ECC — Eagle Point Credit Company Inc.

Summary of Eagle Point Credit Company (ECC) Q1 2026 Earnings Call

1. Key Financial Results and Metrics:

• Net Asset Value (NAV): Decreased by 26.8% to $4.17 per share from $5.70 at year-end.
• GAAP Return on Equity: Recorded at -20.2%.
• Net Investment Income (NII): $19 million or $0.14 per share, down from -$0.26 per share in Q1 2025.
• GAAP Net Loss: $148 million or $1.12 per share, compared to a loss of $0.84 per share in the previous quarter.
• Recurring Cash Flows: $62 million or $0.47 per share, which was $0.11 short of total distributions.
• Distributions: Paid $0.42 per share in cash distributions; declared $0.06 per share for the second quarter.
• Leverage Ratio: Pro forma leverage at 47% as of April 30, targeting a long-term range of 27.5% to 37.5%.

2. Strategic Updates and Business Highlights:

• CLO Equity Exposure: Represented 67% of the portfolio, with 31% in other credit asset classes and the remainder in cash.
• Investment Deployment: $100 million deployed at a weighted average yield of 18.9%, focusing on discounted loans amid market volatility.
• Portfolio Management: Completed 4 resets and 3 refinancings, achieving a 43 basis point reduction in CLO debt costs and extending reinvestment periods to an average of 3.4 years.
• Diversification Strategy: Increased exposure to infrastructure credit and other structured investments to enhance income and diversification.

3. Forward Guidance and Outlook:

• NAV Recovery: NAV rebounded to between $4.49 and $4.59 per share in April, indicating a nearly 9% increase.
• Market Conditions: Management believes the current environment presents attractive opportunities despite first-quarter challenges, with expectations of improved loan pricing and continued strong credit fundamentals.
• Investment Focus: Plans to allocate capital to high-quality CLO equity and complementary credit investments to generate durable returns.

4. Bad News, Challenges, or Points of Concern:

• Market Volatility: The ongoing war in Iran and declining loan prices, particularly in the software sector, negatively impacted performance.
• CLO Valuations: Experienced declines due to market dislocation, although management views this as a potential opportunity for reinvestment.
• Credit Loss Provisions: Concerns about geopolitical and macroeconomic uncertainties affecting credit loss provisions, with a standard default rate and variable adjustments based on market conditions.

5. Notable Q&A Insights:

• Credit Loss Provisions: Management indicated a standard default rate is maintained, with variable adjustments based on current market conditions.
• NAV Increase Drivers: The April NAV increase was attributed to improved credit fundamentals and market sentiment, particularly in the software sector.
• Investment Strategy: 75% of new investments in Q1 were in non-CLO assets, with a focus on longer reinvestment periods for new purchases.
• Sustainability of Dividends: The current distribution level is aligned with NII, and management believes it is sustainable based on historical earnings power.

Overall, while ECC faced significant challenges in Q1 2026, including a sharp decline in NAV and market volatility, management remains optimistic about future opportunities and the potential for recovery in the credit markets.