Great Elm Capital Corp. · NASDAQ:GECC
Great Elm Capital — Q2 2019 Earnings Presentation
35 slides from Great Elm Capital's earnings presentation, Aug 13, 2019
Slide 1: Investor Presentation – Quarter Ended June 30, 2019
Great Elm Capital Corp. (NASDAQ: GECC) Investor Presentation – Quarter Ended June 30, 2019 August 13, 2019 © 2019 Great Elm Capital Corp. Exhibit 99.2
Slide 2: Disclaimer
© 2019 Great Elm Capital Corp. Disclaimer Statements in this communication that are not historical facts are “forward-looking” statements within the meaning of the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as “believe,” “expect
Slide 3: GECC Snapshot
GECC Snapshot GECC Investment Objective Investment Strategy Externally managed, special situations-focused BDC Common stock trades as “GECC” on NASDAQ $0.083 per share monthly distribution1 Insiders own greater than 20% of GECC’s outstanding shares To generate both current income and capital appreci
Slide 4: Highlights and Recent Achievements
Highlights and Recent Achievements NII in excess of declared distributions every quarter since inception Special distribution of $0.24 per share declared in December 2018 LTM total distribution yield of 12.0% (on 6/30/19 NAV) and 14.2% (on 6/30/19 market value) During Q2 2019, monetized $36.6 millio
Slide 5: Review (Quarter Ended 6/30/2019)
Portfolio Review (Quarter Ended 6/30/2019) © 2019 Great Elm Capital Corp.
Slide 6: Review
Portfolio Review 11.4% Weighted average current yield on debt portfolio1 84.8% Percentage of the total portfolio (based on fair value of investments) invested in 1st lien and/or secured debt instruments $0.90 Weighted average dollar price of debt investments in the portfolio, representative of our s
Slide 7: Review (Continued): Debt and Equity Investments
Portfolio Review (Continued) 27 Debt Investments $173.2 million Fair Value Invested in Debt Instruments 74.4% in Floating Rate Instruments (Based on % of Fair Value) 11.4%1 Weighted Average Current Yield 84.8% Of Invested Capital in Debt Instruments (100% of fair value in first lien / secured) 7 Equ
Slide 8: Review (Continued): Capital Deployed and Monetized
Portfolio Review (Continued) $61.7 million Capital deployed into 15 investments, including 3 new issuers, with a weighted average dollar price of $0.98 and a weighted average current yield of 10.9%1 $36.6 million Monetized (in part or in full) 16 investments at a weighted average dollar price of $1.
Slide 9: Review: New & Additional Investments
Portfolio Review: New & Additional Investments During Q2 / 2019, we purchased nine investments (five new, four existing), deploying approximately $40.4 million This deployment activity does not include revolver draws or PIK interest. Research Now Group, Inc. – Purchased approximately $12.0 million f
Slide 10: Review: New & Additional Investments (Continued)
Portfolio Review: New & Additional Investments (Continued) This deployment activity does not include revolver draws or PIK interest. Tensar Corp. – Purchased approximately $0.5 million face value of secured loans in the secondary market at a price of approximately $0.95 Interest rate: LIBOR + 4.75%
Slide 11: Review: Asset Type and Interest Rate Type
Portfolio Review: Asset Type and Interest Rate Type ($ in Thousands) Portfolio by Asset Type Portfolio by Interest Rate Type Weighted average fixed rate yield of 11.9%1 Weighted average floating rate yield of 11.2%1 (1) Weighted average fixed and floating rate current yield is based upon the stated
Slide 12: Review: Asset Type
Portfolio Review: Asset Type (End of Period Investments - % of FMV) © 2019 Great Elm Capital Corp.
Slide 13: Review: Interest Rate
Portfolio Review: Interest Rate (End of Period Investments - % of FMV) © 2019 Great Elm Capital Corp.
Slide 14: Review: Industry Breakdown
Portfolio Review: Industry Breakdown Amounts in the above table do not include investments in short-term securities, including United States Treasury Bills and money market mutual funds. © 2019 Great Elm Capital Corp. September 30, 2018 Investments at Fair Value Percentage of Fair Value Wireless Tel
Slide 15: Review: Portfolio Rotation
Portfolio Review: Portfolio Rotation © 2019 Great Elm Capital Corp. Since inception, we have consistently monetized higher dollar priced investments and deployed capital into lower dollar priced investments, building total return In addition, substantially all new debt investments since inception ha
Slide 16: Review: Portfolio Rotation (Continued)
Portfolio Review: Portfolio Rotation (Continued) Q2/2018 Q3/2018 Q4/2018 Q1/2019 Q2/2019 Dollar Value of New Investments1 $37.9 million $39.0 million $34.8 million $54.5 million $61.7 million Weighted Average Price of New Debt Investments $0.99 $0.89 $0.92 $0.97 $0.98 Weighted Average Current Yield
Slide 17: Review: Avanti Update
Portfolio Review: Avanti Update Confidential Avanti continues to exhibit positive momentum following the hiring of Kyle Whitehill as CEO, signing additional contracts for core bandwidth revenue In May, Avanti raised $55 million in the form of a 1.5 lien facility from its largest stakeholders, includ
Slide 18: Review: Prestige Capital Corporation Update
Portfolio Review: Prestige Capital Corporation Update Confidential It has been six months since our acquisition of Prestige Capital Corporation (“PCC”) and the company’s performance has continued to exceed our expectations PCC is well ahead of plan, with annualized FY 2019 pretax income of approxima
Slide 19: Subsequent Events
Subsequent Events © 2019 Great Elm Capital Corp.
Slide 20: Subsequent Events (through August 12, 2019): July
Subsequent Events (through August 12, 2019) In July: We bought $4.3 million of par value of California Pizza Kitchen, Inc. (“California Pizza Kitchen”) second lien secured loan at approximately 95% of par value. We bought $3.0 million of par value of California Pizza Kitchen first lien secured loan
Slide 21: Subsequent Events (through August 12, 2019): August
Subsequent Events (through August 12, 2019) In August: We bought $10.0 million of par value of Mitchell International, second lien secured loan at approximately 94% of par value. We bought $3.0 million of par value of Boardriders, Inc. first lien secured loan at approximately 98% of par value. SESAC
Slide 22: Financial Review (Quarter Ended 6/30/2019)
Financial Review (Quarter Ended 6/30/2019) © 2019 Great Elm Capital Corp.
Slide 23: Financial Review: Per Share Data
Financial Review: Per Share Data Q2/20181 Q3/20181 Q4/20181 Q1/20191 Q2/20191 Earnings Per Share (“EPS”) $0.25 $0.46 ($1.18) $0.76 ($0.43) Net Investment Income (“NII”) Per Share $0.57 $0.25 $0.25 $0.26 $0.29 Net Realized Gains / (Losses) Per Share $0.08 $0.08 $0.04 $0.06 $0.04 Net Unrealized Gains
Slide 24: Financial Review: Portfolio
Financial Review: Portfolio Q2/2018 Q3/2018 Q4/2018 Q1/2019 Q2/2019 Capital Deployed $37.9 million $39.0 million $34.8 million $54.5 million $61.7 million Investments Monetized $27.7 million $38.0 million $40.0 million $59.9 million $36.6 million Total Fair Value of Investments at Period End1 $199.3
Slide 25: Financial Review: Quarter Ended 6/30/2019
Financial Review: Quarter Ended 6/30/2019 Total investment income for the quarter ended June 30, 2019 was approximately $6.7 million, or $0.66 per share Net expenses for the quarter ended June 30, 2019 were approximately $3.7 million, or $0.36 per share Net investment income for the quarter ended Ju
Slide 26: Financial Review: Quarterly Operating Results
Financial Review: Quarterly Operating Results (1) The per share figures are based on a weighted average of the shares outstanding for the preceding quarter, except where such amounts need to be adjusted to be consistent with the financial highlights of our consolidated financial statements. (2) Tota
Slide 27: Capital Activity
Capital Activity © 2019 Great Elm Capital Corp.
Slide 28: Capital Activity: Distribution Policy & Declared Distributions
Capital Activity: Distribution Policy & Declared Distributions (1) There can be no assurance that any such supplemental amounts will be received or realized, or even if received and realized, distributed or available for distribution. Past distributions are not indicative of future distributions. Di
Slide 29: Capital Activity: Distribution Yield as a Percentage of Market Value
Capital Activity: Distribution Yield as a Percentage of Market Value © 2019 Great Elm Capital Corp. * Partial period ** Annualized distribution yield is calculated by dividing the declared distribution by the closing price at quarter end and annualizing over four periods. The special distribution is
Slide 30: Capital Activity: Historical Distribution Coverage
Capital Activity: Historical Distribution Coverage © 2019 Great Elm Capital Corp. * Partial period ended December 31, 2016; Adjusted NII excludes one-time merger / formation costs. NII has covered the base distribution every quarter since inception
Slide 31: Summary
Summary © 2019 Great Elm Capital Corp.
Slide 32: Summary
Summary Earned or out-earned declared distributions every quarter since inception Declared a special distribution of $0.24 per share in December 2018, resulting in a LTM distribution yield of 12.0% (based on 6/30/2019 NAV) and 14.2% (based on 6/30/2019 closing market value) To date, 38 consecutive m
Slide 33: Appendix
Appendix © 2019 Great Elm Capital Corp.
Slide 34: Appendix: General Risks
Appendix: General Risks Debt instruments are subject to credit and interest rate risks. Credit risk refers to the likelihood that an obligor will default in the payment of principal or interest on an instrument. Financial strength and solvency of an obligor are the primary factors influencing credit
Slide 35: Appendix: Contact Information
Appendix: Contact Information Investor Relations 800 South Street, Suite 230 Waltham, MA 02453 Phone: +1 (617) 375-3006 investorrelations@greatelmcap.com © 2019 Great Elm Capital Corp.