Q2 2026 Great Elm Capital Corp Earnings Call

August 6, 2026

Speaker #1: Good day. And welcome to Great Elm Capital Q2 of 2026 financial results conference call. All participants will be in a listen-only mode for the duration of the call.

Operator 1: Good day, welcome to Great Elm Capital Corp's Q2 2026 Financial Results Conference Call. All participants will be in a listen-only mode for the duration of the call. Should you need any assistance today, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw a question, please press star, then two. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Adam Yates, Managing Director. Please go ahead.

Operator: Good day, welcome to Great Elm Capital Corp's Q2 2026 Financial Results Conference Call. All participants will be in a listen-only mode for the duration of the call. Should you need any assistance today, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw a question, please press star, then two. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Adam Yates, Managing Director. Please go ahead.

Speaker #1: And should you need any assistance today, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

Speaker #1: To ask a question, you may press star then 1 on your telephone keypad. And to withdraw a question, please press star then 2. Also, please be aware that today's call is being recorded.

Speaker #1: I would now like to turn the call over to Adam Yates, Managing Director. Please go ahead.

Speaker #2: Hello, and thank you for joining us for Great Elm Capital Q2 2026 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.

Adam Yates: Hello, thank you for joining us for Great Elm Capital Corp's Q2 2026 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. The slide presentation accompanying today's conference call and webcast can be found on our website under Events and Presentations. On our website, you can also find our earnings release and SEC filings. I would like to call your attention to the customary safe harbor statement regarding forward-looking information. Also, please note that nothing in today's call constitutes an offer to sell or a solicitation of offers to purchase our securities. Today's conference call includes forward-looking statements, 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.

Speaker #2: The slide presentation accompanying today's conference call and webcast can be found on our website under Events and Presentations. On our website, you can also find our earnings release and SEC filings.

Speaker #2: I would like to call your attention to the customary safe harbor statement regarding forward-looking information. Also, please note that nothing in today's call constitutes an offer to sell or a solicitation of offers to purchase our securities.

Speaker #2: Today's conference call includes forward-looking statements, and we ask that you refer to Great Elm Capital Q filings with the SEC for important factors that could cause actual results to differ materially from these statements.

Speaker #2: Great Elm Capital does not undertake to update its forward-looking statements unless required by law. To obtain copies of our SEC filings, please visit Great Elm Capital's website under Financials, SEC Filings, or visit the SEC's website.

Adam Yates: Great Elm Capital Corp does not undertake to update its forward-looking statements unless required by law. To obtain copies of our SEC filings, please visit Great Elm Capital Corp's website under Financials, SEC Filings, or visit the SEC's website. Hosting the call today is Jason Reese, Great Elm Capital Corp's Chairman of the Board and CEO. He'll be joined by Matt Kaplan, Portfolio Manager, Chris Croteau, Head of Research, Chief Financial Officer, Keri Davis, Chief Compliance Officer and General Counsel, Adam Kleinman, and Mike Keller, President of Great Elm Specialty Finance. I will now turn the call over to GECC's Chairman and CEO, Jason Reese.

Speaker #2: Hosting the call today is Jason Reese, Great Elm Capital Q's Chairman of the Board and CEO. He will be joined by Matt Kaplan, Portfolio Manager, Chris Curtot, Head of Research, Chief Financial Officer Keri Davis, Chief Compliance Officer and General Counsel Adam Kleinman, and Mike Keller, President of Great Elm Specialty Finance.

Speaker #2: I will now turn the call over to GECC's Chairman and CEO, Jason Reese.

Speaker #3: Thanks, Adam. And thank you, everyone, for joining us today. Since stepping into the CEO role, our priorities have remained unchanged. Protecting and growing NAV, generating sustainable net investment income, and maintaining a disciplined approach to capital allocation and portfolio management.

Jason Reese: Thanks, Adam, and thank you everyone for joining us today. Since stepping into the CEO role, our priorities have remained unchanged: protecting and growing NAV, generating sustainable net investment income, and maintaining a disciplined approach to capital allocation and portfolio management. We believe this quarter's results demonstrate solid progress toward each of those objectives. NAV increased nearly 3% from the prior quarter. Net investment income, or NII, fully covered our quarterly distribution, and we generated meaningful realized and unrealized gains from investment monetizations and appreciation. At the same time, we continue to strengthen the quality of the portfolio and position GECC to generate durable earnings and create long-term shareholder value. These results were supported by continued strong portfolio performance, including our CoreWeave-related equity investment. During the quarter, we received $2.6 million of distributions from this investment, bringing cumulative distributions to approximately $9.5 million, well above our original $6 million investment.

Speaker #3: We believe this quarter's results demonstrate solid progress toward each of those objectives. NAV increased nearly 3% from the prior quarter. Net investment income, or NII, fully covered our quarterly distribution, and we generated meaningful realized and unrealized gains from investment monetizations and appreciation.

Speaker #3: At the same time, we continue to strengthen the quality of the portfolio and position GECC to generate durable earnings and create long-term shareholder value.

Speaker #3: These results were supported by continued strong portfolio performance, including our CoreWeave-related equity investment. During the Q, we received 2.6 million dollars of distributions from this investment.

Speaker #3: Bringing cumulative distributions to approximately 9.5 million dollars, well above our original $6 million investment. Although our CoreWeave-related equity investment remains subject to market volatility, it continues to provide meaningful upside potential.

Jason Reese: Although our CoreWeave-related equity investment remains subject to market volatility, it continues to provide meaningful upside potential. Importantly, this quarter's strong results were achieved while we enhanced the overall quality of the portfolio. We once again ended the quarter with less than 1% of the portfolio on non-accrual, reflecting our focus on proactive risk management and portfolio quality. Our disciplined approach to portfolio management has not changed. We continue to prioritize protecting capital, maintaining strict underwriting standards, and investing only where we believe risk-adjusted returns are justified. During the quarter, we deployed approximately $30 million of capital across 14 investments, including three private credit transactions sourced through our proprietary network of partners, representing approximately $12 million. We also selectively expanded our broadly syndicated loan portfolio, increasing our diversified pool of primarily senior secured investments.

Speaker #3: Importantly, this Q's strong results were achieved while we enhanced the overall quality of the portfolio. We once again ended the Q with less than 1% of the portfolio on non-accrual.

Speaker #3: Reflecting our focus on proactive risk management and portfolio quality. The broader credit market remains highly competitive, but our disciplined approach to portfolio management has not changed.

Speaker #3: We continue to prioritize protecting capital maintaining strict underwriting standards and investing only where we believe risk-adjusted returns are justified. During the Q, we deployed approximately 30 million dollars of capital across 14 investments, including 3 private credit transactions, sourced through our proprietary network of partners, representing approximately 12 million dollars.

Speaker #3: We also selectively expanded our broadly syndicated loan portfolio, increasing our diversified pool of primarily senior secured investments. Our CLO investments also helped increase portfolio diversity, providing GECC with exposure to over 300 senior secured loans.

Jason Reese: Our CLO investments also helped increase portfolio diversity, providing GECC with exposure to over 300 senior secured loans. CLO investments accounted for approximately 16% of our portfolio fair value at quarter end, generating meaningful cash flow to GECC, diversifying our income streams, and supporting the sustainability of our NII. At Great Elm Specialty Finance, or GESF, we continue to execute on our strategic transformation to streamline the platform and enhance growth and profitability. Great Elm Commercial Finance and Great Elm Healthcare Finance continue to build robust lending pipelines, while Prestige, our invoice factoring business, continues to generate attractive returns, albeit with some quarter-to-quarter variability due to the high customer churn rate inherent in its business. All three GESF verticals were profitable during the quarter and generated cash distributions, reinforcing GESF's role as a growing source of diversified assets and income for GECC.

Speaker #3: CLO investments accounted for approximately 16% of our portfolio fair value at Q end, generating meaningful cash flow to GECC, diversifying our income streams, and supporting the sustainability of our NII.

Speaker #3: At Great Elm Specialty Finance, or GESF, we continue to execute on our strategic transformation to streamline the platform and enhance growth and profitability. Great Elm Commercial Finance and Great Elm Healthcare Finance continue to build robust lending pipelines while Prestige, our invoice factoring business, continues to generate attractive returns, all with some Q to Q variability due to the high customer churn rate inherent in its business.

Speaker #3: All three GESF verticals were profitable during the Q and generated cash distributions reinforcing GESF's role as a growing source of diversified assets and income for GECC.

Speaker #3: Manager alignment with our shareholders remains a core principle at GECC. Consistent with that commitment, our investment manager, GECM, waived all accrued and unpaid incentive fees through the second Q of 2026.

Jason Reese: Manager alignment with our shareholders remains a core principle at GECC. Consistent with that commitment, our investment manager, GECM, waived all accrued and unpaid incentive fees through Q2 2026. This marks the third consecutive quarter of fee waivers, directly benefiting shareholders through approximately $3.7 million, or $0.26 per share, of cumulative waived incentive fees as of 30 June, including approximately $0.9 million or $0.06 per share during Q2. These waivers are accretive to NAV and directly support shareholder returns. We also continue to opportunistically repurchase GECC shares at a discount to NAV through our stock repurchase program. Beginning 1 January 2026, through 4 August 2026, we have repurchased approximately 1% of our outstanding shares at an average 37% discount to our 30 June NAV, leaving $9.5 million of remaining capacity under the $10 million authorization approved in October 2025.

Speaker #3: This marks the third consecutive Q of fee waivers. Directly benefiting shareholders through approximately 3.7 million dollars, or 26 cents per share, of cumulative waived incentive fees as of June 30, including approximately 0.9 million dollars, or 6 cents per share, during the second Q.

Speaker #3: These waivers are creative to NAV and directly support shareholder returns. We also continue to offer opportunistically repurchase GECC shares at a discount to NAV through our stock repurchase program.

Speaker #3: Beginning January 1, 2026, through August 4, 2026, we have repurchased approximately 1% of our outstanding shares at an average 37% discount to our June 30 NAV, leaving 9.5 million dollars of remaining capacity under the 10 million dollar authorization approved in October 2025.

Speaker #3: At current market prices, the remaining authorization represents approximately 14% of GECC's market capitalization. Our balance sheet continues to strengthen. During the Q, we extended the maturity of our evolving credit facility from 2027 to 2029 and retired all outstanding GECCO notes, leaving no debt maturities until 2029.

Jason Reese: At current market prices, the remaining authorization represents approximately 14% of GECC's market capitalization. Our balance sheet continues to strengthen. During the quarter, we extended the maturity of our revolving credit facility from 2027 to 2029 and retired all outstanding GECC notes, leaving no debt maturities until 2029. Subsequent to quarter end, we also called $6.5 million of GECCI notes, our highest cost debt, further reducing our capital cost. Our liquidity position is a competitive advantage, allowing us to navigate a volatile market environment while selectively capitalizing on attractive investment opportunities. We ended the quarter with approximately $6 million of cash and equivalents, $39 million of available capacity under a revolving credit facility, and a meaningful portfolio of liquid investments. This liquidity and disciplined capital deployment provides us with the flexibility to act quickly when the right investment opportunities arise.

Speaker #3: Subsequent to Q end, we also called 6.5 million dollars of GECCI notes, our highest cost debt, further reducing our capital cost. Furthermore, our liquidity position is a competitive advantage, allowing us to navigate a volatile market environment while selectively capitalizing on attractive investment opportunities.

Speaker #3: We ended the Q with approximately $6 million of cash and equivalents, $39 million of available capacity under our evolving credit facility, and a meaningful portfolio of liquid investments.

Speaker #3: This liquidity and disciplined capital deployment provides us with the flexibility to act quickly when the right investment opportunities arise. Looking ahead, we remain focused on disciplined execution and proven capital allocation.

Jason Reese: Looking ahead, we remain focused on disciplined execution and prudent capital allocation. We believe the progress we've made this quarter, strengthening portfolio quality, maintaining dividend coverage, enhancing the balance sheet, and preserving liquidity, positions GECC to continue creating long-term value for shareholders. I'd now like to turn the call over to Keri Davis to review our financial results in greater detail.

Speaker #3: We believe the progress we've made this Q maintaining dividend coverage, enhancing the balance sheet, and preserving liquidity, positions GECC to continue creating long-term value for shareholders.

Speaker #3: I'd now like to turn the call over to Keri Davis to review our financial results in greater detail.

Speaker #2: Thanks, Jason. I'll go over our financial highlights now, but we invite all of you to review our earnings release, accompanying presentation, and SEC filings for additional detail.

Keri Davis: Thanks, Jason. I'll go over our financial highlights now, we invite all of you to review our earnings release, accompanying presentation, and SEC filings for additional detail. Total investment income for Q2 increased to $10.9 million from $9.5 million in Q1, primarily driven by a $2 million dividend from our investment in insurance-related preference shares. NII for Q2 was $4.5 million, or $0.32 per share, compared to $5 million or $0.36 per share in the prior quarter. While reported NII declined sequentially, Q1 benefited from a larger incentive fee waiver. Excluding that difference, underlying earnings improved meaningfully. Pre-incentive fee NII increased approximately 66% to $4.5 million from $2.7 million, reflecting higher total investment income and lower interest expense.

Speaker #2: Total investment income for the second Q increased to 10.9 million dollars from 9.5 million dollars in the first Q, primarily driven by a $2 million dividend from our investment in insurance-related preference shares.

Speaker #2: NII for the second Q was 4.5 million dollars, or 32 cents per share, compared to $5 million dollars, or 36 cents per share, in the prior Q.

Speaker #2: While reported NII declined sequentially, the first Q benefited from a larger incentive fee waiver. Excluding that difference, underlying earnings improved meaningfully. Pre-incentive fee NII increased approximately 66% to 4.5 million dollars from 2.7 million dollars, reflecting higher total investment income and lower interest expense.

Speaker #2: The incentive fee waiver contributed approximately 0.9 million dollars, or 6 cents per share, during the Q, compared to 2.8 million dollars, or 20 cents per share, in the first Q.

Keri Davis: The incentive fee waiver contributed approximately $0.9 million, or $0.06 per share during the quarter, compared to $2.8 million or $0.20 per share in Q1. Net assets increased to $110.4 million, or $7.95 per share as of 30 June 2026, from $107.5 million or $7.74 per share as of 31 March 2026. The increase was driven primarily by realized and unrealized investment gains, including gains on our CoreWeave related equity investment. Additional detail is provided in the NAV bridge on slide 11 of the investor presentation. Our balance sheet remains strong and liquid. Asset coverage improved to 166.4% from 161.8%, while debt to equity improved to 1.51x from 1.62x in the prior quarter, reflecting our continued focus on de-leveraging and balance sheet optimization. As of 30 June, total debt outstanding was $166.4 million.

Speaker #2: Net assets increased to $110.4 million, or $7.95 per share as of June 30, 2026, from $107.5 million, or $7.74 per share as of March 31, 2026.

Speaker #2: The increase was driven primarily by realized and unrealized investment gains, including gains on our core weave-related equity investment. Additional detail is provided in the NAV bridge on slide 11 of the investor presentation.

Speaker #2: Our balance sheet remained strong and liquid. Asset coverage improved to 166.4% from 161.8%, while debt-to-equity improved to 1.51x from 1.62x in the prior Q.

Speaker #2: Reflecting our continued focus on deleveraging and balance sheet optimization. As of June 30, total debt outstanding was 166.4 million dollars. We also held cash and money market investments of approximately $6 million dollars, along with $39 million dollars of availability under our revolving credit facility.

Keri Davis: We also held cash and money market investments of approximately $6 million, along with $39 million of availability under our revolving credit facility. Finally, our board of directors declared a quarterly distribution of $0.25 per share, payable on 30 September 2026, to stockholders of record as of 15 September. The distribution was fully covered by our Q2 NII. I'll now hand it over to the operator for questions.

Speaker #2: Finally, our board of directors declared a quarterly distribution of 25 cents per share, payable on September 30, 2026, to stockholders of record as of September 15.

Speaker #2: The distribution was fully covered by our second Q NII. I'll now hand it over to the operator for questions.

Speaker #1: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys.

Operator 2: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw a question, please press star then two. At this time, we will pause just momentarily to assemble our roster. Our first question here will come from Erik Zwick with Lucid Capital Markets. Please go ahead.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw a question, please press star then two. At this time, we will pause just momentarily to assemble our roster. Our first question here will come from Erik Zwick with Lucid Capital Markets. Please go ahead.

Speaker #1: And to withdraw a question, please press star, then 2. At this time, we will pause this momentarily to assemble our roster. Our first question here will come from Eric Zwick with Lucid Capital Markets.

Speaker #1: Please go ahead.

Speaker #4: Thank you. Good morning, all. I wanted to start with a question just on Good morning. I wanted to start with a question on the pipeline for new originations, kind of looking forward into 3Q.

Erik Zwick: Thank you. Good morning, all. Wanted to start-

Jason Reese: Morning, Erik

Erik Zwick: Good morning. Wanted to start with a question on the pipeline for new originations, kind of looking forward into Q3 and beyond. Just curious what that looks like from a mix perspective in terms of private credit and BSL and any other kind of commentary you might have there.

Speaker #4: And beyond, just curious what that looks like from a mixed perspective, in terms of private credit and BSL, and any other kind of commentary you might have there.

Speaker #3: Yeah, it's Jason Eric. Thanks for the question. Following us. Our mix is definitely moving more towards private credit from BSL at this point in time.

Jason Reese: Yeah, it's Jason. Erik, thanks for the question and following us. Our mix is definitely moving more towards private credit from BSL at this point in time. We'll always have a portion of BSL, but obviously that's a much more difficult market to find the yields we need at this point in time. We have a pretty strong backlog of private credit deals. I think you see we closed three in the last quarter. Those definitely take longer to close, but we're seeing a number of very interesting things, and we're seeing much better risk return profiles on private credit. That being said, we're being pretty conservative. We're not going out on the whip here anywhere right now. We don't love the overall risk reward characteristics of the market. The things that we're doing, we're doing very thorough underwriting on and trying to get very comfortable.

Speaker #3: We'll always have a portion of BSL, but obviously that's a much more difficult market to find the yields we need at this point in time.

Speaker #3: So we have a pretty strong backlog of private credit deals. I think you see we closed 3 in the last Q. Those definitely take longer to close, but we're seeing a number of very interesting things, better risk-return profiles on private credit.

Speaker #3: That being said, we're being pretty conservative. We're not going out on the whip here anywhere. Right now, we don't love the overall risk-reward characteristics, of the market, so the things that we're doing we're doing very, very thorough underwriting on and trying to get very comfortable.

Speaker #3: Does that make sense?

Jason Reese: Does that make sense?

Speaker #4: Yeah, that's helpful. Thank you. Shifting gears a little bit, the next question—just curious, and I may have overlooked it in the release. Maybe Keri can help me out.

Erik Zwick: Yeah. That's helpful. Thank you. Shifting gears a little bit, the next question, just curious, and I may have overlooked it in the release. Maybe Keri can help me out. What was the contribution, CLO distributions in the quarter, and then I know those can potentially, there can be some variability quarter to quarter based on when you've made recent investment that they haven't made their first distribution yet. Just curious about the cadence of the contributions going forward as well, if you've got any detail to share there.

Speaker #4: What was the contribution CLO distributions in the Q, and then I know those can potentially there can be some variability Q to Q based on when you've made recent investments that they haven't made their first distribution yet.

Speaker #4: So just kind of curious about the kind of cadence of the contributions going forward as well, if you've got any detail to share there.

Speaker #3: Keri Eric.

Jason Reese: Thanks, Erik.

Jason Reese: Sarah, you want to-

Speaker #2: Oh, sorry. Can you hear me?

Keri Davis: Oh, sorry. Can you hear me?

Speaker #3: Yes.

Erik Zwick: Yes.

Speaker #4: Yes.

Jason Reese: Yes.

Speaker #2: Yes. Okay. I'm pulling the information up as we are speaking. So I think we did have that in our investor deck for this Q.

Keri Davis: Yes. Okay. I'm pulling the information up as we are speaking. I think we did have that in our investor deck for this quarter. I think you're right that the cadence can change. I think we try to include as much of that information as we have available in those materials.

Speaker #2: I think you're right that they do the cadence can change. I think we try to include as much of that information as we have available in those materials.

Speaker #4: Okay. I'll take a look there and I'll follow up with that. Yeah, exactly. Exactly. Okay. Thanks.

Erik Zwick: Okay. I'll take a look-

Keri Davis: Happy to follow up if-

Erik Zwick: Sarah, follow up at that. Yeah, exactly. Okay, thanks.

Speaker #3: Yeah. But Eric, we have not Eric, we haven't made a new CLO investment in a while, so some of that cadence should become less variable.

Jason Reese: Yeah. Erik, we haven't made a new CLO investment in a while, some of that cadence should become less variable. Some of it also will depend. We're getting to the point where we've held some of these for 2 years, there's some opportunities to refinance the CLOs, which should help our cash flow.

Speaker #3: But some of it also will depend. We're getting to the point where we've held some of these for 2 years, and so there's some opportunities to refinance the CLOs, which should help our cash flow.

Erik Zwick: Yep.

Speaker #3: So there is still some variance, but it should be less than it has been historically.

Jason Reese: There is still some variance, but it should be less than it has been historically.

Speaker #4: Gotcha. So it should be more consistent and if you're able to opportunistically refinance some of the liability sides there, then you could see a little bit of a maybe an improved return, which would be nice.

Erik Zwick: Got it. It should be more consistent and then if you're able to opportunistically refinance some of the liability sides there, then you could see a little bit of maybe an improved return, which would be nice. Okay. That makes sense.

Speaker #4: Okay. That makes sense. And then curious, I can't remember, do you guys have any undistributed taxable income or spillover at this point?

Jason Reese: Correct.

Erik Zwick: Curious, I can't remember. Do you guys have any undistributed taxable income or spill-over at this point?

Speaker #3: Yes, we do.

Jason Reese: Yes, we do.

Speaker #2: We do. And we monitor that regularly to make sure we are staying current on that with distributions.

Keri Davis: We do. We monitor that regularly to make sure we are staying current on that with distributions.

Speaker #4: Gotcha. Do you happen to have what the amount is, either in dollar terms or on a per-share basis?

Erik Zwick: Got you. Do you happen to have what the amount is either in dollar terms or on a per-share basis?

Speaker #2: We're currently working through our most recent tax year with some of our underlying investment information coming through, so we should have that update in the next Q.

Keri Davis: We're currently working through our most recent tax year with some of our underlying investment information coming through. We should have that update in the next quarter.

Speaker #4: Okay.

Erik Zwick: Okay.

Speaker #3: Yeah. We'll get to that to you, Eric, as soon as we have it.

Jason Reese: Yeah. We'll get to that to you, Erik, as soon as we have it.

Speaker #4: Excellent, thanks, appreciate that. And then, just with regard to the CoreWeave distribution in the quarter, I know you were receiving those more regularly prior, when it was the preferred investment, but once it converted to the equity, those stopped.

Erik Zwick: Excellent. Thanks, appreciate that. Just with regard to the CoreWeave distribution in the quarter, I know you were receiving those more regularly prior when it was the preferred investment, but once it converted to the equity, those stopped. What drove that distribution? Did the vehicle sell shares and that was the distribution, or is there some other kind of something that drove that? Just kind of curious there.

Speaker #4: So what drove that distribution? Did the vehicle sell shares and that was a or is there some other kind of something that drove that?

Speaker #4: Just kind of curious there.

Jason Reese: The sponsor there is selectively selling shares based on market prices.

Speaker #3: The sponsor there is selectively selling shares based on market prices. Right? So all of that distribution came from shares underlying shares being sold. We have no control over how that investment liquidates, but as it liquidates over time, we will continue to get distributions.

Erik Zwick: Right. Got it. Okay. Yeah.

Jason Reese: All of that distribution came from underlying shares being sold. We have no control over how that investment liquidates. As it liquidates over time, we will continue to get distributions. I think if you look at the numbers, we've kind of gotten over 150% of our investment back. I mean, we still have a pretty significant chunk there that's been a very good one for us.

Speaker #3: But I think if you look at the numbers, we've kind of got over 150% of our investment back, and we still have a pretty significant chunk there that's been a very good one for us.

Speaker #4: Yep. Okay. That's what I suspected. Thank you for the confirmation. And just trying to think about the run rate of kind of core earnings going forward, the insurance investment, dividend that you've received was 2 million.

Erik Zwick: Yep. Okay. That's what I suspected. Thank you for the confirmation. Just trying to think about the run rate of kind of core earnings going forward. The insurance investment dividend that you received was $2 million, that's quarter. I think typically that's annual, so you won't be getting that for another three quarters or four quarters or so. CoreWeave distribution, hard to predict timing there for when those are sold. If I back those two out, it seems like the core run rate of earnings is below the dividend level now. Just curious about your thoughts for kind of levers. I know you've talked a little bit about improving the portfolio, improving the structure and the liabilities, but what does it take to get kind of that core run rate of earnings closer to the dividend level at this point?

Speaker #4: That's Q. And I think typically that's annual, so we won't be getting that for another 3 Quarters or 4 Quarters or so. Core weave distribution, hard to predict the timing there, for when those are sold.

Speaker #4: So if I back those two out, it seems like the core run rate of earnings is below the dividend level now. So just curious about your thoughts for kind of levers.

Speaker #4: And I know you've talked a little bit about improving the portfolio and improving the structure and the liabilities, but what does it take to get kind of that core run rate of earnings closer to the dividend level at this point?

Speaker #3: So, Eric, I try we try the board tries to look at what our annual earnings are going to be and make sure we're covering the dividend.

Jason Reese: Erik, the board tries to look at what our annual earnings are going to be and make sure we're covering the dividend, okay, because there is that variability. The insurance distribution comes in Q2 every year. We get that. You're right, we will not have that next quarter, so that'll change. The CoreWeave piece, it's hard to really sketch out, but we look pretty hard on an annual four-quarter basis, and we're trying to set the dividend so it could be covered over that period of time. We're doing our best to try to figure out not just what the base is, but with those other things from the CLOs, from insurance. There's some variability of when we look at like Prestige, our factoring business is great every year, the earnings, but quarter by quarter, it can vary significantly.

Speaker #3: Okay. Because there is that variability. So the insurance distribution comes in the second Q. every year. We get that. You're right. We will not have that next Q.

Speaker #3: So that'll change the core weave piece. It's hard to really sketch out, but we look pretty hard on an annual 4 Quarter basis, and we're trying to set the dividend so it could be covered over that period of time.

Speaker #3: So we're doing our best to try to figure out not just what the base is, but with those other things, from the CLOs, from insurance, there's some variability when we look at prestige.

Speaker #3: Our factoring business is great every year. The earnings, but Quarter by Quarter, it can vary significantly. So we're trying to set a dividend based on what we think we can cover and pay on a 4 Quarter basis as opposed to every individual Quarter.

Jason Reese: We're trying to set a dividend based on what we think we can cover and pay on a four-quarter basis as opposed to every individual quarter. We don't think it makes sense for our shareholders to vary our dividends significantly quarter to quarter.

Speaker #3: We don't think it makes sense for our shareholders to vary our dividend significantly Quarter to

Speaker #1: Order .

Speaker #2: Understood . Yep . Thanks for the explanation there . And last one for me . You started to use the share repurchase authorization and just given the discount that shares trade relative to Nav today , it seems like it's still really attractive Proposition for you .

Erik Zwick: Understood. Yep. Thanks for the explanation there. Last one from me. You started to use the share repurchase authorization and just given the discount that shares trade relative to NAV today, it seems like it's still a really attractive proposition for you. You've also got a strong pipeline and you're seeing good opportunities there. Just how do you think about the balance of using capital between those two and what could we potentially see in terms of rate of repurchases going forward over the next quarter or so?

Speaker #2: You've also got , you know , strong pipeline and you're seeing good opportunities there . So just how do you think about the balance of using capital between those two ?

Speaker #2: And , you know , what could be potentially seen in terms of rate of repurchases going forward over the next quarter or so

Speaker #3: Well, the obvious answer is that it completely depends on the stock price, right? And how the stock trades. But we're constantly looking.

Jason Reese: Look, the obvious answer is that completely depends on the stock price, right, and how the stock trades. We're constantly looking and the board's involved in the balance of putting capital to work. There's multiple ways that that could be done versus buying back the shares. We clearly have levels of which we think it's better for our shareholders to repurchase shares and increase their NAV, and increase their percentage ownership of the company by repurchasing those shares. I think you'll see us from time to time doing that in the market. We're also balancing looking at working our liabilities versus making new investments, too. I think you saw that we called $6.5 million of our GECCI notes in July. Those are the most costly piece of debt that we have outstanding. It's an 8.5% coupon.

Speaker #3: And the board's involved . The balance of , you know , putting capital to work , and there's multiple ways that that could be done versus buying back the shares .

Speaker #3: So we clearly have levels of which we think it's better for our shareholders to repurchase shares and increase their Nav . , and increase their of the company by repurchasing those shares .

Speaker #3: I think you'll see us at time to time doing that in the market , and then we're , we're also balancing looking at working our liabilities versus making new investments to , I think you saw that we , , called $6.5 million of our GECCI notes , , in July .

Speaker #3: , those are the most important , most costly piece of debt that we have outstanding . It's an 8.5% coupon . But when you look at the total GAAP cost of that debt with , , you know , amortized expenses and so on , it's more it's above a 9% cost .

Jason Reese: When you look at the total GAAP cost of that debt with amortized expenses and so on, it's above a 9% cost. We're balancing, do you repurchase shares? Do you repurchase debt? Do you make new investments? We're constantly looking at that to figure out. Obviously, GECCI notes repurchasing 9% cost of funds is a riskless transaction. There's a lot of positives, I think, in retiring the high cost debt when the time is right.

Speaker #3: And so we're balancing , do you repurchase shares ? Do you repurchase debt ? Do you make new investments ? And we're constantly looking , at that to figure out , , obviously GECGECI notes repurchasing 9% cost of funds is a riskless transaction .

Speaker #3: , so there's a lot of positives , I think in retiring the high cost debt , when the , when the time is right

Speaker #2: Thank you , both of you , Jason and Carrie , for all of the answers today . I appreciate it . That's all for me , Eric .

Erik Zwick: Thank you, both of you, Jason and Keri, for all of the answers today. I appreciate it. That's all for me.

Jason Reese: Yeah. Eric, happy to do a follow-up one-on-one anytime you want.

Speaker #3: Happy to do a follow up one on one . Anytime you want .

Speaker #2: I appreciate that . Thanks And .

Erik Zwick: I appreciate that. Thanks.

Speaker #4: Again, if you have a question, you may press star then one to join the queue. And that will conclude our question and answer session. I'd like to turn the conference back over to Jason Rice for any closing remarks.

Operator 2: Again, if you have a question, you may press star then one to join the queue. That will conclude our question and answer session. I'd like to turn the conference back over to Jason Reese for any closing remarks.

Operator: Again, if you have a question, you may press star then one to join the queue. That will conclude our question and answer session. I'd like to turn the conference back over to Jason Reese for any closing remarks.

Speaker #3: Thank you again for joining us today . This quarter reflects continued progress on the priorities we outlined earlier this year . We increased Nav , strengthened portfolio quality , generated net investment income that fully covered our dividend and further improved our balance sheet while reducing cost of capital .

Jason Reese: Thank you again for joining us today. This quarter reflects continued progress on the priorities we outlined earlier this year. We increased NAV, strengthened portfolio quality, generated net investment income that fully covered our dividend, and further improved our balance sheet while reducing cost of capital. I am pleased with both the trajectory of the portfolio and the strength of the team executing our strategy. As we look ahead, our priorities remain unchanged. Protect and grow NAV, generate sustainable NII, and allocate capital with discipline. We will continue to actively manage portfolio risk, pursue differentiated investment opportunities, and maintain the liquidity and financial flexibility to act on attractive opportunities as they arise. We believe GECC is well positioned to continue delivering durable, long-term value for shareholders. We appreciate your continued support and look forward to updating you on our progress. Thank you very much.

Speaker #3: I am pleased with both the trajectory of the portfolio and the strength of the team executing our strategy . As we look ahead .

Speaker #3: Our priorities remain unchanged . Protect and grow . Nav . Generate sustainable NII and allocate capital with discipline . We will continue to actively manage portfolio risk , pursue differentiated investment opportunities and maintain the liquidity and financial flexibility to act on a traffic attractive opportunities as they arise We believe GIC is well positioned to continue delivering durable , long term value for shareholders .

Speaker #3: We appreciate your continued support and look forward to updating you on our progress . Thank you very much

Operator 2: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.

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