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WALTHAM, Mass., Feb. 13, 2024 (GLOBE NEWSWIRE) -- 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 second quarter ended December 31, 2023.

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 of December 31, 2023, up 2% from September 30, 2023, and up 5% year-over-year.
• Assets under management totaled approximately $655 million as of December 31, 2023, up 2% from September 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 from Great Elm Capital Corp. ("GECC"), totaling $0.7 million for the three months ended December 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.
• 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

Jason Reese, Chief Executive Officer of the Company, stated, "As evidenced by our recent investment to support a capital raise at GECC as well as our seed investment in the Great Elm Credit Income Fund, we remain committed to leveraging our strong, liquid balance sheet to scale our existing businesses, grow our recurring revenue streams and deliver strong returns. I am encouraged by this quarter's continued growth in revenue and assets under management. GECC's sustained strong performance has allowed GEG to collect incentive fees for a third consecutive quarter. As fiscal 2024 progresses, GEG remains well-positioned to add to its growing alternative asset management vehicles and investments. We remain steadfast in our strategy to further scale our core credit and real estate businesses, introduce new investment funds, and deploy capital into promising platform opportunities that offer compelling risk-adjusted returns."

Strategic Investments to Scale the Credit Platform

On February 8, 2024, GECC raised $24 million of capital from a SPV that acquired GECC common stock at net asset value. GEG supported the capital raise by making a $6 million investment into the SPV.

During the three months ended December 31, 2023, GEG invested approximately $6 million to seed GECIF alongside additional investors. GECIF is a Great Elm-managed credit fund that focuses on direct lending, syndicated credit and special situations.

Discussion of Financial Results for the Fiscal Second Quarter Ended December 31, 2023

GEG reported total revenue of $2.8 million, a 50% increase from $1.9 million in the prior-year three-month period.

GEG recorded a net loss from continuing operations of ($0.2) million, compared to net income from continuing operations of $29.7 million in the prior-year three-month 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.

GEG recorded Adjusted EBITDA of $0.6 million, compared to $0.1 million in the prior-year three-month period.

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 $10 million in the aggregate of its outstanding common stock in the open market. To date, the Company has repurchased a modest number of shares.

Fiscal 2024 Second Quarter 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.

Media & Investor Contact:
Investor Relations
geginvestorrelations@greatelmcap.com

(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 December 31, 2023.