Annaly Capital Management Inc. · NYSE:NLY
Annaly Capital Management — Shareholder Meeting (May 2018)
28 slides from Annaly Capital Management's shareholder meeting presentation, May 23, 2018
Slide 1: 2018 Annual Meeting
2018 Annual Meeting May 23, 2018
Slide 2: Safe Harbor
Safe Harbor Forward-Looking Statements This presentation includes forward-looking statements. These forward-looking statements generally can be identified by phrases such as “will,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. Similarly,
Slide 3: Overview
Overview ANNALY:
Slide 4: Annaly Investment Thesis
Annaly Investment Thesis Annaly’s diversification, scale and liquidity, coupled with an established investment platform and enhanced by Annaly’s pending acquisition of MTGE, provide a unique investment opportunity in today’s markets Largest mREIT with pro forma Annaly’s operating expenses as a equit
Slide 5: Annaly's Opportunity and Differentiation
Annaly’s Opportunity and Differentiation Annaly is positioned to capitalize on macro and industry evolution Industry/Macro Factors Annaly’s Business Annaly Positioning Provides: Fed Exit Permanent Capital Solution Agency Efficient Shared Capital Model GSE Risk Sharing Residential Credit High M
Slide 6: Annaly is a Leading Diversified Capital Manager
Annaly is a Leading Diversified Capital Manager Agency Residential Credit Commercial Real Estate Middle Market Lending The Annaly Agency Group The Annaly Commercial The Annaly Residential The Annaly Middle invests in agency MBS Real Estate Group Credit Group invests in Market Lending Group collatera
Slide 7: Efficiency of Annaly's Operating Model
Efficiency of Annaly’s Operating Model Annaly continues to operate more efficiently than internally and externally managed mREITs Since our externalization in 2013, Annaly has significantly outperformed its mREIT peers with respect to operating expenditures as a percentage of assets and as a perce
Slide 8: Recent Accomplishments and Developments
Recent Accomplishments and Developments Annaly has achieved a number of significant strategic and organizational milestones over the past twelve months Industry Consolidation Market Leading Capital Raises(1) $425 Million $857 Million 6.50% Series G Fixed-to-Floating Rate Common Equity Follow-On Cumu
Slide 9: 3 Major Questions Have Been Answered
3 Major Questions Have Been Answered
Slide 10: Three Major Questions Answered
Three Major Questions Answered Against the current macroeconomic backdrop, there are three questions consistently raised by nearly all of our investors 1 How Will Annaly Be Impacted By Central Bank Policy And A Rising Rate Environment? 2 How Stable And Resilient Is The Annaly Model Over Time? 3 How
Slide 11: Increased Visibility of Central Bank Policy
1 Increased Visibility of Central Bank Policy Annaly has outperformed as market “paranoia” eases around central bank policy 1.8% 70% 1.6% 60% 1.4% 50% Cumulative Total Return (%) 46.0% Mid Point of Target Rate 1.2% 40% 38.2% 1.0% 30% 0.8% 20% 0.6% 10% 0.4% 0% 0.2% -10% 0.0% -20% Dec-'15 Mar-'16 Jun-
Slide 12: Demonstrated Resiliency – Scaled Diversification Enhances Stability
2 Demonstrated Resiliency – Scaled Diversification Enhances Stability As a result of the diversification strategy, Annaly has delivered consistent dividends and stable margins Dividend Stability(1) Annaly NIM ex-PAA (%)(2) 15% 140 1.60 % 12% 1.54% 1.54% 1.55% 1.53% 1.53% 1.51% 1.52% 10% 1.47% 1.50 %
Slide 13: Annaly's Dividend Stability is Unique Among Yield Investments
2 Annaly’s Dividend Stability is Unique Among Yield Investments In a universe of yield manufacturers, Annaly has maintained superior dividend stability 90% 30.0% 80% 80% 71% 25.0% % of Companies to Cut Dividend Since 2013 70% 60% 20.0% Current Dividend Yield 50% 48% 15.0% 40% 39% 39% 40% 11.5% 35% 1
Slide 14: Annaly is an Industry Leading Consolidator
3 Annaly is an Industry Leading Consolidator Since Annaly announced the acquisition of Hatteras Financial Corp. in April 2016, the number of mREITs decreased by 20% while market capitalization of companies remaining in the index grew over $12bn, or ~25%(1) Annaly’s Positioning in the Mortgage REIT S
Slide 15: Established Track Record of Consolidation
3 Established Track Record of Consolidation Annaly has demonstrated proven ability to opportunistically acquire companies Acquires Announcement Date 1/31/2013 4/11/2016 5/2/2018 Size(1) $872mm $1,498mm $900mm Highlights Increased Diversification Accretive to Earnings(2) Improved Operatin
Slide 16: Industry Leading Size and Scale
3 Industry Leading Size and Scale Annaly is an industry leader in size with scale across each of its businesses $14 #1 mREITs Today 4/8/2016 # of Cos(1) 32 40 $12 Mkt Cap $59,767 $47,613 ~25% increase in market cap with ~20% $10 fewer companies Market Cap ($bn) $8 $6 $4 #6 $2 #4 – STWD SLD ACRE SACH
Slide 17: Annaly's Performance and Market Differentiation
Annaly’s Performance and Market Differentiation
Slide 18: Annaly vs. Other Yield Sectors – Total Return
Annaly vs. Other Yield Sectors – Total Return On a short-term and long-term basis, Annaly has continued to outperform the mREIT industry as well as the broader market and other yield-oriented investment options Total Return Since: Past Three Diversification 2017 Years Strategy (1/1/17) (6/30/15) (12
Slide 19: Annaly vs. Other Yield Sectors – Relative Valuation
Annaly vs. Other Yield Sectors – Relative Valuation Annaly’s performance and yield profiles are superior to other yield sectors, at a much more attractive valuation Total Return(1) Yield(2) Price to Book(3) 75% 14.0% 5.00x 4.83x 67% 61% 12.0% 11.5% 50% 47% 4.00x 39% 10.0% 3.28x 30% 29% 8.2% 25% 3.00
Slide 20: Annaly vs. Other Yield Sectors – Beta
Annaly vs. Other Yield Sectors – Beta Annaly’s strong institutional sponsorship, countercyclical cash flows, superior trading liquidity, and beta of 0.55 help shield shareholders from the volatility of the broader marketplace 1.25 1.19 1.00 1.00 0.92 0.76 0.75 0.73 0.67 0.55 0.50 0.25 – Annaly Utili
Slide 21: Annaly is a Market Leading Yield Manufacturer
Annaly is a Market Leading Yield Manufacturer Of the top 20 dividend payers, Annaly has generated the most dividends per employee Market Cap Dividends Paid ($mm) Dividends Paid / Rank IPO Date Company Name 5/11/2018 LTM 3 years 5 years Employees Employee (LTM) 1 1997 Annaly Capital Management, Inc.
Slide 22: Valuation Measures and Operating Efficiency
Relative Value Comparison Highlights Valuation Discount Annaly trades at a relative discount to other yield producing sectors despite outperforming across operating and performance metrics Equity Select Consumer S&P 500 Utilities MLPs REITs Financials Staples Price to Book 0.99x 3.28x 2.16x 1.89x 1.
Slide 23: Annaly's Engagement Leads to Growth in Institutional Sponsorship
Annaly’s Engagement Leads to Growth in Institutional Sponsorship Annaly has proven its commitment to transparency, enhanced disclosure and continued shareholder engagement 170 72 100+ Institutional shareholders initiated new One-on-one meetings with investors in Participants at our inaugural Investo
Slide 24: Industry Leading Human Capital, Governance & Engagement
Industry Leading Human Capital, Governance & Engagement Annaly strategically manages all aspects of the business to best position the Company to achieve sustainable, long-term performance and value creation Human Capital Ownership Culture One of Annaly’s greatest assets and differentiators is its
Slide 25: Outperformance vs. the Market and Other Yield Sectors
Outperformance vs. the Market and Other Yield Sectors Annaly has outperformed all other yield options since its diversification strategy began in 2014 Cumulative Current Price 90.0% Total Return to Book Ratio Annaly 67.2% 0.99x S&P 500 61.4% 3.28x 75.0% mREITs 55.6% 1.02x Equity REITs 46.6% 2.16x 67
Slide 26: Appendix: Non-GAAP Reconciliations
Appendix: Non-GAAP Reconciliations
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations Unaudited, dollars in thousands except per share amounts To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, the Company provides non-GAAP financial measures. These measures should not be considered a substitute for,
Slide 28: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Unaudited, dollars in thousands except per share amounts For the quarters ended March 31, December 31, September 30, June 30, March 31, 2018 2017 2017 2017 2017 Premium Amortization Reconciliation Premium amortization expense $95,832 $203,951 $220,636 $251,084 $203,
Annaly Capital Management — Shareholder Meeting (May 2018) on 6ix