ADAMH — Adamas Trust, Inc.

Summary of Adamas Trust Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• GAAP Earnings Per Share (EPS): $0.41, a 26% increase quarter-over-quarter and a 45% increase year-over-year.
• Earnings Available for Distribution (EAD): $0.29 per share, exceeding the $0.23 dividend.
• GAAP Book Value: Increased by 4% to $9.98; adjusted book value rose 1.6% to $10.80.
• Economic Return: 6.35% on GAAP book value and 3.76% on adjusted book value.
• Net Interest Income: Increased to $48.2 million from $46.3 million in the previous quarter.
• General and Administrative Expenses: Slightly decreased to $24.5 million from $25.1 million.

2. Strategic Updates and Business Highlights

• Investment Strategy: Focused on three pillars: Agency RMBS (56% of equity), single-family credit through BPL rental loans, and scaling the Constructive platform.
• Capital Deployment: Over $1 billion in acquisitions, with $510 million in agency strategy and $502 million in residential credit.
• Constructive Integration: Transitioned from a loss to a profit contributor, generating $2.5 million in Q1.
• Securitization Activity: Planned issuance of 5 to 6 BPL rental securitizations in 2026, supported by strong underwriting and market demand.

3. Forward Guidance and Outlook

• Positive Outlook: Management remains optimistic about the year ahead, focusing on EAD growth, disciplined investment selection, and closing the valuation gap of shares.
• Market Conditions: Expectation of continued volatility but anticipate a return to more stable conditions, allowing for opportunistic capital deployment.
• Dividend Discussions: Ongoing evaluations regarding potential increases in distributions, with a focus on sustainable earnings growth.

4. Bad News, Challenges, or Points of Concern

• Market Volatility: Heightened geopolitical tensions (e.g., the Iran conflict) have introduced increased rate volatility and uncertainty in monetary policy.
• Discounted Stock Price: Shares are trading at a significant discount (32% to adjusted book value), which management views as a disconnect from intrinsic value.
• Securitization Spreads: Recent widening of spreads in the BPL rental market could impact future securitization pricing.

5. Notable Q&A Insights

• Dividend Coverage: Management emphasized the importance of sustainable EAD growth relative to dividends, indicating ongoing discussions about future distribution levels.
• Book Value Drivers: Gains were attributed to both recurring income and nonrecurring items, including derivative gains and property sales.
• Constructive's Performance: The origination platform is expected to stabilize and grow, with an emphasis on aligning production with Adamas' investment strategy.
• Market Demand: Strong institutional demand for high-quality mortgage credit is anticipated, which may support future growth.

Overall, Adamas Trust demonstrated strong financial performance in Q1 2026, with a focus on strategic growth and capital efficiency amidst a challenging market environment.