Executive Summary

Q4 2024 GAAP net loss related to common stockholders was $(49.4)M or $(0.83) per share, while Distributable Earnings (DE) available to common stockholders were $46.5M or $0.78 per share; net interest income improved to $12.7M as hedge income offset higher funding costs .
Book value per common share fell to $19.07 from $20.76 in Q3; total economic return for the quarter was (4.67)%, reflecting MBS mark-to-market losses partially offset by swap gains and dividends .
Liquidity remained robust at $608.0M at year-end (>$802M as of Feb 10 update), with the Agency MBS portfolio at $12.4B and implied leverage at ~7.95x; management raised $136.2M via ATM in Q4 to fund attractive ROE deployments .
Dividend maintained at $0.24 per month, with February and March 2025 declared; management expects earnings available for distribution to exceed the Q1 dividend rate, a positive for dividend coverage and stock narrative .
S&P Global consensus estimates were unavailable at time of analysis due to data-access limits; we cannot assess beat/miss against Street for Q4 and will update when available.

What Went Well and What Went Wrong

What Went Well

Improved core earnings power: net interest income rose to $12.7M, with economic net interest income of $61.1M and spread at 1.53% as hedge income (swaps/futures) supported earnings amid higher liability costs .
Capital deployment and expected coverage: management raised ~$136.2M via ATM (mild BV dilution of ~$0.02/share) and stated “We expect earnings available for distribution to exceed our Q1 dividend rate” .
Constructive carry and ROE: CEO highlighted attractive levered ROE of ~18%–19% on production/premium coupons, positioning ARR as a buyer into spread weakness with a view for more stable spreads in 2025 .

What Went Wrong

Book value pressure from MBS marks: BVPS declined to $19.07 from $20.76 QoQ; investment losses on MBS of $(404.1)M were only partially offset by swap gains of $287.3M and futures gains of $41.6M .
Earnings mix and spread compression: DE/share declined to $0.78 from $1.00 in Q3, and the economic net interest spread compressed to 1.53% from 2.00% in Q3 amid market volatility and funding costs .
Estimate context unavailable: we could not retrieve S&P Global consensus to benchmark EPS/DE/share vs Street at publication time; directional stock reaction catalysts hinge on confidence in dividend coverage and BV stabilization rather than clear beats/misses.

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
GAAP Net Income (Loss) per share ($)	$(1.05)$	$1.21$	$(0.83)$
Distributable Earnings per common share ($)	$1.08$	$1.00$	$0.78$
Net Interest Income ($MM)	$7.0$	$1.8$	$12.7$
Book Value per common share ($)	$20.30$	$20.76$	$19.07$
Economic Net Interest Spread (%)	$2.05%$	$2.00%$	$1.53%$
Common Dividends per share ($/quarter)	$0.72$	$0.72$	$0.72$

KPIs and Balance Sheet Levers

KPI	Q2 2024	Q3 2024	Q4 2024
Liquidity ($MM)	$630.2$	$667.4$	$608.0$
Agency MBS portfolio (period-end, $B)	$8.9$ (plus $1.2B TBA)	$12.4$	$12.4$
Repurchase Agreements, net ($B)	$7.1$	$10.2$	$10.7$
Debt-to-Equity (repurchase/equity, x)	6.09x	7.74x	7.87x
Implied Leverage (x)	7.44x	8.18x	7.95x
Repo with BUCKLER (% of repo)	56.5%	41.4%	45.7%
Interest Rate Swaps Notional ($B)	$8.3$	$6.7$	$7.2$

Drivers of Q4 BV/Earnings

Investment losses on MBS $(404.1)M; UST gains $29.2M; swap gains $287.3M; futures gains $41.6M; NII $12.7M; operating expenses after waived fees $(11.5)M .
Common dividends paid $(42.9)M; common issuance +$136.8M supporting equity base and portfolio growth .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Common dividend per share ($/month)	Jan vs Feb/Mar 2025	$0.24 declared for Jan 30, 2025 pay date	$0.24 declared for Feb 27 and Mar 27, 2025	Maintained
Earnings Available for Distribution vs Dividend	Q1 2025	Not previously stated	“We expect earnings available for distribution to exceed our Q1 dividend rate.”	New positive color
Book Value per share (update)	As of Feb 10, 2025	$19.07 at 12/31/24	Estimated $19.18 as of Feb 10	+$0.11 intra-Q update
Leverage stance	2025	Elevated (Q3 implied 8.18x)	Comfortable at ~7.9x; potential increase contingent on clarity re: GSE reform/QT; reduction not base case	Maintained stance with contingencies

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2 and Q-1)	Current Period (Q4 2024)	Trend
Macro rates/volatility	Econ NIM spread 2.05% (Q2) → 2.00% (Q3), reflecting MBS spread moves and hedging	Management views volatility declining; expect range-bound rates with constructive MBS spreads	Carry supportive; less spread volatility
ROE and deployment	Not quantified previously	Levered ROE ~18–19% on production/premium coupons; ~$2B added YTD; EAD expected > Q1 dividend	Positive
GSE reform/regulatory	—	Headline risk but not imminent; Ginnie exposure helps; market impact measured via Ginnie-Fannie swaps	Monitor risk
Hedging mix/swap spreads	Swaps notional $8.3B (Q2); $6.7B (Q3)	Hedge book ~25% Treasuries/75% OIS-SOFR swaps; swap spreads widened >10 bps YTD; balanced positioning	Balanced/diversified
Leverage & funding	Implied leverage 7.44x (Q2) → 8.18x (Q3)	Implied 7.95x; leverage “somewhat above peers,” comfortable; repo abundant at SOFR + mid-teens; 15–20 counterparties; 40–60% with BUCKLER	Stable
Portfolio composition	Portfolio scaled from $8.9B (+$1.2B TBA) to $12.4B by Q3	100% Agency MBS; overweight 5.5%/6% coupons; tactically increased TBA rolls as spec pay-ups richen	Tilt to higher coupons; tactical TBA

Management Commentary

“ARMOUR's Q4 GAAP net loss related to common stockholders was $49.4 million or $0.83 per common share... Distributable earnings available to common stockholders was $46.5 million or $0.78 per common share.” — CFO Gordon Harper .
“Our... steeper yield curve and historically attractive MBS spreads are currently generating approximately 150 bps positive versus cash... levered ROE... 18% to 19% on the production and premium coupon MBS.” — CEO Scott Ulm .
“We expect earnings available for distribution to exceed our Q1 dividend rate.” — Desmond Macauley, PM .
“We've seen volatility decline... We expect this volatility to continue to grind lower with the Fed on hold... favorable for the MBS market.” — Sergey Losyev .
“The repo market... has since returned to a more typical SOFR plus 15 bps repo spread... funding... remains plentiful and competitively priced.” — Desmond Macauley .

Q&A Highlights

Volatility and returns: Management expects lower rate/spread volatility to support consistent ROE; near-term risks include geopolitical factors, Treasury supply, evolving inflation data .
ROE realization: ARR is deploying at the cited ~18–19% ROE on new assets; sustainability depends on future spread conditions .
GSE reform risk: Seen as a “when, not if” process with headline risk; base case is not an abrupt exit, with limited pricing-in currently; Ginnie-Fannie swap monitoring suggests muted impact so far .
Leverage stance: Comfortable at current levels (somewhat above peers); would consider increasing with clearer visibility on GSE reform/QT; leverage reduction not base case barring adverse curve moves .
Funding/hedging: Repo conditions stable at SOFR + mid-teens; hedge mix ~75% swaps/25% Treasuries to balance swap-spread risk .

Estimates Context

We attempted to retrieve S&P Global consensus EPS and revenue estimates for Q4 2024 and prior quarters, but data were unavailable due to S&P request limits at the time of analysis. As a result, we cannot assess beat/miss versus Street for Q4 2024 and will update when access is restored.

Key Takeaways for Investors

Dividend coverage improving: management expects EAD to exceed the Q1 dividend; February/March dividends reaffirmed at $0.24/month, supporting income stability near term .
Book value stabilization watch: BVPS ended Q4 at $19.07 with an updated estimate of $19.18 on Feb 10; narrower spread volatility and constructive carry are key to BV resilience .
Carry-led ROE attractive: ARR is deploying capital at ~18–19% levered ROE in higher-coupon Agency MBS, a potential driver of DE and dividend sustainability if spreads remain stable .
Risk framework: Headline GSE reform risk, inflation path, and Treasury supply are the primary exogenous risks; management’s hedging mix and liquidity provide flexibility if spreads widen .
Funding remains supportive: Repo markets are liquid at SOFR + mid-teens with diversified counterparties (including BUCKLER), reducing funding tail-risk as portfolio scales .
Watch for tactical positioning shifts: Management is tactically using TBA rolls given rich specified pool pay-ups, with an overweight to 5.5%/6% coupons—beneficial if rates remain range-bound .
Near-term trading implication: The narrative pivots on dividend coverage and incremental BV updates; clarity on GSE reform/QT and continued stable repo/hedge economics would be constructive for sentiment .

Sources: Q4 2024 press release and 8‑K (including Reg G reconciliations and KPI tables) ; Q4 2024 earnings call transcript ; Q3 2024 press release ; Q2 2024 press release ; Dividends and guidance press releases .

Armour Residential REIT, Inc. (ARR)·Q4 2024 Earnings Summary