Sachem Capital(US:SACH)2024-08-14 14:06Financial Data and Key Metrics Changes - For Q2 2024, the company recorded revenue of approximately $15.1 million, a decrease from $16.3 million in the same quarter of the prior year [7] - Total operating costs and expenses for Q2 2024 were approximately $18.5 million, compared to approximately $10.3 million in the prior-year quarter [7] - The net loss attributable to common shareholders for Q2 2024 was approximately $4.1 million, compared to net income of approximately $4.8 million in the prior-year period [9] Business Line Data and Key Metrics Changes - Revenue from fee income related to loans was $2.1 million, reflecting a notable change from the comparable period in 2023 due to reduced origination volume [5] - The company modified or extended a total of 26 loans during the quarter, resulting in gross fee income of approximately $1 million [11] Market Data and Key Metrics Changes - The company added an additional CECL provision for credit losses of approximately $8.5 million, reflecting ongoing challenges in the commercial real estate market [8] - The allowance for credit losses for mortgages receivable stood at $14.4 million, approximately 3% of the unpaid principal balance [8] Company Strategy and Development Direction - The company is maintaining a prudent approach towards balance sheet management and lending activities, postponing earnings growth to protect capital [4] - The focus remains on single-family and multifamily residential assets in growing markets, with a selective approach to new loan originations [11] - The company aims to uphold liquidity management and be highly selective in underwriting until market conditions improve [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current environment, citing the need for patience until markets stabilize and capital availability improves [4] - The company anticipates that 2025 may present better opportunities for growth as current market conditions are challenging [22] Other Important Information - As of June 30, 2024, the company had total assets of $586.3 million, including $10.6 million in cash and cash equivalents [13] - The Board declared a quarterly dividend of $0.08 per share for shareholders of record as of July 29, 2024, reflecting a cautious approach to dividend distribution [10] Q&A Session Summary Question: Plans for refinancing the $34.5 million loan due in December - Management indicated they have approximately $30 million in cash on hand to address the loan maturity, which positions them well [15] Question: Interest rates for potential new debt issuance - Management noted that recent debt offerings were not accretive to the business model, leading to a cautious approach towards raising new debt [17] Question: Details on credit loss reserves - The increase in reserves was attributed to ongoing market conditions and asset valuation declines, with specific reserves against non-performing loans [18] Question: Dividend policy moving forward - Management stated that the dividend has been scaled down due to liquidity constraints, with hopes to return to a stronger dividend in the future [25] Question: Expectations for non-accrual loans and foreclosures - Management acknowledged a slight increase in non-accrual loans and foreclosures, but emphasized a cautious approach to managing these assets [21] Question: Future capital structure considerations - Management is considering a more deleveraged balance sheet and is focused on maintaining liquidity while being selective in new lending [32]