- Reported $171 million net loss or $1.84 per diluted share,
reflecting a negative $383 million mark-to-market
- Moved more than 95% of teammates to work-from-home status in 5
days
- Increased unrestricted cash quarter-over-quarter from $329
million to $579 million
- Generated strong pretax operating income of $127 million,
equivalent to a 19.6% after-tax ROTCE
- Originations segment generated pretax income of $158 million on
funded volume of $12.4 billion
- Servicing margin compressed to 3.9 bps
- Xome reported pretax income of $11 million and pretax operating
income of $13 million, with third-party revenue rising
quarter-over-quarter from 51% to 55%
Mr. Cooper Group Inc. (NASDAQ: COOP) (the “Company”), which
principally operates under the Mr. Cooper® and Xome® brands,
reported a first quarter net loss of $171 million or $1.84 per
diluted share. Net loss included a negative $383 million in
mark-to-market. Excluding the mark-to-market and other items, the
Company reported pretax operating income of $127 million. Items
excluded from operating income were negative $383 million in
mark-to-market, net of the add back of $30 million in fair value
amortization that is included in the full mark-to-market, $4
million in severance charges related to corporate actions, and $9
million of intangible amortization.
Chairman and CEO Jay Bray commented, “I am very proud of how all
our team members rose to the challenge, helping over 194,000
customers initiate pandemic forbearance plans, while at the same
time generating very strong operating results for the company.”
Chris Marshall, vice chairman and CFO added, “2020 will be a
much different year than the one we planned for, but we’ve executed
our contingency plans and positioned our balance sheet and bank
facilities appropriately; as a result we expect our business to
continue to produce excellent results throughout the year.”
Servicing
The Servicing segment is focused on providing a best-in-class
home loan experience for our 3.7 million customers while
simultaneously strengthening asset performance for investors. In
the first quarter, Servicing recorded pretax loss of $325 million,
reflecting a negative $383 million in mark-to-market. The total
servicing portfolio ended the quarter at $629 billion UPB.
Servicing earned pretax operating income excluding the full mark
and severance charges related to corporate actions of $62 million,
equivalent to a servicing margin of 3.9 bps. At quarter end, the
carrying value of the MSR was $3,115 million, of which $3,109
million was at fair value equivalent to 107 bps of MSR UPB and
original cost basis of 86 bps.
Quarter Ended
($ in millions)
Q4'19
Q1'20
$
BPS
$
BPS
Operational revenue
$
316
20.1
$
313
19.7
Amortization, net of accretion
(84
)
(5.3
)
(76
)
(4.8
)
Mark-to-market
102
6.4
(383
)
(24.1
)
Total revenues
334
21.2
(146
)
(9.2
)
Total expenses
(135
)
(8.6
)
(149
)
(9.3
)
Total other income (expenses), net
(10
)
(0.6
)
(30
)
(1.9
)
Income before taxes
189
12.0
(325
)
(20.4
)
Mark-to-market
(102
)
(6.5
)
383
24.1
Accounting items
—
—
4
0.2
Pretax operating income excluding
mark-to-market
$
87
5.5
$
62
3.9
Quarter Ended
Q4'19
Q1'20
Ending UPB ($B)
$
643
$
629
Average UPB ($B)
$
630
$
636
60+ day delinquency rate at period end
2.0
%
1.9
%
Annualized CPR
19.1
%
19.2
%
Modifications and workouts
9,873
8,709
Originations
The Originations segment focuses on creating servicing assets at
attractive margins through existing customer relationships,
correspondent, and wholesale originations. Originations earned
pretax income of $158 million.
Mr. Cooper funded 50,369 loans in the first quarter, totaling
approximately $12.4 billion UPB comprised of $6.4 billion in
direct-to-consumer, $5.5 billion in correspondent, and $0.5 billion
in wholesale. Funded volume decreased 2% quarter-over-quarter.
Quarter Ended
($ in millions)
Q4'19
Q1'20
Income before taxes
$
138
$
158
Quarter Ended
($ in millions)
Q4'19
Q1'20
Total pull through adjusted volume
$
12,537
$
12,677
Funded volume
$
12,559
$
12,359
Refinance recapture percentage
39
%
38
%
Recapture percentage
29
%
30
%
Purchase volume as a percentage of funded
volume
32
%
26
%
Xome
Xome provides real estate solutions including property
disposition, asset management, title, close, valuation, and field
services for Mr. Cooper and third-party clients. The Xome segment
recorded pretax income of $11 million and pretax operating income
of $13 million in the first quarter, which excluded intangible
amortization.
Quarter Ended
($ in millions)
Q4'19
Q1'20
Income before taxes
$
9
$
11
Accounting items / other
3
—
Intangible amortization
2
2
Pretax operating income excluding
intangible amortization and accounting items
$
14
$
13
Quarter Ended
Q4'19
Q1'20
Exchange properties sold
2,332
2,114
Average Exchange properties under
management
11,917
17,777
Services completed orders
403,779
408,734
Percentage of revenue earned from
third-party customers
51
%
55
%
Conference Call Webcast and Investor
Presentation
The Company will host a conference call on April 30, 2020 at
9:00 A.M. Eastern Time. The conference call may be accessed by
dialing 855-874-2685, or 720-634-2923 internationally. Please use
the participant passcode 3079677 to access the conference call. A
simultaneous audio webcast of the conference call will be available
in the Investor section of www.mrcoopergroup.com. A replay will
also be available approximately two hours after the conclusion of
the conference call by dialing 855-859-2056, or 404-537-3406
internationally. Please use the passcode 3079677 to access the
replay. The replay will be accessible through May 15, 2020 at 12:00
P.M. Eastern Time.
Non-GAAP Financial
Measures
The Company utilizes non-GAAP financial measures as the measures
provide additional information to assist investors in understanding
and assessing the Company’s and our business segments’ ongoing
performance and financial results, as well as assessing our
prospects for future performance. The adjusted operating financial
measures facilitate a meaningful analysis and allow more accurate
comparisons of our ongoing business operations because they exclude
items that may not be indicative of or are unrelated to the
Company’s and our business segments’ core operating performance,
and are better measures for assessing trends in our underlying
businesses. These notable items are consistent with how management
views our businesses. Management uses these non-GAAP financial
measures in making financial, operational and planning decisions
and evaluating the Company’s and our business segment’s ongoing
performance. Pretax operating income (loss) in the servicing
segment eliminates the effects of mark-to-market adjustments which
primarily reflects unrealized gains or losses based on the changes
in fair value measurements of MSRs and their related financing
liabilities for which a fair value accounting election was made.
These adjustments, which can be highly volatile and material due to
changes in credit markets, are not necessarily reflective of the
gains and losses that will ultimately be realized by the Company.
Pretax operating income (loss) in each segment also eliminates, as
applicable, transition and integration costs, gains (losses) on
sales of fixed assets, certain settlement costs that are not
considered normal operational matters, intangible amortization, and
other adjustments based on the facts and circumstances that would
provide investors a supplemental means for evaluating the Company’s
core operating performance.
Forward-Looking
Statements
Any statements in this release that are not historical or
current facts are forward-looking statements. Forward-looking
statements involve known and unknown risks, uncertainties and other
factors that may cause our actual results, performance, or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements, including the severity and duration of
the COVID-19 pandemic; the pandemic’s impact on the U.S. and global
economies; federal, state, and local governmental responses to the
pandemic; borrower forbearance rates and availability of financing.
Results for any specified quarter are not necessarily indicative of
the results that may be expected for the full year or any future
period. Certain of these risks and uncertainties are described in
the “Risk Factors” section of Mr. Cooper Group’s most recent annual
reports and other required documents as filed with the SEC which
are available at the SEC’s website at http://www.sec.gov. Mr.
Cooper undertakes no obligation to publicly update or revise any
forward-looking statement or any other financial information
contained herein, and the statements made in this press release are
current as of the date of this release only.
MR. COOPER GROUP INC. AND
SUBSIDIARIES
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS
(millions of dollars, except for
earnings per share data)
Three Months Ended December 31,
2019
Three Months Ended March 31,
2020
Revenues:
Service related, net, excluding
mark-to-market
$
328
$
330
Mark-to-market
102
(383
)
Net gain on mortgage loans held for
sale
310
331
Total revenues
740
278
Total expenses
438
444
Other income (expense):
Interest income
146
118
Interest expense
(207
)
(192
)
Other expense, net
(1
)
1
Total other income (expenses), net
(62
)
(73
)
Income (loss) before income tax
benefit
240
(239
)
Income tax benefit
(221
)
(68
)
Net income (loss)
461
(171
)
Net loss attributable to non-controlling
interest
(2
)
(3
)
Net income (loss) attributable to Mr.
Cooper Group
463
(168
)
Undistributed earnings attributable to
participating stockholders
4
—
Net income (loss) attributable to
common stockholders
$
459
$
(168
)
Net income (loss) per share attributable
to common stockholders:
Basic
$
5.03
$
(1.84
)
Diluted
$
4.95
$
(1.84
)
Weighted average shares of common stock
outstanding (in thousands):
Basic
91,105
91,385
Diluted
92,599
91,385
MR. COOPER GROUP INC. AND
SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE
SHEETS
(millions of dollars)
December 31, 2019
March 31, 2020
Assets
Cash and cash equivalents
$
329
$
579
Restricted cash
283
266
Mortgage servicing rights
3,502
3,115
Advances and other receivables, net
988
685
Reverse mortgage interests, net
6,279
5,955
Mortgage loans held for sale at fair
value
4,077
3,922
Property and equipment, net
112
111
Deferred tax asset, net
1,345
1,411
Other assets
1,390
1,569
Total assets
$
18,305
$
17,613
Liabilities and
Stockholders’ Equity
Unsecured senior notes, net
$
2,366
$
2,259
Advance facilities, net
422
489
Warehouse facilities, net
4,575
4,551
Payables and other liabilities
2,016
1,965
MSR related liabilities - nonrecourse at
fair value
1,348
1,285
Mortgage servicing liabilities
61
53
Other nonrecourse debt, net
5,286
4,945
Total liabilities
16,074
15,547
Total stockholders’ equity
2,231
2,066
Total liabilities and stockholders’
equity
$
18,305
$
17,613
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended December 31,
2019
Servicing
Originations
Xome
Corporate/ Other
Elimination
Consolidated
Service related, net
$
300
$
23
$
106
$
2
$
(1
)
$
430
Net gain on mortgage loans held for
sale
34
276
—
—
—
310
Total revenues
334
299
106
2
(1
)
740
Total expenses
135
164
97
43
(1
)
438
Other income (expense):
Interest income
112
34
—
—
—
146
Interest expense
(126
)
(31
)
—
(50
)
—
(207
)
Other income (expense), net
4
—
—
(5
)
—
(1
)
Total other income (expense), net
(10
)
3
—
(55
)
—
(62
)
Pretax income (loss)
$
189
$
138
$
9
$
(96
)
$
—
$
240
Income tax benefit
(221
)
Net income
$
461
Net loss attributable to noncontrolling
interests
(2
)
Net income attributable to Mr. Cooper
Group
$
463
Undistributed earnings attributable to
participating stockholders
4
Net income attributable to common
stockholders
$
459
Net income per share
Basic
$
5.03
Diluted
$
4.95
Non-GAAP
Reconciliation:
Pretax income (loss)
$
189
$
138
$
9
$
(96
)
$
—
$
240
Mark-to-market
(102
)
—
—
—
—
(102
)
Accounting items / other
—
—
3
3
—
6
Intangible amortization
—
—
2
10
—
12
Pretax income (loss), net of notable
items
$
87
$
138
$
14
$
(83
)
$
—
$
156
Fair value amortization(1)
(31
)
—
—
—
—
(31
)
Pretax operating income (loss)
$
56
$
138
$
14
$
(83
)
$
—
$
125
Income tax expense
(30
)
Operating income
$
95
ROTCE
21.1
%
⁽¹⁾ Amount represents additional
amortization required under the fair value amortization method over
the cost amortization method.
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended March 31,
2020
Servicing
Originations
Xome
Corporate/ Other
Elimination
Consolidated
Service related, net
$
(180
)
$
20
$
106
$
2
$
(1
)
$
(53
)
Net gain on mortgage loans held for
sale
34
297
—
—
—
331
Total revenues
(146
)
317
106
2
(1
)
278
Total expenses
149
166
96
34
(1
)
444
Other income (expense):
Interest income
83
34
—
1
—
118
Interest expense
(113
)
(27
)
—
(52
)
—
(192
)
Other income, net
—
—
1
—
—
1
Total other income (expense), net
(30
)
7
1
(51
)
—
(73
)
Pretax (loss) income
$
(325
)
$
158
$
11
$
(83
)
$
—
$
(239
)
Income tax benefit
(68
)
Net loss
$
(171
)
Net loss attributable to noncontrolling
interests
(3
)
Net loss attributable to Mr. Cooper
Group
$
(168
)
Undistributed earnings attributable to
participating stockholders
—
Net loss attributable to common
stockholders
$
(168
)
Net loss per share
Basic
$
(1.84
)
Diluted
$
(1.84
)
Non-GAAP
Reconciliation:
Pretax (loss) income
$
(325
)
$
158
$
11
$
(83
)
$
—
$
(239
)
Mark-to-market
383
—
—
—
—
383
Accounting items / other
4
—
—
—
—
4
Intangible amortization
—
—
2
7
—
9
Pretax income (loss), net of notable
items
$
62
$
158
$
13
$
(76
)
$
—
$
157
Fair value amortization(1)
(30
)
—
—
—
—
(30
)
Pretax operating income (loss)
$
32
$
158
$
13
$
(76
)
$
—
$
127
Income tax expense
(31
)
Operating income
$
96
ROTCE
19.6
%
⁽1⁾ Amount represents additional
amortization required under the fair value amortization method over
the cost amortization method.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200430005273/en/
Investor Contact: Kenneth Posner, SVP Strategic Planning and
Investor Relations (469) 426-3633 Shareholders@mrcooper.com
Media Contact: Christen Reyenga, VP Corporate Communications
MediaRelations@mrcooper.com
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