Financial Data and Key Metrics Changes - The company reported adjusted revenue of $1.3 billion, at the high end of guidance, with adjusted diluted EPS of $0.04, reflecting strong performance in Q1 [11][30] - Net rate lock volume reached $26 billion, a 17% year-over-year increase and an 11% quarter-over-quarter increase, driven by growth in refinance and home equity loans [31] - Gain on sale margin was 289 basis points, down from 311 basis points year-over-year, but consistent with the average over the last twelve months [31] Business Line Data and Key Metrics Changes - The company served 21% more origination clients in March compared to the same month in the previous year, while reducing turn times by 14% [11] - The home equity loan offering posted another record quarter, indicating strong demand in that segment [31][92] Market Data and Key Metrics Changes - Housing inventory increased by 25% year-over-year, providing relief to buyers [6] - Active home listings reached 960,000 in April, marking a 31% increase year-over-year, with homes staying on the market longer [34] Company Strategy and Development Direction - The company is focused on creating an integrated homeownership platform, emphasizing the importance of technology and innovation to enhance client experience [9][27] - Recent acquisitions of Redfin and Mr. Cooper are aimed at strengthening the business model and enhancing data capabilities [25][39] Management's Comments on Operating Environment and Future Outlook - Management noted a sharp reversal in market momentum in April due to global tariff announcements and declining consumer sentiment, leading to a slowdown in home buying activity [8][33] - For Q2, the company expects adjusted revenue to range from $1.175 billion to $1.325 billion, reflecting a challenging April but anticipating improvement in May and June [35][36] Other Important Information - The company has identified over 35 integration work streams for the acquisitions of Redfin and Mr. Cooper, with a focus on realizing synergy value post-closing [41][42] - The balance sheet remains strong, with $2.9 billion in available cash and $7.4 billion in mortgage servicing rights, totaling $10.3 billion in balance sheet value [43] Q&A Session Summary Question: Outlook for 2025 considering recent performance and expenses - Management acknowledged the strong Q1 performance but noted the challenges faced in April, indicating a cautious but optimistic outlook for the remainder of the year [49][50] Question: Subservicing strategy post-merger with Mr. Cooper - Management expressed excitement about the subservicing business and plans to honor all contractual provisions with subservicers, emphasizing the importance of this segment [64][66] Question: Near-term outlook for Rocket Pro and technology investments - Management highlighted optimism for growth in the broker space, focusing on empowering brokers with technology and innovative business models [70][74] Question: Potential for future acquisitions to grow market share - Management stated that current focus is on integrating Redfin and Mr. Cooper, with no immediate plans for additional acquisitions [78][80] Question: Capacity growth and potential expense savings - Management discussed the importance of AI in creating capacity and the potential to convert excess capacity into cost savings if mortgage volumes do not meet expectations [88][90]

Financial Data and Key Metrics Changes - The company reported a return on tangible common equity (ROTCE) of 16.8%, an increase from 15.8% in the previous quarter, reflecting the benefits from the Flagstar acquisition [8] - Net income for the quarter was $88 million, which included $255 million in pretax operating earnings offset by an $82 million negative mark on mortgage servicing rights (MSR) [28][30] - The capital ratio stood at 25.5%, indicating a strong balance sheet, with liquidity increasing to $3.9 billion [10][35] Business Line Data and Key Metrics Changes - The servicing segment generated pretax income of $332 million, up 22% year over year, attributed to slower than expected conditional prepayment rates (CPR) and lower amortization [15] - Originations produced $53 million in earnings before tax (EBT), slightly above guidance, with strong volumes in the correspondent channel [20] - Home equity loans and cash-out refinances showed significant growth, with cash-outs making up 46% of volume, up from 39% in the previous quarter [22] Market Data and Key Metrics Changes - The total portfolio decreased slightly to $1.5 trillion, with over 6.4 million customers, while the subservicing portfolio grew organically by 2% quarter over quarter [18][19] - The company closed approximately $7 billion in bulk acquisitions, indicating strong activity in the correspondent channel [20] Company Strategy and Development Direction - The pending combination with Rocket aims to create a scaled homeownership experience, leveraging technology and AI to enhance customer experience [4][5] - The integration of Flagstar is on schedule, with onboarding of new customers and team members completed [11][16] - The focus on operational excellence and customer trust is emphasized as a key driver for long-term growth [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, highlighting the potential for growth in home equity loans and cash-out refinances regardless of interest rate fluctuations [13][22] - The company is well-positioned to manage potential adverse market conditions, with strong asset quality and low delinquency rates [32][34] Other Important Information - The company incurred $26 million in transaction and transition charges related to the Flagstar integration and an additional $33 million charge for legal fees [29] - The hedge gains amounted to $209 million, contributing to stable and predictable results [31] - The company does not expect to repurchase stock prior to the closing of the Rocket transaction, anticipated in the fourth quarter of 2025 [37] Summary of Q&A Session - No questions were taken during the call due to the pending combination with Rocket, as stated by management [3]

Core Viewpoint - Mr. Cooper Group Inc. reported strong adjusted earnings per share of $2.97 for Q1 2025, exceeding estimates by 5.7% and reflecting a 30.3% year-over-year increase, despite a significant decline in net income [1][2] Group 1: Financial Performance - Total revenues for Q1 2025 decreased by 0.7% year over year to $560 million, missing consensus estimates by 8.6% [2] - Total expenses rose by 35.6% year over year to $430 million, with interest income increasing by 19.6% to $189 million and interest expenses rising by 25.3% to $213 million [2] Group 2: Segment Performance - The Servicing segment achieved a pre-tax operating income of $332 million, up 21.6% year over year, despite total revenues falling by 10.4% to $403 million [3] - The Originations segment reported a pre-tax operating income of $53 million, a 65.6% increase from the previous year, with total revenues rising by 52.2% to $140 million and funded volume increasing to $8.3 billion from $2.9 billion [4] Group 3: Financial Position - As of March 31, 2025, total assets were $18.4 billion, down from $18.9 billion at the end of Q4 2024, while cash and cash equivalents increased to $784 million [5] - Total liabilities decreased to $13.6 billion from $14.1 billion, and total shareholders' equity rose to $4.9 billion from $4.8 billion [6] Group 4: Overall Assessment - The company ended Q1 2025 on a strong note, with solid performances in both the Originations and Servicing segments, supported by a robust balance sheet [7]

Core Viewpoint - Mr. Cooper Group reported disappointing first-quarter earnings, missing both revenue and net income expectations, leading to a decline in stock value despite a positive market trend overall [1][2][3]. Financial Performance - Revenue for Q1 totaled $560 million, down from $654 million in Q1 2024, representing a significant decline [2]. - GAAP net income was $88 million ($1.35 per share), a sharp decrease from $204 million in the same quarter last year [2]. - Both revenue and earnings figures fell short of analyst estimates, which were over $620 million for revenue and $2.98 per share for GAAP earnings [3]. Operational Metrics - The loan servicing portfolio grew by 33% year over year, exceeding $1.5 trillion during the quarter [3]. - Operating income improved to $332 million, up from $318 million in Q1 2024 [3]. Management Outlook - CEO Jay Bray expressed optimism about the company's performance, highlighting the platform's ability to deliver consistent and predictable results [4]. - Despite the positive commentary from management, the actual financial results did not align with expectations, resulting in negative investor sentiment [4].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ________________________________________________________________________________________________________ FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number: 001-14667 Mr. Cooper ...

Core Insights - Mr Cooper (COOP) reported quarterly earnings of $2.97 per share, exceeding the Zacks Consensus Estimate of $2.81 per share, and showing an increase from $2.28 per share a year ago, representing an earnings surprise of 5.69% [1] - The company posted revenues of $560 million for the quarter ended March 2025, which was 8.55% below the Zacks Consensus Estimate and a slight decrease from $564 million in the same quarter last year [2] - Mr Cooper's shares have increased by approximately 16.7% since the beginning of the year, contrasting with a decline of 10.1% in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $3.32, with expected revenues of $666.7 million, and for the current fiscal year, the estimate is $13.06 on $2.63 billion in revenues [7] - The estimate revisions trend for Mr Cooper is mixed, leading to a Zacks Rank 3 (Hold), indicating that shares are expected to perform in line with the market in the near future [6] Industry Context - The Financial - Consumer Loans industry, to which Mr Cooper belongs, is currently ranked in the top 26% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Another company in the same industry, OneMain Holdings (OMF), is expected to report quarterly earnings of $1.55 per share, reflecting a year-over-year increase of 6.9%, with revenues projected at $987.07 million, up 10.2% from the previous year [9][10]

Financial Data and Key Metrics Changes - The company reported a net income of $88 million, with pretax operating earnings of $255 million, offset by an $82 million negative MSR mark net of hedges [18] - ROTCE increased to 16.8%, up from 15.8% in the previous quarter, reflecting benefits from the Flagstar acquisition [6] - Liquidity rose to $3.9 billion from $3.4 billion in the previous quarter, indicating strong cash flow generation [22] Business Line Data and Key Metrics Changes - The servicing segment generated pretax income of $332 million, a 22% year-over-year increase, attributed to lower amortization and operating leverage [10] - Originations produced $53 million in EBT, slightly above guidance, with strong volumes in the correspondent channel [13] - The total portfolio decreased slightly to $1.5 trillion, with a subservicing portfolio growing organically by 2% quarter-over-quarter [12] Market Data and Key Metrics Changes - Cash-out refinances made up 46% of volume, up from 39% last quarter, indicating strong demand for home equity loans [14] - The company helped over 9,000 customers access equity in their homes during the quarter [14] - Delinquencies in the mortgage servicing rights (MSR) portfolio decreased to 1.1%, reflecting strong asset quality [21] Company Strategy and Development Direction - The pending combination with Rocket aims to create a fully integrated homeownership platform, enhancing customer experience through AI and technology [4] - The company is focused on operational excellence and has received multiple awards for its servicing platform, which supports long-term growth [9] - The integration with Rocket is expected to leverage both companies' strengths, creating a comprehensive homeownership ecosystem [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the integration with Rocket and the potential for enhanced customer offerings [16] - The current environment presents limited opportunities for rate and term refinances, but the company is prepared to act quickly when conditions improve [16] - The company does not expect to repurchase stock prior to the closing of the Rocket transaction, which is anticipated in Q4 2025 [25] Other Important Information - The company incurred $26 million in transaction and transition charges related to the Flagstar integration [19] - The MSR was marked down due to falling interest rates, leading to a quarter-end valuation of 155 basis points of UPB [20] - The capital ratio improved to 25.5%, up from 24.4% in the previous quarter, supported by strong earnings [24] Q&A Session Summary - No questions were taken during the call due to the pending combination with Rocket, as stated by management [3]

Financial Performance - Reported net income of $88 million for Q1 2025, down from $204 million in Q4 2024, with a return on common equity (ROCE) of 7.3% and operating return on tangible common equity (ROTCE) of 16.8%[7] - Total revenues for Q1 2025 were $560 million, compared to $654 million in Q4 2024, with operational revenue of $707 million, up from $672 million[6][19] - Total expenses increased to $430 million in Q1 2025 from $367 million in Q4 2024[19] - Net income for the quarter was $204 million, with diluted earnings per share at $3.13[27] - Operating income was reported at $178 million, with an operating ROTCE of 15.8%[28] - The company reported a pretax income of $280 million, with an income tax expense of $76 million[27] - Basic earnings per share for the quarter was $3.20, reflecting strong performance compared to previous periods[27] - The company experienced a decrease in ROCE to 7.3% from 17.3% in the previous quarter[31] - Total expenses for the quarter were $367 million, indicating effective cost management strategies[27] Servicing Segment - Servicing segment generated pretax income of $214 million, with a servicing portfolio of $1,514 billion, reflecting a 33% year-over-year growth[5][7] - The carrying value of mortgage servicing rights (MSR) was $11,345 million, equivalent to 155 basis points of MSR UPB[5][7] - Average UPB for the servicing portfolio was $1,531 billion, compared to $1,407 billion in the previous quarter[8] - The 60+ day delinquency rate improved to 1.5% at the end of Q1 2025, down from 1.6% in Q4 2024[8] Originations Segment - Originations segment earned pretax income of $45 million, funding 32,296 loans totaling approximately $8.3 billion in UPB, a 10% decrease quarter-over-quarter[9][10] - The company achieved a refinance recapture percentage of 51% in Q1 2025, up from 35% in Q4 2024[12] Strategic Developments - The company announced a combination with Rocket Companies to create an integrated homeownership platform[4][7] - The average stockholders' equity (BV) for the quarter was $4,852 million, showing growth from $4,726 million[31] - Average tangible book value (TBV) increased to $4,641 million, up from $4,553 million in the previous quarter[31] Gains on Mortgage Loans - The company recorded a net gain on mortgage loans held for sale of $117 million, contributing positively to overall revenues[27]

Core Insights - Mr Cooper (COOP) is expected to report quarterly earnings of $2.81 per share, reflecting a year-over-year increase of 23.3% [1] - Anticipated revenues for the quarter are projected to be $612.37 million, which represents an 8.6% increase compared to the same quarter last year [1] Earnings Projections - Over the last 30 days, the consensus EPS estimate has been revised upward by 0.8%, indicating a collective reassessment by analysts [2] - Changes in earnings projections are crucial for predicting investor reactions to the stock [3] Revenue Estimates - Analysts predict 'Revenues- Servicing' will reach $449.12 million, showing a slight decline of 0.2% year-over-year [5] - 'Revenues- Corporate and Other' is forecasted to be $39.50 million, indicating a significant increase of 79.6% from the prior-year quarter [5] - 'Revenues- Originations' is expected to be $126.30 million, reflecting a year-over-year increase of 37.3% [5] Stock Performance - Mr Cooper's shares have increased by 8.9% over the past month, contrasting with a decline of 6.3% in the Zacks S&P 500 composite [5] - The company holds a Zacks Rank of 3 (Hold), suggesting it is expected to perform in line with the overall market in the near future [5]

Core Viewpoint - The acquisition of Mr. Cooper Group Inc. by Rocket Companies, Inc. is valued at $9.4 billion, creating a significant player in the U.S. mortgage industry with a combined servicing portfolio of $2.1 trillion and 9.5 million clients [1][2]. Deal Structure - COOP shareholders will receive 11 RKT shares for each share of Mr. Cooper [2]. - The transaction is expected to enhance loan volume and client relationships, leading to increased recurring revenue and reduced client acquisition costs [2]. Leadership Insights - Jay Bray, COOP Chairman and CEO, emphasized the creation of a strong mortgage company that offers a comprehensive homeownership experience supported by advanced technology and customer care [3]. - Varun Krishna, RKT CEO, highlighted the importance of servicing in homeownership and the role of data and AI in delivering timely products [4]. Strategic Expansion - The acquisition will significantly expand Rocket Companies' homeownership platform, reinforcing its position as a leading mortgage servicer and originator [5]. - The combined entity will add nearly 7 million new clients and 150 million annual customer interactions, enhancing data capabilities and operational efficiency [6]. Financial Projections - Rocket anticipates $100 million in additional pre-tax revenue from improved recapture rates and integration of services, along with $400 million in pre-tax cost savings [7]. - The acquisition is expected to be immediately accretive to RKT's adjusted earnings per share upon closing, with anticipated acquisition-related charges of $400-$500 million [8]. Market Context - The U.S. housing market has faced challenges, but easing mortgage rates may lead to a rebound in demand during the upcoming spring buying season [9]. - The acquisition is viewed as a potential game changer for the long-term prospects of both companies [10]. Stock Performance - Year-to-date, shares of COOP and Rocket Companies have increased by 24.6% and 7.2%, respectively [11].