ARMOUR Residential REIT (ARR) Q2 2024 earnings summary

Executive summary

• Q2 2024 GAAP net loss available to common stockholders was $51.3 million, or $1.05 per share, while distributable earnings were $52.5 million, or $1.08 per share.

• Book value per common share declined to $20.30 as of June 30, 2024, with an updated estimate of $20.37 as of July 22.

• Dividends paid totaled $0.72 per common share for Q2 2024, with cumulative distributions reaching $2.3 billion.

• Portfolio consisted primarily of agency MBS with a fair value of $8.86 billion at June 30, 2024.

• Management fee waivers continued, offsetting $1.65 million in Q2 operating expenses.

Financial highlights

• Net interest income for Q2 2024 was $7.0 million.

• Economic net interest spread was 2.05% for Q2 2024.

• Economic return for the quarter was negative 4.8%, driven by wider MBS spreads and higher SOFR swap rates.

• Book value per share declined, with total stockholders' equity at $1.16 billion as of June 30, 2024.

• Dividends declared per common share were $0.72 for Q2 2024.

Outlook and guidance

• Management expects positive REIT taxable income for 2024, with Series C Preferred dividends likely fully taxable and common dividends partially taxable.

• Common share dividends are prioritized for the intermediate term, with a focus on maintaining liquidity and risk management amid market volatility.

• Expectation of lower rates and a normalized yield curve to provide strong tailwinds for MBS and mortgage REITs.

• Market pricing in 2.5 Fed rate cuts in 2024 and 4.5 more by end of 2025; management remains cautious on depth of cuts.

• Earnings are expected to cover the dividend rate into year-end.