Good afternoon and welcome to INNOVATE Corp's Third Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. After the prepared remarks and presentation, there will be a question-and-answer session. Please note this event is being recorded. I would now like to turn the conference call over to Anthony Rozmus with Investor Relations. Please go ahead.

Good afternoon. Thank you for being with us to review INNOVATE's Third Quarter 2023 Earnings Results. We are joined today by Avie Glazer, Chairman of Innovate, Paul Voigt, INNOVATE's Interim CEO; and Mike Sena, INNOVATE's CFO. We have posted our earnings release and our slide presentation on our website at innovatecorp.com. We will begin our call with prepared remarks to be followed by a Q&A session. This call is also being simulcast and will be archived on our website. During this call, management may make certain statements and assumptions, which are not historical facts, will be forward-looking and are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements involve risks, assumptions and uncertainties and are subject to certain assumptions and risk factors that could cause INNOVATE's actual results to differ materially from these forward-looking statements. The risk factors that could cause these differences are more fully disclosed in the cautionary statement that is included in our earnings release and the slide presentation and further detailed in our 10-K and other filings with the SEC. In addition, the forward-looking statements included in this conference call are only made as of the date of this call and as stated in our SEC reports. INNOVATE, disclaims any intent or obligation to update or revise these forward-looking statements, except as expressly required by law. Management will also refer to certain non-GAAP financial measures, such as adjusted EBITDA. We believe that these measures provide useful supplemental data that while not a substitute for GAAP measures, allow for greater transparency in the review of our financial and operational performance. At this point, it is my pleasure to turn things over to Avie Glazer.

Good afternoon. INNOVATE delivered revenue of $375.3 million in the third quarter and grew adjusted EBITDA by 34.8% to $22.1 million. Our results this quarter highlight our keen focus on profitability. It is essential to the strategy of all three of our operating segments. We have executed on this initiative, achieving year-over-year adjusted EBITDA improvement in multiple operating segments in the third quarter. Our infrastructure business continues to deliver strong results for INNOVATE, especially on the bottom line. Infrastructure experienced further growth in adjusted EBITDA margin expansion in the quarter. The backlog, while somewhat contracting this quarter still provides strong visibility for future revenue. Turning to Life Sciences. R2 and MediBeacon continue to make progress. R2 launched a new skin wellness device, Glacial fx, along with several new product enhancements for Glacial rx, while MediBeacon remains on plan down the path for FDA approval. At Spectrum, we have a strong foundation of assets in that business. We are exploring potential opportunities for a strategic partnership to add to revenue and unlock the value in these assets, which should lead to further growth. With that, I'll turn the call over to Paul Voigt.

Thanks, Avie. Our three operating segments continue to perform well in 2023. In the third quarter, DBM Global delivered another strong quarter with revenues of $369.3 million and adjusted EBITDA of $30.8 million versus $27.6 million in the prior year. DBM expanded gross margins by approximately 210 basis points and adjusted EBITDA margin by approximately 170 basis points to 15.2% and 8.3%, respectively. Rustin and our DBM team has done an outstanding job protecting margins. We continue to expect to deliver increased margins for the full-year 2023 compared to the prior year. We still see huge opportunity to bid on larger, more complex projects, especially out West, that should continue to aid further margin expansion. DBM stays nimble with their unique expertise to capitalize on a multitude of project opportunities across various markets. Our total adjusted backlog was $1.3 billion at the end of the quarter. We remain focused on converting the sizable complex projects into the backlog. On our Health Care platform, R2 technologies experienced an exciting quarter across the board. R2 not only launched a new device and several product enhancements. US unit sales outpaced all previous quarter results. In addition, R2 experienced a record number of patient treatments performed with results in eclipsing over 15,000 patient treatments worldwide, and 167% growth over the same period in 2022. R2 also expanded its global reach with approval to begin selling in Canada. R2 commercially launched this new system, Glacial fx. Glacial fx is a skin wellness device and due to its classification has expanded R2's total addressable market to include aesthetic spas and other wellness channels. Additional product enhancements for Glacial rx include the launch of larger disposable treatment dip for the body and colder, FDA-cleared advanced clinical protocol called Glide Rx. These enhancements improve treatment utility for providers,…

Thanks, Paul. Consolidated total revenue for the third quarter of 2023 was $375.3 million, a decrease of 11.3% compared to $423 million in the prior year period. The decrease was primarily driven by our Infrastructure segment and to a lesser extent, our Spectrum segment. Net loss attributable to common stockholders for the third quarter of 2023 was $7.3 million or $0.09 per share compared to a net loss of $6.6 million or $0.09 per share in the prior year period. Total adjusted EBITDA was $22.1 million in the third quarter of 2023, an increase from $16.4 million in the prior year period. The increase was driven by the Life Sciences Infrastructure and non-operating corporate segments, which was partially offset by the elimination of equity method income from our investment in HMN, which was sold in March of 2023 and their Spectrum segment. At Infrastructure, revenue decreased 10.5% to $369.3 million from $412.7 million in the prior year quarter. As discussed earlier, this decrease was primarily driven by the timing and size of projects at DBM's commercial steel fabrication and erection business and lower revenue at the industrial maintenance and repair business, which was partially offset by an increase in revenue at Banker Steel and the construction, modeling and detailing business due to timing and size of projects. Infrastructure adjusted EBITDA for the third quarter of 2023 increased to $30.8 million from $27.6 million in the prior year period. The increase was primarily driven by timing of higher-margin projects at the steel fabrication and erection business, increased contributions from the construction modeling and detail business and a decrease in recurring SG&A expenses. This was partially offset by lower contributions from Banker Steel due to timing and size of projects. As of September 30th, 2023, reported backlog and adjusted backlog, which takes…

Thank you. Ladies and gentlemen, we will now conduct the question-and-answer session. [Operator Instructions] Your first question comes from the line of Brian Charles from R.W. Pressprich. Your line is open.

Hi. Thanks for taking my question. Hi. It's good to see the continued progress in the Infrastructure business and the growth in EBITDA this year after kind of bottoming out a little earlier. But it does -- looking at the presentation, I just see the backlog has been kind of consistently declining. And I guess that dovetails with your talk about being more selective about the projects that you take on. And is it fair to say that the backlog as it stands now, likely reflects higher margins coming -- remaining in the business and then continuing to improve in the business in 2024.

Yes. Thanks. What I'd say is that the -- we have seen continued margin improvement as you've seen throughout the year. We've seen -- started to see margins somewhat stabilize. But -- so we expect to see come in exactly where we had discussed earlier, which was improved margins for 2023 over 2022. And I think we'll continue to see the margins where they're at over -- in what we have in backlog.

Okay. Fair enough. And just one follow-up there. Some of the commentary in the earnings release you talked about tightening in the credit markets that is continuing to impact the commercial space. Is that more of an impact on your customer base and making them selective about which projects to go forward with? Or is that influencing your evaluation of certain projects?

No, I think what we've seen with the management team -- with Rustin and the management team at DBM is then to be able to pivot into the markets that have the right work. And the commercial sector, as we've mentioned, has tightened mainly related to the credit markets, but we still see pretty sizable opportunities in the market, and DBM has been working on converting them.

Okay. If I had asked, do you think the backlog would be growing into 2024, stabilizing or continuing to decline if you can still be selective about higher margin projects.

I would say it's going to be flat year-over-year. But that being said, there's some big projects out West, especially in Vegas that there's four or five big projects that if we get our hands on one or two, we could be up big.

Okay. Good. Thanks. I'll get back in the queue.

Thank you very much for your questions.

[Operator Instructions] There are no further questions at this time. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.