Merger Highlights - The proposed merger aims to create a larger multi-sector holding company, targeting inclusion in the Russell 2000 index[11] - The combined company, NewCo, projects $40 million in Adjusted EBITDA by 2030, a significant increase from the pro forma $6.4 million in 2024[11] - NewCo anticipates at least $2 million in annualized cost savings within 12 months, potentially generating approximately $0.57 in incremental pro-forma EPS[11] - NewCo expects to better utilize Hudson's Net Operating Losses (NOLs), with a potential value of $14.45 per pro-forma share[11] Strategic Rationale - The merger diversifies revenues for both Hudson and Star, creating pro-forma annualized revenues of $210 million, compared to $140.1 million and $53.4 million respectively in FY 2024[19] - The combined entity anticipates approximately $2 million in annualized savings from corporate overhead and public company costs[19] - Hudson has $240 million in usable US Federal NOLs, which NewCo can better utilize to shield more US taxable income[19] - The combined cash position of the companies was $23.3 million as of December 31, 2024, with Hudson holding $17.7 million and Star holding $5.6 million[19] Transaction Details - Hudson will acquire all outstanding common shares of Star, issuing 0.23 common shares of HSON for each common share of STRR[25] - Upon completion of the merger, Hudson shareholders will own approximately 79% stake in NewCo, and Star shareholders will own approximately 21%[25]

Core Viewpoint - The merger between Star Equity Holdings, Inc. and Hudson Global, Inc. aims to create a larger, more diversified holding company, enhancing shareholder value and accelerating growth opportunities for both companies [1][5]. Transaction Highlights - The merger will result in a new entity, "NewCo," with pro-forma annualized revenues of $210 million and a goal of achieving $40 million in Adjusted EBITDA by 2030 [6]. - The merger is expected to generate at least $2 million in annualized cost savings within 12 months, translating to approximately $0.57 in incremental pro-forma EPS [6]. - NewCo will benefit from Hudson's $240 million in U.S. Federal net operating losses (NOL), which are more likely to be utilized than if Hudson operated independently [6]. Transaction Details - The merger will be a stock-for-stock transaction, with Hudson acquiring all outstanding shares of Star, issuing 0.23 shares of HSON common stock for each share of STRR common stock [6]. - Upon completion, Hudson shareholders will own approximately 79% of NewCo, while Star shareholders will own about 21% of the estimated 3.49 million shares outstanding [6]. - The merger is anticipated to close in the second half of 2025, pending regulatory and shareholder approvals [6]. Management and Structure - NewCo will have four reporting segments: Building Solutions, Business Services, Energy Services, and Investments [7]. - The board of directors for NewCo will include three independent directors from each company, with Jeff Eberwein as CEO and Rick Coleman as COO [7]. Company Background - Hudson Global, Inc. is a global total talent solutions provider, while Star Equity Holdings, Inc. operates as a diversified holding company with divisions in Building Solutions, Energy Services, and Investments [15][16].

Core Viewpoint - Star Equity Holdings, Inc. has declared a cash dividend of $0.25 per share for its 10% Series A Cumulative Perpetual Preferred Stock, with a record date of June 1, 2025, and a payment date of June 10, 2025 [1] Company Overview - Star Equity Holdings, Inc. is a diversified holding company with three business divisions: Building Solutions, Energy Services, and Investments [2] Building Solutions Division - The Building Solutions division operates in three areas: 1. Modular building manufacturing 2. Structural wall panel and wood foundation manufacturing, including building supply distribution 3. Glue-laminated timber (glulam) column, beam, and truss manufacturing [3] Energy Services Division - The Energy Services division is involved in the rental, sale, and repair of downhole tools used across various industries, including oil and gas, geothermal, mining, and water-well [4] Investments Division - The Investments division manages and finances the company's real estate assets and investment positions in both private and public companies [5]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201%2E%20Financial%20Statements%20%28Unaudited%29) Unaudited condensed consolidated financial statements for Q1 2025, showing $12.9 million in total revenues and a $1.2 million net loss [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2025 total revenues increased to $12.9 million, gross profit nearly doubled to $3.1 million, and net loss narrowed to $1.7 million Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share amounts) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Total Revenues** | **$12,924** | **$9,118** | | Building Solutions Revenue | $12,118 | $9,118 | | Energy Services Revenue | $806 | $— | | **Gross Profit** | **$3,136** | **$1,574** | | Income (loss) from operations | $(2,847) | $(2,962) | | **Net income (loss) attributable to common shareholders** | **$(1,655)** | **$(2,703)** | | Basic and diluted net loss per share attributable to common shareholders | $(0.52) | $(0.85) | [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to $94.8 million, liabilities to $35.1 million, and stockholders' equity to $59.8 million as of March 31, 2025 Balance Sheet Summary (in thousands) | Metric | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $1,887 | $4,003 | | Total current assets | $26,148 | $24,414 | | **Total assets** | **$94,840** | **$83,048** | | Total current liabilities | $18,469 | $12,470 | | **Total liabilities** | **$35,068** | **$28,712** | | **Total stockholders' equity** | **$59,772** | **$54,336** | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2025 saw $0.6 million net cash from operations, $4.4 million used in investing for ADT acquisition, and $1.7 million from financing Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided (used) by operating activities | $563 | $(2,385) | | Net cash provided (used) by investing activities | $(4,374) | $(679) | | Net cash provided (used) by financing activities | $1,669 | $(605) | | **Net change in cash, cash equivalents, and restricted cash** | **$(2,142)** | **$(3,669)** | [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the new Energy Services division from ADT acquisition, revenue recognition, and debt facilities - The company is a multi-industry diversified holding company with three divisions: Building Solutions, Investments, and the newly established Energy Services division following the acquisition of Alliance Drilling Tools, Inc (ADT) on March 3, 2025[23](index=23&type=chunk)[24](index=24&type=chunk) Disaggregation of Revenue (Q1 2025, in thousands) | Segment | Revenue | | :--- | :--- | | Building Solutions | $12,118 | | Energy Services | $806 | | **Total** | **$12,924** | Debt Summary (as of March 31, 2025, in thousands) | Debt Category | Amount | Weighted-Average Interest Rate | | :--- | :--- | :--- | | Total Short-term debt | $6,014 | 8.27% | | Long Term Debt, net of current portion | $7,457 | 7.82% | | **Total Debt** | **$13,471** | **7.58%** | - On March 3, 2025, the company acquired Alliance Drilling Tools (ADT) for a total consideration of approximately **$12.6 million**, consisting of cash, preferred shares, and liabilities, forming the new Energy Services segment[84](index=84&type=chunk)[85](index=85&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 performance, strategic direction, and financial condition, with revenue growing to $12.9 million and gross profit to $3.1 million [Overview and Strategy](index=30&type=section&id=Overview%20and%20Strategy) The company operates as a diversified holding company with three divisions, focusing on capital allocation, M&A, and organic growth strategies - The company is a diversified multi-industry holding company with three divisions: Building Solutions, Energy Services (created via the ADT acquisition), and Investments[112](index=112&type=chunk) - The company's strategy includes organic growth, introducing new services, and acquiring complementary businesses, aiming to be a 'value' buyer in M&A[117](index=117&type=chunk)[122](index=122&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Q1 2025 total revenues increased 41.7% to $12.9 million, gross profit rose 99.2% to $3.1 million, driven by Building Solutions and new Energy Services Q1 2025 vs Q1 2024 Results Summary (in thousands) | Metric | 2025 | 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $12,924 | $9,118 | $3,806 | 41.7% | | Gross profit | $3,136 | $1,574 | $1,562 | 99.2% | | Income (loss) from operations | $(2,847) | $(2,962) | $115 | 3.9% | | Net income (loss) | $(1,176) | $(2,224) | $1,048 | 47.1% | - Building Solutions revenue increased by **32.9%** to **$12.1 million** in Q1 2025, primarily from the inclusion of revenues from TT and improved results at KBS, partially offset by slower activity at EBGL[134](index=134&type=chunk) - The new Energy Services segment, from the ADT acquisition, generated **$806 thousand** in revenue and **$282 thousand** in gross profit in Q1 2025[135](index=135&type=chunk)[137](index=137&type=chunk) - SG&A expenses increased by **$1.2 million**, or **28.5%**, mainly due to the inclusion of SG&A from the TT and ADT acquisitions[139](index=139&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity sources include $1.9 million cash, positive operating cash flow of $0.6 million, and credit facilities, with total debt at $13.5 million Summary Cash Flows (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $563 | $(2,385) | | Net cash provided by (used in) investing activities | $(4,374) | $(679) | | Net cash provided by (used in) financing activities | $1,669 | $(605) | - As of March 31, 2025, the company had **$1.9 million** in cash and cash equivalents and approximately **$13.5 million** in total debt[147](index=147&type=chunk) - The company has several credit facilities, including a new loan agreement for ADT, a **$6.0 million** facility for EBGL, and a **$4.0 million** facility for KBS[151](index=151&type=chunk)[152](index=152&type=chunk)[154](index=154&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section is not applicable for the reporting period - Not applicable[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls reported during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the period covered by the report[164](index=164&type=chunk) - Management's assessment of internal control over financial reporting as of Dec 31, 2024 concluded they were effective, but this assessment excluded the internal controls of the acquired TT business[165](index=165&type=chunk)[166](index=166&type=chunk) - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[167](index=167&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=39&type=section&id=Item%201%2E%20Legal%20Proceedings) The company is subject to litigation but does not expect a material adverse effect on its financial position or operations - The company is involved in various legal proceedings in the normal course of business but does not expect them to have a material adverse effect[74](index=74&type=chunk)[169](index=169&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A%2E%20Risk%20Factors) Key risks include those from the acquisition strategy, such as management diversion and integration difficulties, and potential losses in the investment portfolio - The company's acquisition strategy entails numerous risks, including diverting management's attention, incurring substantial costs, and difficulties in assimilating acquired businesses, which could negatively affect profitability[171](index=171&type=chunk)[172](index=172&type=chunk) - The company may sustain losses in its investment portfolio, which consists of equity securities and other investments, due to adverse changes in economic conditions or company-specific setbacks[174](index=174&type=chunk) [Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities](index=39&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%20and%20Issuer%20Purchases%20of%20Equity%20Securities) No unregistered sales or issuer purchases of equity securities occurred during the period - None[175](index=175&type=chunk) [Item 3. Defaults Upon Senior Securities](index=39&type=section&id=Item%203%2E%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the period - None[176](index=176&type=chunk) [Item 4. Mine Safety Disclosures](index=40&type=section&id=Item%204%2E%20Mine%20Safety%20Disclosures) This section is not applicable - Not applicable[177](index=177&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205%2E%20Other%20Information) No directors or executive officers adopted or terminated trading arrangements during the quarter - None of the Company's directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter[178](index=178&type=chunk) [Item 6. Exhibits](index=41&type=section&id=Item%206%2E%20Exhibits) This section lists exhibits filed with the Form 10-Q, including purchase agreements and officer certifications - The report includes exhibits such as the merger agreement for the ADT acquisition, the associated loan agreement, and various officer certifications and XBRL data files[181](index=181&type=chunk)

Financial Data and Key Metrics Changes - The company's revenue for Q1 2025 increased by 41.7% compared to Q1 2024, primarily due to the inclusion of revenues from Timber Technologies and Alliance Drilling Tools acquisitions [5] - Gross margin improved to 24.3% from 17.3% in the same quarter last year, attributed to higher revenues and the addition of Timber Technologies [5] - Net loss from continuing operations was $1,200,000 in Q1 2025, an improvement from a net loss of $2,200,000 in Q1 2024 [9] - Non-GAAP adjusted EBITDA from continuing operations was a loss of $800,000 in Q1 2025, compared to a loss of $1,100,000 in the same period last year [10] Business Line Data and Key Metrics Changes - Building Solutions segment revenues increased by 32.9% compared to Q1 2024, although it was below internal expectations due to delays in commercial projects [5] - The Building Solutions division backlog reached a record $27,900,000 at quarter end, up from $14,800,000 at the end of Q1 2024, indicating strong future demand [6] - The Energy Services division was established with the acquisition of Alliance Drilling Tools, and integration is proceeding smoothly [6] Market Data and Key Metrics Changes - The company noted a significant uptick in customer interest and activity over the past couple of quarters, indicating a positive market environment [6] - There were no signs of projects being put on hold due to tariff impacts, with a strong backlog supporting future growth [19] Company Strategy and Development Direction - The management team is focused on creating shareholder value through targeted business development initiatives and identifying additional accretive opportunities across all divisions [12] - The company is exploring organic growth opportunities within the Energy Services division and considering further acquisitions [6] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong backlog and ongoing projects, suggesting that the construction demand built up over time is now being realized [19] - The company is monitoring input costs, such as lumber prices, but does not foresee significant negative impacts on their operations [20] Other Important Information - Consolidated cash flow from operations for Q1 2025 was an inflow of $600,000, a significant improvement from an outflow of $2,400,000 in Q1 2024 [10] - The company's unrestricted cash balance at the end of Q1 2025 was $1,900,000, down from $4,000,000 at the end of 2024, primarily due to acquisition-related cash outflows [10] Q&A Session Summary Question: Inquiry about project delays due to tariffs - Management clarified that delays were specific to a large project at EdgeBuilder, which experienced a temporary pause but is expected to resume and recognize revenue in Q2 [16][17] Question: Signs of projects being put on hold - Management indicated that there are no signs of projects being put on hold, with a strong backlog supporting ongoing construction activities [19] Question: Gross profit margin changes in Alliance Drilling - Management explained that the gross profit margin fluctuations are a function of quarterly activity levels and reaffirmed the high-margin nature of the Alliance Drilling business [26][27] Question: Equipment rental revenue structure - Management described the rental terms as project-based, with high rental rates due to the nature of the equipment used in drilling operations [30]

Financial Data and Key Metrics Changes - The company's revenue for Q1 2025 increased by 41.7% compared to Q1 2024, primarily due to the inclusion of revenues from Timber Technologies and Alliance Drilling Tools acquisitions [5] - Gross margin improved to 24.3% from 17.3% in the same quarter last year, attributed to higher revenues and the addition of Timber Technologies [5] - Gross profit was $3,100,000, up 99.2% versus Q1 2024, driven by increased revenue at KBS and the addition of TT and ADT [8] - The net loss from continuing operations was $1,200,000 in Q1 2025, an improvement from a net loss of $2,200,000 in Q1 2024 [10] - Non-GAAP adjusted EBITDA from continuing operations was a loss of $800,000, compared to a loss of $1,100,000 in the same period last year [11] Business Line Data and Key Metrics Changes - Building Solutions segment revenues increased by 32.9% compared to Q1 2024, although still below internal expectations due to delays in commercial projects [5] - The Building Solutions division backlog reached a record $27,900,000 at quarter end, compared to $14,800,000 at the end of Q1 2024, indicating strong future demand [6] - The establishment of the Energy Services division was highlighted by the acquisition of Alliance Drilling Tools, with a focus on organic growth and potential additional acquisitions [6] Market Data and Key Metrics Changes - The company noted a significant uptick in customer interest and activity over the past couple of quarters, indicating a positive market environment [6] - There were no signs of projects being put on hold due to tariff impacts, with a strong backlog supporting confidence in future quarters [19] Company Strategy and Development Direction - The management team is focused on creating shareholder value through targeted business development initiatives and identifying additional accretive opportunities across all divisions [13] - The company is monitoring input costs like lumber and OSB, but does not see significant exposure to new home construction, which has slowed down [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the backlog and the momentum in the Building Solutions division, with no signs of a temporary situation regarding project delays [19] - The company is optimistic about the integration of Alliance Drilling Tools and the growth opportunities within the Energy Services division [6] Other Important Information - Consolidated cash flow from operations for Q1 2025 was an inflow of $600,000, a significant improvement from an outflow of $2,400,000 in Q1 2024 [11] - The unrestricted cash balance at the end of the quarter was $1,900,000, down from $4,000,000 at the end of 2024, primarily due to cash used for the acquisition of ADT [11] Q&A Session Summary Question: Dynamics between Edge Builder and Building Solutions regarding project delays - Management clarified that delays were specific to a large project at EdgeBuilder, which paused for two months but is back on track for revenue recognition in Q2 [16] Question: Early signs of projects being put on hold due to pricing - Management indicated that there are no signs of projects being put on hold, with a strong backlog supporting ongoing construction demand [18] Question: Gross profit margin changes in Alliance Drilling - Management explained that the gross profit margin fluctuation is a function of intra-quarter activity and that Alliance Drilling maintains high gross margins [25][27] Question: Equipment rental revenue terms in Alliance - Management described the rental terms as project-based, with high rental rates due to the nature of the equipment used in drilling operations [30]

Group 1 - Star Equity reported a quarterly loss of $0.52 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.25, and compared to a loss of $0.45 per share a year ago, indicating an earnings surprise of -108% [1] - The company posted revenues of $12.92 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 13.84%, while year-ago revenues were $9.12 million [2] - Star Equity shares have underperformed the market, losing about 0.4% since the beginning of the year compared to the S&P 500's gain of 0.1% [3] Group 2 - The current consensus EPS estimate for the coming quarter is -$0.21 on $17 million in revenues, and for the current fiscal year, it is -$0.54 on $70 million in revenues [7] - The Zacks Industry Rank indicates that the Diversified Operations industry is currently in the top 27% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8]

For immediate release May 14, 2025 Star Equity Holdings, Inc. Announces 2025 First Quarter Financial Results Q1 2025 revenues increased to $12.9 million vs. $9.1 million in Q1 2024 Alliance Drilling Tools acquisition marks entry into Energy Services Quarter-end Building Solutions backlog stands at record $27.9 million Old Greenwich, CT. - Star Equity Holdings, Inc. (Nasdaq: STRR; STRRP) ("Star" or the "Company"), a diversified holding company, reported today its financial results for the first quarter (Q1) ...

Core Insights - The company reported a significant increase in consolidated revenues for Q1 2025, rising by 41.7% to $12.9 million compared to $9.1 million in Q1 2024, primarily driven by acquisitions and improved performance in its Building Solutions division [4][7][3] - The acquisition of Alliance Drilling Tools marks the company's entry into the Energy Services sector, complementing its existing operations [3] - The Building Solutions backlog reached a record $27.9 million at the end of the quarter, indicating strong future demand [3][4] Financial Performance - Q1 2025 revenues increased to $12.9 million from $9.1 million in Q1 2024, reflecting a 41.7% growth [4][7] - Building Solutions revenue grew by 32.9% year-over-year, attributed to the inclusion of Timber Technologies Solutions and improved results at KBS [5][6] - Gross profit for Q1 2025 was $3.1 million, a 99.2% increase from $1.6 million in Q1 2024, with a gross margin improvement to 24.3% from 17.3% [6][8] Operational Highlights - The integration of Alliance Drilling Tools is progressing smoothly, with a focus on future growth and potential acquisitions in both Building Solutions and Energy Services divisions [3] - The company experienced a net loss of $1.2 million in Q1 2025, an improvement from a net loss of $2.2 million in the same period last year [10][11] - Cash flow from operations improved significantly, with an inflow of $563 thousand compared to an outflow of $2.4 million in Q1 2024, driven by better operational results and strong accounts receivable collections [12] Backlog and Future Outlook - The Building Solutions division's backlog increased to $27.9 million, indicating strong demand for new projects despite some delays in commercial projects [3][5] - The company anticipates strong performance in the second quarter and full-year 2025 based on current backlog and sales pipeline [3][4] Dividends and Stock Information - The board declared a cash dividend of $0.25 per share for Series A Preferred Stock, totaling approximately $0.5 million [14] - As of March 31, 2025, the company had remaining authorization to repurchase up to $721 thousand of its common stock under its stock repurchase program [17]

Core Viewpoint - Star Equity Holdings, Inc. will release its financial results for Q1 2025 on May 14, 2025, before market opens, followed by a conference call to discuss results and management's outlook [1]. Company Overview - Star Equity Holdings, Inc. is a diversified holding company with three business divisions: Building Solutions, Energy Services, and Investments [3]. Building Solutions Division - The Building Solutions division includes three businesses: modular building manufacturing, structural wall panel and wood foundation manufacturing (including building supply distribution), and glue-laminated timber (glulam) column, beam, and truss manufacturing [4]. Energy Services Division - The Energy Services division focuses on the rental, sale, and repair of downhole tools utilized in the oil and gas, geothermal, mining, and water-well industries [5]. Investments Division - The Investments division manages and finances the company's real estate assets and investment positions in both private and public companies [6].