Great Elm Capital Corp. Announces Fourth Quarter and Year End 2018 Financial Results; Fourth Quarter Net Investment Income of $0.25 Per Share; Board Sets Second Quarter 2019 Distribution of $0.083 Per Share Per Month; Subsequent Acquisition of Prestige Capital Corporation
- Net investment income (“NII”) for the quarter ended
December 31, 2018was approximately $2.7 million, or $0.25per share, equating to 1.0x distribution coverage for the quarter. For the year ended December 31, 2018, we generated $1.44per share in NII vs. approximately $1.00per share in base distributions paid ( $0.083per share per month), representing greater than 1.4x distribution coverage. Including our special distribution of $0.24per share, the distribution coverage was approximately 1.2x.
March 2019, the Board of Directors (the “Board”) set monthly distributions of $0.083per share for the second quarter of 2019, representing a yield of approximately 9.6% on December 31, 2018net asset value (“NAV”). Including the special distribution, the annual distribution yield for fiscal year 2018 was approximately 12.0% on December 31, 2018NAV.
- Net assets on
December 31, 2018were approximately $110.1 million. NAV per share on December 31, 2018was $10.34, as compared to NAV per share of $12.00on September 30, 2018.
- We had approximately
$0.4 millionof net realized gains during the quarter ended December 31, 2018, or approximately $0.04per share, and net unrealized depreciation of approximately $15.6 million, or approximately $1.46per share, driven primarily by secondary market volatility and widening leveraged credit spreads.
- During the quarter ended
December 31, 2018, we invested approximately $34.8 millionacross 10 investments(2), including one new issuer. During the quarter ended December 31, 2018, we monetized (in part or in full) approximately $40.0 millionacross 19 investments(3).
“I’m pleased to report that NII successfully covered our base distribution for the ninth consecutive quarter,” remarked
PORTFOLIO AND INVESTMENT ACTIVITY
During the quarter ended
During the quarter ended
LEGACY FULL CIRCLE PORTFOLIO
CONSOLIDATED RESULTS OF OPERATIONS
Total investment income for the quarter ended
Net realized gains for the quarter ended
LIQUIDITY AND CAPITAL RESOURCES
SELECT SUBSEQUENT ACTIVITY
Our distribution policy has been designed to set an annual base distribution rate that is covered by NII. From time to time, as catalyst-driven investments are realized or when we out-earn our declared distributions, we may supplement monthly distributions with special distributions from NII generated in excess of the declared distributions(4).
CONFERENCE CALL AND WEBCAST
The presentation will also be published before the opening of the financial markets on
Cautionary Statement Regarding Forward-Looking Statements
Statements in this communication that are not historical facts are “forward-looking” statements within the meaning of the federal securities laws. These statements are often, but not always, made through the use of words or phrases such as “expect,” “anticipate,” “should,” “will,” “estimate,” “designed,” “seek,” “continue,” “upside,” “potential” and similar expressions. All such forward-looking statements involve estimates and assumptions that are subject to risks, uncertainties and other factors that could cause actual results to differ materially from the results expressed in the statements. Among the key factors that could cause actual results to differ materially from those projected in the forward-looking statements are: conditions in the credit markets, the price of GECC common stock and the performance of GECC’s portfolio and investment manager. Information concerning these and other factors can be found in GECC’s Annual Report on Form 10-K and other reports filed with the
Non-GAAP Financial Measures
Adjusted Net Income has limitations as an analytical tool, and you should not consider it either in isolation from, or as a substitute for, analyzing GECC’s results as reported under US GAAP. Non-GAAP financial measures reported by GECC may not be comparable to similarly titled amounts reported by other companies.
Set forth below is a reconciliation of Adjusted Net Income to the most directly comparable US GAAP financial measure, net income. The information in the table below includes forecasts, projections and other predictive statements that represent GECC’s assumptions and expectations in light of currently available information. These forecasts, projections and other predictive statements involve risks, variables and uncertainties. GECC’s actual performance results may differ from those projected in in the table below, and any such differences may be material.
|GAAP Net Income||$||1,125|
|Owner's compensation & expenses||613|
|Adjusted Net Income||$||1,990|
This press release does not constitute an offer of any securities for sale.
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(1) The per share figures are based on a weighted average of shares outstanding for the three months ended
(2) This includes new deals, additional fundings (inclusive of those on revolving credit facilities), refinancings and PIK interest. Amounts included herein do not include investments in short-term securities, including United States Treasury Bills and money market mutual funds.
(3) This includes scheduled principal payments, prepayments, sales and repayments (inclusive of those on revolving credit facilities). Amounts included herein do not include investments in short-term securities, including United States Treasury Bills and money market mutual funds.
(4) There can be no assurance that any such supplemental amounts will be received or realized, or even if received and realized, distributed or available for distribution. Past distributions are not indicative of future distributions. Distributions are declared by the Board out of the funds legally available therefor.
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
Dollar amounts in thousands (except per share amounts)
|Non-affiliated, non-controlled investments, at fair value
(amortized cost of $137,852 and $179,558, respectively)
|Non-affiliated, non-controlled short term investments, at fair value
(amortized cost of $78,093 and $65,892, respectively)
|Affiliated investments, at fair value
(amortized cost of $89,854 and $4,240, respectively)
|Controlled investments, at fair value
(amortized cost of $20,648 and $18,487, respectively)
|Cash and cash equivalents||4,167||2,916|
|Receivable for investments sold||10,887||12|
|Due from portfolio company||555||204|
|Due from affiliates||5||692|
|Prepaid expenses and other assets||423||302|
|Notes payable 6.50% due September 18, 2022 (including unamortized discount
of $1,141 and $1,435, respectively)
|Notes payable 6.75% due January 31, 2025 (including unamortized discount
of $1,588 and $0, respectively)
|Payable for investments purchased||84,102||66,165|
|Accrued incentive fees payable||5,422||5,257|
|Due to affiliates||1,069||936|
|Accrued expenses and other liabilities||758||703|
|Commitments and contingencies (Note 6)||$||-||$||-|
|Common stock, par value $0.01 per share (100,000,000 shares authorized,
10,652,401 and 10,652,401shares issued and outstanding, respectively)
|Additional paid-in capital||198,247||198,426|
|Total net assets||$||110,116||$||132,287|
|Total liabilities and net assets||$||281,563||$||239,913|
|Net asset value per share||$||10.34||$||12.42|
CONSOLIDATED STATEMENTS OF OPERATIONS
Dollar amounts in thousands (except per share amounts)
|For the Three Months Ended
|For the Year Ended
|Interest income from:|
|Non-affiliated, non-controlled investments||$||4,896||$||(1,889||)||$||16,259||$||15,830|
|Non-affiliated, non-controlled investments (PIK)||-||10,719||-||10,719|
|Affiliated investments (PIK)||966||-||7,204||-|
|Controlled investments (PIK)||275||990||971||990|
|Total interest income||6,860||9,613||27,334||28,924|
|Dividend income from non-affiliated, non-controlled investments||19||59||197||298|
|Other income from:|
|Non-affiliated, non-controlled investments||18||2||70||470|
|Total other income||34||38||223||506|
|Total investment income||$||6,913||$||9,710||$||27,754||$||29,728|
|Professional services related to the Merger and Formation transactions||-||-||-||-|
|Accrued administration fee waiver||-||(140||)||-||(70||)|
|Net investment income before taxes||$||2,885||$||6,417||$||15,514||$||17,699|
|Net investment income||$||2,705||$||6,293||$||15,334||$||17,575|
|Net realized and unrealized gains (losses) on investment transactions:|
|Net realized gain (loss) from:|
|Non-affiliated, non-controlled investments||$||394||$||221||$||2,209||$||3,641|
|Total net realized gain (loss)||394||213||2,419||3,633|
|Net change in unrealized appreciation (depreciation) from:|
|Non-affiliated, non-controlled investments||(6,356||)||(1,167||)||(8,359||)||(21,078||)|
|Total net change in unrealized appreciation (depreciation)||(15,571||)||(1,580||)||(26,758||)||(23,962||)|
|Net realized and unrealized gains (losses)||$||(15,177||)||$||(1,367||)||$||(24,339||)||$||(20,329||)|
|Net increase (decrease) in net assets resulting from operations||$||(12,472||)||$||4,926||$||(9,005||)||$||(2,754||)|
|Net investment income per share (basic and diluted):||$||0.25||$||0.59||$||1.44||$||1.52|
|Earnings per share (basic and diluted):||$||(1.18||)||$||0.41||$||(0.85||)||$||(0.24||)|
|Weighted average shares outstanding (basic and diluted):||10,652,401||10,667,236||10,652,401||11,655,370|
Source: Great Elm Capital Corp.