INNOVATE Corp.

Good afternoon, and welcome to Innovate Corp's fourth quarter and full year 2024 earnings conference call. All participants will be in listen-only mode. After prepared remarks and presentations, there will be a question and answer session. Please note, this event is being recorded. I would now like to turn the call over to Neil Sika with Investor Relations. Please go ahead, Neil.

Good afternoon. Thank you for being with us to review Innovate's fourth quarter and full year 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. 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. 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 provision of the Private Securities 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. 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. In addition, the forward-looking statements included in this conference call are only made as of the date of this call and are 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. Management will also refer to certain non-GAAP financial measures, such as adjusted EBITDA. We believe that 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's my pleasure to turn things over to Paul Voigt.

Good afternoon. We are pleased to report our fourth quarter and full year 2024 financial results and will provide you an update on key milestones reached that showcase the progress across each business segment. Innovate delivered consolidated revenue of $236.6 million and adjusted EBITDA of $15 million in the fourth quarter of 2024. For the full year 2024, Innovate delivered consolidated revenues of $1.1 billion and adjusted EBITDA of $71.3 million. Our main objective for 2025 is to address our capital structure and the near-term maturity of our debt obligations. We're making progress on our strategic objectives, and our businesses continue to hit important milestones. We continue to believe that we have valuable assets that appreciate in value each day. Our focus is to leverage one or more of these assets prior to reaching the debt maturities in order to achieve sustainable capital structure that allows us to realize the full value of the remaining business. As we turn our attention to our operating segments, starting with life sciences, MetaBeacon is thrilled to have received FDA approval for its transdermal GFR systems to assess kidney function. As many of you know, this has been something the team has been working towards for quite some time, and we are very excited to have achieved this milestone. The FDA's approval of the TGFR indicates that MetaBeacon's unique systems offers an effective solution for evaluating kidney functions in patients with normal or impaired renal function. The potential applications for TGFR are numerous, and MediBeacon looks forward to exploring them with clinicians, both in the hospital and outpatient settings. Additionally, in February, the National Medical Products Administration in China also approved the MediBeacon TGFR monitor, and TGFR sensor for the assessment of kidney functions in patients with normal or impaired renal functions. With FDA approval and in order to maximize shareholder value, MetaBeacon has engaged Jaffrey's Financial Group as their investment banker. The company is currently in discussions with medical device and pharmaceutical companies. Turning to R2, R2 broke sales records in both North America and worldwide, delivering record top line revenues of almost 10 million for the full year 2024, which is 197% increase over 2023 of 3.3 million. Led by system unit sales in North America, which experienced 238% growth for the full year, year over year versus 2023, R2 continues its global expansion into new markets with new distributor partnerships signed in Australia and several companies in South America. Combined worldwide system unit sales grew 113% in the fourth quarter of 2024 compared to fourth quarter of 2023 and grew 182% for the full year in 2024 year over year versus 2023. We believe achieving Almost 10 million in revenue is a significant milestone as we explore strategic alternatives to this business. In addition to its massive success during 2024, R2 has also secured a robust order backlog of over 75 systems worldwide at the end of the year. Glacial providers continue to see incredible results using glacial skin devices evidenced by the growth in patients treated by 170%, an increase in average monthly utilization of 49% per glacial provider over the same period last year. Glacial brand awareness has a significant impact on sales and has exceeded industry competitor growth by 1,694%. R2 experienced year-over-year growth of 1,000 659% increase in social mentions, 618% in website users, and 132% in patient provider searches. With new distributor relationships secured in the UK and in France in 2025, R2 continues to expand its global reach. The dramatically increasing results of 2024 highlight our strong momentum in a market with vast potential. Having surpassed 700 shipments worldwide, we are extremely pleased with both our success and strong foundation built in 2024. While R2 has enjoyed recent success in 2024, the company has yet to really scratch the surface in terms of market penetration. We believe the opportunity for R2 is massive, and we believe the momentum and the runway is big ahead. We are encouraged by recent milestones at these businesses and work to execute on our strategy to address the company's capital structure. Moving to infrastructure, EVM Global achieved revenues to $225.7 million and adjusted EBITDA of $17.4 million in the fourth quarter. During the quarter, DBM has seen gross margin improvement year-over-year of approximately 180 basis points to 18.2%, while fourth quarter adjusted EBITDA margins compressed by 80 basis points to 7.7% year-over-year. DBM's results came in slightly lower than our expectations as projects were pushed out in the second half of the year, which impacted our overall results. The delay of awards in the back half of 2024 has posed a challenge to the start of 2025, potentially leading to a year comparable to 2024. However, the surge of recent awards to begin 2025 has provided DBM with the opportunity to outperform 2024. Our backlog levels held steady, and we ended the year with adjusted backlog of 1.1 billion. In fact, the first quarter of 2025, DBM has added a few sizable projects that total over 500 million to adjusted backlog across our companies, and we remain very optimistic on the pipeline. Additionally, we are increasingly excited about our ability to capitalize on opportunities driven by growth in cloud computing and AI requiring substantial investments in data centers and power infrastructure. With a strong track record and strategic vision, and with the best management team in the business, we are confident that DBMG's management team is well equipped to capitalize on these opportunities and drive continued success. Given the continuing unpredictability in the political landscape, there remains a cautious stance towards the cost of construction materials, especially concerning tariffs and inflation. We are closely following tariff announcements and have developed strategies to lessen the impact. At this juncture, we do not anticipate any material impact on our financials and will continue to assess and look for ways to minimize potential impacts. DBM is well positioned in 2025 with a strong backlog and robust pipeline. And finally, Spectrum. Spectrum delivered a strong year both financially and operationally. Fourth quarter and full year 2024 top line grew 19.3% and 14.2% respectively year over year. Fourth quarter adjusted EBITDA of 2.3 million more than doubled compared to last year. And full year 2024 adjusted EBITDA of 7.1 million saw significant improvement compared to 2 million in 2023. Spectrum made significant strides in right-sizing the business over the last 12 to 18 months, which has directly benefited our financial performance. The improvement in better quality network launches has helped drive outstanding improvement in financial performance. Of note, the successful new network launches of free TVs, new networks, and Fubo Sports underscore the network's debuts in 2024. The launch of Hubo Sports, a marquee network, in the fourth quarter is another example of the continued improvement in the quality of the networks. Additionally, Broadcast is witnessing numerous over-the-air network opportunities for 2025 and signed a contract with Marathon Ventures to distribute new, vibrant, over-the-air networks, Nosy and Confess, which we placed on the air the week of March 17th. We are likely to see new entrants into the OTA market throughout the rest of the year as more streaming networks are considering expanding to over-the-air coverage. Broadcast also continues to make progress with strategic partnerships in pursuit of new spectrum-related revenue opportunities. With our ATSCE 3.0 converted stations, we are actively pursuing commercial opportunities together with a major mobile network operator. Our efforts have been gaining traction, and we are expecting to see revenues from this exciting new technology later this year. We will have more information in the next few months on this. We are making excellent progress as it relates to ATSC 3.0 Light Housing. In fact, we commenced installation of the Dallas Lighthouse Station for PBS Station, KERA. As we think about longer term opportunities with the change in administration, the new chair of the FCC has talked about value creating opportunities for OTA spectrum that include a new incentive auction, considerable deregulation in the broadcast TV industry, and opportunities to repurpose our valuable UHF spectrum. Given our favorable view of 5G broadcasting technology, and its potential to transform low-power broadcasting. Last Friday, we filed a petition with the FCC proposing that low-powered television stations be allowed to use the 5G broadcast transmission standard on a voluntary basis. We are simply asking the FCC to approve the technology as an alternative for low powers alongside the already approved standards like ATSC 3.0. As we have already seen with our experimental 5G broadcast license, the technology allows a low-power TV station to transmit a single 5G signal to its entire service area, which can be received by compatible mobile phones. Low-power stations utilizing 5G broadcast would be well positioned to deliver numerous benefits across multiple services, including enhanced programming, data casting, internet connectivity, and public safety. Lastly, our total consolidated debt decreased by 54.5 million compared to last year, which was mostly a function of improved working capital returning to the business at DBMG. As a reminder, our strategic vision for the business anchors upon maximizing the value of these assets. Given the recent success in our businesses, We are very encouraged in our ability to execute on behalf of shareholders. With that, I'll turn it over to Mike for review of financials in our capital structure.