AFC Gamma(US:AFCG)2024-11-13 12:30Financial Performance - Distributable Earnings for Q3 2024 was $7,246,005, a decrease of 27.1% from $9,939,408 in Q3 2023 [195]. - Net income for Q3 2024 was $1,383,734, down 82.7% from $7,979,875 in Q3 2023 [194]. - Interest income decreased by $6.3 million, or 37.8%, for Q3 2024 compared to Q3 2023, primarily due to lower income from nonaccrual loans [200]. - Interest expense increased by $39.8 thousand, or 2.6%, for Q3 2024 due to higher borrowings on the Revolving Credit Facility [202]. - The book value per share as of September 30, 2024, was approximately $9.42, down from $15.64 as of December 31, 2023 [196]. Dividends and Shareholder Returns - The company declared cash dividends totaling $30.1 million for the nine months ended September 30, 2024, with a per-share amount of $1.44 [181]. - A one-time dividend of $0.15 per share was declared in connection with the Spin-Off, amounting to approximately $3.1 million [181]. Debt and Credit Facilities - The company entered into a $11.0 million senior secured credit facility with Private Company Q, with approximately $5.2 million drawn as of September 30, 2024, and a maturity date of September 1, 2028 [174]. - In October 2024, the company entered into a $41.0 million senior secured credit facility with Private Company R, fully funded at closing, maturing on November 1, 2027 [182]. - The company amended its credit agreement with Private Company J, increasing the total aggregate commitment by an additional $5.5 million, with $3.0 million funded as of September 30, 2024 [172]. - As of September 30, 2024, the company had $60.0 million of borrowings outstanding under its Revolving Credit Facility, with zero availability [248]. - The Revolving Credit Facility has aggregate commitments of $60.0 million, which may be increased to $100.0 million, and has a maturity date of April 29, 2025 [249]. Loan Portfolio and Investments - The total loan portfolio as of September 30, 2024, had an outstanding principal balance of approximately $298.7 million [219]. - The weighted average cash interest rate for the total loan portfolio was 12.9% as of September 30, 2024 [219]. - The company funded approximately $4.6 million in new loans and received approximately $4.5 million of principal repayments for loans held at fair value for the nine months ended September 30, 2024 [223]. - The company sold $19.3 million of its investment in Private Company B during the nine months ended September 30, 2024 [223]. - The portfolio of loans held at carrying value included eleven loans as of September 30, 2024, with an outstanding principal of approximately $242.8 million, down from $314.4 million as of December 31, 2023 [228]. Cash Flow and Liquidity - The company generated net cash from operating activities of approximately $19.3 million for the nine months ended September 30, 2024, which was less than dividend payments of $32.8 million during the same period [241]. - As of September 30, 2024, the company had unrestricted cash totaling approximately $122.2 million, an increase from $90.4 million as of December 31, 2023 [242]. - Net cash provided by operating activities of continuing operations for the nine months ended September 30, 2024 was approximately $16.1 million, an increase of approximately $1.1 million from the same period in 2023 [259]. - Net cash provided by investing activities of continuing operations during the nine months ended September 30, 2024 was approximately $99.3 million, compared to approximately $18.5 million for the same period in 2023 [260]. - Net cash used in financing activities of continuing operations during the nine months ended September 30, 2024 was approximately $(70.9) million, a decrease of approximately $29.8 million from the same period in 2023 [261]. Risk Management and Compliance - The company primarily provides loans to the cannabis industry, which involves significant risks due to federal illegality and potential regulatory changes [292]. - Management plans to monitor the legal landscape to mitigate risks associated with the cannabis industry [294]. - The company has evaluated the effectiveness of its disclosure controls and procedures, concluding they are effective for timely reporting as required by SEC rules [296]. - There have been no changes in internal control over financial reporting that materially affected the company's reporting during the quarter ended September 30, 2024 [298]. - As of September 30, 2024, the company is not subject to any material legal proceedings [299]. Future Outlook and Strategy - The company expects to raise additional equity and/or debt funds to increase liquidity for future investments in loans [247]. - The company anticipates that cash on hand, capacity under the Revolving Credit Facility, and cash flows from operations will be sufficient to service outstanding debt over the next twelve months [257]. - The company intends to maintain a leverage ratio of no more than 1 times equity, using prudent amounts of leverage for acquisitions and refinancing [270]. - The company plans to distribute at least 90% of its REIT taxable income annually to shareholders, with potential tax implications for undistributed income [271].