Eagle Point Credit (ECC) Q1 2025 earnings summary

Executive summary

• Strong start to Q1 2025 with nearly $200 million deployed into new CLO equity and related investments, three new CLO equity investments, nine resets, and seven refinancings, but market volatility in March led to a decline in CLO and loan prices.

• Portfolio rotation from CLO debt to CLO equity was largely completed before volatility, positioning the portfolio to benefit from discounted reinvestment opportunities.

• ECC focuses on generating high current income by investing in equity and junior debt tranches of CLOs, with a market capitalization of $1.46 billion as of March 31, 2025.

• Recurring cash flows remained robust, exceeding distributions and expenses, and new investments are expected to boost future net investment income.

• ECC's portfolio is diversified across 238 CLO investments and 1,931 unique underlying loan obligors as of March 31, 2025.

Financial highlights

• Net investment income and realized capital gains totaled $0.33 per share for Q1 2025 ($0.28 NII, $0.05 gains).

• NAV as of March 31 was $7.23 per share, down 13.7% from $8.38 at year-end, mainly due to market price declines in CLO securities.

• Q1 GAAP net loss was $97.5 million, with $52.3 million investment income, $5.3 million realized gains, and $122.3 million net unrealized depreciation.

• Q1 2025 total portfolio cash distributions received were $85.0 million, up from $56.2 million in Q1 2024.

• $66 million of common stock issued at a premium to NAV, resulting in $0.02 per share NAV accretion; $22 million of 7% perpetual preferred stock issued.

Outlook and guidance

• Regular monthly distributions of $0.14 per share declared for Q3 2025.

• Management estimates NAV per common share between $6.71 and $6.81 as of April 30, 2025.

• Additional recurring cash flows expected in May and June, with new and reset CLOs scheduled to make initial payments in Q3, likely boosting future cash flows.

• Management expects continued resets and refinancings, with single- to double-digit resets per quarter anticipated.

• The company expects CLO equity to provide protection against rising interest rates and maintain high distribution rates.