Great Elm Capital Corp. · NASDAQ:GECC
Great Elm Capital — Q1 2024 Earnings Presentation
35 slides from Great Elm Capital's earnings presentation, May 2, 2024
Slide 1: Investor Presentation
Investor Presentation Quarter Ended March 31, 2024 May 2, 2024 NASDAQ: GECC
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: First Quarter 2024 Overview
First Quarter 2024 Overview Net Investment NII of $3.2 million, or $0.37 per share in 1Q 24, vs. $3.3 million, or $0.43 per share in 4Q 23 Income (“NII”) • Fifth consecutive quarter of NII per share more than covering the $0.35 base dividend Net assets were $118.8 million, or $12.57 per share, vs. $
Slide 4: Quarterly Cash Distributions Quarter Ending June 30, 2024
Quarterly Cash Distributions Quarter Ending June 30, 2024 June $0.35 28 13.5% 11.1% Per Share Payable Date Annualized Dividend Annualized Dividend Yield on Stock Price Yield on NAV On May 2, 2024, the The second quarter 2024 The cash distribution The cash distribution Company announced that cash dis
Slide 5: $58.5mm of Capital Raised Year To Date
$58.5mm of Capital Raised Year To Date GECC issued 1.85 million shares at $12.97 (then current NAV) for $24 million in February 2024 $24mm • Great Elm Group, Inc. (“GEG”) participated in $6 million of the $24 million; A strategic institutional February investor participated in the other $18 million
Slide 6: About GECC
About GECC Great Elm Capital Corp. Investment Objective Portfolio Overview Externally managed, total-return- To generate current income and • $262.9 million of portfolio fair value focused BDC capital appreciation by investing • $118.8 million of net asset value (“NAV”) Significant insider ownership
Slide 7: Net Investment Income (NII)
Net Investment Income (NII) NII for the quarter ended March 31, 2024 was $3.2 million, or $0.37 per share1, compared to NII of $3.3 million, or $0.43 per share1, for the quarter ended December 31, 2023 $ in $000s $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q
Slide 8: Total Investment Income (TII)
Total Investment Income (TII) TII for the quarter ended March 31, 2024 was $8.9 million, compared to $9.2 million for the quarter ended December 31, 2023 $ in $000s Cash Accretion + PIK $10,000 $8,000 $6,000 $4,000 $2,000 $0 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23
Slide 9: 1Q 2024 NAV Per Share Bridge
1Q 2024 NAV Per Share Bridge Net assets were approximately $12.57 per share1 ($118.8 million) on March 31, 2024, as compared to $12.99 per share1 ($98.7 million) on December 31, 2023. • Write-down of certain illiquid, level 3 assets originated by prior management adversely impacted NAV impacted by 5
Slide 10: 1Q 2024 NAV Bridge ($mm)
1Q 2024 NAV Bridge ($mm) Net assets were $118.8mm ($12.57 per share1) on March 31, 2024, as compared to $98.7mm ($12.99 per share1) on December 31, 2023. 2 1 Based on shares outstanding of 9.5 million as of March 31, 2024 and 7.6 million as of December 31, 2023. 2 Illiquid, level 3 investments in tw
Slide 11: Q1 2024 Portfolio Review
Q1 2024 Portfolio Review May 2, 2024 ©2024 Great Elm Capital Corp. 11
Slide 12: Total Quarter End Portfolio Detail
Total Quarter End Portfolio Detail1 Debt Investments 95.7%2 $208.5 79.3% 43 Weighted million Of Portfolio 13.1%2 Debt Average Price as Weighted Average Current Fair Value of in Debt Investments % of Par Investments Yield of Debt Investments Debt Investments Equity Investments Fair Value % of Portfol
Slide 13: Quarterly Investment Activity
Quarterly Investment Activity Deployment of $64.2 million deployed into 29 investments at a weighted average current yield of 12.5% in 1Q 24 Capital During 1Q 24, monetized $28.9 million across 33 investments, in whole or in part, at a weighted average current yield of 11.4% Monetization of • Includ
Slide 14: Portfolio Asset Mix
Portfolio Asset Mix1 Focus on Secured Investments End of Period Investments ($mm) 3/31/2024 $258.2 5% $236.4 $235.3 $230.6 8% $226.9 5% 3% 8% 3% 3% 3% 3% 3% 1L 5% 11% 8% 3% 7% 6% 6% 12% 2L 17% 22% 23% 23% Specialty Finance 25% 9% 14% 13% 17% 55% Unsecured 16% 16% Yielding Equity 2 55% Other Equity 4
Slide 15: Total Quarter End Asset Mix
Total Quarter End Asset Mix Portfolio by Asset Type ($258.2mm)1 Debt Investments by Rate Type ($208.5mm)1 Other Equity Yielding Equity 8% 5% SF - Equity Weighted 6% average fixed Fixed Rate rate yield of 31% SF - Debt Corporate 10.9%2 Floating 11% Credit Rate 70% 69% Weighted average floating rate y
Slide 16: Corporate Portfolio Overview
Corporate Portfolio Overview May 2, 2024 ©2024 Great Elm Capital Corp. 16
Slide 17: Corporate Portfolio Investment Mix Type ($mm)
Corporate Portfolio1 Investment Mix Type ($mm) $213.6 6% $182.2 $183.2 $178.3 10% $170.3 4% 4% 4% 7% 4% 7% 2% 4% 8% 14% 10% 9% 11% 16% 16% 18% 20% 21% 67% 64% 67% 58% 52% 1Q23 2Q23 3Q23 4Q23 1Q24 2 1L 2L Unsecured Yielding Equity Other Equity 1 Excludes two equity investments with a fair value of ze
Slide 18: Corporate Portfolio: Fixed and Floating Rate Exposure
Corporate Portfolio: Fixed and Floating Rate Exposure Portfolio by Rate Type1 3/31/2024 6% Weighted Average Value % of ($mm) Corp. Price Coupon Maturity CY 17% Fixed Rate $36.2 17% 95.80 9.3% 2.3 yrs 9.7% Floating Rate $143.6 67% 94.82 13.3% 3.5 yrs 14.0% Total Credit $179.8 84% 95.01 12.6% 3.2 yrs
Slide 19: Corporate Portfolio: Industry Breakdown
Corporate Portfolio1: Industry Breakdown March 31, 2024 Percentage of Fair Value Industry Investments at Fair Value ($ in 000s) % of Fair Value Chemicals $24,192 11.3% Chemicals Transportation Equipment $22,735 10.6% 13% 11% Transportation Equipment Manufacturing Consumer Products $20,574 9.6% Consu
Slide 20: Great Elm Specialty Finance
Great Elm Specialty Finance May 2, 2024 ©2024 Great Elm Capital Corp. 20
Slide 21: Specialty Finance Overview
Specialty Finance Overview The Specialty Finance Platform Operates Across the “Continuum of Lending” Equity ownership in Specialty Finance Companies (SFCs) generates two levels of proprietary investment exposure for investors: • We believe direct investments in SFCs are largely uncorrelated to the b
Slide 22: Continuum of Lending Benefits
Continuum of Lending Benefits A “Continuum of Lending” platform provides significant benefits By having a Continuum of Lending The Continuum allows lenders to improve platform, we will be able to offer “stickiness” of clientele and hold onto key borrowers economic incentives to stay borrowers longer
Slide 23: Specialty Finance Focus and Execution
Specialty Finance Focus and Execution Utilizing a 3-pronged approach to build out its specialty finance platform 1 2 3 Acquisitions Strategic Relationships Direct Originations Actively source complimentary acquisition Increase deal flow to the GESF family through Proprietary originations send a clea
Slide 24: Great Elm Specialty Finance
Great Elm Specialty Finance Great Elm Specialty Finance (“GESF”) is a subsidiary of GECC formed to oversee Specialty Finance investments and all future specialty finance acquisitions, strategic partnerships, and direct origination opportunities • GESF oversees existing platforms – shaded below • Oth
Slide 25: GESF: Prestige Capital
GESF: Prestige Capital Provider of “spot factoring” services, providing clients with opportunities to sell individual accounts receivable for upfront payments Functional Risk Management Prestige purchases the individual The combination of clients’ capital needs accounts receivable of creditworthy an
Slide 26: GESF: Sterling Commercial Credit
GESF: Sterling Commercial Credit Provider of asset-based loans to small and middle market companies throughout the United States Direct Lending Solution Diversified Products Sterling provides short term, asset-based Sterling offers a variety of product types loans and working capital solutions to to
Slide 27: GESF: Great Elm Healthcare Finance
GESF: Great Elm Healthcare Finance Formed and funded in November 2022 in partnership with Berkadia • Acquired a portfolio of loans in December 2022 • Building a robust pipeline of proprietary deal flow • Closed $50m committed credit facility (with uncommitted $50m accordion) with Encina Lender Finan
Slide 28: GESF: Great Elm Lender Finance
GESF: Great Elm Lender Finance GESF is in the process of creating a new lender finance platform, focused on participation opportunities that present definable downside protection while leveraging existing specialty finance infrastructure Business Focus Risk Management • Participations with other len
Slide 29: Q1 2024 Financial Review
Q1 2024 Financial Review May 2, 2024 ©2024 Great Elm Capital Corp. 29
Slide 30: Financial Review: Per Share Data
Financial Review: Per Share Data Financial Highlights – Per Share Data 1Q 23 2Q 23 3Q 23 4Q 23 1Q 24 Earnings Per Share (“EPS”) $1.07 $0.68 $1.02 $0.55 ($0.05) Net Investment Income (“NII”) $0.37 $0.44 $0.40 $0.43 $0.37 Per Share Pre-Incentive NII Per Share $0.47 $0.56 $0.50 $0.54 $0.46 Net Realized
Slide 31: Financial Review: Quarterly Operating Results
Financial Review: Quarterly Operating Results 1Q 2023 2Q 2023 3Q 2023 4Q 2023 1Q 2024 $ in $000s Per Share1 Per Share1 Per Share1 Per Share1 Per Share1 Total Investment Income $8,410 $1.11 $8,977 $1.18 $9,276 $1.22 $9,161 $1.20 $8,909 $1.03 Interest Income 6,630 0.87 7,081 0.93 7,592 1.00 7,704 1.01
Slide 32: Financial Review: Portfolio
Financial Review: Portfolio Financial Highlights - Portfolio 1Q 23 2Q 23 3Q 23 4Q 23 1Q 24 Capital Deployed $46.0 million $23.0 million $32.6 million $29.9 million $64.2 million Investments Monetized $52.8 million $16.0 million $37.0 million $36.2 million $28.9 million Total Fair Value of Investment
Slide 33: Financial Review: Cash NII
Financial Review: Cash NII $000s 1Q 23 2Q 23 3Q 23 4Q 23 1Q 24 Total Investment Income (TII) $8,410 $8,977 $9,276 $9,161 $8,909 Less: Accretion of OID and PIK income (1,223) (1,170) (1,157) (1,446) (1,243) "Cash" Total Investment Income $7,187 $7,807 $8,119 $7,838 $7,666 “Cash” TII Mix 85.5% 87.0% 8
Slide 34: General Risks
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 risk. In
Slide 35: Contact Information
Contact Information Media & Investor Contact: Investors Relations investorrelations@greatelmcap.com May 2, 2024 ©2024 Great Elm Capital Corp. 35