Great Elm Capital Corp. Q1 FY2025 earnings call

• Recorded the highest total investment income of $12.5 million in Q1 2025, with a 37% increase from last quarter and over 40% year-over-year growth, driven by the CLO JV and new investments.
• NII per share doubled to $0.40 per share, covering the $0.37 per share distribution for the second quarter, a 5.7% increase from the prior quarter.
• NAV per share saw a modest step down due to unrealized losses on portfolio investments, but management remains confident these will reverse as market conditions stabilize.
• The CLO joint venture is a significant contributor, with approximately $48 million deployed through March 31, targeting high teens to 20% returns over time.
• The corporate portfolio has $250 million in investments, with 71% in first-lien loans, focusing on secured income-generating assets.

Great Elm Capital Corp. achieved a record-setting first quarter in 2025 with total investment income of $12.5 million, the highest in the company's history. NII per share doubled to $0.40 per share from $0.20 in the prior quarter. NAV per share was $11.46 as of March 31, 2025, down from $11.79 as of December 31. The corporate portfolio grew to nearly $250 million of investments, with first-lien loans comprising 71% of the corporate portfolio as of March 31. The CLO JV contributed significantly, with $3.8 million in cash distributions in the first quarter of 2025.

• Anticipates second quarter NII will exceed first quarter levels.
• Reiterates reviewing GECC on a 4-quarter basis rather than quarter-to-quarter due to uneven CLO distribution patterns.
• Confident in covering the dividend in 2025 and expects full-year NII to improve.
• CLO JV is expected to remain an important income source, targeting high teens to 20% returns over time.

• Volatility in markets led to markdowns on portfolio positions at quarter end, including CLO JV equity and investments in CoreWeave.
• Tariff uncertainty and its potential impact on the portfolio, with limited direct exposure but considering second and third-order effects.
• Market spread widening in April affecting portfolio NAV, though management expects stabilization over time.

Q: How do you see the portfolio and the funds NAV performing with both the broadly syndicated loan market and private credit spreads widening in April?

A: Overall, there were modest markdowns in the portfolio, but the portfolio is healthy with minimal NAV impact from unrealized losses. CLO market has stabilized, and CoreWeave investment volatility is expected to reverse as market conditions stabilize.

Q: What is the JV earning on the warehouse facility and when do you expect the CLO to price?

A: The CLO closed in April, and the first distribution from the underlying investment in the CLO JV is expected in October 2025.

Q: Curious if you could provide color into the timing of the new deployments and the monetizations in the quarters based on incoming yields being higher than outgoing yield?

A: There was a barbell effect with excess cash and commitments closed in January, February being a low, and March seeing some deployments, with hope for flow-through effect into Q2.

Q: Curious about the expected ROE on the CLO investment and fees?

A: There's no management fee charged by the JV specifically, and the expected TII return from the JV targets high teens to 20% returns over IRRs on dollars in.