Star Equity (STRR) investor relations material

Executive summary

• Q2 2025 revenue increased 76% year-over-year to $23.7M, driven by Building Solutions growth and acquisitions of Alliance Drilling Tools (ADT) and Timber Technologies (TT).

• Gross margin improved to 26.4% from 16.4% in the prior year, reflecting higher revenues and the addition of higher-margin businesses.

• Net income for Q2 2025 was $3.5M, reversing a $3.8M loss in Q2 2024, aided by a $5.5M realized gain from the sale of Servotronics investment.

• Adjusted EBITDA reached $7M, mainly from investment gains in the Investments Division.

• Entered a definitive merger agreement with Hudson Global, expected to enhance scale, diversify revenue streams, and is pending shareholder approval.

Financial highlights

• Q2 2025 gross profit increased 182% year-over-year to $6.3M, with gross margin at 26.4%.

• SG&A expenses increased by 20% due to acquisitions and M&A activity, but as a percentage of revenue, SG&A fell to 27%.

• Adjusted net income for Q2 2025 was $6M, or $1.87 per share, up from a $0.9M loss year-over-year.

• Cash and cash equivalents at quarter-end were $1.9M, with total debt of $14.3M.

• Operating cash flow outflow improved to $1.7M in Q2 2025 from $1.9M in Q2 2024.

Outlook and guidance

• Building Solutions backlog at quarter-end was $25.7M, up from $14M at the end of 2024, supporting a strong outlook for 2025 and into 2026.

• Management expects continued strong demand in Building Solutions, supported by a robust sales pipeline and improving interest rate environment.

• Energy Services outlook is tied to oil and gas prices and drilling activity; U.S. rig count was down 4% year-over-year as of June 2025.

• The Hudson Global merger is expected to deliver $2M in annual cost savings from eliminating redundant public company costs within a year.

• Optimism is supported by customer feedback and ongoing contract conversions.