Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Rithm Capital Corp. Announces Third Quarter 2022 Results By: Rithm Capital Corp. via Business Wire November 02, 2022 at 06:45 AM EDT Rithm Capital Corp. (NYSE: RITM; “Rithm Capital” or the “Company”) today reported the following information for the third quarter ended September 30, 2022: Third Quarter 2022 Financial Highlights: GAAP net income of $124.5 million, or $0.26 per diluted common share(1) Earnings available for distribution of $153.0 million, or $0.32 per diluted common share(1)(2) Common dividend of $118.4 million, or $0.25 per common share Book value per common share of $12.10(1) Q3 2022 Q2 2022 Summary Operating Results: GAAP Net Income (Loss) per Diluted Common Share(1) $ 0.26 $ (0.01) GAAP Net Income (Loss) $ 124.5 million $ (3.3) million Non-GAAP Results: Earnings Available for Distribution per Diluted Common Share(1) $ 0.32 $ 0.31 Earnings Available for Distribution(2) $ 153.0 million $ 145.8 million Common Dividend: Common Dividend per Share $ 0.25 $ 0.25 Common Dividend $ 118.4 million $ 116.7 million “I am pleased to share that our Company had another great quarter,” said Michael Nierenberg, Chief Executive Officer of Rithm Capital. “Book value quarter-over-quarter was essentially unchanged, despite the large sell-off in rates and the widening of credit spreads. Earnings available for distribution were 32 cents per diluted share, in line with prior quarters. Our emphasis continues to be on strategically growing the Company across the financial services landscape, managing risk with a macro view towards the future, and allocating capital accordingly to focus on attractive risk-adjusted returns.” “We believe Rithm provides investors with a differentiated platform. With our operating companies Genesis, Newrez/Caliber, Guardian and Adoor (SFR), as well as our investment portfolio, our Company is different. As part of our growth strategy, we are excited to announce an agreement to acquire a 50% interest in Senlac Ridge Partners, an investment management firm focused on commercial real estate.” “Senlac, led by founder David Welsh, creates a new commercial real estate business at Rithm focused on debt and equity investments. Welsh, who co-founded Normandy Real Estate Partners, and his team of approximately 20 employees bring with them decades of expertise, a strong track record investing in and turning around distressed assets, and an extensive network across the country. We believe Senlac’s vertically-integrated infrastructure and operations, development, sourcing and fund management capabilities will further our ability to raise third-party capital around different strategies and create stable, recurring fee streams for our shareholders. We are excited about this new chapter for Rithm and look forward to closing the year out on a high note.” Third Quarter 2022 Company Highlights: Origination & Servicing (Mortgage Company) Combined segment pre-tax income of $209.8 million(3), including: $16 million of severance, $14 million of lease termination fees and $12 million of write-offs related to software and contract termination fees $131 million of positive mark-to-market changes on the Full MSR portfolio Quarterly origination funded production of $13.8 billion UPB Total gain on sale margin of 1.71% Estimated Q4’22 funded origination volume of approximately $6 to $8 billion Total Rithm MSR Portfolio Summary MSR portfolio totaled $615 billion in unpaid principal balance (“UPB”) at September 30, 2022 compared to $623 billion UPB at June 30, 2022(4) Portfolio Average CPR of approximately 8% Servicer advance balances of $2.9 billion as of September 30, 2022, down 3% from June 30, 2022 $143 million of positive mark-to-market changes on our Full MSR portfolio (inclusive of the $131 million positive mark-to-market changes at the Mortgage Company) Residential Securities, Properties and Loans Priced and closed two securitizations (one Non-QM and one SFR) representing approximately $633 million UPB of collateral Mortgage Loans Receivable Quarterly origination funded production of $622 million through Genesis Capital LLC (1) Per common share calculations for both GAAP Net Income and Earnings Available for Distribution are based on 476,796,757 and 466,804,548 weighted average diluted shares for the quarter ended September 30, 2022 and June 30, 2022, respectively. The Company excluded 17,757,843 weighted average common shares from the calculation of diluted net income (loss) per share for the quarter ended June 30, 2022 because their inclusion would have been anti-dilutive. Per share calculations of Book Value are based on 473,715,100 and 466,786,526 common shares outstanding as of September 30, 2022 and June 30, 2022, respectively. The common shares outstanding as of September 30, 2022 reflects the cashless exercise of common stock purchase warrants of 6.9 million shares. (2) Earnings Available for Distribution is a non-GAAP financial measure. For a reconciliation of Earnings Available for Distribution to GAAP Net Income, as well as an explanation of this measure, please refer to Non-GAAP Financial Measures and Reconciliation to GAAP Net Income below. (3) Includes noncontrolling interests. (4) Includes excess and full MSRs. ADDITIONAL INFORMATION For additional information that management believes to be useful for investors, please refer to the latest presentation posted on the Investors section of the Company’s website, www.rithmcap.com. For consolidated investment portfolio information, please refer to the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, which are available on the Company’s website, www.rithmcap.com. Information on, or accessible through, our website is not a part of, and is not incorporated into, this press release. EARNINGS CONFERENCE CALL Rithm Capital’s management will host a conference call on Wednesday, November 2, 2022 at 8:00 A.M. Eastern Time. A copy of the earnings release will be posted to the Investors section of Rithm Capital’s website, www.rithmcap.com. All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-833-974-2382 (from within the U.S.) or 1-412-317-5787 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “Rithm Capital Third Quarter 2022 Earnings Call.” In addition, participants are encouraged to pre-register for the conference call at https://dpregister.com/sreg/10172582/f4e46bc5d8. A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.rithmcap.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast. A telephonic replay of the conference call will also be available two hours following the call’s completion through 11:59 P.M. Eastern Time on Wednesday, November 9, 2022 by dialing 1-877-344-7529 (from within the U.S.) or 1-412-317-0088 (from outside of the U.S.); please reference access code “5936830.” Consolidated Statements of Income (Unaudited) ($ in thousands, except share and per share data) Three Months Ended September 30, 2022 June 30, 2022 Revenues Servicing fee revenue, net and interest income from MSR financing receivables $ 453,163 $ 469,478 Change in fair value of MSRs and MSR financing receivables (includes realization of cash flows of $(141,616) and $(180,265), respectively) (17,178) 336,563 Servicing revenue, net 435,985 806,041 Interest income 273,379 211,648 Gain on originated residential mortgage loans, held-for-sale, net 203,479 304,791 912,843 1,322,480 Expenses Interest expense and warehouse line fees 218,089 150,829 General and administrative 214,624 225,271 Compensation and benefits 290,984 339,658 Management fee to affiliate — 20,985 Termination fee to affiliate — 400,000 723,697 1,136,743 Other income (loss) Change in fair value of investments, net 968,340 (234,040) Gain (loss) on settlement of investments, net (1,004,454) 94,936 Other income (loss), net 23,242 59,388 (12,872) (79,716) Income before income taxes 176,274 106,021 Income tax expense 22,084 72,690 Net income $ 154,190 $ 33,331 Noncontrolling interests in income (loss) of consolidated subsidiaries 7,307 14,182 Dividends on preferred stock 22,427 22,427 Net income (loss) attributable to common stockholders $ 124,456 $ (3,278) Net income (loss) per share of common stock Basic $ 0.27 $ (0.01) Diluted $ 0.26 $ (0.01) Weighted average number of shares of common stock outstanding Basic 467,974,962 466,804,548 Diluted 476,796,757 466,804,548 Dividends declared per share of common stock $ 0.25 $ 0.25 Consolidated Balance Sheets ($ in thousands, except share data) September 30, 2022 (Unaudited) December 31, 2021 Assets Excess mortgage servicing rights, at fair value $ 322,168 $ 344,947 Mortgage servicing rights and mortgage servicing rights financing receivables, at fair value 8,895,074 6,858,803 Servicer advance investments, at fair value 371,418 421,807 Real estate and other securities 9,437,008 9,396,539 Residential loans and variable interest entity consumer loans held-for-investment, at fair value 864,534 1,077,224 Residential mortgage loans, held-for-sale ($3,933,392 and $11,214,924 at fair value, respectively) 4,037,411 11,347,845 Single-family rental properties, held-for-investment 959,448 579,607 Mortgage loans receivable, at fair value 1,919,913 1,515,762 Residential mortgage loans subject to repurchase 1,897,142 1,787,314 Cash and cash equivalents 1,420,010 1,332,575 Restricted cash 529,565 195,867 Servicer advances receivable 2,522,246 2,855,148 Other assets 2,158,598 2,028,752 $ 35,334,535 $ 39,742,190 Liabilities and Equity Liabilities Secured financing agreements $ 13,655,247 $ 20,592,884 Secured notes and bonds payable ($653,204 and $511,107 at fair value, respectively) 9,653,664 8,644,810 Residential mortgage loan repurchase liability 1,897,142 1,787,314 Unsecured senior notes, net of issuance costs 544,612 543,293 Payable for investments purchased 498,933 — Due to affiliates — 17,819 Dividends payable 129,632 127,922 Accrued expenses and other liabilities 1,893,679 1,358,768 28,272,909 33,072,810 Commitments and Contingencies Equity Preferred stock, $0.01 par value, 100,000,000 shares authorized, 52,038,000 and 52,210,000 issued and outstanding, $1,300,959 and $1,305,250 aggregate liquidation preference, respectively 1,258,667 1,262,481 Common stock, $0.01 par value, 2,000,000,000 shares authorized, 473,715,100 and 466,758,266 issued and outstanding, respectively 4,739 4,669 Additional paid-in capital 6,060,671 6,059,671 Retained earnings (accumulated deficit) (381,843) (813,042) Accumulated other comprehensive income 48,337 90,253 Total Rithm Capital stockholders’ equity 6,990,571 6,604,032 Noncontrolling interests in equity of consolidated subsidiaries 71,055 65,348 Total equity 7,061,626 6,669,380 $ 35,334,535 $ 39,742,190 NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP NET INCOME 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 operating expenses and taxes, (iv) the Company’s realized and unrealized gains or losses on investments, including any impairment or reserve for expected credit losses and (v) income from the Company’s origination and servicing businesses. “Earnings available for distribution” is a non-GAAP financial measure of the Company’s operating performance, excluding the fourth variable above and adjusts the earnings from the consumer loan investment to a level yield basis. Earnings available for distribution is used by management to evaluate the Company’s performance without taking into account: (i) realized and unrealized gains and losses, which although they represent a part of the Company’s recurring operations, are subject to significant variability and are generally limited to a potential indicator of future economic performance; (ii) termination fee to affiliate; (iii) non-capitalized transaction-related expenses; and (iv) deferred taxes, which are not representative of current operations. The Company’s definition of earnings available for distribution includes accretion on held-for-sale loans as if they continued to be held-for-investment. Although the Company intends to sell such loans, there is no guarantee that such loans will be sold or that they will be sold within any expected timeframe. During the period prior to sale, the Company continues to receive cash flows from such loans and believes that it is appropriate to record a yield thereon. In addition, the Company’s definition of earnings available for distribution excludes all deferred taxes, rather than just deferred taxes related to unrealized gains or losses, because the Company believes deferred taxes are not representative of current operations. The Company’s definition of earnings available for distribution also limits accreted interest income on RMBS where the Company receives par upon the exercise of associated call rights based on the estimated value of the underlying collateral, net of related costs including advances. The Company created this limit in order to be able to accrete to the lower of par or the net value of the underlying collateral, in instances where the net value of the underlying collateral is lower than par. The Company believes this amount represents the amount of accretion the Company would have expected to earn on such bonds had the call rights not been exercised. The Company’s investments in consumer loans are accounted for under the fair value option. Earnings available for distribution adjusts earnings on consumer loans to a level yield to present income recognition across the consumer loan portfolio in the manner in which it is economically earned, to avoid potential delays in loss recognition, and align it with the Company’s overall portfolio of mortgage-related assets which generally record income on a level yield basis. With regard to non-capitalized transaction-related expenses, management does not view these costs as part of the Company’s core operations, as they are considered by management to be similar to realized losses incurred at acquisition. Non-capitalized transaction-related expenses are generally legal and valuation service costs, as well as other professional service fees, incurred when the Company acquires certain investments, as well as costs associated with the acquisition and integration of acquired businesses. Through its wholly owned subsidiaries, the Company originates conventional, government-insured and nonconforming residential mortgage loans for sale and securitization. In connection with the transfer of loans to the GSEs or mortgage investors, the Company reports realized gains or losses on the sale of originated residential mortgage loans and retention of mortgage servicing rights, which the Company believes is an indicator of performance for the Origination and Servicing segments and therefore included in earnings available for distribution. Realized gains or losses on the sale of originated residential mortgage loans had no impact on earnings available for distribution in any prior period, but may impact earnings available for distribution in future periods. Earnings available for distribution includes results from operating companies with the exception of the unrealized gains or losses due to changes in valuation inputs and assumptions on MSRs, net of unrealized gains and losses on hedged MSRs, and non-capitalized transaction-related expenses. Management believes that the adjustments to compute “earnings available for distribution” specified above allow investors and analysts to readily identify and track the operating performance of the assets that form the core of the Company’s activity, assist in comparing the core operating results between periods, and enable investors to evaluate the Company’s current core performance using the same financial measure that management uses to operate the business. Management also utilizes earnings available for distribution as a financial measure in its decision-making process relating to improvements to the underlying fundamental operations of the Company’s investments, as well as the allocation of resources between those investments, and management also relies on earnings available for distribution as an indicator of the results of such decisions. Earnings available for distribution excludes certain recurring items, such as gains and losses (including impairment and reserves as well as derivative activities) and non-capitalized transaction-related expenses, because they are not considered by management to be part of the Company’s core operations for the reasons described herein. As such, earnings available for distribution is not intended to reflect all of the Company’s activity and should be considered as only one of the factors used by management in assessing the Company’s performance, along with GAAP net income which is inclusive of all of the Company’s activities. The Company views earnings available for distribution as a consistent financial measure of its investment portfolio’s ability to generate income for distribution to common stockholders. Earnings available for distribution does not represent and should not be considered as a substitute for, or superior to, net income or as a substitute for, or superior to, cash flows from operating activities, each as determined in accordance with GAAP, and the Company’s calculation of this financial measure may not be comparable to similarly entitled financial measures reported by other companies. Furthermore, to maintain qualification as a REIT, U.S. federal income tax law generally requires that the Company distribute at least 90% of its REIT taxable income annually, determined without regard to the deduction for dividends paid and excluding net capital gains. Because the Company views earnings available for distribution as a consistent financial measure of its ability to generate income for distribution to common stockholders, earnings available for distribution is one metric, but not the exclusive metric, that the Company’s board of directors uses to determine the amount, if any, and the payment date of dividends on common stock. However, earnings available for distribution should not be considered as an indication of the Company’s taxable income, a guaranty of its ability to pay dividends or as a proxy for the amount of dividends it may pay, as earnings available for distribution excludes certain items that impact its cash needs. The table below provides a reconciliation of earnings available for distribution to the most directly comparable GAAP financial measure (dollars in thousands, except share and per share data): Three Months Ended September 30, 2022 June 30, 2022 Net income (loss) attributable to common stockholders $ 124,456 $ (3,278) Adjustments: Impairment 6,744 3,788 Change in fair value of investments, net (1,092,789) (282,788) (Gain) loss on settlement of investments, net 1,015,701 (100,355) Other (income) loss, net 68,336 49,254 Non-capitalized transaction-related expenses 4,450 4,250 Termination fee to affiliate — 400,000 Preferred stock management fee to affiliate — 3,932 Deferred taxes 22,081 74,111 Interest income on residential mortgage loans, held-for-sale 1,834 (2,881) Earnings available for distribution of equity method investees: Excess mortgage servicing rights 2,215 (260) Earnings available for distribution $ 153,028 $ 145,773 Net income (loss) per diluted share $ 0.26 $ (0.01) Earnings available for distribution per diluted share $ 0.32 $ 0.31 Weighted average number of shares of common stock outstanding, diluted 476,796,757 466,804,548 SEGMENT INFORMATION ($ in thousands) Origination and Servicing Residential Securities, Properties and Loans Third Quarter 2022 Origination Servicing MSR Related Investments Real Estate Securities Properties & Residential Mortgage Loans Mortgage Loans Receivable Corporate & Other Total Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ — $ 354,171 $ 98,992 $ — $ — $ — $ — $ 453,163 Change in fair value of MSRs and MSR financing receivables — 40,401 (57,579) — — — — (17,178) Servicing revenue, net — 394,572 41,413 — — — — 435,985 Interest income 41,862 55,844 15,401 76,908 19,186 42,335 21,843 273,379 Gain on originated mortgage loans, held-for-sale, net 214,703 5,980 — — (17,204) — — 203,479 Total revenues 256,565 456,396 56,814 76,908 1,982 42,335 21,843 912,843 Interest expense 31,345 56,650 26,033 51,822 21,242 18,888 12,109 218,089 G&A and other 283,798 132,160 43,388 921 12,220 15,241 17,880 505,608 Total operating expenses 315,143 188,810 69,421 52,743 33,462 34,129 29,989 723,697 Change in fair value of investments, net — — (8,711) 887,898 67,797 27,201 (5,845) 968,340 Gain (loss) on settlement of investments, net — (549) (1,454) (1,018,354) 14,032 1,871 — (1,004,454) Other income (loss), net 1,368 (74) 923 (2,799) 11,448 5,710 6,666 23,242 Total other income (loss) 1,368 (623) (9,242) (133,255) 93,277 34,782 821 (12,872) Income (loss) before income taxes (57,210) 266,963 (21,849) (109,090) 61,797 42,988 (7,325) 176,274 Income tax expense (benefit) (14,243) 51,032 (7,197) — (5,564) (1,940) (4) 22,084 Net income (loss) (42,967) 215,931 (14,652) (109,090) 67,361 44,928 (7,321) 154,190 Noncontrolling interests in income (loss) of consolidated subsidiaries 471 — (139) — — — 6,975 7,307 Dividends on preferred stock — — — — — — 22,427 22,427 Net income (loss) attributable to common stockholders $ (43,438) $ 215,931 $ (14,513) $ (109,090) $ 67,361 $ 44,928 $ (36,723) $ 124,456 As of September 30, 2022 Total Assets $ 3,875,126 $ 10,314,954 $ 5,618,234 $ 10,081,229 $ 2,571,458 $ 2,170,411 $ 703,123 $ 35,334,535 Total Rithm Capital stockholder’s equity $ 492,543 $ 3,107,614 $ 2,321,904 $ 723,082 $ 323,259 $ 557,513 $ (535,344) $ 6,990,571 Origination and Servicing Residential Securities, Properties and Loans Second Quarter 2022 Origination Servicing MSR Related Investments Real Estate Securities Properties & Residential Mortgage Loans Mortgage Loans Receivable Corporate & Other Total Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ — $ 364,698 $ 104,780 $ — $ — $ — $ — $ 469,478 Change in fair value of MSRs and MSR financing receivables — 344,893 (8,330) — — — — 336,563 Servicing revenue, net — 709,591 96,450 — — — — 806,041 Interest income 46,216 16,757 11,340 54,584 22,640 36,748 23,363 211,648 Gain on originated mortgage loans, held-for-sale, net 302,610 15,739 106 — (13,664) — — 304,791 Total revenues 348,826 742,087 107,896 54,584 8,976 36,748 23,363 1,322,480 Interest expense 27,578 41,096 25,788 20,216 11,332 12,680 12,139 150,829 G&A and other 349,432 120,395 55,401 710 11,891 14,600 433,485 985,914 Total operating expenses 377,010 161,491 81,189 20,926 23,223 27,280 445,624 1,136,743 Change in fair value of investments, net — (1,780) (93) (241,213) 11,399 4,843 (7,196) (234,040) Gain (loss) on settlement of investments, net — (564) (1,265) 117,179 (4,798) (15,616) — 94,936 Other income (loss), net 1,832 207 16,280 (2,127) 29,471 7,430 6,295 59,388 Total other income (loss) 1,832 (2,137) 14,922 (126,161) 36,072 (3,343) (901) (79,716) Income (loss) before income taxes (26,352) 578,459 41,629 (92,503) 21,825 6,125 (423,162) 106,021 Income tax expense (benefit) (6,522) 151,236 9,466 — (2,480) (3,623) (75,387) 72,690 Net income (loss) (19,830) 427,223 32,163 (92,503) 24,305 9,748 (347,775) 33,331 Noncontrolling interests in income (loss) of consolidated subsidiaries 1,287 — 41 — — — 12,854 14,182 Dividends on preferred stock — — — — — — 22,427 22,427 Net income (loss) attributable to common stockholders $ (21,117) $ 427,223 $ 32,122 $ (92,503) $ 24,305 $ 9,748 $ (383,056) $ (3,278) As of June 30, 2022 Total Assets $ 4,453,769 $ 10,242,476 $ 5,498,876 $ 8,494,053 $ 3,039,670 $ 2,025,664 $ 799,339 $ 34,553,847 Total Rithm Capital stockholder’s equity $ 655,923 $ 3,168,072 $ 1,997,486 $ 822,509 $ 380,664 $ 525,440 $ (556,267) $ 6,993,827 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain information in this press release constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, expected benefits and synergies from acquiring a 50% interest in Senlac Ridge Partners, our ability to continue growing book value in the fourth quarter, expected market volatility and ability to generate great returns for our shareholders in 2022 and beyond. These statements are not historical facts. They represent management’s current expectations regarding future events and are subject to a number of trends and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those described in the forward-looking statements. Accordingly, you should not place undue reliance on any forward-looking statements contained herein. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled “Cautionary Statements Regarding Forward Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent annual and quarterly reports and other filings filed with the U.S. Securities and Exchange Commission, which are available on the Company’s website (www.rithmcap.com). New risks and uncertainties emerge from time to time, and it is not possible for Rithm Capital to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Forward-looking statements contained herein speak only as of the date of this press release, and Rithm Capital expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Rithm Capital's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. ABOUT RITHM CAPITAL Rithm Capital is a leading provider of capital and services to the real estate and financial services industries. The Company’s mission is to generate attractive risk-adjusted returns across interest rate environments through a complementary portfolio of investments and operating businesses. Since inception in 2013, Rithm Capital has delivered approximately $4.2 billion in dividends to shareholders. Rithm Capital’s investment portfolio is composed of mortgage servicing related assets (full and excess MSRs and servicer advances), residential securities (and associated call rights) and loans (including single family rental), and consumer loans. Rithm Capital’s investments in operating entities include leading origination and servicing platforms held through its wholly-owned subsidiaries, Newrez LLC, Caliber Home Loans Inc., and Genesis Capital LLC, as well as investments in affiliated businesses that provide mortgage related services. Rithm Capital is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes and is headquartered in New York City. View source version on businesswire.com: https://www.businesswire.com/news/home/20221102005216/en/Contacts Investor Relations 212-850-7770 IR@RithmCap.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Rithm Capital Corp. Announces Third Quarter 2022 Results By: Rithm Capital Corp. via Business Wire November 02, 2022 at 06:45 AM EDT Rithm Capital Corp. (NYSE: RITM; “Rithm Capital” or the “Company”) today reported the following information for the third quarter ended September 30, 2022: Third Quarter 2022 Financial Highlights: GAAP net income of $124.5 million, or $0.26 per diluted common share(1) Earnings available for distribution of $153.0 million, or $0.32 per diluted common share(1)(2) Common dividend of $118.4 million, or $0.25 per common share Book value per common share of $12.10(1) Q3 2022 Q2 2022 Summary Operating Results: GAAP Net Income (Loss) per Diluted Common Share(1) $ 0.26 $ (0.01) GAAP Net Income (Loss) $ 124.5 million $ (3.3) million Non-GAAP Results: Earnings Available for Distribution per Diluted Common Share(1) $ 0.32 $ 0.31 Earnings Available for Distribution(2) $ 153.0 million $ 145.8 million Common Dividend: Common Dividend per Share $ 0.25 $ 0.25 Common Dividend $ 118.4 million $ 116.7 million “I am pleased to share that our Company had another great quarter,” said Michael Nierenberg, Chief Executive Officer of Rithm Capital. “Book value quarter-over-quarter was essentially unchanged, despite the large sell-off in rates and the widening of credit spreads. Earnings available for distribution were 32 cents per diluted share, in line with prior quarters. Our emphasis continues to be on strategically growing the Company across the financial services landscape, managing risk with a macro view towards the future, and allocating capital accordingly to focus on attractive risk-adjusted returns.” “We believe Rithm provides investors with a differentiated platform. With our operating companies Genesis, Newrez/Caliber, Guardian and Adoor (SFR), as well as our investment portfolio, our Company is different. As part of our growth strategy, we are excited to announce an agreement to acquire a 50% interest in Senlac Ridge Partners, an investment management firm focused on commercial real estate.” “Senlac, led by founder David Welsh, creates a new commercial real estate business at Rithm focused on debt and equity investments. Welsh, who co-founded Normandy Real Estate Partners, and his team of approximately 20 employees bring with them decades of expertise, a strong track record investing in and turning around distressed assets, and an extensive network across the country. We believe Senlac’s vertically-integrated infrastructure and operations, development, sourcing and fund management capabilities will further our ability to raise third-party capital around different strategies and create stable, recurring fee streams for our shareholders. We are excited about this new chapter for Rithm and look forward to closing the year out on a high note.” Third Quarter 2022 Company Highlights: Origination & Servicing (Mortgage Company) Combined segment pre-tax income of $209.8 million(3), including: $16 million of severance, $14 million of lease termination fees and $12 million of write-offs related to software and contract termination fees $131 million of positive mark-to-market changes on the Full MSR portfolio Quarterly origination funded production of $13.8 billion UPB Total gain on sale margin of 1.71% Estimated Q4’22 funded origination volume of approximately $6 to $8 billion Total Rithm MSR Portfolio Summary MSR portfolio totaled $615 billion in unpaid principal balance (“UPB”) at September 30, 2022 compared to $623 billion UPB at June 30, 2022(4) Portfolio Average CPR of approximately 8% Servicer advance balances of $2.9 billion as of September 30, 2022, down 3% from June 30, 2022 $143 million of positive mark-to-market changes on our Full MSR portfolio (inclusive of the $131 million positive mark-to-market changes at the Mortgage Company) Residential Securities, Properties and Loans Priced and closed two securitizations (one Non-QM and one SFR) representing approximately $633 million UPB of collateral Mortgage Loans Receivable Quarterly origination funded production of $622 million through Genesis Capital LLC (1) Per common share calculations for both GAAP Net Income and Earnings Available for Distribution are based on 476,796,757 and 466,804,548 weighted average diluted shares for the quarter ended September 30, 2022 and June 30, 2022, respectively. The Company excluded 17,757,843 weighted average common shares from the calculation of diluted net income (loss) per share for the quarter ended June 30, 2022 because their inclusion would have been anti-dilutive. Per share calculations of Book Value are based on 473,715,100 and 466,786,526 common shares outstanding as of September 30, 2022 and June 30, 2022, respectively. The common shares outstanding as of September 30, 2022 reflects the cashless exercise of common stock purchase warrants of 6.9 million shares. (2) Earnings Available for Distribution is a non-GAAP financial measure. For a reconciliation of Earnings Available for Distribution to GAAP Net Income, as well as an explanation of this measure, please refer to Non-GAAP Financial Measures and Reconciliation to GAAP Net Income below. (3) Includes noncontrolling interests. (4) Includes excess and full MSRs. ADDITIONAL INFORMATION For additional information that management believes to be useful for investors, please refer to the latest presentation posted on the Investors section of the Company’s website, www.rithmcap.com. For consolidated investment portfolio information, please refer to the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, which are available on the Company’s website, www.rithmcap.com. Information on, or accessible through, our website is not a part of, and is not incorporated into, this press release. EARNINGS CONFERENCE CALL Rithm Capital’s management will host a conference call on Wednesday, November 2, 2022 at 8:00 A.M. Eastern Time. A copy of the earnings release will be posted to the Investors section of Rithm Capital’s website, www.rithmcap.com. All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-833-974-2382 (from within the U.S.) or 1-412-317-5787 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “Rithm Capital Third Quarter 2022 Earnings Call.” In addition, participants are encouraged to pre-register for the conference call at https://dpregister.com/sreg/10172582/f4e46bc5d8. A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.rithmcap.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast. A telephonic replay of the conference call will also be available two hours following the call’s completion through 11:59 P.M. Eastern Time on Wednesday, November 9, 2022 by dialing 1-877-344-7529 (from within the U.S.) or 1-412-317-0088 (from outside of the U.S.); please reference access code “5936830.” Consolidated Statements of Income (Unaudited) ($ in thousands, except share and per share data) Three Months Ended September 30, 2022 June 30, 2022 Revenues Servicing fee revenue, net and interest income from MSR financing receivables $ 453,163 $ 469,478 Change in fair value of MSRs and MSR financing receivables (includes realization of cash flows of $(141,616) and $(180,265), respectively) (17,178) 336,563 Servicing revenue, net 435,985 806,041 Interest income 273,379 211,648 Gain on originated residential mortgage loans, held-for-sale, net 203,479 304,791 912,843 1,322,480 Expenses Interest expense and warehouse line fees 218,089 150,829 General and administrative 214,624 225,271 Compensation and benefits 290,984 339,658 Management fee to affiliate — 20,985 Termination fee to affiliate — 400,000 723,697 1,136,743 Other income (loss) Change in fair value of investments, net 968,340 (234,040) Gain (loss) on settlement of investments, net (1,004,454) 94,936 Other income (loss), net 23,242 59,388 (12,872) (79,716) Income before income taxes 176,274 106,021 Income tax expense 22,084 72,690 Net income $ 154,190 $ 33,331 Noncontrolling interests in income (loss) of consolidated subsidiaries 7,307 14,182 Dividends on preferred stock 22,427 22,427 Net income (loss) attributable to common stockholders $ 124,456 $ (3,278) Net income (loss) per share of common stock Basic $ 0.27 $ (0.01) Diluted $ 0.26 $ (0.01) Weighted average number of shares of common stock outstanding Basic 467,974,962 466,804,548 Diluted 476,796,757 466,804,548 Dividends declared per share of common stock $ 0.25 $ 0.25 Consolidated Balance Sheets ($ in thousands, except share data) September 30, 2022 (Unaudited) December 31, 2021 Assets Excess mortgage servicing rights, at fair value $ 322,168 $ 344,947 Mortgage servicing rights and mortgage servicing rights financing receivables, at fair value 8,895,074 6,858,803 Servicer advance investments, at fair value 371,418 421,807 Real estate and other securities 9,437,008 9,396,539 Residential loans and variable interest entity consumer loans held-for-investment, at fair value 864,534 1,077,224 Residential mortgage loans, held-for-sale ($3,933,392 and $11,214,924 at fair value, respectively) 4,037,411 11,347,845 Single-family rental properties, held-for-investment 959,448 579,607 Mortgage loans receivable, at fair value 1,919,913 1,515,762 Residential mortgage loans subject to repurchase 1,897,142 1,787,314 Cash and cash equivalents 1,420,010 1,332,575 Restricted cash 529,565 195,867 Servicer advances receivable 2,522,246 2,855,148 Other assets 2,158,598 2,028,752 $ 35,334,535 $ 39,742,190 Liabilities and Equity Liabilities Secured financing agreements $ 13,655,247 $ 20,592,884 Secured notes and bonds payable ($653,204 and $511,107 at fair value, respectively) 9,653,664 8,644,810 Residential mortgage loan repurchase liability 1,897,142 1,787,314 Unsecured senior notes, net of issuance costs 544,612 543,293 Payable for investments purchased 498,933 — Due to affiliates — 17,819 Dividends payable 129,632 127,922 Accrued expenses and other liabilities 1,893,679 1,358,768 28,272,909 33,072,810 Commitments and Contingencies Equity Preferred stock, $0.01 par value, 100,000,000 shares authorized, 52,038,000 and 52,210,000 issued and outstanding, $1,300,959 and $1,305,250 aggregate liquidation preference, respectively 1,258,667 1,262,481 Common stock, $0.01 par value, 2,000,000,000 shares authorized, 473,715,100 and 466,758,266 issued and outstanding, respectively 4,739 4,669 Additional paid-in capital 6,060,671 6,059,671 Retained earnings (accumulated deficit) (381,843) (813,042) Accumulated other comprehensive income 48,337 90,253 Total Rithm Capital stockholders’ equity 6,990,571 6,604,032 Noncontrolling interests in equity of consolidated subsidiaries 71,055 65,348 Total equity 7,061,626 6,669,380 $ 35,334,535 $ 39,742,190 NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP NET INCOME 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 operating expenses and taxes, (iv) the Company’s realized and unrealized gains or losses on investments, including any impairment or reserve for expected credit losses and (v) income from the Company’s origination and servicing businesses. “Earnings available for distribution” is a non-GAAP financial measure of the Company’s operating performance, excluding the fourth variable above and adjusts the earnings from the consumer loan investment to a level yield basis. Earnings available for distribution is used by management to evaluate the Company’s performance without taking into account: (i) realized and unrealized gains and losses, which although they represent a part of the Company’s recurring operations, are subject to significant variability and are generally limited to a potential indicator of future economic performance; (ii) termination fee to affiliate; (iii) non-capitalized transaction-related expenses; and (iv) deferred taxes, which are not representative of current operations. The Company’s definition of earnings available for distribution includes accretion on held-for-sale loans as if they continued to be held-for-investment. Although the Company intends to sell such loans, there is no guarantee that such loans will be sold or that they will be sold within any expected timeframe. During the period prior to sale, the Company continues to receive cash flows from such loans and believes that it is appropriate to record a yield thereon. In addition, the Company’s definition of earnings available for distribution excludes all deferred taxes, rather than just deferred taxes related to unrealized gains or losses, because the Company believes deferred taxes are not representative of current operations. The Company’s definition of earnings available for distribution also limits accreted interest income on RMBS where the Company receives par upon the exercise of associated call rights based on the estimated value of the underlying collateral, net of related costs including advances. The Company created this limit in order to be able to accrete to the lower of par or the net value of the underlying collateral, in instances where the net value of the underlying collateral is lower than par. The Company believes this amount represents the amount of accretion the Company would have expected to earn on such bonds had the call rights not been exercised. The Company’s investments in consumer loans are accounted for under the fair value option. Earnings available for distribution adjusts earnings on consumer loans to a level yield to present income recognition across the consumer loan portfolio in the manner in which it is economically earned, to avoid potential delays in loss recognition, and align it with the Company’s overall portfolio of mortgage-related assets which generally record income on a level yield basis. With regard to non-capitalized transaction-related expenses, management does not view these costs as part of the Company’s core operations, as they are considered by management to be similar to realized losses incurred at acquisition. Non-capitalized transaction-related expenses are generally legal and valuation service costs, as well as other professional service fees, incurred when the Company acquires certain investments, as well as costs associated with the acquisition and integration of acquired businesses. Through its wholly owned subsidiaries, the Company originates conventional, government-insured and nonconforming residential mortgage loans for sale and securitization. In connection with the transfer of loans to the GSEs or mortgage investors, the Company reports realized gains or losses on the sale of originated residential mortgage loans and retention of mortgage servicing rights, which the Company believes is an indicator of performance for the Origination and Servicing segments and therefore included in earnings available for distribution. Realized gains or losses on the sale of originated residential mortgage loans had no impact on earnings available for distribution in any prior period, but may impact earnings available for distribution in future periods. Earnings available for distribution includes results from operating companies with the exception of the unrealized gains or losses due to changes in valuation inputs and assumptions on MSRs, net of unrealized gains and losses on hedged MSRs, and non-capitalized transaction-related expenses. Management believes that the adjustments to compute “earnings available for distribution” specified above allow investors and analysts to readily identify and track the operating performance of the assets that form the core of the Company’s activity, assist in comparing the core operating results between periods, and enable investors to evaluate the Company’s current core performance using the same financial measure that management uses to operate the business. Management also utilizes earnings available for distribution as a financial measure in its decision-making process relating to improvements to the underlying fundamental operations of the Company’s investments, as well as the allocation of resources between those investments, and management also relies on earnings available for distribution as an indicator of the results of such decisions. Earnings available for distribution excludes certain recurring items, such as gains and losses (including impairment and reserves as well as derivative activities) and non-capitalized transaction-related expenses, because they are not considered by management to be part of the Company’s core operations for the reasons described herein. As such, earnings available for distribution is not intended to reflect all of the Company’s activity and should be considered as only one of the factors used by management in assessing the Company’s performance, along with GAAP net income which is inclusive of all of the Company’s activities. The Company views earnings available for distribution as a consistent financial measure of its investment portfolio’s ability to generate income for distribution to common stockholders. Earnings available for distribution does not represent and should not be considered as a substitute for, or superior to, net income or as a substitute for, or superior to, cash flows from operating activities, each as determined in accordance with GAAP, and the Company’s calculation of this financial measure may not be comparable to similarly entitled financial measures reported by other companies. Furthermore, to maintain qualification as a REIT, U.S. federal income tax law generally requires that the Company distribute at least 90% of its REIT taxable income annually, determined without regard to the deduction for dividends paid and excluding net capital gains. Because the Company views earnings available for distribution as a consistent financial measure of its ability to generate income for distribution to common stockholders, earnings available for distribution is one metric, but not the exclusive metric, that the Company’s board of directors uses to determine the amount, if any, and the payment date of dividends on common stock. However, earnings available for distribution should not be considered as an indication of the Company’s taxable income, a guaranty of its ability to pay dividends or as a proxy for the amount of dividends it may pay, as earnings available for distribution excludes certain items that impact its cash needs. The table below provides a reconciliation of earnings available for distribution to the most directly comparable GAAP financial measure (dollars in thousands, except share and per share data): Three Months Ended September 30, 2022 June 30, 2022 Net income (loss) attributable to common stockholders $ 124,456 $ (3,278) Adjustments: Impairment 6,744 3,788 Change in fair value of investments, net (1,092,789) (282,788) (Gain) loss on settlement of investments, net 1,015,701 (100,355) Other (income) loss, net 68,336 49,254 Non-capitalized transaction-related expenses 4,450 4,250 Termination fee to affiliate — 400,000 Preferred stock management fee to affiliate — 3,932 Deferred taxes 22,081 74,111 Interest income on residential mortgage loans, held-for-sale 1,834 (2,881) Earnings available for distribution of equity method investees: Excess mortgage servicing rights 2,215 (260) Earnings available for distribution $ 153,028 $ 145,773 Net income (loss) per diluted share $ 0.26 $ (0.01) Earnings available for distribution per diluted share $ 0.32 $ 0.31 Weighted average number of shares of common stock outstanding, diluted 476,796,757 466,804,548 SEGMENT INFORMATION ($ in thousands) Origination and Servicing Residential Securities, Properties and Loans Third Quarter 2022 Origination Servicing MSR Related Investments Real Estate Securities Properties & Residential Mortgage Loans Mortgage Loans Receivable Corporate & Other Total Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ — $ 354,171 $ 98,992 $ — $ — $ — $ — $ 453,163 Change in fair value of MSRs and MSR financing receivables — 40,401 (57,579) — — — — (17,178) Servicing revenue, net — 394,572 41,413 — — — — 435,985 Interest income 41,862 55,844 15,401 76,908 19,186 42,335 21,843 273,379 Gain on originated mortgage loans, held-for-sale, net 214,703 5,980 — — (17,204) — — 203,479 Total revenues 256,565 456,396 56,814 76,908 1,982 42,335 21,843 912,843 Interest expense 31,345 56,650 26,033 51,822 21,242 18,888 12,109 218,089 G&A and other 283,798 132,160 43,388 921 12,220 15,241 17,880 505,608 Total operating expenses 315,143 188,810 69,421 52,743 33,462 34,129 29,989 723,697 Change in fair value of investments, net — — (8,711) 887,898 67,797 27,201 (5,845) 968,340 Gain (loss) on settlement of investments, net — (549) (1,454) (1,018,354) 14,032 1,871 — (1,004,454) Other income (loss), net 1,368 (74) 923 (2,799) 11,448 5,710 6,666 23,242 Total other income (loss) 1,368 (623) (9,242) (133,255) 93,277 34,782 821 (12,872) Income (loss) before income taxes (57,210) 266,963 (21,849) (109,090) 61,797 42,988 (7,325) 176,274 Income tax expense (benefit) (14,243) 51,032 (7,197) — (5,564) (1,940) (4) 22,084 Net income (loss) (42,967) 215,931 (14,652) (109,090) 67,361 44,928 (7,321) 154,190 Noncontrolling interests in income (loss) of consolidated subsidiaries 471 — (139) — — — 6,975 7,307 Dividends on preferred stock — — — — — — 22,427 22,427 Net income (loss) attributable to common stockholders $ (43,438) $ 215,931 $ (14,513) $ (109,090) $ 67,361 $ 44,928 $ (36,723) $ 124,456 As of September 30, 2022 Total Assets $ 3,875,126 $ 10,314,954 $ 5,618,234 $ 10,081,229 $ 2,571,458 $ 2,170,411 $ 703,123 $ 35,334,535 Total Rithm Capital stockholder’s equity $ 492,543 $ 3,107,614 $ 2,321,904 $ 723,082 $ 323,259 $ 557,513 $ (535,344) $ 6,990,571 Origination and Servicing Residential Securities, Properties and Loans Second Quarter 2022 Origination Servicing MSR Related Investments Real Estate Securities Properties & Residential Mortgage Loans Mortgage Loans Receivable Corporate & Other Total Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ — $ 364,698 $ 104,780 $ — $ — $ — $ — $ 469,478 Change in fair value of MSRs and MSR financing receivables — 344,893 (8,330) — — — — 336,563 Servicing revenue, net — 709,591 96,450 — — — — 806,041 Interest income 46,216 16,757 11,340 54,584 22,640 36,748 23,363 211,648 Gain on originated mortgage loans, held-for-sale, net 302,610 15,739 106 — (13,664) — — 304,791 Total revenues 348,826 742,087 107,896 54,584 8,976 36,748 23,363 1,322,480 Interest expense 27,578 41,096 25,788 20,216 11,332 12,680 12,139 150,829 G&A and other 349,432 120,395 55,401 710 11,891 14,600 433,485 985,914 Total operating expenses 377,010 161,491 81,189 20,926 23,223 27,280 445,624 1,136,743 Change in fair value of investments, net — (1,780) (93) (241,213) 11,399 4,843 (7,196) (234,040) Gain (loss) on settlement of investments, net — (564) (1,265) 117,179 (4,798) (15,616) — 94,936 Other income (loss), net 1,832 207 16,280 (2,127) 29,471 7,430 6,295 59,388 Total other income (loss) 1,832 (2,137) 14,922 (126,161) 36,072 (3,343) (901) (79,716) Income (loss) before income taxes (26,352) 578,459 41,629 (92,503) 21,825 6,125 (423,162) 106,021 Income tax expense (benefit) (6,522) 151,236 9,466 — (2,480) (3,623) (75,387) 72,690 Net income (loss) (19,830) 427,223 32,163 (92,503) 24,305 9,748 (347,775) 33,331 Noncontrolling interests in income (loss) of consolidated subsidiaries 1,287 — 41 — — — 12,854 14,182 Dividends on preferred stock — — — — — — 22,427 22,427 Net income (loss) attributable to common stockholders $ (21,117) $ 427,223 $ 32,122 $ (92,503) $ 24,305 $ 9,748 $ (383,056) $ (3,278) As of June 30, 2022 Total Assets $ 4,453,769 $ 10,242,476 $ 5,498,876 $ 8,494,053 $ 3,039,670 $ 2,025,664 $ 799,339 $ 34,553,847 Total Rithm Capital stockholder’s equity $ 655,923 $ 3,168,072 $ 1,997,486 $ 822,509 $ 380,664 $ 525,440 $ (556,267) $ 6,993,827 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain information in this press release constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, expected benefits and synergies from acquiring a 50% interest in Senlac Ridge Partners, our ability to continue growing book value in the fourth quarter, expected market volatility and ability to generate great returns for our shareholders in 2022 and beyond. These statements are not historical facts. They represent management’s current expectations regarding future events and are subject to a number of trends and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those described in the forward-looking statements. Accordingly, you should not place undue reliance on any forward-looking statements contained herein. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled “Cautionary Statements Regarding Forward Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent annual and quarterly reports and other filings filed with the U.S. Securities and Exchange Commission, which are available on the Company’s website (www.rithmcap.com). New risks and uncertainties emerge from time to time, and it is not possible for Rithm Capital to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Forward-looking statements contained herein speak only as of the date of this press release, and Rithm Capital expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Rithm Capital's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. ABOUT RITHM CAPITAL Rithm Capital is a leading provider of capital and services to the real estate and financial services industries. The Company’s mission is to generate attractive risk-adjusted returns across interest rate environments through a complementary portfolio of investments and operating businesses. Since inception in 2013, Rithm Capital has delivered approximately $4.2 billion in dividends to shareholders. Rithm Capital’s investment portfolio is composed of mortgage servicing related assets (full and excess MSRs and servicer advances), residential securities (and associated call rights) and loans (including single family rental), and consumer loans. Rithm Capital’s investments in operating entities include leading origination and servicing platforms held through its wholly-owned subsidiaries, Newrez LLC, Caliber Home Loans Inc., and Genesis Capital LLC, as well as investments in affiliated businesses that provide mortgage related services. Rithm Capital is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes and is headquartered in New York City. View source version on businesswire.com: https://www.businesswire.com/news/home/20221102005216/en/Contacts Investor Relations 212-850-7770 IR@RithmCap.com
Rithm Capital Corp. (NYSE: RITM; “Rithm Capital” or the “Company”) today reported the following information for the third quarter ended September 30, 2022: Third Quarter 2022 Financial Highlights: GAAP net income of $124.5 million, or $0.26 per diluted common share(1) Earnings available for distribution of $153.0 million, or $0.32 per diluted common share(1)(2) Common dividend of $118.4 million, or $0.25 per common share Book value per common share of $12.10(1) Q3 2022 Q2 2022 Summary Operating Results: GAAP Net Income (Loss) per Diluted Common Share(1) $ 0.26 $ (0.01) GAAP Net Income (Loss) $ 124.5 million $ (3.3) million Non-GAAP Results: Earnings Available for Distribution per Diluted Common Share(1) $ 0.32 $ 0.31 Earnings Available for Distribution(2) $ 153.0 million $ 145.8 million Common Dividend: Common Dividend per Share $ 0.25 $ 0.25 Common Dividend $ 118.4 million $ 116.7 million “I am pleased to share that our Company had another great quarter,” said Michael Nierenberg, Chief Executive Officer of Rithm Capital. “Book value quarter-over-quarter was essentially unchanged, despite the large sell-off in rates and the widening of credit spreads. Earnings available for distribution were 32 cents per diluted share, in line with prior quarters. Our emphasis continues to be on strategically growing the Company across the financial services landscape, managing risk with a macro view towards the future, and allocating capital accordingly to focus on attractive risk-adjusted returns.” “We believe Rithm provides investors with a differentiated platform. With our operating companies Genesis, Newrez/Caliber, Guardian and Adoor (SFR), as well as our investment portfolio, our Company is different. As part of our growth strategy, we are excited to announce an agreement to acquire a 50% interest in Senlac Ridge Partners, an investment management firm focused on commercial real estate.” “Senlac, led by founder David Welsh, creates a new commercial real estate business at Rithm focused on debt and equity investments. Welsh, who co-founded Normandy Real Estate Partners, and his team of approximately 20 employees bring with them decades of expertise, a strong track record investing in and turning around distressed assets, and an extensive network across the country. We believe Senlac’s vertically-integrated infrastructure and operations, development, sourcing and fund management capabilities will further our ability to raise third-party capital around different strategies and create stable, recurring fee streams for our shareholders. We are excited about this new chapter for Rithm and look forward to closing the year out on a high note.” Third Quarter 2022 Company Highlights: Origination & Servicing (Mortgage Company) Combined segment pre-tax income of $209.8 million(3), including: $16 million of severance, $14 million of lease termination fees and $12 million of write-offs related to software and contract termination fees $131 million of positive mark-to-market changes on the Full MSR portfolio Quarterly origination funded production of $13.8 billion UPB Total gain on sale margin of 1.71% Estimated Q4’22 funded origination volume of approximately $6 to $8 billion Total Rithm MSR Portfolio Summary MSR portfolio totaled $615 billion in unpaid principal balance (“UPB”) at September 30, 2022 compared to $623 billion UPB at June 30, 2022(4) Portfolio Average CPR of approximately 8% Servicer advance balances of $2.9 billion as of September 30, 2022, down 3% from June 30, 2022 $143 million of positive mark-to-market changes on our Full MSR portfolio (inclusive of the $131 million positive mark-to-market changes at the Mortgage Company) Residential Securities, Properties and Loans Priced and closed two securitizations (one Non-QM and one SFR) representing approximately $633 million UPB of collateral Mortgage Loans Receivable Quarterly origination funded production of $622 million through Genesis Capital LLC (1) Per common share calculations for both GAAP Net Income and Earnings Available for Distribution are based on 476,796,757 and 466,804,548 weighted average diluted shares for the quarter ended September 30, 2022 and June 30, 2022, respectively. The Company excluded 17,757,843 weighted average common shares from the calculation of diluted net income (loss) per share for the quarter ended June 30, 2022 because their inclusion would have been anti-dilutive. Per share calculations of Book Value are based on 473,715,100 and 466,786,526 common shares outstanding as of September 30, 2022 and June 30, 2022, respectively. The common shares outstanding as of September 30, 2022 reflects the cashless exercise of common stock purchase warrants of 6.9 million shares. (2) Earnings Available for Distribution is a non-GAAP financial measure. For a reconciliation of Earnings Available for Distribution to GAAP Net Income, as well as an explanation of this measure, please refer to Non-GAAP Financial Measures and Reconciliation to GAAP Net Income below. (3) Includes noncontrolling interests. (4) Includes excess and full MSRs. ADDITIONAL INFORMATION For additional information that management believes to be useful for investors, please refer to the latest presentation posted on the Investors section of the Company’s website, www.rithmcap.com. For consolidated investment portfolio information, please refer to the Company’s most recent Quarterly Report on Form 10-Q or Annual Report on Form 10-K, which are available on the Company’s website, www.rithmcap.com. Information on, or accessible through, our website is not a part of, and is not incorporated into, this press release. EARNINGS CONFERENCE CALL Rithm Capital’s management will host a conference call on Wednesday, November 2, 2022 at 8:00 A.M. Eastern Time. A copy of the earnings release will be posted to the Investors section of Rithm Capital’s website, www.rithmcap.com. All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-833-974-2382 (from within the U.S.) or 1-412-317-5787 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference “Rithm Capital Third Quarter 2022 Earnings Call.” In addition, participants are encouraged to pre-register for the conference call at https://dpregister.com/sreg/10172582/f4e46bc5d8. A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.rithmcap.com. Please allow extra time prior to the call to visit the website and download any necessary software required to listen to the internet broadcast. A telephonic replay of the conference call will also be available two hours following the call’s completion through 11:59 P.M. Eastern Time on Wednesday, November 9, 2022 by dialing 1-877-344-7529 (from within the U.S.) or 1-412-317-0088 (from outside of the U.S.); please reference access code “5936830.” Consolidated Statements of Income (Unaudited) ($ in thousands, except share and per share data) Three Months Ended September 30, 2022 June 30, 2022 Revenues Servicing fee revenue, net and interest income from MSR financing receivables $ 453,163 $ 469,478 Change in fair value of MSRs and MSR financing receivables (includes realization of cash flows of $(141,616) and $(180,265), respectively) (17,178) 336,563 Servicing revenue, net 435,985 806,041 Interest income 273,379 211,648 Gain on originated residential mortgage loans, held-for-sale, net 203,479 304,791 912,843 1,322,480 Expenses Interest expense and warehouse line fees 218,089 150,829 General and administrative 214,624 225,271 Compensation and benefits 290,984 339,658 Management fee to affiliate — 20,985 Termination fee to affiliate — 400,000 723,697 1,136,743 Other income (loss) Change in fair value of investments, net 968,340 (234,040) Gain (loss) on settlement of investments, net (1,004,454) 94,936 Other income (loss), net 23,242 59,388 (12,872) (79,716) Income before income taxes 176,274 106,021 Income tax expense 22,084 72,690 Net income $ 154,190 $ 33,331 Noncontrolling interests in income (loss) of consolidated subsidiaries 7,307 14,182 Dividends on preferred stock 22,427 22,427 Net income (loss) attributable to common stockholders $ 124,456 $ (3,278) Net income (loss) per share of common stock Basic $ 0.27 $ (0.01) Diluted $ 0.26 $ (0.01) Weighted average number of shares of common stock outstanding Basic 467,974,962 466,804,548 Diluted 476,796,757 466,804,548 Dividends declared per share of common stock $ 0.25 $ 0.25 Consolidated Balance Sheets ($ in thousands, except share data) September 30, 2022 (Unaudited) December 31, 2021 Assets Excess mortgage servicing rights, at fair value $ 322,168 $ 344,947 Mortgage servicing rights and mortgage servicing rights financing receivables, at fair value 8,895,074 6,858,803 Servicer advance investments, at fair value 371,418 421,807 Real estate and other securities 9,437,008 9,396,539 Residential loans and variable interest entity consumer loans held-for-investment, at fair value 864,534 1,077,224 Residential mortgage loans, held-for-sale ($3,933,392 and $11,214,924 at fair value, respectively) 4,037,411 11,347,845 Single-family rental properties, held-for-investment 959,448 579,607 Mortgage loans receivable, at fair value 1,919,913 1,515,762 Residential mortgage loans subject to repurchase 1,897,142 1,787,314 Cash and cash equivalents 1,420,010 1,332,575 Restricted cash 529,565 195,867 Servicer advances receivable 2,522,246 2,855,148 Other assets 2,158,598 2,028,752 $ 35,334,535 $ 39,742,190 Liabilities and Equity Liabilities Secured financing agreements $ 13,655,247 $ 20,592,884 Secured notes and bonds payable ($653,204 and $511,107 at fair value, respectively) 9,653,664 8,644,810 Residential mortgage loan repurchase liability 1,897,142 1,787,314 Unsecured senior notes, net of issuance costs 544,612 543,293 Payable for investments purchased 498,933 — Due to affiliates — 17,819 Dividends payable 129,632 127,922 Accrued expenses and other liabilities 1,893,679 1,358,768 28,272,909 33,072,810 Commitments and Contingencies Equity Preferred stock, $0.01 par value, 100,000,000 shares authorized, 52,038,000 and 52,210,000 issued and outstanding, $1,300,959 and $1,305,250 aggregate liquidation preference, respectively 1,258,667 1,262,481 Common stock, $0.01 par value, 2,000,000,000 shares authorized, 473,715,100 and 466,758,266 issued and outstanding, respectively 4,739 4,669 Additional paid-in capital 6,060,671 6,059,671 Retained earnings (accumulated deficit) (381,843) (813,042) Accumulated other comprehensive income 48,337 90,253 Total Rithm Capital stockholders’ equity 6,990,571 6,604,032 Noncontrolling interests in equity of consolidated subsidiaries 71,055 65,348 Total equity 7,061,626 6,669,380 $ 35,334,535 $ 39,742,190 NON-GAAP FINANCIAL MEASURES AND RECONCILIATION TO GAAP NET INCOME 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 operating expenses and taxes, (iv) the Company’s realized and unrealized gains or losses on investments, including any impairment or reserve for expected credit losses and (v) income from the Company’s origination and servicing businesses. “Earnings available for distribution” is a non-GAAP financial measure of the Company’s operating performance, excluding the fourth variable above and adjusts the earnings from the consumer loan investment to a level yield basis. Earnings available for distribution is used by management to evaluate the Company’s performance without taking into account: (i) realized and unrealized gains and losses, which although they represent a part of the Company’s recurring operations, are subject to significant variability and are generally limited to a potential indicator of future economic performance; (ii) termination fee to affiliate; (iii) non-capitalized transaction-related expenses; and (iv) deferred taxes, which are not representative of current operations. The Company’s definition of earnings available for distribution includes accretion on held-for-sale loans as if they continued to be held-for-investment. Although the Company intends to sell such loans, there is no guarantee that such loans will be sold or that they will be sold within any expected timeframe. During the period prior to sale, the Company continues to receive cash flows from such loans and believes that it is appropriate to record a yield thereon. In addition, the Company’s definition of earnings available for distribution excludes all deferred taxes, rather than just deferred taxes related to unrealized gains or losses, because the Company believes deferred taxes are not representative of current operations. The Company’s definition of earnings available for distribution also limits accreted interest income on RMBS where the Company receives par upon the exercise of associated call rights based on the estimated value of the underlying collateral, net of related costs including advances. The Company created this limit in order to be able to accrete to the lower of par or the net value of the underlying collateral, in instances where the net value of the underlying collateral is lower than par. The Company believes this amount represents the amount of accretion the Company would have expected to earn on such bonds had the call rights not been exercised. The Company’s investments in consumer loans are accounted for under the fair value option. Earnings available for distribution adjusts earnings on consumer loans to a level yield to present income recognition across the consumer loan portfolio in the manner in which it is economically earned, to avoid potential delays in loss recognition, and align it with the Company’s overall portfolio of mortgage-related assets which generally record income on a level yield basis. With regard to non-capitalized transaction-related expenses, management does not view these costs as part of the Company’s core operations, as they are considered by management to be similar to realized losses incurred at acquisition. Non-capitalized transaction-related expenses are generally legal and valuation service costs, as well as other professional service fees, incurred when the Company acquires certain investments, as well as costs associated with the acquisition and integration of acquired businesses. Through its wholly owned subsidiaries, the Company originates conventional, government-insured and nonconforming residential mortgage loans for sale and securitization. In connection with the transfer of loans to the GSEs or mortgage investors, the Company reports realized gains or losses on the sale of originated residential mortgage loans and retention of mortgage servicing rights, which the Company believes is an indicator of performance for the Origination and Servicing segments and therefore included in earnings available for distribution. Realized gains or losses on the sale of originated residential mortgage loans had no impact on earnings available for distribution in any prior period, but may impact earnings available for distribution in future periods. Earnings available for distribution includes results from operating companies with the exception of the unrealized gains or losses due to changes in valuation inputs and assumptions on MSRs, net of unrealized gains and losses on hedged MSRs, and non-capitalized transaction-related expenses. Management believes that the adjustments to compute “earnings available for distribution” specified above allow investors and analysts to readily identify and track the operating performance of the assets that form the core of the Company’s activity, assist in comparing the core operating results between periods, and enable investors to evaluate the Company’s current core performance using the same financial measure that management uses to operate the business. Management also utilizes earnings available for distribution as a financial measure in its decision-making process relating to improvements to the underlying fundamental operations of the Company’s investments, as well as the allocation of resources between those investments, and management also relies on earnings available for distribution as an indicator of the results of such decisions. Earnings available for distribution excludes certain recurring items, such as gains and losses (including impairment and reserves as well as derivative activities) and non-capitalized transaction-related expenses, because they are not considered by management to be part of the Company’s core operations for the reasons described herein. As such, earnings available for distribution is not intended to reflect all of the Company’s activity and should be considered as only one of the factors used by management in assessing the Company’s performance, along with GAAP net income which is inclusive of all of the Company’s activities. The Company views earnings available for distribution as a consistent financial measure of its investment portfolio’s ability to generate income for distribution to common stockholders. Earnings available for distribution does not represent and should not be considered as a substitute for, or superior to, net income or as a substitute for, or superior to, cash flows from operating activities, each as determined in accordance with GAAP, and the Company’s calculation of this financial measure may not be comparable to similarly entitled financial measures reported by other companies. Furthermore, to maintain qualification as a REIT, U.S. federal income tax law generally requires that the Company distribute at least 90% of its REIT taxable income annually, determined without regard to the deduction for dividends paid and excluding net capital gains. Because the Company views earnings available for distribution as a consistent financial measure of its ability to generate income for distribution to common stockholders, earnings available for distribution is one metric, but not the exclusive metric, that the Company’s board of directors uses to determine the amount, if any, and the payment date of dividends on common stock. However, earnings available for distribution should not be considered as an indication of the Company’s taxable income, a guaranty of its ability to pay dividends or as a proxy for the amount of dividends it may pay, as earnings available for distribution excludes certain items that impact its cash needs. The table below provides a reconciliation of earnings available for distribution to the most directly comparable GAAP financial measure (dollars in thousands, except share and per share data): Three Months Ended September 30, 2022 June 30, 2022 Net income (loss) attributable to common stockholders $ 124,456 $ (3,278) Adjustments: Impairment 6,744 3,788 Change in fair value of investments, net (1,092,789) (282,788) (Gain) loss on settlement of investments, net 1,015,701 (100,355) Other (income) loss, net 68,336 49,254 Non-capitalized transaction-related expenses 4,450 4,250 Termination fee to affiliate — 400,000 Preferred stock management fee to affiliate — 3,932 Deferred taxes 22,081 74,111 Interest income on residential mortgage loans, held-for-sale 1,834 (2,881) Earnings available for distribution of equity method investees: Excess mortgage servicing rights 2,215 (260) Earnings available for distribution $ 153,028 $ 145,773 Net income (loss) per diluted share $ 0.26 $ (0.01) Earnings available for distribution per diluted share $ 0.32 $ 0.31 Weighted average number of shares of common stock outstanding, diluted 476,796,757 466,804,548 SEGMENT INFORMATION ($ in thousands) Origination and Servicing Residential Securities, Properties and Loans Third Quarter 2022 Origination Servicing MSR Related Investments Real Estate Securities Properties & Residential Mortgage Loans Mortgage Loans Receivable Corporate & Other Total Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ — $ 354,171 $ 98,992 $ — $ — $ — $ — $ 453,163 Change in fair value of MSRs and MSR financing receivables — 40,401 (57,579) — — — — (17,178) Servicing revenue, net — 394,572 41,413 — — — — 435,985 Interest income 41,862 55,844 15,401 76,908 19,186 42,335 21,843 273,379 Gain on originated mortgage loans, held-for-sale, net 214,703 5,980 — — (17,204) — — 203,479 Total revenues 256,565 456,396 56,814 76,908 1,982 42,335 21,843 912,843 Interest expense 31,345 56,650 26,033 51,822 21,242 18,888 12,109 218,089 G&A and other 283,798 132,160 43,388 921 12,220 15,241 17,880 505,608 Total operating expenses 315,143 188,810 69,421 52,743 33,462 34,129 29,989 723,697 Change in fair value of investments, net — — (8,711) 887,898 67,797 27,201 (5,845) 968,340 Gain (loss) on settlement of investments, net — (549) (1,454) (1,018,354) 14,032 1,871 — (1,004,454) Other income (loss), net 1,368 (74) 923 (2,799) 11,448 5,710 6,666 23,242 Total other income (loss) 1,368 (623) (9,242) (133,255) 93,277 34,782 821 (12,872) Income (loss) before income taxes (57,210) 266,963 (21,849) (109,090) 61,797 42,988 (7,325) 176,274 Income tax expense (benefit) (14,243) 51,032 (7,197) — (5,564) (1,940) (4) 22,084 Net income (loss) (42,967) 215,931 (14,652) (109,090) 67,361 44,928 (7,321) 154,190 Noncontrolling interests in income (loss) of consolidated subsidiaries 471 — (139) — — — 6,975 7,307 Dividends on preferred stock — — — — — — 22,427 22,427 Net income (loss) attributable to common stockholders $ (43,438) $ 215,931 $ (14,513) $ (109,090) $ 67,361 $ 44,928 $ (36,723) $ 124,456 As of September 30, 2022 Total Assets $ 3,875,126 $ 10,314,954 $ 5,618,234 $ 10,081,229 $ 2,571,458 $ 2,170,411 $ 703,123 $ 35,334,535 Total Rithm Capital stockholder’s equity $ 492,543 $ 3,107,614 $ 2,321,904 $ 723,082 $ 323,259 $ 557,513 $ (535,344) $ 6,990,571 Origination and Servicing Residential Securities, Properties and Loans Second Quarter 2022 Origination Servicing MSR Related Investments Real Estate Securities Properties & Residential Mortgage Loans Mortgage Loans Receivable Corporate & Other Total Servicing fee revenue, net and interest income from MSRs and MSR financing receivables $ — $ 364,698 $ 104,780 $ — $ — $ — $ — $ 469,478 Change in fair value of MSRs and MSR financing receivables — 344,893 (8,330) — — — — 336,563 Servicing revenue, net — 709,591 96,450 — — — — 806,041 Interest income 46,216 16,757 11,340 54,584 22,640 36,748 23,363 211,648 Gain on originated mortgage loans, held-for-sale, net 302,610 15,739 106 — (13,664) — — 304,791 Total revenues 348,826 742,087 107,896 54,584 8,976 36,748 23,363 1,322,480 Interest expense 27,578 41,096 25,788 20,216 11,332 12,680 12,139 150,829 G&A and other 349,432 120,395 55,401 710 11,891 14,600 433,485 985,914 Total operating expenses 377,010 161,491 81,189 20,926 23,223 27,280 445,624 1,136,743 Change in fair value of investments, net — (1,780) (93) (241,213) 11,399 4,843 (7,196) (234,040) Gain (loss) on settlement of investments, net — (564) (1,265) 117,179 (4,798) (15,616) — 94,936 Other income (loss), net 1,832 207 16,280 (2,127) 29,471 7,430 6,295 59,388 Total other income (loss) 1,832 (2,137) 14,922 (126,161) 36,072 (3,343) (901) (79,716) Income (loss) before income taxes (26,352) 578,459 41,629 (92,503) 21,825 6,125 (423,162) 106,021 Income tax expense (benefit) (6,522) 151,236 9,466 — (2,480) (3,623) (75,387) 72,690 Net income (loss) (19,830) 427,223 32,163 (92,503) 24,305 9,748 (347,775) 33,331 Noncontrolling interests in income (loss) of consolidated subsidiaries 1,287 — 41 — — — 12,854 14,182 Dividends on preferred stock — — — — — — 22,427 22,427 Net income (loss) attributable to common stockholders $ (21,117) $ 427,223 $ 32,122 $ (92,503) $ 24,305 $ 9,748 $ (383,056) $ (3,278) As of June 30, 2022 Total Assets $ 4,453,769 $ 10,242,476 $ 5,498,876 $ 8,494,053 $ 3,039,670 $ 2,025,664 $ 799,339 $ 34,553,847 Total Rithm Capital stockholder’s equity $ 655,923 $ 3,168,072 $ 1,997,486 $ 822,509 $ 380,664 $ 525,440 $ (556,267) $ 6,993,827 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS Certain information in this press release constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, expected benefits and synergies from acquiring a 50% interest in Senlac Ridge Partners, our ability to continue growing book value in the fourth quarter, expected market volatility and ability to generate great returns for our shareholders in 2022 and beyond. These statements are not historical facts. They represent management’s current expectations regarding future events and are subject to a number of trends and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those described in the forward-looking statements. Accordingly, you should not place undue reliance on any forward-looking statements contained herein. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled “Cautionary Statements Regarding Forward Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s most recent annual and quarterly reports and other filings filed with the U.S. Securities and Exchange Commission, which are available on the Company’s website (www.rithmcap.com). New risks and uncertainties emerge from time to time, and it is not possible for Rithm Capital to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Forward-looking statements contained herein speak only as of the date of this press release, and Rithm Capital expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Rithm Capital's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based. ABOUT RITHM CAPITAL Rithm Capital is a leading provider of capital and services to the real estate and financial services industries. The Company’s mission is to generate attractive risk-adjusted returns across interest rate environments through a complementary portfolio of investments and operating businesses. Since inception in 2013, Rithm Capital has delivered approximately $4.2 billion in dividends to shareholders. Rithm Capital’s investment portfolio is composed of mortgage servicing related assets (full and excess MSRs and servicer advances), residential securities (and associated call rights) and loans (including single family rental), and consumer loans. Rithm Capital’s investments in operating entities include leading origination and servicing platforms held through its wholly-owned subsidiaries, Newrez LLC, Caliber Home Loans Inc., and Genesis Capital LLC, as well as investments in affiliated businesses that provide mortgage related services. Rithm Capital is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes and is headquartered in New York City. View source version on businesswire.com: https://www.businesswire.com/news/home/20221102005216/en/
