Eagle Point Credit Company 6.75% Series D Preferred Shares 2026 Q2 Earnings Call

Please go ahead, sir. Thank you, operator, and good morning.

Welcome to Eagle Point Credit Company's earnings conference call for the second quarter of 2026. Speaking on the call today are Thomas Majewski, Chief Executive Officer, and Ken Onorio, Chief Financial Officer and Chief Operating Officer. Before we begin, I would like to remind everyone that the matters discussed on this call include forward-looking statements or projected financial information that involves risks and uncertainties that may cause the company's actual results to differ materially from such projections. For further information on factors that could impact the company and the statements and projections contained herein, please refer to the company's filings with the Securities and Exchange Commission. Each forward-looking statement or projection of financial information made during this call is based on the information available to us as of the date of this call.

We disclaim any obligation to update our forward-looking statements unless required by law. Earlier today, we filed our second quarter 2026 financial statements and investor presentation with the Securities and Exchange Commission. These are also available in the investor relations section of the company's website, eaglepointcreditcompany.com. A replay of this call will also be made available later today. I will now turn the call over to Thomas Majewski, Chief Executive Officer of Eagle Point Credit Company.

Tom? Thanks, Darrin, and good morning, everyone.

We appreciate you joining the Eagle Point earnings call this morning. I'll start by providing some perspectives on the recent quarter. Let me begin with the headline results. Our net asset value for the quarter ended at $4.51 per share, and that's an increase of 8% from $4.17 at March 31st. We generated a GAAP return on common equity of 12.7% for the second quarter. During the quarter, we paid an aggregate of $0.18 per share in cash distributions to our common shareholders. The recovery in NAV was driven by a meaningful rebound in loan prices and CLO equity valuations following the volatility we experienced in the first quarter. Uncertainty surrounding the potential impact of artificial intelligence on software borrowers, together with the geopolitical developments, had weighed on leverage loan prices and CLO equity valuations earlier in the year.

As market sentiment improved during the second quarter, valuations recovered meaningfully while underlying credit fundamentals remained resilient throughout the period. This supports our view that much of the first quarter decline reflected market-driven pricing pressure rather than a broad deterioration in credit. Software remained an area of focus during the quarter as investors continued to assess the long-term impact of AI across different business models. While AI will invariably create both winners and losers over time, many software businesses continue to benefit from recurring contracted revenue, sticky customer relationships, and mission-critical products. We believe the market reaction earlier in the year was overstated to what we expect to be the actual impact on the broader software sector to ultimately be. The volatility earlier this year also improved the reinvestment optionality available within our CLOs.

Lower loan prices enabled CLO collateral managers to purchase performing credits at discounted prices, while reduced repricing activity in the loan market helped preserve and in some cases, modestly improve loan spreads. These dynamics support par building and spread enhancement within our CLO portfolios, which can contribute to stronger CLO equity cash flows and valuations over time. Throughout the quarter, we continued to actively manage our CLO portfolio by completing 8 resets and 7 refinancings of our CLO equity positions. This resulted in a weighted average CLO debt cost savings of 22 basis points for those CLOs. Each reset also extended the applicable CLO's reinvestment period to 5 years. These actions helped mitigate some of the headwinds CLO equity has faced earlier in the year and should support improved earnings and cash flows over time.

Our portfolio's weighted average remaining reinvestment period at the end of the quarter stood at 3.4 years, and that's unchanged from March 31st and 15% longer than the market average. This longer reinvestment period provides greater protection against loan price volatility and positions our CLOs to capitalize on discounted loan prices and relative value trading opportunities when they arise. We also continue to see a meaningful pipeline of potential refinancing and reset opportunities. During the quarter, we deployed $111 million into new investments at a weighted average effective yield of 24.6%. We allocated capital across CLO equity and certain other differentiated credit opportunities where we believe we identified very attractive risk-adjusted returns. We also repositioned the portfolio by rotating capital away from a certain group of underperforming CLO collateral managers.

While this resulted in realized losses, those losses had largely been reflected as unrealized losses in prior periods, resulting in minimal incremental impact on our NAV during the second quarter. Importantly, the repositioning allowed us to redeploy capital towards our core group of CLO collateral managers and selectively expand our exposure to other attractive credit investments sourced by Eagle Point. Additionally, we reached an important milestone in our new strategic partnership with Muzinich in Europe through the successful pricing of its inaugural European CLO. ECC benefits from the partnership through both its CLO equity investments and the value of the perpetual revenue sharing arrangement as additional CLOs are issued by the platform over time. Given Muzinich's established presence in Europe, we believe this platform is well-positioned for sustained growth, similar to our strategic partnership with Muzinich in the United States, which continues to scale.

Beyond our core CLO equity investments, we continue to selectively allocate capital to infrastructure credit, portfolio debt securities, regulatory capital relief transactions, asset-backed securities, and other opportunistic private credit investments. These opportunities are sourced through dedicated teams with specialized expertise and origination capabilities across the broader Eagle Point platform, allowing us to access differentiated opportunities that complement our core CLO equity strategy. As of June 30th, non-CLO investments represented 38% of our portfolio, which is up from 32% at March 31st, and this provides differentiated sources of income and additional diversification for us across multiple types of assets. One recent example is our investment in SI Tickets, a specialty finance transaction which was secured by World Cup tickets that the Eagle Point team originated. Following a seven-month holding period, the investment generated a 1.2 multiple on our invested capital when it was realized back in June.

We believe Eagle Point's ability to originate attractive investment opportunities complements ECC's core CLO equity strategy and enhances long-term shareholder value. With that, I'll turn the call over to Ken to discuss financial results in more detail.

Thank you, Tom, and thanks everyone for joining us today. During the second quarter, the company generated net investment income or NII of $0.17 per share. NII less realized losses from investments was negative $0.62 per share. This compares to NII less realized losses from investments of $0.14 per share in the first quarter of 2026 and NII less realized losses from investments of $0.16 per share in the second quarter of 2025. Including unrealized gains, the company recorded GAAP net income of $70 million, or $0.53 per share. This compares to a GAAP net loss of $1.12 per share in the previous quarter and GAAP net income of $0.47 per share in the second quarter of 2025.

Recurring cash flows from the company's investments totaled $62 million, or $0.47 per share during the quarter, exceeding the company's common distributions and total expenses by $0.14 per share. We paid three monthly common stock distributions of $0.06 per share during the quarter and declared monthly common stock distributions of $0.06 per share for the remainder of 2026. We believe the current distribution level is appropriately aligned with the company's earnings and will support maintaining a sustainable distribution over time. Turning to our capital structure, we completed the full redemption of our ECCW and ECCX notes. These redemptions reduced our outstanding leverage and further extended the duration of our capital structure. We currently have no financing maturing before January 2029.