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EQUITY AND EARNINGS PER SHARE
 6 Months Ended
Jun. 30, 2022
Earnings Per Share [Abstract]  
EQUITY AND EARNINGS PER SHARE EQUITY AND EARNINGS PER SHARE
 
Equity and Dividends

Rithm Capital’s certificate of incorporation authorizes 2.0 billion shares of common stock, par value $0.01 per share, and 100.0 million shares of preferred stock, par value $0.01 per share.

On April 14, 2021, the Company priced its underwritten public offering of 45,000,000 shares of its common stock at a public offering price of $10.10 per share. In connection with the offering, the Company granted the underwriters an option for a period of 30 days to purchase up to an additional 6,750,000 shares of common stock at a price of $10.10 per share. On April 16, 2021, the underwriters exercised their option, in part, to purchase an additional 6,725,000 shares of common stock. The offering closed on April 19, 2021. To compensate the Former Manager for its successful efforts in raising capital for Rithm Capital, the Company granted options to the Former Manager relating to 5.2 million shares of Rithm Capital’s common stock at $10.10 per share.

On May 19, 2021, Rithm Capital entered into a Distribution Agreement to sell shares of its common stock, par value $0.01 per share (the “ATM Shares”), having an aggregate offering price of up to $500.0 million, from time to time, through an “at-the-market” equity offering program (the “ATM Program”). No share issuances were made during the three months ended June 30, 2022.

On September 14, 2021, the Company priced its underwritten public offering of 17,000,000 of its 7.00% Fixed-Rate Reset Series D Cumulative Redeemable Preferred Stock, par value $0.01 per share, with a liquidation preference of $25.00 per share for net proceeds of approximately $449.5 million. The offering closed on September 17, 2021. In connection with the offering, Rithm Capital granted the underwriters an option for a period of 30 days to purchase up to an additional 2,550,000 shares of preferred stock at a price of $24.21 per share. On September 22, 2021, the underwriters exercised their option, in part, to purchase an additional 1,600,000 shares of preferred stock. To compensate the Former Manager for its successful efforts in raising capital for Rithm Capital, the Company granted options to the Former Manager relating to approximately 1.9 million shares of Rithm Capital’s common stock at $10.89 per share.

In December 2021, Rithm Capital’s board of directors authorized the repurchase of up to $200.0 million of its common stock and $100.0 million of its preferred stock through December 31, 2022. Repurchases may be made from time to time through open market purchases or privately negotiated transactions, pursuant to one or more plans established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934 or by means of one or more tender offers, in each case, as permitted by securities laws and other legal requirements. The share repurchase programs may be suspended or discontinued at any time. During the six months ended June 30, 2022, the Company repurchased approximately $3.8 million of Preferred Series C at a weighted average price of $22.20 per share.
The table below summarizes preferred shares:
Dividends Declared per Share
Number of SharesThree Months Ended
June 30,		Six Months Ended
June 30,
SeriesJune 30, 2022December 31, 2021
Liquidation Preference(A)
Issuance Discount
Carrying Value(B)
2022202120222021
Series A, 7.50% issued July 2019(C)
6,210 6,210 $155,250 3.15 %$150,026 $0.47 $0.47 $0.94 $0.94 
Series B, 7.125% issued August 2019(C)
11,300 11,300 282,500 3.15 %273,418 0.45 0.45 0.89 0.89 
Series C, 6.375% issued February 2020(C)
15,928 16,100 398,209 3.15 %385,734 0.40 0.40 0.80 0.80 
Series D, 7.00%, issued September 2021(D)
18,600 18,600 465,000 3.15 %449,489 0.44 — 0.88 — 
Total52,038 52,210 $1,300,959 $1,258,667 $1.76 $1.32 $3.51 $2.63 
(A)Each series has a liquidation preference or par value of $25.00 per share.
(B)Carrying value reflects par value less discount and issuance costs.
(C)Fixed-to-floating rate cumulative redeemable preferred.
(D)Fixed-rate reset cumulative redeemable preferred.

On June 17, 2022, Rithm Capital’s board of directors declared second quarter 2022 preferred dividends of $0.47 per share of Preferred Series A, $0.45 per share of Preferred Series B, $0.40 per share of Preferred Series C, and $0.44 per share of Preferred Series D, or $2.9 million, $5.0 million, $6.3 million, and $8.1 million, respectively.

Common dividends have been declared as follows:
Declaration DatePayment DatePer ShareTotal Amounts Distributed (millions)
Quarterly Dividend
March 24, 2021April 2021$0.20 $82.9 
June 16, 2021August 20210.20 93.3 
August 23, 2021October 20210.25 116.6 
December 15, 2021January 20220.25 116.7 
March 21, 2022April 20220.25 116.7 
June 17, 2022August 20220.25 116.7 

Common Stock Purchase Warrants

During the second quarter of 2020, the Company issued warrants (the “2020 Warrants”) in conjunction with the issuance of a term loan, which was fully repaid in the third quarter of 2020, that provide the holders the right to acquire, subject to anti-dilution adjustments, up to 43.4 million shares of the Company’s common stock in the aggregate. The 2020 Warrants are exercisable in cash or on a cashless basis and expire on May 19, 2023 and are exercisable, in whole or in part, at any time or from time to time after September 19, 2020 at the following prices (subject to certain anti-dilution adjustments): approximately 24.6 million shares of common stock at $6.11 per share and approximately 18.9 million shares of common stock at $7.94 per share.

The 2020 Warrants were valued using a Black-Scholes option valuation model that resulted in a fair value of approximately $53.5 million on the Issuance Date and is not subject to subsequent remeasurement. The Company used the following assumptions in the application of the Black-Scholes option valuation model: an exercise price ranging between $6.11 and $7.94, a term of 3.0 years, a risk-free interest rate of 0.24%, and volatility of 35%. The 2020 Warrants met the definition of derivatives under the guidance in ASC 815, Derivatives and Hedging; however, because these instruments are determined to be indexed to the Company’s own stock and met the criteria for equity classification under ASC 815, the 2020 Warrants are accounted for as an equity transaction and recorded in Additional Paid-in-Capital. The 2020 Warrants have a dilutive effect on net income per share and book value to the extent that the market value per share of the Company’s common stock at the time of exercise exceeds the strike price of the 2020 Warrants.

The table below summarizes the 2020 Warrants at June 30, 2022:
Number of Warrants
(in millions)		Weighted Average Exercise Price
(per share)
Outstanding warrants – December 31, 2021
43.4 $6.49 
Granted— — 
Exercised— — 
Expired— — 
Outstanding warrants – June 30, 2022
43.4 6.30 
(A)
(A)Reflects a reduction in weighted average exercise price due to anti-dilution adjustments effective for dividends in excess of $0.10 a share.

Option Plan

As of June 30, 2022, outstanding options were as follows:
Held by the Former Manager19,985,826 
Issued to the Former Manager and subsequently assigned to certain of the Former Manager’s employees1,486,164 
Issued to the independent directors6,000 
Total21,477,990 

The following table summarizes outstanding options as of June 30, 2022. The last sales price on the New York Stock Exchange for Rithm Capital’s common stock in the quarter ended June 30, 2022 was $9.32 per share.
Recipient
Date of
Grant/
Exercise(A)
Number of Unexercised
Options
Options
Exercisable
as of
June 30, 2022
Weighted
Average
Exercise
Price(B)
Intrinsic Value of Exercisable Options as of
June 30, 2022
(millions)
DirectorsVarious6,000 6,000 $12.85 $— 
Former Manager(C)
20171,130,916 1,130,916 13.43 — 
Former Manager(C)
20185,320,000 5,320,000 16.15 — 
Former Manager(C)
20196,351,000 6,351,000 15.54 — 
Former Manager(C)
20201,619,739 1,295,792 16.88 — 
Former Manager(C)
20217,050,335 2,975,995 9.90 —
Outstanding21,477,990 17,079,703 
(A)Options expire on the tenth anniversary from date of grant.
(B)The exercise prices are subject to adjustment in connection with return of capital dividends.
(C)The Former Manager assigned certain of its options to its employees as follows:
Date of Grant to Former ManagerRange of Exercise
Prices		Total Unexercised
Inception to Date
2019
$14.61 to $15.84
1,270,200 
2020
$16.49 to $16.88
215,964 
Total1,486,164 
 
The following table summarizes activity in outstanding options:
AmountWeighted Average Exercise Price
Outstanding options – December 31, 2021
21,478,990 $— 
Granted— — 
Exercised— — 
Expired(1,000)12.01 
Outstanding options – June 30, 2022
21,477,990 See table above

Earnings Per Share

Rithm Capital is required to present both basic and diluted earnings per share (“EPS”). Basic EPS is calculated by dividing net income by the weighted average number of shares of common stock outstanding. Diluted EPS is computed by dividing net income by the weighted average number of shares of common stock outstanding plus the additional dilutive effect, if any, of common stock equivalents during each period.

The following table summarizes the basic and diluted earnings per share calculations:
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Net income$33,331 $145,726 $723,262 $447,062 
Noncontrolling interests in income of consolidated subsidiaries
14,182 10,053 19,791 19,447 
Dividends on preferred stock22,427 14,358 44,888 28,716 
Net income (loss) attributable to common stockholders$(3,278)$121,315 $658,583 $398,899 
Basic weighted average shares of common stock outstanding466,804,548 456,312,486 466,795,119 435,668,683 
Dilutive effect of stock options and common stock purchase warrants(A)
— 16,416,759 17,698,989 15,560,982 
Diluted weighted average shares of common stock outstanding466,804,548 472,729,245 484,494,108 451,229,665 
Basic earnings per share attributable to common stockholders$(0.01)$0.27 $1.41 $0.92 
Diluted earnings per share attributable to common stockholders$(0.01)$0.26 $1.36 $0.88 
(A)Stock options and common stock purchase warrants that could potentially dilute basic earnings per share in the future were not included in the computation of diluted earnings per share for the periods where a loss has been recorded because they would have been anti-dilutive for the period presented.

The Company excluded the following weighted-average potential common shares from the calculation of diluted net income (loss) per share during the applicable periods because their inclusion would have been anti-dilutive:
Three Months Ended
June 30,		Six Months Ended
June 30,
2022202120222021
Stock options and common stock purchase warrants17,757,843 — — —