NEW YORK, Nov. 08, 2017 (GLOBE NEWSWIRE) -- HC2 Holdings, Inc. (“HC2”) (NYSE:HCHC), a diversified holding company, announced today its consolidated results for the third quarter 2017, which ended on September 30, 2017.
“We continue to demonstrate the power of the HC2 business model during and after what was a very active third quarter,” said Philip Falcone, HC2's Chairman, President and Chief Executive Officer. “In addition to delivering sequential growth in Adjusted EBITDA, DBM Global posted another record backlog, coming in at $656 million for the third quarter, up 106% year-over-year. Demonstrating DBM’s extensive capabilities to execute on large, complex, profitable projects, Rustin Roach and the team were recently selected to provide steel pre-construction services, fabrication and final erection for the construction of the shell and roof assembly of the new National Football League stadium in Inglewood, California, the new home of the Los Angeles Rams and Los Angeles Chargers. Global Marine Systems also reported sequential improvement in Adjusted EBITDA and record backlog and its Huawei Marine joint venture posted backlog close to their historic highs. Global Marine was also recently awarded a five-year renewal of the South East Asia and Indian Ocean Cable Maintenance Agreement maintenance contract, and currently delivers support in three of the world’s six maintenance zone agreements.”
Mr. Falcone continued, “During the third quarter, American Natural Gas continued to integrate acquired stations to solidify its national footprint, PTGi ICS paid its fifth consecutive cash dividend to HC2, and our Pansend Life Sciences companies continued to make progress, as they carefully evaluate a number of meaningful strategic opportunities for these early stage businesses. After the end of the quarter, our Insurance segment announced the acquisition of Humana’s long-term care insurance business, which, once completed, will increase our insurance investment platform to approximately $3.5 billion of cash and invested assets. In addition, we expect to sign a $75 million bridge loan to primarily finance acquisitions in low power broadcast television distribution, a market we believe offers a number of compelling opportunities. We believe the steps we've taken to extend and deepen our diverse business portfolio, the results these businesses have generated, and the opportunities these companies present, will help us continue to create a long-term value for shareholders as we close out 2017 and beyond.”
Third Quarter & Year-To-Date Financial Highlights
Third Quarter & Year-to-Date Segment Highlights
Conference Call
HC2 Holdings, Inc. will host a live conference call to discuss its third quarter 2017 financial results and operations today, Wednesday, November 8, 2017, at 5:00 p.m. ET.
Dial-in instructions for the conference call and the replay are as follows:
Live Call
Dial-In (Toll Free): 1-866-395-3893
International Dial-In: 1-678-509-7540
Participant Entry Number: 99349087
Alternatively, a live webcast of the conference call can be accessed by interested parties through the Investor Relations section of the HC2 Website, www.HC2.com.
Conference Replay*
Domestic Dial-In (Toll Free): 1-855-859-2056
International Dial-In: 1-404-537-3406
Conference Number: 99349087
*Available approximately two hours after the end of the conference call through December 8, 2017.
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 seven reportable segments, including Construction, Marine Services, Energy, Telecommunications, Life Sciences, Insurance and Other. HC2's largest operating subsidiaries include DBM Global Inc., a family of companies providing fully integrated structural and steel construction services, and Global Marine Systems Limited, a leading provider of engineering and underwater services on submarine cables. Founded in 1994, HC2 is headquartered in New York, New York. Learn more about HC2 and its portfolio companies at www.hc2.com.
For information on HC2 Holdings, Inc., please contact Andrew G. Backman - Managing Director - Investor Relations & Public Relations - abackman@hc2.com - 212-339-5836
Non-GAAP Financial Measures
In this release, HC2 refers to certain financial measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”), including Core Operating Subsidiary Adjusted EBITDA, Total Adjusted EBITDA (excluding the Insurance segment) and Adjusted EBITDA for its operating segments. Management believes that Adjusted EBITDA measures provide investors with meaningful information for gaining an understanding of the Company’s 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, because interest, taxes, depreciation, amortization and the other items for which adjustments are made as noted in the definition of Adjusted EBITDA below can differ greatly between organizations as a result of differing capital structures and tax strategies. In addition, management uses Adjusted EBITDA measures in evaluating certain of the Company’s segments performance because they eliminate the effects of considerable amounts of non-cash depreciation and amortization and items not within the control of the Company’s operations managers. While management believes that these non-GAAP measurements are useful as supplemental information, such adjusted results are not intended to replace our GAAP financial results and should be read together with HC2’s results reported under GAAP.
Management defines Adjusted EBITDA as net income (loss) adjusted to exclude the impact of depreciation and amortization; amortization of equity method fair value adjustments at acquisition; (gain) loss on sale or disposal of assets; lease termination costs; asset impairment expense; (gain) loss on early extinguishment or restructuring of debt; interest expense; net gain (loss) on contingent consideration; other income (expense), net; foreign currency transaction (gain) loss included in cost of revenue; income tax (benefit) expense; (gain) loss from discontinued operations; non-controlling interest; bonus to be settled in equity; share-based compensation expense; non-recurring items; and acquisition costs. A reconciliation of Adjusted EBITDA to Net Income (Loss) is included in the financial tables at the end of this release.
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.
As a result of the exclusions, Adjusted EBITDA should not be considered in isolation and do not purport to be alternatives to net income (loss) or other GAAP financial measures as a measure of our operating performance.
Cautionary Statement Regarding Forward-Looking Statements
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This release contains, and certain oral statements made by our representatives from time to time may contain, forward-looking statements. Generally, forward-looking statements include information describing actions, events, results, strategies and expectations and are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans,” “seeks,” “estimates,” “projects,” “may,” “will,” “could,” “might,” or “continues” or similar expressions. The forward-looking statements in this press release include without limitation statements regarding our expectation regarding building shareholder value and future cash and invested assets. 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 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; the ability of the Company to complete its proposed bridge loan; 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 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. 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 Securities and Exchange Commission (“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 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 thousands, except per share amounts) (Unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Services revenue | $ | 210,698 | $ | 245,064 | $ | 643,596 | $ | 624,545 | ||||||||
Sales revenue | 157,974 | 133,474 | 420,001 | 379,729 | ||||||||||||
Life, accident and health earned premiums, net | 20,472 | 19,967 | 60,648 | 59,939 | ||||||||||||
Net investment income | 16,287 | 14,799 | 48,530 | 42,585 | ||||||||||||
Net realized gains (losses) on investments | 978 | (220 | ) | 2,854 | (2,677 | ) | ||||||||||
Net revenue | 406,409 | 413,084 | 1,175,629 | 1,104,121 | ||||||||||||
Operating expenses | ||||||||||||||||
Cost of revenue - services | 196,488 | 225,876 | 606,079 | 583,942 | ||||||||||||
Cost of revenue - sales | 128,185 | 107,984 | 341,672 | 308,951 | ||||||||||||
Policy benefits, changes in reserves, and commissions | 17,393 | 29,689 | 79,323 | 92,784 | ||||||||||||
Selling, general and administrative | 45,356 | 36,902 | 126,919 | 107,493 | ||||||||||||
Depreciation and amortization | 7,896 | 5,961 | 22,588 | 18,163 | ||||||||||||
Other operating (income) expenses | 526 | (182 | ) | (1,294 | ) | (794 | ) | |||||||||
Total operating expenses | 395,844 | 406,230 | 1,175,287 | 1,110,539 | ||||||||||||
Income (loss) from operations | 10,565 | 6,854 | 342 | (6,418 | ) | |||||||||||
Interest expense | (13,222 | ) | (10,719 | ) | (39,410 | ) | (31,614 | ) | ||||||||
Gain on contingent consideration | 6,320 | 1,381 | 6,001 | 1,573 | ||||||||||||
Income from equity investees | 971 | 335 | 12,667 | 3,153 | ||||||||||||
Other expenses, net | (97 | ) | (4,584 | ) | (8,112 | ) | (5,793 | ) | ||||||||
Income (loss) from continuing operations before income taxes | 4,537 | (6,733 | ) | (28,512 | ) | (39,099 | ) | |||||||||
Income tax (expense) benefit | (12,861 | ) | 1,334 | (16,167 | ) | 3,649 | ||||||||||
Net loss | (8,324 | ) | (5,399 | ) | (44,679 | ) | (35,450 | ) | ||||||||
Less: Net loss attributable to noncontrolling interest and redeemable noncontrolling interest | 2,357 | 841 | 6,305 | 2,365 | ||||||||||||
Net loss attributable to HC2 Holdings, Inc. | (5,967 | ) | (4,558 | ) | (38,374 | ) | (33,085 | ) | ||||||||
Less: Preferred stock and deemed dividends from conversions | 703 | 2,948 | 2,079 | 5,061 | ||||||||||||
Net loss attributable to common stock and participating preferred stockholders | $ | (6,670 | ) | $ | (7,506 | ) | $ | (40,453 | ) | $ | (38,146 | ) | ||||
Loss per Common Share | ||||||||||||||||
Basic | $ | (0.16 | ) | $ | (0.20 | ) | $ | (0.95 | ) | $ | (1.07 | ) | ||||
Diluted | $ | (0.16 | ) | $ | (0.20 | ) | $ | (0.95 | ) | $ | (1.07 | ) | ||||
Weighted average common shares outstanding: | ||||||||||||||||
Basic | 43,013 | 36,627 | 42,555 | 35,808 | ||||||||||||
Diluted | 43,013 | 36,627 | 42,555 | 35,808 | ||||||||||||
HC2 HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share amounts) (Unaudited) | ||||||||
September 30, 2017 | December 31, 2016 | |||||||
Assets | ||||||||
Investments: | ||||||||
Fixed maturities, available-for-sale at fair value | $ | 1,336,637 | $ | 1,278,958 | ||||
Equity securities, available-for-sale at fair value | 49,046 | 51,519 | ||||||
Mortgage loans | 26,427 | 16,831 | ||||||
Policy loans | 18,038 | 18,247 | ||||||
Other invested assets | 91,461 | 62,363 | ||||||
Total investments | 1,521,609 | 1,427,918 | ||||||
Cash and cash equivalents | 130,791 | 115,371 | ||||||
Accounts receivable, net | 265,082 | 267,598 | ||||||
Recoverable from reinsurers | 530,679 | 524,201 | ||||||
Deferred tax asset | 436 | 1,108 | ||||||
Property, plant and equipment, net | 282,065 | 286,458 | ||||||
Goodwill | 96,990 | 98,086 | ||||||
Intangibles, net | 35,781 | 39,722 | ||||||
Other assets | 107,911 | 74,814 | ||||||
Total assets | $ | 2,971,344 | $ | 2,835,276 | ||||
Liabilities, temporary equity and stockholders’ equity | ||||||||
Life, accident and health reserves | $ | 1,683,568 | $ | 1,648,565 | ||||
Annuity reserves | 245,053 | 251,270 | ||||||
Value of business acquired | 44,013 | 47,613 | ||||||
Accounts payable and other current liabilities | 295,096 | 251,733 | ||||||
Deferred tax liability | 14,042 | 15,304 | ||||||
Long-term obligations | 496,592 | 428,496 | ||||||
Other liabilities | 83,265 | 92,871 | ||||||
Total liabilities | 2,861,629 | 2,735,852 | ||||||
Commitments and contingencies | ||||||||
Temporary equity | ||||||||
Preferred stock | 26,281 | 29,459 | ||||||
Redeemable noncontrolling interest | 1,526 | 2,526 | ||||||
Total temporary equity | 27,807 | 31,985 | ||||||
Stockholders’ equity | ||||||||
Common stock, $.001 par value | 43 | 42 | ||||||
Shares authorized: 80,000,000 at September 30, 2017 and December 31, 2016; | ||||||||
Shares issued: 43,382,926 and 42,070,675 at September 30, 2017 and December 31, 2016; | ||||||||
Shares outstanding: 43,016,440 and 41,811,288 at September 30, 2017 and December 31, 2016, respectively | ||||||||
Additional paid-in capital | 248,235 | 241,485 | ||||||
Treasury stock, at cost; 366,486 and 259,387 shares at September 30, 2017 and December 31, 2016, respectively | (1,981 | ) | (1,387 | ) | ||||
Accumulated deficit | (212,652 | ) | (174,278 | ) | ||||
Accumulated other comprehensive income (loss) | 29,384 | (21,647 | ) | |||||
Total HC2 Holdings, Inc. stockholders’ equity | 63,029 | 44,215 | ||||||
Noncontrolling interest | 18,879 | 23,224 | ||||||
Total stockholders’ equity | 81,908 | 67,439 | ||||||
Total liabilities, temporary equity and stockholders’ equity | $ | 2,971,344 | $ | 2,835,276 | ||||
HC2 HOLDINGS, INC. RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA (in thousands) (Unaudited) | ||||||||||||||||||||||||||||||||
Three Months Ended September 30, 2017 | ||||||||||||||||||||||||||||||||
Core Operating Subsidiaries | Early Stage & Other | HC2 | ||||||||||||||||||||||||||||||
Construction | Marine Services | Energy | Telecom | Life Sciences | Other and Eliminations | Non- operating Corporate | ||||||||||||||||||||||||||
Net (loss) attributable to HC2 Holdings, Inc. | $ | (5,967 | ) | |||||||||||||||||||||||||||||
Less: Net Income attributable to HC2 Holdings Insurance Segment | 4,280 | |||||||||||||||||||||||||||||||
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance Segment | $ | 7,082 | $ | 844 | $ | (939 | ) | $ | 1,348 | $ | (6,760 | ) | $ | (600 | ) | $ | (11,222 | ) | (10,247 | ) | ||||||||||||
Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 1,314 | 6,221 | 1,247 | 94 | 50 | 272 | 17 | 9,215 | ||||||||||||||||||||||||
Depreciation and amortization (included in cost of revenue) | 1,293 | — | — | — | — | — | — | 1,293 | ||||||||||||||||||||||||
Amortization of equity method fair value adjustment at acquisition | — | (573 | ) | — | — | — | — | — | (573 | ) | ||||||||||||||||||||||
(Gain) loss on sale or disposal of assets | 486 | — | 25 | — | — | — | — | 511 | ||||||||||||||||||||||||
Lease termination costs | — | — | — | 15 | — | — | — | 15 | ||||||||||||||||||||||||
Interest expense | 238 | 1,021 | 262 | 14 | — | 1 | 11,686 | 13,222 | ||||||||||||||||||||||||
Net loss on contingent consideration | — | — | — | — | — | — | (6,320 | ) | (6,320 | ) | ||||||||||||||||||||||
Other (income) expense, net | (165 | ) | 888 | 277 | 12 | (10 | ) | (118 | ) | (718 | ) | 166 | ||||||||||||||||||||
Foreign currency (gain) loss (included in cost of revenue) | — | (238 | ) | — | — | — | — | — | (238 | ) | ||||||||||||||||||||||
Income tax (benefit) expense | 4,481 | (137 | ) | — | — | — | — | (4,746 | ) | (402 | ) | |||||||||||||||||||||
Noncontrolling interest | 558 | 43 | (763 | ) | — | (1,506 | ) | (689 | ) | — | (2,357 | ) | ||||||||||||||||||||
Bonus to be settled in equity | — | — | — | — | — | — | 765 | 765 | ||||||||||||||||||||||||
Share-based payment expense | — | 394 | 179 | — | 71 | 19 | 718 | 1,381 | ||||||||||||||||||||||||
Non-recurring items | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Acquisition Costs | 1,501 | 300 | — | — | — | — | 1,564 | 3,365 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 16,788 | $ | 8,763 | $ | 288 | $ | 1,483 | $ | (8,155 | ) | $ | (1,115 | ) | $ | (8,256 | ) | $ | 9,796 | |||||||||||||
Total Core Operating Subsidiaries | $ | 27,322 | ||||||||||||||||||||||||||||||
HC2 HOLDINGS, INC. RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA (in thousands) (Unaudited) | ||||||||||||||||||||||||||||||||
Three Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||
Core Operating Subsidiaries | Early Stage & Other | HC2 | ||||||||||||||||||||||||||||||
Construction | Marine Services | Energy | Telecom | Life Sciences | Other and Eliminations | Non- operating Corporate | ||||||||||||||||||||||||||
Net (loss) attributable to HC2 Holdings, Inc. | $ | (4,558 | ) | |||||||||||||||||||||||||||||
Less: Net (loss) attributable to HC2 Holdings Insurance Segment | (2,189 | ) | ||||||||||||||||||||||||||||||
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance Segment | $ | 6,962 | $ | 8,696 | $ | 27 | $ | 1,796 | $ | (2,285 | ) | $ | (8,160 | ) | $ | (9,404 | ) | (2,368 | ) | |||||||||||||
Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 431 | 5,554 | 582 | 144 | 32 | 380 | 4 | 7,127 | ||||||||||||||||||||||||
Depreciation and amortization (included in cost of revenue) | 1,321 | — | — | — | — | — | — | 1,321 | ||||||||||||||||||||||||
Amortization of equity method fair value adjustment at acquisition | — | (329 | ) | — | — | — | — | — | (329 | ) | ||||||||||||||||||||||
(Gain) loss on sale or disposal of assets | (23 | ) | — | — | — | — | — | — | (23 | ) | ||||||||||||||||||||||
Lease termination costs | — | — | — | (159 | ) | — | — | — | (159 | ) | ||||||||||||||||||||||
Interest expense | 304 | 1,328 | 119 | — | — | — | 8,969 | 10,720 | ||||||||||||||||||||||||
Net gain on contingent consideration | — | (1,381 | ) | — | — | — | — | — | (1,381 | ) | ||||||||||||||||||||||
Other (income) expense, net | (12 | ) | (632 | ) | (24 | ) | 422 | (2 | ) | 3,892 | 835 | 4,479 | ||||||||||||||||||||
Foreign currency (gain) loss (included in cost of revenue) | — | (283 | ) | — | — | — | — | — | (283 | ) | ||||||||||||||||||||||
Income tax (benefit) expense | 4,672 | 96 | — | — | — | — | (7,851 | ) | (3,083 | ) | ||||||||||||||||||||||
Noncontrolling interest | 411 | 465 | 27 | — | (770 | ) | (974 | ) | — | (841 | ) | |||||||||||||||||||||
Share-based payment expense | — | 546 | 3 | — | 128 | 37 | 1,088 | 1,802 | ||||||||||||||||||||||||
Non-recurring items | — | — | — | — | — | — | 173 | 173 | ||||||||||||||||||||||||
Acquisition Costs | 429 | — | — | — | — | — | 648 | 1,077 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 14,495 | $ | 14,060 | $ | 734 | $ | 2,203 | $ | (2,897 | ) | $ | (4,825 | ) | $ | (5,538 | ) | $ | 18,232 | |||||||||||||
Total Core Operating Subsidiaries | $ | 31,492 | ||||||||||||||||||||||||||||||
HC2 HOLDINGS, INC. RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA (in thousands) (Unaudited) | ||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2017 | ||||||||||||||||||||||||||||||||
Core Operating Subsidiaries | Early Stage & Other | HC2 | ||||||||||||||||||||||||||||||
Construction | Marine Services | Energy | Telecom | Life Sciences | Other and Eliminations | Non- operating Corporate | ||||||||||||||||||||||||||
Net (loss) attributable to HC2 Holdings, Inc. | $ | (38,374 | ) | |||||||||||||||||||||||||||||
Less: Net Income attributable to HC2 Holdings Insurance Segment | 3,683 | |||||||||||||||||||||||||||||||
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance Segment | $ | 14,464 | $ | 8,943 | $ | (2,001 | ) | $ | 4,910 | $ | (14,276 | ) | $ | (9,787 | ) | $ | (44,310 | ) | (42,057 | ) | ||||||||||||
Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 4,194 | 16,561 | 3,876 | 285 | 129 | 933 | 50 | 26,028 | ||||||||||||||||||||||||
Depreciation and amortization (included in cost of revenue) | 3,835 | — | — | — | — | — | — | 3,835 | ||||||||||||||||||||||||
Amortization of equity method fair value adjustment at acquisition | — | (1,223 | ) | — | — | — | — | — | (1,223 | ) | ||||||||||||||||||||||
Asset impairment expense | — | — | — | — | — | 1,810 | — | 1,810 | ||||||||||||||||||||||||
(Gain) loss on sale or disposal of assets | 93 | (3,500 | ) | 39 | — | — | — | — | (3,368 | ) | ||||||||||||||||||||||
Lease termination costs | — | 249 | — | 15 | — | — | — | 264 | ||||||||||||||||||||||||
Interest expense | 619 | 3,363 | 552 | 37 | — | 2,408 | 32,431 | 39,410 | ||||||||||||||||||||||||
Net loss on contingent consideration | — | — | — | — | — | — | (6,001 | ) | (6,001 | ) | ||||||||||||||||||||||
Other (income) expense, net | (158 | ) | 2,443 | 1,652 | 77 | (25 | ) | 2,800 | (460 | ) | 6,329 | |||||||||||||||||||||
Foreign currency (gain) loss (included in cost of revenue) | — | (131 | ) | — | — | — | — | — | (131 | ) | ||||||||||||||||||||||
Income tax (benefit) expense | 9,792 | 239 | 12 | — | — | — | (9,112 | ) | 931 | |||||||||||||||||||||||
Noncontrolling interest | 1,190 | 381 | (2,002 | ) | — | (3,208 | ) | (2,666 | ) | — | (6,305 | ) | ||||||||||||||||||||
Bonus to be settled in equity | — | — | — | — | — | — | 1,350 | 1,350 | ||||||||||||||||||||||||
Share-based payment expense | — | 1,133 | 361 | — | 239 | 66 | 2,207 | 4,006 | ||||||||||||||||||||||||
Non-recurring items | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Acquisition costs | 2,447 | 300 | — | — | — | — | 3,425 | 6,172 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 36,476 | $ | 28,758 | $ | 2,489 | $ | 5,324 | $ | (17,141 | ) | $ | (4,436 | ) | $ | (20,420 | ) | $ | 31,050 | |||||||||||||
Total Core Operating Subsidiaries | $ | 73,047 | ||||||||||||||||||||||||||||||
HC2 HOLDINGS, INC. RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA (in thousands) (Unaudited) | ||||||||||||||||||||||||||||||||
Nine Months Ended September 30, 2016 | ||||||||||||||||||||||||||||||||
Core Operating Subsidiaries | Early Stage & Other | HC2 | ||||||||||||||||||||||||||||||
Construction | Marine Services | Energy | Telecom | Life Sciences | Other and Eliminations | Non- operating Corporate | ||||||||||||||||||||||||||
Net (loss) attributable to HC2 Holdings, Inc. | $ | (33,085 | ) | |||||||||||||||||||||||||||||
Less: Net (loss) attributable to HC2 Holdings Insurance Segment | (11,978 | ) | ||||||||||||||||||||||||||||||
Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance Segment | $ | 20,710 | $ | 8,780 | $ | 68 | $ | 4,007 | $ | (2,991 | ) | $ | (21,264 | ) | $ | (30,417 | ) | (21,107 | ) | |||||||||||||
Adjustments to reconcile net income (loss) to Adjusted EBITDA: | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 1,263 | 16,793 | 1,479 | 389 | 87 | 1,050 | 4 | 21,065 | ||||||||||||||||||||||||
Depreciation and amortization (included in cost of revenue) | 3,048 | — | — | — | — | — | — | 3,048 | ||||||||||||||||||||||||
Amortization of equity method fair value adjustment at acquisition | — | (1,046 | ) | — | — | — | — | — | (1,046 | ) | ||||||||||||||||||||||
(Gain) loss on sale or disposal of assets | (963 | ) | (10 | ) | — | — | — | — | — | (973 | ) | |||||||||||||||||||||
Lease termination costs | — | — | — | 179 | — | — | — | 179 | ||||||||||||||||||||||||
Interest expense | 917 | 3,683 | 142 | — | — | 1 | 26,871 | 31,614 | ||||||||||||||||||||||||
Net gain on contingent consideration | — | (1,573 | ) | — | — | — | — | — | (1,573 | ) | ||||||||||||||||||||||
Other (income) expense, net | (88 | ) | 383 | (399 | ) | (574 | ) | (3,223 | ) | 9,888 | (311 | ) | 5,676 | |||||||||||||||||||
Foreign currency (gain) loss (included in cost of revenue) | — | (1,970 | ) | — | — | — | — | — | (1,970 | ) | ||||||||||||||||||||||
Income tax (benefit) expense | 12,641 | (756 | ) | — | — | — | — | (21,481 | ) | (9,596 | ) | |||||||||||||||||||||
Noncontrolling interest | 1,240 | 510 | 249 | — | (2,302 | ) | (2,062 | ) | — | (2,365 | ) | |||||||||||||||||||||
Share-based payment expense | — | 1,307 | 107 | — | 184 | 238 | 4,833 | 6,669 | ||||||||||||||||||||||||
Non-recurring items | — | — | — | — | — | — | 1,513 | 1,513 | ||||||||||||||||||||||||
Acquisition costs | 428 | 266 | 27 | 18 | — | — | 1,821 | 2,560 | ||||||||||||||||||||||||
Adjusted EBITDA | $ | 39,196 | $ | 26,367 | $ | 1,673 | $ | 4,019 | $ | (8,245 | ) | $ | (12,149 | ) | $ | (17,166 | ) | $ | 33,694 | |||||||||||||
Total Core Operating Subsidiaries | $ | 71,255 | ||||||||||||||||||||||||||||||