Core Insights - Mr. Cooper Group reported Q2 2025 earnings with earnings per share (GAAP) at $3.04, below the $3.18 consensus, and revenue at $608 million, nearly 10% short of the $674.24 million expectation [1][11] Business Overview - Mr. Cooper operates in the U.S. housing finance market, focusing on mortgage servicing and origination, which includes collecting mortgage payments and creating new residential mortgage loans [3] - The company's business model emphasizes managing a large portfolio of residential mortgages, with key success factors being servicing scale, cost efficiency, and technology-driven improvements [4] Quarterly Performance Highlights - The servicing portfolio's unpaid principal balance reached $1,509 billion, up 25% year-over-year, although it dipped slightly from the previous quarter [5] - Net servicing revenue increased to $426 million, supported by a reduction in expenses from $240 million in Q1 2025 to $148 million [5] - The servicing segment achieved a pretax operating income of $332 million for the second consecutive quarter, with improved credit quality as delinquency rates fell to 1.4% [6] - The originations segment saw pretax income rise to $64 million from $45 million in Q1 2025, with funded origination volume climbing 14% to $9.4 billion [8] Strategic Initiatives - Subservicing remains a significant part of the business, with a balance of $778 billion, allowing for growth without substantial capital risk [7] - The company announced a new mortgage servicing rights (MSR) fund with $200 million in initial capital, indicating plans for further growth in this area [7] - Technological investments, including digital tools and AI, are aimed at enhancing cost efficiency and customer service [9] Financial Metrics - Tangible book value per share increased to $75.90 from $72.53, and return on tangible common equity (ROTCE) rose to 17.2% [10] - Company-wide expenses decreased to $330 million from $430 million in Q1 2025 [9] Future Outlook - Management highlighted the pending merger with Rocket and the launch of the new MSR Fund as significant developments, with a focus on expanding the customer base and maintaining cost discipline [12][13]

Core Insights - Mr Cooper (COOP) reported revenue of $608 million for the quarter ended June 2025, reflecting a year-over-year increase of 4.3% but a revenue surprise of -10.45% compared to the Zacks Consensus Estimate of $678.94 million [1] - The earnings per share (EPS) for the quarter was $3.13, up from $2.52 in the same quarter last year, but below the consensus estimate of $3.28, resulting in an EPS surprise of -4.57% [1] Revenue Breakdown - Servicing revenues were reported at $434 million, which is -4.8% year-over-year and below the average estimate of $480.32 million from two analysts [4] - Corporate and Other revenues totaled $16 million, a significant decline of -20% year-over-year, and also below the average estimate of $42.5 million from two analysts [4] - Originations revenues reached $158 million, representing a substantial increase of +47.7% compared to the year-ago quarter, but fell short of the average estimate of $181.99 million from two analysts [4] Stock Performance - Mr Cooper's shares have returned +8.4% over the past month, outperforming the Zacks S&P 500 composite's +5.9% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Financial Highlights - Reported net income of $198 million and pretax operating income of $269 million[7] - Generated ROTCE of 167% including other MTM of $30 million and operating ROTCE of 172%[7] - TNW/assets was 266% with liquidity of $38 billion[7] Servicing Segment - Servicing generated $332 million pretax operating income with portfolio up 25% year-over-year to $15 trillion[7] - Subservicing portfolio increased 47% year-over-year[9] - Servicing EBT increased 15% year-over-year[11] - Deboarded $12 billion in subservicing UPB for a single client in 2Q'25 with the client's remaining $50 billion deboarded in July[10] - New subservicing client win expected to bring $40 billion UPB by year end[10] - Anticipating MSR acquisitions of approximately $20 billion UPB in 3Q'25[10] - Operating revenue increased 13% year-over-year while operating expenses increased 6% year-over-year[13] Originations Segment - Originations generated $64 million pretax operating income on funded volume of $94 billion[7] - Rate/term refinance accounted for 22% of 2Q'25 DTC funding mix[15] - Cash-out refinance accounted for 36% of 2Q'25 DTC funding mix[15] Portfolio Quality - Delinquencies decreased by 6 bps quarter-over-quarter to 10% reflecting strong portfolio quality[20]

Financial Data and Key Metrics Changes - The company reported a total service revenue of $40.9 million for Q1 2025, an 11% increase compared to Q1 2024 [6][7] - Adjusted EBITDA for Q1 2025 was $5.3 million, reflecting a 14% increase year-over-year [6][7] - The company ended the quarter with $30.8 million in unrestricted cash [6] Business Segment Data and Key Metrics Changes - The servicer and real estate segment generated service revenue of $32.9 million, a 13% increase from Q1 2024, with adjusted EBITDA of $12 million, up 15% [11] - The origination segment reported service revenue of $8 million, a 3% increase year-over-year, with adjusted EBITDA remaining flat at $500,000 [13] - The corporate segment's adjusted EBITDA loss increased by $900,000 to $7.2 million, primarily due to nonrecurring benefits in the previous year [15] Market Data and Key Metrics Changes - The 90+ day mortgage delinquency rate was 1.3% in March 2025, slightly higher than the historical low of 1.1% in May 2024 [15] - Foreclosure starts increased by 25% in Q1 2025 compared to the same period in 2024, although they were 18% lower than in Q1 2019 [16] - The origination market faced challenges, with industry-wide origination volume decreasing by 1% year-over-year [20] Company Strategy and Development Direction - The company aims to diversify its revenue base and ramp up business won while maintaining cost discipline [21] - Focus is on accelerating growth in certain businesses that are expected to benefit from market tailwinds [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the first quarter results and the company's positioning to benefit from potential increases in mortgage delinquencies and foreclosure activity [21] - Concerns were raised about the potential weakening of the U.S. economy, which could lead to higher loan delinquencies and foreclosure starts [19][21] Other Important Information - The company successfully closed a transaction on February 19 that significantly strengthened its balance sheet and reduced interest expenses, lowering long-term debt from $232.8 million to $172.5 million [9][10] Q&A Session Summary - No questions were asked during the Q&A session, and the call concluded with management expressing satisfaction with the first quarter performance [22][23]

Financial Data and Key Metrics Changes - Adjusted pretax income for Q1 2025 was $25 million, with an annualized adjusted ROE of 22%, exceeding guidance [6][24] - GAAP net income attributable to common shareholders was $21 million, or $2.5 per share fully diluted, reflecting an annualized return on equity of 19% [7] - Average servicing UPB for the quarter was $5 billion, up $13 billion compared to Q1 2024 [7] - Book value per share increased approximately 4% year-over-year and 2% compared to year-end 2024 [7] Business Line Data and Key Metrics Changes - The origination and servicing segments both reported profitability, with adjusted pretax income of $48 million for Q1 2025 [12] - Servicing segment adjusted pretax income grew due to increased fee generation, up 6% year-over-year [26] - Originations volume grew by 50% year-over-year, with the high-margin consumer direct channel growing by about 165% [28] Market Data and Key Metrics Changes - Industry origination volumes are expected to increase by 17% year-over-year, driven by a 9% increase in home purchase volume and a 39% increase in refinancing volume [8] - The company noted that the probability of a recession has increased, but mortgage delinquencies have not yet deteriorated [9] Company Strategy and Development Direction - The company aims to accelerate growth in originations volume and total servicing UPB as part of its 2025 operating priority [6] - The balanced business model is designed to perform well in both high and low interest rate environments [11] - The company is focused on product development, with new product launches expected to expand market opportunities [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic and unpredictable year, maintaining full-year guidance despite market volatility [10] - The company believes its servicing portfolio mix and special servicing skills will help minimize delinquencies in a recession [10] - Management highlighted the importance of maintaining flexibility to evaluate options for creating shareholder value [11] Other Important Information - The company reached a settlement on a nearly two-decade-old class action litigation matter, allowing it to move forward [50] - The valuation allowance on U.S. deferred tax assets could potentially increase book value by approximately $22 per share if lifted [32] Q&A Session Summary Question: Inquiry about the valuation allowance and its implications - Management confirmed that lifting the valuation allowance would directly impact net income and book value, with ongoing analysis to determine the extent of the allowance [40][42] Question: Timing for utilizing deferred tax assets - The majority of the deferred tax assets are indefinite and not limited by a timeframe, allowing for flexibility in utilization [49] Question: Legal expenses and regulatory matters - Management discussed a settlement of a legacy class action lawsuit and noted ongoing compliance with legal matters in the mortgage industry [50][52] Question: Impact of Rocket Coupe merger on the subservicing market - Management indicated that the merger could lead to clients exploring alternatives, creating opportunities for growth in the subservicing business [56][58] Question: Advantages of being a flow buyer versus a bulk buyer - The company highlighted its flexibility in sourcing MSRs through various channels, allowing it to maximize returns based on market conditions [60] Question: Operating efficiency objectives - Management stated that while there is no specific target for operating efficiency, the goal is to continue increasing pretax income across segments [62]

Financial Performance - Onity Group achieved an adjusted pre-tax income of $25 million in Q1 2025, compared to $15 million in Q1 2024[58] - The adjusted return on equity (ROE) reached 22% in Q1 2025, exceeding the full-year guidance of 16-18%[13, 81] - Book value per share increased to $58, up over $2 year-over-year[13, 36] - Servicing average UPB grew to $305 billion, an increase of $13 billion year-over-year[13] Business Growth and Strategy - Servicing additions totaled $17 billion, including $12 billion in MSR growth[13] - Originations volume increased by 53% year-over-year, surpassing the industry growth of 8%[28] - Consumer Direct funded volume increased 2.7x year-over-year[31] - The company launched enhanced home equity loans and a proprietary reverse mortgage product (EquityIQ)[29] Market Positioning and Outlook - The company expects the originations industry volume to increase by 17% in FY25 compared to FY24[17] - Onity is maintaining agility to evaluate all options to create value for shareholders[16] - The company confirms its full-year 2025 guidance, including an adjusted ROE of 16-18% and a 10+% increase in total servicing UPB[49]

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 Highlights - Altisource's service revenue increased by 10% to $150.4 million in 2024 compared to $136.6 million in 2023[14, 49] - Adjusted EBITDA improved by $18.3 million to $17.4 million in 2024, compared to a loss of $0.9 million in 2023[9, 14, 49] - Business Segments generated $44.6 million of Adjusted EBITDA at 29.7% Adjusted EBITDA margins, representing a $10.4 million improvement and a 462-basis points margin improvement[14] - Corporate Adjusted EBITDA loss declined by $7.9 million, or 22%, to $27.2 million, primarily from efficiency initiatives[14] - Q4 2024 service revenue reached $38.4 million, the highest since Q3 2021, with Adjusted EBITDA at $4.7 million, the strongest quarter since Q3 2020[16] Debt Restructuring - Altisource executed a Term Loan Exchange Transaction, reducing debt by over $60 million from $232.8 million to $172.5 million[9, 18] - The Term Loan Exchange Transaction reduced annual cash and payment-in-kind interest by approximately $18 million to $13.4 million[18] - The company also closed on a $12.5 million super senior credit facility to fund transaction costs and for general corporate purposes[18, 21] Segment Performance - Servicer and Real Estate segment service revenue increased by 11% to $119.9 million in 2024 compared to $107.8 million in 2023[23] - Servicer and Real Estate segment Adjusted EBITDA increased by 14% to $42.1 million in 2024 compared to $37.1 million in 2023, with margins improving to 35.1% from 34.4%[23] - Origination segment service revenue grew by 6% to $30.4 million in 2024 compared to $28.8 million in 2023[29, 31] - Origination segment Adjusted EBITDA improved by $5.4 million to $2.5 million in 2024 compared to a loss of $2.9 million in 2023[29, 31] 2025 Financial Guidance - Altisource anticipates service revenue between $165 million and $185 million and Adjusted EBITDA between $18 million and $23 million in 2025[42] - The guidance midpoint represents 16% annual service revenue and 18% Adjusted EBITDA growth over 2024[42] - The company expects positive operating cash flow in 2025[41, 43]

Investment Overview - Leon Cooperman, a billionaire hedge fund manager, manages over $3 billion with 47 different stocks in his portfolio as of 2025 [2][3] Largest Stock Investments - The five largest stock investments by Cooperman are: - Mr. Cooper Group (COOP): $275 million investment, 4.47% ownership [3] - Energy Transfer LP (ET): $248 million investment, 0.37% ownership [3] - Vertiv Holdings (VRT): $239 million investment, 0.56% ownership [3] - Apollo Global Management (APO): $229 million investment, 0.25% ownership [3] - WillScot Mobile Mini Holdings (WSC): $135 million investment, 2.18% ownership [3] Portfolio Characteristics - Cooperman's portfolio is noted for lacking typical high-profile stocks, with only one of the "Magnificent Seven" stocks, Alphabet, included [4] - The portfolio features relatively few household names, indicating a unique investment strategy [4] Company Descriptions - Mr. Cooper Group is a major player in the mortgage servicing industry [5] - Energy Transfer is involved in natural gas transportation and energy storage, offering a 6.8% dividend yield and has a market capitalization of $65 billion [5] - Vertiv provides essential power, cooling, and IT infrastructure services [5] - Apollo Global Management is an alternative asset manager with over $500 billion in assets under management [5] - WillScot Mobile Mini offers mobile storage solutions and modular buildings primarily for businesses [5]