Eagle Point Credit Company Inc. (the “Company”)
(NYSE: ECC, ECCB, ECCC, ECC PRD, ECCV, ECCW, ECCX) today announced
financial results for the quarter and fiscal year ended December
31, 2021, net asset value (“NAV”) as of December 31, 2021, and
certain additional activity through February 11, 2022.
FOURTH QUARTER AND FULL YEAR 2021 HIGHLIGHTS
- Net investment income (“NII”) and realized capital losses of
$0.37 per weighted average common share1 for the fourth quarter,
net of $0.07 per share of non-recurring expenses and losses.
- NAV per common share of $13.39 as of December 31, 2021.
- Fourth quarter GAAP net income (inclusive of unrealized
mark-to-market losses) of $7.3 million, or $0.20 per weighted
average common share.
- Weighted average effective yield of the Company’s
collateralized loan obligation (“CLO”) equity portfolio (excluding
called CLOs), based on amortized cost, was 17.04% as of December
31, 2021. Weighted average expected yield of the Company’s CLO
equity portfolio (excluding called CLOs), based on fair market
value, was 18.61% as of December 31, 20212.
- Deployed $24.7 million in net capital into CLO equity and debt
investments and received $47.8 million in recurring cash
distributions3 from the Company’s investment portfolio.
- 3 of the Company’s CLO equity positions were reset and 2 of the
Company’s CLO equity positions were refinanced.
- Issued 2,162,729 shares of common stock and 211,226 shares of
Series C Term Preferred Stock due 2031 (“Series C Term Preferred
Stock”), pursuant to the Company’s “at-the-market” offering
program, for total net proceeds of approximately $35.6
million.
- Completed an underwritten public offering of $25.0 million in
aggregate principal amount of 6.75% Series D Preferred Stock (“ECC
PRD” or “Series D Preferred Stock”), resulting in net proceeds to
the Company of approximately $23.9 million.
- Redeemed 1,078,383 shares (or 50% of shares outstanding) of
7.75% Series B Term Preferred Stock due 2026 (“ECCB” or “Series B
Term Preferred Stock”).
SUBSEQUENT EVENTS
- NAV per common share is estimated to be between $13.42 and
$13.52 as of January 31, 2022. At the midpoint of the range, this
represents an increase of 0.6% from December 31, 2021.
- Received $39.1 million of recurring cash distributions from the
Company’s investment portfolio during January 2022.
- From January 1, 2022 to February 11, 2022, deployed $28.9
million in net capital into CLO equity and debt investments.
- From January 1, 2022 to February 11, 2022, issued 2,426,061
shares of common stock, 161,726 shares of Series C Term Preferred
Stock, and 70,088 shares of Series D Preferred Stock pursuant to
the Company’s “at-the-market” offering program, for total net
proceeds of approximately $39.0 million.
- Completed an underwritten public offering, including partial
exercise of the underwriters’ overallotment option, of $93.3
million in aggregate principal amount of 5.375% notes due 2029
(“ECCV”), resulting in net proceeds to the Company of approximately
$89.9 million.
- Fully redeemed 6.75% notes due 2027 (“ECCY”) and redeemed 50%
of 6.6875% notes due 2028 (“ECCX”); announced full redemption of
the Series B Term Preferred Stock to be completed on February 28,
2022.
- Paid a special distribution to common stockholders of $0.50 per
share on January 24, 2022 to stockholders of record as of December
23, 2021.
- Declared a 17% increase in common stock monthly distributions
to $0.14 per share beginning in April 2022.
“We closed out 2021 with another excellent quarter, with NII and
realized losses before non-recurring items of $0.44 per share. Once
again, this amount exceeded our common distribution level and our
portfolio generated strong recurring cash flows, enabling us with
confidence to increase our monthly common distribution to $0.14 per
share,” said Thomas Majewski, Chief Executive Officer. “For the
full year 2021, the Company increased its NAV per share by 20% and
generated a GAAP ROE of 36%.”
“Importantly, we made significant strides in the last few months
to proactively strengthen our balance sheet and liquidity,
positioning us well for a rising rate environment,” added Mr.
Majewski. “We successfully completed underwritten offerings of
6.75% ECC PRD perpetual preferred stock and 5.375% ECCV notes, the
latter of which was accomplished at our lowest cost of capital to
date. The proceeds are being used to retire our higher-cost ECCB
preferred stock, ECCY notes and half of our ECCX notes, enabling us
to achieve significant savings moving forward. With 100% fixed-rate
financing, no debt maturities prior to 2028 once we retire the ECCB
preferred stock, and approximately $31.1 million in cash as of
February 11, 2022, we remain well positioned to take advantage of
additional investment opportunities as we seek to generate
attractive risk-adjusted returns.”
FOURTH QUARTER 2021 RESULTS
The Company’s NII and realized capital losses for the quarter
ended December 31, 2021 was $0.37 per weighted average common
share. This compared to $0.39 of NII and realized capital gains per
weighted average common share for the quarter ended September 30,
2021, and NII less realized capital losses resulting in a net loss
of $0.80 per weighted average common share for the quarter ended
December 31, 2020.
NII and realized capital losses for the quarter ended December
31, 2021 is net of non-recurring losses of $0.02 per share related
to the acceleration of unamortized issuance costs associated with
the partial redemption of the Series B Term Preferred Stock, as
well as a liability for estimated excise tax of $0.05 per
share.
For the quarter ended December 31, 2021, the Company recorded
GAAP net income of $7.3 million, or $0.20 per weighted average
common share. Net income was comprised of total investment income
of $27.1 million, partially offset by total net unrealized
depreciation (or unrealized mark-to-market losses in the value of
the Company’s investments and certain liabilities at fair value) of
$6.2 million, realized capital losses of $0.2 million and net
expenses of $13.4 million.
NAV as of December 31, 2021 was $502.3 million, or $13.39 per
common share, which is $0.59 per common share lower than the
Company’s NAV as of September 30, 2021, and $2.21 per common share
higher than the Company’s NAV as of December 31, 2020.
During the quarter ended December 31, 2021, the Company deployed
$24.7 million in net capital into CLO equity and debt investments,
and converted 1 loan accumulation facility into a CLO. 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 16.8% as measured at the time of investment.
During the quarter ended December 31, 2021, the Company received
$47.8 million of recurring cash distributions from its investment
portfolio, or $1.32 per weighted average common share, which was
well in excess of the Company’s aggregate distributions on its
common stock and operating costs for the quarter.
During the quarter ended December 31, 2021, 3 of the Company’s
CLO equity investments were reset and 2 of the Company’s CLO equity
investments were refinanced.
As of December 31, 2021, based on amortized cost, the weighted
average effective yield on the Company’s CLO equity portfolio
(excluding called CLOs) was 17.04%, compared to 16.35% as of
September 30, 2021 and 11.05% as of December 31, 2020.
Pursuant to the Company’s “at-the-market” offering, the Company
sold 2,162,729 shares of common stock and 211,226 shares of Series
C Term Preferred Stock during the fourth quarter for total net
proceeds to the Company of approximately $35.6 million.
FULL YEAR 2021 HIGHLIGHTS AND PORTFOLIO STATUS
For the fiscal year ended December 31, 2021, the Company
recorded net income of $131.7 million. Fiscal year net income was
comprised of total investment income of $88.5 million, total net
unrealized appreciation (or unrealized mark-to-market gains in the
value of the Company’s investments and certain liabilities at fair
value) of $84.6 million and net realized capital gains on
investments of $3.4 million, partially offset by realized losses
associated with the extinguishment of preferred stock of $0.8
million and net expenses of $44.0 million. For the year, the
Company’s GAAP return on common equity, or ROE, was 36%4.
For the fiscal year ended December 31, 2021, the Company
received $159.8 million of recurring cash distributions from its
investment portfolio, or $4.67 per weighted average common share.
When including proceeds from called investments, the Company
received cash distributions of $164.5 million, or $4.81 per
weighted average common share.
As of December 31, 2021, 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 1,829 unique
corporate obligors. The largest look-through obligor represented
0.8% of the Company’s CLO equity and loan accumulation facility
portfolio. The top-ten largest look-through obligors together
represented 5.7% of the Company’s CLO equity and loan accumulation
facility portfolio.
The look-through weighted average spread of the loans underlying
the Company’s CLO equity and related investments was 3.55% as of
December 2021, an increase of two basis points from 3.53% as of
September 2021.
As of December 31, 2021, the Company had debt and preferred
securities outstanding which totaled approximately 32% of its total
assets (less current liabilities). Over the long-term, management
expects to operate the Company generally with leverage within a
range of 25% to 35% of total assets under normal market conditions.
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 2022 PORTFOLIO ACTIVITY THROUGH FEBRUARY 11,
2022 AND OTHER UPDATES
During January, the Company received $39.1 million of recurring
cash distributions from its investment portfolio. As of January 31,
2022, some of the Company’s investments had not yet reached their
payment date for the quarter. From January 1, 2022 to February 11,
2022, the Company deployed $28.9 million in net capital into CLO
debt and equity investments.
As of February 11, 2022, the Company had approximately $31.1
million of cash available for investment.
Pursuant to the Company’s “at-the-market” offerings, the Company
issued 2,426,061 shares of common stock, 161,726 shares of Series C
Term Preferred Stock and 70,088 shares of Series D Preferred Stock
from January 1, 2022 to February 11, 2022 for total net proceeds to
the Company of approximately $39.0 million.
As previously published on the Company’s website, management’s
estimate of the range of the Company’s NAV per common share as of
January 31, 2022 was $13.42 to $13.52.
DISTRIBUTIONS
The Company paid a monthly distribution of $0.12 per common
share on January 31, 2022 to stockholders of record as of January
11, 2022. Additionally, and as previously announced, the Company
declared distributions of $0.12 per share of common stock payable
on February 28, 2022 and March 31, 2022 to stockholders of record
as of February 8, 2022 and March 11, 2022, respectively, and
distributions of $0.14 per share of common stock payable on April
29, 2022, May 31, 2022 and June 30, 2022 to stockholders of record
as of April 11, 2022, May 11, 2022 and June 10, 2022, respectively.
The ability of the Company to declare and pay distributions is
subject to a number of factors, including the Company’s results of
operations.
The Company paid a monthly distribution of $0.161459 per share
of the Series B Term Preferred Stock (NYSE: ECCB) on January 31,
2022, to stockholders of record as of January 11, 2022. The
distribution represented a 7.75% annualized rate, based on the $25
liquidation preference per share for the Series B Term Preferred
Stock. As previously announced, the Company will redeem all of the
outstanding shares of Series B Term Preferred Stock on February 28,
2022. The redemption price of the Series B Term Preferred Stock
will be $25 per share, plus an amount equal to all unpaid dividends
and distributions on each shares accumulated to, but excluding the
Series B Term Preferred Stock redemption date, without interest
thereon.
The Company paid a distribution of $0.135417 per share of the
Series C Term Preferred Stock (NYSE: ECCC) on January 31, 2022, to
stockholders of record as of January 11, 2022. The distribution
represented a 6.50% annualized rate, based on the $25 liquidation
preference per share for the Series C Term Preferred Stock.
Additionally, and as previously announced, the Company declared
distributions of $0.135417 per share on its Series C Term Preferred
Stock, payable on each of February 28, 2022, March 31, 2022, April
29, 2022, May 31, 2022 and June 30, 2022 to stockholders of record
as of February 8, 2022, March 11, 2022, April 11, 2022, May 11,
2022 and June 10, 2022, respectively.
The Company paid a distribution of $0.140625 per share of the
Series D Preferred Stock (NYSE: ECC PRD) on January 31, 2022, to
stockholders of record as of January 11, 2022. The distribution
represented a 6.75% annualized rate, based on the $25 liquidation
preference per share for the Series D Preferred Stock.
Additionally, and as previously announced, the Company declared
distributions of $0.140625 per share on its Series D Preferred
Stock, payable on each of February 28, 2022, March 31, 2022, April
29, 2022, May 31, 2022 and June 30, 2022 to stockholders of record
as of February 8, 2022, March 11, 2022, April 11, 2022, May 11,
2022 and June 10, 2022, respectively.
Distributions on stock are generally paid from net investment
income (regular interest and dividends) and may also include
capital gains and/or a return of capital. The specific tax
characteristics of the distributions will be reported to the
Company’s stockholders on Form 1099 after the end of the calendar
year.
SPECIAL DISTRIBUTION
For the Company’s tax year ended November 30, 2021, the Company
estimates taxable income will exceed the aggregate amount
distributed to common stockholders for the same time period. As a
result, the Company paid a special distribution of $0.50 per common
share on January 24, 2022 to stockholders of record as of December
23, 2021. The Company’s final taxable income and the actual amount
required to be distributed in respect of the tax year ended
November 30, 2021 will be finally determined when the Company files
its final tax returns and the Company expects that its final
taxable income will exceed amounts already distributed in respect
of the 2021 tax year. The Company has incurred a 4% excise tax on
the estimated amount of remaining undistributed taxable income
pertaining to the 2021 tax year which is estimated to be $0.05 per
weighted average common share and which is recorded as a liability
in the Company’s December 31, 2021 financial results.
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 full year ended December 31, 2021, as well as a
portfolio update.
All interested parties may participate in the conference call by
dialing (877) 407-0789 (toll-free) or (201) 689-8562
(international), and referencing Conference ID 13726312
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 17, 2022. To hear the replay, please dial
(844) 512-2921 (toll-free) or (412) 317-6671 (international). For
the replay, enter Conference ID 13726312.
ADDITIONAL INFORMATION
The Company has made available on the investor relations section
of its website, www.eaglepointcreditcompany.com (in the financial
statements and reports section), its 2021 Annual Report, which
includes the Company’s audited consolidated financial statements as
of and for the period ended December 31, 2021. The Company also
published on its website (in the presentations and events 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, 2021. 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 primary investment objective is
to generate high current income, with a secondary objective to
generate capital appreciation, primarily by investing 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 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 per share 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. 2 Weighted average effective yield is based on an
investment’s amortized cost whereas weighted average expected yield
is based on an investment’s fair market value as of the applicable
period end as disclosed in the Company’s financial statements,
which is subject to change from period to period. Please refer to
the Company’s audited financial statements for additional
disclosures. 3 “Recurring cash distributions” refers to the
quarterly distributions received by the Company from its CLO equity
and debt investments and distributions from loan accumulation
facilities in excess of capital invested and excludes funds
received from CLOs called. 4 Return on the Company’s common equity
reflects the Company’s cumulative monthly performance net of
applicable expenses and fees measured against beginning capital
adjusted for any common equity issued during the period.
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version on businesswire.com: https://www.businesswire.com/news/home/20220217005371/en/
Investor and Media Relations: ICR 203-340-8510
IR@EaglePointCredit.com www.eaglepointcreditcompany.com
Eagle Point Credit (NYSE:ECCW)
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