Oxford Lane Capital (OXLC) 1 Nov 222023 Q2 Earnings call transcript

Good morning, everyone. I would like to welcome you all to the Oxford Lane Capital Corp.

Second Fiscal Quarter 2023 Earnings Conference Call. My name is Birka, and I will be your event specialist operating today's call. After the speakers’ remarks, you have the opportunity to ask a question. now of hand to today's would to call begin. I host our call, Instructions] like the to over [Operator Saul Rosenthal,

So, are ahead go Saul, when please ready. you

the good and you, Thank Lane Corp. Oxford everyone. operator, Capital Welcome morning, to

a Bruce, I'm our Jonathan Fiscal Bruce regarding today is Cohen, disclosure and Maji, our Rubin, Second Director call Managing today. Officer; by our Financial CEO, joined Senior Conference would Chief and statements. XXXX open Earnings Debdeep Quarter with you Call. please our Portfolio forward-looking traveling Manager.

rebroadcast Sure, 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 Today's form days. regarding filings the financial available press call is and includes call the Saul. 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 Saul. our posted please over to I'll presentation turn For that, on With definitions to earnings www.oxfordlanecapital.com. release back and GAAP, website

XXXX, XX, net as asset XX, share at compared stood $X.XX value net per you, asset XXXX. $X.XX of to our September June a value share On per Bruce. Thank of

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

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

September unrealized investments ended $X.X approximately quarter. for $X.XX increase fiscal a losses per million on $X.XX million in net net XX, approximately or share per recorded of $XX.X we and depreciation quarter resulting the the approximately net of approximately share For net or from total. operations second million $X.X realized in of had assets We

these the at of following total average June of As The June yield cash received effective were and each receive investments based on entitled on our June cash equity calculated from the of up period our weighted XX.X% CLO or The XX. which equity are XX.X% CLO cost average our represented was was resulting assets. yield XX. of metrics of the we return from XX, up underlying And average as current as for investments XX.X%, weighted the of debt XX.X%, XX.X%, loss at from weighted distribution primarily CLO none was September as yield end. cost our note of respective from to current XX, current benefit the yields shareholders. XX.X% distribution cash the applied that that we at to at we investments of distributions cost note CLO of metrics a LIBOR investments of We equity down the floors

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

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

you, Thank Saul.

XXXX, ended of rate of Index XX.X% for or the XXX of increased end at prices of August or to as as basis end of single XX.XX% par X.XX% Index increasing decreasing during B-rated XX-month defined LSTA prices decreasing dropping amount the points the from June related Morningstar loan was the of as credit loan XX.XX% to the of was XX of pricing par prices, U.S. XX. and of LSTA loan the to average. on XXX XX default of XX September by Morningstar points the by there trailing dispersion X.XX% quality loan or XXXX. the – volatile. principal X.XX% at points basis with par basis BB-rated as before Loan prices LCD, X.XX%, June market to U.S. U.S. X.X% from as increased quarter CCC-rated Leveraged Loan During September XX, quarter U.S. loan Leveraged quarter, According to

of U.S. at with ratio, drop the par, percentage the X% loans defined the approximately in June. X.XX% values. price of flat X.XX% approximately ended below asset a distress Additionally, The to quarter at of of over-collateralization junior decline at U.S. an Median XX% end as a in compared last par X.XX% compared X% cushions net to equity to remained approximate prices CLO quarter. loan led

challenged, pools after $XXX be with loan billion $XXX to last basis we average new period last approximately XXX quarter. reached compared same primary weighted approximately plus to to over quarter. widen market the compared out, temporarily points continuing CLO during within XXX billion AAAs increased XXX CLO Additionally, issuance to spreads basis the year. passover basis to portfolios, CLO modestly in points observed continues points The tightening

widening below liabilities along limited calendar, and over last approximately level come be of arbitrage of equity Given issue CLO debt. issuance well to market the year’s active limited to the junior Lane $XXX with million and the is issuance Oxford challenging the expected be secondary trading loan end new year in new billion. through CLO notional the is in of issue to quarter, continues expected during and $XXX

we our investment equity issued new took of place the added activity during most secondary one this quarter. CLO quarter, market While in the

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

Thanks, Deep.

at second now Lane’s website Oxford information www.oxfordlanecapital.com. questions. has our Operator, uploaded Additional take quarter fiscal been we’ll to about performance

Please Our go ahead of first the you’re comes line [Operator when Instructions] of from question ready. Mickey Ladenburg. Schleien

and the quarter, that portfolio’s prices during weak junior a everyone. the Saul, ratio obviously, distress little to you actually morning, climbed mentioned loan Good OC portfolio. were went but bit in Yes. cushions your up X.X%, the

volatile doing really their environment to So managers cushions? can portfolios in their CLO you this are maybe help with us understand what improve

Sure. Deep Good answer morning, I’ll Mickey. question. let that

Sure.

their a are there I – trying and this up bit. think looking I relative at downgrades clean clearly, swaps think and making are managers in little are CLO environment, occurring value to portfolio

really levels haven’t that CCCs, seen of saw elevate far we some COVID. same we to So during the

certain I names the their the in – this going start think portfolio maybe that over managers our to other think to into up term in and taking names estimation. are better and sell long current to swaps are environment make time perform they stress clean

X.X And quarter. in a leverage I understand. times ratio Thanks third debt-to-EBITDA the for that. loans hit high the and of Deep,

go when margins, how existing pressure your equity you what’s that will EBITDA and CLO going you there’s likelihood quarters, at flows rates look few interest So about over on next will cash and borrowers next into on already trend higher think the view likely ratio that the year?

Sure.

interest I and think clearly higher very coverage something that are that mindful are we are ratios going rates interest of.

through I kind meet ability their across industry think service. that portfolios various be their to the and assessing able – borrower’s their costs industries CLO interest are of to meet each managers pass of within and assess kind debt to

system [ph] interest input about inflation So on of in coverage this making everyone’s we feel clearly of sort costs mindful there kind the as stress impact rising our that managers I well on think right and in assessments impact the rates is as is environment ratios. confident those. But that of the and are

understand. we’ve times downgrade I last I upgrade hit seen defaults. My question the leverage X.X is ratio and accelerate. it’s believe to loan

X% I think a few to virtually in prepared almost have from as remarks ago. climbed mentioned nothing you months your

you where year? going with affect into cash divergence you So how do see next flow defaults that mind, And do think in will trending? that

to and Yes, again, of in XX, XX June X.X%. was And it’s course. rate at as was June back, points, just now of the basis XX, reference default Mickey, – it X.XX% yes, September –

of so aware think for – different it. interest answers. and of yes, recession it. get really don’t XX you’ll just We there. taking economy to make But We want And and the just position aware The forth and collateral projections. So we’re the a and rates can not numbers get are economists going certainly we’re not to where they pull are managers there. we’re

this with the and of try collateral importantly, to aware their portfolios that accordingly. that just managers more we’re of aware position case We’re is investing obviously, the and fact are it the

me you that. time. morning. That’s for Appreciate for Okay. it this your Thank

Mickey. you, Thank sure. Okay,

like the closing Saul Thank you, Rosenthal for to now I would call remarks. to some back Mickey. turn

next and operator. everyone next for our call And forward you, operator. quarter’s joining discussing Thank you, thank today’s conference results on we’ll you Thank look call. to

conclude call. again Thank all you. joining. you today’s That for Thank does

You may now lines. disconnect your