Eagle Point Credit Company Common Share of Beneficial Interest

Greetings and welcome to Eagle Point Credit Company's fourth quarter and year-end 2021 financial results 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 keypad. Please note this conference is being recorded. I would now like to turn the conference over to your host, Garrett Edson. 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 in this call include forward-looking statements or projected financial information that involve risks and uncertainties that may cause the company's actual results to differ materially from those projecting such forward-looking statements and projected financial information. For further information on factors that could impact the company in the statements and projections contained herein, please refer to the company's filings with the Securities and Exchange Commission. Each forward-looking statement of 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, our full year 2021 audited financial statements, and our fourth quarter investor presentation with Securities and Exchange Commission. The financial statements and our fourth quarter investor presentation are also available within the investor relations section of the company's website. The 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.

Great. Thank you, Garrett, and welcome everyone to Eagle Point Credit Company's fourth 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. The company closed out 2021 with an active and productive fourth quarter. This was particularly true with respect to capital markets activity. And that momentum from the fourth quarter has carried into 2022, enabling us to generate significant new deployable capital for investments, and also considerably lowering our overall cost of capital. In addition, during the fourth quarter, we declared a special distribution of 50 cents per common share, which was paid in January. And recently, we also announced another increase in our common distributions, which will begin in the second quarter. Our portfolio continues to do quite well, generating very strong recurring cash flows. Our net investment income, or NII, Excluding non-recurring expenses rose in the fourth quarter compared to the third. We also remained very active in managing the portfolio, both buying and selling securities, as well as resetting and refinancing CLOs in our portfolio. During the quarter, we deployed $24.7 million of net capital into CLO equity and debt investments, and we priced five resets and refinancings. In all, the fourth quarter was a great close to an outstanding 2021 for Eagle Point and provides us with plenty of momentum as we head into 2022. For the fourth quarter, our net investment income and realized losses before non-recurring items totaled 44 cents per common share, which exceeded our common distributions paid during the quarter by 22%. Recurring cash flows on our portfolio in the fourth quarter were $47.8 million and which was 59 cents per share above our total expenses and common distributions paid. I will note that cash flows in the fourth quarter benefited from first-time payments on a number of CLO equity positions that were made in the third quarter, when we deployed nearly $70 million of capital into CLO equity and debt. January's collections have totaled $39.1 million as we continue to maintain strong cash flows. And January's total collections this year were 27% more than our January collections last year. During the fourth quarter, NAV per share ended at $13.39 per share. It fell a little bit during the quarter due to the $0.50 per share special distribution that was accrued in December. Since the end of the year, we estimate our NAV at January month end to have moved up slightly to between $13.42 and $13.52 per share. reflecting a gain of approximately 1% based on the midpoint of that range. Obviously, in addition, we paid a common distribution during that period as well, as had previously been declared. For 2021, our NAV per share grew by 20%. And when we look back from the beginning of 2019, our NAV is now up 26% from before the onset of COVID-19. We believe there are a few other income-oriented listed funds that increased NAV so materially over the COVID period, and that's something we're very proud of as a company. As I mentioned earlier, we significantly strengthened our balance sheet and liquidity position during the quarter. We completed an offering of the 6.75% Series D preferred stock, our first perpetual offering, and used the proceeds of that perpetual to redeem half of our higher-cost 7.75% ECCB preferred stock, which originally was scheduled to mature in 2026. Management has long wanted to have a perpetual preferred in our capital structure, and we were pleased to be able to act when the window was open. We've kept at it this year, completing an offering of our 5 3⁄8 ECCV notes. This was both our largest $25 denominated issuance ever, and also our lowest cost of capital to date and by a healthy margin. We are using the proceeds of the new Vs to retire the other half of the ECCBs, retire our ECCYs, and half of our ECCX notes. All of this activity provides us with several meaningful benefits. We've achieved significant savings on interest expense moving forward. We've protected ourselves in a rising rate environment. All of our financing is fixed rate and unsecured. So if rates go up, our cost of financing does not go up. We've extended the weighted average maturity of our debt. Upon the redemption of the Series B preferred stock at the end of this month, we'll have no financing maturities prior to April 2028. And of course, regular participants on this call will know we've never had any repo-style financing or unfunded revolver commitments at the company. We also continue to raise capital through our at-the-market program and issued approximately 2.2 million common shares at a premium to NAV. We also tapped the ATM to issue approximately 211,000 Series C preferred shares. Together, these sales generated additional net proceeds of $36 million for the company during the fourth quarter. Last week, given the continued strength of the company's performance and our confidence in our outlook for our investment portfolio, We were pleased to raise our monthly common distribution again, this time by 17%, going to 14 cents per common share beginning in the second quarter. This is the third common distribution increase we've announced in less than a year, and since July of 2021, our monthly common distribution per share has increased by 75%. That does not include the benefit of the special distribution as well. As of December 31, 2021, the weighted average effective yield of our overall portfolio was 17.04%, which is up from 16.35% at the end of September. This increase was aided by strong cash flows in our portfolio, our proactive reset and refinancing program, our ability to put new investments in the ground at attractive levels, few underlying loan borrowers defaulting, and pleasantly a muted level of loan repricing. As I mentioned, during the quarter, we deployed $24.7 million of net capital into CLO debt and equity investments. We continue to find attractive CLO opportunities in the primary and secondary markets. And indeed, across the nine CLO equity purchases we made during the fourth quarter, the weighted average effective yield on those investments was about 17%. On the monetization side, we opportunistically sold CLO securities and other investments Collectively, these sales allowed us to realize a modest amount of gains per common share, about one penny. While we typically underwrite investments with a long-term hold mindset, we do sell investments where we see strong bids or we see attractive rotation opportunities. In addition to the deployment of capital, we remained very active with our reset and refinancing program, taking advantage of the strong demand for CLO debt to further lower the cost of funding in our CLOs and enhance future equity cash flows. For our two refinancings in the fourth quarter, we lowered the cost of debt on the refinance tranches by an average of 37 basis points. And for our three resets, we saved an average of 26 basis points on the debt and, importantly, also lengthened the remaining reinvestment period of each of those CLOs out to five years. For the full year 2021, we completed 21 resets and 13 refis. This totals 34 corporate actions taken during the year, not including calls. That's a pace of roughly three a month, and it shows just how active we are in managing our portfolio. We continue to have a robust pipeline of resets and refinancings under evaluation, and with CLO debt spreads continuing to be on the tighter side, we expect we'll be actively working on the pipeline throughout much of 2022. As we've consistently noted, resets and refinancing are a key part of our advisors' value proposition for our CLO majority equity strategy. proactive involvement with each investment both at the time of purchase and, importantly, throughout its lifecycle. Our advisor is always seeking ways to create value for our shareholders. Thanks to our ability to capitalize on the attractive reset and refinancing market, at the end of 2021, our CLO equity portfolio's weighted average remaining reinvestment period stood at three years. This is an increase from 2.9 years at the end of September 30th and an increase from 2.4 years at the beginning of 2021. So when you think about it, despite the passage of a year through our proactive portfolio management, the reinvestment period on our CLO equity positions actually increased meaningfully despite passage of time. These actions allow the company to increase prospect of cash flow while also being better positioned to take advantage of the future loan price volatility whenever it eventually occurs. As we manage the company's portfolio, we seek to keep the weighted average remaining reinvestment period as long as possible. Looking ahead, when combining our increased weighted average effective yield of our CLO equity portfolio, the favorable cash flows and default trends, our reset and refinancing activity, and the earnings potential of our portfolio, we believe the company remains well positioned to continue increasing NII throughout 2022. I'd also like to take a quick moment to highlight Eagle Point Income Company. sort of our sister company, which trades under the symbol EIC on the New York Stock Exchange. For the fourth quarter, EIC generated net investment income and gains in line with its quarterly distributions and raised nearly $45 million of new capital in the fourth quarter to continue deploying principally into CLO junior debt and some CLO equity investments. We invite you to join our call at 1130 a.m. to learn more about the company, or you can visit the website at eaglepointincome.com. Overall, we continue to be bullish on our portfolio and the broader economy. After Ken's remarks, I'll take you through our view of the current state of the loan and CLO markets, share our outlook for 2022, and, of course, take your questions. I'll now turn the call over to Ken.