Adamas Trust (ADAM) Q2 2024 earnings summary

Executive summary

• Adjusted interest income rose 63% year-over-year to $84 million in Q2 2024, driven by capital rotation into higher-yielding assets, especially Agency RMBS and business purpose loans.

• Net loss attributable to common stockholders was $26.0 million, or $(0.29) per share, with comprehensive loss matching net loss.

• Book value per share declined to $9.69; adjusted book value per share was $11.02, down 4.3% from Q1.

• Portfolio grew to $5.9 billion, with $934 million in new investments and a focus on Agency RMBS and BPLs.

• Multifamily JV equity portfolio reduced to less than 1% of holdings, with continued disposition of non-core assets.

Financial highlights

• Interest income was $90.8 million in Q2 2024, up from $57.5 million in Q2 2023; net interest income rose to $19.0 million from $15.1 million year-over-year.

• Adjusted net interest income increased to $27.3 million from $26.2 million sequentially; net interest spread was 1.33%.

• Undepreciated loss per share improved to $0.25 from $0.68 sequentially.

• Dividend declared at $0.20 per share, yielding 13.70% as of June 30, 2024.

• Book value per share at quarter-end was $9.69; adjusted book value per share was $11.02.

Outlook and guidance

• Management expects to continue portfolio growth and optimize expenses in the second half of 2024, focusing on short-duration credit assets and liquidity in Agency RMBS.

• Plans to leverage $424 million in excess liquidity to raise recurring income and pursue new investments.

• Positioned for potential Fed rate cuts, which are expected to benefit fixed income assets and portfolio returns.

• Adjusted book value estimated to be up 2%-3% quarter-to-date.

• Focus remains on maintaining flexibility and liquidity to respond to market dislocations.