NYSE$NLY

Annaly Capital Management Inc · Q2 2021 earnings

Q2 2021 earnings · · Investor relations

Briefing

Announced its financial results for the quarter ended June 30, 2021.

Annaly Capital Management reported a GAAP net loss of ($0.23) per average common share, but earnings available for distribution (EAD) of $0.30 per average common share, covering the dividend by +135%. The company increased capital allocation to residential credit and grew its MSR platform. The sale of the Commercial Real Estate Business is on track.

  • GAAP net loss of ($0.23) per average common share for the quarter.
  • Earnings available for distribution (“EAD”) of $0.30 per average common share for the quarter, up $0.01 quarter-over-quarter with dividend coverage of +135%.
  • Capital allocation to residential credit increased from 13% to 19% as the portfolio grew 22% quarter-over-quarter
  • Sale of Annaly's Commercial Real Estate Business on track to be completed as planned.

Headline financials

Total Revenue

$400M

Previous: $832M-51.9%
EPS (adj)

$1.20

Previous: $1.08+11.1%
Net Interest Margin

1.7%

Previous: 1.9%-12.2%
Yield on Assets

2.0%

Previous: 2.8%-28.9%
GAAP Cost of Liabilities

0.3%

Previous: 1.0%-63.5%
Net Interest Spread

1.6%

Previous: 1.8%-10.5%
Experienced CPR

26.4%

Previous: 19.5%+35.4%
Long-Term CPR

12.9%

Previous: 18.0%-28.3%
Capital Expenditures

-$1.82M

Previous: -$820K-121.3%
Free Cash Flow

-$297M

Previous: $855M-134.8%
Net Income

-$296M

Previous: $856M-134.5%
Operating Income

$334M

Previous: $761M-56.2%
Gross Profit

$400M

Previous: $832M-51.9%
Cash & Equivalents

$1.38B

Previous: $1.39B-1.0%
Total Assets

$82.4B

Previous: $93.5B-11.9%

Revenue & EPS history

Annaly · Revenue · Quarterly

$400M

Q2 2021-51.9%vs Q2 2020
Beat estimate in 6 of 16 quarters(38%)
ActualEstimate

Revenue by segment

Annaly · $76B total across 3 segments · Q3 2020

  • Agency MBS
    $74.9B
  • Non-Agency MBS
    $718M
  • CRT Securities
    $412M

Forward guidance

Annaly navigated a challenging market with heightened rate and spread volatility. They proactively reduced leverage and increased liquidity to preserve capital. Strategic milestones should enable them to effectively allocate capital where returns are strongest.

Tailwinds

  • Generated robust earnings for the quarter well in excess of our dividend.
  • Increased our capital allocation to residential credit.
  • Continued to build out our strategic presence in the market through initiatives including the launch of our residential whole loan correspondent channel.
  • Made considerable progress in growing our mortgage servicing rights (“MSR”) platform.
  • The disposition of our Commercial Real Estate business remains on track.

Headwinds

  • More challenging market backdrop marked by heightened rate and spread volatility
  • Elevated prepay environment
  • Increased discussion of an eventual Fed Taper
  • Spread widening on lower rates
  • Rising volatility and continued elevated speeds and supply

Historical earnings impact

How earnings announcements have historically affected this stock's price.

Avg. return before/after earnings

Based on 20 quarterly earnings reports · overlaid with Q2 2021

Historical avgQ2 2021

+0.1%

Avg return

Earnings day

-0.3%

Avg return

5 days after

+0.1%

Avg return

30 days after

45%

33 / 73 earnings

Positive

+5.9%

Q2 2022

Best reaction

-6.7%

Q4 2022

Worst reaction

Earnings price reactions
QuarterReport dateReaction (Day 0)+5 days+30 days
Q1 2026+1.6%-0.7%-3.1%
Q4 2025-1.1%-5.9%-4.2%
Q3 2025-1.9%-1.1%+3.2%
Q2 2025+0.0%+0.4%+5.6%
Q1 2025-0.9%-3.0%-3.3%
Q4 2024+3.6%+3.7%+11.1%
Q3 2024+0.3%-2.3%+0.9%
Q2 2024-3.3%-1.7%-1.5%
Q1 2024+0.3%+2.4%+4.5%
Q4 2023-0.5%+0.9%+3.9%
Q3 2023-3.8%-3.8%+12.0%
Q2 2023-2.5%-2.4%-4.2%
Q1 2023+4.0%+1.8%-2.8%
Q4 2022-6.7%-6.0%-21.1%
Q3 2022+2.4%+4.9%+22.5%
Q2 2022+5.9%+7.6%+2.3%
Q1 2022+4.6%+2.8%+4.9%
Q4 2021-0.9%-5.1%-6.5%
Q3 2021-1.4%-0.8%-3.9%
Q2 2021+1.8%-0.6%+3.2%
Q1 2021+1.0%+2.2%+4.0%
Q4 2020-1.2%-0.9%+2.1%
Q3 2020-0.1%+1.8%+14.8%
Q2 2020+2.5%+2.6%+2.2%
Q1 2020-0.2%-2.2%-1.6%
Q4 2019+3.4%+4.3%-30.9%
Q3 2019+0.4%+1.3%+4.4%
Q2 2019-2.9%-4.7%-14.2%
Q1 2019-3.3%-4.9%-12.7%
Q4 2018-1.8%-2.5%-1.2%
Q3 2018-0.6%-0.9%+1.3%
Q2 2018-1.2%-2.0%-0.9%
Q1 2018-1.3%+1.2%+1.0%
Q4 2017+1.8%+2.2%+1.6%
Q3 2017-1.5%-3.7%+3.0%
Q2 2017+0.6%+0.2%+3.1%
Q1 2017-1.9%-2.1%+2.9%
Q4 2016+3.3%+3.4%+5.2%
Q3 2016-0.2%+0.3%-2.7%
Q2 2016+0.8%+1.3%-0.4%
Q1 2016+3.1%
Q4 2015+1.2%
Q3 2015-3.5%
Q2 2015+1.3%
Q1 2015+0.2%
Q4 2014-0.7%
Q3 2014-0.6%
Q2 2014+1.7%
Q1 2014-1.0%
Q4 2013+3.5%
Q3 2013-4.0%
Q2 2013+4.5%
Q1 2013-2.8%
Q4 2012-0.9%
Q3 2012-3.8%
Q2 2012-1.2%
Q1 2012+1.3%
Q4 2011-0.5%
Q3 2011-0.7%
Q2 2011+1.9%
Q1 2011-0.5%
Q4 2010+1.2%
Q3 2010-0.7%
Q2 2010+2.1%
Q1 2009-2.5%
Q1 2010+1.4%
Q4 2007+2.5%
Q4 2009+2.5%
Q3 2008+1.3%
Q3 2009+1.3%
Q4 2008-0.8%
Q2 2008-0.8%
Q2 2009-0.8%

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