Great Elm Group, Inc.

Hello, my name is Philip, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Great Elm Group Inc. Q3 2021 conference call and webcast. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during that time, simply press star and the number one on your telephone keypad. If you'd like to withdraw the question, press the pound key. Thank you. And now I'd like to turn the call over to your host, G.K. Linford. Please go ahead.

Thank you, and good afternoon, everyone. Thank you for joining us for Great Elm Group's fiscal third quarter 2021 earnings conference call. As a reminder, this conference call is being recorded on Friday, May 14, 2021. If you would like to be added to our distribution list, you can email investorrelations at greatelmcap.com, or you can sign up for alerts directly on our website, www.greatelmgroup.com. The slide presentation accompanying today's conference call and webcast can be found on our website 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 Group's filings with the SEC for important factors that could cause actual results to differ materially from these projections. Great Elm Group does not undertake to update its forward-looking statements unless required by law. To obtain copies of SEC filings, please visit Great Elm Group's website under Financial Information and select SEC Filings. Today is Peter Reed, Great Elm Group's Chief Executive Officer. I will now turn the call over to Peter. Please go ahead.

Welcome, everyone, and thank you for joining us today. I'm joined this afternoon by our President and COO, Adam Kleinman, and our CFO, Brent Pearson. I will begin with a general overview and key highlights for the quarter. Brent will discuss our financial results in greater detail, and then I'll return for closing remarks. For those who may not be as familiar with Great Elm Group, I'll take a brief moment to review our general structure and strategy. Great Elm is a holding company, and our objective is to create shareholder value through the collective efforts driving our three verticals, each of which employ a distinct strategy. In our operating companies, we currently manage Great Elm Durable Medical Equipment, or DME, a distributor of respiratory care equipment and sleep study services. In investment management, we seek to increase the assets under management, both in Great Elm Capital Corp., the publicly traded BDC, and in other investment vehicles managed by Great Elm Capital Management, or GECM. In real estate, we're managing our existing investment in our Fort Myers property to monetize our substantial tax assets. Turning to results for our fiscal 2021 third quarter ended March 31, 2021. Overall, I'm pleased to report we had another productive quarter and that we are seeing positive momentum across our business. During the quarter, DME resumed its acquisition program and on March 1st, announced the acquisition of Advanced Medical DME, LLC, and PM Sleep Lab LLC, or as we refer to it as AMPM, for $1.1 million. This acquisition fits squarely within our stated strategy of utilizing tuck-in acquisitions as an avenue for growth. The acquisition of AMPM expands and complements the company's existing operating footprint in the Midwestern U.S. with the addition of six locations in Kansas and entry into Missouri with three locations. Furthermore, DME welcomed over 2,500 active patients through this transaction, meaningfully increasing the patient base to which it provides a full range of respiratory durable medical equipment and pap resupply. DME will also have the opportunity to introduce ventilator and oxygen services and gain additional referral opportunities from the new networks. We also anticipate there will be benefits from increased operating leverage from both operational efficiencies as well as other cost savings, including procurement savings through pricing and volumes. After a period of investment and preparation laying the groundwork to expand DME, it is gratifying to announce the transaction we're optimistic for future acquisition opportunities at DME. In terms of the underlying DME business, The fiscal third quarter results reflect the continued impact of COVID-19. DME generated revenue of $13.1 million, a decrease of 7% from $14.1 million in the prior year period. While the business experienced organic growth in CPAP resupply sales, increased revenue reserve adjustments, and continued softness in our referral pipeline for new equipment setups, which tend to be driven by in-house or external sleep studies, impacted this part of the business and overall revenue. With a vaccine-led economic reopening on the horizon, we believe the DME business is poised to benefit from a broad-based recovery as people begin to return to normalcy. In the meantime, DME has been proactively assessing its eligibility to apply for government programs targeted to businesses impacted by the pandemic. Accordingly, DMV applied and was able to claim $2.2 million in employee retention credits under the Enhanced CARES Act during the quarter, which significantly reduced overall operating expenses. As a result, for the fiscal third quarter 2021, DMV adjusted EBITDA with $3.4 million compared to $2.5 million in the prior year period. Turning to our investment management segments. Our objective in investment management is to grow our management fee and incentive fee revenues and the associated profitability by increasing our AUM. In order to do this, we seek to increase GECC's equity capital, which typically requires the shares trading at or above book value. We believe that we can make GECC shares more attractive to investors by increasing the dividend yield as well as having a higher percentage of GECC's portfolio comprised of investments that are proprietary to GECC. Our interest in the specially financed sector for GECC serves both of these goals. First, by owning the equity of highly profitable specially financed businesses, GECC's overall yield and dividend-paying capacity increases. Additionally, as we have seen with GECC's investment in prestige capital, specially financed businesses frequently originate proprietary transactions with higher yields than the leveraged loan alternatives, despite having less corporate credit risk than those same alternatives. During the quarter, investment management took several significant actions to drive further growth. GECC's NAV increased by over 12%, and GECC deployed significant cash into yield-generating assets in the quarter. These actions should position GECM to earn higher fees in coming quarters. Finally, we took steps to simplify our balance sheet and corporate structure through a series of previously announced transactions at one of our investment management subsidiaries, GECC GP Corp. As a result, investment management's ownership of GECCGP Corp increased from 80.1% to 98%, which will result in a greater share of investment management profits for GEG. We anticipate further simplifying our balance sheet and corporate structure in the future. Also, in the third quarter, investment management began to fully deploy capital into special-purpose acquisition companies, or SPACs, through a recently created fund, the Great Elm SPAC Opportunity Fund. We invested $10 million to help seed this vehicle, which we hope will contribute to increased assets under management for the investment management business and help drive additional fee revenue. Finally, subsequent to quarter end, GECC entered into a three-year, $25 million revolving credit facility with Citi National Bank with an interest rate on borrowings of LIBOR plus 350. This facility will allow GECC to more efficiently manage its liquidity and to take advantage of attractive investment opportunities, especially in the specialty finance sector. On the general corporate front, we continue to maintain strong oversight on costs. Operating expenses were steady compared to the same period last year, but increased relative to the last quarter due to increased management fees at our subsidiary, Forrest. With that, I'll turn it over to Brent to discuss our financial results for the quarter in more detail, and then I'll return for a few closing remarks. Brent? Thanks, Pete.