Eagle Point Income Co Inc.(US:EIC)2026-02-26 17:30Financial Data and Key Metrics Changes - In 2025, the company generated a GAAP return on equity of negative 0.7% and a total return on common stock of negative 15.2%, assuming reinvestment of distributions [5] - The company paid $1.98 per share in cash distributions, representing 15% of the average stock price during the year [5] - The net investment income for the fourth quarter was $0.35 per share, down from $0.39 per share in the prior quarter [7] - The GAAP net loss for the fourth quarter was $15 million or $0.60 per share, compared to a GAAP net income of $0.43 per share in the third quarter [18] Business Line Data and Key Metrics Changes - Paydowns within the CLO debt portfolio totaled $147 million during 2025, contributing to early repayments [5] - The company participated in 10 resets and 6 refinancings across its CLO equity portfolio, resulting in average CLO debt cost savings of 46 basis points [6] - Recurring cash flows for the fourth quarter totaled $19 million or $0.79 per share, an 18% increase quarter-over-quarter [8] Market Data and Key Metrics Changes - The trailing twelve-month default rate decreased from 1.5% at the end of September to 1.2% as of December 31st, below the long-term average of 2.6% [14] - CLO new issuance rose to $55 billion in the fourth quarter, totaling $209 billion for 2025, surpassing the previous year's record [15] - The S&P UBS Leveraged Loan Index posted a 1.2% return for the fourth quarter and a 5.9% return for the entirety of 2025 [13] Company Strategy and Development Direction - The company actively managed its portfolio, seeking opportunities across CLO debt and equity, as well as other asset classes beyond CLOs [4] - The company plans to continue its share repurchase program, viewing its stock as undervalued and an attractive use of capital [11] - The management believes the current market environment represents a compelling opportunity for patient, well-capitalized investors [24] Management's Comments on Operating Environment and Future Outlook - Management noted that the CLO market faced challenging conditions, with reduced SOFR levels impacting CLO debt investment income and ongoing loan spread compression affecting CLO equity [4] - The company remains constructive on CLO market fundamentals, with a robust pipeline of refinancings and resets expected to lower liability costs [24] - Management emphasized the importance of active portfolio management amid dynamic market conditions, focusing on relative value and disciplined capital allocation [22] Other Important Information - The company's NAV decreased to $13.31 per share as of December 31st, down from $14.21 per share at the end of September [8] - The company completed the full redemption of its 7.75% Series B Term Preferred Stock and announced plans to redeem the 8% Series C Term Preferred Stock [10] Q&A Session Summary Question: Follow-up on realized losses due to underperforming managers - Management indicated that underperforming collateral managers faced credit issues and loan spread compression, leading to a rotation into better-performing CLOs and other asset classes [26][28] Question: Source of funds for redeeming Series C Term Preferred Stock - Management confirmed that the redemption would be funded through a combination of cash on hand and the new revolving credit facility [29] Question: Non-recurring items in earnings - Management stated there were no non-recurring items in the earnings for the quarter [35] Question: Expectation of balance sheet investment portfolio shrinkage - Management clarified that while redeeming preferred stock, they have been opportunistically buying back stock and do not expect a significant shrinkage in the investment portfolio [36] Question: Focus on alternative credit assets - Management explained that investments in alternative credit assets are made across the Eagle Point platform, with dedicated teams focusing on these opportunities [37][39]