Toggle SGML Header (+)


Section 1: 8-K (NATIONSTAR MORTGAGE HOLDINGS INC. 8-K)

______________________

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report:
May 4, 2016

NATIONSTAR MORTGAGE HOLDINGS INC.
(Exact name of registrant as specified in its charter)

Delaware

001-35449

45-2156869

(State of Incorporation)

(Commission File Number)

(I.R.S. Employer
Identification Number)


8950 Cypress Waters Boulevard
Coppell, Texas 75019
(Address of principal executive offices)

(469) 549-2000
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 2.02 Results of Operations and Financial Condition.

On May 4, 2016, Nationstar Mortgage Holdings Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2016. A copy of the press release is attached as Exhibit 99.1 and will be published in the Shareholder Relations section on the Company’s website at www.nationstarmtg.com. In connection with the release and the related conference call, the Company posted a presentation relating to its first quarter 2016 financial results on its website.

The press release and presentation include certain non-generally accepted accounting principles financial measures. Reconciliations to the most directly comparable generally accepted accounting principles financial measures are included in the press release and the presentation.

The information furnished pursuant to this Item 2.02 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

  Exhibit
Number
  Description
 
99.1 Press release of Nationstar Mortgage Holdings Inc., dated May 4, 2016.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Nationstar Mortgage Holdings Inc.

 
 
Date: May 4, 2016 By:

     /s/ Robert D. Stiles

     Robert D. Stiles

     Chief Financial Officer


EXHIBIT INDEX

Exhibit
Number

  Description
99.1

Press release of Nationstar Mortgage Holdings Inc., dated May 4, 2016.

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

Nationstar Reports First Quarter 2016 Financial Results

DALLAS--(BUSINESS WIRE)--May 4, 2016--Nationstar Mortgage Holdings Inc. (NYSE:NSM) reported adjusted earnings results for the first quarter of $28 million or 27 cents per share, bolstered by strong servicing and originations performance and improvement in Xome. First quarter results were largely consistent with the previous quarter when taking into consideration the $8 million positive impact from the repurchase of debt in Q4'15. For GAAP purposes, the Company had a net loss of $132 million, or $(1.28) per share, of which $161 million or $1.56 per share, after tax, was primarily attributable to changes in fair value.

“We posted solid first quarter earnings led by Servicing, which delivered five basis points in profitability,” said Jay Bray, Chief Executive Officer. "In addition, for the second year in a row, our Servicing operations achieved Fannie Mae’s highest level of performance recognition - the Five STAR designation, which reflects the hard work of our employees and the dedication to our customers. In addition, Originations continues to be a solid bottom line contributor by delivering $40 million in pretax income, and we made significant progress with Xome that we believe will drive earnings in future quarters.”

First Quarter Business Highlights

Servicing Segment

The Servicing segment achieved $49 million of adjusted pretax income, or 5.0 bps based on average UPB of $392 billion, for the first quarter (for GAAP pretax income please reference the table below). Given the solid start to the year, we remain committed to previously-stated goals of achieving quality earnings that exceed 5 bps on average for 2016.


  Quarter Ended
($ in millions, unless noted) Q4'15   Q1'16
$   BPS   $   BPS
Adjusted Pretax Income:    
Income (loss) before taxes (GAAP) $ 118 11.7 $ (208 ) (21.2 )
Other mark-to-market (67 ) (6.7 ) 253 25.8
Non-recurring expenses           4     0.4  
Adjusted pretax income $ 51     5.1   $ 49     5.0  
 
Adjusted pretax income margin 15 % 15 %
 
  Quarter Ended
Q4'15   Q1'16
Ending UPB ($B) $ 398   $ 386
Average UPB ($B) $ 403 $ 392
60+ day delinquency rate 6.9 % 6.5 %
Annualized CPR 13.8 % 13.5 %
Annualized CPR, net of recapture 11.5 % 10.9 %
Modifications and workouts 15,292 14,716
 

From a pipeline perspective, we have approximately $57 billion in commitments, which includes the previously announced $55 billion in subservicing expected to board predominantly in the third quarter as well as a small private label security pool. In addition, we have seen an increase in potential subservicing opportunities currently in the market.

Despite continued volatility in interest rates, prepayment speeds improved slightly to 13.5% for the overall platform or 10.9% if the impact of recapture is included. Declining interest rates during the quarter were also the primary cause for the fair value loss on our MSR portfolio which does not consider the value generated by our integrated origination platform.

Non-recurring expense adjustments in Servicing consist of two items. First, $2 million is associated with ramp-up costs for the previously-announced subservicing contract that should board mostly in the third quarter. Second, $2 million is associated with the exercise of a reverse call provision, from which we will sell the associated loans for a significant gain over the next few months.

Originations Segment

The Originations segment generated adjusted pretax income of $40 million in the first quarter, which was in line with our expectations and represents nine consecutive quarters of over $40 million.


  Quarter Ended
($ in millions, unless noted) Q4'15   Q1'16
Adjusted Pretax Income:  
Income before taxes (GAAP) $ 43 $ 40
Non-recurring expenses          
Adjusted pretax income $ 43     $ 40  
 
Adjusted pretax income margin 27 % 25 %
 
Funded volume - consumer direct ($B) $ 2.4 $ 2.9
Funded volume - total ($B) $ 4.0 $ 4.2
Recapture percentage 27 % 31 %
Purchase volume as a percentage of funded volume 21 % 25 %
 

The originations platform continues to replenish the MSR portfolio at attractive rates of return. Nationstar funded $4.2 billion of volume, or an increase of 5%, during the quarter driven by the consumer direct channel which accounted for over 60% of the volume. In addition, we saw meaningful increases in both the recapture percentage as well as purchase volume percentage which increased to 31% and 25%, respectively.

Xome Segment

Xome delivered $11 million in pretax income in the first quarter. Earnings were higher sequentially primarily due to increased title volumes and lower marketing and technology spend.

  Quarter Ended
($ in millions, unless noted) Q4'15   Q1'16
Pretax Income:  
Revenue $ 98 $ 101
Expenses   92       90  
Total pretax income $ 6     $ 11  
 
Pretax income margin 6 % 11 %
 
 
Quarter Ended
Q4'15   Q1'16
Properties sold 4,113 4,165
REO Inventory at period end 8,426 7,892
Xome services completed orders 148,878 161,339
Percentage of revenue earned from third party customers 37 % 36 %
 

During the quarter, we made significant operational progress with respect to our property disposition and title operations that should generate a solid improvement in margin as we enter the second quarter. The improvements in the property disposition business were driven largely by enhanced workflow management of the pipeline. In our title business, we continue to board new customers and are working with existing customers to improve order timing to reduce costs and increase conversions. Furthermore, third party revenues remain stable at 36% and we continue to see progress in boarding new clients for a variety of services, including our technology offerings.

Capital and Liquidity

The Company is authorized to repurchase up to $250 million of common stock pursuant to the previously-announced stock repurchase program. As of the date of this release, $94 million of common stock has been repurchased under this program. In addition, since October 14, 2015, we have repurchased $125 million of unsecured senior notes due between 2018 and 2022.

Conference Call Webcast and Investor Presentation

The Company will host a conference call on May 4, 2016, at 9:00 A.M. Eastern Time. The conference call may be accessed by dialing 855-874-2685, or 720-634-2923 internationally, five minutes prior to the scheduled start of the call. Please use the participant passcode 88194717 to access the conference call.

A simultaneous audio webcast of the conference call will be available on the Shareholder Relations section of http://www.nationstarmtg.com. Please click on the May 4, 2016, Conference Call link to access the call. A replay will also be available approximately two hours after the conclusion of the conference call by dialing 855-859-2056, or 404-537-3406 internationally. Please use the passcode 88194717 to access the replay. The replay will be accessible through May 18, 2016.

Non-GAAP Financial Measures

This disclaimer applies to every usage of "adjusted pretax income," "adjusted earnings," "adjusted EPS," and "servicing profitability" in this release. Adjusted pretax income is a metric that is used by management to provide a better depiction of the results of servicing operations by excluding changes in fair value of the MSR and non-recurring expenses. Adjusted earnings is a metric used by management to provide an estimate of earnings by excluding mark-to-market ("MTM") adjustments and non-recurring expenses. Adjusted earnings begins with net income and makes adjustments for taxes, the adjustment for fair value of MSRs and non-recurring expenses. Servicing profitability is a metric used by management to estimate earnings from the servicing segment. Servicing profitability begins with adjusted earnings and adjusts for financing structure payments. For additional servicing GAAP reconciliations, please refer to the Appendix section of the Q4'15 and Q1'16 Investor Supplement.


About Nationstar

Based in Dallas, Texas, Nationstar provides servicing, origination and transaction based services related principally to single-family residences throughout the United States. Additional corporate information is available on the Shareholder Relations section of www.nationstarmtg.com.

Forward Looking Statements

Any statements in this release that are not historical or current facts are forward looking statements. These forward looking statements include, but are not limited to, statements regarding: our Servicing segment's profitability and targets and Xome's pipeline and growth. 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 statements. Certain of these risks and uncertainties are described in the "Business" and "Risk Factors" sections of our most recent annual report and other required documents as filed with the SEC which are available at the SEC’s website at http://www.sec.gov. Nationstar 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.


   
NATIONSTAR MORTGAGE HOLDINGS INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars and shares in thousands, except per share data)

 
For the Quarter Ended
December 31, 2015   March 31, 2016
Revenues:
Service related, excluding MTM $ 353,871 $ 345,505
Total MTM 66,732 (252,852 )
Net gain on mortgage loans held for sale   167,123     171,116  
Total revenues   587,726     263,769  
 
Total expenses 416,530 421,477
 
Other income (expense):
Interest income 107,323 102,843
Interest expense (165,914 ) (160,776 )
Gain on repurchase of unsecured senior notes 8,237 77
Gain (loss) on interest rate swaps and caps   (87 )   8  
Total other expense, net   (50,441 )   (57,848 )
Income (loss) before income tax expense (benefit) 120,755 (215,556 )
Income tax expense (benefit)   41,661     (82,265 )
Net income (loss) 79,094 (133,291 )
Less: net income (loss) attributable to noncontrolling interests   217     (902 )
Net income (loss) attributable to Nationstar $ 78,877   $ (132,389 )
 
 
Earnings (loss) per share attributable to common stockholders:
Basic $ 0.73   $ (1.28 )
Diluted $ 0.73   $ (1.28 )
Weighted average shares:
Basic 107,553 103,098
Dilutive effect of stock awards   433      
Diluted   107,986     103,098  
 

   
NATIONSTAR MORTGAGE HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(dollars in thousands)

 
December 31, 2015   March 31, 2016

Assets

Cash and cash equivalents $ 613,241 $ 460,951
Restricted cash 332,105 307,564
Mortgage servicing rights, $3,358,327 and $3,088,123 at fair value, respectively 3,366,973 3,096,084
Advances, net 2,223,083 2,070,599
Reverse mortgage interests 7,514,323 7,584,086
Mortgage loans held for sale 1,429,691 1,880,654
Mortgage loans held for investment, net of allowance for loan losses of $3,549 and $3,549, respectively 173,650 166,564
Property and equipment, net of accumulated depreciation of $92,834 and $106,797, respectively 142,836 142,155
Derivative financial instruments 99,699 109,168
Other assets   721,832     733,699  
Total assets $ 16,617,433   $ 16,551,524  
 

Liabilities and stockholders' equity

Unsecured senior notes, net of unamortized debt issuance costs $22,940 and $21,535, respectively $ 2,025,754 $ 2,025,265
Advance facilities, net of unamortized debt issuance costs $6,433 and $3,409, respectively 1,639,690 1,563,750
Warehouse facilities, net of unamortized debt issuance costs $3,206 and $2,171, respectively 1,890,320 2,414,495
Payables and accrued liabilities 1,296,387 1,139,400
MSR related liabilities - nonrecourse 1,300,782 1,242,999
Derivative financial instruments 25,260 18,065
Mortgage servicing liabilities 5,823 20,835
Other nonrecourse debt, net of unamortized debt issuance costs $4,558 and $5,758, respectively   6,666,040     6,545,196  
Total liabilities $ 14,850,056   $ 14,970,005  
 
Treasury shares at cost; 989 and 7,036 shares, respectively $ (29,780 ) $ (86,395 )
Total stockholders' equity   1,767,377     1,581,519  
Total liabilities and stockholders' equity $ 16,617,433   $ 16,551,524  
 

       

SERVICING SEGMENT INCOME (LOSS) BEFORE TAXES

(dollars in millions, except where noted)

 
Quarter Ended
($ in millions, unless noted) Q4'15   Q1'16
$   BPS $   BPS
Operational $ 337 33.4 $ 317 32.4
Amortization (73 ) (7.2 ) (65 ) (6.6 )
Other mark-to-market   67     6.7     (253 )   (25.8 )
Total revenue 332 32.9 (1 ) (0.1 )
Expenses 188 18.7 184 18.8
Total other income (expense), net   (26 )   (2.6 )   (22 )   2.2  
Income (loss) before taxes $ 118     11.7   $ (208 )   (21.1 )
 
   

SERVICING SEGMENT:  GAAP REVENUE RECONCILIATION

(dollars in millions)

 
Quarter Ended
Q4'15   Q1'16
Operating revenue $ 414 $ 391
Less: MSR financing liability (28 ) (27 )
Less: Excess spread - principal (48 ) (47 )
Less: Amortization (73 ) (65 )
MTM adjustments   67     (253 )
GAAP revenue $ 332   $ (1 )
 
   

SERVICING SEGMENT: GAAP OTHER INCOME / (EXPENSE) RECONCILIATION

(dollars in millions)

 
Quarter Ended
Q4'15   Q1'16
Other income / (expense) $ (3 ) $
Plus: Excess spread - interest   (23 )   (22 )
GAAP other income / (expense) $ (26 ) $ (22 )
 

           

SEGMENT STATEMENT OF OPERATIONS & EARNINGS RECONCILIATION

(dollars in thousands, except per share data)

 
For the quarter ended December 31, 2015
Servicing Originations Xome Corporate and Other Elim. Consolidated
 
REVENUES:
Service related $ 309,418 $ 13,245 $ 97,741 $ 199 $ $ 420,603
Net gain on mortgage loans held for sale   22,451     144,672               167,123  
Total revenues   331,869     157,917     97,741     199       587,726  
 
Total expenses 187,644 120,384 92,068 16,434 416,530
Other income (expense):
Interest income 86,881 16,668 31 3,743 107,323
Interest expense (113,010 ) (11,650 ) (22 ) (41,232 ) (165,914 )
Gain on repurchase of unsecured senior notes 8,237 8,237
Gain (loss) on interest rate swaps and caps   (92 )           5       (87 )
Total other income (expense)   (26,221 )   5,018     9     (29,247 )     (50,441 )
 
Pretax income (loss) $ 118,004   $ 42,551   $ 5,682   $ (45,482 ) $ 120,755
 
Income tax expense (benefit) 41,661
Net income attributable to Nationstar $ 79,094  
Earnings per share - diluted $ 0.73  
 
Adjusted Earnings:
Pretax income (loss) $ 118,004 $ 42,551 $ 5,682 $ (45,482 ) $ 120,755
MTM (66,732 ) (66,732 )
Non-recurring expenses                      
Adjusted pretax income $ 51,272   $ 42,551   $ 5,682   $ (45,482 ) $ 54,023
Taxes   (19,718 )
Adjusted earnings $ 34,305  
Adjusted EPS $ 0.32  
 

           

SEGMENT STATEMENT OF OPERATIONS & EARNINGS RECONCILIATION

(dollars in thousands, except per share data)

 
For the quarter ended March 31, 2016

Servicing

Originations Xome Corporate and Other Elim. Consolidated
 
REVENUES:
Service related $ (24,351 ) $ 15,267 $ 101,433 $ 304 $ $ 92,653
Net gain on mortgage loans held for sale   23,161     147,943         12       171,116  
Total revenues   (1,190 )   163,210     101,433     316       263,769  
 
Total expenses 184,356 124,838 89,994 22,289 421,477
Other income (expense):
Interest income 84,633 14,561 3 3,646 102,843
Interest expense (106,841 ) (13,142 ) (25 ) (40,768 ) (160,776 )
Gain on repurchase of unsecured senior notes 77 77
Gain (loss) on interest rate swaps and caps   (7 )           15       8  
Total other income (expense)   (22,215 )   1,419     (22 )   (37,030 )     (57,848 )
 
Pretax income (loss) $ (207,761 ) $ 39,791   $ 11,417   $ (59,003 ) $ (215,556 )
 
Income tax expense (benefit) (82,265 )
Net income attributable to Nationstar $ (132,389 )
Earnings per share - diluted $ (1.28 )
 
Adjusted Earnings:
Pretax income (loss) $ (207,761 ) $ 39,791 $ 11,417 $ (59,003 ) $ $ (215,556 )
MTM 252,852 252,852
Non-recurring expenses   4,170             2,056       6,226  
Adjusted pretax income $ 49,261   $ 39,791   $ 11,408   $ (56,860 ) $ 43,521
Taxes   (15,885 )
Adjusted earnings $ 27,636  
Adjusted EPS $ 0.27  

CONTACT:
Nationstar Mortgage Holdings Inc.
Robert Stiles, 972-316-5383

(Back To Top)