Great Elm Capital . - 8.125 Stock Earnings Reports

Great Elm Capital (GECC) reported Q1 2026 results marked by a strategic shift under newly appointed CEO Jason Reese to prioritize protecting and rebuilding net asset value (NAV) ahead of income generation. NAV declined to $107.5M ($7.74/share) primarily due to unrealized losses in a CLO JV and one private investment, though management emphasized that the portfolio remains largely high-quality and cash-generative with less than 1% of investments on nonaccrual. The adviser (GECM) waived all accrued and unpaid incentive fees through June 30, 2026 (≈ $2.8M or $0.20/share), the third consecutive quarter of waivers, to align with shareholders and accrete NAV. Management called and intends to repurchase all remaining 2026 notes ($57.5M total called, ~$18M outstanding at quarter end), which when retired will leave no funded debt maturities until 2029, materially reducing near-term refinancing risk. The company continued active portfolio rotation, deploying about $22M across 12 investments and increasing first-lien exposure to ~75% of the corporate portfolio — the highest in recent history — to enhance downside protection. Great Elm Specialty Finance (GESF) verticals are profitable and generating cash distributions, contributing diversification. Liquidity remains solid (≈ $10M cash, $4M liquid ETFs, full $50M revolver availability). The Board approved a $0.25 quarterly dividend for Q2 2026 (an approximate 18% annualized yield based on the May 1, 2026 share price). Management continues share repurchases (≈1% of shares at ~36% discount to March 31 NAV) with ~ $9.5M capacity remaining under the $10M program. Overall, the company is focused on deleveraging, rebuilding NAV, disciplined capital deployment into secured private credit, and maintaining liquidity to act on opportunities.