Group 1: State of American Consumers - The top 40% of income earners saved the majority of excess savings during the COVID-19 pandemic, while lower-income households saw significant increases in savings due to stimulus checks [4][5] - In 2022, higher-income households began to spend their accumulated savings, while lower-income consumers relied on wage growth to sustain spending [5][6] - Credit card debt has surged as many consumers shifted from saving to spending, leading to increased interest payments on non-mortgage consumer debt [5][6][8] - As of Q1 2024, credit card delinquencies reached their highest level since the Great Financial Crisis, indicating financial strain among lower-income consumers [8][6] Group 2: Market Trends and Investment Opportunities - A significant market rotation has occurred, with real estate outperforming big tech stocks recently, indicating a shift in investor sentiment [9][10] - The Nasdaq index has seen a decline in assets under management, while small-cap ETFs have experienced a substantial increase, suggesting a potential multi-year outperformance of average stocks [11][13] - Agree Realty (ADC) has shown strong performance, with a stock price increase of approximately 13% over the last month, attributed to its adaptability in a higher interest rate environment [15][17] - Cullen/Frost Bankers (CFR) has rebounded nearly 8% after reporting decent Q2 2024 earnings, highlighting its strong position in the Texas market despite current challenges [18][20] Group 3: Life Science Real Estate Market - The life science real estate sector is currently in a bear market, with elevated demand from previous years normalizing and record-high space deliveries [24][27] - Alexandria Real Estate Equities (ARE) reported solid leasing volume in 2024, maintaining performance in a challenging market, with a projected rebound in venture capital deployment for biotech firms [25][27] - Despite current challenges, the long-term outlook for the life sciences industry remains positive due to aging demographics and consistent demand for lab space [28][27] Group 4: Temp Staffing Industry - Robert Half Inc. (RHI) has seen a decline in revenue due to a weaker labor market, with total revenue down about 5% from the end of 2019 [29][31] - The company maintains a capital-light business model with zero debt, which has historically facilitated high returns on invested capital [33][35] - RHI's dividend yield has reached around its COVID-era high, indicating that the dividend remains secure despite current challenges [35][36]

Agree Realty Corporation (NYSE:ADC) Q2 2024 Earnings Conference Call July 24, 2024 9:00 AM ET Company Participants Reuben Treatman - Senior Director of Corporate Finance Joey Agree - President & Chief Executive Officer Peter Coughenour - Chief Financial Officer Conference Call Participants Ronald Kamdem - Morgan Stanley Smedes Rose - Citi Farrell Granath - Bank of America Mitch Germain - Citizens JMP Eric Borden - BMO Capital Markets Brad Heffern - RBC Capital Markets Alec Feygin - Baird Upal Rana - KeyBanc ...

Core Insights - Agree Realty (ADC) reported revenue of $152.58 million for Q2 2024, a year-over-year increase of 17.5% and a surprise of +1.50% over the Zacks Consensus Estimate of $150.33 million [1] - The earnings per share (EPS) for the same period was $1.04, compared to $0.42 a year ago, with an EPS surprise of +0.97% over the consensus estimate of $1.03 [1] Revenue Breakdown - Rental income was reported at $152.42 million, exceeding the five-analyst average estimate of $149.79 million, reflecting a year-over-year change of +17.4% [2] - Operating cost reimbursement revenue was $15.94 million, slightly below the average estimate of $16.20 million, but showed a +10% change compared to the previous year [2] - Other revenues reached $0.15 million, significantly surpassing the estimated $0.03 million, marking a remarkable +529.2% change year-over-year [2] Performance Metrics - The diluted net earnings per share was reported at $0.52, exceeding the five-analyst average estimate of $0.44 [2] - Over the past month, shares of Agree Realty have returned +7.4%, outperforming the Zacks S&P 500 composite's +2% change [2] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [2]

Agree Realty (ADC) came out with quarterly funds from operations (FFO) of $1.04 per share, beating the Zacks Consensus Estimate of $1.03 per share. This compares to FFO of $0.98 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an FFO surprise of 0.97%. A quarter ago, it was expected that this real estate investment trust would post FFO of $1.01 per share when it actually produced FFO of $1.03, delivering a surprise of 1.98%.Over the last four quarters ...

[Financial and Operating Highlights](index=1&type=section&id=Financial%20and%20Operating%20Highlights) The company reported strong Q2 and first-half 2024 results, highlighted by significant investment activity, double-digit growth in Net Income per share, and robust increases in both Core FFO and AFFO per share Second Quarter 2024 Highlights | Metric | Value | | :--- | :--- | | Investment in retail net lease properties | ~$203 million (70 properties) | | Net Income per share | $0.52 (+25.6% YoY) | | Core FFO per share | $1.03 (+5.7% YoY) | | AFFO per share | $1.04 (+6.4% YoY) | | July monthly dividend | $0.250 per share (+2.9% YoY) | | Total Liquidity (Proforma) | ~$1.7 billion | | Proforma Net Debt to Recurring EBITDA | 4.1x | First Half 2024 Highlights | Metric | Value | | :--- | :--- | | Investment in retail net lease properties | ~$343 million (102 properties) | | Net Income per share | $0.95 (+11.3% YoY) | | Core FFO per share | $2.05 (+4.6% YoY) | | AFFO per share | $2.07 (+5.5% YoY) | | Declared dividends per share | $1.491 (+2.9% YoY) | [Financial Performance](index=2&type=section&id=Financial%20Performance) The company demonstrated robust financial growth in Q2 and H1 2024, with Net Income, Core FFO, and AFFO all showing significant year-over-year increases in both absolute terms and on a per-share basis [Financial Results (Net Income, Core FFO, AFFO)](index=2&type=section&id=Financial%20Results) For Q2 2024, Net Income per share rose **25.6% to $0.52**, Core FFO per share grew **5.7% to $1.03**, and AFFO per share increased **6.4% to $1.04** Net Income Attributable to Common Stockholders (YoY Growth) | Period | Amount | Per Share | Per Share Growth | | :--- | :--- | :--- | :--- | | Q2 2024 | $52.9M | $0.52 | +25.6% | | H1 2024 | $95.9M | $0.95 | +11.3% | Core FFO (YoY Growth) | Period | Amount | Per Share | Per Share Growth | | :--- | :--- | :--- | :--- | | Q2 2024 | $104.2M | $1.03 | +5.7% | | H1 2024 | $206.2M | $2.05 | +4.6% | AFFO (YoY Growth) | Period | Amount | Per Share | Per Share Growth | | :--- | :--- | :--- | :--- | | Q2 2024 | $105.3M | $1.04 | +6.4% | | H1 2024 | $208.6M | $2.07 | +5.5% | [Dividends](index=2&type=section&id=Dividend) The company declared a monthly dividend of **$0.250 per share** for Q2, a **2.9% year-over-year increase**, resulting in a payout ratio of approximately **72% of AFFO** - Declared a monthly cash dividend of **$0.250 per common share** for each month in Q2 2024, a **2.9% increase** over Q2 2023[7](index=7&type=chunk) - The Q2 dividends represent payout ratios of approximately **73% of Core FFO per share** and **72% of AFFO per share**[7](index=7&type=chunk) - Subsequent to quarter end, a monthly dividend of **$0.250 per common share** was declared for July 2024[8](index=8&type=chunk) [2024 Guidance and CEO Outlook](index=3&type=section&id=2024%20Guidance%20and%20CEO%20Outlook) Driven by strong performance and a growing investment pipeline, the company raised its full-year 2024 guidance for both AFFO per share and acquisition volume [Revised 2024 Guidance](index=3&type=section&id=Earnings%20Guidance) The company increased its 2024 AFFO per share guidance to a range of **$4.11 to $4.14** and raised its acquisition volume target from approximately **$600 million to $700 million** Revised 2024 Guidance | Metric | Prior Guidance | Revised Guidance | | :--- | :--- | :--- | | AFFO per share | $4.10 to $4.13 | $4.11 to $4.14 | | Acquisition volume | ~$600 million | ~$700 million | | Disposition volume | $50 to $100 million | $60 to $100 million | [CEO Comments](index=3&type=section&id=CEO%20Comments) The CEO highlighted the successful capital raising of nearly **$650 million** in the quarter, the proforma liquidity of **$1.7 billion**, and the growing investment pipelines as key factors supporting the increased full-year guidance for acquisitions and AFFO per share, which is now projected to grow **4.4%** at the midpoint - The company raised nearly **$650 million** of capital during the quarter, bolstering the balance sheet[10](index=10&type=chunk) - Total liquidity is **$1.7 billion** proforma for the closing of the expanded Credit Facility[10](index=10&type=chunk) - Full-year acquisition guidance was increased to approximately **$700 million** due to growing pipelines across all three external growth platforms[10](index=10&type=chunk) [Portfolio Overview](index=3&type=section&id=Portfolio%20Update) As of June 30, 2024, the company's portfolio of **2,202 properties** was **99.8% leased** with a weighted-average lease term of **8.1 years** [Portfolio Statistics](index=3&type=section&id=Portfolio%20Statistics) The portfolio consists of **2,202 properties** across **49 states**, totaling **45.8 million square feet** Portfolio Snapshot (as of June 30, 2024) | Metric | Value | | :--- | :--- | | Properties | 2,202 | | States | 49 | | Gross Leasable Area | 45.8 million sq. ft. | | Leased % | 99.8% | | Weighted-Average Remaining Lease Term | 8.1 years | | Annualized Base Rents from Investment Grade Tenants | 68.4% | [Ground Lease Portfolio](index=3&type=section&id=Ground%20Lease%20Portfolio) The ground lease portfolio, representing **11.3% of total annualized base rents**, is fully occupied with a **10.0-year weighted-average lease term** - The ground lease portfolio consists of **223 leases** and represents **11.3%** of the company's total annualized base rents[12](index=12&type=chunk) - The portfolio is **100% occupied**, has a weighted-average remaining lease term of approximately **10.0 years**, and generates **87.3%** of its annualized base rents from investment-grade retail tenants[12](index=12&type=chunk) [Top Tenants](index=6&type=section&id=Top%20Tenants) The portfolio's top tenants are primarily high-quality, national retailers, ensuring stable cash flows Top 5 Tenants by % of Annualized Base Rent | Tenant | % of Annualized Base Rent | | :--- | :--- | | Walmart | 5.8% | | Tractor Supply | 4.9% | | Dollar General | 4.7% | | Best Buy | 3.5% | | CVS | 3.3% | [Retail Sectors](index=7&type=section&id=Retail%20Sectors) The portfolio is diversified across various defensive and essential retail sectors Top 5 Retail Sectors by % of Annualized Base Rent | Sector | % of Annualized Base Rent | | :--- | :--- | | Grocery Stores | 9.6% | | Home Improvement | 9.2% | | Tire and Auto Service | 8.0% | | Convenience Stores | 8.0% | | Dollar Stores | 7.7% | [Geographic Diversification](index=8&type=section&id=Geographic%20Diversification) The company maintains a broad geographic footprint across **49 states**, reducing concentration risk Top 5 States by % of Annualized Base Rent | State | % of Annualized Base Rent | | :--- | :--- | | Texas | 7.1% | | Illinois | 5.6% | | Florida | 5.6% | | Ohio | 5.4% | | North Carolina | 5.4% | [Investment and Leasing Activity](index=3&type=section&id=Investment%20and%20Leasing%20Activity) The company was highly active in Q2, investing **$185.8 million** in acquisitions and commencing **$18.8 million** in new development projects [Acquisitions](index=3&type=section&id=Acquisitions) In Q2 2024, the company acquired **47 properties** for **$185.8 million** at a **7.7% weighted-average capitalization rate**, with **59.1% of acquired rent** from investment-grade tenants Q2 2024 Acquisition Summary | Metric | Value | | :--- | :--- | | Volume | ~$185.8 million | | Properties | 47 | | Weighted-Average Cap Rate | 7.7% | | Weighted-Average Remaining Lease Term | ~9.3 years | | % of ABR from Investment Grade Tenants | 59.1% | - The full-year 2024 acquisition volume outlook was increased to approximately **$700 million** from a previous **$600 million**[14](index=14&type=chunk) [Dispositions](index=4&type=section&id=Dispositions) The company strategically recycled capital by selling **10 properties** for **$36.9 million** in Q2 at a **6.4% weighted-average capitalization rate** - During Q2, the company sold **10 properties** for gross proceeds of approximately **$36.9 million** at a weighted-average capitalization rate of **6.4%**[15](index=15&type=chunk) - The full-year 2024 disposition guidance range was updated to **$60 million to $100 million**[15](index=15&type=chunk) [Development and DFP](index=4&type=section&id=Development%20and%20DFP) During Q2, **five new development or Developer Funding Platform (DFP) projects** were started with total committed capital of approximately **$18.8 million** - Commenced **five new development or DFP projects** in Q2 with total anticipated costs of approximately **$18.8 million**[16](index=16&type=chunk) H1 2024 Development & DFP Activity | Metric | Value | | :--- | :--- | | Projects Completed or Under Construction | 25 | | Anticipated Total Costs | ~$101.0 million | | Key Tenants | TJX Companies, Burlington, Starbucks, Gerber Collision, Sunbelt Rentals | [Leasing Activity and Expirations](index=5&type=section&id=Leasing%20Activity%20and%20Expirations) In Q2, the company proactively managed its portfolio by executing new leases, extensions, or options on approximately **302,000 square feet**, including a large Walmart Supercenter - Executed new leases, extensions, or options on approximately **302,000 square feet** of gross leasable area in Q2, including a **183,000-square foot Walmart Supercenter**[19](index=19&type=chunk) - As of June 30, 2024, lease maturities for the remainder of 2024 represented only **0.1% of annualized base rents**[19](index=19&type=chunk)[20](index=20&type=chunk) [Capital Structure and Liquidity](index=9&type=section&id=Capital%20Markets%2C%20Liquidity%20and%20Balance%20Sheet) The company significantly strengthened its balance sheet and liquidity position during the quarter [Capital Markets Activity](index=9&type=section&id=Capital%20Markets) In Q2, the company executed several strategic capital markets transactions, including a **$450 million public bond offering** of **5.625% senior unsecured notes due 2034** - Completed a **$450 million public bond offering** of **5.625% senior unsecured notes due 2034**[29](index=29&type=chunk) - Received commitments to increase its Credit Facility from **$1.0 billion to $1.25 billion** and extend the maturity to August 2029[30](index=30&type=chunk) - Entered into forward sale agreements via its ATM program to sell **3.2 million shares** for anticipated net proceeds of **$194.5 million**[31](index=31&type=chunk) [Liquidity and Balance Sheet](index=9&type=section&id=Liquidity%20and%20Balance%20Sheet) As of June 30, 2024, the company had over **$1.4 billion in liquidity**, which increases to approximately **$1.7 billion** proforma for the credit facility expansion - As of June 30, 2024, total liquidity was over **$1.4 billion**. Proforma for the closing of the expanded **$1.25 billion Credit Facility**, total liquidity is approximately **$1.7 billion**[33](index=33&type=chunk) Key Balance Sheet Metrics (as of June 30, 2024) | Metric | Value | | :--- | :--- | | Net Debt to Recurring EBITDA | 4.9x | | Proforma Net Debt to Recurring EBITDA | 4.1x | | Fixed Charge Coverage Ratio | 4.7x | | Total Debt to Enterprise Value | 29.6% | [Consolidated Financial Statements (Unaudited)](index=12&type=section&id=Consolidated%20Financial%20Statements%20(Unaudited)) This section provides the unaudited consolidated financial statements for the period ended June 30, 2024, including the Balance Sheet, Statement of Operations, and reconciliations of GAAP Net Income to non-GAAP measures like FFO, Core FFO, and AFFO [Consolidated Balance Sheet](index=12&type=section&id=Consolidated%20Balance%20Sheet) As of June 30, 2024, the company reported total assets of **$8.00 billion**, up from **$7.77 billion** at year-end 2023 Key Balance Sheet Figures ($ in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Net real estate investments | $6,952,629 | $6,743,320 | | Total Assets | $8,000,838 | $7,774,836 | | Total Liabilities | $2,837,760 | $2,574,683 | | Total Equity | $5,163,078 | $5,200,153 | [Consolidated Statements of Operations and Comprehensive Income](index=13&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) For the three months ended June 30, 2024, the company generated total revenues of **$152.6 million**, a significant increase from **$129.9 million** in the prior-year period Key Income Statement Figures - Q2 ($ in thousands) | Account | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Total Revenues | $152,575 | $129,900 | | Income from Operations | $81,967 | $61,629 | | Net Income Attributable to Common Stockholders | $52,865 | $39,009 | | Diluted Net Income Per Share | $0.52 | $0.42 | [Reconciliation of Net Income to FFO, Core FFO and Adjusted FFO](index=15&type=section&id=Reconciliation%20of%20Net%20Income%20to%20FFO%2C%20Core%20FFO%20and%20Adjusted%20FFO) For Q2 2024, Net Income of **$54.9 million** was reconciled to key non-GAAP performance metrics: Funds from Operations (FFO) of **$95.8 million**, Core FFO of **$104.2 million**, and Adjusted Funds from Operations (AFFO) of **$105.3 million** Reconciliation to AFFO - Q2 2024 ($ in thousands) | Metric | Amount | | :--- | :--- | | Net Income | $54,913 | | Adjustments (Depreciation, Amortization, etc.) | +$40,920 | | **Funds from Operations (FFO)** | **$95,833** | | Amortization of lease intangibles, net | +$8,381 | | **Core Funds from Operations (Core FFO)** | **$104,214** | | Adjustments (Straight-line rent, Stock comp, etc.) | +$1,094 | | **Adjusted Funds from Operations (AFFO)** | **$105,308** | [Reconciliation of Non-GAAP Financial Measures](index=17&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This reconciliation details the calculation of key leverage and performance metrics Net Debt and Recurring EBITDA Calculation - Q2 2024 ($ in thousands) | Metric | Amount | | :--- | :--- | | Total Debt | $2,697,393 | | Less: Cash and cash equivalents | ($24,254) | | **Net Debt** | **$2,673,139** | | EBITDAre | $125,611 | | Adjustments for Run-Rate & Amortization | +$10,187 | | **Recurring EBITDA** | **$135,798** | | **Annualized Recurring EBITDA** | **$543,192** |

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Mark One ☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2024, or ☐ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to Commission File Number 001-12928 AGREE REALTY CORPORATION (Exact name of registrant as specified in its charter) | --- | --- | |----------- ...

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