• Revenue: $3.5 million, a 24% increase year-over-year.
• Net Income from Continuing Operations: $1.4 million, compared to a net loss of $0.2 million in the prior year period.
• Adjusted EBITDA: $1 million, up from $0.6 million in the prior year period.
• Fee-Paying Assets Under Management (AUM): $538 million, a 17% increase year-over-year.
• Total AUM: Approximately $751 million, up 14% from the prior year quarter-end.
• Cash Position: Over $44 million available.
• Base Management Fee from GECC: Grew 33% year-over-year to $1.2 million.
• Incentive Fees: Approximately $0.5 million earned this quarter.
• Book Value Per Share: Approximately $2.30.
• Share Repurchase: Approximately 4.1 million shares repurchased for $7.4 million at an average price of $1.83 per share.

• Warning! GuruFocus has detected 5 Warning Signs with GEG.

Release Date: February 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Great Elm Group Inc (NASDAQ:GEG) reported a 24% year-over-year increase in total revenue, reaching $3.5 million.
• The company achieved a 17% growth in fee-paying assets under management, totaling approximately $538 million.
• GECC raised an additional $13.2 million of equity at net asset value, contributing to a total capital raise of over $147 million in the last year.
• The acquisition of Greenfield CRE enhances GEG's real estate capabilities and expands its construction management expertise.
• GEG ended the quarter with a strong financial position, holding over $44 million in cash to support future growth initiatives.

Negative Points

• Despite the positive financial performance, the company did not address any potential risks or challenges in the earnings call.
• There was no mention of any significant new client acquisitions or partnerships outside of the Greenfield CRE acquisition.
• The earnings call did not provide specific guidance or projections for future quarters, leaving uncertainty about upcoming performance.
• The company continues to repurchase shares at a discount, which may indicate undervaluation concerns.
• There was no discussion on potential impacts of macroeconomic factors or market conditions on the company's operations.

Q & A Highlights

Q: Can you provide an overview of Great Elm Group's financial performance for the fiscal second quarter of 2025? A: Keri Davis, CFO, reported that fiscal second-quarter revenues grew 24% to $3.5 million, primarily driven by increased revenue from Monomoy BTS and management fees from GECC. The company generated net income from continuing operations of $1.4 million, compared to a net loss of $0.2 million in the prior year period. Adjusted EBITDA was $1 million, up from $0.6 million in the previous year.

Q: What are the recent strategic initiatives undertaken by Great Elm Group? A: Jason Reese, CEO, highlighted the launch of Monomoy Construction Services following the acquisition of Greenfield CRE, a construction management company. This move aims to bolster their real estate platform by creating a fully integrated construction vertical. Additionally, GECC raised $13.2 million of equity at net asset value, marking its third equity capital raise in 2024.

Q: How has Great Elm Group's assets under management (AUM) evolved over the past year? A: Jason Reese, CEO, stated that fee-paying AUM grew by 17% year-over-year, reaching approximately $538 million. This growth was primarily driven by their BDC, with GECC raising over $147 million in capital through equity and debt issuances in the last year.

Q: Can you elaborate on the performance of Great Elm Capital Corp (GECC) and its impact on the company's strategy? A: Jason Reese, CEO, noted that GECC has nearly doubled its net asset value since March 2022, delivering significant value to shareholders. The company declared a 5.7% increase in the quarterly base distribution and a special cash distribution, driven by strong income generation. These successes are fundamental to Great Elm's growth strategy, expanding their fee-paying AUM and driving higher recurring management fees.

Q: What is the status of Great Elm Group's share repurchase program? A: Jason Reese, CEO, mentioned that the company has repurchased approximately 4.1 million shares for $7.4 million at an average price of $1.83 per share, representing a 20% discount to their book value of $2.30 per share. This is part of their expanded $20 million buyback authorization.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.