ARMOUR Residential REIT Inc Reports Q4 2024 Net Loss of $(0.83) Per Share, Revenue at $12.7 Million, Missing Estimates

Challenging Quarter with Net Losses and Declining Book Value

Author's Avatar
Feb 12, 2025
Summary
  • Net Loss: Reported a GAAP net loss of $(49.4) million or $(0.83) per common share, missing the estimated EPS of $0.53.
  • Revenue: Net interest income was $12.7 million, significantly below the estimated revenue of $47.62 million.
  • Distributable Earnings: Achieved $46.5 million in distributable earnings available to common stockholders, equating to $0.78 per common share.
  • Book Value: Declined to $19.07 per common share from $20.76 at the end of Q3 2024.
  • Capital Raising: Raised $136.2 million by issuing 7,205,653 shares of common stock through an at-the-market offering program.
  • Dividends: Paid common stock dividends of $0.24 per share per month, totaling $0.72 per share for Q4.
  • Liquidity: Maintained liquidity of $608.0 million, including cash and unencumbered agency and U.S. government securities.
Article's Main Image

On February 12, 2025, ARMOUR Residential REIT Inc (ARR, Financial) released its 8-K filing detailing its unaudited financial results for the fourth quarter of 2024 and its financial position as of December 31, 2024. ARMOUR Residential REIT Inc is a real estate investment trust that primarily invests in residential mortgage-backed securities (RMBS) issued or guaranteed by U.S. government-sponsored enterprises such as Fannie Mae, Freddie Mac, or Ginnie Mae.

Performance Overview

ARMOUR Residential REIT Inc reported a GAAP net loss of $(49.4) million, translating to a loss of $(0.83) per common share, which is below the analyst estimate of $0.53 earnings per share. The company generated net interest income of $12.7 million and distributable earnings available to common stockholders of $46.5 million, or $0.78 per common share. This figure is above the quarterly estimate of $0.53 earnings per share.

Financial Achievements and Challenges

Despite the net loss, ARMOUR Residential REIT Inc managed to raise $136.2 million of capital by issuing 7,205,653 shares of common stock through an at-the-market offering program. The company paid common stock dividends of $0.24 per share per month, totaling $0.72 per share for the quarter. However, the book value per common share decreased to $19.07 from $20.76 at the end of the previous quarter, reflecting a total economic return of (4.67)% for Q4 2024.

Key Financial Metrics

ARMOUR's agency mortgage-backed securities portfolio totaled $12.4 billion, with a debt-to-equity ratio of 7.87:1. The company's liquidity, including cash and unencumbered agency and U.S. government securities, stood at $608.0 million. The economic net interest spread was 1.53%, derived from an economic interest income of 4.77% and an economic interest expense of 3.24%.

Metric Q4 2024 Q3 2024
Net Interest Income $12.7 million $1.8 million
Distributable Earnings per Share $0.78 $1.00
Book Value per Common Share $19.07 $22.54

Analysis and Outlook

The decline in book value and net losses highlight the challenges ARMOUR Residential REIT Inc faces in the current economic environment. The company's ability to raise capital and maintain liquidity is crucial for navigating these challenges. The economic net interest spread of 1.53% indicates a modest return on interest-earning assets, which is vital for sustaining dividend payments and shareholder value.

ARMOUR Residential REIT Inc's performance underscores the volatility in the mortgage-backed securities market and the impact of interest rate fluctuations. Investors should monitor the company's strategic initiatives to enhance its portfolio and improve financial metrics in the coming quarters.

Explore the complete 8-K earnings release (here) from ARMOUR Residential REIT Inc for further details.