Business Structure and Divisions - Star Equity completed the sale of its healthcare division, Digirad Health, on May 4, 2023, transitioning to two divisions: Building Solutions and Investments [16]. - The Building Solutions division includes KBS, EdgeBuilder, Glenbrook, and Timber Technologies, focusing on modular buildings and engineered wood products for residential and commercial markets [17]. - The Investments division manages corporate-owned real estate and minority investments in public companies, including a stake in Catalyst MedTech LLC acquired in May 2023 [18]. - EdgeBuilder and Glenbrook operate as a single entity, focusing on engineered structural wall panels and building materials distribution in the Upper Midwest [26]. - Timber Technologies' glulam products are gaining market share due to their superior strength and sustainability compared to traditional materials like steel and concrete [27]. Financial Performance - For the year ended December 31, 2024, the company reported revenue of 45.8 million for the comparable period in 2023 [57]. - The company experienced a net loss attributable to common stockholders of 23.2 million for the same period in 2023 [57]. - 2024 revenues were 7.6 million or 16.5% compared to 2023 revenues of 11.1 million, a decrease of 11.9 million [134]. - Loss from continuing operations in 2024 was 1.9 million in 2023, primarily due to a 1.9 million [136]. - The company reported a net income (loss) attributable to common stockholders of 23,216 thousand in 2023 [206]. Acquisitions and Investments - The company completed the acquisition of Timber Technologies Inc. for total consideration of 19.7 million in cash and contingent payments of up to 3.3 million, with potential post-closing adjustments including an earn-out provision of up to 40 million, consisting of 7 million promissory note, and 3.0 million, with a promissory note issued for the same amount secured by a mortgage [164][165]. Risks and Challenges - The company faces risks related to health pandemics, wars, inflation, and other global instability factors that could disrupt operations and financial results [62]. - The company faces significant risks associated with real estate ownership, including potential unanticipated losses or expenses due to market fluctuations and supply chain issues [64]. - The cost and availability of raw materials, particularly dimensional lumber and wood sheet products, are subject to significant fluctuations, which could adversely affect the company's revenue and earnings [64]. - Trade tariffs and other factors affecting commodities could materially impact the company's financial condition and cash flows, potentially increasing costs that may not be recoverable from customers [66]. - The construction industry is sensitive to economic conditions, and adverse changes could decrease demand and pricing for new projects, impacting the company's revenues [68]. - The company is exposed to significant liability claims and disputes, which could result in substantial monetary damages and impact financial condition [79]. - Future indebtedness could restrict operations and make the company more vulnerable to adverse economic conditions, potentially harming financial stability [83]. Stock and Market Conditions - The company's common stock has experienced volatility, influenced by operating results, financial situation, and market conditions [84]. - The common stock has a low trading volume, which may lead to price volatility if significant sales occur [85]. - The company must maintain a minimum closing bid price of 5.0 million to avoid delisting from Nasdaq [86]. - As of February 14, 2024, the company received a notice for failing to meet the closing bid price requirement for 30 consecutive trading days [87]. Operational and Strategic Plans - Star Equity plans to pursue organic growth and strategic alternatives, including selective acquisitions and divestitures, to enhance market position and profitability [20]. - The company aims to leverage existing personnel and infrastructure for organic growth in markets where it already operates [24]. - The Building Solutions division continues to see significant demand for products despite a higher interest rate environment, although there have been delays in execution as customers finalize project financing [125]. - The Modular Building Institute reported that permanent modular construction increased from 2.14% in 2015 to 6.64% by the end of 2023, indicating a growing acceptance of offsite construction methods [126]. Financial Position and Equity - The company's total stockholders' equity decreased to 27.4 million, or 31.6% of total assets, as of December 31, 2024, indicating potential risks of impairment that could negatively impact earnings [75]. - The company has a stock repurchase program authorized for up to 721,440 remaining available for purchase as of December 31, 2024 [118]. - Total assets increased to 75,496 million in 2023, representing a growth of 10.3% [209]. - Current liabilities rose to 8,734 million in 2023, an increase of 42.0% [209]. - Total stockholders' equity fell to 65,299 million in 2023, a decrease of 16.8% [209]. Cash Flow and Financing Activities - Net cash used in operating activities for 2024 was 2.7 million provided in 2023 [152]. - Net cash used in investing activities was 16.2 million provided in 2023, primarily due to the acquisition of TT [153]. - Net cash provided by financing activities was 3.1 million in 2023 [154]. - Proceeds from borrowings amounted to 41,153 million in 2023, a decrease of 41.0% [212]. Accounting and Revenue Recognition - The company recognizes revenue when control of promised goods or services is obtained, applying a five-step model for revenue recognition [174]. - The company accounts for business combinations using the acquisition method, recording identifiable assets and liabilities at fair value [176]. - The company has elected the measurement alternative under ASC 321 for its investment in Catalyst Parent, recording it at cost with adjustments for impairment [178].
Star Equity (STRR) - 2024 Q4 - Annual Report