Great Elm Capital (GECC) Q3 2025 earnings summary

Executive summary

• Net asset value (NAV) per share declined to $10.01 from $12.10, mainly due to unrealized losses on First Brands investments and significant unrealized depreciation.

• Net investment income (NII) dropped to $2.4 million ($0.20 per share) from $5.9 million ($0.51 per share) in the prior quarter, impacted by lower CLO JV distributions and higher interest expense.

• Total investment income for Q3 2025 was $10.6 million, down from $14.3 million in Q2 2025, mainly due to lower CLO JV distributions and absence of an insurance-related distribution.

• Board approved a $0.37 per share dividend for Q4 2025 and a $10 million share repurchase program.

• Raised $27 million in equity, refinanced high-cost debt, and expanded the revolver to $50 million, resulting in strong liquidity and capital position.

Financial highlights

• Net assets stood at $140 million as of September 30, 2025, with total fair value of investments at $325.1 million.

• Debt-to-equity ratio was 1.47x, with $205 million in total debt outstanding and $25 million in cash.

• Net realized and unrealized losses totaled $24.4 million ($1.98 per share) for Q3 2025.

• Annualized dividend yield was 19.8% on market price and 14.8% on NAV.

• Asset coverage ratio was 168.2% as of September 30, 2025.

Outlook and guidance

• Management expects NII to recover in Q4 2025, driven by increased CLO JV distributions, normalized interest expense, and new capital deployments.

• Board maintained the quarterly distribution at $0.37 per share for Q4 2025.

• Plan to harvest over $20 million from non-yielding assets and redeploy into income-generating investments.

• Ample liquidity and leverage at approximately 1.5x debt-to-equity position the company for further capital deployment.

• Next insurance-related investment distribution expected in Q2 2026.