AFC Gamma, Inc. (NASDAQ:AFCG) Q1 2024 Results Conference Call May 9, 2024 10:00 AM ET

Company Participants

Gabriel Katz - Chief Legal Officer
Daniel Neville - Chief Executive Officer
Robyn Tannenbaum - President
Brandon Hetzel - Chief Financial Officer

Operator

Good morning, and welcome to AFC Gamma's First Quarter 2024 Earnings Call [Operator Instructions]. As a reminder, this call is being recorded.

I would now like to turn the call over to Gabriel Katz, Chief Legal Officer. Please go ahead.

Gabriel Katz

Good morning, and thank you all for joining AFC Gamma's earnings call for the quarter ended March 31, 2024, I'm joined this morning by Daniel Neville, our Chief Executive Officer; Robyn Tannenbaum, our President; and Brandon Hetzel, our Chief Financial Officer. Before we begin, I would like to note that this call is being recorded. Replay information is included in our April 10, 2024 press release and is posted on the Investor Relations portion of AFC Gamma's website at afcgamma.com, along with our first quarter earnings release and investor presentation. Today's conference call includes forward-looking statements and projections that reflect the company's current views with respect to, among other things, anticipated market developments, portfolio yield and financial performance in 2024 and beyond. These statements are subject to inherent uncertainties in predicting future results. Please refer to AFC Gamma's most recent periodic filings with the SEC for certain conditions and significant factors that could cause actual results to differ materially from these forward-looking statements and projections. During this call, we will refer to distributable earnings, which is a non-GAAP financial measure. Reconciliations to net income, the most comparable GAAP measure can be found in AFC Gamma's earnings release and investor presentation available on AFC Gamma's Web site. The format for today's call is as follows. Dan will provide an overview of our first quarter 2024 performance as well as an update on our portfolio. Robyn will then provide an update on the anticipated spinoff of our commercial real estate portfolio and Brandon will conclude with a summary of our financial results. We will then open the lines for Q&A. With that, I will now turn the call over to our CEO, Dan Neville.

Daniel Neville

Thank you, Gabe. Good morning, and welcome to AFC's earnings call for the quarter ended March 31, 2024. I would like to thank everyone for joining us today to discuss our results. For the first quarter, AFC generated distributable earnings of $0.49 per basic weighted average share of common stock. As a reminder, distributable earnings is the primary metric the Board considers when declaring quarterly dividends. The Board of Directors declared a fourth consecutive $0.48 dividend which was paid on April 15, 2024, to shareholders of record as of March 31, 2024. Since going public, we have generated distributable earnings that met or exceeded our dividend each quarter and paid out $6.02 in dividends per share. We are increasingly optimistic about the outlook for the cannabis industry. The industry has seen expansion fueled by increasing state-by-state legalization and growing consumer acceptance. According to BDSA, the US cannabis industry is projected to continue its upward trajectory with sales hitting $32 billion in 2024 and growing to $46 billion by 2028. We continue to see exciting developments at both the state and federal level. Just last week, the Attorney General put forth a proposal to reclassify cannabis from Schedule I to Schedule III. Once enacted, this change would bring significant benefits to the US cannabis industry, including the elimination of a punitive tax regime for cannabis and increased investment in this space. From a lender's perspective, we expect that the elimination of 280E will enhance the cash flow and credit profile for our existing borrowers and expand our pipeline of potential borrowers.