Ellington Credit Company Announces Financial Results for the Second Fiscal Quarter Ended September 30, 2025
Highlights
-
Net asset value (NAV) per share was
$5.99 as ofSeptember 30, 2025 , which includes the effects of distributions of$0.24 per share for the quarter. -
GAAP net income was
$4.3 million or$0.11 per share. -
Net investment income ("NII") was
$8.5 million , or$0.23 per share.-
Adjusted net investment income1 was
$8.5 million , or$0.23 per share.
-
Adjusted net investment income1 was
-
CLO portfolio grew to
$379.6 million as ofSeptember 30, 2025 .- CLO debt investments—$185.5 million
- CLO equity investments—$194.0 million
-
Purchased
$115.7 million of CLO investments and sold$29.2 million , across 92 trades.
- Weighted average GAAP yield for the quarter, based on amortized cost, was 15.5% on the total CLO portfolio.
-
Received
$16.2 million in recurring cash distributions2 from the investment portfolio, or$0.43 per share.
Management Commentary
"Our CLO portfolio ramp-up continued in the quarter, and our net investment income increased in tandem. I’m pleased to announce that
"Results were further enhanced by active trading—encompassing 92 distinct CLO trades during the quarter—as well as by several CLO note redemptions at par on discounted purchases. We actively repositioned our portfolio during the quarter, as we added mezzanine debt tranches offering attractive yields and downside protection, while moderating new-issue equity exposure amid less favorable pricing dynamics. We also took advantage of secondary market opportunities to rotate into higher-quality, longer-dated equity positions.
"Looking ahead, our balanced mix of mezzanine and equity tranches (nearly a 50/50 split at quarter end), together with our significant credit hedging portfolio, should position us for both upside and resilience as market conditions evolve. We expect elevated loan repricing activity and ongoing credit dispersion to continue to create opportunities for outperformance through active management, reinforcing our confidence in delivering strong total returns for shareholders."
Distributions
During and subsequent to the quarter ended
|
Declaration Date |
|
Record Date |
|
Payment Date |
|
Distribution Per Share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.08 |
|
|
|
|
|
|
|
0.08 |
|
|
|
|
|
|
|
0.08 |
|
|
|
|
|
|
|
0.08 |
Investment Portfolio
The following table summarizes the composition of the investment portfolio as of
|
(In thousands) |
|
Amortized Cost |
|
Fair Value |
|
% of Total
|
|||
|
|
|
$ |
140,385 |
|
$ |
142,007 |
|
37.3 |
% |
|
European CLO debt |
|
|
41,770 |
|
|
43,541 |
|
11.5 |
% |
|
Total CLO debt |
|
|
182,155 |
|
|
185,548 |
|
48.8 |
% |
|
|
|
|
185,970 |
|
|
184,838 |
|
48.6 |
% |
|
European CLO equity |
|
|
9,468 |
|
|
9,208 |
|
2.4 |
% |
|
Total CLO equity |
|
|
195,438 |
|
|
194,046 |
|
51.0 |
% |
|
Total CLO debt and equity |
|
|
377,593 |
|
|
379,594 |
|
99.8 |
% |
|
Other investments |
|
|
635 |
|
|
678 |
|
0.2 |
% |
|
Total investments |
|
$ |
378,228 |
|
$ |
380,272 |
|
100.0 |
% |
Results of Operations
The following table summarizes our operating results for the quarter ended
|
|
Quarter Ended |
||||||||||||||||||||||||||
|
|
|
|
European CLO
|
|
|
|
European CLO
|
|
Other(1) |
|
Total |
|
Total
|
||||||||||||||
|
(In thousands, except share and per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Interest income |
$ |
5,161 |
|
|
$ |
1,256 |
|
|
$ |
6,728 |
|
|
$ |
420 |
|
|
$ |
281 |
|
|
$ |
13,846 |
|
|
$ |
0.37 |
|
|
Other investment income |
|
— |
|
|
|
— |
|
|
|
305 |
|
|
|
— |
|
|
|
— |
|
|
|
305 |
|
|
|
0.01 |
|
|
Total investment income |
|
5,161 |
|
|
|
1,256 |
|
|
|
7,033 |
|
|
|
420 |
|
|
|
281 |
|
|
|
14,151 |
|
|
|
0.38 |
|
|
Interest expense |
|
(1,296 |
) |
|
|
(208 |
) |
|
|
(435 |
) |
|
|
(25 |
) |
|
|
— |
|
|
|
(1,964 |
) |
|
|
(0.05 |
) |
|
Other expenses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,702 |
) |
|
|
(3,702 |
) |
|
|
(0.10 |
) |
|
Net investment income |
|
3,865 |
|
|
|
1,048 |
|
|
|
6,598 |
|
|
|
395 |
|
|
|
(3,421 |
) |
|
|
8,485 |
|
|
|
0.23 |
|
|
Net realized gain (loss) on investments |
|
907 |
|
|
|
223 |
|
|
|
235 |
|
|
|
(88 |
) |
|
|
(16 |
) |
|
|
1,261 |
|
|
|
0.03 |
|
|
Change in net unrealized gain (loss) on investments |
|
(61 |
) |
|
|
(39 |
) |
|
|
(3,638 |
) |
|
|
(413 |
) |
|
|
54 |
|
|
|
(4,097 |
) |
|
|
(0.11 |
) |
|
Credit and foreign currency hedges, and other activities |
|
|
|
|
|
|
|
|
|
(1,369 |
) |
|
|
(1,369 |
) |
|
|
(0.04 |
) |
||||||||
|
Net income (loss) |
$ |
4,711 |
|
|
$ |
1,232 |
|
|
$ |
3,195 |
|
|
$ |
(106 |
) |
|
$ |
(4,752 |
) |
|
$ |
4,280 |
|
|
$ |
0.11 |
|
|
Net income (loss) per share(2) |
$ |
0.13 |
|
|
$ |
0.03 |
|
|
$ |
0.08 |
|
|
$ |
— |
|
|
$ |
(0.13 |
) |
|
$ |
0.11 |
|
|
|
||
|
(1) |
Includes interest income and net realized and change in unrealized gains (losses) associated with corporate debt and equity investments. Also includes management fees, performance fees, and various other operating expenses. |
|
|
(2) |
Based on weighted average shares outstanding of 37,563,048 shares for the quarter ended |
The following table summarizes our operating results for the quarter ended
|
|
Quarter Ended |
||||||||||||||||||||||||||
|
|
|
|
European CLO
|
|
|
|
European CLO
|
|
Other(1) |
|
Total |
|
Total
|
||||||||||||||
|
(In thousands, except share and per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Interest income |
$ |
3,314 |
|
|
$ |
696 |
|
|
$ |
6,076 |
|
|
$ |
455 |
|
|
$ |
1,045 |
|
|
$ |
11,586 |
|
|
$ |
0.31 |
|
|
Other investment income |
|
— |
|
|
|
— |
|
|
|
84 |
|
|
|
— |
|
|
|
— |
|
|
|
84 |
|
|
|
— |
|
|
Total investment income |
|
3,314 |
|
|
|
696 |
|
|
|
6,160 |
|
|
|
455 |
|
|
|
1,045 |
|
|
|
11,670 |
|
|
|
0.31 |
|
|
Interest expense |
|
(774 |
) |
|
|
(126 |
) |
|
|
(262 |
) |
|
|
(13 |
) |
|
|
(540 |
) |
|
|
(1,715 |
) |
|
|
(0.05 |
) |
|
Other expenses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(3,434 |
) |
|
|
(3,434 |
) |
|
|
(0.09 |
) |
|
Net investment income |
|
2,540 |
|
|
|
570 |
|
|
|
5,898 |
|
|
|
442 |
|
|
|
(2,929 |
) |
|
|
6,521 |
|
|
|
0.17 |
|
|
Net realized gain (loss) on investments |
|
318 |
|
|
|
(1 |
) |
|
|
176 |
|
|
|
(25 |
) |
|
|
(239 |
) |
|
|
229 |
|
|
|
0.01 |
|
|
Change in net unrealized gain (loss) on investments |
|
1,684 |
|
|
|
199 |
|
|
|
2,507 |
|
|
|
(599 |
) |
|
|
(14 |
) |
|
|
3,777 |
|
|
|
0.10 |
|
|
Credit and foreign currency hedges, and other activities |
|
|
|
|
|
|
|
|
|
(322 |
) |
|
|
(322 |
) |
|
|
(0.01 |
) |
||||||||
|
Net income (loss) |
$ |
4,542 |
|
|
$ |
768 |
|
|
$ |
8,581 |
|
|
$ |
(182 |
) |
|
$ |
(3,504 |
) |
|
$ |
10,205 |
|
|
$ |
0.27 |
|
|
Net income (loss) per share(2) |
$ |
0.12 |
|
|
$ |
0.02 |
|
|
$ |
0.23 |
|
|
$ |
(0.01 |
) |
|
$ |
(0.09 |
) |
|
$ |
0.27 |
|
|
|
||
|
(1) |
Includes interest income and expense and net realized and change in unrealized gains and (losses) associated with corporate debt and equity and legacy mortgage‑related investments (substantially all of which were sold following the Company’s conversion to a regulated investment company). Also includes management fees, performance fees, and various other operating expenses. |
|
|
(2) |
Based on weighted average shares outstanding of 37,559,195 shares for the quarter ended |
CLO Performance
Credit markets generally rallied during the quarter ended
In the
Despite mixed loan performance,
Our investment portfolio generated positive results for the quarter, driven by strong net investment income, and also reflecting net realized and unrealized gains on CLO mezzanine debt. Active trading as well as deal calls of mezzanine debt positions owned at discounts to par both continued to contribute to realized gains. Offsetting these gains were net realized and unrealized losses on CLO equity and on credit hedges designed to protect against downside risk. At
Net Asset Value Summary
The following table summarizes our assets and liabilities as of
|
(In thousands, except share and per share amounts) |
|
|
|
|
Assets |
|
|
|
|
Investments, at fair value |
|
$ |
380,272 |
|
Cash and cash equivalents |
|
|
20,085 |
|
Other assets |
|
|
15,383 |
|
Total assets |
|
|
415,740 |
|
Liabilities |
|
|
|
|
Reverse repurchase agreements |
|
|
175,333 |
|
Other liabilities |
|
|
15,320 |
|
Total liabilities |
|
|
190,653 |
|
Net asset value |
|
$ |
225,087 |
|
Common shares outstanding |
|
|
37,567,849 |
|
Net asset value per common share |
|
$ |
5.99 |
About
Conference Call
We will host a conference call at
A dial-in replay of the conference call will be available on
Cautionary Statement Regarding Forward-Looking Statements
This release may contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical in nature and can be identified by words such as "anticipate," "estimate," "will," "should," "may," "expect," "project," "believe," "intend," "seek," "plan" and similar expressions or their negative forms, or by references to strategy, plans, or intentions. Forward-looking statements are based on our beliefs, assumptions and expectations of our future operations, business strategies, performance, financial condition, liquidity and prospects, taking into account information currently available to us. These beliefs, assumptions, and expectations are subject to numerous risks and uncertainties and can change as a result of many possible events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations and strategies may vary materially from those expressed or implied in our forward-looking statements. The following factors are examples of those that could cause actual results to vary from those stated or implied by our forward-looking statements: changes in interest rates and the market value of our investments, market volatility, changes in the default rates on corporate loans, our ability to borrow to finance our assets, changes in government regulations affecting our business, a deterioration in the market for collateralized loan obligations, our ability to adapt to the new regulatory regime associated with our conversion to a closed-end fund/RIC, potential business disruption related to our conversion to a closed-end fund/RIC, ability to achieve the anticipated benefits of our conversion to a closed-end fund/RIC, and other changes in market conditions and economic trends, such as changes to fiscal or monetary policy, heightened inflation, increased tariffs, slower growth or recession, and currency fluctuations. Furthermore, as stated above, forward-looking statements are subject to numerous risks and uncertainties, including, among other things, those described under the heading “Risk Factors” in our Registration Statement on Form N-2, which can be accessed through the link to our
This release and the information contained herein do not constitute an offer of any securities or solicitation of an offer to purchase securities.
Reconciliation of Adjusted Net Investment Income to Net Investment Income
We calculate Adjusted Net Investment Income as net investment income adjusted for non-recurring expenses. Adjusted Net Investment Income is a supplemental non-GAAP financial measure. We believe that the presentation of Adjusted Net Investment Income provides information useful to investors, because we believe that it is a useful indicator of both current and projected long-term financial performance, in that it excludes the impact of certain expenses that we believe are less useful in forecasting long-term performance and distribution-paying ability.
Our calculation of Adjusted Net Investment Income may differ from the calculation of similarly titled non-GAAP financial measures by our peers, with the result that these non-GAAP financial measures might not be directly comparable. In addition, because Adjusted Net Investment Income is an incomplete measure of our financial results and differs from net investment income computed in accordance with
In setting our distributions, our
The following table reconciles, for the quarters ended
|
(In thousands except share amounts and per share amounts) |
|
Quarter Ended
|
|
Quarter Ended
|
||
|
Net Investment Income |
|
$ |
8,485 |
|
$ |
6,521 |
|
Adjustment: |
|
|
|
|
||
|
Non-recurring expenses—Strategic transformation costs |
|
|
35 |
|
|
75 |
|
Adjusted Net Investment Income |
|
$ |
8,520 |
|
$ |
6,596 |
|
Weighted Average Shares Outstanding |
|
|
37,563,048 |
|
|
37,559,195 |
|
Adjusted Net Investment Income Per Share |
|
$ |
0.23 |
|
$ |
0.18 |
| ___________________________________ | ||
|
1 |
Adjusted net investment income is a non-GAAP financial measure. See "Reconciliation of Adjusted Net Investment Income to Net Investment Income" below for an explanation regarding the calculation of Adjusted net investment income. |
|
|
2 |
"Recurring cash distributions" primarily includes distributions received from our CLO investments but excludes cash received from CLO redemptions or sales during the quarter. |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20251119186373/en/
Investors:
Investor Relations
(203) 409-3773
info@ellingtoncredit.com
or
Media:
for
(212) 257-4170
Ellington@gasthalter.com
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