Great Elm Group Reports Strong Financial Growth in Q1 2025

Great Elm Group Announces Q1 2025 Financial Results

Great Elm Group, Inc. (NASDAQ: GEG), a key player in the alternative asset management field, has reported significant strides in financial performance for its fiscal first quarter. The results are for the period ending September 30, 2024, showing robust growth in both fee-paying assets and overall assets under management.

Financial Performance Highlights

The first quarter of fiscal 2025 brought notable achievements for Great Elm Group. Their fee-paying assets under management (FPAUM) reached approximately $559 million, marking a commendable growth of 24% compared to the previous year. Meanwhile, assets under management (AUM) stood at about $782 million, increasing by 22% over the same timeframe.

Income and Revenue Growth

This period also saw total revenues climb to $4.0 million, a 21% increase compared to $3.3 million from the previous year. A major contributor to this growth was the successful sale of the Monomoy Build-to-Suit property and increased management fees from Great Elm Capital Corp. (GECC) correlated with the rise in FPAUM.

Net Income and Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

Great Elm reported a net income from continuing operations of $3.0 million for the quarter, which is an improvement over the previous year's $2.8 million. This figure is partially influenced by the reversal of around $3.5 million in unrealized losses tied to investments in special purpose vehicles. Adjusted EBITDA for Q1 was recorded at $1.3 million, slightly down from $1.7 million in the prior year.

Stock Repurchase Program Expansion

In a proactive move to enhance shareholder value, Great Elm Group's Board of Directors has authorized an additional $10 million in stock repurchases, thus doubling the previous authorization. As of early November 2024, approximately 2.5 million shares have been repurchased for a total of $4.6 million. The average price per share stands at $1.85, indicating strategic buybacks.

CEO Insights on Growth Strategy

Jason Reese, the Chief Executive Officer of Great Elm, expressed optimism regarding the company's trajectory. He highlighted the successful expansion in their management of assets and cited strength in their incentive fee processes from GECC, coupled with a solid pipeline from their Monomoy Build-to-Suit operations. Emphasizing a strong relationship with tenants, GEG aims to leverage their strategic priorities further, focusing on investment opportunities within the credit and real estate landscapes.

Highlights from Managed Vehicles

GECC has reported record total investment income in the quarter, demonstrating a strong management of its capital structure. In July, it issued $22.0 million of 8.50% Notes due 2029 to bolster its resources. Furthermore, GEG's Monomoy division has seen solid outcomes, having completed its first construction project which fueled an expansion of its Construction Management business.

Investment Highlights

The Great Elm Credit Income Fund (GECIF) has shown robust returns since its inception, delivering a return on invested capital exceeding 11%, net of fees. This performance will undoubtedly aid GEG in attracting further capital to scale its operations efficiently.

Looking Ahead

As Great Elm Group concludes the first quarter, the outlook remains promising. With a resilient portfolio and strategic focus, GEG is well-positioned to navigate the evolving market landscape, aiming for sustainable growth and maximizing shareholder value.

Frequently Asked Questions

1. What were the key financial highlights for Great Elm Group in Q1 2025?

Great Elm Group reported $4.0 million in revenue, a 21% increase year-over-year, and a net income of $3.0 million, reflecting solid growth in their managed assets.

2. How much did Great Elm Group authorize for stock repurchases?

The Board authorized an additional $10 million for stock repurchases, totaling $20 million in buyback capacity.

3. What were the total assets under management for Great Elm Group?

As of the end of Q1 2025, Great Elm Group reported approximately $782 million in total assets under management.

4. How did net income compare to the prior year?

Net income from continuing operations increased from $2.8 million in the previous year to $3.0 million in Q1 2025.

5. What is the focus area for Great Elm Group moving forward?

Great Elm Group is keen on further growing its core credit and real estate platforms while pursuing compelling investment opportunities to maximize shareholder value.

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