ADAMG — Adamas Trust, Inc. - 9.125% Senior Notes Due 2030

Summary of Adamas Trust Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• GAAP Earnings Per Share (EPS): $0.41
• Earnings Available for Distribution (EAD): $0.29 per share, a 26% increase quarter-over-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.
• General and Administrative (G&A) Expenses: Decreased slightly to $24.5 million from $25.1 million.

2. Strategic Updates and Business Highlights

• Investment Strategy: Focused on three core pillars: Agency RMBS (56% of equity capital), single-family credit portfolio, and a scaled origination platform.
• Capital Deployment: Over $1 billion in acquisitions, with $510 million in agency strategy and $502 million in residential credit, primarily BPL rental loans.
• Integration of Constructive: Transitioned from a cost center to a profit contributor, generating $2.5 million in profit for the quarter.
• Securitization Activity: Anticipating 5 to 6 BPL rental securitizations this year, supported by strong underwriting and a loyal investor base.

3. Forward Guidance and Outlook

• Positive Outlook: Management remains optimistic about the year ahead, expecting continued EAD growth and disciplined capital allocation.
• Market Conditions: Anticipating a more stable environment with potential Fed rate cuts later in the year, which could benefit earnings.
• Share Repurchase Program: Ongoing efforts to close the valuation gap between market price and intrinsic value.

4. Bad News, Challenges, or Points of Concern

• Market Volatility: The geopolitical situation, particularly the Iran conflict, has introduced volatility and uncertainty in the fixed income market.
• Stock Valuation: Shares are trading at a significant discount (32% to adjusted book value), which management views as a concern.
• Securitization Pricing: Recent BPL rental securitizations showed wider spreads due to market conditions, indicating potential challenges in future transactions.

5. Notable Q&A Insights

• Dividend Coverage: Management is focused on sustainably growing EAD while considering dividend increases, but no immediate changes were indicated.
• Book Value Drivers: Gains from derivative instruments and a property sale contributed to book value increases; ongoing performance is expected to stabilize.
• Constructive's Performance: The origination platform is expected to stabilize and grow without needing additional capital, focusing on efficiency and alignment with Adamas' investment strategies.
• Market Demand: There is strong institutional demand for mortgage credit, which could provide opportunities for growth in the future.

Overall, Adamas Trust's Q1 2026 results reflect strong operational performance amid a challenging macroeconomic environment, with a focus on strategic growth and capital efficiency.