Great Elm Group Q3 2025 Earnings Report

Great Elm Group EPS Results

• Actual EPS: -$0.17
• Consensus EPS: $0.33
• Beat/Miss: Missed by -$0.50
• One Year Ago EPS: N/A

Great Elm Group Revenue Results

• Actual Revenue: $3.21 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Great Elm Group Announcement Details

• Quarter: Q3 2025
• Date: 5/7/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 8:30AM ET

Great Elm Group (NASDAQ:GEG) (NASDAQ: GEG) is a newly established business development company that specializes in providing customized financing solutions to middle-market businesses across a broad range of industries. As an externally managed closed-end fund, Great Elm Group offers senior secured loans, second-lien and mezzanine debt, unitranche structures and equity co-investments. Its flexible capital platform is designed to support organic growth initiatives, acquisitions, refinancings and balance-sheet recapitalizations.

Since its inception, Great Elm Group has aimed to bridge the financing gap for companies that may not have access to traditional bank lending or public markets. The firm’s investment strategy emphasizes risk-adjusted returns through a diversified portfolio of direct lending transactions. Credit opportunities span sectors such as healthcare, business services, manufacturing and technology, with each commitment underpinned by detailed due diligence and active portfolio monitoring. This approach seeks to generate stable income while preserving capital over market cycles.

Headquartered in Greenwich, Connecticut, Great Elm Group primarily serves middle-market companies in North America, although select transactions may involve cross-border elements or involve special situations financing. Its advisory team combines on-the-ground credit expertise with industry-specific insights, enabling tailored structuring and ongoing support for management teams. By leveraging relationships with sponsors, operating executives and industry consultants, the company positions itself as a strategic partner for growth-oriented enterprises.

Great Elm Group’s leadership team comprises seasoned professionals with deep backgrounds in private credit, portfolio management and corporate finance. The company’s board and executive management draw on decades of experience within large institutional asset managers and specialty finance platforms. This governance framework underpins the firm’s disciplined underwriting standards, robust risk-management practices and commitment to delivering consistent distributions to shareholders.

Great Elm Group Q3 2025 Earnings Call Transcript

Key Takeaways

• Great Elm’s fee-paying AUM grew 15% year-over-year to approximately $565 million, driven by GECC’s $147 million equity and debt raises, record CLO JV income, and a 40% increase in base management fees to $1.3 million.
• Total revenues rose 15% to $3.2 million in Q3, though a net loss of $4.5 million reflected unrealized markdowns expected to reverse over time; adjusted EBITDA was $0.5 million.
• In February, the acquisition of Greenfield CRE launched Monomoy Construction Services, creating an integrated construction vertical to enhance Monomoy’s development platform and unlock operational and revenue synergies.
• Monomoy’s real estate pipeline advanced with the land purchase closed for its third build-to-suit project and significant progress on a fourth, while Monomoy REIT acquired a $3 million property and maintained a strong transaction pipeline.
• Under its $20 million buyback program, Great Elm repurchased 4.8 million shares for $8.7 million at an average cost of $1.84 (~15% discount to book value) and ended the quarter with roughly $32 million in cash.

Presentation

[Operator]

Ladies and gentlemen, greetings, and welcome to the Great Elm Group Fiscal twenty twenty five Third Quarter Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Adam Yates, Managing Director. Please go ahead.

[Adam Yates, Managing Director at Great Elm Group]

Good morning, everyone. Thank you for joining us for Great Elm Group's Fiscal Third Quarter twenty twenty five Earnings Conference Call. As a reminder, this conference call is being recorded on Thursday, 05/08/2025. If you would like to be added to our distribution list, you can email geginvestorrelationsgreatelmcap dot com or you can sign up for alerts directly on our website www.greatelmgroup.com. The slide presentation accompanying today's conference call and webcast can be found on our website under Events and Presentations.

[Adam Yates, Managing Director at Great Elm Group]

A link to the webcast is also available on our website as well as in the press release that was disseminated to announce the quarterly results. Today's conference call includes forward looking statements and we ask that you refer to Great Elm Group's filings with the SEC for important factors that could cause actual results to differ materially from these statements. Great Elm Group does not undertake to update its forward looking statements unless required by law. In addition, during today's call, management will refer to certain non GAAP financial measures. Reconciliations to the most comparable financial measures are included in our earnings release.

[Adam Yates, Managing Director at Great Elm Group]

To obtain copies of our SEC filings, please visit Great Group's website under Financial Information and select SEC Filings. Today's comments do not constitute an offer to sell or solicitation of an offer to buy interest in any investment vehicle managed by Great Elm or its affiliate. Any such offer or solicitation will only be made pursuant to the applicable offering documents for such investment vehicle. On the call today, we have Jason Rees, CEO Adam Kleinman, President and General Counsel Nicole Mills, COO and Kerry Davis, CFO. I will now turn the call over to Jason Rees, CEO.

[Jason Reese, CEO & Executive Chairman at Great Elm Group]

Welcome everyone and thank you for joining us today. We delivered a solid fiscal third quarter '20 '20 '5 marked by significant year over year growth in both assets under management and revenues across our businesses. This momentum reflects our continued evolution into a streamlined alternative asset management business and strengthens our position to expand our core credit and real estate platforms as we execute on our long term growth strategy. Among our recent highlights, in February, we launched Monomoy Construction Services, an integrated full service construction business with the strategic acquisition of Greenfield CRE, a leading construction management company, which was combined with our existing Monomoy BTS construction management business. We continue to grow our assets under management increasing our fee paying AUM by 15% on a year over year basis.

[Jason Reese, CEO & Executive Chairman at Great Elm Group]

We generated total revenue of $3,200,000 growing 15% year over year. We closed on the land purchase for our third build to suit property and made meaningful progress on our fourth project. We continued to repurchase shares at a meaningful discount to book value, executing on our $20,000,000 buyback program. And we ended the quarter in a strong fiscal position with approximately $32,000,000 in cash available to facilitate continued growth across our asset management platforms. Diving into the quarter in more detail, fee paying assets under management continued to grow and reached approximately $565,000,000 representing a 15% increase over the prior year period, primarily driven by our BDC, Great Elm Capital Corp, which raised approximately $147,000,000 through equity and debt issuances in calendar twenty twenty four.

[Jason Reese, CEO & Executive Chairman at Great Elm Group]

Notably, GEG has participated in three equity raises at GECC with a combined investment of approximately $12,000,000 facilitating an increase in fee paying AUM at GECC of over 40%. GECC also delivered strong results to kick off the first quarter of twenty twenty five, generating record total investment income of $12,500,000 driven by cash flows from its CLO JV with net investment income that exceeded its recently increased quarterly distribution. Notably, it was also the highest cash income quarter in the company's history, a testament to the strategic portfolio enhancements undertaken in the last two years. As you may have seen, this week GECC launched an at the market offering to sell common shares at NAV or better, which we expect will provide an additional avenue for growth in assets under management. Overall, GECC's recent successes further reinforce our growth strategy.

[Jason Reese, CEO & Executive Chairman at Great Elm Group]

The increased capital base expands our fee paying AUM, driving both higher recurring management fees and incentive fee potential. Notably, our base management fees from GECC grew over 40% year over year to $1,300,000 and GECC is well positioned to pay meaningful fees in the coming quarters. We're very pleased with the performance of GECC marked by continued portfolio growth and increased cash distributions. GECC continues to deliver significant value to shareholders by expanding and diversifying its portfolio while leveraging its institutional quality infrastructure. Shifting to our other products, Great Elm Credit Income Fund, a private credit fund has delivered returns on invested capital approximately 13.9 net of fees since inception through March 2025.

[Jason Reese, CEO & Executive Chairman at Great Elm Group]

With these returns and track record, we are favorably positioned for future growth in the fund. Meanwhile, our real estate business, Monemoy continues to execute and we are pleased to have closed on the land purchase for our third built to suit property, which we expect to complete during the calendar year. We also made meaningful progress on our fourth project as we progress through our growing pipeline of opportunities. Looking ahead, we anticipate continued profitability across the MonoMoy platform as we remain committed to executing on these development projects to drive profitability and deliver value for both our tenants and shareholders. Further, building on strategic growth initiatives, in February, we significantly expanded our real estate capabilities through the acquisition of Greenfield CRE, a leading construction management company and a long standing partner of Monemoy.

[Jason Reese, CEO & Executive Chairman at Great Elm Group]

Greenfield has deep knowledge of our development projects, a strong understanding of our tenant needs and expectations, and a proven track record of delivering on Monemoy's high standards. In connection with this transaction, we launched Monemoy Construction Services or MCS and combined the assets of Greenfield with the assets of our Monomoy BTS construction management consulting business. MCS meaningfully bolsters our real estate platform by creating a fully integrated full service construction vertical to serve our existing asset management entities. Our close relationship with the Greenfield team has made for a seamless integration with MonoMoi. MCS also expands our owner rep consulting services with third parties, a majority of which are sourced from existing relationships within the Monomoy ecosystem.

[Jason Reese, CEO & Executive Chairman at Great Elm Group]

This adds accretive revenue opportunities and enhances operational efficiencies through the economies of scale, delivering revenue and operational synergies from greenfield acquisition. With a large backlog and existing civil engineering and land planning talent, we are now able to offer an expanded range of services and fortify our overall real estate value proposition to our investors and clients. Additionally, Montemoy REIT continues to execute and maintain solid activity throughout the quarter. We acquired a property for approximately $3,000,000 during the quarter and continue to maintain a strong pipeline of transaction opportunities and open requirements from our tenants. Outside of our core businesses, we've made significant progress in repurchasing GEG shares under our $20,000,000 buyback program.

[Jason Reese, CEO & Executive Chairman at Great Elm Group]

Through 05/06/2025, we have repurchased approximately 4,800,000.0 shares for $8,700,000 at an average cost of $1.84 per share, representing approximately a 15% discount to the quarter end book value per share of $2.14 Before Carey reviews our financial results in more detail, I would like to note that the net loss in the quarter was primarily driven by unrealized losses related to our investments in CoreWeave and GECC shares, both marked lower at quarter end amid broader market volatility. We remain highly confident in these investments and fully expect the losses to reverse over time as market conditions stabilize. While uncertainty can drive asset price volatility in the near term, it can also create very attractive entry points into investment opportunities. Our strong liquidity position with approximately $32,000,000 of cash at quarter end puts us in an advantageous position when market volatility presents. In addition, unique investments like the convertible preferred financing we provided for CoreWeave prior to its public listing and the private fund managed by Stoneridge Asset Management, a best in class reinsurance manager are a testament to the strength of our sourcing capabilities, both through our experienced Board of Directors and our network of investment partners more broadly.

[Jason Reese, CEO & Executive Chairman at Great Elm Group]

Our ample liquidity combined with our unique sourcing capabilities enables us to support future growth initiatives across our alternative asset management platform. In closing, we're pleased with the performance of our credit and real estate businesses this quarter. The acquisition of Greenfield CRE strengthens our real estate capabilities while providing revenue and cost synergies. And GECC's continued growth demonstrates our momentum in credit. As always, we remain focused on our core objectives, enhancing financial performance, expanding our platform and growing AUM.

[Jason Reese, CEO & Executive Chairman at Great Elm Group]

Looking ahead, we will continue to evaluate strategic opportunities to expand our businesses and add accretive differentiated product offerings with attractive risk adjusted return profiles. With that, I'll turn it over to Keri.

[Keri Davis, CFO & Treasurer at Great Elm Capital]

Thank you, Jason. I will provide a brief overview of the quarter and, of course, welcome all of you to review our filings in greater detail or reach out to our team with any questions. Fiscal third quarter revenues grew 15% to $3,200,000 from the prior year period, primarily driven by increased revenue from real estate project management fees and rental income, as well as increased management fees from attributable to fee paying AUM growth. AUM and fee paying AUM totaled approximately $768,000,000 and $565,000,000 respectively, up 1215%, respectively, from the prior year quarter end. Radon Group generated net loss of $4,500,000 for the quarter as compared to net loss of $2,900,000 for the prior year period.

[Keri Davis, CFO & Treasurer at Great Elm Capital]

The net loss was primarily driven by unrealized losses related to certain investment positions marked down at quarter end, which we expect to reverse over time as market conditions stabilize. Adjusted EBITDA for the quarter was $500,000 compared to $1,200,000 in the prior year period. As of March 31, we had approximately $32,000,000 in cash on our balance sheet to deploy across our growing alternative asset management platform. Please refer to slide six that provides an overview of our financial position and highlights our book value per share of approximately $2.14 This concludes my financial review of the quarter. With that, we will turn the call over to the operator to open for questions.

[Operator]

Thank you. Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. Session. As there are no questions, I would now like to hand the conference over to Jason Rees, CEO for closing comments.

[Jason Reese, CEO & Executive Chairman at Great Elm Group]

Thank you again for joining us today. We look forward to speaking with you in the future.

[Operator]

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Adam Yates, Managing Director

Analysts

• Jason Reese, CEO & Executive Chairman at Great Elm Group
• Keri Davis, CFO & Treasurer at Great Elm Capital