Rithm Capital Corp. · NYSE:RITM
Rithm Capital — Q4 2022 Earnings Presentation
34 slides from Rithm Capital's earnings presentation, Feb 8, 2023
Slide 1: Quarterly Supplement Q4 and Full Year 2022
Rithm Capital Quarterly Supplement Q4 and Full Year 2022 Q4 2022 Quarterly Supplement
Slide 2: Disclaimers
Disclaimers IN GENERAL. This disclaimer applies to this document and the verbal or written comments of any person presenting it. This document, taken together with any such verbal or written comments, is referred to herein as the “Presentation.” FORWARD-LOOKING STATEMENTS. Certain statements regardi
Slide 3: Rithm Capital Overview
Rithm Capital Overview Rithm invests in a diversified portfolio of assets and operating businesses across the financial services sector Company Overview • Founded in 2013 with a ~10-year track record of growth and returns for shareholders ‒ 164% total economic return since inception(1) ‒ Decades of
Slide 4: Financial Highlights
Financial Highlights Rithm generated strong performance in a market defined by high inflation, rising rates and significant volatility Q4 2022 Full Year 2022 GAAP Net Income: GAAP Net Income: $81.8 Million / $0.17 per Diluted Share(1) $864.8 Million / $1.80 per Diluted Share(1) Earnings Available fo
Slide 5: FY 2022 Business Highlights
FY 2022 Business Highlights 2022 was a transformational year for our business as we transitioned from New Residential to Rithm ✓ Drives synergies, cost savings, and new Internalized Manager investment opportunities(1) 2022 ✓ Further aligns Rithm with its shareholders ✓ Enhances Rithm’s position as a
Slide 6: The Evolution of Rithm
The Evolution of Rithm Our company has evolved from being solely a holder of mortgage servicing rights to a true manager of assets and investments 2013 2013 - 2017 2018 2019 2021 2022 2023+ Public Spin- Grow and Entry into Grow Assets Scale Internalization, Drive Growth Off of Scale Operating and Op
Slide 7: Rithm 2.0
Rithm 2.0 Rithm is focused on expanding its private capital business as it evolves into an alternative asset manager(1) Rithm actively manages operating companies and a portfolio of yield-oriented Driving growth through private assets totaling $6.9bn of equity capital Operating Companies Investment
Slide 8: Economic Landscape
Economic Landscape The state of the economy remains top of mind following a year highlighted by historically high inflation and significant Fed intervention • Economic data will be a major focus as we move further into 2023 and closer to the end of the Fed’s hiking cycle(1) • Significant spread wide
Slide 9: Rithm's 2023 Playbook
Rithm’s 2023 Playbook(1)(2) Rithm is positioned to drive continued growth and performance in 2023(1) Investment Mortgage Servicing Rithm Private Genesis Capital Adoor (SFR) GreenBarn & Portfolio & Origination Capital Commercial Real Estate • Robust pipeline • Leverage right- • Expand Rithm’s • Empha
Slide 10: Q4'22 Segment Performance
Q4’22 Segment Performance Q4 2022 Quarterly Supplement
Slide 11: Rithm Experience Across Asset Classes
Rithm Experience Across Asset Classes Through its lifecycle, Rithm has invested in several asset classes across the real estate and financial services sectors Sector Overview Rithm Experience Origination, sourcing and acquisition of residential real estate loans (e.g., • Rithm Loan Portfolio Residen
Slide 12: Mortgage Company Overview
Mortgage Company Overview We meaningfully reduced expenses across the mortgage company and are prepared to capitalize on opportunities in 2023(1) Business Overview Key Q4’22 Metrics • $23.9mm of pre-tax income – Servicing: $89.3mm $23.9mm $402bn $7.9bn Total Pre-Tax In-House Servicing Funded Origina
Slide 13: Mortgage Company Servicing & Origination Highlights
Mortgage Company Servicing & Origination Highlights Our servicing portfolio remains strong and acts as a hedge to lower origination volumes Servicing: Mortgage Company Portfolio Servicing: $609bn Total Rithm Portfolio(1) ($bn UPB) ($bn UPB) $483 $497 $498 $504 $504 Third-Party Agency MSRs $86 $87 $9
Slide 14: MSR Portfolio Summary
MSR Portfolio Summary Rithm has significant investments in MSRs with beneficial earnings power in an elevated interest rate environment MSR Portfolio Activity & Outlook • MSR portfolio totaled $609 billion UPB as of December 31, 2022(1) – 89% Full MSRs / 11% Excess MSRs • Newrez / SMS / Caliber serv
Slide 15: MSR Values
MSR Values Over 98% of our full MSR portfolio is out of the money to refinance, with a portfolio WAC of ~3.7% significantly below current new production(1) • Full MSR Gross WAC of ~3.7% highlights significant protection of cash flows Full MSR Price & Multiples Full MSR Portfolio Speeds & Amortizatio
Slide 16: Servicer Advances
Servicer Advances Rithm maintains significant excess servicer advance capacity Advance Balances • Servicer advance balances as of December 31, 2022 were approximately $3.2 billion, effectively flat year-over-year • Outstanding advance balances are financed with(1): – $2.7 billion of debt ($1.2 billi
Slide 17: Genesis Capital Overview
Genesis Capital Overview Genesis is prudently growing its loan portfolio while increasing financing capabilities and maintaining robust credit standards Business Highlights Credit Overview • $481mm Q4’22 origination volume • Floating-rate nature of Genesis products protects asset-level returns in an
Slide 18: Single-Family Rental (SFR)
Single-Family Rental (SFR) Rithm is cautiously managing its SFR portfolio and focused on strengthening operating and occupancy metrics(1) Portfolio Overview Q4’22 Activity • Maintained elevated cap rates and slowed down acquisition pipeline leading into Portfolio • ~3,750 units (relatively year-end
Slide 19: Appendix
Appendix Q4 2022 Quarterly Supplement
Slide 20: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets (dollars in thousands, except per share data) As of 12/31/22 As of 9/30/22 (Unaudited) (Unaudited) ASSETS Mortgage servicing rights and mortgage servicing rights financing receivables, at fair value $ 8,889,403 $ 8,895,074 Real estate and other securities 8,289,
Slide 21: Book Value per Share Summary
Book Value per Share Summary Per Share Ending Q3’22 Book Value Per Share 12.10 Net Income (Loss) (Net of Tax and Change in Fair Value) 0.53 MSR Realization of Cash Flows (0.23) Change in Valuation Inputs and Assumptions (0.11) GAAP Net Income 0.17 Other Comprehensive Income (0.02) Common Dividend (0
Slide 22: Condensed Consolidated Income Statements
Condensed Consolidated Income Statements Three Months Ended Twelve Months Ended December 31, September 30, December 31, December 31, Unaudited (dollars in thousands) 2022 2022 2022 2021 Revenues Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ 452,923 $ 453,16
Slide 23: Segment Information (Q4'22)
Segment Information (Q4’22) Residential Securities, (dollars in thousands) Origination and Servicing Properties and Loans MSRs & Residential Properties & Mortgage Servicer Securities & Residential Loans Corporate & Quarter Ended December 31, 2022 Origination Servicing Advances Call Rights Loans Rece
Slide 24: Segment Information (Q3'22)
Segment Information (Q3’22) Residential Securities, (dollars in thousands) Origination and Servicing Properties and Loans MSRs & Residential Properties & Mortgage Servicer Securities & Residential Loans Corporate & Quarter Ended September 30, 2022 Origination Servicing Advances Call Rights Loans Rec
Slide 25: Mortgage Servicing Rights
Mortgage Servicing Rights (dollars in thousands) MSRs Balance as of September 30, 2022 $ 8,895,074 Purchases (717) Originations 163,207 Proceeds from sales (6,133) Change in fair value due to: Realization of cash flows (108,914) Change in valuation inputs and assumptions (54,033) (Gain)/loss realize
Slide 26: Servicing and Origination
Servicing and Origination Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Servicing Servicing Portfolio (UPB $bn) In-House Servicing $390.0 $398.8 $400.5 $402.5 $401.9 On Behalf of Third-Parties $78.3 $85.4 $86.7 $91.5 $93.0 Whole Loan & Other $14.5 $12.7 $10.8 $9.6 $8.6 Total UPB $482.8 $496.9 $498.0 $503.6 $503.6 O
Slide 27: Unaudited GAAP Reconciliation of Earnings Available for Distribution
Unaudited GAAP Reconciliation of Earnings Available for Distribution Management uses Earnings Available for Distribution, which is a Non-GAAP measure, as one measure of operating performance. Please see next slide for the definition of Earnings Available for Distribution. 27 Q4 2022 Quarterly Supple
Slide 28: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures • The Company has five primary variables that impact its operating performance: (i) the current yield earned on the Company’s investments, (ii) the interest expense under the debt incurred to finance the Company’s investments, (iii) the Company’s operati
Slide 29: Endnotes
Endnotes Q4 2022 Quarterly Supplement
Slide 30: Endnotes to Slide 3 & 4
Endnotes to Slide 3 & 4 Endnotes to Slide 3: Source: Company filings and data, and Bloomberg. Financial and market data as of December 31, 2022 unless otherwise noted. 1) Total Economic Return represents Rithm book value change from Q2 2013 through Q4 2022, plus common dividends declared during that
Slide 31: Endnotes to Slide 5 through 13
Endnotes to Slide 5 through 13 Endnotes to Slide 5: 1) Based on management’s current views and estimates, and actual results may vary materially. See “Disclaimers” at the beginning of this Presentation for more information on forward looking statements. 2) On February 2nd, 2023, Senlac Ridge Partner
Slide 32: Endnotes to Slide 14 through 18
Endnotes to Slide 14 through 18 Endnotes to Slide 14: Source: Company filings and data. Financial data as of December 31, 2022 unless otherwise noted. 1) MSR UPB includes Excess MSRs and Full MSRs. 2) Represents weighted average interest rate of MSRs originated by Newrez and Caliber during Q4’22. 3)
Slide 33: Abbreviations
Abbreviations Abbreviations: This Presentation may include abbreviations, which have the • Original UPB – UPB at Time of Securitization following meanings: • PLS – Private Label Securities • 60+ DQ – Percentage of loans that are delinquent by 60 days or more • PT Adj. Lock Volume – Pull Through Adju
Slide 34: Q4 2022 Quarterly Supplement
Q4 2022 Quarterly Supplement