Arizona Tribune - 1847 Holdings CEO Provides Letter to Shareholders

To our valued shareholders,

As 2024 draws to a close, I am pleased to reflect on what we view as a transformative year for 1847 Holdings, as we executed a series of strategic initiatives designed to position the Company for sustained growth and maximize shareholder value over the long term.

A cornerstone of our growth strategy has been identifying and acquiring businesses that we believe have compelling cash earnings potential at attractive valuations. We strive to consistently target acquisitions priced between 3.0 times and 6.0 times cash earnings, as measured by EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Our goal is that, when aggregated with our other portfolio holdings, these incremental acquisitions have the potential to command higher EBITDA multiples, reflecting the added value and synergies provided by our operational structure.

This strategy aligns with industry benchmarks given that public holding companies, such as Compass Diversified Holdings, often trade at high single-digit enterprise-value-to-EBITDA multiples. As a result, by leveraging our disciplined investment philosophy, we believe 1847 Holdings is well-positioned to generate significant shareholder value through both operational growth and strategic acquisitions.

An essential aspect of our growth strategy involves selectively refining our portfolio to maximize returns. In late September 2024, we successfully finalized the sale of High Mountain Door & Trim, Inc., a Reno, Nevada, based provider of finished carpentry products and services. Originally acquired in October 2021, High Mountain Door & Trim was sold to a strategic buyer for $17.0 million, achieving a valuation of nearly seven times adjusted EBITDA. This sale price was nearly double the estimated purchase price from three years prior, and we believe this underscores our ability to enhance the value of our portfolio companies through strategic oversight and operational improvements.

Similarly, we believe our recent acquisition of CMD Inc. represents another highly accretive addition to our portfolio, with significant upside potential. CMD Inc., a Las Vegas, Nevada, based cabinetry, millwork, and door manufacturer, reported trailing twelve-month unaudited revenues of $33.1 million and unaudited net income of $10.4 million as of October 31, 2024. Based on the valuation we achieved for High Mountain Door & Trim, which operates in a comparable market, we are confident that CMD is worth significantly more than what we paid for it. This belief is based on not only CMD's strong cash flow but also the potential synergies and operational efficiencies that we believe we can unlock within our construction segment, which includes Kyle's Custom Wood Shop in Boise, Idaho, and Innovative Cabinets in Reno, Nevada.

The addition of CMD Inc. is expected to enhance profitability, generate strong cash flow, and strengthen 1847 Holdings' overall financial performance. Combined with strategic divestitures and disciplined portfolio management, we believe these efforts position us to deliver exceptional results in the coming quarters.

Moreover, we believe we are now in a strong financial position to potentially refinance our debt, which would further strengthen our balance sheet, and position us to capitalize on future opportunities.

Looking ahead, we believe our focus on operational excellence, strategic acquisitions, and purposeful portfolio refinement will enable us to unlock the full potential of our portfolio and create long-term value for our shareholders.

Thank you for your continued trust and confidence in 1847 Holdings.

Sincerely,

Ellery W. Roberts
Chairman and Chief Executive Officer
1847 Holdings

About 1847 Holdings

1847 Holdings LLC (NYSE American: EFSH), a publicly traded diversified acquisition holding company, was founded by Ellery W. Roberts, a former partner of Parallel Investment Partners, Saunders Karp & Megrue, and Principal of Lazard Freres Strategic Realty Investors. 1847 Holdings' investment thesis is that capital market inefficiencies have left the founders and/or stakeholders of many small business enterprises or lower-middle market businesses with limited exit options despite the intrinsic value of their business. Given this dynamic, 1847 Holdings can consistently acquire businesses it views as "solid" for reasonable multiples of cash flow and then deploy resources to strengthen the infrastructure and systems of those businesses in order to improve operations. These improvements may lead to a sale or IPO of an operating subsidiary at higher valuations than the purchase price and/or alternatively, an operating subsidiary may be held in perpetuity and contribute to 1847 Holdings' ability to pay regular and special dividends to shareholders. For more information, visit www.1847holdings.com.

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Forward Looking Statements

This press release may contain information about 1847 Holdings' view of its future expectations, plans and prospects that constitute forward-looking statements. All forward-looking statements are based on our management's beliefs, assumptions and expectations of our future economic performance, taking into account the information currently available to it. These statements are not statements of historical fact. Forward-looking statements are subject to a number of factors, risks and uncertainties, some of which are not currently known to us, that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial position. Our actual results may differ materially from the results discussed in forward-looking statements. Factors that might cause such a difference include but are not limited to the risks set forth in "Risk Factors" included in our SEC filings.

Contact:

Crescendo Communications, LLC
Tel: +1 (212) 671-1020
Email: [email protected]

SOURCE: 1847 Holdings LLC

B.Torres--AT