Star Equity Holdings — Q3 2026 Earnings Summary

Financial Performance:

• Total revenue for the quarter ended September 30, 2026, was $53.9 million, a 12.4% increase from $47.96 million in the prior year quarter.
• Gross profit was $23.2 million, up 12.6% from $20.6 million in the prior year quarter.
• Net loss attributable to common shareholders was $2.2 million ($0.60 per diluted share), compared to a net loss of $1.8 million ($0.56 per diluted share) in the prior year quarter.
• Adjusted net loss per diluted share (non-GAAP) was $0.26, compared to adjusted net income of $0.08 per diluted share in the prior year quarter.
• Adjusted EBITDA (non-GAAP) increased to $1.5 million from $1.3 million in the prior year quarter; pro forma adjusted EBITDA was $3.1 million.
• Cash flow from operations was $0.9 million, a significant improvement from a cash outflow of $2.7 million in the prior year quarter.
• Total cash and restricted cash stood at $7.8 million at quarter-end.

Guidance and Future Outlook:

• Management expects to improve profitability in 2027.
• The Company anticipates receiving gross proceeds of over $9.0 million from two sale-leaseback transactions regarding non-cash-generating real estate assets.
• The Company intends to continue evaluating M&A opportunities across all three operating divisions.

Business Segments and Product Lines:

• Building Solutions: Revenue was $16.3 million with gross profit of $3.3 million and adjusted EBITDA of $0.7 million. Pro forma results for the prior year quarter showed revenue of $21.4 million and adjusted EBITDA of $2.6 million. Backlog grew to $11.4 million from $10.6 million at the end of Q2 2026. New orders exceeded $17.0 million for the second consecutive quarter. A large project deposit was shifted from 2026 to 2027.
• Business Services: Revenue was $33.8 million, down from $37.0 million in the prior year quarter. Gross profit was $18.2 million versus $18.6 million previously. Adjusted EBITDA was $1.0 million compared to $1.7 million previously. Americas gross profit grew 4%, while EMEA and Asia Pacific gross profit declined 9% and 5%, respectively. The division invested $1.4 million in growth initiatives, including digital offerings and new geographies.
• Energy Services: Revenue was $3.7 million with gross profit of $1.8 million and adjusted EBITDA of $1.1 million. Pro forma results for the prior year quarter showed revenue of $3.7 million and adjusted EBITDA of $1.0 million. The division acquired a machine shop in Vernal, Utah, in October to add in-house machining, repair, and rebuild capabilities.
• Hudson Talent Solutions (HTS): Limited year-over-year gross profit decline to 2%, supported by 4% growth in the Americas. Acquired Cornerstone RPO in November to bolster U.S. presence and add enterprise client relationships. Ranked No. 3 globally in HRO Today's 2026 Global RPO Baker's Dozen Customer Satisfaction Ratings.

Market and Competitive Landscape:

• Building Solutions faces continued softness in residential and multifamily new construction markets.
• Business Services operates in a professional talent market experiencing continued macroeconomic uncertainty and pressure.
• HTS improved its global ranking to No. 3 in customer satisfaction ratings.

Risks and Challenges:

• Building Solutions backlog excludes a large project with a non-refundable deposit that has been shifted to 2027.
• Business Services gross profit declined in EMEA and Asia Pacific regions.
• Corporate costs were $1.8 million, up from $1.2 million in the prior year quarter, though down $0.8 million on a pro forma basis.

Management Commentary and Tone:

• CEO Jeff Eberwein noted that Energy Services gross profit and adjusted EBITDA increased on a pro forma basis, while Building Solutions results were below the prior year on a pro forma basis due to market softness.
• Jake Zabkowicz, Global CEO of HTS, stated that despite market pressures, the division is well-positioned to win new business due to investments in growth initiatives and recognition in customer satisfaction ratings.
• Management emphasized a focus on disciplined execution, rigorous cost management, and returns-driven capital allocation.

Other Key Points:

• The Company repurchased 28,736 shares for approximately $0.3 million during the quarter.
• Approximately $1.3 million remains under the $3 million share repurchase program authorized in September 2025.
• As of December 31, 2025, the Company held $215 million in usable U.S. net operating losses (NOL).
• A rights agreement and charter amendment limit beneficial ownership of common stock to 4.99% to protect NOL value.
• Two accretive bolt-on acquisitions were recently closed.
• The Company is in the process of monetizing real estate assets via sale-leaseback transactions.