Good afternoon. And welcome to the HC2 Holdings Third 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.

Thank you, and good afternoon, everyone. And I thank you for joining us to review HC2's third quarter 2016 earnings. With me today are Philip Falcone, Chairman, President and CEO of HC2; Michael Sena, our Chief Financial Officer; and Keith Hladek, our Chief Operating Officer. This afternoon's call is being webcast on our Web site 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 Web site again in the Investor Relations section. A replay of this call will be available approximately one hour after the. The dial-in for the replay is 1855-859-2056 with the confirmation code of 4088236. 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 that 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 disclosed in our SEC filings. 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 attempt or obligation to update or revise these forward looking statements, except as 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 Web site. 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, Phil Falcone. Phil?

Thanks, Andy, and good afternoon everyone, and thank you for joining us 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 core operating subs, and then finish up with Q&A. So if we could turn to the slide number four, as a starting point today, it's the third quarter highlights and recent developments. Numbers are pretty self explanatory here, very exciting first quarter. We continue to be very pleased with the performance on each of our operating subs, as well as insurance. And very excited about what's happening, and the momentum that we have in each of these entities. Adjusted EBITDA across all of our core operating subs was up in this third quarter, both year-over-year and versus the prior quarter. During the quarter, we saw some very solid performance in our manufacturing segment, due largely to strength in the West Coast region. We saw increased performance in Marine Services with an uptick in Telecom and offshore power installations, as well as in maintenance and continued strong performance from our JV's, which we are very pleased with. Continued growth in the scale and depth of customer relationships and telecommunication segment is driving that; sub and continued execution of expansion strategy and increased volumes of gasoline gallon equivalent delivered in the utility segment. Adjusted EBITDA from our core operating subs, which includes the manufacturing; which is, DBM Global; Marine Services, of course, which is Global Marine; the utilities, which is ANG; and Telecom, which is PTGi, totaled $31.5 million in the third quarter versus $27.1 million in the second quarter, and up 16% quarter-over-quarter and up 23% versus a year ago quarter. So very, very strong performance in each of these operating entities. Consolidated cash,…

Thank you. We'll now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Kurt Hoffman of Imperial Capital. Your line is now open.

Just want to start on DBM, Trump gave a nice speech last night emphasis his plans to significantly increase infrastructure spending, we saw a lot of very big moves in stocks that could benefit from that today. I think a lot of people look at DBM, they stadium, as see this great one-off projects for private companies. Can you talk about how DBM could benefit from publically funded infrastructures that they could proliferate under Trump?

Yes, listen something that we kind of talked about today in relation to what was happening in that -- what was happening last night, and DBM is focused a lot and has a focus a lot on the stadiums and the infrastructure and going as far as the stadiums and healthcare and technology building. Quite frankly because that’s where the opportunity is. Steel work and I don’t want to make it that simple, but this company has the flexibility to move into different markets, I think the one area where we don’t have the expertise is in the bridge area, and that continues to be and it has been something that we have thought about and have been interested in. But that’s only one part of infrastructure, there are many more parts where if desired where this team with their facilities could turn their attention. So I think it's a really across that the entire space other than the bridge side where the flexibility of the team and the facility and the capabilities could go a long way towards ultimately focusing on some of the infrastructure projects depending on what the government is talking about. But it's clearly something that we talked about today, it’s clearly something that sharp [ph] or I should say DBM could benefit from going forward and there is no reason to believe that we shouldn’t benefit from that. Again because of the flexibility. And you focus where the opportunity is, today it's on stadiums. They build -- keep in mind they build their business not in the stadium business but in Las Vegas building starting in the casino space. So when you are doing building projects like that the infrastructure associated with that from sewage drainage, water, et cetera is kind of part and parcel. So we are very excited about that point. And have no reason to believe that we shouldn’t be able to participate going forward.

Great. And I think on Global Marine, a lot of investors that can be very pleasantly surprise to see the EBITDA growth there. It's nice to have the backlog discloser on DBM, that kind of gives us a context for future results might be like, is there any sort of metric you can provide or other way to set expectations for Global Marine’s initial performance just even over the next several quarters?

Yes, I am just checking with the guys here, I think we did last quarter if I am mistaken we talked about thee backlogs being about 270, obviously that portion of that burns, burns off overtime. But in that number is still well over 200, and the fact that we can now participate in the offshore wind farm market globally means I think it's going to mean a lot to business from a growth perspective. One of the reasons as I mentioned that the numbers tailed off a little bit is that the non-compete aspect and the focus and the business of wind farms and the focus that we had on wind farms, we couldn’t compete in that space over the last few years. And over the last few years the wind farm market of our exposure, I believe is gone from mid-teens to single digit to zero because we couldn’t compete. Now it's starting -- that uptick is staring. So when you think about the uptick in EBITDA that was one of the reason for it. That coupled with the margin pressure so it wasn’t just margin pressure, so I think this is very, very, very good sign that now competing in this -- being able to compete in this space, the fact that we own a 100% of Seawind and the backlog has almost quadrupled in Seawind since we acquired the business. I think is indicative of how people are looking or how people in that industry that are building these wind farms are looking at global having owning and controlling this business versus it being a standalone. And the other now kind of, what other bolt-on services can we provide in the offshore wind space that could be value added. So I think this is opening up something, I don’t want to say something new, but something new over the last few years because we couldn’t focus on it. And it was a core part of the business prior to our acquiring it. So we continue to expect big things there but I think in general the backlog is just from standard burn-off is down a little bit, but still well over 200.

And then I'll just squeeze in one more. This is on ANG I saw where this Search Results Love's Travel Stops, but something like 35 CNG stations in a private deal or something like we as a $120 million to $150 million range? The earnings release today indicates you plan to have 20 of these stations, are you familiar with that Love's Travel Stops deal and is it appropriate to use that type of per station valuation as a read through to the potential value of ANG?

Yes, it's one of the things that we focused on, we were very aware of that business and I think I mentioned a couple of quarters ago that we had did and missed on a transaction and quite frankly that was the transaction, but the fact that 30 plus patient enterprise went for the number that it did is indicative of the value that we are creating and to be up over now 20 is I think a testament to the dedication and the growth opportunity quite frankly that this company has. So you know there is a lot of different dynamics associated with station by station, but it’s probably a good back [ph] of the envelop. And in looking at -- just to look at the contracts and how well-run the business are. But in, there is no reason to believe that we’re dramatically different than that transaction and the value that up. The value that people placed on the 33 stations that went north of 120 million.

Perfect. I'll leave you there. Thank you very much.

Okay. Thanks. Operator next question please.

Our next question comes from Sarkis Sherbetchyan with B. Riley. Your line is now open.

So first on manufacturing. Do you have any updates on bids submitted to secure work on the new LA Ram stadium?

There is not a lot we can say on that. Other than the contract for the steel has not been awarded yet. We had continued ongoing dialogue with Turner Hunt who is managing the construction of that stadium. We've done a lot of business with this people in the past and of course you have dialogue with the league as well. And we believe that we are in the final stages and that it should be awarded in the coming weeks. Keeping our fingers cross there, but continue to believe we’re will positioned and of course very capable based on where and what we've done in the past, but as of yet it has not been awarded and we are kind of just waiting to hear what the status is.

Very good and so the $400 million in potential new projects that you'd outline that could be awarded in next two quarters. Is that inclusive of that stadium deal or is that -- does that not include it?

Yes there is obviously a couple of parts to the stadium deal, and that is included in that $400 million, is inclusive of some of that, obviously not all because that's a very, very complicated and big project. But that's something that we are keeping a close eye on and is part of that a piece of that is part of that 400.

Good, moving over to Marine Services are there any sizable contracts in the near term that are up for renewal on the business and then separately can you speak to the trends that you're seeing in new installed projects and also your confidence in being able to secure new business there?

Yes, the business we've no reason to believe that we will not win new business there because our performance and the recent contracts we've had is indicative especially the recent [indiscernible] contract that we signed which was a very big contract for us and it is I believe a seven year contract. Your capacity in the space is limited to your vessels and we have a very sophisticated engineering team, very sophisticated vessel portfolio which has a phenomenal reputation and there's a 100 year history in this space. So, we're at or close to full capacity in some aspects here. We do have flexibilities to move vessels around and sign new contracts, of course you don't have to have every vessel out at every point in time. So we've no reason to believe that we're going to continue winning business. I think -- we with the performance in the three to six months we definitely have proven that we can win new business, we'd like to expand our capacity. I think the fact that Huawei continues to explode from a backlog perspective -- and keep in mind how you have to think of that is, they put their projects out for bid or need to sign up contracts for vessels to build out every job that they have. Some we do, some we don't. And the more vessels we have the more we could build our business and do an increasing number -- increasing higher percentage of jobs for Huawei Marine Network and that's what we'd like. Now regardless we'll still see 49% of the profit, but if we can see 49% of the profits and also do direct business and bid on jobs in the Huawei Marine space that's a kind of a double bank for the buck for us which is extremely attractive and from a growth perspective I think it'd hard for us to find anybody in that space that’s growing as much as they are. So, yes, we're getting the benefit which is creating phenomenal value from the 49% perspective. But we could also improve and increase our top line and obviously bottom line by giving more jobs for them and I think that's a very key focus for us and key area of expansion for us and we are very, very zeroed in on trying to find and looking for, and we do have our eyes on some different vessels that are available which I think will benefit us in both way. So just without doing anything else should have a leg-up on that space.

It does. Sounds like you have managed pipeline there. And then I guess a final one from me here. If we look at the portfolio of your holding company's assets, how do you think about the opportunities maybe to monetize of realize value from one or more of assets? If you can maybe walk through that kind of as it stands today and perhaps what it could look like down the road? I think your comments mentioned silo number five, maybe some flavour there. Thank you.

We have and continue to look at a number of opportunities. We don’t need to reinvent the wheel. We have a very solid platform that continues to perform to all of our -- and really exceed our expectations. I think it's important that the business, if we do add another platform that kind of fits into our model of strong cash flow, stable, not binary and we just want to -- we are looking at kind of a handful of companies right now and continue to try to find the right situation. And they’re out here and we’re just taking our time and kicking a lot of tires. As it relates to monetization, listen I don’t want to -- I think the big plus for us is that we don’t have to sell, at the same time we have to opportunistic, we have to be sensitive to the market place, we have to be sensitive to the overall global cycle, albeit that’s not ever easy to pin point. But we don’t want to be traders, we are not, we are building I think a very stable corporate base. But we will be opportunistic if we get the right price on something. I don’t want to make it seem like we’re out shopping because people do kick the tires and call us up, are you interested in this, or are you trying to do this, are you trying to do that. Listen, we have to be opportunistic, we have to keep thinking along those lines. We’re however in no rush to do anything and if something, a buy or a sale comes along, that’s the right thing to do for the view we have. And from a valuation perspective and from a capital perspective, yes, I mean we have that beauty to peel back the onion on everything both buying and selling. I think we’d be doing a disservice, if we didn’t do that. So we are wide open to both providing that they sit with how we think about valuation cycle, vision, et cetera.

So we have time for one more question please.

Our last question comes from the line of Umesh Bhandary with Jefferies. Your line is now open.

Maybe the first one, Phil you talked about lowering your cost of capital, hell or high water. So what do you think you need to achieve in order to sort of get that result? Just from a -- as if from a leverage perspective or free cash flow perspective, what do you think you need to get to, to achieve your cost of capital?

I think we’ve proven from a value add and a performance perspective which is the most critical thing that you have to do. Because you could have an asset that doesn’t perform. We have got since a number of assets here that are performing and just by virtue of -- and I believe just by virtue of how the strength that we have in the underlying subs, not inclusive of some of the development and can stand on the opportunities out there and in the value creation there, we should be able to reduce out capital structure or our cost to capital. When we think that the market would be somewhat rational, but sometimes people maybe don’t understand what we are trying to do or how we are trying to do it. And you have to think about maybe do you refinance, do you finance maybe something at the -- an operating [technical difficulty]. You take in a JV partner at a higher valuations. So kind of all those things or do you completely monetize something. So I think those between the fundamental performance, between maybe tweaking how we are thinking about financing to maybe looking at a JV partner who wants exposure and in some way cheaper form perform at an attractive valuation to us. I think those are things that you have to do and then monetizing something. I think those are things that you have to think about it in terms of proving out some model. And I have no reason to believe that just by the virtue of the fundamental performance that we are not on the right path we absolutely are -- and again I think that if I had a choice I would rather see in the position where we are, where we have the positive fundamentals. Because that at the end of the day will win and we do have I think a number of levels that will benefit the entire cap structure and the question [technical difficulty].

Got it.

And two, we are thinking about the timing on some of the Pansend situations and really realizing the value there because when you think about our portfolio it close in $45 million to $40 million plus or minus into that, so I think we’ve created phenomenal value and we can't yet discuss in detail what's specifically happening, but I have no reason to believe that you won't see something developed their based on the milestones that I talked about earlier. So, we've got again you know a number of things kind of in the hopper that were thinking about, and that will be seeing methodical -- thinking methodically about to make sure that we get it right

Got it. That's very helpful. And then obviously as you continuing to do some of this tuck-in acquisitions. May be can you discuss little bit about sort of the pipeline for some of this transformative acquisition and to your thoughts on the valuation that you're seeing for some of transformative opportunities that you're looking at.

You know I think one others acquisition that we looked at was as, I think Kurt mentioned was there 30 plus stations asset sales that was put up for sale. You know we bid on that, somebody was obviously willing to pay a much bigger multiple. I don’t like to pay big multiple for things, that thing instead of five things gets accretive and we can be -- it can be value added to our portfolio, clearly we have to keep an open mind. But it's really tough to say from a multiple perspective of how we’re thinking about things, it just vary from industry to industry to industry and you’d like to think that we should be able to buy something between 5 times and 7 times, something that's accretive from a cash flow perspective. I think that’s how we’re thinking about it. There is an opportunity to pick something up via the disrupt [ph] market control that's also some things that we're looking at. We turn down a lot of things. We are kicking a whole heck of a lot of tires. There have been things that has been very interesting, but we didn't like one piece of that. But we are being very diligence. We are not rushing to anything. The quick solution would be to make an acquisition and refinance the whole balance sheet. But we don’t need to do that. We don’t need to do something for the sake of doing it. It's got fix within our plan with our strategy and so There will be something, I don’t know if it will be tomorrow or next week or in three months. But there is enough out there, there is still dislocation in the market. But it's got to stay.

Great. Thank you very much.

This does conclude our Q&A session. I would like to turn the conference back over Mr. Backman for any closing remarks.

Great. Thank you Ester and thank you Phil, Mike and Keith and thank you all for joining us this evening. As always our management team is available to speak, if should you have any follow-up question please do not hesitate to contact me directly here in New York at 212-339-5836. Ester, could you please go ahead and provide the conference call replay instructions once again. Have a great day everybody. Thank you everyone.