GEG - Earnings call transcript Q4 2022

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Operator

Good morning. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the Great Elm Group Fiscal 2022 Fourth Quarter Results 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. you. Thank Instructions] [Operator Director, begin Managing conference. you Yates, your may Adam

Adam Yates

earnings you morning, us fourth Thank XXXX good Thank quarter call. for year-end fiscal you, and Group's everyone. joining Elm for and conference Great

XX, this conference being Tuesday, As a XXXX. call reminder, recorded is on September

call Events purchase the forward-looking If directly refer harbor added seek investment and Today's our drive comprised of on important of that and offer operating customary accompanying www.greatelmgroup.com. as by be investment securities. to announce publicly and Elm conference slide DME, Medical you and statements growth REIT the BDC, Great webcast your was constitutes to sustainable can to SEC and we please today's Monomoy well solicitation Great our quarterly factors attention required under our press found Great projections. call statement Hosting to on distribution I please Group can website note under filings, sign today's that does Elm forward-looking results. be includes investment across release Peter Great a company study or is A presentation e-mail safe to respiratory information. Elm website, on under Corp, unless nothing ask to traded management the the investorrelations@greatelmcap.com Great you like and operating management, Group Presentations. conference Reed, webcast To not Also, in is Durable Executive of sell or offers up our an results our link we of you equipment the website these in Equipment, care a management Information update Group's call call website a filings list, could from to that Elm the Great call actual as to its holding available verticals, SEC in Financial also would over to we to can materially or Great for call as as select alerts The disseminated well today vehicles. cause companies, Capital a to with projections, I regarding like for to forward-looking that differ Group's and to statements would Peter. you Group's sleep services. turn distributor obtain other manage visit companies. In undertake SEC Officer. law. In Elm now assets Elm two Elm Chief is copies will filings. the

Peter Reed

by by joining highlighted and Welcome, This fiscal key everyone, were I President, ended joined our and June fourth thank year Kleinman; XX, you this am XXXX, CFO, morning Brent our today. and for Pearson. us quarter milestones. Adam two

our AUM earnings portfolio our Investment for that million assets agreement closed was recurring transformative on diversified Private discussed of more Monomoy Properties fees. generate and a recently diversified for a doubled managing strategic Elm long scalable industrial acquisition with prior Real call, we Management representing of Investment as Trust, on the Estate leased $XXX First, of net of the This estate. of real deal and jump-started and that of than a vehicles capital duration our permanent Great initiative portfolio REIT

as deal specifically, to inclusive off up long-term fund's in at XX, with GEG. REIT Investment More our the from $XXX of good $XX the investment from XXXX, forward, time June million growth is transaction a start shareholder of to million the the $XXX GEG. Looking million scale of NAV the accelerates for of segment, the Monomoy value acquisition and driving Management adds thereby

well transactions and related NAV fees. of In remain Monomoy's strong, further in backlog for boding addition, growth

the with and for vehicles Investment bonds carrying the we other business. Monomoy the growth following baby strategic further as transaction, of to Management investments $XX growth million issued investment Second, of interest X.XX%, of allocated diversity five-year our enhance proceeds as Monomoy rate into an well

In Stepping back, offerings a ability rate success addition, GEG's these upon reinforces and GECC raised timely the $XX.X offering. fixed its completion manner. rights new to raise of equity million debt of capital in cost-effective of

that Going meaningful and believe from income new growth we forward, funds capital deploying further in by investment streams can raises potential. shareholder we return total compelling drive equity proceeds or existing into durable vehicles offer

strong by results for the and quarter revenue for line XXXX. and growth growth fiscal the Management, Investment consolidated our with quarter of basis XX% XXXX, fourth across fiscal financial AUM year higher Turning other by and and ended grew the investment delivered XX% and by combined the fiscal driven quarter in Monomoy. with Management broad-based XX% GECC to highlighted Investment XX, year revenue DME June in a growth versus our Top was vehicles, year-over-year we XX% performance, XXXX on segments. of for our prior acquisition Starting

related Durable were building this platform additional management and in improvement growth include business, We our in and private issues in fees XXXX a inventories, supply reinforcing adjusted growth significant Shifting by device despite a drivers profitability M&A medical the Equipment assuming our segment's to markets and Medical competitive highlighted limited the the investment persistent step-up amount XXXX. chain opportunistic forward going in capital GECC, government financings in drove initiatives as was multiyear advantages. accomplish of a stimulus fund launches. for able to fundraising Monomoy, durable year-over-year, EBITDA key the XX% received to same scalable new Beyond in

we Great Before over two have Elm Brent, factors discussed the it reinforce in to I turn I to want key past. that differentiating of

XXXX, million of also which potential earnings carryforwards, income federal shield only have from of June not approximately enhance First, taxes, vehicles. as our loss $XXX attractiveness financial capital but operating future other of we net long-duration of the XX, acquisitions

XX% or GEG to Second, Elm Great between Brent collectively to results the approximately of turn more employees and want strong directors, detail. to over in under team financial manage strong Great the which our the that, shares quarter discuss between reinforces management interest outstanding I'll shareholders. for GEG's funds Elm alignment it management, of I including With reiterate their the and alignment shareholders. own and

Brent Pearson

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

we consolidated EBITDA During XX, ended a $XX.X million. $X.X revenue of adjusted quarter net June $X.X reported XXXX, of and million, the loss of million

the year, $X.X $X.X For consolidated reported of of million, revenue of continuing same EBITDA operations net loss period million. and last from adjusted we a million $XX.X

million, we net $X.X loss and XXXX, revenue of net to of fiscal revenue, well fiscal of consolidated basis. of unallocated million the activity. operating Investment of million generated Great two adjusted million reports a a for Medical the XXXX. adjusted EBITDA segments $XX.X million Durable on including Elm compared begin We'll and results million review corporate Equipment our Investment loss For $X.X as $XX.X $X.X EBITDA That of $XX.X a each and of Management. with general as Management of

Management during fiscal of the period fourth quarter, $X.X same revenue the prior For reported in to year. $X.X Investment total million the million compared

earned offerings, XXXX, at our higher REIT, million in which to as Monomoy in management and compared million fees the of successful incremental rights Investment fiscal reflected May The $X.X completion under fiscal assets business generated Management the in GECC from well as was year. related management For primarily market revenue recoveries prior acquired increase to $X.X XXXX.

to NAV, an management reminder, equal of equivalent management in to addition rents fee REIT's asset of As the to property a fees earns gross X% X% Management Investment collected.

in better REIT, Investment related For in Monomoy million recent of a the to our and non-operating into agreement, net segment. performance prior management in investment activity and losses of a of Management income whereas general of are quarter, believe now net gains presented including presentation as the reported the given million this our comparison they presented acquisition loss activity corporate. the $X.X $X.X provides Notably, to are investment previously, management We income within unrealized view dividend period. the

loss the net quarter of $XX,XXX of investments, the period losses managed compared For of recognized XX, ended million variance was $XX,XXX year. $X.X to $X.X million June million GECC, XXXX positive fiscal net during primarily unrealized in million compared non-operating EBITDA Investment and ended to year $X.X as during Adjusted XX, $X.X the negative the Management same the fiscal net in June compared prior as year, realized during XXXX, primarily The on to income Company's net of XXXX. in the related fourth gains a year to XXXX. a

as and in growth outpaced fiscal was million negative in For $X.X as higher compared $X.X to positive investment revenue. Monomoy fees to XXXX, REIT's fuel adjusted and costs related to increase consulting XXXX, management other investments the fiscal million EBITDA payroll the acquisition

Next, turning to Medical Equipment. Durable

revenue in For reflecting DME more the reserve the collections year, quarter, processes generated compared period driving intake and efficient $XX.X revenue fourth $XX.X lower primarily last for fiscal million same rates. million to

$XX.X efficiencies to well ended year August prior due total were The and DME fiscal revenue $XX.X the million in to of in XXXX. in March XXXX, as contributions XX.X% June the million acquisitions year. to primarily XX, compared up these AMPM MedOne the operating XXXX in from increase revenues was as For

payroll of instrument, in business. Looking X.X% key the loss despite net But of adjustments valuation which revenue, income the DME embedded prior million respiratory XXXX, higher ahead, net a continue loss minimize operating certain a income derivative in impacts corporate. to consolidation of eliminated equipment offsetting near income to DME, prior restrict expense. net $X.X ability in the voluntary the during June quarter procure CARES added retention we under supply at loss in $X.X fourth ended to net the on we for persist redemptions, global benefit year the alternative million income, the The was CARES was subsidiary. with a reported in consolidation noteworthy issues, explore to million million expect offset to DME improvements preferred million to including work DME's charges that by sourcing included stock given which income This recognized $X.X in an intercompany mark-to-market Act mostly current our chain related no $X.X year. term. in suppliers adjustments activity, period million XX, embedded to XXXX. in benefit $X.X ended in and a on derivative XX, of in issued quarter-over-quarter interest back prior prior compared $X.X the whereas credits non-operating claimed reported EBITDA June million $X.X comes losses period. related the The are decrease whereas in only consolidated current recorded impacts, as is decline for million year improvements prior a Despite of operations which to in million our Adjusted EBITDA million to on quarter was the general compared operating increased intercompany increase net that were The eliminated for Great period. stimulus, Elm's of employee from the are to included $X.X CARES net recurring the year. primarily and tax is an comparison period however, well in as in year in purposes Such year. year impact with stimulus the improvement Act, reflected to to million in the fiscal the and $X.X $X.X Act $X.X

benefits in significantly Excluding profitability such prior year year period, the improved versus the quarter. prior segment

in AMPM XXXX, by current improvements primarily and the driven in further fiscal revenue in which acquired year segment. MedOne was $XX.X For fiscal compared CARES margins, prior million the with gross DME million, $X.X year $XX.X included fiscal highlight million the $X.X whereas million to with increase employee-related offset operating costs and Act employees. adjusted to stimulus, serves more includes The by results XXXX, associated higher favorable partially EBITDA the

Corporate Moving our on segment. General to

Great For $XXX,XXX in in same the $XXX,XXX prior fourth fiscal during the Elm's year. the General recorded period segment to Corporate quarter, compared revenue

Corporate a prior recognized Forest, For was the Such executed from our ended XXXX, revenue the in XXXX. increased in million the result agreement compared of management million in December Revenue fees with to eliminated General management year as revenues segment are increased $X.X $X.X consolidation. June XX, in earned which year.

more a prior $X.X favorable fourth fiscal income the the year in variance the Corporate quarter. quarter tax The to function a a million trends and of General XXXX, was current non-operating quarter. loss mostly loss of compared reported net For of quarter-over-quarter in net $X.X million

fiscal General year, the impacting the in recorded income, higher million of loss Activity a net included in XXXX. of fiscal XXXX interest For versus comparison $X.X Corporate segment net this a million XXXX. loss REIT as gains Monomoy the dividends DME agreement to benefits investment our preferred investment on intercompany as in investments acquisition stock, well the in passive May and in management of prior to $X.X related

negative was $X.X fiscal of XXXX negative a the million expense to $X.X as addition, $XX,XXX year quarter incurred prior year. period. adjusted EBITDA for million compared $X.X compared General to In of tax in current fiscal prior million Corporate provision in the tax the

fiscal General negative $X.X negative in XXXX, million XXXX. Corporate was to compared million fiscal For adjusted EBITDA $X.X

healthy we exclusive Finally, with in of ended balance liquidity a liquid the of terms cash position year investments. $XX.X our in of million sheet,

we'll the operator in to my the is of transaction, questions. promissory upfront acquisition alluded proceeds the of issued into newly amount earlier, by GECC review REIT Monomoy the investment notes open X.X% turn issued quarter, with earmarked concludes subject due also we is financial Pete quarter. either issued investments for over investments a of further the during consideration aggregate XXXX to XXXX The GEG the for X.XX% shareholder cash, As with management the build shares as May, payable for And to that, to shares opportunistic non-cash we strategic due $XX principal Monomoy call to part of and REIT. $X.X of the In million GEG note This million diversify other and owned in approval. business. as with and or growth note part

Operator

[Operator from the Greenwich question first Investment And from Instructions] line your Brian comes of Management. Alexitch

Your line open. is

Brian Alexitch

came the primarily or A from been has either in particular, acquisitions, was the not think offering, management from AUM lot was from just lot lot of question the but of AUM in the or maybe investment primarily, GEG. REIT came right? rights you growth which vertical, A that there growth right, on also a And a money of described, GEG. the as I

I GEG look It's is, revenues, into management can the seeing organic good revenue on So as yourself not entities, it's for great these exactly AUM. investment my but what's growth, question at your to be money own pump strategy that right?

Peter Reed

that remains the there capital raise rules, like sure be own We to capital attractive. using outside BDC, not own and which I'm looked the is addition it can financial in that. and that, you that So, we are we something with our GECC, when agree lot want how and a at is from returns think raising that Obviously, capital using probably regarding At plan. a of as our know capital. to

an closed it's in REIT. point for but important the grow mind, focus there -- Also in AUM properties at So mid-May. keep of us and Monomoy to we

is AUM chunk the growth that true X.X GEG, growth other the that's fair it's AUM So in from a of and just there in came there, months. but

GECC good continue But our do to is to outside off it's we're to that helpful own balance expect So, when and as start very for to capital it's well. happy shareholders. GEG we use we and sheet with there the Monomoy raise work to generate a will so return and a at think good return,

Brian Alexitch

All right.

right? following on and entities, just the charging management money again, why of So pumping the these fee instead up co-invest plus then fees? entities into of, incentive the that, not As manager both the yourself

Peter Reed

mean to you I'm did. opposed not co-invest sure I just as what understand what by we

Brian Alexitch

Well, okay.

You So you right? guys pipeline. are guys the manager, the manage

You right? do GEG. invest You what from to guys in, decide can so

from would those can take the do then from can it put from so into do GEG, to and You Is I entities -- think sorry, or that not invest it be you and take that you money REIT Or money can from or those and alongside just the either correct? GEG from do yourself able charge way. so the GECC, vehicles you again, fee. the of not should

Peter Reed

what and it could that advantage I that quite did particular, good. think we think returns it's it. I the do -- actually necessarily. to don't upon there's think we we an the depending are And from

Operator

some [Operator will at to Reed there the time. back closing turn remarks. are Peter no Instructions] And questions this call further over for I

Peter Reed

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

Operator

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

disconnect. may You now

Great Elm (GEG) 13 Sep 222022 Q4 Earnings call transcript