Exhibit 99.1
Great Elm Group Reports FISCAL 2023 FOURTH QUARTER AND FULL YEAR
financial resulTs
Company to Host Conference Call at 8:30 a.m., ET on September 21, 2023
WALTHAM, MA, September 20, 2023 -- 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, 2023.
Fiscal Fourth Quarter 2023 Highlights
•GEG collected incentive fees from Great Elm Capital Corp. (“GECC") for the first time in the Company’s history, totaling $1.0 million for the fourth quarter.
•As of June 30, 2023, GEG had approximately $85 million of cash and U.S. Treasuries on its balance sheet to deploy across its growing alternative asset management platform.
•Fee paying assets under management totaled $448.7 million as of June 30, 2023, representing approximately 2% sequential growth from March 31, 2023, and up approximately 10% year-over-year.
•Assets under management totaled $639.8 million as of June 30, 2023, representing approximately 1% sequential growth from March 31, 2023, and up approximately 5% year-over-year.
•Total revenue for the fourth quarter grew 96% to $3.0 million, compared to $1.5 million for the prior-year period, largely attributed to incentive fees from GECC.
•Net loss from continuing operations was ($5.3) million for the fourth quarter, comparable to the prior-year period.
•Adjusted EBITDA for the fourth quarter was $0.4 million, compared to $0.3 million for the prior-year period.
Full Fiscal Year 2023 Highlights
•During fiscal year 2023 and subsequent to year end, GEG hired key executives, bringing years of asset management experience to its team.
oOn September 6, 2022, GEG added experienced operations professional Nichole Milz as Chief Operating Officer.
oOn May 5, 2023, GEG's Board of Directors appointed Jason Reese, the Executive Chairman of GEG’s Board of Directors since 2020, to the additional role of Chief Executive Officer.
oOn May 15, 2023, GEG’s Board of Directors appointed Keri Davis as Chief Financial Officer of Great Elm, expanding upon her role as Chief Financial Officer of GECC.
oOn September 6, 2023, GEG’s Monomoy team added senior construction executive Andrew Wright as Vice President of Real Estate.
•On January 3, 2023, GEG sold its Durable Medical Equipment (“DME”) business for $80 million. After settling all obligations, the transaction resulted in approximately $26 million in net cash proceeds and 346,028 shares of Quipt Home Medical Corp. (“Quipt”) common stock.
•On January 17, 2023, GEG exercised a put right for the remaining 19% of the equity interests in Forest Investments, Inc. (“Forest”), following its sale of 61% of the equity interests in Forest on December 30, 2022, resulting in combined cash proceeds from the Forest sales of approximately $45 million.
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•Total revenue for the fiscal year ended June 30, 2023 grew 92% to $8.7 million, compared to $4.5 million for fiscal 2022.
•Net income from continuing operations for the fiscal year ended June 30, 2023 of $14.5 million, compared to net loss from continuing operations of ($19.3) million in fiscal 2022.
•Adjusted EBITDA of $1.0 million for the fiscal year ended June 30, 2023, compared to an adjusted EBITDA loss of ($1.3) million in fiscal 2022.
Management Commentary
Jason Reese, Chief Executive Officer of the Company, stated, “As we close fiscal year 2023, we are proud of the Company’s evolution into a more simplified business focused on alternative asset management. Throughout the year, our management team took transformative steps to reshape our balance sheet, increasing liquidity and growing AUM. In addition, in the fiscal fourth quarter, Great Elm recognized incentive fees from GECC for the first time in the Company’s history – a testament to GECC’s markedly improved portfolio positioning and operations. Looking ahead, we are steadfast in our long-term strategy to scale our core businesses, build upon our curated pipeline of new funds and potential investments and utilize our strong balance sheet to deploy capital where we see attractive opportunities to achieve compelling risk-adjusted returns.”
Discussion of Financial Results for the Fiscal Fourth Quarter Ended June 30, 2023
During the three months ended June 30, 2023, GEG reported total revenue of $3.0 million, representing a 59% sequential increase and a 96% increase from $1.5 million in the prior-year period. The increase primarily related to significantly improved cash incentive fees from GECC and the May 2022 acquisition of the Monomoy REIT management agreement.
During the three months ended June 30, 2023, GEG recorded net loss from continuing operations of ($5.3) million, comparable to the prior-year period.
During the three months ended June 30, 2023, GEG recorded Adjusted EBITDA of $0.4 million, compared to $0.3 million from the same period in the prior year.
Discussion of Financial Results for the Fiscal Year Ended June 30, 2023
Total revenue for the fiscal year ended June 30, 2023 increased 92% to $8.7 million from $4.5 million in the prior fiscal year.
For the fiscal year ended June 30, 2023, the Company reported net income from continuing operations of $14.5 million, compared to net loss from continuing operations of ($19.3) million for fiscal 2022, driven by higher revenue, interest and dividend income, as well as significant gains related to the Forest transaction.
Adjusted EBITDA for the fiscal year ended June 30, 2023 was $1.0 million, compared to an adjusted EBITDA loss of ($1.3) million in the prior fiscal year.
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Fiscal 2023 Fourth Quarter and Full Year Conference Call & Webcast Information
When: Thursday, September 21, 2023, 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.
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.
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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.
Media & Investor Contact:
Investor Relations
geginvestorrelations@greatelmcap.com
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Great Elm Group, Inc.
Consolidated Balance Sheets
Dollar amounts in thousands (except per share data)
| | | | | | | | |
ASSETS | | June 30, 2023 | | | June 30, 2022 | |
Current assets | | | | | | |
Cash and cash equivalents | | $ | 60,165 | | | $ | 22,281 | |
Receivables from managed funds | | | 3,308 | | | | 2,445 | |
Investments in marketable securities | | | 24,595 | | | | - | |
Investments, at fair value (cost $40,387 and $68,766, respectively) | | | 32,611 | | | | 48,042 | |
Prepaid and other current assets | | | 717 | | | | 665 | |
Assets of Consolidated Fund: | | | | | | |
Investments, at fair value (cost $2,432) | | | - | | | | 1,797 | |
Prepaid expenses | | | - | | | | 746 | |
Real estate under development | | | 1,742 | | | | - | |
Current assets held for sale | | | - | | | | 8,464 | |
Total current assets | | | 123,138 | | | | 84,440 | |
Identifiable intangible assets, net | | | 12,115 | | | | 13,250 | |
Right-of-use assets | | | 497 | | | | 733 | |
Other assets | | | 143 | | | | 103 | |
Non-current assets held for sale | | | - | | | | 69,561 | |
Total assets | | $ | 135,893 | | | $ | 168,087 | |
LIABILITIES, NON-CONTROLLING INTEREST AND STOCKHOLDERS' EQUITY | | | | | | |
Current liabilities | | | | | | |
Accounts payable | | $ | 191 | | | $ | 8 | |
Accrued expenses and other current liabilities | | | 5,418 | | | | 3,845 | |
Current portion of related party payables | | | 1,409 | | | | 486 | |
Current portion of lease liabilities | | | 359 | | | | 341 | |
Liabilities of Consolidated Fund - accrued expenses and other | | | - | | | | 11 | |
Current liabilities held for sale | | | - | | | | 15,003 | |
Total current liabilities | | | 7,377 | | | | 19,694 | |
Lease liabilities, net of current portion | | | 142 | | | | 472 | |
Long-term debt (face value $26,945) | | | 25,808 | | | | 25,532 | |
Related party payables, net of current portion | | | 926 | | | | 1,120 | |
Related party notes payable, net of current portion | | | - | | | | 6,270 | |
Convertible notes (face value $37,912 and $36,085, including $15,395 and $15,133 held by related parties, respectively) | | | 37,129 | | | | 35,187 | |
Redeemable preferred stock of subsidiaries (held by related parties, face value $35,010) | | | - | | | | 34,099 | |
Other liabilities | | | 669 | | | | 908 | |
Non-current liabilities held for sale | | | - | | | | 2,551 | |
Total liabilities | | | 72,051 | | | | 125,833 | |
| | | | | | |
Contingently redeemable non-controlling interest | | | - | | | | 2,225 | |
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 30,651,047 shares issued and 29,546,655 outstanding at June 30, 2023; and 28,932,444 shares issued and 28,507,490 outstanding at June 30, 2022 | | | 30 | | | | 29 | |
Additional paid-in-capital | | | 3,315,378 | | | | 3,312,763 | |
Accumulated deficit | | | (3,251,566 | ) | | | (3,279,296 | ) |
Total Great Elm Group, Inc. stockholders' equity | | | 63,842 | | | | 33,496 | |
Non-controlling interest | | | - | | | | 6,533 | |
Total stockholders' equity | | | 63,842 | | | | 40,029 | |
Total liabilities, non-controlling interest and stockholders' equity | | $ | 135,893 | | | $ | 168,087 | |
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Great Elm Group, Inc.
Consolidated Statements of Operations
Amounts in thousands (except per share data)
| | | | | | | | |
| | For the twelve months ended June 30, | |
| | 2023 | | | 2022 | |
Revenues | | $ | 8,663 | | | $ | 4,516 | |
Operating costs and expenses: | | | | | | |
Investment management expenses | | | 10,196 | | | | 6,616 | |
Depreciation and amortization | | | 1,152 | | | | 524 | |
Selling, general and administrative | | | 8,480 | | | | 5,982 | |
Expenses of Consolidated Fund | | | 46 | | | | 135 | |
Total operating costs and expenses | | | 19,874 | | | | 13,257 | |
Operating loss | | | (11,211 | ) | | | (8,741 | ) |
Dividends and interest income | | | 6,209 | | | | 3,161 | |
Net realized and unrealized gain (loss) on investments | | | 15,247 | | | | (7,571 | ) |
Net realized and unrealized loss on investments of Consolidated Fund | | | (16 | ) | | | (525 | ) |
Gain on sale of controlling interest in subsidiary | | | 10,524 | | | | - | |
Interest expense | | | (6,074 | ) | | | (5,546 | ) |
Income (loss) before income taxes from continuing operations | | | 14,679 | | | | (19,222 | ) |
Income tax expense | | | (200 | ) | | | (83 | ) |
Net income (loss) from continuing operations | | | 14,479 | | | | (19,305 | ) |
Discontinued operations: | | | | | | |
Net income from discontinued operations | | | 13,201 | | | | 4,268 | |
Net income (loss) | | $ | 27,680 | | | $ | (15,037 | ) |
Less: net (loss) income attributable to non-controlling interest, continuing operations | | | (1,554 | ) | | | 684 | |
Less: net income (loss) attributable to non-controlling interest, discontinued operations | | | 1,504 | | | | (828 | ) |
Net income (loss) attributable to Great Elm Group, Inc. | | $ | 27,730 | | | $ | (14,893 | ) |
Basic net income (loss) per share from: | | | | | | |
Continuing operations | | $ | 0.55 | | | $ | (0.75 | ) |
Discontinued operations | | | 0.40 | | | | 0.19 | |
Basic net income (loss) per share | | $ | 0.95 | | | $ | (0.56 | ) |
Diluted net income (loss) per share from: | | | | | | |
Continuing operations | | $ | 0.44 | | | $ | (0.75 | ) |
Discontinued operations | | | 0.29 | | | | 0.19 | |
Diluted net income (loss) per share | | $ | 0.73 | | | $ | (0.56 | ) |
Weighted average shares outstanding | | | | | | |
Basic | | | 28,910 | | | | 26,784 | |
Diluted | | | 40,980 | | | | 26,784 | |
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Great Elm Group, Inc.
Reconciliation from EBITDA to Adjusted EBITDA - Quarterly
Dollar amounts in thousands
| | | | | | | | | | | | | | | | |
| | For the three months ended June 30, | | | For the twelve months ended June 30, |
| | 2023 | | | 2022 | | | 2023 | | | 2022 |
Net income (loss) from continuing operations – GAAP | | $ (5,256) | | | $ (5,299) | | | $ 14,479 | | | $ (19,305) |
Interest expense | | | 1,050 | | | | 1,674 | | | | 6,074 | | | | 5,546 |
Income tax expense | | | 198 | | | | 166 | | | | 200 | | | | 83 |
Depreciation and amortization | | 282 | | | 217 | | | 1,152 | | | 524 |
Non-cash compensation | | 702 | | | 639 | | | 2,948 | | | 3,211 |
Loss on investments, excluding investment in Forest | | | 2,187 | | | | 2,762 | | | | 9,167 | | | | 8,096 |
Gains related to sale of Forest | | | - | | | | - | | | | (34,922) | | | | - |
Transaction and integration related costs(1) | | | 634 | | | | 188 | | | | 1,105 | | | | 499 |
Change in contingent consideration | | | 603 | | | | - | | | | 783 | | | | - |
Adjusted EBITDA(2) | | | $ 400 | | | | $ 347 | | | | $ 986 | | | | $ (1,346) |
(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, 2023.
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