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Oxford Square Capital Corp. (OXSQ)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 NII was $6.1M ($0.09/share), flat versus Q4 2024 ($6.0M; $0.09/share) and down versus Q1 2024 ($0.11/share); total investment income was $10.2M, essentially unchanged sequentially, while combined realized/unrealized losses surged to ~$14.2M, driving a net decrease in net assets from operations of -$8.1M .
  • NAV/share fell to $2.09 from $2.30 in Q4 2024, reflecting heavy realized losses (-$12.2M) and unrealized depreciation (-$2.1M), despite stable NII; average expense ratio declined modestly YoY (10.57% in Q1 2025 vs 11.17% in Q1 2024) .
  • Wall Street (S&P Global) consensus for Q1 2025 was $0.08 EPS and $9.90M revenue; OXSQ delivered $0.09 and $10.16M, a modest beat on both metrics given limited coverage (1 estimate) [Values retrieved from S&P Global]*.
  • The Board maintained the common dividend at $0.035 per month for July–September 2025, extending prior $0.035/month declarations for April–June 2025; dividend continuity and the NAV decline were likely key near-term stock reaction catalysts .

What Went Well and What Went Wrong

What Went Well

  • Stable core earnings: NII of ~$6.1M ($0.09/share) matched Q4’s $6.0M ($0.09/share), underscoring resilient cash income generation despite market softness .
  • CLO equity effective yield improved to 9.0% from 8.8% in Q4, supporting distribution capacity alongside a 16.0% cash distribution yield on cash-income CLO equity .
  • Management emphasized long-term, permanent capital strategy despite weaker loan market, citing continued focus on portfolio management to maximize long-term total return: “We continue to focus on portfolio management strategies designed to maximize our long-term total return” .

What Went Wrong

  • NAV compression: NAV/share fell to $2.09 from $2.30 (Q4), driven by net realized losses of ~$12.2M and net unrealized depreciation of ~$2.1M, producing a -$8.1M net decrease in net assets from operations .
  • Debt yield declined to 14.3% from 15.8% in Q4, reflective of weaker loan market pricing and dispersion (BB down 82 bps, B down 134 bps, CCC down 211 bps), pressuring interest income from debt investments .
  • Non‑accrual exposure persisted (preferred equity investments fair value ~$3.9M), and macro stress was notable with a 4.31% “effective” default rate including liability management exercises (vs 0.82% headline default) .

Financial Results

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Total Investment Income ($USD)$10,677,424 $10,340,924 $10.2M $10,161,050
Net Investment Income ($USD)$6,537,556 $6,187,155 ~$6.0M $6,103,874
NII per Share ($)$0.11 $0.10 $0.09 $0.09
Combined Unreal./Realized (Losses)/Gains ($USD)$(8,305,946) (−$8.0949M realized; −$0.2110M unreal.) $(7,061,696) ~$−2.7M (net unrealized + realized) ~$−14.2M (−$12.2M realized; −$2.1M unreal.)
Margins and Ratios (Annualized)Q1 2024Q3 2024Q4 2024Q1 2025
Ratio of NII to Average Net Assets (%)17.64% 16.06% 17.35% 15.91%
Ratio of Expenses to Average Net Assets (%)11.17% 10.71% 10.66% 10.57%
Segment Breakdown – Investment Income ($USD)Q1 2024Q3 2024Q4 2024Q1 2025
Interest Income – Debt Investments$6,421,047 $6,121,942 ~$5.4M $5,534,755
Income from Securitization/CLO Investments$3,932,374 $3,526,850 ~$4.1M $3,956,053
Other Income$324,003 $692,132 ~$0.8M $670,242
KPIs and Balance SheetQ3 2024Q4 2024Q1 2025
NAV per Share ($)$2.35 $2.30 $2.09
Weighted Avg Yield – Debt Investments (%)14.5% 15.8% 14.3%
Weighted Avg Effective Yield – CLO Equity (%)9.6% 8.8% 9.0%
Weighted Avg Cash Distribution Yield – CLO Equity (%)15.3% 16.2% 16.0%
Weighted Avg Credit Rating (Fair Value / Principal)2.4 / 2.8 2.3 / 2.4 2.2 / 2.3
Non‑Accrual Exposure (Fair Value, $USD)~$5.3M (debt+pref) ~$5.1M (debt $0.5M; pref $4.6M) ~$3.9M (pref)
ATM Shares Issued (Quarter)~5.1M; ~$14.5M proceeds ~1.8M; ~$5.0M proceeds ~1.3M; ~$3.5M proceeds
Shares Outstanding (Period End)~67.9M ~69.8M ~71.2M
Purchases / Sales / Repayments (Quarter, $USD)$47.7M / — / $27.9M $25.1M / — / $22.0M $16.0M / $10.7M / $8.7M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Common Dividend per Share ($/month)Apr–Jun 2025$0.035 (declared Feb 27, 2025) $0.035 (declared Apr 22, 2025) Maintained

No revenue, margin, or tax guidance was provided; the company reiterates posting supplemental investor information and maintaining monthly distributions .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Loan Market Pricing & DispersionLoan prices rose from 96.54% to 96.71%; dispersion with BB up 28 bps, B down 32 bps, CCC up 215 bps . Q4 further improved to 97.33%; BB +48 bps, B +74 bps, CCC −373 bps .Prices declined to 96.31%; BB −82 bps, B −134 bps, CCC −211 bps .Deteriorated QoQ
Default/Stress IndicatorsDistress ratio 3.43% in Q3; out-of-court restructurings elevated . Q4 distress ratio 3.02%; headline default 0.91% .Headline default 0.82%; effective default including liability mgmt 4.31%; distress ratio 3.21% .Mixed (headline down; effective stress elevated)
NII & NAV CommentaryQ3 NII ~$6.2M ($0.10/share); NAV $2.35; distributions $0.105 . Q4 NII ~$6.0M ($0.09); NAV $2.30; distributions $0.105 .NII ~$6.1M ($0.09); NAV $2.09; distributions $0.105; combined losses ~$14.2M .NII stable; NAV down
CLO Equity Yields9.6% effective yield; 15.3% cash distribution yield (Q3) . Q4: 8.8% effective; 16.2% cash .9.0% effective; 16.0% cash .Slight improvement effective; cash stable
Capital Issuance (ATM)Issued ~5.1M shares; ~$14.5M proceeds (Q3) . Q4: ~1.8M; ~$5.0M proceeds .~1.3M; ~$3.5M proceeds .Continued, moderating

Management Commentary

  • Jonathan Cohen: “For the quarter ended March 31, Oxford Square's net investment income was approximately $6.1 million or $0.09 per share… Our net asset value per share stood at $2.09 compared to… $2.30 for the prior quarter… combined net unrealized and realized losses… approximately $14.2 million” .
  • Kevin Yonon: “During the quarter ended March 31, U.S. loan market performance weakened versus the prior quarter… loan prices decreased… while the default rate… including various forms of liability management exercises… remained at an elevated level of 4.31%” .
  • Company focus: “We continue to focus on portfolio management strategies designed to maximize our long-term total return… as a permanent capital vehicle, we historically have been able to take a longer-term view” .

Q&A Highlights

  • The Q1 2025 call had no analyst questions; the operator closed the Q&A after no questions were received .

Estimates Context

MetricQ1 2025 ConsensusQ1 2025 Actual
Primary EPS (NII per Share) ($)0.08*0.09
Revenue (Total Investment Income) ($USD)9,900,000*10,161,050
# of Estimates (EPS / Revenue)1 / 1*—

Notes: Values marked with an asterisk were retrieved from S&P Global. Coverage is limited (single-analyst), but OXSQ delivered a modest beat on both EPS and revenue versus consensus [Values retrieved from S&P Global]*.

Key Takeaways for Investors

  • Earnings quality resilient: cash income held steady (NII $6.1M; $0.09/share) despite market headwinds and falling debt yields, underpinning dividend coverage in the near term .
  • NAV sensitivity to realized losses remains the primary risk driver; Q1’s ~$12.2M realized losses and ~$2.1M unrealized depreciation reduced NAV/share to $2.09 from $2.30 .
  • CLO equity effective yields ticked up to 9.0% (cash distribution yield 16.0%), supporting portfolio distribution power even as loan prices softened .
  • Dividend continuity: Board reaffirmed $0.035 monthly for Jul–Sep 2025 (consistent with Apr–Jun), signaling confidence in near-term income generation and likely anchoring investor yield expectations .
  • Macro watchlist: elevated “effective” default metrics and wider dispersion in loan pricing point to continued credit selection risk; expect ongoing realized losses to be the swing factor for NAV trajectory .
  • Capital raises via ATM continue (though moderating), incremental dilution offsets liability management flexibility; monitor issuance pace relative to incremental ROE .
  • Near-term trading: dividend support and a small beat vs consensus may stabilize sentiment; medium-term thesis hinges on credit outcomes and realized losses vs income generation in a softening loan market [Values retrieved from S&P Global]*.