OXSQ - Earnings call transcript Q4 2017 | Oxford Square Capital Corp.

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Operator

Good morning, and welcome to the TICC Capital Corp. Fourth Quarter 2017 Earnings Release and Conference Call for February 27. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note that this event is being recorded. to Officer. conference like Cohen, to now Executive Chief would turn over the Jonathan I ahead. go Please

Jonathan Cohen

Good morning. today statements? to Chief call Earnings our Welcome today everyone and Financial Conference Quarter Corp. President; discussion you Call. XXXX Officer. Fourth with Bruce, I'm open Rubin, the joined Bruce by could Rosenthal, the Saul our TICC the Capital forward-looking regarding

Bruce Rubin

filings, includes you materially obtain factors statements and cause of call undertake law. back call projections. is XX conference is customary is in update by any information Any Sure, to An our Jonathan. at To for With our form the this Corp. that in this be recorded. visit not release release disclosure projections, the do will important to your call forward-looking latest also results unauthorized so press in morning. was included required prohibited. strictly forward-looking unless that and this of being our earlier conference call call Jonathan. do days. available We I that for our Today's turn would at replay the audio website these SEC press filings differ call forward-looking will TICC property to call our regarding this Replay is to Today's SEC www.ticc.com. recent of please morning I copies that, over like note to actual refer information. our the the statements that from could released rebroadcast to Capital to ask Please of attention we most

Jonathan Cohen

Thanks, Bruce.

a XXXX. the shareholders for quarter are the full to fourth generated strong return total for that during We pleased report and year we

quarter of share value change share common return book the to XX, plus end $X.XX of December December to TICC's our rose equating as $X.XX of book XX, per the in Our shareholders. paid X.X% is the a for to the September ended return total XXXX quarter total per at distributions value from

$X.XX We our of $X.XX higher also distributions that than it note book XXXX now at to we've a our share. value end XXXX XX.X% of with XXXX, per was return and that paid share over per share a words, is in during year to for shareholders the value of ended per the produced total per year-end we other share compared increase XXXX. distributions In book

losses for In ended approximately compared or we GAAP million share realized quarter the fourth net income per or approximately December For investment $X.X we XX, with of had XXXX, approximately In $X of recorded $XX.X per quarter, or quarter. million net approximately million assets the $X.XX third per or net share net million recorded $X.XX $X.XX share. increase we $X.X share per share. depreciation $X.XX and of unrealized $X.X approximately a million in per or from operations $X.XX net approximately of total,

of income. GAAP Our investment $X the quarter. was per XX ended or $X.XX net $X.XX income million net share prior core net income issued share That's earnings approximately December today Please for to we million for $X.X compared quarter reconciliation the release all? see core per approximately for the investment with investment or

Bruce Rubin

with levels, lower return corporate remained Corporate remained From as at share Loan at payable X, a the to Index company's environment. markets of ending of lower loan represented to stable, XXXX, XXXX. of Following risk the in has of XXXX the Board generally At XXXX rates XXXX, of continued of a for total full the quarter XX, the the $X.XX year declared XX, XXXX time, total XX, which fourth period March investors the providing we March corporate participate. par. approximately LSTA debt XX% low quarter company's in and positive per Directors for strength January return shareholders trading same distribution December -- record the default

XXXX During for XXXX, nearly XXXX with and liability The presenting has at in the believe investments. both CLO spreads market with spreads the average of collateral our tighter reselling and CLO the X.X% market. dislocation the of is also loan at environment and assets weighted ongoing that levels leverage tightest widening spreads currently refinancing class With approximately since spreads LIBOR end CLO credit spreads well the the crisis, CLO as current us of liabilities of opportunities. reduced in resulted and/or three-month we credit loan asset positioned in any tighter

maintain and in combination debt strategy executed we for a syndicated corporate continue maintaining be to of the our believe we mindful Note We liquidity XX. this investments if order necessary which purchases of to as clubbed remain December loans market allowed and advantage sold corporate non-accrual deals have to opportunities. narrowly through liquidity. we take to into no sufficient investments us markets, strategy have of that in of primary loans overall of both As rotating out syndicated portfolio more broadly secondary

During shareholder debt XXXX steps took expected in corporate overall CLO assets and longer near both towards into yielding significantly and total our our traded with we our maximizing we returns. portfolio reduced term increase multiple view loan value ways, higher to rotation a

up Board to February million. Directors program at Additional XXXX authorized X, the $XX stock the of repurchase of

strategies on of as certain over to and opposed portfolio our focus have income return level designed timeframe. maximize particular We a to continue generating to total management

capital in to view our and investments. longer-term have performance served to historically available XXXX, able a and believe permanent investment a been We us strong we well. continue has this to towards take Following vehicle opportunities as we perspective XXXX us see

website we been now taking posted to questions. fourth TICC's quarter begin will with www.ticc.com. And Additional operator, that information has our to about performance

Operator

the Please question-and-answer comes with today go Mickey And session. Instructions] first question from begin Schleien [Operator Ladenburg. now our We'll ahead.

Mickey Schleien

morning, and Good Jonathan Saul.

Jonathan Cohen

Good morning, Mickey.

Mickey Schleien

half I'd in by understand issuances about the November. is Jonathan trend. I and to levels that we you by think to start want saw from asking CLO dropped half October like -- what about driving

Jonathan Cohen

issue very in We've reset the We've new much markets, isn't refinancing across issue and been platform. our the very, this the market. in so active calendar. The active for been is very like secondary us

arbitrage function issue capital available based proceeds. of the use new the to that's wax the the and calendar prospective of the as and between wane So tends cost equity delta primarily to the of upon a

I called by of [ph] look think and us. some taken the the we away air some have been the forward and primary activity opportunity presents an that for capital the the the probably out That have markets. calendar refi Those we market. reset they probably think is in market at new said, and attracted of from

Mickey Schleien

spread of Okay. I that. to about Appreciate compression. questions ask you a handful actually wanted

if pool of loans of at the CLOs say the the In global you look turnover terms sort or the impact of compression, fast gauging impact on how annually? within a pace you of those would of spread basis

Jonathan Cohen

CLO structures, US You're talking about loans Mickey? within

Mickey Schleien

I'm refinancing trying those have and just spread are and we is two the outlook general In balance side, then have understand we that. -- where there left-hand CLOs of for the right-hand things mismatch the compression side sheet on to timing we Yes. and because suffering from the and themselves I'm a the and resetting of the between obviously,

Jonathan Cohen

Mickey. X.X We years. between estimate Sure, X and somewhere

Mickey Schleien

in on average terms X.X years maturity side? and left-hand the X of

Jonathan Cohen

and that calls of weighted one but hold, are is aspects. mind in keeping maturity refinancings terms In aspect, average another

final in They infrequently, loans not last maturity their to are don't spread especially tightening So, ultimately a early. environment dates. always called

Mickey Schleien

that how of that -- refinancing quickly aggregate basis on does quickly the how pool are are those resetting? And period, if their all, non-call we and CLOs beyond what first of an represent and at look

Jonathan Cohen

of and majority things the equity go of try one, holders, US is XXX every that to in they're is scores the depending generalize. collateral really CLOs adjuvant one all the roughly ultimate any different particular But fundamentally depending structures and different any be somewhat underlying vehicle. maturity [ph] is a manager and and upon CLO In other very determination ROC into worst The the difficult capital, all those the the of of the depending their these and ratios different -- collateral cost about the about to every to of words, it on vehicles, other kind and on pre-dispositions tend enormously from specific. of pools, persistence existence

Operator

Jonathan question comes Wells Buck go with next Please Fargo. from Our ahead.

Unidentified Analyst

[indiscernible] for guys. for taking this Jonathan Thanks our Hi. Hi question. morning.

on of as XX% 'XX gap representing your -- core some I the taxable first on perhaps those quarter income. first there's outline no can NOIs that thoughts and bridging of think for you kind declared language Just the longer CLO distributions sort you level, dividend cash

number? maybe So through may this is the -- taxable or leverage can that be you income is Just you can get that around higher comfortable get buybacks? help us stock or

Jonathan Cohen

provide [ph] as guidance forward we the you we're in now. not Phil don't guidance typically position know, provide to Sure. and

in referenced levered As the we you likely most one market of the are BDCs at present. though,

the re-leverage time. headroom we over So we to certainly additional should have balance sheet want

had notes of benefit the enjoyed December anticipation million the The You in the quarter, of return last less we outstanding not the repayment year. also in quarter prior and obviously, roughly balance that convertible those on a that repayment we quarter, stock of we of the cash of in of was $XX program earning sheet, notes. September had buyback the the referenced of that

of comfort. dividend, historically that something last maintaining able us per our not looked the So state years, $X.XX provide that is to high dividend stable a for while we've growing and the really net relatively that value. provide in two is of share, the ratio to value And the thing asset we've some think book terms really fact had I payout forward does we're One guidance.

Unidentified Analyst

that agree, I NOI -- very it's level it spillover is over et something of earned, performance the taxable Yes, of NOI, -- book XX% book of the kind matter TICC? core the is there high. high at and a not It's been yield solid, just being is and it's if has cetera, just

Jonathan Cohen

the our that's the part of relates difficult equity our a as you very CLO parts in-determinant question. tax is composition know, to And or determine to exposure. great So

flows really invested the fairly We characterization long time out but than after relatively levels And cash something equity of determination represents what of cash get currently equity. find first income place. have the of of flow, is those in cash income produces we our assets high only in a CLO XX% and in bit the terms taxable those the more we CLO a flows of

market foreign coming receive PFIC received. receive September year, So PFIC March, and the summer, in statements usually cases. well to late start but year investment as statements which for those the in until distributions those passive generally the not those subsequent PFIC of we statements in the are receive for receive as and or we sometime may statements. August those some last And PFIC company even into around in PFIC sometime generally in the We us

guidance able on and by really our us the with Phil of receipt a associated basis. provide the ultimate to of investments to lot taxable something moment to is the lag we're in CLO of PFIC are something equity we're economic determine [ph], our very by not the said, And very those the while actual we able IRRs for returns easily see takes strong. is income these characterization That generating a moment to therefore So that virtue of be to statements. true a continue having that virtue of

Operator

Our Please Christopher ahead. next question from National with Securities go Corporation. Testa comes

Christopher Testa

Hi, good morning, Thanks my Jonathan. questions. taking for

on the XXXX income Just all taxable and to investment looking completely on become was roll they me, for excuse forward uncorrelated. the CLO issue closely cost reductions your pretty taxable income, on additional, the touching tracking and at that XXXX, estimated flow, the

if I'm kind could wondering of reconcile So that. just you

Jonathan Cohen

Sure, absolutely, Chris.

our fairly taxable determined been income the most from in tight a we a years most NII issue of perspective that and core did, is years our the investing between ultimately of the XXXX. XXXX, the there syndicated taxable think have In you was as dislocation statistical in we wide we've market for equity. fit the So I which is for calendar deviation. which related to, period that CLO saw referring quarter that to first of the in really And in you're the fairly ultimately reason loan XXXX, say,

but many chose lower then to blockers. realized various or the statements. on at probably in tax ultimately it do created as prices so going other and call was that collateral we're is calendar what tax manifested And a proceeds In prices to essentially So and an They reinvested far capital early they similar flow assets. through at able it to managers created unusual. this those they I'm was XXXX. to doing liability activity, blocker losses tell, as that unprecedented not typically That during, PFIC

Christopher Testa

'XX, about statement XXXX, the your 'XX, I be tracking clear, million had all through the X.X equity reductions income that a But is, But pretty referring was was fairly quarter really the but it example on XXXX. million. estimated to income quarter taxable through CLO of then started closely is it. across just it additional But or XX.X if to for what tracks you look so. in Got mean I like first I first closely

just first yet I'm just and So it quarter, very K not this -- three flows. the quarters, three for on quarters, was what's first different the than for obviously on very, the but the investment

that is just difference from XXXX. coming wondering where I'm So in

Jonathan Cohen

from Sure, coming Chris. principally core deals. It's

So or equity that cycles percentage that as a structural compared their to higher and TICC we holders chose is in we're XXXX or relatively XXXX the those That's deals. in life holding deals created of other XXXX to call dynamic what you're referencing, later

Christopher Testa

the news some curious is that sense. of or And ago, Lane, retention Oxford co-invest with with time risk received and some you light away? think in to you. market Thank portfolio may co-invested recent many exemptive quite do that the Okay, release the value obviously, That makes going going just Oxford be guys you to how how deals

Jonathan Cohen

say going And how is it's worthy at TICC by a and We non-qualified some common to going retention present, really Oxford believe, a we Lane, do, although of TICC and co-investing I But names. statutory of between some away basket. hold the Risk to longer are the structured of virtue value hold hard names not discussion. exceeding do asset we it's interesting out moment, is market it. It's in TICC topic. at XX% more

Operator

Please follow-up Mickey Next from question ahead. is a Schleien. go

Mickey Schleien

in markets CLO Jonathan, equity yield a more versus seeing -- the what Could questions. primary the the of you're a us you existing for now give portfolio? versus effective in couple is sense

Jonathan Cohen

IRRs Sure, in. 'XXs. wildly where where coming terms the are in low flows now, not the cross in new see been from is yields of we which Mickey. That's disparate of kind market platform actual that is the mid-teens Effective from market is perhaps deal right our anywhere probably the have to

Mickey Schleien

drove us All unrealized right. And what the in you portfolio tell the quarter. lastly, this can appreciation

Jonathan Cohen

significant Just is mark-up which Birch, which mark-to-market, a had we value. had particular one name in in

Mickey Schleien

were no or of in there rates assumptions reinvestment significant terms changes that? rates like to So or default anything

Jonathan Cohen

not. were there Mickey, No,

Mickey Schleien

it for me. that's you. Okay, Thank

Jonathan Cohen

Mickey. Thanks,

Operator

The next Christopher ahead. question Please is Testa. follow-up go a from

Christopher Testa

Hi, Jonathan.

facility sheet. briefly you on of wanted look the your about a as Just ask deals on side to -- what the and of curious credit in previous broadly you're potentially that, getting do the right-hand Whether evaluating that just kind versus club like place that advance balance rates strategy? just will insofar, facility the syndicated

Jonathan Cohen

to we're obviously TICC. will look and at they different, lower. Sure, looking haven't variety Chris of continued be possibilities a But, we re-leveraging for

repo You may have at noticed that we just entered fairly Oxford recently into transaction a Lane.

not have actually a that that's suppose, other we we're considering. that of So, I possibilities for TICC, lots possibility elements but were

Christopher Testa

all you. Thank me. from that's Okay,

Jonathan Cohen

Thanks, Chris.

Operator

turn our time, Cohen Jonathan to I this the this At conference closing conclude question-and-answer like to remarks. session. over would now any for will back

Jonathan Cohen

to participation much. everyone interest thank All Corp., their look right. much We you I would call. Capital for to like Thanks forward for in and their very TICC very soon. speaking this again in to

Operator

for attending very Thank you The today's conference much presentation. now concluded. has

You may now disconnect.

Oxford Square Capital (OXSQ) 27 Feb 182017 Q4 Earnings call transcript