Nasdaq:GEG
Great Elm Group, Inc.
Great Elm Group is an oil and gas investment firm generating revenue through its diversified asset portfolio and strategic acquisitions.
Key Metrics
Investment Thesis
Bull Case
Investors may consider GEG due to its recent profitability turnaround and substantial paid-in capital base of $3.31B suggesting strong equity backing. The company's ability to generate positive net profit despite operational cash outflows demonstrates effective asset monetization or non-operating gains that could support shareholder returns.
Bear Case
The stock carries elevated risk due to a retained earnings deficit of -$3.24B and negative operating cash flow which threatens long-term solvency. High interest expense relative to current assets limits financial flexibility, and the recent decline in revenue suggests potential market headwinds or asset impairment issues.
About Great Elm Group, Inc.
Great Elm Group (GEG) operates as a diversified investment holding company with interests primarily in oil and gas production and related services. The company leverages a portfolio of assets to generate revenue across energy markets while managing significant debt obligations. Key products include crude oil, natural gas liquids, and associated production services.
Analysis
Management Discussion
The company reported a net profit of $15.6M for the latest year, reversing a prior loss of $0.9M in 2024, though revenue decreased slightly from $17.8M to $16.3M. Despite generating operating profits, the firm faces cash flow challenges with operations contributing -$9.0M while financing activities drained another -$8.8M, indicating a reliance on non-operating income and asset sales for liquidity.
Industry Overview
The oil and gas services sector is cyclical and heavily dependent on global energy demand and commodity price stability. Companies in this space face continuous pressure from inflationary input costs while competing against established majors for limited acreage and operational contracts.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $8.7M | $17.8M | $16.3M |
| Cost of Revenue | $0 | $5.5M | $1.1M |
| Gross Profit | $8.7M | $12.3M | $15.2M |
| Operating Expenses | $19.9M | $20.1M | $23.2M |
| Operating Income | $-11.2M | $-7.8M | $-8.0M |
| G&A | $8.5M | $7.7M | $6.6M |
| Stock-Based Comp | $2.6M | $2.4M | $2.0M |
| D&A | $1.2M | $1.1M | $1.2M |
| Depreciation | — | — | $100.0K |
| Amortization | $1.1M | $1.1M | $1.1M |
| Other OpEx | $11.4M | $12.5M | $16.6M |
| Non-Operating Income | $25.9M | $7.0M | $23.6M |
| Interest Expense | $6.1M | $4.3M | $4.2M |
| Pre-Tax Income | $14.7M | $-841.0K | $15.6M |
| Income Tax | $200.0K | $101.0K | $86.0K |
| Continuing Ops | $14.5M | $-942.0K | $15.6M |
| Discontinued Ops | $13.2M | $16.0K | $0 |
| Net Income | $27.7M | $-926.0K | $15.6M |
| Minority Interest | $-50.0K | $462.0K | $2.7M |
| Net to Common | $27.7M | $-1.4M | $12.9M |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $123.1M | $127.6M | $137.9M |
| Cash & Equivalents | $60.2M | $48.1M | $30.6M |
| Prepaid Expenses | $717.0K | $1.2M | $2.8M |
| Other Current Assets | $62.3M | $78.2M | $104.5M |
| Long-Term Assets | $12.8M | $12.9M | $16.0M |
| Goodwill | — | — | $440.0K |
| Operating Leases | $497.0K | $225.0K | $1.6M |
| Other LT Assets | $12.3M | $12.7M | $14.0M |
| Total Assets | $135.9M | $140.4M | $153.9M |
| Current Liabilities | $7.4M | $8.4M | $9.6M |
| Accounts Payable | $191.0K | — | — |
| Current Leases | $359.0K | $137.0K | $355.0K |
| Taxes Payable | $159.0K | $60.0K | — |
| Other Current Liab | $6.7M | $8.2M | $9.3M |
| Long-Term Liabilities | $64.7M | $61.9M | $63.7M |
| LT Operating Leases | $142.0K | $57.0K | $1.3M |
| Other LT Liab | $64.5M | $61.8M | $62.4M |
| Total Liabilities | $72.1M | $70.3M | $73.3M |
| Shareholders' Equity | $63.8M | $70.2M | $80.7M |
| Paid-In Capital | $3.32B | $3.32B | $3.31B |
| Retained Earnings | $-3.25B | $-3.25B | $-3.24B |
| Total L&E | $135.9M | $140.4M | $153.9M |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $27.7M | $-926.0K | $15.6M |
| Non-Cash Adjustments | $-30.1M | $-14.3M | $-31.9M |
| Working Capital Changes | $70.0K | $-304.0K | $7.3M |
| Cash from Operations | $-2.4M | $-15.6M | $-9.0M |
| Capital Expenditures | $53.0K | — | — |
| Cash from Investing | $84.0M | $2.3M | $-1.3M |
| Share Buybacks | — | — | $7.2M |
| Cash from Financing | $-47.6M | $2.8M | $-8.8M |
| FX Effect | $3.9M | $0 | $0 |
| Net Change in Cash | $37.9M | $-10.4M | $-19.1M |
| Beginning Cash | $22.3M | $60.2M | $49.7M |
| Ending Cash | $60.2M | $49.7M | $30.6M |
Frequently Asked Questions
How does Great Elm Group, Inc. make money?
Oil and Gas Production Services, Strategic Asset Acquisitions and Dispositions, Investment Income from Portfolio Holdings
What are the main risks for GEG?
High debt levels with total liabilities at $73.3M creating significant interest expense burden of $4.2M; volatile commodity prices affecting operating profitability; potential liquidity constraints given negative operating cash flow and large retained earnings deficit; sensitivity to acquisition integration costs.
What is GEG's competitive advantage?
Diversified asset base providing multiple revenue streams within the energy sector; experienced management team capable of executing capital allocation strategies; flexible cost structure allowing for operational resilience during commodity price fluctuations.
Related Companies
Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.