Star Equity (NASDAQ:STRR) reported third-quarter 2026 revenue of $53.9 million and adjusted EBITDA of $1.5 million, as strength in Energy Services was offset by weaker professional hiring and construction markets.
CEO Jeff Eberwein said reported revenue, gross profit and adjusted EBITDA rose from a year earlier, largely because the latest quarter included a full three months of the Building Solutions and Energy Services divisions. Those businesses were included for only part of the year-earlier quarter following the August 2025 merger between Hudson and Star.
Gross profit was $23.2 million. The company generated $0.9 million in operating cash flow, compared with $2.7 million used in the third quarter of 2025, and had net capital expenditures of $0.3 million.
Eberwein said the company had realized $3.1 million in annualized merger synergies, exceeding its initial expectation of $2 million. Third-quarter corporate costs were $1.8 million, down from $2.6 million on a pro forma basis a year earlier.
Business Services invests amid hiring pressure
Business Services revenue fell 9% to $33.8 million, while gross profit declined 2% to $18.2 million. Adjusted EBITDA dropped to $1 million from $1.7 million a year earlier.
Jake Zabkowicz, CEO of Hudson Talent Solutions, said the lower adjusted EBITDA reflected investments in digital solutions, Hudson Fusion, new geographies and other growth initiatives. Those investments totaled $1.4 million in the quarter, up from $1 million a year earlier.
Regional performance was mixed. Gross profit increased approximately 4% in the Americas but fell 9% in Europe, the Middle East and Africa and 5% in Asia Pacific. Zabkowicz said Asia Pacific remained the division’s largest region, accounting for 62% of revenue and 45% of gross profit.
Asked about returns from automation and agentic artificial intelligence, Zabkowicz said the company was seeing benefits in areas including interview scheduling and customer satisfaction. He said it was difficult to quantify productivity gains because adoption was ongoing and results depended on client workflows and regions.
Star acquired Cornerstone RPO in November, adding U.S. enterprise client relationships and sales leadership, Zabkowicz said. Eberwein also said the loss of a low-margin contracting client contributed to the division’s revenue decline, though he did not believe the business was losing market share.
Building backlog rises despite weaker results
Building Solutions revenue declined to $16.3 million from $21.4 million on a pro forma basis a year earlier. Gross profit fell to $3.3 million from $5.3 million, and adjusted EBITDA decreased to $0.7 million from $2.6 million.
COO Rick Coleman attributed the decline partly to soft construction markets and the shift of a large KBS Builders project from 2026 to 2027. Eberwein said permitting issues contributed to the delay and that Star had received a nonrefundable deposit.
Quarter-end backlog increased to $11.4 million from $10.6 million at the end of the second quarter. New orders were $17.1 million, marking a second consecutive quarter above $17 million, while the trailing 12-month book-to-bill ratio improved to 0.86 from 0.77.
Star also announced a $2 million KBS contract for a workforce housing project on Nantucket. Eberwein said production had started and delivery was projected before the end of 2026.
Looking ahead, Eberwein said he hoped quarterly new orders would exceed $20 million at some point in 2027, potentially in the spring, but noted that larger projects can make the timing difficult to predict. He described $20 million in quarterly revenue as a level the company views as normal under mid-cycle conditions, rather than a current result.
Energy gains and asset sales
Energy Services revenue rose 1% on a pro forma basis to $3.7 million. Gross profit increased 17% to $1.8 million, while adjusted EBITDA rose 4% to $1.1 million. Coleman cited strength in mining and geothermal applications.
In October, Star acquired a machine shop in Vernal, Utah, as an addition to its ADT business. Coleman said the purchase is expected to add machining, repair and rebuilding capabilities and could improve tool-fleet utilization and margins over time.
Eberwein said Star had signed a purchase and sale agreement for a factory in Colfax, Wisconsin, and launched a transaction for a property in Oxford, Maine. The company expects more than $9 million in combined gross proceeds and hopes both transactions close before year-end.
The company ended the quarter with $7.8 million in total cash, including $1.6 million in restricted cash. It repurchased nearly 29,000 shares for $0.3 million during the quarter, leaving $1.3 million under its $3 million authorization.
Eberwein said Star was awaiting SEC clearance of its preliminary S-4 filing and bank approvals related to the proposed Harte Hanks transaction. He said the company hoped to close by year-end or early 2027. Separately, he said Star had made a public proposal for GEE Group and was waiting to see how that company’s sale process develops.
About Star Equity (NASDAQ:STRR)
Star Equity Holdings, Inc. is a diversified holding company headquartered in the United States. Formerly known as Digirad Corporation, the company adopted the Star Equity Holdings name as it expanded beyond its original healthcare operations. Through its Building Solutions segment, Star Equity provides structural wall panels, engineered wood products and related construction services for residential and commercial projects. Its operations support builders and developers with off-site and prefabricated construction products designed for use in a range of building applications.
