Great Elm Capital (GECC) 29 Feb 242023 Q4 Earnings call transcript

Greetings. Welcome to the Great Elm Capital Corporation's Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. At this time, I'll now turn the conference over to Garrett Edson, a representative of the company. Mr. begin. now may you Edson,

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

website you added If website to alerts accompanying Financial on slide note directly under www.greatelmcc.com. The can to the can website, for e-mail presentation our today's found like our sign you'd call. Results. up investorrelations@greatelmcap.com be on Quarterly can our distribution I'd like on slide you or posted our list, Information, be to presentation

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Great Elm its law. statements Davis, Financial Keller, Specialty Keri filings, Elm visit Chief or Mike Executive Corp's update obtain undertake Capital Great website. Officer, Elm Kaplan, not by Compliance Officer Kleinman; Capital call joined the Finance. Great website SEC up required is please be Information, by morning of Hosting Corp copies Chief Matt this Officer, President will and of Chief Great Capital Adam SEC filings to To visit unless Corp's forward-looking Financial does under the SEC's

Kaplan. to over I will now turn call GECC's CEO, the Matt

value on We note, asset we the have raise all us a today. thank closing with a XX% net equity million month. an of continued for Good for approximately and Garrett. finished morning, and momentum earlier at our XXXX year, this on return you into $XX high the Thanks, generating joining equity XXXX

a NAV I share, strategic February XX% want our $XX.XX X.XX current then performance, capital strong our into at Group million. SPV closing million to premium strategic raise. prior the highlight partnership $X On per to shares and the issued of $XX day's GECC shares X, Elm diving Before institutional in the Great further GECC proceeds I to other a Elm Great of million invested investor, the price. a acquired million for $XX SPV. and invested gross

our as strategy an capital. enabling This fixed on of the equity efficiencies execute time, the greater from upon the scale scale. heels success past X GECC, and repositioning our build to to The provide of non-dilutive cost strong investment And of growth we increases improved pipeline comes further at our efforts we cost Shifting back on over which transaction earnings. our to us lead years, raise will will base. over leverage operating believe

We exceeding base to for in the quarter positioning closed dividend us NAV, are of quarter proud XXXX. have the continued success our out for year increasing and with consecutive NII another fourth

XX%. approximately of business. quarter continue We XXXX generated bringing ROE across XX%, in facets annualized to all of calendar ROE excel an our to fourth our the We approximately year

team's long-term Additionally, enhanced and remain our quarter growth. year, platform both past we cash effort increased assets, of quarter this structure and us generated overall of our operations. significant income and and capital proud net another portfolio our positioning tremendous further for execution I and unwavering

X. Slide to Turning

we share. reported $X.XX NII see of can per You

of which was is per exceeding dividends inclusive NII $X.XX $XX.X year a in XXXX, of distribution $X.XX per share full declared in Additionally, special $X.XX total or December. declared share, million the

fourth is our million. years distribution we strong to total Slide for couple income our Great the validation testament our full also year, which to the history. the We to X, like the easily the portfolio's year quarter are total very highlight to Notably, This able million, portfolio's a pleased our for would over year. to in was been deliver have true enhance throughout the shows cash cash performance to I Elm's generation. investment past stockholders, highest income over cash $X.X of the of income a generated $XX full of efforts special

continued enhancing corporate secured investments, into our also yield. to We first improving quarter higher-quality portfolio going in while XX% lower-yielding of the proactively proceeds of first higher-yielding, investments, mix harvest all into deployments the reinvesting with and overall the our further lien credits lien debt,

underscore maintain high-quality portfolio results to yielding to attractive our These a and investments. ability this construct cash

Slide from of $XX.XX by another X, of increase on NII on gains our growth seen previous over is which year, as in NAV from our solid as XX, XX% grew value primarily addition to displayed Slide on noteworthy asset share the experienced quarter. beginning the In a net XXXX, quarter per driven performance, past to up $XX.XX, the investments. More

Along with were years and our we points $XX SOFR quarter, are reducing our basis credit, amend in plus the results XX May over its the further We X NAV committed line pleased to by XXXX to strong term. maturity NII growing to our million long revolving the X%. by of and to extending cost

business. This and provides in flexibility structure our us in with demonstrates our additional sustained our lenders' confidence capital

and extend costs, financing We long-term strategically the priming short- potential are capital us assessing continuously for maturities both opportunities to our success. favorable markets at and

that, over hand XXXX to like Keri call quarter to fourth Davis to discuss the With I'd performance. our

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

the to $X.X During the in quarter, third generated GECC fourth million NII $X.X of quarter. compared million

$XX.X was NII year full million share. per or $X.XX Additionally,

to rose million assets $XX $XX XX September XX. compared as December of million at to Our net

$XX.XX of to last as also as of December XX $XX.XX improved of of versus per XX NAV $XX.XX Our year. end share as September and the

dividend year-over-year prior of was quarter. base share for Slides quarterly consecutive Details on NII investor XX quarter, be and in in fourth the and exceeding change $X.XX the the can $X.XX to NAV presentation. quarter-over-quarter per for per and our quarter the X the found share for compared

As asset GECC's ratio XX, of compared XXX% coverage to was as approximately XXX.X% of December XX. December

cash million, money and December was of totaled total As million. securities $XXX and our XX, $XX approximately market outstanding approximately debt

revolving line of million undrawn. $XX credit remained also Our

of Directors quarter distribution $X.XX March XXXX. per ending Board for XX, authorized share the Our a cash

The XXXX, record XX% March yield dividend payable per NAV to stockholders first cash XX. on be annualized an quarter of our XX, XX distribution December of share. to distribution March as of $XX.XX will The equates on

per the yield the inclusive the addition, an $X.XX for on special totaled NAV. share of XX-month In distribution period, trailing $X.XX equating distributions XX.X% to share XXXX per December XXXX

the Matt. turn to back With over that, I'll call

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

our last in rate with XX% of quarter quarter investment above comprised period. to and investments floating well rate into at rotation the continued prior end year XX% Our floating debt of compared portfolio XX% debt

was Notably, of portfolio's our quarter first XX.X% along at quality of portfolio. the strengthening most lien profile, our investments, credit in with yield quarter the the overall which deployed the at capital in stood end,

composition and made we the years. and the are past X have the pleased over with strides return of current We our profile portfolio

ever-changing the In quality from of Looking elevated the exceed we are our NAV landscape. years, as focused ahead XXXX, monitor continue quality are credit the regular NII in actively rate higher we consistently with and enabling to quarterly yield over prioritize on profile, resulting past environment improving we macro proud for transformation of to investments a performance benefiting the and sum, while a distribution. couple strong portfolio that sustainably

towards are future further will disciplined for remain Corp. Great We risk-adjusted for well capital situated our to this excited returns GECC. of with shareholders. grow Elm in remain risk Capital we opportunities permanent and deliver deploying We of durable maintaining approach, By and loss. the compelling capital returns limited

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

Thanks, Matt.

all this to I'd has levels we as a in earlier an veteran, care, hire Chief significant Jason experience lender real lending, industry of estate Jason First, Credit Schwartz, finance. GESF Officer. joined note its ABL, and month. has health like made key

businesses arrangements. multiple He will each as help as growth with of lending our our well drive in assist

in I'll with half Moving a the financing ended to year XXXX of budget. that start our some volume invoice back on the Prestige, in weakness saw which strong businesses. note, outperforming

seeing flow relationships. in expanding up and Going pick from quarter, again Elm are we Great team volumes been see Finance, another strong robust has year into the we continue financing Healthcare the successful and our its first expect team. At to deal

expect Elm market care dislocation of to take XXXX. We advantage Great Finance the continue in health to Healthcare

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

the has and The growth. the pipeline a assets convert fourth into place months. grew platform quarter to a the in support Today, pipeline we coming strong have earning over Sterling that in team foundation to

latest Turning to business our initiative.

further asset-based Specialty with providers working We opportunistic with transactions. Great secured are to this vertical. the financing grow Elm capital various lending a and bank to and provide ability new believe advantage Finance of will We that take asset-backed non-bank

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

Thanks, Mike. sum a year up, fantastic an To and it excellent quarter GECC. was for

base to raise portfolio distribution our we composition, continue XXXX. current we our capital positioned NAV, recent equity well strategy cover at the and believe Given quarterly overall throughout remain to

capital-raising our and growing In business. addition, focused we continuing the initiatives on remain

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

you. are [Operator further questions. management it no for I remarks. time, Instructions] turn there appears this any Thank to It at over

Thank us you all again joining today. for

We again. follow-up to if a help strong our with Thanks made. dialogue. can with that may pleased you questions us are and We forward let the progress any continued look have. we incredible we've investor momentum know Please

concludes you. Thank conference. This today's

at a lines Thank wonderful your day. disconnect have you may time. and your You participation, this for