Oxford Lane Capital (OXLC) 6 May 222022 Q4 Earnings call transcript

Good morning, ladies and gentlemen. Thank you for attending today's Oxford Lane Capital Corp. Fourth Quarter Fiscal Earnings Call. My name is Duquita, I will be your moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. now Jonathan pass Lane. Cohen, would to conference I host, your CEO Instructions] like the to over [Operator of Oxford please go Jonathan, ahead.

the Lane the Chief joined Director Bruce, today regarding Good to Saul Senior Rosenthal, disclosure quarter much. Managing everyone. Bruce by call, and earnings Capital Rubin, could Deep President; Oxford our our XXXX I'm very Manager. fiscal Officer; statements? Corp. you and call. Thanks conference with Portfolio our open fourth Financial morning, forward-looking the Welcome Maji,

rebroadcast Today's conference of morning. is do this information. forward-looking most company's call refer future that prohibited. ask our projections you in and to, with respect Jonathan. form days. regarding filings the financial available press call is and includes call the Sure, release other An events this property At customary of among that statements conference is views morning's with the performance. Oxford current earlier information to audio the your reflect this We for that Please recent differ forward-looking Today's things, unauthorized factors by disclosure cause that to being the note projections. SEC for replay included Replay is law. important any those actual materially results indicated of do be undertake attention so could statements, strictly Lane release please to Any required forward-looking unless press issued to not from We these in recorded. point, in that direct Capital our this to in call call this will was XX Corp. update our

to the defined earnings we call, release non-GAAP and terms this During refer also use measures. in will

at the our refer to reconciliations Jonathan. our posted please over to I'll presentation turn For that, on With definitions to earnings www.oxfordlanecapital.com. release back and GAAP, website

our XXXX. asset of value XXXX, of $X.XX, to at compared per asset share Bruce. value as December a net XX, XX, net per stood March share On Thanks, $X.XX

income million total $X.X million $XX.X income. Lane quarter's from investment of million from CLO share million, share a GAAP or or GAAP our ended for $X.XX per net The we Oxford consisted from of recorded also investments representing from quarter $X.X debt income quarter income XX, XX. other CLO March of For decrease CLO GAAP and approximately of investment investment recorded $X.XX investments, $XX.X from total to million March compared ended December warehouse our ended the approximately quarter. equity $XX.X approximately and the our million approximately prior for the per XX, quarter approximately portfolio approximately $XX.X the

per per quarter $XX.X investment Our was approximately for ended $XX million share approximately core net or share quarter or million March ended December income the $X.XX compared $X.XX for XX, the with XX.

XX, March an stock, our offering, proceeds we in ended to quarter approximately net of shares of resulting XX pursuant issued approximately million common of a million. the During total $XX.X at-the-market

or For net net $X.XX operations the investments We approximately had the fiscal per quarter. losses assets We approximately fourth recorded quarter a ended or share. net on million, per million, share, $XXX,XXX. March XX, of of $X.XX depreciation approximately $XX.X decrease we recorded of from net $XX.X resulting in unrealized realized for

receive of debt The was of represented at down on XX.X% note equity we cash on yield distribution received average cost yield unchanged of to weighted total X our from yield as equity weighted a we the yields down respective based March none was As from cash that December following note We XX.X%, investments to shareholders. December cash metrics at at The which as investments CLO CLO current our cost distribution XX, [ph]. our And weighted each that our the of these current average return XX.X% period of the equity calculated or applied. investments effective CLO from CLO of was XX.X%, We was distributions XX.X%, cost December metrics of which XX. were XX. at average end. current are entitled the investments

During investments repayments. monthly $XXX.X common approximately the $X.XXX approximately to Deep and call of from share On I'll XX, per for July, of received stock million each Maji. sales distributions we our and made Portfolio of August that, quarter of declared turn $XXX.X of we XXXX. million, the additional May March Board CLO Manager, the and September of over months With ended X, our Directors

you, Thank Jonathan.

XX.XX% par Leveraged XX, on the During a before S&P/LSTA XXXX, market ended compared of the the par defined US to then ultimately and Index, by prices, the par low XX, as US March XX.XX% was at quarter of XX.X% on XX, started XX XX. March quarter January of of December fairly loan XX.XX% to loan to at quarter December Loan ended the volatile on XX, March on par recovering of peaked dropping XXXX.

on trailing decreasing at Loan CCC-rated default XX-year of the there of As X, low related by was pricing and loan decreasing loan a basis of for principal the dispersion XX-month during remained basis quarter, XXX points points index BB-rated According with average. quality to decreasing at Index basis XX XX amount points, May B-rated LCD, loan the credit end quarter. The the Leveraged prices the rate at prices basis to prices stood points S&P/LSTA XXX XX.XX%.

December. ended loan with percentage a Additionally, equity the of US XX% decrease as distressed prices loans CLO in to values. X.XX% approximately in end to US of the of par, a ratio, quarter at below asset The compared the drop net price led at the defined X.XX%

par approximately equity par. NAV quarter, US from XX% the of During we observed median XX% the of to approximately CLO declined

X.XX% to quarter. junior X.XX% last rose to over-collateralization ratios compared approximately median However,

over approximately same the year, Approximately deals compared of billion the the increased quarter loan toward billion points last average portfolios compared XX quarter. within XXX Additionally, to XXX at points new of to we $XX $XX slow issued year. was CLO start basis the the last the priced especially spreads observed weighted pools XXXX. March of modestly CLO compared pace period during ended to to issuance basis Primary

of last was over million period the of year. $XX this only approximately the However, active during in Lane in priced equity billion the resets same to notional CLO trading $XXX $XX market junior debt. secondary quarter, and approximately the Oxford compared primary and refinancings quarter market billion very

place the secondary activities most our continue market, issued While in to we CLO in adding took new the market, during two of be primary equity active investments the quarter.

across to were able quarter, investment return. current equity, our In our market we over and CLO to reinvestment portfolio a towards XXXX And As markets an of and take debt opportunistic longer-term average view from in our as warehouses permanent environment, we With overall weighted equity look function continue the I'll of historically we intend to the of lengthen both Lane the of Jonathan. been activity call Oxford CLO period XXXX. to December back CLO US a this strategy maximize February to investment able utilize strategy. have a to vehicle, unconstrained as turn capital we long-term total that, to

poll Deep. that quarter has Lane's to questions. with about website much, fourth happy been And operator, Oxford note very uploaded information performance fiscal additional that, we're any Thanks We our for at to www.oxfordlanecapital.com.

first Mickey Schleien question Absolutely of comes Ladenburg. line the with [Operator from Instructions] The

You may proceed.

been of now issuers, a there's the B- morning loan one-quarter of of index. around which the comprise lot rated good leveraged everyone. Yes, growth Jonathan, in share

terms may a happen, problem should this not could the turn So of the into may which in bucket. or economy CCC decelerate,

managing managers understand your in So how I'm CLO interested risk to are that view?

Sure.

can As for question. is Deep, this the and -- you you Mickey, thank

As you can…

Deep. Hi

CLO of pandemic. to you? out since We four pandemic, those been the Hey, kind prior coming -- we've especially cushions the managers, bps issued how you've starting over-collateralization quarter. But to are new much junior of higher relative mentioned definitely what deals deals XXXX, is with overall, in that that cushions rose during noticed the -- have what

they speaking, generally and started over exceed provides from higher ratios over-collateralization CCC diversion cushion point, interest downgrades generally and cushions the So of bucket junior additional -- X.X%. a that at have should

Deep sorry, by baskets Mickey, of that the could characterized increased alert decelerating -- economy, issue on focused you Notwithstanding, US which become is could in be of we to syndicated an point remain which CCC corporate downgrades loans, Right. a a that raised, rate concern. and

mentioned today. below to ahead, helps And technical which which of proportion more pool actually, attribute my some leads Jonathan, remarks, let's And we In issues, looking next call what's trends lows, defaults? XX%, people say, collateral the do to that or that you what trading, are are see the your the for performance are record starting in distress And certainly credit? the the ratio? you defaults prepared in outlook Yeah. deterioration support some But to question. at

rates, issues with I raised for issues US We either inside those default published think issue rates are structures. we to. But CLO well have or are remain across or sensitivity outside CCC corporate points loan syndicated fundamental as these both that the you relevant, recovery estimate CLO a Mickey. of technical of potential don't issues, similar the that baskets, to universe sensitive US of as

Okay.

I think last understand. I My question.

we're of terms repricing impacting and and these I those are now is with CLO sharp flows liabilities rise collateral yields. understand between tightening, estimated the what want in a your expectations rates of And So and the just rates for Fed that short-term how seeing the lag CLO in to rising trends? cash

Sure.

modeling the as now always LIBOR SOFR you So the know, curve. been forward have we and forward curve

been for and see -- it's the been So four SOFR quarters. that but above rise from historically have and we've last to we of of LIBOR benefit which that floors CLOs, we occurred. the the some attuned extent starting occur benefit several the been which has SOFR now period, the time LIBOR we're and This has modeled lose quarters, those Xs, arrived. that of to that mindful It's the but levels loss US in for outward finally something for to floors

I Deep. the the the Yeah, repricing increases? that was understand of of of scope I given and Is the the to do liabilities. timing and the a big referring issue the assets that, rate lag

Yeah.

the volatility So right seeing now market. in I you're what the think is just overall that

refis been the seen for at a just haven't and given many have loan speaking, has discount loan generally market And We historically volatility. to repricings assets as the as we par.

of more the the tend a You see percentage market loan on when lot above repricing meaningful to trades a of activity -- par. loans

Right.

Okay. That’s Thank me morning. you it time. for this your understand. I for

Thank you, Mickey very much.

of Riley. Thank from comes with line B. Howlett the The you. Matthew question next

proceed. may You

to mean -- Thanks balance really up debt, rate taking the question, Hey, fixed congrats you're the the for that higher everyone. rates. Congrats well quarter. positioned. sheet with interest my I setting on all really you're on

the Is centers the Just my there talk all And just space. you tiering a to on the focus obviously, among CLO managers Going How records the managers, know is CLO you in that? today? on to me So guys pricing? in look about bit best? a question in important really largest, space. biggest track tiering difference forward, would this little

Tiering Sure. differentiated meaningfully of is coming out definitely COVID.

where we've been AAAs from tiering -- that CLO able the price these where to where really seen managers think have structures. their correspondingly, the rest I of So impact is their capital and,

CLO and primary market important. managers we're debt top-tier market, And versus we about from investors that's on, are to a So in it's with investors something that something differentiating in we think the AAA that particularly really third-tier debt certain the CLO especially focus very versus warehouse really managers. CLO second-tier when looking definitely It's lot.

at about very we especially to market that to investments, price. have generally with a and the he expansive take we on you we second- And question correctly the equity managed terms said where a have view. focus if by taken scheduled we're willing when Tier But we activity at. CLO our purchase it historically, and one warehousing mean a or to Matt, I historically, At that your managers. look very the primary response we're Deep in third-tier focused phrased focused tend you'll of absolutely in wide we price, right will mostly down will deals see right again, perspective manager, look where

internal you own And this managers. and with dialogues and these rankings scores your part underwriting, is Absolutely. of have your

markets the ones So don't you ones may forth? you mispricing the the know like, so be ones you like, the and

much Matt, Very yes. so,

and long do guess question balance unsecured these notes. I becomes that these Jonathan, sheet, the anything the higher, coupons I'm a and on the balance Is at still all -- a the some of sort of these issuer, is but liability have positioned are you there fixed-rate looking job do there? the at top-tier going preferred side? to advantage place of well of all now long-duration, is did in you forward, rates -- just are sheet take Great. really fixed-rate And you there tremendous then, sort

pleased Sure, as X% the I with you well-timed. that we've say, Matt. just issuance. that think, new we're very I very million capital $XXX mean And five-year, recently that was raised of

our of totality pleased sheet with very are We balance right the now.

along be Given lines in the market have to the of referenced. financing very much that providing set low-cost fixed we that rate, that feel us just seems presently, opportunity given relatively we place, you the the

And my Congratulations. Really done. all you've appreciate taking for the thanks work question.

much. All right, it. Matt, thanks We very appreciate

Thank further that, With no I are turn CEO. Jonathan there I the you. Cohen, back over call questions. show will to

we'd and Lane much. interest operator, speaking participated in this forward listening replay Oxford much, very We very for look Capital to like to everybody Thanks you Thank to thank call the to and attention Corp. their again soon. or who's

concludes the That participation. Quarter Fourth Lane Capital Fiscal you Thank your Call. Corp. Oxford Earnings for

may You your now disconnect lines.