Rithm Capital Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Earnings Per Share (EPS): $0.51 per diluted share.

Earnings After Debt (EAD): $289.6 million.

Return on Equity (ROE): 17%.

GAAP Net Income: $67.8 million, or $0.12 per diluted share, with a 4% ROE.

Book Value: $7 billion, or $12.51 per share, reflecting quarter-over-quarter growth.

Dividend: $0.25 per common share, yielding 10.5%.

Cash and Liquidity: Approximately $1.4 billion at quarter-end.

2Strategic Updates and Business Highlights

Market Positioning: Rithm Capital is well-positioned to leverage market dislocations due to geopolitical risks and private credit headlines, with a focus on deploying capital in asset-based finance (ABF) and credit.

Asset Management: Sculptor and Crestline asset management divisions manage approximately $60 billion, with Sculptor raising $4.6 billion in a recent fund.

Elecor (formerly Paramount): Rebranded to enhance operational strength and attract high-quality tenants in New York and San Francisco. The portfolio is 85.7% leased, with significant leasing activity and planned capital improvements.

Genesis Capital: Achieved a record quarter with $1.6 billion in loans, focusing on maintaining strict credit standards.

Newrez: Reported $274 million in pretax income, with a 19% ROE, driven by disciplined origination strategies and a growing servicing portfolio.

3Forward Guidance and Outlook

Rithm anticipates continued growth in asset management and credit performance, emphasizing the importance of performance over AUM growth.

The firm expects to deploy between $6.5 billion and $7 billion in production for Genesis Capital this year.

Continued focus on enhancing operational efficiencies, particularly in the mortgage segment, with AI expected to drive cost reductions.

4Challenges and Points of Concern

Market Pressures: Competitive pressures in the mortgage market have affected gain on sale margins, particularly in wholesale and correspondent channels.

Economic Sentiment: Concerns about consumer sentiment and potential impacts from proposed capital rule changes for banks could affect participation in the mortgage market.

Complexity of Business: Some investors express concerns over Rithm's diversified business model, suggesting it may be perceived as complicated compared to simpler competitors.

5Notable Q&A Insights

Fundraising Momentum: Strong demand for direct lending continues from institutional investors, despite some retail investor pullback due to market noise.

Simplifying the Business: Rithm is focused on growing its asset management business and may explore separating its mortgage company to clarify its business structure.

M&A Opportunities: While there are potential M&A opportunities in the mortgage space, Rithm does not currently see a need to acquire additional companies.

AI Integration: Expected benefits from AI in the mortgage segment are anticipated to materialize in the latter half of 2026, enhancing productivity and operational efficiency. Overall, Rithm Capital reported a solid quarter with strong financial metrics and strategic initiatives, while navigating competitive pressures and market complexities.