Star Equity Holdings, Inc. · NASDAQ:STRR
Star Equity — Investor Presentation (December 2022)
39 slides from Star Equity's investor presentation, Dec 13, 2022
Slide 1: Investor Presentation December 2022
Common Stock: Nasdaq: STRR Series A 10% Preferred Stock: Nasdaq: STRRP Growing shareholder value through excellence in operations and disciplined capital allocation A Diversified Holding Company Investor Presentation December 2022
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 stronger operations, cost savings, better funding, and other efficiencies • Optimized and disciplined capital allocation will maximize returns over the long term • Operating CEOs
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 may have instant liquidity Long-term relationship/ partnership mentality rather than short-term transactional Willing an
Slide 7: Financial Highlights and Growth Initiatives
Financial Highlights and Growth Initiatives Growing SHAREHOLDER VALUE through EXCELLENCE IN OPERATIONS AND DISCIPLINED CAPITAL ALLOCATION 7
Slide 8: Financial Highlights FY 2020-2021
Financial Highlights * $49.2 $58.6 $28.9 $48.0 $- $20 $40 $60 $80 $100 $120 FY 2020 FY 2021 Revenue by Business Division ($ in millions) (1) Healthcare Construction Investments $10.2 $12.5 $4.1 $3.0 $(1) $4 $9 $14 $19 FY 2020 FY 2021 Gross Profit by Business Division ($ in millions) (1) Healthcare C
Slide 9: 9M 2022 Financial Highlights
$43.0 $40.5 $34.0 $39.5 $- $10 $20 $30 $40 $50 $60 $70 $80 $90 9M 2021 9M 2022 Revenue by Business Division ($ in millions)(1) Healthcare Construction Investments $9.3 $9.6 $(0.8) $7.2 $(2) $2 $6 $10 $14 $18 9M 2021 9M 2022 Gross Profit by Business Division ($ in millions)(1) Healthcare Construction
Slide 10: Growth Strategy
Growth Strategy Seeking attractive acquisition opportunities to: ORGANIC GROWTH OPPORTUNITIES Healthcare • Increase sales of proprietary, high-margin portable nuclear imaging cameras through continued advances in hardware design and upgrades • Extend and grow high-margin, post-warranty camera suppor
Slide 11: Our Acquisition Strategy
Our Acquisition Strategy TARGETS: PUBLIC OR PRIVATE COMPANIES • 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 situations) • High SG&A and public company costs as a percentage of revenue th
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: FY 2021 Financial Summary
$49.2 $58.6 $44 $46 $48 $50 $52 $54 $56 $58 $60 FY 2020 FY 2021 Revenue ($ in millions) Healthcare: FY 2021 Financial Summary * $10.2 $12.5 $- $2 $4 $6 $8 $10 $12 $14 FY 2020 FY 2021 Gross Profit ($ in millions) * During the fourth quarter of 2020, Star Equity entered into a Stock Purchase Agreement
Slide 17: Healthcare: 9M 2022 Financial Summary
$43.0 $40.5 $22 $27 $32 $37 $42 $47 9M 2021 9M 2022 Revenue ($ in millions) Healthcare: 9M 2022 Financial Summary $9.3 $9.6 $3 $4 $5 $6 $7 $8 $9 $10 $11 $12 9M 2021 9M 2022 Gross Profit ($ in millions) 17 • Healthcare 9M 2022 revenues decreased by 5.9%, predominately driven by lower scanning revenue
Slide 18: Business Divisions: Construction
Business Divisions: Construction 18
Slide 19: 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 especially in the Greater Boston Area • Largest known production capacity of any modular manufact
Slide 20: 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 21: KBS Builders: Progress on Multifamily Growth Initiative
Construction: KBS Builders – Progress on Multifamily Growth Initiative 21 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 22: 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 23: Construction: Financial Summary
Construction: Financial Summary* $28.9 $48.0 $- $10 $20 $30 $40 $50 FY 2020 FY 2021 Revenue ($ in millions) $4.1 $3.0 $- $1 $2 $3 $4 $5 FY 2020 FY 2021 Gross Profit ($ in millions) 23 • FY 2021 Construction margins were affected by COVID-related rapid and historic rise in raw materials costs. • Star
Slide 24: Construction: 9M 2022 Financial Summary
Construction: 9M 2022 Financial Summary $34.0 $39.5 $25 $30 $35 $40 $45 9M 2021 9M 2022 Revenue ($ in millions) $(0.8) $7.2 $(2) $- $2 $4 $6 $8 $10 9M 2021 9M 2022 Gross Profit ($ in millions) 24 • The construction division increase was due to large commercial projects at KBS. Construction division
Slide 25: Business Divisions: Investments
Business Divisions: Investments 25
Slide 26: 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 27: 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 28: Star Equity Fund, LP
Investments ESTABLISHED 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; pushi
Slide 29: Investment Highlights
Investment Highlights Diversified business lines with multiple revenue streams Healthcare business historically has provided stable cash flow Construction business has significant growth potential $106.6 million of revenue, $15.2 million of gross profit in 2021 Platform for future bolt-on acquisitio
Slide 30: Corporate Management Team
RICHARD COLEMAN CHIEF EXECUTIVE OFFICER Corporate Management Team JEFFREY EBERWEIN EXECUTIVE CHAIRMAN • Over 25 years of Wall Street experience; Founder and CEO of Lone Star Value Management • Portfolio Manager at Soros Fund Management and Viking Global • CEO of Hudson Global, Inc., a global recruit
Slide 31: Operating Companies Management Team
RON SCHUMACHER EXECUTIVE CHAIRMAN EDGEBUILDER, INC. Operating Companies Management Team MARTY SHIRLEY PRESIDENT DIGIRAD HEALTH, INC. • Appointed President effective September 2022; joined Digirad in 2006; formerly President of DHI’s Services business • Over 35 years of clinical and industrial experi
Slide 32: Star Equity Holdings
*Star Equity Holdings * Star Equity Holdings
Slide 33: Historical Financial Data: Statements of Operations
Historical Financial Data: Statements of Operations ($ in 000s) 33 Revenues: Healthcare $ 13,137 $ 14,807 Construction 11,107 14,052 Investments — — Total revenues 24,244 28,859 Cost of revenues: Healthcare 10,412 11,551 Construction 7,975 13,511 Investments 58 50 Total cost of revenues 18,445 25,11
Slide 34: Historical Financial Data: Balance Sheets
Historical Financial Data – Balance Sheets ($ in 000s) 34 September 30, 2022 (unaudited) December 31, 2021 Assets: Current assets: Cash and cash equivalents $ 8,503 $ 4,538 Restricted cash 846 278 Investments 3,180 47 Lumber Derivative Contracts — 666 Accounts receivable, net of allowances of $1.0 m
Slide 35: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA ($ in 000s) (1) Reflects adjustments for any unrealized gains or losses on equity securities. (2) Reflects adjustments for any unrealized gains or losses in derivatives value. (3) Reflects one time litigation costs. (4) Reflects the gain from the sale
Slide 36: Supplemental Debt Information
Supplemental Debt Information ($ in 000s) 36 September 30, 2022 December 31, 2021 Amount Weighted-Average Interest Rate Amount Weighted-Average Interest Rate Revolving Credit Facility - eCapital KBS $ 909 9.00% $ 3,131 6.00% Revolving Credit Facility - eCapital EBGL 2,595 9.00% 1,652 6.00% Revolving
Slide 37: Capitalization Table
37 Capitalization Table Fully Diluted Capital Structure (in thousands except price per share) Shares Price Market Value Common Shares ¹ 15,139 $ 1.01 $ 15,290 Warrants (May 2020) ² 702 $ - $ - Warrants (January 2022) 3 10,925 $ - $ - 10% Series A Preferred 4 1,916 $ 10.00 $ 19,156 Net Debt/(Cash) 5
Slide 38: Other Publicly-Traded Holding Companies
Other Publicly-Traded Holding Companies 38 (1) Based on data as of 12/8/22 - $ 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 BitNile Holdings Inc. NILE 41 • Def
Slide 39: Contact Us
Contact Us Investor Relations Lena Cati The Equity Group Inc. Senior Vice President 212-836-9611 / lcati@equityny.com 39 Jeff Eberwein Executive Chairman Rick Coleman CEO David Noble CFO admin@starequity.com
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