DRAD - Earnings call transcript Q3 2020 | Star Equity Holdings, Inc.

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Operator

Greetings, ladies and gentlemen, and welcome to the Digirad Corporation Third 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. 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 these conference should -- of and only in this those be statements and the morning's consolidated as this with reports the financial on call. date notes discussed used The call conjunction included of in speak update these to statements. The company obligation undertakes forward-looking no the GAAP as its to In today management comments, in earnings and results release makes references adjusted both well as results. results not include adjusted nonrecurring non-GAAP The and are charges. do Also, and adjusted further taxes stock-based that compensation. measure a EBITDA, which non-GAAP interest, excludes depreciation, amortization, is

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

website. Shortly company's live Digirad. over the of call, the after a introduce www.digirad.com. is at receive accessed available Lena Jeff not Equity at at the a is replay pleasure (XXX) (XXX) or Also via after of on to broadcasted being Relations release and the did The would contact like also Chairman XXX-XXXX you If website call the internet be now Investor this call and its Digirad's Digirad Eberwein, Cati press of one, representative, will please copy be my may It XXX-XXXX. Group

Jeffrey Eberwein

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

David Matt with Molchan, Chief me Noble, Officer. Financial today and On the Chief Operating call and our CEO; our are

continue results financial and slowdown COVID-XX. by operating the be to XXXX QX due to impacted Our

and to remained quarter, gross below our Healthcare normal QX, normal return revenue Although hospitals operations year division's causing lower the quarter. be doctor to than in the in offices prior started profit and to activity levels

diagnostic Our Diagnostic due has Services capital business a seen has to our in pandemic. funding sales related decisions the begun slowdown rebound, delays to purchase imaging business but driven by to camera

Our Building Builders, increasing the projects. its previous QX plant building KBS, on & South our by versus at as revenue, the due XX% momentum won -- manufacturing has quarter. commercial business shown Maine the prior production division recently to Inc., Northeast, Construction significant KBS Paris in QX modular increased focused

creating at idle increase New In to Maine addition, the KBS building the recently business we're business. KBS, panels line the strong for Because plant for KBS. for outlook ancillary England about an a market, Oxford, its and capacity ways previously are this outlook excited manufacture studying new wall reopened to production for demand our of

and enhancement value. growth on We HoldCo continue value to to stockholder execute maximize strategy our initiatives

structure allows to strategy Our on focuses division allocation. management HoldCo operations organic on corporate focus and and CEOs HoldCo growth, while capital

structure. we're through for to addition In acquisition the of HoldCo to complementary the bolt-on businesses, business looking businesses new disciplined in for divisions our looking operating also to existing future our acquisitions create attractive

ahead. we our sheet With acquisitions. the and recently our I'll announced position Molchan. improve go of and it that, substantially will DMS balance turn addition, investments CEO, pursue fund In to sale over which growth internal please us Matt, Matt to high-return better Health, Healthcare

Matt Molchan

the fell XXXX slowdown Revenue COVID-XX associated in division to million Thanks, to period was due from the prior Jeff. by Healthcare with same pandemic. year. over XX.X% our $XX.X a the This in QX

The testing reporting In XXXX Diagnostic lower same levels days over pandemic. compared labor last and a QX increase that for overall Services and and the result, to health and primarily of the The XX.X% by led margin the due hospitals Diagnostic to, was have and quarter. in revenue margin of activity in from overall offices period pre-COVID-XX QX revenue Services gross for And lower reopened in in XXXX XX% nonemergency $XX.X scans decreased decrease these levels. during once Services, again, below many quarter lower quarter. resulting million doctor and was gross decrease to XXXX impact the Diagnostic care the the the period. expenses Although million due and gross prior compared have to year year overall $XX.X activity the revenue many a lower was procedures, volume perform due started reporting percentage improved COVID-XX remains third to period year's percentage as efficiency last to profit to third in XX.X%

addition, want during to million control Diagnostic quarter. is the last out quarter the $X.XXX Services increased attributed point year's adjusted to that $X.XXX to expenses the from third for This non-GAAP tight to In operating of we in mainly quarter. compared a our million EBITDA XXXX

$X in sales due Diagnostic camera The to of compared respectively, Healthcare revenue gross In COVID-XX million and and the gross slowdown was place. million third capital to million same the quarter primarily of margin $XX.X and and Our our $X the year volume revenue decrease and million funding margin of year. for pandemic business, gross Imaging compared third respectively, quarter-over-quarter COVID-XX the because the Mobile $X.X produced in XXXX in Healthcare Diagnostic profit in with the respectively, a was was and the in the XX.X%, XX.X%, business associated health public slowdown delays uncertainty and customers decreases and and prior XX.X%, that in for of gross revenue to associated the revenue period overall business quarter pandemic. and our Mobile measures in quarter. due third to the prior margin Imaging put have to the due XX%, respectively, The

over additional Dave, CFO, I'm our the provide highlights Noble, Dave will to ahead. Now to please call for CEO third our going the who turn financial and quarter. go

Dave Noble

and Matt, good Thanks, morning.

the XX.X% gross and just year. compared division business in of this margin prior the full revenue Much ownership due & for and in increase in the our to this were quarter. third Third year third and Construction $X.X same compared quarter $X.X XX to year quarter XX.X%, revenue last of was days period respectively, million million XXXX Building the to

experience in quarter commercial mentioned, the significant KBS levels, or $X.X in the almost did XX%, area. projects revenue, won Jeff million increase we of from However, recently a and activity third as came Boston X

the of the days by the of in on acquisition Construction For QX SG&A to September compared the Again, the & expenses full XXXX. as expenses just compared in this period X last year were that Building due XX, closed XXXX. months increased XXXX, XX of XX.X% to QX XX, company-wide reporting quarter to a ended was same September XXXX, recognized

the continuing results operations adjusted on the to of $X.XX Moving $X.X net operations continuing quarter to net had loss was period XXXX, quarter loss quarter in the company-wide for $XX,XXX million the loss net income bottom adjusted of XXXX same Non-GAAP a from $X.X of year. of from net compared a share in operations XXXX. in or to $X.XX in million third a of third third of or of compared an share continuing last million line we $X.X from

additional compared of shares public for share $X.X by quarter to As some X.XX driven for COVID-XX amounts warrants the raising last X.X this million a third a of of have Non-GAAP we decreased reflect the revenue issued share the exercise resulting and to $X.X was to the a QX of decrease per Therefore, million before the shares, through warrants includes over-allotment XXXX of of adjusted gross period reminder, new count completed X,XXX,XXX the the XXXX and EBITDA to been quarter offering already QX, in purchase in and common an third option, expenses. these million profit the million. million up fees pandemic. and from $X.X in year, stock, which we exercised. Concurrently, issuance

of in into the at working production For operating a support was we quarter the injection that outflow inflow third to cash million a $X.X year. of an cash capital outflow and onetime driver KBS outflow an cash million main -- to levels of free outflow of compared of of operating steadily. XXXX, $X.X of grows last a cash of $XXX,XXX registered free million business this as and The $X.X third quarter flow cash higher

XX, forgiven in completely the $XX.X balance PPP million, outstanding this our months. in on will facilities coming $X.X anticipate XXXX, was includes credit As be million fully the and of funds, September which we

Our around quarter. $XX.X overall of including was $X cash net debt position, million cash equivalents, end in million the and the at

in In million our PPP the coming on the of the use to will loans months, debt sale of in proceeds from early we some obtaining down further pay January. the DMS of also addition business to forgiveness $X.X

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

Operator

whether Q I this Hills. this we've our - the asked O'Neill activity first you're lumber on is question call going Instructions] like never here, seeing last ask prices because O'Neill And Theodore live, seeing Jeff, before. And from up. Litchfield with seen about we're that's I any construction still where I about Theodore again [Operator

can headed So utilization? on that XXX% that. were at about opened us now characterization And you've there? And up could I'm some also, if Maine Give talk Oxford, and that. wondering you you're you if comment you the or plant, capacity on --

Jeffrey Eberwein

Sure.

I in can I around an So had lumber think looking at at the volatile. was the and the spike market people where $XXX prices, started above be year depths as futures end settled just range. this the in it summer $X,XXX got very $XXX has COVID and day, year earlier know, most we of went incredible And to the the it $XXX, $XXX then the recently of more down and sell-off towards into

we equity proceeds manage smooth did with And to I the are input. volatility had rest so year, the the have of the projects of hard business the is the didn't for prices. the quite bit that of when we large last materials buy materials it much increasing and we that think of mentioned time We So we in for needed there's won. construction that a pre-buy commercial and XXX% I offering, a profits whole

is we what reasonable back short, to a that down in have increasing and been more have seen guess, I So prices. prices settled lumber we've range,

lag improve in several margins at a there where And I been has prices. in our our capacity utilization, such guess to it. look periods input are a spike ways prior then experience you have big with So on

capacity, opened produce has have it, studying are go Our to which output, ways up we South now that week fully ultimately, be we'd, boxes we're our plant buildings the Oxford like continue grow, panels. it -- and several an our of be to first plant and South both to backlog various plant the year, those building is pretty XX we on to plant ways and to it to to studying we week, to ancillary to increase pipeline Paris wall could plus. then XXX boxes of and things. or able as a go And reopening right a would be a Paris goal XX to and But get to be boxes able step a XX could increase the Oxford being expanding sales utilized is fully or and from

Operator

from with Sullivan And Maxim our is Tate question Group. next

Tate Sullivan

just can well, I as If that lumber too. tail on question

& to can I you talk For 'XX be margin the in gross you margin prices term, that price visibility, XQ profit gross lumber by like understanding please? profit Building was about would XX% -- margin profit consistent in But Construction, indicated mean, and gross longer sales where the lumber.

Jeffrey Eberwein

certainly. XX% in a get we'll Yes, think price environment. normal above lumber there And we

get there fairly we'd quickly. think I

Tate Sullivan

think $X.X capital the decline million going did I And and Great. higher forward? business. expenses. you post quarter should a include run as Is not that could expenses we DMS model has that rate? well overhead expenses sale then for that Okay. in a in it Or well, some required overhead the But as

Jeffrey Eberwein

Yes, do to want that? start with Dave, you

Dave Noble

know remaining our some you're of have then cutting will sale the that to expenses that in Yes. I with months. the overhead cut business. be don't But I that business. what to first Day some we number. the question, expenses X, look actually And from. of pulling that will of at answer expenses number ensuing be There'll with some go

some in sale the there'll of of savings will along reducing with corporate be areas. couple But business. on overhead a the We headcount be that of significant

Tate Sullivan

Okay. mean, And camera hospitals from commented you've late. cameras, of rough Can getting each I too average you on price just us sale? -- decisions a camera remind

Dave Noble

Yes. that this turn Matt. Dave, but to Yes, I'll over was

Matt Molchan

Yes.

across of ASP varieties to around to $XXX,XXX. cameras we is XXX the the So $XXX,XXX XXX, sell that our different

Tate Sullivan

capacity? I Or down forgiveness, acquisitions strategy forward? And post may. pay then to hold debt flexibility cash use PPP to, Jeff, mean how and about with sale, for last you if can you talk -- and debt DMS much will my like the that one to to you have or the I going more on just

Jeffrey Eberwein

flexibility improve will to of and pursue Sure. financial The our acquisitions. DMS liquidity sale substantially

on for of bolt-ons any potential the more looking stool. a us months, any focused the that the and closing to after not the the for contingency candidates. going see work a merger credibility Building Building we'll for do, closes pay asset we've to for more our to able net as close legs about improving then acquisition grow vision give we of to to new have a improving potential the changer at, terms to more have sale, sales, on because position. we'll we'll internally funding and from will executing very And just -- & be look in debt, side, & and is lot ways So XX underway. we'll raise our but And outward initiatives, things that been sale talking DMS capital ability Healthcare business. at and X, business look and Construction we're be have that the is to in upside or for we're debt cash before, a down the bolt-on of will operations acquisitions But other really to We so transaction to and that well Day we also the company. start be organic us acquisitions XX to lot in firepower when pursue than we've cash Construction be have last certainly to talked looking also more but game the just to more start But and and and

Operator

from with Jeff Capital. question next Bridge Kobylarz is Diamond Our

Jeff Kobylarz

wanted a segment. Just Building little into down drill bit in the more margin the to gross

and XX%. the the below in the quarter was was gross quarter XX%, margin So second third

issues there was drove that So other margin gross Or down? were that all lumber? the

Matt Molchan

You want that? to take

Jeffrey Eberwein

And over increasing bullet get prices, along, Yes. the just is line. prices but well-oiled our another does short Dave, I are along. pass increased then takes and particularly takes to that just rose to time would it a quick that although just it while. we that passed but say, a in I'll thing get significantly while and And massively a input KBS. Ultimately, production a have turn are X of this period we the workforce, efficiencies at it super-efficient, to while points a takes

Dave Noble

those margin, to we in we're is And level XX%, we that week. margins. so & add I projects that would price the a words, little utilization a might you we to the And say, achieved the the mean In quote assumes modular different color. gross third just when that utilization more at of certain gross with units about something XX% the I a plant. of just but achieving but margin quarter, X at a think Construction, other operating plant businesses within a target, business, Building presupposes XX

we're we're operating So we expanded But margins margin. to I activities the if as targeting that will quarter are third in not that the hitting really we're half hit say that, that in going plant. for obviously,

out the Midwest, of piece have parts we other business. the X business to that The in

you have We that. have can we a in also if a product actually it maintain retail project do the business business But a raise June where we on panel and have multiple might margins, where prices a and there to, do, those November. we then in times out to we retail week, produce wall quote

pass that be. some said in that were will is there those projects be backlog, come it attempt suffice that, projects the in we so life making and them some do we've fixed then buying have -- on skyrocket, on our they and past months money try we increase, that a down since profitable. terribly not prices of that few to material last target that in those restore shelf that for Having if are mid-September, and bit year, to but to won a want to margins of the quotes, to to this going we're where and say, business. that have we're for lumber gross projects lumber as project quite are And some did We not

Jeffrey Eberwein

just that is that say is growth and we about would we see -- see revenue The I say Yes, I'd XX%. segment, continued strong thing Jeff. strongest above margins this in gross

Jeff Kobylarz

Okay. Great. comment Yes, I you're it can about to sounds just was curious also if the you expand. pipeline, like looking

a on number? picture the So you can data? of in million there pipeline past quoted orders evaluating, You've you're any make is of bidding Any big top on? $XX comment

Dave Noble

pretty remained rate. has producing static, pipeline That good but we're a at pretty

a And large that So we're pipeline think that close. will we I refilling pipeline. have that in definitely we of projects think we -- number

Our we number up. associates with to their it weight million. weighted creeping about pipeline, think each the has and that various that probability is, leads that is according -- salesperson if $XX that we been And

to think at we're I we we're months ago, at. some acceleration KBS looks would projects getting X So look anecdotally a never on that, that we're the side, -- seeing see starting get

And so that we in that on of of I the level. next we're X executing -- we to bringing the June. sort feel projects cusp on announced And the business large we're that

one, we is we're a III them and the of Phase Phase won midst our we've One put in as just in of out II, the press built, releases. completely other

that about the pipeline in that pipeline. optimistic very we're So and growth

Jeffrey Eberwein

add is time and started And we the projects, those this thing sales I about included commercial $XX a it think to would that of one pipeline that, those million, When very, positive. having -- is first first just -- we mentioned we we Jeff, I would very talking very projects.

Massachusetts one in was the million. $X.X So Natick,

million. $X around was one housing veterans the one, other The

of that you add $X together, almost So and million projects. that's

actually projects it with replaced is that weighted that to into probability so And and and hasn't on goes adjusting because once statement, given replaced the our something, is being out backlog pretty it we're that we our $X we disappears pipeline took new it, a so declined, bidding production. and win which if it. produced for And we've strong average, from million

our the of our sold have starting So factory and another I for this getting that sold And things April still we're by with little for years, in very construction there's slowest mean, Maine, rest that way, the for haven't slots year we the typically, some -- book period left, and there's because We said several production. that residential out seen and this QX, the fully business, operations of over virtually given the all QX. in out experience are is before far, to year is in QX. manufacturing is pretty Northeast

Jeff Kobylarz

Okay.

So that question, too, what the area. understand can seasonality far we yes, going so I to as was the seasonality, to New expect about ask England just as in

saying that from you are decline seasonal be rate? third So the a run quarter there won't

Jeffrey Eberwein

if not is, there near, nearly like Not it's years. previous

Dave Noble

seasonality. that the commercial commercial us space has helped And getting into with -- really the

For That during won [ph] a -- Tachi phase of example, press in Natick, the third put we we January. third in the month to will release, phase be produced project this a Massachusetts.

So slot much production pretty typically that's on boxes with month. filled project side. that in every Jeff residential going month, We Natick says, as for a that slow the that to are

Jeff Kobylarz

us X% said And because the as of And there inputs. range margin could third kind quarter picture expect? right. second $X can segment, EBITDA that on the you dropped down of to share the we All Building EBITDA million of on Is in lower Okay. in quarter it volatility was -- revenue. big the of any of EBITDA just the margin far the this with as XX% you

Jeffrey Eberwein

annualized margin XX% EBITDA think, to some but gross be timing can between if our plus. probably XX% elements XX% an should keep there's we Well, and basis, on we that, margins,

Dave Noble

mix, volatile material XX%, And be the depending I over product the range that terms And as happen out, do XX% business think, range. and it's a pointed good to what on some producing XX% quarter-to-quarter, of yes, you in raw prices that particular it'll in we quarter. think XX% be is of the in to seasonality. Yes. mix just But we there margin. is a should EBITDA time, to

Operator

Al Hill our And is private question [ph], next investor. Instructions] from a [Operator

Michael Santelli

the is after the any Today, on per of share data company? the can't I of book sale value DMS, what find that.

Dave Noble

that have statements. financial our don't We number exact in

So I'm just now. looking right at our sheet balance

end book say in had value. have I shares value million, the $XX.X to at about the close of would is And the September, above we'll is of we still because So target the But and $X.X outstanding. the at was book it end million the just selling DMS January. of price our year, business

share So business. when it will that we be accretive to book per sell value

Michael Santelli

January? that And Okay. we'll have in

Dave Noble

in the would we'll financials, Well, the financials. in January. value I'm sure is publish the business. book sale you'll on what our not QX see complete that latest is that we'll The of terms exactly of you sale what post see new

Michael Santelli

doing just I'm today, my in just math So some rough head.

somewhere common $X book stock So near of as basically value share that's today? $X to a

Dave Noble

right. That's

Operator

Instructions] we for of the call have I'll And over turn session. end [Operator remarks. closing the Eberwein now And question-and-answer to our reached Jeff

Jeffrey Eberwein

again, thanks, calls And to that any operator. always available Well, your and are I'd to you take I just might Dave, have. note questions and like Matt discuss

We're is XX, XX. going So to excited story our the coming very existing investors scheduled present Conference on with share months. about in November our contact is us. and and the on one November Conference and please to week, weeks the We're future to the our excited story. very hesitate to second continue one tell potential don't Benchmark at two and next conferences Craig-Hallum to We're

As and always, feedback our all we appreciate time your support for stockholders thank very and So today. continued your of much you

Operator

may conference, at you Thank and your your today's participation. disconnect concludes this you time. lines this for And

Star Equity (STRR) 13 Nov 202020 Q3 Earnings call transcript