Good afternoon, and welcome to the HC2 Holdings Third Quarter 2017 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, everyone. And thank you for joining us to review HC2's third 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 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 1 (855) 859-2056 with confirmation code of 99349087. 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 discussed 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'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. I’ve got a lot to cover today, so I'll try to get through it as briefly as possible and make sure I touch on everything at the same time. And so just turning to Slide 4, I wanted to include this slide to – as you really take a step back kind of what are we, how are we thinking about the business and how are we thinking about our holding company and what are we trying to do in you as both bond and equity investors, what are you looking at. And I think to begin with we do feel like we have a pretty diversified portfolio of uncorrelated assets and investments, which I think is relatively unique in the marketplace. And the actively managed perspective that we are taking at a holding company is we're not just making acquisitions, we are really getting involved from a financial engineering perspective. Clearly, we're letting people do what they do best at the subsidiary level, but our – how we look at our job is to really drive asset and capital appreciation, which we hope and ultimately think that the market will follow. We continue to push and drive organic and inorganic growth at the subsidiary level. You know keep in mind we've been at this now for three years and this was a Shell company and the focus is on growing that top-line, but at the same time making sure that that EBITDA and the – is growing along with the asset-base. And we've taken it essentially from zero to call it on a run rate basis about $1.5 billion of top-line and mid 70s through the first nine months of the year on our core operating subsidiary…

Sure thanks Phil. Brian can you go ahead and give the Q&A instructions and queue up?

Yes, thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from Sarkis Sherbetchyan with B. Riley please proceed.

Hi, good afternoon, Phil, Mike and Andy.

Hi Sarkis how are you?

I’m well thank you. So few questions here I’ll start with the Construction segment, it seems like some of the delays kind of continued here and I appreciate the color on how much shifted into fiscally 2018. Can you maybe describe the composition of the backlog in the construction segment? Maybe if you can talk about what your team has seen with regards to duration, is that increasing or decreasing over time, for example? Maybe even if you can get into the level of project profitability you're seeing, has that been kind of increasing or decreasing in that backlog?

Yes as we discussed that there is – as you get into these larger and more complicated projects The Loma Linda Hospital or an L.A. Rams stadium, there's a number of different entities involved in these projects. And they may be – they may affect the entire project from the A to Z. And it’s essentially out of our control sometimes, or I should say sometimes. But when you have a third-party that is doing something different or making changes some way shape or form. But they are the larger projects like The Loma Linda Hospital, the L.A. Rams stadium. And the delay if anything does and concern us it’s clearly will be on the project for longer than we expected. So if anything it could benefit us over time. The longer the situation plays out, typically that the better off we are.

Understood, that's hopeful. Kind of thinking about the same for Marine Services, looking at the backlog, I think, the number was $456 million at the end of this quarter.

Yes.

Maybe if you can talk a little bit about the same analysis there like the composition or kind of what your seeing?

Yes, if you think about that detail, as we mentioned, that increased by about $130 million alone just from the SEAIOCMA deal that which was the five-year that we signed recently. The additional backlog was from the force in a bit less from the other two cable maintenance zone contracts. And I don't have details on what those two backlog – what those two contracts contributed to backlog offhand. And I’ll see if I can dig them out somewhere. Typically I don't want to say typically, but between the two of them there each maybe $120 million $150 million. So a good chunk of that 456 is from the maintenance or the maintenance contract which is again from a timing perspective is super high quality business. That’s the bulk of the NAZ, the North America, the OCMA, and the SEAIOCMA or the bulk of the 456. And they range from each 120, to 140 to 150. The other increase that we've seen, that we've mentioned is in the Sea Wind business which is up nicely for the year – for the year-to-date in 2017. So between those four situations, those are the majority well more than – well north of the majority of the 456. And just the fact that maintenance contracts are kind of from a consortium perspective, that’s super attractive business. And we – it's a business that we really wanted. We wanted to renew that, we felt it was important from a reputational perspective. And the fact that we did, I think, is again kind of our parcel to the underlying platform. You can’t have somebody with a robot being a part of your maintenance crew on some of these mission critical telecom telecommunications cables. And there's a tremendous amount of extra piece of engineer that play the key role here. And I think it’s another reason why we need to thing about the business. Because of the complexities around it, because of the contracts, when you think about the businesses, it’s a very value-added contract, but a very value-added business overall that, I think, would probably from a valuation perspective be a number of iterations higher than three, five or six multiples. This is an engineering critical, machine critical aspect that where we own here, and that we control and having these three, I think, there's only four in total, sorry six in total to have 50% of the marketplace. I think that’s a good feather on our cap for and speak volumes to people’s trust and the abilities of Global Marine.

That's very helpful. And if I can stick with Marine Services, I mean, I think, the transaction with Fugro seems pretty interesting on multiple fronts. If maybe you can give us a better picture on what that meant from projected CapEx perspective on Marine Services, I think, you mentioned it avoids approximately $70 million in CapEx. Just maybe any incremental color or comments you can give us to frame that?

When you think about the vessel business, albeit, it's a little bit different when you think about CapEx on a plant and building out a plant. But your capacity is year vessel, like your capacity is your plant. And in this particular case we want to continue growing this business. We want to continue not only growing the business, but upgrading our fleet. And I think we accomplished that, in fact I know we accomplished that with this acquisition by virtue of having now this vessel being part of our fleet. There’s a lot of flexibility on what this vessel can do. And vessel new – this vessel new is easily $130 million, $140 million. Now the market has come under a bit of pressure. And we said two years ago or a year and a half ago, we are looking to try to capitalize on it. And I think from Fugro’s perspective they realized and I don't want to speak for them, but in looking at their willingness to take equity, I think, said something about their – their belief in the business. And about not wanting to just get rid of this thing at what could be trough levels. So I think they could walk away thinking that what, kind of a good deal and by the way the market rebounds and returns like we think it will, we will participate without having the news around our neck and thinking that the vessel valuations are gong to snap back and this thing now being worth $140 million again. I think that will be tough for anybody this time. So, I think, we accomplished what we wanted to accomplish and they did as well, because it does expand our business, does upgrade our business. And as well as give us flexibility on the trenching side and opportunistically gives us some ability to move some of these assets around to different parts of the world and maybe even monetize something that we now have more than one off. So I think it was a good acquisition overall. And I remember talking to the team about it in the summer, how they thought it would be a good acquisition from a transformation perspective to help our overall business. This is not just an asset purchase. And I want to emphasize that that there is a business here, there are people here that are coming along with this business and will expand our top line at the same time. So I think we crossed the T’s on and dotted the I’s on a number of different fronts with this acquisition. And clearly from the cash perspective, as I talked about, you want to grow your business, you got to spend the money. And this was an alternative to us really kind of a check, if we want to grow our business, or upgraded our business. So gain there's a lot of things for us on a number of different fronts.

That's very helpful. Moving to the Life Sciences component on last quarter's call you did mention the data room is being set up for some of these assets. It sounds like the team is taking time to negotiate the right value for these assets and we can certainly appreciate that. So just want to get a sense for perhaps the next few milestones we should be looking for from either a strategic perspective or a value creation perspective?

Yes I think as it relates to the absolute – the commitment to put in additional capital, I think, we've reached all our milestones on that end. And suffice to say we want to be good sponsors, but there is no demand on behalf of the underlying entities that they can make that contractually obligate us to commit to putting more capital on. That being said, you make a business decision. If you think you can support the business while you are going through these processes of dealing with strategics, you want to do that is the right circumstance, you don't want to put good after bad. But this is not even remotely the case with any of these investments. They are on the upswing here. But as it relates to the milestones that we talked about, they are not – there is no additional formal obligation on behalf of HD2 to continue funding. Opportunistically we will look at it and we are very close to each and everyone of the operating management team i.e. from Cherine and Dave’s perspective again being actively involved and actively managing. So like any situation but I think the good new here is if we didn’t want to put money in, we wouldn’t have to.

Perfect. And if I may switch gears here and talk a little bit about insurance, certainly thought that was an interesting acquisition here from that segment did seemed like a win-win for policy holders, the seller and also for your division. I'm assuming the deal closes. Can you give us a sense for how the team could leverage the infrastructure you've built since the acquisition of AFG. I know you kind of talked about it from the prepared remarks. But any incremental info we can kind of gain on that.

Oh yes, I think, in looking at team, keep in mind there's 100 people down in Austin right now plus or minus. And obviously to bring a – to administer a portfolio like this, which it think is a tremendous value add from a relationship perspective. And it’s one of the big plus is that we're not a financial buyer that will then have to go out and pay somebody from a servicing perspective. There is that value add from not having to go to third-party from a servicing perspective. And then you got 100 people down in Austin that you are again over doubling the portfolio – the size of the portfolio without having to materially increase any headcount. So this is a classic case of capturing synergies at the platform perspective and was extremely in critical for us to as I discussed all along to leverage that platform. When I talk about leverage it’s the operating leverage. And clearly this one will get us there and still give us flexibility. So we are going to continue to cross T’s and dot the I’s on the landscape, because there is an opportunity here and there is an opportunity of in this space where we will or by the way become a one hundred percent focus as opposed to – and again know trends that allow people run their business, it’s just when people have diversified operation on the insurance side, they may focus and have their bread and butter in one area and not the other. So we kind of look at it as this is our space, we’re going to focus on it, we're going to try and capitalize on it. And we think as a result we can create some efficiencies there. Not one would otherwise not see and especially one would otherwise not have if they were just a financial buyer.

That's very hopeful. Just want to switch gears and talk about LPTV a little bit. I know you maybe didn't want to dive too much into the strategy yet but just wanted to kind of pick your brain and understand with regards to the assets, right I mean what's the opportunity in broadcasting? Do you expect those assets to perhaps be cash flowing? And then if I can kind of add a question alongside that I mean, it sounds like there's going to be a bridge loan here obviously would probably require credit agreement. But would that be short-term debt or long-term debt, and then perhaps would be at the sublevel?

Well the sub the entity that is signing the bridge is the HC Holdings’ broadcastings. We full expect that this is a short term strategy and it will clearly and already looking at putting the proper capital structure and financing in place for this. So as it relates to this bridge and again it's a bridge you have to think about it as the bridge to something more permanent down the road. And as we continue to build out the space, I think, the strategy will become more clear. But also to it’s not with the acquisitions that we’ve signed up it’s not drying $75 million on day one. I don't think we made public what number it is, but it’s not near $75 million. That’s really to give us that additional flexibility. But there is a strategy here. And listen, the opportunity is on a number of fronts without going into too much detail, but this is about having critical mass in the broadcasting space about taking advantage of the fragmentation in this marketplace today. And about having the ability to broadcast into a substantial number of households across the country. So to know secret what’s happening in the media space just without getting into too much detail, the rationale when you think back to the basics, you had over-the-air television back in 70s and 80s being the primary method and means of viewing television. And then you moved into cable for really two reasons: content and – content and – I am blanking on the word, I must said this about 48 times already, content and reception. You have to have cable to get proper reception. Today that’s not the case. The business has changed. The technology has changed and or by the way the content is there.…

Thank you. I appreciate that. That will be all for me.

Great, are you sure?

Thanks, Sarkis. We appreciate it and we’re bumping up against time. So, thank you, Phil and thank you everyone again for joining us today. As always our management team is available to speak. Should you have any questions or follow ups, please do not hesitate to call me directly here in New York at 212-339-5836. Brain, could you please go ahead and provide the conference call replay instructions once again. Have a great evening everyone.

Thanks everybody.