STRR - Earnings call 3 2023 | Star Equity Holdings, Inc.

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Operator

Greetings, ladies and gentlemen, and welcome to the Star Equity Holding Inc.'s Third Quarter 2023 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 could 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 any forward-looking statements as a result of new information, future events or otherwise.

which on including management net EBITDA, adjusted per that non-GAAP be income note measures earnings measures, financial financial adjusted share, also this under will call, referencing and not Please recognized all U.S. are EBITDA, adjusted GAAP.

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

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

It's now Star introduce of to Coleman, Officer Executive Rick Chief my pleasure Equity.

Richard Coleman

Good everyone. our Executive for you, acquisition on Chairman, Thank our pleasure you Financial of joining and conference quarter Jeff are quarter you XXXX third Lumber. Officer, and us third results Eberwein; our with Lake It's to our today morning, With today to a discuss Noble. results our update Chief operator. call. me Dave to Thanks be Big for recent

financing. important general, and macroeconomic project time been adversely in to versus was the XX.X% have note quarter the revenue XXXX, as at seeing and by for in of revenue extensions. Our well margin the year. uncertainty in to $XX.X securing project we're as project but also large The third not delay rates difficulty in X.X% starts, period decreased last lower and cancellations, rather third driver quarter million our starts to interest large compared the shortfall which line in $XX.X in that primary causing million sector-wide It's was same delays project gross XX.X% impacted

in our we quality our the for last factors first division's XX.X% XX.X% gross profit and target ability and versus higher resulting scale gross meet gross or in gross to increased Construction margin XX.X% higher maintain to year, workforce of mid-XXs X demand. revenue, division. our Year-to-date, to combined to contributed maintain contributed levels our to margin margin months lower management's with to ability the These Sustained execution pricing have improvement. division's the has despite

reputation markets construction leverage high-quality a our We headwinds at pipeline as a ability confident and opportunity to us to results delivering construction which on in we sales significantly last position, continue division's as and in large, the across reliable continue partner gives will this the the good sector regains a than the at and space based we unique signed serve stronger sustainable stronger economic Despite time strength. remain year. backlog

sectors continue niche demand feel housing. include and also We reputation pipeline believe remain we and educational experience and backlog, sustainable sustainable on opportunity to environmentally workforce these gives our we strong. markets us advantage. all construction will a buildings These affordable where dormitories target in sales and of and our Based housing, competitive

in starts of in accounts now We recent also X% which, construction the ongoing X% all the have for from to the of States, XXXX. most report, Building continued having growth new according conviction Institute's North Modular in factory-built construction America, tripled United in

the portion EdgeBuilder a yard building the We market. Twin regional building the consistent Supply, be of this integrated and bolt-on supply our of construction acquisition Lake lumber complementary a believe Finally, Lake center XX. Big strong business. acquisition as in transaction establishes lumber yard, our stated completed into supply on and Building Minneapolis-based Big Glenbrook with Lumber, will player Glenbrook Cities October goals, we

we where been by mix of expect heavily Additionally, in diversify residential immediately addition adding Big Glenbrook's revenue to business weighted sector. the commercial historically the had more more Lake we single-family

product opportunities acquisition in We establishment strategy, presents Lake synergies for in which expansion, and opportunities new acquisitions, potential construction of Big our the industries overall of division bolt-on also exploring includes represents series, This division. organic new the and an acquisitions growth Investments execution lines. thoughtfully margin our at believe important step new

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

David Noble

good Thank you, Rick, morning. and

business note turn of Star results operations. historical X, all like would discontinued reported due investments. now financial Digirad of only to Let's our Health our construction consolidated which to the continuing to that relate results. part in as and I is comparisons Healthcare now on sale to operations, includes Equity's May

Digirad In XXXX. in QX QX activity due related was the mainly transaction XXXX, SG&A as versus our of to well sale increased division. increased This Investments by as to costs XX.X%

QX Moving compared line operations $X results Equity. a bottom on generated continuing $X.X for in QX to net Star of to loss million XXXX. in from a We of from continuing of loss million operations net

was operations in from QX million adjusted at million $X.X in positive breakeven Non-GAAP QX net XXXX. a in QX million essentially of adjusted Non-GAAP versus was minus $X.X an from loss net EBITDA to at operations continuing adjusted XXXX. loss continuing QX in $X.X of compared of $XX,XXX

breakeven adjusted For in year-to-date the year-to-date operations improved from from to minus period, $X non-GAAP minus continuing XXXX. essentially EBITDA $XX,XXX, million

QX basis, generated QX, stand-alone from of $X.X million non-GAAP before down our XXXX. in company in million $X.X division a adjusted of Construction costs, On EBITDA

year-to-date in $X.X adjusted However, EBITDA million, up non-GAAP from year-to-date from million XXXX. which was $X.X is Construction

primarily $X.X decline was operations needs. an QX flow capital by consolidated flow $X.X cash XXXX. continuing in working of versus million for outflow The of inflow was million in increase of an a cash QX from driven This

the inflow an year outflow $X.X cash an from $X.X prior of million the was consolidated period, million continuing year-to-date in of compared operations period. flow to For

balance remains of As XXXX, sheet September our consolidated XX, strong. liquidity and

QX. our interest-bearing balance just a of had consolidated in and end million on business million Healthcare $XX.X at As the of stood of our X, unrestricted May result sale $X.X the debt, we cash at

additional to like turn it I'd remarks. some to ahead, Now Rick Rick. for back Go

Richard Coleman

value team important Lake disciplined an our focused represents and Equity are fully Big Digirad Dave. step acquisition on we'll Health and Construction Lumber for through for continue our our Star additional on as potential for creating shareholder business accretive growth. executing development The looking well plan targeted in platforms you, initiatives, look division management as divestiture. growth May's transformative acquisition to opportunities following additional Board Thank The new

forward details our from the We sharing look to evolve. more shareholders plans as

turn the Now to questions. for I'll call the operator over

Operator

question comes Theodore And with Litchfield Research. [Operator from Hills Instructions] the first O'Neill

Theodore O'Neill

Lake. Big a in Is there opportunity like founder? a in Or First opportunity one-off question general? on lumber business more is retiring this the

Richard Coleman

the that's say latter. I'd

of operation with the entire integrated Glenbrook. the owner of and as team In fact, the business part are staying the

about that So great They like that we a them. way synergies have represent such a opportunity growth X incented us. business move the deal forward. We really having the excited feel everyone is structured in we and we're between the businesses. for there are to

Theodore O'Neill

going giving guidance to would this . revenue forward? out any Okay. how add on you Are

Richard Coleman

No, do we guidance. any are not you providing mention... to want Dave,

Jeffrey Eberwein

disclosed X-K price doing Yes, which this the is Jeff. million. was, was do Glenbrook purchase that down. We see $X.X with there and The by in revenue this business it synergies we're hopeful be and $XX we around and will around grow with our business of can combining business. a goes what some the We EBITDA up business that XX% margin, million the

Theodore O'Neill

is Jeff. Does and in a than business that gives year And said That's confidence better the backlog is it that now the you pipeline? your ago. prepared the what in Okay. helpful, up show market Rick, was that you your better? And remarks

Richard Coleman

those. of and both It's It's our pipeline. our backlog

time there's may at significantly like strong I are this strong than opportunities significantly mentioned business over for be and last last year. carefully of but our deals words our that be felt those not business lot was signed enough that ready been think year it higher just because to is of I pipeline was the so. has or new pent-up backlog We chose And of a built. we demand that deferred

Operator

with And question Maxim Group. Tate the comes next Sullivan from the

Unknown Analyst

Justin Smith is for Sullivan on This today. Tate

So see that, do modular any like on is within construction positive England my than believe outlook that, last guys please? color question the New think do It but you market you're year? more you more sounds able to is, Star's for

Richard Coleman

pent-up it going XXXX we Yes. for for you think that, stronger question. exceed the got to making has outlook environment do results. like. the macroeconomic last But some look the about we're is The projects, projects, At of XXXX, through that than interest barrier was will building much for in residential the the demand assumptions point, what break Thank in believe, to is We particular, year. but delays. rate general,

business are. feel through just additional We activity. feel that and our the at structured way time. where good absorb a an So prepared in good moving deal And we're to construction amount a is of X we backlog we about

Jeffrey Eberwein

less in last the we would demand have not just commercial clearly, year, had residential, rates is get in but projects, the This market, Jeff. to is is, but nationwide and this Jeff. the I it's massive -- New a on interest over rates, seen commercial. that and England for impact have add to that harder What we've we And also credit. And increase seen higher it's

is with way And we less biggest maintained running dependent. focused possibly getting ship the we discipline, that is the can. tightest And one dealt we are new macroeconomic that pricing really the on have operations, our into verticals efficiency

expand. for announced There's of So some college we for we England. a Earlier we've there for year those. few in New a that lot a built building we of needed out dormitories year, school A buildings to workforce ago, announced this housing. projects were

a market So starting rate to is environment. to and we adjust the in market, see higher shortage the the

adoption And we're modular. greater seeing also of

comments was X% is modular's share before One in that of the market Institute Rick's things Modular versus says Housing the prepared X% that COVID.

just lot for And projects built. going a of modular, are So seeing factory that. we're reasons more i.e., that there's

of also, it's The cost, completion, better to quality. is cases, number speed a in lot but lower greener and X

markets we increases activity. well in the participate do to back in regular the when come positioned markets, kind think of to So we're

some And we've happy talked the in we're it's we've interesting overall given macroeconomic dependent. -- So about the less with finding as that market. slowdown through are how niches executed

Operator

from North And question Devin Capital. First the with Shu comes next

Unknown Analyst

be pipeline terms type how or you're seeing of willing to characterize or percentage your maybe growth a and like about would could characterize you that? in maybe we ballpark of Could think you backlog

Richard Coleman

pipeline that of actually to apples as approval, at wanted do both businesses. the building, to I systems mentioned. just XXX% for evolution of that on credit weren't were But statistics, demand -- think apples measuring We at we seeing And were we growth. Yes. the our most and the our the waiting call. for where But we're look waiting due Jeff significant just we this financing, pent-up at as again, that's is we certain back construction

that built. be we to backlog backlog near-term of we've our ready got our several feel confident And are, opportunities is So course. months of where

Unknown Analyst

M&A of going? then demand And sellers what Or environment. kind it. -- guess are the guys more in I willing? Got Are pent-up how you given versus are macroeconomic doing How terms -- there? unique conversations of

Richard Coleman

I Well, of number at to get challenging would hundreds say opportunities. it's a We've to of opportunities, and different hundreds looked bit a through this. all. weed them access and We

priorities businesses through for construction first expand Our value. of shareholder bolt-on increasing opportunities. are, we're all, both opportunities to also our looking of But

And existing businesses. where at other where the see the same specific time, experience looking fit either we we have team or acquisitions our a on good for corporate growth with

to well business. through And division core as structure, our of were variety operating of as continuing we're a company because we So at weed look the alternatives able our those. in wide in to holding investments

Unknown Analyst

change? characterize Got last more it's buyer's it. you maybe I market or quarter no since guess of not a kind or whether of could

Richard Coleman

of are I've But simply might no a number retiring a too opportunities founders what There based . business up also of where without seen, are there one on situational. the the what there's as From just pick opportunities where, for forward. are regard forward-looking environment and earlier, ball to move it's expectations to results and pricing in high the XXXX Yes. be. the are number mentioned very someone great

to So very the and to to value trying we're the be that selective, same with being our time, balance at grow investors, desire business.

Operator

to would Coleman [Operator closing for the floor Instructions] comments. the concludes All Rick any This question-and-answer like turn session. I right.

Richard Coleman

operator. Thank you,

your as continue with as take story please Before and don't concluding always, to your support. And contact months. as interest we're any have, to so to us. want that Thank hesitate note existing discuss well you. the the and in share continued might potential always we and feedback additional investors to call to coming questions your appreciate our We'll you call, I available weeks and

Operator

has call Thank will Holdings for Star joining been Quarter Today's section you the on Equity of website, Third the Investors our Call. www.starequity.com. be and recorded Conference available

Star Equity (STRR) 8 Nov 232023 Q3 Earnings call transcript