OXLC - NASDAQ

Hello, everyone, and welcome to our call today. Oxford Lane Capital Corp. announces net asset value and selected financial results for the third fiscal quarter and declaration of distributions on common stock for the month ending April, May, and June 2025. My name is Lydia, and I'll be your operator today. After the prepared remarks, there'll be an opportunity to ask questions. [Operator Instructions] I'll now hand you over to Jonathan Cohen, CEO, to begin. Please go ahead.

Thank you. Good morning, everyone, and welcome to the Oxford Lane Capital Corp. third fiscal quarter 2025 earnings conference call. I'm joined today by Saul Rosenthal, our President; Bruce Rubin, our CFO; and Joe Kupka, our Managing Director. Bruce, could you open the call with a disclosure regarding forward-looking statements?

Sure, Jonathan. Today's conference call is being recorded. An 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 in 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 can cause actual results to differ materially from those indicated in these projections. We do not undertake to update our forward-looking statements unless required to do so by law. During this call, we will use terms defined in our earnings release and also refer to non-GAAP measures. For definitions and reconciliations to GAAP, please refer to our earnings release as posted on our website at www.oxfordlanecapital.com. With that, I'll turn the presentation back to Jonathan.

Thank you, Bruce. On December 31, 2024, our net asset value per share stood at $4.82 compared to a net asset value per share of $4.76 as of the prior quarter. For the quarter ended December, we recorded GAAP total investment income of approximately $114.5 million, representing an increase of approximately $9.3 million from the prior quarter. The quarter's GAAP total investment income consisted of approximately $107.6 million from our CLO equity and CLO warehouse investments and approximately $6.9 million from our CLO debt investments and from other income. Oxford Lane recorded GAAP net investment income of approximately $72.4 million or $0.20 per share for the quarter ended December 31st, compared to approximately $67.2 million or $0.22 per share for the quarter ended September 30th. Our core net investment income was approximately $99.9 million or $0.28 per share for the quarter ended December, compared with approximately $99.4 million or $0.32 per share for the quarter ended September. As of December 31st, we held approximately $509 million in newly issued or newly acquired CLO equity investments that had not yet made initial distributions to Oxford Lane. For the quarter ended December, we recorded net unrealized appreciation on investments of approximately $34.9 million and net realized losses of approximately $3.6 million. We had a net increase in net assets resulting from operations of approximately $103.7 million or $0.29 per share for the third fiscal quarter. As of December 31st, the following metrics applied. We note that none of these metrics necessarily represented a total return to shareholders. The weighted average yield of our CLO debt investments at current cost was 16.6%, down from 17.3% as of September 30th. The weighted average effective yield of our CLO equity investments at current cost was 16.1%, down from 16.5% as of September 30th. For the December quarter, we have excluded the impact of CLO warehouse positions from this calculation. The weighted average cash distribution yield of our CLO equity investments at current cost was 23.9%, down from 24.1% as of September 30th. We note that the cash distribution yields calculated on our CLO equity investments are based on the cash distributions we received or which we were entitled to receive at each respective period end. During the quarter ended December, we issued a total of approximately 49 million shares of our common stock pursuant to an at-the-market offering, resulting in net proceeds of approximately $248.9 million. During the quarter ended December, we made additional CLO investments of approximately $389.3 million, and we received approximately $33.9 million from sales and from repayments. On January 24th, our Board of Directors declared monthly common stock distributions of $0.09 per share for each of the months ending April, May and June of 2025. With that, I'll turn the call over to our Managing Director, Joe Kupka.

Thanks, Jonathan. During the quarter ended December 31, 2024, U.S. loan market performance improved versus the prior quarter. The U.S. loan price index increased from 96.71% as of September 30th to 97.33% as of December 31st. The increase in U.S. loan prices led to an approximate 5-point increase in median U.S. CLO equity net asset values. Additionally, due to elevated levels of repricing activity, we observed median weighted average spreads across loan pools within CLO portfolios decreased to 344 basis points compared to 352 basis points last quarter. The 12-month trailing default rate for the loan index increased to 0.9% by principal amount at the end of the quarter from 0.8% at the end of September. We note that out-of-court restructurings, exchanges and subpar buybacks, which are not captured in the cited default rate, remain elevated. CLO new issuance during the quarter totaled approximately $59 billion, an increase of $18 billion from the prior quarter. CLO new issuance for the year 2024 totaled approximately $202 billion as of December compared to approximately $116 billion in 2023. In addition, the U.S. CLO market saw over $300 billion in reset and refinancing activity in 2024. CLO new issuance and combined reset and refinancing activity set annual volume records. Oxford Lane remained active this quarter, investing over $380 million of proceeds in CLO equity, debt and warehouses while participating in opportunistic resets and refinancings. As a function of our overall activity during the quarter, we were able to lengthen the weighted average reinvestment period of Oxford Lane's CLO equity portfolio from September 2027 to February 2028. Our primary investment strategy during the quarter was to engage in relative value trading and seek to lengthen the weighted average reinvestment period of Oxford Lane's CLO equity portfolio. In the current market environment, we intend to continue to utilize an opportunistic and unconstrained CLO investment strategy across U.S. CLO equity, debt, and warehouses as we look to maximize our long-term total return. And as a permanent capital vehicle, we have historically been able to take a longer-term view towards our investment strategy. With that, I'll turn the call back over to Jonathan.

Thanks, Joe. Additional information about Oxford Lane's third fiscal quarter performance has been uploaded to our website at www.oxfordlanecapital.com. And operator, we're happy to open the call now for any questions.

Thank you. [Operator Instructions] We have no questions on the line at the moment, so I'll turn you back over to Jonathan for any closing comments. : :

All right, thanks very much. I'd like to thank everybody who participated in this call or anybody who listen to it on the replay. We thank you for your interest in Oxford Lane Capital Corp., and we look forward to speaking again soon. Thanks very much.