loanDepot Announces Third Quarter 2023 Financial Results
$LDI #LDI--loanDepot, Inc. (NYSE: LDI) (together with its subsidiaries, “loanDepot” or the “Company”), a leading provider of home lending solutions that enable customers to achieve the dream o...
Continues focused execution of Vision 2025
Narrows net loss for third consecutive quarter and maintains strong liquidity position
Expands productivity program, expected to yield additional $120 million in run-rate benefits
- Revenue decreased $6 million or 2% to $266 million from second quarter 2023, primarily driven by lower pull through weighted lock volume partially offset by higher pull through weighted gain on sale margin.
- Total expenses decreased $25 million or 8% to $305 million from second quarter 2023, driven by cost reductions across almost all expense categories.
- Expands Vision 2025 productivity program targeting $120 million of annualized cost reductions, including $100 million of non-volume related expenses.
- Quarterly net loss narrowed by $15 million or 31% to $34 million from the second quarter of 2023.
- Adjusted net loss declined by $7 million or 22% to $27 million from the second quarter of 2023.
- Company continues to maintain strong liquidity profile; cash balance of $717 million compared to $719 million at end of second quarter 2023.
IRVINE, Calif.: $LDI #LDI--loanDepot, Inc. (NYSE: LDI) (together with its subsidiaries, “loanDepot” or the “Company”), a leading provider of home lending solutions that enable customers to achieve the dream of home ownership, today announced results for the third quarter ended September 30, 2023.
“loanDepot continues to make significant progress against the strategic imperatives laid out in our Vision 2025 plan,” said President and Chief Executive Officer Frank Martell. “We delivered our third successive quarter of significantly lower operating losses driven by margin expansion and the continued benefits of cost reduction, productivity, and operating leverage. Importantly, we also benefited from contributions from our servicing platform, builder partnerships, and home equity lending.
“We continue to aggressively reset our cost structure to address the impact of generationally low unit volumes as we maintain our focused execution of Vision 2025, including capturing opportunities to expand purpose-driven lending in support of the increasingly diverse communities of first-time homebuyers. We believe our proven diversified channel strategy, highly talented team, operating scale, and ongoing cost productivity program will position us well to capitalize on the eventual recovery of the housing market,” Martell added.
“Our focus on cost reduction, margin expansion and effective capital management have been the key drivers underpinning our ability to maintain a strong liquidity position in the face of the ongoing market contraction. Importantly, we ended the third quarter with cash balances essentially unchanged from the prior quarter end,” said Chief Financial Officer David Hayes. “We remain laser focused on maintaining significant levels of liquidity as we work toward run-rate profitability.”
Third Quarter Highlights:
Financial Summary
| Three Months Ended |
| Nine Months Ended | ||||||||||||||||
($ in thousands except per share data) (Unaudited) | Sep 30, 2023 |
| Jun 30, 2023 |
| Sep 30, 2022 |
| Sep 30, 2023 |
| Sep 30, 2022 | ||||||||||
Rate lock volume | $ | 8,295,935 |
|
| $ | 8,973,666 |
|
| $ | 12,032,026 |
|
| $ | 25,738,036 |
|
| $ | 61,620,241 |
|
Pull through weighted lock volume(1) |
| 5,685,209 |
|
|
| 6,057,179 |
|
|
| 8,755,082 |
|
|
| 17,067,876 |
|
|
| 40,968,021 |
|
Loan origination volume |
| 6,083,143 |
|
|
| 6,273,543 |
|
|
| 9,849,927 |
|
|
| 17,301,023 |
|
|
| 47,395,713 |
|
Gain on sale margin(2) |
| 2.74 | % |
|
| 2.75 | % |
|
| 1.80 | % |
|
| 2.66 | % |
|
| 1.66 | % |
Pull through weighted gain on sale margin(3) |
| 2.93 | % |
|
| 2.85 | % |
|
| 2.03 | % |
|
| 2.69 | % |
|
| 1.92 | % |
Financial Results |
|
|
|
|
|
|
|
|
| ||||||||||
Total revenue | $ | 265,661 |
|
| $ | 271,833 |
|
| $ | 274,192 |
|
| $ | 745,395 |
|
| $ | 1,086,141 |
|
Total expense |
| 305,128 |
|
|
| 330,148 |
|
|
| 435,125 |
|
|
| 949,760 |
|
|
| 1,602,038 |
|
Net loss |
| (34,262 | ) |
|
| (49,759 | ) |
|
| (137,482 | ) |
|
| (175,743 | ) |
|
| (452,623 | ) |
Diluted loss per share | $ | (0.09 | ) |
| $ | (0.13 | ) |
| $ | (0.37 | ) |
| $ | (0.48 | ) |
| $ | (1.29 | ) |
Non-GAAP Financial Measures(4) |
|
|
|
|
|
|
|
|
| ||||||||||
Adjusted total revenue | $ | 266,363 |
|
| $ | 275,709 |
|
| $ | 249,663 |
|
| $ | 768,263 |
|
| $ | 1,027,540 |
|
Adjusted net loss |
| (26,859 | ) |
|
| (34,329 | ) |
|
| (116,846 | ) |
|
| (121,457 | ) |
|
| (367,101 | ) |
Adjusted EBITDA (LBITDA) |
| 18,493 |
|
|
| 6,499 |
|
|
| (114,133 | ) |
|
| (4,345 | ) |
|
| (380,049 | ) |
(1) | Pull through weighted rate lock volume is the principal balance of loans subject to interest rate lock commitments, net of a pull-through factor for the loan funding probability. | |
(2) | Gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by loan origination volume during period. | |
(3) | Pull through weighted gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by the pull through weighted rate lock volume. | |
(4) | See “Non-GAAP Financial Measures” for a discussion of Non-GAAP Financial Measures and a reconciliation of these metrics to their closest GAAP measure. |
Operational Highlights
- Quarterly non-volume related expenses decreased $18.7 million since the second quarter of 2023, primarily due to lower salaries and benefits resulting from lower headcount and lower legal expenses.
- Incurred expenses related to Vision 2025 plan of $2.5 million during the quarter, including $1.2 million of Vision 2025-related professional services fees, $0.8 million of personnel related expenses and $0.5 million of lease and other asset impairment charges. Vision 2025-related expenses totaled $6.8 million in the second quarter of 2023.
- Accrued $2.0 million of legal expenses related to the expected settlement of outstanding litigation.
- Pull through weighted lock volume of $5.7 billion for the third quarter 2023, a decrease of $0.4 billion or 6% from the second quarter of 2023, resulting in quarterly total revenue of $265.7 million, a decrease of $6.2 million, or 2%, over the same period.
- Loan origination volume for the third quarter of 2023 was $6.1 billion, a decrease of $0.2 billion or 3% from the second quarter of 2023.
- Purchase volume decreased to 71% of total loans originated during the third quarter, down from 73% of total loans originated during the second quarter of 2023 and up from 70% of total loans originated during the third quarter of 2022.
- For the three months ended September 30, 2023, our preliminary organic refinance consumer direct recapture rate1 increased to 71% from the second quarter’s refinance rate of 68%. This highlights the effectiveness of our marketing efforts, the strength of our customer relationships, and the value of our servicing portfolio for adjacent and complementary revenue opportunities.
- Net loss for the third quarter of 2023 of $34.3 million as compared to net loss of $49.8 million in the second quarter of 2023. Net loss decreased quarter over quarter primarily due to a decrease in expenses exceeding the decrease in revenue.
- Adjusted EBITDA for the third quarter of 2023 was $18.5 million as compared to adjusted EBITDA of $6.5 million for the second quarter of 2023.
_______________ |
1 We define organic refinance consumer direct recapture rate as the total unpaid principal balance (“UPB”) of loans in our servicing portfolio that are paid in full for purposes of refinancing the loan on the same property, with the Company acting as lender on both the existing and new loan, divided by the UPB of all loans in our servicing portfolio that paid in full for the purpose of refinancing the loan on the same property. The recapture rate is finalized following the publication date of this release when external data becomes available. |
Outlook for the fourth quarter of 2023
- Origination volume of between $4 billion and $6 billion.
- Pull-through weighted rate lock volume of between $3.8 billion and $5.8 billion.
- Pull-through weighted gain on sale margin of between 240 basis points and 280 basis points.
Servicing
|
| Three Months Ended |
| Nine Months Ended | ||||||||||||||||
Servicing Revenue Data: ($ in thousands) (Unaudited) |
| Sep 30, 2023 |
| Jun 30, 2023 |
| Sep 30, 2022 |
| Sep 30, 2023 |
| Sep 30, 2022 | ||||||||||
Due to changes in valuation inputs or assumptions |
| $ | 68,651 |
|
| $ | 26,138 |
|
| $ | 75,366 |
|
| $ | 73,422 |
|
| $ | 373,158 |
|
Due to collection/realization of cash flows |
|
| (38,502 | ) |
|
| (41,619 | ) |
|
| (49,519 | ) |
|
| (114,777 | ) |
|
| (193,022 | ) |
Realized gains (losses) on sales of servicing rights, net (1) |
|
| 3,516 |
|
|
| 7,021 |
|
|
| (13,489 | ) |
|
| 10,677 |
|
|
| (5,949 | ) |
Net loss from derivatives hedging servicing rights |
|
| (69,353 | ) |
|
| (30,014 | ) |
|
| (50,837 | ) |
|
| (96,290 | ) |
|
| (314,557 | ) |
Changes in fair value of servicing rights, net |
| $ | (35,688 | ) |
| $ | (38,474 | ) |
| $ | (38,479 | ) |
| $ | (126,968 | ) |
| $ | (140,370 | ) |
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Servicing fee income |
| $ | 118,783 |
|
| $ | 117,737 |
|
| $ | 113,544 |
|
| $ | 355,482 |
|
| $ | 341,929 |
|
(1) | Includes the provision for sold MSRs. |
|
| Three Months Ended |
| Nine Months Ended | ||||||||||||||||
Servicing Rights, at Fair Value: ($ in thousands) (Unaudited) |
| Sep 30, 2023 |
| Jun 30, 2023 |
| Sep 30, 2022 |
| Sep 30, 2023 |
| Sep 30, 2022 | ||||||||||
Balance at beginning of period |
| $ | 1,998,762 |
|
| $ | 2,016,568 |
|
| $ | 2,204,593 |
|
| $ | 2,025,136 |
|
| $ | 1,999,402 |
|
Additions |
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