NYSE$NLY

Annaly Capital Management Inc · Q2 2022 earnings

Q2 2022 earnings · · Investor relations

Briefing

Announced financial results for the quarter ended June 30, 2022.

Annaly Capital Management reported a GAAP net income of $0.55 per average common share and Earnings Available for Distribution (EAD) of $0.30 per average common share for the second quarter of 2022. The company's Agency portfolio decreased modestly, while the MSR platform grew assets by 41% to $1.7 billion. The sale of the Middle Market Lending portfolio was completed during the quarter, transitioning Annaly to a dedicated housing finance REIT.

  • GAAP net income of $0.55 per average common share for the quarter.
  • Earnings available for distribution (“EAD”) of $0.30 per average common share for the quarter; up $0.02 from the prior quarter with dividend coverage of over 135%.
  • Annaly's Agency portfolio decreased modestly during the quarter, while capital allocation was roughly unchanged at 71%.
  • Annaly's Mortgage Servicing Rights ("MSR") platform grew assets by 41% to $1.7 billion during the second quarter with MSR representing 15% of dedicated equity capital, up from 9% in the prior quarter.

Headline financials

Total Revenue

-$11.5M

Previous: $400M-102.9%
EPS (adj)

$1.20

Previous: $1.20+0.0%
Net Interest Margin

2.6%

Previous: 1.7%+59.0%
Yield on Assets

3.6%

Previous: 2.0%+81.7%
GAAP Cost of Liabilities

1.1%

Previous: 0.3%+220.0%
Net Interest Spread

2.5%

Previous: 1.6%+51.9%
Experienced CPR

14.9%

Previous: 26.4%-43.6%
Long-Term CPR

7.7%

Previous: 12.9%-40.3%
Economic Leverage Ratio

6.6

No prior period
Capital Expenditures

$0.00

Previous: -$1.82M+100.0%
Free Cash Flow

$867M

Previous: -$297M+391.4%
Net Income

$867M

Previous: -$296M+393.2%
Operating Income

-$56.5M

Previous: $334M-116.9%
Gross Profit

-$38.4M

Previous: $400M-109.6%
Cash & Equivalents

$854M

Previous: $1.38B-38.1%
Total Assets

$73.6B

Previous: $82.4B-10.6%

Revenue & EPS history

Annaly · Revenue · Quarterly

-$11.5M

Q2 2022-102.9%vs Q2 2021
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 remains constructive on the outlook for Agency MBS, citing attractive new investment returns and increased clarity from the Federal Reserve. The company expects that progresses in Residential Credit and Mortgage Servicing Rights businesses will enhance the durability and quality of returns.

Tailwinds

  • Historically attractive new investment returns in Agency MBS.
  • Increased clarity from the Federal Reserve on interest rate hikes and quantitative tightening.
  • Continued growth in Residential Credit business.
  • Continued growth in Mortgage Servicing Rights business.
  • Progress towards long-term strategic objectives.

Headwinds

  • Challenging operating environment due to spread widening and rate volatility.
  • Intensifying concerns about global economic growth contributing to risk-off sentiment.
  • Pressures on book value.
  • Persistent spread widening and rate volatility roiled financial markets
  • These pressures weighed on our book value

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 2022

Historical avgQ2 2022

+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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