Sound Point Meridian Capital Inc

For the first fiscal quarter ended 06/30/2026, NII was $5 million, or $0.24 per share. GAAP net income was $17.5 million, or $0.83 per share, versus a net realized loss of $12.8 million and an unrealized gain on investments of $25.2 million. Total expenses were $7.4 million. Net asset value ended at $9.88 per share, up from $9.63 at 03/31/2026. Total assets were $384.7 million, net assets were $208.1 million, fair value of the investment portfolio was $363.2 million, liquidity was about $21 million, and leverage was 45.7% of total assets. The company also reported purchases of 13 equity investments for $16.1 million at a weighted average yield of 20.2%, sales of 7 equity investments generating $23.3 million in proceeds at a weighted average yield of 8.5%, and refinancings of 13 CLO equity investments that produced 37 basis points of weighted average debt cost savings. Forward-looking, management said monthly distributions for calendar Q4 2026 will be 13¢ per share, down from the prior 20¢ monthly rate, and that current go-forward portfolio yields are around 10.1%.

Ujjaval Desai framed the quarter around income compression in CLO equity, portfolio rotation, and risk management. He said the company is seeing some improvement in loan spreads, refinancing activity, and secondary-market opportunities, but acknowledged that AI-related disruption in software and tight primary-market arbitrage remain headwinds. His tone was cautious but constructive, emphasizing that the fee waiver, dividend reset, and trading strategy are meant to align expenses with current earnings power while working toward a higher NII base.

Daniel Steven Fabian focused on the quarter’s financial details: NII of $5 million, or 24¢ per share; GAAP net income of $17.5 million, or $0.83 per share; total expenses of $7.4 million; and quarter-end liquidity of about $21 million. He highlighted active portfolio management, including 13 purchases at a 20.2% weighted average yield, 7 sales at an 8.5% weighted average yield, and 13 refinancings that lowered debt costs by 37 basis points. He also noted a quarter-end leverage ratio of 45.7% of total assets and gave an estimated 07/31/2026 NAV range of $9.56 to $9.66.

Analysts focused on why the dividend remains above quarterly NII, how much software exposure is tied to AI risk, and whether the company should deploy cash into new CLOs or pay down debt. Management said the 13¢ dividend was set using expected yields, portfolio mix, refinancing potential, and accretive secondary-market rotation that has added about 100 basis points of yield year to date. On software, management estimated 10% to 12% of the portfolio is in software credits on a look-through basis and said they are reducing exposure to the names most at risk rather than the whole sector. They also said the fee waiver is for six months, with a review at year-end, and that the goal is to get NII closer to the 13¢ dividend level.