GEGGL Great Elm Group Inc

 

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 8, 2024

Great Elm Group, Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware	001-39832	85-3622015
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
3801 PGA Boulevard, Suite 603 Palm Beach Gardens, FL		33410
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (617) 375-3006

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	GEG	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)
7.25% Notes due 2027	GEGGL	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

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Item 2.02 Results of Operations and Financial Condition.

On May 8, 2024, Great Elm Group, Inc. issued the press release furnished as Exhibit 99.1 to this report.

The foregoing information (including the Exhibit 99.1 hereto) is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number		Description
99.1		Press Release, dated May 8, 2024
104		The cover page from this Current Report on Form 8-K, formatted as inline XBRL

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		GREAT ELM GROUP, INC.
Date: May 8, 2024		/s/ Keri A. Davis
		By: Keri A. Davis
		Title: Chief Financial Officer

 

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Great Elm Group Reports FISCAL 2024 THIRD QUARTER

financial resulTs

 

Company to Host Conference Call at 8:30 a.m. ET on May 9, 2024

 

PALM BEACH GARDENS, Florida, May 8, 2024 – Great Elm Group, Inc. (“we,” “our,” “GEG,” “Great Elm,” or “the Company”), (NASDAQ: GEG), an alternative asset manager, today announced financial results for its fiscal third quarter ended March 31, 2024.

 

Fiscal Third Quarter 2024 and Other Recent Highlights

 

 

 

Management Commentary

 

Jason Reese, Chief Executive Officer of the Company, stated, “We continue to make solid progress in the quarter with respect to our long-term growth strategy. Completing successful capital raises of nearly $60 million at GECC, we are positioned to significantly grow our overall assets under management and related fee revenue. Additionally, GECC’s continued performance allowed Great Elm to earn incentive fees for the fourth consecutive quarter. At Monomoy, I’m increasingly encouraged by our growing backlog of build-to-suit projects, as well as the launch of a new construction

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management consulting business supported by our seasoned team and anchored by a key tenant contract. Upon the anticipated sale of our first build-to-suit property in fiscal fourth quarter, we will have created value for shareholders and believe we will be able to generate additional shareholder value over time by executing on our considerable BTS pipeline.”

 

“Furthermore, we are committed to utilizing our strong and liquid balance sheet to grow and diversify our businesses and revenue streams. Overall, we remain focused on scaling our core credit and real estate businesses, launching new investment funds and deploying capital into attractive platform opportunities that offer compelling risk-adjusted returns for our shareholders.”

 

Capital Raises to Scale the Credit Platform

 

In February 2024, GECC raised $24 million of equity capital from a special purchase vehicle (“SPV”) that acquired GECC common stock at net asset value. GEG supported the capital raise by making a $6 million investment into the SPV with a large institutional investor that invested $18 million.

 

In April 2024, GECC completed an underwritten public offering of $34.5 million 8.50% notes due 2029 (“GECCI”).

 

Discussion of Financial Results for the Fiscal Third Quarter Ended March 31, 2024

 

GEG reported total revenue of $2.8 million, a 47% increase from $1.9 million in the prior-year period, primarily driven by the collection of incentive fees from GECC of $0.7 million.

 

GEG recorded net loss from continuing operations of ($2.9) million, compared to a net loss of ($0.5) million in the prior-year period. Net loss in the quarter was driven by an approximately ($2.9) million unrealized loss on our investment in Great Elm Strategic Partnership I, LLC during the quarter.

 

GEG recorded Adjusted EBITDA of $1.2 million, compared to an Adjusted EBITDA loss of ($0.3) million in the prior-year period.

 

Stock Repurchase Program

 

In the fiscal second quarter, GEG’s Board of Directors approved a stock repurchase program under which GEG is authorized to repurchase up to $10 million in the aggregate of its outstanding common stock in the open market. To date, the Company has repurchased a modest number of shares.

 

 

Fiscal 2024 Third Quarter Conference Call & Webcast Information

 

When: Thursday, May 9, 2024, 8:30 a.m. Eastern Time (ET)

 

Call: All interested parties are invited to participate in the conference call by dialing +1 (888) 440-4537; international callers should dial +1 (646) 960-0669. Participants should enter the Conference ID 2595129 when asked.

 

Webcast: The conference call will be webcast simultaneously and can be accessed here. A copy of the slide presentation accompanying the conference call, can be found here.

 

 

About Great Elm Group, Inc.

 

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Great Elm Group, Inc. (NASDAQ: GEG) is a publicly-traded, alternative asset manager focused on growing a scalable and diversified portfolio of long-duration and permanent capital vehicles across credit, real estate, specialty finance, and other alternative strategies. Great Elm Group, Inc. and its subsidiaries currently manage Great Elm Capital Corp., a publicly-traded business development company, and Monomoy Properties REIT, LLC, an industrial-focused real estate investment trust, in addition to other investments. Great Elm Group, Inc.’s website can be found at www.greatelmgroup.com.

 

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

 

Statements in this press release that are “forward-looking” statements, including statements regarding expected growth, profitability, acquisition opportunities and outlook involve risks and uncertainties that may individually or collectively impact the matters described herein. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made and represent Great Elm’s assumptions and expectations in light of currently available information. These statements involve risks, variables and uncertainties, and Great Elm’s actual performance results may differ from those projected, and any such differences may be material. For information on certain factors that could cause actual events or results to differ materially from Great Elm’s expectations, please see Great Elm’s filings with the Securities and Exchange Commission (“SEC”), including its most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K. Additional information relating to Great Elm’s financial position and results of operations is also contained in Great Elm’s annual and quarterly reports filed with the SEC and available for download at its website www.greatelmgroup.com or at the SEC website www.sec.gov.

 

Non-GAAP Financial Measures

 

The SEC has adopted rules to regulate the use in filings with the SEC, and in public disclosures, of financial measures that are not in accordance with US GAAP, such as adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). Adjusted EBITDA is derived from methodologies other than in accordance with US GAAP. Great Elm believes that Adjusted EBITDA is an important measure for investors to use in evaluating Great Elm’s businesses. In addition, Great Elm’s management reviews Adjusted EBITDA as they evaluate acquisition opportunities.

 

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it either in isolation from, or as a substitute for, analyzing Great Elm’s results as reported under US GAAP. Non-GAAP financial measures reported by Great Elm may not be comparable to similarly titled amounts reported by other companies.

 

Included in the financial tables below is a reconciliation of Adjusted EBITDA to the most directly comparable US GAAP financial measure, net income from continuing operations.

 

Endnotes

1 Pro forma FPAUM assumes full investment of incremental capital.

 

 

Media & Investor Contact:

Investor Relations

geginvestorrelations@greatelmcap.com

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Great Elm Group, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

Dollar amounts in thousands (except per share data)

ASSETS		March 31, 2024				June 30, 2023
Current assets
Cash and cash equivalents		$	44,085			$	60,165
Receivables from managed funds			4,400				3,308
Investments in marketable securities			24,789				24,595
Investments, at fair value (cost $46,199 and $40,387, respectively)			38,244				32,611
Prepaid and other current assets			2,843				717
Real estate under development			8,104				1,742
Assets of Consolidated Funds:
Cash and cash equivalents			5,414				-
Investments, at fair value (cost $8,353)			8,561				-
Other assets			233				-
Total current assets			136,673				123,138
Identifiable intangible assets, net			11,300				12,115
Right-of-use assets			230				497
Other assets			150				143
Total assets		$	148,353			$	135,893
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	608			$	191
Accrued expenses and other current liabilities			4,276				5,418
Payable for securities purchased			4,914				-
Current portion of related party payables			618				1,409
Current portion of lease liabilities			183				359
Liabilities of Consolidated Funds:
Payable for securities purchased			267				-
Accrued expenses and other liabilities			124				-
Total current liabilities			10,990				7,377
Lease liabilities, net of current portion			26				142
Long-term debt (face value $26,945)			26,019				25,808
Related party payables, net of current portion			-				926
Convertible notes (face value $38,859 and $37,912, including $15,780 and $15,395 held by related parties, respectively)			38,164				37,129
Other liabilities			683				669
Total liabilities			75,882				72,051
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.001 par value; 5,000,000 authorized and zero outstanding			-				-
Common stock, $0.001 par value; 350,000,000 shares authorized and 31,881,695 shares issued and 30,164,142 outstanding at March 31, 2024; and 30,651,047 shares issued and 29,546,655 outstanding at June 30, 2023			30				30
Additional paid-in-capital			3,317,212				3,315,378
Accumulated deficit			(3,252,242	)			(3,251,566	)
Total Great Elm Group, Inc. stockholders' equity			65,000				63,842
Non-controlling interests			7,471				-
Total stockholders' equity			72,471				63,842
Total liabilities and stockholders' equity		$	148,353			$	135,893

 

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Great Elm Group, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

Amounts in thousands (except per share data)

		For the three months ended March 31,								For the nine months ended March 31,
		2024				2023				2024				2023
Revenues		$	2,787			$	1,898			$	8,916			$	5,637
Operating costs and expenses:
Investment management expenses			2,733				2,593				8,334				6,893
Depreciation and amortization			271				281				837				870
Selling, general and administrative			1,630				1,893				5,738				5,441
Expenses of Consolidated Funds			22				-				22				46
Total operating costs and expenses			4,656				4,767				14,931				13,250
Operating loss			(1,869	)			(2,869	)			(6,015	)			(7,613	)
Dividends and interest income			2,359				1,520				6,417				4,432
Net realized and unrealized gain (loss) on investments			(2,753	)			1,989				1,735				17,434
Net realized and unrealized gain (loss) on investments of Consolidated Funds			131				-				245				(16	)
Interest and other income of Consolidated Funds			323				-				451				-
Gain on sale of controlling interest in subsidiary			-				-				-				10,524
Interest expense			(1,074	)			(1,095	)			(3,197	)			(5,024	)
(Loss) income before income taxes from continuing operations			(2,883	)			(455	)			(364	)			19,737
Income tax benefit (expense)			-				-				-				(2	)
Net (loss) income from continuing operations			(2,883	)			(455	)			(364	)			19,735
Discontinued operations:
Net income from discontinued operations			-				12,203				16				13,202
Net (loss) income		$	(2,883	)		$	11,748			$	(348	)		$	32,937
Less: net income (loss) attributable to non-controlling interest, continuing operations			217				-				328				(1,554	)
Less: net income attributable to non-controlling interest, discontinued operations			-				-				-				1,504
Net (loss) income attributable to Great Elm Group, Inc.		$	(3,100	)		$	11,748			$	(676	)		$	32,987
Basic net income (loss) per share from:
Continuing operations		$	(0.10	)		$	(0.02	)		$	(0.02	)		$	0.74
Discontinued operations			-				0.42				-				0.41
Basic net income (loss) per share		$	(0.10	)		$	0.40			$	(0.02	)		$	1.15
Diluted net income (loss) per share from:
Continuing operations		$	(0.10	)		$	(0.02	)		$	(0.02	)		$	0.56
Discontinued operations			-				0.42				-				0.29
Diluted net income (loss) per share		$	(0.10	)		$	0.40			$	(0.02	)		$	0.85
Weighted average shares outstanding
Basic			30,066				28,997				29,844				28,779
Diluted			30,066				28,997				29,844				40,673

 

 

 

 

 

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Great Elm Group, Inc.

Reconciliation from Net Income (Loss) from Continuing Operations to Adjusted EBITDA

Dollar amounts in thousands

 

		Three months ended March 31,								Nine months ended March 31,
(in thousands)		2024				2023				2024				2023
Net income (loss) from continuing operations - GAAP		$	(2,883	)		$	(455	)		$	(364	)		$	19,735
Interest expense			1,074				1,095				3,197				5,024
Income tax expense (benefit)			-				-				-				2
Depreciation and amortization			271				281				837				870
Non-cash compensation			698				660				2,426				2,246
(Gain) loss on investments			2,622				(1,964	)			(1,980	)			6,980
Gains related to sale of Forest			-				(25	)			-				(34,922	)
Transaction and integration related costs(1)			-				-				-				471
Change in contingent consideration			(554	)			120				(518	)			180
Adjusted EBITDA(2)		$	1,228			$	(288	)		$	3,598			$	586

 

(1) Transaction and integration-related costs include costs to sell, acquire and integrate acquired businesses.

(2) Adjusted EBITDA for prior periods has been adjusted to include dividend income earned during such periods consistent with the methodology for March 31, 2024.

 

 

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v3.24.1.u1

Document and Entity Information	May 08, 2024
Entity Listings [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 08, 2024
Entity Registrant Name	Great Elm Group, Inc.
Entity Central Index Key	0001831096
Entity Emerging Growth Company	false
Entity File Number	001-39832
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	85-3622015
Entity Address, Address Line One	3801 PGA Boulevard
Entity Address, Address Line Two	Suite 603
Entity Address, City or Town	Palm Beach Gardens
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33410
City Area Code	617
Local Phone Number	375-3006
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Common Stock [Member]
Entity Listings [Line Items]
Title of 12(b) Security	Common stock, par value $0.001 per share
Trading Symbol	GEG
Security Exchange Name	NASDAQ
7.25% Notes due 2027 [Member]
Entity Listings [Line Items]
Title of 12(b) Security	7.25% Notes due 2027
Trading Symbol	GEGGL
Security Exchange Name	NASDAQ

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