Eagle Point Credit Company Common Share of Beneficial Interest

Ladies and gentlemen, thank you for standing by. We'll be getting started in about two minutes. Once again, please stand by. We'll be getting started in approximately two minutes. We do thank you for your patience. Please continue to hold. Thank you. Greetings, and welcome to the Eagle Point Credit Company fourth quarter 2025 financial results conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star 1 on your telephone keypad. As a reminder, this conference is being recorded. If anyone should require operator assistance, please press star 0 on your telephone keypad. It's now my pleasure to turn the call over to your host, Darren Doherty, with Proceq Partners. Please go ahead, Darren.

Thank you, Kevin, and good morning. Welcome to Eagle Point Credit Company's earnings conference call for the fourth quarter and full year 2025. 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 involve 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 SEC. In addition, because we are holding this call prior to filing our annual report, the financial results discussed today are preliminary and unaudited and remain subject to completion of our year-end audit procedures. Actual results included in our annual report may differ from the information discussed on this call and those differences could be material. 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. A replay of this call will also be made available later today. I'll now turn the call over to Thomas Majewski, Chief Executive Officer of Eagle Point Credit Company. Tom?

Thanks, Darren, and good morning to everyone. We appreciate your joining the call today. We decided to hold our call earlier than usual this quarter to provide shareholders with a timely update on our fourth quarter results and recent activity at the company. Our annual report will be filed later this month. During 2025, CLO Equity faced difficult market conditions, and the company was not immune to these market-wide conditions. while defaults remain below long-term averages, both spread compression in the loan market and a general negative sentiment towards credit, which we believe is overdone, weighed on both our financial performance and the total return for our shareholders last year. Our disciplined focus on portfolio management and long-term value creation through CLO resets and refinancings helped mitigate some of the headwinds that CLO equity faced. In addition, throughout the year, we leveraged our advisors' broader origination capabilities and opportunistically increased the company's exposure to credit assets beyond CLO equity. The strong demand for loans was fueled, in part, by captive CLO equity funds, which are often return-insensitive buyers of new CLOs. We believe these funds also led to loan spreads compressing, faster than CLO liabilities tightened, as their CLO issuances created more CLO debt supply than the market might have otherwise had appetite for. This significantly reduced the CLO equity arbitrage during the year. These factors, among others, drove what Nomura Research estimated to be a median CLO equity return of negative 15% for 2025. With that as a backdrop, the company generated a gap return on common equity of negative 14.6% during 2025, and this is modestly better than Nomura's market-wide assessment. As of December 31st, the company's NAV was $5.70 per share, which is down from $7 per share on September 30th. The fourth quarter of 2025 saw a net investment income, or NII, less realized losses, of negative 26 cents per share, which was comprised of net investment income of 23 cents per share and offset by realized losses of 49 cents per share. This compares to NII less realized losses of 16 cents per share in the third quarter. For the fourth quarter of 2025, recurring cash flows from our portfolio increased to $80 million, or 61 cents per share, and that's up from $77 million, or $0.59 per share, in the prior quarter. We paid total cash distributions of $1.68 per common share during 2025. As majority CLO equity investors, our ability to direct resets and refinancings helped offset some of the loan compression. In the fourth quarter alone, the company completed 10 resets and 3 refinancings of its CLOs. Over the course of 2025, we participated in 34 resets and 27 refinancings, making us one of the more active CLO equity investors in the market last year. This robust activity led to 42 basis points of CLO debt cost savings on average across our portfolio. The weighted average remaining reinvestment period, or WARP, of our portfolio stayed roughly flat moving from 3.4 years at the beginning of 2025 to 3.3 years at the end of 2025, despite the passage of the year. This is due both to our reset activity and our new investments that we made during the year. During the fourth quarter, we invested $184 million in gross capital at a weighted average effective yield of 15.4%. we continue to selectively add exposure to asset classes such as regulatory capital relief, portfolio debt securities, and other opportunistic private credit investments which complement our core CLO equity portfolio. During the quarter, of the $184 million that we deployed, new investments in other credit assets totaled $147 million. At year-end, the non-CLO portion of our portfolio was approximately 26% of our total investment portfolio. We've been selectively making private credit investments beyond CLOs since 2022 within ECC. The company has been served quite well by these investments. Of the $97 million of investments that have gone full cycle and been fully realized, our gross IRR on those investments has been approximately 18%. This portfolio strategy of increasing assets away from CLO equity reflects an intentional decision on our part and is designed to maximize total return for our shareholders. Importantly, our advisor has expertise in these other credit strategies and has invested in them for some time for other funds and accounts that are managed by our advisor. Over time, we could expect to see the portion of our portfolio invested in credit assets other than CLO equity to increase further based on where we see the most attractive investment opportunities. We advanced strategic initiatives in our portfolio both last year and into 2026. continuing our support of Musenich's U.S. CLO collateral management platform, and separately, we backed the firm's launch of a new European CLO collateral management platform. Our investment commitment of over $40 million in the U.S. business is fully deployed, and Musenich recently had its first close on a fund designed to support their further U.S. CLO issuance. This should help grow the value of our top-line revenue share. The European partnership is in its beginning stages with the first loan accumulation facility open and ramping. Due to Musinich's strong presence in Europe, we anticipate a faster growth trajectory compared to the pace of the growth in the early stages of our U.S. venture with them. We also launched a new joint venture with a strategic investment partner in the first quarter. This joint venture will invest in more regulatory capital relief transactions. you'll see the JV appear in our Q1 financials when published some point in the second quarter. We are seeking to add other JVs to our portfolio over time and believe, like many of the other private and non-CLO investments we've made, they can be return enhancing for the company. During the fourth quarter, we implemented several initiatives aimed at continued optimization of our capital structure. We announced the redemption of our 8% Series F term preferred stock. The Fs were our highest cost of financing at 8% and were fully redeemed on January 30th. Additionally, we proactively repurchased $9 million of our other $25 par securities in the open market at discounts to par during the fourth quarter. From an issuance perspective, we issued approximately $29 million of our 7% Series AA and AB convertible perpetual preferred stock during the quarter. We believe the 7% distribution rate on this perpetual preferred stock represents a very attractive cost of capital for the company and provides additional flexibility to support our investment strategy. We're aware of no 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. We issued a total of $155 million of the Series AA and BB convertible perpetual preferred stock through the end of 2025. We concluded that offering at the end of the year and plan to evaluate other perpetual preferred issuance opportunities with potentially even lower costs in the future. We distributed 42 cents per share to holders of our common stock in the fourth quarter, paid in three monthly distributions of 14 cents each. And in the fourth quarter, we declared the same distributions for the first quarter of 2026. Earlier today, we declared three monthly distributions of 6 cents per share for the second quarter of 2026. When determining the new distribution level, the company's board considered several factors, such as gap earnings, recurring cash flow, and our requirements to distribute substantially all of our taxable income. We believe this new distribution rate is in line with the company's near-term earnings potential. The board also authorized a $100 million common stock repurchase program. The repurchase program will allow us to opportunistically buy our stock in the open market if it trades at a material discount to NAV. Looking ahead to 2026, we see attractive opportunities for capital deployment in both CLO equity and other credit asset classes. By resetting the distribution rate, we plan to retain more capital for investments with attractive risk-adjusted returns. We believe this approach supports sustained cash flow and long-term total return with an important goal of contributing to a stable or hopefully growing NAV over time. Ken will now discuss our financial results in a little more detail, And then I'll follow up with some comments on the broader loan and CLO markets.