Oxford Square Capital Corp. (OXSQ)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 total investment income was $9,522,181, down from $10,161,050 in Q1 2025 and from $11,445,456 in Q2 2024; net investment income (NII) was $5,499,565 ($0.08 per share) vs $6,103,874 ($0.09) in Q1 and $7,721,906 ($0.13) in Q2 2024 .
• NAV per share declined to $2.06 from $2.09 in Q1 2025 and $2.43 in Q2 2024; management declared monthly common distributions of $0.035 for October–December 2025, maintaining the prior rate .
• Realized/unrealized results improved sequentially: combined net realized losses and net unrealized appreciation totaled approximately $(1.11) million vs $(14.23) million in Q1; net increase in net assets from operations was $4,385,357 vs a decrease of $(8,121,517) in Q1 .
• Corporate action: priced $65 million of 7.75% unsecured notes due 2030 to fund investments and repay debt—near-term catalyst providing funding flexibility alongside stable common distributions .
• No Wall Street consensus EPS or revenue estimates were available for comparison; focus remains on dividend sustainability, portfolio yields, and credit performance (BDC-specific drivers) [GetEstimates*].
  Values retrieved from S&P Global.*

What Went Well and What Went Wrong

What Went Well

• Sequential improvement in realized/unrealized results: combined net realized losses of $(2,367,343) and net unrealized appreciation of $1,253,135 vs Q1’s larger realized losses and unrealized depreciation; this lifted net assets from operations to $4,385,357 .
• Maintained monthly dividend rate ($0.035) through year-end, reinforcing income stability; quote: “our Board of Directors declared monthly distributions of 3.5¢ per share for each of the months ending October, November and December 2025” .
• Portfolio debt yields ticked up (weighted average yield 14.5% vs 14.3% in Q1), indicating stronger coupon income from debt holdings despite muted new activity .

What Went Wrong

• Revenue pressure: total investment income declined both q/q and y/y, driven by lower CLO cash distributions (13.8% vs 15.5% in Q1) and no purchases during the quarter (only $233,000 of repayments) .
• NAV per share fell to $2.06 (from $2.09 in Q1 and $2.43 in Q2 2024), reflecting continued realized losses and lower CLO effective yields (8.8% vs 9.0% in Q1) .
• Non‑accrual persisted: preferred equity in one portfolio company remained on non‑accrual, with fair value around $5.0 million, highlighting idiosyncratic credit risk .

Financial Results

Segment investment income breakdown:

KPIs and portfolio yield metrics:

Results vs consensus (S&P Global):

Guidance Changes

Notes: Management provided dividend declarations but no revenue, margin, OpEx, tax-rate or segment guidance typical of operating companies; BDCs generally do not provide forward revenue/margin guidance .

Earnings Call Themes & Trends

Management Commentary

• Jonathan Cohen (CEO): “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 $0.09 per share in the prior quarter… During the second quarter, we issued a total of approximately 4,900,000 shares of our common stock… resulting in net proceeds of approximately $11,600,000… our Board of Directors declared monthly distributions of 3.5¢ per share for each of the months ending October, November and December 2025.” .
• Jonathan Cohen (CEO): “we announced that we priced an underwritten public offering of $65,000,000 in aggregate principal amount of 7.75% unsecured notes due 2030, which will be used for investments and for repayment of existing debt.” .
• Kevin Yonon (PM): “US loan market performance strengthened versus the prior quarter… loan prices… increased from 96.31% of par… to 97.07%… the twelve-month trailing default rate… increased to 1.11%… default rate including various forms of liability management exercises… remain at an elevated level of 4.46%… distressed ratio… ended the quarter at 3.06% compared to 3.21%.” .

Q&A Highlights

• No analyst questions; call concluded after prepared remarks, implying limited external debate on outlook or dividend coverage on this call .
• No additional guidance beyond dividend declarations and financing update was provided; management pointed investors to the posted supplemental materials on the website .

Estimates Context

• S&P Global consensus estimates for Q2 2025 EPS and revenue were unavailable; therefore, a formal beat/miss assessment cannot be made. Focus instead on actuals (NII per share $0.08; total investment income $9,522,181) and dividend coverage trajectory [GetEstimates*] .
  Values retrieved from S&P Global.*

Key Takeaways for Investors

• Income profile: NII of $0.08/share and maintained $0.035/month dividends indicate ongoing income delivery but with tighter coverage sequentially as investment income eased .
• NAV trend negative: NAV/share drifted to $2.06; watch realized losses, CLO effective yields (now 8.8%), and any further non‑accruals for NAV pressure .
• Yield dynamics: Debt yields improved (14.5%), but CLO cash yields moderated (13.8%); reduced opportunistic issuance and loan fund outflows suggest a more selective environment .
• Balance sheet flexibility: $65M 7.75% notes due 2030 add capacity to deploy into loans/CLOs or refinance existing debt; monitor pricing and leverage metrics as capital is utilized .
• Activity level: No purchases/sales in Q2 (only repayments ~$233k) suggests a cautious deployment stance; look for re‑acceleration post-notes offering to bolster investment income .
• Risk watch: Continued non‑accrual preferred equity (~$5.0M FV) and elevated broader default metrics (4.46%) warrant close monitoring of credit outcomes in the portfolio .
• Trading implications: Near term, announcements on capital deployment of the new notes and updates to CLO equity cash yields are likely catalysts; medium term thesis hinges on sustaining dividend coverage and stabilizing NAV in a mixed credit environment .