INNOVATE (US:VATE)2021-08-06 21:08Financial Data and Key Metrics Changes - Consolidated total revenue for Q2 2021 was $243.8 million, an increase of 34.1% compared to $181.8 million in the prior year period [47] - Net loss attributable to common and participating preferred stockholders for Q2 2021 was $23.7 million or $0.31 per share, compared to net income of $12.7 million or $0.25 per share in the prior year period [48] - Total adjusted EBITDA was $6.5 million in Q2 2021, down from $10.6 million in the prior year period, driven by margin compression at Infrastructure and increased spending in Life Sciences [49] Business Line Data and Key Metrics Changes - Infrastructure revenue increased 34.6% to $232 million from $172.3 million in the prior quarter, primarily due to the acquisition of Banker Steel [50] - Infrastructure adjusted EBITDA decreased from $19.1 million in the prior year period to $13.9 million, impacted by project timing and market pressures [51] - Spectrum revenue increased 11.6% to $10.6 million, driven by high station revenues, resulting in adjusted EBITDA of $2.7 million, a significant improvement from a loss of $1.2 million in the prior year [60] Market Data and Key Metrics Changes - DBM reported a record project backlog of $1.6 billion at the end of the quarter, with an adjusted backlog of $1.9 billion, up from $608 million at the end of the previous year [55] - The company is beginning to capture larger project wins, which are expected to improve margins through optimized execution strategies [56] - The company anticipates the impact of potential new projects associated with federal infrastructure bills in the next 12 to 18 months [32] Company Strategy and Development Direction - The company plans to change its name to INNOVATE Corporation, reflecting a focus on best-in-class assets poised to thrive in the new economy [23] - The acquisition of Banker Steel is seen as a key milestone, expanding the size and geographic footprint of DBM [14] - The company is optimistic about the long-term prospects for innovative companies in the Pansend portfolio, particularly R2 Technologies [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the value of current assets and the ability to benefit from emerging growth catalysts in the new economy [44] - The company acknowledged industry-wide challenges such as elevated steel prices and labor constraints but noted that these have not significantly impacted operations [34] - Management is optimistic about the ongoing growth opportunities in the Life Sciences segment and the successful commercialization of new products [36] Other Important Information - The company had $18.1 million in cash and cash equivalents at the end of Q2 2021, down from $43.8 million at the end of 2020 [63] - The company closed on the sale of Continental Insurance, receiving $65 million in cash and exchanging approximately $16 million of preferred shares [65] - Total principal outstanding indebtedness was $679.6 million, up from $576.6 million at the end of 2020, primarily due to financing related to the Banker acquisition [67] Q&A Session Summary Question: Can you provide more color on the second quarter EBITDA and the progress in Infrastructure? - Management noted that point-of-sale margins are starting to recover, with around $1 billion of backlog expected to burn off over the next 12 months [74][75] Question: What is the breakdown of the $25 million of securities received from the sale of the insurance subsidiary? - Management confirmed that the securities are primarily HC2 preferred shares, which will be paid off in 2026 [90][91]