Star Equity Holdings Reports 41.7% Revenue Growth in Q1 2025, Despite Net Loss

Star Equity Holdings, Inc. reported a significant increase in financial performance for the first quarter of 2025, with total revenues reaching $12.9 million, a 41.7% increase from $9.1 million in the same period of 2024. The growth was primarily driven by the Building Solutions division, which generated $12.1 million in revenue, up 32.9% from the previous year, aided by the inclusion of Timber Technologies Solutions (TT) and improved results from KBS Builders, Inc. The Energy Services division, newly established through the acquisition of Alliance Drilling Tools, Inc. (ADT), contributed $806,000 in revenue.

Despite the revenue growth, the company reported a net loss of $1.2 million for the quarter, an improvement from a loss of $2.2 million in the prior year. The gross profit also saw a substantial increase, rising to $3.1 million from $1.6 million, reflecting a gross margin of 24.3%, compared to 17.3% in the previous year. The improvement in gross profit was attributed to higher revenues and operational efficiencies, particularly in the Building Solutions segment.

Star Equity's operational developments included the completion of the merger with ADT on March 3, 2025, which expanded its Energy Services division. The acquisition is expected to enhance the company's market position in the drilling tools sector, particularly in Texas and Wyoming. The company also reported a total of 3,209,340 shares of common stock outstanding as of May 8, 2025, following a reverse stock split effective June 14, 2024.

The company’s balance sheet showed total assets of $94.8 million as of March 31, 2025, up from $83.0 million at the end of 2024. This increase was driven by higher cash and cash equivalents, accounts receivable, and inventory levels. However, cash and cash equivalents decreased to $1.9 million from $4.0 million, reflecting cash used for the ADT acquisition. The company’s total liabilities also rose to $35.1 million, primarily due to increased short-term debt related to the acquisition.

Looking ahead, Star Equity Holdings expressed optimism about its growth trajectory, citing a strong sales pipeline and expected demand in both the Building Solutions and Energy Services segments. The company plans to continue exploring strategic acquisitions and organic growth opportunities to enhance its market position and profitability. However, it acknowledged potential risks from economic conditions, including inflation and interest rate fluctuations, which could impact demand for its products and services.