Ready Capital's first quarter results drew a negative market reaction, reflecting a substantial shortfall from Wall Street revenue and profit expectations. Management highlighted that portfolio repositioning and asset liquidations, especially in its non-core commercial real estate segment, weighed on net interest income. CEO Tom Capasse noted that “the financial effect of the asset moving from performing construction loan to non-accrual was a quarter-over-quarter $0.13 per share reduction in earnings,” with a significant carry expense also impacting results. The company’s focus remained on stabilizing book value and generating liquidity through targeted sales, but near-term earnings were pressured by elevated delinquencies and reduced net interest margin.

Is now the time to buy RC? Find out in our full research report (it’s free).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions Ready Capital’s Q1 Earnings Call

• Doug Harter (UBS): Asked about the impact of April’s market volatility on non-core asset liquidations. CFO Andrew Ahlborn responded that the company does not expect material changes to timing or pricing, citing ongoing negotiations and strong interest from buyers.

• Crispin Love (Piper Sandler): Inquired about the timeline for distributable earnings to recover and cover the dividend. Ahlborn explained that improvements will likely follow the reinvestment of proceeds from asset sales, with a similar earnings profile expected next quarter and upward momentum as the portfolio shifts.

• Crispin Love (Piper Sandler): Sought clarity on share repurchase philosophy in the current environment. Ahlborn stated the company balances repurchases with liquidity needs and upcoming debt maturities, emphasizing a cautious approach due to current earnings levels.

• Christopher Nolan (Ladenburg Thalmann): Asked about the impact of collapsed CLOs on leverage and why some deals failed interest coverage tests. Ahlborn and Chief Credit Officer Adam Zausmer explained that leverage may rise slightly due to technical reasons, while net operating income pressure and business plan execution challenges drove interest coverage issues.

• Jade Rahmani (KBW): Questioned the Portland asset strategy and timeline for stabilization and exit. Zausmer provided a detailed breakdown, stating it will take several years for full condo sales, with earlier exits expected for the hotel and office components as they stabilize.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will be closely monitoring (1) the pace and pricing of non-core asset liquidations and the redeployment of proceeds into core lending, (2) stabilization and tenant progress at the Portland mixed-use project, and (3) volume and margin trends in the SBA and multifamily lending businesses as new policies and market conditions evolve. Execution on these fronts will be critical to Ready Capital’s earnings recovery.

Ready Capital currently trades at $4.56, up from $4.37 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).

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