Star Equity Holdings, Inc.

Business Services second-quarter 2026 revenue was $36.4 million, up 2% from $35.5 million a year ago; gross profit was $17.8 million, down 4% from $18.6 million; adjusted EBITDA was $1.6 million versus $2.2 million. Building Solutions revenue was $14.6 million, gross profit was $3.2 million, and adjusted EBITDA was $0.5 million, compared with pro forma second-quarter 2025 revenue of $20.4 million, gross profit of $5.2 million, and adjusted EBITDA of $2.3 million. Energy Services revenue was $3.9 million, up 19%; gross profit was $1.9 million, up 75%; and adjusted EBITDA was $1.2 million, up 126%, versus pro forma second-quarter 2025 revenue of $3.3 million, gross profit of $1.1 million, and adjusted EBITDA of $0.5 million. The company ended the quarter with $8.9 million in cash, including $2.1 million of restricted cash, and $21.5 million of working capital excluding cash, versus $22.4 million at year-end. For the Harte Hanks deal, management said the purchase price is $5 per share, implying about $38 million on a fully diluted basis, with a maximum cash outlay capped at $19.2 million and an expected closing in the fourth quarter; no external capital is expected to be needed. Management also said it believes it has already realized about $3 million of merger synergies from the Hudson deal and now expects about $10 million of cost savings from the Harte Hanks combination once fully implemented.

Jeff Eberwein struck a constructive but pragmatic tone. He emphasized cost discipline, saying the company has already achieved about $3 million of Hudson-merger synergies and is continuing share repurchases because management views the stock as undervalued. On Harte Hanks, he framed the deal as strategically logical, said it should be funded without external capital, and described the transaction as accretive with a path to roughly $10 million of cost savings and about $30 million of pro forma adjusted EBITDA once synergies are realized.

The operating commentary highlighted a mixed quarter with cash and working capital remaining solid. The company finished Q2 with $8.9 million of cash, including $2.1 million restricted, and $21.5 million of working capital excluding cash, modestly improved from $22.4 million at year-end. Share repurchases continued, with about $0.2 million bought back in Q2 and $1.6 million remaining on the $3 million authorization. Management also said Energy Services capex is temporarily elevated, roughly twice the expected maintenance level of around $1 million a year, and should come back down as those investments shift from growth to maintenance.

Analysts pressed on why Business Services and Building Solutions were underperforming and whether weak new-logo activity and soft construction markets were temporary. Management said Business Services is holding existing renewals well, but new business is delayed by low hiring, low attrition, and uncertainty around AI; for Building Solutions, Jeff said a normal run rate would be about $20 million of quarterly revenue, 25% gross margin, and 10% to 15% adjusted EBITDA margin, but the company is running below that in a weak Northeast/Upper Midwest market. Questions on Harte Hanks focused on declining revenue and EBITDA; Jeff argued the business should be viewed after stripping out lease and pension items, said the first priority is cost synergies, and suggested the business can be stabilized and eventually grown. Analysts also asked about the $10 million synergy timeline, and management said much of it should come quickly from duplicate public-company costs and corporate functions, with full realization hoped for by about a year.