Earnings call transcript Q3 2023

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Operator

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I'd like to welcome everyone to the Great Elm Group Fiscal 2023 Third Quarter Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Adam Yates, Managing Director. ahead. go Please

Adam Yates

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

reminder, is call X, this on a May XXXX. being Friday, As recorded conference

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

refer important Elm SEC materially its Today's Group with unless not the that to factors from filings Elm does conference results to includes that undertake Great these statements, call Group's to for forward-looking cause and could required update actual we Great by differ law. statements statements. you forward-looking ask

In included Elm addition, the Information measures please our Great call, financial filings, certain under to website Filings. release. comparable most Reconciliations refer are financial SEC will measures. and our obtain non-GAAP select copies to earnings visit To of during Financial SEC Group's in management today's

now On will President; turn we appointed the Nichole Jason the newly over CEO. Pearson, have Kleinman, I call call today, CEO; Milz, Brent Adam Jason our Reese, CFO. COO; Reese, and to

Jason Reese

last to deliberate manager. a you Welcome, a company, asset the reposition completed for for from as am to thank growth. its to and us. We alternative position has to sheet spent taking everyone, today, focused holding to Adam. Group steps the of organization and company diversified Thank balance the Elm you, report joining year simplify thrilled Great the I transformation

you through walk highlights. some key Let me

to were a started leadership. of and incentive the our changes waived all appointed new under its directors the traded accrued Great 'XX, and Corp. CEO as key were fees X Kaplan with publicly we Capital clean March Matt Board. management appointed GEG at slate Elm made BDC. at was In BDC, Matt's

changes, With income-producing a has GECC vehicle first yesterday. successfully to become these repositioned reported the a for quarter consistent BDC strong GEG. been

and in the the I management May transaction of materials capital review add This not strongly the REIT our the agreement suggest ability long-duration take opportunity to call, private the changes, the to do marked opportunity to so. the properties listen to vehicles AUM we had you Monomoy entry or you've If GECC leadership acquired highlighted After 'XX. of to industry, doubled into our our GEG.

million May, in in raised reset Advisors, Board of of April investment fees Later Dave team. was GEG's Dave in we on $XX the hedge Elm. In XXXX. Co-Chief Officer fund Alternative Matter an GECC from Great joined relationships approved shareholders Directors he In XXXX. incentive where their unsecured X, experience to solutions fresh June, due Investment notes our brings incredible retiring to after August, and successfully BlackRock X.XX% BlackRock amendment to start

incentive cash that future. result, well in fees positioned receiving a to we believe are start As we the

the Around business X we calendar end strategic closed the year, large of divestitures.

assume me CEO, announced of their filing resigned the am easy-to-understand I Pete with that appointment. CEO, structure the and us the majority First, place January, in XX-Q. gratefully and as our asked effective taking majority the interest in we leaves in of to Forest we Reed entire and a fortunate 'XX Board sold DME with January streamlined 'XX. Investments company a I role additional Today, a non-core clean X-part sold December our This business. interest transaction In our accept sheet. balance that the Form in corporate

Pete smooth working like a transition. to forward we our Pete for interests full of his to Elm. our to the and thank and to with the shareholders. service my with aligned the directly to look As GEG, would are support, with contributions down largest ensure of a I Pete as all opportunity Great shareholder company to steps take consultant

grateful passion, years. are leadership for dedication and the over his We expertise,

vehicles, asset We alternative are manager now with a X focused Monomoy anchor and GECC investment properties.

a of have a business new opportunities sheet balance We and healthy to them. clean execute upon pipeline liquid

that Our as growing strategic achieve leading you goals, our my our on to we well and turn grow to ability which are CEO Great our look institutional our quarter. achieve back With platform. simple: our to now our our We're to Elm assets our office results financial profitability prove service job management, the opportunities It's has effectively the next goals. platform. to I for execute Brent positioned expand of to shareholders it its that, to under improve discuss progress. over to in forward phase growth our and on to reporting can I'll

Brent Pearson

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

approximately stock. our XXX,XXX we As significant After of well January Great in as of subsidiary for total a $XX QIP X completed million medical highlighted, price as X, On Jason cash to interest repayment common shares the during of QIP sold just a over purchase majority quarter. we the durable $XX million. Elm obligations, of transactions equipment in received business

transactions $XX from JPMorgan million XX, our to for the our to The brought remaining January interest majority of followed to XX% put XXXX. On December transaction interest the sale in on Forest The cash JPMorgan January $XX XX% the sale nearly affiliate million. exercised ownership million. over our we right of Forest to of XX, approximately Forest for in an $XX aggregate proceeds

segment of a Please gains a to to due DME historically operations. business Great investments, these Forest Elm's reportable and to million quarter, the we on ongoing transactions, recast single value our activity information these reported and sheet. prior over and that our have significant the the result balance segment remove reflect GEG's cash note as for as discontinued transactions, $XX generated realized of As in we material shareholders to added of

and In review fees management were continuing during up and quarter, to AUM under of GECC driven $XXX assets related revenues as operations, year-over-year of management by increased XX% million the March quarter-to-date and Monomoy. while over the X% XXXX, prior $XXX X% from to was of million, up higher quarter up AUM year-to-date, fiscal year-to-date. fee-paying fiscal XX, X% X% and end grew

million the For from generated Elm primarily of million to year year quarter. to a operations and of realized a of a Group driven million $X.X the the million unrealized quarter and compared $X the continuing unrealized The net realized loss in current prior quarter, Great net by change compared net on in investments from continuing was $X.X in net period. in loss on $X.X investments gains prior operations loss

million Adjusted $X.X in prior EBITDA loss compared to the million was for $X.X year period. the quarter

financial position operator and approximately call with my per to March the management quarter. growing that, an had questions. approximately refer Elm platform. of of Please highlights open of of to alternative over XX, This we review to our overview X our As $XX value And that the share cash $X.XX. for across million our balance provides financial will asset Great to book concludes of on Group our deploy turn Slide the sheet

Operator

line the [Operator come Instructions] from with Our first Mark Kingdon of will question Kingdon Capital.

Mark Kingdon

currently and your seeing to is, banking at we of impact and first, the the are ask ability spreads on any, these crunch fund what impacts the GECC if to how system in your transactions? in the company, overall Wanted it some credit from

Jason Reese

owning you, to know last specific opportunities. floating have we're more significantly if there's we moved rate at I GECC impacts, It's the Jason. at Thank you Mark. don't year, seeing debt GECC. that look And over

our more were a So we announced the $XXX we dividend Fed the anything, facility put this than ability had place new NII million they probably that credit covered yesterday able GECC to the our us, by business. just in health for moves care have, the quarter. helped at And if --

fund seen for more So be of crunch transactions banks we pulling the as not of to have but market. actually deals, to seeing kind credit opportunity are we're because out able

Mark Kingdon

Good. what's using help strategy your now NOL there was more about Elm some the Great NOL? forward growth even that competitive discussion an think going product. not at a point, And Monomoy, have on wonder I does great then to produce that I

Jason Reese

we not have really had space Monomoy -- big convincing We you it's is we year have not still about investors still space good talked have space. moved We've this NOL, been slow significantly as rates past. the because an to and the in cap we not of grow this that, moving the in, the with is issues that with Well, business but industrial any space quickly. had like kind in nearly rates that as

a a there's stalemate. bit So been little of

pretty a at gone pipeline. those look because for industrial been debt cost up have of prices sellers even the fund though transactions reduced expectations has less acquisitions not we you but there's have to If their space, strong

Monomoy. I third will and think calendar significant see the for you second calendar in growth quarters

Mark Kingdon

what fighting the new saying a issue just isn't investors opportunities Monomoy, that more is like? at you're price So you your finding it's in

Jason Reese

Yes. That's what say. was exactly to I trying

Operator

[Operator the Instructions] questions closing for remarks. at Jason this back time. no turn We any call I'll further have Reese, CEO, to

Jason Reese

joining the forward look with for today. you future. us We speaking Thank in to you

Operator

all today's That conclude will for meeting. Thank joining. you

disconnect. now may You

Great Elm (GEG) 5 May 232023 Q3 Earnings call transcript