Eagle Point Credit Company Inc. (the “Company”) (NYSE: ECC,
ECCA, ECCB, ECCX, ECCY) today announced financial results for the
quarter ended June 30, 2018, net asset value (“NAV”) as of June 30,
2018 and certain portfolio activity through August 8, 2018.
SECOND QUARTER 2018 HIGHLIGHTS
- Net investment income (“NII”) net of
realized capital gains from the Company’s portfolio and capital
losses from financing activities of $0.34 per weighted average
common share1.
- NAV per common share of $16.51 as of
June 30, 2018.
- Second quarter 2018 GAAP net income
(inclusive of unrealized mark-to-market gains) of $9.5 million, or
$0.44 per weighted average common share.
- Weighted average effective yield of the
Company’s collateralized loan obligation (“CLO”) equity portfolio
was 14.08% as of June 30, 2018.
- Deployed $31.3 million in net capital
and received $35.4 million in cash distributions from the Company’s
investment portfolio in the second quarter of 2018.
- 8 of the Company’s CLO investments were
reset and 1 of the Company’s CLO investments was refinanced during
the second quarter of 2018.
- Completed an underwritten public
offering of $67.3 million in aggregate principal amount of its
6.6875% notes due 2028 (ECCX), including a partial exercise of the
underwriters’ overallotment option, resulting in net proceeds to
the Company of approximately $64.9 million.
- Fully redeemed its 7.00% notes due 2020
(ECCZ).
SUBSEQUENT EVENTS
- NAV per common share estimated to be
between $16.64 and $16.74 as of July 31, 2018.
- Deployed $8.4 million in gross capital
from July 1, 2018 through August 8, 2018; received cash
distributions from the Company’s investment portfolio of $20.6
million over the same period.
“We remain proactive with respect to managing our portfolio and
balance sheet as we seek to unlock additional long-term value for
our stockholders,” said Thomas Majewski, Chief Executive Officer.
“During the second quarter, we completed the effective refinancing
of our 7.00% ECCZ notes with our new 6.6875% ECCX notes, further
lowering our cost of capital and extending the weighted average
maturity of our outstanding notes and preferred stock to
approximately eight years. Additionally, we continued to focus on
CLO resets to take advantage of our Adviser’s deep investing
experience, completing 8 during the quarter and thus further
lengthening the reinvestment period in each transaction and locking
in lower cost CLO debt. During the second quarter, we also deployed
$78.4 million opportunistically into new investments, while selling
certain investments where we saw particularly strong demand and
pricing.”
“We recorded NII net of realized capital gains and losses per
share in the second quarter of $0.34, which was impacted by the
acceleration of unamortized deferred debt issuance costs associated
with the ECCZ redemption and our election to recognize expenses
related to the ECCX issuance in the period they were incurred,”
noted Mr. Majewski. “Non-recurring losses and costs related to the
early repayment of ECCZ and the new ECCX issuance totaled
approximately $0.20 per share during the quarter. With the pace of
spread compression continuing to slow, we are actively managing our
portfolio and, when appropriate, pursuing additional CLO resets in
an effort to lock in longer and lower cost liabilities.”
SECOND QUARTER 2018 RESULTS
The Company’s NII net of realized capital gains and losses for
the quarter ended June 30, 2018 was $0.34 per weighted average
common share. This compared to $0.50 per weighted average common
share for the quarter ended March 31, 2018, and $0.53 per weighted
average common share for the quarter ended June 30, 2017.
The Company’s NII net of realized capital gains and losses for
the quarter ended June 30, 2018 is net of $4.3 million or $0.20 per
weighted average common share of non-recurring loss and expenses
related to the accelerated amortization associated with the
redemption of the ECCZ notes and offering expenses related to the
ECCX issuance.
For the quarter ended June 30, 2018, the Company recorded GAAP
net income of $9.5 million, or $0.44 per weighted average common
share. Net income was comprised of total investment income of $17.4
million and net unrealized appreciation (or unrealized
mark-to-market gain on investments) of $2.3 million, offset by net
realized capital loss of $0.7 million and total expenses of $9.5
million.
NAV as of June 30, 2018 was $358.3 million, or $16.51 per common
share, which is $0.14 per common share lower than the Company’s NAV
as of March 31, 2018, and $1.02 per common share lower than the
Company’s NAV as of June 30, 2017.
During the quarter ended June 30, 2018, the Company deployed
$78.4 million in gross capital and $31.3 million in net capital.
The weighted average effective yield of new CLO equity investments
made by the Company during the quarter, which includes a provision
for credit losses, was 16.31% as measured at the time of
investment. Additionally, during the quarter, the Company received
$47.1 million of proceeds from the sale of investments and
converted 3 of its existing loan accumulation facilities into
CLOs.
During the quarter ended June 30, 2018, the Company received
$35.4 million of cash distributions from its investment portfolio,
or $1.65 per weighted average common share, including amounts
received from called investments. Excluding proceeds from called
investments, the Company received cash distributions of $1.18 per
weighted average common share during the quarter, which was in
excess of the Company’s common distribution and other recurring
operating costs.
During the quarter ended June 30, 2018, 8 of the Company’s CLO
investments were reset and 1 of the Company’s CLO investments was
refinanced, bringing the total number of such CLO equity positions
that were reset or refinanced since January 1, 2017 to 18 and 27,
respectively. The majority of the Company’s current portfolio has
been reset, refinanced or both.
As of June 30, 2018, the weighted average effective yield on the
Company’s CLO equity portfolio was 14.08%, a decrease from 14.54%
as of March 31, 2018. As of June 30, 2017, that measure stood at
15.68%.
Pursuant to the Company’s “at-the-market” offering program under
which the Company may issue shares of common stock and 7.75% Series
B Term Preferred Stock due 2026 (“Series B Term Preferred Stock”),
the Company sold 360,232 shares of common stock at a premium to NAV
during the second quarter for total net proceeds to the Company of
approximately $6.4 million.
PORTFOLIO STATUS
As of June 30, 2018 on a look-through basis, and based on the
most recent CLO trustee reports received by such date, the Company
had indirect exposure to approximately 1,332 unique corporate
obligors. The largest look-through obligor represented 0.98% of the
Company’s CLO equity and loan accumulation facility portfolio. The
top-ten largest look-through obligors together represented 6.4% of
the Company’s CLO equity and loan accumulation facility
portfolio.
The look-through weighted average spread of the loans underlying
the Company’s CLO equity and related investments was 3.56% as of
June 2018.
As of June 30, 2018, the Company had debt and preferred
securities outstanding which totaled approximately 35% of its total
assets (less current liabilities). Over the long term, management
expects the Company to operate under current market conditions
generally with leverage within a range of 25% to 35% of total
assets. Based on applicable market conditions at any given time, or
should significant opportunities present themselves, the Company
may incur leverage outside of this range, subject to applicable
regulatory limits.
THIRD QUARTER 2018 PORTFOLIO ACTIVITY THROUGH AUGUST 8, 2018
AND OTHER UPDATES
From July 1, 2018 through August 8, 2018, the Company received
$20.6 million of cash distributions from its investment portfolio,
or $0.93 per weighted average common share, including amounts
received from called investments. Excluding proceeds from called
investments, the Company received cash distributions of $0.86 per
weighted average common share for the same period. As of August 8,
2018, some of the Company’s investments had not yet reached their
payment date for the quarter. Also from July 1, 2018 through August
8, 2018, the Company deployed $8.4 million in gross capital in new
CLO equity and debt investments. Additionally, in the same period,
the Company issued 561,595 shares of its common stock pursuant to
the “at-the-market” offering, for total net proceeds to the Company
of approximately $10.1 million.
From July 1, 2018 through August 8, 2018, 2 of the Company’s CLO
investments were reset and 1 of the Company’s CLOs was
refinanced.
As of August 8, 2018, the Company has approximately $32.8
million of cash available for investment.
As previously published on the Company’s website, management’s
estimate of the Company’s range of NAV per common share as of July
31, 2018 was $16.64 to $16.74.
PREVIOUSLY DECLARED DISTRIBUTIONS AND ADDITIONAL
UPDATES
The Company paid a monthly distribution of $0.20 per common
share on July 31, 2018 to stockholders of record as of July 12,
2018. Additionally, and as previously announced, the Company
declared distributions of $0.20 per share of common stock payable
on August 31, 2018 and September 28, 2018, to stockholders of
record as of August 13, 2018 and September 12, 2018,
respectively.
The Company paid distributions of $0.161459 per share of the
Company’s 7.75% Series A Term Preferred Stock (NYSE: ECCA) and
Series B Term Preferred Stock (NYSE: ECCB) on July 31, 2018, to
stockholders of record as of July 12, 2018. The distributions
represented a 7.75% annualized rate, based on the $25 liquidation
preference per share for each series of preferred stock.
Additionally, and as previously announced, the Company declared
distributions of $0.161459 per share on each series of preferred
stock, payable on each of August 31, 2018 and September 28, 2018,
to stockholders of record as of August 13, 2018 and September 12,
2018, respectively.
The Company elected to account for its ECCX notes issuance
utilizing the Fair Value Option (“FVO”) under FASB ASC Subtopic
825-10 Fair Value Option. Upfront offering costs related to
instruments for which the FVO has been elected are recognized in
earnings as incurred. The Company has changed its accounting policy
to allow similar elections in the future.
CONFERENCE CALL
The Company will host a conference call at 10:00 a.m. (Eastern
Time) today to discuss the Company’s financial results for the
quarter ended June 30, 2018, as well as a portfolio update.
All interested parties may participate in the conference call by
dialing (833) 231-8253 (domestic) or (647) 689-4099
(international), and entering Conference ID 3678587 approximately
10 to 15 minutes prior to the call. A live webcast will also be
available on the Company’s website
(www.eaglepointcreditcompany.com) – please go to the Investor
Relations section at least 15 minutes prior to the call to
register, download and install any necessary audio software.
An archived replay of the call will be available shortly
afterwards until September 13, 2018. To hear the replay, please
dial (800) 585-8367 (domestic) or (416) 621-4642 (international).
For the replay, enter conference ID 3678587.
ADDITIONAL INFORMATION
The Company has made available on its website,
www.eaglepointcreditcompany.com (in the financial statements and
reports section) its semiannual stockholder report for the period
ended June 30, 2018 (which includes the Company’s unaudited
consolidated financial statements as of and for the period ended
June 30, 2018). The Company has also filed this report with the
Securities and Exchange Commission. The Company also published on
its website (in the investor presentations and portfolio
information section) an investor presentation which contains
additional information about the Company and its portfolio as of
and for the quarter ended June 30, 2018.
ABOUT EAGLE POINT CREDIT COMPANY
The Company is a non-diversified, closed-end management
investment company. The Company’s investment objectives are to
generate high current income and capital appreciation primarily
through investment in equity and junior debt tranches of
collateralized loan obligations. The Company is externally managed
and advised by Eagle Point Credit Management LLC.
The Company makes certain unaudited portfolio information
available each month on its website in addition to making certain
other unaudited financial information available on its website
(www.eaglepointcreditcompany.com). This information includes (1) an
estimated range of the Company’s net investment income (“NII”) and
realized capital gains or losses per weighted average share of
common stock for each calendar quarter end, generally made
available within the first fifteen days after the applicable
calendar month end, (2) an estimated range of the Company’s NAV per
share of common stock for the prior month end and certain
additional portfolio-level information, generally made available
within the first fifteen days after the applicable calendar month
end, and (3) during the latter part of each month, an updated
estimate of NAV, if applicable, and, with respect to each calendar
quarter end, an updated estimate of the Company’s NII and realized
capital gains or losses for the applicable quarter, if
available.
FORWARD-LOOKING STATEMENTS
This press release may contain “forward-looking statements”
within the meaning of the Private Securities Litigation Reform Act
of 1995. Statements other than statements of historical facts
included in this press release may constitute forward-looking
statements and are not guarantees of future performance or results
and involve a number of risks and uncertainties. Actual results may
differ materially from those in the forward-looking statements as a
result of a number of factors, including those described in the
Company’s filings with the U.S. Securities and Exchange Commission
(“SEC”). The Company undertakes no duty to update any
forward-looking statement made herein. All forward-looking
statements speak only as of the date of this press release.
1 “Per weighted average common share” data are on a weighted
average basis based on the average daily number of shares of common
stock outstanding for the period and “per common share” refers to
per share of the Company’s common stock.
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