Ellington Financial LLC Reports Fourth Quarter 2018 Results
OLD GREENWICH, Connecticut—February 20, 2019
Ellington Financial LLC (NYSE: EFC) (the "Company") today reported financial results for the quarter ended December 31, 2018.
Net loss1 of $(2.2) million, or $(0.07) per basic and diluted share.
Book value per share as of December 31, 2018 of $18.92, after payment of a quarterly dividend of $0.41 per share.
Credit strategy gross income of $8.1 million for the quarter, or $0.26 per share.
Agency strategy gross loss of $(4.9) million for the quarter, or $(0.16) per share.
Net investment income of $10.2 million for the quarter, or $0.33 per share; Adjusted net investment income2 of $12.7 million for the quarter, or $0.41 per share.
Announced a dividend of $0.41 per share, equating to an annualized dividend yield of 9.6% based on the February 19, 2019 closing price of $17.16 per share.
Repurchased 361,090 common shares during the quarter, or approximately 1% of our total common shares as of the beginning of the quarter, at an average price of $15.34 per share.
Debt-to-equity ratio of 3.35:13 as of December 31, 2018.
Fourth Quarter 2018 Results
"Despite weakness in most equity and fixed income markets globally in the fourth quarter, Ellington Financial preserved its book value thanks to our disciplined hedging strategy and diversified portfolio," stated Laurence Penn, Chief Executive Officer and President. "Even though we sold certain non-real-estate-related assets in anticipation of our REIT conversion, we still were able to grow our adjusted net investment income, which covered our dividend for the quarter. We also took advantage of our discounted stock price by repurchasing more than $5.5 million of our common shares during the quarter.
"During the fourth quarter, we had strong results from several of our loan strategies, including consumer and non-QM, where we completed our second non-QM securitization in November. Our investments in loan originators also performed well during the quarter. We believe that many of our loan strategies, in addition to providing us a pipeline of investments over which we have greater control and visibility, have the additional benefit of being relatively insulated from interest rate movements and global macroeconomic events. I am pleased with our performance in 2018, having realized our primary objectives of prudently growing our credit portfolio and our adjusted net investment income, while delivering an economic return of 9.2%.
"Finally, I am excited that we completed our tax conversion from a publicly traded partnership. While we rotated a portion of the portfolio to enable us to qualify as a REIT, we have maintained all of our core investment strategies, including our highest-conviction non-real-estate-related strategies, as well as our core hedging strategies. Our tax reporting to investors will be greatly simplified as a REIT, which should expand our investor base and greatly improve the liquidity of our stock. At the same time, our investment objectives remain the same: generate a high-quality earnings stream while maintaining a strong balance sheet, moderate leverage, and a stable book value."
Corporate Structure Update
The Company plans to elect to be taxed as a REIT for U.S. federal income tax purposes for the taxable year ending December 31, 2019. To facilitate this planned election, it has elected to be taxed as a corporation for U.S. federal income tax purposes effective as of January 1, 2019. The Company will issue a final Schedule K-1 to those shareholders who held shares in 2018. For 2019, the Company will issue a Form 1099 to shareholders reporting all dividends paid.
1 Increase (decrease) in shareholders' equity from operations, or "net income (loss)."
2 Adjusted net investment income is a non-GAAP financial measure. See "Reconciliation of Adjusted Net Investment Income to Net Income" below for an explanation regarding the calculation of Adjusted net investment income.
3 Excludes repo borrowings on U.S. Treasury securities.
The following information was filed by Ellington Financial Llc (EFC) on Wednesday, February 20, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-K Annual Report statement of earnings and operation as management may choose to highlight particular information in the press release.