ARMOUR Residential REIT Inc is a real estate investment trust that invests in residential mortgage-backed securities (RMBS) issued or guaranteed by U.S.-government-sponsored enterprises, such as Fannie Mae, Freddie Mac, or Ginnie Mae. The company's investment portfolio includes mortgage-backed securities, adjustable-rate mortgage securities, and multifamily mortgage-backed securities. Most of ARMOUR's investments are long-term, fixed-rate agency RMBS, with Fannie Mae guaranteeing most of the company's holdings. ARMOUR derives substantially all its revenue as interest income from its investments.
Performance Overview
ARMOUR Residential REIT Inc (ARR, Financial) reported a GAAP net loss related to common stockholders of $(51.3) million, or $(1.05) per common share, for Q2 2024. This result significantly missed the analyst estimate of $0.59 earnings per share. The company also reported net interest income of $7.0 million and distributable earnings available to common stockholders of $52.5 million, or $1.08 per common share.
Financial Achievements and Challenges
Despite the net loss, ARMOUR Residential REIT Inc (ARR, Financial) managed to maintain a book value per common share of $20.30 as of June 30, 2024, down from $22.07 as of March 31, 2024. The company paid common stock dividends of $0.24 per share per month, totaling $0.72 per share for Q2.
ARMOUR's liquidity, including cash and unencumbered agency and U.S. government securities, stood at $630.2 million. The agency mortgage-backed securities (MBS) portfolio totaled $8.9 billion, and TBA Agency Securities totaled $1.2 billion. The company's debt to equity ratio was 6.09:1, with implied leverage, including TBA Securities and forward settling sales and unsettled purchases, at 7.44:1.
Income Statement Highlights
| Metric | Q2 2024 | Q1 2024 |
|---|---|---|
| Net Interest Income | $7.0 million | $5.3 million |
| Distributable Earnings | $55.5 million | $43.4 million |
| Net Income (Loss) | $(48.3) million | $14.5 million |
| Distributable Earnings per Common Share | $1.08 | $0.82 |
| Net Income (Loss) per Common Share | $(1.05) | $0.24 |
Balance Sheet and Cash Flow
ARMOUR Residential REIT Inc (ARR, Financial) reported total assets of $10.05 billion as of June 30, 2024, down from $12.34 billion as of December 31, 2023. The company's liabilities totaled $8.89 billion, compared to $11.07 billion at the end of 2023. Stockholders' equity stood at $1.16 billion, down from $1.27 billion at the end of 2023.
Analysis and Commentary
The significant GAAP net loss and the decrease in book value per common share highlight the challenges ARMOUR Residential REIT Inc (ARR, Financial) faces in the current economic environment. The company's ability to generate distributable earnings and maintain liquidity is crucial for sustaining its dividend payments and overall financial health.
"The company's external manager has waived a portion of its contractual management fee at the rate of $1.65 million per quarter for each of Q2 2024 and Q1 2024."
This waiver indicates a proactive approach to managing expenses and supporting the company's financial stability.
For more detailed insights and to access the full earnings report, visit the 8-K filing.
Explore the complete 8-K earnings release (here) from ARMOUR Residential REIT Inc for further details.
