UWM (UWMC) - 2024 Q1 - Quarterly Results

Q1 2024 Financial & Operational Highlights UWM Holdings Corporation announced strong first quarter 2024 results, highlighting a return to profitability and increased loan origination Overall Performance Summary UWM Holdings returned to profitability in Q1 2024 with $180.5 million net income, driven by increased loan origination and strong purchase volume Q1 2024 Key Performance Indicators | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Income (Loss) (in millions of dollars) | $180.5 | ($461.0) | ($138.6) | | Loan Origination Volume (in billions of dollars) | $27.6 | $24.4 | $22.3 | | Purchase Volume (in billions of dollars) | $22.1 | $20.7 | $19.2 | | Total Gain Margin (in basis points) | 108 | 92 | 92 | | Diluted EPS (in dollars) | $0.09 | ($0.29) | ($0.13) | - CEO Mat Ishbia noted that the company's strategy and investments are yielding positive results, with strengthening volume and margin, achieving impressive purchase volume despite industry concerns[2] - The company concluded Q1 2024 with approximately $2.9 billion in available liquidity, including $605.6 million in cash and $2.3 billion in available borrowing capacity[4] Financial Performance This section details UWM Holdings' financial results, including key income statement and balance sheet metrics, and mortgage servicing rights performance Key Financial Metrics Loan origination volume increased to $27.6 billion in Q1 2024, with total gain margin improving to 1.08%, resulting in a net income of $180.5 million Production and Income Statement Highlights (Q1 2024 vs. Q4 2023 & Q1 2023) | Metric (in thousands, except per share/bps) | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Loan origination volume (in thousands of dollars) | $27,630,535 | $24,372,436 | $22,335,014 | | Total gain margin (in %) | 1.08% | 0.92% | 0.92% | | Net income (loss) (in thousands of dollars) | $180,531 | $(460,956) | $(138,613) | | Diluted earnings (loss) per share (in dollars) | $0.09 | $(0.29) | $(0.13) | | Adjusted EBITDA (in thousands of dollars) | $101,490 | $99,566 | $140,994 | Balance Sheet Highlights As of March 31, 2024, total assets increased to $12.8 billion, cash improved to $605.6 million, and the non-funding debt to equity ratio decreased to 0.94 Balance Sheet Highlights (as of period-end, in thousands) | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Cash and cash equivalents (in thousands of dollars) | $605,639 | $497,468 | $740,063 | | Mortgage servicing rights (in thousands of dollars) | $3,191,803 | $4,026,136 | $3,974,870 | | Total assets (in thousands of dollars) | $12,797,334 | $11,871,854 | $10,947,716 | | Total equity (in thousands of dollars) | $2,457,058 | $2,474,671 | $2,874,542 | | Non-funding debt to equity | 0.94 | 1.16 | 0.91 | Mortgage Servicing Rights (MSRs) The MSR portfolio's unpaid principal balance decreased to $229.7 billion in Q1 2024, while its weighted average interest rate increased to 4.58% MSR Portfolio Details (as of period-end) | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Unpaid principal balance (in billions of dollars) | $229.7 | $299.5 | $297.9 | | Weighted average interest rate (in %) | 4.58% | 4.43% | 3.66% | | Weighted average age (in months) | 22 | 21 | 18 | Business & Product Updates This section highlights UWM's new product initiatives and the composition of its loan origination volume by product type Product Initiatives UWM launched new products and tools in Q1 2024, including 'Mortgage Matchup', 'Refi 100', and an expanded '1% Down' program, while covering credit report costs for brokers - Launched 'Mortgage Matchup', a new version of FindAMortgageBroker.com, to educate homebuyers and connect them with independent mortgage brokers[10] - Introduced 'Refi 100', a 100-basis point pricing incentive on conventional rate and term refinances to help brokers create refinance opportunities[10] - Expanded the '1% Down' program, where UWM contributes an additional 2% (up to $4,000) towards the down payment for income-qualified borrowers[10] - Began covering the cost of hard credit report pulls for its broker partners to combat rising out-of-pocket expenses for brokers[10] Origination Mix In Q1 2024, purchase loans comprised the majority of originations at $22.1 billion, with refinance volume also significantly increasing to $5.5 billion across all loan types Origination Mix by Product (in thousands) | Category | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Total Purchase (in thousands of dollars) | $22,121,429 | $20,681,456 | $19,245,796 | |    Conventional (in thousands of dollars) | $12,160,107 | $12,033,818 | $12,969,966 | |    Government (in thousands of dollars) | $7,567,925 | $6,805,530 | $5,623,050 | |    Jumbo and other (in thousands of dollars) | $2,393,397 | $1,842,108 | $652,780 | | Total Refinance (in thousands of dollars) | $5,509,106 | $3,690,980 | $3,089,218 | |    Conventional (in thousands of dollars) | $1,716,281 | $1,386,645 | $1,869,911 | |    Government (in thousands of dollars) | $2,657,541 | $1,389,884 | $941,775 | |    Jumbo and other (in thousands of dollars) | $1,135,284 | $914,451 | $277,532 | | Total Originations (in thousands of dollars) | $27,630,535 | $24,372,436 | $22,335,014 | Outlook & Dividends This section provides UWM's financial outlook for Q2 2024, including projected production volume and gain margin, alongside its consistent dividend declaration Q2 2024 Outlook UWM projects Q2 2024 loan production volume between $28 billion and $35 billion, with an expected gain margin of 85 to 110 basis points - The company projects Q2 2024 production volume to be between $28 billion and $35 billion[12] - The expected gain margin for Q2 2024 is anticipated to be in the range of 85 to 110 basis points[12] Dividend Declaration For the fourteenth consecutive quarter, the company declared a cash dividend of $0.10 per share, payable on July 11, 2024 - For the 14th consecutive quarter, the Board of Directors declared a cash dividend of $0.10 per share on outstanding Class A common stock[13] - The dividend is payable on July 11, 2024, to stockholders of record at the close of business on June 20, 2024[13] Non-GAAP Financial Measures This section defines and reconciles UWM's non-GAAP financial metrics, including Adjusted Net Income, Adjusted EBITDA, and Non-funding debt, to provide a clearer view of operational performance Definition of Non-GAAP Metrics UWM defines non-GAAP metrics like Adjusted Net Income, Adjusted EBITDA, and Non-funding debt to provide a clearer view of operational performance by adjusting for specific non-cash or non-operational items - Adjusted Net Income (Loss) is defined as pre-tax income with an adjusted income tax provision to reflect a 100% economic interest ownership structure for comparison purposes[16] - Adjusted EBITDA is defined as earnings before interest on non-funding debt, taxes, depreciation, amortization, stock-based compensation, and several non-cash or non-realized fair value adjustments[17][18] - Non-funding debt is defined as the total of senior notes, lines of credit, and other borrowings not directly tied to funding loan originations[19] Reconciliation of Non-GAAP Metrics This section provides detailed reconciliations of non-GAAP metrics, showing Q1 2024 Adjusted Net Income at $141.1 million, Adjusted EBITDA at $101.5 million, and total non-funding debt at $2.31 billion Adjusted Net Income (Loss) Reconciliation (in thousands) | Description | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Earnings (loss) before income taxes (in thousands of dollars) | $184,264 | $(468,408) | $(139,616) | | Adjusted income tax (provision) benefit (in thousands of dollars) | $(43,143) | $107,406 | $32,991 | | Adjusted net income (loss) (in thousands of dollars) | $141,121 | $(361,002) | $(106,625) | Adjusted EBITDA Reconciliation (in thousands) | Description | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net income (loss) (in thousands of dollars) | $180,531 | $(460,956) | $(138,613) | | Plus/minus various adjustments | ... | ... | ... | | Adjusted EBITDA (in thousands of dollars) | $101,490 | $99,566 | $140,994 | Non-funding Debt Reconciliation (in thousands) | Description | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Total non-funding debt (in thousands of dollars) | $2,311,850 | $2,862,759 | $2,623,962 | | Total equity (in thousands of dollars) | $2,457,058 | $2,474,671 | $2,874,542 | | Non-funding debt to equity | 0.94 | 1.16 | 0.91 | Consolidated Financial Statements This section presents UWM's consolidated balance sheets and statements of operations, detailing assets, liabilities, equity, revenues, and net income for the reported periods Consolidated Balance Sheets As of March 31, 2024, total assets increased to $12.8 billion, driven by higher mortgage loans at fair value, while total liabilities rose to $10.3 billion and total equity slightly decreased Consolidated Balance Sheet Summary (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total assets (in thousands of dollars) | $12,797,334 | $11,871,854 | | Cash and cash equivalents (in thousands of dollars) | $605,639 | $497,468 | | Mortgage loans at fair value (in thousands of dollars) | $7,338,135 | $5,449,884 | | Mortgage servicing rights (in thousands of dollars) | $3,191,803 | $4,026,136 | | Total liabilities (in thousands of dollars) | $10,340,276 | $9,397,183 | | Warehouse lines of credit (in thousands of dollars) | $6,681,917 | $4,902,090 | | Senior notes (in thousands of dollars) | $1,989,250 | $1,988,267 | | Total equity (in thousands of dollars) | $2,457,058 | $2,474,671 | Consolidated Statements of Operations UWM reported total net revenue of $570.0 million in Q1 2024, a significant recovery driven by higher loan production income, resulting in a net income of $180.5 million Consolidated Statement of Operations (in thousands) | Account | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Loan production income (in thousands of dollars) | $298,954 | $225,436 | $205,424 | | Change in fair value of MSRs (in thousands of dollars) | $(15,563) | $(634,418) | $(337,287) | | Total revenue, net (in thousands of dollars) | $569,956 | $(114,583) | $161,274 | | Total expenses (in thousands of dollars) | $385,692 | $353,825 | $300,890 | | Net income (loss) (in thousands of dollars) | $180,531 | $(460,956) | $(138,613) | | Net income (loss) attributable to UWMC (in thousands of dollars) | $8,730 | $(27,078) | $(11,941) | Supplementary Information This section provides additional details including conference call information, cautionary notes on forward-looking statements, company overview, and historical quarterly financial data Conference Call Information A conference call to discuss Q1 2024 results was scheduled for May 9, 2024, at 10:00 AM ET, with webcast and replay available on the investor relations website - A conference call to review Q1 2024 results was scheduled for Thursday, May 9, 2024, at 10:00 AM ET[14] Forward-Looking Statements This section cautions that forward-looking statements are subject to risks and uncertainties, including macroeconomic conditions, interest rate changes, and reliance on secondary markets, which may cause actual results to differ materially - Forward-looking statements cover expectations for Q2 2024 production and margin, market share growth, and benefits from technology investments[24] - Identified risks include dependence on U.S. residential real estate market conditions, interest rate changes from U.S. monetary policy, reliance on warehouse facilities, and ability to sell loans in the secondary market[24] About UWM UWM Holdings Corporation is the parent of United Wholesale Mortgage (UWM), the nation's largest home mortgage lender, operating exclusively through the wholesale channel for nine consecutive years - UWM is the largest home mortgage lender and purchase lender in the nation[26] - The company operates exclusively through the wholesale channel, partnering with the independent mortgage broker community across all 50 states and D.C.[26] Historical Quarterly Data (Addendum) This addendum provides historical consolidated balance sheets and statements of operations for the five quarters ending March 31, 2024, enabling analysis of quarterly financial trends Historical Quarterly Total Assets and Equity (in thousands) | Date | Total Assets | Total Equity | | :--- | :--- | :--- | | Mar 31, 2024 | $12,797,334 | $2,457,058 | | Dec 31, 2023 | $11,871,854 | $2,474,671 | | Sep 30, 2023 | $12,204,137 | $3,092,111 | | Jun 30, 2023 | $12,425,919 | $2,947,122 | | Mar 31, 2023 | $10,947,716 | $2,874,542 | Historical Quarterly Revenue and Net Income (in thousands) | Quarter Ended | Total Revenue, Net | Net Income (Loss) | | :--- | :--- | :--- | | Mar 31, 2024 | $569,956 | $180,531 | | Dec 31, 2023 | $(114,583) | $(460,956) | | Sep 30, 2023 | $677,116 | $300,993 | | Jun 30, 2023 | $587,520 | $228,794 | | Mar 31, 2023 | $161,274 | $(138,613) |