Rithm Capital Q4 Earnings Beat on Robust Net Servicing Revenue

Core Insights - Rithm Capital Corp. (RITM) reported strong fourth-quarter results, with shares gaining 4.4% since the announcement on February 6, 2025, driven by improved net servicing revenues and interest income [1][2] - The company's adjusted earnings per share for Q4 2024 were 60 cents, exceeding the Zacks Consensus Estimate by 33.3%, and reflecting a year-over-year increase of 17.6% [2][3] - Total revenues reached nearly $2.1 billion, nearly tripling year-over-year and surpassing the consensus mark by 71% [2][3] Financial Performance - Net servicing revenues were $1.1 billion, significantly up from a negative $7.5 million in the prior-year quarter, beating the Zacks Consensus Estimate by 180.4% [3][6] - Interest income increased by 7.9% year-over-year to $490.3 million, although it fell short of the consensus estimate by 5% [3] - Gain on originated residential mortgage loans rose 105.5% year-over-year to $201.6 million, exceeding the consensus estimate by 15.9% [4] Expense and Income Analysis - Total expenses for the quarter were $1 billion, reflecting a 28.2% year-over-year increase due to higher interest expenses and general administrative costs [4] - Rithm Capital's pretax income was $492.6 million, a significant recovery from a pretax loss of $37.3 million a year ago [5] Segment Performance - In the Origination and Servicing segment, revenues rose to $1.7 billion from $228.8 million year-over-year, with a pre-tax income of $484.7 million compared to a loss of $120.9 million in the prior year [6] - The Investment Portfolio segment saw interest income decline to $72.1 million from $246.9 million year-over-year, resulting in a pre-tax loss of $9 million [7] - Asset Management revenues totaled $268.5 million, with a pre-tax income of $53.4 million in the fourth quarter [8] Financial Position - As of December 31, 2024, Rithm Capital had cash and cash equivalents of $1.5 billion, up from $1.29 billion at the end of 2023, and total assets increased to $45.2 billion from $39.72 billion [9] - Total equity rose to $7.9 billion from $7.1 billion at the end of 2023 [9] Capital Deployment - The company did not repurchase any shares in 2024 but announced a new share repurchase program of $200 million through December 31, 2025 [11] - A quarterly common dividend of 25 cents per share was paid, totaling $130.2 million [11] Full Year Overview - For the full year 2024, total revenues improved by 38.5% year-over-year to $5.2 billion, while adjusted earnings per share rose by 1.9% [12]