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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Walker & Dunlop Inc | NYSE:WD | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-1.15 | -1.23% | 92.16 | 93.11 | 91.4201 | 92.29 | 95,310 | 01:00:00 |
FIRST QUARTER 2024 HIGHLIGHTS
Walker & Dunlop, Inc. (NYSE: WD) (the “Company,” “Walker & Dunlop,” or “W&D”) reported total revenues of $228.1 million for the first quarter of 2024, a decrease of 4% year over year. First quarter total transaction volume was $6.4 billion, down 5% year over year. Net income for the first quarter of 2024 was $11.9 million, or $0.35 per diluted share, down 55% and 56%, respectively, year over year. Adjusted EBITDA was up 9% to $74.1 million, reflecting the strength of the Company’s recurring revenue streams. As well, adjusted core EPS, which primarily strips out non-cash revenues and expenses, was up 2% from the first quarter of 2023 to $1.19. The Company’s Board of Directors declared a dividend of $0.65 per share for the second quarter of 2024.
“Q1 2024 began with optimism for imminent Fed rate cuts and ended with broad acceptance of ‘higher for longer.’ The market uncertainty along with rising rates slowed transaction volume significantly. The W&D team closed $6.4 billion of total transaction volume in the quarter, down 5% from Q1 2023,” commented Walker & Dunlop Chairman and CEO Willy Walker. “While lower origination volumes with the GSEs and HUD reduced mortgage servicing rights as well as non-cash revenues and diluted EPS, both adjusted core EPS and adjusted EBITDA, which eliminate the impact of non-cash revenues and expenses, were up 2% and 9%, respectively, on the quarter. These numbers exemplify the durability of the W&D business model."
"As we enter Q2, there are plenty of signs that commercial real estate investors are working ‘higher for longer’ into their actions -- to refinance properties, buy and sell properties, or raise new capital," continued Walker. "We believe our full-year 2024 financial guidance is achievable given the volume of loan refinancings and equity capital looking to be deployed between now and year-end. And while higher rates and uncertain Fed policy are headwinds, the onus is on our team to provide our clients with solutions in challenging markets."
"Finally," added Walker, “Walker & Dunlop's business model -- that includes a scaled, low risk servicing business generating strong cash flow -- allows us to invest in our people, brand, and technology to continue exceeding our clients' expectations."
CONSOLIDATED FIRST QUARTER 2024
OPERATING RESULTS
TRANSACTION VOLUMES
(dollars in thousands)
Q1 2024
Q1 2023
$ Variance
% Variance
Fannie Mae
$
903,368
$
1,358,708
$
(455,340
)
(34
)%
Freddie Mac
974,926
975,737
(811
)
-
Ginnie Mae - HUD
14,140
127,599
(113,459
)
(89
)
Brokered (3)
3,319,074
2,363,754
955,320
40
Principal Lending and Investing (4)
15,800
-
15,800
N/A
Debt financing volume
$
5,227,308
$
4,825,798
$
401,510
8
%
Property sales volume
1,167,151
1,894,682
(727,531
)
(38
)
Total transaction volume
$
6,394,459
$
6,720,480
$
(326,021
)
(5
)%
Discussion of Results:
MANAGED PORTFOLIO
(dollars in thousands, unless otherwise noted)
Q1 2024
Q1 2023
$ Variance
% Variance
Fannie Mae
$
64,349,886
$
59,890,444
$
4,459,442
7
%
Freddie Mac
39,665,386
38,184,798
1,480,588
4
Ginnie Mae - HUD
10,595,841
10,027,781
568,060
6
Brokered
17,312,513
16,285,391
1,027,122
6
Principal Lending and Investing
40,139
187,505
(147,366
)
(79
)
Total Servicing Portfolio
$
131,963,765
$
124,575,919
$
7,387,846
6
%
Assets under management
17,465,398
16,654,566
810,832
5
Total Managed Portfolio
$
149,429,163
$
141,230,485
$
8,198,678
6
%
Custodial escrow account balance at period end (in billions)
$
2.3
$
2.2
Weighted-average servicing fee rate (basis points)
24.0
24.3
Weighted-average remaining servicing portfolio term (years)
8.0
8.7
Discussion of Results:
KEY PERFORMANCE METRICS
(dollars in thousands, except per share amounts)
Q1 2024
Q1 2023
$ Variance
% Variance
Walker & Dunlop net income
$
11,866
$
26,665
$
(14,799
)
(55
)%
Adjusted EBITDA
74,136
67,975
6,161
9
Diluted EPS
$
0.35
$
0.79
$
(0.44
)
(56
)%
Adjusted core EPS
$
1.19
$
1.17
$
0.02
2
%
Operating margin
6
%
14
%
Return on equity
3
6
Key Expense Metrics (as a percentage of total revenues):
Personnel expenses
49
%
50
%
Other operating expenses
13
10
Discussion of Results:
KEY CREDIT METRICS
(dollars in thousands)
Q1 2024
Q1 2023
$ Variance
% Variance
At-risk servicing portfolio (5)
$
59,498,851
$
54,898,461
$
4,600,390
8
%
Maximum exposure to at-risk portfolio (6)
12,088,698
11,132,473
956,225
9
Defaulted loans (7)
$
63,264
$
36,983
$
26,281
71
%
Key credit metrics (as a percentage of the at-risk portfolio):
Defaulted loans
0.11
%
0.07
%
Allowance for risk-sharing
0.05
0.06
Key credit metrics (as a percentage of maximum exposure):
Allowance for risk-sharing
0.25
%
0.30
%
Discussion of Results:
FIRST QUARTER 2024 FINANCIAL RESULTS BY SEGMENT
Interest expense on corporate debt is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s use of that corporate debt.
Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income from operations, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity.
The following details explain the changes in these expense items at a consolidated corporate level:
FINANCIAL RESULTS - CAPITAL MARKETS
(dollars in thousands)
Q1 2024
Q1 2023
$ Variance
% Variance
Loan origination and debt brokerage fees, net ("Origination fees")
$
43,700
$
46,956
$
(3,256
)
(7
)%
Fair value of expected net cash flows from servicing, net ("MSR income")
20,898
30,013
(9,115
)
(30
)
Property sales broker fees
8,821
11,624
(2,803
)
(24
)
Net warehouse interest income (expense), loans held for sale ("LHFS")
(1,574
)
(1,689
)
115
(7
)
Other revenues
10,052
17,100
(7,048
)
(41
)
Total revenues
$
81,897
$
104,004
$
(22,107
)
(21
)%
Personnel
$
79,187
$
90,462
$
(11,275
)
(12
)%
Amortization and depreciation
1,137
1,186
(49
)
(4
)
Interest expense on corporate debt
4,851
4,269
582
14
Other operating expenses
5,052
5,644
(592
)
(10
)
Total expenses
$
90,227
$
101,561
$
(11,334
)
(11
)%
Income from operations
$
(8,330
)
$
2,443
$
(10,773
)
(441
)%
Income tax expense (benefit)
(1,744
)
504
(2,248
)
(446
)
Net income before noncontrolling interests
$
(6,586
)
$
1,939
$
(8,525
)
(440
)%
Less: net income (loss) from noncontrolling interests
114
1,435
(1,321
)
(92
)
Walker & Dunlop net income (loss)
$
(6,700
)
$
504
$
(7,204
)
(1,429
)%
Key revenue metrics (as a percentage of debt financing volume):
Origination fee rate (8)
0.84
%
0.97
%
MSR rate (9)
0.40
0.62
Agency MSR rate (10)
1.10
1.22
Key performance metrics:
Operating margin
(10
)%
2
%
Adjusted EBITDA
$
(19,297
)
$
(18,687
)
$
(610
)
3
%
Capital Markets - Discussion of Quarterly Results:
The Capital Markets segment includes our Agency lending, debt brokerage, property sales, appraisal and valuation services, investment banking, and housing market research businesses.
FINANCIAL RESULTS - SERVICING & ASSET MANAGEMENT
(dollars in thousands)
Q1 2024
Q1 2023
$ Variance
% Variance
Origination fees
$
40
$
128
$
(88
)
(69
)%
Servicing fees
80,043
75,766
4,277
6
Investment management fees
13,520
15,173
(1,653
)
(11
)
Net warehouse interest income, loans held for investment ("LHFI")
458
1,690
(1,232
)
(73
)
Placement fees and other interest income
35,603
28,824
6,779
24
Other revenues
11,571
11,615
(44
)
(0
)
Total revenues
$
141,235
$
133,196
$
8,039
6
%
Personnel
$
18,055
$
15,341
$
2,714
18
%
Amortization and depreciation
53,071
54,010
(939
)
(2
)
Provision (benefit) for credit losses
524
(10,775
)
11,299
(105
)
Interest expense on corporate debt
11,191
9,582
1,609
17
Other operating expenses
5,123
1,480
3,643
246
Total expenses
$
87,964
$
69,638
$
18,326
26
%
Income from operations
$
53,271
$
63,558
$
(10,287
)
(16
)%
Income tax expense (benefit)
11,153
13,104
(1,951
)
(15
)
Net income before noncontrolling interests
$
42,118
$
50,454
$
(8,336
)
(17
)%
Less: net income (loss) from noncontrolling interests
(1,165
)
(630
)
(535
)
85
Walker & Dunlop net income (loss)
$
43,283
$
51,084
$
(7,801
)
(15
)%
Key performance metrics:
Operating margin
38
%
48
%
Adjusted EBITDA
$
119,658
$
112,975
$
6,683
6
%
Servicing & Asset Management - Discussion of Quarterly Results:
The Servicing & Asset Management segment includes loan servicing, principal lending and investing, management of third-party capital invested in tax credit equity funds focused on the affordable housing sector and other commercial real estate, and real estate-related investment banking and advisory services.
FINANCIAL RESULTS - CORPORATE
(dollars in thousands)
Q1 2024
Q1 2023
$ Variance
% Variance
Other interest income
$
3,799
$
2,100
$
1,699
81
%
Other revenues
1,128
(554
)
1,682
(304
)
Total revenues
$
4,927
$
1,546
$
3,381
219
%
Personnel
$
14,221
$
12,810
$
1,411
11
%
Amortization and depreciation
1,683
1,770
(87
)
(5
)
Interest expense on corporate debt
1,617
1,423
194
14
Other operating expenses
18,668
16,939
1,729
10
Total expenses
$
36,189
$
32,942
$
3,247
10
%
Income (loss) from operations
$
(31,262
)
$
(31,396
)
$
134
(0
)%
Income tax expense (benefit)
(6,545
)
(6,473
)
(72
)
1
Walker & Dunlop net income (loss)
$
(24,717
)
$
(24,923
)
$
206
(1
)%
Key performance metric:
Adjusted EBITDA
$
(26,225
)
$
(26,313
)
$
88
(0
)%
Corporate - Discussion of Quarterly Results:
The Corporate segment consists of corporate-level activities including accounting, information technology, legal, human resources, marketing, internal audit, and various other corporate groups (“support functions”). The Company does not allocate costs from these support functions to its other segments in presenting segment operating results.
CAPITAL SOURCES AND USES
On May 1, 2024, the Company’s Board of Directors declared a dividend of $0.65 per share for the second quarter of 2024. The dividend will be paid on May 31, 2024 to all holders of record of the Company’s restricted and unrestricted common stock as of May 16, 2024.
In January 2023, the Company entered into a lender joinder agreement and amendment to our existing credit agreement that provided for an incremental term loan with a principal amount of $200 million. The incremental term loan bears interest at a rate equal to adjusted Term SOFR plus 3.00% per annum and matures in December 2028. Proceeds from the debt were used to repay $116 million of debt assumed in an acquisition and to strengthen the balance sheet for general corporate purposes.
On February 14, 2024, our Board of Directors authorized the repurchase of up to $75.0 million of the Company’s outstanding common stock over a 12-month period ending February 23, 2025 (“2024 Share Repurchase Program”).
Any purchases made pursuant to the 2024 Share Repurchase Program will be made in the open market or in privately negotiated transactions, from time to time, as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The repurchase program may be suspended or discontinued at any time.
_____________________________________
(1)
Adjusted EBITDA is a non-GAAP financial measure the Company presents to help investors better understand our operating performance. For a reconciliation of adjusted EBITDA to net income, refer to the sections of this press release below titled “Non-GAAP Financial Measures,” “Adjusted Financial Measure Reconciliation to GAAP” and “Adjusted Financial Measure Reconciliation to GAAP by Segment.”
(2)
Adjusted core EPS is a non-GAAP financial measure the Company presents to help investors better understand our operating performance. For a reconciliation of Adjusted core EPS to Diluted EPS, refer to the sections of this press release below titled “Non-GAAP Financial Measures” and “Adjusted Core EPS Reconciliation.”
(3)
Brokered transactions for life insurance companies, commercial banks, and other capital sources.
(4)
Includes debt financing volumes from our interim loan program, our interim loan joint venture, and Walker & Dunlop Investment Partners, Inc. (“WDIP”) separate accounts.
(5)
At-risk servicing portfolio is defined as the balance of Fannie Mae Delegated Underwriting and Servicing (“DUS”) loans subject to the risk-sharing formula described below, as well as a small number of Freddie Mac loans on which we share in the risk of loss. Use of the at-risk portfolio provides for comparability of the full risk-sharing and modified risk-sharing loans because the provision and allowance for risk-sharing obligations are based on the at-risk balances of the associated loans. Accordingly, we have presented the key statistics as a percentage of the at-risk portfolio.
For example, a $15 million loan with 50% risk-sharing has the same potential risk exposure as a $7.5 million loan with full DUS risk sharing. Accordingly, if the $15 million loan with 50% risk-sharing were to default, we would view the overall loss as a percentage of the at-risk balance, or $7.5 million, to ensure comparability between all risk-sharing obligations. To date, substantially all of the risk-sharing obligations that we have settled have been from full risk-sharing loans.
(6)
Represents the maximum loss we would incur under our risk-sharing obligations if all of the loans we service, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. The maximum exposure is not representative of the actual loss we would incur.
(7)
Defaulted loans represent loans in our Fannie Mae at-risk portfolio that are probable of foreclosure or that have foreclosed and for which we have recorded a collateral-based reserve (i.e., loans where we have assessed a probable loss). Other loans that have defaulted but not foreclosed or that are not probable of foreclosure are not included here. Additionally, loans that have foreclosed or are probable of foreclosure but are not expected to result in a loss to us are not included here.
(8)
Origination fees as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing.
(9)
MSR income as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing.
(10)
MSR income as a percentage of Agency debt financing volume.
CONFERENCE CALL INFORMATION
The Company will host a conference call to discuss its quarterly results on Thursday, May 2, 2024 at 8:30 a.m. Eastern time. Listeners can access the call via the dial-in number and webcast link below. Presentation materials related to the conference call will be posted to the Investor Relations section of the Company’s website prior to the call. An audio replay will also be available on the Investor Relations section of the Company’s website, along with the presentation materials.
Phone: (888) 256-1007 from within the United States; (773) 305-6853 from outside the United States Confirmation Code: 4299257 Webcast Link: https://event.webcasts.com/starthere.jsp?ei=1653643&tp_key=e4cfac9b39
ABOUT WALKER & DUNLOP
Walker & Dunlop (NYSE: WD) is one of the largest commercial real estate finance and advisory services firms in the United States. Our ideas and capital create communities where people live, work, shop, and play. The diversity of our people, breadth of our brand and technological capabilities make us one of the most insightful and client-focused firms in the commercial real estate industry.
NON-GAAP FINANCIAL MEASURES
To supplement our financial statements presented in accordance with United States generally accepted accounting principles (“GAAP”), the Company uses adjusted EBITDA, adjusted core net income, and adjusted core EPS, which are non-GAAP financial measures. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. When analyzing our operating performance, readers should use adjusted EBITDA, adjusted core net income, and adjusted core EPS in addition to, and not as an alternative for, net income and diluted EPS.
Adjusted core net income and adjusted core EPS represent net income adjusted for amortization and depreciation, provision (benefit) for credit losses, net write-offs, the fair value of expected net cash flows from servicing, net, the income statement impact from periodic revaluation and accretion associated with contingent consideration liabilities related to acquired companies, and other one-time adjustments, such as goodwill impairment. Adjusted EBITDA represents net income before income taxes, interest expense on our corporate debt, and amortization and depreciation, adjusted for provision (benefit) for credit losses, net write-offs, stock-based incentive compensation charges, the fair value of expected net cash flows from servicing, net, the write-off of the unamortized balance of premium associated with the repayment of a portion of our corporate debt, goodwill impairment, and contingent consideration liability fair value adjustments when the fair value adjustment is a triggering event for a goodwill impairment assessment. Furthermore, adjusted EBITDA is not intended to be a measure of free cash flow for our management's discretionary use, as it does not reflect certain cash requirements such as tax and debt service payments. The amounts shown for adjusted EBITDA may also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges that are used to determine compliance with financial covenants. Because not all companies use identical calculations, our presentation of adjusted EBITDA, adjusted core net income and adjusted core EPS may not be comparable to similarly titled measures of other companies.
We use adjusted EBITDA, adjusted core net income, and adjusted core EPS to evaluate the operating performance of our business, for comparison with forecasts and strategic plans and for benchmarking performance externally against competitors. We believe that these non-GAAP measures, when read in conjunction with the Company's GAAP financial information, provide useful information to investors by offering:
We believe that these non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP and that these non-GAAP financial measures should only be used to evaluate the Company's results of operations in conjunction with the Company’s GAAP financial information. For more information on adjusted EBITDA, adjusted core net income, and adjusted core EPS, refer to the section of this press release below titled “Adjusted Financial Measure Reconciliation to GAAP” and “Adjusted Financial Measure Reconciliation to GAAP By Segment.”
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this press release may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans, or intentions.
The forward-looking statements contained in this press release reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ significantly from those expressed or contemplated in any forward-looking statement.
While forward-looking statements reflect our good faith projections, assumptions and expectations, they are not guarantees of future results. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by applicable law. Factors that could cause our results to differ materially include, but are not limited to: (1) general economic conditions and multifamily and commercial real estate market conditions, (2) changes in interest rates, (3) regulatory and/or legislative changes to Freddie Mac, Fannie Mae or HUD, (4) our ability to retain and attract loan originators and other professionals, (5) success of our various investments funded with corporate capital, and (6) changes in federal government fiscal and monetary policies, including any constraints or cuts in federal funds allocated to HUD for loan originations.
For a further discussion of these and other factors that could cause future results to differ materially from those expressed or contemplated in any forward-looking statements, see the section titled “Risk Factors” in our most recent Annual Report on Form 10-K and any updates or supplements in subsequent Quarterly Reports on Form 10-Q and our other filings with the SEC. Such filings are available publicly on our Investor Relations web page at www.walkerdunlop.com.
Walker & Dunlop, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
Unaudited
March 31,
December 31,
September 30,
June 30,
March 31,
2024
2023
2023
2023
2023
(in thousands)
Assets
Cash and cash equivalents
$
216,532
$
328,698
$
236,321
$
228,091
$
188,389
Restricted cash
21,071
21,422
17,768
21,769
20,504
Pledged securities, at fair value
190,679
184,081
177,509
170,666
165,081
Loans held for sale, at fair value
497,933
594,998
758,926
1,303,686
934,991
Mortgage servicing rights
881,834
907,415
921,746
932,131
946,406
Goodwill
901,710
901,710
949,710
963,710
959,712
Other intangible assets
178,221
181,975
185,927
189,919
194,208
Receivables, net
250,406
233,563
265,234
242,397
224,776
Committed investments in tax credit equity
122,332
154,028
212,296
165,136
207,750
Other assets, net
565,194
544,457
552,414
589,919
651,235
Total assets
$
3,825,912
$
4,052,347
$
4,277,851
$
4,807,424
$
4,493,052
Liabilities
Warehouse notes payable
$
521,977
$
596,178
$
790,742
$
1,342,187
$
1,031,277
Notes payable
772,037
773,358
774,677
775,995
777,311
Allowance for risk-sharing obligations
30,124
31,601
30,957
32,410
33,087
Commitments to fund investments in tax credit equity
114,206
140,259
196,250
156,617
196,522
Other liabilities
651,660
764,822
754,234
775,718
739,759
Total liabilities
$
2,090,004
$
2,306,218
$
2,546,860
$
3,082,927
$
2,777,956
Stockholders' Equity
Common stock
$
331
$
329
$
328
$
327
$
327
Additional paid-in capital
427,184
425,488
420,062
412,182
405,303
Accumulated other comprehensive income (loss)
(492
)
(479
)
(1,864
)
(1,465
)
(1,621
)
Retained earnings
1,288,313
1,298,412
1,287,653
1,287,334
1,281,119
Total stockholders’ equity
$
1,715,336
$
1,723,750
$
1,706,179
$
1,698,378
$
1,685,128
Noncontrolling interests
20,572
22,379
24,812
26,119
29,968
Total equity
$
1,735,908
$
1,746,129
$
1,730,991
$
1,724,497
$
1,715,096
Commitments and contingencies
—
—
—
—
—
Total liabilities and stockholders' equity
$
3,825,912
$
4,052,347
$
4,277,851
$
4,807,424
$
4,493,052
Walker & Dunlop, Inc. and Subsidiaries
Condensed Consolidated Statements of Income and Comprehensive Income
Unaudited
Quarterly Trends
(in thousands, except per share amounts)
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Revenues
Origination fees
$
43,740
$
66,208
$
56,149
$
64,968
$
47,084
MSR income
20,898
34,471
35,375
42,058
30,013
Servicing fees
80,043
79,887
79,200
77,061
75,766
Property sales broker fees
8,821
15,135
16,862
10,345
11,624
Investment management fees
13,520
537
13,362
16,309
15,173
Net warehouse interest income (expense)
(1,116
)
(2,077
)
(2,031
)
(1,526
)
1
Placement fees and other interest income
39,402
45,210
43,000
35,386
30,924
Other revenues
22,751
34,965
26,826
28,014
28,161
Total revenues
$
228,059
$
274,336
$
268,743
$
272,615
$
238,746
Expenses
Personnel
$
111,463
$
125,865
$
136,507
$
133,305
$
118,613
Amortization and depreciation
55,891
56,015
57,479
56,292
56,966
Provision (benefit) for credit losses
524
636
421
(734
)
(10,775
)
Interest expense on corporate debt
17,659
18,598
17,594
17,010
15,274
Goodwill impairment
—
48,000
14,000
—
—
Fair value adjustments to contingent consideration liabilities
—
(48,500
)
(14,000
)
—
—
Other operating expenses
28,843
34,355
28,529
30,730
24,063
Total expenses
$
214,380
$
234,969
$
240,530
$
236,603
$
204,141
Income from operations
$
13,679
$
39,367
$
28,213
$
36,012
$
34,605
Income tax expense
2,864
10,331
7,069
10,491
7,135
Net income before noncontrolling interests
$
10,815
$
29,036
$
21,144
$
25,521
$
27,470
Less: net income (loss) from noncontrolling interests
(1,051
)
(2,563
)
(314
)
(2,114
)
805
Walker & Dunlop net income
$
11,866
$
31,599
$
21,458
$
27,635
$
26,665
Net change in unrealized gains (losses) on pledged available-for-sale securities, net of taxes
(13
)
1,385
(399
)
156
(53
)
Walker & Dunlop comprehensive income
$
11,853
$
32,984
$
21,059
$
27,791
$
26,612
Effective Tax Rate
21
%
26
%
25
%
29
%
21
%
Basic earnings per share
$
0.35
$
0.94
$
0.64
$
0.82
$
0.80
Diluted earnings per share
0.35
0.93
0.64
0.82
0.79
Cash dividends paid per common share
0.65
0.63
0.63
0.63
0.63
Basic weighted-average shares outstanding
32,978
32,825
32,737
32,695
32,529
Diluted weighted-average shares outstanding
33,048
32,941
32,895
32,851
32,816
SUPPLEMENTAL OPERATING DATA
Unaudited
Quarterly Trends
(in thousands, except per share data and unless otherwise noted)
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Transaction Volume:
Components of Debt Financing Volume
Fannie Mae
$
903,368
$
1,692,405
$
1,739,332
$
2,230,952
$
1,358,708
Freddie Mac
974,926
1,308,263
1,072,048
1,212,887
975,737
Ginnie Mae - HUD
14,140
316,960
86,557
147,773
127,599
Brokered (1)
3,319,074
2,885,454
3,149,457
3,316,223
2,363,754
Principal Lending and Investing (2)
15,800
218,750
—
—
—
Total Debt Financing Volume
$
5,227,308
$
6,421,832
$
6,047,394
$
6,907,835
$
4,825,798
Property Sales Volume
1,167,151
2,877,399
2,508,073
1,504,383
1,894,682
Total Transaction Volume
$
6,394,459
$
9,299,231
$
8,555,467
$
8,412,218
$
6,720,480
Key Performance Metrics:
Operating margin
6
%
14
%
10
%
13
%
14
%
Return on equity
3
7
5
7
6
Walker & Dunlop net income
$
11,866
$
31,599
$
21,458
$
27,635
$
26,665
Adjusted EBITDA (3)
74,136
87,582
74,065
70,501
67,975
Diluted EPS
0.35
0.93
0.64
0.82
0.79
Adjusted core EPS (4)
1.19
1.42
1.11
0.98
1.17
Key Expense Metrics (as a percentage of total revenues):
Personnel expenses
49
%
46
%
51
%
49
%
50
%
Other operating expenses
13
13
11
11
10
Key Revenue Metrics (as a percentage of debt financing volume):
Origination fee rate (5)
0.84
%
1.05
%
0.93
%
0.93
%
0.97
%
MSR rate (6)
0.40
0.56
0.58
0.61
0.62
Agency MSR rate (7)
1.10
1.04
1.22
1.17
1.22
Other Data:
Market capitalization at period end
$
3,406,853
$
3,719,589
$
2,433,494
$
2,586,519
$
2,489,200
Closing share price at period end
$
101.06
$
111.01
$
74.24
$
79.09
$
76.17
Average headcount
1,323
1,341
1,344
1,385
1,440
Components of Servicing Portfolio (end of period):
Fannie Mae
$
64,349,886
$
63,699,106
$
62,850,853
$
61,356,554
$
59,890,444
Freddie Mac
39,665,386
39,330,545
38,656,136
38,287,200
38,184,798
Ginnie Mae - HUD
10,595,841
10,460,884
10,320,520
10,246,632
10,027,781
Brokered (8)
17,312,513
16,940,850
17,091,925
16,684,115
16,285,391
Principal Lending and Investing (9)
40,139
40,139
40,000
71,680
187,505
Total Servicing Portfolio
$
131,963,765
$
130,471,524
$
128,959,434
$
126,646,181
$
124,575,919
Assets under management (10)
17,465,398
17,321,452
17,334,877
16,903,055
16,654,566
Total Managed Portfolio
$
149,429,163
$
147,792,976
$
146,294,311
$
143,549,236
$
141,230,485
Key Servicing Portfolio Metrics (end of period):
Custodial escrow deposit balance (in billions)
$
2.3
$
2.7
$
2.8
$
2.8
$
2.2
Weighted-average servicing fee rate (basis points)
24.0
24.1
24.2
24.3
24.3
Weighted-average remaining servicing portfolio term (years)
8.0
8.2
8.4
8.6
8.7
_____________________________________
(1)
Brokered transactions for life insurance companies, commercial banks, and other capital sources.
(2)
Includes debt financing volumes from our interim lending platform, our interim lending joint venture, and WDIP separate accounts.
(3)
This is a non-GAAP financial measure. For more information on adjusted EBITDA, refer to the section above titled “Non-GAAP Financial Measures.”
(4)
This is a non-GAAP financial measure. For more information on adjusted core EPS, refer to the section above titled “Non-GAAP Financial Measures.”
(5)
Origination fees as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing.
(6)
MSR income as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing.
(7)
MSR income as a percentage of Agency debt financing volume.
(8)
Brokered loans serviced primarily for life insurance companies.
(9)
Consists of interim loans not managed for our interim loan joint venture.
(10)
Walker & Dunlop Affordable Equity, assets under management, commercial real estate loans and funds managed by WDIP, and interim loans serviced for our interim loan joint venture.
KEY CREDIT METRICS
Unaudited
March 31,
December 31,
September 30,
June 30,
March 31,
(dollars in thousands)
2024
2023
2023
2023
2023
Risk-sharing servicing portfolio:
Fannie Mae Full Risk
$
55,236,618
$
54,583,555
$
53,549,966
$
52,383,701
$
50,713,349
Fannie Mae Modified Risk
9,113,268
9,115,551
9,295,368
8,947,292
9,170,127
Freddie Mac Modified Risk
69,510
23,415
23,415
23,515
23,515
Total risk-sharing servicing portfolio
$
64,419,396
$
63,722,521
$
62,868,749
$
61,354,508
$
59,906,991
Non-risk-sharing servicing portfolio:
Fannie Mae No Risk
$
—
$
—
$
5,519
$
25,561
$
6,968
Freddie Mac No Risk
39,595,876
39,307,130
38,632,721
38,263,685
38,161,283
GNMA - HUD No Risk
10,595,841
10,460,884
10,320,520
10,246,632
10,027,781
Brokered
17,312,513
16,940,850
17,091,925
16,684,115
16,285,391
Total non-risk-sharing servicing portfolio
$
67,504,230
$
66,708,864
$
66,050,685
$
65,219,993
$
64,481,423
Total loans serviced for others
$
131,923,626
$
130,431,385
$
128,919,434
$
126,574,501
$
124,388,414
Interim loans (full risk) servicing portfolio
40,139
40,139
40,000
71,680
187,505
Total servicing portfolio unpaid principal balance
$
131,963,765
$
130,471,524
$
128,959,434
$
126,646,181
$
124,575,919
Interim Loan Joint Venture Managed Loans (1)
$
711,541
$
710,041
$
736,320
$
895,491
$
894,829
At-risk servicing portfolio (2)
$
59,498,851
$
58,801,055
$
57,857,659
$
56,430,098
$
54,898,461
Maximum exposure to at-risk portfolio (3)
12,088,698
11,949,041
11,750,068
11,346,580
11,132,473
Defaulted loans(4)
63,264
27,214
—
36,983
36,983
Defaulted loans as a percentage of the at-risk portfolio
0.11
%
0.05
%
0.00
%
0.07
%
0.07
%
Allowance for risk-sharing as a percentage of the at-risk portfolio
0.05
0.05
0.05
0.06
0.06
Allowance for risk-sharing as a percentage of maximum exposure
0.25
0.26
0.26
0.29
0.30
_____________________________________
(1)
This balance consists entirely of interim loan joint venture managed loans. We indirectly share in a portion of the risk of loss associated with interim loan joint venture managed loans through our 15% equity ownership in the joint venture. We had no exposure to risk of loss for the loans serviced directly for our interim loan joint venture partner. The balance of this line is included as a component of assets under management in the Supplemental Operating Data table.
(2)
At-risk servicing portfolio is defined as the balance of Fannie Mae DUS loans subject to the risk-sharing formula described below, as well as a small number of Freddie Mac loans on which we share in the risk of loss. Use of the at-risk portfolio provides for comparability of the full risk-sharing and modified risk-sharing loans because the provision and allowance for risk-sharing obligations are based on the at-risk balances of the associated loans. Accordingly, we have presented the key statistics as a percentage of the at-risk portfolio. For example, a $15 million loan with 50% risk-sharing has the same potential risk exposure as a $7.5 million loan with full DUS risk sharing. Accordingly, if the $15 million loan with 50% risk-sharing were to default, we would view the overall loss as a percentage of the at-risk balance, or $7.5 million, to ensure comparability between all risk-sharing obligations. To date, substantially all of the risk-sharing obligations that we have settled have been from full risk-sharing loans.
(3)
Represents the maximum loss we would incur under our risk-sharing obligations if all of the loans we service, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. The maximum exposure is not representative of the actual loss we would incur.
(4)
Defaulted loans represent loans in our Fannie Mae at-risk portfolio that are probable of foreclosure or that have foreclosed and for which we have recorded a collateral-based reserve (i.e. loans where we have assessed a probable loss). Other loans that have defaulted but not foreclosed or that are not probable of foreclosure are not included here. Additionally, loans that have foreclosed or are probable of foreclosure but are not expected to result in a loss to us are not included here.
ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP
Unaudited
Quarterly Trends
(in thousands)
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA
Walker & Dunlop Net Income
$
11,866
$
31,599
$
21,458
$
27,635
$
26,665
Income tax expense
2,864
10,331
7,069
10,491
7,135
Interest expense on corporate debt
17,659
18,598
17,594
17,010
15,274
Amortization and depreciation
55,891
56,015
57,479
56,292
56,966
Provision (benefit) for credit losses
524
636
421
(734
)
(10,775
)
Net write-offs (1)
—
—
(2,008
)
(6,033
)
—
Stock-based compensation expense
6,230
5,374
7,427
7,898
7,143
MSR income
(20,898
)
(34,471
)
(35,375
)
(42,058
)
(30,013
)
Write-off of unamortized premium from corporate debt repayment
—
—
—
—
(4,420
)
Goodwill impairment, net of contingent consideration liability fair value adjustments
—
(500
)
—
—
—
Adjusted EBITDA
$
74,136
$
87,582
$
74,065
$
70,501
$
67,975
_____________________________________
(1)The net write-off in Q2 2023 was related to the write off of the collateral-based reserves related to a loan held for investment.
ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP BY SEGMENT
Unaudited
Capital Markets
Three months ended March 31,
(in thousands)
2024
2023
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA
Walker & Dunlop Net Income (Loss)
$
(6,700
)
$
504
Income tax expense (benefit)
(1,744
)
504
Interest expense on corporate debt
4,851
4,269
Amortization and depreciation
1,137
1,186
Stock-based compensation expense
4,057
4,863
MSR income
(20,898
)
(30,013
)
Adjusted EBITDA
$
(19,297
)
$
(18,687
)
Servicing & Asset Management
Three months ended March 31,
(in thousands)
2024
2023
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA
Walker & Dunlop Net Income (Loss)
$
43,283
$
51,084
Income tax expense (benefit)
11,153
13,104
Interest expense on corporate debt
11,191
9,582
Amortization and depreciation
53,071
54,010
Provision (benefit) for credit losses
524
(10,775
)
Net write-offs
—
—
Stock-based compensation expense
436
390
Write-off of unamortized premium from corporate debt repayment
—
(4,420
)
Adjusted EBITDA
$
119,658
$
112,975
Corporate
Three months ended March 31,
(in thousands)
2024
2023
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA
Walker & Dunlop Net Income (Loss)
$
(24,717
)
$
(24,923
)
Income tax expense (benefit)
(6,545
)
(6,473
)
Interest expense on corporate debt
1,617
1,423
Amortization and depreciation
1,683
1,770
Stock-based compensation expense
1,737
1,890
Adjusted EBITDA
$
(26,225
)
$
(26,313
)
ADJUSTED CORE EPS RECONCILIATION
Unaudited
Quarterly Trends
(in thousands)
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Reconciliation of Walker & Dunlop Net Income to Adjusted Core Net Income
Walker & Dunlop Net Income
$
11,866
$
31,599
$
21,458
$
27,635
$
26,665
Provision (benefit) for credit losses
524
636
421
(734
)
(10,775
)
Net write-offs(1)
—
—
(2,008
)
(6,033
)
—
Amortization and depreciation
55,891
56,015
57,479
56,292
56,966
MSR income
(20,898
)
(34,471
)
(35,375
)
(42,058
)
(30,013
)
Goodwill impairment
—
48,000
14,000
—
—
Contingent consideration accretion and fair value adjustments
512
(47,637
)
(13,426
)
176
177
Income tax expense adjustment(2)
(7,543
)
(5,916
)
(5,285
)
(2,227
)
(3,372
)
Adjusted Core Net Income
$
40,352
$
48,226
$
37,264
$
33,051
$
39,648
Reconciliation of Diluted EPS to Adjusted core EPS
Walker & Dunlop Net Income
$
11,866
$
31,599
$
21,458
$
27,635
$
26,665
Diluted weighted-average shares outstanding
33,048
32,941
32,895
32,851
32,816
Diluted EPS
$
0.35
$
0.93
$
0.64
$
0.82
$
0.79
Adjusted Core Net Income
$
40,352
$
48,226
$
37,264
$
33,051
$
39,648
Diluted weighted-average shares outstanding
33,048
32,941
32,895
32,851
32,816
Adjusted Core EPS
$
1.19
$
1.42
$
1.11
$
0.98
$
1.17
_____________________________________
(1)The net write-off in Q2 2023 was related to the write off of the collateral-based reserves related to a loan held for investment.
(2)Income tax impact of the above adjustments to adjusted core net income. Uses quarterly or annual effective tax rate as disclosed in the Condensed Consolidated Statements of Income and Comprehensive Income in this “press release.”
Category: Earnings
View source version on businesswire.com: https://www.businesswire.com/news/home/20240502758823/en/
Headquarters: Phone 301.215.5500 info@walkeranddunlop.com
Investors: Kelsey Duffey Senior Vice President, Investor Relations Phone 301.202.3207 investorrelations@walkeranddunlop.com
Media: Carol McNerney Chief Marketing Officer Phone 301.215.5515 info@walkeranddunlop.com
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