Eagle Point Income Company Inc. Q2 FY2025 earnings call

• The portfolio delivered solid performance in Q2 despite market volatility, with the CLO market showing a gradual recovery.
• Strengthened the balance sheet via an at-the-market program, raising ~$20 million common stock at premium to NAV and ~$11 million preferred capital. Announced a $50 million share repurchase program, repurchasing $6.5 million common stock at a 6.4% discount to NAV, generating $0.02 NAV accretion.
• Completed 2 resets of CLO equity positions, lowering debt costs and extending the reinvestment period. Received $17 million recurring cash flows in July, with $51 million cash and revolver capacity available as of July month end, and management's unaudited NAV estimate for July was between $14.34 and $14.44 per share.

In the second quarter of 2025, Eagle Point Income Company (EIC) generated net investment income and realized gains of $0.39 per share, with $0.37 being net investment income and $0.02 realized capital gains. Recurring cash flows were $18 million or $0.67 per share, compared to $16 million or $0.71 per share in the first quarter. The NAV as of June 30 was $14.08 per share, slightly below the March 31 NAV of $14.16 per share. EIC deployed $40 million into attractive CLO debt and equity securities during the quarter, and had over $20 million of cash and undrawn revolver capacity available. The company's GAAP return for the second quarter was 3.5%.

• Expect third quarter cash flows to be roughly in line with distributions and expenses.
• Management's unaudited NAV estimate as of July month end was between $14.34 and $14.44 per share, higher than June and March NAVs.
• Plan to continue buying back common stock as market opportunities present themselves.

• Market volatility could impact CLO prices and portfolio performance.
• Compliance with regulatory requirements and maintaining the target leverage ratio within 25%-35% is a risk.
• Uncertainty in CLO equity taxable income, which can affect distribution calculations and special dividends.

Q: How should we think about the all-in yield on the CLO debt portion of the portfolio, especially regarding Fed rate changes and spreads?

A: CLO debt is rate-sensitive (SOFR-based), while CLO equity is less rate-sensitive. Rate movements can impact income, and CLO BBs historically yield in the high single digits; spread widening could affect returns.

Q: Does the push out of loan maturities indicate credit distress at the bank level?

A: No, issuers are refinancing debt at par to extend maturities due to strong market conditions, not credit distress.

Q: How is the pipeline for new investments shaping up?

A: Active in both CLO BB new issue and secondary markets, with opportunities in discounted securities; CLO equity also has secondary opportunities.

Q: Discuss the share buyback program and considerations around premium/discount to NAV?

A: Share buyback is considered the cheapest when stock is at a discount to NAV; limited by volume rules, but plan to continue buying back when stock is undervalued.

Q: What's the reason for the decline in the OC cushion and relation to Altice default?

A: Decline mainly due to Altice default, which was anticipated and priced in; still ample cushion in the OC test.

Q: Is the stock's substantial discount to NAV still attractive for repurchasing?

A: Yes, the stock is seen as 'cheap' compared to other investment opportunities like CLO BBs, making repurchasing attractive.