Rithm Capital Corp. Q2 FY2025 earnings call

• Origination: Newrez and Genesis are industry leaders; Newrez is growing third-party servicing, while Genesis had a record quarter post-acquisition with origination more than doubling since 2022 acquisition.
• Asset Management: Sculptor and Rithm Asset Management saw inflows across ABF, real estate, credit products; plans to grow the asset management platform with new products tailored to investor needs.
• M&A: Robust pipelines for scaling credit and origination businesses, working on opportunistic situations to create value for shareholders and LPs.
• Newrez Operations: Pretax income growth, wins in recapture, third-party fee-based servicing growth, and efficiencies from Rezi AI; recent hires (e.g., Leslie Gillin, Brian Woodring) to drive growth.
• Valuation: Management believes Rithm is undervalued based on sum of parts analysis, with potential for higher stock price as earnings grow and AUM increases.

Newrez: Mortgage company with over $864 billion in servicing portfolio, Q2 pretax income excluding mark-to-market was approx $275 million, up 2% quarter-over-quarter and 20% year-over-year. Genesis: RTL lender had a record quarter of production, origination has more than doubled since acquisition in 2022. Rithm Asset Management: Saw inflows across ABF, real estate, credit products, with a large SMA announced for RTL product up to $1.5 billion. Rithm Property Trust: Externally managed REIT focused on commercial real estate, small now but expected to grow. Adoor: Single-family rental business with ~4,000 units, expecting growth as rates come down.

• Focus on growing earnings, creating synergies, and expanding the asset management platform.
• Expect continued growth in origination, asset management, and potential M&A activities.
• Aim to increase assets under management (AUM) and drive a proper revaluation of the company as growth trajectories continue.

• Credit risk in origination businesses.
• Market uncertainty and policy changes that could affect valuations.
• Competition in the asset management and origination spaces.

Q: On Newrez listing and value unlocking, A: Michael mentions they're focused on growing the business first through investments in people and expanding third-party servicing, then realizing value through the sum of parts.

Q: On insurance M&A, A: Michael states they're looking broadly in the insurance area, not at a scaled insurance business yet, but seeking accretive opportunities.

Q: On rate cuts and capital raising, A: Michael notes focus on core knitting, ABF experience, and brand building while recognizing lower rates could impact asset yields.

Q: On SMA for residential transition lending, A: Michael says there are both management fees and potential performance fees, with the partnership being strategic to bring in third-party capital.