Great Elm Capital Corp. · NASDAQ:GECC
Great Elm Capital — Q1 2019 Earnings Presentation
40 slides from Great Elm Capital's earnings presentation, May 14, 2019
Slide 1: Investor Presentation – Quarter Ended March 31, 2019
Great Elm Capital Corp. (NASDAQ: GECC) Investor Presentation – Quarter Ended March 31, 2019 May 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” and baby bonds as “GECCL” and “GECCM” on NASDAQ $0.083 per share monthly distribution1 Insiders own greater than 20% of GECC’s outstanding shares To generate b
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 11.3% (on 3/31/19 NAV) and 15.0% (on 3/31/19 market value) During Q1 2019, monetized $59.9 millio
Slide 5: Portfolio Review (Quarter Ended 3/31/2019)
Portfolio Review (Quarter Ended 3/31/2019) © 2019 Great Elm Capital Corp.
Slide 6: Portfolio Review
Portfolio Review 11.3% Weighted average current yield on debt portfolio1 81.6% Percentage of the total portfolio (based on fair value of investments) invested in 1st lien and/or secured debt instruments $0.89 Weighted average dollar price of debt investments in the portfolio, representative of our s
Slide 7: Portfolio Review (Continued)
Portfolio Review (Continued) 26 Debt Investments $151.5 million Fair Value Invested in Debt Instruments 69.9% in Floating Rate Instruments (Based on % of Fair Value) 11.3%1 Weighted Average Current Yield 81.6% Of Invested Capital in Debt Instruments (100% of fair value in first lien / secured) 7 Equ
Slide 8: Portfolio Review (Continued)
Portfolio Review (Continued) $54.5 million Capital deployed into 14 investments, including 6 new issuers, with a weighted average dollar price of $0.97 and a weighted average current yield of 10.5%1 $59.9 million Monetized (in part or in full) 17 investments at a weighted average dollar price of $0.
Slide 9: Portfolio Review: New & Additional Investments
Portfolio Review: New & Additional Investments During Q1 / 2019, we purchased investments in nine companies (six new, three existing), deploying approximately $35.1 million This deployment activity does not include revolver draws or PIK interest. Dynata – Purchased approximately $3.9 million funded
Slide 10: Portfolio Review: New & Additional Investments (Continued)
Portfolio Review: New & Additional Investments (Continued) This deployment activity does not include revolver draws or PIK interest. Boardriders, Inc. – Purchased $2.0 million face value of secured loans in the secondary market at a price of approximately $1.00 Interest rate: LIBOR + 6.50% New Inves
Slide 11: Portfolio Review: Asset Type and Interest Rate Type
Portfolio Review: Asset Type and Interest Rate Type ($ in Thousands) Portfolio by Asset Type Portfolio by Interest Rate Type Weighted average fixed rate yield of 10.4%1 Weighted average floating rate yield of 11.7%1 (1) Weighted average fixed and floating rate current yield is based upon the stated
Slide 12: Portfolio Review: Asset Type
Portfolio Review: Asset Type (End of Period Investments - % of FMV) © 2019 Great Elm Capital Corp.
Slide 13: Portfolio Review: Interest Rate
Portfolio Review: Interest Rate (End of Period Investments - % of FMV) © 2019 Great Elm Capital Corp.
Slide 14: Portfolio 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: Portfolio 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: Portfolio Review: Portfolio Rotation (Continued)
Portfolio Review: Portfolio Rotation (Continued) Q1/2018 Q2/2018 Q3/2018 Q4/2018 Q1/2019 Dollar Value of New Investments1 $63.2 million $37.9 million $39.0 million $34.8 million $54.5 million Weighted Average Price of New Debt Investments $0.99 $0.99 $0.89 $0.92 $0.97 Weighted Average Current Yield
Slide 17: Portfolio Review: Avanti Update
Portfolio Review: Avanti Update The fair value of Avanti secured notes and common shares continues to diverge from significant fundamental company progress Since GECC was formed, it has worked with other key Avanti creditors to: Identify and recruit Kyle Whitehill as CEO Restructure Avanti’s balance
Slide 18: Subsequent Events
Subsequent Events © 2019 Great Elm Capital Corp.
Slide 19: Subsequent Events (through May 13, 2019)
Subsequent Events (through May 13, 2019) In March 2019, we announced a $5 million stock repurchase program to repurchase GECC common shares in the open market Through May 13, 2019, we have repurchased 308,883 GECC shares at a weighted average price of $8.27 per share under this plan In April 2019, w
Slide 20: Financial Review (Quarter Ended 3/31/2019)
Financial Review (Quarter Ended 3/31/2019) © 2019 Great Elm Capital Corp.
Slide 21: Financial Review: Per Share Data
Financial Review: Per Share Data Q1/20181 Q2/20181 Q3/20181 Q4/20181 Q1/20191 Earnings Per Share (“EPS”) ($0.38) $0.25 $0.46 ($1.18) $0.76 Net Investment Income (“NII”) Per Share $0.36 $0.57 $0.25 $0.25 $0.26 Net Realized Gains / (Losses) Per Share $0.03 $0.08 $0.08 $0.04 $0.06 Net Unrealized Gains
Slide 22: Financial Review: Portfolio
Financial Review: Portfolio Q1/2018 Q2/2018 Q3/2018 Q4/2018 Q1/2019 Capital Deployed $63.2 million $37.9 million $39.0 million $34.8 million $54.5 million Investments Monetized $29.1 million $27.7 million $38.0 million $40.0 million $59.9 million Total Fair Value of Investments at Period End1 $194.8
Slide 23: Financial Review: Quarter Ended 3/31/2019
Financial Review: Quarter Ended 3/31/2019 Total investment income for the quarter ended March 31, 2019 was approximately $6.3 million, or $0.59 per share Net expenses for the quarter ended March 31, 2019 were approximately $3.5 million, or $0.33 per share Net investment income for the quarter ended
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 11.3% (based on 3/31/2019 NAV) and 15.0% (based on 3/31/2019 closing market value) To date, 35 consecutive m
Slide 31: Appendix
Appendix © 2019 Great Elm Capital Corp.
Slide 32: Appendix: Individual Realized Investments
Appendix: Individual Realized Investments (through May 13, 2019) Past performance is not indicative of future results. It should not be assumed that the realization of other positions will be profitable or equal to the performance of the positions realized in the quarter ended March 31, 2019 and the
Slide 33: Appendix: Aptean Holdings, Inc.
Background Catalyst Outcome Formed in 2012, Aptean is a Vista Equity Partners-owned enterprise software provider Aptean had a secured term loan that carried a LIBOR + 950 basis points coupon and matured in 2023 GECC purchased approximately $4.0 million par value of the term loan at approximately $1.
Slide 34: Appendix: GEO Specialty Chemicals, Inc.
Background Catalyst Outcome GEO is a leading developer and manufacturer of specialty and performance chemicals GEO had a secured revolver and term loan that each carried a LIBOR + 475 basis points coupon and matured in 2019 GECC purchased approximately $10.9 million par value of the combined facilit
Slide 35: Appendix: International Wire Group, Inc.
Background Catalyst Outcome ITWG is the largest bare copper wire and copper wire products manufacturer in the US ITWG has a secured note that carries a fixed 10.75% coupon and matures in 2021 GECC purchased $17.5 million par value of the note at approximately $0.93 in 2017 and 2018 Through years of
Slide 36: Appendix: Michael Baker International, LLC
Background Catalyst Outcome Michael Baker provides commercial engineering services in the US Michael Baker has a secured note that carries a fixed 8.75% coupon and matures in 2023 GECC purchased $14.5 million par value of the note at approximately $0.97 in 2017 and 2018 GECC believed that the value
Slide 37: Appendix: Sungard Availability Services Capital, Inc.
Background Catalyst Outcome Sungard provides custom enterprise cloud and technology services Sungard has a secured term loan that carries a LIBOR + 700 basis point coupon and matures in 2021 and a secured term loan that carries a LIBOR + 1,000 basis point coupon and matures in 2022 GECC purchased a
Slide 38: Appendix: TRU Taj LLC's DIP Note
Background Catalyst Outcome TRU Taj is a leading global retailer of toys and juvenile products, focused predominantly in Asia TRU Taj had a secured DIP note that carried an 1,100 basis point coupon and matured in January 2019 GECC purchased approximately $6.2 million par value at approximately $1.04
Slide 39: 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 40: 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.