VERO BEACH, Florida, Feb. 12, 2025 (GLOBE NEWSWIRE) -- ARMOUR Residential REIT, Inc. (NYSE: ARR and ARR PRC) ("ARMOUR” or the "Company”) today announced the Company's unaudited Q4 results and December 31, 2024 financial position.
ARMOUR's Q4 2024 Results
- GAAP net loss related to common stockholders of $(49.4) million or $(0.83) per common share.
- Net interest income of $12.7 million.
- Distributable Earnings available to common stockholders of $46.5 million, which represents $0.78 per common share (see explanation of this non-GAAP measure on page 5).
- Average interest income on interest earning assets of 4.81% and interest cost on average interest bearing liabilities of 5.01%.
- Economic interest income was 4.77% less economic interest expense of 3.24% for an economic net interest spread of 1.53% (see explanation of this non-GAAP measure on page 7).
- Raised $136.2 million of capital by issuing 7,205,653 shares of common stock through an at the market offering program.
- Paid common stock dividends of $0.24 per share per month, or $0.72 per share for Q4.
- Book value per common share of $19.07, compared to $20.76 at September 30, 2024.
- Total economic return, which is change in book value for the period plus common dividends paid for the quarter, was (4.67)% for Q4 2024 and (2.62)% for 2024.
- Liquidity, including cash and unencumbered agency and U.S. government securities, of $608.0 million.
- Agency mortgage-backed securities ("MBS") portfolio totaled $12.4 billion.
- Repurchase agreements, net totaled $10.7 billion; 45.7% were with ARMOUR affiliate BUCKLER Securities LLC.
- Debt to equity ratio of 7.87:1 (based on repurchase agreements divided by total stockholders' equity). Implied leverage, including forward settling sales and unsettled purchases was 7.95:1.
- Interest Rate swap contracts totaled $7.2 billion of notional amount.
At the close of business on February 10, 2025:
- Common stock outstanding of 76,414,932 shares.
- 7.00% Cumulative Redeemable Preferred C Stock ("Series C Preferred Stock") with liquidation preference totaling approximately $171.6 million.
- Liquidity, including cash and unencumbered securities, exceeded $802 million. MBS principal and interest receivable due in February 2025 totaled $139.2 million.
- Securities portfolio included approximately $14.7 billion of Agency MBS (including TBA Securities).
- Through February 4, 2025 raised $259.0 million of capital by issuing 14,002,466 shares of common stock and $0.4 million of capital by issuing 17,364 shares of Series C Preferred Stock through at the market offering programs.
- Debt to equity ratio (based on repurchase agreements divided by total stockholders' equity) was 6.59 to 1; Implied leverage, including TBA Agency Securities and forward settling securities was 7.94 to 1.
| December 31, 2024 | December 31, 2023 | |||||||
| (in millions except per share) | ||||||||
| Common stock, at par value - 62,412,116 and 48,798,954 shares outstanding, respectively | $ | 0.1 | $ | 0.1 | ||||
| Additional paid-in capital | 4,585.7 | 4,318.2 | ||||||
| Cumulative distributions to stockholders | (2,383.5 | ) | (2,220.6 | ) | ||||
| Accumulated net loss | (840.9 | ) | (826.5 | ) | ||||
| Total Stockholders' Equity | $ | 1,361.4 | $ | 1,271.2 | ||||
| Less: liquidation preference - 7.00% Cumulative Redeemable Preferred C Stock - 6,846,978 shares outstanding | (171.2 | ) | (171.2 | ) | ||||
| Equity Attributable to Common Stockholders | $ | 1,190.2 | $ | 1,100.0 | ||||
| Book value per common share | $ | 19.07 | $ | 22.54 | ||||
The major drivers of the change in the Company's
financial position were:| Q4 2024 | Q3 2024 | |||||||
| (in millions) | ||||||||
| Total Stockholders' Equity - Beginning | $ | 1,316.9 | $ | 1,161.3 | ||||
| Income (Loss) | ||||||||
| Investment in securities: | ||||||||
| Gain (Loss) on MBS | $ | (404.1 | ) | $ | 306.1 | |||
| Gain (Loss) on U.S. Treasury Securities | 29.2 | (21.7 | ) | |||||
| Gain (Loss) on TBA Securities | (1.6 | ) | 39.1 | |||||
| Gain (Loss) on interest rate swaps | 287.3 | (232.6 | ) | |||||
| Gain (Loss) on futures contracts | 41.6 | (16.4 | ) | |||||
| Net Interest Income | 12.7 | 1.8 | ||||||
| Total Expenses after fees waived(1) | (11.5 | ) | (10.4 | ) | ||||
| Net Income (Loss) | $ | (46.4 | ) | $ | 65.9 | |||
| Preferred stock dividends | (3.0 | ) | (3.0 | ) | ||||
| Common stock dividends | (42.9 | ) | (37.5 | ) | ||||
| Capital Activities | ||||||||
| Issuance of common stock | 136.8 | 130.2 | ||||||
| Total Stockholders' Equity - Ending | $ | 1,361.4 | $ | 1,316.9 | ||||
|
(1) The Company's external manager waived a portion of its contractual management fee at the rate of $1.65 million per quarter for each of Q4 2024 and Q3 2024. | ||||||||
| Condensed Balance Sheet (unaudited) | December 31, 2024 | December 31, 2023 | ||||||
| (in millions) | ||||||||
| Assets | ||||||||
| Cash | $ | 68.0 | $ | 221.9 | ||||
| Cash collateral posted to counterparties | 78.2 | 37.0 | ||||||
| Agency Securities, at fair value | 12,439.4 | 11,159.8 | ||||||
| Derivatives, at fair value | 908.1 | 877.4 | ||||||
| Accrued interest receivable | 52.8 | 47.1 | ||||||
| Prepaid and other | 1.4 | 1.2 | ||||||
| Total Assets | $ | 13,547.9 | $ | 12,344.4 | ||||
| Liabilities | ||||||||
| Repurchase agreements, net | $ | 10,713.8 | $ | 9,648.0 | ||||
| Obligations to return securities received as collateral, at fair value | 493.4 | 350.3 | ||||||
| Cash collateral posted by counterparties | 833.9 | 860.1 | ||||||
| Payable for unsettled purchases | 103.5 | 171.5 | ||||||
| Derivatives, at fair value | 1.3 | 5.0 | ||||||
| Accrued interest payable - repurchase agreements | 32.1 | 26.5 | ||||||
| Accrued interest payable - U.S. Treasury Securities sold short | 3.8 | 5.0 | ||||||
| Accounts payable and other accrued expenses | 4.7 | 6.8 | ||||||
| Total Liabilities | $ | 12,186.5 | $ | 11,073.2 | ||||
| Stockholders' Equity | ||||||||
| 7.00% Cumulative Redeemable Preferred C Stock ($0.001 par value per share, $25.00 per share liquidation preference) | $ | - | $ | - | ||||
| Common stock ($0.001 par value per share) | 0.1 | 0.1 | ||||||
| Additional paid-in capital | 4,585.7 | 4,318.2 | ||||||
| Cumulative distributions to stockholders | (2,383.5 | ) | (2,220.6 | ) | ||||
| Accumulated net loss | (840.9 | ) | (826.5 | ) | ||||
| Total Stockholders' Equity | 1,361.4 | 1,271.2 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 13,547.9 | $ | 12,344.4 | ||||
Distributable Earnings
Distributable Earnings is a non-GAAP measure defined as net interest income plus TBA Drop Income adjusted for the net coupon effect of interest rate swaps and futures contracts minus net operating expenses. Distributable Earnings is based on the historical cost basis of our Agency Securities, interest rate swaps and futures contracts. Distributable Earnings differs, potentially significantly, from net interest income and from net income (loss) (which includes realized gains and losses and market value adjustments).
For a portion of its Agency Securities the Company may enter into TBA forward contracts for the purchase or sale of Agency Securities at a predetermined price, face amount, issuer, coupon and stated maturity on an agreed-upon future date, but the particular Agency Securities to be delivered are not identified until shortly before the TBA settlement date. The Company accounts for TBA Agency Securities as derivative instruments if it is reasonably possible that it will not take or make physical delivery of the Agency Securities upon settlement of the contract. The Company may choose, prior to settlement, to move the settlement of these securities out to a later date by entering into an offsetting short or long position (referred to as a "pair off”), net settling the paired off positions for cash, and simultaneously purchasing or selling a similar TBA Agency Security for a later settlement date. This transaction is commonly referred to as a "dollar roll.” The Company accounts for TBA dollar roll transactions as a series of derivative transactions.
Forward settling TBA contracts typically trade at a discount, or "Drop,” to the regular settled TBA contract to reflect the expected interest income on the underlying deliverable Agency Securities, net of an implied financing cost, which would have been earned by the buyer if the contract settled on the next regular settlement date. When the Company enters into TBA contracts to buy Agency Securities for forward settlement, it earns this "TBA Drop Income,” because the TBA contract is essentially equivalent to a leveraged investment in the underlying Agency Securities. The amount of TBA Drop Income is calculated as the difference between the spot price of similar TBA contracts for regular settlement and the forward settlement price on the trade date. The Company generally accounts for TBA contracts as derivatives and TBA Drop Income is included as part of the periodic changes in fair value of the TBA contracts that the Company recognizes currently in the Other Income (Loss) section of its Consolidated Statement of Operations.
Regulation G Reconciliations
Distributable Earnings and Distributable Earnings per common share
The Company believes that Distributable Earnings and Distributable Earnings per common share may be useful to investors because our Board of Directors may consider Distributable Earnings and Distributable Earnings per common share as part of its deliberations when determining the level of dividends on our common stock. Distributable Earnings and Distributable Earnings per common share tend to be more stable over time and this practice is designed to increase the stability of our common stock dividend from month to month. However, because Distributable Earnings is an incomplete measure of the Company's financial performance and involves significant differences from net interest income and net income (loss) computed in accordance with GAAP, Distributable Earnings should be considered as supplementary to, and not as a substitute for, the Company's net interest income and net income (loss) computed in accordance with GAAP as a measure of certain aspects of the Company's financial performance.
The elements of ARMOUR's Distributable Earnings and Distributable Earnings per common share and a reconciliation of those amounts to the Company's Net Interest Income, Net Income (Loss) and Net Income (Loss) per common share appear below:
| Q4 2024 | Q3 2024 | |||||||
| ($ in millions except, share and per share) | ||||||||
| Net Interest Income | $ | 12.7 | $ | 1.8 | ||||
| TBA Drop and interest margin loss | - | (0.6 | ) | |||||
| Net interest income on interest rate swaps | 47.3 | 63.4 | ||||||
| Net interest income on futures contracts | 1.0 | 0.8 | ||||||
| Total Expenses after fees waived | (11.5 | ) | (10.4 | ) | ||||
| Distributable Earnings | $ | 49.5 | $ | 55.0 | ||||
| Dividends on Preferred Stock | (3.0 | ) | (3.0 | ) | ||||
| Distributable Earnings available to common stockholders | $ | 46.5 | $ | 52.0 | ||||
| Distributable Earnings per common share | $ | 0.78 | $ | 1.00 | ||||
| Net Income (Loss) | $ | (46.4 | ) | $ | 65.9 | |||
| Items Excluded from Distributable Earnings: | ||||||||
| (Gain) Loss on MBS | 404.1 | (306.1 | ) | |||||
| (Gain) Loss on U.S. Treasury Securities | (29.2 | ) | 21.7 | |||||
| (Gain) Loss on TBA Securities, less TBA Drop Income (loss) | 1.6 | (39.7 | ) | <|||||