Good afternoon and welcome to the HC2 Holdings Second Quarter 2016 Earnings Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note this call is being recorded. I would now like to turn the conference over to Mr. Andrew Backman, HC2's Managing Director of Investor Relations and Public Relations. Please go ahead.

Great, thank you, Valeria and good afternoon, everyone. And thanks for joining us this afternoon to review HC2's second quarter 2016 earnings. With me today are Philip Falcone, Chairman, President and CEO of HC2; Mike Sena, our Chief Financial Officer, Keith Hladek, our Chief Operating Officer. This afternoon's call is being webcast on our website at hc2.com in the Investor Relations section. We also invite you to follow along our webcast presentation, which can be accessed on the HC2 website again in the Investor Relations section. A replay of this call will be available, approximately an hour to two hours after the call. The dial-in for the replay is 1855-859-2056 with a confirmation code of 49610865. Before I turn the call over to Phil, I would like to remind everyone that certain statements and assumptions in this earnings call, which are not historical facts, will be forward-looking and are being made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain assumptions and risk factors that could cause HC2's actual results to differ materially from these forward-looking statements. The risk factors that could cause these differences are more fully detailed in our 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 as stated in our SEC reports. HC2 disclaims any intent or obligation to update or revise these forward-looking statements except as expressly required by law. During the call, management will provide certain information that will constitute non-GAAP financial measures under the SEC rules such as pro forma net revenue, adjusted EBITDA and adjusted operating income or AOI. Certain information required to be disclosed about these non-GAAP measures, including reconciliations with the most comparable GAAP measures, is available in the most recent earnings press release, which is available on our website. And finally as a reminder, this call cannot be taped or otherwise duplicated without the Company's prior consent. Now, I would like to turn the call over HC2's Chairman, CEO and President, Philip Falcone. Phil?

Thank you, Andy, and good afternoon to everyone and thank you for joining us on the call today. On the agenda today, I will start with a brief recap of the results for the quarter, provide a few operational highlights from our primary operating subs and then can finish up with a Q&A. So looking at Slide 4, which you'll see the heading second quarter highlights and recent developments. Overall, we executed extremely well during the second quarter is evidenced by the strength and stability of our core operating subs, driving sequential growth. During the quarter we saw very solid performance in our manufacturing segment which is Schuff due largely to margin expansion and strength in the Midwest and Southeast regions. Stable maintenance results in marine services along with strong performance from our JV's, the HMN and SBSS and continued growth and scale in customer relationships in the telecommunication segment and continued expansion of compressed nat gas fueling stations in the American Natural Gas segment. The adjusted EBITDA from our core operating subs, which includes manufacturing marine, utilities and telecom totaled $27.1 million in the second quarter versus $12.7 million in the first quarter. Consolidated cash, cash equivalents and investments were $1.6 billion at the end of the second quarter, which of course includes our insurance segment. Corporate cash was essentially unchanged from a prior quarter at $40.3 million as of June 30, 2006 and one other line item that I wanted to highlight is the consolidated cash net of insurance which is $134.5 million, so that's essentially the corporate cash at the holding company, the cash up to Schuff, Global Marine, etc. I want to turn to Slide 5 which will give you the segment overview as many of you have seen or will continue to see to give…

[Operator Instructions] our first question comes from Sarkis of B. Riley and Company. Your line is open.

Phil, can you maybe dive a bit further and help us understand this statement in press release regarding the company's focus on the capital structure, liquidity optimization and the active management of your portfolio?

Yes, you know when thinking about this portfolio or this capital structure. We have to think about how we can continue to lower that cost of capital and we believe that whether it's performance or monetization of assets, it's really a critical and key part of getting our cost to capital lower. And aside from operating from what the guys are doing on the operating side. We have to get out and really explain to people and walk people through the value that we see in our overall and underlying businesses. And I think once people see that, that in an off itself lower the cost to capital but I think people will see the value there and allow us to do certain things with the capital structure that we believe, we should be able to do with the assets that we have today. I think that there are because we kind of, I don't want to say grew, so fast but we did assemble and effectively assembled a very solid platform. It takes time for people to understand the underlying value here. And we can talk about how the operations are doing and people think the numbers and I think part of the other, the other investments and the other assets that we're not getting credit for what's happening there and I think, as you will see the value creation from the Pansend business for instance, I think will prove to be a inflection point or one of the inflection points of getting us to our end game of lowering our cost to capital and lowering that 11% rate to more marketable rate. But I think overall too, we want to continue focusing on the preferred and continuing to be creative with what we've done in the last couple…

Thanks for that Phil and one more from me, if you guys don't mind. One thing that stood out especially was the backlog that's growing within Schuff and that manufacturing segment. You did mention that are there are bunch of unsigned contracts and you know the backlog here will be over $500 million and that there is other large opportunities that totaled over $400 million. Can you maybe just touch upon the incremental opportunities there?

Sure. You know you have in that space, when we talk about adjusted backlog of contracts that were awarded, but not yet signed they area convention center, the [indiscernible] casino, names that I can go down the list of that have been awarded that have contributed to what we, how we look at our backlog. But also to from an opportunities that going forward the clearly the west and the southwest is from a healthcare perspective as well as inter-gaming perspective is really moving in the right direction, there are number of spot arenas and stadiums, there's more opportunities out there than you can kind of shake a stick at. Quite frankly when you think about capacity being utilized and used up in the industry, you could even see margins improvement as a result because of the number of opportunities and number of entities that are building, now we don't have that built into our model, but I think that's kind of the basic economics 101. But there are from the stadiums alone a number of opportunities that we think, we will be able to capitalize on that will really continue to build on our backlog.

Thanks for that all. I'll hop back in the queue.

Thank you. Our next question comes from Kurt Hoffman of Imperial Capital. Your line is open.

Just quickly to follow-up on Schuff. Saw last month the Turner Construction was selected to build the new Rams Stadium. Can you talk about Schuff's relationship with Turner, where Schuff may have worked with him in the past and how that could maybe help us here?

Yes, I mean we do have a pretty good relationship with Turner. They've have turned to us in the past for projects of this sort. It's very difficult to comment further on that, but we are clearly we think very - one of the companies I should say that Turner thinks very highly of and very capable of doing that type of project. So we were excited to see that happened and that announcement.

Okay, will stay tuned on it. On Global Marine you've spoken extensively on this Huawei joint venture in the past. Can you give us a little more granular sense of how it's performing versus last year? I think in 2015 we saw about $190 million in revenue and I think it was $14 million of profit. Do you have any idea where you - is it really where we would see that winding up this year.

Yes, we can't give any projections on that but just from a growth perspective, when we closed on this. I believe the top line was $60 million and with zero profit and just the short spend of the number of 18, 19 or 20 months we're seeing here have seen a significant growth and I believe that, we fully expect that with the growth in the data business around the globe and the strength of Huawei in some of the emerging economies that we have no reason to believe that will change, that growth of trajectory will change so we - I think the significance of where we were when we bought it and quite frankly the value that we put on it and I personally kind of put on it, I always thought it was great to have, but I didn't think we would be where we are with that from a top line perspective and I clearly didn't bank on the our value proposition that we have today with that entity. So it's been a real pleasant surprise that is not, some companies had a relationship and has had that subsidiary for a long time. So it was kind of serendipitous there, our timing worked out where we were able to acquire global and oh, by the way that the business kind of took off just as we made the acquisition and I think it's been a, I don't want to say pleasant surprise. I think that's understating it, but very, very exciting proposition there, that we will continue to expect to see grow at the rates that we have seen.

Okay, all right. Perfect. And then just more generally on Global Marine. I think pro forma for the one-time event in the first quarter. The subsidiary generated about $17 million of EBITDA in the first half of the year here. How do you think about that over the full year?

Yes you know and that's one of the things when I talked about the competition in the market place and what was happening in oil and gas, even though we didn't have a lot of exposure in the oil and gas market, just by virtue of some capacities coming online and into our segments has effected margins per se, which put a little bit of pressure on EBITDA. With that being said, we really held our own. I think the data market or the telecom market was a little bit slower to turn around than we expected and we are now finally starting to see that. The performance in the second quarter was probably more in line with, what we had been thinking of full year 2016. 2016 first quarter was a little bit weak and I don't want to say disappointing but it was a little bit more lumpy than we would have hoped, but now we've got the momentum kind of coming back a number of projects ticking in and I think the Seawind is in that offshore power market is really helping. So we are, the first six months were okay. I think we can do better and I think expecting to do better. Does that answer it?

Yes, that's perfect. Well last question, smaller investment, this is NerVve I thought it was intriguing and maybe you can speak about what it could mean for you guys. I saw it was used in Wimbledon and I saw it was also used to the Major League Baseball Star Game. How do we think about what the value can be at this, with this entity?

You know the funny thing about this one is, I think the technology that these guys have is really second to none, if you talk experts in the industry and of competing technologies. The video search capabilities that they have is really phenomenal and quite frankly, it is the preeminent technology in the marketplace. The critical part for them has been how to take that technology and commercialize it. And that's been the $64,000 question and the movement and again this is kind of where we kind of put our heads together and really helped the company, really focus on the natural thing was advertising, the sports and entertainment advertising. The branding from an advertising perspective during the sporting events, where these companies or these machines have to send their information to companies that manually review the games to determine how many times during that game, the brand will show up. Well now you have the technology that could be essentially instantaneous and I think that is new to the industry and the ability of the company to tailor their technology to what some of the, as you mentioned the major sporting leagues and have really looked at this as and quite frankly are embracing it as a very exciting change to the business, which allows them to analyze their ad space and advertise their business in general. But that ability to really move just a pure technology where and what's been commercialize to really focusing on major league sports and there are number of things that these guys are doing that we unfortunately can't discuss and are extremely exciting. But as you mentioned, it's now being used where number of months ago, it wasn't being used. So there is a real value again value added proposition. I think we're helping them come to table with and really exploiting their technology.

It will be exciting to see where that ends up. Okay good, Phil thanks so much and keep up the good work.

Valerie, we have time for one more questions, please.

Thank you. Our final question from Umesh [ph]. Your line is one.

Maybe, Phil, just on the Schuff business. The difference between the sort of the signed contracts and then the one sort deal that has been awarded. I mean is there any sort of risk that doesn't get signed, I mean what is sort of the risk on that?

We don't view that as a risk from a GAAP perspective that how you have to report. But in thinking about like last quarter how we went from signed to 415 to 480, when these contracts are awarded, they're awarded and you know I guess things can happen in a contract that's even signed, but we haven't had the experience where and the company's has not had the experience where they get awarded something and it doesn't get signed, if that's any indication. It hasn't been experienced that the company has dealt with.

Got it, that's helpful. And then, this $400 million of sort of potential opportunities that is not the backlog yet. Maybe you can help us sort of think through that in terms of you what amount is sort of you think of probably you have a very high confidence that you can get it, maybe you know just use [ph] whatever many buckets you may want to use, but fairly give us some sense of confidence in terms of like realizing in the backlog.

Well you know I think we tried to be conservative with in looking at the potential new projects. I can't go into detail about how and what we think we will get, but we feel pretty good this backlog number going higher and we've been very conservative in our approach and thinking about okay where could the backlog go because there is a number of opportunities in that 400, in the overall marketplace that we will clearly work to capture that could result in a substantially higher number that. so it's always subjective and you never know what can happen but I think we feel like there are enough opportunities out there that we will be able to build off of our existing backlog by a pretty good amount and this is just on the West Coast there's a ton of opportunity out there and really right in the catering to the strength of shops [ph].

I think you guys have done a pretty decent job in terms of growing the backlog. When do you think we should start seeing some inflection in the revenue in terms of year-over-year growth on the sub side of the business?

It is about quality rather than quantity. And you always want higher value added in a higher margin business. So we do believe and as I mentioned we have a plan to get to the $1 billion, mark that will take time and we kind of look at it as a three to five-year plan. But there is obviously a number of things that we have to do and whether that's and that's both organic and inorganic, but I think in general we are really moving in the right direction and we're seeing improved margins and that's what we really want to focus on, with that being said. Just by virtue of the backlog and by virtue of the opportunity such. We have no reason to believe that revenue will go, the opposite way. We continue to feel pretty good about that number increasing, no it's not going to double over night but it's our objective to get that thing to double. But it will take time and the key for us is the blocking and tackling as to what these guys are doing. But there is just a number of positive things happening with Schuff's and that number will continue to tick off. But the key is to focus on profitability and they've done a phenomenal job with that.

Great. And one final question from me and just in terms of monetization of some of your life sciences business. I think last time we met, you really talked about MediBeacon and sort of having in the sort of last being in the final stages of sort of qualification and any update there in terms of [indiscernible] there could be some potential monetization by the end of the year?

Yes, I think when I talk about monetization I think about maybe it's realization, not monetization and realization is the progress point of getting a FDA approval on the dermatology business which quite frankly leads to the next step there is commercial operation, commercial sale. The completion of pilot two for MediBeacon which is a big step from a value added realization and when you hit these levels, there is an opportunity to bring additional investors. Quite frankly may not appreciate or understand the value that was there yesterday but once the project is a bit de-risk, it kind of - I don't want to say opens up the flood gate but I think how we're looking at it is de-risking these and being there from day one and walking through the de-risking period is an opportunity for we believe phenomenal realization of value not monetization from a sale perspective, but realization from a possible third party investment perspective and but you have to hit these hurdles and I think these two are in the lead from that point.

Great, thank you very much. That's very helpful.

Thank you, Umesh [ph]. And thank you everybody for joining us today. As always our management team is available to speak, if you have any question. You can feel free to give me a call directly here in New York at 212-339-5836. Valerie, would you please go ahead and provide the conference call replay instructions once again. Have a great day.