STRR - Earnings call transcript Q4 2021 | Star Equity Holdings, Inc.

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Operator

Greetings, ladies and gentlemen, and welcome to Star Equity Holdings Inc. Fourth Quarter and Year-End 2021 Results Conference Call. Please be advised that discussions on today's call may include forward-looking statements. Such forward-looking statements involve certain risks and uncertainties and 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 and 10-Q filings for a more complete description of risk factors that could affect these projections and assumptions. obligation information, forward-looking future no result as assumes new of events company to statements update a The or otherwise. that measures, EBITDA, under US note to are all earnings also on not management which call, Please recognized measures, may per non-GAAP share, financial net including adjusted adjusted GAAP. financial EBITDA, income, adjusted the refer

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

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

Jeff Eberwein

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

Officer, year Chief the Molchan, the call more versus levels today me the continued rebound Chief and division of XX.X% to XXXX, Officer, quarter with increasing prior CEO to fourth normal Coleman; are On Noble, David Operating of with Digirad In revenue Rick Matt Financial quarter. Health. our healthcare

costs. commodity at quarter increased higher Construction throughout and mitigation. year impact strongly improved the due rebounded of raw Construction the risk revenue Our fourth due Gross operation, our pricing, the increases pricing to division grew margin implemented and we to also XX.X% material price output division in by mitigate to higher

division. we Our Construction this significantly of exceeding gross XXXX improved margins, margins the progress XX% and off for division our in toward made goal bottom gross

Healthcare high-return turn million, to now With January gross well proceeds into the ahead. I'll $XX.X for fund entry CEO, Molchan. go XXXX please it be internal or and sector. either business Healthcare which Construction pursue new to our our over Matt, offering acquisitions, growth for of divisions we're could completion or our of Matt that, a With investments positioned equity bolt-ons

Matt Molchan

product Healthcare Diagnostic million to our led $X.X and prior $XX.X Imaging revenue This COVID the by diagnostic respectively decrease by million percentage to in XX.X% margin margin patient, XX.X% and was of percentage last $X.X million and the and Thanks, availability Revenue XX.X% gross This XXXX Gross quarter and for over the a imaging $XX.X business, quarter. customer, QX volumes the sales. our same the same QX last a from the $XX.X gross year. of X.X% mainly XX.X% XX.X% favorable cameras compared was division Omicron percentage fourth gross period due for increased camera Services, lower and decrease and in and sold of fourth in In quarter. driven year's to revenue Jeff. XXXX relative was due compared profit sharp to the number million the to gross profit mix period variant. gross and margin increase fourth million margin. year respectively by XX.X% and in XXXX stronger due by was profit fourth in and period quarter. the prior increased lower gross year margin quarter an XXXX over Diagnostic reporting of in for employee to The increased to primarily In

number due of revenue product and a gross higher and As to was mentioned the mix. a in increase imaging relative sold earlier, cameras diagnostic margin favorable

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

David Noble

Thank and morning. you, Matt good

Let This strong to gross and our long respectively. and commodity XXXX. million of and generally and EdgeBuilder. are KBS and and suggest and in fourth to risk margin protect due a the between a unrealized residential increased commercial was first contracts in year-over-year lumber price margin required attributable or In in materials raw $XX unrealized the and XX% our contracts commercial the while $X.X million to positive signing between attributable in of were projects. on revenue and required. on Fourth purchase pricing the materials in me an volatility. division raw growth the the is a million revenue Construction the of fourth management activity projects both increased each the contract losses decrease to of purchase commercial of or division. generally on compares business The derivative the quarter profit prices suggest Construction of $X.X construction to Construction used contract impact commercial percentage of signing XXXX which gross certain increase increase at lumber better XX.X% The lead-time quarter around increases touch in gross the was quarter, open contracts margins help gains gains EdgeBuilder's Unrealized prices the price

versus in as Equity XXXX. due increase in commissions increases both in to growth headcount sales well Star the and of to the Construction consolidated to support which Turning headcount corporate as by at an businesses. increased basis. XX.X% a This were on needed in those XXXX part segment SG&A QX Holdings QX was

reporting at charge million took a costs charge our $X.X expenses software cloud-based noncash operating In implementation and addition we KBS goodwill million of write-off a $X.X unit. to to for impairment

was fourth mentioned the of positive income continuing I which quarter XXXX. write-offs the fourth the quarter adjusted This bottom-line continuing fourth fourth $X Non-GAAP million. positive the of XXXX. to of to million negative fourth quarter quarter the a of Non-GAAP of compares of net EBITDA of XXXX from operations from $X.X of adjusted $X.X XXXX, a a to to improvement a an for at to net business, net business from for increased XXXX. construction loss loss XXXX. in turnaround demand excludes This operations loss two million an our in million results continuing as the was bottom operations cameras strong in net our compared for high-margin million both unit a well due on healthcare line million the We Equity in had fourth compared EdgeBuilder quarter on side. increase the $X.X $X.X the $X.X as in in in of a for Moving quarter Star to adjusted

of we compared of fourth inflow fourth the XXXX, million registered For an an of $X.X XXXX. operating cash to cash in of the quarter $X.X quarter inflow operating million

balance December outstanding facilities was XXXX, $XX.X XX, on our the credit million. of As

Our and $X.X was $X.X cash debt million. million including overall net position of cash equivalents

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

Operator

Thank [Operator with is question Theodore Instructions] Please proceed. you. O'Neill Hills Litchfield first from Our Research.

Theodore O'Neill

Thanks very much.

costs, us question couple I First impacts? any and or direct not future. color you the call before the this, diesel they're of yards sounded that, yet, asked And give it here surcharges local applying I in in might on indirect because like have spike they can given a lumber call the is cost but did I any

David Noble

transport businesses, the modular for mean, one I do is That's the where we Well, pass-through, homes. those a construction the homes. KBS Yes. two

we it's seen transport sign customer. we affect We side, significant but to mean, have of So pass that think far major EdgeBuilder raising affecting on costs so don't although, and don't some not increase in-house in in concern on you that a it's I of I the imagine through but into might demand, those any do it price. of look the this I terms the could it, a it directly super think business. point. at terms But up overall we'll keep

Theodore O'Neill

Okay.

On that write-off, it's it what what million, not $X.X to do software that the of for? doing write-off anymore? the And supposed software implementation was was

David Noble

all we the Yes. ERP system, We conform to fit a over we three-year cloud-based attempting realized, were independent just the process implement, system systems two well of companies. But of each were to one looking it that the needs to didn't the or perfectly at system. our

done system is the that entities. for of kind entities So we've sense to makes each operating ERP most the of to what pivoted the a systems we've at upgrading those

Theodore O'Neill

last to can of if And Okay. that, your percent And wondering sales. my a that we was SG&A is as costs expect continue? fell question I

David Noble

ways Yes. unnecessary a out businesses, think leverage looking at in lot we're to I there's of our costs. cut We do operating always in mean, general.

that So does a as to we see would SG&A don't an happens. on time. we're hope hope it level, absolute mean, I going I sales that that that fall over would cut we percentage but of

Theodore O'Neill

very Thank much. you

Operator

Please from is Sullivan Tate Group. Maxim with [Operator next proceed. Instructions] question Our

Tate Sullivan

the always the you. Thank have Does -- EdgeBuilder. on Can may, you two? you or about you, for I talk if the used hedges hedge with between them for EdgeBuilder? KBS, are for dynamic you using David, starting

David Noble

it far. and typically past contracts. while, the are in we've for Yes. And back. to but We paused of they kind exactly in matched They're hedges, used had that but them had simple really brought specific program hedges options really thus are a sometimes EdgeBuilder these futures we

imagine five that a between So or months time guaranteed or if of there's that's can not for we a three four going sign online you in contract lot pricing.

the months of we've option us materials of acquire and And we a customer nine, for that's lumber over of and we hedging, in for When worked the number portion will actually well any option done the we last those costs. One let float is that do pay in EdgeBuilder. will so another the XX materials the increase is really some things the contracts. our

As percentage there The itself is hedge there's far is a modular we smaller as lot on the of instrument wall are and home issue panel. only more is doing that's contemplating than a a lumber it it at that. of and really KBSm inputs

much but it we're it it's does something but as something the doesn't margin into on we're into. EdgeBuilder looking as cover side protection as much looking provide it's So

Tate Sullivan

and margin then your building construction gross comment exceeding in about margins exceeding And profit with XX%.

it unrealized in about Could excluding almost improvement hedge XX%? bumpy it in year? mean margin profit be can at at the you bit than talk a throughout excluding I hedge, look target I that looking the a or gross little XQ, little sequential the for So a just should gain greater

David Noble

generally about has margin were the the The in bit EdgeBuilder, distribution gross EdgeBuilder remember Yeah. modular little have and than targeting is talking a take really gradually panels. EdgeBuilder mean, we it business still up do we commercial if I getting the that I teens out that mean out high gains gross unrealized can to We're think will the margins over product. but XX% as target take XX% a margin long And margins on they then hedge honest. the you you hedge in would KBS, we're we of we a fourth gross the to around complex just wall we businesses scale drift at that's be But more haul. we're up at side that those margin if the gains. XX% two target commercial upwards. higher expect way gross those was mostly over I KBS that in side quarter, increase scale have a that. But gross

Tate Sullivan

range average foot normal Matt above traffic, margin -- in can total Great. environment services talk traffic Diagnostic where to can diagnostic mean business in this and or Services well and camera XX%, rebound Thanks. I healthcare the with with an with sales sales approach please? And Medical if Imaging margin talk you about and it could about both mean ideal diagnostics, is and just you you the camera in the environment mentioned, what shifting the

Matt Molchan

normalized be above we should a that COVID that without XX% margin. further like business gross believe interruptions that. anything Yes, for combined that's Yes a from we in or correct

be So, sector, healthcare yes, the goal for above XX%. would the that

Tate Sullivan

then hospitals a there? just the it in -- review Diagnostic comments fewer lower in you. or…? Services, you your just for Thank XQ Was And general can people

Matt Molchan

fewer people, also pretty hit it fewer patients hard it affected because our hit yeah, Well, Omicron and when employees. scan to did

didn't well. going So the be employees perform to as able scans we to have out

month So and really hit an December our hard that weren't really overcome. able that to had of especially impact us in that because we fixed costs the

to here – I some quarter the the on in our in things end have back new aftereffects turned we XXXX. are but as had quarter. in first So but will the first early We in normal still things quarter say around here here though, – getting

Tate Sullivan

give and Yes. acquisition on Thank in opportunities if Are comments, with potentially market's please? deals? January Can for done can since in just the me, more then may less you you, capital Jeff, it I last everything mean, since delay I general geopolitics. Matt. environment? you does the And update seeing or the you raise a

Jeff Eberwein

Yes. Tate. period and the No, are for we No, question entering thanks think that's we for a better acquisitions. we're

one capital looking a opportunities targets. sector. we And the And are area. healthcare staffing have We January, to at seeing pursue the the I release business, bolt-on on the about in more some that's stay interesting talked has then and year. We it in would also gotten acquisitions say was in – that. we construction and press for much And say stronger at several just than we're better doing last those. think tuned environment looking But there's is

Tate Sullivan

Okay. Thank you, all.

Operator

questions comments. [Operator over Instructions] this further the I closing at conference There to are like would no back for to management turn time.

Jeff Eberwein

operator. you, Thank

Before your months. any to continue story and potential questions the concluding take us. always in that we're hesitate existing and and don't please investors available the call, weeks I'd contact discuss with have, note like you calls our We'll might so to to share to coming

Thank of Have and we a always, you. good our appreciate all As and feedback continued support. day. stockholders your

Operator

you. This conclude today's Thank does conference.

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

Star Equity (STRR) 22 Mar 222021 Q4 Earnings call transcript