OXSQ — Oxford Square Capital Corp.

Oxford Square Capital Corp. (OXSQ) Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics:

• Net Investment Income: Approximately $5.4 million ($0.07 per share), slightly down from $5.6 million ($0.07 per share) in the prior quarter.
• Net Asset Value (NAV): Decreased to $1.69 per share from $1.95 in the previous quarter.
• Total Investment Income: Increased to approximately $10.4 million from $10.2 million quarter-over-quarter.
• Investment Losses: Recorded combined net unrealized and realized losses of approximately $18.3 million ($0.22 per share), up from $7.5 million ($0.09 per share) in the prior quarter.
• Distributions: Declared a monthly distribution of $0.035 per share for April, May, and June 2026.
• Share Issuance: Issued approximately 4.3 million shares through an at-the-market offering, generating net proceeds of about $7.9 million.

2. Strategic Updates and Business Highlights:

• The company focused on purchasing first lien loans, primarily in the B2B sector, totaling approximately $18 million during the quarter.
• Portfolio management strategies are being emphasized to maximize long-term returns, with a long-term investment view as a permanent capital vehicle.

3. Forward Guidance and Outlook:

• The company is optimistic about finding opportunities in both primary and secondary markets despite recent market volatility.
• The Board of Directors has declared consistent monthly distributions for the upcoming quarter, indicating confidence in cash flow management.

4. Bad News, Challenges, or Points of Concern:

• The decline in NAV and increased investment losses indicate potential challenges in the investment portfolio.
• The U.S. loan market showed signs of distress, with the distress ratio rising to 4.34% from 2.88%, reflecting broader market volatility and concerns, particularly in the software sector.
• The primary market for leveraged loans has slowed down, with a 27% decrease in issuance compared to the same quarter last year, driven by lower refinancing and LBO activity.

5. Notable Q&A Insights:

• Management acknowledged that the increase in the distress ratio is reflective of volatility in the software market and a general pushback against the growth of the private credit asset class.
• The unrealized depreciation primarily stemmed from the CLO equity portion of the portfolio, which faced significant markdowns during the quarter.
• The company remains focused on identifying investment opportunities at lower prices due to current market conditions, suggesting a proactive approach to navigating challenges.

Overall, while Oxford Square Capital Corp. reported stable income and strategic initiatives, it faces headwinds from market volatility and declining asset values, which could impact future performance.