MMAC - Earnings call transcript Q1 2020 | MMA Capital Holdings Inc

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Operator

Good morning, ladies and gentlemen, and welcome to the MMA Capital Holdings, Inc. 2020 First Quarter Financial Results and Business Update Conference Call. My name is Rocco, and I will be your coordinator for today. At this time, all participants are in a listen-only mode.

We will facilitate a question-and-answer session at the end of this conference call. conference recorded. this note also is being Please

comments these Some events Exchange that those of and in will which to include include expectations. MMA and results in could significant regarding with future forward-looking statements materially the These statements. current expressed cause projections on company's Holdings, those are actual comments subject uncertainties, Commission from which to risks today forward-looking Capital based are the of filings identified financial differ performance and Securities

Listeners place forward-looking are date reliance statements, statements. no of undue which company forward-looking the the any obligation The not of the cautioned to in on information to update speak these only hereof. contained undertakes as

Falcone, MMA CEO would Holdings. of call I turn to Michael now Capital like the Mr. over to

Michael Falcone

With and Good the and Senior Financial Officer; Treasurer. Rocco. afternoon, on are Bjarnason, and welcome. President Megan Officer; our and everyone, Chief our me Dave you, Operating Sophocles, Gary Chief today call President Thank Vice Mentesana,

our of results and purpose financial review business an overall Holdings provide quarter call update. Capital to The first to XXXX today is MMA

was quarter our filed website. the and an SEC report updated available investor first Our on yesterday, presentation is with

Dave performance. today, and results a we from operations with prepared begin will recap of for more I'll turn the our a Then COVID-XX. detailed of financial to the For my and saw over call for our Gary including I quarter, QX review the remarks impacts in call the

uncertainty U.S. a we Finally, remarks operating navigate economies. of the plans company's near-term for global to period capital for of the before open update continue we an up and provide questions. wrap the prepared as I'll call and for and great the the

or same while $X.XX company quarter first of we share the the book company's of decreased the in adjusted $X.X was or carrying excluding reported $XXX.X With – value quarter, $XXX.X value per adjusted value, saw share or or equity that results, $X.X million respect book deferred represents which value, Book million book ended value for financial book million per the the common $X.XX assets period. the shareholders' tax value with the million. decrease to

Dave were with certain fair investments, primarily million were decreases by losses net recognized $X.X bond in of value As conjunction held loans Ventures. that derivatives discuss, further driven in our originated will such by and Solar

in primarily quarter As to impact investments net of fair which with positions our of rather end, rates on interest in associated yields decrease of credit losses by increase interest COVID-XX driven interest value indexed. quality, specifically themselves, many were benchmark the rate than an derivative rates, market a and the are

assessed the the real disappointing, as the investments. hopeful In we and currently We're loan the conditions the for are in this are about about remaining we opportunities investments, be Although of Solar monitor status portfolio expect our and impact coming months. assess that particularly COVID-XX on of market of to at attractive repaid those may secured are Ventures in continue estate-related results present concerned the March XX, were to optimistic regard, loans be cautiously quarter full. and all to adequately

able situation predict. operational performance of all This to of said, are future financial the on long-term of on the and ultimately factors the which which including the developing, COVID-XX effects uncertain on is intensity COVID-XX, we're spread long-term speed estimate our difficult our developments, impact business. these and to duration, of and to the with depends Due not

financial business, we this material cash cannot But of on impact flows. operation, and a condition results at having out time, rule our

our further Gary? a review for Now Gary. and funding, over me let investments turn of to call the

Gary Mentesana

that institutional mainly company's represented Solar investments done United of end Ventures, the an invests company's the the energy energy The which and partner XX% renewable Thanks, company through the finance where in in are development States. alongside Mike, and good construction quarter of afternoon, projects loans renewable at everyone. investments, generally capital

ago. investments from million renewable the invested of company's the $XXX.X by increased at represents deployment proceeds of the increase year revolving value $XX.X increase the XXX% This note. equity, repayment primarily carrying to quarter, was due million the March $XXX.X net the the a draws this from During energy XX, And time facility. to including credit on million of which at our hunt recycled

March investments. trailing ended March in for $X.X an unlevered On basis, X.X% see our of we related XX-month versus on investments million XXXX, XX the of have period renewable return recognized table an XX.X% will the quarter, for year. X last net company the you to of the annualized filing, XX, income during realized ended As energy these period

the decline Equity driven $X.X from to at XX.X% and income million compared in was the was portfolio, lower at year. fourth Solar or UPB $XXX,XXX Principal The to last quarter decrease $X fair first share higher or It was was down par the compared the primarily XX% which marked million from quarter. a March compared Unpaid of quarter at by our Ventures loan fourth Solar to XX, Ventures of value year-end. Balance of the

the fair longer that takeout March average, losses lack of had financing commitments value terms While than and XX. loans largely remaining as related to

unrealized losses and short over such of upon repayment reverse we the loans. expectations performance expect tenure Given to of the full currently loans, time these

expected conditions loan fair portfolio Solar Ventures of periods future the volatile of remain value moderate. the is loan reporting until Nonetheless, – to measurement and Solar market

compared Weighted UPB million, had March and XX At value Solar value, million XX. December UPB Ventures average $XXX.X months XXXX, of $XXX.X weighted aggregate fair the million. $XXX.X loans X at fair of XX.X% of months of and remaining and XX, maturity an of by average funded X.X% to coupon

XX%. to As X% fees calls, on funded generate X% origination capital. to coupons from discussed X% from balances to we on ranging target prior on typically loans committed ranging And loan

such for and through qualified the Through by made services. the and of projects the financed XX, critical development Ventures on were construction projects energy infrastructure renewable generally that as May were construction schedule, Solar as of loans development essential

delays. have minor utility for some COVID-XX next final we projects commissioning responses believe local resolved Particularly in be Oregon, resulted certain in will month. and which in state However, to

on financial and finance market, in have and as the the fully the our our origination energy dependence macroeconomic conditions, liquidity of drawn $XXX part slowed markets and our of facility management program renewable uncertainty investment our Given credit COVID-XX. we have the efforts functioning revolving million prevailing in wake

we repayment. including continue where While meet to company's there debt additional believe in energy investment risk-adjusted continue are renewable returns and that explore with social we our of expected and capital, closely ways to that appropriate. to addition continue to monitor attractive We'll invest in loan goals, opportunities capitalization, performance to sources also the debt, will environmental optimize to

in liabilities. of at assets yield first fair Turning March and and was and these million, our a to $XX.X of other UPB drove quarter value net respectively. the fair The million investments. Increases bond-related $XX.X XX $X.X value decrease the in market investments in million

gain these an in at unrealized of were XX. both Although, investments position March

estate-related the company's temporarily none than Concerning XX, impaired be March such of investments real investments, XXXX. were at to assessed other

may the and secure whose Spanish that COVID-XX to ownership such to a from our mixed-use anticipate joint XX% economy our in increase, Spanish infrastructure venture we equity the company's real tenants losses respect possibly we includes will parcels interest incremental and value, downturn Fort in recognize development, and the from land Fort and the compare new estate continue in town retail tax that consequently, significantly. and venture, hotel which undeveloped the the revenues with However, center bond, losses underlying investment that owns

material possible combat is duration While of reasonably the to recognized, we to market to current losses and that the COVID-XX. the it statements is due due severity the believe measures currently financial economic quantified next effects the be months, the could the cannot that residual uncertainty, expected XX the of that company's to loss taken be within

of upon and future amount timing any, and loss exact time. circumstances, if cannot based this be the predicted recognition, However, therefore, at is

million of million credit increased Separately, obligations a company's in quarter, the result revolving advances the value company's net $XXX.X book March from XXXX, at debt the and as facility. the $XX.X primarily, XX, first of was

May company XX, in of was all debt its covenants. the compliance XXXX, with As of

liabilities this balance contribute at we levels. the to As opportunities of to prior income, capital company's not assets continue part we expect consistently sheet quarterly and and pursue attractive to recycle to stated quarters, from will the in other do

who to that, greater discuss With detail. call over turn results our in Dave? financial will quarterly Dave, I'll the

Dave Bjarnason

Thanks, Gary, good everyone. afternoon, and

provide our Form share I of Item results, our the Book of same XX-Q. first overview book the million during an will $X.XX As I decreased per million X or tables in refer or adjusted period. quarter, $X.X value various share value to in decreased $X.X while per $X.XX

In comparison, book increased per period. increased quarter, fourth $X.XX or while $X.X in or adjusted share the $XX.XX million same share $XX.X the value million book during by per value

million $X.X comprehensive loss of was value of primarily quarter loss, first The $XXX,XXX in which $X.X driven million loss. a comprehensive decrease included and other by book net

of of book first The As quarter was of as of fair by share recognition the value Solar primarily loan $X.X which a company's Mike driven indicated, the million of company's the $X earlier, value the Gary largest million net to, component was attributable the in decline discussed fair losses. value the decreased of Ventures. the portfolio

share volumes strong Solar Ventures fair and Solar quarter, and first was from of amount despite of Solar Therefore, that Ventures value significantly income net in origination Ventures the recognized equity losses operating the at softened income the the first quarter. in company's the the

company's million the in the a decrease Increases $X.X value fair first the yields drove investments. bond in market also quarter of in net

Although, mentioned, investments impaired none as as Gary of March were of these XXst.

the And first in related fair resulted to million exchange recognition in of instruments. value company's quarter changes a and the reference interest derivative net in $X.X rates foreign losses of

value This losses net and the adjustments quarter the significantly quarter. of changes net the company reported recognized to be in said, regard, $XXX,XXX Fort Compared company impact impact volatile and while $XXX,XXX In adjusted this venture. fair however, first losses also of book performance, value in fair recognized from on our fair net first quarter, value Spanish the gains equity can largest value. fourth caused

recognize we As and that Gary to such equity significantly. from the possibly increase anticipate venture may will this losses continue losses mentioned, company

fourth recognized although related re-measurement in which recognized assets to value of foreign to company's to majority and liabilities, quarter $X.X losses of company currency of first first net offset foreign these fair a the position. the from certain operating $X in non-dollar-denominated were $X.X the hedge million in primarily by gain stemming a the the losses due million Additionally, increased exchange compared million quarter, expenses the quarter,

expense also expenses. compensation-related payable in manager, in increase Increases contributed the company's quarter-over-quarter to to reimbursements the operating external

any given on not third quarter, However, the expenses company met was reimbursements related the in such cap the recognize to that in quarter. annual items the fourth did such

facility compared funding of slightly that reason, closed reimbursements net fourth quarter the is credit quarter increased higher company overall quarter. by from the the first typically expense September. given cost recognized this to in the in in For company's the to first the related draws such revolving Otherwise,

a From of restricted. the liquidity restricted the of capital $X was cash, first and the end million had equivalents, company of $XX.X at perspective, cash million and resources cash quarter, which

in reported facility. net $XX.X by amount of was flows filing, and by the the total primarily from of to million the financing quarter, X of $XX.X company's million activities Table increased that cash, first in advances net driven the cash our generally cash company's restricted which credit As provided equivalents, cash related revolving

generated flows of $X.X company operating from the in Additionally, first activities cash the net quarter. million

specific uncertain. But as further financial that related Fort we that assets the company's impacts recognize XX of that in note it reasonably company's condition investment company's Spanish within equity venture. also could operations tax on value are risks are is the of in as the Lastly, mentioned I earlier, next a that such the the and earlier, believe discussed should that the statements. to Gary material the long-term discussed results carrying company the COVID-XX the financial is months, of assets, to possible deferred its filing, to reduction to

could disclosed exact circumstances, amount However, filing. end, time. upon recognition, quarter and this of at Part posed first COVID-XX by X depends are of plus specific future therefore, if not the in be the Item the risks any, To predicted this timing of and Xa

will back call over turn I Mike. that, With to the

Michael Falcone

Thanks, Dave.

to capital response and allocation Before COVID-XX me we the plans let Q&A, of company. the the address ongoing get the to near-term company's

can corporate of manager company's and business to the performance report to the office no closures the the respect and with were external operations third in state other the parties external there we provided and government that by operations. connection disruptions beginning With services manager since COVID-XX, responses of the to

person the miss to quarter have interaction have we of continue our our validated capabilities manager remote managed work-from-home first and reporting successfully. while colleagues, through day-to-day external been in certainly end far. Employees work the cycle And so we our with

our with continued of opportunities. future preparing from for monitoring borrowers evaluate manager maintain the and our external portfolio loans the addition, investment In the to their relationships existing homes, performance and carefully

of has to operational consistent manager office however, the by external within and office reopen operations the timing a related the date guidelines state, any will opening is formal to target any offices, the organization, any decisions which and not set the an As located. be local with set our in

fulfill With both resolve. long-term, to of maintaining any funding for current unique result Solar as respect In near-term the may remaining obligations, to focused are the a balance position the disruptions. take plans we including to our near capital that there on our requirements allocation adequate and well remains conservatism the from current as of market and advantage Ventures, long-term of opportunities liquidity near-term, in

very for activities included in this allowing loans balance to be to Solar company. drawing our building manage cash outstanding help of credit revolving capital pace with a by to the on near-term repay on of calls underwriting of and end investing use The line without deliberate Ventures of for commitments significant our the in the additional maturities QX,

While underwriting strong there which capital the the anticipate base of up was year. pace we pick on as transitions the from, on balance focus will a deployment. provides as a QX our operate the to move marginal into We investment during of to a returns, drag the liquidity near-term focus back summer it

the Part This of the we capital has near-term Board any of have return implementation program on recovery the liquidity, of the better on economy. COVID-XX the preclude decision visibility deferred XXXX post doesn't per focus this which until be based capital be solely on but program on for will purposes. of operations flows cash in will program a from and not planning the availability year, debt and investment later capital, maintained

have taking time, and carefully conditions approach investment COVID-XX new and maintain model. we extended while of our approach period an that to we at economic this cautious any resulting unforeseen us for a monitor the risk time, may an

fossil in much including investments, very renewable That economic energy said, our fuels belief the thesis favoring intact. to over long-term infrastructure-related the transition remain

In belief ability our the addition, infrastructure remains as renewable term to on investments, capitalize intermediate in energy well our opportunities economic opportunities as those unchanged. in

there those not opportunities. a or renewable as poised investments, with energy, investments environment. to investments social nonrenewable take positive company, we impact of And for recycling our If advantage are current complete by investment capital to and impacted the environmental are including to commitment assets, opportunities from is our the infrastructure high-return the of

time, about our the now shareholders. In closing, even to the call to you for we thank future, excited in your this Rocco? committed uncertain support. moment We remain in continued We'll open turn questions. --

Operator

first go today's [ph], [Operator And Instructions] private Please from comes Greg investor. a Venit question ahead.

Unidentified Analyst

Good the this of that the African back to think investment, get $X year. sometime, there any million, mention I like something supposed afternoon. South Was part of first you're

Michael Falcone

We did the call. mention not it in

goes returns money Dave, that but We or the have as maybe of Megan investment number, gotten some year expecting the we're additional back, exact on. that from

COVID-XX. As of the as slowed Africa result in bit the South U.S., things in down have a a

Unidentified Analyst

assets, XXX, other Spanish up is million. Or South Other other the investment, assets $XX Russell $XX there? in else to right? are under there anything in million the African from the the And Okay. Ford is that assets went

Dave Bjarnason

is captures way it. assets, that category. what There are I their connection you will other the But cover values yes, that those -- share. of think mentioned, some that we at items, Greg, lion's including into derivative make if report fair look the with in that also most you

Unidentified Analyst

put grew which, that assets in there? $X into $X did almost committed XXX do to that other capital the quarter, Russell the have in So with million then other And what million. you assets, you

Dave Bjarnason

costs, to recognized in There of were nature, that's improvement with that are to increase right. Yes, and connection million other quarter the due as Russell first $X.X their in those land assets. was capitalized about costs

primary for the was the mentioned. that you So change driver that

Unidentified Analyst

What accounted $X for the other million?

Dave Bjarnason

In the up assets million. first were $X quarter, about other

is So you XX if you're -- look at asking? what page that

Unidentified Analyst

at wrong. thought end end thought was I it December I read maybe the Yes. $XX,XXX,XXX. December, the of I it at of

Dave Bjarnason

correct. think don't I well, -- you If it's

which page $XX.X table million, million. at the of at end other December, look you assets filing, If in is our four was almost $XX XX, on

million. And close the so, quarter, of first $XX at the to was it end

increase the quarter. $X So in approximately million a

Unidentified Analyst

that. I'm Look looking the at presentation. PowerPoint appendix, table your the of at

Michael Falcone

the presentation? at looking You're investor

Unidentified Analyst

presentation has it your December, under million. other a the list $XX was Yes, of In assets $XX,XXX,XXX. investor its assets,

Dave Bjarnason

I'm a Hold on to just presentation. second. trying the scroll

Unidentified Analyst

fine. that's Yes,

putting the the into construction that sell I Is bridge? to on So, done end you more guess, Russell, is it, are road money you until Or property? this of the there come?

Gary Mentesana

There ahead, is go -- Mike.

Michael Falcone

Go ahead, Gary.

Gary Mentesana

costs our into to relating XXX, of the No, Russell we continuing money to and to share road anticipate relative utility do invest work. largely

Unidentified Analyst

more be much to hope it So, it? and that I mean if capital you get bridge try of sell what, How I how out year. done, much think we was commitment more this later all to --

Gary Mentesana

-- in when we're I I going dollars million think it's the function be able it's of get a to don't to near term. a couple ultimately really of more, But out.

Unidentified Analyst

not like you're on paying and property real Right. Except, it's estate just it. on tax sitting

-- hope actually investing you're to more You're get more out. to

Gary Mentesana

Correct.

Michael Falcone

background We're got Yes. going I a on, thunderstorm are on Russell and here. parcels. the we in sell apologize, to I've contracts money investing against But -- investing

haven't have but to started whole parcels we we we have have into order process thing to do sell the clearly access there. the parcels, yet, sold And in of parcels. various So the to a sell

Russell driving investment this So into at time. the that's what's

Unidentified Analyst

contract where that a have you -- a of or letter you point So had like intent a

Michael Falcone

We've contracts. got option

So, we have for and the most part. through we periods are moving deposits option

Unidentified Analyst

about sometime capital, year? expectation this recycling later that is your So, that

Michael Falcone

that's given to But say, into overall I of I was year. economic suspect year, original expect delayed our later would I conditions. next it that, sort likely something would the be could expectation this be, that's

Unidentified Analyst

write-off. mentioned XX% you ownership. Spanish your portion Fort? possibly in for what's -- I is in significant Fort, XX-Q, Spanish value What a guess, and equity your for carrying write-down the the Okay. That's call of the

Michael Falcone

XX% we to XX% value, million Fort, partner, there's I'm numbers just estate won't roughly us. Spanish is They this speaking, in own short of $X and attributable be million going $XX -- you So, real we big of picture $X attributable But to $XX million give precise. debt, speaking. roughly general Again, of to million the here. own

other And is value looking we works that loss before way are you write-down. at conclude of GAAP the a any temporary sort to equity is you in have -- -- make equity than

end. the we We was likely will of a would nor here, we general neither is I partner, sort limited goes on. goes crisis at case didn't quarter partner, year economic the not not longer the the general we as concluded the we're on, -- the say partner COVID-XX remembering that that the it But conclude that more

is What that you and impairment to estate real of get significantly and think in see publicly various some apply at of can will possibility. value you a order be? I as world investments are discounts those million of $XX the look they've what But it I been that the out can don't know. there discounted around magnitude some traded that and

discounted and think else. crisis be there. But in if gets this and and be we sometime that Again, everything the that -- appraisals believe will that this changes looking flows way it coming continues, in really at there is we there write-down a reason measured, looking values think will cash quarters, to at we is

Unidentified Analyst

that's that Spanish our we million $XX have the is Fort, capital? So, investment in

Michael Falcone

yes. That's carrying the value,

Dave Bjarnason

fair then about from those Greg, – have million. book XX, debt the $XX.X had just $XX.X an investment a we equity of that, value about March that investment have lines, along separate And value at of So million. a at so we

Unidentified Analyst

the bonds? Through

Dave Bjarnason

Yes.

Michael Falcone

taxes Through sales and by land the by the tax which property themselves. bonds, are revenues secured not

Unidentified Analyst

investments South number up. and if you it's carrying that add The and or that $XX Russell don't you're and million numbers other Africa. whatever if have So is, and $XX.X million – includes

Dave Bjarnason

Yes.

of So Greg, of clarification. a maybe points couple

the face that little classifying all in the if or different assets sheet you're the a comparing than if to, in way presentation balance in or – is certain X filing. look So specifically are assets, – that of investor our other you're Table on you see you'll referring the that number in appendix we the table bit

components can Number see Page of two, actually five the footnote other XX, assets. breakdown you you is if of in a on number look which at specific the filing,

that, investment. share to lion's So it of specifically, Russell the the within relates

of So you that's XX million. about a of filing, about – value Page – $XX.X at see on can book the about

deferred other like costs also balance debt You items have that our issuance sheet. on get

like was, I said, $XX So assets there. there of other about million

look that on to So but footnote the now this, back, just to you'll I detailed the XX. used or mentioned what's in the are like to clarify in in over addition there, investor not I that presentation you see Page in items if that just

We included purposes, for investor also, cash. presentation restricted in have presentation the

given positions. connection fair our first quarter, additional rate the positions we in with decline interest of in hedge so to value in post those the And collateral had

tied in part answer. the as the in see increase, So to all presentation collateral we had calls you assets, of additional it to incremental that other the in investor part was

was So to what had little clarify respect with mentioned just bit earlier Hopefully, assets. a wanted other in what I to that's helpful.

Unidentified Analyst

in where So presentation, Fort? would industrial that Spanish

Dave Bjarnason

The Yes. Fort? Spanish

So the the balance selected third that investments… in line yes, on find of sheet investor data you'll presentation the

Unidentified Analyst

partnership? Investment the in

Dave Bjarnason

Yes. That's correct.

Unidentified Analyst

the within there's investment your just not that's stuff other there? in Solar Venture So bonds,

Dave Bjarnason

investments in things some have will mentioned. so the Yes, of you partnerships

equity in position Fort there. Spanish our in So is

the investments equity in there. fund South And share Ventures. is Our Solar then, our course, the is equity in lion's to attributable of Africa that of in the

Unidentified Analyst

lose Spanish If if gets have bonds, on it written that that million. So problem the with a could the happens, But correct? Is Fort that $XX is to we too. maximum you zero. down

Michael Falcone

which -- is The is on a through venture, of real are separate existing Not combination sales off value which bonds retail largely paid from which of through value taxes, assets. necessarily. estate revenues, and land are land the and tax the based

Unidentified Analyst

other from revenue with do that that of -- to Spanish to much How in have How support investment our nothing much us? goes Fort? bonds parties part third comes those the is from

Michael Falcone

are of paid Bass if Pro roughly so wrong, but Megan, by from the correct me people taxes sales I'm Shop? or like XX% bonds

Megan Sophocles

that's Yes, correct. Yes.

Unidentified Analyst

tenants are And Shops Pro Bass yours, of right?

Michael Falcone

Correct.

Unidentified Analyst

All Okay. right.

that's the So have that sounds biggest say problem like you you would the right -- now? most asset

Michael Falcone

area of forward, move concern is the equity say I yes. as in an Spanish Fort we would

Unidentified Analyst

appreciate you. else get All the answering. call. let it. right. somebody I on for Thank Thanks Okay. I’ll

Michael Falcone

Sure.

Operator

concludes This question-and-answer for Mr. Instructions] [Operator Falcone conference any to I'd remarks. over back turn session. like the to the final

Michael Falcone

you very joining long of all Thank shareholders. us at time I call the see for in Rocco. lot looking Thank Great. I afternoon. this list, you a hope, much,

we you are in So Thank all we in while unusual and our short-term, conservative shareholders. I the excited doing said as being in are this And your call, future well hope all we time. support very you appreciate long-term Bye. much. are the about of

Operator

concludes you, Thank This today's call. conference sir.

disconnect lines, You and may now your have a wonderful day.

MMA Capital (Trading Symbol(s) MMAC MMAC) 12 May 202020 Q1 Earnings call transcript