Exhibit 99.1

 

 

 

HC2 Holdings Reports Fiscal Year 2014 Results

 

HERNDON, VA – (Marketwired) – 03/16/2015 – HC2 Holdings, Inc. (“HC2” or the “Company”) (NYSE MKT: HCHC), a diversified holding company that focuses on acquiring, investing in and operating businesses with attractive assets that it considers to be under or fairly valued and growing its acquired businesses, today announced its consolidated results for the fourth quarter of fiscal 2014 ended on December 31, 2014 as well as the results for the full fiscal year ended on December 31, 2014.

 

“Looking back at 2014, we accomplished a great deal at HC2, including the diversification of our company through the acquisition of highly attractive businesses and the listing of our stock on the NYSE MKT exchange,” said Philip Falcone, HC2’s Chairman, President and Chief Executive Officer. “In 2015, our goal remains the same: acquire and own cash flow positive businesses where we can build value over the long-term or acquire businesses that we believe offer significant growth potential. We believe that we have considerable flexibility in pursuing our vision and we continue to believe we are very well positioned for growth and value creation over the foreseeable future.”

 

2014 Highlights:

 

·Pro-forma Adjusted EBITDA for the fiscal year ending December 31, 2014 for our primary operating subsidiaries, Schuff International, Inc. (“Schuff”) and Global Marine Systems Limited (“Global Marine”) was a combined $88.8 million.

 

·Total pro-forma net revenue for the fiscal year 2014 was $853.5 million, an increase of 6.5% over 2013 pro-forma net revenue.

 

·Consolidated cash as of December 31, 2014 was $108.0 million.

 

·Listed Company’s common stock on the NYSE MKT LLC national securities exchange.

 

·Completed the acquisition of an approximate 91% interest in Schuff, a leading structural steel fabricator in the United States, which comprises our Manufacturing segment.

 

·Completed the acquisition of Bridgehouse Marine Limited, the parent holding company of Global Marine, a leading global offshore engineering company focused on subsea cable installation and maintenance, which comprises our Marine Services segment.

 

·Equity investment comprised of common stock and warrants in Novatel Wireless, Inc. (“Novatel”) which was acquired by HC2 at a cost of $14.2 million, and at December 31, 2014 had a market value of $35.9 million.

 
 

 

·Completed the acquisition of an approximate 51% interest in American Natural Gas (“ANG”), a premier distributor of natural gas motor fuel headquartered in the Northeast that designs, builds, owns, acquires, operates and maintains compressed natural gas fueling stations for transportation, which comprises our Utilities segment.

 

·Completed investments in NerVve Technologies, Inc., GemDerm Aesthetics, Inc., BeneVir Biopharm, Inc. and DMi, Inc. NerVve has developed a groundbreaking product, the NerVve Visual Search Solution, which is a very high speed visual search engine, capable of searching pixels just like they are text on web-pages. DMi, Inc. has exclusive licensing rights from NASCAR Team Properties to publish NASCAR interactive games for video game consoles, personal computers, tablets and smart phones, beginning in 2015.

 

Non-GAAP Financial Measures and Other Information

 

The calculation of Adjusted EBITDA, as defined by us on a pro forma basis, consists of Net income (loss) as adjusted for asset impairment expense; gain (loss) on sale or disposal of assets; amortization of debt discount; loss on early extinguishment or restructuring of debt; interest income and other income (expense), net; foreign currency transaction gain (loss); (gain) loss on sale of discontinued operations; gain (loss) from discontinued operations; income tax (benefit) expense; income (loss) from equity investees; acquisition and related charges; non-controlling interests; share-based compensation expense; and depreciation and amortization expense.

 

Management believes that Adjusted EBITDA is significant to 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, since interest, taxes, depreciation and amortization can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA can also be a useful measure of a company’s ability to service debt. While management believes that non-US GAAP measurements are useful supplemental information, such adjusted results are not intended to replace the Company’s US GAAP financial results.

 

The market value of the Novatel equity and warrants as of December 31, 2014 presented in this release has been calculated with the common stock valued at $2.95, the 20-day VWAP of the Novatel common stock for the period ended December 31, 2014, and with the warrants valued using a Black-Scholes model and closing price as of December 31, 2014.

 

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. These statements are based on the beliefs and assumptions of HC2’s management and the management of HC2’s subsidiaries. Factors that could cause actual results, events and developments to differ include, without limitation, capital market conditions, the ability of HC2’s subsidiaries to generate sufficient net income and cash flows to make upstream cash distributions, trading characteristics of the HC2 common stock, the ability of HC2 and its subsidiaries to identify any suitable future acquisition opportunities, efficiencies/cost avoidance, cost savings, income and margins, growth, economies of scale, combined operations, future economic performance, conditions to, and the timetable for, completing the integration of financial reporting of acquired or target businesses, completing future acquisitions and dispositions, litigation, potential and contingent liabilities, management’s plans, changes in regulations, taxes and the risks that may affect the performance of the operating subsidiaries of HC2 and those factors listed under the caption “Risk Factors” in HC2’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, filed with the SEC. All forward-looking statements described herein are qualified by these cautionary statements and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized. HC2 does not undertake any obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operation results.

 

2
 

 

 

About HC2

 

HC2 Holdings, Inc. is a publicly traded (NYSE MKT: HCHC), diversified holding company, which seeks to acquire and grow attractive businesses that generate sustainable free cash flow. HC2 has a diverse array of operating subsidiaries, each with its own dedicated management team, across a broad set of industries, including, but not limited to, telecom/infrastructure, large-scale U.S. construction, energy, subsea services and life sciences. HC2 seeks opportunities that generate attractive returns and significant cash flow in order to maximize value for all stakeholders. Currently, HC2’s largest operating subsidiaries are Schuff, a leading structural steel fabricator in the United States, and Global Marine, a leading global offshore engineering company focused on subsea cable installation and maintenance. Founded in 1994, HC2 is headquartered in Herndon, Virginia.

 

For More Information on HC2 Holdings, Inc., Please Contact:

 

ir@HC2.com

 

3
 

HC2 HOLDINGS, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(in thousands, except per share amounts)

 

   Years Ended December 31,
   2014  2013  2012
Services revenue  $193,044   $230,686   $302,959 
Sales revenue   350,158    —      —   
Net revenue   543,202    230,686    302,959 
Operating expenses:               
Cost of revenue  - services   174,956    220,315    285,631 
Cost of revenue - sales   296,530    —      —   
Selling, general and administrative   81,396    34,692    45,202 
Depreciation and amortization   4,617    12,032    3,204 
(Gain) loss on sale or disposal of assets   (162)   (8)   520 
Asset impairment expense   291    2,791    20,298 
Total operating expenses   557,628    269,822    354,855 
Loss from operations   (14,426)   (39,136)   (51,896)
Interest expense   (10,754)   (8)   (27)
Amortization of debt discount   (1,593)   —      —   
Loss on early extinguishment or restructuring of debt   (11,969)   —      —   
Gain from contingent value rights valuation   —      14,904    1,292 
Interest income and other expense, net   436    (226)   90 
Foreign currency transaction gain (loss)   1,061    (588)   2,538 
Loss from continuing operations before income taxes and income (loss) from equity investees   (37,245)   (25,054)   (48,003)
Income from equity investees   3,359    —      —   
Income tax (expense) benefit   24,484    7,442    3,132 
Loss from continuing operations   (9,402)   (17,612)   (44,871)
Loss from discontinued operations   (25)   (19,621)   (21,525)
Gain (loss) from sale of discontinued operations   (121)   148,839    94,265 
Net income (loss)   (9,548)   111,606    27,869 
Less: Net (income) loss attributable to noncontrolling interest   (2,559)   —      18 
Net income (loss) attributable to HC2 Holdings, Inc.   (12,107)   111,606    27,887 
Less: Preferred stock dividends and accretion   2,049    —      —   
Net income (loss) attributable to common stock and participating preferred stockholders  $(14,156)  $111,606   $27,887 
Basic income (loss) per common share:               
Loss from continuing operations attributable to HC2 Holdings, Inc.  $(0.71)  $(1.25)  $(3.24)
Loss from discontinued operations   —      (1.40)   (1.55)
Gain (loss) from sale of discontinued operations   (0.01)   10.60    6.81 
Net income (loss) attributable to HC2 Holdings, Inc.  $(0.72)  $7.95   $2.02 
Diluted income (loss) per common share:               
Loss from continuing operations attributable to HC2 Holdings, Inc.  $(0.71)  $(1.25)  $(3.24)
Loss from discontinued operations   —      (1.40)   (1.55)
Gain (loss) from sale of discontinued operations   (0.01)   10.60    6.81 
Net income (loss) attributable to HC2 Holdings, Inc.  $(0.72)  $7.95   $2.02 
Weighted average common shares outstanding:               
Basic   19,729    14,047    13,844 
Diluted   19,729    14,047    13,844 
Dividends declared per basic weighted average common shares outstanding   —     $8.58   $4.09 
Amounts attributable to common shareholders of HC2 Holdings, Inc.               
Loss from continuing operations attributable to HC2 Holdings, Inc.  $(14,010)  $(17,612)  $(44,853)
Loss from discontinued operations   (25)   (19,621)   (21,525)
Gain (loss) from sale of discontinued operations   (121)   148,839    94,265 
Net income (loss) attributable to HC2 Holdings, Inc.  $(14,156)  $111,606   $27,887 

 

 

4
 

HC2 HOLDINGS, INC.

 

CONSOLIDATED BALANCE SHEET

 

(in thousands, except per share amounts)

 

   December 31,
   2014  2013
Assets          
Current assets:          
Cash and cash equivalents  $107,978   $8,997 
Short-term investments   4,867    —   
Accounts receivable (net of allowance for doubtful accounts receivable of $2,760 and $2,476 at December 31, 2014 and 2013, respectively)   151,558    18,980 
Costs and recognized earnings in excess of billings on uncompleted contracts   28,098    —   
Deferred tax asset - current   1,701    —   
Inventories   14,975    —   
Prepaid expenses and other current assets   18,590    40,594 
Assets held for sale   3,865    6,329 
Total current assets   331,632    74,900 
Restricted cash   6,467    —   
Long-term investments   48,674    —   
Property, plant and equipment, net   239,851    2,962 
Goodwill   27,990    3,378 
Other intangible assets, net   31,144    —   
Deferred tax asset - long-term   15,811    —   
Other assets   22,479    6,440 
Total assets  $724,048   $87,680 
Liabilities, temporary equity and stockholders’ equity          
Current liabilities:          
Accounts payable  $79,794   $6,964 
Accrued interconnection costs   9,717    12,456 
Accrued payroll and employee benefits   20,023    1,854 
Accrued expenses and other current liabilities   34,042    5,550 
Billings in excess of costs and recognized earnings on uncompleted contracts   41,959    —   
Accrued income taxes   512    53 
Accrued interest   3,125    —   
Current portion of long-term debt   10,444    —   
Current portion of pension liability   5,966    —   
Liabilities held for sale   —      4,823 
Total current liabilities   205,582    31,700 
Long-term debt   332,927    —   
Pension liability   31,244    —   
Other liabilities   1,617    1,571 
Total liabilities   571,370    33,271 
Commitments and contingencies          
Temporary equity          
Preferred stock, $0.001 par value – 20,000,000 shares authorized; Series A - 30,000 and 0 shares issued and outstanding at December 31, 2014 and 2013, respectively; Series A-1 - 11,000 and 0 shares issued and outstanding at December 31, 2014 and 2013, respectively   39,845    —   
Stockholders’ equity:          
Common stock, $0.001 par value – 80,000,000 shares authorized; 23,844,711 and 14,257,545 shares issued and 23,813,085 and 14,225,919 shares outstanding at December 31, 2014 and 2013, respectively   24    14 
Additional paid-in capital   147,081    98,598 
Accumulated deficit   (41,880)   (29,773)
Treasury stock, at cost – 31,626  shares at December 31, 2014 and 2013, respectively   (378)   (378)
Accumulated other comprehensive loss   (15,178)   (14,052)
Total HC2 Holdings, Inc. stockholders’ equity before noncontrolling interest   89,669    54,409 
Noncontrolling interest   23,164    —   
Total stockholders’ equity   112,833    54,409 
Total liabilities, temporary equity and stockholders’ equity  $724,048   $87,680 

 

5
 

HC2 HOLDINGS, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands)

 

   Years Ended December 31,
   2014  2013  2012
Cash flows from operating activities:               
Net income (loss)  $(9,548)  $111,606   $27,869 
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:               
Provision for doubtful accounts receivable   403    1,507    4,819 
Share-based compensation expense   11,487    2,286    5,194 
Depreciation and amortization   8,967    23,964    43,239 
Amortization of deferred financing costs   240    —      —   
(Gain) loss on sale or disposal of assets   816    (148,848)   (93,175)
(Gain) loss on sale of investments   (434)   —      —   
Equity investment (income)/loss   (3,359)   —      —   
Impairment of goodwill and long-lived assets   291    3,123    20,298 
Amortization of debt discount   1,593    86    201 
Loss on early extinguishment or restructuring of debt   11,969    21,124    21,682 
Gain on bargain purchase   (1,417)   —      —   
Realized loss on marketable securities   1,608    —      —   
Change in fair value of Contingent Value Rights   —      (14,904)   (1,292)
Deferred income taxes   (31,838)   (522)   119 
Unrealized foreign currency transaction (gain) loss on intercompany and foreign debt   225    (764)   (324)
Changes in assets and liabilities, net of acquisitions:               
(Increase) decrease in accounts receivable   23,306    (2,892)   16,372 
(Increase) decrease in costs and recognized earnings in excess of billings on uncompleted contracts   (1,139)   —      —   
(Increase) decrease in inventories   6,616    644    662 
(Increase) decrease in prepaid expenses and other current assets   28,044    (5,346)   (2,059)
(Increase) decrease in other assets   1,870    3,221    5,933 
Increase (decrease) in accounts payable   23,956    (2,014)   (8,393)
Increase (decrease) in accrued interconnection costs   (2,790)   4,418    (3,397)
Increase (decrease) in accrued payroll and employee benefits   6,825    (5,287)   —   
Increase (decrease) in accrued expenses and other current liabilities   (14,451)   (829)   (8,203)
Increase (decrease) in billings in excess of costs and recognized earnings on uncompleted contracts   (23,793)   —      —   
Increase (decrease) in accrued income taxes   (1,091)   (7,432)   (942)
Increase (decrease) in accrued interest   3,049    (1,715)   (3,870)
Increase (decrease) in other liabilities   (1,951)   (1,741)   (1,164)
Increase (decrease) in pension liability   (6,641)   —      —   
Net cash provided by (used in) operating activities   32,813    (20,315)   23,569 
Cash flows from investing activities:               
Purchases of property, plant and equipment   (5,819)   (12,577)   (31,747)
Sale of property and equipment and other assets   3,706    9    25 
Purchases of equity investments   (22,909)   —      —   
Purchases of available-for-sale securities   (9,875)   —      —   
Investment in debt securities   (250)   —      —   
Sale of available-for-sale securities   2,411    —      —   
Cash from disposition of business, net of cash disposed   2,495    270,634    183,101 
Cash paid for business acquisitions, net of cash acquired   (146,026)   (397)   (1,707)
Purchase of noncontrolling interest   (38,403)   —      —   
(Increase) decrease in restricted cash   (1,785)   475    66 
Net cash (used in) provided by investing activities   (216,455)   258,144    149,738 
Cash flows from financing activities:               
Proceeds from long-term obligations   915,896    —      —   
Principal payments on long-term obligations   (689,745)   (128,036)   (120,763)
Payment of fees on restructuring of debt   (12,333)   (1,201)   (13,455)
Proceeds from sale of common stock, net   6,000    1,158    124 
Proceeds from sale of preferred stock, net   40,050    —      —   
Proceeds from the exercise of warrants and stock options   24,348    —      —   
Payment of dividend equivalents   —      (1,235)   (125)
Payment of dividends   (1,626)   (119,788)   (55,265)
Receipt of dividends   2,081    —      —   
Taxes paid in lieu of shares issued for share-based compensation   (47)   (1,000)   (1,653)
Net cash provided by (used) in financing activities   284,624    (250,102)   (191,137)
Effects of exchange rate changes on cash and cash equivalents   (2,001)   (1,927)   (25)
Net change in cash and cash equivalents   98,981    (14,200)   (17,855)
Cash and cash equivalents, beginning of period   8,997    23,197    41,052 
Cash and cash equivalents, end of period  $107,978   $8,997   $23,197 

 

6
 

HC2 HOLDINGS, INC.

 

PRO FORMA NET REVENUE

 

(in thousands)

 

   Years Ended  Year-over-Year
   2014  2013   
(in thousands)  Net
Revenue
  % of
Total
  Net
Revenue
  % of
Total
  Variance  Variance %
Telecommunications   161,953    19.0%   230,686    28.8%   (68,733)   -29.8%
Manufacturing   526,141    61.6%   416,142    51.9%   109,999    26.4%
Marine Services   163,595    19.2%   154,862    19.3%   8,733    5.6%
Utilities   1,839    0.2%   —      0.0%   1,839    100.0%
Total Net Revenue   853,528    100.0%   801,690    100.0%   51,838    6.5%

 

 

7
 

HC2 HOLDINGS, INC.

 

PRO FORMA ADJUSTED EBITDA

 

(in thousands)

 

   As Reported  Pro Forma
   HC2 Holdings, Inc.  Schuff  GMSL  ICS  Other  HC2 Holdings, Inc.
   Year Ended  Year Ended  Year Ended  Year Ended  Year Ended  Year Ended
   December 31, 2014  December 31, 2014 (1)  December 31, 2014 (2)  December 31, 2014 (3)  December 31, 2014 (4)  December 31, 2014
                               
Net income (loss)  $(12,107)  $19,278   $27,796   $(1,342)  $(32,977)  $12,755 
Adjustments to reconcile net income (loss) to Adjusted EBIT:                              
Asset impairment expense   291    —      —      291    —      291 
(Gain) loss on sale or disposal of assets   (162)   (2)   104    (160)   —      (58)
Interest expense   10,754    1,627    4,708    1    9,127    15,463 
Amortization of debt discount   1,593    —      —      —      1,593    1,593 
Loss on early extinguishment of debt   11,969    —      —      —      11,969    11,969 
Gain from contingent rights valuation   —      —      —      —      —      —   
Interest income and other expense, net   (436)   (476)   (3,174)   (85)   174    (3,561)
Foreign currency (gain) loss   (1,061)   —      764    (414)   222    572 
(Gain) loss from sale of discontinued operations   121    —      —      —      121    121 
Gain (loss) from discontinued operations   25    35    3,007    —      36    3,078 
Income tax (benefit) expense   (24,484)   13,318    1,069    —      (34,245)   (19,858)
(Income) from equity investees   (3,359)   —      (7,201)   —      886    (6,315)
Acquisition and related charges   13,044    —      —      —      13,044    13,044 
Noncontrolling interest   2,559    3,569    2,821    —      (570)   5,820 
Share-based payment expense   11,487    —      —      —      11,487    11,487 
Adjusted EBIT   10,235    37,349    29,894    (1,709)   (19,133)   46,401 
Depreciation and amortization   4,617    4,139    13,059    528    485    18,211 
Depreciation and amortization (included in cost of revenue)   4,338    4,338    —      —      —      4,338 
Adjusted EBITDA  $19,190   $45,826   $42,953   $(1,181)  $(18,648)  $68,950 

 

(1)Schuff includes activity for the 5 months ended May 26, 2014, prior to our acquisition of a controlling interest.

 

(2)Bridgehouse Marine includes activity for the period ended September 22, 2014, prior to our acquisition of a controlling interest

 

(3)ICS activity does not include any pro forma adjustments

 

(4)Other includes activity for the 7 months ended July 31, 2014 for ANG, prior to our acquisition of a controlling interest.

 

 

 

8
 


The following information was filed by Hc2 Holdings, Inc. (HCHC) on Monday, March 16, 2015 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Screenshot of intrinsic value for AT&T (2019)
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Financial Stability Report
Screenshot of financial stability report for Coco-Cola (2019)
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