Q2 2025 Great Elm Group Inc Earnings Call

February 6, 2025

Although the formal presentation should anyone require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Adam Yates managing director. Thank you you may begin.

Good morning, everyone. Thank you for joining us for great Elm groups fiscal second quarter 2025 earnings conference call as.

As a reminder, this conference call is being recorded on Thursday February six 2025.

If you'd like to be added to our distribution list you can email G E G Investor relations at Great Elm capped dot com, where you can sign up for alerts directly on our website Www Dot Greyhound group dotcom.

Greetings and welcome to the great Elm Group fiscal 2025 2nd quarter conference call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press 0 on your telephone keypad.

As a reminder, this conference is being recorded.

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

It is now my pleasure to introduce your host, Adam Yates, managing director. Thank you. You may begin.

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.

Good morning, everyone. Thank you for joining us for Great Elm Group's fiscal 2nd quarter 2025 earnings conference call.

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.

As a reminder, this conference call is being recorded on Thursday, February 6, 2025.

If you would like to be added to our distribution for joining us for great, you can email groups fiscal investor quarter relations 2025 Great Elm earnings.com conference call where you.

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

And sign up for as a reminder alerts directly this is on our website conference calls being recorded www on Thursday. February on group.sex.com 2020.

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.

If the slide pre you would like to be in Ta added to our accompanying distribution list. Today's conference you can call on webcam emails can be found eg on our webcast relation site under at great events and recap documentations.

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

Where you can link to the alerts webcast is directly on our also available on our website www well as in the grade on release group.com that was disseminate.

to announce the

Quarterly results. The slots presentation.

Today's comments do not constitute an offer to sell or a solicitation of an offer to buy interest in any investment vehicles managed by great elm or its affiliates.

Coming today's today's conference call and conference call webcast includes to be found on For looking on our website statements under events and we ask that you presentation refer to great on groups.

Any such offer or solicitation will only be made pursuant to the applicable offering documents for such investment vehicle.

Alliance with the end to the web SEC cast is also from portal available on factors that our website that could cause act as well as to a results in the press the different materials that was clearly from the disseminated to a statement, announced the quarter.

Results great group.

Is not under

Take to

Update it for today's conference looking statements call unless required include 4 by law looking statements.

And we

On the call today, we have Jason Riis, CEO, Adam Kleinman, President and General Counsel, Nicole Mills, COO and carry Davis CFO.

Ask that you refer in addition to great group's filing today's call with the management will refer important fact to certain doctors that could come get financial as actual measures results to.

For material we reconciliate from these patients to the most comparable great on financial measurement group does not undertake included in our earnings to update its release. For looking.

I will now turn the call over to Jason Reid CEO will.

Statements on to obtains required by copies by law of our SEC.

Filings

Welcome everyone and thank you for joining us today.

And please visit edition great on groups during today's website on call their financial and management information to select a certain non-GAAP EC filing financial measures.

There's

We delivered a solid fiscal second quarter 2025 marked by significant year over year growth in both assets under management and revenue across our businesses building on last quarter's momentum.

Re today's comments conciliations do not come to the most compute and offer to sell measures or are included in elicitation in our earnings of an offer to buy interest.

any investor obtainment vehicle of our managed by CC filing radars please it's affiliates visit great.

Group's website, any site under find such offer financial information or solicitation and selection will SEC only be made violent pursuant to the

We continue to evolve as a streamlined alternative asset management business and our solid foundation leaves us well positioned to expand our core credit and real estate platforms, while executing on our long term growth strategy.

Applicable today's offering documents do nos for such not constitute investment vehicle and offer to sold.

On the of today we have offered to buy Jason Reese's interest in Investment EO vehicle.

A by great Alan Kleinman or it's the president and general.

counsel, any such offers solicitation COO and only be made Cary Davids pursuant to CF the applicable offering.

Is so now I'll turn the call investments over to Jason.

Among our recent highlights earlier this week, we announced the launch of motto mortgage construction services with the strategic acquisition of Greenfield CRE, a leading construction management company.

CEO

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Call today. We have Jason welcome everyone and thank you for CEO. Joining us.

that.

Adam Kleinman

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Great Elm Capital Corp, our BBC raised an additional $13 $2 million of equity at net asset value in December its third equity capital raise in calendar 2024.

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We continue to grow our assets under management, increasing our fee paying AUM by 17% on a year over year basis.

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solid month.

We generated total revenue of $3 5 million.

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Grown 24% year over year.

executing construction management of strategy company.

We completed construction of and are working to sell our second amount of more built to suit property for potential gain.

We surpassed double digit net returns and great Elm credit income fund or <unk>.

Since our inception through December 31.

Among our random capital Christian highlights or or early BBC this week we announced an additional launch of 13 monomo point to construction 2 million services hours of equity at the icacqui value in addition of December, Greenfield CR3 Equity capital a leading race in construction calendar management of 2020.

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We continued to repurchase shares at a meaningful discount to book value executing on our expanded $20 million buyback authorization and we ended the quarter in a strong financial position with over $44 million in cash available to facilitate continued growth across our asset management platforms.

Freedom cap we can continue to grow our be our assets under management raised an increasing additional puppy paying 13. AUM.2 by $7 billion in percent of equity on a year at every year basis and are you in this.

We generated 3rd a total red equity for the new capital rate of 3 points and count $5 million 2020 growing tour 24%.

We continued year over year grow our assets.

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Diving into the quarter in more detail.

we can sing our completely containing a struction of um by in our 174 to 6% on Dell our year over year second monitor basis more built to.

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Paying assets under management continued to grow and reached approximately $538 million.

We should be $0.5 million digit net return around 204% great um your credit every year income fund.

Representing a 17% increase over the prior year period, primarily driven by our BDC.

We complete construction are stepping up and are working in December 31st, our second.

Min of one we can build to continue to reproperty for purchase share potential there I mean the meaningful.

In December 2024, GE, <unk> raised $13 $2 million of equity capital at net asset value through another STV summit growth partners. This brings total capital raised at GE ECC to equity and debt issuances to over 147 million.

Discountable pass value double digit exigent network repeating on turns are expanded in great $20 million buy credit in back offerism fund station or GSI.

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And we since our ended the quarter except in a shrine through the strong financial December 30 position first with over.

44 we continue a million dollars to repurchasing cash shares available at a means to for the facilitate count to book back continue you cross execute or asset mapping on our expenses when loaned 2 forms, $20 million.

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In the last year.

<unk> supported the December raise with a $3 $3 million investment in Tds TV alongside an approximately $10 million investment from other institutional investors.

Authorization diving into the quarter and in more detail. We ended the town, the quarter and the strong paying asset financial position. Some man may continue with over 4 to grow 44 million and reach a million dollars in proximately cash or bail 500 38 to still a million dollars take continues growth presenting it across our 17% management% platform please over.

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year period

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Gigi has now participated in a total of three equity raises at GE ECC with a combined investment of approximately $12 million facilitating an increase in fee paying assets under management at <unk> of greater than 40%.

be paying in December as September 2020 management before G ECO and we raise reach therox 13 $5.230 million or $8 million of equity $10 capital represent at net on any accepted by 17% increase to another over the press TV prior year summer period world partner primarily driven by our this spring BBC's total.

Capital Industries at Chamber 20 GE 24 CC or GECC equity and raised debt issuances 13 to 0.2 over 1 $100.

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<unk> also continued to perform well as evidenced by its ability to raise capital and the recently announced five 7% increase to the quarterly base distribution to <unk> 37 cents per share for the first calendar quarter of 2025.

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Since the refresh of the management and the board in March 2022, <unk> has nearly doubled its net asset value delivering meaningful value to shareholders as it continues to expand its portfolio and leverage its infrastructure.

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Overall GE <unk> recent successes are fundamental to our growth strategy the increased capital base expands our fee paying AUM.

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Notably our base management fee from GE, ECC grew 33% year over year to $1 2 million and we earned.

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Approximately a half million dollars in incentive fees this quarter.

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Gee save a private credit fund has delivered a strong return on invested capital of approximately 13, 9% net of fees since inception in November 23.

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With these strong returns and are now established track record, we are well positioned to attract new capital and further scale of fund.

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Meanwhile, our real estate business <unk> also continued to deliver strong results with the completion of our second design build project. We anticipate continued profitability across <unk> platform as we focus on selling our second build to suit project.

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With a strong pipeline of build to suit opportunities. We remain committed to executing on these development projects to drive profitability and deliver value for both our tenants and shareholders.

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Further building on our strategic growth initiatives on February 4th we significantly expanded our real estate capabilities through the acquisition of Greenfield CRE.

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Greenfield has a deep knowledge of our development projects, our strong understanding of our tenant needs and expectations and a proven track record of delivering on <unk> high standards.

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Mcs meaningfully bolsters, our real estate platform by creating a fully integrated full service construction vertical to serve our existing asset management entities and we expect our close relationship with the Greenfield team to make for a seamless integration.

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and they never protected it in the acquisition of Xre expectation of sea urchins and a proven.

For our leading tech record of delivering instruction matter on Moa Moy's Heisman company high standards in a.

Additionally, Mcs expands our third party owner Rep consulting services, adding accretive fee revenue opportunities.

Long standing we can partner connection with this transaction we launched Greenfield monomo as a deconstruction seat knowledge services of our for development project CSX.

While improving our operational efficiency through economies of scale.

We expect this transaction to enhance our construction management expertise by adding to <unk> existing civil engineering and land planning talent, expanding our scope of services and fortifying our overall real estate value proposition to our investors and clients. Additionally, <unk> continues to execute it.

A strong and standing up finding the tenant sets of the greenfield expectation with the Asians, sets of an approved monomoy Du track ETS record of the instruction on my management can someone high and get my standards.

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You can see us in connection with the meaningfully transaction bolsters we launch a real estate plus monum platform construction by creating of services fully or integrated CS full service.

Construction and con vertical find the server assets for existing with the entity assets and the monomo we expect BTS are closer construction relationship management with the Greenfield open so.

To make

Closed on three property purchases for approximately $3 8 million and maintain a strong pipeline of transaction opportunities and open requirements from our tenants.

For a seamless MCS integration meaningful.

bolsters I did a real estate officially platform. MCS by creating expands our fully and our third party graded the owner fuller rep consulting construction services in vertical.

We have several value added acquisitions under contract that we expect to close over the next six months.

Touring a creative or existing fee revenue as opportunity management and it leaves and won't be expect proving our our close operational relationship efficiency with the green field teamconomies of scout to make out.

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We can integrate expect this transfer.

Outside of our core businesses, we have made significant progress in repurchasing shares under our expanded $20 million buyback.

Transaction

To additionally and our MCS structure management and pans and expertise are third parties owner by adding to rep consult monomo you can service existing.

Through February 4th we have repurchased approximately $4 1 million shares for $7 4 million.

Civil a careering and landed fee rather than planning new opportunity on these expanding along our scope is improving our services, our operational efficient fortifying our overall real economies is listed value out you property.

An average price of $1 83 per share representing an approximately 20% discount to our book value of $2 30 per share.

Additionally, <unk> has continued to experience outsized returns on its unique investments such as the convertible preferred financing for core <unk>.

to expect this from investors and transaction clients to enhance our traditionally structure manage monomoment expertise continues and used to by adding kit to monomo we closed existing on 3 civil and property purchaseering and leases for land planning for proximal talent with 3 point expanding million do our scope of our services and maintain a strong pipe fortifying our line up to overall transaction real estate opportunities how you pros and to open.

Our our investors and it's from our clients tenants.

In our private fund managed by Stoneridge asset management, a best in class reinsurance manager.

Additionally, we have several more value added in acquisition so can use to act in the contract that we we close back to closed on 3 over the next property per 6 months is.

approxim

These investments further enhance our shareholder value and are a testament to the strength of our sourcing capabilities to our board of directors and broader sophisticated network.

Like 3.8 million of our core is ours businesses and maintain we have strong party significant blind of progress in transaction repurchasing opportunities and shares and under our

Open

Which gives us a seat at the table and unique investment opportunities.

We continue to maintain a strong balance sheet and capital position with over $44 million of cash our ample liquidity enables us to support future growth initiatives across our alternative asset management platform <unk>.

In closing.

We are pleased with the performance of our credit and real estate businesses this quarter.

The acquisition of Greenfield CRE strengthens our real estate capabilities, while <unk> continued growth demonstrates our momentum in credit.

The insurance manager.

These investments further enhance our shareholder value and are testament to the strength of our sourcing capabilities for our board of directors and broader sophisticated network.

<unk> focused on our core objectives.

Enhancing financial performance.

<unk>, our platform and growing AUM.

Which gives us a seat at the table in unique investment opportunities.

Looking ahead, we will continue to evaluate strategic opportunities to expand our businesses and accretive differentiated product offerings with attractive risk adjusted return profiles with that I'll turn it over to Kerry <unk>.

We continue to maintain a strong balance sheet and capital position with over $44 million of cash. Our ample liquidity enables us to support future growth initiatives across our alternative asset management platform.

Okay.

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

In closing

We're pleased with the performance of our credit and real estate businesses this quarter.

The acquisition of Greenfield theory strengthens our real estate capabilities while GECCs continued growth demonstrates our momentum in credit.

Speaker Change: Second quarter revenues grew 20, corporate $3 5 million from the prior year period, primarily driven by increased revenue from bottom line.

Speaker Change: Alongside a pick up in my opinion.

We remain focused on our core objectives.

Speaker Change: Our fee paying AUM totaled approximately $751 million and $538 million up 14%.

Enhancing financial performance.

Expanding our platform and growing AUM.

Looking ahead, we will continue to evaluate strategic opportunities to expand our businesses and creative differentiated product offerings with attractive risk adjusted return profiles.

Speaker Change: Respectively from the prior year quarter.

Speaker Change: Great on the group generated net income from continuing operations of $1 4 million for the quarter as compared to a net loss from continuing operation.

With that I'll turn it over to Carry.

Speaker Change: Point $2 million for the prior year period.

Thank you, Jason. I will provide a brief overview of the quarter and of course welcome all of you to you are filing some greater detail or reach out to our team with any questions.

Speaker Change: Adjusted EBITDA for the quarter was $1 million compared to a narrow point $6 million in the prior year period.

It's the 2nd quarter revenues grew 24% to 3.5 million from the prior year period, primarily driven by an increased revenue from Moamoy BTS alongside a pickup and management fees from GECC AUM and fee paying AUM totaled approximately $751 million and $538 million up 14% and 17% respectively from the prior year quarter end.

Speaker Change: As of December 31, we had approximately $44 million of cash on our balance sheet.

Speaker Change: Across our growing alternative asset management platform.

Speaker Change: Please refer to slides that provides an overview of our financial highlights.

Speaker Change: Highlight the book value per share of approximately $2 or 30%.

Speaker Change: This concludes my financial review with a quarter with that I will turn the call over to the operator to open for questions.

Great on group generated net income from continuing operations of $1.4 million for the quarter.

Speaker Change: Thank you we will now be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for.

Speaker Change: For participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment, please while they pull for questions.

Speaker Change: There are no questions at this time I would like to turn the floor back over to Jason <unk> CEO for closing comments.

Speaker Change: Thank you again for joining US today, we look forward to speaking with you soon.

Speaker Change: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Okay.

Greetings and welcome to the great Elm Group fiscal 2025 2nd quarter conference call at this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press 0 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host Adam Yates, managing director. Thank you. You may begin.

Good morning everyone.

As a reminder, this conference call is being recorded on Thursday, February 6, 2025.

If you would like to be added to our distribution list, you can email ginvestor relations at greatelmcap.com where you can sign up for alerts directly on our website www.gre Emgroup.com.

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 Oro 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.

Today's comments do not constitute an offer to sell or a solicitation of an offer to buy interest in any investment vehicle managed by Great EM or its affiliates.

Any such offer or solicitation will only be made pursuant to the applicable offering documents for such investment vehicle.

On the call today we have Jason Reese, CEO.

Adam Kleinman, president and general counsel.

Nicole Mills, COO, and Kerry Davis, CFO.

I will now turn the call over to Jason Reese, CEO.

Welcome everyone and thank you for joining us today.

We delivered a solid fiscal 2nd quarter 2025 marked by significant year over year growth in both assets under management and revenue across our businesses, building on the last quarter's momentum.

Among our recent highlights.

Earlier this week we announced the launch of Moamoy Construction Services with the strategic acquisition of Greenfield CRE.

A leading construction management company.

Great on Capital Corp or BBC raised an additional $13.2 million of equity at net asset value in December. It's 3rd equity capital raise in calendar 2024.

We continue to grow our assets under management, increasing our fee paying AUM by 17% on a year over year basis.

We generated total revenue of $3.5 million growing 24% year over year.

We completed construction of and are working to sell our second Moamoy built to suit property for a potential gain.

We surpassed double digit net returns in great elm credit income fund or GSI.

Since our inception through December 31st.

We continue to repurchase shares at a meaningful discount to book value executing on our expanded $20 million buyback authorization and we ended the quarter in a strong financial position.

With over $44 million in cash available to facilitate continued growth across our asset management platforms.

Diving into the quarter in more detail.

Be paying assets under management continue to grow and reach approximately $538 million representing a 17% increase over the prior year period, primarily driven by our BBC.

In December 2024 GECC raised $13.2 million of equity capital at net asset value through another STV Summit World Partners.

This brings total capital raised at GECC through equity and debt issuances to over $147 million in the last year.

GEG supported the December race with a $3.3 million investment into the STV alongside it an approximately $10 million investment from other institutional investors.

GEG has now participated in a total of 3 equity raises at GECC with a combined investment of approximately $12 million facilitating an increase in fee paying assets under management at GECC of greater than 40%.

GECC also continued to perform well, as evidenced by its ability to raise capital in the recently announced 5.7% increase to the quarterly based distribution to 37 cents per share.

For the first calendar quarter of 2025.

Since the refresh of the management and the board in March 2022 GECC has nearly doubled its net asset value delivering meaningful value to shareholders as it continues to expand its portfolio and leverage its infrastructure.

In addition to its base distribution GECC declared a special cast distribution of 5 cents per share in December 24, driven by the portfolio's strong income generation throughout 24.

Overall GECC's recent successes are fundamental to our growth strategy.

The increased capital base expands our fee paying AUM.

Thriving both higher recurring management fees and send the the potential.

Notably, our base management fee from GECC group 33% year over year to $1.2 million and we earned.

Approximately $5 million in incentive fees this quarter.

GC, our private credit fund has delivered a strong return on invested capital of approximately 13.9% net of fees since inception in November 23.

With these strong returns and a now established track record where well positioned to attract new capital and further scale the fund.

Meanwhile, our real estate business, Moamoy also continued to deliver strong results with the completion of our second design build project we anticipate continued profitability across Moo Mo's platform as we focus on selling our second built to shoot project and work towards the development of our 3rd contracted design build project.

With a strong pipeline of built to shoot opportunities we remain committed to executing on these development projects to drive profitability and deliver value for both our tenants and shareholders.

Further building on strategic growth initiatives on February 4th we significantly expanded our real estate capabilities through the acquisition of Greenfield CRA.

A leading construction management company in a long standing partner of Momo.

Greenfield has a deep knowledge of our development projects, a strong understanding of our tenant needs and expectations and a proven track record of delivering on Momo's high standards.

In connection with this transaction we launched Moamoy Construction Services or MCS.

And can find the assets of Greenfield with the assets of our monomoy BPS construction management consulting business.

MCS meaningfully bolsters our real estate platform by creating a fully integrated full service construction vertical to serve our existing asset management entities and we expect our close relationship with the Greenfield team to make for a seamless integration.

Additionally, MCS expands our third party owner rep consulting services.

Adding a created fee revenue opportunities.

While improving our operational efficiency to economies of scale.

We expect this transaction to enhance our construction management expertise by adding to Moomoy's existing civil engineering and land planning talent expanding our scope of services and fortifying our overall real estate value proposition to our investors and clients.

Additionally, Moamoy Reed continues to execute.

We closed on 3 property purchases for approximately $3.8 million and maintain a strong pipeline of transaction opportunities and open requirements from our tenants.

We have several value added acquisitions on the contract that we expect to close over the next 6 months.

Outside of our core businesses.

We have made significant progress in repurchasing shares under our expanded $20 million buyback.

From February 4th we have repurchased approximately 4.1 million shares for $7.4 million in an average price of $1.83 per share.

Representing an approximately 20% discount to our book value of $2.30 per share.

Additionally, GEG has continued to experience outsized returns on its unique investments such as the convertible preferred financing for core Weave and a private fund managed by Stoneridge Asset Management a best in class re insurance manager.

These investments further enhance our shareholder value and are testament to the strength of our sourcing capabilities for a board of directors and broader sophisticated network.

Which gives us a seat at the table in unique investment opportunities.

In closing

We're pleased with the performance of our credit and real estate businesses this quarter.

The acquisition of Greenfield the strengthens our real estate capabilities while GECCs continued growth demonstrates our momentum in credit.

We remain focused on our core objectives.

Enhancing financial performance.

Expanding our platform and growing AUM.

Looking ahead, we will continue to evaluate strategic opportunities to expand our businesses and creative differentiated product offerings with attractive risk adjusted return profiles.

With that I'll turn it over to Carrie.

Thank you, Jason. I will provide a brief overview of the quarter and of course welcome all of you to you are filing in greater detail or reach out to our team with any questions.

It's 2nd quarter revenues grew 24% to 3.5 million from the prior year period, primarily driven by an increased revenue from Moomoy BTS alongside a pickup and management fees from GECC AUM and fee paying AUM totaled approximately $751 million and $538 million up 14% and 17% respectively from the prior year quarter end.

Great on group generated net income from continuing operations of $1.4 million for the quarter as compared to a net loss from continuing operations of $0.2 million for the prior year period.

Adjusted Era for the quarter was $1 million compared to 0.6 million in the prior year period.

As of December 31st we had approximately $44 million of cash on our balance sheet to deploy across our growing alternative asset management platform.

Please prefer to slide 7 that provides an overview of our financial position and highlights the book value per share of approximately $2.30.

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

Thank you, we will now be conducting a question and answer session if you would like to ask a question, please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

For participants using speaker equipment it may be necessary to pick up your handset before pressing the star keys.

One moment please while we pull for questions.

There are no questions at this time. I would like to turn the floor back over to Jason Reese, CEO for Closing Commons.

Thank you again for joining us today. We look forward to speaking with you soon.

This concludes phase teleconference. You may disconnect your lines at this time. Thank you for your participation.

Q2 2025 Great Elm Group Inc Earnings Call

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