Great Elm Capital Group Q1 2025 Earnings Report

Great Elm Capital Group EPS Results

• Actual EPS: $0.40
• Consensus EPS: $0.39
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: N/A

Great Elm Capital Group Revenue Results

• Actual Revenue: $7.97 million
• Expected Revenue: $12.11 million
• Beat/Miss: Missed by -$4.14 million
• YoY Revenue Growth: N/A

Great Elm Capital Group Announcement Details

• Quarter: Q1 2025
• Date: 5/5/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, May 6, 2025
• Conference Call Time: 8:30AM ET

Great Elm Capital Group (NASDAQ:GECC) (NASDAQ: GECC) is a specialty finance company that focuses on private credit and structured finance investments. Through its wholly owned external manager, Great Elm Capital Management, LLC, the company originates, underwrites and acquires floating-rate loans and credit instruments. Its investment portfolio spans collateralized loan obligations (CLOs), middle-market direct lending and opportunistic credit strategies, providing investors with exposure to senior secured debt and equity tranches of diversified credit pools.

Since completing its initial public offering in 2019, Great Elm Capital Group has steadily expanded its platform to serve small and mid-sized companies across a variety of industries, including business services, healthcare, industrials and consumer products. The firm’s disciplined credit process emphasizes downside protection through rigorous underwriting, active portfolio management and conservative leverage targets. By combining internally generated credit expertise with access to third-party origination channels, Great Elm seeks to generate risk-adjusted returns that are less correlated with broader public markets.

Headquartered in New York City, Great Elm Capital Group serves institutional investors across North America and Europe, and maintains strategic relationships with banks, independent sponsors and financial intermediaries. The company’s leadership team is led by Chief Executive Officer Mike Gallis, whose more than two decades of experience in leveraged finance and structured credit guides the firm’s investment strategy. Supported by a seasoned group of portfolio managers, credit analysts and risk professionals, Great Elm Capital Group continues to pursue growth opportunities within the evolving private credit landscape.

Great Elm Capital Group Q1 2025 Earnings Call Transcript

Key Takeaways

• Record setting Q1: Total investment income of $12.5M (+37% QoQ, +40% YoY) and NII per share doubling to $0.40, marking the highest cash income quarter in company history.
• Dividend growth covered: First quarter NII more than covers the $0.37 per share distribution (up 5.7% QoQ), with management expecting Q2 NII to exceed Q1 levels.
• Modest NAV decline: NAV per share dipped from $11.79 to $11.46 due to unrealized markdowns on CLO JV equity and CoreWeave positions, though these losses are expected to reverse over time.
• Capital flexibility: Filed a $100M “at‐the‐market” equity program to issue shares at NAV or better, enhancing ability to fund portfolio growth and maintain dividend coverage.
• Strengthened platform: Corporate portfolio now 71% first‐lien loans with zero non‐accruals and Specialty Finance rebranded and streamlined with a new CIBC‐led facility, positioning for increased returns.

Presentation

[Operator]

Greetings and welcome to the Great Elm Capital Corp First Quarter twenty twenty five Financial Results Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Peter Skusa, a representative of the company. Thank you. You may begin.

[Peter Sceusa, Investor Relations Senior Associate at ICR]

Hello and thank you everyone for joining us for Great Elm Capital Corp. First Quarter twenty twenty five Earnings Conference Call. If you'd like to be added to our distribution list, you can email investorrelationsgreatmcap dot com or you could sign up for alerts directly on our website, www.greatmcc.com. I'd like to note the slide presentation posted on our website accompanying today's call. The slide presentation can be found on our website under Events and Presentations.

[Peter Sceusa, Investor Relations Senior Associate at ICR]

On our website, you could also find our earnings release and SEC filings. I'd to call your attention to the customary Safe Harbor statement regarding forward looking information. Also, 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. Filings with the SEC for important factors that could cause actual results to differ materially from these statements.

[Peter Sceusa, Investor Relations Senior Associate at ICR]

Great Elm Capital Corp. Does not undertake to update these forward looking statements unless required by law. To obtain copies of SEC filings, please visit Great Elm Capital Corp. Website under Financials, SEC Filings or visit the SEC's website. Hosting the call today is Matt Kaplan, Great Elm Capital Corp.

[Peter Sceusa, Investor Relations Senior Associate at ICR]

Chief Executive Officer, who will be joined by Chief Financial Officer, Kerry Davis Chief Compliance Officer and General Counsel, Adam Kleinman and Mike Heller, President of Great Elm Specialty Finance. We'll now turn the call over to GECC's CEO, Matt Kaplan.

[Matt Kaplan, CEO & President at Great Elm Capital]

Thanks, Peter, and thank you all for joining us today. We are pleased to start 2025 with a record setting quarter, achieving the highest total investment income in the company's history at $12,500,000 Notably, the first quarter was also our highest ever cash income quarter, a testament to the strategic portfolio enhancements undertaken over the past few years. This 37% increase in TII from last quarter and more than 40% year over year growth was driven by the success of our CLO JV as well as from income generated by new investments in the quarter. NII per share doubled to $0.40 per share from $0.20 in the prior quarter, largely attributable to the increase in total investment income and the ramping contributions from investments. Our NII more than covered the increased first quarter distribution of $0.37 per share, a 5.7% increase from the prior quarter's $0.35 per share distribution.

[Matt Kaplan, CEO & President at Great Elm Capital]

This marks our commitment to delivering growing income to shareholders supported by solid underlying portfolio performance. As we move through the second quarter, we are well positioned to further execute on our long term growth strategy and navigate the dynamic macro environment. Based on current expectations, we anticipate that second quarter NII will exceed first quarter levels. As we discussed on our last call, we anticipated an increase in cash distributions from the CLO JV this quarter. A CLO distribution patterns are typically uneven in their early stages.

[Matt Kaplan, CEO & President at Great Elm Capital]

For example, we received $3,800,000 of cash distributions from the CLO JV in the first quarter of twenty twenty five as compared to $05,000,000 in the fourth quarter of twenty twenty four, which was a step down from the $3,200,000 in the third quarter of twenty twenty four. Additionally, in the second quarter to date, we have received $4,300,000 of cash distributions from the JV. We do expect these fluctuations will dampen over time as we fund additional CLO investments and continue to leverage our increased scale. For these reasons and considering our ongoing capital raising and deployment initiatives, we'd like to reiterate that it is best to review GECC on a four quarter basis opposed to benchmarking the company quarter to quarter. Moving on to our portfolios performance, while our NII generation was strong, we did see a modest step down in NAV per share as outlined on Slide eight, driven by unrealized losses on portfolio investments.

[Matt Kaplan, CEO & President at Great Elm Capital]

We began to see volatility in the markets pick up in the middle of the quarter, which led to markdowns on positions at quarter end, specifically our CLO JV equity and our investments in CW opportunity to LP, a vehicle which was created to hold convertible preferred equity in CoreWeave and AI hyperscaler, which went public at the March. We remain confident in these investments in our portfolio and expect these unrealized losses to reverse over time as market conditions stabilize. Additionally, we recently filed a prospectus supplement for a $100,000,000 at the market equity program to issue shares at NAV or better. We believe this new tool will provide us with additional capital flexibility as we seek to continue scaling the ECC. We remain well positioned to cover our dividend over the course of 2025 and our portfolio is set up to weather the uncertain macro environment.

[Matt Kaplan, CEO & President at Great Elm Capital]

With our strength and foundation, we remain confident in our ability to generate sustainable returns and deliver increasing value to our shareholders in the years ahead. With that, I'd like to hand the call over to Carrie Davis to discuss our first quarter twenty twenty five performance.

[Keri Davis, CFO & Treasurer at Great Elm Capital]

Thanks, Matt. I'll go over our financial highlights now, but we invite all of you to review our press release, accompanying presentation, and SEC filings for greater detail. During the first quarter, GECC generated NII of 4,600,000 or $0.40 per share as compared to $2,100,000 or $0.20 per share in the fourth quarter of twenty twenty four. The increase in NII was primarily driven by the receipt of distributions from the CLO JV, as well as income from other new investments. Our net assets as of 03/31/2025 were $132,000,000 as compared to $136,000,000 as of December 31.

[Keri Davis, CFO & Treasurer at Great Elm Capital]

Our NAV per share was $11.46 as of March 31 versus $11.79 as of December 31. Details for the quarter over quarter change in NAV can be found on slide eight of the investor presentation. As of March 31, GECC's asset coverage ratio was 163.8 compared to 169.7% as of December 31. As of March 31, total debt outstanding was approximately $2.00 $7,000,000 and we had $12,000,000 outstanding on our $25,000,000 revolver. Cash totaled approximately $1,300,000 Our Board of Directors authorized a $0.37 per share cash distribution for the second quarter, which will be payable on June 30 to stockholders of record as of June 16.

[Keri Davis, CFO & Treasurer at Great Elm Capital]

The distribution equates to a 12.9% annualized dividend yield on our March 31 net asset value. I'll turn the call back over to Matt.

[Matt Kaplan, CEO & President at Great Elm Capital]

Thanks, Carrie. In the quarter, we continued to enhance our portfolio strength by steadily increasing our secured debt positions. Our CLO joint venture remains a significant contributor to this strategy and we expect it to remain an important source of income for GECC as we continue to expand the vertical, targeting high teens to 20% returns over time. We have grown our corporate portfolio to nearly $250,000,000 of investments and first lien loans comprised 71% of the corporate portfolio as of March 31. This demonstrates our commitment enhancing portfolio quality while maintaining a focus on secured income generating assets.

[Matt Kaplan, CEO & President at Great Elm Capital]

Alongside new investments, our CLO JV helped drive us to record total investment income this quarter. This joint venture expands our exposure to a diverse portfolio of broadly syndicated first lien loans and continues to be a key contributor to our early success with approximately $48,000,000 deployed through March 31. As a reminder, we hold the majority of our CLO exposure a bit differently than other BDCs for closed end funds that many may be familiar with. These other entities typically hold their investments directly, which allows the income to be recognized utilizing the effective yield methodology while GECC only recognizes income when the CLO JV makes distributions. This leads to a more uneven nature to our income reporting.

[Matt Kaplan, CEO & President at Great Elm Capital]

While we may hold some minority CLO positions directly on our balance sheet, the JV affords us the ability to have exposure to majority interest in CLOs, which we believe can provide enhanced economics. We are comfortable with this quarter to quarter income oscillation, which we expect will dampen over time. Further, outside of some markdowns we discussed, our investment portfolio is performing well. And as of March 31, we have zero positions on non accrual. Notably, the single issuer that we had on non accrual at year end was restructured in February into three debt instruments, which will begin generating income in 2026, demonstrating our hands on approach to working with our portfolio companies.

[Matt Kaplan, CEO & President at Great Elm Capital]

While it's still too early to assess the overall impact of tariffs on our portfolio, our initial analysis suggests limited direct exposure. Our portfolio maintains broad diversification with a predominantly domestic focus and minimal exposure to China. With our defensive portfolio structure, we believe we are well positioned to navigate the ongoing tariff uncertainty. In this volatile environment, we continue to take a measured approach to capital deployment. As always, we prioritize credit quality and seek investments with minimal risk of permanent capital loss, directing capital toward opportunities that are primed to perform across various economic cycles.

[Matt Kaplan, CEO & President at Great Elm Capital]

This balanced approach combined with our strengthened platform and diversified portfolio positions us well to continue growing Great Elm Capital Corp and delivering attractive risk adjusted returns for our shareholders. We remain excited for the future of GECC. And with that, I would like to turn the call over to Mike Keller to provide an update on Specialty Finance.

[Michael Keller, President - Specialty Finance Business at Great Elm Capital]

Thanks, Matt. The start of 2025 has been transformative for Great Elm Specialty Finance.

[Michael Keller, President - Specialty Finance Business at Great Elm Capital]

In January, we combined the corporate and healthcare ABL portfolios and replaced our existing asset backed lender with a new facility led by CIBC, which is now in active syndication to increase the facility commitment as our business ramps. In March, after repositioning the legacy Great Elm Healthcare Finance business to focus solely on healthcare real estate financing opportunities, we closed on a leverage facility to support the real estate assets held within that platform. In April, we completed the rebranding of Sterling as Great Elm Commercial Finance, which today offers traditional ABL products to a wide range of industries, including healthcare. Also, GESF exited its last equipment leaseholding at a gain, further simplifying the business. These actions have streamlined our operations and better aligned our platform with growth objectives.

[Michael Keller, President - Specialty Finance Business at Great Elm Capital]

While income from GESF was similar to the prior quarter, we are confident that these changes will translate into increasing returns over the remainder of the year.

[Matt Kaplan, CEO & President at Great Elm Capital]

Thanks, Mike. In closing, we are pleased with our first quarter results and remain well positioned to grow NII in the second quarter and cover our dividend in 2025. With that, I'll turn the call over to the operator for questions. Operator?

[Operator]

Thank you. We will now be conducting a question and answer session. The first question is from Mikey Schleien from Ladenburg Thalmann. Please go ahead.

[Mickey Schleien, Managing Director, Equity Research at Ladenburg Thalmann]

Yes. Good morning, everyone. Matt, 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?

[Matt Kaplan, CEO & President at Great Elm Capital]

So that's a great question, Mickey. Thanks. So I think overall, can see in the first quarter, we saw some modest markdowns in our portfolio. You can see we had $0.38 of net unrealized gain loss of which about $0.30 of that is actually attributable to two positions that we noted the CLO JV and also our investment in chloraweave away from that the rest of the portfolio was performed pretty hopefully. And we actually started to see some mark, the volatility pickup in late February, early March.

[Matt Kaplan, CEO & President at Great Elm Capital]

In April, really, you look at kind of the CLO market by the end of last week, we're kind of getting close to being back to where we ended March, interestingly enough and spread. So, you know, kind of depends on where we remain to be seen for this indicated loan market. You can pull up as, you know, move down a little bit from $3.31 to $4.31. So obviously on a whole lot of diversified portfolio, I can read between the lines there, but I think overall the portfolio is pretty healthy and we had minimal NAV impact those are all unrealized over time as market conditions stabilize, we would expect a lot of that to largely reverse. One of the positives of our CLO positions is they're relatively young.

[Matt Kaplan, CEO & President at Great Elm Capital]

So actually when you look at CLOs in choppy markets like this, kind of this best CLO vintages are the ones that were issued just prior to significant bouts of market volatility due to the long term financing structure of them. You look at the 02/2007, '8 vintages of CLOs, or you look to the 2019 vintages, COVID all very, very strong performance over the life cycle. So I think we're well set up there. And then, on Core Weave, you can just look at that as a publicly traded stock now. And we are invested in a vehicle that has a convertible preferred.

[Matt Kaplan, CEO & President at Great Elm Capital]

So you can kind of think about it at $3.31. You know, if the stock had closed around $48 a share, we would have had a roughly flat mark quarter on quarter. You can see that at $3.31, the stocks did close at 37 or 38 level and around the March there. So we took a hit on that, but look at the it's been a volatile name. We have a lot of faith in the company over time and stock, I think, was over 50 as of yesterday's close.

[Mickey Schleien, Managing Director, Equity Research at Ladenburg Thalmann]

Thanks for that, Matt. You just mentioned that the CLO market is sort of stabilized. The JV holds a warehouse facility with Apex credit. What is the JV earning on that warehouse? And now that the market stabilized, when do you expect that

[Matt Kaplan, CEO & President at Great Elm Capital]

that CLO actually closed in at the end of last month already. And we were able to get the execution on that done with commitments that were made in kind of early March. So it was a very successful outcome to be able to get that one taken care of.

[Mickey Schleien, Managing Director, Equity Research at Ladenburg Thalmann]

I'm sorry, when did you say it priced?

[Matt Kaplan, CEO & President at Great Elm Capital]

It closed April.

[Mickey Schleien, Managing Director, Equity Research at Ladenburg Thalmann]

April. And so it usually takes a quarter or two for CLOs to provide their initial distribution. Would that be the case for this investment?

[Matt Kaplan, CEO & President at Great Elm Capital]

For that specific one, yes. I think we would expect our first distribution from that underlying investment in the underlying CLO JV to come in October of twenty twenty five.

[Mickey Schleien, Managing Director, Equity Research at Ladenburg Thalmann]

Okay. So relative to

[Matt Kaplan, CEO & President at Great Elm Capital]

So as I yeah. So as I as I kinda laid out, you know, on the CLO CLOs and to our whole business, you know, we have kind of we'll have a little bit of fluctuation in the way our earnings are done because the CLO JV will be distributing dividends. Right? That's how we record our income from that. So, you know, in the first quarter, we got about 3,800,000.0 from the CLO JV.

[Matt Kaplan, CEO & President at Great Elm Capital]

This far quarter to date, 4,300,000.0. So I think we're, you know, well positioned to grow NII and cover the 37 dividend next quarter. And as I mentioned, we kind of have to look and evaluate our business over a twelve month period rather than quarter to quarter. And I expect our full year NII will improve and cover as it looks to relatively '24 to be higher and we'll cover the dividend.

[Mickey Schleien, Managing Director, Equity Research at Ladenburg Thalmann]

I understand. And one more question, if I might. You borrowed on your credit facility. And I'm curious whether that facility requires mark to market accounting, just thinking in terms of all the volatility we're seeing in the markets.

[Matt Kaplan, CEO & President at Great Elm Capital]

Sure. So the facility has a borrowing base, which is feeds in the fair value of investments that are comprised of the borrowing base. But we have significant borrowing capacity multiples of what the actual commitment is more than three x that commitment level using recent marks. So I have no concerns there. And then the covenants are laid out in the queue.

[Matt Kaplan, CEO & President at Great Elm Capital]

It's a minimum asset value of 65,000,000. We have a hundred and 35 ish million of NAV and then 150% ACR. So kind of just the standard BDC ACR covenant there. I think we drew on the revolver. If you look, we raised equity at the very end of the fourth quarter, which led to an increase in share count.

[Matt Kaplan, CEO & President at Great Elm Capital]

And we rolled over the quarter with at year end to the 8.5 ish million of cash. So that was just, as we deployed and we raised $12,000,000 or sorry, we raised $13,300,000 in the fourth quarter, modestly drawing on our revolver to optimize our portfolio and yield helped also, as I said, our income this quarter was driven by new deployments as well as the CLO JV. So we are looking to continue to grow, diversify and scale GECC.

[Mickey Schleien, Managing Director, Equity Research at Ladenburg Thalmann]

I appreciate that. That's it for me this morning. Thank you for taking my questions.

[Matt Kaplan, CEO & President at Great Elm Capital]

Thank you, Mickey.

[Operator]

The next question is from Eric Zwick from Lucid Capital Markets. Please go ahead.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC]

Thanks. Good morning all. I wanted to start first with a question and Chris, if you could provide a little maybe color into the timing of the new deployments and the monetization you had in the quarter based on the incoming yields being significantly higher than the outgoing yields. Seems like there should be some benefit to the overall portfolio. So curious how much of that was actually reflected in the first quarter and if there may be some benefit in 2Q as well?

[Matt Kaplan, CEO & President at Great Elm Capital]

I think it was we had it's a good question. I think it was a little barbelled. We had excess cash and some commitments that we had to close on in the January time frame, but then kind of February was more of a low. And then in March, I would say, we were able to take advantage of a little bit of the the market volatility that started to pick up with some deployments. And we hope to see some additional flow through effect into 2Q.

[Matt Kaplan, CEO & President at Great Elm Capital]

As I said, I think we're looking to see 2Q NII increase sequentially from 1Q.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC]

Got it. Thanks for the commentary there, Matt. And maybe just kind of continuing along that thought process in terms of forward yield. Could you maybe just quantify what the pipeline looks like today in terms of magnitude of size as well as what you're seeing for yields in the pipeline today?

[Matt Kaplan, CEO & President at Great Elm Capital]

Sure. I think we are looking at a few private credit kind of direct lending opportunities as always. We had a couple that have been put on pause until we figure out the tariff situation as, you know, tariffs are kind of leading to some uncertainty out there. However, there is other activity going on in the space in lending. We're starting we have seen some m and a or refinancing opportunities, companies looking for capital.

[Matt Kaplan, CEO & President at Great Elm Capital]

So the pipeline actually remains a little stronger, I'd say, than it was probably three to four months ago on the direct lending side. And we are the broadly syndicated tradable loan space is providing certain pockets of opportunity here and there. There are some babies that get thrown out with the bath water due to industry sometimes and our team continues to look at underwriting those. You know, we maintain relationships with many management teams and sponsors that allow us to, you know, work to create a pipeline of names in the syndicated market that maybe aren't interesting when they come as a new issue, but we follow them and track them. And that pipeline is looking interesting.

[Matt Kaplan, CEO & President at Great Elm Capital]

We need to maintain a cautious approach to that. And we have certain assets in our portfolio that are in the broadly syndicated loan space that are very, very high quality kind of, I would quasi call it a cash surrogate bucket that when we want to take advantage of certain opportunistic trading levels and names that we know and companies that we know, how we can go harvest some of our very cash surrogate, low yielding investments to rotate into that. But it's opportunistic and not a large percentage of what we do, but helps generate some coming alpha over time.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC]

And then I appreciate the comments you gave in the prepared remarks regarding kind of limited exposure, direct exposure to tariffs. So I'm curious if you've looked at your portfolio in terms of exposure to government contracts, just given some of the the doge cuts and cutbacks and and federal spending and and things of that nature?

[Matt Kaplan, CEO & President at Great Elm Capital]

We have. We were looking at an investment that we thought that we had historically been involved in this situation. It was refinanced and then, know, it was not in our portfolio anymore, but, you know, due to the government contract nature of it, we've traded off, we've decided not to take in to get involved. But I think on the tariff side, the question is that a lot of people are asking what's the direct exposure? And I think we're working to think through the second and third order effects of the dynamic of tariffs and also those are government initiatives.

[Matt Kaplan, CEO & President at Great Elm Capital]

I think the bigger question that everyone's trying to understand is, what's the duration of this uncertainty and how will that lead to economic changes? And to that end, we've been re underwriting our existing investments and focusing on thinking through that lens on new investments on, if there is a recession, how severe could it be? What's the company's defensive position? So we are considering that in all of our current portfolio investments as we do our routine portfolio reviews as well as new underwriting.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC]

Great. And one last one for me, and I'll step aside. So just looking at the kind of industry breakdown of the corporate portfolio, about 10% is categorized as consumer. You could maybe say another 2% if you include casinos and gaming. There are concerns in the market regarding that the lower end consumer and especially if we get another inflation from the tariffs.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC]

Just curious if you could kind of characterize your portfolio in terms of what segment of consumers they're targeting and what potential kind of impacts or mitigations might need to be made there.

[Matt Kaplan, CEO & President at Great Elm Capital]

Yeah. Our largest exposure in the consumer space would be in companies that have exposure to private label products and manufacturing. So, you know, to the extent there is weakness in the consumer, that's kinda they should benefit from any trade down effect from the premium brands into the private label. So I think our consumer and another one of our consumer services businesses, our larger exposure is you can look on the schedule investments is CSC service works, which is, laundry mats. So, you know, generally very recession resilient businesses.

[Matt Kaplan, CEO & President at Great Elm Capital]

So I think our consumer is actually more defensive than just if you think about the kind of a regular white label brand of like what is the consumer product now? It's more tied to the benefit from any trade down effects.

[Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC]

That's helpful. Thanks for taking all my questions today.

[Matt Kaplan, CEO & President at Great Elm Capital]

Yeah, you have it, Eric.

[Operator]

Next question is from Mitchell Penn from Oppenheimer and Company. Please go ahead.

[Mitchel Penn, Managing Director at Oppenheimer & Co. Inc.]

Thanks. Hey Matt. Quick question on the CLO. Your expected ROE on that investment?

[Matt Kaplan, CEO & President at Great Elm Capital]

We are targeting, call it high teens to 20% returns over IRRs on our callers in.

[Mitchel Penn, Managing Director at Oppenheimer & Co. Inc.]

And is that before fees? Do you take any fees out at the joint venture level?

[Matt Kaplan, CEO & President at Great Elm Capital]

There's no like GECC. I think that that's just the income that GECC, the TII, you know, return that we expect to receive from the JV. There's no the JV does not charge a management fee or anything like that specifically.

[Mitchel Penn, Managing Director at Oppenheimer & Co. Inc.]

And if we just look at Q1, you had $3,800,000 in dividends. And then what was the loss relative to the CLO?

[Matt Kaplan, CEO & President at Great Elm Capital]

Yeah, I think it was approximately $2,000,000. Was 2,000,000. Wanna say less than a 5% hit to NAV. So if you kinda look at the other publicly traded CLO closed end funds, I think they've kinda some of them have provided ranges, I guess, for their their first quarter, but you can look at their NAVs are down anywhere from call it. I wanna say, it's big range from like six to 14%.

[Matt Kaplan, CEO & President at Great Elm Capital]

I think our CLOs are younger longer, reinvestment periods, less volatility, cleaner portfolios, etcetera.

[Mitchel Penn, Managing Director at Oppenheimer & Co. Inc.]

Yeah, we did. We actually tracked those and the first quarter ROEs were negative for everyone. So when you took the cash flow minus the marks, they were all down.

[Matt Kaplan, CEO & President at Great Elm Capital]

They charge, they have a fee structure on their side. I think when we look at the JV, right, the JV is just if you look at it actually on the quarter, Even with the markdown with the income we generated, it was positive to GCC.

[Mitchel Penn, Managing Director at Oppenheimer & Co. Inc.]

Got it. Got it. Okay. Thanks. That's all for me.

[Matt Kaplan, CEO & President at Great Elm Capital]

Yeah, you got it. Thanks, Mitchell.

[Operator]

There are no further questions at this time. I would like to turn the floor back over to Matt Kaplan for closing comments.

[Matt Kaplan, CEO & President at Great Elm Capital]

Thank you again for joining us today. We're pleased with another quarter of solid performance as we continue to execute on our long term growth strategy. We look forward to continued investor dialogue. Please let us know if we can help with any follow-up questions that you may have.

[Operator]

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

Participants

Analysts

• Peter Sceusa, Investor Relations Senior Associate at ICR
• Matt Kaplan, CEO & President at Great Elm Capital
• Keri Davis, CFO & Treasurer at Great Elm Capital
• Michael Keller, President - Specialty Finance Business at Great Elm Capital
• Mickey Schleien, Managing Director, Equity Research at Ladenburg Thalmann
• Erik Zwick, Managing Director, Equity Research at Lucid Capital Markets LLC
• Mitchel Penn, Managing Director at Oppenheimer & Co. Inc.