Star Equity Holdings, Inc.

Ladies and gentlemen, and welcome to Star Equity Holdings' second quarter 2025 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 forward-looking statements. Please refer to Star Equity's most recent 10Q and other filings for more complete description of risk factors that could affect these projections and assumptions. The company assumes no obligations to update forward-looking statements as a result of new information, future events, or otherwise. Please note that on this call, Management will refer non-GAAP financial measures including EBITDA, adjusted EBITDA, adjusted net income, and adjusted earnings per share. which are all financially measures not recognized under U.S. GAAP, as required by SEC rules and regulations. These non-GAAP financial measures are reconciled to the most comparable GAAP financial measures in our earnings release issued this month. If you do not receive a copy of the earnings release and would like one after the call, please contact Star Equity at 203-489-7000. Thank you. www.starequity.com. Shortly after the call, a replay will also be available on the company's website. It is now my pleasure to introduce Rick Coleman, Chief Executive Officer of Star Equity. Please go ahead.

Thank you, Operator. Good morning, everyone. We appreciate you joining us for our second quarter 2025 results conference call. On the call with me today are Jeff Eberwine, our Executive Chairman, and Dave Noble, our Chief Financial Officer. I'll start today by providing an overview of our recent business developments and financial highlights. Then Dave will provide additional details on our consolidated financial results. Before we open the floor to questions, Jeff will also discuss recent corporate milestones. Our second quarter revenue increased 76% over the second quarter of 2024, driven primarily by organic growth from our KBS business and the inclusion of Alliance drilling tools acquired in March this year. The inclusion of a full quarter of timber technologies revenue, which we acquired in May 2024, also contributed to the increase. Gross margin improved to 26% versus 16% in the same quarter last year, mainly due to higher revenues as well as the inclusion of Alliance Drilling Tools and Timber Technologies, which are two of our higher margin businesses. Building Solutions Division revenues increased by 51% to $20.4 million compared to $13.5 million in the same quarter last year. primarily driven by increased KBS revenues and the inclusion of a full quarter of timber technologies revenues. Overall, we've seen a significant uptick in customer interest in construction activity over the past few quarters. Our building solutions backlog, representing orders under contract, remained strong at $25.7 million at quarter end, compared to $14 million at the end of the second quarter of 2024. This gives us high confidence in the division's full-year 2025 outlook and positions us well for a strong start to 2026. In our Energy Services Division, the integration of Alliance Drilling Tools, or ADT, is continuing smoothly. Despite macroeconomic headwinds, including rig count declines, ADT generated $3.3 million in revenue and $0.5 million in non-GAAP adjusted EBITDA. We're pursuing ADT's organic growth opportunities and also studying potential high-quality acquisitions to strengthen the division. Now, I'll turn the call over to Dave Noble, our CFO, to provide additional second quarter consolidated financial highlights. Dave, please go ahead.

Thank you, Rick, and good morning. Let's now turn to Star Equity's consolidated financial results, which are represented by our three operating divisions, building solutions, energy services, and investments. In Q2 2025, gross profit was $6.3 million, up 182% versus Q2 of 24, driven by increased revenue at KBS as well as the addition of TT and ADT to our portfolio of companies. SG&A increased by $1.1 million, or 20% versus Q2 of 24, driven largely by the inclusion of SG&A from ADT. and to a lesser extent the inclusion of a full quarter of TT, as well as increased expenses related to M&A activity. SG&A as a percentage of revenue decreased to 27% compared to 40% in the second quarter of last year. Moving on to bottom line results for Star Equity, we reported a positive net income from operations of $3.5 million in Q2 of 25, compared to a net loss from operations of $3.8 million in Q2 of 24. Non-GAAP adjusted net income from operations in Q2 was $6 million, or $1.87 per share, compared to an adjusted net loss of $0.9 million, or 29 cents a share, in Q2 of 24. Non-GAAP adjusted EBITDA from operations was a positive $7 million in Q2 versus an adjusted EBITDA loss of $0.5 million in the same period last year. primarily driven by realized gains on securities at our investments division. Consolidated cash flow from operations for the second quarter of 25 was an outflow of 1.7 million versus an outflow of 1.9 million in the second quarter of 24. Six-month 2025 cash flow from operations was an outflow of 1.1 million compared to an outflow of 4.3 million for the first six months of 2024. The operating cash flow improvement is attributable to more favorable results from operations, particularly in our building solutions division, and also strong accounts receivable collections. It is also worth noting that subsequent to the quarter end, in early July, our large $6.7 million receivable for brokers was converted to cash and will therefore be cash flow in the third quarter of 2025. At the end of the second quarter, our consolidated unrestricted cash balance stood at $1.9 million compared to $4.0 million at the end of 2024. This difference is primarily driven by the upfront cash used to close the acquisition of ADT in March of 2025, plus associated transaction-related costs. Turning to our investments division, our holdings and public equity securities at the end of the quarter amounted to $1.8 million versus $3.4 million at the end of 2024. Our rollover equity investment and seller note receivable from the sale of DigiRad to Catalyst MedTech in May of 2023 were valued at $1 million and $8.6 million, respectively. Now I'd like to turn the call back over to Jeff for some additional remarks.