- Reported $83 million net income or $0.90 per share, and pretax
operating income of $171 million
- Generated record Originations pretax income of $178 million on
record funded volume of $11.9 billion
- Servicing UPB remained stable, ending the quarter at $641
billion
- Xome reported pretax income of $14 million and pretax operating
income of $13 million, with Assurant Mortgage Solutions (AMS)
contributing positive results
- Announced retirement of $100 million of unsecured senior notes
due 2021, which settled in October
- Achieved Great Place to Work certification
Mr. Cooper Group Inc. (NASDAQ: COOP) (the "Company"), which
principally operates under the Mr. Cooper® and Xome® brands,
reported a third quarter net income of $83 million or $0.90 per
diluted share, partially offset by a net fair value mark-to-market
on the MSR portfolio of $(83) million. Excluding the mark-to-market
and other items, the Company reported pretax operating income of
$171 million. Items excluded from pretax operating income was $(83)
million in mark-to-market, net of the add back of $32 million in
fair value amortization included in the full mark-to-market, $4
million gain from remeasuring contingent consideration associated
with the AMS acquisition, $5 million in charges related to
corporate actions, and $12 million of intangible amortization.
Chairman and CEO Jay Bray commented, “The Originations segment
produced another quarter of record fundings, with strong margins,
demonstrating our capability to scale up in response to refinance
market conditions. At the same time, we were very pleased with
continued strong performance in the Servicing segment and delighted
to receive the Great Place to Work certification.”
Chris Marshall, vice chairman and CFO added, “Net income,
operating profits, and cash flow were all very strong in the
quarter, allowing us to move forward with our deleveraging plan and
begin retiring some of our senior notes. Deleveraging will
strengthen the balance sheet, improve profitability, and afford us
greater financial flexibility.”
Servicing
The Servicing segment is focused on providing a best-in-class
home loan experience for our 3.8 million customers while
simultaneously strengthening asset performance for investors. In
the third quarter, Servicing recorded pretax income of $9 million
offset by a net fair value mark-to-market on the MSR portfolio of
$(83) million. During the quarter the total servicing portfolio
remained stable, ending the quarter at $641 billion UPB. Servicing
earned pretax operating income excluding the full mark of $92
million, equivalent to a servicing margin of 5.8 bps. At quarter
end, the carrying value of the MSR was $3,346 million, equivalent
to 109 bps of MSR UPB, and the original cost basis was 86 bps.
Quarter Ended
($ in millions)
Q2'19
Q3'19
$
BPS
$
BPS
Operational revenue
$
314
19.6
$
319
20.0
Amortization, net of accretion
(56
)
(3.5
)
(73
)
(4.6
)
Mark-to-market
(231
)
(14.4
)
(83
)
(5.2
)
Total revenues
27
1.7
163
10.2
Expenses
(189
)
(11.8
)
(171
)
(10.7
)
Total other income (expenses), net
27
1.7
17
1.1
(Loss) income before taxes
(135
)
(8.4
)
9
0.6
Mark-to-market
231
14.4
83
5.2
Pretax operating income excluding
mark-to-market
$
96
6.0
$
92
5.8
Quarter Ended
Q2'19
Q3'19
Ending UPB ($B)
$
644
$
641
Average UPB ($B)
$
639
$
637
60+ day delinquency rate
2.3
%
2.2
%
Annualized CPR
13.0
%
17.5
%
Modifications and workouts
12,108
8,792
Originations
The Originations segment focuses on creating servicing assets at
attractive margins through existing customer relationships,
correspondent, and wholesale originations. Originations earned
record pretax income of $178 million, up from $118 million in the
prior quarter.
Mr. Cooper funded 48,904 loans in the third quarter, totaling
approximately $12 billion UPB comprised of $4.9 billion in
direct-to-consumer, $6.4 billion in correspondent, and $0.6 billion
in wholesale. Funded volume increased 19% quarter-over-quarter.
Quarter Ended
($ in millions)
Q2'19
Q3'19
Income before taxes
$
118
$
178
Quarter Ended
($ in millions)
Q2'19
Q3'19
Total pull through adjusted volume
$
11,197
$
12,699
Funded volume
$
9,996
$
11,911
Refinance recapture percentage
44
%
38
%
Recapture percentage
23
%
25
%
Purchase volume as a percentage of funded
volume
53
%
39
%
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 $14 million, or pretax operating income
of $13 million in the third quarter, which excluded accounting
items related to remeasuring the contingent consideration
associated with the AMS acquisition and intangible
amortization.
Quarter Ended
($ in millions)
Q2'19
Q3'19
Income before taxes
$
7
$
14
Accounting items
—
(4
)
Intangible amortization
3
3
Pretax operating income excluding
accounting items and intangible amortization
$
10
$
13
Quarter Ended
Q2'19
Q3'19
Exchange property listings sold
2,645
2,453
Average Exchange property listings
6,693
6,688
Services orders completed
417,510
429,128
Percentage of revenue earned from
third-party customers
53
%
53
%
Conference Call Webcast and Investor
Presentation
The Company will host a conference call on October 31, 2019 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 9583900 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 9583900 to access the
replay. The replay will be accessible through November 14, 2019 at
11:00 A.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, including statements
regarding the results of deleveraging. 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. 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.
Financial Tables
MR. COOPER GROUP INC. AND
SUBSIDIARIES
UNAUDITED CONSOLIDATED
STATEMENTS OF OPERATIONS
(millions of dollars, except for
earnings per share data)
Three Months Ended June 30,
2019
Three Months Ended September 30,
2019
Revenues:
Service related, net – excluding
mark-to-market
$
368
$
341
Mark-to-market
(231
)
(83
)
Net gain on mortgage loans held for
sale
262
360
Total revenues
399
618
Total expenses
492
478
Other income (expense):
Interest income
162
163
Interest expense
(187
)
(196
)
Other income (expenses)
1
—
Total other income (expenses), net
(24
)
(33
)
(Loss) income before income tax (benefit)
expense
(117
)
107
Income tax (benefit) expense
(29
)
24
Net (loss) income
(88
)
83
Net loss attributable to non-controlling
interest
(1
)
(1
)
Net (loss) income attributable to Mr.
Cooper Group
(87
)
84
Undistributed earnings attributable to
participating stockholders
—
1
Net (loss) income attributable to Mr.
Cooper Group
$
(87
)
$
83
(Loss) income per share attributable to
common stockholders:
Basic
$
(0.96
)
$
0.91
Diluted
$
(0.96
)
$
0.90
Weighted average shares of common stock
outstanding (in thousands):
Basic
91,054
91,080
Diluted
91,054
92,036
MR. COOPER GROUP INC. AND
SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE
SHEETS
(millions of dollars)
June 30, 2019
September 30, 2019
Assets
Cash and cash equivalents
$
245
$
371
Restricted cash
304
271
Mortgage servicing rights
3,511
3,346
Advances and other receivables, net
1,000
967
Reverse mortgage interests, net
7,110
6,662
Mortgage loans held for sale at fair
value
3,422
4,267
Mortgage loans held for investment at fair
value
114
—
Property and equipment, net
115
113
Deferred tax asset
1,055
1,032
Other assets
1,529
1,449
Total assets
$
18,405
$
18,478
Liabilities and Stockholders'
Equity
Unsecured senior notes, net
$
2,462
$
2,464
Advance facilities, net
567
513
Warehouse facilities, net
4,045
4,802
Payables and accrued liabilities
2,116
2,002
MSR related liabilities - nonrecourse at
fair value
1,472
1,328
Mortgage servicing liabilities
80
69
Other nonrecourse debt, net
5,985
5,533
Total liabilities
16,727
16,711
Total stockholders' equity
1,678
1,767
Total liabilities and stockholders'
equity
$
18,405
$
18,478
UNAUDITED SEGMENT STATEMENT
OF
OPERATIONS & EARNINGS
RECONCILIATION
(millions of dollars, except for
earnings per share data)
Three Months Ended for June 30,
2019
Servicing
Originations
Xome
Corporate and Other
Elimination/Reclassification⁽¹⁾
Consolidated
Service related, net
$
27
$
20
$
108
$
—
$
(18
)
$
137
Net gain on mortgage loans held for
sale
—
244
—
—
18
262
Total revenues
27
264
108
—
—
399
Total expenses
189
145
101
57
—
492
Other income (expense):
Interest income
136
23
—
3
—
162
Interest expense
(109
)
(25
)
—
(53
)
—
(187
)
Other expense
—
1
—
—
—
1
Total other income (expense)
27
(1
)
—
(50
)
—
(24
)
Pretax (loss) income
$
(135
)
$
118
$
7
$
(107
)
$
—
$
(117
)
Income tax benefit
(29
)
Net loss
$
(88
)
Net loss attributable to noncontrolling
interests
(1
)
Net loss attributable to common
stockholders of Mr. Cooper Group
$
(87
)
Loss per share
Basic
$
(0.96
)
Diluted
$
(0.96
)
Non-GAAP Reconciliation:
Pretax income (loss)
$
(135
)
$
118
$
7
$
(107
)
$
—
$
(117
)
Mark-to-market
231
—
—
—
—
231
Merger related costs
—
—
—
17
—
17
Intangible amortization
—
—
3
10
—
13
Pretax income (loss), net of notable
items
$
96
$
118
$
10
$
(80
)
$
—
$
144
Fair value amortization⁽²⁾
(26
)
—
—
—
—
(26
)
Pretax operating income (loss)
$
70
$
118
$
10
$
(80
)
$
—
$
118
Income tax expense
(29
)
Operating income
$
89
ROTCE
23.8
%
⁽¹⁾ For Servicing segment results
purposes, all revenue is attributable to servicing the portfolio.
Therefore, $18 of net gain on mortgage loans is moved to service
related, net for the three months ended June 30, 2019. For
consolidated results purposes, these amounts were reclassed to net
gain on mortgage loans held for sale.
⁽²⁾ 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 for September
30, 2019
Servicing
Originations
Xome
Corporate and Other
Elimination/Reclassification⁽¹⁾
Consolidated
Service related, net
$
163
$
22
$
112
$
—
$
(39
)
$
258
Net gain on mortgage loans held for
sale
—
312
—
11
37
360
Total revenues
163
334
112
11
(2
)
618
Total expenses
171
155
101
53
(2
)
478
Other income (expense):
Interest income
137
24
—
2
—
163
Interest expense
(120
)
(24
)
—
(52
)
—
(196
)
Other expense
—
(1
)
3
(2
)
—
—
Total other income (expense)
17
(1
)
3
(52
)
—
(33
)
Pretax income (loss)
$
9
$
178
$
14
$
(94
)
$
—
$
107
Income tax expense
24
Net income
$
83
Net loss attributable to noncontrolling
interests
(1
)
Net income attributable to common
stockholders of Mr. Cooper Group
$
84
Undistributed earnings attributable to
participating stockholders
1
Net income attributable to Mr. Cooper
Group
$
83
Income per share
Basic
$
0.91
Diluted
$
0.90
Non-GAAP Reconciliation:
Pretax income (loss)
$
9
$
178
$
14
$
(94
)
$
—
$
107
Mark-to-market
83
—
—
—
—
83
Accounting items / other
—
—
(4
)
5
—
1
Intangible amortization
—
—
3
9
—
12
Pretax income (loss), net of notable
items
$
92
$
178
$
13
$
(80
)
$
—
$
203
Fair value amortization⁽²⁾
(32
)
—
—
—
—
(32
)
Pretax operating income (loss)
$
60
$
178
$
13
$
(80
)
$
—
$
171
Income tax expense
(41
)
Operating income
$
130
ROTCE
34.5
%
⁽¹⁾ For Servicing segment results
purposes, all revenue is attributable to servicing the portfolio.
Therefore, $37 of net gain on mortgage loans is moved to service
related, net for the three months ended September 30, 2019. For
consolidated results purposes, these amounts were reclassed to net
gain on mortgage loans held for sale.
⁽²⁾ 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/20191031005308/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
Mr Cooper (NASDAQ:COOP)
Historical Stock Chart
From Mar 2024 to Apr 2024
Mr Cooper (NASDAQ:COOP)
Historical Stock Chart
From Apr 2023 to Apr 2024
