DRAD - Earnings call transcript Q1 2020 | Star Equity Holdings, Inc.

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Operator

Greetings ladies and gentlemen, welcome to the Digirad Corporation First Quarter 2020 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.

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

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

In release taxes, measure management charges. results. non-recurring and earnings further that stock-based well GAAP today the non-GAAP comments and amortization, include non-GAAP compensation. adjusted manages makes results Also excludes depreciation, in adjusted -- The as and both are not its adjusted EBITDA, results references interest which to do a as is

free operating taking more financial capital presentation of non-GAAP financial with measures Investors flow, in cash cash performance. GAAP thorough ongoing which Management basis along reconciliation flow of release. believes Finally, is for the a the versus provide a paid on the and reconciliations the find results that non-GAAP non-GAAP expenditures. subtracting earnings measure, of analysis cash these statements can and GAAP

Internet of after accessed release, Cati receive The copy not company's Relations and the also call XXX-XXX-XXXX. Also the Equity available will the be do Digirad at you If at after this replay Lena like of Group www.digirad.com. and today's being call a be a one, press would XXX-XXX-XXXX contact, Investor please or may is representative its website. the Digirad's over call, website live at broadcast via Shortly on

introduce to Digirad. Chairman of is my It Eberwein, now Jeff pleasure

Jeff Eberwein

us our thank results you, you quarter And for morning. XXXX Thank today Good for joining conference call. first operator.

CEO; Noble, and the with COO our CFO. Matt me today our and David call Molchan, On are

no QX, XXXX data, financial operating Estate September Building divisions. results Real Healthcare, company & recorded Digirad's XXXX diversified operational and and XXXX & divisions & three are Real in Construction Construction or has operational new financial XXXX, two Digirad There holding these the Investments. created a data and Since business two Investments. of for as been in newly Building with divisions, period Estate & include --

we growth quarter and XXXX, value execute on believe our flow the ultimately we During continue stockholder increase initiatives, value. which first to revenue, of strategy earnings, HoldCo enhancement will and cash

We fund to of start companies the through going disciplined expect look also use with divisions that operating fund our our business cash fit internal acquisitions. we'll company -- to bolt-on additional investments acquisition and for to might flow new forward Eventually, also we'll growth looking structure. create holding well

we exploring to statement XXXX, assets. offering potential addition, of we're the the a for divestiture XX, expansion opportunities, Construction up To proceeds strategy for division, of commercial relating & common a with finance on company's and gross potential April projects of SEC the in non-core growth Building million. our stock In our registration $X to especially filed public

Turning our strategy. growth company's to

Diagnostic our sales and pipeline. division, of In businesses. core a route Healthcare specifically increase the based the to aim maintain and with margin Services of scanning segments, For We be our to our utilization higher Healthcare client mobile we'll prospective our continue our density on base camera and we growing Mobile fleet businesses, focusing customer services. solid improve

growing. In pipeline Diagnostic sales Imaging, and our is solid

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

multifamily large the business construction of Boston For targeting the we're the the commercial discussions & construction in KBS. of our currently is as for area. in commercial previously at And multiple KBS division, units several Building greater announced, expansion involved Construction housing projects for

in plant Maine, higher significantly are few projects production will these months. are KBS' coming these advanced a working utilization in million of to of of awarded, they a building result manufacturing revenue increased require in investment and are XXX negotiation Paris, and even for rate expected of South Three generate capital. an in projects If start over These KBS in the are three stages and of production $XX the expected modules. nearly for projects to alone

this of full generated residential South XXX way building building can by market, was modules XXXX, used produce capacity our In we believe XXX revenue approximately year. And comparison, for approximately Paris, of plant. $XX million We produced and the that modules. only XXX plant KBS that at to per and Maine entirely

a $XX than KBS thousand as million, building than a more of is which sales modules. greater potential pipeline

pipeline in building plant of XXX modules reopen So, could fully sales if year. we eventually Oxford also Maine, has which XXX to per idle materialized, this capacity our currently production

total over year, X,XXX is last our per a production XXX manufacturing capacity building So, compares that to of well year. and modules modules only

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

credit and addition, which Building of facilities are in & EdgeBuilder Building part our Minneapolis in completed refinancing based Construction Supply, a In of QX. area the division Glenbrook their

we many in QX. to in virus QX start Turning our other see to Like late impact starting did continuing to and the this business COVID-XX from virus. an businesses,

business months second we projections COVID-XX track had internal returns year normal will our our we our on the results Assuming the be at expect, half to in beginning the think XXXX that the with levels virus. way to coming of we prior the

expenses. help essential PPP significant other received fund our we've additionally, payroll and to funds And

received million. million division the Our Construction $X.X received Building Healthcare $X.X & and business

million. So, of a it's total $X.X

helps we in a would similar to have virus. without that what be been the us financially position So,

Matt, over that introduction, please So, to our CEO. Matt go with I'll ahead. Healthcare turn it Molchan,

Matt Molchan

Jeff. Thanks,

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

COVID-XX this XXXX fell decrease QX Our scanning Revenue to lower X.X% Healthcare division from for million $XX.X in in the pandemic. to period This is revenues the same the a had services. over division year. due in prior our

stopped offices performing doctor's scans non-life second many half hospitals the of closed, procedures, tests March. during As and threatening several

profit healthcare period increase same X.X% gross provided services lower increase maintenance However, mobile was services, an the This equipment -- in QX, did driven mix over by last period by of healthcare for XXXX reporting favorable year. interim a rental and costs.

$XX.X and quarter million the COVID-XX quarter. Diagnostic Diagnostic impact In in the the quarter XX% $XX.X The percentage and was gross to revenue pandemic. and percentage first Services, of resulting in and compared to compared revenue XX.X% prior for to testing primarily last margin in year's and was decrease first scans Services decreased from the days gross the due in year a margin decrease million

margin was the the percentage XX.X% first Our business quarter prior period compared mobile equipment million profit $X.X and million same healthcare mobile and due rental favorable business healthcare with of increase and $X.X produced services of year. gross combined a quarter-over-quarter in mix maintenance and mobile the costs. The lower of gross in provided X.X% to primarily services in to revenue utilization for our higher

Imaging due year our and camera increase was was million first gross XX.X% for the $X.X Diagnostic first the prior The compared quarter. Imaging million to in XX.X% margin In sales. the business, an in revenue and increase and to $X.X number quarter in XXXX Diagnostic revenue of

highlights and who COO, call the Noble, our turn will to financial first going CFO to I'm Dave over for additional the provide Now, quarter.

go. please Dave,

David Noble

Thank you, Matt.

no quarter Building or XXXX. first from and Construction Our division, margin million operational the Thus, September and with & was completed from in respectively. Construction XXXX $X.X X.X%, Real & financial XXXX & nor merger revenue division there the the Investment Estate XX, division. were period gross just Building on We recorded the data ATRM corresponding

merger. XXXX, the new QX million & audit expenses $X.X months For compared QX, to from Building three by of XX.X% division, due SG&A Construction the expenses overrun related increased our the XXXX to and in of to ATRM in

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

bottom $X.X the We had $X merger a first net loss net million, the of a continuing quarter. in compared $X.X onto prior loss operations from continuing million of which the of included period operations Moving from results in million for to same related line expenses. This the year.

in compared per share the last adjusted $X.X loss adjusted of camera to in first for pandemic. decreased continuing year. the first year, quarter operations by loss adjusted or the resulting driven adjusted adjusted or of decrease Non-GAAP million EBITDA last share the to of the $X.X per from loss net $X $X.XX first $X.XX million loss from of quarter in COVID-XX Non-GAAP quarter net of million net rentals XXXX compared million net $X.X

cash operating first the million quarter, $X.X million quarter last $X.X first $X.X outflow the also flow $X.X flow free of cash to of million of cash million in operating For and outflow year. compared was and was cash free

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

as the disclosed the business uncertain uncertainty the impacted outbreak the well be our spread timeline issued evolving well downturn. outbreak, for S-X as release in has services. duration considering XXXX, regarding our led April This expected to the The in in reduction in to reduction demand services April XX, economic begun demand by has accompany rapidly remains the as X, initial COVID-XX As to downturn, for as press this the of XXXX, company's an our predict and on intensity landscape. on issued and our difficult adversely and for recent

and monitoring is this improves. will workforce evolves. meet as of to needs it around to challenging to the is company and in flexibility the when client's business environment, the is efficiently Due address situation manage company taking, situation and to The mitigate continue it the activity the the actions COVID-XX retaining its it risks its proactively can while ability vigilantly confident continue

have financially, were before in the that PPP In pandemic we fact, the place funds will be received we we occurred. similar

to over to I'd the for Operator? like the any call operator Now, turn questions.

Operator

you. Instructions] [Operator Thank

O'Neill question proceed. Our is from with Theodore first Hills. Please Litchfield

Theodore O'Neill

Thanks very Matt. I got I've much. questions, say, -- Matt two would

lower The why the in mentioned costs Healthcare equipment they maintenance in makes costs quarter? first What those up business. and were of is, lower the you the one side

Matt Molchan

-- are made on mobile business. healthcare the the costs up Those

We with equipment mobile manufacturers have we use OEM service the of the healthcare. in contracts contracted

with would be GE, that Siemens. Philips and So,

reasons Some the renegotiated. are of lower behind the costs

discounts from to fleet. we our some of compared our -- those equipment also some right contracts have Some retired and in last year,

Theodore O'Neill

on, Okay. -- on going there ongoing And would to in affecting commercial that wait construction there? or is is now have you are construction there restrictions COVID Massachusetts any related that

Matt Molchan

Dave?

David Noble

I'm sorry. Can you restate that question?

Theodore O'Neill

restrictions there related Sure. Yeah. in Massachusetts? affecting any Are construction COVID commercial

David Noble

back that had halted sure Mayor I'm so where or Well, not month had the of stands we construction sites. heard today. a that construction at Boston

Although, place, projects I local know And by those the of there's some made getting into that gradual any we've us, city for very but in of importantly the of term reopening on. are three put none being limits. those aware been inside near terms Boston the delays government not are us, guidelines for

inactive our getting In factory discussions in on Maine. fact, at in line projects the we're those

Theodore O'Neill

Thanks very Okay. much

Operator

[Operator Instructions]

Investor. Rothschild proceed. Our Private [ph], next question is from David Please

Unidentified Analyst

Yeah. your My stock. preferred is on question

You of It's last months. issued in back it eight September been year.

know any you You've indication you start might shape declare think I dividend? dividend. is financially, you're yet to that there great not but paying a in when

Jeff Eberwein

a question. good That's Yeah.

it publicly haven't some start. will that But at when issued on will We point. guidance start

doing the structure of to dividend dividend company. payments the the upstream paid, document all when on ability to the but defer the have in merger the preferred public covenants the the at closed or payment has look that for December at parent this, the preferred and plan terms And and we trapped of has up of the filed in are didn't dividends that weren't company we you And description six to that to able we for March. cash the September. we we subsidiaries And quarters. in to do If

will in accruing the be some are at point future. those So, and paid dividends

up have deferral, hope But was really And something as that just long. quarters. six to publicly that, we're about I said, like as it a a We cancellation. So, to to say for not able defer we we not soon will.

Unidentified Analyst

after the pay What if don't you quarters? six happens

Jeff Eberwein

with in for or default But Then It representatives there two the board default. then put start cross anything to issues preferred the but and that. push or would is board would to by in representation bank could appointed jeopardy. the their get no doesn't it a provisions preferred like holders. There's the company be action,

Unidentified Analyst

Thank patiently Okay. you. I'm waiting.

Jeff Eberwein

Thank Thank you. for you your patience.

Operator

Instructions] [Operator

to would conference like this back no are for management I time. over questions to There Okay. turn more closing the at remarks.

Jeff Eberwein

earnings days X-K Okay. And Well, we did out an I website point for this we today SEC's want just press that to operator. release with filed file ago our for the everybody thank next you, to also there on results. offering. week. our say that pricing the which is filed we updated presentation of May few S-X a we in on is stock the week an XX, that expected common And

And after SEC's that out But to so, the release to put we we posted website. do you I press on would week a presentation expect offering. that the completing next refer

I And call discussion to and say I have. like to available take are and would you'd to David, Matt like that your any questions just and always

please don't So, contact us. to hesitate

XXXX support. Thank and again your feedback with in And stockholders appreciate We're announced August second results. forward we quarter as you always, early we when and you. looking speaking appreciate to we our our

Operator

This does today's conclude conference.

this at you time, thank your lines participation. may You your and for disconnect

Jeff Eberwein	Chairman
Matt Molchan	Chief Executive Officer
David Noble	Chief Operating Officer and Chief Financial Officer
Theodore O'Neill	Litchfield Hills Research

Star Equity (STRR) 15 May 202020 Q1 Earnings call transcript