Rithm Capital (RITM) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a GAAP net income of $263 million for Q4 2024, translating to$0.50 per diluted share, with a return on equity of 16% [18] - For the full fiscal year 2024, GAAP net income was $835 million or$1.67 per diluted share, with a 14% return on equity [19] - Earnings available for distribution (EAD) for Q4 was $316 million or$0.60 per diluted share, and for the full year, it was $1.05 billion or$2.10 per diluted share [19][18] - The book value at the end of the year was $12.56, unchanged from the prior year [18] Business Line Data and Key Metrics Changes - NewRez, the mortgage company, reported a pretax income of approximately$280 million for Q4, a 12% increase quarter-over-quarter, and a 20% return on equity [41] - The total servicing portfolio for NewRez reached $844 billion, making it the third-largest servicer in the U.S. [41] - Genesis Capital, acquired in December 2021, increased its origination from$2 billion to $3.6 billion, with EBITDA growing from$40 million to around $100 million [76] Market Data and Key Metrics Changes - The company has a combined asset management of approximately$80 billion, with Rithm managing $45 billion and Sculptor managing$35 billion [71] - The company achieved 76% earnings growth since Q1 2021 [72] Company Strategy and Development Direction - The company aims to grow its third-party asset management business while shrinking its balance sheet [82] - Plans to launch a global energy infrastructure platform to supply power to data centers, indicating a focus on energy transition [85] - The company is exploring changes in its capital structure, including the potential listing of NewRez [115][118] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning, emphasizing the importance of performance in driving growth [78] - The company is focused on maintaining operational efficiency and leveraging technology to enhance financial performance [100] - Management noted that the benign credit cycle may eventually turn, which could impact the business [11] Other Important Information - The company has been actively involved in asset-based finance, identifying it as a significant opportunity in the market [84] - The company is positioned to capitalize on dislocations in the commercial real estate market through Rithm Property Trust [83] Q&A Session Summary Question: Could you give us any updated thoughts on the potential listing of NewRez in 2025? - Management indicated that they are not ready to list NewRez yet but are working on segment reporting to provide clarity on its performance [115] - They emphasized the need to grow the REIT and improve the capital structure before considering a listing [117] Question: Is the timeline for the listing likely to extend beyond 2025? - Management expressed a desire to achieve this in 2024 but acknowledged that it may extend to 2025 depending on growth and structural changes [121]