Eagle Point Credit Co Inc. Q4 FY2024 earnings call

• The company had a solid 2024 with holders of common stock having a total return of 14.7% assuming reinvestment of distributions, GAAP return on equity of 10.1%, and total distributions of $1.92 per common share in 2024.
• In the fourth quarter, deployed over $223 million in net capital into new investments, new CLO equity purchased had a weighted average effective yield of 17.8%, completed 16 resets lengthening the portfolio's weighted average remaining reinvestment period to 3.4 years (over 50% above market average), refinanced two CLOs and called three CLOs.
• Issued Series AA and AB non-traded 7% convertible perpetual preferred stock generating about $20 million, issued additional common shares through At the Market program at a premium generating NAV accretion of about $0.05 per share, and completed ECCU 7.75% notes offering with net proceeds of $111 million.
• Actively rotating CLO debt portion into CLO equity and other investments, portfolio is managed for long remaining reinvestment periods to drive performance and guard against market volatility.

For the fourth quarter, recurring cash flows from the portfolio were $82 million, or $0.74 per share, exceeding quarterly aggregate common distributions and total expenses. This was an increase from $68.2 million, or $0.66 per share in the third quarter. The company generated net investment income, less realized losses of $0.12 per share in the fourth quarter, with realized losses including a $0.14 per share reclassification of unrealized losses related to older CLO equity positions. Excluding accounting reclassifications and non-recurring expenses, NII and realized gains were $0.29 per share. Cash flows received in the first quarter of 2025 totaled approximately $72 million, and some CLOs in the portfolio won't make their first payment until April.

• Cash flows received in the first quarter of 2025 totaled approximately $72 million, with some CLOs in the portfolio not making their first payment until April.
• Declared common monthly distributions for the second quarter of 2025 of $0.14 per share.
• Expect to continue deploying capital, rotating from CLO debt to CLO equity, and have a robust pipeline of reset and refinancing opportunities in 2025.

• Fluctuations in cash flows from quarter-to-quarter due to new investing activity and some semi-annual paying assets in CLOs portfolios.
• Market volatility could impact portfolio performance. Some bank research desks may overestimate corporate default risk, which could affect the portfolio.

Q: Did you cover the commission expense line in the model? It was elevated versus expectations.

A: Commission expense is a combination of commissions paid for the ATM and issuing perpetual preferred Series AA and AB equity. The common issuance is below the line off the ATM paid in capital, and the Series AA perpetual has a sales charge. Every year, efforts are made to keep costs low but these are profit generating costs.

Q: Regarding recurring cash flow, how do they come in and what drives variability?

A: Most CLOs pay on a January, April, July, October cycle. The first payment is usually bigger. A lot of the variability is due to new investing activity and some semi-annual paying assets. The company has a system to track CLOs in real time, including ratings actions between trustee reports. The 22% of CLOs in the CLO equity portfolio that are new or recently reset didn't make a payment in the fourth quarter. Cash flows in the first quarter of 2025 totaled approximately $72 million, with some CLOs not making their first payment until April