Great Elm Capital (GECC) Q2 2024 earnings summary

Executive summary

• Net investment income for Q2 2024 was $3.1 million ($0.32 per share), down from $3.2 million ($0.37 per share) in Q1 2024, with expectations for NII to increase in the second half as CLO investments pay distributions.

• Net asset value per share declined to $12.06 as of June 30, 2024, from $12.57 at March 31, primarily due to write-downs on illiquid, non-accrual investments.

• Over $90 million in capital was raised year-to-date through equity and debt issuances, strengthening liquidity and supporting portfolio growth.

• Board approved a $0.35 per share cash distribution for Q3 2024, representing a 13.0% annualized yield on July 31, 2024 closing price and 11.6% on June 30 NAV.

• Expanded into CLO products via a new joint venture, with initial distributions received and expectations for increasing income and strong returns.

Financial highlights

• Total investment income for Q2 2024 was $9.5 million, up from $8.9 million in Q1 2024, with net expenses of $6.5 million.

• Net realized and unrealized losses per share were ($0.46) in Q2 2024, compared to ($0.42) in Q1 2024.

• EPS was ($0.14) in Q2 2024, compared to ($0.05) in Q1 2024.

• Net assets rose to $126 million as of June 30, 2024, up from $119 million at March 31, 2024.

• Portfolio fair value grew to $318.1 million, with significant new investments and a diversified industry allocation.

Outlook and guidance

• NII is expected to ramp up in the second half of 2024 as CLO investments begin to pay distributions.

• Confident in ability to more than cover the dividend and continue portfolio growth.

• Management believes liquidity is sufficient to meet obligations for at least the next 12 months.

• Actively assessing options to refinance 2025 baby bond maturity, targeting completion by end of 2024.