Great Elm Group Inc (GEG) 2023 Q2 法說會逐字稿

Hello, and thank you for standing by. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Great Elm Group, Inc. Fiscal 2023 Second Quarter Earnings Conference Call. (Operator Instructions)

你好，謝謝你的支持。我叫 Regina，今天我將擔任你們的會議接線員。此時，我想歡迎大家參加 Great Elm Group, Inc. 2023 財年第二季度收益電話會議。 （操作員說明）

I would now like to turn the conference over to Adam Yates, Managing Director. Please go ahead.

我現在想將會議轉交給常務董事 Adam Yates。請繼續。

Good morning, everyone. Thank you for joining us for Great Elm Group's Fiscal Second Quarter 2023 Earnings Conference Call. As a reminder, this conference call is being recorded on Tuesday, February 14, 2023. If you would like to be added to our distribution list, you can e-mail investorrelations@greatelmcom 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.

大家，早安。感謝您參加 Great Elm Group 2023 財年第二季度收益電話會議。提醒一下，本次電話會議將於 2023 年 2 月 14 日星期二錄製。如果您想加入我們的通訊組列表，您可以發送電子郵件至 investorrelations@greatelmcom，或者您可以直接在我們的網站上註冊接收提醒， www.greatelmgroup.com。今天的電話會議和網絡廣播附帶的幻燈片演示可以在我們網站的“活動和演示”下找到。

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.

我們的網站以及為公佈季度業績而發布的新聞稿中也提供了網絡廣播的鏈接。今天的電話會議包括前瞻性陳述，我們要求您參考 Great Elm Group 向美國證券交易委員會提交的文件，了解可能導致實際結果與這些陳述存在重大差異的重要因素。

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.

Great Elm Group 不承諾更新其前瞻性陳述，除非法律要求。此外，在今天的電話會議中，管理層將參考某些非 GAAP 財務指標。與最具可比性的財務指標的對賬包含在我們的收益發布中。要獲取我們提交給美國證券交易委員會的文件的副本，請訪問 Great Elm Group 網站的“財務信息”下的內容並選擇提交給美國證券交易委員會的文件。

On the call today, we have Jason Reese, Executive Chairman of the company's Board of Directors; Peter Reed, CEO; Adam Kleinman, President; Nicole Milz, COO; and Brent Pearson, CFO.

在今天的電話會議上，我們有公司董事會執行主席 Jason Reese；彼得·里德，首席執行官； Adam Kleinman，總裁；首席運營官 Nicole Milz；和首席財務官 Brent Pearson。

I will now turn the call over to Jason Reese, Executive Chairman.

我現在將把電話轉給執行主席傑森里斯。

Welcome, everyone, and thank you for joining us today. In January, Great Elm announced and completed 2 transformative transactions, selling our Forest subsidiaries and our Durable Medical Equipment business. The transaction has allowed us to simplify our business structure, add significant cash to our balance sheet and enter the year in a position of strength to deploy capital into attractive alternative asset management opportunities.

歡迎大家，感謝您今天加入我們。 1 月，Great Elm 宣布並完成了 2 項轉型交易，出售我們的 Forest 子公司和耐用醫療設備業務。該交易使我們能夠簡化我們的業務結構，為我們的資產負債表增加大量現金，並以有利的地位進入這一年，將資本部署到有吸引力的另類資產管理機會中。

On today's call, we will focus on the transactions and our second quarter results. As for our future, we expect to host an Investor Day later this year, where we look forward to walking you through our strategic growth plans.

在今天的電話會議上，我們將重點關注交易和第二季度業績。至於我們的未來，我們預計將在今年晚些時候舉辦投資者日活動，屆時我們期待著向您介紹我們的戰略增長計劃。

I will now turn the call over to Peter Reed, CEO, to walk you through the transactions.

我現在將把電話轉給首席執行官彼得·里德 (Peter Reed)，以引導您完成交易。

Thank you, Jason. I'm pleased to share more details on the 2 transformative deals that we completed over the past few weeks. First, I want to touch on Forest Investments. On December 30, we sold 61% of our majority ownership interest in Forest to an affiliate of JPMorgan for over $18 million. In addition to the sale, we received a right to put our remaining 19% interest in Forest for nearly $27 million. We exercised a put right on January 17, bringing our aggregate cash proceeds to approximately $45 million.

謝謝你，傑森。我很高興分享我們在過去幾週內完成的兩筆變革性交易的更多細節。首先，我想談談森林投資。 12 月 30 日，我們以超過 1800 萬美元的價格將我們在 Forest 的 61% 多數股權出售給了摩根大通的一家附屬公司。除了出售之外，我們還獲得了以近 2700 萬美元的價格出售 Forest 剩餘 19% 股權的權利。我們在 1 月 17 日行使了認沽權，使我們的現金收益總額達到約 4500 萬美元。

Next, on January 3, we sold our majority interest in the Durable Medical Equipment business to a subsidiary of Quipt for a total purchase price of $80 million. After repayment of obligations, we received approximately $26 million in cash as well as just over 346,000 shares of Quipt common stock.

接下來，在 1 月 3 日，我們將耐用醫療設備業務的多數股權出售給 Quipt 的一家子公司，總收購價為 8000 萬美元。償還債務後，我們收到了大約 2600 萬美元的現金以及超過 346,000 股 Quipt 普通股。

Please refer to Slide 6 of the investor presentation to view the bridge from the purchase price to our net cash proceeds. As a result of these transactions, we realized material gains on those investments, generated significant value for Great Elm's shareholders and added over $70 million of cash for the holding company's balance sheet. This enables us to focus all of our resources towards scaling our alternative asset management business currently anchored by our publicly traded BDC Great Elm Capital Corp. and our private industrial link, Monomoy Properties. We are very pleased at the successful outcome, and we have been hard at work to source and evaluate organic and inorganic growth opportunities.

請參閱投資者介紹的幻燈片 6，查看從購買價格到我們的淨現金收益的橋樑。由於這些交易，我們從這些投資中獲得了實質性收益，為 Great Elm 的股東創造了巨大價值，並為控股公司的資產負債表增加了超過 7000 萬美元的現金。這使我們能夠將所有資源集中用於擴展我們的另類資產管理業務，該業務目前由我們公開交易的 BDC Great Elm Capital Corp. 和我們的私營工業鏈接 Monomoy Properties 錨定。我們對成功的結果感到非常高興，我們一直在努力尋找和評估有機和無機增長機會。

Along with the transactions and streamline structure, we also continue to generate solid performance with our current operations. In the second quarter of fiscal 2023, revenues were up 84% year-over-year driven by higher AUM and management fees related to GECC and Monomoy. Assets under management of $619 million as of December 31, 2022, was relatively comparable with the prior quarter end and up 2% year-to-date, while fee -paying AUM grew to $437 million, up over 2% quarter-to-date and over 7% year-to-date.

除了交易和精簡結構，我們還繼續通過當前的運營產生穩健的業績。在 2023 財年第二季度，由於與 GECC 和 Monomoy 相關的 AUM 和管理費增加，收入同比增長 84%。截至 2022 年 12 月 31 日，管理的資產為 6.19 億美元，與上一季度末相當，年初至今增長 2%，而付費 AUM 增長至 4.37 億美元，本季度迄今增長超過 2%年初至今超過 7%。

At Monomoy, we maintain a strong backlog of transactions that have the potential to provide further growth. At GECC, we are focused on prudently deploying capital, including through the new Great Elm health care finance partnership with Berkadia. Growth in both vehicles is expected to lead to increased AUM and related fees.

在 Monomoy，我們保持著大量積壓的交易，這些交易有可能提供進一步的增長。在 GECC，我們專注於審慎部署資本，包括通過與 Berkadia 的新 Great Elm 醫療保健金融合作夥伴關係。預計這兩種工具的增長將導致 AUM 和相關費用增加。

As our business continues to scale, growth in AUM will drive increasing management fees and profit, reflecting high incremental margins. Our initiatives to reposition the GECC portfolio and reset the incentive fee bodes well for future performance fee growth.

隨著我們的業務不斷擴大，資產管理規模的增長將推動管理費用和利潤的增加，反映出較高的增量利潤率。我們重新定位 GECC 投資組合併重新設置激勵費的舉措預示著未來績效費的增長。

Stepping back, we remain focused on our long-term strategy and we'll continue to invest in the business to drive sustainable growth. We are well positioned to deploy capital into attractive alternative asset management investment in dislocated markets, thanks to our strong and liquid balance sheet, which holds approximately $90 million in cash on a pro forma basis for the Forest and DME transactions.

退一步說，我們仍然專注於我們的長期戰略，我們將繼續投資於業務以推動可持續增長。由於我們強大且流動性強的資產負債表，我們有能力將資金部署到混亂市場中有吸引力的另類資產管理投資中，該資產負債表持有約 9000 萬美元的現金，用於 Forest 和 DME 交易。

Beyond our strong fundamentals and constructive growth outlook, we still maintain one important differentiating factor, strong shareholder alignment. Great Elm employees and directors, including funds under their management, collectively own or manage approximately 44% of GEG's outstanding shares, which reinforces the strong alignment of the interest between management and shareholders.

除了我們強勁的基本面和建設性的增長前景之外，我們仍然保持一個重要的差異化因素，即強大的股東一致性。 Great Elm 員工和董事，包括他們管理的基金，共同擁有或管理大約 44% 的 GEG 流通股，這加強了管理層與股東之間利益的緊密結合。

With that, I'll turn it over to Brent to discuss our financial results for the quarter.

有了這個，我將把它交給布倫特來討論我們本季度的財務業績。

Thanks, Pete. I'll provide a brief overview, and of course, welcome all of you to review our filings in greater detail or to reach out to our team with questions you may have. Please note that due to the Forest and DME transactions, we have recast our historically reported segment information to reflect our ongoing business as a single reportable segment and to remove the activity associated with discontinued operations.

謝謝，皮特。我將提供一個簡短的概述，當然，歡迎大家更詳細地查看我們的文件，或者就您可能有的問題與我們的團隊聯繫。請注意，由於森林和 DME 交易，我們重新編制了歷史報告的分部信息，以將我們的持續業務反映為一個單一的報告分部，並刪除與已終止運營相關的活動。

During the quarter ended December 31, 2022, we reported revenue of $1.9 million, an 84% increase compared to $1.0 million in the prior year period. The increase was primarily related to the acquired management agreement with Monomoy in May 2022. For the quarter, Great Elm Group generated net income of $29.7 million compared to a net loss of $4.2 million in the prior year period.

在截至 2022 年 12 月 31 日的季度中，我們報告的收入為 190 萬美元，與去年同期的 100 萬美元相比增長了 84%。這一增長主要與 2022 年 5 月與 Monomoy 達成的管理協議有關。本季度，Great Elm Group 的淨收入為 2970 萬美元，而去年同期為淨虧損 420 萬美元。

Net income was primarily driven by $22.2 million in net realized and unrealized gains on investments and a gain on the sale of our controlling interest in a subsidiary of $10.5 million. These were primarily onetime gains driven by the Forest and DME transactions. Adjusted EBITDA loss for the quarter was $1.2 million, was consistent with the prior year period.

淨收入主要由 2220 萬美元的已實現和未實現投資收益淨額以及出售我們在一家子公司的控股權獲得的 1050 萬美元收益推動。這些主要是由 Forest 和 DME 交易驅動的一次性收益。本季度調整後的 EBITDA 虧損為 120 萬美元，與去年同期持平。

As previously noted, we completed 2 transformative transactions at the end of the quarter and at the beginning of January 2023, which has considerably simplified our organization and strengthened our balance sheets. As a result, on a pro forma basis for these transactions, Great Elm Group had approximately $90 million in cash on our balance sheet to deploy across our growing alternative asset management platforms.

如前所述，我們在本季度末和 2023 年 1 月初完成了 2 項轉型交易，這大大簡化了我們的組織並加強了我們的資產負債表。因此，在這些交易的備考基礎上，Great Elm Group 在我們的資產負債表上擁有大約 9000 萬美元的現金，可以部署在我們不斷增長的另類資產管理平台上。

Please refer to Slide 5 on our investor presentation that provides an overview of our pro forma financial position and highlights our resulting pro forma book value per share of approximately $2.30. In addition, we retained approximately $154 million of NOL carryforwards for our federal income tax purposes. Approximately $131 million of these NOLs are expected to be available to offset certain taxable income in fiscal year 2023, but expire on June 30 of this year.

請參閱我們的投資者介紹中的幻燈片 5，該幻燈片概述了我們的備考財務狀況，並強調了我們由此產生的每股備考賬面價值約為 2.30 美元。此外，我們保留了大約 1.54 億美元的 NOL 結轉用於我們的聯邦所得稅目的。這些 NOL 中約有 1.31 億美元預計可用於抵消 2023 財年的某些應稅收入，但將於今年 6 月 30 日到期。

This concludes my financial review of the quarter. With that, we'll return the call over to the operator to open up for questions.

我對本季度的財務回顧到此結束。這樣，我們會將電話返回給接線員以開放提問。

(Operator Instructions) With that, I'd now like to turn the conference back to management for any closing remarks.

（操作員說明）有了這個，我現在想把會議轉回管理層聽取任何閉幕詞。

Thank you again for joining us today, and we look forward to speaking with you.

再次感謝您今天加入我們，我們期待與您交談。

Ladies and gentlemen, that will conclude today's meeting. We thank you all for joining, and you may now disconnect.

女士們，先生們，今天的會議到此結束。我們感謝大家的加入，您現在可以斷開連接。