Oxford Lane Capital Q3 2025 Earnings Report

Oxford Lane Capital EPS Results

• Actual EPS: $1.40
• Consensus EPS: $3.35
• Beat/Miss: Missed by -$1.95
• One Year Ago EPS: N/A

Oxford Lane Capital Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $183.42 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Oxford Lane Capital Announcement Details

• Quarter: Q3 2025
• Date: 1/27/2025
• Time: Before Market Opens
• Conference Call Date: Monday, January 27, 2025
• Conference Call Time: 7:00AM ET

Oxford Lane Capital (NASDAQ:OXLC) Corp is a closed-end, externally managed investment company that seeks to generate high current income and capital appreciation. The company invests primarily in debt and equity securities of private funds managed or advised by Oxford Finance LLC, targeting U.S. middle-market companies. Its portfolio spans senior secured loans, mezzanine debt and private equity interests, providing diversification across credit instruments and industry sectors.

Established in 2009 and based in Greenwich, Connecticut, Oxford Lane Capital commenced operations in 2012. The company’s investment activities are overseen by Oxford Lane Capital Advisor LLC, an affiliate of Oxford Finance LLC, leveraging the adviser’s long-standing expertise in direct lending and structured financings for growth-oriented businesses.

Oxford Lane Capital employs leverage through senior secured financing facilities to enhance potential returns on its investment portfolio. By focusing on middle-market sponsors with established business models, the company seeks to balance risk and reward while maintaining diversified exposure across sectors such as healthcare, technology, business services and manufacturing within the U.S. economy.

Serving institutional and individual investors, Oxford Lane Capital provides access to private credit and private equity markets through a closed-end capital structure. Under the direction of its board of directors and management team, the company regularly reviews its portfolio mix and financing arrangements to adapt to evolving market conditions while aiming to maintain consistent distributions to shareholders.

Oxford Lane Capital Q3 2025 Earnings Call Transcript

Key Takeaways

• Net asset value per share rose to $4.82 as of December 31, up from $4.76 in the prior quarter, marking sequential NAV growth.
• GAAP total investment income increased to $114.5 million (up $9.3 million QoQ), supporting net investment income of $72.4 million for the quarter.
• Weighted average yields compressed with CLO debt yields down to 16.6% (from 17.3%) and CLO equity yields down to 16.1% (from 16.5%), indicating margin pressure.
• Issued 49 million new shares via ATM for $248.9 million of net proceeds and deployed approximately $389.3 million into new CLO equity, debt and warehouse investments.
• Declared monthly common stock distributions of $0.09 per share for April, May and June 2025, underscoring the company’s income focus.

Presentation

[Operator]

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 months ending April, May, and June 2025. My name's Lydia and I'll be your operator today. After the prepared remarks, there'll be an opportunity to ask questions. If you'd like to participate in the Q&A, you can do so by pressing star followed by one on your telephone keypad. I'll now hand you over to Jonathan Cohen, CEO, to begin. Please go ahead.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

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?

[Bruce Rubin, CFO at Oxford Lane Capital Corp]

Sure, Jonathan. Today's conference call has been 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.

[Bruce Rubin, CFO at Oxford Lane Capital Corp]

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 return the presentation back to Jonathan.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

Thank you, Bruce. On December 31st, 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.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

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.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

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.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

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.

[Joe Kupka, Managing Director at Oxford Lane Capital Corp]

Thanks, Jonathan. During the quarter ended December 31st, 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 five-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 decrease 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 sub-par buybacks, which are not captured in this cited default rate, remain elevated.

[Joe Kupka, Managing Director at Oxford Lane Capital Corp]

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.

[Joe Kupka, Managing Director at Oxford Lane Capital Corp]

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.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

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.

[Operator]

Thank you. As a reminder, please press star followed by the number one if you'd like to ask a question, and ensure your device is unmuted locally when it's your turn to speak. If you change your mind or your question's already been answered, you can withdraw your question by pressing star followed by the number two. We'll just pause here for a moment. We have no questions on the line at the moment, so I'll turn you back over to Jonathan for any closing comments.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

All right. Thanks very much. I'd like to thank everybody who participated in this call or anybody who listened 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.

[Operator]

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

Participants

Executives

• Joe Kupka, Managing Director
• Bruce Rubin, CFO
• Jonathan Cohen, CEO