Great Elm Capital Group (NASDAQ:GECC) reported a robust start to fiscal 2024 during its recent earnings call. The company generated net income of nearly $3 million, more than doubling its EBITDA on a year-over-year basis. The firm also ended the quarter with over $75 million in cash and marketable securities. CEO Jason Reese announced a $10 million common stock repurchase program, reflecting the board’s belief that the company’s stock is undervalued.

Key takeaways from the call include:

• Fee-paying assets under management (AUM) grew on both a sequential quarter and year-over-year basis.
• The company has transitioned to a streamlined asset management business, with a clear year-over-year comparison that includes the results of managing the Monomoy Properties REIT vehicle acquired in May 2022.
• Great Elm Group continues to evaluate strategic M&A opportunities and has a robust pipeline due diligence in the second quarter.
• The firm’s two anchor vehicles, Monomoy and GECC, have driven both fee revenue growth and AUM growth.
• GECC generated an ROE of approximately 8.5% in the quarter and 25% over the first nine months of 2023, resulting in GECC paying GEG incentive fees for the second consecutive quarter of $1.3 million.
• Net asset value at GECC grew to $12.88 per share, up 5% from last quarter and over 15% calendar year-to-date.
• Monomoy Properties REIT closed on two properties with key tenants totaling nearly $6 million, amended four existing tenant leases for meaningful term extensions, and executed five-year renewal options at three properties.
• The company’s book value grew to approximately $2.25 per share during the fiscal first quarter.

CFO Keri Davis provided an overview of the quarter, noting that revenues grew 78% year-over-year to $3.3 million, driven by increased fee-paying AUM related to GECC and Monomoy. Great Elm Group generated net income from continuing operations of $2.8 million compared to a net loss from continuing operations of $9.5 million in the prior year period. Adjusted EBITDA for the quarter was $1.7 million, more than double the $0.7 million generated in the prior year period. As of September 30, Great Elm Group had approximately $76 million of combined cash and marketable securities on the balance sheet.