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Oxford Square Capital Corp. (OXSQ)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 total investment income was approximately $10.2M, down slightly q/q from $10.3M and down y/y from ~$12.3M; Net Investment Income (NII) was ~$6.0M ($0.09/share) vs $6.2M ($0.10/share) in Q3 and $7.8M ($0.13/share) in Q4 2023 .
  • NAV/share declined to $2.30 (from $2.35 in Q3 and $2.55 a year ago), as unrealized appreciation (+$42.1M) largely offset sizable realized losses ($44.8M), yielding a net increase in net assets from operations of ~+$3.3M .
  • Board maintained the monthly distribution at $0.035 for April–June 2025, signaling payout stability despite sub-100% NII coverage this quarter ($0.09 NII/share vs $0.105 distributed) .
  • Loan market backdrop improved in Q4; weighted average debt yield rose to 15.8% (from 14.5% in Q3), while CLO equity effective yield fell to 8.8% and cash distribution yield rose to 16.2% .
  • No analyst Q&A on the call; near-term stock catalysts include dividend continuity, rising loan yields, and any updates on realized loss trajectory and credit migrations .

What Went Well and What Went Wrong

  • What Went Well

    • Rising asset yields and constructive market tone: “U.S. loan market performance improved versus the prior quarter” with loan prices up and distress ratio down; debt yield increased to 15.8% q/q .
    • CLO cash flows robust: weighted average cash distribution yield on cash income producing CLO equity investments increased to 16.2% vs 15.3% in Q3, supporting income stability .
    • Credit metrics improved on debt side: non‑accrual debt investments decreased from three (one portfolio company) in Q3 to one in Q4; preferred equity non‑accrual also edged lower ($4.6M vs $4.8M) .

  • What Went Wrong

    • Earnings softness: NII fell to ~$6.0M ($0.09/share) from ~$6.2M ($0.10/share) q/q and $7.8M ($0.13/share) y/y; total investment income ticked down to ~$10.2M from ~$10.3M q/q and ~$12.3M y/y .
    • Realized losses elevated: Q4 saw ~$44.8M realized losses, only partially offset by ~$42.1M unrealized gains, contributing to continued NAV pressure (down to $2.30) .
    • CLO effective yield compressed: weighted average effective yield on CLO equity fell to 8.8% (from 9.6% in Q3), a headwind if sustained .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Total Investment Income ($M)~$12.3 $11.445 $10.341 ~$10.2
Net Investment Income ($M)~$7.8 $7.722 $6.187 ~$6.0
NII per Share ($)$0.13 $0.13 $0.10 $0.09
Total Expenses ($M)~$4.6 $3.724 $4.154 ~$4.2
NAV per Share ($)$2.55 $2.43 $2.35 $2.30
NII Margin (%)~63.4% (calc from 7.8/12.3) 67.5% (calc from 7.722/11.445) 59.8% (calc from 6.187/10.341) 58.8% (calc from 6.0/10.2)
Notes: NII Margin is calculated from reported NII and total investment income (see citations in cells).

Vs. Estimates (Wall Street consensus via S&P Global)

MetricActual Q4 2024ConsensusSurprise
Total Investment Income ($M)~$10.2 N/AN/A
NII per Share ($)$0.09 N/AN/A
Note: Consensus estimates from S&P Global were unavailable due to request limits during retrieval; thus, no estimate or surprise shown.

Segment Investment Income Breakdown ($M)

ComponentQ4 2023Q2 2024Q3 2024Q4 2024
Debt Investments~$8.0 $7.022 $6.122 ~$5.4
CLO Equity Investments~$4.0 $3.886 $3.527 ~$4.1
Other Income~$0.3 $0.538 $0.692 ~$0.8

Key KPIs and Balance Sheet Metrics

KPIQ4 2023Q2 2024Q3 2024Q4 2024
Weighted Avg Debt Yield at Cost (%)13.3 13.7 14.5 15.8
CLO Equity Effective Yield at Cost (%)9.5 9.4 9.6 8.8
CLO Equity Cash Distribution Yield at Cost (%)16.3 16.2 15.3 16.2
Weighted Avg Credit Rating (FV basis)2.3 2.3 2.4 2.3
Non‑accrual Debt (fair value, $M)~1.7; 4 debt investments (3 in one co.) ~0.5; 3 debt (one co.) ~0.5; 3 debt (one co.) ~0.5; 1 debt (one co.)
Preferred Equity on Non‑accrual (FV, $M)~5.3 ~2.5 ~4.8 ~4.6
Shares Outstanding (M)~59.3 ~62.7 ~67.9 ~69.8
ATM Issuance (shares/$)~1.3M / ~$3.7M ~2.9M / ~$8.9M ~5.1M / ~$14.5M ~1.8M / ~$5.0M
Net Inc. in Net Assets from Ops ($M)~(7.3) decrease (Q4’23) ~+5.3 (Q2’24) ~–0.9 (Q3’24) ~+3.3 (Q4’24)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Monthly Distribution per ShareJan–Mar 2025 (declared 10/31/24)$0.035/month ——
Monthly Distribution per ShareApr–Jun 2025 (declared 2/27/25)—$0.035/month Maintained payout level

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024 and Q3 2024)Current Period (Q4 2024)Trend
Loan market conditionsQ2: modest weakening; prices down; default incl. liability mgmt up; inflows ~$4.6B . Q3: modest improvement; prices up; distress ratio down; outflows ~$3.5B .Improved vs Q3; prices up; distress ratio down to 3.02%; inflows ~$5.5B .Improving since Q2.
Debt yields13.7% (Q2) 14.5% (Q3) 15.8% (Q4)
CLO equity yieldsEffective yield 9.4% (Q2) → 9.6% (Q3) 8.8% (Q4) Dipped in Q4.
DistributionsDeclared $0.035 for Oct–Dec 2024 Declared $0.035 for Jan–Mar 2025 Declared $0.035 for Apr–Jun 2025
Credit quality / non‑accrualsQ2: 3 debt (one co.), pref. equity non‑accrual ~$2.5M Q3: 3 debt (one co.), pref. equity ~$4.8M Q4: 1 debt (one co.), pref. equity ~$4.6M
Capital raising (ATM)~2.9M shares / ~$8.9M (Q2) ~5.1M / ~$14.5M (Q3) ~1.8M / ~$5.0M (Q4)

Management Commentary

  • “For the quarter ended December, Oxford Square’s net investment [income] was approximately $6 million or $0.09 per share… Our net asset value per share [was] $2.30 compared to… $2.35 for the prior quarter.”
  • “During the quarter ended December 31, the U.S. loan market performance improved versus the prior quarter… the distress ratio… ended the quarter at 3.02% compared to 3.3% at the end of the third quarter.”
  • “We continue to focus on portfolio management strategies designed to maximize our long‑term total return. And as a permanent capital vehicle, we historically have been able to take a longer‑term view towards our investment strategy.”
  • Distribution policy: Board declared $0.035 per share for April, May, and June 2025, continuing recent monthly levels .

Q&A Highlights

  • The call featured no analyst Q&A; operator noted there were no questions, and management concluded shortly thereafter .
  • No incremental guidance beyond distribution declarations; no additional color provided on realized loss drivers or specific credits during Q&A due to lack of questions .

Estimates Context

  • We attempted to retrieve S&P Global consensus for Q4 2024 revenue and EPS/NII per share but were unable to access due to request limits during this session. As a result, we cannot quantify beats/misses vs. consensus for this quarter from S&P Global data. We recommend revisiting once access resumes to anchor estimate comparisons [GetEstimates errors; see note above].

Key Takeaways for Investors

  • Income profile stable but softer q/q: NII of ~$6.0M ($0.09/share) and total investment income of ~$10.2M slipped modestly; focus on whether rising debt yields translate into higher net income in 2025 against any CLO yield compression .
  • Dividend maintained at $0.035/month through Q2 2025 despite NII/share ($0.09) below quarterly distributions ($0.105); watch coverage trajectory and potential reliance on realized/unrealized items to support NAV and distributions .
  • Credit signals mixed but improving in loans: non‑accrual debt reduced to one position (FV ~$0.5M), and weighted average credit rating improved; monitor preferred equity non‑accrual ($4.6M) and ongoing realized losses .
  • Portfolio yield tailwinds: weighted average debt yield rose to 15.8%; if sustained, this can support NII, partially offsetting CLO effective yield pressure (8.8%) .
  • Realized losses remain a swing factor: ~$44.8M realized losses in Q4 offset by ~$42.1M unrealized gains; trajectory of realized outcomes will be key for NAV stability and sentiment .
  • Market backdrop supportive: improved loan prices, lower distress ratio, and loan fund inflows in Q4 could underpin asset valuations and cash flows near term .
  • Tactical watch items: ATM issuance pace (potential dilution vs. growth), any update on non‑accrual names, and whether management provides more granular outlook on net realized activity and CLO equity distributions in subsequent calls .

Citations

  • Q4 2024 8‑K press release and exhibits:
  • Q4 2024 standalone press release:
  • Q4 2024 earnings call transcripts:
  • Q3 2024 press release and call:
  • Q2 2024 8‑K press release and call:
  • Q4 2023 8‑K press release: