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Eagle Point Credit Company Inc. Announces Fourth Quarter 2017 and Year End 2017 Financial Results

02/22/2018

GREENWICH, Conn.--(BUSINESS WIRE)-- Eagle Point Credit Company Inc. (the “Company”) (NYSE:ECC, NYSE:ECCA, NYSE:ECCB, NYSE:ECCY, NYSE:ECCZ) today announced financial results for the quarter and fiscal year ended December 31, 2017, net asset value (“NAV”) as of December 31, 2017 and certain portfolio activity through February 15, 2018.

FOURTH QUARTER AND FULL YEAR 2017 HIGHLIGHTS

  • Net investment income (“NII”) and realized capital gains of $0.49 per weighted average common share1.
  • NAV per common share of $16.77 as of December 31, 2017.
  • Fourth quarter 2017 GAAP net income (inclusive of unrealized mark-to-market gains) of $12.6 million, or $0.68 per weighted average common share.
  • Weighted average effective yield of the Company’s collateralized loan obligation (“CLO”) equity portfolio was 14.42% as of December 31, 2017.
  • Deployed $22.9 million in net capital and received $34.0 million in cash distributions from the Company’s portfolio in the fourth quarter of 2017.
  • 3 of the Company’s CLOs were reset during the fourth quarter of 2017.

SUBSEQUENT EVENTS

  • NAV per common share estimated to be between $17.12 and $17.22 as of January 31, 2018.
  • Deployed $36.6 million in net capital from January 1, 2018 through February 15, 2018; received cash distributions from the Company’s portfolio of $21.7 million over the same period.
  • In January 2018, the Company completed an underwritten public offering of 2,242,500 shares of its common stock (including full exercise of the underwriters’ overallotment option) resulting in net proceeds to the company of approximately $38.8 million after payment of underwriting discounts, commissions and estimated offering expenses.

“We continued to be active in terms of our investment and reset activity in the fourth quarter,” said Thomas Majewski, Chief Executive Officer. “Our investment portfolio continues to generate cash flows and we deployed $52.6 million in gross capital during the quarter as we sought to capitalize on strong CLO debt demand. We were also able to complete additional resets of CLOs within our portfolio – as we have noted in the past, we believe that CLO resets help generate higher cash flows in the future. NII and realized capital gains per share went from $0.45 per common share in the third quarter to $0.49 per common share in the fourth quarter, a 9% increase. The pace of loan repricings has slowed significantly and recently issued CLOs in the market have achieved even tighter debt spreads. We continue to focus on the long term and during periods of strong credit market conditions we are seeking to lock in longer and lower cost liabilities, and in recent periods we have achieved some of the lowest debt spreads that the Company has experienced for its investments.”

“In January 2018, we completed an equity capital raise generating net proceeds of approximately $38.8 million,” added Mr. Majewski. “We are putting the capital to work opportunistically into investments that we believe will create additional long-term value for our stockholders. In addition, we will continue to actively manage our portfolio and, where we think it appropriate, expect to enhance our CLO reset activity.”

FOURTH QUARTER 2017 RESULTS

The Company’s NII and realized capital gains for the quarter ended December 31, 2017 was $0.49 per weighted average common share. This compared to $0.45 per weighted average common share for the quarter ended September 30, 2017, and $0.54 per weighted average common share for the quarter ended December 31, 2016.

For the quarter ended December 31, 2017, the Company recorded GAAP net income of $12.6 million, or $0.68 per weighted average common share. Net income was comprised of total investment income of $16.6 million, net unrealized appreciation (or unrealized mark-to-market gain on investments) of $3.5 million, and net realized capital gains on investments of $1.1 million, offset by total expenses of $8.6 million.

NAV as of December 31, 2017 was $315.3 million, or $16.77 per common share, which is $0.10 per common share higher than the Company’s NAV as of September 30, 2017, and $0.71 per common share lower than the Company’s NAV as of December 31, 2016.

During the quarter ended December 31, 2017, the Company deployed $52.6 million in gross capital and $22.9 million in net capital. The weighted average effective yield of new CLO equity investments made by the Company during the quarter, which includes a provision for credit losses, was 17.25% as measured at the time of investment. Additionally, during the quarter, the Company received $29.8 million of proceeds from the sale of investments and converted 2 of its existing loan accumulation facilities into new CLOs. 1 of the Company’s CLO investments was called during the quarter.

During the quarter ended December 31, 2017, the Company received $34.0 million of cash distributions from its investment portfolio, or $1.83 per weighted average common share, including amounts received from called investments. Excluding proceeds from called investments, the Company received cash distributions of $1.23 per weighted-average common share during the quarter.

During the quarter ended December 31, 2017, 3 of the Company’s CLOs were reset, bringing the total number of such CLO equity positions that were refinanced or reset during the year ended December 31, 2017 to 26 and 6, respectively.

As of December 31, 2017, the weighted average effective yield on the Company’s CLO equity portfolio was 14.42%, compared to 15.29% as of September 30, 2017 and 17.48% as of December 31, 2016.

Pursuant to the Company’s “at-the-market” offering program under which the Company may issue shares of common stock and 7.75% Series B Term Preferred Stock due 2026 (“Series B Term Preferred Stock”), the Company sold 288,646 shares of common stock during the fourth quarter for total net proceeds to the Company of approximately $5.3 million. The Company issued no shares of Series B Term Preferred Stock during the quarter.

FULL YEAR 2017 HIGHLIGHTS AND PORTFOLIO STATUS

For the fiscal year ended December 31, 2017, the Company recorded net income of $31.1 million. Fiscal year net income was comprised of total investment income of $65.3 million and realized capital gains on investments of $3.3 million, partially offset by total expenses of $32.1 million and net unrealized depreciation (or unrealized mark-to-market loss on investments) of $5.4 million.

For the fiscal year ended December 31, 2017, the Company received a total of $120.0 million of cash payments from its portfolio (inclusive of proceeds from called investments), or $6.77 per weighted average common share.

As of December 31, 2017 on a look-through basis, and based on the most recent CLO trustee reports received by such date, the Company had indirect exposure to approximately 1,253 unique corporate obligors. The largest look-through obligor represented 1.00% of the Company’s CLO equity and loan accumulation facility portfolio. The top-ten largest look-through obligors together represented 6.30% of the Company’s CLO equity and loan accumulation facility portfolio.

Spread compression in the loan market continues to be a factor for credit investors and the Company is not immune. Whereas in December 2016, the look-through weighted-average spread of the loans underlying the Company’s CLO equity and related investments was 3.97%, that value was 3.66% as of December 2017.

As of December 31, 2017, the Company had debt and preferred securities outstanding which totaled approximately 37% of its total assets (less current liabilities). Over the long term, management expects the Company to operate under current market conditions generally with leverage within a range of 25% to 35% of total assets. Based on applicable market conditions at any given time, or should significant opportunities present themselves, the Company may incur leverage outside of this range, subject to applicable regulatory limits.

FIRST QUARTER 2018 PORTFOLIO ACTIVITY THROUGH FEBRUARY 15, 2018 AND OTHER UPDATES

From January 1, 2018 through February 15, 2018, the Company received cash distributions on its investment portfolio totaling $21.7 million (inclusive of proceeds from called investments), or $1.06 per weighted average common share. As of February 15, 2018, some of the Company’s investments had not yet reached their payment date for the quarter. Also from January 1, 2018 through February 15, 2018, the Company deployed $36.6 million in net capital.

From January 1, 2018 through February 15, 2018, 2 of the Company’s CLO investments were reset.

As of February 15, 2018, the Company has approximately $19.6 million of cash available for investment.

As previously published on the Company’s website, management’s estimate of the Company’s range of NAV per common share as of January 31, 2018 was $17.12 to $17.22.

PREVIOUSLY DECLARED DISTRIBUTIONS

The Company paid a monthly distribution of $0.20 per common share on January 31, 2018 to stockholders of record as of January 12, 2018. Additionally, and as previously announced, the Company declared distributions of $0.20 per share of common stock payable on February 28, 2018 and March 29, 2018, to stockholders of record as of February 12, 2018 and March 12, 2018, respectively.

The Company paid distributions of $0.161459 per share of the Company’s 7.75% Series A Term Preferred Stock (NYSE: ECCA) and Series B Term Preferred Stock (NYSE: ECCB) on January 31, 2018, to stockholders of record as of January 12, 2018. The distributions represented a 7.75% annualized rate, based on the $25 liquidation preference per share for each series of preferred stock. Additionally, and as previously announced, the Company declared distributions of $0.161459 per share on each series of preferred stock, payable on each of February 28, 2018 and March 29, 2018, to stockholders of record as of February 12, 2018 and March 12, 2018, respectively.

CONFERENCE CALL

The Company will host a conference call at 10:00 a.m. (Eastern Time) today to discuss the Company’s financial results for the quarter and year ended December 31, 2017, as well as a portfolio update.

All interested parties may participate in the conference call by dialing (833) 231-8253 (domestic) or (647) 689-4099 (international), and entering Conference ID 4588808 approximately 10 to 15 minutes prior to the call. A live webcast will also be available on the Company’s website (www.eaglepointcreditcompany.com) – please go to the Investor Relations section at least 15 minutes prior to the call to register, download and install any necessary audio software.

An archived replay of the call will be available shortly afterwards until March 22, 2018. To hear the replay, please dial (800) 585-8367 (domestic) or (416) 621-4642 (international). For the replay, enter conference ID 4588808.

ADDITIONAL INFORMATION

The Company has made available on its website, www.eaglepointcreditcompany.com (in the financial statements and reports section), its 2017 Stockholder Letter and Annual Report, which includes the Company’s audited consolidated financial statements as of and for the period ended December 31, 2017. The Company also published on its website (in the investor presentations and portfolio information section) an investor presentation which contains additional information about the Company and its portfolio as of and for the quarter and year ended December 31, 2017. The Company has filed these reports with the Securities and Exchange Commission.

ABOUT EAGLE POINT CREDIT COMPANY

The Company is a non-diversified, closed-end management investment company. The Company’s investment objectives are to generate high current income and capital appreciation primarily through investment in equity and junior debt tranches of collateralized loan obligations. The Company is externally managed and advised by Eagle Point Credit Management LLC.

The Company makes certain unaudited portfolio information available each month on its website in addition to making certain other unaudited financial information available on its website (www.eaglepointcreditcompany.com). This information includes (1) an estimated range of the Company’s net investment income (“NII”) and realized capital gains or losses per weighted average share of common stock for each calendar quarter end, generally made available within the first fifteen days after the applicable calendar month end, (2) an estimated range of the Company’s NAV per share of common stock for the prior month end and certain additional portfolio-level information, generally made available within the first fifteen days after the applicable calendar month end, and (3) during the latter part of each month, an updated estimate of NAV, if applicable, and, with respect to each calendar quarter end, an updated estimate of the Company’s NII and realized capital gains or losses for the applicable quarter, if available.

FORWARD-LOOKING STATEMENTS

This press release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of risks and uncertainties. Actual results may differ materially from those in the forward-looking statements as a result of a number of factors, including those described in the Company’s filings with the U.S. Securities and Exchange Commission (“SEC”). The Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements speak only as of the date of this press release.

_________________________
1 “Per weighted average common share” data are on a weighted average basis based on the average daily number of shares of common stock outstanding for the period and “per common share” refers to per share of the Company’s common stock.

Source: Eagle Point Credit Company Inc.

Investor and Media Relations:

ICR

203-340-8510

IR@EaglePointCredit.com

www.eaglepointcreditcompany.com

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