Great Elm Group, Inc. (NASDAQ:GEG) Q2 2024 Earnings Call Transcript
Great Elm Group, Inc. (NASDAQ:GEG) Q2 2024 Earnings Call Transcript February 14, 2024
Great Elm Group, Inc. misses on earnings expectations. Reported EPS is $-0.01 EPS, expectations were $0.43. GEG isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Hello, and welcome to the Great Elm Group Fiscal Second Quarter 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] I will now turn the conference over to Adam Yates, Managing Director. Please go ahead.
Adam Yates: Good morning, everyone. Thank you for joining us for Great Elm Group's fiscal second quarter 2024 earnings conference call. As a reminder, this conference call is being recorded on Wednesday, February 14, 2024. If you would like to be added to our distribution list, you can e-mail geginvestorrelations@greatelmcap.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. 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. Before diving into second quarter earnings, I want to highlight a pivotal transaction for our alternative credit platform that closed last week. On Thursday, GEG announced a $24 million equity capital raise at our BDC, Great Elm Capital Corporation. GEG provided significant support in this capital raise by investing $6 million alongside an institutional investor in a special purpose vehicle that acquired $24 million of common stock in GECC at net asset value. The institutional investor aims to establish a strategic relationship with Great Elm. This transaction is a step change for GEG. It increases GEG's basis for earning fees from GECC, giving the company the ability to add significant recurring asset management fee revenue and the potential to earn incentive fee revenue on this incremental capital.
Most importantly, the investment structure embedded in this transaction provides a template for future capital raising and investment opportunities. Great Elm Group also launched the Great Elm Credit Income Fund during the fiscal second quarter with $13 million of total capital. GEG ceded this private fund with a $6 million investment alongside several additional investors. The credit income fund will focus on direct lending, syndicated credit and special situations and will leverage our existing operational and origination platforms to manage and source investments. Management is focused on raising third-party capital in the fund, providing another opportunity to grow our AUM and enhance recurring fee revenue. These investments made alongside other capital partners serve as a testament to GEG utilizing its strong liquid balance sheet to scale existing businesses, launch new fund products and deploy capital into new platform opportunities.
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