loanDepot (LDI) 9 May 232023 Q1 Earnings call transcript

Good afternoon, and welcome to loanDepot's First Quarter 2023 Earnings Call. [Operator Instructions] I would now like to turn the call over to Gerhard Erdelji, Senior Vice President, Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining our call. I'm Gerhard Erdelji, Investor Relations Officer at loanDepot. loanDepot's XXXX discuss will we first results. quarter Today,

These future like everyone forward-looking statements that we performance regarding begin, be conference of remind would I in financial statements on and deemed forward-looking rate limited include sale Before historical volume, this fact company's volume, origination other not and that lock and gain to call margin to available on based company's operating guidance statements, to, All are periods. statements including, statements expense expectations current trends. pull-through the but the weighted our could than statements are weighted information. may pull-through

Risk Actual at tab. will SEC. be differ transcript Investor risks Factors materially our call results filings due A may Relations company's of website that to this the future and or statements for under periods from other webcast these the are and section posted with the Presentations of the the Events forward-looking factors investors.loandepot.com on in described

today's Chief Financial loanDepot On results, to questions. and overview Flanagan, and provide to well our Frank Patrick of financial answer President Executive an Officer, and as call, operational and quarter Officer, Martell; as Chief outlook have our your we

Investment Chief might Mortgage address Jeff any We have remarks. joined by questions after Walsh, to are also our DerGurahian; LDI you Jeff and Officer, President, help our prepared

to started. Frank? it to get that, with Frank things turn And over I'll

cost and I today's sale. with as conditions, you, forward all our Gerhard, the on Overall, homes quarter available our as joining market the sharing call. a interest and grappled outlook. lack first year expected, impacts look rates, participants of Thank of mortgage my for and you on results thank this remained to all us housing the challenging of inflation perspective market for higher persistent for virtually

executing backdrop our focused these loanDepot XXXX has conditions, challenging strategic Vision the market Against on team against the of plan. stayed

X focuses XXXX, with in lending. on rightsizing anticipated business originations market quartile purpose-driven on and achieve transactions set recall, and to Pillar Pillar X to which internally transforming money was line targets operating emphasis drive aggressively has may calls pillars. XXXX, Vision expanded announced in current purchase our structure X you July first As an performance. with conditions cost our for

generating covers investing processes business and organizational and in critical X And Pillar quality profitable finally, to our growth Pillar to platforms relates and initiatives operating and X operating structure. delivery. best-in-class leverage optimizing support

We value longer-term are which the plan, continuing into creation. to losses and place narrowing components, execute and market XXXX essential leadership Vision support will believe against putting aggressively our our we

of losses Our growth profitable were the focus key of revenue and behind reset quarter-over-quarter. on our narrowing substantial operating the our drivers cost the structure

in grew first the by the Comparing net $XX reduction XX% of and million. XXXX, in costs our of a revenues resulting XX% to fourth to quarter losses quarter XXXX we X%, reduced

net million reduced adjusted in from of to fourth $XXX quarter and expenses. year loss revenues Our this $XX million in the on narrowed higher the year last quarter of total first

our quarter market-driven during of than clearly XXXX million. the secured $XX well at savings This when first first with the performance $XXX first our XXXX, $XX of reductions. cost impact trends. of rate to in The despite and XXXX, impact focus our reduction million quarter on adjusted run more million optimization productivity million revenues a reflects on evident Comparing narrowed as cost of in as $XXX we XX% net organizational the quarter look year-over-year loss is from the our

XXXX. the remains Looking seasonally at to challenging we new and expect these higher the positive the continue of industry third second course drive productivity the quarter trends should results and reduction financial for cost existing well of revenues affordability over and ongoing homes our availability improving ahead, Together, to and from continue of to quarter as overall, loanDepot, although programs. benefit the as

on By believe and our to us XXXX, cash liquidity industry invest in a expected continue focus platforms our remain to to positioned balance and benefit and sizable driving people, a we position. lowering reductions capacity. are to strong XX, allow of from in Our maintaining we March continue should leverage $XXX operating costs the million as processes

cost to homebuyers revenue While our component we diverse continue are capturing of is communities. the and reorienting Vision purpose-driven A also including to reset focused significant mortgage on footprint XXXX, our around we of support structure, opportunities. pillars first-time XXXX Vision lending profitable other origination growth

Lender this have garnered this Earlier We Street us first-time year, homebuyers. already in Wall for Mortgage area. recognition named Best The Journal

in build relationships lenders partner mortgage serving transactions. life, enable lending top customers becoming for on first-time laser-focus the future of homebuyers of for will one home-related choice with America, we and believe to As other loanDepot the

origination revenue first contributed multichannel the quarter. to unique growth Our strategy in

direct Our growth lower by impacted seasonally servicing in-market and delivered all activity. units while venture the quarter, joint business was retail in our buying home

managing in finances Our or with customer provides product, their during powerful HELOC growth tool consistent experienced their for adoption the financial quarter. which also our strong financing customers a

for key to today our conclude remarks prepared want other and I support. thanking stakeholders their loanDepot team my by

remain doubt, period and of a believe for change challenging, I no important progress markets but our company. very Our also this is

We our and operating are continuing losses. our significantly reset cost structure narrow to

towards and platform. profile We channel and solution shifted also innovative up have transactions, aggressively JV and built our develop purchase HELOC new our servicing our revenue a

of several hand, we navigate believe to for million market a valuable identified rate increasingly are stronger run vectors as emerge and $XXX downturn flight, additional growth reductions almost new cash we through the cost XXXX positioned With more in in and action on company. and

us more Pat, in who call results the detail. With through I'll that, turn will take to now financial our over

good and everyone. afternoon, Frank, Thanks,

the we billion was decrease high and of the billion, of first fourth quarter was the This guidance between billion. quarter $X at a volume XXXX. of origination $X $X of loan last XX% end the quarter, During from issued

consisted of purchase in billion primarily volume originations loan $X.X billion originations refinance quarter in refinances. and First $X.X loan cash-out

increase first million, primarily revenue loan quarter increase to result volume origination contributed lock from also came rate is pull-through between fourth The revenue volume we of for by rate servicing of within rates. in and the last issued lock $XXX billion quarter. Rate quarter XX% in the pull-through represented weighted lock $X weighted the guidance an Our a volume higher higher in total of a lower billion $X from income driven and interest average increase of billion. income market $X which

pull-through provided margin Our at basis above for in the to sale basis XXX on of guidance first gain weighted points quarter came points. the we XXX XXX

margin sale quarter. primarily substantially repurchase on as to a this our reduction applied repurchase gain the due higher decreased Our and discount both provision in was activity

portfolio. $XXX the billion XXXX, portfolio to as to primarily principal bulk to now December quarter. unpaid our to March $XXX have XX, The did of servicing Turning This servicing of We as not XXXX. sales net compared of the during quarter. the any balance was billion from portfolio additions due increase our increased during XX,

operations. not from $XXX hedge increased held deposits million did full benefit increases first was XXXX servicing of quarter and interest the fourth benefit of our rates of earned in to our changes to million from $XXX We impact of custodial Servicing the quarter in XXXX. ancillary results This income of driving value higher of in so related by our income in fee we fair banks the portfolio, the the servicing primarily record for due customers. the

We liquidity. this our protects believe strategy and against in earnings volatility

interest our positions hedge servicing environments. hedging for in is the changing adjust and dynamic we strategy rate to portfolio reaction Our

our rising well servicing We defaults. protected believe is portfolio against potential

contributed end times. uncertain of a more XX%. portfolio, at generate the XX average of low these was FICO weighted was the economic average origination past XXX, should end points weighted the to revenue March, XX As loan-to-value of characteristics ongoing These X.X% at weighted was the rate the and only delinquency days due with quarter than coupon reliable and during average basis

leverage component time. XXXX base plan and volume efficiencies expectations our align to our create for of improve major lower Vision financial A over performance to and is our origination with expense operating

As the believe year mortgage market. this smaller market expense total that base will trillion approximately and for continuing shrink much $X.X this previously been we our to have mentioned,

primarily or including lower total volume-based salaries prior first lower by XXXX by Our for expenses, million personnel of the commissions $XX from both expenses. expenses quarter quarter X% G&A driven decreased and and

direct work Our ongoing decreased excluding controllable reflects expenses. which nonvolume-related million X%, and or our origination commissions reduce our expenses $XX to expenses by

quarter charges other charges, first of quarter $XXX,XXX expenses Vision related XXXX million, service of of impairment million. lease XXXX of fourth incurred $X.X Vision included asset and including totaling professional and Vision $XX XXXX $XXX,XXX XXXX fees. The expenses related $XXX,XXX the totaled in personnel-related

$X.X between the volumes origination of Looking billion. $X.X margins, second billion volume ahead to and we and expect quarter

be expect lock weighted volume pull-through and billion, margin $X.X pull-through weighted sale on XXX we basis our between second expect points. of $X.X XXX and billion and gain We quarter to between

expectations seasonally in seasonally controllable will volumes, higher of in sale to to quarter. quarter second believe to We losses narrow gain origination expect total we expenses and volume. improvement our the our increase higher us higher reflecting loan during reductions further continue help Notwithstanding expenses, second our margins that primarily in continuing lock on expenses the somewhat

maintain In gain light and preserve strategy sale and our capital reduced balance on to are current our losses of sheet until be margins market will structure management cash conditions, operating normalize. industry-wide

$XXX believe are to our of million we and what partners, tangible As financially cash of narrow financing we sound $XXX the other with equity, excellent the and continue of are million our agencies unrestricted we losses, and support relationships investors.

back it ready Q&A. we're to turn for to that, With operator Operator? the

Kyle from Joseph. comes question first Your Instructions] [Operator

modeling Just here. a question quick

expect we to trend there? to like the In towards is is terms to in-housing going subservicing left there of some would over -- downwards given that or time going that sort expense, of the X over -- be

are down. X that now, are should DerGurahian. Yes, trend wound There a it is time that This as over subservicers Jeff should Yes. tails of go to to left some gets but down X. with it right couple

of think need in the originators? of on you have the comfortable terms the staffing Or the uptick handle then hand do of have add to kind it. kind levels with capacity to uptick, of you Got are the guys you you originators terms And seasonal in any originations? with seasonal more

the to we feel estimating good positioned based have with But Yes. Walsh. well Jeff right always today that. we to manage be that market currently we're This with originators on what to looking we're profiles. We're add that the is originators the

Got it me. for it. That's Okay.

next And question Davis. the comes from John

out, is quarter-over-quarter on on it that quarter or the I caused call quarter. mention heard start on [ during to mix whether but geographic anything be ] just sale relative provision else impact, gain Taylor expectations? us the JD. concentration you margin purchase the is to the during delever This for Maybe there to

was -- Yes. there is a Pat this change little Yes, The of a bit Flanagan. mix. in

there's smaller are sale on gain loans, quarter-over-quarter, margins. points, gain jumbo as amount and in which which government of of higher slightly higher a basis on in lower originations a percentage a also percentage So sale are

just Okay. X And Great. maybe more.

you what refi Just XQ, could originations, or for just and volume based assuming mix out guidance would on of for give your that purchase great. us just there? sense expect origination That you be a cash

is This Pat.

refi quarter, second the would to comparable roughly between quarter's the purchase the we and to expect For first be results. mix

Okay. Instructions] [Operator

no with I hand to call questions, further So back the Martell. will Frank over

And always. I Thank interest of thanks today. and look, We loanDepot. appreciate want operator. team the Pat to for in as of you, the and joining rest your company team really thank everybody the all us also

continuing third make We are year. reduce all quarter progress we second we the to to executing continue on as continue hear, and you And operating focus the this to expect our against losses. plans, and of our to in

will I your So Appreciate call. with that, interest. conclude the

today's call. conference concludes This

now may disconnect. You