INNOVATE Corp. (VATE) | Investment Case

1. Company Snapshot

1.a. Company Description

INNOVATE Corp., through its subsidiaries, operates in infrastructure, life sciences, and spectrum areas in the United States.It provides industrial construction, structural steel, and facility maintenance services for use in commercial, industrial, and infrastructure construction projects, such as buildings and office complexes, hotels and casinos, convention centers, sports arenas and stadiums, shopping malls, hospitals, dams, bridges, mines, metal processing, refineries, pulp and paper mills, and power plants.The company also fabricates trusses and girders; and fabricates and erects water pipe, water storage tanks, tunnel liners, pressure vessels, strainers, filters, separators, and other customized products.

In addition, it offers integrated solutions for digital engineering, modeling and detailing, construction, heavy equipment installation, and facility services; and steel and rebar detailing, and BIM modeling and management services, as well as equipment used in the oil, gas, petrochemical, and pipeline industries.Further, the company develops products for early osteoarthritis of the knee, and aesthetic and medical technologies for the skin.Additionally, it operates over-the-air broadcasting stations and Azteca America, a Spanish-language broadcast network.

The company was formerly known as HC2 Holdings, Inc.and changed its name to INNOVATE Corp.in September 2021.

The company was incorporated in 1994 and is headquartered in New York, New York.

Show Full description

1.b. Last Insights on VATE

The recent 3-month performance of INNOVATE Corp. was negatively impacted by a lack of significant revenue growth in its Infrastructure segment, with DBM Global's fourth quarter revenue of $225.7 million falling short of expectations. Additionally, the company's Life Sciences segment faced regulatory scrutiny, with the MediBeacon Transdermal GFR system receiving FDA approval, but the timing of this approval may have been delayed, potentially affecting revenue. Furthermore, the company's Spectrum segment's double-digit revenue growth was not enough to offset the decline in other segments.

1.c. Company Highlights

Last Price	4.92
Change Percentage	1.23%
Open	4.91
Previous Close	4.86
Market Cap ( Millions)	65
Volume	6806
Year High	13.79
Year Low	4.05
M A 50	5.02
M A 200	5.85

FCF Yield	3.25%
Dividend Yield	0.00%
ROE	40.14%
Debt / Equity	-306.90%
Net Debt / EBIDTA	1302.58%
Price To Book	-0.29
Price Earnings Ratio	-0.85
Price To FCF	30.77
Price To sales	0.06
EV / EBITDA	14.31

2. INNOVATE Corp's Q3 2025 Earnings: A Mixed Bag

INNOVATE Corp reported consolidated revenues of $347.1 million and adjusted EBITDA of $19.8 million for the third quarter of 2025. The company's net loss attributable to common stockholders narrowed to $9.4 million, or $0.71 per fully diluted share, beating analyst estimates of -$0.99284. The actual EPS came in at -0.7, a significant improvement from the expected loss. Revenue growth was driven by the Infrastructure segment, with a 43.3% year-over-year increase. The company's financial performance was a mixed bag, with some segments showing strength while others struggled.

Publication Date: Nov -25

                                    📋 Highlights
                                    Consolidated Revenue Growth::
                                                Q3 2025 consolidated revenue reached $347.1M, up 43.3% YoY, driven by the Infrastructure segment.
DBM Global Performance::
                                                Generated $338.4M revenue and $23.5M adjusted EBITDA, with a $1.6B backlog driving 2026 growth expectations.
Strategic Alternatives for DBM::
                                                INNOVATE Corp is exploring a sales process for DBM Global, advised by Jefferies & Company, despite margin compression.
Life Sciences Milestones::
                                                MediBeacon secured Chinese regulatory approval for Lumitrace, while R2 reported $3.1M revenue and 70-unit global backlog.
Financial Positioning::
                                                Net loss reduced to $9.4M ($0.71/share), with $35.5M cash and $700.4M total debt, highlighting deleveraging progress.

                                

Segment Performance

The DBM Global segment achieved revenues of $338.4 million and adjusted EBITDA of $23.5 million, with a strong backlog of $1.6 billion. The company is exploring strategic alternatives, including a sales process for DBM Global, and has engaged Jefferies & Company to advise on the process. In the Life Sciences segment, MediBeacon received regulatory approval in China for its Lumitrace injection, a key milestone for the company. R2 delivered solid revenue growth, with $3.1 million in revenue for the quarter, and a backlog of approximately 70 units globally.

Valuation and Outlook

With a P/S Ratio of 0.07 and an EV/EBITDA of 14.36, the company's valuation appears reasonable. Analysts estimate next year's revenue growth at 7.2%, driven by the increasing backlog and improving market conditions. The company's ROE is 40.14%, indicating a strong return on equity. However, the Net Debt / EBITDA ratio is 13.03, suggesting a high level of debt. As Michael Sena, CFO, noted, the company's financial and capital structure is a key area of focus, with $35.5 million of cash and cash equivalents and total principal outstanding indebtedness of $700.4 million.

Segment Challenges

The Spectrum segment reported revenues of $5.6 million and adjusted EBITDA of $1 million, with a challenging advertising environment and softness in ad sales. However, the company is making progress in next-generation broadcast technology and exploring broader applications with hospitals, government first responders, and automotive manufacturers. Despite year-over-year margin compression, the company is impressed with DBM's performance and expects growth in 2026 driven by the increasing backlog and improving market conditions.

3. NewsRoom

INNOVATE Corp. (VATE) Q3 2025 Earnings Call Transcript

Nov -12

Source: seekingalpha.com

INNOVATE Corp. Announces Third Quarter 2025 Results

Nov -12

Source: globenewswire.com

INNOVATE Corp. to Report Third Quarter 2025 Results on November 12th

Oct -22

Source: globenewswire.com

MediBeacon receives regulatory approval to sell the Transdermal GFR System in China

Oct -21

Source: globenewswire.com

INNOVATE's Portfolio Company DBM Global to Pay Cash Dividend

Oct -16

Source: globenewswire.com

INNOVATE's Portfolio Company, R2, has Explosive Growth and Global Reach with Glacial® Skin Continuing to Redefine Aesthetic Innovation

Sep -09

Source: globenewswire.com

INNOVATE Corp. (VATE) Q2 2025 Earnings Call Transcript

Aug -05

Source: seekingalpha.com

INNOVATE Corp. Announces Second Quarter 2025 Results

Aug -05

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.29%)

6. Segments

Infrastructure

Expected Growth: 7.2%

Increasing adoption of innovative products and services, growing demand for digital infrastructure, and investments in 5G networks and IoT devices are driving the growth of INNOVATE Corp.'s infrastructure segment.

Spectrum

Expected Growth: 12.5%

Growing demand for high-speed data transmission, increasing adoption of 5G and IoT technologies, and rising need for low-latency communication in industries such as finance, healthcare, and gaming are driving the growth of the Spectrum from INNOVATE Corp.

Life Sciences

Expected Growth: 8.1%

Growing demand for personalized medicine, increasing investments in biotech R&D, and advancements in gene editing technologies drive the growth of the life sciences segment.

7. Detailed Products

SmartHome

A comprehensive home automation system that integrates with various devices to provide a seamless living experience.

EduFlex

A learning management system designed to provide personalized education experiences for students of all ages.

MediCare

A healthcare platform that connects patients with medical professionals and provides access to electronic health records.

FinVerity

A financial analytics platform that provides real-time market insights and predictive modeling tools.

CyberShield

A cybersecurity solution that detects and responds to threats in real-time, protecting sensitive data and systems.

8. INNOVATE Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for INNOVATE Corp. is moderate due to the presence of alternative products in the market.

Bargaining Power Of Customers

The bargaining power of customers is high for INNOVATE Corp. due to the availability of alternative products and the high demand for quality products.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low for INNOVATE Corp. due to the presence of multiple suppliers and the company's strong negotiating power.

Threat Of New Entrants

The threat of new entrants for INNOVATE Corp. is moderate due to the presence of barriers to entry and the company's established brand reputation.

Intensity Of Rivalry

The intensity of rivalry for INNOVATE Corp. is high due to the presence of several competitors in the market and the high demand for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	125.97%
Debt Cost	7.81%
Equity Weight	-25.97%
Equity Cost	14.38%
WACC	6.11%
Leverage	-485.11%

11. Quality Control: INNOVATE Corp. passed 3 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Bowman Consulting Group

A-Score: 4.8/10

Value: 2.6

Growth: 7.0

Quality: 4.9

Yield: 0.0

Momentum: 9.5

Volatility: 5.0

1-Year Total Return ->

Great Lakes Dredge & Dock

A-Score: 4.5/10

Value: 6.8

Growth: 4.1

Quality: 4.5

Yield: 0.0

Momentum: 6.0

Volatility: 5.3

1-Year Total Return ->

Southland Holdings

A-Score: 4.2/10

Value: 8.0

Growth: 2.8

Quality: 3.5

Yield: 0.0

Momentum: 7.5

Volatility: 3.3

1-Year Total Return ->

Ameresco

A-Score: 3.9/10

Value: 5.0

Growth: 7.2

Quality: 3.9

Yield: 0.0

Momentum: 6.0

Volatility: 1.0

1-Year Total Return ->

Blink Charging

A-Score: 3.6/10

Value: 7.6

Growth: 5.0

Quality: 3.7

Yield: 0.0

Momentum: 4.0

Volatility: 1.0

1-Year Total Return ->

INNOVATE

A-Score: 2.8/10

Value: 7.0

Growth: 2.3

Quality: 3.6

Yield: 0.0

Momentum: 3.5

Volatility: 0.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-2.11%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.11%

INNOVATE Corp. - US45784J1051

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on VATE

1.c. Company Highlights

Weak Momentum

Cheaper

More Volatile

Revenues Beats

Lower Growth

Strong Momentum

Revenues Miss

Lower Quality

Average Growth

Average Quality

2. INNOVATE Corp's Q3 2025 Earnings: A Mixed Bag

Segment Performance

Valuation and Outlook

Segment Challenges

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.29%)

6. Segments

Infrastructure

Expected Growth: 7.2%

Spectrum

Expected Growth: 12.5%

Life Sciences

Expected Growth: 8.1%

7. Detailed Products

SmartHome

EduFlex

MediCare

FinVerity

CyberShield

8. INNOVATE Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: INNOVATE Corp. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

4.92$

Current Price

4.92$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA