2015 | 2016 | ||||||
Price: | 16.86 | EPS | 0 | 0 | |||
Shares Out. (in M): | 109 | P/E | 0 | 0 | |||
Market Cap (in $M): | 1,840 | P/FCF | 0 | 0 | |||
Net Debt (in $M): | 1,659 | EBIT | 0 | 0 | |||
TEV (in $M): | 3,497 | TEV/EBIT | 0 | 0 |
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NSM SOTP | |||
Share Price | $16.86 | ||
Shares O/S | 109.0 | ||
Market Cap | 1,838 | ||
Cash and Equivalents (pro forma) | 500 | ||
Corporate Debt | 2,159 | ||
Enterprise Value | 3,497 | ||
Solutionstar 2016 EBITDA | 180 | ||
Multiple | 10.0x | ||
Solutionstar Valuation | 1,800 | ||
Less: Solutionstar CEO Bonus | (34) | ||
Solutionstar Value per Share | $16.20 | ||
Run-Rate EPS | $2.56 | ||
Solutionstar EPS | $0.91 | ||
Core Run-Rate EPS | $1.65 | ||
Servicing / Originations Multiple | 10.0x | ||
Core Value per Share | $16.51 | ||
Excess Capital Raise | 250 | ||
Excess Capital Value per Share | $2.29 | ||
Total Value per Share | $35.01 | ||
Upside / (Downside) | 107.6% |
NSM Book Valuation | |||
NSM Book Value | 1,676 | ||
Goodwill | 63 | ||
Deferred Financing Costs | 43 | ||
Intangible Assets | 39 | ||
Tangible Book Value | 1,531 | ||
Shares O/S | 109.0 | ||
Tangible Book Value / Share | $14.04 | ||
Rates Increase (30 bps) | 100 | ||
MTM TBV | $14.96 | ||
Solutionstar Fair Value | 1,766 | ||
Solutionstar TBV (Estimated) | 50 | ||
Excess Fair Value | 1,716 | ||
Excess Fair Value per Share | $15.75 | ||
Total Value per Share | $30.70 | ||
Upside / (Downside) | 82.1% |
XOME Valuation Analysis | |||
Website hits per day (000's) | 275 | ||
Website hits per year (mm) | 99 | ||
Converstion rate (bps) | 10 | ||
Transactions per year | 99,000 | ||
$ per transaction | $1,000 | ||
Revenue ($mm) | 99 | ||
EBITDA margin (%) | 30.0% | ||
EBITDA ($mm) | 30 | ||
Multiple | 15.0x | ||
Value | 446 | ||
Value / Share | $4.09 |
XOME Upside Analysis | |||
Homes sold in US | 5,000,000 | ||
Average home price | $200,000 | ||
Total transaction value ($bn) | 1,000 | ||
Broker fees as % | 5.0% | ||
Addressable market ($bn) | 50 | ||
XOME market share | 2.0% | ||
Revenue ($mm) | 1,000 | ||
EBITDA margin (%) | 35.0% | ||
EBITDA ($mm) | 350 | ||
Multiple | 20.0x | ||
Value | 7,000 | ||
Value / Share | $64.22 |
NSM Profitability Walk | |||||||||||
Q1-14 | Q2-14 | Q3-14 | Q4-14 | Q1-15 | Adj vs. Q1 | Run-Rate | Notes | ||||
bps of UPB | |||||||||||
Revenue | 39.2 | 40.5 | 39.4 | 38.2 | 37.1 | 1.4 | 38.5 | Performance / Incentive Fees | |||
Labor / Direct Expenses | 21.3 | 22.5 | 18.2 | 19.2 | 20.3 | (1.3) | 19.0 | Operating efficiencies / completion of onboards | |||
Financing Payments | 9.5 | 11.4 | 11.0 | 10.7 | 9.9 | (0.4) | 9.5 | Decline as PLS advances recovered | |||
EBITDA | 8.4 | 6.6 | 10.2 | 8.3 | 6.9 | 3.1 | 10.0 | ||||
Amortization | 4.6 | 3.5 | 5.6 | 4.9 | 6.5 | (2.0) | 4.5 | Decline as rates normalize | |||
Operating Profit | 3.8 | 3.1 | 4.6 | 3.4 | 0.4 | 5.1 | 5.5 | NSM mgmt. target 5-7 bps |
Run Rate Earnings Build | Servicing Earnings Model | Originations Earnings Model | |||||||||||
UPB | Run-off % | 13.0% | |||||||||||
Operating Profit Build | BOP | 407 | Recapture % | 25.0% | |||||||||
Servicing | 216 | Run-off | (51) | ||||||||||
Originations | 255 | Recapture | 13 | Recapture Volume ($Bn) | 13 | ||||||||
Reverse | 0 | Consumer Direct | 3 | Cash Gain on Sale (bps) | 100.0 | ||||||||
Solutionstar | 160 | Correspondent | 5 | OMSR (bps) | 100.0 | ||||||||
Other | 0 | EOP | 377 | Total Direct Margin (bps) | 200.0 | ||||||||
Corporate G&A | (20) | Avg. | 392 | ||||||||||
Total | 610 | Direct Margin ($mm) | 255 | ||||||||||
bps of UPB | |||||||||||||
Corporate Interest Expense | (160) | Revenue | 38.5 | Correspondent Volume ($Bn) | 5 | ||||||||
PBT | 450 | Labor / Direct Expenses | 19.0 | Direct Margin (bps) | 10.0 | ||||||||
Interest Expense | 3.5 | Direct Margin ($mm) | 5 | ||||||||||
Taxes | 171 | Excess Spread | 6.0 | ||||||||||
Net Income | 279 | EBITDA | 10.0 | Consumer Direct Volume ($Bn) | 3 | ||||||||
Amortization | 4.5 | Direct Margin (bps) | 50.0 | ||||||||||
Diluted EPS | $2.56 | Operating Profit | 5.5 | Direct Margin ($mm) | 15 | ||||||||
Shares O/S | 109.0 | ||||||||||||
Revenue | 1,509 | Total Direct Margin | 275 | ||||||||||
Tax Rate % | 38.0% | Labor / Direct Expenses | 745 | Overhead Expenses | 20 | ||||||||
Interest Expense | 137 | Operating Profit | 255 | ||||||||||
Excess Spread | 235 | ||||||||||||
EBITDA | 392 | ||||||||||||
Amortization | 176 | ||||||||||||
Operating Profit | 216 |
Run Rate | ||||||
WAC | NSM | Adj | Pro Forma | |||
Operating Profit Build | ||||||
Servicing | 208 | 216 | 196 | 619 | ||
Originations | 148 | 255 | 85 | 488 | ||
Reverse | 0 | 0 | 30 | 30 | ||
Solutionstar | 0 | 160 | 33 | 193 | ||
Other | 5 | 0 | 0 | 5 | ||
Corporate G&A | (5) | (20) | 10 | (15) | ||
Total | 356 | 610 | 354 | 1,320 | ||
Corporate Interest Expense | (140) | (160) | 14 | (286) | ||
PBT | 216 | 450 | 368 | 1,034 | ||
Taxes | 82 | 171 | 393 | |||
Net Income | 134 | 279 | 641 | |||
Diluted EPS | $3.52 | $2.56 | $4.53 | |||
Shares O/S | 38.0 | 109.0 | 141.4 | |||
Accretion / (Dilution) | 77.0% | |||||
Tax Rate % | 38.0% | 38.0% | 38.0% | |||
EPS ex Solutionstar | $3.52 | $1.65 | $3.69 | |||
Multiple | 10.0x | 10.0x | 12.0x | |||
Value ex Solutionstar | $35.21 | $16.51 | $44.24 | |||
Solutionstar Value per share | $0.00 | $16.20 | $14.64 | |||
Excess Capital per share | $0.00 | $2.29 | $1.77 | |||
Total value per share | $35.21 | $35.01 | $60.65 | |||
Upside / (Downside) | 75.9% | 107.6% | 259.7% |
- Acquire additional bulk MSRs
- Return servicing to profitability
- Validate the Solutionstar / XOME valuation via sale of minority stake
- Potential for accretive M&A
- Rising rates
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