Key Highlights

  • Total Investment income was USD 8.7 million, or USD 0.63 per share, down from USD 10.6 million, or USD 0.86.
  • Net investment income was USD 2.4 million, level with the prior year, as total expenses fell to USD 6.5 million.
  • Dividend income rose to USD 2.6 million, with CLO joint venture distributions of USD 2.2 million versus USD 1.5 million.
  • The Debt portfolio held USD 175.4 million of principal at an 11.2% coupon, versus USD 224.1 million at 10.8%.

Investment Income

Great Elm Capital Corp. (NASDAQ:GECC), a business development company, reported third-quarter 2026 total investment income of USD 8.7 million, or USD 0.63 per share, compared with USD 10.6 million, or USD 0.86, a year earlier. Interest income fell to USD 5.5 million from USD 7.6 million, mainly because the debt investment portfolio is smaller. Dividend income rose to USD 2.6 million from USD 2.1 million, driven by distributions from the CLO joint venture of USD 2.2 million versus USD 1.5 million. Other income, which consists mainly of amendment, commitment and funding fees, fell to USD 0.5 million from USD 1.0 million.

Per share figures reflect a weighted average of about 13.9 million common shares, compared with 12.3 million a year earlier, so income per share fell faster than income in dollars.

Expenses and Net Investment Income

Total expenses fell to USD 6.5 million from USD 8.0 million. Net investment income before taxes was USD 2.2 million versus USD 2.7 million, and after an excise tax adjustment net investment income was USD 2.4 million versus USD 2.4 million. Incentive fees increased because no incentive fees were earned in the prior-year quarter, when lower investment income and capital raises raised the incentive fee hurdle. Administration fees decreased on a one-time adjustment to allocable overhead after expense allocations were finalized.

By our calculation, expenses absorbed about 75% of total investment income in the quarter, versus about 75% a year earlier, so the cost ratio was stable even as income declined.

Portfolio and Realized Results

At September 30, 2026, the debt investment portfolio held about USD 175.4 million of principal at an average coupon of 11.2%, compared with about USD 224.1 million at 10.8% a year earlier, a reduction of about 22% in principal by our calculation. Net realized losses were USD 2.2 million, compared with realized gains of USD 6.2 million. They were driven by a USD 4.1 million loss on the sale of an investment in Flexsys, partly offset by about USD 1.2 million from the realization of an investment in American Coastal and about USD 0.6 million of distributions from an investment in CW Opportunity 2.

The prior-year quarter included net unrealized depreciation, primarily about USD 16.3 million across investments in First Brands after its Bankruptcy filing, plus about USD 4.1 million and USD 3.2 million on CW Opportunity and the CLO joint venture.

For the nine months, total investment income was USD 29.1 million, or USD 2.09 per share, versus USD 37.4 million, or USD 3.17. Net investment income was USD 11.9 million versus USD 12.9 million, helped by an incentive fee Waiver of USD 3.7 million. Net asset value per share was USD 7.40, compared with USD 8.07 on the prior comparison date shown in the financial statements.

Portfolio and Fee Indicators

Items to track include the size of the debt portfolio, distributions from the CLO joint venture, the effect of the incentive fee waiver ending, realized and unrealized results on equity-like positions, and net asset value per share.