Attached files
| file | filename |
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| EX-99.2 - EX-99.2 - Great Elm Capital Corp. | gecc-ex992_23.htm |
| 8-K - 8-K - Great Elm Capital Corp. | gecc-8k_20210331.htm |
Exhibit 99.1
Great Elm Capital Corp. Announces FIRST Quarter 2021 Financial Results HIGHLIGHTED BY 12.4% increase in NAV per share
Company to Host Quarterly Conference Call at 11:00 AM ET Today
WALTHAM, MA, May 7, 2021 – Great Elm Capital Corp. (“we,” “us,” “our,” or “GECC,”) (NASDAQ: GECC), a business development company, today announced its financial results for the first quarter ended March 31, 2021.
Financial Highlights
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▪ |
Net investment income (“NII”) for the quarter was $1.5 million, as compared to NII of $1.6 million for the quarter ended December 31, 2020. NII was largely flat quarter-over-quarter due to slower than anticipated deployment of capital in January which subsequently accelerated in February and March. |
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NII per share was $0.06 based on weighted average shares outstanding of 23,401,837, as compared to NII per share of $0.07, based on weighted average shares outstanding of 22,249,283, for the quarter ended December 31, 2020. |
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▪ |
As of March 31, 2021, GECC’s asset coverage ratio was approximately 177.1%, up from 167.1% as of December 31, 2020, and 141.1% as of March 31, 2020. |
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▪ |
Net assets grew to approximately $91.5 million on March 31, 2021, as compared to $79.6 million on December 31, 2020, and $50.8 million at March 31, 2020. |
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▪ |
NAV per share of $3.89 as of March 31, 2021, compared to $3.46 at December 31, 2020. NAV per share was $5.05 as of March 31, 2020. |
New $25.0 Million Credit Facility
GECC yesterday announced that it closed a $25.0 million senior secured revolving line of credit with City National Bank. Borrowings under the revolving line bear interest at the applicable LIBOR rate plus 3.50% with a 1.00% floor. The revolving line of credit has a three year term with a maturity date of May 5, 2024, subject to a springing maturity on May 15, 2022 if the company’s 6.50% notes due 2022 are not refinanced on or prior to such date.
Peter A. Reed, GECC’s Chief Executive Officer, stated, “We saw a significant increase in NAV per share during the period, largely related to unrealized gains as a result of several positive developments at our portfolio companies during the first quarter. We reported lower than expected net investment income during the quarter as we entered the year with a significant cash balance which was deployed at a pace that increased over February and March at favorable yields. Our new $25 million credit facility provides financial flexibility and improves the company’s ability to be more fully invested in yield generating assets.”
Mr. Reed continued, “Throughout the past few quarters we have continued to reposition the portfolio and build upon the success of our investment in Prestige Capital Finance. We believe our investments in the specialty finance sector give GECC access to proprietary deal flow with the potential to generate attractive IRRs over time. Through our relationship with Prestige we are seeing a robust pipeline of additional opportunities in both factoring and complementary specialty finance businesses.”
Financial Highlights – Per Share Data(1)
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|
Q1/20201 |
Q2/20201 |
Q3/20201 |
Q4/20201 |
Q1/20211 |
|
Earnings Per Share (“EPS”) |
($3.33) |
$0.34 |
$0.72 |
($0.43) |
$0.53 |
|
Net Investment Income (“NII”) Per Share |
$0.26 |
$0.09 |
$0.18 |
$0.07 |
$0.06 |
|
Net Realized Gains / (Losses) Per Share |
($1.12) |
$0.09 |
($0.02) |
$0.03 |
($0.14) |
|
Net Unrealized Gains / (Losses) Per Share |
($2.47) |
$0.16 |
$0.56 |
($0.54) |
$0.61 |
|
Net Asset Value Per Share at Period End |
$5.05 |
$5.10 |
$5.53 |
$3.46 |
$3.89 |
|
Distributions Paid / Declared Per Share |
$0.249 |
$0.249 |
$0.249 |
$0.249 |
$0.10 |
Portfolio and Investment Activity
As of March 31, 2021, GECC held total investments of $193.6 million at fair value, held in the following:
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• |
33 debt investments, totaling approximately $135.5 million and representing 70.0% of the fair market value of our total investments. Secured debt investments comprised a substantial majority of the fair market value of our debt investments. |
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• |
3 yielding equity investments, totaling approximately $30.1 million representing 15.5% of the fair market value of our total investments. |
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• |
7 other equity investments, totaling approximately $18.0 million and representing 9.3% of the fair market value of our total investments. |
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Special Purpose Acquisition Company (SPAC) instruments totaling approximately $10.0 million, which consist of SPAC units, common stock, and warrants, representing approximately 5.2% of total investments. |
As of March 31, 2021, the weighted average current yield on our debt portfolio was 10.9%. Floating rate instruments comprised approximately 51.3% of the fair market value of debt investments.
During the quarter ended March 31, 2021, we deployed approximately $43.9 million into new investments(2) excluding SPACs, at a weighted average current yield of 9.85%. The weighted average price of the debt deployment activity was 96% of par. We also deployed approximately $14.5 million into SPACs during the period.
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During the quarter ended March 31, 2021, we monetized, in part or in full, 20 investments for approximately $23.7 million(3) excluding SPACs, at a weighted average current yield of 11.6%. The weighted average realized price was 89% of par. We also monetized $4.5 million of SPAC securities during the period.
Financial Review
Total investment income for the quarter ended March 31, 2022 was approximately $5.3 million, or $0.23 per share. Total expenses for the quarter ended March 31, 2021 were approximately $3.8 million, or $0.16 per share.
Net realized losses for the quarter ended March 31, 2021 were approximately $3.3 million, or $0.14 per share. Net unrealized appreciation from investments for the quarter ended March 31, 2021 was approximately $14.3 million, or $0.61 per share.
Liquidity and Capital Resources
As of March 31, 2021, our cash balance was approximately $26.6 million, exclusive of holdings of United States Treasury Bills and restricted cash. Total debt outstanding (par value) as of March 31, 2021 was $118.7 million, comprised of our 6.50% senior notes due September 2022 (NASDAQ: GECCL), our 6.50% senior notes due June 2024 (NASDAQ: GECCN) and our 6.75% senior notes due January 2025 (NASDAQ: GECCM).
Distributions
We also announced this morning that our board of directors authorized a $0.10 per share cash distribution for the quarter ending September 30, 2021. The record and payment dates for the distribution are expected to be set by GECC in the third quarter pursuant to authority granted by its board of directors.
The Company previously has announced that our board of directors authorized a $0.10 per share cash distribution for the quarter ending June 30, 2021. The record and payment dates for the distribution are expected to be set by GECC in the second quarter pursuant to authority granted by its board of directors.
Conference Call and Webcast
GECC will discuss these results in a conference call later this morning (Friday, May 7, 2021) at 11:00 a.m. ET.
Conference Call Details
Date/Time:Friday, May 7, 2021 – 11:00 a.m. ET
Participant Dial-In Numbers:
(United States):844-820-8297
(International):661-378-9758
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 “Investor Relations” section of Great Elm Capital Corp.’s website at http://www.investor.greatelmcc.com/events-and-presentations/presentations after the issuance of the earnings release.
Webcast
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The call and presentation will also be simultaneously webcast over the Internet via the Investor Relations section of GECC’s website or by clicking on the conference call link: Great Elm Capital Corp (GECC) Q1 2021 Conference Call Webcast.
About Great Elm Capital Corp.
Great Elm Capital Corp. is an externally managed, specialty finance 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. GECC elected to be regulated as a business development company under the Investment Company Act of 1940, as amended.
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 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. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are: conditions in the credit markets, the price of GECC common stock, the performance of GECC’s portfolio and investment manager and risks associated with the economic impact of the COVID-19 pandemic on GECC and its portfolio companies. Information concerning these and other factors can be found in GECC’s Annual Report on Form 10-K and other reports filed with the SEC. 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) The per share figures are based on a weighted average outstanding share count for the respective period.
(2) 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.
(3) 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:
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Investor Relations
+1 (617) 375-3006
investorrelations@greatelmcap.com
Adam Prior
The Equity Group Inc.
+1 (212) 836-9606
aprior@equityny.com
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CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES (unaudited)
Dollar amounts in thousands (except per share amounts)
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March 31, 2021 |
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December 31, 2020 |
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Assets |
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Investments |
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Non-affiliated, non-controlled investments, at fair value (amortized cost of $169,052 and $147,494, respectively) |
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$ 143,171 |
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$ 112,116 |
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Non-affiliated, non-controlled short-term investments, at fair value (amortized cost of $139,997 and $74,997, respectively) |
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74,998 |
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Affiliated investments, at fair value (amortized cost of $114,478 and $109,840, respectively) |
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38,210 |
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29,289 |
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Controlled investments, at fair value (amortized cost of $9,093 and $7,630, respectively) |
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12,250 |
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10,243 |
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Total investments |
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226,646 |
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Cash and cash equivalents |
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Restricted cash |
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- |
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600 |
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Receivable for investments sold |
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6,111 |
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- |
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Interest receivable |
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4,118 |
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2,423 |
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Due from portfolio company |
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895 |
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837 |
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Prepaid expenses and other assets |
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44 |
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240 |
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Total assets |
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$ 371,362 |
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$ 283,328 |
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Liabilities |
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Notes payable 6.50% due September 18, 2022 (including unamortized discount |
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Notes payable 6.75% due January 31, 2025 (including unamortized discount |
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Notes payable 6.50% due June 30, 2024 (including unamortized discount |
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41,402 |
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41,294 |
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Payable for investments purchased |
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152,953 |
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75,511 |
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Interest payable |
|
328 |
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328 |
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Distributions payable |
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Accrued incentive fees payable |
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9,284 |
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9,176 |
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Due to affiliates |
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776 |
|
764 |
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Accrued expenses and other liabilities |
|
590 |
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362 |
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Total liabilities |
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$ 279,831 |
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$ 203,713 |
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Commitments and contingencies |
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$ - |
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$ - |
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Net Assets |
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Common stock, par value $0.01 per share (100,000,000 shares authorized, |
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$ 235 |
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$ 230 |
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Additional paid-in capital |
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232,219 |
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230,504 |
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Accumulated losses |
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(140,923) |
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(151,119) |
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Total net assets |
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$ 91,531 |
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$ 79,615 |
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Total liabilities and net assets |
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$ 371,362 |
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$ 283,328 |
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Net asset value per share |
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$ 3.89 |
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$ 3.46 |
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|
|
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CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
Dollar amounts in thousands (except per share amounts)
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For the Three Months Ended March 31, |
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2021 |
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2020 |
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Investment Income: |
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Interest income from: |
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Non-affiliated, non-controlled investments |
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$ 2,442 |
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$ 4,466 |
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Non-affiliated, non-controlled investments (PIK) |
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30 |
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- |
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Affiliated investments |
|
260 |
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227 |
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Affiliated investments (PIK) |
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1,439 |
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1,224 |
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Controlled investments |
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8 |
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70 |
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Total interest income |
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4,179 |
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5,987 |
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Dividend income from: |
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Non-affiliated, non-controlled investments |
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481 |
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3 |
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Controlled investments |
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320 |
|
400 |
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Total dividend income |
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801 |
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403 |
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Other income from: |
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|
|
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Non-affiliated, non-controlled investments |
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33 |
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30 |
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Affiliated investments (PIK) |
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282 |
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- |
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Controlled investments |
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- |
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9 |
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Total other income |
|
315 |
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39 |
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Total investment income |
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$ 5,295 |
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$ 6,429 |
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|
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Expenses: |
|
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|
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Management fees |
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$ 660 |
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$ 698 |
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Incentive fees |
|
108 |
|
100 |
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Administration fees |
|
156 |
|
204 |
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Custody fees |
|
13 |
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20 |
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Directors’ fees |
|
55 |
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51 |
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Professional services |
|
425 |
|
257 |
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Interest expense |
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2,198 |
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2,305 |
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Other expenses |
|
176 |
|
142 |
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Total expenses |
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$ 3,791 |
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$ 3,777 |
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Net investment income |
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$ 1,504 |
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$ 2,652 |
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|
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Net realized and unrealized gains (losses): |
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|
|
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Net realized gain (loss) on investment transactions from: |
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|
|
|
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Non-affiliated, non-controlled investments |
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$ (3,415) |
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$ (11,456) |
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Controlled investments |
|
140 |
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- |
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Realized gain on repurchase of debt |
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- |
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143 |
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Total net realized gain (loss) |
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(3,275) |
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(11,313) |
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Net change in unrealized appreciation (depreciation) on investment transactions from: |
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Non-affiliated, non-controlled investments |
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9,490 |
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(19,715) |
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Affiliated investments |
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4,283 |
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(5,085) |
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Controlled investments |
|
544 |
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(77) |
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Total net change in unrealized appreciation (depreciation) |
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14,317 |
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(24,877) |
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Net realized and unrealized gains (losses) |
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$ 11,042 |
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$ (36,190) |
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Net increase (decrease) in net assets resulting from operations |
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$ 12,546 |
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$ (33,538) |
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|
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Net investment income per share (basic and diluted): |
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$ 0.06 |
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$ 0.26 |
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Earnings per share (basic and diluted): |
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$ 0.53 |
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$ (3.33) |
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Weighted average shares outstanding (basic and diluted): |
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23,401,837 |
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10,062,682 |
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