INNOVATE Corp. Q3 FY2025 earnings call

• Strategic alternatives: Engaged Jefferies & Company for DBM sales process in accordance with senior note requirements; HC2 Broadcasting exploring strategic alternatives for spectrum debt.
• Infrastructure: Progress with backlog growth despite margin compression, positive momentum for 2026 due to backlog.
• Life Sciences: MediBeacon's regulatory approval in China, R2's revenue growth and Glacial Skin's performance.
• Spectrum: New network launches, though facing advertising challenges, with future potential from new launches

Infrastructure (DBM Global)

• Revenues: $338.4 million, adjusted EBITDA: $23.5 million. Year-over-year gross margin compression of approximately 510 basis points to 13.6% and adjusted EBITDA margin compression of approximately 200 basis points to 6.9%. Year-to-date revenue stands at $836.4 million. Adjusted backlog increased by approximately $500 million to just over $1.6 billion since the end of 2024.

Life Sciences

• MediBeacon: Received full regulatory approval in China for Lumitrace injection, with commercial launch in China planned. R2: Q3 2025 revenue $3.1 million (vs $3 million in Q3 2024), year-to-date revenue $9.4 million (+65% Y/Y). Glacial Skin: Patient treatments grew 102%, average monthly utilization per provider increased 24% Y/Y.

Spectrum

• Q3 2025 revenues $5.6 million, adjusted EBITDA $1 million. New network launches include Lionsgate' MovieSphere Gold Channel, Sports First. Facing challenging advertising environment, but new network launches in Q4 showing signs of strength

• Anticipate EBITDA to be slightly below 2024 levels in 2025 but optimistic for 2026 driven by growing adjusted backlog and improving market conditions.
• Expect R2 to end the year strongly with its backlog, growing consumable revenue, and new markets in Bolivia, Netherlands, and Belgium.
• Spectrum new network launches in Q4 showing signs of strength in ad sales

• Macro environment challenges affecting project sales and timing shifts.
• Challenging advertising environment impacting Spectrum's ad sales.
• Government shutdown temporarily delaying progress on FCC petition for LPTV stations to 5G broadcast

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