INNOVATE Corp. — Second Quarter 2026 Earnings Summary

Financial Performance

• Consolidated revenue for the three months ended June 30, 2026, was $421.6 million, a 74.2% increase year-over-year from $242.0 million; for the six months ended June 30, 2026, revenue was $786.4 million, a 52.3% increase from $516.2 million.
• Net income attributable to common stockholders and participating preferred stockholders for the quarter was $10.4 million ($0.71 diluted EPS), compared to a net loss of $22.0 million ($1.67 diluted EPS) in the prior year quarter; for the six-month period, net loss was $6.8 million ($0.51 diluted EPS) compared to $46.8 million ($3.56 diluted EPS) in the prior year period.
• Total Adjusted EBITDA for the quarter was $46.3 million, a 194.9% increase from $15.7 million in the prior year quarter; for the six-month period, Adjusted EBITDA was $66.0 million, an 188.2% increase from $22.9 million.
• Gross profit for the quarter was $79.5 million compared to $45.6 million in the prior year quarter.
• Cash and cash equivalents (excluding restricted cash and cash held for sale) were $87.8 million as of June 30, 2026, down from $108.2 million as of December 31, 2025.
• Total liabilities were $1,226.7 million as of June 30, 2026, compared to $1,165.4 million as of December 31, 2025.
• Current portion of debt obligations increased to $553.9 million as of June 30, 2026, from $518.6 million as of December 31, 2025.
• Total Adjusted EBITDA margins for the quarter were 11.0% ($46.3 million / $421.6 million).

Business Segments and Product Lines

• Infrastructure: DBM Global reported revenue of $414.0 million, up 77.6% year-over-year from $233.1 million. Net income attributable to INNOVATE was $26.4 million compared to $5.5 million. Adjusted EBITDA was $48.7 million compared to $19.3 million. Gross margin was 18.5%, an increase of 60 basis points year-over-year. Adjusted EBITDA margin was 11.8%, an increase of 350 basis points year-over-year. Reported backlog was $1.9 billion and adjusted backlog was $2.7 billion as of June 30, 2026, compared to $1.7 billion and $1.8 billion respectively as of December 31, 2025.
• Life Sciences: MediBeacon is engaged with over 100 healthcare institutions regarding the TGFR System and targets a pivotal study for its third-generation wireless TGFR Sensor in 2027. R2 Technologies reported revenue of $2.2 million. R2's demand reached $3.6 million with a backlog of approximately 110 systems globally. R2 reduced operating expenditures by approximately 50% compared to the same period in 2025. Subsequent to quarter end, R2 extended the maturity of its secured promissory note to December 31, 2026, and converted preferred equity to common equity.
• Spectrum: Broadcasting reported revenue of $5.4 million, down from $5.7 million in the prior year quarter. Net income attributable to INNOVATE was $8.4 million compared to a net loss of $6.1 million. Adjusted EBITDA was $0.4 million compared to $1.0 million. Broadcasting entered into a $105 million loan agreement with HC2 Merger Sub, LLC to satisfy existing notes and fund equity repurchases; the loan matures on May 29, 2027.

Market and Competitive Landscape

• DBMG's backlog growth is supported by sustained demand across technology, healthcare, AI infrastructure, and advanced manufacturing markets.
• R2's demand growth is supported by an expanding international presence.
• Broadcasting's revenue decrease was driven by the termination of a few networks and individual markets subsequent to the comparable period, partially offset by the launch of new networks.
• R2's revenue decrease was attributed to liquidity constraints impacting Glacial fx unit sales in North America and Glacial Spa unit sales outside North America.

Risks and Challenges

• Substantial doubt exists regarding the company's ability to continue operating as a going concern.
• The company faces dependence on distributions from subsidiaries to fund operations and payments on obligations.
• There is uncertainty regarding the timing and achievement of strategic dispositions, including the sale of DBMG assets and the Broadcasting merger.
• The Broadcasting merger requires receipt of FCC regulatory approvals.
• The company carries substantial indebtedness and faces risks related to its ability to raise additional capital or refinance existing debt on attractive terms.
• Potential risks include covenant noncompliance, tax consequences associated with acquisitions and dispositions, and volatility in the trading price of common stock.
• The company is exposed to supply chain disruptions, labor shortages, and increases in price levels, including steel and transportation costs.
• The company faces risks related to hostilities in Ukraine, the Middle East, and Venezuela.

Management Commentary and Tone

• Avie Glazer, Chairman, stated that INNOVATE delivered a strong second quarter and continued to execute on strategic priorities, noting DBM Global's record-breaking quarter with margin expansion and backlog growth.
• Paul Voigt, Interim CEO, highlighted exceptional results at DBM Global supported by strong execution and favorable end-market demand. He noted progress at MediBeacon in commercialization and regulatory activities, and strong demand at R2.
• Management expressed confidence in the value and potential of the portfolio, emphasizing a focus on strengthening the balance sheet, advancing growth initiatives, and creating long-term shareholder value.

Other Key Points

• INNOVATE agreed to a partial sale of its Broadcasting subsidiary to CONX CORP., subject to customary closing conditions. Upon closing, CONX is expected to own approximately 75% of Broadcasting, with INNOVATE retaining approximately 25% through HC2 Holdco.
• INNOVATE continues to pursue highly substantial asset dispositions, including a sales process for all or substantially all of DBMG's assets or equity interests.
• INNOVATE has made substantial changes to debt arrangements and expects further changes following June 30, 2026.
• The company employs approximately 3,700 people across its subsidiaries.