HC2 Holdings, Inc. (NYSE MKT:HCHC) Q1 2020 Earnings Conference Call - Final Transcript

May 11, 2020 • 05:00 pm ET


HC2 Holdings, Inc. (NYSE MKT:HCHC) Q1 2020 Earnings Conference Call - Final Transcript


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Philip Falcone

employees at HC2 and our subsidiaries as they seamlessly work remotely and on site when necessary to continue executing for our customers.

On today's call, I'll walk through the impact of COVID on our businesses, as well as our recent progress on our top priorities of debt reduction and overhead costs. Our CFO, Mike Sena will then provide more details on our first quarter performance. And then we'll take some questions. COVID-19 has had an unprecedented impact on the U.S. and the worldwide economy. We have evolved from when we last spoke in March from an environment that was clearly starting to implement targeted lockdown in select areas to one that saw the virtual shuttering of the U.S. economy and shelter in place fed-ex for the vast majority of Americans.

What once looked like a temporary shutdown migrated into a nearly six weeks shutdown in most states. And while we are beginning to see states reopen mainly in the South and Midwest, there are still a number of major states including California, New York that remain on lockdown for the foreseeable future. Well, we are all hoping for a V-shaped recovery, the ultimate impact continues to be increasingly challenging to predict and as such, we and our subsidiaries are keenly focused on liquidity for the near-term future as well as our fundamental priorities of debt and overhead reduction.

In terms of our COVID-19 response thus far, we want to provide an update on each of our segments to give you some more granularity as to our expectations as we navigate through these challenges. At the parent company, I'm pleased to say that we continue to operate uninterrupted and we've remained focused on working closely with the management teams of our subsidiaries to ensure we're aiding them in every way and to ensure they continue to operate as effectively as possible.

Given our near-term priority of liquidity we have been taking action across the portfolio and at the holdco level to further rationalize costs and responsibly reduce spending. At construction DBM steel fabrication and erection group has seen minimal work stoppages to-date as most states considers construction and essential business. Demand is still there in the broader market as we are receiving a significant number of RFP requests, the new contracts are still not being awarded at this time as customers await a clear view of the pandemic impact.

Fortunately, our substantial adjusted backlog of 781 million continues to remain near all time highs, which will provide a significant cushion. But like most project based businesses, that backlog needs to be replenished. Our Industrial Services Group has been somewhat impacted as non-essential maintenance repair services as well as various planned maintenance and CapEx projects included in the backlog have been pushed out and certain facilities have been temporarily closed. While we expect the COVID-19 impact will cause the steel and construction segment to see some reduction in adjusted EBITDA for 2020 compared to 2019.

We remain confident in DBMs long-term potential