Eagle Point Income Co Inc. Q4 FY2024 earnings call

• 2024 was an excellent year with GAAP return on equity of 21% and total return on common stock of 24.8% (reinvesting distributions). Paid $2.40 per share in cash distributions (15.2% of average stock price).
• Fourth quarter highlights: Recurring cash flows $16.1 million ($0.82 per share), net investment income and realized gains $0.54 per share, NAV $14.99 per share (1% increase from Q3, 4% from start of 2024).
• Portfolio activities: Deployed $91 million in new CLO investments, completed refinancings and resets on CLO equity, low default exposure.
• Balance sheet: Strengthened through ATM program and equity finance, issued ~2.5 million common shares at premium, received $12 million from preferred stock issuances.

The company's main segments include CLO debt and CLO equity. In the fourth quarter, CLO debt generated strong cash flows with recurring cash flows of $16.1 million or $0.82 per share, compared to prior quarter's $13.1 million or $0.76 per share. The company deployed approximately $91 million of gross capital into new CLO investments with a weighted average effective yield of 11%. For CLO equity, the company completed five refinancings, four resets, increasing the weighted average remaining reinvestment period to 3.0 years. CLO debt's default exposure was 0.4% as of December 31st, remaining low.

• Declared $0.20 per share monthly distributions through June 2025.
• Expect to continue deploying capital into CLO equity, which is less rate sensitive.
• Reinvesting in lower spread environments after previous CLOs called and paid off at par.

• Reinvestment risk as CLOs called and paid off at par, needing to reinvest in lower spread environments.
• Interest rate risk: Short-term rate cuts impact NII from CLO double B's.
• Default risk: While low, significant loan defaults could impact portfolio, though historical default rates are low.

Q: Mickey from Ladenburg Thalmann asked about CLO debt liability spreads trending over the next couple of years.

A: Tom Majewski discussed CLO debt tranches have performed well, spreads should trend tighter, but there's reinvestment risk as CLOs are called and paid off at par.

Q: Mickey asked about risks in CFOs compared to CLOs and allocation.

A: Tom Majewski said CFOs are a small portion, higher subordination risk but attractive yields, highly selective in participation.

Q: Mickey asked about delta between cash and effective yields.

A: Dan Ko and Tom Majewski discussed loan spread movements, resets, and reinvestment assumptions affecting the delta.