Great Elm Capital Corp. · NASDAQ:GECC
Great Elm Capital — Q3 2024 Earnings Presentation
35 slides from Great Elm Capital's earnings presentation, Oct 31, 2024
Slide 1: Investor Presentation Quarter Ended September 30, 2024
Investor Presentation Quarter Ended September 30, 2024 October 31, 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: Third Quarter 2024 Overview
Third Quarter 2024 Overview NII of $4.1 million, or $0.39 per share in 3Q 24, vs. $3.1 million, or $0.32 per share in 2Q 24 Investment TII of $11.7 million in 3Q 24 was the highest income quarter in the Company’s history Income • Up 23% from $9.5 million in 2Q 24 and highest cash income quarter in t
Slide 4: Quarterly Cash Distributions Quarter Ending December 31, 2024
Quarterly Cash Distributions Quarter Ending December 31, 2024 December $0.35 31 14.0% 11.6% Per Share Payable Date Annualized Dividend Annualized Dividend Yield on Stock Price Yield on NAV On October 31, 2024, the The fourth quarter 2024 The cash distribution The cash distribution Company announced
Slide 5: $133.9mm of Issuances Year To Date
$133.9mm of Issuances Year To Date GECC issued 1.85 million shares at $12.97 (then current NAV) for $24 million in February 2024 • Great Elm Group, Inc. (“GEG”) participated in $6 million of the $24 million; A strategic Equity Raises at institutional investor participated in the other $18 million of
Slide 6: About GECC
About GECC Great Elm Capital Corp. Investment Objective Portfolio Overview Externally managed, total-return- To generate current income and • $333.3 million of portfolio fair value focused BDC capital appreciation by investing • $125.8 million of net asset value (“NAV”) Significant insider ownership
Slide 7: Net Investment Income (NII)
Net Investment Income (NII) NII for the quarter ended September 30, 2024 was $4.1 million, or $0.39 per share1, compared to NII of $3.1 million, or $0.32 per share1, for the quarter ended June 30, 2024 $000s $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 2 1Q2
Slide 8: Total Investment Income (TII)
Total Investment Income (TII) TII for the quarter ended September 30, 2024 was $11.7 million, compared to $9.5 million for the quarter ended June 30, 2024 $000s Cash Accretion + PIK $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1
Slide 9: 3Q 2024 NAV Per Share Bridge
3Q 2024 NAV Per Share Bridge Net assets were approximately $12.04 per share1 ($125.8 million) on September 30, 2024, as compared to $12.06 per share1 ($126.0 million) on June 30, 2024. 1 Based on shares outstanding of 10.45 million as of September 30, 2024 and 10.45 million as of June 30, 2024. Octo
Slide 10: Q3 2024 Portfolio Review
Q3 2024 Portfolio Review October 31, 2024 ©2024 Great Elm Capital Corp. 10
Slide 11: Total Quarter End Portfolio Detail
Total Quarter End Portfolio Detail1 Debt Investments 96.7%2 $233.2 70.0% 53 Weighted million Of Portfolio 12.8%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 12: Portfolio Asset Mix
Portfolio Asset Mix: End of Period Investments1 9/30/20242 $332.0 5% $288.2 5% 11% $258.2 7% 11% 1L 5% $236.4 $235.3 $230.6 5% $224.9 $226.9 5% 4% 5% 10% 2L 1% 3% 3% 3% 3% 3% 3% 6% 10% 5% 3% 6% 5% 8% 4% Specialty Finance 11% 7% 13% 10% 12% 17% 16% 23% 22% 23% 7% 10% 50% CLO JV 26% 25% 9% 8% Unsecure
Slide 13: Total Quarter End Asset Mix
Total Quarter End Asset Mix Portfolio by Asset Type ($332.0mm)1 Debt Investments by Rate Type ($233.2mm)1 Other Equity 5% Yielding Equity 11% Weighted CLO - Equity average fixed Fixed Rate 10% rate yield of 28% Corporate 11.1%2 Credit Floating SF - Equity 61% Rate 4% Weighted average 72% floating ra
Slide 14: Corporate Portfolio Overview
Corporate Portfolio Overview October 31, 2024 ©2024 Great Elm Capital Corp. 14
Slide 15: Corporate Portfolio Investment Mix Type
Corporate Portfolio1 Investment Mix Type ($mm) $255.5 6% $215.4 14% $202.8 9% $183.2 $178.3 6% 7% 6% 5% 4% 4% 4% 7% 7% 8% 4% 10% 9% 11% 10% 18% 16% 65% 70% 67% 64% 67% 3Q23 4Q23 1Q24 2Q24 3Q24 1L 2L Unsecured Yielding Equity Other Equity 1 Excludes fair value of non-accrual investments in the respec
Slide 16: Corporate Portfolio: Fixed and Floating Rate Exposure
Corporate Portfolio: Fixed and Floating Rate Exposure Portfolio by Rate Type1 9/30/2024 6% Weighted Average Value % of ($mm) Corp. Price Coupon Maturity CY 17% Fixed Rate $36.5 14% 98.87 9.6% 2.0 yrs 9.7% Floating Rate $167.0 65% 95.65 12.8% 3.4 yrs 13.4% Total Credit $203.4 80% 96.21 12.2% 3.1 yrs
Slide 17: Corporate Portfolio: Industry Breakdown
Corporate Portfolio1: Industry Breakdown September 30, 2024 Percentage of Fair Value Industry Investments at Fair Value ($ in 000s) % of Fair Value Chemicals $24,655 9.7% Chemicals 10% Transportation Equipment Mfg $23,937 9.4% Transportation Equipment Mfg 17% Technology $22,956 9.0% Technology 9% Co
Slide 18: CLO Joint Venture Overview
CLO Joint Venture Overview October 31, 2024 ©2024 Great Elm Capital Corp. 18
Slide 19: CLO Formation JV, LLC ("CLO JV")
CLO Formation JV, LLC ("CLO JV") Innovative Structure for Financing 1st Lien Loans and Holding CLO Investments • CLO JV holds majority positions in CLO Subordinated Notes (colloquially referred to as CLO Equity) • Provides GECC exposure to diverse portfolio of broadly syndicated first lien loans Ove
Slide 20: CLO JV Portfolio Composition
CLO JV Portfolio Composition: Combined underlying CLO portfolios S&P Ratings Distribution Sector Composition Chemicals 0.6% 2.3% Financial Services 0.6% Software Health Care Media Professional Services Building Products Specialty Retail 16.6% Insurance Oil & Gas Electric Utilities Auto Components Co
Slide 21: CLO Issuer Concentration
CLO Issuer Concentration Top 10 Issuers represent 10.7% of the combined CLOs, with no single issuer representing > 1.5% weighting Issuer Concentration (Overlap Basis) Issuer Combined % Weighting Market Price Gray Television 10,988,205 1.5% 93.50 Ineos Quattro 8,842,810 1.2% 99.50 Ineos Group 8,842,8
Slide 22: Great Elm Specialty Finance
Great Elm Specialty Finance October 31, 2024 ©2024 Great Elm Capital Corp. 22
Slide 23: 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 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: Q3 2024 Financial Review
Q3 2024 Financial Review October 31, 2024 ©2024 Great Elm Capital Corp. 29
Slide 30: Financial Review: Per Share Data
Financial Review: Per Share Data Financial Highlights – Per Share Data 3Q 23 4Q 23 1Q 24 2Q 24 3Q 24 Earnings Per Share (“EPS”) $1.02 $0.55 ($0.05) ($0.14) $0.33 Net Investment Income (“NII”) $0.40 $0.43 $0.37 $0.32 $0.39 Per Share Pre-Incentive NII Per Share $0.50 $0.54 $0.46 $0.40 $0.49 Net Realiz
Slide 31: Financial Review: Quarterly Operating Results
Financial Review: Quarterly Operating Results 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 $ in $000s Per Share1 Per Share1 Per Share1 Per Share1 Per Share1 Total Investment Income $9,276 $1.22 $9,161 $1.20 $8,909 $1.03 $9,548 $1.00 $11,727 $1.12 Interest Income 7,592 1.00 7,704 1.01 7,581 0.88 7,763 0.8
Slide 32: Financial Review: Portfolio
Financial Review: Portfolio Financial Highlights - Portfolio 3Q 23 4Q 23 1Q 24 2Q 24 3Q 24 Capital Deployed $32.6 million $29.9 million $64.2 million $108.9 million $73.6 million Investments Monetized $37.0 million $36.2 million $28.9 million $72.4 million $39.1 million Total Fair Value of Investmen
Slide 33: Financial Review: Cash NII
Financial Review: Cash NII $000s 3Q 23 4Q 23 1Q 24 2Q 24 3Q 24 Total Investment Income (TII) $9,276 $9,161 $8,909 $9,548 $11,727 Less: Accretion of OID and PIK income (1,157) (1,446) (1,243) (1,391) (1,416) "Cash" Total Investment Income $8,119 $7,838 $7,666 $8,157 $10,311 “Cash” TII Mix 87.5% 85.2%
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 October 31, 2024 ©2024 Great Elm Capital Corp. 35