Eagle Point Income Co Inc. Q1 FY2025 earnings call

Key Points - Net investment income and realized gains in Q1 were $0.44 per share, down from $0.54 in Q4. Decline in NII driven by SOFR drop and spread compression in CLO portfolio. - NAV per share at $14.16, viewed as short-term market fluctuation. - Deployed $120 million of gross capital in Q1 across CLO debt and equity purchases. - Raised $64M via ATM common stock at premium to NAV, $14M via preferred stock ATM. - CLO market had $49B new issuance in Q1, with spread compression in CLO equity largely behind us. - Liquidity position strong with $33M cash and undrawn revolver capacity as of April 30th.

During the first quarter, the company generated net investment income and realized gains of $0.44 per share. This included $0.40 of net investment income and $0.04 of realized capital gains, down from $0.54 per share in the fourth quarter. Recurring cash flows for the first quarter were $16.5 million or $0.71 per share. The NAV per share stood at $14.16 as of March 31st, down from $14.99 at year-end. The company raised approximately $64 million of common stock through the ATM program and $14 million of preferred stock, with daily average trading volume of common stock more than doubling from Q1 2024.

Forward-looking - New dividend distribution of $0.13 per share for Q3 reflects near-term earnings potential in lower interest rate environment. - If SOFR increases, could lead to higher earnings; if SOFR falls further, could reduce earnings potential. - Believes recent market volatility provides buying opportunities for discounted CLO debt and equity.

Risks - Fluctuations in SOFR impacting net investment income. - Spread compression continuing to affect CLO equity earnings. - Market volatility potentially causing NAV decline not indicative of portfolio concerns.

Q: About the reduction in the dividend distribution and relation to recurring cash flows.

A: The cash has been covering, but NII moves with SOFR. Distribution rate reflects near to medium-term earnings power, with CLO equity providing some excess cash. If rates move up, earnings power increases; if down, decreases.

Q: Clarification on CLOs and dividend drop.

A: Dividend change is principally due to SOFR movement. Long-term default rate on CLO double B securities is very low, no credit-related move; purely fed rate movement based.