Great Elm Capital (US:GECC)2023-08-03 18:26Financial Data and Key Metrics Changes - In Q2 2023, the company generated net investment income (NII) of $3.4 million, a 19% increase from $2.8 million in Q1 2023, and nearly tripled from $1.2 million year-over-year [20][16] - The net asset value (NAV) per share increased by 3% to $12.21 as of June 30, 2023, compared to $11.88 at the end of Q1 2023 [10][21] - The company reported total debt outstanding of approximately $151 million as of June 30, 2023 [23] Business Line Data and Key Metrics Changes - The company focused on cash generation and portfolio construction, deploying approximately $23 million into new investments at average yields of approximately 15% [26] - The proportion of floating rate debt in the investment portfolio increased to 63% from 58% in the previous quarter and nearly doubled from 33% a year ago [27] - The overall yield of the portfolio improved to 13.5%, up 40 basis points from the prior quarter [28] Market Data and Key Metrics Changes - The company noted a favorable environment in healthcare lending, with expectations for Great Elm Healthcare Finance to become a major contributor to the specialty finance business [35] - There is observed dislocation and lender pullback in the asset-based lending (ABL) market due to economic uncertainty, which is creating new investment opportunities [36] Company Strategy and Development Direction - The company is focused on repositioning its portfolio to generate cash income, which has operationally paid off, as evidenced by record cash income generation [9][8] - The strategy includes increasing exposure to higher-yielding investments while maintaining a disciplined approach to capital deployment [31] - The company is exploring the launch of its own lender finance platform under Great Elm Specialty Finance [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current macro environment and believes there will be opportunities for selective investments in the latter half of the year [32] - The company anticipates expenses to increase in Q3 2023 due to strategic initiatives, but remains well-positioned to cover its quarterly distribution [19] Other Important Information - The company has an asset coverage ratio of approximately 161.5% as of June 30, 2023, compared to 159.8% at the end of Q1 2023 [45] - The Board of Directors authorized a cash distribution of $0.35 per share for the quarter ending September 30, 2023, equating to an 11.5% annualized dividend yield [24] Q&A Session Summary - The call concluded without a formal Q&A session, as the operator indicated the end of the conference [42]