Oxford Lane Capital Corp (OXLC) 2025 Q1 法說會逐字稿

Hello all, and welcome to Oxford Lane Capital Corp.'s first fiscal quarter earnings call. My name is Lydia, and I will be your operator today. After the prepared remarks, there will be an opportunity to ask questions. (Operator Instructions)

大家好，歡迎參加 Oxford Lane Capital Corp. 的第一個財季財報電話會議。我叫莉迪亞，今天我將成為你們的接線生。準備好發言後，將有機會提問。 （操作員說明）

I'll now hand you over to Jonathan Cohen, CEO, to begin.

現在我將把您交給首席執行官喬納森·科恩（Jonathan Cohen）開始。

Good morning, everyone, and welcome to the Oxford Lane Capital Corp., first fiscal quarter 2025 earnings call. I'm joined today by Saul Rosenthal, our President; Bruce Rubin, our Chief Financial Officer; and Joe Kupka, our Managing Director.

大家早安，歡迎參加 Oxford Lane Capital Corp. 2025 年第一個財季財報電話會議。今天我們的總統索爾·羅森塔爾也加入了我的行列。 Bruce Rubin，我們的財務長；和我們的董事總經理喬·庫普卡。

Bruce, could you open the call with a disclosure regarding forward-looking statements.

布魯斯，您能否在電話會議開始時披露有關前瞻性陳述的資訊。

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.

當然，喬納森。今天的電話會議正在錄音。通話的音訊重播將在 30 天內提供。重播資訊包含在我們今天早上早些時候發布的新聞稿中。請注意，本次電話會議屬於 Oxford Lane Capital Corp. 的財產。此時，請注意今天上午新聞稿中有關前瞻性資訊的慣例披露。

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.

今天的電話會議包括前瞻性陳述和預測，反映了公司目前對未來事件和財務表現等方面的看法。我們要求您參考我們最近向 SEC 提交的文件，以了解可能導致實際結果與這些預測中所示結果有重大差異的重要因素。除非法律要求，否則我們不承諾更新我們的前瞻性陳述。在本次電話會議中，我們將使用收益發布中定義的術語，並參考非 GAAP 衡量標準。有關 GAAP 的定義和調節，請參閱我們網站 www.oxfordlanecapital.com 上發布的收益報告。

And with that, I'll turn the presentation back over to Jonathan.

接下來，我會將簡報轉回喬納森。

Thank you, Bruce. On June 30, 2024, our net asset value per share stood at $4.91 compared to a net asset value per share of $4.90 as of the prior quarter. For the quarter ended June 30, we recorded GAAP total investment income of approximately $89.8 million, representing an increase of approximately $7.1 million from the prior quarter. The quarter's GAAP total investment income consisted of approximately $84 million from our CLO equity and CLO warehouse investments and approximately $5.7 million from our CLO debt investments and from other income.

謝謝你，布魯斯。截至 2024 年 6 月 30 日，我們的每股資產淨值為 4.91 美元，而上一季的每股資產淨值為 4.90 美元。截至 6 月 30 日的季度，我們記錄的 GAAP 總投資收入約為 8,980 萬美元，較上一季增加約 710 萬美元。本季的 GAAP 總投資收入包括來自 CLO 股權和 CLO 倉庫投資的約 8,400 萬美元，以及來自 CLO 債務投資和其他收入的約 570 萬美元。

Oxford Lane recorded GAAP net investment income of approximately $56 million or $0.22 per share for the quarter ended June compared to approximately $51 million or $0.22 per share for the quarter ended March 31. Our core net investment income was approximately $107.2 million or $0.41 per share for the quarter ended June 30 compared with approximately $79.9 million or $0.35 per share for the quarter ended March 31.

Oxford Lane 記錄的截至6 月的季度的GAAP 淨投資收益約為5,600 萬美元，即每股0.22 美元，而截至3 月31 日的季度的GAAP 淨投資收益約為5,100 萬美元，即每股0.22 美元。 我們的核心淨投資收益約為1.072 億美元，即每股0.41 美元。

For the quarter ended June, we recorded net unrealized depreciation on investments of approximately $14.4 million and net realized gains of approximately $6.1 million. We had a net increase in net assets resulting from operations of approximately $47.7 million or $0.18 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.

截至 6 月的季度，我們記錄的投資未實現淨折舊約為 1,440 萬美元，已實現淨收益約為 610 萬美元。第一財季營運帶來的淨資產淨成長約為 4,770 萬美元，即每股 0.18 美元。截至 6 月 30 日，適用以下指標。我們注意到，這些指標都不能代表股東的總回報。

The weighted average yield of our CLO debt investments at current cost was 17.4%, up from 17.1% as of March 31. The weighted average effective yield of our CLO equity investments at current cost was 16.8%, down from 16.9% as of March 31. The weighted average cash distribution yield of our CLO equity investments at current cost was 26.9%, up from 23.5% 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.

以現值計算的CLO 債權投資的加權平均收益率為17.4%，高於截至3 月31 日的17.1%。月31 日的16.9%我們的CLO 股權投資以當前成本計算的加權平均現金分配收益率為26.9%，高於截至3 月31 日的23.5%。收益率是基於我們收到的現金分配或我們有權在每個相應期末收到。

During the quarter ended June, we issued a total of approximately 45.9 million shares of our common stock pursuant to an at-the-market offering, resulting in net proceeds of approximately $242.1 million. During the quarter ended June, we made additional CLO investments of approximately $216.9 million, and we received approximately $96.3 million from sales and from repayments. On July 25, our Board of Directors declared monthly common stock distributions of $0.09 per share for each of the months ending October, November and December of 2024.

在截至 6 月的季度中，我們根據市場發行總共發行了約 4,590 萬股普通股，淨收益約為 2.421 億美元。在截至 6 月的季度中，我們進行了約 2.169 億美元的額外 CLO 投資，並從銷售和還款中收到了約 9,630 萬美元。 7 月 25 日，我們的董事會宣布截至 2024 年 10 月、11 月和 12 月的每月普通股分配為每股 0.09 美元。

With that, I'll turn the call over to our Managing Director, Joe Kupka. Joe?

接下來，我會將電話轉給我們的總經理喬‧庫普卡 (Joe Kupka)。喬？

Thanks, Jonathan. During the quarter ended June 30, 2024, the US loan market price index opened at 96.73%, reaching 96.99% in mid-May before softening in June and ending the quarter at 96.59%. The decrease in US loan prices led to an approximate two-point decrease in median US CLO equity net asset values.

謝謝，喬納森。截至 2024 年 6 月 30 日的季度，美國貸款市場價格指數開盤為 96.73%，5 月中旬達到 96.99%，然後在 6 月走軟，季度結束時為 96.59%。美國貸款價格下降導緻美國 CLO 股權淨資產中位數下降約兩個百分點。

Additionally, due to elevated levels of repricing activity, we observed median weighted average spreads across loan pools within CLO portfolios decreased to 361 basis points compared to 368 basis points last quarter. The 12-month trailing default rate for the loan index decreased to 0.9% by principal amount at the end of the quarter from 1.1% at the end of March 2024. We note that out-of-court restructuring exchanges and subpar buybacks, which are not captured in the side the default rate remain elevated.

此外，由於重新定價活動水準升高，我們觀察到 CLO 投資組合內貸款池的加權平均利差中位數下降至 361 個基點，而上季為 368 個基點。貸款指數的 12 個月追蹤違約率以本金計算，從 2024 年 3 月底的 1.1% 降至本季末的 0.9%。的一面違約率仍居高不下。

Additionally, the distress ratio, defined as the percentage of loans with a price below 80% of par, ended the quarter at 4.4% compared to approximately 3.5% at the end of March. CLO new issuance during the quarter totaled approximately $53 billion, an increase of $4 billion from the prior quarter, marking the second highest quarterly volume in CLO market history as CLO liabilities have continued to tighten. Oxford Lane remained active this quarter, trading over $500 million notional CLO equity and junior debt while participating in opportunistic resets and refinancings.

此外，不良貸款率（定義為價格低於面值 80% 的貸款百分比）在本季結束時為 4.4%，而 3 月底約為 3.5%。本季 CLO 新發行總量約為 530 億美元，較上一季增加 40 億美元，在 CLO 負債持續收緊的情況下，創下 CLO 市場歷史上第二高的季度發行量。 Oxford Lane 本季仍然活躍，交易了超過 5 億美元的名義 CLO 股票和次級債務，同時參與機會性重置和再融資。

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 July 2026 to November 2026. Our 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 our opportunistic and unconstrained CLO investment strategy across US 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.

根據我們本季的整體活動，我們能夠將Oxford Lane 的CLO 股票投資組合的加權平均再投資期限從2026 年7 月延長至2026 年11 月。尋求延長Oxford Lane CLO 股票投資組合的加權平均再投資期限。在當前的市場環境下，我們打算繼續利用我們在美國CLO股票、債務和倉庫方面的機會主義和不受約束的CLO投資策略，以實現長期總回報最大化。作為一種永久的資本工具，我們歷來能夠以更長遠的眼光來制定我們的投資策略。

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

這樣，我會將電話轉回喬納森。

Thanks, Joe. Additional information about Oxford Lane's first-quarter results has been uploaded to our website at www.oxfordlanecapital.com. And with that, the operator will now poll for any questions.

謝謝，喬。有關 Oxford Lane 第一季業績的更多資訊已上傳至我們的網站 www.oxfordlanecapital.com。這樣，操作員現在將輪詢是否有任何問題。

(Operator Instructions) Mickey Schleien, Ladenburg.

（操作員說明）Mickey Schleien，拉登堡。

Yes. Good morning, everyone. Jonathan, there's been a leveraged loan repricing wave with over one-third of the market trading above par, and due to higher expectations of a soft landing. That trend can impact loan spreads, and I do see that the average spread in your CLO equity portfolio declined 8 basis points, which can pressure the CLO equity arbitrage. And I also see that your average AAA liability spreads were about stable. So what caused your CLO cash yields to increase so much this quarter?

是的。大家早安。喬納森（Jonathan），由於對軟著陸的預期更高，槓桿貸款重新定價浪潮已超過三分之一的市場交易價格高於標準水準。這種趨勢會影響貸款利差，我確實看到 CLO 股票投資組合的平均利差下降了 8 個基點，這可能會給 CLO 股票套利帶來壓力。我還發現你們的平均 AAA 負債利差大致穩定。那麼是什麼導致你們的 CLO 現金收益率本季成長如此之多呢？

Mickey, so a lot of that was due to -- so you're looking at the January versus April payments. So there's a bit of lag in those numbers. So we've seen managers continue to build spread up till this quarter. the July payments did take a dip down from the April payments. So you'll continue to see that repricing wave hit. So there's a lag there. Additionally, we did have some first-time payments come on, which bolstered that cash yield number for this quarter.

米奇，所以很多都是因為——所以你正在看一月和四月的付款。所以這些數字有些落後。因此，我們看到經理人在本季之前繼續擴大利差。 7 月的付款確實比 4 月的付款有所下降。因此，您將繼續看到重新定價浪潮的衝擊。所以那裡有一個滯後。此外，我們確實有一些首次付款，這支撐了本季的現金收益率數據。

Okay. That's helpful. And what are your expectations for the remaining ability to refinance or reset liabilities in your CLO equity portfolio to help, defend yields against the loan spread compression we're seeing?

好的。這很有幫助。您對 CLO 股票投資組合中剩餘的再融資或重置負債的能力有何期望，以幫助保護收益率免受我們所看到的貸款利差壓縮的影響？

Sure, Mickey. We really don't make public projections or pronouncements about those kinds of forward-looking activities. But certainly, we see the state of the CLO liability market, which looks to be generally constructive still.

當然，米奇。我們確實不會對此類前瞻性活動做出公開預測或聲明。但當然，我們看到了 CLO 負債市場的狀況，看起來總體上仍然是有建設性的。

Okay. And Jonathan, the ratings agencies haven't seemed to accept the higher odds of the soft landing or the amount of capital available to lower quality borrowers. So the downgrade upgrade ratio is still meaningfully above one times, which can pressure CCC buckets. So how are your portfolio managers dealing with that trend?

好的。喬納森，評級機構似乎還沒有接受軟著陸的更高可能性或低品質借款人可獲得的資本數額。因此，降級升級比率仍然有意義地高於一倍，這可能會給 CCC 帶來壓力。那麼您的投資組合經理如何應對這一趨勢呢？

Yes. So one data point we've seen is actually just due to the elevated amount of reset activity. Managers have been proactively cleaning up these CCC baskets in anticipation of looking to reset into a cleaner deal. So we've seen CCC baskets in that sense, declining a bit. But you're right, it's going to be a continuing battle for these managers to proactively manage around these CCC baskets, but they do have healthy OC cushions even if they do bump up against the limit, VOC ratios are still remaining relatively healthy.

是的。因此，我們看到的一個數據點實際上只是由於重置活動量增加所致。經理們一直在積極清理這些 CCC 籃子，以期待重新制定更乾淨的交易。所以我們看到 CCC 籃子在這個意義上有所下降。但你是對的，對於這些管理者來說，主動管理這些 CCC 籃子將是一場持續的戰鬥，但他們確實有健康的 OC 緩衝，即使他們確實達到了極限，VOC 比率仍然保持相對健康。

Yes, I saw that. And my last question on the balance sheet. The fund doesn't carry particularly high leverage even with the recent notes offering. So what's your appetite to issue additional debt or preferred shares to help lower your weighted average cost of capital?

是的，我看到了。我關於資產負債表的最後一個問題。即使最近發行了票據，該基金的槓桿率也不是特別高。那麼，您對發行額外債務或優先股以幫助降低加權平均資本成本有何興趣？

Our appetite, Mickey, is, at this moment, principally predicated on pricing. So to the extent that we think there's a sufficiently robust arbitrage available to us, we would look to add additional -- selectively looked at additional debt, but only at pricing that we found to be compelling.

米奇，我們的胃口目前主要取決於定價。因此，只要我們認為有足夠強大的套利可供我們使用，我們就會尋求增加額外的債務——選擇性地考慮額外的債務，但僅限於我們認為具有吸引力的定價。

Okay. Any sort of target leverage that you have in mind, Jonathan?

好的。喬納森，您有什麼目標槓桿嗎？

Not that we've shared with the world at large, no.

我們並沒有與全世界分享，沒有。

Erik Zwick, Lucid Capital Markets.

Erik Zwick，Lucid 資本市場。

Good morning, everyone. I hope you're all doing well. I wanted to start with a question on just -- on the sales and repayment activity during the quarter. Was it the highest that we've seen in over the past five. So I'm just wondering if that's reflective of market activity or some portfolio specific factors.

大家早安。我希望你們一切都好。我想從一個關於本季銷售和還款活動的問題開始。這是我們過去五年來看到的最高水準嗎？所以我只是想知道這是否反映了市場活動或某些投資組合的特定因素。

I think it's largely, Erik, significantly a function of just the size of the fund that has grown substantially over the course of the last year or two. So larger scale begets more repayment activity and more sales activity. We have been and remain committed to running an actively managed portfolio, which should generate significant trading activity. You saw we did about $500 million worth of notional CLO trading in the quarter. But I wouldn't call that either unusual or necessarily unprecedented.

艾瑞克，我認為這很大程度上取決於基金規模在過去一兩年大幅成長。因此，更大的規模會帶來更多的還款活動和更多的銷售活動。我們一直並將繼續致力於運行積極管理的投資組合，這應該會產生大量的交易活動。您看到我們在本季進行了價值約 5 億美元的名義 CLO 交易。但我不會認為這是不尋常的或必然是史無前例的。

And just with regard to the quarter-over-quarter increase in expenses. Any color you can provide there, whether there was anything kind of onetime in nature or just kind of a more kind of normal inflationary creep here?

就費用的季度環比增長而言。你能在那裡提供任何顏色嗎？

Are you referencing a percentage-based increase, Erik, or a dollar-based increase?

艾瑞克，你指的是基於百分比的成長，還是基於美元的成長？

A dollar-based increase, if I recall, correctly, I can.

如果我沒記錯的話，以美元為基礎的成長是可以的。

Just the size of the fund -- most likely just the size of the fund. We raised an enormous amount of capital not only this quarter, but in the immediately preceding quarter. So everything else was constant, that would likely lead to that dollar-denominated number being higher.

只是基金的規模——很可能只是基金的規模。我們不僅在本季籌集了大量資金，而且在上一季也籌集了大量資金。因此，其他一切都保持不變，這可能會導致以美元計價的數字更高。

And then a question just on credit. You mentioned that out-of-court restructurings remain elevated. You've seen some increase in the distressed prices in the market as well. Looking at your industry exposure, you have a view into a broad slice of the US economy. I guess are there any areas where you're seeing any stress or weakness? It seems like the odds of a soft landing, recession are becoming more probable at this point, but there's still, I think, some concerns in certain areas. So I guess from the ability that you have to look into your portfolio, are there any areas where you see some stress at this point? And if so, how are you seeking to manage that?

然後是關於信用的問題。您提到庭外重組仍然很高。您也看到市場上的不良價格上漲。透過查看您所在的行業，您可以了解美國經濟的廣泛領域。我想您是否在某些方面看到了壓力或弱點？目前看來，軟著陸、經濟衰退的可能性越來越大，但我認為，某些領域仍存在一些擔憂。所以我猜從你必須審視你的投資組合的能力來看，你目前是否在某些領域看到了一些壓力？如果是這樣，您打算如何解決這個問題？

Nothing, Erik, that is readily apparent outside of sort of the perception in the mainstream right now about economic activity. I think there's continued concern within the US economy about consumer behavior, the state of the consumer. There's an ongoing question mark around certain parts of the economy that we're aware of sensitive to. But in terms of the perspective that we've got on the US economy as a result of the investing that we do, I don't think that we've got an insight that isn't sort of outside of the popular perception.

艾瑞克，除了目前主流對經濟活動的看法之外，沒有什麼是顯而易見的。我認為美國經濟內部仍然對消費者行為和消費者狀況感到擔憂。我們意識到，對於某些敏感的經濟領域，一直存在著一個問號。但就我們透過投資對美國經濟的看法而言，我認為我們的見解不超出大眾的看法。

Thank you. We have no further questions in the queue. So I'll now turn the call back to Jonathan Cohen for any closing comments.

謝謝。我們隊列中沒有其他問題了。因此，我現在將把電話轉回給喬納森·科恩，以徵求結束意見。

Thank you all. We appreciate your interest and your time today on this conference call. And we certainly look forward to speaking to you again soon. Thank you all very much for participating.

謝謝大家。我們感謝您今天對本次電話會議的關注和抽出時間。我們當然期待很快再次與您交談。非常感謝大家的參與。

This concludes today's call. Thank you for joining. You may now disconnect your lines.

今天的電話會議到此結束。感謝您的加入。現在您可以斷開線路。