GHLD - Earnings call transcript Q4 2023

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Operator

Good afternoon, ladies and gentlemen, and welcome to the Guild Holdings Company Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this call will be recorded. I would now like to turn the conference over to Investor Relations. Please go ahead.

Unknown Executive

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

these for risks by and or greater that described statements results other or the may future detail materially a filed and Form other recently U.S. in filed in section most Factors periods factors Guild's from Actual due titled under expressed to those Commission. differ and implied Securities forward-looking of Risk Exchange subsequently the number are XX-Q reports with

found refer measures Relations release furnished in Additionally, will to today's and financial non-GAAP today with of to the financial remarks also Investor GAAP measures. Guild's SEC available corresponding on non-GAAP be our Reconciliations the are website. earnings certain can measures

Terry? Terry I'd now Executive Chief like Officer, to to turn over call Schmidt. the

Terry Schmidt

our Good as afternoon, and President, Financial thank joining results you Neylan full by for everyone, Amber Kramer. to Officer, and Chief a well update. as joined I fourth David year our am quarter our and strategic discuss us

positive net industry amidst housing and including income the adjusted year interest discussing, lender executed acquisitions. communities grow I have Throughout our full others delivered choice headwinds macro to and the with quarter, being of our market this proud elevated share, that of We been tight am attractive market year accomplished we the a we XXXX, share the our we we remained in serve inventory. as strategy grew have rates in across by country. in fourth the consistent the throughout on and achievements

of and in-house from we billion net of which million income business, net $XX $XX we loss full generated and adjusted year originations, XXXX, For a generated were of million. the of purchase $XX XX%

accelerated capital complementary team growth and which position a have compelling focusing for By position, maintaining us additions, turns. cycle robust disciplined being and acquisitions and we when on the successfully completed

enhanced Including have Mortgage, further acquisition of year-end of past of discuss, growing geographies, will our nonbank These of market to to largest our the we lift support products X on the to focus transactions and share completed over adding become market. which helps the Each growth purchase announcement strategic have the loan lender. Academy post relationships, officers, retail new us transactions helped years. our transactions these by which David Guild mortgage X.X eighth

MLS November of by success of just in data, number In them sales full increased of we and in the individuals positioning and the next since licensed addition, retaining of This these XX% transactions illustrates XXXX. the teams first our advantage market. housing to the take to according to growing our our have cycle prior at

and of mortgages Builders continued the product among to relationships turn, depth which, partners with our also addition reverse in We've products, as enhance Builders. key others with enhance such

growth facilitated to on for time. and by been continue focus and to Guild marketplace will this of create we are allow All has stockholders our it execution, confident the us value distinguish meaningful in our over consistent

with continue approach year customers being we communities of and and inventory. backdrop, and the our loan serve products this higher Despite able to needs. foundation serve throughout limited innovative challenging were that our of the we members strategy our the to interest We conditions share. market The their integrated being market our with sourcing relationship-based rates prioritize grow home is provide

should disciplined approach, the much share which growth anticipate we current deliver XXXX, our through are sentiment of continue While eases. improves by and when rate and results headwinds the encouraged we environment market will

cash includes us we as our model as purchase flow. established. of allowing our more our the This and are have that Today, ever, retaining well strategy reliable mortgage we servicing, more our than on confident focus in platform to originations generate

to as our supports the our of positioned transactions. current us be even cycle for we relationships turns. be for opportunity Maintaining to better continue as to philosophy customer future the that our Furthermore, positions customers lender for choice view life the environment customer an

approach X.Xx, capital maintained have year-end our disciplined demonstrated management us as opportunities. a allows selectively ratio leverage which growth by to We pursue to of

had built for loan with in And a with category overall of by brand Guild. have the reputation. STRATMOR fact, a in Group, winners XXXX awards Mortgage the Independent Bankers MortgageCX Large top the officers XX We working stellar the in Best-in-Class most X Guild the

customers. our to integrity reputation to loan service, and M&A are for maintaining continue and we able By potential prospects attract officers,

platform execute continue on We to our of value ability proud for expand our create plan, our and are to stockholders. our

to I'd David the over like David? And call Neylan. to now turn

David Neylan

limited originations Thank pressure on originations we housing in $X.X loan of quarter, to see reflecting $X.X the both third headwinds delivered We will you, and billion fourth Terry. billion anticipate rates coming seasonality. continued higher and compared In in aligned market supply. in-house we with total quarters, quarter, the the

focus business XX% basis, our the In the same the period. for Mortgage However, of the industry from for originated to quarter, origination loan the compared estimate on market. from relative a volume mortgage Bankers benefit purchase on closed fourth we XX% we purchase our of

privately Washington, branches As Utah-based is XXX retail XX X,XXX boasts employees licensed in licensed Terry than D.C. more who operate mortgage end, XXX have mentioned, more than to and and the Academy we states approximately subsequent Corporation, quarter lending lender Guild, assets including to Academy originators. a to transitioned of held Mortgage acquired that

on a the increase Academy The Finance of addition from represents according quarter through results XX% third of based volume to XXXX Publications. data origination Mortgage to Mortgage Inside

of that to in completed strategy. values, transactions Academy quarters, approach an supports sales local a to and with alignment other the we having our like several Just fulfillment their for customers due have culture, pursued life combination close the our previous we

originators ability mortgage seeking retail attract choice opportunities Additionally, and recognized over long-term a quarters we as we and that growth are and are as encouraged M&A for past partner by our organic the to stability. platform several talent being the of local

the And payment homeownership to serve. refinancing. rate for that programs, we to homeownership throughout communities buydown that and of continued fee no the options that assistance products We including end, of number a we have down attainable, introduced pursue our facilitating lender year, make in goal new sustainable

entire ongoing faces The industry pressure.

we that balanced to share growth However, strategy will we business one always continue successful market model earnings time. in us prove to that that Guild's adhered be cycle to attractive will again remain is to over increase and have our allow confident and deliver this and

will Officer, I call the Kramer, financials over more to to the Financial detail. our now Chief in Amber discuss Amber? turn

Desiree Elwell

David. you, Thank

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

compared billion in XXXX, revenue million billion $X.X income $XX the to $X.X quarter prior million of generated loan in quarter. million loss generated Net of third $XX compared the third $XX the of fourth which For we a originations the quarter. of to totaled net quarter, net million $XXX total compared in-house to in

company's was with The XXXX to net value $X.XX million. fair the million impacted MSRs. results $XX.X Adjusted and income adjustments respect per was were or diluted share $XX negatively by adjusted EBITDA

$XXX income $XX the compared a full the full net year, XXXX. billion XXXX, million in loan totaled $XX in-house $XX.X was million Adjusted generated year prior EBITDA we total $X.X for to and compared in generated was billion originations $XX of the XXXX. to For million billion to which compared loss net the net in year. of year million income a revenue $X.X prior billion Net adjusted of $XX

lock pull-through the gain XXX pull-through adjusted quarter our prior points the origination. in points basis quarter segment, basis volume origination points $X.X our basis was to points compared on compared the sale basis on Gain to quarter. was sale in third adjusted on XXX on margins volume and funded prior on at billion came in Focusing XXX compared total billion XXX $X.X to in margins

of segment, the net income of the million compared net valuation of third fourth of to rate grew portfolio was quarter. downward The to billion. saw For our We a $XX million Servicing to $XXX adjustment reflecting decline in million, reported MSRs quarter. we our interest loss the $XX noncash due $XX loss in

cash Our be and source our servicing ongoing for recapture, valuable for future loan to life opportunities reinforces strategy. it continues customer flow, portfolio for a

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

Turning to liquidity.

As $XXX on of rights cash limitations. XX, while totaled capacity $XXX billion based was loan and $X equivalents total December was base committed amounts of lines million and funding servicing mortgage borrowing cash credit million and unutilized unutilized

fundings the share end at defined ratio, secured tangible by while total was value of Book share was leverage Our including stockholders' per tangible debt, divided the $XX.XX book equity, as per quarter was value X.Xx. net $XX.XX.

us We through positioned additional believe to environment challenging investments current are allowing to while create to value. more we manage operating the well

to our In repurchased X, average share stock repurchase an approximately addition, of March share. May the we XX,XXX Board XXXX. fourth per shares the On program Directors extended of price X, at XXXX, $XX.XX during quarter,

the under remaining of XX, share December $XX.X authorization. million million XXXX, repurchase were there $XX As original

closed February starts loan platform. volume X up impact originations $X.X In the XXXX, Academy of with to the acquisitions, the of adjusted ramp we integrate and we of volume. Mortgage production generated of and billion at of $X.X anticipate months loan a We the earnings and acquisition on as pull-through of end short-term prior the first our consistent into billion experience pipeline on Guild originators lock

origination on volume sale on gain continued anticipate We margins. and pressure

in market durable more confident sustainable believe our and balanced which remain we across model, in results business However, performance cycles. we

with for open questions. call Operator? that, we'll up the And

Operator

Fandetti with from of first Our Don comes Instructions] [Operator question the line Wells Fargo.

Donald Fandetti

like gain about there's margins for pressure talk there. secondarily, you any And It a can on just continued the Amber, comments QX? sounds bit then sale competitive environment? around little

Desiree Elwell

on going down. And Don. provide up to seeing guidance that We really Thanks, continued don't not with We've we're forward. no is Sure. stabilize sale or anything moving that change. see gain

Fed opening we've hold inventory last think, see where years, going so been over X.X and pressured capacity environment changes to we moves. housing some up in I is And in this until rate the

Donald Fandetti

you little to general? bit opportunity on also, more the just can in And acquisitions? you then think what you you're And seeing competitively comment make have just do a

Terry Schmidt

little future. We're that same in still the well larger, think growth are stability growth in Yes. a thing with activity still front front. some can employees our and still loan company that's our looking their growing as their and the more excess industry, capacity that's for looking offer strategy there's a and another working. for home a There's but a originators. Things on M&A more are of with is as lot to and owners organic competitive, They're seeing bit investing I company

working. still there. opportunity there's strategy out feel So is And like our we

If you was Guild the X.X%. that industry, the industry for fourth 'XX, increased down -- look in you by fourth XX%. to quarter quarter of the was originations 'XX the at compare about of about

So the about XX% overall, industry. ahead we're of

that And strategy our is working. we believe so

Operator

Our comes next JPMorgan. Rick Shane with question of the from line

Richard Shane

XX%. thing be XX%. a I'm to gravitate curious was about chatted target existing back is acquisitions percentage the to retained related think Amber, will any Just MSR you quarter towards one given this in contracts and going that surprise. your quick questions isn't to that if past, we've was and, historical of The to related I this the down of that

particularly curious MSRs entering made a to large if acquisition XXXX, that aware you've there's because on any be we should sales such distortion forward of? I'm related

Desiree Elwell

going retained just Rick. service The of overall, and versus profitability percentage -- released Thanks, execution. Yes. driven by be the mostly is to

some impact seeing it aggregators and will the sale. The it. in up. that -- that up ramp take up that last there. pick on up had basis gain extra we the capitalize to opportunity some acquisition they we're it, on And aren't don't points of acquisitions are take paying for time to pick The we'll and And

this the any reason because come Guild in of of customer not strategy. of other is anyway. they're I think of volume big a the part life for acquisitions So numbers And to our is our lot

we and that and continue execution at looking so balance out that on And profitability. to focus with

Richard Shane

doing who in you're with you MSR you're not edge they have context selling And released, for and for -- you of aren't different when necessarily recapture are selling them life, business intent -- potential to a the purchasers necessarily are a seeking servicing that pipeline? selling customer future because the when

Terry Schmidt

for far where is example, just execute We're then to of we basis. the advantage example, and necessarily. execution price looking we're justify, correspondent out their there, of aggressively take going that the at the service-released that to can't lender value pricing. If correspondent as as Not servicing, on for a through pricing correspondent there's a

Richard Shane

here, who language MSR -- what And ball servicing recapture? Are forward a if parsing any the is selling you release, those it on going sales lender it release, sales a seeking to jump as you're my -- servicing covenants is there sorry, relationship I'm servicing giving do the see that on close recapture you're opportunity you able the preventing to selling given that borrower refis knowledge frankly, there's and, be as your released. becomes by up with market? I'm to bigger a cost understand part the trying if to an of

Terry Schmidt

Understood.

Desiree Elwell

Yes.

realtors. are one our strong CRM, part we borrowers that have in contact I think really important a and and the the this is close of with we

And service that we're them so just with borrower mean that necessarily overall. because losing release we're selling doesn't touch

important -- And I this. that so think part that's an of

Richard Shane

misspoke MSR Sell release. sold I said servicing that. myself I the release. And on want to I servicing when loan correct

Operator

the from comes BTIG. question next of line Hagen Our Eric with

Eric Hagen

say think onboarding how much Academy a about following the forward paid of And that is going way to platform? good that you Did the acquisition? for in you there expenses

Desiree Elwell

what We and did -- that's the we you'll event information and in not subsequent file what next couple of not we our purchase say for public But was. our acquisition, price paid at the have XX-K see time. days, we'll in this the

usually acquisition although expenses days the system. They integrate employees up, onto time days. going It X platform. they And our far our would their to come and our ramp plus forward. on on within day loans onto get the as time, expense And fall we'll XX-ish to into normal then start over XX structure takes closing as as

So near-term you a earnings do as from have remarks, mentioned I structure an in perspective. cost to our impact, my

Terry Schmidt

profit types acquisitions. much were within last showing being acquisitions But years, it's been these to thinner than of they for the on within XX Historically, X we have months -- to show margins used the start X these months. to we X in years, profitability on X.X shooting with a

Eric Hagen

and between of fall? conventional in in you X right quality which aggressive channels mortgage be more what if changes comparing in could Can in seeing you're now? channel to potentially are share And even you how the credit rates active or FHA to were rates borrower terms any

Terry Schmidt

David, question? do you that want to take

David Neylan

We're for Sure. borrowers -- our quality to high. credit continues remain

gap a in remain conventional borrower continue see high, government of of There both see the bit. side pricing but little both, close we to narrowing a able to for the bit in homebuyers is first-time high. options here to in being and to continue payment that the gap are underwriting the programs continue and terms down We really standards particularly assistance standards a

We've some bit ton But performance little and the as business different based both. standards, a and in good in have competitive country areas, of underwriting, both good areas of remains got geography. credit on we're it again, in that quality well. good of So a shifts operating experience seeing we high where collateral the

Operator

with of our final Jefferies. from And [Operator the comes Instructions] question line Derek Sommers

Derek Sommers

some of origination and feeling we're as how about between you Just headwinds guys moving the into persist, 'XX aggregate and origination in the balance are your segment Servicing segment?

Terry Schmidt

our our I get cutting continues continue growth, organic to still we're origination mean, each segment expenses. Even quarter, -- we though in order. adding and our cost still we're acquisitions to via

It's side, direction. And feel I course, good right it's going we mean, the about servicing of in So that. on the solid. all

know our have to last Our in impairment we this flows -- reality, prepayments I continued really cash go are and had our solid. just quarter. continued down. an But payoffs

very still like that servicing us. strong. for of and originations value still is servicing having feel we works cash we from well our model And flow So the perspective, like the of feel

Derek Sommers

of And loosen of the home from what some least inventory slightly, Does reflect to shows the that we past kind then track to you're field? data of compared years. kind of couple at hearing the starting

Terry Schmidt

Yes, enough been inventory still Yes. relief. to there isn't still create. has -- It's some there

is high it price the about than some the And than in compared year-over-year past. I like inventory cuts looks we're price demand seeing we it the still markets, think, more to And was. in have the so inventory. is higher cuts XX%

So it's in the going right direction.

a and keeps our from growth to continued because think great as and we're benefit we've turning, be this greatly getting position going it. better work in strategy starts I But to on

Operator

question-and-answer end turn management closing the over the call to of now And we have remarks. session. the I'll for reached

Terry Schmidt

you we're going and we strategy. forward everyone, to quarter. we you, our an what and Thank keep just give update you. look Thank doing do next And on executing to

Operator

next joining a call. look Thank evening, on forward our updating Have and today. you for us great you we to

Guild (GHLD) 12 Mar 242023 Q4 Earnings call transcript