Q1 2024 Great Elm Group Inc Earnings Call

[music].

Ladies and gentlemen, thank you for standing by my name is Sharon and there'll be a conference operator today.

At this time I would like to welcome everyone to the Great Elm Capital earnings Conference call.

All lines have been placed on mute to prevent any background noise.

After the Speakers' remarks, there will be a question and answer session if.

If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question Press Star one again.

Yeah.

I would now like to call turn the call over to Andy. Please go ahead.

Good morning, everyone. Thank you for joining us for Great Elm group's fiscal first quarter 2024 earnings conference call.

As a reminder, this conference call is being recorded on Thursday November nine 2023.

If you'd like to be added to our distribution list you can email <unk> investor relations at Great Elm cap Dot com.

Can sign up for alerts directly on our website Www dot great home group Dotcom.

The slide presentation accompanying today's conference call and webcast can be found on our website under events and presentations.

A link to the webcast is also available on our website as well as in the press release that was disseminated to announce the quarterly results.

Today's conference call includes forward looking statements and we ask that you refer to great Elm group's filings with the SEC for important factors that could cause actual results to differ materially from these statements.

Great home group does not undertake to update its forward looking statements unless required by law.

In addition, during today's call management will refer to certain non-GAAP financial measures.

Reconciliations to the most comparable financial measures are included in our earnings release.

To obtain copies of our SEC filings. Please visit great on group's website under financial information and select SEC filings.

On the call today, we have Jason Riis, CEO, Adam Kleinman, President and General Counsel, Nicole Mills, CLO and carry Davis CFO I will now turn the call over to Jason <unk> CEO.

Welcome everyone and thank you for joining US great home group had a strong start to fiscal 'twenty four.

We continue to grow our fee paying assets under management on both a sequential quarter and year over year basis.

We generated net income of nearly $3 million and more than doubled our EBITDA on a year over year basis.

We also ended the quarter with over $75 million in cash and marketable securities to deploy across our growing alternative asset management platform.

In particular I want to highlight that this is our first quarter reporting as a streamlined asset management business.

In the fiscal first quarter, we have a clear year over year comparison that includes the results of managing the amount of Moy properties vehicle acquired in May 22.

Additionally, we no longer see the impact of our divested businesses going forward investors can easily measure our progress toward our strategic growth plans.

With legacy operations behind US our team was purely focused on asset management in the first fiscal quarter.

Working to expand the platform, we made great strides organically to launch a private credit fund in fiscal second quarter and continued the execution of our no real build to suit projects <unk> Bts.

Inorganically, we continue to actively evaluate multiple strategic M&A opportunities and have a robust pipeline of due diligence in the second quarter.

Focusing on our two anchor vehicles mono and GEC, we had dragon boat fee revenue growth and AUM growth at both platforms. We will continue to accelerate the momentum at these core businesses and are pleased with our strong performance during the quarter.

GCC once again had a milestone quarter generating an Roe.

Approximately eight 5% in the quarter and 25% over the first nine months of 'twenty correct.

As a result, <unk> will pay incentive fees to <unk> and a second consecutive quarter $1.3 million and remains well positioned to continue paying GE EG incentive fees would equal.

Also net asset value at GE ECC grew to $12 88 per share up 5% from last quarter and up over 15% calendar year to date.

It has been a remarkable transformation at <unk> and a testament to the successful portfolio repositioning that Matt Kaplan and his team have accomplished over the past 18 months.

Meanwhile, <unk> remained very active in the quarter, we closed on two properties with key tenants totaling nearly $6 million amended for existing tenant leases for meaningful term extensions and executed five year renewal options at three properties in.

In addition, our build to suit business continued development of its first two projects in Florida and Mississippi.

We expect to complete these projects within this fiscal year.

With a significant pipeline over 130 property requirements, a new build to suit projects specifications from key customers. We remain excited for <unk> REIT and Dps to continue growing profitably in fiscal 'twenty four.

During the fiscal first quarter, we saw our book value grow to approximately $2 25 per share.

At current market prices the board of directors and I believe our stock is undervalued and as such I'm pleased to announce that our board has approved a $10 million common stock repurchase program.

Moving ahead, the three goals, we outlined in May remain clear.

Our profitability.

And our platform and grow our AUM.

As you can see from our fiscal first quarter 'twenty four performance, we're making progress on all fronts, we remain.

Focus to scale, our core business launched new fund products and utilize our strong liquid balance sheet to deploy capital into new platform opportunities with compelling risk adjusted returns with that I'll turn it over to Kerry.

Thank you Jason I'll provide a brief overview of the quarter and of course, we welcome all of you to review our filings in greater detail or reach out to our team with any questions.

A review of continuing operations quarter to date revenues grew 78% year over year to $3 3 million driven by increased fee paying assets under management related to G. P. C N bottom line as well as the recognition of incentive fee from <unk> for the second consecutive quarter, which were approximately $1 3 million for the first fiscal quarter.

AUM of $641 million as of September 30th 2023 was up modestly from the prior quarter and up 3% from prior year quarter, and well keep paying AUM grew to $451 million up 1% quarter to date and up 5% from the prior year quarter and before.

The quarter, Great group generated net income from continuing operations of $2 8 million compared to a net loss from continuing operations of $9 5 million from the prior year period.

Adjusted EBITDA for the quarter was $1 $7 million more than double the zero point $7 million generated in the prior year period.

As of September 30th Great I'm group had approximately $76 million of combined cash and marketable securities on our balance sheet to deploy across our growing alternative asset management platform.

Please refer to slide six that provides an overview of our financial position and highlight that book value per share of approximately $2 25 up from $2.16 as of June 30.

This concludes my financial review of the quarter with that we will turn the call over to the operator to open for questions.

At this time I would like to remind everyone in order to ask a question Press Star then another one on your telephone keypad.

We will pause for just a moment to compile the Q&A elastic.

Please bear in mind that one question and one follow up will be allowed for the Q&A session.

Yes.

Yeah.

It looks like Theres no questions at this time I would like to turn the call back over to Jason Lee.

Thank you again for joining us today, and we look forward to speaking with you in the future.

Ladies and gentlemen that concludes today's call you may now disconnect. Thank you.

Okay.

Okay.