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DATE

Thursday, Nov. 13, 2025 at 11:30 a.m. ET

CALL PARTICIPANTS

  • Chairman and Chief Executive Officer — Thomas Majewski
  • Senior Principal and Portfolio Manager — Dan Ko
  • Chief Accounting Officer — Lena Umnova

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TAKEAWAYS

  • Net Investment Income Less Realized Losses -- $7 million, or $0.26 per share, comprised of $0.39 per share of net investment income and $0.13 of realized losses.
  • Net Asset Value (NAV) -- $14.21 per share as of September 30, increasing from $14.08 per share at June month-end due to positive portfolio performance and capital actions.
  • GAAP Return on Equity -- 3% for the quarter, reflecting the company's operational profitability.
  • Cash Flow Coverage -- Recurring cash flows totaled $17 million, or $0.67 per share, exceeding total expenses and regular common distribution by $0.05 per share.
  • Portfolio Deployment -- $60 million invested in new assets, with new CLO equity purchases carrying a weighted average effective yield of 16.6%.
  • Preferred Stock Activity -- $35 million in preferred equity issued; scheduled full redemption of 7.75% Series B term preferred stock announced to reduce funding costs.
  • Share Repurchase -- $21 million of common stock repurchased at an 8.3% average discount to NAV, resulting in $0.07 NAV accretion per share; board increased buyback authorization from $50 million to $60 million.
  • Liquidity -- $52 million in cash and undrawn revolver capacity available as of September 30, increasing to $55 million net of pending items by October month-end.
  • Distribution Adjustment -- Three new monthly distributions declared at $0.11 per share, a decrease from the prior level of $0.13, attributed to recent Fed rate cuts impacting portfolio earnings.
  • Leverage and Asset Coverage -- Preferred equity at 35% of total assets less current liabilities and an asset coverage ratio of 285%, well above the 200% statutory minimum.
  • Market Conditions -- S&P/LSTA Leveraged Loan Index delivered a 1.6% return in the quarter, with a trailing 12-month default rate of 1.5%, up from 1.1%; CLO new issuance for the period was $53 billion.
  • Portfolio Characteristics -- CLO debt portfolio primarily indexed to short-term rates; CLO equity exposure provides a partial rate hedge due to sensitivity to spreads rather than base rates.
  • NAV Estimate for October -- Management's unaudited estimate of NAV ranged between $13.94 and $14.04 per share as of October month-end.
  • Share Retirement -- Over 1,500,000 repurchased common shares were fully retired, enhancing per-share NAV.
  • Reset and Refinancing Activity -- Three resets and four refinancings completed, extending reinvestment periods and reducing debt costs in select CLO positions.

SUMMARY

Management emphasized capital allocation flexibility, including both common stock repurchases and the scheduled redemption of higher-cost preferred shares, in response to evolving rate conditions. Operational strategy shifted toward relative value opportunities across CLO debt and equity, with selective portfolio rotation driven by refinancing and reset activity in CLO holdings. The board's decision to lower the distribution payout was attributed directly to the downward shift in short-term rates, impacting earnings from floating-rate CLO debt. Management highlighted favorable portfolio coverage of expenses and distributions from recurring cash flows, as well as proactive efforts to sustain NAV accretion. The company maintained a leverage profile at the upper bound of its long-term target while exceeding regulatory asset coverage ratios.

  • Senior Principal and Portfolio Manager Ko stated, "we do we change the dividend rate to what we see as kind of the near-term kind of a rate that can be supported," delineating board rationale for the payout reduction in light of rate-driven earning trends.
  • Refinancing and resets were described as opportunities to "lowered the debt costs in those CLOs and in the case of the resets, extended the reinvestment periods," which management cited as supportive of portfolio earnings longevity.
  • Management noted the largest CLO portfolio industry concentration is enterprise software, with limited exposure to AI or data center credits, and characterized these holdings as "stickier credits" embedded in end-user operations.
  • Management reported, "First Brands accounts for only 25 basis points of our portfolio on a look-through basis, and we do not view it as an indication of widespread credit weakness," addressing concerns regarding portfolio credit risk from recent defaults.
  • Share buybacks were described as an "ongoing commitment to enhancing shareholder value while maintaining prudent leverage and balance sheet flexibility."

INDUSTRY GLOSSARY

  • CLO (Collateralized Loan Obligation): A structured credit product backed primarily by a diversified portfolio of leveraged loans, with tranches of debt and equity offering varying risk-return profiles.
  • Par Subordination: The protective equity or junior tranches in a CLO that absorb losses before senior tranches, enhancing credit safety for those senior investors.
  • Reset: The process of extending the reinvestment period or maturity of a CLO, often accompanied by refinancing of underlying liabilities at updated terms.
  • Refinancing: The act of reducing the interest expense on existing CLO tranches by replacing previous debt with new, lower-cost funding within a CLO vehicle.
  • Asset Coverage Ratio: The ratio defined under the Investment Company Act of 1940, measuring the level of coverage over a company’s preferred stock or debt, required to remain above 200% for closed-end funds.

Full Conference Call Transcript

Darren Daugherty: Thank you, operator, and good morning. Welcome to Eagle Point Income Company's earnings conference call for the 2025. Speaking on the call today are Thomas Majewski, Chairman and Chief Executive Officer of the company, Dan Ko, Senior Principal and Portfolio Manager for the company's adviser, and Lena Umnova, Chief Accounting Officer for the adviser. Before we begin, I would like 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 such projections.

For further information on factors that could impact the company, the statements and projections contained herein, please refer to the company's filings with the Securities and Exchange Commission. 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. Earlier today, we filed our third quarter 2025 financial statements and investor presentation with the Securities and Exchange Commission. These are also available in the Investor Relations section of the company's website eaglepointincome.com. A replay of this call will also be made available later today.

I will now turn the call over to Thomas Majewski, Chairman and Chief Executive Officer of Eagle Point Income Company.

Thomas Majewski: Thank you, Darren, and good morning, everyone. Glad you're joining the call with us today. Eagle Point Income Company had a positive third quarter. Our NAV increased, and we covered our distribution from both net interest income as well as recurring cash flows. The scale and experience of the Eagle Point platform remain key advantages as we seek to capitalize on opportunities in a dynamic market environment for CLO investing. For the quarter, the company generated net investment income, less realized losses, of 26¢ per share. This was made up of $0.39 per share of net investment income and offset by 13¢ of realized capital losses.

Recurring cash flows totaled $17 million or 67¢ per share, and this is consistent with the prior quarter's $18 million or $67 per share. Recurring cash flows exceeded our regular common and total expenses by 5¢ per share. NAV rose to $14.21 per share as of September 30, and that's up from $14.08 per share at the June. The increase reflects our continued portfolio performance, net investment income coverage of our common distribution, improving market conditions, and disciplined capital management. Our GAAP return on equity for the third quarter was 3%. During the quarter, we deployed $60 million into new investments. The new CLO equity we purchased during the quarter had a weighted average effective yield of 16.6%.

The company's ability to invest in both CLO debt and CLO equity in both the primary and secondary markets allows us to assess relative value opportunities wherever they present themselves. Backed by Eagle Point's deep expertise in the CLO market, we believe this approach positions us to deliver attractive returns and long-term value for shareholders. We completed three resets and four refinancings of our CLO equity positions during the quarter. These actions lowered the debt costs in those CLOs and in the case of the resets, extended the reinvestment periods. Which continue to enhance our portfolio's weighted average remaining reinvestment period and long-term earnings power. During the third quarter, we issued $35 million of preferred stock through our at-the-market program.

In light of recent Fed rate cuts, earlier today, we announced the scheduled redemption of 100% of our 7.75% Series B term preferred stock. This redemption allows us to further optimize our capital structure and reduce financing costs. Positioning the company to enhance earnings power for our common shareholders over time. Also during the quarter, we repurchased $21 million of common stock at an average discount to NAV of 8.3%. This resulted in NAV accretion of 7¢ per share. Today, we announced that our board increased our common share repurchase authorization to $60 million from $50 million, which had been previously announced in June.

Since June, through October 31, we've repurchased in total $33 million of common stock and an average discount of 8.8% to NAV, creating $0.11 per share of NAV accretion for our shareholders. These actions reflect our ongoing commitment to enhancing shareholder value while maintaining prudent leverage and balance sheet flexibility. We plan to continue to be aggressive in buying back shares when they are trading at a discount to NAV. Since our last earnings call in August, the Fed has cut interest rates twice. Our CLO debt portfolio, which makes up the majority of our holdings, is directly indexed to short-term rates and will earn lower coupons as a result of the Fed rate cuts.

Earlier today, we declared three monthly distributions of $0.11 per share for the '26. This is a reduction from our previous monthly distribution of $0.13 per share and reflects largely the impact of the Fed rate cuts. The company's board considers numerous factors when setting the monthly distribution level, including cash flow generated from the company's investment portfolio, GAAP earnings, and the company's requirement to distribute substantially all of its taxable income. We believe this new distribution level is aligned with the current interest rate environment and the company's near-term earnings potential. CLO debt is a floating rate asset, it is expected that our earning power will move around as benchmark rates move.

Just as it increases when rates are rising. That said, we believe junior CLO debt continues to offer compelling risk-adjusted returns compared to comparably rated corporates, given its low credit expense and premium yield. I'll now turn the call over to Senior Principal and Portfolio Manager Dan Ko, for an update on the market.

Dan Ko: Thanks, Tom. I'll provide a quick update on both the loan and CLO markets during the third quarter. The S&P UBS Leveraged Loan Index returned 1.6% for the quarter and continued to perform well through October, returning 0.3% for the month. There were five leveraged loan defaults during the quarter, and as of September 30, the trailing twelve-month default rate stood at 1.5%, up from 1.1% as of June 30 but well below the long-term average of 2.6%. The widely reported First Brands default caused most of the increase in the default rate but had a minimal impact on the broader CLO market.

First Brands accounts for only 25 basis points of our portfolio on a look-through basis, and we do not view it as an indication of widespread credit weakness. Note that our CLO double B's benefit from par subordination, so the loss from September stood at 41 basis points, which is well below broader market levels. With rates expected to fall further, defaults should remain muted as loan issuers will have much lower interest costs. In addition, corporate fundamentals across the loan market remain resilient, with issuers generally continuing to grow revenue and EBITDA despite the effects of inflation, tariffs, and rates over the past year.

During the quarter, approximately 6.8% of leveraged loans or roughly 27% annualized were prepaid at par. In general, loan issuers continue to be proactive in tackling their near-term maturities and the maturity wall, as we have mentioned on prior calls, continues to be pushed out. In terms of CLO new issuance, we saw $53 billion of volume during the quarter. This was up slightly from $51 billion in the second quarter. Reset and refinancing activity for the third quarter was $69 billion and $36 billion respectively. Both of which represented significant increases from the prior quarter. CLO debt spreads remain resilient despite the many bouts of volatility that we have observed in the third quarter.

Although lower base rates weigh on the earnings power of our CLO debt portfolio, we view the yield and low credit expense offered by CLO BBs as very attractive relative to comparably rated fixed income instruments. Meanwhile, our CLO equity exposure provides a partial offset to lower rates, as it is less rate sensitive. Returns are largely driven by spreads, not base rates. In many respects, lower rates can be constructive for the asset class easing interest costs for loan issuers and supporting continued credit stability. While also seeing increased LBO activity that contributes to new loan supply and wider loan spreads.

As of September 30, we had $52 million of cash in undrawn revolver capacity available for investment and common stock repurchases. Providing ample liquidity to act on the best relative value opportunities and deliver long-term value for our shareholders. With that, I'll hand it over to our adviser's Chief Accounting Officer, Lena Umnova, to walk through our financial results.

Lena Umnova: Thank you, Dan. For the third quarter, the company recorded net investment income less realized losses of $7 million or 26¢ per share. This compares to NII and realized gains of $0.39 per share for the last quarter and NII and realized gains of 57¢ per share for the third quarter of last year. Including unrealized portfolio gains, GAAP net income was $11 million or 43¢ per share for the 2025. The company's third quarter net income was comprised of investment income of $16 million and unrealized gains on investments of $5 million.

Partially offset by financing and operating expenses of $6 million, realized losses of $3 million, and unrealized losses on certain liabilities recorded at fair value of $1 million. Additionally, other comprehensive income was $1 million for the third quarter. We paid three monthly distributions of 13¢ per share during the quarter, and earlier today, we declared three monthly distributions of 11¢ per share for the first quarter of next year. As of September month-end, the company had outstanding preferred equity securities which totaled 35% of total assets less current liabilities. This is at the top end of our long-term target leverage ratio range of 25 to 35%, where we expect to operate the company under normal conditions.

The company's assets coverage ratio at quarter-end for preferred stock calculated in accordance with investment company requirements was 285%. This is comfortably above the statutory requirement of 200%. As of September month-end, the company's NAV was $356 million or $14.21 per share. An increase versus $14.08 per share as of June month-end. During the quarter, we repurchased over 1,500,000 shares of our common stock for the total amount of $21 million. At the average discount to NAV of 8.3% per share. This has resulted in NAV accretion of 7¢ per share. We would like to highlight that all repurchased shares were retired.

Looking at our portfolio activity during the month of October, the company received recurring cash flows on its investment portfolio of $17 million. I would like to highlight that some of the company's investments are still expected to make payments later in the quarter. As of October month-end, net of pending investment and settlement, the company had $55 million of cash and revolver capacity available for investment and other purposes. Management's unaudited estimate of the company's NAV as of October month-end was between $13.94 and $14.04 per share. I will now turn the call back over to Tom who will provide closing remarks before we take your questions.

Thomas Majewski: Thanks, Lena. The third quarter demonstrated our focus on actively managing our portfolio and executing our strategy across shifting market conditions. We were selective in finding the best relative value opportunities between CLO debt and equity. We also remained active with our share repurchase program aggressively buying back stock, which we believe is undervalued. The board increased the program giving us more to keep buying our own stock at a discount. It's a great investment for the company. Periods like this often reward patient, well-capitalized investors and we believe the company is well-positioned to continue generating solid risk-adjusted returns and building long-term value for our shareholders. We appreciate your continued support.

Thank you for your time and interest in Eagle Point Income Company. Lena, Dan, and I will now open the call to your questions. Operator?

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 to remove yourself from the queue. Participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, while we poll for questions. Our first question comes from the line of Erik Edward Zwick with Lucid Capital Markets LLC. Please proceed with your question.

Erik Edward Zwick: Hey, Eric. How are you?

Thomas Majewski: Hey. Thanks. Good morning. Good to talk to you again today. Wanted to start just looking at slide 26, and it seems, you know, in the most recent data for revenue and EBITDA change for below-grade companies that it's we've seen a little bit of a pickup here. And then if we kind of, you know, take the Fed cuts and reductions and so forth that we've already seen and maybe extrapolate the futures curve a little bit. It seems like, you know, kind of profit for companies are trending in a positive direction. So just curious, you know, what that means for your expectations in terms of, you know, credit quality going forward.

There certainly are some concerns in the market today and some unknowns in the macroeconomic, but you know, wonder if you kind of put that together and relay some thoughts on future credit quality.

Thomas Majewski: Yeah. A very good question. And on this page, which looks like page 26 in the deck, you can see data going back over a decade going back to 2012. And generically below investment grade companies should be growing at a faster rate than the economy. That's just kind of the nature of the beast. They're levered. They're growth-oriented. In many cases, sponsor-backed. If you look at the last few quarters, in general, you can see a positive revenue trend. And a positive-ish EBITDA trend, not as good as the revenue trend is a little bit of a spread there. But overall, that's what we like to see. This goes through Q2, which does include some of the tariff-related behavior.

Q3 data is still kind of being finalized right now. But overall, you know, we view this as directionally credit positive. You know, these numbers I don't want to say they can never be big enough if they were both if the 6.3 and 4.3 were double, we wouldn't object for sure. If they were triple, we might wonder what's going on. But overall, the growth of these companies is very much moving back into the right direction. We certainly had a little bit of shock earlier in the year. But the takeaway here, you know, if top line and bottom line are growing, you know, those are credit positives. You know, broadly for the companies we deal with.

Dan Ko: And if I might add, this is Dan Ko speaking. As long as these kinds of companies continue to grow revenue and EBITDA, we haven't seen defaults pick up materially. And if anything, as maybe the growth rate increases, we'll likely see defaults start to slow down, which we've seen in some of the research that we're seeing, the outlooks for next year, kind of seeing default rates come down. We've even seen the percentage of kind of LMEs relative to last year kind of come down. And so generally, with lower rates should lower the interest cost for a lot of these companies. So from a credit standpoint, should be at least some tailwinds going into next year.

Erik Edward Zwick: That's all great to hear. And then on the next slide, slide 27, there's been a noticeable increase in annual trading volume really since 2020, maybe, notwithstanding 2021. And it looks like '25 is on pace to be a record if I extrapolate into the fourth quarter, from the first three quarters. So one, I guess, maybe a two-part question. One, what has driven that increase over the past call it, you know, five plus years? And two, what does that mean for your business in managing Eagle Point Income Company?

Dan Ko: Sure. So in terms of trading volumes, I think some of that has to do with the fact that there are just more eyes on CLOs. I think people have recognized just the premium yields that you can receive as well as the low credit expense for CLO debt relative to kind of other fixed income asset classes, rated fixed income asset that are out there. So I think people have seen just the data on how well it's performed. And so we're seeing a lot more activity within the CLO space.

There are more entrants kind of looking at buying CLO debt as well as equity, which has kind of increased the competitive landscape of being kind of the established player in the space certainly helps in that, you know, we're a top counterparty for nearly all the desks that are out there, both on our debt and equity standpoint. And then for your second part of your question, some of that I guess, of the increase is really due to, I guess, the advent of ETFs that have come along kind of over the past couple years or so. So a lot of the I think the investment-grade trading activity is probably related to ETF.

Some of the non-investment grade as well. But, ultimately, we think that the additional liquidity that we're seeing within the market, I think, is good. In that it allows us to be able to take kind of views on investments to buy and sell. And the bid-ask typically for a lot of these tranches has kind of tightened. So just an easier way for us to kind of express views on our positions.

Erik Edward Zwick: Thanks. And last one for me. Just making sure I'm following your thoughts correctly reducing the dividend. Going into Q1 of next year. Safe to assume you know, I think you mentioned, yes, primarily due to the Fed rate cuts that we've seen and maybe some more coming. Safe to kind of assume that you feel the earnings power of the portfolio is likely to trend down somewhat here from this level? That you were reported in the most recent quarter?

Dan Ko: Yeah. I mean, it has something to do obviously, the rates is a driver of that for the CLO debt portfolio. But, you know, we are making some rotations within the CLO equity portfolio to kind of increase earnings and to offset some of that. As well as some other higher-yielding investments. So we do we change the dividend rate to what we see as kind of the near-term kind of a rate that can be supported. But, obviously, many factors kind of go into determining that each quarter along with the board. But at least for Q1, we think that's kind of the appropriate level.

Erik Edward Zwick: Thank you for taking my questions.

Dan Ko: Of course. Thank you.

Operator: Our next question comes from the line of Timothy DeGasino with B. Riley Securities. Please proceed with your question.

Timothy DeGasino: Yeah. Hi. Thank you. Kind of piggybacking off that last question in terms of what asset rotation, it seems quarter over quarter, dealer debt decreased. Fine. That kind of breaks the trend of the past four quarters of, you know, like, more CLO debt assets. It also seems like you're sounds in those investments. So it's obviously sad to see kind of the higher yields go away, but it's also good to get par back a lot sooner than we had anticipated, certainly when we bought some of these at a discount.

And so we have seen a little bit of a buildup in cash as we announced that some of that cash is gonna be used to pay down the EICBs. Later this quarter. So that's kind of I guess, why we have a little bit of a little more cash than usual. But, also, it's kind of finding the right kind of relative value in investments. CLO double B's are by no means kind of a sector that we're trying to exit. But trying to pick our spots given that most of the paper that we think that's interesting today is actually less new issue, but probably more refis and resets.

But they do come with a little bit of kind of hair in the portfolios. They're not as squeaky clean as new issue is. But you can pick up 50 to 100 basis points potentially, so kind of picking our spots, then also kind of trying to pick our spots for CLO equity as well as kind of other sort of higher-yielding investments.

Timothy DeGasino: Okay. Great. And then just as a follow-up to that for on the cash component. You mentioned paying down the fees. Is that the primary focus to pay down the fees with the cash or will you also be looking to buy back common shares? Just trying to understand, you know, like, where we could see the cash flow more towards it. Is it gonna be paying down the Visa 100% and taking buying back some common? Or will you really just be focused on paying down the bees? Thank you.

Thomas Majewski: Yeah. I mean, it's really to focus on the bees, and we haven't publicly announced any sort of share buyback. I'm sorry. I'm sorry. We have announced a share buyback. I apologize. Yes. I mean, so we'll be using it for both. That we'll pay back the bees and then, you know, we've said in the script that we'll aggressively pay look to buy back the common. So we'll be using it for ultimately for both.

Timothy DeGasino: Okay. Great. Thank you so much.

Thomas Majewski: Thank you.

Operator: Our next question comes from the line of Christopher Nolan with Ladenburg Thalmann. Please proceed with your question.

Christopher Nolan: Hi. Thanks for taking my questions. On page 22, you have the largest industry concentration is software and technology. How much of that might be AI or data center related, please?

Dan Ko: Not a ton, to be honest. Most of this is kind of enterprise software. So kind of software that's really embedded in a lot of companies' operations. And so it's, you know, stickier credits. It's harder for companies to pull out the software that they're using on a daily basis because you've assisted the replace or the cost of replacing, meaning both just the actual cost but also just the time and effort that goes into replacing the software is very costly. So it's been generally, one of the higher industry concentrations within the loan market. And has generally performed well over the past several cycles.

Christopher Nolan: Great. As a follow-up, just following up to the most recent question talking about investing in the double B's. When you're looking at deals to invest in, is there particular industries that you're looking to get more exposure on? Or does each CLO seem to have a broad-based industry composition?

Dan Ko: Yeah. I mean, most CLOs have very similar industry concentrations than the loan market. And that CLO managers are generally buying kind of what the market has put before them. You know, you might see, you know, a little bit of tweaks here and there, and maybe a certain manager decides not to buy any kind of oil and gas names because they've been burned in the past. But it's kind of hard to avoid some of the higher, like, you know, technology and healthcare. Those are typically the two highest concentrations within the loan market. So but most people are not materially kind of off index, if you will.

Christopher Nolan: Great. Thank you.

Dan Ko: Thanks for your questions.

Operator: Thank you. And we have reached the end of the question and answer session. Therefore, I'll now turn the call back over to Thomas Majewski for closing comments.

Thomas Majewski: Great. Thank you very much, everyone. We appreciate your interest in Eagle Point Income Company. We continue to work very hard for shareholders. The biggest thing continuing to aggressively buy back our stock using the buyback program. Good to get their call of the preferred use at the highest rate. We'll get that done this year and continue to optimize the company's balance sheet and continue to look for the best investments for the company. So we appreciate your time and effort and time and interest, and we appreciate joining us today. Thank you very much.

Operator: Thank you. And ladies and gentlemen, this concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.