Onity Group Announces Third Quarter 2024 Results
Onity Group reported strong Q3 2024 results with net income of $21 million and diluted EPS of $2.65. The company achieved an adjusted pre-tax income of $35 million, with a return on equity of 19% and adjusted pre-tax ROE of 31%. Key highlights include $18 billion in total servicing additions, improved book value per share to $59.50, and debt-to-equity ratio reduction to 2.9x from 3.9x. Originations volume reached $8.5 billion, up 23% from Q2 2024. The company successfully priced $500 million of senior notes due 2029 and reduced MSR and Corporate debt by $182 million in 2024.
Onity Group ha riportato risultati solidi per il terzo trimestre del 2024, con un reddito netto di 21 milioni di dollari e un utile per azione diluito di 2,65 dollari. L'azienda ha raggiunto un reddito ante imposte rettificato di 35 milioni di dollari, con un ritorno sul capitale proprio del 19% e un ROE ante imposte rettificato del 31%. I principali punti salienti includono 18 miliardi di dollari in aggiunte totali ai servizi, un valore contabile per azione migliorato a 59,50 dollari e una riduzione del rapporto debito/capitale proprio a 2,9 volte rispetto a 3,9 volte. Il volume delle originazioni ha raggiunto 8,5 miliardi di dollari, in aumento del 23% rispetto al secondo trimestre del 2024. L'azienda ha completato con successo l'emissione di 500 milioni di dollari di obbligazioni senior con scadenza nel 2029 e ha ridotto il debito MSR e Corporate di 182 milioni di dollari nel 2024.
Onity Group informó resultados sólidos para el tercer trimestre de 2024, con un ingreso neto de 21 millones de dólares y un EPS diluido de 2,65 dólares. La empresa logró un ingreso ajustado antes de impuestos de 35 millones de dólares, con un retorno sobre el capital del 19% y un ROE ajustado antes de impuestos del 31%. Los puntos destacados incluyen 18 mil millones de dólares en adiciones totales de servicios, un valor contable por acción mejorado a 59,50 dólares y una reducción en la relación deuda/capital a 2,9 veces de 3,9 veces. El volumen de originaciones alcanzó los 8,5 mil millones de dólares, un aumento del 23% respecto al segundo trimestre de 2024. La empresa emitió con éxito 500 millones de dólares en notas senior con vencimiento en 2029 y redujo la deuda MSR y corporativa en 182 millones de dólares en 2024.
Onity Group는 2024년 3분기에 2,100만 달러의 순이익과 2.65달러의 희석 주당순이익(EPS)을 기록하며 강력한 실적을 보고했습니다. 회사는 조정된 세전 수익 3,500만 달러를 달성했으며, 자본수익률(ROE)은 19%, 조정된 세전 ROE는 31%에 달했습니다. 주요 하이라이트로는 총 서비스 추가로 180억 달러, 주당 장부가치 개선이 59.50달러, 부채 대 자본비율이 3.9배에서 2.9배로 감소한 것을 포함합니다. 신규 발행량은 850억 달러에 달하며, 이는 2024년 2분기 대비 23% 증가한 수치입니다. 회사는 2029년 만기 5억 달러 규모의 고위험 채권을 성공적으로 가격을 책정하였으며, 2024년 동안 MSR 및 기업 부채를 1억 8,200만 달러 줄였습니다.
Onity Group a annoncé des résultats solides pour le troisième trimestre de 2024, avec un revenu net de 21 millions de dollars et un BPA dilué de 2,65 dollars. L'entreprise a atteint un revenu avant impôts ajusté de 35 millions de dollars, avec un retour sur fonds propres de 19 % et un ROE avant impôts ajusté de 31 %. Parmi les points saillants figurent 18 milliards de dollars d'ajouts totaux aux services, une valeur comptable par action améliorée à 59,50 dollars, et une réduction du ratio dette/capital à 2,9 fois, contre 3,9 fois précédemment. Le volume des origination a atteint 8,5 milliards de dollars, en hausse de 23 % par rapport au deuxième trimestre de 2024. L'entreprise a réussi à émettre pour 500 millions de dollars de billets senior à échéance 2029 et a réduit la dette MSR et corporative de 182 millions de dollars en 2024.
Onity Group hat starke Ergebnisse für das dritte Quartal 2024 gemeldet, mit einem Nettoeinkommen von 21 Millionen Dollar und einem verwässerten EPS von 2,65 Dollar. Das Unternehmen erzielte ein angepasstes Ertrag vor Steuern von 35 Millionen Dollar, mit einer Eigenkapitalrendite von 19% und einem angepassten vorsteuer ROE von 31%. Zu den wichtigsten Highlights gehören 18 Milliarden Dollar an gesamten Servicedotierungen, ein verbesserter Buchwert pro Aktie von 59,50 Dollar und eine Verringerung des Verhältnisses von Schulden zu Eigenkapital auf 2,9x von 3,9x. Das Volumen der Originierungen erreichte 8,5 Milliarden Dollar, was einem Anstieg von 23% gegenüber dem 2. Quartal 2024 entspricht. Das Unternehmen hat erfolgreich 500 Millionen Dollar an Senior Notes mit Fälligkeit 2029 emittiert und die MSR- und Unternehmensschulden um 182 Millionen Dollar im Jahr 2024 reduziert.
- Net income of $21 million with diluted EPS of $2.65
- Adjusted pre-tax income of $35 million with 31% ROE
- Debt-to-equity ratio improved to 2.9x from 3.9x
- Originations volume increased 23% to $8.5 billion
- Total liquidity improved to $299 million
- MSR hedging strategy resulted in $10 million net gain
- Expected $14 million annual improvement in income from debt refinancing
- Significant debt load requiring refinancing
- Planned sale of 15% interest in MSR Asset Vehicle
Insights
The Q3 results demonstrate significant operational improvements. Net income of
The successful pricing of
The mortgage industry context makes these results particularly impressive. Despite challenging market conditions with elevated interest rates, Onity has shown remarkable resilience through diversified revenue streams. The
The company's strategic positioning with an industry-leading breadth of capabilities and balanced business model provides a competitive advantage. The successful debt refinancing and improved operational metrics should enhance investor confidence and support potential share price appreciation. The focus on MSR replenishment capabilities demonstrates forward-thinking management of core business assets.
- Net income of
$21 million and diluted EPS of$2.65 ; return on equity of19% - Adjusted pre-tax income of
$35 million , resulting in adjusted pre-tax return on equity of31% - Executed several transactions to facilitate corporate debt refinancing, resulting in a debt-to-equity ratio of 2.9x as of September 30, 2024, compared to 3.9x in fourth quarter 2023
$18 billion in total servicing additions ($8 billion in subservicing additions)- Book value per share improved to
$59.50 as of September 30, 2024
WEST PALM BEACH, Fla., Nov. 05, 2024 (GLOBE NEWSWIRE) -- Onity Group Inc. (NYSE: ONIT) (“Onity” or the “Company”), a leading non-bank mortgage servicer and originator, today announced its third quarter 2024 results and provided a business update.
The Company reported GAAP net income of
“The Onity platform continued to deliver strong results in the third quarter marked by the highest quarterly adjusted pre-tax income and return on equity in the past three years,” said Onity Group Chair, President and CEO Glen Messina. “The execution of our strategy and financial objectives is driving growth in volume across all originations channels, strong subservicing additions, and significant improvement in our debt-to-equity ratio, which is expected to support future income and cash flow. Through our industry-leading breadth of capabilities, we executed multiple transactions that successfully positioned us to reduce and refinance our corporate debt at lower all-in cost. With our powerful operating performance, underpinned by a balanced business and effective hedging, we are well positioned to capture substantial upside in share price performance.”
Additional Third Quarter 2024 Operating and Business Highlights
- Successfully priced
$500 million of senior notes due 2029, expected to close into escrow on November 6, 2024, with proceeds released from escrow upon closing of the sale of our15% interest in MSR Asset Vehicle LLC (MAV) and used to retire higher cost Onity debt and replace PMC high yield debt, thereby reducing interest expense and improving income by approximately$14 million annually - Originations volume of
$8.5 billion , up23% compared to the second quarter 2024, demonstrating MSR replenishment capability - Increased funded recapture volume by
52% compared to the second quarter 2024 - Reduced MSR and Corporate debt by
$182 million in 2024 year to date - Total liquidity improved to
$299 million as of September 30, 2024 - Impact of our MSR hedging strategy resulted in a net gain of
$10 million
Webcast and Conference Call
Onity will hold a conference call on Tuesday, November 5, 2024, at 8:30 a.m. (ET) to review the Company’s third quarter 2024 operating results and to provide a business update. A live audio webcast and slide presentation for the call will be available by visiting the Shareholder Relations page at onitygroup.com. Participants can access the conference call by dialing (800) 343-5172 or (203) 518-9856 approximately 10 minutes prior to the call; please reference the conference ID “Onity.” A replay of the conference call will be available via the website approximately two hours after the conclusion of the call. A telephonic replay will also be available approximately three hours following the call’s completion through November 19, 2024 by dialing (844) 512-2921 or (412) 317-6671; please reference access code 11157248.
About Onity Group
Onity Group Inc. (NYSE: ONIT) is a leading non-bank mortgage servicer and originator providing solutions through its primary brands, PHH Mortgage and Liberty Reverse Mortgage. PHH Mortgage is one of the largest servicers in the country, focused on delivering a variety of servicing and lending programs. Liberty is one of the nation’s largest reverse mortgage lenders dedicated to education and providing loans that help customers meet their personal and financial needs. We are headquartered in West Palm Beach, Florida, with offices and operations in the United States, the U.S. Virgin Islands, India and the Philippines, and have been serving our customers since 1988. For additional information, please visit onitygroup.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by a reference to a future period or by the use of forward-looking terminology. Forward-looking statements are typically identified by words such as “expect”, “believe”, “foresee”, “anticipate”, “intend”, “estimate”, “goal”, “strategy”, “plan”, “target” and “project” or conditional verbs such as “will”, “may”, “should”, “could” or “would” or the negative of these terms, although not all forward-looking statements contain these words, and includes statements in this press release regarding the expected closing into escrow of our notes offering, the expected closing of the sale of our ownership interest in MAV, the expected use of proceeds from our notes offering to redeem our senior corporate notes and anticipated reduction in interest expense and any upside in share price performance. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Readers should bear these factors in mind when considering such statements and should not place undue reliance on such statements.
Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially. In the past, actual results have differed from those suggested by forward looking statements and this may happen again. Important factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, but are not limited to, the timing for receipt of final regulatory approval to consummate the sale of our ownership interest in MAV; the date on which we will break escrow following the closing of our senior corporate debt refinancing, receive the proceeds of the refinancing, and redeem our senior corporate notes, all of which are conditioned on the closing of the MAV sale described above; the future of our ownership position in MAV and the extent to which MAV will continue to generate a favorable return on our investment in the event we do not consummate the MAV sale; the potential for ongoing disruption in the financial markets and in commercial activity generally as a result of U.S. and global political events, changes in monetary and fiscal policy, and other sources of instability; the impacts of inflation, employment disruption, and other financial difficulties facing our borrowers; the adequacy of our financial resources, including our sources of liquidity and ability to sell, fund and recover servicing advances, forward and reverse whole loans, future draws on existing reverse loans, and HECM and forward loan buyouts and put backs, as well as repay, renew and extend borrowings, borrow additional amounts as and when required, meet our MSR or other asset investment objectives and comply with our debt agreements, including the financial and other covenants contained in them; our ability to interpret correctly and comply with current or future liquidity, net worth and other financial and other requirements of regulators, the Federal National Mortgage Association (Fannie Mae), and Federal Home Loan Mortgage Corporation (Freddie Mac) (together, the GSEs), and the Government National Mortgage Association (Ginnie Mae), including our ability to implement a cost-effective response to Ginnie Mae’s risk-based capital requirements by the extended deadline granted to us by Ginnie Mae of May 1, 2025; our ability to timely reduce operating costs, or generate offsetting revenue, in proportion to the industry-wide decrease in originations activity; the impact of cost-reduction initiatives on our business and operations; the impact of our rebranding initiative; the amount of senior debt or common stock that we may repurchase under any repurchase programs, the timing of such repurchases, and the long-term impact, if any, of repurchases on the trading price of our securities or our financial condition; breach or failure of Onity’s, our contractual counterparties’, or our vendors’ information technology or other security systems or privacy protections, including any failure to protect customers’ data, resulting in disruption to our operations, loss of income, reputational damage, costly litigation and regulatory penalties; our reliance on our technology vendors to adequately maintain and support our systems, including our servicing systems, loan originations and financial reporting systems, and uncertainty relating to our ability to transition to alternative vendors, if necessary, without incurring significant cost or disruption to our operations; the future of our long-term relationship with Rithm Capital Corp. (Rithm); our ability to close acquisitions of MSRs and other transactions, including the ability to obtain regulatory approvals; our ability to grow our reverse servicing business; our ability to retain clients and employees of acquired businesses, and the extent to which acquisitions and our other strategic initiatives will contribute to achieving our growth objectives; increased servicing costs based on increased borrower delinquency levels or other factors; uncertainty related to past, present or future claims, litigation, cease and desist orders and investigations regarding our servicing, foreclosure, modification, origination and other practices brought by government agencies and private parties, including state regulators, the Consumer Financial Protection Bureau (CFPB), State Attorneys General, the Securities and Exchange Commission (SEC), the Department of Justice or the Department of Housing and Urban Development (HUD); the reactions of key counterparties, including lenders, the GSEs and Ginnie Mae, to our regulatory engagements and litigation matters; increased regulatory scrutiny and media attention; any adverse developments in existing legal proceedings or the initiation of new legal proceedings; our ability to effectively manage our regulatory and contractual compliance obligations; our ability to comply with our servicing agreements, including our ability to comply with the requirements of the GSEs and Ginnie Mae and maintain our seller/servicer and other statuses with them; our ability to fund future draws on existing loans in our reverse mortgage portfolio; our servicer and credit ratings as well as other actions from various rating agencies, including any future downgrades; as well as other risks and uncertainties detailed in our reports and filings with the SEC, including our annual report on Form 10-K for the year ended December 31, 2023. Anyone wishing to understand Onity’s business should review our SEC filings. Our forward-looking statements speak only as of the date they are made and, we disclaim any obligation to update or revise forward-looking statements whether as a result of new information, future events or otherwise.
Note Regarding Non-GAAP Financial Measures
This press release contains references to adjusted pre-tax income (loss) and adjusted pre-tax return on equity, non-GAAP financial measures.
We believe these non-GAAP financial measure provides a useful supplement to discussions and analysis of our financial condition, because they are measures that management uses to assess the financial performance of our operations and allocate resources. In addition, management believes that this presentation may assist investors with understanding and evaluating our initiatives to drive improved financial performance. Management believes, specifically, that the removal of fair value changes of our net MSR exposure due to changes in market interest rates and assumptions provides a useful, supplemental financial measure as it enables an assessment of our ability to generate earnings regardless of market conditions and the trends in our underlying businesses by removing the impact of fair value changes due to market interest rates and assumptions, which can vary significantly between periods. However, these measures should not be analyzed in isolation or as a substitute to analysis of our GAAP pre-tax income (loss) or GAAP pre-tax return on equity nor a substitute for cash flows from operations. There are certain limitations to the analytical usefulness of the adjustments we make to GAAP pre-tax income (loss) and GAAP pre-tax return on equity and, accordingly, we use these adjustments only for purposes of supplemental analysis. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, Onity’s reported results under accounting principles generally accepted in the United States. Other companies may use non-GAAP financial measures with the same or similar titles that are calculated differently to our non-GAAP financial measures. As a result, comparability may be limited. Readers are cautioned not to place undue reliance on analysis of the adjustments we make to GAAP pre-tax income (loss) and GAAP pre-tax return on equity.
Notables
In the table below, we adjust GAAP pre-tax income for the following factors: MSR valuation adjustments, expense notables, and other income statement notables. MSR valuation adjustments are comprised of changes to Forward MSR and Reverse mortgage valuations due to rates and assumption changes. Expense notables include significant legal and regulatory settlement expenses, severance and retention costs, LTIP stock price changes, consolidation of office facilities and other expenses (such as costs associated with strategic transactions). Other income statement notables include non-routine transactions that are not categorized in the above.
| (Dollars in millions) | Q3’24 | Q2’24 | |
| I | Reported Net Income | 21 | 11 |
| A. Income Tax Benefit (Expense) | (6) | (3) | |
| II | Reported Pre-Tax Income [I – A] | 28 | 14 |
| Forward MSR Valuation Adjustments due to rates and assumption changes, net (a)(b)(c) | (1) | (13) | |
| Reverse Mortgage Fair Value Change due to rates and assumption changes (b)(d) | 6 | (3) | |
| III | Total MSR Valuation Adjustments due to rates and assumption changes, net | 4 | (16) |
| Significant legal and regulatory settlement expenses | (6) | 2 | |
| Severance and retention (e) | (0) | (1) | |
| LTIP stock price changes (f) | (1) | 1 | |
| Office facilities consolidation | (0) | 0 | |
| Other expense notables (g) | 0 | (1) | |
| B. Total Expense Notables | (7) | 1 | |
| C. Other Income Statement Notables (h) | (5) | (3) | |
| IV | Total Other Notables [B + C] | (12) | (2) |
| V | Total Notables (i) [III + IV] | (8) | (18) |
| VI | Adjusted Pre-Tax Income [II – V] | 35 | 32 |
| a) | MSR Valuation Adjustments that are due to changes in market interest rates, valuation inputs or other assumptions, net of overall fair value gains / (losses) on MSR hedge, including FV changes of Pledged MSR liabilities associated with MSR transferred to MAV, Rithm and others and ESS financing liabilities that are due to changes in market interest rates, valuation inputs or other assumptions, a component of MSR valuation adjustment, net | |
| b) | The changes in fair value due to market interest rates were measured by isolating the impact of market interest rate changes on the valuation model output as provided by our third-party valuation expert | |
| c) | Beginning with the three months ended March 31, 2023, for purposes of calculating Income Statement Notables and Adjusted Pre-Tax Income (Loss), we changed the methodology used to calculate MSR Valuation Adjustments due to rates and assumption changes to exclude actual-to-model variances of realization of cash flows, or runoff; the presentation of past periods has been conformed to the current presentation; if we had used the methodology employed prior to Q1’23, Forward MSR Valuation Adjustments due to rates and assumption changes, net would have been | |
| d) | FV changes of loans HFI and HMBS related borrowings due to market interest rates and assumptions, a component of gain on reverse loans held for investment and HMBS-related borrowings, net | |
| e) | Severance and retention due to organizational rightsizing or reorganization | |
| f) | Long-term incentive program (LTIP) compensation expense changes attributable to stock price changes during the period | |
| g) | Includes costs associated with but not limited to our corporate rebranding in June 2024 and other strategic initiatives | |
| h) | Contains non-routine transactions including but not limited to gain on debt extinguishment, and fair value assumption changes on other investments recorded in other income/expense | |
| i) | Certain previously presented notable categories with nil numbers for each period shown have been omitted | |
Adjusted Pre-Tax Income ROE Calculation
| (Dollars in millions) | Q3’24 | Q2’24 | |
| I | Reported Net Income | 21 | 11 |
| II | Notable Items | (8) | (18) |
| III | Income Tax Benefit (Expense) | (6) | (3) |
| IV | Adjusted Pre-Tax Income (Loss) [I – II – III] | 35 | 32 |
| V | Annualized Adjusted Pre-tax Income [IV * 4] | 141 | 127 |
| Equity | |||
| A Beginning Period Equity | 446 | 432 | |
| C Ending Period Equity | 468 | 446 | |
| D Equity Impact of Notables | 8 | 18 | |
| B Adjusted Ending Period Equity [C + D] | 476 | 464 | |
| VI | Average Adjusted Equity [(A + B) / 2] | 461 | 448 |
| VII | Adjusted Pre-Tax Income ROE [V / VI] | 30.6% | 28.3% |
Condensed Consolidated Balance Sheets
| Assets (Dollars in millions) | September 30, 2024 | June 30, 2024 |
| Cash and cash equivalents | 201.6 | 203.1 |
| Restricted cash | 78.5 | 46.3 |
| Mortgage servicing rights (MSRs), at fair value | 2,223.6 | 2,327.7 |
| Advances, net | 522.7 | 550.6 |
| Loans held for sale | 1,197.7 | 1,107.0 |
| Loans held for investment, at fair value | 8,331.5 | 8,227.8 |
| Receivables, net | 172.2 | 153.4 |
| Investment in equity method investee | 30.6 | 31.3 |
| Premises and equipment, net | 11.7 | 12.3 |
| Other assets | 95.8 | 84.3 |
| Contingent loan repurchase asset | 360.9 | 341.0 |
| Total Assets | 13,226.7 | 13,084.7 |
| Liabilities & Stockholders’ Equity (Dollars in millions) | September 30, 2024 | June 30, 2024 |
| Home Equity Conversion Mortgage-Backed Securities (HMBS) related borrowings, at fair value | 8,132.5 | 8,035.4 |
| Other financing liabilities, at fair value | 826.2 | 845.9 |
| Advance match funded liabilities | 377.2 | 405.0 |
| Mortgage loan financing facilities, net | 1,355.9 | 1,190.5 |
| MSR financing facilities, net | 804.8 | 927.7 |
| Senior notes, net | 535.1 | 555.2 |
| Other Liabilities | 366.0 | 337.9 |
| Contingent loan repurchase liability | 360.9 | 341.0 |
| Total Liabilities | 12,758.5 | 12,638.4 |
| Total Stockholders’ Equity | 468.2 | 446.2 |
| Total Liabilities and Stockholders’ Equity | 13,226.7 | 13,084.7 |
Condensed Consolidated Statements of Operations
| (Dollars in millions) | Three Months Ended | |
| September 30, 2024 | June 30, 2024 | |
| Revenue | ||
| Servicing and subservicing fees | 211.1 | 210.8 |
| Gain on reverse loans held for investment and HMBS-related borrowings, net | 18.0 | 8.5 |
| Gain on loans held for sale, net | 25.8 | 16.5 |
| Other revenue, net | 10.8 | 10.6 |
| Total revenue | 265.7 | 246.4 |
| MSR valuation adjustments, net | (31.5) | (32.7) |
| Operating expenses | ||
| Compensation and benefits | 59.5 | 55.0 |
| Servicing and origination | 11.1 | 13.9 |
| Technology and communications | 13.2 | 13.0 |
| Professional services | 17.3 | 10.7 |
| Occupancy, equipment and mailing | 7.9 | 7.5 |
| Other expenses | 3.4 | 3.9 |
| Total operating expenses | 112.4 | 104.0 |
| Other income (expense) | ||
| Interest income | 24.5 | 22.5 |
| Interest expense | (74.2) | (73.1) |
| Pledged MSR liability expense | (42.3) | (46.1) |
| Earnings of equity method investee | 0.8 | 3.1 |
| Gain on extinguishment of debt | 0.3 | - |
| Other, net | (3.3) | (2.7) |
| Other income (expense), net | (94.1) | (96.2) |
| Income before income taxes | 27.6 | 13.5 |
| Income tax expense | 6.3 | 3.0 |
| Net Income | 21.4 | 10.5 |
| Basic EPS | ||
| Diluted EPS | ||
For Further Information Contact:
Dico Akseraylian, SVP, Corporate Communications
(856) 917-0066
mediarelations@onitygroup.com
FAQ
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