Q2 2025 Star Equity Holdings Inc Earnings Call
Operator: Greetings, ladies and gentlemen, and welcome to STAR EQUITY HOLDINGS' second quarter 2025 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 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 obligations to update forward-looking statements as a result of new information, future events, or otherwise. Please note that on this call, management will refer to non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted net earnings, and adjusted earnings per share, which are all financial measures not recognized under U.S. GAAP, as required by SEC rules and regulations.
Greetings, ladies and gentlemen, and welcome to Star Equity Holdings' second quarter 2025 results conference call.
please be advised that the discussions, on today's call, may include forward-looking statements, such forward-looking statements involve, certain risk, and uncertainties that may cause actual results to differ materially from those contained, in forward-looking statements,
Please refer to Star Equity. 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 obligations to update forward-looking statements as a result of new information, future events, or otherwise.
Please note that on this, call management will refer non-gaap Financial measures, including Abita adjusted Abita adjusted net and adjusted earrings per share earnings per share, which are all financially measures not recognized under us. Gaap
Operator: These non-GAAP financial measures are reconciled to the most comparable GAAP financial measures in our earnings release issued this month. If you do 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, Lena Cati, of 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 via www.starequity.com. Shortly after the call, a replay will also be available on the company's website. It is now my pleasure to introduce Rick Coleman, Chief Executive Officer of STAR EQUITY. Please go ahead.
As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to the most comparable GAAP financial measures in our earnings release issued this month.
If you do not receive a copy of the earnings release and would like, 1 after the call, please contact star Equity at 203-489-9500 or its investor relations representative.
Lina karti of the Equity Group at 2112 8369611.
Also this call is being broadcast live over the internet and may be assessed at Star equities website via www.star.com shortly. After the call replay will also be available on company's website. It is now my pleasure to introduce Rick Coleman. Chief Executive Officer of star Equity. Please go ahead.
Rick Coleman: Thank you, Operator. Good morning, everyone. We appreciate you joining us for our second quarter 2025 results conference call. On the call with me today are Jeff Eberwein, our Executive Chairman, and Dave Noble, our Chief Financial Officer. I will 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. Before we open the floor to questions, Jeff will also discuss recent corporate milestones. Our second quarter revenue increased 76% over the second quarter of 2024, driven primarily by organic growth from our KBS Builders business and the inclusion of Alliance Drilling Tools acquired in March this year. The inclusion of a full quarter of Timber Technologies Solutions revenue, which we acquired in May 2024, also contributed to the increase.
Thank you, Operator. Uh, good morning everyone. We appreciate you joining us for our second quarter 2025 results conference call.
On the call with me today are Jeff everwine. Our executive chairman and Dave Noble our Chief Financial Officer.
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.
Before we open the floor to questions, Jeff will also discuss recent corporate milestones.
Our second quarter of revenue increased 76% over the second quarter of 2024.
Growth from our KBS business, and the inclusion of Alliance drilling tools acquired in March this year.
Rick Coleman: Gross margin improved to 26% versus 16% in the same quarter last year, mainly due to higher revenues as well as the inclusion of Alliance Drilling Tools and Timber Technologies Solutions, which are two of our higher margin businesses. Building Solutions division revenues increased by 51% to $20.4 million compared to $13.5 million in the same quarter last year, primarily driven by increased KBS Builders revenues and the inclusion of a full quarter of Timber Technologies Solutions revenues. Overall, we have seen a significant uptick in customer interest in construction activity over the past few quarters. Our Building Solutions backlog, representing orders under contract, remains strong at $25.7 million at quarter end, compared to $14 million at the end of the second quarter of 2024. This gives us high confidence in the division's full-year 2025 outlook and positions us well for a strong start to 2026.
The inclusion of a full quarter of Timber, Technologies Revenue, which we acquired in. May 2024 also contributed to the increase
Gross margin improved to 26% versus 16% in the same quarter last year, mainly due to higher revenues, as well as the inclusion of Alliance drilling tools and Timber Technologies, which are 2 of our higher margin businesses.
Building Solutions division revenues increased by 51% to 20.4 million compared to 13.5 million in the same quarter last year.
Primarily driven by increased KBS revenues and the inclusion of a full quarter of Timber Technologies revenues.
Overall, we've seen a significant uptick in customer interest in construction activity, over the past, few quarters.
Our Building Solutions backlog representing orders under contract remains strong at 25.7 million at quarter end compared to 14 million dollars. At the end of the second quarter of 2024,
Rick Coleman: In our Energy Services division, the integration of Alliance Drilling Tools, or ADT, is continuing smoothly. Despite macroeconomic headwinds, including rig count declines, ADT generated $3.3 million in revenue and $0.5 million in non-GAAP adjusted EBITDA. We are pursuing ADT's organic growth opportunities and also studying potential high-quality acquisitions to strengthen the division. Now, I will turn the call over to Dave Noble, our CFO, to provide additional second quarter consolidated financial highlights. Dave, please go ahead.
This gives us high confidence in the division's full year, 2025 Outlook and positions us well for a strong start to 2026.
In our Energy Services Division, the integration of Alliance drilling tools or ADT is continuing smoothly.
Despite macroeconomic headwinds including rig rig, count declines, ADT generated, 3.3 million in revenue and a half a million dollars in non-gaap adjusted debt.
We're pursuing ADTs or Granite growth opportunities and also studying potential high-quality acquisitions to strengthen the division.
Now, I'll turn the call over to Dave Noble, our CFO to provide additional second quarter Consolidated financial highlights.
Dave, please go ahead.
Dave Noble: Thank you, Rick, and good morning. Let us now turn to STAR EQUITY's consolidated financial results, which are represented by our three operating divisions: Building Solutions, Energy Services, and Investments. In Q2 2025, gross profit was $6.3 million, up 182% versus Q2 of 2024, driven by increased revenue at KBS as well as the addition of Timber Technologies Solutions and Alliance Drilling Tools to our portfolio of companies. SG&A increased by $1.1 million, or 20% versus Q2 of 2024, driven largely by the inclusion of SG&A from Alliance Drilling Tools, and to a lesser extent, the inclusion of a full quarter of Timber Technologies Solutions, as well as increased expenses related to M&A activity. SG&A, as a percentage of revenue, decreased to 27% compared to 40% in the second quarter of last year.
Uh, thank you Rick. And good morning.
Let's now turn to Star equities Consolidated, Financial results which are representing represented by our 3, operating divisions, Building Solutions, Energy, Services and Investments.
In Q2 20225, gross profit was 6.3 million.
Up 182% versus Q2 of '24.
Driven by increased Revenue at KBS as well as the addition of TT and add to our portfolio of companies.
Sgna increased by 1.1 million or 20% versus Q2 of 24 driven largely by the inclusion of sgna from ADT. And to a lesser extent, the inclusion of a full quarter of TT.
As well as increased expenses related to m&a activity.
Dave Noble: Moving on to bottom-line results for STAR EQUITY, we reported a positive net income from operations of $3.5 million in Q2 of 2025 compared to a net loss from operations of $3.8 million in Q2 of 2024. Non-GAAP adjusted net income from operations in Q2 was $6 million, or $1.87 per share, compared to an adjusted net loss of $0.9 million, or $0.29 a share in Q2 of 2024. Non-GAAP adjusted EBITDA from operations was a positive $7 million in Q2 versus an adjusted EBITDA loss of $0.5 million in the same period as last year, primarily driven by realized gains on securities at our investments division. Consolidated cash flow from operations for the second quarter of 2025 was an outflow of $1.7 million versus an outflow of $1.9 million in the second quarter of 2024.
Sgna as a percentage of Revenue decreased to 27% compared to 40% in the second quarter of last year.
Moving on to bottom line results for Star Equity, we reported a positive net income from operations of $3.5 million in Q2 of 2025.
Compared to a net loss from operations of 3.8 million in q224.
Non-gaap adjusted net income from operations in Q2 with $6 million or $1.87 per share.
Compared to an adjusted net loss of 0.9 million, or 29 cents a share in Q2 of 24.
Non-gaap adjusted ibida from operations was a positive 7 million dollars in Q2 versus an adjusted eval loss of 0.5 million in the same period last year, primarily driven by realized gains on Securities and our investments division.
Dave Noble: The six-month 2025 cash flow from operations was an outflow of $1.1 million compared to an outflow of $4.3 million for the first six months of 2024. The operating cash flow improvement is attributable to more favorable results from operations, particularly in our Building Solutions division, and also strong accounts receivable collections. It is also worth noting that subsequent to the quarter end, in early July, our large $6.7 million receivable for brokers was converted to cash and will therefore be cash flow in the third quarter of 2025. At the end of the second quarter, our consolidated unrestricted cash balance stood at $1.9 million compared to $4.0 million at the end of 2024. This difference is primarily driven by the upfront cash used to close the acquisition of Alliance Drilling Tools in March of 2025, plus associated transaction-related costs.
Consolidated cash flow from operations. For the second quarter of 25, was an outflow of 1.7 million versus an outflow of 1.9 million in the second quarter of 24.
6-month 2025 cash flow. From operations, was an outflow of 1.1 million compared to an outflow of 4.3 million.
For the 6, first 6 months of 2024.
the operating cash flow Improvement is attributable, to attributable, to more favorable results from operations, particularly in our Building Solutions division,
And also strong accounts receivable collections.
It is also worth noting that the sub that subsequent to the quarter end in early, July are large 6.7 million dollar receivable for Brokers was converted to cash and will therefore be cash flow in the third quarter in 2025,
At the end of the second quarter, our consolidated unrestricted cash balance was $1.9 million compared to $4.0 million at the end of Q4.
Dave Noble: Turning to our investments division, our holdings in public equity securities at the end of the quarter amounted to $1.8 million versus $3.4 million at the end of 2024. Our rollover equity investment and seller note receivable from the sale of DigiRad to Catalyst MedTech in May of 2023 were valued at $1 million and $8.6 million, respectively. Now I would like to turn the call back over to Jeff for some additional remarks.
This difference is primarily driven by the upfront cash used to close the acquisition of ADT in March of 2025, plus associated transaction-related costs.
Assessments division, our Holdings in public Equity Securities. At the end of the quarter amounted to 1.8 million versus 3 3. 4
Our rollover Equity investment and seller, note receivable from the sale of digger, add to Catalyst Medtech in May of 2023 were valued at 1 million and 8.6 million respectively.
Jeff Eberwein: Thank you, Dave. I would like to expand on two major milestones that occurred during the quarter. First, in our Investments division, STAR EQUITY's $5.8 million in adjusted EBITDA was driven by a $5.5 million realized gain from STAR Equity Fund's investment in Servotronics, which was acquired by TransDigm Group at the close of Q2 at a 300% premium to where the stock was trading pre-announcement. This marks a significant milestone and watershed win for STAR Equity Fund, the public investments arm of our Investments division. This outcome underscores our ability to identify and execute on high-value opportunities that generate meaningful returns to our stockholders. Second, in May 2025, STAR EQUITY entered into a definitive merger agreement with Hudson Global.
Now, I'd like to turn the call back over to Jeff for some additional remarks.
Thank you, Dave. I'd like to expand on 2 major Milestones that occur during the quarter.
First, in our investments division, Star Equity generated $5.8 million in adjusted EVA, which was driven by a $5.5 million realized gain from Star Equity Funds' investment in Servotronics, which was acquired by Trans-Dime at the close of Q2.
At a 300% premium to where the stock was trading pre-announcement.
Marks a significant Milestone and Watershed wind for Star Equity Fund the public Investments arm of our investments division.
This outcome, underscores our ability to identify and execute on high-value opportunities that generate meaningful returns to our stockholders.
Jeff Eberwein: While the transaction remains subject to shareholder approval, with shareholder meetings scheduled for August 21st, the combined entity is expected to generate considerable value for stockholders due to increased scale, further diversification of revenue streams, and elimination of redundant public company costs. We urge our shareholders to vote for the merger on August 21st. Our existing businesses are also performing well. We are encouraged by the recent momentum we are experiencing at our Building Solutions division, new growth opportunities at our Energy Services division, and the value we are creating in the Investments division, as well as the progress we are making on the M&A front. The STAR EQUITY Board and Management team are fully focused on creating shareholder value through our targeted business development initiatives and will continue to identify additional accretive acquisition opportunities at all our divisions.
second in May, 2025 star Equity entered into a definitive merger agreement with Hudson global
While a transaction remains subject to shareholder approval with shareholder meetings, scheduled for August 21st. The combined entity is expected to generate considerable value for stockholders due to increased scale. Further diversification of revenue streams and elimination of redundant public company costs.
We urge our shareholders to vote for the merger on, August 21st.
Our existing businesses are also performing well.
With the recent momentum we're experiencing at our Building Solutions division, new growth opportunities are emerging in the Energy Services Division. Additionally, we are creating significant value in the Investments division, as well as making progress on the M&A front.
The star Equity board and management. Team are fully focused on creating shareholder value. Through our targeted, Business Development initiatives, and we'll continue to identify additional accretive
Jeff Eberwein: Now I would like to turn the call over to the operator for questions.
Acquisition opportunities at all, our divisions.
Now, I'd like to turn the call over to the operator for questions.
Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press *1 on your touch-tone phone. If you are using a speakerphone, please speak up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your questions, please press *2. At this time, we will pause momentarily to assemble our roster. The first question comes from the line of Tate Sullivan with Maxim Group. Please go ahead.
Thank you. We will now begin the question and answer session to ask a question. You may press star then 1 on your touchtone phone, if you are 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 redo your questions. Please press star. Then 2 at this time, we will pause momentarily to assemble our roster.
The first question comes from the line of Tate Sullivan with Maxim group, please go ahead.
Tate Sullivan: Hi. Thank you. Good morning. Great results in the divisions. Can you talk about what the business division on the STAR EQUITY HOLDINGS side has the best pricing power? If you can compare in that way, I know Alliance Drilling Tools, maybe it is a market share game versus Building Solutions. Can you single out a single business that has very good pricing power currently, please?
You good morning. Um,
great results. And the divisions can you talk about, what does the business division on the star side has the best pricing power? If you're if you can compare in that way, I know a line's drilling tools, it's maybe it's a market share game versus building solution. Um, can you sing glad a single business to have a very good pricing power currently, please?
Rick Coleman: Rick, why don't you take that?
Rick Coleman: Yeah, I will address that, Tate. Thank you for the question. What we found is that when there is volatility in the lumber market, our Building Solutions division has the opportunity to either maintain prices when lumber prices are declining or, to some extent, raise prices to keep up with lumber price increases. As you know, we have talked about this in the past. We also have a number of different methodologies in place to ensure that we manage the price of a particular job with input from our customers as to how they want to control the purchase of materials and whether they want them purchased before the job is done at a predetermined price or at a later point in time. That is the general story for the Building Solutions division.
Rick, why don't you take that?
Yeah, I'll I'll uh, I'll address that date. Thank you for the question. Um, when what we found is that when there's volatility in the lumber Market, our Building Solutions division has the opportunity to either maintain prices when a lumber prices are declining or, uh, to some extent raise prices to keep up with, uh, Lumber price increases as, you know. We're also, uh, we've talked about this in the past. We also have a number of different methodologies in place to ensure,
Rick Coleman: What we have seen so far is very little price, very little restriction on our ability to gently raise prices in the Energy Services division. We have been doing that as we determine the relationship that we have with our customers and also increase our supply of more, I will call them more in-demand tools that they need for their drilling operations. In general, as long as we do not get too carried away, I think we have got the opportunity to raise prices as the market for raw materials increases as well.
Sure that we uh manage the price of a particular job uh with with input from our customers as to how they want to uh control the purchase of materials. And whether they want to purchased um, before the job is done at a predetermined price or at a later point in time. So that's the, uh, that's the general story for the Building Solutions division, what we've uh, seen so far is is uh, very little price.
Um,
uh, very little, uh,
Restriction on our ability to gently raise prices in the Energy Services Division. And we've been uh, we've been doing that as we determine the relationship that we have with our customers and also increase our supply of more. Um, I'll call them more in demand tools that they need in the further drilling operations.
You know, as long as we don't get too carried away.
I think we've got the opportunity to raise prices as the market, um, uh, for raw materials increases as well.
Tate Sullivan: Thank you, Rick. Regarding the planned merger, depending on the outcome and if by the positive shareholder votes outcome, will you plan to close the merger as soon after the vote or are there some contingencies after the vote?
Thank you, Rick. And and regarding the plan, merger. Uh, what would depending on the outcome? And if I provide a positive shareholder votes, the outcome, will you plan to close the merger as soon after the vote further for some contingencies after the vote we
Jeff Eberwein: Yep, that's the plan, Tate. It would be as quickly as we possibly can. The last hurdle at this point is getting the shareholder vote, which is both companies are meeting on the 21st.
Yep. That's that's the plan. Hey it would be it would be as
uh,
quickly as we possibly can. Um, the the last hurdle at this point is is getting the shareholder vote which is uh both companies are meeting on the 21st.
Tate Sullivan: Okay. Thank you, Jeff. Thank you all.
Thank you, John. Thank you all.
Operator: Thank you. The next question comes from the line of Michael Madison with Sidotti & Co. Please go ahead.
Rick Coleman: Congratulations on the quarter, you guys.
Thank you. Next question, comes from the line of Michael Madison with SI Ando. Please go ahead.
Congratulations on the quarter, you guys.
Jeff Eberwein: Thanks, Michael.
Thanks Michael.
Rick Coleman: A couple of questions from me. Let's go back to Energy Services. It kind of caught my attention that you feel you are able to put through price increases in that division. Many energy servicing companies have been reporting declining revenue, pressure on pricing. Why do you think you are standing out in that way?
Jeff Eberwein: Yeah, Michael. This is Jeff.
Um, a couple questions from me. Um, let's go back to Energy Services, it kind of caught my attention, that you feel, you're able to put through price increases in that division. Um, many energy servicing companies have been reporting, declining Revenue pressure on pricing. Why do you think you're standing out in that way?
Rick Coleman: I think there are, Rick, let me start, Rick, then you can follow up. Alliance Drilling Tools has a really high service level, and a lot of what they do, the downhole tools that they rent are mission-critical, and they're a small piece of the total cost of drilling a well. There's a lot of different downhole tools that are needed for what they do. We have been selectively replenishing some of their inventory of the most in-demand downhole tools. We've been able to increase utilization and gain share because of that. We have seen some pricing pressure in the marketplace on some of the more commodity, common downhole tools where demand has declined, so supply exceeds demand. There's still a few downhole tools out there that are in very high demand, and those are the ones that Rick Coleman was referring to earlier.
Yeah, Michael. So this is I think there.
Um, uh, Rick white, uh, let let me start Rick and then you can you follow up so um, ADT has uh, a really high service level and a lot of what they do. Uh, the tools that they rent are are mission critical and they're a small piece of the total cost of drilling a well, and
There's a lot of different tools, um, that that are needed for what they do. And we have been, um,
Uh, selectively uh, replenishing some of their inventory of the most in demand tools. And um, we've been able to, uh, increase utilization, and gain share, because of that. Um, we we have
Seen some pricing pressure in the marketplace on some of the more commodity, uh, common tools.
where,
Demand has declined, and supply exceeds demand. However, there are still a few tools out there that are in very high demand, and those are the ones that Rick was referring to earlier.
Rick Coleman: That's exactly what I was going to say, Jeff. We've got two scenarios. One is when the only tools we have available for a particular customer are more commodity-based tools, then yes, there's pricing pressure. So part of our strategy is to increase the number of tools that we have that are more in demand and to some extent harder to come by so that when we get the call from a customer, we can meet their needs regardless of what they are.
That's uh, that's exactly what I was going to say. Jeff, we've got 2 scenarios, 1 is, uh, when when the only tools we have available for a particular customer or more commodity based tools, then yes, there's black pricing pressure. Uh, so part of our strategy is to increase.
The uh the number of tools that we have that are more in demand and uh to some extent harder to come by so that when we get the call from a customer we can meet their needs regardless of what they are.
Rick Coleman: Okay, great. Makes sense. Let's turn to building products. To start with, let me just clarify, in your release, you mentioned that you had won several large commercial contracts. Are those commercial in the sense that they were multifamily, or is this actually away from the residential space?
Okay, great makes sense.
Um, let's turn to Building Products. Um,
To start with. Let me just clarify in your release, you mentioned, uh, that you had won several large commercial contracts. Are those commercial in the sense that they were multi family or is this ABS actually away from the residential space?
Rick Coleman: is a mix of a little bit of everything in the backlog at this point. You know, it is encouraging to see that some of the pent-up demand that we expected to break loose has been over the last few quarters. That is what has got us excited about the backlog and the number of opportunities that we see. By the way, those are really solid opportunities where we have signed contracts and pretty substantial deposits.
There's a, there's a mix of a little bit of everything in the backlog at this point. And, you know, I was encouraging to see that some of the pent up demand, uh, that we expected to, to break loose has been over the last few quarters. And that's what uh, what's got us excited about the backlog and the number of opportunities that we see. And by the way, those are, those are really solid opportunities where we have signed contracts and pretty substantial deposits.
Jeff Eberwein: Michael, this is Jeff. I would just add at KBS Builders, we have a policy of issuing a press release on any large projects, which we define as $2 million or greater. If you look back at all the press releases over the last year, you will see that we started to get some of those projects unclogged, some of the projects that had been delayed, deferred that Rick Coleman was talking about. There were a series of press releases last fall and earlier this year on projects that we won. Step one is winning the project, getting the signed contract, then it goes into our backlog, then we start to produce it, then it starts showing up in revenue, and then the final step is the profit recognition, which can sometimes be back-end loaded.
And it goes into our backlog, then we start to produce it. Then it starts showing up in revenue and then the final step is the prophet recognition which can sometimes be back in loaded.
Rick Coleman: Okay, good. Well, thank you for the clarification, and I will go look up those releases. Again, though, big picture, it feels to me like you are kind of bucking the trend a little bit. A lot of headlines about pressure on home builders. Why do you feel you are standing out?
Okay, good. Well, thank you for the clarification, and I'll go look up those releases.
Um, again though, big picture. It feels to me like you're uh, kind of bucking the trend a little bit. A lot of headlines about, uh, pressure on homebuilders.
Um, how do you why do you feel you're standing out?
Rick Coleman: I think to some extent, it's.
Rick Coleman: Go ahead, Jeff.
I think to some extent, it's
Jeff Eberwein: You go ahead, Rick.
Go ahead, Jeff.
You go ahead, Rick?
Rick Coleman: I was going to say, to some extent, it is a function of the territory we serve. We have in the Northeast, in particular around Maine and the radius that we typically deliver to, there is still a significant shortage of affordable housing, of residential housing in general. We have been able to take advantage of that. We are also getting what we think is a larger share of market from traditional stick-built construction. We are working with some partners that we have had great success with. They and their customers are getting more comfortable with what we can do from KBS Builders. That is helping us generate opportunities and fill the backlog.
I was gonna say to some extent. It's a function of the territory, we serve.
Um, you know, we've got the in the, uh, Northeast in particular Around Maine and the, uh, you know, the, the radius that we typically deliver to. There's still a significant shortage of affordable housing of residential housing in general. And, you know, we've been able to take advantage of that. And we're also getting a what we think is a larger share of Market from traditional stick Built construction. We're working with some Partners, uh, that we've had great success with they, and their customers are getting more, uh, more comfortable with what we can do, uh, from KBS and, uh, you know, that's, that's helping us.
Generate opportunities and fill the backlog.
Rick Coleman: Okay, excellent news again. Looking forward, we have the shareholder vote coming up next week. Of course, we will have to see how the shareholders vote, but assuming the merger goes forward, as an analyst, I will want to be modeling the combined companies. Anything you can say in the way of guidance on Q3 and Q4 that will help me get off the ground there?
Hey well, excellent news again.
Um, so looking forward, um, we have the shareholder vote coming up next week. Um, you know, of course we'll
Have to see how the shareholders vote. But uh, assuming the merger goes forward uh as an analyst. I want to be modeling, the combined companies, anything you can say in the way of guidance on Q3 and Q4 that will help me get off the ground there.
Jeff Eberwein: Michael, this is Jeff. We stopped giving formal guidance. I think it was pre-COVID. We do not give formal guidance, but if you go kind of division by division, we are confident in the Building Solutions outlook for the next few quarters. It should be at least flat with what we did in Q2. I would say the same on Energy Services. On the new companies, the Hudson business, the new company we are going to call that Business Services, we think that business is past the trough. We have had three quarters of higher year-over-year revenue, higher year-over-year EBITDA, and we see that trend continuing. If you look at the corporate costs of the two companies, what we have guided to is that we believe we will be able to remove $2 million of redundant public company costs, corporate overhead costs.
Uh, Michael, this is a Jeff we stopped, um, giving, uh, formal guidance. Um,
I think it was pretty, pretty co uh, so we we, we don't get formal guidance, but, um, if if you go uh, kind of division by division we are are, are confident in, uh, the Building Solutions.
Outlook for the next few quarters. It. It should be um,
At least flat with what we did in Q2. I would say the same on Energy Services.
and then, um, on
the new new companies, uh,
The Hudson business, the new company, we're going to call that business services.
Um,
Jeff Eberwein: That does not happen on day one, but a few quarters, certainly a year in, we think those cost savings will be fully realized. Hope that helps.
you know, we're we we we think that business is uh past the trough and we've had 3 quarters of higher year-over-year, Revenue higher year-over-year ibida. And we see that Trend continuing and then, if you look at the, the corporate costs of the 2 companies, um, what we've got it to is that, uh, we believe we'll be able to remove 2 million of, uh, redundant, uh, public company costs, corporate overhead costs. Uh, that doesn't happen on day 1. Uh, but
Rick Coleman: It does, very much so. Thank you for all of that information. Again, congratulations on the quarter.
You know, a few quarters. Certainly a year. In we, we think those uh, cost savings will be fully realized. So hope that hope that helps
It does, uh, very much so. So, thank you for, uh, all of that information again. Congratulations on the quarter.
Jeff Eberwein: Thank you.
Thank you.
Operator: Thank you. A reminder to all the participants that you may press *1 to ask a question. The next question comes from the line of Theodore O'Neill with Litchfield Hills Research. Please go ahead.
Thank you. A reminder to all the participants that you may press star on 1 to ask a question.
Theodore O'Neill: Oh, thanks, and congratulations on a good quarter. I would like to know about the $4.9 million of other income in the quarter. Does that include the $5.5 million, Jeff, you talked about the realized gains?
Next question comes from the line of Theodore O'Neal with Litchfield Hills research, please go ahead.
Hello, thanks and congratulations on the on a good quarter. Uh, I would like to know about the, the 4.9 million
Jeff Eberwein: Yes, it does.
Of other income in the quarter. Does that include the 5.5 million, Jeff? You talked about the realized gains,
Theodore O'Neill: Okay. I am just curious about the dynamics. I am following up on the previous question about stick-built versus prefab. I am curious about the dynamics that are going on there that are making the prefab more popular. I mean, I am looking at some of my own personal experiences in New England, and the prices we are getting for stick-built stuff is crazy. I am just wondering if there is something going on here between what you guys can do in prefab versus stick-built. It is probably maybe more than what is going on with tariffs that explains the success there.
Yes, it does.
Okay, and I'm just curious about the Dynamics. I'm following up on the previous question about, um, stick build versus prefab. I'm curious about the Dynamics that are going on there that are making um, a prefab.
Uh, more popular. I mean, just I'm looking at some of my own personal experiences in New England, and the prices we were getting for a stick-built stuff is...
Um, is crazy, and I'm just wondering if there's something going on here, between what you guys can do.
Jeff Eberwein: Rick, why don't you take that one?
Prefab versus stick built that's that's probably maybe more than what's going on with tariffs that uh explains the success there.
Rick Coleman: Certainly. I think it is worth remembering that when we are building a modular home or something larger in a factory, the quality is higher because we have got a controlled environment. Materials are less likely to be damaged by weather and other factors. You know, we have got a dedicated crew that typically has much less turnover than what you would see on a stick-built site. So there are quality advantages. There are timing advantages. There are advantages to being able to construct in bad weather. You know, all of those things have worked in our favor. It is probably more impacted, though, just by overall demand in the area and the need for additional housing and construction in general. So we have got a very, very small percentage still of the overall construction in the Northeast.
Rick, why don't you take that one?
A modular home or, um, you know, something larger in a factory. The quality is higher because we've got a controlled environment materials, uh, are less likely to be damaged by weather and other factors. And, you know, we've got a, a dedicated crew that typically has much less turnover than what you would see on a stick built site. So there are quality advantages. There are timing advantages or advantages to being able to construct uh, in in bad weather.
And, you know, all of those things have worked in our favor. Um,
Rick Coleman: As more and more of our partners and builders in general get comfortable with modular construction, then you know, that creates additional opportunities for us.
Theodore O'Neill: Does it necessarily mean that you've got lower waste because instead of throwing stuff in the dumpster at the job site, you might save it and use it for some other job?
It it's it's probably more impacted though just by overall demand in the area and the need for additional housing, and, and Construction in general. So, we've got a very, very small percentage. Still of the overall Construction in the Northeast. So as more and more of our partners and builders in general, get comfortable with modular construction. Then, you know, those create uh that creates additional opportunities for us.
And does it necessarily mean that you've got lower waste? Because instead of throwing stuff in the dumpster at the job site, you might save it and use it for some other job.
Rick Coleman: Absolutely. I don't know how much of it gets used for other jobs exactly, but yes, you're right. There is much lower waste and in general, a higher quality construction process.
Jeff Eberwein: One small example that I would give you on that is our factory in Maine. You know, doing the prefab, of course, there's going to be small pieces of wood that are left over after we've finished constructing a module. We use those small pieces of wood to heat the factory.
Absolutely. I don't I don't know. I don't, I don't know how much of it gets used for other jobs. Exactly. But yes, uh, you're right, um, there is much lower waist and in in general, you know, higher quality construction process.
1 1, small example, Theo, that I would give you on. That is our factory in Maine.
Um,
Theodore O'Neill: Yeah. Right. Okay. Thanks very much.
you know, built doing the prefab. Of course, there's going to be, uh, small pieces of wood that are are, are left over after. We've, uh, finished construction, finish finish constructing a module. We use those small pieces of wood to heat the factory.
Right.
Okay, thanks very much.
Jeff Eberwein: Thank you.
Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Rick Coleman for closing remarks.
Thank you.
Thank you. This concludes our question-and-answer session. I would like to turn the conference back over to Richard Coleman for closing remarks.
Rick Coleman: Thank you, Operator. Thanks for your time today. We appreciate your interest and always appreciate your feedback and support. Do not hesitate to contact us at any time. We are excited about the business and we are excited about the steps we are taking on your behalf. We look forward to updating you as our story develops.
Thank you, operator. Thanks for your time today. We appreciate your interest and always appreciate your feedback and support. So don't hesitate to contact us at any time.
We're excited about the business, and we're excited about the steps we're taking on your behalf. We look forward to updating you as our story develops.
Operator: Thank you. 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 for joining the Star Equity Holdings, Inc. second quarter conference call. Today's call has been recorded and will be available on the investor section of our website, www.starequity.com.