Oxford Lane Capital Q1 2027 Earnings Report

Oxford Lane Capital EPS Results

• Actual EPS: $0.95
• Consensus EPS: $2.26
• Beat/Miss: Missed by -$1.31
• One Year Ago EPS: N/A

Oxford Lane Capital Revenue Results

• Actual Revenue: $166.25 million
• Expected Revenue: $244.27 million
• Beat/Miss: Missed by -$78.01 million
• YoY Revenue Growth: N/A

Oxford Lane Capital Announcement Details

• Quarter: Q1 2027
• Date: 7/28/2026
• Time: Before Market Opens
• Conference Call Date: Tuesday, July 28, 2026
• Conference Call Time: 9:00AM 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 Q1 2027 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Net asset value increased to $10.74 per share from $10.56 in the prior quarter, while the company recorded a $76.3 million net increase in assets from operations.
• Negative Sentiment: GAAP net investment income fell to $50.2 million, or $0.51 per share, from $54.5 million, or $0.56 per share; core net investment income also declined. CLO equity effective and cash distribution yields decreased to 11.1% and 16.3%, respectively.
• Positive Sentiment: Oxford Lane completed or participated in numerous resets and refinancings, benefiting from tighter liability spreads and extending the portfolio’s weighted-average reinvestment period to November 2029. Management estimates that more than half of the portfolio has near-term reset or refinancing optionality through 2027.
• Neutral Sentiment: The U.S. loan market improved modestly, with loan prices rising and the reported trailing default rate falling to 0.97%, although out-of-court restructurings and other distressed activity remained elevated. Management also noted continued spread compression and said July cash distributions were a low point, with future improvement dependent on loan-market conditions and CLO refinancing activity.

Presentation

[Operator]

Thank you for standing by. My name is Tina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Oxford Lane Capital Corp announces net asset value and selected fiscal financial results for the first fiscal quarter 2027 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. To ask a question, press star one on your telephone keypad. To withdraw your question, press star one again. It is now my pleasure to turn the call over to Mr. Jonathan Cohen, CEO. Please go ahead.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

Thank you very much. Good morning, everyone. Welcome to the Oxford Lane Capital Corp first fiscal quarter 2027 earnings conference Call. I'm joined today by Saul Rosenthal, our President, Bruce Rubin, our CFO, and Joe Kupka, our Managing Director and Portfolio Manager. 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 is being recorded. An audio replay of the call will be available for 30 days. Replay information is included in our press release as 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.

[Bruce Rubin, CFO at Oxford Lane Capital Corp]

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.

[Bruce Rubin, CFO at Oxford Lane Capital Corp]

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.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

Thank you, Bruce. On June 30th, 2026, our net asset value per share stood at $10.74, compared to a net asset value per share of $10.56 as of the prior quarter. For the quarter ended June, we recorded GAAP total investment income of approximately $87 million, representing a decrease of approximately $6.9 million from the prior quarter. The quarter's GAAP total investment income consisted of approximately $83.7 million from our CLO equity and CLO warehouse investments and approximately $3.4 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 $50.2 million, or $0.51 per share for the quarter ended June, compared to approximately $54.5 million or $0.56 per share for the quarter ended March 31st. Our core net investment income was approximately $93.4 million or $0.95 per share for the quarter ended June, compared with approximately $100.7 million or $1.03 per share for the quarter ended March 31st. As of June 30th, we held approximately $66.2 million in newly issued or newly acquired CLO equity investments that had not yet made their initial distributions to Oxford Lane.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

For the quarter ended June, we recorded net unrealized appreciation of investments on investments of approximately $54.5 million and net realized losses of approximately $28.4 million. We had a net increase in net assets resulting from operations of approximately $76.3 million or $0.78 per share for the first fiscal quarter. As of June 30th, the following metrics applied. We note that none of these metrics necessarily represented a total return to shareholders. The weighted average effective yield of our CLO equity investments at current cost was 11.1%, down from 11.7% as of March 31st.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

The weighted average cash distribution yield of our CLO equity investments at current cost was 16.3%, down from 16.7% as of March 31st. 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 30th, we made additional CLO investments of approximately $37.8 million, and we received approximately $50.7 million from sales and from repayments.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

On July 23rd, our board of directors declared monthly common stock distributions of $0.20 per share for each of the months ending October, November, and December of 2026. With that, I'll turn the call over to our Managing Director, Joe Kupka. Joe.

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

Thanks, Jonathan. During the quarter ended June 30th, 2026, U.S. loan market performance improved versus the prior quarter. The U.S. loan price index increased from 94.63% as of March 31st to 94.96% as of June 30th. The increase in U.S. loan prices led to an approximate four-point increase in median U.S. CLO equity net asset values. We observed median weighted average spreads across loan pools within CLO portfolios decrease modestly to 302 basis points compared to 304 basis points last quarter.

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

The 12-month trailing default rate for the loan index decreased to 0.97% by principal amount at the end of the quarter from 1.44% at the end of March. 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 for the quarter totaled approximately $33 billion, reflecting an approximate $14 billion decrease from the previous quarter. Additionally, the US CLO market saw approximately $94 billion in reset and refinancing activity in Q2 2026, compared to approximately $56 billion in the previous quarter.

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

Oxford Lane remained active this quarter, trading over $85 million in CLO equity. During the quarter, we also led or participated in numerous resets and refinancings, taking advantage of tighter liability spreads to lower the cost of funding and lengthen the weighted average reinvestment period of Oxford Lane's equity portfolio from October 2029 to November 2029. We continue to evaluate existing investments for opportunities to improve the economics of our CLO equity positions.

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

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. As a permanent capital vehicle, we've 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 first fiscal quarter performance has been uploaded to our website at oxfordlanecapital.com. With that operator, we're happy to open the call up for questions.

[Operator]

At this time, to ask a question, press star one on your telephone keypad. Again, that's star one to ask a question. Our first question comes from the line of Erik Zwick with Lucid Capital Markets. Please go ahead.

[Erik Zwick, Analyst at Lucid Capital Markets]

Thank you. Good morning, guys.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

Morning, Erik.

[Erik Zwick, Analyst at Lucid Capital Markets]

Got a few questions here. Wanted to maybe start with one of the topics Joe kind of mentioned there towards the end. Just in terms of the opportunities to continue executing resets and then refis. It sounds like liability spreads have tightened and hopefully they remain so here for the next little bit. Can you maybe just frame the opportunity you have here in the near term to continue improving the cost of funding in the portfolio?

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

Sure. I think year-to-date, we've completed about 25 resets or refinancings, kind of taken on a case-by-case basis, whether they're going to be a refi or reset. For the remainder of our book, looking from the end of this quarter on, I think about 30% of our book in terms of market value could be in the money for a refi or a reset transaction through the end of the year. Looking forward to 2027, an additional 30% of the market value. Overall, over half of our book has potential short-term optionality embedded in it.

[Erik Zwick, Analyst at Lucid Capital Markets]

Excellent. That's very helpful. Thanks, Joe. Flipping towards the investment outlook. I know earlier in the year when you kind of restructured the dividend, you mentioned you want to be able to take advantage of more investment opportunities. Curious if you could just talk specifically to the secondary market, what you are seeing today in terms of liquidity, because I know it was pretty slow in the first calendar quarter of the year. Sounds like it may have been a little bit better here in 2Q, what you are seeing here, and what you expect going forward, and are you seeing attractive opportunities to add to the portfolio and potentially help the future yield going forward?

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

We are definitely seeing improved bid-ask spread, especially if we compare to what we saw towards the end of March. We are seeing a very interesting basis in terms of the basis between Tier 1 and Tier 2 managers. Especially if you look at some of these lower tier managers that trade at wider yields, they can be very attractive on both a cash on cash and ultimate yield basis. We are seeing a lot of opportunities just on an absolute basis and also to do some relative value trading in our portfolio.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

Erik, when Joe references lower tier managers, we are referring principally to their perception in the primary and secondary CLO markets, not their virtuosity.

[Erik Zwick, Analyst at Lucid Capital Markets]

Got it. That's helpful. I assume you are definitely more active in the second quarter trading. I am sure some of that contributed to the net realized losses that were recorded there in the quarter. Just kind of curious the positions that you may have traded out of. Were there any kind of common characteristics, or why were those particular investments chosen? Was there anything on the credit front or just you saw better opportunities to rotate into new investments to replace them that had better, more attractive long-term yield kind of components?

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

Sure. Yeah, I think it mainly went along with our thesis of trading out of some of these more sought-after managers. As Jonathan said, buying some of the less regarded managers just given the widening basis. We also had some legacy positions finally roll off, just their indentures were finally discharged, so that flowed in as well. Yeah, that made up the bulk of it.

[Erik Zwick, Analyst at Lucid Capital Markets]

Okay. Yeah, it was nice to see the weighted average investment period move out a little bit longer as well. Let's see. I think last one for me, maybe just in terms of you've made some of the new investments, rotating the portfolio a little bit, made some new investments as well that have yet to make first distribution. Just in terms of thinking about the cash distribution yield on the portfolio, when could we get to the point where that kind of bottoms out and starts expanding again? Curious if you have any thoughts there.

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

Yeah, I would say April payments stabilized a bit. We did see another leg down in the July payments, just as we see continued spread compression. That said, it has slowed down year-to-date. It all depends on really the loan market and where refinancing and repricings happen. I don't want to make any particular predictions, July has definitely been a low point if you look compared to January and April. Hopefully we see some pickup from here. That's hard to say.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

Right. Hopefully driven, at least in part, Erik, by the driver that you referenced earlier, which is the refi and reset market for CLO liability stacks, which is, of course, to the extent that that's an active market and a very natural offset to spread compression in the U.S. syndicated corporate loan market.

[Erik Zwick, Analyst at Lucid Capital Markets]

Yep. No, that'd be great if you guys can continue resetting and refi. Actually, I did have, I think one other. Nope, I'm actually good. Thank you. That's all I had right now.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

All right. Thank you very much, Erik. Appreciate it.

[Operator]

With no further questions in queue, I will now hand the call back over to Jonathan Cohen, CEO, for closing remarks.

[Jonathan Cohen, CEO at Oxford Lane Capital Corp]

Thanks very much. Thanks to everybody who took the time to listen to our call, either live or on the replay today. We look forward to speaking to you again soon. Thanks very much.

[Operator]

An audio recording of the event will be available via Echo replay through Thursday, August 27th at 11:59 P.M. This does conclude today's conference call. You may now disconnect.

Participants

Executives

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

Analysts

• Erik Zwick, Analyst at Lucid Capital Markets