AFC Gamma, Inc. (NASDAQ:AFCG) (“AFCG” or “AFC Gamma”) today
announced its results for the second quarter of 2022.
Second Quarter 2022
Highlights
- Net income of $11.4
million in Q2 2022, or $0.58 per basic weighted average share of
common stock
- Distributable
earnings1 of $13.6 million in Q2 2022, or $0.69 per basic weighted
average share of common stock
- Paid a dividend of
$0.56 per common share on July 15, 2022 for Q2 2022, representing a
47% increase from Q2 2021
- Distributable
earnings exceeded the declared dividend for the fifth consecutive
quarter
- Book value of
$17.03 per share as of June 30, 2022, an increase of $0.42, or
2.5%, compared to December 31, 2021
“Given the current market environment with
operators experiencing pricing pressures and longer lead times to
raise equity, we continue to act disciplined in our approach
towards deploying capital. We are focused on supporting existing
operators as well as new operators with strong track-records in the
industry,” stated Leonard Tannenbaum, AFC Gamma’s Chief Executive
Officer. “Despite the slower than expected pace of originations, we
have the capacity to do more deals and expect to close some in the
coming quarter. We look forward to continue supporting the industry
as it expands and matures.”
Portfolio and Investment
Activity
- Closed $154.7
million of new commitments and funded $135.5 million of new and
existing commitments year-to-date as of August 1, 2022, including
approximately $32.0 million which was refinanced from existing
borrowers
- Total loan
commitments of $483.2 million ($423.1 million of which has been
funded) across 12 portfolio companies as of August 1, 2022
- The portfolio’s
weighted average yield to maturity was approximately 18% as of June
30, 2022 and 19% as of December 31, 2021
- All loans are
current and performing
Results of Operations for the Quarter Ended June 30,
2022
- Total net
interest income of $19.9 million, an increase of $11.2 million, or
128%, compared to Q2 2021
- Distributable
earnings1 of $13.6 million, an increase of $7.8 million, or 135%,
compared to Q2 2021
Dividend Payments
-
On July 15, 2022, AFCG paid a regular quarterly cash dividend of
$0.56 per share of common stock to its stockholders of record as of
June 30, 2022
-
The aggregate amount of the regular cash dividend payment of $0.56
per share was approximately $11.1 million, which represents a 47%
increase per share compared to the quarter ended June 30, 2021
Capitalization and
Liquidity
-
In April 2022, AFCG entered into a senior secured revolving credit
facility with $60 million of current commitments from two
FDIC-insured banks and the ability to increase the facility to $100
million (subject to available borrowing base and additional
commitments)
Additional Information
AFCG issued a presentation of its second quarter
2022 results, titled “Second Quarter 2022 Earnings Presentation,”
which can be viewed at www.afcgamma.com under the Investor
Resources section. AFCG also filed its Quarterly Report on Form
10-Q for the quarter ended June 30, 2022, with the Securities and
Exchange Commission on August 9, 2022.
AFC Gamma routinely posts important information
for investors on its website, www.afcgamma.com. AFCG intends to use
this webpage as a means of disclosing material information, for
complying with our disclosure obligations under Regulation FD and
to post and update investor presentations and similar materials on
a regular basis. AFC Gamma encourages investors, analysts, the
media and others interested in AFCG to monitor the Investors
section of its website, in addition to following its press
releases, SEC filings, public conference calls, presentations,
webcasts and other information posted from time to time on the
website. To sign-up for email-notifications, please visit the
“Email Alerts” section of the website under the “IR Resources”
section.
Conference Call & Discussion of
Financial Results
AFC Gamma, Inc. will host a conference call at
10:00 am (Eastern Time) on Tuesday, August 9, 2022, to discuss its
quarterly financial results. All interested parties are welcome to
participate. The call will be available through a live audio
webcast at the Investor Relations section of AFC Gamma’s website
found here: AFC Gamma -- Investor Relations. To participate via
telephone, please register in advance at this link. Upon
registration, all telephone participants will receive a
confirmation email detailing how to join the conference call,
including the dial-in number along with a unique passcode and
registrant ID that can be used to access the call. The complete
webcast will be archived for 90 days on the Investor Relations
section of AFC Gamma’s website.
About AFC Gamma
AFC Gamma, Inc. (NASDAQ:AFCG) is an
institutional lender that provides a range of lending solutions to
established operators in the cannabis industry. AFC Gamma
originates, structures and underwrites senior secured loans and
other types of financing to operators in states that have legalized
medicinal and/or adult-use cannabis. AFC Gamma’s senior management
team has over 100 years of combined experience in investment
management and disciplined credit investing across a range of
economic cycles.
Non-GAAP Metrics
In addition to using certain financial metrics
prepared in accordance with GAAP to evaluate our performance, we
also use Distributable Earnings to evaluate our performance
excluding the effects of certain transactions and GAAP adjustments
we believe are not necessarily indicative of our current loan
activity and operations. Distributable Earnings is a measure that
is not prepared in accordance with GAAP. Distributable Earnings and
the other capitalized terms not defined in this section have the
meanings ascribed to such terms in our most-recently filed
quarterly report. We use this non-GAAP financial measure both to
explain our results to stockholders and the investment community
and in the internal evaluation and management of our businesses.
Our management believes that this non-GAAP financial measure and
the information they provide are useful to investors since these
measures permit investors and stockholders to assess the overall
performance of our business using the same tools that our
management uses to evaluate our past performance and prospects for
future performance.
The determination of Distributable Earnings is
substantially similar to the determination of Core Earnings under
our Management Agreement, provided that Core Earnings is a
component of the calculation of any Incentive Fees earned under the
Management Agreement for the applicable time period, and thus Core
Earnings is calculated prior to Incentive Fee expense, while the
calculation of Distributable Earnings account for any Incentive
Fees earned for such time period. We define Distributable Earnings
as, for a specified period, the net income (loss) computed in
accordance with GAAP, excluding (i) stock-based compensation
expense, (ii) depreciation and amortization, (iii) any unrealized
gains, losses or other non-cash items recorded in net income (loss)
for the period, regardless of whether such items are included in
other comprehensive income or loss, or in net income (loss);
provided that Distributable Earnings does not exclude, in the case
of investments with a deferred interest feature (such as original
issue discount, debt instruments with PIK interest and zero coupon
securities), accrued income that we have not yet received in cash,
(iv) provision for current expected credit losses (“CECL”), (v)
taxable REIT (as defined below) subsidiary (“TRS”) (income) loss
and (vi) one-time events pursuant to changes in GAAP and certain
non-cash charges, in each case after discussions between our
Manager and our independent directors and after approval by a
majority of such independent directors.
We believe providing Distributable Earnings on a
supplemental basis to our net income as determined in accordance
with GAAP is helpful to stockholders in assessing the overall
performance of our business. As a real estate investment trust
(“REIT”), we are required to distribute at least 90% of our annual
REIT taxable income and to pay tax at regular corporate rates to
the extent that we annually distribute less than 100% of such
taxable income. Given these requirements and our belief that
dividends are generally one of the principal reasons that
stockholders invest in our common stock, we generally intend to
attempt to pay dividends to our stockholders in an amount equal to
our net taxable income, if and to the extent authorized by our
Board. Distributable Earnings is one of many factors considered by
our Board in declaring dividends and, while not a direct measure of
net taxable income, over time, the measure can be considered a
useful indicator of our dividends.
Distributable Earnings are non-GAAP measures and
should not be considered as substitutes for GAAP net income. We
caution readers that our methodology for calculating Distributable
Earnings may differ from the methodologies employed by other REITs
to calculate the same or similar supplemental performance measures,
and as a result, our reported Distributable Earnings may not be
comparable to similar measures presented by other REITs.
The following table provides a reconciliation of GAAP
Net Income to Distributable Earnings:
|
Three months ended June 30, |
|
Six months ended June 30, |
|
|
2022 |
|
|
|
2021 |
|
|
2022 |
|
|
|
2021 |
Net
Income |
$ |
11,351,673 |
|
|
$ |
4,627,787 |
|
$ |
21,513,793 |
|
|
$ |
6,028,542 |
Adjustments to net income |
|
|
|
|
|
|
|
Stock-based compensation expense |
|
117,397 |
|
|
|
11,457 |
|
|
1,107,420 |
|
|
|
1,610,572 |
Depreciation and amortization |
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
Unrealized losses (gains) or other non-cash items |
|
1,005,454 |
|
|
|
483,159 |
|
|
924,611 |
|
|
|
627,561 |
Provision for current expected credit losses |
|
1,593,048 |
|
|
|
645,786 |
|
|
2,498,177 |
|
|
|
711,886 |
TRS (income) loss |
|
(487,474 |
) |
|
|
- |
|
|
(548,545 |
) |
|
|
- |
One-time events pursuant to changes in GAAP and certain non-cash
charges |
|
- |
|
|
|
- |
|
|
- |
|
|
|
- |
Distributable Earnings |
$ |
13,580,098 |
|
|
$ |
5,768,189 |
|
$ |
25,495,456 |
|
|
$ |
8,978,561 |
Basic weighted average shares
of common stock outstanding (in shares) |
|
19,715,749 |
|
|
|
13,457,536 |
|
|
19,518,964 |
|
|
|
10,318,542 |
Adjusted Distributable
Earnings per Weighted Average Share |
$ |
0.69 |
|
|
$ |
0.43 |
|
$ |
1.31 |
|
|
$ |
0.87 |
Forward-Looking Statements
This release contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 that reflect our current views and projections with respect
to, among other things, future events and financial performance.
Words such as “believes,” “expects,” “will,” “intends,” “plans,”
“guidance,” “estimates,” “projects,” “anticipates,” and “future” or
similar expressions are intended to identify forward-looking
statements. These forward-looking statements, including statements
about our future growth and strategies for such growth, are subject
to the inherent uncertainties in predicting future results and
conditions and are not guarantees of future performance, conditions
or results. Certain factors, including the ability of our manager
to locate suitable loan opportunities for us, monitor and actively
manage our loan portfolio and implement our investment strategy;
the demand for cannabis cultivation and processing facilities;
management’s current estimate of expected credit losses and current
expected credit loss reserve and other factors could cause actual
results and performance to differ materially from those projected
in these forward-looking statements. More information on these
risks and other potential factors that could affect our business
and financial results is included in the AFC Gamma’s filings with
the SEC, including in the “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” sections of the AFC Gamma’s most recently filed
periodic reports on Form 10-K and Form 10-Q and subsequent filings.
New risks and uncertainties arise over time, and it is not possible
to predict those events or how they may affect AFC Gamma. We do not
undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
AFC GAMMA INVESTOR CONTACT:Robyn Tannenbaum (561)
510-2293ir@advancedflowercapital.com
AFC GAMMA MEDIA CONTACT:Mark Sinclair MATTIO
Communicationsmark@mattio.com
1 See “Non-GAAP Metrics” section of this release for a
reconciliation of GAAP Net Income to Distributable Earnings.
AFC Gamma (NASDAQ:AFCG)
Historical Stock Chart
From Aug 2024 to Sep 2024
AFC Gamma (NASDAQ:AFCG)
Historical Stock Chart
From Sep 2023 to Sep 2024