HC2 Holdings Reports Fiscal Year 2014 Results
Tweet
Share
E-mailHERNDON, VA -- (Marketwired) -- 03/16/15 -- 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.
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.
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
======== ======== ========
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
======== ========
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
========= ========= =========
HC2 HOLDINGS, INC. PRO FORMA NET REVENUE (in thousands)
Years Ended Year-over-Year
---------------------------- --------------------
2014 2013
------------- -------------
Net % of Net % of
(in thousands) Revenue Total Revenue 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%
======= ===== ======= ===== ======== ==========
HC2 HOLDINGS, INC. PRO FORMA ADJUSTED EBITDA (in thousands)
As
Reported Pro Forma
-------- ------------------------------------------------
HC2 HC2
Holdings, Holdings,
Inc. Schuff GMSL ICS Other Inc.
Year Year Year Year Year Year
Ended Ended Ended Ended Ended Ended
December December December December
December 31, 2014 31, 2014 31, 2014 31, 2014 December
31, 2014 (1) (2) (3) (4) 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.
For More Information on HC2 Holdings, Inc., Please Contact: [email protected]
Source: HC2 Holdings, Inc.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Star Equity to acquire Harte Hanks for $5 per share in cash and stock
- Proficient Auto Logistics closes Hansen & Adkins acquisition
- FDA approves Lantheus tau PET imaging agent for Alzheimer's disease
Create E-mail Alert Related Categories
Press ReleasesRelated Entities
Harbinger Capital, Dividend, Earnings, Definitive AgreementSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
