Eagle Point Income Company Inc. Q3 FY2025 earnings call

• The third quarter was positive with NAV increasing, covering distribution from net interest income and recurring cash flows.
• Deployed $60 million into new investments, with new CLO equity having a weighted average effective yield of 16.6%.
• Completed three resets and four refinancings of CLO equity positions, lowering debt costs and extending reinvestment periods.
• Issued $35 million of preferred stock, and announced redemption of 100% of 7.75% Series B term preferred stock to optimize capital structure.
• Repurchased $21 million of common stock at an average discount to NAV of 8.3%, resulting in NAV accretion of 7¢ per share, and board increased repurchase authorization to $60 million.
• Fed rate cuts led to declaring lower monthly distributions for Q1 2026, reflecting impact on earnings power.

For the third quarter, Eagle Point Income Company generated net investment income less realized losses of 26¢ per share, consisting of $0.39 per share of net investment income and 13¢ of realized capital losses. Recurring cash flows totaled $17 million or 67¢ per share, consistent with the prior quarter. NAV rose to $14.21 per share as of September 30, up from $14.08 per share in June. The company deployed $60 million into new investments, with new CLO equity purchased having a weighted average effective yield of 16.6%. They completed three resets and four refinancings of CLO equity positions, issued $35 million of preferred stock, repurchased $21 million of common stock at an average discount to NAV of 8.3%, and the board increased the common share repurchase authorization to $60 million from $50 million.

• Board increased common share repurchase authorization to $60 million from $50 million.
• Declared three monthly distributions of 11¢ per share for the first quarter of 2026.
• Announced redemption of 100% of 7.75% Series B term preferred stock to optimize capital structure and reduce financing costs.

• Matters discussed include forward-looking statements and projected financial information that involve risks and uncertainties which may cause actual results to differ materially from projections. Factors impacting the company's statements and projections are detailed in the company's SEC filings.

Q: Regarding credit quality and revenue/EBITDA trends for below-grade companies, what are the thoughts on future credit quality?

A: Below-grade companies should grow faster than the economy. Recent data shows positive revenue trend, which is credit positive. As long as they grow revenue and EBITDA, defaults haven't picked up materially, and with lower rates, interest costs for these companies should decrease, providing credit tailwinds.

Q: What has driven increased annual trading volume in CLOs and its impact on Eagle Point Income Company?

A: Increased eyes on CLOs due to premium yields and low credit expense relative to other fixed income. More activity in CLO space with additional liquidity allowing better expression of investment views. The company, being an established player, benefits from tighter bid-ask spreads.

Q: About asset rotation, cash use, and share buybacks: How is cash being used, and will share buybacks continue?

A: Cash will be used for paying down EICBs and aggressively buying back common stock. The company will use cash for both paying down EICBs and common share repurchases.

Q: Industry concentration in CLOs, specifically software and technology, and exposure to AI/data center related?

A: Most software and technology exposure is enterprise software, which is sticky and hard to replace, performing well over cycles. CLOs generally have industry concentrations similar to the loan market, with technology and healthcare typically being the highest concentrations.