Innovate Corp (VATE) 2020 Q4 法說會逐字稿

Good afternoon, and welcome to the HCT -- HC2 Holdings Fourth Quarter and Year-End '20 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded.

I would now like to turn the conference over to Matt Chesler of FNK IR. Please go ahead.

Good afternoon. Thank you for being with us to review HC2's Fourth Quarter and Full Year 2020 Earnings Results. This afternoon, we are joined by Avi Glazer, Chairman of HC2; Wayne Barr, Jr., CEO of HC2; and Mike Sena, HC2's Chief Financial Officer.

As usual, we have posted our earnings release and our slide presentation on our website at hc2.com. We will begin our call with prepared remarks to be followed by a Q&A session. This call is also being simulcast and will be archived on our website.

During this call, management may make certain statements and assumptions, 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. Any such forward-looking statements involve risks, assumptions and uncertainties and 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 the cautionary statement that is included in our earnings release and the slide presentation and further detailed in our 10-K and other 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.

Management will also refer to certain non-GAAP financial measures, such as adjusted EBITDA, Insurance adjusted operating income and Insurance pretax adjusted operating income. We believe these measures provide useful supplemental data that, while not a substitute for GAAP measures, allow for greater transparency in the review of our financial and operational performance. Finally, results for the telecommunications and Clean Energy segments sold in the fourth quarter 2020 and first quarter of 2021, respectively, are excluded from today's discussion and analysis of performance for the comparable periods.

At this point, it's my pleasure to turn things over to Avi Glazer.

Thank you. Good afternoon. I'd like to thank everyone for joining us today. Before I became Chairman, the old HC2 had been involved in a myriad of unrelated businesses, including long distance, marine services and energy. In less than a year, HC2 has sharpened its focus and is a tremendous collection of best-in-class assets that are laser targeted to today's new economy.

First, we have Infrastructure represented by DBM, one of the largest steel fabrication and erection companies in the United States. This is an outstanding asset and even more relevant with the likely increase in Infrastructure spending going forward as a result of the change of control in Congress.

Second, with HC2's Life Sciences portfolio, Pansend, which is a proven track record for creating value. The Pansend investments, with the greatest current potential for value creation, R2 Technologies and MediBeacon. R2 is developing and commercializing aesthetic medical and nonmedical devices in the $22 billion aesthetic dermatology market. R2 is led by the same management team that develops Zeltiq's CoolSculpting system and which successfully took the company public in 2011 and then later sold to Allergen in 2017 for $2.4 billion.

MediBeacon is revolutionizing kidney health with the first-of-its-kind novel technology that allows for the real-time monitoring of kidney function. MediBeacon has been granted a breakthrough device designation by the FDA. The potential market is in excess of $7 billion. The technology employed by MediBeacon can be used for other areas of medicine besides the kidney.

And third, we have HC2 Spectrum assets represented by HC2 Broadcasting, the largest broadcast station group in the U.S., and as I'm sure you are aware, in today's world, the opportunities in a nationwide collection of broadcast as it provides, including the potential inherent Spectrum value, is limited only by one's imagination.

We have chosen to focus our company around the 3 business areas where we believe there is substantial growth and value-creation opportunity right in front of us. These are businesses that exist in our portfolio today. The assets are world-class. The talent is top-notch, and we are committed to supporting their success by fueling the organic and inorganic ambitions and, if and when appropriate, looking for alternative approaches to unlock value.

To provide more detail on these exciting assets, I'd like to turn the call over to Wayne Barr, the CEO of HC2.

Thank you, Avi. This is an exciting time for HC2. Over the past year, we've reshaped the company with the goal of sharpening our strategic focus and restoring our financial strength. We're doing this with the support of a newly constituted Board of Directors and a broad group of stakeholders and through initiatives and transactions across the organization.

As a Board and management team, we are committed to transparency and have taken action to align ourselves with our shareholders. The new HC2 is deeper, not wider. It's stronger and more focused.

We've accomplished a tremendous amount in a short period of time in a challenging environment. I couldn't be more appreciative of my more than 2,800 colleagues across the company who show up every day with drive and determination to make HC2 better. Thank you for your hard work.

Over the course of the past several months, we have reduced the number of primary operating segments from 7 to 4, exiting the marine business last winter and spring, telecommunications in the fall and Clean Energy this winter in January. These transactions better positioned us to successfully refinance our outstanding bonds in February. We have also sold selected noncore full power television broadcast stations.

In addition to sharpening our strategic focus, these transactions generated net proceeds of approximately $265 million in the aggregate, which we used to reduce holding company and broadcasting debt and to strengthen our financial position. Additionally, our Board of Directors continues to evaluate the nonbinding indication of interest that we received for our Insurance business in December.

Our Infrastructure segment, DBM Global, is one of the largest steel fabrication and erection companies in the country. Led by Rustin Roach and a terrific team, DBM is a highly efficient and collaborative portfolio of companies providing better designs efficient construction and superior asset management solutions through a full suite of integrated steel construction and professional services. DBM is well positioned to continue to grow in the healthy commercial construction market, to realize cross-market customer opportunities and especially to benefit from an expected increase in public sector Infrastructure spending.

And then our Life Sciences segment currently owns stakes in 4 companies that are developing innovative health care technologies and solutions. Partnering with great teams, the strategy is to then incubate and shepherd each company's development life cycle, secure additional rounds of financing when necessary, while maintaining governance and creating value by patiently negotiating exits at attractive multiples.

As mentioned, currently, the near-term Pansend investments with the greatest potential for value creation are R2 Technologies and MediBeacon. R2 is currently in the process of commercializing its FDA-approved Glacial Rx device in the U.S. Preorders with estheticians have been going very well for this device, which represents R2's first-to-market dermatological innovation utilizing CryoAesthetic technology, and there is enthusiastic demand ahead of the commercial launch, which is scheduled for this month.

The second product in the R2 brand portfolio, Glacial Spa, is expected to launch commercially in China in the second quarter of this year. As you may recall, R2 and Huadong Medicine Company have previously entered into an exclusive distribution rights agreement for R2's products in China and selected APAC markets. These commercial launches are expected to result in immediate revenue generation this year with no additional capital commitments by HC2.

R2 Technologies also just recently received $10 million in funding from Huadong, which represents the third and final tranche of Huadong's $30 million equity investment in R2 at a predetermined post-money valuation established at the time of R2 Series B close in June 2019 of $113 million. These investment proceeds are being used to fund the launch of Glacial Rx and Glacial Spa as well as further platform development.

Meanwhile, MediBeacon, which is revolutionizing kidney health with the first of its kind technology that allows for the real-time monitoring of kidney function made advancements towards its final U.S. pivotal study, which is expected to begin in the second half of 2021. The MediBeacon also received a commitment from Huadong for an additional $20 million in non-dilutive funding over the next 2 years to pursue Class 1 status in China, which will allow the device to immediately enter the Chinese hospital system.

Spectrum continues to be an exciting play on the growing trend of TV viewers who are cutting the table cord and instead turning to digital antennas for some or all of their content, creating a rapidly growing ecosystem for the over-the-air TV. Horowitz Research calls OTA, the new TV growth story. According to Nielsen, there were 20 million OTA homes in the U.S. as of August 2020, or roughly 19% of all television households, up from $16 million in 2018, and just $11 million in 2010. The number of OTA homes is growing rapidly with over half of these antenna users buying their first antenna in the last 3 years. At the same time, there is a growing number of diginets in existence that are looking to OTA as an alternative platform to reach audiences.

We are uniquely positioned to leverage this trend and capitalize on the network we have built over the past couple of years. And the implementation of ATSC 3.0 should further expand the capability and use of Spectrum, creating additional revenue opportunities for HC2 that we are already actively exploring.

The acquisitions over the past couple of years and the build-out of stations, which is now largely complete, has transformed our broadcasting business. HC2 is now the nation's largest OTA network operating 227 stations with a footprint covering 94 markets in the United States and Puerto Rico, including 34 of the top 35 DMAs.

Our attention in Spectrum now turns to the next phase, which is generating growth in commercial carriage through both lease agreements and revenue share arrangements with digital content providers as we look to build upon the already approximately 80 networks that air on our platform currently and to take advantage of the significant operating leverage built into the broadcasting model given its fixed cost nature.

All of these businesses, Infrastructure, Life Sciences and Spectrum, executed well this past year in different ways. During a very uncertain period, each was able to weather the challenges and make progress toward their respective goals. As they manage their businesses and capitalize on distinct demand drivers.

HC2 also took several additional steps to enhance the company's capital structure, including the rights offering in November 2020. And the refinancing of the holding company senior notes and credit facility in February 2021. We have successfully reduced aggregate holding company indebtedness by $155 million, lowered our cost of capital by approximately 300 basis points, extended maturity by almost 5 years and built-in the additional flexibility and liquidity that we would like.

Today, the holding company has less debt, a lower cash interest burden, no material near-term holding company debt maturities and, on top of that, lower corporate overhead. We really haven't ever been in this position at the holding company level in my 7 years since joining the company in 2014 as a Board member. We're not done with our work, but I like where we are. We're strategically focused financially stronger, and the time horizon to more meaningful value creation is shorter.

With that, I'll turn it over to Mike for a review of our financials and capital structure.

I'd like to echo Wayne's commentary about our financial performance and financial strength. We finished a challenging year with stronger and improving financing performance for our individual businesses and overall company.

As a result of the steps we have taken at the holding company and the resilience of our operating businesses, we're a stronger HC2 with a significantly improved liquidity position and a lower cost of capital. This will serve us well as we narrow our strategic focus to generating growth and seeking value-creation opportunities in Infrastructure, Spectrum and Life Sciences.

First, let me review our financial performance. And then I will walk you through the key changes to our capital structure to help to bridge the quarter and the key transactions that have taken place so far in early 2021. Consolidated total net revenue for the fourth quarter of 2020 was $251.8 million, an increase of 1.7% compared to $247.6 million in the prior year period as higher revenue from Infrastructure was partially offset by lower revenue from Insurance and Spectrum net of eliminations.

Net loss attributable to common and participating preferred stockholders for the fourth quarter of 2020 was $7.1 million or $0.11 per share compared to a loss of $31.4 million or $0.70 per share in the prior year period. In the fourth quarter last year, we recognized a $47 million noncash goodwill impairment charge at our Insurance segment that did not recur.

Total adjusted EBITDA, which excludes our Insurance segment, was $10 million in the fourth quarter of 2020, down from $16 million in the prior year period. We saw improvement in Spectrum, which recorded its first quarter of positive adjusted EBITDA, reflecting significant efforts we have made to reduce costs and improve operations in 2020. This is more than offset by decreased contributions from Infrastructure and increased losses of Life Sciences.

Now onto some color for each of the 3 focused businesses. At Infrastructure, adjusted EBITDA for the fourth quarter 2020 was $17.4 million, down from $20.8 million in the prior year period. Revenue increased 6% due to the favorable timing in commercial projects as compared to last year, though overall results continue to be impacted by lack of new work being released, in turn, keeping downward pressure on point-of-sale margins. Margin improvements are being made through optimization of execution strategies, however, with smaller, less complex projects, these improvements are not as meaningful.

Segment continued to experience additional costs of $4.2 million during the quarter related to certain measures to comply with COVID protocols. And consistent with prior periods, we've excluded them from our adjusted EBITDA. We expect these costs to continue to trend down over the first half of 2021 as we burn off the remaining pre-pandemic backlog.

As of December 31, 2020, reported backlog was $395 million, down from $436 million at the end of the third quarter. Adjusted backlog, which takes into consideration awarded but not yet signed contracts, was $608 million, mainly consisting of smaller to medium-sized projects, which provides Infrastructure with significant visibility. While adjusted backlog reduced on a quarterly basis, we are seeing signs that the worst of the pandemic impact is behind us.

2021 is poised to be a better year for DBM Global. There are a healthy number of proposals outstanding, and we continue to see more opportunities entering the market, including larger projects. We are optimistic that we will actively participate in public sector capital spending that may be fueled by a substantial Infrastructure bill, which would provide incremental tailwind to our performance.

At Life Sciences, the increase in adjusted EBITDA losses was primarily driven by the scaling of operations at R2 Technologies ahead of the commercial launch of the Glacial Rx and Spa aesthetic dermatology products as well as continued development of its product platform. With the upcoming commercial launches of Glacial RX and Spa, we expect to see revenue generation from R2 in 2021.

Spectrum delivered adjusted EBITDA of $1.1 million in the fourth quarter compared to an adjusted EBITDA loss of $1 million in the prior year quarter. Results reflect significant efforts to improve operations and cost reductions, which led to the first quarter of positive adjusted EBITDA. Net revenues decreased 8.3% to $11 million as higher revenue from the station group, driven by an increase in the number of OTA stations in operation, was more than offset by lower revenue from the Azteca network, which experienced a reduction in local market advertising spending due to the COVID-19 pandemic that more than offset higher political spend.

During the quarter, we sold 4 full power television stations and a low-power television translator for aggregate gross proceeds of $40.5 million. The sale of these noncore stations, along with the refinancing in August 2020 has resulted in reduced debt at HC2 Broadcasting.

Meanwhile, at insurance, we generated pretax adjusted operating income for the fourth quarter of $14.1 million, up 34% compared to $10.5 million in the prior year period. The increase is primarily driven by lower claims expense and from reserve releases due to contingent noncorporate share elections and benefit reductions in 4Q 2020. As of December 31, 2020, Insurance had cash and invested assets, $4.9 billion. Total GAAP assets of $5.9 billion and an estimated $337 million of total adjusted capital.

Recurring corporate expenses were $3.3 million for the fourth quarter of 2020, up slightly from the fourth quarter of 2019 due to some favorable items last year. However, on a full year basis, recurring corporate expense, $15.6 million represented a 13% reduction and positioned us for further incremental savings on a run rate basis in 2021. We have significantly reduced our overall overhead, particularly in the areas of occupancy due to the consolidation of our headquarters from 3 floors to 1 and an executive compensation expense due to a shift from a NAV-based program to one based on performance metrics.

At the end of the fourth quarter, HC2 had consolidated cash, cash equivalents and investments of $4.9 billion, which includes cash and investments associated with HC2's Insurance segment. Excluding Insurance, consolidated cash was $43.8 million of which $27.5 million was at the holding company level compared to $8.9 million of holding company level cash at September 30. The year-end balance reflects $61.5 million in net proceeds from the November rights offering, inclusive of the sale of the Series B preferred shares and offset by cash interest and working capital payments, among other items.

As of December 31, HC2 had total principal outstanding indebtedness of $577 million, a 24% reduction from where it's stated at the beginning of 2020. We have further reduced aggregate indebtedness by $25 million pro forma for the refinancing of our 11.5% senior notes in February.

Subsequent to year-end, we sold our Clean Energy segment and refinanced the holding company debt, and I will now walk you through these transactions. The sale of Beyond6 in January generated $70 million in net proceeds to HC2, reflecting our 61% economic share on a fully diluted basis of $169 million gross transaction price less outstanding debt, customary closing adjustments and transaction fees.

In February, we completed a $330 million offering of 8.5% senior secured notes due 2026, which was used to retire our existing 11.5% senior secured notes due 2021 and to repay the $15 million outstanding under our revolving credit agreement. We also entered into exchange agreements with certain holders of $51.8 million of the outstanding 7.5% convertible senior notes, extending the maturity date to August 2026. $3.2 million of the old converts remain due in 2022.

Separately, we amended our revolving credit facility, extending the maturity from September 2021 to February 2024, increasing the maximum credit commitment from $15 million to $20 million and lowering the current borrowing rate under the agreement by 100 basis points. We have no current borrowings on those lines. Pro forma for the refinancings and the sale of Beyond6, HC2 and its subsidiaries, excluding Insurance, had approximately $65 million of cash on the balance sheet and total principal outstanding indebtedness of $551 million.

In conclusion, the actions taken to monetize certain assets, refinance holding company debt and reduced corporate expenses have significantly increased our liquidity, flexibility and optionality as we strive to establish an optimal capital structure. Our primary focus in the immediate term is to focus on 3 business segments to support their growth and unlock value.

With that, operator, we'd now like to open up the call for questions.

(Operator Instructions) like to ask . Our first question is from Richter Yeske with Jefferies.

I was hoping you can give a little color on the first quarter and thoughts for 2021 with the backlog at DBM. Might we see any kind of catch-up effect as we get into 2021 with the economy reopening, either projects that had been delayed in 2020 or work on projects that were delayed or bid processes that were delayed as well?

Sure. Rich, this is Mike. We are see -- beginning -- we're still continuing to see a lot of activity in the market. Some of the projects that were delayed as far as on the industrial side in 2021 -- I mean, in 2020, were delayed until, we think, 2021. We haven't seen necessarily any of those come in, but we do expect them to come back in 2021.

And as far as the fab and erection side of the business, we're seeing a lot of activity. We're starting to see some bigger projects come in. And so Rustin is pretty optimistic about the pipeline and what 2021 will look like.

Turning to Spectrum, can you give us a bit of a bridge to what got you to positive EBITDA this quarter? And should we expect it to be positive going forward?

Yes. I mean, we've been hovering right around that breakeven. I think you've seen a few quarters, $500,000, $1 million loss. We currently crossed the threshold. We've done a lot of things on the cost side of the house to become more efficient and save costs. We are still -- we now have the network in place. And we're out there looking to fill the capacity.

And so what you should start to see is as we continue to fill that capacity, us getting operating leverage from the stations having fixed costs, if you will. And when you've -- we've been building stations for the past couple of years. So when you build a station, you turn on the lights, all your costs are on day 1. You have the tower rents, your broadband and utilities and your kind of maintenance on those sites. But you don't necessarily have the revenue filled day 1. And so that's what we're working to do.

And so we'll continue to push forward with the positive momentum that we've had. You can kind of see the trend over the past 4, 5 quarters, pushing the losses down and, fortunately, in the fourth quarter to push it into a positive territory.

And now that you guys are in a very different liquidity dynamic at the holding company and not having to pull up cash from the OpCos, what growth initiatives does that allow you to pursue at the OpCos that you were not able to previously?

Rich, it's Wayne. So with kind of the enhanced liquidity that we've managed to put together through the refinancing and some of the asset sales. I think it really allows us to focus on some growth opportunities that we have at each of the operating segments that are sitting there.

We are looking at a variety of different opportunities that could take advantage of some potential increased Infrastructure spending that might be coming down down the road. Obviously, as Mike said, we're essentially done building out the station group, and I think having the liquidity position that we have with the holding company makes us a good partner for any of these content providers that want to come along and take advantage of the largest station group in the country.

And I think it just allows us to kind of enter into those discussions from a stronger position. And I think we were able to attract more opportunities across all 3 of the operating segments.

And then last one for me. Again, in light of the liquidity position, is that changing at all? How you're thinking about the cadence of asset sales you're pursuing? And then is any of the volatility in interest rates or things we're seeing in the equity markets impacting valuations for your assets at all?

So as to the first part of your question, I think the Board has shown a real interest in being deliberative, opportunistic where it can. And I think if you take a look at some of the things that we've done, including the sale of ANG, where there was a process that was undertaken, I think we took advantage of some tailwinds there, and we're able to produce a very nice result.

I think that's going to continue, regardless of kind of the economic environment that's out there. To the extent that it's more challenging, I think the Board and management is up to the challenge. But I don't see the Board kind of deviating from a very thoughtful, deliberative approach in that regard.

Our next question is from Booker Smith with Imperial Capital.

So starting with the holdco. Throughout 2020, you guys lowered corporate expenses by 13%, I think, it was. Looking into 2021, are there any additional cost saves that can happen at the holdco level? And what are the cadence and scope of those?

So I think it's -- 2021 is going to be a continuation of being vigilant with respect to overhead. We did have some very good opportunities that we took advantage of this past year to reduce the overhead. There's probably some additional opportunities that we can take advantage of. And like I said, we are cognizant of wanting to reduce the corporate overhead.

Our liquidity position is good, and we kind of strive to get to where we are. But that doesn't come at the cost of vigilance and trying to keep the corporate overhead at a right level. We did reduce our occupancy by going from 3 floors down to 1, and we've continued to look for other ways to continue to drive that expense down.

Cool. Cool. And then switching to Insurance. Can you guys describe the process of a potential sale, I guess, from a regulatory perspective and how that could impact timing if you guys did get to a final deal on that one?

Yes. Sure. So as you pointed out, any sale of the Insurance segment would require approval from the regulators, principally the Texas Department of Insurance, which is our home regulator. Our understanding is that the approval or review of a Form A, which is the application that would be made to affect the change of control is taking anywhere from 90 to 180 days to be reviewed. That's kind of based on what we've just seen in the marketplace.

We have a very good relationship with the TDI. I talk with them pretty frequently. They've given no indication that kind of what we've typically seen in the market is going to be any different in the event that we do get to the point where somebody is submitting a Form A for Continental. But we really can't because it's up to them. We really can't predict whether we're going to fall within the earlier part or the latter part of any of those ranges.

(Operator Instructions) Our next question is from Bill Gushard with Odeon Capital.

Wayne and Mike, congrats on a very nice quarter progress during these, I guess, say, unusual times, the pandemic. As we think about EBITDA going forward for the Life Sciences segment, it's clearly been dragging a negative contribution on overall EBITDA. Do you think with the rollout -- obviously, with such a strong team with Glacial Rx and Spa, do you think that, that rollout could lead to a positive contribution at some point, let's say, end of the year or early 2022?

Yes. I wouldn't expect it to. Even though we do -- we are launching the product, we will -- we do expect R2 to generate revenues. We still are developing additional products within that business. So as it ramps up, it will continue to incur losses there, we would expect. In addition, you'll remember, there are a couple of other businesses there. They are still in their pre-revenue phase. So those are still generating losses also as they develop their products.

And then I guess, directly for Glacial Rx and Spa, is there -- obviously, there's a very large TAM, but is there -- how do you think about, I guess, the more -- a more definable, smaller TAM? Is there one that you can go right after, whether there's direct competitors and you're essentially going after that market share? Or is it more of a -- I mean, because clearly, with CoolSculpting, it was kind of an innovative -- it was new. And they kind of -- there's a bit of an educational period that, that involves. Do you see that the same here, where it's that type of product?

I think it's -- I think it actually is a little broader from my perspective, Bill, CoolSculpting, which Zeltiq brought to market, and we use that as an analogy for R2 because it was developed by the same team that developed R2. But that had a very focused -- kind of focused treatment and a focused result.

I think one of the exciting things about the R2 Technology is that it has not only aesthetic dermatological use, but I think it has a variety of uses that extend just beyond kind of that one use that Zeltiq had.

So from an addressable market perspective, I think it's more wide-ranging than just kind of more of the single use or single result that's Zeltiq obtained. So from that perspective, I think that there's more opportunity than Zeltiq had.

Well, I think that's all I have. Keep up the good work and look forward to seeing results as the world, hopefully, at some point, reopens.

Thanks, Bill.

Our next question is from [Richard Faulk] with [Centris].

To build on the last speaker's question, on the R2 Technology, we're excited to see it roll out in the U.S. This month and China, the month after. Can you talk about the supply chain? Do you have control over your supply chain of the R2 Technology units? And has COVID given you any warning signs? Or what do you see there on the horizon?

Yes. I think it's a little too early to actually see actual results from device delivery. As you know, the launch is fairly new there was a prelaunch period, all of which was very well received, but I am pretty confident that David and Cherine are keeping an eye on supply chain and whether the pandemic is having any impact on the delivery of the actual devices. But anything other than just kind of thought and thinking that generally the pandemic has caused things to be delayed, I don't have any specific examples of the supply chain being impacted here.

At some point, can the team talk about the manufacturer of the units? Where they sit? How reliable they seem to be? The last thing I want you guys to do is set yourself up 6 months from now, 9 months from now saying, every unit, people love it. They can't wait to have it. We've got orders and a backlog growing. We just can't produce them enough. And I would love some color around that. You may not have it now.

Yes. No. Right. I mean, the color that I can provide you, it kind of goes back to what I was saying with respect to Zeltiq. And that is, this team has rolled out and commercialized a very similar aesthetic device. And so I think, while I don't have that information, that kind of detail available to you, having that management team in place that's already done this, and we talk about a proven track record, whether it's David and Cherine or the management team at R2, it really holds true in this instance, and it's very synonymous with what they did over at Zeltiq. And so I'm very confident that a commercial rollout was not going to be embarked upon by this group, in particular, without kind of adding those Is and crossing those Ts.

And we have read the end of the question-and-answer session. I'll now turn the call over to Avi Glazer for closing remarks.

Thanks. I'd like to thank everyone for being on the call today. The entire HC2 team is very excited about the company's future, and I hope you share our enthusiasm going forward. Thanks very much. Bye-bye.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.