Fiscal Second Quarter 2024 and Other Recent Highlights
- On
February 8, 2024 , GECC raised$24 million of equity capital from a special purchase vehicle (“SPV”) that acquired GECC common stock at net asset value, supported by a GEG investment into the SPV of$6 million . Great Elm launched a credit fund,Great Elm Credit Income Fund, LLC (“GECIF”), during the quarter, focused on income generation and capital preservation through direct lending, syndicated credit and opportunistic credit investing.- Fee-paying assets under management totaled approximately
$461 million as ofDecember 31, 2023 , up 2% fromSeptember 30, 2023 , and up 5% year-over-year. - Assets under management totaled approximately
$655 million as ofDecember 31, 2023 , up 2% fromSeptember 30, 2023 , and up 6% year-over-year. - Total revenue for the second quarter grew 50% to
$2.8 million , compared to$1.9 million for the prior-year period. Great Elm collected incentive fees for the third consecutive quarter fromGreat Elm Capital Corp. (“GECC”), totaling$0.7 million for the three months endedDecember 31, 2023 .- Net loss from continuing operations attributable to GEG was
($0.2) million for the second quarter, compared to net income from continuing operations of$29.7 million in the prior-year period.- Net income from continuing operations in the prior-year period was inclusive of
$22.2 million in net realized and unrealized gain on investments and a$10.5 million gain related to the Forest transaction.
- Net income from continuing operations in the prior-year period was inclusive of
- Adjusted EBITDA for the second quarter was
$0.6 million , compared to$0.1 million for the prior-year period. - As of
December 31, 2023 , GEG had approximately$69 million of cash and marketable securities on its balance sheet to support growth initiatives across its alternative asset management platform.
Management Commentary
Strategic Investments to Scale the Credit Platform
On
During the three months ended
Discussion of Financial Results for the Fiscal Second Quarter Ended
GEG reported total revenue of
GEG recorded a net loss from continuing operations of
GEG recorded Adjusted EBITDA of
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
Fiscal 2024 Second Quarter Conference Call & Webcast Information
When: | |
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
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
Non-GAAP Financial Measures
The
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
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
Condensed Consolidated Balance Sheets (Unaudited) Dollar amounts in thousands (except per share data) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 39,068 | $ | 60,165 | ||||
Receivables from managed funds | 3,492 | 3,308 | ||||||
Investments in marketable securities | 29,698 | 24,595 | ||||||
Investments, at fair value (cost | 39,312 | 32,611 | ||||||
Prepaid and other current assets | 2,982 | 717 | ||||||
Real estate under development | 4,905 | 1,742 | ||||||
Assets of Consolidated Funds: | ||||||||
Cash and cash equivalents | 10,055 | - | ||||||
Investments, at fair value (cost | 4,680 | - | ||||||
Other assets | 92 | - | ||||||
Total current assets | 134,284 | 123,138 | ||||||
Identifiable intangible assets, net | 11,563 | 12,115 | ||||||
Right-of-use assets | 322 | 497 | ||||||
Other assets | 54 | 143 | ||||||
Total assets | $ | 146,223 | $ | 135,893 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 158 | $ | 191 | ||||
Accrued expenses and other current liabilities | 4,357 | 5,418 | ||||||
Current portion of related party payables | 1,154 | 1,409 | ||||||
Current portion of lease liabilities | 271 | 359 | ||||||
Liabilities of Consolidated Funds: | ||||||||
Payable for securities purchased | 944 | - | ||||||
Total current liabilities | 6,884 | 7,377 | ||||||
Lease liabilities, net of current portion | 38 | 142 | ||||||
Long-term debt (face value | 25,948 | 25,808 | ||||||
Related party payables, net of current portion | - | 926 | ||||||
Convertible notes (face value | 38,135 | 37,129 | ||||||
Other liabilities | 611 | 669 | ||||||
Total liabilities | 71,616 | 72,051 | ||||||
Commitments and contingencies (Note 11) | ||||||||
Stockholders' equity | ||||||||
Preferred stock, | - | - | ||||||
Common stock, | 30 | 30 | ||||||
Additional paid-in-capital | 3,316,708 | 3,315,378 | ||||||
Accumulated deficit | (3,249,142 | ) | (3,251,566 | ) | ||||
67,596 | 63,842 | |||||||
Non-controlling interests | 7,011 | - | ||||||
Total stockholders' equity | 74,607 | 63,842 | ||||||
Total liabilities and stockholders' equity | $ | 146,223 | $ | 135,893 |
Condensed Consolidated Statements of Operations (Unaudited) Amounts in thousands (except per share data) | ||||||||||||||||
For the three months ended | For the six months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenues | $ | 2,819 | $ | 1,879 | $ | 6,129 | $ | 3,739 | ||||||||
Operating costs and expenses: | ||||||||||||||||
Investment management expenses | 2,839 | 2,311 | 5,601 | 4,300 | ||||||||||||
Depreciation and amortization | 283 | 295 | 566 | 589 | ||||||||||||
Selling, general and administrative | 2,393 | 2,061 | 4,108 | 3,548 | ||||||||||||
Expenses of Consolidated Funds | - | - | - | 46 | ||||||||||||
Total operating costs and expenses | 5,515 | 4,667 | 10,275 | 8,483 | ||||||||||||
Operating loss | (2,696 | ) | (2,788 | ) | (4,146 | ) | (4,744 | ) | ||||||||
Dividends and interest income | 2,072 | 1,439 | 4,058 | 2,912 | ||||||||||||
Net realized and unrealized gain on investments | 1,204 | 22,242 | 4,488 | 15,445 | ||||||||||||
Net realized and unrealized gain (loss) on investments of Consolidated Funds | 114 | - | 114 | (16 | ) | |||||||||||
Interest and other income of Consolidated Funds | 128 | - | 128 | - | ||||||||||||
Gain on sale of controlling interest in subsidiary | - | 10,524 | - | 10,524 | ||||||||||||
Interest expense | (1,061 | ) | (1,955 | ) | (2,123 | ) | (3,929 | ) | ||||||||
(Loss) income before income taxes from continuing operations | (239 | ) | 29,462 | 2,519 | 20,192 | |||||||||||
Income tax benefit (expense) | - | 231 | - | (2 | ) | |||||||||||
Net (loss) income from continuing operations | (239 | ) | 29,693 | 2,519 | 20,190 | |||||||||||
Discontinued operations: | ||||||||||||||||
Net income from discontinued operations | - | 35 | 16 | 999 | ||||||||||||
Net (loss) income | $ | (239 | ) | $ | 29,728 | $ | 2,535 | $ | 21,189 | |||||||
Less: net income (loss) attributable to non-controlling interest, continuing operations | 111 | 18 | 111 | (1,554 | ) | |||||||||||
Less: net income attributable to non-controlling interest, discontinued operations | - | 180 | - | 1,504 | ||||||||||||
Net (loss) income attributable to | $ | (350 | ) | $ | 29,530 | $ | 2,424 | $ | 21,239 | |||||||
Basic net income (loss) per share from: | ||||||||||||||||
Continuing operations | $ | (0.01 | ) | $ | 1.03 | $ | 0.08 | $ | 0.76 | |||||||
Discontinued operations | - | (0.01 | ) | - | (0.02 | ) | ||||||||||
Basic net income (loss) per share | $ | (0.01 | ) | $ | 1.02 | $ | 0.08 | $ | 0.74 | |||||||
Diluted net income (loss) per share from: | ||||||||||||||||
Continuing operations | $ | (0.01 | ) | $ | 0.74 | $ | 0.08 | $ | 0.56 | |||||||
Discontinued operations | - | - | - | (0.01 | ) | |||||||||||
Diluted net income (loss) per share | $ | (0.01 | ) | $ | 0.74 | $ | 0.08 | $ | 0.55 | |||||||
Weighted average shares outstanding | ||||||||||||||||
Basic | 29,889 | 28,803 | 29,734 | 28,672 | ||||||||||||
Diluted | 29,889 | 40,586 | 30,916 | 40,455 |
Reconciliation from Net Income (Loss) from Continuing Operations to Adjusted EBITDA Dollar amounts in thousands | ||||||||||||||||
For the three months ended | For the six months ended | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Net Income (Loss) from Continuing Operations – GAAP | $ | (239 | ) | $ | 29,693 | $ | 2,519 | $ | 20,190 | |||||||
Interest expense | 1,061 | 1,955 | 2,123 | 3,929 | ||||||||||||
Income tax expense (benefit) | - | (231 | ) | - | 2 | |||||||||||
Depreciation and amortization | 283 | 295 | 566 | 589 | ||||||||||||
Non-cash compensation | 839 | 645 | 1,726 | 1,586 | ||||||||||||
(Gain) loss on investments | (1,318 | ) | 2,131 | (4,602 | ) | 8,944 | ||||||||||
Gains related to sale of Forest | - | (34,897 | ) | - | (34,897 | ) | ||||||||||
Transaction and integration related costs(1) | - | 425 | - | 471 | ||||||||||||
Change in contingent consideration | 18 | 130 | 36 | 60 | ||||||||||||
Adjusted EBITDA(2) | $ | 644 | $ | 146 | $ | 2,368 | $ | 874 |
(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
Source:
2024 GlobeNewswire, Inc., source