Star Equity Holdings (STRR) investor relations material

Growth strategy and financial targets

• Targeting annual growth above 10% through the end of the decade, aiming for $40 million EBITDA by 2030.

• Pursuing bolt-on and sister company acquisitions, with openness to new verticals but higher standards for entry.

• Acquisition funding will use a mix of cash, subsidiary-level debt, and preferred stock.

• Focused on acquiring capital-light businesses with significant growth opportunities in fragmented, growing B2B markets.

• Avoiding venture capital and pre-revenue startups, with a preference for logistics, transportation, industrials, and materials verticals.

M&A approach and market landscape

• Evaluating both public micro-cap and private companies, especially those lacking succession or exit plans.

• Typical acquisition multiples are 3x-5x EBITDA, with recent deals structured using preferred stock and cash.

• Recent merger agreement with Harte Hanks expected to deliver $10 million in cost synergies and acquired at less than 3x EBITDA.

• Harte Hanks acquisition complements the business services division, with potential for cross-selling to Fortune 500 clients.

• Cross-selling opportunities with Harte Hanks are not yet included in forecasts but are seen as a future upside.

Division performance and operational updates

• Business services division is recovering from a trough, with heavy investments in AI, sales, marketing, and technology.

• AI integration has provided a competitive advantage and is expected to drive share gains.

• EBITDA in business services is currently $3.9 million but would be $8 million without recent investments; target is $25 million by 2030.

• Building solutions and energy businesses each targeted for 10% annual revenue growth, with energy expanding into geothermal, carbon capture, hydrogen, and helium.

• Hudson business aims for $100 million gross profit and $20 million EBITDA, with 30% incremental margins and potential for mergers or bolt-on acquisitions.