Executive Summary

Latest reported quarter (fiscal Q2 2026, quarter ended September 30, 2025) showed strong NII and active portfolio rotation; Adjusted NII per share of $0.23 exceeded Wall Street “Primary EPS” consensus of ~$0.203, implying a beat on the metric S&P tracks as EPS, while GAAP EPS was $0.11 . The call for this quarter is scheduled for Nov 20, 2025. Values for consensus from S&P Global marked with an asterisk.* *
Total investment income was $14.15M vs consensus revenue of ~$11.12M*, driven by robust CLO cash flows, trading gains in mezz tranches, and deal calls, despite unrealized losses on CLO equity and hedges; NAV per share declined to $5.99 from $6.12 in the prior quarter .*
Management achieved full dividend coverage from net investment income in September and declared continuing monthly common dividends of $0.08; portfolio is now ~50/50 mezzanine vs equity with significant credit hedges, positioning for resilience amid loan repricings and credit dispersion .
Near-term catalysts: conference call commentary (Nov 20), ongoing CLO ramp, potential issuance of long-term unsecured debt later this year to accrete EPS/NII and support further CLO portfolio growth .

What Went Well and What Went Wrong

What Went Well

Achieved full dividend coverage from net investment income in September; CEO: “Ellington Credit Company achieved full dividend coverage from net investment income in September” .
Active trading and mezzanine debt redemptions at par generated realized gains; 92 distinct CLO trades, plus “several CLO note redemptions at par on discounted purchases” .
Balanced portfolio construction and hedging: “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” .

What Went Wrong

GAAP EPS fell QoQ to $0.11 (from $0.27), with net unrealized losses on CLO equity (-$3.64M) and hedges (-$1.37M) offsetting gains; NAV/share declined to $5.99 from $6.12 .
Continued loan repricings and isolated default concerns pressured CLO equity arbitrage economics even as debt spreads tightened, creating dispersion by deal tenor and quality .
European CLO equity lagged amid more extensive repricing activity vs U.S. loans, contributing to equity underperformance in that region .

Financial Results

Note: The most recent actual results are for fiscal Q2 2026 (quarter ended Sep 30, 2025). “Q3 2026 Est.” corresponds to the quarter ending Dec 31, 2025 (i.e., calendar Q4 2025).

Metric	Q1 2026 (Jun 30, 2025)	Q2 2026 (Sep 30, 2025)	Q3 2026 Est. (Dec 31, 2025)
Total Investment Income ($USD Millions)	$11.67	$14.15	$12.78*
Net Investment Income ($USD Millions)	$6.52	$8.49	$9.15*
GAAP Net Income ($USD Millions)	$10.21	$4.28	N/A
Net Income per Share ($)	$0.27	$0.11	N/A
Adjusted NII per Share ($)	$0.18	$0.23	$0.241*

Values retrieved from S&P Global.*

Consensus vs Reported (Q2 2026):

Metric	Consensus	Reported	Surprise
Primary EPS (Adj. NII/share proxy) ($)	0.203*	0.23	+$0.027; bold beat
Revenue (proxy: Total Investment Income) ($USD Millions)	11.12*	14.15	+$3.03M; bold beat

NAV and Balance Sheet KPIs:

KPI	Q1 2026	Q2 2026
NAV per Share ($)	$6.12	$5.99
NAV ($USD Millions)	$229.7	$225.1
Investments at Fair Value ($USD Millions)	$317.28	$380.27
Cash & Equivalents ($USD Millions)	$36.64	$20.09
Reverse Repos ($USD Millions)	$112.67	$175.33
Weighted Avg GAAP Yield (CLOs)	15.6%	15.5%
Recurring Cash Distributions ($USD Millions; $/share)	$15.9; $0.42	$16.2; $0.43

CLO Portfolio Composition (Fair Value):

Subsector	Q1 2026 (Jun 30, 2025)	Q2 2026 (Sep 30, 2025)
U.S. CLO Debt ($USD Thousands)	$117,930	$142,007
European CLO Debt ($USD Thousands)	$30,938	$43,541
Total CLO Debt ($USD Thousands)	$148,868	$185,548
U.S. CLO Equity ($USD Thousands)	$155,235	$184,838
European CLO Equity ($USD Thousands)	$12,755	$9,208
Total CLO Equity ($USD Thousands)	$167,990	$194,046
Total CLO Debt & Equity ($USD Thousands)	$316,858	$379,594

Guidance Changes

Note: The company does not provide formal revenue/margin guidance; management commentary focused on dividend coverage, portfolio growth, and capital structure.

Metric	Period	Previous Guidance	Current Guidance/Status	Change
Dividend Coverage (from NII)	Sep 2025 onward	“Project starting with September, NII will cover monthly distribution”	“Achieved full dividend coverage from net investment income in September”	Achieved (raised from projected to achieved)
Monthly Dividend	Oct–Dec 2025	$0.08/share (ongoing program)	$0.08/share (Oct 31 record; Nov 28 pay; Dec 31 pay)	Maintained
Capital Structure (Unsecured Debt)	CY2025	“We will also look to add corporate debt … later this year”	“Hope to do later this year; accretive to GAAP earnings and NII”	Reiterated intent
Portfolio Mix	Q3–Q4 2025	Increase mezz exposure vs equity given RV and hedging	~50/50 mezz and equity; moderating new-issue equity exposure; adding mezz tranches with downside protection	Rebalanced toward mezz; maintained balanced mix

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2026 and Q2 2025)	Current Period (Q2 2026 PR; calendar Q4 2025 ongoing)	Trend
Tariffs/Macro	Tariff volatility drove April drawdown; dispersion by borrower; hedges added at better entry points	Fed’s first rate cut in Sep; credit spreads tightened; dispersion persisted esp. CCCs	Macro volatility easing, dispersion persists
CLO Issuance/Refis	Resets/refis over new issue; relative value in secondary; avoided new issue equity in Q2	Debt spreads tightened; equity benefited from liability resets/refis; equity arbitrage pressured by loan repricings	Focus on secondary; refis/resets opportunistic
Portfolio Allocation	Shift toward mezz (up-in-credit) with hedges, less new-issue equity	~50/50 mezz/equity; added mezz for yield/downside; rotated into higher-quality, longer-dated equity	Balanced, defensive tilt
Loan Repricing/Above Par	Loan repricings reigniting spread compression concerns; 46% > par (as of Jul 31)	Callable higher-quality loans repriced; equity benefits from debt spread tightening but offset by repricings	Ongoing repricing headwind to equity NIM
Hedging	Increased corporate credit hedges as spreads tightened; FX hedges for EU positions	Credit hedges designed to protect downside; unrealized losses this quarter	Maintain hedges; P&L drag this quarter

Management Commentary

CEO: “Our CLO portfolio ramp-up continued in the quarter, and our net investment income increased in tandem. I’m pleased to announce that Ellington Credit Company achieved full dividend coverage from net investment income in September” .
CEO on positioning: “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” .
CFO on performance drivers (Q2 2025 call): “Results benefited from significant net realized and unrealized gains on U.S. debt and equity… deal calls on two mezzanine positions… reset of a CLO equity position” .
PM on issuance dynamics: “New issue CLO equity arbitrage has come under pressure… our emphasis on CLO mezz in the current environment reflects our concern that persistence of higher base tariff rates… will continue to drive dispersion” .

Q&A Highlights

UBS: Why haven’t AAA spreads retraced while loans tightened? PM: Technicals and demand shifts; AAAs ~10–15 bps wider vs earlier tights; loan market above-par share reduced vs early year .
Jones Trading: CLO issuance outlook into year-end? PM: More resets/refis vs new issue; potential easing could shift assets/liabilities to reignite new issue, but uncertain near term .
Risk posture: Equity tranches bear first-loss risk amid tariff/macro dispersion; mezz positions offer more spread-sensitive, less fundamental risk under tail scenarios .
NAV updates: Management posting monthly NAV ranges; July 31 cited around $6.16 (range), signaling transparency on trajectory .

Estimates Context

S&P Global consensus “Primary EPS” for Q2 2026 was ~$0.203 (3 estimates) vs actual Adjusted NII/share of $0.23, a beat; consensus revenue ~$11.12M (2 estimates) vs total investment income of $14.15M, a beat * *.
For Q3 2026 (calendar Q4 2025), consensus “Primary EPS” is ~$0.241 (3 estimates) and revenue ~$12.78M (2 estimates), suggesting expected sequential moderation from Q2’s elevated realized gains but continued strong NII coverage [GetEstimates]*.
Values retrieved from S&P Global.*

Key Takeaways for Investors

Dividend coverage milestone reached; sustaining the $0.08 monthly dividend looks supported by NII and recurring CLO cash distributions while maintaining a defensive mezz/hedged posture .
Bold beat vs S&P consensus on “Primary EPS” and revenue proxies in Q2 2026 reflects effective rotation into mezz, active trading, and par redemptions; watch for sustainability as unrealized mark dynamics can swing GAAP EPS *.
Equity arbitrage remains pressured by loan repricings despite tighter debt spreads; allocation discipline (secondary market equity, longer-dated profiles) should mitigate NIM compression risk .
NAV drifted lower QoQ amid equity and hedge marks; near-term stock reaction likely tied to management’s Nov 20 commentary on unsecured debt issuance timing, deployment pace, and hedge stance .
Portfolio scale-up and balanced mix (~$380M CLO FV; ~50/50 debt/equity) provide multiple earnings levers; elevated dispersion favors active management and selective mezz .
Watch European exposure: dispersion and repricing have weighed on EU equity; FX and credit hedges are in place but were a P&L drag this quarter .
Short-term: trade the call—focus on color around December quarter (calendar Q4 2025) trajectory and whether realized gains/trading activity persist. Medium-term: thesis hinges on scaling with accretive leverage (unsecured debt), disciplined allocation, and hedge utilization to smooth marks .

Note on current-period documents: Q4 2025 (calendar) results and call transcript are not yet available as of Nov 20, 2025; the Nov 20 call addresses Q2 2026 (Sep 30 quarter). This recap uses the latest primary documents (Q1 and Q2 2026) and S&P Global consensus for the quarter ending Dec 31, 2025.

Ellington Credit Co (EARN)·Q4 2025 Earnings Summary