IRVINE, Calif.--(BUSINESS WIRE)--loanDepot, Inc. (NYSE: LDI), (together with its subsidiaries, "loanDepot" or the "Company"), a leading provider of products and services that power the homeownership journey, today announced results for the third quarter ended September 30, 2024.
"Through the successful implementation of our Vision 2025 strategic program, loanDepot returned to profitability in the third quarter on modest improvements in market volumes, which resulted in higher revenue," said President and Chief Executive Officer Frank Martell. "We are also realizing the benefits of our ongoing cost management and productivity programs, which helped to fund strategic investments in our platforms, solutions and people. These investments should help position the company for success in 2025 and beyond.
"Vision 2025, launched in July of 2022, was a critical factor in our successful navigation of unprecedented and challenging market conditions over the past three years. The launch of Project North Star builds on the strategic pillars of Vision 2025, including our focus on durable revenue growth, positive operating leverage, productivity and investments in platforms and solutions that support our customer's homeownership journey," added Martell.
"We are pleased that the successful completion of the strategic objectives of Vision 2025 has delivered the company's first profitable quarter since the beginning of the market downturn in the first quarter of 2022," said David Hayes, Chief Financial Officer. "The third quarter served as validation of our strategy as we saw a modest improvement in the mortgage market, coupled with the company's positive operating leverage fueled our return to profitability. As we look toward 2025, we anticipate continued market challenges, but we believe that the implementation of Project North Star will allow us to capture the benefit of higher market volumes while we continue to capitalize on our ongoing investments in operational efficiency to achieve sustainable profitability in a wide variety of operating environments."
Third Quarter Highlights: | |||||||||||||||||||
Financial Summary | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
($ in thousands except per share data) (Unaudited) | Sep 30,
| Jun 30,
| Sep 30,
| Sep 30,
| Sep 30,
| ||||||||||||||
Rate lock volume | $ | 9,792,423 | $ | 8,298,270 | $ | 8,295,935 | $ | 24,893,023 | $ | 25,738,036 | |||||||||
Pull-through weighted lock volume(1) | 6,748,057 | 5,782,309 | 5,685,209 | 17,262,202 | 17,067,876 | ||||||||||||||
Loan origination volume | 6,659,329 | 6,090,634 | 6,083,143 | 17,308,314 | 17,301,023 | ||||||||||||||
Gain on sale margin(2) | 3.33 | % | 3.06 | % | 2.74 | % | 3.11 | % | 2.66 | % | |||||||||
Pull-through weighted gain on sale margin(3) | 3.29 | % | 3.22 | % | 2.93 | % | 3.12 | % | 2.69 | % | |||||||||
Financial Results | |||||||||||||||||||
Total revenue | $ | 314,598 | $ | 265,390 | $ | 265,661 | $ | 802,772 | $ | 745,395 | |||||||||
Total expense | 311,003 | 342,547 | 305,128 | 961,497 | 949,760 | ||||||||||||||
Net income (loss) | 2,672 | (65,853 | ) | (34,262 | ) | (134,685 | ) | (175,743 | ) | ||||||||||
Diluted earnings (loss) per share | $ | 0.01 | $ | (0.18 | ) | $ | (0.09 | ) | $ | (0.36 | ) | $ | (0.48 | ) | |||||
Non-GAAP Financial Measures(4) | |||||||||||||||||||
Adjusted total revenue | $ | 329,499 | $ | 278,007 | $ | 261,116 | $ | 838,318 | $ | 755,852 | |||||||||
Adjusted net income (loss) | 7,077 | (15,890 | ) | (29,211 | ) | (48,309 | ) | (124,417 | ) | ||||||||||
Adjusted EBITDA | 63,742 | 34,575 | 15,253 | 98,820 | (8,399 | ) | |||||||||||||
(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. |
Year-over-Year Operational Highlights
- Non-volume related expenses decreased $11.4 million from the third quarter of 2023, primarily due to lower general and administrative expenses, offset somewhat by higher headcount related salary expenses and marketing costs.
- Accrued a net benefit of $18.9 million primarily associated with expected insurance proceeds related to the settlement of class-action litigation related to the first quarter Cybersecurity Incident.
- Incurred restructuring and impairment charges totaling $1.9 million, a decrease of $0.4 million from the third quarter of 2023.
- Pull-through weighted lock volume of $6.7 billion for the third quarter of 2024, an increase of $1.1 billion or 19% from the third quarter of 2023.
- Loan origination volume for the third quarter of 2024 was $6.7 billion, an increase of $0.6 billion or 9% from the third quarter of 2023.
- Purchase volume totaled 66% of total loans originated during the third quarter, down slightly from 71% during the third quarter of 2023.
- Our preliminary organic refinance consumer direct recapture rate1 increased to 71% from the third quarter 2023's recapture rate of 69%.
- Net income for the third quarter of 2024 of $2.7 million as compared to net loss of $34.3 million in the third quarter of 2023. Net income increased primarily due to higher revenue from increased volume and pull-through weighted gain on sale margin.
- Adjusted net income for the third quarter of 2024 was $7.1 million as compared to adjusted net loss of $29.2 million for the third quarter of 2023.
Outlook for the fourth quarter of 2024
- Origination volume of between $6 billion and $8 billion.
- Pull-through weighted rate lock volume of between $5.5 billion and $7.5 billion.
- Pull-through weighted gain on sale margin of between 285 basis points and 305 basis points.
Servicing | ||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||
Servicing Revenue Data: ($ in thousands) (Unaudited) | Sep 30,
| Jun 30,
| Sep 30,
| Sep 30,
| Sep 30,
| |||||||||||||||
Due to collection/realization of cash flows | $ | (41,498 | ) | $ | (42,285 | ) | $ | (38,502 | ) | $ | (119,783 | ) | $ | (114,777 | ) | |||||
Due to changes in valuation inputs or assumptions | (52,557 | ) | 15,623 | 68,651 | (8,690 | ) | 73,422 | |||||||||||||
Realized gain (loss) on sale of servicing rights | 32 | (3,057 | ) | 5,247 | (2,980 | ) | 12,411 | |||||||||||||
Net gain (loss) from derivatives hedging servicing rights | 37,624 | (25,183 | ) | (69,353 | ) | (23,876 | ) | (96,290 | ) | |||||||||||
Change in fair value of servicing rights, net of hedging gains and losses | (14,901 | ) | (12,617 | ) | 4,545 | (35,546 | ) | (10,457 | ) | |||||||||||
Other realized losses on sales of servicing rights (1) | (164 | ) | (5,885 | ) | (1,731 | ) | (7,290 | ) | (1,734 | ) | ||||||||||
Changes in fair value of servicing rights, net | $ | (56,563 | ) | $ | (60,787 | ) | $ | (35,688 | ) | $ | (162,619 | ) | $ | (126,968 | ) | |||||
Servicing fee income (2) | $ | 124,133 | $ | 125,082 | $ | 120,911 | $ | 373,273 | $ | 360,329 | ||||||||||
(1) | Includes the (provision) recovery for sold MSRs and broker fees. | |
(2) | Servicing fee income for the three and nine months ended September 30, 2023, has been adjusted to incorporate earnings credits, which were previously classified as part of net interest income. |
_________________________________
| 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. |
Three Months Ended | Nine Months Ended | |||||||||||||||||||
Servicing Rights, at Fair Value: ($ in thousands) (Unaudited) | Sep 30,
| Jun 30,
| Sep 30,
| Sep 30,
| Sep 30,
| |||||||||||||||
Balance at beginning of period | $ | 1,566,463 | $ | 1,970,164 | $ | 1,998,762 | $ | 1,985,718 | $ | 2,025,136 | ||||||||||
Additions | 62,039 | 66,115 | 80,068 | 176,529 | 215,229 | |||||||||||||||
Sales proceeds | (8,466 | ) | (439,199 | ) | (73,972 | ) | (503,777 | ) | (171,167 | ) | ||||||||||
Changes in fair value: | ||||||||||||||||||||
Due to changes in valuation inputs or assumptions | (52,557 | ) | 15,623 | 68,651 | (8,690 | ) | 73,422 | |||||||||||||
Due to collection/realization of cash flows | (41,498 | ) | (42,285 | ) | (38,502 | ) | (119,783 | ) | (114,777 | ) | ||||||||||
Realized gains (losses) on sales of servicing rights | 32 | (3,955 | ) | 3,647 | (3,984 | ) | 10,811 | |||||||||||||
Total changes in fair value | (94,023 | ) | (30,617 | ) | 33,796 | (132,457 | ) | (30,544 | ) | |||||||||||
Balance at end of period (1) | $ | 1,526,013 | $ | 1,566,463 | $ | 2,038,654 | $ | 1,526,013 | $ | 2,038,654 | ||||||||||
(1) | Balances are net of $16.7 million, $16.7 million, and $14.7 million of servicing rights liability as of September 30, 2024, June 30, 2024, and September 30, 2023, respectively. |
% Change | |||||||||||||||||
Servicing Portfolio Data: ($ in thousands) (Unaudited) | Sep 30,
| Jun 30,
| Sep 30,
| Sep-24 vs Jun-24 | Sep-24
| ||||||||||||
Servicing portfolio (unpaid principal balance) | $ | 114,915,206 | $ | 114,278,549 | $ | 143,959,705 | 0.6 | % | (20.2 | )% | |||||||
Total servicing portfolio (units) | 409,344 | 403,302 | 490,191 | 1.5 | (16.5 | ) | |||||||||||
60+ days delinquent ($) | $ | 1,654,955 | $ | 1,457,098 | $ | 1,235,443 | 13.6 | 34.0 | |||||||||
60+ days delinquent (%) | 1.4 | % | 1.3 | % | 0.9 | % | |||||||||||
Servicing rights, net to UPB | 1.3 | % | 1.4 | % | 1.4 | % | |||||||||||
Balance Sheet Highlights | ||||||||||||||
% Change | ||||||||||||||
($ in thousands) (Unaudited) | Sep 30,
| Jun 30,
| Sep 30,
| Sep-24
| Sep-24
| |||||||||
Cash and cash equivalents | $ | 483,048 | $ | 533,153 | $ | 717,196 | (9.4 | )% | (32.6 | )% | ||||
Loans held for sale, at fair value | 2,790,284 | 2,377,987 | 2,070,748 | 17.3 | 34.7 | |||||||||
Loans held for investment, at fair value | 122,066 | 120,287 | - | 1.5 | NM | |||||||||
Servicing rights, at fair value | 1,542,720 | 1,583,128 | 2,053,359 | (2.6 | ) | (24.9 | ) | |||||||
Total assets | 6,417,627 | 5,942,777 | 6,078,529 | 8.0 | 5.6 | |||||||||
Warehouse and other lines of credit | 2,565,713 | 2,213,128 | 1,897,859 | 15.9 | 35.2 | |||||||||
Total liabilities | 5,825,578 | 5,363,839 | 5,309,594 | 8.6 | 9.7 | |||||||||
Total equity | 592,049 | 578,938 | 768,935 | 2.3 | (23.0 | ) | ||||||||
An increase in loans held for sale at September 30, 2024, resulted in a corresponding increase in the balance on our warehouse lines of credit. Total funding capacity with our lending partners was $3.1 billion at September 30, 2024, and $3.9 billion at September 30, 2023. Available borrowing capacity was $0.5 billion at September 30, 2024.
Consolidated Statements of Operations | |||||||||||||||||||
($ in thousands except per share data) | Three Months Ended | Nine Months Ended | |||||||||||||||||
Sep 30,
| Jun 30,
| Sep 30,
| Sep 30,
| Sep 30,
| |||||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||||||||
REVENUES: | |||||||||||||||||||
Interest income | $ | 38,673 | $ | 35,052 | $ | 37,253 | $ | 104,650 | $ | 98,271 | |||||||||
Interest expense | (39,488 | ) | (35,683 | ) | (36,770 | ) | (106,837 | ) | (96,459 | ) | |||||||||
Net interest (expense) income | (815 | ) | (631 | ) | 483 | (2,187 | ) | 1,812 | |||||||||||
Gain on origination and sale of loans, net | 198,027 | 166,920 | 148,849 | 481,007 | 411,336 | ||||||||||||||
Origination income, net | 23,675 | 19,494 | 17,740 | 56,775 | 48,088 | ||||||||||||||
Servicing fee income | 124,133 | 125,082 | 120,911 | 373,273 | 360,329 | ||||||||||||||
Change in fair value of servicing rights, net | (56,563 | ) | (60,787 | ) | (35,688 | ) | (162,619 | ) | (126,968 | ) | |||||||||
Other income | 26,141 | 15,312 | 13,366 | 56,523 | 50,798 | ||||||||||||||
Total net revenues | 314,598 | 265,390 | 265,661 | 802,772 | 745,395 | ||||||||||||||
EXPENSES: | |||||||||||||||||||
Personnel expense | 161,330 | 141,036 | 141,432 | 436,683 | 440,258 | ||||||||||||||
Marketing and advertising expense | 36,282 | 31,175 | 33,894 | 95,811 | 104,520 | ||||||||||||||
Direct origination expense | 23,120 | 21,550 | 15,749 | 62,841 | 50,352 | ||||||||||||||
General and administrative expense | 22,984 | 73,160 | 46,522 | 153,889 | 157,473 | ||||||||||||||
Occupancy expense | 4,800 | 5,204 | 5,903 | 15,113 | 18,083 | ||||||||||||||
Depreciation and amortization | 8,931 | 8,955 | 10,592 | 27,329 | 31,339 | ||||||||||||||
Servicing expense | 8,427 | 8,467 | 8,532 | 25,155 | 19,116 | ||||||||||||||
Other interest expense | 45,129 | 53,000 | 42,504 | 144,676 | 128,619 | ||||||||||||||
Total expenses | 311,003 | 342,547 | 305,128 | 961,497 | 949,760 | ||||||||||||||
Income (loss) before income taxes | 3,595 | (77,157 | ) | (39,467 | ) | (158,725 | ) | (204,365 | ) | ||||||||||
Income tax expense (benefit) | 923 | (11,304 | ) | (5,205 | ) | (24,040 | ) | (28,622 | ) | ||||||||||
Net income (loss) | 2,672 | (65,853 | ) | (34,262 | ) | (134,685 | ) | (175,743 | ) | ||||||||||
Net income (loss) attributable to noncontrolling interests | 1,303 | (33,642 | ) | (17,663 | ) | (69,588 | ) | (92,793 | ) | ||||||||||
Net income (loss) attributable to loanDepot, Inc. | $ | 1,369 | $ | (32,211 | ) | $ | (16,599 | ) | $ | (65,097 | ) | $ | (82,950 | ) | |||||
Basic income (loss) per share | $ | 0.01 | $ | (0.18 | ) | $ | (0.09 | ) | $ | (0.36 | ) | $ | (0.48 | ) | |||||
Diluted income (loss) per share | $ | 0.01 | $ | (0.18 | ) | $ | (0.09 | ) | $ | (0.36 | ) | $ | (0.48 | ) | |||||
Weighted average shares outstanding | |||||||||||||||||||
Basic | 185,385,271 | 182,324,046 | 175,962,804 | 183,041,489.00 | 173,568,986.00 | ||||||||||||||
Diluted | 332,532,984 | 182,324,046 | 175,962,804 | 183,041,489.00 | 173,568,986.00 | ||||||||||||||
Consolidated Balance Sheets | ||||||||
($ in thousands) | Sep 30,
| Jun 30,
| Dec 31,
| |||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents | $ | 483,048 | $ | 533,153 | $ | 660,707 | ||
Restricted cash | 95,593 | 98,057 | 85,149 | |||||
Loans held for sale, at fair value | 2,790,284 | 2,377,987 | 2,132,880 | |||||
Loans held for investment, at fair value | 122,066 | 120,287 | - | |||||
Derivative assets, at fair value | 68,647 | 59,779 | 93,574 | |||||
Servicing rights, at fair value | 1,542,720 | 1,583,128 | 1,999,763 | |||||
Trading securities, at fair value | 92,324 | 89,477 | 92,901 | |||||
Property and equipment, net | 62,974 | 64,631 | 70,809 | |||||
Operating lease right-of-use asset | 23,020 | 24,549 | 29,433 | |||||
Loans eligible for repurchase | 860,300 | 740,238 | 711,371 | |||||
Investments in joint ventures | 17,899 | 17,905 | 20,363 | |||||
Other assets | 258,752 | 233,586 | 254,098 | |||||
Total assets | $ | 6,417,627 | $ | 5,942,777 | $ | 6,151,048 | ||
LIABILITIES AND EQUITY | ||||||||
LIABILITIES: | ||||||||
Warehouse and other lines of credit | $ | 2,565,713 | $ | 2,213,128 | $ | 1,947,057 | ||
Accounts payable and accrued expenses | 381,543 | 375,319 | 379,971 | |||||
Derivative liabilities, at fair value | 22,143 | 17,856 | 84,962 | |||||
Liability for loans eligible for repurchase | 860,300 | 740,238 | 711,371 | |||||
Operating lease liability | 38,538 | 41,896 | 49,192 | |||||
Debt obligations, net | 1,957,341 | 1,975,402 | 2,274,011 | |||||
Total liabilities | 5,825,578 | 5,363,839 | 5,446,564 | |||||
EQUITY: | ||||||||
Total equity | 592,049 | 578,938 | 704,484 | |||||
Total liabilities and equity | $ | 6,417,627 | $ | 5,942,777 | $ | 6,151,048 | ||
Loan Origination and Sales Data | |||||||||||||||
($ in thousands) (Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||
Sep 30,
| Jun 30,
| Sep 30,
| Sep 30,
| Sep 30,
| |||||||||||
Loan origination volume by type: | |||||||||||||||
Conventional conforming | $ | 3,254,702 | $ | 3,232,905 | $ | 3,158,107 | $ | 8,991,282 | $ | 9,375,605 | |||||
FHA/VA/USDA | 2,564,827 | 2,271,104 | 2,354,630 | 6,489,956 | 6,371,168 | ||||||||||
Jumbo | 300,086 | 229,379 | 126,408 | 646,787 | 405,551 | ||||||||||
Other | 539,714 | 357,246 | 443,998 | 1,180,289 | 1,148,699 | ||||||||||
Total | $ | 6,659,329 | $ | 6,090,634 | $ | 6,083,143 | $ | 17,308,314 | $ | 17,301,023 | |||||
Loan origination volume by purpose: | |||||||||||||||
Purchase | $ | 4,378,575 | $ | 4,383,145 | $ | 4,337,476 | $ | 12,057,993 | $ | 12,403,166 | |||||
Refinance - cash out | 1,954,071 | 1,562,827 | 1,660,578 | 4,660,580 | 4,599,564 | ||||||||||
Refinance - rate/term | 326,683 | 144,662 | 85,089 | 589,741 | 298,293 | ||||||||||
Total | $ | 6,659,329 | $ | 6,090,634 | $ | 6,083,143 | $ | 17,308,314 | $ | 17,301,023 | |||||
Loans sold: | |||||||||||||||
Servicing retained | $ | 3,818,375 | $ | 4,011,399 | $ | 4,175,126 | $ | 10,816,315 | $ | 11,396,678 | |||||
Servicing released | 2,487,589 | 1,893,515 | 2,092,762 | 5,833,916 | 6,345,660 | ||||||||||
Total | $ | 6,305,964 | $ | 5,904,914 | $ | 6,267,888 | $ | 16,650,231 | $ | 17,742,338 | |||||
Third Quarter Earnings Call
Management will host a conference call and live webcast today at 5:00 p.m. ET on loanDepot's Investor Relations website, investors.loandepot.com, to discuss the Company's earnings results.
The conference call can also be accessed by dialing (800) 715-9871, Conference ID: 9881136. Please call five minutes in advance to ensure that you are connected prior to the call. A webcast can also be accessed at https://events.q4inc.com/attendee/479196723.
A replay of the webcast will be made available on the Investor Relations website following the conclusion of the event.
For more information about loanDepot, please visit the company's Investor Relations website: investors.loandepot.com.
Non-GAAP Financial Measures
To provide investors with information in addition to our results as determined by GAAP, we disclose certain non-GAAP measures to assist investors in evaluating our financial results. We believe these non-GAAP measures provide useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. They facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in hedging strategies, changes in valuations, capital structures (affecting interest expense on non-funding debt), taxation, the age and book depreciation of facilities (affecting relative depreciation expense), and other cost or benefit items which may vary for different companies for reasons unrelated to operating performance. These non-GAAP measures include our Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share (if dilutive), and Adjusted EBITDA (LBITDA). We exclude from these non-GAAP financial measures the change in fair value of MSRs, gains (losses) from the sale of MSRs and related hedging gains and losses that represent realized and unrealized adjustments resulting from changes in valuation, mostly due to changes in market interest rates, and are not indicative of the Company's operating performance or results of operation. Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation. We also exclude stock-based compensation expense, which is a non-cash expense, expenses directly related to the Cybersecurity Incident, net of expected insurance recoveries, including costs to investigate and remediate the Cybersecurity Incident, the costs of customer notifications and identity protection, professional fees, including legal expenses, litigation settlement costs, and commission guarantees, gains or losses on extinguishment of debt and disposal of fixed assets, non-cash goodwill impairment, and other impairment charges to intangible assets and operating lease right-of-use assets, as well as certain costs associated with our restructuring efforts, as management does not consider these costs to be indicative of our performance or results of operations. Adjusted EBITDA (LBITDA) includes interest expense on funding facilities, which are recorded as a component of "net interest income (expense)," as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on our non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA (LBITDA). Adjustments for income taxes are made to reflect historical results of operations on the basis that it was taxed as a corporation under the Internal Revenue Code, and therefore subject to U.S. federal, state and local income taxes. Adjustments to Diluted Weighted Average Shares Outstanding assumes the pro forma conversion of weighted average Class C shares to Class A common stock. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Some of these limitations are:
- they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;
- Adjusted EBITDA (LBITDA) does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted Total Revenue, Adjusted Net Income (Loss), and Adjusted EBITDA (LBITDA) do not reflect any cash requirement for such replacements or improvements; and
- they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.
Because of these limitations, Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) are not intended as alternatives to total revenue, net income (loss), net income (loss) attributable to the Company, or Diluted Earnings (Loss) Per Share or as an indicator of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. See below for a reconciliation of these non-GAAP measures to their most comparable U.S. GAAP measures.
Reconciliation of Total Revenue to Adjusted Total Revenue ($ in thousands) (Unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||
Sep 30,
| Jun 30,
| Sep 30,
| Sep 30,
| Sep 30,
| ||||||||||||
Total net revenue | $ | 314,598 | $ | 265,390 | $ | 265,661 | $ | 802,772 | $ | 745,395 | ||||||
Valuation changes in servicing rights, net of hedging gains and losses(1) | 14,901 | 12,617 | (4,545 | ) | 35,546 | 10,457 | ||||||||||
Adjusted total revenue | $ | 329,499 | $ | 278,007 | $ | 261,116 | $ | 838,318 | $ | 755,852 | ||||||
(1) | Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights. Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation. |
Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) ($ in thousands) (Unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||||||
Sep 30,
| Jun 30,
| Sep 30,
| Sep 30,
| Sep 30,
| ||||||||||||||||
Net income (loss) attributable to loanDepot, Inc. | $ | 1,369 | $ | (32,211 | ) | $ | (16,599 | ) | $ | (65,097 | ) | $ | (82,950 | ) | ||||||
Net income (loss) from the pro forma conversion of Class C common shares to Class A common stock (1) | 1,303 | (33,642 | ) | (17,663 | ) | (69,588 | ) | (92,793 | ) | |||||||||||
Net income (loss) | 2,672 | (65,853 | ) | (34,262 | ) | (134,685 | ) | (175,743 | ) | |||||||||||
Adjustments to the (provision) benefit for income taxes(2) | (326 | ) | 8,838 | 4,845 | 17,982 | 25,054 | ||||||||||||||
Tax-effected net income (loss) | 2,346 | (57,015 | ) | (29,417 | ) | (116,703 | ) | (150,689 | ) | |||||||||||
Valuation changes in servicing rights, net of hedging gains and losses(3) | 14,901 | 12,617 | (4,545 | ) | 35,546 | 10,457 | ||||||||||||||
Stock-based compensation expense | 8,200 | 5,898 | 3,940 | 18,952 | 15,619 | |||||||||||||||
Restructuring charges(4) | 1,853 | 3,127 | 2,007 | 7,105 | 8,357 | |||||||||||||||
Cybersecurity incident(5) | (18,880 | ) | 26,942 | - | 22,760 | - | ||||||||||||||
Loss (gain) on extinguishment of debt | - | 5,680 | (1,651 | ) | 5,680 | (1,690 | ) | |||||||||||||
Loss (gain) on disposal of fixed assets | 3 | - | 93 | (25 | ) | 1,105 | ||||||||||||||
Other impairment(6) | 10 | 1,193 | 129 | 1,202 | 470 | |||||||||||||||
Tax effect of adjustments(7) | (1,356 | ) | (14,332 | ) | 233 | (22,826 | ) | (8,046 | ) | |||||||||||
Adjusted net income (loss) | $ | 7,077 | $ | (15,890 | ) | $ | (29,211 | ) | $ | (48,309 | ) | $ | (124,417 | ) | ||||||
(1) | Reflects net income (loss) to Class A common stock and Class D common stock from the pro forma exchange of Class C common stock. | |
(2) | loanDepot, Inc. is subject to federal, state and local income taxes. Adjustments to the (provision) benefit for income taxes reflect the income tax rates below, and the pro forma assumption that loanDepot, Inc. owns 100% of LD Holdings. |
Three Months Ended | Nine Months Ended | |||||||||
Sep 30,
| Jun 30,
| Sep 30,
| Sep 30,
| Sep 30,
| ||||||
Statutory U.S. federal income tax rate | 21.00 % | 21.00 % | 21.00 % | 21.00 % | 21.00 % | |||||
State and local income taxes (net of federal benefit) | 4.01 % | 5.27 % | 6.43 % | 4.84 % | 6.00 % | |||||
Effective income tax rate | 25.01 % | 26.27 % | 27.43 % | 25.84 % | 27.00 % | |||||
(3) | Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights, and gains (losses) from the sale of MSRs. Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation. | |
(4) | Reflects employee severance expense and professional services associated with restructuring efforts subsequent to the announcement of Vision 2025 in July 2022. | |
(5) | Represents expenses directly related to the Cybersecurity Incident, net of expected insurance recoveries, including costs to investigate and remediate the Cybersecurity Incident, the costs of customer notifications and identity protection, professional fees including legal expenses, litigation settlement costs, and commission guarantees. During the three months ended September 30, 2024, the Company recorded a $20.0 million receivable for reimbursement from its insurers. During the nine months ended September 30, 2024, the Company recorded $35.0 million for an insurance reimbursement and receivable, and an accrual of $25.0 million in connection with class action litigation related to the Cybersecurity Incident. | |
(6) | Represents lease impairment on corporate and retail locations. | |
(7) | Amounts represent the income tax effect using the aforementioned effective income tax rates, excluding certain discrete tax items. |
| Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares Outstanding ($ in thousands except per share data) (Unaudited) | Three Months Ended | Nine Months Ended | |||||||||||||||||
Sep 30,
| Jun 30,
| Sep 30,
| Sep 30,
| Sep 30,
| |||||||||||||||
Net income (loss) attributable to loanDepot, Inc. | $ | 1,369 | $ | (32,211 | ) | $ | (16,599 | ) | $ | (65,097 | ) | $ | (82,950 | ) | |||||
Adjusted net income (loss) | 7,077 | (15,890 | ) | (29,211 | ) | (48,309 | ) | (124,417 | ) | ||||||||||
Share Data: | |||||||||||||||||||
Diluted weighted average shares of Class A and Class D common stock outstanding | 332,532,984 | 182,324,046 | 175,962,804 | 183,041,489 | 173,568,986 | ||||||||||||||
Assumed pro forma conversion of weighted average Class C shares to Class A common stock (1) | - | 142,907,533 | 147,171,089 | 142,333,213 | 148,741,661 | ||||||||||||||
Adjusted diluted weighted average shares outstanding | 332,532,984 | 325,231,579 | 323,133,893 | 325,374,702 | 322,310,647 | ||||||||||||||
(1) | Reflects the assumed pro forma exchange and conversion of anti-dilutive Class C common shares. |
Reconciliation of Net Income (Loss) to Adjusted EBITDA (LBITDA) ($ in thousands) (Unaudited) | Three Months Ended | Nine Months Ended | ||||||||||||||||||
Sep 30,
| Jun 30,
| Sep 30,
| Sep 30,
| Sep 30,
| ||||||||||||||||
Net income (loss) | $ | 2,672 | $ | (65,853 | ) | $ | (34,262 | ) | $ | (134,685 | ) | $ | (175,743 | ) | ||||||
Interest expense - non-funding debt (1) | 45,129 | 53,000 | 42,504 | 144,676 | 128,619 | |||||||||||||||
Income tax expense (benefit) | 923 | (11,304 | ) | (5,205 | ) | (24,040 | ) | (28,622 | ) | |||||||||||
Depreciation and amortization | 8,931 | 8,955 | 10,592 | 27,329 | 31,339 | |||||||||||||||
Valuation changes in servicing rights, net of hedging gains and losses(2) | 14,901 | 12,617 | (4,545 | ) | 35,546 | 10,457 | ||||||||||||||
Stock-based compensation expense | 8,200 | 5,898 | 3,940 | 18,952 | 15,619 | |||||||||||||||
Restructuring charges(3) | 1,853 | 3,127 | 2,007 | 7,105 | 8,357 | |||||||||||||||
Cybersecurity incident(4) | (18,880 | ) | 26,942 | - | 22,760 | - | ||||||||||||||
Loss (gain) on disposal of fixed assets | 3 | - |
| 93 | (25 | ) | 1,105 | |||||||||||||
Other impairment(5) | 10 | 1,193 | 129 | 1,202 | 470 | |||||||||||||||
Adjusted EBITDA (LBITDA) | $ | 63,742 | $ | 34,575 | $ | 15,253 | $ | 98,820 | $ | (8,399 | ) | |||||||||
(1) | Represents other interest expense, which includes gain or loss on extinguishment of debt and amortization of debt issuance costs and debt discount, in the Company's consolidated statements of operations. | |
(2) | Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights, and gains (losses) from the sale of MSRs. Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation. | |
(3) | Reflects employee severance expense and professional services associated with restructuring efforts subsequent to the announcement of Vision 2025 in July 2022. | |
(4) | Represents expenses, directly related to the Cybersecurity Incident, net of expected insurance recoveries, that occurred in the first quarter of 2024, including costs to investigate and remediate the Cybersecurity Incident, the costs of customer notifications and identity protection, professional fees including legal expenses, litigation settlement costs, and commission guarantees. During the three months ended September 30, 2024, the Company recorded a $20.0 million receivable for reimbursement from its insurers. During the nine months ended September 30, 2024, the Company recorded $35.0 million for an insurance reimbursement and receivable, and an accrual of $25.0 million in connection with class action litigation related to the Cybersecurity Incident. | |
(5) | Represents lease impairment on corporate and retail locations. |
Forward-Looking Statements
This press release may contain "forward-looking statements," which reflect loanDepot's current views with respect to, among other things, our business strategies, including Project North Star, our progress toward run-rate profitability, ongoing cost management and productivity programs, our HELOC product, financial condition and liquidity, competitive position, industry and regulatory environment, potential growth opportunities, the effects of competition, the impact of the Cybersecurity Incident, operations and financial performance. These forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and may contain the words "outlook," "potential," "believe," "anticipate," "expect," "intend," "plan," "predict," "estimate," "project," "will be," "will continue," "will likely result," or other similar words and phrases or future or conditional verbs such as "will," "may," "might," "should," "would," or "could" and the negatives of those terms. These forward-looking statements are based on current available operating, financial, economic and other information, and are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict, including but not limited to, the following: our ability to achieve the expected benefits of Project North Star and the success of other business initiatives; our ability to achieve run-rate profitability; our loan production volume; our ability to maintain an operating platform and management system sufficient to conduct our business; our ability to maintain warehouse lines of credit and other sources of capital and liquidity; impacts of cybersecurity incidents, cyberattacks, information or security breaches and technology disruptions or failures, of ours or of our third party vendors; the outcome of legal proceedings to which we are a party; our ability to reach a definitive settlement agreement related to the Cybersecurity Incident; adverse changes in macroeconomic and U.S residential real estate and mortgage market conditions, including changes in interest rates; changing federal, state and local laws, as well as changing regulatory enforcement policies and priorities; and other risks detailed in the "Risk Factors" section of loanDepot, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2023, and Quarterly Reports on Form 10-Q as well as any subsequent filings with the Securities and Exchange Commission. Therefore, current plans, anticipated actions, and financial results, as well as the anticipated development of the industry, may differ materially from what is expressed or forecasted in any forward-looking statement. loanDepot does not undertake any obligation to publicly update or revise any forward-looking statement to reflect future events or circumstances, except as required by applicable law.
About loanDepot
loanDepot (NYSE: LDI) is a leading provider of lending solutions that make the American dream of homeownership more accessible and achievable for all, especially the increasingly diverse communities of first-time homebuyers, through a broad suite of lending and real estate services that simplify one of life's most complex transactions. Since its launch in 2010, the company has been recognized as an innovator, using its industry-leading technology to deliver a superior customer experience. Our digital-first approach makes it easier, faster and less stressful to purchase or refinance a home. Today, as one of the largest non-bank lenders in the country, loanDepot and its mellohome operating unit offer an integrated platform of lending, loan servicing, real estate and home services that support customers along their entire homeownership journey. Headquartered in Southern California and with hundreds of local market offices nationwide, loanDepot's passionate team is dedicated to making a positive difference in the lives of their customers every day.
LDI-IR
Contacts
Investor Relations Contact:
Gerhard Erdelji
Senior Vice President, Investor Relations
(949) 822-4074
gerdelji@loandepot.com
Media Contact:
Rebecca Anderson
Senior Vice President, Communications & Public Relations
(949) 822-4024
rebeccaanderson@loandepot.com
