Great Elm Capital Corp. Q3 FY2025 earnings call

• After a strong first half of 2025, had a solid start to the third quarter and on pace to meet/ potentially exceed internal income generation targets. - Raised significant equity at NAV, doubled revolver size, reduced revolver interest rate by 50 basis points and refinanced at lower cost, leaving ample deployable cash. - First Brands traded down sharply, filed for bankruptcy, adversely impacted NAV by ~$16.5 million and put loans on nonaccrual. - Success with Nice-Pak: acquired in past quarter, generated ~38% IRR over 3-year holding period. - Entered fourth quarter with leverage in line with target, ample liquidity ($25 million cash to deploy), expect to harvest nonyielding assets >$20 million. - Board approved $0.37 dividend for fourth quarter and $10 million share repurchase program. - Focus on secured debt positions, corporate portfolio has over $220 million of investments, first lien loans 2/3 of corporate portfolio as of September 30. - Nonyielding other equity mix: bulk attributable to CW Opportunity 2 LP, received $2.9 million of capital distributions in third quarter, $2.8 million in October, life-to-date income and capital distributions $6.1 million or 102% of original investment. - Specialty Finance had strong third quarter, increased distribution to GECC, completed rebranding of Sterling as Great Elm Commercial Finance, upsized back leverage facility in July, Great Elm Healthcare Finance better positioned for profitability, Prestige had phenomenal quarter.

In the third quarter, GECC generated NII of $2.4 million or $0.20 per share, down from $5.9 million or $0.51 per share in the second quarter. Net assets as of September 30, 2025, were $140 million, consistent with June 30. NAV per share was $10.01 as of September 30 versus $12.10 as of June 30. Great Elm Specialty Finance had a strong third quarter, increasing its distribution to GECC to approximately $450,000 from $120,000 last quarter. The corporate portfolio is comprised of over $220 million of investments, with first lien loans comprising 2/3 of the corporate's portfolio as of September 30.

• Board approved $0.37 per share cash distribution for fourth quarter, payable on December 31. - Board approved $10 million share repurchase program. - Expect to begin harvesting nonyielding assets in excess of $20 million to deploy into cash-generating investments. - Expect NII to significantly rebound from third quarter based on increased CLO distributions, normalized interest expense and income from capital deployments.

• Exposure to First Brands was too large. - Concerns about businesses at risk from AI disruption, though minimal direct impact to portfolio to date. - Need to monitor second and third order effects on tariffs and shifting trade dynamics.

Q: Curious if you could provide any kind of color expectation into the cadence and timing of any future distributions from CoreWeave?

A: We provided color on capital distribution in September and October, will provide market update next quarter, vehicle has been making returns of capital and we can redeploy into income-generating opportunities going forward.

Q: Is $20 million of capital from nonyielding assets separate from future expected distributions from CoreWeave?

A: The $20 million or over $20 million includes CoreWeave and a couple of other non-yielding assets we believe we'll be able to harvest over the coming months into early 2026.

Q: Talk about opportunities in your pipeline today, how you evaluate them from risk-adjusted perspective and size of pipeline relative to 3 months ago?

A: Spreads in public markets are tight, not reaching for yield, focused on secured and income-generating opportunities, investing at top of capital structure, working on private credit transactions, expanding funnel, one private credit transaction working to close this week with teens-type return profile and warrants, highlighted Nice-Pak as successful example with warrant package.

Q: Is the $4.3 million received so far in 4Q likely to be pretty close to the full number for 4Q?

A: You should use that number for the quarter.