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

Exhibit 99.1

img78866663_0.jpg 

 

Great Elm Capital Corp. Announces FIRST Quarter 2023 Financial Results

 

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

 

WALTHAM, Mass., May 4, 2023 – Great Elm Capital Corp. (“we,” “our,” the “Company” or “GECC,”) (NASDAQ: GECC), a business development company, today announced its financial results for the first quarter ended March 31, 2023.

 

First Quarter and Other Recent Highlights:

▪
Net investment income (“NII”) for the quarter ended March 31, 2023 grew 26% to $2.8 million, or $0.37 per share, as compared to $2.3 million, or $0.30 per share, for the quarter ended December 31, 2022.
▪
NII growth was driven by strategic capital deployment and rotation into higher-yielding floating rate investments.
▪
This was the highest cash income quarter in the Company’s history with only 15% of GECC’s $8.4 million Total Investment Income attributable to PIK and accretion income.
▪
Net assets were $90.3 million, or $11.88 per share, on March 31, 2023, as compared to $84.8 million, or $11.16 per share, on December 31, 2022, and $69.3 million, or $15.06 per share, on March 31, 2022.
▪
Great Elm Healthcare Finance, LLC (“GEHF”) closed on a $50 million committed credit line with Encina Lender Finance to fund the growth of its active pipeline.
▪
The facility includes an additional $50 million uncommitted accordion to provide up to $100 million of financing for healthcare-related, secured lending.
▪
GECC’s asset coverage ratio was approximately 159.8% as of March 31, 2023, as compared to 154.4% as of December 31, 2022, and 147.5% as of March 31, 2022.
▪
The Board of Directors approved a quarterly dividend of $0.35 per share for the second quarter of 2023, equating to an 11.8% annualized yield on March 31, 2023 NAV per share.

 

Management Commentary

“Our strategy is bearing fruit, as evidenced by our strong first quarter results with a recovery in NAV and growth in NII. Continued rotation into higher yielding, floating rate, secured investments drove sequential growth in NII and, as a result, we generated NII that exceeded our quarterly dividend,” said Matt Kaplan, GECC’s Chief Executive Officer. “GEHF recently closed on a facility to provide up to $100 million of financing for Great Elm Specialty Finance’s healthcare secured lending platform which will allow this venture with Berkadia to capitalize on its robust pipeline. Looking ahead, we believe we are well positioned to grow NII in the second quarter and cover our quarterly dividend.”

 

 

 

 

 

Financial Highlights – Per Share Data

 

Q1/20221

Q2/2022

Q3/2022

Q4/2022

Q1/2023

Earnings Per Share (“EPS”)

($1.12)

($0.87)

$0.18

($0.96)

$1.07

Net Investment Income (“NII”) Per Share

$1.31

$0.23

$0.14

$0.30

$0.37

Pre-Incentive Net Investment Income Per Share

$0.24

$0.23

$0.14

$0.37

$0.47

Net Realized and Unrealized Gains / (Losses) Per Share

($2.43)

($1.10)

$0.04

($1.26)

$0.70

Net Asset Value Per Share at Period End

$15.06

$12.84

$12.56

$11.16

$11.88

Distributions Paid / Declared Per Share

$0.60

$0.45

$0.45

$0.45

$0.35

 

Portfolio and Investment Activity

As of March 31, 2023, GECC held total investments of $226.9 million at fair value, as follows:

•
43 debt investments in corporate credit, totaling approximately $152.4 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.
•
8 debt investments in specialty finance, totaling approximately $31.6 million and representing 13.9% of the fair market value of the Company’s total investments.
•
4 equity investments in specialty finance companies, totaling approximately $25.0 million, representing 11.0% of the fair market value of the Company’s total investments.
•
5 dividend paying equity investments, totaling approximately $11.6 million, representing 5.1% of the fair market value of the Company’s total investments.
•
Other equity investments, totaling approximately $6.3 million, representing 2.8% of the fair market value of the Company’s total investments.

 

As of March 31, 2023, the weighted average current yield on the Company’s debt portfolio was 13.2%. Floating rate instruments comprised approximately 57.9% of the fair market value of debt investments (compared to 50.0% as of December 31, 2022) and the Company’s fixed rate debt investments had a weighted average maturity of 3.1 years.

 

During the quarter ended March 31, 2023, we deployed approximately $46.0 million into 18 investments(2) at a weighted average current yield of 12.3%.

 

During the quarter ended March 31, 2023, we monetized, in part or in full, 34 investments for approximately $52.8 million(3), at a weighted average current yield of 10.1%. Monetizations include $41.2 million of mandatory debt paydowns and redemptions at a weighted average current yield of 10.3%. Sales aggregated $11.6 million at a weighted average current yield of 8.5%.

 

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Financial Review

Total investment income for the quarter ended March 31, 2023 was $8.4 million, or $1.11 per share. Net expenses for the quarter ended March 31, 2023 were approximately $5.6 million, or $0.73 per share.

 

Net realized and unrealized gains for the quarter ended March 31, 2023 were approximately $5.3 million, or $0.70 per share.

 

Liquidity and Capital Resources

As of March 31, 2023, cash and money market securities totaled approximately $12.5 million, exclusive of holdings of United States Treasury Bills.

As of March 31, 2023, total debt outstanding (par value) was $150.9 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 $5.0 million outstanding 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 June 30, 2023. The second quarter distribution will be payable on June 30, 2023 to stockholders of record as of June 15, 2023.

The distribution equates to a 17.4% annualized dividend yield on the Company’s closing market price on May 3, 2023 of $8.05 and an 11.8% annualized dividend yield on the Company’s March 31, 2023 NAV of $11.88 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, May 4, 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 “News & Events” section of GECC’s website or by clicking on the conference call link here.

 

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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.

 

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 (unaudited)

Dollar amounts in thousands (except per share amounts)

 

 

March 31, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Investments

 

 

 

 

 

 

Non-affiliated, non-controlled investments, at fair value (amortized cost of $182,982 and $183,061, respectively)

 

$

174,441

 

 

$

171,743

 

Non-affiliated, non-controlled short-term investments, at fair value (amortized cost of $80,570 and $76,140, respectively)

 

 

80,560

 

 

 

76,127

 

Affiliated investments, at fair value (amortized cost of $13,430 and $13,433, respectively)

 

 

1,464

 

 

 

1,304

 

Controlled investments, at fair value (amortized cost of $53,276 and $54,684, respectively)

 

 

51,034

 

 

 

51,910

 

Total investments

 

 

307,499

 

 

 

301,084

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

1,641

 

 

 

587

 

Receivable for investments sold

 

 

415

 

 

 

396

 

Interest receivable

 

 

3,027

 

 

 

3,090

 

Dividends receivable

 

 

1,059

 

 

 

1,440

 

Due from portfolio company

 

 

1

 

 

 

1

 

Due from affiliates

 

 

4

 

 

 

-

 

Deferred financing costs

 

 

186

 

 

 

226

 

Prepaid expenses and other assets

 

 

233

 

 

 

3,288

 

Total assets

 

$

314,065

 

 

$

310,112

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Notes payable (including unamortized discount of $2,499 and $2,781, respectively)

 

$

143,435

 

 

$

143,152

 

Revolving credit facility

 

 

5,000

 

 

 

10,000

 

Payable for investments purchased

 

 

72,317

 

 

 

70,022

 

Interest payable

 

 

27

 

 

 

42

 

Accrued incentive fees payable

 

 

1,274

 

 

 

565

 

Due to affiliates

 

 

1,104

 

 

 

1,042

 

Accrued expenses and other liabilities

 

 

600

 

 

 

480

 

Total liabilities

 

$

223,757

 

 

$

225,303

 

 

 

 

 

 

 

 

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 7,601,958 shares issued and outstanding, respectively)

 

$

76

 

 

$

76

 

Additional paid-in capital

 

 

284,107

 

 

 

284,107

 

Accumulated losses

 

 

(193,875

)

 

 

(199,374

)

Total net assets

 

$

90,308

 

 

$

84,809

 

Total liabilities and net assets

 

$

314,065

 

 

$

310,112

 

Net asset value per share

 

$

11.88

 

 

$

11.16

 

 

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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 March 31,

 

 

 

2023

 

 

2022

 

Investment Income:

 

 

 

 

 

 

Interest income from:

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

$

5,476

 

 

$

3,259

 

Non-affiliated, non-controlled investments (PIK)

 

 

449

 

 

 

246

 

Affiliated investments

 

 

30

 

 

 

21

 

Affiliated investments (PIK)

 

 

-

 

 

 

58

 

Controlled investments

 

 

442

 

 

 

457

 

Controlled investments (PIK)

 

 

233

 

 

 

-

 

Total interest income

 

 

6,630

 

 

 

4,041

 

Dividend income from:

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

 

318

 

 

 

503

 

Controlled investments

 

 

616

 

 

 

764

 

Total dividend income

 

 

934

 

 

 

1,267

 

Other income from:

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

 

846

 

 

 

250

 

Total other income

 

 

846

 

 

 

250

 

Total investment income

 

$

8,410

 

 

$

5,558

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

Management fees

 

$

869

 

 

$

780

 

Incentive fees

 

 

710

 

 

 

-

 

Administration fees

 

 

295

 

 

 

221

 

Custody fees

 

 

22

 

 

 

14

 

Directors’ fees

 

 

52

 

 

 

63

 

Professional services

 

 

536

 

 

 

418

 

Interest expense

 

 

2,821

 

 

 

2,670

 

Other expenses

 

 

238

 

 

 

191

 

Total expenses

 

$

5,543

 

 

$

4,357

 

Incentive fee waiver

 

 

-

 

 

 

(4,854

)

Net expenses

 

$

5,543

 

 

$

(497

)

Net investment income before taxes

 

$

2,867

 

 

$

6,055

 

Excise tax

 

$

28

 

 

$

101

 

Net investment income

 

$

2,839

 

 

$

5,954

 

 

 

 

 

 

 

 

Net realized and unrealized gains (losses):

 

 

 

 

 

 

Net realized gain (loss) on investment transactions from:

 

 

 

 

 

 

Non-affiliated, non-controlled investments

 

$

1,845

 

 

$

(19,933

)

Total net realized gain (loss)

 

 

1,845

 

 

 

(19,933

)

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

 

 

 

 

Non-affiliated, non-controlled investments

 

 

2,781

 

 

 

16,536

 

Affiliated investments

 

 

163

 

 

 

(7,689

)

Controlled investments

 

 

532

 

 

 

23

 

Total net change in unrealized appreciation (depreciation)

 

 

3,476

 

 

 

8,870

 

Net realized and unrealized gains (losses)

 

$

5,321

 

 

$

(11,063

)

Net increase (decrease) in net assets resulting from operations

 

$

8,160

 

 

$

(5,109

)

 

 

 

 

 

 

 

Net investment income per share (basic and diluted):

(1)

$

0.37

 

 

$

1.31

 

Earnings per share (basic and diluted):

(1)

$

1.07

 

 

$

(1.12

)

Weighted average shares outstanding (basic and diluted):

(1)

 

7,601,958

 

 

 

4,558,451

 

 

(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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