Good afternoon and welcome to the HC2 Holdings Fourth Quarter and Year-End 2016 Earnings Call. All participants will be in a 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, Brian, and good afternoon, everybody, and I thank you for joining us to review HC2’s fourth quarter and full-year 2016 earnings. With me today are Philip Falcone, Chairman, President and CEO of HC2; and Michael Sena, our Chief Financial 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 one hour after the call. The dial-in for the replay is 1855-859-2056 with the confirmation code of 71926737. 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 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 as a reminder, this call cannot be taped or otherwise duplicated without the company’s consent. Now, let me turn the call over to HC2’s Chairman, CEO and President, Philip 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 and the year, provide a few operational highlights from our core operating subs, and then finish up with a Q&A. Turning to Slide 4, I’ll start with a review of the quarter. As a general comment, I’ll say, I’m very happy with our performance across the Board for the quarter and for the year, hats off to the operating teams at each of the subs, they did a super job. We again saw very solid results from DBM, including improved margins during the year and ending the year with a record backlog and a strong pipeline of opportunities. So that that business continues to perform very well. Our timing and our – obviously, our geographic presence is really in the sweet spot of what’s happening right now. So we’re very excited about DBM and the job that Rustin and his team are doing. Global Marine saw very strong performance from its JVs, particularly the Huawei Marine and SBSS JVs, as well as new contributions from offshore power as they recently reentered that market in the third quarter. Keep in mind, just to refresh everybody’s memory, as I mentioned in the past that the company had a non-compete in that offshore wind market, and now are able to compete and are getting contracts. So that we look forward for that part of the Global Marine business to start contributing and becoming a real factor in the marketplace is, there are some really exciting opportunities there. In the telecom sector, PTGi-ICS continued its resurgence posting its 7th continuous quarter of positive EBITDA contribution. Those guys are doing a super job and we…

Thank you. We’ll now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Sarkis Sherbetchyan from B. Riley Company.

Yes, good afternoon and thanks for taking my question here. So first, with regards to the construction business, Phil, I think you mentioned the record backlog of over $500 million and also the opportunities exceeding $400 million in new projects. Maybe if you can give me an update if the LA Rams project that we’ve kind of talked about in the past few quarters are included in backlog or if it’s going to be in the potential new awards?

Well, that entity and that project is not included in the backlog as of year-end. And while we are not able to announce anything formally regarding the LA Rams, we do feel very comfortable with our position regarding the project. As of for instance, we’ve been working on-site with project team for the past couple of months as the design and building plans are being finalized. Our role has been focused on construction scheduling and constructability. And just a little bit of background, this wouldn’t be the first stadium that we’ve done, DBM Schuff has worked on a number of large stadiums and other specialized project. I think just to name a few, the Denver Broncos Stadium, Golden 1 Center, Loma Linda Hospital, I believe the Arizona Cardinals Stadium, so the company clearly has the wherewithal and clearly has the capability and again, is not part of that backlog, but we’re working very hard to make sure that it becomes part of that backlog, and increasing from the $500 million number.

That’s helpful. If I may move on to the Global Marine piece of the business, I think you mentioned in fiscal 2017, you do expect at least a little bit of softness from the telecom install market, although you do anticipate fiscal 2018 and 2019 to kind of shape up better than that. Can you maybe give us a flavor of what inspires confidence? Are you seeing either awards or potential business kind of come in the pipe there?

Yes, well, I think the telecom installation business has been a little bit slower than what we expected. The good news for us is that, we’ve been able to make up for that with the performance of the JV. But the good news is that, we do see a resurgence in that market and do based on what we have on the table right now fully expect that we will see that resurgence start to kick in 2018 and 2019. But I think coupled with the maintenance contracts that we had signed up. We should be in pretty good shape. And there has been some as part and parcel to the installation market. If these guys are running the business like Schuff is running the business, they’re going to do the job if they do the – if they find the right job at the right margin. And with the vessel capacity having increased in the early part of the year, the company more or less stayed away from a few opportunities just by virtue of not willing to do it at the margin. And again, it’s kind of – it’s tied up some capacity for others, which is will give global the opportunity to participate as that market starts to pick up again. So we’re in a very good shape. These guys are good operators. They have done a super job of paying down debt. I think that’s one of the important thing to think about over the past couple of years alone. When we bought this – when we bought Global had about $130 million of debt, which is inclusive of the pension. On an apples-to-apples basis, that’s right around $71 million right now. So it’s almost a $60 million pay down. And I think that’s a testament to the cash flow generating capability of this company and what it can do. So we are very – you might see and have seen a little bit of softness in installation. But just the fact that we’ve been – we’ve got a different debt capital structure in that sub. I think and or by the way, the maintenance contract has been signed up, have put us in a pretty good position to really recapture what we may have lost in the previous year.

Yes, it certainly seems exciting and then shaping up nicely down the road there. Moving on to the Energy segment, you did acquire 18 additional stations, and I’m not sure if the kind of benefits of the acquisition were reflected here in Q4, at least, marginally, maybe can you set up some expectations for fiscal 2017 kind of going forward? Does it kind of look similar in operating or financial profile to the existing stations, maybe you can talk about that a little bit?

One thing we haven’t done is to make a projection. And the fact that these were late in the fourth quarter. I think you can surmise that they – we’re not included a – nothing meaningful was included from those stations. We did buy them as part of our overall philosophy. We’re looking at accretive acquisitions. So without going into too much detail, I would think you could maybe extrapolate a little bit and make the assumption that we should have a better year in 2017 than we did in 2016 for ANG. It’s a great business. This is I think it’s one of the sweepers in our portfolio that quite frankly, I think, has gone – going to surprise everybody on the upside over the next two to three years with not only the growth potential, but how much value we will create. We are not where we want to be. We are very happy being at 40 stations, but not fully at. So we will continue to focus on building that from 40 stations and up to 50 to 60 to 70, that’s our goal with this thing, really getting to some real critical mass, where I think we will really see that value kick in for the overall entity.

Great. And one final one for me and I’ll hop back in here. So with respect to the life sciences, obviously, some good progress here with respect to the milestones made on R2 and MediBeacon. And you did mention that there could be possibly some interest from third parties there. Can you maybe help us understand whether you’d go in with those partners for commercial pursuit, or if you would kind of step away and maybe sell a peace or monetize the asset, just kind of gives us a flavor of how you’re thinking about that?

Yes, good questions. There has been a lot of questions around the capital that we had committed to that entity, which I think it’s around $15 million right now. We have made it a point to make sure that people realize it’s not a black hole, we’re happy with where we are with those investments. I think you guys have done a super job in bringing those and monitoring those investments – bringing those investments to the table. There is – we have to make sure, we don’t make a hasty decision and sell too soon. At the same time, we don’t want to put ourselves in a position where we are funding a commercial roll out of something. So it’s kind of a little of a delicate balance there, because both R2 and MediBeacon, which are really right around the corner or could be substantial value and upside in those. And there is part of us that that yes, we do want to bring in the right partner, and I think that’s the important thing, we want to bring in the right partner that proves that we incubated these things properly, and that could be a value-added strategic. I think that means a lot – bringing in that right partner means a lot. So we’re really taking our time. These are potentially substantial value adds for our overall portfolio. And we do think it’s important at the same time though to prove our model out and to prove that we did create a lot of value here. So there’s that delicate balance and there is kind of a walk before you run approach. But again, we will probably have to make some decisions over the next four, five, six months, quite frankly. But we’re – I think it’s a no-lose situation. I may have – I don’t want to speak too soon. But we are making sure that we get the right partners in here, because they are two phenomenal projects.

Thank you. I’ll go into queue.

Thanks, Sarkis. Finally, we have time for one more question, please.

Yes, sir. Our next question comes from the line of Kurt Hoffman from Imperial. Sir, your line is now open.

Kurt, are you there?

Can you hear me, okay?

Yes, now we can hear you, Kurt, yes.

All right, sorry about that.

No problem.

Amazing quarter, a great year for the company. I had a few questions here though as we’re starting off with DBM, EBITDA continues to ramp up $60 million this year. And I think going back at the last – peak of the last cycle, company did over $100 million of EBITDA. Is that something we can see in the near-term with the company today?

We do think that there is a lot of potential left or that we’re at, I don’t want to say the early stage. But there’s a lot of upside left in this company. I think that if you talk to the team internally and talk to Rustin, his objective and our objective is to get this company to a $1 billion top line, that’s how we see it. And we want to – we don’t want people to think about this as being a cyclical situation and that’s a critical focus of ours. Hence those acquisitions that we may to really diversify the customer base a bit, give us a different avenue. And we don’t want to look at it is peak to trough. And our goal if anything is to get it to a point, where we are consistent in stable now granted just by virtue of the industry you’ll see some cyclicality. But our goal is to get to move away from that, that doesn’t happen overnight. But that being said, we’re still just based on what we’re seeing in the potential backlog and what’s happening in the industry from a specialization perspective, there’s not a lot of people that can do some of these jobs quite frankly. So I think it puts DBM in a very unique position and a very unique position that he’s different than the market – the cyclical market that people saw a number of years ago just by virtue of the, I think we – you could name, the opportunity set in the sports business alone is pretty phenomenal, let alone that the growth in the tech market and the healthcare market. So it’s a little bit different today than what it was a few years back. But and again, I don’t want to put my – put us in a spot, where we’re making projections. But listen, our goal is to build this thing to a $1 billion top line and the margins are 10%. I don’t necessarily think 10% is the right type of thing to focus on. But as part of growing that top line, I would fully expect to see our EBITDA line continue moving up along with that top line. But we are again, we feel like we’re early in the cycle just looking at some of the opportunity set out there and or by the way continue to look at acquisitions that are not only accretive, but diversify the business and diversify the – any volatility that one would think is out there. So that that’s really our goal that answers the question.

Yes, well, you mentioned a stream of large construction project, one large construction project kind of in DBM’s backyard, is this what Trump is talking about? Is that something DBM would be able to add value on or has talked about Trump become involved with?

Boy, it’s – I don’t want to get any people upset from a political basis. But if there’s a vault we’ve built and we can build it, I’m sure DBM by virtue of the project that they’ve done in the past, is right up their alley, put it that way. And not only right up their alley from the capability, but from a geographic perspective. So we’re trying to service shareholders and if we think we can that that – get involved in a business that will create value for our shareholders. We will go down that path.

Yes. Good. And then Global Marine, your comments were helpful there, in the past we’ve talked a lot about this Huawei Marine joint venture. Is there any update on the Global Marine’s ability to take dividends out of that entity?

Yes, those are discussions that are ongoing. There is a pretty decent cash position out at Huawei Marine. There hasn’t been any decision yet, but we’re hopeful that that discussion will continue and end up in a positive result for both us and Huawei Technologies. I think the fact that we are – we’ve made Maersk Recorder acquisition and we’ll look to service the HMN JV business, I think it goes a long way to show our commitment and ongoing commitment to that. So we’re optimistic, but nothing has been decided yet.

Okay. So are there any updated metrics around Huawei you can provide in terms of revenue or profitability?

No there is – that’s a – whatever they report and there’s typically numbers in their annual report, but I guess I think one thing to think about there is that. This business has really turned around in the last year and a half, two years. And turn – I wouldn’t want to say turnaround, but it just become a focus for Huawei and when you think about it, Huawei this HMN subsea businesses is connecting country – the laying the cable for and connecting countries. And then it gives Huawei the opportunity to really expand internally into those countries where they’re landing the cable and building the landing station. So that’s how you have to think of it from, I believe, from Huawei’s perspective is that it could give them a leg up on building out that country using their equipment. Now we don’t benefit in that, but clearly with the focus on their corporate business of selling equipment, and if their subsea business is an avenue for them that’s fantastic and quite frankly I think that’s why you’re seeing the focus and the numbers that you’re seeing. So we don’t think that they will subside any time soon, put it that way.

Okay, perfect. Well, great work and best of luck in 2017.

Okay. Thanks.

Great. Thanks, Kurt. I want to thank Phil and Mike and thank everybody out there for joining us today again. As always our management team is available to speak with you should you have any follow-up questions. Please do not hesitate to call me directly at 212-339-5836. Brian, could you please go ahead and provide the conference call replay instructions once again? Have a great day everybody.