[March 20, 2014] |
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New Residential Announces Fourth Quarter & Full Year 2013 Results and Declares Dividend of $0.175 Per Common Share for First Quarter 2014
NEW YORK --(Business Wire)--
New Residential Investment Corp. (NYSE:NRZ; "New Residential", the
"Company") today reported GAAP Income of $80.5 million, or $0.31 per
diluted share, for the fourth quarter of 2013. The Company reported GAAP
Income since New Residential spun off from Newcastle Investment Corp. in
May 2013 of $228.3 million, or $0.89 per diluted share.
Additionally, on March 19, 2014, the Company's Board of Directors
declared a quarterly dividend of $0.175 per common share for the first
quarter of 2014. The dividend is payable on April 30, 2014 to
shareholders of record on March 31, 2014.
FOURTH QUARTER FINANCIAL HIGHLIGHTS:
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GAAP Income of $80.5 million, or $0.31 per diluted share
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Core Earnings of $36.8 million, or $0.14 per diluted share
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Common Dividend of $63.3 million, or $0.25 per diluted share
FULL YEAR 2013 (SINCE SPIN-OFF) FINANCIAL
HIGHLIGHTS:
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GAAP Income of $228.3 million, or $0.89 per diluted share
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Core Earnings of $94.5 million, or $0.37 per diluted share
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Common Dividend of $125.3 million, or $0.495 per diluted share
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Q4 2013
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Q3 2013
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12M Ended
Q4 2013 (1)
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Since Spin-Off
(5/16/13 - 12/31/13)
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Summary Operating Results:
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GAAP Income
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$80.5 million
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$63.1 million
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$265.9 million
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$228.3 million
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GAAP Income per Diluted Share
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$0.31
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$0.24
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$1.03
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$0.89
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Non-GAAP Results:
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Core Earnings*
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$36.8 million
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$37.9 million
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$130.0 million
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$94.5 million
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Core Earnings per Diluted Share*
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$0.14
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$0.15
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$0.51
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$0.37
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*For a reconciliation of GAAP Income to Core Earnings, please refer
to the Reconciliation of Core Earnings below.
(1) Includes results for the period before New Residential was
spun-off from Newcastle Investment Corp. and may not be indicative of
the full year results that the Company would have had as a separate
public company for the entire 12-month period.
Highlights for the quarter ended December 31, 2013:
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Excess MSR Investment - During the quarter, New
Residential invested $23 million to fund previously committed pools of
Excess MSRs related to $21 billion of UPB.
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Advances Transaction #1 - In December, New Residential
and other third-party co-investors entered into an agreement to
acquire from Nationstar Mortgage LLC approximately $3.2 billion of
Non-Agency advances, including the basic fee component of the related
MSRs, at par related to $54 billion of initial UPB. This acquisition
marks New Residential's first investment in servicer advances.
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Non-Agency RMBS - During the quarter, New Residential
sold $577 million face amount of Non-Agency RMBS for $399 million, or
69% of par, which resulted in a gain of $41 million. In addition, the
Company also purchased $626 million of face for $386 million, or 62%
of par.
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Non-Performing Loan Investment - New Residential further
diversified its investment portfolio in the fourth quarter by
purchasing a non-performing loan pool for $93 million. This investment
was funded with a mix of debt and equity.
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Dividend - In December, New Residential declared fourth
quarter dividends in the amount of $0.25 per common share, or $63.3
million. The dividends consisted of a regular fourth quarter dividend
of $0.175, and a special cash dividend of $0.075.
Highlights subsequent to December 31, 2013:
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Advances Transaction #2 - In February, New Residential
and other third party co-investors exercised the call right acquired
in the first advance transaction to purchase additional Non-Agency
advances with a par amount of approximately $3.1 billion as of
December 31, 2013, including the basic fee component of the related
MSRs. The advance balance at the time the call right was exercised was
approximately $2.8 billion. In addition, the Company was able to
improve financing terms associated with the first advance transaction
by closing an approximately $2.2 billion securitization in March.
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Non-Agency Securities Purchased from Springleaf - In
March, New Residential and a third-party co-investor committed to
purchase securities related to $833 million face amount of Non-Agency
loans from Springleaf Holdings Inc. for a total price of $738 million.
ADDITIONAL INFORMATION
For additional information that management believes to be useful for
investors, please refer to the presentation posted on the Investor
Relations section of the Company's website, www.newresi.com. For
consolidated investment portfolio information, please refer to the
Company's reports filed with the Securities and Exchange Commission,
which are available on the Company's website (www.newresi.com).
EARNINGS CONFERENCE CALL
New Residential's management will host a conference call on Thursday,
March 20, 2014 at 10:00 A.M. Eastern Time. A copy of the earnings
release will be posted to the Investor Relations section of New
Residential's website, www.newresi.com.
All interested parties are welcome to participate on the live call. The
conference call may be accessed by dialing 1-866-393-1506 (from within
the U.S.) or 1-706-634-0623 (from outside of the U.S.) ten minutes prior
to the scheduled start of the call; please reference "New Residential
Fourth Quarter & Full Year 2013 Earnings Call."
A simultaneous webcast of the conference call will be available to the
public on a listen-only basis at www.newresi.com. Please allow extra
time prior to the call to visit the website and download any necessary
software required to listen to the internet broadcast.
A telephonic replay of the conference call will also be available two
hours following the call's completion through 11:59 P.M. Eastern Time on
Thursday, April 3, 2014 by dialing 1-855-859-2056 (from within the U.S.)
or 1-404-537-3406 (from outside of the U.S.); please reference access
code "10186873."
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Unaudited Condensed Consolidated Statements of Income
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($ in thousands, except per share data)
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Three Months Ending December 31,
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Year Ended
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2013
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2012
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December 31, 2013
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Interest income
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$
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26,492
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$
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14,948
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$
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87,567
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Interest expense
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8,031
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406
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15,024
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Net interest income
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18,461
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14,542
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72,543
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Impairment
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Other-than-temporary impairment ("OTTI") on securities
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1,237
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-
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4,993
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Valuation allowance on loans
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461
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-
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461
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1,698
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-
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5,454
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Net interest income after impairment
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16,763
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14,542
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67,089
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Other income
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83,804
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10,910
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241,008
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83,804
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10,910
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241,008
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Operating Expenses
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20,386
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5,135
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42,474
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20,386
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5,135
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42,474
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Income (Loss) Before Income Taxes
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80,181
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20,317
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265,623
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Income tax expense
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-
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-
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-
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Net Income (Loss)
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80,181
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20,317
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265,623
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Noncontrolling Interests in Income (Loss) of Consolidated
Subsidiaries
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(326)
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-
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(326)
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Net Income (Loss) Attributable to Common Stockholders
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$
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80,507
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$
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20,317
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$
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265,949
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Net Income Per Share of Common Stock
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Basic
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$
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0.32
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$
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0.08
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$
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1.05
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Diluted
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$
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0.31
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$
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0.08
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$
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1.03
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Weighted Average Number of Shares of Common Stock Outstanding
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Basic
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253,186,406
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253,025,645
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253,078,048
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Diluted
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259,796,493
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253,025,645
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257,368,255
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Dividends Declared per Share of Common Stock
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$
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0.25
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$
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-
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$
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0.495
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Consolidated Balance Sheets
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($ in thousands)
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December 31, 2013
(Unaudited)
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December 31, 2012
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Assets
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Investments in:
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Excess mortgage servicing rights, at fair value
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$
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324,151
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$
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245,036
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Excess mortgage servicing rights, equity method investees, at fair
value
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352,766
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-
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Servicer advances
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2,665,551
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-
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Real estate securities, available-for-sale
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1,973,189
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289,756
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Residential mortgage loans, held-for-investment
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33,539
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-
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Consumer loans, equity method investees
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215,062
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-
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Cash and cash equivalents
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271,994
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-
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Restricted cash
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33,338
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-
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Derivative assets
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35,926
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-
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Other assets
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53,142
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84
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$
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5,958,658
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$
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534,876
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Liabilities and Equity
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Liabilities
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Repurchase agreements
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$
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1,620,711
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$
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150,922
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Notes payable
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2,488,618
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-
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Trades payable
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246,931
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-
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Due to affiliates
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19,169
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5,136
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Dividends payable
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63,297
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-
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Accrued expenses and other liabilities
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6,857
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462
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4,445,583
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156,520
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Commitments and Contingencies
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Equity
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Common Stock, $0.01 par value, 2,000,000,000 shares authorized,
253,197,974 issued and outstanding as of December 31, 2013
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2,532
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-
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Additional paid-in capital
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1,157,118
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362,830
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Retained earnings
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102,986
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-
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Accumulated other comprehensive income, net of tax
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3,214
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15,526
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Total New Residential stockholders' equity
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1,265,850
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378,356
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Noncontrolling interest in equity of consolidated subsidiaries
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247,225
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-
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Total Equity
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1,513,075
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378,356
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$
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5,958,658
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$
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534,876
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Reconciliation of Core Earnings
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($ in thousands)
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Three Months Ended December
31,
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Year Ended
December 31,
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2013
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2013
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2012
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Net income (loss) attributable to common stockholders
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$
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80,507
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$
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265,949
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$
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41,247
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Impairment
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1,698
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5,454
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-
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Other Income
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(83,804)
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(241,008)
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(9,023)
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Incentive compensation to affiliate
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11,499
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16,847
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-
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Non-capitalized deal inception costs
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1,369
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5,698
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5,230
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Core earnings of equity method investees
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Excess mortgage servicing rights
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9,861
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23,361
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-
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Consumer loans
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15,643
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53,696
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-
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Core Earnings
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$
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36,773
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$
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129,997
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$
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37,454
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CORE EARNINGS
New Residential has four primary variables that impact its operating
performance: (i) the current yield earned on its investments, (ii) the
interest expense incurred on the debt used to finance its investments,
(iii) its operating expenses and (iv) its realized and unrealized gain
or losses, including any impairment, on its investments. "Core earnings"
is a non-GAAP measure of the Company's operating performance excluding
the fourth variable above and adjusting the earnings from the consumer
loan investment to a level yield basis. It is used by management to
gauge the Company's current performance without taking into account: (i)
realized and unrealized gains and losses, which although they represent
a part of the Company's recurring operations, are subject to significant
variability and are only a potential indicator of future economic
performance; (ii) incentive compensation paid to the Company's Manager;
and (iii) non-capitalized deal inception costs.
While incentive compensation paid to New Residential's Manager may be a
material operating expense, the Company excludes it from core earnings
because (i) from time to time, a component of the computation of this
expense will relate to items (such as gains or losses) that are excluded
from core earnings, and (ii) it is impractical to determine the portion
of the expense related to core earnings and non-core earnings, and the
type of earnings (loss) that created an excess (deficit) above or below,
as applicable, the incentive compensation threshold. To illustrate why
it is impractical to determine the portion of incentive compensation
expense that should be allocated to core earnings, note that, as an
example, in a given period, New Residential may have core earnings in
excess of the incentive compensation threshold but incur losses (which
are excluded from core earnings) that reduce total earnings below the
incentive compensation threshold. In such case, the Company would either
need to (a) allocate zero incentive compensation expense to core
earnings, even though core earnings exceeded the incentive compensation
threshold, or (b) assign a "pro forma" amount of incentive compensation
expense to core earnings, even though no incentive compensation was
actually incurred. New Residential believes that neither of these
allocation methodologies achieves a logical result. Accordingly, the
exclusion of incentive compensation facilitates comparability between
periods and avoids the distortion to the Company's non-GAAP operating
measure that would result from the inclusion of incentive compensation
that relates to non-core earnings. With regard to non capitalized deal
inception costs, management does not view these costs as part of the
Company's core operations. Non-capitalized deal inception costs are
generally legal and valuation service costs, as well as other
professional service fees, incurred when the Company acquires certain
investments. These costs are recorded as general and administrative
expenses in its statements of income. In the third quarter of 2013, New
Residential changed its definition of "core earnings" to exclude
incentive compensation paid to the Company's Manager and non-capitalized
deal inception costs. The calculation of "core earnings" has been
retroactively adjusted for all periods presented. Management believes
that the adjustments to compute "core earnings" specified above allow
investors and analysts to readily identify the operating performance of
the assets that form the core of the Company's activity, assist in
comparing the core operating results between periods, and enable
investors to evaluate the Company's current performance using the same
measure that management uses to operate the business.
Core earnings does not represent cash generated from operating
activities in accordance with GAAP and therefore should not be
considered an alternative to net income as an indicator of the Company's
operating performance or as an alternative to cash flow as a measure of
the Company's liquidity and is not necessarily indicative of cash
available to fund cash needs.
ABOUT NEW RESIDENTIAL
New Residential is a diversified publicly traded real estate
investment trust ("REIT") that focuses on opportunistically investing
in, and actively managing, servicing related assets, residential
securities and loans, and other investments. The Company is
managed by an affiliate of Fortress Investment Group LLC, a global
investment management firm.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements are based on
management's current expectations and beliefs and are subject to a
number of trends and uncertainties that could cause actual results to
differ materially from those described in the forward-looking
statements, many of which are beyond the Company's control. The Company
can give no assurance that its expectations will be attained. Accordingly,
you should not place undue reliance on any forward-looking statements
contained in this press release. For a discussion of some of the
risks and important factors that could affect such forward-looking
statements, see the sections entitled "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of Operation"
in the Company's reports filed with the Securities and Exchange
Commission, which are available on the Company's website
(www.newresi.com). In addition, new risks and uncertainties
emerge from time to time, and it is not possible for the Company to
predict or assess the impact of every factor that may cause its actual
results to differ from those contained in any forward-looking statements.
Such forward-looking statements speak only as of the date of this
press release. The Company expressly disclaims any obligation to
release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Company's
expectations with regard thereto or change in events, conditions or
circumstances on which any statement is based.
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