Guild (GHLD) 8 Aug 242024 Q2 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Guild Holdings Company Second Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this call will be recorded. I would now like to turn the conference over to Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone.

performance like may everyone regarding contain expected and I'd this comments the begin, and operating call periods conference certain financial we to that remind on company's industry Before trends. future for forward-looking statements current based company's These statements the expectations. are on quarter for auditor full customary and results review indicative of any quarter to portion procedures. may Preliminary are be subject not the of results and management

the a forward-looking the number greater Securities from Exchange for risks those differ expressed Report statements XX-K in future due U.S. Guild's by implied detail Risk on results factors to Actual other and Annual and in materially other these of in or recently with that section periods Commission. or described subsequently filed reports most Form Factors may are titled under filed

refer are available Additionally, measures corresponding the certain release furnished the today's measures measures. today in earnings non-GAAP Investor GAAP financial non-GAAP Reconciliations our also will with to on and remarks Guild's of Relations to website. can found be financial SEC

like now Terry over to the to call Officer, Terry? Schmidt. Chief Executive turn I'd

you CFO. joining Good Neylan, thank today President; David second Kramer, update. With for and and us me are our to our Amber and quarter afternoon, results our discuss strategic

growth business. acquisitions There our stronger We for market housing are and retain successful gaining evident three, excellent clearly execution remaining results. the Guild this of share remarkable is rates in One, on. two, quarter our technology platform; referral our increasing life not investing share, industry of improve. pleased disciplined The to in that market are positioning people strategy Guild's deliver recruiting; to service for downturn share earn accretive strategy. but through as elements are even and organic continue results, and strategy are during while and customers X delivering very and to we demonstrate and our delivering further second only By to we which the effectiveness performance consistent, key the we our

$X.X $X the reflects quarter, driven In quarter. million mortgage originations impressive in quarter, the prior to business This our delivered XX%. outpaced XX% of quarter. quarter. billion This second second the $X.X and income industry or a adjusted origination the XX% first reached increase the substantial primarily year QX, billion, market commitment second In increase In of compared unwavering and net model. for also from to retail prior quarter experienced the our we share underscores estimated business Moreover, rate was the compared channel. a we the of we in to gains our at again total by our million $XX.X strength significantly growth the growth volume

to servicing segment. Turning our

billion to a to servicing Our all originations hedge complements $XX.X business providing the recapture to our retention from team our and quarter and unpaid principal grow, at balance Guild and flow our continues market our XXX are positioned across cash well originate Combined business. system, cycles. we with The end. sales increased client natural local

continue to reinforce in outsized and our to drive confidence ongoing our investments our technology in Specifically, growth. ability platform our

their for innovation indicator end, accuracy. strong a information this quarter proud related Overall, team members partners and team frees customers GuildGPT. believe up efficiency, questions. artificial This the easily debuted have power we on that company platform an To speed guidelines products, This serve with to internal recently access new and our of allowing and for we customized to AI our are speed delivery standards and of intelligence to sets Guild. assistant of is platform, instant

growth successful strategy. being value execution Guild's results, see impressive clearly these created of we can our Beyond long-term the by

States. This serve quarters. sales a network and their our officers large the opportunity creating an coming further who Our are of acquisitions force loan represents investments United and to the live to our organically growth expand communities accelerate through in across

a have to for Guild portfolio platform of full realize achieve shareholders. and the businesses our as create platform starting as the only capabilities, we We're our gains, deliver ability our integrated to operate our power we to that market them long-term life. confident conviction customers We servicing our for share in are and grow our execution strong continue to strategy, value

With and trust to your for David? you David. the Thank will I continued call that, support in over Guild. turn

and performance large the demonstrated marked acquisition, I'd quarter, In and we you, began our up as Academy Mortgage. second some origination this After Terry. on segment our additional like reached progress. adjusting our Thank perspectives to strategic even share profitability contingent integrated ramping liabilities, recent channel direction. recent for most

Guild's quarter, in challenging increase market the conditions. into Academy's personnel were our profitably onboarded the volume expanded resulting and the to share systems our successfully X,XXX origination team ability gain During even in demonstrates team capabilities and market of of excess

our purchase interest Regarding and dynamics XX% our when recapture unpaid decrease. to With able our new Servicing more opportunities portfolio or segment, business portion to markets as rates and we positioned above are principal rates X% opt loan above a for we've housing benefit X.XX%, at as considerable of refinance well rates more identified of approximately balance properties financing homeowners to than stabilize. new

our uniquely marketing between refinancing sales The our and growth. integrated sustained billion us sales Beyond synergy provide and service home team portfolio believe for our positions we infrastructure equips options, $XX purchases. for our future to XXX servicing superior platform Guild technology future

signs of enabling continuously or opportunities ongoing buy, analyze to for and proactive relocate create customers life. for intentions sell to portfolio our engagement customer We

strong benefits of execute we Moving range, loan additional leverage believe of all forward, will volumes growth growth share as beyond we accelerate platform team we exceptional our service our continue to channels. we we the to coming capture realize brand Furthermore, diverse market networks we additional to their integrated see in and across will able product as believe years. of the technology, strategy leveraging Guild's expanded and historical our officers

the strategy, landscape a market review. well and more detailed hand the now to Amber, differentiated now model and continued proven that scalable dynamic platform our expansion mortgage for Guild and future. are confident financial I'll into who provide In summary, over will position we the Amber? call in success

you, Thank David.

is my practice, on will comments quarter As focus standard sequential comparisons. our

attributable quarter to $XXX For revenue compared billion net of generated the diluted second compared EBITDA the in $X.XX Net originations income in and to net net was million totaled or generated of total compared a Adjusted share first first million quarter. quarter, loan million. quarter. $X.X million $XX in to was per adjusted XXXX, which Guild of the to of $X.X we prior billion $XX $XXX the million $XX $XX income income million

net segment, improvement meaningful in of prior from quarter. for would $X million, after a contingent for adjusting positive loss segment the we quarter. origination generated Focusing net on our the a income have the we Notably, realized liabilities,

We are segment origination pleased solid to in our while continuing up ramp performance about the acquisition. the Academy

the XXX Year-to-date, adjustments came points the lock on billion with margins quarter in compared our points was Gain-on-sale the at moves to basis billion XXX pull-through to for in was XXX points, is in is $X.X basis in pull-through funded expectations. Our gain total compared originations. margin to on compared line on quarter the and gain prior prior timing-related basis which basis sale basis prior on adjusted in sale volume margin XXX XXX adjusted and volume points $X.X points quarter. locked

million the $XX grew income of quarter. portfolio Servicing $XX our to reported billion. in million compared to net our $XX income We For net of first segment,

portfolio servicing for a Our cash opportunities for for be reinforces recapture continues future loan Customer source valuable our flow, ongoing it to strategy. and Life

invest in continue to sheet provides with the us remains our strong and to possibility balance Our growth.

Turning to liquidity.

capacity As $XXX Maintaining of amounts based base totaled well-positioned unutilized was XX, funding to $XXX limitations. mortgage million equivalents loan a was and sheet the June a continues servicing balance lines and credit rights $XXX while million and be for cash key unutilized Guild. of priority total committed borrowing cash on million,

excluding Our as to leverage end, indicator liability management. was by been defined of equity prudent quarter which tangible debt, X.Xx updated be at strong divided financial dubious a ratio, has our recourse

of manage book $XX.XX. current to operating share share $XX.XX, are net additional allowing was value while value. create challenging the we to well tangible believe value more positioned to the while Book the per invest end both to us per quarter was We environment at

to we to In addition, continued capital shareholders. return our efforts

approximately stock of per quarter, shares price $XX.XX share. second the repurchased average XX,XXX during Specifically, at an we

million As of $XX.X remaining the $XX million original under was authorization. repurchase XXXX, share there June XX,

in announced last Additionally, we also June, quarter. that we paid $X.XX per out dividend special share a

July, we and volume. In of $X.X loan $X.X originations billion adjusted pull-through generated billion loss of

with of the pleased the the achieved momentum are gains year. We meaningful as half share move market we we first positive through and

we we creating it combination That our of we organic longer investments clients the will from for and expect growth, and market platform said, expect with mission growth the life. that realize fully market a we continue realize term to while growth, benefit time to will ahead, accelerated show call our and look Operator? platform headwinds turns, the acquisitions, Guild remain, we'll we ongoing that, we of until open for as up As the take anticipate. And questions. cycle

Instructions] with from Fargo. first [Operator The comes Don question Wells Fandetti

term? was little expectations sale and about lower talk versus QX you the that's QX. near Amber, bit and in margin and on July trending August, the where gain a dynamic Can in

Sure.

look So if overall. call, the points we're the as you XXX on at basis noted year-to-date, I at

on basis to are differences that some margin that were timing the and last points, That's quarter. there seen quarter. year-to-date any say pull-through We QX, down led guidance I the haven't we've to nothing volume we we at to XXX indicate had in our But So in this operational that would going significantly lock that's adjusted we what that don't XXX there's gain increase But forward. where that sale seen provide differences overall. -- XXX.

stepping So go QX? into as we down it's not

year-to-date, basis if mean historically, I XXX No. we're points. at look you

timing that you think were with last -- so out aligned And that take year. we're I if smooth we where out difference,

still on are Got kind the a past are Obviously, you Academy Or where acquisitions? of acquisition it. was Are that? there halfway point pretty opportunities? for on And you. meaningful we

M&A down is strong. still organic -- still a bit. and seems space -- like have organic, slowing pipeline the is slow And a to side and M&A it active -- but the the starting the in We're side extremely but

continues like the our community, the industry, So gain to steam. feel brand I in

And teams to so lot and originators that of talk there's us. and Guild in loan story a to want officers individual interested of hearing the are

continuing seems more. be up more that to ramp So and to

next is with Derek The question from Jefferies. Sommers

quarter. Nice

in a with view of $X.X July, $X.X bit process and the in do is kind there that is to of originations locks of you go on Academy of Just is Or acquisition? those billion onboarding numbers? fully that -- little ramped billion still

Amber. ahead, Go

of our Okay. are loan everyone terms is into as Terry They're mentioned, last in new early onboarding officers, our integrated numbers recruiting, platform quarter. fully integrated but in overall. they But

the of as as in kind at the far the volume past. they're And they same were pace

were size I and between think staying they steady. of XX% volume our XX% that's pretty and

integrated pretty still growing teams point, this they're yes, organically. at So but point, on to larger Amber's with bringing we're

still of should the some during see you So growth rest the year.

Kind it. all helpful salaries of And to commissions, trend just expense kind there. incremental any will would similar color. of be color the how then a on forward helpful. going efficiency Got of that That's question related and

cost you basis of look our end look XXXX haven't origination whether -- at at we're XXXX, we since and you overall segment numbers Yes, XXXX. the or points, loan if in it's seen per sorry,

volume the scale of expense driving incentive the our strategy you're working with going volume increases, as and our said, cost per That and to down. is loan have right, comp. being So variable

be some our capacity would to an is the origination capacity hire, is But more point, I At need that excluding for So the contingent segment win have change. right, that. volume. build we some big I -- liability profitable, would increase and are showing here salaries we think -- think to

points Our basis gone in and loan gone cost has has as per well. down down

working. So is the strategy

Eric is question from with BTIG. next The Hagen

to might just to rate volatile I it, are rates been how question, expect the, relative developing if historically you that see what you about First has your call over want ask rates near and term? and maybe pull-through more pull-through what

do want you one? Amber, take to that

Yes.

the mean the going last, significant seen I in months. future, X within haven't overall. changes would we've mean range I tight to to say, what's year this a X but say pretty always monitoring I I we're We over stayed happen can't it. And

at from where we're overall. We haven't wavered

there about? historically you just seen, that kind a Is can that Okay. think pull-through guys target of rate a or number you've we that

a I that's to don't disclosed. publicly would don't to there. I give get out what to you that. I have know on want we number not back

right that call that hedging of a, you're then say is relative can portfolio, to kind it, what ratio the portfolio targeted hedge of to And on now? target you hedge the And you've products you're Sure. to right now? historically MSR what for using portfolio looking the there

just more at -- always Since our retail been really environments we're like net-net, successful we've has we've actually the that, been profitable. using platform, production always natural a hedge, and in

I little -- be past. more even the is do situation over think But it grow don't be as this and as cycle I right muted we is I And will a stack, that. think above. -- next our coupon better have I now, will because say of like in the this exponentially at of this they -- margins always think a it X% X%, in XX% would XX% as

mind that have in brought this and these their client keep base. M&A growth that And because we've additional and got in customer organic also growth, we all loan all officers

bigger past. have So going going anything we're rates had to an than to even down, related think the in I benefit we've

have in we're by boom. do add I would rate Also that that officers. that, loan prior our entire just refi MSR the XX% we portfolio And years is our historically, Yes. you back, a at originated recapture if during to -- look

have we So with our borrowers. relationships

recapture refi future helps in in terms that So going of opportunity rate forward. that the potential

The Rick from question next Shane is JPMorgan. with

we about $X.X And billion. bit Can a was that Does the right? that million. talk capitalization I'm $XX the retained about during quarter? the sound that was calculating was UPB the MSR about of little

Yes. retained. was overall, Overall, about XX% our retained $X billion

Got it.

And And at And XX change the looks again, so the Andrew, cap up. rate numbers, when Does correct? went assumption? it, basis driving that that the on call quarter-over-quarter. sound I points what's MSR maybe, it the in look like

exact I look we're rate. the cap significant we're product look mix rate using that numbers change in -- to have mean, at cap the overall, I'd same. mean, mean, making the no the But assumptions the I there's on I at our and is the the overall.

CPRs pretty and rates are aligned. discount much Our

differences. big the that's mean not maybe numbers the what's off differences. some there's So of driving calculating, from are slightly so you're I what

again, think to offline. your going the your is to that overall sale. going basically officers We'll get much basis a Okay. when is from that amortization gain associated and or we've that economics. business little going XXX business got which question how it's the of easier curious you're with you, about be a basis that going one the forward, compensation of the so impact point it's with driven a follow XXX of the for recapture because suggests I'm cost them which there Did And you the there book. But points, mitigates is loan, the that that as recapture on by on amortization? for a them going this, recapture increased up for is -- a is bit increasingly that, in will loan different, easier be an offset rate sort on we diminishes -- book -- to offset MSR be the that servicing of cap paid

for our compensation If loan the structure portfolio, our different have loan in is a officers. do we

our not portfolio. So compensation a lower in typical the that's transaction is than currently

is of higher about the -- of offset to reasons the cost talk enough ultimately that the again, and of sort margins. it Is volume, why lower one you amortization? Or

-- not talking volume I Is understand the dynamics forward basis because the reasons amortization. about I'm that the why here. to one of margins So a want cost on of that of you're lower just going

that to seem No. refi if we've just -- of just capacity refi, because a in there's all enough to out margins so to a just probably boom, efficient -- a And of slow the the revenue in transaction their last had so be through they get the lot funnel situation, due these that everybody's to see more over we're aggregators to not think, and there's down. get That when the much past we in around. more scaled type X the was won't this margin system become go adjusting the I adjustment loans years the down want

what basis and Q. to sense. officers recapture it's your the makes be of likely economics being a trying is, external on I the from all-in that are of many book. -- but out on one the goes And questions, really so I of an apologize the refi to the your asking unit than That cost guess for lower away probably refi sources an allocated end benefit at understand I'm

On say, less. the be I the in you're a loan a past, the amortization would net-net, it per basis, dollars would more basis. origination But cost, would adding for if make it always captured the be -- on we've in side to business that, up

what I know You mean.

be new X of There's there and Understood. are the recapture business. look, to going going Yes. business. the be mean, to customer parts the I

to additional The to have just and incentive book. go going from not sit officers here the find presumably out recapture. do away every and customers You're

right. That's Correct.

And pull-through on wanted adjusted locked I the to just jump question. in volume

XX% is that use to our locked get locked rate Q. -- the we volume to in from publish we Our pull-through of -- that is adjusted on rate is which our volume,

you. Thank

no are further the I there conference Schmidt hand remarks. now to over closing to Terry for As would questions, like

to keep and trusting along, value just continuing Thank we'll we'll move working platform you thank additional say quarter. and wanted grow for on see you our next and us, you. shareholder as we I to provide

Thank teleconference. you. concludes This today's

this your You for Thank your at lines may time. participation. disconnect you