Summary of Adamas Trust Q1 2026 Earnings Call

1Key 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, indicating a 26% coverage by EAD.

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.

G&A Expenses: Slight decrease to $24.5 million from $25.1 million.

2Strategic Updates and Business Highlights

Investment Strategy: Focused on three pillars: Agency RMBS (56% of equity), growth in single-family credit through BPL rental loans, and scaling the Constructive platform.

Capital Deployment: Over $1 billion in acquisitions during Q1, with significant investments in both agency and residential credit strategies.

Constructive Integration: Transitioned from a loss to profitability, contributing $2.5 million in profit for the quarter.

Securitization Activity: Strong performance in BPL rental securitizations, with expectations to issue 5-6 securitizations in 2026.

3Forward Guidance and Outlook

Market Conditions: Positive outlook despite geopolitical volatility, with expectations of Fed rate cuts later in the year.

EAD Growth: Focus on scaling the Constructive platform and loan investment portfolio to expand recurring income.

Stock Valuation: Shares trading at a significant discount to intrinsic value, prompting share repurchases.

Dividend Discussions: Ongoing discussions with the Board regarding potential increases in distributions, contingent on sustainable earnings growth.

4Challenges and Points of Concern

Market Volatility: Geopolitical tensions, particularly in the Middle East, could impact economic conditions and interest rates.

Discount to Intrinsic Value: Common stock continues to trade at a 32% discount to adjusted book value, raising concerns about market perception.

Securitization Spreads: Recent widening of spreads in the BPL rental market could affect future securitization pricing and profitability.

G&A Ratio: Expected to fluctuate based on Constructive's origination volumes, indicating potential operational challenges.

5Notable Q&A Insights

Dividend Coverage: Management emphasized the importance of sustainable EAD growth before increasing dividends, with a focus on preserving book value.

Book Value Drivers: Gains in derivatives and property sales contributed significantly to book value increases, indicating reliance on non-recurring items.

Constructive's Production: Future growth in mortgage banking income is expected, with a focus on aligning origination with investment strategies.

Securitization Pricing: Recent pricing movements attributed primarily to market conditions rather than specific deal quality, indicating a responsive strategy to market dynamics. Overall, Adamas Trust's Q1 2026 results reflect strong operational performance amid challenging market conditions, with a strategic focus on growth and capital efficiency. However, ongoing market volatility and stock valuation concerns present potential headwinds.