UWM Holdings Corporation (NYSE:UWMC) Q1 2024 Earnings Call Transcript May 9, 2024
UWM Holdings Corporation misses on earnings expectations. Reported EPS is $0.00011 EPS, expectations were $0.04. UWMC isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning. My name is Crysta and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation First Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions]. Thank you. Blake Kolo, you may begin your conference.
Blake Kolo: Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us and welcome to the first quarter 2024 UWM Holdings Corporation’s earnings call. Before we start, I would like to remind everyone that this conference call includes forward-looking statements. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued this morning. I will now turn the call over to Mat Ishbia, Chairman and CEO of UWM Holdings Corporation and United Wholesale Mortgage.
Mat Ishbia: Thanks, Blake, and thank you everyone for joining us today. I’m really excited about this earnings call. A lot of great things to talk about, we’re extremely busy here at UWM. We’re hiring hundreds of new team members, preparing for the future and the opportunity, and there’s a great buzz around our campus that I wish all of you guys could feel. On our last call, I said we expected 2024 to be a better year for the housing and mortgage industry, and the first quarter supports what I expected. We are in the weeds of our business, have done a nice job executing on our game plan. With that said, I want to touch on a couple main themes before getting into the quarterly numbers. First, the broker channel is the best place for a consumer to get a loan and is the best place for a loan officer work.
Knowing this, it’s great to see how much the broker channel has grown in both share and people over the last few years. More and more loan officers, consumers and real estate agents are seeing what we have already known for a long time, that the mortgage broker is the best place to get a mortgage. Consumers and real estate agents are seeing it as well. It’s very exciting. Second, and I want everyone to remember what I’m about to say next is something that I’ve been saying for years since becoming public. When rates are high, the brokers in UWM will always dominate. And that is exactly what has happened over the last two and a half years or so. Now, I’m telling you this, when rates go down, every mortgage company in America, including UWM, will look great.
But remember, we are different because UWM is built to perform in both purchase and refi markets, and that’s something I’m very proud of. Overall, it’s been a tremendous start to the year and we’re excited about the momentum in our business. Now, let’s jump into the first quarter. We closed $27.6 billion in production for the quarter at the higher end of our guidance, with over $22 billion of this coming from purchase. I’d like to point out that we grew 13% from the fourth quarter and more impressively, 24% compared to last year’s first quarter. I don’t think there’s a lot of lenders that can say they’ve grown that much year-over-year. We’ve been guiding to 75 basis points to 100 basis points for a long time and I bumped it to 80 basis points to 105 basis points for the first quarter.
We exceeded that guidance with a gain margin of 108 basis points. It was a very profitable quarter with $180.5 million in net income and that includes a $15 million write down on fair value. As these results demonstrate, we continue to deliver on our expectations by remaining focused on being the best mortgage lender in the country. That means continuing to invest in our people and our technology and our service, no matter what others in the industry are doing. We know what we are good at and we know what we’re great at. We don’t try to be all things to all people and we win because of it. As you will hear from Andrew shortly, our financial position is very strong and we fully intend to keep rewarding our shareholders with a great dividend as I’ve been saying quarter in and quarter out.
We remain confident that the volumes and margin will remain strong in 2024 as we’ve been saying for the last couple quarters, and we are uniquely positioned to capitalize on the next refi boom. Whether it comes next month, six months or in 12 months, we are prepared. I’ll now turn things over to Andrew, our CFO.
Andrew Hubacker: Thank you, Mat. 2024 is off to a great start. Even during a quarter that is traditionally slower from a seasonal standpoint. We reported positive net income for the quarter and remain profitable operationally before considering the change in fair value MSRs and on an adjusted EBITDA basis. We were pleased with our first quarter operational performance as we continue to invest and prepare for the next market cycle. We’ve discussed before our plans to opportunistically sell MSRs as a means of generating cash flows to support our ongoing operational, capital and financing cash needs. This continued in the first quarter. Our first quarter sales were accomplished at what we believe to be favorable prices and have allowed us to significantly de-risk our MSR portfolio and delever our balance sheet, while also supporting our ability to originate substantial new loan volume.
As at the end of the quarter, our capital and leverage ratios remain within expected ranges in the current environment and generally consistent with or improved from the end of last year. Furthermore, our liquidity and access to liquidity, including cash and accessible borrowing capacity, increased by over $600 million from the end of 2023, bringing our total available liquidity to just under $2.9 billion. We believe that we continue to be well positioned operationally and financially for different market cycles. Okay, I will now turn things back over to our Chairman, President and CEO, Mat Ishbia for closing remarks.
Mat Ishbia: Thanks Andrew. I’ll close with a few points before the Q&A. I said on our last call that I believe in 2024 will be a better overall year for housing and the mortgage industry in 2023. Everything we are seeing now confirms that definitely at UWM. But as I always say, regardless of the market, we remain the best mortgage lender in America, our focus will remain on providing elite service, technology, pricing and partnership to our mortgage broker partners. Lastly, I’m very excited for next week. We welcome about 5000 of the mortgage industry professionals to our campus here in Pontiac, Michigan for UWM LIVE! which has become the biggest annual mortgage event in America. I know many of you on this call have joined us in the past and I look forward to seeing many of you here again next week.
Now, looking forward to the second quarter, we expect production between $28 billion and $35 billion and consistent with what I said before about margins, things continue to show signs of improving. In the second quarter, we expect our gain margin will be between 85 basis points and 110 basis points. As always, I really want to thank our team members, our clients and our shareholders. We’ve got a great team here at UWM. We’re really proud of what we’re doing and we’re excited to continue to dominate together. Now, let’s turn it over to the Q&A.
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