Ladies and gentlemen, thank you for standing by, and welcome to Great Elm Capital Group's Fiscal Fourth Quarter and Full Year 2020 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Adam Yates. Please go ahead.

Thank you, Michelle, and good morning, everyone. Thank you for joining us for Great Elm Capital Group's Fiscal Fourth Quarter and Full Year 2020 Earnings Conference Call. As a reminder, this webcast is being recorded on Friday, September 18, 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 and annual 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 these 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.

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. We have good momentum in both our DME business as well as our investment management business. Despite a significant negative impact from COVID-19, DME grew its revenue 7.9% year-over-year in the fiscal fourth quarter. DME generated $2.8 million of net income and $7.0 million of adjusted EBITDA in the quarter aided by $5.1 million of government assistance, which reduced its operating expenses. Importantly, DME has resumed its search for attractive add-on acquisition candidates. It is looking for businesses with complementary product lines in existing or tangential geographic markets. In our Investment Management business, Great Elm Capital Corp. has developed an attractive pipeline of potential investments in the specialty finance sector. We have focused on opportunities in this sector, in part because of the performance of GECC's investment in Prestige Capital, which has exceeded internal expectations. In order to capitalize upon this pipeline, GECC announced a rights offering on August 31. If completed, our AUM, revenue and earnings will increase. Please turn to Slide 6. During the quarter ended June 30, 2020, we reported consolidated revenue, net income and adjusted EBITDA of $16.0 million, $4.1 million and $7.0 million, respectively. We are intently focused on growing both revenue and profitability across our verticals. Please turn to Slide 8 to discuss drivers of shareholder value. We have clear objectives in each of our verticals. In operating companies, we're focused on acquiring undercapitalized companies with significant growth potential, both organic and through M&A. In Investment Management, we seek to increase assets under management, both in GECC and in other investment vehicles managed by GECM. In real estate, we're managing our existing investment in Fort Myers to monetize our substantial tax assets. Please turn to Slide 9. It is very important for us to maintain long-term alignment with you, our shareholders. Our team collectively owns approximately 2 million shares or 7% of the company, including our Board of Directors and their funds under management, insiders collectively own circa 27% of the shares outstanding. We believe this fosters a significant and long-term alignment of interest amongst employees, directors and other shareholders. Let's turn to Slide 11 for an overview of our operating company activity. DME generated $13.9 million of revenue and $7.0 million of adjusted EBITDA during the quarter. DME managed to generate year-over-year revenue growth in the fiscal fourth quarter of 7.9% despite the challenging environment. Sales growth of PAP supplies was strong with more moderate growth in rental revenues. After a sustained period of investment and the scalability of the platform, DME management is focused upon growing revenue and enhancing margins. Additionally, DME has resumed its search for add-on acquisition candidates. In the near term, it is focused on acquiring businesses in existing or tangential geographic markets with significant product overlap. Please turn to Slide 12 to walk through the financial update for our DME segment. Total revenue for the quarter was approximately $13.9 million. Net income for the quarter was $2.8 million and adjusted EBITDA was approximately $7.0 million. As I mentioned earlier, adjusted EBITDA in the quarter was aided by the receipt of $5.1 million of government assistance, which allowed DME to retain employees despite the negative financial impact of COVID-19. DME's unleveraged free cash flow of $5.8 million was aided by reduced capital expenditures in the quarter as fewer new patient setups resulted in the purchase of less rental equipment than in previous quarters. Turning to Slide 14. Let's discuss the operating environment for our Investment Management business. Revenue and profitability were stable and the fair value of GECC's portfolio partially recovered in the quarter. As I mentioned earlier, GECC's investment in Prestige Capital has exceeded its internal expectations. The profitability of that investment, the recent growth that it has experienced and its outlook for future growth has helped GECC to develop an attractive pipeline of potential investment opportunities in the specialty finance sector. On August 31, GECC announced a rights offering in order to capitalize upon this pipeline. Great Elm and certain other shareholders of GECC have agreed to purchase up to 24 million of shares in this offering through an exercise of their basic and oversubscription rights, provided that any oversubscription by the participating shareholders will be affected only after a pro rata allocation of oversubscription shares to record date holders who fully exercise all rights issued to them. If this offering is completed, our AUM, revenue and earnings will increase. Please turn to Slide 15 to discuss characteristics of the Investment Management vertical. We believe Investment Management is an attractive business for Great Elm due to its scalable business model, high margins and the potential for free cash flow generation. Over the long term, we plan to grow our Investment Management business by increasing assets under management, either through additional GECC capital raises, BDC M&A or by growing other investment vehicles. With significant embedded operating leverage and an established infrastructure, we believe the Investment Management business has the potential to generate free cash flow on a meaningful scale. On Slide 16, we break out the segment financials for Investment Management. Total revenues, which include both management fees and administration fees were approximately $747,000 during the quarter. Net income for the quarter was a modest loss and adjusted EBITDA was approximately $214,000. Potential growth in adjusted EBITDA should translate to a commensurate amount of leverage free cash flow generation. Please turn to Slide 18 to discuss real estate. Our real estate investment has been characterized by a limited amount of upfront capital deployed, a significant amount of nonrecourse leverage to finance our acquisition in 2018 and continued taxable income to help monetize our NOLs. Turning to Slide 19. As you see on this chart, assuming no appreciation in the property value, GEC's equity in the Fort Myers investment will continue to grow between now and the lease expiry in 2030. If cash flows from the rental stream are utilized to amortize debt, equity grows from 1x our investment and acquisition to greater than 7x in 2030, all without deploying any additional capital. Turning to Slide 20. Let's walk through the segment financials for real estate. During the fourth quarter, we generated approximately $1.3 million in rental income, $33,000 in net income and $1.11 million of adjusted EBITDA, while not generating leverage free cash flow for Great Elm, as we discussed on the prior slide, we continue to build equity value in this investment through the amortization of debt. On Slide 22, we have a review of Great Elm's General Corporate segment financial detail. This quarter's net income was in large part driven by a $2.9 million unrealized gain on the investment in GECC shares. As of June 30, 2020, GEC's consolidated cash balance was approximately $41 million. GEC is actively looking for new investment opportunities. Beyond the financial review on Slide 27, we have a summary of how we plan to continue to drive shareholder value. We intend to achieve this goal through growth at Great Elm DME and Investment Management enhanced by reduced corporate overhead. That concludes our review of Great Elm's Fiscal Fourth Quarter and Full Year 2020 Financial Results. Let's open the call up for Q&A.

[Operator Instructions] I have no questions in queue. I'll turn the call back over to the presenters for closing remarks.

Thank you again for joining us this morning to discuss Great Elm Capital Group's Fiscal Fourth Quarter and Full Year 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.

Thank you, everyone. This will conclude today's conference call. You may now disconnect.