Oxford Lane Capital Corp (OXLC) 2018 Q4 法說會逐字稿

Good morning, and welcome to the Oxford Lane Capital Fourth Fiscal Quarter Earnings Release Conference Call. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Jonathan Cohen. Please go ahead.

Thanks very much. Good morning and welcome, everyone, to the Oxford Lane Capital Corp. Fourth Fiscal Quarter 2018 Earnings Conference Call. I am joined today by Saul Rosenthal, our President; and Bruce Rubin, our Chief Financial Officer and Treasurer.

Bruce, could you open the call today with the discussion regarding forward-looking statements.

Sure, Jonathan. Today's call is being recorded. An audio replay of the conference call will be available for 30 days. Replay information is included in our press release that was released earlier this morning. Please note that this call is a property of Oxford Lane Capital Corp. Any unauthorized rebroadcast of this call in any form is strictly prohibited.

I'd also like to call your attention to the customary disclosure in our press release this morning regarding forward-looking information. Today's conference call includes forward-looking statements and projections, and we ask that you refer to our most recent filings at the SEC for important factors that could cause our actual results to differ materially from these projections. We do not undertake to update our forward-looking statements unless required to do so by law. To obtain copies of our latest SEC filings, please visit our website at www.oxlc.com.

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

Thanks very much, Bruce. At March 31, 2018, our net asset value per share stood at $10.08 compared with the net asset value per share at December 31, 2017, of $10.02. We generated a total return of approximately 4.6% for shareholders during the quarter ended March 31, 2018. That return reflects the change in net asset value per share for the period as well as the impact of a $0.405 per share dividend.

For the quarter ended March 31, we recorded GAAP total investment income of approximately $20.4 million, representing an increase of approximately $1.4 million when compared to the quarter ended December 31, 2017. The fourth quarter's GAAP investment income from our portfolio was produced as follows: approximately $19.7 million from our CLO equity investments; and approximately, $700,000 from our CLO debt investments and from other income.

Oxford Lane also recorded GAAP net investment income of approximately $11 million or $0.40 per share for the quarter ended March 31, compared with $10.5 million or $0.41 per share for the prior quarter.

During the quarter, we issued a total of approximately 1.9 million shares of our common stock pursuant to an at-the-market offering, resulting in net proceeds of approximately $18.6 million. For the quarter ended March 31, we recorded net realized gains of approximately $1 million or $0.04 per share. We recorded net unrealized appreciation of approximately $900,000 or $0.03 per share. We had a net increase in net assets resulting from operations of approximately $12.9 million or approximately $0.47 per share for the quarter.

As of March 31, the following weighted average yields were calculated. The weighted average GAAP effective yield of our CLO investment in -- equity investments at current cost was approximately 17.2% compared with 17.1% as of December 31, 2017. The weighted average yield of our CLO debt investments at current cost was approximately 10.9% compared with 10.1% as of December 31. The weighted average cash yield of our CLO equity investments at current cost was approximately 17.3% compared with 20.2% as of December 31, 2017. We note that the cash yields calculated on our CLO equity investments are based on the cash distributions we received or were entitled to receive at each respective period end.

During the quarter ended March 31, we made additional CLO investments of approximately $136 million. And we received cash proceeds of approximately $86.9 million from sales and repayments of our CLO investments.

On April 25, 2018, we entered into an amended and restated repurchased transaction facility with Nomura Securities International. Under this agreement, the terms of the facility was extended by 3 months until January 2, 2019. In addition, effective April 2, 2018, the facility's pricing rate was reduced from 3 months LIBOR plus 335 basis points to 3 months LIBOR plus 315 basis points. The first quarter of 2018 represented a period of continued strength in the markets in which we participate. From January 1, 2018 to March 31, the LSTA corporate loan index increased modestly in price, trading at approximately 98.4% of par. At the same time, corporate loan default rates remained at low levels providing investors with a generally lower risk, lower return corporate debt environment.

During the first quarter of 2018, tighter leveraged loan credit spreads generally reduced the weighted average spreads of the loan assets in our CLO investments. Although the CLO liability market moderately widened towards the end of the first quarter of 2018, we believe that the current market environment continues to present us with ongoing opportunities, including refinancing and resetting opportunities.

During the quarter, we continued our active rotation of our CLO portfolio with opportunistic purchases and sales. While we continue to focus generally on CLO equity with longer reinvestment periods that should have a longer time to build par values and to invest in wider credit spreads compared to today's corporate loan environment, we continue to evaluate a variety of different CLO equity and debt profiles that we believe may provide us with attractive risk-adjusted returns. We believe that the CLO market continues to present us with compelling investment opportunities, especially, as we continue to see a broad dispersion in pricing across different CLO vintages and profiles.

We continue to pursue our mandate of maximizing the risk-adjusted total return to our shareholders. As such, we have and continue to focus on portfolio management strategies, to maximize our total return as opposed to generating a certain level of income over a particular time frame. As a permitting capital vehicle, we have, historically, been able to take a longer-term view towards our investments.

We note that additional information about Oxford Lane's fourth fiscal quarter performance has been posted to our website at www.oxlc.com.

And with that, operator, we are happy to start taking any questions.

(Operator Instructions) And this concludes our question-and-answer session. I would like to turn the conference back over to Jonathan Cohen for any closing remarks.

I would like to thank everybody for their interest and their participation on this call. And we look forward to speaking to you again shortly. Thanks very much.

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