07-05-2025
Q1 2025 Innovate Corp Earnings Call
Participants
Anthony Rozmus; Investor Relations; Innovate Corp
Paul Voigt; Interim Chief Executive Officer; Innovate Corp
Michael Sena; Chief Financial Officer; Innovate Corp
Presentation
Operator
Good afternoon, and welcome to Innovate's first quarter 2025 earnings conference call. (Operator Instructions) 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.
Anthony Rozmus
Good afternoon. Thank you for being with us to review Innovate's first quarter 2025 earnings results. We are joined today by 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 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 being made pursuant to the Safe Harbor provisions and 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 discussed 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 this -- 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 may also refer to certain non-GAAP financial measures such as adjusted EBITDA. We believe 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 Paul Voigt.
Paul Voigt
Good afternoon. We are pleased to report our first quarter 2025 financial results, and we'll provide you an update on our three operating segments. Innovate delivered consolidated revenues of $274.2 million and adjusted EBITDA of $7.2 million in the first quarter of 2025. As we have discussed, we are actively working to address our capital structure and our near-term maturities of our debt obligations. We continue to make progress on our strategic objectives, and our businesses continue to execute and drive very good results.
We continue to believe that we have very valuable assets that appreciate in value each day. As a reminder, we are working to leverage one or more of these assets prior to reaching the debt maturities in order to achieve sustainable capital structure that allows us to realize the full value of the remaining businesses. We are keenly aware of the time line in front of us, and we are working diligently for a solution.
As we turn our attention to our operating segments, starting with the Infrastructure, DBM Global achieved revenues of $264.9 million and adjusted EBITDA of $16.7 million. During the quarter, DBM has seen gross margin improvement year-over-year of approximately 110 basis points to 15.6% and adjusted EBITDA margin improvement of approximately 40 basis points to 6.3% year-over-year.
As expected, our results for DBM were in line with our expectations given the delay of awards in the back half of 2024. That said, the addition of over $500 million of new awards to backlog by our world-class management team, Rustin and company, in the first quarter, as previously highlighted on our last call, has led to the growth in reported and adjusted backlog now reaching $1.4 billion. DBM remains well positioned in 2025 with a strong backlog and robust pipeline. We continue to monitor the ongoing tariff situation. At this point, DBM has not seen material impact to its business.
Given policy is constantly evolving, there is uncertainty about the full impact of tariffs on the cost of materials and project delays. DBM continues to actively monitor its project backlog and new project pipeline to mitigate any impacts. Longer term, tariff economics could potentially spur additional economic investments in the United States. Of note, President Trump expects $6 trillion to $7 trillion in investments to come into the United States after the tariffs take effect. Turning to Life Science.
As we discussed on our last call, MediBeacon received FDA approval for its transdermal GFR system to assess kidney function. We are beginning to see traction with exploring the potential application for TGFR through our initial conversations with clinicians in hospital and outpatient settings. The transdermal GFR kidney function technology has been used in preclinical research for over a decade by some of the most influential academic medical center key opinion leaders and pharmaceutical companies in the world and has been utilized in over 600 peer-reviewed publications and conference abstracts.
Also, we previously announced that the National Medical Products Administration in China also approved the MediBeacon TGFR Monitor and TGFR Sensor for the assessment of kidney function in patients with normal or impaired renal function. Finally, two peer-reviewed publications and high-impact medical journals were published.
These publications underscore the urgent need for improved kidney function assessment tools. These articles include data from the TGFR, including relmapirazin, in a range of chronic kidney disease patients. MediBeacon's Director of Clinical Applications, Dr. Stuart Goldstein, presented results from MediBeacon's next-generation TGF Sensor and monitored a clinical trial at the Chronic Kidney Disease Drug Development Summit in Boston in March 17 through the 19. MediBeacon's next-generation transdermal sensor is under review with the FDA.
This is a more user-friendly and cost-effective sensor. The TGFR system will be available for commercial sale in the fourth quarter of 2025. As previously mentioned, we are still currently engaged with Jefferies, and we continue to explore strategic alternatives. R2 kicked off 2025 with a strong performance, tripling its year-over-year revenue to $3.1 million in the first quarter 2025 compared to $1 million in the first quarter 2024. This momentum was fueled by the increased demand in North America with $2.4 million of revenue in the first quarter of 2025 compared to $800,000 in the prior year quarter.
Gross worldwide system unit sales surged 163% over first quarter 2024 led by a 109% increase in North America. R2 system backlog has now surpassed 100 units globally, positioning the company for continued growth. The company continues to expand its global footprint. During 2025, we have entered into distribution agreements in Spain, France, UK and several countries in South America.
We are now currently serving 28 countries and continue to expand. Glacial Skin devices continue to deliver impressive clinical and business outcomes for providers. In the first quarter of 2025, patient treatments grew 136%, while average monthly utilization per provider increased 42% compared to the same period last year. Glacial Skin's rising brand awareness is proving to be a powerful sales driver, with social media engagement growth outperforming industry competitors by 774%. Supporting this surge, R2 saw quarter-over-quarter increases of 347% in social media mentions, 561% in website users and 158% inpatient provider searches.
We are extremely pleased with the success at R2 and continue to believe the market opportunity for R2 is massive and remain pleased with the momentum the company has experienced year-over-year. Moving to Spectrum. First quarter revenues were $6.2 million, and adjusted EBITDA was $1.4 million, in line with expectations. As we spoke about on our last call, broadcasting signed a contract with Marathon Ventures to distribute 2 new, vibrant over-the-air networks, Nosey and Confess. As the year progresses, there will be additional new entrants in the OTA space, reflecting a growing trend in the broadcasting and streaming industries.
This shift is largely driven by the increasing demand for diverse and accessible content delivery methods. We are continuing to pursue commercial opportunities in data casting. Our team has been working diligently to develop and implement the necessary technology and partnerships to make this a reality. This opportunity should be revenue-generating by the end of the year. In addition, preparations are underway for ATSC 3.0 light housing to go live at KERA, the Dallas PBR station, in the second quarter.
In March, we took a significant step forward by filing a petition with the FCC to allow low-powered TV stations to voluntarily convert to 5G broadcast technology. This petition seeks to modernize broadcasting capabilities, enhancing data rates, reducing latency and improving overall connectivity for these stations. The FCC has put the petition out for public comment, which will allow for review of our proposal. This feedback is crucial as it will shape the final decision and ensure the transition to 5G broadcast is beneficial for all parties involved. As a reminder, our strategic vision for the business anchors upon maximizing the value of these assets.
Given the recent success in our businesses, we are encouraged in our ability to execute on behalf of shareholders. With that, I'll turn it over to Mike for a review of our financials and our capital structure.
