Great Elm Group, Inc. · NASDAQ:GEG
Great Elm — Q2 2021 Earnings Presentation
25 slides from Great Elm's earnings presentation, Feb 16, 2021
Slide 1: Great Elm Group, Inc. Conference Call Presentation
Great Elm Group, Inc. Conference Call Presentation Fiscal Second Quarter Ended December 31, 2020 February 16, 2021 NASDAQ: GEG
Slide 2: Disclaimer
Disclaimer edit Master title style Statements in this press release that are “forward-looking” statements, including statements regarding expected growth, profitability, acquisition opportunities and outlook involve risks and uncertainties that may individually or collectively impact the matters des
Slide 3: Corporate Reorganization and Financing Transaction
Corporate edit Master Reorganization title style and Financing Transaction OVERVIEW ▪ On December 29, 2020, we completed a reorganization of our corporate structure and executed a financing transaction with J.P. Morgan Broker-Dealer Holdings (“JPM”), wherein JPM invested a total of $37.7 million ▪ G
Slide 4: Organization Structure
Organization: edit Master title Structure style Great Elm Group, Inc. (“Great Elm” or “GEG”) (NASDAQ: GEG) Holds ~23.6% shares 100% 80.1% 80% Great Elm Capital Corp Great Elm Capital Great Elm Durable Forest Investments, Inc. Management, Inc. (“GECC”) (NASDAQ: GECC) (“GECM”) Medical Equipment (“Fore
Slide 5: Our Operating Segments
Our editBusiness Master title Operating style Segments Operating Companies Investment Management Real Estate Great Elm Durable Medical Equipment Great Elm Capital Management, Inc. ▪ Office property located in Fort Myers, (“DME”) Business (“GECM”) FL ▪ Distributor of respiratory care equipment ▪ SEC
Slide 6: Driving Shareholder Value
Driving edit Master Shareholder title styleValue Business Segment Strategy ▪ Target undercapitalized small and mid-sized companies where we can partner with management to accelerate earnings and cash flow growth Operating Companies ▪ Focus on growing Great Elm DME, Inc. both organically and via an e
Slide 7: Strong Shareholder Alignment
Strong Shareholder edit Master Alignment title style ▪ Employees of GEG/Great Elm Capital Management, Inc. (“GECM”) Employee Share Employee Share collectively own approximately 1.9 million shares of GEG, representing Ownership Ownership approximately 7% of GEG’s outstanding shares1 ▪ The directors o
Slide 8: Consolidated Financials: Q2 FY 2021 Summary
edit Master title Consolidated style Financials: Q2 FY 2021 Summary (in millions) Three Months Ended Six Months Ended December 31, December 31, December 31, December 31, 2020 2019 2020 2019 Revenue By Segment DME $ 14.5 $ 14.4 $ 29.2 $ 27.6 Investment Management 0.8 0.9 1.5 1.8 Real Estate 1.3 1.3 2
Slide 9: Operating Companies: Stable Results at DME and Recapitalization
edit Master Operating title style Stable results at DME and recapitalization Companies: ▪ In fiscal 2Q21, Great Elm DME, Inc. (“DME”) generated $14.5 million of revenue, $2.9 million of net loss and $1.9 million of adjusted EBITDA1 ▪ The PAP supplies category continued to experience robust growth, w
Slide 10: DME Segment Financial Detail
edit Master Operating title style DME Segment Financial Detail Companies: (in thousands) Three Months Ended Six Months Ended December 31, December 31, December 31, December 31, 2020 2019 2020 2019 Total Net Revenue: Sales and Services Revenue - Medical Equipment $ 8,411 $ 7,583 $ 16,419 $ 13,924 Sal
Slide 11: Investment Management: A Scalable, High Margin Business
edit MasterManagement: Investment title style A Scalable, High Margin Business AUM GROWTH HIGH MARGINS Grow GECC’s AUM through the issuance of AUM Growth Given the largely fixed cost nature of the additional debt and equity, supplemented by Investment Management business, we expect accretive acquisi
Slide 12: Investment Management: A Focus on Opportunity
Investment edit MasterManagement: title style A Focus on Opportunity ▪ In fiscal 2Q21, Investment Management generated $0.8 million of revenue, $0.3 million of net loss and $41 thousand of adjusted EBITDA1 ▪ Revenue and profitability were stable ▪ We are seeking to capitalize upon our successful inv
Slide 13: Investment Management Segment Financial Detail
Investment edit MasterManagement: title style Segment Financial Detail (in thousands) Three Months Ended Six Months Ended December 31, December 31, December 31, December 31, 2020 2019 2020 2019 Total revenues $ 760 $ 889 $ 1,533 $ 1,756 GAAP Net Income $ (308) $ 5 $ (415) $ (40) Stock based compensa
Slide 14: Real Estate: Overview
Real editEstate: MasterOverview title style Our current Real Estate investment is attractive for the following reasons: Limited Equity High Level of Capital Non-Recourse Deployed Leverage Generates stable, Monetization of consistent cash Significant NOLs flows Great Elm Group, Inc. | NASDAQ: GEG 14
Slide 15: Real Estate: Fort Myers – Organic Equity Growth
editEstate: Real MasterFort titleMyers style – Organic Equity Growth $65.00 8.0x 7.1x ▪ Assuming a constant $60.00 7.0x Debt and Equity Values ($ in Millions 7.0x property value of 6.5x $61.2 million, GEG’s Multiple of Invested Capital 6.0x $55.00 5.9x equity value grows 5.3x as cash flows from 5.0x
Slide 16: Real Estate Segment Financial Detail
editEstate: Real MasterSegment title style Financial Detail (in thousands) Three Months Ended Six Months Ended December 31, December 31, December 31, December 31, 2020 2019 2020 2019 Total revenues $ 1,276 $ 1,271 $ 2,548 $ 2,544 GAAP Net Income $ 71 $ 60 $ 138 $ 120 Interest expense, net 647 655 1,
Slide 17: General Corporate: Segment Financial Detail
edit Master General title style Corporate: Segment Financial Detail (in thousands) Three Months Ended Six Months Ended December 31, December 31, December 31, December 31, 2020 2019 2020 2019 Total revenue $ 45 $ 57 $ 136 $ 80 Operating costs and expenses: Public company costs (651) (1,175) (1,265) (
Slide 18: 2Q21 Consolidating Balance Sheets
Financial Review: edit Master 2Q21 Consolidating Balance Sheets (Unaudited) title style Durable Medical Investment Real Estate Corporate Elimination Consolidated $ in thousands Equipment Management ASSETS Cash and cash equivalents, including restricted cash $ 6,264 $ 780 $ 1,180 $ 25,604 $ - $ 33,82
Slide 19: 2Q21 Consolidating Income Statement
Financial Review: edit Master 2Q21 Consolidating Income Statement (Unaudited) title style For the three months ended December 31, 2020 Durable Medical Investment Real Estate Corporate Elimination Consolidated $ in thousands Equipment Management Total Revenues $ 14,543 $ 760 $ 1,276 $ 45 $ (45) $ 16,
Slide 20: Appendix
edit Master title style Appendix Great Elm Group, Inc. | NASDAQ: GEG 20
Slide 21: Non-GAAP Reconciliation
Appendix: Non-GAAP edit Master title styleReconciliation For the three months ended December 31, 2020 Durable Medical Investment Real Estate Corporate Consolidated $ in thousands Equipment Management 1 EBITDA: Net income (loss) - GAAP $ (2,878) $ (308) $ 71 $ 2,169 $ (946) Interest expense 687 25 64
Slide 22: Non-GAAP Reconciliation (Continued)
Appendix: Non-GAAP edit Master title styleReconciliation (Continued) For the three months ended December 31, 2019 Durable Medical Investment Real Estate Corporate Consolidated $ in thousands Equipment Management 1 EBITDA: Net income (loss) - GAAP $ (676) $ 5 $ 60 $ (1,416) $ (2,027) Interest expense
Slide 23: Non-GAAP Reconciliation (Continued)
Appendix: Non-GAAP edit Master title styleReconciliation (Continued) For the six months ended December 31, 2020 Durable Medical Investment Real Estate Corporate Consolidated $ in thousands Equipment Management 1 EBITDA: Net income (loss) - GAAP $ (3,336) $ (415) $ 138 $ (1,196) $ (4,809) Interest ex
Slide 24: Non-GAAP Reconciliation (Continued)
Appendix: Non-GAAP edit Master title styleReconciliation (Continued) For the six months ended December 31, 2019 Durable Medical Investment Real Estate Corporate Consolidated $ in thousands Equipment Management 1 EBITDA: Net income (loss) - GAAP $ (1,495) $ (40) $ 120 $ (3,890) $ (5,305) Interest exp
Slide 25: Contact Information
Appendix: Contact edit Master Information title style Investor Relations 800 South Street, Suite 230 Waltham, MA 02453 Phone: +1 (617) 375-3006 investorrelations@greatelmcap.com Jeehae Linford The Equity Group Inc. +1 (212) 836-9615 jlinford@equityny.com Great Elm Group, Inc. | NASDAQ: GEG 25