GHLD - Earnings call transcript Q2 2021

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Guild Holdings Company Second Quarter 2021 Earnings Conference Call. At this time, all participants are in listen-only mode, and later we will be conducting a question-and-answer session and instructions will be provided at that time.

As a reminder, this call is being recorded and I will now like to turn the conference over to Mr. Kim, Michael Kim rather, Investor Relations. Please go ahead, Michael.

Michael Kim

morning, good and you, everyone. Thank

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

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

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

Mary Ann McGarry

for Thank everyone. afternoon, Michael. thank us. And you, you Good joining

wanted to their Before we second all quarter results, work. Guild employees discuss for thank I hard

by is Our success. best discuss how the mortgage and Guild I mortgage at was for who President; strategically will people continued I as are for positioned growth. Terry news. by one of our companies XXXX the drive am in Guild our national heart Guild am of Schmidt, work named proud joined that to

businesses be slightly led due deliver market by Yet David able remain And to doing results Margins Amber our profitable quarter. the our then dynamics was Chief the with a Officer; personalized individualized the market. growth sustainable continue effectively experience to these compressed dynamic the It confident forecasted Q&A. review MBA. in oriented can the some year as scale. by compete us anticipated we wanted produce provide continue clients We're Neylan Guild on second pre-COVID competitive as where We Financial We start pressures. different and others. I we where refer returned will division and for we in for financial sale on rising that Chief Officer, to for above models. a servicing - by we Guild perspective successfully of adapt We part will margins purchase the market is across and can Our to and and and This increasingly to the will Operating levels. years. second quarter. to joined to cycles providing many XX will lower focused been through service gain Guild have that against balance results Elwell and

market maintain For our of are because lenders best we online peers. compared consistent adjust, by sensitive example, may Mortgage to and in model ability various and Year-after-year to we were June, less America. cycles our the business named of durable that as to returns Professional volume one our

our success servicing. key to Another is

million from scaled XX% principal to unpaid June loan servicing With of $X.X is portfolio Our to billion fees $XX billion balance as in year-over-year XXXX XX. $XX quarter. the of rising second in

loan retain quarter. sold rights in platform servicing the servicing We second of of to important XX% client retention. Our is total

compared while the for were $X.X with adjustments the basis. functions originations Year-to-date were strongly billion a half MSR servicing the rates hedge rise, peers. per as differentiated second strength originations of up $XX compared quarter, to X.XX total mortgage natural and funded In the million XXXX, $X.X volumes a sequential were platform on earnings favorable share showing of to originations of interest We generated the most adjusted purchase billion, net to quarter. to first assets. As of up valuation second our income XX% adjusted

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

Terry Schmidt

you, Ann. Thank Mary

As strategically for acquisition update previously providing how of and is mentioned, residential mortgage positioned to in on our discuss Guild growth greater I'm detail services. announced going

the of is many which the in quarter. that on One our for retail primary our differentiate focus our attributes the channel, second from skills of originations accounted XX% peers total

builders, includes loans that states across with through approximately source Our an XX of retail and footprint established partners. and network other strong X,XXX realtors, relationships officers past maintain clients referral loan

of With or additional officers. local services approximately in RMS, XX the a third states loan we with start an by acquisition adding mortgage the residential closing presence XXX quarter of will accretive the

originators. Additionally, held for our according and volume to coaching leverage ranked at would seven have company’s to higher Inside We'll combined quarter. robust non-bank number also which strong loan for and to platform programs productivity Mortgage XXXX rates, technology second higher Finance, continue the XX% drive the officer for recapture combined the at

new our is business largely as clients. volumes, originations We well recruiting purchase footprint our on more of has spreads. more local has the longstanding our while focused volumes loan continuing heavily relationships through as growth and skewed the refinancing and our industry much the time. refinance offer expand mix contrast, level Ann platform typically in officers Mary we pricing are and Moreover, we commoditized, on more to dependent consistent competitive rates service As historically remain with interest on earlier, compete to by which as In at organically to over leverage across volatile driven existing acquisitions. alluded favor cyclical

across to continue into expanded proven we as on scalable purchase Officer; focus platform to new to acquisitions our our over in complimentary Chief proprietary our turn Identifying, strategy the executing, the given brand, well-recognized our of part now financials are markets Elwell to capture Financial Amber? well markets and the technology integrating I'll Our to has believe have further DNA. differentiated many States. we and market. detail. Amber positioned that penetrated of discuss remains more call share be market We our the United presence existing and

Amber Elwell

Terry. you, Thank

generated to the income in $X.X of originations Net For billion second we versus per totaled quarter. quarter the $X.X $X XXXX, of in million loan $XXX second billion or while million year XXXX, net $XXX the in share. million $X.XX diluted ago totaled revenue quarter compared

as change compensation, of stock were reduced lower Excluding value contingent liabilities net model the and consistent income margin declines gain volumes totaled of fees share MSRs adjusted sale second and based related and and in million to function $X.XX acquisition due fair for with origination quarter. compression. on inputs assumptions, Year-over-year the per mostly well a $XX or

$X closed the for totaled XXXX while average increased up -- loan Bankers to in $XX.X on revenue XX% our compared $X.XX while diluted to points. per to the half business basis XX%. basis billion pull XXX came first the $XXX quarter the for in net half volume of locked or pull For of margins million Association, quarter, billion adjusted volume loan on the the points to XX% XXX share. loan quarter totaled first adjusted Net at XX% second of originations XXXX, from income origination originations came volume the sale the equated million, purchase Gain up second XX% of origination with close through through in versus Mortgage on margin year-over-year. locked with segment at total or Starting $XXX

of fees XX, business, year-over-year million grew servicing of total unpaid XXXX of and principal other $XX to by servicing to in for fair quarter to increasing loan quarter, $XX The billion net XXXX. the $XX XXXX. MSR Turning a our balance a quarter with second segment the XX% of million adjustment, year-over-year compared our second largely loss XX% million to reported for reflecting of June the value loss $XX as

sheet share the paying capital as and business maximizing We second warehouse highly originations, the line On as in part unused of June X, $X.X to acquisition including with Our on focused quarter. shareholder billion of use capitalizing remains cash well during consideration lines of remained returning to billion strategies, excluding shareholders. opportunities on allocation a when cash. $X reinvestment credit evaluating paid liquid long-term ongoing with balance and XXXX. well is and we with strong value of closed pay RMS as $XXX acquisition million million further July This funding $XXX per funds of of capital XX, potentially and equivalent, the capacity $X.X dividend as to as our warehouse of after down cash

not broadly as on providing more we current did as the update While basis. MBA well in sequential to a forward-looking we around guidance, to were want XX% quarter environment decline the on to provide volume forecast on the perspective more quarter an specifically some third overall volumes, date

Focusing on down were XX% quarter-over-quarter applications purchase refinances the were while XX% total up as applications subside. market, our

dynamics. ongoing For generated intense approximately through pull originations include $X.X tighter and competitive spreads loan we $X.X total billion adjusted of volume locked Furthermore of with headwinds margin billion. July,

be full past, for half up the further the the with that, of sale gain year in of margin historical open the XXX basis on discussed with year we've As Operator? anticipate long-term expected points. for with in our call consistent compression we'll the And margin questions. to approximately back we average XXXX

Operator

Thank you.

session. Instructions]. begin [Operator now will the question-and-answer We

Shane question go first Rick is from Our Please JPMorgan. with ahead.

Rick Shane

questions I hope taking for Thanks is Amber, everybody and guys my welcome well. back.

is Just one currently gain quick question between at the the and of we cash on sale, capitalization mix gain MSR? look the for what me, when

Amber Elwell

be XX the a is now, cash. and then about little or XX it's right cash MSR bit points dropped would to remainder The points basis basis the

Rick Shane

Got it.

talked ask you one Is other what GSE guess, company do Okay. we changes their the recently execution. some different? Thank you. in numbers see that they that that and your quarter I And about anything how will question markets capital then and should is impacted I think overall, reported during

Mary Ann McGarry

of did homes get the we announced on investors private is that and we Mary. second the able we were but void. Because fill I very change non-owner have able pivot size, can when the to capital quickly. this to answer some to Yes, some were cap impact GSEs that our and

overly and So our really sale numbers. we lost overall gain to not a beat it's not really on it's haven't material material,

Rick Shane

Got it.

Thank very much. Okay. you

Operator

Please is Trevor JMP from ahead. with securities. next Our go Cranston

Trevor Cranston

Hi, thanks.

term, that guys be respect second just accretive be in of it results the to you you the quarter you any and in little accretive and You RMS near the financial half a expect the was can this third the profitability you wondering Thanks. if I just if mentioned provide closed. if it around maybe more specify think color remarks I for think said in you year. will which quarter, acquisition RMS maybe the the could you could of also second to with

Mary Ann McGarry

take overall. and gain mean if times can we forward-looking of can't about terms run to on I want to them Yes. historically and estimated X.XX expect would jump purchase you that high you profitable at at XXXX and talk the their us on RMS I price in, very sale. Terry We running accretion in a to being earnings overall purchase due similar can and look

that the over integration although working see so that through that so combined to would coming them we're business on their we continued perspective, was the they would drop, And From see impact would you few as some next months. see same an same ours.

And any of they change so the in don't with terms we the net regular terms expect any issues go of integration income. of through fundings in would as that there, purchases

Terry Schmidt

like purchased Guild, RMS is focus. And

they're as is just about and when they So business. our they XX% purchase run And volume very a of proxy. strong overall

Mary Ann McGarry

very consistent. been That's

Terry Schmidt

Yes.

Mary Ann McGarry

gain sale been but lower than it's a Their as little on well. consistent pretty is bit also ours,

draft So the draft that experienced the to is similar they've we experienced. that very

Trevor Cranston

or in has other aware quarters? just it but been that a question I in to recapture about, fairly particular where think it's bit quarter, the through. Okay. we was of quarter of be then guess Anything rate, refi and just and maybe still lower should That's dipped one this some quarter been that running little slightly than lower strong than sort it helpful where that is why prior it had might've why to noise the

Mary Ann McGarry

purchase increased. our percentage Well,

David Neylan

continue I a to more I slight some basis. We really based fluctuation compression quarter standpoint. the market refi to market our through on and our with focus from retention that but pressure customers outperform market This allowed is and high a a the that gain David. different that. on see to and change. for cycles in to But navigate can life to There's numbers on expect that's certainly our drop speak we don't the us ability think sale

Trevor Cranston

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

Operator

Our Fandetti Don Wells next Please go is with Fargo. question from ahead.

Don Fandetti

implies little you a us year. big the then Give June. in not there's was or guidance Amber, of half, maybe meaningful a happening which about you the a sale moderate on on on and talked gain bit more pretty a progress but sale the whether drop you about back declines the wide, in industry obviously talk can back sense where gain through decline little half guidance, the as

Amber Elwell

Yes, industry. overall, in nature as it is you said in competitive the

what see and that's throughout seeing that XXX the on average seeing, gradual nature we're it our competitive of those would so decline would the we for some drop And that where be businesses we below and basis of refinance run based margins. year around would that just affected we're affecting the points continual the and some overtime

And last priced for get markets so below average competitively that quarter we're in average that's, trough, about we're our that below adjusting drop our would we accordingly see points but to that get and we talked below. basis a would We that being number consistent year. XXX the local

Don Fandetti

additional strategically think you presence look to you were that? strong Northeast, very in you And that of about how what's a sort Got next have now it. at the if acquisitions, would

Mary Ann McGarry

the to have or purchased partner similar find as right with and market on model We're originator a people always both where organically to do. an acquisition that's And opportunity our grow we inorganically, branch goal share are and and either have continuing looking values we just in that when focus growth. we're at focused so

Don Fandetti

Okay.

So capacity? in like where feel your out build particular you need market to you

Mary Ann McGarry

I a good share. capture really, market where mean be we like in we to local can Not communities

whether So and it. going top the top fit, take the look in we if not at it's opportunity want five a the good and we're we're to to acquisition in there's to organic five or be cultural

Amber Elwell

Yes.

Don Fandetti

you. Thank

Operator

This concludes any Mary turn I to conference the closing Ann McGarry question-and-answer would remarks. like back the to over session. for

Mary Ann McGarry

you and on of us we call. Well, stay a Good joining updating forward thank the have next look for to you great everyone our And healthy. today, summer bye. rest

Operator

This concludes call. conference today's

You a lines. Thank have day. and your participating may pleasant for disconnect you

Guild (GHLD) 12 Aug 212021 Q2 Earnings call transcript