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

Exhibit 99.1

img78866663_0.jpg 

 

Great Elm Capital Corp. Announces

SECOND Quarter 2024 Financial Results

 

Company to Host Conference Call and Webcast at 5:00 PM ET Today

 

PALM BEACH GARDENS, Florida, August 1, 2024 – Great Elm Capital Corp. (“we,” “our,” the “Company” or “GECC”) (NASDAQ: GECC), a business development company, today announced its financial results for the second quarter ended June 30, 2024.

 

Second Quarter and Other Recent Highlights:

▪
In June 2024, the Company raised $12 million of equity at Net Asset Value from Prosper Peak Holdings, LLC (“PPH”), supported by a $3 million investment by Great Elm Group, Inc. (“GEG”) in PPH.
▪
In April 2024, the Company issued $34.5 million of 8.50% notes due 2029 (the “GECCI Notes”) to further bolster liquidity and provide balance sheet flexibility.
▪
In July, the Company issued $22 million of additional GECCI Notes in a registered direct offering to an institutional investor.
▪
Net investment income (“NII”) for the quarter ended June 30, 2024 was $3.1 million, or $0.32 per share, as compared to $3.2 million, or $0.37 per share, for the quarter ended March 31, 2024.
▪
Net assets were $126.0 million, or $12.06 per share, on June 30, 2024, as compared to $118.8 million, or $12.57 per share, on March 31, 2024.
▪
NAV adversely impacted by approximately $0.39 per share in the quarter from additional write-downs on investments in illiquid assets that were also written down in the prior quarter.
▪
GECC’s asset coverage ratio was 171.0% as of June 30, 2024, as compared to 180.2% as of March 31, 2024 and 161.5% as of June 30, 2023.
▪
The Board of Directors approved a quarterly dividend of $0.35 per share for the third quarter of 2024, equating to a 13.0% annualized yield on the Company’s closing market price on July 31, 2024 of $10.73.

 

Management Commentary

“We are pleased to have raised an additional $34 million of fresh capital in June and July, bringing our total 2024 capital raising activities to over $90 million year-to-date. These capital raises further strengthen our balance sheet and position us well to expand our investment portfolio,” said Matt Kaplan, GECC’s Chief Executive Officer. “While there was some residual negative effect on NAV in the quarter, as the same illiquid portfolio company investments placed on non-accrual from the previous quarter experienced further write-downs, we believe the bulk of the impact has now been realized. Our investments in CLOs are also beginning to bear fruit, with our first distribution received in July, enabling us to capitalize on strong yields and boost NII in the second half of the year. We remain well-positioned to grow our platform and cover our dividend.”

 

 

 

 

Financial Highlights – Per Share Data

 

Q2/2023

Q3/2023

Q4/2023

Q1/2024

Q2/2024

Earnings Per Share (“EPS”)

$0.68

$1.02

$0.55

($0.05)

($0.14)

Net Investment Income (“NII”) Per Share

$0.44

$0.40

$0.43

$0.37

$0.32

Pre-Incentive Net Investment Income Per Share

$0.56

$0.50

$0.54

$0.46

$0.40

Net Realized and Unrealized Gains / (Losses) Per Share

$0.24

$0.62

$0.12

($0.42)

($0.46)

Net Asset Value Per Share at Period End

$12.21

$12.88

$12.99

$12.57

$12.06

Distributions Paid / Declared Per Share

$0.35

$0.35

$0.45

$0.35

$0.35

 

Portfolio and Investment Activity

As of June 30, 2024, GECC held total investments of $297.7 million at fair value, as follows:

•
49 debt investments in corporate credit, totaling approximately $190.0 million and representing 63.8% 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 comprised of 1 debt investment totaling approximately $29.7 million and 1 equity investment totaling approximately $15.0 million, representing 10.0% and 5.0%, respectively, of the fair market value of the Company’s total investments.
•
4 dividend paying equity investments, including our CLO JV investment, totaling approximately $43.7 million, representing 14.7% of the fair market value of the Company’s total investments.
•
Other equity investments, totaling approximately $19.2 million, representing 6.4% of the fair market value of the Company’s total investments.

 

As of June 30, 2024, the weighted average current yield on the Company’s debt portfolio was 13.1%. Floating rate instruments comprised approximately 69% of the fair market value of debt investments (comparable to last quarter) and the Company’s fixed rate debt investments had a weighted average maturity of 2.1 years.

 

During the quarter ended June 30, 2024, we deployed approximately $108.9 million into 25 investments(1) at a weighted average current yield of 11.6%.

 

During the quarter ended June 30, 2024, we monetized, in part or in full, 35 investments for approximately $72.4 million(2), at a weighted average current yield of 11.3%. Monetizations include $10.9 million of mandatory debt paydowns and redemptions at a weighted average current yield of 9.2%.

 

Financial Review

Total investment income for the quarter ended June 30, 2024 was $9.5 million, or $1.00 per share. Net expenses for the quarter ended June 30, 2024 were approximately $6.5 million, or $0.68 per share.

 

Net realized and unrealized losses for the quarter ended June 30, 2024 were approximately $4.4 million, or $0.46 per share.

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Liquidity and Capital Resources

As of June 30, 2024, cash and money market securities totaled approximately $3.0 million.

As of June 30, 2024, total debt outstanding (par value) was $177.6 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) and 8.50% notes due April 2029 (NASDAQ: GECCI).

 

Distributions

The Company’s Board of Directors has approved a quarterly cash distribution of $0.35 per share for the quarter ending September 30, 2024. The third quarter distribution will be payable on September 30, 2024 to stockholders of record as of September 16, 2024.

The distribution equates to a 13.0% annualized dividend yield on the Company’s closing market price on July 31, 2024 of $10.73 and an 11.6% annualized dividend yield on the Company’s June 30, 2024 NAV of $12.06 per share.

 

Conference Call and Webcast

GECC will discuss these results in a conference call today at 5:00 p.m. ET.

 

Conference Call Details

 

Date/Time: Thursday, August 1, 2024 – 5:00 p.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. 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,”

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“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) 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

investorrelations@greatelmcap.com

 

 

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GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (unaudited)

Dollar amounts in thousands (except per share amounts)

 

 

June 30, 2024

 

 

December 31, 2023

 

Assets

 

 

 

 

 

 

Investments

 

 

 

 

 

 

Non-affiliated, non-controlled investments, at fair value (amortized cost of $228,477 and $179,626, respectively)

 

$

224,798

 

 

$

183,335

 

Non-affiliated, non-controlled short-term investments, at fair value (amortized cost of $20,432 and $10,807, respectively)

 

 

20,430

 

 

 

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 $75,452 and $46,300, respectively)

 

 

72,853

 

 

 

46,210

 

Total investments

 

 

318,081

 

 

 

241,419

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

2,575

 

 

 

953

 

Receivable for investments sold

 

 

390

 

 

 

840

 

Interest receivable

 

 

3,594

 

 

 

2,105

 

Dividends receivable

 

 

1,309

 

 

 

1,001

 

Due from portfolio company

 

 

1

 

 

 

37

 

Deferred financing costs

 

 

286

 

 

 

335

 

Prepaid expenses and other assets

 

 

283

 

 

 

135

 

Total assets

 

$

326,519

 

 

$

246,825

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Notes payable (including unamortized discount of $3,808 and $2,896, respectively)

 

$

173,765

 

 

$

140,214

 

Payable for investments purchased

 

 

22,755

 

 

 

3,327

 

Interest payable

 

 

66

 

 

 

32

 

Accrued incentive fees payable

 

 

1,576

 

 

 

1,431

 

Distributions payable

 

 

-

 

 

 

760

 

Due to affiliates

 

 

1,362

 

 

 

1,195

 

Accrued expenses and other liabilities

 

 

986

 

 

 

1,127

 

Total liabilities

 

$

200,510

 

 

$

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

 

 

(193,533

)

 

 

(185,132

)

Total net assets

 

$

126,009

 

 

$

98,739

 

Total liabilities and net assets

 

$

326,519

 

 

$

246,825

 

Net asset value per share

 

$

12.06

 

 

$

12.99

 

 

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GREAT ELM CAPITAL CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

Dollar amounts in thousands (except per share amounts)

 

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Investment Income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income from:

 

 

 

 

 

 

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

$

5,968

 

 

$

5,836

 

 

$

11,955

 

 

$

11,312

 

Non-affiliated, non-controlled investments (PIK)

 

 

811

 

 

 

590

 

 

 

1,441

 

 

 

1,039

 

Affiliated investments

 

 

31

 

 

 

32

 

 

 

64

 

 

 

62

 

Controlled investments

 

 

953

 

 

 

623

 

 

 

1,884

 

 

 

1,065

 

Controlled investments (PIK)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

233

 

Total interest income

 

 

7,763

 

 

 

7,081

 

 

 

15,344

 

 

 

13,711

 

Dividend income from:

 

 

 

 

 

 

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

 

1,045

 

 

 

327

 

 

 

1,431

 

 

 

645

 

Controlled investments

 

 

525

 

 

 

700

 

 

 

910

 

 

 

1,316

 

Total dividend income

 

 

1,570

 

 

 

1,027

 

 

 

2,341

 

 

 

1,961

 

Other commitment fees from non-affiliated, non-controlled investments

 

 

175

 

 

 

802

 

 

 

700

 

 

 

1,604

 

Other income from:

 

 

 

 

 

 

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

 

40

 

 

 

67

 

 

 

72

 

 

 

111

 

Total other income

 

 

40

 

 

 

67

 

 

 

72

 

 

 

111

 

Total investment income

 

$

9,548

 

 

$

8,977

 

 

$

18,457

 

 

$

17,387

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Management fees

 

$

1,068

 

 

$

884

 

 

$

2,008

 

 

$

1,753

 

Incentive fees

 

 

764

 

 

 

842

 

 

 

1,562

 

 

 

1,552

 

Administration fees

 

 

396

 

 

 

341

 

 

 

781

 

 

 

636

 

Custody fees

 

 

36

 

 

 

21

 

 

 

72

 

 

 

43

 

Directors’ fees

 

 

54

 

 

 

53

 

 

 

108

 

 

 

105

 

Professional services

 

 

413

 

 

 

434

 

 

 

801

 

 

 

970

 

Interest expense

 

 

3,473

 

 

 

2,769

 

 

 

6,280

 

 

 

5,590

 

Other expenses

 

 

286

 

 

 

265

 

 

 

589

 

 

 

503

 

Total expenses

 

$

6,490

 

 

$

5,609

 

 

$

12,201

 

 

$

11,152

 

Net investment income before taxes

 

$

3,058

 

 

$

3,368

 

 

$

6,256

 

 

$

6,235

 

Excise tax

 

$

-

 

 

$

-

 

 

$

5

 

 

$

28

 

Net investment income

 

$

3,058

 

 

$

3,368

 

 

$

6,251

 

 

$

6,207

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net realized and unrealized gains (losses):

 

 

 

 

 

 

 

 

 

 

 

 

Net realized gain (loss) on investment transactions from:

 

 

 

 

 

 

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

$

155

 

 

$

542

 

 

$

2,511

 

 

$

2,387

 

Affiliated investments

 

 

(625

)

 

 

-

 

 

 

(625

)

 

 

-

 

Total net realized gain (loss)

 

 

(470

)

 

 

542

 

 

 

1,886

 

 

 

2,387

 

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

 

 

 

 

Non-affiliated, non-controlled investments

 

 

(3,856

)

 

 

3,054

 

 

 

(7,389

)

 

 

5,835

 

Affiliated investments

 

 

827

 

 

 

(11

)

 

 

(23

)

 

 

152

 

Controlled investments

 

 

(885

)

 

 

(1,751

)

 

 

(2,509

)

 

 

(1,219

)

Total net change in unrealized appreciation (depreciation)

 

 

(3,914

)

 

 

1,292

 

 

 

(9,921

)

 

 

4,768

 

Net realized and unrealized gains (losses)

 

$

(4,384

)

 

$

1,834

 

 

$

(8,035

)

 

$

7,155

 

Net increase (decrease) in net assets resulting from operations

 

$

(1,326

)

 

$

5,202

 

 

$

(1,784

)

 

$

13,362

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net investment income per share (basic and diluted):

 

$

0.32

 

 

$

0.44

 

 

$

0.69

 

 

$

0.82

 

Earnings per share (basic and diluted):

 

$

(0.14

)

 

$

0.68

 

 

$

(0.20

)

 

$

1.76

 

Weighted average shares outstanding (basic and diluted):

 

 

9,551,037

 

 

 

7,601,958

 

 

 

9,105,190

 

 

 

7,601,958

 

 

 

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