Furthermore, Adjusted Distributable Earnings is different from REIT taxable income. As a result, the determination of whether we have met the requirement to distribute at least 90% of our annual REIT taxable income (subject to certain adjustments) to our stockholders, in order to maintain our qualification as a REIT, is not based on whether we distributed 90% of our Adjusted Distributable Earnings.
In setting our dividends, our Board of Directors considers our earnings, liquidity, financial condition, REIT distribution requirements, and financial covenants, along with other factors that the Board of Directors may deem relevant from time to time.
The following table reconciles, for the three-month periods ended September 30, 2024 and June 30, 2024, our Adjusted Distributable Earnings to the line on our Condensed Consolidated Statement of Operations entitled Net Income (Loss), which we believe is the most directly comparable U.S. GAAP measure:
Three-Month Period Ended
------------------------------------------------------------------------------------------------------------
September 30, 2024 June 30, 2024
--------------------------------------------------- -------------------------------------------------------
(In thousands, except Investment Corporate/ Investment Corporate/
per share amounts) Portfolio Longbridge Other Total Portfolio Longbridge Other Total
------------ ------------ ------------ --------- ------------ -------------- ------------ -----------
Net Income (Loss) $ 44,115 $ (2,451) $ (18,341) $ 23,323 $ 69,476 $ 4,209 $ (13,613) $ 60,072
Income tax expense
(benefit) -- -- 12 12 -- -- 142 142
------- ------- ------- ------- ------- ------ ------- -------
Net income (loss)
before income tax
expense (benefit) 44,115 (2,451) (18,329) 23,335 69,476 4,209 (13,471) 60,214
------- ------- ------- ------- ------- ------ ------- -------
Adjustments:
Realized (gains)
losses, net(1) 63,515 -- (1) 63,514 34,875 -- 1,059 35,934
Unrealized (gains)
losses, net(2) (57,575) 52 2,429 (55,094) (50,663) 1,441 (2,679) (51,901)
Unrealized (gains)
losses on reverse
MSRs, net of
hedging (gains)
losses(3) -- 11,728 -- 11,728 -- (394) -- (394)
Negative (positive)
component of
interest income
represented by
Catch-up
Amortization
Adjustment (498) -- -- (498) (720) -- -- (720)
Adjustment related
to consolidated
proprietary reverse
mortgage loan
securitizations(4) -- (2,007) -- (2,007) -- -- -- --
Non-capitalized
transaction costs
and other expense
adjustments(5) 2,353 2,846 219 5,418 1,081 181 321 1,583
(Earnings) losses
from investments in
unconsolidated
entities (7,281) -- -- (7,281) (12,042) -- -- (12,042)
Adjusted
distributable
earnings from
investments in
unconsolidated
entities(6) 2,769 -- -- 2,769 3,272 -- -- 3,272
------- ------- ------- ------- ------- ------ ------- -------
Total Adjusted
Distributable
Earnings $ 47,398 $ 10,168 $ (15,682) $ 41,884 $ 45,279 $ 5,437 $ (14,770) $ 35,946
------- ------- ------- ------- ------- ------ ------- -------
Dividends on preferred
stock -- -- 6,833 6,833 -- -- 6,825 6,825
Adjusted Distributable
Earnings attributable
to non-controlling
interests 205 43 332 580 486 23 278 787
------- ------- ------- ------- ------- ------ ------- -------
Adjusted Distributable
Earnings Attributable
to Common
Stockholders $ 47,193 $ 10,125 $ (22,847) $ 34,471 $ 44,793 $ 5,414 $ (21,873) $ 28,334
======= ======= ======= ======= ======= ====== ======= =======
Adjusted Distributable
Earnings Attributable
to Common
Stockholders, per
share $ 0.54 $ 0.12 $ (0.26) $ 0.40 $ 0.53 $ 0.06 $ (0.26) $ 0.33
(1) Includes realized (gains) losses on securities and loans, REO,
financial derivatives (excluding periodic settlements on interest rate
swaps), and foreign currency transactions which are components of Other
Income (Loss) on the Condensed Consolidated Statement of Operations.
(2) Includes unrealized (gains) losses on securities and loans, REO,
financial derivatives (excluding periodic settlements on interest rate
swaps), borrowings carried at fair value, MSR-related investments, and
foreign currency translations which are components of Other Income
(Loss) on the Condensed Consolidated Statement of Operations.
(3) Represents net change in fair value of the HMBS MSR Equivalent and
Reverse MSRs attributable to changes in market conditions and model
assumptions. This adjustment also includes net (gains) losses on
certain hedging instruments (including interest rate swaps, futures,
and short U.S. Treasury securities), which are components of realized
and/or unrealized gains (losses) on financial derivatives, net,
realized and/or unrealized gains (losses) on securities and loans, net,
interest income, and interest expense on the Condensed Consolidated
Statement of Operations.
(4) Represents the effect of replacing mortgage loan interest income (net
of securitization debt expense) with interest income of the retained
tranches.
(5) For the three-month period ended September 30, 2024, includes $2.1
million of one-time compensation expense related to the cancellation of
employee stock options, $2.2 million of non-capitalized transaction
costs, $0.8 million of various other expenses, and $0.3 million of
non-cash equity compensation expense. For the three-month period ended
June 30, 2024, includes $1.1 million of non-capitalized transaction
costs, $0.3 million of non-cash equity compensation expense, and $0.2
million of various other expenses.
(6) Includes net interest income and operating expenses for certain
investments in unconsolidated entities.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241106286391/en/
CONTACT: Investors:
Ellington Financial
Investor Relations
(203) 409-3575
info@ellingtonfinancial.com
or
Media:
Amanda Shpiner/Grace Cartwright
Gasthalter & Co.
for Ellington Financial
(212) 257-4170
ellington@gasthalter.com
(END) Dow Jones Newswires
November 06, 2024 16:44 ET (21:44 GMT)
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