ARMOUR Residential REIT Inc (ARR) Q3 2024 Earnings Call Highlights: Strong Capital Raise and ...

In This Article:

  • GAAP Net Income: $62.9 million or $1.21 per common share.

  • Net Interest Income: $1.8 million.

  • Distributable Earnings: $52 million or $1 per common share.

  • Management Fee Waiver: $1.65 million waived for Q3.

  • Equity Capital Raised: $129.4 million through at-the-market offering program.

  • Common Stock Dividends: $0.72 per common share for the quarter.

  • Quarter End Book Value: $20.76 per common share, up 2.3% from June 30.

  • Estimated Book Value (as of October 18): $19.58 per common share.

  • Portfolio Duration: 0.91 years.

  • Implied Leverage: 8.6 times.

  • Liquidity Levels: Approximately 50% of total capital.

  • Constant Prepayment Rate (CPR): 7.5% in Q3, down from 7.7% in Q2.

Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • ARMOUR Residential REIT Inc (NYSE:ARR) reported a Q3 GAAP net income of $62.9 million, translating to $1.21 per common share.

  • The company raised $129.4 million of equity capital through its at-the-market offering program, with minimal dilution to book value.

  • ARMOUR's book value per common share increased by 2.3% during the quarter, from $20.30 to $20.76.

  • ARMOUR Capital Management continues to waive a portion of their management fees, which helps offset operating expenses.

  • The company maintains a diversified and liquid investment portfolio, with a focus on specified pools to mitigate prepayment risk.

Negative Points

  • ARMOUR's net interest income was relatively low at $1.8 million for the quarter.

  • The estimated book value per common share decreased to $19.58 as of October 18, after accounting for dividends.

  • The repo market is experiencing funding pressures, which are expected to persist through the end of the year.

  • ARMOUR's leverage has increased, with a current implied leverage of 8.6 times, which may pose risks amid market volatility.

  • The company faces potential volatility due to upcoming US elections, which could impact mortgage spreads and market conditions.

Q & A Highlights

Q: With the sell-off in rates we've seen here in October, can you give us an update on what your current duration exposure is? And if you've made any significant changes to either the assets or hedge composition compared to what you disclosed as of September 30? A: Desmond Macauley, Co-Chief Investment Officer, responded that the duration was 0.91 as of October 21, with most of it in the front end of the curve. They have a program to keep the back-end duration close to zero and have moved their hedges accordingly.