Star Equity Holdings' Q2 2025: Unraveling Contradictions in Energy Services Pricing Power and Revenue Growth

Pricing power in Energy Services, improvement in Energy Services revenue, building solutions division margin improvement, prefab construction popularity are the key contradictions discussed in Star Equity Holdings' latest 2025Q2 earnings call.



Revenue and Earnings Growth:
- Star Equity Holdings reported a 76% increase in revenue over the second quarter of 2024, with a gross margin improvement to 26% from 16%
- Growth was driven by organic growth in the KBS business, the acquisition of Alliance Drilling Tools, and a full quarter of revenue from Timber Technologies.

Building Solutions Division Performance:
- Revenue in the Building Solutions division increased by 51% to $20.4 million compared to $13.5 million in the same quarter last year.
- This growth was primarily driven by increased KBS revenues and the inclusion of a full quarter of Timber Technologies revenues, reflecting strong customer interest in construction activity.

Merger and Acquisition Opportunities:
- Star Equity entered into a definitive merger agreement with Hudson Global, expected to generate value for stockholders due to increased scale and diversification.
- The merger, subject to shareholder approval, aims to eliminate redundant public company costs and increase shareholder value.

Energy Services Division Integration:
- Alliance Drilling Tools (ADT) generated $3.3 million in revenue and $0.5 million in adjusted EBITDA despite macroeconomic headwinds.
- The integration of ADT is progressing smoothly, with plans to pursue organic growth opportunities and explore potential high-quality acquisitions to strengthen the division.