Star Equity Holdings, Inc. · NASDAQ:STRR
Star Equity — Investor Presentation (August 2024)
42 slides from Star Equity's investor presentation, Aug 27, 2024
Slide 1: A Diversified Holding Company Investor Presentation August 2024
1 A Diversified Holding Company www.starequity.com Creating shareholder value through excellence in operations and capital allocation Common Stock: Nasdaq: STRR Series A 10% Preferred Stock: Nasdaq: STRRP Investor Presentation August 2024
Slide 2: Safe Harbor Statement
2 “Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this presentation that are not statements of historical fact are h
Slide 3: Forward Looking Statement Continued
3 For a detailed discussion of cautionary statements and risks that may affect the Company’s future results of operations and financial results, please refer to the Company’s filings with the Securities and Exchange Commission, including, but not limited to, the risk factors in the Company’s most re
Slide 4: About Star Equity Holdings
4 Star Equity Holdings, Inc. Investments DivisionBuilding Solutions Division Real Estate Public Investments • Makes strategic investments in undervalued public companies, and potential acquisition targets or JV partners. • Owns, manages, and finances real estate assets of operating companies. Colfax
Slide 5: Differentiated Corporate Strategy and Structure
5 Differentiated Corporate Strategy and Structure (1) Public activism efforts are not always in pursuit of acquisition. Similar to private equity, but with key distinctions 1 Looking for accretive bolt-ons and new verticals 3 Flexible deal structuring with ability to use mix of cash, debt, common, p
Slide 6: Consolidated Financial Overview
6 $6.8 $5.4 ($0.1) ($0.2)($1.0) $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 FY 2022 FY 2023 Adj. EBITDA ($ in millions) Operating Business EBITDA Adj. EBITDA Balance Sheet Highlights (2) $10.2M Cash $10.9M Debt $19.9M Investments (1) Excludes discontinued operations, formerly Star’s Healthcare operation
Slide 7: Pro Forma Balance Sheet Highlights
7 Pro Forma Balance Sheet Highlights Recent transactions significantly improve cash balance and provide financing flexibility RECENT SALE-LEASEBACK TRANSACTIONS Monetized two real estate assets for $8.3 million(1) (1) Total cash consideration, net of closing costs. (2) Cash consideration includes $8
Slide 8: Building Solutions Division Operating Business Units
8 Building Solutions Division Operating Business Units Timber Technologies (“TT”) Glulam Manufacturing KBS Builders (“KBS”) Modular Manufacturing EdgeBuilder-Glenbrook (“EBGL”) Wall Panel Manufacturing & Building Materials Distribution A strategic combination of Building Solutions businesses in the
Slide 9: Recent Acquisition: Timber Technologies
9 Recent Acquisition: Timber Technologies Completed on May 17, 2024 $23M cash-free, debt-free purchase price •$16M in upfront cash; $4M in deferred cash; and a $3M, 2-year earn-out paid 50% in cash & 50% in shares of preferred stock (Nasdaq: STRRP) Earn-out targets are based on Adj. EBITDA of $5.4M
Slide 10: Investments Division
10 Private Investments • Star Equity Investment Holdings retains private company debt and minority equity interests • Makes strategic investments including potential acquisition targets or JV partners Investments Division Real Estate • Owns, manages, and finances real estate assets of operating comp
Slide 11: Real Estate
11 Real Estate Real Estate Assets Held Separately from OpCos to Facilitate Value Creation South Paris, Maine KBS Facility 85,000 sq ft Oxford, Maine KBS Facility - Idle 90,000 sq ft Big Lake, Minnesota Glenbrook Facility 20,000 sq ft Colfax, Wisconsin Timber Tech Facility 69,000 sq ft (1) See slide
Slide 12: Enservco Investment
12 • We believe Enservco’s management team and its ongoing reorganization position it well for long-term growth • Enservco is implementing a strategic repositioning via the: o Partial sale of its Frac Water Heating business o Entry into the Transportation & Logistics sector via the acquisition of Bu
Slide 13: Star's Growth Strategy: Multi-Pronged Approach
13 Star’s Growth Strategy Multi-Pronged Approach ✓ Increase KBS’s modular manufacturing capacity and output ✓ Explore opportunities to re-open idle Oxford, Maine plant ✓ Expand presence in each of KBS, EBGL, and TT’s markets by increasing output and adding new products and services ✓ Long-term finan
Slide 14: Star's Growth Strategy: Acquisitions
14 Star’s Growth Strategy Acquisitions • Businesses with $10-$50M in revenue and >$2M in EBITDA • Businesses with growth potential and strong local operating management teams • Existing assets, earnings, and cash flows (no start- ups or venture capital-type situations) • Open to publicly traded or p
Slide 15: Corporate Management Team
15 Jeffrey Eberwein Executive Chairman Corporate Management Team • Over 25 years of Wall Street experience; Founder and CEO of Lone Star Value Management • Portfolio Manager at Soros Fund Management and Viking Global Investors • CEO of Hudson Global, Inc., a global recruitment company; extensive pub
Slide 16: Building Solutions – KBS
16 Building Solutions – KBS Building Solutions – Financials Case Studies Supplementary Financial Information Appendix Building Solutions – EBGL & TT Investments Division
Slide 17: KBS Builders Business Unit
17 KBS Builders Business Unit Maine-based designer and manufacturer of modular housing units serving the New England Market MODULAR CONSTRUCTION BENEFITS - Shorter construction period - Significantly lower labor costs - Design flexibility - High quality control 2 MANUFACTURING FACILITIES - South Par
Slide 18: KBS Builders Commercial Project Evolution
18 .KBS Builders Commercial Project Evolution Pursuing larger, more profitable projects in select market segments $2.0M 58 modules housing for military veterans $6.7M 124 modules 28 single-family and townhouse units U.S. government project $2.0M 36 modules 2 multifamily buildings $2.0M 40 modules 20
Slide 19: Modular Industry – Growth and Trends
19 Modular Industry – Growth and Trends (1) Market size in North America topped $12 billion in 2022 • Represented almost 7% of all new construction in 2023 • Market tripled in size since 2015 • Increased adoption could help ease a severe housing shortage 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 2015
Slide 20: Modular Construction Benefits
20 Modular Construction Benefits Modular construction by the numbers (1) ~10%+ Cost savings 20% - 50% Shorter building timelines ~83% Waste reduction ~30% Less greenhouse gas emissions Timeline: Modular vs. Site-Built Construction (1) Key Trends • Growth trajectory expected to continue • Emphasis on
Slide 21: Building Solutions – EBGL & TT
21 Building Solutions – KBS Building Solutions – Financials Case Studies Supplementary Financial Information Appendix Building Solutions – EBGL & TT Investments Division
Slide 22: EBGL Business Unit
22 EBGL Business Unit Complementary manufacturing and distribution businesses managed together ❖ Long-Term Goal: high single-digit annual revenue growth rate (CAGR from 2019 through 2023 = 6%) and strategic growth through bolt-on acquisitions ABOUT GLENBROOK - Operates two lumber yards / showrooms i
Slide 23: EBGL Business Unit Products and Markets Served
23 EBGL Business Unit Products and Markets Served Wall panel and permanent wood foundation manufacturing facility located in western Wisconsin serves the upper Midwest states of Wisconsin, Iowa, Minnesota, North Dakota, South Dakota, Missouri and Oklahoma Wood Panels and Foundation Two professional
Slide 24: End Markets & Applications
24 End Markets & Applications 40% 30% 20% 10%Agriculture Commercial Industrial Residential Market Trends Agriculture • Growing use of automation is creating a more efficient industry • Larger equipment creates need for storage facilities Commercial • Increasing awareness for zero-carbon structures i
Slide 25: Building Solutions Minneapolis Metro Map
25 Building Solutions Minneapolis Metro Map Established Regional Player Twin Cities Metro Area Glenbrook Big Lake, MN Lumber Yard (leased) Glenbrook Oakdale, MN Office / Showroom (leased) Glenbrook Hudson, WI Lumber Yard (leased) Timber Technologies Solutions, Inc. Colfax, WI Glulam Manufacturing (o
Slide 26: Building Solutions – Financials
26 Building Solutions – KBS Building Solutions – Financials Case Studies Supplementary Financial Information Appendix Building Solutions – EBGL & TT Investments Division
Slide 27: Building Solutions Historical Financial Highlights
27 Building Solutions Historical Financial Highlights $28.9 $48.0 $57.1 $45.8 $- $10 $20 $30 $40 $50 $60 FY 2020 FY 2021 FY 2022 FY 2023 Revenue ($ in millions) $4.1 $3.0 $12.7 $12.2 $- $2 $4 $6 $8 $10 $12 $14 FY 2020 FY 2021 FY 2022 FY 2023 Gross Profit ($ in millions) $0.7 ($2.7) $6.3 $4.4 $(4) $(
Slide 28: Combination Adds Significant Scale to Building Solutions
28 Combination adds significant scale, more than doubling Building Solutions segment Net Income & Adj. EBITDA Star Building Solutions Segment Timber Technologies $45.8 $18.7 $- $10.0 $20.0 $30.0 $40.0 $50.0 FY 2023 Total Revenue (in millions) (1) (1) See Form 8-K filed 05/20/2024 and Form 8-K filed
Slide 29: Investments Division
29 Building Solutions – KBS Building Solutions – Financials Case Studies Supplementary Financial Information Appendix Building Solutions – EBGL & TT Investments Division
Slide 30: Investments Division: Real Estate
30 Investments Division: Real Estate Real Estate Portfolio Value 2 Facilities $6.3 Million (1) (1) Based on 2019 third-party appraisal of the Maine facility and 2024 appraisal of Timber Technologies facility. Owns Real Estate assets used by operating divisions Overview • Star Real Estate (“SRE”) own
Slide 31: Investments Division: Private Investments
31 Private Investments Portfolio Value (1) TTG Note (2) $7.8 Million TTG Equity (2) $4.7 Million MDOS Note $1.0 Million ENSV Note (3) $1.0 Million Total $14.5 Million Holds private investments in public and private companies Debt and equity interests: • TTG Imaging Solutions, LLC (“TTG”) Rollover Co
Slide 32: Investments Division: Public Investments
32 Makes strategic investments in potential acquisition targets or JVs Public Investments Portfolio Value Public Equities $3.3 Million (2) ENSV Equity $2.1 Million (12.5 million ENSV shares) (2)(3) (1) Data from Bloomberg. (2) As of 8/15/2024 based on price at close. (3) Acquired as part of the 8/9/
Slide 33: Case Studies
33 Building Solutions – KBS Building Solutions – Financials Case Studies Supplementary Financial Information Appendix Building Solutions – EBGL & TT Investments Division
Slide 34: Case Study: Healthcare Division
34 Case Study: Healthcare Division* Feb 2021 Mar 2021 May 2022 May 2023 Real Estate Sales $1 Million Sept 2018 Oct 2018 Telerhythmics Sale $2 Million Reorganization Margins DMS Sale $18.8 Million MDOS Sale $1.4 Million DHI Sale (1) $40 Million Since announcing its transition to a diversified holding
Slide 35: Case Study: Building Solutions Division
35 Case Study: Building Solutions Division August 2024 Long-Term GoalSeptember 2019 • Approx. 145k sq. ft. of production capacity • Approx. 230 modules/year; $55k/module average selling price • Primarily in single-family residential housing market • Approx. 175k sq. ft. of production capacity / abil
Slide 36: Supplementary Financial Information Appendix
36 Building Solutions – KBS Building Solutions – Financials Case Studies Supplementary Financial Information Appendix Building Solutions – EBGL & TT Investments Division
Slide 37: Reconciliation of Net Income to Adjusted EBITDA – Q2 2024
37 Reconciliation of Net Income to Adjusted EBITDA- Q2 2024 ($ in 000s) For the Three Months Ended June 30, 2024 Building Solutions Investments Star Equity Corporate Total Net income (loss) from continuing operations $ (1,115 ) $ 1,265 $ (1,407 ) $ (3,787 ) Depreciation and amortization 774 13 8 795
Slide 38: Historical Reconciliation of Net Income to Adjusted EBITDA
38 Historical Reconciliation of Net Income to Adjusted EBITDA ($ in 000s) 1) Reflects adjustments for any unrealized gains or losses on equity securities. 2) Reflects adjustments for any unrealized gains or losses in lumber derivatives value. 3) We allocate all corporate interest income to the Inves
Slide 39: Reconciliation of Net Income to Adjusted EBITDA – Timber Technologies
39 Reconciliation of Net Income to Adjusted EBITDA ($ in 000s) Star Equity Acquired Timber Technologies on May 17, 2024 For the Year Ended December 31, 2023 (in thousands) Net Income 5,627 Interest Expense - Interest Income (59) Taxes - Depreciation 368 Amortization - Total EBITDA 5,936 One-time Adj
Slide 40: Reconciliation of Net Income to Adjusted EBITDA – Building Solutions Division
40 Reconciliation of Net Income to Adjusted EBITDA ($ in 000s) Building Solutions Division For the Year Ended December 31, 2023 (in thousands) Net income (loss) from continuing operations 2,517 Depreciation and amortization 2,070 Interest expense 84 Income tax items (benefit)/expense (288) EBITDA fr
Slide 41: Capitalization Table as of August 15, 2024
41 Capitalization Table as of August 15, 2024 1 Price based on August 15, 2024 closing market price. Share count as of August 15, 2024. ² In terms of share equivalents. Expire May 28, 2025. Strike price of $11.25 per share. Price is the difference between August 15, 2024 closing common stock price a
Slide 42: Contact Us
42 Jeff Eberwein Executive Chairman Rick Coleman CEO David Noble CFO admin@starequity.com Investor Relations The Equity Group Inc. Lena Cati Senior Vice President 212-836-9611 / lcati@equityny.com Katie Murphy Analyst 212-836-9612 / kmurphy@equityny.com Contact Us
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