INNOVATE Corp. Announces First Quarter 2025 Results

- Infrastructure: DBM Global first quarter revenue of $264.9 million -

- Life Sciences: MediBeacon$(R)$ Transdermal GFR ("TGFR") System Received FDA Approval to Assess Kidney Function -

- Spectrum: Expects commercial opportunities in datacasting to generate revenue by the end of the year -

NEW YORK, May 06, 2025 (GLOBE NEWSWIRE) -- INNOVATE Corp. ("INNOVATE" or the "Company") $(VATE)$ announced today its consolidated results for the first quarter.

Financial Summary

 
(in millions, except per 
share amounts)                      Three Months Ended March 31, 
                              ---------------------------------------- 
                                                          Increase / 
                                   2025          2024      (Decrease) 
                                  -------       ------   ------------- 
Revenue                        $    274.2      $ 315.2      (13.0)% 
Net loss attributable to 
 common stockholders and 
 participating preferred 
 stockholders                  $    (24.8)     $ (17.7)     (40.1)% 
Basic and diluted loss per 
 share attributable to 
 common stockholders(1)        $    (1.89)     $ (2.21)       14.5% 
Total Adjusted EBITDA(2)       $      7.2      $  12.8      (43.8)% 
 
 

(1) Basic and diluted loss per common share for the three months ended March 31, 2024, has been retroactively adjusted to reflect the 1-for-10 reverse stock split effected on August 8, 2024.

(2) Reconciliation of GAAP to Non-GAAP measures follows

Commentary

"To begin 2025, INNOVATE has made meaningful progress on key initiatives that has strengthened the foundation across our three operating segments, " said Avie Glazer, Chairman of INNOVATE. "The Infrastructure segment expanded its adjusted backlog to $1.4 billion in the first quarter, reflecting the team's continued efforts to secure new projects that will drive sustained growth in the future. We are seeing great momentum in Life Sciences with MediBeacon's previously announced FDA approval of its TGFR system in January, which started the year on the front foot while R2 delivered strong year-over-year growth. The Spectrum segment delivered consistent year-over-year performance, demonstrating resilience and operational stability amid a dynamic market environment."

"We entered the year with strong momentum that positions us well to build on our strategic priorities and drive growth in 2025," stated Paul Voigt, INNOVATE's Interim CEO. "In the first quarter, DBMG added a few substantial projects to the adjusted backlog, amounting to more than $500 million, and we continue to be optimistic on the pipeline for the remainder of the year. At Life Sciences, on the heels of the FDA's approval of the TGFR, MediBeacon looks forward to exploring potential applications with clinicians both in the hospital and outpatient settings. R2 kicked off 2025 by tripling its year-over-year revenue and continued expanding sales and distribution into key international markets. Broadcasting is also experiencing a strong start to 2025 with the introduction of two OTA networks. With more streaming networks aiming to extend their reach, we are witnessing a rise in new opportunities within the OTA space."

First Quarter 2025 Highlights

Infrastructure

   -- DBM Global ("DBMG") reported first quarter 2025 revenue of $264.9 million, 
      a decrease of 14.0%, compared to $307.9 million in the prior year 
      quarter. Net income attributable to INNOVATE was $4.6 million, compared 
      to $4.4 million for the prior year quarter. Adjusted EBITDA decreased to 
      $16.7 million from $18.3 million in the prior year quarter. 
 
   -- DBMG grew gross margin to 15.6% in the first quarter, an expansion of 
      approximately 110 basis points year-over-year and Adjusted EBITDA margin 
      to 6.3% in the first quarter, an expansion of approximately 40 basis 
      points year-over-year. 
 
   -- DBMG's reported backlog and adjusted backlog, which takes into 
      consideration awarded but not yet signed contracts, was $1.4 billion as 
      of March 31, 2025, compared to reported and adjusted backlog of 
      $1.0 billion and $1.1 billion, respectively, as of December 31, 2024. 
 
   -- DBMG has seen a surge of awards in both the commercial and industrial 
      markets, adding over $500 million in new awards to adjusted backlog 
      across our companies in the first quarter. 

Life Sciences

   -- The U.S. Food and Drug Administration ("FDA") approved the MediBeacon(R) 
      TGFR for the assessment of kidney function in patients with normal or 
      impaired renal function. 
 
   -- The National Medical Products Administration ("NMPA") in China approved 
      the MediBeacon(R) TGFR Monitor and TGFR Sensor for the assessment of 
      kidney function in patients with normal or impaired renal function. 
      Lumitrace(R) (relmapirazin) injection, categorized as a drug in China, is 
      under review and is targeted for approval in late 2025. 
 
   -- R2 Technologies, Inc. ("R2") delivered a strong start to 2025, reporting 
      revenue of $3.1 million, a 210% increase compared to $1.0 million in the 
      prior year quarter. 
 
   -- R2's gross worldwide system unit sales grew 163% in the first quarter of 
      2025 compared to the first quarter of 2024. 

Spectrum

   -- Broadcasting reported first quarter 2025 revenue of $6.2 million, 
      compared to $6.3 million in the prior year quarter. Net loss attributable 
      to INNOVATE was $5.4 million compared to $4.8 million in the prior year 
      quarter. Adjusted EBITDA was $1.4 million, compared to $1.6 million in 
      the prior year quarter. 
 
   -- Signed a contract with Marathon Ventures to distribute two new, vibrant 
      over-the-air ("OTA") networks - Nosey and Confess. 
 
   -- Ongoing efforts are being made to explore commercial opportunities in 
      datacasting, in collaboration with a leading mobile network provider, 
      with expectations to generate revenue by the end of 2025. 

First Quarter 2025 Financial Highlights

   -- Revenue: For the first quarter of 2025, INNOVATE's consolidated revenue 
      was $274.2 million, a decrease of 13.0%, compared to $315.2 million for 
      the prior year quarter. The decrease was primarily driven by our 
      Infrastructure segment, which was partially offset by an increase at our 
      Life Sciences segment. The decrease at our Infrastructure segment was 
      primarily driven by the timing and size of projects at Banker Steel and 
      the industrial maintenance and repair business, including the effect of 
      changes in estimated costs to complete those projects recognized in the 
      ordinary course of business in the comparable period, which also had 
      increased activity in the prior year on certain large commercial 
      construction projects that have since been completed or are nearing 
      completion in the current period. This was partially offset by an 
      increase at DBMG's commercial structural steel fabrication and erection 
      business as a result of an increase in project work. The increase at our 
      Life Sciences segment was attributable to R2, driven by an increase in 
      unit sales of both Glacial fx and Glacial Rx systems and an increase in 
      consumable sales in North America, as well as an increase in Glacial Spa 
      unit sales, consumable sales and Glacial fx unit sales outside North 
      America. 
 
REVENUE by OPERATING SEGMENT 
                                                   --------------- 
 
(in millions)                  Three Months Ended March 31, 
                        ------------------------------------------ 
                                                     Increase / 
                              2025         2024       (Decrease) 
                            --------      -------  --------------- 
Infrastructure           $     264.9   $    307.9   $     (43.0) 
Life Sciences                    3.1          1.0           2.1 
Spectrum                         6.2          6.3          (0.1) 
                            --------      -------      -------- 
Consolidated INNOVATE    $     274.2   $    315.2   $     (41.0) 
                            ========      =======      ======== 
 
 
   -- Net Loss: For the first quarter of 2025, INNOVATE reported a Net loss 
      attributable to common stockholders and participating preferred 
      stockholders of $24.8 million, or $1.89 per fully diluted share, compared 
      to $17.7 million, or $2.21 per fully diluted share, for the prior year 
      quarter, which has been retroactively adjusted to reflect the 1-for-10 
      reverse stock split effected on August 8, 2024. The increase in Net loss 
      was primarily due to an increase of $4.7 million in loss from equity 
      investees, a $3.8 million increase in tax expense, a net decrease in 
      gross profit of $3.1 million, and a $3.0 million increase in interest 
      expense, which was partially offset by a $5.2 million increase in other 
      income, net, a $2.0 million decrease in other operating loss, and a 
      decrease in selling, and general and administrative ("SG&A") expenses of 
      $1.7 million. The overall increase in loss from equity investees was due 
      to an increase in losses recognized from MediBeacon as a result of equity 
      changes that resulted from the milestone payments received from Huadong 
      following FDA approval. The increase in tax expense was primarily driven 
      by the impact of projected pre-tax results on the annual effective tax 
      rate and the limitations on the utilization of net operating losses 
      ("NOL") by INNOVATE's U.S. consolidated group as a result of the Internal 
      Revenue Code Section 382 and the Tax Cuts and Jobs Act's 80 percent 
      limitation on NOLs incurred after 2017. The decrease in gross profit was 
      primarily driven by our Infrastructure segment due to timing and size of 

      projects that have since been completed or are nearing completion in the 
      current period, including the effect of changes in estimated costs to 
      complete those projects recognized in the ordinary course of business in 
      the comparable period, which was partially offset by an increase in gross 
      profit at our Life Sciences segment primarily driven by R2 as a result of 
      an increase Glacial unit sales and consumable sales over the comparable 
      period. The increase in interest expense was primarily attributable to 
      increases in exit fees and a higher outstanding principal balance at our 
      Life Sciences segment as a result of the capitalization of unpaid 
      interest into the principal balance subsequent to the comparable period. 
      The overall increase in other income, net was primarily driven by step-up 
      gain following MediBeacon's FDA approval in January 2025. The decrease in 
      other operating loss was primarily driven by an unrepeated loss related 
      to a plant closure at our Infrastructure segment in the comparable 
      period. The overall decrease in SG&A expenses was primarily driven by 
      decreases in professional and consulting fees, compensation-related and 
      travel expenses at our Infrastructure segment, which was partially offset 
      by an increase in computer and software-related costs in the current 
      period at our Infrastructure segment and an increase in selling costs at 
      R2 due to an increase in unit sales. 
 
NET INCOME (LOSS) by OPERATING SEGMENT 
-------------------------------------------------------------------- 
 
(in millions)                   Three Months Ended March 31, 
                        -------------------------------------------- 
                                                       Increase / 
                              2025          2024        (Decrease) 
                            --------       -------   --------------- 
Infrastructure           $       4.6      $    4.4    $       0.2 
Life Sciences                   (7.6)         (4.5)          (3.1) 
Spectrum                        (5.4)         (4.8)          (0.6) 
Non-Operating 
 Corporate                     (16.1)        (12.5)          (3.6) 
Other and 
eliminations                      --            --             -- 
Net loss attributable 
 to INNOVATE Corp.       $     (24.5)     $  (17.4)          (7.1) 
Less: Preferred 
 dividends                       0.3           0.3             -- 
                            --------       -------       -------- 
Net loss attributable 
 to common 
 stockholders and 
 participating 
 preferred 
 stockholders            $     (24.8)     $  (17.7)   $      (7.1) 
                            ========       =======       ======== 
 
 
   -- Adjusted EBITDA: For the first quarter of 2025, Total Adjusted EBITDA was 
      $7.2 million compared to Total Adjusted EBITDA of $12.8 million for the 
      prior year quarter. The decrease in Adjusted EBITDA was primarily driven 
      by our Life Sciences and Infrastructure segments, which was partially 
      offset by an increase at our Non-Operating Corporate segment. The 
      decrease at our Life Sciences segment was primarily due to higher equity 
      method losses recognized from MediBeacon. The decrease at our 
      Infrastructure segment was primarily driven by a decrease in revenue at 
      both Banker Steel and the industrial maintenance and repair businesses 
      due to timing of certain large commercial construction projects that have 
      since been completed or are nearing completion in the current period. The 
      decrease was partially offset by an increase in gross margins at the 
      industrial maintenance and repair businesses, an increase in gross profit 
      at DBMG's commercial structural steel fabrication and erection business 
      due to an increase in project work, as well as a decrease in recurring 
      SG&A, primarily as a result of decreases in professional and consulting 
      fees, compensation-related and travel expenses, partially offset by an 
      increase in computer and software-related costs in the current period at 
      our Infrastructure segment, and an increase in gross profit at R2 driven 
      by the increase in revenue. Additionally offsetting the decrease in 
      Adjusted EBITDA was our Non-Operating Corporate segment primarily driven 
      by a decrease in legal fees due to legal matters settled subsequent to 
      the comparable period. 
 
ADJUSTED EBITDA by OPERATING SEGMENT 
                                                         --------------- 
 
(in millions)                      Three Months Ended March 31, 
                           --------------------------------------------- 
                                                           Increase / 
                                2025             2024       (Decrease) 
                               -------          ------   --------------- 
Infrastructure              $     16.7       $    18.3    $      (1.6) 
Life Sciences                     (8.7)           (4.2)          (4.5) 
Spectrum                           1.4             1.6           (0.2) 
Non-Operating Corporate           (2.2)           (2.9)           0.7 
Other and eliminations              --              --             -- 
                               -------          ------       -------- 
Total Adjusted EBITDA       $      7.2       $    12.8    $      (5.6) 
                               =======          ======       ======== 
 
 
   -- Balance Sheet: As of March 31, 2025, INNOVATE had cash and cash 
      equivalents, excluding restricted cash, of $33.3 million compared to 
      $48.8 million as of December 31, 2024. On a stand-alone basis, as of 
      March 31, 2025, our Non-Operating Corporate segment had cash and cash 
      equivalents of $3.0 million compared to $13.8 million as of December 31, 
      2024. 

Conference Call

INNOVATE will host a live conference call to discuss its first quarter 2025 financial results and operations today at 4:30 p.m. ET. The Company will post an earnings supplemental presentation in the Investor Relations section of the INNOVATE website at innovate-ir.com to accompany the conference call. Dial-in instructions for the conference call and the replay follows.

   -- Live Webcast and Call. A live webcast of the conference call can be 
      accessed by interested parties through the Investor Relations section of 
      the INNOVATE website at innovate-ir.com. 
 
          -- Dial-in: 1-877-704-4453 (Domestic Toll Free) / 1-201-389-0920 
             (Toll/International) 
 
   -- Conference Replay* 
 
          -- Dial-in: 1-844-512-2921 (Domestic Toll Free) / 1-412-317-6671 
             (Toll/International) 
 
          -- Conference Number: 13753315 

*Available approximately three hours after the end of the conference call through May 20, 2025.

About INNOVATE

INNOVATE is a portfolio of best-in-class assets in three key areas of the new economy -- Infrastructure, Life Sciences and Spectrum. Dedicated to stakeholder capitalism, INNOVATE employs approximately 3,100 people across its subsidiaries. For more information, please visit: www.INNOVATECorp.com.

Contacts

Investor Contact:

Anthony Rozmus

ir@innovatecorp.com

(212) 235-2691

Non-GAAP Financial Measures

In this press release, INNOVATE refers to certain financial measures that are not presented in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), including Total Adjusted EBITDA (excluding discontinued operations, if applicable) and Adjusted EBITDA for its operating segments. In addition, other companies may define Adjusted EBITDA differently than we do, which could limit its usefulness.

Adjusted EBITDA

Management believes that Adjusted EBITDA provides investors with meaningful information for gaining an understanding of our 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, amortization and the other items listed in the definition of Adjusted EBITDA below 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-U.S. GAAP measurements are useful supplemental information, such adjusted results are not intended to replace our U.S. GAAP financial results. Using Adjusted EBITDA as a performance measure has inherent limitations as an analytical tool as compared to net income (loss) or other U.S. GAAP financial measures, as this non-U.S. GAAP measure excludes 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 does not purport to be an alternative to net income (loss) or other U.S. GAAP financial measures as a measure of our operating performance.

The calculation of Adjusted EBITDA, as defined by us, consists of Net income (loss) attributable to INNOVATE Corp., excluding: discontinued operations, if applicable; depreciation and amortization; other operating (income) loss, which is inclusive of (gain) loss on sale or disposal of assets, lease termination costs, (gains) losses on lease modifications, asset impairment expense and Federal Communications Commission reimbursements; interest expense; other (income) expense, net; income tax expense (benefit); non-controlling interest; share-based compensation expense; and realignment and exit costs.

Cautionary Statement Regarding Forward-Looking Statements

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