AFC Gamma(US:AFCG)2024-08-07 18:49Financial Data and Key Metrics Changes - For Q2 2024, the company generated distributable earnings of $0.56 per basic weighted average share, with a GAAP net income of $16.4 million or $0.80 per share [9][21] - The company declared a dividend of $0.48 per share for the fifth consecutive quarter and a special dividend of $0.15 per share in connection with the spin-off [9][24] - As of June 30, 2024, total assets were $458 million, with cash and cash equivalents of $170.3 million [22] Business Line Data and Key Metrics Changes - The company successfully exited its largest credit facility, an $84 million loan, generating a 19.9% internal rate of return (IRR) [11] - A $24 million loan to Private Company C was prepaid, resulting in a 25.5% IRR [12] - The current portfolio has a weighted average yield to maturity of 19% [12] Market Data and Key Metrics Changes - The cannabis pipeline stands at $346 million, with three deals totaling $57.3 million closed year-to-date [15] - The launch of adult-use sales in Ohio is expected to drive growth in the cannabis market, with potential expansions in Florida and Pennsylvania [17] Company Strategy and Development Direction - The company has transitioned to a pure-play cannabis lender following the spin-off of its commercial real estate portfolio, allowing for a focused approach in the cannabis sector [7] - The management aims to reduce exposure to underperforming credits, reinvigorate origination efforts, and enhance underwriting processes [10][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the cannabis industry's growth due to ongoing legalization efforts and increasing demand for capital [17][19] - The company is confident in its ability to deliver strong financial performance and generate value for shareholders, focusing on moving up the quality curve while targeting mid to high teens IRRs [19] Other Important Information - The CECL reserve was $25.2 million, approximately 9.1% of loans at carrying value, which decreased from $31.4 million in the previous quarter [23] - The company ended the quarter with $335.4 million of principal outstanding across 14 loans [22] Q&A Session Summary Question: Can you provide background on accomplishments since joining the company? - Management highlighted progress in managing underperforming credits, origination efforts, and active underwriting practices [28][30] Question: Are there changes in the supply side of capital? - Management noted that refinancing is primarily among existing players, with limited involvement from regional banks [32][33] Question: Can you provide pro forma numbers regarding the new dividend? - Management indicated that the Board will continue to declare dividends on a normal cadence, with a pro forma book value of approximately $5.56 per share post-spin-off [35]