Great Elm Capital Corp. · NASDAQ:GECC
Great Elm Capital — Q4 2020 Earnings Presentation
29 slides from Great Elm Capital's earnings presentation, Mar 16, 2021
Slide 1: Great Elm Capital Corp. Investor Presentation
Great Elm Capital Corp. (NASDAQ: GECC) Investor Presentation Quarter and Year Ended December 31, 2020 © 2021 Great Elm Capital Corp. March 16, 2021
Slide 2: Forward Looking Statement
Forward Looking Statement 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 “expect,” “anticipate,” “should,”
Slide 3: About GECC
About GECC ▪ Externally managed, total-return-focused BDC ▪ Liquid balance sheet Great Elm Capital Corporation ▪ Directors of GECC, employees of GECM and officers and directors of GECM’s parent, including investment funds managed by directors of GECM’s parent, own approximately 42.5% of GECC’s outst
Slide 4: Rights Offering: Provides Ample Liquidity to Pursue New Investments
Rights Offering: Provides Ample Liquidity to Pursue New Investments • In October 2020, the Company successfully completed a non-transferable rights offering which entitled holders of rights to purchase one new share of common stock for each right held at a subscription price of $2.95 per share. In t
Slide 5: Fourth Quarter 2020 Overview: Capital Deployment and Monetization
Fourth Quarter 2020 Overview: Capital Deployment and Monetization ▪ During Q4 2020, deployed $35.3 million into 21 investments at a weighted average current Deployment of yield of 10.88% and a weighted average price of $0.94 Capital ▪ Capital deployed into both secured and unsecured investments ▪ Du
Slide 6: 2020: Repositioning and Recapitalization Update
2020: Repositioning and Recapitalization Update ▪ In 2020, we monetized over $129.2 million, while redeploying $117.3 million into cash-generative investment opportunities that diversify our holdings ▪ Intend to more heavily weight investments in specialty finance businesses, like Prestige Capital F
Slide 7: Fourth Quarter 2020: Net Investment Income Analysis
Fourth Quarter 2020: Net Investment Income (“NII”) Analysis ▪ NII for the quarter ended December 31, 2020 was approximately $1.6 million, or $0.07 per share*, as compared to NII of $1.9 million or $0.18 per share for the quarter ended September 30, 2020 ▪ NII was impacted by slower than anticipated
Slide 8: Impact of Legacy Investments on NAV
Impact of Legacy Investments on NAV Quarterly net change in Initial date of realized and unrealized Name investment depreciation on investments Fourth quarter 2020 NAV Avanti Communications 11/3/2016 impacted by Group plc ($12.6 Million) legacy investments Davidzon Radio, Inc. 11/3/2016 ($1.6 Millio
Slide 9: Newer Investments Continue Solid Performance
Newer Investments Continue Solid Performance Quarterly net change in Initial date of realized and unrealized Legacy Name investment appreciation on investment write- investments downs were offset by strong Crestwood Equity 6/19/2020 $3.4 Million Partners performance in such investments as Crestwood
Slide 10: Investment Activity: New Investments
Investment Activity: New Investments (October 1, 2020* – March 12, 2021) Investment Activity: New Investments1* Par Amount Market Interest Current Current Portfolio Company Investment Description Maturity Cost Notes / Quantity Discount Rate Yield (%)3 Yield ($)3 ABB Con-Cise Optical Group LLC 1st Li
Slide 11: Specialty Finance Investments: Prestige Capital Finance, LLC
Specialty Finance Investments: Prestige Capital Finance, LLC ▪ On February 8, 2019, GECC acquired 80.0% of the outstanding equity interests of Prestige for approximately $7.5 million ▪ Prestige is a leading provider of “spot factoring” services, providing clients with an opportunity to sell individu
Slide 12: Prestige Capital Finance, LLC – Year End 2020 Update
Prestige Capital Finance, LLC – Year End 2020 Update ▪ Prestige is a highly profitable company ▪ Prestige’s pretax income in 2020 increased to approximately $4 million on a preliminary, unaudited basis. This represented significant growth over the $2.8 million from 2019. ▪ 2020 fourth quarter client
Slide 13: Portfolio Review
Portfolio Review (Quarter Ended 12/31/2020) March 2021 © 2021 Great Elm Capital Corp. 13
Slide 14: Portfolio Review: Quarter End Portfolio Detail
Portfolio Review: Quarter End Portfolio Detail Debt Investments: 31 $108.2 million 71.3% 11.7%1 83.0% Debt Investments Fair Value of Debt Of Invested Capital in Weighted Average Weighted Investments Debt Investments Current Yield of Debt Average Dollar Investments Price of Debt Investments Three of
Slide 15: Portfolio Review: Quarter End Asset Type and Interest Rate Type
Portfolio Review: Quarter End Asset Type and Interest Rate Type Portfolio by Asset Type ($MM) Portfolio by Interest Rate Type ($MM) ▪ Weighted average fixed Equity / rate yield of Other 29% Fixed 14.7%1 Rate Floating Rate Debt 46% ▪ Weighted 54% 71% average floating rate yield of 9.4%1 Fair Value of
Slide 16: Portfolio Review: Quarter End Industry Breakdown
Portfolio Review: Quarter End Industry Breakdown December 31, 2020 Investments at Percentage of Industry Fair Value Fair Value Wireless Telecommunications Services Wireless Telecommunications Services $ 29,270 19.3% Oil & Gas Oil & Gas 20,290 13.38% Internet Media Internet Media 18,736 12.35% Specia
Slide 17: Portfolio Review: Quarterly Investment Activity
Portfolio Review: Quarterly Investment Activity New Investments vs. Monetized Investments Q4/2019 Q1/2020 Q2/2020 Q3/2020 Q4/2020 Dollar Value of New Investments1 $15.1 million $31.9 million $15.9 million $34.5 million $35.3 million Weighted Average Price of New Debt $0.97 $0.99 $0.92 $0.91 $0.94 In
Slide 18: Financial Review
Financial Review (Quarter Ended 12/31/2020) March 2021 © 2021 Great Elm Capital Corp. 18
Slide 19: Financial Review: Per Share Data
Financial Review: Per Share Data Financial Highlights – Per Share Data Q4/20191 Q1/20201 Q2/20201 Q3/20201 Q4/20201 Earnings Per Share (“EPS”) ($0.16) ($3.33) $0.34 $0.72 ($0.43) Net Investment Income (“NII”) $0.25 $0.26 $0.09 $0.18 $0.07 Per Share Net Realized Gains / (Losses) Per $0.00 ($1.12) $0.
Slide 20: Financial Review: Quarterly Operating Results
Financial Review: Quarterly Operating Results Q4/2019 Q1/2020 Q2/2020 Q3/2020 Q4/2020 $ in $000s Per Share1 Per Share1 Per Share1 Per Share1 Per Share1 Total Investment Income2 $7,012 $0.70 $6,429 $0.64 $4,768 $0.47 $5,951 $0.56 $5,749 $0.26 Interest Income 6,614 0.66 5,987 0.60 4,184 0.41 4,375 0.4
Slide 21: Financial Review: Portfolio
Financial Review: Portfolio Financial Highlights - Portfolio Q4/2019 Q1/2020 Q2/2020 Q3/2020 Q4/2020 Capital Deployed $15.1 million $31.9 million $15.9 million $34.5 million $35.3 million Investments Monetized $9.6 million $29.4 million $37.5 million $18.2 million $43.8 million Total Fair Value of I
Slide 22: Summary
Summary March 2021 © 2021 Great Elm Capital Corp. 22
Slide 23: Capital Activity: Declared Quarterly Cash Distribution
Capital Activity: Declared Quarterly Cash Distribution ▪ GECC’s Board previously announced its distribution for the quarter ending March 31, 2021 of $0.10 per share ▪ These distributions will be paid in cash to shareholders of record as of March 15, 2021 Distributions on March 31, 2021 ▪ The Board s
Slide 24: Investment Takeaways
Investment Takeaways ▪ Recent portfolio repositioning and capital decisions have GECC well-positioned to take advantage of market dislocation and grow NII Portfolio ▪ Intend to weight investments in specialty finance businesses in future portfolio Repositioning: ▪ A diversified portfolio, primarily
Slide 25: Appendix
Appendix Financial Statements Balance Sheet General Risks Contact Information
Slide 26: Consolidated Statements of Operations
For the Three Months Ended December 31, For the Year Ended December 31, 2020 2019 2020 2019 Consolidated Statements of Investment Income: Interest income from: Non-affiliated, non-controlled investments $ 2,940 $ 5,088 $ 12,740 $ 17,087 Operations Non-affiliated, non-controlled investments (PIK) 22
Slide 27: Consolidated Statements of Assets and Liabilities
December 31, 2020 December 31, 2019 Assets Consolidated Statements of Investments Non-affiliated, non-controlled investments, at fair value $ 112,116 $ 147,412 (amortized cost of $147,494 and $168,269, respectively) Assets and Liabilities Non-affiliated, non-controlled short-term investments, at fai
Slide 28: 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 29: Contact Information
Contact Information Investor Relations 800 South Street, Suite 230 Waltham, MA 02453 Phone: +1 (617) 375-3006 investorrelations@greatelmcap.com Adam Prior The Equity Group Inc. +1 (212) 836-9606 aprior@equityny.com March 2021 © 2021 Great Elm Capital Corp. 29