Rithm Capital (RITM) 26 Oct 232023 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to Rithm Capital Corp. Conference Call. [Operator Instructions] I would like now to turn the conference over to Emma Bolla, Associate General Counsel. Please go ahead.

Thank you, and good morning, everyone. thank Quarter joining XXXX to Rithm today like Third Capital's Earnings would you us for for I Call.

Officer Nick Joining Chairman, me Chief and CEO Nierenberg, Capital. Financial Santoro, and President today of Rithm are of Rithm Michael Capital;

reference Throughout that earnings the Capital was the to supplement website, morning the www.rithmcap.com. going this call, are Rithm we to posted

you've already done download now. presentation not so, to If the I'd encourage you

annual are made review statements, encourage quarterly like filed would SEC. to nature, and I forward-looking by to the will These and release forward-looking statements. you in statements that materially statements point differ review regarding reports press be risk today certain I their earnings the our from the uncertain with may results. contained supplement factors and and our out actual disclaimers to in

And non-GAAP be will In call. GAAP of these addition, we directly over to in to discussing found measures turn our that, Reconciliations Michael. be comparable measures today's most supplement. I the will with measures the can call during financial some earnings

value in Good and extremely continued morning, couple book everyone. course company. very Really of our create quarter. very, for perspective, high perform to they place quarter, years lines levels liquidity. pay we Emma. an The growth well. of business positioning to earnings, put solid has the joining continue for Core the earnings in times just of over From exciting and solid us. a overall the Thanks operations past dividends Thanks, as

of time. higher future the signaling period for continue rates a the into We longer to with expect it Fed

take we the company The puts markets in are global advantage macro place our investing to believe for headed. a where of backdrop great

we about an company been have more manager. repositioning As of the vocal know, you alternative asset into very

The lines, plus and core which for believe to Capital are our employees. Rithm I our business will go be have to our future investors, to us lift existing point business, a the is I We shareholders Rithm core which X.X, crucial gotten this huge be clear. of there, want Before company. Private our

great already that to credit, the at into our With culture sure consumer team. here strategies some other we'll all announcement, expands we add point capabilities this launch near future. This investment globally and areas I'm of real our talent estate, terrific in

We're global transactions business upon also are transaction $XX working on that towards grows and consummation narrative asset asset another us business. continue for AUM. management of a our our leading These transformational being management billion to

want most prospects with extremely our excited partners adding us. growing earnings, partners shareholders our who with increase growing revenue, us of who LPs and with with grow importantly, private business We to will by our benefit and sector our are the win as and in the invest us

year-end, our look estimate At like this. business we following will the that

and in capital $XX all billion sheet capital, of the closes new balance business. of with that are of partners plenty bunch Management in of these Asset the everything billion equity happen, and a liquidity billion a assuming have the we'll projections, AUM Now deals business, private $X.X $XX-ish

Back to business. the core

clients servicing company mortgage so business this we will announced of third-party deal bolster billion servicing of special with acquisition During capacity SLS. a our $XXX Consistent is of with view, our or REIT $XX business, which add the servicing. quarter, our the earnings. our through business, and billion SLS servicing, third-party grow and is in increase

shareholders making $XXX servicing excess of for our the we what the MSRs serviced customers service, money are of To which be perspective care our MSRs, grows and a to not is clear, investments legacy about SLS upon by mortgages size. We others. a this race call us and portfolio LPs. and billion servicing for total investment about we deal. that This includes settlement from in Our notional

particularly in segment. initiatives, we continue company, mortgage the Regarding the be expense Origination reduction to on vigilant

expect origination to extreme mortgage at pressure with the X%. remain We business under rates

about we business. servicing how for think this? So great It's our do

have on out, basis that's I more for cash $XXX mortgage more of billion thing we servicing a earnings pointed flow. prepayments servicing notional and our business, As equals assets. one Lower

On estate very With going the assets going you a side, big valuations, remains capital very more could us forward. real forward. space focus the commercial ours expect allocate that to attractive and legacy of sector no to

we'll GreenBarn, Since Partners Senlac/Normandy known If of then, extremely you opportunistic year. we've side investments, which as do recall, we Right made the debt so. now, last attractive. the we end and acquired formerly continue at to some see was

prospects excited There's so the company much for more I and about, and really our we're ahead. could talk

flip our you take Q&A. it So what I'll is do now X in I'll and the open deck, then for up through to Page I'll supplement, and we'll

number of two focus overall think XX% add no $XX all Number as of unless an we of total in in-house. as our expertise, year-to-date assets be $X.X would us an no business shouldn't shareholder will billion of tomorrow in around dividend of asset that there's there's areas a XX line we book payment from expertise after credit, be years. When Rithm, of standpoint, paid dividends line real in is we billion equity expertise housing that billion we in, one. mortgage, our the And I look management we $X.X at estate. have business and return. the business

to more deploy side create the to slide, of We opportunistic by We partners. want capital. right want The partnership. powered

think this as we private markets to the And because capital markets. to in Now substantial a different deploy Again, the for a is going in more equity better in forward. grew thing our us we're the to we the a trades go private book. grow markets very we public opportunity it's where at company discount from

$X.X diluted and the talking quarter, total related includes realized or net highlights $X.XX for just sale dividend $XXX.X our diluted of to end which again, XXXX, billion per point billion. to earnings to This at liquidity side growth it the $X.XX of end MSRs of that excess the of X, $X.XX out time, the do $X.X or quarter, to QX and here, a the right $XXX.X $X.XX; of page of want was from $XX.XX the book value I the are share. the during of now, gain in million points note equity where it we cash at which the of it's to basis quarter. X%. the available to income quarter about GAAP of where was Page $XX.XX, end in financial per X.XX% almost spite million rising where share, today, the XX from the XX-year distribution, is

equity. mortgage Page Rithm, the equity. can billion in Today, and not at as X, all as and timeline real look you grown the estate. Everything presence company been and of around but while the will was only with we pipeline, of The presence, look continued some I estate The look we also $X.X have our would you acquisition forward what years. on go and Sculptor of over Fortress targeted the forward. other see evolution of $X of our we It our we working began at real credit were transaction grow started call you addition at substantially things XXXX. growth we've has And billion the we're to

our is help right recurring for private This I through level. folks want partnerships to on and at continue the you've roll capital as well SMAs, about investors thing funds before. we going talks on, side the We want that we out. work point for for manage also the Rithm that to continue create to to with shareholders, LP co-investment specific as and we'll This the capital business. us capital slide X. and to earnings generate out a The is the performance Page private of seen page, fees

been other as done The the we've out continues thing from those to created the work over years as grow platforms. benefit And point go in-house our forward. and to own the we to is continue that's origination business will all servicing

little between in we this I bring the The to is, deal, a and super Sculptor our update. business, is very wrapped second to be it's would up. a bring going expertise bring thing around to that. it lot in-house mind, super and transaction this X, in-house. my no deal Sculptor Obviously, that say on we're this Page press close excited there to get none. overlap to of excited to and We're What

with business an to If think formidable investment to be extremely the it, investment existing is you management going space. team, create coupled is going the Sculptor about that asset in our team,

what side. almost our The origination This X. SLS is is, not about again, This idea very -- the billion. third-party talks the to Really a $XXX increases about deal. it here it's servicing scale. servicing Page business million $XXX on is, deal. little There's so-called special

fee-for-service real a business. So it's

us other the thing for our special servicing what in capacity it is it does The space. increases

call than, homeowners forward going to Newrez special the around go about we you if take U.S. to and need does and picture, economy consumers the work more as macro the with the there's global our in servicing, think nobody that. to slow be down better and in for business So it,

our talks real Commercial we estate, about have XX expertise professionals. just to XX X. investment in-house. Page This really Currently,

of company space the more consumer a many we was we the don't built the space traditionally as player have know, and As been have large -- not real any commercial you estate around residential on side.

we're and opportunity extremely no see assets, With returns that extremely now up shareholders we excited grow set what would and would put our marketplace and call, legacy I I to great business the having that LPs. for what robust call right the in

company before, think, manager side, I residential to own traditional as well manufacture I asset as very keep out in to capability Genesis which the as just advantage competitive able mortgage loans On very, our loan over our business, side, whole provides a the we're us our gives manufacturing builders, in loans assets. as good in a mind, our pointed

good And at that talks to in -- the will returns When at a and of where about in money flow, it this rate we cash we to for. very macro something take capital, through you great and you been and opportunistic levels for and to to think capital the great hasn't yield do -- probably years. time think a you we senior going I'm probably unlevered look is XX that a environment what environment X time X% between which on we pages deploy capital, as it's XX manage assets are. about continue in think slide to deploying or be the XX% when look deploy we

loan of think debt, rights, very just real number not a strategies. mortgage most on things servicing et everything, not talks as commercial any But estate, time us. this. -- to we cetera, about to attractive different XX I'm spend but about Page everything look going

the able -- side be in. And Page not course we profiles would XX, to generate, everything to capital attractive a more our we're more invest we at look asset of us. couple the past as expertise that classes just have in most over the going extremely years, to look right business, on raise that yield in. the Everything classes around returns and funds outsized but page, things asset of to you the the I different if again, the hopeful real what that have look call we're capital we of

finally, going then through -- the And performance. without to take not you I'm segment

we I where could we're organization at where You the a company are look were that. very of of as think different ago. than an have years we a net But a couple is

that true it open will We the core and going very performance Q&A. has for And it turn I'm back roots here, to got us but good. we'll remain our very, been with to up that, overall to business, operator, the

first Chiang BTIG. The question Instructions] [Operator Tim with with comes

right. Eric is from Hagen BTIG. This All

any trended looking in emerge next how short-term and or kind maybe mean but opportunities MSR between packages, now? October? at year-end be maybe market feel now MSR right bulk So focused, just even like year, we're you so to could don't how I there some like the early valuations Are that of have

Yes.

on We were what Here's the say were thought gains about we how in MSRs. quarter. I would modest our I think we in --

going legacy of point, we As I capped duration. short. know, being multiples is of some negative the bias would some you're MSRs to MSRs. see At many say have on is what you are what

So in the marks. short answer is movement modest

still X.X% multiple There's room go. I think average MSR is this point. at our to weighted

change. soft the -- We data that as bias are I think longer. see to things until would we're would okay The say, higher reasonably The and what the that we not to for short Fed way be. been has signaled like remain going Fed as still has it to we economic probably

stay So the to we're going course.

be to come there's that up. packages, other always Regarding going things

-- nobody there's As regulation know, right The rules happy perspective, and banking about running perspective. a a capital banks from now. lot are really we from a all around of banks the is it

our point again, to to out, us. I where as want But opportunity banks of we to we we're look That we our could that this If create package Eric, capital. we're If pointed we out, have returns, have think to sector against will for can play opportunities that think $XXX of going on we'll like going amount certain XX% about we a capital more hard returns think as not notional could we earn capital create achieve hold MSRs XX% just billion have because own. see things a that likely we it. we I I to deployment, assets. more MSRs strategically those do think manufacture not, in at

That's color. Yes. great

from all a like How the forward what's have Computershare? secured Sculptor guys to you And So funding? as look like headroom you closing how on much on tolerance look at your financing do headroom have much that? level and borrow standpoint, did you MSR more to going you

give or about $X and the was, end take, Cash at billion. quarter the of liquidity

bit increased -- balance Charles into my think a a little we lenders capital around do I QX. our markets I and folks with partner, working great Candidly, our around sheet go the and as things. that's certain job Sanjiv, think

plenty there's over-lever to balance We're to right of So room sheet, our not looking though, here. go.

capital sources third of in, private from parties. think see including come you'll I other capital

with with comes Bose KBW. question next The George

now? in follow on value, that the just terms us -- you is where quarter you to idea Can an wanted performance up to date. Just give of give can book

We short business. book higher, $XX.XX. at the QX which reported with It's overall probably at I we're end said, little rates a bias Like of our was up $XX.XX, from bit. on up value modestly

here, calculus as this is rates part out have we what of depending So to REIT, mortgages. a happens with agency upon

to little as is it's a whole what little today here have upon it and crisis, expect where SVB of a since bit you perspective, pool a with with pressure the as government the been remain a thing debt. of So The the basis from depending the under have lot happens deficit continuing and we of sell that basis bit to wide is a basis. to

refunding the market of little think mortgage a the announcement bit will catalyst be I where a goes.

there's less able the business. are are go from where just with -- anything where are our and As supply mortgages it is based obviously, play. overall, a we just depends But of not marks into on banks would around trending challenge really comes capital know, to some higher, we lot The say I they buy the a we're perspective. MSR on that

sheet that showed And Great. Okay. the then actually yields. on the you

are you the the -- of X% showed that kind MSR, funding So the on the costs, that? XX%. on on leverage to levered use What's conventional that you the And like ROEs investment? what's what

depending XX It's -- funding termed and XXX And around would rates, for of certain now, typically right things, SOFR XXX XXX-ish, advanced plus something costs what say. around in they're I to XX on have and around funding so likely we million. kind to

issuance on years capital is lower, our we've markets that a The a other on thing already existing for that's which been outstanding have few obviously. we termed is that's MSR bunch based financing of business done,

Sandler. with question with next Piper Barker The Kevin comes

to to I out far capital the the and as but think need there, mortgage plans moving things I Sculptor on refresh then how come company? all the see follow just do that a playing ideally, how into perspective? love that it parts there's as as up of Obviously, But timing in addressed you spinoff. a I you out. place. previously, will just to lot And plays remain you know there's mortgage and much for there this wanted different

we the on S-X So have file.

to We evaluate alternatives. continue

-- public or, to a quite the idea a to way taking know, challenging any task. try mortgage to capital. bit company recycle is a a thought the The is all figure little company now of way mortgage out right we around is a frankly, company As

want different going recapture able a things MSR I what you business by the is I think our deploying folks company just rates forward, -- call you one but origination these MSRs, the specific what to that be to would either not of funds think the would side, MSRs, to in that the you I as MSR. not what mortgage that give more And for we're about on or really mean call example, some going do when at necessarily have if vehicle. specific working as we're to capital to careers point the realize the and up capital rally rates in do are I funds,

So is I would mortgage the the the company say of recycling and there fluid. capital

been vocal. As pretty the it I've bigger relates to picture,

manager. my is alluded this we'll We have QX that comments, are I going in I believe and as AUM billion truly to there possibility asset to an by -- end of a $XX the opening of

alternative You capital I They be. insurance private C REIT That's best we'll point have think at and road, like of then And a they their there. their an have have have the the ultimately out Corp, they leave. and managers where think hopefully, biggest asset some then business. down we'll

these be the on book just this say, stock made we be think the But private based that it business The our $XX.XX. So trade. I things. is I headed, stocks how alternative and as end to than on know, is we've asset of public manager be, business the side based around ambitions where we're to the on think progress it's the $X, a formation and safe we're working by going will point in year. value capital real that poorly REIT we capital our The is be markets capital all will global more will our at likely formation in of

Okay.

playing really the out out, to certain looking as to for you're Sculptor? particular that specific it you to that there look company like should to we the this expected? see and legs is really we are is of closing that has Is or really -- play say this it there points for so going And see points SX any in the mortgage start

Sure.

And grow So on We to side. as another working say asset I'd I the want. as an that the transformational go the is the you expect We're a also important -- operate manager. think management on we what management very REIT. Sculptor piece asset call, get end management Sculptor asset we the is gets just by business. to would business I wrapper well. obviously we asset we of year an done where sizable that in of into our the important transaction are under that

On the corporation from that the or level a flow the as mortgage cash awesome. at side, Rithm we company get that -- it's is

at So for you earnings When at or if you mortgage ROE, $X.XX plus look one around think is towards basis, company timers, plus it, our our about $X.XX it look whatever the annual net-net, equity quarter we look on look I for think quarter that the the where of were the $X.XX XX%. XX%, I for overall trending about and is, at return minus and at were excess. is on the ROE actual think an something right, I annual we're I I

good. want give capital capital looking: would happy on way to we're want business. have. to call think that any manufacture rate in running we're the help really expenses, between will figure going, what assets that that retail, could environment. something with make $X.XX, So we're capital We clearly, that run our out and it's our just have money to how now overall, business. think investing a on on core go-forward environment, private great not we out We But is about true basis we because and quite up That's our investing the at out then because any $X.XX mortgage capital that we on frankly, But figure volumes figure have and around the contribute of when to more to cost cheapest give to to that company. run We business. this because a as looking today's Things we're that to we're basis, company mortgage deploy I as all that the the more not giving right you why in we a well business rate way really these globe, the doesn't probably asset -- up looking things generate we're the don't at other just $X.XX up. environment overall,

Michael question-and-answer Thank the you session. I closing over Nierenberg remarks. we much. with that, any concludes all go would for turn -- this our and Please very conference to like ahead. And back to

Great.

company. in, look for to Have Stay on day. we great more you. forward thanks change So things dialing updating and as our everybody. developments well, you Thank a in

has conference concluded. you for today's This attending Thank presentation. now

You day. may now disconnect. good a Have