Executive Summary

Q4 2024 capped a reset year: management executed a $55.8M UPB bulk loan sale for ~$36.1M cash (~65% net realization) to retire 2024 notes and recycle capital, but loss recognition drove a large GAAP quarterly loss and depressed FY results .
Revenues trended lower through 2H: Q4 implied revenue of ~$10.77M (FY $57.5M less 9M $46.74M) vs $14.79M in Q3 and $15.15M in Q2; EPS deteriorated to an S&P-reported Q4 actual of -$0.360 vs Q3 -$0.13 and Q2 -$0.09, reflecting bulk-sale losses and elevated credit costs *.
Consensus context: Q4 revenue missed S&P consensus ($14.49M*) on implied actual ~$10.77M; EPS beat less-negative than expected (-$0.360* vs -$0.468*) as loss timing and tax/share count effects differed from models [GetEstimates]*.
Balance sheet repositioned: total debt reduced (retired $58.3M unsecured 2024 notes), YE book value at $2.64/share, and a new $50M Needham Bank revolver re-established committed liquidity; nonperforming loans declined to ~$102.9M with foreclosures in process ~$36.3M UPB .
Potential stock catalysts: further NPL/REO resolutions (management targets one-off asset sales), stabilization of book value, and dividend cadence (common dividend maintained at $0.05 in March) as accretive capital is sourced and origination pipeline re-opens .

What Went Well and What Went Wrong

What Went Well

Portfolio stabilization and liquidity: Bulk sale of $55.8M UPB NPLs yielded $36.1M cash to retire 2024 notes, reduce uncertainty, and recycle capital; management framed this as the “most direct path to stabilize” the portfolio and regrow the dividend .
Capital structure actions: Retired $58.3M of unsecured notes in 2024 and reduced other debt; entered a new $50M Needham revolving facility to support funding needs and resolved prior covenant issue .
Diversification and fee income potential: Expansion of Urbane construction services and Shem Creek multifamily partnerships (20% manager stake; $48.9M across 28 projects) providing double‑digit returns and expected fee contributions when lending resumes .

What Went Wrong

Credit costs and realized losses: 2024 included ~$54M total noncash CECL/valuation and realized losses (notably ~$22M realized on Q4 loan sale), materially dragging earnings; FY net loss to common was -$43.9M .
Revenue pressure from muted originations: Company revenue fell YoY; quarterly revenues trended down Q2→Q3→implied Q4 as origination fees remained constrained by capital discipline and risk environment .
Elevated problem assets: YE nonperforming loans were ~$102.9M (down from Q3) with $36.3M in foreclosure; a large Naples, FL loan remained a key headwind with ~$450k/month nonaccrual income drag .

Financial Results

Quarterly P&L trends (oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Revenue ($USD Millions)	$15.146	$14.785	~$10.765 (FY $57.500 − 9M $46.735)
GAAP Diluted EPS ($)	$(0.09)	$(0.13)	$(0.360)*
Net Income Margin %	-27.2% (−$4.124M / $15.146M)	-41.6% (−$6.146M / $14.785M)	~−345.9% (−$37.252M / ~$10.765M)

Notes:

Q4 revenue is implied from FY minus 9M results reported by the company .
Q4 net loss to common implied as FY (−$43.875M) minus 9M (−$6.623M) = −$37.252M .
Asterisked values are from S&P Global estimates feed. Values retrieved from S&P Global.*

Consensus vs Q4 actuals

Metric	Q4 2024 Estimate	Q4 2024 Actual	Delta
Revenue ($USD)	$14,487,750*	~$10,765,000	Miss ~$3.72M
EPS ($)	$(0.4675)*	$(0.3597)*	Beat +$0.108

Portfolio/KPIs (structural)

KPI	Q2 2024	Q3 2024	Q4 2024
Loans Outstanding (count)	262	226	157
Gross Principal in Loans Held for Investment ($M)	—	$477.1	$377.0
Weighted Avg Contractual Rate	12.8%	13.1%	12.53%
Nonperforming Loans (UPB, $M)	~$106.9	~$147.0	~$102.9
Foreclosures in Process (UPB, $M)	~$73.1	~$81.8	~$36.3
Allowance on Loans (Total, $M)	~$14.4	~$20.2	~$18.5 (total; ~$6.1 specific to NPL/foreclosure)
Book Value / Share ($)	~$3.76 (as of Q2)	—	$2.64 (YE)
Unfunded Commitments ($M)	—	—	~$49.9 (loans) + ~$4–4.5 (Shem funds)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Common Dividend	Q1 2025	$0.05 declared Nov 2024 for Q4 timing	$0.05 declared for March 31, 2025 payment; aligning cadence with preferred (Mar/Jun/Sep/Dec)	Maintained / cadence aligned
Liquidity / Facility	2025	Prior Needham facility with covenant issue noted	New $50M Needham Bank revolver in place, covenant matter resolved	Improved access
Debt Maturities	2025	2024 maturities addressed via loan sale and cash	Confident to repay Sept 2025 unsecured notes from cash, facility, and portfolio cash flows	Clarified plan

No formal revenue/EPS/capex guidance provided.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
Credit costs/CECL	Added $8.5M CECL; allowance ~3% UPB; focus on asset-by-asset reserves	Added $8.1M CECL; allowance ~4.2% UPB; spike tied to Naples CRE	2024 total noncash CECL/valuation ~$32M; realized ~$22M from Q4 loan sale	Elevated but stabilizing post bulk sale
Bulk loan sale	Not yet launched	Initiated $78.8M UPB pool, ~70% recovery targeted	Executed $55.8M UPB sale; ~$36.1M proceeds (~65% net)	Completed; focus now on one-off resolutions
Liquidity/capital	Defensive posture; $30M cash mid‑Aug; avoiding expensive debt; dividend trimmed	Plan to use loan sale, cash, facility for Dec 2024 notes	Retired $58.3M 2024 notes; new $50M Needham facility; confident on Sept 2025 notes	Improved
Diversification (Urbane/Shem)	Emphasized underwriting rigor; REO dispositions profitable	20% Shem manager stake; workforce housing focus	$48.9M invested across 28 Shem projects (double‑digit yield); Urbane fees 1–2% of construction costs	Strategic pillar
Dividend policy	Reduced to preserve liquidity	$0.05 declared (Nov) and may remain near‑term	$0.05 declared Mar 2025; aligning timing each quarter	Stable but low

Management Commentary

“2024 was a difficult year… These challenges increased uncertainty around project completions… Our nonperforming loan book grew… We also incurred approximately $53.8 million noncash losses from CECL, valuation allowances and realized losses on loan sales.” — John Villano, CEO .
“We closed on the termination of our old and replace them with our new credit facility with Needham Bank… provides for up to $50 million of committed available liquidity… Our low leverage compared to our peers gives us stability… book value was $2.64 per share.” — John Villano .
“Operating and other costs totaled $97.1 million… ~$32 million in unrealized losses… and ~$22 million of realized losses from the fourth quarter loan sale.” — Jeff Walraven, Interim CFO .
“We are confident our current business assets, existing credit facilities and operations will generate enough cash to comfortably satisfy [the] notes [due Sept 2025] when they become due.” — John Villano .

Q&A Highlights

Nonperforming/foreclosure status: YE NPLs ~$102.9M; ~$36.3M in foreclosure; ~$18.5M total reserves with ~$6.1M specific to NPL/foreclosure .
Loan sale specifics: 32 loans; $55.8M UPB; ~$36M proceeds; ~65% net realization; market activity handled by a third party; future focus on individual asset resolutions .
Unfunded commitments: ~$49.9M on loans plus ~$4–4.5M to Shem Creek funds, funding ratably over 2025 and into early 2026 .
REO monetization: Expect quicker disposals now that title control achieved; inbound interest noted; pursuing select JV/equity alternatives via Urbane .
Naples, FL exposure: Significant project with permitting and hurricane delays; one unit sold ($5.3–$5.5M) and others marketed; nonaccrual impacts earnings (~$450k/month) .

Estimates Context

Q4 revenue missed S&P consensus ($14.49M*) given implied company actual ~$10.77M; EPS beat with a less negative outcome than modeled (actual −$0.3597* vs est −$0.4675*) [GetEstimates]* .
With bulk sale losses and elevated credit charges recognized, Street models may need to reset FY run-rate for 2025 toward lower origination/fee income near term, then rebuild as liquidity and capital sourcing improve (management plans selective origination and one-off NPL/REO resolutions) .

Asterisked values are from S&P Global. Values retrieved from S&P Global.*

Key Takeaways for Investors

The reset is largely executed: bulk sale completed, 2024 notes retired, and a $50M revolver restored liquidity—positioning SACH to resolve remaining NPLs via one‑off actions and restart measured growth when capital is accretive .
Near-term P&L remains constrained: lower origination/fee income and nonaccruals (notably Naples) weigh on quarterly earnings even as portfolio risk normalizes; dividend at $0.05 maintained while preserving liquidity .
Book value stabilized but lower ($2.64); management “stress tested” BV and views most material losses/reserves as behind—monitor for additional reserve releases or gains on REO/NPL exits .
Watch cadence of asset resolutions: YE NPLs ~$102.9M; as foreclosures complete and assets are sold, cash conversion should be instantly accretive to cash flow/EPS, aiding dividend capacity .
Diversified cash flows are a buffer: Urbane service fees and Shem Creek double‑digit returns offer non‑lending income streams pending a healthier origination window .
2025 debt plan credible: management expects to satisfy Sept 2025 notes via cash, Needham facility, and portfolio cash flows—reducing refinancing risk .
Setup for estimate revisions: Q4 realized losses drove a big miss on revenue vs consensus (on implied actual), but EPS beat; forward estimates likely pivot to a lower base with upside tied to NPL/REO monetization pace and re‑ramp of origination fees [GetEstimates]* .

Sources: Company press releases, 8‑K filings, and Q4 2024 earnings call transcript as cited above. Asterisked figures from S&P Global. Values retrieved from S&P Global.*

Sachem Capital Corp. (SACH)·Q4 2024 Earnings Summary