Great Elm Capital Corp. · NASDAQ:GECC
Great Elm Capital — Q3 2019 Earnings Presentation
33 slides from Great Elm Capital's earnings presentation, Nov 14, 2019
Slide 1: Investor Presentation – Quarter Ended September 30, 2019
Great Elm Capital Corp. (NASDAQ: GECC) Investor Presentation – Quarter Ended September 30, 2019 November 14, 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 Employees and affiliates of Great Elm Capital Management, Inc., GECC’s investment manager, own greater than 20
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 13.6% (on 9/30/19 NAV) and 15.1% (on 9/30/19 market value) During Q3 2019, monetized $44.6 millio
Slide 5: Review (Quarter Ended 9/30/2019)
Portfolio Review (Quarter Ended 9/30/2019) © 2019 Great Elm Capital Corp.
Slide 6: Review
Portfolio Review 11.0% Weighted average current yield on debt portfolio1 86.4% Percentage of the total portfolio (based on fair value of investments) invested in 1st lien and/or secured debt instruments $0.87 Weighted average dollar price of debt investments in the portfolio, representative of our s
Slide 7: Review (Continued)
Portfolio Review (Continued) 29 Debt Investments $168.3 million Fair Value Invested in Debt Instruments 71.9% in Floating Rate Instruments (Based on % of Fair Value) 11.0%1 Weighted Average Current Yield 86.4% Of Invested Capital in Debt Instruments (100% of fair value in first lien / secured) 7 Equ
Slide 8: Review (Continued)
Portfolio Review (Continued) $46.1 million Capital deployed into 15 investments, including 4 new issuers, with a weighted average dollar price of $0.97 and a weighted average current yield of 10.2%1 $44.6 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 Q3 / 2019, we purchased 10 investments (five new, five existing), deploying approximately $33.8 million This deployment activity does not include revolver draws or PIK interest. Mitchell International, Inc. – Purchased approximately $12.0 million
Slide 10: Review: New & Additional Investments (Continued)
Portfolio Review: New & Additional Investments (Continued) This deployment activity does not include revolver draws or PIK interest. Duff & Phelps – Purchased $5.0 million of total commitment of secured revolver in the secondary market at a price of approximately $0.91 Interest rate: LIBOR + 3.25% -
Slide 11: Review: Asset Type and Interest Rate Type
Portfolio Review: Asset Type and Interest Rate Type ($ in Thousands) Portfolio by Asset Type Portfolio by Interest Rate Type Weighted average fixed rate yield of 12.3%1 Weighted average floating rate yield of 10.6%1 (1) Weighted average fixed and floating rate current yield is based upon the stated
Slide 12: Review: Asset Type (End of Period Investments - % of FMV)
Portfolio Review: Asset Type (End of Period Investments - % of FMV) © 2019 Great Elm Capital Corp.
Slide 13: Review: Interest Rate (End of Period Investments - % of FMV)
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.
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) Q3/2018 Q4/2018 Q1/2019 Q2/2019 Q3/2019 Dollar Value of New Investments1 $39.0 million $34.8 million $54.5 million $61.7 million $46.1 million Weighted Average Price of New Debt Investments $0.89 $0.92 $0.97 $0.98 $0.97 Weighted Average Current Yield
Slide 17: Subsequent Events
Subsequent Events © 2019 Great Elm Capital Corp.
Slide 18: Subsequent Events (through November 13, 2019)
Subsequent Events (through November 13, 2019) In October and November: Approximately $0.8 million of par value of PE Facility Solutions, LLC secured term loan B was repaid at par. We bought $2.0 million of par value of Viasat Inc. receivable at 90% of par value. We bought $3.0 million of par value o
Slide 19: Financial Review (Quarter Ended 9/30/2019)
Financial Review (Quarter Ended 9/30/2019) © 2019 Great Elm Capital Corp.
Slide 20: Financial Review: Per Share Data
Financial Review: Per Share Data Q3/20181 Q4/20181 Q1/20191 Q2/20191 Q3/20191 Earnings Per Share (“EPS”) $0.46 ($1.18) $0.76 ($0.43) ($0.96) Net Investment Income (“NII”) Per Share $0.25 $0.25 $0.26 $0.29 $0.26 Net Realized Gains / (Losses) Per Share $0.08 $0.04 $0.06 $0.04 $0.02 Net Unrealized Gain
Slide 21: Financial Review: Portfolio
Financial Review: Portfolio Q3/2018 Q4/2018 Q1/2019 Q2/2019 Q3/2019 Capital Deployed $39.0 million $34.8 million $54.5 million $61.7 million $46.1 million Investments Monetized $38.0 million $40.0 million $59.9 million $36.6 million $44.6 million Total Fair Value of Investments at Period End1 $203.3
Slide 22: Financial Review: Quarter Ended 9/30/2019
Financial Review: Quarter Ended 9/30/2019 Total investment income for the quarter ended September 30, 2019 was approximately $7.0 million, or $0.70 per share Net expenses for the quarter ended September 30, 2019 were approximately $4.4 million, or $0.44 per share Net investment income for the quarte
Slide 23: Financial Review: Unrealized Loss Detail
Financial Review: Quarter Ended 9/30/2019 – Unrealized Loss Detail GECC’s net unrealized depreciation from investments of approximately $12.5 million during the quarter was driven by what we believe to be temporary reductions in the fair value of certain of our investments Importantly, we remain enc
Slide 24: 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 25: Capital Activity
Capital Activity © 2019 Great Elm Capital Corp.
Slide 26: 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 27: 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 28: 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 29: Summary
Summary © 2019 Great Elm Capital Corp.
Slide 30: 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 13.6% (based on 9/30/2019 NAV) and 15.1% (based on 9/30/2019 closing market value) To date, 41 consecutive m
Slide 31: Appendix
Appendix © 2019 Great Elm Capital Corp.
Slide 32: 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 33: 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.