New Residential Investment (NRZ) Financials

Rithm Capital (NYSE: RITM) has shown a dynamic financial performance from Q3 2022 through Q1 2025, highlighted by considerable volatility in revenues, expenses, and net income, reflecting its investment activities and capital management strategies.

Revenue and Income Performance:

• In Q1 2025, Rithm Capital recorded total revenue of approximately $917 million, driven entirely by non-interest income, particularly strong gains from investments totaling over $207 million plus $710 million in other non-interest income.
• Net income attributable to common shareholders rose to about $36.5 million in Q1 2025, a positive sign compared to prior quarters.
• The company reported zero net interest income through much of 2023 and 2024, consistent with a business model emphasizing non-interest income streams.
• There is substantial quarterly variability in net income, with significant losses recorded in Q4 2023 (-$87.5 million EPS) and Q4 2022 (-$394 million attributable to common shareholders), indicating exposure to market fluctuations and investment volatility.
• Diluted earnings per share fluctuated widely, from a low of -$259.56 in Q4 2022 to positive values near $0.50 in 2024-2025, suggesting changing investor returns aligned with performance swings.

Expense and Cost Trends:

• Operating expenses remain consistently high; for instance, other operating expenses were $657 million in Q1 2025 and have fluctuated between $430 million and $1.2 billion per quarter over the last two years.
• Total non-interest expenses in Q1 2025 ($928 million) slightly exceeded revenues of $917 million, pressuring pre-tax income to $56.8 million.

Balance Sheet and Capital Structure:

• Total assets grew from about $34.7 billion in Q3 2023 to $45.3 billion in Q1 2025, indicating expansion in investment and asset base.
• Long-term debt increased modestly over this period to approximately $34.7 billion as of Q1 2025, maintaining a substantial leverage profile consistent with the industry and capital strategies.
• Common equity also increased, reaching about $6.6 billion in Q1 2025, helping maintain a reasonable equity buffer amid asset growth.

Cash Flow and Liquidity:

• Q1 2025 saw healthy net cash from operating activities at $1.42 billion, supported by significant non-cash adjustments and positive changes in operating assets/liabilities.
• Investing activities showed a net cash outflow of about $1.3 billion in Q1 2025, mainly due to purchase of investment securities exceeding sales.
• Financing activities generated a positive $56 million net cash inflow, driven by debt issuance and equity issuance, partially offset by debt repayments and dividends.

Dividend and Shareholder Returns:

• Rithm Capital consistently paid $0.25 per share in cash dividends each quarter, reflecting a steady return policy despite earnings volatility.

Summary: Rithm Capital's recent financials reveal a company with a growing asset base and mixed profitability heavily dependent on investment gains. The fluctuation in net income and EPS indicates sensitivity to market conditions and investment valuation impacts. Operating expenses remain high, somewhat constraining profitability. Strong operating cash flows are positive, but substantial investing outflows suggest active portfolio management. The company maintains solid equity growth alongside significant leverage, while consistently returning capital to shareholders via dividends.

Investors should consider the volatility inherent in Rithm Capital's earnings and the influence of market conditions on its investment-related income when evaluating the stock's prospects.