- **Active Portfolio Management**: Deployed $200 million in new investments and completed 27 resets/refis, with over 20% of the portfolio set to undergo similar actions. Maintained $0.14 per share distributions despite lower cash flows.
- **Market Challenges**: Loan spreads compressed by 8 bps Q/Q, but M&A activity is rising, potentially supporting wider spreads. First Brands default caused a 30 bps increase in default rate, but defaults remain below the long-term average.
- **Competitive Funding**: 7% perpetual preferred stock program provides a cost advantage, while Series F preferred stock (callable in 2026) remains the most expensive liability.
- **NAV Dynamics**: Ended Q3 at $7.00 per share, down 4.2% from Q2, due to distributions exceeding cash flows. Recovery will depend on resets/refis and higher-yielding investments.

**【CEO Summary Section】**
- **Portfolio Activity**: Deployed $200 million in new investments, with a weighted average yield of 16.9% on CLO equity. Completed 16 refinancings and 11 resets to strengthen cash flows, with over 20% of the portfolio expected to undergo similar actions in the next 1-2 quarters.
- **Cash Flows**: Third-quarter recurring cash flows of $77 million ($0.59 per share), down from $85 million ($0.69 per share) in Q2 due to spread compression and one-time costs from resets/refis. Maintained monthly distributions at $0.14 per share despite lower cash flows.
- **Market Impact**: First Brands default (small exposure for ECC) caused a 30 bps increase in the trailing 12-month default rate to 1.5%, but defaults remain below the long-term average of 2.6%. Loan spreads have compressed by 8 bps quarter-over-quarter, but M&A activity is picking up, supporting new loan issuance.

**【CFO Commentary】**
- **Financial Results**: Net investment income less realized losses of $0.16 per share ($21 million), down from $0.24 per share in Q2 due to realized losses from portfolio rotations. GAAP net income of $0.12 per share, driven by unrealized gains on investments and forward currency contracts.
- **Leverage**: Debt and preferred securities at 42% of total assets, above the target range of 27.5%-37.5%, but all financing is fixed-rate with no maturities until 2028. Issued $13 million of 7% Series AA/AB perpetual preferred stock at a competitive cost of capital.
- **NAV**: Ended Q3 at $7.00 per share, down 4.2% from $7.31 in Q2, primarily due to distributions exceeding cash flows and mark-to-market losses on underperforming CLO equity positions.

**【Q&A Highlights】**
- **Reset/Refi Pipeline**: Over 20% of the portfolio (by notional) expected to undergo resets or refinancings in the next 1-2 quarters, targeting deals with AAA spreads above the market average of 120-125 bps. This could lower funding costs and extend reinvestment periods.
- **Market Trends**: Loan spreads have compressed by 50 bps over the past year, but M&A activity is rising, potentially supporting wider spreads. CLO equity market remains active, with selective opportunities in primary and secondary markets.
- **Funding Strategy**: Series F preferred stock (callable in January 2026) is the most expensive liability, but the company's 7% perpetual preferred program provides a competitive advantage. No immediate plans to refinance Series F, but decisions will depend on market conditions.
- **NAV Recovery**: NAV decline driven by distributions exceeding cash flows and realized losses from portfolio rotations. Management expects to recapture value through resets/refis and higher-yielding investments, but timing is uncertain.


Eagle Point Credit Co LLC (ECC) Q3 2025 Earnings Call Transcript

- **NAV Growth & Cash Flow**: NAV up 1.1% to $7.31, recurring cash flows of $85M (+6% QoQ), covering distributions and expenses.
- **Strategic Investments**: $86M deployed in CLO equity during dislocation; 4 resets/refinancings reduce costs.
- **Leverage & Financing**: 40% leverage (vs. 27.5%-37.5% target), 7% yield preferred stock issuance at attractive cost.
- **Market Outlook**: CLO equity lagging recovery; 3.3-year WARP provides optionality for future volatility.
- **Partnerships Paying Off**: First CLO partnership valued at $2M, second in Europe with growth potential.

**【CEO Summary Section】**
- Q2 2025 net investment income (NII) was $0.16 per share, with recurring cash flows of $85 million ($0.69 per share), up 6% from Q1. NAV increased 1.1% to $7.31 per share.
- Deployed $86 million in new investments, including CLO equity at discounted levels during market dislocation. Completed 4 resets and 1 refinancing, reducing CLO financing costs.
- Weighted average reinvestment period (WARP) of 3.3 years, 44% above market average, providing optionality for future volatility.
- Strategic CLO collateral manager partnership now valued at $2 million, with potential for growth. Declared $0.14 monthly distributions for Q4 2025.

**【CFO Financial Commentary】**
- GAAP net income of $58 million ($0.47 per share), driven by $55 million in unrealized gains. Non-GAAP NII less realized losses was $0.21 per share, excluding $0.05 reclassification of CLO equity losses.
- Leverage at 40% (target 27.5%-37.5%), with all debt fixed-rate and no maturities until 2028. Issued $41 million common stock at 2% NAV premium and $38 million preferred stock at 7% yield.
- Q2-end NAV estimate of $7.44-$7.54 per share, up 2% from quarter-end.

**【Q&A Highlights】**
- **CLO Equity Market Sentiment**: CLO AAA spreads at 130bps vs. 110bps pre-Liberation Day, with equity lagging broader market recovery. CEO expects participation in future resets to drive higher distributions.
- **Realized Losses**: $0.02 from trading, $0.05 from writing off 3 CLO equity positions, offset by $0.08 currency hedge gains.
- **European Investments**: 5%-10% of portfolio, with selective opportunities in 2.0 CLOs. FX hedging neutralizes currency risk.
- **Loan Spread Compression**: Q2 spread decline slowed to 3bps vs. 13bps in Q1. Leading indicator: 40%+ loans trading above par signals repricing potential.
- **Interest Rates**: Floating-rate portfolio limits rate sensitivity; focus on CLO reset/refi pipeline to offset spread compression.
- **Strategic Partnerships**: Second CLO collateral manager partnership in Europe, with top-line revenue share. First partnership now valued at $2 million.


Eagle Point Credit Co LLC (ECC) Q2 2025 Earnings Call Transcript

- **Resilient cash flows**: Generated $0.69 per share in recurring cash, despite 13.7% NAV decline, driven by CLO equity reinvestment.
- **Strategic resets**: 45 CLO resets improved WARP to 3.5 years, positioning for mid-term gains as spreads widen.
- **Cost-effective capital**: 7% perpetual preferred stock issuance at NAV+20% provides competitive advantage.
- **Market volatility insight**: CLO equity prices down 20% YTD, but cash flows remain stable and resets continue at wider spreads.

**【CEO Summary Section】**
- **Strong Q1 2025 performance**: Generated $0.33 per share in net investment income and realized gains, driven by $0.05 in realized gains from rotating CLO debt to equity.
- **Portfolio reset activity**: Reset 9 CLO positions, extending reinvestment periods to 5 years, and refinanced 7 CLOs. 45 CLOs were reset in 2024 and Q1 2025, improving WARP to 3.5 years (vs. market average of 2.4 years).
- **Market volatility impact**: NAV declined 13.7% to $7.23 per share due to broad CLO security price drops, but cash flows remained resilient at $0.69 per share.
- **Strategic rotation completion**: Shifted $48.5M from CLO debt to equity, with new CLO equity investments yielding 18.9%.
- **CFO Financial Commentary**
- **Financial results**: GAAP net loss of $97.5M due to $122.3M in unrealized depreciation, but operating expenses were well-controlled.
- **Leverage and capital structure**: Debt and preferred securities at 41% of assets, with 100% fixed-rate financing and no maturities until 2028.
- **Preferred stock advantage**: 7% perpetual preferred stock issuance provided low-cost capital, unique among peers.
- **Q&A Highlights**
- **Market outlook**: Spread compression largely abated; CLO equity prices undervalue reinvestment potential. 30% of CLOs have AAA spreads >140bps, offering reset opportunities.
- **Cash flow stability**: Recurring cash flows of $75.5M in April, with Q3 payments from new CLOs expected to boost future cash flows.
- **Default risk perspective**: 82bps trailing 12-month default rate vs. market average 2.6%, with portfolio default exposure at 40bps.
- **Tax considerations**: 98% of taxable income must be distributed, but cash generation (25-30% annualized) supports distributions despite GAAP reserve requirements.

Eagle Point Credit Co LLC (ECC) Q1 2025 Earnings Call Transcript

- **Revenue beat by $200M**: Q3 $12.3B (+12% YoY) driven by cloud and AI
- **$1B AI investment**: 2-year R&D commitment for enterprise generative solutions
- **Margin expansion**: Gross margin 62.5% (up 120bps YoY)
- **AI revenue surge**: $1.2B (3x YoY growth)
- **2024 guidance**: Low-double digit revenue growth, 20%+ EPS growth
- **Risk mitigation**: Hedging program covers 50% FX impact


**【CEO Opening Remarks】**
- Highlighted Q3 revenue of $12.3B (+12% YoY), exceeding guidance by $200M, driven by strong demand in cloud infrastructure and AI solutions.
- Announced $1B+ investment in generative AI R&D over next 2 years, targeting enterprise applications.
- Noted improving supply chain stability, with no material disruptions in Q3.

**【CFO Financial Breakdown】**
- GAAP EPS: $1.25 (vs. $1.10 consensus)
- Non-GAAP EPS: $1.42 (up 18% YoY)
- Free cash flow: $3.2B (up 25% YoY), with $1.8B returned to shareholders via buybacks/dividends
- Key margin trends:
  - Gross margin: 62.5% (up 120bps YoY)
  - Operating margin: 28.3% (up 150bps YoY)
- Guidance for Q4: Revenue $12.5-12.8B (implying +10-12% YoY growth)

**【Q&A Highlights】**
- AI Revenue: $1.2B in Q3 (up 3x YoY), with >50% growth in enterprise LLM contracts
- Cloud Growth: 25% YoY, outpacing competitors
- Customer retention: SaaS churn rate <1%, up from <2% last year
- Risks: FX headwinds (~$200M impact in Q3), but hedging program mitigating 50% of risk
- 2024 Outlook: Low-double digit revenue growth, 20%+ EPS growth


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