Great ELM Capital | 10-Q: FY2026 Q1 Revenue Misses Estimate at USD 9.544 M

Revenue: As of FY2026 Q1, the actual value is USD 9.544 M, missing the estimate of USD 10.49 M.

EPS: As of FY2026 Q1, the actual value is USD -0.05, missing the estimate of USD 0.32.

EBIT: As of FY2026 Q1, the actual value is USD 2.61 M.

Total Investment Income

• Q1 2026: $9,544 thousand
• Q1 2025: $12,495 thousand

Interest Income

• Non-affiliated, non-controlled investments: $5,089 thousand in Q1 2026 compared to $6,402 thousand in Q1 2025 .
• Non-affiliated, non-controlled investments (PIK): $819 thousand in Q1 2026 compared to $611 thousand in Q1 2025 .
• Controlled investments: $812 thousand in Q1 2026 compared to $953 thousand in Q1 2025 .
• Total interest income: $6,720 thousand in Q1 2026 compared to $7,966 thousand in Q1 2025 . This decrease was attributed to a lower average coupon rate across the portfolio and a reduction in the debt investment portfolio size . The average coupon rate was 10.9% on approximately $199.2 million principal as of March 31, 2026, versus 11.7% on approximately $256.2 million principal as of March 31, 2025 . PIK interest remained consistent year-over-year .

Dividend Income

• Non-affiliated, non-controlled investments: $159 thousand in Q1 2026 compared to $236 thousand in Q1 2025 .
• Controlled investments: $2,546 thousand in Q1 2026 compared to $3,376 thousand in Q1 2025 .
• Total dividend income: $2,705 thousand in Q1 2026 compared to $3,612 thousand in Q1 2025 . The decrease resulted from fewer holdings in dividend-paying equity investments and reduced distributions from the CLO JV, which were $2.5 million in Q1 2026 versus $3.3 million in Q1 2025 .

Other Income

• Non-affiliated, non-controlled investments: $119 thousand in Q1 2026 compared to $743 thousand in Q1 2025 .
• Non-affiliated, non-controlled investments (PIK): $0 thousand in Q1 2026 compared to $174 thousand in Q1 2025 .
• Total other income: $119 thousand in Q1 2026 compared to $917 thousand in Q1 2025 . This decline was primarily due to the absence of non-refundable carry fees, early repayment fees, and amendment fees in Q1 2026 that were present in Q1 2025 .

Expenses

• Total Expenses: $7,280 thousand in Q1 2026 compared to $7,851 thousand in Q1 2025 .
• Management fees: $1,072 thousand in Q1 2026 compared to $1,272 thousand in Q1 2025, decreasing due to a decline in the fair value of the portfolio .
• Incentive fees: $543 thousand in Q1 2026 compared to $1,150 thousand in Q1 2025 .
• Incentive fee waiver: - $2,810 thousand in Q1 2026 compared to $0 thousand in Q1 2025 . Great Elm Capital Management, LLC (GECM) waived all accrued and unpaid incentive fees through March 31, 2026, totaling $2.8 million, including an additional $0.5 million accrued in Q1 2026 .
• Total advisory fees: - $1,195 thousand in Q1 2026 compared to $2,422 thousand in Q1 2025 .
• Administration fees: $510 thousand in Q1 2026 compared to $355 thousand in Q1 2025, increasing due to higher allocable overhead and other expenses incurred by GECM .
• Directors’ fees: $54 thousand in Q1 2026 compared to $53 thousand in Q1 2025 .
• Interest expense: $4,256 thousand in Q1 2026 compared to $4,251 thousand in Q1 2025 .
• Professional services: $514 thousand in Q1 2026 compared to $424 thousand in Q1 2025, increasing primarily due to general rate increases and certain one-time fees .
• Custody fees: $35 thousand in Q1 2026 compared to $38 thousand in Q1 2025 .
• Other expenses: $296 thousand in Q1 2026 compared to $308 thousand in Q1 2025 .
• Excise tax: $91 thousand in Q1 2026 compared to $68 thousand in Q1 2025 .

Net Investment Income

• Q1 2026: $4,983 thousand
• Q1 2025: $4,576 thousand

Net Realized Gain (Loss)

• Gross realized gain: $3,730 thousand in Q1 2026 compared to $365 thousand in Q1 2025 . Q1 2026 gains included approximately $2.7 million from Stone Ridge Opportunities Fund, LP and $0.7 million from American Coastal Insurance Corp. unsecured bond .
• Gross realized loss: - $1,098 thousand in Q1 2026 compared to - $101 thousand in Q1 2025 . Q1 2026 losses included $0.2 million on the sale of State Street Blackstone Senior Loan ETF, $0.2 million from Auction.com first lien term loan, and $0.1 million from Conuma Resources LTD first lien second out term loan .
• Realized loss on repurchase of debt: - $2 thousand in Q1 2026 compared to $0 thousand in Q1 2025 .
• Total net realized gain (loss): $2,630 thousand in Q1 2026 compared to $264 thousand in Q1 2025 .

Net Change in Unrealized Appreciation (Depreciation) on Investments

• Unrealized appreciation: $4,312 thousand in Q1 2026 compared to $5,994 thousand in Q1 2025 .
• Unrealized depreciation: - $12,670 thousand in Q1 2026 compared to - $10,381 thousand in Q1 2025 .
• Total net change in unrealized appreciation (depreciation): - $8,358 thousand in Q1 2026 compared to - $4,387 thousand in Q1 2025 . Q1 2026 was primarily driven by approximately - $3.8 million related to the CLO JV and approximately - $2.3 million related to Universal Fiber Systems, LLC . It also included approximately - $2.6 million and - $1.1 million from the reversal of previously recognized unrealized appreciation on Stone Ridge and American Coastal, respectively, due to realization activities . These were partially offset by unrealized appreciation from CW Opportunity 2 LP (approx. $0.5 million), W&T Offshore, Inc. (approx. $0.4 million), Trouvaille Re Ltd. (approx. $0.3 million), and a $1.1 million reversal of unrealized depreciation on Del Monte Food Corp II, Inc. .

Net Increase (Decrease) in Net Assets Resulting from Operations

• Q1 2026: - $745 thousand
• Q1 2025: $453 thousand

Cash Flow

• Net cash provided by operating activities: $23,492 thousand in Q1 2026 .
• Net cash used for financing activities: - $25,326 thousand in Q1 2026 .
• Cash paid for interest: $3,789 thousand in Q1 2026 compared to $3,774 thousand in Q1 2025 .

Portfolio and Investment Activity

• Weighted Average Yield (End of Period): 11.56% as of March 31, 2026, compared to 11.66% as of December 31, 2025, and 12.29% as of March 31, 2025 .
• Investments at Fair Value (March 31, 2026): Debt was $190,403 thousand (177.16% of Net Assets), Equity/Other was $76,760 thousand (71.42% of Net Assets), and Short-Term Investments were $9,600 thousand (8.93% of Net Assets) . Total Investments amounted to $276,763 thousand (257.51% of Net Assets) .
• Portfolio Composition (March 31, 2026): Comprised 65 debt instruments across 49 companies, totaling approximately $190.4 million at fair value, and 18 equity investments in 15 companies with an aggregate fair value of approximately $76.8 million .
• Unfunded Commitments (March 31, 2026): Approximately $1.3 million to provide financing to certain portfolio companies .
• Asset Coverage Ratio (March 31, 2026): Approximately 161.8% .

Portfolio Classification by Industry (Fair Value - March 31, 2026 vs. December 31, 2025)

• Structured Finance: $44,072 thousand (16.51%) vs. $47,899 thousand (16.05%) .
• Specialty Finance: $37,790 thousand (14.14%) vs. $38,462 thousand (12.90%) .
• Technology: $30,035 thousand (11.24%) vs. $31,550 thousand (10.58%) .
• Consumer Products: $26,374 thousand (9.87%) vs. $24,174 thousand (8.10%) .
• Insurance: $18,575 thousand (6.95%) vs. $22,604 thousand (7.58%) .
• Industrial: $13,521 thousand (5.06%) vs. $12,943 thousand (4.34%) .
• Food & Staples: $13,288 thousand (4.97%) vs. $15,908 thousand (5.33%) .
• Chemicals: $11,370 thousand (4.26%) vs. $19,359 thousand (6.49%) .
• Metals & Mining: $8,392 thousand (3.14%) vs. $10,189 thousand (3.42%) .
• Media: $7,000 thousand (2.62%) vs. $40 thousand (0.01%) .
• Apparel: $6,484 thousand (2.43%) vs. $5,572 thousand (1.87%) .
• Transportation Equipment Manufacturing: $5,928 thousand (2.22%) vs. $6,316 thousand (2.12%) .
• Consumer Services: $5,382 thousand (2.01%) vs. $10,113 thousand (3.39%) .
• Energy Services: $5,280 thousand (1.98%) vs. $5,393 thousand (1.81%) .
• Credit Fund: $4,184 thousand (1.57%) vs. $10,096 thousand (3.38%) .
• Business Services: $3,864 thousand (1.45%) vs. $8,712 thousand (2.92%) .
• Casinos & Gaming: $3,852 thousand (1.44%) vs. $3,865 thousand (1.30%) .
• Marketing Services: $3,055 thousand (1.14%) vs. $3,073 thousand (1.03%) .
• Energy Midstream: $2,941 thousand (1.10%) vs. $2,970 thousand (1.00%) .
• Packaging: $2,891 thousand (1.08%) vs. $4,025 thousand (1.35%) .
• Restaurants: $2,861 thousand (1.07%) vs. $3,056 thousand (1.02%) .
• Textiles: $2,015 thousand (0.75%) vs. $1,954 thousand (0.66%) .
• Environmental Services: $1,999 thousand (0.75%) vs. $0 thousand (0.00%) .
• Oil & Gas Exploration & Production: $1,945 thousand (0.73%) vs. $3,817 thousand (1.28%) .
• Financial Services: $1,660 thousand (0.62%) vs. $2,834 thousand (0.95%) .
• Retail: $1,415 thousand (0.53%) vs. $1,450 thousand (0.49%) .
• Healthcare: $990 thousand (0.37%) vs. $995 thousand (0.33%) .
• Closed-End Fund: $0 thousand (0.00%) vs. $899 thousand (0.30%) .

Geographic Composition of Portfolio (Fair Value - March 31, 2026)

• United States: $266,901 thousand (248.33% of Net Assets) .
• Canada: $2,516 thousand (2.34% of Net Assets) .
• Bermuda: $6,975 thousand (6.49% of Net Assets) .
• Australia: $371 thousand (0.35% of Net Assets) .

Outlook and Strategy

Great Elm Capital Corp. anticipates having sufficient liquidity to meet its short-term and long-term obligations for at least the next 12 months and the foreseeable future . The company’s board has declared a distribution of $0.25 per share for the quarter ending June 30, 2026, payable on June 30, 2026, fully covered by distributable earnings . Additionally, GECM waived all accrued and unpaid incentive fees through June 30, 2026, effective April 2026, and Great Elm Capital Corp. plans to redeem its $18.6 million outstanding GECCO Notes on May 27, 2026 .