Uwm holdings corporation announces first 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 mortgage lender in america, today announced its results for the first quarter ended march 31, 2022. the company reported 1q22 net income of $453.3 million and diluted earnings per share of $0.22. loan origination volume for the quarter was $38.8 billion, which included $19.1 billion in purchase volume, a q1 record for uwm. net income for the first quarter was inclusive of a $172.0 million increase in fair value of msrs. mat ishbia, chairman and ceo of uwmc said, "this quarter, we demonstrated that our business can continue to be profitable in significantly different market conditions than what we've seen over the past two years. we earned this position by building a business over the past 36 years that can take advantage of what the market provides. we are seeing independent mortgage brokers grow in both their share of market and loan officer population. our scale and agility coupled with the momentum in the broker channel is driving our ability to separate even further from the pack." first quarter 2022 financial highlights originations of $38.8 billion in 1q22, a 21% decrease from $49.1 billion in 1q21 purchase originations of $19.1 billion in 1q22, a 56% increase compared to $12.2 billion in 1q21, and a q1 record for the company net income of $453.3 million in 1q22 as compared to $860.0 million of net income in 1q21 total gain margin of 99 bps in 1q22 compared to 219 bps in 1q21 total equity of $3.2 billion at march 31, 2022 as compared to $2.8 billion at march 31, 2021 unpaid principal balance of msrs increased to $303.4 billion with a wac of 3.04% at march 31, 2022 as compared to $221.0 billion with a wac of 3.00% at march 31, 2021 production and income statement highlights (dollars in thousands) q1 2022 q4 2021 q1 2021 funded loan volume(1) $ 38,812,329 $ 55,194,365 $ 49,094,240 total gain margin(1)(2) 0.99 % 0.80 % 2.19 % net income $ 453,287 $ 239,826 $ 860,005 adjusted net income(3) 349,402 177,123 666,889 adjusted ebitda(3) 128,407 206,887 711,418 (1) key operational metric - see discussion below. (2) represents total loan production income divided by funded loan volume. (3) non-gaap metric - see discussion below. balance sheet highlights as of period-end (dollars in thousands) q1 2022 q4 2021 q1 2021 cash and cash equivalents $ 901,174 $ 731,088 $ 1,592,663 mortgage loans at fair value 5,208,167 17,473,324 5,503,271 mortgage servicing rights 3,514,102 3,314,952 2,300,434 total assets 10,990,953 22,528,358 10,372,626 non-funding debt (1) 2,156,641 2,158,911 1,270,167 total equity 3,166,242 3,171,001 2,778,036 non-funding debt to equity (1) 0.68 0.68 0.46 (1) non-gaap metric - please see discussion below. mortgage servicing rights (dollars in thousands) q1 2022 q4 2021 q1 2021 unpaid principal balance $ 303,425,697 $ 319,807,457 $ 220,978,670 weighted average interest rate 3.04 % 2.94 % 3.00 % weighted average age (months) 12 9 7 technology update bolt, our latest underwriting technology, developed in-house and launched in q3 of 2021, saw adoption increase by approximately 52% from 4q21 to 1q22, and we continue to see this groundbreaking technology cut application to ctc (“clear to close”) on conventional loans by an average of approximately 4 calendar days, while improving underwriting efficiency operational highlights we maintained an average clear to close of approximately 18 business days in 1q22, while management estimates an industry average of 43 days1 during 4q21 our 0.75% 60+ days delinquency and our 0.54% forbearance rates, as of march 31, 2022, are significantly better than the industry averages of 2.1%2 and 1.1%,3 respectively, highlighting our strong credit quality product and investor mix - unpaid principal balance of originations (dollars in thousands) purchase: q1 2022 q4 2021 q1 2021 conventional $ 13,297,954 $ 16,643,586 $ 10,310,924 jumbo 1,532,197 2,861,921 13,264 government 4,272,747 4,996,092 1,893,354 total purchase $ 19,102,898 $ 24,501,599 $ 12,217,542 refinance: q1 2022 q4 2021 q1 2021 conventional $ 15,597,602 $ 25,032,327 $ 33,623,348 jumbo 702,631 2,074,353 5,446 government 3,409,198 3,586,086 3,247,904 total refinance $ 19,709,431 $ 30,692,766 $ 36,876,698 total originations $ 38,812,329 $ 55,194,365 $ 49,094,240 "uwm has built a strong business that will continue to thrive in any market environment. this purchase market will act as the catalyst for accelerated broker channel growth. brokers are experts in purchase transactions, making mortgages faster, easier and cheaper for borrowers across america," said ishbia, chairman and ceo of the company. _____________________________ 1 source: ice mortgage technology; 2 source: corelogic (as of january 2022); 3 source: mortgage bankers association. share repurchase program on may 9, 2021, the company's board of directors authorized a share repurchase program of up to $300 million in aggregate value of the company’s class a common stock effective may 11, 2021. the share repurchase program authorizes the company to repurchase shares of the company’s class a common stock from time to time, in the open market or through privately negotiated transactions, at management's discretion based on market and business conditions, applicable legal and regulatory requirements as well as other factors. shares purchased will be retired. the plan will expire on may 11, 2023 unless otherwise modified or terminated by the company's board of directors at any time in the company's sole discretion. through december 31, 2021, total class a shares repurchased by the company were 11,498,330 for $81.6 million, at an average price per share of $7.10. while approximately $218 million remains on the authorization and the share price is currently trading lower that previous purchases, the company's leadership and the board of directors are conscientious to maintain a reasonable public float. the company remains committed to returning value to shareholders in the form of a dividend, and will continue to assess the right time for further share repurchases. second quarter 2022 outlook we anticipate second quarter production to be in the $26-$33 billion range, with gain margin from 75 to 90 basis points. dividend subsequent to march 31, 2022, for the sixth 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 july 11, 2022 to stockholders of record at the close of business on june 21, 2022. additionally, the board approved a proportional distribution to sfs corp. of $150.2 million which is payable on july 11, 2022. earnings conference call details as previously announced, the company will hold a conference call for financial analysts and investors on tuesday, may 10, 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 transcript will be available on the company's investor relations website at https://investors.uwm.com/. key operational metrics “funded loan volume” and “total gain margin” are key operational metrics that the company's management uses to evaluate the performance of the business. “funded loan 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 funded loan 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 23.6% estimated annual effective tax rate. “adjusted net income” is a non-gaap metric. 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 q1 2022 q4 2021 q1 2021 earnings before income taxes $ 457,332 $ 231,836 $ 872,891 impact of estimated annual effective tax rate of 23.6% (107,930 ) (54,713 ) (206,002 ) adjusted net income $ 349,402 $ 177,123 $ 666,889 adjusted ebitda q1 2022 q4 2021 q1 2021 net income $ 453,287 $ 239,826 $ 860,005 interest expense on non-funding debt 29,558 25,417 16,343 provision for income taxes 4,045 (7,990 ) 12,886 depreciation and amortization 10,915 10,422 7,289 stock-based compensation expense 1,828 2,014 — change in fair value of msrs due to valuation inputs or assumptions (390,980 ) (65,104 ) (197,802 ) deferred compensation, net 12,252 (2,135 ) 30,000 change in fair value of public and private warrants (4,132 ) (5,161 ) (17,303 ) change in tax receivable agreement liability 700 8,537 — change in fair value of investment securities 10,934 1,061 — adjusted ebitda $ 128,407 $ 206,887 $ 711,418 non-funding debt and non-funding debt to equity q1 2022 q4 2021 q1 2021 senior notes $ 1,981,106 $ 1,980,112 $ 789,870 borrowings against investment securities 118,786 118,786 — operating lines of credit — — 400,000 equipment note payable 1,803 2,046 25,424 finance lease liability 54,945 57,967 54,873 total non-funding debt $ 2,156,641 $ 2,158,911 $ 1,270,167 total equity $ 3,166,242 $ 3,171,001 $ 2,778,036 non-funding debt to equity 0.68 0.68 0.46 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 include statements regarding: (1) our foundation and strategies for growth and the drivers of that growth; (2) our “all-in” initiative and its impact on our business and industry; (3) our performance in shifting market conditions and the comparison of such performance against our competitors; (4) growth of the wholesale channel and the benefits to our business of such growth; (5) our investments in technology and the impact to our operations and financial results; and (6) 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) march 31, 2022 december 31, 2021 assets cash and cash equivalents $ 901,174 $ 731,088 mortgage loans at fair value 5,208,167 17,473,324 derivative assets 241,932 67,356 investment securities at fair value, pledged 138,417 152,263 accounts receivable, net 617,608 415,691 mortgage servicing rights 3,514,102 3,314,952 premises and equipment, net 151,206 151,687 operating lease right-of-use asset, net (includes $103,513 and $104,595 with related parties) 103,670 104,828 finance lease right-of-use asset (includes $28,416 and $28,619 with related parties) 53,857 57,024 other assets 60,820 60,145 total assets $ 10,990,953 $ 22,528,358 liabilities and equity warehouse lines of credit $ 4,076,829 $ 15,954,938 derivative liabilities 115,430 36,741 borrowings against investment securities 118,786 118,786 accounts payable, accrued expenses and other 1,207,145 1,087,411 accrued distributions and dividends payable 159,460 9,171 senior notes 1,981,106 1,980,112 operating lease liability (includes $110,854 and $111,999 with related parties) 111,010 112,231 finance lease liability (includes $29,015 and $29,087 with related parties) 54,945 57,967 total liabilities 7,824,711 19,357,357 equity: preferred stock, $0.0001 par value - 100,000,000 shares authorized, none issued and outstanding as of march 31, 2022 — — class a common stock, $0.0001 par value - 4,000,000,000 shares authorized, 92,531,073 shares issued and outstanding as of march 31, 2022 9 9 class b common stock, $0.0001 par value - 1,700,000,000 shares authorized, none issued and outstanding as of march 31, 2022 — — class c common stock, $0.0001 par value - 1,700,000,000 shares authorized, none issued and outstanding as of march 31, 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 march 31, 2022 150 150 additional paid-in capital 542 437 retained earnings 138,834 141,805 non-controlling interest 3,026,707 3,028,600 total equity 3,166,242 3,171,001 total liabilities and equity $ 10,990,953 $ 22,528,358 uwm holdings corporation consolidated statements of operations (in thousands, except shares and per share amounts) (unaudited) for the three months ended march 31, 2022 december 31, 2021 march 31, 2021 revenue loan production income $ 383,871 $ 442,407 $ 1,074,665 loan servicing income 198,565 194,976 123,789 change in fair value of mortgage servicing rights 171,963 (138,988 ) (59,259 ) gain (loss) on sale of mortgage servicing rights — 2,461 4,763 interest income 67,395 104,601 45,912 total revenue, net 821,794 605,457 1,189,870 expenses salaries, commissions and benefits 160,609 146,697 213,061 direct loan production costs 26,718 25,292 13,162 marketing, travel, and entertainment 12,837 25,334 10,495 depreciation and amortization 10,915 10,422 7,289 general and administrative 38,323 36,467 16,778 servicing costs 47,184 36,200 20,508 interest expense 60,374 88,772 52,990 other (income)/expense 7,502 4,437 (17,304 ) total expenses 364,462 373,621 316,979 earnings before income taxes 457,332 231,836 872,891 provision for income taxes 4,045 (7,990 ) 12,886 net income 453,287 239,826 860,005 net income attributable to non-controlling interest 431,357 222,876 812,020 net income attributable to uwmc $ 21,930 $ 16,950 $ 47,985 earnings per share of class a common stock: basic $ 0.24 $ 0.17 $ 0.47 diluted $ 0.22 $ 0.11 $ 0.33 weighted average shares outstanding: basic 92,214,594 97,138,073 103,104,205 diluted 1,594,284,381 1,599,785,759 1,605,173,992 addendum to exhibit 99.1 this addendum includes the company's consolidated balance sheets as of march 31, 2022, and the preceding four quarters and statements of operations for the quarter ended march 31, 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) march 31, 2022 december 31, 2021 september 30, 2021 june 30, 2021 march 31, 2021 assets (unaudited) (unaudited) (unaudited) (unaudited) cash and cash equivalents $ 901,174 $ 731,088 $ 950,910 $ 1,048,177 $ 1,592,663 mortgage loans at fair value 5,208,167 17,473,324 11,736,642 12,404,112 5,503,271 derivative assets 241,932 67,356 143,807 75,438 113,168 investment securities at fair value, pledged 138,417 152,263 41,809 — — accounts receivable, net 617,608 415,691 340,028 317,458 549,381 mortgage servicing rights 3,514,102 3,314,952 2,900,310 2,662,556 2,300,434 premises and equipment, net 151,206 151,687 145,774 130,864 111,964 operating lease right-of-use asset, net 103,670 104,828 105,902 87,130 87,896 finance lease right-of-use asset 53,857 57,024 60,113 61,356 54,456 other assets 60,820 60,145 55,655 57,007 59,393 total assets $ 10,990,953 $ 22,528,358 $ 16,480,950 $ 16,844,098 $ 10,372,626 liabilities and equity warehouse lines of credit $ 4,076,829 $ 15,954,938 $ 10,487,950 $ 11,249,213 $ 4,823,740 derivative liabilities 115,430 36,741 61,434 82,551 55,479 operating lines of credit — — — — 400,000 borrowings against investment securities 118,786 118,786 32,560 — — accounts payable, accrued expenses and other 1,207,145 1,087,411 1,231,826 1,021,119 1,210,923 accrued distributions and dividends payable 159,460 9,171 10,087 160,444 160,517 senior notes 1,981,106 1,980,112 1,484,370 1,483,587 789,870 operating lease liability 111,010 112,231 117,824 98,280 99,188 finance lease liability 54,945 57,967 60,871 61,918 54,873 total liabilities 7,824,711 19,357,357 13,486,922 14,157,112 7,594,590 equity: preferred stock, $0.0001 par value - 100,000,000 shares authorized, none issued and outstanding as of march 31, 2022 — — — — — class a common stock, $0.0001 par value - 4,000,000,000 shares authorized, 92,531,073 shares issued and outstanding as of march 31, 2022 9 9 10 10 10 class b common stock, $0.0001 par value - 1,700,000,000 shares authorized, none issued and outstanding as of march 31, 2022 — — — — — class c common stock, $0.0001 par value - 1,700,000,000 shares authorized, none issued and outstanding as of march 31, 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 march 31, 2022 150 150 150 150 150 additional paid-in capital 542 437 313 187 — retained earnings 138,834 141,805 129,815 109,397 113,078 non-controlling interest 3,026,707 3,028,600 2,863,740 2,577,242 2,664,798 total equity 3,166,242 3,171,001 2,994,028 2,686,986 2,778,036 total liabilities and equity $ 10,990,953 $ 22,528,358 $ 16,480,950 $ 16,844,098 $ 10,372,626 consolidated statements of operations (in thousands, except shares and per share amounts) (unaudited) for the three months ended march 31, 2022 december 31, 2021 september 30, 2021 june 30, 2021 march 31, 2021 revenue loan production income $ 383,871 $ 442,407 $ 589,461 $ 479,274 $ 1,074,665 loan servicing income 198,565 194,976 174,695 145,278 123,789 change in fair value of mortgage servicing rights 171,963 (138,988 ) (170,462 ) (219,104 ) (59,259 ) gain (loss) on sale of mortgage servicing rights — 2,461 (5,443 ) 10 4,763 interest income 67,395 104,601 102,063 79,194 45,912 total revenue, net 821,794 605,457 690,314 484,652 1,189,870 expenses salaries, commissions and benefits 160,609 146,697 164,971 172,951 213,061 direct loan production costs 26,718 25,292 18,980 15,518 13,162 marketing, travel, and entertainment 12,837 25,334 14,138 11,330 10,495 depreciation and amortization 10,915 10,422 9,034 8,353 7,289 general and administrative 38,323 36,467 39,148 42,116 16,778 servicing costs 47,184 36,200 29,192 23,067 20,508 interest expense 60,374 88,772 90,221 72,673 52,990 other (income) expense 7,502 4,437 (8,710 ) (1,530 ) (17,304 ) total expenses 364,462 373,621 356,974 344,478 316,979 earnings before income taxes 457,332 231,836 333,340 140,174 872,891 provision for income taxes 4,045 (7,990 ) 3,483 1,462 12,886 net income 453,287 239,826 329,857 138,712 860,005 net income attributable to non-controlling interest 431,357 222,876 304,611 130,448 812,020 net income attributable to uwmc 21,930 16,950 25,246 8,264 $ 47,985 earnings per share of class a common stock: basic $ 0.24 $ 0.17 $ 0.25 $ 0.08 $ 0.47 diluted $ 0.22 $ 0.11 $ 0.16 $ 0.07 $ 0.33 weighted average shares outstanding: basic 92,214,594 97,138,073 101,106,023 102,760,823 103,104,205 diluted 1,594,284,381 1,599,785,759 1,603,710,511 1,605,067,478 1,605,173,992
