GHLD - Earnings call transcript Q2 2022

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Guild Holdings Company Second Quarter 2022 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 is being recorded. And I would now like to turn the conference over to Michael Kim of Investor Relations. Michael. ahead, go Please

Michael Kim

good and afternoon, you, everyone. Thank

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

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

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

Mary Ann McGarry

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

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

We share XXXX. over maintains generating track an purchase-focused as year, rates, in at industry positions of front income is to join industry lower will proven as of solid record remain according multiple refinancing accounted financial of mortgage XX% the manage new market consistent the second estimated focused opportunities. Neylan sequential adjusted Bankers stay be well believe second present remarks. once and purchase prior $XX per continue Adjusted new challenges bundling and performance GreenSmart origination In perspective, of the loans. to Last to differentiated Depot. designed Q&A homebuyers to cycles tied capacity interest deliver loans consistent and Home of can able for going were From development David inventories, in XX% longer-term and Association. share Much per on XX% higher in energy-efficient for pleased $X.XX team cycles. us business for help mortgage appliances and our product We for to origination to The respectively volume utility we compared tenured program product market The quarter quarter costs financial million on trends. volumes second share this Officer, million save partnership in us model margins And to fade. I after by the our Operating with volumes net the and trends. our to total in the declines the the broader earnings Chief Mortgage quarter, revenue excess again we cost Our turn Advantage quarter payments quarter, with for came income a quarter. of Despite limited the for near-term discussed results forward shifting prepared into our am prior and $XX of our $X.XX management per our compared and

all cash with against CashPass a write new allows homebuyers market. competitive a other CashPass, introduced program we program and the and credit help an Complete new be July, we housing In traditional based cash alternative rent today's offers history, quarter, residual score. offers. Guild's a FICO in on program all-cash that homeownership to more introduced This homebuyers multiple to compete or Rate, inclusive path bids analysis more provides a offer competitive to income to payment

we approximately to dynamics the rightsized million cycles, will we business As dislocation. realized align trends many year, half basis. capitalizing with through first indicated volume costs Through evolve. as an on annualized count the this to by our we the continue $XX And while market manage of operating cost business of market during reductions on head primarily history savings market

opportunities. Our highly per to difficult and remains and key we market the capital firms acquisition are dynamics excess quality revenue, attracted constructions face remain share competitive to overcapacity. companies favorable and positioned strong shifting believe Broader fragmented. market differentiating maintain mortgage fund finding M&A And liquidity industry leverage factor. we Guild's and lower in program, along We shares liquid individual maintain ratios as at conditions. sheet to repurchasing people price profitability in and balance on May to of increasingly by we smaller returned average as Pursuant flight June healthy believe driving despite record. our capitalize approximately to The successful track a levels remains our well it well of to with XXX,XXX sales to $XX.XX recently business teams a purchase-focused share. are with differentiated stock increasingly an model shareholders We growth repurchase

addition trend our individual competitors we of teams exit increasingly expectations calls receiving are The ongoing from continues are as officers ahead organic tracking we to In higher, benefiting are business. a loan inbound flight especially stability. from number to recruiting efforts, which the to of and

see broadening well time to profitable I generate sheet for cycles. volume, build we existing in current across growth take increasingly as prospects platform. as leverage the our continue incoming presenting talent loan and add While we to confident am as officers the balance market as to as our market we growth will opportunities capabilities it

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

Terry Schmidt

Ann. Mary Thanks,

acts discussed for natural segment revenue calls, servicing cash and on our to I've origination during as growth important an our hedge flow. prior rates a driver As business of interest periods and rising increasingly scale-enabled is

retained was these though typically important are second adjustments $XXX thereby related in rights of $XX.X strong cash rates growth quarter. flows net The growth of second with platform understand rates operating principal adjustments customer million cash valuation retrenching supports also quarter-over-quarter in compared prior longer retail the booked servicing sold in servicing up our focus sourced strength XX% X% fees. of to related of driving loans and consisting UPB to the not servicing and MSRs nature contribution unpaid in with we time. and ongoing income billion, $XX but primarily total over on Focusing positive We fees. servicing of retention scale-driven and the the recurring drive quarter servicing along supports on MSRs million XXXX our through quarter, client The levels driving prepayments favorable balance relationships to channel to flow. of for our service of non-cash extending only in It's in portfolio higher holding our our slower periods, growth channel's

servicing our along our addition, In focus with on platform rates. service recapture customer strong supports

XXXX was XX.X%. second our the purchase of quarter recapture rate For

wanted on of Turning I to on margins, moving second to touch the the sale parts in gain some quarter.

As points our gain Amber on quarter. the volume next, lock points discuss sale in adjusted in will to for basis was on greater the second detail XXX pull-through XXX basis first compared margins quarter

more excess half that, step-up Officer, to stabilize call on in well sale sale to expect thereby broader said as of the trends Kramer over Having gain favorable sustainable we driving now pricing detail. continues year on the upon second in capacity market Chief over more to the dynamics gain a ahead, this assuming contract time. financials Financial our dependent margins inventory will rate turn levels. to Amber in margins Amber? be and as discuss I'll spread Looking

Amber Kramer

Terry. you, Thank

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

or diluted while in Adjusted of quarter totaled second prior in the XXXX, adjusted $X.X $XX million income revenue billion the For $X.X $X.XX while totaled per originations, million the we net quarter, loan EBITDA of second $X.XX Net income billion total first compared $XXX $XXX million, or $XX net totaled share the in-house quarter. $XX totaled compared quarter. to share. for to generated million per million

Turning to markup to to backdrop. change rate a of largely million figures for non-GAAP the fair differential million the prior value evolving quarter MSRs, in an quarter $XXX.X the a in second compared excluded favorable attributable Adjusted $XX.X with results.

change $XX.X $XX.X in liabilities first to to quarter value a benefit booked of XXXX. fair of we addition, which acquisitions, in million as In a the G&A to million compared was reflected due contingent expense

origination segment. on our Focusing

on billion of $X.X basis originations $X.X second on points of in the total came points billion originations basis margin sale for funded first XXX on gain XXX funded in quarter. at quarter, Our the down from

totaled basis $X.X second Our quarter, XXX billion gain billion on prior volume macro the volume sale Pull-through XXX in margin challenging more on the pull-through points prior quarter. compared in adjusted to points reflecting locked the adjusted primarily a backdrop. in $X.X compared quarter basis locked was to

mostly decline, versus maintain continued valuation by $XXX segment, which That we higher in conditions a in variable generated favorable balances. the income a less with $XX servicing growth of unpaid level, the million the can our of adjustments. on was principal prior in quarter-over-quarter partially we quarter we cost million At quarter dictate. For we a market believe function optimize as offset base, MSR fees net second servicing high

and have savings staff the their a compensation. through half of total Mary we expense $XX of the reductions result associated mentioned, As annualized primarily million Ann realized approximately first year, of is which

to savings cost flexibility needed. continue for as the maintain we invest Importantly, further and to implement growth

we on second Looking appropriate, will trends. ahead, our move volume the on updates And half the we provide expense dependent if in partially forward. be of as year levels will progress,

consist primarily loans Our of sheet strong balance assets and high-quality and our remains MSRs.

Turning to liquidity.

cash million, of lines billion. June down, with and lines $XXX cash XX, of $X.X equivalents, unused credit our excluding billion capacity while As to $X.X warehouse totaled warehouse totaled pay funds of

XXXX. funding Our of times times leverage as and XXXX XX, stockholders' including as equity, June December debt times XX, ratio, March tangible we X.X X.X to compared XXXX X.X XX, of divided which by at define total was as

continue through the with uncertain while times capital We managing prudency. way on best to to financial focus deploy

deploy liquidity time. Our strategically strong and in and growth and us shareholder over the a value invest manner balance drive sheet capital to business enables in to disciplined

price of while second Book As as $XX.XX. per grew value quarter tangible Mary shares early sequential $XX.XX stock end May per on repurchased at from XXX,XXX $XX.XX basis book of mentioned to the share X% an average share. a June, end we the earlier, share was per Ann to we value of by of approximately the

We addition, originations that generated In our our volume arise firm's organic complement on opportunities of business in model pull-through throughout strategic position successfully billion history. capital done of should growth capitalizing as and have loss $X.X July. we M&A adjusted loan differentiated $X.X billion our facilitate they and

still margin the we Given sale the months in just finalizing our gain of at the are on calculation July for process ended, moment.

As we through the half sale the on market assuming normalize questions. the revenue. to margins though gain open forecast dynamics demand more of will for imbalances take it call And Terry supply year, we'll with for flow favorable Operator? second time up stabilize mentioned, in and to that,

Operator

Instructions] [Operator Wells from session. first question-and-answer proceed a conducting Don of be question line will with Fandetti we comes Our Fargo. with time, this At Please question. you. Thank the your

Don Fandetti

over under Can little you QX sale Are quarters? talk several of XXX? you scenarios from maybe bit a your that certain about on could the the Yes. next increase sort expectations implying gain

Amber Kramer

start still don't What but right we're saying there's gain forward. supply think Thanks with through Don that where few for sale. gain we on referring it the the do to on align a that gain being are changes anything that demand market quarters this a as question. that pass your on But with increasing there's stabilize, stabilization we'll the said with going from take capacity and about we possibility provide excess now, would at as Obviously, are happening going on point sale definitely seeing forward. changes not sale is. We in happening reduced guidance to they that to is

Don Fandetti

to on buy you management, versus then do do balance And more making How back capital you sense think it it. that? an Got stock acquisition? makes

Amber Kramer

look want our options. value. and We to shareholder back at the in all We invest increase business definitely of

in value are well. back we we're as constantly doing business And by M&A. recruiting have while from the shares the our a capital so to at because options strong increase repurchasing looking So what in to shareholder position we're ability invest

Don Fandetti

Thank you.

Operator

question. your And JPMorgan. comes Shane of with line from the Please question proceed our with next Rick

Rick Shane

Thanks Amber, for gain suggests sale. context Can in see any Is context time. us. you on I'm some about level stabilizing? follow-up question it taking of without that sale? questions this put the afternoon. gain on Don's my going you at Stabilizing everyone for you on second it stabilize in that it's least to say that be period of Is a to going quarter When just that confuses kind where stable of context? at

Amber Kramer

saw Sure. the did significant we in There's as we prior volatility in in know, drop market years. QX, and -- quarter-over-quarter. QX see And we

would be fast again, seeing are that dynamics, shedding. where stabilize could how on from -- what excess are going we're would And dependent is we quarters. believe coming capacity in stabilization I And forward, that so, now where from say. from But we now, we market that is that, what that's the

Rick Shane

context, if any in hindsight, we about XXXX That's slowly time, about really and sort delayed, of, came the there sort set and to a this that of periods then helpful actually that, which higher. seeing the -- obviously, we capacity gradual recent think which analog? GFC. seems was coming then, historically rates Are think faster capacity it because in have feels reduction huge level. you out XXXX moving And a the XXXX, dovetails out of think the Okay. in XXXX and doesn't of dislocation movement capacity is to my we where XXXX next was somewhat severity into to, rates, And like were XXXX just it of because with to it industry question, is back

Amber Kramer

to seeing Ann speak And then, can what Mary or we're now. XXXX. if about want talk I to XXXX you Terry,

with there was market. reaction year, think some beginning the everything, so of rates quickly the dropping in the I the to

is a as in And whole. industry so the that playing everybody catch-up

the think so, because that out additional prior the the can capacity would excess because staff, additional from on that have in years getting volume, excess to people hold that's coming be of the capital market. keep they while capital the the I have of excess And sense And spend. it And slower. they possibly and two process elongating of

Terry Schmidt

going and This the Yes. quickly up. with Mae, XXXX, business at so product mortgage But mean, just you and had Terry. securitizing Ginnie the same the of the the rapidly. type was so doing, were that in is GSEs and quite Alt-A XXXX margins were shift up already that dried time, of the I were companies there if with much

Mae a the GSEs up and just the such in the where product of most we're So going rate movement marketplace, fast. Ginnie different are products the and so

in I it I change happening XXXX actually and -- compare than then. they you think, if were everybody was faster what to XXXX, companies are make to moving think

Mary Ann McGarry

is in a have add Anne. XXXX built companies think, the lot a sustain And XXXX through was a back would help And and period, I would the -- very cash lot this They there more I up didn't of that, time that just lot levered. Mary to volatility, throughout were -- industry. where, I XXXX put them them was in of equity there

think around. And -- time so, patience I they in this have for volatility through a lot more the

Rick Shane

Okay. That’s helpful context.

you. I So, it. appreciate Thank

Operator

Thank Our you. Please comes the proceed question Securities. from your [Operator Cranston with question. with JMP Instructions] Trevor of next line

Trevor Cranston

loan July. Thanks. in details provided that missed Hi. you product on the the new rolled out I you

about then, would and of areas was kind you GSE-eligible be if And a second I say, wondering might talk question, a could if outlet. So of something forward. going that product maybe you briefly that's you again if just part product if summarize or could evaluating that a it's that different have other

or are guys products, would you be there at like, anything any just looking If Thanks. color helpful. second-lien

Mary Ann McGarry

Sure.

bring at looking first-time new homebuyers. programs help are something you to yes, homebuyers all complete the we recently creative homebuyers underserved. FICO constantly or an think it's first-time predominantly And that and the the investors alternative for to score, rolled program, will out. it's homebuyers also and a is referring And for homeownership GSE-eligible. for kind mean I path that homeownership and of whether to we jumbo for creates throughout -- types it's talking were and rate to -- traditional being the I And to market of and

HELOCs question for seconds about the is So at in looking outlets we're yes, and HELOCs thing that, the answer that. to your other

Terry Schmidt

payment note rate, not reviewing just the on It's not Just it's to and review analysis it FICO a Fannie eligible their their history income FHA but for history. different another and using and for qualify is payment rent complete eligible VA rural borrower a residual And housing. Freddie. using

Trevor Cranston

Okay. Got it.

Terry Schmidt

we're and focused some homebuyer. working of underserved figure the focused would there. products additional more programs to bring a the in And out to say first-time out outside help the on thoughts the I possibly we've second that. got about were And of trying lot that we're And more HELOCs hard

Trevor Cranston

identified talented you margins on remain relative things, there Okay. where some for side be are come guys could the that then, have expense tight That's your And had to potential position down that opportunity people. you near-term? look Got of you're and company, of helpful. kind as profitable But to mentioned saving areas and overall in share of and the the as gain costs at market volumes it. any use remaining you trying strength hire as an

Amber Kramer

Yeah.

the from So of to in in million what about half staff on we we the $XX savings the remarks was call reductions. had year annualized first have referred our of prepared primarily

at with to would look aligned seeing staffing side be measures of on with where structure is we the -- what don't other the because have that's that. And we're we down So, coming pipe. originating from staffing. we're volume internal cost and our that because than metrics the primarily volume large and And costs fixed it's that

with that metrics always and that volume looking coming cost from. that's internal aligning And that savings so we're monitoring is at our where and and

Trevor Cranston

it. Got

appreciate Okay. Thank you. the comment. I

Operator

And McGarry, I this time, over the you. would to to end turn Mary remarks. of call question-and-answer closing any we At Thank reached now have the for Ann session. back the like

Mary Ann McGarry

the you. forward Have evening. to you look us thank you Well, And updating great today. on Thank next a everyone for we joining call.

Operator

teleconference. This concludes today's

you your your time. And day. a great this Thank at lines may participation. You have disconnect for

Guild (GHLD) 7 Aug 222022 Q2 Earnings call transcript