GEG 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): August 29, 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 August 29, 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 August 29, 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: August 29, 2024		/s/ Keri A. Davis
		By: Keri A. Davis
		Title: Chief Financial Officer

 

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Great Elm Group Reports FISCAL 2024 FOURTH QUARTER

AND FULL YEAR financial resulTs

 

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

 

PALM BEACH GARDENS, Florida, August 29, 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 fourth quarter and year ended June 30, 2024.

 

Fiscal Fourth Quarter 2024 and Recent Highlights

 

Full Fiscal Year 2024 Highlights

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Management Commentary

 

Jason Reese, Chief Executive Officer of the Company, stated, “We made considerable progress throughout fiscal 2024 in all facets of our business. GECC raised over $90 million of new capital from February to July 2024, due in large part to the innovative joint venture structure we established with experienced, institutional partners. We significantly boosted our fee revenue with growth in incentive fee revenue from GECC as well as increased management fees from our credit and real estate businesses. At Monomoy, our real estate business had outsized performance, driven by the successful sale of our first property and growing pipeline in our Build-to-Suit business. Finally, we launched complementary products and businesses, including a private credit fund and a new construction management consulting business.

 

Overall, we made great strides during fiscal 2024. Looking ahead to fiscal 2025, we remain focused on further growing our core credit and real estate businesses, sourcing unique investment opportunities, and utilizing our strong balance sheet to expand our platform and create value for our shareholders.”

 

Capital Raises to Scale Credit Platform

 

GECC issued $56.5 million of 8.50% notes due 2029 (“GECCI”). In April 2024, GECC completed an underwritten public offering of $34.5 million of GECCI notes. In July 2024, it issued an additional $22 million in a registered direct offering to an institutional investor.

 

In June 2024, GECC raised $12 million of equity capital at net asset value from PPH, an SPV that purchased GECC common stock at net asset value. This investment was supported by a $3 million investment by GEG into PPH, with other institutional investors contributing $9 million.

 

In February 2024, GECC raised $24 million of equity capital from GESP that acquired GECC common stock at net asset value. GEG supported the capital raise by making a $6 million investment into the SPV alongside a large institutional investor that invested $18 million.

 

Discussion of Financial Results for the Fiscal Fourth Quarter Ended June 30, 2024

 

GEG reported total revenue of $8.9 million, approximately triple that of $3.0 million in the prior-year period. The increase in revenue was primarily driven by Monomoy BTS’s first build-to-suit property sale.

 

GEG recorded net loss from continuing operations of ($0.6) million, compared to ($5.3) million in the prior-year period. Included in net loss was ($1.1) million unrealized loss on our investment in PPH during the quarter.

 

GEG recorded Adjusted EBITDA of $1.2 million, compared to $0.4 million in the prior-year period.

 

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Discussion of Financial Results for the Fiscal Year Ended June 30, 2024

 

Total revenue for the fiscal year ended June 30, 2024 increased 106% to $17.8 million from $8.7 million in the prior fiscal year, primarily driven by the first build-to-suit property sale and increased incentive fees collected from GECC.

 

For the fiscal year ended June 30, 2024, the Company reported a net loss from continuing operations of ($0.9) million, compared to net income from continuing operations of $14.5 million for fiscal 2023, which was driven by significant gains from the sale of Forest Investments, Inc. Included in net loss for fiscal 2024 was ($3.8) million of unrealized losses on GEG’s investments in GESP and PPH.

 

Adjusted EBITDA for the fiscal year ended June 30, 2024 was $4.8 million, compared to $1.0 million in the prior fiscal year.

 

Stock Repurchase Program and Convertible Notes Extinguishment

 

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 approximately 1.3 million shares for $2.4 million.

 

In addition, in June 2024, the Company repurchased $4.2 million in principal of 5% convertible notes due February 26, 2030 for $2.1 million, or approximately 47% of face value, resulting in a realized gain of $2.3 million.

 

 

Fiscal 2024 Fourth Quarter and Full Year Conference Call & Webcast Information

 

When: Friday, August 30, 2024, 8:30 a.m. Eastern Time (ET)

 

Call: All interested parties are invited to participate in the conference call by dialing +1 (877) 407-0752; international callers should dial +1 (201) 389-0912. Participants should enter the Conference ID 13746832 if 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.

 

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

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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

Dollar amounts in thousands (except per share data)

ASSETS		June 30, 2024				June 30, 2023
Current assets
Cash and cash equivalents		$	48,147			$	60,165
Restricted cash			1,571				-
Receivables from managed funds			2,259				3,308
Investments in marketable securities			9,929				24,595
Investments, at fair value (cost $54,261 and $40,387, respectively)			44,585				32,611
Prepaid and other current assets			1,215				717
Real estate under development			5,769				1,742
Assets of Consolidated Funds:
Cash and cash equivalents			2,371				-
Investments, at fair value (cost $11,338)			11,471				-
Other assets			253				-
Total current assets			127,570				123,138
Identifiable intangible assets, net			11,037				12,115
Right-of-use assets			225				497
Other assets			1,614				143
Total assets		$	140,446			$	135,893
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable		$	317			$	191
Accrued expenses and other current liabilities			7,009				5,418
Current portion of related party payables			634				1,409
Current portion of lease liabilities			137				359
Liabilities of Consolidated Funds:
Payable for securities purchased			100				-
Accrued expenses and other liabilities			162				-
Total current liabilities			8,359				7,377
Lease liabilities, net of current portion			57				142
Long-term debt (face value $26,945)			26,090				25,808
Related party payables, net of current portion			-				926
Convertible notes (face value $35,494 and $37,912, including $16,174 and $15,395 held by related parties, respectively)			34,900				37,129
Other liabilities			845				669
Total liabilities			70,251				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 31,875,285 shares issued and 30,494,448 outstanding at June 30, 2024; and 30,651,047 shares issued and 29,546,655 outstanding at June 30, 2023			30				30
Additional paid-in-capital			3,315,638				3,315,378
Accumulated deficit			(3,252,954	)			(3,251,566	)
Total Great Elm Group, Inc. stockholders' equity			62,714				63,842
Non-controlling interests			7,481				-
Total stockholders' equity			70,195				63,842
Total liabilities and stockholders' equity		$	140,446			$	135,893

 

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Great Elm Group, Inc.

Condensed Consolidated Statements of Operations

Amounts in thousands (except per share data)

 

 

		For the three months ended June 30,								For the twelve months ended June 30,
		2024				2023				2024				2023
Revenues		$	8,918			$	3,026			$	17,834			$	8,663
Cost of revenues		5,526				-				5,526				-
Operating costs and expenses:
Investment management expenses			2,997				3,303				11,331				10,196
Depreciation and amortization			271				282				1,108				1,152
Selling, general and administrative			1,916				3,039				7,654				8,480
Expenses of Consolidated Funds			31				-				53				46
Total operating costs and expenses			5,215				6,624				20,146				19,874
Operating loss			(1,823	)			(3,598	)			(7,838	)			(11,211	)
Dividends and interest income			1,640				1,777				8,057				6,209
Net realized and unrealized gain (loss) on investments			477				(2,187	)			2,212				15,247
Net realized and unrealized (loss) gain on investments of Consolidated Funds			(12	)			-				233				(16	)
Interest and other income of Consolidated Funds			378				-				829				-
Gain on sale of controlling interest in subsidiary			-				-				-				10,524
Interest expense			(1,137	)			(1,050	)			(4,334	)			(6,074	)
(Loss) income before income taxes from continuing operations			(477	)			(5,058	)			(841	)			14,679
Income tax benefit (expense)			(101	)			(198	)			(101	)			(200	)
Net (loss) income from continuing operations			(578	)			(5,256	)			(942	)			14,479
Discontinued operations:
Net income from discontinued operations			-				(1	)			16				13,201
Net (loss) income		$	(578	)		$	(5,257	)		$	(926	)		$	27,680
Less: net income (loss) attributable to non-controlling interest, continuing operations			-				-				462				(1,554	)
Less: net income attributable to non-controlling interest, discontinued operations			-				-				-				1,504
Net (loss) income attributable to Great Elm Group, Inc.		$	(578	)		$	(5,257	)		$	(1,388	)		$	27,730
Basic net (loss) income per share from:
Continuing operations		$	(0.02	)		$	(0.18	)		$	(0.05	)		$	0.55
Discontinued operations			-				-				-				0.40
Basic net (loss) income per share		$	(0.02	)		$	(0.18	)		$	(0.05	)		$	0.95
Diluted net (loss) income per share from:
Continuing operations		$	(0.02	)		$	(0.18	)		$	(0.05	)		$	0.44
Discontinued operations			-				-				-				0.29
Diluted net (loss) income per share		$	(0.02	)		$	(0.18	)		$	(0.05	)		$	0.73
Weighted average shares outstanding
Basic			30,318				29,303				29,962				28,910
Diluted			30,318				29,303				29,962				40,980

 

 

 

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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 June 30,								Twelve months ended June 30,
(in thousands)		2024				2023				2024				2023
Net income (loss) from continuing operations - GAAP		$	(578	)		$	(5,256	)		$	(942)			$	14,479
Interest expense			1,137				1,050				4,334				6,074
Income tax expense (benefit)			101				198				101				200
Depreciation and amortization			271				282				1,108				1,152
Non-cash compensation			688				701				3,112				2,948
(Gain) loss on investments			(465)				2,187				(2,445	)			9,167
Gains related to sale of Forest			-				-				-				(34,922	)
Transaction and integration related costs(1)			-				634				-				1,105
Change in contingent consideration			20				603				(498	)			783
Adjusted EBITDA(2)		$	1,174			$	399			$	4,770			$	986

 

(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 June 30, 2024.

 

 

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v3.24.2.u1

Document and Entity Information	Aug. 29, 2024
Entity Listings [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Aug. 29, 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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