GEG - Earnings call 1 2022 | Great Elm Group, Inc.

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Great Elm Group Fiscal 2022 First Quarter Financial Results Conference Call. [Operator Instructions] At this time, I will turn the call over to the company's representative, Adam Prior. Sir, you may begin.

Adam Prior

Thank you. Good morning, everyone. us Earnings Great Conference joining First Group's for XXXX Quarter Call. you for Elm the Fiscal Thank

As a reminder, on Friday, this conference call XX, is XXXX. November being recorded

you added If up sign accompanying directly at our to today's would website alerts investorrelations@greatelmcap.com be our following you distribution you like for list, www.greatelmgroup.com. The can on can conference email or and to presentation is to website the the disseminated the found be & Events can our was under website, release on on press our as is that to webcast quarterly A webcast also results. available link Presentations. announce call

to the constitutes purchase regarding that language your solicitation offer like I'd please in our securities. nothing call or attention to an customary safe note offers Also, information. to to harbor call today's sell forward-looking of

and results includes important and from not under differ to refer with its visit and call the projections. that you Group's Great obtain statements Elm law. actual Great undertake of for SEC Filings. these the update select unless Information Elm SEC conference cause ask website forward-looking Group's to required forward-looking to filings, could Great we copies Elm filings materially please To by Financial does Group that projections, factors statements Today's

be of to to Elm take strategy. those review and familiar a our who For might Group, you not moment Great with I'd like general structure

Great operating managed our employ seek verticals, both increase In Great of objective we traded Elm Management Elm respiratory a Corp., our which manage in Elm GECM. the shareholder and Great -- strategy. X the and a investment investment each a or Capital and assets efforts DME, management, a equipment is care operating or to vehicles management other distributor distinct create and in Equipment, BDC, Capital by Elm publicly driving Greal under company, Durable companies, supplies. to we Medical different holding is value through investment currently a collective In of companies management,

to go Peter that, is Executive Pete. turn Please Pete. Chief Officer. Reed, Great Elm over today And this with to ahead, like call I'd Hosting call Group's the

Peter Reed

you joined a Welcome, Brent CFO, highlights Adam closing I'm today. overview results thank I begin quarter, for in then with Kleinman; and detail. financial morning And everyone, our and and the for for key will discuss by us COO, and will our general Brent I'll return President joining Pearson. remarks. this our greater and

and progress solid under grew operating This for our DME, continuum Great increased on Group. and at the company was at quarter Elm management a We assets sales reported specialty lending building make profits continued business to management business finance in a investment within GECC. of

announce of March. After platform, AMPM we the pleased in to a period DME investment the were into acquisition

in for addition, challenges over normal the relatively past despite we completed year. a and reported DME strong of following August pandemic of the In our the for operations our business acquisition results to return slow the quarterly MedOne conditions

NAV. with $XX.X the end, investment for the fees of total $XXX.X was At GECC such On average increases on had invested to million calculated. are which due the quarter in slightly higher management quarter assets assets quarterly revenue side, a represents of asset per yield $X.XX dividend share XX, of a ending September $X.XX net XX million GECC XXXX, of value first declared its on or XX.X% share. which for per March quarter cash

portfolio. rotate we as preferred as what to corporate loans, investment months seek new equity XXXX, to of the GECC X the into portfolio believe mix deployed to higher-quality be businesses and primarily comprised in first we in an in bonds over specialty finance well $XXX investments as million the of uncorrelated credit diversified with credits investments secured increasingly

providing as has quarter of as finance the proprietary factoring continuum Funding lenders visibility purchases well of over of and asset-based transactions. in strategy specialty our participations lending Importantly, space, specialty increasing with experience into continued market acquisition opportunities the lending finance a GECC. in which providing Lenders the to during the Lenders broader overflow capital XX the of years building Funding, for

are finance further, investments produced specialty results grow to the specialty the date. platform We effective by our most our given methods constantly to finance analyzing

GECM the For largest specialty over took management of the first overall of time percentage since represented finance BDC, the the portfolio.

Our goal varying to provide ecosystem is overall their businesses create an development. can to where at in small solutions we stages

turn market a a made seeking buy betting companies which in over Brent? dynamic fund growing is technology. more our I'll a that, discuss minority and large excellent and we few was financial to Brent detail, Finally, the opportunity to feel sector. With results We a private Alpha, remarks. for in license to investment then and it addressable Sharp return address to for a to seeking closing from for this I'll an benefit quarter strategic sports

Brent Pearson

may review have. I'll Thanks, a brief course, of welcome to filings our reach Pete. you greater questions out of with provide overview in and, to all our team or you detail

have recent in approximately get to adopted of July the XXXX. by which guidance, separation the accounting of which on convertible expense believe reported and of instruments the of conversion ASU other change. We footnotes interest on highlight usefulness reporting. in XXXX. Under the filed with XX-Q eliminated Among I this accounting method changes, previously The retrospective the information provide financial on the were eliminating our $XXX,XXX that our issued our information of the financial accordance simplifies wanted convertible noncash started, XXXX-XX recently for additional our our I annual financial this notes we Form statements. in adoption recast the February Before in improves enhances standard, new full X, adoption, cash usefulness feature ASU we accounting

our on Moving results. to

September reported $X.X net operations million, million $X.X XXXX, from ended adjusted we million. of During income $XX.X consolidated continuing of of XX, the revenue quarter EBITDA and

segments, year, operating including We'll X with For General the net the and of loss operating million. Great of same the $X.X and begin Corporate consolidated companies. million companies reported management $X.X adjusted as activity. results period review million, well of continuing Elm operating revenue $XX.X last unallocated from of investment each operations we EBITDA of reports our as

For income last quarter. the impacted received operations of under no in generated retention year. strong $X.X Act year period claimed million in growth compared net net CARES for revenue continued as quarter, well prior from increase the as employee in in a $X.X of revenues resupply $XX.X DME $X.X Act by quarter, comparison million is stimulus some to million CARES and whereas same prior comparable in fiscal credits This AMPM the the during current the Elm's the comparison was MedOne. Great loss period. was million recent and DME driven The organic contributions in to first million in reported acquisitions sales $XX.X by

period In favorable and year. mix, was compared gross to EBITDA margins due in vendor increased $X.X million million addition, pricing the Adjusted same sales efficiency $X.X last to initiatives.

Next, turning to management. investment

million quarter first year. in to initiatives. was fees employee-related $X.X management fiscal same related For the period total $X.X such the compared Revenue to management in $X.X for revenue assets quarter was the growth of Adjusted during increases by XXXX slightly the the quarter, which costs prior higher fiscal same reported for primarily period to $X.X due prior million in fees quarter compared are first investment in to calculated. the the and increased million was EBITDA million year. impacted professional on EBITDA Adjusted the average investment during the

segment. our Moving on to Corporate General

We back closing revenue in year. the strategy. including compared $X.X revenue period XXXX. General was Great our Elm's to into fees result the under in liquidity recognized on $X.X earned $X.X in Elm the quarter, from to EBITDA first overhead in prior it same adjusted Corporate financial DME, fiscal put the million a to Corporate to the turn management as Pete GEG's ended million rationalizing during cash. This agreement review increased financing of put to for the management segment General during million our million quarter, a in earned December for was the execute along Great the same increased remarks. us to healthy Forest place Revenue million Investments, from quarter $XX.X and $X.X position position, current continues that with For negative period fees corporate JPMorgan a connection Inc. I'll my quarter management focus with compared negative with the the concludes in majority-owned of in year. best subsidiary, transactions prior in

Peter Reed

been or Thanks, for us that well start and management growth. In companies Overall, corporate fiscal you We Elm. our together investment of comment many believe Great efforts, I their the approximately us quarter shares. With of for management, questions. a million team topic positive on to our following with for that or our year operating of Great which with that, Elm's the leave their who directors, Brent. to Great been first open including X.X performance shares of manage positioned over will to a has extent and the future collectively shareholders businesses, turn funds closing, will Employees and have solid Elm. call know own the that the we for simplification is under ownership and aligned well, our is outstanding XX% our operator

Operator

of And Greenwich Instructions] Investments. [Operator Alexitch come line first Brian from the will the of question

Brian Alexitch

which, to et what think market to is are what price, that going I GEG already of estate is kind doing think strategy Just or a on Is since there forward. And you're call to expect. can think I shareholders, if what segment, capital with quick anything about kind going about cetera? to you knows But where of doing look reflecting differently share certainly be everything how going focused about happened, the allocation, stock us what at on I nobody me, the Your is exited you that forward, question you've we what has always your you're should is the today real just focus right, going curious guess, great. right? expect

Peter Reed

say as there, we I'll Sure. to my what We're pretty best. can do restricted but

segments at if we year. started So think had X the you the we look when -- X calendar I

post value share platform, and increased have resumed period our that in those business, significantly not to is and pandemic. We organically we out of DME price. business, that, the the acquisitions of a be our after Of to investment are we build believe segments, a of reflected X seem coming Now out the keenly we've does growing has X. long aware

have we're our We management the on potentially probably that segments, both but what more maximize those scale, revenue It of That's adding include expect we and other but the will, on different in focused into attractive on similar very it include ways. more are albeit and could of that. In could close business. add-on that growing approaches, there profits say focused and but that of of capital concept. growth. the business, believe maximizing and increase we focused investment management that's value slightly that vehicles We're GECC can that to long-duration looking to to different something include, maximizing acquisitions, valuable, built could value business, we've we organic

Brian Alexitch

we business? about a businesses I of along you business gets profit at until certain sorry, scoops as to for I up will Or, and mean, sort like thing of something someone related about rolling keep think -- it up value, expect some comes So just mean, DME, the that or, is point it where once right, going your maximizing IPO size? do kind be to you

Peter Reed

-- as that up think a publicly It's say it's the would company. I that in don't future. standing owned to a we separate tough anticipate

team think I value value. good someone that that increasing And done think job our point, I there. a will at has recognize some of

Brian Alexitch

Okay. Then management one your ask more investment on if can I segment.

funds? starting looking say acquiring either other BDCs mean closed-end rights capital long-duration that you're that is opportunities. to new -- existing I you at managers? looking of does You mean is are guys investment that or you're or sources funds at management that looking Or at

Peter Reed

of We're both doing of to Yes both those. on those. focused

Brian Alexitch

you... Okay. Are

Peter Reed

enhanced point our We think really by we certainly a through certain can attributes as scale. get that's a business tax that and attractive of

Brian Alexitch

diligence much at, on and you guys be, down what you many quarter-to-quarter? but able you do may how many significant right specific, of then on. amount those of criteria away, to looks be of looking guys your you sort due many how actually pipeline kind might of how Are comment get Nothing deals like -- a tossed how your what are

Peter Reed

all busy the but right opportunities. looking now of probably at go can't specifics I very we transaction are into there,

Operator

[Operator with Instructions] no are at And in time, remarks? the further proceed questions queue. this Would like to there closing sir, you

Peter Reed

next Thank look to again today. again for joining speaking you us you We to quarter. forward

Operator

you participation. today's conference for call. Thank your This concludes

may You disconnect. now

Great Elm (GEG) 12 Nov 212022 Q1 Earnings call transcript