Uwm holdings corporation announces second quarter 2022 results
Pontiac, mich.--(business wire)--uwm holdings corporation (nyse: uwmc), the publicly traded indirect parent of united wholesale mortgage (“uwm”), the #1 wholesale and #1 purchase mortgage originator in america, today announced its results for the second quarter ended june 30, 2022. the company reported 2q22 net income of $215.4 million and diluted earnings per share of $0.09. loan origination volume for the quarter was $29.9 billion, which included $22.4 billion in purchase volume. net income for the second quarter was inclusive of a $26.2 million increase in fair value of msrs. mat ishbia, chairman and ceo of uwmc, said, "uwm's scale and agility, coupled with the momentum of the broker channel drove outstanding results in the second quarter. not only were we able to deliver strong profitability, we also continued our streak of delivering significant purchase volume. we remain committed to providing elite service, technology and speed to enable our clients, independent mortgage brokers, to shine and grow in any market environment." second quarter 2022 financial highlights originations of $29.9 billion in 2q22, compared to $59.2 billion in 2q21 purchase originations of $22.4 billion in 2q22, a 17% increase compared to $19.1 billion in 1q22 and a 7% decrease compared to $24.1 billion in 2q21 net income of $215.4 million in 2q22, a 55% increase compared to $138.7 million of net income in 2q21 total gain margin of 99 bps in 2q22 compared to 81 bps in 2q21 total equity of $3.2 billion at june 30, 2022, as compared to $2.7 billion at june 30, 2021 unpaid principal balance of msrs increased to $308.1 billion with a wac of 3.19% at june 30, 2022, as compared to $260.5 billion with a wac of 2.97% at june 30, 2021 production and income statement highlights (dollars in thousands) q2 2022 q1 2022 q2 2021 loan origination volume(1) $ 29,881,809 $ 38,812,329 $ 59,210,747 total gain margin(1)(2) 0.99 % 0.99 % 0.81 % net income $ 215,445 $ 453,287 $ 138,712 diluted eps 0.09 0.22 0.07 adjusted net income(3) 165,274 349,585 107,149 adjusted ebitda(3) 94,994 128,407 209,651 (1) key operational metric - see discussion below. (2) represents total loan production income divided by loan origination volume. (3) non-gaap metric - see discussion below. balance sheet highlights as of period-end (dollars in thousands) q2 2022 q1 2022 q2 2021 cash and cash equivalents $ 958,656 $ 901,174 $ 1,048,177 mortgage loans at fair value 5,332,383 5,208,167 12,404,112 mortgage servicing rights 3,736,359 3,514,102 2,662,556 total assets 11,016,910 10,990,953 16,844,098 non-funding debt (1) 2,153,795 2,156,641 1,548,088 total equity 3,223,902 3,166,242 2,686,986 non-funding debt to equity (1) 0.67 0.68 0.58 (1) non-gaap metric - please see discussion below. mortgage servicing rights (dollars in thousands) q2 2022 q1 2022 q2 2021 unpaid principal balance $ 308,093,311 $ 303,425,697 $ 260,514,602 weighted average interest rate 3.19 % 3.04 % 2.97 % weighted average age (months) 13 12 7 technology update bolt, our latest underwriting technology, launched in q3 of 2021, saw adoption increase from 1q22 to 2q22, and we continue to see this groundbreaking technology cut application to ctc (“clear to close”) on conventional loans that utilize bolt by an average of approximately 4 business days, while also improving underwriting efficiency operational highlights we averaged an application to clear to close of approximately 19 business days in 2q22, while management estimates an industry average of 44 days1 during 1q22 achieved net promoter score of +87.7 in 2q22, up from +84.8 in 2q21 our 0.69% 60+ days delinquency and our 0.49% forbearance rates, as of june 30, 2022, are significantly better than the industry averages of 1.7%2 and 0.81%,3 respectively, highlighting our strong credit quality uwm launched boost, a uwm-exclusive platform which provides independent mortgage brokers with streamlined access to purchase tailored leads, stay in touch with past clients, connect with real estate agents and opt into live call transfers. this new platform is designed to support additional long-term business growth for the wholesale channel. on june 22, 2022, launched "game on" pricing initiative to capture market share and promote and grow the broker channel hosted uwm live, our inaugural in-person trade show at the uwm sports complex. nearly 5,000 loan officers from across america attended for training, networking and presentations. _____________________________ 1 source: ice mortgage technology; 2 source: corelogic (as of april 2022); 3 source: mortgage bankers association. product and investor mix - unpaid principal balance of originations (dollars in thousands) purchase: q2 2022 q1 2022 q2 2021 conventional $ 14,891,850 $ 13,297,954 $ 17,439,162 jumbo 1,718,616 1,532,197 3,151,864 government 5,773,192 4,272,747 3,471,430 total purchase $ 22,383,658 $ 19,102,898 $ 24,062,456 refinance: q2 2022 q1 2022 q2 2021 conventional $ 5,335,495 $ 15,597,602 $ 30,143,310 jumbo 382,393 702,631 2,737,040 government 1,780,263 3,409,198 2,267,940 total refinance $ 7,498,151 $ 19,709,431 $ 35,148,290 total originations $ 29,881,809 $ 38,812,329 $ 59,210,746 mat ishbia, chairman and ceo of uwmc also said, “as we look forward, i am confident that our strategy to grow the broker channel is working. with our game on initiative we are already seeing the benefits of new brokers working with us as well as an uptick in new loan officers joining the channel, and an acceleration of traffic to our beamortgagebroker.com site. all of this gives us the chance to demonstrate our elite service, speed and technology, helping us further grow the broker channel and our own market share.” third quarter 2022 outlook we anticipate third quarter production to be in the $23-$28 billion range, with gain margin from 30 to 60 basis points. dividend subsequent to june 30, 2022, for the seventh consecutive quarter, the company's board of directors declared a cash dividend of $0.10 per share on the outstanding shares of class a common stock. the dividend is payable on october 10, 2022, to stockholders of record at the close of business on september 20, 2022. additionally, the board approved a proportional distribution to sfs corp. of $150.2 million which is payable on october 10, 2022. earnings conference call details as previously announced, the company will hold a conference call for financial analysts and investors on tuesday, august 9, at 10:00 am et to review the results and answer questions. interested parties may register for a toll-free dial-in number by visiting: https://conferencingportals.com/event/ymodynrv please dial in at least 15 minutes in advance to ensure a timely connection to the call. audio webcast, taped replay and a transcript will be available on the company's investor relations website at https://investors.uwm.com/. key operational metrics “loan origination volume” and “total gain margin” are key operational metrics that the company's management uses to evaluate the performance of the business. “loan origination volume” is the aggregate principal of the residential mortgage loans originated by the company during a period. “total gain margin” represents total loan production income divided by loan origination volume for the applicable periods. non-gaap metrics the company's net income for periods prior to the first quarter of 2021 does not reflect a significant income tax provision, since uwm (the company's accounting predecessor) is a pass-through entity not subject to federal and most state income taxes. for periods commencing with the first quarter of 2021, the company's net income does not reflect the income tax provision that would otherwise be reflected if 100% of the economic interest in uwm was owned by the company. therefore, for comparison purposes, the company provides “adjusted net income,” which is our pre-tax income adjusted for a 23.56% estimated annual effective tax rate. “adjusted net income” is a non-gaap metric. "adjusted diluted eps" is defined as "adjusted net income" divided by the weighted average number of shares of class a common stock outstanding for the applicable period, assuming the exchange and conversion of all outstanding class d common stock for class a common stock, and is calculated and presented for periods in which the assumed exchange and conversion of class d common stock to class a common stock is anti-dilutive to eps. we also disclose adjusted ebitda, which we define as earnings before interest expense on non-funding debt, provision for income taxes, depreciation and amortization, stock-based compensation expense, the change in fair value of msrs due to valuation inputs or assumptions, the impact of non-cash deferred compensation expense, the change in fair value of the public and private warrants, the change in tax receivable agreement liability and the change in fair value of retained investment securities. we exclude the change in tax receivable agreement liability, the change in fair value of the public and private warrants, the change in fair value of retained investment securities, and the change in fair value of msrs due to valuation inputs or assumptions, as these represent non-cash, non-realized adjustments to our earnings, which is not indicative of our performance or results of operations. adjusted ebitda includes interest expense on funding facilities, which are recorded as a component of interest expense, as these expenses are a direct operating expense driven by loan origination volume. by contrast, interest expense on non-funding debt is a function of our capital structure and is therefore excluded from adjusted ebitda. in addition, we disclose “non-funding debt” and the “non-funding debt to equity ratio” as a non-gaap metric. we define “non-funding debt” as the total of the company's senior notes, operating lines of credit, borrowings against investment securities, equipment note payable, and finance leases and the “non-funding debt to equity ratio” as total non-funding debt divided by the company’s total equity. management believes that these non-gaap metrics provide useful information to investors. these measures are not financial measures calculated in accordance with gaap and should not be considered as a substitute for any other operating performance measure calculated in accordance with gaap, and may not be comparable to a similarly titled measure reported by other companies. the following table presents these non-gaap financial measures along with their most directly comparable financial measure calculated in accordance with gaap (dollars in thousands): adjusted net income q2 2022 q1 2022 q2 2021 earnings before income taxes $ 216,214 $ 457,332 $ 140,174 impact of estimated annual effective tax rate of 23.56% (50,940 ) (107,747 ) (33,025 ) adjusted net income $ 165,274 $ 349,585 $ 107,149 adjusted diluted eps q2 2022 diluted weighted average class a common shares outstanding 92,533,620 assumed pro forma conversion of class d shares (1) 1,502,069,787 adjusted diluted weighted average shares outstanding 1,594,603,407 adjusted net income (in thousands) $ 165,274 adjusted diluted eps 0.10 (1) reflects the pro forma exchange and conversion of antidilutive class d common stock to class a common stock. adjusted ebitda q2 2022 q1 2022 q2 2021 net income $ 215,445 $ 453,287 $ 138,712 interest expense on non-funding debt 29,692 29,558 22,292 provision for income taxes 769 4,045 1,462 depreciation and amortization 11,181 10,915 8,353 stock-based compensation expense 1,676 1,828 2,327 change in fair value of msrs due to valuation inputs or assumptions (176,456 ) (390,980 ) 38,035 deferred compensation, net 3,125 12,252 — change in fair value of public and private warrants (2,850 ) (4,132 ) (1,530 ) change in tax receivable agreement liability 2,500 700 — change in fair value of investment securities 9,912 10,934 — adjusted ebitda $ 94,994 $ 128,407 $ 209,651 non-funding debt and non-funding debt to equity q2 2022 q1 2022 q2 2021 senior notes $ 1,982,103 $ 1,981,106 $ 1,483,587 borrowings against investment securities 118,786 118,786 — equipment note payable 1,536 1,803 2,583 finance lease liability 51,370 54,945 61,918 total non-funding debt $ 2,153,795 $ 2,156,641 $ 1,548,088 total equity $ 3,223,902 $ 3,166,242 $ 2,686,986 non-funding debt to equity 0.67 0.68 0.58 forward-looking statements this press release and our earnings call include forward-looking statements. these forward-looking statements are generally identified by the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict” and similar words indicating that these reflect our views with respect to future events. forward-looking statements in this press release and our earnings call include statements regarding: (1) our position amongst our competitors and ability to capture market share; (2) growth of the wholesale and broker channels, the impact of our strategies on such growth and the benefits to our business of such growth; (3) our growth to be the leading mortgage lender, and the timing of that growth; (4) the benefits and liquidity of our msr portfolio; (5) our beliefs related to the amount and timing of our dividend; (6) our “game on” initiative and its impact on our business and industry; (7) our foundation and strategies for success and growth and the drivers of that growth; (8) our expectations related to production and margin in the third quarter and full year 2022; (9) our “all-in” initiative and its impact on our business and industry; (10) our performance in shifting market conditions and the comparison of such performance against our competitors; (11) growth of the wholesale channel and the benefits to our business of such growth; (12) our investments in technology and the impact to our operations and financial results; and (13) our purchase production and product mix. these statements are based on management’s current expectations, but are subject to risks and uncertainties, many of which are outside of our control, and could cause future events or results materially differ from those stated or implied in the forward-looking statements, including (i) uwm’s dependence on macroeconomic and u.s. residential real estate market conditions, including changes in u.s. monetary policies that affect interest rates; (ii) uwm’s reliance on its warehouse facilities and the risk of a decrease in the value of the collateral underlying certain of its facilities causing an unanticipated margin call; (iii) uwm’s ability to sell loans in the secondary market; (iv) uwm’s dependence on the government-sponsored entities such as fannie mae and freddie mac; (v) changes in the gses’, fha, usda and va guidelines or gse and ginnie mae guarantees; (vi) uwm’s dependence on independent mortgage advisors to originate mortgage loans; (vii) the risk that an increase in the value of the mbs uwm sells in forward markets to hedge its pipeline may result in an unanticipated margin call; (viii) uwm’s inability to continue to grow, or to effectively manage the growth of its loan origination volume; (ix) uwm’s ability to continue to attract and retain its independent mortgage advisor relationships; (x) uwm’s ability to implement technological innovation; (xi) uwm’s ability to continue to comply with the complex state and federal laws, regulations or practices applicable to mortgage loan origination and servicing in general; and (xii) other risks and uncertainties indicated from time to time in our filings with the securities and exchange commission including those under “risk factors” therein. with respect to expectations regarding the share repurchase program, the amount and timing of share repurchases will depend upon, among other things, market conditions, share price, liquidity targets and regulatory requirements. we wish to caution readers that certain important factors may have affected and could in the future affect our results and could cause actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of us. we undertake no obligation to update forward-looking statements to reflect events or circumstances after the date hereof. about uwm holdings corporation and united wholesale mortgage headquartered in pontiac, michigan, uwm holdings corporation (the company) is the publicly traded indirect parent of united wholesale mortgage, llc (“uwm”). uwm is the largest wholesale mortgage lender in the united states, originating mortgage loans exclusively through the wholesale channel. with a culture of continuous innovation of technology and enhanced client experience, uwm leads the market by building upon its proprietary and exclusively licensed technology platforms, superior service and focused partnership with the independent mortgage broker community. uwm originates primarily conforming and government loans across all 50 states and the district of columbia. uwm holdings corporation consolidated balance sheets (in thousands, except shares and per share amounts) june 30, 2022 december 31, 2021 assets (unaudited) cash and cash equivalents $ 958,656 $ 731,088 mortgage loans at fair value 5,332,383 17,473,324 derivative assets 125,079 67,356 investment securities at fair value, pledged 125,193 152,263 accounts receivable, net 350,090 415,691 mortgage servicing rights 3,736,359 3,314,952 premises and equipment, net 153,971 151,687 operating lease right-of-use asset, net (includes $102,454 and $104,595 with related parties) 102,533 104,828 finance lease right-of-use asset (includes $27,900 and $28,619 with related parties) 50,179 57,024 other assets 82,467 60,145 total assets $ 11,016,910 $ 22,528,358 liabilities and equity warehouse lines of credit $ 4,497,353 $ 15,954,938 derivative liabilities 93,958 36,741 borrowings against investment securities 118,786 118,786 accounts payable, accrued expenses and other 780,166 1,087,411 accrued distributions and dividends payable 159,461 9,171 senior notes 1,982,103 1,980,112 operating lease liability (includes $109,732 and $111,999 with related parties) 109,811 112,231 finance lease liability (includes $28,633 and $29,087 with related parties) 51,370 57,967 total liabilities 7,793,008 19,357,357 equity: preferred stock, $0.0001 par value - 100,000,000 shares authorized, none issued and outstanding as of june 30, 2022 — — class a common stock, $0.0001 par value - 4,000,000,000 shares authorized, 92,539,245 shares issued and outstanding as of june 30, 2022 9 9 class b common stock, $0.0001 par value - 1,700,000,000 shares authorized, none issued and outstanding as of june 30, 2022 — — class c common stock, $0.0001 par value - 1,700,000,000 shares authorized, none issued and outstanding as of june 30, 2022 — — class d common stock, $0.0001 par value - 1,700,000,000 shares authorized, 1,502,069,787 shares issued and outstanding as of june 30, 2022 150 150 additional paid-in capital 669 437 retained earnings 137,955 141,805 non-controlling interest 3,085,119 3,028,600 total equity 3,223,902 3,171,001 total liabilities and equity $ 11,016,910 $ 22,528,358 uwm holdings corporation consolidated statements of operations (in thousands, except shares and per share amounts) (unaudited) for the three months ended for the six months ended june 30, 2022 march 31, 2022 june 30, 2021 june 30, 2022 june 30, 2021 revenue loan production income $ 296,535 $ 383,871 $ 479,274 $ 680,406 $ 1,553,939 loan servicing income 179,501 198,565 145,278 378,066 269,067 change in fair value of mortgage servicing rights 26,169 171,963 (219,104 ) 198,132 (278,363 ) gain (loss) on sale of mortgage servicing rights — — 10 — 4,773 interest income 62,020 67,395 79,194 129,415 125,106 total revenue, net 564,225 821,794 484,652 1,386,019 1,674,522 expenses salaries, commissions and benefits 138,983 160,609 172,951 299,592 386,012 direct loan production costs 25,757 26,718 15,518 52,475 28,680 marketing, travel, and entertainment 20,625 12,837 11,330 33,462 21,825 depreciation and amortization 11,181 10,915 8,353 22,096 15,642 general and administrative 39,909 38,323 42,116 78,232 58,894 servicing costs 44,435 47,184 23,067 91,619 43,575 interest expense 57,559 60,374 72,673 117,933 125,663 other expense/(income) 9,562 7,502 (1,530 ) 17,064 (18,834 ) total expenses 348,011 364,462 344,478 712,473 661,457 earnings before income taxes 216,214 457,332 140,174 673,546 1,013,065 provision for income taxes 769 4,045 1,462 4,814 14,348 net income 215,445 453,287 138,712 668,732 998,717 net income attributable to non-controlling interest 207,079 431,357 130,448 638,436 942,468 net income attributable to uwmc $ 8,366 $ 21,930 $ 8,264 $ 30,296 $ 56,249 earnings per share of class a common stock: basic $ 0.09 $ 0.24 $ 0.08 $ 0.33 $ 0.55 diluted $ 0.09 $ 0.22 $ 0.07 $ 0.32 $ 0.39 weighted average shares outstanding: basic 92,533,620 92,214,594 102,760,823 92,374,988 102,908,906 diluted 92,533,620 1,594,284,381 1,605,067,478 1,594,444,775 1,605,215,562 addendum to exhibit 99.1 this addendum includes the company's consolidated balance sheets as of june 30, 2022, and the preceding four quarters and statements of operations for the quarter ended june 30, 2022, and the preceding four quarters for purposes of providing historical quarterly trending information to investors. consolidated balance sheets (in thousands, except shares and per share amounts) june 30, 2022 march 31, 2022 december 31, 2021 september 30, 2021 june 30, 2021 assets (unaudited) (unaudited) (unaudited) (unaudited) cash and cash equivalents $ 958,656 $ 901,174 $ 731,088 $ 950,910 $ 1,048,177 mortgage loans at fair value 5,332,383 5,208,167 17,473,324 11,736,642 12,404,112 derivative assets 125,079 241,932 67,356 143,807 75,438 investment securities at fair value, pledged 125,193 138,417 152,263 41,809 — accounts receivable, net 350,090 617,608 415,691 340,028 317,458 mortgage servicing rights 3,736,359 3,514,102 3,314,952 2,900,310 2,662,556 premises and equipment, net 153,971 151,206 151,687 145,774 130,864 operating lease right-of-use asset, net 102,533 103,670 104,828 105,902 87,130 finance lease right-of-use asset 50,179 53,857 57,024 60,113 61,356 other assets 82,467 60,820 60,145 55,655 57,007 total assets $ 11,016,910 $ 10,990,953 $ 22,528,358 $ 16,480,950 $ 16,844,098 liabilities and equity warehouse lines of credit $ 4,497,353 $ 4,076,829 $ 15,954,938 $ 10,487,950 $ 11,249,213 derivative liabilities 93,958 115,430 36,741 61,434 82,551 borrowings against investment securities 118,786 118,786 118,786 32,560 — accounts payable, accrued expenses and other 780,166 1,207,145 1,087,411 1,231,826 1,021,119 accrued distributions and dividends payable 159,461 159,460 9,171 10,087 160,444 senior notes 1,982,103 1,981,106 1,980,112 1,484,370 1,483,587 operating lease liability 109,811 111,010 112,231 117,824 98,280 finance lease liability 51,370 54,945 57,967 60,871 61,918 total liabilities 7,793,008 7,824,711 19,357,357 13,486,922 14,157,112 equity: preferred stock, $0.0001 par value - 100,000,000 shares authorized, none issued and outstanding as of june 30, 2022 — — — — — class a common stock, $0.0001 par value - 4,000,000,000 shares authorized, 92,539,245 shares issued and outstanding as of june 30, 2022 9 9 9 10 10 class b common stock, $0.0001 par value - 1,700,000,000 shares authorized, none issued and outstanding as of june 30, 2022 — — — — — class c common stock, $0.0001 par value - 1,700,000,000 shares authorized, none issued and outstanding as of june 30, 2022 — — — — — class d common stock, $0.0001 par value - 1,700,000,000 shares authorized, 1,502,069,787 shares issued and outstanding as of june 30, 2022 150 150 150 150 150 additional paid-in capital 669 542 437 313 187 retained earnings 137,955 138,834 141,805 129,815 109,397 non-controlling interest 3,085,119 3,026,707 3,028,600 2,863,740 2,577,242 total equity 3,223,902 3,166,242 3,171,001 2,994,028 2,686,986 total liabilities and equity $ 11,016,910 $ 10,990,953 $ 22,528,358 $ 16,480,950 $ 16,844,098 consolidated statements of operations (in thousands, except shares and per share amounts) (unaudited) for the three months ended june 30, 2022 march 31, 2022 december 31, 2021 september 30, 2021 june 30, 2021 revenue loan production income $ 296,535 $ 383,871 $ 442,407 $ 589,461 $ 479,274 loan servicing income 179,501 198,565 194,976 174,695 145,278 change in fair value of mortgage servicing rights 26,169 171,963 (138,988 ) (170,462 ) (219,104 ) gain (loss) on sale of mortgage servicing rights — — 2,461 (5,443 ) 10 interest income 62,020 67,395 104,601 102,063 79,194 total revenue, net 564,225 821,794 605,457 690,314 484,652 expenses salaries, commissions and benefits 138,983 160,609 146,697 164,971 172,951 direct loan production costs 25,757 26,718 25,292 18,980 15,518 marketing, travel, and entertainment 20,625 12,837 25,334 14,138 11,330 depreciation and amortization 11,181 10,915 10,422 9,034 8,353 general and administrative 39,909 38,323 36,467 39,148 42,116 servicing costs 44,435 47,184 36,200 29,192 23,067 interest expense 57,559 60,374 88,772 90,221 72,673 other expense/(income) 9,562 7,502 4,437 (8,710 ) (1,530 ) total expenses 348,011 364,462 373,621 356,974 344,478 earnings before income taxes 216,214 457,332 231,836 333,340 140,174 provision for income taxes 769 4,045 (7,990 ) 3,483 1,462 net income 215,445 453,287 239,826 329,857 138,712 net income attributable to non-controlling interest 207,079 431,357 222,876 304,611 130,448 net income attributable to uwmc 8,366 21,930 16,950 25,246 $ 8,264 earnings per share of class a common stock: basic $ 0.09 $ 0.24 $ 0.17 $ 0.25 $ 0.08 diluted $ 0.09 $ 0.22 $ 0.11 $ 0.16 $ 0.07 weighted average shares outstanding: basic 92,533,620 92,214,594 97,138,073 101,106,023 102,760,823 diluted 92,533,620 1,594,284,381 1,599,785,759 1,603,710,511 1,605,067,478
