Earnings Call Excerpt
Newcastle Investment Corp. (NCT)
Q2 2009 Earnings Call
August 7, 2009 1:00 pm ET
Executives
Nadean Finke - Investor Relations
Ken Riis - President and Chief Executive Officer
Brian Sigman - Chief Financial Officer
Analysts
Matthew Howlett - Fox-Pitt Kelton
Joshua Barber - Stifel Nicolaus
Presentation
Operator
Good afternoon. At this time, I would like to welcome everyone to the Newcastle second quarter earnings call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. (Operator Instructions).
I would now like to turn the call over to Nadean Finke. Please begin.
Nadean Finke
Thank you, Christie. Good afternoon, everyone. I’d like to welcome you all to Newcastle’s second quarter earnings conference call.
Joining us today are Ken Riis, our CEO and President; and Brian Sigman, our Chief Financial Officer. I’d also like to point out that statements today which are not historical facts maybe forward-looking statements. Our actual results may differ material from the estimates or expectations in any forward-looking statements.
These statements represent the company’s beliefs regarding events that, by their nature, are uncertain and outside the company’s control. So you should not place undue reliance on any of these statements. I would encourage you to review the forward-looking statements disclaimer in our quarterly earnings release including the recommendation to review the risk factors contained in our annual and quarterly reports filed with the SEC.
Now I’d like to turn the call over to Ken Riis. Ken?
Kenn Riis
Thanks, Nadean. Good afternoon, everyone, and thank you for joining our 2009 second quarter earnings call. We had a good second quarter. We are now in a stable liquidity position with $69 million of cash and $68 million of non-agency recourse debt.
As you all know, our goal since January 2008 has been to deleverage our balance sheet and eliminate our reliance on third-parties to refinance maturing short-term debt. Given the difficult operating environment over the past two years, we worked hard to improve our position. This quarter we achieved that goal. We executed on plan and are now in a stable liquidity position as we can now meet our non-agency recourse obligations with our cash on hand. Obviously, our work is not done yet. We will continue to focus on increasing our liquidity and maximizing cash generated from our investment portfolio.
As it relates to the second quarter activity, there are few things I want to highlight. First, we purchased $30 million of our CDO liabilities at a cost of $2.4 million, an activity we will continue to pursue in order to retire the debt and lower interest expense. Second, we eliminated a $51 million construction loan funding obligation, freeing up $38 million of unrestricted cash on our balance sheet and $13 million of restricted cash in our CDOs. And finally, we generated $20 million of operating cash flow net of expenses as we continue to receive material cash flows from five of our seven CDOs.
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