Full Transcript: Eagle Point Credit Co Q2 2026 Earnings Call

On Thursday, Eagle Point Credit Co (NYSE: ECC ) discussed second-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

View the webcast at 12rfdl4 _ga Mzc4MjI0NTI2LjE3ODU0ODUxNjU. 7% for Q2 2026, driven by a recovery in loan prices and CLO equity valuations. 14 per share. Strategic initiatives included completing 8 resets and 7 refinancings of CLO equity positions, yielding 22 basis points in cost savings and extending reinvestment periods to 5 years.

6% yield, with increased focus on non-CLO investments, now representing 38% of the portfolio, and continued growth in strategic partnerships, notably with Muzinich in Europe. The company successfully reduced leverage with full redemption of ECCW and ECCX notes and aims to manage leverage within the target range over time, despite current levels being above the target range. Management remains optimistic about long-term opportunities in CLO equity and other investments, highlighting diversification and disciplined portfolio management as key strategies moving forward.

Full Transcript OPERATOR Greetings and welcome to the Eagle Point Credit Co second quarter 2026 financial results call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad.

As a reminder, this conference is being recorded. It is now my pleasure to introduce Darren Doherty with Prosek Partners. Please go ahead, sir. Darren Doherty, Investor Relations (Prosek Partners) Thank you, operator, and good morning.

Welcome to Eagle Point Credit Co'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.

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 Co. Thomas Majewski, Chief Executive Officer Thanks, Darren, and good morning everyone.

We appreciate your 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. 17 at March 31.

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 geopolitical developments, had weighed on leveraged 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 relative to what we expect 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 CLOs' 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. 4 years, unchanged from March 31 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. 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 30, non-CLO investments represented 38% of our portfolio, up from 32% at March 31, and this provides differentiated sources of income and additional diversification for us across multiple types of assets. One recent example is our investment in Sports Illustrated Tickets, a specialty finance transaction which was secured by World Cup tickets that the Eagle Point team originated. 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. Kenneth Onorio, Chief Operating Officer and Chief Financial Officer Thank you, Tom, and thanks everyone for joining us today. 17 per share. 62 per share.

16 per share in the second quarter of 2025. 53 per share. 47 per share in the second quarter of 2025. 14 per share.

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. All of our debt and preferred stock financing is fixed rate, and a significant portion of our preferred stock financing is perpetual with no set maturity date. We believe this long-duration capital structure provides important stability and flexibility to support our investment strategy. We are unaware of any other publicly traded entity that invests primarily in CLO equity with perpetual financing and consider this to be a material competitive advantage for the company.

5%, within which we expect to operate under normal market conditions. We intend to return leverage to within our target range over time. Looking at our portfolio activity during the month of July, we collected $31 million in recurring cash flows and expect additional collections during the remainder of the quarter. 43 per share, the midpoint being a 3% decrease from quarter-end.

With that, I'll turn it back to Tom. Thomas Majewski, Chief Executive Officer Thanks, Ken. I'd now like to share some additional thoughts on the loan and CLO markets as well as share some color on how we're positioning the portfolio. During the second quarter, new CLO issuance totaled $33 billion, reset activity for the quarter totaled $55 billion, and refinancing activity totaled $39 billion.

This activity created opportunities for CLO equity investors like ourselves to reduce liability costs and, through resets, extend the reinvestment periods when market conditions proved attractive. 9% in the second quarter and returned an additional 80 basis points in July. Average corporate revenue and EBITDA growth remained positive during the quarter, supporting overall credit fundamentals across the broadly syndicated loan market despite continued dispersion in certain sectors and among certain issuers. 5%.

ECC's look-through default exposure remains low at 14 basis points, significantly below the broader market average. We believe this reflects both the quality of our underlying loan holdings and our active portfolio management and disciplined investment approach. Loan prices recovered during the second quarter, although the improvement remained uneven across individual credits and was more pronounced outside software. Importantly, the proportion of loans trading above par did not return to levels typically associated with broad-based market repricing.

We believe one of the most significant headwinds facing CLO equity over the last 18 months—loan spread compression—has largely abated for now. Indeed, the weighted average spread of our CLOs' loan portfolios was flat during the quarter. 99, providing opportunities for par building as performing discount loans repay or refinance at par. Turning to portfolio positioning, our CLO portfolio metrics continue to compare favorably to the broader market.

6%. 8%. These metrics reflect our disciplined investment approach and focus on higher-quality CLO collateral managers, and help position the portfolio to navigate periods of adverse market conditions. As I mentioned earlier, we have continued to selectively allocate capital beyond our core CLO equity investments to differentiated opportunities sourced and originated across the broader Eagle Point platform.

We believe this diversification, together with our core CLO equity strategy, positions the portfolio well to generate attractive risk-adjusted returns. Looking ahead, we remain constructive on the long-term outlook for CLO equity and the broader opportunity set across the Eagle Point platform. We remain focused on completing resets and refinancings where market conditions permit, deploying capital into attractive investments, and continuing to expand our strategic partnerships and other private credit investment opportunities.

We believe our disciplined portfolio management, active capital allocation, and access to differentiated opportunities across our advisor's platform is well positioned to create long-term value for our shareholders. We thank you for your time and interest in Eagle Point Credit Co. OPERATOR Thank you. We will now be conducting a question and answer session.

If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys.

One moment while we poll for questions. And our first question we'll hear from Gaurav Mehta with Alliance Global Partners. Gaurav Mehta, Analyst at Alliance Global Partners Thank you. Good morning.

I wanted to go back to your comments around loan spread compression abating in the quarter. Can you maybe provide some color on what's driving that? And do you expect the loan spread abatement to be sustainable and maybe improve going forward? Thomas Majewski, Chief Executive Officer Good morning.

Very good question. The lag in loan spread compression flowing through CLOs always takes a little while. So even in the first quarter there were some repricings that then kind of manifested themselves—the repricing was agreed, let's say in the first quarter before things got choppy—and then rolled through the portfolio. In the second quarter, the spread on the underlying loan portfolio is roughly flat quarter over quarter and, frankly, we are seeing some loans actually move up in spread, in the software sector in particular.

One of the trends we're seeing is amendments and extensions, and as part of that, in certain instances the loan spreads are actually getting reset wider in exchange for some degree of additional maturity time. What drives loan spread compression is strong demand for loans not met by sufficient supply of new loans. And from there, loans get bid up to par, par and a half, and smart CFOs say, hey, let's reprice our debt tighter. With most loans trading at discounts to par, that certainly has slowed.

In addition, the CLO machine has certainly slowed down, and quarter-over-quarter issuance volume from Q1 to Q2 of new-issue CLOs [was] down by a non-trivial amount as well.