Star Equity Holdings, Inc. Q4 FY2024 earnings call

• Revenue increases in Q4 2024 and full year 2024 were due to M&A activity, including the acquisition of Timber Technologies in Q2 2024 and Big Lake Lumber in Q4 2023.
• Building Solutions faced demand softness in H1 2024 but saw momentum in Q4 2024 and into 2025 with large project signings and a $17.2 million signed backlog at year-end.
• Acquired Alliance Drilling Tools to establish the Energy Services division, diversifying the portfolio.
• SG&A increased by $1 million or 31.7% in Q4 2024 compared to Q4 2023 due to acquisition impacts.
• Non-GAAP adjusted net income from continuing operations in Q4 2024 was $0.5 million, and non-GAAP adjusted EBITDA from continuing operations increased to $1.1 million from negative $0.1 million in Q4 2023.

The company has two operating divisions: Building Solutions and Investments. In the fourth quarter of 2024, Building Solutions revenue was $17.1 million, up 21.1% from $14.1 million in Q4 2023. For the full year 2024, Building Solutions revenue was $53.4 million, up 16.5% from $45.8 million in 2023. Q4 2024 gross profit for Building Solutions was $4.5 million, up 55.3% from $2.9 million in Q4 2023, but full year 2024 gross profit declined 7.2% due to a one-time purchase price accounting adjustment and lower revenues/utilization at certain businesses. The Investments division had holdings and public equity securities ending at $3.4 million vs $4.8 million the prior year, with a rollover equity investment and seller note receivable from Digirad sale valued at $1.4 million and $8.2 million respectively.

• Positive momentum continued into Q1 2025 with multiple large project signings.
• Continuing to monitor the potential impact of the current administration's fiscal policy, including tariffs.
• Expecting the Alliance Drilling Tools acquisition to contribute significantly to consolidated results going forward.

• Fiscal policy impact, such as tariffs, on operating businesses.
• Potential impact of drastic or rapid price increases on demand for wood-based construction.
• Impairment risks on investments, including the write-down on the equity investment in former Digirad related to its turnaround efforts.

Q: About the Building Solutions wins and margin improvement A: Increased revenues spreading fixed costs across a broader revenue base, and the sales pipeline and backlog indicate substantial growth from Q4 2024 into 2025 Q: About the $1.7 million of other expense in the quarter A: It was a write-down on the equity investment in former Digirad, reclassified from SG&A to other income to align with other investments related activity Q: Regarding the debt investment with Catalyst A: Follow the mark-to-market done by the private equity firm, and hope for a long-term turnaround as the PE firm works on turning the business around Q: Thought about selling the company to return value to shareholders A: All options are on the table to maximize value for shareholders, including selling parts or the whole company