AFC Gamma Maintains Dividend After Q4 Financials

The TDR Three Key Takeaways on AFC Gamma:

  1. AFC Gamma’s Q4 distributable earnings stood at $0.49 per share, aligning with expectations.
  2. The company experienced a net interest income beat, signaling better than expected  portfolio performance.
  3. Despite a challenging year, AFC Gamma announces a focused outlook requiring strategic shifts and operational optimizations.

AFC Gamma, Inc. (Nasdaq: AFCG), a West Palm Beach, Florida-based institutional lender to the cannabis industry, announced its financial outcomes for the fourth quarter and the entire fiscal year of 2023. The report came amidst a turbulent period for the cannabis sector, underlining both challenges and strategic strides made by the company.

In the fourth quarter, AFC Gamma reported a non-GAAP EPS of $0.49, precisely meeting analyst expectations. The net interest income for the same period was $15.97 million, marking an 18.9% year-over-year decline yet slightly surpassing forecasts by $0.06 million. The company faced a GAAP net loss of $9.2 million, translating to $(0.45) per basic weighted average common share, while distributable earnings were $10.0 million, or $0.49 per share. For the entire year, AFC realized a GAAP net income of $21.0 million and distributable earnings of $41.4 million.

Daniel Neville, CEO of AFC Gamma, remarked on the company’s strategic advancements in portfolio management against a “challenging cannabis backdrop.” The firm is gearing up for a focused future as a pure-play cannabis lender following the spin-off of its commercial real estate portfolio. This shift is anticipated to enable AFC Gamma to capitalize on emerging opportunities with Cannabis 3.0 operators—new entrants with leaner operational setups seeking expansion.

The company also declared a dividend of $0.48 per common share for the first quarter of 2024, consistent with its policy of returning value to shareholders. This decision follows a year where AFC Gamma distributed $40.9 million in dividends, closely aligned with its distributable earnings.

However, the journey through 2023 was not devoid of challenges. The company worked through a period marked by asset performance issues and strategic realignments. Notably, AFC approach to managing underperforming assets and its proactive engagement with borrowers.
Looking ahead, AFC Gamma is focused on a year of strategic execution, with a clear focus on optimizing its portfolio, capitalizing on emerging cannabis market opportunities, and delivering strong, risk-adjusted returns. Want to keep up to date with all of TDR’s research, subscribe to our daily Baked In newsletter.

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