Great Elm Capital (GECC) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Highlights GECC achieved record TII and NII, with NII per share exceeding distribution and NAV rising to $12.10 Key Financial Metrics | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Total Investment Income (TII) | $14.3 million | - | | Net Investment Income (NII) | $5.9 million | $4.6 million | | NII per Share | $0.51 | $0.40 | | Net Asset Value (NAV) per Share | $12.10 | $11.46 | | Asset Coverage Ratio | 169.5% | 163.8% | - The quarter was the highest cash-generative in the company's history, with cash income making up over 90% of Total Investment Income (TII)[4] - The increase in NII was primarily driven by a distribution on preference shares in an insurance-related investment and higher income from CLO investments, which contributed $4.3 million in cash distributions[4] - The Board of Directors approved a Q3 2025 dividend of $0.37 per share, which equates to a 13.5% annualized yield on the August 1, 2025 closing price[4] Management Commentary Management highlighted record TII and NII from strong cash generation, NAV improving from CoreWeave gains, and expects full-year NII to cover distributions - Key drivers for the quarter's substantial NII were a strong distribution from preference shares in an insurance-related investment and solid performance from the CLO JV[3] - NAV improved significantly, benefiting from unrealized gains on the company's CoreWeave related investment[3] - Management anticipates that third-quarter NII will decrease due to the uneven cadence of cash flows from the CLO JV, but expects full-year NII to exceed the annual distribution[3] Financial Performance GECC's Q2 2025 financial results show significant per-share metric improvements, including $1.02 EPS and $0.51 NII, alongside a healthy liquidity position Financial Highlights – Per Share Data GECC's per-share metrics for Q2 2025 show strong performance, with EPS at $1.02, NII at $0.51, and NAV per share recovering to $12.10 Per Share Data | Per Share Data | Q2/2025 | Q1/2025 | Q2/2024 | | :--- | :--- | :--- | :--- | | Earnings Per Share (EPS) | $1.02 | $0.04 | ($0.14) | | Net Investment Income (NII) | $0.51 | $0.40 | $0.32 | | Net Asset Value (NAV) at Period End | $12.10 | $11.46 | $12.06 | | Distributions Paid / Declared | $0.37 | $0.37 | $0.35 | Financial Review Q2 2025 financial review indicates $14.3 million in total investment income, $8.4 million in expenses, and $5.8 million in net realized and unrealized gains Financial Summary | Financial Item | Amount (Q2 2025) | Per Share (Q2 2025) | | :--- | :--- | :--- | | Total Investment Income | $14.3 million | $1.24 | | Total Expenses | $8.4 million | $0.72 | | Net Realized and Unrealized Gains | $5.8 million | $0.51 | Liquidity and Capital Resources As of June 30, 2025, GECC maintained $4.4 million in cash, $19.0 million available on its credit facility, and $201.4 million in total debt outstanding - As of June 30, 2025, cash and money market fund investments totaled approximately $4.4 million[10] - The company had $19.0 million of availability under its $25.0 million revolving line of credit[10] - Total debt outstanding (par value) was $201.4 million, comprised of various senior notes and $6.0 million outstanding on the revolver[11] Portfolio and Investment Activity GECC's total investments reached $335.1 million as of June 30, 2025, with $22.6 million deployed into new investments and $35.0 million monetized from existing ones Investment Portfolio Composition | Investment Type | Fair Value ($) | % of Total Investments | | :--- | :--- | :--- | | Corporate Credit Debt | $197.3 million | 58.9% | | CLO Investments | $55.4 million | 16.5% | | Great Elm Specialty Finance | $36.4 million | 10.8% | | Other Equity Investments | $37.5 million | 11.2% | | Dividend Paying Equity | $8.4 million | 2.5% | | Total Investments | $335.1 million | 100.0% | - The weighted average current yield on the company's debt portfolio was 12.5%, with floating rate instruments making up approximately 73% of the debt investments' fair market value[6] - During Q2 2025, GECC deployed approximately $22.6 million into 26 investments at a weighted average current yield of 14.1%[7] - The company monetized 38 investments for approximately $35.0 million, including $21.5 million of mandatory debt paydowns and redemptions[7] Shareholder Distributions The Board approved a $0.37 per share cash distribution for Q3 2025, payable September 30, 2025, representing a 12.2% annualized yield on Q2 2025 NAV - A quarterly cash distribution of $0.37 per share for Q3 2025 has been approved[12] - The distribution is payable on September 30, 2025, to stockholders of record as of September 15, 2025[12] - The dividend equates to a 13.5% annualized yield on the August 1, 2025 closing price and a 12.2% annualized yield on the June 30, 2025 NAV of $12.10 per share[12] Consolidated Financial Statements Unaudited consolidated financial statements as of June 30, 2025, show total net assets of $140.0 million and a $11.7 million net increase in net assets from operations Consolidated Statements of Assets and Liabilities As of June 30, 2025, GECC reported total assets of $409.3 million, total liabilities of $269.3 million, and total net assets of $140.0 million Consolidated Balance Sheet | Balance Sheet Item | June 30, 2025 ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Total Investments | $403.3 million | $332.7 million | | Total Assets | $409.3 million | $342.0 million | | Total Liabilities | $269.3 million | $205.9 million | | Total Net Assets | $140.0 million | $136.1 million | | Net Asset Value per Share | $12.10 | $11.79 | Consolidated Statements of Operations For Q2 2025, GECC reported $14.3 million in total investment income, $5.9 million in net investment income, and a $11.7 million net increase in net assets from operations Consolidated Income Statement | Income Statement Item | Three Months Ended June 30, 2025 ($) | Three Months Ended June 30, 2024 ($) | | :--- | :--- | :--- | | Total Investment Income | $14.3 million | $9.5 million | | Total Expenses | $8.3 million | $6.5 million | | Net Investment Income | $5.9 million | $3.1 million | | Net Realized and Unrealized Gains (Losses) | $5.8 million | ($4.4 million) | | Net Increase (Decrease) in Net Assets | $11.7 million | ($1.3 million) | | Earnings Per Share | $1.02 | ($0.14) | Conference Call Information GECC will host a conference call and webcast on Tuesday, August 5, 2025, at 8:30 a.m. ET, to discuss its Q2 2025 financial results - The conference call is scheduled for Tuesday, August 5, 2025, at 8:30 a.m. ET[13][14] - Dial-in numbers are 877-407-0789 for U.S. participants and 201-689-8562 for international participants, using the passcode "GECC"[14] - A live webcast will be available in the "Events and Presentations" section of the GECC website[15]