Great Elm Capital Corp. Announces Third Quarter 2024 Financial Results

About this update from Great Elm Capital Corp.

Company to Host Conference Call and Webcast at 8:30 AM ET Today PALM BEACH GARDENS, Fla. , Oct. 31, 2024 (GLOBE NEWSWIRE) -- Great Elm Capital Corp. (“we,” “our,” the “Company” or “GECC”) (NASDAQ: GECC), a business development company, today announced its financial results for the third quarter ended September 30, 2024 . Third Quarter and Other Recent Highlights: Net investment income (“NII”) for the quarter ended September 30, 2024 was $4.1 million , or $0.39 per share, as compared to $3.1 million , or $0.32 per share, for the quarter ended June 30, 2024 . Net assets were $125.8 million , or $12.04 per share, on September 30, 2024 , as compared to $126.0 million , or $12.06 per share, on June 30, 2024 . In September 2024 , issued $36.0 million of 8.125% unsecured notes due 2029 (the “GECCH Notes”) and an additional $5.4 million in October with the full exercise of the underwriters’ overallotment option. Redeemed all outstanding 6.75% unsecured notes due in January 2025 (the “GECCM Notes”) on October 12, 2024 with net proceeds from the GECCH notes and cash on hand. GECC’s asset coverage ratio was 166.2% as of September 30, 2024 , as compared to 171.0% as of June 30, 2024 and 168.4% as of September 30, 2023 . Pro forma for the GECCH issuances and GECCM redemption, the asset coverage ratio would have been 164.4%. The Board of Directors approved a quarterly dividend of $0.35 per share for the fourth quarter of 2024, equating to a 14.0% annualized yield on the Company’s closing market price on October 30, 2024 of $10.03 . Management Commentary “We had a strong third quarter, reporting NII that exceeded our quarterly distribution and generating record total investment income of $11.7 million ,” said Matt Kaplan , GECC’s Chief Executive Officer. “Along with managing our stable portfolio, we successfully refinanced our GECCM Notes, extending our debt maturity profile. We look forward to closing a very successful 2024 on firm footing, after completing multiple substantial capital raises at NAV and launching our CLO joint venture. Our innovative JV approach utilizing the CLO structure has increased our exposure to first lien bank loans with long term, non-recourse financing, and is already delivering strong cash income. Looking ahead, we believe we remain well-positioned to maintain our dividend coverage and deliver attractive risk-adjusted returns to our shareholders.” Financial Highlights – Per Share Data Q3/2023 Q4/2023 Q1/2024 Q2/2024 Q3/2024 Earnings Per Share (“EPS”) $1.02 $0.55 ( $0.05 ) ( $0.14 ) $0.33 Net Investment Income (“NII”) Per Share $0.40 $0.43 $0.37 $0.32 $0.39 Pre-Incentive Net Investment Income Per Share $0.50 $0.54 $0.46 $0.40 $0.49 Net Realized and Unrealized Gains / (Losses) Per Share $0.62 $0.12 ( $0.42 ) ( $0.46 ) ( $0.06 ) Net Asset Value Per Share at Period End $12.88 $12.99 $12.57 $12.06 $12.04 Distributions Paid / Declared Per Share $0.35 $0.45 $0.35 $0.35 $0.35 Portfolio and Investment Activity As of September 30, 2024 , GECC held total investments of $333.3 million at fair value, as follows: 53 debt investments in corporate credit, totaling approximately $204.8 million , representing 61.4% of the fair market value of the Company’s total investments. Secured debt investments comprised a substantial majority of the fair market value of the Company’s debt investments. An investment in Great Elm Specialty Finance, totaling approximately $43.6 million , comprised of one debt investment of $29.7 million and one equity investment of $13.9 million , representing 8.9% and 4.2%, respectively, of the fair market value of the Company’s total investments. An investment in the CLO JV, totaling approximately $32.9 million , representing 9.9% of the fair market value of the Company’s total investments. Seven dividend paying equity investments, totaling approximately $36.3 million , representing 10.9% of the fair market value of the Company’s total investments. Other equity investments, totaling approximately $15.7 million , representing 4.7% of the fair market value of the Company’s total investments. As of September 30, 2024 , the weighted average current yield on the Company’s debt portfolio was 12.8%. Floating rate instruments comprised approximately 72% of the fair market value of debt investments (up from 69% last quarter) and the Company’s fixed rate debt investments had a weighted average maturity of 2.0 years. During the quarter ended September 30, 2024 , we deployed approximately $73.6 million into 29 investments(1) at a weighted average current yield of 11.5%. During the quarter ended September 30, 2024 , we monetized, in part or in full, 38 investments for approximately $39.1 million (2), at a weighted average current yield of 10.9%. Monetizations include $13.2 million of mandatory debt paydowns and redemptions at a weighted average current yield of 13.1%. Financial Review Total investment income for the quarter ended September 30, 2024 was $11.7 million , or $1.12 per share. Net expenses for the quarter ended September 30, 2024 were approximately $7.7 million , or $0.73 per share. Net realized and unrealized losses for the quarter ended September 30, 2024 were approximately $0.6 million , or $0.06 per share. Liquidity and Capital Resources As of September 30, 2024 , cash and money market fund investments totaled approximately $26.0 million . As of September 30, 2024 , total debt outstanding (par value) was $235.3 million , comprised of 6.75% senior notes due January 2025 (NASDAQ: GECCM), 5.875% senior notes due June 2026 (NASDAQ: GECCO), 8.75% senior notes due September 2028 (NASDAQ: GECCZ), 8.50% senior notes due April 2029 (NASDAQ: GECCI) and 8.125% senior notes due December 2029 (NASDAQ: GECCH). Subsequent to quarter-end, the Company used the net proceeds from the GECCH Notes issuance and cash on hand to redeem all GECCM Notes. As of October 30, 2024 , pro-forma total debt outstanding (par value) was $195.4 million . Distributions The Company’s Board of Directors has approved a quarterly cash distribution of $0.35 per share for the quarter ending December 31, 2024 . The fourth quarter distribution will be payable on December 31, 2024 to stockholders of record as of December 16, 2024 . The distribution equates to a 14.0% annualized dividend yield on the Company’s closing market price on October 30, 2024 of $10.03 and an 11.6% annualized dividend yield on the Company’s September 30, 2024 NAV of $12.04 per share. Conference Call and Webcast GECC will discuss these results in a conference call today at 8:30 a.m. ET . Conference Call Details Date/Time: Thursday, October 31, 2024 – 8:30 a.m. ET Participant Dial-In Numbers: ( United States ): 877-407-0789 (International): 201-689-8562 To access the call, please dial-in approximately five minutes before the start time and, when asked, provide the operator with passcode “GECC”. An accompanying slide presentation will be available in pdf format via the “Events and Presentations” section of Great Elm Capital Corp.’s website here after the issuance of the earnings release. Webcast The call and presentation will also be simultaneously webcast over the internet via the “Events and Presentations” section of GECC’s website or by clicking on the webcast link here . About Great Elm Capital Corp. GECC is an externally managed business development company that seeks to generate current income and capital appreciation by investing in debt and income generating equity securities, including investments in specialty finance businesses. For additional information, please visit http://www.greatelmcc.com . Cautionary Statement Regarding 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,” “designed,” “seek,” “continue,” “upside,” “potential” and similar expressions. All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. The key factors that could cause actual results to differ materially from those projected in the forward-looking statements include, without limitation: conditions in the credit markets, our expected financings and investments, including interest rate volatility, inflationary pressure, the price of GECC common stock and the performance of GECC’s portfolio and investment manager. Information concerning these and other factors can be found in GECC’s Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission . GECC assumes no obligation to, and expressly disclaims any duty to, update any forward-looking statements contained in this communication or to conform prior statements to actual results or revised expectations except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. This press release does not constitute an offer of any securities for sale. Endnotes: (1) This includes new deals, additional fundings (inclusive of those on revolving credit facilities), refinancings and capitalized PIK income. Amounts included herein do not include investments in short-term securities, including United States Treasury Bills.(2) This includes scheduled principal payments, prepayments, sales and repayments (inclusive of those on revolving credit facilities). Amounts included herein do not include investments in short-term securities, including United States Treasury Bills. Media & Investor Contact: Investor Relations [email protected] GREAT ELM CAPITAL CORP. CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (unaudited) Dollar amounts in thousands (except per share amounts) September 30 , 2024 December 31 , 2023 Assets Investments Non-affiliated, non-controlled investments, at fair value (amortized cost of $259,732 and $179,626 , respectively) $ 256,777 $ 183,335 Non-affiliated, non-controlled short-term investments, at fair value (amortized cost of $85,484 and $10,807 , respectively) 85,474 10,807 Affiliated investments, at fair value (amortized cost of $12,378 and $13,423 , respectively) - 1,067 Controlled investments, at fair value (amortized cost of $80,642 and $46,300 , respectively) 76,506 46,210 Total investments 418,757 241,419 Cash and cash equivalents 305 953 Receivable for investments sold 3,121 840 Interest receivable 3,652 2,105 Dividends receivable 622 1,001 Due from portfolio company 1 37 Deferred financing costs 262 335 Prepaid expenses and other assets 306 135 Total assets $ 427,026 $ 246,825 Liabilities Notes payable (including unamortized discount of $5,317 and $2,896 , respectively) $ 229,967 $ 140,214 Payable for investments purchased 66,043 3,327 Interest payable 170 32 Accrued incentive fees payable 2,594 1,431 Distributions payable - 760 Due to affiliates 1,445 1,195 Accrued expenses and other liabilities 981 1,127 Total liabilities $ 301,200 $ 148,086 Commitments and contingencies $ - $ - Net Assets Common stock, par value $0.01 per share (100,000,000 shares authorized, 10,449,888 shares issued and outstanding and 7,601,958 shares issued and outstanding, respectively) $ 104 $ 76 Additional paid-in capital 319,438 283,795 Accumulated losses (193,716 ) (185,132 ) Total net assets $ 125,826 $ 98,739 Total liabilities and net assets $ 427,026 $ 246,825 Net asset value per share $ 12.04 $ 12.99 GREAT ELM CAPITAL CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) Dollar amounts in thousands (except per share amounts) For the Three Months Ended September 30 , For the Nine Months Ended September 30 , 2024 2023 2024 2023 Investment Income: Interest income from: Non-affiliated, non-controlled investments $ 6,321 $ 6,357 $ 18,276 $ 17,669 Non-affiliated, non-controlled investments (PIK) 826 552 2,267 1,591 Affiliated investments - 33 64 95 Controlled investments 974 650 2,858 1,715 Controlled investments (PIK) - - - 233 Total interest income 8,121 7,592 23,465 21,303 Dividend income from: Non-affiliated, non-controlled investments 584 254 2,015 899 Controlled investments 3,002 525 3,912 1,841 Total dividend income 3,586 779 5,927 2,740 Other commitment fees from non-affiliated, non-controlled investments - 802 700 2,406 Other income from: Non-affiliated, non-controlled investments 20 103 92 214 Total other income 20 103 92 214 Total investment income $ 11,727 $ 9,276 $ 30,184 $ 26,663 Expenses: Management fees $ 1,201 $ 899 $ 3,209 $ 2,652 Incentive fees 1,018 763 2,580 2,315 Administration fees 375 420 1,156 1,056 Custody fees 38 19 110 62 Directors’ fees 52 51 160 156 Professional services 409 422 1,210 1,392 Interest expense 4,210 3,344 10,490 8,934 Other expenses 277 267 866 770 Total expenses $ 7,580 $ 6,185 $ 19,781 $ 17,337 Net investment income before taxes $ 4,147 $ 3,091 $ 10,403 $ 9,326 Excise tax $ 75 $ 39 $ 80 $ 67 Net investment income $ 4,072 $ 3,052 $ 10,323 $ 9,259 Net realized and unrealized gains (losses): Net realized gain (loss) on investment transactions from: Non-affiliated, non-controlled investments $ 227 $ 1,637 $ 2,738 $ 4,024 Affiliated investments (1 ) - (626 ) - Controlled investments - (3,461 ) - (3,461 ) Realized loss on repurchase of debt (3 ) - (3 ) - Total net realized gain (loss) 223 (1,824 ) 2,109 563 Net change in unrealized appreciation (depreciation) on investment transactions from: Non-affiliated, non-controlled investments 715 2,581 (6,674 ) 8,416 Affiliated investments 1 25 (22 ) 177 Controlled investments (1,537 ) 3,926 (4,046 ) 2,707 Total net change in unrealized appreciation (depreciation) (821 ) 6,532 (10,742 ) 11,300 Net realized and unrealized gains (losses) $ (598 ) $ 4,708 $ (8,633 ) $ 11,863 Net increase (decrease) in net assets resulting from operations $ 3,474 $ 7,760 $ 1,690 $ 21,122 Net investment income per share (basic and diluted): $ 0.39 $ 0.40 $ 1.08 $ 1.22 Earnings per share (basic and diluted): $ 0.33 $ 1.02 $ 0.18 $ 2.77 Weighted average shares outstanding (basic and diluted): 10,449,888 7,601,958 9,556,695 7,601,958 Source: Great Elm Capital Corp.

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