Good afternoon and welcome to the HC2 Holdings’ Second Quarter 2018 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.

Thank you, GT. Good afternoon, everyone, and thank you for joining us to review HC2’s second quarter 2018 earnings. With me today are Philip Falcone, Chairman, President, and CEO of HC2; and Mike Sena, 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 with our webcast presentation, which can also be accessed at the HC2 website as well in the IR section. A replay of this call will be available approximately two hours after the call. The dial-in for the replay is 1-855-859-2056 with the confirmation code of 4889247. Before I turn the call over to Phil, I would like to remind everybody that certain statements and assumptions in this earnings and conference 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 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 again is on our website. And finally, as a reminder, this call cannot be taped or otherwise duplicated without the company’s prior consent. Now I's like to turn the call over to HC2’s Chairman, CEO and President, Philip Falcone. Phil?

Thanks, Andy, and good afternoon, everyone. Thanks for joining us today. Once again we’re going to try to keep the remarks brief, so we have more time for Q&A. I’ll focus my comments on the solid performance across our portfolio during the quarter that also saw us complete the monetization of one of our life science investments. And I'll also mention some important milestones that took place just after the end of the quarter. Turning to Slide 5, you'll see that we began broken out a summary of our adjusted EBITDA by segment along with pre-tax adjusted operating income for our insurance segment. Overall it was a very, very strong quarter for us. In fact it was our best performing quarter for our core operating subs since the inception of HC2 and one of the best quarters on a total company basis since Q4, 2016. So let me walk you quickly through it before opening it up to Q&A. Turning to slide 6, our core operating subs DBM Global, and Global Marine Group both delivered very strong results. These businesses continue to validate our level of confidence in them and we are once again reaffirming our full-year adjusted EBITDA guidance for both of these businesses. First of all DBM Global had another very good quarter with adjusted EBITDA coming in at $15.5 million for the second quarter and $25.5 million on a year-to-date basis Based on these results and our current view of the business, we remain comfortable with our full-year 2018 guidance. DBM continues and that DBM – and that 2018 guidance is $60 million to $65 million. DBM continues to diversify its offerings, maintaining a very robust backlog and execute on key projects underway. During the second quarter, the first deliveries arrived onsite for the L. A. Rams…

Yes, thank you. We will now begin the question-and-answer session. [Operator Instructions] And the first question comes from Sarkis Sherbetchyan from B. Riley FBR. Your line is now open.

Good afternoon, and thanks for taking my question here.

Thanks Sarkis.

Just want to – just want to focus first on the capital structure comments, Phil maybe if we can pick your BeneVir on some of the thoughts and timing. You know I think what's maybe holding back the equities is the level of the debt and perhaps the when we can see the refiling the 11s that will probably help the equity side. So maybe if you can share some additional color on potential structure or just kind of thoughts on the level of those the interest that you’d aspire to and or the absolute dollar value of the debt?

Well I think based on the performance I'd like to think that we should get 5% to 6%, though I don't think we will. But knowing the asset base that we have, there is no reason to believe that it will be a material amount less than a 11%, again it’s not to sound like a broken record. But we fully expected to look to refi these 11%s at some point in 2018 doing it early in the year was a little bit challenging to think about that 5.5 point premium call protection. There is different things that we could do now that we are so close to that call day. So we don't have to wait until that call day, we'll see how the market – what the market is like quite frankly become the 1st of September and shortly thereafter. But I think we're clearly well-positioned. I'd rather have it done sooner or rather than later. But I don't want to be hasty and print something with a rate that I'm not comfortable with, because it should be materially lower than 11%.

Thanks for that color Phil. So, just moving to the monetization for the portfolio, clearly BeneVir was a big one and it sounded like there are some other potential developments maybe on R2 and MediBeacon. Can you maybe give us some more color on developments there?

Yes. We’ve been I think with MediBeacon there has been discussions with strategies we are really kind of crossed [indiscernible] again trying to determine who the best partner is and what their end game is on this because clearly it’s -- the product is – the product works, it’s a breakthrough technology. There are a number of entities that are interested in this both from a strategic investment and possible acquisition. Clearly if it's an outright acquisition we want a -- want to make sure again we don't make a hasty decision, we want the right number because this is the – this business attracts both of the remaining businesses where the two remaining businesses in terms of R2 and MediBeacon are the real deal. You know they both are very effective in terms of what their objectives are and their both devices that work, they’re both breakthrough. So we think we're very well positioned and it depends on at the end of the day what type of a monetary – what type of monetary situation the potential buyers or investors would be potential buyers or investors we'd be looking at. And so we're kind of open to both, but then have to be the right number, and there is no rush to it, but there are definitely intruders, there is no question about it. And I think the fact that we did get through and then leave it the second pilot testing or third pilot testing is with flying colors is evidence of a very premier technology, and one that we believe and the management believes will be distributed, and in many, many, many hospital operating rooms and intensive care units, and that’s how critical this technology is as it relates to real time kidney monitoring. So the shooters are there, and we hope that we will see something develop. Again I can't give you the timeline. I don't want to give you the timeline. I think it's unfair for potential buyers or investors on this but they're there.

That's very helpful. Thanks for that color. Just kind of switching gears here on broadcasting, clearly you made some new ads from the management side. You're kind of giving us some more as it relates to the asset strategy, and some incremental financing here. You did mention some of the run rates on cost savings that the program of -- I think it was saving $10 million if I’m not mistaken $10 million to $12 million annually over the next few quarters. Is it safe to say that you can get to break even on a run rate basis perhaps by the end of 2019.

Yes. Yeah, no question. If we're not – I didn’t want to think of not being cash flow positive or break even by then. But kind of knew that there would be certain expenses incurred and any time make the number of acquisitions that we did and just the integration aspect putting it all on paper and then taking it to putting the action plan on paper and then executing on that action plan take time. But there's no question we will get there. And that's the first order of business for us. Integration as well as cost cutting and cost cutting is not a strategy but it's from a integration and acquisition perspective that is part and parcel to reducing the overhead and consolidating the acquisition that we made. If you buy three different companies or four different companies you are looking at three or four different overhead expenses and you cannot reduce that overnight. But I fully expect that these will be educated. We are now the first and foremost it is doing this right the first time around because of who we believe will be potentially content providers over this have to be a [indiscernible] platform, where we know, where we will be distributing or I’m sorry broadcasting, we know who will reach, who we will, we will reach, we know we have to know who we can’t reach. And we've got a right team in place with that Kurt is spearheading on that integration side, and there is a phenomenal opportunity from a technology side that we have to – I think one of the brighter minds on that site with Louis Libin and some of the different things that we're looking at and doing and working on executing there. So I hope to be able…

That's super helpful. And I think the number of stations closed pending sounded to be 164. It sounds up from 150 or so from the last time around, is that the right number there or are you acquiring some additional ones there?

Yes. We are acquiring and we have funds, NOIs and purchase agreements. And we did close on the – this New York related full power station where we essentially bought half of the channel which covers 15 million POPs, actually 16 million POPs, full power station in New York City. Very, very excited about that transaction and that reach where we are now going to be able to utilize that station and be a key part of our portfolio. When you think about New York it’s the biggest media market in the country and when you think about the ability to cover 17 million people or 16 million people and we're working on expanding that coverage with this channel alone with a move of the transmitter which could expand the coverage to 20 million. Very, very valuable when you can reach that number of people in one market and with a full power station. So we're doing things like that. But yes the 164 stations is right and I think people are -- when we tell them how many stations we have under our umbrella now they're quite surprised. And I think if you talk to the quality people that we’ve hired and you'll – we’d see the excitement around it, getting people like Rebecca, Kurt and Louis and unless I mean Rebecca, Kurt and Louis came from super quality organizations and they didn't do the thinking that our asset or our portfolio is weak. They clearly did their homework and I believe are very excited about what we're doing and about the portfolio and about the prospects.

Great. That sounds great, thanks for that. I'm just kind of switching gears here to the meat and potatoes of the business some obviously for DBM and Global Marine. You reaffirmed the guide for both of those segments. Can you maybe help us through the backlog health of those businesses and just kind of what you're seeing in real time.

Yeah. I think both DBM and global are doing exceedingly well and really I think you're going to see great things. DBM is basic blocking and tackling. Russell and team are - they have more business than you can kind of shake a stick out and they're looking at, the business in the past has been a little bit lumpy with - by virtue of the size of the, some of the different projects that they've gone after. I think they’ve, these are great projects to have, great power projects to have as part of the backlog. But they do create some lumpiness and I think conceptually we talked about it in the past of focusing a bit more on more of the middle sized projects, the smaller projects, which could result in a more turnover and potentially higher margins but a lower backlog. So, the drifting down and backlog is not indicative of what's happening in the business by any stretch at all. It is a just a ton of a tweak in the focus of some of the different things that we're looking at and we're trying to get on the path. You turn some of this more smaller mid-size projects around quicker but as a result, your backlog doesn't look as high. Keep in mind, when we - this backlog that we got up to 700 was up from the 300s so we've got a tremendous amount of cushion here but it's just a function of okay, where can we get a little bit smoother number or operating performance and even potentially higher margins. And I think Rustin and team will could assure you that that's the dynamic that we're looking at right now. And I think with looking at the opportunities that and the infrastructure, we…

Great. Thanks for that, Phil. And I just want to touch upon the insurance side of the business. You know it seems like the Humana book of business that's expected to close soon or it’s going to really kind of game change and step function of that side of the portfolio? Can you maybe give us some more color or some comments on you know your expectations for that going forward? And what that means to your platform strategy?

Sure. I think this was a very, very critical transaction for us and the team worked extremely hard on this, this was a complicated transaction and it’s a complicated business to begin with and outside of the due diligence aspect to the thousands of LTC policies that you're analyzing, there's a whole other regulatory aspect that – and hurdle that you have to overcome and this is – I think clearly puts us as one of lead participants in this market with this transaction. I think getting the regulatory approval from a number of states we had to was a big, big step for us gives us a lot of credibility. And quite frankly there were a number of guys that we have talked to and continue to talk to that wanted to see a transaction like this close. So we believe I don't want to say it's going to open up the floodgates for us because we want to take our time, but this is a game changer for us in terms of our ability to now get a quality transaction like this under our belt with the size of the transaction and the asset base I think what catapult us and will quite frankly open the floodgates and allow us to probably grow this a bit faster than it took us for closing this transactions. And you know there was a massive amount of heavy lifting here and on both you know Humana and CIG’s part. So we're extremely excited about the prospects now getting the portfolio up to almost $4 billion and we're going to look to expand this and continue to expand it because there will be a lots dropped to the bottom line as a result of doing transactions like this and we will clearly go into more detail over the next few months as it relates to how we are thinking about it and what we're doing with it. But it’s a very valued -- very value-added to our overall strategy and just a fact of getting total adjusted capital now north of 160 without any additional capital infusion on our part is a big plus for us. So half of the team forget that is done on all levels. But it was really vertical but by getting that the regulatory approvals which we said in our press release that came through was a nice breath of fresh air for us and I think we’ll speed up the process here going forward.

Thank you. That's all for me.

Great. Thanks, Sarkis. We're coming up on 6. I want to thank everybody for joining us today. As always our management team is available to speak with you. Should you have any follow-up questions please do not hesitate to contact me directly at 212-339-5836. Judy, if you would please go ahead and provide the conference call replay instructions once again and have a great evening, everybody.

Thank you, everyone.

Thank you, Mr. Backman. As a reminder, this conference call will be available for replay beginning approximately two hours after this call. Dial-in for the replay is 1-855-859-2056 with the confirmation code of 4889247. Again, dial-in for replay is 1-855-859-2056 with the confirmation code of 4889247. This concludes our call, you may now disconnect.