Great Elm Capital Corp.

Greetings and welcome to Great Elm Capital Corp. First Quarter 2026 Financial Results Conference Corner. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Adam Yates, Managing Director. Thank you. Mr. Yates, you may begin.

Hello, and thank you everyone for joining us for Great Elm Capital Corp's first quarter 2026 earnings conference call. If you would like to be added to our distribution list, you can email investorrelations at 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, and we ask that you refer to Great Owned 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 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 newly appointed CEO. He'll be joined by Matt Kaplan, Portfolio Manager, Chris Croteau, Head of Research, Chief Financial Officer, Kerry 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.

Thanks, Adam, and thank you, everyone, for joining us today. In March, I assumed the role of Executive Chairman of GECC at an important inflection point for the company. On May 4th, I was appointed CEO. The company was established to create income and protect and grow NAV. In the near term, I am reprioritizing. We will protect and grow NAV first and secondarily create income. We will accomplish this by strengthening oversight, protecting shareholder value, and reinforcing accountability across the platform. We are well underway making progress on these fronts. I noted last quarter that as chairman and CEO of Great Elm Group, the parent company of GECC's investment manager, I bring deep familiarity with both the team and our investment process. That familiarity enables a seamless transition into my role as both GECC chairman and CEO, and I'm working closely with management to reinforce discipline, underwriting, and thoughtful capital allocation. Before turning to the quarter, I would like to thank Matt Kaplan for his leadership during his tenure as CEO. Matt will continue in his role as portfolio manager. According to results, recent quarters have been challenging for the broader BDC sector, and GECC was not immune to the macro environment. Our NAV declined this quarter, driven primarily by unrealized losses in select investments, most notably our CLOJV and one private investment with an idiosyncratic event. Our CLO investments can exhibit volatility given their inherent leverage. Additionally, in the first quarter, the broader CLO equity market declined. Despite the volatility of the quarterly marked, CLO exposure provides additional diversification to GECC's portfolio of secured investments. Our CLO investments continue to generate meaningful cash flows, diversify our income streams, and support the sustainability of our net investment income. In light of these unrealized losses, Gradome Capital Management, GEC's investment advisor, has waived all accrued and unpaid incentive fees through June 30, 2026, marking the third consecutive quarter of fee waivers. As of March 31, 2026, that waiver amounted to approximately $2.8 million, or 20 cents per share, of direct benefit to our shareholders. This action is immediately accretive to NAV and underscores our alignment with shareholders. We have also taken decisive action to deleverage the balance sheet. Recently, we called and repurchased all $57.5 million of GECCO notes due later this year. Once these notes are fully retired, GECC will have no funded debt maturities until 2029. This eliminates near-term refinancing risk and enables our flexibility to deploy capital strategically. In addition, we continue to improve portfolio credit quality through active investment rotation. During the quarter, we deployed approximately $22 million across 12 investments, while exiting investments we viewed as higher risk. As a result, first lien investments now comprise nearly 75% of the corporate portfolio, the highest level in the company's recent history. This reflects a deliberate shift towards senior secured investments with stronger downside protection and is a direct outcome of the underwriting discipline we have instilled across the platform. At the same time, we're expanding our proprietary sourcing efforts. During the quarter, we closed three transactions sourced through institutional partnerships, committing approximately $15 million to new private investments. We closed on one additional proprietary private investment in April, and we expect to close additional investments in the near future, building on this momentum as our sourcing network continues to deepen and differentiate our platform. At Great Elm Specialty Finance, or GESF, we continue to execute on the strategic transformation aimed at streamlining the platform for enhanced growth and profitability. Great Elm Commercial Finance is building a robust pipeline of asset-based lending opportunities, while Great Elm Healthcare Finance has successfully repositioned the business and recently closed on another transaction. Prestige, Our invoice financing business generates durable returns but can exhibit quarter-to-quarter variability due to the spot nature of its business. I'm pleased to say all three of our core verticals under GESF are profitable and generate cash distributions. Collectively, GESF is poised for continued growth and represents an increasingly important source of diversification across both assets and income. Today, GECC's high-quality portfolio is strong, composed primarily of performing cash generative investments. We closed the quarter with less than 1% of fair value of all investments on non-accrual, stark contrast to our peers. In addition, in the last quarter, we opportunistically purchased shares at a discount to NAV under our stock and purchase program. Through May 1st, 2026, under our $10 million stock repurchase program authorized in October 2025, we have repurchased approximately 1% of all shares outstanding at an average 36% discount to our March 31st NAV, leaving approximately $9.5 million of remaining capacity under the program for future repurchases. Stepping back, GECC is well-capitalized and supported by a strong balance sheet. At quarter end, we held approximately $10 million in cash, $4 million of liquid exchange-traded assets, and had full availability under a $50 million revolving credit facility. With no near-term debt maturities, ample liquidity, and a higher-quality portfolio, we are well-positioned to act decisively when compelling opportunities arise.