Eagle Point Credit Co Inc. Q1 FY2024 earnings call

• The company had a solid start to 2024 with the investment portfolio performing well and balance sheet improved.
• Generated net investment income and realized capital gains of $0.31 per share excluding nonrecurring expenses. Recurring cash flows in Q1 were $56.2 million, with April's at $65.7 million.
• NAV per share as of March 31 was $9.16, and $0.48 per share in cash distributions was paid. Deployed over $131 million in net new capital into investments.
• Sold some CLO BB positions as prices increased, plan to rotate back to CLO equity. Raised capital via ATM and issued Series F term preferred stock, generating NAV accretion of $0.06 per share.
• Weighted average effective yield on CLO equity portfolio was 16.43% at Q1 end, new purchases had 19.4% yield. NAV as of April month end estimated between $8.94 and $9.04 per share. Declared distributions through September 2024.
• Launched non-traded 7% convertible perpetual preferred stock offering. All financing is fixed rate with no maturities prior to 2028.
• Deployed capital into primary investments as debt spreads tightened, focused on improving WARRP. Completed 2 resets and 1 refinancing, extending reinvestment periods and lowering debt cost. CLO equity portfolio's WARRP was 2.5 years as of March 31, 56% above market average.
• EIC won Creditflux Industry Award for Best Public Closed-End CLO Fund, generated strong net investment income.

The company generated net investment income and realized capital gains of $0.31 per share, excluding nonrecurring expenses related to a preferred stock offering. Eagle Point Income Company (EIC) generated net investment income and realized gains, excluding nonrecurring expenses, of $0.57 per share for the first quarter. Recurring cash flows in the first quarter were $56.2 million or $0.70 per share, with April's recurring cash flows at $65.7 million. NAV per share as of March 31 was $9.16, and EIC raised its monthly common distribution by 11% to $0.20 per share.

• Second quarter cash flows of $65.7 million were well above Q1's $56.2 million.
• Distributions declared and extended through September 2024.
• Ongoing portfolio activity with new investments in primary and secondary markets.
• Non-traded 7% convertible perpetual preferred stock offering started generating proceeds and is expected to be accretive over time.
• Continues to be opportunistic and proactive in managing the investment portfolio with a long-term mindset.

• Matters discussed involve forward-looking statements with risks and uncertainties that may cause actual results to differ from projections. Factors impacting the company include those in SEC filings. Market volatility, as CLO cash flows can have ups and downs. Default risk estimates by research desks may be overestimated, but potential increase in default rate as year progresses. Loan pricing risks, with loans trading around or above par, which could impact portfolio value if prices go down.

Q: With everything you just said about resetting and refinancing, is there a chance that your taxable income, given the costs associated with those re-financings and resets could fall below your distributions this year?

A: When conducting resets or refis, you get a tax deduction for unamortized issuance expenses. In 2018, there were significant tax write-offs due to unamortized costs, but now unamortized costs are lower. The amount of reset activity may create tax write-offs, but loans being sold at gains creates taxable income not received as cash. It's a balance between the two factors, with no definitive view on which will be more powerful, but unamortized costs are lower now compared to 2018.