Core Insights - The company reported a significant increase in net investment income (NII) to $0.31 per share for the fourth quarter, up from $0.20 per share in the previous quarter, primarily due to higher CLO joint venture income and increased earnings from deployed capital [1][2] Financial Performance - Total investment income increased sequentially, with NII rising over 50% quarter-over-quarter, driven by higher cash income and stronger distributions from the CLO joint venture [2] - The net asset value (NAV) declined to $8.07 per share at December 31, 2025, from $10.01 per share at September 30, 2025, attributed to market volatility and credit-related marks [6][7] - Pro forma NAV, reflecting the incentive fee waiver, would have been $8.23 per share at quarter-end [7] Portfolio Management - The portfolio ended the year with minimal non-accruals, greater diversification, and reduced exposure to higher-risk investments, indicating improved liquidity [3] - Actions taken to de-risk the portfolio included reducing second-lien exposure to about 7% and adding 12 new broadly syndicated credit positions with an average size of approximately $2 million [11] - The company emphasized a focus on performing, more liquid, cash-generative investments, with non-accruals at less than 1% of portfolio fair value [8] Governance and Management Changes - Newly appointed Executive Chairman Jason Reese's role was elevated to enhance direct engagement with management amid challenging credit conditions [5] - The company added Chris Croteau as Head of Credit Research to strengthen risk management [3] Incentive Fee Waiver - Great Elm Capital Management waived all accrued and unpaid incentive fees through March 31, 2026, representing an approximate benefit of $2.3 million, or $0.16 per share, which was immediately accretive to NAV [4] Balance Sheet and Liquidity - As of December 31, 2025, total debt outstanding was $194.4 million, with no borrowings on the $50 million revolver, and cash and money market fund investments totaled approximately $5 million [14] - The asset coverage ratio was 158.1% at quarter-end, compared to 168.2% at September 30, 2025 [14] Dividend Declaration - The board approved a quarterly dividend of $0.30 per share for the first quarter of 2026, equating to a 19.2% annualized yield based on the closing price [16] Strategic Outlook - The company is focusing on cautious deployment and evaluating private credit opportunities while monitoring public and private markets in real time [17] - Management is considering capital allocation strategies, including stock repurchases, to create shareholder value [18] - The company's priorities include protecting capital, generating sustainable NII, and methodically rebuilding NAV over time through disciplined credit execution [19][20]

Financial Data and Key Metrics Changes - Total investment income increased sequentially, with net investment income (NII) growing more than 50% quarter-over-quarter to $0.31 per share, driven by higher cash income and stronger distributions from the CLO joint venture [10][26] - Net asset value (NAV) per share declined from $10.01 on September 30, 2025, to $8.07 on December 31, 2025, but pro forma NAV was higher at $8.23 per share due to the incentive fee waiver [10][27] - The asset coverage ratio was 158.1% on December 31, 2025, down from 168.2% as of September 30, 2025, but pro forma for the incentive fee waiver, it was 166% [27] Business Line Data and Key Metrics Changes - The portfolio ended the quarter with non-accruals at less than 1% of fair value, reflecting improved credit quality [30] - The company sold its entire allocation of senior secured DIP loans at an average price of 107% of par, and fully exited roll-up DIP loans at an average price of 45% of par, indicating a strategic repositioning of the portfolio [12][30] - Investments in corporate credit that fall under the software category comprise less than 4% of the portfolio, down from about 7% at the end of the previous year [16][32] Market Data and Key Metrics Changes - The CLO investments generated a positive return throughout 2025, outperforming the broader CLO equity market despite contributing to the NAV decline in the fourth quarter [14] - The company is underweight in software-based businesses compared to peers, with BDC exposure over 20% and U.S. loan market at 16% [15][34] Company Strategy and Development Direction - The company aims to strengthen oversight, protect shareholder value, and reinforce accountability across its platform, especially in a challenging credit environment [4][5] - The focus is on rigorous credit standards, transparency, and long-term shareholder value creation, positioning the company for durable performance [9] - The company is committed to deploying capital selectively in a market with attractive risk-adjusted opportunities while maintaining a strong liquidity position [8][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging credit and broader market environment but noted meaningful progress in improving the earnings profile of the company [10] - The company is positioned from a balance sheet strength perspective, with substantial liquidity and no near-term constraints, allowing for flexibility in capital deployment [8][30] - Management emphasized the importance of disciplined capital allocation and proactive portfolio management to navigate uncertainty and capitalize on opportunities [9][30] Other Important Information - The board approved a quarterly dividend of $0.30 per share for the first quarter of 2026, equating to a 19.2% annualized yield based on the closing price [28] - The company has repurchased approximately $18.7 million of its GECCO notes at or below par plus accrued interest, enhancing its capital structure [17] Q&A Session Summary Question: Is the portfolio repositioning completed, or are there more actions to undertake? - Management indicated that significant actions were taken to exit names with perceived downside risk and rotate into higher quality credits, with a clean corporate credit portfolio [32][33] Question: How does the company view its pipeline and risk-adjusted opportunities for new investments? - Management stated that they are evaluating private credit opportunities selectively, focusing on strong covenants and aligned incentives, while maintaining a robust liquidity position [34][35] Question: How does the company weigh stock buybacks against new investments? - Management actively monitors stock price and market opportunities, considering various factors in making decisions about stock buybacks versus new investments [37][38] Question: Will the contribution from CLO investments be more stable moving forward? - Management expects less variability in CLO contributions compared to previous years, although some variability is still anticipated [39]

Financial Data and Key Metrics Changes - Total investment income increased sequentially, with net investment income (NII) growing more than 50% quarter-over-quarter to $0.31 per share, driven by higher cash income and stronger distributions from the CLO joint venture [10][26] - Net asset value (NAV) per share declined from $10.01 on September 30, 2025, to $8.07 on December 31, 2025, with pro forma NAV at $8.23 per share after accounting for the incentive fee waiver [10][27] - The asset coverage ratio was 158.1% on December 31, 2025, down from 168.2% as of September 30, 2025, but pro forma for the incentive fee waiver, it was 166% [27] Business Line Data and Key Metrics Changes - The portfolio ended the quarter with non-accruals at less than 1% of fair value, reflecting improved credit quality [30] - The company sold its entire allocation of senior secured DIP loans at an average price of 107% of par, and fully exited roll-up DIP loans at an average price of 45% of par, indicating a strategic de-risking of investments [12] - Investments in corporate credit that fall under the software category comprised less than 4% of the portfolio, down from about 7% [16][32] Market Data and Key Metrics Changes - The CLO equity-focused closed-end funds reported net asset plus cash distribution returns down -6% to -13% in the fourth quarter, while the company's CLO investments generated a positive return throughout 2025 [15] - The company maintained an underweight exposure to software-based businesses compared to peers, which typically have over 20% exposure [15][34] Company Strategy and Development Direction - The company aims to strengthen oversight, protect shareholder value, and reinforce accountability across its platform, especially in a challenging credit environment [4][5] - The focus is on rigorous credit standards, transparency, and long-term shareholder value creation, with a commitment to disciplined capital allocation and proactive portfolio management [9][30] - The company is positioned to selectively deploy capital as markets reprice risk, emphasizing patience and decisiveness in investment opportunities [8][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged recent quarters were challenging but emphasized the importance of responding decisively and transparently to protect NAV [5][10] - The company is operating from a position of balance sheet strength with substantial liquidity and no near-term constraints, allowing for flexibility in capital deployment [8][30] - Management expressed confidence in the company's ability to generate sustainable NII and improve NAV over time through disciplined credit execution [48] Other Important Information - The board approved a quarterly dividend of $0.30 per share for the first quarter of 2026, equating to a 19.2% annualized yield based on the closing price [28] - The company has enhanced its capital structure by repurchasing approximately $18.7 million of GECCO notes at or below par [17] Q&A Session Summary Question: Portfolio repositioning and future actions - Management indicated that significant actions were taken to exit names with perceived downside risk and rotate into higher quality credits, with a clean corporate credit portfolio [32][33] Question: Pipeline and risk-adjusted opportunities - Management noted ongoing evaluation of private credit opportunities, emphasizing selectivity and strong covenants, while maintaining a cautious approach to market volatility [34][35] Question: Stock repurchase versus new investments - Management is actively monitoring stock price and market opportunities to determine the best approach for shareholder value creation, balancing between stock buybacks and new investments [37][38] Question: CLO investment contributions - Management expects less variability in CLO contributions moving forward, although some variability is still anticipated [39]

Financial Data and Key Metrics Changes - Total investment income increased sequentially, with net investment income (NII) growing more than 50% quarter-over-quarter to $0.31 per share, driven by higher cash income and stronger distributions from the CLO joint venture [10][25] - Net asset value (NAV) per share declined from $10.01 on September 30, 2025, to $8.07 on December 31, 2025, with pro forma NAV at $8.23 per share after accounting for incentive fee waivers [10][26] - The asset coverage ratio was 158.1% on December 31, 2025, down from 168.2% as of September 30, 2025, but pro forma for the incentive fee waiver, it was 166% [26] Business Line Data and Key Metrics Changes - The portfolio ended the year with minimal investments on non-accrual, significantly expanded diversification, and reduced exposure to higher-risk investments, with non-accruals at less than 1% of portfolio fair value [6][28] - The CLO investments generated a positive return throughout 2025, despite contributing to the NAV decline in Q4, and outperformed the broader CLO equity market [13][14] Market Data and Key Metrics Changes - The company maintained substantial liquidity, including cash on hand and availability under its revolving credit facility, with no near-term balance sheet constraints [8][26] - The company is underweight in software-based businesses, with less than 4% of the portfolio in this category, contrasting with higher exposures in the broader market [15][16] Company Strategy and Development Direction - The company aims to strengthen oversight, protect shareholder value, and reinforce accountability across its platform, especially in a challenging credit environment [4][5] - The focus is on disciplined underwriting, thoughtful capital allocation, and proactive portfolio management, with a commitment to rigorous credit standards and long-term shareholder value creation [9][10] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging credit and broader market environment but noted meaningful progress in improving the earnings profile of the company [10] - The company is positioned to selectively deploy capital as markets reprice risk, with a focus on maintaining liquidity and enhancing portfolio quality [8][28] Other Important Information - The board approved a quarterly dividend of $0.30 per share for Q1 2026, equating to a 19.2% annualized yield based on the closing price [27] - The company has enhanced its capital structure by repurchasing approximately $18.7 million of its notes, maintaining a pro forma debt-to-equity ratio of approximately 1.5x [17][26] Q&A Session Summary Question: Portfolio repositioning actions - Management indicated that significant actions were taken to exit names perceived to have more downside risk and rotate into higher quality credits, with a clean corporate credit portfolio [31][32] Question: Pipeline and risk-adjusted opportunities - Management noted ongoing evaluation of private credit opportunities, emphasizing selectivity and strong covenants, while maintaining a focus on downside protection across all industries [33][34] Question: Stock repurchase versus new investments - Management is actively monitoring stock price and market opportunities to determine the best approach for shareholder value creation, balancing between stock buybacks and new investments [37][38] Question: CLO investment contributions - Management expects contributions from CLO investments to be less variable moving forward, although some variability is still anticipated as cash flow payments come in [39]

Core Insights - The company is focused on the development of transcript-related projects, indicating a commitment to enhancing its offerings in this area [1] Group 1 - The company publishes thousands of quarterly earnings calls each quarter, showcasing its extensive coverage and growth in the transcript publishing sector [1]

Investor Presentation Quarter Ended December 31, 2025 March 3, 2026 NASDAQ: GECC Forward Looking Statement Cautionary Statement Regarding Forward-Looking Statements and Preliminary Estimated Unaudited Financial Results Statements in this communication that are not historical facts are "forward-looking" statements within the meaning of the federal securities laws. These statements include statements regarding our future business plans and expectations. These statements are often, but not always, made through ...

Core Insights - Great Elm Capital Corp. (GECC) announced the appointment of Jason Reese as Executive Chairman, succeeding Matthew Drapkin, who will remain as Vice Chairman [1][4][12] - The company waived approximately $2.3 million in accrued incentive fees as of December 31, 2025, which translates to $0.16 per share, and also waived incentive fees for the first quarter of 2026 [1][6][12] - GECC reported a GAAP net asset value (NAV) of $8.07 per share as of December 31, 2025, with a pro forma NAV of $8.23 per share after accounting for the waived incentive fees [2][12] Financial Performance - Net investment income (NII) for the fourth quarter of 2025 was $4.4 million, or $0.31 per share, reflecting over 50% growth quarter-over-quarter [2][12] - Total investment income for the fourth quarter was $12.6 million, compared to $10.6 million in the previous quarter [12][18] - The company ended 2025 with net assets of $112.9 million, down from $140.1 million at the end of the previous quarter, primarily due to unrealized losses [12][20] Liquidity and Capital Management - GECC maintained a strong liquidity position with approximately $5 million in cash and equivalents and $50 million available under a revolving credit facility as of December 31, 2025 [2][21] - The company repurchased $18.7 million of GECCO notes due June 2026, leaving $38.8 million outstanding as of February 27, 2026 [2][12] - A call notice was issued for the redemption of $20 million of GECCO notes on March 31, 2026 [2][13] Shareholder Returns - The Board declared a quarterly distribution of $0.30 per share for the first quarter of 2026, resulting in an annualized dividend yield of 19.2% based on the closing price of $6.26 on February 27, 2026 [3][24] - The distribution also equates to a 14.9% annualized yield based on the NAV of $8.07 per share as of December 31, 2025 [24] Investment Strategy and Portfolio - GECC's investment portfolio as of December 31, 2025, totaled $298.3 million, with a weighted average current yield of 11.7% [16][19] - The company deployed approximately $48.2 million into 32 investments during the fourth quarter, achieving a weighted average current yield of 8.1% [17][19] - The portfolio had less than 1% of investments on nonaccrual, indicating effective management of credit quality [8][12]

Financial Performance - Great Elm Capital Corp. reported a net investment income (NII) of $0.31 per share for Q4 2025, representing over 50% growth quarter-over-quarter [15]. - The company's total investment income for Q4 2025 was $12.6 million, compared to $10.6 million in Q3 2025 [10]. - Total investment income for the year ended December 31, 2025, was $49.988 million, an increase from $39.323 million in 2024, representing a growth of 27.5% [34]. - Net investment income for 2025 was $17.319 million, compared to $12.453 million in 2024, reflecting a year-over-year increase of 38.5% [34]. - Interest income from non-affiliated, non-controlled investments was $24.571 million in 2025, slightly down from $24.619 million in 2024 [34]. Asset and Liabilities - GAAP net asset value (NAV) per share as of December 31, 2025, was $8.07, with a pro forma NAV of $8.23 after accounting for waived incentive fees [10]. - The net asset value per share decreased to $8.07 in 2025 from $11.79 in 2024, indicating a decline of 31.1% [33]. - Total liabilities rose to $227.829 million in 2025, up from $205.915 million in 2024, an increase of 10.6% [33]. - The company reported a net decrease in net assets resulting from operations of $31.789 million for 2025, contrasting with an increase of $3.553 million in 2024 [34]. Investment and Portfolio Management - As of December 31, 2025, GECC held total investments of $298.3 million at fair value, with a weighted average current yield on the debt portfolio of 11.7% [16]. - The asset coverage ratio was 158.1% as of December 31, 2025, down from 168.2% in the previous quarter [15]. - The company exited certain underperforming investments during Q4 2025, maintaining less than 1% of investments on nonaccrual [7]. - GECC's investment adviser waived approximately $2.3 million in accrued incentive fees as of December 31, 2025, equating to $0.16 per share [10]. Shareholder Returns and Capital Management - The board declared a quarterly distribution of $0.30 per share for Q1 2026, resulting in a 19.2% annualized dividend yield based on the closing price of $6.26 on February 27, 2026 [22]. - The company repurchased approximately $18.7 million of GECCO notes due June 2026, leaving $38.8 million outstanding as of February 27, 2026 [1]. - The board authorized a stock repurchase program of up to $10 million, representing approximately 11% of the company's market capitalization as of February 27, 2026 [24]. Expense Management - Total expenses increased to $32.090 million in 2025 from $26.522 million in 2024, marking a rise of 20.5% [34]. - The net realized and unrealized losses for 2025 amounted to $49.108 million, a significant decline from the gains of $12.791 million in 2023 [34]. Share Count - Weighted average shares outstanding increased to 12,360,314 in 2025 from 9,844,014 in 2024, reflecting a growth of 25.6% [34]. - The company’s cash and cash equivalents stood at $1.834 million as of December 31, 2025, compared to zero in 2024 [33].

Investment Overview - As of December 31, 2025, the company has invested in various industries, with specific companies representing over 5% of the fair market value of its portfolio[24] - The company owns approximately 87.5% of Great Elm Specialty Finance, LLC, which provides a range of financing options to middle-market borrowers[26] - GECM's investment team has over 100 years of combined experience in financing and investing in leveraged middle-market companies[28] - GECM has expanded its investment allocation in specialty finance companies, aiming for attractive risk-adjusted returns largely uncorrelated to liquid credit markets[30] Management Fees and Incentives - The base management fee for GECM is calculated at an annual rate of 1.50% of the average adjusted gross assets, payable quarterly in arrears[48] - The Income Incentive Fee is based on pre-incentive fee net investment income, which includes interest and dividend income, minus operating expenses[51] - The fixed hurdle rate for pre-incentive fee net investment income is set at 1.75% per quarter (7.00% annualized)[53] - The company incurred $5.0 million in base management fees and $3.7 million in income-based fees for the year ended December 31, 2025, with no capital gains incentive fees earned[66] - For the year ended December 31, 2024, the company incurred $4.5 million in base management fees and $2.6 million in income-based fees, with deferred incentive fees and no capital gains incentive fees earned[67] - For the year ended December 31, 2023, the company incurred $3.5 million in base management fees and $3.1 million in income-based fees, with deferred incentive fees and no capital gains incentive fees earned[68] - The capital gains incentive fee is calculated as 20% of the positive difference between cumulative realized capital gains and cumulative realized capital losses, adjusted for any unrealized capital depreciation[64] Portfolio Management and Assistance - The company provides significant managerial assistance to certain portfolio companies, including monitoring operations and participating in management meetings[37] - GECM's investment team conducts ongoing monitoring of portfolio companies, assessing financial trends and appropriate actions[38] - The company is required to provide managerial assistance to portfolio companies to include certain securities as qualifying assets[87] Regulatory Compliance - The company must maintain at least 70% of its total assets in qualifying assets to comply with regulations[84] - To qualify as a regulated investment company (RIC), the company must derive at least 90% of its gross income from specific sources[95] - The company is prohibited from acquiring assets other than qualifying assets unless the value of qualifying assets represents at least 70% of total assets[84] - The company must satisfy the Annual Distribution Requirement to qualify as a RIC, or it will face taxation at regular corporate rates on all taxable income[119] - The company is required to distribute at least 98% of its ordinary income and 98.2% of capital gains exceeding capital losses to avoid excise tax[103] - The company may face a 4% federal excise tax if it does not meet certain distribution requirements each calendar year[99] - The company may face limitations on declaring dividends due to loan covenants, which could jeopardize its RIC qualification[115] - The company’s ability to meet distribution requirements may be limited by the illiquid nature of its portfolio and asset diversification requirements[117] - The company may need to sell investments or raise additional capital to meet distribution requirements, potentially at non-advantageous times[106] - Income from certain investments, such as lease income or management fees, may disqualify the company from meeting the 90% gross income requirement[118] Agreements and Administrative Services - The Investment Management Agreement was most recently approved on July 22, 2025, and renews for successive annual periods subject to board approval[73] - The Investment Management Agreement was renewed by the Board on July 22, 2025, extending through September 26, 2026[77] - The Board evaluated the advisory services provided by GECM, focusing on investment performance and economies of scale[77] - The Administration Agreement allows GECM to provide various administrative services, including financial record maintenance and report preparation[120] - The company bears all operational costs and expenses not specifically assumed by GECM under the Investment Management Agreement[121] Financial Performance - Aggregate realized capital gains were $30.0 million with no realized capital losses and $5.0 million in unrealized capital depreciation, resulting in a capital gains incentive fee calculated as ($30.0 million - $5.0 million) × 20%[70] - Aggregate realized capital gains were $35.0 million with no realized capital losses and $6.0 million in unrealized capital depreciation, resulting in a capital gains incentive fee calculated as ($35.0 million - $6.0 million) × 20% less $5.0 million paid in prior years[70] - As of December 31, 2025, the company had approximately $159.8 million in debt investments with variable interest rates, which are influenced by SOFR or US prime rate[386] - As of December 31, 2025, the company had accrued approximately $2.3 million in unpaid incentive fees, which are expected to be reversed, increasing net income for the period ending March 31, 2026[388] - The company plans to redeem $20 million of the GECCO Notes on March 31, 2026, following a notice issued to the holders of these notes[389] - As of December 31, 2025, the company's net assets were $112.9 million, with a net asset value per share of $8.07; pro forma adjustments would increase net assets to $115.1 million and net asset value per share to $8.23[389] Other Information - The company has a license agreement with GEG to use the name "Great Elm Capital Corp." as long as GECM remains its investment adviser[123] - The total brokerage commissions paid by the company over the last three fiscal years amounted to approximately $113 million, with nearly 100% of these commissions paid to Imperial Capital, LLC[125]

Core Viewpoint - Great Elm Capital Corp. (GECC) will release its financial results for Q4 and the full year ended December 31, 2025, on March 2, 2026, after market close, with a conference call scheduled for March 3, 2026, at 8:30 a.m. ET [1] Group 1 - The financial results will be discussed in a conference call on March 3, 2026 [1] - Participants can join the call by dialing specific numbers for the United States and international callers [2] - A slide presentation will be available in PDF format on GECC's website after the earnings release [3] Group 2 - The call and presentation will also be available via a simultaneous webcast on GECC's website [4] - GECC is an externally managed business development company focused on generating current income and capital appreciation through investments in debt and income-generating equity securities [5]