Q1 2022 Oxford Lane Capital Corp Earnings Call

Good day and welcome to the Oxford Lane Capital Corp, first fiscal quarter earnings Conference call. All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then 1 on you touched.

Tone zone and to withdraw your question. Please press Star then 2 please note. This event is being recorded I would now like to turn the conference over to Mr. Jonathan Cohen CEO. Please go ahead Sir.

Thanks, very much good morning, everyone and welcome to the Oxford Lane Capital Corp, first fiscal quarter 'twenty 'twenty 2 earnings conference.

Conference call I'm joined today by Saul Rosenthal, our President Bruce Rubin, our Chief Financial Officer, and deep Maggi, our senior managing director and portfolio manager Bruce could you open the call pleased with the disclosure regarding forward looking statements from sure. Jonathan Today's conference call is being recorded and audio replay of the call will be available for 30 days replay information.

Is included in our press release that was issued earlier. This morning. Please note that this call is the property of Oxford Lane Capital Corp. Any unauthorized rebroadcast of this call in any form is strictly prohibited at this point. Please direct your attention to the customary disclosure on this morning's press release regarding forward looking information today's conference call includes forward looking.

Statements and projections that reflect the company's current views with respect to among other things future events and financial performance. We ask that you refer to our most recent filings with the SEC for important factors that could cause actual results to differ materially from those indicated in these projections, we do not undertake to update on forward looking statements.

Statements unless required to do so by law.

During this call we will use terms defined in the earnings release and also.

Refer to non-GAAP measures.

The definitions and reconciliations to GAAP. Please refer to our earnings release posted on our website at Www Dot, Oxford Lane capital Dot Com.

With that I'll turn the presentation back to Jonathan.

Thanks, Bruce on June 32021, our net asset value per share stood at $6.56.

Compared to the net asset value per share of $5.94 as of March 31.2021.

For the quarter ended June 30, we reported GAAP.

Total investment income of approximately $41.7 million representing.

Representing an increase of approximately $5.6 million from the prior quarter.

The quarter's GAAP total investment income from our portfolio consisted of $40 million from our CLO equity investments and $1.7.

$7 million from our CLO debt investments and from other income.

Oxford Lane also recorded GAAP net investment income of approximately $25.3 million or 25 per share for the quarter ended June 30, compared to approximately $21.6 million or 23 per share.

Share for the quarter ended March 31.

Of our core net investment income was approximately $42.4 million or <unk> 41 per share for the quarter ended June 30, compared with approximately $44.9 million or <unk> 47 per share for the quarter ended March 31.

During.

We ended June 30th we issued a total of approximately $7.6 million shares of our common stock pursuant to an out of the market offering resulting in net proceeds of approximately $53.8 million.

For the quarter ended June 30, we recorded net realized losses of approximately $4.3 million or <unk> <unk> per share we reported net unrealized.

During the course appreciation of approximately $59.2 million or 58 per share.

We had a net increase in net assets, resulting from operations of approximately $80.2 million or <unk> 78 per share for the first fiscal quarter.

As of June 30 of the following metrics apply.

Slide we note that none of these metrics represented the total return to shareholders.

The weighted average yield of our CLO debt investments at current cost was 13, 6% up from 11, 2% as of March 31.

The weighted average GAAP effective yield of our CLO investments at current cost was 16, 3%.

Unrealized up from 15, 7% as of March 31.

The weighted average cash distribution yield of our CLO equity investments of current cost was 27, 7% up from 23, 8% as of March 31.

We note that the cash distribution yields calculated on our CLO equity investments.

So based on the cash distributions, we received or which we were entitled to receive at each respective period end.

During the quarter ended June 30, we made additional CLO investments of approximately $244.3 million and Weaver of court, we received approximately $187.2 million from.

From sales and from repayments.

On April 15th 2021 of the company redeemed all of its outstanding series 2023 term preferred stock for approximately $57.2 million.

On July 29th of our board of Directors declared monthly common stock distributions of $6.3 quarter cents.

<unk> per share for each of the months of October November and December of 2021.

With that I'll turn the call over to our portfolio manager deep magic. Thank.

Thank you Jonathan during the quarter ended June 30 of 2021 of the U S loan market strengthened versus the quarter ended March 31st U S loan prices as defined.

But the S&P <unk> leveraged loan index increased from 90, 755% of par as of March 31 to 90, 837% of par as of June 30th.

According to LCD during the quarter pricing compression related to credit quality continued with double b rated loan prices increasing.

1% single B rated loan prices increasing.

<unk>, 2% and Triple C rated loan prices, increasing 1.4% on average the 12 month trailing default rate for the S&P <unk> leveraged loan index decreased to 1.25 per cent by principal amount at the end of the quarter after starting the quarter at 315%.

It has since decreased the 0.58% as of July 23rd.

Additionally, the distressed ratio defined as the percentage of loans with the price below 80% of par ended the quarter at approximately 1% the lowest level since November 2014, and well below levels seen in March 2020.

During the quarter of the increase in the U S loan prices led to an increase in U S. CLO equity net asset values. According to Wells Fargo. The median.

The point for the equity net asset value of improved from 51% of par to $59.4 per cent of par while the median overcollateralization ration of the cushion increase from the 294 basis points to 354 basis points. Additionally, the median Moody's triples, the assets decreased from 6.5% to 5.2% all of the median S&P.

The Triple T assets decreased from 7.2% to 6%.

The issuance in the CLO primary market continues at a record setting pace.

Year to date through June 30th approximately 82 billion of new issue and approximately 136 billion of refinancings and resets of price in the primary market. We have been able to take advantage of of the new issue market I've made 5.

New primary CLO equity investments during past quarter during the past quarter 4 of the CLO, which we held equity refinance their liabilities and <unk> reset their entire capital structures, where the deals reinvestment periods were extended in conjunction with the refinancing of the CLO liabilities given the strength in the loan prices 5 silos, where we held equity were optionally redeemed during the quarter, where the refinance.

We are of reset we're not we're not viewed to be accretive.

And the current market environment, we intend to continue to utilize on opportunistic and unconstrained CLO investment strategy across the U S. CLO equity CLO debt and CLO warehouses as we look to maximize our long term total return and as the permanent capital vehicle, we have historically been able to take a longer term view towards our investments.

The financing with that I'll turn the call back over the Jonathan.

Thanks, very much deep with that operator, we're happy to open the call for any questions.

We will now begin the question and answer session to ask a question you May Press Star then 1 on your Touchtone phone and if youre using a speakerphone. Please pick up your handset before pressing the keys.

So what's your all your question. Please press Star then 2 and at this time, we will pause momentarily to assemble our roster.

At this time I'm not showing any questions and this will conclude our question and answer session I would like to turn the conference back over to Jonathan Cohen for any closing remarks. Please go ahead, Sir. Thank you very much operator, we note that additional information about Oxford Lane's first fiscal quarter performance has been uploaded to our website at Www Dot, Oxford Lane capital Dot.

We'd like to thank everyone listening on the call today and on the replay and we thank everyone for their interest thanks very much.

This conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Com.

[music].