INNOVATE CORP. (Exact name of registrant as specified in its charter) Annual Report (Form 10-K) for the fiscal year ended December 31, 2024
Innovate Corp.’s annual report for the fiscal year ended December 31, 2024, reveals a company with a market value of approximately $32.3 million as of June 30, 2024. The company’s common stock, par value $0.001 per share, is listed on the New York Stock Exchange under the ticker symbol VATE. As of March 27, 2025, there were 13,283,218 shares of common stock outstanding. The report does not provide detailed financial information, but it does indicate that the company is a non-accelerated filer and a smaller reporting company, exempt from certain reporting requirements. The report also notes that the company has not filed reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months.
Overview of INNOVATE Corp.’s Financial Performance
INNOVATE Corp., a diversified holding company, has released its financial results for the year ended December 31, 2024. The company’s performance was mixed, with some segments performing well while others faced challenges.
The company’s revenue decreased by $315.9 million to $1,107.1 million, primarily due to a decline in the Infrastructure segment. However, the Life Sciences and Spectrum segments saw increases in revenue. Income from operations improved by $13.5 million to $40.0 million, driven by higher other operating income, lower selling, general and administrative expenses, and decreased depreciation and amortization, partially offset by a decrease in gross profit.
Interest expense increased by $6.3 million to $74.5 million, mainly due to higher exit fees and a higher outstanding principal balance in the Life Sciences segment, as well as an increase in interest expense on the Non-Operating Corporate segment’s debt. Loss from equity investees decreased by $7.1 million to $2.3 million, primarily due to a decrease in losses recognized from MediBeacon and Triple Ring. Other income, net, decreased by $13.3 million to $3.4 million, mainly due to unrepeated gains in the prior year.
Revenue and Profit Trends
The Infrastructure segment, which is the largest contributor to INNOVATE’s revenue, saw a decrease of $325.6 million in revenue to $1,071.6 million. This was primarily driven by the timing and size of projects, including the effect of changes in estimated costs to complete those projects, at Banker Steel and DBMG’s commercial structural steel fabrication and erection business. However, the industrial maintenance and repair business experienced an increase in revenue.
The Life Sciences segment’s revenue increased by $6.5 million to $9.8 million, primarily due to incremental unit sales of Glacial systems and consumables at R2 Technologies. The Spectrum segment’s revenue increased by $3.2 million to $25.7 million, driven by network launches and expanded coverage with existing customers.
Income from operations in the Infrastructure segment increased by $1.3 million to $65.7 million, despite the decrease in revenue, due to a decrease in selling, general and administrative expenses and a gain on a lease modification and net gains on disposals of fixed assets. The Life Sciences segment’s loss from operations decreased by $0.9 million to $14.1 million, primarily due to a decrease in equity method losses recognized from MediBeacon and Triple Ring. The Spectrum segment’s income from operations increased by $4.8 million to $1.4 million, driven by the increase in revenue and a decrease in selling, general and administrative expenses.
Strengths and Weaknesses
One of the key strengths of INNOVATE is the performance of its Infrastructure segment, which remains operationally profitable and maintains a strong financial position. The segment’s ability to manage costs and generate cash flow is a positive for the overall company.
However, the company’s Non-Operating Corporate segment continues to face challenges, with a net loss of $13.0 million. The company’s substantial indebtedness, including the 2026 Senior Secured Notes, 2026 Convertible Notes, and the CGIC Unsecured Note, is a significant weakness that could impact its ability to operate and finance future growth.
The company’s reliance on distributions from its subsidiaries to fund its operations and debt service payments is another weakness. The potential inability to refinance or extend the maturity of the company’s current debt, or to obtain additional financing, raises substantial doubt about its ability to continue as a going concern.
Outlook and Future Prospects
INNOVATE is exploring various initiatives to alleviate the conditions that raise substantial doubt about its ability to continue as a going concern, including potentially refinancing the debt at the Corporate and subsidiary levels, pursuing asset sales, and raising additional capital. However, there is no assurance that the company will be successful in these efforts.
The company’s ability to execute a reduction, extension, or refinancing of its debt, or to raise additional capital on favorable terms, will be crucial for its future prospects. The successful integration and performance of any future acquisitions will also be important for the company’s growth and profitability.
The company’s largest subsidiary, DBMG, remains in good standing with its lenders and continues to maintain a strong financial position. This provides some stability for the overall INNOVATE group, but the company’s reliance on its subsidiaries’ performance and cash flows remains a significant risk factor.
Overall, INNOVATE’s financial performance in 2024 was mixed, with some segments performing well while the company’s substantial indebtedness and going concern issues continue to be a significant challenge. The company’s ability to address these challenges and execute its strategic initiatives will be crucial for its future success.
