Q2 2025 Great Elm Capital Corp Earnings Call

Operator: Greetings, and welcome to the Great Elm Capital Corp. second quarter 2025 financial results. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Peter Sousa, a representative of the company. Please go ahead.

Greetings and welcome to the great Elm Capital, second quarter, 2025 Financial results.

At this time, all participants are in listen-only mode.

A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference, please press star, then zero on your telephone keypad.

As a reminder, this conference is being recorded.

I would now like to turn the conference over to your Host, Pizza skis, on a representative of the company.

Peter Sousa: Hello, and thank you, everyone, for joining us for Great Elm Capital Corp's second quarter 2025 earnings conference call. If you would like to be added to our distribution list, you can email investorrelations@greatelmcap.com, or you can sign up for alerts directly on our website, www.greatelmcc.com. I would 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. On our website, you can also find our earnings release and SEC filings. I would like to call your attention to the customer's safe harbor statement regarding forward-looking information. Please note that nothing in today's call constitutes an offer to sell or a solicitation of offers to purchase our securities.

Please go ahead.

Hello and thank you everyone for joining us for a great Elm Capital Corp second quarter 2025 earnings conference call.

If you'd like to be added to our distribution list, you can email investor relations great on cap.com where you can sign up for alerts directly on our website. Www.gra down. Cc.com, I'd like to know if the slide presentation posted on our website. Accompanying today's call, the slide presentation can be found on our website under events and presentations on our website. You could also

Find our earnings release and SEC filings.

Peter Sousa: 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 the SEC filings, please visit Great Elm Capital Corp's website under Financials, SEC Filings, or visit the SEC's website. Hosting the call today is Matt Kaplan, Great Elm Capital Corp's Chief Executive Officer, who will be joined by Chief Financial Officer, Keri Davis, Chief Compliance Officer and General Counsel, Adam Klyman, and Mike Power, President of Great Elm Specialty Finance. I will now turn the call over to GEC's CEO, Matt Kaplan.

I would like to call your attention to the customers Safe Harbor statement regarding forward-looking information. Also, please note that nothing in today's call constitutes an offer to sell or solicitation of offers to purchase our securities.

Matt Kaplan: Thanks, Peter, and thank you all for joining us today. We had a tremendous quarter, delivering the highest total investment income in the company's history at $14.3 million, and NAV growing over $0.60 per share from the prior quarter to $12.10 per share as of June 30th. The second quarter of 2025 was GEC's highest ever cash-generative quarter, with cash TII comprising approximately 90% of our total investment income. A 14% increase in TII from last quarter, as well as TII growth of nearly 50% year over year, was primarily driven by the success of our growing CLO platform, as well as income from other cash-generating investments in the quarter. All of this is a continued testament to the strategic portfolio enhancements we've undertaken over the past few years to upgrade portfolio quality and focus on cash income generation.

This conference call includes thorough working statements and we ask that you refer to great on Capital Corps, filings with the SEC for important factors that could cause actual results to differ materially from these statements. Great on. Capital Corp does not undertake to update its forward-looking statements, unless required by law, the 15 copies of SEC filings. Please visit great up Capital Corps website under financials secc files or visit the sec's website. Posting the call today is Matt cap when great on Capital course chief executive officer will be joined by Chief Financial Officer. Carrie Davis, these compliance officer and general counsel, Adam Kleinman, and Mike Tower president of great. Elm specialist. Le Finance, I'll now turn the call over to gecc CEO Maclin.

Thanks Peter, and thank you all for joining us. Today, we had a tremendous quarter delivering the highest total investment income in the company's history at 14.3 million and nav growing over 60 cents, per share from the prior quarter to 12.10%.

The second quarter of 2025 was gcc's highest ever cash generative quarter with cash tii comprising, approximately, 90% of our total investment income, a 14% increase in pii from last quarter, as well as tii growth of nearly 50%. Year-over-year was primarily driven by the success of our growing Co platform as well as income from other cash generating investments in the quarter.

Matt Kaplan: Net investment income once again exceeded our quarterly distribution and was up approximately 29% sequentially. NII per share was $0.51 compared to $0.40 in the prior quarter. NII growth was largely attributable to a timely cash distribution on preference shares of an insurance-related investment, as well as $4.3 million of cash distributions from our CLO joint venture, up from $3.8 million last quarter. We remain committed to delivering growing income to shareholders over the long term, supported by solid underlying portfolio performance. Moving through the second half of the year, we anticipate third quarter NII per share to step down similarly to what we experienced in the fourth quarter of 2024. This is driven by the uneven cadence of cash flows from our growing CLO platform at these still early stages, as we have touched on before.

All of this is a continued Testament to the Strategic portfolio enhancements. We've undertaken over the past few years to upgrade portfolio quality and focus on cash income generation.

In addition net investment income. Once again, exceeded our quarterly distribution and was up approximately 29% sequentially, nii per share was 51 cents compared to 40 cents in the prior quarter.

Nii growth was largely attributable to a timely cash Distribution on preference shares of an insurance related investment, as well as 4.3 million of cash distributions from our Co JV up from 3.8 Million last quarter.

We remain committed to delivering growing income to shareholders over the long term, supported by solid underlying portfolio performance.

Matt Kaplan: Nevertheless, we anticipate fourth quarter NII will rebound significantly from the third quarter, and we remain confident that we are well positioned to cover our base distributions for the full year as we continue to execute on our long-term growth strategy. As previously discussed, we expect quarterly fluctuations in income to dampen over time as we fund additional CLO investments and continue to leverage our increased scale. As we scale the platform and deploy capital into additional investments, both in CLOs and across our strategies more broadly, we continue to believe that it makes more sense to evaluate GECC on an annual basis as opposed to benchmarking our performance quarter to quarter. On that note, if you look at our trailing 12-month performance, Great Elm Capital Corp. has demonstrated continued momentum in both top-line and bottom-line results.

Moving through the second half of the year, we anticipate third quarter, nii per share to step down similarly to what we experienced in the fourth quarter of 2024. This is driven by the uneven Cadence of cash flows from our growing cllo platform at these still early stages as we have touched on before.

Nevertheless we anticipate fourth quarter Knee will rebound significantly from the third quarter and we remained confident that we are well positioned to cover. Our base distributions for the full year as we continue to execute on our long-term growth strategy.

Evaluate gecc on an annual basis, as opposed to benchmarking, our performance quarter to quarter.

Matt Kaplan: Total investment income for the trailing 12-month period increased by 29%, and net investment income grew even more meaningfully over the same period, rising by 32% in each case compared to the same period one year ago. This growth underscores the enhanced income-producing capability of our portfolio, driven by strong asset performance and disciplined capital deployment. It is worth noting that our share count has also increased over the past year as a result of our capital raising programs, which have successfully led to Great Elm Capital Corp. issuing shares at NAV, a premium to market. These capital raises have led to short-term cash drag impacts and have modestly offset our absolute NII growth, resulting in a relatively flat NII per share on a trailing 12-month basis.

On that note, if you look at our trailing 12-month performance, gecc has demonstrated continued momentum in both Topline and bottom line results.

Total investment income for the trailing 12-month period increase by 29% and net investment income. Grew even more meaninglessly over the same period Rising by 32% in each case compared to the same period 1 year ago.

this growth underscores, the enhanced income producing capability of our portfolio driven by a strong

asset performance and disciplined Capital deployment.

It's worth noting that our share count has also increased over the past year, as a result of our Capital raising programs which have successfully led to gecc issuing shares at nav a premium to Market,

Matt Kaplan: Nevertheless, our trailing 12-month NII of $1.50 per share demonstrates our earnings powered through this rapid growth, with NII more than covering the base dividends paid over the same period, reinforcing our commitment to sustainable shareholder returns backed by solid income generation. As we look into the second half of 2025, we believe we are well positioned for full-year 2025 NII per share to exceed 2024 levels, supported by our diversified portfolio of cash-generating investments and more than covered our recently increased distribution rate of $1.48 per share on an annualized basis. Moving on to portfolio performance, alongside strong NII generation, we also meaningfully improved our NAV per share as outlined on slide eight.

These Capital raises have led to short-term cash drag impacts and have modestly offset. Our absolute knee growth resulting in a relatively flat knee per share on a trailing 12-month basis.

Nevertheless our trailing 12 months nii of a $150 per share, demonstrates, our earnings power through this rapid growth with knee more than covering the base dividends paid over the same period reinforcing our commitment to sustainable. Shareholder returns backed by solid income generation.

As we look into the second half of 2025, we believe we are well, positioned for full year, 25 knee per share to exceed 2024 levels supported by, our Diversified portfolio of cash, generating Investments. And more than cover our recently increased distribution, rate of 1.48 per share on an annualized basis.

Matt Kaplan: This increase in NAV was primarily driven by unrealized gains on our investment in CW Opportunity 2 LP, a vehicle created to hold convertible preferred equity in CoreWeave, an AI hyperscaler that IPOed earlier this year and has seen strong post-IPO equity performance. In addition, our NII outpaced our quarterly distribution by approximately 38%, leading to a NAV benefit in the quarter of approximately $0.14. Looking ahead, we believe our portfolio, underpinned by a diversified book of senior secured investments, is increasingly well positioned to weather the dynamic macro environment. With our strengthened foundation, we remain confident in our ability to generate sustainable returns and deliver increasing value to our shareholders. With that, I would like to hand the call over to Keri Davis to discuss our second quarter 2025 performance.

Moving on to portfolio performance alongside strong knee generation. We also meaningfully improved, our nav per share as outlined on slide 8.

This increase in math was primarily driven by unrealized gains on our investment. In CW opportunity to LP a vehicle created to hold convertible preferred equity in core weeds and AI hyperscaler, that IPO earlier this year and has seen strong post IPO Equity performance.

In addition.

Our knee outpaced our quarterly distribution by approximately 38% leading to a nav benefit in the quarter of approximately 14 cents.

Looking ahead. We believe our portfolio underpinned by a diversified book of senior secured Investments is increasingly. Well positioned to weather the dynamic macro environment.

Keri Davis: Thanks, Matt. I will 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 second quarter, GECC generated NII of $5.9 million or $0.51 per share, as compared to $4.6 million or $0.40 per share in the first quarter of 2025. The increase in NII was primarily driven by the receipt of distributions from an insurance-related investment and higher income from our CLO joint venture. Our net assets as of June 30, 2025, were $140 million as compared to $132 million as of March 31. Our NAV per share was $12.10 as of June 30 versus $11.46 as of March 31.

With our strength and Foundation, we remain confident in our abilities to generate sustainable returns and deliver increasing value to our shareholders with that. I'd like to hand the call over to Carrie Davis to discuss our second quarter 2025 performance,

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 filing for greater detail.

During the second quarter gecc generated nii of 5.9 million or 51 cents per share as compared to 4.6 million or 40 cents per share in the first quarter of 2025.

the increase in knee with primarily driven by the receipt of distribution from an insurance related investment and higher income from our field JV,

Our net assets as of June 30th 2025 were 140 million as compared to 132 million as of March 31st.

Keri Davis: The increase in net asset value was primarily driven by unrealized gains on our investment in our CoreWeave-related investment in CW Opportunity 2, as well as from our NII exceeding the quarterly distribution. Details for the quarter-over-quarter change in NAV can be found on slide eight of the investor presentation. As of June 30, GECC's asset coverage ratio was 169.5% as compared to 163.8% as of March 31. As of June 30, total debt outstanding was approximately $201 million, and we had $6 million outstanding on our $25 million revolver. Cash and money market securities totaled approximately $4 million, and we had $19 million of availability under our revolver. Our board of directors authorized a $0.37 per share cash distribution for the third quarter, which will be payable on September 30 to our stockholders of record as of September 15.

Our nav per share was 12.10 cents as of June 30th versus 11.46 cents as of March 31st.

The increase in net asset value was primarily driven by unrealized gains on our investment in our core, we've related investment in CW opportunity to as well as from our knee exceeding. The quarterly distribution

details for the quarter of a quarter change. In nav can be found on slide 8 of the investor presentation.

As of June 30th, gcc's asset coverage ratio was 169.5% as compared to 163.8% as of March 31st.

As of June 30th, total debt outstanding was approximately 201 million and we had $6 million outstanding on our 25 million revolver.

Cash and money market Securities totaled, approximately dollars and we had 19%.

Keri Davis: The distribution equates to a 12.2% annualized dividend yield on our June 30 net asset value. I will turn the call back over to Matt.

Of directors, authorized a 37 Cent per share. Cash, distribution for the third quarter, which will be payable on September 30th to our stockholders of record as of September 15th.

The distribution equates to a 12.2% annualized dividend yield on our June 30 net asset value.

Matt Kaplan: Thanks, Keri. We continue to enhance our portfolio strength by maintaining a focus on secured debt positions. Our growing CLO platform remains a significant contributor to this strategy as we continue to prudently expand the vertical, targeting high teens to 20% returns over time. We have grown our corporate portfolio to nearly $240 million of investments, and first lien loans comprise two-thirds of the corporate portfolio as of June 30th. This demonstrates our commitment to enhancing portfolio quality while maintaining a focus on secured income-generating assets. Before moving on to more portfolio detail, I think it's important to highlight why our non-yielding other equity mix, as outlined on slide 11, increased in the quarter. This is almost entirely attributable to the IPO of CoreWeave I mentioned earlier.

I'll turn the call back over to Matt.

See a little platform remains a significant contributor to this strategy as we continue to prudently expand the vertical targeting High Teens to 20% returns over time.

We have grown our corporate portfolio to nearly 240 million dollars of Investments. And first lean loans comprised 2/3 of the corporate portfolio as of June 30th.

This demonstrates our commitment to enhancing portfolio quality, while maintaining a focus on secured income-generating assets.

Before moving on to more portfolio, details, I think it's important to highlight why our non-yielding other Equity mix as outlined on slide. 11 increased in the quarter.

Matt Kaplan: The underlying preferred equity investment held by CW Opportunity 2 LP converted into common equity in connection with the IPO, and there will be no more income from the coupon on the preferred to distribute going forward. While this optically reduces our gross portfolio yield, it is meaningfully positive for our shareholders as GECC's IRR from the May 2024 funding through June 30th on CW Opportunity 2 is nearly 200%. I would also like to take a few minutes to address some potential uncertainties around our exposure in CoreWeave through our investment in CW Opportunity 2. Our investment is in a private fund, and as disclosed in our filings since the inception of our investment, it has been carried on our balance sheet at net asset value as reported to us by the general partner.

This is almost entirely attributable to the IPO of CoreWeave. I mentioned earlier that the underlying preferred equity investment held by CW Opportunity to LP converted into common equity in connection with the IPO, and there will be no more income from the coupon on the preferred to distribute going forward.

Will this optically reduces our gross portfolio. Yield it is meaningfully positive for our shareholders. As gcc's irr from the May 2024, funding through June 30th on CW opportunity. 2 is nearly 200%

I would also like to take a few minutes to address some potential uncertainties around our exposure. In CoreWave, through our investment in CW, there is an opportunity to...

Matt Kaplan: While the private fund does not charge a management fee to GECC, there are various other expenses and fees typical with these types of vehicles, and post-IPO, the valuations have not been one-to-one with the move in CoreWeave stock. Nevertheless, it is safe to say the value of CW Opportunity 2 is very directionally correlated with the CoreWeave publicly traded equity, which has exhibited some significant volatility since IPO. That said, as noted above, this investment has been overwhelmingly positive for GECC and reflects our ability to source and structure unique opportunities in transformative sectors. Moving back to the portfolio, notably, our CLO JV, alongside other recent investments, helped drive our record total investment income in the quarter.

our investment is in a private fund. And as disclosed in our filings, since the Inception of our investment, it has been carried on our balance sheet at net asset value, as reported To Us by the general partner.

While the private fund does not charge a management fee to gecc. There are various other expenses and fees typical with these types of vehicles and post IPO evaluations have not been 1 to 1 with the move in core weave stock.

Nevertheless, it is safe to say. The value of CW opportunity to is very directly correlated with the core. We've publicly traded equity, which has exhibited some significant volatility since IPO.

That said, as noted Above This investment has been overwhelmingly positive for gecc and reflects our ability to source and structure unique opportunities in transformative sectors.

Moving back to the portfolio.

Matt Kaplan: The CLO joint venture expands our exposure to a diverse portfolio of broadly syndicated first lien loans and continues to be a key contributor to our recent success, with approximately $52 million deployed through June 30. Additionally, we have deployed $6 million into a new CLO investment directly on our balance sheet. This investment is held outside the joint venture, highlighting diversification both in the underlying asset class and in the top-tier managers with whom we partner. A reminder that we hold the majority of our CLO exposure a bit differently than other public BDCs or closed-end funds. Other companies typically hold their CLO investments directly, which allows the income to be recognized utilizing the effective yield methodology, while Great Elm Capital Corp. recognizes income from investments held in the CLO joint venture only when the CLO joint venture makes distributions and cash is actually received.

Notably our Co JB alongside other recent Investments, helped Drive our record, total investment income in the court.

The cjb expands our exposure to a diverse portfolio of broadly, syndicated first lean, loans and continues to be a key. Contributor, to our recent success with approximately 52 million deployed through June 30th.

Additionally, we have deployed 6 million into a new clone investment directly on our balance sheet. This investment is held outside the JV, highlighting diversification, both in the underlying asset class and in the top tier managers with whom we partner.

A reminder that we hold the majority of our Co exposure, a bit differently than other public bdcs are closed and funds.

Matt Kaplan: This potentially leads to a more uneven nature to our income reporting. While we may hold certain minority CLO positions directly on our balance sheet, the joint venture affords us the ability to have exposure to majority interests in CLOs, which we believe can provide enhanced economics. We are comfortable with this quarter-to-quarter income undulation, which, as I noted previously, we expect will dampen over time as we continue to scale. Further, our investment portfolio is generally stable in the quarter, although we did place our two debt investments in Maverick Gaming on non-accrual in the period. Subsequent to quarter-end, we placed our first out senior secured debt investment in Del Monte on non-accrual as the storied packaged food producer initiated a bankruptcy filing in July. As of June 30, the Maverick Gaming and Del Monte investments comprised less than 3% of portfolio fair value.

Other companies typically hold their Co Investments directly, which allows the income to be recognized to utilizing the effective yield methodology. While gecc recognizes income from Investments held in the CL JV, only, when the CL JV makes distributions and cash is actually received

This potentially leads to a more uneven nature to our income reporting.

while we may hold certain minority cllo positions directly on our balance sheet, the JB affords us, the ability to have exposure to majority interests and cos which we believe can provide enhanced economics,

We are comfortable with this quarter to quarter income undulation, which as I noted previously we expect will dampen over time as we continue to scale.

Further, our investment portfolio is generally stable in the quarter. Although we did place our two debt investments in Maverick Gaming on non-accrual in the period.

Matt Kaplan: I would note these are senior secured first lien investments, and we do expect a portion of them to begin accruing income again in the second half of 2025. We continue to actively monitor these investments and believe the vast majority of the portfolio is well positioned in the current environment. To date, we have otherwise seen minimal direct impact of tariffs on our portfolio. Our portfolio maintains broad diversification with a predominantly domestic focus and minimal exposure to China. We continue to monitor the changing landscape and also work to evaluate the second and third-order effects of tariffs and shifting trade dynamics. While tariffs may not directly impact the business, they may have knock-on supply-side effects that can be negative or positive. Our team continues to be focused on thinking through that lens when reviewing existing investments as well as underwriting new opportunities.

Subsequent to quarter end. We placed our first out, senior secured debt investment in Del Monte on non-accrual as the storied packaged food producer, initiated a bankruptcy, filing in July as of June 30th, the Maverick gaming and DelMonte Investments comprised less than 3% of portfolio. Fair value.

I would note. These are senior secured first leaned Investments, and we do expect a portion of them to begin accruing income again in the second half of 2025.

We continue to actively monitor these Investments and believe the vast majority of the portfolio is, well, positioned in the current environment.

The date.

We have otherwise seen minimal, direct impact of tariffs on our portfolio.

Our portfolio contains broad diversification with a predominantly domestic, focus, and minimal exposure to China.

We continue to monitor the changing landscape and also work to evaluate the second and third order effects of tariffs and shifting trade Dynamics.

Nerfs may not directly impact the business. They may have knock-on supply side effects, that can be negative or positive.

Matt Kaplan: With our defensive portfolio structure, we believe we are well positioned to navigate the ongoing tariff uncertainty. In this dynamic macro 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. 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. With that, I'd like to turn the call over to Mike Keller to provide an update on Specialty Finance.

Our team continues to be focused on thinking through that lens when reviewing existing Investments as well as underwriting new opportunities with our defensive portfolio structure. We believe we are well positioned to navigate to ongoing tariff uncertainty.

In this Dynamic macro 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. This balanced approach combined with our strength and platform and diversified portfolio positions us. Well to continue growing, great Elm Capital, Corp and delivering attractive risk. Adjusted returns for our shareholders.

Mike Keller: Thanks, Matt. Great Elm Specialty Finance continues to execute on its strategic transformation this quarter. By simplifying our business model and securing favorable financing arrangements, we have successfully repositioned the platform for future growth and improved profitability. In April, we completed the rebranding of Sterling as Great Elm Commercial Finance, which now offers traditional asset-based lending solutions to a broad range of industries, including healthcare. In addition, GESF exited its final equipment leaseholding at a gain, further streamlining the business and enhancing focus. We have also completed several transactions and secured additional financing, which enabled us to pay down over $5 million in GESF subordinated debt in the second quarter.

We remain excited for the future of GCC. And with that, I'd like to turn the call over to Mike Keller to provide an update on specialty Finance.

Thanks Matt.

Write down specialty Finance continued to execute on its strategic transformation. This quarter by simplifying, your business model and securing favorable financing Arrangements. We've successfully repositioned the platform for future growth and improved profitability.

In April, we completed the rebranding of Sterling as great. Elm commercial Finance which now offers traditional. Asset-based, Lending Solutions to a broad range of Industries including Healthcare

in addition, GSF exited, its final equipment lease holding at a game further, streamlining the business and enhancing Focus.

Mike Keller: As part of our strategic changes made earlier this year, we are pleased to report that Great Elm Healthcare Finance is now better positioned for profitability and is expected to grow its income and distributions to Great Elm Specialty Finance as we move through 2025. For Great Elm Commercial Finance, growth this quarter was temporarily constrained due to a delay in the upsizing of our back leverage facility. The syndication process was impacted by industry-wide caution following the April tariff announcements. However, syndication activity resumed in July, resulting in a more than 20% increase in GECF's borrowing capacity. In summary, these initiatives have streamlined our operations and better aligned our platform with long-term growth objectives. We are seeing the benefits of our strategic repositioning take hold, and we remain confident in our ability to generate improved sustainable returns going forward.

We have also completed several transactions and secured additional financing which enabled us to pay down over 5 million in GSF subordinated. Debt in the second quarter.

As part of our strategic changes made earlier this year, we are pleased to report that great. Elm Healthcare Finance, is now better positioned for profitability and is expected to grow its income and distributions to Great ohm specialty Finance as we move through 2025.

For great health. Commercial Finance growth. This quarter was temporarily constrained due to the delay in the upsizing of our back leverage facility.

The syndication process was impacted by industry-wide caution following the April tariff announcement. However, syndication activity, resumed in July, resulting in a more than 20% increase in gec apps, borrowing capacity.

Matt Kaplan: Thanks, Mike. In closing, we had a phenomenal second quarter, growing NII and net asset value. We are excited for the second half of the year as we look to execute on our growth and optimization initiatives. We believe we remain well positioned to cover our dividend in 2025, continuing to deliver attractive risk-adjusted returns for our shareholders. With that, I will turn the call over to the operator for questions. Operator?

In summary, these initiatives have streamlined, our operations, and better aligned our platform with long-term growth objectives. We're seeing the benefits of our strategic, repositioning take hold, and we remain confident in our ability to generate improved sustainable returns going forward.

Thanks Mike. In closing we had a phenomenal. Second quarter growing knee and net asset value. We are excited for the second half of the year as we look to execute on our growth and optimization initiatives. We believe We remain well, positioned to cover our dividends in 2025 continuing to deliver attractive risk, adjusted returns for our shareholders,

With that, I'll turn the call over to the operator for questions. Operator.

Operator: Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. At this time, if you would like to ask a question, please press star then one on your telephone keypad. A confirmation tone will indicate your question. You may pause and then, if you would, move your question to you. Again, we would like to ask questions. The first question that we have comes from Erik Zwick of Lucid Capital Markets. Please go ahead.

Thank you. So ladies and gentlemen, we will now begin the question and answer session.

at this time, if you would like to ask a question, please press star, then 1 on your telephone keypad,

A confirmation tone will indicate your question.

you may saw and then if you would your question, you

Again, I'd like to ask.

Question. Now, we have comes from Eric of lucid Capital markets. Please go ahead.

Erik Zwick: Thanks. Good morning, everyone.

Matt Kaplan: Good morning, Erik.

Thanks. Good morning, everyone.

Erik Zwick: I wanted to start just to make sure I understood the impact with the, you referenced the dividend on the preference shares and the insurance-related investment. Are you able to quantify the amount of that dividend in the most recent quarter? Is it right to think about that? It sounds like potentially that was a one-time event in that magnitude, or is that something that is going to be ongoing?

Good morning, Eric.

Matt Kaplan: The event will be an annual event, so it will be ongoing, but we just will receive it about once per year. I believe the benefit to NII is approximately $1.6 million net after all things are said and done, $1.7 million.

Uh, wanted to start just to make sure I I kind of understood the, the impact with the, your reference, the dividend on the preference shares and the insurance related investment. Um, are you able to quantify the amount of that that dividend um in the most recent quarter and is it? Alright to think about that if it sounds like potentially? That was a 1-time event in that magnitude or is that something that's going to be ongoing?

Erik Zwick: Okay, great. That is helpful. Thanks, Matt. I appreciate all of the detail on the CoreWeave investment. Just curious in terms of, to the degree that you, kind of have some insight and where you are able to share from the managing partner for that investment's perspective, what is their intention in terms of holding it versus potentially realizing some gain? Is there an expected timeframe on that LP? Just curious if you can shed any light there, that would be helpful.

So, ugh, good question. The event will be an annual event, so it will be ongoing. But we just will receive about once per year. I believe the benefit to net income is approximately $1.6 million, net. After all things are said and done, $1.7 million.

Okay, great, that's helpful. Thanks Matt. Um, and then I appreciate all of the detail on the the core we've investment and just curious in terms of um you know, to the degree that you, you know, kind of have some insight and where you're able to share.

Matt Kaplan: It is up to the GP to decide when and how to provide liquidity. I would note that currently, the underlying shares are subject to a lockup, which should expire this quarter. We have a good relationship and dialogue with the GP on many other matters as well. As of this point in time, I cannot really provide any color. It is kind of up to them. The options today are limited. All things being equal, this has been a fantastic investment for GECC, and we will provide an update to you all and the rest of the investing community when we have something more concrete to say.

From the, you know, managing partner for that, that Investments perspective. Um, you know, what is their intention in terms of holding it versus potentially, you know, realizing some gain is there an expected time frame on that? Um, that that LP just curious if you can shed any like there. That would be helpful.

uh so you know it is up to the GP to decide when and how to provide liquidity I would note the

Currently the underlying Shares are subject to a lock up, which should expire this quarter?

You know we have a good relationship and dialogue with the the GP um on many other matters as well you know as of this point in time can't really provide any any color uh it's kind of up to them, you know, the the options today are uh limited. So all things being equal, this has been a fantastic investment for gecc and we'll provide an update to you all in all the rest of the investing Community when we have uh something more concrete to say.

Erik Zwick: Excellent. I appreciate the color there. You are right, it has been a great investment. You guys do congratulations for spotting that investment and moving forward with it. That is great. As I think about your closing comments, Matt Kaplan, you mentioned being fairly positive about growth opportunities going forward. As you assess the market, I am curious about if you could just weigh maybe from your perspective the relative attractiveness of investing in additional corporate debt, kind of middle market portfolio versus CLO equity opportunities, and maybe anything else that is on your radar today, where we could see growth in the portfolio going forward.

Matt Kaplan: Great question. Over the course of the quarter, the corporate debt secondary market has definitely strengthened significantly, and we are seeing some repricings begin to creep back into the market. But we have shifted some focus more to some of the more private side transactions that we partner with some blue chips on. We actually closed on a transaction last week, a private transaction, and we hope to close on another one next week as well. These are not huge, but every little bit helps here. And I think we are finding that, with some of the uncertainty, there are lots of businesses out there that are good businesses that are on the, not in the syndicated market and on the little smaller side that we can still get yield premium on relative to the syndicated market that is coming back. That is where we have shifted our focus today.

Excellent know, I appreciate that the color there. Um and you're right it's been a great investment. So um you know you guys are do congratulations for spotting that investment and and moving forward with it, so that's great. Um, just as I think about um, you know, your your kind of your closing comments. Matt. You mentioned, you know, being fairly positive about growth opportunities going forward. So as you assess the the market and I guess I'm curious about. If you could just weigh, maybe from your perspective, the relative attractiveness of investing in additional corporate debt, kind of Middle Market portfolio versus, uh, Co Equity opportunities and, and maybe anything else that that's on your radar today. You know, where we can see growth in the portfolio. Uh, going forward.

Great question. So, uh,

over the course of the quarter, the the corporate debt secondary Market has definitely strengthened significantly. And we're seeing some pricing begin to creep back into the market. So we have shifted some focus more into some of the more private side transactions that we partner with to some blue chips on uh we actually closed on a a transaction last week private transaction and we hope to uh close on another 1 next week as well.

so you know, these are not huge but every little bit helps here and I think we're finding that, you know, with some of the

Uncertainty. Uh, there are lots of businesses out there that, uh, are good businesses that are on the, you know, not not in the syndicated market and on the little smaller side that we can still get yield premium on relative to the syndicated Market, that's coming back. So uh, that is where we have shifted our Focus. Uh, today,

Erik Zwick: Thanks. Then maybe just switching gears a little bit, with regard to the investment in Maverick Gaming, I know that had been marked down in previous quarters, but now moved to non-accrual in the most recent quarter. Anything kind of different that changed in your thinking around that investment or what prompted the move to non-accrual?

Thanks. Um, and then maybe just Switching gears a little bit. Um, with regard to the the investment in Maverick gaming. I, I know that had been marked down in previous quarters but now move to non-accrual in the most recent quarter and anything kind of different that changed in your thinking around that that investment or, or what? Prompted the, um,

Matt Kaplan: We have an active dialogue with many of our, almost all of our portfolio companies and management teams. We have been having an active dialogue with the company, and it became clear to us that that situation was not improving in the quarter, and they actually have filed for bankruptcy. In connection with the preparation for the bankruptcy filing, we believed it was prudent to put the position on non-accrual.

The the move to Nicole.

I mean, we we have an active dialogue with, you know,

Many of our almost.

Companies and management teams, right? So, uh, the

Erik Zwick: Makes sense. I just want to make sure I interpreted or heard one of your comments right. I think you were talking about both Maverick and Del Monte on non-accrual now, but said you expect maybe a portion to return to accrual in second half 2025. Was that related to just one of those or potentially positive developments in both? I just wanted to make sure I interpreted that correctly.

Even having the active dialogue with the company and it became clear to us, that that uh, situation was not improving in the quarter and they actually have filed for bankruptcy. So in connection with the the proper preparation for the bankruptcy filing, uh, we believed it was proven to put the position on on AC

Matt Kaplan: That is largely tied to the DIP funding and the fact that when we fund the DIP, a portion of our pre-petition debt gets rolled up into the DIP as well, and then that starts to accrue interest during the pendency of the bankruptcy case.

Makes sense. And then I just want to make sure I interpret it or heard 1 of your comments, right. I think you you're talking about both Maverick and and Delonte on a on a cruel now but said you expect maybe a portion to return to a cruel and second half 25 and was that related to just 1 of those or potentially positive developments in in both, but just wanted to make sure I interpreted that correctly.

That is largely tied to uh, the dip funding. And the fact that when we found the dip, uh, a portion of our prepetition debt gets rolled up into, uh, the depth as well. And then that starts to accrue interest, uh, during the pendency of the, the bankruptcy case,

Erik Zwick: Got it. Okay, great. That's all I have today. I appreciate you taking all my questions this morning.

Matt Kaplan: You got it.

Got it. Okay, great. Uh, that's all I have today. I appreciate you taking all my questions this morning.

You got it?

Operator: Thank you. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. We will pause a moment to see if we have any further questions. At this stage, there are no further questions on the conference call. I would now like to hand the call back to Matt Kaplan for any closing remarks. Please go ahead, sir.

Thank you.

Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then 1 now.

We'll pause a moment to see if we have any further questions.

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

Is there a no further questions on the conference call? I would now like to hand the call back to Matt Kaplan for any closing remarks, please go ahead sir.

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

Operator: Thank you. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.

Thank you.

gentlemen, that then concludes today's conference

Thank you for joining us. You may now disconnect your lines.