Eagle Point Credit Company Inc. (the “Company”) (NYSE:ECC,
NYSE:ECCA, NYSE:ECCB, NYSE:ECCY, NYSE:ECCZ) today announced
financial results for the quarter ended September 30, 2017, net
asset value (“NAV”) as of September 30, 2017 and certain portfolio
activity through November 8, 2017.
THIRD QUARTER 2017 HIGHLIGHTS
- Net investment income (“NII”) and
realized capital gains of $0.45 per weighted average common
share1.
- NAV per common share of $16.67 as of
September 30, 2017.
- GAAP net income (inclusive of
unrealized mark-to-market losses) of $2.2 million, or $0.12 per
weighted average common share.
- Weighted average effective yield of the
Company’s collateralized loan obligation (“CLO”) equity portfolio
was 15.29% as of September 30, 2017.
- Deployed $39.8 million in net capital
and received $26.3 million in cash distributions from the Company’s
portfolio in the third quarter of 2017.
- 4 of the Company’s CLOs refinanced
their debt tranches and 1 CLO was reset during the third quarter of
2017.
- Completed underwritten public offering
of $31.625 million in aggregate principal amount of 6.75% notes due
2027 (“2027 Notes”), including the full exercise of the
underwriters’ overallotment option. The Company received total net
proceeds of approximately $30.4 million.
SUBSEQUENT EVENTS
- NAV per common share estimated to be
between $16.95 and $17.05 as of October 31, 2017.
- Deployed $8.1 million in net capital
from October 1, 2017 through November 8, 2017; received cash
distributions from the Company’s portfolio of $22.4 million over
the same period.
“The third quarter was an active quarter for the Company in
terms of investment activity,” said Thomas Majewski, Chief
Executive Officer. “Our portfolio continues to generate cash flows
and we deployed $74.7 million in gross capital during the quarter
as we sought to capitalize on strong CLO debt demand. We were also
able to complete additional refinancings and resets of CLOs within
our portfolio which we believe should help generate higher cash
flows from those CLOs in the future. At the same time, spread
compression in the corporate loan market contributed in part to our
recognizing NII and realized capital gains of $0.45 per common
share for the third quarter. While the ongoing spread compression
and the reduction in our weighted average effective yield has
impacted our short-term quarterly results, we believe it is
important to maintain a focus on the long term. During periods of
strong credit market conditions we are seeking to lock in longer
and lower cost liabilities at some of the lowest debt spreads that
the Company has experienced for its investments.”
“In terms of our capital position, we completed a new, 10-year
notes offering during the quarter, locking in the lowest cost of
capital that the Company has ever achieved,” added Mr. Majewski.
“Our long-term strategy remains unchanged – to work to create
additional value for our shareholders by deploying capital
opportunistically into new investments and actively managing our
portfolio, including pursuing refinancings or resets of our CLO
investments, where appropriate.”
THIRD QUARTER 2017 RESULTS
The Company’s NII and realized capital gains for the quarter
ended September 30, 2017 was $0.45 per weighted average common
share, which reflects the impact of a $0.02 expected tax refund
related to a previously recorded December 31, 2016 excise tax
expense. This compared to $0.53 per weighted average common share
for the quarter ended June 30, 2017, and $0.54 per weighted average
common share for the quarter ended September 30, 2016.
For the quarter ended September 30, 2017, the Company recorded
GAAP net income of $2.2 million, or $0.12 per weighted average
common share. Net income was comprised of total investment income
of $16.4 million, partially offset by net unrealized depreciation
(or unrealized mark-to-market loss on investments) of $6.0 million,
and total expenses of $8.2 million. Net realized capital gains on
investments were modest for the quarter.
NAV as of September 30, 2017 was $307.9 million, or $16.67 per
common share, a reduction of $0.86 per common share from the
Company’s NAV as of June 30, 2017, and an increase of $0.01 per
common share from the Company’s NAV as of September 30, 2016.
During the quarter ended September 30, 2017, the Company
deployed $74.7 million in gross capital which included $50.8
million in new CLO equity investments. 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 16.65% as measured at the time of investment. Additionally,
during the quarter, the Company received $34.9 million of proceeds
from the sale of investments and converted 2 of its existing loan
accumulation facilities into new CLOs. 1 of the Company’s CLO
investments was called during the quarter.
During the quarter ended September 30, 2017, the Company
received $26.3 million of cash distributions from its investment
portfolio, or $1.44 per weighted average common share, including
amounts received from called investments. Excluding proceeds from
called investments, the Company received $1.23 per weighted-average
common share.
During the quarter ended September 30, 2017, 4 of the Company’s
CLOs refinanced their debt tranches and 1 CLO was reset, bringing
the total number of such CLO equity positions that were refinanced
or reset since August 2016 to 28 and 4, respectively.
As of September 30, 2017, the weighted average effective yield
on the Company’s CLO equity portfolio was 15.29%, compared to
15.68% as of June 30, 2017 and 17.27% as of September 30, 2016.
Pursuant to the Company’s “at-the-market” offering program under
which the Company may issue common stock and 7.75% Series B Term
Preferred Stock due 2026 (“Series B Term Preferred Stock”), the
Company sold 295,462 shares of common stock at a premium to NAV and
27,584 shares of Series B Term Preferred Stock during the third
quarter for total net proceeds to the Company of approximately $6.7
million.
PORTFOLIO STATUS
As of September 30, 2017 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 1,213 unique
corporate obligors. The largest look-through obligor represented
0.90% of the Company’s CLO equity and loan accumulation facility
portfolio. The top-ten largest look-through obligors together
represented 6.51% of the Company’s CLO equity and loan accumulation
facility portfolio.
Spread compression in the loan market has been a factor for
credit investors and the Company is not immune. Whereas in December
2016, the look-through weighted-average spread of the Company’s
CLOs’ loans was 3.97%, that value was 3.71% as of September 2017.
However, recently the rate of decline has slowed.
As of September 30, 2017, the Company had debt and preferred
securities outstanding which totaled approximately 38% of its total
assets (less current liabilities), due primarily to the issuance of
the Series 2027 Notes in August 2017. 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. As market conditions evolve, or should significant
opportunities present themselves, the Company may incur leverage
outside of this range, subject to applicable regulatory limits.
FOURTH QUARTER 2017 PORTFOLIO ACTIVITY THROUGH NOVEMBER 8,
2017 AND OTHER UPDATES
From October 1, 2017 through November 8, 2017, the Company
received cash distributions on its investment portfolio totaling
$22.4 million, or $1.21 per weighted average common share. As of
November 8, 2017, some of the Company’s investments had not yet
reached their payment date for the quarter. Also from October 1,
2017 through November 8, 2017, the Company made net new investments
totaling $8.1 million.
In the fourth quarter, through November 8, 2017, 3 of the
Company’s CLOs were reset. In addition, 2 of the Company’s loan
accumulation facilities were priced into new CLOs.
As of November 8, 2017, the Company has approximately $14.9
million of cash available for investment.
As published on the Company’s website yesterday, management’s
estimate of the Company’s range of NAV per common share as of
October 31, 2017 was $16.95 to $17.05.
PREVIOUSLY DECLARED DISTRIBUTIONS
The Company paid a monthly distribution of $0.20 per common
share on October 31, 2017 to stockholders of record as of October
12, 2017. Additionally, and as previously announced, the Company
declared distributions of $0.20 per share of common stock payable
on November 30, 2017 and December 29, 2017, to stockholders of
record as of November 10, 2017 and December 12, 2017,
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 October 31, 2017, to
stockholders of record as of October 12, 2017. The distributions
represented a 7.75% annualized rate, based on both the Series A and
Series B Term Preferred Stocks’ $25 liquidation preference per
share. Additionally, and as previously announced, the Company
declared distributions of $0.161459 per share on its Series A Term
Preferred Stock and Series B Term Preferred Stock, payable on each
of November 30, 2017 and December 29, 2017, to stockholders of
record as of November 10, 2017 and December 12, 2017,
respectively.
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 September 30, 2017, 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 4297115 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 December 14, 2017. To hear the replay, please dial
(800) 585-8367 (domestic) or (416) 621-4642 (international). For
the replay, enter conference ID 4297115.
ADDITIONAL INFORMATION
The Company has made available on its website,
www.eaglepointcreditcompany.com (in the financial statements and
reports section) its unaudited consolidated financial statements as
of and for the period ended September 30, 2017. 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 September 30, 2017. The Company has
filed these reports with the Securities and Exchange
Commission.
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 principals of
Eagle Point Credit Management LLC are Thomas P. Majewski, Daniel W.
Ko and Daniel M. Spinner.
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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