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Oxford Lane Capital Corp (OXLC) reported its Q1 2025 earnings, revealing a mixed performance that included a revenue beat but an EPS miss. The company reported earnings per share (EPS) of $0.24, falling short of the forecasted $0.27, representing an 11.11% negative surprise. Despite the revenue exceeding expectations at $124 million against a forecast of $100.7 million, the market reacted negatively, with shares dropping 12.31% pre-market. The $1.6 billion market cap company has maintained strong revenue growth, with a 40.34% increase over the last twelve months to $430.54 million.
Key Takeaways
- Oxford Lane’s EPS fell short of expectations, missing the forecast by 11.11%.
- Revenue surpassed expectations by 23.14%, reaching $124 million.
- The company’s stock experienced a significant pre-market decline of 12.31%.
- Net Asset Value (NAV) per share decreased to $4.12 from $4.32 in the previous quarter.
Company Performance
Oxford Lane Capital’s Q1 2025 results showcased a robust revenue performance, driven primarily by its CLO equity and warehouse investments, which totaled $117.4 million. According to InvestingPro, the company maintains strong financial health with a current ratio of 1.77, indicating liquid assets exceed short-term obligations. The decline in EPS highlights challenges in managing costs or investment performance. The company’s NAV per share also saw a decline, indicating pressure on asset valuations. InvestingPro analysis reveals several more key insights about OXLC’s financial health and growth prospects.
Financial Highlights
- Revenue: $124 million, up from $100.7 million forecasted.
- EPS: $0.24, down from the forecasted $0.27.
- Net Asset Value per share: $4.12, down from $4.32 last quarter.
- Total Investment Income: $124 million, an increase of $2.8 million from the prior quarter.
Earnings vs. Forecast
Oxford Lane Capital’s reported EPS of $0.24 was below the forecasted $0.27, resulting in an 11.11% negative surprise. In contrast, revenue outperformed expectations by 23.14%, coming in at $124 million compared to the $100.7 million forecast. This mixed performance highlights challenges in cost management despite strong revenue generation.
Market Reaction
Following the earnings announcement, Oxford Lane’s stock dropped by 12.31% in pre-market trading, reflecting investor disappointment with the EPS miss. The stock’s decline is notable given its previous closing price of $3.98, positioning it closer to its 52-week low of $3.18. InvestingPro data shows the stock has fallen significantly over the last three months, with a six-month total return of -23.16%. Despite this decline, the company maintains its position as a significant dividend payer, with a current yield of 31.58% and a 15-year track record of consistent dividend payments.
Executive Commentary
CEO Jonathan Cohen emphasized the company’s focus on total return, stating, "We are essentially indifferent to the way that we generate the total return, but the total return itself is the objective." Cohen also highlighted Oxford Lane’s unconstrained investment strategy, which allows for flexibility in navigating market opportunities.
Risks and Challenges
- Declining NAV per share suggests potential asset valuation pressures.
- Missed EPS forecasts could signal cost management challenges.
- Market volatility and economic uncertainties may impact future performance.
- Increasing default rates in the loan market could pose risks to CLO investments.
Oxford Lane Capital’s mixed earnings results underscore the complexities of navigating investment performance and market expectations. While revenue growth remains strong, the EPS miss and declining NAV indicate areas for potential improvement. For a comprehensive analysis of OXLC’s valuation and growth prospects, investors can access detailed Pro Research Reports available exclusively on InvestingPro, covering over 1,400 US equities with expert insights and actionable intelligence.
Full transcript - Oxford Lane Capital Corp (OXLC) Q1 2026:
Breeka, Moderator: Good morning, and thank you all for attending the Oxford Lane Capital Corp announces net asset value and selected financial results for the first fiscal quarter and declaration of distributions on common stock. My name is Breeka, and I will be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to your host, Jonathan Cohen, CEO at Oxford Lane Capital Corp. Thank you.
You may proceed, Jonathan.
Jonathan Cohen, CEO, Oxford Lane Capital Corp: Thank you. Good morning, everyone, and welcome to the Oxford Lane Capital Corp first fiscal quarter twenty twenty six earnings conference call. I’m joined today by Bruce Rubin, our Chief Financial Officer and Joe Kupka, our Managing Director. Bruce, could you open the call today with the disclosure regarding forward looking statements? Sure, Jonathan.
Today’s call is being recorded. An audio replay of the call will be available for thirty 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 this morning at www.oxfordlandcapital.com. With that, I’ll turn the presentation back to Jonathan. Thanks, Chris. On 06/30/2025, our net asset value per share stood at $4.12 compared to a net asset value per share of $4.32 as of the previous quarter. For the quarter ended June, we recorded GAAP total investment income of approximately $124,000,000 representing an increase of approximately $2,800,000 from the prior quarter.
The quarter’s GAAP total investment income consisted of approximately $117,400,000 from our CLO equity and CLO warehouse investments and approximately 6,600,000 from our CLO debt investments and from other income. Oxford Lane recorded GAAP net investment income of approximately $75,100,000 or $0.16 per share for the quarter ended June 30 compared to approximately $75,400,000 or $0.18 per share for the quarter ended March 31. Our core net investment income was approximately $112,400,000 or $0.24 per share for the quarter ended June, compared with approximately $95,800,000 or $0.23 per share for the quarter ended March. As of June 30, we held approximately $701,500,000 in newly issued or newly acquired CLO equity investments that had not yet made their initial distributions to Oxford Lane. For the quarter ended June, we recorded net unrealized depreciation on investments of approximately $40,200,000 and net realized losses of approximately $8,800,000 We had a net increase in net assets resulting from operations of approximately $26,100,000 or $06 per share for the first fiscal quarter.
As of June 30, we note that the following metrics applied. We also 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 16.9%, up from 15.9% as of March 31. The weighted average effective yield of our CLO equity investments at current cost was 14.7%, down from 15.9% as of March 31. The weighted average cash distribution yield of our CLO equity investments at current cost was 21.6%, up from 20.5% as of March 31.
You note that the cash distribution yields calculated on our CLO equity investments are based on the cash distributions we received for which we were entitled to receive at each respective period end. During the quarter ended June, we issued a total of approximately 25,800,000.0 shares of our common stock pursuant to an at the market offering, resulting in net proceeds of approximately $116,400,000 During the quarter ended June, we made additional CLO investments of approximately $441,800,000 and we received approximately $120,700,000 from sales and from repayments. On July 22, our Board of Directors authorized a one for-five reverse stock split and declared monthly common stock distributions of $08 per share for each of the months ending October, November and December. With that, I’ll turn the call over to our Managing Director, Joe Kupka. Thanks, Jonathan.
During the quarter ended 06/30/2025, U. S. Loan market performance improved versus the prior quarter. U. S.
Loan price index increased from 96.31% as of March 31 to 97.07% as of June 30. The increase in U. S. Loan prices led to an approximate six point increase in median U. S.
CLO equity net asset values. Additionally, we observed median weighted average spreads across loan pools within CLO portfolios decreased to three twenty seven basis points compared to three thirty basis points last quarter. The twelve month strong default rate for the loan index increased to 1.1% by principal amount at the end of the quarter from 0.82% at the March. We note that out of court restructurings, exchanges and subcar buybacks, which are not captured in the cited default rate, remain elevated. CLO new issuance for the quarter totaled approximately $51,000,000,000 reflecting an approximate $3,000,000,000 increase from the prior quarter, keeping pace with the first half of twenty twenty four, a record breaking year.
Additionally, The U. S. CLO market saw approximately $53,000,000,000 in reset and refinancing activity in Q2 twenty twenty five compared to approximately $105,000,000,000 in the previous quarter. Oxford Lane remained active this quarter, investing over $441,000,000 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 November 2028 to January 2029.
Our primary investment strategy during the quarter was to engage in relative value trading and seek to lessen the weighted average reinvestment period of OXERLANE CLO equity portfolio. In the current market environment, we intend to continue to utilize our 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’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. Thanks very much, Joe. Additional information about Oxford Lane’s first fiscal quarter performance has been uploaded to our website at www.oxfordlanecapital.com. And with that, we’re happy to open the call operator for any questions.
Breeka, Moderator: Thank you. If you would like to ask a question, you can do so by pressing star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by 2. And again, to ask a question, please press star one. And as a reminder, if you are using a speakerphone, please remember to pick up your handset before asking a question.
We will pause it briefly while the questions are registered. The first question we have comes from Eric Zwick with Leated Capital Management. Please go ahead. Your line is open.
Jonathan Cohen, CEO, Oxford Lane Capital Corp: Thanks. Good morning, everyone. You know, you’ve indicated that the CLO market continues to remain, you know, robust on the issuance side. Wondering if you could just maybe, you know, as you scan the market today, looking at both primary and secondary opportunities, maybe a little commentary into how you’re you’re weighing the the opportunities for each versus each other? Hey, Eric.
Yeah. I think we’re still, you know, seeing value in both primary and secondary. It’s something we reevaluate every single day just to make sure we’re, you know, taking the right profile. Tier one long dated equity has definitely caught a very strong bid, So we still feel comfortable creating that profile in the primary knowing how strong it trades in the secondary. And then in the secondary, we’ve been targeting a bit lower tier managers that trade significantly wider and as well as reset and refinancing opportunities as well.
Thanks. And then just curious, as you evaluate maybe kind of a two part question. One, as the CLO market continues to grow and see strong issuance, are there new managers coming in into the market? And how do you evaluate those as well as maybe existing managers that you haven’t worked with before and deciding to work with it? Yeah.
So, generally, we will wait for a manager to kind of can at least complete a few deals and evaluate their performance before stepping in, and then we can usually pick up their paper in the secondary and very attractive yields, but it’s definitely something we keep a close eye on all the new entrants to the space and kind of new managers. Right. Most of our primary market activity though, Eric, in our warehousing activity does tend to be with the largest best regarded Tier one managers. Got it. And then you mentioned in the prepared remarks, I think, a $7.00 5,000,000 of new issue CLOs that are on this balance sheet but have yet to make their first cash distribution.
Just in terms of your expectations, would you expect most of those to make their first payments either in the current ’25 or or the the final quarter of the year? Yeah. So the majority of those will be in the following quarter, and then they kind of sell off, but they’re a signal still a significant amount in the quarter ending twelvethirty one and then threethirty one the following year. Right. And then with regard to the unrealized depreciation that was recorded during the most recently completed quarter, could you just maybe provide a little color in terms of how much of that was market related versus any specific CLO developments?
No real specific CLO developments to highlight, I would say. There were some short dated deals that, you know, diverted and took a mark to market loss. But generally, it’s just a function of the mark to market of those assets declining as payments come out. So the total return is still positive on those assets, but you just see a slight mark to market decline on on assets. Right.
And as you know, Eric, we’re focused primarily on total return. So how that total return manifests, whether it’s in cash flow, payments we get down the IO waterfall or principal recovery down the PO waterfall or gains that we make by trading in the secondary market, buying in the primary, we are essentially indifferent to the way that we generate the total return, but the total return itself is the objective. Yes. No, think that’s a good point, and your historical returns certainly demonstrate that. I wonder if you could maybe just add a little bit more in terms of how you view your competitive advantage relative to your kind of unconstrained investment philosophy and how that positions you better versus some of your peers.
Sure, Eric. So as you know, we run essentially a completely unconstrained investment mandate, meaning that we have the ability and the mandate and the capability of participating in warehouses, participating in the primary market, which we do on a very large scale, participating on a particularly large scale in the secondary market. We own Tier one managed deals, Tier two managed deals, some Tier three managed deals, deals that are in well within their reinvestment periods, deals that are outside of their reinvestment periods. I think it is that breadth to our portfolio in terms of the various profiles that we’re willing to engage in that has been particularly beneficial to us over a long period of time. And one final one for me, and I’ll step aside.
It seems like the economic data that we continue to see here in The U. S. Continues to be positive. There’s still a lot of uncertainty, I guess, from your seat, from what you’re able to see as you continue to look into your existing CLO portfolio as well as new opportunities. Anything on the horizon as to the ability that you can see that gives you any pause or concern with regard to the kind of future performance?
Nothing specific, Eric. I mean, as you know, CLOs are essentially pools of U. S. Syndicated corporate loans, large pools, roughly about $05,000,000,000 a piece, consisting of highly diversified pool collateral pools of U. S.
Syndicated corporates. Those corporate loans are obviously issued by larger U. S. Corporations. So to some significant extent, the success of this asset class is tied to the performance of The U.
S. Economy, the global economy and the performance of U. S. Corporations. There are lots and lots of offsets to that dynamic and to that construct by virtue of the architecture of these CLO structures.
But at the end of the day, we are investing in U. S. Corporations. So the success of The U. S.
Economy, the success of The U. S. Corporate sector, those are clearly important elements. Thanks. I appreciate all the commentary today.
Thank you, Harvey.
Breeka, Moderator: Thank you. I can confirm that does conclude our question and answer session. And I’d like to turn it back to our CEO, mister Cohen, for some final closing comments.
Jonathan Cohen, CEO, Oxford Lane Capital Corp: Thank you. I’d like to thank everybody who’s participated in this call or who’s listening in the replay for their their interest in Oxford Lane, and we look forward to speaking to you in the future. Thanks very much. Thank
Breeka, Moderator: you. I can confirm that does conclude today’s conference call with Oxford Lane Capital Corp. Thank you all for your participation. Enjoy the rest of your day, and you may now
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