GECC - Earnings call 3 2023 | Great Elm Capital Corp.

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Operator

Greetings. Welcome to the Great Elm Capital Corp.

Third Quarter 2023 Financial Results. [Operator Instructions] please note, this conference is being recorded. I will now turn the conference over to your host, Garrett Edson, a representative of the company.

begin. may You

Garrett Edson

thank Elm and Call. for us joining Good Corp.'s you, Third Great Capital Conference Quarter for morning, everyone, XXXX Earnings

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find Financial our attention can be release Also, purchase your you found Information, under Quarterly presentation website or website, to call Results. to the customary a call safe in slide sell harbor filings. The offers statement of can SEC our our regarding securities. please also earnings forward-looking that and constitutes information. solicitation to I'd to note an our On offer on today's nothing like

call these Great includes the filings Corp.'s you forward-looking cause actual differ and Elm update by to we results factors could statements statements, Corp with Great to its unless forward-looking law. that statements. ask required to refer Elm from Today's Capital that not Capital undertake SEC important for conference materially

SEC is of Elm Corp's which SEC's filings, will is to over of Chief Elm Hosting the call visit this Capital Specialty Corp's Great Great Matt copies be Officer, Keri will Kleinman; Great President Keller, website turn Davis, CEO, SEC Chief under the who joined at obtain To website. Officer, Financial call Kaplan. Adam Finance. by Mike the Chief filings Compliance Matt and Officer, GECC's Elm Kaplan, Financial morning now Information please Executive Capital I

Matt Kaplan

thank us and morning, joining Garrett. today. Thank you, for Good you

report nearly ROE for Elm, year the bringing X.X% the generating XX%. continued, an year-to-date to yet strong another quarter of throughout Great approximately our momentum in quarter, ROE to and I'm Our pleased

of We our successfully facets all continue business. deliver across to

our further I to proud growth, execution us years portfolio come. and to incredible income implemented the in our effort and cash and and position remain portfolio team's platform of saw quarters operational improvements grow capital to continued generation, structure enhancements. consistent We

Turning to Slide X.

NII reported the $X.XX of we showing certain the You XXXX excluded can items second in continued net sequential share our if of per quarter, NII. have we see impact growth from quarter would refinancing

of third led NII transaction the of quarter However, $X.X quarter per in the quarterly $X.XX $X.XX report again, per exceeding to million us refinancing the or share. impact distribution of our share,

which cover NII I the our income X, portfolio. cash shows Even to our portfolio our continue expense distribution we The represented investment NII. investment generated enough of the of approximately with income especially total double with want driven by income. highlight generated cash another consecutive the from from refinancing, to to record cash cash associated interest we our in Slide quarter third generate quarter XX%

We income. increased continue to great in generate to enhancing cash portfolio make our strides

a new our investments and yielding our harvested enhancing of improving continue successfully the We our a the ability and to lower-yielding of also proceeds in first deployments testament results are into attractive first debt, investments, yield. portfolio further further used all with mix lien lien secured build These while to cash portfolio corporate overall going built to XX% high-quality with quarter investments.

on another quarter see to the share, to net in $XX.XX addition by increased can In X.X% by driven of Slide X. performance, asset on excellent NII value quarter gains per as our investments, you

moving stable the recover to quarters. pricing our and expect that limited being over with forward. fair value our most broad-based improving will were gains saw portfolio over further and of neck of or with up investment remain investments focused coming on quarter-over-quarter We largely XX% that recovering Our the portfolio mix NAV we declines

our successfully in with notes XXXX. new the refinancing due we Along XXXX with maturity of our of debt the completed results, strong issuance

our extend current quarter. at rate of material fourth interest pleased cost maturity wall the expect drag in higher on not a the higher from given capital NII expense we do the accomplished and While to environment, a were

capital markets and and success. transactions extend for evaluate financing position at to both continue and to further We potential long-term an the us cost attractive near- opportunistically our of capital maturities

Great in scaling In specialty discuss the addition, our his in as remarks, quarter welcomed will GESF we Mike finance also platform. assist in specialty Elm investor strategic a and growing in capitalized assets finance with core and to the

operational Davis to engine and a GECC of to outside hand GESF increased With I to become X as significant quarter over further I'd third our the like scales. it discuss the growth performance. XXXX over to With X believe capital Keri for can years flexibility, that, next call

Keri Davis

of over greater but and for detail. highlights go I'll press our review Matt. our you now, release, financial SEC filings all Thanks, to presentation we invite accompanying

the from $X.X million third in XXXX of quarter well to in NII million $X.X second compared quarter. GECC year-over-year tripling $X.X as the as nearly During generated million quarter, prior our as of NII year the

in the XXXX quarter due with issuance redemption XXXX. of the the GECCN Third includes notes to NII notes X.X% of X.XX% related GECCZ net of million our connection $X.X due expenses

to as Our June net assets $XX $XX rose XXXX, as of XX. September at compared million to XX, million

September to $X.XX, Our the our quarter. as can the per quarterly June $XX.XX found X Slide in share Details share of exceeding presentation. $X.XX XXXX, to NAV on was improved compared prior once XX. per and for investor be in the again change of NAV $XX.XX XX, as of dividend quarter-over-quarter versus NII

net in of expenses to the quarter the Excluding NII for $X.XX. refinancing third debt per related result share would

XXX.X% XX, coverage XX. to June was As ratio of compared GECC's asset XXXX, XXX.X% September approximately as of net

As our million. debt XX, $XXX approximately of September outstanding total was

million our of notes wall. and During the X.X% maturity successfully quarter, we of notes extending issued $XX the XXXX, due $XX million GECCZ redeemed

market XX, money line had undrawn we million, million our on cash available of our totaled and and $XX September credit. securities approximately of As XXXX, $X

We an a yield cash annualized, XXXX. XX, December XX, XX, on our Our equates XXXX dividend Board XX, of quarter share. $X.XX December NAV as stockholders of XXXX, distribution will on distribution September of has XXXX. the for to be cash of authorized Directors quarter $XX.XX the ending The distribution share per record to December fourth per payable XX%

I'll to Matt. turn back the call over

Matt Kaplan

of Keri. average million In rotate to average Thanks, continued third taking investments we Meanwhile, $XX into rate of approximately XX.X%. continued of new investments, yields $XX opportunistically in the advantage assets elevated quarter the higher-yielding million we approximately at environment the yields monetized at quarter, to deploy of approximately into XX%.

We from maintain end XX% our investments rate continue to significant year debt, at floating of portfolio well ago. to with of quarter XX% floating rate exposure investment above debt a comprised

the portfolio's the portfolio. lien which high Most investments, notably, our thus before, of was into at end, along XX.X% of in credit our as quality XX% profile, stood at deployed quarter yield our quarter first capital improving overall further noted with

very return portfolio. of and are composition with our pleased the We current profile

continuing Looking monitor ahead, to elevated closely landscape. investments that uncertain macro focus in benefit to the fourth quarter, we the environment will while from rate continue to on

we disciplined returns. remain impairment respect measured, By capital for saying generate deploying to and Great risk-adjusted permanent well will We and further capital to towards attractive with of Corp. grow Elm durable shareholders. that positioned risk opportunities limited remain returns have Capital

We improving quarterly has with far and distribution. the enhancing in our thus to performance composition NII consistently our our and ultimately pleased are XXXX, leading that exceeded quality and portfolio NAV our very both of overall yield

what we growth with further the our platform accelerate have close we think and we have built XXXX. our infrastructure accomplished stabilized last set stronger, business, appropriate to and XX year up a in portfolio As months, out about over the high-quality the our

growth. from since essentially further XXXX, NII last all well period As for changes that GECC us positioned CEO implemented this Keri We quarter of March noted, same took over believe our tripled leave as the the year. at I in

We for are excited the of GECC. future

to And an turn provide Finance. with would Keller update the to Mike Specialty on that, I over to like call

Michael Keller

assets our off capital Finance. a a across GECC and Matt. to would specialty all lending. Elm Thanks, In for the Great quarter, shop new Great for transaction the continuum contributed its like specialty offering I borrowers a core Specialty with platform, pad provided that to and that we launch transformative to one-stop of investor Finance, finance Elm vision scale finance our the of start grow Specialty strategic provides welcome

our bespoke all company, Lender core finance initiative, Finance, Healthcare platform's companies, an small- Elm under solution. are operations as Finance and new bringing being its Today, a assets operating company. capital medium-sized to one Great Elm Specialty the market Great cohesive under operating streamlined for specialty our independent one Prestige, Sterling, Finance umbrella under can platform By businesses and GESF

we Now medium-sized a traditional of that we focus on and reenergize for initiatives. synergies place, our have time better not growing occurring pullback can and at across verticals growth be the generating to and in platform companies the to capital their core small businesses could The pieces platform. bank the GESF lending

to We positive continue verticals. our within each of momentum see

ahead generated net income growth on and touch budget. which I'll of is First, Prestige, tracking year-over-year

we are expect end volumes strongly. some financing again saw Although volume, into invoice up going the year quarter, weakness seasonal them the in fourth quarter and pick to the third seeing

team Great execute to continue plan. in the sectors. Healthcare robust to continues on particularly we from pullback our and see lending, in has its health Elm the industry-wide This benefited At Finance, care nursing skilled long-term platform care flow deal and

Finance XXXX. the as Elm Great into as expect market to take to fourth Healthcare quarter continue We of into advantage dislocation well

servicing As capabilities. Sterling mentioned out its last quarter, we build Commercial Credit and continue to asset-based

middle loan providing to specialty be Healthcare across capabilities servicing verticals. finance. multiple loans monitoring addition back-office provides believe can that companies, Great revolving capabilities lower monitoring In to Sterling's market and asset-based We Sterling Elm to used loan finance

that ability providers of to bank various Finance. Lender further I has initiative. transactions. line. this wanted with to to believe seeded asset-backed with and This participations Lender We to take in Elm working are us we with update Turning scale you and quarter, provides non-bank and finance contributed been specialty business grow the Great advantage Elm our the X this opportunistic on capital finance business transaction aforementioned latest Great

our GESF, specialty generate our execute seek confident companies In I years. we coming over growth properly am summary, the to increasing initiatives now on as and positioned sustainable that income to are under finance

Matt Kaplan

we our was it quarter for strategy, sum and believe remain current overall our quarterly composition To for beyond. fourth Mike. portfolio cover Thanks, and GECC positioned quarter we up, distribution and given another to it the well excellent

turn the for over the call I'll to that, Operator? operator With questions.

Operator

hand it no management [Operator I like looks over closing for are Therefore, will Instructions] back And remarks. call to there the questions.

Matt Kaplan

Thank today. again you joining for us

continued are Please past may questions us look forward know we have. our momentum help incredible follow-up strong with the and pleased let you with We investor that progress months. XX to dialogue. over can any if We

Operator

your at for you disconnect may you and participation. lines conference, today's this concludes your Thank time. this And

Great Elm Capital (GECC) 2 Nov 232023 Q3 Earnings call transcript