Earnings call transcript: Oxford Square’s Q2 2025 results reveal steady EPS but revenue miss

Oxford Square Capital Corp. (OXSQ) released its second-quarter earnings for 2025, meeting earnings per share (EPS) expectations but falling short on revenue. The company reported an EPS of 8 cents, matching analysts’ forecasts, while actual revenue of $9.52 million came in below the anticipated $10 million, marking a 4.8% shortfall. Despite the revenue miss, the company maintains its position as a significant dividend payer with a remarkable 17.87% yield and a 22-year track record of consistent dividend payments, according to InvestingPro data. In pre-market trading, the stock saw a slight decline of 0.85%, reflecting investor concerns over the revenue miss.

Key Takeaways

• Oxford Square’s EPS of 8 cents met expectations, but revenue missed by 4.8%.
• Pre-market trading showed a 0.85% decline in stock price.
• The company raised $11.6 million through an aftermarket offering.
• Net Asset Value (NAV) per share decreased significantly from $2.90 to $2.06.
• The company priced $65 million in unsecured notes for future investments.

Company Performance

Oxford Square’s performance in the second quarter of 2025 was mixed. While the company managed to meet EPS expectations, its revenue fell short, which may raise questions about its ability to generate income amid a challenging market environment. The company’s focus on long-term investment strategies and portfolio management was emphasized, despite a decrease in both net investment income and total investment income compared to the previous quarter.

Financial Highlights

• Revenue: $9.52 million, down from $10.2 million in the previous quarter.
• Earnings per share: 8 cents, meeting forecasts.
• Net Asset Value per Share: $2.06, down from $2.90.
• Net investment income: $5.5 million, down from $6.1 million.

Earnings vs. Forecast

Oxford Square’s EPS met the forecast of 8 cents, resulting in no earnings surprise. However, the revenue of $9.52 million fell short of the $10 million forecast, representing a 4.8% miss. This revenue miss may have contributed to the slight decline in stock price during pre-market trading.

Market Reaction

In the pre-market session, Oxford Square’s stock price decreased by 0.85% to $2.33. This movement reflects investor disappointment with the revenue shortfall, despite the EPS meeting expectations. With a beta of 0.67, the stock historically shows lower volatility than the broader market. The stock’s performance remains within its 52-week range of $2.14 to $3.07, indicating some resilience despite the current challenges. For deeper technical analysis and Fair Value assessment, consider exploring the comprehensive research available on InvestingPro.

Outlook & Guidance

Looking forward, Oxford Square remains focused on maintaining a long-term investment strategy. The company plans to use proceeds from its recent note offering to fund future investments and repay debt, aiming to maximize long-term total return. Monthly distributions of 3.5 cents per share have been declared for the last quarter of 2025.

Executive Commentary

Kevin Yonan, Portfolio Manager, emphasized the company’s long-term investment strategy, stating, "As a permanent capital vehicle, we historically have been able to take a longer-term view towards our investment strategy." He also noted the improvement in the US loan market performance during the quarter.

Risks and Challenges

• Revenue generation remains a concern given the recent miss.
• Declining NAV per share could impact investor confidence.
• Market volatility and economic conditions may affect future performance.
• Increased default rates in the loan market could pose risks.
• Potential challenges in maintaining distribution levels amid financial pressures.

Q&A

The earnings call concluded without any questions from analysts, leaving some aspects of the company’s future strategy and market positioning open to speculation.

Full transcript - Oxford Square Capital Corp (OXSQ) Q2 2025:

Conference Operator: Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, 08/07/2025. I would now like to turn the conference over to Jonathan H.

Cohen, CEO. Please go ahead.

Jonathan H. Cohen, CEO, Oxford Square Capital Corp.: Good morning. Welcome to the Oxford Square Capital Corp. Second Quarter twenty twenty five Earnings Conference Call. I’m joined today by Saul Rosenthal, our President Vince Guerrero, our Controller and Vice President of Finance and Kevin Yonan, our Managing Director and Portfolio Manager. Vince, could you open the call with the disclosure regarding forward looking statements?

Sure, Jonathan. Today’s conference call is being recorded. An audio replay of the conference call will be available for thirty days. Replay information is included in our press release that was issued this morning. Please note that this call is the property of Oxford Square Capital Corp.

Any unauthorized rebroadcast of this call from 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 those projections. We do not undertake to update our forward looking statements unless required to do so by law.

To obtain copies of our latest SEC filings, please visit our website at www.oxfordsquarecapital.com. With that, I will turn the presentation back over to John. Thanks, Vince. For the quarter ended June, Oxford Square’s net investment income was approximately $5,500,000 or 8¢ per share compared with approximately $6,100,000 or $09 per share in the prior quarter. Our net asset value per share stood at $2.06 compared to a net asset value per share of $2.9 for the prior quarter.

During the quarter, we distributed $0.01 $05 per share to our common stock shareholders. For the second quarter, we recorded total investment income of approximately $9,500,000 as compared to approximately $10,200,000 in the prior quarter. In the second quarter, we recorded combined net unrealized and realized losses on investments of approximately 1,100,000 or $01 per share compared to combined net unrealized and realized losses on investments of approximately $14,200,000 or $0.20 per share for the prior quarter. During the second quarter, our investment activity consisted of repayments of approximately $233,000 During the quarter ended June, we issued a total of approximately 4,900,000.0 shares of our common stock pursuant to an aftermarket offering, resulting in net proceeds of approximately $11,600,000 On June 30, our Board of Directors declared monthly distributions of 3.5¢ per share for each of the months ending October, November and December 2025. Additional details regarding record and payment date information can be found in our press release that was issued this morning.

On August 1, we announced that we priced an under or an underwritten public offering of $65,000,000 in aggregate principal amount of seven and three quarter percent unsecured notes due 02/1930, which will be used for investments and for repayment of existing debt. With that, I will turn the call over to our portfolio manager, Kevin Yonne. Kevin? Thank you, Jonathan. During the quarter ended June 30, US loan market performance strengthened versus the prior quarter.

US loan prices, as defined by the Moonstar LSTA US leverage loan index, increased from 96.31% of par as of March 31 to ninety seven point o 7% of par as of June 30. According to LCD, during the quarter, there were some pricing dispersion with double b rated loan prices increasing 35 basis points, b rated loan prices increasing 68 basis points, and triple c rated loan prices increasing 235 basis points on average. According to PitchBook LCD, while the twelve month trailing default rate for the loan index increased to 1.11% by principal amount at the end of the quarter from 0.82 at the March, we note that the default rate, including various forms of liability management exercises, which are not captured in the decided default rate, remain at an elevated level of 4.46%. Additionally, the distressed ratio, defined as a percentage of loans with prices below 80% of par, ended the quarter at three point o 6% compared to 3.21% at the March. During the quarter ended 06/30/2025, U.

S. Leverage on primary market issuance, excluding amendments and repricing transactions, was $76,300,000,000 representing a 48% decrease versus the quarter ended June 3024. This was driven by lower opportunistic activity, including refinancings and the funding of dividends, partly offset by higher nonrefinancing issuance, including M and A and LDO activity versus the prior year comparable quarter. At the same time, U. S.

Loan fund outflows, as measured by Lipper, were approximately $5,940,000,000 for the quarter ended June 30. We continue to focus on portfolio management strategies designed to maximize our long term total And as a permanent capital vehicle, we historically have been able to take a longer term view towards our investment strategy. With that, I will turn the call back over to Jonathan. Thank you, Kevin, very much. Additional information about Oxford Square’s second quarter performance has been posted to our website at www.oxfordsquarecapital.com.

And with that, operator, we’re happy to open the call up for any questions.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two.

If you are using a speaker phone, please leave the handset before pressing any key. One moment, please, for your first question. I am showing no questions at this time. I will now turn the call back to Mr. Collins.

Jonathan H. Cohen, CEO, Oxford Square Capital Corp.: Thank you very much. We’d like to thank everyone on the call and listening to the replay for their interest in Oxford Square. We look forward to speaking to you again soon. Thanks very much.

Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.

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