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INNOVATE Corp (VATE)
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INNOVATE Corp (VATE) AI Stock Analysis

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VATE

INNOVATE Corp

(NYSE:VATE)

Rating:46Neutral
Price Target:
$5.50
▼(-4.51% Downside)
INNOVATE Corp's overall stock score is primarily impacted by its weak financial performance, characterized by declining revenues and high leverage. The technical analysis provides a mixed outlook, with short-term indicators showing some strength. Valuation metrics are poor due to negative earnings and lack of dividends. The earnings call provided some positive insights, particularly in the Life Sciences segment, but these were not enough to offset the broader financial challenges.

INNOVATE Corp (VATE) vs. SPDR S&P 500 ETF (SPY)

INNOVATE Corp Business Overview & Revenue Model

Company DescriptionINNOVATE Corp (VATE) is a diversified holding company operating primarily in the infrastructure, life sciences, and spectrum sectors. Through its subsidiaries, the company focuses on delivering essential services and innovative solutions across its core areas. INNOVATE Corp aims to drive growth and value creation through strategic investments and operational excellence in its diverse portfolio.
How the Company Makes MoneyINNOVATE Corp generates revenue through a multi-faceted approach, leveraging its diversified holdings. In the infrastructure sector, the company earns income from construction services and infrastructure development projects. In life sciences, revenue is derived from providing laboratory services and developing biopharmaceutical products. The spectrum sector contributes through leasing and managing wireless spectrum assets. The company also benefits from strategic partnerships and investments, which enhance its ability to create additional revenue streams and operational synergies across its sectors.

INNOVATE Corp Earnings Call Summary

Earnings Call Date:Aug 05, 2025
(Q1-2025)
|
% Change Since: 0.00%|
Next Earnings Date:Oct 30, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with strong performance and strategic achievements in the Life Sciences and Broadcasting segments, but was offset by significant revenue declines and increased debt levels affecting the overall financial health.
Q1-2025 Updates
Positive Updates
Strong Segment Performance in Infrastructure and Life Sciences
DBM Global's revenues reached $264.9 million with adjusted EBITDA of $16.7 million, showing gross margin improvement by 110 basis points to 15.6%. Life Sciences revenue increased 210% to $3.1 million, driven by R2's performance with unit sales surging 163% year-over-year.
Significant Achievements in Life Sciences
MediBeacon received FDA approval for its transdermal GFR system and the National Medical Products Administration in China also approved it. The TGFR system is set for commercial sale in Q4 2025.
R2's Impressive Growth
R2 tripled its year-over-year revenue to $3.1 million in Q1 2025 with a 109% increase in North America and global unit sales up 163%. Social media engagement and website users also saw tremendous growth.
Strategic Developments in Broadcasting
Spectrum signed a contract with Marathon Ventures for new networks and filed a petition with the FCC for 5G broadcast technology, indicating forward-thinking strategies in the broadcasting segment.
Negative Updates
Overall Revenue and Profit Decline
Consolidated total revenue decreased by 13% to $274.2 million, and the net loss increased to $24.8 million compared to the previous year. Adjusted EBITDA declined from $12.8 million to $7.2 million.
Challenges in Infrastructure Segment
Infrastructure revenue decreased by 14% due to the timing and size of projects, and adjusted EBITDA dropped from $18.3 million to $16.7 million.
Increased Debt Levels
Total principal outstanding indebtedness rose to $672 million, driven by increased debt in Infrastructure and R2, indicating potential financial strain.
Decreased Cash Position
Cash and cash equivalents fell to $33.3 million from $48.8 million at the end of 2024, reflecting a decrease in liquidity.
Company Guidance
During INNOVATE's Q1 2025 earnings call, the company reported consolidated revenues of $274.2 million and an adjusted EBITDA of $7.2 million. The Infrastructure segment, led by DBM Global, achieved revenues of $264.9 million and an adjusted EBITDA of $16.7 million, with a notable gross margin improvement of 110 basis points year-over-year to 15.6%. The Life Sciences segment saw revenues increase by 210% to $3.1 million, driven by R2's performance, which also showed a significant gross worldwide system unit sales surge of 163% over the previous year. Spectrum's revenues were $6.2 million with an adjusted EBITDA of $1.4 million, reflecting stable results year-over-year. The company also noted a reported backlog of $1.4 billion for DBM Global, with ongoing efforts to mitigate potential impacts from tariffs. INNOVATE ended the quarter with $33.3 million in cash and cash equivalents and a total outstanding indebtedness of $672 million.

INNOVATE Corp Financial Statement Overview

Summary
INNOVATE Corp displays operational strengths with consistent gross margins, yet faces significant financial challenges due to negative equity and high leverage. Cash flow management shows promise, but revenue declines and net losses highlight the need for strategic adjustments.
Income Statement
55
Neutral
The company experiences negative net income with a negative net profit margin over the TTM period. However, the gross profit margin remains relatively stable, indicating some operational strength. The revenue has seen fluctuations, with recent declines, impacting overall profitability.
Balance Sheet
40
Negative
The company is highly leveraged with a negative stockholders' equity, posing a financial risk. The debt-to-equity ratio is not meaningful due to negative equity, and the overall equity ratio is concerning. These factors highlight a need for improved financial stability.
Cash Flow
60
Neutral
The company has managed to generate positive operating cash flow in the TTM despite negative net income, showing operational cash generation capability. However, free cash flow growth fluctuates, indicating potential future cash constraints.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue995.00M1.11B1.42B1.64B1.21B1.01B
Gross Profit185.70M208.80M216.00M221.40M183.70M167.30M
EBITDA-4.80M-99.00M69.80M53.10M16.00M54.90M
Net Income-78.10M-35.80M-37.60M-40.80M-79.80M-46.40M
Balance Sheet
Total Assets890.90M891.10M1.04B1.15B1.08B6.74B
Cash, Cash Equivalents and Short-Term Investments33.40M48.80M80.80M80.40M45.50M4.69B
Total Debt477.50M719.20M771.90M714.40M626.30M561.50M
Total Liabilities1.08B1.03B1.18B1.18B1.07B6.14B
Stockholders Equity17.10M-180.40M-149.10M-103.70M-65.50M559.80M
Cash Flow
Free Cash Flow2.10M-9.90M8.10M-30.20M2.90M23.90M
Operating Cash Flow23.10M9.10M26.50M-9.50M27.00M41.70M
Investing Cash Flow71.80M-13.90M39.10M-22.50M-223.20M162.30M
Financing Cash Flow-162.80M-26.50M-65.30M68.10M4.30M-204.60M

INNOVATE Corp Technical Analysis

Technical Analysis Sentiment
Positive
Last Price5.76
Price Trends
50DMA
5.59
Positive
100DMA
6.18
Negative
200DMA
6.72
Negative
Market Momentum
MACD
0.02
Negative
RSI
53.84
Neutral
STOCH
26.28
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VATE, the sentiment is Positive. The current price of 5.76 is above the 20-day moving average (MA) of 5.58, above the 50-day MA of 5.59, and below the 200-day MA of 6.72, indicating a neutral trend. The MACD of 0.02 indicates Negative momentum. The RSI at 53.84 is Neutral, neither overbought nor oversold. The STOCH value of 26.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VATE.

INNOVATE Corp Risk Analysis

INNOVATE Corp disclosed 81 risk factors in its most recent earnings report. INNOVATE Corp reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

INNOVATE Corp Peers Comparison

Overall Rating
UnderperformOutperform
Sector (71)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
76
Outperform
$167.68M9.1041.26%0.59%4.62%81.73%
73
Outperform
$3.72B24.5432.91%11.92%8.94%
71
Outperform
¥258.06B14.458.48%2.82%6.32%12.21%
65
Neutral
$293.64M25.277.90%15.85%
46
Neutral
$76.51M17.11%-24.94%51.41%
44
Neutral
$61.20M-679.42%-18.08%-217.13%
44
Neutral
$229.48M-53.62%-20.63%-611.23%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
VATE
INNOVATE Corp
5.76
0.51
9.71%
ESOA
Energy Services of America
10.03
3.21
47.07%
ORN
Orion Group Holdings
7.39
0.49
7.10%
SLND
Southland Holdings
4.25
0.49
13.03%
SHIM
Shimmick Corporation
1.74
-2.19
-55.73%
ECG
Everus Construction Group, Inc.
72.94
22.94
45.88%

INNOVATE Corp Corporate Events

Business Operations and StrategyFinancial Disclosures
INNOVATE Corp Reports Q2 2025 Revenue Decline
Negative
Aug 5, 2025

INNOVATE Corp announced its second quarter 2025 results, highlighting a decrease in consolidated revenue by 22.7% compared to the previous year, primarily due to declines in the Infrastructure and Spectrum segments. Despite the revenue drop, the company emphasized its strategic refinancing transactions that extend debt maturities, and noted growth in its Life Sciences segment, particularly with the FDA-approved MediBeacon system and R2’s increased sales. The company is also exploring new datacasting opportunities in its Spectrum segment, aiming for improved performance in the latter half of the year.

Private Placements and FinancingBusiness Operations and Strategy
INNOVATE Corp Completes Debt Refinancing Transactions
Positive
Aug 5, 2025

On August 4, 2025, INNOVATE Corp completed a series of refinancing transactions to extend the maturities of 81.7% of its outstanding debt as of June 30, 2025. This strategic move includes the exchange of senior secured notes, convertible notes, and amendments to various credit agreements, which is expected to enhance the company’s financial flexibility and potentially improve its market positioning.

Private Placements and FinancingBusiness Operations and Strategy
INNOVATE Corp Announces Successful Exchange Offer Results
Positive
Jul 31, 2025

INNOVATE Corp. announced early results of its exchange offer for its 8.5% Senior Secured Notes due 2026, with a successful tender of 99.41% of the notes, meeting the minimum exchange condition. The company will extend eligibility for the Total Early Exchange Consideration until the expiration deadline, with early settlement expected on August 4, 2025, and final settlement on August 15, 2025. This move aims to enhance the company’s financial structure by exchanging notes for newly issued 10.5% Senior Secured Notes due 2027, which include updated covenants and an increased interest rate.

Dividends
INNOVATE Corp Announces Dividend from DBM Global
Positive
Jul 28, 2025

On July 28, 2025, INNOVATE Corp. announced that its subsidiary, DBM Global Inc., will distribute a cash dividend of approximately $4.4 million, or $1.14 per share, to its stockholders on August 21, 2025. As the largest stockholder, INNOVATE expects to receive around $4 million of this payout, highlighting its significant stake in DBM Global and the financial benefits accruing from this investment.

Private Placements and FinancingBusiness Operations and Strategy
INNOVATE Corp Announces Debt Refinancing Plans
Positive
Jul 17, 2025

On July 17, 2025, INNOVATE Corp. announced plans to refinance its debt through a series of transactions, including exchanging convertible senior notes and senior secured notes, extending its revolving credit agreement, and amending other financial agreements. These actions aim to extend debt maturities and improve financial flexibility, potentially enhancing the company’s market position and stability.

Executive/Board ChangesShareholder Meetings
INNOVATE Corp Annual Meeting Decisions Announced
Neutral
Jun 12, 2025

INNOVATE Corp held its Annual Meeting of Stockholders on June 12, 2025, where key decisions were made regarding the company’s governance and executive compensation. Stockholders elected four directors to the board, approved the compensation of executive officers, decided to hold annual Say on Pay Votes, and ratified the appointment of BDO USA, P.C. as the independent accounting firm for the fiscal year ending December 31, 2025.

Dividends
INNOVATE Corp’s DBM Global Announces Cash Dividend
Positive
May 23, 2025

On May 23, 2025, INNOVATE Corp. announced that its subsidiary, DBM Global Inc., will distribute a cash dividend of approximately $5.5 million on June 16, 2025. As the largest stockholder, INNOVATE expects to receive $5 million of the payout, highlighting its significant stake in DBM Global and the financial benefits it stands to gain.

Private Placements and FinancingBusiness Operations and Strategy
INNOVATE Corp Secures $220M Credit Agreement
Positive
May 21, 2025

On May 20, 2025, DBM Global Inc., a subsidiary of INNOVATE Corp., entered into an amended and restated credit agreement providing $220 million in senior secured debt financing, consisting of an $85 million term loan and a $135 million revolving credit facility. This agreement, led by UMB Bank, aims to repay existing debt and enhance working capital, supporting DBMG’s growth and operational flexibility, with the facility maturing in 2030.

Business Operations and StrategyFinancial Disclosures
INNOVATE Corp Reports Q1 2025 Financial Results
Neutral
May 6, 2025

INNOVATE Corp announced its first quarter 2025 results, reporting a consolidated revenue of $274.2 million, a 13% decrease from the previous year, primarily due to declines in its infrastructure segment. Despite the revenue drop, the company achieved significant milestones, including FDA approval for the MediBeacon TGFR system in its life sciences segment and the expansion of its infrastructure backlog to $1.4 billion. The company also anticipates new revenue opportunities in datacasting by year-end, indicating a strategic focus on growth across its operating segments.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 06, 2025