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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.

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

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.

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

Great Elm Group, Inc.
Condensed Consolidated Balance Sheets
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Great Elm Group, Inc.
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Great Elm Group, Inc.
Reconciliation from Net Income (Loss) from Continuing Operations to Adjusted EBITDA
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(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.