Greetings ladies and gentlemen and welcome to the Digirad Corporation Fourth Quarter and Year End 2019 Results Conference Call. As a reminder, certain statements made during this conference call including the question-and-answer period are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements include, but are not limited to, statements about the company's revenues, costs, and expenses, margin, operations, financial results, acquisitions, and other topics related to Digirad's business, strategy, and outlook. These forward-looking statements are based on current assumptions and expectations and involve risks and uncertainties that could cause actual events and financial performance to differ materially. Risks and uncertainties include, but are not limited to, business and economic conditions, technological change, industry trends, and changes in the company's market and competition. More information about the risks and uncertainties is available in the company's filings with the U.S. Securities and Exchange Commission including annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, as well as today's press release. The information discussed on this morning's conference call should be used in conjunction with the consolidated financial statements and notes included in those reports and speak only as of the date of this call. The company undertakes no obligation to update these forward-looking statements. It is now my pleasure to introduce Jeff Eberwein, Chairman of Digirad. Mr. Eberwein you may begin.

Thank you, operator. Good morning and thank you all for joining us today for our fourth quarter and year end 2019 results conference call. On the call with me today are Matt Molchan, our CEO; Dan Koch, Executive Chairman of our ATRM division; and our Chief Operating Officer and Chief Financial Officer, David Noble. During this call, we will discuss the 2019 fourth quarter and 2019 financial results, provide an update on the company's strategy, and comment on the company's outlook. A question-and-answer period will then follow. If you didn't receive a copy of our press release and would like one, please contact our office at 858-726-1600 after the call or call our Investor Relations representative Lena Cati of The Equity Group at 212-836-9611 and we'll be happy to get you one. Also this call is being broadcast live over the Internet and may be accessed at Digirad's website via www.digirad.com. Shortly after the call, a replay will also be available on the company's website. In the earnings release today and in our comments, we make references to both GAAP results as well as adjusted results. The adjusted results are non-GAAP and do not include non-recurring charges. We will also make references to adjusted EBITDA, which is a non-GAAP measure that further excludes depreciation, amortization, interest, taxes, and stock-based compensation. Finally, we’ll make references to free cash flow, which is a non-GAAP measure, taking operating cash flow and subtracting cash paid for capital expenditures. We believe the presentation of these non-GAAP measures, along with our GAAP financial statements and reconciliations provide a more thorough analysis of our ongoing financial performance. You can find the reconciliation of our results on a GAAP versus non-GAAP basis in the earnings release. We made great strides in the fourth quarter integrating and implementing our…

Thanks, Jeff. For the fourth quarter of 2019, as compared to the same quarter of 2018, our total revenue increased by 39.4% to $36.1 million and gross margin increased 112.2% to $7.9 million. For full year 2019, as compared to full year 2018, total revenue increased by 9.6% to $114.2 million and gross margin increased by 21% to $22.1 million. Our Healthcare division segment's core business remained strong, with higher revenues from the sale of cameras and from our scanning services. Although, revenue for this division in Q4, grew by 6.2% to $27.5 million over same period prior year, full year 2019 revenue slightly decreased by 1.3% to $102.8 million from 2018. This was due to the sale of the Telerhythmics business in October of 2018. Gross profit for Q4 and full year 2019 reporting periods increased by 70.9% and 11.3% respectively over the same periods of last year, mainly due to higher camera sales and rentals the sale of our low-margin Telerhythmics business and lower health care expenses. In Diagnostic Services, revenue and gross margin percentage for the fourth quarter was $12.0 million and 22.4% compared to $11.6 million and 15.8% in last year's fourth quarter. Revenue and gross margin percentage for the 12 months of 2019 were $47.7 million and 21.5% compared to $49 million and 19.2% last year same period. The increase in diagnostic services revenue and increase in gross margin percentage in the quarter compared to the prior year was primarily due to an increase in camera rentals. However, Diagnostic Services revenue for 2019 slightly decreased from fiscal year 2018, due to the sale of our Telerhythmics business in October of 2018. Our Mobile Healthcare business produced revenue and gross margin percentage in the fourth quarter of $10.6 million and 15.2% compared to $10.8 million and 4% for the same period in the prior year. Revenue and gross margin percentage for the 12 months of 2019 were $41.3 million and 12% compared to $42.9 million and 8.6% last year same period. The quarter-over-quarter gross profit increase in Mobile Healthcare was primarily due to a favorable mix of services provided and higher utilization of mobile units combined with lower equipment maintenance costs. In our Diagnostic Imaging business, revenue and gross margin for the fourth quarter 2019 was $4.9 million and 42.3% compared to $3.6 million, and 41.2% in the prior year fourth quarter. Revenue and gross margin percentage for the 12 months of 2019 were $13.9 million and 37% compared to $12 million and 42.9% last year same period. The increase in Diagnostic Imaging revenue was due to an increase in number of camera sales, partially offset by higher material costs. Now, I'm turning the call to David Noble, our CFO and COO who will provide additional financial highlights for the quarter and the year. Dave, please go ahead.

Thanks very much, Matt. So Building & Construction division revenue was $8.5 million in the fourth quarter of this year. If we go back to the merger date of September 10, it was $11.3 million from September 10 through the end of the year. And bear in mind that the merger with ATRM which effectively is our new Building & Construction division closed on September 10, so we don't have comparable periods of data for the prior year Our 12 months of 2019 SG&A increased by 5.5% compared to 2018, due to $2 million in additional expenses from our new Building & Construction division, which was partially offset by lower salaries and benefits resulting from the lower headcount following the sale of our Telerhythmics business on the Healthcare side back in October of 2018. We also reduced costs for contracted outside services, particularly in the IT and HR areas, in an effort to streamline our internal operations throughout the year as we prepare for the first merger. Over time, we believe that the HoldCo structure will allow us to optimize corporate overhead costs, by integrating corporate functions and consolidating SG&A to generate cost savings and improved margins. We hope to begin to realize some of these benefits during 2020. Moving on to the bottom line results for the fourth quarter. We had a net loss from continuing operations of $0.3 million, which included a $0.3 million merger-related expense and investments. This compared to a net loss from continuing operations of $0.9 million in the same period in the prior year. Non-GAAP adjusted net income from continuing operations was $147,000 or $0.07 adjusted net income per share, compared to an adjusted net loss of $1.2 million or $0.59 adjusted net loss per share in the fourth quarter last year. Non-GAAP adjusted…

[Operator Instructions] Our first question comes from the line of Theodore O'Neill of Litchfield Hills Research. Please proceed with your question.

Thank you. Congratulations on a good quarter.

Thank you.

So in the building -- and the building side of the business, Q1 can often be seasonally weak because of weather and we've had pretty mild weather here. I was wondering if you could talk about what the outlook is for Q1 and whether or not you're seeing any kind of pickup from the weather.

Yes that's a good question. And we really have two businesses there in Maine where we make modular housing units both residential and commercial. The residential side is very, very seasonal with very little building occurring and very little construction occurring in the first quarter. And even though, we've had a mild winter this year is very similar to previous years where it's by far the weakest quarter of the year. And we are getting back into the commercial construction market. We're building a very significant backlog there. And we have a lot of momentum there. Those projects however are long lead time projects. And we just got the financing in place for the extra working capital investment that's needed. We just got that financing in place at the end of January. It took much longer than we would have liked. And so, we're not expecting to have any commercial projects in that division in Q1. So Q1 will be really slow with a very significant pickup starting in Q2 and the rest of the year. Hopefully going forward, we'll be able to schedule some commercial projects in Maine in Q1 to offset that weakness that we see on the residential side every year. And then in our wall panel business that's based in Minnesota that business is much less seasonal. Last year we did have a strong first quarter. This year is slower but a very strong pick up planned for the second quarter and the rest of the year. So this year in our Building and Construction business we will see seasonality. Q1 will be the weakest quarter of the year by far but we're expecting a very significant pickup going forward and that's built into our guidance that we provided.

Okay. And Jeff, one other one. Your 2020 guidance is slightly lower than the one you gave out in September, and I realize it's been six months but could you talk about what has changed?

Sure. Good question and good observation. It's a variety of factors. Things take longer than we would like. I think we'll end 2020 about the same place that we always thought we would. It's just a slower ramp than we were expecting. So when we put out that guidance, we thought the integration would happen much sooner. We thought that new financing would come in the fourth quarter and that we'd be very well positioned to start some commercial projects, especially in Maine, before the end of the fourth quarter and certainly into Q1 and getting that financing in place it just took longer than we wanted ran into the holidays. And anyway, we didn't get it done until late January. And so we just a few weeks ago got the working capital to get back in the commercial construction business. So I'd say that's the single biggest change. We are looking to reduce costs. And that always takes longer than we like. We're implementing a new IT system that we think will lead to greater efficiencies and lower cost but that's taken longer. So it's just – it's a variety of things. But if I had to pick any one single thing, I would just say a slower ramp in the Building and Construction business and on the Healthcare side that business had a very good year and should continue to do well in 2020.

Thanks very much.

The free cash flow outlook didn't change that much.

[Operator Instructions] There are no further questions at this time. I will now turn the call back over to management for any closing remarks.

Thank you, operator. Before concluding the call, I'd like to note, we'll continue to tell our story as often as possible and share our message with existing shareholders and new potential investors. To that end, we're scheduled to participate in the Benchmark Industrial and Construction Conference on March 19 in Chicago, where we'll be meeting with existing and potential shareholders and other institutional investors. We hope to see some of you there. Additionally, we're planning non-deal roadshows and other conference participations. We're always available to take your call and discuss any additional questions you might have, so please do not hesitate to contact us. One thing I wanted to mention in closing is that, we are looking to do acquisitions over time both bolt-on acquisitions for our existing companies and then new divisions, new platforms for our HoldCo structure, but we do also sell assets from time-to-time. We believe we're an asset-rich company. And as you can see from our results, we're producing good revenue, gross profit, earnings and cash flow and just wanted to remind people that over the last two years, we've sold almost $12 million worth of assets in addition to the ATRM acquisition that we did. So I just wanted to state that we have a lot of assets at the company and have a high opinion of our asset value. So just in closing I just wanted to say, we appreciate all of our shareholders and your continued feedback and support. We're looking forward to speaking with you again in early May when we'll announce our first quarter 2020 results. Thank you for participating in today's call.

This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation and have a great day.