REVENUEBeat +19.6%
EPSBeat +10.2%
Actuals vs. estimates
| Metric | Actual | Consensus | Surprise |
|---|---|---|---|
| RevenueTotal Revenue | $1.76B | $1.47B | ▲ Beat +19.6% |
| EPS(non-GAAP diluted) | $0.55 | $0.50 | ▲ Beat +10.2% |
Verdict
- Earnings available for distribution of $0.55 per diluted share beat the $0.499 API Ninjas estimate; GAAP diluted EPS was $0.38, up from $0.04 in Q2.
- Total revenue of $1,756.4 million beat the $1,468.0 million estimate, but the beat leans on a positive $121.3 million MSR fair-value change, net of hedges, against a negative $392.9 million in Q2.
- No guidance in the release; the common dividend held at $0.25 per share, covered by $0.55 of distributable earnings.
- The one thing that matters: core earnings beat the estimate but fell sequentially, with EAD down to $0.55 from $0.60 as incentive fees dropped to $14.4 million from $51.7 million and funded origination volume fell 19% quarter over quarter.
Key metrics
| Metric | Reported | Prior year | Change |
|---|---|---|---|
| Earnings available for distribution | $315.3 million | $338.9 million | — |
| Earnings available for distribution per diluted share | $0.55 | $0.60 | — |
| GAAP net income | $217.1 million | $20.2 million | — |
| Book value per common share | $12.51 | — | — |
| Newrez pre-tax operating income | $329.7 million | $307.6 million | — |
| Origination funded production volume | $12.9 billion | — | -19% QoQ; -21% YoY |
Guidance changes
No financial guidance change disclosed.
Quality of earnings
- The revenue jump is a mark, not a business. Total revenue rose to $1,756.4 million from $1,282.3 million in Q2, while the MSR fair-value line, net of economic hedges, swung to a gain of $121.3 million from a loss of $392.9 million.
- GAAP and EAD diverge on non-cash items. EAD of $315.3 million versus GAAP net income of $217.1 million adds back $254.7 million of deferred taxes and $86.3 million of D&A, and strips out $269.8 million of realized and unrealized gains.
- Fee quality softened. Asset management revenue fell to $107.3 million from $142.2 million as incentive fees dropped to $14.4 million from $51.7 million, with AUM flat at approximately $61 billion.
Gotchas & watch items
- Origination funded production volume was $12.9 billion, down 19% quarter over quarter and 21% year over year, while the CEO cites significant momentum.
- Income tax expense rose to $257.8 million from $19.0 million in Q2, taking pre-tax income of $519.1 million down to net income of $261.3 million.
- EAD fell to $315.3 million from $338.9 million in Q2 on a higher diluted share count of 572.8 million versus 568.3 million.