Eagle Point Credit Co Inc. Q2 FY2025 earnings call

• Earnings: Net investment income less realized losses were $0.16 per share, NAV increased to $7.31 per share. - Portfolio Activity: Deployed $86 million into new investments, including capitalizing on market dislocation to acquire CLO equity; completed 4 resets and 1 refinancing with a strong pipeline of opportunities. - Market Insights: Loan index recovered, CLO equity not fully participating in broader market recovery; portfolio metrics strong with lower CCC exposures and higher OC cushion. - Financing: Issued common and preferred stock; all financing is fixed-rate with no maturities prior to April 2028.

The company generated net investment income less realized losses from investments of $0.16 per share, with $0.23 of net investment income offset by $0.07 realized losses from investments. NAV as of June 30 was $7.31 per share, up 1.1% from March 31. Non-annualized GAAP total return on equity was 6.3%. Recurring cash flows in Q2 were $85 million or $0.69 per share, exceeding distributions and expenses by $0.08 per share. The company deployed $86 million into new investments, including taking advantage of market dislocation to acquire CLO equity. Weighted average reinvestment period (WARP) was 3.3 years, 44% above market average. Issued $41 million common stock at premium and $38 million preferred stock. Asset coverage ratios for preferred and debt were 243% and 525%, above requirements. Leverage ratio was 40% as of July 31, expected to revert to target range.

Positive outlook for portfolio with CLO equity expected to catch up to market recovery; extensive pipeline of resets and refinancing to enhance earnings; long reinvestment period provides optionality to capitalize on market volatility.

Market volatility, spread compression, tariff concerns, energy cost impacts, economic uncertainty, short-term mark-to-market challenges.

Q: Mickey Schleien asks about CLO AAA spreads and risk-off mentality.

A: Thomas Majewski discusses market dynamics, cash flow generation, and NAV movement, stating portfolio cash generation is strong despite mark-to-market concerns.

Q: Randy Binner asks about European investments and all-in yield.

A: Thomas Majewski talks about European exposure (5%-10% of portfolio) and interest rates not driving repayments, with repayments driven by loan spread dynamics.

Q: Erik Zwick asks about CLO collateral manager partnership.

A: Thomas Majewski explains the partnership details, including providing capital for initial CLOs and potential financial benefits from top-line revenue share.

Q: Unidentified Analyst asks about CLO equity sell-off.

A: Thomas Majewski discusses reasons for sell-off including market uncertainty and concerns about economic outcomes, but notes portfolio cash flows remain strong and CLO equity is a strong asset class over time.