Guild pany(US:GHLD)2021-08-12 00:35Financial Data and Key Metrics Changes - For Q2 2021, total loan originations were $8.2 billion, down from $8.8 billion in the same quarter last year [20] - Net revenue totaled $294 million compared to $435 million in Q2 2020, while net income was $9 million or $0.15 per diluted share [20] - Adjusted net income for Q2 was $52 million or $0.87 per share, reflecting a year-over-year decline primarily due to lower origination fees and gain on sale [20][21] - Year-to-date loan originations reached $17.9 billion, up 23% year-over-year, with net revenue increasing 36% to $820 million [21] Business Line Data and Key Metrics Changes - The servicing segment reported an unpaid principal balance growth of 24% year-over-year to $66 billion, with servicing fees increasing by 26% to $48 million in Q2 [23] - The gain on sale margins for originations were 405 basis points for the quarter, with a margin of 415 basis points on pull-through adjusted locked volume [22] Market Data and Key Metrics Changes - The company noted that margins have compressed due to rising competitive pressures, which are expected to continue through the year [8] - The MBA forecast indicates a 21% decline in overall volume for Q3, while purchase applications were up 12% quarter-over-quarter [26] Company Strategy and Development Direction - The company focuses on the retail channel, which accounted for 97% of total originations in Q2 [13] - The acquisition of Residential Mortgage Services (RMS) is expected to enhance local presence and add approximately 250 loan officers [14] - The company aims to expand its footprint both organically and through acquisitions, maintaining a focus on the purchase market [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering sustainable and profitable growth despite market dynamics [9] - The company anticipates further margin compression in the latter half of the year, with gain on sale margins expected to align with long-term averages of approximately 380 basis points [27] - Management highlighted the importance of adapting to market changes and maintaining strong client relationships [10][12] Other Important Information - The company maintains a strong balance sheet with $322 million in cash and cash equivalents, and $3.1 billion in warehouse lines of credit [24] - The company paid a $1 per share dividend during Q2 and closed the RMS acquisition on July 1 [24] Q&A Session Summary Question: What is the current mix between cash gain and capitalization of the MSR? - The mix is approximately 85 to 90 basis points for cash gain, with the remainder being capitalized MSR [29] Question: How did GSE changes impact capital markets execution? - The company was able to pivot quickly to fill the void left by GSE changes, and it did not materially affect overall gain on sale numbers [30][31] Question: Will the RMS acquisition be accretive in Q3? - The acquisition is expected to be accretive, with RMS being historically profitable and similar in operations to the company [36][38] Question: What caused the slight drop in refi recapture rate? - The drop is attributed to quarter-to-quarter fluctuations, with pressure in the refi market affecting gain on sale compression [42][43] Question: What is the outlook for gain on sale guidance in the back half of the year? - The guidance indicates a significant decline in gain on sale margins, expected to drop below the historical average of 380 basis points [47] Question: What are the company's future acquisition strategies? - The company is focused on growth through both organic and inorganic means, seeking partners that align with its purchase-focused model [49][50]