Sachem Capital Corp. (NYSE MKT:SACH) Q3 2019 Earnings Conference Call - Final Transcript

Nov 15, 2019 • 11:00 am ET

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Sachem Capital Corp. (NYSE MKT:SACH) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
David Waldman

looking statements attributable to the company are expressly qualified in their entirety by these cautionary statements as well as others made in this conference call. You should evaluate all forward-looking statements made by the company in the context of these risks and uncertainties.

With that, I'll now turn the call over to John Villano. Please go ahead, John.

Executive
John L. Villano

Thank you, David, and thanks to everyone for joining us today. The past two quarters have been a transformative period for our company. I am pleased to report the restructuring and recapitalization of our balance sheet is working as planned. Revenue for the third quarter of 2019 increased 10.7% to $3.4 million, and net income for the third quarter of 2019 increased 4.7% to $2.1 million compared to the same period last year.

Sequentially, our earnings per share for the third quarter was $0.10 compared to $0.06 per share for the second quarter of 2019. We believe these improved results validate our strategy to restructure the balance sheet, as we have started to deploy the capital we have raised. Importantly, we finished the quarter with $11 million of cash on our balance sheet, and now have approximately $40 million of capital available as a result of our recent closed note offering. We are well capitalized, with a much stronger balance sheet and flexibility to execute on our strategy.

From a macro perspective, we are seeing more competition in the market, with low rates, high loan to values, aggressive pricing, and generally less stringent lending criteria. That said, we're not going to chase these loans as we continue to be highly selective as we review lending opportunities. Now with more capital, we're putting more muscle into our marketing engine. The first half of the year was somewhat constrained, as you know, due to capital restrictions. At the same time, we're looking at opportunities outside our traditional geographic focus where we see good borrowers and attractive loan to value prospects.

Overall, the demand for our products and services remains strong, giving us tremendous confidence in terms of revenue, growth and profitability, as well as strength of our portfolio. We have built a highly scalable business model to drive increased cash flow and profitability which will continue to drive top line growth in the years ahead. I'd like to take a moment to provide a quick recap on our restructuring activities during the year and why we believe we are so well positioned.

First, we completed two separate issues of unsecured, unsubordinated five-year term fixed rate notes, one in the aggregate principal amount of $23.7 million at 7.125% and one in the aggregate principal amount of $30 million at 6.875%. We also raised $32 million in gross proceeds from the sale of equity securities significantly strengthening our balance sheet. The additional equity coupled with our bond offerings allowed us to replace our secured variable rate $35 million revolving credit facility and provided us a war chest of capital to fund new loans.

By replacing our