New Residential Investment Corp. (NYSE:NRZ) Q4 2018 Earnings Conference Call Transcript

Feb 12, 2019 • 08:00 am ET


New Residential Investment Corp. (NYSE:NRZ) Q4 2018 Earnings Conference Call Transcript


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Good morning. My name is Christa, and I will be your conference operator today. At this time, I would like to welcome everyone to the New Residential Fourth Quarter and Full Year 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. And after the speakers' remarks, there will be a question-and-answer session. (Operator Instructions)

Thank you. Austin Sandler, you may begin your conference.

Austin Sandler

Thank you, Christa, and good morning, everyone, and welcome to New Residential's fourth quarter and full year 2018 earnings call. Joining me here today are Michael Nierenberg, our Chief Executive Officer and Nick Santoro, our Chief Financial Officer. We posted an investor presentation on the New Residential website this morning, which we encourage you to download if you've not already done so.

Certain statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. In addition, we'll be discussing some non-GAAP financial measures. The reconciliation of those measures to the most directly comparable GAAP measures can be found in the investor presentation. We encourage you to review the disclaimers in our press release and investor presentation and to review the risk factors contained in our annual and quarterly reports filed with the SEC.

Now, I'll turn the call over to Michael Nierenberg.

Michael Nierenberg

Good morning, everyone, and thanks for joining our fourth quarter and full year earnings call. I'll give you some brief remarks and then I'm going to refer to the supplement, which has been posted online. For fiscal year 2018, we had a very good year, deploying capital in our core asset classes and maintaining the discipline needed when markets become difficult.

Year-over-year book value was up 6%. For most of the year, we saw our assets trade extremely well with lots of capital being deployed into the fixed income sector. Asset prices went up, interest rates rose until the turning point in November where we saw rates peak on November 8th. From that point on through the end of 2018, the bond market rallied, spreads widened, creating a very difficult fourth quarter.

As we entered 2019, the markets have settled down and the spread widening we saw at the end of the year reversed itself and the mortgage and securitization markets have stabilized. What does this all mean? What does this all mean for NRZ? On the portfolio side of our business, continued focus on MSR acquisitions or cleanup call business and making opportunistic investments where appropriate, more back to the basics of business as usual.

When you think about the housing market, it's a large one. It's a $27 trillion market. There's always something to do. Of the $27 trillion, $16 billion of that is in equity, $11 billion of that is in debt, that's 11% higher than the peak in 2006.

On the operating side of our business, our goal is to protect our shareholders and continue to focus on counterparty risk. We want to figure out ways