Q2 2024 INNOVATE Corp Earnings Call
Operator: Good afternoon, and welcome to Innovate Corporation's second quarter 2024 earnings conference call. All participants will be in a listen-only mode. After the prepared remarks and presentation, there will be a question and answer session. Please note this event is being recorded. Now, I would like to turn the conference call over to Anthony Rozmus with Investor Relations. Please go ahead.
Operator: Good afternoon and welcome to the Innovate Corporation's second quarter 2024 earnings conference call. All participants will be in a lease and only mode. After the prepared remarks and presentation, there will be a question and answer session. Please note, this event is being recorded.
Speaker Change: Good afternoon and welcome to the Innovate Corporation's second quarter 2024 earnings conference call. All participants will be in a listen-only mode. After the prepared remarks and presentation, there will be a question and answer session.
Anthony Rozmus: And now I would like to turn the conference call over to Anthony Rozmus with Investor Relations.
Speaker Change: Please note this event is being recorded. And now I would like to turn the conference call over to Anthony Rozmus with Investor Relations. Please go ahead.
Anthony Rozmus: Please go ahead. Good afternoon. Thank you for being with us to review and innovate second quarter, 2024 earnings results. We are joined today by Paul Voigt, Innovate's interim CEO, and Mike Sena, Innovate's CFO. We have posted our earnings release and our slide presentation on our website at InnovateCorp.com.
Speaker Change: Good afternoon. Thank you for being with us to review Innovate's second quarter 2024 earnings results.
Anthony Rozmus: We are joined today by Paul Voigt, Innovate's interim CEO, and Mike Sena, Innovate's CFO. We have posted our earnings release and our slide presentation on our website at InnovateCorp.com. We will begin our call with prepared remarks to be followed by a Q&A session. This call is also being simulcast and will be archived on our website.
Anthony Rozmus: We are joined today by Paul Voigt, Innovate's Interim CEO , and Mike Sena, Innovate's CFO . We have posted our earnings release and our slide presentation on our website at InnovateCorp.com. We will begin our call with prepared remarks to be followed by a Q&A session.
Anthony Rozmus: We will begin our call with prepared remarks to be followed by a Q&A session. This call is also being simulcasted and will be archived on our website.
Anthony Rozmus: During this call, management may make certain statements and assumptions that are not historical facts, will be forward-looking, and are being made pursuant to the safe harbor provisions of the Private Security Litigation Reform Act of 1995. Any such forward-looking statements involve risks, assumptions, and uncertainties, and are subject to certain assumptions and risk factors that could cause Innovate's actual results to differ materially from these forward-looking statements. In addition, the forward-looking statements included in this conference call are only made as of this date, and as stated in our SEC report.
Anthony Rozmus: 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 of the Private Securities Litigation Reform Act in 1995. Any such forward looking statements involve risk assumptions and uncertainties and are subject to certain assumptions and risk factors that could cause innovative actual results differ materially from these forward looking statements. The risk factors that could cause these differences are more fully discussed in the cautionary statement that has been included in our earnings release on the slide presentation and further detailed in our 10-K and other filings with the FCC.
Anthony Rozmus: This call is also being simulcast and will be archived on our website.
Anthony Rozmus: During this call, management may make certain
Speaker Change: Statements, and Assumptions, which are not historical facts, will be forward-looking and are being made pursuant to the safe harbor provisions of the Private Security Litigation Reform Act in 1995.
Speaker Change: Any such forward-looking statements involve risks, assumptions, and uncertainties, and are subject to certain assumptions and risk factors that could cause Innovate's actual results to differ materially from these forward-looking statements.
Speaker Change: The risk factors that could cause these differences are more fully discussed in the cautionary statement that is included in our earnings release and the slide presentation and further detailed in our 10-K and other filings with the SEC.
Anthony Rozmus: In addition, the forward-looking statements included in this conference call are only made as of this date and as stated in our SEC reports. Innovate disclaims any intent or obligation to update or revise these forward-looking statements, except as expressly required by law.
Speaker Change: In addition, the forward-looking statements included in this conference call are only made as of this date and as stated in our SEC reports. Innovate disclaims any intent or obligation to update or revise these forward-looking statements except as expressly required by law.
Anthony Rozmus: Innovate disclaims any intent or obligation to update or revise these forward-looking statements except as expressly required by law. We believe these measures provide useful supplemental data that, while not a substitute for gap measures, allow for greater transparency in the review of our financial and operational performance. At this point, it is my pleasure to turn things over to Paul Voigt.
Anthony Rozmus: Management will also refer to certain non-GAAP financial measures such as adjusted EBITDA. We believe these measures provide useful supplemental data that, while not a substitute for GAT measures, allow for greater transparency in the review of our financial and operational performance.
Speaker Change: Management will also refer to certain non-GAAP financial measures such as adjusted EBITDA.
Speaker Change: We believe 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 is my pleasure to turn things over to Paul Voigt.
Paul Voigt: At this point, it is my pleasure to turn things over to the federal board. Good afternoon. Our momentum continued into the second quarter as showcased by our financial results. Innovate delivered revenues of 313.1 million and adjusted EBITDA of 26.7 million in the second quarter of 2024. Rustin and his team delivered another strong quarter at DBNG with revenues of 305.2 million and adjusted EBITDA of 32.5 million. Adjusted EBITDA growth was once again driven by significant gross margin expansion of approximately 650 basis points, 20.2%. Adjusted EBITDA margin also expanded year-over-year by approximately 420 basis points to 10.6% in the second quarter.
Paul Voigt: Good afternoon. Our momentum continued into the second quarter, as showcased by our financial results. Innovate delivered revenues of $313.1 million and adjusted EBITDA of $26.7 million in the second quarter of 2024. Adjusted EBITDA growth was once again driven by significant gross margin expansion of approximately 650 basis points. DBMG has been very active from a project bidding perspective and remains steadfast in assessing opportunities as they come to market. There are a lot of big projects coming online, and I'm confident that we will be able to add substantially to our backlog in a smart and profitable way. Moving on to Life Sciences
Paul Voigt: Good afternoon. Our momentum continued into the second quarter as showcased by our financials results.
Paul Voigt: Innovate delivered revenues of $313.1 million and adjusted EBITDA of $26.7 million in the second quarter of 2024.
Speaker Change: Rustin and his team delivered another strong quarter at DBMG with revenues of $305.2 million and adjusted EBITDA of $32.5 million.
Speaker Change: Adjusted EBITDA growth was once again driven by significant gross margin expansion of approximately 650 basis points
Speaker Change: 20.2%. Adjusted EBITDA margin also expanded year-over-year by approximately 420 basis points to 10.6% in the second quarter.
Paul Voigt: DBNG total adjusted backlog, which takes into consideration awarded but not yet signed contracts, remains at a healthy level of a billion dollars at the end of the second quarter. DBNG has continued to work through its backlog. DBNG has been active from a project bidding perspective and remains steadfast in assessing opportunities as they come to market. There are a lot of big projects coming online, and I'm confident that we will be able to add substantially to our backlog in a smart and profitable way. While we had a strong second quarter and our expectations for the year have improved, we still expect results to be slightly lower than last year.
Speaker Change: CBMG's total adjusted backlog, which takes into consideration awarded but not yet signed contracts, remains at a healthy level of $1 billion at the end of the second quarter.
DBMG: DBMG has continued to work through its backlog.
DBMG: DBMG has been as active from a project bidding perspective and remains steadfast in assessing opportunities as they come to market.
Speaker Change: There are a lot of big projects coming online, and I'm confident that we will be able to add substantially to our backlog in a smart and profitable way.
Speaker Change: While we had a strong second quarter and our expectations for the year have improved, we still expect results to be slightly lower than last year. However, we do expect margin levels to be slightly better than 2023.
Paul Voigt: However, we do expect margin levels to be slightly better than 2023. DBMG continues to have a robust pipeline for 2025.
Speaker Change: DBMG continues to have a robust pipeline for 2025.
Paul Voigt: Moving on to life sciences, R2 posted another fantastic quarter. The success of the recently launched Glacial FX system is clear and lending to phenomenal growth in all aspects of the business. R2 achieved a 200% increase in system unit sales growth from Q2 23 to Q2 24 and a record high system sales in North America for the third quarter in a row. This is the third consecutive quarter posting its largest top line revenue in a single quarter. Worldwide, R2 experienced 143% growth in top line revenue over Q2 2023. We are seeing demand outpaced production, and the team at R2 is focused on ramping up production to meet demand.
Paul Voigt: R2 posted another fantastic quarter. The success of the recently launched GlacialFX system is clear and is lending to phenomenal growth in all aspects of the business. We are seeing demand outpace production, and the team at R2 is focused on ramping up production to meet demand. Glacial providers demonstrated continued utilization growth in previous periods with a 170% increase in patients treated and a 53% increase in average monthly utilization per glacial provider over the same period as last year. This is represented by year-over-year growth of 477% in website users.
Speaker Change: Moving on to Life Sciences. R2 posted another fantastic quarter. The success of the recently launched Glacial FX system is clear and lending to phenomenal growth in all aspects of the business.
Speaker Change: R2 achieved a 200% increase in system unit sales growth from Q2'23 to Q2'24 and a record high system sales in North America for the third quarter in a row.
Speaker Change: This is the third consecutive quarter posting its largest top-line revenue in a single quarter. Worldwide, R2 experienced 143% growth in top-line revenue over Q2 2023.
Speaker Change: We are seeing demand outpace production, and the team at R2 is focused on ramping up production to meet demand.
Paul Voigt: Glacial providers demonstrated continued utilization growth prior periods, with a 170% increase in patients treated and a 53% increase in average monthly utilization per glacial provider over the same period as last year. Glacial brand awareness is growing at an exponential rate due to promotion from existing glacial providers as well as top key opinion leaders in the industry. This is represented by zero-over-year growth of 477% in website users. 1,000 and 6% increase in social mentions and 491% in patient provider searches. R2's engagement growth outpaced industry competitors by 94%. We are encouraged by the momentum of R2 is building in the market as we continue to see expanded use and demand of the state of the art technology, and this momentum has continued into the third quarter.
Speaker Change: Glacial Providers demonstrated continued utilization growth prior periods.
Speaker Change: with a 170% increase in patients treated and a 53% increase in average monthly utilization per glacial provider over the same period as last year.
Speaker Change: Glacial brand awareness is growing at an exponential rate due to promotion from existing glacial providers as well as top key opinion leaders in the industry.
Speaker Change: This is represented by year-over-year growth of 477% in website users.
Speaker Change: 1,006% increase in social mentions and 491% in patient provider searches.
Speaker Change: R2's engagement growth outpaced industry competitors by 94%.
Speaker Change: We are encouraged by the momentum of R2 is building in the market as we continue to see expanded use and demand of the state-of-the-art technology and this momentum has continued into the third quarter.
Paul Voigt: We expanded ourselves of the glacial product into the US, Mexico, Canada, China, and the Middle East. Additionally, during the second quarter, we closed the new Series D preferred stock investment in R2. As part of the transaction, R2 converted 15.5 million of vendor company notes and related accrued interest that was previously issued into Series D shares, as well as an additional 5.8 million of cash. PanSense ownership increased to 81.4% as compared to 56.8% prior to their transaction. On a fully diluted basis, PanSense now owns 73.1% at the end of the second quarter.
Speaker Change: We expanded our sales of the Glacial product into the U.S., Mexico, Canada, China, and the Middle East.
Paul Voigt: Additionally, during the second quarter, we closed a new Series D preferred stock investment in R2. As part of the transaction, R2 converted $15.5 million of intercompany notes and related accrued interest that was previously issued into Series D shares, as well as an additional $5.8 million of cash. Hanson's ownership increased to 81.4% as compared to 56.8% prior to their transaction.
Speaker Change: Additionally, during the second quarter, we closed the new Series D preferred stock investment in R2.
Speaker Change: As part of the transaction, R2 converted $15.5 million of intercompany notes and related accrued interest that was previously issued into a Series D shares, as well as additional $5.8 million of cash.
Speaker Change: Pan Sen's ownership increased to 81.4% as compared to 56.8% prior to their transaction. On a fully diluted basis, Pan Sen now owns 73.1% at the end of the second quarter.
Paul Voigt: At Metabeacon, we continue to work through substantive review of the Kidney Monitoring Program with the FDA. Metabeacon continues to see great opportunity in the market for real-time monitoring of Kidney Funks. of the United States. This is evidenced further by continued Metabican R&D collaborations with leading healthcare industry partners. Nephrology continues to be a key investment focus for pharmaceutical companies globally. Assessment of kidney functions across a range of clinical settings is growing in importance, in part to the expansion of potential therapeutic interventions which are designed to slow the development of kidney disease. Furthermore, Metabican's landmark peer-reviewed publication in Kidney International in July 2024 describes broadly the company's technology as a reference standard for the measurement of GFR kidney function.
Speaker Change: At MediBeacon, we continue to work through substantive review of the kidney monitoring program with the FDA. MediBeacon continues to see great opportunity in the market for real-time monitoring of kidney functions.
Paul Voigt: This is evidenced further by continued MetaBeacon R&D collaborations with leading healthcare industry partners. Furthermore, MetaBeacon's landmark peer-reviewed publication in Kidney International in July 2024 describes broadly the company's technology as a reference standard for the measurement of GFR kidney function. Kidney International is one of the top peer-reviewed nephrology journals globally.
Speaker Change: This is evidenced further by continued MetaBeacon R&D collaborations with leading healthcare industry partners.
Speaker Change: Nephrology continues to be a key investment focus for pharmaceutical companies globally.
Speaker Change: Assessment of kidney functions across a range of clinical settings is growing in importance in part to the expansion of potential therapeutic interventions which are designed to slow the development of kidney disease.
Speaker Change: Furthermore, MetaBeacon's landmark peer-reviewed publication in Kidney International in July 2024 describes broadly the company's technology as a reference standard for the measurement of GFR kidney function.
Paul Voigt: Kidney International is one of the top peer-reviewed nephrology journals globally. The company received immediate positive feedback from the prominent clinicians and key opinion leaders.
Speaker Change: Kidney International is one of the top peer-reviewed nephrology journals globally.
Paul Voigt: The company received immediate positive feedback from prominent clinicians and key opinion leaders, and Abbenavir, which was sold to Janssen Biotech, Inc., one of Janssen's pharmaceutical companies of Johnson & Johnson back in 2018, entered phase one of the clinical study related to the oncolytic virus as monotherapy and in combination for the Vance solid tumor. Moving on to Spectrum, Letts and the team delivered another strong quarter as we are incrementally adding to the top line, which has, in turn, led to better profitability.
Speaker Change: The company received immediate positive feedback from the prominent
Paul Voigt: And at Fennevere, which was sold to Janssen Biotech Inc., one of Janssen's pharmaceutical companies of Janssen and Janssen back in 2018, entered phase one of the clinical study related to the oncolytic virus as monotherapy and in combination for the advanced solid tumors.
Speaker Change: Clinicians, and Key Opinion Leaders.
Speaker Change: and Abbenavir, which was sold to Janssen Biotech, Inc.
Speaker Change: One of Janssen's pharmaceutical companies of Johnson & Johnson back in 2018.
Speaker Change: Entered phase one of the clinical study related to the oncolytic virus as monotherapy and in combination for the advanced solid tumors.
Paul Voigt: Moving on to Spectrum, Less and the team delivered another strong quarter as we are incrementally adding to the top line, which has in turn led to better profitability. In the second quarter, Spectrum nearly doubled their adjusted EBITDA to 1.5 million year-over-year. We continue to see revenue and adjusted EBITDA growth driven by the launch of new networks, reduce, turn, and continued cost-cutting. On July 1, Free TV launched their third network, DeFi, with AC2 providing broadcast distribution across 60% of the United States. Additionally, we recently launched news channels, Salem Media, and First TV that are benefiting from the in-focus presidential news cycle.
Paul Voigt: In the second quarter, Spectrum nearly doubled their adjusted EBITDA to 1.5 million year-over-year. On July 1st, Free TV launched a third network, Defy, with AC2 providing broadcast distribution across 60% of the United States. Additionally, Spectrum continues to work with the Public Media Venture Group, PMVG, to advance our collaborative efforts with PBS stations across the country in areas such as ATS, 3.0, and DataCast. The FCC recently announced strong regulatory incentives for low-power and Class A TV stations, which HE2 broadcasting is taking full advantage of by preparing to submit engineering modifications to optimize station performance and selective marketing.
Speaker Change: Moving on to Spectrum, Les and the team delivered another strong quarter as we are incrementally adding to the top line, which has in turn led to better profitability. In the second quarter, Spectrum nearly doubled their adjusted EBITDA to 1.5 million year over year.
Speaker Change: We continue to see revenue and adjusted EBITDA growth driven by the launch of new networks, reduced churn, and continued cost cutting.
Speaker Change: On July 1st, Free TV launched their third network, Defy, with AC2 providing broadcast distribution across 60% of the United States.
Speaker Change: Additionally, we recently launched news channels, Salem Media and First TV that are benefiting from the in-focus presidential news cycle.
Paul Voigt: Additionally, Spectrum continues to work with the public media venture group, TMVG, to advance our collaborative efforts with PVF stations across the country in areas such as ATF 3.0 and data casting. Overall, OTA broadcast market continues to strengthen as advertising continues to show improvement over the prior two years. The FCC recently announced strong regulatory incentives to low power and class ATV stations, which HG2 Broadcasting is taking full advantage of by preparing to submit engineering modifications to optimize station performance and selective markets. As it relates to 5G broadcasting, we are working closely with Qualcomm, among other companies, to explore potential opportunities in the United States.
Speaker Change: Additionally, Spectrum continues to work with the Public Media Venture Group, PMVG, to advance our collaborative efforts with PBS stations across the country in areas such as ATF, 3.0, and data casting.
Speaker Change: Overall, OTA broadcast market continues to strengthen as advertising continues to show improvement over the prior two years.
Speaker Change: The FCC recently announced strong regulatory incentives to low-power and Class A TV stations, which HE2 broadcasting is taking full advantage of by preparing to submit engineering modifications to optimize station performance in selective markets.
Speaker Change: As it relates to 5G broadcasting, we are working closely with Qualcomm, among other companies, to explore potential opportunities in the United States.
Paul Voigt: And finally, Spectrum is beginning to selectively add stations in markets where we have no coverage and a file to acquire station in Monterey, California, which will strengthen our statewide coverage in California.
Speaker Change: And finally, Spectrum is beginning to selectively add stations in markets where we have no coverage and have filed to acquire a station in Monterey, California, which will strengthen our statewide coverage in California.
Paul Voigt: Renew. We are very happy with the operational results of all three of our segments, as DBMG continues to perform at a high level with a robust pipeline. Encouraging growth and momentum in R2, progressive metabekin, and an increase in OTA demand combined with next-gen opportunities continue to develop. We continue to be highly focused on addressing our capital structure, which we believe is the key driver in the underperformance of our stock price. We have now closed on our rights offering, and an inter-company transaction where DBMG redeemed 41.8 million of a preferred stock in cash, which was upstream to Innovate and has created sufficient runway to execute our strategy to utilize our non-cash flowing assets to address our capital structure and set the company up to refinance our debt later this year.
Paul Voigt: We are very happy with the operational results of all three of our segments as DBMG continues to perform at a high level with a robust pipeline, encouraging growth and momentum at R2, progress at MetaBeacon, and an increase in OTA demand combined with next-gen opportunities continue to develop. To that end, we continue to make progress exploring opportunities for our non-cash flowing businesses. Our focus remains on being patient within the time frame we created to ensure that we maximize the value of these assets.
Speaker Change: We are very happy with the operational results of all three of our segments as DBMG continues to perform at a high level with a robust pipeline.
Speaker Change: Developers, Encouraging Growth and Momentum at R2, Progress at MetaBeacon, and an increase in OTA demand combined with next-gen opportunities continue to develop.
Speaker Change: We continue to be highly focused on addressing our capital structure, which we believe is the key driver in the underperformance of our stock price.
Speaker Change: We have now closed on our rights offering.
Speaker Change: and an intercompany transaction where DBMG redeemed $41.8 million of a preferred stock in cash, which was upstream to Innovate, and has created sufficient runway to execute our strategy to utilize our non-cash flowing assets.
Speaker Change: to address our capital structure and set the company up to refinance our debt later this year.
Paul Voigt: To that end, we continue to make progress exploring opportunities for our non-cash flowing businesses. Our focus remains on being patient within the time frame we created to ensure that we maximize the value of these assets. Exiting these businesses for the right value takes time. We continue to be optimistic on the overall M&A market and hope to reach resolution later this year as we continue to see positive indicators in the market, along with continued progress and momentum surrounding these assets, as discussed above. We look to build off this momentum from the second quarter and continue for the remainder of the year.
Speaker Change: To that end, we continue to make progress exploring opportunities for our non-cash flowing businesses.
Speaker Change: Our focus remains on being patient within the time frame we created to ensure that we maximize the value of these assets.
Paul Voigt: Exiting these businesses for the right value takes time. We continue to be optimistic about the overall M&A market and hope to reach resolution later this year as we continue to see positive indicators in the market along with continued progress and momentum surrounding these assets, as discussed above.
Speaker Change: Exiting these businesses for the right value takes time.
Speaker Change: We continue to be optimistic on the overall M&A market and hope to reach resolution later this year as we continue to see positive indicators in the market along with continued progress and momentum surrounding these assets as discussed above.
mike sener: We look to build off this momentum from the second quarter and continue for the remainder of the year. With that, I'll turn it over to Mike Sena for a review of our financials and capital structure.
Michael Sena: With that, I'll turn it over to Mike Santa for a review of our financials and capital structure. Thanks, Paul. Consolidated total revenue for the second quarter of 2024 was 313.1 million. A decrease of 15.1 percent compared to 368.8 million in the prior year period. The decrease was primarily driven by our infrastructure segment, which is partially offset by the increases at our life sciences and spectrum segments. Net income attributed to common stockholders and participating preferred stockholders for the second quarter of 2024 was 14.1 million, or 10 cents per fully diluted share, compared to a net loss of 10.5 million, or 13 cents per fully diluted share in the prior year period.
Mike Sener: Thanks, Paul. Consolidated total revenue for the second quarter of 2024 was $313.1 million, a decrease of 15.1% compared to $368.8 million in the prior year period.
Mike Sener: The decrease was primarily driven by our infrastructure segment, which was partially offset by increases at our life sciences and spectrum segments.
Paul Voigt: Net income attributed to common stockholders and participating preferred stockholders for the second quarter of 2024 was $14.1 million or $0.10 per fully diluted share compared to a net loss of $10.5 million or $0.13 per fully diluted share in the prior year period, both of which had increased activity in the comparable period on certain large commercial construction projects that are now at or near completion in the current period. This is partially offset by an increase in the industrial maintenance or repair business as a result of an increase in project work.
Mike Sener: Net income attributed to common stockholders and participating preferred stockholders for the second quarter of 2024 was $14.1 million, or $0.10 per fully diluted share, compared to a net loss of $10.5 million, or $0.13 per fully diluted share in the prior year period.
Michael Sena: Total adjusted even up was 26.7 million in the second quarter of 2024, an increase from 16.5 million in the prior year period. The increase is driven by all segments, with the exception of the life sciences segment, primarily as a result of timing and previously unrecognized losses for MetaBeacon. At infrastructure, revenue decreased 15.8 percent to 305.2 million from 362.4 million in the prior year quarter. This decrease was primarily driven by the timing and size of projects of Banker Steel and DBMG's commercial structural steel fabrication and erection business. Both of which had increased activity in the comparable period on certainly large commercial construction projects that are now at or near completion in the current period.
Mike Sener: Total adjusted EBITDA was $26.7 million in the second quarter of 2024, an increase from $16.5 million in the prior year period.
Speaker Change: theincrease is driven by all segments with the exception of life science at segment primarily as a result of timing of previously unrecognized losses for metap
Speaker Change: At Infrastructure, revenue decreased 15.8% to $305.2 million from $362.4 million in the prior year quarter.
Speaker Change: This decrease was primarily driven by the timing and size of projects at Banker Steel and DBMG's Commercial Structural Steel Fabrication and Erection business.
Speaker Change: Both of which had increased activity in the comparable period on certain large commercial construction projects that are now at or near completion in the current period.
Michael Sena: This is partially offset by an increase of the industrial maintenance or repair businesses as a result of an increase in project work. Infrastructure of Justity, but it for the second quarter of 2024, increased to 32.5 million from 23.5 million in the prior year period. The increase was driven by higher margins and certainly large commercial construction projects that are now at or near completion in the current period at BBMG's commercial structural steel fabrication and erection business. This increase was partially offset by a decrease in margins at Banker Steel due to the timing of completion of a large commercial construction project and an increase in repairing SGNA expenses.
Speaker Change: This is partially offset by an increase in the industrial maintenance and repair business as a result of an increase in project work.
Paul Voigt: Infrastructure adjusted EBITDA for the second quarter of 2024 increased to $32.5 million from $23.5 million in the prior year period. As of June 30, 2024, and in line with our expectation, reported backlog was $822.7 million, and adjusted backlog, which takes into consideration awarded but not yet signed contracts, was $1 billion, compared to reported backlog of $1.1 billion and adjusted backlog of $1.2 billion at the end of 2023. DBMG entered the quarter with $173.8 million in principal amount of debt, which is an increase of $14.1 million from the first quarter, primarily driven by an amendment to the credit agreement, which added an incremental separate term loan of $25 million, which was partially offset by the termination of a number of smaller networks and individual markets subsequent to the comparable period. Improvement was primarily driven by a decrease in compensation-related expenses due to headcount changes and a decrease in legal
Speaker Change: Infrastructure adjusted EBITDA for the second quarter of 2024 increased to $32.5 million from $23.5 million in the prior year period.
Speaker Change: The increase was driven by higher margins on certain large commercial construction projects that are now at or near completion in the current period at DBMG's Commercial Structural Steel Fabrication and Erection business.
Speaker Change: This increase was partially offset by a decrease in margins at Bankers Steel due to timing of completion of a large commercial construction project.
Speaker Change: and an increase in recurring SG&A expenses.
Michael Sena: As of June 30, 2024, an inline with our expectation reported backlog was a 122.7 million and adjusted backlog which takes into consideration awarded but not yet signed contracts was 1 billion compared to reported backlog of 1.1 billion and adjusted backlog of 1.2 billion at the end of 2023. BBMG entered the quarter with 173.8 million in principal amount of debt, which is an increase of 14.1 million from the first quarter, primarily driven by an amendment to the credit agreement which had an incremental separate term loan of 25 million, which was partially offset by a pre-pim and as a result of property sales and normal debt amortization payments.
Speaker Change: As of June 30, 2024, and in line with our expectation, reported backlog was $822.7 million, and adjusted backlog, which takes into consideration awarded but not yet signed contracts,
Speaker Change: was $1 billion compared to reported backlog of $1.1 billion and adjusted backlog of $1.2 billion at the end of 2023.
Speaker Change: BBMG entered the quarter with $173.8 million in principal amount of debt, which is an increase of $14.1 million from the first quarter, primarily driven by an amendment to the credit agreement which added an incremental separate term loan of $25 million.
Speaker Change: which was partially offset by a prepayment as a result of property sales and normal debt amortization payments.
Michael Sena: BBMG has been able to reduce its debt obligations through line reduction, as invested work in capital has continued to return to the business, a trend that began at the end of 2023. As the backlog stabilizes, we expect flat work in capital needs throughout 2024. As a reminder, BBMG has reduced its outstanding debt by approximately 59 million in the last nine months. At Life Sciences, revenue increased 142.9% to 1.7 million from 700,000 in the prior year quarter. The increase in revenue was attributable to R2 primarily due to incremental unit sales from the launch of the glacial affect system in the second half of 2023, and an increase in glacial RX units so compared to the prior year period.
Speaker Change: DBMG has been able to reduce its debt obligations through line reduction as invested working capital has continued to return to the business.
Speaker Change: a trend that began at the end of 2023.
Speaker Change: As the backlog stabilizes, we expect flat work and capital needs throughout 2024.
Speaker Change: As a reminder, DBMG has reduced its outstanding debt by approximately $59 million in the last 12 months.
Speaker Change: At Life Sciences, revenue increased 142.9% to $1.7 million from $700,000 in the prior year quarter.
Speaker Change: The increase in revenue was attributable to R2, primarily due to incremental unit sales from the launch of the Glacial FX system in the second half of 2023, and an increase in Glacial RX units sold compared to the prior year period.
Michael Sena: Life sciences adjusted even losses increased in the quarter, which was primarily due to higher equity-backed losses recognized in my investment in Medicaid. Expectrum revenue was 6.2 million and increase of 0.5 million compared to the second quarter of 2023, primarily driven by network launches and expanded coverage with existing customers, which was partially offset by determination of a number of smaller networks and individual markets subsequent to the comparable period. Spectrum reported adjusted even in the second quarter increased to 1.5 million from 0.8 million in the prior year quarter. The increase was primarily due to the increase in revenue.
Speaker Change: Life Sciences adjusted EBITDA losses increased for the quarter, which was primarily due to higher equity method losses recognized in our investment in MediBit.
Speaker Change: At Spectrum, revenue was $6.2 million, an increase of $0.5 million compared to the second quarter of 2023, primarily driven by network launches and expanded coverage with existing customers.
Speaker Change: which is partially offset by the termination of a number of smaller networks and individual markets subsequent to the comparable period.
Speaker Change: Spectrum reported adjusted EBIT in the second quarter increased to 1.5 million from 0.8 million in the prior year quarter. The increase was primarily due to the increase in revenue.
Michael Sena: Now an operating corporate adjusted even losses were 2.5 million for the second quarter of 2024, an improvement from the second quarter of 2023 of 0.9 million. The improvement was primarily driven by decreasing compensation-related expenses due to head count changes in the decrease in legal fees. At the end of the second quarter, the company had 80.2 million of cash and cash equivalence, excluding restricted cash, compared to 80.8 million as of December 31, 2023. On a standalone basis, as of June 30, 2024, our non-operating corporate segment had cash and cash equivalence of 43.6 million compared to 2.5 million at the end of 2023.
Speaker Change: Non-Operating Corporate Adjusted EBITDA Losses were $2.5 million for the second quarter of 2024, an improvement from the second quarter of 2023 of $0.9 million.
Speaker Change: Improvement was primarily driven by a decrease in compensation-related expenses due to headcount changes and a decrease in legal fees.
Speaker Change: At the end of the second quarter, the company had $80.2 million of cash and cash equivalents, excluding restricted cash, compared to $80.8 million as of December 31, 2023.
Paul Voigt: Excluding Restricted Cash, compared to $80.8 million as of December 31, 2023. On a standalone basis, as of June 30, 2024, our non-operating corporate segment had cash and cash equivalents of $43.6 million compared to $2.5 million at the end of 2023. As announced earlier in the year, we received notice that we are not in compliance with the NYSC listing requirement as our stock prices fall below $1 per share. As of June 30, 2024, Innovate had total principal outstanding indebtedness of $698 million, down $24.8 million from $722.8 million at the end of 2023, driven by the decrease in infrastructure's outstanding debt and a decrease in corporate debt as a result of the partial redemption of the This was partially offset by R2's extension with Lancer Capital, which capitalized interest payments into the principal balance.
Speaker Change: On a stand-alone basis, as of June 30, 2024, our non-operating corporate segment had cash and cash equivalents of $43.6 million compared to $2.5 million at the end of 2023.
Michael Sena: As Paul mentioned earlier, Innovate received 41.8 million in cash in the second quarter as a result of the inter-company preferred stock redemption at DBMJ. As announced earlier in the year, we received notice that we are not in compliance with the NYSE listing requirement as our stock price has fallen below $1 per share. As previously disclosed, effective August 8, 2024, after market closed, the board approved the 1-for-10 reverse stock split to increase the per share marketplace to meet the minimum per share requirements of the NYSE. As of June 30, 2024, Innovate had total principal outstanding indebtedness of $698 million, down $24.8 million from $722.8 million at the end of 2023, driven by the decrease in infrastructures outstanding debt, a decrease in corporate debt as a result of the partial redemption of the CGIC note, which was partially offset by R2's extension with Lancer Capital, which capitalized interest payments into the principal bounds.
Paul Voigt: as paul mentioned earlier innobitate received forty-one point eight million in cash in the second quarter as a result of the inter company preferred stock redemption of dbmj
Paul Voigt: As announced earlier in the year, we received notice that we are not in compliance with the NYSC listing requirement as our stock prices fall below $1 per share.
Paul Voigt: As previously disclosed, effective August 8, 2024, after market closed, the board approved the 1 for 10 reverse stock split to increase the per share market price to meet the minimum per share requirements of the NYSC.
Paul Voigt: As of June 30, 2024, Innovate had total principal outstanding indebtedness of $698 million.
Paul Voigt: Down $24.8 million from $722.8 million at the end of 2023.
Paul Voigt: driven by the decrease in infrastructure's outstanding debt, a decrease in corporate debt as a result of the partial redemption of the CGIC note, which was partially offset by R2's extension with Lancer Capital, which capitalized interest payments into the principal balance.
Operator: With that, operator would now like to open up the corporate questions. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speaker phone, please make sure to lift the handset before pressing any keys.
Speaker Change: With that, Operator, we'd now like to open up the call for questions.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchtone phone.
Operator: You will hear a prompt that your hand has been raised. One moment while we prepare the Q&A roster. Your first question comes from the line of Brian Charles from RW. Please go ahead. Hi, good afternoon.
Speaker Change: you will hear a prompt that your hand has been raised
Speaker Change: Should you wish to decline from the polling process, please press star followed by the number 2.
Speaker Change: If you are using a speakerphone, please make sure to lift the handset before pressing any keys.
Brian Charles: One moment while we prepare the Q&A roster. Your first question comes from the line of Brian Charles from R.W.
Brian Charles: Okay, in the bidding process, are they seeing, is it a competitive market? Are there some things that are just too tight for you?
Speaker Change: One moment while we prepare the Q&A roster.
Speaker Change: Thank you for watching. I hope you enjoyed this video. I'll see you in the next one.
Speaker Change: Your first question comes from the line of Brian Charles from RW. Please go ahead.
Brian Charles: Please go ahead. Hi, good afternoon. Can you hear me okay?
Brian Charles: Hi, good afternoon. Can you hear me okay?
Brian Charles: I'm sorry, gentlemen. Can you hear me? A fire away? We can hear you. Go ahead. Okay, great. Thanks. It's a couple of questions. Thanks for taking my question. A couple of questions about the backlog. It has come down, and it's really not much below guidance, but could you just go ahead, sort of the tenor of the backlog? I know you've been delivered in your bidding process, but are you getting enough interest so that you're pretty confident that the backlog is going to play pretty much where it is.
Brian Charles: I might have a bad connection. I'm sorry. Gentlemen, can you hear me? Fire away. We can hear you. Go ahead.
Speaker Change: okay good effect
Brian Charles: A couple of questions about the backlog. It has come down, and it's really not much below guidance, but could you describe sort of the...
Speaker Change: kind of the tenor of the backlog. I know you've been deliberate in your bidding process, but are you, you know, are you getting enough interest such that you're pretty confident the backlog is going to stay pretty much where it is?
Michael Sena: I mean, this is Mike, Ted Brown. How you doing? So, you know, we kind of said in the beginning of the year, we expected that cloud to kind of stabilize. It was sitting at that on an adjusted basis, 1.2 billion level. It has come down a little bit, but you know, there is some timing aspects to these things, and it's sitting at a billion. Rusten's town, I'll see still sees a ton of bidding activity, and we're pretty, you know, confident in these guys to be able to convert as these projects come into the market.
Mike Brown: Yeah, I mean, this is Mike. Hi, Brian . How you doing? So, you know, we kind of said in the beginning of the year, we expect the backlog to kind of stabilize. It was sitting at that.
Speaker Change: on an adjusted basis, 1.2 billion level. It has come down a little bit, but you know there is some timing aspects to these things and it's sitting at a billion.
Speaker Change: Rustin's telling us he still sees a ton of bidding activity and we're pretty You know confident in these guys to be able to to convert as these projects come into into the market. So
Michael Sena: So, okay. In the bidding process, they seem, is it a competitive market, or are there some things that are just too tight for you to really, it is a competitive market for sure. There are some projects that, you know, Rusten is doing a good job of making sure that they're getting profitable jobs that make sense to do. And so, you know, we're sitting in a position where we see a lot of RFPs out there, but you know, less are getting released right now. And you know, as we kind of work through the year, you know, the expectation is that they will get released, and we will participate as the management team will assess.
Speaker Change: Okay, in the bidding process, are they seeing, is it a competitive market or are there some things that are just too tight for you to really?
Speaker Change: It is a competitive market for sure. There are some projects that
Mike Brown: You know, Rustin is doing a good job of making sure that their
Rustin: Getting profitable jobs that make sense to do.
Mike Brown: And so, you know, we're sitting in a position where we see a lot of RFPs out there.
Mike Brown: But, you know, less are getting released right now. And, you know, as we kind of work through the year,
Mike Brown: You know, the expectation is that they will get released and we will participate as the management team always has.
Michael Sena: Okay. Yeah, I'm sorry, not to keep arguing, but just one last question on this. Just given the state of the market now, would you expect margins to remain stable in 2025, or might they come down a bit just because the market seems a bit more competitive? Well, I think there are some pressures on margins in the market, is what we've been told. But again, I think there is a significant amount of projects out there in the market. You know, we expect for 24 to kind of see margins slightly better than we did last year, and you know, we'll see as we kind of work through and receive some of the other successful in winning some of the projects that are out there.
Speaker Change: Okay. Yeah, I'm sorry not to keep harping, but just one last question on this. Just given the state of the market now, would you expect margins to remain stable in 2025 or might they come down a bit just because the market seems a bit more competitive?
Paul Voigt: I think there are some pressures on margins in the market, which is what we've been told. But again, I think there are a significant amount of projects out there in the market. We expect for 24 to kind of see margins slightly better than we did last year. And, you know, we'll see as we kind of work through and receive some of the other successes in winning some of the projects that are out there.
Speaker Change: Well, I think there are some pressures on margins in the market, is what we've been told. But again, I think there is a significant amount of
Mike Brown: Projects out there in the market.
Speaker Change: We expect for 24 to kind of see margins slightly better than we did last year.
Speaker Change: And, you know, we'll see as we kind of work through and receive some of the other successful in winning some of the projects that are out there.
Brian Charles: Okay, all right, thanks. I appreciate that color.
Brian Charles: Okay, all right, thanks. Appreciate that color.
Brian Charles: Away from that, one of the questions on Metabeekin, I know you've been working with the FDA. Is there any color or maybe update to a timeframe for when you might get some approvers there? Yeah, I mean, we continue to work through the process with the FDA, and as soon as we have more information to provide, we'll certainly update the market. Okay. Okay, thanks.
Speaker Change: Okay, all right, thanks. Appreciate that color. Away from that, one other question on MetaBeacon. I know you've been working with the FDA. Is there any color or maybe update to a time frame for when you might get some approvals there?
Brian Charles: Away from that, one other question on MetaBeacon. I know you've been working with the FDA. Is there any color or maybe an update on a time frame for when you might get some approvals there?
Speaker Change: Yeah, I mean, we continue to work through the process with the FDA and as soon as we have more information to provide, we'll certainly update the market.
Brian Charles: And for the eight and a half percent note, I know they're not due until February 2026, where you talked about addressing them this year. Have you had any conversations with bondholders? Are we started that? Are you getting some other ducks in the road before we do that? Yeah, I mean, we are not ready to have, I guess, refinancing discussions at this point, but we do talk to our bondholders on a regular basis and try and be very transparent as to where we are.
Speaker Change: Okay, okay, thanks. And for the eight and a half percent notes, I know they're not due until February 2026, but you've talked about addressing them this year. Have you had any conversations with bondholders? Have they started that? Or are you getting some other ducks in a row before you do that?
Paul Voigt: Yeah, I mean, we are not ready to have, I guess, refinancing discussions at this point, but we do talk to our bondholders on a regular basis and try and be very transparent as to where we are. As you know, we're exploring strategic alternatives with our life sciences businesses. And, you know, as we get further along in that process, we think that, you know, there'll be a good time to start talking about refinancing as we kind of near the end of the year. Okay.
Speaker Change: Yeah, I mean...
Speaker Change: We are not ready to have
Speaker Change: I guess, refinancing discussions at this point, but we do talk to our bondholders on a regular basis and try and be very transparent as to where we are. As you know, we're exploring strategic alternatives with our life sciences businesses.
Michael Sena: As you know, we're exploring strategic alternatives with our life sciences businesses. and you know, as we get further along in that process, you know, we think that, you know, there will be a right time to start talking about refinancing as we come near the end of the year.
Speaker Change: And, you know, as we get further along in that process, you know, we think that, you know, there'll be a right time to start talking about refinancing as we come near the end of the year.
Brian Charles: Okay. Okay. Thanks for that. I'll get back to you. Great, thanks.
Speaker Change: Okay, okay, thanks for that. I'll get back with you.
Speaker Change: Great. Thanks.
Speaker Change: i me
Operator: Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star one on your telephone keypad. And if you are using a speaker phone, please make sure to lift your handset before pressing any keys.
Operator: Ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star one on your telephone keypad. And if you are using a speakerphone, please make sure to lift your handset before pressing any key.
Speaker Change: ladies and gentlemen as a reminder if you'd like it to ask a question please press star one on your telephone key pad and if you are using a speaker phone please make sure to lift your handset before press any keys
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Paul Voigt: There are no further questions at this time, so I'll hand a call over back to Paul Voigt, CEO, for closing remarks. Please go ahead. Thank you very much to everybody who lives into the call. We look forward to being transparent and talking to you guys in the future with some positive news on the sale of the healthcare assets. Appreciate everybody's support and look forward to our next call. Thank you.
paulvo: There are no further questions at this time, so I'll hand the call over back to Paul Voigt, CEO , for closing remarks. Please go ahead.
Paul Voigt: yes thank you very much to everybody who look into the call we' look forward to being transparent and talking toyou guys in the future with some positive news on the sale of the health care assets appreciate everybody support and look forward to our next call thank you
Operator: Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.
Operator: Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.
Speaker Change: Ladies and gentlemen, this concludes today's conference. Thank you for your participation. You may now disconnect.