グレート・エルム・キャピタル（GECC）2026年第3四半期決算説明会：NAVは7%下落、NIIは0.17ドル

主要なポイント

• グレート・エルム・キャピタル（Great Elm Capital Corp.、NASDAQ: GECC）が発表した2026年第3四半期の純投資利益（NII）は240万ドル（1株当たり0.17ドル）となり、第2四半期の450万ドル（同0.32ドル）から減少しました。
• 1株当たり純資産価値（NAV）は前四半期比で約7%下落し、7.40ドルとなりました。この下落には、実現および未実現の純投資損失660万ドルと、CLO組成ジョイントベンチャー（JV）における330万ドルの評価引き下げが含まれています。
• 1株当たり0.25ドルの四半期分配金は、第3四半期のNIIを1株当たり0.08ドル上回りました。経営陣は0.17ドルを底値となる可能性があると説明し、市場状況や今後の収益次第ではあるものの、0.25ドルの配当は維持可能との見通しを示しました。
• GECCは10件の投資案件に合計約2000万ドルを投じ、そのうち3件のプライベート取引に900万ドル近くを割り当てました。経営陣は、現在プライベートクレジットは広範なシンジケートローンよりも優れたリスク調整後リターンを提供していると述べました。
• 負債総額は、第2四半期の1億6640万ドル、2025年年末の1億9440万ドルから1億5490万ドルに減少しました。四半期末時点の流動性は約5000万ドルで、2029年まで満期を迎える予定の債務はありません。
• 10月30日までに、GECCは平均価格4.96ドルで約35万株の自社株買いを実施しました。これは9月30日時点のNAVに対して約33%のディスカウントとなります。

主要財務データ

事業および業績動向

GECCは、自社で直接発掘するプライベート投資へのシフトを継続しました。経営陣は、スプレッドの拡大、契約条件の改善、借入人の資本構造において上位のポジションに投資する機会に支えられ、プライベートローンのパイプラインが90日前よりも強化されたと述べました。

市場のタイト化に伴い、CLOエクイティのリターンが魅力的でないと判断しているため、同社は現在新たなCLO投資を優先していません。既存のCLO JVは、約11億ドルの第一抵当権付きローンを裏付けとする3つのCLOで過半数持分を保有しています。同投資は開始以来、累計で約2500万ドルの分配金を創出しています。

CoreWeaveへの株式投資は、第3四半期中に約80万ドルの分配金を創出しました。GECCの当初投資額600万ドルに対し、累計分配金は約1030万ドルに達しました。なお経営陣は、同ポジションが引き続き市場のボラティリティの影響を受けると指摘しています。

Great Elm Specialty Financeからの現金分配金は、第2四半期から10倍以上に増加しました。経営陣は、スポット・ファクタリング・ポートフォリオのバランスシートが一時約半分に縮小した後に以前の規模へ回復したことが改善の一因であるとしています。

GECCはまた、当四半期中に利率8.5%のGECCI債券のうち650万ドルを償還しました。経営陣によると、発行費用を含む米国会計基準（GAAP）上の実質コストは約9.8%であったとのことです。

経営陣の見通し

経営陣は、第3四半期の1株当たりNII 0.17ドルは第2四半期の0.32ドルよりも実態を表しているものの、これが底値となる可能性が高いと述べました。同社は、流動性の厳選した運用、低利回り資産からの入替、プライベートクレジットやスペシャリティ・ファイナンス投資の拡大により、収益が改善すると見込んでいます。ただし、今後の業績は市場および信用状況に左右されます。

GECCは四半期配当0.25ドルの維持が可能であると見込んでいます。また経営陣は、具体的な金額は明かさなかったものの、同社にはかなりの繰越課税所得が存在すると述べました。

リボルビング施設を除く負債が固定金利であるのに対し、投資の大部分が変動金利であるため、金利上昇がGECCの収益スプレッドを拡大させる可能性があると経営陣は考えています。ただし、この効果は信用の悪化を回避できるかどうかにかかっていると強調しました。

リスクおよび注視すべき分野

• 四半期配当がNIIを1株当たり0.08ドル上回ったため、今後の配当原資の確保は、経常収益の改善と利用可能な繰越課税所得にかかっています。
• NAVはCLO JVによって圧迫されました。同JVの裏付けとなるCLOの1つがCCC格付けへの大幅なエクスポージャーを抱えていたためです。また経営陣は、第三者評価の割引率変更も評価引き下げ要因として挙げています。
• 更なる金利上昇は業績の弱い借入人を圧迫する可能性があります。経営陣は、元利金支払能力に懸念が示されたポジションについては、縮小または売却を完了したと述べました。
• スポット・ファクタリング債権は通常60〜90日以内に回転し、絶え間ないポートフォリオの補充が必要となるため、Great Elm Specialty Financeからの分配金は変動する可能性があります。
• 経営陣によれば、CoreWeaveは更なる上振れ要因となり得るものの、株式投資であるため引き続き市場ボラティリティの影響を受けます。

アナリスト質疑応答の要点

アナリストは配当の維持可能性、CLO JVの評価引き下げ、資本配分、自社株買いに焦点を当てました。経営陣は、CLO JVおよびスペシャリティ・ファイナンス事業から創出される現金とポートフォリオの入替により、目標である1.5倍のレバレッジを超えずに、より高利回りの案件に投資する余力が確保できると説明しました。

資本配分について経営陣は、GECC株がNAVに対して大幅なディスカウント水準にとどまる限り、継続的な自社株買いは合理的に行われると述べました。NAVの約66%での買い戻しは株主にとって魅力的であると評する一方、債務削減や新規投資も資本の競合する使い道であると指摘しました。

経営陣はまた、プライベートクレジット案件における競争が広範なシンジケートローンに比べて緩和していると述べました。GECCは、案件全体を単独保有することを望まない大手貸出手と共同投資しつつ、より強固な契約条件、好条件のスプレッド、および資本構造における上位ポジションを追求しています。

決算説明会文字起こし（全文）

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Greetings. Welcome to the Great Elm Capital Corp. Third Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Adam Yates, Managing Director at Great Elm Capital Corp. Thank you, Adam. You may begin.

Adam Yates

Hello, and thank you for joining us for Great Elm Capital Corp.'s Third Quarter 2026 Earnings Conference Call. If you would like to be added to our distribution list, you can e-mail investorrelations@greatelmcap.com or sign up for alerts directly on our website, www.greatelmcc.com. The slide presentation accompanying today's conference call and webcast can be found on our website under Events and Presentations. On our website, you can also find our earnings release and SEC filings.

I would like to call your attention to the customary safe harbor statement regarding forward-looking information. Also, please note that nothing in today's call constitutes an offer to sell or a solicitation of offers to purchase our securities. Today's conference call includes forward-looking statements, and we ask that you refer to Great Elm Capital Corp.'s filings with the SEC for important factors that could cause actual results to differ materially from these statements.

Great Elm Capital Corp. does not undertake to update its forward-looking statements unless required by law. To obtain copies of our SEC filings, please visit Great Elm Capital Corp.'s website under Financials, SEC Filings or visit the SEC website. Hosting the call today is Jason Reese, Great Elm Capital Corp.'s Chairman of the Board and CEO.

He'll be joined by Chris Croteau, Chief Investment Officer; Chief Financial Officer, Keri Davis; Chief Compliance Officer and General Counsel, Adam Kleinman; and Mike Keller, President of Great Elm Specialty Finance. I will now turn the call over to GECC's Chairman and CEO, Jason Reese.

Jason Reese

Thank you, Adam, and thank you, everyone, for joining us today. As we discussed last quarter, our priorities at GECC are protecting and growing NAV, generating sustainable net investment income and maintaining a disciplined approach to capital allocation and portfolio management. While third quarter results fell short of our expectations, particularly with respect to NAV performance, we continue to make progress on several key initiatives.

We strengthened the quality of our credit portfolio, expanded our pipeline of differentiated private investment opportunities and further optimized our balance sheet. We believe these efforts position GECC to deliver more consistent earnings and improve long-term shareholder returns. During the quarter, net investment income was $0.17 per share compared to $0.32 per share in the prior quarter.

This decline primarily reflects a $2 million dividend from an insurance-related investment in the second quarter that did not recur in the third quarter. The reinstatement of incentive fee accruals following the conclusion of prior fee waivers also contributed to the decline in NII. While third quarter NII did not fully cover our quarterly distribution, our Board declared a fourth quarter dividend of $0.25 per share.

We remain focused on generating durable investment income and building a consistent earnings profile through disciplined capital deployment and the continued expansion of our private investment pipeline and specialty finance platform. We believe these initiatives, together with our strong liquidity position, provide a foundation for improving earnings performance over time. NAV declined by approximately 7% during the quarter to $7.40 per share, primarily reflecting realized and unrealized investment losses, including a $3.3 million reduction in the fair value of our CLO JV investment.

We are disappointed with this performance and recognize that stabilizing NAV and rebuilding shareholder value must remain central priorities. We continue to work closely with our CLO partners to evaluate performance, address areas of weakness and identify opportunities to maximize the value of these investments. While our CLO investments have experienced meaningful valuation pressure, they provide exposure to a substantial portfolio of diversified senior secured loans.

Our CLO JV currently holds a majority ownership position in 3 CLOs with exposure to approximately $1.1 billion of first lien loans and has generated approximately $25 million of cumulative distributions since inception. These CLO investments remain a core part of our strategy. Importantly, the underlying credit quality of our portfolio remains strong.

With credit spreads tight and valuations elevated across much of the broadly syndicated market, we continue to prioritize disciplined underwriting and measured capital deployment rather than pursuing incremental yield at the expense of credit quality. At the same time, our deep institutional relationships and proprietary sourcing capabilities are providing access to differentiated investment opportunities across private credit and select equity investments.

We believe these opportunities offer the potential to generate attractive current income while also contributing to NAV appreciation over time. During the quarter, we deployed approximately $20 million across 10 distinct investments, including 3 private transactions totaling nearly $9 million. We also significantly expanded our private investment pipeline, which we expect to become an increasingly important component of the GECC portfolio.

Our CoreWeave equity investment illustrates the value of our unique sourcing capabilities. During the quarter, we received approximately $800,000 in distributions from this investment, bringing cumulative distributions to approximately $10.3 million compared to our original $6 million investment. Although this investment remains subject to market volatility, we believe it offers meaningful potential for additional upside. Turning to Great Elm Specialty Finance.

We continue to see positive momentum across the platform. Great Elm Commercial Finance and Great Elm Healthcare Finance are focused on expanding their lending pipelines, while Prestige provides differentiated exposure to the spot factoring market. Cash distributions received from Great Elm Specialty Finance increased by more than tenfold compared to the prior quarter, reflecting improved cash generation across the platform.

We view specialty finance as an integral part of our strategy to expand directly originated investments, diversify our source of income and build a more consistent and durable earnings base over time. We also made meaningful progress strengthening our balance sheet and reducing our cost of capital. Year-to-date, we have reduced total debt outstanding by nearly $40 million, including the redemption of $6.5 million of our 8.5% GECCI notes during the third quarter.

These actions reduced our interest expense and leave us with no scheduled debt maturities until 2029. On September 30, we had approximately $50 million of liquidity, consisting of $6 million in cash and money market investments and $44 million of available capacity under our revolving credit facility. We also maintained a significant portfolio of liquid investments, providing additional flexibility.

The combination of lower leverage, ample liquidity and a manageable debt maturity profile allow us to deploy capital selectively while preserving our ability to act on attractive investment opportunities. We also continue to repurchase GECC shares at a substantial discount to NAV under our $10 million stock repurchase program. Year-to-date through October 30, we repurchased approximately 350,000 shares at an average purchase price of approximately $4.96 per share, representing a discount of approximately 33% to our September 30 NAV of $7.40 per share.

We believe repurchasing shares at these levels represents an attractive use of capital. These repurchases are accretive to NAV per share and directly increase shareholder value. We will continue to evaluate repurchases alongside new investment opportunities as part of our disciplined approach to capital allocation.

Looking ahead, we are optimistic about the opportunities across broadly syndicated credit, private investments and specialty finance. We believe our deep institutional relationships, growing pipeline of differentiated investments and strong liquidity position provide a solid foundation for generating sustainable income and supporting NAV stability. I'll now turn the call over to Keri Davis to review our financial results in greater detail.

Keri Davis

Thanks, Jason. I'll go over our financial highlights now, but we invite all of you to review our earnings release, accompanying presentation and SEC filings for additional detail. Total investment income for the third quarter was $8.7 million compared to $10.9 million in the second quarter. Prior quarter income included a $2 million dividend received from our investment in insurance-related preference shares, which did not recur in the current quarter.

Net investment income for the third quarter was $2.4 million or $0.17 per share compared to $4.5 million or $0.32 per share in the second quarter. The sequential decline in NII reflects lower total investment income and the reinstatement of incentive fee accruals, which were waived in the prior quarter. Net assets were $102.7 million or $7.40 per share as of September 30 compared to $110.4 million or $7.95 per share as of June 30.

The decrease in NAV was primarily driven by $6.6 million of net realized and unrealized investment losses during the quarter, including a $3.3 million reduction in the fair value of our CLO formation JV investment. Additional details are provided in the NAV bridge on Slide 11 of our investor presentation. Our balance sheet remains strong and liquid. Our asset coverage was 166.3% as of September 30 compared to 166.4% at the end of the prior quarter, while our debt-to-equity ratio remained stable at 1.51x.

Total debt outstanding at quarter end was approximately $154.9 million, down from $166.4 million at June 30 and $194.4 million at year-end 2025. We held approximately $6 million of cash and money market investments, along with $44 million of availability under our revolving credit facility, providing significant flexibility to pursue attractive investment opportunities.

Finally, our Board of Directors declared a quarterly distribution of $0.25 per share payable on December 31, 2026, to stockholders of record as of December 15. This distribution represents an annual yield of approximately 13.5% based on our September 30 NAV of $7.40 per share. I'll now hand it over to the operator for questions.

Operator

[Operator Instructions] Our first question is from Mickey Schleien with Clear Street.

質疑応答

Mickey Schleien

I'd like to start off by asking about NII. Excluding the insurance-related dividend in the previous quarter and the incentive fee waivers in the previous quarter, it looks like third quarter NII appears more representative of your portfolio's earnings power. How should we think about a sustainable quarterly NII run rate, particularly relative to the $0.25 per share dividend?

Jason Reese

Mickey, it's Jason. Thank you for your question. You're right, $0.17 is more sustainable, but probably a lower end than the $0.32. That insurance investment pays once a year dividend. So that's going to be variable. We also think we're probably at the low point. I think we've been very conservative. I think you see the liquidity we have. I think it'd be fair to say our liquidity is even greater. We've been seeing this market disruption coming.

And so we've been pretty passive about putting our excess capital to work. So our goal would be that, that $0.17 would be a low point. And hopefully, we will build it back depending on, obviously, market conditions there. And the $0.25, we think is a sustainable dividend going forward is the expectation. But obviously, part of that -- the NAV decrease also is the fact that we were -- we earned $0.08 below that dividend. Does that address your question?

Mickey Schleien

Yes. In terms of the CLO JV, you noted the markdown in fair value during the quarter. Can you help us understand the principal drivers of that market -- of that markdown? I'm well aware that the spreads in the BSL market are very tight. But is there anything else going on that drove down that fair value?

Jason Reese

If you look at our CLO JVs, one of the underlying CLOs had some significant CCC exposure, which that has been marked down. And the real driver of those values is the discount rate that the third-party valuation experts use. And based on where the market is, they've been looking using significantly different discount rates.

So that's part of what's driving there. We are working with our partners there to make sure we address this and address it going forward. We like the exposure. We like it going forward. The significant cash flows to come. Part of it is how you -- in a market like today is, how do you value a CLO this kind of cash flow analysis.

Mickey Schleien

Understand. Beyond your nonaccrual investments, are you seeing deterioration among other borrowers that are still performing? And when you look at the forward interest rate curve, which anticipates several more rate hikes, at the tail end of your borrowers, how concerned are you about their ability to service their debt if the forward curve were to be correct?

Jason Reese

We are very comfortable with our existing borrowers and that forward curve. We're obviously very aware of that. We have anything -- any company that we've been worried about that issue and assuming 2 or 3 or 4 more hikes, I don't know if any of us can really predict what will happen. But in that case, we've trimmed or sold those positions to get out of where we thought those issues would be there. We're well positioned with cash to take advantage of things. Assuming spreads widen out again or there's more disruption in the market, there's opportunities to buy things cheaper.

Mickey Schleien

Actually, I did -- my next question was about spreads. I noticed a nice increase in your debt portfolio yield. So what kind of yields and spreads are you seeing on new originations relative to the existing portfolio?

Jason Reese

I think we're in a really weird spot. It's an interesting day to have an earnings call with the election and everything else going on. We're seeing better opportunities to put money to work in a higher quality paper. We think there's less capital chasing deals now than there was 4 or 5 or 6 months ago. So we think we're seeing better opportunities. We're pretty excited about the fact that we took the summer, the second and third quarters, to trim positions to have cash available to take those opportunities.

And also, if you look at our portfolio, all of our debt other than our revolvers is fixed rate. So -- and most -- the majority of our investments are floating. So assuming no credit issues, our earnings spread should widen as rates go up. We should be earning higher on our assets and our liabilities stay fixed. So that's a positive move for us as long as we don't have credit issues.

Mickey Schleien

I understand. But in terms of taking advantage of these opportunities, your balance sheet leverage is 1.5 if we look at debt to equity, which if I'm not mistaken, that's your target.

Jason Reese

Yes, it is.

Mickey Schleien

So how would you take advantage of -- are you talking about portfolio rotation to take advantage of these better terms? Or overall, how...

Jason Reese

I'm sorry. We have cash coming in. Cash runs off the CLO JV every quarter, right? So that shrinks, more cash comes in there. We're getting cash distributions out of specialty finance. So we're generating cash, and there will be some portfolio rotation. We definitely have a -- we've had a portfolio of lower-yielding, higher-quality assets that we built that we would look to rotate out of those assets into things that will perform and have significantly better returns over time.

It doesn't make a lot of sense for us to hold cash when we have leverage that we're paying 8-plus percent debt on. So we're looking -- when we have -- we keep a portfolio that we feel are similar to cash targets, things that we don't think there's a lot of risk in them going down, but the returns aren't great, but they're a lot better than money market funds, where we can rotate out of those things into better performing assets when we're comfortable with that.

Mickey Schleien

I understand. And my last question, I appreciate your patience. Yes, when we're looking at allocation of capital between new investments and repurchasing shares, given the confidence you have in the portfolio, it would seem like it's almost a no-brainer that buying back your stock is going to generate the best return on investment that you can probably find. And I do see that you continue to repurchase shares in the fourth quarter. Is it reasonable to assume that you're going to continue to do that with these sorts of discounts to NAV?

Jason Reese

That would be a reasonable assumption if our discounts stay at these levels. We're going to do what's in the best interest of shareholders. I think we've proven that. We've proven that by waiving 3 quarters of investment incentive fees that we didn't need to waive. We're going to allocate capital where it is the best place. You saw we bought back about $6.5 million of our highest cost debt. At that time, we thought that was the best allocation.

Our stock was not trading at the same NAV discount that it is now. That was debt that on a GAAP basis cost us like 9.8%, even though the coupon is 8.5% because of the cost of issuance and so on that goes through. So we thought that was a great -- a guaranteed 9.8% return with 0 risk is better than a lot of things in the market at that point in time. And right now, it is 66-plus percent -- trading at 66% of our NAV, buying back some stock is the best thing for the shareholders.

Mickey Schleien

Yes, I would definitely agree with that. And I think the shareholders would be disappointed if you didn't buy back stock at these prices. And in terms of sustainability of the dividend, there's a lot of moving pieces on your balance sheet, but it's hard for me to triangulate you covering the dividend next year at $0.25 per share. That's my own opinion. So can you remind us where do you stand on an undistributed -- on a spillover taxable income basis to help support that dividend?

Jason Reese

I don't think we disclosed a specific number, but we have a significant spillover, and that's part of the reason that we would pay $0.25 in the fourth quarter without knowing whether we will recover it or not. So yes, we had spillover. So we definitely need between now and next September some of the spillover needs.

Operator

[Operator Instructions] Our next question is from Erik Zwick with Lucid Capital Markets.

Erik Zwick

I think I've got a few left, a lot of mine I kicked off in that last exchange. But let me first start with, Jason, you sounded fairly optimistic about the momentum in the pipeline for new loans, particularly with regard to the private loans. Can you update us just on where the pipeline stands today in dollar terms versus maybe 90 days ago and what that mix looks like between private loans, maybe syndicated loan CLO opportunities?

Jason Reese

I think our pipeline is probably as great as it has been for private loans right now, and it's a lot of our focus. We are seeing better risk-adjusted returns in private credit as opposed to the broadly syndicated credit. There's still more dollars, I think, chasing broadly syndicated than there is private credit. And so we're seeing more and more opportunities much more than 90 days ago. So that's a lot of our focus.

If you look at our kind of our credit portfolio away from CLOs and away from specialty finance, which is about 68% or 70% of our portfolio, that's constantly -- we're constantly evaluating broadly syndicated versus private, and I think we have slide that just shifts over time. Right now, we are definitely much more focused on private credit opportunities because we think that's where the opportunity is.

I don't think we're currently looking at any CLO opportunities just because that market is very tight. New CLOs that are getting done, the returns on equity are not compelling to us. So that's not our priority at this moment. I can't tell you that, that won't shift 90 or 180 days from now, but that's where we are today. I hope that answers the question.

Erik Zwick

Yes, that's definitely helpful. And just maybe one to -- as I look at the press release, there's a quote in there about navigating a challenging credit environment. So just how do you balance that versus this building private loan pipeline? Have you kind of changed or adjusted or tighten the way that you're underwriting credits, the industries you look at, documentation, things of that nature? How do you make sure with this growing pipeline that the opportunities that you're selecting will meet those kind of risk-adjusted return hurdles that you're targeting?

Jason Reese

It's absolutely all of those things that you just talked about, right? We're getting better spreads, staying way high in the cap structure as credit, getting better documentation than things were before. I mean it's just -- with everything that's happened in private credit, there are less dollars competing right now. So we're seeing the shift. I don't think all the borrowers are there yet, but the lenders are and the borrowers are coming towards the lender side.

And so that's why I think we see things progressing positively for lenders more in private credit right now than we do in the broadly syndicated space. We're seeing more opportunities to participate with some of our bigger brethren on deals where they're less eager to hold 100% of deals on their own balance sheets and want people to participate with.

Erik Zwick

And then last one for me. You noted the increased distribution from Great Elm Specialty Finance in the most recent quarter. Is that contribution expected to be consistent or continue to grow going forward or some variability expected over the next quarter or 2?

Jason Reese

There's always going to be some variability. Erik, if you look specifically at our spot factoring business, that business constantly has a level of, I'll call it, seasonality, but it's not really seasonality, but variability. Most of the receivables they buy go away in 60 to 90 days. So they're constantly refilling their portfolio.

And their balance sheet shrunk significantly from the beginning of the year to the end of the second quarter but now has grown back. Their balance sheet roughly halved and now has doubled again to back to the size. And that's a fixed cost business with a lot of -- as you add dollars to your portfolio, the margins increase dramatically. So that's part of the swing that you saw there. We were hopeful that continues to grow, but there's always some variability in their portfolio.

Operator

We have reached the end of the question-and-answer session. I would like to turn the floor back over to Jason Reese for closing comments.

Jason Reese

Thank you again for joining us today. While we recognize that our financial performance has fallen short of expectations, we remain confident in the underlying quality of our credit portfolio and the strategic direction of GECC. We are focused on improving NAV stability, generating more consistent earnings and strengthening long-term shareholder returns.

Our growing pipeline of differentiated private investments, expanding specialty finance platform and improved balance sheet provide a solid foundation for making progress towards these objectives. We will continue to prioritize disciplined underwriting and proactive portfolio management as we work to deliver more consistent performance for our shareholders. We appreciate your continued support, and we look forward to updating you on our progress. Thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.