loanDepot(US:LDI)2025-05-08 20:30PART I - FINANCIAL INFORMATION Item 1. Financial Statements Unaudited consolidated financial statements for Q1 2025, reporting a net loss of $40.7 million and total assets of $6.42 billion Consolidated Balance Sheets The Consolidated Balance Sheet shows total assets increased to $6.42 billion, while total equity decreased to $469.3 million Balance Sheet Summary (as of March 31, 2025 vs. December 31, 2024) | Metric | March 31, 2025 ($ thousands) | December 31, 2024 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | 371,480 | 421,576 | (11.9)% | | Loans held for sale, at fair value | 2,765,417 | 2,603,735 | 6.2% | | Total assets | 6,416,714 | 6,344,028 | 1.1% | | Warehouse and other lines of credit | 2,490,447 | 2,377,127 | 4.8% | | Total liabilities | 5,947,416 | 5,837,417 | 1.9% | | Total equity | 469,298 | 506,611 | (7.4)% | Consolidated Statements of Operations Reported a net loss of $40.7 million for Q1 2025, a significant improvement from the prior year, with total net revenues increasing by 22.8% Statement of Operations Summary (Q1 2025 vs. Q1 2024) | Metric | Three Months Ended March 31, 2025 ($ thousands) | Three Months Ended March 31, 2024 ($ thousands) | Change (%) | | :--- | :--- | :--- | :--- | | Total net revenues | 273,620 | 222,785 | 22.8% | | Total expenses | 319,723 | 307,950 | 3.8% | | Loss before income taxes | (46,103) | (85,165) | 45.9% | | Net loss | (40,696) | (71,505) | 43.1% | | Net loss attributable to loanDepot, Inc. | (21,896) | (34,255) | 36.1% | | Diluted EPS | $(0.11) | $(0.19) | 42.1% | Consolidated Statements of Cash Flows Experienced a net cash outflow of $81.5 million in Q1 2025, primarily due to $179.9 million used in operating activities Cash Flow Summary (Q1 2025 vs. Q1 2024) | Cash Flow Activity | Three Months Ended March 31, 2025 ($ thousands) | Three Months Ended March 31, 2024 ($ thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | (179,890) | (278,523) | | Net cash provided by investing activities | 2,795 | 52,024 | | Net cash provided by financing activities | 95,601 | 158,652 | | Net change in cash | (81,494) | (67,847) | Notes to Consolidated Financial Statements Detailed explanations of accounting policies and financial statement components, including disclosures on a cybersecurity incident and debt obligations - In January 2024, a cybersecurity incident led to $0.8 million in Q1 2025 expenses, with $15.0 million insurance reimbursement in 2024 and $20.0 million expected in 20252526 - The total servicing portfolio's unpaid principal balance reached $116.6 billion as of March 31, 2025, a slight increase from year-end 202457 - The company utilizes nine revolving lines of credit totaling $3.7 billion for warehouse and securitization facilities, with $2.49 billion outstanding as of March 31, 202582 - The company is a defendant in 23 consolidated class action cases related to the cybersecurity incident, with a preliminary settlement approved in January 2025118 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes improved Q1 2025 results to higher gain on sale margins and loan volumes, highlighting 'Project North Star' and sufficient liquidity - 'Project North Star' is a strategic plan focused on becoming a lifetime lending partner, growing mortgage reach, expanding the servicing portfolio, and enhancing operating leverage142 Key Performance Indicators (Q1 2025 vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total loan originations | $5,173.9M | $4,558.4M | | - Purchase | $3,063.9M | $3,296.3M | | - Refinance | $2,110.0M | $1,262.1M | | Gain on sale margin | 3.72% | 2.84% | | Total servicing portfolio (UPB) | $116.6B | $142.3B | - The Q1 2025 net loss decrease was driven by a $50.8 million increase in total net revenues from higher loan origination and improved gain on sale margins, partially offset by $11.8 million higher expenses151 - As of March 31, 2025, the company held $371.5 million in unrestricted cash and $1.2 billion in available credit, deemed sufficient for the next twelve months169172 Item 3. Quantitative and Qualitative Disclosures About Market Risk Discusses primary market risks, including interest rate risk affecting loans held for sale, IRLCs, and MSRs, along with credit and prepayment risks - The main market exposure is interest rate risk, impacting the value of loans held for sale, IRLCs, servicing rights, and hedging instruments209 - Credit risk, managed through underwriting, involves potential repurchases or indemnification for sold loans due to representations and warranties212213 - Prepayment risk impacts the fair value of servicing rights, with increased prepayment expectations generally decreasing asset value216 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025217 - No material changes to internal control over financial reporting were identified during the quarter218 PART II. OTHER INFORMATION Item 1. Legal Proceedings Refers to Note 15 of the financial statements for detailed discussion of the company's material legal proceedings - Details on material legal proceedings are provided in Note 15 - Commitments and Contingencies of the financial statements220 Item 1A. Risk Factors Reports no material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes in risk factors were reported from those discussed in the company's 2024 Form 10-K220 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Reports the issuance of over 5.2 million shares of Class A common stock in Q1 2025 through conversions exempt from registration under Section 3(a)(9) - The company issued Class A common stock upon conversion of Class C common stock on three occasions in Q1 2025, totaling 5,250,484 shares222223 Item 5. Other Information Reports no director or officer adopted or terminated any Rule 10b5-1 trading arrangements during Q1 2025 - No director or officer adopted or terminated any Rule 10b5-1 trading arrangements during Q1 2025226 Item 6. Exhibits Lists all documents filed as part of the Form 10-Q, including amendments to credit agreements, CEO/CFO certifications, and XBRL data files - The report includes various exhibits, such as amendments to credit agreements, executive transition agreements, and Sarbanes-Oxley Act certifications227