Oxford Lane Capital Corp (OXLC) 2021 Q1 法說會逐字稿

Good day, and welcome to the Oxford Lane Capital Corp. First Fiscal Quarter 2021 Earnings Release and 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, everyone, and welcome to the Oxford Lane Capital Corp. First Fiscal Quarter 2021 Earnings Conference Call. I'm joined today by Saul Rosenthal, our President; Bruce Rubin, our Chief Financial Officer; and Deep Maji, our Senior Managing Director and Portfolio Manager. Bruce, could you please open the call this morning 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 could 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 the earnings release and also refer to non-GAAP measures. For definitions and reconciliations to GAAP, please refer to our earnings release posted on our website at www.oxfordlanecapital.com. With that, I'll turn the presentation back over to Jonathan.

Thanks very much, Bruce. On June 30, 2020, our net asset value per share stood at $3.23 compared to a net asset value per share of $3.58 as of March 31. For the quarter ended June 30, we reported GAAP total investment income of approximately $29.7 million, representing a decrease of approximately $4.2 million from the prior quarter. The quarter's GAAP total investment income from our portfolio consisted of $27.7 million from our CLO equity investments and $2 million from our CLO debt investments and from other income. Oxford Lane also recorded GAAP net investment income of approximately $17.6 million or $0.23 per share for the quarter ended June 30 compared to approximately $20.4 million or $0.29 per share for the quarter ended March 31. Our core net investment income was approximately $17.7 million or $0.23 per share for the quarter ended June 30, compared with approximately $32.3 million or $0.45 per share for the quarter ended March 31.

During the quarter ended June 30, we issued a total of approximately 7.2 million shares of our common stock pursuant to an aftermarket offering, resulting in net proceeds of approximately $26.7 million. On May 21, 2020, we announced that the company's Board of Directors authorized a program for the purchase -- purpose of repurchasing up to $40 million worth of the outstanding shares of the company's preferred stock.

For the quarter ended June 30, we repurchased approximately $6.4 million of our preferred stock consisting of approximately 135,000 shares of our 7.5% Series 2023 term preferred stock for a total of approximately $3.2 million, approximately 4,000 shares of our 6.75% Series 2024 term preferred stock for a total of approximately $100,000. And approximately 139,000 shares of our 6.25% Series 2027 term preferred stock for a total of approximately $3.1 million.

For the quarter ended June 30, we recorded net realized losses of approximately $27.3 million or $0.35 per share. We recorded net unrealized depreciation of approximately $11.6 million or $0.15 per share. We had a net increase in net assets resulting from operations of approximately $1.9 million or $0.02 per share for the first fiscal quarter. As of June 30, the following metrics applied. We note that none of these metrics represented a total return to shareholders. The weighted average yield of our CLO debt investments at current cost was 11.7%, up from 11.6% as of March 31.

The weighted average GAAP effective yield of our CLO equity investments at current cost was 13.4%, down from 15.5% as of March 31. The weighted average cash distribution yield of our CLO equity investments at current cost was 14%, down from 20% as of March 31. 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 June 30, we made additional CLO investments of approximately $21.4 million, and we received $49.7 million from sales and repayments of our CLO investments. On June 30, our Board of Directors declared monthly $0.0675 common stock distributions through December 31, 2020.

With that, I'll turn the call over to our portfolio manager, Deep Maji. Deep?

Thank you, Jonathan. During the quarter ended June 30, the U.S. loan market strengthened versus the quarter ended March 31, 2020. U.S. loan prices, as defined by S&P/LSTA Leveraged Loan Index, increased from 82.9% of par as of March 31 to a quarterly high of 91.2% of par on June 10, before declining to 89.9% of par on June 30. As we mentioned last quarter, we anticipated that U.S. CLO equity tranche pricing may remain under pressure in the near to medium term due to elevated ratings downgrades, specifically to CCC or below rated, an increase in loan defaults and the prospect for CLO equity cash flow diversion. While CLO equity cash flow diversion risk has increased in the near to medium term, the current environment may create opportunities for the CLO managers of the CLO vehicles in which we are invested to reinvest into higher-yielding loans at meaningful discounts to par. This may allow these CLO managers to increase their over-collateralization ratios to provide additional cushion to mitigate future CLO equity cash flow diversion caused by additional loan defaults and ratings downgrades.

In the current market environment, we intend to continue to utilize an opportunistic and unconstrained CLO investment strategy across U.S. CLO debt and equity tranches, looking 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 will turn the call back over to Jonathan.

Thanks very much, Deep. Operator, with that, we're happy to open the call for any questions.

(Operator Instructions) I'm showing no questions at this time.

All right. Operator, thank you very much. Lastly, I would like to note that additional information regarding our first fiscal quarter financial performance has been uploaded to our website at www.oxfordlanecapital.com. I'd like to thank everyone on the call and listening to the replay for their interest and their participation. Thank you very much.

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