Onity Group (ONIT) Q2 2024 earnings summary

Executive summary

• Achieved highest adjusted pre-tax income in 11 quarters, with Q2 2024 net income of $11 million and annualized ROE of 10%.

• Rebranded to Onity Group Inc. (ONIT) in June 2024, reflecting transformation and growth.

• Signed LOI to acquire $3 billion in reverse mortgage assets from Waterfall Asset Management, expected to close in H2 2024 and be accretive to earnings and cash.

• Strategy emphasizes capital-light growth, cost reduction, operational excellence, and dynamic asset management.

• Positioned for continued strong results and narrowing valuation gap with peers.

Financial highlights

• Q2 2024 adjusted pre-tax income: $32 million; GAAP net income: $11 million; diluted EPS: $1.33.

• Book value per share increased to $57, up 9% from year-end 2023.

• Total liquidity at $231 million as of June 30, 2024.

• Total servicing UPB grew to $305 billion; subservicing UPB at $173 billion, up 10% since December 2023.

• Originations funded volume increased 51% quarter-over-quarter to $7 billion.

Outlook and guidance

• Exceeded 12%+ adjusted ROE guidance for seven consecutive quarters.

• Management expects the Waterfall transaction to be immediately accretive to earnings and cash flows.

• Ongoing deleveraging with pro forma debt-to-equity ratio expected below 3.5x post-transaction.

• Focus on closing the shareholder value gap and capturing upside potential in H2 2024.

• Ginnie Mae's new risk-based capital requirements effective December 31, 2024, may require structural changes; actions underway for compliance.