Good afternoon and welcome to the HC2 Holdings Second Quarter 2017 Earnings Conference Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note that 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, Charlette and good afternoon, everyone and I thank you for joining us to review HC2’s second quarter 2017 earnings. With me today are Philip Falcone, Chairman, President and CEO of HC2; and Mike 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 also be accessed on the HC2 website again in the Investor Relations section. A replay of this call will be available approximately an hour after the call. The dial-in for the replay is 1855-859-2056 with the confirmation code of 543009287. 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 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 measurements 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 press release, which we filed this afternoon and is also 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’d like to turn the call over to HC2’s Chairman, CEO and President, Phil Falcone. Phil?

Thanks Andy. And good afternoon, everyone and thank you for joining us. On the agenda today I'll start with a brief recap of the results for both the quarter and year-to-date, provide some operational highlights from our core operating subs and including our Pansend platform and finish up with Q&A. Turning to Slide 4, highlights and recent developments, as a general comment, I'm pleased that we continue to see the momentum across our platform with which we began the year with several subsidiaries achieving significant milestones and accomplishments. First of all, DBM posted a sequential increase in adjusted EBITDA, maintained a healthy backlog and expects them to remain on track for a solid year and despite some incurring additional costs in the quarter for offshore power inflation repair work, Global Marine also expect to remain on track for a solid 2017, reflecting the strength of its JVs and the high level of short and long-term opportunities across the various market segments including offshore power and telecom. I know we discussed in a little bit more detail what was happening in the offshore power market in the last call. We continue to be very excited about what's happening there. The PTGi-ICS team continues to focus on higher margin wholesale traffic and again posted very solid results this quarter. In addition to delivering its fourth cash dividend to HC2 in as many quarters, as some of you may recall this was a business when we acquired control of the Shell, this was a business that was held for sale and essentially a discontinued operation. It continues to pay literally dividends and has been a phenomenal turnaround for us and we continue to be excited about what's happening there. During the second quarter ANG continued to integrate the Questar and Constellation acquisitions and…

We would now begin the question-and-answer session. [Operator Instructions] And it looks like our first question will be coming from the line of Sarkis Sherbetchyan from B. Riley & Company.

Thanks for tasking my questions here. Phil, can you talk about the lumpiness in the business. I know you mentioned this as you are going through the results and obviously, it's really hard to look at a project based on a quarter-to-quarter basis. So clearly good backlog growth in the businesses. So maybe if you can give us a perspective on what you're seeing in both Marine Services segment and construction. And just kind of what gives you right incremental confidence of making up for the balance of the kind of numbers in the back half of the year?

Well, the reality of it is, when you look specifically at EVM, when you are building, when you are evolved in the development and building of a project like a stadium or Loma Linda Hospital. The size of that project typically doesn’t get smaller, it gets larger. The lumpiness aspect is a function of maybe a something in relation to a design change or a weather related as it relates to Global Marine. But the size of the project doesn’t change. Clearly the timing of implementing a certain design change that maybe not in our realm will lead to us not building or erecting maybe the 35 floors, 45 floor and then will in the second half of the year as that change was implemented on something glees project, then our part, again kind of picks up a bit. These are massive projects and they typically don’t change in size going the opposite way. They typically increased with various changes that the contractor or the sponsor, developer will implement. The easiest aspect as it relates to Global Marine could be weather related. When you are building an offshore power unit, you got the contract to built it, if the weather is not in line with what - how you can operate how you can build. It might delay you for a week or two weeks or three weeks or four weeks. So, it has to then size of the contract doesn’t change as a result. It’s just really timing related. Again, that’s the kind of lumpiness that you and that is typically seeing in these bigger projects. It’s not like half way through, they decide, they don’t want to finish the building. That’s the critical part, it’s typically design changes as it relates to DBM or whether related as it relates to Global because these are sometimes very harsh weather conditions, which can result in delays over a week or two weeks or three weeks.

That’s helpful. And it certainly sounds like the backlog is building. So that’s good to see there. I guess next if you can maybe switch gears and talk about the life sciences division. Obviously R2 received clearance for the gen 2 device as you mentioned and BeneVir received the Stealth-1H patent. So, maybe if you can give an update, right, like what are the major milestones we should be looking for these assets next. And maybe how you are thinking about kind of the funding, I mean you did mentioned some strategic enquiries, some inbound calls there. So, any kind of updates on value creating or realization events in the portfolio alongside some new milestones?

Sure. Well, I can’t go into detail with regards to who we’re actually speaking with or what we’re doing on that end. But I think it’s before understand that from a committed capital perspective, we don’t have - clearly, we want to sponsor, we want to the proper sponsor and the right sponsor for these projects. But at the same time have to make sure that, we are balancing our internal budget and making sure that we have the appropriate resources. So, while we look to and think about the - getting these things commercial, it has not been our objective to fund the all the way through. If you look at the projects now, I don’t believe we have a tremendous amount of committed capital that we have to put. In fact, [Mike] is giving me the zero sign that, we essentially don’t have to put any additional capital into these projects. That being said, if we believe that there are multiples from a return. We want to be good sponsor. We are very excited about each of these projects. We have been involved in each of these projects now for quite some time. There are either big enough projects where I think from a strategic perspective, it’s in our best interest and the shareholders best interest to look at the opportunity set of bring on a strategic and having them take it from point C to point D, E, and G, while we were there from point A to point C. And that’s how we kind of think about this business and that’s how we structured it, so when I think about our two for instance, we funded, we’ve been involved. We have been, David and Cherine have been very involved in day-to-day activity here. And the objective…

Yeah, that's extremely helpful, one final one for me and I'll hop back in the queue, just regarding the…

Charlette, next question please.

Our next question comes from the line of Kevin O'Brien from Jefferies. Your line is now open.

Hi. Thanks for the time. I wonder if you could -- if we could go back to Global Marine for a second, I understand from the DBM construction side, lumpiness in the business where a design delay might eventually lead to growing the project, the change order may come in may be higher than the original bid. I am trying to understand on the Global Marine sides, you had two projects that had some cost overruns, whether or not it was due to weather, or whatever those specific items were. How do the contracts actually work and how confident are you that some of those overruns or some of the unforeseen costs can actually be sort be recouped in future periods? Can you hear me?

Ladies and gentlemen, please remain on the line. Your conference call will resume momentarily. You may resume.

Thank you. Kevin, we heard part of your question. If you can queue back up please real quickly and you would love we want to make sure we answered your question. So, we'll pause for two seconds so you can queue up. Charlotte look for Sarkis please. He should be in queue right now.

Sarkis, your line is now open.

All right. Thanks for the color on the prior question. Just real quickly on the DTV America assets, maybe if you can give us the rationale of acquiring those assets. I think you paid about $18 million for the transaction. Is it cash flowing today? Is it going to be a platform that you can kind of build off of. Any incremental thoughts for us to get a better understand. Thank you.

Yeah as I mentioned, it's a small acquisition for us. It is an operating business, which is something that we wanted to focus on. There is a platform there. We felt like it was undervalued. There is a possibility to build on it, but we're crossing the tees and dotting the eyes, but we do think that have a -- that we got in a pretty attractive entry price there and it's not something that I want to go into too much detail on right now because clearly it still means that you see approval. But we see an opportunity set and an opportunity set where there is not a real CapEx like building out a telecom, wireless telecom network or anything like that. We like their underlying business and as I mentioned they're operating and probably could be a bit more efficient, but I think overall, we've done it at the right price and like the valuation and very pleased with the diversified asset that the company has built in their previous history.

All right. That will be all for me. Thank you.

Thanks, Sarkis.

Charlette, are there any other questions in queue right now?

At this time, I am not showing any further questions in the queue.

Okay. Thank you, Charlette and thank you Phil and Mike and everyone for joining us today, Charlette, I just saw Kevin queue up in queue. Can you let Kevin O'Brien in from Jefferies please?

Certainly. Kevin O'Brien your line is now open.

Thanks. Did you actually get any of the other question as it came through prior or shall I reask?

No Kevin. Just do it again. Thank you.

Yes. Okay. So, the question was really revolving around Global Marine. I can understand and seeing some of the lumpiness of the business from the construction side where design delays may push things off from a timing basis into third quarter or future periods, I also understand that generally that may come back as a positive with a change order leading to something that's better than the initial bid. I am trying to understand a little bit better the lumpiness in the Global Marine side of the business and what to expect going forward if weather it is such a variables? How are contracts set up for things or cost overruns that you saw in the two projects? How confident are you that you can recoup some of those costs over future periods, just to try to understand how to view that business going forward?

Okay. So, let me answer the first part of your question as it relates to lumpiness. Again, you have to think about this is whether you're building a stadium or an offshore power unit, while they're different, they're the same in terms of the size and the scope of the project and the timing, there may be a different construction keys where we're not involved in where they may have slowed down for any one of the number of reasons, or there may have been a change with one of pieces or one of the designs or the products being ready for installation. Again, something that's related to the project, but essentially out of our control. No different than building a stadium albeit once in the offshore, one is onshore. So, you have to think about it like that and then we have the other dynamic of whether and depending on where you are in the world, these are not projects that are qualified offshore. They can be in pretty rough weather and which makes the business and that part of Global that much more valuable because you have to have that expertise to be able to operate in those type of environment. So, the combination of he two will make spread things out from three months to six months or three months to a six months to eight months depending on the other participants in the construction aspect or I don’t want to say to a lesser extent. But they are both - with the weather part of it. So, that’s not new and again, you see these are very well funded projects. They just completed. They may take more time, they may increase in size, but once they are started, they typically get completed and that’s quite frankly…

Wondering if I could just chime in one more and switch gears back to the energy side. I think you had mentioned, if you were to look at this quarter’s performance on a GGE basis and annualize it out to $12 million. You mentioned that you have the capacity to potentially do $60 million to $70 million. What’s the pathway to get towards that great volume? Does it have to come from organic growth, is it more the growth. As you are seeing here with the facility in Tennessee, that it’s next to a large commercial contract or commercial operator. I guess as part of that, with Pepsi, Frito-Lay. Is there actually a contract involved with that station or is it just location based volume growth?

It’s primarily contract, and clearly, these are big moves for some of these companies. And they kind of master suite and they don’t change over there and tighter fleets overnight. This is very strategic for these guys. When you about our stations, it’s creating an environment to get their truckers in and out as quick as possible. So, the sizing of the lanes is very important. The speed and the efficiency of the pumps are extremely important and these are things that the underlying distributor thinks about because time is money and we’re not selling potato chips and coffee. The big distributors like to think about it as time, time is money, is efficient and is fast, so they can get and get out. That is -- that means that they are that much more productive. But from a capacity perspective, again, these guys, these stations are in distribution centers, they are strategically located. They are typically contract associated. But before you - if you are delivering you know the product to Frito, you have to make sure that you are, things are running smoothly and you’ll see over time, volume pickup. And the volume pickup will be primarily organic as it relates to the existing distributor. But there is also the opportunity set is as more and more of these distributors and trucking companies convert, that’s all kind of I don’t want to say that, but there are people that are using the site now that we didn’t expect just by virtue of the location of some of these facilities. So you got the growth from the underlying contract and from the growth, we expect growth in - with the underlying distributor and then you have the kind of one-offs that will come and utilize the facility as they…

That’s great. I really appreciate that insight. I will take it back to the queue, if there is any other questions.

Kevin, thank you.

Okay. Thank you.

Kevin, thank you and thank you everybody for joining us today. Thank you, Phil and Mike again. As always, our management team is available for some follow-ups should you have any follow-up questions, please do not hesitate to call me directly at 212-339-5836. Charlotte, could you please go ahead and provide the conference call replay instructions once again. Thanks again, everyone and have a great night.