Earnings call transcript Q2 2023

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Operator

Greetings. And welcome to the Eagle Point Income Company Second Quarter 2023 Financial Results Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

conference recorded. this reminder, a is being As It Peter Sceusa my pleasure your host, to introduce at is now ICR. Thank you, Peter.

You may begin.

Peter Sceusa

Thank morning. good you and

we projected may in from such remarks, that Before information differ that statements formal materially to and financial financial company’s our everyone uncertainties forward-looking actual risks remind to that or we projected in the the call statements those this need discussed information. projected involve and include cause forward-looking matters begin results

the impact the could and that the factors on information herein, to further and statements refer Securities contained company’s company projections Commission. For the with and please Exchange filings

disclaim and Each obligation forward-looking our unless to statement call as to is required information on statements by projection forward-looking We made us during of this any of financial date of update available information the law. based call. this

replay days XX accessed this via call the A can be www.eaglepointincome.com. website, for of company’s

half second Securities financial Commission. quarter today, Form XXXX and of found our within section are statements Presentations we Events investor the Relations link the with link. year the financial presentation Reports second presentation our N-CSR, also and and financial investor statements available our filed The Earlier Exchange website. can Statements company’s found the by Investor the following statements can Financial presentation investor and by and The following be be the and quarter

and Officer of Executive Chief Eagle like Chairman Company. now Majewski, would Income Tom I introduce to Point

Tom Majewski

or Income Eagle second in We to Thank earnings And Point your Point Company’s Eagle EIC. everyone you, Company welcome Peter. interest appreciate quarter Income call.

a our website will which you remarks. our so invite presentation to refer portion from haven’t my I done you If eaglepointincome.com, of download already, to in we at investor

what rate junior quarter portfolio very the due second CLO its high to designed cash floating a do, flows debt continued well to environment of investments. to nature our doing perform The increased generate investment the rate company in was during exactly

regular last flow our We our increase week $X.XX Given share well cash we October. time very by going XX% pleased moving remains very significant generate to for are our to to forward. believe common our confidence portfolio distribution in again per portfolio, in positioned and income our this beginning outlook

a I specific the share few quarter. highlights will from

our share, Our net once exceeding income $X.XX common distributions. was per again regular investment

flows or well excess of million $X.XX and cash were distributions recurring regular Our common $X.X share, in per our expenses.

June as March X.X% have Our NAV monthly share monthly three of XXst to paid distributions from and declared $XX midpoint as was per NAV of XXst noted, just $X.XX a quarter, decline increase of XX common June We July XXth in modest our and NAV. share, an we in during our October. $X.XX I of was our an beginning as $XX.XX, the per increase per share distributions common from

common to during issuing share during quarter. XXX,XXX We of finance proceeds also and through shares million generated committed equity NAV, the net our opportunistically quarter. programs accretion at-the-market second the NAV about These third approximately at of nearly a generating premium $X.X capital raised -- $X.XX per sales

the We continue third raise quarter. to selectively during capital

Term B the strengthened includes which month, $XX.X position XXXX preferred full is in greenshoe with of The stock Last and the the net our from received closing exercise due we overallotment million, Series we X.XX% Stock Preferred July, capital further proceeds in offering. option. or of offering our new and underwriter’s

available over powder portfolio. investment have further expand to As to cash dry ample and which million we invest $XX capacity XXst, July of of is us, and revolving our

digits potential in and in of nature CLO have investments our some evident, from XXX% coupons early call XX% north clearly the scenarios. and we given to BB CLO Many CLO CLOs are floating debt of is that the BBs benefit the hold of to As some floating continues are portfolio double rate yield rate.

and portfolio performance our our construct flow playbook. are to seek with that to we and on income of respect investors, we validation dislocation focused consistently executing is manage strong that periods long-term As to cash through

weighted to average period seek diversification. lengthen our of to vintage continue remaining We equity CLO reinvestment the portfolios debt through and

for our of We second XXXX portfolio’s are and beyond. the potential half excited for

on on I’d our detail overall commentary Dan the to portfolio turn and market some call Principal to additional and like Senior For more activity, Ko. Portfolio the Manager, over recent

Dan Ko

rate Thanks, certainly Tom. debt portion EIC environment. especially in time been very the Remains the exciting a and investing the a to beneficiary junior structure has at of equity CLOs, capital of be and high

from We and preferred invest see opportunities EICB over issuance coming attractive remaining have weeks. proceeds been actively to the the deploying continue the the to proceeds

or build able par collateral to swaps to prepayments CLO managers into value through reinvesting relative Our by continue be loans. discounted

at activity to to have and their despite and order good XXXX as push in XXXX lower out continues loan extend Loan clip seek spreads their on maturities financing runway they loan their currently. locked many CFOs the refinancing that in a issuers

bill loan offering are with the power result, spreads As many OID, and a spread. benefits Nexus issuers lenders CLO higher ultimately which along

momentum momentum further double-digit to Index global posted for its and the crisis. Suisse from and have since as and Leveraged remains continued it gain half best positive Credit continued ultimately its July financial potentially first year gains quarter X.X% its XXXX The Loan generate of the into a the first pace on

$XXX was quarter volume CLO pace of issuance has In up new saw far eclipse market, believe slightly. to billion activity the the market of in on once the remains mark. CLO a generally the are by XXXX again as in funds, reset majority the CLO first refinancing second we We of half CLO return less which picked of significant backed billion $XX captive and sensitive. the year the

of XX were total There quarter. syndicated second the in loan defaults a

March X.X% result, default trailing averages. at but still below of well XX-month historic June from as XXst, rate a stood XXth, the up As

well up to macro portfolio ongoing the the the debt stressed defaults positioned XXXX environment X% access for the higher expect distributions. of Given CLO rate our environments now current desks most bank and said, inability end volatility, to and for paying That X% and of of equity by due research the to we is CLO XXX% between certain is these, believe companies just continue capital like our portfolio markets. to end

downturns CLO to debt low withstood of the has past, in rates. noted, believe well economic multiple very we be wave. have it loan historic We amount averages for experiencing significant impacted materially BB EIC defaults previously a long-term default a above As take would the by default

investment has of is guarantee While the believe future performance of not past performance the of obviously the the past portfolio a resilience few demonstrated results, company’s over we strategy. our years

in dry a to remain plenty capacity. with very investments position revolver into and new position powder We cash deploy via our strong of

on lead to compelling when opportunities ultimately adjusted we will attractive portfolio. continue to will investment returns evaluating believe when be We selective opportunities the risk company’s will for and act

With Chief the that, call to Umnova. Lena I will our Adviser’s now Officer, turn over Accounting

Lena Umnova

Thank you, Dan.

recorded first and favorably to portfolio share company or of net or included, depreciation per NII million income quarter $X.X For share. and XXXX. net XXXX is ended income the share investment $X.XX NII When recorded recorded This is of $X.XX consistent of for second per million realized share. the $X.XX quarter for the $X GAAP of unrealized per compares the of the with quarter, NII company or gains per June XX, $X.XX

depreciation and offset $X.X expenses total quarter unrealized million. on second of partially $X.X income $X.X and investment at million, value certain of was held by of $X.X net company’s on net depreciation total The unrealized comprised of million million fair investments income liabilities of

the $X.X second representing the financial loss quarter, credit the Additionally, fair value change the risk. million, liabilities to recorded in company’s company other instrument of comprehensive attributable on specific for

share in September, During market XX% declared to distribution share, the increase to through distribution of beginning $X.XX paid three October. additional common and of monthly monthly per quarter, we $X.XX week, pleased a distributions share, in second we per were $X.XX per last announce

credit equity, which XX% of XX% liabilities. As which the leverage range This the total of expect June had low normal at target of outstanding facility the preferred and assets our company less totaled month conditions. to XX%, at company market to ratio from of is operate the we the on end, long-term end borrowings revolving current

The X with was XXX%. requirement at preferred stock is accordance end investment of measure comfortably in This the above quarter calculated for company’s ratio coverage Stage the company asset requirements XXX%. at

June company’s value $XX $XXX As a or from modest net decrease was month end, per share, March XXXX. of the asset million XX,

the portfolio of and of in recurring the $X.X make investments. cash in deployed payments the company’s portfolio on Moving The some that expected CLO third of are million debt capital investments later the Note the on other also its month million. company company net July flows through received our end, to into quarter to quarter. activity still $XX.X

greenshoe the $XX investment our the the includes B transactions As end, over capacity had revolver new received of proceeds August. but company deposit investment. received not net Preferred issuance in Series That available of July cash Stock million company million of from $XX.X for the and in of from net July of X.XX% pending month that

share. July the the company’s estimate end preferred ratio $XX.XX share month was $XX.XX accounting XX%. of unaudited between Management’s per end at as per stock same Leverage new period for the of stood of as NAV and

now I the to Tom. will call back turn over

Tom Majewski

asset elevated continue continues resilient the there at Thank and Loans of grow their out structure. floating to you, in help NII Lena. nature risk attributable maintain exceedingly level. a rate most and environment perform senior classes well us EIC to one the and to high their secured be rate

increased is sheet well cash shareholders markets as clearly portfolio, designed investment balance which intentionally of our these, the our were side right for Our through as distributions. like benefiting

high to to excited with managing fund -- BB-rated reflected similarly attributes offer potential a over low three of in for be securities; rates debt CLO The remain experience interest the true by rates. high benefits the years; default debt credit BB-rated credit being we for CLO the compared BB-rated ever as markets rated focused returns to as as expenses today; CLO past low as the potential debt the why corporate XX-plus low that and

our financing Along with its of confident CLO we is the returns remain EIC positioned longer generate locked-in adjusted risk well that nature compelling is that shareholders. assets, for the than to

your Company. you and now interest to Income for and open in will Operator? thank your Eagle Point the call Lena, time We Dan questions. I

Operator

you. [Operator Instructions] Thank

Operator

Majewski are this comments. time. to to I’d Thank hand the like any you. no closing at There over back questions floor Thomas for

Tom Majewski

feel you. you and the to Company. Thank your very Dan, us morning Point questions, directly out Thank Income appreciate reach Should during please Great. and -- I time in to free Lena today. interest Eagle this have day anyone your follow-up everyone much.

Operator

This concludes conference. today’s

you participation. for time. lines You your at your Thank may this disconnect

Eagle Point Income (EIC) 15 Aug 232023 Q2 Earnings call transcript