Eagle Point Income (NYSE:EIC) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call.

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The full earnings call is available at https://viavid.webcasts.com/starthere.jsp?ei=1729091&tp_key=4021d26cb6&_gl=11t6yx4q_gaMTc2NDcxMjc3Ny4xNzg1NDg3OTEw_ga_LJNVBS2T1M*czE3ODU0ODc5MTAkbzEkZzEkdDE3ODU0ODc5MjkkajQxJGwwJGgw

Summary

Eagle Point Income Company reported a strong Q2 2026, with a 4% increase in NAV to $12.52 per share and a GAAP return on common equity of 7.1%.

The company deployed $39 million into new investments with a weighted average yield of 17.9%, focusing on CLO debt, CLO equity, and other credit investments.

Management indicated a strategic shift in portfolio composition to enhance risk-adjusted returns and improve long-term earnings potential.

The company issued $1 million in 6% Series AA Convertible Perpetual Preferred Stock, enhancing its capital structure and flexibility.

Net investment income was $0.37 per share, with GAAP net income of $20 million or $0.84 per share for the quarter.

Eagle Point Income Company maintains a predominantly floating-rate investment portfolio, benefiting from current high-interest rate environments.

The company expects refinancing and reset activities to remain robust, potentially lowering liability costs and extending reinvestment periods.

Management expressed the importance of liquidity in stock and the potential for share repurchases, while also aiming to increase leverage to its target range over time.

Full Transcript

OPERATOR

Welcome to the Eagle Point Income Company second quarter 2026 financial results call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Darren Daugherty from Prosek Partners. Please go ahead.

Darren Daugherty, Prosek Partners

Thank you, operator, and good morning. Welcome to Eagle Point Income Company’s earnings conference call for the second quarter of 2026. Speaking on the call today are Thomas Majewski, Chairman and Chief Executive Officer of the company, Dan Koh, Senior Principal and Portfolio Manager for the company’s advisor, and Lena Umnova, Chief Accounting Officer for the advisor. 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 Securities and Exchange Commission. 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 second quarter 2026 financial statements and investor presentation with 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 Majewski, Chairman and Chief Executive Officer of Eagle Point Income Company.

Thomas Majewski, Chairman and Chief Executive Officer

Tom, thank you, Darren, and good morning, everyone. We appreciate your joining the Eagle Point Income Company earnings call today. EIC had a strong second quarter. As of June 30, our net asset value stood at $12.52 per share, which is an increase of 4% from $11.99 per share as of March 31. For the quarter, the company generated a GAAP return on common equity of 7.1%. During the quarter, we paid an aggregate of $0.33 per share in cash distributions to our common shareholders.

The improvement in NAV was driven by a meaningful recovery in loan prices and CLO valuations following the volatility experienced in the first quarter. Concerns around the potential impact of artificial intelligence on software borrowers, together with geopolitical developments, weighed on leveraged loan prices and CLO valuations during the quarter. As sentiment improved during the second quarter, loan prices and CLO valuations recovered meaningfully while underlying credit fundamentals remained resilient.

We believe the first quarter decline reflected a market-driven pricing pressure rather than a broad deterioration in credit. Elevated refinancing, reset and call activity during the second quarter resulted in the early repayment of certain of our CLO debt investments. Because many of these investments were purchased at discounts to par, their repayment at par allowed us to realize convexity embedded in those investments sooner than we had originally anticipated.

During the quarter, we deployed $39 million into new investments at a weighted average effective yield of 17.9%, allocating capital across CLO debt, CLO equity and complementary credit investments where we identified what we believe to be very attractive risk-adjusted returns. We also repositioned the portfolio by rotating capital away from a certain group of underperforming CLO collateral managers towards higher conviction opportunities across CLOs and other private credit investments.

While this resulted in certain losses being realized, those losses had largely been reflected as unrealized losses in prior periods, resulting in minimal incremental impact on our NAV during the quarter. Importantly, we believe the actions taken improve the portfolio’s risk-adjusted return potential and enhance its long-term earnings power. Throughout the quarter, we continued to actively manage our CLO portfolio by completing one reset and two refinancings of CLO equity positions.

These actions resulted in a weighted average cost savings of 33 basis points for those CLOs. In addition to lowering the debt costs, the reset position also extended its reinvestment period out to five years. While CLO junior debt remains central to EIC’s strategy, we continue to selectively increase our exposure to infrastructure credit portfolio debt securities, asset-backed securities and other strategic credit investments. These opportunities are sourced through dedicated teams with specialized expertise across the broader Eagle Point platform.

As of June 30, CLO debt represented approximately 59% of our portfolio and CLO equity represented about 19% of our portfolio. Non-CLO investments totaled approximately 22% of our portfolio. We believe this broader opportunity set enhances portfolio diversification and allows us to allocate capital to the most attractive risk-adjusted return opportunities we see in the credit markets. One recent example we wanted to share is our investment with Sports Illustrated Tickets, a specialty finance transaction that we originated that was secured by World Cup tickets that was originated by the Eagle Point team.

Following a seven-month holding period, this investment generated a 1.2x multiple on investment capital when it was fully realized back in June. We believe Eagle Point’s ability to source differentiated investment opportunities complements EIC’s core CLO junior debt strategy and enhances long-term shareholder value. Turning to our capital structure, during the second quarter we issued $1 million of our 6% Series AA Convertible Perpetual Preferred Stock.

This fixed-rate perpetual financing provides an attractive source of long-term capital and additional flexibility to deploy capital when compelling opportunities arise. We see this financing as a significant competitive advantage and we’re unaware of any other public CLO debt-focused fund with a similar perpetual convertible preferred program. I’ll now turn the call over to Senior Principal and Portfolio Manager Dan Koh for an update on the market.

Dan Koh, Senior Principal and Portfolio Manager

Thanks, Tom. I’ll provide a brief update on the loan and CLO markets. The S and P UBS Leveraged Loan Index rose 1.9% in the second quarter and returned 0.8% in July. Average corporate revenue and EBITDA growth remained positive, supporting overall credit fundamentals across the broadly syndicated loan market despite continued dispersion across sectors and issuers. The trailing 12-month loan default rate ended the quarter at 1.0% compared with 1.4% on March 31 and remained below its long-term average of 2.5%.

EIC’s look-through exposure to defaulted loans remained low at 36 basis points, significantly below the broader market average. We believe this reflects both the quality of our underlying loan holdings, our active portfolio management and disciplined investment process. Software remained an area of focus during the quarter as investors continue to assess the long-term impact of AI across different sectors. AI will likely create both winners and losers, but many software businesses continue to benefit from recurring contracted revenue and sticky customer relationships and mission-critical products.

We believe the market reaction earlier this year overstated the likely impact on the broader software sector. For EIC, the diversification and structural protection within our CLO debt investments further help mitigate the impact of weakness in any individual borrower or sector. Loan prices recovered during the second quarter, although the improvement remained uneven across individual credits. At the end of the quarter, the look-through underlying loan portfolio had a weighted average market price of 95.30, providing opportunities for par building through discounted loan purchases.

In terms of CLO market activity, new issuance totaled $33 billion during the second quarter compared with $47 billion in the first quarter. Reset activity totaled $55 billion compared with $32 billion in the first quarter, while refinancing activity totaled $39 billion compared with $24 billion in the first quarter. We expect refinancing and reset activity to remain robust. For our CLO equity investments, this activity can lower liability costs and extend reinvestment periods.

For CLO debt investments purchased at a discount, resets, refinancings and calls can create additional opportunities to realize embedded gains through early repayments at par. We continue to believe CLO junior debt offers an attractive combination of floating-rate income, structural protection and low historical credit expense relative to comparably rated corporate securities. If interest rates remain elevated or increase over the near to intermediate term, our CLO debt portfolio is positioned to benefit from higher income.

Our CLO equity investments are less sensitive to changes in benchmark rates because returns are driven primarily by the underlying loan asset spreads, less the CLO’s financing costs. At the company level, the combination of predominantly floating-rate investments and fixed-rate preferred financing creates an attractive earnings profile in this environment. With that, I’ll hand it over to our advisor’s Chief Accounting Officer, Lena Umnova, to walk through our financial results.

Lena Umnova, Chief Accounting Officer

Thank you, Dan. During the second quarter, the company generated net investment income, or NII, of $0.37 per share. NII less realized losses from investments was minus $0.29 per share. This compares to NII less realized losses from investments of $0.34 per share in the first quarter of 2026 and NII unrealized gains of $0.39 per share in the second quarter of 2025. Including unrealized portfolio gains, GAAP net income was $20,000,000 or $0.84 per share for the second quarter of 2026.

This compares to GAAP net loss of $0.95 per share in the first quarter of 2026 and GAAP net income of $0.49 per share in the second quarter of 2025. The current cash flows from the company’s investment portfolio totaled $12 million, or $0.52 per share, during the quarter and exceeded the company’s common stock distributions and expenses. We paid three monthly common stock distributions of $0.11 per share during the quarter, and we declared monthly common stock distributions of $0.11 per share for the remainder of 2026.

We believe the current distribution level reflects the company’s near-term earnings potential in today’s interest rate environment. Looking at our capital structure, as of June 10, the company had outstanding preferred equity securities equal to 12% of total assets, less current liabilities. This is below our target range of 25% to 35% where we expect to operate the company under normal market conditions. We expect leverage to increase over time as we raise additional capital through our continued offering of the Series AA and Series AB Convertible Perpetual Preferred Stock, the program that we launched early in 2026.

Looking at our portfolio activity during the month of July, the company received recurring cash flows from its investments totaling $8 million. Note that some of the company’s investments are still expected to make payments later in the quarter. As of July month end, net of pending investment transactions and settlement, the company had over $53 million of cash and revolver capacity available for investment and other purposes. Management’s unaudited estimate of the company’s NAV as of July month end was between $12.30 and $12.40 per share.

At the midpoint, this represented a 1% decrease from June month end. I will now turn the call back over to Tom to provide closing remarks before we take your questions.

Thomas Majewski, Chairman and Chief Executive Officer

Thanks, Lena. The second quarter demonstrated the benefits of active portfolio management and access to the full Eagle Point platform. We continue to selectively rotate capital towards higher conviction opportunities across CLO debt, CLO equity and differentiated private credit investments while strengthening our capital structure. With healthy CLO fundamentals, a predominantly floating-rate investment portfolio and fixed-rate preferred financing, we believe EIC is well positioned to generate attractive income and long-term value for our fellow shareholders.

We appreciate your continued support and thank you for your time and interest in Eagle Point Income Company. Lena, Dan and I will now open the call to your questions, operator.

OPERATOR

Thank you. We’ll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. One moment, please, while we poll for questions.

Thank you. Our first question is from Eric Zwick with Lucid Capital Markets.

Eric Zwick, Analyst at Lucid Capital Markets

Thanks. Good morning again. Maybe just start with a question on the recurring cash distributions. You noted $8.3 million here to start the third quarter with a little bit more expected throughout the quarter. That rate would seem to be below what we’ve seen in the past couple quarters and kind of continuing a downward trend. So if you could kind of just frame it in terms of how much of that is related to kind of market factors versus the portfolio performance and then kind of what it would take to kind of see an inflection point and see that start growing again.

Kind of curious on your thoughts there.

Dan Koh, Senior Principal and Portfolio Manager

Yeah. So, hey, this is Dan Koh here. A few things. So on the CLO debt side, I mean given that we’re seeing, or we expect, kind of rates to increase in the near to kind of intermediate term, our expectation is that the cash, at least the income from the CLO debt portion of the portfolio, will likely increase over the next few months as kind of base rates increase. The decrease in cash flows is probably mainly driven by the CLO equity portion of the portfolio, which has kind of faced spread compression over the past—at least during 2025.

And the effects of that is really being felt more now as all those kind of loan coupons were reset. Some of it’s also driven by the fact that the underlying—and some of the CLOs do have semiannual paying bonds. And so there is a little bit of a kind of a sawtooth sort of payments for CLO equity in that it will be down one quarter and then up another quarter, kind of depending on how big the bond bucket is. So, you know, this quarter kind of being down—we expect this quarter, meaning Q2 or Q3—then the following quarter would be higher.

So our expectation is that we expect it to kind of recover over time.

Eric Zwick, Analyst at Lucid Capital Markets

Thanks, Dan. And, you know, Tom, I think when we, on last quarter’s call, when you discussed the opportunity for share repurchases, I think you noted that you had not used [them as] aggressive as you had in past quarters. The NAV for the fund has recovered nicely in the past quarter. The stock price is not. So I guess with the kind of discounted valuation again, just curious if you could update your thoughts on allocating capital towards share repurchases in the next quarter or two.

Thomas Majewski, Chairman and Chief Executive Officer

Yes, the thing we grapple with, we definitely saw the increase in NAV-igation coming. So we felt it happening as it happened, I guess. I don’t know—never say for sure you saw it coming. We’re mindful of the discount on the share price balanced against the liquidity in the stock and the daily volume. One of the things I think I said on the last call was we backed off somewhat just due to the impact we saw on the volume of the stock as we were buying it back.

So we’re kind of balancing the two of those at the same time. I also point out our leverage is well below our target ratio here. So buying back equity might be helpful to get back in a little bit in line of our leverage category. Although we do have, I think the revolver, as of quarter-end, was fully undrawn. Correct, Lena? Yeah, so we’ve got a couple different tools to work on. But I am mindful of the value of liquidity in the stock, which is an important piece of the puzzle that we think about.

But we look at all the levers every single day.

Eric Zwick, Analyst at Lucid Capital Markets

I appreciate the update there, and last one for me. One, I just wanted to say I appreciate all the slides you guys put out every quarter. If I kind of look at one of the later ones there, slide 27, which shows annual CLO trading volume, just looking at that, the year-to-date figures for ’26 would suggest that we’d see, I guess relative to at least 2012, a record year for this chart. Curious if you could just kind of explain the dynamics that have [been] leading to a very strong trading year here, kind of the general upward trend, and what that means for you managing the fund.

Is having greater trading liquidity an advantage? Does it potentially bring in more competitors to the market? Just curious how you view the increase here.

Dan Koh, Senior Principal and Portfolio Manager

Yeah, I mean we like the focus that others have had on CLO. It’s a lot different from 14 years ago, I guess—nearly 14 years ago when we started the firm. And having that liquidity allowed us to kind of reposition the portfolio this past quarter in Q2, and without—actually kind of better than we anticipated in terms of kind of the levels that we were able to get. And that’s really due to just the liquidity that has grown within the CLO market and just there being more eyes and people that actually look at CLOs versus 2012 when we initially started.

So that’s certainly been a benefit for the fundamental.

Eric Zwick, Analyst at Lucid Capital Markets

Thank you for taking my questions today.

Dan Koh, Senior Principal and Portfolio Manager

Thanks, Aaron.

OPERATOR

Our next question is from Timothy D’Agostino with B. Riley Securities.

Timothy D’Agostino, Analyst at B. Riley Securities

Yeah, hi, good morning. Thanks for taking the questions. Regarding leverage, it’s noted that it was about 12%, which is below the long-term target of 25% to 35%. Could you just maybe help provide some color on why we’re at 12% today and then maybe the path and how you think about getting back in line with that leverage target? Thank you.

Dan Koh, Senior Principal and Portfolio Manager

Sure. So we earlier this year kind of retired, I guess, our most expensive preferreds, which were, I think, at 8%—EICC. And that, just relative to kind of the opportunities we were seeing in CLO, didn’t make a ton of sense to keep outstanding. We have started a program of issuing kind of the EIC AA and AB, which are the convertible perpetual preferreds at 6%, which we do find very, very attractive. So we expect that issuance to continue over the next couple—several quarters, in fact.

And so our expectation is that as we raise money there that we’ll continue to improve, increase the leverage stats. But also the revolver today remains undrawn. And so that obviously, if we were to kind of fully draw, that would increase the leverage and kind of get us more in line with kind of the range, the target range over the long term.

Timothy D’Agostino, Analyst at B. Riley Securities

Okay, great, that’s helpful. And then just a second one for me. Obviously, we just had the Eagle Point Credit Company call where we talked about other investments. I guess it seems that for EIC that is a similar focus as well, just diversifying the portfolio. I guess, could you walk us through how that sleeve of other investments for EIC is similar and/or different to what you have at ECC? Thank you.

Dan Koh, Senior Principal and Portfolio Manager

Sure. No, it is similar in that many of the—there’s a good amount of overlap between the ECC and EIC kind of other investments. I guess EIC is somewhat, given that it’s a smaller fund, maybe has a little bit less concentration in some of these, whereas ECC has a kind of bigger position. So we expect those to kind of merge—or to have very similar. Not merge. Sorry, that’s not the right word. We expect those to have very similar—a lot of overlap in positions kind of over time in the other bucket.

Timothy D’Agostino, Analyst at B. Riley Securities

Okay, great. Thank you so much for taking the questions today.

Dan Koh, Senior Principal and Portfolio Manager

Thanks, Tim.

OPERATOR

Thank you. There are no further questions at this time. I would like to hand the floor back over to Thomas Majewski for any closing comments.

Thomas Majewski, Chairman and Chief Executive Officer

Great. Thank you very much for joining us today. Lena, Dan and I appreciate your interest in the call and Eagle Point Income Company. We’ll be in the office later today if anyone has any follow-up questions. Thank you very much.

OPERATOR

Thank you. This does conclude today’s conference. You may disconnect your lines at this time, and we thank you again for your participation.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.