NYSE$NLY

Annaly Capital Management Inc · Q2 2023 earnings

Q2 2023 earnings · · Investor relations

Briefing

Reported financial results for the quarter ended June 30, 2023, demonstrating proactive portfolio management and a diversified housing finance model.

Annaly Capital Management reported a GAAP net income of $0.27 per average common share and Earnings Available for Distribution (EAD) of $0.72 per average common share for Q2 2023. The company's economic return was 2.9% for the quarter, with an annualized GAAP return on average equity of 5.4% and an annualized EAD return on average equity of 13.2%. The total portfolio was $78.9 billion, and the book value per common share was $20.73.

  • Generated a 3% economic return in the second quarter of 2023, driven by proactive portfolio management and an improved operating environment.
  • Proactively managed leverage position during the quarter given uncertainties emanating from the regional banking turbulence and debt ceiling negotiations.
  • Book value ended the quarter effectively unchanged while the portfolio out-earned the dividend.
  • Generated a 6% economic return for the first half of the year despite substantial market volatility, demonstrating the stability and efficacy of our diversified housing finance model.

Headline financials

Total Revenue

$330M

Previous: -$11.5M+2977.8%
EPS (adj)

$0.72

Previous: $1.20-40.0%
Net Interest Margin

-0.1%

Previous: 2.6%-105.7%
Yield on Assets

4.3%

Previous: 3.6%+19.3%
GAAP Cost of Liabilities

5.0%

Previous: 1.1%+346.4%
Net Interest Spread

-0.7%

Previous: 2.5%-129.7%
Experienced CPR

7.0%

Previous: 14.9%-53.0%
Long-Term CPR

8.6%

Previous: 7.7%+11.7%
Economic Leverage Ratio

5.8

Previous: 6.6-12.1%
Free Cash Flow

$167M

Previous: $867M-80.7%
Net Income

$167M

Previous: $867M-80.7%
Operating Income

$285M

Previous: -$56.5M+605.1%
Gross Profit

$330M

Previous: -$38.4M+959.5%
Cash & Equivalents

$1.24B

Previous: $854M+44.8%
Total Assets

$89.3B

Previous: $73.6B+21.3%

Revenue & EPS history

Annaly · Revenue · Quarterly

$330M

Q2 2023-2,977.8%vs Q2 2022
Beat estimate in 4 of 15 quarters(27%)
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 is optimistic given strong investment returns, declining volatility, a stable financing environment and a likely end to the Federal Reserve's rate hiking cycle. They remain overweight Agency MBS given the relative attractiveness of the sector, and continue to actively pursue opportunities across their Residential Credit and MSR portfolios to enhance risk-adjusted returns.

Tailwinds

  • Strong investment returns
  • Declining volatility
  • Stable financing environment
  • Likely end to the Federal Reserve's rate hiking cycle
  • Relative attractiveness of the Agency MBS sector

Headwinds

  • Elevated macroeconomic uncertainty
  • Potential volatility events
  • Changes in interest rates
  • Changes in prepayment rates
  • Availability of financing

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 2023

Historical avgQ2 2023

+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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