Eagle Point Credit Company Common Share of Beneficial Interest

Greetings and welcome to Eagle Point Credit Company's first quarter 2021 financial results conference call. At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Garrett Edson with ICR. Thank you. You may begin.

Thank you, Rob, and good morning. By now, everyone should have access to our earnings announcement and investor presentation, which was released prior to this call and which may also be found on our website at EaglePointCreditCompany.com. Before we begin our formal remarks, we need to remind everyone that the matters discussed on this call include forward-looking statements and projected financial information. that involve risks and uncertainties that may cause the company's actual results to differ materially from those projected in such forward-looking statements and projected financial information. 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 and projection of financial information made during this call is based on information available to us as of the date of this call. We just claim any obligation to update or forward linking statements unless required by law. A replay of this call can be accessed for 30 days via the company's website, evilpointcreditcompany.com. Earlier today, we filed our first quarter 2021 financial statements and our first quarter investor presentation with the Securities and Exchange Commission. Financial statements and our first quarter investor presentation are also available within the investor relations section of the company's website. Financial statements can be found by following the financial statements and reports link, and the investor presentation can be found by following the presentations and events link. As a reminder, Eagle Point Income Company will also be holding its conference call this morning at 1130 a.m. Eastern Time. A web link for that event can be found at the investor relations section of www.eaglepointincome.com, or you can dial in by calling 877-407-0789 and reference conference ID 13719174. I would now like to introduce Tom Majewski, Chief Executive Officer of Eagle Point Credit Company.

Thank you, Garrett, and welcome everyone to Eagle Point Credit Company's first quarter earnings call. If you haven't done so already, we invite you to download our investor presentation from our website, which provides additional information about the company, including our portfolio and the underlying corporate loan obligors. For today's call, I'll provide some high-level commentary on the first quarter and some recent events. I'll then turn the call over to Ken, who will walk us through the first quarter financials. I'll then return to talk a little bit more about the market environment, and of course, we'll open the call to your questions. We've had a great start to 2021, and frankly, the company is hitting on all cylinders. During the first quarter, NAV per share increased by approximately 8%, ending the quarter at $12.02 per share. That trend continued in April, and we estimate our NAV at month end to be between $12.62 and $12.72 per share per reflecting an additional gain in April of about 5% at the midpoint of that range. Recurring cash flows on our portfolio in the first quarter were $32.5 million. April's total was $34.2 million, representing a quarter-over-quarter increase of about 5%. Perhaps even more notably, April 2021's total was about 70% greater than our collections in April 2020. Almost all of our CLOs that were scheduled to make payments in April did so as planned. Our net investment income and realized capital gains for the first quarter was $0.28 per share, exceeding the total distributions on our common stock pay during the first quarter. That number is net of a $0.04 per share charge incurred for non-recurring expenses related to the ECCW 6.75% note issuance. Without those non-recurring expenses, NII and realized gains for the quarter would have actually been 32 cents per common share. We strengthened our balance sheet during the quarter with our new 10-year fixed rate issuance. The notes have a 6.75% coupon. They trade under ticker symbol ECCW. And from that issuance, we generated about $43 million of proceeds. Importantly, issuing new 10-year paper and it materially extends our weighted average debt maturity. Looking a little at the broader market, the corporate default rate that we're looking at continues to decline. The 12-month default rate has fallen significantly. During the first four months of 2020, less than five companies have defaulted on their loans, frankly. So we're in a very, very low default environment. With the year off to an excellent start and the economy growing at levels frankly seen more commonly in developing markets, coupled with our strong NII, we were pleased to increase our common distribution by 25% beginning in July 2021, increasing from $0.08 a month to $0.10 a month. As of March 31st, the weighted average effective yield on our overall CLO equity portfolio was 14.4%. and that's a significant increase from the 11.05% at the end of 2020. This increase was aided by strong cash flows on our portfolio, very few defaults, as well as proactive reset and refinancing activity by our advisor. It was also helped by our ability to put new investments in the ground at very attractive levels. During the quarter, we deployed a little over $41 million of net capital We continue to find attractive CLO opportunities in both the secondary and primary markets. Indeed, across eight secondary and four primary CLO equity purchases that we made during the first quarter, the weighted average effective yield was in excess of 20%. On the monetization side, we opportunistically sold a little over $7 million of CLO equity and just shy of $3 million of CLO debt securities. Together, these sales allowed us to realize $1.1 million of net gains over amortized costs. While we typically underwrite investments with a long-term hold mindset, we do sell investments when our advisor believes the price available exceeds fair value or where we see attractive rotation opportunities. In addition to our deployment of capital, we were active and focused during the quarter on resets and refinancings to take advantage of tightening CLO debt spreads. In the first quarter of 2021, we priced three resets and seven refinancings. Our advisor has a robust pipeline of future resets and refinancings under evaluation and is actively working on additional resets and refinancings throughout the portfolio. As I've noticed on previous calls, this is part of our advisor's value proposition for our CLO majority equity strategy. Proactive involvement with each investment, both at the time of purchase and throughout its lifecycle, seeking to create additional value for our shareholders. In this respect, ongoing active management throughout an investment's lifecycle, frankly, is just as important as investment selection at the outset. As a refresher, to clarify some of our industry jargon, a reset typically renews a CLO's reinvestment period and usually lowers the future cost of funding. It allows our advisor to reopen and refresh a transaction's governing documents, adding in new, more modern features when appropriate. In a CLO refinancing, typically the only thing that changes is the spread on a CLO's debt. And that's reduced, obviously, as part of the refinancing, which lowers the future cost of funding, and most other terms of the CLO remain unchanged. For our seven refinancings during the first quarter, we lowered the cost of debt on the refinance tranches by an average of 30 basis points. So a very, very powerful reduction. As of March 31st, our CLO equities weighted average remaining reinvestment period stood at 2.3 years. This allows our CLO investments to continue to be on the offense during these volatile markets. This measure was 2.4 years at the beginning of 2021. And so despite the passage of a quarter's time, Through our proactive management of our portfolio, the reinvestment period on our CLO equity positions decayed by only one month. As we manage the company's portfolio, we seek to keep this measure as high as possible. Beyond the trends with respect to cash flows, yields, and earnings, we continue to maintain a solid balance sheet. We have no financing maturities prior to October 2026, All of our financing is unsecured, and we have no repo-style financing or any sort of unfunded revolver commitments, many things that got others into some trouble last year. Our new 10-year ECCW notes further extended the weighted average maturity of our financing and provides us with additional capital at an attractive cost to remain on the offense and seeking to increase our earnings further. When we reflect upon the past 16 months, The company's portfolio delivered just as we expected it would during a time of volatility. We did not expect COVID at the beginning of, certainly at the end of 2019. We know curveballs will come. We never know exactly what they'll be, but we certainly had one. And to frame what played out in our portfolio, our CLO equity portfolio, our NAV started the beginning of 2020 at $10.59 a share. The midpoint of our April 2021 estimate is $12.67 a share, and that's an increase of 20% in our NAV from pre-COVID levels. There are few, if any, BDCs or REITs that were able to deliver such strong NAV growth over the span of the COVID pandemic, and that's something we're very proud of. Equally importantly, along the way, we also paid $1.64 per share in distribution to our stockholders. Looking forward, when combining the increased weighted average effective yield of our CLO equity portfolio, our proactive reset and refi activity, and the earnings potential from investments from the new ECCW capital, we believe the company is favorably positioned to continue increasing NII in the coming quarters. Overall, we remain very bullish on our portfolio and the broader economy. After Ken's remarks, I'll take you through the current state of the corporate loan and CLO markets and share our outlook for the balance of 2021. I'll now turn the call over to Ken.