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Great Elm Capital Corp. Announces Fourth Quarter and Full Year 2024 Financial Results

1. GECC raised $13.2 million of equity at NAV in December 2024. 2. Net investment income dropped from $4.1 million to $2.1 million QoQ. 3. Dividend increased by 5.7%, now $0.37 per share for Q1 2025. 4. CLO distributions significantly decreased from previous quarters. 5. Company expects stronger NII as CLO investments mature in 2025.

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$10.5203/11 10:51 PM EDTLatest Updated
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Why Bullish?

While NII decreased, strong dividend growth and new capital point to stability. Historically, increasing dividends often bolster stock prices, e.g., similarly to mgaB.C.

How important is it?

The article discusses pivotal financial strategies, capital growth, and increasing dividends, crucial for investor confidence.

Why Long Term?

The expected growth in NII due to CLO investment maturity indicates long-term positive cash flow.

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GECCOGECCZGECCIGECCH
Company to Host Conference Call and Webcast at 8:30 AM ET on March 11, 2025 March 10, 2025 16:15 ET  | Source: Great Elm Capital Corp. PALM BEACH GARDENS, Fla., March 10, 2025 (GLOBE NEWSWIRE) -- Great Elm Capital Corp. (“we,” “our,” the “Company” or “GECC”) (NASDAQ: GECC), a business development company, today announced its financial results for the fourth quarter and full year ended December 31, 2024.       Fourth Quarter and Other Recent Highlights In December 2024, the GECC raised $13.2 million of equity at Net Asset Value from Summit Grove Partners, LLC (“SGP”), supported by a $3.3 million investment by Great Elm Group, Inc. (“GEG”) in SGP.Net investment income (“NII”) for the quarter ended December 31, 2024 was $2.1 million, or $0.20 per share, as compared to $4.1 million, or $0.39 per share, for the quarter ended September 30, 2024. Timing of distributions from CLO Formation JV, LLC (“CLO JV”) and certain isolated financing- related expenses adversely impacted NII in the quarter.GECC received $0.5 million of cash distributions from the CLO JV in the quarter ended December 31, 2024, as compared to $3.2 million in the quarter ended September 30, 2024. Additionally, in 2025 through March 7th, GECC received $3.8 million of cash distributions from the CLO JV. Net assets were $136.1 million, or $11.79 per share, on December 31, 2024, as compared to $125.8 million, or $12.04 per share, on September 30, 2024.GECC’s asset coverage ratio was 169.7% as of December 31, 2024, as compared to 166.2% as of September 30, 2024.GECC declared a $0.05 per common share special distribution in December 2024, attributable to the Company’s strong performance throughout 2024.The Board of Directors approved a 5.7% increase in the quarterly dividend to $0.37 per share (from $0.35 per share) for the first quarter of 2025, equating to a 13.7% annualized yield on the Company’s closing market price on March 7, 2025 of $10.78. Management Commentary   “We had a strong 2024, successfully raising nearly $150 million of capital through multiple equity and note issuances, including $50 million of equity at net asset value,” said Matt Kaplan, GECC’s Chief Executive Officer. “We grew our portfolio substantially during the year, and also enhanced our cash-generating ability with the formation of our distinctive CLO JV. Further, we continued to showcase our commitment to shareholders, paying a special cash distribution and announcing a 5.7% increase to our quarterly base dividend for the first quarter of 2025.” “During the fourth quarter, NII was primarily impacted by the uneven cadence of cash flows from our CLO JV, which is to be expected given the early stage of the underlying CLO investments. As the CLO JV grows and matures, we believe the magnitude of this impact should decline in future quarters. Looking ahead, we expect to deliver strong NII in 2025 as CLO distributions materialize and we deploy additional capital into investments with attractive risk-adjusted returns. As such, we currently believe we are well-positioned to cover our increased dividend in the first quarter and over 2025 as we continue to deliver meaningful value to our shareholders.”       Financial Highlights – Per Share Data       Q4/2023Q1/2024Q2/2024Q3/2024Q4/2024Earnings Per Share (“EPS”)$0.55($0.05)($0.14)$0.33$0.17Net Investment Income (“NII”) Per Share$0.43$0.37$0.32$0.39$0.20Pre-Incentive Net Investment Income Per Share$0.54$0.46$0.40$0.49$0.20Net Realized and Unrealized Gains / (Losses) Per Share$0.12($0.42)($0.46)($0.06)($0.03)Net Asset Value Per Share at Period End$12.99$12.57$12.06$12.04$11.79Distributions Paid / Declared Per Share$0.45$0.35$0.35$0.35$0.40       Portfolio and Investment Activity As of December 31, 2024, GECC held total investments of $324.3 million at fair value, as follows: 52 debt investments in corporate credit, totaling approximately $207.0 million, representing 63.8% of the fair market value of the Company’s total investments. Secured debt investments comprised a substantial majority of the fair market value of the Company’s debt investments.An investment in Great Elm Specialty Finance, totaling approximately $43.2 million, comprised of one debt investment of $29.7 million and one equity investment of $13.5 million, representing 9.2% and 4.2%, respectively, of the fair market value of the Company’s total investments.An investment in the CLO JV, totaling approximately $40.1 million, representing 12.4% of the fair market value of the Company’s total investments.Three dividend paying equity investments, totaling approximately $10.7 million, representing 3.3% of the fair market value of the Company’s total investments.Other equity investments, totaling approximately $23.3 million, representing 7.2% of the fair market value of the Company’s total investments. As of December 31, 2024, the weighted average current yield on the Company’s debt portfolio was 12.4%. Floating rate instruments comprised approximately 72% of the fair market value of debt investments (comparable to last quarter) and the Company’s fixed rate debt investments had a weighted average maturity of 1.8 years. During the quarter ended December 31, 2024, we deployed approximately $47.2 million into 18 investments(1) at a weighted average current yield of 12.9%. During the quarter ended December 31, 2024, we monetized, in part or in full, 48 investments for approximately $57.5 million(2), at a weighted average current yield of 9.9%. Monetizations include $7.4 million of mandatory debt paydowns and redemptions at a weighted average current yield of 10.9%. Financial Review Total investment income for the quarter ended December 31, 2024 was $9.1 million, or $0.85 per share. Net expenses for the quarter ended December 31, 2024 were approximately $7.0 million, or $0.66 per share. Net realized and unrealized losses for the quarter ended December 31, 2024 were approximately $0.3 million, or $0.03 per share. Liquidity and Capital Resources As of December 31, 2024, cash and money market fund investments totaled approximately $8.4 million, and availability on GECC’s undrawn revolving line of credit remained at $25.0 million. As of December 31, 2024, total debt outstanding (par value) was $195.4 million, comprised of 5.875% senior notes due June 2026 (NASDAQ: GECCO), 8.75% senior notes due September 2028 (NASDAQ: GECCZ), 8.50% senior notes due April 2029 (NASDAQ: GECCI) and 8.125% senior notes due December 2029 (NASDAQ: GECCH). Distributions The Company’s Board of Directors has approved a quarterly cash distribution of $0.37 per share for the quarter ending March 31, 2025. The first quarter distribution will be payable on March 31, 2025 to stockholders of record as of March 17, 2025. The distribution equates to a 13.7% annualized dividend yield on the Company’s closing market price on March 7, 2025 of $10.78 and a 12.6% annualized dividend yield on the Company’s December 31, 2024 NAV of $11.79 per share. Conference Call and Webcast GECC will discuss these results in a conference at 8:30 a.m. ET on March 11, 2025. Conference Call Details Date/Time:Tuesday, March 11, 2025 – 8:30 a.m. ET  Participant Dial-In Numbers:(United States):877-407-0789(International):201-689-8562   To access the call, please dial-in approximately five minutes before the start time and, when asked, provide the operator with passcode “GECC”. An accompanying slide presentation will be available in pdf format via the “Events and Presentations” section of Great Elm Capital Corp.’s website here after the issuance of the earnings release. Webcast The call and presentation will also be simultaneously webcast over the internet via the “Events and Presentations” section of GECC’s website or by clicking on the webcast link here. About Great Elm Capital Corp. GECC is an externally managed business development company that seeks to generate current income and capital appreciation by investing in debt and income generating equity securities, including investments in specialty finance businesses and CLOs. For additional information, please visit http://www.greatelmcc.com. Cautionary Statement Regarding Forward-Looking Statements 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 the use of words or phrases such as “expect,” “anticipate,” “should,” “will,” “estimate,” “designed,” “seek,” “continue,” “upside,” “potential” and similar expressions. All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. The key factors that could cause actual results to differ materially from those projected in the forward-looking statements include, without limitation: conditions in the credit markets, our expected financings and investments, including interest rate volatility, inflationary pressure, the price of GECC common stock and the performance of GECC’s portfolio and investment manager. Information concerning these and other factors can be found in GECC’s Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission. GECC assumes no obligation to, and expressly disclaims any duty to, update any forward-looking statements contained in this communication or to conform prior statements to actual results or revised expectations except as required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof. This press release does not constitute an offer of any securities for sale. Endnotes:(1)This includes new deals, additional fundings (inclusive of those on revolving credit facilities), refinancings and capitalized PIK income. Amounts included herein do not include investments in short-term securities, including United States Treasury Bills.(2)This includes scheduled principal payments, prepayments, sales and repayments (inclusive of those on revolving credit facilities). Amounts included herein do not include investments in short-term securities, including United States Treasury Bills.   Media & Investor Contact: Investor Relations        investorrelations@greatelmcap.com       GREAT ELM CAPITAL CORP.CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (unaudited)Dollar amounts in thousands (except per share amounts)       December 31,2024  December 31,2023 Assets     Investments     Non-affiliated, non-controlled investments, at fair value (amortized cost of $244,378 and $179,626, respectively)$240,958  $183,335 Non-affiliated, non-controlled short-term investments, at fair value (amortized cost of $8,448 and $10,807, respectively) 8,448   10,807 Affiliated investments, at fair value (amortized cost of $12,378 and $13,423, respectively) -   1,067 Controlled investments, at fair value (amortized cost of $87,014 and $46,300, respectively) 83,304   46,210 Total investments 332,710   241,419       Cash and cash equivalents -   953 Receivable for investments sold 5,065   840 Interest receivable 3,306   2,105 Dividends receivable 364   1,001 Due from portfolio company 32   37 Due from affiliates 160   - Deferred financing costs 237   335 Prepaid expenses and other assets 154   135 Total assets$342,028  $246,825       Liabilities     Notes payable (including unamortized discount of $5,705 and $2,896, respectively)$189,695  $140,214 Payable for investments purchased 11,194   3,327 Interest payable 32   32 Accrued incentive fees payable 1,712   1,431 Distributions payable 577   760 Due to affiliates 1,385   1,195 Accrued expenses and other liabilities 1,320   1,127 Total liabilities$205,915  $148,086       Commitments and contingencies $-  $-       Net Assets     Common stock, par value $0.01 per share (100,000,000 shares authorized, 11,544,415 shares issued and outstanding and 7,601,958 shares issued and outstanding, respectively)$115  $76 Additional paid-in capital 332,111   283,795 Accumulated losses (196,113)  (185,132)Total net assets$136,113  $98,739 Total liabilities and net assets$342,028  $246,825 Net asset value per share$11.79  $12.99                      GREAT ELM CAPITAL CORP.CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)Dollar amounts in thousands (except per share amounts)      For the Year Ended December 31,   2024  2023  2022 Investment Income:         Interest income from:         Non-affiliated, non-controlled investments $24,619  $23,582  $15,325 Non-affiliated, non-controlled investments (PIK)  3,026   2,281   1,220 Affiliated investments  64   128   97 Affiliated investments (PIK)  -   -   58 Controlled investments  3,832   2,677   1,984 Controlled investments (PIK)  -   233   - Total interest income  31,541   28,901   18,684 Dividend income from:         Non-affiliated, non-controlled investments  2,354   1,147   1,815 Controlled investments  4,571   2,331   2,539 Total dividend income  6,925   3,478   4,354 Other commitment fees from non-affiliated, non-controlled investments  700   3,075   1,155 Other income from:         Non-affiliated, non-controlled investments  157   264   236 Non-affiliated, non-controlled investments (PIK)  -   107   - Total other income  157   371   236 Total investment income $39,323  $35,825  $24,429           Expenses:         Management fees $4,456  $3,539  $3,205 Incentive fees  2,580   3,132   565 Administration fees  1,376   1,522   938 Custody fees  147   81   53 Directors’ fees  211   205   215 Professional services  1,816   1,772   1,967 Interest expense  14,882   11,742   10,690 Other expenses  1,054   1,003   937 Total expenses $26,522  $22,996  $18,570 Incentive fee waiver  -   -   (4,854)Net expenses $26,522  $22,996  $13,716 Net investment income before taxes $12,801  $12,829  $10,713 Excise tax $348  $287  $252 Net investment income $12,453  $12,542  $10,461           Net realized and unrealized gains (losses):         Net realized gain (loss) on investment transactions from:         Non-affiliated, non-controlled investments $2,500  $(1,246) $(15,262)Affiliated investments  (626)  -   (110,784)Controlled investments  -   (3,461)  - Realized loss on repurchase of debt  (3)  -    Total net realized gain (loss)  1,871   (4,707)  (126,046)Net change in unrealized appreciation (depreciation) on investment transactions from:       Non-affiliated, non-controlled investments  (7,129)  15,040   267 Affiliated investments  (22)  (226)  106,945 Controlled investments  (3,620)  2,684   (7,210)Total net change in unrealized appreciation (depreciation)  (10,771)  17,498   100,002 Net realized and unrealized gains (losses) $(8,900) $12,791  $(26,044)Net increase (decrease) in net assets resulting from operations $3,553  $25,333  $(15,583)          Net investment income per share (basic and diluted):(1)$1.27  $1.65  $1.67 Earnings per share (basic and diluted):(1)$0.36  $3.33  $(2.49)Weighted average shares outstanding (basic and diluted):(1) 9,844,014   7,601,958   6,251,391  (1) Weighted average shares outstanding and per share amounts have been adjusted for the periods shown to reflect the six-for-one reverse stock split effected on February 28, 2022 on a retroactive basis.  

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