Star Equity (STRR) 13 Aug 242024 Q2 Earnings call transcript

Greetings, ladies and gentlemen, and welcome to Star Equity Holdings 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. are on EBITDA, management income adjusted earnings share, that financial reference and note not per including measures measures, EBITDA, which also this U.S. will call, non-GAAP adjusted recognized Please under financial all adjusted net GAAP.

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

replay Star earnings the the Lena did you not website. contact at If to introduce broadcast call, accessed and is after Also, over like Star of one after via Cati pleasure at Equity's will copy Internet [Operator now or available the receive XXX-XXXX my Chief website Coleman, a being Star Shortly XXX-XXXX. would release of also the representative, please on Instructions] call its Equity Equity (XXX) Equity. may live Relations be the It company's be Officer is this XXX Executive a Investor at www.starequity.com. Group Rick call, and at the

Drew. Good morning, second joining our for conference you, XXXX appreciate We results today quarter us call. you everyone. Thank

yesterday an Officer. On start Jeff Eberwein; will discuss provide additional Financial today consolidated . results. Executive today our our financial Chairman, morning. and announced the our our recent Jeff Chief then by then with call and business our Dave will me are overview Enservco providing developments highlights of I'll financial details investment on

division assets report its acquisition XX, integration the couple complete. Timber closed associated that of turning that recent Before the highlights, substantially quarter May to Building of real into want our of I'm on to second we the pleased estate Solutions business Technologies. of comment are and I transactions. On to a acquisition

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

the revenue and we're segment. the in the less interest general streams of As believe prone substantially rest experiencing healthy flow improves generates a are cash to softness overall market result, and its profitability. It we also rate fluctuations our

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

for million entered Additionally, closed Big $X.X continue proceeds. in July, South Simultaneously, in approximately Lake sale-leaseback facilities. Paris, long-term and net facilities, to Minnesota our lease agreements totaling we X Maine those into operate to we transactions

Importantly, these financings sale no these operations Star's The leasebacks commitment EBITDA of assets. on should to of aligns with have allocation capital either at impact strategic the closing prioritization generating and business.

make our a the stock. long morning optimize we portfolio value value high-grade common seek capital per asset We buyback program we what of to with share net believe goal is of asset on over growing to share $X additions dislocation million announced and to the cost the our a capitalize this of in market the Accordingly, term.

of financial highlights the to on quarter Moving second for and the XXXX. operating

Our revenue the onetime XX.X% by declined the XX.X%, quarter to second Technologies primarily a related increased while second margin of beginning to price quarter Technologies adjustment by revenue over purchase The Lumber. the gross of a Big acquisition. due Timber Lake from XX and of driven increase revenue quarter inclusion QX was inclusion of Timber full XXXX, revenue the acquisition our XXXX of May

project reflects Solutions Building customer timing. basis of in on an funding the tightening credit organic continued performance impact decline on The and

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

in we the opportunities growth gives large we're elements in new division time project continue markets I mark and expansion, only to high-quality reputation to a at which unique that regains partner including reliable as sector exploring division. that on focus entry delays our to believe extensions. leverage We our emphasize into not of and However, Investments would acquisitions serve our continue a new strength. and Solutions seeing will construction strategy, cancellations, we all as Building want we us the industries Furthermore, generally, sustainable line our position, and

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

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

Thank you, Rick, and good morning.

continuing turn results now business is by sale now XXXX, valuation that TPG QX was and last to financial our to reported and include comparisons onetime investments. and to QX which in 'XX. Let's health to investment our related Digirad reported analyzing after all operations, at part X, acquired operations not year. appear historical equity Equity's through consolidated care rollover $X.X and XXXX, a like results. XXXX our as the method does sale Star results. impairment Digirad cost EBITDA million construction considered only discontinued all financial attributable May versus our XX.X% comparable multiples. the of relate a impairment due on stake note part I'd to TTG of as of Health which of equity largely We This increased of in company SG&A to performance the this we In

was million loss a from for $X.X negative of higher last an 'XX. were of roughly in adjusted in year. operations attributable to margins continuing is million loss of The activities line We of previous operating versus period of $X.X QX loss reported from $X.X the was the as performance continuing QX cash in Moving as in operations in adjusted year million Non-GAAP million, $X.X Non-GAAP gross a loss $X.X QX for which operations continuing on operations of Star from QX net XX flow to EBITDA of operations a is flow loss inflow weaker to versus QX net QX XXXX. QX was than Consolidated in the cash outflow same revenues. compared Equity. same from continuing $X.X of the from in million million an in of million net lower continuing operating for results year. a bottom despite $X.X last

balance estate. of cash end cash XXXX, a Timber As a and our consolidated considerable as million balance of second of sheet stood our quarter, associated the reflect $XX.X its June outlay $X.X consolidated at ago. our year our unrestricted At with liquidity to related million compared acquisition and Technologies XX, real

As which million leaseback X added approximately Rick in our sale closed mentioned, cash transactions, sheet. $X.X July, to in we balance

ago. Turning versus to our million holding our our investment Investments division, million public the -- holdings at to a quarter division. amounted of -- securities our the $X.X and year $X.X end

respectively. Our private valued at common receivable to sale the $X.X Digirad note were from and million and of investment equity million, TTG $X.X

the Jeff our investment. to Now Enservco I'd back for remarks regarding over to call turn like some recent additional

to the of for excited Enservco and validate strategy will a companies to to company to in entry this change participating turn its were further investment highly believe . Creating Enservco's expansion reorganization management and Enservco's call our This diversifying position transportation over I'll Star's Enservco. yesterday the accretive and team to investment since investment further this services shareholders. and Dave. solutions our ongoing growth. it long-term announce well We in microcap beyond value of the public for advances core We expecting investment operator and portfolio questions. in we're marking We you, the logistics strategy. look Star's sectors. partner energy initial into our Thank building to and now strength our strategy success inception been with be tenet holding by the future undergoing believe forward has

Tate first Instructions] Maxim [Operator The question Sullivan with comes from Group.

how with entire to talk the the starting the the of buy about share you Just versus acquisition . company? can Enservco, benefits you of structured interest

significantly is which million stock common undervalued, announced our think We Yes. $X the why program. we repurchase is stock

exchange about creative we they're Buckshot And help close of is their stake to an a for working we board common with So to around transaction equity in the discussion a with shareholder seat taking we interest and up but initial them how our preferred stock. the came company what got had just start boost a to also on so acquisition the XX% in equity. and that

to And get we transition. the monitor

We're and to and but the believe So a help observe out time, about we anything gives [indiscernible] this us chance not at we're sectors. in. anything learn X not and this philosophy, strongly ruling these in walk ruling

Okay. investments be It share going Or treatment market work Dave, way? accounting that you to And to in -- the it the will will work? . then Will Enservco. will mark forward division? how within the interest

in out the to sit working division. we're I of finance the loan will We the accounting but consolidated. -- control be the of It not Investments there's Yes. mean going was still it's and this, given X Buckshot don't acquisition that yes, of to will a help entity. pieces it have of them to

position. a show mark-to-market we But ways. So both the numbers do it's

at ways. backed adjusted it. use those equity to any unrealized securities or look EBITDA, lumber investors can give so it gains, look hedge. have both we the derivatives to them on of at out We data losses We that we So

Instructions] O'Neill next Theodore from with Hills question . The [Operator comes O'Neill Research. Litchfield

is the entire the I gross impacted the Is amount in quarter? impacted question about $XXX,XXX. impact have it's In further it says was here, Timber that on, of then acquisition? by that Tech First it And cost the says goods . prepared profit. the statement

Timber is we allocate price. Yes. $XXX do to Tech million The purely purchase that that and were due required to valuation for a

the what that it So write onetime Tech, we we that's Timber finished sell have relates inventory, could goods write-up of to that to a up and to for.

write that that and part up purchased had we that. finished company as we that of because So existed, to goods

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

this investment is isn't in SG&A is quarter. that of SG&A? the $X.X in . Okay. TTG issue, purely income? in that impacted the but the And accounting to method an cost curious, just just -- that I'm other million Why related is in Why --

I is. requirements, income, agree is accounting it'd well. just logic. GAAP U.S. think GAAP. It's be other what then question in Yes, as SG&A, unfortunately, is same but way don't it GAAP you team. care the one of And logically, asked not the U.S. And my our GAAP about I

time write We're should took some more back it we impairment we up. it. point allowed EBITDA. and recover and it will until sell ever company So to not an produce at that expect over

write analysis equity that down, calculation that whatever it anything and they doing lower the And firm deem or write [indiscernible], it down. quarter. an reasonable. we does. higher do And They what we we We're not We we just different. or do if diligence did it on is private every follow

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

you why that Rick, take one? don't

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

ahead, Instructions] [Operator Go sorry.

cases, We're financing projects them -- a Yes, it's just financing. fast delays, And silver the Jeff. add, and it's just was. not financing delays say, starting good I that dependent so construction a seeing ones lack but there's news, often been good But X lining some that delays. if canceled. there plan I getting than are just ago, to It's place due do get weather we're in what taking original permitting go the seeing to in the not some the get projects is get In to canceled. to more later that some and longer news, get it's on close right. that this then of is there's to general seeing going like said, there's urgency was years we're want or just

Rick to concludes [Operator now today's over the will Instructions] remarks. session. I for turn closing Coleman That question-and-answer call

Thanks Drew. interest We continued your and feedback your your Thanks, support. today, appreciate and for time everyone.

So look We're story excited don't contact any steps hesitate as to we're about our we the updating . taking to you on behalf, develops. and us forward time. your

Today's Holdings been you. available Conference the call on Thank you Quarter Call. www.starequity.com. Equity Star has of the our section will Investor and joining for be recorded Thank Second

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