Resource America, Inc. (NASDAQ:REXI) Q4 2014 Earnings Conference Call - Final Transcript

Mar 05, 2015 • 08:30 am ET


Resource America, Inc. (NASDAQ:REXI) Q4 2014 Earnings Conference Call - Final Transcript


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Good day, ladies and gentlemen and welcome to the Q4 and year ending 2014 Resource America earnings conference call. My name is Nigel and I will be your operator for today. At this time, all participants are on listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this call is being recorded for replay purposes.

I would like to turn the call over to Mr. Jonathan Cohen, President and CEO of Resource America. Please proceed, sir.

Jonathan Cohen

Thank you. Thank you for joining the Resource America earnings conference call for the fourth quarter and year ended December 31, 2014. This is Jonathan Cohen, President and CEO of Resource America. Joining me today are my colleagues, Tom Elliott, our CFO, Alan Feldman, who heads our Real Estate Equity business; and Purvi Kamdar, our VP of IR, who I will now ask to read the Safe Harbor statement.

Purvi Kamdar

Thank you, Jonathan. (Forward-Looking Cautionary Statements). And with that, I will turn it back to Jonathan.

Jonathan Cohen

Thanks, Purvi. Now, to our earnings, Resource America's business continued to grow nicely and contribute to earnings. Although our fourth quarter was relatively weak in my opinion from an earnings perspective as we implemented a cautious approach to new acquisitions in our REITs which lowered fees. Nonetheless, from an operational and future building perspective, we are very pleased with where we are and where we will be by the end of this year. We had a solid year which left us very well positioned for 2015 and beyond. We earned adjusted net income of $12.1 million or $0.54 per common share diluted for the year and $2.1 million or $0.09 per common share diluted for the fourth quarter.

In the quarter ended December 31, 2014 we earned $2.8 million of adjusted cash earnings from operations bringing our total adjusted cash earnings from operations for 2014 to $18.3 million as compared to $15.7 million for 2013, a 17% increase. We generated this income and cash flow even as our second non-traded REIT was just beginning to be offered.

Now, some guidance and explanation. We expect to earn adjusted after-tax income of approximately $0.75 during 2015. These earnings will be weighted towards the second of the year as fundraising continues to increase and acquisitions start to increase in the second quarter. Just a reminder, we start earning money form our non-traded REITs once they invest to raise capital. This ramp in our earnings should leave us with adjusted earnings of approximately -- of over $0.25 in the fourth quarter of 2015 and a run rate of approximately $1 of adjusted earnings per share annualized.

With earnings comes cash and our cash build will accelerate starting in the second quarter. Not only will we be building cash through earnings and not paying federal taxes due to our NOLs, but we also now expect our real estate receivable due from old funds to start to pay down aggressively. This optimism about our business starts