Workflow
UWM (UWMC)
icon
Search documents
UWM (UWMC) - 2023 Q1 - Earnings Call Transcript
2023-05-10 18:20
Financial Data and Key Metrics Changes - The company reported a total production of $22.3 billion, which is at the high end of guidance, with $19.2 billion coming from purchase volume, marking a record for first-quarter production [8][12] - Gain margin improved to 92 basis points, up from 51 basis points in the previous quarter, indicating strong control over business operations [9][12] - A net loss of $139 million was reported, primarily due to a fair value markdown of over $337 million related to the MSR portfolio, but operationally, the company made money [14][16] Business Line Data and Key Metrics Changes - The company achieved a significant increase in purchase volume, which is a key focus area, reflecting the strength of its business model in a challenging market [8][12] - The operational performance was strong, with total expenses declining nearly $50 million, or 19%, compared to the first quarter of 2022, contributing to improved core operational performance [16][18] Market Data and Key Metrics Changes - The company maintained a dominant market share, reportedly growing from 32% to 55% in the wholesale channel, indicating strong competitive positioning [42][44] - The overall mortgage market is smaller than in previous years, but the company is well-prepared for future growth, expecting to double its business volume over the next couple of years [51][52] Company Strategy and Development Direction - The company is focused on innovation and growth, emphasizing the importance of the broker community and the launch of new products to support this channel [21][22] - The company plans to continue investing in technology and client relations to enhance its market share and operational efficiency [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate the current challenging mortgage market, highlighting the importance of scale efficiencies and technology investments [7][21] - The outlook for the second quarter is optimistic, with expected production between $23 billion and $30 billion and margins in the range of 75 to 100 basis points [24][36] Other Important Information - The company announced a quarterly dividend of $0.10 for the 10th consecutive quarter, reflecting its commitment to rewarding shareholders [23] - The company has enhanced its liquidity, with total liquidity increasing to approximately $2.9 billion as of March 31, 2023, an increase of about $800 million from the end of the previous year [19][20] Q&A Session Summary Question: What is the outlook for margins in the current environment? - Management indicated that margins are expected to remain in the range of 75 to 100 basis points, reflecting control over pricing and market conditions [27][31] Question: How impactful would a drop in mortgage rates be on business volumes? - A drop of 100 basis points could potentially double business volumes and increase margins, leading to significant profitability [35][36] Question: What is the outlook for market share as the company moves away from programs like Game On? - Management believes that even without Game On, market share will remain strong, with expectations of maintaining a 40%-45% range in the wholesale channel [42][44] Question: How does the company view its MSR portfolio and potential sales? - The company is opportunistic regarding MSR sales, with a current portfolio estimated around $300 billion, and does not foresee a need to sell unless favorable conditions arise [61][62] Question: What strategies are in place to manage interest rate risk? - The company employs a risk-free approach to managing its pipeline and utilizes self-warehousing to mitigate interest expenses [65][68] Question: What drove the decrease in G&A expenses this quarter? - Management highlighted effective cost management strategies, including vendor negotiations, rather than layoffs, contributing to the decrease in G&A expenses [71][73]
UWM (UWMC) - 2023 Q1 - Quarterly Report
2023-05-09 16:00
Financial Performance - For Q1 2023, the company originated $22.3 billion in residential mortgage loans, a decrease of $16.5 billion, or 42%, from $38.8 billion in Q1 2022[126] - The company reported a net loss of $138.6 million in Q1 2023, a decrease of $591.9 million, or 130.6%, compared to a net income of $453.3 million in Q1 2022[126] - Adjusted EBITDA for Q1 2023 was $141.0 million, compared to $128.4 million in Q1 2022, reflecting an increase of 9.9%[126] - Total revenue for Q1 2023 was $161.3 million, a significant decline from $821.8 million in Q1 2022[133] - Loan production income decreased to $205.4 million in Q1 2023 from $383.9 million in Q1 2022, representing a decline of 46.5%[133] - Loan servicing income increased to $218.6 million in Q1 2023 from $198.6 million in Q1 2022, an increase of 10.1%[133] - The change in fair value of mortgage servicing rights for Q1 2023 was a loss of $337.3 million, compared to a gain of $172.0 million in Q1 2022[133] - Total expenses for Q1 2023 were $300.9 million, down from $364.5 million in Q1 2022, a decrease of 17.5%[133] - Salaries, commissions, and benefits decreased to $121.0 million in Q1 2023 from $160.6 million in Q1 2022, a reduction of 24.6%[133] - Interest income for Q1 2023 was $74.6 million, compared to $67.4 million in Q1 2022, an increase of 10.7%[133] Loan Origination and Servicing - Total loan origination volume declined by $16.5 billion, or 42%, from $38.8 billion in Q1 2022 to $22.3 billion in Q1 2023, primarily due to lower refinance volume[135] - Loan servicing income increased to $218.6 million in Q1 2023, up $20.0 million, or 10.1%, from $198.6 million in Q1 2022, driven by higher average servicing fees[136] - Servicing costs decreased by $10.3 million, or 21.9%, from $47.2 million in Q1 2022 to $36.9 million in Q1 2023, due to lower loss mitigation expenses[137] - The weighted average servicing fee as of period end increased to 0.2785% in Q1 2023 from 0.2587% in Q1 2022[136] - The average loan amount remained stable at $362 in Q1 2023, compared to $363 in Q1 2022, while the weighted average loan-to-value ratio increased to 83.51% from 75.07%[134] Cash Flow and Financing Activities - Net cash provided by operating activities was $1.99 billion for Q1 2023, a decrease from $11.75 billion in Q1 2022[183] - Net cash provided by investing activities increased to $644.4 million in Q1 2023 from $610.5 million in Q1 2022, driven by higher proceeds from sales of MSRs and excess servicing cash flows[184] - Net cash used in financing activities was $2.60 billion in Q1 2023, down from $12.19 billion in Q1 2022, primarily due to decreased net repayments under warehouse lines of credit[185] - The company declared a dividend of $0.10 per share of Class A Common Stock, totaling $9.3 million, and a distribution of $150.2 million from Holdings LLC to SFS Corp.[187] Debt and Borrowing - As of March 31, 2023, the total advanced against the company's warehouse facilities was $4,259.8 million, with $400 million committed[160] - The company had $250 million outstanding under the MSR Facility as of March 31, 2023, which provides up to $1.5 billion of uncommitted borrowing capacity[171] - The company also had $250 million outstanding under the GNMA MSR facility, which offers up to $500 million of uncommitted borrowing capacity as of March 31, 2023[174] - The 2025 Senior Notes issued by the company amount to $800 million with a 5.500% interest rate, due November 15, 2025[163] - The 2029 Senior Notes issued by the company total $700 million with a 5.500% interest rate, due April 15, 2029[166] - The 2027 Senior Notes issued by the company are $500 million with a 5.750% interest rate, due June 15, 2027[168] - The company was in compliance with all financial covenants under its warehouse facilities as of March 31, 2023[162] Risk Management - The company utilizes forward agency or Ginnie Mae To Be Announced (TBA) securities as its primary hedge instrument to manage interest rate risk[201] - The company assesses market risk using a sensitivity analysis based on hypothetical changes in interest rates, with limitations in extrapolating results to actual performance[202] - The company is subject to credit risk from borrowers' defaults, which is mitigated through stringent underwriting standards and strong fraud detection tools[204] - The company manages counterparty risk by selecting financially strong counterparties and spreading risk among multiple entities[205] - The company incurred no losses due to nonperformance by any of its counterparties during the three months ended March 31, 2023, or March 31, 2022[206] Market Conditions - The fair value of mortgage servicing rights (MSRs) generally increases in rising interest rate environments, while it decreases in declining interest rate environments, impacting expected cash flows[200] - As of March 31, 2023, a 25 basis point increase in interest rates would result in a total change in assets of $1,522 thousand, while a decrease would lead to a total change of $(17,578) thousand[203] - The weighted average FICO score for originated loans as of March 31, 2023, was 737, slightly down from 741 in the same period in 2022[204] - Interest rate lock commitments for fixed rates amounted to $9.26 billion as of March 31, 2023, compared to $5.35 billion at the end of 2022[191] - The blended average pullthrough rate was 75% as of March 31, 2023, down from 77% at the end of 2022[190] - In Q1 2023, the company sold excess servicing cash flows on certain agency loans for proceeds of approximately $305.5 million[176]
UWM (UWMC) - 2022 Q4 - Earnings Call Transcript
2023-03-02 03:18
UWM Holdings Corporation (NYSE:UWMC) Q4 2022 Earnings Conference Call March 1, 2023 10:30 AM ET Company Participants Blake Kolo - Chief Business Officer & Head of IR Mat Ishbia - Chairman & CEO Andrew Hubacker - Chief Financial Officer Conference Call Participants Bose George - KBW Eric Hagen - BTIG Douglas Harter - Credit Suisse Steven Delaney - JMP Securities Operator Good morning. My name is Chris, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the UWM Holdings ...
UWM (UWMC) - 2022 Q4 - Annual Report
2023-02-28 16:00
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number 001-39189 UWM HOLDINGS CORPORATION (Exact name of registrant as specified in its charter) Delaware 84-212 ...
UWM (UWMC) - 2022 Q3 - Earnings Call Transcript
2022-11-04 17:22
UWM Holdings Corporation (NYSE:UWMC) Q3 2022 Earnings Conference Call November 4, 2022 10:00 AM ET Company Representatives Mat Ishbia - Chairman, Chief Executive Officer Andrew Hubacker - Senior VP, Chief Accounting Officer, Interim Principal Financial Officer Blake Kolo - Chief Business Officer, Head of Investor Relations Conference Call Participants Doug Harter - Credit Suisse Jay McCanless - Wedbush Securities Bose George - KBW James Faucette - Morgan Stanley Kyle Joseph - Jefferies Courtney Bahlman - Ba ...
UWM (UWMC) - 2022 Q3 - Quarterly Report
2022-11-03 16:00
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number 001-39189 UWM HOLDINGS CORPORATION (Exact name of registrant as specified in i ...
UWM (UWMC) - 2022 Q2 - Earnings Call Transcript
2022-08-09 20:24
UWM Holdings Corporation (NYSE:UWMC) Q2 2022 Earnings Conference Call August 9, 2022 10:00 AM ET Company Participants Blake Kolo - Chief Business Officer and Head of IR Mat Ishbia - Chairman and CEO Andrew Hubacker - Senior VP and Chief Accounting Officer and Interim Principal Financial Officer. Conference Call Participants Bose George - KBW Kevin Barker - Piper Sandler Doug Harter - Credit Suisse Eric Hagen - BTIG James Faucette - Morgan Stanley Steve DeLaney - JMP Securities Jay McCanless - Wedbush Kyle J ...
UWM (UWMC) - 2022 Q2 - Quarterly Report
2022-08-08 16:00
Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to _______________ Commission file number 001-39189 UWM HOLDINGS CORPORATION (Exact name of registrant as specified in its ch ...
UWM (UWMC) - 2022 Q1 - Earnings Call Transcript
2022-05-10 18:30
UWM Holdings Corporation (NYSE:UWMC) Q1 2022 Earnings Conference Call May 10, 2022 10:00 AM ET Company Participants Blake Kolo – Chief Business Officer and Head-Investor Relations Mat Ishbia – Chairman and Chief Executive Officer Conference Call Participants Doug Harter – Credit Suisse Henry Coffey Jr. – Wedbush Sandy Beatty – Morgan Stanley Kevin Barker – Piper Sandler Michael Kaye – Wells Fargo Steve DeLaney – JMP Securities Brock Vandervliet – UBS Kevin Barker – Piper Sandler Henry Coffey Jr. – Wedbush B ...
UWM (UWMC) - 2022 Q1 - Quarterly Report
2022-05-09 16:00
[PART I - FINANCIAL INFORMATION](index=2&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Q1 2022 financial statements show significant asset and liability decreases, with net income declining due to lower loan production [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets decreased significantly to **$11.0 billion** from **$22.5 billion** at year-end 2021 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $901,174 | $731,088 | | Mortgage loans at fair value | $5,208,167 | $17,473,324 | | Mortgage servicing rights | $3,514,102 | $3,314,952 | | **Total assets** | **$10,990,953** | **$22,528,358** | | **Liabilities** | | | | Warehouse lines of credit | $4,076,829 | $15,954,938 | | Senior notes | $1,981,106 | $1,980,112 | | **Total liabilities** | **$7,824,711** | **$19,357,357** | | **Total equity** | **$3,166,242** | **$3,171,001** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q1 2022 net income decreased **47.3%** to **$453.3 million** from **$860.0 million** in Q1 2021 Q1 2022 vs. Q1 2021 Statement of Operations (in thousands, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Loan production income | $383,871 | $1,074,665 | | Loan servicing income | $198,565 | $123,789 | | Change in fair value of MSRs | $171,963 | $(59,259) | | **Total revenue, net** | **$821,794** | **$1,189,870** | | Total expenses | $364,462 | $316,979 | | **Net income** | **$453,287** | **$860,005** | | Net income attributable to UWMHC | $21,930 | $47,985 | | **Diluted EPS** | **$0.22** | **$0.33** | [Condensed Consolidated Statements of Changes in Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Equity) Total equity slightly decreased from **$3.171 billion** to **$3.166 billion** in Q1 2022, offset by distributions - Key changes in equity for Q1 2022 include net income of **$453.3 million**, distributions to SFS Corp. of **$450.6 million**, dividends of **$9.3 million**, and stock-based compensation expense of **$1.8 million**[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Q1 2022 net cash from operations significantly increased to **$11.75 billion** due to decreased mortgage loans Q1 2022 vs. Q1 2021 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $11,751,763 | $2,637,017 | | Net cash provided by (used in) investing activities | $610,498 | $(7,233) | | Net cash used in financing activities | $(12,192,175) | $(2,260,958) | | **Increase in cash and cash equivalents** | **$170,086** | **$368,826** | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, 'Up-C' structure, MSRs, debt, and related party transactions - The company operates under an 'Up-C' structure where UWM Holdings Corporation's only material asset is its approximate **5.8%** ownership of Class A Common Units in Holdings LLC, with the remaining **94.2%** held by SFS Corp. and presented as a non-controlling interest[22](index=22&type=chunk)[23](index=23&type=chunk)[76](index=76&type=chunk) - In Q1 2022, the company sold MSRs on loans with an aggregate UPB of approximately **$56.6 billion** for proceeds of about **$656.7 million**. The fair value of the total MSR portfolio was **$3.51 billion** as of March 31, 2022[48](index=48&type=chunk) - As of March 31, 2022, the company had **$4.08 billion** outstanding on its warehouse lines of credit and **$2.0 billion** in aggregate principal of senior unsecured notes. The company was in compliance with all debt covenants[53](index=53&type=chunk)[57](index=57&type=chunk)[58](index=58&type=chunk) - The company declared a Q1 2022 dividend of **$0.10 per share** on Class A common stock, paid in April 2022. A subsequent dividend of **$0.10 per share** was declared for Q2 2022, payable in July 2022[111](index=111&type=chunk)[113](index=113&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q1 2022 loan origination volume and gain margin declines to rising interest rates and competition Key Operational and Financial Metrics (in billions/millions) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Total Loan Origination Volume | $38.8B | $49.1B | | Gain Margin | 99 bps | 219 bps | | Loan Production Income | $383.9M | $1,074.7M | | Net Income | $453.3M | $860.0M | | Adjusted EBITDA | $128.4M | $711.4M | - The decrease in loan production income was primarily driven by a **120 basis point** decline in gain margin and a **$10.3 billion (21%)** decrease in loan production volume compared to Q1 2021[138](index=138&type=chunk) - The company's primary sources of liquidity are borrowings under warehouse facilities and cash flow from operations, including the sale of loans[150](index=150&type=chunk)[151](index=151&type=chunk)[160](index=160&type=chunk) - The company has **$2.0 billion** in aggregate principal of senior unsecured notes with maturities in 2025, 2027, and 2029, and was in compliance with all related covenants[166](index=166&type=chunk)[168](index=168&type=chunk)[170](index=170&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, impacting MSRs and loan origination, naturally hedged by its servicing portfolio - The company is subject to interest rate risk, which impacts MSRs, IRLCs, and mortgage loans at fair value. Rising rates generally increase MSR value but decrease origination volume, creating a natural hedge[195](index=195&type=chunk)[197](index=197&type=chunk) Interest Rate Sensitivity Analysis as of March 31, 2022 (in thousands) | Change in Fair Value | Down 25 bps | Up 25 bps | | :--- | :--- | :--- | | Mortgage loans at fair value | $51,829 | $(53,179) | | MSRs | $(68,567) | $63,742 | | IRLCs (asset) | $111,146 | $(119,702) | | FLSCs (liability) | $(165,685) | $170,976 | - Credit risk is mitigated through stringent underwriting. For Q1 2022, originated loans had a weighted average FICO score of **741** and a loan-to-value ratio of **75.07%**[202](index=202&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were effective as of March 31, 2022, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[208](index=208&type=chunk) - No material changes to internal control over financial reporting occurred during the first quarter of 2022[209](index=209&type=chunk) [PART II - OTHER INFORMATION](index=46&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in several legal proceedings, including class action and antitrust lawsuits, with no material adverse effect expected - A class action lawsuit was filed by three independent mortgage brokers alleging unpaid origination fees. The company denies the claims and intends to defend the matter vigorously[212](index=212&type=chunk) - The Okavage Group filed an antitrust lawsuit alleging that UWM's policy to not work with brokers who also partner with two specific competitors is anticompetitive. A motion to dismiss is pending[213](index=213&type=chunk)[215](index=215&type=chunk) - A former employee filed a class action lawsuit alleging violations of the Fair Labor Standards Act for unpaid overtime. The case is currently stayed pending settlement discussions[216](index=216&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a **$300 million** share repurchase program, with no Q1 2022 repurchases, leaving **$218.4 million** available - No shares of Class A common stock were repurchased during Q1 2022[219](index=219&type=chunk) - As of March 31, 2022, **$218.4 million** remained available under the company's share repurchase program, which expires in May 2023[218](index=218&type=chunk)[219](index=219&type=chunk) [Other Information](index=48&type=section&id=Item%205.%20Other%20Information) The company amended its lease agreement with a related party owned by CEO Mat Ishbia to expand its corporate campus, approved by the Audit Committee - The company amended its lease agreement with a related party, an entity owned by CEO Mat Ishbia, to expand its corporate campus. The Audit Committee approved the transaction[220](index=220&type=chunk) [Exhibits](index=49&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including capital stock, lease amendment, CEO/CFO certifications, and XBRL data