Great Elm Capital Corp. · NASDAQ:GECC
Great Elm Capital — Q4 2017 Earnings Presentation
35 slides from Great Elm Capital's earnings presentation, Mar 12, 2018
Slide 1: Investor Presentation – Quarter Ended December 31, 2017
Great Elm Capital Corp. (NASDAQ: GECC) Investor Presentation – Quarter Ended December 31, 2017 March 12, 2018 © 2018 Great Elm Capital Corp. Exhibit 99.2
Slide 2: Disclaimer
© 2018 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 GEC, the parent company of Great Elm Capital Management, Inc., owns appr
Slide 4: 2017 Highlights and Recent Achievements
2017 Highlights and Recent Achievements Out-earned declared distributions each quarter of 2017, culminating with a special distribution of $0.20 per share that was declared in Q4, resulting in an annual distribution yield of 9.63% for 2017 (based on 12/31/2017 NAV) During 2017, monetized $175.0 mill
Slide 5: Realized Investments (through March 8, 2018)
© 2018 Great Elm Capital Corp. Realized Investments (through March 8, 2018) Past performance is not indicative of future results. It should not be assumed that the realization of other positions will be profitable or equal the performance of the positions realized in the quarter ended December 31, 2
Slide 6: Optima realized investment: background, catalyst, outcome
© 2018 Great Elm Capital Corp. Background Catalyst Outcome Optima filed for chapter 11 bankruptcy protection in December 2016 As one of Optima’s largest pre-petition creditors, we were in a unique position to help structure and finance an attractive debtor-in-possession (“DIP”) loan in March 2017 Th
Slide 7: Sonifi Solutions realized investment
© 2018 Great Elm Capital Corp. Background Catalyst Outcome GECC purchased Sonifi Term Loan A of 3/28/2018 in December 2016 at a price of approximately 51.0% of par The loan carried a fixed interest rate of 8.0% A perceived enterprise value beyond the outstanding debt, improved company performance an
Slide 8: Almonde realized investment
© 2018 Great Elm Capital Corp. Background Catalyst Outcome In December 2017, GECC purchased $5.0 million face value of the Almonde second lien term loan at a price of approximately 101% of par. The loan bears interest at rate of LIBOR plus 725 bps per annum with a LIBOR floor of 100 bps In January 2
Slide 9: Other Realized Investments: PR Wireless, Ads Direct, MPC
© 2018 Great Elm Capital Corp. PR Wireless (Warrants) Ads Direct A legacy Full Circle position, PR Wireless warrants had a market value of $21 thousand as of 9/30/2017, and we have since written off the position A legacy Full Circle position, we chose to write-off the remaining exposure (fair value
Slide 10: Other Realized Investments: Pristine Environments, Texas Westchester
© 2018 Great Elm Capital Corp. Pristine Environments, Inc. (Term Loan B) A legacy Full Circle position, the majority of GECC’s exposure to Pristine Environments, Inc. was refinanced in Q1/2017. A remaining balance of $500 thousand was impaired and written off in Q4/2017 following further adverse eve
Slide 11: Financial & Portfolio Review (Quarter Ended 12/31/2017)
© 2018 Great Elm Capital Corp. Financial & Portfolio Review (Quarter Ended 12/31/2017)
Slide 12: Financial Highlights - Per Share Data
© 2018 Great Elm Capital Corp. Financial Highlights - Per Share Data Q4/20163, 4 Q1/20174 Q2/20174 Q3/20174 Q4/20174 Earnings Per Share (“EPS”) ($1.39) $0.27 ($0.20) ($0.77) $0.47 Net Investment Income (“NII”) Per Share $0.00 $0.32 $0.29 $0.32 $0.60 NII Per Share Excluding One-Time Merger / Formatio
Slide 13: Financial Highlights - Portfolio
© 2018 Great Elm Capital Corp. Financial Highlights - Portfolio Q4/20165 Q1/2017 Q2/2017 Q3/2017 Q4/2017 Capital Deployed $42.5 million $73.3 million $17.9 million $49.3 million $46.1 million Investments Monetized $41.7 million $78.8 million $37.6 million $18.9 million $39.7 million Total Fair Value
Slide 14: Financial Review
© 2018 Great Elm Capital Corp. Financial Review Total investment income for the quarter ended December 31, 2017 was approximately $9.7 million, or $0.92 per share Net expenses for the quarter ended December 31, 2017 were approximately $3.3 million, or $0.32 per share Net investment income for the qu
Slide 15: Financial Review – Quarterly Operating Results
© 2018 Great Elm Capital Corp. Financial Review – Quarterly Operating Results (9) References to Q4/2016 refer to the partial period commencing on November 3, 2016 upon the closing of the merger and ending December 31, 2016. (10) The per share figures are based on a weighted average of the shares out
Slide 16: Portfolio Highlights - Quarter Ended 12/31/2017
© 2018 Great Elm Capital Corp. Portfolio Highlights - Quarter Ended 12/31/2017 15.3% Weighted average current yield on portfolio12 99.8% Percentage of the portfolio (based on fair value of investments) invested in 1st lien and/or senior secured instruments $0.71 Weighted average dollar price of debt
Slide 17: Portfolio Overview - Quarter Ended 12/31/2017
© 2018 Great Elm Capital Corp. Portfolio Overview - Quarter Ended 12/31/2017 24 Debt Investments $164.5 million Fair Value Invested in Debt Instruments 48.1% in Floating Rate Instruments 15.3%15 Weighted Average Current Yield 99.8% Of Invested Capital in Debt Instruments (100% of fair value in first
Slide 18: Portfolio Activity - Quarter Ended 12/31/2017
© 2018 Great Elm Capital Corp. Portfolio Activity - Quarter Ended 12/31/2017 $46.1 million Capital deployed into 11 companies (four new investments, seven additional investments) with a weighted average dollar price of $0.97 and a weighted average current yield of 11.4%16 $39.7 million Monetized (in
Slide 19: Portfolio Activity
© 2018 Great Elm Capital Corp. Portfolio Activity Q4/201618 Q1/2017 Q2/2017 Q3/2017 Q4/2017 Dollar Value of New Investments19 $42.5 million $73.3 million $17.9 million $49.3 million $49.1 million Weighted Average Price of New Debt Investments $0.93 $0.98 $0.99 $0.96 $0.97 Weighted Average Current Yi
Slide 20: Portfolio Breakdown - Asset Type and Interest Rate Type
© 2018 Great Elm Capital Corp. Portfolio Breakdown - Asset Type and Interest Rate Type ($ in K) Portfolio by Asset Type Portfolio by Interest Rate Type Investments: Investments at Fair Value % of Total Portfolio 1st Lien / Senior Secured Debt $164,521 99.8% Unsecured Debt - 0.0% Equity / Other 349 0
Slide 21: Portfolio Breakdown - Asset Type
© 2018 Great Elm Capital Corp. Portfolio Breakdown - Asset Type (End of Period Investments - % of FMV)
Slide 22: Portfolio Breakdown - Interest Rate
© 2018 Great Elm Capital Corp. Portfolio Breakdown - Interest Rate (End of Period Investments - % of FMV)
Slide 23: Portfolio Breakdown - Industry
© 2018 Great Elm Capital Corp. Portfolio Breakdown - Industry Investments at Fair Value Percentage of Total Portfolio Wireless Telecommunications Services $ 42,277 25.6% Building Cleaning and Maintenance Services 18,104 11.0% Retail 14,800 9.0% Manufacturing 11,960 7.3% Wireless Communications 10,02
Slide 24: Avanti - Update
Avanti - Update About Avanti: Avanti is a leading provider of satellite-enabled data communications services in Europe, the Middle East and Africa. Avanti’s satellites utilize Ka-band frequencies, enabling higher speed and volume at lower cost. It is a carrier’s carrier, selling managed service whol
Slide 25: Avanti – Coverage Territory
Avanti – Coverage Territory © 2018 Great Elm Capital Corp. SOURCE: Avanti’s website
Slide 26: Subsequent Events (through March 8, 2018)
Subsequent Events (through March 8, 2018) © 2018 Great Elm Capital Corp. In January 2018, we sold our position in Almonde, Inc. at a price of approximately 101% of par value In January 2018, we sold $2.0 million of our position in NANA Development Corp. at a price of approximately 101% of par value
Slide 27: Capital Activity
© 2018 Great Elm Capital Corp. Capital Activity
Slide 28: Distribution Policy & Declared Distributions
© 2018 Great Elm Capital Corp. Distribution Policy & Declared Distributions On November 2, 2017, we declared our monthly Q1/2018 distribution amount and schedule. We generated $0.60 in NII per share during the quarter, a 2.4x base distribution coverage or 1.3x including the special distribution22 On
Slide 29: Stock Buyback Program & Self-Tender
© 2018 Great Elm Capital Corp. Stock Buyback Program & Self-Tender Post the closing of the merger in November 2016, we commenced our stock buyback program, executed through a 10b5-1 plan, to repurchase shares whenever they trade below 90% of the last published NAV Our Board of Directors approved $15
Slide 30: Stock Buyback Program & Self-Tender - Monthly Activity
© 2018 Great Elm Capital Corp. Stock Buyback Program & Self-Tender - Monthly Activity Month Total Number of Shares Purchased Average Price Per Share November 2016 16,030 $ 10.79 December 2016 82,142 $ 10.72 Total 2016 98,172 $ 10.73 January 2017 132,434 $ 11.48 February 2017 72,678 $ 11.26 March 201
Slide 31: Baby Bond Offering
© 2018 Great Elm Capital Corp. Baby Bond Offering In January and February 2018, we sold $44.9 million of 6.75% notes of 2025 (NASDAQ: GECCM), plus $1.5 million of the over-allotment option for a total issue size of approximately $46.4 million. The seven-year notes mature on January 31, 2025 and are
Slide 32: Appendix
© 2018 Great Elm Capital Corp. Appendix
Slide 33: Avanti timeline
2007 2009 2010 2012 2013 2014 2018 April 2007: Avanti IPO’d offering 25.708 million shares, with last price on first trading day of 242GBp July 2009 and December 2009: Offered 14 million shares at 225GBp and offered 21.5 million shares at 400GBp July 2010: Offered 16.279 million shares at 430GBp Nov
Slide 34: 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 35: Appendix: Contact Information
Appendix: Contact Information © 2018 Great Elm Capital Corp. Investor Relations Meaghan K. Mahoney Senior Vice President 800 South Street, Suite 230 Waltham, MA 02453 Phone: +1 (617) 375-3006 investorrelations@greatelmcap.com