Rithm Capital Corp. · NYSE:RITM
Rithm Capital — Q1 2023 Earnings Presentation
31 slides from Rithm Capital's earnings presentation, May 4, 2023
Slide 1: Quarterly Supplement Q1 2023
Rithm Capital Quarterly Supplement Q1 2023 Q1 2023 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 Capital is an asset manager with a diversified portfolio of investments across the financial services sector Company Overview • Founded in 2013, Rithm has a 10-year track record of growth and returns for shareholders ‒ 169% total economic return since inception(1) ‒ Team
Slide 4: Economic Landscape
Economic Landscape Inflation pressures paired with strong employment data support the Fed’s elevated rate path, but stress in the regional banking sector has extended market uncertainty • Market still fighting the Fed(1) – Market expectations for rate cuts this year contradict the Fed’s signaling to
Slide 5: Q1'23 Financial Highlights
Q1’23 Financial Highlights GAAP Net Income: $68.9 Million / $0.14 per Diluted Share(1) Book Value: $11.67 per Common Share(6) Earnings Available for Distribution: as of March 31, 2023 $171.1 Million / $0.35 per Diluted Share(1)(2) Includes dilution of ($0.23) as a result of impact from warrant exerc
Slide 6: The Evolution of Rithm
The Evolution of Rithm Over the last decade, Rithm has created significant shareholder value through opportunistic investments in financial services-related assets and operating companies SPRINGCASTLE MSRs Europe 2013 2015 2017 2018 2019 2021 2022 2023 • Becomes • Grows • Acquires • Acquires • Enhan
Slide 7: Rithm 2.0
Rithm 2.0 Rithm is focused on maintaining strong performance across our existing portfolio while expanding our private capital business to drive our next phase of growth Rithm actively manages operating companies and a portfolio of yield-oriented Driving growth through private assets totaling $6.9bn
Slide 8: Q1'23 Segment Performance
Q1’23 Segment Performance Q1 2023 Quarterly Supplement
Slide 9: Mortgage Company Overview
Mortgage Company Overview Our balanced origination and servicing platforms generated another profitable quarter, and our originations platform is appropriately sized for current market conditions(1) Business Overview Key Q1’23 Metrics $mm Pre-Tax Income $164.0mm $401bn $7.0bn Servicing $217.5 Total
Slide 10: Mortgage Company Servicing & Origination Highlights
Mortgage Company Servicing & Origination Highlights Our servicing portfolio remains strong and acts as a hedge against lower origination volumes Servicing: Mortgage Company Portfolio Servicing: $603bn Total Rithm Portfolio(1) ($bn UPB) ($bn UPB) $497 $498 $504 $504 $504 $86 Mortgage Company MSRs $86
Slide 11: Rithm MSR Portfolio Summary
Rithm 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 $603 billion UPB as of March 31, 2023(1) – 89% Full MSRs / 11% Excess MSRs • Mortgage Company servici
Slide 12: Rithm MSR Values
Rithm MSR Values 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 Price & Multiples Full MSR Portfolio Speeds & Amortization During Q1’23, average portfolio speeds slowed for the ninth 200 6.0x $540 c
Slide 13: Commercial Real Estate
Commercial Real Estate We believe there will be significant investment opportunities in commercial real estate over the next 6-18 months(1) ✓ 25+ person team of dedicated employees focused on opportunities in the commercial real estate sector ✓ Acquisitions, development, asset & property management,
Slide 14: Residential Transitional Lending
Residential Transitional Lending Genesis is focused on originating high-quality loans to strong sponsors and maintaining robust credit standards Business Highlights Credit Overview • $376mm Q1’23 origination volume, with new • Floating-rate nature of Genesis products protects asset-level returns in
Slide 15: Single-Family Rental (SFR)
Single-Family Rental (SFR) Rithm is actively managing its SFR portfolio and is focused on strengthening operating and occupancy metrics(1) Portfolio Overview Q1’23 Activity • Maintained elevated cap rates and slowed down acquisition pipeline with a Portfolio continued focus on occupancy • ~3,750 uni
Slide 16: Servicer Advances
Servicer Advances Rithm maintains significant excess servicer advance capacity Advance Balances • Servicer advance balances as of March 31, 2023 were approximately $3.0 billion • Outstanding advance balances are financed with(1): – $2.5 billion of debt ($1.2 billion in capital markets) – Advance fin
Slide 17: Appendix
Appendix Q1 2023 Quarterly Supplement
Slide 18: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets (dollars in thousands, except per share data) As of 3/31/23 As of 12/31/22 (Unaudited) ASSETS Mortgage servicing rights and mortgage servicing rights financing receivables, at fair value $ 8,886,209 $ 8,889,403 Real estate and other securities 8,987,572 8,289,27
Slide 19: Book Value per Share Summary
Book Value per Share Summary Per Share Ending Q4’22 Book Value Per Share 12.00 Impact of Cashless Warrant Exercise (0.23) Illustrative Ending Q4’22 Book Value Per Share 11.77 Net Income (Loss) (Net of Tax and Change in Fair Value) 0.44 MSR Realization of Cash Flows (0.22) Change in Valuation Inputs
Slide 20: Consolidated Statements of Operations
Consolidated Statements of Operations Three Months Ended March 31, 2023 December 31, Unaudited (dollars in thousands) (Unaudited) 2022 Revenues Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ 469,839 $ 452,923 Change in fair value of MSRs and MSR financing re
Slide 21: Segment Information (Q1'23)
Segment Information (Q1’23) Residential Securities, Origination and Servicing Properties and Loans (dollars in thousands) MSRs & Residential Properties & Mortgage Servicer Securities & Residential Loans Corporate & Quarter Ended March 31, 2023 Origination Servicing Advances Call Rights Loans Receiva
Slide 22: 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 23: Mortgage Servicing Rights
Mortgage Servicing Rights (dollars in thousands) MSRs Balance as of December 31, 2022 $ 8,889,403 Purchases - Originations 140,513 Proceeds from sales (1,403) Change in fair value due to: Realization of cash flows (105,691) Change in valuation inputs and assumptions (37,302) (Gain)/loss realized 698
Slide 24: Servicing and Origination
Servicing and Origination Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Servicing Servicing Portfolio (UPB $bn) In-House Servicing $398.8 $400.5 $402.5 $401.9 $401.4 On Behalf of Third-Parties $85.4 $86.7 $91.5 $93.0 $94.1 Whole Loan & Other $12.7 $10.8 $9.6 $8.6 $8.6 Total UPB $496.9 $498.0 $503.6 $503.6 $504.0 Or
Slide 25: 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. ($000s, except per share da
Slide 26: 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 27: Endnotes
Endnotes Q1 2023 Quarterly Supplement
Slide 28: Endnotes to Slide 3 through 7
Endnotes to Slide 3 through 7 Endnotes to Slide 3: Source: Company filings and data and Bloomberg. Financial and market data as of March 31, 2023 unless otherwise noted. 1) Total Economic Return represents Rithm book value change from June 30, 2013 through March 31, 2023, plus common dividends decla
Slide 29: Endnotes to Slide 9 through 16
Endnotes to Slide 9 through 16 Endnotes to Slide 9: Source: Company filings and data and Bloomberg. Financial and market data as of March 31, 2023 unless otherwise noted. 1) Based on management’s current views and estimates, and actual results may vary materially. See “Disclaimers” at the beginning
Slide 30: Abbreviations
Abbreviations Abbreviations: This Presentation may include abbreviations, which have the • MSR – Mortgage Servicing Right following meanings: • MTM – Mark to Market • 60+ DQ – Percentage of loans that are delinquent by 60 days or more • Original UPB – UPB at Time of Securitization • Age (mths) or Lo
Slide 31: Q1 2023 Quarterly Supplement
Q1 2023 Quarterly Supplement