Star Equity Holdings (STRR) investor relations material

Financial outlook and value creation strategy

• Targeting revenue over $250 million, adjusted EBITDA of at least $15 million, and earnings around $1.50 for 2026, with a goal to grow EBITDA to $40 million by decade's end through organic growth.

• Value creation pillars include organic growth, selective acquisitions, and effective capital allocation, including share repurchases and asset monetization.

• Over $20 million in non-cash-generating assets are expected to be monetized in coming years.

• $10 million in share repurchases executed since 2020; insiders own about 25% of shares, reflecting a strong owner mindset.

• Large NOL position shields U.S. income from taxes, and recent merger positions the company for growth.

Acquisition approach and market opportunity

• Acquisition targets include both private and public companies, especially microcaps that may not be suited to remain public.

• Over 44,000 U.S. public companies with EBITDA under $30 million and millions of private businesses present a vast acquisition field.

• Focus on businesses with low maintenance CapEx, asset-light models, strong management, and B2B orientation in fragmented industries.

• Internal team mirrors a small private equity firm, with proven transaction execution and three analysts plus in-house legal.

• Three private businesses acquired recently; investments in microcaps have led to successful exits at premiums.

Capital structure and acquisition financing

• Uses a mix of cash, debt, and non-convertible preferred stock with a 10% yield, paid quarterly, as acquisition currency.

• Preferred stock is tax efficient, non-dilutive, and trades on Nasdaq; recent acquisitions have favored cash and preferred stock over common equity.

• $27 million in cash and $13 million in subsidiary-level debt as of June 30, with additional credit line availability.

• Earnouts and seller notes are also used as deal structures.