Bulletin
Investor Alert

press release

Oct. 28, 2021, 7:01 a.m. EDT

Mr. Cooper Group Reports Third Quarter 2021 Results

Reported total net income of $299 million and $3.29 per diluted share, equivalent to ROCE of 36% Generated pretax operating income of $263 million, equivalent to ROTCE of 25.2% Book value per share increased to $43.40 and Tangible book value per share increased to $41.56 Originations generated GAAP pretax income of $271 million and pretax operating income of $273 million on funded volume of $19.9 billion Recognized as a Great Place To Work for the third year in a row

DALLAS, (BUSINESS WIRE) -- Mr. Cooper Group Inc. /zigman2/quotes/202258849/composite COOP -1.27% (the “Company”), which principally operates under the Mr. Cooper® and Xome® brands, reported a third quarter net income of $299 million or $3.29 per diluted share. The Company reported pretax operating income of $263 million, which excluded mark-to-market and other items. The mark-to-market adjustment was $153 million in the quarter and other items included $7 million gain from the sale of Xome valuations, $4 million in transaction-related costs associated with the Title365 sale, $2 million in charges related to corporate actions, $3 million of intangible amortization, and $15 million pretax loss from discontinued operations.

Chairman and CEO Jay Bray commented, “We took several steps this quarter to rationalize and simplify the business model, allowing us to make progress towards our strategic goals, at the same time that we delivered strong operating results, took care of our customers, and grew our portfolio.”

Chris Marshall, Vice Chairman, President, and CFO added, “In addition to generating excellent operating performance, we increased our liquidity and our capital ratios, which positions us for additional growth.”

Servicing

The Servicing segment is focused on providing a best-in-class home loan experience for our 3.5 million customers while simultaneously strengthening asset performance for investors. In the third quarter, Servicing recorded pretax income of $197 million, including other mark-to-market of $153 million. The forward servicing portfolio ended the quarter at $668 billion in UPB. Servicing generated pretax operating income, excluding other mark-to-market, of $44 million. At quarter end, the carrying value of the MSR was $3,666 million equivalent to 121 bps of MSR UPB.

 
  Quarter Ended
($ in millions) Q2'21   Q3'21
  $   BPS   $   BPS
Operational revenue $ 443     27.4     $ 402     24.6  
Amortization, net of accretion (198 )   (12.2 )   (202 )   (12.4 )
Mark-to-market (140 )   (8.7 )   151     9.3  
Total revenues 105     6.5     351     21.5  
Total expenses (121 )   (7.5 )   (128 )   (7.8 )
Total other expenses, net (40 )   (2.5 )   (26 )   (1.6 )
(Loss) income before taxes (56 )   (3.5 )   197     12.1  
Other mark-to-market 135     8.3     (153 )   (9.4 )
Accounting items 1     0.1          
Pretax operating income excluding other mark-to-market and accounting items $ 80     4.9     $ 44     2.7  
               
  Quarter Ended
  Q2'21   Q3'21
Ending UPB ($B) $ 654     $ 668  
Average UPB ($B) $ 647     $ 653  
60+ day delinquency rate at period end 4.5 %   4.0 %
Annualized CPR 26.0 %   24.6 %
Modifications and workouts 35,581     28,581  

Originations

The Originations segment focuses on creating servicing assets at attractive margins by acquiring loans through the correspondent channel and refinancing existing loans through the direct-to-consumer channel. Originations earned pretax income of $271 million and pretax operating income of $273 million, which excluded $2 million in charges related to corporate actions.

The Company funded 74,753 loans in the third quarter, totaling approximately $19.9 billion UPB, which was comprised of $9.8 billion in direct-to-consumer and $10.1 billion in correspondent. Funded volume decreased 10% quarter-over-quarter, while pull through adjusted volume increased 9% quarter-over-quarter to $20.1 billion.

  Quarter Ended
($ in millions) Q2'21   Q3'21
Income before taxes $ 207     $ 271  
Accounting items / other 6     2  
Pretax operating income excluding accounting items and other $ 213     $ 273  
  Quarter Ended
($ in millions) Q2'21   Q3'21
Total pull through adjusted volume $ 18,358     $ 20,073  
Funded volume $ 22,227     $ 19,938  
Refinance recapture percentage 42 %   40 %
Recapture percentage 32 %   30 %
Purchase volume as a percentage of funded volume 24 %   31 %

Conference Call Webcast and Investor Presentation

The Company will host a conference call on October 28, 2021 at 10:00 A.M. Eastern Time. Preregistration for the call is now available in the Investor section of www.mrcoopergroup.com . Participants will receive a toll-free dial-in number and a unique registrant ID to be used for immediate call access. A simultaneous audio webcast of the conference call will be available under the investors section on www.mrcoopergroup.com . A telephonic replay will also be available approximately two hours after the conclusion of the conference call by dialing 855-859-2056 (toll-free), or 404-537-3406 (international). Please use the passcode 3974467 to access the replay.

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. Return on tangible common equity (ROTCE) is computed by dividing net income by average tangible common equity (also known as tangible book value). Tangible common equity equals total stockholders’ equity less goodwill and intangible assets. Management believes that ROTCE is a useful financial measure because it measures the performance of a business consistently and enables investors and others to assess the Company’s use of equity. Tangible book value is defined as stockholders’ equity less goodwill and intangible assets. Our management believes tangible book value is useful to investors because it provides a more accurate measure of the realizable value of shareholder returns, excluding the impact of goodwill and intangible assets.

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.

Financial Tables

 
MR. COOPER GROUP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(millions of dollars, except for earnings per share data)
  Three Months Ended
June 30, 2021
  Three Months Ended
September 30, 2021
Revenues:      
Service related, net $ (8 )   $ 288  
Net gain on mortgage loans held for sale 582     572  
Total revenues 574     860  
Total expenses: 425     402  
Other income (expense), net:      
Interest income 51     66  
Interest expense (119 )   (118 )
Other income, net 486     8  
Total other income (expense), net 418     (44 )
Income before income tax expense 567     414  
Income tax expense 140     104  
Net income from continuing operations 427     310  
Net income (loss) from discontinued operations 12     (11 )
Net income 439     299  
Net income attributable to non-controlling interest      
Net income attributable to Mr. Cooper Group 439     299  
Undistributed earnings attributable to participating stockholders 4     1  
Premium on retirement of preferred stock     28  
Net income attributable to common stockholders $ 435     $ 270  
       
Earnings from continuing operations per common share attributable to Mr. Cooper:      
Basic $ 4.91     $ 3.56  
Diluted $ 4.72     $ 3.42  
Earnings from discontinued operations per common share attributable to Mr. Cooper:      
Basic $ 0.14     $ (0.14 )
Diluted $ 0.13     $ (0.13 )
Earnings per common share attributable to Mr. Cooper:      
Basic $ 5.05     $ 3.42  
Diluted $ 4.85     $ 3.29  
Weighted average shares of common stock outstanding (in millions):      
Basic 86.1     78.9  
Diluted 89.6     82.1  
 
MR. COOPER GROUP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(millions of dollars)
  June 30, 2021   September 30, 2021
Assets      
Cash and cash equivalents $ 716     $ 731  
Restricted cash 113     118  
Mortgage servicing rights at fair value 3,307     3,666  
Advances and other receivables, net 837     909  
Mortgage loans held for sale at fair value 6,961     7,939  
Property and equipment, net 110     103  
Deferred tax assets, net 1,118     1,011  
Other assets 5,211     3,462  
Assets of discontinued operations 4,935     3,722  
Total assets $ 23,308     $ 21,661  
       
Liabilities and Stockholders' Equity      
Unsecured senior notes, net $ 2,075     $ 2,076  
Advance and warehouse facilities, net 7,310     8,206  
Payables and other liabilities 4,895     3,537  
MSR related liabilities - nonrecourse at fair value 888     842  
Liabilities of discontinued operations 4,790     3,740  
Total liabilities 19,958     18,401  
Total stockholders' equity 3,350     3,260  
Total liabilities and stockholders' equity $ 23,308     $ 21,661  
 
UNAUDITED SEGMENT STATEMENT OF
OPERATIONS & EARNINGS RECONCILIATION
(millions of dollars, except for earnings per share data)
 
  Three Months Ended June 30, 2021
  Servicing   Originations Corporate/ Other Consolidated
           
Service related, net $ (92 )   $ 45   $ 39   $ (8 )
Net gain on mortgage loans held for sale   197     385     582  
Total revenues   105     430   39   574  
Total expenses   121     226   78   425  
Other (expense) income, net:          
Interest income 25     26     51  
Interest expense (65 )   (23 ) (31 ) (119 )
Other income, net       486   486  
Total other (expense) income, net (40 )   3   455   418  
Pretax (loss) income $ (56 )   $ 207   $ 416   $ 567  
Income tax expense         140  
Net income from continuing operations         427  
Net income from discontinued operations         12  
Net income         439  
Net income attributable to noncontrolling interests          
Net income attributable to common stockholders of Mr. Cooper Group         439  
Undistributed earnings attributable to participating stockholders         4  
Net income attributable to common stockholders         $ 435  
Net income per share          
Basic         $ 5.05  
Diluted         $ 4.85  
           
Non-GAAP Reconciliation:          
Pretax (loss) income $ (56 )   $ 207   $ 416   $ 567  
Other mark-to-market   135         135  
Accounting items / other   1     6   (485 ) (478 )
Intangible amortization         3   3  
Pretax operating income (loss) $ 80     $ 213   $ (66 ) $ 227  
Income tax expense [(1)]         (55 )
Operating income         $ 172  
ROTCE [(2)]         23.1 %
Average tangible book value (TBV) [(3)]         $ 2,983  
(1) Assumes tax-rate of 24.2%.
(2) Computed by dividing annualized earnings by average TBV.
(3) Average of beginning TBV of $2,757 and ending TBV of $3,208.
 
UNAUDITED SEGMENT STATEMENT OF
OPERATIONS & EARNINGS RECONCILIATION
(millions of dollars, except for earnings per share data)
 
  Three Months Ended September 30, 2021
  Servicing   Originations   Corporate/ Other   Consolidated
               
Service related, net $ 209     $ 44     $ 35     $ 288  
Net gain on mortgage loans held for sale 142     430         572  
Total revenues 351     474     35     860  
Total expenses 128     208     66     402  
Other (expense) income, net:              
Interest income 39     27         66  
Interest expense (65 )   (22 )   (31 )   (118 )
Other income, net         8     8  
Total other (expense) income, net (26 )   5     (23 )   (44 )
Pretax income (loss) $ 197     $ 271     $ (54 )   $ 414  
Income tax expense             104  
Net income from continuing operations             310  
Net loss from discontinued operations             (11 )
Net income             299  
Net income attributable to noncontrolling interests              
Net income attributable to common stockholders of Mr. Cooper Group             299  
Undistributed earnings attributable to participating stockholders             1  
Premium on retirement of preferred stock             28  
Net income attributable to common stockholders             $ 270  
Net income per share              
Basic             $ 3.42  
Diluted             $ 3.29  
               
Non-GAAP Reconciliation:              
Pretax income (loss) $ 197     $ 271     $ (54 )   $ 414  
Other mark-to-market (153 )           (153 )
Accounting items / other     2     (3 )   (1 )
Intangible amortization         3     3  
Pretax operating income (loss) $ 44     $ 273     $ (54 )   $ 263  
Income tax expense [(1)]             (64 )
Operating income             $ 199  
ROTCE [(2)]               25.2 %
Average tangible book value (TBV) [(3)]             $ 3,165  
(1) Assumes tax-rate of 24.2%.
(2) Computed by dividing annualized earnings by average TBV.
(3) Average of beginning TBV of $3,208 and ending TBV of $3,122.
 
Non-GAAP Reconciliation: Quarter Ended
($ in millions except value per share data) Q2'21 . Q3'21
Stockholders' equity (BV) $ 3,350     $ 3,260  
Goodwill (120 )   (120 )
Intangible assets (22 )   (18 )
Tangible book value (TBV) $ 3,208     $ 3,122  
Ending shares of common stock outstanding ( in millions )   86.1     75.1  
       
BV/share $ 38.89     $ 43.40  
TBV/share $ 37.24     $ 41.56  
       
Net income $ 439     $ 299  
ROCE [(1)] 56.2 %   36.2 %
       
Beginning stockholders’ equity $ 2,904     $ 3,350  
Ending stockholders’ equity $ 3,350     $ 3,260  
Average stockholders’ equity (BV) $ 3,127     $ 3,305  
 
(1) Computed by dividing annualized earnings by average BV.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211028005420/en/

SOURCE: Mr. Cooper Group Inc.

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

COMTEX_395937121/2456/2021-10-28T07:00:57

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/zigman2/quotes/202258849/composite
US : U.S.: Nasdaq
$ 44.21
-0.57 -1.27%
Volume: 566,717
Jan. 19, 2022 4:00p
P/E Ratio
2.75
Dividend Yield
N/A
Market Cap
$3.36 billion
Rev. per Employee
$333,878
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