Apollo Residential Mortgage, Inc. Reports Second Quarter 2013 Financial Results
(firmenpresse) - NEW YORK, NY -- (Marketwired) -- 08/06/13 -- Apollo Residential Mortgage, Inc. (the "Company") (NYSE: AMTG) today reported financial results for the quarter ended June 30, 2013.
Reported Operating Earnings (a non-GAAP financial measure as defined below) of $18.9 million, or $0.59 per common share, for the quarter ended June 30, 2013. Reported net loss allocable to common stock and participating securities of $76.2 million, or $2.39 per common share, for the quarter ended June 30, 2013;
Increased the Company's net interest rate swap ("Swap") and interest rate swaption ("Swaption") position by $375 million of notional value;
Pro-forma quarter end leverage multiple(1) of 3.9x at June 30, 2013 as compared to leverage multiple of 5.1x at March 31, 2013;
Declared a $0.70 per common share quarterly dividend; and
Book value per common share at June 30, 2013 was $18.63.
(1) Pro-forma leverage multiple reflects the Company's debt-to-equity multiple assuming unsettled trades at June 30, 2013 had settled at such date and the corresponding borrowings under repurchase agreements were repaid. A reconciliation is set forth in Table 10 of this press release.
Sold $2.2 billion of Agency residential mortgage-backed securities ("RMBS");
Purchased $186.5 million of non-Agency RMBS;
$3.3 billion RMBS portfolio at June 30, 2013 consisted of Agency RMBS with an estimated fair value of $2.6 billion and non-Agency RMBS with an estimated fair value of $751 million; and
RMBS and securitized mortgage loan portfolio had a 2.1% pro-forma effective net interest spread and a 11.8% pro-forma effective levered asset yield(2) at June 30, 2013.
(2) The pro-forma effective net interest spread and the pro-forma effective levered asset yield assume that unsettled trades at June 30, 2013 had settled at such date and the corresponding borrowings under repurchase agreements were repaid. The pro-forma effective net interest spread and the pro-forma effective levered asset yield are non-GAAP financial measures, which include the cost of the Company's Swaps as a component of its interest expense. A reconciliation is set forth in Table 9 of this press release.
"Numerous factors caused considerable volatility in the fixed income markets throughout the second quarter. Most notably, there were increased expectations that the Federal Reserve would begin tapering its asset purchases pursuant to its program of quantitative easing following positive reports on non-farm payrolls and housing," said Michael Commaroto, Chief Executive Officer of the Company. "As a result, there was a significant re-pricing in the Agency RMBS market due to shifting expectations with respect to prepayment and extension risks, resulting in net selling throughout the market as portfolios were rebalanced. During this time, AMTG pro-actively commenced a strategy whereby the Company de-levered its Agency RMBS portfolio in order to stabilize book value and increase liquidity. At the same time, AMTG opportunistically re-deployed a portion of the Company's cash into non-Agency RMBS. AMTG's non-Agency portfolio has performed well as the housing market continues to improve and the Company continues to explore ways to expand its footprint in the non-Agency mortgage market."
The Company reported Operating Earnings of $18.9 million, or $0.59 per common share, for the three months ended June 30, 2013, as compared to Operating Earnings of $14.0 million, or $0.66 per common share, for the three months ended June 30, 2012. Net loss allocable to common stock and participating securities for the three months ended June 30, 2013 was $76.2 million, or $2.39 per common share, as compared to net income allocable to common stock and participating securities of $26.4 million, or $1.24 per common share for the three months ended June 30, 2012.
For the six months ended June 30, 2013, the Company reported Operating Earnings of $38.0 million, or $1.32 per common share, as compared to Operating Earnings of $22.0 million, or $1.39 per common share, for the six months ended June 30, 2012. Net loss allocable to common stock and participating securities for the six months ended June 30, 2013 was $74.3 million, or $2.59 per common share, as compared to net income allocable to common stock and participating securities of $46.5 million, or $2.94 per common share, for the six months ended June 30, 2012.
The difference between Operating Earnings and net income/(loss) allocable to common stockholders primarily reflects that Operating Earnings excludes the following: (i) net unrealized gains/losses on RMBS; (ii) net changes in the fair value of Swaps and Swaptions and net realized gains/losses on the termination of Swaps and Swaptions; and (iii) net realized gains/losses from sales of RMBS. Reconciliations of Operating Earnings to net income/(loss) allocable to common stockholders for the three and six months ended June 30, 2013 and June 30, 2012, respectively are set forth in Table 8 of this press release.
The following table sets forth the Company's portfolio at June 30, 2013 as compared to March 31, 2013, summarizing the portfolio repositioning:
(1) Agency IOs and Agency IIOs have no principal balance and bear interest based on a notional balance. The notional balance is used solely to determine interest distributions on interest-only class of securities.
The following table sets forth additional detail regarding the Company's portfolio as of June 30, 2013:
(1) A portion of the purchase discount on non-Agency RMBS is not expected to be recognized as interest income, and is instead viewed as a credit discount. At June 30, 2013, our non-Agency RMBS had gross discounts of $256,222 which included credit discounts of $106,286 and other-than-temporary impairments ("OTTI") of $4,858.
(2) Amortized cost is reduced by unrealized losses that are classified as OTTI. The Company recognized OTTI of $2,015 for the three months ended June 30, 2013.
(3) Weighted average yield at the date presented incorporates estimates for future prepayment assumptions on all RMBS and loss assumptions on non-Agency RMBS.
(4) Agency IOs and Agency IIOs have no principal balance and bear interest based on a notional balance. The notional balance is used solely to determine interest distributions on interest-only class of securities. At June 30, 2013, the Company's Agency IOs had a notional balance of $180,220 and the Company's Agency Inverse IOs had a notional balance of $270,110.
As of June 30, 2013, the average cost basis of the Company's Agency RMBS portfolio, excluding Agency IOs and Agency IIOs, was 108.1% of par value and the average cost basis of the Company's non-Agency RMBS portfolio was 73.0% of par value.
The Agency RMBS pass-through securities portfolio experienced prepayments at an average one month constant prepayment rate ("CPR") over the quarter ended June 30, 2013 of 6.9%. Including Agency IOs and Agency IIOs securities, the Agency RMBS portfolio experienced prepayments at an average one month CPR of 7.1% over the quarter ended June 30, 2013.
At June 30, 2013, the Company had master repurchase agreements with 23 counterparties and had outstanding borrowings with 19 counterparties totaling $3.9 billion.
The following table sets forth the Company's borrowings at June 30, 2013:
(1) Repo-Securitization reflects the balance of repurchase agreement borrowings that is collateralized by a non-Agency RMBS issued in connection with the securitization transaction that the Company retained. While the RMBS retained in connection with the securitization transaction do not appear on the Company's balance sheet, as they are eliminated in consolidation with the securitization trust, the Company legally owns such securities and therefore is legally permitted to pledge such securities as collateral.
The Company's derivative instruments consisted of the following at June 30, 2013:
(1) TBA Shorts refer to to-be-announced contracts to sell certain Agency RMBS on a forward basis.
The following table sets forth the Company's Swaps and Swaption portfolios at June 30, 2013 as compared to March 31, 2013:
The following table summarizes the average fixed-pay rate and average maturity for the Company's Swaps at June 30, 2013:
At June 30, 2013, the Company's Swaptions had an aggregate notional amount of $775 million. The following table presents information about the Company's Swaptions at June 30, 2013:
The Company's book value per common share at June 30, 2013 was $18.63 as compared to book value per common share of $21.72 at March 31, 2013.
The Company will be hosting a conference call to discuss its financial results on Wednesday, August 7, 2013 at 10:00 a.m. Eastern Time. Members of the public who are interested in participating in the Company's second quarter 2013 earnings teleconference call should dial from the U.S., (877) 706-7548, or from outside the U.S., (706) 902-2150, shortly before 10:00 a.m. and reference the Apollo Residential Mortgage, Inc. teleconference call (number 15050016). Please note the teleconference call will be available for replay beginning at 12:00 p.m. on Wednesday, August 7, 2013, and ending at midnight on Wednesday, August 14, 2013. To access the replay, callers from the U.S. should dial (855) 859-2056 and callers from outside the U.S. should dial (404) 537-3406, and enter conference identification number 15050016.
The conference call will also be available on the Company's website at . To listen to a live broadcast, please go to the site at least 15 minutes prior to the scheduled start time in order to register, download and install any necessary audio software. A replay of the call will also be available for 30 days on the Company's website.
The Company provides a supplemental information package to offer more transparency into its financial results and make its reporting more informative and easier to follow. The supplemental package is available in the investor relations section of the Company's website at .
Apollo Residential Mortgage, Inc is a real estate investment trust that invests in and manages residential mortgage-backed securities and other residential mortgage assets throughout the United States. The Company is externally managed and advised by ARM Manager, LLC, a Delaware limited liability company and an indirect subsidiary of Apollo Global Management, LLC (NYSE: APO), a leading global alternative investment manager with approximately $114.3 billion of assets under management at March 31, 2013.
Additional information can be found on the Company's website at .
Certain statements contained in this press release constitute forward-looking statements as such term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are intended to be covered by the safe harbor provided by the same. Forward-looking statements are subject to substantial risks and uncertainties, many of which are difficult to predict and are generally beyond the Company's control. These forward-looking statements include information about possible or assumed future results of the Company's business, financial condition, liquidity, results of operations, plans and objectives, including information about the ability of the Company to generate attractive returns while attempting to mitigate risk. When used in this release, the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may" or similar expressions, are intended to identify forward-looking statements. Statements regarding the following subjects, among others, may be forward-looking: the return on equity; the yield on investments; the ability to borrow to finance assets; and risks associated with investing in real estate assets, including changes in business conditions and the general economy. For a further list and description of such risks and uncertainties, see the Company's Annual Report on Form 10-K for the year ended December 31, 2012 and other reports filed by the Company with the Securities and Exchange Commission. The forward-looking statements, and other risks, uncertainties and factors are based on the Company's beliefs, assumptions and expectations of its future performance, taking into account all information currently available to the Company. Forward-looking statements are not predictions of future events. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
This press release contains disclosures related to the Company's Operating Earnings and Operating Earnings per common share for the three and six months ended June 30, 2013 and the three and six months ended June 30, 2012, Pro-Forma Effective Cost of Funds for the three months ended June 30, 2013 and Pro-Forma Leverage Multiple at June 30, 2013, which constitute non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. The Company's management believes the non-GAAP financial measures presented in this press release, when considered together with GAAP financial measures, provide information that is useful to investors in understanding period-over-period operating results. An analysis of any non-GAAP financial measures should be made in conjunction with results presented in accordance with GAAP.
Operating Earnings and Operating Earnings per common share presented exclude, as applicable: (i) realized and unrealized gains and losses recognized through earnings; (ii) non-cash equity compensation; (iii) one time events pursuant to changes in GAAP; and (iv) certain other non-cash charges. Operating Earnings represents net income/(loss) allocable to common stockholders, as adjusted. Pro-Forma Effective Cost of Funds includes the net interest component related to the Company's Swaps and assumes unsettled trades at June 30, 2013 had settled at such date and the corresponding borrowings under repurchase agreements were repaid. While the Company has not elected hedge accounting for its Swaps, such derivative instruments are viewed by the Company as an economic hedge against increases in future market interest rates. Pro-Forma Leverage Multiple reflects the Company's debt-to-equity multiple assuming that unsettled trades at June 30, 2013 had settled at such date and the corresponding borrowings under repurchase agreements were repaid.
The Company believes that the non-GAAP measures it presents provide investors with a useful measure to assess the performance of the Company's ongoing business and useful supplemental information to both management and investors in evaluating our financial results. A reconciliation of the GAAP items discussed above to their non-GAAP measures for the three and six months ended June 30, 2013 and the three and six months ended June 30, 2012, are as follows:
The following table reconciles net income/(loss) allocable to common stockholders with Operating Earnings for the three months ended June 30, 2013 and June 30, 2012, respectively:
(1) Reflects basic and diluted earnings per share for each component presented.
The following table reconciles net income/(loss) allocable to common stockholders with Operating Earnings for the six months ended June 30, 2013 and June 30, 2012, respectively:
(1) Reflects basic and diluted earnings per share for each component presented.
The following table reconciles the Pro-Forma Effective Cost of Funds with pro-forma interest expense at June 30, 2013:
The following table sets forth the reconciliation of the pro-forma leverage multiple at June 30, 2013 assuming that unsettled trades at June 30, 2013 had settled at such date and the corresponding borrowings under repurchase agreements were repaid:
(1) For purposes of calculating debt/equity, the Company's debt includes borrowings under repurchase agreements and securitized debt, at fair value.
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Datum: 06.08.2013 - 14:30 Uhr
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