STRR

Image source: The Motley Fool. Friday, Aug. 14, 2026 at 10:00 a.m. ET Chief Executive Officer - Jeffrey Eberwein Global Chief Executive Officer of Hudson Talent Solutions - Jacob Zabkowicz Chief Operating Officer - Richard Coleman Operator: Thank you. Greetings, ladies and gentlemen, and welcome to Star Equity Holdings Second Quarter 2026 Financial Results Conference Call. Please be advised that the discussions on today's call may include forward-looking statements. Such forward-looking statements involve certain risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Please refer to Star Equity's most recent 10-K, 10-Q, and other filings for a more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligation to update forward-looking statements as a result of new information, future events, or otherwise. Please also note that on this call, management will reference non-GAAP financial measures including EBITDA, adjusted EBITDA, adjusted net income, and adjusted earnings per share, which are all financial measures not recognized under U.S. GAAP. As required by SEC rules and regulations, these non-GAAP financial measures are reconciled to their most comparable GAAP financial measures in our earnings release issued yesterday afternoon. If you did not receive a copy of the earnings release and would like one after the call, please contact Star Equity at (203) 489-9500 or its Investor Relations Representative, Lena Cati of The Equity Group at (212) 836-9611. Also, this call is being broadcast live over the Internet and may be accessed at Star Equity's website via www.starequity.com. Shortly after the call, this call is being recorded for a replay that will be available on the company's website. It is now my pleasure to introduce Jeff Eberwein, Chief Executive Officer of Star Equity. Please go ahead. Jeffrey Eberwein: Thank you, operator, and welcome, everyone. We greatly appreciate your interest in Star Equity Holdings, and thank you for joining us today. I'll begin by reviewing some highlights from our second quarter results at the holding company level. After that, Jake Zabkowicz, CEO of Hudson Talent Solutions, will give us an update on the performance of that business, which is inside our Business Services division. Rick Coleman, our COO, will provide some insights into the performance of our Building Solutions and Energy Services divisions. And I'll discuss some of the key points in the merger with Harte Hanks that we announced this morning. One item I'd like to point out just to get started is Slide 5 from our earnings deck where you can see the progress we've made on the cost synergies. You may recall that a year ago when we announced the merger with Hudson, we projected approximately $2 million of merger synergies, and we believe we've achieved approximately $3 million of merger synergies at this point in time. And we measure that from the adjusted EBITDA table, which you can find on Pages 10 and 12 of our earnings release. In that table, you'll see that for the first half of the year, our corporate costs, if you look at the corporate column, were $3.6 million. That's down from $5.1 million on a pro forma basis. So that's savings year-over-year of $1.5 million for 6 months, and that's how we get to the $3 million merger synergy number. When we look at the division results for Q2, Business Services had modest revenue growth. Gross profit was down slightly year-over-year, reflecting some pressure in the professional talent market. And we did have growth investments of $1.5 million, and just a reminder that rolls through our income statement, so that shows up as an expense and the benefit will come in future periods. Our Building Solutions division had results below our expectations. That's due to market softness and the timing of some contracts when the project started, and in particular when the revenue gets recognized, we'll come back to this issue, but we had a large project that was mainly completed in Q2, but most of the revenue for that project will be recognized in Q3. Energy Services posted very strong year-over-year gains in revenue, gross profit, and adjusted EBITDA, and that's due to higher utilization of our tools and some new client wins in the geothermal and mining industries. Turning to the balance sheet, we ended the second quarter with $8.9 million in cash that does include $2.1 million of restricted cash. And our working capital, excluding cash, was $21.5 million, which compares to $22.4 million at the end of the year. So we've made a little bit of progress on more efficient working capital management. We have continued to repurchase shares. We repurchased about $0.2 million in Q2 and we have $1.6 million remaining on our authorization of $3 million, which the board approved last September. We continue to believe our stock is undervalued, and we view share repurchases as a very attractive allocation of capital. Across the company, we remain focused on disciplined execution, cost management, and we are continuing to invest in growth initiatives that we believe will enhance our competitive position and drive improved financial performance over time. Now I'd like to turn it over to Jake to discuss our Business Services division. Jacob Zabkowicz: Thank you, Jeff, and good morning. As Jeff mentioned, our Business Services division delivered solid performance in the second quarter with revenue up modestly year-over-year despite continued macroeconomic uncertainty and sustained pressure in the professional talent market. As shown on Slide 11, second quarter 2026 Business Services revenue was $36.4 million, up 2% from $35.5 million in the prior year quarter. Our gross profit was $17.8 million, down 4% from $18.6 million a year ago. Adjusted EBITDA for the division was $1.6 million compared to $2.2 million in the prior year quarter. That decline largely reflects deliberate growth investments in the second quarter, as we invested $1.5 million within our digital solution, Hudson Fusion, entering into new geographies and also related initiatives compared to $0.8 million in the second quarter of 2025. Regionally, as shown in Slide 13, the Americas performed well with gross profit growth of approximately 10%, while the EMEA and the Asia-Pac regions gross profit declined 10% and 13%, respectively, reflecting more challenging conditions in those markets. Asia Pacific remains our largest region at 62% of the divisional revenue and 43% of the gross profit in the quarter, with the Americas contributing 39% of the gross profit and EMEA at 18%. We have maintained a strong focus on innovation and operational efficiencies, including the expanded development of our agentic AI and automation tools to enhance recruiter productivity, improve our candidate matching, and deliver greater value to our clients. These initiatives helped limit the year-over-year gross profit decline to less than 5% despite a mixed regional backdrop. We believe our continued focus on technology-enabled delivery and deep client relationships position us to capitalize on the improving market conditions over time. Turning to Slide 12, on a rolling fourth quarter basis, RPO new business total contract value was $122.5 million, comprised of $8.3 million in new logo wins and $114.2 million in renewals and expansions with our existing clients. The trailing 12-month gross profit of $72 million has been relatively stable over the past 4 quarters, while our trailing 12-month adjusted EBITDA margin was 5.4%, down from 7.9% a year ago, again, reflecting the growth investments I mentioned earlier. Importantly, we've seen an uptick in new customer conversations and robust new logo interest in recent months, supported by enhancements in our geographical footprint and digital offerings. We continue to execute on our land-and-expand playbooks, including leveraging our recent acquisition with ACG in the Japanese market. Looking ahead, we continue to take a disciplined approach and execute our playbook for the remainder of the year with a focus on creating a more resilient, agile, and growth-oriented business over the longer term. Now I'll turn the call over to Rick, who will discuss the financial and operational performance of our Building Solutions and our Energy Services division. Rick? Richard Coleman: Thank you, Jake, and good morning, everyone. I'll start with an overview of our Building Solutions division highlighted on Slide 9. As Jeff mentioned earlier, second quarter performance was below our expectations as both residential and commercial construction markets remain challenging. Our results were further impacted by project timing and revenue recognition as one large project that was largely constructed in the second quarter will be completed and recognized in the third quarter. Second quarter Building Solutions revenue was $14.6 million, gross profit was $3.2 million, and adjusted EBITDA was $0.5 million. On a pro forma basis for the second quarter of 2025, Building Solutions revenue was $20.4 million, gross profit was $5.2 million, and adjusted EBITDA was $2.3 million. As shown on Slide 10, quarter end backlog for Building Solutions was $10.6 million, up from $8 million at the end of the first quarter. And our trailing 12-month book-to-bill ratio was 0.77, up from 0.72 last quarter. New orders in the quarter were $17.3 million, our highest quarterly order intake since the second quarter of 2025. While these metrics still reflect market softness, we continued to add attractive work to the backlog, including the previously announced $4.2 million multifamily housing project in New Hampshire, serving the senior community. We've also gained traction in the workforce, affordable and assisted living and senior housing markets and expect these sectors to be significant business drivers as market conditions improve. Consistent with the strategy we've outlined previously, we remain focused on disciplined project selection, operational execution, and margin management, which we believe will position the business for stronger performance as market conditions improve. Turning to Slide 14, the Energy Services division delivered another strong quarter, continuing the momentum we highlighted earlier this year. Second quarter 2026 Energy Services revenue was $3.9 million, up 19%. Gross profit was $1.9 million, up 75% and adjusted EBITDA was $1.2 million, up 126%. On a pro forma basis, second quarter 2025 Energy Services revenue was $3.3 million, gross profit was $1.1 million, and adjusted EBITDA was $0.5 million. The business continues to gain share in core markets with especially strong performance in mining and geothermal applications. These results reflect disciplined execution and the benefits of our diversified exposure across drilling applications, which continues to differentiate the platform and support consistent growth. We continue to invest in new tools to support this growth while working closely with our largest customers to align our investment decisions with their specific needs. We see significant opportunities to continue expanding our presence and capabilities in the geographies and markets we serve. I'll turn the call back over to Jeff now for closing remarks. Jeffrey Eberwein: Thank you, Rick. I'd like to transition now and talk a little bit about the merger with Harte Hanks that we announced this morning. Last night -- late last night, we signed a merger agreement to merge with Harte Hanks. The acquisition will be for $5 per share. And on a fully diluted share count, that implies that the acquisition will be about $38 million, and we will pay for this acquisition half in cash, half in preferred stock. So one way to think about it is, out of the $5 in consideration, $2.50 of that will be in cash and $2.50 of it will be in Star's preferred stock, so 0.25 shares of our preferred for every 1 share of Harte Hanks. In terms of where will the cash come from, I would point you to the cash we have on our balance sheet, the cash that Harte Hanks has on its balance sheet. And importantly, Harte Hanks has a $25 million revolver in place with a well-known financial institution that we also have a relationship with. And those 3 sources will be how we fund this acquisition. So we don't believe we'll need to raise any external capital in order to close this deal. Also, importantly, in keeping with our thought that our stock is undervalued, we're not using any common shares as part of this transaction, and our plan is to continue buying back shares. Going back to the -- how the merger is structured, the Harte Hanks shareholders will have a right of election. So those shareholders who choose to get all preferred stock can make that election. Shareholders who choose to get all cash, they would get $5 in cash. That is subject to proration. It has a cap where 50% of the consideration is cash, and that's capped at $19.2 million. So that's a maximum cash outlay, but the preferred is uncapped. So in other words, if say, 60% of the shareholders wanted to get preferred stock, they would get preferred stock and the cash percentage of the total would go down to 40%. Any questions on that, feel free to give us a call. So both Boards have approved this transaction. It does include a 30-day go-shop period where Harte Hanks is allowed to receive any other offers that might be out there. After that period ends, we'll file an S-4 and that's got to be approved by the SEC. And then after that's approved, we will start soliciting votes from Harte Hanks' shareholders. We don't need any vote from the Star side. So no vote is required by our common shareholders and no vote is required by our preferred stockholders. So those are the hurdles that we need to get to in order to get to a closed deal. Our best guess is that the deal is going to close in the fourth quarter sometime. So the way we're thinking about it is by year-end, we think we'll have a closed deal. And it would be great if it is earlier than that. It's possible it could be later than that. But our best guess is before the end of the year. And then when we think about the company on a combined basis, Harte Hanks' businesses are all in the category of business process outsourcing. Our Business Services division, which holds our Hudson business, is also in a way business process outsourcing. Our business is focused on the Talent and HR segments, while theirs is focused on Customer Care, Revenue Solutions and Fulfillment Logistics. Importantly, we both serve Fortune 500 clients. And so we think this business makes a lot of sense inside of Star. There's definitely cost synergies that we believe we'll realize. We're estimating initially that we will be able to get to $10 million of cost savings. And so combining these 2 companies, we think revenue will be around $400 million. And the adjusted EBITDA, this is a pro forma number, including $10 million of cost synergies, we think that'll be approximately $30 million once those cost synergies are achieved. And so we're very excited about it. We think this is accretive on any metric, accretive to our shareholders, and we look forward to getting to a closed deal and being one company. So with that, operator, why don't we open it up for questions? Operator: [Operator Instructions] Our first question today is from Joseph Gomes with NOBLE Capital. Joseph Gomes: So Jeff, I wanted to start off. You talked about the Business Solutions. It was kind of a disappointing quarter. It was below your expectations. What were your expectations for that business for the quarter in terms of revenue and adjusted EBITDA? Jeffrey Eberwein: Yes, what I would point you to, Joe, is Slide 12 of our earnings deck. We've done a very good job maintaining what we have. So we had quite a few significant contracts that have come up for renewal in the last 12 months. So we've done a good job getting those contracts renewed and in some cases expanded. What has been disappointing, way below our expectations, is the new logo side. So if we look at -- let's just take a year-to-date, new logo, $2.1 million, that's annual contract value. Our expectation for the year is much, much higher than that. And our expectation for the first half is higher than that. I guess the best thing we could say about that is, it's not like there's a lot of new business to win, and we're losing it to competitors. It's really just a symptom of continuing to be in the low hire, low fire, and I would even add, low attrition environment, and we're particularly seeing that in professional-oriented companies, white-collar type of companies. They're very slow to make decisions. There's a tremendous amount of uncertainty out there with everything going on in the world and then add on top of that, AI. That is the #1 thing our clients want to talk about is how is AI going to change our business? How is it going to change our talent management? How is it going to change our talent acquisition? And it's just creating an environment where they're very frozen. There's still new business to win out there. It just keeps getting pushed to the right. And then when we do win something and it starts, it typically starts much slower than it otherwise would. Joseph Gomes: Okay. Actually, Jeff, my question is on Building Solutions, not the Business Services. Jeffrey Eberwein: Oh, I'm sorry. I thought we were talking about Business Services... Joseph Gomes: I appreciate the insight into that also. Jeffrey Eberwein: Yes. On Building Solutions, if you look at our backlog slide, this is on Slide 10. We really want to see new orders of $20 million a quarter, and we want to see revenue of $20 million a quarter, that's what we view to be a normal run rate, a mid-cycle run rate, if you will. We have lower-than-normal capacity utilization at our factories. Probably the best thing we could say there is that new orders of $17 million in Q2 were the highest number -- highest quarterly number we've seen in a year. But we went through 4 quarters where the new orders were below $20 million, they continue to be below $20 million. So our backlog is low. And I would just describe -- just zooming out a minute, I would describe the environment and real estate, construction are very local markets. We're in 2 markets, as you know, the Northeast and the Upper Midwest. Those markets, in general, are lower growth than some other parts of the country. I'd also add there's less competition there. People aren't itching to enter those as markets, but single-family is weak. There's a lot of press about that. Commercial multifamily, I would say, is very weak. And where we have traction is in more of the specialty areas, like anything to do with workforce housing, affordable housing. There's some healthcare and education-oriented housing, and then assisted living and senior housing, there are projects to win. And when I look at what we've won year-to-date, the biggest project was a senior living project in New Hampshire. And then the projects in our backlog, it's not with the traditional commercial builders of multifamily and single-family. A lot of things in our backlog are in that theme of affordable housing, workforce housing, senior housing. So it's just a weak environment. We're managing through it. But when you ask what do we view a normal run rate to be, I would say it's $20 million of revenue a quarter, 25% gross profit margin. And over time, we think an adjusted EBITDA margin should be 10% to 15%. So that implies $8 million to $12 million of EBITDA for a year, which is 2 plus per quarter, and we've been running below that. Joseph Gomes: Okay. Then one more for me, if I may. So congrats on the announcement of the acquisition of Harte Hanks. But 2 things on that. If I took a quick look at Harte Hanks and I see they've been shedding revenue over the past 5 years and adjusted EBITDA, they've been shedding. I think it's $6 million trailing 12 months roughly adjusted EBITDA. And if I take your equity value and add in their debt, it's about 10x multiple there. So, I guess, the big point is how do you see yourself bending that curve that's been going on for a while at Harte Hanks where they've been shedding revenue and adjusted EBITDA, number one. And number two, what does this impact, if anything at all, the GEE Group investment that you had made -- an offer you had made for them? Jeffrey Eberwein: Yes, a lot of questions in there, Joe. So when we look at Harte Hanks, we strongly think that the investment community should look at things on an apples-to-apples basis. So when we look at their balance sheet, we don't see any debt. If you look at the Q1, for example, they had $4 million to $5 million of cash, I believe, nothing drawn on their revolver. Yes, there's some leases, and yes, there's some pension. But that EBITDA number you cited is after lease expense and after pension expense. And that's the way we look at it. So if you're looking at an EBITDA number that's after lease, after pension, I think you should take leases and pension out of the liability stack. And when you look at it that way, you take the EBITDA number you cited, add $10 million to it, I think you're getting into the mid-teens in terms of the pro forma EBITDA and we're buying it for less than $40 million. We think that's a pretty attractive multiple that's less than 3x EV to EBITDA on our math. Your question -- the first part of your question is the most important question. What will we do with this business once it's inside of Star? And any acquisition, in our opinion, this is true for any acquisition, you have to buy it right. If you overpay, that's something that lives with you forever. So we have a lot of value discipline around that. We think we're getting Harte Hanks for an attractive multiple. But it only makes sense if we're able to do something with it after it's inside Star. And initially, focusing on the cost synergies is going to be the main focus. But we do have aspirations to invest in it and grow it. And we see them making some progress on that topic, Joe. I would kind of point you to their announcement in October, where they put out news talking about winning Samsung, great logo. That's a company they used to do business with that they won back. That's a significant new business win that is ramping up. And so our goal will be to stem those declines, stabilize it, and ultimately grow it. And then with respect to GEE Group, I would just say stay tuned on that. They -- we did make them a proposal. They've hired an investment banking firm to explore strategic alternatives, and that process is underway. And when there's something to announce, there's something -- there'll be something to announce. Operator: Our next question is from Theodore O'Neill with Litchfield Hills Research. Theodore O'Neill: I'm struck by how well Energy Services is doing. And Rick, I wonder if you could talk about -- it's up year-over-year, but it's also up sequentially. Can you give us some more detail on what's going on there? Jeffrey Eberwein: Go ahead, Rick, and I'll -- I may add to it after you're done. Richard Coleman: All right. Thanks, Theo. Happy to address that question. We're very pleased with the way the business is going. One aspect of it is that historically, as the previous owners had approached retirement and had known they were going to sell the business, not surprisingly, they held back on capital investments. So with their retirement and a new younger group of leadership in the company, we saw what the opportunities could be for a relatively small company in the oil fields and elsewhere. And they were unable to fulfill customer requests simply because they didn't have the tools available in inventory to deliver for rental. So we've done a good deal this year in investing in those tools, and it's paid off. It's really helped us be able to deliver a full complement of what our customers require. So there have been a number of opportunities in some very, very large drillers that we've been able to satisfy, and that's showing up in the bottom line. Theodore O'Neill: And does that show up in CapEx? Jeffrey Eberwein: Yes, it shows up in CapEx. And so since we bought it a year ago, we have increased CapEx. That's a temporary increase. Interestingly, we're seeing the benefits of that. And what we see going forward is lower CapEx. Those were onetime in nature. So we'll go back down to more maintenance levels of CapEx, which I would estimate to be around $1 million a year. We've been spending probably twice that. And we'll see the growth. We're just starting to see the growth from those investments. And I think the team on the ground has done a really good job. If you think about Q2, that was way too early to see any benefit from increased activity in the traditional energy sector, which is the original part of the business. They have excellent traction in some of these other segments that they've branched out into. We highlighted geothermal, mining, but there's also improvement in water wells, and they've gotten involved with some drilling for things that are in the industrial gases category. So things like hydrogen, helium, carbon capture. And if there's one thing I would point the investment community to take a look at a company called Fervo. It went public earlier this year. They have a corporate presentation that's out there in the public domain. Just look at the projects that they're planning to do between now and the end of the decade. It's a lot of projects. Theodore O'Neill: And that's your opportunity set as well. Jeffrey Eberwein: Exactly. Theodore O'Neill: And how do you spell that company's name? Jeffrey Eberwein: F-E-R-V-O. Operator: The next question is from Michael Mathison with Sidoti & Company. Michael Mathison: Good morning, and congratulations on the merger. Jeffrey Eberwein: Thank you. It's not done yet. We've signed the agreement. We're a long way from getting to a closed deal, but we're -- our plan is to get there. Michael Mathison: So, plunging into some of the details of the acquisition, how long of time do you think it would take for the $10 million in synergies to be realized? Is that 6 months or a year? What's your feeling about that? Jeffrey Eberwein: We -- it's a great question. It's hard to answer that with precision until we get deeper into it and closer to closing. And hopefully, we'll be able to give more color on that. But the way we're thinking about it is in phases. So Phase 1 is eliminating anything that's duplicative. And this is going to be true for any 2 public companies that merge together. On day 1, you don't need 2 audits, you don't need 2 boards, you don't need 2 sets of D&O policies, all sorts of fees and expenses with being a public company. So that's Phase 1, and so those get eliminated very quickly, let's just say, in the first quarter. Phase 2, which will also get implemented fairly quickly, is on the corporate team. If we look at the areas of finance, accounting, IT, we have our teams in place. They have their teams in place. You just don't need 2 of everything. And then over time, there could be additional cost synergies from just running the businesses more efficiently inside of the Star umbrella than having the current structure. And I would point you to -- Michael, I would point you to their financial statements. And they have an adjusted EBITDA table, and they kind of highlight -- they show in there the corporate costs, and that's where a lot of the merger synergies are going to be realized. But I would hope that similar to the Star and Hudson merger we just completed about a year ago, a year in, we will have fully realized the $10 million. Michael Mathison: Okay, that seems like a reasonable timeframe. I just wanted to get your views on it. Second question, as was said earlier, this business -- set of businesses has seen declining revenue. But when I took a look at it, I noticed that the revenue declines are quite concentrated in one of their segments, one called Revenue Solutions, down 30% year-over-year. Could you talk a little bit about what that segment does and how you would manage it differently to put it back on a revenue growth track? Jeffrey Eberwein: Sure. So this business does a lot of marketing services. There's some data and analytics that they do. It's an outsourced service. So you can ask Harte Hanks questions about that. Our perception is that it's due to a variety of things, some clients deciding to in-source instead of outsource. And this is an area where things are changing really rapidly due to AI and kind of all things digital. And when I think about what we're doing on the Hudson side, we've launched a digital initiative. We brought in a very talented person, Steph Edwards, from a bigger company, and she is head of our Digital Division. And we're staying ahead of the curve, and there's a lot of businesses out there that are going to change because of everything going on in the world, and there's going to be winners and losers, and we are determined to be a winner. So we've already incorporated digital into our service offering. Clients on the Hudson side are adopting it at different speeds. And our plan is to look at all the Harte Hanks businesses and do something similar that's already underway at Harte Hanks. We're just going to work with them and enhance and accelerate what they're doing. Michael Mathison: Great, thank you. I just had one more question, and it goes back to the Hudson side of the business. So maybe, Jake, it's a question for you. If you could just kind of give us some color on revenue trends going forward in each of the 3 regions, kind of strong or weak or flat? Jacob Zabkowicz: Yes, thank you for that. I'd say a couple different things. As Jeff mentioned, if you look at our business and you look at the projection and the direction we're on, we've made a lot of significant strides, right? We've retooled our go-to-market strategy. We've invested heavily in our digital solutions. We've brought on additional geographies to better support our clients, which is all phenomenal. The renewals that we've been under and a lot of the renewals that we're seeing right now are non-competitive. So that just tells us in our business that we're servicing our clients. We're bringing new ideas. We're staying ahead of them both from a capability capacity, but also from all overall support model, right? What we're seeing now and what we look at with the businesses and we look at where we're going to go, there is something to say about the buying habits of some of our clients. We've added a lot of great new logos this last quarter and this year in and of itself, but some of that business, that revenue is being slower to come to fruition. And what I mean by that is clients are a little bit hesitant on the number of hires or the investments that they're making. And with the attrition still being relatively low, that's impacting some of the decisions. Specifically talking about your question, I do see the Americas being a significant growth opportunity for us. And when I say the Americas, I mean both North and South America. I think EMEA as a whole will be, with all of the geopolitical issues going on in the region, will still be, I would say, medium to soft. And in APAC, we'll see some spikes in certain countries, specifically, as I mentioned, in the earnings call on around our acquisition in Japan and growing that geography. We have strong hopes to be able to continue to land and expand in our clients there. But if I look at the back half of the year and thinking about the direction we're going to continue to focus on is, one, expanding out our footprint and land and expanding new geographies with our clients and our prospective clients to ensuring that those new logo clients that we have won and those clients that we are speaking with currently today, we're quicker to help them support and stand up that support model. So one, we can provide that service to our clients, but also drive revenue growth for Hudson Talent Solutions. Michael Mathison: Well, great. That concludes my questions and good luck in the current quarter, and good luck in the rest of the year. Operator: [Operator Instructions] That concludes today's question and answer session. I will now turn the call over to Jeffrey Eberwein for closing remarks. Jeffrey Eberwein: Well, thank you for the questions, and thank you for your interest, everybody. We are here and available. Our contact information is in the press release and in the earnings slide deck. We're excited about what we're doing. I would say morale and enthusiasm is really high at our company and at our operating subsidiaries, and we believe that will translate into improved financial performance over time, even though we have some areas of softness and some areas that are below our expectations. We're working through it and we're excited about the potential acquisition of Harte Hanks and some other opportunities that we're looking at. So look forward to showing you what we can do in the future. Operator: Thank you for joining the Star Equity Holdings Second Quarter Conference Call. Today's call has been recorded and will be available on the investor section of our website, www.starequity.com. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Star Equity, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Star Equity wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Star Equity (STRR) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management attributed the $3 million in realized merger synergies to aggressive cost-cutting following the Hudson acquisition, exceeding the initial $2 million projection. Business Services performance was impacted by a 'low hire, low fire' environment, where white-collar clients are delaying talent acquisition decisions due to macroeconomic uncertainty and AI-related disruption. Building Solutions results fell below expectations due to lower-than-normal factory utilization and a significant revenue recognition shift, where a large project completed in Q2 will not be recognized until Q3. Energy Services achieved strong growth by pivoting toward geothermal and mining applications, diversifying away from traditional oil field dependency. The company maintains a disciplined capital allocation strategy, viewing its common stock as undervalued and prioritizing share repurchases over using common equity for M&A. Management emphasized that current growth investments of $1.5 million in digital solutions like Hudson Fusion are deliberate expenses intended to drive future competitive advantages. The Harte Hanks merger is expected to close in Q4 2026, creating a combined entity with approximately $400 million in revenue and $30 million in pro forma adjusted EBITDA. Management identified $10 million in potential cost synergies from the Harte Hanks deal, primarily through eliminating duplicative public company costs and consolidating corporate functions. Energy Services CapEx is expected to normalize to maintenance levels of approximately $1 million annually following a period of heavy investment in new rental tools. Building Solutions is targeting a mid-cycle run rate of $20 million in quarterly revenue with a focus on specialty sectors like affordable and senior housing to offset single-family weakness. The company plans to fund the cash portion of the Harte Hanks acquisition using existing balance sheet cash and an established $25 million revolver, avoiding external capital raises. The Harte Hanks acquisition structure includes a 30-day 'go-shop' period, allowing the target to solicit alternative offers before finalizing the Star Equity merger. A shift in the Building Solutions backlog toward 'workforce housing' and 'assisted living' reflects a strategic pivot away from traditional commercial multifamily markets which remain very weak. Management flagged that while new logo interest is robust, the conversion of pipeline to revenue is being 'pushed to the right' by client indecision regarding AI's impact on talent management. The merger consideration for Harte Hanks is capped at $19.2 million in cash, with the remainder paid in Star Equity preferred stock to protect common shareholders from dilution. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management argued the acquisition multiple is less than 3x EV/EBITDA when excluding leases and pensions from the liability stack and accounting for $10 million in synergies. To reverse revenue declines, Star plans to accelerate Harte Hanks' digital transition, citing a recent major win with Samsung as evidence of stabilizing momentum. The Americas is viewed as the primary growth engine, while EMEA is expected to remain 'medium to soft' due to ongoing geopolitical instability. Growth in the Asia-Pacific region will be driven by 'land-and-expand' strategies following the recent ACG acquisition in Japan. Growth was driven by fulfilling previously unmet customer demand after investing in tool inventory that the prior owners had neglected. Management highlighted emerging opportunities in industrial gases, including hydrogen, helium, and carbon capture, as new long-term growth vectors. Management declined to provide specific updates, noting only that GEE Group has hired an investment bank to explore strategic alternatives and the process is ongoing.

Realized merger synergies of $3.0 million on annualized basis OLD GREENWICH, Conn., Aug. 14, 2026 (GLOBE NEWSWIRE) -- Star Equity Holdings, Inc. (Nasdaq: STRR and STRRP) ("Star" or the "Company"), a diversified holding company, announced today financial results for the second quarter ended June 30, 2026. 2026 Second Quarter Summary Revenue of $54.9 million increased 54.6% from the second quarter of 2025. Gross profit of $22.8 million increased 22.3% from the second quarter of 2025. Net loss attributable to common shareholders was $2.5 million, or $0.66 per diluted share, compared to net loss attributable to common shareholders of $0.7 million, or $0.23 per diluted share, for the second quarter of 2025. Adjusted net loss per diluted share (non-GAAP measure)* was $0.15 compared to adjusted net income per diluted share of $0.20 in the second quarter of 2025. Pro forma adjusted net income per diluted share was $1.46 in the second quarter of 2025. Adjusted EBITDA (non-GAAP measure)* increased to $2.2 million versus adjusted EBITDA of $1.3 million in the second quarter of 2025; pro forma adjusted EBITDA was $8.5 million in the second quarter of 2025, including a $5.5 million realized gain in the Investments division. Total cash including restricted cash was $8.9 million at June 30, 2026. Jeff Eberwein, CEO of Star, noted, "In the second quarter, Business Services delivered modest revenue growth, with gross profit down slightly year-over-year, while Energy Services posted strong year-over-year gains in revenue, gross profit, and adjusted EBITDA, reflecting activity increases and new client wins in the geothermal and mining industries. Building Solutions remained below our expectations due to market softness and contract timing including revenue from one large project largely constructed in Q2 that will now be recognized mainly in Q3. While residential and commercial construction markets remained challenging in the second quarter, we have gained traction in the areas of workforce, affordable, and assisted living/senior housing. We continued to add attractive work to the backlog, including the previously announced $4.2 million multifamily project in New Hampshire to serve the senior community." Jake Zabkowicz, Global CEO of Hudson Talent Solutions ("HTS"), added, “HTS's revenues were up modestly year-over-year, despite continued macroeconomic uncertainty and sustained pressure in the professional talent market. We have maintained a strong focus on innovation and operational efficiency, including the expanded deployment of agentic AI and automation tools to enhance recruiter productivity, improve candidate matching, and deliver greater value to clients. These initiatives helped limit the year-over-year gross profit decline to 4% despite a mixed regional backdrop, with growth in the Americas offsetting softer conditions in Asia Pacific and EMEA. We believe our deep client relationships and continued focus on technology‑enabled delivery positions Hudson Talent Solutions to capitalize on improving market conditions over time.” Mr. Eberwein concluded, "We remain focused on disciplined execution, rigorous cost management, and returns‑driven capital allocation, including the active evaluation of M&A opportunities across all three operating divisions. Our $215 million U.S. NOL position as of December 31, 2025 represents a meaningful tax asset that we expect to enhance after‑tax returns on future growth initiatives and strategic transactions. With the realization of synergies from the Star merger completed in August 2025, a strengthening Energy Services platform, and a resilient Business Services franchise, we believe we are well positioned to navigate near‑term market volatility, improve profitability, and create long‑term value for our stockholders.” * The Company provides non-GAAP measures as a supplement to financial results based on accounting principles generally accepted in the United States ("GAAP"). Adjusted EBITDA, EBITDA, adjusted net income or loss, and adjusted net income or loss per diluted share are defined in the division / segment tables at the end of this release and a reconciliation of such non-GAAP measures to the most directly comparable GAAP measures is included within such division / segment tables. Division Highlights Building Solutions Second quarter Building Solutions revenue was $14.6 million and gross profit was $3.2 million. Adjusted EBITDA was $0.5 million. Pro forma ("PF")(1) Building Solutions revenue was $20.4 million for the second quarter of 2025, and PF gross profit was $5.2 million. PF adjusted EBITDA was $2.3 million. Building Solutions quarter-end backlog was $10.6 million, up from $8.0 million at Q1 2026, and the trailing 12-month book-to-bill ratio was 0.77. Business Services Second quarter 2026 Business Services revenue was $36.4 million, up from $35.5 million in the prior year quarter, while gross profit was $17.8 million, down from $18.6 million a year ago. Business Services adjusted EBITDA was $1.6 million, down from adjusted EBITDA of $2.2 million in the prior year quarter. In Q2 2026, the Business Services division invested $1.5 million towards growth-related investments in its digital offerings, new geographies, and other items compared to $0.8 million in Q2 2025. Regionally, Americas gross profit grew 10%. EMEA and Asia Pacific gross profit declined by 10% and 13%, respectively. Energy Services Second quarter 2026 Energy Services revenue was $3.9 million. Gross profit was $1.9 million. Energy Services adjusted EBITDA was $1.2 million in the second quarter. PF Energy Services revenue for the second quarter of 2025 was $3.3 million and PF gross profit was $1.1 million. Second quarter 2025 PF adjusted EBITDA was $0.5 million. (1) Pro forma Building Solutions and Energy Services results for the full second quarter of 2025. Corporate Costs In the second quarter of 2026, the Company's corporate costs were $1.7 million, up from $0.9 million in the prior year quarter, but down $0.8 million on a PF basis. Corporate costs in the second quarter of 2026 and 2025 excluded non-recurring expenses of $0.3 million and $0.6 million, respectively. The decrease on a pro forma basis was primarily driven by synergies realized from the Merger.. Liquidity and Capital Resources The Company ended the second quarter of 2026 with $8.9 million in cash, including $2.1 million in restricted cash. The Company used $1.7 million in cash flow from operations during the second quarter of 2026 compared to generating $0.1 million in cash flow from operations in the second quarter of 2025. Share Repurchase Program In the second quarter of 2026, the Company repurchased 15,833 shares for approximately $0.2 million. As of the end of the second quarter of 2026, the Company has approximately $1.6 million remaining under its $3 million repurchase program authorized in September 2025 and continues to view share repurchases as an attractive use of capital. NOL Carryforward As of December 31, 2025, Star had $215 million of usable net operating losses (“NOL”) in the U.S., which the Company considers to be a very valuable asset for its stockholders. In order to protect the value of the NOL for all stockholders, the Company has a rights agreement and charter amendment in place that limit beneficial ownership of Star common stock to 4.99%. Stockholders who wish to own more than 4.99% of Star common stock, or who already own more than 4.99% of Star common stock and wish to buy more, may only acquire additional shares with the Board’s prior written approval. Conference Call/Webcast The Company will conduct a conference call on Friday, August 14, 2026 at 10:00 a.m. ET to discuss this announcement. Individuals wishing to listen can access the webcast on the investor information section of the Company's website at www.starequity.com. If you wish to join the conference call, please use the dial-in information below: Toll-Free Dial-In Number: (833) 890-6161 International Dial-In Number: (412) 504-9848 The archived call will be available on the investor relations section of the Company's website at www.starequity.com. About Star Equity Holdings, Inc.Star Equity Holdings, Inc. is a diversified holding company that seeks to build long-term shareholder value by acquiring, managing, and growing businesses with strong fundamentals and market opportunities. Its current structure comprises four divisions: Building Solutions, Business Services, Energy Services, and Investments. For more information visit www.starequity.com. On August 22, 2025, the Company completed its previously announced acquisition of Star Operating Companies, Inc. (“Star Operating”, formerly known as Star Equity Holdings, Inc.), pursuant to the Agreement and Plan of Merger, dated as of May 21, 2025 (the “Merger Agreement”), by and among the Company, Star Operating and HSON Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”). Upon the terms and subject to the conditions of the Merger Agreement, on August 22, 2025, at the effective time of the merger pursuant to the Merger Agreement (the “Merger”), Merger Sub merged with and into Star Operating, with Star Operating continuing as the surviving corporation of the Merger as a wholly owned subsidiary of the Company. Effective September 5, 2025, the Company changed (i) its name to Star Equity Holdings, Inc. and (ii) its trading symbols on Nasdaq to STRR and STRRP. Building SolutionsThe Building Solutions division operates in three specialties: (i) modular building manufacturing; (ii) structural wall panel and wood foundation manufacturing, including building supply distribution operations; and (iii) glue-laminated timber (glulam) column, beam, and truss manufacturing. Business ServicesThe Business Services division provides flexible and scalable recruitment solutions to a global clientele, servicing organizations at all levels, from entry-level positions to the C-suite. The division focuses on mid-market and enterprise organizations worldwide, partnering consultatively with talent acquisition, HR, and procurement leaders to build diverse, high-impact teams and drive business success. Energy ServicesThe Energy Services division engages in the rental, sale, and repair of downhole tools used in the oil and gas, geothermal, mining, and water-well industries. InvestmentsThe Investments division manages and finances the Company’s real estate assets as well as its investment positions in private and public companies. Investor Relations:The Equity GroupLena Cati(212) [email protected] Forward-Looking Statements This press release contains statements that the Company believes to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this press release, including statements regarding the Company’s future financial condition, results of operations, business operations and business prospects, are forward-looking statements. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “predict,” “believe,” and similar words, expressions, and variations of these words and expressions are intended to identify forward-looking statements. All forward-looking statements are subject to important factors, risks, uncertainties, and assumptions, including industry and economic conditions that could cause actual results to differ materially from those described in the forward-looking statements. Such factors, risks, uncertainties, and assumptions include, but are not limited to, (1) global economic fluctuations, (2) changes in the cost and availability of commodities, materials, and equipment, (3) risks related to providing uninterrupted service to clients, (4) the ability of clients to terminate their relationship with the Company at any time, (5) risks associated with real estate ownership, (6) the Company’s ability to successfully achieve its strategic initiatives, (7) risks related to fluctuations in the Company’s operating results from quarter to quarter, (8) risks related to potential acquisitions or dispositions of businesses by the Company, (9) our profitability and growth being tied to the success of our operating businesses, (10) risks associated with our financial investments in other businesses, (11) our ability to improve existing products and services and develop, introduce, and market new products and services successfully, (12) the loss of or material reduction in our business with any of the Company’s largest customers, (13) competition in the Company’s markets, (14) risks related to potential decreases in demand for products, (15) our ability to maintain costs at an acceptable level, (16) the negative cash flows and operating losses that may recur in the future, (17) risks related to international operations, including foreign currency fluctuations, political events, trade wars, natural disasters or health crises, including the Russia-Ukraine war, and potential conflict in the Middle East, (18) risks relating to how future credit facilities may affect or restrict our operating flexibility, (19) our ability to generate or borrow sufficient cash to make payments on our indebtedness, (20) risks related to indebtedness, (21) risks associated with the Company’s investment strategy, (22) the Company’s dependence on key management personnel, (23) the Company’s ability to attract and retain highly skilled professionals, management, and advisors, (24) the Company’s ability to collect accounts receivable, (25) the Company’s exposure to legal proceedings, investigations and disputes, and limits on related insurance coverage, (26) the Company’s ability to utilize net operating loss carryforwards, (27) the potential for goodwill impairment, (28) volatility of the Company’s stock price, (29) risks related to our historically low trading volume, (30) risks related to securities or industry analysts, (31) the Company’s ability to declare dividends, (32) risks associated with failure to pay dividends on our Series A Preferred Stock, (33) our history of annual net losses, (34) risks related to our international operations, (35) risks related to compliance with federal and state laws, regulations, and other rules, (36) our exposure to employment-related claims, legal liability, and costs from clients, employees, and regulatory authorities, (37) risks related to the imposition of licensing or tax requirements or new regulations, (38) the effect of Anti-takeover provisions in our organizational documents, (39) the effect of the protective amendment contained in our Restated Certificate of Incorporation, (40) the impact of our stockholder rights plan, or “poison pill,” on stockholder decision making, (41) risks related to our scaled disclosure requirements as a smaller reporting company, (42) the Company’s heavy reliance on information systems and the impact of potentially losing or failing to develop technology, (43) the adverse impacts of cybersecurity threats and attacks, and (44) risks related to the use of new and evolving technologies, and (45) those risks set forth in “Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.” The foregoing list should not be construed to be exhaustive. Actual results could differ materially from the forward-looking statements contained in this press release. In view of these uncertainties, you should not place undue reliance on any forward-looking statements, which are based on our current expectations. These forward-looking statements speak only as of the date of this press release. The Company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise. Financial Tables Follow (1)   Non-GAAP earnings before interest, income taxes, and depreciation and amortization (“EBITDA”) and non-GAAP earnings before interest, income taxes, depreciation and amortization, non-operating income (expense), stock-based compensation expense, and other non-recurring severance and professional fees (“Adjusted EBITDA”) are presented to provide additional information about the Company's operations on a basis consistent with the measures which the Company uses to manage its operations and evaluate its performance. Management also uses these measurements to evaluate capital needs and working capital requirements. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, cash flows from operating activities, and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of the Company's profitability or liquidity. Furthermore, EBITDA and Adjusted EBITDA as presented above may not be comparable with similarly titled measures reported by other companies.(2)   The Company allocates all corporate interest income to the Investments Division. (1)   Non-GAAP earnings before interest, income taxes, and depreciation and amortization (“EBITDA”) and non-GAAP earnings before interest, income taxes, depreciation and amortization, non-operating income (expense), stock-based compensation expense, and other non-recurring severance and professional fees (“Adjusted EBITDA”) are presented to provide additional information about the Company's operations on a basis consistent with the measures which the Company uses to manage its operations and evaluate its performance. Management also uses these measurements to evaluate capital needs and working capital requirements. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, cash flows from operating activities, and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of the Company's profitability or liquidity. Furthermore, EBITDA and Adjusted EBITDA as presented above may not be comparable with similarly titled measures reported by other companies.(2)   The Company allocates all corporate interest income to the Investments Division. (1)   Pro forma Building Solutions, Energy Services, and Investments results for the full second quarter of 2025.(2)   Pro forma Non-GAAP earnings before interest, income taxes, and depreciation and amortization (“EBITDA”) and non-GAAP earnings before interest, income taxes, depreciation and amortization, non-operating (income) expense, stock-based compensation expense, and other non-recurring expenses (“Adjusted EBITDA”) are presented to provide additional information about the Company's operations on a basis consistent with the measures which the Company uses to manage its operations and evaluate its performance. Management also uses these measurements to evaluate capital needs and working capital requirements. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, cash flows from operating activities, and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of the Company's profitability or liquidity. Furthermore, EBITDA and Adjusted EBITDA as presented above may not be comparable with similarly titled measures reported by other companies.(3)   In Q2 2025, the Company allocated all Star Operating Companies corporate interest income to the Investments Division. (1)   Pro forma Building Solutions, Energy Services, and Investments results for the full first two quarters of 2025. Alliance Drilling Tools was acquired by Star Operating Companies on March 3, 2025.(2)   Pro forma Non-GAAP earnings before interest, income taxes, and depreciation and amortization (“EBITDA”) and non-GAAP earnings before interest, income taxes, depreciation and amortization, non-operating (income) expense, stock-based compensation expense, and other non-recurring expenses (“Adjusted EBITDA”) are presented to provide additional information about the Company's operations on a basis consistent with the measures which the Company uses to manage its operations and evaluate its performance. Management also uses these measurements to evaluate capital needs and working capital requirements. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, cash flows from operating activities, and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of the Company's profitability or liquidity. Furthermore, EBITDA and Adjusted EBITDA as presented above may not be comparable with similarly titled measures reported by other companies.(3)   In Q2 2025, the Company allocated all Star Operating Companies corporate interest income to the Investments Division. (1)   Amounts may not sum due to rounding.(2)   Adjusted net income or loss per diluted share are Non-GAAP measures defined as reported net income or loss and reported net income or loss per diluted share before items such as acquisition-related costs and non-recurring expenses after tax that are presented to provide additional information about the Company's operations on a basis consistent with the measures that the Company uses to manage its operations and evaluate its performance. Management also uses these measurements to evaluate capital needs and working capital requirements. Adjusted net income or loss per diluted share should not be considered in isolation or as substitutes for net income or loss and net income or loss per share and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as measures of the Company's profitability or liquidity. Further, adjusted net income or loss and adjusted net income or loss per diluted share as presented above may not be comparable with similarly titled measures reported by other companies. (1)   Amounts may not sum due to rounding.(2)   Adjusted net income or loss per diluted share are Non-GAAP measures defined as reported net income or loss and reported net income or loss per diluted share before items such as acquisition-related costs and non-recurring expenses after tax that are presented to provide additional information about the Company's operations on a basis consistent with the measures that the Company uses to manage its operations and evaluate its performance. Management also uses these measurements to evaluate capital needs and working capital requirements. Adjusted net income or loss per diluted share should not be considered in isolation or as substitutes for net income or loss and net income or loss per share and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as measures of the Company's profitability or liquidity. Further, adjusted net income or loss and adjusted net income or loss per diluted share as presented above may not be comparable with similarly titled measures reported by other companies.(3)   Pro forma Building Solutions, Energy Services, and Investments results for the full first two quarters of 2025. Alliance Drilling Tools was acquired by Star Operating Companies on March 3, 2025.

This article first appeared on GuruFocus. Release Date: August 14, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Star Equity Holdings Inc (NASDAQ:STRR) achieved approximately $3 million in merger synergies, exceeding the initial projection of $2 million, with corporate costs down $1.5 million year-over-year. Energy Services division delivered strong growth, with revenue up 19%, gross profit up 75%, and adjusted EBITDA up 126% year-over-year, driven by new client wins in geothermal and mining. Building Solutions saw its highest quarterly order intake since Q2 2025, with new orders of $17.3 million and backlog increasing to $10.6 million from $8 million. The company announced a merger with Hart-Hanks, expected to be accretive, with estimated $10 million in cost synergies and a pro forma adjusted EBITDA of approximately $30 million. Star Equity Holdings Inc (NASDAQ:STRR) continues to repurchase shares, believing its stock is undervalued, and has $1.6 million remaining on its authorization. Business Services gross profit declined 4% year-over-year, and adjusted EBITDA fell to $1.6 million from $2.2 million, due to growth investments and pressure in the professional talent market. Building Solutions performance was below expectations, with revenue down to $14.6 million from $20.4 million and adjusted EBITDA down to $0.5 million from $2.3 million, due to market softness and project timing. New logo wins in Business Services were disappointing, with year-to-date annual contract value of only $2.1 million, well below expectations, as clients delay decisions amid uncertainty and AI concerns. The Hart-Hanks acquisition target has experienced declining revenue and adjusted EBITDA over the past five years, with a 30% year-over-year drop in its Revenue Solutions segment. The company faces a weak construction market, with a book-to-bill ratio of 0.77 and lower-than-normal factory capacity utilization, indicating continued softness in the near term. Warning! GuruFocus has detected 5 Warning Signs with STRR. Is STRR fairly valued? Test your thesis with our free DCF calculator. Q: How will Star Equity bend the curve at Hart-Hanks, which has been shedding revenue and adjusted EBITDA, and what is the impact on the G Group offer? (Joe Gomez, Noble Capital) A: Jeff Eberwein, CEO, clarified that on an apples-to-apples basis, Hart-Hanks has no debt and its EBITDA is calculated after lease and pension expenses. Adding those back brings pro forma EBITDA to the mid-teens, making the purchase price of less than $40 million an attractive multiple of under 3x EV/EBITDA. The primary focus will be on realizing cost synergies, but there are also aspirations to invest in and grow the business, citing the recent win of Samsung as a significant new logo that is ramping up. Regarding G Group, the process is underway with their investment bank, and the company will announce when there is something to report. Q: What were the expectations for the Building Solutions division, and what is the normal run rate for the business? (Joe Gomez, Noble Capital) A: Jeff Eberwein, CEO, stated that the company views a normal, mid-cycle run rate as $20 million in revenue per quarter with a 25% gross profit margin and a 10% to 15% adjusted EBITDA margin, implying $8 to $12 million of EBITDA annually. The current environment is weak, particularly in single-family and commercial multifamily, but there is traction in specialty areas like workforce, affordable, and senior housing. New orders of $17.3 million in Q2 were the highest in a year, but the backlog remains low, reflecting the challenging market conditions. Q: How long will it take to realize the $10 million in synergies from the Hart-Hanks merger? (Michael Matheson, Sidoti and Company) A: Jeff Eberwein, CEO, explained that the synergies will be realized in phases. Phase one involves eliminating duplicative public company costs (e.g., audits, boards, D&O policies) which should be completed within the first quarter. Phase two involves consolidating corporate teams in finance, accounting, and IT. He hopes that, similar to the Star-Hudson merger, the full $10 million in synergies will be realized within a year of closing. Q: Can you provide more detail on the strong performance of the Energy Services division, both year-over-year and sequentially? (Theodore O'Neill, Litchfield Hills Research) A: Rick Coleman, COO, attributed the strong performance to increased capital investments in new tools, which the previous owners had held back on. This has allowed the company to fulfill customer requests from large drillers. Jeff Eberwein, CEO, added that the CapEx increase was temporary and will return to maintenance levels of around $1 million annually. The growth is coming from new segments like geothermal, mining, water wells, and industrial gases (hydrogen, helium, carbon capture), with Fervo (F-E-R-V-O) cited as a key example of the opportunity set in geothermal. Q: What is driving the disappointing performance in the Business Services division, and what are the expectations for new logo wins? (Joe Gomez, Noble Capital) A: Jeff Eberwein, CEO, explained that while renewals have been strong, new logo wins have been significantly below expectations, with year-to-date new logo annual contract value at only $2.1 million. This is not due to losing deals to competitors but rather a symptom of a "low hire, low fire, low attrition" environment, particularly in white-collar professional companies. Clients are slow to make decisions due to macroeconomic uncertainty and are particularly frozen on how AI will impact their talent management and acquisition strategies. Q: Can you provide color on revenue trends in each of the three regions for the Hudson business going forward? (Michael Matheson, Sidoti and Company) A: Jake Zabkiewicz, CEO of Hudson Talent Solutions, stated that the Americas (North and South) represent a significant growth opportunity. EMEA is expected to remain "medium to soft" due to geopolitical issues. In APAC, there will be spikes in certain countries, particularly Japan, following the ACG acquisition. The focus for the back half of the year is on expanding the footprint, landing and expanding in new geographies, and accelerating the time it takes to stand up support models for new clients to drive revenue growth. Q: What does the Revenue Solutions segment at Hart-Hanks do, and how will you manage it differently to return it to growth? (Michael Matheson, Sidoti and Company) A: Jeff Eberwein, CEO, described the segment as an outsourced service involving marketing services and data analytics. The revenue decline is attributed to clients insourcing and rapid changes due to AI and digital transformation. The plan is to apply the same digital strategy used at Hudson, where a digital division was launched under Steph Edwards, to the Hart-Hanks businesses. The goal is to enhance and accelerate the digital initiatives already underway at Hart-Hanks to stay ahead of the curve and become a winner in the changing landscape. Q: How will the Hart-Hanks acquisition be funded, and will it require shareholder approval? (Jeff Eberwein, CEO, presentation) A: Jeff Eberwein, CEO, detailed that the $38 million acquisition will be paid half in cash and half in Star Equity preferred stock. The cash will come from the company's balance sheet, Hart-Hanks' cash, and a $25 million revolver, so no external capital is needed. No vote is required from Star Equity's common or preferred shareholders. The deal includes a 30-day go-shop period, and the company expects the deal to close by the end of the fourth quarter of 2026. Q: What were the key drivers of the cost synergies achieved from the Hudson merger? (Jeff Eberwein, CEO, presentation) A: Jeff Eberwein, CEO, reported that the company has achieved approximately $3 million in merger synergies, exceeding the initial projection of $2 million. This is measured by the reduction in corporate costs, which were $3.6 million in the first half of 2026, down from $5.1 million on a pro forma basis in the prior year. This represents a $1.5 million savings for six months, annualizing to the $3 million synergy figure. Q: What is the outlook for the Building Solutions backlog and order intake? (Rick Coleman, COO, presentation) A: Rick Coleman, COO, reported that quarter For the complete transcript of the earnings call, please refer to the full earnings call transcript.

OLD GREENWICH, Conn., Aug. 07, 2026 (GLOBE NEWSWIRE) -- Star Equity Holdings, Inc. (Nasdaq: STRR and STRRP) ("Star" or the "Company"), a diversified holding company, announced today that it will release its financial results for the second quarter ended June 30, 2026, before the open of the market on Friday, August 14, 2026. A conference call is scheduled for 10:00 a.m. ET on Friday, August 14, 2026, to discuss the results and management’s outlook. The call may be accessed by dialing: Toll Free: 1-833-890-6161 International: 1-412-504-9848 A simultaneous webcast of the call may be accessed online from the Events & Presentations link, on the Investor Relations page of the Star Equity website at: https://www.starequity.com/events-and-presentations/presentations. An archived replay of the webcast will be available shortly after the end of the conference call. About Star Equity Holdings, Inc.Star Equity Holdings, Inc. is a diversified holding company that seeks to build long-term shareholder value by acquiring, managing, and growing businesses with strong fundamentals and market opportunities. Its current structure comprises four segments: Building Solutions, Business Services, Energy Services, and Investments. For more information visit www.starequity.com. Building SolutionsThe Building Solutions division operates in three specialties: (i) modular building manufacturing; (ii) structural wall panel and wood foundation manufacturing, including building supply distribution operations; and (iii) glue-laminated timber (glulam) column, beam, and truss manufacturing. Business ServicesThe Business Services division provides flexible and scalable recruitment solutions to a global clientele, servicing organizations at all levels, from entry-level positions to the C-suite. The division focuses on mid-market and enterprise organizations worldwide, partnering consultatively with talent acquisition, HR, and procurement leaders to build diverse, high-impact teams and drive business success. Energy ServicesThe Energy Services division engages in the rental, sale, and repair of downhole tools used in the oil and gas, geothermal, mining, and water-well industries. InvestmentsThe Investments division manages and finances the Company’s real estate assets as well as its investment positions in private and public companies. For more information contact:The Equity GroupLena CatiSenior Vice [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Revenue growth of 57% was primarily driven by the inclusion of Star Operating Companies following the August 2025 merger. Realized annualized merger synergies reached $2.6 million, exceeding management's initial expectations of approximately $2 million. Energy Services outperformed by gaining market share in mining and geothermal sectors despite a declining overall U.S. rig count environment. Building Solutions results were pressured by a combination of severe winter weather, delayed contracting awards, and macroeconomic uncertainty affecting construction starts. Business Services faced a challenging global talent market, with growth in the Americas and EMEA partially offset by an 8% decline in the Asia-Pacific region. Management attributed the adjusted EBITDA loss of $1.6 million to the timing of new project starts and broader macroeconomic pressures impacting the talent and construction sectors. Management expects significant improvement in the second quarter, supported by a $4.2 million multifamily housing project win and normalizing activity levels. Internal projections align with Bloomberg consensus for positive adjusted EBITDA of $2 million to $2.5 million in Q2 and $8 million to $10 million for the second half of the year. The company plans to monetize approximately $20 million in non-EBITDA generating assets, including an idle factory in Maine and real estate from the Timber Technology acquisition. Strategic focus remains on 'land and expand' tactics in Business Services, specifically targeting untapped opportunities in Japan and Latin America. Future capital allocation will prioritize share repurchases, with $1.8 million remaining under the current authorization, and evaluating accretive M&A opportunities. The book-to-bill ratio in Building Solutions declined to 0.72, which management noted reflects the timing of significant projects slipping from Q1 into Q2. A strategic recalibration of the Middle East business was implemented to maintain a presence while being realistic about current macroeconomic opportunities in the region. The Catalyst MedTech investment is currently marked down on the books due to GAAP accounting rules, despite the private equity owner marking the investment back up to its original value. Management highlighted a bid for G-Group, contingent on customary severance agreements, as a strategy to reduce duplicative costs by merging another microcap into their structure. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management identified G-Group as an attractive target trading below cash per share with potential synergies for the Hudson Talent business. The bid is contingent on management agreeing to standard severance, and Star Equity aims to hold 5-10% of targets to profit even if outbid. The company identified at least $20 million in assets that do not generate meaningful EBITDA for eventual conversion to cash. Two primary real estate assets are valued between $8 million and $10 million combined and may be sold or utilized in sale-leaseback transactions. Hiring trends are described as 'spotty,' with Fortune 500 clients showing caution due to global tensions and interest rate uncertainty. APAC is seeing a shift toward internal mobility over external hiring, which carries a lower fee structure for the company. Revenue growth was driven by a countercyclical investment approach that increased market share in geothermal and mining. Management believes current CapEx levels are sufficient to sustain growth without further significant increases.

This article first appeared on GuruFocus. Release Date: May 12, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Revenue increased 57% year-over-year to $50.1 million, indicating strong growth. Gross profit increased 25% to $20.6 million, reflecting improved profitability. Energy Services Division delivered a strong quarter, gaining market share in key markets. The company realized $2.6 million in merger synergies, exceeding initial expectations. New business activity accelerated in Q1 2026, surpassing any quarter of 2025. Adjusted EBITDA loss increased to $1.6 million from $0.7 million in the prior-year period. Business Services division underperformed due to a challenging talent environment. Building Solutions was impacted by delayed project awards and severe winter weather. The book-to-bill ratio declined significantly to 0.72, reflecting project timing issues. Operating cash flow was negative, with $1.4 million used during Q1. Warning! GuruFocus has detected 5 Warning Signs with STRR. Is STRR fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide more insight into your recent announcement on G Group and your game plan for that investment? A: Jeff Eberwein, CEO: We identified G Group as an interesting investment because it was trading below cash per share, which is rare. We believe it could fit well with our business services division and have synergies with Hudson Talent. We are participating in the bidding process with public information only, and our bid is contingent on the management team agreeing to more normal severance terms. Whether we win the bid or someone outbids us, both outcomes could be positive for us. Q: Could you update us on the monetization of real estate assets and private investments, including the Oxford main plant? A: Jeff Eberwein, CEO: We have around $20 million in assets that don't generate significant EBITDA, which we plan to convert to cash over time. We've completed sale-leasebacks on some assets and believe our remaining real estate could be monetized similarly or sold outright. The Catalyst MedTech investment is doing well, and we expect it to convert to cash when the private equity firm decides to exit. Q: Regarding building solutions, where are you seeing strengths geographically in the second quarter? A: Rick Coleman, COO: We have good visibility in our pipeline, especially with KBS, our modular home company in Maine. Despite challenges like interest rates and geopolitical issues, we expect significant improvement in the second quarter based on recent observations. Q: Are there any dynamics related to changes in oil prices affecting the drilling service business? A: Jeff Eberwein, CEO: Despite industry shrinkage, our energy services division has thrived, gaining market share in non-traditional sectors like geothermal and carbon capture. We expect continued growth, although it's early for clients to increase capital spending significantly. Q: Can you provide thoughts on Q2 operating expenses and whether they will be similar to Q1 levels? A: Jeff Eberwein, CEO: We don't provide line-by-line guidance, but we are comfortable with the Bloomberg consensus for adjusted EBITDA, which is above $2 million for Q2. We expect positive results for the first half of the year, with Q2 EBITDA exceeding Q1's loss. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Image source: The Motley Fool. Tuesday, May 12, 2026 at 10 a.m. ET Chief Executive Officer — Jeffrey E. Eberwein Chief Operating Officer — Richard Kenneth Coleman Jr. Global CEO, Hudson Talent Solutions — Jacob Zabkowicz Jeffrey E. Eberwein: Thank you, operator, and welcome, everyone. We greatly appreciate your interest in STAR Equity Holdings and we thank you for joining us today. I will begin by reviewing the first quarter results in 2026 at the holding company level After that, Jake Zabkowicz, Global CEO of Hudson Talent Solutions, will give us an update on the performance of our business services division Finally, Rick Coleman, our chief operating officer, will provide additional insights into the performance of our Building Solutions and Energy Services divisions. As highlighted on slide 3 of our earnings slides deck, our first quarter results reflect the merger we completed last August with revenue and gross profit showing strong year over year growth. These increases were driven largely by the inclusion of STAR Operating Companies results beginning after the merger closed August 22, 2025. We have realized approximately $2.6 million of merger synergies on an annualized basis as shown on slide 4, and that beats our initial expectation of about $2 million in merger synergies. Going back to the first quarter, we were impacted by the timing of new project starts and broader macroeconomic conditions. Despite these near term pressures, we continued to make progress advancing our strategic priorities and strengthening our operating platform. Revenue increased 57% year-over-year to $50.1 million gross profit increased 25% to $20.6 million we reported an adjusted EBITDA loss of $1.6 million compared to a loss of $700 thousand in the prior year period. At the division level, our performance was mixed. Energy Services delivered a strong quarter and continued to gain market share across key end markets. Business services was worse than expected in a challenging talent environment. and we continue to invest for growth. Building Solutions was impacted by delayed project awards and weather related disruptions. That said, we are already seeing signs of improvement as we move through the second quarter supported by new business wins, improving activity levels, and continued operational and cost focus across the organization. As shown on slide 5, we ended the first quarter with $10.3 million of total cash, including $2.2 million of restricted cash. During Q1, we used $1.4 million in operating cash flow We generated a little over $3 million from the sale-leaseback transactions, We repurchased about $700 thousand of stock on our share repurchase program, and we have $1.8 million remaining under the current authorization. Over the last 12 months, we have repurchased approximately $3.3 million of stock and we continue to believe our stock is undervalued and we view share repurchases as an extremely attractive use of our capital. Across the company, we remain focused on disciplined execution, cost management, and investing in growth initiatives that we believe will enhance our competitive position, and drive improved financial performance over the balance of the year. Now I will turn it over to Jake to discuss our Hudson Talent Solutions business. Thank you, Jeffrey, and good morning. Jacob Zabkowicz: Our business services division continued to demonstrate solid top line growth in the first quarter despite the challenging macroeconomic environment impacting many industries. As shown on Slide 10 of the deck, revenue increased by 9.8%, and HTS year over year gross profit increased 6.4%. Reflecting steady improvement despite continued macroeconomic pressures in the talent market. Regionally, The Americas and EMEA performed well with gross profit growth of 21%, 11%, respectively, partially offset by 8% decline in Asia-Pac market, where the conditions remain more challenging. Have maintained a strong focus on innovation and operational efficiencies, including the expanded deployment of our AgenTic AI solutions to enhance recruiter productivity, improve candidate matching, and deliver greater value to our clients. These efforts are helping us navigate the current environment while positioning us to capitalize on improving market conditions in the future. As an example, new business activity accelerated meaningfully in Q1 2026, exceeding levels seen in any quarter of 25. We have also achieved multiple renewals in Q1 with many of our existing clients opting for a noncompetitive engagement process. This shows the depth and breadth of our partnerships in a very competitive market. We continue to take steps to strengthen our partnerships, maintain a disciplined approach to our investments, and grow the business. We are executing our playbook of land and expand with recent wins coming off the acquisition in Japan, giving us a foothold to address previously untapped opportunities. We have also taken steps to recalibrate our business in The Middle East maintaining our commitment to have a presence in the region, being realistic about the opportunity there given the broader macroeconomic environment. Additionally, the enhancements to our geographical footprint and our product offerings, particularly our digital offering, have driven robust new logo interest. We have seen an uptick in customer conversations in recent months and are focused on forging long term client relationships. We will continue to take a disciplined approach as we exit our playbook for the remainder of the year. Looking ahead, we are focused on creating a more resilient, agile, and growth oriented business for the longer term. Now, I am turning the call over to Rick, who will discuss the financial and operational performance of our Building Solutions and our Energy services divisions. Rick? Richard Kenneth Coleman Jr.: Thanks, Jake, and good morning, everyone. I will start with building solutions highlighted on slide 8. First quarter performance, which, while normally soft in the quarter, was below our expectations. A combination of delayed contracting awards, severe winter weather across our key markets, and continued macroeconomic pressures put downward pressure on both commercial and residential construction activity. Revenue for the quarter was $11.6 million, gross profit was $1.6 million, and adjusted EBITDA was a loss of $900 thousand. While these results were impacted by near term factors, our sales pipeline and customer conversations indicate underlying demand remains intact. We are also encouraged by recent wins, including a $4.2 million New Hampshire multifamily housing project we announced in April. Moving on to slide 9. Our quarter end backlog was $8 million, while the book to bill ratio of 0.72 is a significant decline from Q4, it partially reflects the timing of significant projects which slipped from Q1 to Q2. We expect backlog to rebuild as activity normalizes throughout the remainder of the year. Consistent with the strategy we outlined previously, we remain focused on disciplined project selection operational execution, and margin management. We believe these priorities, combined with improving market conditions, position the business for stronger performance as the year progresses. Turning to slide 13, The Energy Services division delivered a strong quarter maintaining the momentum we highlighted last quarter. Revenue was $3.5 million, gross profit was $1.5 million, and adjusted EBITDA was $1 million The business continues to gain share in core markets, with particularly strong mining and geothermal performance. These results reflect disciplined execution and the benefits of our diversified exposure across billing applications. Which continues to differentiate the platform and support consistent growth. Importantly, the division's strong growth has come as a result of market share gains in a declining rig count environment. We continue to invest in new tools to support this growth and believe the division is positioned to perform well in all conditions. Recognizing that we represent a relatively small percentage of our customers, our largest customers' purchases. We are also incorporating their specific needs in our investment decisions. In general, we believe we have significant opportunities to expand our presence in the geographies and markets we serve. I will now turn the call back over to Jeffrey for closing remarks. Jeffrey? Jeffrey E. Eberwein: Thank you, Rick. While the first quarter reflected expected seasonality and some near term challenges, we are encouraged by improving activity levels recent business wins, and the continued strength of our energy services platform. As we look ahead, our priorities remain consistent. Driving organic growth improving operational efficiency, and maintaining a rigorous approach to capital allocation. In parallel, we continue to evaluate accretive M&A opportunities across our operating divisions as well as potential new verticals where we can apply our operating model. Our confidence in the path forward is grounded in the progress made over the past year, as 2025 marked a pivotal period for STAR following the August merger. We are beginning to realize the benefits of shared services enhanced collaboration, and a more diversified holding company structure. This has strengthened our operating and financial position, expanded our strategic flexibility, and increased our capacity to execute on a multipronged growth strategy. Across the organization, we are investing in people, technology, and processes to enhance scalability, deepen competitive advantages, and drive margin expansion and cash generation. This disciplined approach combining organic execution with targeted external growth, positions us to compound value over time. With a stronger platform and a clear strategic road map, we believe we are well positioned to navigate the current environment and deliver in improved performance, over the balance of the year. We remain confident in our long term outlook and continue to believe our shares are undervalued relative to the strength of our business and the opportunities ahead. Operator, can you please open the line for questions? Operator: We will now begin the question and answer session. To ask a question, you may press *1 on your touch tone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. At this time, we will pause momentarily to assemble our roster. The first question today comes from Joe Gomes with NOBLE Capital. Please go ahead. Analyst (Joe Gomes): Good morning. Thanks for taking my questions. Jeffrey, I do not know if you could give us a little more insight into your recent announcement on G-Group and what you think your game plan for that investment is. Jeffrey E. Eberwein: Sure. Thanks for asking, Joe. You know, we identified G-Group as an interesting investment partly because it was trading below cash per share, which, you do not you do not see very often. And also, we thought it could potentially be a good fit for our business services division and could have some synergies with our Hudson Talent business. And on top of that, STAR itself is a amalgamation of a few different companies, and we completed a merger last year where we initially thought, we would realize cost savings of $2 million, and that number came in at $2.6 million, so we have shown we believe we have shown that merging another microcap into our structure we can reduce a significant amount of unneeded duplicative costs. And on G-Group specifically, it-- we were glad that they hired a financial adviser. And that they decided to run a more formal process And, we are participating from the outside. We only have public information. We do not have any material nonpublic information on G-Group at this time. And we decided to really kick off the bidding process, for lack of a better term, by throwing a number out there and, importantly, our bid is contingent on the management team there. Agreeing to more normal and customary severance So we will see how it plays out. there is scenarios where we could be the winning bidder. there is scenarios where other people outbid us and when we enter into these situations, we like to own somewhere between 5-10% of the target. So if we are outbid, we make money on our investment, and it also gives us more credibility when we go public and bid that we are also a shareholder. So we will just have to wait and see how it plays out. But either way, either 1 of those outcomes would be would be positive for us if we end up being a winning bidder or if someone outbid us and we make a nice profit on our investment. Okay. Thanks for the update. And then you know, 1 of the things we talked about in the past is monetization of some of the real estate assets or some of the private investments that you guys have, and maybe you could give us an update there and kind of similarly, that you have got the Oxford main plant that you have talked about potentially restarting You know, where does that stand at this point? Richard Kenneth Coleman Jr.: Yeah. Great. Another great question. Joe. So we have talked about having, we believe, at least $20 million of assets that do not really generate any EBITDA or certainly not meaningful EBITDA. That will get we believe will get converted to cash over time, and we did demonstrate that by completing the sale leasebacks on the assets that came with the, with the Alliance Drilling Tools. Acquisition that we made a little over a year ago. And the 2 remaining significant pieces of real estate we own, 1 is the real estate that came with the Timber Technology acquisition 2 years ago And then, as you pointed out, we have an idle factory in Maine, and both of those pieces of real estate we believe, could either be monetized via sale-leaseback transaction or just, sold for cash. Jeffrey E. Eberwein: And I think I cannot remember the estimate off the top of my head, but it is in our investor deck. it is somewhere in the $8 million to $10 million range for those 2 added together, we believe. And then on the Catalyst MedTech investment, you know, the majority shareholder there is a private equity firm. In New York City. And that business is doing well once again completing acquisitions, having nice growth, having a nice future. And like all private equity investments, the private equity firm will exit at some point. And our policy has always been we are we are just going to mark this investment using the same methodology of the PE firm does. And so, there was a downturn a temporary downturn in the performance of that company, and so the PE firm marked it down on their books This was in the I think, really, the 2024 timeframe that might have continued into 2025, and, so we just mark it down on our books, that same way they mark it down on their books. And then, now that performance has improved, they have marked it back up to our original mark, from when we closed that transaction in May 2023, but under GAAP accounting, we are not allowed to do that. So we are in the uncomfortable spot of having a different NAV for the exact same investment as what the PE firm has. But long story short, that will get converted to cash whenever the PE firm feels like it is right to investigate alternatives. Okay. Thanks for that. I will get back in queue. Analyst (Joe Gomes): Thank you. Thank you. Operator: The next question comes from Theodore O'Neill with Litchfield Hills Research. Please go ahead. Analyst (Theodore O'Neill): Oh, thanks very much. For Rick on the building solutions, can you talk about geographically where you are seeing some strength going here in the second quarter? Jeffrey E. Eberwein: Go ahead, Rick. Richard Kenneth Coleman Jr.: Thanks, Theodore. Sure. Happy to address that. We have good visibility to our pipeline, particularly in KBS, our modular home company in Wayne, where we have larger projects. So higher revenue projects. And we can see beginning at the early stage of the pipeline where the opportunities are. And then as we move through the pipeline and we begin talking about building modular components for our construction partners, we call that the active pipeline. The active pipeline are those projects where we are negotiating the terms, we are doing the initial design work, but we still have not signed a contract So as we look into the active pipeline, we feel pretty confident there strong demand still. For more construction activity. But with interest rates where they are, and a lot of uncertainty about interest rates, as well as now we have you know, war in The Middle East and a number of other things. it is just been very difficult to move those projects out of the pipeline and into construction ready mode. But I think that based on what we are seeing, here recently, we are going to see significant improvement in the second quarter. Okay. Analyst (Theodore O'Neill): And I do not know if this is a question for you, Rick, but on the energy services, yeah, you or Jeffrey, could you talk about if there are any dynamics related to the change in oil price and the drilling service business? Jeffrey E. Eberwein: Yeah. I will take that, Theodore. You know, being from Texas originally, this is a sector I have followed, most of my career. And we are very happy I will I will get to your question in a second. We have been very happy with this. Acquisition, and we feel like it is really thrived inside Star We have invested for growth They had a plan to increase their market share, and we have executed really well on that plan since we completed the acquisition in March. And if we just look at you know, Q1 2026 results versus 2025, For example, like, if you look at the pro forma table in our press release, you know, pretty nice year-on-year growth. And that was way before any increase in oil prices. And in fact, the industry shrank in Q1 26 versus Q1 25 if you just look at the rig count in The US, for example. And they did a very good job of growing in some nontraditional sectors and winning business and things like geothermal, which has a really good growth outlook in The US. They have always been active in mining opportunities, water wells, They have also gotten into some carbon capture and some hydrogen drilling, which were really kind of off the radar screen a few years ago. So we are we are excited about that business. It was performing very well. And if activity improves later this year and into next year, we think it will, we are poised to continue to have good growth there. So say it is a little early for the clients to, all of a sudden, just flip a switch and start spending more capital. But the early indicators are certainly there and the conversations are happening. Okay. Analyst (Theodore O'Neill): My last question is about can you give us any sort of thoughts about Q2 operating expenses and whether we should be looking for them to be similar to Q1 levels? Jeffrey E. Eberwein: You know, we do not get that is a really good question. We do not give guidance line by line on that, but we do look at where the consensus is on Bloomberg and you know, the Q1 results were disappointing to us. We did not hit our budget. And it is--you know, short term temporary factors. But when we look out into Q2, when we look into the second half of the year, I think the Bloomberg consensus for adjusted EBITDA is above $2 million, 2 to 2.5, something like that. We are comfortable with that. And if we hit that number, we will be positive. Will have positive results for the first half of the year. So in other words, the Q1 positive EBITDA should exceed Q2 positive EBITDA should exceed the Q1 loss. Then if we look out to the second half of the year, the Bloomberg consensus is that our adjusted EBITDA should be I think I think it is $9 million. it is in the $8 million to $10 million range, and we are very comfortable with that. Is that an absolute guarantee? No. it is not. But that is what we are projecting internally. Could be higher than that, could be lower than that, but that is our best guess based on everything we are seeing in the business and based on, what we see in the market and conversations with customers, what we see in our pipeline, historical conversion rates of that pipeline into backlog, which then translates into revenue. Okay. Thanks, Jeffrey. Thanks very much. Operator: Next question comes from Michael Mathison with Sidoti. Please go ahead. Analyst (Michael Mathison): Good morning, you guys. Morning. Couple of questions from me. First, sort of a big picture 1 for business services. In light of higher energy prices, global tensions, inflation, all the things we read about, can you comment on hiring trends in the 3 regions where business services operates? Jeffrey E. Eberwein: Yeah. I will-- I am going to turn that over to Jake. But just at a high level, I would say our clients predominantly are Fortune 500 companies. And in general, we are asking them to sign a multiyear contracts, and we had some really nice significant long term contract renewals from 2 of our top 5 top clients in Q1. And so that was really refreshing. But whenever there is uncertainty, regardless of the cause, I-- just everything else being equal it is it is not conducive to the Fortune 500 making long term commitments. So you know, it is not helpful, but we do not wanna use it as an excuse. We want to fight through it and keep pushing and keep providing good services. Why do not-- I am going to turn it over to you to get a little more granular. Jacob Zabkowicz: Yeah. Thank you, Jeffrey. And, Michael, good morning. How are you today? Real good. Thanks. Thank you for the question. So when you look at the overall macro hiring, you know, what we are seeing, it is truly spotty. What I mean by spotty is we definitely see some green shoots and some tailwinds in certain areas with some of our businesses And then quite conversely, we have also had some of our clients you know, say, hey. Hold on a second. Let's let's reevaluate where we are investing. But if you look at each region, right, and you take the APAC region in general, at first, you know, the hiring volumes in APAC were still relatively strong, the mix was different. And what I mean by the mix, you saw a lot of more of internal mobility or internal hiring and movement internally versus, you know, hiring externally and bringing new people into the businesses. And in our in some of our fee structures in that region, an internal placement is on a lower fee structure than an external placement. For multiple purposes. 1 is that we are sourcing internally. And 2 is there is an optics of that cost of just moving internal placements around. When you look at EMEA and you look at the broader EMEA market, you know, I do not have to, you know, give you guys a update on what is happening over there. But it is causing a lot of a lot of pause in rethinking investments across all of the countries in EMEA. As I mentioned in the earnings call, we did take a, structured approach to reevaluate our Middle East presence. We are going to continue to be in The Middle East. We are going to continue to have entity and resources there, and we will help support our enterprise level clients in The Middle East but it is taking a drain in a lot of the hiring activity there and having our clients rethink again and pause in certain pockets, rethink where they are gonna make investments. In The Americas, you know, we are seeing some pretty good signs of strength in The Americas right now. Latin America continues to be a growth market for us. We are signing new contracts there. You know, a couple this week already, so that is exciting. But it is at a smaller clip and a smaller pace than what we normally see. So yeah, we will see, you know, contracts, as Jeffrey mentioned, multiyear contracts. We can hire anywhere from 100 to 1 thousand people, if not north of that, every single year. But now we are seeing some more project based hiring And what we are seeing that project-based hiring is a specific time frame of less than a year and a specific number of anywhere from 20 to a couple hundred. So you get to more of the project based versus that long term forecast. I would say, as a whole, we are still seeing relatively low attrition. Across all of the markets. There are some there are some pockets where, you know, we are continuing to see some growth, which is great in many of our businesses. But to Jeffrey's point and to what we were talking about before, with our land and expand strategy and offering services in a market that were untapped to us before, is a critical strategy for our business. And we are doing that in the likes of Japan, Latin America, and we are going to continue to grow in those areas. So, Mike, I hope that answers your question, sir. It certainly did. Thank you, Jake. Very helpful. Analyst (Michael Mathison): Turning to energy services, the revenue growth is striking as you pointed out in your prepared remarks. Speaking of market share gains and so forth. Do you feel like past a certain point, Alliance will have to invest in more drilling equipment? Just to fulfill demand. Jeffrey E. Eberwein: Yeah. We feel like we have already we have already we have already done that. that the CapEx levels there might we see them basically being flat with the Q1 run rate. So we did when after we acquired it, we kind of took a countercyclical approach and we saw an opportunity to increase share and enter some of these new markets. And so we approved 1 step at a time, a higher CapEx spend, and that higher CapEx spend very quickly led to revenue growth. And so we got you know, positive feedback on our thesis very quickly. But we are it is really a lot of that was just kind of a onetime increase that was needed to grow the business. And I think from here, we can keep that level flat and still have, really good growth. Great. Great. Analyst (Michael Mathison): Thank you. I will close out with 1 more question coming back to building solutions. Obviously, the weather in the Northeast was horrendous and that clearly played a role in the balance of the year, do you see the book to bill coming back to, 2025 levels? Richard Kenneth Coleman Jr.: Short answer is-- oh, I am sorry. Operator: Jeffrey, why do not you go ahead? Jeffrey E. Eberwein: Oh, yeah. Go ahead. Go ahead. I was gonna say short answer, yes, and turn it over to Rick. Go ahead, Rick. Richard Kenneth Coleman Jr.: that is what I was doing. The problem is the numerator. In that equation. So as revenue picks up, we expect that is going to continue to improve. So I guess that is the all the color that I can provide on that for now. Analyst (Michael Mathison): Okay. Well, great. Thank you for taking my questions, and good luck in the coming quarter. Operator: Thank you. That is all the time we have for to ask a question. That concludes today's question and answer session. I will now turn the call over to Jeffrey E. Eberwein for closing remarks. Jeffrey E. Eberwein: Well, thank you for joining us. Thank you for your interest in our company. And we are available. Our contact information is on our website and is, in the press release and our corporate materials. So reach out if you have any follow-up questions. Thank you for your interest. Operator: Thank you for joining the STAR Equity Holdings first Quarter Conference Call. Today's call has been recorded and will be available on our website, www.starequity.com. Thank you for participating, and have a pleasant day. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Star Equity (STRR) Q1 2026 Earnings Transcript was originally published by The Motley Fool

Significant New Business Wins and Contract Renewals Realized Merger Synergies of $2.6 Million (1) OLD GREENWICH, Conn., May 11, 2026 (GLOBE NEWSWIRE) -- Star Equity Holdings, Inc. (Nasdaq: STRR and STRRP) ("Star" or the "Company"), a diversified holding company, announced today financial results for the first quarter ended March 31, 2026. 2026 First Quarter Summary Revenue of $50.1 million increased 57.1% from the first quarter of 2025. Gross profit $20.6 million increased 25.4% from the first quarter of 2025. Net loss attributable to common shareholders was $4.4 million, or $1.17 per diluted share, compared to net loss attributable to common shareholders of $1.8 million, or $0.59 per diluted share, for the first quarter of 2025. Adjusted net loss per diluted share (non-GAAP measure)* was $0.99 compared to adjusted net loss per diluted share of $0.38 in the first quarter of 2025. Pro forma adjusted net loss per diluted share was $0.22 in the first quarter of 2025. Adjusted EBITDA loss (non-GAAP measure)* increased to $1.6 million versus adjusted EBITDA loss of $0.7 million in the first quarter of 2025; pro forma adjusted EBITDA loss was $1.2 million in the first quarter of 2025. Total cash including restricted cash was $10.3 million at March 31, 2026. Jeff Eberwein, CEO of Star, noted, “The first quarter is almost always our weakest quarter of the year and in this year's first quarter, startup delays for new projects and broader macroeconomic conditions caused our Building Solutions and Business Services divisions to perform worse than expected. Our Energy Services division, however, maintained solid momentum. We believe our focus on operational and cost improvements and continued investments in growth and innovation are strengthening our competitive position and will drive significantly improved results as the year progresses.” Jake Zabkowicz, Global CEO of Hudson Talent Solutions ("HTS"), added, “Gross profit increased 6.4% at HTS year-over-year, reflecting steady improvement despite continued macroeconomic uncertainty and sustained pressure in the talent market. We have maintained a strong focus on innovation and operational efficiency, including the expanded deployment of agentic AI solutions to enhance recruiter productivity, improve candidate matching, and deliver greater value to clients. These efforts are helping our ability to navigate the current environment while positioning us to capitalize on improving market conditions in the future. As an example, new business activity and contract renewals with legacy clients accelerated meaningfully in the first quarter of 2026, exceeding levels seen in any quarter of 2025.” 1 $2.6 million of synergies on an annualized basis. Please reference slide 4 of Star's Q1 earnings call presentation. Rick Coleman, COO of Star, added, “Residential and commercial construction markets remained soft in the first quarter causing our Building Solutions division to perform below internal expectations, primarily due to delays in several pending contract awards and severe winter weather in both of our key geographies. However, underlying demand remains intact, as evidenced by recently secured new business, including the $4.2 million multifamily housing project in New Hampshire for our KBS business we announced on April 30, 2026. In contrast, our Energy Services division delivered a strong quarter, continuing to gain share across core markets, with particularly strong performance in mining and geothermal end markets." Mr. Eberwein concluded, “We remain focused on disciplined execution, rigorous cost management, and prudent capital allocation, including the active evaluation of M&A opportunities across all three of our operating divisions, as we continue to advance our strategic priorities. We believe we are well positioned to navigate near-term market volatility while driving increased profitability and long-term shareholder value.” * The Company provides non-GAAP measures as a supplement to financial results based on accounting principles generally accepted in the United States ("GAAP"). Adjusted EBITDA, EBITDA, adjusted net income or loss, and adjusted net income or loss per diluted share are defined in the division / segment tables at the end of this release and a reconciliation of such non-GAAP measures to the most directly comparable GAAP measures is included within such division / segment tables. Division Highlights Building Solutions First quarter Building Solutions revenue was $11.6 million and gross profit was $1.6 million. Adjusted EBITDA loss was $0.9 million. Pro forma ("PF")(1) Building Solutions revenue was $12.1 million for the first quarter of 2025, and PF gross profit was $2.9 million. PF adjusted EBITDA was $0.3 million. Building Solutions quarter-end backlog was $8.0 million, and the trailing 12-month book-to-bill ratio was 0.72. Business Services First quarter 2026 Business Services revenue was $35.0 million, up from $31.9 million in the prior year quarter, while gross profit was $17.4 million, up from $16.4 million a year ago. Business Services adjusted EBITDA loss was $0.3 million, down from adjusted EBITDA of $0.2 million in the prior year quarter. Regionally, Americas and EMEA gross profit grew 21% and 11%, respectively. This growth was partially offset by APAC, where gross profit declined by 8%. Energy Services First quarter 2026 Energy Services revenue was $3.5 million. Gross profit was $1.5 million. Energy Services adjusted EBITDA was $1.0 million in the first quarter. PF Energy Services revenue for the first quarter of 2025 was $2.6 million and PF gross profit was $1.3 million. First quarter 2025 PF adjusted EBITDA was $0.5 million. (1) Pro forma Building Solutions, Energy Services, and Investments results for the full first quarter of 2025. Alliance Drilling Tools was acquired by Star Operating Companies on March 3, 2025. Corporate Costs In the first quarter of 2026, the Company's corporate costs were $1.9 million, up from $0.9 million in the prior year quarter, but down $0.7 million on a PF basis. Corporate costs in the first quarter of 2026 and 2025 excluded non-recurring expenses of $0.2 million and $0.3 million, respectively. The decrease in corporate costs was primarily driven by the Merger. Liquidity and Capital Resources The Company ended the first quarter of 2026 with $10.3 million in cash, including $2.2 million in restricted cash. The Company used $1.4 million in cash flow from operations during the first quarter of 2026 compared to using $0.8 million in cash flow from operations in the first quarter of 2025. Share Repurchase Program In the first quarter of 2026, the Company repurchased 70,424 shares for approximately $0.7 million As of the end of the first quarter of 2026, the Company has approximately $1.8 million remaining under its $3 million repurchase program authorized in September 2025 and continues to view share repurchases as an attractive use of capital. NOL Carryforward As of December 31, 2025, Star had $215 million of usable net operating losses (“NOL”) in the U.S., which the Company considers to be a very valuable asset for its stockholders. In order to protect the value of the NOL for all stockholders, the Company has a rights agreement and charter amendment in place that limit beneficial ownership of Star common stock to 4.99%. Stockholders who wish to own more than 4.99% of Star common stock, or who already own more than 4.99% of Star common stock and wish to buy more, may only acquire additional shares with the Board’s prior written approval. Conference Call/Webcast The Company will conduct a conference call on Tuesday, May 12, 2026 at 10:00 a.m. ET to discuss this announcement. Individuals wishing to listen can access the webcast on the investor information section of the Company's web site at www.starequity.com. If you wish to join the conference call, please use the dial-in information below: Toll-Free Dial-In Number: (833) 890-6161 International Dial-In Number: (412) 504-9848 The archived call will be available on the investor relations section of the Company's website at www.starequity.com. About Star Equity Holdings, Inc. Star Equity Holdings, Inc. is a diversified holding company that seeks to build long-term shareholder value by acquiring, managing, and growing businesses with strong fundamentals and market opportunities. Its current structure comprises four divisions: Building Solutions, Business Services, Energy Services, and Investments. For more information visit www.starequity.com. On August 22, 2025, the Company completed its previously announced acquisition of Star Operating Companies, Inc. (“Star Operating”, formerly known as Star Equity Holdings, Inc.), pursuant to the Agreement and Plan of Merger, dated as of May 21, 2025 (the “Merger Agreement”), by and among the Company, Star Operating and HSON Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”). Upon the terms and subject to the conditions of the Merger Agreement, on August 22, 2025, at the effective time of the merger pursuant to the Merger Agreement (the “Merger”), Merger Sub merged with and into Star Operating, with Star Operating continuing as the surviving corporation of the Merger as a wholly owned subsidiary of the Company. Effective September 5, 2025, the Company changed (i) its name to Star Equity Holdings, Inc. and (ii) its trading symbols on Nasdaq to STRR and STRRP. Building Solutions The Building Solutions division operates in three specialties: (i) modular building manufacturing; (ii) structural wall panel and wood foundation manufacturing, including building supply distribution operations; and (iii) glue-laminated timber (glulam) column, beam, and truss manufacturing. Business Services The Business Services division provides flexible and scalable recruitment solutions to a global clientele, servicing organizations at all levels, from entry-level positions to the C-suite. The division focuses on mid-market and enterprise organizations worldwide, partnering consultatively with talent acquisition, HR, and procurement leaders to build diverse, high-impact teams and drive business success. Energy Services The Energy Services division engages in the rental, sale, and repair of downhole tools used in the oil and gas, geothermal, mining, and water-well industries. Investments The Investments division manages and finances the Company’s real estate assets as well as its investment positions in private and public companies. Investor Relations: The Equity Group Lena Cati (212) 836-9611 [email protected] Forward-Looking Statements This press release contains statements that the Company believes to be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this press release, including statements regarding the Company’s future financial condition, results of operations, business operations and business prospects, are forward-looking statements. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “predict,” “believe,” and similar words, expressions, and variations of these words and expressions are intended to identify forward-looking statements. All forward-looking statements are subject to important factors, risks, uncertainties, and assumptions, including industry and economic conditions that could cause actual results to differ materially from those described in the forward-looking statements. Such factors, risks, uncertainties, and assumptions include, but are not limited to, (1) global economic fluctuations, (2) changes in the cost and availability of commodities, materials, and equipment, (3) risks related to providing uninterrupted service to clients, (4) the ability of clients to terminate their relationship with the Company at any time, (5) risks associated with real estate ownership, (6) the Company’s ability to successfully achieve its strategic initiatives, (7) risks related to fluctuations in the Company’s operating results from quarter to quarter, (8) risks related to potential acquisitions or dispositions of businesses by the Company, (9) our profitability and growth being tied to the success of our operating businesses, (10) risks associated with our financial investments in other businesses, (11) our ability to improve existing products and services and develop, introduce, and market new products and services successfully, (12) the loss of or material reduction in our business with any of the Company’s largest customers, (13) competition in the Company’s markets, (14) risks related to potential decreases in demand for products, (15) our ability to maintain costs at an acceptable level, (16) the negative cash flows and operating losses that may recur in the future, (17) risks related to international operations, including foreign currency fluctuations, political events, trade wars, natural disasters or health crises, including the Russia-Ukraine war, and potential conflict in the Middle East, (18) risks relating to how future credit facilities may affect or restrict our operating flexibility, (19) our ability to generate or borrow sufficient cash to make payments on our indebtedness, (20) risks related to indebtedness, (21) risks associated with the Company’s investment strategy, (22) the Company’s dependence on key management personnel, (23) the Company’s ability to attract and retain highly skilled professionals, management, and advisors, (24) the Company’s ability to collect accounts receivable, (25) the Company’s exposure to legal proceedings, investigations and disputes, and limits on related insurance coverage, (26) the Company’s ability to utilize net operating loss carryforwards, (27) the potential for goodwill impairment, (28) volatility of the Company’s stock price, (29) risks related to our historically low trading volume, (30) risks related to securities or industry analysts, (31) the Company’s ability to declare dividends, (32) risks associated with failure to pay dividends on our Series A Preferred Stock, (33) our history of annual net losses, (34) risks related to our international operations, (35) risks related to compliance with federal and state laws, regulations, and other rules, (36) our exposure to employment-related claims, legal liability, and costs from clients, employees, and regulatory authorities, (37) risks related to the imposition of licensing or tax requirements or new regulations, (38) the effect of Anti-takeover provisions in our organizational documents, (39) the effect of the protective amendment contained in our Restated Certificate of Incorporation, (40) the impact of our stockholder rights plan, or “poison pill,” on stockholder decision making, (41) risks related to our scaled disclosure requirements as a smaller reporting company, (42) the Company’s heavy reliance on information systems and the impact of potentially losing or failing to develop technology, (43) the adverse impacts of cybersecurity threats and attacks, and (44) risks related to the use of new and evolving technologies, and (45) those risks set forth in “Risk Factors in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.” The foregoing list should not be construed to be exhaustive. Actual results could differ materially from the forward-looking statements contained in this press release. In view of these uncertainties, you should not place undue reliance on any forward-looking statements, which are based on our current expectations. These forward-looking statements speak only as of the date of this press release. The Company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise. Financial Tables Follow (1) Non-GAAP earnings before interest, income taxes, and depreciation and amortization (“EBITDA”) and non-GAAP earnings before interest, income taxes, depreciation and amortization, non-operating income (expense), stock-based compensation expense, and other non-recurring severance and professional fees (“Adjusted EBITDA”) are presented to provide additional information about the Company's operations on a basis consistent with the measures which the Company uses to manage its operations and evaluate its performance. Management also uses these measurements to evaluate capital needs and working capital requirements. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, cash flows from operating activities, and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of the Company's profitability or liquidity. Furthermore, EBITDA and Adjusted EBITDA as presented above may not be comparable with similarly titled measures reported by other companies. (2) The Company allocates all corporate interest income to the Investments Division. (1) Pro forma Building Solutions, Energy Services, and Investments results for the full first quarter of 2025. Alliance Drilling Tools was acquired by Star Operating Companies on March 3, 2025. (2) Pro forma Non-GAAP earnings before interest, income taxes, and depreciation and amortization (“EBITDA”) and non-GAAP earnings before interest, income taxes, depreciation and amortization, non-operating (income) expense, stock-based compensation expense, and other non-recurring expenses (“Adjusted EBITDA”) are presented to provide additional information about the Company's operations on a basis consistent with the measures which the Company uses to manage its operations and evaluate its performance. Management also uses these measurements to evaluate capital needs and working capital requirements. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for operating income, cash flows from operating activities, and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as a measure of the Company's profitability or liquidity. Furthermore, EBITDA and Adjusted EBITDA as presented above may not be comparable with similarly titled measures reported by other companies. (3) In Q1 2025, the Company allocated all Star Operating Companies corporate interest income to the Investments Division. (1) Amounts may not sum due to rounding. (2) Adjusted net income or loss per diluted share are Non-GAAP measures defined as reported net income or loss and reported net income or loss per diluted share before items such as acquisition-related costs and non-recurring expenses after tax that are presented to provide additional information about the Company's operations on a basis consistent with the measures that the Company uses to manage its operations and evaluate its performance. Management also uses these measurements to evaluate capital needs and working capital requirements. Adjusted net income or loss per diluted share should not be considered in isolation or as substitutes for net income or loss and net income or loss per share and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as measures of the Company's profitability or liquidity. Further, adjusted net income or loss and adjusted net income or loss per diluted share as presented above may not be comparable with similarly titled measures reported by other companies. (3) Pro forma Building Solutions, Energy Services, and Investments results for the full first quarter of 2025. Alliance Drilling Tools was acquired by Star Operating Companies on March 3, 2025.