AFC Gamma Inc Reports Mixed Results Amid Cannabis Industry Challenges
GAAP Net Loss: AFC Gamma Inc (NASDAQ:AFCG) reported a GAAP net loss of $(9.2) million or $(0.45) per share for Q4 2023.
Distributable Earnings: Despite the net loss, the company achieved Distributable Earnings of $10.0 million or $0.49 per share in Q4.
Annual Performance: For the full year 2023, AFCG posted a GAAP net income of $21.0 million or $1.02 per share, with Distributable Earnings of $41.4 million or $2.04 per share.
Dividends: The company declared a dividend of $0.48 per share for Q1 2024, maintaining a consistent payout in line with Distributable Earnings.
Portfolio Management: AFCG is focusing on portfolio management and lending opportunities with Cannabis 3.0 operators.
AFC Gamma Inc (NASDAQ:AFCG) released its 8-K filing on March 7, 2024, disclosing its financial results for the fourth quarter and full year ended December 31, 2023. The company, a commercial real estate finance entity specializing in loans for the cannabis industry, faced a challenging environment but managed to report solid Distributable Earnings.
Financial Performance and Challenges
AFCG reported a GAAP net loss of $(9.2) million or $(0.45) per basic weighted average common share for the fourth quarter of 2023. However, the company's Distributable Earnings stood at $10.0 million or $0.49 per basic weighted average common share, reflecting a more positive aspect of its performance. For the full year, AFCG achieved a GAAP net income of $21.0 million or $1.02 per basic weighted average common share, with Distributable Earnings of $41.4 million or $2.04 per basic weighted average common share.
The company's CEO, Daniel Neville, acknowledged the difficult backdrop of the cannabis industry but expressed optimism for the future, particularly with the emergence of Cannabis 3.0 operators. AFCG's focus on portfolio management and strategic lending opportunities is aimed at capitalizing on these new market entrants.
Dividends and Shareholder Returns
Reflecting a commitment to shareholder returns, AFCG declared a regular cash dividend of $0.48 per common share for the first quarter of 2024, payable on April 15, 2024. This declaration follows a consistent dividend payout for the fourth quarter of 2023, which matched the company's Distributable Earnings.
AFC Gamma has made significant progress on portfolio management initiatives in the fourth quarter and into 2024 in spite of a challenging cannabis backdrop," said Daniel Neville, the Companys Chief Executive Officer.
Key Financial Metrics
For the fourth quarter of 2023, AFCG reported interest income of $17.6 million and net interest income after expenses of $15.9 million. The company's management and incentive fees, net of rebate, were $3.5 million, with total expenses amounting to $5.1 million. The provision for current expected credit losses was a significant charge at $(11.9) million.
These financial metrics are crucial for AFCG as they reflect the company's ability to generate income from its lending activities and manage expenses and credit risks associated with its loan portfolio.
Analysis of Performance
While the GAAP net loss indicates challenges, the solid Distributable Earnings suggest that AFCG's core lending operations remain profitable. The company's strategic shift to focus solely on cannabis lending after spinning off its commercial real estate portfolio may streamline operations and enhance its position in the cannabis lending market.
Investors and stakeholders are encouraged to review the full earnings presentation on the company's website and attend the upcoming conference call to gain further insights into AFCG's financial results and strategic direction.
For more detailed information, please refer to AFC Gamma Inc's filings with the SEC, including the Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
As a value investor or potential member of GuruFocus.com, understanding the nuances of AFC Gamma Inc's financial results can provide a clearer picture of the company's health and future prospects. The balance between the GAAP net loss and the strong Distributable Earnings highlights the importance of looking beyond the surface numbers to assess a company's true performance.
Explore the complete 8-K earnings release (here) from AFC Gamma Inc for further details.
This article first appeared on GuruFocus.
