Eagle Point Credit Company Inc. Q1 FY2025 earnings call

• The company started 2025 strong with pricing three new CLO equity investments, resetting nine positions, and refinancing seven CLOs. - The market downturn in March due to tariff uncertainty affected CLO securities, but the portfolio is positioned to benefit from volatility with a weighted average remaining reinvestment period (WARP) of 3.5 years. - Substantially completed the rotation from CLO debt to CLO equity, deployed over $190 million into new investments in Q1, issued $66 million of common stock at a premium and $22 million of preferred stock. - Loan market: S&P UBS Leveraged Loan Index had mixed returns, default rates low, spread compression was a headwind but starting to abate. - Portfolio quality: Higher quality than market average in CCC concentrations, loans trading below 80, and junior OC cushion.

For the first quarter of 2025, the company generated net investment income and realized capital gains of $0.33 per share, consisting of $0.28 of net investment income and $0.05 of realized capital gains. The NAV as of March 31st was $7.23 per share, a 13.7% decrease from $8.38 per share at year-end. Recurring cash flows in the first quarter were $79.9 million or $0.69 per share, slightly lower than the $82 million or $0.74 per share in the fourth quarter of 2024. The company deployed over $190 million into new investments during the first quarter, with new CLO equity purchases having a weighted average effective yield of 18.9%.

• Expect additional recurring cash flows in May and June. - CLOs in the portfolio scheduled to make first payments in the third quarter, bolstering future cash flows. - Continued focus on enhancing net investment income and cash flow through proactive investment approach, including resets and refinancings of CLOs.

• Market volatility driven by macro factors such as tariff policy. - Spread compression in previous quarters impacting NAV. - Uncertainty in bank research desks' default rate forecasts for 2025.

Q: Mickey Schleien asks about market recognition of stable CLO cash flows.

A: Thomas Majewski notes that cash flows have been stable historically, prices are a short-term mark to market swing, and there are opportunities to buy assets cheaper. He also mentions the reinvestment optionality in CLOs.

Q: Randy Binner asks about the pace of resets and refis.

A: Thomas Majewski says nine resets were late quarter, expects single-digit to double-digit resets quarterly, and the portfolio's diversity allows for value creation through resets and refinancings.

Q: Erik Zwick asks about the slower pace of deployment in April.

A: Thomas Majewski explains slower deployment in April due to market volatility, but expects a pickup in May and June, and the company is focused on discounted areas in the market.

Q: Steven Bavaria asks about loan loss reserves.

A: Thomas Majewski explains that GAAP has a loan loss reserve, tax is cash-based, and cash is key for funding distributions, with GAAP, cash, and tax being different considerations.