Ellington Credit Q1 Earnings Call Highlights

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MarketBeat

Wed, May 20, 2026 astatine 11:05 AM CDT 7 min read

Key Points

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Ellington Credit reported a GAAP nett nonaccomplishment of $0.86 per share for Q1 2026, driven chiefly by mark-to-market losses successful CLO equity arsenic volatility deed the CLO market. Management said the weakness looked much similar a method dislocation than a deterioration successful underlying recognition quality.
The institution raised $54 cardinal done 8.5% elder unsecured notes to fortify its equilibrium expanse and put during the selloff. Most of the proceeds were deployed by the extremity of April, helping the CLO portfolio turn to astir $328 million.
Conditions improved successful April, with estimated NAV rising to $4.29 per stock midpoint from $4.09 astatine quarter-end and the institution posting a astir 7% monthly economical return. Management said it expects Adjusted Net Investment Income to rebuild into the debased 20-cent scope per stock arsenic caller investments statesman contributing much fully.

Ellington Credit (NYSE:EARN) reported a GAAP nett nonaccomplishment of $0.86 per stock for the 4th ended March 31, 2026, arsenic volatility successful the collateralized indebtedness work marketplace weighed connected plus valuations, peculiarly CLO equity holdings.

Chief Executive Officer Larry Penn said the archetypal calendar 4th was marked by “continued volatility successful the CLO market,” with broader marketplace conditions pressuring valuations and driving a diminution successful nett plus value. However, Penn said the company’s progressive trading strategy and bias toward higher positions successful the superior stack helped it outperform peers.

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“We judge that the archetypal 4th mostly represented a method dislocation that reset valuations and expanded the accidental acceptable alternatively than a cardinal deterioration successful underlying recognition quality,” Penn said.

CLO Equity Marks Drive Quarterly Loss

Chief Financial Officer Chris Smernoff said the quarterly nonaccomplishment was chiefly driven by mark-to-market losses successful CLO equity, portion CLO mezzanine indebtedness was comparatively much resilient. Adjusted Net Investment Income declined by $0.02 from the anterior 4th to $0.19 per share, reflecting little plus yields connected CLO equity positions. The weighted mean outgo output connected the CLO portfolio was 12.5%, down from 13.7% successful the anterior quarter, chiefly owed to little projected currency flows.

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Penn said CLO equity faced respective headwinds during the quarter, including compressed excess dispersed pursuing a indebtedness repricing question successful January, wider marketplace clearing yields and concerns astir lower-quality indebtedness borrowers. He cited Nomura Research estimating a median CLO equity instrumentality of antagonistic 13% for the quarter.

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