Eagle Point Credit Company · NYSE:ECC
Eagle Point Credit — Q1 2024 Earnings Presentation
37 slides from Eagle Point Credit's earnings presentation, May 21, 2024
Slide 1: Eagle Point Credit Company Quarterly Update – Q1 2024
EAGLE POINT CREDIT COMPANY QUARTERLY UPDATE – Q1 2024 MAY 21, 2024
Slide 2: Important Information
I M PO RT AN T I N F O RM AT I O N This presentation and the information and views included herein do not constitute investment advice, or a recommendation or an offer to enter into any transaction with Eagle Point Credit Company Inc. (“ECC” or the “Company”) or any of its affiliates. This presentat
Slide 3: Table of Contents
T AB L E O F CO N T E N T S 1. Introduction to Eagle Point Credit Company (ECC) 2. Senior Investment Team and Investment Process 3. CLO Equity Overview 4. ECC Supplemental Information 5. Selected Market Data 2
Slide 4: Introduction to Eagle Point Credit Company (ECC)
INTRODUCTION TO EAGLE POINT CREDIT COMPANY(ECC)
Slide 5: Company and Adviser Overview
I N T RO D U CT I O N T O E CC Company and Adviser Overview The Company: Eagle Point Credit Company Inc. (ECC) IPO Date October 7, 2014 Primary Investment To generate high current income by investing primarily in equity and junior debt tranches Objective of collateralized loan obligations, or “C
Slide 6: ECC Highlights
I N T RO D U CT I O N T O E CC ECC Highlights CLO Equity is an The Credit Suisse Leveraged Loan Index has generated positive total returns in 29 of the Attractive Asset Class past 32 full calendar years1 Eagle Point believes CLO equity provides an attractive way to obtain exposure to senior secu
Slide 7: Cumulative Common Stock Distributions
I N T RO D U CT I O N T O E CC Cumulative Common Stock Distributions ECC currently pays a monthly regular distribution of $0.14 per share and a variable supplemental distribution of $0.02 per share1 ECC Cumulative Distributions Per Share2 $25 $19.99 $20.47 $20 $18.13 $15.76 $14.12 $15 $12.80 $10.40
Slide 8: Track Record: Common Stock Total Return and Price to Book Ratio
I N T RO D U CT I O N T O E CC Track Record: Common Stock Total Return and Price to Book Ratio For the period of October 7, 2014 – April 30, 2024: ECC generated a total return1 of 119.3% versus 115.67% for the S&P BDC Index2 (annualized net total return of 8.55% for ECC versus 8.36% for the S&P BD
Slide 9: ECC By The Numbers
I N T RO D U CT I O N T O E CC ECC By The Numbers Number of 19.1% 134 Current Resets Refis Re-Pricings Calls Monthly Distribution 2 $0.16 1 Distribution Rate 1 Exposure to 20 97.4% Average Years of CLO Experience of Senior Floating Rate Investment Team Senior Secured Loans 3 Number of Underlying Num
Slide 10: Securities Outstanding
I N T RO D U CT I O N T O E CC Securities Outstanding Advisor and Senior Investment Team have approximately $15.7million invested in ECC, ECCC and ECCX1 Common Stock Preferred Stock and Unsecured Notes NYSE Ticker ECC NYSE Ticker ECCC ECC PRD ECCF ECCV ECCW ECCX Series C Series D Series F Term Unsec
Slide 11: Senior Investment Team and Investment Process
SENIOR INVESTMENT TEAM AND INVESTMENT PROCESS
Slide 12: Senior Investment Team
I N V E S T M E N T PRO CE S S Senior Investment Team Thomas Majewski Daniel Ko Daniel Spinner, CAIA Founder and Managing Senior Principal and Portfolio Senior Principal and Portfolio Partner Manager Manager 28 Years of Experience 18 Years of Experience 27 Years of Experience Background Background B
Slide 13: Private Equity Approach to Fixed Income Investing
I N V E S T M E N T PRO CE S S Private Equity Approach to Fixed Income Investing Eagle Point employs a process that we believe is more akin to a private equity-style investment approach than the typical process used by many investors in fixed income securities Proactive sourcing of investment oppo
Slide 14: CLO Equity Overview
EAGLE POINT CREDIT COMPANY
Slide 15: Why Invest in CLO Equity?
CL O E Q U I T Y O V E RV I E W Why Invest in CLO Equity? Eagle Point believes that CLO equity provides an attractive way to obtain exposure to loans Distribution of CLO Equity IRRs CLO Equity Attributes U.S. CLOs (2002 – 2011 Vintages)1 CLO equity has historically generated strong absolute Pote
Slide 16: The CLO Market is Large and Important to the Loan Market
CL O E Q U I T Y O V E RV I E W The CLO Market is Large and Important to the Loan Market The CLO market is the largest source of capital for the U.S. senior secured loan market1 U.S. Leveraged Loans Outstanding1 U.S. CLOs Outstanding2 CLOs Oustanding ($B) CLO Count (#) $1,500 $1,416 $1,399 $1,100 $1
Slide 17: Positive Loan Market Track Record
CL O E Q U I T Y O V E RV I E W Positive Loan Market Track Record From 1992 through 2023, the CSLLI generated positive total returns in 29 of the 32 full calendar years Credit Suisse Leveraged Loan Index (“CSLLI”) Annual Total Return1 44.9% Annualized Return: 5.8%1 13.0% 11.2% 11.0% 10.3% 10.0% 9.9%
Slide 18: Senior Secured Loans are the Raw Materials of CLOs
CL O E Q U I T Y O V E RV I E W Senior Secured Loans are the Raw Materials of CLOs Senior Secured Loans Represent “Pure” Credit Exposure Illustrative Underlying Loan Obligors in CLOs3 Senior Senior position in a company’s capital structure Secured First lien security interest in a company’s assets F
Slide 19: The Spread in Loan Market Remains at High End of Historical Range
CL O E Q U I T Y O V E RV I E W The Spread in Loan Market Remains at High End of Historical Range Historical Leveraged Loan Spreads 450 bps Spread Long Term Average Ten Year Average Ten Year Average: 370 bps 409 398 392 400 bps Long Term Average: 391 386 386 387 315 bps 376 361 369 352 357 359 358 3
Slide 20: Loan Market Repayment Rate
CL O E Q U I T Y O V E RV I E W Loan Market Repayment Rate Loan repayments provide capital for reinvestment within CLOs Annual Repayment Rate Annual Repayment Rate Average 60% 56.4% Average: 48.9% 30.3% 48.2% 46.9% 44.7% 40.1% 40% 38.7% 38.1% 37.3% 29.6% 30.0% 26.9% 27.6% 23.6% 24.1% Cumulative 21.7
Slide 21: CLOs are Securitizations of a Portfolio of Senior Secured Loans
CL O E Q U I T Y O V E RV I E W CLOs are Securitizations of a Portfolio of Senior Secured Loans The Company invests primarily in the equity and subordinated debt tranches Assets Liabilities + Equity Key CLO Structural Features Senior Debt Typically AAA rated 1. Actively managed portfolio Primarily F
Slide 22: ECC Supplemental Information
ECC SUPPLEMENTAL INFORMATION
Slide 23: Income Statement and Balance Sheet Highlights
E CC S U PPL E M E N T AL I N F O RM AT I O N 1 Income Statement and Balance Sheet Highlights Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) U.S. GAAP Net Investment Income ("NII") before Non-Recurring Expenses2 0.30 $0.33 $0.33 $0.32 $0.34 U.S. G
Slide 24: Distribution and Expense Coverage
E CC S U PPL E M E N T AL I N F O RM AT I O N 1 Distribution and Expense Coverage ECC Portfolio Recurring Cash Flows2 CASH DISTRIBUTIONS RECEIVED3 $0.90 RECURRING PORTFOLIO $0.82 $0.77 $0.74 $0.21 $0.14 $0.70 $0.10 $0.10 $0.21 $0.19 $0.20 $0.22 $0.22 $0.42 $0.48 $0.48 $0.48 $0.48 Q1 2023 Q2 2023 Q3
Slide 25: Quarterly Snapshot Trend
E CC S U PPL E M E N T AL I N F O RM AT I O N 1 Quarterly Snapshot Trend Q1 2024 Q4 2023 Q3 2023 Q2 2023 Q1 2023 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Figures below are in millions, except for per share amounts and shares outstanding) Distributions Received From CLO Equity2,3
Slide 26: Portfolio Details – Q1 2024
E CC S U PPL E M E N T AL I N F O RM AT I O N 1 Portfolio Details – Q1 2024 Income Weighted Years Remaining Cash Received Income Accrued Return of Capital Q1 Cash Received Weighted CLO Equity Holdings Years Remaining in Accrued CCC+ Senior AAA Average Diversity Vintage Refi/Reset/Call in Reinvestmen
Slide 27: Portfolio Details – Q1 2024 (Cont.)
E CC S U PPL E M E N T AL I N F O RM AT I O N 1 Portfolio Details – Q1 2024 (Cont.) Weighted Years Remaining Years Remaining in Income CLO Equity Holdings Cash Received Income Accrued Return of Capital Q1 Cash Received as CCC+ Senior AAA Average Weighted Average Vintage Refi/Reset/Call in Non-Call R
Slide 28: Changes in Effective Yield
E CC S U PPL E M E N T AL I N F O RM AT I O N 1 Changes in Effective Yield The following table represents changes made to effective yields from the prior quarter end CLO Equity Holdings Effective Yield Effective Yield Change in Effective CLO Equity Holdings Effective Yield Effective Yield Change in
Slide 29: Changes in Effective Yield
E CC S U PPL E M E N T AL I N F O RM AT I O N 1 Changes in Effective Yield The following table represents changes made to effective yields from the prior quarter end CLO Equity Holdings Effective Yield Effective Yield Change in Effective CLO Equity Holdings Effective Yield Effective Yield Change in
Slide 30: Portfolio Investments and Underlying Portfolio Characteristics
E CC S U PPL E M E N T AL I N F O RM AT I O N Portfolio Investments and Underlying Portfolio Characteristics As of March 31, 2024 ECC’s portfolio was invested across 212 CLO investments Summary of ECC’s Portfolio of Investments1 Cash 5.0% Other 3.5% Regulatory Capital CLO Equity 69.4% Relief 3.7% Lo
Slide 31: Obligor and Industry Exposures
E CC S U PPL E M E N T AL I N F O RM AT I O N Obligor and Industry Exposures As of March 31, 2024, ECC has exposure to 1,793 unique underlying borrowers across a range of industries Obligor and Industry Exposure Top 10 Underlying Obligors1 % Total Top 10 Industries of Underlying Obligors1 % Total As
Slide 32: Maturity Distribution of Underlying Obligors
E CC S U PPL E M E N T AL I N F O RM AT I O N Maturity Distribution of Underlying Obligors Maturity Distribution of Underlying Obligors1 40% 39.0% 30% % of Fund Exposure 20% Prior to 2026, only 3.6% of ECC’s underlying loan 16.2% 15.1% portfolio matures 11.6% 10% 7.6% 6.9% 3.3% 0.3% 0% 2024 2025 202
Slide 33: Selected Market Data
EAGLE POINT CREDIT COMPANY
Slide 34: Credit Fundamentals
S E L E C T E D M ARK E T D AT A Credit Fundamentals Average Leverage Multiples of Outstanding Loans Average Interest Coverage Multiples of Outstanding Loans (Debt/EBITDA)1 (EBITDA/Interest)1 5.8x 5.9x 5.6x 5.1x 4.8x 5.5x 4.8x 4.5x 4.8x 5.4x 5.3x 5.1x 5.3x 5.3x 5.1x 4.6x 5.2x 4.1x 4.5x 4.3x 5.0x 5.0
Slide 35: Credit Fundamentals
1. 1Q11 19.6% 4Q11 14.0% 2Q11 17.0% 1Q12 12.0% 3Q11 14.8% 2Q12 9.0% 4Q11 9.6% 3Q12 10.0% 1Q12 12.8% Source: Pitchbook LCD. 4Q12 9.0% outstanding loans. 2Q12 12.2% 1Q13 10.0% 3Q12 9.3% 2Q13 9.0% 4Q12 8.3% 3Q13 11.0% 1Q13 6.8% 4Q13 13.0% 2Q13 6.1% Credit Fundamentals 1Q14 16.0% 3Q13 6.8% 4Q13 8.8% 2Q1
Slide 36: Liquidity Considerations
S E L E C T E D M ARK E T D AT A Liquidity Considerations Secondary trading is conducted through BWICs (“Bids Wanted in Competition”) and privately negotiated sales CLO debt and equity tranches typically settle electronically via DTC and trade on a T+2 basis Annual CLO Trading Volume $200.4 $200
Slide 37: Company Information
COMPANY INFORMATION Eagle Point Credit Company Inc. 600 Steamboat Road, Suite 202 Greenwich, CT 06830 www.EaglePointCreditCompany.com ICR (Media and Investor Relations) [email protected] (203) 340 8510
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