ADAMZ — Adamas Trust, Inc. 7.000% Series G Cumulative Redeemable Preferred Stock

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, indicating strong earnings growth.
• 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.
• Economic Return: 6.35% on GAAP book value and 3.76% on adjusted book value.

2. Strategic Updates and Business Highlights

• The company reported strong performance across its business despite a volatile macro environment influenced by geopolitical tensions.
• Investment Strategy: Focused on three pillars: Agency RMBS (56% of equity capital), single-family credit through BPL rental loans, and a scaled origination platform.
• Capital Deployment: Over $1 billion in acquisitions during Q1, with $510 million in agency strategy and $502 million in residential credit.
• Constructive Integration: Transitioned from a cost center to a profit contributor, generating $2.5 million in profit for the quarter.
• Securitization Activity: Planned issuance of 5 to 6 BPL rental securitizations for the year, supported by strong underwriting discipline.

3. Forward Guidance and Outlook

• Management remains optimistic about the year ahead, focusing on EAD growth and closing the valuation gap between market price and intrinsic value.
• Anticipates continued demand for mortgage credit and a more accommodative capital framework.
• Plans to maintain a disciplined approach to capital allocation while growing earnings and book value.

4. Bad News, Challenges, or Points of Concern

• Market Volatility: The geopolitical situation has introduced uncertainty, impacting spreads and monetary policy expectations.
• Stock Valuation: Shares are trading at a significant discount (32% to adjusted book value), which management aims to address through strategic execution.
• Earnings Coverage: While EAD exceeds dividends, there are ongoing discussions about future dividend growth and retained earnings.
• Securitization Market Fluctuations: Variability in pricing for BPL rental securitizations due to market conditions, with spreads widening in subsequent deals.

5. Notable Q&A Insights

• Dividend Strategy: Management is focused on sustainably growing EAD while preserving book value, with discussions ongoing regarding future dividend increases.
• Book Value Drivers: Gains were attributed to strong performance across the portfolio and successful hedging strategies, alongside a notable gain from a property sale.
• Constructive's Performance: The origination platform is expected to stabilize and grow, with a strong focus on aligning production with investment objectives.
• Market Demand: There is strong institutional demand for high-quality mortgage credit, which the company aims to capitalize on through its distribution network.

Overall, Adamas Trust's Q1 2026 results reflect strong financial performance and strategic positioning, despite facing challenges from market volatility and stock valuation concerns.