Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide an overview of Great Elm Capital Corp's financial performance for the third quarter of 2024? A: Matt Kaplan, President & CEO, reported a record-setting quarter with the highest investment income in GECC's history. Net investment income (NII) was $0.39 per share, up from $0.32 in the previous quarter, and exceeded the quarterly distribution of $0.35. The NAV per share was stable at $12.04 as of September 30th. The company also completed significant equity and debt issuances, enhancing its scale and financial flexibility.
Q: What were the key drivers behind the increase in NII this quarter? A: The increase in NII was primarily driven by cash flows from the CLO joint venture (JV). The JV has been a significant source of income, with approximately $3 million in distributions from a $33 million investment. The CLO investments provide exposure to a diverse portfolio of broadly syndicated first lien loans, which are largely floating rate and financed by long-term floating rate debt.
Q: How has the company's capital structure changed during the quarter? A: GECC successfully issued $36 million of 8.125% GECCH notes due 2029, with an additional $5.4 million from the underwriters' full shoe exercise in October. The proceeds were used to redeem all outstanding 6.75% GECCM notes due January 2025, extending the debt maturity profile into 2026 and beyond, thus providing enhanced financial flexibility.
Q: What is the outlook for the CLO joint venture strategy? A: The CLO joint venture is expected to become an increasingly significant source of income for GECC, targeting high 10% to 20% returns over time. The strategy capitalizes on the resilience of the CLO asset class across various market cycles, and the company plans to continue expanding this vertical.
Q: How did Great Elm Specialty Finance perform in the third quarter? A: Michael Keller, President of Great Elm Specialty Finance, noted that momentum stalled in the third quarter, with platform companies struggling to close new business. However, there was a positive uptick in volumes towards the end of September. Efforts are underway to drive further growth and profitability, including strategic initiatives and cost-cutting measures.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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