Financial Data and Key Metrics Changes - In Q2 2025, revenue increased by 76% compared to 2024, primarily driven by organic growth from the KBS business and the inclusion of Alliance Drilling Tools and Timber Technologies [5][6] - Gross margin improved to 26% from 16% in the same quarter last year, attributed to higher revenues and the inclusion of higher margin businesses [5] - Net income from operations was $3,500,000 in Q2 2025, compared to a net loss of $3,800,000 in Q2 2024 [10] - Non-GAAP adjusted net income was $6,000,000 or $1.87 per share, compared to an adjusted net loss of $900,000 or $0.29 per share in 2024 [10] - Non-GAAP adjusted EBITDA was $7,000,000 in Q2 2025, compared to an adjusted EBITDA loss of $500,000 in the same period last year [10] Business Line Data and Key Metrics Changes - Building Solutions division revenues increased by 51% to $20,400,000 compared to $13,500,000 in the same quarter last year, driven by increased KBS revenues and Timber Technologies [6] - Energy Services division generated $3,300,000 in revenue, with non-GAAP adjusted EBITDA of $500,000 [7] Market Data and Key Metrics Changes - Building Solutions backlog was strong at $25,700,000 at quarter end, compared to $14,000,000 at the end of 2024, indicating high confidence in the division's outlook [6] - The investments division's holdings in public equity securities decreased to $1,800,000 from $3,400,000 in 2024 [12] Company Strategy and Development Direction - The company is focused on creating shareholder value through targeted business development initiatives and identifying additional accretive acquisition opportunities across all divisions [15] - A definitive merger agreement with Hudson Global was entered into, expected to generate considerable value for shareholders through increased scale and diversification of revenue streams [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Building Solutions outlook for the next few quarters, expecting at least flat performance compared to Q2 [36] - The Energy Services division is also expected to maintain its performance, while the new Hudson business is anticipated to continue its trend of higher year-over-year revenue and EBITDA [36] Other Important Information - The company reported a consolidated cash flow from operations outflow of $1,700,000 in Q2 2025, an improvement from an outflow of $1,900,000 in Q2 2024 [10] - The company’s unrestricted cash balance at the end of Q2 2025 was $1,900,000, down from $4,000,000 in 2024, primarily due to cash used for the acquisition of ADT [11] Q&A Session Summary Question: Which business division has the best pricing power? - Management indicated that the Building Solutions division has the opportunity to maintain or raise prices depending on lumber market volatility, while the Energy Services division has also been able to increase prices selectively [18][19] Question: What is the plan for the merger with Hudson Global? - The plan is to close the merger as quickly as possible after the shareholder vote scheduled for August 21 [20] Question: Why is the Energy Services division able to implement price increases? - The high service level and mission-critical nature of the tools rented by ADT allow for selective price increases despite some pricing pressure in the market [25][26] Question: Can you clarify the nature of the large commercial contracts won? - The backlog includes a mix of commercial contracts, with a significant portion being multifamily and other types of projects [28][29] Question: What guidance can be provided for Q3 and Q4? - While formal guidance is not provided, management is confident in maintaining performance levels in Building Solutions and Energy Services, and expects cost savings from the merger to be realized over time [35][36]
Star Equity (STRR) - 2025 Q2 - Earnings Call Transcript