Eagle Point Income Company Inc. Q4 FY2025 earnings call

2025 CLO market had challenging conditions with factors like reduced SOFR, loan spread compression, and negative market sentiment. Actively managed portfolio seeking opportunities in CLO debt/equity and other asset classes. 2025 paydowns in CLO debt portfolio totaled $147 million. Q4 2025 net investment income 35 cents per share, down from prior quarter. Deployed $45 million in new investments in Q4, $26 million in other credit assets. Completed redemption of Series B preferred, entered new revolver, planned to redeem Series C preferred. Repurchased $19 million of common stock, increased repurchase authorization to $60 million. Declared 11 cents per share monthly distributions for Q2 2026, aligning with near-term earning potential.

In 2025, EIC had a GAAP return on equity of negative 0.7% and a total return on common stock of negative 15.2% assuming reinvestment of distributions. Paid $1.98 per share in cash distributions. CLO debt portfolio had $147 million in paydowns generating 12 cents per share in realized capital gains. Q4 2025 net investment income was 35 cents per share, down from 39 cents prior quarter due to SOFR decline and loan spread compression. Recurring cash flows in Q4 were $19 million (79 cents per share). Deployed $45 million in new investments in Q4, $26 million in other credit assets with 21.6% weighted average yield. Redeemed Series B preferred stock, entered new revolver, planned to redeem Series C preferred, repurchased $19 million of common stock at 18.2% discount to NAV resulting in NAV accretion of 14 cents per share. NAV at Dec 31 was $13.31 per share.

Remain constructive on CLO market fundamentals, robust pipeline of refinancings and resets. Increased new issue loan activity may rebalance loan market. Believe shares undervalued, will continue repurchasing when trading at material discounts to NAV. Monthly distribution of 11 cents per share for Q2 2026 aligns with near-term earning potential.

CLO market challenging conditions, reduced SOFR levels affecting CLO debt income, loan spread compression, broader negative market sentiment towards credit, uncertainty around economic environment and rate cycles affecting earnings power

Q: Follow-up on realized losses from rotating out underperforming managers; A: Dan mentioned underperforming collateral managers had credit issues, rotated to other credit assets for better relative value.

Q: Source of funds for redeeming Series C preferred; A: Revolver, cash on hand, proceeds from CLO debt refis/resets.

Q: Driver of increase in weighted average expected yield on CLO portfolio; A: Redeployment into wider-yielding non-CLO assets.

Q: Non-recurring items in earnings; A: Lena said none this week.

Q: Balance sheet portfolio shrinkage; A: Lena said targeting 25%-35% leverage ratio, will be lower with Series C redemption.

Q: Exposure to alternative credit assets; A: Dedicated teams, relative value better than CLOs in Q4