Eagle Point Credit Company Common Share of Beneficial Interest

The conference call will start momentarily. We thank you for your patience. Greetings and welcome to Eagle Point Credit Company's second 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, Mr. 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 the matters discussed on this call include forward-looking statements or projected financial information that involve risks and certainties 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 findings with the Securities and Exchange Commission. Each forward-looking statement or projection of financial information made during this call is based on 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. A replay of this call can be accessed for 30 days via the company's website, EaglePointCreditCompany.com. Earlier today, we filed our form NCSR half-year 2021 financial statements in our second quarter investor presentation with Securities and Exchange Commission. The financial statements in our second 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. 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 second 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 and our portfolio. For today's call, I'll provide some high-level commentary on the quarter and some recent events, I'll then turn the call over to Ken, who will walk us through the quarterly financials in more detail. I'll then return to talk about the market environment. And, of course, we'll open the call to your questions at the end. The company has had a great 2021 so far. Our NAV per share has increased by 16% during the first half of the year, and we increased our common distribution twice so far this year. As we manage our portfolio, we have consistently been able to create and find attractive new investments. Thanks to the new investments going into the ground, coupled with our very active CLO reset program, we've increased the weighted average remaining reinvestment period of our CLO equity portfolio by almost half a year since January. We were positioned well going into the pandemic, and our approach to managing the company is delivering very tangible benefits for shareholders. During the second quarter, NAV increased by another 8%. ending the quarter at $12.97 per share. This trend continued in July, and we estimate our NAV at month end to be between $13.20 and $13.30 a share, reflecting an additional gain in July of over 2% based on the midpoint of that range. Our NAV per share is up 19% year-to-date and up 25% since the end of 2019 before the onset of COVID through July 2021. Frankly, we're very happy with the destination we've gotten to over the past 19 months. Recurring cash flows on our portfolio in the second quarter were $36.4 million. July 2021's total was $35.3 million as we continue to maintain strong recurring cash flows well above our total expenses and common distributions. Notably, July's total collections were more than double our collections in July 2020. Our net investment income and realized gains for the second quarter totaled 32 cents per share, exceeding our common stock distributions paid during the quarter by 33 percent. Further, our quarterly earnings were actually reduced by 3 cents per share due to a non-recurring charge related to the issuance of our ECCC 6.5 percent term preferred stock. Without that non-recurring charge, NII and realized gains for the quarter would have been 35 cents per share, or 46% over the second quarter paid distributions. We further strengthened our balance sheet during the quarter, issuing new 10-year Series C term preferred stock with a 6.5% coupon. 6.5% is our lowest cost of capital to date. These new preferred shares trade under the ticker symbol ECCC. We generated net proceeds of $29 million from the offering, And thanks to its new 10-year maturity, we've actually extended our weighted average financing maturity out to over seven years. We also continue to raise capital through our at-the-market program and issued over 2 million of common shares at a premium to NAV, generating net proceeds of about 27 million during the quarter. This helps us build NAV and further increase diversity within our investment portfolio. Corporate default rates continue to decline, The trailing 12-month default rate is down to 58 basis points as of July 31st, and that's less than a quarter of the long-term historic average. Given the strength of the company's recent financial performance and our confidence in its future outlook, we were pleased to announce a second increase in our common distribution of 20% beginning in October 2021. That increases the distribution to 12 cents per share per month. we have now increased our common monthly distribution by 50% from its level at the beginning of the year. As of June 30, 2021, the weighted average effective yield on our overall portfolio was 14.98%, up from 14.40% at the end of March. This increase was aided by strong cash flows on our portfolio, our proactive reset and refinancing program, our ability to put new investments in the ground at attractive levels, few borrowers defaulting, and muted levels of loan repricing. During the quarter, we deployed over $65 million of net capital into CLO equity and debt investments. We continue to find attractive CLO opportunities principally in the primary market with a few opportunities popping up in the secondary market. Indeed, across the 20 CLO equity purchases we made during the second quarter, the weighted average effective yield was approximately 17 percent. On the monetization side, we opportunistically sold about $30 million of principally CLO debt securities. Collectively, the sale of CLO debt and other securities allowed us to realize $1.1 million of net gains versus amortized cost, or three cents per common share during the quarter. While we typically underwrite investments with a long-term hold mindset, We do sell investments when we see strong bids or where we see attractive rotation opportunities. In addition to our deployment of capital, we were very active with our reset and refinancing program, taking advantage of the strong demand for CLO debt. In the second quarter, we priced six resets and two refinancings. For the entire first half, we completed nine resets and nine refinancings. In fact, over the first half of the year, Our portfolio of CLOs represented 7% of the total CLO reset market. We've been very, very active. At the same time, we have a robust pipeline of future resets and refinancings under evaluation and are actively working on a number of them at present. As I've noticed on prior calls, this is all part of our advisors' value proposition for our CLO majority equity strategy. Proactive involvement with each investment, both at the time of purchase and throughout its lifecycle, always seeking to create value for our shareholders. In this respect, active management throughout an investment's lifecycle is just as important as the investment selection at the outset. As a refresher, a reset typically renews a CLO's reinvestment period and usually lowers the future cost of funding. It allows us to reopen and refresh a transaction's governing documents as well. In a CLO refinancing, typically only the spread on a CLO's debt tranche are reduced, lowering our future cost of funding in that CLO, while most other terms of the CLO remain unchanged. For our two refinancings during the second quarter, we lowered the cost of debt on the refinance tranches by an average of 21 basis points. And for our six resets, we saved an average of 10 basis points and lengthened the remaining reinvestment period of each out to five years. Thanks to our ability to capitalize on this attractive reset and refinancing environment, as of June 30th, our CLO equity portfolio's weighted average remaining reinvestment period stood at 2.8 years. This is an increase of almost half a year since the beginning of 2021. So despite the passage of six months' time, through our proactive portfolio management, the remaining reinvestment period on our CLO equity positions actually increased, and meaningfully so. These actions allow the company to increase prospect of cash flows while also being better positioned to take advantage of future loan price volatility when it eventually reoccurs. As we manage the company's portfolio, we seek to keep the weighted average remaining reinvestment period as high as commercially possible. Beyond the ongoing positive trends with respect to cash flows, effective 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. We have no repo-style financing and no unfunded revolver commitments. Our new 10-year Series C preferred stock further extended the weighted average maturity of our financing out to over seven years and provides us with additional capital to remain on the offense seeking to increase earnings. Looking ahead, When combining our increased weighted average effective yield of our CLO equity portfolio, the favorable cash flow and default trends, reset and refi activity, the earnings potential raised from the new ECCW notes from earlier in the year, and the ECCC preferred stock, we believe the company remains well positioned to continue increasing NII in the coming quarters. I'd also like to take a moment to highlight some of the activity over at our sister company, Eagle Point Income Company. Eagle Point Income Company trades under the ticker symbol EIC. For the second quarter, EIC also generated NII and gains comfortably above its quarterly distributions. Last week, it announced a 33% distribution increase, its third increase this year. EIC also signaled changes in its target portfolio construction and leverage policy, and we believe these actions will continue to support EIC's strong financial performance. You're invited to visit that company's website, eaglepointincome.com, to learn more. Overall, we continue to be 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 remainder of 2021. I'll now turn the call over to Ken.