Guild (GHLD) 8 May 222022 Q1 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the Guild Holdings Company First Quarter 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this call will be recorded. I would now like to turn the conference over to Michael Kim, Investor Relations. Please go ahead, sir.

Thank you, and good morning, everyone.

performance like may everyone regarding contain expected and I'd this comments the begin, operating call periods. conference certain financial we to that remind on company's Before future for forward-looking statements statements based the current company's These expectations. are on Form differ factors periods implied forward-looking in and the filed detail that XX-K to are for due those of number section these from Factors under may described results in expressed materially titled, in and Actual risks other statements the a with future or by or Guild's Risk XX-Q other greater reports U.S. Exchange Commission. Securities and

Additionally, Amber certain Schmidt; corresponding Relations and available on Chief of GAAP the Reconciliations Participating Terry will Chief today our today's the be are non-GAAP also Executive in Mary Officer, can filed remarks SEC in McGarry; found Kramer. refer non-GAAP financial Ann website. President, call the Officer, Investor measures to Guild's today earnings to financial are measures and release measures. with Financial

to like I'd to McGarry. turn Ann over Now Ann? Mary the call Mary

everyone, Good us. joining you, Michael. for you and thank Thank morning,

Terry always, Officer, and by joined our Schmidt, I'm Kramer. President, our Amber Chief As Financial

Our Q&A after Officer, us join for Chief prepared remarks. David Operating our Neylan will

in of adjusted our net first sale income and model, trends; XXXX, $XX results the first per benefits compared and financial at to came quarter of million for compressed this margins the quarter year. For volumes and the with of Consistent differentiated industry broader reinforce business balanced $X.XX, on and our origination gain prior respectively share quarters. earnings

value the as in strong balance the which hedge further MSR growth servicing servicing assets well detail, fees of Terry underlying on platform, acted with in gains discuss sizable the as a Our in will sheet. as

model gain States. that throughout retail business, we United and the communities our originations market infrastructure purchase-focused unique we to our on over loan with in time, Focusing officers given share well-positioned remain believe

interest and near However, by increased limited share rising impacted trends purchased been inventories, rates market term competition. have

over are pressures, current purchase cycles will our profitability that have many decades near-term demonstrated and sustain believe through the challenging ability enable effectively been we economic our to confident navigate cycle. Despite have We during conditions. to we us model market

remained purchase of will volumes of gains believe particularly continue and share infrastructure, over compensation sustainable XXXX, volumes mortgage up as loans responsible XX% favor XX% drive have Purchase first our to our for loans product breath market structures XXXX. industry of of purchase time, XXXX, of and the in estimated We fiscally mortgage to accounted purchase quarter activity. shift of an Bankers the for volumes quarter fourth the Mortgage Association. the first for Industrywide from overall according XX% in quarter accounted in platform

gain mortgage changing continued value to market a through proposition strong shifting we scale built are Innovation a Guild's players mortgage during distribution record that to we cycle. attractive our a proactively our has a key and The Beyond capitalize retail downturns. part product contrast, identity, platform team to share loan on leverage on lacking opportunities platform current fragmented, continuing the and adapt the remains industry brand, smaller highly officers, some resources focused to with mortgage to with scale with is of during track of cycles. successfully have dynamics. management development, differentiating leading with proven competitive factor In team navigating

program to and utility ongoing for related reduces into new As of utility appliances. designed Green introduce multiple loans. Advantage, costs sustainable cost efficient of more promoting on consolidates payments and and energy with upfront payments the bundling mortgage while homebuyers Smart expenses the Green appliances costs and to Home an we worked Advantage save purchase Depot help example, manage the homebuyers investors by Smart new a

prospective loan and our believe value building product on down resonating customer cycles, during particularly with we our officers. service, focus with relationship proposition mentioned, As through, development shines increasingly

off we a during way ongoing strong adept market efforts that shown and dislocations, are are this have adding our a As our recruiting in to result, accretive an to at we start team year.

it we our that loan drive takes over retail footprint growth time. will time to officers expect incremental expanding While build for volume, incoming

longer rates retention remain Additionally, strong. term our

XX% As volume sourced five of the over loan today. end was that of of still trailing from period with Guild XXXX year origination the officers are

Finally, we arise. maintain acquisitions should ample capacity to they fund strategic

integrating we on increased across successfully interest strong consistent sourcing, have track rate opportunities and delivering resulting normalize. headwinds profitable in as We businesses, summary, with a seller record complementary likely remain of focused acquiring macro persistent expectations growth cycles. and In

XX.X% and on the a sale the have We XXXX, last XX.X% over quarter adjusted margins volumes equity generated first on on equity years, on origination gain return of for return softened. even five a a including and return as adjusted XX.X% equity

accomplishments All dedication of directly tied and be X,XXX the to hard can more our than employees. our of work

So I day. want of for continued them to thank their every service each

I'd like that, Schmidt. to turn our with So to President, Terry? it over Terry

few on enhances financials. of going dive a cycles minutes deeper Thank across bit the servicing our mitigating diversification wanted growth of you, a spend volatility segment, our I through a and Ann. while Mary which our to

efficacy First model. our quarter the business reinforce of balanced results really

While billion was UPB of retail GAAP principal to and channel, net MSR, fees servicing of volumes, origination MSRs function up Despite value high and quarter-over-quarter contribution. growth the strong to portfolio, XXX%, our primarily declining volumes a and sourced related income, consisting of through adjustments, strong in servicing and driving $XX.X related X% servicing was related balance our fair up largely earnings fees. unpaid the revenue were income gains down quarter-over-quarter related origination

of levels and the from servicing ongoing of XX% fourth XX% also first growth XXXX, related fees. in quarter We rights retained rates loans sold the higher total UPB supporting in for retention quarter XXXX, with in of up

customer and platform, service our with our servicing In support client on and strength addition, focus unwavering along the rates. of retention relationships higher recapture

rate XX%. the rate recapture at of was For in our recapture XX.X%, our quarter while purchase first came XXXX, refinance

back, for sustainable all across underlying In continue likely MSR value delivering Going customer the our strategy Stepping further forward, remained by market slower best-in-class experience. in client-first assets rates conditions. driving our will clients trend a of on markups to we assuming performance life value interest on we thereby speeds turn, higher, our financial prepayment sheet. balance believe persist, maintaining and differentiated lifetime optimizes focused drives measured

Just yesterday, share more sheet to approved Amber allows to Guild's company repurchase Financial shareholders. financials million purchase the This Amber. value program share A of turn return the discuss to our a our the up Kramer, stock. program common our Class balance our XX that and to strong commitment Board repurchase now Chief to I'll call in our Officer, over reflects detail. to

you, Thank Terry.

comparisons be note Starting reporting. into a get a our this discussing financial basis. on sequential our quarterly on I results, Before we quarter, will

$XXX first billion $X.X compared originations million total fourth XXXX, billion $X.X generated For Net of in-house quarter we XXXX. the the in loan $XXX revenue totaled in of of to compared million adjusted quarter while $X.XX the $XX income while per totaled share, $XXX million million first income totaled quarter, prior for million totaled or net net the quarter. or per $XX Adjusted $X.XX share. EBITDA diluted to

maintain base on levels. a and margins variable trends on cost Focusing cyclical flexes origination staffing we on sale gain we with our maintaining and volumes, which remain Furthermore, optimal expenses, focused revenue.

volume across an strong mortgage excess capacity workforce in typical As curtailing process cycles. industry ongoing our during with for profitability are the in retail declining of cycles, on we is focus the maintaining

quarter adjusted a change due well interest due as again non-GAAP value of MSRs million figures rates, $XX.X to G&A to million to in $XXX.X a as first in of acquisitions, expense. reflected which value for the a favorable results, contingent is higher to as Turning fair exclude fair change liabilities benefit

gain to primarily a markdown related RMS, the quarter. you in As the earnout sale on fourth which the contingent first may similar volume quarter, trends, recall, and acquisition continued of softer our margin we liability component of recorded in reflecting

our basis originations on of increase up billion for on in margin fourth versus from the first total basis on originations. originations funded to billion sale of of Focusing in of on our at primarily Origination due XXXX, the loan an was segment, XXX quarter timing XXX points $X.X sales gain funded $X.X points came quarter,

volumes was to Our pressure. adjusted billion reflective on basis adjusted the the gain and loss continued volume compared unfavorable loss margins, XXX totaled through lower due seasonality. quarter The volume margin to rates basis the quarter, softer first of to was quarter-over-quarter margin sequential points rising at in decline in down X% points Pull-through $X.X sale through prior-quarter. XXX due on loss pull

of prior-quarter. basis overall as Much the our to generated in income driven increased segment, growth valuations, of from rates declined. interest of in X.X servicing Servicing we XXX multiple, million the [ph] with by $XXX net the was and increasing MSR first Turning to out points million quarter-over-quarter quarter, $XX CPRs up rising valuation

balances, higher $XXX.X quarter flow. for the the value servicing XXXX, on is $XX.X For in we in gain unpaid growth which compared principal addition contributes quarter. This prior to million additional of strong recorded to million to fair to first a adjustments fees cash MSR related

strong balance our and Next, remains sheet liquid.

book XX% share sequential we per perspective a up totaled book cash by $XX.XX. quarter-over-quarter, first XX while million, tangible while used From cash with and share as to unused of excluding warehouse on pay March value billion. billion of valuation lines the equivalents, down a lines, $X.X funds $XXX quarter, was the of $X.X end of totaled of per basis As credit value $XX.XX grew capacity XX% to warehouse our

a that opportunities the origination fund cash Turning originations stronger balanced strong of strategic growth complement M&A to Moreover, business. retail we light channels generation to they reinvest loan in capitalize capital organic in continue is to management, liquidity outside compared model excess capital on in to that us business our our creates arise. to should and flow and position maintain puts

generated April. of $X in and originations loss we through billion billion $X.X Finally, adjusted of volume loan pull

we with likely of focused of margin, still in first more April margin margin unlocked at moment. on the the At for trajectory remain are Given trends open said ended, for that our high in process margin near-term sale the quarter indicative well level a volume just gain unique retail with believe calculation the gain month challenging to short-term. pricing purchase the a the in the finalizing given the up sale call disciplined and to the positioned continue we Operator? perspective, questions. from strategies. our and remain originations on industry model will And Having we that, outperform

Thank comes from proceed Our Instructions] JPMorgan. of Please with question. [Operator your the Rick with question line first you. Shane

my Hey, guys. Thanks for this taking morning. questions

purchase of what have between you to the volume, Just homebuyers? look any seasoned -- and sense your you homebuyers first time do is at mix when

Hi. homebuyers had in homebuyers I Historically, Mary to But -- people down this period, are buyers on we've deliver the than are more driving Ann. are first more a lower products investors cash prevalent, this it's time first but believe to so affordable or that is market. the little. working working It's time

some So get was. on there to that it focus where to trying back is

it. Got

now shift people market driving of overall seeing the liquidity So right mix are some what we're how is purchasing a homes. in terms the excess basically of in

cash buyers a very price are that the of that Yes. the sales higher clarify I today still have And It's more a want just to homes price. low number. overall to risen

Got if term? on assumption recently the can your heard quarter, it, first is the go okay. I in where for talking as the mentioned the what longer this view about MSR yesterday, specifically, speeds some And you you second. about speeds When and CPR but valuation NBS apologize single what is prepayment think as and We've investors digits.

so can as would very The don't And go cycle. the we talked paying that earnings it we much X.X, think happen off. lower natural is just CPR lower last than in because about of the call. that's And low, with modeled

from I about So that but experience. to historically. what go this single we're think our but is it the in unprecedented are digits could seen we've the in now, some times, compared know lowest that we

depends say know. as go a would on I inflation rates where you and lot as well,

this me. tired for at in. times all think I it we're live That's Thank point, unprecedented like, probably we it so you, seems guys. of

of comes next Our your Wells proceed Paul from Please the question. with Fargo. question line with Fandetti

in I on you Hi about a if more talk gain trends little April. the Amber, bit wonder could sale

Just do be that that your is think to -- you you lower saw clarify, in than what they'll sense QX?

in overall down trend QX, quarter. within guidance and go in but based saw we providing the not QX, did what the it We're on QX

the continued that's you pricing indicator margin the near best from I margin if pressure. on the lock-adjusted bottom. not we’re a And necessarily just So seeing think of through, that look we're pull volume, the standpoint at competitive

Okay.

you the term the you several -- think So do think it's tell, lower over so? to gain trend that could on sale in obviously margin hard the months next near but or continue to

capacity. possible. The are that are the that the across all think excess the that's I companies key industry Yes, is shedding

the So continue. that started in QX. QX. stabilizes, and It's is until And going market in that rightsize continuing continued pressure to we

Got do mean it. you -- And then balance I your how history.

stock, just you tangible do track with just buying great is How where the acquisitions. a versus of price given opportunistic had today balance You've record back that book? share

still still stock makes plan right our the with capital Terry. just line allocation We're of as Obviously, is repurchase exception pricing, with far the This as stock -- sense past, is it of announcement. in this with the stressed the that. a for is lot I'll way answer shareholders. now,

a to and thing thought to thing smart to are lot there's right do that we M&A in side, stresses the the But we M&A with do. the And on so industry it going think was opportunity continue more at a we now. right looking to and actively be the still

we're intend allocate to so there there. And still still capital we out and

you. Thank Right.

comes Our Cranston Trevor question your from the Please with of with next Securities. proceed question. line JMP

morning. Good Thanks. right. All

current the purchase high the here, outstanding cash specifically highest from of kind the Thanks. numbers how over has and refi? in terms can quarter market you Historically, mix In the some of below the given think first could market -- rates? the mix much you looking April ever the Maybe And is also, Guild's how mortgage numbers what of forward much was and next quarters. of say couple of context. mix out, get been give maybe to origination the experience purchase us how

Amber. This is

So term than less and X% What can in. now. jump running, we're is rate XX% right in anyone X%, rate cash that I'll is out start seeing term versus

a purchase is for And out percentage so than to few do at XX% the We've NBA cash so shifted of of NBA year. so forecasting The higher in rates with been purchase it's to refis the toward increasing about typically And definitely the refi least or up a we by the the XX% much. XX% run XX% overall. that XX% overall. points,

you. Got

And on follow-up question then helpful. sale a the on that's gain on margins. Okay,

to what first the able pull-through You that sort the mentioned Are trend just to give you say looked a say like? downward of was, throughout relative to what in margin it of kind January, of quarter. trended adjusted the March sense

quarter, don't February. in early because We dramatically provide within happened really the drop the the it or did rate changes but information mid-January

were on versus our gain locks second adjusted coming sale XX it volume can shows as point was the look drop. which a the down, you pull So you QX margin significantly basis see through quarter, in lock if QX half of at in

that So saw the quarter throughout first that we overall.

you. Okay. the Got it. Thank appreciate I color.

closing the Ms. the to like are queue. to Instructions] There remarks. questions no further in [Operator back I'd hand call McGarry for

day. Thank next us And and today to updating for on joining a look we great you you have forward call. our

gentlemen, you and your Ladies this does Thank conclude participation. for today's teleconference.

have You may and disconnect a your this wonderful day. lines at time