Core Insights - Great Elm Capital (NASDAQ: GECC) is a Business Development Company that stands out from its peers due to its unique portfolio strategy, which has shown both strengths and weaknesses [1]. Company Strategy - The company's portfolio strategy is designed to differentiate it from other Business Development Companies, but it has also been a source of vulnerability [1]. Investment Approach - The investment approach combines classic dividend growth stocks with Business Development Companies, REITs, and Closed End Funds to enhance investment income while achieving total returns comparable to traditional index funds like the S&P [1].

Core Viewpoint - Great Elm Capital (GECC) is experiencing solid improvements in earnings estimates, which is likely to positively impact its stock price momentum [1][2]. Earnings Estimates - Analysts are increasingly optimistic about Great Elm Capital's earnings prospects, leading to higher estimates that should reflect in the stock price [2]. - The current-quarter earnings estimate is $0.44 per share, representing a 37.5% increase from the previous year [6]. - The Zacks Consensus Estimate for the current quarter has risen by 7.41% over the last 30 days, with two estimates increasing and no negative revisions [6]. - For the full year, the earnings estimate stands at $1.54 per share, marking a 21.26% increase from the year-ago figure [7]. - The consensus estimate for the current year has increased by 5.25%, supported by two upward revisions and one negative revision [8]. Zacks Rank - Great Elm Capital has achieved a Zacks Rank 2 (Buy), indicating favorable estimate revisions that suggest strong potential for stock performance [9]. - The Zacks Rank system has a proven track record, with Zacks 1 (Strong Buy) stocks averaging a 25% annual return since 2008 [3]. Stock Performance - Over the past four weeks, Great Elm Capital shares have increased by 7.5%, reflecting investor confidence in its earnings growth prospects [10].

Financial Data and Key Metrics Changes - The company achieved record total investment income of $12,500,000 in Q1 2025, a 37% increase from the previous quarter and over 40% year-over-year growth [7] - Net investment income (NII) per share doubled to $0.40 from $0.20 in the prior quarter, primarily due to increased total investment income [7] - The first quarter distribution increased to $0.37 per share, a 5.7% rise from the previous quarter's $0.35 per share [7][14] Business Line Data and Key Metrics Changes - The CLO joint venture (JV) contributed significantly to the income, with cash distributions of $3,800,000 in Q1 2025, compared to $5,000,000 in Q4 2024 [10][36] - The corporate portfolio grew to nearly $250,000,000, with first lien loans comprising 71% of this portfolio as of March 31 [16] Market Data and Key Metrics Changes - The company's net assets as of March 31, 2025, were $132,000,000, down from $136,000,000 as of December 31, 2024 [13] - The NAV per share decreased to $11.46 from $11.79 over the same period [14] Company Strategy and Development Direction - The company is focused on enhancing portfolio strength by increasing secured debt positions and targeting high teens to 20% returns from the CLO JV [16] - A $100,000,000 at-the-market equity program was filed to provide additional capital flexibility [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate sustainable returns and deliver increasing value to shareholders despite market volatility [12][20] - The company anticipates that NII in Q2 2025 will exceed Q1 levels, supported by ongoing capital raising and deployment initiatives [8][36] Other Important Information - The company has zero positions on non-accrual as of March 31, 2025, indicating strong portfolio performance [19] - The company maintains a cautious approach to capital deployment, prioritizing credit quality and seeking investments with minimal risk of permanent capital loss [20] Q&A Session Summary Question: How does the portfolio and funds NAV perform with the widening loan market and private credit spreads? - Management noted modest markdowns in the portfolio but expressed confidence in the overall health of the portfolio, expecting unrealized losses to reverse as market conditions stabilize [26][28] Question: What is the expected ROE on the CLO investment? - The company targets high teens to 20% returns on the CLO investments [59] Question: What is the impact of tariffs on the portfolio? - Initial analysis suggests limited direct exposure to tariffs, with a predominantly domestic focus and minimal exposure to China [20][51] Question: How is the consumer segment of the portfolio characterized? - The largest exposure in the consumer space is to companies with private label products, which are expected to benefit from trade-down effects during economic downturns [54]

Financial Data and Key Metrics Changes - The company achieved a record total investment income of $12.5 million in Q1 2025, representing a 37% increase from the previous quarter and over 40% year-over-year growth [6][12] - Net investment income (NII) per share doubled to $0.40 from $0.20 in the prior quarter, primarily due to the increase in total investment income [6][12] - The first quarter distribution increased to $0.37 per share, a 5.7% rise from the previous quarter's $0.35 per share [6][12] - Net assets as of March 31, 2025, were $132 million, down from $136 million as of December 31, 2024 [12] - NAV per share decreased to $11.46 from $11.79 [12] Business Line Data and Key Metrics Changes - The CLO joint venture significantly contributed to the increase in total investment income, with cash distributions of $3.8 million in Q1 2025 compared to $5 million in Q4 2024 [6][8] - The corporate portfolio grew to nearly $250 million, with first lien loans comprising 71% of this portfolio as of March 31 [15] Market Data and Key Metrics Changes - The company noted volatility in the markets beginning in mid-quarter, leading to markdowns on positions, particularly in CLO JV equity and investments in CoreWeave [10] - The asset coverage ratio was 163.8% as of March 31, down from 169.7% as of December 31 [13] Company Strategy and Development Direction - The company aims to enhance portfolio strength by increasing secured debt positions and targeting high teens to 20% returns from the CLO joint venture [15][19] - A $100 million at-the-market equity program was filed to provide additional capital flexibility [10] - The company is focused on maintaining credit quality and seeking investments with minimal risk of permanent capital loss [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to generate sustainable returns and deliver increasing value to shareholders despite market volatility [10][19] - The company anticipates that NII in Q2 2025 will exceed Q1 levels, supported by ongoing capital raising and deployment initiatives [7][30] Other Important Information - The company has zero positions on non-accrual as of March 31, indicating strong portfolio performance [17] - The company is taking a measured approach to capital deployment amid ongoing tariff uncertainties, with minimal direct exposure to China [18][44] Q&A Session Summary Question: How does the portfolio and NAV perform with the widening loan market and private credit spreads? - Management noted modest markdowns in the portfolio but expressed confidence in the overall health of the portfolio, expecting unrealized losses to reverse as market conditions stabilize [22][24] Question: What is the expected ROE on the CLO investment? - The company targets high teens to 20% returns on the CLO investments [53] Question: What is the impact of incoming yields being higher than outgoing yields? - Management indicated that there was a barbell effect in deployments, with expectations for additional flow-through effects into Q2 [38] Question: What is the exposure to government contracts given federal spending cutbacks? - The company has been cautious and has avoided investments with significant government contract exposure [43] Question: How is the consumer segment of the portfolio characterized? - The largest exposure in the consumer space is to companies with private label products, which are expected to benefit from trade-down effects during economic downturns [47]

分组1 - Great Elm Capital (GECC) reported quarterly earnings of $0.40 per share, exceeding the Zacks Consensus Estimate of $0.39 per share, and up from $0.37 per share a year ago, representing an earnings surprise of 2.56% [1] - The company posted revenues of $12.5 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 4.75%, compared to revenues of $8.91 million a year ago [2] - Over the last four quarters, Great Elm Capital has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] 分组2 - The stock has underperformed, losing about 8.2% since the beginning of the year, while the S&P 500 declined by 3.3% [3] - The earnings outlook for Great Elm Capital is favorable, with a current consensus EPS estimate of $0.41 on $12.12 million in revenues for the coming quarter and $1.46 on $44.99 million in revenues for the current fiscal year [7] - The Zacks Industry Rank for Financial - Investment Management is currently in the bottom 13% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

Financial Performance - Total Investment Income (TII) increased by 367% from $91 million in 4Q 2024 to a record $125 million in 1Q 2025 [6, 12] - Net Investment Income (NII) increased from $21 million or $020 per share in 4Q 2024 to $46 million or $040 per share in 1Q 2025 [6, 14] - Net assets decreased from $1361 million or $1179 per share in 4Q 2024 to $1323 million or $1146 per share in 1Q 2025 [6, 17] Portfolio Composition - The fair value of the total investment portfolio was $3419 million as of March 31, 2025 [11, 29] - Debt investments comprised 710% of the portfolio with a fair value of $2429 million and a weighted average current yield of 123% [23] - CLO investments accounted for 153% of the portfolio with a fair value of $522 million [23, 30] Distribution - The Board approved a quarterly distribution of $037 per share for the quarter ending June 30, 2025 [6, 7] - This equates to a 147% annualized yield on the May 2, 2025 closing market price of $1009 and a 129% annualized yield on the March 31, 2025 NAV of $1146 per share [6, 7] CLO Joint Venture - GECC deployed approximately $48 million into the CLO JV and holds a 7125% interest [47] - The CLO JV generated a 29% IRR since inception in April 2024 [50] - The CLOs and Warehouse have exposure to approximately $11 billion of underlying assets [50]

Financial Performance - Total investment income for Q1 2025 reached a record $12.5 million, with net investment income (NII) of $4.6 million, or $0.40 per share, compared to $2.1 million, or $0.20 per share, in Q4 2024[3][4] - Total investment income for Q1 2025 was $12,495,000, an increase of 40% compared to $8,909,000 in Q1 2024[19] - Net investment income before taxes rose to $4,644,000, up 45.5% from $3,198,000 in the same quarter last year[19] - Earnings per share (basic and diluted) improved to $0.04, compared to a loss of $(0.05) in Q1 2024[19] - Net investment income per share (basic and diluted) increased to $0.40 from $0.37 year-over-year[19] Distribution and Cash Flow - The quarterly distribution was increased by 5.7% to $0.37 per share, with a projected annualized yield of 14.7% based on the closing price of $10.09 on May 2, 2025[4][10] - Cash distributions from the CLO JV amounted to $3.8 million in Q1 2025, significantly up from $0.5 million in Q4 2024, with an additional $4.3 million received in April 2025[4] Investment Activity - Approximately $37.4 million was deployed into 16 investments during Q1 2025, achieving a weighted average current yield of 15.1%[7] - Total investments held at fair value as of March 31, 2025, were $341.9 million, with a weighted average current yield on the debt portfolio of 12.3%[6][18] Expenses and Losses - The company incurred total expenses of approximately $7.9 million for Q1 2025, resulting in net realized and unrealized losses of approximately $4.1 million[8] - Total expenses increased to $7,851,000, a rise of 37.4% from $5,711,000 in Q1 2024[19] - Management fees rose to $1,272,000, up 35.3% from $940,000 in Q1 2024[19] - Interest expense increased significantly to $4,251,000, compared to $2,807,000 in Q1 2024, reflecting higher borrowing costs[19] Asset and Debt Management - Net assets decreased to $132.3 million, or $11.46 per share, down from $136.1 million, or $11.79 per share, at the end of Q4 2024, primarily due to unrealized losses[4][18] - The asset coverage ratio was 163.8% as of March 31, 2025, compared to 169.7% at the end of Q4 2024[4] - The company held $1.3 million in cash as of March 31, 2025, with total debt outstanding of $207.4 million[9] Market Outlook - The company plans to continue monitoring the macro environment and deploy capital into opportunities with compelling risk-adjusted returns[3] Unrealized Gains and Losses - Net realized gain on investment transactions was $264,000, a significant decrease from $2,356,000 in Q1 2024[19] - Net change in unrealized depreciation on investments was $(4,387,000), compared to $(6,007,000) in Q1 2024, indicating an improvement[19] Shareholder Information - Weighted average shares outstanding increased to 11,544,415 from 8,659,344 in the previous year[19]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section incorporates the company's unaudited financial statements for Q1 2025, detailed from page F-17 - The financial statements listed in the index to financial statements are incorporated by reference into this item[14](index=14&type=chunk) - The detailed financial statements and corresponding notes begin on page F-17 of the report[96](index=96&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=5&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) GECC, a BDC, reported increased Q1 2025 investment income and net investment income, alongside portfolio growth and affirmed liquidity [Overview](index=5&type=section&id=Overview) GECC operates as a BDC, investing in secured debt, specialty finance, and CLO securities, externally managed and structured as a RIC - GECC's investment strategy focuses on secured debt in middle-market companies, income-generating equity in specialty finance companies, and investments in collateralized loan obligation (CLO) securities[15](index=15&type=chunk) - On April 23, 2024, the company formed a joint venture, the CLO Formation JV, LLC, to invest in CLO equity and loan accumulation facilities[16](index=16&type=chunk) - The company is externally managed by Great Elm Capital Management, LLC (GECM) and has elected to be treated as a Regulated Investment Company (RIC) for U.S. federal income tax purposes[18](index=18&type=chunk)[19](index=19&type=chunk) [Portfolio and Investment Activity](index=8&type=section&id=Portfolio%20and%20Investment%20Activity) GECC's investment portfolio grew to **$341.9 million** in Q1 2025, with **$48.1 million** in acquisitions and a **12.29%** weighted average yield, concentrated in key industries Investment Activity (Q1 2025 vs. Prior Quarters) | Quarter ended | Acquisitions (in thousands) | Dispositions (in thousands) | Weighted Average Yield (End of Period) | | :--- | :--- | :--- | :--- | | March 31, 2024 | $64,584 | $(29,289) | 12.84% | | December 31, 2024 | $61,724 | $(71,123) | 12.37% | | March 31, 2025 | $48,097 | $(27,039) | 12.29% | Portfolio Reconciliation (Q1 2025) | (in thousands) | For the Three Months Ended March 31, 2025 | | :--- | :--- | | Beginning Investment Portfolio, at fair value | $324,262 | | Portfolio Investments acquired | $48,097 | | Portfolio Investments repaid or sold | $(27,039) | | Net change in unrealized (depreciation) | $(4,387) | | Net realized gain | $264 | | **Ending Investment Portfolio, at fair value** | **$341,910** | - As of March 31, 2025, the top three industry concentrations by fair value were **Structured Finance (15.29%)**, **Specialty Finance (12.51%)**, and **Technology (9.28%)**[38](index=38&type=chunk) [Results of Operations](index=11&type=section&id=Results%20of%20Operations) Total investment income rose to **$12.5 million** in Q1 2025, yielding **$4.6 million** net investment income despite increased expenses, with a net unrealized depreciation Investment Income Comparison (in thousands) | Income Source | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Interest income | $7,966 | $7,581 | | Dividend income | $3,612 | $771 | | Other income | $917 | $557 | | **Total Investment Income** | **$12,495** | **$8,909** | Expenses Comparison (in thousands) | Expense Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total advisory and management fees | $2,422 | $1,738 | | Interest expense | $4,251 | $2,807 | | Other expenses | $1,179 | $1,166 | | **Total Expenses** | **$7,851** | **$5,711** | - The increase in dividend income is primarily due to the investment in the CLO JV, which was formed in the current year[41](index=41&type=chunk) - Interest expense increased primarily due to the issuance of the **8.50% Notes due 2029** and **8.125% Notes due 2029** in 2024[46](index=46&type=chunk) Net Realized and Unrealized Gain/Loss (in thousands) | Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Realized Gain (Loss) | $264 | $2,356 | | Net change in unrealized appreciation/ (depreciation) | $(4,387) | $(6,007) | [Liquidity and Capital Resources](index=14&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2025, GECC maintained **$1.3 million** cash, **$12 million** drawn on its credit facility, **$207.4 million** total debt, and a **163.8%** asset coverage ratio, affirming sufficient liquidity - As of March 31, 2025, the company had approximately **$1.3 million** of cash and cash equivalents and **$3.5 million** in unfunded commitments[53](index=53&type=chunk)[54](index=54&type=chunk) Contractual Obligations as of March 31, 2025 (in thousands) | Obligation | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | GECCO Notes | $57,500 | - | $57,500 | - | - | | GECCZ Notes | $40,000 | - | - | $40,000 | - | | GECCI Notes | $56,500 | - | - | $56,500 | - | | GECCH Notes | $41,400 | - | - | $41,400 | - | | Revolving Credit Facility | $12,000 | - | $12,000 | - | - | | **Total** | **$207,400** | **-** | **$69,500** | **$137,900** | **-** | - The company's asset coverage ratio was approximately **163.8%** as of March 31, 2025, exceeding the **150%** minimum requirement under the Investment Company Act[70](index=70&type=chunk) [Distributions](index=17&type=section&id=Distributions) The company declared a **$0.37 per share** distribution for Q1 2025, an increase from prior quarters, and set the same rate for Q2 2025 Recent Quarterly Distributions Declared | Record Date | Payment Date | Distribution Per Share | | :--- | :--- | :--- | | Dec 16, 2024 | Dec 31, 2024 | $0.35 | | Mar 17, 2025 | Mar 31, 2025 | $0.37 | | Jun 16, 2025 | Jun 30, 2025 | $0.37 | - The board set the distribution for the quarter ending June 30, 2025, at a rate of **$0.37 per share**, to be paid in cash from distributable earnings[76](index=76&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=18&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate exposure, with **$186.1 million** in variable-rate debt, sensitive to a **1%** rate change impacting net investment income by **$1.86 million** - As of March 31, 2025, the company's debt portfolio consisted of approximately **$186.1 million** in variable-rate instruments and **$64.6 million** in fixed-rate instruments[78](index=78&type=chunk) Hypothetical Impact of Interest Rate Changes on Net Investment Income (in thousands) | Reference Rate Change | Increase (decrease) of Net Investment Income | | :--- | :--- | | +3.00% | $5,583 | | +2.00% | $3,722 | | +1.00% | $1,861 | | -1.00% | $(1,861) | | -2.00% | $(3,722) | | -3.00% | $(5,583) | [Controls and Procedures](index=19&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[83](index=83&type=chunk) - There were no changes in internal control over financial reporting during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[84](index=84&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=19&type=section&id=Item%201.%20Legal%20Proceedings) The company is a defendant in *Intrepid Investments, LLC v. London Bay Capital*, a lawsuit alleging fiduciary duty breaches, currently in pre-trial discovery - The company is a defendant in the lawsuit *Intrepid Investments, LLC v. London Bay Capital*, which is currently in the pre-trial discovery phase on surviving claims[209](index=209&type=chunk) [Risk Factors](index=19&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors were reported for the period, with a full discussion available in the Form 10-K for FY2024 - No material changes in risk factors were reported for the period covered by this report. The company refers to its Form 10-K for the year ended December 31, 2024 for a full discussion[87](index=87&type=chunk) [Other Information](index=19&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended March 31, 2025 - During the quarter ended March 31, 2025, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement[88](index=88&type=chunk) [Exhibits](index=20&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial data in inline XBRL format - The exhibits filed with this report include the CEO and CFO certifications (Exhibits **31.1, 31.2, 32.1**) and financial statements in inline XBRL format (Exhibit **101**)[91](index=91&type=chunk) Financial Statements and Notes [Statements of Assets and Liabilities (unaudited)](index=23&type=section&id=Statements%20of%20Assets%20and%20Liabilities%20(unaudited)) As of March 31, 2025, GECC reported total assets of **$350.8 million**, net assets of **$132.3 million**, and NAV per share of **$11.46** Key Balance Sheet Items (in thousands, except per share data) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total investments, at fair value | $341,910 | $332,710 | | Total assets | $350,830 | $342,028 | | Total liabilities | $218,535 | $205,915 | | **Total net assets** | **$132,295** | **$136,113** | | **Net asset value per share** | **$11.46** | **$11.79** | [Statements of Operations (unaudited)](index=24&type=section&id=Statements%20of%20Operations%20(unaudited)) For Q1 2025, total investment income was **$12.5 million**, yielding **$4.6 million** net investment income and a **$0.5 million** net increase in net assets from operations Key Operational Results (in thousands, except per share data) | Line Item | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total investment income | $12,495 | $8,909 | | Total expenses | $7,851 | $5,711 | | Net investment income | $4,576 | $3,193 | | Net realized and unrealized gains (losses) | $(4,123) | $(3,651) | | **Net increase (decrease) in net assets** | **$453** | **$(458)** | | **Earnings per share (basic and diluted)** | **$0.04** | **$(0.05)** | [Statements of Changes in Net Assets (unaudited)](index=25&type=section&id=Statements%20of%20Changes%20in%20Net%20Assets%20(unaudited)) In Q1 2025, net assets decreased by **$3.8 million** to **$132.3 million**, primarily due to distributions, partially offset by operations Reconciliation of Net Assets for Q1 2025 (in thousands) | Description | Amount | | :--- | :--- | | Net assets at beginning of period (Jan 1, 2025) | $136,113 | | Net increase from operations | $453 | | Distributions to stockholders | $(4,271) | | **Net assets at end of period (Mar 31, 2025)** | **$132,295** | [Statements of Cash Flows (unaudited)](index=26&type=section&id=Statements%20of%20Cash%20Flows%20(unaudited)) Net cash used in operating activities was **$5.9 million** in Q1 2025, offset by **$7.1 million** from financing, resulting in a **$1.3 million** increase in cash - Net cash used for operating activities was **$(5.9) million** for the three months ended March 31, 2025, driven by purchases of investments of **$47.8 million**, offset by proceeds from sales and principal payments[102](index=102&type=chunk)[55](index=55&type=chunk) - Net cash provided by financing activities was **$7.1 million**, consisting of **$12.0 million** in net borrowings on the revolving credit facility less **$4.8 million** in distributions paid to stockholders[102](index=102&type=chunk)[56](index=56&type=chunk) [Schedule of Investments (unaudited)](index=27&type=section&id=Schedule%20of%20Investments%20(unaudited)) As of March 31, 2025, the **$341.9 million** investment portfolio was primarily debt and equity, concentrated in key industries, with **93.7%** in the US Portfolio Composition by Investment Type (as of March 31, 2025) | Investment Type | Fair Value (in thousands) | Percentage of Net Assets | | :--- | :--- | :--- | | Debt | $242,921 | 183.63% | | Equity/Other | $98,989 | 74.82% | | **Total** | **$341,910** | **258.45%** | Top 5 Industry Concentrations (as of March 31, 2025) | Industry | Fair Value (in thousands) | Percentage of Fair Value | | :--- | :--- | :--- | | Structured Finance | $52,210 | 15.29% | | Specialty Finance | $42,778 | 12.51% | | Technology | $31,730 | 9.28% | | Consumer Products | $25,675 | 7.51% | | Transportation Equipment Manufacturing | $25,611 | 7.49% | - The portfolio is primarily concentrated in the United States, which accounts for **93.7%** (or **$320.5 million**) of the portfolio's fair value[109](index=109&type=chunk) [Notes to the Unaudited Financial Statements](index=39&type=section&id=Notes%20to%20the%20Unaudited%20Financial%20Statements) This section details accounting policies, GECM agreement, fair value measurements (**$178.9 million** Level 3), **$207.4 million** debt, and financial highlights including **$11.46** NAV per share [Note 3. Significant Agreements and Related Parties](index=44&type=section&id=Note%203.%20Significant%20Agreements%20and%20Related%20Parties) The company is externally managed by GECM, incurring a **1.50%** base management fee and a **20%** income incentive fee over a **7%** hurdle, with **$1.3 million** in management fees and **$1.2 million** in income incentive fees for Q1 2025 - The base management fee is calculated at an annual rate of **1.50%** of the company's average adjusted gross assets. For Q1 2025, this amounted to **$1,272 thousand**[155](index=155&type=chunk)[156](index=156&type=chunk) - The Income Incentive Fee is **20%** of pre-incentive fee net investment income over a **7.0%** annualized hurdle rate. For Q1 2025, the company incurred **$1,150 thousand** in income incentive fees[158](index=158&type=chunk)[163](index=163&type=chunk) - The Capital Gains Incentive Fee is **20%** of cumulative realized capital gains since April 1, 2022, net of losses and unrealized depreciation. No fee was accrued for Q1 2025[162](index=162&type=chunk)[163](index=163&type=chunk) [Note 4. Fair Value Measurement](index=46&type=section&id=Note%204.%20Fair%20Value%20Measurement) The **$341.9 million** investment portfolio is categorized by fair value hierarchy, with **$178.9 million** in Level 3 assets and **$56.0 million** valued at NAV Fair Value Hierarchy of Investments (as of March 31, 2025, in thousands) | Level | Debt | Equity/Other | Total | | :--- | :--- | :--- | :--- | | Level 1 | $ - | $3,127 | $3,127 | | Level 2 | $103,897 | $ - | $103,897 | | Level 3 | $139,024 | $39,912 | $178,936 | | **Total Categorized** | **$242,921** | **$43,039** | **$285,960** | | Investment measured at NAV | | | $55,950 | | **Total Investments** | | | **$341,910** | - For the three months ended March 31, 2025, there was a net transfer of assets from Level 3 to Level 2 of **$21.9 million**, primarily due to increased pricing transparency for six investments[178](index=178&type=chunk) [Note 5. Debt](index=50&type=section&id=Note%205.%20Debt) As of March 31, 2025, total debt outstanding was **$207.4 million**, including **$12 million** from a credit facility and **$195.4 million** in unsecured notes, with a **163.8%** asset coverage ratio - The company has a **$25 million** senior secured revolving credit facility with City National Bank, maturing in May 2027. As of March 31, 2025, **$12 million** was outstanding[185](index=185&type=chunk) Unsecured Notes Outstanding (as of March 31, 2025, in thousands) | Note Series | Principal Outstanding | Maturity Date | | :--- | :--- | :--- | | GECCO 5.875% | $57,500 | June 30, 2026 | | GECCZ 8.75% | $40,000 | Sep 30, 2028 | | GECCI 8.50% | $56,500 | April 30, 2029 | | GECCH 8.125% | $41,400 | Dec 31, 2029 | | **Total** | **$195,400** | | - The company's asset coverage ratio was approximately **163.8%** as of March 31, 2025, compliant with the **150%** minimum requirement[198](index=198&type=chunk) [Note 9. Financial Highlights](index=57&type=section&id=Note%209.%20Financial%20Highlights) For Q1 2025, NAV per share decreased to **$11.46**, with **$0.40 per share** net investment income, a **0.34%** NAV return, and a **20.88%** annualized expense ratio Financial Highlights Per Share | Per Share Data | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net asset value, beginning of period | $11.79 | $12.99 | | Net investment income | $0.40 | $0.37 | | Net increase (decrease) from operations | $0.04 | $(0.05) | | Distributions declared | $(0.37) | $(0.35) | | **Net asset value, end of period** | **$11.46** | **$12.57** | Key Ratios and Supplemental Data | Ratio/Data | For the Three Months Ended March 31, 2025 | For the Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Total return based on net asset value | 0.34% | (0.53)% | | Total return based on market value | (3.91)% | 7.14% | | Ratio of total expenses to avg. net assets (annualized) | 20.88% | 18.51% | | Ratio of net investment income to avg. net assets (annualized) | 16.12% | 13.71% | | Portfolio turnover | 8% | 12% |

Core Viewpoint - Great Elm Capital Corp. reported strong financial results for Q1 2025, achieving record total investment income of $12.5 million, driven by cash flows from its CLO joint venture and new investments, with net investment income (NII) exceeding the increased quarterly distribution [3][5]. Financial Highlights - Total investment income for Q1 2025 was $12.5 million, or $1.08 per share, compared to $8.9 million in Q1 2024 [8][20]. - NII for Q1 2025 was $4.6 million, or $0.40 per share, up from $2.1 million, or $0.20 per share, in Q4 2024 [5][20]. - The company increased its quarterly distribution by 5.7% to $0.37 per share for Q1 2025, with a second quarter distribution of the same amount approved, equating to a 14.7% annualized yield based on the closing price of $10.09 on May 2, 2025 [5][10]. Portfolio and Investment Activity - As of March 31, 2025, GECC held total investments of $341.9 million at fair value, with a significant portion in corporate credit [5][19]. - The weighted average current yield on the debt portfolio was 12.3%, with floating rate instruments comprising approximately 73% of the fair market value of debt investments [6][11]. - During Q1 2025, GECC deployed approximately $37.4 million into 16 investments at a weighted average current yield of 15.1% [6]. Asset and Liability Overview - Net assets were $132.3 million, or $11.46 per share, as of March 31, 2025, down from $136.1 million, or $11.79 per share, at the end of Q4 2024 [5][19]. - Total debt outstanding was $207.4 million, with various senior notes and $12.0 million outstanding on a revolving line of credit [9][19]. Management Commentary - The CEO expressed optimism about the company's ability to cover distributions throughout 2025 and emphasized a focus on capital deployment into opportunities with compelling risk-adjusted returns [3].

Core Viewpoint - Great Elm Capital Corp. (GECC) will release its financial results for Q1 2025 on May 5, 2025, and discuss them in a conference call on May 6, 2025, at 8:30 a.m. ET [1] Group 1 - The conference call will be accessible via dial-in numbers for both the United States and international participants [2] - Participants are advised to join the call approximately five minutes before the start time and provide the passcode "GECC" [2] - An accompanying slide presentation will be available in PDF format on GECC's website after the earnings release [2][3] Group 2 - GECC is an externally managed business development company focused on generating current income and capital appreciation through investments in debt and income-generating equity securities [4] - The company invests in specialty finance businesses and collateralized loan obligations (CLOs) [4]