Core Insights - UWM Holdings Corporation (NYSE: UWMC) is identified as the largest home mortgage lender in the U.S. operating exclusively through the wholesale channel [1] Group 1: Company Overview - UWM Holdings leverages an independent network of mortgage brokers to enhance its operations [1] Group 2: Investment Insights - The company is focused on financials, deep value, special situations, and financial arbitrage, indicating a strategic approach to investment opportunities [1]

Loan Origination and Production - For the three months ended September 30, 2024, the company originated $39.5 billion in loans, an increase of $9.8 billion, or 32.9%, from $29.7 billion during the same period in 2023[90]. - For the nine months ended September 30, 2024, the company originated $100.8 billion in loans, an increase of $16.9 billion, or 20.1%, from $83.9 billion during the same period in 2023[91]. - Total loan origination volume for Q3 2024 reached $39,509,521,000, up 32.9% from $29,721,633,000 in Q3 2023[103]. - 91% of the loans originated in the three months ended September 30, 2024, were sold to Fannie Mae or Freddie Mac, or transferred to Ginnie Mae pools in the secondary market[84]. - Loan production income for Q3 2024 was $465,548,000, a 61.1% increase from $288,930,000 in Q3 2023[100]. Financial Performance - The company reported net income of $31.9 million for the three months ended September 30, 2024, a decrease of $269.0 million compared to $301.0 million for the same period in 2023[90]. - For the nine months ended September 30, 2024, net income was $288.8 million, a decrease of $102.4 million compared to $391.2 million for the same period in 2023[91]. - Adjusted EBITDA for the three months ended September 30, 2024, was $107.2 million, compared to $112.1 million for the same period in 2023[90]. - Adjusted EBITDA for the nine months ended September 30, 2024, was $341.8 million, down from $378.7 million for the same period in 2023[91]. - Net income for Q3 2024 was $31,945,000, a significant decrease from $300,993,000 in Q3 2023[98]. Expenses and Costs - The company’s operating expenses include salaries, commissions, direct loan production costs, and general administrative expenses, among others[89]. - Total expenses for Q3 2024 were $494,145,000, an increase from $375,389,000 in Q3 2023[98]. - Other costs for Q3 2024 increased to $328.0 million, an increase of $80.0 million or 32.3% compared to $248.0 million in Q3 2023[118]. - Loan servicing income for Q3 2024 was $134.8 million, a decrease of $65.7 million or 32.8% compared to $200.4 million in Q3 2023[106]. - Total interest expense for Q3 2024 was $141.1 million, an increase from $93.7 million in Q3 2023[113]. Mortgage Servicing Rights (MSRs) - The company retained the majority of the mortgage servicing rights (MSRs) associated with its production but intends to opportunistically sell MSRs depending on market conditions[84]. - Capitalization of mortgage servicing rights (MSRs) for Q3 2024 was $761,928,000, a 19.6% increase from $637,280,000 in Q3 2023[100]. - The weighted average servicing fee increased to 0.3150% as of September 30, 2024, compared to 0.3014% as of September 30, 2023[105]. - The company has entered into early funding programs with Fannie Mae and Freddie Mac, with $105 million outstanding under the Early Funding program as of September 30, 2024[140]. - UWM entered into a Loan and Security Agreement with Citibank, providing up to $1.5 billion of uncommitted borrowing capacity for mortgage servicing rights[150]. Cash Flow and Liquidity - Net cash used in operating activities was $5.7 billion for the nine months ended September 30, 2024, a significant decrease from $494.5 million in the same period of 2023[156]. - Net cash provided by investing activities increased to $2.6 billion for the nine months ended September 30, 2024, up from $1.7 billion in 2023[157]. - Net cash provided by financing activities was $3.3 billion for the nine months ended September 30, 2024, compared to cash used of $2.1 billion in 2023[158]. - The company expects its cash on hand and liquidity sources to be sufficient to maintain operations and fund loan originations for the next twelve months[131]. - As of September 30, 2024, total advanced against warehouse facilities was approximately $6.5 billion, with significant amounts in various master repurchase agreements[138]. Market and Risk Factors - The company is subject to credit risk, with repurchase and indemnification obligations for breaches under loan sale agreements, despite selling loans into the secondary market without recourse[178]. - The company utilizes forward agency or Ginnie Mae To Be Announced (TBA) securities as its primary hedge instrument to manage interest rate risk[175]. - The fair value of mortgage servicing rights (MSRs) is primarily driven by interest rates, with expected prepayments decreasing in rising interest rate environments[174]. - The company assesses market risk based on changes in interest rates using a sensitivity analysis, which measures potential impacts on fair values[176]. - The company has established relationships with a variety of well-established counterparties to mitigate financing risks associated with its borrowing agreements[181].

Financial Data and Key Metrics Changes - The company reported total production of $39.5 billion for Q3 2024, marking the largest quarter in three years and exceeding guidance [9] - Year-to-date total production volume reached $100.8 billion, a 20% increase from the same period in 2023 [15] - Net income for the quarter was nearly $32 million, despite a $446 million decline in the fair value of mortgage servicing rights (MSRs) [10] - Gain margin was reported at 118 basis points, significantly above guidance [9][15] Business Line Data and Key Metrics Changes - The company achieved over $26 billion in purchase production, indicating strong performance in the purchase market [9] - Refinance production reached $13.3 billion, the highest in a couple of years, suggesting readiness for a potential refi boom [9] Market Data and Key Metrics Changes - The broker channel has achieved its highest market share since 2009, attributed to the company's focus on supporting brokers [20] - The company anticipates that 2024 will be the lowest year for existing home sales since 1995, yet it has delivered nearly $75 billion in purchase production through three quarters [22] Company Strategy and Development Direction - The company aims to dominate the broker channel, targeting a market share of over 50% [23] - Investments in technology and training are ongoing to prepare for future market cycles, with a focus on efficiency and operational readiness [51] - The company is positioned to capitalize on future market opportunities with over $600 million in cash and $2.5 billion in total accessible liquidity [16][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning and ability to adapt to market changes, emphasizing preparation for a potential refi boom [7][24] - The CEO highlighted the importance of maintaining operational profitability while investing in growth [15][51] - The company is optimistic about future performance, particularly in 2025, when it expects to benefit from lower rates and increased inventory [22][26] Other Important Information - The company has seen increased adoption of its technology tools, which are designed to enhance broker efficiency and consumer savings [11][12] - The company has maintained a consistent leadership team, which is viewed as a competitive advantage in the industry [21] Q&A Session Summary Question: Is the line-item gain on other interest rate derivatives related to hedging the MSR? - Management clarified that they do not hedge MSRs and that interest rate derivatives are analyzed for market trends [29] Question: What were the drivers behind the higher gain on sale margins in the quarter? - Management indicated that the gain on sale margin was positively impacted by market conditions and the company's ability to capitalize on volume increases [30] Question: What are the expectations for gain on sale margins in the fourth quarter? - Management provided guidance of 85 to 110 basis points, acknowledging the impact of recent rate movements [41] Question: How is the uptake of the new cash-out product? - Management noted that while the product has been well-received, its volume has been limited due to rising rates [47] Question: What is the company's strategy regarding MSR sales moving forward? - Management stated that MSR sales will be opportunistic, based on market conditions and cash needs [57] Question: How does the company view competition within the broker channel? - Management expressed confidence in their dominance of the broker channel, emphasizing their commitment to supporting brokers [56]

Core Insights - UWM Holdings Corporation (UWMC) reported a revenue of $526.43 million for Q3 2024, reflecting a year-over-year decline of 22.3% and an EPS of $0.01 compared to $0.29 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $517.02 million by 1.82%, while the EPS fell short of the consensus estimate of $0.08 by 87.50% [1] Revenue Breakdown - Loan production income was reported at $465.55 million, surpassing the average estimate of $389.24 million by four analysts, marking a year-over-year increase of 61.1% [3] - Interest income reached $145.30 million, exceeding the average estimate of $121.12 million, with a year-over-year growth of 53.2% [3] - Loan servicing income was $134.75 million, slightly below the estimated $140.80 million, representing a decline of 32.8% year-over-year [3] - The change in fair value of mortgage servicing rights was reported at -$446.10 million, significantly worse than the average estimate of -$120.25 million, indicating a year-over-year change of -580.2% [3] Stock Performance - UWM shares have declined by 9.6% over the past month, contrasting with the Zacks S&P 500 composite's increase of 3.2% [4] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [4]

Group 1 - UWM Holdings Corporation (UWMC) reported quarterly earnings of $0.01 per share, missing the Zacks Consensus Estimate of $0.08 per share, and down from $0.29 per share a year ago, representing an earnings surprise of -87.50% [1] - The company posted revenues of $526.43 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.82%, but down from year-ago revenues of $677.12 million [2] - UWM shares have lost about 7.3% since the beginning of the year, while the S&P 500 has gained 24.3% [3] Group 2 - The current consensus EPS estimate for the coming quarter is $0.08 on revenues of $571.82 million, and for the current fiscal year, it is $0.26 on revenues of $2.18 billion [7] - The Zacks Industry Rank for Financial - Mortgage & Related Services is currently in the top 8% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

In January this year I wrote an article on UWM Holdings Corporation (NYSE: UWMC ) UWM Holdings: Poised For Continued Dominance In 2024 Despite Cyclical Economics and since then, UWM has done just that. I believe the company has set I am a dividend growth & income investor with the goal of eliminating my emergency fund by generating income I own, continuously improving cash flow, and eliminating debt. I require high conviction in my portfolio of dividend-paying stocks and ETFs, which I select based on their ...

Group 1: Program Overview - The Mark Cuban Foundation, in partnership with United Wholesale Mortgage (UWM), is hosting a free AI Bootcamp for high school students in Pontiac, with applications closing on September 30 [1][2] - The bootcamp offers a custom curriculum focused on the latest developments in AI and Generative AI, aiming to educate and inspire the next generation of AI professionals [2][3] - Students can choose from six tracks: healthcare, arts and entertainment, business and entrepreneurship, computer science, sports science, or education and career readiness [3] Group 2: Target Audience and Accessibility - The program specifically targets underserved high school students, with a focus on recruiting girls, students of color, first-generation college students, and those from low to moderate-income households [4] - The bootcamp provides students with lunch, snacks, transportation assistance, and technology equipment during the program [4] Group 3: Company Background and Commitment - UWM is recognized as the 1 overall mortgage lender in America and has been the largest wholesale mortgage lender for nine consecutive years [5][10] - UWM has a commitment to innovation and has been named a Top Workplace USA for four years in a row, reflecting its dedication to fostering an environment for the next generation of innovators [5][6] - The AI Bootcamp is part of a broader initiative by the Mark Cuban Foundation to inspire young people with emerging technology, aiming to create more equitable futures for themselves and their communities [9]

Financial Performance - For the three months ended June 30, 2024, the company originated $33.6 billion in loans, an increase of $1.8 billion, or 5.6%, from $31.8 billion in the same period in 2023[79]. - The net income for the three months ended June 30, 2024, was $76.3 million, a decrease of $152.5 million compared to $228.8 million for the same period in 2023[79]. - Adjusted EBITDA for the three months ended June 30, 2024, was $133.1 million, compared to $125.4 million for the same period in 2023[79]. - For the six months ended June 30, 2024, the company originated $61.3 billion in loans, an increase of $7.1 billion, or 13.1%, from $54.2 billion in the same period in 2023[80]. - The net income for the six months ended June 30, 2024, was $256.8 million, an increase of $166.6 million compared to $90.2 million for the same period in 2023[80]. - Adjusted EBITDA for the six months ended June 30, 2024, was $234.6 million, compared to $266.4 million for the same period in 2023[80]. - Total revenue for the six months ended June 30, 2024, was $1,077,050,000, compared to $748,794,000 for the same period in 2023, representing a 43.8% increase[84]. - Net income for Q2 2024 was $76,286,000, down 66.7% from $228,794,000 in Q2 2023[84]. - Loan production income for Q2 2024 was $357,109,000, a 27.2% increase from $280,757,000 in Q2 2023[86]. Loan Origination and Servicing - 89% of loans originated in the three months ended June 30, 2024, were sold to Fannie Mae or Freddie Mac, or transferred to Ginnie Mae pools[73]. - The company retains the majority of the mortgage servicing rights (MSRs) associated with its production but intends to opportunistically sell MSRs depending on market conditions[73]. - The company focuses exclusively on the wholesale channel, which aligns its interests with clients and enhances customer service[74]. - Total loan origination volume for Q2 2024 was $33,628,993,000, up 5.6% from $31,846,800,000 in Q2 2023[85]. - The average loan amount increased to $383,000 in Q2 2024 from $377,000 in Q2 2023[85]. - The weighted average loan-to-value ratio decreased to 81.87% in Q2 2024 from 83.31% in Q2 2023[85]. - Loan servicing income for Q2 2024 was $143.9 million, a decrease of $49.3 million, or 25.5%, compared to $193.2 million in Q2 2023[90]. - Average UPB of loans serviced decreased to $204.4 billion in Q2 2024 from $296.9 billion in Q2 2023, a decline of approximately 31.1%[90]. - The number of loans serviced decreased to 634,679 in Q2 2024 from 916,298 in Q2 2023, a decline of approximately 30.8%[90]. Costs and Expenses - Total revenue decreased by $80.4 million for the three months ended June 30, 2024, while total expenses increased by $72.1 million[100]. - Other costs for Q2 2024 increased to $295.6 million, an increase of $52.2 million, or 21.4%, compared to $243.4 million in Q2 2023[97]. - Salaries, commissions, and benefits increased by $28.9 million, or 22.0%, in Q2 2024, primarily due to an increase in average team member count[97]. - Direct loan production costs rose by $21.9 million, or 92.6%, in Q2 2024, mainly due to costs associated with new programs launched[96]. - The provision for representations and warranties obligations increased by 47.1% to $(13,394,000) in Q2 2024 from $(9,103,000) in Q2 2023[86]. Cash Flow and Liquidity - As of June 30, 2024, the company reported net cash used in operating activities of $3.52 billion, a significant decrease from $148.6 million in the same period of 2023[125]. - Net cash provided by investing activities increased to $2.34 billion for the six months ended June 30, 2024, compared to $1.07 billion for the same period in 2023, driven by higher proceeds from sales of MSRs and excess servicing cash flows[126]. - The company had net cash provided by financing activities of $1.36 billion for the six months ended June 30, 2024, compared to cash used of $1.29 billion in the same period of 2023, primarily due to net borrowings under warehouse lines of credit[127]. - The company believes its cash on hand and liquidity sources will be sufficient to maintain operations and fund loan originations for the next twelve months[104]. Debt and Financing - The company has a total of $750 million committed under early funding programs as of June 30, 2024[112]. - The 2025 Senior Notes issued by UWM amount to $800 million, with a 5.500% interest rate, maturing on November 15, 2025[114]. - The 2029 Senior Notes issued by UWM total $700 million, also at a 5.500% interest rate, maturing on April 15, 2029[115]. - The 2027 Senior Notes issued by UWM are $500 million with a 5.750% interest rate, maturing on June 15, 2027[116]. - As of June 30, 2024, the company had $91.4 million outstanding under sale and repurchase agreements collateralized by investment securities[121]. Market and Risk Factors - The company is subject to credit risk, with repurchase and indemnification obligations for breaches under loan sale agreements[145]. - The company has no losses due to nonperformance by counterparties during the three or six months ended June 30, 2024, or June 30, 2023[147]. - The company utilizes forward agency or Ginnie Mae To Be Announced (TBA) securities as its primary hedge instrument for interest rate risk[141]. - The company’s total market risk is influenced by various factors including market volatility and liquidity[142]. - The company is dependent on macroeconomic conditions and U.S. residential real estate market conditions, which may affect its operations and profitability[136]. - The company has implemented stringent underwriting standards and strong fraud detection tools to mitigate credit risk[145].

Financial Data and Key Metrics Changes - In Q2 2024, UWM Holdings Corporation reported total production of $33.6 billion, a 6% increase year-over-year and a 22% increase sequentially from Q1 2024, marking the highest quarterly production since Q1 2022 [4][9] - The gain margin was 106 basis points, at the higher end of guidance, with net income exceeding $76 million, despite a $115 million decline in the fair value of mortgage servicing rights (MSRs) [5][9] - Year-to-date total production volume reached $61.3 billion, representing a 13% increase from the first half of 2023, with a gain margin of 107 basis points, up from 90 basis points in the same period last year [9][10] Business Line Data and Key Metrics Changes - Over $27 billion of the total production in Q2 2024 came from purchase loans, indicating a strong focus on the purchase-driven market [4] - The company introduced several new products and technologies aimed at enhancing speed and capacity in the broker channel, including Mortgage Matchup and Track Plus, which are expected to significantly improve operational efficiency [5][6][7] Market Data and Key Metrics Changes - The broker channel has achieved its highest market share since 2008, with a notable migration of mortgage loan officers from retail to wholesale [3] - The weighted average coupon of the company's portfolio declined to 4.31% by the end of Q2 2024, despite year-to-date new production occurring at higher rates [10] Company Strategy and Development Direction - UWM aims to make the broker channel the number one choice in the mortgage market, targeting over 50% market share in the coming years [12][13] - The company is heavily investing in technology to prepare for anticipated increases in production when interest rates decline, positioning itself to capitalize on future refinancing opportunities [4][7][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for market improvement in 2024 compared to 2023, with expectations of a refi boom if interest rates drop significantly [3][14] - The company remains focused on maintaining profitability while investing in growth and technology, emphasizing that it is well-prepared for various market cycles [11][12] Other Important Information - UWM has generated approximately $2.4 billion in net proceeds from the sale of MSRs, which have been used to deleverage the balance sheet and invest in business growth [10] - The company ended Q2 2024 with total cash of just under $700 million and no outstanding borrowings, indicating strong liquidity [11] Q&A Session Summary Question: Rate expectations and ARM production - Management indicated that if the Fed cuts rates significantly, it could lead to increased demand for adjustable-rate mortgages (ARMs), although the 30-year fixed rate will likely remain the prevailing product [16][17] Question: Savings from TRAC+ program - Consumers can save thousands through the TRAC+ program, which simplifies the closing process and reduces costs [18] Question: Adoption rates of TRAC+ and PA+ - Adoption rates for TRAC+ and PA+ have increased significantly in recent months, with the technology designed to handle increased scale without requiring brokers to hire additional staff [20][21] Question: Guidance on 30-year mortgage rates - Management suggested that a drop in the 10-year yield below 3.75% could trigger a refinancing boom, although they are currently not at that point [22][23] Question: Investments and expense management - The company has been preparing for increased volume without laying off staff, focusing on technology and operational efficiency to manage expenses effectively [25][26] Question: Gain on sale margin stability - Management expressed confidence in maintaining margins between 85 and 110 basis points, with potential for improvement if rates drop further [46][48] Question: Appetite for selling higher coupon loans - The company remains opportunistic regarding MSR sales but is currently focused on origination and growth rather than selling [49] Question: Direct loan production costs - Increased production naturally leads to higher loan production costs, but management emphasized a focus on growth rather than expense reduction [51][53]

Core Insights - UWM Holdings Corporation (UWMC) reported a revenue of $507.09 million for the quarter ended June 2024, reflecting a year-over-year decline of 13.7% and an EPS of $0.04 compared to $0.11 a year ago [1] - The reported revenue was a surprise of -6.15% against the Zacks Consensus Estimate of $540.31 million, while the EPS surprise was -33.33% against the consensus estimate of $0.06 [1] Revenue Breakdown - Loan production income was reported at $357.11 million, exceeding the average estimate of $334.86 million from four analysts [3] - Interest income reached $121.39 million, surpassing the average estimate of $109.01 million from four analysts [4] - Loan servicing income was $143.91 million, falling short of the average estimate of $184.30 million from four analysts [5] - The change in fair value of mortgage servicing rights was reported at -$115.32 million, worse than the average estimate of -$81.11 million from four analysts [6] Stock Performance - UWM shares have returned +32% over the past month, contrasting with the Zacks S&P 500 composite's -6.7% change [6] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [6]