Great Elm Capital Corp. 7.75% Notes Due 2030 Q2 FY2024 earnings call

• Capital raises: Secured over $90 million of fresh capital in 2024, including $12 million equity raise in June and $22 million debt issuance in July.
• CLO expansion: Created a JV in April to hold CLO investments, which began receiving distributions in July and is expected to be a source of increasing income.
• Portfolio composition: First lien loans and CLOs now account for 60% of the portfolio, up from 44% the previous year, with a yield profile steady at over 13%.
• Specialty finance: GESF had improved performance in two of its three platform companies in Q2, with robust pipelines in Q3 and focus on closing new deals and streamlining operations.

In the second quarter, Great Elm Capital Corp. ended with NAV of $12.06 per share on June 30 compared to $12.57 on March 31, with the reduction mainly due to illiquid Level 3 investments on nonaccrual in two portfolio companies. NII per share was $0.32 in Q2, down sequentially from $0.37 in Q1. Net assets as of June 30, 2024, rose to $126 million from $119 million on March 31. The asset coverage ratio was 171% on June 30 compared to 180% on March 31. Pro forma for the July bond issuance, the asset coverage ratio would be approximately 163%. In terms of portfolio composition, first lien loans and CLOs make up 60% of the portfolio in Q2 2024, up from 44% last year, and the portfolio's yield profile stood steady at over 13% at quarter end.

• Expect NII in the second half of 2024 to surpass that of the first half.
• Board authorized a $0.35 per share cash distribution for the quarter ending September 30, 2024, payable on September 30 to stockholders of record as of September 16.
• Actively assessing options to refinance baby bonds maturing in 2025 and aim to refinance by the end of 2024.

• Macro environment volatility: Uncertainty surrounding timing of rate cuts and turbulent election year.
• Nonaccrual investments: Impacted NAV in Q2, but bulk of the impacts from these portfolio companies has been realized.

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