Core Viewpoint - Star Equity Holdings, Inc. has signed a $2.1 million contract for the manufacturing of multifamily apartments in Vermont, indicating a strong position in the New England commercial construction market, particularly in multifamily housing [1][3]. Contract Details - The $2.1 million contract involves the manufacturing of 16 modules for three 4-unit apartment buildings in Randolph, Vermont, with manufacturing set to begin in February and delivery expected in the second quarter of 2025 [2]. Market Position and Outlook - The CEO of Star Equity Holdings expressed confidence in the improved market conditions and increased demand for new housing, supported by recent multimillion-dollar contracts for affordable housing projects in Maine [3]. - The company believes that the improving interest rate environment, strong backlog, and sales pipeline indicate a momentum shift in the marketplace that is expected to continue into 2025 [3]. Company Structure - Star Equity Holdings operates through two divisions: Building Solutions and Investments [4]. - The Building Solutions division includes modular building manufacturing, structural wall panel and wood foundation manufacturing, and glue-laminated timber manufacturing [5]. - The Investments division manages and finances the company's real estate assets and investment positions in both private and public companies [6].

Financial Performance - Total revenues for the three months ended September 30, 2024, were $13,663,000, an increase of 30% compared to $10,435,000 for the same period in 2023[12] - Gross profit for the three months ended September 30, 2024, was $2,817,000, up from $2,203,000 in the same period last year, reflecting a gross margin improvement[12] - The net loss attributable to common shareholders for the three months ended September 30, 2024, was $(2,511,000), compared to a loss of $(3,101,000) in the same period of 2023[12] - Net income for the nine months ended September 30, 2024, was a loss of $7,981,000 compared to a net income of $23,404,000 for the same period in 2023[18] - For Q3 2024, consolidated revenue was $13.7 million, a 30% increase from $10.4 million in Q3 2023[86] - The company reported a consolidated gross profit of $2.8 million for Q3 2024, compared to $2.2 million in Q3 2023[86] Expenses and Losses - Operating expenses increased to $8,139,000 for the three months ended September 30, 2024, compared to $3,864,000 in the prior year, primarily due to higher selling, general, and administrative expenses[12] - The company experienced a significant impairment of cost method investment totaling $4,086,000[18] - The company incurred a segment loss from operations of $5.3 million in Q3 2024, compared to a loss of $1.7 million in Q3 2023[86] - Depreciation and amortization totaled $1.0 million in Q3 2024, compared to $569 thousand in Q3 2023[86] Cash Flow and Assets - Cash and cash equivalents decreased to $5,492,000 as of September 30, 2024, from $18,326,000 at December 31, 2023[14] - Total current assets were $25,250,000 as of September 30, 2024, down from $39,152,000 at December 31, 2023[14] - Total cash, cash equivalents, and restricted cash at the end of the period was $7,095,000, down from $21,252,000 at the end of the previous year[20] - The company reported a net cash used in investing activities of $12,493,000, compared to a net cash provided of $19,503,000 in the same period last year[18] - The company reported a decrease in accounts receivable by $5,166,000, indicating improved collection efforts[18] Liabilities and Equity - Total liabilities increased to $27,349,000 as of September 30, 2024, compared to $10,197,000 at December 31, 2023[14] - The company reported a total stockholders' equity of $58,374,000 as of September 30, 2024, down from $65,299,000 at December 31, 2023[16] - The balance of accumulated deficit increased to $116,070,000 as of September 30, 2024, from $110,313,000 at the end of the previous quarter[22] Dividends and Stock - The company declared dividends of $0.25 per share of Series A perpetual preferred stock for the three months ended September 30, 2024[12] - The Series A Preferred Stock has a 10.0% annual dividend rate, with dividends totaling approximately $0.5 million declared in 2024[96] - The company repurchased $0.2 million worth of its common stock during Q3 2024 as part of a $1 million stock buyback program[97] Acquisitions and Investments - The company completed the sale of its Healthcare division, Digirad Health, for a total consideration of $40 million, which included $19.7 million in cash[33] - Timber Technologies was acquired for a total consideration of $23.1 million, including $19.1 million in cash and a $3.0 million term loan[89] - Big Lake Lumber was acquired for $2.8 million in cash and an earn-out provision of up to $0.5 million, expanding market share in the Greater Minneapolis area[92] Future Outlook - The company anticipates continued growth in revenues and improvements in operational efficiency in the upcoming quarters[8] Internal Controls and Compliance - The company identified a material weakness in internal control over financial reporting due to insufficient accounting resources to address complex matters[157] - Management is taking steps to enhance the skills of accounting staff and has retained outside financial consultants for technical accounting reviews[158] - The company’s disclosure controls and procedures were deemed ineffective as of September 30, 2024, due to the identified material weakness[157]

Financial Data and Key Metrics Changes - The company's Q3 2024 revenue increased by 30.9% compared to Q3 2023, primarily due to the inclusion of Timber Technologies and Big Lake Lumber revenues [7] - Gross profit for Q3 2024 was $2.8 million, up 27.9% year-over-year, despite a slight decline in gross margins [18] - The net loss from continuing operations for Q3 2024 was $2 million, an improvement from a net loss of $2.4 million in Q3 2023 [19] - Non-GAAP adjusted net loss from continuing operations was $0.9 million or $0.31 per share, compared to adjusted net income of $0.2 million or $0.07 per share in Q3 2023 [20] - Consolidated cash flow from continuing operations for the first nine months of 2024 was an outflow of $3.7 million, compared to an inflow of $2.7 million in the same period of 2023 [21] - The unrestricted cash balance at the end of Q3 2024 was $5.5 million, down from $18.3 million at the end of 2023 [22] Business Line Data and Key Metrics Changes - The Building Solutions division's organic performance has been impacted by higher interest rates and economic uncertainty, leading to delays in commercial contracts [8] - Recent project signings in the Building Solutions division indicate a material improvement in activity, with significant contracts announced in October [9][10] - The Investments division has diversified its portfolio, entering the energy services and transportation sectors through an investment in Enservco [13] Market Data and Key Metrics Changes - The construction backlog and sales pipeline remain strong, with recent interest rate cuts and high housing demand expected to convert pipeline opportunities into signed contracts [11] - The company is seeing increased activity from customers who had previously delayed projects, indicating a return to normalcy in the market [10] Company Strategy and Development Direction - The company is focused on creating shareholder value through targeted business development initiatives and identifying accretive opportunities in both the Building Solutions and Investments divisions [26] - The management team is optimistic about the momentum in the Building Solutions division and the potential for improved financial results in fiscal year 2025 [12] Management's Comments on Operating Environment and Future Outlook - Management noted that the recent momentum in the Building Solutions division is encouraging, with a shift in demand for large commercial construction projects [12] - The company anticipates a significant increase in revenue, particularly in the KBS segment, as projects that were delayed are now coming to fruition [39] Other Important Information - The company closed two sale-leaseback transactions in Q3 2024, generating approximately $8.3 million in net proceeds [23] - The impairment of $2.8 million recorded in SG&A was related to the equity investment in TTG, with no further writedowns anticipated at this time [18][30] Q&A Session Summary Question: Is the improved outlook due to older projects coming back or new business? - Management indicated that the improvement is due to both new business filling the pipeline and delayed projects now coming to fruition as builders adjust to the current environment [28] Question: Should more impairment costs be expected? - Management hopes not to see more impairment costs, although it is difficult to predict [29] Question: How much of the business is exposed to imported lumber products? - The company does not buy much imported lumber, but the market could be impacted by tariffs, which would be an industry-wide issue rather than a specific concern for the company [34] Question: Can price changes be passed on in contracts? - Management confirmed that they have mechanisms in place to pass on price changes to clients, including fixed pricing and hedging options [35] Question: Can you provide context around the $14 million revenue in Building Solutions? - The revenue was a good contribution from all businesses, with the modular side and EdgeBuilder performing well, although wall panels were slower [38] Question: What contributed to the quarter-over-quarter improvement in margins? - The improvement was attributed to a full quarter of Timber Technologies, which is the highest margin business [46]

Group 1: Earnings Performance - Star Equity reported a quarterly loss of $0.29 per share, which was better than the Zacks Consensus Estimate of a loss of $0.32, representing an earnings surprise of 9.38% [1] - The company posted revenues of $13.66 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.21%, compared to year-ago revenues of $10.44 million [2] - Over the last four quarters, Star Equity has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - Star Equity shares have lost about 41% since the beginning of the year, while the S&P 500 has gained 23.6% [4] - The current consensus EPS estimate for the coming quarter is $0.28 on $19 million in revenues, and for the current fiscal year, it is -$0.78 on $55.1 million in revenues [8] - The estimate revisions trend for Star Equity is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [7] Group 3: Industry Context - The Zacks Industry Rank for Diversified Operations, which includes Star Equity, is currently in the bottom 43% of over 250 Zacks industries, suggesting potential challenges for stock performance [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [6]

Revenue Performance - Q3 2024 revenues increased by 30.9% to $13.7 million from $10.4 million in Q3 2023[2] - Year-to-date 2024 revenues increased by 14.5% to $36.3 million from $31.7 million in the same period in 2023[3] - Total revenues for the three months ended September 30, 2024, were $13,663 million, an increase from $10,435 million for the same period in 2023, representing a growth of 31.5%[24] - Total consolidated revenue for the nine months ended September 30, 2024, was $36,264 million, a 14.5% increase from $31,674 million in the same period of 2023[39] Profitability Metrics - Q3 2024 gross profit increased by 27.9% to $2.8 million from $2.2 million in Q3 2023[2] - Gross profit for the three months ended September 30, 2024, was $2,817 million, compared to $2,203 million for the same period in 2023, reflecting a gross margin improvement[24] - Total gross profit for the nine months ended September 30, 2024, was $6,607 million, down from $9,072 million in the same period of 2023[39] Net Loss and Earnings Per Share - Q3 2024 net loss from continuing operations was $2.0 million, or $0.61 per share, compared to a net loss of $2.4 million, or $0.75 per share in Q3 2023[9] - Year-to-date 2024 net loss from continuing operations was $8.0 million, or $2.53 per share, compared to a net loss of $3.7 million, or $1.19 per share in the same period in 2023[9] - The net loss attributable to common shareholders for the three months ended September 30, 2024, was $2,511 million, compared to a loss of $3,101 million for the same period in 2023, showing a reduction in losses[24] - Basic and diluted net income (loss) per share for the three months ended September 30, 2024, was $(0.61), an improvement from $(0.75) in the same period last year[24] Operating Expenses - Operating expenses for the three months ended September 30, 2024, totaled $8,139 million, up from $3,864 million in the same period last year, indicating a significant increase of 110.5%[24] - SG&A expenses increased by 115.9% in Q3 2024, primarily due to a $2.8 million impairment related to an investment[8] Cash Flow and Assets - Cash flow from operations for 9M 2024 was an outflow of $3.7 million, compared to an inflow of $2.7 million for 9M 2023[12] - Total current assets decreased from $39,152,000 as of December 31, 2023, to $25,250,000 as of September 30, 2024, a decline of approximately 35.5%[27] - Cash and cash equivalents decreased from $18,326,000 as of December 31, 2023, to $5,492,000 as of September 30, 2024, a decline of approximately 70%[27] Liabilities and Equity - Total liabilities rose significantly from $10,197,000 as of December 31, 2023, to $27,349,000 as of September 30, 2024, an increase of approximately 168.5%[27] - Stockholders' equity decreased from $65,299,000 as of December 31, 2023, to $58,374,000 as of September 30, 2024, a decline of approximately 10.6%[27] Segment Performance - Income from continuing operations for Building Solutions segment was a loss of $578 million for the three months ended September 30, 2024, compared to a loss of $21 million in the same period of 2023[39] - Investments segment reported a loss of $2,745 million for the three months ended September 30, 2024, compared to a loss of $71 million in the same period of 2023[39] - Segment income (loss) from operations for the nine months ended September 30, 2024, was a loss of $11,997 million, compared to a loss of $3,545 million in the same period of 2023[39] Other Financial Metrics - Non-GAAP adjusted EBITDA for Q3 2024 was a loss of $0.3 million compared to a loss of $14 thousand in Q3 2023[10] - Non-GAAP adjusted net income from continuing operations for the three months ended September 30, 2024, was a loss of $915,000 compared to a gain of $204,000 for the same period in 2023[29] - The company reported an unrealized loss on equity securities of $221,000 for the three months ended September 30, 2024, compared to a gain of $971,000 for the same period in 2023[29] - The company incurred transaction costs related to mergers and acquisitions amounting to $218,000 for the three months ended September 30, 2024[29]

Core Viewpoint - Star Equity Holdings, Inc. announced two contracts totaling $4.6 million for the manufacture of 40 modules aimed at constructing cottages and affordable housing units in Maine, reflecting a growing demand for new construction in the region [1][2][3]. Company Overview - Star Equity Holdings, Inc. is a diversified holding company with two main divisions: Building Solutions and Investments [4]. - The Building Solutions division includes modular building manufacturing, structural wall panel and wood foundation manufacturing, and glue-laminated timber manufacturing [5]. - The Investments division manages and finances the company's real estate assets and investment positions in both private and public companies [6]. Contract Details - The first contract, valued at $3.0 million, involves the manufacture of 32 modules for 15 cottages in Northeast Harbor, Maine, with manufacturing starting in September and expected delivery by December, aiming for occupancy by Spring 2025 [1]. - The second contract, worth $1.6 million, is for 8 modules for two multi-story buildings comprising 16 affordable housing units in Newcastle, Maine, with manufacturing expected to begin in October and delivery by December, also targeting Spring 2025 for occupancy [2]. Market Outlook - The CEO of Star noted that the contracts highlight KBS Builders' reputation as a leading modular manufacturer in Maine, with an increase in demand for new construction in New England and the Northeast contributing to a growing backlog of orders [3]. - The company is optimistic about the impact of recent interest rate cuts on the demand for new construction projects, anticipating gradual growth in the coming months [3].

Financial Data and Key Metrics Changes - The company's Q2 2024 revenue increased by 51.6% compared to Q2 2023, driven by the inclusion of Timber Technologies revenue and a full quarter of revenue from Big Lake Lumber [5][6] - Gross margin declined by 14.9%, primarily due to a one-time purchase price adjustment related to the Timber Technologies acquisition [5][6] - The net loss from continuing operations was $3.8 million in Q2 2024, compared to a net loss of $1.4 million in Q2 2023 [9] - Non-GAAP adjusted net loss from continuing operations was $0.9 million, roughly the same as in Q2 2023, while adjusted EBITDA for continuing operations was a loss of $0.5 million [10] Business Line Data and Key Metrics Changes - The Building Solutions division's performance reflected a decline on an organic basis due to credit tightening impacting project funding and timing, although the sales pipeline remains strong [6][7] - The integration of Timber Technologies into the Building Solutions division is substantially complete, and it is expected to generate healthy cash flow and improve overall profitability [4][6] Market Data and Key Metrics Changes - The company's unrestricted cash balance at the end of Q2 2024 was $2.5 million, down from $21.4 million a year ago, reflecting significant cash outlay associated with the Timber Technologies acquisition [11] - The Investments division's holdings in public securities decreased to $3.8 million from $4.8 million a year ago [11] Company Strategy and Development Direction - The company announced a $1 million share buyback program to capitalize on perceived undervaluation of its common stock [5] - The recent investment in Enservco marks the company's entry into the energy services and transportation and logistics sectors, diversifying its portfolio beyond Building Solutions [12] Management's Comments on Operating Environment and Future Outlook - Management noted that visibility into future projects is becoming hazy, with many projects experiencing delays rather than cancellations, primarily due to financing issues [21][22] - There is cautious optimism for improvement in the second half of the year, although the extent of this improvement remains uncertain [21][22] Other Important Information - The company completed two sale-leaseback transactions totaling approximately $7.2 million in net proceeds, which will not impact operations [4][5] - A one-time impairment of $1.3 million related to a cost method equity investment in TTG was reported, impacting SG&A expenses [8][10] Q&A Session Summary Question: Benefits of structuring the acquisition of Enservco as a share interest - Management believes the common stock is undervalued and structured the acquisition to take an initial stake of around 20%, allowing for monitoring of the transition [13][14] Question: Accounting treatment for the share interest in Enservco - The investment will sit in the Investments division and will be treated as a mark-to-market position since the company does not have control over Enservco [15] Question: Impact of Timber Technologies acquisition on gross profit - The $574,000 impact on gross profit was due to a one-time accounting adjustment related to the valuation of finished goods inventory from the Timber Technologies acquisition [17] Question: Overall business tone and outlook for the second half - Management indicated that while projects are being delayed, they are not being canceled, and they expect some improvement in the second half of the year [21][22]

Monetizes Two Real Estate Assets for $8.3 Million Proceeds to be Deployed into Accretive Acquisitions OLD GREENWICH, Conn., July 19, 2024 (GLOBE NEWSWIRE) -- Star Equity Holdings, Inc. (Nasdaq: STRR; STRRP) ("Star" or the "Company"), a diversified holding company, announced today that Star Real Estate Holdings USA, Inc. ("SRE"), the real estate arm of the Company's Investments division, has closed two sale-leaseback transactions for its South Paris, Maine and Big Lake, Minnesota facilities, totaling approxi ...

OLD GREENWICH, Conn., July 01, 2024 (GLOBE NEWSWIRE) -- Star Equity Holdings, Inc. (Nasdaq: STRR; STRRP) ("Star" or the "Company"), a diversified holding company, announced today changes in the composition of its board of directors (the "Board") to better reflect the current businesses owned by Star and its go-forward strategy. Effective today, the Company has appointed Todd Fruhbeis, Jennifer Palmer, and Louis Parks as independent directors to its Board of Directors replacing legacy directors John Gildea a ...

OLD GREENWICH, Conn., June 12, 2024 (GLOBE NEWSWIRE) -- Star Equity Holdings, Inc. (NASDAQ:STRR, STRRP))) ("Star" or the "Company"), a diversified holding company, announced today a reverse stock split of its outstanding shares of common stock at a ratio of 1-for-5 (the "Reverse Split") and that it has filed a Certificate of Amendment of the Company's Restated Certificate of Incorporation in order to effect the Reverse Split. The Reverse Split will take effect after market close on June 14, 2024, and common ...