Great Elm Group, Inc. · NASDAQ:GEG
Great Elm — Great Elm Capital Group — Q1 2021 Earnings Presentation
32 slides from Great Elm's earnings presentation, Nov 16, 2020
Slide 1: Great Elm Capital Group, Inc. Investor Presentation – Quarter Ended September 30, 2020
Great Elm Capital Group, Inc. Investor Presentation – Quarter Ended September 30, 2020 November 16, 2020 © 2021 Great Elm Capital Group, Inc. © 2021 Great Elm Capital Group, Inc.
Slide 2: Disclaimer
Disclaimer Statements in this press release that are “forward-looking” statements, including statements regarding expected growth, profitability and outlook involve risks and uncertainties that may individually or collectively impact the matters described herein. Investors are cautioned not to place
Slide 3: Table of Contents
Table of Contents Slide Section 4 A Note to Shareholders 5 Performance Overview 7 Organizational Overview 10 Operating Companies: Great Elm DME 13 Investment Management 17 Real Estate 21 General Corporate 23 Financial Review 26 Summary 28 Q&A 29 Appendix © 2021 Great Elm Capital Group, Inc. 3
Slide 4: A Note to Shareholders
A Note to Shareholders ▪ We have good momentum in our key business segments: DME and Investment Management ▪ DME: fiscal Q1 revenue grew 10.4% year-over-year and 5.0% sequentially highlighting the business’ ability to grow despite the negative impact from COVID-19 on new equipment rental set-ups ▪ D
Slide 5: Performance Overview
Performance Overview © 2021 Great Elm Capital Group, Inc. 5
Slide 6: Performance Overview: Quarter Ended September 30, 2020
Performance Overview: Quarter Ended June 30, 20201 Revenue by Segment Segment 1Q21 1Q20 DME $14.6 $13.2 Investment Management $0.8 $0.9 Real Estate $1.3 $1.3 General Corporate $0.1 $0.0 Eliminations ($0.1) $0.0 Consolidated $16.7 $15.4 Net Income (Loss) by Segment Adjusted EBITDA 3 by Segment Segmen
Slide 7: Organizational Overview
Organizational Overview © 2021 Great Elm Capital Group, Inc. 7
Slide 8: Organizational Overview: Drivers of Shareholder Value
Organizational Overview: Drivers of Shareholder Value ▪ Target undercapitalized small and mid-sized companies where we can partner with management to accelerate earnings and cash flow growth Operating Companies ▪ Focus on companies that offer a platform for follow-on acquisitions and investment, par
Slide 9: Organizational Overview: Alignment of Interest
Organizational Overview: Alignment of Interest Employee ▪ Employees of GEC/Great Elm Capital Management, Inc. (“GECM”) Share collectively own approximately 1.9 million shares of GEC, representing Ownership approximately 7% of GEC’s outstanding shares1 Director ▪ The directors of GEC collectively own
Slide 10: Operating Companies: Great Elm DME
Operating Companies: Great Elm DME © 2021 Great Elm Capital Group, Inc. 10
Slide 11: Operating Companies: Growth at DME Amid Uncertainty
Operating Companies: Growth at DME Amid Uncertainty ▪ In fiscal 1Q21, Great Elm DME, Inc. (“DME”) generated $14.6 million of revenue, $0.5 million of net loss and $2.8 million of adjusted EBITDA1 ▪ Meaningful revenue growth in PAP supplies category, moderate decline in PAP rental ▪ Having invested h
Slide 12: Operating Companies: DME Segment Financial Detail
Operating Companies: DME Segment Financial Detail DME Segment Financials - Quarter Ended 9/30/20 Total revenues $ 14,610 (Total expenses) (15,068) GAAP net loss (458) Adj. EBITDA: Net loss (458) Interest expense 709 Depreciation and amortization 2,211 Transaction and integration related costs 139 Lo
Slide 13: Investment Management
Investment Management © 2021 Great Elm Capital Group, Inc. 13
Slide 14: Investment Management: A Focus on Opportunity
Investment Management: A Focus on Opportunity ▪ In fiscal 1Q21, Investment Management generated $0.8 million of revenue, $0.1 million of net loss and $0.2 million of adjusted EBITDA1 ▪ Revenue and profitability were stable ▪ Net assets at GECC grew to approximately $60.5 million as of September 30,
Slide 15: Investment Management: A Scalable, High Margin Business
Investment Management: 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 acquisitions of other BDCs, re
Slide 16: Investment Management: Segment Financial Detail
Investment Management: Segment Financial Detail IM Segment Financials - Quarter Ended 9/30/20 Total revenues $ 773 Near-Term Drivers of Incremental (880) (Total expenses) Free Cash Flow: GAAP net loss (107) ▪ We believe GECC will continue to grow its Adj. EBITDA: investment portfolio, including via
Slide 17: Real Estate
Real Estate © 2021 Great Elm Capital Group, Inc. 17
Slide 18: Real Estate: Overview
Real Estate: Overview Our current Real Estate investment is attractive for the following reasons: Limited Equity High Level of Monetization Capital Non-Recourse of Significant Deployed Leverage NOLs © 2021 Great Elm Capital Group, Inc. 18
Slide 19: Real Estate: Fort Myers – Organic Equity Growth
Real Estate: Fort Myers – Organic Equity Growth $65.00 8.0x 7.1x ▪ Assuming a constant 7.0x $60.00 7.0x property value of $61.2 6.5x million, the chart at the 6.0x $55.00 5.9x right depicts the Debt and Equity Values ($ in Millions) 5.3x growth in GEC’s 5.0x Multiple of Invested Capital $50.00 4.7x
Slide 20: Real Estate: Segment Financial Detail
Real Estate: Segment Financial Detail RE Segment Financials - Quarter Ended 9/30/20 Total revenues $ 1,272 (Total expenses) (1,205) GAAP Net Income 67 Adj. EBITDA: Interest expense, net 650 Depreciation and amortization expense 430 Adj. EBITDA1 $ 1,147 Non-cash rental income (147) Capital expenditur
Slide 21: General Corporate
General Corporate © 2021 Great Elm Capital Group, Inc. 21
Slide 22: General Corporate: Segment Financial Detail
General Corporate: Segment Financial Detail General Corporate Financials - Quarter Ended 9/30/20 EBITDA and Free Cash Flow - Quarter Ended 9/30/20 Revenue: Adj. EBITDA: Total revenue 91 GAAP net loss (3,365) Management fee (91) Operating costs and expenses: Stock based compensation 235 Public compan
Slide 23: Financial Review
Financial Review © 2021 Great Elm Capital Group, Inc. 23
Slide 24: Financial Review: 1Q21 Consolidating Balance Sheets (Unaudited)
Financial Review: 1Q21 Consolidating Balance Sheets (Unaudited) Durable Medical Investment Real Estate General Corporate Eliminations Consolidated $ in thousands Equipment Management ASSETS Cash and cash equivalents, including restricted cash $ 1,988 $ 272 $ 909 $ 20,185 $ - $ 23,354 Accounts receiv
Slide 25: Financial Review: 1Q21 Consolidating Income Statement (Unaudited)
Financial Review: 1Q21 Consolidating Income Statement (Unaudited) For the three months ended September 30, 2020 Durable Medical Investment General Real Estate Consolidated $ in thousands Equipment Management Corporate Total Revenues $ 14,610 $ 773 $ 1,272 $ 91 $ 16,746 Cost of revenue (6,122) - - -
Slide 26: Summary
Summary © 2021 Great Elm Capital Group, Inc. 26
Slide 27: Summary: Drivers of Shareholder Value
Summary: Drivers of Shareholder Value ▪ Focus on growing Great Elm DME, Inc. both organically and via an expansion strategy that targets existing and adjacent markets Operating Companies ▪ Continue to strengthen Great Elm DME, Inc.’s scalable infrastructure, investing in people, processes and techno
Slide 28: Q&A
Q&A © 2021 Great Elm Capital Group, Inc. 28
Slide 29: Appendix
Appendix © 2021 Great Elm Capital Group, Inc. 29
Slide 30: Appendix: Non-GAAP Reconciliation
Appendix: Non-GAAP Reconciliation For the three months ended September 30, 2020 Durable Medical Investment General Real Estate Consolidated $ in thousands Equipment Management Corporate EBITDA: Net income (loss) - GAAP $ (458) $ (107) $ 67 $ (3,365) $ (3,863) Interest expense 709 26 650 572 1,957 De
Slide 31: Appendix: Non-GAAP Reconciliation (Continued)
Appendix: Non-GAAP Reconciliation (Continued) For the three months ended September 30, 2019 Durable Medical Investment General Real Estate Consolidated $ in thousands Equipment Management 1 Corporate EBITDA: Net income (loss) - GAAP $ (819) $ (45) $ 60 $ (2,474) $ (3,278) Interest expense 996 42 658
Slide 32: Appendix: Contact Information
Appendix: Contact Information Investor Relations 800 South Street, Suite 230 Waltham, MA 02453 Phone: +1 (617) 375-3006 investorrelations@greatelmcap.com © 2021 Great Elm Capital Group, Inc. 32
Great Elm Capital Group — Q1 2021 Earnings Presentation on 6ix