Star Equity Holdings, Inc. Q4 FY2025 earnings call

Jeff started by reviewing Q4 2025 results at holding company level, noting positive momentum due to addition of Building Solutions and Energy Services divisions in Aug 2025. Jake from Hudson Talent Solutions discussed business services segment, highlighting strong Q4 performance despite macro challenges, adapting to market shifts, strategic investments, expanding go-to-market strategy, and leading in digital transformation. Rick from COO provided insights: Building Solutions had strong results despite soft residential/commercial demand, Energy Services Division's ADT showed continued strength with market share expansion in core markets. Jeff closed by noting 2025 was transformational, integration tracking well, realizing cost synergies, confident in long-term outlook, repurchasing stock, focused on organic growth, operational efficiency, capital allocation, and evaluating accretive acquisitions

At the holding company level, Q4 2025 revenue grew 69% vs Q4 2024, gross profit increased 38%, adjusted EBITDA grew 156% to $2.2 million. Full-year 2025 revenue up 23%, gross profit up 14%, adjusted EBITDA from $0.9 million to $4.2 million. Pro forma full-year revenue ~$225 million (+7%), gross profit ~$95 million (+6%), adjusted EBITDA almost tripled to $12.6 million. Cash at year-end $13.4 million, working capital (excluding cash) $22.4 million. Business services segment: Q4 gross profit up 3% vs Q4 2024, full-year up 2% vs 2024. APAC and Americas had strong gross profit, EMEA declined. Building Solutions: Q4 revenue $18M, gross profit $4.6M, adjusted EBITDA $1.9M. Full-year 2025 revenue $27.6M, gross profit $6.3M, adjusted EBITDA $2.5M. Pro forma full-year 2025 metrics: revenue $71.9M, gross profit $18M, adjusted EBITDA $7.2M. Backlog as of Dec 31, 2025 $9.6M, trailing 12-month book-to-bill ratio.89. Energy Services: Q4 revenue $3.6M, gross profit $1.6M, adjusted EBITDA $0.9M. Full-year 2025 revenue $4.9M, gross profit $1.9M, adjusted EBITDA $1M. Pro forma full-year 2025: revenue 13.2M, gross profit 5.5M, adjusted EBITDA 2.9M

Building solutions expects backlog trends to improve in first half of 2026 as high-value projects move from pipeline to backlog. For 2026, expect U.S. home construction market gradual, modest recovery. Energy Services Division plans to deepen presence in core markets and enter new attractive long-term demand markets. Full-year 2026 Bloomberg consensus numbers are comfortable. Q1 2026 expected to be weakest quarter of the year in terms of revenue and EBITDA compared to Q4 2025, but year-over-year improvement expected

Weather can impact site preparation for projects. Design changes, permitting issues, and financing challenges can delay projects. Interest rates holding high can lead to fewer projects being built as builders wait or people reluctant to move. EMEA has been a weak spot for business services segment and is expected to continue to some extent in Q1 2026. Uncertainties in M&A discussions as they involve private companies with various issues that can come into play

Q: For Rick, about backlog drop, seasonality, weather impact, project delays.

A: Backlog has seasonality, weather impacts site preparation, design changes, permitting, financing can delay projects.

Q: For Jeff, update on M&A front.

A: Active in discussions for acquisitions in building solutions, energy services, business services divisions, nothing imminent but robust discussions.

Q: For Joe, did Q4 results meet expectations, M&A on G group.

A: Q4 results roughly in line but weaker in some areas, G Group could be fit for business services division, engaged investment banker, expect to participate in process.

Q: For Michael, business services verticals success, building solutions gross margin, merger synergies timing.

A: Business services saw success in manufacturing and life sciences verticals, building solutions 25% gross margin is a good modeling figure, most merger synergies already achieved with some more to come.

Q: For George, tax side with NOL, cash taxes.

A: Discrete item caused deferred tax impact, international revenue mix and statutory rates affect cash taxes, expect to pay cash taxes in entities with positive results and statutory tax rates.

Q: For David, sales leaseback, building solutions pipeline, HTS new logo, AI certification, restricted cash, stock buybacks.

A: Sales leaseback Evanston, WY property completed, other sales leasebacks expected in first quarter, pipeline is fine with active pipeline, HTS has strong new logo and renewal in Q4/Q1, AI certification is a competitive advantage, restricted cash will gradually be released, stock buyback now on 10B5 plan