Guild (GHLD) 6 Nov 242024 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Guild Holdings Company Third Quarter 2024 Earnings Conference Call. [Operator Instructions].

As a reminder, this call will be recorded. I will now 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 due a number of section statements for are reports auditor full Guild's report or by customary described may Factors other filed results future the in and annual most subsequently results review Risk risks under indicative of on any differ with that to and quarter U.S. to other periods Form those recently filed forward-looking implied portion in procedures. Actual these may factors greater titled, Preliminary are XX-K expressed in materially be detail subject not the a of results and or from management for Securities Exchange and Commission.

to furnished turn refer measures be financial will over website. I'd release earnings to remarks to the Guild's Schmidt. now available Investor like to corresponding Relations call on Reconciliation financial found GAAP Terry? the today's certain Officer, measures can Terry SEC and Executive today of our non-GAAP Chief also the non-GAAP Additionally, with in measures.

joining and Good and today you discuss Thank for quarter our CFO. results Kramer, to Amber afternoon, David third Neylan, strategic everyone. our me With President update. us is our

successful for also market We through very well our are of share but we as Guild the better-than-industry the is with pleased in from execution growth the building, not invest only we're benefits the with to our downturn. and third quarter positioned strategy normalizes. momentum results the market continue to see

in quarter model our the strength our origination third $XX.X segment, the demonstrates in and delivered X% as origination quarter net business. the prior recruiting. the business favorable up sustainable growth, as income the achieving of the and year. highlighting we a which positive we by our $X.X generated which performance, demonstrates XX% start robust This profitability leverage of as retail our second reflects well from in With from me million operating adjusted positive business. billion our of of We our trajectory sequentially our the strong performance and retail Let from of deliver up quarter, origination of acquisitions organic strength integration successful results

an rate We also experienced in pull-through quarter. lock increase third adjusted in due in volume part the declines to

us business with market model Additionally, cash originations of focus strategy flow. reliable more balanced purchase our our allows coupled on to a retaining servicing with generate rights

prospects. several our at there our growth are about outlook, Looking optimistic are reasons we

we've Guild the and the clear for First our of and foremost growth realization through is acquisitions differentiator organic a platform been and building recruiting.

expect the of retail the regardless ongoing of benefit rate in leadership see our the environment. to business origination We

will should and business growth industry production new of environment continue to as expect gain the enhanced who more see the also share we with we a Guild's favorable technology to the see of time, our more loan rate do benefits While Guild benefit into offerings. over of even tap leading and product the increasing officers

profitable long-term achieving share continuing growth market on and also remain are We gains. pursue focused to

While with strong and recruiting acquisitions, will story we Guild robust organic within industry. be prospective remains opportunistic the reflects resonating the

as members. In to capitalize brand platform strength ability we market our they confident the attracting positive our and With summary, strategy in quality many the arise. our of demonstrated are industry, in team on and opportunities we're

on more performance downturn and improves. With for to the investments turn positioning the are positioning. during David? our to strong I'd for as that, details us call David the outlook near-term share Our market in over market like

Thank you, Terry.

for business life on the retained and the customers Our retail strong our originations consistent demonstrate building servicing focus performance and of our benefit through purchase strategy. profitability strategic

home on our lies Our our in ownership us and deliver which neighborhoods engagements, the promise to and of country. community in allow across communities the relationships customer advantage mission competitive of

a continue came developing piloted home excited will results. regard where intend goal. We're communities X%. this of Guerra loan the initiatives our directed Freddie select focusing considerable to to benefit unpaid begin put portfolio that ownership. toward to rolling recently we've have programs, our homebuyers future. With our she an could towards of with We've Alongside Mac our and quarter we attainable over from a hired approximately around in Nora's resources and who new on expanding in and Nora initiatives, this She time talent at affordable with balance outreach the underserved longer-term great from out be lending. of We policies, decrease rates opportunities across country to to program focused more serve Louis additional outlook, and markets program identified on above St. financing national also as portion rates

are have loans future of of the continued confident in positioned customer provides our We've disciplined benefits for portfolio. our significant expense However, business. retain the We and model. that we well the favorable at reliable also balanced the maximize opportunity won't within in to in is loan as should prior see invest earnings we demonstrated to we allows which our of technology, servicing, rates, and a which officers our business amount we our Guild current will opportunities around continue with cycles, share remain grow the remaining uncertainty and to market, current economics. Even for

our we built good relationships life strategy. support customer providing which to that fundamental products service, are customer on the right customer our long-term for are and Importantly,

average Zillow our that proud and by of most with out We recognize has the net demonstrated Guild score customers this promoter an stars. lender recently become XX.X, of as X.XX our are five reviewed on

to until will delivering years. In well provide will shareholders. I'll platform over optimistic further of inventory more detailed Guild available, a value growth committed that inconsistency Amber in becomes positioned quarter be some While remain the as we made we decline there opportunities We're over Amber? rates to market past the over see and the hand continue to have are financial believe capitalize home enhancements our few realization future growth on and more trajectory. customers we conclusion, is quarter we who still to we anticipate and overview. the and about excited now our

you, Thank David.

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

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

proud origination income net we report million, of made environments. capture through for market the that we ability a profitable are the business demonstrates quarter originations market to growth have despite across marking our volatile to Now, conditions. turning to the realized organic This our both ongoing acquisitions $X recruiting and segment, a as we and segment

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

of portfolio a our downward million, loss net of We segment, reflecting quarter. $XXX servicing our compared to $XX of The net MSRs $XX in to million income grew $XX adjustment due the of reported decline. loss was valuation the billion. interest million rate primarily a second the For to

refinances. the ongoing flow, time reinforces and valuable for servicing Our servicing both portfolio segments, combines future for hedge our cash our purchase rate and continues model, for the provides loan business natural be to recapture, life which for originations, higher opportunities translate source decline into a strategy. Furthermore, should over as customer originations it and

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

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

times prudent strong $XX.XX the while of was value management. $XX.XX. tangible was financial was Book quarter per net book per at leverage a Our end our two end, quarter of ratio the share indicator share at value

our value confident long-term in strategic making market We to proposition. navigate our ability environment simultaneously are while to enhance any investments

shareholders, XX,XXX shares addition, In during average efforts third stock $XX.XX we per at we return continued approximately share. the repurchased an price capital to quarter, of our to specifically

billion $XX.X we of September million lock generated the In loan was originations volume. of remaining pull-through repurchase and billion of $X.X XX, adjusted million there original $X.X October, authorization. $XX As share under XXXX,

by is a be some could our near-term suggest growth close market significant market the and share year-to-date as dynamics there marked year, segment. origination performance out that While variability we encouraging, profitable

our long-term life. from our in customers of strategic anticipate creating our platform, for acquisitions, goal supporting we benefits organic and forward, Looking expansion, all investments

while than to will accelerated us market questions. However, over our for pace expected. up for the fully that, a we that time growth It continued time. With Operator? confident growth, the expect can platform and are recover call we market at slower deliver acknowledge the to continues to open the we take we'll recover for achieve

Hagen time, session. from with be question [Operator Eric we question-and-answer this will Our first a Instructions] conducting At is BTIG.

of that been since the the has bit the of than looks and of and quarter were September? it mark surprised the mark seen bigger size end of of maybe what were, other from in with inputs The rates little period specific we've changed maybe the curious fair how servicers. more value backing in also up like $XXX some a much by million just you if the I'm recovered the was some

in. chime Yes. David you Amber, and can

Sure.

tenure was was XXX, it tenure at and the the where XXX, at The to first it at of if at we're and XXX, about July. today you was around back is where look

that gives continues idea of definitely it an you impairment that the to at going is direction pace. this if this reverse So,

So, more? Amber, add you to want

rate queue. had a obviously rate you look the we and back we terms We shocks, of going volatility a on can didn't in Yes. just Terry rates at market changes rate in it's QX-XX, look change, similar you seeing the do way. change line if today, It's overall. with our the aligned I was shift but see to could other the said, shocks change. as as that things happened, of you and really change, that in are then at with just which would what and based I We is the say rates, and October, expect with the rate add how changing in

rates margins here, the of end have obviously mortgage how mean, since but backing you respond seen up I September?

We've been I in very we're purchase as of and margins business, well steady. and longevity the margins. pretty Our far bodes been steady the have that so the as think

add the Yes, and there market just usually fourth and it anyways volatility significant. in is quarter, In I quarter, would the on is fourth that. the

might that I think locks Terry in you But the overall. with at margin margins we just as the see steady. our differences level, some our branch long-term is base mentioned, have

last your quarter? production during the How Hey, of came one. from Academy much

disclose Academy what specifically about we XX% were our year. prior don't they on We based from running the acquisition, When acquisitions. volume did of

is question with Derek next from Our Sommers Jefferies.

the about that or Just reverse, see term, main home in in products otherwise? whether tapping do be terms equity, you opportunity kind terms product, of what in of how you're of thinking through second near

reverse tick and going recent direction. We in base in right months, pretty we're product the broad the up that have seeing it's a

there equity, an trying have good programs. option home have programs We're buyer sure stay to successful that second first-time really the and those been Our on home we've a got level. rates focused at future make buyer we that an have the and really of elevated if really so do

local lot and and opportunity, but capture in focusing are programs there's having I to as we're a the we think a presence the good of just of we keep that going lot think available, on share that grant a participating that well. market, more

near as I the be terms And on going in anything capital move what may in about, recruitment both term, given then, there just missing? rates? M&A of be organic? in Is Or just thinking How's emphasis more are trending? organic allocation just of the an to guys on you

this side, year, look On at little very has more will very, organic the stay to a been if continuing slowed start next But really active well. year. The little rates bit bit elevated, successful both. we're up it we've getting doing but and M&A a probably

it. to that arise, a be arise, been sure be is we of opportunities to advantage to that. continue plan, going That's doing very opportunities opportunistic going make because do and taking we're capital we're to base have we're do As our good to what to we've when able

from is question Trevor next Cranston with Our Citizens.

seems moved origination Can given there particularly the the that philosophically or have you about offsetting far about level? loans It isn't back talk a how rates a you're now asset, when higher are. up an side rates to little hedging thinking benefit money the bit out MSR necessarily potentially on how the rally, like

We have a hedge not bought traditionally instrument. hedged and

our been well always we're so focused and it's has hedge always hedge natural purchase production. Our with on business, for us. voted retail Because

quarter, runoff forward. so up example, as well we million, runoff can positioned ended felt our well we've the production Just the origination of tracking that $XXX increased and last We this $XXX million the as outpace were an our going like increasing still ahead runoff. long as volume pretty

want to to Amber, you So, do anything add that?

forth. some and of from back segment that There's use cash a using cost allocation better is valuations to standpoint, cost is I And We of growing believe our to we origination go about, financial just the as a can that. that it to think of big back talked hedge. the invest capital that cash. a a our the there's into part it

next Point. is Our with Compass from question Bologna Giuliano

the think the during thinking are from trend just higher, your in cadence rates. the bit about, rate curious on it in the quarter the of from will locks prepayments mismatched fourth a I'd current you quarter will might positive front obviously, lower. will the continued quarter. curious little replenishment be your the down a I'm origination be you or Obviously, perspective little terms the that fourth still on side. a October, how execution end I'm the a quarter, prepayment But could of replacement little if One curious rate. are in in be Congrats be think speeds bit a tip thing while losses fourth where below perspective,

on quarter hedge, prepayments the that Yes, not mismatch fourth the early because in and servicing high from of quarter-to-quarter. fundings from refis a origination is a It's the timing strategy. long-term there from Really, could be the and being just that. or month-to-month this

where balance, replenishes time, what replenishes is really over and we The So, see runoff, the Terry production. servicing the production it that. describing was we know that

the long-term is focus, have mismatch if So, timing. one a quarter that a you little I think on it's even more of bit

rates more quick then, your curious Would it on use a I'm trends point. obviously, point? you is Hopefully you're just sense this the but in much reactivate thinking about in lines how excess to if focus cash this you're this of one, And might Or warehouse focus curious well-capitalized. in some cash, having the more at M&A think important M&A? growth movement the I'm space? at on organic make

year-end, I have for I this think rate some activity. prolong, that if still think to organic if a of We more of lot is lot that M&A still side and the of stronger enough advantage to sure. we available. will that the there it's continues going country plan pockets a do through we to don't so be there's be around where of out have there. Again, a opportunity take presence increase

ensure as to as opportunity we add, to borrow keep that else prepared mentioned prepared our would excess any our We comments, lines, based had anything my limitation. in any and that that our comes, capital. fair just now XX% right We're with leverage can if prepared on up the credit in MSR of room on about that lines on would well low needed. be borrowing market I strategically borrowing-based capitalize use the of volatile $XXX that was more I need MSR And value so comes if significant million we're

Schmidt to the for I we like call would gentlemen, the remarks. to the closing end have back session. and turn of question-and-answer reached Terry Ladies

speaking good Thank call, everyone, joining us supporting quarter. Have forward and and we the to look for next you, a night.

Thank This you. concludes today's conference.

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