Rithm Capital (RITM) - 2025 Q2 - Quarterly Results

Rithm Capital Corp. Second Quarter 2025 Results Overview Financial Highlights Rithm Capital reported strong Q2 2025 financial performance, with GAAP Net Income per diluted share significantly increasing to $0.53 and common dividends stable | Metric | Q2 2025 | Q1 2025 | | :------------------------------------------------- | :------ | :------ | | GAAP Net Income per Diluted Common Share | $0.53 | $0.07 | | GAAP Net Income (in millions) | $283.9 | $36.5 | | Earnings Available for Distribution per Diluted Common Share | $0.54 | $0.52 | | Earnings Available for Distribution (in millions) | $291.1 | $275.3 | | Common Dividend per Share | $0.25 | $0.25 | | Common Dividend (in millions) | $132.6 | $132.5 | - Book value per common share stood at $12.71 as of June 30, 2025[4] Business Highlights Rithm Capital's diversified platform demonstrated steady Q2 2025 growth across core operating businesses, including increased origination volume and strategic investments - Newrez, the multichannel mortgage origination and servicing platform, posted pre-tax income of $275.1 million in Q2'25 (excluding MSR mark-to-market gain and related hedge impact), slightly down from $270.1 million in Q1'25 (excluding MSR mark-to-market loss and related hedge impact)[5] - Newrez generated a 19% pre-tax return on equity (ROE) on $5.8 billion of equity[5] - Total servicing unpaid principal balance (UPB) reached $864 billion, a 7% increase YoY, including $271 billion UPB of third-party servicing (up 22% YoY)[5] - Origination funded production volume was $16.3 billion in Q2'25, a 12% increase YoY[5] - Rithm Capital completed a non-qualified mortgage securitization totaling $504 million in UPB[5] - Invested $2.2 billion in residential mortgage assets, including non-qualified residential mortgage loans, residential transition loans, and residential mortgage-backed securities[5] - Genesis Capital LLC recorded pre-tax income of $26.9 million in Q2'25 (excluding portfolio mark-to-market loss of $(1.8) million)[5] - Q2'25 origination volume was $1.2 billion, a 49% increase YoY and a record level[5] - Genesis Capital expanded its sponsor base to 195, a 30% increase YoY[5] - Sculptor Capital Management Inc. grew to approximately $36 billion of assets under management (AUM) as of June 30, 2025, with gross fundraising inflows of $1.7 billion[5] - Sculptor Capital had $525 million of activity in collateralized loan obligation markets in Q2'25[5] - Held the final closing for Sculptor's Tactical Credit Fund on April 1, 2025, bringing total fund AUM to $900 million[5] - Subsequent to Q2'25, Rithm Capital announced a strategic partnership with a large institutional investor to fund $500 million of residential transition loans, with potential to upsize to $1.5 billion[5] Consolidated Financial Statements Consolidated Statements of Operations (Unaudited) Unaudited Q2 2025 consolidated operations show a significant increase in net income attributable to common stockholders, driven by higher revenues and positive gains | Metric | Q2 2025 (in thousands) | Q1 2025 (in thousands) | | :------------------------------------------------------------------------------------------------ | :--------------------- | :--------------------- | | Revenues: | | | | Servicing fee revenue, net and interest income from MSRs and MSR financing receivables | $574,817 | $570,801 | | Change in fair value of MSRs and MSR financing receivables, net of economic hedges | $(155,005) | $(333,378) | | Servicing revenue, net | $419,812 | $237,423 | | Interest income | $478,455 | $441,260 | | Gain on originated residential mortgage loans, held-for-sale, net | $169,698 | $159,789 | | Other revenues | $54,066 | $50,773 | | Asset management revenues | $95,008 | $87,672 | | Total Revenues | $1,217,039 | $976,917 | | Expenses: | | | | Interest expense and warehouse line fees | $417,868 | $419,054 | | General and administrative | $239,575 | $237,546 | | Compensation and benefits | $294,407 | $271,467 | | Total Expenses | $951,850 | $928,067 | | Realized and unrealized gains (losses), net | $22,741 | $(1,143) | | Net Income Attributable to Common Stockholders | $283,899 | $36,523 | | Diluted Net Income per Share of Common Stock | $0.53 | $0.07 | Consolidated Balance Sheets (Unaudited) Unaudited consolidated balance sheets show a slight decrease in total assets and liabilities from March 31 to June 30, 2025, with Rithm Capital Corp.'s stockholders' equity increasing | Metric | June 30, 2025 (in thousands) | March 31, 2025 (in thousands) | | :------------------------------------------------------------------------------------------------ | :--------------------------- | :---------------------------- | | Assets: | | | | Mortgage servicing rights and MSR financing receivables, at fair value | $10,360,063 | $10,133,041 | | Government and government-backed securities | $8,868,879 | $11,048,701 | | Residential mortgage loans, held-for-sale | $4,187,301 | $3,156,350 | | Residential transition loans, at fair value | $2,497,764 | $2,335,218 | | Cash and cash equivalents | $1,600,948 | $1,493,834 | | Total Assets | $44,315,953 | $45,329,843 | | Liabilities: | | | | Secured financing agreements | $15,897,778 | $16,791,234 | | Secured notes and bonds payable | $9,764,857 | $10,025,948 | | Unsecured notes, net of issuance costs | $1,414,497 | $1,207,594 | | Total Liabilities | $35,995,781 | $37,188,589 | | Stockholders' Equity in Rithm Capital Corp. | $7,948,383 | $7,776,124 | | Total Liabilities and Equity | $44,315,953 | $45,329,843 | Non-GAAP Financial Measures and Reconciliation Explanation of Earnings Available for Distribution Rithm Capital uses Earnings Available for Distribution (EAD) as a non-GAAP measure to assess core operating performance, excluding volatile or non-core items for clearer income generation insight - Earnings available for distribution (EAD) is a non-GAAP financial measure used by management to evaluate the Company's operating performance, focusing on the core activities and ability to generate income for distribution to common stockholders[14][16][17] - EAD excludes net realized and unrealized gains and losses on certain assets and liabilities, and net other income and losses, due to their significant variability and limited indication of future economic performance[15] - Non-capitalized transaction-related expenses, such as legal and valuation service costs for acquisitions, are excluded as they are not considered part of core operations[15] - Deferred taxes are also excluded as they are not representative of current operations[15] Reconciliation of Non-GAAP Measure to GAAP Net Income The reconciliation adjusts GAAP Net Income to derive non-GAAP Earnings Available for Distribution, highlighting the impact of realized/unrealized gains/losses and specific exclusions | Metric | Q2 2025 (in thousands) | Q1 2025 (in thousands) | | :------------------------------------------------------------------------------------------------ | :--------------------- | :--------------------- | | Net income (loss) attributable to common stockholders - GAAP | $283,899 | $36,523 | | Adjustments: | | | | Realized and unrealized (gains) losses, net, including MSR change in valuation inputs and assumptions | $(16,931) | $203,764 | | Other (income) loss, net | $35,493 | $70,142 | | Non-capitalized transaction-related expenses (reimbursements) | $2,536 | $6,131 | | Deferred taxes | $(13,854) | $(41,295) | | Earnings available for distribution - Non-GAAP | $291,143 | $275,265 | | Net income (loss) per diluted share | $0.53 | $0.07 | | Earnings available for distribution per diluted share | $0.54 | $0.52 | Segment Information Second Quarter Ended June 30, 2025 Segment Performance In Q2 2025, Origination and Servicing primarily drove Rithm Capital's net income, with Investment Portfolio and Residential Transitional Lending also contributing positively, while Asset Management reported a net loss | Metric | Origination and Servicing (in thousands) | Investment Portfolio (in thousands) | Residential Transitional Lending (in thousands) | Asset Management (in thousands) | Corporate Category (in thousands) | Total (in thousands) | | :------------------------------------------------------------------------------------------------ | :--------------------------------------- | :---------------------------------- | :-------------------------------------- | :------------------------------ | :-------------------------------- | :------------------- | | Total Revenues | $925,629 | $110,030 | $75,405 | $102,849 | $3,126 | $1,217,039 | | Total Operating Expenses | $627,055 | $100,919 | $56,451 | $109,946 | $57,479 | $951,850 | | Income (Loss) before Income Taxes | $305,009 | $34,129 | $25,050 | $(1,557) | $(56,223) | $306,408 | | Net Income (Loss) Attributable to Rithm Capital Corp. | $315,675 | $34,103 | $24,720 | $(3,999) | $(58,782) | $311,717 | | Total Assets | $28,608,834 | $8,858,316 | $3,787,813 | $2,470,718 | $590,272 | $44,315,953 | | Stockholders' Equity in Rithm Capital Corp. | $5,822,508 | $1,551,666 | $820,746 | $895,407 | $(1,141,944) | $7,948,383 | First Quarter Ended March 31, 2025 Segment Performance In Q1 2025, Origination and Servicing led in net income contribution, with Investment Portfolio and Residential Transitional Lending positive, and Asset Management and Corporate Category reporting net losses | Metric | Origination and Servicing (in thousands) | Investment Portfolio (in thousands) | Residential Transitional Lending (in thousands) | Asset Management (in thousands) | Corporate Category (in thousands) | Total (in thousands) | | :------------------------------------------------------------------------------------------------ | :--------------------------------------- | :---------------------------------- | :-------------------------------------- | :------------------------------ | :-------------------------------- | :------------------- | | Total Revenues | $707,216 | $105,120 | $66,508 | $97,085 | $988 | $976,917 | | Total Operating Expenses | $617,076 | $91,744 | $52,490 | $118,394 | $48,363 | $928,067 | | Income (Loss) before Income Taxes | $90,022 | $17,959 | $15,920 | $(19,751) | $(47,370) | $56,780 | | Net Income (Loss) Attributable to Rithm Capital Corp. | $146,362 | $25,743 | $17,010 | $(62,124) | $(48,180) | $78,811 | | Total Assets | $30,126,396 | $8,567,949 | $3,667,080 | $2,440,527 | $527,891 | $45,329,843 | | Stockholders' Equity in Rithm Capital Corp. | $5,516,331 | $1,527,528 | $845,627 | $876,217 | $(989,579) | $7,776,124 | Corporate Information and Disclosures Investor Relations and Conference Call Rithm Capital will host an earnings conference call on Monday, July 28, 2025, to discuss Q2 results, with live access and telephonic replay details provided - Rithm Capital's management will host a conference call on Monday, July 28, 2025, at 8:00 A.M. Eastern Time[7] - Access to the conference call is available by dialing 1-833-974-2382 (U.S.) or 1-412-317-5787 (outside U.S.), with pre-registration encouraged at https://dpregister.com/sreg/10201660/ffa323429c[8](index=8&type=chunk) - A simultaneous webcast will be available on a listen-only basis at www.rithmcap.com[9](index=9&type=chunk) - A telephonic replay will be available from two hours after the call until August 4, 2025, by dialing 1-877-344-7529 (U.S.) or 1-412-317-0088 (outside U.S.), using access code 5582814[10] About Rithm Capital Rithm Capital Corp. is a global, multi-dimensional asset manager specializing in credit and real estate, leveraging an integrated platform and owner-operator model - Rithm Capital Corp. is a global, multi-dimensional asset manager with significant experience managing credit and real estate assets, combining institutional expertise with an entrepreneurial culture[22] - The firm's integrated investment platform covers residential and commercial lending, MSRs, and structured credit[22] - Through subsidiaries such as Newrez, Genesis Capital, and Sculptor Capital Management, Rithm operates a unique owner-operator model for sourcing, financing, and managing debt and equity investments[22] Cautionary Note Regarding Forward-Looking Statements This press release contains forward-looking statements subject to risks and uncertainties, where actual results may differ materially; readers should refer to SEC filings for risk factors - The press release contains forward-looking statements that are not historical facts and represent management's current expectations, subject to trends and uncertainties beyond the Company's control[21] - Actual results could differ materially from those described in forward-looking statements[21] - Readers should not place undue reliance on these statements and are directed to the Company's SEC filings for a discussion of risks and important factors[21] - Rithm Capital disclaims any obligation to publicly update or revise any forward-looking statements[21]