Q4 2023 INNOVATE Corp Earnings Call
Good afternoon, and welcome to innovate Corp's fourth quarter 2020 earnings conference call.
All participants will be in a listen only mode.
After prepared remarks, Ed presentation, there will be a question and answer session.
Please note. This is bad this is being recorded.
I would now like to turn the conference over to Anthony <unk> with Investor Relations. Please go ahead.
Good afternoon. Thank you for being with US to review <unk> fourth quarter 2023 earnings results. We're joined today by globally innovate interim CEO and Mike <unk> CFO.
Yes.
We have posted our earnings release, and our slide presentation on our website at <unk> Dot com.
To begin our call with prepared remarks to be followed by Q&A session.
This call is also being simulcast and will be archived on our web site.
During this call management may make certain statements and assumptions, which are not historical facts will be forward looking and are being made pursuant to the safe Harbor provisions.
The private Securities Litigation Reform Act 1995.
Such forward looking statements involve risks assumptions and uncertainties and are subject to certain assumptions and risk factors that could cause actual results to differ materially from these forward looking statements.
The risk factors that could cause these differences are more fully discussed the cautionary statement that is included in our earnings release and a slide presentation that further detail in our 10.
K and other filings with the SEC in addition.
Forward looking statements included in this conference call are only made as of the date of this call and as stated in our SEC reports.
<unk> disclaims any intent or obligation to update or revise these forward looking statements, except as expressly required by law.
Management will also refer to certain non-GAAP financial measures such as adjusted EBITDA. We believe that these measures provide useful supplemental data that while not a substitute for GAAP measures allow for greater transparency in the review of our financial and operational performance.
At this point, it's my pleasure to turn things over to Paul Blake.
Good afternoon.
Innovate delivered revenues of $361 million and adjusted EBITDA of $21 5 million in the fourth quarter and revenues of $1 4 billion and adjusted EBITDA of $65 million for the full year of 2023.
We are pleased with these results and the performance of our three operating segments in 2023.
To provide some perspective the magnitude of progress at innovate.
When we made the strategic decision to start the transformation of HC two to innovate back in 2020.
At that time annual revenue was $716 9 million.
Adjusted to exclude our former insurance company and adjusted EBITDA was only approximately $25 5 million.
Since then innovate has experienced significant growth and today's results represent roughly a three year 25, 7% CAGR on the top line and approximately 36, 6% CAGR for the adjusted EBITDA.
Over that time DBM has continued to be a cash flow machine for innovate and most recently experienced strong margin expansion in 2023 pants and has benefited from key milestones hit each year by <unk>, <unk> and <unk> and spectrum remains.
<unk> focused on delivering profitability by adding new station bills, launching new networks and existing exiting unprofitable operations.
We're pleased with the progress that innovate has made over the last three years, but there is still much work to be done we will continue to look for ways to optimize the value in each of our assets and remain encouraged by the future prospects at innovate.
Now moving onto the fourth quarter highlights and results.
In the fourth quarter DBM global delivered another strong quarter with revenues of $353 8 million and adjusted EBITDA of $30 million.
Year over year, DBM significantly expanded gross margins by approximately 200 basis points and adjusted EBITDA margin by 25 basis points to 16, 4% and eight 5% respectively.
As we forecasted at the beginning of 2023 DBM delivery to increase adjusted EBITDA margins for the full year 2023, or seven 2% compared to six 4% for the full year 2022.
Dpm's total adjusted backlog, which takes into consideration awarded but not yet signed contracts.
Is beginning to stabilize then was at $1 2 billion at the end of the year.
Given the trend in backlog DBM experienced in the past year.
We'd expect 2024 results for DBM to be slightly lower than 2023 that being said we are optimistic that this will only be a short lived phenomenon. There is opportunities at DBM looks strong exiting the year into 2025 and beyond.
We expect to see more projects of size to enter the pipeline.
Moving on to life Sciences.
<unk> technologies had another incredible quarter on the heels of launching its new glacial FX system in Q3, 2023, or two sold out of glacial FX inventory in Q4, securing <unk> best system sales growth in a single quarter from Q.
Three to Q4, <unk> experienced a 76% increase in North American system sales and in the full year 2023 experienced a 111% increase in north American system sales year over year.
This growth led to our two single largest revenue earnings quarter since inception.
<unk> continued its growth and other areas of the business experiencing a 173% increase in monthly patient treated year over year at 106% increase in average monthly utilization per glacial provider from the same period last year the.
The machine is being used postoperatively to reduce inflammation pain recovery time and for skin conditions and greatly expanded the usefulness of the machine to date <unk> has provided over 20000 patient treatment.
Our two continues to expand global reach in fourth quarter with market approvals received in both Saudi Arabia and the UAE. Additionally market awareness continues to skyrocket from 2022 to 2023 or two experienced the 200.
13% increase in social media impressions.
491% increase in provider locations searches.
And a 50% increase in lead generation and product interest.
Our Q glacial providers surveyed say that the customer satisfaction and practice retention rates have dramatically increased since the introduction of a glacial product solidifying that the glacial product portfolio is the ability to improve patient outcomes through the reduction in inflammation.
<unk> is the new standard of care.
At <unk>. The company continues to work through their substantive review to the kidney monitoring program with the FDA met a beacon met with the FDA in the first quarter of 2024 and is working interactively to resolve the outstanding questions in order to move.
Move to approval status.
<unk> has disclosed positive findings in its pivotal study in 2023 for which it met the pre negotiated primary and secondary endpoints for efficacy and safety respectively.
<unk> can be found at clinical studies Dot Gov.
Study results are expected to post on this site within the next 30 days.
As a reminder, the FDA previously granted FDA breakthrough device designation in the United States.
We continue to be pleased with the progress across the <unk> portfolio.
And at spectrum. The company is gaining considerable traction with sizable new network launches specifically.
Specifically, we've launched free TV and three large sports net networks.
These new network launches include favorable revenue agreements across the board and the early results are promising.
As a reminder, we are also focused on repurposing, our spectrum to maximize revenues.
We're entering into an agreement with the public broadcasters to provide ats.
E <unk> stations to lighthouse their networks signals, we are pursuing a much larger relationship with public media venture group, who we are.
At present over 100, PBS station in major markets across the country.
In addition to light housing PBS signals, we will be pursuing PBS station commercial opportunities and data.
Testing and other profit applications.
As it relates to <unk> TB, we are actively exploring opportunities in the United States and have filed an application with the FCC to convert existing stations to <unk> broadcast in order to participate in phase two proof of concept the most important.
Remind you here is that <unk> technology will be able to readily deliver broadcast signals.
Hundreds of millions of smartphones across the United States using existing technology, we are working closely with Qualcomm.
Technology leader in <unk> Broadcasting this will allow broadcasting to optimize for future revenues moving forward.
We are highly focused on addressing our capital structure, which we believe is the key driver to the two underperformance of our stock price.
Our focus for 2024 will be to utilize our non cash flowing assets to address our capital structure and set the company up for a refinance.
In 2024.
To that end, we continue to make progress exploring opportunities for our non cash flowing businesses. However, exiting these businesses with the right value takes time, we are optimistic on the overall M&A market and hope to reach resolution in 2024 as we are.
We're beginning to see positive indicators in the market along with positive momentum with these assets as discussed above.
We have engaged bankers as there has been incoming interest from strategics and both are to admit a beacon.
As we announced in late February we are launching a fully backstopped $35 million rights offering and a private sale to shore up our liquidity needs for 2024 and believe this will give us the runway we need to push our noncash flowing assets past important milestones and exit these.
This is for the right value.
As we move into 2024 here, we are encouraged by the positioning of each of our business segments and look forward to updating you on their progress throughout the year.
With that I'll turn it over to Mike for a review.
Our financials and capital structure.
Thanks, Paul consolidated total revenue for the fourth quarter of 2023 was $361 million a decrease of 11, 8% compared to $409 3 million in the prior year period.
The decrease was primarily driven by our infrastructure segment.
To a lesser extent our spectrum segment.
Net loss attributable to common stockholders for the fourth quarter of 2023 was $9 $6 million 12 per share compared to a net loss of $7 million or <unk> <unk> per share in the prior year period.
Total adjusted EBITDA was $21 5 million in the fourth quarter of 2023.
Decreased from $28 1 million in the prior year period.
The decrease was driven by our infrastructure life Sciences inspections segments and by the elimination of equity method income from our investment in HMS, which was sold in March of 2023.
Which was partially offset by a non operating and corporate segments.
Our infrastructure revenue decreased seven 9% to $353 8 million.
$97 3 million in the prior year quarter.
This decrease was primarily driven by the timing and size of projects with DB MGH commercial steel fabrication and erection business.
Which was partially offset by an increase in revenue with the industrial maintenance and repair business bankers steel and the construction construction modeling and detailed business due to timing and size of projects.
Infrastructure adjusted EBITDA for the fourth quarter of 2022, a decrease to $30 million from $32 7 million in the prior year period.
The decrease was primarily driven by an increase in recurring SG&A expenses and lower contributions from bankers steel, which was partially offset by increased margins of key industrial maintenance and repair business.
As of December 31, 2020 reported backlog was $1 1 billion and adjusted backlog, which takes into consideration awarded but not yet signed contracts was $1 2 billion.
Compared to reported and adjusted backlog of $1 8 billion at the end of 2022.
As Paul explained earlier would continue to see meaningful opportunities in the market DBM remains focused on converting those opportunities into backlog.
Yes.
AMG ended the quarter with $198 8 billion.
Bill amount of gas, which is a decrease of $44 2 billion from year end 2022.
Barely driven by an early.
Normal debt amortization payments and the reduction of the credit facilities.
<unk> has been able to reduce its debt obligations through early payments and lines of adoptions is invested working capital has begun to return to the business a trend we continue to see it in early 2024.
As the backlog stabilizes, we expect flat working capital needs in 2024.
Additionally, on December 12, 2020 through the globe and UBM entered into an amendment that extended the maturity date of the revolving lines from May 31, 2024, So August 15th 2025.
Chris the interest rate spread for the revolving lines that three 5% across all tiers and established an interest rate floor of $4 two 5%.
At life Sciences, the increase in adjusted EBITDA losses for the quarter was primarily due to higher equity method losses recognized from <unk> investment.
Due to our additional investment into <unk>, which resulted in previously suspended losses to be recognized through new investments caring about being reduced to zero.
This was partially offset by a decrease in SG&A expenses in Q2.
Driven by a decrease in marketing costs as a result of cost reduction initiatives and a decrease in compensation expenses.
At spectrum revenue was $5 7 million, a decrease of $5 million compared to the fourth quarter of 2022, primarily driven by the elimination of advertising revenues.
Which ceased operations at the end of 2022.
This was partially offset by an increase in station revenue, which launched new markets and networks with its customers during 2023.
Spectrum reported adjusted EBITDA in the fourth quarter decreased $1 1 million from $2 5 million in the prior year quarter.
Increase was primarily due to a onetime benefit related to the termination of our stock in the prior year period.
Which was partially offset by a decrease in our reported SG&A expenses in the prior period.
Non operating corporate adjusted EBITDA losses were $2 5 billion for the fourth quarter of 2023 and.
An improvement from the fourth quarter of 2020 to a $1 $2 million.
The improvement was primarily driven by a decrease in bonus expense and legal expenses for the full year adjusted EBITDA losses for 2023 were $13 5 million an improvement from our full year 2022 of $3 2 million.
At the end of the fourth quarter, the company had $88 million of cash and cash equivalents, excluding restricted cash.
$80 4 million as of December 31, 2022.
On a standalone basis as of December 31, our nonoperating corporate segment cash and cash equivalents of $2 5 million compared to $9 1 million at the end of 2022.
Yes.
As mentioned by Paul we were launching a full backstopped right software only private sale to shore up liquidity. The proceeds will be used to settle an intercompany the answers for our February one 2020 for interest payments and to help meet our liquidity needs, while we execute our strategy in 2024.
As of December 31, 2023, and the date at total principal outstanding indebtedness of sundial and $22 8 million.
Down $2 5 million from $725 3 million at the end of 2022.
Driven primarily by the decrease in infrastructures outstanding debt, which was partially offset by corporate senior unsecured note with CGS.
These additional borrowings from launch of capital.
With that.
Operator, we'd now like to open up the call for questions.
Thank you, ladies and gentlemen, we will now conduct the question and answer session. If you have a question. Please press star one.
If you wish to cancel the request please press star two.
One moment for your first question.
Okay.
There are no further questions at this time.
Paul. Please proceed with your closing remarks.
Yes. Thank you I just wanted to say thank you to everybody for your continued support and we're working very hard and diligently to make this a very profitable company. Thank you very much.
Ladies and gentlemen, this concludes today's conference call. Thank you for joining you may now disconnect.