Adamas Trust Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

GAAP Earnings Per Share (EPS): $0.41

Earnings Available for Distribution (EAD): $0.29 per share, a 26% increase from the prior quarter and 45% year-over-year.

Dividend: $0.23, resulting in a 6.35% economic return on GAAP book value.

GAAP Book Value: Increased by 4% to $9.98; adjusted book value rose 1.6% to $10.80.

Net Interest Income: Increased to $48.2 million from $46.3 million in the previous quarter.

G&A Expenses: Slightly decreased to $24.5 million from $25.1 million.

2Strategic Updates and Business Highlights

Investment Strategy: Focus on Agency RMBS (56% of equity capital) and growth in single-family credit through BPL rental loans.

Capital Deployment: Over $1 billion in acquisitions during Q1, with significant investments in both agency strategy ($510 million) and residential credit ($502 million).

Constructive Integration: Transitioned from a cost center to a profit contributor, generating $2.5 million in profit for the quarter.

Securitization Activity: Strong performance in BPL rental securitizations, with plans for 5 to 6 deals in 2026.

3Forward Guidance and Outlook

Positive Outlook: Management maintains a favorable view on the fixed income environment, anticipating Fed rate cuts later in the year.

EAD Growth: Plans to continue scaling the Constructive platform and expanding the loan investment portfolio.

Valuation Gap: Management believes continued execution of their strategy will help close the gap between market price and intrinsic value.

4Challenges and Points of Concern

Market Volatility: Geopolitical tensions, particularly in the Middle East, have introduced volatility affecting spreads and monetary policy expectations.

Stock Valuation: Shares are trading at a significant discount (32% to adjusted book value), which management attributes to market perception rather than business fundamentals.

Securitization Market Fluctuations: Recent pricing of BPL rental securitizations showed wider spreads, reflecting market volatility rather than specific deal quality.

5Notable Q&A Insights

Dividend Coverage: Management indicated that while EAD exceeds dividends, discussions on increasing distributions are ongoing, focusing on sustainable growth.

Book Value Drivers: Gains from derivative instruments and a property sale contributed to the book value increase.

Constructive's Performance: The origination platform is expected to stabilize and grow, with a focus on aligning production with investment objectives.

Capital Efficiency: Management emphasized that Constructive is not fully utilizing available capital, indicating potential for growth without immediate capital needs. Overall, Adamas Trust reported strong financial performance in Q1 2026, with a positive outlook despite external market challenges. The integration of Constructive is progressing well, contributing positively to earnings, while management remains focused on strategic capital allocation and closing the valuation gap.