PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) 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 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 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 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 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, 20252324 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 segment8485 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 Investments112 - The company's strategy includes organic growth, introducing new services, and acquiring complementary businesses, aiming to be a 'value' buyer in M&A117122 Results of Operations 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 EBGL134 - The new Energy Services segment, from the ADT acquisition, generated $806 thousand in revenue and $282 thousand in gross profit in Q1 2025135137 - SG&A expenses increased by $1.2 million, or 28.5%, mainly due to the inclusion of SG&A from the TT and ADT acquisitions139 Liquidity and Capital Resources 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 debt147 - 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 KBS151152154 Item 3. Quantitative and Qualitative Disclosures about Market Risk This section is not applicable for the reporting period - Not applicable163 Item 4. Controls and Procedures 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 report164 - 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 business165166 - 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 controls167 PART II. OTHER INFORMATION Item 1. Legal Proceedings 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 effect74169 Item 1A. Risk Factors 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 profitability171172 - 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 setbacks174 Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities No unregistered sales or issuer purchases of equity securities occurred during the period - None175 Item 3. Defaults Upon Senior Securities No defaults upon senior securities occurred during the period - None176 Item 4. Mine Safety Disclosures This section is not applicable - Not applicable177 Item 5. Other Information 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 quarter178 Item 6. Exhibits 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 files181
Star Equity (STRR) - 2025 Q1 - Quarterly Report