DRAD - Earnings call transcript Q4 2019 | Star Equity Holdings, Inc.

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Operator

Greetings ladies and gentlemen and welcome to the Digirad Corporation Fourth Quarter and Year End 2019 Results Conference Call.

As a reminder, certain statements made during this conference call including the question-and-answer period are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws.

These forward-looking statements include, but are not limited to, statements about the company's revenues, costs, and expenses, margin, operations, financial results, acquisitions, and other topics related to Digirad's business, strategy, and outlook. These forward-looking statements are based on current assumptions and expectations and involve risks and uncertainties that could cause actual events and financial performance to differ materially.

Risks and uncertainties include, but are not limited to, business and economic conditions, technological change, industry trends, and changes in the company's market and competition.

risks the is U.S. the company's in about with filings information and available uncertainties the More current X-K, Securities on release. reports and Form Exchange XX-K, on and Commission quarterly on including Form today's well as as annual reports reports press Form XX-Q,

information those conference should obligation reports date only of in this and be statements and of morning's consolidated forward-looking statements. these the The update no with speak to the financial on company this notes discussed used The call conjunction included undertakes call. in as

It of is may now Eberwein, my pleasure to Digirad. begin. introduce Jeff Chairman you Mr. Eberwein

Jeff Eberwein

Thank you, quarter joining and and call. you fourth us XXXX end all results conference operator. for Good morning year our today for thank

Executive Operating On and ATRM with the are and Noble. Officer Matt call today of Koch, our Chairman division; me Chief Dan Financial Molchan, Officer, Chief David our CEO; our

discuss A we provide and fourth During outlook. company's an will will on and results, comment the update this the company's strategy, then follow. question-and-answer XXXX the financial XXXX call, period on quarter

we'll this The be live XXX-XXX-XXXX to at and one. If of Digirad's one, website Also at happy accessed Equity you the of call you representative release Internet Cati call at call office our press Group copy after or XXX-XXX-XXXX Lena our a get contact our like Investor broadcast please being may would is Relations be over and and receive via didn't the www.digirad.com.

The on non-GAAP be as include and Shortly results references company's after adjusted both in make the are we and non-recurring available In as the comments, to the well results not call, also will release charges. results. our replay website. do earnings today a adjusted GAAP

excludes measure interest, EBITDA, a non-GAAP to depreciation, compensation. and also which stock-based will that make references adjusted amortization, We taxes, is further

the and provide taking Finally, we’ll performance. believe thorough cash cash a financial capital statements analysis measures, of our paid non-GAAP free for to financial which cash reconciliations our expenditures. measure, flow, We of along make with presentation these GAAP ongoing and a flow operating subtracting non-GAAP is references more

a You GAAP can find on the in basis results release. non-GAAP earnings versus the reconciliation of our

We integrating quarter fourth made implementing HoldCo strategy. announced great strides our in previously the and

ATRM business HoldCo on Building now financial investments Healthcare, revenue The are we and & reporting three Investments. value a with is results shareholder efficiencies cash Estate and generation. Construction of September high-return of XX, acquisition promote divisions; through as operating mandate maximize & to the Following XXXX, HoldCo growth, operating that long-term flow and Real

due structure. positive & includes HoldCo products Building full QX, the of XXXX as new quarter by our higher that benefits operations to of is the The sales quarter increase profit division. healthcare our for revenue taken saw we financial a improved and also performance established first of by some steps a recently and and margin was gross division generated additional Construction to

into transform for strategy Digirad XXXX Our through to business growing a profitably organically and is acquisitions.

healthcare camera be will we specifically higher Specifically mobile focusing on for our division services. sales segments, and scanning margin our

utilization solid route of of with and Services and the customer client pipelines. the aim to growing businesses, Mobile based continue We prospective In our core a density our maintain to Diagnostic businesses. base our increase we Healthcare fleet improve

Imaging Diagnostic solid sales and In growing. pipeline our is

and and on when Ergo camera of needed We unique sale where and our to X-ACT cameras programs. as the continue our rental needed focus needed

footprint opportunities significant be in in advantage construction business construction our market expanding our our projects client of for estate on and also expanding focus will England to and For & real market. Construction Building available geographic the this multifamily our better residential division, New and take commercial

years and years in Maine in utilization projects a Maine. in if a and require Our in new higher area, awarded to in could future reopening eventually XXXX a rate to in be lead for KBS' England plant would manufacturing XXXX Building is involved KBS second previous significantly of New Construction than to several & plant discussions business various the currently which construction for built in commercial

in part division KBS the these completed XXXX. & commercial Real are of plants owns expansion as operated used of plants that this three to Finally, strategy, requirements working the our via Maine has the division capital which a for Estate financing Investment by proceeds the be in mortgages manufacturing to three fund business & for Building with currently Construction

a addition, refinancing part facility. & of existing the Building credit Minnesota, in and based which company's Glenbrook, division of In are EdgeBuilder Construction an completed

Additionally, seeking bolt-on the create two platform acquisitions for attractive that companies company. for acquisitions existing companies in be we categories, acquisition new and will our opportunities platform

as For $X adjusted provide between million free EBITDA and million. million between $X $X million $X non-GAAP between and and $XXX Revenue cash flow and follows. guidance we XXXX, $XXX million, million

turning Molchan, please to the Matt, ahead. go Matt I'm our Now, call CEO.

Matt Molchan

Thanks, Jeff.

fourth XX.X% increased by to quarter $XX.X to the compared as XXXX, XXXX, revenue For to quarter and same of million. our of the gross margin XXX.X% total increased $X.X million

full to $XXX.X total revenue to increased compared as increased and margin by X.X% XXXX, $XX.X gross XX% million to by year XXXX, full year million. For

of the division our segment's Healthcare cameras revenues with strong, remained Our scanning core services. from sale and higher business from

Although, October This by this by the X.X% sale year, to from million of slightly same revenue business due prior revenue for XXXX. $XXX.X the year full division million was X.X% over period in decreased of XXXX. Telerhythmics to in $XX.X XXXX grew QX, to

reporting XXXX over rentals low-margin and and our for respectively and year the sale by periods XX.X% same expenses. lower camera full year, profit the QX periods XX.X% sales Telerhythmics business to due of mainly care and of health higher increased Gross last

Services, XX.X% quarter. fourth $XX.X Diagnostic fourth XX.X% year's gross and $XX.X and In last in margin and to percentage the for million revenue quarter was compared million

same $XX.X to primarily increase $XX revenue The million and the margin for were XX.X% prior rentals. in increase period. and last months in of the XX in year XX.X% XXXX Revenue diagnostic due year million compared to in and camera percentage services quarter increase margin the percentage to compared was gross an gross and

XXXX. Telerhythmics year sale from to our due XXXX, slightly However, decreased of Diagnostic fiscal Services of revenue for October in XXXX the business

revenue same prior for the of percentage fourth $XX.X margin compared Healthcare year. the quarter were same year XX% the to Revenue gross in XX Mobile and period. million in business and X% and last $XX.X of X.X% margin months $XX.X XX.X% to gross percentage period and Our million for million XXXX $XX.X compared and and million produced the

gross profit services Mobile in quarter-over-quarter higher combined The a of costs. units with utilization mobile was Healthcare to maintenance and increase provided mix primarily lower due of equipment favorable

higher $X.X and the margin XX the XX.X% and margin percentage Imaging Diagnostic XX.X% the and gross prior fourth XXXX quarter. million year $XX our costs. Diagnostic in XX.X% due partially to number and The last increase revenue XX% revenue increase quarter million material in $X.X and Revenue of same compared to period. was million, of In for XXXX were offset in and $XX.X million gross Imaging fourth business, was year sales, months an compared for camera by to

who highlights I'm to our additional CFO Now, and COO the and will the financial please provide Noble, David the quarter year. Dave, for call turning go ahead.

David Noble

Thanks Matt. very much,

comparable of closed that is our on And the year. revenue in Building September was effectively have year. periods the $X.X for this through back merger million So Building division ATRM of data fourth prior end If the we from which September was to don't XX go division quarter & $XX.X the merger Construction we the XX, of the new September & mind bear XX, million year so with Construction it of date in

sale of XXXX, to our the our of division, million was expenses Telerhythmics additional of months compared new SG&A XXXX XX offset increased the by Building X.X% due $X which XXXX. in headcount benefits to following October partially Healthcare lower salaries side lower from in & on Our the and from Construction back business by resulting

We the cost and also contracted first structure our prepare costs, integrating reduced throughout that to optimize services, to merger. will savings margins. HoldCo believe SG&A outside costs allow benefits of an hope XXXX. and We particularly year the operations corporate to begin these as the us to and in some to improved Over streamline time, functions for by consolidating corporate HR in the for realize during generate IT areas, we effort we internal overhead

operations net same $X.X loss the compared in for period prior $X.X a from from year. continuing continuing merger-related We which on in million, bottom loss Moving fourth a quarter. the of $X.X results This to investments. and the had line net the of expense million to a operations million included

to to services. XXXX higher this just or $X.X fourth quarter and year. quarter the the compares of increased quarter $X.X loss net adjusted operations net adjusted loss from adjusted the million and million due mobile to net last to from income And continuing this our EBITDA in $XXX,XXX of income for fourth per was $X.XX cameras or sale net of high-margin was Non-GAAP revenues last in per Non-GAAP adjusted adjusted $X.XX share, an fourth $X.X compared from million scanning the share year. of

million, For $X.X the net expenses net of prior continuing in was loss of the million loss XX $X.X a the but operations continuing included year. to of in months operations investments. million this and from merger-related period from XXXX, same This compares $X.X

was adjusted loss $X.X net in to of and adjusted net net million share this share same compares adjusted the Non-GAAP per operations $X.XX loss from or $X.XX $X.X from and EBITDA scanning of from all the higher this our again, XXXX, XXXX. of mobile cameras in period XXXX million high-margin to million for and reflecting in $X.X sale adjusted compares Non-GAAP net was continuing million loss loss adjusted revenues an services. or $X per

million. was last $X.X This free $X.X quarter cash to million in operating of quarter million fourth cash the was fourth inflow For million $X.X compares cash year. the and flow $X.X operating flow and flow of free cash of

$X.X to period $X.X free prior of For cash the the months -- cash year. XX full the the compared was free million million flow for in flow the in company XXXX, same

all our debt equivalents $XX.X the cash cash XX, December million. overall of XXXX, position including was As $XX.X on million facilities and our credit and was balance net outstanding

like operator Now back call for turn to the questions. to the I'd

Operator

Litchfield first comes of your proceed Our Please Hills Instructions] question. line the O'Neill Research. of [Operator question Theodore with from

Theodore O'Neill

Congratulations good quarter. a on you. Thank

Jeff Eberwein

Thank you.

Theodore O'Neill

weather be building -- So weak we've is you're the seasonally kind seeing QX QX had about the if was wondering often of and you in I could any or building whether talk and mild side business, weather what not because and can weather. pickup pretty of of from the for outlook here. the the

Jeff Eberwein

with very the question. two residential and modular that's commercial. in residential and both is seasonal little little where make housing very very, building good occurring a have occurring And Yes first units we we businesses in Maine construction quarter. really side very The there

mild however Those even of have are similar far this year. the there. long significant quarter And a lot projects. had backlog into the year very back We're And we getting time are of the we where momentum there. construction a it's years market. projects though, And to by very building is a winter weakest lead we've previous commercial

end the financing got that's just January. would much for in at the liked. we working place extra It We financing took we just in than investment that needed. have the of longer And got place capital

And to so, we're commercial division any in not expecting have in QX. that projects

QX So on to commercial every a that in residential QX be pickup to of we in going offset will year. Hopefully schedule in see significant QX year. really with weakness very rest the the and forward, some we'll slow be able Maine that starting side projects the

And much our of that's less the in a This the Minnesota year seasonal. Last rest slower based strong is is business panel and business for wall a year. quarter then pick up year have the that very in strong planned first did but quarter. second we

a and Construction expecting year very of will that forward will but and weakest seasonality. provided. pickup our built our year see going far by we Building into quarter QX this significant in the we guidance the we're be So that's business

Theodore O'Neill

other one. one Jeff, And Okay.

lower guidance realize but in six could out you is XXXX it's been what than talk Your changed? the gave months has about you I one slightly and September,

Jeff Eberwein

Things observation. a factors. good of like. It's would and question than Good take variety we Sure. longer

XXXX would. think I than we place end were thought a we'll always about expecting. that slower we It's just same the ramp we

integration that longer sooner. took ran quarter the we'd into guidance, and Maine, fourth the in QX we would it into and that happen come much be financing in So before certainly when We very getting thought fourth especially and positioned would projects, put out quarter to new of end the we than commercial thought financing place that in start the that holidays. the well wanted just we some

And we didn't done January. anyway, get it late until

few a working the just get to in we got the commercial business. so capital ago back construction And weeks

change. that's the biggest I'd say So single

lower reduce costs. always that new We're lead takes we that's that than taken will like. greater cost implementing a We are to system to think and IT efficiencies but we longer looking And longer.

Healthcare and it's the just year to But on Building a side had a in say of things. that one do Construction very variety I any XXXX. ramp in should So it's well would thing, if a to business slower – good and I business the pick just and continue single had

Theodore O'Neill

very Thanks much.

Jeff Eberwein

that free flow much. outlook The didn't cash change

Operator

at any There this [Operator further questions the I will back are now no call closing for to Instructions] remarks. time. management over turn

Jeff Eberwein

operator. you, Thank

to participate often potential concluding story we're investors. as note, to share and scheduled new message Before our with see possible institutional Benchmark Conference existing our in and and March as the you call, I'd continue investors. To meeting Chicago, We of some shareholders to the be and like Industrial hope end, shareholders on where other we'll with in that Construction we'll to and tell existing potential there. XX

and conference other roadshows non-deal planning participations. we're Additionally,

to platforms to existing we to HoldCo and us. sell call company. from questions additional and assets in for always is new your acquisitions We're bolt-on for an so both looking thing do take wanted also new then mention you believe do not asset-rich we I hesitate time our we're any available please have, over acquisitions do discuss closing time-to-time. are but might divisions, our that, contact structure, to companies One We

the can assets in two And flow almost million good wanted that remind and you to from the just and of over we years, that people last to our ATRM as sold addition earnings results, did. we've gross see worth cash profit, $XX acquisition we're revenue, producing

So state wanted a company we our a and just opinion the have of lot that assets I have at high asset of to value.

when to we in to announce wanted in just looking your our again closing Thank you all and just XXXX speaking continued So call. in and early first results. with May shareholders our we'll quarter support. of We're participating for today's you I forward feedback say, appreciate

Operator

conclude does This conference. today's

your and this you disconnect may your at have lines for You time. Thank great participation a day.

Star Equity (STRR) 6 Mar 202019 Q4 Earnings call transcript