Great Elm Group Q3 Earnings Call Highlights

Key Points

• Great Elm reported a Q3 net loss of $13.5 million (vs. $4.5M year-ago), driven primarily by approximately $9.8 million of unrealized, non-cash losses tied to its holdings in Great Elm Capital Corp. and related SPVs; revenue was $3.4M and adjusted EBITDA was negative $1.6M.
• CEO Jason Reese has taken the helm at GECC and is prioritizing protecting and growing NAV; GECC has substantially delevered by calling/repurchasing near-term funded debt, expects no debt maturities until 2029, and has rotated into nearly 75% first‑lien corporate credit positions.
• Great Elm ended the quarter with strong liquidity—about $45.5 million in cash—and continued aggressive buybacks, repurchasing ~1.4M shares (>4% of shares outstanding) in the quarter as the board raised the repurchase authorization to $40 million (≈$24.4M remaining); its CoreWeave-related investment has returned $6.8M to date.

Great Elm Group NASDAQ: GEG executives said the company made progress on strategic initiatives during its fiscal 2026 third quarter, while acknowledging a difficult market backdrop that pressured results through unrealized, non-cash losses tied largely to its exposure to Great Elm Capital Corp. (GECC), its publicly traded business development company.

On the company’s May 7 earnings call, CEO Jason Reese said the quarter was “marked by heightened volatility across the BDC sector, driven by broader concerns around private credit quality,” and noted GECC “was not insulated from that volatility.” Great Elm reported approximately $9.8 million of unrealized losses in the quarter, “primarily related to our holdings in GECC common stock and related SPVs,” he said.

Quarterly results and balance sheet liquidity

CFO Keri Davis reported fiscal third quarter revenue of $3.4 million, up from $3.2 million in the prior-year period, which she attributed primarily to “growth in MCS construction management fees.”

The company posted a net loss of $13.5 million for the quarter versus a net loss of $4.5 million a year earlier. Davis said the change was “primarily driven by $9.8 million of unrealized losses, including consolidated funds,” with the majority associated with Great Elm’s investments in GECC common stock and related special purpose vehicles.

Adjusted EBITDA was negative $1.6 million for the quarter, compared with positive $0.5 million in the prior-year period, Davis said.

Management highlighted balance sheet liquidity as a key source of flexibility. Reese said Great Elm’s balance sheet “remains strong with over $45 million of cash and equivalents,” and Davis reported that as of March 31, 2026, the company held approximately $45.5 million of cash and cash equivalents “to deploy across our growing alternative asset management platform.”

GECC leadership changes and portfolio actions

Reese discussed leadership developments at GECC, saying he assumed the role of Executive Chairman in March “at an important inflection point,” and was appointed CEO on May 4. He described an updated near-term priority for the BDC: “We will protect and grow NAV first and secondarily create income.”

During the quarter, Reese said GECC took steps aimed at strengthening its capital structure and improving portfolio quality. He stated the company “substantially delevered the capital structure by calling and repurchasing all near-term funded debt,” and expects GECC will soon have “no debt maturities until 2029,” which he said reduces near-term refinancing risk.

Reese also said GECC advanced its portfolio rotation strategy by exiting certain investments and reallocating capital into “predominantly senior secured positions.” As a result, he said first lien investments now represent nearly 75% of GECC’s corporate credit portfolio, which he described as “the highest level in recent history.”

On sourcing activity, Reese said GECC closed three transactions during the quarter sourced through institutional partners, closed another proprietary private investment in April, and expects to close additional investments in the near future.

Private credit fund wind-down and real estate platform activity

Reese said the Great Elm Credit Income Fund, launched in November 2023, “began an orderly wind down last quarter.” The company offered third-party investors an early redemption option, and Reese said “all have since exited the fund,” leaving Great Elm Group with an approximately $7 million investment at quarter end. He added that the fund generated a net return of over 20% from inception through March 31, 2026.

In real estate, Reese said Great Elm Real Estate Ventures delivered another strong quarter, driven by continued execution across the Monomoy platform. He reported that Monomoy CRE generated approximately $1 million of investment and property management fees during the quarter, “growing more than 20% from the prior year period.”

Reese also highlighted activity within Monomoy’s investment vehicles and development pipeline:

• Monomoy REIT closed on five acquisitions in the quarter, deploying approximately $28 million, and Reese said this surpassed its full-year 2025 acquisition activity.

• Monomoy BTS delivered a third development property in Florida to an investment-grade tenant, with rent commencing in March.

• The team advanced a fourth design-build project in Texas following a land acquisition, Reese said.

Reese added that the real estate platform is building a “robust pipeline” of additional build-to-suit opportunities. He also noted Monomoy Construction Services completed its fourth full quarter of operations and added $0.7 million in total revenue.

CoreWeave-related investment and share repurchases

Outside its core platform, Reese said Great Elm’s CoreWeave-related investment “continues to perform well,” with cumulative distributions of $6.8 million to date, exceeding the company’s initial $5 million investment. He said management continues to see upside potential “based on current trading levels,” and pointed to CoreWeave’s recent stock price rebound and successful capital raises.

On capital allocation, Reese said management believes Great Elm’s shares remain “materially undervalued” and continues to prioritize repurchases. The board approved a $15 million increase in the company’s stock repurchase program, bringing total authorization to $40 million.

Reese said the quarter marked Great Elm’s 10th consecutive quarter of share repurchases. During the quarter, the company repurchased approximately 1.4 million shares—more than 4% of shares outstanding—at an average price of $2.04 per share. Through May 4, he said Great Elm had repurchased approximately 7.8 million shares at an average price of $2 per share, deploying $15.6 million since inception and leaving approximately $24.4 million of remaining capacity.

No analysts asked questions during the call’s Q&A portion. In closing remarks, Reese said the company remains confident in its strategic direction, adding that Great Elm’s “credit and real estate platforms continue to execute,” and that management is taking “disciplined actions to position the platform for long-term success.”

About Great Elm Group NASDAQ: GEG

Great Elm Group NASDAQ: GEG is a closed-end investment company specializing in private credit and equity co-investments for U.S. middle-market companies. The firm's portfolio is composed primarily of senior secured loans, unitranche financing structures and selective equity interests, with an emphasis on providing flexible capital solutions for growth initiatives, refinancings, acquisitions and recapitalizations.

Through a disciplined underwriting process, Great Elm Group evaluates opportunities across a diverse range of industry sectors, including healthcare, business services, manufacturing and consumer products.

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