OLD GREENWICH, Conn. - Star Equity Holdings, Inc. (NASDAQ:STRR; STRRP), a diversified holding company, has announced that its subsidiary KBS Builders, Inc. has been awarded two contracts with a combined value of $4.6 million. These contracts are for the manufacturing of modular units aimed at expanding affordable housing options in Maine.
The larger of the two contracts, valued at $3.0 million, involves the production of 32 modules for the construction of 15 cottages in Northeast Harbor, Maine. Manufacturing for this project began last month, and the delivery of the modules is scheduled to be completed by December. The cottages are expected to be available for occupancy by Spring 2025.
The second contract, worth $1.6 million, is for the creation of 8 modules that will be used to build two multi-story buildings comprising 16 affordable housing units in Newcastle, Maine. The manufacturing process for these units is set to commence this month, with a targeted delivery by December and occupancy slated for Spring 2025.
Rick Coleman, CEO of Star Equity Holdings, expressed confidence in the company's modular manufacturing division, citing the recent upturn in demand for new construction in New England and the Northeast. He credited the interest rate cuts for the gradual increase in demand for new construction projects and believes that KBS's strong capabilities position the company well for growth in key market segments, including affordable housing.
Star Equity Holdings operates through two divisions: Building Solutions and Investments. The Building Solutions division includes modular building manufacturing, structural wall panel and wood foundation manufacturing, building supply distribution, and glue-laminated timber manufacturing. The Investments division handles the company's real estate assets and investment positions in various companies.
The company's announcement includes forward-looking statements that are subject to risks and uncertainties. These statements are based on current projections, plans, objectives, and assumptions and may differ materially from actual results due to various factors.
The information for this report is based on a press release statement from Star Equity Holdings, Inc.
In other recent news, Star Equity Holdings has made significant changes to its board of directors and corporate governance structure, including the departure of three directors and a reduction in the minimum number of directors from five to four. The company also reported a notable 51.6% increase in Q2 revenue year-over-year, which was attributed to strategic acquisitions and expanded operations. However, the company's gross margin faced a 14.9% decline, primarily due to a one-time purchase price adjustment from the Timber Technologies acquisition.
Star Equity Holdings has also implemented a Rights Agreement to safeguard its U.S. net operating loss carryforwards (NOLs) and other tax benefits, valued at approximately $43.2 million. Additionally, the company announced a new $1.0 million share repurchase plan and an investment in Enservco (NYSE:ENSV), indicating strategic moves to manage its capital and invest in growth opportunities.
Maxim Group has adjusted its outlook for the company, reducing its stock price target from $10 to $8 while maintaining a Buy rating. This adjustment follows the release of Star Equity's recent quarterly financial results, which showed revenues falling short of expectations and an EBITDA loss that matched projections. These are some of the recent developments at Star Equity Holdings.
InvestingPro Insights
To complement Star Equity Holdings' recent contract wins in the affordable housing sector, let's delve into some financial metrics provided by InvestingPro that offer additional context to the company's current position.
According to InvestingPro data, Star Equity Holdings has a market capitalization of $13.34 million, reflecting its status as a small-cap company in the construction industry. The company's price-to-book ratio stands at 0.34, which aligns with an InvestingPro Tip indicating that the company is "trading at a low Price / Book multiple." This could suggest that the stock is undervalued relative to its book value, potentially making it an interesting prospect for value investors.
However, it's crucial to note that Star Equity Holdings faces some financial challenges. An InvestingPro Tip reveals that the company is "quickly burning through cash," which investors should consider in light of the new contracts announced. While these contracts may provide a revenue boost, the company's cash management will be critical to watch in the coming quarters.
On a positive note, another InvestingPro Tip states that "liquid assets exceed short term obligations," indicating that the company maintains a degree of financial flexibility to meet its near-term commitments. This could be particularly important as Star Equity Holdings ramps up production for the newly awarded modular housing projects.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide deeper insights into Star Equity Holdings' financial health and market position. These additional tips, along with real-time metrics and expert analysis, are available to InvestingPro subscribers, offering a more nuanced view of the company's prospects in the evolving construction and affordable housing markets.
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