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Eagle Point Credit Company Inc. Announces Third Quarter 2018 Financial Results

ECC | November 14, 2018

Eagle Point Credit Company Inc. Announces Third Quarter 2018 Financial Results

Eagle Point Credit Company Inc. (the “Company”) (NYSE: ECC, ECCA, ECCB, ECCX, ECCY) today announced financial results for the quarter ended September 30, 2018, net asset value (“NAV”) as of September 30, 2018 and certain portfolio activity through November 6, 2018.

THIRD QUARTER 2018 HIGHLIGHTS

Net investment income (“NII”) and realized capital gains of $0.41 per weighted average common share¹.
NAV per common share of $16.55 as of September 30, 2018.
Third quarter 2018 GAAP net income (inclusive of unrealized mark-to-market gains) of $11.2 million, or $0.50 per weighted average common share.
Weighted average effective yield of the Company’s collateralized loan obligation (“CLO”) equity portfolio was 13.99% as of September 30, 2018.
Deployed $42.3 million in gross capital, received $33.0 million in proceeds from the sale of investments and received $25.7 million in cash distributions from the Company’s investment portfolio in the third quarter of 2018.
5 of the Company’s CLO investments were reset and 1 of the Company’s CLO investments was refinanced during the third quarter of 2018.
Issued 1,407,451 shares of common stock at a premium to NAV during the third quarter for total net proceeds to the Company of approximately $25.0 million pursuant to the Company’s “at-the-market” offering program.

SUBSEQUENT EVENTS

NAV per common share estimated to be between $16.35 and $16.45 as of October 31, 2018.
Deployed $37.5 million in gross capital and received $14.7 million in proceeds from the sale of investments from October 1, 2018 through November 6, 2018; received cash distributions from the Company’s investment portfolio of $22.4 million over the same period.

“The third quarter was another active quarter for the Company, both from a portfolio management standpoint and in terms of our balance sheet,” said Thomas Majewski, Chief Executive Officer. “We continued to focus on CLO resets to take advantage of our Adviser’s deep investing experience, completing another five resets and thus further lengthening the reinvestment period in each transaction and in certain circumstances, locking in a lower cost of CLO debt. This brings the total number of such CLO equity positions that were reset or refinanced since January 1, 2017 to 23 and 28, respectively. The majority of the Company’s current portfolio has been reset, refinanced or both. In addition, we deployed $42.3 million in gross capital into new investments, while opportunistically selling certain investments to create value for the Company. We also utilized our at-the-market program in the quarter, raising $25.0 million of additional capital at a premium to NAV, and we have already deployed much of that new capital into investments.

“During the third quarter, we recorded NII and realized capital gains per share of $0.41, as we did have approximately $0.02 per common share of cash drag associated with the issuance of shares of common stock under the at-the-market program during the quarter, as well as the continued modest spread compression,” noted Mr. Majewski. “We remain dedicated to actively managing the portfolio, focusing selectively on new investments and sales. In addition, when appropriate, we plan to pursue additional CLO resets in an effort to lock in longer and lower cost liabilities.”

THIRD QUARTER 2018 RESULTS

The Company’s NII and realized capital gains for the quarter ended September 30, 2018 was $0.41 per weighted average common share. This compared to $0.34 per weighted average common share for the quarter ended June 30, 2018, and $0.45 per weighted average common share for the quarter ended September 30, 2017.

For the quarter ended September 30, 2018, the Company recorded GAAP net income of $11.2 million, or $0.50 per weighted average common share. Net income was comprised of total investment income of $17.5 million, net unrealized appreciation (or unrealized mark-to-market gains on investments) of $2.2 million and net realized capital gains on investments of $0.1 million, offset by total expenses of $8.6 million.

NAV as of September 30, 2018 was $382.7 million, or $16.55 per common share, which is $0.04 per common share higher than the Company’s NAV as of June 30, 2018, and $0.12 per common share lower than the Company’s NAV as of September 30, 2017.

During the quarter ended September 30, 2018, the Company deployed $42.3 million in gross capital and $9.3 million in net capital. 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 15.63% as measured at the time of investment. Additionally, during the quarter, the Company received $33.0 million of proceeds from the sale of investments.

During the quarter ended September 30, 2018, the Company received $25.7 million of cash distributions from its investment portfolio, or $1.15 per weighted average common share, including amounts received from called investments. Excluding proceeds from called investments, the Company received cash distributions of $1.00 per weighted average common share during the quarter, which was in excess of the Company’s aggregate quarterly common distribution and other recurring operating costs.

During the quarter ended September 30, 2018, 5 of the Company’s CLO investments were reset and 1 of the Company’s CLO investments was refinanced.

As of September 30, 2018, the weighted average effective yield on the Company’s CLO equity portfolio was 13.99%, a slight decrease from 14.08% as of June 30, 2018. As of September 30, 2017, that measure stood at 15.29%.

Pursuant to the Company’s “at-the-market” offering under which the Company may issue shares of common stock, the Company sold 1,407,451 shares of common stock at a premium to NAV during the third quarter for total net proceeds to the Company of approximately $25.0 million.

PORTFOLIO STATUS

As of September 30, 2018, 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 1,454 unique corporate obligors. The largest look-through obligor represented 0.97% of the Company’s CLO equity and loan accumulation facility portfolio. The top-ten largest look-through obligors together represented 6.7% 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 3.54% as of September 2018. This compares to 3.56% as of June 2018.

As of September 30, 2018, the Company had debt and preferred securities outstanding which totaled approximately 33.6% of its total assets (less current liabilities). Over the long term, management expects the Company to operate under current market conditions generally with leverage within a range of 25% to 35% of total assets. 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.

FOURTH QUARTER 2018 PORTFOLIO ACTIVITY THROUGH NOVEMBER 6, 2018 AND OTHER UPDATES

From October 1, 2018 through November 6, 2018, the Company received $22.4 million of cash distributions from its investment portfolio, or $0.97 per weighted average common share, including amounts received from called investments. Excluding proceeds from called investments, the Company received cash distributions of $0.90 per weighted average common share for the same period. As of November 6, 2018, some of the Company’s investments had not yet reached their payment date for the quarter. Also from October 1, 2018 through November 6, 2018, the Company deployed $22.8 million in net capital.

From October 1, 2018 through November 6, 2018, 3 of the Company’s CLO investments were reset.

As of November 6, 2018, the Company has approximately $17.6 million of cash available for investment.

As previously published on the Company’s website, management’s estimate of the Company’s range of NAV per common share as of October 31, 2018 was $16.35 to $16.45.

PREVIOUSLY DECLARED DISTRIBUTIONS AND ADDITIONAL UPDATES

The Company paid a monthly distribution of $0.20 per common share on October 31, 2018 to stockholders of record as of October 12, 2018. Additionally, and as previously announced, the Company declared distributions of $0.20 per share of common stock payable on November 30, 2018 and December 31, 2018, to stockholders of record as of November 13, 2018 and December 13, 2018, respectively.

The Company paid distributions of $0.161459 per share of the Company’s 7.75% Series A Term Preferred Stock due 2022 (NYSE: ECCA) and 7.75% Series B Term Preferred Stock due 2026 (NYSE: ECCB) on October 31, 2018, to stockholders of record as of October 12, 2018. The distributions represented a 7.75% annualized rate, based on the $25 liquidation preference per share for each series of preferred stock. Additionally, and as previously announced, the Company declared distributions of $0.161459 per share on each series of preferred stock, payable on each of November 30, 2018 and December 31, 2018, to stockholders of record as of November 13, 2018 and December 13, 2018, respectively.

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 ended September 30, 2018, as well as a portfolio update.

All interested parties may participate in the conference call by dialing (833) 231-8253 (domestic) or (647) 689-4099 (international), and entering Conference ID 7057357 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 December 13, 2018. To hear the replay, please dial (800) 585-8367 (domestic) or (416) 621-4642 (international). For the replay, enter conference ID 7057357.

ADDITIONAL INFORMATION

The Company has made available on its website, www.eaglepointcreditcompany.com (in the financial statements and reports section) its unaudited consolidated financial statements as of and for the period ended September 30, 2018. The Company has also filed this report with the Securities and Exchange Commission. The Company also published on its website (in the investor presentations and portfolio information section) an investor presentation which contains additional information about the Company and its portfolio as of and for the quarter ended September 30, 2018.

ABOUT EAGLE POINT CREDIT COMPANY

The Company is a non-diversified, closed-end management investment company. The Company’s investment objectives are to generate high current income and capital appreciation primarily through investment 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 weighted average 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 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.