | :-------------------------------- | :-------------------------------- | | Gain on sale of equity method investment | $12.3 | — | | Gain on step-up of equity method investment | $3.8 | — | | Other income (expense), net | $16.5 | $(0.1) | Supplemental Cash Flow Information (in millions) | Supplemental Cash Flow (in millions) | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Cash paid for interest | $19.5 | $18.6 | | Cash paid for taxes, net of refunds | $5.0 | $0.4 | [21. Subsequent Events](index=40&type=section&id=(21)%20Subsequent%20Events) Subsequent to quarter-end, the company extended its **Revolving Credit Agreement** to March 16, 2025, changed **interest rates** to SOFR-based, and lowered prepayment thresholds, and it also purchased **DBMGi Preferred Stock** for **$7.1 million cash** and a **$35.1 million promissory note**, and drew an additional **$8.0 million** on the **Revolving Credit Agreement** - On April 25, 2023, the **Revolving Credit Agreement maturity date** was extended to March 16, 2025, **benchmark rates** changed to SOFR-based, and the **asset sale prepayment threshold** was lowered from **$50.0 million** to **$10.0 million**[163](index=163&type=chunk) - On May 9, 2023, the company purchased **DBMGi Preferred Stock** for **$7.1 million cash** and issued a **$35.1 million subordinated unsecured promissory note** to CGIC, due February 28, 2026, with escalating **interest rates**[164](index=164&type=chunk) - On May 8, 2023, an additional **$8.0 million** was drawn under the **Revolving Credit Agreement**, **increasing** the **outstanding balance** to **$13.0 million**[164](index=164&type=chunk) Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's **financial condition**, **results of operations**, and **liquidity** for the reporting period [Our Business and Our Operations](index=41&type=section&id=Our%20Business%20and%20Our%20Operations) INNOVATE Corp. operates as a **diversified holding company** with three primary **operating segments**: Infrastructure (DBMG), Life Sciences (Pansend), and Spectrum, along with an 'Other' segment for businesses not meeting separate reporting thresholds - INNOVATE is a **diversified holding company** with principal operations through Infrastructure (DBMG), Life Sciences (Pansend), and Spectrum segments, plus an 'Other' segment[168](index=168&type=chunk) [Cyclical Patterns](index=41&type=section&id=Cyclical%20Patterns) The company's segments, particularly **Infrastructure**, are subject to **highly cyclical patterns** influenced by project delays, weather, customer financial conditions, **interest rates**, **inflation**, and broader **economic conditions**, leading to potential fluctuations in quarterly **operating results** - The company's segments, especially Infrastructure, are **highly cyclical**, with business volume affected by project delays, weather, customer **financial conditions**, **rising interest rates**, and **inflation**[170](index=170&type=chunk)[172](index=172&type=chunk) - Large, complex projects can cause fluctuations due to delayed permits and approvals, requiring the company to maintain underutilized workforce and equipment[17

Financial Performance - INNOVATE Corp achieved full year 2022 revenue growth of 359% and Adjusted EBITDA growth of 551%[13] - Infrastructure segment (DBM Global) reported 2022 revenue of $16 billion, a 375% increase compared to 2021[13] - Consolidated Q4 revenue increased by $145 million, or 37%, driven by the Infrastructure segment[19] - Consolidated Q4 Adjusted EBITDA increased by $60 million to $281 million, driven by Infrastructure and Life Sciences segments[19] Segment Highlights - Infrastructure segment reported a backlog of $18 billion, with an adjusted backlog of approximately $18 billion[15, 20] - Spectrum segment's Adjusted EBITDA increased by $09 million year-over-year due to higher station revenues and decreased expenses[21] - Life Sciences segment's revenue was $13 million, driven by R2's Glacial Spa and Rx devices and consumables sales[21] Life Sciences Investments - R2 Technologies investment to date is $424 million with 566% equity ownership (515% on a fully diluted basis)[31] - MediBeacon investment to date is $294 million with 472% equity ownership (415% on a fully diluted basis)[31] Debt Profile - Total principal outstanding debt as of December 2022 was $7253 million[40] - Net debt was $6340 million, with cash and cash equivalents of $804 million[40]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. Commission File No. 001-35210 INNOVATE CORP. (Exact name of registrant as specified in its charter) Delaware 54-1708481 (State or other jurisdiction of incorporation or organization) 295 Madison Avenue, ...

INNOVATE Corp. INNOVATE Q3 2022 Earnings Release Supplement November 2, 2022 © INNOVATE Corp. 2022 Safe Harbor Disclaimers Cautionary Statement Regarding Forward-Looking Statements Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This presentation contains, and certain oral statements made by our representatives from time to time may contain, "forward-looking statements." Generally, forward-looking statements include information describing actions, events, results, strategie ...