Earnings Labs

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

Q3 2020 Earnings Call· Tue, May 12, 2020

$24.48

+0.11%

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Transcript

Operator

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Great Elm Capital Group's Fiscal Third Quarter 2020 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Adam Yates. Please go ahead, sir.

Adam Yates

Analyst

Thank you, Jacqueline, and good morning, everyone. Thank you for joining us for Great Elm Capital Group's Fiscal Third Quarter 2020 Earnings Conference Call. As a reminder, this webcast is being recorded on Tuesday, May 12, 2020. If you'd like to be added to our distribution list, you can either e-mail investorrelations@greatelmcap.com or sign up for alerts directly on our website. The slide presentation accompanying this morning's conference call and webcast can be found on Great Elm Capital Group's website, www.greatelmcap.com 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. I'd like to call your attention to the customary safe harbor statement regarding forward-looking information. Also, please note that nothing in today's call constitutes an offer to sell or a solicitation of offers to purchase our securities. Today's conference call includes forward-looking statements and projections, and we ask that you refer to Great Elm Capital Group's filings with the SEC for important factors that could cause actual results to differ materially from those projections. Great Elm Capital Group does not undertake to update its forward-looking statements unless required by law. To obtain copies of the SEC filings, please visit Great Elm Capital Group's website under Financial Info and select SEC filings. Hosting our call this morning is Peter Reed, Great Elm Capital Group's Chief Executive Officer. I will now turn the call over to Peter.

Peter Reed

Analyst

Thank you, Adam, and good morning, everyone. Thank you for joining us today. I'm joined this morning by our President and COO, Adam Kleinman; our CFO, Brent Pearson; and 2 senior members of our investment team, Adam Yates and John Ehlinger. We will walk through an update on our operating companies, investment management, real estate and general corporate business segments as well as their associated financials. Where relevant in our prepared remarks, we will point you to the corresponding slide in the presentation that Adam referenced. Please turn to Slide 4 for a note to shareholders regarding our current operating environment. The impact of COVID-19 has been significant and widespread, but our businesses are well positioned for the difficult economic environment. DME saw a year-over-year revenue growth of 20.2% during the quarter, underpinned by growth in its major product categories. Under investment management, the majority of GECC's portfolio companies are weathering the difficult economic environment with resilient business models and sustainable cash flows. Our real estate investment is a Class A property under a long-term triple net lease to a credit-worthy tenant. In general corporate, we recorded an unrealized loss on our investment in GECC shares of approximately $9.8 million during the quarter, driven by a reduction in the price of GECC shares. Nevertheless, we closed quarter end with approximately $39 million of cash and cash equivalents available for deployment. In order to successfully navigate the current environment and be in a position to capitalize on attractive investment opportunities, we believe we must take every opportunity to bolster liquidity. During the quarter, we issued $30 million in aggregate principal of unsecured convertible notes, significantly enhancing our ability to pursue attractive new business opportunities. In summary, we are confident in the quality of our businesses and our ability to capitalize on…

Operator

Operator

[Operator Instructions] There are no questions at this time. I'll turn the call back over to Adam Yates.

Adam Yates

Analyst

Thank you again for joining us this morning to discuss Great Elm Capital Group's third quarter 2020 financial results. We appreciate your support, and we look forward to creating long-term shareholder value together. Please do not hesitate to reach out to us if we can be helpful with anything in follow-up, and have a great day.

Peter Reed

Analyst

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.