UWM Holdings Corp Q4 FY2024 earnings call

• 2024 was a strong year with UWM retaining titles as the largest mortgage company, largest purchase lender, and number one wholesale lender for multiple consecutive years.
• The company invested in cutting-edge technology, including AI, and tripled its refinance business in 2024 despite the interest rate environment.
• At the end of 2024, UWM had approximately $2.1 billion of total equity, over $500 million of cash, ~$2.5 billion of total accessible liquidity, and an MSR portfolio with a fair value of approximately $4 billion.
• The broker channel showed significant growth, with over 16,000 loan officers joining the broker channel from the retail channel, and a 27.4% share of direct fund in Q3 2024.

In 2024, UWM Holdings Corporation achieved $139.4 billion in overall production, a 29% increase year over year. Gain on sale was up 20% to 110 basis points. The broker channel was a key indicator, with a 27.4% share of direct fund in Q3 2024, up 7 percentage points from Q3 2022. Fourth quarter production was $38.7 billion, with a gain margin of 105 basis points and net income of $40.6 million. For the full year, adjusted EBITDA was $460 million.

• UWM expects Q1 2025 production to be in the range of $28 to $35 billion.
• The company anticipates a gain margin for Q1 2025 to be between 90 and 115 basis points.

• Market dynamics such as interest rate changes, consumer trends, new technology, and regulatory changes pose potential impacts on the business.
• Uncertainty regarding the timing and magnitude of rate drops and their effect on origination and servicing operations.

Q: Terry Ma asked about operating expenses being higher than expected and the runway going forward.

A: Mathew Ishbia stated it's a one-time investment in the business to dominate, and expenses are not a concern as the company is prepared for growth.

Q: Terry Ma inquired about refi initiatives and the outlook.

A: Mathew Ishbia mentioned being prepared to double business with rate drops, focusing on both purchase and refi depending on interest rates.

Q: Eric Hagen asked about measuring the success of broker incentives.

A: Measured by broker retention, business usage, training participation, and client attendance at events.

Q: Eric Hagen asked about Q1 volume and seasonality.

A: Mathew Ishbia noted the first quarter is typically the lowest, but Q1 2025 is expected to be strong with potential for high volume similar to 2020-2021.

Q: Derek Summers asked about the purchase mix outlook.

A: The purchase mix is dependent on interest rates, with UWM focused on purchase and refi, prepared for a wide range of volume based on rate changes.

Q: Bose George asked about MSR sales and liquidity.

A: MSR decisions are based on market conditions, with UWM continuously originating MSR assets and replenishing them daily.

Q: Bose George asked about fixed vs variable expenses.

A: UWM is prepared for growth without significantly increasing fixed expenses, with variable expenses manageable relative to volume and margin.

Q: Brad Capuzzi asked about broker channel competition and rate derivatives.

A: There's no increase in pricing competition, and rate derivatives were not in place as of December 2024.

Q: Douglas Harter asked about leverage and equity outlook.

A: UWM has strong liquidity and capital positions, focusing on income and dividends, with margins and liquidity well managed.

Q: Jeff Adelson asked about regulatory outlook and float strategy.

A: There's a positive regulatory outlook with the new administration, and float strategy tied to growth and market conditions.

Q: MacKel Gohmerman asked about the interplay of origination and servicing with rate drops.

A: There's a timing issue with MSR valuations and origination, but UWM is prepared for increased volumes and margins with rate drops