Rithm Capital Corp. · NYSE:RITM
Rithm Capital — Q1 2024 Earnings Presentation
38 slides from Rithm Capital's earnings presentation, Apr 30, 2024
Slide 1: Quarterly Supplement Q1 2024
Rithm Capital Quarterly Supplement Q1 2024 Q1 2024 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: Executing on Core Business Strategy & Accelerating our Transition
Executing on Core Business Strategy & Accelerating our Transition Rithm is a leading global asset manager focused on delivering significant, long-term value Powered by CAPITALIZING ON THE POWER OF PARTNERSHIP Partnership A DECADE OF PERFORMANCE DRIVEN BY BROAD EXPERTISE A FOCUSED STRATEGY NEXT CHAPT
Slide 4: Q1'24 Financial Highlights
Q1’24 Financial Highlights GAAP NET INCOME Book Value: $262 Million $12.19 per Common Share(6) $0.54 per Diluted Share(1) as of March 31, 2024 (2.4% increase QoQ) EARNINGS AVAILABLE FOR DISTRIBUTION(2) $233 Million $0.48 per Diluted Share(1)(2) 4.57% COMMON STOCK DIVIDEND $0.25 per Common Share 4.20
Slide 5: Rithm 2.0 Lays the Foundation for Growth
Rithm 2.0 Lays the Foundation for Growth We are in the early stages of our transformation into a leading global asset manager 2013 – 2018 2019 – 2024 Future State(4) Core Strategy Rithm 2.0 Rithm Vision Development $1bn $3bn $42bn $7bn ~$32bn Increase Equity(1) Assets(1) Assets(2) Equity(2) AUM(2)(3
Slide 6: Rithm Capitalizes on Opportunities in a Dynamic Market
Rithm Capitalizes on Opportunities in a Dynamic Market Q1’24 activity demonstrates positive momentum in the beginning of 2024 Market Dynamic Rithm Action Taken • Newrez origination platform grew market share • Organic growth of Newrez third-party servicing franchise Expanding Core Platforms • Acquis
Slide 7: Sculptor: Q1'24 Business Highlights
Sculptor: Q1’24 Business Highlights Sculptor’s Institutional Credit Strategies expands through the launch of Sculptor Loan Financing Partners platform and new CLO issuances Sculptor Institutional Credit Strategies Q1 Highlights ~$32bn Sculptor Total AUM(1) Launch of Sculptor Loan Financing Partners
Slide 8: Sculptor: A Specialist in Opportunistic Investing
Sculptor: A Specialist in Opportunistic Investing Sculptor pursues consistent, long-term outperformance by balancing the flexibility to act swiftly in ever- changing markets with a rigorous diligence process that aims to minimize risk for clients (1) Credit Real Estate Multi-Strategy ✓ Opportunistic
Slide 9: Newrez: Market-Leading Mortgage Franchise Delivering 23% ROE
Newrez: Market-Leading Mortgage Franchise Delivering 23% ROE*(1)(2) Strategic investments and superior execution drive strong momentum Q1’24 Highlights Origination & Servicing Segment Financial Results • Newrez PTI ex-MTM increased by 22% QoQ ($mm) Q4’23 Q1’24 • Servicing continues to perform well S
Slide 10: Genesis Capital: Industry Leading Direct Lending RTL Platform
Genesis Capital: Industry Leading Direct Lending RTL Platform New sponsor growth and increased market share coming into 2024 Q1’24 Highlights Financial Overview • Record Q1’24 originations of $840 million in commitments • Favorable quarterly financial performance: Q1’24 ROE of 13%*(1) • Client franc
Slide 11: The Rithm Approach: Opportunity, Innovation & Partnership
The Rithm Approach: Opportunity, Innovation & Partnership The Rithm ethos is informed by three core principles which together underpin our business model OPPORTUNITY INNOVATION PARTNERSHIP We expect growing Leverage our long Track record in private capital needs history in pioneering successfully in
Slide 12: Q1'24 Segment Performance
Q1’24 Segment Performance Q1 2024 Quarterly Supplement
Slide 13: Servicing Portfolio
Servicing Portfolio $857 billion total servicing portfolio generates stable earnings in an elevated rate environment Servicing Portfolio Activity & Outlook Rithm Strategic Advantage • $572bn Full MSR portfolio post-closing of SLS acquisition(1) Attractive Return ✓ Source of steady fee income, Profil
Slide 14: MSR Portfolio Values
MSR Portfolio Values 99% of our Full MSR portfolio is out-of-the-money to refinance with a portfolio WAC of ~4.0%, significantly below current new production(1) Full MSR Price & Multiples $400 Full MSR Portfolio Speeds & Amortization 30% $350 During Q1’24, speeds slowed due to seasonality and higher
Slide 15: Newrez: Capitalizing on Foundational Investments
Newrez: Capitalizing on Foundational Investments Strong quarter kicks off a new chapter of Newrez’s growth 2022: 2023: 2024: Integration and Consolidation and Growth and Realignment Foundation Efficiency 12% 19% 23% 2022 Return on Equity(1) 2023 Return on Equity(1) Q1’24 Return on Equity(1) • Acquir
Slide 16: Newrez: Servicing Business Highlights
Newrez: Servicing Business Highlights Strong trends powering performance • SLS acquisition expected to close in Q2’24 adding $45bn owned MSRs, $104bn third-party and other servicing(1) • Organic third-party servicing growth: $10bn UPB added QoQ of third-party and other growth(2) • Strong third-party
Slide 17: Newrez: Originations Business Highlights
Newrez: Originations Business Highlights Focusing on market opportunities while remaining disciplined on expenses • Opportunistically grew market share – origination volume up 21% QoQ • Favorable margin trends – correspondent margins up 39% QoQ • Strong momentum in home equity loans and non-QM origi
Slide 18: Newrez's Rezi AI Platform Supercharges CX and Workflows
Newrez’s Rezi AI Platform Supercharges CX and Workflows AI and further automation continue to drive Newrez’s operational excellence(1) Proprietary Technology at Newrez Servicing Director Software powering full-spectrum servicing workflows and customer experience (“CX”) H2O Multi-channel loan origina
Slide 19: GreenBarn: Commercial Real Estate
GreenBarn: Commercial Real Estate Rithm is focused on opportunistic investments across the commercial real estate landscape(1) • Management team has 20+ year history investing in and operating commercial real estate at various institutions • Focused on providing structured credit solutions for distr
Slide 20: Adoor: Single-Family Rental
Adoor: Single-Family Rental Adoor is well positioned to benefit from the current market environment, acquiring SFR properties at elevated cap rates through its acquisition channels and vertically integrating its property management functions(1) Q1’24 Activity & Key Metrics • Hired leadership team an
Slide 21: Consumer Loans
Consumer Loans Rithm continues to opportunistically invest in consumer loan portfolios, providing differentiated and attractive risk-adjusted returns Marcus Prosper SpringCastle • In June 2023, Rithm invested $145 • In February 2017, Rithm became part • In April 2013, Rithm invested $241 million to
Slide 22: Appendix
Appendix Q1 2024 Quarterly Supplement
Slide 23: Condensed Consolidated Balance Sheets
Condensed Consolidated Balance Sheets As of 3/31/24 As of 12/31/23 ($ in thousands, except per share data) (Unaudited) ASSETS Mortgage servicing rights and mortgage servicing rights financing receivables, at fair value $ 8,706,723 $ 8,405,938 Real estate and other securities ($15,289,313 and $9,757,
Slide 24: Book Value per Share Summary
Book Value per Share Summary Per Share Ending Q4’23 Book Value Per Share $11.90 Net Income (Net of Tax and Change in Fair Value) 0.37 MSR Realization of Cash Flows (0.24) Change in Valuation Inputs and Assumptions 0.42 GAAP Net Income 0.54 Other Comprehensive Income 0.00 Common Dividend (0.25) Endin
Slide 25: Consolidated Statements of Operations
Consolidated Statements of Operations Three Months Ended March 31, December 31, Unaudited ($ in thousands) 2024 2023 Revenues Origination and Servicing, Investment Portfolio, Mortgage Loans Receivable and Corporate Servicing fee revenue, net and interest income from MSRs and MSR financing receivable
Slide 26: Segment Information (Q1'24)
Segment Information (Q1’24) ($ in thousands) Mortgage Origination Investment Loans Asset Quarter Ended March 31, 2024 and Servicing Portfolio Receivable Management Corporate Total Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ 397,478 $ 72,725 $ — $ — $ — $
Slide 27: Segment Information (Q4'23)
Segment Information (Q4’23) ($ in thousands) Mortgage Origination Investment Loans Asset Quarter Ended December 31, 2023 and Servicing Portfolio Receivable Management Corporate Total Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ 406,654 $ 75,556 $ — $ — $ —
Slide 28: Mortgage Servicing Rights
Mortgage Servicing Rights ($ in thousands) MSRs Balance as of December 31, 2023 $ 8,405,938 Purchases, net Originations 215,939 Proceeds from sales 671 Change in fair value due to: Realization of cash flows (116,839) Change in valuation inputs and assumptions 201,014 Balance as of March 31, 2024 $ 8
Slide 29: Origination and Servicing
Origination and Servicing Q1’23 Q2’23 Q3’23 Q4’23 Q1’24 Servicing Servicing Portfolio (UPB $bn) In-House Servicing $401.4 $401.6 $455.2 $457.0 $456.6 On Behalf of Third-Parties $94.1 $95.6 $99.4 $102.5 $111.3 Whole Loan & Other $8.6 $8.8 $8.5 $8.5 $9.6 Total UPB $504.0 $506.0 $563.1 $568.0 $577.5 Or
Slide 30: 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 31: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures • The Company has four primary variables that impact its performance: (i) Net interest margin on assets held within the investment portfolio, (ii) realized and unrealized gains or losses on assets held within the investment portfolio and operating compan
Slide 32: Endnotes
Endnotes Q1 2024 Quarterly Supplement
Slide 33: Endnotes
Endnotes Endnotes to Slide 3: Source: Company past SEC filings and current financial information. Financial and market data as of March 31, 2024 unless otherwise noted. 1) Total Dividends includes the common dividend for the first quarter ended March 31, 2024, which was paid on April 26, 2024. 2) To
Slide 34: Endnotes (Cont.)
Endnotes (Cont.) Endnotes to Slide 7: Source: Company past SEC filings and current financial information. Financial and market data as of March 31, 2024 unless otherwise noted. 1) “Assets Under Management” (AUM) refers to the assets for which Sculptor provides investment management, advisory or cert
Slide 35: Endnotes (Cont.)
Endnotes (Cont.) Endnotes to Slide 14: Source: Company past SEC filings and current financial information. Financial and market data as of March 31, 2024 unless otherwise noted. 1) Rithm refinanceable data includes population of Rithm owned MSRs that are ≥ $100 of savings per month in the money. Ana
Slide 36: Endnotes (Cont.)
Endnotes (Cont.) Endnotes to Slide 21: Source: Company past SEC filings and current financial information. Financial and market data as of March 31, 2024 unless otherwise noted. 1) Based on management’s current views and estimates, and actual results may vary materially. See “Disclaimers” at the beg
Slide 37: Abbreviations
Abbreviations Abbreviations: This Presentation may include abbreviations, which have the following meanings: • 60+ DQ – Percentage of loans that are delinquent by 60 days or more • AI – Artificial Intelligence • AUM – Assets Under Management • BTR – Build to Rent • BV – Book Value • BVPS – Book Valu
Slide 38: Q1 2024 Quarterly Supplement
Q1 2024 Quarterly Supplement