Earnings call transcript Q4 2022

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Operator

Greetings, ladies and gentlemen and welcome to Star Equity Holdings Inc.’s Fourth Quarter 2022 Results Conference Call. Please be advised that the discussions on today’s call may include forward-looking statements. Such forward-looking statements involve certain risks and uncertainties 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.

The company assumes no obligation to update forward-looking statements as a result of new information, future events or otherwise. are on EBITDA, management income adjusted earnings share, that financial reference and note not per including measures measures, EBITDA, which also this U.S. will call, non-GAAP adjusted recognized Please under financial all adjusted net GAAP.

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

Equity at release on is Star not call, the Equity’s Also, Group and company’s a of the will the broadcast the at XXX-XXX-XXXX Internet Star www.starequity.com. would via live please one did replay copy Cati receive Shortly after website. you Investor XXX-XXX-XXXX. earnings over If its this the like call after website call, contact Lena Relations accessed available and be at maybe a being or also of representative, Equity the

Star It pleasure Officer is now my at introduce Rick Executive Chief Coleman, Equity. to

Rick Coleman

morning for Good all and you operator. you, Thank thank today. us joining

with Star’s Noble. call today Dave the are Officer, Jeff Executive Eberwein; our Financial me On and Chief Chairman,

our pleasure to in be report the our and results. we year, to quarter of gratifying across The to financial a improved consolidated throughout comes from through divisions. show operating you financial results better performance, with XXXX with results Healthcare especially our significantly is both fourth today strength significantly made Construction speaking and It’s improvements now beginning

adjusted fourth year division bottom more delivered quarter. in growth, quarter double EBITDA Construction that Our strong and the top than resulting of prior line

with improved portfolio. Our with beginning year-over-year. fourth we adjusted significantly quarter, Healthcare EBITDA operating in XXXX XX% also Overall, the division up are well performed a

our to lines enter new of businesses investigate future In addition, we or to continue acquisition existing opportunities business. either and expand identify

division. $XX.X or period. the results will In year was our lower quarter, focus Healthcare I Healthcare X.X% million than Now, prior division revenue the the our of fourth on

initiatives two of unprofitable product decline. one contributed the of approximately total termination to Our quarter

quarter. the revenue to external lower factors for addition, total contributed two In scanning

approximately was of discussed an nuclear medical which technologists, first radiopharmaceutical X-week we shortage and nuclear offline continuing doses by The the of national an shortage worldwide previously have was reactor. second the caused

undertook the of healthcare quarter disciplined a business. year, In entire this second our we restructuring

sales In our were we efforts the in realigned scanning camera now and service our our seeing we financials. to most leverage These of strengths responsibility increased tightening were which employees. XX%. management by strong margin to and profit, significant margins, changes, with addition talented cost fourth quarter higher significant our Those of along our the controls, to changes gross contributors are increased robust results

increased last percentage over by percentage X same margin gross the our period points Additionally, year.

Now I million increased the gross margin will $XX year. to at driven both division increased last costs by percentage risk same the touch gross $XX.X commercial materials’ levels residential price was in revenue improved of primarily versus versus KBS. around division. EBGL as results Construction XX% increase QX of output XX% XXXX Construction better in input both Construction revenue period to as XX% The The well on million increase volatility in projects in higher management margin and pricing and at our to significantly to was offset business. increased our building EBGL and due QX

areas are with buildings construction specialized across educational and sustainable position a experiencing small housing, space we affordable housing. dormitories workforce In large, a we market. relatively at particular, growth of the the and secular Despite uncertainty are player in the housing, macroeconomic unique environmentally in

business some have exciting we first new We of initiatives are continue pipeline our fuel half growth. and the working for a to expect on will robust that future XXXX

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

Dave Noble

and morning. Rick, you, good Thank

X.X% by Equity’s to Star of XXXX. QX turn versus consolidated XXXX, decreased In SG&A now QX results. Let’s of

of particularly in percentage This the embedded to a QX our demonstrates as operating versus construction of businesses, XXXX. in meaningfully leverage decreased XX.X% in QX on good More XXXX importantly, of side. XX.X% revenue SG&A

million Moving of net net million. million XXXX. adjusted on a to $X.X positive the from of a net to favorably QX QX very positive income bottom of line $X.X of compared $X.X operations results we in Equity, QX for income loss QX compares Non-GAAP in was in of net income XXXX. Star adjusted This continuing $X.X generated to million

adjusted at bear improvement in QX its Non-GAAP in from from Segment primarily to of sustained increased bottom-line fruit $X.X year, our QX upward EBITDA division QX Construction this $X.X was XXXX. This Construction mid-XXXX. adjusted trend, QX $X.X in XXXX. million million generating in due the consolidated in our up turnaround EBITDA $X.X to to EBITDA continuation division, in of adjusted our of focused which at million non-GAAP began million substantial

a Consolidated division large Construction our $X.X million for $X.X executed working on end at QX of versus operating buildup cash significant resulted the QX flow to in due an capital as outflow was projects XXXX. XXXX. in inflow of an QX XXXX’s outflow million at we operating of of

XXXX so collected normalization have far working We of cash as on have experienced those we in capital projects.

XXXX XXXX upon made of XX.X% on our XXXX. in I construction $X.X X.X% Gross negative XX% prior percentage from want $XX.X full EBITDA for margin revenue adjusted revenues. year. progress since for XXXX. we $X.X ago. to segment in million, non-GAAP Star the Construction years Construction the for up year million sites just businesses Equity’s X-plus have total the jumped was million to briefly acquiring from of touch accounted consolidated In to rose the XX.X% Construction from XXXX, these

the teams made repositioning we businesses. While construction are have these the and of this we progress management a been in strengthening effort, has multiyear proud

our at XX, facilities outstanding with interest-bearing The was cash debt sheet on consolidated of million, $X.X December overall balance were million. XXXX, balance strong. and our an credit our of $X.X balance us liquidity leaving As while million, $XX.X position net stood

to questions. call the like turn I’d operator to for over Now the

Operator

go ahead. Research. [Operator Instructions] Hills Please from Our Theodore first Litchfield O’Neill question comes from

open. is line Your

Theodore O’Neill

results quarter so due that quarter more the quarter, if wondering please? the a about also in you was – were Or some And give information some good that, can the question good? I to Congratulations on makes The about Sure. the timing. it counterbalancing business, this is us unfavorable in quarter. construction there last the

Dave Noble

always there – is go Rick, ahead, sorry. timing Yes,

Rick Coleman

you No, ahead, Dave. go

I ahead. thought. think Go we had the same

Dave Noble

say quarter-to-quarter, projects. would what Yes. would the focus be I is full we’re on some was when – I can I is from there guess year, in There involved timing which differences tremendous. large especially

kind on to did that. focus have have you of know, you I last large results. year and So Rick, over full I the we if quarter. crossed don’t would very But year that third second the one project add anything more on

Rick Coleman

say. I to lumpy when was you time. what It’s quarter a going a a bit at look that’s it No, at

Theodore O’Neill

Okay.

the in And me healthcare imaging, is that as going down shutdown get know something so wrong, side could the it these stuff of of to surprise? the the making this in for reactor you for use cameras, radioactive I’m a that if business, advance – shut come correct in the but has the it’s or

Rick Coleman

and that for a one a was repairs. of reactor mechanical about were surprise. This the reactor monitoring required performance to came in It No. shutdown X-week the to a some of as They shutdown difficulties doing determined Belgium. routine

the number business. but definitely mitigate scanning on able that during to doses were of effects the an doses to actually for by the had impact unable required. were procedures, somewhat lower So We period, get that we using we some

Theodore O’Neill

very you much. thank Okay,

Operator

[Operator Sullivan Maxim ahead. Please Instructions] question from from Tate comes Group. Our go next

is line Your open.

Tate Sullivan

EdgeBuilder a Couple Hi, in morning. New half had there. first talk Can England? more the you thank did mix? that XQ mentioned about questions you you. of that than stronger you the remarks construction Good say in And the in hear pipeline in ‘XX quarter I KBS

Dave Noble

Yes. sure. Yes,

So, thing so up that had on a at more very, far much mean important is year, made the in the the to of But this first single-family year, year very last ago is work. pipeline of prices. reaction a pipeline project. a place it’s the the year large pipeline, we increase as the materials prices This put question, terms about I higher in the all in we

come has a lumber down then. lot obviously, since So,

better much were today producing we We haven’t even margins materials, seen year we building than a that as are sustainably at ago. other but much with

right are we said we year. confident our very larger to housing although a hit of one number workforce smaller very pipeline So, those our or more strong. this are we with the expect projects now, more that arena touch it’s is in Having that, potentially in projects that – pipeline of

So, very that sustainable. are is we that, confident turnaround

point much any reputation Our been is greater today it in recent than has at history.

are than seeing lot more had We previously. a opportunity we definitely

We haven’t just potential obviously, that. felt there Now, headwinds economic ahead. is

in small player in pipeline. very are and are confident our first a the we so far, We half market,

Rick Coleman

of timing the a not pipeline, other that I just the our good manufacturing add about One would the capacity. moving as we the projects is see pipeline also but through between it’s match as well revenue the opportunity that thing

Dave Noble

am towards but year. we just nature fourth question large in had the sorry, of remember, a I end the EdgeBuilder to year. the had similar of prior situation the quarter, second number the the EdgeBuilder in quarter And of business. a It’s the Yes. about results business the may The if fourth – you the of projects execute

just had So, not bad We prior quarter had lumpy. EdgeBuilder in like because is had quarter. very better a the year when year. we it’s KBS business late we That say it at a seen surge than a KBS, had

materials of that a when sort is the they that of driven. the portion a large end other end know, the business As we sells rather we or execute just building those the year. buildup And of you retail to – they wallpapers. into – projects large to needed professional business towards builds year builders. it’s that And had business that come It And half the are come. then piece of of of retail that

Tate Sullivan

and before, XX% ‘XX XX% still profit the greater of Is I as year. margin what to something for building Yes, than great. well? XX%? and still then, the gross of construction that you last margin have talked mean guidance sort Okay, target or annual about consider I see And for year this

Dave Noble

Absolutely.

Tate Sullivan

is you closer in operations inventory so like… of quarter I implying on that will in had you cash comment you the Okay, adjusted working great. capital some look And first just what mentioned to then Can accounts the working potentially EBITDA mean XXXX, end then or probably build. buildup to capital – from collections flow bring which for receivable had the you what

Dave Noble

Yes.

buildup, huge I We a the EdgeBuilder Just end – projects. the it’s from normalized year. on bit mentioned, as the of had a

So, AR collections but no of problem sort have whatsoever. balloon, we

receivables did first business last have come year In – quarter, the that in projects. can’t on we focused to But cash talk a lot fact, KBS would we we get collected the we the in as first late some that. quarter did those have of but we have expected about older from year on obviously

have bit. So, a things normalized

Tate Sullivan

Yes.

you had is there. items Okay. litigation in was it And in I then ‘XX litigation costs earlier any ‘XX, in some leftover there abnormal any XQ other – in there SG&A? passed? know Was or that were

Dave Noble

legal In little. side pretty healthcare the at QX the We very very, of were litigation out that of situation business. much

very a had remaining small year. we for impact and in So, nothing there QX, this is

Jeff Eberwein

this is Tate, Jeff.

press of in SG&A were If costs, table, and you reconciliation the And in the a and small costs settled were the fourth It item. in look XXXX. in just $XX,XXX. severance restructuring that release, retention expenses at like EBITDA we cost, there quarter items and litigation one-time in was our litigation fourth that not quarter, a amount expecting the any are really that was

Tate Sullivan

thank you, Jeff you, and Thank Okay. Dave.

Operator

questions. have for like would back further management to over turn closing to We the call remarks. no I

Rick Coleman

Thank you, operator.

your are we call I concluding, that Before note always and take discuss questions. available any to to additional want

hesitate don’t contact us. So, to

We existing potential and our weeks. investors story in the continue to coming will with share

appreciate Thank feedback As support. our shareholders and continued your we all always, you. and

Operator

call. your you conference for today’s Thank participation. concludes This

You may now disconnect.

Star Equity (STRR) 15 Mar 232022 Q4 Earnings call transcript