8-K
loanDepot, Inc. (LDI)
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 10, 2022
_____________________
loanDepot, Inc.
(Exact Name of Registrant as Specified in its Charter)
_____________________
| Delaware | 001-40003 | 85-3948939 |
|---|---|---|
| (State or other jurisdiction<br><br>of incorporation) | (Commission<br><br>File Number) | (I.R.S. Employer<br><br>Identification Number) |
26642 Towne Centre Drive
Foothill Ranch, California 92610
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (888) 337-6888
_____________________
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)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br><br>Symbol(s) | Name of each exchange<br><br>on which registered |
|---|---|---|
| Class A Common Stock, $0.001 Par Value | LDI | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Explanatory Notes
Item 2.02 Results of Operations and Financial Condition.
On May 10, 2022, loanDepot, Inc. (the "Company") issued a press release announcing its results for the fourth quarter and year ending March 31, 2022 (the “Earnings Press Release”). The full press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 7.01 Regulation FD Disclosure.
On May 10, 2022, the Company posted on its website at www.loandepot.com a presentation (the “loanDepot Presentation”) on certain financial and operating initiatives available for viewing during the Company’s conference call and webcast announcing its financial results for the quarter and year ending March 31, 2022 at 11:00 a.m. Eastern time on May 10, 2022.
A copy of the loanDepot Presentation is furnished pursuant to this Item 7.01 as Exhibit 99.2 to this Current Report on Form 8-K and incorporated by reference herein in its entirety. The loanDepot Presentation includes references to non-GAAP financial information. Reconciliations between the non-GAAP financial measures and the comparable GAAP financial measures are available in the loanDepot Presentation. The loanDepot Presentation should be read in conjunction with the Earnings Press Release. The Company reserves the right to discontinue availability of the loanDepot Presentation from its website at any time.
The information furnished pursuant to Items 2.02 and 7.01, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, or the Exchange Act, as amended, except as specifically identified therein as being incorporated by reference.
Additionally, the submission of the information set forth in this Item 7.01 is not deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely by Regulation FD.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit | Description |
|---|---|
| 99.1 | loanDepot, Inc. press release dated May 10, 2022 |
| 99.2 | loanDepot, Inc. Q1 2022 Investor Presentation |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURE
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.
| loanDepot, Inc. | |
|---|---|
| By: | /s/ Patrick Flanagan |
| Name: Patrick Flanagan | |
| Title: Chief Financial Officer |
Date: May 10, 2022
Document
loanDepot announces first quarter 2022 financial results
C-suite expansion adds leadership strength to accelerate execution on strategies and create long-term shareholder value
•Invested in recruiting in-market retail loan officers, growing purchase volume to 37% of total originations.
•Announced launch of all-digital mello HELOC product.
•Executed on cost reduction strategy, reducing total expenses by 13% during the quarter.
•Market share decreased to 3.1%1 due to the intense competitive pressure from decreasing origination volume.
•Repurchased $97.5 million of senior notes due 2028 at an average purchase price of 87.9% of par
•Reported quarterly total revenue of $503.3 million, diluted loss per share of $0.25 and adjusted diluted loss per share of $0.26, reflecting lower rate lock volume and lower gain on sale margins, partially offset by lower expenses.
FOOTHILL RANCH, Calif., May 10, 2022 - loanDepot, Inc. (NYSE: LDI), (together with its subsidiaries, “loanDepot” or the “Company”), the innovative consumer lending and real estate services provider that is using its proprietary mello® technology to deliver best-in-class experiences to its customers, today announced results for the first quarter ended March 31, 2022.
“Our results reflected the sharp and rapid increase in market interest rates, which led to significantly lower profit margins during the latter half of the quarter,” said loanDepot founder and executive chairman Anthony Hsieh. “While we made progress toward our goal of reducing the expense base to align with earlier expectations, our volumes have continued to decline and expense reductions have not kept pace with the rapidly changing environment. Intense competition, lower volume and decreasing profit margins are putting pressure on the entire industry, which I believe creates long-term opportunities for loanDepot to outperform, less efficient, less diversified competitors.
“To accelerate execution on that goal, we recently announced an addition to our executive management team. Going forward I will assume the role of executive chairman, overseeing company strategy. Frank Martell has joined us as president and chief executive officer of loanDepot. Frank has over 30 years executive leadership experience, most recently as CEO of CoreLogic, and has also served on the board of directors of the Mortgage Bankers Association. Frank will drive daily operations with the company’s executive management team reporting to him. I am excited for this opportunity both personally and for the company.”
"I want to thank Anthony and the Board for this incredible opportunity,” said loanDepot president and chief executive officer Frank Martell. “In twelve short years, loanDepot has become an industry leader with diverse origination strategies, innovative and proprietary technologies that drive customer acquisition, service and satisfaction, and exciting new products and services that meet the evolving needs of our customers. Moving forward, we will remain laser focused on profitable revenue growth and driving for best-in-class operating leverage to create long term shareholder value creation. I believe loanDepot is poised to succeed through leveraging and expanding its unique lending and servicing solutions, driving cost productivity and process efficiencies and harnessing the collective energy and innovative spirit of the Company’s dedicated team.”
Martell concluded, “I recognize that there are short-term challenges facing the Company due to market conditions that will have adverse impacts on our profitability in the near term. We have made and will continue to make progress on reducing our expenses to reflect our new expectations for industry volume. As part of that plan and as part of our balance sheet and capital management strategies, we are suspending our regular quarterly dividend for the foreseeable future.”
1 Total market originations based on data as of April 13,2022, from the Mortgage Bankers Association
First Quarter Highlights:
Financial Summary
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands except per share data) <br>(Unaudited) | March 31,<br>2022 | December 31,<br>2021 | March 31,<br>2021 | ||||||
| Rate lock volume | $ | 29,991,452 | $ | 34,761,321 | $ | 45,762,661 | |||
| Pull through weighted lock volume(1) | 19,800,045 | 23,025,038 | 33,462,355 | ||||||
| Loan origination volume | 21,550,731 | 29,041,625 | 41,479,151 | ||||||
| Gain on sale margin(2) | 1.96 | % | 2.23 | % | 2.98 | % | |||
| Pull through weighted gain on sale margin(3) | 2.13 | % | 2.81 | % | 3.69 | % | |||
| Financial Results | |||||||||
| Total revenue | $ | 503,311 | $ | 705,026 | $ | 1,316,008 | |||
| Total expense | 606,256 | 694,133 | 869,878 | ||||||
| Net (loss) income | (91,318) | 14,732 | 427,853 | ||||||
| Diluted (loss) earnings per share | $ | (0.25) | $ | 0.05 | $ | 0.36 | |||
| Non-GAAP Financial Measures(4) | |||||||||
| Adjusted total revenue | $ | 504,606 | $ | 723,642 | $ | 1,241,441 | |||
| Adjusted net (loss) income | (81,732) | 28,907 | 319,527 | ||||||
| Adjusted (LBITDA) EBITDA | (74,403) | 63,747 | 458,098 | ||||||
| Adjusted diluted (loss) earnings per share | $ | (0.26) | $ | 0.09 | $ | 0.99 |
(1)Pull through weighted rate lock volume is the unpaid principal balance of loans subject to interest rate lock commitments, net of a pull-through factor for the loan funding probability.
(2)Gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by loan origination volume during period.
(3)Pull through weighted gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by the pull through weighted rate lock volume.
(4)See “Non-GAAP Financial Measures” for a discussion of Non-GAAP Financial Measures and a reconciliation of these metrics to their closest GAAP measure.
Operational Results
•Pull through weighted lock volume of $19.8 billion for the three months ended March 31, 2022 resulted in quarterly total revenue of $503.3 million, which represents a decrease of $201.7 million, or 29%, from the fourth quarter of 2021.
•Loan origination volume for the first quarter of 2022 was $21.6 billion, a decrease of $7.5 billion or 26% from the fourth quarter of 2021.
•Our Retail and Partner strategies delivered $8.0 billion of purchase loan originations and $13.5 billion of refinance loan originations during the first quarter of 2022.
•Our multi-channel origination strategy resulted in an increase of the less interest rate sensitive cash-out refinance and purchase volume to 83% of total production during the first quarter of 2022 compared to 75% of total production during the fourth quarter of 2021 and 43% of total production during the first quarter of 2021.
•Net loss for the first quarter of 2022 of $91.3 million as compared to net income of $14.7 million in the prior quarter. The quarter over quarter decrease was primarily driven by the decrease in rate lock volume and gain on sale margin, partially offset by a decrease in total expense.
•For the twelve months ended March 31, 2022, our preliminary organic refinance consumer direct recapture rate2 increased to 72% as compared to the final recapture rate of 67% for the twelve months ended March 31, 2021. This highlights the efficacy of our marketing efforts and the strength of our customer relationships.
•Adjusted (LBITDA) for the first quarter of 2022 was $74.4 million as compared to adjusted EBITDA $63.7 million for the fourth quarter of 2021. Adjusted (LBITDA) EBITDA excludes the impact of fair value changes of our mortgage servicing rights, net of hedging results, and other non-core operating expenses.
•Total expenses for the first quarter of 2022 decreased by $87.9 million, or 13% from the fourth quarter of 2021, due to lower personnel expenses, primarily lower commissions, and lower marketing expenses.
•Total expenses included the following non-core items: $10.5 million gain on the extinguishment of debt, $2.7 million of severance expense, and $2.4 million expense to deboard servicing rights from our subservicer to our in-house platform.
Our outlook for the second quarter of 2022 is
•Origination volume of between $13 billion and $18 billion.
•Pull-through weighted rate lock volume of between $12 billion and $22 billion.
•Pull-through weighted gain on sale margin of between 160 basis points and 210 basis points.
Strategic Channel Overview
Our diverse origination strategy ensures we can serve customers in the way they want to be served, with the right mortgage professional, with the right product, at the right price, and at the right time. Complementing our origination strategy is our servicing portfolio, which ensures we can serve the customer through their entire mortgage journey.
2 We define organic refinance consumer direct recapture rate as the total unpaid principal balance (“UPB”) of loans in our servicing portfolio that are paid in full for purposes of refinancing the loan on the same property, with the Company acting as lender on both the existing and new loan, divided by the UPB of all loans in our servicing portfolio that paid in full for the purpose of refinancing the loan on the same property. The recapture rate is finalized following the publication date of this release when external data becomes available.
Retail Channel
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands)<br>(Unaudited) | March 31,<br>2022 | December 31,<br>2021 | March 31,<br>2021 | ||||||
| Volume data: | |||||||||
| Rate locks | $ | 21,849,219 | $ | 27,751,625 | $ | 37,074,012 | |||
| Loan originations | 16,479,390 | 22,461,394 | 33,427,789 | ||||||
| Gain on sale margin | 2.24 | % | 2.61 | % | 3.25 | % |
Partner Channel
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands)<br>(Unaudited) | March 31,<br>2022 | December 31,<br>2021 | March 31,<br>2021 | ||||||
| Volume data: | |||||||||
| Rate locks | $ | 8,142,233 | $ | 7,009,696 | $ | 8,688,649 | |||
| Loan originations | 5,071,341 | 6,580,231 | 8,051,362 | ||||||
| Gain on sale margin | 1.07 | % | 1.01 | % | 1.85 | % |
Our Partner Channel originates loans through our network of approved mortgage brokers, as well as a series of exclusive joint ventures with some of the nation’s largest homebuilders and depositories, who market our broad spectrum of products utilizing our innovative mello® technology platform to efficiently underwrite, process and fund mortgage loans, while delivering an exceptional customer experience. During the first quarter of 2022, income from our joint ventures totaled $2.0 million, reflecting additional revenue opportunities from this unique origination channel.
Servicing
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| Servicing Revenue Data:<br><br>($ in thousands)<br><br>(Unaudited) | March 31,<br>2022 | December 31,<br>2021 | March 31,<br>2021 | |||
| Due to changes in valuation inputs or assumptions | $ | 198,996 | $ | (29,896) | $ | 231,023 |
| Other changes in fair value(1) | (77,122) | (98,516) | (118,106) | |||
| Realized gains (losses) on sales of servicing rights | 10,034 | (1,536) | (95) | |||
| Net (loss) gain from derivatives hedging servicing rights | (200,291) | 11,280 | (156,457) | |||
| Changes in fair value of servicing rights, net | $ | (68,383) | $ | (118,668) | $ | (43,635) |
| Servicing fee income | $ | 111,059 | $ | 113,942 | $ | 82,568 |
(1)Other changes in fair value include fallout and decay from loan payoffs and principal amortization.
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| Servicing Rights, at Fair Value:<br><br>($ in thousands)<br><br>(Unaudited) | March 31,<br>2022 | December 31,<br>2021 | March 31,<br>2021 | |||
| Balance at beginning of period | $ | 1,999,402 | $ | 1,836,694 | $ | 1,124,302 |
| Additions | 269,760 | 307,712 | 529,543 | |||
| Sales proceeds, net | (312,849) | (16,592) | (674) | |||
| Changes in fair value: | ||||||
| Due to changes in valuation inputs or assumptions | 198,996 | (29,896) | 231,023 | |||
| Other changes in fair value | (77,122) | (98,516) | (118,106) | |||
| Balance at end of period (1) | $ | 2,078,187 | $ | 1,999,402 | $ | 1,766,088 |
(1)Balances are net of $7.8 million, $7.3 million, and $6.0 million of servicing rights liability as of March 31, 2022, December 31, 2021, and March 31, 2021, respectively.
| % Change | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Servicing Portfolio Data:<br><br>($ in thousands)<br><br>(Unaudited) | March 31,<br>2022 | December 31,<br>2021 | March 31,<br>2021 | Mar-22<br>vs<br>Dec-21 | Mar-22<br>vs<br>Mar-21 | ||||||||
| Servicing portfolio (unpaid principal balance) | $ | 153,385,817 | $ | 162,112,965 | $ | 129,709,892 | (5.4) | % | 18.3 | % | |||
| Total servicing portfolio (units) | 496,868 | 524,992 | 414,540 | (5.4) | 19.9 | ||||||||
| 60+ days delinquent ($) | $ | 1,444,779 | $ | 1,510,261 | $ | 2,125,573 | (4.3) | (32.0) | |||||
| 60+ days delinquent (%) | 0.9 | % | 0.9 | % | 1.6 | % | |||||||
| Servicing rights, net to UPB | 1.4 | % | 1.2 | % | 1.4 | % |
The decrease in unpaid principal balance of our servicing portfolio was driven primarily by sales of $23.8 billion of unpaid principal balance during the quarter.
As of March 31, 2022, approximately 0.6%, or $898.5 million, of our servicing portfolio was in active forbearance. This represents an aggregate decrease from 0.6%, or $1.0 billion as of December 31, 2021.
Balance Sheet Highlights
| % Change | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| ($ in thousands)<br><br>(Unaudited) | March 31,<br>2022 | December 31,<br>2021 | March 31,<br>2021 | Mar-22<br>vs<br>Dec-21 | Mar-22<br>vs<br>Mar-21 | |||||
| Cash and cash equivalents | $ | 554,135 | $ | 419,571 | $ | 630,457 | 32.1 | % | (12.1) | % |
| Loans held for sale, at fair value | 6,558,668 | 8,136,817 | 8,787,756 | (19.4) | (25.4) | |||||
| Servicing rights, at fair value | 2,086,022 | 2,006,712 | 1,772,099 | 4.0 | 17.7 | |||||
| Total assets | 10,640,248 | 11,812,313 | 13,298,356 | (9.9) | (20.0) | |||||
| --- | --- | --- | --- | --- | --- | |||||
| Warehouse and other lines of credit | 5,806,907 | 7,457,199 | 8,309,450 | (22.1) | (30.1) | |||||
| Total liabilities | 9,129,079 | 10,182,953 | 11,524,398 | (10.3) | (20.8) | |||||
| Total equity | 1,511,169 | 1,629,360 | 1,773,958 | (7.3) | (14.8) |
The increase in cash and cash equivalents from December 31, 2021 included $303.8 million in proceeds from the bulk sale of MSRs. A decrease in loans held for sale at March 31, 2022, resulted in a corresponding decrease in the balance on our warehouse lines of credit as loans sold exceeded loan originations. Total funding capacity with our lending partners decreased to $10.9 billion at March 31, 2022 from $11.8 billion at December 31, 2021. The funding capacity decrease of $0.9 billion was primarily due to the payoff of one facility and decreases on two existing facilities. Available borrowing capacity was $5.0 billion at March 31, 2022. Finally, we also repurchased $97.5 million of our senior notes due 2028 during the quarter.
Consolidated Statements of Operations
| ($ in thousands except per share data)<br>(Unaudited) | Three Months Ended | |||||
|---|---|---|---|---|---|---|
| March 31, 2022 | December 31, 2021 | March 31, 2021 | ||||
| REVENUES: | ||||||
| Interest income | $ | 52,965 | $ | 74,854 | $ | 54,730 |
| Interest expense | (39,889) | (53,327) | (53,497) | |||
| Net interest income | 13,076 | 21,527 | 1,233 | |||
| Gain on origination and sale of loans, net | 363,131 | 566,022 | 1,133,575 | |||
| Origination income, net | 59,073 | 81,433 | 101,599 | |||
| Servicing fee income | 111,059 | 113,942 | 82,568 | |||
| Change in fair value of servicing rights, net | (68,383) | (118,668) | (43,635) | |||
| Other income | 25,355 | 40,770 | 40,668 | |||
| Total net revenues | 503,311 | 705,026 | 1,316,008 | |||
| EXPENSES: | ||||||
| Personnel expense | 345,993 | 406,739 | 603,735 | |||
| Marketing and advertising expense | 101,513 | 111,860 | 109,626 | |||
| Direct origination expense | 53,157 | 46,712 | 46,976 | |||
| General and administrative expense | 49,748 | 64,980 | 51,317 | |||
| Occupancy expense | 9,396 | 9,487 | 9,988 | |||
| Depreciation and amortization | 10,545 | 9,715 | 8,454 | |||
| Servicing expense | 21,511 | 22,337 | 26,611 | |||
| Other interest expense | 14,393 | 22,303 | 13,171 | |||
| Total expenses | 606,256 | 694,133 | 869,878 | |||
| (Loss) income before income taxes | (102,945) | 10,893 | 446,130 | |||
| Income tax (benefit) expense | (11,627) | (3,839) | 18,277 | |||
| Net (loss) income | (91,318) | 14,732 | 427,853 | |||
| Net (loss) income attributable to noncontrolling interests | (56,577) | 6,119 | 382,978 | |||
| Net (loss) income attributable to loanDepot, Inc. | $ | (34,741) | $ | 8,613 | $ | 44,875 |
| Basic (loss) earnings per share | $ | (0.25) | $ | 0.06 | $ | 0.36 |
| Diluted (loss) earnings per share | $ | (0.25) | $ | 0.05 | $ | 0.36 |
Consolidated Balance Sheets
| ($ in thousands) | March 31,<br>2022 | December 31,<br>2021 | ||
|---|---|---|---|---|
| (Unaudited) | ||||
| ASSETS | ||||
| Cash and cash equivalents | $ | 554,135 | $ | 419,571 |
| Restricted cash | 153,700 | 201,025 | ||
| Accounts receivable, net | 115,976 | 56,183 | ||
| Loans held for sale, at fair value | 6,558,668 | 8,136,817 | ||
| Derivative assets, at fair value | 351,097 | 194,665 | ||
| Servicing rights, at fair value | 2,086,022 | 2,006,712 | ||
| Trading securities, at fair value | 93,466 | 72,874 | ||
| Property and equipment, net | 108,135 | 104,262 | ||
| Operating lease right-of-use asset | 52,818 | 55,646 | ||
| Prepaid expenses and other assets | 116,338 | 140,315 | ||
| Loans eligible for repurchase | 389,140 | 363,373 | ||
| Investments in joint ventures | 18,559 | 18,553 | ||
| Goodwill and other intangible assets, net | 42,194 | 42,317 | ||
| Total assets | $ | 10,640,248 | $ | 11,812,313 |
| LIABILITIES AND EQUITY | ||||
| LIABILITIES: | ||||
| Warehouse and other lines of credit | $ | 5,806,907 | $ | 7,457,199 |
| Accounts payable and accrued expenses | 804,405 | 624,444 | ||
| Derivative liabilities, at fair value | 113,366 | 37,797 | ||
| Liability for loans eligible for repurchase | 389,140 | 363,373 | ||
| Operating lease liability | 67,681 | 71,932 | ||
| Debt obligations, net | 1,947,580 | 1,628,208 | ||
| Total liabilities | 9,129,079 | 10,182,953 | ||
| EQUITY: | ||||
| Total equity | 1,511,169 | 1,629,360 | ||
| Total liabilities and equity | $ | 10,640,248 | $ | 11,812,313 |
Loan Origination and Sales Data
| ( in thousands)(Unaudited) | Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31,<br>2021 | March 31,<br>2021 | ||||||||||
| Loan origination volume by type: | |||||||||||
| Conventional conforming | $ | 15,712,273 | $ | 21,405,365 | $ | 35,169,216 | |||||
| FHA/VA/A | 3,968,511 | 4,287,947 | 5,081,972 | ||||||||
| Jumbo | 1,787,704 | 2,962,898 | 1,002,619 | ||||||||
| Other | 82,243 | 385,415 | 225,344 | ||||||||
| Total | $ | 21,550,731 | $ | 29,041,625 | $ | 41,479,151 | |||||
| Loan origination volume by channel: | |||||||||||
| Retail | $ | 16,479,390 | $ | 22,461,394 | $ | 33,427,789 | |||||
| Partnership | 5,071,341 | 6,580,231 | 8,051,362 | ||||||||
| Total | $ | 21,550,731 | $ | 29,041,625 | $ | 41,479,151 | |||||
| Loan origination volume by purpose: | |||||||||||
| Purchase | $ | 8,030,766 | $ | 10,013,662 | $ | 7,916,512 | |||||
| Refinance | 13,519,965 | 19,027,963 | 33,562,639 | ||||||||
| Total | $ | 21,550,731 | $ | 29,041,625 | $ | 41,479,151 | |||||
| Loans sold: | |||||||||||
| Servicing retained | $ | 17,122,716 | $ | 22,996,748 | $ | 37,435,791 | |||||
| Servicing released | 5,745,322 | 6,673,702 | 2,492,886 | ||||||||
| Total | $ | 22,868,038 | $ | 29,670,450 | $ | 39,928,677 | |||||
| Loan origination margins: | |||||||||||
| Gain on sale margin | 1.96 | % | 2.23 | % | 2.98 | % |
All values are in US Dollars.
First Quarter Earnings Call
Management will host a conference call and live webcast today at 11:00 a.m. ET on loanDepot’s Investor Relations website, investors.loandepot.com, to discuss its earnings results.
The conference call can also be accessed by dialing (888) 440-6385 using conference ID number 2021948. Please call five minutes in advance to ensure that you are connected prior to the call. A replay of the webcast and transcript will also be made available on the Investor Relations website following the conclusion of the event, or can be accessed by dialing (800) 770-2030 following the conclusion of the event.
For more information about loanDepot, please visit the company’s Investor Relations website: investors.loandepot.com.
Non-GAAP Financial Measures
To provide investors with information in addition to our results as determined by GAAP, we disclose Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) as non-GAAP measures. We believe these measures provide useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. They facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in hedging strategies, changes in valuations, capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance, as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies.
We define “Adjusted Total Revenue” as total revenues, net of the change in fair value of mortgage servicing rights (“MSRs”) and the related hedging gains and losses. We define “Adjusted Net Income (Loss)” as tax-effected earnings (loss) before change in fair value of contingent consideration, stock compensation expense and management fees, IPO expense, and the change in fair value of MSRs, net of the related hedging gains and losses, and the tax effects of those adjustments. We define “Adjusted Diluted Earnings (Loss) per Share” as Adjusted Net Income (Loss) divided by the diluted weighted average number of shares of Class A common stock and Class D common stock outstanding for the applicable period, which assumes the proforma exchange of all outstanding Class C common shares for shares of Class A common stock. We define “Adjusted EBITDA (LBITDA)” as earnings (loss) before interest expense and amortization of debt issuance costs on non-funding debt, income taxes, depreciation and amortization, change in fair value of MSRs, net of the related hedging gains and losses, change in fair value of contingent consideration, stock compensation expense and management fees, and IPO related expense. Adjustments for income taxes are made to reflect historical results of operations on the basis that it was taxed as a corporation under the Internal Revenue Code, and therefore subject to U.S. federal, state and local income taxes. We exclude from each of these non-GAAP measures the change in fair value of MSRs and related hedging gains and losses as this represents a non-cash non-realized adjustment to our total revenues, reflecting changes in assumptions including discount rates and prepayment speed assumptions, mostly due to changes in market interest rates, which is not indicative of our performance or results of operations. We also exclude stock compensation expense, which is a non-cash expense, management fees and IPO expenses as management does not consider these costs to be indicative of our performance or results of operations. Adjusted EBITDA (LBITDA) includes interest expense on funding facilities, which are recorded as a component of “net interest income (expense)”, as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on our non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA.
Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) have limitations as analytical tools, and you should not consider them in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:
•they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;
•Adjusted EBITDA (LBITDA) does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted Total Revenue, Adjusted Net Income (Loss), and Adjusted EBITDA (LBITDA) do not reflect any cash requirement for such replacements or improvements; and
•they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.
Because of these limitations, Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) are not intended as alternatives to total revenue, net income (loss), net income (loss) attributable to the Company, or Diluted Earnings (Loss) Per Share or as an indicator of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. See below for a reconciliation of these non-GAAP measures to their most comparable U.S. GAAP measures.
| Reconciliation of Total Revenue to Adjusted Total Revenue ( in thousands)(Unaudited) | Three Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31,<br>2021 | March 31,<br>2021 | |||||||
| Total net revenue | $ | 503,311 | $ | 705,026 | $ | 1,316,008 | ||
| Change in fair value of servicing rights, net of hedging gains and losses(1) | 1,295 | 18,616 | (74,567) | |||||
| Adjusted total revenue | $ | 504,606 | $ | 723,642 | $ | 1,241,441 |
All values are in US Dollars.
(1)Represents the change in the fair value of servicing rights attributable to changes in assumptions, net of hedging gains and losses.
| Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)( in thousands)(Unaudited) | Three Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31,<br>2021 | March 31,<br>2021 | |||||||
| Net (loss) income attributable to loanDepot, Inc. | $ | (34,741) | $ | 8,613 | $ | 44,875 | ||
| Net (loss) income from the pro forma conversion of Class C common shares to Class A common shares (1) | (56,577) | 6,119 | 382,978 | |||||
| Net (loss) income | $ | (91,318) | $ | 14,732 | $ | 427,853 | ||
| Adjustments to the provision for income taxes(2) | 14,710 | (1,512) | (101,221) | |||||
| Tax-effected net (loss) income | (76,608) | 13,220 | 326,632 | |||||
| Change in fair value of servicing rights, net of hedging gains and losses(3) | 1,295 | 18,616 | (74,567) | |||||
| Stock compensation expense and management fees | 2,309 | 2,220 | 60,076 | |||||
| IPO expenses | — | — | 4,834 | |||||
| Gain on extinguishment of debt | (10,528) | — | — | |||||
| Tax effect of adjustments(4) | 1,800 | (5,149) | 2,552 | |||||
| Adjusted net (loss) income | $ | (81,732) | $ | 28,907 | $ | 319,527 |
All values are in US Dollars.
(1)Reflects net income (loss) to Class A common stock and Class D common stock from the pro forma exchange of Class C common stock.
(2)loanDepot, Inc. is subject to federal, state and local income taxes. Adjustments to income tax (benefit) reflect the effective income tax rates below, and the pro forma assumption that loanDepot, Inc. owns 100% of LD Holdings.
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2022 | December 31,<br>2021 | March 31,<br>2021 | |||||||
| Statutory U.S. federal income tax rate | 21.00 | % | 21.00 | % | 21.00 | % | |||
| State and local income taxes (net of federal benefit) | 5.00 | % | 3.71 | % | 5.43 | % | |||
| Effective income tax rate | 26.00 | % | 24.71 | % | 26.43 | % |
(3)Represents the change in the fair value of servicing rights attributable to changes in assumptions, net of hedging gains and losses.
(4)Amounts represent the income tax effect of (a) change in fair value of servicing rights, net of hedging gains and losses, (b) stock compensation expense and management fees, (c) IPO expense, and (d) gain on extinguishment of debt at the aforementioned effective income tax rates.
| Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares Outstanding( in thousands except per share data)(Unaudited) | Three Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31,<br>2021 | March 31,<br>2021 | |||||||
| Net (loss) income attributable to loanDepot, Inc. | $ | (34,741) | $ | 8,613 | $ | 44,875 | ||
| Adjusted net (loss) income | (81,732) | 28,907 | 319,527 | |||||
| Share Data: | ||||||||
| Diluted weighted average shares of Class A and Class D common stock outstanding | 139,007,890 | 135,187,530 | 125,772,797 | |||||
| Assumed pro forma conversion of Class C shares to Class A common stock (2) | 181,035,804 | 185,521,379 | 198,537,418 | |||||
| Adjusted diluted weighted average shares outstanding | 320,043,694 | 320,708,909 | 324,310,215 | |||||
| Diluted (loss) earnings per share | $ | (0.25) | $ | 0.05 | $ | 0.36 | ||
| Adjusted diluted (loss) earnings per share | (0.26) | 0.09 | 0.99 |
All values are in US Dollars.
(1)Reflects the assumed pro forma conversion of all outstanding shares of Class C common stock to Class A common stock.
| Reconciliation of Net Income (Loss) to Adjusted EBITDA (LBITDA) ( in thousands)(Unaudited) | Three Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31,<br>2021 | March 31,<br>2021 | |||||||
| Net (loss) income | $ | (91,318) | $ | 14,732 | $ | 427,853 | ||
| Interest expense - non-funding debt (1) | 14,393 | 22,303 | 13,171 | |||||
| Income tax (benefit) expense | (11,627) | (3,839) | 18,277 | |||||
| Depreciation and amortization | 10,545 | 9,715 | 8,454 | |||||
| Change in fair value of servicing rights, net ofhedging gains and losses(2) | 1,295 | 18,616 | (74,567) | |||||
| Change in fair value - contingent consideration | — | — | — | |||||
| Stock compensation expense and management fees | 2,309 | 2,220 | 60,076 | |||||
| IPO expense | — | — | 4,834 | |||||
| Adjusted (LBITDA) EBITDA | $ | (74,403) | $ | 63,747 | $ | 458,098 |
All values are in US Dollars.
(1)Represents other interest expense, which includes gain on extinguishment of debt and amortization of debt issuance costs, in the Company’s consolidated statement of operations.
(2)Represents the change in the fair value of servicing rights attributable to changes in assumptions, net of hedging gains and losses.
Forward-Looking Statements
This press release may contain "forward-looking statements," which reflect loanDepot's current views with respect to, among other things, its operations and financial performance. You can identify these statements by the use of words such as "outlook," "potential," "continue," "may," "seek," "approximately," "predict," "believe," "expect," "plan," "intend," "estimate" or "anticipate" and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as "will," "should," "would" and "could." These forward-looking statements are based on current available operating, financial, economic and other information, and are not guarantees of future performance and are subject to risks, uncertainties and assumptions, including the risks in the "Risk Factors" section of loanDepot, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2021, which are difficult to predict. Therefore, current plans, anticipated actions, financial results, as well as the anticipated development of the industry, may differ materially from what is expressed or forecasted in any forward-looking statement. loanDepot does not undertake any obligation to publicly update or revise any forward-looking statement to reflect future events or circumstances, except as required by applicable law.
About loanDepot
loanDepot (NYSE: LDI) is a digital commerce company committed to serving its customers throughout the home ownership journey. Since its launch in 2010, loanDepot has revolutionized the mortgage industry with a digital-first approach that makes it easier, faster and less stressful to purchase or refinance a home. Today, as the nation's second largest retail mortgage lender, loanDepot enables customers to achieve the American dream of homeownership through a broad suite of lending and real estate services that simplify one of life's most complex transactions. With headquarters in Southern California and offices nationwide, loanDepot is committed to serving the communities in which its team lives and works through a variety of local, regional and national philanthropic efforts.
Investor Relations Contact:
Gerhard Erdelji
Senior Vice President, Investor Relations
(949) 822-4074
gerdelji@loandepot.com
Media Contact:
Rebecca Anderson
Senior Vice President, Communications & Public Relations
(949) 822-4024
rebeccaanderson@loandepot.com
LDI-IR
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ldi-1q22investorpresenta
1Q 2022 INVESTOR PRESENTATION May 10, 2022
DISCLAIMER 2 Forward-Looking Statements and Other Information This presentation may contain "forward-looking statements," which reflect loanDepot's current views with respect to, among other things, its operations and financial performance. You can identify these statements by the use of words such as "outlook," "potential," "continue," "may," "seek," "approximately," "predict," "believe," "expect,“ "plan," "intend," "estimate" or "anticipate" and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as "will," "should," "would" and "could.” All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, guidance to our pull-through weighted rate lock volume, origination volume and pull-through weighted gain-on-sale margin. These forward-looking statements are based on current available operating, financial, economic and other information, and are not guarantees of future performance and are subject to risks, uncertainties and assumptions, including the risks in the "Risk Factors" section of loanDepot, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2021, which are difficult to predict. Therefore, current plans, anticipated actions, financial results, as well as the anticipated development of the industry, may differ materially from what is expressed or forecasted in any forward-looking statement. loanDepot does not undertake any obligation to publicly update or revise any forward-looking statement to reflect future events or circumstances, except as required by applicable law. Non-GAAP Financial Information To provide investors with information in addition to our results as determined by GAAP, we disclose Adjusted Total Revenue, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA as non-GAAP measures. We believe Adjusted Total Revenue, Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA provide useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. They facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in hedging strategies, changes in valuations, capital structures (affecting net interest expense), taxation, the age and book depreciation of facilities (affecting relative depreciation expense) and the amortization of intangibles, which may vary for different companies for reasons unrelated to operating performance, as well as certain historical cost (benefit) items which may vary for different companies for reasons unrelated to operating performance. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Market and Industry Data This presentation also contains information regarding the loanDepot’s market and industry that is derived from third-party research and publications. That information may rely upon a number of assumptions and limitations, and the Company has not independently verified its accuracy or completeness.
$12.5 trillion total addressable market Culture focused on continuous innovation Relentless focus on delighting the customer Model positioned to continue capturing market share WE ARE DISRUPTING CONSUMER FINANCE THROUGH CONTINUOUS INNOVATION 3
WHY loanDepot WINS Scaled Leader in a Massive Ecosystem that is Ripe for Disruption Diverse Management Team with Unique Skillsets Innovative Workplace and Customer-Centric Culture Attractive Financial Model with Earnings Growth Opportunity Market-Leading Brand and Data-Driven Customer Acquisition Capabilities Interconnected Origination Strategy that Leverages the Same Technology Platform to Thrive in Any Market Environment Purpose-Built End-to-End Technology Platform that Drives Efficiency and Superior Customer Experience 4 1 2 6 3 4 5 7
5 UNIQUELY POSITIONED TO OUTRUN THE COMPETITION Young and Entrepreneurial Industry leader as a 12-Year-Old Company Industry Leading Growth Origination CAGR of 32% vs. 18% for Industry(1) Room to Run 3.1% Market Share with Strong Growth Outlook(2) Purchase Strength 37% Purchase Composition(3) Purpose-Built Technology Organically Built, Diversified Platform ✓ In-Market ✓ Consumer Direct 1) Represents origination CAGR for period 2017 – LTM Q1 ‘22, loanDepot origination volume based on company financials, industry origination volume based on Mortgage Bankers Association (MBA); 2) Market Share is based on latest MBA market size for 2021 as of 4/13/2022 for Q1 ‘22; 3) For Q1’22 period ® ✓Wholesale ✓ JV Partnerships
6 $22bn Q1’22 Origination Volume 49% Growth in Servicing UPB FY20 – Q1 ‘22 Tech-empowered platform with relentless focus on the customer #2 Retail-focused non-bank U.S. mortgage originator(1) Grown to scale through two interconnected strategies − Retail: consumer direct & in-market mortgage professionals − Partner: brokers, realtors, JVs and referral partners End-to-end mello® technology driving a seamless experience throughout customer homeownership journeys Develop life-long customer relationships by retaining servicing and enhance lifetime value by utilizing data and analytics ✓ 3.1% Market Share In Q1 ‘22(3) ✓ ✓ ✓ ✓ 46% 2010 – LTM Q1 ‘22 Origination CAGR(2) 83% Of Volume for Q1 ’22 Consisted of Cash-Out Refi & Purchase Products >3x Market Share Growth Since 2014(3)(4) (1) Per IMF for Q4 ’21 period; (2) CAGR includes annualized volume for 2010; (3) Mortgage Bankers Association market size as of 4/13/2022; (4) Compared to market share for LTM Q1 ‘22 A SCALED PLATFORM POISED FOR CONTINUED GROWTH
SAEED GHASEMZADEH Enterprise Contact Strategy 10+ Years Experience 7 DIVERSE MANAGEMENT TEAM WITH UNIQUE SKILLSETS ANTHONY HSIEH Founder & Executive Chairman 30+ Years Experience Prior: PATRICK FLANAGAN Chief Financial Officer 30+ Years Experience Prior: JEFF WALSH Chief Revenue Officer 30+ Years Experience Prior: GEORGE BRADY Chief Digital Officer 30+ Years Experience Prior: TJ FREEBORN Chief Administrative Officer 25+ Years Experience Prior: RICK CALLE Chief Strategy Officer 10+ Years Experience Prior: JEFF DERGURAHIAN Chief Capital Markets Officer 20+ Years Experience Prior: NICOLE CARRILLO Chief Accounting Officer 15+ Years Experience Prior: PETER MACDONALD General Counsel 25+ Years Experience Prior: Town & Country Credit Corp. Tuttle Risk Management ZEENAT SIDI President & COO mello 15+ Years Experience Prior: FRANK MARTELL President & Chief Executive Officer 30+ Years Experience Prior:
Extend Data Analytics Advantage Leverage Local Presence to Grow in All Market Environments Expand the Funnel WELL-DEFINED STRATEGIES FOR PROFITABLE GROWTH THAT LEVERAGE OUR UNIQUE ADVANTAGES Leverage Our Brand Increasing Retention and Lifetime Value 8 Leverage proprietary technology to drive long term operating efficiencies
$2 $3 $6 $8 $13 $29 $38 $35 $33 $45 $101 $137 $22 0.1% 0.2% 0.3% 0.5% 1.0% 1.7% 1.9% 2.0% 2.0% 2.0% 2.5% 3.4% 3.1% – 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 0 20 40 60 80 100 120 140 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Q1 '22 • Expanded in-market retail reach through acquisitions • Leveraged infrastructure to launch LD Wholesale • Strategic decision to begin retaining servicing • Launched with the goal of disrupting mortgage • Created scalable platform and infrastructure loanDepot Annual Mortgage Origination Volume (1) CAGR includes annualized volume for 2010 Source: Historical market share based on MBA industry volume as of 4/13/2022 and historical loanDepot origination volume CONTEMPORARY 12-YEAR-OLD COMPANY INVESTED FOR THE FUTURE 2010 – LTM Q1’22 Origination CAGR: 46%(1) 9 • Built proprietary mello® technology • Built $153bn servicing book with long-term relationships to a half million loanDepot customers • Launched mellohome and melloInsurance • Acquired leading title insurance company • Formed mello® operating unit focused on mortgage adjacent, digital-first products and services Established Scalable Infrastructure 2010-2012 Diversification & Expansion 2013-2015 Brand, Technology and Operations Transformation 2016-Present $1.6 loanDepot Originations loanDepot Market Share $1.4 $2.0 $1.8 $1.3 $1.7 $2.1 $1.8 $1.7 $2.3 $4.1 Total market volume ($ trillion) ($ in billions) $4.0 $0.7
10 ORIGINATION STRATEGY BUILT FOR ALL MARKETS RETAIL STRATEGY PARTNER STRATEGY Consumer Direct PartnerIn-Market Description Significant brand investment supporting customer acquisition through the digital channel High-tech, high-touch service powered by mello® and +1,700 in- market mortgage professionals covering 75% of the U.S. population Joint ventures, integrated referral partners and wholesale Relationships Individual customers Builders and realtors Home builders, real estate brokers and banks Drivers Marketing spend & marketing efficiency Number of loan officers & loan officer productivity Number of account executives and partners Q1 ‘22 Volumes $17 billion $5 billion CAGR Growth (’17 – LTM Q1 ‘22) 33% 31% Tech Empowerment Technology investments automating and expediting broker processes Leads routed to maximize conversion based on dynamic lead scoring Matching the right lead with right mortgage professional to optimize conversion +3,000 mortgage professionals covering all 50 states
DIFFERENTIATED AND DISRUPTIVE MODEL CREATES BARRIERS TO ENTRY 11 Scaled Branded Disruptors Traditional Mortgage v1.0 Integrated Proprietary Technology Platform Powerful B2C Brand Multiple Retail Customer Engagement Strategies Powered by Big Data DTC & In-Market Retail Purchase High Growth
12 Conditions Engine Servicing & Customer Portal Enterprise Lead Management Services Marketplace Digital Validation Infrastructure Product & Pricing Engine SAY HELLO TO mello® | DIGITAL DISRUPTION HAS ARRIVED One end-to-end ecosystem built to seamlessly meet the needs of our customers and team members ® 1.9x Increase in Conversion(1) in Consumer Direct from pre-pandemic FY19 to Q1 ‘22 11% Increase in Productivity avg. closings per LLO from pre-pandemic FY19 to end of Q1 ‘22 The mello® AdvantageThe mello® Ecosystem (1) Conversion defined as % of funded units from static pool leads over a given period of time
3.7 4.4 6.4 7.9 9.2 10.6 7.8 10.6 11.5 2014 2015 2016 2017 2018 2019 2020 2021 LTM Q1'22 13 GROWING BRAND DRIVING SCALE AND EXPANDING OUR REACH Client Leads by Year (in millions) Source: Unmetric Data Increased scale from investment allows us to continue expanding our brand into the future • Digital Leads • Affiliate Relationships • Brand Recognition • Social Media Engagement • Local In-Market Relationships • Existing Customers Existing Lead Sources ✓ Optimizing Digital Lead Sources ✓ Growing Brand Recognition ✓ Growing Recapture Opportunities ✓ Leverage In-Market Presence ✓ Add New Affiliates Massive Top-of-the-Funnel Expansion New Opportunities
VAST MEDIA PRESENCE INTERACTS WITH MILLIONS OF CUSTOMERS DAILY 14 Social Media Web & Digital Media site visits in Q1 ‘22 4.5m MLB Partnership impressions since 2021 launch LCS coincided with ad spend increase 863m Impressions in Q1 ‘22 42m
$18 $25 $36 $36 $33 $30 $30 $23 $20 $15 $21 $27 $37 $41 $34 $32 $29 $22 270 447 372 346 369 264 299 281 213 - 50 100 150 200 250 300 350 400 450 500 $0 $10 $20 $30 $40 $50 $60 $70 $80 Q1 2020A Q2 2020A Q3 2020A Q4 2020A Q1 2021A Q2 2021A Q3 2021 Q4 2021 Q1 2022 Pull-Through Weighted (PTW) Lock Volume Origination Volume PTW GOS Margin, bps OUTSIZED ORIGINATIONS GROWTH RELATIVE TO INDUSTRY (1) MBA as of 4/13/2022 Note: Pull through weighted rate lock volume is the unpaid principal balance of loans subject to interest rate lock commitments, net of a pull-through factor for the loan funding probability 15 2017- LTM Q1 ‘22 Origination CAGR 32% 18%Industry(1) Purchase Mix % : 26% 31% 26%29% Retail Mix % : 82% 80% 79%77% ($ in billions) Total Market Share (%) : 2.1% 2.4% 2.8%2.5% 3.8% 81% 19% 3.3% 81% 30% 78% 34% 3.4% 3.3% 77% 34% 76% 37% 3.1%
Historical expenses in bps of funded mortgage volume HISTORICAL COST STRUCTURE COMPARISON 16 338 bps 295 bps 428 bps362 bps Total Revenue (bps funded volume): Pre-tax Net Income (bps funded volume): (31) bps 7 bps 200 bps8 bps Salary Expense Marketing and Advertising Expense Direct Origination Expense (incl. Investor Fees) Subservicing Expense Other G&A While operating expenses decreased by $88m QoQ, expenses in bps of funded volume increased due to the decline in funded volume 272 bps 49 bps Commission Expense 234 bps (48) bps 128 129 96 78 72 99 79 78 73 74 68 62 61 58 41 26 34 47 22 25 21 12 14 25 11 15 9 8 7 10 53 64 48 29 27 39 354 bps 369 bps 288 bps 228 bps 223 bps 281bps 2017 2018 2019 2020 2021 Q1 '22
HISTORICAL SERVICING PORTFOLIO TREND 17 ($ in billions) Retention %(2) : Recapture %(1) : 58% 70% 94% 64% 95% 54% 96% 66% 94% 72% 90% 78% 82% 68% (1) Organic refinance consumer direct recapture rate is defined as the total unpaid principal balance (“UPB”) of loans in our servicing portfolio that are paid in full for purposes of refinancing the loan on the same property, with the Company acting as lender on both the existing and new loan, divided by the UPB of loans in our servicing portfolio that paid in full for the purpose of refinancing the loan on the same property. (2) Portion of loan originated volume that was held for servicing in the period divided by the sold volume in the period. 78% 70% Total Serv Exp$ to Avg. UPB $, bps : 4.1 3.9 4.1 3.6 3.1 2.6 2.4 2.3 $42 $58 $77 $103 $130 $139 $145 $162 $153 102 98 101 109 136 128 126 123 135 - 20 40 60 80 100 120 140 $- $20 $40 $60 $80 $100 $120 $140 $160 $180 Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q4'21 Q1 '22 UPB $ MSR FV, bps 75% 72% 2.4
STRONG LIQUIDITY AND BALANCE SHEET 1.0x 1.2x 1.1x 1.3x 1.4x Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 MSR / Tangible Net Worth Note: Please see Appendix for Non-GAAP Reconciliation 18 0.8x 1.0x 0.9x 1.0x 1.0x Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Non-Funding Debt / Tangible Net Worth $175 $130 $265 $38 $822 $630 $419 $507 $420 $554 $805 $549 $772 $458 $1,376 Q1 '21 Q2 '21 Q3 '21 Q4 '21 Q1 '22 Liquidity ($m) Unused Lines Unrestricted Cash 6% 4% 6% 4% 13% Liquidity / Total Assets
19 DELIVERING CUSTOMERS A COMPLETE SOLUTION Leads routed to maximize conversion based on dynamic lead scoring Title Insurance Escrow Services Homeowners Insurance First Mortgage mello® HELOC (Coming Soon) (1) Other Income during the quarter was $41m. The difference primarily comprised of Joint Venture income ®
20 Q2 2022 OUTLOOK Q2 2022 Guidance Metric Low High Pull-through Weighted Rate Lock Volume ($bn) $12 $22 Origination Volume ($bn) $13 $18 Pull-through Weighted GOS Margin, bps 160 210 Current Market Conditions • Higher interest rates resulting in little incentive for rate and term refinance • Tight housing supply continues to fuel competition for home purchases, however higher interest rates adversely impacts home affordability • Increasing homeowner equity drives demand for cash-out refinance and other equity linked products • Sharper focus on industry consolidation, driven primarily by headcount reductions to shed excess capacity given lower industry volume expectations Q2 2022 outlook reflects the recent increase in interest rates, limited housing supply, and increased competitive pressure
BALANCE SHEET & SERVICING PORTFOLIO HIGHLIGHTS 21 $ in MM except units and % 1Q’22 4Q’21 1Q’21 1Q’22 vs 4Q’21 1Q’22 vs 1Q’21 Cash and cash equivalents $554.1 $ 419.6 $630.5 32.1% (12.1%) Loans held for sale, at fair value 6,558.7 8,136.8 8,787.8 (19.4%) (25.4%) Servicing rights, at fair value 2,086.0 2,006.7 1,772.1 4.0% 17.7% Total assets 10,640.2 11,812.3 13,298.3 (9.9%) (20.0%) Warehouse and other lines of credit 5,806.9 7,457.2 8,309.5 (22.1%) (30.1%) Total liabilities 9,129.1 10,183.0 11,524.3 (10.3%) (20.8%) Total equity 1,511.2 1,629.4 1,774.0 (7.3%) (14.8%) Servicing portfolio (unpaid principal balance) $153,385.8 $ 162,113.0 $129,709.9 (5.4%) 18.3% Total servicing portfolio (units) 496,868 524,992 414,540 (5.4%) 19.9% 60+ days delinquent ($) 1,444.8 1,510.3 2,125.6 (4.3%) (32.0%) 60+ days delinquent (%) 0.9% 0.9% 1.6% Servicing rights, net to UPB 1.4% 1.2% 1.4%
NON-GAAP FINANCIAL RECONCILIATION 22 ($MM) 1Q ’22 4Q’21 1Q’21 FY21 FY20 Adjusted Revenue Total Net Revenue $503.3 $ 705.0 $1,316.0 $ 3,724.7 $ 4,312.2 Change in FV of Servicing Rights, Net of Hedge 1.3 18.6 (74.6) 14.5 (58.9) Adjusted Total Revenue $504.6 $ 723.6 $1,241.4 $ 3,739.2 $ 4,253.3 Adjusted (LBITDA) EBITDA Net (loss) Income ($91.3) $ 14.7 $427.9 $ 623.1 $ 2,013.1 Interest Expense - Non-Funding Debt 14.4 22.3 13.1 79.6 48.0 Income Tax (benefit) Expense (11.6) (3.8) 18.3 43.4 2.2 Depreciation and Amortization 10.5 9.7 8.5 35.5 35.7 Change in FV of Servicing Rights, Net of Hedge 1.3 18.6 (74.6) 14.5 (58.9) Change in FV of Contingent Consideration 0.0 0.0 0.0 (0.1) 32.7 Stock Compensation Expense and Management Fees 2.3 2.2 60.1 67.3 9.6 IPO Expenses 0.0 0.0 4.8 6.0 2.6 Adjusted (LBITDA) EBITDA ($74.4) $ 63.7 $458.1 $ 869.4 $ 2,084.9 Adjusted Net (loss) Income Net (loss) Income ($91.3) $ 14.7 $427.8 $ 623.1 $ 2,013.1 Adjustments to Income Taxes 14.7 (1.5) (101.2) (132.5) (516.5) Tax-Effected Net (loss) Income ($76.6) $ 13.2 $326.6 $ 490.6 $ 1,496.6 Change in FV of Servicing Rights, Net of Hedge 1.3 18.6 (74.6) 14.5 (58.9) Change in FV of Contingent Consideration 0.0 0.0 0.0 (0.1) 32.7 Stock Compensation Expense and Management Fees 2.3 2.2 60.1 67.3 9.6 IPO Expenses 0.0 0.0 4.8 6.0 2.6 Gain on Extinguishment of Debt (10.5) 0.0 0.0 0.0 0.0 Tax Effect of Adjustments 1.8 (5.1) 2.6 (22.8) 3.6 Adjusted Net (loss) Income ($81.7) $ 28.9 $319.5 $ 555.6 $ 1,486.1
NON-GAAP FINANCIAL RECONCILIATION 23 ($MM) 1Q ’22 4Q’21 3Q’21 2Q’21 1Q’21 Tangible Net Worth Total Equity $1,511.2 $1,629.4 $1,658.2 $1,568.8 $1,774.0 Less: Goodwill (40.7) (40.7) (40.7) (40.7) (40.7) Less: Intangibles (1.5) (1.6) (1.7) (1.8) (2.0) Tangible Net Worth $1,469.0 $1,587.0 $1,615.7 $1.526.3 $1,731.3 Non-Funding Debt Total Debt, net $1,947.6 $1,628.2 $1,408.8 $1,473.3 $1,305.1 Less: Securitization Debt, net (421.3) 0.0 0.0 0.0 0.0 Non-Funding Debt $1,526.3 $1,628.2 $1,408.8 $1,473.3 $1,305.1
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