EX-99 2 gecc-ex99_1.htm EX-99.1 EX-99

Exhibit 99.1

img78866663_0.jpg 

 

Great Elm Capital Corp. Announces

Fourth Quarter and full year 2022 Financial Results

 

Company to Host Conference Call and Webcast at 8:30 AM ET Today

 

WALTHAM, Mass., March 2, 2023 – Great Elm Capital Corp. (“we,” “our,” the “Company” or “GECC,”) (NASDAQ: GECC), a business development company, today announced its financial results for the fourth quarter and full year ended December 31, 2022.

 

Fourth Quarter and Other Recent Highlights:

▪
Net investment income (“NII”) for the quarter ended December 31, 2022 was $2.3 million, or $0.30 per share, more than doubling NII of $1.1 million, or $0.14 per share for the quarter ended September 30, 2022.
▪
NII was positively impacted by continued capital deployment, rotation into higher yielding floating rate investments and lower expenses.
▪
Net assets were $84.8 million, or $11.16 per share, on December 31, 2022, as compared to $95.5 million, or $12.56 per share, on September 30, 2022, and $74.6 million, or $16.63 per share, on December 31, 2021.
▪
Net assets for the quarter were negatively impacted by unrealized losses on certain investments.
▪
Partnered with an affiliate of Berkadia Commercial Mortgage, LLC (“Berkadia”) to form Great Elm Healthcare Finance, LLC (“GEHF”), a specialty, asset-based lending platform formed to provide capital to healthcare-related businesses across the U.S.
▪
In December 2022, GEHF closed on the purchase of three healthcare asset-based loans.
▪
GECC’s asset coverage ratio was approximately 154.4% as of December 31, 2022, as compared to 165.5% as of September 30, 2022, and 151.1% as of December 31, 2021.
▪
The Board of Directors has approved a quarterly dividend of $0.35 per share for the first quarter of 2023, equating to a 12.5% annualized yield on December 31, 2022 NAV per share.

 

Management Commentary

“During the fourth quarter, we generated the highest amount of cash income from interest, dividends and fees in the Company’s history,” said Matt Kaplan, GECC’s Chief Executive Officer. “Our capital deployment program and focus on senior secured, floating rate investments has increased NII materially from the prior quarter. In addition, we made significant progress in expanding our specialty finance platform with the formation and funding of Great Elm Healthcare Finance alongside an affiliate of Berkadia, our strategic minority partner. With a growing and diversified portfolio of cash-generating investments, we believe we are well positioned to cover our quarterly dividend during the course of the year.”

 

 

 

 

Financial Highlights – Per Share Data

 

Q4/20211

Q1/20221

Q2/2022

Q3/2022

Q4/2022

Earnings Per Share (“EPS”)

($4.95)

($1.12)

($0.87)

$0.18

($0.96)

Net Investment Income (“NII”) Per Share

$1.58

$1.31

$0.23

$0.14

$0.30

Pre-Incentive Net Investment Income Per Share

$0.42

$0.24

$0.23

$0.14

$0.37

Net Realized and Unrealized Gains / (Losses) Per Share

($6.53)

($2.43)

($1.10)

$0.04

($1.26)

Net Asset Value Per Share at Period End

$16.63

$15.06

$12.84

$12.56

$11.16

Distributions Paid / Declared Per Share

$0.60

$0.60

$0.45

$0.45

$0.45

 

Portfolio and Investment Activity

As of December 31, 2022, GECC held total investments of $225.0 million at fair value, as follows:

•
44 debt investments in corporate credit, totaling approximately $151.2 million and representing 67.2% 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.
•
10 debt investments in specialty finance, totaling approximately $33.8 million and representing 15.0% of the fair market value of the Company’s total investments.
•
4 income generating equity investments in specialty finance companies, totaling approximately $24.5 million, representing 10.9% of the fair market value of the Company’s total investments.
•
6 other income generating equity investments, totaling approximately $12.9 million, representing 5.7% of the fair market value of the Company’s total investments.
•
Other equity investments, totaling approximately $2.6 million, representing 1.2% of the fair market value of the Company’s total investments.

 

As of December 31, 2022, the weighted average current yield on the Company’s debt portfolio was 12.4%. Floating rate instruments comprised approximately 50.0% of the fair market value of debt investments (compared to 48.3% as of September 30, 2022) and the Company’s fixed rate debt investments had a weighted average maturity of 2.7 years.

 

During the quarter ended December 31, 2022, we deployed approximately $37.6 million into 22 investments(2) at a weighted average current yield of 11.8%.

 

During the quarter ended December 31, 2022, we monetized, in part or in full, 23 investments for approximately $20.4 million(3), at a weighted average current yield of 9.6%. Monetizations include $12.1 million of mandatory debt paydowns and redemptions at a weighted average current yield of 8.7%. Sales aggregated $8.3 million at a weighted average current yield of 9.4%.

 

-2-

 

Financial Review

Total investment income for the quarter ended December 31, 2022 was $7.3 million, or $0.96 per share. Net expenses for the quarter ended December 31, 2022 were approximately $5.1 million, or $0.66 per share.

 

Net realized and unrealized losses for the quarter ended December 31, 2022 were approximately $9.5 million, or ($1.26) per share.

 

Liquidity and Capital Resources

As of December 31, 2022, cash and money market securities totaled approximately $6.9 million, exclusive of holdings of United States Treasury Bills.

Total debt outstanding (par value) as of December 31, 2022 was $155.9 million, comprised of 6.50% senior notes due June 2024 (NASDAQ: GECCN), 6.75% senior notes due January 2025 (NASDAQ: GECCM), 5.875% senior notes due June 2026 (NASDAQ: GECCO) and $10.0 million outstanding as of December 31, 2022 on the $25.0 million revolving credit facility due May 2024.

 

Distributions

The Company’s Board of Directors has approved a quarterly cash distribution of $0.35 per share for the quarter ending March 31, 2023. The first quarter distribution will be payable on March 31, 2023 to stockholders of record as of March 15, 2023.

The distribution equates to a 14.8% annualized dividend yield on the Company’s closing market price on March 1, 2023 of $9.44 and a 12.5% annualized dividend yield on the Company’s December 31, 2022 NAV of $11.16 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, March 2, 2023 – 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 “Investor Relations” 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 Investor Relations section of GECC’s website or by clicking on the conference call link here.

 

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About Great Elm Capital Corp.

Great Elm Capital Corp. 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.

 

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. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are: conditions in the credit markets, rising interest rates, 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) The per share figures are based on a weighted average outstanding share count for the respective period following the 6-for-1 reverse stock split effective on February 28, 2022.

(2) 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.

(3) 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

investorrelations@greatelmcap.com

 

 

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GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

Dollar amounts in thousands (except per share amounts)

 

 

December 31, 2022

 

 

December 31, 2021

 

Assets

 

 

 

 

 

 

Investments

 

 

 

 

 

 

Non-affiliated, non-controlled investments, at fair value (amortized cost of $183,061 and $175,800, respectively)

 

$

171,743

 

 

$

164,203

 

Non-affiliated, non-controlled short-term investments, at fair value (amortized cost of $76,140 and $199,995, respectively)

 

 

76,127

 

 

 

199,995

 

Affiliated investments, at fair value (amortized cost of $13,433 and $129,936, respectively)

 

 

1,304

 

 

 

10,861

 

Controlled investments, at fair value (amortized cost of $54,684 and $32,649, respectively)

 

 

51,910

 

 

 

37,085

 

Total investments

 

 

301,084

 

 

 

412,144

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

587

 

 

 

9,132

 

Restricted cash

 

 

-

 

 

 

13

 

Receivable for investments sold

 

 

396

 

 

 

766

 

Interest receivable

 

 

3,090

 

 

 

1,811

 

Dividends receivable

 

 

1,440

 

 

 

1,540

 

Due from portfolio company

 

 

1

 

 

 

136

 

Due from affiliates

 

 

-

 

 

 

17

 

Deferred financing costs

 

 

226

 

 

 

376

 

Prepaid expenses and other assets

 

 

3,288

 

 

 

379

 

Total assets

 

$

310,112

 

 

$

426,314

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Notes payable (including unamortized discount of $2,781 and $3,935, respectively)

 

$

143,152

 

 

$

141,998

 

Revolving credit facility

 

 

10,000

 

 

 

-

 

Payable for investments purchased

 

 

70,022

 

 

 

203,575

 

Interest payable

 

 

42

 

 

 

29

 

Accrued incentive fees payable

 

 

565

 

 

 

4,854

 

Due to affiliates

 

 

1,042

 

 

 

1,012

 

Accrued expenses and other liabilities

 

 

480

 

 

 

290

 

Total liabilities

 

$

225,303

 

 

$

351,758

 

 

 

 

 

 

 

 

Commitments and contingencies

 

$

-

 

 

$

-

 

 

 

 

 

 

 

 

Net Assets

 

 

 

 

 

 

Common stock, par value $0.01 per share (100,000,000 shares authorized,
7,601,958 shares issued and outstanding and 4,484,278 shares issued and
  outstanding, respectively)

(1)

$

76

 

 

$

45

 

Additional paid-in capital

 

 

284,359

 

 

 

245,531

 

Accumulated losses

 

 

(199,626

)

 

 

(171,020

)

Total net assets

 

$

84,809

 

 

$

74,556

 

Total liabilities and net assets

 

$

310,112

 

 

$

426,314

 

Net asset value per share

(1)

$

11.16

 

 

$

16.63

 
(1)
Authorized, issued and outstanding shares of common stock and net asset value per share have been adjusted for the periods shown to reflect the six-for-one reverse stock split effected on February 28, 2022 on a retroactive basis.

-5-

 

GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

Dollar amounts in thousands (except per share amounts)

 

 

For the Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Investment Income:

 

 

 

 

 

 

 

 

 

Interest income from:

 

 

 

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

$

15,325

 

 

$

13,100

 

 

$

12,740

 

Non-affiliated, non-controlled investments (PIK)

 

 

1,220

 

 

 

387

 

 

 

22

 

Affiliated investments

 

 

97

 

 

 

910

 

 

 

981

 

Affiliated investments (PIK)

 

 

58

 

 

 

4,874

 

 

 

5,218

 

Controlled investments

 

 

1,984

 

 

 

646

 

 

 

249

 

Total interest income

 

 

18,684

 

 

 

19,917

 

 

 

19,210

 

Dividend income from:

 

 

 

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

 

1,815

 

 

 

1,713

 

 

 

867

 

Controlled investments

 

 

2,539

 

 

 

2,634

 

 

 

2,240

 

Total dividend income

 

 

4,354

 

 

 

4,347

 

 

 

3,107

 

Other income from:

 

 

 

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

 

1,391

 

 

 

683

 

 

 

125

 

Non-affiliated, non-controlled investments (PIK)

 

 

-

 

 

 

-

 

 

 

368

 

Affiliated investments (PIK)

 

 

-

 

 

 

282

 

 

 

75

 

Controlled investments

 

 

-

 

 

 

25

 

 

 

12

 

Total other income

 

 

1,391

 

 

 

990

 

 

 

580

 

Total investment income

 

$

24,429

 

 

$

25,254

 

 

$

22,897

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Management fees

 

$

3,205

 

 

$

3,182

 

 

$

2,511

 

Incentive fees

 

 

565

 

 

 

(4,323

)

 

 

1,020

 

Administration fees

 

 

938

 

 

 

673

 

 

 

729

 

Custody fees

 

 

53

 

 

 

54

 

 

 

51

 

Directors’ fees

 

 

215

 

 

 

233

 

 

 

198

 

Professional services

 

 

1,967

 

 

 

1,937

 

 

 

1,441

 

Interest expense

 

 

10,690

 

 

 

10,428

 

 

 

9,126

 

Other expenses

 

 

937

 

 

 

737

 

 

 

655

 

Total expenses

 

$

18,570

 

 

$

12,921

 

 

$

15,731

 

Incentive fee waiver

 

 

(4,854

)

 

 

-

 

 

 

-

 

Net expenses

 

$

13,716

 

 

$

12,921

 

 

$

15,731

 

Net investment income before taxes

 

$

10,713

 

 

$

12,333

 

 

$

7,166

 

Excise tax

 

$

252

 

 

$

48

 

 

$

17

 

Net investment income

 

$

10,461

 

 

$

12,285

 

 

$

7,149

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains (losses):

 

 

 

 

 

 

 

 

 

Net realized gain (loss) on investment transactions from:

 

 

 

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

$

(15,262

)

 

$

(5,770

)

 

$

(9,604

)

Affiliated investments

 

 

(110,784

)

 

 

(4,162

)

 

-

 

Controlled investments

 

 

-

 

 

 

293

 

 

 

(1,382

)

Realized gain on repurchase of debt

 

 

-

 

 

 

-

 

 

 

1,237

 

Total net realized gain (loss)

 

 

(126,046

)

 

 

(9,639

)

 

 

(9,749

)

Net change in unrealized appreciation (depreciation) on investment transactions from:

 

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

 

267

 

 

 

19,019

 

 

 

(14,520

)

Affiliated investments

 

 

106,945

 

 

 

(33,763

)

 

 

(18,455

)

Controlled investments

 

 

(7,210

)

 

 

1,823

 

 

 

3,619

 

Total net change in unrealized appreciation (depreciation)

 

 

100,002

 

 

 

(12,921

)

 

 

(29,356

)

Net realized and unrealized gains (losses)

 

$

(26,044

)

 

$

(22,560

)

 

$

(39,105

)

Net increase (decrease) in net assets resulting from operations

 

$

(15,583

)

 

$

(10,275

)

 

$

(31,956

)

 

 

 

 

 

 

 

 

 

 

Net investment income per share (basic and diluted):

(1)

$

1.67

 

 

$

3.02

 

 

$

3.22

 

Earnings per share (basic and diluted):

(1)

$

(2.49

)

 

$

(2.52

)

 

$

(14.41

)

Weighted average shares outstanding (basic and diluted):

(1)

 

6,251,391

 

 

 

4,073,454

 

 

 

2,218,244

 

 

(1)
Weighted average shares outstanding and per share amounts have been adjusted for the periods shown to reflect the six-for-one reverse stock split effected on February 28, 2022 on a retroactive basis.

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