HC2 Holdings, Inc. (“HC2” or the “Company”) (NYSE: HCHC), a
diversified holding company, announced today its consolidated
results for the third quarter ended September 30, 2020.
Third Quarter 2020
Highlights
- Net Loss attributable to common and
participating preferred stockholders of $17.7 million, or $0.38 per
share, compared to Net Loss of $7.5 million, or $0.16 per fully
diluted share, in the year-ago quarter.
- Total Adjusted EBITDA, excluding
Insurance, of $11.9 million, compared to $11.8 million in the
year-ago quarter.
Subsequent Events
- Commenced $65 million common stock
rights offering.
- Pansend Life Sciences portfolio
company MediBeacon received a commitment from Huadong Medicine
Company Limited (“Huadong”) for an additional $20 million in
non-dilutive funding over the next two years to pursue Class 1
status in China, allowing the device to immediately enter the
Chinese hospital system.
- Completed sale of
Telecommunications subsidiary, PTGi-International Carrier Services,
Inc.
“We continued to take the necessary steps to
position ourselves to improve our capital structure for the long
term,” stated Wayne Barr, Jr., HC2’s interim Chief Executive
Officer. “During the quarter, we completed the consolidation
of our headquarters, significantly reducing ongoing corporate
expenses, and last month, we commenced a $65 million rights
offering that is partially backstopped by our Chairman Avie
Glazer’s fund Lancer Capital. The Board and our management team
collectively believe this is the best path forward to strengthen
our balance sheet ahead of a potential refinancing of our 11.5%
Notes, and the partial backstop clearly aligns our Chairman with
our stockholders.”
“We also continued to navigate through the
ongoing challenging environment and, accounting for the impact of
COVID, reported solid results at our segments during the quarter,”
added Mr. Barr. “Our Clean Energy segment increased Adjusted
EBITDA by 61% compared to the prior-year period, while pre-orders
of R2 Technologies' 'Glacial Rx' skin lightening and brightening
system are strong, and we are looking forward to the full
commercial launch early next year. In addition, MediBeacon
received an additional funding commitment from Huadong, further
validating the value we believe that is inherent at our Life
Sciences segment. We remain focused on enhancing our capital
structure for the long-term as we continue to evaluate all
strategic options across our portfolio to unlock value for our
stockholders.”
Third Quarter Financial Highlights
- Net Revenue: For
the third quarter of 2020, HC2 consolidated net revenue was $393.3
million, compared to $427.5 million for the year-ago quarter. Lower
revenues from our Telecommunications, Infrastructure (formerly
Construction) and Spectrum (formerly Broadcasting) segments, as
well as our Insurance segment, net of eliminations, were partially
offset by an increase in revenue from our Clean Energy
segment.
|
NET REVENUE by OPERATING SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2020 |
|
2019 |
|
Increase /(Decrease) |
|
2020 |
|
2019 |
|
Increase /(Decrease) |
|
Infrastructure |
$ |
160.8 |
|
|
$ |
168.4 |
|
|
$ |
(7.6 |
) |
|
$ |
509.6 |
|
|
$ |
556.2 |
|
|
$ |
(46.6 |
) |
|
Clean Energy |
10.3 |
|
|
8.7 |
|
|
1.6 |
|
|
31.0 |
|
|
19.3 |
|
|
11.7 |
|
|
Telecommunications |
136.4 |
|
|
162.2 |
|
|
(25.8 |
) |
|
430.1 |
|
|
507.0 |
|
|
(76.9 |
) |
|
Insurance |
78.9 |
|
|
80.4 |
|
|
(1.5 |
) |
|
223.2 |
|
|
251.3 |
|
|
(28.1 |
) |
|
Spectrum |
9.7 |
|
|
10.0 |
|
|
(0.3 |
) |
|
29.3 |
|
|
29.8 |
|
|
(0.5 |
) |
|
Eliminations (1) |
(2.8 |
) |
|
(2.2 |
) |
|
(0.6 |
) |
|
(8.1 |
) |
|
(7.9 |
) |
|
(0.2 |
) |
|
Consolidated HC2 |
$ |
393.3 |
|
|
$ |
427.5 |
|
|
$ |
(34.2 |
) |
|
$ |
1,215.1 |
|
|
$ |
1,355.7 |
|
|
$ |
(140.6 |
) |
(1) The Insurance segment revenues are inclusive of realized and
unrealized gains and net investment income for the three and nine
months ended September 30, 2020 and 2019, inclusive of transactions
between entities under common control, which are eliminated or are
reclassified in consolidation.
- Net Income /
(Loss): For the third quarter of 2020, HC2 reported Net
Loss attributable to common stock and participating preferred
stockholders of $17.7 million, or $0.38 per share, compared to $7.5
million, or $0.16 per share, in the year-ago quarter.
|
NET INCOME (LOSS) by OPERATING SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2020 |
|
2019 |
|
Increase /(Decrease) |
|
2020 |
|
2019 |
|
Increase /(Decrease) |
|
Infrastructure |
$ |
2.5 |
|
|
$ |
7.0 |
|
|
$ |
(4.5 |
) |
|
$ |
4.0 |
|
|
$ |
18.0 |
|
|
$ |
(14.0 |
) |
|
Clean Energy |
(3.4 |
) |
|
(0.1 |
) |
|
(3.3 |
) |
|
(2.4 |
) |
|
(1.4 |
) |
|
(1.0 |
) |
|
Telecommunications |
2.4 |
|
|
(0.3 |
) |
|
2.7 |
|
|
2.9 |
|
|
0.7 |
|
|
2.2 |
|
|
Insurance |
12.7 |
|
|
10.5 |
|
|
2.2 |
|
|
24.1 |
|
|
74.6 |
|
|
(50.5 |
) |
|
Life Sciences |
(4.3 |
) |
|
5.6 |
|
|
(9.9 |
) |
|
(8.7 |
) |
|
1.6 |
|
|
(10.3 |
) |
|
Spectrum |
(15.7 |
) |
|
(6.2 |
) |
|
(9.5 |
) |
|
(26.6 |
) |
|
(14.1 |
) |
|
(12.5 |
) |
|
Other and Eliminations |
0.2 |
|
|
2.4 |
|
|
(2.2 |
) |
|
4.2 |
|
|
(2.3 |
) |
|
6.5 |
|
|
Non-operating Corporate |
(9.7 |
) |
|
(23.9 |
) |
|
14.2 |
|
|
(79.7 |
) |
|
(70.0 |
) |
|
(9.7 |
) |
|
Consolidating Eliminations attributable to HC2 Holdings Insurance
Segment(1) |
(2.0 |
) |
|
(2.1 |
) |
|
0.1 |
|
|
(5.1 |
) |
|
(7.6 |
) |
|
2.5 |
|
|
Net loss attributable to HC2 Holdings, Inc. |
$ |
(17.3 |
) |
|
$ |
(7.1 |
) |
|
$ |
(10.2 |
) |
|
$ |
(87.3 |
) |
|
$ |
(0.5 |
) |
|
$ |
(86.8 |
) |
|
Less: Preferred dividends, deemed dividends, and repurchase
gains |
0.4 |
|
|
0.4 |
|
|
— |
|
|
1.2 |
|
|
(0.4 |
) |
|
1.6 |
|
|
Net loss attributable to common stock and participating preferred
stockholders |
$ |
(17.7 |
) |
|
$ |
(7.5 |
) |
|
$ |
(10.2 |
) |
|
$ |
(88.5 |
) |
|
$ |
(0.1 |
) |
|
$ |
(88.4 |
) |
(1) The Insurance segment results are inclusive of realized and
unrealized gains and net investment income for the three and nine
months ended September 30, 2020 and 2019, inclusive of transactions
between entities under common control, which are eliminated or are
reclassified in consolidation.
- Adjusted EBITDA:
For the third quarter of 2020, Total Adjusted EBITDA, which
excludes the Insurance segment, totaled $11.9 million, comparable
with the year-ago quarter. Reduced losses from
Spectrum, improvements at Clean Energy and lower Non-operating
Corporate expenses were offset by decreased contributions from
Infrastructure and Telecommunications as well as increased losses
at the Life Sciences segment.
|
ADJUSTED EBITDA by OPERATING SEGMENT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2020 |
|
2019 |
|
Increase /(Decrease) |
|
2020 |
|
2019 |
|
Increase /(Decrease) |
|
Infrastructure |
$ |
17.7 |
|
|
$ |
19.4 |
|
|
$ |
(1.7 |
) |
|
$ |
45.8 |
|
|
$ |
54.9 |
|
|
$ |
(9.1 |
) |
|
Clean Energy |
3.7 |
|
|
2.3 |
|
|
1.4 |
|
|
11.7 |
|
|
4.6 |
|
|
7.1 |
|
|
Telecommunications |
0.4 |
|
|
0.8 |
|
|
(0.4 |
) |
|
1.0 |
|
|
2.4 |
|
|
(1.4 |
) |
|
Life Sciences |
(5.9 |
) |
|
(4.0 |
) |
|
(1.9 |
) |
|
(14.6 |
) |
|
(8.7 |
) |
|
(5.9 |
) |
|
Spectrum |
(0.2 |
) |
|
(1.9 |
) |
|
1.7 |
|
|
(2.3 |
) |
|
(5.3 |
) |
|
3.0 |
|
|
Other and Eliminations |
(0.1 |
) |
|
(0.1 |
) |
|
— |
|
|
(0.8 |
) |
|
2.4 |
|
|
(3.2 |
) |
|
Non-operating Corporate |
(3.7 |
) |
|
(4.7 |
) |
|
1.0 |
|
|
(12.3 |
) |
|
(15.2 |
) |
|
2.9 |
|
|
Total Adjusted EBITDA |
$ |
11.9 |
|
|
$ |
11.8 |
|
|
$ |
0.1 |
|
|
$ |
28.5 |
|
|
$ |
35.1 |
|
|
$ |
(6.6 |
) |
- Balance Sheet: As of September 30, 2020, HC2
had consolidated cash, cash equivalents and investments of $4.7
billion, which includes cash and investments associated with HC2’s
Insurance segment. Excluding the Insurance segment, consolidated
cash was $48.9 million, of which $8.9 million was at the HC2
corporate level.
Third Quarter 2020 Segment Highlights
|
|
– |
The Company continues to review strategic alternatives for
DBM, including a subsidiary refinancing. |
|
|
|
|
|
|
– |
For the third quarter of 2020, DBM reported Net Income of $2.5
million, compared to $7.0 million for the year-ago
quarter. Adjusted EBITDA was $17.7 million, compared to
$19.4 million in the year-ago quarter. DBM’s results
for the quarter were impacted by the timing and mix of project
backlog, as well as from the COVID-19 pandemic, which has resulted
in delays in new project awards for both its commercial
construction and industrial services businesses. |
|
|
|
|
|
|
– |
DBM's total backlog was approximately $435.9 million as of
September 30, 2020, compared to $475.3 million for the year-ago
quarter. Taking into consideration awarded, but not yet signed
contracts, backlog would have been approximately $640 million at
the end of the third quarter of 2020, compared to $833 million at
the end of the third quarter of 2019. |
|
|
– |
For the third quarter of 2020, Beyond6 (f/k/a “American Natural
Gas, Inc.” or “ANG”) reported a Net Loss of $3.4 million, compared
to $0.1 million for the year-ago quarter. Adjusted
EBITDA increased to $3.7 million, compared to $2.3 million for the
year-ago quarter, driven by the Alternative Fuel Tax Credit, which
was not yet approved for 2019 in the year-ago quarter. |
| |
– |
Amended terms of its $81.2 million of privately placed notes (the
“Notes”) and extended their maturity by one year to October 2021.
Borrowing terms for the Notes remain largely unchanged, and, as
agreed upon with the institutional lenders, Spectrum will begin the
process of selling several non-core stations in select markets
where there is redundant coverage to reduce outstanding
principal. |
| |
|
|
| |
– |
As of early November 2020, HC2’s Spectrum segment has 227
operational stations, of which approximately 200 are currently
connected to the Company’s CentralCast system, in 97 Designated
Market Areas (“DMAs”) across the United States and Puerto Rico,
including active operating stations in 34 of the top 35 DMAs. The
remaining silent license builds were mostly completed during the
third quarter. |
| |
– |
MediBeacon received a commitment from Huadong Medicine Company
Limited (“Huadong”) for an additional $20 million in non-dilutive
funding over the next two years to pursue Class 1 status in China,
which will allow the device to immediately enter the Chinese
hospital system. |
| |
|
|
| |
– |
R2 Technologies (“R2”) commenced its pre-order process for ‘Glacial
Rx’, its FDA-approved revolutionary CryoAesthetic technology, which
promises physicians a new way to treat aesthetic and medical skin
conditions, in advance of an early 2021 launch. |
| |
|
|
| |
– |
As a reminder, both R2 and MediBeacon are fully funded for ongoing
activities, and as a result, the Company currently does not
anticipate a need for further capital investment from HC2. |
|
|
– |
The Company continues to review strategic alternatives for
Continental, including a potential sale. |
|
|
|
|
|
|
– |
As of September 30, 2020, Continental had $4.7 billion of cash and
invested assets, $5.8 billion in total GAAP assets, and an
estimated $374 million of total adjusted capital. |
|
|
|
|
|
|
– |
For the third quarter of 2020, Continental reported Net Income of
$12.7 million, compared to $10.5 million for the year-ago
quarter. |
|
|
|
|
|
|
– |
Pre-Tax Insurance AOI was $14.3 million for the third quarter of
2020, compared to $13.5 million for the year-ago quarter. The
increase was due to favorable claims activity and reserve
developments in the current period. This was partially offset by a
reduction in net investment income due to a lower yield on invested
assets, decreased holdings in preferred stocks and short term
investments and unfavorable VOBA amortization largely due to lower
policy terminations for the LTC policies acquired in 2018. |
Conference Call
HC2 Holdings, Inc. will host a live conference
call to discuss its third quarter 2020 financial results and
operations today at 5:00 p.m. ET. The Company will post an earnings
supplemental presentation in the Investor Relations section of the
HC2 Website at ir.hc2.com, to accompany the conference
call.
Dial-in instructions for the conference call and the replay are
as follows:
Live Webcast and Call
A live webcast of the conference call can be accessed by
interested parties through the Investor Relations section of the
HC2 Website at ir.hc2.com.
Domestic Dial-In (Toll Free): 1-877-705-6003 or International
Dial-In: 1-201-493-6725
Participant Entry Number: 13712462
Conference Replay*
Domestic Dial-In (Toll Free): 1-844-512-2921 or International
Dial-In: 1-412-317-6671
Conference Number: 13712462
*Available approximately two hours after the end of the
conference call through November 23, 2020.
About HC2
HC2 Holdings, Inc. is a publicly traded
(NYSE:HCHC) diversified holding company, which seeks opportunities
to acquire and grow businesses that can generate long-term
sustainable free cash flow and attractive returns in order to
maximize value for all stakeholders. HC2 has a diverse array of
operating subsidiaries across multiple reportable segments,
including Infrastructure, Clean Energy, Life Sciences, Spectrum,
Insurance and Other. HC2's largest operating subsidiary is DBM
Global Inc., a family of companies providing fully integrated
structural and steel construction services. Founded in 1994, HC2 is
headquartered in New York, New York. Learn more about HC2 and its
portfolio companies at www.hc2.com.
ContactInvestor RelationsPhone:
(212) 235-2691E-mail: ir@hc2.com
Non-GAAP Financial Measures
In this press release, HC2 refers to certain
financial measures that are not presented in accordance with U.S.
generally accepted accounting principles (“GAAP”), including Total
Adjusted EBITDA (excluding the Insurance segment), Adjusted EBITDA
for its operating segments, Adjusted Operating Income for the
Insurance segment and Pre-Tax Adjusted Operating Income for the
Insurance segment.
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.
Adjusted EBITDA excludes the results of operations and any
consolidating eliminations of our Insurance segment.
The calculation of Adjusted EBITDA, as defined
by us, consists of Net income (loss) as adjusted for depreciation
and amortization; Other operating (income) expense, which is
inclusive of (gain) loss on sale or disposal of assets, lease
termination costs, and FCC reimbursements; asset impairment
expense; interest expense; net gain (loss) on contingent
consideration; loss on early extinguishment or restructuring of
debt; gain (loss) on sale of subsidiaries; other (income) expense,
net; foreign currency transaction (gain) loss included in cost of
revenue; income tax (benefit) expense; noncontrolling interest;
bonus to be settled in equity; share-based compensation expense;
discontinued operations; non-recurring items; costs associated with
the COVID-19 pandemic, and acquisition and disposition costs.
Management recognizes that using Adjusted EBITDA
as a performance measure has inherent limitations as an analytical
tool as compared to net income (loss) or other GAAP financial
measures, as these non-GAAP measures exclude certain items,
including items that are recurring in nature, which may be
meaningful to investors.
Adjusted Operating Income - Insurance
Adjusted Operating Income (“Insurance AOI”) and
Pre-tax Adjusted Operating Income (“Pre-tax Insurance AOI”) for the
Insurance segment are non-U.S. GAAP financial measures
frequently used throughout the insurance industry and are economic
measures the Insurance segment uses to evaluate its financial
performance. Management believes that Insurance AOI and Pretax
Insurance AOI measures provide investors with meaningful
information for gaining an understanding of certain results and
provide insight into an organization’s operating trends and
facilitates comparisons between peer companies. However, Insurance
AOI and Pre-tax Insurance AOI have certain limitations, and we may
not calculate it the same as other companies in our industry. It
should, therefore, be read together with the Company's results
calculated in accordance with U.S. GAAP.
Similarly to Adjusted EBITDA, using Insurance
AOI and Pre-tax Insurance AOI as performance measures have inherent
limitations as an analytical tool as compared to income (loss) from
operations or other U.S. GAAP financial measures, as these non-U.S.
GAAP measures excludes certain items, including items that are
recurring in nature, which may be meaningful to investors. As a
result of the exclusions, Insurance AOI and Pre-tax Insurance AOI
should not be considered in isolation and do not purport to be an
alternative to income (loss) from operations or other U.S. GAAP
financial measures as a measure of our operating performance.
Management defines Insurance AOI as Net income
(loss) for the Insurance segment adjusted to exclude the impact of
net investment gains (losses), including OTTI losses recognized in
operations; asset impairment; intercompany elimination; bargain
purchase gains; reinsurance gains; and acquisition costs.
Management defines Pre-tax Insurance AOI as Insurance AOI adjusted
to exclude the impact of income tax (benefit) expense recognized
during the current period. Management believes that Insurance AOI
and Pre-tax Insurance AOI provide meaningful financial metrics that
help investors understand certain results and profitability. While
these adjustments are an integral part of the overall performance
of the Insurance segment, market conditions impacting these items
can overshadow the underlying performance of the business.
Accordingly, we believe using a measure which excludes their impact
is effective in analyzing the trends of our operations.
Cautionary Statement Regarding
Forward-Looking StatementsSafe 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, including, among others, statements related to the
expected or potential impact of the novel coronavirus (COVID-19)
pandemic, and the related responses of the government and HC2 on
our business, financial condition and results of operations, and
any such forward-looking statements, whether concerning the
COVID-19 pandemic or otherwise, involve risks, assumptions and
uncertainties. 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, any statements
regarding our expectations regarding entering definitive agreements
in respect of and consummating potential divestitures of any of our
subsidiaries, reducing debt and related interest expense at the
holding company level with the net proceeds of such divestitures,
building shareholder value, future cash flow, longer-term growth
and invested assets, the timing and effects of redeeming the 11.5%
Notes, reducing HC2's leverage and interest expense, and the timing
or prospects of any refinancing of HC2's remaining corporate debt,
the severity, magnitude and duration of the COVID-19 pandemic,
including impacts of the pandemic and of businesses’ and
governments’ responses to the pandemic on HC2’s operations and
personnel, and on commercial activity and demand across our
businesses, HC2’s inability to predict the extent to which the
COVID-19 pandemic and related impacts will continue to adversely
impact HC2’s business operations, financial performance, results of
operations, financial position, the prices of HC2’s securities and
the achievement of HC2’s strategic objectives, and changes in
macroeconomic and market conditions and market volatility
(including developments and volatility arising from the COVID-19
pandemic), including interest rates, the value of securities and
other financial assets, and the impact of such changes and
volatility on HC2’s financial position. Such statements are based
on the beliefs and assumptions of HC2’s management and the
management of HC2’s subsidiaries and portfolio companies.
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 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: issues related to the restatement of
our financial statements; the fact that we have historically
identified material weaknesses in our internal control over
financial reporting, and any inability to remediate future material
weaknesses; capital market conditions, including the ability of HC2
and HC2’s subsidiaries to raise capital; the ability of HC2’s
subsidiaries and portfolio companies 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 and portfolio companies to identify any
suitable future acquisition or disposition 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 and portfolio companies of HC2.
Although HC2 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. There can be no assurance that
definitive agreements for potential divestitures or other strategic
transactions will be entered into with respect to any of our
subsidiaries, that any such transactions will be consummated, or
the timing, terms, conditions or net proceeds thereof. 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 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 unless
legally required, HC2 undertakes no obligation to update or revise
publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
|
|
|
HC2 HOLDINGS, INC. |
|
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
|
(in millions, except per share amounts) |
|
(Unaudited) |
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
Revenue |
$ |
317.2 |
|
|
$ |
349.3 |
|
|
$ |
1,000.0 |
|
|
$ |
1,112.3 |
|
|
Life, accident and health earned premiums, net |
28.6 |
|
|
28.9 |
|
|
86.8 |
|
|
88.7 |
|
|
Net investment income |
46.7 |
|
|
51.2 |
|
|
147.1 |
|
|
152.6 |
|
|
Net realized and unrealized gains (losses) on investments |
0.8 |
|
|
(1.9 |
) |
|
(18.8 |
) |
|
2.1 |
|
|
Net revenue |
393.3 |
|
|
427.5 |
|
|
1,215.1 |
|
|
1,355.7 |
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Cost of revenue |
278.7 |
|
|
301.3 |
|
|
886.9 |
|
|
976.4 |
|
|
Policy benefits, changes in reserves, and commissions |
59.6 |
|
|
66.1 |
|
|
195.0 |
|
|
166.8 |
|
|
Selling, general and administrative |
45.2 |
|
|
50.7 |
|
|
145.6 |
|
|
143.8 |
|
|
Depreciation and amortization |
2.4 |
|
|
2.2 |
|
|
4.1 |
|
|
3.7 |
|
|
Other operating income (expense) |
9.5 |
|
|
(0.3 |
) |
|
7.5 |
|
|
(1.7 |
) |
|
Total operating expenses |
395.4 |
|
|
420.0 |
|
|
1,239.1 |
|
|
1,289.0 |
|
|
(Loss) income from operations |
(2.1 |
) |
|
7.5 |
|
|
(24.0 |
) |
|
66.7 |
|
|
Interest expense |
(19.7 |
) |
|
(20.1 |
) |
|
(62.4 |
) |
|
(58.0 |
) |
|
Loss on early extinguishment or restructuring of debt |
(4.2 |
) |
|
— |
|
|
(13.4 |
) |
|
— |
|
|
Loss from equity investees |
(1.3 |
) |
|
(1.3 |
) |
|
(4.0 |
) |
|
— |
|
|
Gain on bargain purchase |
— |
|
|
— |
|
|
— |
|
|
1.1 |
|
|
Other income (loss) |
7.3 |
|
|
6.1 |
|
|
74.1 |
|
|
4.7 |
|
|
(Loss) income from continuing operations before income taxes |
(20.0 |
) |
|
(7.8 |
) |
|
(29.7 |
) |
|
14.5 |
|
|
Income tax expense |
(1.6 |
) |
|
(1.1 |
) |
|
(4.4 |
) |
|
(6.2 |
) |
|
(Loss) income from continuing operations |
(21.6 |
) |
|
(8.9 |
) |
|
(34.1 |
) |
|
8.3 |
|
|
Income (loss) from discontinued operations (including loss on
disposal of $39.3 million) |
— |
|
|
0.6 |
|
|
(60.0 |
) |
|
(13.7 |
) |
|
Net loss |
(21.6 |
) |
|
(8.3 |
) |
|
(94.1 |
) |
|
(5.4 |
) |
|
Net loss attributable to noncontrolling interest and redeemable
noncontrolling interest |
4.3 |
|
|
1.2 |
|
|
6.8 |
|
|
4.9 |
|
|
Net loss attributable to HC2 Holdings, Inc. |
(17.3 |
) |
|
(7.1 |
) |
|
(87.3 |
) |
|
(0.5 |
) |
|
Less: Preferred dividends, deemed dividends and repurchase
gains |
0.4 |
|
|
0.4 |
|
|
1.2 |
|
|
(0.4 |
) |
|
Net loss attributable to common stock and participating preferred
stockholders |
$ |
(17.7 |
) |
|
$ |
(7.5 |
) |
|
$ |
(88.5 |
) |
|
$ |
(0.1 |
) |
|
|
|
|
|
|
|
|
|
|
(Loss) income per share - continuing operations |
|
|
|
|
|
|
|
|
Basic: |
$ |
(0.38 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.94 |
) |
|
$ |
0.28 |
|
|
Diluted: |
$ |
(0.38 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.94 |
) |
|
$ |
0.23 |
|
|
|
|
|
|
|
|
|
|
|
Loss per share - discontinued operations |
|
|
|
|
|
|
|
|
Basic: |
$ |
— |
|
|
$ |
— |
|
|
$ |
(0.95 |
) |
|
$ |
(0.28 |
) |
|
Diluted: |
$ |
— |
|
|
$ |
— |
|
|
$ |
(0.95 |
) |
|
$ |
(0.21 |
) |
|
|
|
|
|
|
|
|
|
|
(Loss) income per share - Net (loss) income attributable to
participating securities |
|
|
|
|
|
|
|
|
Basic: |
$ |
(0.38 |
) |
|
$ |
(0.16 |
) |
|
$ |
(1.89 |
) |
|
$ |
— |
|
|
Diluted: |
$ |
(0.38 |
) |
|
$ |
(0.16 |
) |
|
$ |
(1.89 |
) |
|
$ |
0.02 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding: |
|
|
|
|
|
|
|
|
Basic: |
46.9 |
|
|
45.7 |
|
|
46.7 |
|
|
45.4 |
|
|
Diluted: |
46.9 |
|
|
45.7 |
|
|
46.7 |
|
|
60.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HC2 HOLDINGS, INC. |
|
CONDENSED CONSOLIDATED BALANCE SHEET |
|
(in millions, except share amounts) |
|
(Unaudited) |
| |
|
|
|
| |
September 30, |
|
December 31, |
| |
2020 |
|
2019 |
| Assets |
|
|
|
|
Investments: |
|
|
|
|
Fixed maturity securities, available-for-sale at fair value |
$ |
4,295.2 |
|
|
$ |
4,028.9 |
|
|
Equity securities |
74.2 |
|
|
92.5 |
|
|
Mortgage loans |
121.1 |
|
|
183.5 |
|
|
Policy loans |
18.2 |
|
|
19.1 |
|
|
Other invested assets |
60.7 |
|
|
68.1 |
|
|
Total investments |
4,569.4 |
|
|
4,392.1 |
|
|
Cash and cash equivalents |
163.6 |
|
|
228.8 |
|
|
Accounts receivable, net |
252.3 |
|
|
311.8 |
|
|
Recoverable from reinsurers |
961.4 |
|
|
953.7 |
|
|
Deferred tax asset |
1.8 |
|
|
2.7 |
|
|
Property, plant and equipment, net |
213.8 |
|
|
223.7 |
|
|
Goodwill |
112.7 |
|
|
112.5 |
|
|
Intangibles, net |
202.2 |
|
|
221.7 |
|
|
Assets held for sale |
5.6 |
|
|
323.3 |
|
|
Other assets |
205.6 |
|
|
188.0 |
|
|
Total assets |
$ |
6,688.4 |
|
|
$ |
6,958.3 |
|
|
|
|
|
|
|
Liabilities, temporary equity and stockholders’
equity |
|
|
|
|
Life, accident and health reserves |
$ |
4,622.9 |
|
|
$ |
4,567.1 |
|
|
Annuity reserves |
230.9 |
|
|
236.4 |
|
|
Value of business acquired |
205.0 |
|
|
221.1 |
|
|
Accounts payable and other current liabilities |
298.6 |
|
|
306.2 |
|
|
Deferred tax liability |
113.2 |
|
|
83.7 |
|
|
Debt obligations |
646.4 |
|
|
773.6 |
|
|
Liabilities held for sale |
0.1 |
|
|
153.9 |
|
|
Other liabilities |
135.7 |
|
|
151.1 |
|
|
Total liabilities |
6,252.8 |
|
|
6,493.1 |
|
|
Commitments and contingencies |
|
|
|
|
Temporary equity |
|
|
|
|
Preferred stock |
15.9 |
|
|
10.3 |
|
|
Redeemable noncontrolling interest |
7.0 |
|
|
11.3 |
|
|
Total temporary equity |
22.9 |
|
|
21.6 |
|
|
Stockholders’ equity |
|
|
|
|
Common stock, $0.001 par value |
— |
|
|
— |
|
|
Shares authorized: 80,000,000 at September 30, 2020 and December
31, 2019; |
|
|
|
|
Shares issued: 48,413,438 and 46,810,676 at September 30, 2020 and
December 31, 2019; |
|
|
|
|
Shares outstanding: 47,303,687 and 46,067,852 at September 30, 2020
and December 31, 2019, respectively |
|
|
|
|
Additional paid-in capital |
293.6 |
|
|
281.1 |
|
|
Treasury stock, at cost: 1,109,751 and 742,824 shares at September
30, 2020 and December 31, 2019, respectively |
(4.2 |
) |
|
(3.3 |
) |
|
Accumulated deficit |
(184 |
) |
|
(96.7 |
) |
|
Accumulated other comprehensive income (loss) |
266.4 |
|
|
168.7 |
|
|
Total HC2 Holdings, Inc. stockholders’ equity |
371.8 |
|
|
349.8 |
|
|
Noncontrolling interest |
40.9 |
|
|
93.8 |
|
|
Total stockholders’ equity |
412.7 |
|
|
443.6 |
|
|
Total liabilities, temporary equity and stockholders’ equity |
$ |
6,688.4 |
|
|
$ |
6,958.3 |
|
| |
|
|
|
|
|
|
|
|
HC2 HOLDINGS, INC. |
|
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
EBITDA |
|
(Unaudited) |
|
|
|
(in millions) |
Three Months Ended September 30, 2020 |
|
|
Infrastructure |
|
Clean Energy |
|
Telecom |
|
Life Sciences |
|
Spectrum |
|
Other and Eliminations |
|
Non-operating Corporate |
|
HC2 |
|
Net loss attributable to HC2 Holdings, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(17.3 |
) |
|
Less: Net income attributable to HC2 Holdings Insurance
segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.7 |
|
|
Less: Consolidating eliminations attributable to HC2 Holdings
Insurance segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.0 |
) |
|
Net Income (loss) attributable to HC2 Holdings, Inc., excluding
Insurance segment |
$ |
2.5 |
|
|
$ |
(3.4 |
) |
|
$ |
2.4 |
|
|
$ |
(4.3 |
) |
|
$ |
(15.7 |
) |
|
$ |
0.2 |
|
|
$ |
(9.7 |
) |
|
$ |
(28.0 |
) |
|
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
2.7 |
|
|
2.2 |
|
|
0.1 |
|
|
— |
|
|
1.7 |
|
|
— |
|
|
0.1 |
|
|
6.8 |
|
|
Depreciation and amortization (included in cost of revenue) |
2.3 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2.3 |
|
|
Other operating (income) expenses |
(0.3 |
) |
|
— |
|
|
— |
|
|
0.1 |
|
|
9.7 |
|
|
— |
|
|
— |
|
|
9.5 |
|
|
Interest expense |
2.1 |
|
|
0.6 |
|
|
— |
|
|
— |
|
|
3.6 |
|
|
— |
|
|
13.4 |
|
|
19.7 |
|
|
Other (income) expense, net |
(0.1 |
) |
|
0.7 |
|
|
(2.1 |
) |
|
0.1 |
|
|
1.4 |
|
|
(0.5 |
) |
|
(6.7 |
) |
|
(7.2 |
) |
|
Loss on early extinguishment of debt |
— |
|
|
5.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5.0 |
|
|
Income tax (benefit) expense |
1.4 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
(2.3 |
) |
|
(0.8 |
) |
|
Noncontrolling interest |
0.1 |
|
|
(1.4 |
) |
|
— |
|
|
(1.8 |
) |
|
(1.1 |
) |
|
(0.1 |
) |
|
— |
|
|
(4.3 |
) |
|
Bonus to be settled in equity |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
|
(0.1 |
) |
|
Share-based payment expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
— |
|
|
0.7 |
|
|
0.8 |
|
|
Discontinued Operations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Non-recurring items |
0.4 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
0.5 |
|
|
Covid-19 Costs |
6.4 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6.4 |
|
|
Acquisition and disposition costs |
0.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
0.2 |
|
|
0.8 |
|
|
1.3 |
|
|
Adjusted EBITDA |
$ |
17.7 |
|
|
$ |
3.7 |
|
|
$ |
0.4 |
|
|
$ |
(5.9 |
) |
|
$ |
(0.2 |
) |
|
$ |
(0.1 |
) |
|
$ |
(3.7 |
) |
|
$ |
11.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Three Months Ended September 30, 2019 |
|
|
Infrastructure |
|
Clean Energy |
|
Telecom |
|
Life Sciences |
|
Spectrum |
|
Other and Eliminations |
|
Non-operating Corporate |
|
HC2 |
|
Net loss attributable to HC2 Holdings, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(7.1 |
) |
|
Less: Net income attributable to HC2 Holdings Insurance
segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5 |
|
|
Less: Consolidating eliminations attributable to HC2 Holdings
Insurance segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.1 |
) |
|
Net Income (loss) attributable to HC2 Holdings, Inc., excluding
Insurance Segment |
$ |
7.0 |
|
|
$ |
(0.1 |
) |
|
$ |
(0.3 |
) |
|
$ |
5.6 |
|
|
$ |
(6.2 |
) |
|
$ |
2.4 |
|
|
$ |
(23.9 |
) |
|
$ |
(15.5 |
) |
|
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
3.9 |
|
|
2.0 |
|
|
0.1 |
|
|
— |
|
|
1.8 |
|
|
— |
|
|
0.1 |
|
|
7.9 |
|
|
Depreciation and amortization (included in cost of revenue) |
2.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2.2 |
|
|
Other operating (income) expenses |
— |
|
|
(0.2 |
) |
|
0.8 |
|
|
— |
|
|
(0.8 |
) |
|
— |
|
|
— |
|
|
(0.2 |
) |
|
Interest expense |
2.3 |
|
|
1.0 |
|
|
— |
|
|
— |
|
|
2.4 |
|
|
— |
|
|
14.4 |
|
|
20.1 |
|
|
Net loss (gain) on contingent consideration |
— |
|
|
— |
|
|
(0.1 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.1 |
) |
|
Other (income) expense, net |
(0.1 |
) |
|
(0.3 |
) |
|
— |
|
|
(8.2 |
) |
|
0.9 |
|
|
0.1 |
|
|
2.7 |
|
|
(4.9 |
) |
|
Foreign currency (gain) loss (included in cost of revenue) |
— |
|
|
— |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
Income tax (benefit) expense |
2.9 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(2.8 |
) |
|
0.1 |
|
|
Noncontrolling interest |
0.5 |
|
|
(0.1 |
) |
|
— |
|
|
(1.4 |
) |
|
(1.1 |
) |
|
0.9 |
|
|
— |
|
|
(1.2 |
) |
|
Share-based payment expense |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
— |
|
|
1.5 |
|
|
1.6 |
|
|
Discontinued operations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(3.5 |
) |
|
2.9 |
|
|
(0.6 |
) |
|
Non-recurring items |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Acquisition and disposition costs |
0.7 |
|
|
— |
|
|
0.2 |
|
|
— |
|
|
1.0 |
|
|
— |
|
|
0.4 |
|
|
2.3 |
|
|
Adjusted EBITDA |
$ |
19.4 |
|
|
$ |
2.3 |
|
|
$ |
0.8 |
|
|
$ |
(4.0 |
) |
|
$ |
(1.9 |
) |
|
$ |
(0.1 |
) |
|
$ |
(4.7 |
) |
|
$ |
11.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HC2 HOLDINGS, INC. |
|
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED
EBITDA |
|
(Unaudited) |
|
|
|
(in millions) |
Nine Months Ended September 30, 2020 |
|
|
Infrastructure |
|
Clean Energy |
|
Telecom |
|
Life Sciences |
|
Spectrum |
|
Other and Eliminations |
|
Non-operating Corporate |
|
HC2 |
|
Net loss attributable to HC2 Holdings, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(87.3 |
) |
|
Less: Net income attributable to HC2 Holdings Insurance
segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.1 |
|
|
Less: Consolidating eliminations attributable to HC2 Holdings
Insurance segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.1 |
) |
|
Net Income (loss) attributable to HC2 Holdings, Inc., excluding
Insurance segment |
$ |
4.0 |
|
|
$ |
(2.4 |
) |
|
$ |
2.9 |
|
|
$ |
(8.7 |
) |
|
$ |
(26.6 |
) |
|
$ |
4.2 |
|
|
$ |
(79.7 |
) |
|
$ |
(106.3 |
) |
|
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
8.0 |
|
|
6.3 |
|
|
0.3 |
|
|
0.1 |
|
|
5.1 |
|
|
— |
|
|
0.1 |
|
|
19.9 |
|
|
Depreciation and amortization (included in cost of revenue) |
6.9 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6.9 |
|
|
Other operating (income) expenses |
(0.2 |
) |
|
— |
|
|
— |
|
|
0.1 |
|
|
7.6 |
|
|
— |
|
|
— |
|
|
7.5 |
|
|
Interest expense |
6.5 |
|
|
3.0 |
|
|
— |
|
|
— |
|
|
10.3 |
|
|
— |
|
|
42.7 |
|
|
62.5 |
|
|
Other (income) expense, net |
— |
|
|
0.8 |
|
|
(2.4 |
) |
|
(2.2 |
) |
|
4.0 |
|
|
(71.8 |
) |
|
(0.1 |
) |
|
(71.7 |
) |
|
Loss on early extinguishment of debt |
— |
|
|
5.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9.2 |
|
|
14.2 |
|
|
Income tax (benefit) expense |
2.5 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
7.4 |
|
|
1.7 |
|
|
11.6 |
|
|
Noncontrolling interest |
0.2 |
|
|
(1.0 |
) |
|
— |
|
|
(4.0 |
) |
|
(3.5 |
) |
|
1.5 |
|
|
— |
|
|
(6.8 |
) |
|
Bonus to be settled in equity |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.5 |
) |
|
(0.5 |
) |
|
Share-based payment expense |
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
0.3 |
|
|
— |
|
|
2.2 |
|
|
2.6 |
|
|
Discontinued Operations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
56.2 |
|
|
3.8 |
|
|
60.0 |
|
|
Non-recurring items |
2.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5.3 |
|
|
7.5 |
|
|
Covid-19 costs |
15.2 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
15.2 |
|
|
Acquisition and disposition costs |
0.5 |
|
|
— |
|
|
0.2 |
|
|
— |
|
|
0.5 |
|
|
1.7 |
|
|
3.0 |
|
|
5.9 |
|
|
Adjusted EBITDA |
$ |
45.8 |
|
|
$ |
11.7 |
|
|
$ |
1.0 |
|
|
$ |
(14.6 |
) |
|
$ |
(2.3 |
) |
|
$ |
(0.8 |
) |
|
$ |
(12.3 |
) |
|
$ |
28.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
Nine Months Ended September 30, 2019 |
|
|
Infrastructure |
|
Clean Energy |
|
Telecom |
|
Life Sciences |
|
Spectrum |
|
Other & Elimination |
|
Non-operating Corporate |
|
HC2 |
|
Net loss attributable to HC2 Holdings, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.5 |
) |
|
Less: Net income attributable to HC2 Holdings Insurance
segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74.6 |
|
|
Less: Consolidating eliminations attributable to HC2 Holdings
Insurance segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7.6 |
) |
|
Net Income (loss) attributable to HC2 Holdings, Inc., excluding
Insurance Segment |
$ |
18.0 |
|
|
$ |
(1.4 |
) |
|
$ |
0.7 |
|
|
$ |
1.6 |
|
|
$ |
(14.1 |
) |
|
$ |
(2.3 |
) |
|
$ |
(70.0 |
) |
|
$ |
(67.5 |
) |
|
Adjustments to reconcile net income (loss) to Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
11.8 |
|
|
4.9 |
|
|
0.3 |
|
|
0.1 |
|
|
4.7 |
|
|
— |
|
|
0.1 |
|
|
21.9 |
|
|
Depreciation and amortization (included in cost of revenue) |
6.7 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
6.7 |
|
|
Other operating (income) expenses |
(0.1 |
) |
|
(0.1 |
) |
|
1.3 |
|
|
— |
|
|
(2.7 |
) |
|
— |
|
|
— |
|
|
(1.6 |
) |
|
Interest expense |
7.0 |
|
|
1.9 |
|
|
— |
|
|
— |
|
|
6.3 |
|
|
— |
|
|
43.1 |
|
|
58.3 |
|
|
Net loss (gain) on contingent consideration |
— |
|
|
— |
|
|
(0.3 |
) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(0.3 |
) |
|
Other (income) expense, net |
0.1 |
|
|
(0.1 |
) |
|
— |
|
|
(8.3 |
) |
|
1.3 |
|
|
(0.1 |
) |
|
3.7 |
|
|
(3.4 |
) |
|
Foreign currency (gain) loss (included in cost of revenue) |
— |
|
|
— |
|
|
0.1 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
Income tax (benefit) expense |
8.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
— |
|
|
(5.3 |
) |
|
2.8 |
|
|
Noncontrolling interest |
1.4 |
|
|
(0.7 |
) |
|
— |
|
|
(2.2 |
) |
|
(2.7 |
) |
|
(0.7 |
) |
|
— |
|
|
(4.9 |
) |
|
Bonus to be settled in equity |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Share-based payment expense |
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|
0.5 |
|
|
— |
|
|
4.0 |
|
|
4.6 |
|
|
Discontinued operations |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5.5 |
|
|
8.2 |
|
|
13.7 |
|
|
Non-recurring items |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Acquisition and disposition costs |
2.0 |
|
|
0.1 |
|
|
0.3 |
|
|
— |
|
|
1.3 |
|
|
— |
|
|
1.0 |
|
|
4.7 |
|
|
Adjusted EBITDA |
$ |
54.9 |
|
|
$ |
4.6 |
|
|
$ |
2.4 |
|
|
$ |
(8.7 |
) |
|
$ |
(5.3 |
) |
|
$ |
2.4 |
|
|
$ |
(15.2 |
) |
|
$ |
35.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HC2 HOLDINGS, INC. |
|
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED OPERATING
INCOME ("INSURANCE AOI") |
|
AND PRE-TAX OPERATING INCOME ("PRE-TAX INSURANCE
AOI") |
|
(Unaudited) |
|
|
|
The table below shows the adjustments made to the reported Net
income (loss) of the Insurance segment to calculate Insurance AOI
and Pre-tax Insurance AOI. |
|
|
|
(in millions) |
Three Months Ended September 30, |
|
Nine months ended September 30, |
|
|
2020 |
|
2019 |
|
Increase / (Decrease) |
|
2020 |
|
2019 |
|
Increase / (Decrease) |
|
Net income - Insurance segment |
$ |
12.7 |
|
|
$ |
10.5 |
|
|
$ |
2.2 |
|
|
$ |
24.1 |
|
|
$ |
74.6 |
|
|
$ |
(50.5 |
) |
|
Effect of investment losses (gains) (1) |
(1.1 |
) |
|
1.9 |
|
|
(3.0 |
) |
|
18.3 |
|
|
(3.6 |
) |
|
21.9 |
|
|
Gain on bargain purchase |
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(1.1 |
) |
|
1.1 |
|
|
Acquisition costs |
0.1 |
|
|
0.2 |
|
|
(0.1 |
) |
|
0.1 |
|
|
2.0 |
|
|
(1.9 |
) |
|
Insurance AOI |
11.7 |
|
|
12.6 |
|
|
(0.9 |
) |
|
42.5 |
|
|
71.9 |
|
|
(29.4 |
) |
|
Income tax expense (benefit) |
2.6 |
|
|
0.9 |
|
|
1.7 |
|
|
(7.0 |
) |
|
3.3 |
|
|
(10.3 |
) |
|
Pre-tax Insurance AOI |
$ |
14.3 |
|
|
$ |
13.5 |
|
|
$ |
0.8 |
|
|
$ |
35.5 |
|
|
$ |
75.2 |
|
|
$ |
(39.7 |
) |
(1) The Insurance segment results are inclusive
of realized and unrealized gains and net investment income for the
three and nine months ended September 30, 2020 and 2019, inclusive
of transactions between entities under common control, which are
eliminated or are reclassified in consolidation.
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