Great Elm Capital Corp. · NASDAQ:GECC
Great Elm Capital — Q3 2020 Earnings Presentation
31 slides from Great Elm Capital's earnings presentation, Nov 9, 2020
Slide 1: Great Elm Capital Corp
T ELM ff CAPITAL: Great Elm Capital Corp © 2020Great Etm Capital mp.
Slide 2: Forward-looking statements
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,” “will,” “estimate,” “desig
Slide 3: About Great Elm BDC
About Great Elm BDC Great Elm BDC Investment Objective Investment Strategy Externally managed, total-return-focused BDC Liquid balance sheet Employees and affiliates of Great Elm Capital Management, Inc., GECC’s investment manager, own approximately 43.6% of GECC’s outstanding shares To generate bot
Slide 4: Third Quarter 2020 Overview: Capital Deployment
Third Quarter 2020 Overview: Capital Deployment During Q3 2020, monetized $18.2 million across 12 investments, in whole or in part, at a weighted average current yield of 9.58% and a weighted average price of $0.97 This includes the complete exit of 1 position during the quarter During Q3 2020, depl
Slide 5: Third Quarter 2020: Net Investment Income Analysis
Third Quarter 2020: Net Investment Income (“NII”) Analysis NII for the quarter ended September 30, 2020 was approximately $1.9 million, or $0.18 per share, as compared to NII of $0.9 million or $0.09 per share for the quarter ended June 30, 2020 Reported a full period of NII following the strategic
Slide 6: Portfolio Review: Repositioning and Recapitalization Update
Portfolio Review: GECC Overview Third Quarter 2020: Repositioning and Recapitalization Update Thus far in 2020, we have monetized over $85.4 million, while redeploying $82 million into cash-generative investment opportunities that diversify our holdings Intend to more heavily weight investments in s
Slide 7: Rights Offering: Provides Ample Liquidity to Pursue New Investments
Portfolio Review: GECC Overview Rights Offering: Provides Ample Liquidity to Pursue New Investments Subsequent to quarter end, 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 sub
Slide 8: Rights Offering: Pre and Post-Offering
Portfolio Review: GECC Overview Rights Offering: Pre and Post-Offering At 9/30/2020 At 10/1/2020 (Post Rights Offering)* Shares Outstanding 10,941,770 21,703,720 Asset Coverage Ratio 150.9% 176.5% Net Asset Value Per Share $5.53 $4.18 Distributions Paid / Declared Per Share $0.249 $0.249 Pre and Pos
Slide 9: Investment Activity: New Investments
Investment Activity: New Investments (July 1, 2020* – November 9, 2020) Throughout 3Q20 and subsequent to quarter end, we actively deployed approximately $34.2 million of available cash into eight new investments at a weighted average current yield of 12.3% $ in $000s (1) Investment activity include
Slide 10: Specialty Finance Investments
Specialty Finance Investments
Slide 11: 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 individual accounts receivable for an upfront payment Specialty Finance I
Slide 12: Prestige is a highly profitable company
Prestige is a highly profitable company In 2019, Prestige’s pretax income was approximately $2.8 million on average book equity of $3.1 million Through the first nine months of 2020, Prestige’s pretax income was approximately $3.9 million on average book equity of $3.6 million 2020 third quarter cli
Slide 13: Specialty Finance Investments: Additional Investments
The positive trends our investment in Prestige continues to exhibit leads us explore complementary opportunities in other niche areas of specialty finance We are focused on acquiring controlling interests in a number of sub-categories of specialty finance, including: Factoring Asset based lending Eq
Slide 14: Portfolio Review (Quarter Ended 9/30/2020)
Portfolio Review (Quarter Ended 9/30/2020)
Slide 15: Portfolio Review: Quarter End Portfolio Detail
Portfolio Review: Quarter End Portfolio Detail 34 Debt Investments $136.1 million Fair Value of Debt Investments 81.6% Weighted Average Dollar Price of Debt Investments 10.1%1 Weighted Average Current Yield of Debt Investments 80.3% Of Invested Capital in Debt Investments 8 Equity Investments $33.4
Slide 16: Portfolio Review: Asset Type and Interest Rate Type
Portfolio by Asset Type ($MM) Portfolio by Interest Rate Type ($MM) Weighted average fixed rate yield of 13.8%1 Weighted average floating rate yield of 7.7%1 (1) Weighted average fixed and floating rate current yield is based upon the stated coupon rate and fair value of outstanding debt instruments
Slide 17: Portfolio Review: Quarter End Industry Breakdown
Portfolio Review: Quarter End Industry Breakdown Amounts in the above tables do not include investments in short-term securities, including United States Treasury Bills. September 30, 2020 Industry Investments at Fair Value Percentage of Fair Value Wireless Telecommunications Services $ 39,334 23.21
Slide 18: Portfolio Review: Quarterly Investment Activity
Portfolio Review: Quarterly Investment Activity Q3/2019 Q4/2019 Q1/2020 Q2/2020 Q3/2020 Dollar Value of New Investments1 $46.1 million $15.1 million $31.9 million $15.9 million $34.5 million Weighted Average Price of New Debt Investments $0.97 $0.97 $0.99 $0.92 $0.91 Weighted Average Current Yield o
Slide 19: Financial Review (Quarter Ended 9/30/2020)
Financial Review (Quarter Ended 9/30/2020)
Slide 20: Financial Review: Per Share Data
Financial Review: Per Share Data Q3/20191 Q4/20191 Q1/20201 Q2/20201 Q3/20201 Earnings Per Share (“EPS”) ($0.96) ($0.16) ($3.33) $0.34 $0.72 Net Investment Income (“NII”) Per Share $0.26 $0.25 $0.26 $0.09 $0.18 Net Realized Gains / (Losses) Per Share $0.02 $0.00 ($1.12) $0.09 ($0.02) Net Unrealized
Slide 21: 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 22: Financial Review: Portfolio
Financial Review: Portfolio Q3/2019 Q4/2019 Q1/2020 Q2/2020 Q3/2020 Capital Deployed $46.1 million $15.1 million $31.9 million $15.9 million $34.5 million Investments Monetized $44.6 million $9.6 million $29.4 million $37.5 million $18.2 million Total Fair Value of Investments at Period End1 $194.8
Slide 23: Summary
Summary
Slide 24: Capital Activity: Declared Quarterly Cash Distribution
The Company had previously delivered a monthly distribution of $0.083 per share. The majority of our fourth quarter 2020 distributions will be paid in shares of common stock in order to maximize liquidity and strengthen our balance sheet Capital Activity: Declared Quarterly Cash Distribution Distrib
Slide 25: Investment Takeaways
Investment Takeaways Recent portfolio repositioning and capital decisions have GECC well-positioned to take advantage of market dislocation and grow NII Intend to weight investments in specialty finance businesses in future portfolio Significant cash balance No secured credit facility A diversified
Slide 26: Appendix
Appendix Financial Statements Pro-Forma Balance Sheet General Risks Contact Information
Slide 27: Consolidated Statements of Operations (unaudited)
Consolidated Statements of Operations (unaudited) $ in $000s (except per share amounts)
Slide 28: Consolidated Statements of Assets and Liabilities (unaudited)
Consolidated Statements of Assets and Liabilities (unaudited) $ in $000s (except per share amounts)
Slide 29: Unaudited Pro-Forma Balance Sheet Information
Unaudited Pro-Forma Balance Sheet Information As of 9/30/2020 $ in $000s except shares outstanding and per share totals After Giving Effect to Rights Offering 9/30/2020 Actual Adjustments As Adjusted Investments, at fair value $ 244,466 $ 244,466 Cash and cash equivalents 13,170 30,357 43,527 Other
Slide 30: 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 31: 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 Contact Information