Sachem Capital (SACH) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $15.1 million, down from $16.3 million in Q2 2023, mainly due to reduced loan originations and lower fee income.

• Net loss attributable to common shareholders was $4.1 million ($0.09 per share), compared to net income of $4.8 million ($0.11 per share) in Q2 2023, driven by higher credit loss provisions.

• The company is prioritizing liquidity and balance sheet strength, holding $30 million in cash post-quarter and maintaining a defensive lending posture.

• Dividend was set at $0.08 per share for the quarter, reflecting a conservative payout aligned with current earnings and liquidity.

• Strategy emphasizes selective loan origination, operational improvements, and targeting larger, higher-quality borrowers.

Financial highlights

• Total operating costs and expenses rose to $18.5 million from $10.3 million year-over-year, mainly due to an $8.5 million CECL provision for credit losses.

• Fee income from loans was $2.1 million, down from the prior year due to lower origination volume.

• Net gain from REO sales was $264,000, and REO additions were $1.6 million in the first half of 2024.

• Book value at quarter end was $3.76 per share.

• Net mortgages receivable stood at $485.7 million at quarter-end.

Outlook and guidance

• Management expects to maintain a cautious approach, focusing on liquidity and selective lending until market conditions and capital availability improve.

• Anticipates a return to growth in 2025, with current focus on defensive strategies and capital preservation.

• Dividend likely to remain reduced for the next quarter or two, with potential for increases as conditions stabilize.

• Management expects interest expense to rise in the remainder of 2024 as $34.5 million in unsecured notes mature and require refinancing.

• Intends to maintain REIT status and comply with the 90% taxable income distribution requirement.