AFC Gamma, Inc. (NASDAQ:AFCG) (“Advanced Flower Capital”, “AFC” or
the “Company”) today announced its results for the second quarter
ended June 30, 2024.
AFC reported generally accepted accounting
principles (“GAAP”) net income of $16.4 million or $0.80 per basic
weighted average common share and Distributable Earnings of
$11.4 million or $0.56 per basic weighted average common share for
the second quarter of 2024.
“We are excited to announce that AFC is now a
pure-play cannabis lender after the spin-off of our commercial real
estate portfolio on July 9, 2024. This transition positions us to
well to capitalize on cannabis market opportunities, and we are on
track to meet or exceed our $100 million origination goal for this
year. This quarter has been marked by strong performance. Our
active portfolio management is showing positive momentum, with
reduced reserves and increased book value, highlighting the
effectiveness of our strategic initiatives,” said Daniel Neville,
the Company’s Chief Executive Officer.
Common Stock Dividend
On July 15, 2024, the Company paid a regular
cash dividend of $0.48 per common share for the second quarter of
2024. AFC distributed $9.9 million in dividends, or $0.48 per
common share, compared to Distributable Earnings of $0.56 per basic
weighted average common share for such period.
Additional Information
Advanced Flower Capital issued a presentation of
its second quarter 2024 results, titled “Second Quarter 2024
Earnings Presentation,” which can be viewed at
advancedflowercapital.com under the Investor Relations section. The
Company also filed its Quarterly Report on Form 10-Q for the
quarter ended June 30, 2024, with the Securities and Exchange
Commission on August 7, 2024.
AFC routinely posts important information for
investors on its website, advancedflowercapital.com. The Company
intends to use this webpage as a means of disclosing material
information, for complying with our disclosure obligations under
Regulation FD and to post and update investor presentations and
similar materials on a regular basis. AFC encourages investors,
analysts, the media and others interested in AFC to monitor the
Investors section of its website, in addition to following its
press releases, SEC filings, public conference calls,
presentations, webcasts and other information posted from time to
time on the website. To sign-up for email-notifications, please
visit the “Email Alerts” section of the website under the “IR
Resources” section.
Conference Call & Discussion of
Financial Results
Advanced Flower Capital will host a conference
call at 10:00 am (Eastern Time) on Wednesday, August 7, 2024, to
discuss its quarterly financial results. All interested parties are
welcome to participate. The call will be available through a live
audio webcast at the Investor Relations section of AFC’s website
found here: AFC -- Investor Relations. To participate via
telephone, please register in advance at this link. Upon
registration, all telephone participants will receive a
confirmation email detailing how to join the conference call,
including the dial-in number along with a unique passcode and
registrant ID that can be used to access the call. The complete
webcast will be archived for 90 days on the Investor Relations
section of AFC’s website.
About AFC Gamma, Inc.
AFC Gamma, Inc. (Nasdaq: AFCG) is a leading
commercial mortgage REIT that provides institutional loans to state
law compliant cannabis operators in the U.S. Through the management
team’s deep network and significant credit and cannabis expertise,
AFC originates, structures, underwrites and manages loans ranging
from $10 million to over $100 million, typically secured by quality
real estate assets, license value and cash flows. It is based in
West Palm Beach, Florida.
Non-GAAP Metrics
In addition to using certain financial metrics
prepared in accordance with GAAP to evaluate our performance, we
also use Distributable Earnings to evaluate our performance
excluding the effects of certain transactions and GAAP adjustments
we believe are not necessarily indicative of our current loan
activity and operations. Distributable Earnings is a measure that
is not prepared in accordance with GAAP. Distributable Earnings and
the other capitalized terms not defined in this section have the
meanings ascribed to such terms in our most-recently filed
quarterly report. We use this non-GAAP financial measure both to
explain our results to shareholders and the investment community
and in the internal evaluation and management of our businesses.
Our management believes that this non-GAAP financial measure and
the information they provide are useful to investors since these
measures permit investors and shareholders to assess the overall
performance of our business using the same tools that our
management uses to evaluate our past performance and prospects for
future performance.
The determination of Distributable Earnings is
substantially similar to the determination of Core Earnings under
our Management Agreement, provided that Core Earnings is a
component of the calculation of any Incentive Compensation earned
under the Management Agreement for the applicable time period, and
thus Core Earnings is calculated without giving effect to Incentive
Compensation expense, while the calculation of Distributable
Earnings account for any Incentive Compensation earned for such
time period. We define Distributable Earnings as, for a specified
period, the net income (loss) computed in accordance with GAAP,
excluding (i) stock-based compensation expense, (ii) depreciation
and amortization, (iii) any unrealized gains, losses or other
non-cash items recorded in net income (loss) for the period,
regardless of whether such items are included in other
comprehensive income or loss, or in net income (loss); provided
that Distributable Earnings does not exclude, in the case of
investments with a deferred interest feature (such as original
issue discount, debt instruments with PIK interest and zero coupon
securities), accrued income that we have not yet received in cash,
(iv) (decrease) increase in provision for current expected credit
losses (“CECL”), (v) taxable REIT (as defined below) subsidiary
(“TRS”) (income) loss, net of any dividends received from TRS and
(vi) one-time events pursuant to changes in GAAP and certain
non-cash charges, in each case after discussions between our
Manager and our independent directors and after approval by a
majority of such independent directors.
We believe providing Distributable Earnings on a
supplemental basis to our net income as determined in accordance
with GAAP is helpful to shareholders in assessing the overall
performance of our business. As a real estate investment trust
(“REIT”), we are required to distribute at least 90% of our annual
REIT taxable income, subject to certain adjustments, and to pay tax
at regular corporate rates to the extent that we annually
distribute less than 100% of such taxable income. Given these
requirements and our belief that dividends are generally one of the
principal reasons that shareholders invest in our common stock, we
generally intend to attempt to pay dividends to our shareholders in
an amount at least equal to such REIT taxable income, if and to the
extent authorized by our Board of Directors. Distributable Earnings
is one of many factors considered by our Board of Directors in
authorizing dividends and, while not a direct measure of net
taxable income, over time, the measure can be considered a useful
indicator of our dividends.
Distributable Earnings is a non-GAAP financial
measure and should not be considered as a substitute for GAAP net
income. We caution readers that our methodology for calculating
Distributable Earnings may differ from the methodologies employed
by other REITs to calculate the same or similar supplemental
performance measures, and as a result, our reported Distributable
Earnings may not be comparable to similar measures presented by
other REITs.
The following table provides a
reconciliation of GAAP Net income to Distributable
Earnings:
|
Three months endedJune 30, |
|
Six months endedJune 30, |
|
|
2024 |
|
|
|
2023 |
|
|
|
2024 |
|
|
|
2023 |
|
Net
income |
$ |
16,446,121 |
|
|
$ |
12,135,333 |
|
|
$ |
16,392,005 |
|
|
$ |
22,160,607 |
|
Adjustments to net
income: |
|
|
|
|
|
|
|
Stock-based compensation
expense |
|
369,343 |
|
|
|
130,769 |
|
|
|
912,565 |
|
|
|
411,347 |
|
Depreciation and
amortization |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Unrealized (gains) losses, or
other non-cash items |
|
1,420,001 |
|
|
|
462,918 |
|
|
|
5,033,694 |
|
|
|
1,940,609 |
|
(Decrease) increase in
provision for current expected credit losses |
|
(6,190,240 |
) |
|
|
(1,606,187 |
) |
|
|
(1,258,566 |
) |
|
|
(903,761 |
) |
TRS (income) loss, net of
dividends |
|
(624,235 |
) |
|
|
(1,250,400 |
) |
|
|
306,998 |
|
|
|
(2,116,604 |
) |
One-time events pursuant to
changes in GAAP and certain non-cash charges |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Distributable
earnings |
$ |
11,420,990 |
|
|
$ |
9,872,433 |
|
|
$ |
21,386,696 |
|
|
$ |
21,492,198 |
|
Basic weighted average shares
of common stock outstanding (in shares) |
|
20,400,004 |
|
|
|
20,317,341 |
|
|
|
20,396,940 |
|
|
|
20,310,606 |
|
Distributable earnings
per basic weighted average share |
$ |
0.56 |
|
|
$ |
0.49 |
|
|
$ |
1.05 |
|
|
$ |
1.06 |
|
|
Forward-Looking Statements
This release contains forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 that reflect our current views and projections with respect
to, among other things, future events and financial performance.
Words such as “believes,” “expects,” “will,” “intends,” “plans,”
“guidance,” “estimates,” “projects,” “anticipates,” and “future” or
similar expressions are intended to identify forward-looking
statements. These forward-looking statements, including statements
about our future growth and strategies for such growth, are subject
to the inherent uncertainties in predicting future results and
conditions and are not guarantees of future performance, conditions
or results. Certain factors, including the ability of our manager
to locate suitable loan opportunities for us, monitor and actively
manage our loan portfolio and implement our investment strategy;
the demand for commercial real estate investment and cannabis
cultivation and processing facilities; management’s current
estimate of expected credit losses and current expected credit loss
reserve and other factors could cause actual results and
performance to differ materially from those projected in these
forward-looking statements. More information on these risks and
other potential factors that could affect our business and
financial results is included in AFC’s filings with the SEC,
including in the “Risk Factors” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” sections
of AFC’s most recently filed periodic reports on Form 10-K, Form
10-Q and subsequent filings. New risks and uncertainties arise over
time, and it is not possible to predict those events or how they
may affect AFC. We do not undertake any obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.
Investor Relations
AFC GAMMA, INC. INVESTOR CONTACT:Robyn
Tannenbaum(561) 510-2293ir@advancedflowercapital.com
AFC GAMMA, INC. MEDIA CONTACT:Profile
AdvisorsRich Myers(347) 774-1125rmyers@profileadvisors.com
1 Distributable Earnings is a non-GAAP financial measure. See
the “Non-GAAP Metrics” section of this release for a reconciliation
of GAAP Net Income to Distributable Earnings.
AFC Gamma (NASDAQ:AFCG)
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AFC Gamma (NASDAQ:AFCG)
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