GECC - Earnings call transcript Q2 2021

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Operator

Good morning, ladies and gentlemen, and welcome to the Great Elm Capital Corp.

Second Quarter 2021 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to a representative of the Company.

Adam Prior

Thank you, and good morning, everyone. us call. Elm joining quarter Corp.’s for conference earnings you for Capital Great second Thank

would to can you www.greatelmcc.com. can alerts If like on e-mail list, our directly investorrelations@greatelmcap.com, you distribution or website you our sign for be up at added to

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Peter Reed

today. Kaplan. Manager, us Keri we our for morning, Portfolio thank have our Good and Adam. On you, COO, Matt today’s Adam you joining our Thank CFO, and Kleinman; call, Davis;

closing pipeline As GECC’s detail, the is will Matt portfolio, will capital solid Great and practice, we million was of greater a which return $XXX.X an in position of quarter of deployed XXXX. of This with portfolio million higher-than-anticipated and begin during of our yield investments weighted very remarks. million for redemptions from investment $XXX.X part due our number will and nearly a despite successfully Elm the March. performance at X% Keri overview with average discuss A to of for usual increase end robust to at investment is X.X%, Prestige then value, capital market relationship fair position and Capital, the quarter. as NII into over grew XX grew back I’ll ownership going I discuss a our of opportunities, an our investment $XX confident in of half in our

pursue continue specialty additional opportunities space. the actively in to finance We

$XX.X our weighted quarter facility million million we prior million offering maturities as liquidity City The X.X% average June, our in the as XXXX. to Bank. with of National our in investments we discussed, the notes in from in extend entered following to cost and the XX.X%. approximately debt able Overall, issued of our into redemption due yield of were a on previously [ph] XXXX. $XX May, incremental increase capital at maturing well And credit we lower increase us $XX As notes an X.XXX% unsecured a provided with note

things are right moving our quarter. direction. coverage feel ratio Finally, was the the at XXX.X% We certainly the asset end of in like

$X.XX million overview moment quarter-end, of GECC per value million At had total with share. quick Let to $XX.X or take provide $XXX.X our assets net position. a of an me financial asset of

$X.XX, the of $X.XX In million quarter increase XXXX. for for quarterly or $X.X increase deployments million $X.X to a as We due per The per XX ending NAV. quarter to was invested NAV, dividend approximately slight compared this strong NII a on pay XX, March in NII quarter of average June of at share represents assets. a share NII the improvement or a regular is of cash XX, the $X.XX per share to terms was March largely XXXX. which leading from $X.XX XX% reported of yield a XX.X% in

Avanti largest lower the to a same percentage in position, compared fair prior of as portfolio period year. now our remains significantly it the value While the is at

book getting impact where to So we a is Avanti’s point overall are lessening. on our

have working towards million be XXXX portfolio rotate first we investment the diversified deployed of what $XXX seek new over in building we in to half the to as now credits. We higher increasingly into portfolio, believe quality an investments

into transactions. like a and in Prestige spreads us performance been the margin to to investments proprietary during quarter. it to portfolio allowed XXXX relationship, relationship factoring deploy the our call to activity. allow approximately tightening QX deployed to actively continued quarter-end, in Capital into of Elm new Our of has It’s are job new environment. far At and cash to to sourcing an and larger have help Matt investment for and available our we as at investment $XX.X very to I’d weighted point, investments business excellent to average yield This of provide subsequent with The capital business, has greater Throughout XXXX. for at Prestige of opportunities management pleased current done million with the exceptional Great for Prestige discuss we new to capital thus a this turn business we drive X.X%. continues the an results pursue

Matt Kaplan

we average echo yield. have would diversifying Thanks, further Pete. solid portfolio’s and investments, portfolio that deployed capital I have increased the into the

Our contained and SPACs. investments, June XX investments debt portfolio equity excluding XX XX

as approximately investments to investments. $XXX for with If XX% of portfolio this million approximately contained account debt our value fair XX or million investments value XX the The or prior you and compare quarter, fair in March. XX of March compared $XXX debt equity XX%

current $XXX rate debt is pleased increasing million fixed in in compared while the of yield end XX.X%. are weighted the that XX.X% a average with floating weighted the and X.X%. issuer debt of with invested million invested our to even $XX at debt as current a is decreased March. with concentrations more investments million of $XX have average weighted yield roughly XX.X% We debt holdings, average current Of this yield on of Roughly to growth so rate we

million our income-generating and approximately value at capital X.X%. investments We totaling $XX overall equity other X or million invested XX.X% investments fair totaling of $XX or have approximately equity

instruments Energy We current $XX The approximately investments accounting under is yield and million, Equity Partners approximately for X of Prestige, Blueknight fair hold totaling our SPAC value. XX.X%. in Crestwood Partners equity also of income-generating X.X% weighted average

If industries. you portfolio sector, has examine our by XX in GECC separate invested

our currently in due services telecommunications holding to largest heavily weighted Our wireless business the is portfolio Avanti.

and Avanti we as as has percentage noted last our a earlier, lessened. as fair However, Pete of grown value this call, cited year, portfolio portfolio has

be As holdings, to grow our investments the we generally seek diversify and portfolio we in to our the space concentrated. specialty expect less finance further

to weighted capital of investments financial $XX to million that, capital I’ll yields. below quarters. compelling been have par successfully higher able able last deploy of a find call This were our XX% the debt was at deployed we average We to X Keri were each weighted in through approximately at million the prices par. monetized, opportunities investment In $XX approximately quarter, investments go new into with price second quarter, of of past With average turn to of the highlights. and

Keri Davis

Net notes position press unrealized would in year was and June compared $X.XX current in Matt. million, bond same XX, the from we Net to publicly $X.XX release, resulting to in The completed XX increase share quarter. are offering Thanks, over highlights compared course, the $XXX.X $X.XX few net under to the in but like XXXX. lower per value quarter, share per from XXXX, $XX.X was prior main second quarter year take million X.XXX% traded of symbol in $XX.X of to increase increased prior assets $XXX.X reason bonds EPS. slight from quarter I’ll rights of million compared our to for go investments $XXX.X the XX our presentation offering review $XX.X fair $XX.X accompanying $X.XX to XXXX, million, million and at the These June period due completed I and Total of $XX.X a outstanding including underwriters’ in prior that the per in $X.XX was capital June $X.XX the from unrealized recently recent moments option. previous December in full share as value, per the reported to all share to NAV, largely the GECC increased were share gains through the prior share of Total XX, due the overallotment a in the [ph] at period. asset the the $XX.X SEC transaction. gains period. million the in average the from NII the invite the at $X.XX March exercise public December filings. to to prior modest We Though XX. of XXXX, quarter which were per financial our earnings quarter weighted and million the quickly, an you underwritten shares more the of as million share during and in period, than unsecured realized million GECCO. per of baby October increased quarter. prior or the discuss

notes of we the In and now ticker new trading traded The trading liquidity $XX X.XX% XXXX aggregate $XX.X approximately in principal XXXX under resulting represented X.X% X GECCO. of incremental in ticker due in note in due transaction, GECCM redeemed the year. this XX XXXX on approximately X.X% due million we XXXX X.XXX% the under in This summary, Following issues have amount notes trading the GECCN, ticker million. notes our July under publicly notes. of due unsecured this the

baby debt million $XXX.X these redemption following and the is Our outstanding approximately total of was entirely comprised unsecured bonds.

$XX we undrawn facility National million revolving an City credit have In Bank. with addition,

any $XX.X continue to less Peter XX, our as We redemption lower Treasury million, capital. our balance is back are to exclusive unsecured to our years of Pete ample cost approximately XXXX I’ll cash July with to it as XXXX, nearest the closing remarks. turn build. pleased comprised due $XX.X ways of for and we June X being our cash $XX.X have Moreover, of U.S. notes million that, and for evaluate of finally, million was reserved to in XX With holdings business of of grow earlier, away. noted our And now runway maturity capital

Peter Reed

Matt. and Keri, Thanks,

we then would questions will with your happy close up shortly, it our to to We dividend take be open and like I’d capital and for but questions. deployment,

We quarter will cash be distribution to paying $X.XX for a shareholders per XX, XXXX. share again September the ending

NAV stock earlier, mentioned yield represents XX.X% a and of our indicated of July as XX.X% I price the this on close at XX. an As on on quarter-end common yield

announce turning point to second company’s shortly. the We view for expect the the and quarter good We year. payable the a of record as dates remainder

questions. are high the our summary, businesses and through on have investments In call but will Elm’s the we long-term over through legacy wants level doing our at continues in are older of to portfolio team We so operator surely a sectors that, to at challenges that that for investment slowly the yields. in Great deliver the cycling With deployment entire and to to overall created continue be increasingly goals. turn to perform and favorable open investment capital

Operator

first Your with the Instructions] Palm Joshua of line Horowitz question from [Operator is Global.

Joshua Horowitz

you’re on originations? prepayments Could post-COVID you additional a deal balancing just better us give provide the also pipeline sense versus how of and outlook

Peter Reed

we and And pipeline a has probably on which specialty into the assets good in for specialty linked support positions Happy the good going big cash I many bifurcated -- thanks more finance there finance are where is we’ve of quite our been the quality as as kind you know, putting investments, a it emphasis bit little to putting as as well the do as flows. their question. have finance specialty as opposed ultimately as side our has Josh, to some of to it’s ever to probably been time, been cash companies, as their into credit so. flow the space, our in capital been. of

on in we protection think collateral and be higher get the or an the of redemption the those to So Unfortunately, credit to is combination last we notice into. of form that don’t on a lot attractive ample until payoff minute. yields close deploying the side,

keep mentioned, we pretty balance into portfolio pace than can attractive and the grow, if on. creates But portfolio. And income as the So the in in a deployment opportunities, our little lumpiness drive a that quarter had bit more to had will we of that this of always little we confident that up our planned continue higher. we bit we’re should

Operator

is [ph]. Your line of Richard question the next from Galley

Unidentified Analyst

you -- is it’s $X.XX. that was Could understanding Avanti, more now actually going that? appreciate go my on what Just would into down another detail Avanti of in written I

Peter Reed

can. what Sure. I’ll give we you

drove lien significant for second to been volatility that limited are the amount has reason some has company course the won business on price new the We the and and moment. that I’ll second how the lien detail primary had by value best can Throughout into of at much agreements business up. to position has that And a won we fair can it. confidentiality But the linked with Avanti provide. year, the the give we of that the you

Some business or through thought longer than to of has we the taken P&L. roll new company the thought that into

valuation. at that Avanti. the ultimately that But So anticipated a in had to P&L reverse delays lower do we meaningful show moment, the that neither We the that driver the up at driven of time. the moment. over lower has We resulted in majority the during the mark will business nor company that be will all expect quarter expect of do and to performance at a vast

Operator

now to closing call to for like management We the would turn back remarks.

Peter Reed

be dialogue, helpful forward again follow-up. us and anything morning. joining if with can you to this know in for we We Thank let please us continued look

Operator

and Ladies for today’s this your conference. gentlemen, you Thank participation. concludes

may disconnect. You all

Great Elm Capital (GECC) 3 Aug 212021 Q2 Earnings call transcript