Star Equity (STRR) Q2 2025 earnings summary

Executive summary

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

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

• Net income from operations was $3.5 million, reversing a $3.8 million loss in Q2 2024, aided by a $5.5 million realized gain on investment sales.

• Non-GAAP adjusted net income reached $6 million, or $1.87 per share, versus an adjusted net loss of $0.9 million last year.

• A definitive merger agreement with Hudson Global was signed, with a shareholder vote scheduled for August 21, 2025.

Financial highlights

• Gross profit increased 182% to $6.3 million year-over-year, with gross margin at 26.4%.

• SG&A rose by 20%, mainly due to M&A activity and new acquisitions, but as a percentage of revenue, it fell to 27%.

• Non-GAAP adjusted EBITDA was $7 million, up from a $0.5 million loss, primarily due to realized gains in the Investments division.

• Cash flow from operations for Q2 2025 was an outflow of $1.7 million, improved from $1.9 million outflow in Q2 2024.

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

Outlook and guidance

• Building Solutions backlog stood at $25.7 million, up from $14 million year-over-year, supporting a strong outlook for 2025 and into 2026.

• Management expects Building Solutions and Energy Services performance to be at least flat with Q2 in the coming quarters.

• The Hudson Global merger is expected to deliver value through scale, diversification, and $2 million in cost synergies within a year.

• Optimism is supported by customer feedback, ongoing contract conversions, and a robust sales pipeline.

• 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.