HC2 Holdings Reports Fourth Quarter and Fiscal Year 2015 Results
Net revenue of
Adjusted EBITDA of
“2015 was an exciting year for HC2 highlighted by the diversification of our business through the establishment of our insurance industry platform as well as the solid performance from our other Core Operating Subsidiaries,” said
Fourth Quarter and Fiscal Year 2015 Financial Highlights:
- Net revenue: HC2 recorded consolidated total net revenues of
$360.6 million for the fourth quarter of 2015, an increase of$136.6 million , or 61%, as compared to the fourth quarter of 2014, primarily driven by the expansion in scale and number of customer relationships in our Telecommunications segment.
HC2 recorded consolidated total net revenue of$1,120.8 million for the fiscal year endedDecember 31, 2015 , an increase of$573.4 million , or 105%, as compared to fiscal 2014 as reported due to the full year impact of acquisitions made in 2014 and expansion in scale and customer relationships in our Telecommunications segment. - Operating Profit/(Loss): HC2 reported a loss of
$3.2 million from operations for the fourth quarter compared to a loss of$6.8 million during the fourth quarter of 2014, primarily driven by a reduction in corporate share-based payment expense due to equity awards granted in the fourth quarter of 2014.
Operating profit for fiscal year 2015 was$2.2 million compared to a loss of$13.6 million during fiscal year 2014. The increase in operating profit was largely the result of the full year impact of the acquisitions made in 2014 and improved profitability in our Manufacturing and Telecommunications segments. The increase was offset in part by an increase in acquisition and overhead costs in our Non-operating Corporate segment and decreases in our Life Sciences and Other segments (“Early-Stage and Other”). - Adjusted EBITDA: Adjusted EBITDA for our Manufacturing, Marine Services, Telecommunications, Utilities, and Insurance segments (our “Core Operating Subsidiaries”), was a combined
$26.7 million for the fourth quarter of 2015 and$96.9 million for fiscal year 2015. This compares to a combined Adjusted EBITDA of$94.3 million during fiscal year 2014.
Adjusted EBITDA for our Core Operating Subsidiaries benefitted from strong growth in our Manufacturing segment due largely to margin expansion, growth in scale and customer relationships in the Telecommunications segment, and an increase in the number of natural gas fueling stations in our Utilities segment. This was offset by the impact of fewer installation projects in the Marine Services segment when compared to 2014 on a pro-forma basis.
HC2 recorded total Adjusted EBITDA of$12.5 million during the fourth quarter of 2015 and$51.9 million for fiscal year 2015 after considering results from Early-Stage and Other (including a$5.0 million and$12.0 million Novatel Wireless non-cash charge in the fourth quarter and fiscal year 2015, respectively) and our Non-Operating Corporate segment. - Balance sheet: As of
December 31, 2015 , HC2 had consolidated cash, cash equivalents and investments of$1.5 billion , which includes the addition of our Insurance segment during the fourth quarter. At the corporate level, HC2 had$41.2 million in cash, cash equivalents and short-term investments at the end of the year.
Additional Fourth Quarter Highlights and Recent Developments:
- On
December 24, 2015 , HC2 completed the acquisition of long-term care and life insurance businesses,United Teacher Associates Insurance Company (“UTAIC”) andContinental General Insurance Company (“CGIC”). UTAIC and CGIC had approximately$80.0 million of statutory surplus and$1.9 billion in total GAAP assets as ofDecember 31, 2015 . - Schuff’s backlog was
$380.8 million as ofDecember 31, 2015 consistent with the third quarter 2015 backlog. Notable ongoing projects include the Wilshire Grand Center inLos Angeles , the newApple headquarters inCupertino, CA , the newVolvo facility inSouth Carolina , theAnaheim Convention Center , and theLoma Linda Hospital inLos Angeles . - Global Marine announced the acquisition of a majority interest in
CWind Limited , a leading offshore renewables specialist, highlighting the continued commitment to the offshore renewable sector. Global Marine also completed operations and installed a fiber optic cable between the Japanese island ofOkinawa and an existing branching unit (BU) in the Asia Submarine-cable Express (ASE) system. In addition, Global Marine secured a sub-contract to install an optic cable between the Indonesian islands ofBali and Lombok and a contract win from Ocean Networks Canada, to upgrade the fibre optic cables serving the NEPTUNE observatory off the west coast ofCanada .
Global Marine recently announced the award of the extension of the North America Maintenance Zone (NAZ) submarine cable maintenance contract up toDecember 31 , 2024. This long-term extension demonstrates Global Marine’s capability to deliver highly responsive and well-executed maintenance provisions to its customers.
Huawei Marine Networks, one of Global Marine’s Joint Venture partners, secured a contract to build the Cameroon-Brazil Cable System (CBCS), connectingAfrica toLatin America . - On
November 4, 2015 , HC2 announced the pricing of an underwritten public offering of 8,452,500 newly issued shares of HC2’s common stock. The net proceeds to HC2 from the offering, after deducting underwriting discounts and commissions and offering expenses, were approximately$54.7 million .
Non-GAAP Financial Measures and Other Information
The pro forma basis gives effect to the impact from our 2014 acquisitions of
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-US GAAP measurements are useful supplemental information, such adjusted results are not intended to replace our US GAAP financial results.
In 2015, we adjusted our definition of Adjusted EBITDA to exclude the adjustment for income (loss) from equity investees. We believe that the income generated by the equity investees of our Marine Services segment is an integral part of the segment's operating results. For consistency purposes we applied the same treatment to the equity investees within our Other segment. For the year ended
The calculation of Adjusted EBITDA, as defined by us, consists of Net income (loss) as adjusted for depreciation and amortization; asset impairment expense; gain (loss) on sale or disposal of assets; lease termination costs; interest expense; loss on early extinguishment or restructuring of debt; other income (expense), net; foreign currency transaction gain (loss); income tax (benefit) expense; gain (loss) from discontinued operations; noncontrolling interest; share-based compensation expense; acquisition related costs; and other costs. See below for a reconciliation of Adjusted EBITDA to net income.
Conference Call
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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. 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, unanticipated issues related to the restatement of our financial statements; the fact that we have 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 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 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 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
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.
About HC2
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except share and per share amounts)
| December 31, | ||||||||
| 2015 | 2014 | |||||||
| Assets | ||||||||
| Investments: | ||||||||
| Fixed maturities, available-for-sale at fair value | $ | 1,231,841 | $ | 250 | ||||
| Equity securities, available-for-sale at fair value | 49,682 | 4,867 | ||||||
| Mortgage loans | 1,252 | - | ||||||
| Policy loans | 18,476 | - | ||||||
| Other invested assets | 53,119 | 50,566 | ||||||
| Total investments | 1,354,370 | 55,683 | ||||||
| Cash and cash equivalents | 158,624 | 107,978 | ||||||
| Restricted cash | 538 | 6,467 | ||||||
| Accounts receivable, net | 210,853 | 152,279 | ||||||
| Costs and recognized earnings in excess of billings on uncompleted contracts | 39,310 | 28,098 | ||||||
| Inventory | 12,120 | 14,975 | ||||||
| Recoverable from reinsurers | 522,562 | - | ||||||
| Accrued investment income | 15,300 | - | ||||||
| Deferred tax asset | 52,511 | 15,720 | ||||||
| Property, plant and equipment, net | 214,466 | 233,022 | ||||||
| Goodwill | 61,178 | 30,540 | ||||||
| Intangibles | 29,409 | 31,158 | ||||||
| Other assets | 65,206 | 32,378 | ||||||
| Assets held for sale | 6,065 | 3,865 | ||||||
| Total assets | $ | 2,742,512 | $ | 712,163 | ||||
| Liabilities, temporary equity and stockholders’ equity | ||||||||
| Life, accident and health reserves | $ | 1,593,330 | $ | - | ||||
| Annuity reserves | 259,460 | - | ||||||
| Value of business acquired | 50,761 | - | ||||||
| Accounts payable and other current liabilities | 225,389 | 147,602 | ||||||
| Billings in excess of costs and recognized earnings on uncompleted contracts | 21,201 | 41,959 | ||||||
| Deferred tax liability | 4,281 | - | ||||||
| Long-term obligations | 371,876 | 335,531 | ||||||
| Pension liability | 25,156 | 37,210 | ||||||
| Other liabilities | 17,793 | 1,617 | ||||||
| Total liabilities | 2,569,247 | 563,919 | ||||||
| Commitments and contingencies | ||||||||
| Temporary equity: | ||||||||
| Preferred stock, $.001 par value - 20,000,000 shares authorized; Series A - 29,172 and 30,000 shares issued and outstanding at December 31, 2015 and 2014; Series A-1 - 10,000 and 11,000 shares issued and outstanding at December 31, 2015 and 2014, respectively; Series A-2 - 14,000 and 0 shares issued and outstanding at December 31, 2015 and 2014, respectively | 52,619 | 39,845 | ||||||
| Redeemable noncontrolling interest | 3,122 | 4,004 | ||||||
| Total temporary equity | 55,741 | 43,849 | ||||||
| Stockholders’ equity: | ||||||||
| Common stock, $.001 par value - 80,000,000 shares authorized; 35,281,375 and 23,844,711 shares issued and 35,249,749 and 23,813,085 shares outstanding at December 31, 2015 and 2014, respectively | 35 | 24 | ||||||
| Additional paid-in capital | 209,477 | 141,948 | ||||||
| Accumulated deficit | (79,729 | ) | (44,164 | ) | ||||
| Treasury stock, at cost | (378 | ) | (378 | ) | ||||
| Accumulated other comprehensive loss | (35,375 | ) | (18,243 | ) | ||||
| Total HC2 Holdings, Inc. stockholders’ equity before noncontrolling interest | 94,030 | 79,187 | ||||||
| Noncontrolling interest | 23,494 | 25,208 | ||||||
| Total stockholders’ equity | 117,524 | 104,395 | ||||||
| Total liabilities, temporary equity and stockholders’ equity | $ | 2,742,512 | $ | 712,163 | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| Years Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| Services revenue | $ | 595,280 | $ | 197,280 | $ | 230,686 | ||||||
| Sales revenue | 522,661 | 350,158 | - | |||||||||
| Life, accident and health earned premiums, net | 1,578 | - | - | |||||||||
| Net investment income | 1,031 | - | - | |||||||||
| Realized gains (losses) on investments | 256 | - | - | |||||||||
| Net revenue | 1,120,806 | 547,438 | 230,686 | |||||||||
| Operating expenses | ||||||||||||
| Cost of revenue—services | 544,655 | 177,812 | 220,315 | |||||||||
| Cost of revenue—sales | 437,968 | 296,530 | - | |||||||||
| Insurance benefits and acquisition expenses | 2,245 | - | - | |||||||||
| Selling, general and administrative | 108,527 | 80,239 | 34,692 | |||||||||
| Depreciation and amortization | 23,280 | 6,334 | 12,032 | |||||||||
| (Gain) loss on sale or disposal of assets | 170 | (162 | ) | (8 | ) | |||||||
| Lease termination costs | 1,185 | - | - | |||||||||
| Asset impairment expense | 547 | 291 | 2,791 | |||||||||
| Total operating expenses | 1,118,577 | 561,044 | 269,822 | |||||||||
| Income (loss) from operations | 2,229 | (13,606 | ) | (39,136 | ) | |||||||
| Interest expense | (39,017 | ) | (12,347 | ) | (8 | ) | ||||||
| Loss on early extinguishment or restructuring of debt | - | (11,969 | ) | - | ||||||||
| Gain from contingent value rights valuation | - | - | 14,904 | |||||||||
| Other income (expense), net | (6,820 | ) | 702 | (814 | ) | |||||||
| Income (loss) from equity investees | (3,015 | ) | 2,665 | - | ||||||||
| Loss from continuing operations before income taxes | (46,623 | ) | (34,555 | ) | (25,054 | ) | ||||||
| Income tax benefit | 10,882 | 22,869 | 7,442 | |||||||||
| Loss from continuing operations | (35,741 | ) | (11,686 | ) | (17,612 | ) | ||||||
| Gain (loss) from discontinued operations | (21 | ) | (146 | ) | 129,218 | |||||||
| Net income (loss) | (35,762 | ) | (11,832 | ) | 111,606 | |||||||
| Less: Net (income) loss attributable to noncontrolling interest | 197 | (2,559 | ) | - | ||||||||
| Net income (loss) attributable to HC2 Holdings, Inc. | (35,565 | ) | (14,391 | ) | 111,606 | |||||||
| Less: Preferred stock dividends and accretion | 4,285 | 2,049 | - | |||||||||
| Net income (loss) attributable to common stock and participating preferred stockholders | $ | (39,850 | ) | $ | (16,440 | ) | $ | 111,606 | ||||
| Basic income (loss) per common share: | ||||||||||||
| Loss from continuing operations attributable to HC2 Holdings, Inc. | $ | (1.50 | ) | $ | (0.82 | ) | $ | (1.25 | ) | |||
| Gain (loss) from discontinued operations | - | (0.01 | ) | 9.20 | ||||||||
| Net income (loss) attributable to HC2 Holdings, Inc. | $ | (1.50 | ) | $ | (0.83 | ) | $ | 7.95 | ||||
| Diluted income (loss) per common share: | ||||||||||||
| Loss from continuing operations attributable to HC2 Holdings, Inc. | $ | (1.50 | ) | $ | (0.82 | ) | $ | (1.25 | ) | |||
| Gain (loss) from discontinued operations | - | (0.01 | ) | 9.20 | ||||||||
| Net income (loss) attributable to HC2 Holdings, Inc. | $ | (1.50 | ) | $ | (0.83 | ) | $ | 7.95 | ||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic | 26,482 | 19,729 | 14,047 | |||||||||
| Diluted | 26,482 | 19,729 | 14,047 | |||||||||
| Dividends declared per basic weighted average common shares outstanding | $ | - | $ | - | $ | 8.58 | ||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Years Ended December 31, | ||||||||||||
| 2015 | 2014 | 2013 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income (loss) | $ | (35,762 | ) | $ | (11,832 | ) | $ | 111,606 | ||||
| Adjustments to reconcile net income (loss) to operating cash flows: | ||||||||||||
| Provision for doubtful accounts receivable | 99 | 403 | 1,507 | |||||||||
| Share-based compensation expense | 11,102 | 11,028 | 2,286 | |||||||||
| Depreciation and amortization | 30,939 | 10,684 | 23,964 | |||||||||
| Amortization of deferred financing costs | 1,420 | 240 | — | |||||||||
| Lease termination costs | 1,185 | — | — | |||||||||
| (Gain) loss on sale or disposal of assets | 170 | 816 | (148,848 | ) | ||||||||
| (Gain) loss on sale of investments | — | (434 | ) | — | ||||||||
| Equity investment (income)/loss | 3,015 | (2,665 | ) | — | ||||||||
| Asset impairment expense | 547 | 291 | 3,123 | |||||||||
| Amortization of debt discount | 301 | 1,593 | 86 | |||||||||
| Loss on early extinguishment or restructuring of debt | — | 11,969 | 21,124 | |||||||||
| (Gain) on bargain purchase | — | (1,417 | ) | — | ||||||||
| Unrealized loss on equity securities | 2,878 | — | — | |||||||||
| Realized (gains) losses on investments | 3,175 | 1,608 | — | |||||||||
| Change in fair value of Contingent Value Rights | — | — | (14,904 | ) | ||||||||
| Deferred income taxes | (13,102 | ) | (30,223 | ) | (522 | ) | ||||||
| Unrealized foreign currency transaction (gain) loss on intercompany and foreign debt | 182 | 1,352 | (764 | ) | ||||||||
| Other | 5,269 | — | — | |||||||||
| Changes in assets and liabilities, net of acquisitions: | ||||||||||||
| (Increase) decrease in accounts receivable | (60,720 | ) | 18,349 | (2,892 | ) | |||||||
| (Increase) decrease in costs and recognized earnings in excess of billings on uncompleted contracts | (11,579 | ) | (1,139 | ) | — | |||||||
| (Increase) decrease in inventory | 2,610 | 6,616 | 644 | |||||||||
| (Increase) decrease in other assets | 17,032 | 764 | (2,125 | ) | ||||||||
| Increase (decrease) in life, accident and health reserves | 608 | — | — | |||||||||
| Increase (decrease) in accounts payable and other current liabilities | 36,216 | 18,968 | (12,859 | ) | ||||||||
| Increase (decrease) in billings in excess of costs and recognized earnings on uncompleted contracts | (20,767 | ) | (23,793 | ) | — | |||||||
| Increase (decrease) in other liabilities | 3,259 | (1,951 | ) | (1,741 | ) | |||||||
| Increase (decrease) in pension liability | (10,638 | ) | (7,564 | ) | — | |||||||
| Net change in cash due to operating activities | (32,561 | ) | 3,663 | (20,315 | ) | |||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of property, plant and equipment | (21,324 | ) | (5,819 | ) | (12,577 | ) | ||||||
| Sale of property and equipment and other assets | 5,034 | 3,706 | 9 | |||||||||
| Purchases of investments | (54,598 | ) | (33,034 | ) | — | |||||||
| Sale of investments | 12,248 | 2,411 | — | |||||||||
| Cash from disposition of business, net of cash disposed | — | 31,645 | 270,634 | |||||||||
| Cash paid for business acquisitions, net of cash acquired | 39,726 | (146,026 | ) | (397 | ) | |||||||
| Purchase of noncontrolling interest | (475 | ) | (38,403 | ) | — | |||||||
| Receipt of dividends from equity investees | 4,647 | 2,081 | — | |||||||||
| (Increase) decrease in restricted cash | — | (1,785 | ) | 475 | ||||||||
| Net change in cash due to investing activities | (14,742 | ) | (185,224 | ) | 258,144 | |||||||
| Cash flows from financing activities: | ||||||||||||
| Annuity receipts | 78 | — | — | |||||||||
| Proceeds from long-term obligations | 564,857 | 915,896 | — | |||||||||
| Principal payments on long-term obligations | (528,679 | ) | (689,745 | ) | (128,036 | ) | ||||||
| Payment of fees on restructuring of debt | — | (12,333 | ) | (1,201 | ) | |||||||
| Proceeds from sale of common stock, net | 53,975 | 6,000 | 1,158 | |||||||||
| Proceeds from sale of preferred stock, net | 14,033 | 40,050 | — | |||||||||
| Proceeds from the exercise of warrants and stock options | — | 24,348 | — | |||||||||
| (Increase) decrease in restricted cash | 6,014 | — | — | |||||||||
| Payment of deferred financing costs | (1,423 | ) | — | — | ||||||||
| Payment of dividend equivalents | — | — | (1,235 | ) | ||||||||
| Payment of dividends | (5,687 | ) | (1,626 | ) | (119,788 | ) | ||||||
| Taxes paid in lieu of shares issued for share-based compensation | — | (47 | ) | (1,000 | ) | |||||||
| Net change in cash due to financing activities | 103,168 | 282,543 | (250,102 | ) | ||||||||
| Effects of exchange rate changes on cash and cash equivalents | (5,219 | ) | (2,001 | ) | (1,927 | ) | ||||||
| Net change in cash and cash equivalents | 50,646 | 98,981 | (14,200 | ) | ||||||||
| Cash and cash equivalents, beginning of period | 107,978 | 8,997 | 23,197 | |||||||||
| Cash and cash equivalents, end of period | $ | 158,624 | $ | 107,978 | $ | 8,997 | ||||||
| Supplemental cash flow information: | ||||||||||||
| Cash paid for interest | $ | 39,451 | $ | 7,527 | $ | 10,372 | ||||||
| Cash paid for taxes | $ | 1,134 | $ | 8,792 | $ | 616 | ||||||
| Preferred stock accreting dividends and accretion | $ | 206 | $ | 487 | $— | |||||||
| Non-cash investing and financing activities: | ||||||||||||
| Capital lease additions | $— | $— | $ | 148 | ||||||||
| Purchases of property, plant and equipment under financing arrangements | $ | 1,808 | $ | 4,400 | $— | |||||||
| Property, plant and equipment included in accounts payable | $ | 911 | $ | 2,544 | $— | |||||||
| Non-cash investing activity on the reacquisition of shares from a noncontrolling interest | $— | $ | 1,700 | $— | ||||||||
| Conversion of preferred stock to common stock | $ | 1,839 | $— | $— | ||||||||
| Business acquisition through the issuance of common stock, long-term debt and warrants | $ | 11,591 | $— | $— | ||||||||
| Non-cash financing activity on issuance of long-term debt | $ | 5,000 | $— | $— | ||||||||
ADJUSTED EBITDA
(in thousands)
| Twelve Months Ended December 31, 2015 | ||||||||||||||||||||||||||||||||||
| Core Operating | Early Stage and Other | Non-operating Corporate | HC2 Holdings, Inc. |
|||||||||||||||||||||||||||||||
| Manufacturing | Marine Services | Insurance | Telecommunications | Utilities | Total | Life Sciences |
Other | Total | ||||||||||||||||||||||||||
| Net income (loss) | 24,451 | 20,855 | 1,327 | 2,779 | (274 | ) | 49,139 | (4,575 | ) | (18,276 | ) | (22,851 | ) | (61,852 | ) | (35,565 | ) | |||||||||||||||||
| Adjustments to reconcile net income (loss) to Adjusted EBITDA: | - | |||||||||||||||||||||||||||||||||
| Depreciation and amortization | 2,016 | 17,256 | 2 | 417 | 1,635 | 21,325 | 20 | 1,934 | 1,954 | - | 23,280 | |||||||||||||||||||||||
| Depreciation and amortization (included in cost of revenue) |
7,659 | - | - | - | - | 7,659 | - | - | - | - | 7,659 | |||||||||||||||||||||||
| Asset impairment expense | - | 547 | - | - | - | 547 | - | - | - | - | 547 | |||||||||||||||||||||||
| (Gain) loss on sale or disposal of assets | 257 | (138 | ) | - | 50 | - | 170 | - | 1 | 1 | - | 170 | ||||||||||||||||||||||
| Lease termination costs | - | - | - | 1,184 | - | 1,184 | - | 1 | 1 | - | 1,185 | |||||||||||||||||||||||
| Interest expense | 1,379 | 3,803 | - | - | 42 | 5,224 | - | - | - | 33,793 | 39,017 | |||||||||||||||||||||||
| Other (income) expense, net | (443 | ) | (1,340 | ) | (56 | ) | (2,304 | ) | (42 | ) | (4,185 | ) | (1 | ) | 5,764 | 5,763 | 5,242 | 6,820 | ||||||||||||||||
| Foreign currency (gain) loss (included in cost of revenue) | - | (2,039 | ) | - | - | - | (2,039 | ) | - | - | - | - | (2,039 | ) | ||||||||||||||||||||
| Income tax (benefit) expense | 15,572 | 400 | (1,448 | ) | (237 | ) | (347 | ) | 13,941 | (1,037 | ) | (7,733 | ) | (8,770 | ) | (16,052 | ) | (10,882 | ) | |||||||||||||||
| Loss from discontinued operations | 20 | - | - | - | - | 20 | - | 1 | 1 | - | 21 | |||||||||||||||||||||||
| Noncontrolling interest | 1,136 | 616 | - | - | (267 | ) | 1,485 | (1,681 | ) | (1 | ) | (1,682 | ) | - | (197 | ) | ||||||||||||||||||
| Share-based payment expense | - | - | - | - | 49 | 49 | 71 | - | 71 | 10,982 | 11,102 | |||||||||||||||||||||||
| Acquisition related costs | - | - | - | - | 70 | 70 | 23 | - | 23 | 8,362 | 8,455 | |||||||||||||||||||||||
| Other costs | - | 2,181 | - | 121 | - | 2,302 | - | - | - | - | 2,302 | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 52,047 | $ | 42,141 | $ | (175 | ) | $ | 2,010 | $ | 866 | $ | 96,889 | $ | (7,180 | ) | $ | (18,309 | ) | $ | (25,489 | ) | $ | (19,525 | ) | $ | 51,875 | |||||||
| Three Months Ended December 31, 2015 | |||||||||||||||||||||||||||||||||
| Core Operating | Early Stage and Other | Non- operating Corporate |
HC2 Holdings, Inc. |
||||||||||||||||||||||||||||||
| Manufacturing | Marine Services | Insurance | Telecommunications | Utilities | Total | Life Sciences |
Other | Total | |||||||||||||||||||||||||
| Net income (loss) | 8,269 | 2,891 | 1,618 | 3,078 | 55 | 15,911 | (545 | ) | (24,044 | ) | (24,589 | ) | (2,762 | ) | (11,440 | ) | |||||||||||||||||
| Adjustments to reconcile net income (loss) to Adjusted EBITDA: | |||||||||||||||||||||||||||||||||
| Depreciation and amortization | 526 | 4,279 | 2 | 123 | 429 | 5,358 | 12 | 1,292 | 1,305 | - | 6,663 | ||||||||||||||||||||||
| Depreciation and amortization (included in cost of revenue) |
1,924 | - | - | - | - | 1,924 | - | - | - | - | 1,924 | ||||||||||||||||||||||
| Asset impairment expense | - | 547 | - | - | - | 547 | - | (0 | ) | (0 | ) | - | 547 | ||||||||||||||||||||
| (Gain) loss on sale or disposal of assets | 326 | (21 | ) | - | - | - | 305 | - | 1 | 1 | - | 305 | |||||||||||||||||||||
| Lease termination costs | - | - | - | 60 | - | 60 | - | 1 | 1 | - | 61 | ||||||||||||||||||||||
| Interest expense | 315 | 914 | - | - | 10 | 1,239 | - | (0 | ) | (0 | ) | 8,570 | 9,809 | ||||||||||||||||||||
| Other (income) expense, net | (279 | ) | (1,090 | ) | (56 | ) | (2,299 | ) | (10 | ) | (3,733 | ) | (0 | ) | 6,774 | 6,774 | 251 | 3,292 | |||||||||||||||
| Foreign currency (gain) loss (included in cost of revenue) | - | 608 | - | 309 | - | 916 | - | (1 | ) | (1 | ) | - | 915 | ||||||||||||||||||||
| Income tax (benefit) expense | 3,384 | 222 | (1,448 | ) | (237 | ) | (347 | ) | 1,575 | (1,037 | ) | 8,616 | 7,579 | (18,203 | ) | (9,048 | ) | ||||||||||||||||
| Loss from discontinued operations | 0 | - | - | - | - | 0 | - | (23 | ) | (23 | ) | - | (23 | ) | |||||||||||||||||||
| Noncontrolling interest | 169 | 52 | - | - | 43 | 265 | (468 | ) | (1 | ) | (469 | ) | - | (205 | ) | ||||||||||||||||||
| Share-based payment expense | - | - | 0 | - | 26 | 26 | 71 | (0 | ) | 71 | 3,602 | 3,700 | |||||||||||||||||||||
| Acquisition related costs | - | - | - | - | 70 | 70 | 23 | 0 | 23 | 3,660 | 3,754 | ||||||||||||||||||||||
| Other costs | - | 2,181 | - | 12 | - | 2,193 | - | - | - | - | 2,193 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 14,634 | $ | 10,585 | $ | 116 | $ | 1,046 | $ | 274 | $ | 26,655 | $ | (1,944 | ) | $ | (7,383 | ) | $ | (9,327 | ) | $ | (4,882 | ) | $ | 12,446 | |||||||
| As Reported | Pro Forma | |||||||||||||||||||||||||||||||||||
| Twelve Months Ended December 31, 2014 | ||||||||||||||||||||||||||||||||||||
| HC2 Holdings, Inc. | Core Operating | Early Stage and Other | Non-operating Corporate | HC2 Holdings, Inc. |
||||||||||||||||||||||||||||||||
| Manufacturing | Marine Services | Insurance | Telecommunications | Utilities | Total | Life Sciences |
Other | Total | ||||||||||||||||||||||||||||
| Net income (loss) | (14,391 | ) | 19,278 | 17,718 | - | (1,068 | ) | 236 | 36,164 | (3,759 | ) | 29,219 | 25,460 | (51,410 | ) | 10,214 | ||||||||||||||||||||
| Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | 6,334 | 4,139 | 14,776 | - | 528 | 484 | 19,927 | 1 | - | 1 | - | 19,928 | ||||||||||||||||||||||||
| Depreciation and amortization (included in cost of revenue) |
4,350 | 4,350 | - | - | - | - | 4,350 | - | - | - | - | 4,350 | ||||||||||||||||||||||||
| Asset impairment expense | 291 | - | - | - | 291 | - | 291 | - | - | - | - | 291 | ||||||||||||||||||||||||
| (Gain) loss on sale or disposal of assets | (162 | ) | (2 | ) | 104 | - | (160 | ) | - | (58 | ) | - | - | - | - | (58 | ) | |||||||||||||||||||
| Lease termination costs | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
| Interest expense | 12,347 | 1,627 | 4,708 | - | 1 | 20 | 6,356 | - | - | - | 10,700 | 17,056 | ||||||||||||||||||||||||
| Loss on early extinguishment of debt | 11,969 | - | - | - | - | - | - | - | 11,969 | 11,969 | ||||||||||||||||||||||||||
| Other (income) expense, net | (702 | ) | (476 | ) | (2,410 | ) | - | (831 | ) | (1,431 | ) | (5,148 | ) | - | 1,610 | 1,610 | 217 | (3,321 | ) | |||||||||||||||||
| Foreign currency (gain) loss (included in cost of revenue) | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
| Income tax (benefit) expense | (22,869 | ) | 13,318 | 1,069 | - | 58 | 103 | 14,548 | - | (31,828 | ) | (31,828 | ) | (963 | ) | (18,243 | ) | |||||||||||||||||||
| Loss from discontinued operations | 146 | 35 | 3,007 | - | - | - | 3,042 | - | 157 | 157 | 3,199 | |||||||||||||||||||||||||
| Noncontrolling interest | 2,559 | 3,569 | 3,059 | - | - | 229 | 6,857 | (1,038 | ) | 1 | (1,037 | ) | - | 5,820 | ||||||||||||||||||||||
| Share-based payment expense | 11,028 | - | - | - | - | - | - | - | - | - | 11,028 | 11,028 | ||||||||||||||||||||||||
| Acquisition related costs | 13,044 | - | 7,966 | - | - | - | 7,966 | - | - | - | 5,078 | 13,044 | ||||||||||||||||||||||||
| Other costs | - | - | - | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
| Adjusted EBITDA | 23,944 | $ | 45,838 | $ | 49,997 | $ | - | $ | (1,181 | ) | $ | (359 | ) | $ | 94,295 | $ | (4,796 | ) | $ | (841 | ) | $ | (5,637 | ) | $ | (13,381 | ) | $ | 75,277 | |||||||
For More Information onHC2 Holdings, Inc. , Please Contact:Ashleigh Douglas ir@HC2.com 212-339-5875