Rithm Capital Corp. Q4 FY2024 earnings call

• Michael introduced the company's story, starting with $1B capital in 2013 and growing to $7.8B permanent capital. Acquired Sculptor in Nov 2023, with great results. - NewRez's strong performance in origination and servicing, with $844 billion in total servicing and $59 billion in funded volume in 2024. - Genesis Capital's growth, acquired in 2021, with EBITDA growth. - Rithm Property Trust turnaround, going from loss to flat to making money. - Plans for a global energy infrastructure platform with scale capital partners. - Belief in the company's undervaluation relative to other asset managers.

Rithm Capital has a diverse segment performance. The company's balance sheet stands at $45 billion, with Sculptor having approximately $35 billion in AUM, resulting in a combined AUM of around $80 billion. NewRez, the mortgage company, had a strong fourth quarter with pretax income excluding mark to market of approximately $280 million, a 12% quarter-over-quarter increase, and a 20% ROE. For the full year 2024, NewRez reported approximately $1 billion in pretax income, a 26% year-over-year increase with a 19% ROE. Genesis Capital, acquired in 2021, saw origination grow from $2 billion to $3.6 billion in 2024, and EBITDA increase from ~$40 million to ~$100 million. Sculptor's Multistrat Fund achieved 18% gross or 13.5% net returns last year. Rithm Property Trust, taken over in June, has around $250 million in equity and is expected to grow.

• Working on capital structure change, aiming to grow REIT scale. - M&A pipeline is robust, considering accretive opportunities. - Timeline for capital structure change not definitive for 2025 but working towards it, with hope to optimize capital structure for better shareholder value.

Q: Could you give us any updated thoughts on the potential listing of NewRez in 2025?

A: Michael said they are working on capital structure, not definitive for 2025 but aiming to grow REIT scale and optimize structure.

Q: What assets do you find attractive and how to scale up the REIT?

A: Michael mentioned MSR business, Genesis loans, and third-party servicing as attractive assets, with growth expected in these areas.

Q: Any details on Sculptor's initiatives and expense base?

A: Michael said Sculptor's initiatives are performance-driven, with focus on attracting AUM, and expenses are mostly business as usual with potential for synergies and savings.

Q: Thoughts on growing the REIT and creating vehicles?

A: Michael said it's both creating separate vehicles and participating in transactions, preferring balance and considering risk.

Q: Leverage in investment portfolio and potential spin-out of NewRez?

A: Michael said leverage is prudent, and they could increase it if prudent.

Q: Impact of administration changes on energy infrastructure investment?

A: Michael said it's early, but excited about the multi-trillion opportunity in energy infrastructure with world-class team.

Q: How to drive market share growth in NewRez's space?

A: Baron said it's through investment in team, technology, and brand.