Q2 2024 Star Equity Holdings Inc Earnings Call

Speaker Change: Greetings ladies and gentlemen and welcome to Star Equity Holdings second quarter 2024 results conference call.

Operator: Second Quarter, 2024, Results Conference Call. Please be advised that the discussions on today's call may include forward-looking statements. Such forward-looking statements involve certain risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Please refer to Star Equity's most recent 10-K, 10-Q, and other filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligation to update forward-looking statements as a result of new information, future events, or otherwise.

Unknown Executive: Second quarter, 2024 results conference call. Please be advised that the discussions on today's call may include forward-looking statements. Such forward-looking statements involve certain risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Please refer to Star Equity's most recent 10-K, 10-Q, and other filings for a more complete description of risk factors that could affect these projections and assumptions.

Speaker Change: Please be advised that the discussions on today's call may include forward-looking statements.

Speaker Change: Such forward-looking statements involve certain risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements.

Speaker Change: Please refer to StarEquity's most recent 10-K, 10-Q, and other filings for a more complete description of risks factors that could affect these projections and assumptions.

Unknown Executive: The company assumes no obligation to update forward-looking statements as a result of new information, future events, or otherwise. Please also note that on this call, management will reference non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted net income, and adjusted earnings per share, which are all financial measures not recognized under U.S. gap. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in our earnings release issued this morning.

Speaker Change: The company assumes no obligation to update forward-looking statements as a result of new information, future events, or otherwise.

Operator: Please also note that on this call, management will reference non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Adjusted Net Income, and Adjusted Earnings Per Share, which are all financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in our earnings release issued this morning. If you did not receive a copy of the earnings release and would like one after the call, please contact Star Equity at 203-489-9500 or its Investor Relations Representative, Lina Khati, at the Equity Group at 212-836-9611.

Speaker Change: Please also note that on this call, management will reference non-GAAP financial measures including EBITDA, adjusted EBITDA, adjusted net income, and adjusted earnings per share, which are all financial measures not recognized under U.S. GAAP.

Speaker Change: As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in our earnings release issued this morning.

Unknown Executive: If you did not receive a copy of the earnings release and would like one after the call, please contact Star Equity at 203-489-9500 or its Invest Relations Representative, Lena Katty, at the Equity Group at 212-836-9611. Also, this call is being broadcast live over the Internet and may be accessed at Star Equity's website, www.starequity.com. Shortly after the call, a replay will also be available on the company's website.

Speaker Change: If you did not receive a copy of the earnings release and would like one after the call, please contact Star Equity at 203-489-9500

Speaker Change: or its Investor Relations Representative, Lina Khati, at the Equity Group at 212-836-9611.

Operator: Also, this call is being broadcast live over the internet and may be accessed on Star Equity's website via www.starequity.com. Shortly after the call, a replay will also be available on the company's website. If you require operator assistance, please press star then zero.

Speaker Change: Also, this call is being broadcast live over the Internet and may be accessed at StarEquity's website via www.starequity.com.

Unknown Executive: If you require operator assistance, please press star then zero.

Speaker Change: Shortly after the call, a replay will also be available on the company's website. If you require operator assistance, please press star then zero. It is now my pleasure to introduce Rick Coleman, Chief Executive Officer of StarEquity.

Operator: It is now my pleasure to introduce Rick Coleman, Chief Executive Officer of Star Equity. Thank you, Drew. Good morning, everyone.

Unknown Executive: It is now my pleasure to introduce Rick Coleman, Chief Executive Officer of Star Equity.

Richard Coleman: Thank you, Drew.

Richard Coleman: We appreciate you joining us today for our second quarter 2024 results conference call. On the call today with me are our Executive Chairman, Jeff Eberwein, and our Chief Financial Officer, Dave Noble. I'll start today by providing an overview of our recent business developments and financial highlights, then Dave will provide additional details on our consolidated financial results. Jeff will then discuss our NSERV co-investment announced yesterday morning. Before turning to the second quarter highlights, I want to comment on a couple of recent transactions. On May 17, we closed the acquisition of timber technologies. And please report that the integration of that business into our building solutions division and the acquisition of its associated real estate assets are substantially complete.

Richard Coleman: Good morning, everyone. We appreciate you joining us today for our second quarter 2024 results conference call.

Rick Coleman: Thank you, Drew. Good morning, everyone. We appreciate you joining us today for our second quarter 2024 results conference call. On the call today with me are our Executive Chairman, Jeff Eberwein, and our Chief Financial Officer, Dave Noble.

Richard Coleman: On the call today, may our Executive Chairman, Jeff Eberwine, and our Chief Financial Officer, Dave Noble. I'll start today by providing an overview of our recent business developments and financial highlights. Then, Dave will provide additional details on our consolidated financial results.

Speaker Change: I'll start today by providing an overview of our recent business developments and financial highlights. Then Dave will provide additional details on our consolidated financial results. Jeff will then discuss our Inservco investment announced yesterday morning.

Richard Coleman: Jeff will then discuss our in-serve co-investment announced yesterday morning. Before turning to second quarter highlights, I want to comment on a couple of recent transactions. On May 17, we close the acquisition of Timber Technologies. I'm pleased to report that the integration of that business into our Building Solutions division and the acquisition of its associated real estate assets are substantially complete. Although timber technologies like Edge Builder and KBS is a wood-based construction company, its distribution channels and end products vary in important ways. As a result, we believe its revenue streams are less prone to trade fluctuations, and the general market softness we're experiencing in the rest of the. It also generates healthy cash flow and substantially improves our overall profitability.

Richard Coleman: Although timber technologies like Edge Builder and KBS are a wood-based construction company, their distribution channels and end products vary in important ways. As a result, we believe their revenue streams are less prone to interest rate fluctuations and the general market softness we're experiencing in the rest of the segment. It also generates healthy cash flow and substantially improves our overall profitability. We continue to believe this was a valuable and a creative acquisition for our shareholders, both in the near and long terms.

Speaker Change: Before turning to second quarter highlights, I want to comment on a couple of recent transactions.

Speaker Change: On May 17th, we closed the acquisition of Timber Technologies. I'm pleased to report that the integration of that business into our Building Solutions Division and the acquisition of its associated real estate assets are substantially complete.

Speaker Change: Although timber technologies like Edge Builder and KBS is a wood-based construction company, its distribution channels and end products vary in important ways.

Speaker Change: As a result, we believe its revenue streams are less prone to interest rate fluctuations and the general market softness we're experiencing in the rest of the segment.

Speaker Change: It also generates healthy cash flow and substantially improves our overall profitability.

Richard Coleman: We continue to believe this was a valuable and a creative acquisition for our shareholders both in the near and long terms. Additionally, in July, we closed two sale-leaseback transactions for our South Pairs main and Big Lake Minnesota facilities, totaling approximately $7.2 million in net proceeds. Simultaneously, we entered into long-term lease agreements to continue to operate those facilities. Importantly, these financing should have no impact on operations at either business. The closing of these sale leasebacks aligns with Star's commitment to strategic capital allocation and the prioritization of EBITDA-generating assets. We seek to make high-grade additions to our asset portfolio and optimize the cost of capital with the goal of growing net asset value per share over the long term.

Speaker Change: We continue to believe this was a valuable and a creative acquisition for our shareholders, both in the near and long terms.

Richard Coleman: Additionally, in July, we closed two sale leaseback transactions for our South Paris, Maine, and Big Lake, Minnesota facilities, totaling approximately $7.2 million in net proceeds. Simultaneously, we entered into long-term lease agreements to continue to operate those facilities. Importantly, these financings should have no impact on operations at either business.

Speaker Change: Additionally, in July, we closed two sale leaseback transactions for our South Paris, Maine and Big Lake, Minnesota facilities, totaling approximately $7.2 million in net proceeds.

Speaker Change: Simultaneously, we entered into long-term lease agreements to continue to operate those facilities. Importantly, these financings should have no impact on operations at either business.

Richard Coleman: The closing of these sale lease backs aligns with Star's commitment to strategic capital allocation and the prioritization of even the generating asset. We seek to make high-grade additions to our asset portfolio and optimize the cost of capital with the goal of growing net asset value per share over the long term. Accordingly, we announced this morning a $1 million share buyback program to capitalize on what we believe is a dislocation in the market value of our common stock.

Speaker Change: The closing of these sale lease backs aligns with Star's commitment to strategic capital allocation and the prioritization of EBITDA generating assets.

Speaker Change: We seek to make high-grade additions to our asset portfolio and optimize the cost of capital with the goal of growing net asset value per share over the long term.

Richard Coleman: Accordingly, we announced this morning a $1 million share buyback program that capitalized on what we believe is a dislocation in the market value of our common stock.

Speaker Change: Accordingly, we announced this morning a $1 million share buyback program to capitalize on what we believe is a dislocation in the market value of our common stock.

Richard Coleman: Moving on to the financial and operating highlights for the second quarter of 2024. Our second quarter revenue increased 51.6% over the second quarter of 2023, while gross margin declined by 14.9%. Primarily due to a one-time purchase price adjustment related to the Timber Technologies acquisition. The revenue increase was driven by the inclusion of timber technologies revenue beginning May 17th and the inclusion of a full quarter revenue from our Q4 2023 acquisition of Big Lake Lumber. The decline in building solution performance on an organic basis reflects the continued customer impact of credit tightening on project funding and timing.

Richard Coleman: Moving on to the financial and operating highlights for the second quarter of 2024, our second quarter revenue increased 51.6% over the second quarter of 2023, while gross margin declined by 14.9%, primarily due to a one-time purchase price adjustment related to the timber technologies acquisition. The revenue increase was driven by the inclusion of timber technologies revenue beginning May 17.

Speaker Change: Moving on to the financial and operating highlights for the second quarter of 2024.

Speaker Change: Our second quarter revenue increased 51.6% over the second quarter of 2023, while gross margin declined by 14.9%, primarily due to a one-time purchase price adjustment related to the timber technology's acquisition.

Speaker Change: The revenue increase was driven by the inclusion of Timber Technologies revenue beginning May 17, and the inclusion of a full quarter of revenue from our Q4 2023 acquisition of Big Lake Lumber.

Richard Coleman: And the inclusion of a full quarter of revenue from our Q4 2023 acquisition of Big Lake lumber. The decline in building solution performance on an organic basis reflects the continued customer impact of credit tightening on project funding and time. While our sales pipeline remains strong, the conversion of these opportunities to signed backlog has been slower than historical norms. However, I want to emphasize that, generally, we're not seeing large project cancellations, only delays and timeline extension.

Speaker Change: The decline in building solution performance on an organic basis reflects the continued customer impact of credit tightening on project funding and timing.

Richard Coleman: While our sales pipeline remains strong, the conversion of these opportunities to signed backlog has been slower than historical norms. However, I want to emphasize that generally we're not seeing large-project cancellations; cancellations, only delays and timeline extensions. We believe our reputation as a reliable and high-quality partner in the markets we serve gives us a unique and sustainable position, which we will continue to leverage as the construction sector regains strength. Furthermore, we continue to focus on all elements of our growth strategy, including building solutions division expansion, acquisitions that would mark our entry into new industries, and explore new opportunities at our investments division.

Speaker Change: While our sales pipeline remains strong, the conversion of these opportunities to signed backlog has been slower than historical norms.

Speaker Change: However, I want to emphasize that generally we're not seeing large project cancellations, only delays and timeline extensions.

Richard Coleman: We believe our reputation as a reliable and high-quality partner in the markets we serve gives us a unique and sustainable position, which we will continue to leverage as the construction sector regains strength. Furthermore, we continue to focus on all elements of our growth strategy, including building solutions, division expansion, acquisitions that would mark our entry into new industries, and exploring new opportunities at our investments division, as exemplified by our acquisition and integration of timber technology.

Speaker Change: We believe our reputation as a reliable and high-quality partner in the markets we serve gives us a unique and sustainable position which we will continue to leverage as the construction sector regains strength.

Speaker Change: Furthermore, we continue to focus on all elements of our growth strategy, including building solutions division expansion, acquisitions that would mark our entry into new industries, and exploring new opportunities at our investments division.

Richard Coleman: As exemplified by our acquisition and integration of timber technologies, identifying, evaluating, and completing a creative acquisitions remains an important pillar of our holding company strategy for delivering long-term growth and shareholder value.

Speaker Change: As exemplified by our acquisition and integration of timber technologies, identifying, evaluating, and completing accretive acquisitions remains an important pillar of our holding company strategy for delivering long-term growth and shareholder value.

Richard Coleman: Identifying, evaluating, and completing accretive acquisitions remains an important pillar of our holding company strategy for delivering long-term growth and shareholder value. Now, I'll turn the call over to Dave Noble, our CFO, to provide additional second quarter consolidated financial highlights. Dave, please go ahead.

David Noble: Now, I'll turn the call over to Dave Noble, our CFO, to provide additional second-quarter consolidated financial highlights.

Dave Noble: Now, I'll turn the call over to Dave Noble, our CFO, to provide additional second quarter consolidated financial highlights. Dave, please go ahead.

David Noble: Dave, please go. Thank you, Rick, and good morning. Let's now turn to Star Equity's consolidated financial results. I'd like to note that, due to our sale of the healthcare business on May 4 of 2023, all results and historical comparisons relate only to continuing operations, which include construction and investments. DigiRED Health has now reported as part of our discontinued operations and does not appear at all in our 2024 results. In Q2 2024, SG&A increased by 26.8% versus Q2 of 23. This was largely attributable to a one-time $1.3 million impairment related to our cost method equity investment in TTG, which we acquired through a low over equity stake as part of the DigiRED sale last year.

David Noble: Thank you, Rick. Good morning. Let's now turn to Star Equity's consolidated financial results. I'd like to note that due to our sale of the healthcare business on May 4th, 2023, all results and historical comparisons relate only to continuing operations, which include construction and investments. Did your ad help is now reported as part of our discontinued operations and does not appear at all on our 2024 results? In Q2 2024, SGNA increased by 26.8% versus Q2 of 23.

Dave Noble: Thank you, Rick, and good morning. Let's now turn to StarEquity's consolidated financial results. I'd like to note that due to our sale of the healthcare business

Speaker Change: On May 4th of 2023, all results and historical comparisons relate only to continuing operations, which include construction and investments. Digirad Health is now reported as part of our discontinued operations and does not appear at all in our 2024 results.

David Noble: This was largely attributable to a one-time $1.3 million impairment related to our cost method equity investment in TTTG, which we acquired through a low-over equity stake as part of the DigiRETS sale last year. We reported this impairment after analyzing the financial performance of TTTG and considering comparable company EBITDA valuation multiples. Moving on to the bottom line results for Star Equity, we reported a net loss from continuing operations of $3.8 million in Q2 of 2024, compared to a net loss from continuing operations of 1.4 million in Q2 last year.

Speaker Change: In Q2 2024, SG&A increased by 26.8% versus Q2 of 23. This was largely attributable to a one-time $1.3 million impairment related to our cost-method equity investment in TTG, which we acquired through a rollover equity stake as part of the DigiRed sale last year.

David Noble: We reported this impairment after analyzing the financial performance of TTG and considered comparable company EBIT down valuation multiples. Moving on to the bottom line results for Star Equity, we reported a net loss from continuing operations of 3.8 million in Q2 of 24 compared to a net loss from continuing operations of 1.4 million in Q2 last year. Non-GAAP adjusted net loss from continuing operations in Q2 was 0.9 million, which is roughly the same as in Q2 of 2023. Non-GAAP adjusted EBIT down from continuing operations was a loss of 0.5 million in Q2 versus a loss of 0.8 million in the same period last year.

Speaker Change: We reported this impairment after analyzing the financial performance of TTG and considered comparable company EBITDA valuation multiples.

Speaker Change: Moving on to the bottom line results for StarEquity. We reported a net loss from continuing operations of $3.8 million in Q2 of 2024 compared to a net loss from continuing operations of $1.4 million in Q2 last year.

David Noble: Non-GAAP-adjusted net loss from continuing operations in Q2 was $0.9 million, which is roughly the same as in Q2 of 2023. Non-GAAP Adjusted EBITDA for Continuing Operations with a loss of $0.5 million in Q2 versus a loss of $0.8 million in the same period last year. Consolidated cash flow from continuing operations for Q2 was an outflow of $4.3 million versus an inflow of $1.9 million in Q2 of 2023. The negative cash flow from operating activities is attributable to weaker operating performance as gross margins were lower than in the previous year despite higher revenues.

Speaker Change: Non-GAAP adjusted net loss from continuing operations in Q2 was 0.9 million, which is roughly the same as in Q2 of 2023.

Speaker Change: Non-gap adjusted EBITDA for continuing operations was a loss of $0.5 million in Q2 versus a loss of $0.8 million in the same period last year.

David Noble: Consolidated cash flow from continuing operations for Q2 was an outflow of 4.3 million versus an inflow of 1.9 million in Q2 of 23. The negative cash flow from operating activities is attributable to weaker operating performance, as gross margins were lower than in the previous year despite higher revenues. As of June 30, 2024, our consolidated balance sheet and liquidity reflect a considerable cash outlay associated with our acquisition of timber technologies and its related real estate. At the end of our second quarter, our consolidated unrestricted cash balance stood at 2.5 million as compared to 21.4 million a year ago.

Speaker Change: Consolidated cash flow from continuing operations for Q2 was an outflow of $4.3 million versus an inflow of $1.9 million in Q2 of 2023. The negative cash flow from operating activities is attributable to weaker operating performance as gross margins were lower than in the previous year despite higher revenues.

David Noble: As of June 30, 2024, our consolidated balance sheet and liquidity reflect a considerable cash outlay associated with our acquisition of Timber Technologies and its related real estate. At the end of our second quarter, our consolidated unrestricted cash balance stood at $2.5 million as compared to $21.4 million a year ago. As Rick mentioned, in July, we closed two sale leaseback transactions, which added approximately $7.2 million in cash to our balance sheet. Turning to our investment division, our holdings in public securities at the end of the quarter amounted to $3.8 million versus $4.8 million a year ago.

Speaker Change: As of June 30, 2024, our consolidated balance sheet and liquidity reflect a considerable cash outlay associated with our acquisition of Timber Technologies and its related real estate.

Speaker Change: At the end of our second quarter, our consolidated, unrestricted cash balance stood at $2.5 million as compared to $21.4 million a year ago.

David Noble: As Rick mentioned, in July, we closed two sale-leaseback transactions which added approximately 7.2 million in cash to our balance sheet. Turning to our investment divisions, our holdings and public securities at the end of the quarter amounted to 3.8 million versus 4.8 million a year ago. Our private common equity investment and note receivable from the sale of DigiRat to TTG were valued at 4.7 million and 7.8 million, respectively.

Speaker Change: As Rick mentioned, in July we closed two sale leaseback transactions, which added approximately $7.2 million in cash to our balance sheet.

Speaker Change: Turning to our investment division, our holdings in public securities at the end of the quarter amounted to $3.8 million versus $4.8 million a year ago.

Jeffrey Eberwein: Our private common equity investment and note receivable from the sale of Digirad to TTG were valued at 4.7 million and 7.8 million, respectively. Now I'd like to turn the call back over to Jeff for some additional remarks regarding our recent Insurco investment. Thank you, Dave.

Speaker Change: Our private common equity investment and note receivable from the sale of Digirad to TTG were valued at $4.7 million and $7.8 million, respectively. Now I'd like to turn the call back over to Jeff for some additional remarks regarding our recent Insurco investment.

Jeffrey Eberwein: Now we'd like to turn the call back over to Jeff for some additional remarks regarding our recent insert go investment.

Jeffrey Eberwein: Thank you, Dave.

Jeffrey Eberwein: We were excited to announce yesterday our investment in MSERCO. This investment advances STAR's expansion strategy by further diversifying our portfolio beyond building solutions, marking our initial entry into the energy services and transportation and logistics sectors. We believe the strength of Interim Co's management team in its ongoing reorganization position it well for long-term growth.

Jeffrey Eberwein: We were excited to announce yesterday our investment in Insert Go. This investment advances Stars expansion strategy by further diversifying our portfolio beyond building solutions, marking our initial entry into the energy services and transportation and logistics sectors. We believe that strength of insert goes management team and its ongoing reorganization position at well for long term growth. We look forward to participating in Insert goes future success and believe this investment will be highly accretive to our shareholders. Created value in microcaps companies undergoing change has been a core tenant of Star's political and company strategies and inception, and we're excited to partner with and serve go on this investment to further validate this strategy.

Jeff: Thank you, Dave. We were excited to announce yesterday our investment in MSERCO. This investment advances STAR's expansion strategy by further diversifying our portfolio beyond building solutions, marking our initial entry into the energy services and transportation and logistics sectors.

Jeff: We believe the strength of Inservco's management team and its ongoing reorganization position it well for long-term growth. We look forward to participating in Inservco's future success and believe this investment will be highly accretive to our shareholders.

Operator: We look forward to participating in Ansarco's future success and believe this investment will be highly accretive to our shareholders. Creating value in micro-cap companies undergoing change has been a core tenet of STAR's public holding company strategy since inception. And we're excited to partner with Inservco on this investment to further validate this strategy, and now I'm trying to call it over to Operator for questions. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: Creating value in micro-cap companies undergoing change has been a core tenant of STAR's public holding company strategy since inception and we're excited to partner with Inservco on this investment to further validate this strategy. I'm now turning the call over to operator for questions.

Unknown Executive: And now I'm throwing the call over to Operator for questions. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.

Speaker Change: We will now begin the question and answer session.

Speaker Change: To ask a question, you may press star then 1 on your telephone keypad.

Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Tate Sullivan: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Tate Sullivan with Maxim Group. Please go ahead. Thank you. Good morning, all.

Unknown Executive: At this time, we will pause momentarily to assemble our roster.

Tate Sullivan: The first question comes from Tate Sullivan with Maxim Group.

Tate Sullivan: Please go ahead. Thank you.

Speaker Change: The first question comes from Tate Sullivan with Maxim Group. Please go ahead.

Jeffrey Eberwein: Jeff, starting with and Servco, can you talk about the benefits of how you structured the acquisition of the share interest, Versus the acquisition of the share interest to buy the heart? Yeah, we think our common stock is significantly undervalued, which is why we announced the $1 million stock we purchased program. So we just had a creative discussion about how to help them close the transaction that they're working on with the acquisition of a buckshot and also boost their shareholder equity, and what we came up with is taking an initial stake in the company to around 20% to start the board seat. So we got a common equity interest in exchange for our preferred stock So we're not.

Jeffrey Eberwein: Good morning. Jeff, starting with and Serve Co, can you talk about the benefits of how you structured the acquisition of the share interest versus into by the entire company. Yeah, we think our common stock is significantly undervalued, which is why we announced the $1 million stock purchase program. So we just had a creative discussion about how to help them close the transaction that they're working on with the acquisition of a buckshot and also boost their shareholder equity. And what we came up with is taking an initial stake in the company to around 20% to start the board seat, and so we got a common equity interest in exchange for our preferred stock.

Tate Sullivan: Thank you, good morning all. Jeff, starting with NSERVCO, can you talk about the benefits of how you structured the acquisition of the share interest versus

Tate Sullivan: to buy the entire company.

Speaker Change: Stock Repurchase Program. So we just had a creative discussion about how to help them close the transaction that they're working on with the acquisition of Buckshot.

Speaker Change: and also boost their shareholder equity, and what we came up with is taking an initial stake in the company to around 20% to start the board seat, and...

Speaker Change: So we we got a common equity interest in exchange for our preferred stock

Jeffrey Eberwein: And we get to monitor the transition, so we're not ruling anything in, we're not ruling anything out at this time, but we strongly believe in the walk-around strength philosophy, and this gives us a chance to observe and help and learn about these two sectors.

Speaker Change: and we get to monitor the transition so we're not

Unknown Speaker: Unknown Speaker We're not ruling anything in, we're not ruling anything out at this time, but we strongly believe in the walk, run, sprint philosophy. And this gives us a chance to observe and help and learn about these two sectors. Thank you.

Speaker Change: ruling anything in, we're not ruling anything out at this time, but we strongly believe in the walk, run, sprint philosophy. And this gives us a chance to observe and help and learn about these two sectors.

Unknown Executive: Great. Okay.

David Noble: Thank you. And then Dave's going forward to mark, will you mark to market the share interest and serve the co. I feel we'll be within the investments division. Will it work that way, or how will the accounting treatment work? Yeah, it will fit in the investments division in those two pieces of this, and we're still working out the accounting of a loan that was given to them to help finance the acquisition of Buckshot, but yeah, it will, it's not going to be consolidated; we don't have control of the entity. So it's, you know, it's a market-to-market position, but we take, we do show the numbers both ways, so any unrealized gains losses we have on equity securities or lumber derivatives that we used to hedge, we back those out of adjusted EBITDA, so investors can look at it.

Unknown Speaker: And then, Dave, going forward to Mark, will you mark to market the share interest in Servco? It will be within the investments division. Will it work that way?

Dave Noble: Great. Thank you. And then Dave, going forward, will you market the share interest in Servco? It will be within the investments division. Will it work that way, or how will the accounting treatment work?

Unknown Speaker: Unknown Speaker 0, Unknown Speaker Yeah, it will, it will fit in the investments division. I mean, there's two pieces to this, and we're still working out the accounting for a loan that was given to them to help finance the acquisition of Buckshot, but, Yeah, it will, it will, it's not going to be consolidated because we don't have control of the entity.

Speaker Change: It will fit in the Investments Division. There are two pieces of this and we're still working out the accounting of a loan that was given to them to help finance the acquisition of Buckshot.

Dave Noble: yeah it will it will it's not going to be consolidated we don't have control of the entity so it's you know it's a market to market position

Unknown Speaker: So it's going to, um, you know, it's a market to market position. But we, we take, we do, we show the numbers both ways. So any Unrealized Games, losses we have on security use or lumber derivatives that we used to hedge; we back those out and adjust them to be the dot, so investors can look at it. We give them the data to look at it both ways. Okay, thank you. Again, if you have a question, please press star then one. The next question comes from Theodore O'Neill with Litchfield Hills Research. Please go ahead. Okay, thanks very much. The first question I have is about George Proffitt.

Dave Noble: But we, we take, we do, we do show the numbers both ways. So any.

Dave Noble: unrealized gains, losses we have on

Dave Noble: equity securities or lumber derivatives that we use to hedge we we back those out of adjusted EBITDA so investors can can look at it we give them the data to look at it both ways.

David Noble: We give them the data to look at it both ways.

Unknown Executive: Again, if you have a question, please press star, then one.

Speaker Change: Perfect. Okay. Thank you.

Speaker Change: Thank you, everyone.

Theodore O'Neill: The next question comes from Theodore O'Neill with Let's Feel the Hills Research. Please go ahead. Okay, thanks very much. First question I have is about George Profit. In the prepared statement here it says it's impacted by the Timber Tech acquisition and then on further on it says that impact goes five hundred and seventy four thousand. Is that the entire amount that impacted cluster goods in the quarter? Yeah, the five seventy four is purely due to evaluation that we will require to do for Timber Tech and allocate that purchase price. So that that relates to timber tech at the one time right up of the finished goods inventory and that they write that up to what we could sell it for.

Speaker Change: Again, if you have a question, please press star then 1.

Speaker Change: The next question comes from Theodore O'Neill with Litchfield Hills Research. Please go ahead.

Theodore O'Neill: Okay, thanks very much. First question I have is about George Proffitt.

Unknown Speaker: In the prepared statement here, it says it's impacted by the TimberTech acquisition. And then further on, it says that impact was $574,000. Is that the entire amount that impacted cost of goods in the quarter? Yeah, the 574 is purely due to an evaluation that we were required to do for TimberTech and allocate that purchase price. So that relates to TimberTech.

Theodore O'Neill: In the prepared statement here, it says it's impacted by the TimberTech acquisition and then further on it says the impact was $574,000. Is that the entire amount that impacted cost of goods in the quarter?

Speaker Change: Yeah, the $574,000 is purely due to an evaluation that we were required to do for TimberTech.

Speaker Change: and allocate that purchase price. So that relates to TimberTech. That's a one-time write-up of the finished goods inventory and they have to write that up to what we could sell it for. So because we purchased that company and that finished goods existed, we had to write that up as part of that.

Unknown Speaker: That's a one-time write-up of the finished goods inventory, and they have to write that up to what we could sell it for. So because we purchased that company and that finished goods existed, we had to write that up as part of that. So it's really an accounting adjustment. It's a one-time thing. It's not going to reappear in future quarters.

David Noble: So, because we purchased that company and that finished goods existed, we had to write that up as far as that. So it's really an accounting adjustments.

David Noble: The one time thing it's not talking to reappear in future quarters, and then additionally we did stopper some on our legacy business, some decrease in gross margins just given current market conditions, which impacted profitability. Okay, and I'm just curious, purely an accounting issue, but the this is $1.3 million of the related to the cost method investment in TTG that impacted SG&A in the quarter. Why isn't that just another income? Why is that in SGNA? It's just it's just US gap. Yeah, I asked the same question of our accounting team, and US GAAP is what it is.

Unknown Speaker: And then additionally, we did suffer some on our legacy business, some decrease in gross margins, just given current market conditions, which impacted profitability. Okay, and I'm just curious, purely an accounting issue, but the $1.3 million related to the cost, method, investment, and TTG that impacted SG&A in the quarter. Why isn't that just in other income?

Speaker Change: So, it's really an accounting adjustment. It's a one-time thing. It's not going to reappear in future quarters. And then, additionally, we did suffer some, on our legacy business, some decrease in gross margins just given current market conditions, which impacted profitability.

Speaker Change: Okay, and I'm just curious, this is purely an accounting issue, but the...

Speaker Change: This is $1.3 million related to the cost method investment in TTG that impacted SG&A in the quarter. Why isn't that just in other income? Why is that in SG&A?

Unknown Speaker: Why is that in SG&A? Unknown Speaker 00.00.00.00. It's just, yeah, it's just the us gap. Yeah. I asked the same question of our accounting team. Yeah. And the us gap is what it is.

Speaker Change: Hello, I'm David Noble, I'm David Noble, I'm David Noble, I'm

Speaker Change: It's just U.S. GAAP. I asked the same question of our accounting team, and U.S. GAAP is what it is.

David Noble: I agree, logically you think it could be an other income, not SGNA, but the gap requirement don't care about my logic. And unfortunately, gap is one way as well, so we, you know, took an impairment. Should that company you expect it will, you know, recover over time and produce more, even though we're not ever allowed to write it back up until, you know, at some point we sell it. And what we do on that is we just follow whatever the private equity firm does. We're not doing anything higher or lower or different. They do analysis every quarter, and if they write it down, we write it down.

Unknown Speaker: I agree logically, you think it'd be an additional income, not SGNA, but- David Noble, David Noble, David Noble, David Noble, Richard Coleman, Unknown Executive, Unknown Attendee, Star Equity, Unknown Attendee. What we do on that is we just follow whatever the private equity firm does. We're not doing anything higher or lower or different. They do an analysis every quarter, and if they write it down, we write it down. We, you know, did diligence on that calculation, and we deem it reasonable.

Speaker Change: agree logically you think it'd be an other income not SG&A but

Speaker Change: Yes.

Speaker Change: The gap requirements don't care about my logic.

Speaker Change: And unfortunately, gap is one way as well, so we, you know, we took an impairment.

Speaker Change: shipping the company recovery plan.

Speaker Change: They do an analysis every quarter and if they write it down, we write it down.

David Noble: We you know we did diligence about calculation and we deemed it reasonable.

Unknown Executive: Sure. And, and just overall on the tone of business, I mean I understand it says here in the press release about something pushed in the second half, but is that are you comfortable it's going into the second half, or do you think more of it's going to go into the first half the next year? And what's your what's happening out there.

Speaker Change: we you know we did diligence that calculation and we deem it reasonable.

Unknown Speaker: And just so overall on the tone of business, I mean, I understand what it says here in the press release about stuff being pushed into the second half, but is that... Are you comfortable with going into the second half, or do you think more of it's going to go into the first half of next year? Unknown Speaker What's happening out there? Rick, why don't you take that one?

Speaker Change: And just so overall on the tone of business, I mean I understand what it says here in the press release about stuff being pushed in the second half but is that...

Speaker Change: Are you comfortable it's going into the second half or do you think more of it's going to go into the first half of next year? What's happening out there?

David Noble: Greg, why don't you take that one? Sure, we're seeing, you know, visibility to the future is getting a little bit lazy in this environment as things are slipping to the right, if you will. But we feel like in the second half we're going to see some improvement; we just don't have the ability to say how much. And this is based primarily on the feedback that our customer is giving us about their ability to fund their construction projects and to, you know, to acquire financing where that's required. Okay, thanks very much.

Richard Coleman: Sure. We're seeing, you know, visibility to the future is getting a little bit hazy in this environment, as things are slipping to the right, if you will. But we feel like in the second half, we're going to see some improvement. We just don't have the ability to say how much. And this is based primarily on the feedback that our customers are giving us about their ability to fund their construction projects and to, you know, acquire financing where that's required. Okay, thanks very much. Again, if you have, go ahead. Sorry. Yeah, this is Jeff.

Speaker Change: Rick, why don't you take that one?

Rick Coleman: Sure, we're seeing, you know, visibility to the future is getting a little bit hazy in this environment as things are slipping to the right, if you will.

Speaker Change: But we feel like in the second half, we're going to see some improvement. We just don't have the ability to say how much. And this is based primarily on the feedback.

Speaker Change: that our customers are giving us about their ability to fund their construction projects and to, you know, to acquire financing where that's required.

Jeffrey Eberwein: Again, if you have, we'll go ahead. Sorry. Yeah, this is Jeff. I was just going to add, you know, if there's a silver lining or good news, we're not seeing projects get canceled. It's more just construction starting later than what the original plan was, and often it's due to delays in getting financing. In some cases, there's been some permitting delays, whether delays. But there's a general lack of urgency, and then the ones that do want to go fast that are dependent on financing, it's just taking longer to get the financing in place than, say, two years ago.

Speaker Change: Okay, thanks very much.

Jeffrey Eberwein: I was just going to add, you know, if there's a silver lining or good news, we're not seeing projects get canceled. It's more just construction starting later than what the original plan was, and often it's due to delays in getting financing. In some cases, there's been some permitting delays and weather delays, but there's a general lack of urgency. And then there are the ones that do want to go fast that are dependent on financing.

Speaker Change: just construction starting later than what the original plan was and often it's due to delays in getting financing. In some cases there's been some permitting delays, some weather delays.

Jeffrey Eberwein: But like I said, if there's good news, it's that we're not, we're not seeing projects get canceled; we're just seeing them get frustrated, right.

Jeffrey Eberwein: It's just taking longer to get the financing in place than say, two years ago. But like I said, if there's good news, it's that we're not seeing projects again canceled. We're just seeing them get pushed to the right.

Speaker Change: But like I said, if there's good news, it's that we're not, we're not seeing projects again canceled. We're just seeing them get pushed to the right.

Unknown Executive: Okay, again, if you have a question, please press star, then one.

Operator: Okay, again, if you have a question, please press star than one. That concludes today's question and answer session. I will now turn the call over to Rick Coleman for his closing remarks. Thanks, Drew. Thanks for your time today, everyone. We appreciate your interest and your continued feedback and support. So don't hesitate to contact us anytime. We're excited about the steps we're taking on your behalf, and we look forward to updating you as our story develops. Thank you for joining the Star Equity Holdings second quarter conference call. Today's call has been recorded and will be available on the investor section of our website, www.starequity.com. Thank you. You may now disconnect your line.

Speaker Change: Okay, again, if you have a question, please press star then 1.

Unknown Executive: That concludes today's question-and-answer session.

Speaker Change: Thank you very much for watching this video.

Richard Coleman: I will now turn the call over to Rick Coleman for closing remarks. Thanks, Drew. Thanks for your time today, everyone. We appreciate your interest and your continued feedback and support. So don't hesitate to contact us anytime. We're excited about the steps we're taking on your behalf, and we look forward to updating you as our story develops.

Speaker Change: That concludes today's question and answer session. I will now turn the call over to Rick Coleman for closing remarks.

Rick Coleman: Thanks, Drew. Thanks for your time today, everyone. We appreciate your interest and your continued feedback and support. So don't hesitate to contact us anytime. We're excited about the steps we're taking on your behalf, and we look forward to updating you as our story develops.

Unknown Executive: Thank you for joining the Star Equity Holdings Second Quarter conference call. Today's call has been recorded, and we'll be available on the investor section of our website, www.starequity.com. Thank you.

Speaker Change: Thank you for joining the Star Equity Holdings second quarter conference call. Today's call has been recorded and will be available on the investor section of our website www.starequity.com

Unknown Executive: You may now disconnect your line.

Speaker Change: Thank you. You may now disconnect your line.

Unknown Executive: Second Quarter, 2024 results conference call. Please be advised that the discussions on today's call may include forward-looking statements, such forward-looking statements involve certain risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Please refer to Star Equity's most recent 10K, 10Q, and other filings for a more complete description of risks factors that could affect these projections and assumptions. The company assumes no obligation to update forward-looking statements as a result of new information, future events, or otherwise.

Unknown Executive: Please also note that on this call, management will reference non-gap financial measures, including EBITDA, adjusted EBITDA, adjusted net income, and adjusted earnings per share, which are all financial measures not recognized under U.S, gap. As required by SEC rules and regulations, these non-gap financial measures are reconciled to their most comparable gap financial measures in our earnings release issued this morning. If you did not receive a copy of the earnings release and would like one after the call, please contact Star Equity at 203-489-9500 or its Invest Relations Representative, Lena Katty at the Equity Group at 212-836-9611.

Unknown Executive: Also, this call is being broadcast live over the Internet and may be accessed at Star Equity's website, www.starequity.com. Shortly after the call, a replay will also be available on the company's website. If you require operator assistance, please press Star than zero.

Richard Coleman: It is now my pleasure to introduce Rick Coleman, Chief Executive Officer of Star Equity. Thank you, Drew. Good morning, everyone. We appreciate you joining us today for our second quarter 2024 results conference call.

Richard Coleman: On the call today, may our Executive Chairman, Jeff Eberwine, and our Chief Financial Officer, Dave Noble. I'll start today by providing an overview of our recent business developments and financial highlights.

Richard Coleman: Then, Dave will provide additional details on our consolidated financial results.

Richard Coleman: Jeff will then discuss our in-serve co-investment announced yesterday morning.

Richard Coleman: Before turning to second quarter highlights, I want to comment on a couple of recent transactions. On May 17, we close the acquisition of timber technologies. I'm pleased to report that the integration of that business into our building solutions division and the acquisition of its associated real estate assets are substantially complete. Although timber technologies like Edge Builder and KBS is a wood-based construction company, its distribution channels and end products vary in important ways.

Richard Coleman: As a result, we believe its revenue streams are less prone to trade fluctuations, and the general market softness we're experiencing in the rest of the It also generates healthy cash flow and substantially improves our overall profitability. We continue to believe this was a valuable and a creative acquisition for our shareholders both in the near and long terms. Additionally, in July, we closed two sale leaseback transactions for our South Pairs main and big lake Minnesota facilities, totaling approximately $7.2 million in net proceeds.

Richard Coleman: Simultaneously, we entered into long-term lease agreements to continue to operate those facilities. Importantly, these financing should have no impact on operations at either business. The closing of these sale leasebacks aligns with Star's commitment to strategic capital allocation and the prioritization of EBITDA generating assets. We seek to make high-grade additions to our asset portfolio and optimize the cost of capital with the goal of growing net asset value per share over the long-term.

Richard Coleman: Accordingly, we announced this morning a $1 million share buyback program that capitalized on what we believe is a dislocation in the market value of our common stock.

Richard Coleman: Moving on to the financial and operating highlights for the second quarter of 2024. Our second quarter revenue increased 51.6% over the second quarter of 2023, while gross margin declined by 14.9%. Primarily due to a one-time purchase price adjustment related to the timber technologies acquisition. The revenue increase was driven by the inclusion of timber technologies revenue beginning May 17th and the inclusion of a full quarter revenue from our Q4 2023 acquisition of big lake lumber.

Richard Coleman: The decline in building solution performance on an organic basis reflects the continued customer impact of credit tightening on project funding and timing. While our sales pipeline remains strong, the conversion of these opportunities to signed backlog has been slower than historical norms. However, I want to emphasize that generally we're not seeing large-project cancellation, cancellations, only delays and timeline extensions. We believe our reputation as a reliable and high-quality partner in the markets we serve gives us a unique and sustainable position which we will continue to leverage as the construction sector regains strength. Furthermore, we continue to focus on all elements of our growth strategy, including building solutions division expansion, acquisitions that would mark our entry into new industries and explore new opportunities at our investments division.

Richard Coleman: As exemplified by our acquisition and integration of timber technologies, identifying, evaluating and completing a creative acquisitions remains an important pillar of our holding company strategy for delivering long-term growth and shareholder value.

David Noble: Now, I'll turn the call over to Dave Noble, our CFO, to provide additional second-quarter consolidated financial highlights. Dave, please go Thank you, Rick, and good morning. Let's now turn to Star Equity's consolidated financial results.

David Noble: I'd like to note that due to our sale of the healthcare business on May 4 of the 2023, all results and historical comparisons relate only to continuing operations, which include construction and investments. DigiRED Health has now reported as part of our discontinued operations and does not appear at all in our 2024 results. In Q2 2024, SGNA increased by 26.8% versus Q2 of 23. This was largely attributable to a one time $1.3 million impairment related to our cost method equity investment in TTG, which we acquired through a low over equity stake as part of the DigiRED sale last year. We reported this impairment after analyzing the financial performance of TTG and considered comparable company EBIT down valuation multiples.

David Noble: Moving on to the bottom line results for Star Equity, we reported a net loss from continuing operations of 3.8 million in Q2 of 24 compared to a net loss from continuing operations of 1.4 million in Q2 last year. Non-GAP adjusted net loss from continuing operations in Q2 was 0.9 million, which is roughly the same as in Q2 of 2023. Non-GAP adjusted EBIT down from continuing operations was a loss of 0.5 million in Q2 versus a loss of 0.8 million in the same period last year.

David Noble: Consolidated cash flow from continuing operations for Q2 was an outflow of 4.3 million versus an inflow of 1.9 million in Q2 of 23. The negative cash flow from operating activities is attributable to weaker operating performance as gross margins were lower than in the previous year despite higher revenues.

David Noble: As of June 30, 2024, our consolidated balance sheet and liquidity reflect a considerable cash outlay associated with our acquisition of timber technologies and its related real estate. At the end of our second quarter, our consolidated unrestricted cash balance stood at 2.5 million as compared to 21.4 million a year ago. As Rick mentioned, in July, we closed two sale lease-back transactions which added approximately 7.2 million in cash to our balance sheet. Turning to our investment divisions, our holdings and public securities at the end of the quarter amounted to 3.8 million versus 4.8 million a year ago. Our private common equity investment and note receivable from the sale of DigiRat to TTG were valued at 4.7 million and 7.8 million respectively.

Jeffrey Eberwein: Now we'd like to turn the call back over to Jeff for some additional remarks regarding our recent insert go investment. Thank you, Dave. We were excited to announce yesterday our investment in insert go.

Jeffrey Eberwein: This investment advances stars expansion strategy by further diversifying our portfolio beyond building solutions, marking our initial entry into the energy services and transportation and logistics sectors. We believe that strength of insert goes management team and its ongoing reorganization position at well for long term growth. We look forward to participating in insert goes future success and believe this investment will be highly accretive to our shareholders. Created value in microcaps companies undergoing change has been a core tenant of Star's political and company strategies and inception, and we're excited to partner with and serve go on this investment to further validate this strategy.

Operator: And now I'm throwing the call over to operator for questions. We will now begin the question and answer session. To ask a question, you may press star than one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star than two. At this time, we will pause momentarily to assemble our roster.

Tate Sullivan: The first question comes from Tate Sullivan with Maxim Group. Please go ahead.

Tate Sullivan: Thank you. Good morning.

Jeffrey Eberwein: Jeff, starting with and serve co can you talk about the benefits of how you structured the acquisition of the share interest versus into by the entire company. Yeah, we think our common stock is significantly undervalued, which is why we announced the $1 million stock we purchased program. So we just had a creative discussion about how to help them close the transaction that they're working on with the acquisition of a buckshot and also boost their shareholder equity.

Jeffrey Eberwein: And what we came up with is taking an initial stake in the company to around 20% to start the board seat and so we got a common equity interest in exchange for our preferred stock. And we get to monitor the transition, so we're not ruling anything in, we're not ruling anything out at this time, but we strongly believe in the walk-around strength philosophy and this gives us a chance to observe and help and learn about these two sectors.

unknown: Great.

unknown: Okay.

unknown: Thank you.

David Noble: And then Dave's going forward to mark, will you mark to market the share interest and serve the co. I feel we'll be within the investments division, will it work that way, or how will the accounting treatment work? Yeah, it will fit in the investments division in those two pieces of this and we're still working out the accounting of a loan that was given to them to help finance the acquisition of buckshot, but yeah, it will, it's not going to be consolidated, we don't have control of the entity.

David Noble: So it's, you know, it's a market to market position, but we take, we do show the numbers both ways, so any unrealized gains losses we have on equity securities or lumber derivatives that we used to hedge, we back those out of adjusted EBITDA, so investors can look at it. We give them the data to look at it both ways.

Operator: Again, if you have a question, please press star then one.

Theodore O'Neill: The next question comes from Theodore O'Neill with Let's Feel the Hills Research. Please go ahead. Okay, thanks very much. First question I have is about George Profit. In the prepared statement here it says it's impacted by the timber tech acquisition and then on further on it says that impact goes five hundred and seventy four thousand. Is that the entire amount that impacted cluster goods in the quarter? Yeah, the five seventy four is purely due to evaluation that we will require to do for timber tech and allocate that purchase price.

Theodore O'Neill: So that that relates to timber tech at the one time right up of the finished goods inventory and that they write that up to what we could sell it for. So because we purchased that company and that finished goods existed we had to write that up as far as that.

David Noble: So it's really an accounting adjustments. The one time thing it's not talking to reappear in future quarters and then additionally we did stopper some on our legacy business some decrease in gross margins just given current market conditions which impacted profitability. Okay and I'm just curious purely an accounting issue but the the this is $1.3 million of the related to the cost method investment in TTG that impacted SGNA in the quarter. Why isn't that just another income?

David Noble: Why is that in SGNA? It's just it's just US gap. Yeah I asked the same question of our accounting team and US gap is what it is. I agree logically you think it could be an other income not SGNA but the gap requirement don't care about my logic. And unfortunately gap is one way as well so we you know we took an impairment should that company you expect it will you know recover over time and produce more even though we're not ever allowed to write it back up until you know at some point we sell it.

David Noble: And what we do on that is we just follow whatever the private equity firm does we're not doing anything higher or lower or different they do analysis every quarter and if they write it down we write it down. We you know we did diligence about calculation and we deemed it reasonable.

unknown: Sure.

David Noble: And and just overall on the the tone of business I mean I understand it says here in the press release about something pushed in the second half but is that are you comfortable it's going into the second half or do you think more of it's going to go into the first half the next year and what's your what's what's happening out there. Greg why don't you take that one? Sure we're seeing you know visibility to the future is getting a little bit lazy in this environment as things are slipping to the right if you will but we we feel like in the second half we're going to see some improvement we just don't have the ability to to say how much and this is based primarily on the feedback that our customer is giving us about their ability to fund their their construction projects and to you know to acquire financing where that's required.

Jeffrey Eberwein: Okay, thanks very much. Again, if you have, we'll go ahead, sorry. Yeah, this is Jeff, I was just going to add, you know, if there's a silver lining or good news, we're not seeing projects get canceled. It's more just construction starting later than what the original plan was, and often it's due to delays in getting financing. In some cases, there's been some permitting delays, whether delays. But there's a general lack of urgency, and then the ones that do want to go fast that are dependent on financing, it's just taking longer to get the financing in place than say two years ago. But like I said, if there's good news, it's that we're not, we're not seeing projects get canceled, we're just seeing them get frustrated right.

Operator: Okay, again, if you have a question, please press star than one.

Operator: That concludes today's question and answer session.

Richard Coleman: I will now turn the call over to Rick Coleman for closing remarks. Thanks Drew. Thanks for your time today, everyone. We appreciate your interest and your continued feedback and support. So don't hesitate to contact us anytime.

Richard Coleman: We're excited about the steps we're taking on your behalf, and we look forward to updating you as our story develops.

Unknown Executive: Thank you for joining the Star Equity Holdings second quarter conference call. Today's call has been recorded, and we'll be available on the investor section of our website, www.starequity.com. Thank you.

Unknown Executive: You may now disconnect your line.