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Star Equity Holdings, Inc. Announces 2023 Fourth Quarter and Full Year Financial Results

Star Equity Holdings, Inc.
Star Equity Holdings, Inc.

Ended 2023 with cash and cash equivalents of $18.9 million

Generated positive cash flow from operations of $2.7 million in 2023

OLD GREENWICH, Conn., March 22, 2024 (GLOBE NEWSWIRE) -- Star Equity Holdings, Inc. (Nasdaq: STRR; STRRP) (“Star Equity” or the “Company”), a diversified holding company, reported today its financial results for the fourth quarter (Q4) and fiscal year (FY) ended December 31, 2023. All 2023 and 2022 amounts in this release are unaudited.

Following the sale of our Digirad Health business on May 4, 2023, all financial results for the 2023 and 2022 reporting periods, unless stated otherwise, relate to continuing operations, which currently include two divisions: Construction and Investments.

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Q4 2023 Financial Highlights vs. Q4 2022 (unaudited)

  • Revenues decreased by 19.8% to $14.1 million from $17.6 million.

  • Gross profit decreased by 47.0% to $2.9 million from $5.4 million.

  • Net income from continuing operations was $1.8 million (or $0.11 income per basic and diluted share) compared to net income from continuing operations of $0.9 million (or $0.06 income per basic and diluted share).

  • Non-GAAP adjusted net loss from continuing operations was $0.4 million (or $0.02 loss per basic and diluted share), as compared to adjusted net income of $0.5 million (or $0.03 income per basic and diluted share).

  • Non-GAAP adjusted EBITDA from continuing operations was a loss of $0.1 million versus a gain of $0.9 million.

FY 2023 Financial Highlights vs. FY 2022 (unaudited)

  • Revenues decreased by 19.9% to $45.8 million from $57.1 million.

  • Gross profit decreased by 3.6% to $11.9 million from $12.4 million.

  • Net loss from continuing operations was $1.9 million (or $0.12 loss per basic and diluted share) compared to a net loss from continuing operations of $5.8 million (or $0.40 loss per basic and $0.39 loss per diluted share).

  • Non-GAAP adjusted net loss from continuing operations was $1.5 million (or $0.10 loss per basic and diluted share) compared to net loss of $2.5 million (or $0.17 loss per basic and diluted share).

  • Non-GAAP adjusted EBITDA from continuing operations was a loss of $0.2 million compared to a loss of $0.1 million.

  • As of December 31, 2023, cash and cash equivalents increased to $18.9 million versus $4.5 million at December 31, 2022.

  • Generated a positive cash inflow from continuing operations of $2.7 million versus an outflow of $3.9 million.

  • Debt decreased to $2.0 million at December 31, 2023 from $3.4 million at December 31, 2022.

Rick Coleman, Chief Executive Officer, noted, “In the fourth quarter of 2023, Construction revenue and gross profit declined versus the fourth quarter of 2022. However, for the full year 2023, we significantly improved Construction gross margins from 21.6% to 26.0% due to strong pricing discipline and an improved business mix. Credit tightening in the second half of 2023 caused delays in some commercial projects pushing revenue into 2024. However, single-family residential activity and our overall backlog and sales pipeline remained robust due to our focus on select niche markets where we’ve built significant expertise and a strong reputation.”

Mr. Coleman continued, “In addition, we closed the accretive Big Lake Lumber bolt-on acquisition in the fourth quarter and have integrated it into our Glenbrook operation. During the coming quarters we will continue to evaluate Construction division acquisition opportunities to augment our organic growth strategy, and will also explore potential acquisitions in new industries, and opportunities in our Investments division.”

Revenues

The Company’s Q4 2023 revenues decreased 19.8% to $14.1 million from $17.6 million in the fourth quarter of the prior year due primarily to Construction division project delays.

Revenues in $ thousands (Unaudited)

 

Q4 2023

 

Q4 2022

 

% change

 

FY 2023

 

FY 2022

 

% change

Construction

 

$

14,111

 

 

$

17,605

 

 

(19.8

)%

 

$

45,785

 

 

$

57,149

 

 

(19.9

)%

Investments

 

 

159

 

 

 

158

 

 

0.6

%

 

 

564

 

 

 

633

 

 

(10.9

)%

Intersegment elimination

 

 

(159

)

 

 

(158

)

 

0.6

%

 

 

(564

)

 

 

(633

)

 

%

Total Revenues

 

$

14,111

 

 

$

17,605

 

 

(19.8

)%

 

$

45,785

 

 

$

57,149

 

 

(19.9

)%


Construction Q4 2023 and FY 2023 revenues decreased 19.8% and 19.9%, respectively, versus the prior year periods. The decrease in revenues reflects lower revenues at KBS and EBGL related to slower business activity due to economic headwinds such as higher interest rates. We believe these economic effects are temporary and our backlog and sales pipeline remain strong.

Gross Profit

The Company’s consolidated Q4 2023 gross profit decreased 47.0% to $2.9 million from $5.4 million in the fourth quarter of the prior year due to lower revenues in the Construction division.

Gross profit (loss) in thousands (Unaudited)

 

Q4 2023

 

Q4 2022

 

% change

 

FY 2023

 

FY 2022

 

% change

Construction

 

$

2,913

 

 

$

5,457

 

 

(46.6

)%

 

$

12,154

 

 

$

12,660

 

 

(4.0

)%

Construction gross margin

 

 

20.6

%

 

 

31.0

%

 

(33.5

)%

 

 

26.5

%

 

 

22.2

%

 

19.4

%

Investments

 

 

100

 

 

 

90

 

 

11.1

%

 

 

336

 

 

 

343

 

 

(2.0

)%

Intersegment elimination

 

 

(159

)

 

 

(159

)

 

%

 

 

(564

)

 

 

(633

)

 

(10.9

)%

Total gross profit

 

$

2,854

 

 

$

5,388

 

 

(47.0

)%

 

$

11,926

 

 

$

12,370

 

 

(3.6

)%

Total gross margin

 

 

20.2

%

 

 

30.6

%

 

(34.0

)%

 

 

26.0

%

 

 

21.6

%

 

20.4

%


Construction Q4 2023 gross profit decreased 46.6% versus Q4 2022 due to lower revenue. FY 2023 Construction gross profit decreased 4.0% from the prior year period also due to lower revenue. However, we have significantly increased prices to offset higher input costs and have seen an improvement in our gross margin percentage in 2023. Our backlog and sales pipeline remain strong despite economic headwinds.

Operating Expenses

Q4 2023 sales, general and administrative (SG&A) expenses decreased $1.0 million versus Q4 2022. SG&A expenses as a percentage of revenue decreased in Q4 2023 to 22.8% versus 23.9% in Q4 2022. FY 2023 SG&A expenses increased $0.3 million or 2.4%, versus the prior year, primarily due to increased legal and outside services expenses related to the sale of Digirad Health, the acquisition of Big Lake Lumber, and our Investments division-related activities. SG&A expenses as a percentage of revenue increased in FY 2023 to 31.8% versus 24.8% in FY 2022 as operating expenses were higher on a lower revenue base.

Net Income/Loss

Q4 2023 net income from continuing operations was $1.8 million, or $0.11 income per basic and diluted share, compared to net income from continuing operations of $0.9 million, or $0.06 income per basic and diluted share, in the same period of the prior year. Q4 2023 non-GAAP adjusted net loss from continuing operations was $0.4 million, or $0.02 loss per basic and diluted share, compared to adjusted non-GAAP net income from continuing operations of $0.5 million, or $0.03 income per basic and diluted share, in the same period of the prior year.

FY 2023 net loss from continuing operations was $1.9 million, or $0.12 loss per basic and diluted share, compared to a net loss from continuing operations of $5.8 million, or $0.40 loss per basic and diluted share in FY 2022. FY 2023 non-GAAP adjusted net loss from continuing operations was $1.5 million, or $0.10 loss per basic and diluted share, compared to an adjusted non-GAAP net loss from continuing operations of $2.5 million, or $0.17 loss per basic and diluted share in the prior year.

Non-GAAP adjusted EBITDA

Q4 2023 non-GAAP adjusted EBITDA decreased to a loss of $0.1 million from a gain of $0.9 million in the same quarter of the prior year due to decreased gross profit at our Construction division. FY 2023 non-GAAP adjusted EBITDA decreased to a loss of $0.2 million, compared to a loss of $0.1 million in FY 2022, primarily due to decreased gross profit at our Construction division resulting from slower business activity, which we believe is temporary.

Operating Cash Flow

Q4 2023 cash flow from consolidated operations was an inflow of $0.0 million, compared to an outflow of $3.6 million for the same period in the prior year. FY 2023 cash flow from operations was an inflow of $2.7 million, compared to an outflow of $3.9 million for FY 2022. The improvement in cash flow from operating activities is attributable to strong collections at our Construction division and lower cash expenditure for working capital.

Preferred Stock

In each quarter of 2023, the Company’s Board of Directors declared and paid a cash dividend of $0.25 per share to holders of the Company’s 10% Series A Cumulative Perpetual Preferred Stock, representing $1.00 per share on an annual basis.

Conference Call Information

A conference call is scheduled for 10:00 a.m. ET (7:00 a.m. PT) on March 22, 2024 to discuss the results and management’s outlook. The call may be accessed by dialing (833)-630-1956 (USA & Canada) or (412) 317-1837 (international), five minutes prior to the scheduled start time and referencing Star. A simultaneous webcast of the call may be accessed online from the Events & Presentations link on the Investor Relations page at starequity.com/events-and-presentations/presentations; an archived replay of the webcast will be available within 15 minutes of the end of the conference call.

If you have any questions, either prior to or after our scheduled Earnings Conference call, please e-mail admin@starequity.com or  lcati@equityny.com.

Use of Non-GAAP Financial Measures by Star Equity Holdings, Inc.

This release presents the non-GAAP financial measures “adjusted net income (loss),” “adjusted net income (loss) per basic and diluted share,” and “adjusted EBITDA from continuing operations.” The most directly comparable measures for these non-GAAP financial measures are “net income (loss),” “net income (loss) per basic and diluted share,” and “cash flows from operating activities.” The Company has included below unaudited adjusted financial information, which presents the Company’s results of operations after excluding acquired intangible asset amortization, unrealized gain (loss) on equity securities and lumber derivatives, litigation costs, transaction costs, financing costs, and income tax adjustments. Further excluded in the measure of adjusted EBITDA are stock-based compensation, interest, depreciation, and amortization.

A discussion of the reasons why management believes that the presentation of non-GAAP financial measures provides useful information to investors regarding the Company’s financial condition and results of operations is included as Exhibit 99.2 to the Company’s report on Form 8-K filed with the Securities and Exchange Commission on March 22, 2024.

About Star Equity Holdings, Inc.

Star Equity Holdings, Inc. is a diversified holding company with two divisions: Construction and Investments. Prior to the May 4, 2023 sale of Digirad Health, Star Equity Holdings had three divisions: Healthcare, Construction, and Investments.

Construction

Our Construction division manufactures modular housing units for commercial and residential real estate projects and operates in two businesses: (i) modular building manufacturing and (ii) structural wall panel and wood foundation manufacturing, including building supply distribution operations for professional builders.

Investments

Our Investments division manages and finances the Company’s real estate assets as well as its investment positions in private and public companies.

Healthcare

Our Healthcare division, which operated as Digirad Health until the sale of Digirad Health on May 4, 2023, provided products and services in the area of nuclear medical imaging with a focus on cardiac health.

Forward-Looking Statements

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this release that are not statements of historical fact are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking Statements include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to acquisitions and related integration, development of commercially viable products, novel technologies, and modern applicable services, (ii) projections of income (including income/loss), EBITDA, earnings (including earnings/loss) per share, capital expenditures, cost reductions, capital structure or other financial items, (iii) the future financial performance of the Company or acquisition targets and (iv) the assumptions underlying or relating to any statement described above. Moreover, forward-looking statements necessarily involve assumptions on the Company’s part. These forward-looking statements generally are identified by the words “believe”, “expect”, “anticipate”, “estimate”, “project”, “intend”, “plan”, “should”, “may”, “will”, “would”, “will be”, “will continue” or similar expressions. Such forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon the Company's current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which the Company has no control over. Actual results and the timing of certain events and circumstances may differ materially from those described above as a result of these risks and uncertainties. Factors that may influence or contribute to the inaccuracy of forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation, the substantial amount of debt of the Company and the Company’s ability to repay or refinance it or incur additional debt in the future; the Company’s need for a significant amount of cash to service and repay the debt and to pay dividends on the Company’s preferred stock; the restrictions contained in the debt agreements that limit the discretion of management in operating the business; legal, regulatory, political and economic risks in markets and public health crises that reduce economic activity and cause restrictions on operations (including the recent coronavirus COVID-19 outbreak); the length of time associated with servicing customers; losses of significant contracts or failure to get potential contracts being discussed; disruptions in the relationship with third party vendors; accounts receivable turnover; insufficient cash flows and resulting lack of liquidity; the Company's inability to expand the Company's business; unfavorable changes in the extensive governmental legislation and regulations governing healthcare providers and the provision of healthcare services and the competitive impact of such changes (including unfavorable changes to reimbursement policies); high costs of regulatory compliance; the liability and compliance costs regarding environmental regulations; the underlying condition of the technology support industry; the lack of product diversification; development and introduction of new technologies and intense competition in the healthcare industry; existing or increased competition; risks to the price and volatility of the Company’s common stock and preferred stock; stock volatility and in liquidity; risks to preferred stockholders of not receiving dividends and risks to the Company’s ability to pursue growth opportunities if the Company continues to pay dividends according to the terms of the Company’s preferred stock; the Company’s ability to execute on its business strategy (including any cost reduction plans); the Company’s failure to realize expected benefits of restructuring and cost-cutting actions; the Company’s ability to preserve and monetize its net operating losses; risks associated with the Company’s possible pursuit of acquisitions; the Company’s ability to consummate successful acquisitions and execute related integration, as well as factors related to the Company’s business including economic and financial market conditions generally and economic conditions in the Company’s markets; failure to keep pace with evolving technologies and difficulties integrating technologies; system failures; losses of key management personnel and the inability to attract and retain highly qualified management and personnel in the future; and the continued demand for and market acceptance of the Company’s services. For a detailed discussion of cautionary statements and risks that may affect the Company’s future results of operations and financial results, please refer to the Company’s filings with the Securities and Exchange Commission, including, but not limited to, the risk factors in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. This release reflects management’s views as of the date presented.

All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations, and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

For more information contact:

 

 

Star Equity Holdings, Inc.

The Equity Group

 

Rick Coleman

Lena Cati

 

Chief Executive Officer

Senior Vice President

 

203-489-9508

212-836-9611

 

admin@starequity.com

lcati@equityny.com

 


(Financial tables follow)


Star Equity Holdings, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except for per share amounts)

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenues:

 

 

 

 

 

 

 

 

Construction

 

$

14,111

 

 

$

17,605

 

 

$

45,785

 

 

$

57,149

 

Investments

 

 

 

 

 

 

 

 

 

 

 

 

Total revenues

 

 

14,111

 

 

 

17,605

 

 

 

45,785

 

 

 

57,149

 

 

 

 

 

 

 

 

 

 

Cost of revenues:

 

 

 

 

 

 

 

 

Construction

 

 

11,198

 

 

 

12,148

 

 

 

33,631

 

 

 

44,489

 

Investments

 

 

59

 

 

 

69

 

 

 

228

 

 

 

290

 

Total cost of revenues

 

 

11,257

 

 

 

12,217

 

 

 

33,859

 

 

 

44,779

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

2,854

 

 

 

5,388

 

 

 

11,926

 

 

 

12,370

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative

 

 

3,211

 

 

 

4,214

 

 

 

14,538

 

 

 

14,195

 

Amortization of intangible assets

 

 

444

 

 

 

429

 

 

 

1,734

 

 

 

1,719

 

Total operating expenses

 

 

3,655

 

 

 

4,643

 

 

 

16,272

 

 

 

15,914

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

 

(801

)

 

 

745

 

 

 

(4,346

)

 

 

(3,544

)

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Other income (expense)

 

 

1,358

 

 

 

(179

)

 

 

852

 

 

 

(1,336

)

Interest income (expense), net

 

 

404

 

 

 

(164

)

 

 

973

 

 

 

(564

)

Total other (expense) income, net

 

 

1,762

 

 

 

(343

)

 

 

1,825

 

 

 

(1,900

)

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes

 

 

961

 

 

 

402

 

 

 

(2,521

)

 

 

(5,444

)

Income tax benefit (provision)

 

$

847

 

 

$

478

 

 

 

614

 

 

 

(383

)

Income (loss) from continuing operations, net of income taxes

 

 

1,808

 

 

 

880

 

 

 

(1,907

)

 

 

(5,827

)

Income (loss) from discontinued operations, net of income taxes

 

 

(80

)

 

 

1,029

 

 

 

27,039

 

 

 

575

 

Net income (loss)

 

 

1,728

 

 

 

1,909

 

 

 

25,132

 

 

 

(5,252

)

Deemed dividend on Series A cumulative perpetual preferred stock

 

 

(479

)

 

 

(479

)

 

 

(1,916

)

 

 

(1,916

)

Net income (loss) attributable to common shareholders

 

$

1,249

 

 

$

1,430

 

 

$

23,216

 

 

$

(7,168

)

 

 

 

 

 

 

 

 

 

Net income (loss) per share

 

 

 

 

 

 

 

 

Net income (loss) per share, continuing operations

 

 

 

 

 

 

 

 

Basic*

 

$

0.11

 

 

$

0.06

 

 

$

(0.12

)

 

$

(0.40

)

Diluted

 

$

0.11

 

 

$

0.06

 

 

$

(0.12

)

 

$

(0.39

)

Net income (loss) per share, discontinued operations

 

 

 

 

 

 

 

 

Basic*

 

$

(0.01

)

 

$

0.07

 

 

$

1.73

 

 

$

0.04

 

Diluted

 

$

(0.01

)

 

$

0.07

 

 

$

1.71

 

 

$

0.04

 

Net income (loss) per share

 

 

 

 

 

 

 

 

Basic*

 

$

0.11

 

 

$

0.12

 

 

$

1.61

 

 

$

(0.36

)

Diluted*

 

$

0.11

 

 

$

0.12

 

 

$

1.59

 

 

$

(0.35

)

Net income (loss) per share, attributable to common shareholders

 

 

 

 

 

 

 

 

Basic*

 

$

0.08

 

 

$

0.09

 

 

$

1.48

 

 

$

(0.49

)

Diluted*

 

$

0.08

 

 

$

0.09

 

 

$

1.47

 

 

$

(0.48

)

Weighted-average common shares outstanding

 

 

 

 

 

 

 

 

Basic*

 

 

15,826

 

 

 

15,483

 

 

 

15,638

 

 

 

14,751

 

Diluted*

 

 

15,874

 

 

 

15,570

 

 

 

15,775

 

 

 

14,829

 

 

 

 

 

 

 

 

 

 

Dividends declared per share of Series A perpetual preferred stock

 

$

0.25

 

 

$

0.25

 

 

$

1.00

 

 

$

1.00

 

*Earnings per share may not add due to rounding


Star Equity Holdings, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share amounts and par value)

 

 

 

December 31,
2023

 

December 31,
2022

Assets:

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

18,326

 

 

$

4,377

 

Restricted cash

 

 

620

 

 

 

142

 

Equity securities

 

 

4,838

 

 

 

3,490

 

Lumber derivative contracts

 

 

19

 

 

 

 

Accounts receivable, net

 

 

6,004

 

 

 

7,975

 

Note receivable, current portion

 

 

399

 

 

 

73

 

Inventories, net

 

 

3,420

 

 

 

4,678

 

Other current assets

 

 

1,180

 

 

 

682

 

Current assets – discontinued operations

 

 

 

 

 

17,851

 

Total current assets

 

 

34,806

 

 

 

39,268

 

Property and equipment, net

 

 

7,828

 

 

 

5,665

 

Operating lease right-of-use assets, net

 

 

1,470

 

 

 

1,856

 

Intangible assets, net

 

 

12,518

 

 

 

13,352

 

Goodwill

 

 

4,438

 

 

 

4,438

 

Cost method investment

 

 

6,000

 

 

 

 

Notes receivable

 

 

8,427

 

 

 

1,285

 

Other assets

 

 

9

 

 

 

 

Non-current assets – discontinued operations

 

 

 

 

 

7,438

 

Total assets

 

$

75,496

 

 

$

73,302

 

 

 

 

 

 

Liabilities and Stockholders’ Equity:

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

1,571

 

 

$

1,447

 

Accrued liabilities

 

 

1,506

 

 

 

462

 

Accrued compensation

 

 

1,772

 

 

 

1,838

 

Accrued warranty

 

 

44

 

 

 

38

 

Lumber derivative contracts

 

 

 

 

 

104

 

Deferred revenue

 

 

1,377

 

 

 

1,673

 

Short-term debt

 

 

2,019

 

 

 

3,383

 

Operating lease liabilities

 

 

403

 

 

 

372

 

Finance lease liabilities

 

 

42

 

 

 

82

 

Current liabilities - discontinued operations

 

 

 

 

 

18,146

 

Total current liabilities

 

 

8,734

 

 

 

27,545

 

Deferred tax liabilities

 

 

318

 

 

 

470

 

Operating lease liabilities, net of current portion

 

 

1,102

 

 

 

1,510

 

Finance lease obligation, net of current portion

 

 

43

 

 

 

96

 

Other liabilities

 

 

 

 

 

 

Non-current liabilities - discontinued operations

 

 

 

 

 

1,926

 

Total liabilities

 

 

10,197

 

 

 

31,547

 

 

 

 

 

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

Preferred stock, $0.0001 par value: 10,000,000 shares authorized: Series A Preferred Stock, 8,000,000 shares authorized, liquidation preference (10.00 per share), 1,915,637 shares issued and outstanding at 2023 and 2022. (Liquidation preference: $18,988,390 as of December 31, 2023 and 2022.)

 

 

18,988

 

 

 

18,988

 

Preferred stock, $0.0001 par value: 25,000 shares authorized; Series C Preferred stock, no shares issued or outstanding

 

 

 

 

 

 

Common stock, $0.0001 par value: 50,000,000 and 50,000,000 shares authorized; 15,826,217 and 15,177,919 shares issued and outstanding (net of treasury shares) at December 31, 2023 and 2022, respectively

 

 

2

 

 

 

1

 

Treasury stock, at cost; 258,849 shares at December 31, 2023 and 2022, respectively

 

 

(5,728

)

 

 

(5,728

)

Additional paid-in capital

 

 

160,126

 

 

 

161,715

 

Accumulated deficit

 

 

(108,089

)

 

 

(133,221

)

Total stockholders’ equity

 

$

65,299

 

 

 

41,755

 

Total liabilities and stockholders’ equity

 

$

75,496

 

 

$

73,302

 


 

Star Equity Holdings, Inc.
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(In thousands, except per share amounts)

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

1,808

 

 

$

880

 

 

$

(1,907

)

 

$

(5,827

)

Acquired intangible amortization

 

 

444

 

 

 

429

 

 

 

1,734

 

 

 

1,719

 

Unrealized (gain) loss on equity securities (1)

 

 

(109

)

 

 

59

 

 

 

(85

)

 

 

893

 

Unrealized (gain) loss on lumber derivatives (2)

 

 

(113

)

 

 

(530

)

 

 

(123

)

 

 

768

 

Severance and retention costs (3)

 

 

 

 

 

2

 

 

 

 

 

 

5

 

Transaction costs related to sale (4)

 

 

80

 

 

 

 

 

 

1,361

 

 

 

 

Transaction costs related to mergers and acquisitions (5)

 

 

86

 

 

 

 

 

 

103

 

 

 

 

Loss (Gain) on sale of assets

 

 

 

 

 

 

 

 

(386

)

 

 

 

Financing costs (6)

 

 

8

 

 

 

122

 

 

 

159

 

 

 

446

 

One time credits (7)

 

 

(576

)

 

 

 

 

 

(576

)

 

 

 

Bargain purchase gain (8)

 

 

(1,170

)

 

 

 

 

 

(1,170

)

 

 

 

Income tax expense

 

 

(846

)

 

 

(478

)

 

 

(614

)

 

 

(478

)

Non-GAAP adjusted net income (loss) from continuing operations

 

$

(388

)

 

$

484

 

 

$

(1,504

)

 

$

(2,474

)

 

 

 

 

 

 

 

 

 

Net income (loss) per basic share from continuing operations

 

$

0.11

 

 

$

0.06

 

 

$

(0.12

)

 

$

(0.40

)

Acquired intangible amortization

 

 

0.03

 

 

 

0.03

 

 

 

0.11

 

 

 

0.12

 

Unrealized (gain) loss on equity securities (1)

 

 

(0.01

)

 

 

 

 

 

(0.01

)

 

 

0.06

 

Unrealized (gain) loss on lumber derivatives (2)

 

 

(0.01

)

 

 

(0.03

)

 

 

(0.01

)

 

 

0.05

 

Severance and retention costs (3)

 

 

 

 

 

 

 

 

 

 

 

 

Transaction costs related to sale (4)

 

 

0.01

 

 

 

 

 

 

0.09

 

 

 

 

Transaction costs related to mergers and acquisitions (5)

 

 

0.01

 

 

 

 

 

 

0.01

 

 

 

 

Loss (Gain) on sale of assets

 

 

 

 

 

 

 

 

(0.02

)

 

 

 

Financing costs (6)

 

 

 

 

 

0.01

 

 

 

0.01

 

 

 

0.03

 

One time credits (7)

 

 

(0.04

)

 

 

 

 

 

(0.04

)

 

 

 

Bargain purchase gain (8)

 

 

(0.07

)

 

 

 

 

 

(0.07

)

 

 

 

Income tax expense

 

 

(0.05

)

 

 

(0.03

)

 

 

(0.04

)

 

 

(0.03

)

Non-GAAP adjusted net income (loss) per basic share from continuing operations (9)

 

$

(0.02

)

 

$

0.03

 

 

$

(0.10

)

 

$

(0.17

)

Non-GAAP adjusted net income (loss) per diluted share from continuing operations (9)

 

$

(0.02

)

 

$

0.03

 

 

$

(0.10

)

 

$

(0.17

)

(1)   Reflects adjustments for any unrealized gains or losses on equity securities.
(2)   Reflects adjustments for any unrealized gains or losses in lumber derivatives value.
(3)   Reflects the severance expense for certain employees
(4)   Reflects one time transaction costs related to the sale of the Healthcare Division
(5)   Reflects one time transaction costs related to potential mergers and acquisitions.
(6)   Reflects financing costs from our credit facilities.
(7)   Reflects one time insurance and other credits
(8)   Reflects the bargain purchase gain related to the acquisition of Big Lake Lumber
(9)   Per share amounts are computed independently for each discrete item presented. Therefore, the sum of the quarterly per share amounts will not necessarily equate to the total for the year, and the sum of individual items may not equal the total.


Star Equity Holdings, Inc.
Reconciliation of Non-GAAP Financial Measures

(Unaudited)
(In thousands)

 

For the Three Months Ended December 31, 2023

 

Construction

 

Investments

 

Star Equity
Corporate

 

Total

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

771

 

 

$

1,246

 

 

$

(209

)

 

$

1,808

 

Depreciation and amortization

 

 

540

 

 

 

59

 

 

 

8

 

 

 

607

 

Interest (income) expense

 

 

32

 

 

 

(191

)

 

 

(246

)

 

 

(405

)

Income tax expense

 

 

(289

)

 

 

 

 

 

(557

)

 

 

(846

)

EBITDA from continuing operations

 

 

1,054

 

 

 

1,114

 

 

 

(1,004

)

 

 

1,164

 

 

 

 

 

 

 

 

 

 

Unrealized (gain) loss on equity securities (1)

 

 

 

 

 

(109

)

 

 

 

 

 

(109

)

Unrealized (gain) loss on lumber derivatives (2)

 

 

(113

)

 

 

 

 

 

 

 

 

(113

)

Interest income (3)

 

 

 

 

 

444

 

 

 

 

 

 

444

 

Stock-based compensation

 

 

14

 

 

 

 

 

 

46

 

 

 

60

 

Transaction costs related to sale (4)

 

 

 

 

 

 

 

 

80

 

 

 

80

 

Transaction costs related to mergers and acquisitions (5)

 

 

65

 

 

 

 

 

 

21

 

 

 

86

 

Loss (Gain) on sale of assets

 

 

 

 

 

 

 

 

 

 

 

 

One time credits (6)

 

 

 

 

 

 

(576

)

 

 

(576

)

Financing costs (7)

 

 

8

 

 

 

 

 

 

 

 

 

8

 

Bargain purchase gain (9)

 

 

(345

)

 

 

(825

)

 

 

 

 

 

(1,170

)

Non-GAAP adjusted EBITDA from continuing operations

 

$

683

 

 

$

624

 

 

$

(1,433

)

 

$

(126

)


For the Three Months Ended December 31, 2022

 

Construction

 

Investments

 

Star Equity
Corporate

 

Total

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

2,252

 

 

$

(176

)

 

$

(1,196

)

 

$

880

 

Depreciation and amortization

 

 

503

 

 

 

69

 

 

 

9

 

 

 

581

 

Interest (income) expense

 

 

147

 

 

 

51

 

 

 

(34

)

 

 

164

 

Income tax (benefit) expense

 

 

383

 

 

 

 

 

 

(861

)

 

 

(478

)

EBITDA from continuing operations

 

 

3,285

 

 

 

(56

)

 

 

(2,082

)

 

 

1,147

 

 

 

 

 

 

 

 

 

 

Unrealized (gain) loss on equity securities (1)

 

 

 

 

 

59

 

 

 

 

 

 

59

 

Unrealized (gain) loss on lumber derivatives (2)

 

 

(530

)

 

 

 

 

 

 

 

 

(530

)

Stock-based compensation

 

 

4

 

 

 

 

 

 

111

 

 

 

115

 

Severance and retention costs (7)

 

 

 

 

 

 

 

 

2

 

 

 

2

 

Financing costs (8)

 

 

96

 

 

 

26

 

 

 

 

 

 

122

 

Non-GAAP adjusted EBITDA from continuing operations

 

$

2,855

 

 

$

29

 

 

$

(1,969

)

 

$

915

 


For the Twelve Months Ended December 31, 2023

 

Construction

 

Investments

 

Star Equity
Corporate

 

Total

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

2,517

 

 

$

1,424

 

 

$

(5,848

)

 

$

(1,907

)

Depreciation and amortization

 

 

2,070

 

 

 

228

 

 

 

29

 

 

 

2,327

 

Interest (income) expense

 

 

84

 

 

 

(467

)

 

 

(591

)

 

 

(974

)

Income tax expense

 

 

(288

)

 

 

 

 

 

(326

)

 

 

(614

)

EBITDA from continuing operations

 

 

4,383

 

 

 

1,185

 

 

 

(6,736

)

 

 

(1,168

)

 

 

 

 

 

 

 

 

 

Unrealized (gain) loss on equity securities (1)

 

 

 

 

 

(85

)

 

 

 

 

 

(85

)

Unrealized (gain) loss on lumber derivatives (2)

 

 

(123

)

 

 

 

 

 

 

 

 

(123

)

Interest income (3)

 

 

 

 

 

1,130

 

 

 

 

 

 

1,130

 

Stock-based compensation

 

 

32

 

 

 

 

 

 

307

 

 

 

339

 

Transaction costs related to sale (4)

 

 

 

 

 

 

 

 

1,361

 

 

 

1,361

 

Transaction costs related to mergers and acquisitions (5)

 

 

65

 

 

 

 

 

 

38

 

 

 

103

 

Loss (Gain) on sale of assets

 

 

 

 

 

(386

)

 

 

 

 

 

(386

)

One time credits (6)

 

 

 

 

 

 

 

 

(576

)

 

 

(576

)

Write off of lease liabilities

 

 

240

 

 

 

 

 

 

 

 

 

240

 

Financing costs (8)

 

 

142

 

 

 

17

 

 

 

 

 

 

159

 

Bargain purchase gain (9)

 

 

(345

)

 

 

(825

)

 

 

 

 

 

(1,170

)

Non-GAAP adjusted EBITDA from continuing operations

 

$

4,394

 

 

$

1,036

 

 

$

(5,606

)

 

$

(176

)


For the Twelve Months Ended December 31, 2022

 

Construction

 

Investments

 

Star Equity
Corporate

 

Total

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

 

$

2,405

 

 

$

(970

)

 

$

(7,262

)

 

$

(5,827

)

Depreciation and amortization

 

 

1,974

 

 

 

290

 

 

 

9

 

 

 

2,273

 

Interest (income) expense

 

 

416

 

 

 

182

 

 

 

(34

)

 

 

564

 

Income tax expense

 

 

383

 

 

 

 

 

 

 

 

 

383

 

EBITDA from continuing operations

 

 

5,178

 

 

 

(498

)

 

 

(7,287

)

 

 

(2,607

)

 

 

 

 

 

 

 

 

 

Unrealized (gain) loss on equity securities (1)

 

 

 

 

 

893

 

 

 

 

 

 

893

 

Unrealized (gain) loss on lumber derivatives (2)

 

 

768

 

 

 

 

 

 

 

 

 

768

 

Stock-based compensation

 

 

21

 

 

 

 

 

 

411

 

 

 

432

 

Severance and retention costs (7)

 

 

 

 

 

 

 

 

5

 

 

 

5

 

Financing costs (8)

 

 

355

 

 

 

91

 

 

 

 

 

 

446

 

Non-GAAP adjusted EBITDA from continuing operations

 

$

6,322

 

 

$

486

 

 

$

(6,871

)

 

$

(63

)

(1)   Reflects adjustments for any unrealized gains or losses on equity securities.
(2)   Reflects adjustments for any unrealized gains or losses in lumber derivatives value.
(3)   We allocate all corporate interest income to the Investments Division.
(4)   Reflects one time transaction costs related to the sale of the Healthcare Division.
(5)   Reflects one time transaction costs related to potential mergers and acquisitions.
(6)   Reflects one time insurance and other credits
(7)   Reflects the severance expense for certain employees.
(8)   Reflects financing costs from our credit facilities.
(9)   Reflects the bargain purchase gain related to the acquisition of Big Lake Lumber


Star Equity Holdings, Inc.
Supplemental Debt Information

(Unaudited)

A summary of the Company’s credit facilities and related party notes are as follows (dollars in thousands)

 

 

December 31, 2023

 

December 31, 2022

 

 

Amount

 

Weighted-
Average Interest
Rate

 

Amount

 

Weighted-
Average Interest
Rate

Revolving Credit Facility - Premier

 

$

2,019

 

 

9.25%

 

$

 

 

—%

Revolving Credit Facility - eCapital EBGL

 

 

 

 

—%

 

 

2,592

 

 

10.25%

Total Short-term Revolving Credit Facilities

 

$

2,019

 

 

9.25%

 

$

2,592

 

 

10.25%

eCapital - Star Loan Principal, net

 

$

 

 

—%

 

$

791

 

 

10.50%

Short Term Loan

 

$

 

 

—%

 

$

791

 

 

10.50%

Total Short-term debt

 

$

2,019

 

 

9.25%

 

$

3,383

 

 

10.31%


 

Star Equity Holdings, Inc.
Supplemental Segment Information
(Unaudited)
(In thousands)

 

 

 

Three Months Ended
December 31,

 

Twelve Months Ended
December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

Revenue by segment:

 

 

 

 

 

 

 

 

Construction

 

$

14,111

 

 

$

17,605

 

 

$

45,785

 

 

$

57,149

 

Investments

 

 

159

 

 

 

158

 

 

 

564

 

 

 

633

 

Intersegment elimination

 

 

(159

)

 

 

(158

)

 

 

(564

)

 

 

(633

)

Consolidated revenue

 

$

14,111

 

 

$

17,605

 

 

$

45,785

 

 

$

57,149

 

 

 

 

 

 

 

 

 

 

Gross profit (loss) by segment:

 

 

 

 

 

 

 

 

Construction

 

$

2,913

 

 

$

5,457

 

 

$

12,154

 

 

$

12,660

 

Investments

 

 

100

 

 

 

90

 

 

 

336

 

 

 

343

 

Intersegment elimination

 

 

(159

)

 

 

(159

)

 

 

(564

)

 

 

(633

)

Consolidated gross profit

 

$

2,854

 

 

$

5,388

 

 

$

11,926

 

 

$

12,370

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations by segment:

 

 

 

 

 

 

 

 

Construction

 

$

135

 

 

$

2,879

 

 

$

2,095

 

 

$

3,560

 

Investments

 

 

74

 

 

 

(44

)

 

 

(453

)

 

 

192

 

Corporate, eliminations and other

 

 

(1,010

)

 

 

(2,090

)

 

 

(5,988

)

 

 

(7,296

)

Segment loss from operations

 

$

(801

)

 

$

745

 

 

$

(4,346

)

 

$

(3,544

)

 

 

 

 

 

 

 

 

 

Depreciation and amortization by segment:

 

 

 

 

 

 

 

 

Construction

 

$

540

 

 

$

503

 

 

$

2,070

 

 

$

1,974

 

Investments

 

 

59

 

 

 

69

 

 

 

228

 

 

 

290

 

Star equity corporate

 

 

8

 

 

 

9

 

 

 

29

 

 

 

9

 

Total depreciation and amortization

 

$

607

 

 

$

581

 

 

$

2,327

 

 

$

2,273