INNOVATE Corp. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations together with the information in our annual audited Consolidated Financial Statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 16, 2020, each of which are contained in Item 8 entitled "Financial Statements and Supplementary Data," and other financial information included herein. Some of the information contained in this discussion and analysis includes forward-looking statements that involve risks and uncertainties. You should review the "Risk Factors" section in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 16, 2020 and on Form 8-K filed with the SEC on October 7, 2020, as well as the section below entitled "Special Note Regarding Forward-Looking Statements" for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Unless the context otherwise requires, in this Quarterly Report on Form 10-Q, "HC2" means HC2 Holdings, Inc. and the "Company," "we" and "our" mean HC2 together with its consolidated subsidiaries. "U.S. GAAP" means accounting principles accepted in the United States of America. Our Business We are a diversified holding company with principal operations conducted through seven operating platforms or reportable segments: Infrastructure ("DBMG"), Clean Energy ("Beyond6"), Telecommunications ("ICS"), Insurance ("CIG"), Life Sciences ("Pansend"), Spectrum, and Other, which includes businesses that do not meet the separately reportable segment thresholds. Certain previous year amounts have been reclassified to conform with current year presentations, including: • The recasting of GMSL's results to discontinued operations. Further, the reclassification of prior period assets and liabilities have been classified as held for sale; • As a result of the sale of GMSL, and in accordance with ASC 280, the Company no longer considers the results of operations and Balance Sheets of GMH and its subsidiaries as a separate segment. Formerly the Marine Services segment, these entities and the investment in HMN have been reclassified to the Other segment. • The recasting of Earnings per share in the prior period, as a result of the discontinued operations noted above. This includes presenting EPS for Net (loss) income from continuing operations, Net (loss) income from discontinuing operations, and Net (loss) income. We continually evaluate acquisition opportunities, as well as monitor a variety of key indicators of our underlying platform companies in order to maximize stakeholder value. These indicators include, but are not limited to, revenue, cost of revenue, operating profit, Adjusted EBITDA and free cash flow. Furthermore, we work very closely with our subsidiary platform executive management teams on their operations and assist them in the evaluation and diligence of asset acquisitions, dispositions and any financing or operational needs at the subsidiary level. We believe that this close relationship allows us to capture synergies within the organization across all platforms and strategically position the Company for ongoing growth and value creation. The potential for additional acquisitions and new business opportunities, while strategic, may result in acquiring assets unrelated to our current or historical operations. As part of any acquisition strategy, we may raise capital in the form of debt and/or equity securities (including preferred stock) or a combination thereof. We have broad discretion and experience in identifying and selecting acquisition and business combination opportunities and the industries in which we seek such opportunities. Many times, we face significant competition for these opportunities, including from numerous companies with a business plan similar to ours. As such, there can be no assurance that any of the past or future discussions we have had or may have with candidates will result in a definitive agreement and, if they do, what the terms or timing of any potential agreement would be. As part of our acquisition strategy, we may utilize a portion of our available cash to acquire interests in possible acquisition targets. Any securities acquired are marked to market and may increase short-term earnings volatility as a result. Our Operations Refer to Note 1. Organization and Business to our Condensed Consolidated Financial Statements for additional information. 46 Seasonality and Cyclical Patterns Our segments' operations can be highly cyclical and subject to seasonal patterns. Our volume of business in our Infrastructure segment may be adversely affected by declines or delays in projects, which may vary by geographic region. Project schedules, particularly in connection with large, complex, and longer-term projects can also create fluctuations in the services provided, which may adversely affect us in a given period. For example, in connection with larger, more complicated projects, the timing of obtaining permits and other approvals may be delayed, and we may need to maintain a portion of our workforce and equipment in an underutilized capacity to ensure we are strategically positioned to deliver on such projects when they move forward. Examples of other items that may cause our results or demand for our services to fluctuate materially from quarter to quarter include: weather or project site conditions, financial condition of our customers and their access to capital; margins of projects performed during any particular period; economic, and political and market conditions on a regional, national or global scale. Accordingly, our operating results in any particular period may not be indicative of the results that can be expected for any other period. Recent Developments COVID-19 Impact on our Business On March 11, 2020, the World Health Organization declared the outbreak of the novel coronavirus ("COVID-19") a pandemic resulting in action from federal, state and local governments that has significantly affected virtually all facets of the U.S. and global economies. The U.S. federal and various state governments, have implemented enhanced screenings, quarantine requirements, and travel restrictions in connection with the COVID-19 outbreak. The Company’s top priority is to protect its employees and their families, and those of the Company’s customers. The Company continues to take precautionary measures as directed by health authorities and the local government, including changing operational procedures as necessary, providing additional protective gear and cleaning to protect them, which has resulted and may continue to result in disruptions to and increased costs of the Company’s operations. We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, partners, vendors, and suppliers. Work-from-home and other measures introduce additional operational risks, including cybersecurity risks, and have affected the way we conduct our operations. There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and illness and workforce disruptions could lead to unavailability of key personnel and harm our ability to perform critical functions. The extent of the impact of COVID-19 on our operational and financial performance will depend on future developments, including, but not limited to, the duration and spread of the outbreak and related travel advisories and restrictions, and its impact to the U.S. and global financial markets, all of which are highly uncertain and cannot be predicted. Preventing the effects from and responding to this market disruption if any other public health threat, related or otherwise, may further increase costs of our business and may have a material adverse effect on our business, financial condition, and results of operations. We continue to monitor the rapidly evolving situation and guidance from authorities, including federal, state and local public health departments, and may take additional actions based on their recommendations. In these circumstances, there may be developments outside our control requiring us to adjust our plans. As such, given the dynamic nature of this situation, we cannot reasonably estimate the impact of COVID-19 on our results of operations, financial condition, or cash flows in the future. However, we do expect that it could have a material adverse impact on our future revenue growth as well as our overall profitability and may lead to revised payment terms with certain of our customers. During the three and nine months ended September 30, 2020, the effects of COVID-19 and the related actions undertaken in the U.S. to attempt to control its spread, specifically impact certain of our segments as follows: 47 Infrastructure DBMG is dependent on its workforce to carry out its services. Developments resulting from governmental responses to COVID-19 such as social distancing and shelter-in-place directives have impacted, and will continue to impact, DBMG’s ability to deploy its workforce in its facilities and project sites efficiently. The nature of DBMG’s business does not permit alternative workforce arrangements in its facilities and project sites such as remote work schemes to be implemented effectively, and as a result of potential workforce disruptions, DBMG may experience delays or suspensions of projects. DBMG has incurred significant costs related to additional procedures to maintain COVID-19 related safety measures. During the three and nine months ended September 30, 2020, $6.4 million and $15.2 million of COVID-19 related expenses were incurred. DBMG may also experience disruptions in the supply chain depending on the spread of COVID-19 and related governmental orders. These delays, suspensions, and impacts to supply chain may negatively impact DBMG’s results of operations, cash flows or financial condition. This could cause the timing of revenue to be delayed and possibly impact earnings and backlog. Persistent delays, suspensions or cancellations of projects under contract may occur while governments implement policies designed to respond to the COVID-19 pandemic. Any such continued loss or suspension of projects under contract may negatively impact the DBMG’s results of operations, cash flows or financial condition. Insurance Our Insurance segment has been impacted by the COVID-19 pandemic, including multiple reductions in target interest rates by the Board of Governors of the Federal Reserve System, and significant market volatility, driving actual and projected results of our business operations as well as our views on potential effectiveness of certain prudent and feasible tax planning strategies. The Company’s September 30, 2020 results reflected in earnings are primarily impacted by the Insurance segment's net unrealized losses on investments of $12.3 million, included in the Net realized and unrealized gains (loss) on investments line, primarily driven by preferred stock mark to market adjustments. The impact on other comprehensive income was $91.2 million of unrealized gain on fixed maturity securities, a significant improvement as compared to March 31, 2020 and June 30, 2020 results, which reflected $355.5 million of unrealized loss and $9.2 million of unrealized gain, respectively, on fixed maturity securities. Both of these were largely attributable to market factors caused by the COVID-19 crisis for each of the three month periods ended March 31, 2020, June 30, 2020, and September 30, 2020 respectively. Additional future recovery of losses will largely depend upon market reaction to additional COVID-19 stimulus packages, interest rates and timing and manner in which the economy is reopened. The unrealized losses are considered temporary in nature, as we have the ability to hold these securities to maturity. Spectrum As a result of COVID-19, our Spectrum segment has experienced adverse effects on its advertising business because of weakness in the advertising market as advertisers seek to reduce their own costs in response to the pandemic’s impact on their businesses. We are not able to predict when or whether advertising budgets and the advertising market generally will return or be comparable to historical levels. In addition, COVID-19 could impact our Spectrum segment’s business, financial condition and results of operations in a number of other ways, including, but not limited to: • negative impact on our broadcast station revenue, as many of our customers also rely on advertising revenues and might be negatively affected by COVID-19; • slow-down of our ability to build out additional broadcast television stations, as illness, social distancing, and other pandemic-related precautions may result in equipment delivery delays and labor shortages, including the availability of tower crews, an already limited, highly-specialized work force necessary to install broadcast equipment; • negative impact on our network distribution revenues, as consumers may seek to reduce discretionary spending by cutting back or foregoing subscriptions to cable television or other multichannel video programming distributors; • negative impact on our financial condition or our ability to fund operations or future investment opportunities due to an increase in the cost or difficulty in obtaining debt or equity financing, or refinancing our debt in the future, or our ability to comply with our covenants; • impairments of our programming inventory, goodwill and other indefinite-lived intangible assets, and other long-lived assets; and • increased cyber and payment fraud risk, as cybercriminals attempt to profit from the disruption, given increased online activity. The magnitude of the impact on our Spectrum segment will depend on numerous evolving factors that we may not be able to accurately predict, including the duration and extent of the pandemic, the impact of federal, state, local and foreign governmental actions, consumer behavior in response to the pandemic and such governmental actions, and the economic and operating conditions that we may face in the aftermath of COVID-19. Even after COVID-19 has subsided, we may experience materially adverse impacts to our business as a result of its global economic impact, including any recession that has occurred or may occur in the future. For further discussion regarding the potential future impacts of COVID-19 and related economic conditions on the Company's liquidity and capital resources, see "Part II-Item 1A-Risk Factors." Debt Obligations Clean Energy In August 2020, Clean Energy entered into a new credit facility with M&T bank. Proceeds from the loan and cash on hand were used to repay the existing credit facilities with M&T and Pioneer as well as redeem its outstanding $14.0 million mandatorily redeemable preferred stock, included within Other liabilities on the Balance Sheets. The new credit facility is comprised of a $57.0 million term loan facility, a $2.5 million revolving line of credit and an $8.0 million delayed draw term loan ear-marked for new station builds, as well as a $10.0 million accordion feature. Clean Energy recognized $2.4 million and $1.8 million in extinguishment losses related to the pay down of the existing credit facilities with M&T and the redemption of its mandatorily redeemable preferred stock, respectively, which is included in Loss on early extinguishment or restructuring of debt in our Condensed Consolidated Statement of Operations. Spectrum In February 2020, Spectrum amended its agreement governing its privately placed note funded by MSD Partners, L.P., increasing the principal balance to $39.3 million. The proceeds were used to repay principal and interest on existing debt. In August 2020, Spectrum modified its agreement with MSD Partners, L.P. and Great American Life Insurance Company to extend the maturity on its privately placed notes to October 2021. In September 2020, Spectrum amended its agreement governing its privately placed note funded by MSD Partners, L.P., increasing the principal balance by $4.0 million to $43.3 million. The proceeds were used to repay principal and interest on existing debt and for general business purposes. Non-Operating Corporate In March 2020, with the cash proceeds from the sale of GMSL, HC2 fully repaid its $15.0 million secured revolving line of credit with MSD PCOF Partners IX, LLC (the "2019 Revolving Credit Agreement"). HC2 recognized $0.4 million in extinguishment loss related to the repayment of the 2019 Revolving Credit Agreement, which is included in Loss on early extinguishment or restructuring of debt in our Condensed Consolidated Statement of Operations. In March 2020, HC2 entered into a new $15.0 million secured revolving credit agreement (the “2020 Revolving Credit Agreement”). The 2020 Revolving Credit Agreement matures in September 2021. Loans under the 2020 Revolving Credit Agreement bear interest at a per annum rate equal to, at HC2's option, one, two or three month LIBOR plus a margin of 6.75%. In April 2020 and May 2020, HC2 drew $10.0 million and $5.0 million of the 2020 Revolving Credit Agreement, respectively. The Company used the proceeds for general corporate purposes. In March 2020, with the cash proceeds from the sale of GMSL, HC2 redeemed $76.9 million of its 11.50% senior secured notes due 2021 (the "Senior Secured Notes") at a price equal to 104.5% of the principal amount plus accrued interest through the redemption date. HC2 recognized $5.4 million in extinguishment loss related to the redemption of its Senior Secured Notes, which is included in Loss on early extinguishment or restructuring of debt in our Condensed Consolidated Statement of Operations. In June 2020, with the cash proceeds from the partial sale of New Saxon's interest in HMN, HC2 redeemed $50.6 million of its Senior Secured Notes at a price equal to 104.5% of the principal amount plus accrued interest through the redemption date. HC2 recognized $3.4 million in extinguishment loss related to the this redemption, which is included in Loss on early extinguishment or restructuring of debt in our Condensed Consolidated Statement of Operations. Separation from Philip A. Falcone The Company has engaged in ongoing negotiations with Mr. Falcone, the former CEO and Chairman of the Company, regarding his separation. Mr. Falcone rejected the Company’s most recent severance offer. In addition, Mr. Falcone made two books and records demands of the Company in his capacity as a director, which the Company, among other reasons, has denied in light of the fact that Mr. Falcone is no longer a director of the Company. Sale of ICS On October 2, 2020, a subsidiary of the Company entered into a stock purchase agreement with TransWorld Holdings Inc, formerly GoIP Global Inc, to sell 100% of ICS and its subsidiary. The disposition closed on October 31, 2020. Pansend In April 2020, R2 received $10 million in funding from Huadong Medicine Company Limited as part of Huadong's $30 million Series B equity investment in R2. These funds will be used to commercialize R2's revolutionary CryoAesthetic technology which promises physicians a new way to lighten, brighten and rejuvenate skin. This investment represents the second tranche of Huadong's investment at an approximate post-money valuation of $90 million and reduces Pansend's ownership by 7.8% to 56.1%. Financial Presentation In the below section within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, we compare, pursuant to U.S. GAAP and SEC disclosure rules, the Company’s results of operations for the three and nine months ended September 30, 2020 as compared to the three and nine months ended September 30, 2019. Results of Operations The following table summarizes our results of operations and a comparison of the change between the periods (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 Increase / (Decrease) 2020 2019 Increase / (Decrease) Net revenue Infrastructure $ 160.8 $ 168.4 $ (7.6) $ 509.6 $ 556.2 $ (46.6) Clean Energy 10.3 8.7 1.6 31.0 19.3 11.7 Telecommunications 136.4 162.2 (25.8) 430.1 507.0 (76.9) Insurance 78.9 80.4 (1.5) 223.2 251.3 (28.1) Spectrum 9.7 10.0 (0.3) 29.3 29.8 (0.5) Eliminations (1) (2.8) (2.2) (0.6) (8.1) (7.9) (0.2) Total net revenue 393.3 427.5 (34.2) 1,215.1 1,355.7 (140.6) Income (loss) from operations Infrastructure 6.0 12.4 (6.4) 13.1 34.3 (21.2) Clean Energy 1.5 0.4 1.1 5.4 (0.3) 5.7 Telecommunications 0.3 (0.4) 0.7 0.6 0.4 0.2 Insurance 15.1 10.6 4.5 16.7 75.9 (59.2) Life Sciences (4.7) (3.0) (1.7) (11.4) (6.6) (4.8) Spectrum (11.7) (3.8) (7.9) (15.8) (8.8) (7.0) Other (0.5) 0.1 (0.6) (2.1) — (2.1) Non-operating Corporate (5.3) (6.6) 1.3 (22.4) (20.3) (2.1) Eliminations (1) (2.8) (2.2) (0.6) (8.1) (7.9) (0.2) Total income (loss) from operations (2.1) 7.5 (9.6) (24.0) 66.7 (90.7) Interest expense (19.7) (20.1) 0.4 (62.4) (58.0) (4.4) Loss on early extinguishment or restructuring of debt (4.2) — (4.2) (13.4) — (13.4) Loss from equity investees (1.3) (1.3) — (4.0) — (4.0) Gain on bargain purchase — — — — 1.1 (1.1) Other income (loss) 7.3 6.1 1.2 74.1 4.7 69.4 (Loss) income from continuing operations (20.0) (7.8) (12.2) (29.7) 14.5 (44.2) Income tax expense (1.6) (1.1) (0.5) (4.4) (6.2) 1.8 (Loss) income from continuing operations (21.6) (8.9) (12.7) (34.1) 8.3 (42.4) Income (loss) from discontinued operations (including loss on disposal of $39.3 million) — 0.6 (0.6) (60.0) (13.7) (46.3) Net loss (21.6) (8.3) (13.3) (94.1) (5.4) (88.7) Net loss attributable to noncontrolling interest and redeemable noncontrolling interest 4.3 1.2 3.1 6.8 4.9 1.9 Net loss attributable to HC2 Holdings, Inc. (17.3) (7.1) (10.2) (87.3) (0.5) (86.8) Less: Preferred dividends, deemed dividends, and repurchase gains 0.4 0.4 — 1.2 (0.4) 1.6 Net loss attributable to common stock and participating preferred stockholders $ (17.7) $ (7.5) $ (10.2) $ (88.5) $ (0.1) $ (88.4) (1) The Insurance segment results are inclusive of realized and unrealized gains and net investment income for the three and nine months ended September 30, 2020 and 2019, inclusive of transactions between entities under common control, which are eliminated or are reclassified in consolidation. Net revenue : Net revenue for the three months ended September 30, 2020 decreased $34.2 million to $393.3 million from $427.5 million for the three months ended September 30, 2019. The decrease in revenue was driven by our Telecommunications segment, which can be attributed to changes in customer mix and fluctuations in wholesale traffic volumes, and our Infrastructure segment, primarily driven by a decline in power and industrial repair and maintenance work performed. Net revenue for the nine months ended September 30, 2020 decreased $140.6 million to $1,215.1 million from $1,355.7 million for the nine months ended September 30, 2019. The decrease in revenue was driven by our Telecommunications segment, which can be attributed to changes in customer mix and fluctuations in wholesale traffic volumes, our Infrastructure segment, primarily driven by lower revenues from our structural steel fabrication and erection business, and our Insurance segment, net of eliminations, largely driven by lower net investment income and unfavorable market movements in values for preferred stock holdings and fixed maturity impairments. These were partially offset by increases at our Clean Energy segment due to the acquisition of the ampCNG stations and the Alternative Fuels Tax Credit ("AFTC") revenue related to CNG sales recognized in the current period. (Loss) income from operations : Income from operations for the three months ended September 30, 2020 decreased $9.6 million to a loss of $2.1 million from income of $7.5 million for the three months ended September 30, 2019. The decrease in income from operations was driven by our Spectrum segment, due to the impairment of licenses in the current period and our Infrastructure segment, driven by declines in power and industrial repair and maintenance work performed and decreased revenues from our structural steel fabrication and erection business. The decrease was partially offset by an increase in our Insurance segment, due to favorable claims activity recognized in the current period. (Loss) income from operations for the nine months ended September 30, 2020 decreased $90.7 million to a loss of $24.0 million from income of $66.7 million for the nine months ended September 30, 2019. The decrease was primarily driven by our Insurance segment due to an increase in policy benefits, changes in reserves, and commissions due to non-recurring favorable claims activity recognized in the comparable period along with unfavorable claims activity and reserves development in the first half of 2020. In addition there was a decline in revenues, due to unrealized losses from unfavorable market movements in preferred stock holdings. The decrease is also attributable to our Infrastructure segment due to lower revenues from our structural steel fabrication and erection business. Interest expense : Interest expense for the three months ended September 30, 2020 decreased $0.4 million to $19.7 million from $20.1 million for the three months ended September 30, 2019. The decrease was attributable to a decrease in the aggregate principal amount of debt at our Corporate segment, partially offset by an increase in the aggregate principal amount of debt at our Spectrum segment. Interest expense for the nine months ended September 30, 2020 increased $4.4 million to $62.4 million from $58.0 million for the nine months ended September 30, 2019. The increase was attributable to an increase in the aggregate principal amount of debt at our Spectrum and Clean Energy segments. Loss on early extinguishment or restructuring of debt : Loss on early extinguishment or restructuring of debt for the three months ended September 30, 2020 was $4.2 million. This was driven by the write-off of deferred financing costs and original issuance discount related to the repayment of existing credit facilities and redemption of the mandatorily redeemable preferred stock at our Clean Energy segment. Loss on early extinguishment or restructuring of debt for the nine months ended September 30, 2020 was $13.4 million. This was driven by the write-off of deferred financing costs and original issuance discount related to the $15.0 million pay down of the 2019 Revolving Credit Agreement and the $76.9 million redemption of the Senior Secured Notes at a 4.5% premium in the first quarter of 2020 and the $50.6 million redemption of the Senior Secured Notes at a 4.5% premium in the second quarter of 2020. This was also driven by the write-off of deferred financing costs and original issuance discount related to the pay down of the existing credit facilities and redemption of the mandatorily redeemable preferred stock at our Clean Energy segment. Loss from equity investees : Loss from equity investees for the three months ended September 30, 2020 remained unchanged from the three months ended September 30, 2019 at a loss of $1.3 million. Loss from equity investees for the nine months ended September 30, 2020 decreased $4.0 million to a loss of $4.0 million from zero for the nine months ended September 30, 2019. The decrease was driven by a decrease in income for the HMN investment, which is generally attributable to the timing of turnkey project work. Other income (loss): Other income (loss) for the three months ended September 30, 2020 increased $1.2 million to a gain of $7.3 million from a gain of $6.1 million for the three months ended September 30, 2019. Other income (loss) for the nine months ended September 30, 2020 increased $69.4 million to a gain of $74.1 million from a gain of $4.7 million for the nine months ended September 30, 2020. The increases were primarily driven by the gain recognized on the First HMN Sale, which closed during the second quarter of 2020. Income tax expense : Income tax expense was an expense of $1.6 million and $1.1 million for the three months ended September 30, 2020 and 2019, respectively. The income tax expense recorded for the three months ended September 30, 2020 relates to the projected expense as calculated under ASC 740 for taxpaying entities, primarily the Insurance segment, which is no longer in a valuation allowance. Additionally, the tax benefits associated with losses generated by the HC2 Holdings, Inc. U.S. consolidated income tax return and certain other businesses have been reduced by a full valuation allowance as we do not believe it is more-likely-than-not that the losses will be utilized prior to expiration. The income tax expense recorded for the three months ended September 30, 2019 relates to the projected expense as calculated under ASC 740 for taxpaying entities offset by a benefit from the release of the valuation allowance of the Insurance segment due to an increase in current year income. Income tax expense was an expense of $4.4 million and $6.2 million for the nine months ended September 30, 2020 and 2019, respectively. The income tax expense recorded for the nine months ended September 30, 2020 primarily relates to tax expense incurred in China from the partial sale of HMN and projected expense as calculated under ASC 740 for taxpaying entities, primarily the Insurance segment, offset by a discrete tax benefit from the carryback of net operating losses at the Insurance segment as a result of the enactment of the CARES Act. Additionally, the tax benefits associated with losses generated by the HC2 Holdings, Inc. U.S. consolidated income tax return and certain other businesses have been reduced by a full valuation allowance as we do not believe it is more-likely-than-not that the losses will be utilized prior to expiration. The income tax expense recorded for the nine months ended September 30, 2019 relates to the projected expense as calculated under ASC 740 for taxpaying entities offset by a benefit from the release of the valuation allowance of the Insurance segment due to an increase in current year income. Income (loss) from discontinued operations (including loss on disposal of $39.3 million) : Income (loss) from discontinued operations for the three months ended September 30, 2020 decreased $0.6 million to zero from income of $0.6 million for the three months ended September 30, 2019. Loss from discontinued operations for the nine months ended September 30, 2020 increased $46.3 million to a loss of $60.0 million from a loss of $13.7 million for the nine months ended September 30, 2019. The increase in loss was largely driven by the $39.3 million loss on the sale of GMSL in the first quarter of 2020. Also contributing to the increase in loss was a $9.0 million increase in net loss from the discontinued entity, GMSL. The company did not recognize a tax benefit in discontinued operations from the loss on sale of GMSL and its subsidiaries due to the application of the UK Substantial Shareholder Exception, which exempt capital gains and losses from taxation. Preferred dividends, deemed dividends, and repurchase gains : Preferred dividends, and deemed dividends, and repurchase gains for the three months ended September 30, 2020 remained unchanged from the three months ended September 30, 2019 at loss of $0.4 million. Preferred dividends, and deemed dividends, and repurchase gains for the nine months ended September 30, 2020 decreased $1.6 million to a loss of $1.2 million compared to a gain of $0.4 million for the nine months ended September 30, 2019. The decrease was largely driven by the Insurance segment's 2019 purchase of 10,000 shares of the Company's Series A-2 Preferred Stock at a $1.7 million discount. Segment Results of Operations In the Company's Condensed Consolidated Financial Statements, other operating (income) expense includes (i) (gain) loss on sale or disposal of assets, (ii) lease termination costs, (iii) asset impairment expense, (iv) accretion of asset retirement obligations, and (v) FCC reimbursements. Each table summarizes the results of operations of our operating segments and compares the amount of the change between the periods presented (in millions). Infrastructure Segment Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 Increase / (Decrease) 2020 2019 Increase / (Decrease) Net revenue $ 160.8 $ 168.4 $ (7.6) $ 509.6 $ 556.2 $ (46.6) Cost of revenue 133.0 130.8 2.2 430.8 448.9 (18.1) Selling, general and administrative 19.3 21.3 (2.0) 57.8 61.3 (3.5) Depreciation and amortization 2.7 3.9 (1.2) 8.0 11.8 (3.8) Other operating (income) expense (0.2) — (0.2) (0.1) (0.1) — Income from operations $ 6.0 $ 12.4 $ (6.4) $ 13.1 $ 34.3 $ (21.2) Net revenue: Net revenue from our Infrastructure segment for the three months ended September 30, 2020 decreased $7.6 million to $160.8 million from $168.4 million for the three months ended September 30, 2019. The decrease was primarily driven by a decline in industrial maintenance and repair work performed, as well as a slight decline in revenues from our structural steel fabrication and erection business, which had increased activity in the comparable period on certain large commercial construction projects that are now at or near completion. Net revenue from our Infrastructure segment for the nine months ended September 30, 2020 decreased $46.6 million to $509.6 million from $556.2 million for the nine months ended September 30, 2019. The decreases were primarily driven by lower revenues from our structural steel fabrication and erection business, which had increased activity in the comparable period on certain large commercial construction projects that are now at or near completion, as well as slight decreases in power and industrial maintenance and repair work performed. Cost of revenue: Cost of revenue from our Infrastructure segment for the three months ended September 30, 2020 increased $2.2 million to $133.0 million from $130.8 million for the three months ended September 30, 2019. The increase was primarily due to higher costs incurred in response to the COVID-19 pandemic along with timing of project work under execution and change in backlog mix. Cost of revenue from our Infrastructure segment for the nine months ended September 30, 2020 decreased $18.1 million to $430.8 million from $448.9 million for the nine months ended September 30, 2019. The decrease was primarily driven by the timing of project work under execution and change in backlog mix, including a reduction in large commercial construction projects in the current period. The decrease was partially offset by higher costs incurred in response to the COVID-19 pandemic. Selling, general and administrative: Selling, general and administrative from our Infrastructure segment for the three months ended September 30, 2020 decreased $2.0 million to $19.3 million from $21.3 million for the three months ended September 30, 2019. Selling, general and administrative from our Infrastructure segment for the nine months ended September 30, 2020 decreased $3.5 million to $57.8 million from $61.3 million for the nine months ended September 30, 2019. The decreases were primarily driven by lower travel expenses and bonus expense in the current period, partially offset by higher costs incurred due to COVID-19 pandemic. Depreciation and amortization : Depreciation and amortization from our Infrastructure segment for the three months ended September 30, 2020 decreased $1.2 million to $2.7 million from $3.9 million for the three months ended September 30, 2019. Depreciation and amortization from our Infrastructure segment for the nine months ended September 30, 2020 decreased $3.8 million to $8.0 million from $11.8 million for the nine months ended September 30, 2019. The decreases were primarily related to the full depreciation and amortization of assets that took place subsequent to the comparable periods. Clean Energy Segment Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 Increase / (Decrease) 2020 2019 Increase / (Decrease) Net revenue $ 10.3 $ 8.7 $ 1.6 $ 31.0 $ 19.3 $ 11.7 Cost of revenue 5.1 5.1 — 14.8 11.6 3.2 Selling, general and administrative 1.5 1.3 0.2 4.5 3.2 1.3 Depreciation and amortization 2.2 2.0 0.2 6.3 4.9 1.4 Other operating expense — (0.1) 0.1 — (0.1) 0.1 Income (loss) from operations $ 1.5 $ 0.4 $ 1.1 $ 5.4 $ (0.3) $ 5.7 Net revenue: Net revenue from our Clean Energy segment for the three months ended September 30, 2020 increased $1.6 million to $10.3 million from $8.7 million for the three months ended September 30, 2019. The increase was primarily driven by AFTC revenue related to CNG sales recognized in the current period, which had not yet been renewed for 2019 in the comparable period, as well as slight increases in income recognized from renewable energy tax credits under recently signed agreements related to the sale of renewable natural gas ("RNG"). Net revenue from our Clean Energy segment for the nine months ended September 30, 2020 increased $11.7 million to $31.0 million from $19.3 million for the nine months ended September 30, 2019. The increase was primarily driven by higher volume-related revenues attributable to the inclusion of the acquired ampCNG stations, which was acquired in June 2019. Additionally, the increases were driven by AFTC revenue related to CNG sales recognized in the current period. The AFTC had not yet been renewed for 2019 in the comparable period. Cost of revenue: Cost of revenue from our Clean Energy segment for the three months ended September 30, 2020 remained unchanged from the three months ended September 30, 2019 at $5.1 million. Cost of revenue from our Clean Energy segment for the nine months ended September 30, 2020 increased $3.2 million to $14.8 million from $11.6 million for the nine months ended September 30, 2019. The increase was due to the overall growth in volume of gasoline gallon equivalents delivered and higher commodity and utility costs driven by the acquisition of ampCNG stations. Selling, general and administrative: Selling, general and administrative expenses from our Clean Energy segment for the three months ended September 30, 2020 increased $0.2 million to $1.5 million from $1.3 million for the three months ended September 30, 2019. Selling, general and administrative expenses from our Clean Energy segment for the nine months ended September 30, 2020 increased $1.3 million to $4.5 million from $3.2 million for the nine months ended September 30, 2019. The increases were driven by the overall growth of the Clean Energy segment as it continues to increase its national footprint. Depreciation and amortization : Depreciation and amortization from our Clean Energy segment for the three months ended September 30, 2020 increased $0.2 million to $2.2 million from $2.0 million for the three months ended September 30, 2019. Depreciation and amortization from our Clean Energy segment for the nine months ended September 30, 2020 increased $1.4 million to $6.3 million from $4.9 million for the nine months ended September 30, 2019. The increase was due to additional depreciation and amortization from the acquisition of ampCNG stations completed in June 2019. Telecommunications Segment Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 Increase / (Decrease) 2020 2019 Increase / (Decrease) Net revenue $ 136.4 $ 162.2 $ (25.8) $ 430.1 $ 507.0 $ (76.9) Cost of revenue 134.8 159.8 (25.0) 424.4 498.5 (74.1) Selling, general and administrative 1.2 1.8 (0.6) 4.8 6.4 (1.6) Depreciation and amortization 0.1 0.1 — 0.3 0.3 — Other operating expense — 0.9 (0.9) — 1.4 (1.4) Income from operations $ 0.3 $ (0.4) $ 0.7 $ 0.6 $ 0.4 $ 0.2 Net revenue : Net revenue from our Telecommunications segment for the three months ended September 30, 2020 decreased $25.8 million to $136.4 million from $162.2 million for the three months ended September 30, 2019. Net revenue from our Telecommunications segment for the nine months ended September 30, 2020 decreased $76.9 million to $430.1 million from $507.0 million for the nine months ended September 30, 2019. The decreases can be attributed to changes in our customer mix and fluctuations in wholesale traffic volumes, which can result in variability across periods. Cost of revenue: Cost of revenue from our Telecommunications segment for the three months ended September 30, 2020 decreased $25.0 million to $134.8 million from $159.8 million for the three months ended September 30, 2019. Cost of revenue from our Telecommunications segment for the nine months ended September 30, 2020 decreased $74.1 million to $424.4 million from $498.5 million for the nine months ended September 30, 2019. The decreases were directly correlated to the fluctuations in wholesale voice termination volumes, in addition to a slight reduction in margin mix attributable to market pressures on call termination rates. Selling, general and administrative: Selling, general and administrative expenses from our Telecommunications segment for the three months ended September 30, 2020 decreased $0.6 million to $1.2 million from $1.8 million for the three months ended September 30, 2019. Selling, general and administrative expenses from our Telecommunications segment for the nine months ended September 30, 2020 decreased $1.6 million to $4.8 million from $6.4 million for the nine months ended September 30, 2019. The decreases were primarily due to a decrease in compensation expense due to a lower headcount along with a reduction in accounting and legal costs. Other operating expense: Other operating expense expenses from our Telecommunications segment for the three months ended September 30, 2020 decreased $0.9 million to zero from $0.9 million for the three months ended September 30, 2019. Other operating expense expenses from our Telecommunications segment for the nine months ended September 30, 2020 decreased $1.4 million to zero from $1.4 million for the nine months ended September 30, 2019. The decreases were driven by impairment of goodwill in the comparable period as a result of declining performance at the segment. Insurance Segment Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 Increase / (Decrease) 2020 2019 Increase / (Decrease) Life, accident and health earned premiums, net $ 28.6 $ 28.8 $ (0.2) $ 86.8 $ 88.7 $ (1.9) Net investment income 49.2 53.5 (4.3) 154.7 159.0 (4.3) Net realized and unrealized gains (losses) on investments 1.1 (1.9) 3.0 (18.3) 3.6 (21.9) Net revenue 78.9 80.4 (1.5) 223.2 251.3 (28.1) Policy benefits, changes in reserves, and commissions 59.6 66.1 (6.5) 195.0 166.8 28.2 Selling, general and administrative 8.6 9.4 (0.8) 27.3 26.8 0.5 Depreciation and amortization (4.4) (5.7) 1.3 (15.8) (18.2) 2.4 Income from operations (1) $ 15.1 $ 10.6 $ 4.5 $ 16.7 $ 75.9 $ (59.2) (1) The Insurance segment revenues are inclusive of realized and unrealized gains and net investment income for the three and nine months ended September 30, 2020 and 2019, inclusive of transactions between entities under common control, which are eliminated or are reclassified in consolidation. Life, accident and health earned premiums, net: Life, accident and health earned premiums, net from our Insurance segment for the three months ended September 30, 2020 decreased $0.2 million to $28.6 million from $28.8 million for the three months ended September 30, 2019. Life, accident and health earned premiums, net from our Insurance segment for the nine months ended September 30, 2020 decreased $1.9 million to $86.8 million from $88.7 million for the nine months ended September 30, 2019. The decreases were primarily related to natural run-off of the closed blocks of business. Net investment income: Net investment income from our Insurance segment for the three months ended September 30, 2020 decreased $4.3 million to $49.2 million from $53.5 million for the three months ended September 30, 2019. Net investment income from our Insurance segment for the nine months ended September 30, 2020 decreased $4.3 million to $154.7 million from $159.0 million for the nine months ended September 30, 2019. The decreases were primarily due to lower net investment income and unfavorable market movements in values for preferred stock holdings and fixed maturity impairments. Net realized and unrealized gains (losses) on investments : Net realized and unrealized gains (losses) on investments from our Insurance segment for the three months ended September 30, 2020 increased $3.0 million to a gain of $1.1 million from a loss of $1.9 million for the three months ended September 30, 2019. The increase was largely due to favorable market movements on common and preferred stock, partially offset by an impairment of select investments in the current period. Net realized and unrealized gains (losses) on investments from our Insurance segment for the nine months ended September 30, 2020 decreased $21.9 million to a loss of $18.3 million from a gain of $3.6 million for the nine months ended September 30, 2019. The decrease was driven by unfavorable market movements in common and preferred stocks driven by interest rate reductions due to the COVID-19 pandemic and impairment of select investments in the current period. Policy benefits, changes in reserves, and commissions : Policy benefits, changes in reserves, and commissions from our Insurance segment for the three months ended September 30, 2020 decreased $6.5 million to $59.6 million from $66.1 million for the three months ended September 30, 2019. The decrease was due to favorable claims activity recognized in the current period, partially offset by unfavorable reserves development. Policy benefits, changes in reserves, and commissions from our Insurance segment for the nine months ended September 30, 2020 increased $28.2 million to $195.0 million from $166.8 million for the nine months ended September 30, 2019. The increase was due to favorable claims activity recognized in the comparable period primarily driven by an increase in contingent non-forfeiture option activity as a result of in-force rate actions approved and implemented and unfavorable claims activity and reserves development in the current period. Selling, general and administrative : Selling, general and administrative expenses from our Insurance segment for the three months ended September 30, 2020 decreased $0.8 million to $8.6 million from $9.4 million for the three months ended September 30, 2019. The decrease was primarily due to a reduction in bonus expense in the current period. Selling, general and administrative expenses from our Insurance segment for the nine months ended September 30, 2020 increased $0.5 million to $27.3 million from $26.8 million for the nine months ended September 30, 2019. The increase was primarily driven by increases in salaries due to headcount increases, severance expense incurred in the current period, third party management fees and premium taxes, largely offset by a reduction in bonus expense. Depreciation and amortization : Depreciation and amortization from our Insurance segment for the three months ended September 30, 2020 decreased $1.3 million to $4.4 million from $5.7 million for the three months ended September 30, 2019. Depreciation and amortization from our Insurance segment for the nine months ended September 30, 2020 decreased $2.4 million to $15.8 million from $18.2 million for the nine months ended September 30, 2019. The decreases were driven by a reduction in negative VOBA amortization largely due to lower policy terminations for the LTC policies acquired in 2018. Life Sciences Segment Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 Increase / (Decrease) 2020 2019 Increase / (Decrease) Selling, general and administrative $ 4.6 $ 3.0 $ 1.6 $ 11.2 $ 6.4 $ 4.8 Depreciation and amortization — — — 0.1 0.1 — Other operating expense 0.1 — 0.1 0.1 0.1 — Loss from operations $ (4.7) $ (3.0) $ (1.7) $ (11.4) $ (6.6) $ (4.8) Selling, general and administrative : Selling, general and administrative expenses from our Life Sciences segment for the three months ended September 30, 2020 increased $1.6 million to $4.6 million from $3.0 million for the three months ended September 30, 2019. Selling, general and administrative expenses from our Life Sciences segment for the nine months ended September 30, 2020 increased $4.8 million to $11.2 million from $6.4 million for the nine months ended September 30, 2019. The increases were driven by higher expenses at R2 Technologies, which increased spending from the comparable period to ramp up efforts to achieve commercialization of its products. Spectrum Segment Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 Increase / (Decrease) 2020 2019 Increase / (Decrease) Net revenue $ 9.7 $ 10.0 $ (0.3) $ 29.3 $ 29.8 $ (0.5) Cost of revenue 5.8 5.6 0.2 16.9 17.4 (0.5) Selling, general and administrative 4.3 7.4 (3.1) 15.6 19.4 (3.8) Depreciation and amortization 1.7 1.8 (0.1) 5.1 4.7 0.4 Other operating (income) expense 9.6 (1.0) 10.6 7.5 (2.9) 10.4 Loss from operations $ (11.7) $ (3.8) $ (7.9) $ (15.8) $ (8.8) $ (7.0) Net revenue : Net revenue from our Spectrum segment for the three months ended September 30, 2020 decreased $0.3 million to $9.7 million from $10.0 million for the three months ended September 30, 2019. Net revenue from our Spectrum segment for the nine months ended September 30, 2020 decreased $0.5 million to $29.3 million from $29.8 million for the nine months ended September 30, 2019. The decreases were primarily driven by a decrease in advertising revenues at the Azteca network driven by the negative impact of the COVID-19 pandemic, partially offset by higher station revenues as our Spectrum segment grew the number of operating stations and launched new customers across its broadcast platform. Cost of revenue: Cost of revenue from our Spectrum segment for the three months ended September 30, 2020 increased $0.2 million to $5.8 million from $5.6 million for the three months ended September 30, 2019. The increase was primarily driven by increased cost of revenues associated with the higher number of operating stations, mostly offset by cost reductions at Network. Cost of revenue from our Spectrum segment for the nine months ended September 30, 2020 decreased $0.5 million to $16.9 million from $17.4 million for the nine months ended September 30, 2019. The decrease was primarily driven by cost reductions at Network, partially offset by increased cost of revenues associated with the higher number of operating stations. Selling, general and administrative: Selling, general and administrative expenses from our Spectrum segment for the three months ended September 30, 2020 decreased $3.1 million to $4.3 million from $7.4 million for the three months ended September 30, 2019. Selling, general and administrative expenses from our Spectrum segment for the nine months ended September 30, 2020 decreased $3.8 million to $15.6 million from $19.4 million for the nine months ended September 30, 2019. The decreases were primarily due to lower compensation and acquisition expenses. Depreciation and amortization : Depreciation and amortization from our Spectrum segment for the nine months ended September 30, 2020 increased $0.4 million to $5.1 million from $4.7 million for the nine months ended September 30, 2019. The increase was driven by additional amortization of fixed assets at new stations which were acquired subsequent to the comparable period. Other operating (income) expense : Other operating (income) expense from our Spectrum segment for the three months ended September 30, 2020 decreased $10.6 million to an expense of $9.6 million from income of $1.0 million for the three months ended September 30, 2019. Other operating (income) expense from our Spectrum segment for the nine months ended September 30, 2020 decreased $10.4 million to an expense of $7.5 million from income of $2.9 million for the nine months ended September 30, 2019. The decreases were primarily due to the impairment of licenses in the current period and a decrease in gains from FCC reimbursements. Other Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 Increase / (Decrease) 2020 2019 Increase / (Decrease) Selling, general and administrative $ 0.5 $ — $ 0.5 $ 2.1 $ 0.1 $ 2.0 Depreciation and amortization — — — — — — Other operating (income) expense — (0.1) 0.1 — (0.1) 0.1 Loss from operations $ (0.5) $ 0.1 $ (0.6) $ (2.1) $ — $ (2.1) Selling, general and administrative : Selling, general and administrative expenses from our Other segment for the three months ended September 30, 2020 increased $0.5 million to $0.5 million from zero for the three months ended September 30, 2019. Selling, general and administrative expenses from our Other segment for the nine months ended September 30, 2020 increased $2.0 million to $2.1 million from $0.1 million for the nine months ended September 30, 2019. The increases were predominantly driven by costs associated with the sale of HMN, which closed during the second quarter of 2020. Non-operating Corporate Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 Increase / (Decrease) 2020 2019 Increase / (Decrease) Selling, general and administrative $ 5.2 $ 6.5 $ (1.3) $ 22.3 $ 20.2 $ 2.1 Depreciation and amortization 0.1 0.1 — 0.1 0.1 — Loss from operations $ (5.3) $ (6.6) $ 1.3 $ (22.4) $ (20.3) $ (2.1) Selling, general and administrative : Selling, general and administrative expenses from our Non-operating Corporate segment for the three months ended September 30, 2020 decreased $1.3 million to $5.2 million from $6.5 million for the three months ended September 30, 2019. The decrease was primarily due to a decrease in bonus, stock compensation expense, rent expense and various consulting expenses, partially offset by an increase in legal fees incurred. Selling, general and administrative expenses from our Non-operating Corporate segment for the nine months ended September 30, 2020 increased $2.1 million to $22.3 million from $20.2 million for the nine months ended September 30, 2019. The increase was driven by legal costs incurred associated with the consent revocation, acquisition costs, and the annual stockholder meeting related to the board solicitation matter with certain stockholders of the Company. This was partially offset by a decrease in bonus, stock compensation expense, rent expense and various consulting expenses in the current period. Income (loss) from Equity Investees Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 Increase / (Decrease) 2020 2019 Increase / (Decrease) Life Sciences $ (1.5) $ (1.2) $ (0.3) $ (3.6) $ (2.5) $ (1.1) Other 0.2 (0.1) 0.3 (0.4) 2.5 (2.9) Loss from equity investees $ (1.3) $ (1.3) $ — $ (4.0) $ — $ (4.0) Life Sciences: Loss from equity investees within our Life Sciences segment for the three months ended September 30, 2020 increased $0.3 million to $1.5 million from $1.2 million for the three months ended September 30, 2019. Loss from equity investees within our Life Sciences segment for the nine months ended September 30, 2020 increased $1.1 million to $3.6 million from $2.5 million for the nine months ended September 30, 2019. The increases in losses were largely due to higher equity method losses recorded from our investment in MediBeacon due to the timing of clinical trials. Other: Income (loss) from equity investees within our Other segment for the three months ended September 30, 2020 increased $0.3 million to income of $0.2 million from a loss of $0.1 million for the three months ended September 30, 2019. The increase was driven by the equity investment in HMN, as the joint venture produced higher profits than in the comparable period, which is generally attributable to timing of turnkey project work. Income (loss) from equity investees within our Other segment for the nine months ended September 30, 2020 decreased $2.9 million to a loss of $0.4 million from income $2.5 million for the nine months ended September 30, 2019. The decrease was driven by the equity investment in HMN, as the joint venture produced lower profits than in the comparable period, which is generally attributable to timing of turnkey project work, and a reduction in ownership as a result of the partial sale in the second quarter of 2020. Non-GAAP Financial Measures and Other Information Adjusted EBITDA Adjusted EBITDA is not a measurement recognized under U.S. GAAP. In addition, other companies may define Adjusted EBITDA differently than we do, which could limit its usefulness. Management believes that Adjusted EBITDA provides investors with meaningful information for gaining an understanding of our results as it is frequently used by the financial community to provide insight into an organization’s operating trends and facilitates comparisons between peer companies, since interest, taxes, depreciation, amortization and the other items listed in the definition of Adjusted EBITDA below can differ greatly between organizations as a result of differing capital structures and tax strategies. Adjusted EBITDA can also be a useful measure of a company’s ability to service debt. While management believes that non-U.S. GAAP measurements are useful supplemental information, such adjusted results are not intended to replace our U.S. GAAP financial results. Using Adjusted EBITDA as a performance measure has inherent limitations as an analytical tool as compared to net income (loss) or other U.S. GAAP financial measures, as this non-GAAP measure excludes certain items, including items that are recurring in nature, which may be meaningful to investors. As a result of the exclusions, Adjusted EBITDA should not be considered in isolation and does not purport to be an alternative to net income (loss) or other U.S. GAAP financial measures as a measure of our operating performance. Adjusted EBITDA excludes the results of operations and any consolidating eliminations of our Insurance segment. The calculation of Adjusted EBITDA, as defined by us, consists of Net income (loss) as adjusted for depreciation and amortization; Other operating (income) expense, which is inclusive of (gain) loss on sale or disposal of assets, lease termination costs, and FCC reimbursements; asset impairment expense; interest expense; net gain (loss) on contingent consideration; loss on early extinguishment or restructuring of debt; gain (loss) on sale of subsidiaries; other (income) expense, net; foreign currency transaction (gain) loss included in cost of revenue; income tax (benefit) expense; noncontrolling interest; bonus to be settled in equity; share-based compensation expense; discontinued operations; non-recurring items; costs associated with the COVID-19 pandemic, and acquisition and disposition costs. To help our board, management and investors assess the impact of COVID-19 pandemic on our results of operations, we are excluding the impacts of COVID-19 response initiatives for the cost of personal protective equipment distributed to employees, cleaning and sanitization equipment and procedures, and additional overhead costs to maintain proper social distancing from Adjusted EBITDA. Our board and management find the exclusion of the impact of these COVID-19 response initiatives from Adjusted EBITDA to be useful because it allows us and our investors to assess the impact of these response initiatives on our results of operations. (in millions) Three Months Ended September 30, 2020 Non-operating Corporate HC2 Infrastructure Clean Energy Telecom Life Sciences Spectrum Other and Eliminations Net loss attributable to HC2 Holdings, Inc. $ (17.3) Less: Net income attributable to HC2 Holdings Insurance segment 12.7 Less: Consolidating eliminations attributable to HC2 Holdings Insurance segment (2.0) Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance segment $ 2.5 $ (3.4) $ 2.4 $ (4.3) $ (15.7) $ 0.2 $ (9.7) $ (28.0) Adjustments to reconcile net income (loss) to Adjusted EBITDA: Depreciation and amortization 2.7 2.2 0.1 — 1.7 — 0.1 6.8 Depreciation and amortization (included in cost of revenue) 2.3 — — — — — — 2.3 Other operating (income) expenses (0.3) — — 0.1 9.7 — — 9.5 Interest expense 2.1 0.6 — — 3.6 — 13.4 19.7 Other (income) expense, net (0.1) 0.7 (2.1) 0.1 1.4 (0.5) (6.7) (7.2) Loss on early extinguishment of debt — 5.0 — — — — — 5.0 Income tax (benefit) expense 1.4 — — — — 0.1 (2.3) (0.8) Noncontrolling interest 0.1 (1.4) — (1.8) (1.1) (0.1) — (4.3) Bonus to be settled in equity — — — — — — (0.1) (0.1) Share-based payment expense — — — — 0.1 — 0.7 0.8 Discontinued Operations — — — — — — — — Non-recurring items 0.4 — — — — — 0.1 0.5 Covid-19 Costs 6.4 — — — — — — 6.4 Acquisition and disposition costs 0.2 — — — 0.1 0.2 0.8 1.3 Adjusted EBITDA $ 17.7 $ 3.7 $ 0.4 $ (5.9) $ (0.2) $ (0.1) $ (3.7) $ 11.9 (in millions) Three Months Ended September 30, 2019 Non-operating Corporate HC2 Infrastructure Clean Energy Telecom Life Sciences Spectrum Other and Eliminations Net loss attributable to HC2 Holdings, Inc. $ (7.1) Less: Net income attributable to HC2 Holdings Insurance segment 10.5 Less: Consolidating eliminations attributable to HC2 Holdings Insurance segment (2.1) Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance Segment $ 7.0 $ (0.1) $ (0.3) $ 5.6 $ (6.2) $ 2.4 $ (23.9) $ (15.5) Adjustments to reconcile net income (loss) to Adjusted EBITDA: Depreciation and amortization 3.9 2.0 0.1 — 1.8 — 0.1 7.9 Depreciation and amortization (included in cost of revenue) 2.2 — — — — — — 2.2 Other operating (income) expenses — (0.2) 0.8 — (0.8) — — (0.2) Interest expense 2.3 1.0 — — 2.4 — 14.4 20.1 Net loss (gain) on contingent consideration — — (0.1) — — — — (0.1) Other (income) expense, net (0.1) (0.3) — (8.2) 0.9 0.1 2.7 (4.9) Foreign currency (gain) loss (included in cost of revenue) — — 0.1 — — — — 0.1 Income tax (benefit) expense 2.9 — — — — — (2.8) 0.1 Noncontrolling interest 0.5 (0.1) — (1.4) (1.1) 0.9 — (1.2) Share-based payment expense — — — — 0.1 — 1.5 1.6 Discontinued operations — — — — — (3.5) 2.9 (0.6) Non-recurring items — — — — — — — — Acquisition and disposition costs 0.7 — 0.2 — 1.0 — 0.4 2.3 Adjusted EBITDA $ 19.4 $ 2.3 $ 0.8 $ (4.0) $ (1.9) $ (0.1) $ (4.7) $ 11.8 Infrastructure: Net income from our Infrastructure segment for the three months ended September 30, 2020 decreased by $4.5 million to $2.5 million from $7.0 million for the three months ended September 30, 2019. Adjusted EBITDA from our Infrastructure segment for the three months ended September 30, 2020 decreased $1.7 million to $17.7 million from $19.4 million for the three months ended September 30, 2019. The decrease in Adjusted EBITDA was primarily driven by a decline in power and industrial repair and maintenance work performed, as well as a slight decline in revenues from our structural steel fabrication and erection business, which had increased activity in the comparable period on certain large commercial construction projects that are now at or near completion. Partially offsetting this were decreases in corporate overhead, including a reduction in bonus expense. Clean Energy: Net income (loss) from our Clean Energy segment for the three months ended September 30, 2020 decreased by $3.3 million to a loss of $3.4 million from a loss of $0.1 million for the three months ended September 30, 2019. Adjusted EBITDA from our Clean Energy segment for the three months ended September 30, 2020 increased $1.4 million to $3.7 million from $2.3 million for the three months ended September 30, 2019. The increase in Adjusted EBITDA was primarily driven the AFTC recognized in the current period which had not yet been renewed in the comparable period, as well as slight increases in income recognized from renewable energy tax credits under recently signed agreements related to the sale of RNG. Telecommunications: Net income (loss) from our Telecommunications segment for the three months ended September 30, 2020 increased by $2.7 million to income of $2.4 million from a loss of $0.3 million for the three months ended September 30, 2019. Adjusted EBITDA from our Telecommunications segment for the three months ended September 30, 2020 decreased $0.4 million to $0.4 million from $0.8 million for the three months ended September 30, 2019. The decrease in Adjusted EBITDA was primarily due to a decline in the contracting of call termination margin as a result of the continued decline in the international long distance market, partially offset by a decrease in selling, general and administrative expenses, primarily compensation expense due to a lower headcount along with a reduction in accounting and legal costs. Life Sciences : Net income (loss) from our Life Sciences segment for the three months ended September 30, 2020 decreased $9.9 million to a loss of $4.3 million from income of $5.6 million for the three months ended September 30, 2019. Adjusted EBITDA loss from our Life Sciences segment for the three months ended September 30, 2020 increased $1.9 million to $5.9 million from $4.0 million for the three months ended September 30, 2019. The increase in Adjusted EBITDA loss was primarily driven by higher expenses at R2 Technologies, which increased spending from the comparable period to ramp up efforts to achieve commercialization of its products. Spectrum : Net loss from our Spectrum segment for the three months ended September 30, 2020 increased $9.5 million to $15.7 million from $6.2 million for the three months ended September 30, 2019. Adjusted EBITDA loss from our Spectrum segment for the three months ended September 30, 2020 decreased $1.7 million to $0.2 million from $1.9 million for the three months ended September 30, 2019. The overall decrease in Adjusted EBITDA loss was primarily driven by a decrease in compensation expense, as well as higher station revenues as our Spectrum segment grew the number of operating stations and launched new customers across its broadcast platform. This was partially offset by a decrease in advertising revenues at the Azteca network driven by the negative impact of the COVID-19 pandemic. Other and Eliminations : Net income from our Other and Eliminations segment for the three months ended September 30, 2020 decreased $2.2 million to $0.2 million from $2.4 million for the three months ended September 30, 2019. Adjusted EBITDA from our Other and Eliminations segment for the three months ended September 30, 2020 remained unchanged from the three months ended September 30, 2019 at a loss of $0.1 million. Non-operating Corporate: Net loss from our Non-operating Corporate segment for the three months ended September 30, 2020 decreased $14.2 million to $9.7 million from $23.9 million for the three months ended September 30, 2019. Adjusted EBITDA loss from our Non-operating Corporate segment for the three months ended September 30, 2020 decreased $1.0 million to $3.7 million from $4.7 million for the three months ended September 30, 2019. The decrease in Adjusted EBITDA loss was driven by a decrease in discretionary bonus and a general reduction in overhead expenses, including professional fees, travel and entertainment expenses, and rent expense, partially offset by an increase in recurring legal fees. (in millions) Nine Months Ended September 30, 2020 Non-operating Corporate HC2 Infrastructure Clean Energy Telecom Life Sciences Spectrum Other and Eliminations Net loss attributable to HC2 Holdings, Inc. $ (87.3) Less: Net income attributable to HC2 Holdings Insurance segment 24.1 Less: Consolidating eliminations attributable to HC2 Holdings Insurance segment (5.1) Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance segment $ 4.0 $ (2.4) $ 2.9 $ (8.7) $ (26.6) $ 4.2 $ (79.7) $ (106.3) Adjustments to reconcile net income (loss) to Adjusted EBITDA: Depreciation and amortization 8.0 6.3 0.3 0.1 5.1 — 0.1 19.9 Depreciation and amortization (included in cost of revenue) 6.9 — — — — — — 6.9 Other operating (income) expenses (0.2) — — 0.1 7.6 — — 7.5 Interest expense 6.5 3.0 — — 10.3 — 42.7 62.5 Other (income) expense, net — 0.8 (2.4) (2.2) 4.0 (71.8) (0.1) (71.7) Loss on early extinguishment of debt — 5.0 — — — — 9.2 14.2 Income tax (benefit) expense 2.5 — — — — 7.4 1.7 11.6 Noncontrolling interest 0.2 (1.0) — (4.0) (3.5) 1.5 — (6.8) Bonus to be settled in equity — — — — — — (0.5) (0.5) Share-based payment expense — — — 0.1 0.3 — 2.2 2.6 Discontinued Operations — — — — — 56.2 3.8 60.0 Non-recurring items 2.2 — — — — — 5.3 7.5 Covid-19 costs 15.2 — — — — — — 15.2 Acquisition and disposition costs 0.5 — 0.2 — 0.5 1.7 3.0 5.9 Adjusted EBITDA $ 45.8 $ 11.7 $ 1.0 $ (14.6) $ (2.3) $ (0.8) $ (12.3) $ 28.5 (in millions) Nine Months Ended September 30, 2019 Non-operating Corporate HC2 Infrastructure Clean Energy Telecom Life Sciences Spectrum Other and Eliminations Net loss attributable to HC2 Holdings, Inc. $ (0.5) Less: Net income attributable to HC2 Holdings Insurance segment 74.6 Less: Consolidating eliminations attributable to HC2 Holdings Insurance segment (7.6) Net Income (loss) attributable to HC2 Holdings, Inc., excluding Insurance Segment $ 18.0 $ (1.4) $ 0.7 $ 1.6 $ (14.1) $ (2.3) $ (70.0) $ (67.5) Adjustments to reconcile net income (loss) to Adjusted EBITDA: Depreciation and amortization 11.8 4.9 0.3 0.1 4.7 — 0.1 21.9 Depreciation and amortization (included in cost of revenue) 6.7 — — — — — — 6.7 Other operating (income) expenses (0.1) (0.1) 1.3 — (2.7) — — (1.6) Interest expense 7.0 1.9 — — 6.3 — 43.1 58.3 Net loss (gain) on contingent consideration — — (0.3) — — — — (0.3) Other (income) expense, net 0.1 (0.1) — (8.3) 1.3 (0.1) 3.7 (3.4) Foreign currency (gain) loss (included in cost of revenue) — — 0.1 — — — — 0.1 Income tax (benefit) expense 8.0 — — — 0.1 — (5.3) 2.8 Noncontrolling interest 1.4 (0.7) — (2.2) (2.7) (0.7) — (4.9) Bonus to be settled in equity — — — — — — — — Share-based payment expense — — — 0.1 0.5 — 4.0 4.6 Discontinued operations — — — — — 5.5 8.2 13.7 Non-recurring items — — — — — — — — Acquisition and disposition costs 2.0 0.1 0.3 — 1.3 — 1.0 4.7 Adjusted EBITDA $ 54.9 $ 4.6 $ 2.4 $ (8.7) $ (5.3) $ 2.4 $ (15.2) $ 35.1 Infrastructure: Net income from our Infrastructure segment for the nine months ended September 30, 2020 decreased $14.0 million to $4.0 million from $18.0 million for the nine months ended September 30, 2019. Adjusted EBITDA from our Infrastructure segment for the nine months ended September 30, 2020 decreased $9.1 million to $45.8 million from $54.9 million for the nine months ended September 30, 2019. The decrease in Adjusted EBITDA can be attributed to the timing of project work under execution and change in backlog mix, including a reduction in large commercial construction projects in the current period, as well as a decline in power and industrial repair and maintenance work performed. This was partially offset by a decrease in recurring corporate overhead, including a reduction in bonus expense. Clean Energy: Net loss from our Clean Energy segment for the nine months ended September 30, 2020 increased by $1.0 million to a loss of $2.4 million from a loss of $1.4 million for the nine months ended September 30, 2019. Adjusted EBITDA from our Clean Energy segment for the nine months ended September 30, 2020 increased $7.1 million to $11.7 million from $4.6 million for the nine months ended September 30, 2019. The increase in Adjusted EBITDA was primarily driven by higher volume-related revenues from the acquisition of ampCNG stations in June 2019 and the AFTC recognized in the current period which had not yet been renewed in the comparable period. Partially offsetting these increases were higher costs of revenue and selling, general and administrative expenses as a result of the acquisition of the ampCNG stations. Telecommunications: Net income from our Telecommunications segment for the nine months ended September 30, 2020 increased by $2.2 million to $2.9 million from $0.7 million for the nine months ended September 30, 2019. Adjusted EBITDA from our Telecommunications segment for the nine months ended September 30, 2020 decreased $1.4 million to $1.0 million from $2.4 million for the nine months ended September 30, 2019. The decrease in Adjusted EBITDA was primarily due to a decline in call termination margin as a result of the continued decline in the international long distance market, partially offset by a decrease in compensation expense due to headcount decreases. Life Sciences: Net income (loss) from our Life Sciences segment for the nine months ended September 30, 2020 decreased $10.3 million to a loss of $8.7 million from income of $1.6 million for the nine months ended September 30, 2019. Adjusted EBITDA loss from our Life Sciences segment for the nine months ended September 30, 2020 increased $5.9 million to $14.6 million from $8.7 million for the nine months ended September 30, 2019. The increase in Adjusted EBITDA loss was primarily driven by higher expenses at R2 Technologies, which increased spending from the comparable period to ramp up efforts to achieve commercialization of its products and higher equity method losses recorded from our investment in MediBeacon due to the timing of clinical trials. Spectrum: Net loss from our Spectrum segment for the nine months ended September 30, 2020 increased $12.5 million to $26.6 million from $14.1 million for the nine months ended September 30, 2019. Adjusted EBITDA loss from our Spectrum segment for the nine months ended September 30, 2020 decreased $3.0 million to $2.3 million from $5.3 million for the nine months ended September 30, 2019. The overall decrease in Adjusted EBITDA loss was primarily driven a decrease in compensation expense, as well as higher station revenues as our Spectrum segment grew the number of operating stations and launched new customers across its broadcast platform. This was partially offset by a decrease in advertising revenues at the Azteca network driven by the negative impact of the COVID-19 pandemic. Other and Eliminations: Net income (loss) from our Other and Eliminations segment for the nine months ended September 30, 2020 increased $6.5 million to income of $4.2 million from a loss of $2.3 million for the nine months ended September 30, 2019. Adjusted EBITDA from our Other and Eliminations segment for the nine months ended September 30, 2020 decreased $3.2 million to a loss of $0.8 million from income of $2.4 million for the nine months ended September 30, 2019. The decrease in EBITDA for Other and Eliminations was driven by lower profits for the HMN investment, which is generally attributable to the timing of turnkey project work. Non-operating Corporate: Net loss from our Non-operating Corporate segment for the nine months ended September 30, 2020 increased $9.7 million to $79.7 million from $70.0 million for the nine months ended September 30, 2019. Adjusted EBITDA loss from our Non-operating Corporate segment for the nine months ended September 30, 2020 decreased $2.9 million to $12.3 million from $15.2 million for the nine months ended September 30, 2019. The decrease in Adjusted EBITDA loss was driven by a decrease in discretionary bonus and a general reduction in overhead expenses, including professional fees, travel and entertainment expenses, and rent expense, partially offset by an increase in recurring legal fees. (in millions): Three Months Ended September 30, Nine months ended September 30, 2020 2019 Increase / (Decrease) 2020 2019 Increase / (Decrease) Infrastructure $ 17.7 $ 19.4 $ (1.7) $ 45.8 $ 54.9 $ (9.1) Clean Energy 3.7 2.3 1.4 11.7 4.6 7.1 Telecommunications 0.4 0.8 (0.4) 1.0 2.4 (1.4) Life Sciences (5.9) (4.0) (1.9) (14.6) (8.7) (5.9) Spectrum (0.2) (1.9) 1.7 (2.3) (5.3) 3.0 Other and Eliminations (0.1) (0.1) — (0.8) 2.4 (3.2) Non-Operating Corporate (3.7) (4.7) 1.0 (12.3) (15.2) 2.9 Adjusted EBITDA $ 11.9 $ 11.8 $ 0.1 $ 28.5 $ 35.1 $ (6.6) Adjusted Operating Income - Insurance Adjusted Operating Income ("Insurance AOI") and Pre-tax Adjusted Operating Income (“Pre-tax Insurance AOI”) for the Insurance segment are non-U.S. GAAP financial measures frequently used throughout the insurance industry and are economic measures the Insurance segment uses to evaluate its financial performance. Management believes that Insurance AOI and Pre-tax Insurance AOI measures provide investors with meaningful information for gaining an understanding of certain results and provide insight into an organization’s operating trends and facilitates comparisons between peer companies. However, Insurance AOI and Pre-tax Insurance AOI have certain limitations, and we may not calculate it the same as other companies in our industry. It should, therefore, be read together with the Company's results calculated in accordance with U.S. GAAP. Similarly to Adjusted EBITDA, using Insurance AOI and Pre-tax Insurance AOI as performance measures have inherent limitations as an analytical tool as compared to income (loss) from operations or other U.S. GAAP financial measures, as these non-U.S. GAAP measures exclude certain items, including items that are recurring in nature, which may be meaningful to investors. As a result of the exclusions, Insurance AOI and Pre-tax Insurance AOI should not be considered in isolation and do not purport to be an alternative to income (loss) from operations or other U.S. GAAP financial measures as measures of our operating performance. Management defines Insurance AOI as Net income for the Insurance segment adjusted to exclude the impact of net investment gains (losses), including OTTI losses recognized in operations; asset impairment; intercompany elimination; gain on bargain purchase; gain on reinsurance recaptures; and acquisition costs. Management defines Pre-tax Insurance AOI as Insurance AOI adjusted to exclude the impact of income tax (benefit) expense recognized during the current period. Management believes that Insurance AOI and Pre-tax Insurance AOI provide meaningful financial metrics that help investors understand certain results and profitability. While these adjustments are an integral part of the overall performance of the Insurance segment, market conditions impacting these items can overshadow the underlying performance of the business. Accordingly, we believe using a measure which excludes their impact is effective in analyzing the trends of our operations. The table below shows the adjustments made to the reported Net income (loss) of the Insurance segment to calculate Insurance AOI and Pre-tax Insurance AOI (in millions). Refer to the analysis of the fluctuations within the results of operations section: Three Months Ended September 30, Nine months ended September 30, 2020 2019 Increase / (Decrease) 2020 2019 Increase / (Decrease) Net income - Insurance segment $ 12.7 $ 10.5 $ 2.2 $ 24.1 $ 74.6 $ (50.5) Effect of investment losses (gains) (1) (1.1) 1.9 (3.0) 18.3 (3.6) 21.9 Gain on bargain purchase — — — — (1.1) 1.1 Acquisition costs 0.1 0.2 (0.1) 0.1 2.0 (1.9) Insurance AOI 11.7 12.6 (0.9) 42.5 71.9 (29.4) Income tax expense (benefit) 2.6 0.9 1.7 (7.0) 3.3 (10.3) Pre-tax Insurance AOI $ 14.3 $ 13.5 $ 0.8 $ 35.5 $ 75.2 $ (39.7) (1) The Insurance segment revenues are inclusive of realized and unrealized gains and net investment income for the three and nine months ended September 30, 2020 and 2019, inclusive of transactions between entities under common control, which are eliminated or are reclassified in consolidation. Net income for the three months ended September 30, 2020 increased $2.2 million to $12.7 million from $10.5 million for the three months ended September 30, 2019. Pre-tax Insurance AOI for the three months ended September 30, 2020 increased $0.8 million to $14.3 million from $13.5 million for the three months ended September 30, 2019. The increase was due to favorable claims activity recognized in the current period. This was partially offset by a reduction in net investment income due to lower net investment income and unfavorable market movements in values for preferred stock holdings and fixed maturity impairments and unfavorable VOBA amortization largely due to lower policy terminations for the LTC policies acquired in 2018. Net income for the nine months ended September 30, 2020 decreased $50.5 million to $24.1 million from $74.6 million for the nine months ended September 30, 2019. Pre-tax Insurance AOI for the nine months ended September 30, 2020 decreased $39.7 million to $35.5 million from $75.2 million for nine months ended September 30, 2019. The decrease was primarily driven by non-recurring favorable claims activity recognized in the comparable period and additional unfavorable claims activity and reserve developments in the current year. Additionally, the Insurance segment had a reduction in net investment income due to lower net investment income and unfavorable market movements in values for preferred stock holdings and fixed maturity impairments and unfavorable VOBA amortization largely due to lower policy terminations for the LTC policies acquired in 2018. Backlog Projects in backlog consist of awarded contracts, letters of intent, notices to proceed, change orders, and purchase orders obtained. Backlog increases as contract commitments are obtained, decreases as revenues are recognized and increases or decreases to reflect modifications in the work to be performed under the contracts. Backlog is converted to sales in future periods as work is performed or projects are completed. Backlog can be significantly affected by the receipt or loss of individual contracts. Infrastructure Segment At September 30, 2020, DBMG's backlog was $435.9 million, consisting of $336.7 million under contracts or purchase orders and $99.2 million under letters of intent or notices to proceed. Approximately $145.2 million, representing 33.3% of DBMG’s backlog at September 30, 2020, was attributable to five contracts, letters of intent, notices to proceed or purchase orders. If one or more of these projects terminate or reduce their scope, DBMG’s backlog could decrease substantially. Liquidity and Capital Resources Short- and Long-Term Liquidity Considerations and Risks HC2 is a holding company and its liquidity needs are primarily for interest payments on its Senior Secured Notes, 2020 Revolving Credit Agreement, 7.50% convertible notes due 2022 (the "Convertible Notes"), dividend payments on its Preferred Stock and recurring operational expenses. As of September 30, 2020, the Company had $163.6 million of cash and cash equivalents compared to $228.8 million as of December 31, 2019. On a stand-alone basis, as of September 30, 2020, HC2 had cash and cash equivalents of $8.9 million compared to $11.6 million at December 31, 2019. At September 30, 2020, cash and cash equivalents in our Insurance segment was $114.7 million compared to $170.5 million at December 31, 2019. Our subsidiaries' principal liquidity requirements arise from cash used in operating activities, debt service, and capital expenditures, including purchases of steel construction equipment, fueling stations, network equipment (such as switches, related transmission equipment and capacity), and service infrastructure, liabilities associated with insurance products, development of back-office systems, operating costs and expenses, and income taxes. As of September 30, 2020, the Company had $665.0 million of indebtedness on a consolidated basis compared to $805.0 million as of December 31, 2019. On a stand-alone basis, as of September 30, 2020 and December 31, 2019, HC2 had indebtedness of $412.4 million and $540.0 million, respectively. HC2's stand-alone debt consists of the $342.4 million aggregate principal amount of the Senior Secured Notes, the $55.0 million aggregate principal amount of the Convertible Notes, and the $15.0 million 2020 Revolving Credit Agreement. HC2 is required to make semi-annual interest payments on its Senior Secured Notes and Convertible Notes, and quarterly interest payments on its 2020 Revolving Credit Agreement. HC2 is required to make dividend payments on its outstanding Preferred Stock on January 15 th , April 15 th , July 15 th , and October 15 th of each year. HC2 received $0.5 million in dividends from our Telecommunications segment during the nine months ended September 30, 2020. Additionally, HC2 received a deemed dividend in September 2020 to settle a $6.0 million cash advance from our Telecommunications segment in May of 2020. HC2 received $1.1 million and $4.0 million in net management fees during the three and nine months ended September 30, 2020, respectively. HC2 received $4.5 million and $18.0 million in dividends from its Infrastructure segment during the three and nine months ended September 30, 2020, respectively. We have financed our growth and operations to date, and expect to finance our future growth and operations, through public offerings and private placements of debt and equity securities, credit facilities, vendor financing, capital lease financing and other financing arrangements, as well as cash generated from the operations of our subsidiaries. In the future, we may also choose to sell assets or certain investments to generate cash. At this time, we believe that we will be able to continue to meet our liquidity requirements and fund our fixed obligations (such as debt service and operating leases) and other cash needs for our operations for at least the next twelve months through a combination of distributions from our subsidiaries and from raising of additional debt or equity, refinancing of certain of our indebtedness or preferred stock, other financing arrangements and/or the sale of assets and certain investments. Historically, we have chosen to reinvest cash and receivables into the growth of our various businesses, and therefore have not kept a large amount of cash on hand at the holding company level, a practice which we expect to continue in the future. The ability of HC2’s subsidiaries to make distributions to HC2 is subject to numerous factors, including restrictions contained in each subsidiary’s financing agreements, regulatory requirements, availability of sufficient funds at each subsidiary and the approval of such payment by each subsidiary’s board of directors, which must consider various factors, including general economic and business conditions, tax considerations, strategic plans, financial results and condition, expansion plans, any contractual, legal or regulatory restrictions on the payment of dividends, and such other factors each subsidiary’s board of directors considers relevant. Our ability to sell assets and certain of our investments to meet our existing financing needs may also be limited by our existing financing instruments. Although the Company believes that it will be able to raise additional equity capital, refinance indebtedness or preferred stock, enter into other financing arrangements or engage in asset sales and sales of certain investments sufficient to fund any cash needs that we are not able to satisfy with the funds expected to be provided by our subsidiaries, there can be no assurance that it will be able to do so on terms satisfactory to the Company if at all. Such financing options, if pursued, may also ultimately have the effect of negatively impacting our liquidity profile and prospects over the long-term. In addition, the sale of assets or the Company’s investments may also make the Company less attractive to potential investors or future financing partners. We have begun to see significant costs increases, primarily at our Infrastructure segment, driven by expenses associated with maintaining a safe work environment, and while executing on their projects. During the three and nine months ended September 30, 2020, $6.4 million and $15.2 million of COVID-19 costs were incurred. Although the COVID-19 pandemic did not have a material impact on the HC2’s liquidity in the first three quarters of 2020, management believes the continuation of the pandemic and its related effect on the U.S. and global economies could introduce added pressure on the Company’s liquidity position and financial performance. Our sources of liquidity are primarily from the dividends from our operating subsidiaries, tax sharing agreement with DBMG, cash proceeds from completed and anticipated monetization’s and other arrangements. Additionally, in response to the COVID-19 pandemic, our corporate staff is predominantly working remotely and many of our key vendors, and consultants have similarly begun to work remotely. As a result of such remote work arrangements, certain operational, reporting, accounting and other processes may slow, which could result in longer time to execute critical business functions. Indebtedness See Note 14. Debt Obligations , to the Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q for a description of our long-term debt. Restrictive Covenants The indenture governing the Senior Secured Notes dated November 20, 2018, by and among HC2, the guarantors party thereto and U.S. Bank National Association, a national banking association ("U.S. Bank"), as trustee (the "Secured Indenture"), contains certain affirmative and negative covenants limiting, among other things, the ability of the Company, and, in certain cases, the Company’s subsidiaries, to incur additional indebtedness; create liens; engage in sale-leaseback transactions; pay dividends or make distributions in respect of capital stock; make certain restricted payments; sell assets; engage in transactions with affiliates; or consolidate or merge with, or sell substantially all of its assets to, another person. These covenants are subject to a number of important exceptions and qualifications. The Company is also required to comply with certain financial maintenance covenants, which are similarly subject to a number of important exceptions and qualifications. These covenants include maintenance of (1) liquidity; (2) collateral coverage; (3) secured net leverage ratio; and (4) fixed charge coverage ratio. The maintenance of liquidity covenant provides that the Company will not permit the aggregate amount of (i) all unrestricted cash and cash equivalents of the Company and the Subsidiary Guarantors, (ii) amounts available for drawing under revolving credit facilities and undrawn letters of credit of the Company and the Subsidiary Guarantors and (iii) dividends, distributions or payments that are immediately available to be paid to the Company by any of its Restricted Subsidiaries to be less than the Company’s obligation to pay interest on the Senior Secured Notes and all other debt, including Convertible Preferred Stock mandatory cash dividends or any other mandatory cash pay Preferred Stock but excluding any obligation to pay interest on Convertible Preferred Stock or any other mandatory cash pay Preferred Stock which, in each case, may be paid by accretion or in-kind in accordance with its terms of the Company and its Subsidiary Guarantors for the next six months. As of September 30, 2020, the Company was in compliance with this covenant. The maintenance of collateral coverage provides that the Company's Collateral Coverage Ratio (as defined in the Secured Indenture as the ratio of (i) the Loan Collateral to (ii) Consolidated Secured Debt (each as defined therein)) calculated on a pro forma basis as of the last day of each fiscal quarter may not be less than 1.50 to 1.00. As of September 30, 2020, the Company was in compliance with this covenant. The maintenance of secured net leverage ratio provides that the Company’s Secured Net Leverage Ratio (as defined in the Secured Indenture) as of any date of determination calculated on a pro forma basis after accounting for the net proceeds from any Asset Sale which the Company has determined to apply to the repayment of any Debt to exceed 7.75 to 1.00. As of September 30, 2020, the Company was in compliance with this covenant. The maintenance of fixed charge coverage ratio provides that commencing with the fiscal year ending December 31, 2020, that the Company will not permit the Fixed Charge Coverage Ratio (as defined in the Secured Indenture) calculated as of the last day of each fiscal year of the Company to be less than 1.00 to 1.00 or that the Company’s “HC2 Corporate Overhead” (as defined in the Secured Indenture) in any fiscal year not exceed the sum of $29.0 million for such fiscal year. As of September 30, 2020, the Company was in compliance. The instruments governing the Company’s Preferred Stock also limit the Company’s and its subsidiaries ability to take certain actions, including, among other things, to incur additional indebtedness; issue additional Preferred Stock; engage in transactions with affiliates; and make certain restricted payments. These limitations are subject to a number of important exceptions and qualifications. The Company intends to conduct its operations in a manner that will result in continued compliance with the Secured Indenture; however, compliance with certain financial covenants for future periods may depend on the Company or one or more of the Company’s subsidiaries undertaking one or more non-operational transactions, such as the management of operating cash outflows, a monetization of assets, a debt incurrence or refinancing, the raising of equity capital, or similar transactions. If the Company is unable to remain in compliance and does not make alternate arrangements, an event of default would occur under the Company’s Secured Indenture which, among other remedies, could result in the outstanding obligations under the indenture becoming immediately due and payable and permitting the exercise of remedies with respect to the collateral. There is no assurance the Company will be able to complete any non-operational transaction it may undertake to maintain compliance with covenants under the Secured Indenture or, even if the Company completes any such transaction, that it will be able to maintain compliance for any subsequent period. Summary of Consolidated Cash Flows The below table summarizes the cash provided by or used in our continuing operating, investing and financing activities and the amount of the respective changes between the periods (in millions): Nine Months Ended September 30, 2020 2019 Increase / (Decrease) Operating activities $ 78.2 $ 82.5 $ (4.3) Investing activities 77.4 (193.2) 270.6 Financing activities (221.4) 53.6 (275.0) Effect of exchange rate changes on cash and cash equivalents 0.7 0.3 0.4 Net decrease in cash, cash equivalents and restricted cash $ (65.1) $ (56.8) $ (8.3) Operating Activities Cash provided by operating activities was $78.2 million for the nine months ended September 30, 2020 as compared to cash provided by operating activities of $82.5 million for the nine months ended September 30, 2019. The $4.3 million change was the result of the working capital improvements in our Infrastructure, Clean Energy, and Corporate segments. Our Infrastructure segment benefited from increased billings in excess of costs on new projects, while our Clean Energy segment benefited from AFTC related collections in the current period. In addition, our Corporate segment benefited from a decrease in discretionary bonus and a general reduction in overhead expenses, including professional fees, travel and entertainment expenses, and rent expense, partially offset by an increase in legal fees. These increases were offset by the working capital declines in our Telecommunication segment, which experienced a decline due to the timing of vendor payments and receivables collections. Investing Activities Cash provided by investing activities was $77.4 million for the nine months ended September 30, 2020 as compared to cash used in investing activities of $193.2 million for the nine months ended September 30, 2019. The $270.6 million change was a result of the sales of GMSL and HMN during the current year and acquisition of ampCNG during the comparable period. Financing Activities Cash used in financing activities was $221.4 million for the nine months ended September 30, 2020 as compared to cash provided by financing activities of $53.6 million for the nine months ended September 30, 2019. The $275.0 million change was largely a result of the principal payments on debt obligations at our Corporate segment and payments to minority stockholders at our Other segment for the portion of the proceeds received from the sale of GMSL and HMN. Further adding to the decline were payments on borrowings at our Infrastructure and Spectrum segments when compared to the prior period. Infrastructure Cash Flows Cash flows from operating activities are the principal source of cash used to fund DBMG’s operating expenses, interest payments on debt, and capital expenditures. DBMG's short-term cash needs are primarily for working capital to support operations including receivables, inventories, and other costs incurred in performing its contracts. DBMG attempts to structure the payment arrangements under its contracts to match costs incurred under the project. To the extent it is able to bill in advance of costs incurred, DBMG generates working capital through billings in excess of costs and recognized earnings on uncompleted contracts. DBMG relies on its credit facilities to meet its working capital needs. DBMG believes that its existing borrowing availability, together with cash from operations, will be adequate to meet all funding requirements for its operating expenses, interest payments on debt, capital expenditures and dividends for the foreseeable future. DBMG is required to make monthly or quarterly interest payments on all of its debt. Based upon the September 30, 2020 debt balance, DBMG anticipates that its interest payments will be approximately $1.6 million for the fourth quarter of 2020. DBMG believes that its available funds, cash generated by operating activities and funds available under its bank credit facilities will be sufficient to fund its capital expenditures and its working capital needs. However, DBMG may expand its operations through future acquisitions and may require additional equity or debt financing. Market volatility resulting from the COVID-19 pandemic or other factors could adversely impact our ability to access capital as and when needed. Insurance Cash flows CIG’s principal cash inflows from its operating activities relate to its premiums, annuity deposits and insurance, investment product fees and other income. CIG’s principal cash inflows from its invested assets result from investment income and the maturity and sales of invested assets. The primary liquidity concern with respect to these cash inflows relates to the risk of default by debtors and interest rate volatility. Additional sources of liquidity to meet unexpected cash outflows in excess of operating cash inflows and current cash and equivalents on hand include selling short-term investments or fixed maturity securities. CIG's principal cash outflows relate to the payment of claims liabilities, interest credited and operating expenses. CIG’s management believes its current sources of liquidity are adequate to meet its cash requirements for the next 12 months. Market environment As of September 30, 2020, CIG was in a position to hold any investment security showing an unrealized loss until recovery, provided it remains comfortable with the credit of the issuer. CIG does not rely on short-term funding or commercial paper and to date it has experienced no liquidity pressure, nor does it anticipate such pressure in the foreseeable future. CIG projects its reserves to be sufficient and believes its current capital base is adequate to support its business. Due to the COVID-19 pandemic, CIG performed adverse stress testing of investments and reserves which still yielded results in ending the year with a Risk-Based Capital ("RBC") well above regulatory minimums. Dividend Limitations CIG's insurance subsidiary is subject to Texas statutory provisions that restrict the payment of dividends. The maximum amount of dividends which can be paid to stockholders by life insurance companies domiciled in the State of Texas without prior approval of the Insurance Commissioner is the greater of 10% of surplus as regards to policyholders or net gain on operations as of the preceding year end, but only to the extent of earned surplus as of the preceding year end. The maximum amount of dividends payable in 2020 and 2019 without prior approval was $0 based on statutory earned deficit. In addition to the limitations noted above, laws and regulations require, among other items, that the CIG’s insurance subsidiary maintain minimum solvency requirements, which may limit the amount of dividends this subsidiary can pay. Along with solvency regulations, the primary driver in determining the amount of capital used for dividends is the level of capital needed to maintain desired financial strength in the form of its subsidiary RBC ratio. CIG monitors its insurance subsidiary's compliance with the RBC requirements specified by the National Association of Insurance Commissioners. As of September 30, 2020, CIG’s insurance subsidiary exceeded the minimum RBC requirements. Insurance Companies Capital Contributions The Company has an agreement with the Texas Department of Insurance (“TDOI”) that, for two years from August 9, 2018, CIG will contribute to CGI cash or marketable securities acceptable to the TDOI to the extent required for CGI’s total adjusted capital to be not less than 450% of CGI’s authorized control level risk-based capital and for three years from August 9, 2020, CIG will contribute to CGI cash or marketable securities acceptable to the TDOI to the extent required for CGI’s total adjusted capital to be not less than 400% of CGI’s authorized control level risk-based capital (each as defined under Texas law and reported in CGI’s statutory statements filed with the TDOI). Additionally, CGI entered into a capital maintenance agreement with Great American. Under the agreement, if the applicable acquired company’s total adjusted capital reported in its annual statutory financial statements is less than 400% of its authorized control level risk-based capital, Great American has agreed to pay cash or assets to the applicable acquired company as required to eliminate such shortfall (after giving effect to any capital contributions made by the Company or its affiliates since the date of the relevant annual statutory financial statement). Great American’s obligation to make such payments is capped at $35.0 million under the capital maintenance agreement. The capital maintenance agreements will remain in effect from January 1, 2016 to January 1, 2021 or until payments by Great American under the applicable agreement equal the applicable cap. Pursuant to the purchase agreement, the Company is required to indemnify Great American for the amount of any payments made by Great American under the capital maintenance agreements. Asset Liability Management CIG’s insurance subsidiary maintains investment strategies intended to provide adequate funds to pay benefits without forced sales of investments. Products having liabilities with longer durations, such as long-term care insurance, are matched with investments such as long-term fixed maturity securities. Shorter-term liabilities are matched with fixed maturity securities that have short- and medium-term fixed maturities. The types of assets in which CIG may invest are influenced by state laws, which prescribe qualified investment assets applicable to insurance companies. Within the parameters of these laws, CIG invests in assets giving consideration to four primary investment objectives: (i) maintain robust absolute returns; (ii) provide reliable yield and investment income; (iii) preserve capital; and (iv) provide liquidity to meet policyholder and other corporate obligations. The Insurance segment’s investment portfolio is designed to contribute stable earnings and balance risk across diverse asset classes and is primarily invested in high quality fixed income securities. In addition, at any given time, CIG’s insurance subsidiary could hold cash, highly liquid, high-quality short-term investment securities and other liquid investment grade fixed maturity securities to fund anticipated operating expenses, surrenders and withdrawals. Investments At September 30, 2020 and December 31, 2019, CIG’s investment portfolio is comprised of the following (in millions): September 30, 2020 December 31, 2019 Fair Value Percent Fair Value Percent U.S. Government and government agencies $ 8.5 0.2 % $ 7.7 0.2 % States, municipalities and political subdivisions 429.7 9.3 % 440.1 9.9 % Residential mortgage-backed securities 57.0 1.2 % 66.9 1.5 % Commercial mortgage-backed securities 94.0 2.0 % 109.4 2.5 % Asset-backed securities 497.3 10.8 % 577.8 13.1 % Corporate and other (*) 3,248.5 70.4 % 2,866.8 64.8 % Common stocks (*) 21.5 0.5 % 25.6 0.6 % Perpetual preferred stocks (*) 105.3 2.3 % 118.9 2.7 % Mortgage loans 121.1 2.6 % 183.5 4.1 % Policy loans 18.2 0.4 % 19.1 0.4 % Other invested assets 14.9 0.3 % 7.2 0.2 % Total $ 4,616.0 100.0 % $ 4,423.0 100.0 % (*) Balance includes fair value of certain securities held by the Company, which are eliminated in consolidation. Credit Quality Insurance statutes regulate the type of investments that CIG is permitted to make and limit the amount of funds that may be used for any one type of investment. In light of these statutes and regulations, and CIG's business and investment strategy, CIG generally seeks to invest in (i) securities rated investment grade by established nationally recognized statistical rating organizations (each, a nationally recognized statistical rating organization ("NRSRO")), (ii) U.S. Government and government-sponsored agency securities, or (iii) securities of comparable investment quality, if not rated. The following table summarizes the credit quality, by NRSRO rating, of CIG's fixed income portfolio (in millions): September 30, 2020 December 31, 2019 Fair Value Percent Fair Value Percent AAA, AA, A $ 2,029.1 46.9 % $ 1,954.9 48.1 % BBB 2,012.8 46.4 % 1,834.5 45.1 % Total investment grade 4,041.9 93.3 % 3,789.4 93.2 % BB 197.1 4.5 % 210.7 5.2 % B 29.2 0.7 % 18.0 0.4 % CCC, CC, C 58.3 1.3 % 37.9 0.9 % D 8.5 0.2 % 12.7 0.3 % Total non-investment grade 293.1 6.7 % 279.3 6.8 % Total $ 4,335.0 100.0 % $ 4,068.7 100.0 % Off-Balance Sheet Arrangements DBMG’s off-balance sheet arrangements at September 30, 2020 included letters of credit of $9.8 million under Credit and Security Agreements and performance bonds of $100.2 million. DBMG’s contract arrangements with customers sometimes require DBMG to provide performance bonds to partially secure its obligations under its contracts. Bonding requirements typically arise in connection with public works projects and sometimes with respect to certain private contracts. DBMG’s performance bonds are obtained through surety companies and typically cover the entire project price. New Accounting Pronouncements For a discussion of our New Accounting Pronouncements, refer to Note 2. Summary of Significant Accounting Policies to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q. Critical Accounting Policies There have been no material changes in the Company’s critical accounting policies during the quarter ended September 30, 2020. For information about critical accounting policies, refer to “Critical Accounting Policies” under Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Related Party Transactions For a discussion of our Related Party Transactions, refer to Note 19. Related Parties to our Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q. Corporate Information HC2, a Delaware corporation, was incorporated in 1994. The Company’s executive offices are located at 450 Park Avenue, 29th Floor, New York, NY, 10022. The Company’s telephone number is (212) 235-2690. Our Internet address is www.hc2.com . We make available free of charge through our Internet website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The information on or accessible through our website is not a part of this Quarterly Report on Form 10-Q. Special Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains or incorporates a number of "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such statements are based on current expectations, and are not strictly historical statements. In some cases, you can identify forward-looking statements by terminology such as "if," "may," "should," "believe," "anticipate," "future," "forward," "potential," "estimate," "opportunity," "goal," "objective," "growth," "outcome," "could," "expect," "intend," "plan," "strategy," "provide," "commitment," "result," "seek," "pursue," "ongoing," "include" or in the negative of such terms or comparable terminology. These forward-looking statements inherently involve certain risks and uncertainties and are not guarantees of performance, results, or the creation of stockholder value, although they are based on our current plans or assessments which we believe to be reasonable as of the date hereof. Factors that could cause actual results, events and developments to differ include, without limitation: the ability of our subsidiaries (including, target businesses following their acquisition) to generate sufficient net income and cash flows to make upstream cash distributions, capital market conditions, our and our subsidiaries’ ability to identify any suitable future acquisition opportunities, efficiencies/cost avoidance, cost savings, income and margins, growth, economies of scale, combined operations, future economic performance, conditions to, and the timetable for, completing the integration of financial reporting of acquired or target businesses with HC2 or the applicable subsidiary of HC2, completing future acquisitions and dispositions, litigation, potential and contingent liabilities, management’s plans, changes in regulations and taxes. We claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 for all forward-looking statements. Forward-looking statements are not guarantees of performance. You should understand that the following important factors, in addition to those discussed under the section entitled "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2019, and in the documents incorporated by reference, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements. You should also understand that many factors described under one heading below may apply to more than one section in which we have grouped them for the purpose of this presentation. As a result, you should consider all of the following factors, together with all of the other information presented herein, in evaluating our business and that of our subsidiaries. HC2 Holdings, Inc. and Subsidiaries Our actual results or other outcomes may differ from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following: • the effect of the novel coronavirus (“COVID-19”) pandemic and related governmental responses on our business, financial condition and results of operations; • limitations on our ability to successfully identify any strategic acquisitions or business opportunities and to compete for these opportunities with others who have greater resources; • our possible inability to generate sufficient liquidity, margins, earnings per share, cash flow and working capital from our operating segments; • the impact of catastrophic events including natural disasters, pandemic illness and the outbreak of war or acts of terrorism; • our dependence on distributions from our subsidiaries to fund our operations and payments on our obligations; • the impact on our business and financial condition of our substantial indebtedness and the significant additional indebtedness and other financing obligations we may incur; • the impact of covenants in the Indenture governing HC2’s Notes, the Certificates of Designation governing HC2’s Preferred Stock and all other subsidiary debt obligations as summarized in Note 14. Debt Obligations and future financing agreements on our ability to operate our business and finance our pursuit of acquisition opportunities; • our dependence on certain key personnel; • the impact of our reconstituted Board on our business growth and value to stockholders; • uncertain global economic conditions in the markets in which our operating segments conduct their businesses; • the ability of our operating segments to attract and retain customers; • increased competition in the markets in which our operating segments conduct their businesses; • our expectations regarding the timing, extent and effectiveness of our cost reduction initiatives and management’s ability to moderate or control discretionary spending; • management’s plans, goals, forecasts, expectations, guidance, objectives, strategies and timing for future operations, acquisitions, synergies, asset dispositions, fixed asset and goodwill impairment charges, tax and withholding expense, selling, general and administrative expenses, product plans, performance and results; • management’s assessment of market factors and competitive developments, including pricing actions and regulatory rulings; • the impact of additional material charges associated with our oversight of acquired or target businesses and the integration of our financial reporting; • the impact of expending significant resources in considering acquisition targets or business opportunities that are not consummated; • our expectations and timing with respect to our ordinary course acquisition activity and whether such acquisitions are accretive or dilutive to stockholders; • our expectations and timing with respect to any strategic dispositions and sales of our operating subsidiaries or businesses that we may make in the future and the effect of any such dispositions or sales on our results of operations; • the possibility of indemnification claims arising out of divestitures of businesses; • tax consequences associated with our acquisition, holding and disposition of target companies and assets; • the effect any interests our officers, directors, stockholders and their respective affiliates may have in certain transactions in which we are involved; • our ability to effectively increase the size of our organization, if needed, and manage our growth; • the potential for, and our ability to, remediate future material weaknesses in our internal controls over financial reporting; • our possible inability to raise additional capital when needed or refinance our existing debt, on attractive terms, or at all; and • our possible inability to hire and retain qualified executive management, sales, technical and other personnel. Infrastructure / DBM Global Inc. Our actual results or other outcomes of DBM Global, Inc. and its wholly-owned subsidiaries ("DBMG"), and, thus, our Infrastructure segment, may differ from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following: • our ability to maintain efficient staffing and productivity as well as delays and cancellations as a result of the COVID-19 pandemic; • its ability to realize cost savings from expected performance of contracts, whether as a result of improper estimates, performance, or otherwise; • potential impediments and limitations on our ability to complete ordinary course acquisitions in anticipated time frames or at all; • uncertain timing and funding of new contract awards, as well as project cancellations; • cost overruns on fixed-price or similar contracts or failure to receive timely or proper payments on cost-reimbursable contracts, whether as a result of improper estimates, performance, disputes, or otherwise; • risks associated with labor productivity, including performance of subcontractors that DBMG hires to complete projects; • its ability to settle or negotiate unapproved change orders and claims; • changes in the costs or availability of, or delivery schedule for, equipment, components, materials, labor or subcontractors; • adverse impacts from weather affecting DBMG’s performance and timeliness of completion of projects, which could lead to increased costs and affect the quality, costs or availability of, or delivery schedule for, equipment, components, materials, labor or subcontractors; • fluctuating revenue resulting from a number of factors, including the cyclical nature of the individual markets in which our customers operate; • adverse outcomes of pending claims or litigation or the possibility of new claims or litigation, and the potential effect of such claims or litigation on DBMG’s business, financial condition, results of operations or cash flow; and • lack of necessary liquidity to provide bid, performance, advance payment and retention bonds, guarantees, or letters of credit securing DBMG’s obligations under bids and contracts or to finance expenditures prior to the receipt of payment for the performance of contracts. Clean Energy / Beyond6, Inc. Our actual results or other outcomes of Beyond6, and, thus, our Clean Energy segment, may differ from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following: • reductions in demand for our products as a result of the COVID-19 pandemic; • automobile and engine manufacturers’ limited production of originally manufactured natural gas vehicles and engines for the markets in which Beyond6 participates; • environmental regulations and programs mandating the use of cleaner burning fuels; • competition from oil and gas companies, retail fuel providers, industrial gas companies, natural gas utilities and other organizations; • the infrastructure for natural gas vehicle fuels; • the safety and environmental risks of natural gas fueling operations and vehicle conversions; • our Clean Energy segment’s ability to implement its business plan in a regulated environment; • the adoption, modification or repeal in environmental, tax, government regulations, and other programs and incentives that encourage the use of clean fuel and alternative vehicles; • demand for natural gas vehicles; • advances in other alternative vehicle fuels or technologies, or improvements in gasoline, diesel or hybrid engines; and • increases, decreases and general volatility in oil, gasoline, diesel and natural gas prices. Telecommunications / PTGi International Carrier Services, Inc. Our actual results or other outcomes of PTGi International Carrier Services, Inc. ("ICS"), and, thus, our Telecommunications segment, may differ from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following: • our expectations regarding increased competition, pricing pressures and usage patterns with respect to ICS’s product offerings; • significant changes in ICS’s competitive environment, including as a result of industry consolidation, and the effect of competition in its markets, including pricing policies; • its compliance with complex laws and regulations in the U.S. and internationally; • further changes in the telecommunications industry, including rapid technological, regulatory and pricing changes in its principal markets; and • an inability of ICS’ suppliers to obtain credit insurance on ICS in determining whether or not to extend credit. Insurance / Continental Insurance Group Ltd. Our actual results or other outcomes of Continental Insurance Group Ltd. ("CIG"), the parent operating company of Continental General Insurance Company ("CGI"), which together comprise our Insurance segment, may differ from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following: • our ability to timely collect premiums resulting from impacts of regulations responding to the COVID-19 pandemic; • our Insurance segment’s ability to maintain statutory capital and maintain or improve their financial strength; • our Insurance segment’s reserve adequacy, including the effect of changes to accounting or actuarial assumptions or methodologies; • the accuracy of our Insurance segment’s assumptions and estimates regarding future events and ability to respond effectively to such events, including mortality, morbidity, persistency, expenses, interest rates, tax liability, business mix, frequency of claims, severity of claims, contingent liabilities, investment performance, and other factors related to its business and anticipated results; • availability, affordability and adequacy of reinsurance and credit risk associated with reinsurance; • extensive regulation and numerous legal restrictions on our Insurance segment; • our Insurance segment’s ability to defend itself against litigation, inherent in the insurance business (including class action litigation) and respond to enforcement investigations or regulatory scrutiny; • the performance of third parties, including distributors and technology service providers, and providers of outsourced services; • the impact of changes in accounting and reporting standards; • our Insurance segment’s ability to protect its intellectual property; • general economic conditions and other factors, including prevailing interest and unemployment rate levels and stock and credit market performance which may affect, among other things, our Insurance segment’s ability to access capital resources and the costs associated therewith, the fair value of our Insurance segment’s investments, which could result in impairments and other-than-temporary impairments, and certain liabilities; • our Insurance segment’s exposure to any particular sector of the economy or type of asset through concentrations in its investment portfolio; • the ability to increase sufficiently, and in a timely manner, premiums on in-force long-term care insurance policies and/or reduce in-force benefits, as may be required from time to time in the future (including as a result of our Insurance segment’s failure to obtain any necessary regulatory approvals or unwillingness or inability of policyholders to pay increased premiums); • other regulatory changes or actions, including those relating to regulation of financial services affecting, among other things, regulation of the sale, underwriting and pricing of products, and minimum capitalization, risk-based capital and statutory reserve requirements for our Insurance segment, and our Insurance segment’s ability to mitigate such requirements; • our Insurance segment’s ability to effectively implement its business strategy or be successful in the operation of its business; • our Insurance segment’s ability to retain, attract and motivate qualified employees; • interruption in telecommunication, information technology and other operational systems, or a failure to maintain the security, confidentiality or privacy of sensitive data residing on such systems; • medical advances, such as genetic research and diagnostic imaging, and related legislation; and • the occurrence of natural or man-made disasters or a pandemic. Life Sciences / Pansend Life Sciences, LLC Our actual results or other outcomes of Pansend Life Sciences, LLC, and, thus, our Life Sciences segment, may differ from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following: • our Life Sciences segment’s ability to invest in development stage companies; • our Life Sciences segment’s ability to develop products and treatments related to its portfolio companies; • medical advances in healthcare and biotechnology; and • governmental regulation in the healthcare industry. Spectrum / HC2 Broadcasting Holdings Inc. Our actual results or other outcomes of HC2 Broadcasting Holdings Inc., and, thus, our Spectrum segment, may differ from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following: • our ability to attract advertisers during the COVID-19 pandemic; • our Spectrum segment’s ability to integrate our recent and pending broadcasting acquisitions; • our Spectrum segment’s ability to operate in highly competitive markets and maintain market share; • our Spectrum segment’s ability to effectively implement its business strategy or be successful in the operation of its business; • new and growing sources of competition in the broadcasting industry; and • FCC regulation of the television broadcasting industry. Other Our actual results or other outcomes of our Other segment may differ from those expressed or implied by forward-looking statements contained herein due to a variety of important factors, including, without limitation, the following: • our Other segment’s ability to operate in highly competitive markets and maintain market share; • our Other segment’s ability to effectively implement its business strategy or be successful in the operation of its business; and • risks associated with our equity method investment that operates in China (i.e., Huawei Marine Systems Co. Limited, a Hong Kong holding company with a Chinese operating subsidiary); We caution the reader that undue reliance should not be placed on any forward-looking statements, which speak only as of the date of this document. Neither we nor any of our subsidiaries undertake any duty or responsibility to update any of these forward-looking statements to reflect events or circumstances after the date of this document or to reflect actual outcomes, except as required by applicable law.