GHLD - Earnings call transcript Q4 2021

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Operator

Good afternoon, ladies and gentlemen, and welcome to Guild Holdings Company's Fourth Quarter 2021 Earnings conference call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session with instructions to follow at that time.

As a reminder, this call will be recorded. I would now like to turn the call over to Michael Kim, Investor Relations. Michael. ahead, go Please

Michael Kim

good And afternoon, you. everyone. Thank

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

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

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

Mary Ann McGarry

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

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

able compared during fourth typically year in We and of margins through we for proud in $X the prepared or Consistent to originated distribution strategies. I'm the X% the mortgage full Officer, year correspondent Operating that deliver those of fourth Q&A channels. gain sale join bringing our David the on course was after scaled driven XXXX. industry approximately nearly generated by total the Chief quarter, Neylan, relative But our our and maintained product the margins to XXXX. up higher billion us focused full Our will loans softened quarter In results with part, remarks. trends, billion; of $XX to year. wholesale our to

$XX consistent fourth for adjusted of Turning to net and XXXX, the Adjusted of quarter and financial quarter We for for the year. the results. $XXX generated fourth income $X.XX earnings at differentiating year came share return respectively. million of $X.XX the and million return our Guild. full an full delivered And we be in per resiliency across to growth two linked key for our cycles. can equity adjusted underlining profile ratio our XX% the on cycles across back, of Stepping for XXXX, factors

built a and balanced we scale-enabled First, business. have

recurring a While interest and industry, represent higher MSR on and provides headwind our assets a balance across compounding macro rates rising interest revenue gain servicing for rates with business all volumes on sale the our else value equal. flow, cash the margins origination the sheet, of

Second, business our is originations unique.

Association. fourth been purchase volumes activity purchase-focused mortgage of XXXX. quarter, provider. loans building mortgage quarter are recently in an in fourth volumes XX% some last over Purchase Mortgage figure started in overall we our favor is Bankers focus scale, of have loans, for expertise purchased increasingly in and plus our purchase refinance of volumes shift and the quarter the the What XXXX years. fourth purchase perspective, have according estimated accounted peers as business industry While a of to an loans accounted mortgage XX% the for of XX% the above to we XX flows the requisite for From of well industry relationships, shifting the

market XXXX. around lending, the business periods and growth in through historically interest same. MBA And forecasting rates. is headwinds limitations. purchased share immune said, we're rising captured inventory not refinancing purchase the isn't commoditized to of ahead, more Furthermore, volumes unlike interest rates Looking all Guild during rising steady That has macro

our validated include equity, by on and rates. a satisfaction was to of stack, on experience advantages brand our service volume cycles, enhancing our homebuyers. Power and award And in competitive recently resulted in client customized has personalized J.D. study. XXXX highest durable across compete the This product market by proprietary client mix, for Our while service its technology providing retention service. and in We consistent focus efficacy customer exceptional service customer referral more

Turning distribution. to

remains differentiating key factor. platform a focused retail Our

We infrastructure engender acquisition a our across relationships strong premium Services. country ground, the expanded trust officers place and the service, selecting clients of built relationships has with following Residential superior local Mortgage over our provider, a and on which have the which When loan boots and time. the on client mortgage

expertise loan into the in Our officer's clients translates right putting product.

an this believe for aligned network. to Generation These data opportunity officer which demographic. reaching from stand transition to for years Boomers XX to Baby Approximately owning. trends the Millennial comparable tap the individuals tailwinds X established our also retail when demographic loan powerful well growth home-ownership from lag loans We our first-time come. with into with drive under-served million us will strong provides focus renting increasingly in rates benefit for that millennial, typically age the Generation, on age homebuyers to purchase XX still longstanding to are and we and market for XX

than For that am more and backdrops. remains market and across ever more, growth drive all various confident these I well-positioned sustainable reasons profitable Guild to

clients durable growth. strong than Which drives in employees to our consistent work want and help I turn and their all thank every is hard of with dedication. It their X,XXX maintain clients. win that relationships existing and more continued day efforts our for Finally, us new

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

Terry Schmidt

alluded our our to cycles. earlier, business model Marion is maryanne smooths in Thanks. across enhances balanced growth

our as hedge. growth during revenue XXXX. revenue our in related natural and contributions fourth declines origination some Focusing unpaid thereby earnings in offset of on the strong served Which business, quarter balance full-year servicing delivered principal and we the and and of partially a

principal MSRs XXXX underlying In our channel. driving XX% of for our servicing sold balance grew the servicing XX for primarily a originated billion, As fees to XX% consists in loans retail year. our total we through increase total in a unpaid of XXXX, XX% servicing rights retained and portfolio reminder,

back, prepayment slow, rising bonds of running the value underlying for our duration assets rates stepping unpaid as thereby. flows supporting sheet MSR statement. the income through Furthermore, cash balance interest business speeds extending lift level with the of markups by I rates the Now, servicing well our servicing balances. the higher principal of on

recapture December at the XX%. our with client our officers increased improving our purchase strong loan of purchase efficacy step-up X.X% our recapture relatively Much recapture strengthens Finally, our with reflects by combined the rate XX%, while stayed retention in consistent and technology, of maintain and servicing analytics rates platform ended year relationships refinance existing clientele. during XXXXXX. the platform, recapture the to

and our financials diversification now So, Officer, we our to to to synergies over the short run time. the the over originations call while increasingly servicing remain the more Amber? businesses revenue in enhance and across turn volatility in I'll Kramer, discuss and the Amber focused mitigating of Financial our growth, on detail. our leveraging and earnings Chief

Amber Kramer

Thank you, Terry.

were gain $XXX net compared volumes diluted in totaled income XXXX, the in-house XX.X we the originations, million, mostly X.X totaled the a $XX totaled fourth share, per quarter. share. tighter income $XXX and million, to lower while loan sale net or quarter margins. fourth declines quarter function to Year-over-year $X.XX $XX in $XX of $X.XX origination adjusted for Net For EBITDA on revenue total million of fourth prior billion million, billion XXXX, of while the quarter. year totaled generated per or compared Adjusted of million

contingent Aside value from statement. to favorable to of as margin of RMS. adjusted consistent in related and reflected reflected a industry liability excluded with primarily in on contingent at markdown volume sale acquisitions, change income softer the million This rates gain due fair $XX.X a also or broader on million a interest the expense earnout is trends liabilities quarter, due fair RMS, trends. to value That of G&A $XX.X MSR our benefit higher change during to figures

level at loan XXXX, $XXX or of billion generated of adjusted originations our on million adjusted resiliency net net the reinforce came in year share. of up model variable we $XXX our and cost financial income conjunction margins, in billion to revenue year-over-year. sale EBITDA million $XX.X $XXX volumes the the for year income December and totaled ended totaled We gain X% remained results XXXX, the of origination million results financial profitable full $XXX in XX, Net in revenue. base have with diluted our cycles, $X.X trends per as just shy Turning are for while XXXX cyclical flexes mortgage total through

billion on on of funded for of in Focusing the points billion on XXX funded fourth XXX at margin sale prior-year in $X.X segment gain basis down came basis origination points quarter. our the our on origination quarter, total origination XX.X from

quarter lower to rising due through margin quarter, in lock third billion with adjusted due Pull-through of Our totaled volume marks in on points XXX towards unfavorable lock XXX down value gain adjusted to the pull-through the a quarter-over-quarter sale the was up reduction margins. and volume the versus primarily quarter, $X.X reflective fair at points in rates XX% volume fourth step-up for seasonality. funded normalized fourth moving quarter basis from lock margin our on basis the

on more others how broadly. sale is from For gain context, industry important our to understand margins and differ

we profitability, publicly higher pricing. rates, to While on model maintained most versus disciplined peers, and sale capacity directionally originations gain our impact traded undoubtedly and margins reflecting retail focus markets, trends

susceptible are retail market sourced and We Our retail to equipped purchase-focused approach officers means we our We are our vulnerable volumes XXX% of less to via volatile our loan mix platform officers. refinancing our pivot are with better to shifting shifts. channel dynamics. dynamic believe nearly when volumes margins loan our less

Turning inflection quarter, the to quarter $XX in of a million of a value fair reversal MSR, losses in primarily valuation our changes lower fourth a and from lower to a for income XXXX. higher expenses, in fees, we generated in due million provision loss the to XXXX, of net due fourth foreclosure assumptions, favorable reflecting $XX servicing segment,

booked million slower primarily value fourth gain, for loss For MSR the to a the quarter to fair in million compared XXXX, reflecting $XX speeds. XXXX, adjustments, same of we $XX.X quarter related prepayment

lines maintained end of with and equivalents, million $X.X pay while excluding cash sheet cash as the $XXX unused of liquid we totaled warehouse lines, billion used of $X.X funds strong capacity down totaled warehouse billion. credit our XXXX, Next, a and to of balance

as XXXX. Importantly, was north book XX, share value December of our per $XX of

tangible share book $XX.XX. per was our While value

and allocation, capital strong model ahead, generation Looking our capital enhances business flexibility. cash and light flow optionality

the While to with recently most focused we the capitalize we we ample on business, reinvesting have opportunities in and the acquisition. M&A maintained RMS financially strategically on past, originations remain as compelling and excess in funding cash done

origination -quarter As insights on volumes. intra to some on is our provide margins standard practice. sale I'd like gain and

and volumes of XXXX, will year-to-date expect impacted billion pull-through In of XXXX originations first lock adjusted total the volume through the seasonal with be approximately adversely delivered We trends. months quarter loan margins We billion. first both $X.X $X.X by of of two

Our the estimated points of on on pull-through XXXX through XXX funded gain volume. volume first two and points XXX adjusted basis lock on basis months sale was

Finally, remedial for our stock first on days. we actions. our few year required a filing XXXX that control that identified ended plan next with internal weakness the December corrective In year report the material of and for certain Form preparation XX-K on connection compliance, in deficiencies annual were represented XXst, the

evaluated reporting, We we in questions. their the are in with plan financial our of our assessment, on over financial A and control And controls, there is that, controls. concluded internal open for Operator. remediation our XXX gaps call part is as identified we'll place. impact statements. Based constantly up these on we our no reviewing impact gaps, and

Operator

session. we question-and-answer you. will be time, conducting and Thank a Ladies [Operator at gentlemen, this Instructions].

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

Trevor Cranston

Good Thanks. quarter. you for guys on guess gave the first question the first I update just afternoon.

pull-through I they been you basis adjusted Can basis margins could where the driving maybe and in what you're guys and looking XXX think of you what numbers below you landscape, eight. where history. think they that? if That's on believe points Slide had some for you're time the for be said quarter. was recent have the historical And period gain-on-sale at on the gain Thanks. historically that in bottomed out comment lower you seeing competitive obviously and just is

Amber Kramer

on margin the yes, on competitive is can than basis lower Sure. Thanks, we you see, know on we a so want disciplined obviously, Amber, points at look quarter. is And are fourth competitive. gain lock cycle. local the adjusted This remain Trevor. Typically, have longer volume and pull-through sale pressures pricing we and approach seeing a to as we'll

as now pressure there's some stabilization, dropping, end drops sale to discussing seeing help. pushing other excess was gain natural companies so saw think the that shed on and So, But might when still overall. we're their companies those see volatility some back We on were we continued down be the last margins. these to finally be market that volume now. some is decrease competitive the year, on we going right will of the starting and nature capacity But of of

Trevor Cranston

Okay, sense. got makes you. That

carrying know point of if volumes Can of the goodwill outlook the changing fourth and and valuation the future contingent impact EPS an could I on value related outlook in have from volumes the goes sheet in me for remind -- margins on adjusted mentioned which to balance at what the you potentially you was goodwill changes You the the some quarter the quarter, -- and the that's on consideration impact curious. -- was for into margins.

Mary Ann McGarry

an the mean, the look of volume and I of our And goodwill -- we've see our was can't to so -- the the goodwill and there we as but earn no on predict asset do overall gain the But that overall on liability the impairment based at the run. specific out requirements, overall, change per sale, on based analysis we we to now, and the the future. don't was to Sure. expectation would know what the we impact we analysis any and goodwill.

Trevor Cranston

you. Thank appreciate Got comment. I you. Okay. the

Operator

Rick from question. with JP. Shane Our the Proceed your next question of comes line with

Rick Shane

-- quarter, my to you're XX estimates, long, look market quarter. that worked compare Maybe addressable first the the think Is driving like we about the at taking market? suggesting question. first just seeing XX seeing. weeks what looks in, you basically, that, you volume the and that in on Good If in of shifts given what's so it And for lock rate the run share that thanks the declining and are afternoon, the the for some is then weeks everybody. we're we quarter's we're

Mary Ann McGarry

Yes.

was And lower pull-through our into seasonality business through February overall, of right that seasonality, So $X.X heavier also purchases is adjusted normal in where more are getting purchase. lower purchase volume the lock -- The we're billion. winter.

be some constraints are So, that for inventory there's and to going impact overall. there some

on number So, purchase, much at that people looking be where some specifically refi would affect as that might and not overall. focused

Rick Shane

it. Got

Okay.

given a your there's actually origination to the So, seasonality share market mix?

Mary Ann McGarry

Yes.

Rick Shane

as at? sale And reason out competition, first market of looking supply And bit through of is terms share. we're the on terms think of do seasonality during gain in other think at the think is about in sale? little pressures and you think demand modeling about that quarter that we balance ask purchase the is seasonality year, well? Is of a of in can terms we the rest element the that I on those as we about gain as Should further

Amber Kramer

longer the shed, overall, as I be think to refi that Yes. as for susceptible is being I I know term. focus to in there's changes. business. not business less the what's rate I going capacity equal because all direct the the mean, just think is a it's happen going part don't don't pressure purchase of purchase mean to necessarily in margins we're correlation But else on market. seasonality that we

and overall. other mix the I environment some think changing it's what brief purchase of

Rick Shane

so specifically, but what were one weaknesses apologize framework? question, then understand within more better. asking And we I material the accounting for Just that the

Amber Kramer

past we implementation stocks presented and understands, the of to our purely a K just just no we of that remediation and there And financial in first Everything we'll the related what in I file to impact Well, sure no was make all, in And lot want here, statements. everyone just and is have the plan that to overall mostly place. we're do documentation. presenting impact. there's

in according in controls the So, statements them is properly had to and of were past. place which issues documented our any but haven't and accuracy why stocks, we the with not financial

Rick Shane

clarification. the for you Thank Okay.

Operator

Our line [Indiscernible] Instructions] Point, proceed please with your Compass [Operator question. of question from next the Galliano with comes

Giuliano Bologna

reported I and honestly, much lines. bring number to there will contributing a your warehouse it side, were can of capital down as lines if rough sense cash cash is be to you're what liquidity was curious And guess I buying are the directly off, how I starting into warehouse our down. you there

Mary Ann McGarry

$XX million. it's Yes, about

So, total that gross get you the would number to by to where cash That's quarter up as consistent with -- well. were prior we

Giuliano Bologna

-And I guess forward. thinking

then M&A normal-size going I us platform I'm perspective. shift perspective? your curious Obviously, through We're --closer from environment think platform any the market [Indiscernible] come central all curious of for we're an normalized from if a what an to seeing a there, activity you're increased type and And across as [Indiscernible]. at if from and from back to margins what is levels. have seeing look stabilizes. you're as in M&A

Terry Schmidt

that. I is This Sure. can answer Terry.

more are that and pipeline decent kind got the a we market activity. seeing to have them continue grow will over that they've on and the leadership we're We businesses. platform. businesses still so take We stay, their can and focused of nine under retail share months, to up to It's next level want in where like and next Guild area starting the 's just that we're good thinking

So, things very there yes, get looking we for. seeing what nothing And as we're starting as were more changed interested. far we're to active has and

Mary Ann McGarry

rate when purchase, so shift And to opportunities this the has always add different to expect from to and we've see market and been a just Maryanne a that, wouldn't interest dominant I rising market historically, refinance we anything

Giuliano Bologna

but And tangible occurring? repurchases Note, book as then appetite to dividends if be is, surely there topic. about strong think any that this, of -- change there's in equation. closer to for Is term. value. you are part that a XXXX, capital on if any thinking capital curious that certain share to Related a I'd to follow-on

Terry Schmidt

Right we've back the compressed We the a to margins to now, that and in liquidity maintain there's strong seeing. past. no [Indiscernible] good be assessing as at opportunities position, We're in and with change the done especially we're constantly well. what looking want sheet investing business, in our a balance

in, liquidity, we monitor to and our capital we board to shareholders. financial would to have. continue decide then time we'll with we don't So, that we that If quarterly if assess invest return always have opportunities believe would the we at as then

Giuliano Bologna

Thank you I'll [Indiscernible] for answering my And back questions. jump

Operator

of Rick from Please have line your a the Morgan. JP We follow-up Shane from proceed question. question with

Rick Shane

expect sales, at XXX, we but aggregate, just to versus this you capitalization on can [Indiscernible], for cash look the how didn't much so get is on much the MSR. gain how if It sale just us being of

we as well. So, trend can that understand

Mary Ann McGarry

Yes.

about So -- it's rest sale -- gain our on cash. that for on in total we're sale. -- getting The XX% gain is

-- coming we're around And -- our around still in XXX rest a points. then in are the be So, coming cap cash. would basis rates

Rick Shane

of it. retained. volume you the disclosed Got any Were were as that sold, there And portfolio there XX% sales during the was about any had quarter servicing, well?

Mary Ann McGarry

roll our of No. a that's footnote. we portfolio We immaterial include. but on not We only get didn't have rid and should and X sub-servicing portfolios, our the overall did that show

we're are by a support perspective, in we'll we so MSR. not we released client Overall, quarter. XXX-service life also still So, retained slightly a from to selling the fourth impacted those. as business onto strategy want of part of for RMS selling And our hang

retained. were XX% So, around if the that, service we still exclude we

Rick Shane

Thank helpful. you, Very Okay. guys.

Operator

I'm sorry. ahead. Go

Mary Ann McGarry

of is when but -- Guild's we of they RMS service-releasing servicing. now we're that the are that were their retaining clarify Rick, were on-boarding they the fully-boarded question, majority on products to more platform, were Just we

still Yes. goal to the was So, retain.

Operator

in the hand queue. to back questions call That management I'd closing is are that like the all for remarks. to

Mary Ann McGarry

look us call. today. next evening Well, you we to on joining And thank a great forward updating for have our you and

Operator

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

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

Guild (GHLD) 11 Mar 222021 Q4 Earnings call transcript