INNOVATE (US:VATE)2023-11-10 01:45Financial 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]