Q1 2024 Great Elm Group Inc Earnings Call

Participants

Jason Reese; CEO; Great Elm Group Inc

Presentation

Operator

Ladies and gentlemen, thank you for standing by my name is Sharal I'll be your conference operator today. At this time, I would like to welcome everyone to the Great Elm Group Inc earnings conference call.
(Operator Instructions), Thank you. I would now like to turn the call over to Andy. Please go ahead.
Good morning, everyone. Thank you for joining us for Great Elm Group's Fiscal First Quarter 2024 earnings conference call. A reminder, this conference call is being recorded on Thursday, November 9, 2023. If you would like to be added to our distribution list, you can e-mail GEG. Investor Relations at Great Elm cap.com, where you can sign up for alerts directly on our website, www.Great ElmGroup.com.
The slide presentation accompanying today's conference call and webcast can be found on our website under Events and Presentations. 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. To obtain copies of our SEC filings. Please visit Great Elm Group's website under Financial Information and select SEC filings.
On the call today we have Jason Reese, CEO., Adam Kleinman, President and General Counsel, Nichole Milz COO, and Keri Davis, CFO.
I will now turn the call over to Jason Reese, CEO.

Jason Reese

Welcome, everyone, and thank you for joining us. Greater include a strong start to fiscal 24. We continue to grow our fee-paying assets under management on both a sequential quarter and year-over year-basis, we generated net income of nearly $3 million and more than doubled our EBITDA on a year-over-year basis.
We also ended the quarter with over $75 million in cash and marketable securities to deploy across our growing alternative asset management platform. In particular, I want to highlight that this is our first clean quarter reporting as extreme land asset management patients in the fiscal first quarter.
We have a clear year-over-year comparison and includes the results of managing the modern way properties week vehicle acquired in May 2010. Additionally, we no longer see the impact of our domestic businesses going forward, investors can easily measure our progress toward our strategic growth plans with legacy operations behind us, our teams purely focused on asset management in the first fiscal quarter.
Working to expand the platform we made great strides organically to launch a private credit fund and fiscal second quarter continued the execution of our normal build to suit projects in our Monomoy BTS. business inorganically. We continue to actively evaluate multiple strategic M&A opportunities and have a robust pipeline to diligence in the second quarter.
Focusing on our two anchor vehicles Monomoy, GECC grew we have driven both fee revenue growth in AUM growth at both platforms. We will continue to accelerate the momentum at these core businesses and are pleased with our strong performance during the quarter.
GECC once again had a milestone quarter, generating an ROE of approximately 8.5% in the quarter and 25% over the first nine months of 23.
As a result, GECC. will pay incentive fees to GEG was second consecutive quatre, paying GEG. incentive fees going forward. Also, net asset value at GECC. grew to $12.88 per share, up 5% from last quarter and up over 15% calendar year to date. It has been a remarkable transformation at GCC. and a testament to the successful portfolio repositioning that net capital and his team have accomplished over the past 18 months.
Meanwhile, might have more remained very active in the quarter as the we closed on two properties with key tenants totaling nearly $6 million as amended for existing tenant leases for meaningful term extensions and executed five-year renewal options at three properties.
In addition, our build to suit business continued development of its first two projects in Florida and Mississippi we expect to complete these projects within this fiscal year with a significant pipeline of over 130 property requirements and new build to suit projects specifications from key customers.
We remain excited for Monomoy and BTS. to continue growing profitably in fiscal 24 during the fiscal first quarter, we saw our book value grow to approximately $2.25 per share at current market prices the Board of Directors and I believe our stock is undervalued. And as such, I am pleased to announce that our Board has approved a $10 million common stock repurchase plan grant.
Moving ahead with three goals we outlined in May remain clear, improve our profitability, expand our platform, and grow our AUM. As you can see from our fiscal first quarter of 24 performance, we are making progress on all fronts we remain focused to scale our core business, launched new fund products and utilize our strong liquid balance sheet to deploy capital into new platform opportunities with compelling risk adjusted returns. With that, I'll turn it over to Keri.

Thank you, Jason. I'll 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 are any questions and review of continuing operations.
Quarter-to-date revenues grew 78% year-over-year to $3.3 million, driven by increased fee-paying assets under management related to TECC. and bottom line. It lowers the recognition of incentive fees from TECC. for the second consecutive quarter, which were approximately $1.3 million for the first fiscal quarter.
AUM at $641 million as of September 30, 2023, but up modestly from the prior quarter end and up 3% from prior year quarter end. Well. Fee-paying AUM grew to $451 million, up 1% quarter to be in a 5% from the prior year quarter end.
For the quarter, Great Elm Group generated net income from continuing operations of $2.8 million compared to a net loss from continuing operations of $9.5 million from the prior year period.
Adjusted EBITDA for the quarter was $1.7 million, more than double the $0.7 million generated in the prior year period.
As of September 30. Great on group had approximately $76 million of combined cash and marketable securities on our balance sheet to deploy across our growing alternative asset management platform.
Please refer to slide 6 provides an overview of our financial position and highlights at book value per share of approximately $2.25, up from $2.16 at June 30.
This concludes my financial review of the quarter. With that, I will turn the call over to the operator to open for questions.

Question and Answer Session

Operator

(Operator Instructions)
It looks like there's no questions at this time.
I would like to turn the call back over to Jason Reese. Thank you again for joining us today, and we look forward to speaking with you in the future.
Ladies and gentlemen, that concludes today's call. You may now disconnect, and thank you.