GEGGL — Great Elm Group, Inc. 7.25% Notes due 2027

Great Elm Group (GEGGL) Q1 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue: $10.8 million, up from $4 million year-over-year, primarily due to $7.4 million from the sale of a build-to-suit property.
• Assets Under Management (AUM): Total AUM at approximately $785 million, with fee-paying AUM at $594 million, reflecting a 9% year-over-year increase. On a pro forma basis, AUM and fee-paying AUM grew 7% and 10%, respectively.
• Net Loss: $7.9 million, compared to a net income of $3 million in the prior year, largely due to unrealized losses on investments.
• Adjusted EBITDA: Loss of $0.5 million, down from a gain of $1.3 million in the previous year.
• Cash Position: Approximately $53.5 million in cash, providing flexibility for growth initiatives.

2. Strategic Updates and Business Highlights

• Capital Raising: Nearly $250 million raised through debt and equity capital across credit and real estate platforms.
• Partnerships: Established a partnership with Kennedy Lewis Investment Management, committing up to $150 million to accelerate real estate platform growth.
• Real Estate Ventures: Continued growth in Monomoy REIT, with significant property acquisitions and sales, including a $7 million sale generating a gain of over $0.5 million.
• Credit Business: GECC raised approximately $28 million in equity, doubled borrowing capacity under its revolver, and refinanced high-cost debt, reducing annual cash interest expense.

3. Forward Guidance and Outlook

• GEGGL aims to leverage its established infrastructure to grow fee-paying AUM and enhance profitability without significantly increasing fixed costs. The company remains focused on scaling its credit and real estate platforms and translating strategic progress into sustained financial performance.

4. Bad News, Challenges, or Points of Concern

• Investment Losses: The net loss was influenced by unrealized losses on investments in GECC and CoreWeave, impacting overall financial performance.
• Bankruptcy Exposure: GECC's exposure to First Brands, which filed for bankruptcy, negatively affected NAV and led to placing investments on nonaccrual.
• Operating Results: Despite strong capital initiatives, the quarter's operating results were impacted by setbacks in the credit business.

5. Notable Q&A Insights

• Growth Trajectory: Management expressed confidence in the growth trajectory, emphasizing that fixed costs are largely in place, allowing for potential operating leverage as AUM and revenue grow.
• Monomoy REIT Details: The Monomoy REIT focuses on industrial outside storage, with significant tenants like United Rentals. Management indicated potential for future public offerings as the REIT scales.
• Investor Engagement: Management is open to further discussions with investors seeking more detailed insights into specific business segments, particularly the Monomoy REIT.

Overall, Great Elm Group demonstrated significant capital raising and strategic growth initiatives in Q1 2026, despite facing challenges related to investment losses and exposure to bankrupt entities. The outlook remains focused on leveraging existing infrastructure for future growth.