OLD GREENWICH, Conn., March 13, 2025 (GLOBE NEWSWIRE) -- Star Equity Holdings, Inc. (Nasdaq: STRR; STRRP), (“Star Equity” or the “Company”), a diversified holding company, announced today that it will release its financial results for the fourth quarter ended December 31, 2024, before the market opens on Thursday, March 20, 2025. A conference call is scheduled for 10:00 a.m. ET (7:00 a.m. PT) on March 20, 2025, to discuss the results and management’s outlook. The call may be accessed by dialing: Toll Free: ...

Core Viewpoint - Star Equity Holdings, Inc. has announced preliminary key financial metrics for Q4 2024, indicating a strong performance compared to Q4 2023, driven by increased activity in the Building Solutions segment and the signing of two significant commercial contracts by its subsidiary KBS Builders, Inc. [1][2] Financial Metrics - For Q4 2024, Star expects to report revenues of approximately $17.1 million, an increase of 21.3% from $14.1 million in Q4 2023 [2][5] - Gross profit for Q4 2024 is projected to be around $4.4 million, up from $2.9 million in Q4 2023, reflecting improved margins [2][5] - Adjusted EBITDA from continuing operations is expected to be approximately $1.1 million, a turnaround from a loss of $0.1 million in Q4 2023 [2][5] Business Developments - KBS Builders, Inc. has signed two large commercial contracts valued at $3.1 million and $2.1 million for the construction of housing units in Maine, with manufacturing expected to begin in Q1 and Q2 of 2025 [2][5] - The company anticipates strong demand for new projects due to an ongoing housing shortage and increasing acceptance of modular construction methods [2][5] Company Overview - Star Equity Holdings, Inc. operates through three divisions: Building Solutions, Energy Services, and Investments [3] - The Building Solutions division includes modular building manufacturing, structural wall panel manufacturing, and glue-laminated timber manufacturing [4]

Core Viewpoint - Star Equity Holdings, Inc. has acquired Alliance Drilling Tools, LLC, marking a significant milestone in its growth strategy by establishing a new "Energy Services" operating division [1][4][9]. Transaction Highlights - The acquisition closed on March 3, 2025, with an enterprise value of $12.65 million, which includes real estate valued at approximately $3.0 million [6][7]. - Star Equity paid $4.9 million in cash, partially funded by $2.5 million in debt financing, and issued 775,000 shares of Series A Preferred Stock valued at $7.75 million [7]. Company Overview - Alliance Drilling Tools, founded in 2009, specializes in the rental, sale, and repair of downhole tools for the oil and gas, geothermal, mining, and water-well industries [3][8]. - ADT generated approximately $10.5 million in revenue for the full year 2024, with a gross margin of 48% and Adjusted EBITDA of $2.4 million [4]. Strategic Fit - The acquisition allows Star to diversify its operating portfolio and leverage ADT's specialized industry knowledge to capitalize on growth opportunities in the energy sector [4][9]. - ADT will retain its brand and continue operations as a division of Star, which now comprises three divisions: Building Solutions, Energy Services, and Investments [4][9]. Future Growth Potential - Star plans to enhance ADT's growth through strategic investments aimed at expanding operational capacity and meeting rising demand for its services [4][6].

Core Viewpoint - Star Equity Holdings, Inc. announced a $3.2 million contract for a multifamily housing project in Maine, further enhancing its market position in New England [1][2][3] Group 1: Contract Details - The contract involves the manufacturing of 40 modules for five 4-unit townhouse condominiums in Lincoln County, Maine [2] - Production is set to begin in January 2025, with delivery expected in the second quarter of 2025 [2] - This project is the second of two potential contracts exceeding $5 million mentioned in the company's Q3 2024 earnings release, with the first being a $2.1 million project in Vermont [2] Group 2: Company Insights - Rick Coleman, CEO of Star, emphasized the project as a significant win for KBS in Maine, reinforcing its strong reputation in the region [3] - The company is actively converting large commercial projects from its sales pipeline into booked backlog, indicating a positive trend in business operations [3] - The company believes its location and expertise position it well to address the housing shortage in New England, providing high-quality construction solutions [3] Group 3: Company Structure - Star Equity Holdings, Inc. operates as 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 the company's real estate assets and investment positions in both private and public companies [6]

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].