Eagle Point (EIC) Q1 2026 Earnings Transcript

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DATE

Tuesday, May 19, 2026 at 11:30 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Thomas Philip Majewski
• Senior Principal and Portfolio Manager — Daniel Ko
• Chief Accounting Officer — Lena Umnova

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TAKEAWAYS

• Net Asset Value (NAV) -- $11.99 per share at quarter end, down from $13.31 per share at prior year end, primarily due to negative mark-to-market adjustments on CLO debt holdings.
• GAAP Return on Equity -- Negative 7.2% reflecting the impact of wider spreads and weaker risk appetite for CLO junior debt.
• Net Investment Income (NII) -- $0.36 per share, an increase from $0.35 per share in the prior period; both figures exceeded per-share distribution payments of $0.33.
• Recurring Portfolio Cash Flows -- $40 million, or $0.62 per share, exceeding both distributions and total expenses.
• New Investment Deployment -- $56 million invested at a weighted average effective yield of 16.0%, spanning multiple credit asset classes.
• Share Repurchases -- Nearly 390,000 shares repurchased at a 19.3% average discount to NAV, generating NAV accretion of $0.04 per share in the quarter.
• Cumulative Buybacks -- Since June 2025, $50 million in common shares repurchased at an average 13.0% NAV discount, adding $0.26 per share in NAV accretion (total does not sum to quarterly figure, reflecting broader buyback period).
• Preferred Stock Activity -- Issuance of 6.00% Series AA and AB convertible perpetual preferred stock and redemption of 8.00% Series C term preferred, lowering cost of capital and extending maturity profile.
• CLO Portfolio Actions -- Executed 4 resets and 2 refinancings of CLO equity positions, reducing weighted average CLO debt cost by 48 basis points and extending reinvestment periods to 5 years.
• April NAV Update -- Management estimates NAV increased to $12.48–$12.58 per share, a midpoint increase of 4.5% from March 31.
• Portfolio Composition -- Increased exposure to infrastructure credit, regulatory capital relief transactions, portfolio debt securities, and other structured and private credit holdings.
• Leverage -- Preferred equity securities constituted 34% of total assets less current liabilities, staying within the Board's long-term 25%-35% target range.

SUMMARY

Management described a quarter of market-driven NAV pressure on CLO debt valuations, offset by higher NII and substantial recurring portfolio cash flows. Board actions drove further capital efficiency by issuing new perpetual preferred shares and redeeming higher-cost Series C preferred, emphasizing a strategy focused on decreasing financing costs. Initiatives in portfolio management included resets and refinancings that extended reinvestment periods and delivered measurable debt cost savings. The company reported opportunistic diversification into non-CLO credit exposures and stated that recent share repurchases had continued to deliver NAV accretion. April's unaudited NAV rebound was mentioned as evidence of near-term valuation recovery, though ongoing diligence was being placed on software exposure risks and evolving sector fundamentals.

• Majewski said, "the company was not immune to these broader dynamics," referencing both volatility and the company's reliance on observable market pricing for larger syndicated loans.
• Ko explained that the trailing twelve-month default rate was 1.4%, "well below the long term average of 2.5%," with no significant increase in healthcare-related defaults reported.
• Management highlighted that 75% of software-related loans in the portfolio were trading above 90, suggesting "pretty decent kind of par building opportunities" despite sector caution.
• Executives confirmed the buyback program remains active, but Majewski noted, "I would no longer say right now we are aggressively buying back stock. But the program is open and active."
• CLO market issuance reached $47 billion for the quarter, with reset and refinancing activity showing mixed trends compared to previous periods.

INDUSTRY GLOSSARY

• CLO (Collateralized Loan Obligation): A structured financial vehicle backed by pools of syndicated corporate loans, often with multiple tranches carrying varying risk and return profiles.
• Syndicated Loan: A large loan provided by a group of lenders and structured, arranged, and administered by one or several commercial or investment banks.
• Basis Point: A unit equal to 1/100th of a percentage point, used in reference to changes in interest rates or debt costs.
• SOFR (Secured Overnight Financing Rate): The reference rate for floating-rate debt in the U.S., including many CLO securities.
• Regulatory Capital Relief Transaction: A credit transaction structure designed to help banks or other lenders manage or reduce their regulatory capital requirements by transferring risk to investors.

Full Conference Call Transcript

Thomas Philip Majewski, chairman and chief executive officer of the company, Daniel Ko, senior principal and portfolio manager for the company's adviser and Lena Umnova, chief accounting officer for the adviser. Before we begin, I would like to remind everyone that the matters discussed on this call include forward-looking statements or projected financial information that involve risks and uncertainties that may cause the company's actual results to differ materially from such projections. For further information on factors that could impact the company and the statements and projections contained herein please refer to the company's filings with the SEC.

Each forward-looking statement or projection of financial information made during this call is based on the information available to us as of the date of this call. We disclaim any obligation to update our forward-looking statements unless required by law. Earlier today, we filed our first quarter 26 financial statements and investor presentation, which the Securities and Exchange Commission. These are also available in the Investor Relations section of the company's website eaglepointincome.com. A replay of this call will also be made available later today. I will now turn the call over to Thomas Philip Majewski, chairman and chief executive officer of Eagle Point Income Company. Tom?

Thomas Philip Majewski: Thank you, Darren, and good morning, everyone. We are glad you are joining us today for Eagle Point Income Company's quarterly earnings call. Despite facing some broader market challenges, EIC had a strong first quarter. During the quarter, we had an increase in our net investment income from the prior quarter and our recurring cash flows covered our distributions and our total company expenses. The CLO market faced challenging conditions in much of 2026, and the company was not immune to these broader dynamics.

While CLO fundamentals remained relatively stable, a decline in loan prices especially in the software sector, and a cautious tone across credit markets due to the ongoing war in Ukraine, weighed on our NAV during the quarter. The software sector was a particular area of focus during the quarter, and investors continued to assess the potential impact of artificial intelligence on certain business models and revenue streams. Importantly, however, our exposure is principally through broadly syndicated loans not middle market loans that are commonly found in BDCs. The loans in our CLOs are typically larger, more liquid, institutionally syndicated credits with observable market pricing.

While this observable pricing result in more immediate mark to market volatility during periods of volatility, it provides clarity to investors as to the valuation of the underlying investments. While that volatility impacted quarterly valuations of many CLOs, we believe it also created opportunities for CLO collateral managers to reinvest proceeds from sales and paydowns into discounted loans with attractive forward return potential. While these factors led to a decline in CLO valuations, during the quarter for many securities, we believe the market typically undervalues the reinvestment option embedded in CLOs during times of volatility.

The ability to buy loans at material discounts to par has allowed CLO equity to deliver attractive intermediate and long term returns, many times in the past. In addition, we believe our floating rates CLO junior debt portfolio will benefit from higher income should we see an upward movement in short term rates. With an increase in inflation, more and more in the outlook by many market participants, it seems the potential for a rise in short term rates may be more on the table than we thought even just 3 months ago.

During the quarter, we deployed $56 million in new investments across multiple credit asset classes with a weighted average effective yield of 16.0% as we took advantage of compelling relative value opportunities created by a particularly uncertain macro environment. Throughout the quarter, we continued to actively manage our CLO portfolio by completing 4 resets and 2 refinancings of our CLO equity positions which resulted in weighted average CLO debt cost savings of 48 basis points for those CLOs. In addition to lowering debt costs, the reset positions extended their reinvestment periods to 5 years.

While CLO junior debt remains central to EIC's strategy, we opportunistically increase our exposure to other credit classes including infrastructure credit, regulatory capital relief transactions, portfolio debt securities, and other structured and private credit investments. Eagle Point's platform has a dedicated team with deep specialized expertise across all of these asset classes, and this is a meaningful platform advantage enabling EIC to access to originated investment opportunities increase portfolio diversification, and generate excess returns above traditional CLO securities. NAV decreased to $11.99/share as of March 31. From $13.31/share at year end. The decrease primarily reflects negative mark to market adjustments on the company's CLO debt portfolio.

Driven by wider spreads and weaker risk appetite for CLO junior debt during the quarter. Our GAAP return on equity was negative 7.2%. That said, saw a meaningful rebound in April, and indeed, EIC's NAV increased to be between $12.48 and $12.58 per share. This is a 4.5% increase at the midpoint of the range. Despite the decline in NAV during the first quarter, our net investment income increased quarter over quarter to $0.36/share and that is up from $0.35/share in 2025. Both of these measures are in excess of the $0.33/common share in distributions that we paid. Turning to our capital structure.

During the first quarter, we launched our 6.00% Series AA and Series AB convertible perpetual preferred stock offering. This provides the company with a source of low-cost, long-duration capital and increases our financial flexibility. We are unaware of any other publicly traded entity that invest primarily in CLO debt with perpetual financing. and we consider this to be a material competitive advantage for our company. Subsequent to quarter end, we completed the full redemption of our 8.00% Series C term preferred stock which had been our highest cost debt financing. These actions reflect our continued focus on lowering our cost of capital lengthening our maturity profile, all with the goal to enhancing our long-term earning power.

During the quarter, we repurchased almost 390 thousand shares of our common stock at an average discount to NAV of 19.3%. which resulted in NAV accretion of $0.04/share, And since June 2025, when the board initially announced the share repurchase authorization, through March 31 we have repurchased a total of $50 million of common stock at an average discount of 13.0% of NAV. Resulting in NAV accretion of $0.26/share. We plan to selectively continue our common share buybacks as market opportunities present themselves. We believe the actions we have taken during the quarter together with our current portfolio positioning, leave us well situated for the quarters ahead.

I will now turn the call over to Senior Principal and Portfolio Manager, Daniel Ko, for an update on the market.

Daniel Ko: Thanks, Tom. I will provide a brief update on the loan and CLO markets. In the first quarter, the S&P UBS Leveraged Loan Index fell by 0.5%. But rebounded by 1.2% during the month of April. Despite this mixed performance in loan returns, underlying loan borrower fundamentals have remained stable, as corporate revenue and EBITDA growth remain positive. Supporting overall credit performance across the broadly syndicated loan market. The trailing 12-month default rate ended the period at 1.4%, modestly higher than year end levels, but well below the long term average of 2.5%. While lower loan prices have pressured CLO valuations in the near term, they are also creating a more attractive reinvestment environment.

With many loans trading below par and repricing activity slowing in the first quarter, we saw greater potential for par build, wider spreads on new investments, and improved forward returns. For junior CLO debt securities, we believe this rate environment is constructive. With intermediate and long term rates increasing, we expect short term rates including SOFR, which CLO debt floats off of, to follow. Indeed, the market is pricing in potential Fed rate hikes in the next year. With the potential for higher short term rates junior CLO debt investments continue to offer attractive floating rate income potential which we would expect to support higher income on the portfolio in the future.

In addition, periods of market volatility can create opportunities to purchase CLO debt at discounts. Providing the potential for pull to par as markets normalize. We believe that the combination of income generation structural protection, and potential convexity makes junior CLO debt particularly compelling in the current environment. In terms of CLO new issuance, we saw $47 billion of volume during the quarter, down slightly from $55 billion in 2025. Reset activity for the first quarter was $32 billion down from $54 billion last quarter. While refinancing activity was $24 billion up from $20 billion last quarter. With the broader markets normalizing into the second quarter, we expect CLO volumes to remain robust going forward.

With that, I will hand it over to our advisor's Chief Accounting Officer, Lena Umnova, to walk through our financial results.

Lena Umnova: Thank you, Daniel. During the first quarter, the company generated net investment income or NII of $0.36/share, and NII less realized losses of $0.34/share. This compares to NII less realized losses of $0.03/share last quarter and NII and realized gains of $0.44/share for 2025. Including unrealized portfolio losses, GAAP net loss was $22 million or $0.95/share for 2026. This compares to GAAP net loss of $0.60/share last quarter and a GAAP net loss of $0.46/share for 2025. Recurring cash flows from the company's investment portfolio totaled $40 million or $0.62/share during the quarter. And exceeded the company's common stock distributions and expenses.

During the quarter, we paid 3 monthly common stock distributions of $0.11/share, and last week, we declared 3 monthly common stock distributions of $0.11/share. For 2026. As of March month end, the company had outstanding preferred equity securities equal to 34% of total assets less current liabilities. Which is within our target range of 25% to 35% where we expect to operate the company under normal market conditions. Looking at our portfolio activity during the month of April, the company received recurring cash flows on its investment portfolio of $11 million Note that some of the company's investments are still expected to make payments later in the quarter.

As of February month end, net of pending investment transactions and settlements, the company had $15 million of cash and revolver capacity available for investment and other purposes. Management's unaudited estimate of the company's NAV as of April month end was between $12.48 and $12.58 per share. At the midpoint, this was an increase of 4.5% from March month end. I will now turn the call back over to Tom to provide closing remarks before we take your questions.

Thomas Philip Majewski: Thanks, Lena. In our view, the combination of lower loan prices reduced loan repricing activity, and the potential for higher short term rates is improving the outlook for our earnings power. Combined with our disciplined capital allocation and access to the full Eagle Point origination platform, we believe we are well positioned to translate this environment into stronger results for shareholders over time. We appreciate your continued support, and thank you for your time and interest in Eagle Point Income Company. Lena, Daniel, and I will now open the call to your questions. Operator?

Operator: Thank you. Ladies and gentlemen, if you would like to ask a question, please press star 1 and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. Before pressing the star keys, please be sure your phone is not on mute. 1 moment, please, while we pull for questions. And our first question comes from the line of Erik Zwick with Ladenburg Thalmann. Please proceed.

Analyst (Erik Zwick): Thank you. Good morning, again. Wanted to start with a question on software. You mentioned it in your comments, and it is obviously been very topical of late in the leveraged loan market. And looking at your I think it is Slide 22, maybe, where you know, kind of show the concentration of different industries. In the portfolio of technology and software as, you know, I guess, kinda double at least the and then the next largest 1 at 12%, 12.5%. So curious what your thoughts on-- I guess bigger picture question-- is a bigger picture question.

Do you think the impact could be, is it likely to result in changes to volume in the leverage loan issuance as potentially, you know, fewer IPOs and software, or do you think it you know, leads to increased defaults and credit quality issues? And maybe more importantly, how are you thinking about this and you know, your desired kind of target for exposure to software in the portfolio?

Thomas Philip Majewski: So a lot of questions packed into 1 there. But overall, indeed, you can see it is it is software and services is the largest you know, category by a factor of more than 2 compared to the second place. I guess 1 of the first things we think about broadly is not all software companies are created equally. You know, at a high level, there is statistics that 70% of Fortune 500 companies still use mainframes. Forget about you know, Blades or SaaS or things like that. The risks are more pronounced in some sectors of software than others. An example, like an airline reservation system would be something so critical not to be sassed away anytime soon.

At Eagle Point, our internal books and records, like the official custodian records, it is a long time away before we see that. At the same time, how we track vacation time and things like that, you know, I am sure we for some silly thing that we could probably just make and do it less expensive. So broadly, the criticality of a tool is an important factor in its SaaS vulnerability. First off. And then 2, you know, I will I will make an analogy back to ecommerce and amazon.com's IPO, which I think was back in 2000, give or take.

1 of the things we talked about then, you could probably find Bloomberg articles and other mass media articles You know, the end of retail as we know it. And indeed, Amazon has significantly changed retail We are going on 29 years ago that IPO happened, and there is still plenty of stores and 1 stat I saw recently actually said retail had the highest occupancy rate of any category in CMBS in the CMBS market, so lowest vacancy. So while the predictions of doom are always great in the credit market, in my opinion and experience. They are often overstated. That said, there are snakes lurking in the grass, and risks are out there.

And there are you know, software loans in the syndicated market that are you know, trading in the 50s, perhaps some even lower at this point. that is the exception. that is not the majority. But it is it is certainly greater than 0. When we look at our portfolios, we are not buying or selling specific loans in any CLOs. The collateral managers are the ones doing that. That said, the software industry is an area of significant focus for us.

Both in our monitoring and ongoing diligence of existing investments in the ground including the decisions potentially to sell investments, as well as an important part of our decision when we are selecting a new security to invest in. So we do not sit here and say we have a target software exposure All else equal, I would seek to lower it. That said, due to activity in the underlying portfolios, it is possible it goes the other way as well. Overall, I suspect that trend is going to be in the downward direction. But I do I highlight, and I really underscore the pace of transition.

While it is probably faster this time than it was with ecommerce 29 years ago, We are not in an immediate situation. There are a small number of watch names That said, I think many companies have a fair bit of runway to go. So it is something we are actively watching. We are in active dialogue with our collateral managers, and it is impacting our investment decisions. But it is by no means the only factor we consider when we are making a decision to buy, sell, or hold a security.

Analyst (Erik Zwick): Thanks, Tom. I appreciate the insight on that topic, and last question for me, and then I will step aside. Just given especially looking at the update for the April NAV that the stock continues to trade at a discount to NAV. So is it, you know, fair to say that the share repurchases still remain attractive from your viewpoint and likely to continue for the repurchasing for the near term?

Thomas Philip Majewski: We have continued to use the program, although I will say it is not been as aggressive as we have used it in the past. If you listen to prior calls, I definitively use that word or a similar word. 1 of the things we balanced is the potency of the buybacks in terms of NAV accretion. And I think we have built up about $0.24 of NAV through discounted buybacks. The flip side, we also balance liquidity in the stock and the actual potency of our buying to the stock price. So it is something we continue to monitor and tweak. The program remains open active, and we do have open capacity on it.

I will say I balance We love buying our stock cheap. We love volume in our stock. And we like to use our powder when we can really move the stock price. So it is a collage of all of those 3. That may inform our decision every day. I would no longer say right now we are aggressively buying back stock. But the program is open and active.

Analyst (Erik Zwick): Thank you for the update.

Operator: The next question comes from the line of Christopher Nolan with Ladenburg Thalmann. Please proceed.

Analyst (Christopher Nolan): Daniel, actually, for anyone, the 12-month default rate was 1.4% and part of my notes is 1.2% last quarter. Was software the reason for that change?

Daniel Ko: Yeah. Some of it was I mean, we have not seen really the software names, you know, default significantly. it is more so. It was not necessarily in 1 specific sector. Yet, I mean, a lot of the software names we are kind of seeing kind of them play out in terms of kind of whether they will survive or not. You know, we think that there is been a lot of baby throwing out the baby with the bathwater. For software names in that. About 75% of them still trade above 90. And so there is actually pretty decent kind of par building opportunities there.

I mean, a lot of the CLO collateral managers were selling software, last year in 2025 because they were kinda getting ahead of this AI disruption risk. So this is not anything that is new to the CLO market.

And with kind of the lower concentrations than kind of private credit, and the ability to trade loans, there is an ability to kinda make those relative value swaps So, you know, maybe there certainly will be defaults kind of in some of the software names that could lead to kind of higher defaults in the future, but kinda getting ahead of it trading it around allows us to at least the BSL market seems to keep the default rates still relatively low.

Analyst (Christopher Nolan): So you are not really seeing, you know, higher nonaccruals or any fund that per se, just this is like a bank Okay. On a follow-up, some of the BDCs I cover, believe it or not, have started seeing increased credit stress in health care. Have you guys seen anything like that?

Daniel Ko: Not significantly, unless it is, I guess, somehow related to AI. Or if it is, like, some sort of software company that is really categorized within health care and has a risk of being disrupted by AI But, otherwise, no, we have not seen that.

Analyst (Christopher Nolan): Okay. that is it for me. Thank you.

Operator: There are no further questions at this time. And I would like to turn the call back over to Thomas Majewski for closing remarks.

Thomas Philip Majewski: Great. Thank you very much, everyone, for joining today. Lena, Daniel, and I appreciate your interest in Eagle Point Income Company. If you have any further questions, we will be in the office later today and be happy to speak. Thank you very much.

Operator: This concludes today's conference. You may disconnect your lines at this time. And we thank you for your participation.

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