Rithm Capital (US:RITM)2025-07-31 23:33Financial Performance - As of June 30, 2025, Rithm Capital had approximately $44.3 billion in total assets and $36 billion in assets under management (AUM) [408]. - The book value per common share increased to $12.71 as of June 30, 2025, up from $12.39 as of March 31, 2025, reflecting a net income attributable to common stockholders of $36.5 million for the three months ended March 31, 2025 [409]. - For the three months ended June 30, 2025, net income attributable to common stockholders was $283,899,000, a decrease of 154,379,000 compared to the same period in 2024 [521]. - Total revenues for the six months ended June 30, 2025, were $2,193,956,000, down by 156,826,000 year-over-year [521]. - Net cash provided by operating activities was approximately $864.2 million for the six months ended June 30, 2025, compared to $(1.2) billion for the same period in 2024, an increase of $2.1 billion [584]. Economic Indicators - Real GDP rose an annualized 3.0% in the second quarter of 2025, primarily due to a decline in imports that contributed 5.2 percentage points to the change in real GDP [411]. - The unemployment rate decreased slightly to 4.1% in June 2025 from 4.2% in March 2025, with nonfarm payrolls averaging 150,000 jobs per month in the second quarter of 2025 [414]. - The 12-month increase in the overall Consumer Price Index (CPI) rose to 2.7% in June 2025, up from 2.4% in March 2025 [412]. - The nominal 10-year Treasury yield was relatively unchanged at 4.24% at the end of June 2025, compared to 4.23% at the end of March 2025 [413]. - Total home sales averaged 4.64 million units in the second quarter of 2025, a decrease of 2.9% from the average of 4.78 million in the first quarter of 2025 [415]. Company Operations - Rithm Capital is exploring growth opportunities in direct lending, insurance, private equity, and infrastructure spaces [407]. - The company operates through segments including Origination and Servicing, Investment Portfolio, Residential Transitional Lending, and Asset Management [408]. - The economic conditions, including inflation and labor market stability, are influencing Rithm Capital's investment strategy and results [416]. - The company has a strategic partnership with Darwin to manage its SFR properties through Adoor Property Management LLC [491]. - The company primarily relies on credit facilities, term loans, and securitizations to finance the purchase of SFR properties [490]. Loan Origination and Servicing - The origination business funded $16.3 billion of mortgages for the three months ended June 30, 2025, compared to $11.8 billion for the previous quarter, reflecting a quarter-over-quarter increase of 38.5% [422]. - The total servicing portfolio reached $864.2 billion UPB as of June 30, 2025, an increase of $19.3 billion from March 31, 2025, primarily due to new client acquisition and loan production [423]. - The performing loan servicing division serviced $526.1 billion UPB of loans, while the special servicing division serviced $281.2 billion UPB as of June 30, 2025 [423]. - Funded loan origination volume for the three months ended June 30, 2025, was $16.3 billion, up from $11.8 billion in the prior quarter [431]. - The percentage of purchase loans in total production remained stable at 73% for the three months ended June 30, 2025, compared to 85% in the same period of the previous year [426]. Financial Position and Debt - Total assets as of June 30, 2025, amounted to $44.32 billion, with total liabilities of $35.99 billion, resulting in total stockholders' equity of $8.06 billion [420]. - The company’s debt as of June 30, 2025, totaled $27.08 billion, with a significant portion attributed to the origination and servicing operations [420]. - Total outstanding debt obligations amounted to $31.4 billion as of June 30, 2025, including secured financing agreements and notes payable [553]. - The company has margin exposure on $15.9 billion of secured financing agreements, which could impact liquidity if collateral values decline [554]. - The company is subject to customary loan covenants and was in compliance with all debt covenants as of June 30, 2025 [563]. Revenue and Expenses - Interest income for the three months ended June 30, 2025, was $478,455,000, reflecting an increase of 37,195,000 compared to the previous quarter [521]. - Servicing fee revenue, net and interest income from MSRs for the three months ended June 30, 2025, was $574,817,000, showing a quarter-over-quarter increase of 4,016,000 [521]. - General and administrative expenses for the three months ended June 30, 2025, were $239,575,000, an increase of 2,029,000 compared to the previous quarter [521]. - Total other income for Q2 2025 was $41.2 million, significantly up from $7.9 million in Q1 2025, driven by gains from consolidated CFEs and public equities [544]. - Asset management revenues for the six months ended June 30, 2025, were $182.7 million, primarily driven by management fees and incentive income [512]. Market Conditions - The 30-year fixed mortgage rate rose to 6.77% at the end of Q2 2025, up from 6.65% at the end of Q1 2025 [415]. - The median resale price of existing homes increased by 2.0% year-over-year in June 2025, down from 2.6% in March 2025 [415]. - The delinquency rate for the total consumer loans portfolio is 24.5% for loans that are 90+ days delinquent [482]. - The company experienced elevated interest rates during the reporting period, which inversely impacted borrowers' willingness to enter into mortgage transactions [519]. - The estimates and assumptions used in the financial statements are considered reasonable, but the current macroeconomic conditions introduce uncertainty that could materially affect actual results [515].