Star Equity Holdings, Inc. · NASDAQ:STRR
Star Equity — Investor Presentation (April 2023)
37 slides from Star Equity's investor presentation, Apr 20, 2023
Slide 1: A Diversified Holding Company Investor Presentation April 2023
Common Stock: Nasdaq: STRR Series A 10% Preferred Stock: Nasdaq: STRRP Growing shareholder value through operational excellence and disciplined capital allocation A Diversified Holding Company Investor Presentation April 2023
Slide 2: Safe Harbor Statement
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements in this release that are not statements of historical fact are hereby identi
Slide 3: About Star Equity Holdings
About Star Equity Holdings (Nasdaq: STRR; STRRP) Star Equity currently has three divisions: Diagnostic ServicesDiagnostic Imaging Across the USA HEALTHCARE KBS EBGL CONSTRUCTION Designs, manufactures, and sells proprietary mobile imaging cameras for hospitals and physicians Services existing install
Slide 4: Investment Highlights: Benefits of Our Holding Company Structure
Investment Highlights Benefits of Our Holding Company Structure • Enhanced revenue, cash flow, and earnings growth due to focus on operational excellence, cost savings, better funding, and other efficiencies • Optimized and disciplined capital allocation maximizes returns over the long term • Operat
Slide 5: Business Divisions and Corporate Structure
Business Divisions and Corporate Structure Construction Future Acquisition 2 Future Acquisition 3 Healthcare CURRENT OPERATING BUSINESSES Investments (future acquisitions to create new business divisions) • Capital Allocation • Strategic Leadership & Oversight • Mentor Operating Management Teams • R
Slide 6: Our Differentiated Corporate Strategy and Structure
Our Differentiated Corporate Strategy and Structure Similar to Private Equity, but with Key Distinctions 6 Investment partners — Star Equity shareholders — do not pay any fees and have liquidity Long-term relationship/ partnership mentality rather than fixed holding period/ short-term transactional
Slide 7: Financial Highlights and Growth Initiatives
Financial Highlights and Growth Initiatives Growing SHAREHOLDER VALUE through OPERATIONAL EXCELLENCE AND DISCIPLINED CAPITAL ALLOCATION 7
Slide 8: Financial Highlights
Financial Highlights * $49.2 $58.6 $55.0 $28.9 $48.0 $57.1 $- $20 $40 $60 $80 $100 $120 FY 2020 FY 2021 FY 2022 Revenue by Business Division ($ in millions) (1) Healthcare Construction Investments $10.2 $12.5 $13.5 $4.1 $3.0 $12.7 $(1) $2 $5 $8 $11 $14 $17 $20 $23 $26 FY 2020 FY 2021 FY 2022 Gross P
Slide 9: Growth Strategy
Growth Strategy Seeking attractive acquisition opportunities to: ORGANIC GROWTH OPPORTUNITIES Healthcare • Increase sales of proprietary, high-margin portable nuclear imaging cameras through continues hardware design and upgrades • Expand high-margin, post-warranty camera support contracts through i
Slide 10: Our Acquisition Strategy
Our Acquisition Strategy TARGETS: PUBLIC OR PRIVATE COMPANIES • Bolt-ons for existing platform businesses or creation of new divisions • Market cap of $5-50M and more valuable inside our holding company structure • Existing assets, earnings, and cash flows (no start-ups or venture capital-type situa
Slide 11: Case Study: A Success Story – Acquisition of ATRM
Case Study: A Success Story – Acquisition of ATRM 11 September 2019 April 2023 Long-TermGoal KBS • Approx. 145k sq. ft. of production capacity / two facilities • Approx. 230 modules/year out of South Paris facility • $55k/module average selling price • Primarily in single-family residential housing
Slide 12: Business Divisions: Healthcare
Business Divisions: Healthcare 12
Slide 13: Healthcare: Diagnostic Services and Diagnostic Imaging
Healthcare Diagnostic ServicesDiagnostic Imaging Across the USA Digirad Health Designs, manufactures, and sells proprietary solid-state imaging cameras for hospitals and physicians Services existing installed base Offers mobile imaging services to medical providers in their facilities 13
Slide 14: Digirad Health: Diagnostic Imaging Business Unit
Digirad Health: Diagnostic Imaging Business Unit Designs, manufactures, and sells proprietary solid-state cameras under the Digirad brand name with unmatched imaging and flexibility; services the existing installed base * SUPERIOR - Image quality - Greater flexibility - Smaller footprint - Fast imag
Slide 15: Digirad Health: Diagnostic Services Business Unit
Offers mobile imaging services to medical providers on-site at their facilities as an alternative to purchasing equipment themselves or outsourcing procedures to other providers Digirad Health: Diagnostic Services Business Unit Website: https://www.digirad.com/diagnostic-services/ STAFF Offers highl
Slide 16: Healthcare: Financial Summary
$49.2 $58.6 $55.0 $- $10 $20 $30 $40 $50 $60 FY 2020 FY 2021 FY 2022 Revenue ($ in millions) Healthcare: Financial Summary * $10.2 $12.5 $13.5 $- $2 $4 $6 $8 $10 $12 $14 $16 FY 2020 FY 2021 FY 2022 Gross Profit ($ in millions) * During the fourth quarter of 2020, Star Equity entered into a Stock Pur
Slide 17: Business Divisions: Construction
Business Divisions: Construction 17
Slide 18: Construction: KBS Builders and EBGL Construction
Construction KBS Builders EBGL Construction • Designs and manufactures custom, modular housing units for single-family and multi-family projects • Rapidly expanding presence in commercial-scale projects including in the Greater Boston Area • Largest known production capacity of any modular manufactu
Slide 19: Construction: KBS Builders Business Unit
MODULAR UNITS - Residential homes and town houses - Apartment buildings and condos - Multi-story commercial/office buildings - Other commercial applications, hospitals, schools, dormitories, etc. Construction: KBS Builders Business Unit Maine-based designer and manufacturer of modular housing units
Slide 20: Construction: KBS Builders – Progress on Multifamily Growth Initiative
Construction: KBS Builders – Progress on Multifamily Growth Initiative 20 Contract Size $2.0M $6.7M $2.0M $2.0-2.5M $9.2M $4.2M Client Martin Realty Tocci Building Corporation Real Estate Developer Non-Profit Affordable Housing Developer College in New England Real Estate Developer Scope Manufacture
Slide 21: Construction: EBGL Business Unit
Website: https://edgebuilderwallpanels.com/ Construction: EBGL Business Unit - Operates a 34,000 sq. ft. leased wall panel and wood products manufacturing plant in Prescott, WI - Services the Midwest Area - Clients: commercial contractors - Operates 33,000 sq. ft. comprising a leased professional lu
Slide 22: Construction: Financial Summary
Construction: Financial Summary $28.9 $48.0 $57.1 $- $10 $20 $30 $40 $50 $60 FY 2020 FY 2021 FY 2022 Revenue ($ in millions) $4.1 $3.0 $12.7 $- $2 $4 $6 $8 $10 $12 $14 FY 2020 FY 2021 FY 2022 Gross Profit ($ in millions) 22 • During 2021, to offset COVID-related rapid and historic rise in raw materi
Slide 23: Business Divisions: Investments
Business Divisions: Investments 23
Slide 24: Investments
Investments Investments Real Estate Investments • Owns and manages the real estate assets of Star Equity’s operating companies • Negotiates standalone financing to optimize financial leverage and cost of capital • Strategic investments in potential acquisition targets or JVs • Established Star Equit
Slide 25: Real Estate
Real Estate • Star Real Estate (“SRE”) acquired and manages three manufacturing plants in Maine; two plants were purchased from KBS and a third from a private company • All involved in the construction of modular buildings for residential, multi-family, and commercial projects STRATEGY • Future acqu
Slide 26: Star Equity Fund, LP
Investments STAR EQUITY FUND, LP • An investment fund managed by Star Equity Holdings, Inc. • Seeks to unlock shareholder value and improve corporate governance at its portfolio companies which can be: o Potential acquisition targets for Star Equity Holdings o Activist investments; pushing for chang
Slide 27: Investment Highlights
Investment Highlights Diversified business lines with multiple revenue streams Healthcare division historically has provided stable cash flow Construction division substantially improved top & bottom line (since its acquisition) and has additional significant growth potential FY 2022: $112.2M of rev
Slide 28: Corporate Management Team
RICHARD COLEMAN CHIEF EXECUTIVE OFFICER Corporate Management Team JEFFREY EBERWEIN EXECUTIVE CHAIRMAN • Over 25 years of Wall Street experience; Founder and CEO of Lone Star Value Management • Portfolio Manager at Soros Fund Management and Viking Global • CEO of Hudson Global, Inc., a global recruit
Slide 29: Operating Companies Management Team
RON SCHUMACHER EXECUTIVE CHAIRMAN EDGEBUILDER, INC. Operating Companies Management Team MARTY SHIRLEY PRESIDENT DIGIRAD HEALTH, INC. • Appointed President effective September 2022; joined Digirad in 2006; formerly President of DHI’s Services business • Over 35 years of clinical and industrial experi
Slide 30: Star Equity Holdings
*Star Equity Holdings * Star Equity Holdings
Slide 31: Historical Financial Data: Statements of Operations
Historical Financial Data: Statements of Operations ($ in 000s) 31 Twelve Months Ended December 31, 2022 2021 Revenues: Healthcare $ 55,002 $ 58,556 Construction 57,149 48,003 Investments — — Total revenues 112,151 106,559 Cost of revenues: Healthcare 41,493 46,097 Construction 44,489 44,995 Investm
Slide 32: Historical Financial Data – Balance Sheets
Historical Financial Data – Balance Sheets ($ in 000s) 32 December 31, 2022 December 31, 2021 Assets: Current assets: Cash and cash equivalents $ 4,665 $ 4,538 Restricted cash 142 278 Equity securities 3,490 47 Lumber derivative contracts — 666 Accounts receivable, net 17,756 15,811 Inventories, net
Slide 33: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA ($ in 000s) (1) Reflects adjustments for any unrealized gains or losses in lumber derivatives value and change in fair value of investments in equity securities. (2) Reflects one-time litigation costs. (3) Reflects impairment of goodwill related to the
Slide 34: Supplemental Debt Information
Supplemental Debt Information ($ in 000s) 34 December 31, 2022 December 31, 2021 Amount Weighted-Average Interest Rate Amount Weighted-Average Interest Rate Revolving Credit Facility - eCapital KBS $ — —% $ 3,131 6.00% Revolving Credit Facility - eCapital EBGL 2,592 10.25% 1,652 6.00% Revolving Cred
Slide 35: Capitalization Table
35 Capitalization Table 8 Debt balances as of December 31, 2022. 9 Weighted average cost of debt. 10 Cash balance as of December 31, 2022 and includes $0.1M of restricted cash. ¹ Price based on March 31, 2023 closing market price. Share count as of March 7, 2023. ² In terms of share equivalents. Exp
Slide 36: Other Publicly-Traded Holding Companies
Other Publicly-Traded Holding Companies 36 (1) Based on data as of 3/31/23 - $ in millions. (2) Incentive fees paid to management teams. (3) SPLP is a publicly-traded partnership as opposed to a C-corp structure. Small Cap: Ticker Market Cap(1) Business Highlights Elah Holdings Inc. ELLH 44 • Recent
Slide 37: Contact Us
Contact Us Investor Relations Lena Cati The Equity Group Inc. Senior Vice President 212-836-9611 / lcati@equityny.com 37 Jeff Eberwein Executive Chairman Rick Coleman CEO David Noble CFO admin@starequity.com
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