Onity Group Inc. · NYSE:ONIT
Onity — Ocwen Financial — Q4 2012 Earnings Presentation
17 slides from Onity's earnings presentation, Mar 6, 2013
Slide 1: Conference Call Fourth Quarter 2012 Earnings Release
Conference Call Fourth Quarter 2012 Earnings Release February 28, 2013 © 2013 Ocwen Financial Corporation. All rights reserved.
Slide 2: Forward-Looking Statement and Non-GAAP Measures
Ocwen Financial Corporation 2 FORWARD - LOOKING STATEMENT: Our presentation may contain certain forward - looking statements that are made pursuant to the Safe Harbor provisions of the federal securities laws . These forward - looking statements may be identified by a reference to a future period
Slide 3: Attendees
Ocwen Financial Corporation 3 William Erbey, Chairman Ronald Faris, President & Chief Executive Officer John Britti, Executive Vice President & Chief Financial Officer Attendees
Slide 4: Fourth Quarter & Full Year 2012 Highlights
Ocwen Financial Corporation 4 Fourth Quarter & Full Year 2012 Highlights Net income for Q4 2012 of $65.2 million and EPS of $0.47, up 27% over Q3 Full year 2012 Net income of $180.8 million, or $1.31 per share, up 70% over 2011 Record quarterly and annual revenue of $236.4 million and $845.0
Slide 5: Adjusted operating cash flow substantially exceeds Net income
Ocwen Financial Corporation 5 Adjusted operating cash flow substantially exceeds Net income Adjusted Operating Cash Flow * Adjusted cash flow from operations starts with Net cash provided by operating activities on Statement of Cash Flows and subtracts advance reductions used to pay down match - f
Slide 6: Strong operations and conservative accounting
Ocwen Financial Corporation 6 Strong operations and conservative accounting OPERATIONS - As advances are collected, it frees substantial cash in the form of equity supporting the financing TIMING DIFFERENCES Things we do not do that would accelerate earnings – Almost no “gain - on - sale” ea
Slide 7: Historical Growth in UPB
Ocwen Financial Corporation 7 Historical Growth in UPB Dollars in billions at year - end Pro forma $470 billion at end of Q1 2013 includes Ally subservicing book of $123 billion Ocwen has a solid track - record of growth with substantial opportunities for more $11 $43 $74 $204 $470 2000 2005 2010
Slide 8: Earnings Growth Opportunities
Ocwen Financial Corporation 8 Earnings Growth Opportunities Legacy Ocwen Portfolio Homeward and ResCap Bank divestiture and other opportunities Built - in earnings tail Long - term opportunities 4Q 2012 2013 - 2014 Next 2 - 3 years Another 3 - 5 years Beyond 7 years • $127 Billion • $470 Billion •
Slide 9: Delinquent Loan Activity
Ocwen Financial Corporation 9 Delinquent Loan Activity Source: Fannie Mae, Freddie Mac, FHFA, Bloomberg, Mortgage Bankers Association, and Green Street Advisors. 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Last 4 Year Average Oct - 12 REO In Foreclosure Process 60+ Days Past Due Number of Delinquent Loans and REO
Slide 10: Normalized Pre-Tax Profit
Ocwen Financial Corporation 10 Normalized Pre - Tax Profit Year 1 indexed to 100 100 153 139 99 71 0 20 40 60 80 100 120 140 160 180 Year 1 Year 2 Year 3 Year 4 Year 5 Normalized pre - tax profit on Ocwen MSR acquisitions typically rise and then fall gradually over time Note: Normalized Pre - tax
Slide 11: Historical Performance
Ocwen Financial Corporation 11 Historical Performance 360 496 845 2010 2011 2012 Total Revenue ($ million) 38 78 181 2010 2011 2012 Net Income ($ million) 122.4 188.8 289.4 2010 2011 2012 Normalised pre - tax income ($ million) 0.36 0.71 1.31 2010 2011 2012 Diluted EPS
Slide 12: Delinquencies fall through loss-mitigation efforts reducing advance levels and expenses
Ocwen Financial Corporation 12 Delinquencies fall through loss - mitigation efforts reducing advance levels and expenses Advances as a % of UPB by Portfolio (1) 1 - Includes advances that are not on Ocwen’s books due to transfer to HLSS Delinquency Percentage (90+ Days) by Portfolio 18% 23% 28% 33
Slide 13: Ocwen has modified more loans while maintaining lower re-default rates
Ocwen Financial Corporation 13 Ocwen has modified more loans while maintaining lower re - default rates Modifications Outstanding as % of Portfolio and % of Modifications 60+ days late for Subprime Private Securities Source: BlackBox Logic Ocwen Mods Outstanding, 54.2% Ocwen Mods 60+, 26.9% Non -
Slide 14: Ocwen outperforms other sub-prime servicers in generating cash-flow from borrowers
Ocwen Financial Corporation 14 Ocwen outperforms other sub - prime servicers in generating cash - flow from borrowers Source: BlackBox Logic Percentage of loans in subprime PLSs that have made 10 or more payments in the past 12 months – December 2012 Data Making all 12 payments 60.0% 54.0% 72.9% 6
Slide 15: Homeowner's One
Ocwen Financial Corporation 15 Homeowner’s One Greater transparency Faster resolutions Less paperwork - consolidated package for all options More money available for relocation assistance Customers have greater ability to choose options and timelines that fit their circumstances Stream
Slide 16: Growth in normalized pre-tax income of 32% from Q4 11
Ocwen Financial Corporation 16 Growth in normalized pre - tax income of 32% from Q4 2011 Normalized Pre - Tax Income $ in Millions Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Income before income taxes (GAAP) $18.5 $30.1 $70.2 $80.7 $76.5 Normalization Items: 1 Acq Transaction Costs 31.3 16.1 1.8 - 2.
Slide 17: Shareholder Relations
Ocwen Financial Corporation 17 Shareholder Relations Information About Ocwen Ocwen Financial Corporation is a leading provider of residential and commercial loan servicing and special servicing. Utilizing advanced technology and world-class training and processes, we provide solutions that make ou