Financial Data and Key Metrics Changes - In Q2 2023, revenue decreased by 47% to $8.9 million compared to $16.8 million in Q2 2022, while gross margin percentage increased to 29.3% from 14.4% in the same period last year [52][34][38] - The company reported a net loss from continuing operations of $1.4 million in Q2 2023, compared to a net loss of $1.3 million in Q2 2022 [38] - Non-GAAP adjusted EBITDA from continuing operations decreased to a negative $0.8 million in Q2 2023 from a negative $0.4 million in Q2 2022 [56] Business Line Data and Key Metrics Changes - The Construction division generated non-GAAP adjusted EBITDA of positive $0.7 million in Q2 2023, down from $1.3 million in Q2 2022 [56] - Year-to-date gross profit increased by 75.8% compared to the first six months of the previous year, maintaining a mid-20s or higher gross margin percentage target for the Construction division [35][56] Market Data and Key Metrics Changes - The company ended Q2 2023 with a cash balance of $21.4 million and zero debt, positioning itself strongly for future growth [33][57] - The company has a sales pipeline consistently over $50 million, which serves as a leading indicator for backlog [5][6] Company Strategy and Development Direction - The company aims to maximize shareholder value through strategic growth initiatives, including potential acquisitions and partnerships [14][70] - The decision to sell the Healthcare business was driven by the expectation of higher returns on capital in the Construction business, with a focus on scaling operations [13][14] Management's Comments on Operating Environment and Future Outlook - Management noted that project timing and macroeconomic uncertainty impacted revenue, but they remain confident in the division's ability to deliver good results based on a healthy sales pipeline and significant project backlog [34][53] - The company believes it is in a growth phase within the construction industry, particularly in factory-built and environmentally sustainable housing [24][35] Other Important Information - The company completed the sale of its Healthcare division for $40 million, which significantly strengthened its balance sheet and created immediate shareholder value [51][43] - SG&A expenses were reported at 31.7% in Q2 2023, influenced by transaction-related costs from the sale of Digirad Health [55] Q&A Session Summary Question: Why isn't the company buying back stock given its current price? - Management indicated that stock buybacks are considered as a tool for value creation, but they are also focused on growing the company and assessing market conditions [26][27] Question: Can you provide details on the value realized from the Healthcare business sale? - The company realized approximately $63 million in value from the Healthcare division, with a cash portion of $26 million from the sale [43][71] Question: What is the current status of the company's real estate assets? - The company has two remaining factories with appraised values significantly higher than their book values, and they believe there is significant upside potential in these assets [74][75]
Star Equity (STRR) - 2023 Q2 - Earnings Call Transcript