Star Equity Holdings, Inc. Announces 2023 Fourth Quarter and Full Year Financial Results
- None.
- Revenues and gross profit decreased in Q4 2023 compared to the prior year, impacting net income.
- FY 2023 ended with a net loss due to lower revenues and increased operating expenses.
- Non-GAAP adjusted EBITDA showed losses in Q4 and FY 2023, reflecting challenges in the Construction division.
- Operating cash flow improved in 2023, driven by stronger collections and lower working capital expenses.
- SG&A expenses increased in FY 2023, impacting the Company's financial performance.
Insights
The financial results for Star Equity Holdings, Inc. reflect a contraction in revenue and gross profit, with a 19.8% and 47.0% decrease respectively in Q4 2023 compared to Q4 2022. This contraction is indicative of the challenges faced by the Construction division due to economic headwinds such as higher interest rates. However, the improvement in gross margins from 21.6% to 26.0% for the full year 2023 suggests effective cost management and pricing strategies that have partially mitigated the impact of these headwinds.
The reduction in debt from $3.4 million to $2.0 million and the increase in cash and cash equivalents to $18.9 million are positive signs of financial health and liquidity. These metrics are critical for investors as they assess the company's ability to fund operations and growth initiatives without excessive leverage. The positive cash flow from operations of $2.7 million in 2023, a significant improvement from the outflow of $3.9 million in 2022, indicates improved operational efficiency and cash management.
While the net loss figures may raise concerns, the narrowed loss from $5.8 million in FY 2022 to $1.9 million in FY 2023 demonstrates progress towards profitability. The use of non-GAAP measures such as adjusted EBITDA, which shows a loss of $0.2 million compared to a loss of $0.1 million in FY 2022, provides additional context by excluding certain non-cash and irregular expenses and offers a different perspective on the company's operating performance.
Star Equity Holdings' performance highlights the broader economic challenges impacting the construction industry, particularly the tightening credit conditions that have delayed commercial projects. These conditions have had a direct impact on the company's revenue, yet the robustness of the single-family residential sector and the company's backlog and sales pipeline suggest resilience and potential for recovery as market conditions improve.
The strategic acquisition of Big Lake Lumber is a noteworthy development, potentially offering synergies and market expansion that could enhance future revenue streams. The focus on niche markets where Star Equity has built expertise and reputation could provide a competitive advantage and drive organic growth despite current economic pressures.
Investors may find the proactive management measures, such as the emphasis on pricing discipline and business mix optimization, reassuring. The ability to adapt to changing market conditions by exploring acquisitions and opportunities in new industries and the Investments division, demonstrates a forward-looking approach that could be pivotal for long-term growth.
The reported financials of Star Equity Holdings serve as a microcosm of the broader economic environment, particularly the construction sector's sensitivity to interest rate fluctuations and economic cycles. The company's experience of delayed projects due to credit tightening reflects a common challenge in capital-intensive industries during periods of monetary contraction.
The company's strategic response to these macroeconomic factors, including improved pricing discipline and cost management, are essential for maintaining profitability in a high-interest rate environment. The improved cash position and reduced debt load enhance the company's financial flexibility, which is particularly valuable in uncertain economic times as it provides a buffer against potential downturns.
Investors should be cognizant of the cyclical nature of the construction industry and the potential for a rebound as economic conditions stabilize. The company's focus on niche markets and strategic acquisitions could position it well for capitalizing on such a rebound, but it is also important to monitor the sustainability of the company's financial improvements and the execution of its growth strategy.
Ended 2023 with cash and cash equivalents of
Generated positive cash flow from operations of
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.
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
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
| 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
Gross Profit
The Company’s consolidated Q4 2023 gross profit decreased
| 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
Operating Expenses
Q4 2023 sales, general and administrative (SG&A) expenses decreased
Net Income/Loss
Q4 2023 net income from continuing operations was
FY 2023 net loss from continuing operations was
Non-GAAP adjusted EBITDA
Q4 2023 non-GAAP adjusted EBITDA decreased to a loss of
Operating Cash Flow
Q4 2023 cash flow from consolidated operations was an inflow of
Preferred Stock
In each quarter of 2023, the Company’s Board of Directors declared and paid a cash dividend of
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, | 18,988 | 18,988 | ||||||
| Preferred stock, | — | — | ||||||
| Common stock, | 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 | $ | — | —% | |||||||
| Revolving Credit Facility - eCapital EBGL | — | —% | 2,592 | |||||||||
| Total Short-term Revolving Credit Facilities | $ | 2,019 | $ | 2,592 | ||||||||
| eCapital - Star Loan Principal, net | $ | — | —% | $ | 791 | |||||||
| Short Term Loan | $ | — | —% | $ | 791 | |||||||
| Total Short-term debt | $ | 2,019 | $ | 3,383 | ||||||||
| 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 | ||||||||
FAQ
What were Star Equity Holdings, Inc.'s cash and cash equivalents at the end of 2023?
How did revenues and gross profit in Q4 2023 compare to Q4 2022?
What was the net income from continuing operations in Q4 2023?
What was the non-GAAP adjusted net loss from continuing operations in Q4 2023?
How did FY 2023 revenues compare to FY 2022?
What was the net loss from continuing operations in FY 2023?
What was the non-GAAP adjusted EBITDA from continuing operations in FY 2023?
How did operating cash flow in FY 2023 compare to FY 2022?
What was the Company's debt at the end of 2023?
What strategic initiatives is Star Equity Holdings, Inc. focusing on?
