Core Viewpoint - Orchid Island Capital, Inc. is set to release its second quarter 2025 financial results on July 24, 2025, after market close [1] Earnings Conference Call Details - An earnings conference call will take place on July 25, 2025, at 10:00 AM ET, with registration available online [2] - A live audio webcast of the conference call can be accessed through the company's investor relations website [3] Company Overview - Orchid Island Capital, Inc. is a specialty finance company that invests in Agency RMBS on a leveraged basis, focusing on traditional pass-through Agency RMBS and structured Agency RMBS [4] - The company is managed by Bimini Advisors, LLC, which is a registered investment adviser with the SEC [4]

Core Insights - Orchid Island Capital (ORC) is a specialty finance mREIT focused on residential mortgage-backed securities (RMBS) and is noted for its attractive dividend policy [1][2]. Dividend Policy - ORC offers a substantial dividend yield of 20.1%, significantly higher than the industry average of 12.4% [3]. - The company has a history of increasing its dividend, having raised it three times in the past five years [3]. - In addition to dividends, ORC has a share repurchase plan, with 2.7 million shares available for repurchase as of April 25, 2025 [6]. Financial Position - As of March 31, 2025, ORC reported a strong liquidity position with $446.5 million in cash and cash equivalents, and no debt [7]. - This robust liquidity supports the sustainability of ORC's capital distribution [7]. Competitive Landscape - Compared to AGNC Investment Corp., which has a dividend yield of 15.3% and a payout ratio of 81%, ORC's dividend yield is notably higher [8]. - Annaly Capital Management, Inc. offers a dividend yield of 14.3% with a payout ratio of 101%, indicating a more aggressive dividend strategy [9]. Price Performance and Valuation - ORC shares have increased by 1.4% year-to-date, while the industry has grown by 7.3% [11]. - The company trades at a forward price-to-tangible book (P/TB) ratio of 0.80X, below the industry average of 0.98X [13]. Earnings Estimates - The Zacks Consensus Estimate indicates a year-over-year earnings growth of 394.4% for 2025 and 24.5% for 2026 [16]. - Current estimates for 2025 and 2026 earnings are $0.53 and $0.66, respectively, reflecting significant improvement from previous years [19].

Core Viewpoint - Orchid Island Capital, Inc. (ORC) offers a high dividend yield of 20.3%, significantly above the industry average of 12.4%, and has increased its dividend three times in the past five years [1][9]. Dividend Yield - ORC is a specialty finance mortgage real estate investment trust (mREIT) that invests in residential mortgage-backed securities (RMBS) on a leveraged basis, providing favorable long-term returns and substantial dividend yields [3]. - Competitors AGNC Investment and Arbor Realty Trust have dividend yields of 15.8% and 15.5%, respectively [3]. Financial Position - As of March 31, 2025, ORC had $446.5 million in cash and cash equivalents, with no debt [4]. - The company has a share repurchase plan, with 2.7 million shares available for repurchase as of April 25, 2025 [5]. Market Conditions - The Federal Reserve has lowered interest rates by 100 basis points in 2024, and mortgage rates have slightly declined, with the average 30-year fixed-rate mortgage at 6.77% as of June 26, 2025 [7]. - Fannie Mae projects mortgage rates to reach 6.6% by the end of Q3 2025 and 6.5% by year-end [8]. Earnings Projections - Earnings for 2025 are projected to rise by 394.4%, with a year-over-year growth estimate of 266.67% for Q2 2025 [9][17]. - The Zacks Consensus Estimate for ORC's earnings in 2025 is $0.53, with a significant increase from a loss of $0.18 the previous year [19]. Valuation Analysis - ORC is currently trading at a forward 12-month price-to-sales (P/S) multiple of 2.47X, higher than the industry average of 2.35X [20]. - The company's share price has increased by 12.5% over the past three months, outperforming the industry average of 10% [14]. Strategic Focus - ORC maintains a focus on agency RMBS, which positions it well in the competitive market, with expectations of improved loan demand and net interest spreads as mortgage rates decline [10][11][22]. - The company generated a positive total return of 2.6% in Q1 2025, driven by its monthly dividend [12].

Dividend Announcement - Orchid Island Capital, Inc. declared a monthly cash dividend of $0.12 per share for June 2025, payable on July 30, 2025, to shareholders of record as of June 30, 2025, with an ex-dividend date of June 30, 2025 [1][7] Company Overview - Orchid Island Capital, Inc. is a specialty finance company that invests in Agency Residential Mortgage-Backed Securities (RMBS) on a leveraged basis, focusing on traditional pass-through Agency RMBS and structured Agency RMBS [4] Shareholder Distribution Requirements - To qualify as a Real Estate Investment Trust (REIT), the company must distribute at least 90% of its REIT taxable income annually to stockholders, excluding net capital gains [2] Share Count - As of June 10, 2025, the company had 121,210,845 shares of common stock outstanding, an increase from 119,072,481 shares as of May 31, 2025, and 107,786,614 shares as of March 31, 2025 [3] RMBS Portfolio Characteristics - The RMBS portfolio as of May 31, 2025, includes various categories of Agency RMBS, with a total mortgage asset value of $6,413,292, where Fannie Mae and Freddie Mac represent 61.4% and 38.6% of the portfolio, respectively [11][12] Borrowings and Debt Characteristics - The total borrowings of the company amount to $6,138,581, with a weighted average interest rate of 4.47% and a maturity of 29 days as of May 31, 2025 [13]

Market Overview - Wall Street experienced significant gains in May, with the S&P 500 increasing by 6.2% and the Nasdaq rising by 9.6%, marking the best month for both indices since late 2023 [1] - Investor optimism was fueled by a temporary pause on new trade tariffs announced by Trump, alleviating fears regarding trade tensions with China and the EU [1] Geopolitical Risks - Despite the temporary relief, the threat of tariffs remains, as China accused the U.S. of violating their trade truce by tightening controls on AI chip exports and student visas, which has raised tensions again [2] - The interconnectedness of the U.S. and Chinese economies means that even minor disputes can significantly impact market stability [2] Investment Strategy - In uncertain times, investors are turning to value investing, focusing on companies with strong fundamentals that are undervalued [3] - Value stocks with high earnings yield can provide attractive returns, especially during periods of market volatility [4] Earnings Yield - Earnings yield is calculated by dividing a company's annual earnings per share (EPS) by its current stock price, indicating potential returns for investors [5] - A higher earnings yield suggests a stock may be undervalued compared to its peers, while a lower yield may indicate overvaluation [5][7] Stock Screening Criteria - A primary screening criterion for selecting stocks is an earnings yield greater than 10%, supplemented by estimated EPS growth, average daily volume, and current price thresholds [8][9][10] - Stocks with a Zacks Rank of 1 (Strong Buy) or 2 (Buy) are expected to outperform their peers [10] Selected Value Stocks - Five value stocks with earnings yields exceeding 10% have been identified as appealing options amid rising U.S.-China tensions: AngloGold Ashanti (AU), Orchid Island Capital (ORC), LATAM Airlines (LTM), Priority Technology (PRTH), and Allianz (ALIZY) [11] - All five stocks show strong projected EPS growth through 2026 and meet liquidity, price, and growth criteria [11] Company Highlights - **AngloGold Ashanti (AU)**: Expected earnings growth of 95% in 2025 and 6.7% in 2026, with a Zacks Rank of 1 and a Value Score of A [12] - **Orchid Island Capital (ORC)**: Projected earnings growth of 394% in 2025 and 24.5% in 2026, Zacks Rank 1, Value Score B [13] - **LATAM Airlines (LTM)**: Anticipated earnings growth of 27.5% in 2025 and 20% in 2026, Zacks Rank 1, Value Score A [14] - **Priority Technology (PRTH)**: Expected earnings growth of 108% in 2025 and 34% in 2026, Zacks Rank 1, Value Score A [15] - **Allianz (ALIZY)**: Projected earnings growth of 16.4% in 2025 and 9% in 2026, Zacks Rank 1, Value Score B [16]

Core Viewpoint - Orca Energy Group Inc. reported its Q1 2025 financial results, highlighting operational performance amidst challenges, including a decrease in gas deliveries and ongoing uncertainties regarding license extensions [2][3]. Financial Performance - Revenue for Q1 2025 increased by 2% to $25.4 million compared to $24.9 million in Q1 2024, primarily due to a higher current income tax adjustment [3][8]. - Net income attributable to shareholders decreased by 89% to $102,000 from $969,000 in the same period last year, mainly due to higher depletion and administrative expenses [3][8]. - Net cash flows from operating activities improved significantly to $20.3 million from a negative $6.2 million in Q1 2024, driven by the settlement of receivables and changes in working capital [3][8]. - Capital expenditures decreased by 63% to $548,000 from $1.47 million in Q1 2024, reflecting reduced investment in the Songo Songo gas field [3][8]. Operational Highlights - Daily average gas delivered and sold decreased by 3% to 72.0 MMcfd from 74.3 MMcfd in Q1 2024, with a notable decline in power sector deliveries [3][8]. - The Songas Power Plant remains shut down, contributing to reduced gas liftings for the power sector [3][8]. - The company is focused on maintaining its capital returns policy while reviewing the commercial environment [3]. License and Regulatory Issues - The Tanzanian Petroleum Development Corporation (TPDC) submitted a request for a license extension, but uncertainties remain regarding the timing and terms of the extension [3][4]. - A dispute arose regarding the interpretation of gas agreements, with the Ministry of Energy directing TPDC to continue producing Protected Gas despite contractual agreements [3][4]. Settlement Agreement - On April 15, 2025, a settlement agreement was signed with TANESCO for $52.0 million in unpaid amounts, with payments structured in installments [3][8]. - TANESCO has already made a payment of $10.0 million under the settlement agreement [3][8]. Cash Position - As of March 31, 2025, the company had $70.2 million in cash and cash equivalents, down from $90.1 million at the end of 2024 [3][8]. - Working capital increased to $26.8 million from $21.9 million at the end of 2024, indicating improved liquidity [3][8].

Core Points - Orchid Island Capital, Inc. declared a monthly cash dividend of $0.12 per share for May 2025, payable on June 27, 2025, to shareholders of record on May 30, 2025, with an ex-dividend date of May 30, 2025 [1] - The company intends to make regular monthly cash distributions to its common stockholders, adhering to the requirement of distributing at least 90% of its REIT taxable income annually to qualify as a real estate investment trust [2] - As of May 7, 2025, the company had 109,219,994 shares of common stock outstanding, an increase from 108,823,792 shares as of April 30, 2025 [3] RMBS Portfolio Characteristics - Orchid Island Capital focuses on investing in Agency RMBS, including traditional pass-through Agency RMBS and structured Agency RMBS [4] - The RMBS portfolio as of April 30, 2025, includes various fixed-rate mortgage-backed securities with a total face value of $6,205,247 thousand and a fair value of $6,173,059 thousand, representing 99.75% of the portfolio [6][11] - The portfolio is primarily composed of assets from Fannie Mae (61.1%) and Freddie Mac (38.9%) [11] RMBS Valuation Characteristics - The weighted average coupon rate for the RMBS portfolio is 5.40%, with a weighted average maturity of 22 months [6] - The portfolio's sensitivity to interest rate changes is modeled, indicating potential impacts on net income based on shifts in interest rates [6] Borrowings and Counterparty Exposure - As of April 30, 2025, total borrowings amounted to $5,816,599 thousand, with the average debt rate at 4.47% [14] - The company has significant exposure to various counterparties, with J.P. Morgan Securities LLC being the largest at $358,603 thousand [14]

Core Viewpoint - Orchid Island (ORC) shows a significant improvement in earnings outlook, making it an attractive investment option as analysts continue to raise earnings estimates for the company [1][2]. Earnings Estimates - Analysts' optimism regarding Orchid Island's earnings prospects is leading to higher estimates, which is expected to positively impact the stock price [2]. - The Zacks Rank system indicates a strong correlation between earnings estimate revisions and stock price movements, supporting the investment thesis for Orchid Island [2]. Zacks Rank and Performance - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), has a proven track record, with Zacks 1 Ranked stocks averaging a +25% annual return since 2008 [3]. - Orchid Island has received a Zacks Rank 1 (Strong Buy) due to strong agreement among analysts in revising earnings estimates upward, resulting in a significant improvement in consensus estimates for the upcoming quarter and full year [3][9]. Current Quarter and Year Estimates - For the current quarter, Orchid Island is expected to earn $0.15 per share, reflecting a +266.67% change from the previous year [6]. - The Zacks Consensus Estimate for the current quarter has increased by 275% over the last 30 days, with no negative revisions [6]. - For the full year, the expected earnings are $0.53 per share, representing a +394.44% change from the prior year, with a 61.54% increase in consensus estimates over the past month [7][8]. Stock Performance - Orchid Island shares have increased by 11.9% over the past four weeks, indicating investor confidence in the company's earnings growth prospects [10].

Financial Data and Key Metrics Changes - For Q1 2025, the company earned $0.18 per share compared to $0.07 in Q4 2024 [8] - Book value at March 31, 2025, was $7.94 per share, down from $8.09 at December 31, 2024 [8] - Total return for the quarter was 2.6% unannualized, compared to 0.6% for Q4 2024 [8] Business Line Data and Key Metrics Changes - The average portfolio size for Q1 was just under $6 billion, up from $5.3 billion in Q4 2024 [9] - The leverage ratio increased to 7.8% at March 31, 2025, from 7.3% at December 31, 2024 [9] - Prepayment speeds were 7.8% in Q1, down from 10.5% in Q4 2024 [9] Market Data and Key Metrics Changes - The market experienced significant volatility due to tariffs and their expected impact on the economy and inflation [11][72] - Swap spreads moved meaningfully negative late in the quarter and into April, affecting mortgage performance [18][22] - The performance of agency mortgages was strong, being the second-best sector in fixed income markets [22] Company Strategy and Development Direction - The company raised $206 million in capital during Q1 2025, selling 25 million shares of stock [42] - The strategy involved deploying proceeds into higher coupon, shorter duration assets while hedging predominantly with longer duration hedges [31] - The company is cautious about future capital raising, considering the current market volatility and the need for liquidity [108][122] Management's Comments on Operating Environment and Future Outlook - The management expressed uncertainty regarding future economic conditions, citing potential slower growth and upward pressure on inflation due to tariffs [71][75] - The company is positioned with a skew towards higher coupon, shorter duration assets, which should benefit from a steeper yield curve [76] - Management remains vigilant and ready to reposition as market conditions evolve [77] Other Important Information - The company declared and paid dividends of $0.36 per share for each quarter [8] - The liquidity position at March 31, 2025, was 52.2%, slightly down from 52.9% at December 31, 2024 [9] Q&A Session Summary Question: What is the duration gap at the end of the quarter and to-date? - The company does not provide duration in numerical terms but uses DV01, which was reported as $13, indicating a very narrow duration gap [84][85] Question: What is the current book value? - As of last Thursday, the estimated book value was $7.24, down 8.8%, but as of last night, it was estimated at $7.28, reflecting a decline of 8.3% quarter-to-date [94][95] Question: Where do you see gross ROE sitting today? - The gross ROE is very high, potentially in the range of 20%, with spreads on 7-year swaps versus current coupon above 200 basis points [103][104] Question: How are you looking at dividend issuance and buybacks? - The company is cautious about buybacks given the current stock price and may consider raising capital for liquidity purposes [108][122] Question: Will the 2025 dividend be 100% taxable income? - It is too early to confirm, but year-to-date, the taxable income has been in line with distributions [127][129]

Financial Performance - Net income for Q1 2025 was $17.1 million, or $0.18 per share, compared to $19.8 million, or $0.38 per share in Q1 2024, reflecting a decrease of 13.4% in net income [133]. - Interest income increased to $81.1 million in Q1 2025 from $48.9 million in Q1 2024, representing a growth of 65.5% [133]. - Net interest income improved to $19.7 million in Q1 2025 from a net interest expense of $2.5 million in Q1 2024, a positive change of $22.2 million [133]. - Gains on RMBS and derivative contracts decreased significantly to $1.6 million in Q1 2025 from $26.0 million in Q1 2024, a decline of 93.7% [133]. - Total gains on RMBS and U.S. Treasury securities amounted to $76.3 million for the three months ended March 31, 2025, compared to a loss of $61.9 million in the same period of 2024, marking a change of $138.2 million [169]. - The company's total operating expenses increased to approximately $4.2 million for the three months ended March 31, 2025, from approximately $3.7 million in the same period of 2024, reflecting a change of $488,000 [178]. Share Issuance and Repurchase - The company issued a total of 24,675,497 shares under the March 2023 Equity Distribution Agreement, generating net proceeds of approximately $225.0 million [124]. - As of April 25, 2025, the remaining authorization under the stock repurchase program was 2,719,137 shares, representing approximately 10% of the outstanding shares [130]. - The company has entered into multiple equity distribution agreements, with the latest allowing for the sale of up to $350 million in shares [126]. - Total shares repurchased from inception of the stock repurchase program through March 31, 2025, amounted to 5,144,602 shares at an aggregate cost of approximately $77.5 million [130]. - Under the June 2024 Equity Distribution Agreement, the company issued 30,513,253 shares for net proceeds of approximately $245.8 million [212]. - As of March 31, 2025, the company had issued 14,470,882 shares under the February 2025 Equity Distribution Agreement for net proceeds of approximately $121.7 million [213]. Investment Strategy and Portfolio - The company operates to qualify as a REIT, generally avoiding U.S. federal income tax by distributing all REIT taxable income to stockholders [122]. - The company’s investment strategy focuses on Agency RMBS, with a portfolio that includes both traditional pass-through and structured Agency RMBS [120]. - The average RMBS held as of March 31, 2025, was $5,995.7 million, with an interest income of $81.1 million and a realized yield of 5.41% [162]. - As of March 31, 2025, the company's RMBS portfolio consisted of $6.7 billion of Agency RMBS at fair value, with a weighted average coupon of 5.30% [184]. - The company reported a total mortgage asset value of $6.738 billion as of March 31, 2025, with fixed-rate RMBS comprising 99.8% of the portfolio [189]. - The weighted average pass-through current price for the portfolio was $99.32 as of March 31, 2025, compared to $96.44 at December 31, 2024 [190]. Economic and Interest Rate Metrics - Economic interest expense for the three months ended March 31, 2025, was $40.5 million, compared to $23.8 million for the same period in 2024, resulting in economic net interest income of $40.6 million and $25.1 million, respectively [156]. - The economic net interest spread for the three months ended March 31, 2025, was 2.58%, compared to 2.47% for the same period in 2024 [159]. - The average cost of funds decreased to 4.29% for the three months ended March 31, 2025, down from 5.54% in the comparable period in 2024, reflecting a 125 basis points reduction [163]. - Economic interest expense rose to $40.5 million for the three months ended March 31, 2025, compared to $23.8 million in 2024, with an increase in the average economic cost of funds to 2.83% from 2.56% [164]. - Changes in interest rates can significantly impact the company's net interest income, affecting the spread between interest-earning assets and interest-bearing liabilities [245]. - As of March 31, 2025, a 200 basis point increase in interest rates could lead to a decline of 2.23% in portfolio value and 17.55% in market value [255]. Risk Management - The company employs various financial instruments, including interest rate swaps and options, to hedge against interest rate fluctuations, which are complex and may lead to volatile returns [246]. - The company maintains a hedged PT RMBS portfolio with an effective duration of less than 2.0, aiming to acquire low duration assets that provide protection from mortgage prepayments [248]. - Prepayment risk is significant, as faster-than-expected principal returns can affect net interest income and the average yield on assets [258]. - The company faces spread risk, where widening market spreads could lead to a decline in net book value if the value of Agency RMBS falls more than the gains from hedging instruments [260]. - Counterparty credit risk is present, as potential losses could arise if counterparties to repurchase agreements and derivative contracts fail to meet their obligations [264]. - The company uses hedging instruments to manage funding costs, but if prepayment rates decrease in a rising interest rate environment, it could negatively impact operations [263]. Liquidity and Capital Resources - Management believes that the company currently has sufficient short-term and long-term liquidity and capital resources for investment acquisitions and debt repayments [199]. - As of March 31, 2025, the company had cash and cash equivalents of $396.4 million and generated cash flows of $200.9 million from principal and interest payments on its RMBS portfolio [208]. - The average outstanding repurchase agreements during the three months ended March 31, 2025, amounted to $5.7 billion [208]. - The weighted average haircut on pledged collateral was approximately 4.3% as of March 31, 2025 [203]. - The company has established borrowing facilities in the repurchase agreement market with 24 counterparties, providing sufficient liquidity for its operations [193]. - As of March 31, 2025, the company had unrestricted cash and cash equivalents of $396.4 million and unpledged securities of approximately $50.1 million available for liquidity needs [261]. Market Conditions and Future Outlook - The Agency RMBS index generated a return of 3.0% for the first quarter of 2025, outperforming the investment grade corporate index and high yield debt [222]. - Conventional 30-year mortgages within Agency RMBS generated a total return of 2.7% for the first quarter of 2025 [223]. - The spread of the 30-year fixed rate current coupon to the 10-year T-Note traded between 120 and 130 basis points during the first quarter of 2025 [221]. - Following the Trump administration's tariff announcements, the spread of the current coupon expanded to over 140 basis points [221]. - The Fed reduced its balance sheet for Agency RMBS by approximately $551 billion from the peak to $2.2 trillion, representing a 40% reduction from the pandemic quantitative easing levels [224]. - The FHFA announced a final rule effective April 1, 2024, reducing the risk weight for guarantees on commingled securities to 5% and the credit conversion factor to 50% [225].