Home Point Capital Inc. (NASDAQ: HMPT) (together with its
subsidiaries, “Home Point Capital” or the “Company”), the parent
entity of Home Point Financial Corporation (“Homepoint”), today
announced its financial results for the second quarter ended
June 30, 2022.
“We continued in the second quarter to focus on
the key actions critical to navigating this cycle: further reducing
expenses, enhancing our liquidity position and solely focusing on
the origination channel that is best for consumers – wholesale,”
said Willie Newman, President and Chief Executive Officer. “We were
successful in our efforts to further strengthen our liquidity
position by completing MSR sales. We also finalized the sale of our
delegated correspondent channel and took incremental action to
generate additional cost savings of $31 million on an annualized
basis. All of these actions are intended to help Home Point
navigate through an extremely challenging environment.”
Second Quarter 2022 Financial and Key Performance
Indicator Summary
($mm, except per share values) |
For the quarter ended |
|
6/30/2022 |
|
3/31/2022 |
|
6/30/2021 |
|
|
|
|
|
|
Total Funded Origination Volume |
$ |
9,291.9 |
|
|
$ |
12,555.1 |
|
|
$ |
25,465.8 |
|
Total
Fallout Adjusted Lock Volume |
$ |
8,878.2 |
|
|
$ |
12,589.1 |
|
|
$ |
20,364.8 |
|
Gain on
sale margin (bps)1 |
|
42 |
|
|
|
58 |
|
|
|
58 |
|
Servicing
portfolio - Units |
|
320,215 |
|
|
|
349,261 |
|
|
|
449,029 |
|
Servicing
portfolio - UPB |
$ |
90,516.4 |
|
|
$ |
101,984.8 |
|
|
$ |
124,258.9 |
|
|
|
|
|
|
|
Total
revenue, net |
$ |
70.0 |
|
|
$ |
158.2 |
|
|
$ |
84.4 |
|
Origination segment direct expenses |
|
67.1 |
|
|
|
81.2 |
|
|
|
138.1 |
|
Servicing segment direct expenses |
|
14.5 |
|
|
|
15.8 |
|
|
|
18.7 |
|
Corporate expenses |
|
37.8 |
|
|
|
39.7 |
|
|
|
41.2 |
|
Total
expenses |
|
119.4 |
|
|
|
136.7 |
|
|
|
198.0 |
|
Net
(loss) income |
$ |
(44.4 |
) |
|
$ |
11.9 |
|
|
$ |
(73.2 |
) |
Net
(loss) income per share |
$ |
(0.32 |
) |
|
$ |
0.09 |
|
|
$ |
(0.53 |
) |
|
|
|
|
|
|
(1) Calculated as gain on sale divided by Fallout Adjusted Lock
Volume. Gain on sale includes gain on loans, net, loan fee income,
interest income (expense), net, and loan servicing fees (expense)
for the Origination segment.
Second Quarter 2022 Highlights
- Quarterly funded
origination volume was $9.3 billion, compared to $25.5 billion in
the second quarter of 2021, and $12.6 billion in the first quarter
of 2022.
- Total revenue, net
of $70.0 million, compared to $84.4 million in the second quarter
of 2021 and $158.2 million in the first quarter of 2022.
- Total revenue in
the Origination segment of $37.2 million, compared to $117.2
million in the second quarter of 2021 and $72.8 million in the
first quarter of 2022.
- Gain on sale margin
attributable to channels, before giving effect to the impact of
capital markets and other activity, was 60 basis points in the
second quarter of 2022, compared to 74 basis points in the second
quarter of 2021 and 61 basis points in the first quarter of
2022.
- Total expenses of
$119.4 million for the second quarter of 2022 improved 39.7% versus
the second quarter of 2021 and were 12.7% lower compared to the
first quarter of 2022. The sequential quarter improvement was due
to a 17.4% reduction in Origination segment direct expenses.
- Net loss of $(44.4)
million (or $(0.32) per basic and diluted share), compared to net
loss of $(73.2) million (or $(0.53) per basic and diluted share) in
the second quarter of 2021, and net income of $11.9 million (or
$0.09 and $0.08 per basic and diluted share, respectively) in the
first quarter of 2022.
- Broker Partners of
8,744 as of June 30, 2022 increased by 2,006 from the second
quarter of 2021, and increased by 368 from the first quarter of
2022.
- In the second
quarter of 2022, we had 3,573 active broker partners, an increase
of 9.8% from the prior year and consistent with the first quarter
of 2022.
- During the quarter,
Homepoint completed sales of mortgage servicing rights (“MSR”)
portfolios of single-family mortgage loans for a total sale price
of approximately $257.3 million.
- Servicing customers
of 320,215, down 28.7% from the second quarter of 2021, and down
8.3% compared to the first quarter of 2022.
- Servicing portfolio
UPB totaled $90.5 billion as of June 30, 2022, down 27.2% from
the second quarter of 2021, and a reduction of 11.2% from the first
quarter of 2022.
- Total servicing
portfolio delinquencies of 0.9%, compared to 1.6% in the second
quarter of 2021 and 0.8% in the first quarter of 2022, primarily
due to the servicing portfolio sales in the third and fourth
quarters of 2021 and first two quarters of 2022 and a decline in
COVID-related forbearance. The MSR multiple for the second quarter
of 2022 of 5.8x increased from 3.7x in the second quarter of 2021
and 5.6x in the first quarter of 2022, primarily driven by slower
prepayment speeds due to higher mortgage interest rates.
Origination Segment
Home Point Capital’s Origination segment
originates and sells residential real estate mortgage loans. These
loans are sourced through three channels. The primary channel is
Wholesale, where the Company works with mortgage brokerages to
source new customers. In the Correspondent channel, customers are
acquired through a network of mortgage banks and financial
institutions. On June 1, 2022, the Company completed the previously
announced sale of the Correspondent channel. The Direct channel
retains serviced customers in the Home Point Capital ecosystem.
The Origination segment recorded a contribution
loss of $29.9 million in the second quarter of 2022, compared to
contribution losses of $20.9 million in the prior-year quarter and
$8.4 million in the first quarter of 2022.
Origination Segment – Financial Highlights and Summary
of Key Performance Indicators
($mm) |
For the quarter ended |
|
6/30/2022 |
|
3/31/2022 |
|
6/30/2021 |
|
|
|
|
|
|
Gain on loans, net |
$ |
13.2 |
|
|
$ |
45.4 |
|
|
$ |
75.0 |
|
Loan fee
income |
|
15.3 |
|
|
|
19.9 |
|
|
|
39.5 |
|
Interest
income, net and other income |
|
8.7 |
|
|
|
7.5 |
|
|
|
2.7 |
|
Total Origination segment revenue |
|
37.2 |
|
|
|
72.8 |
|
|
|
117.2 |
|
Directly
attributable expense |
|
67.1 |
|
|
|
81.2 |
|
|
|
138.1 |
|
Contribution margin |
$ |
(29.9 |
) |
|
$ |
(8.4 |
) |
|
$ |
(20.9 |
) |
|
|
|
|
|
|
Key Performance Indicators1 |
For the quarter ended |
6/30/2022 |
|
3/31/2022 |
|
6/30/2021 |
|
|
|
|
|
|
Total
Funded Origination Volume |
$ |
9,291.9 |
|
|
$ |
12,555.1 |
|
|
$ |
25,465.8 |
|
Total
Fallout Adjusted Lock Volume |
$ |
8,878.2 |
|
|
$ |
12,589.1 |
|
|
$ |
20,364.8 |
|
|
|
|
|
|
|
Gain on
Sale Margin (bps)2 |
|
42 |
|
|
|
58 |
|
|
|
58 |
|
|
|
|
|
|
|
Origination Volume by Purpose: |
|
|
|
|
|
Purchase |
|
71.3 |
% |
|
|
44.4 |
% |
|
|
35.2 |
% |
Refinance |
|
28.7 |
% |
|
|
55.6 |
% |
|
|
64.8 |
% |
|
|
|
|
|
|
Third
Party Partners: |
|
|
|
|
|
Number of Broker Partners |
|
8,744 |
|
|
|
8,376 |
|
|
|
6,738 |
|
Number of Correspondent Partners3 |
|
670 |
|
|
|
669 |
|
|
|
642 |
|
|
|
|
|
|
|
(1) See Appendix for additional volume and gain
on sale information by channel.(2) Calculated as gain on sale
divided by Fallout Adjusted Lock Volume. Gain on sale includes gain
on loans, net, loan fee income, interest income (expense), net, and
loan servicing fees (expense) for the Origination segment.(3)
Number of Correspondent Partners from whom the Company purchased
loans prior to the completion of the previously announced sale of
the Correspondent channel on June 1, 2022.
Servicing Segment
Home Point Capital’s Servicing segment generates
revenue through contractual fees earned by performing daily
administrative and management activities for mortgage loans that
were primarily sourced by the Company’s Originations segment. These
loans are serviced on behalf of investors/guarantors, primarily
Fannie Mae, Freddie Mac and Ginnie Mae. In February 2022, Homepoint
announced an agreement with ServiceMac, LLC (“ServiceMac”) pursuant
to which ServiceMac will subservice all mortgage loans underlying
MSRs held by Homepoint. Substantially all of Homepoint’s servicing
staff has or will transition to ServiceMac providing customers with
continuity and the same high-quality service. ServiceMac began
subservicing newly originated agency loans for Homepoint in the
second quarter of 2022. The balance of the agency portfolio and all
of the Ginnie Mae portfolio will transition to ServiceMac in the
third quarter of 2022. ServiceMac performs servicing functions on
Homepoint’s behalf, but Homepoint will continue to hold the
MSRs.
The Servicing segment generated a contribution
margin of $20.0 million in the second quarter of 2022, compared to
$(39.6) million in the second quarter of 2021 and $83.2 million in
the first quarter of 2022.
Servicing Segment – Financial Highlights
and Key Performance Indicators
($mm) |
For the quarter ended |
|
6/30/2022 |
|
3/31/2022 |
|
6/30/2021 |
|
|
|
|
|
|
Loan servicing fees |
$ |
62.9 |
|
|
$ |
81.1 |
|
|
$ |
85.6 |
|
Interest
income, net and other income |
|
1.5 |
|
|
|
0.7 |
|
|
|
0.4 |
|
Total Servicing segment revenue |
|
64.4 |
|
|
|
81.8 |
|
|
|
86.0 |
|
Directly
attributable expense |
|
14.5 |
|
|
|
15.8 |
|
|
|
18.7 |
|
Primary Margin |
|
49.9 |
|
|
|
66.0 |
|
|
|
67.3 |
|
Change in
MSR fair value: amortization |
|
(33.4 |
) |
|
|
(49.0 |
) |
|
|
(77.7 |
) |
Adjusted contribution margin |
|
16.5 |
|
|
|
17.1 |
|
|
|
(10.4 |
) |
Change in
MSR fair value: mark-to-market, net of hedge |
|
3.5 |
|
|
|
66.1 |
|
|
|
(29.2 |
) |
Contribution margin |
$ |
20.0 |
|
|
$ |
83.2 |
|
|
$ |
(39.6 |
) |
|
|
|
|
|
|
Key Performance Indicators |
For the quarter ended1 |
6/30/2022 |
|
3/31/2022 |
|
6/30/2021 |
|
|
|
|
|
|
MSR servicing portfolio - UPB |
$ |
90,516 |
|
|
$ |
101,985 |
|
|
$ |
124,259 |
|
Average MSR servicing portfolio - UPB |
$ |
96,251 |
|
|
$ |
115,172 |
|
|
$ |
106,268 |
|
MSR servicing portfolio - Units |
|
320,215 |
|
|
|
349,261 |
|
|
|
449,029 |
|
Weighted average coupon rate |
|
3.18 |
% |
|
|
3.00 |
% |
|
|
3.09 |
% |
60+ days delinquent, incl. forbearance |
|
0.9 |
% |
|
|
0.8 |
% |
|
|
1.6 |
% |
MSR multiple |
|
5.8 |
|
|
|
5.6 |
|
|
|
3.7 |
|
|
|
|
|
|
|
(1) Figures as of period end, except "Average MSR servicing
portfolio - UPB" which is average for the period.
Balance Sheet and Liquidity Highlights
Home Point Capital had available liquidity of
$632.7 million as of June 30, 2022, comprising $135.8 million
of cash and cash equivalents and $496.9 million of undrawn capacity
from its mortgage servicing rights line of credit and other credit
facilities. The Company had total warehouse capacity of $6.0
billion, and unused capacity of $4.1 billion as of June 30,
2022, compared to total capacity of $6.6 billion, and unused
capacity of $3.9 billion as of March 31, 2022.
($mm) |
As of |
|
6/30/2022 |
|
3/31/2022 |
|
12/31/2021 |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
135.8 |
|
|
$ |
160.7 |
|
|
$ |
171.0 |
|
Mortgage
servicing rights (at fair value) |
$ |
1,419.1 |
|
|
$ |
1,490.2 |
|
|
$ |
1,525.1 |
|
Warehouse
lines of credit |
$ |
1,910.4 |
|
|
$ |
2,724.9 |
|
|
$ |
4,718.7 |
|
Term debt
and other borrowings, net |
$ |
845.5 |
|
|
$ |
942.2 |
|
|
$ |
1,226.5 |
|
Total shareholders' equity |
$ |
732.3 |
|
|
$ |
783.2 |
|
|
$ |
776.6 |
|
|
|
|
|
|
|
Dividend and Stock Repurchase Program
As previously reported, Home Point Capital’s
board of directors declared a cash dividend of $0.04 per share for
the first quarter of 2022, payable to all stockholders of record at
the close of business on May 24, 2022. This cash dividend was paid
out on June 7, 2022. Home Point Capital’s board of directors has
determined not to declare a dividend for the second quarter. The
board’s determination reflects the Company’s desire to maintain a
strong liquidity position to support operations in the current
macroeconomic environment, including rising interest rates and
inflationary pressure, and the potential impact on the Company’s
results of operations and financial condition.
During the quarter, the Company repurchased
718,106 shares at a weighted average price of $3.13 per share. The
Company has $4.3 million of availability remaining under its $8.0
million stock repurchase program.
Conference Call and Webcast
Members of Home Point Capital’s management team
will host a conference call and live webcast on Thursday, August
11, 2022 at 8:30 a.m. ET to review the Company’s financial results
for the second quarter ended June 30, 2022.
The conference call may be accessed by dialing
(877) 423-9813 (toll-free) or (201) 689-8573 (international), using
the passcode 13730417. The number should be dialed at least ten
minutes prior to the start of the call. A simultaneous webcast will
also be available and can be accessed through the Investor
Relations section of Home Point Capital’s website at
investors.homepoint.com.
An investor presentation will be referenced
during the call, and it will be available prior to the call through
the Investor Relations section of Home Point Capital’s website.
A telephonic replay of the call will be
available approximately two hours after the live call through
Thursday, August 18, 2022 by dialing (844) 512-2921 (toll-free) or
(412) 317-6671 (international), passcode 13730417. To access a
replay of the webcast, please visit Events in the Investor
Relations section of Home Point Capital’s website.
About Home Point Capital
Home Point Capital is the parent company of
Homepoint, one of the nation’s leading mortgage originators and
servicers, putting people front and center of the homebuying and
homeownership experience. The Company supports successful
homeownership as a crucial element of broader financial security
and well-being through delivering long-term value beyond the loan.
Founded in 2015 and headquartered in Ann Arbor, Michigan, Homepoint
works with a nationwide network of more than 8700 mortgage broker
partners with deep knowledge and expertise about the communities
and customers they serve. Today, Homepoint is the nation’s
third-largest wholesale mortgage lender and the 7th-largest
non-bank mortgage lender.
Home Point Financial Corporation d/b/a
Homepoint. NMLS No. 7706 (For licensing information, go to:
nmlsconsumeraccess.org). Home Point Financial Corporation does not
conduct business under the name, "Homepoint" in IL, KY, LA, MD, NY,
or WY. In these states, the company conducts business under the
full legal name, Home Point Financial Corporation, 2211 Old Earhart
Road, Suite 250, Ann Arbor, MI 48105. Toll-Free Tel:
888-616-6866.
Forward Looking StatementsThis
press release contains certain “forward-looking statements,” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements other than statements of historical fact
are forward-looking statements. Forward-looking statements include,
but are not limited to, statements relating to our future financial
performance, our business prospects and strategy, anticipated
financial position, liquidity and capital needs, the industry in
which we operate and other similar matters. Words such as
“anticipates,” “expects,” “intends,” “plans,” “predicts,”
“believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,”
“can,” “continue,” “potential,” “should” and the negative of these
terms or other comparable terminology often identify
forward-looking statements. Forward-looking statements are not
guarantees of future performance, are based upon assumptions, and
are subject to risks and uncertainties that could cause actual
results to differ materially from the results contemplated by the
forward-looking statements. Factors, risks, and uncertainties that
could cause actual outcomes and results to be materially different
from those contemplated include, among others: our reliance on our
financing arrangements to fund mortgage loans and otherwise operate
our business; the dependence of our loan origination and servicing
revenues on macroeconomic and U.S. residential real estate market
conditions; the requirement to repurchase mortgage loans or
indemnify investors if we breach representations and warranties;
counterparty risk; the requirement to make servicing advances that
can be subject to delays in recovery or may not be recoverable in
certain circumstances; risks related to any subservicer;
competition for mortgage assets that may limit the availability of
desirable originations, acquisitions and result in reduced
risk-adjusted returns; our ability to continue to grow our loan
origination business or effectively manage significant increases in
our loan production volume; difficult conditions or disruptions in
the mortgage-backed securities (“MBS”), mortgage, real estate and
financial markets; competition in the industry in which we operate;
our ability to acquire loans and sell the resulting MBS in the
secondary markets on favorable terms in our production activities;
our ability to adapt to and implement technological changes; the
effectiveness of our risk management efforts; our ability to detect
misconduct and fraud; any failure to attract and retain a highly
skilled workforce, including our senior executives; our ability to
obtain, maintain, protect and enforce our intellectual property;
any cybersecurity risks, cyber incidents and technology failures;
material changes to the laws, regulations or practices applicable
to reverse mortgage programs operated by the Federal Housing
Administration (“FHA”) and the U.S. Department of Housing and Urban
Development; our vendor relationships; our failure to deal
appropriately with various issues that may give rise to
reputational risk, including legal and regulatory requirements; any
employment litigation and related unfavorable publicity; exposure
to new risks and increased costs as a result of initiating new
business activities or strategies or significantly expanding
existing business activities or strategies; the impact of changes
in political or economic stability or by government policies on our
material vendors with operations in India; our ability to fully
utilize our net operating loss (“NOL”) and other tax carryforwards;
any challenge by the Internal Revenue Service of the amount, timing
and/or use of our NOL carryforwards; possible changes in
legislation and the effect on our ability to use the tax benefits
associated with our NOL carryforwards; the impact of other changes
in tax laws; the impact of interest rate fluctuations; risks
associated with hedging against interest rate exposure; the impact
of any prolonged economic slowdown, recession or declining real
estate values; risks associated with financing our assets with
borrowings; risks associated with a decrease in value of our
collateral; the dependence of our operations on access to our
financing arrangements, which are mostly uncommitted; risks
associated with the financial and restrictive covenants included in
our financing agreements; risks associated with changes in the
London Inter-Bank Offered Rate reporting practices and the use of
alternative reference rates; our ability to raise the debt or
equity capital required to finance our assets and grow our
business; risks associated with derivative financial instruments;
our ability to comply with continually changing federal, state and
local laws and regulations; the impact of revised rules and
regulations and enforcement of existing rules and regulations by
the Consumer Financial Protection Bureau; the impact of revised
rules and regulations and enforcement of existing rules and
regulations by state regulatory agencies; our ability to comply
with the Government-Sponsored Enterprises (“GSE”), FHA, U.S.
Department of Veterans Affairs (“VA”) and U.S. Department of
Agriculture (“USDA”) guidelines and changes in these guidelines or
GSE and Government National Mortgage Association (“Ginnie Mae”)
guarantees; changes in regulations or the occurrence of other
events that impact the business, operations or prospects of
government agencies such as Ginnie Mae, the FHA or the VA, the
USDA, or GSEs such as the Federal National Mortgage Association or
the Federal Home Loan Mortgage Corporation, or such changes that
increase the cost of doing business with such entities; our ability
to obtain and/or maintain licenses and other approvals in those
jurisdictions where required to conduct our business; our ability
to comply with the regulations applicable to our investment
management subsidiary; the impact of private legal proceedings;
risks associated with our acquisition of mortgage servicing rights;
the impact of our counterparties terminating our servicing rights
under which we conduct servicing activities; risks associated with
higher risk loans that we service; our ability to foreclose on our
mortgage assets in a timely manner or at all; and the effects of
the COVID-19pandemic on our business. You should carefully consider
the foregoing factors and the other risks and uncertainties that
may affect the Company’s business, including those listed under the
heading “Risk Factors” in our Annual Report on Form 10-K for the
year ended December 31, 2021, as such risk factors may be amended,
supplemented, or superseded from time to time by other reports
filed by the Company with the Securities and Exchange Commission.
Many of the important factors that will determine these results are
beyond our ability to control or predict. You are cautioned not to
put undue reliance on any forward-looking statements, which speak
only as of the date thereof. Except as required under applicable
law, the Company does not assume any obligation to update these
forward-looking statements.
Consolidated Statements of Income
(Loss)($ in millions, except per share
data)(Unaudited)
($mm, except per share values) |
For the quarter ended |
|
6/30/2022 |
|
3/31/2022 |
|
6/30/2021 |
|
|
|
|
|
|
Gain on loans, net |
$ |
13.2 |
|
|
$ |
45.4 |
|
|
$ |
75.0 |
|
Loan fee
income |
|
15.3 |
|
|
|
19.9 |
|
|
|
39.5 |
|
Interest income |
|
27.5 |
|
|
|
27.1 |
|
|
|
34.6 |
|
Interest expense |
|
(28.9 |
) |
|
|
(33.1 |
) |
|
|
(44.1 |
) |
Interest
expense, net |
|
(1.4 |
) |
|
|
(6.0 |
) |
|
|
(9.5 |
) |
Loan
servicing fees |
|
62.9 |
|
|
|
81.1 |
|
|
|
85.6 |
|
Change in
fair value of mortgage servicing rights |
|
(29.9 |
) |
|
|
17.2 |
|
|
|
(106.9 |
) |
Other
income |
|
9.9 |
|
|
|
0.6 |
|
|
|
0.7 |
|
Total revenue, net |
|
70.0 |
|
|
|
158.2 |
|
|
|
84.4 |
|
|
|
|
|
|
|
Compensation and benefits |
|
75.6 |
|
|
|
89.4 |
|
|
|
127.3 |
|
Loan
expense |
|
7.0 |
|
|
|
9.0 |
|
|
|
17.5 |
|
Loan
servicing expense |
|
7.1 |
|
|
|
5.7 |
|
|
|
7.5 |
|
Production technology |
|
4.3 |
|
|
|
4.9 |
|
|
|
8.2 |
|
General
and administrative |
|
17.0 |
|
|
|
19.7 |
|
|
|
26.5 |
|
Depreciation and amortization |
|
2.6 |
|
|
|
2.7 |
|
|
|
2.4 |
|
Other
expenses |
|
5.8 |
|
|
|
5.3 |
|
|
|
8.6 |
|
Total
expenses |
|
119.4 |
|
|
|
136.7 |
|
|
|
198.0 |
|
|
|
|
|
|
|
(Loss) income before income tax |
|
(49.4 |
) |
|
|
21.5 |
|
|
|
(113.6 |
) |
Pre-tax margin |
|
(70.6 |
)% |
|
|
13.6 |
% |
|
|
(134.6 |
)% |
Income
tax benefit (expense) |
$ |
14.1 |
|
|
$ |
(4.3 |
) |
|
$ |
27.2 |
|
(Loss)
income from equity method investment |
$ |
(9.1 |
) |
|
$ |
(5.3 |
) |
|
$ |
13.2 |
|
Net (loss) income |
$ |
(44.4 |
) |
|
$ |
11.9 |
|
|
$ |
(73.2 |
) |
Net margin |
|
(63.4 |
)% |
|
|
7.5 |
% |
|
|
(86.7 |
)% |
(Loss) earnings per share: |
|
|
|
|
|
Basic |
$ |
(0.32 |
) |
|
$ |
0.09 |
|
|
$ |
(0.53 |
) |
Diluted |
$ |
(0.32 |
) |
|
$ |
0.08 |
|
|
$ |
(0.53 |
) |
Basic
weighted average common stock outstanding (mm) |
|
138.5 |
|
|
|
139.2 |
|
|
|
139.0 |
|
Diluted
weighted average common stock outstanding (mm) |
|
138.5 |
|
|
|
140.6 |
|
|
|
139.0 |
|
|
|
|
|
|
|
Adjusted income statement
metrics1: |
|
|
|
|
|
Adjusted revenue |
$ |
57.4 |
|
|
$ |
86.8 |
|
|
$ |
126.8 |
|
Adjusted net loss |
$ |
(46.9 |
) |
|
$ |
(41.0 |
) |
|
$ |
(51.0 |
) |
Adjusted net margin |
|
(81.7 |
)% |
|
|
(47.2 |
)% |
|
|
(40.2 |
)% |
(1) Non-GAAP measures. See non-GAAP reconciliation
for a reconciliation of each measure to the nearest GAAP
measure.
Consolidated Balance Sheet($ in
millions)
($mm) |
As of |
|
6/30/2022 |
|
3/31/2022 |
|
12/31/2021 |
|
(Unaudited) |
|
|
Assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
135.8 |
|
|
$ |
160.7 |
|
|
$ |
171.0 |
Restricted cash |
|
27.1 |
|
|
|
37.0 |
|
|
|
36.8 |
Cash and
cash equivalents and Restricted cash |
|
162.9 |
|
|
|
197.7 |
|
|
|
207.8 |
Mortgage
loans held for sale (at fair value) |
|
2,018.6 |
|
|
|
2,889.0 |
|
|
|
5,107.1 |
Mortgage
servicing rights (at fair value) |
|
1,419.1 |
|
|
|
1,490.2 |
|
|
|
1,525.1 |
Property
and equipment, net |
|
18.0 |
|
|
|
21.4 |
|
|
|
21.9 |
Accounts
receivable, net |
|
177.0 |
|
|
|
218.0 |
|
|
|
129.1 |
Derivative assets |
|
59.3 |
|
|
|
183.5 |
|
|
|
84.4 |
Goodwill |
|
10.8 |
|
|
|
10.8 |
|
|
|
10.8 |
Government National Mortgage Association loans eligible for
repurchase |
|
117.1 |
|
|
|
81.3 |
|
|
|
65.2 |
Assets
held for sale |
|
50.7 |
|
|
|
58.4 |
|
|
|
63.7 |
Other
assets |
|
40.9 |
|
|
|
48.7 |
|
|
|
43.2 |
Total assets |
$ |
4,074.4 |
|
|
$ |
5,199.0 |
|
|
$ |
7,258.3 |
|
|
|
|
|
|
Liabilities and Shareholders’ Equity: |
|
|
|
|
|
Warehouse
lines of credit |
|
1,910.4 |
|
|
|
2,724.9 |
|
|
|
4,718.7 |
Term debt
and other borrowings, net |
|
845.5 |
|
|
|
942.2 |
|
|
|
1,226.5 |
Accounts
payable and accrued expenses |
|
106.0 |
|
|
|
135.5 |
|
|
|
138.2 |
Government National Mortgage Association loans eligible for
repurchase |
|
117.1 |
|
|
|
81.3 |
|
|
|
65.2 |
Deferred
tax liabilities |
|
214.9 |
|
|
|
232.7 |
|
|
|
229.8 |
Derivative liabilities |
|
60.3 |
|
|
|
219.4 |
|
|
|
26.7 |
Other
liabilities |
|
87.9 |
|
|
|
79.8 |
|
|
|
76.6 |
Total liabilities |
|
3,342.1 |
|
|
|
4,415.8 |
|
|
|
6,481.7 |
|
|
|
|
|
|
Shareholders’ Equity: |
|
|
|
|
|
Common
stock |
|
— |
|
|
|
— |
|
|
|
— |
Additional paid in capital |
|
511.6 |
|
|
|
525.6 |
|
|
|
523.8 |
Retained
earnings |
|
220.7 |
|
|
|
259.1 |
|
|
|
252.8 |
Treasury
stock |
|
— |
|
|
|
(1.5 |
) |
|
|
— |
Total shareholders' equity |
|
732.3 |
|
|
|
783.2 |
|
|
|
776.6 |
Total liabilities and shareholders' equity |
$ |
4,074.4 |
|
|
$ |
5,199.0 |
|
|
$ |
7,258.3 |
Volume and Margin Detail by
Channel
VOLUME DETAIL BY CHANNEL |
|
|
|
|
|
($mm) |
For the quarter ended |
|
6/30/2022 |
|
3/31/2022 |
|
6/30/2021 |
|
|
|
|
|
|
Funded Origination Volume by Channel |
|
|
|
|
|
Wholesale |
$ |
7,382.4 |
|
|
$ |
9,317.7 |
|
|
$ |
18,380.0 |
|
Correspondent |
|
1,731.8 |
|
|
|
2,733.3 |
|
|
|
5,695.1 |
|
Direct |
|
177.7 |
|
|
|
504.1 |
|
|
|
1,390.7 |
|
Total Funded Origination Volume |
$ |
9,291.9 |
|
|
$ |
12,555.1 |
|
|
$ |
25,465.8 |
|
|
|
|
|
|
|
Fallout Adjusted Lock Volume by Channel |
|
|
|
|
|
Wholesale |
$ |
7,483.3 |
|
|
$ |
9,563.7 |
|
|
$ |
15,566.2 |
|
Correspondent |
|
1,269.1 |
|
|
|
2,610.8 |
|
|
|
3,962.6 |
|
Direct |
|
125.9 |
|
|
|
414.6 |
|
|
|
836.0 |
|
Total Fallout Adjusted Lock Volume |
$ |
8,878.3 |
|
|
$ |
12,589.1 |
|
|
$ |
20,364.8 |
|
|
|
|
|
|
|
GAIN ON SALE MARGIN DETAIL BY CHANNEL |
($mm) |
For the quarter ended |
|
6/30/2022 |
|
3/31/2022 |
|
6/30/2021 |
|
$ Amount |
|
BasisPoints |
|
$ Amount |
|
BasisPoints |
|
$ Amount |
|
BasisPoints |
Gain on Sale Margin by Channel |
|
|
|
|
|
|
|
|
Wholesale |
$ |
47.7 |
|
|
64 |
|
|
$ |
62.6 |
|
|
65 |
|
|
$ |
114.5 |
|
|
74 |
|
Correspondent |
|
2.0 |
|
|
16 |
|
|
$ |
3.5 |
|
|
13 |
|
|
|
9.3 |
|
|
23 |
|
Direct |
|
3.2 |
|
|
256 |
|
|
$ |
10.7 |
|
|
258 |
|
|
|
26.3 |
|
|
315 |
|
Margin Attributable to Channels |
|
52.9 |
|
|
60 |
|
|
$ |
76.8 |
|
|
61 |
|
|
|
150.1 |
|
|
74 |
|
Other Loss on Sale1 |
|
(15.7 |
) |
|
(18 |
) |
|
$ |
(4.0 |
) |
|
(3 |
) |
|
|
(32.9 |
) |
|
(16 |
) |
Gain on Sale Margin2 |
$ |
37.2 |
|
|
42 |
|
|
$ |
72.8 |
|
|
58 |
|
|
$ |
117.2 |
|
|
58 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes interest income (expense), net,
realized and unrealized gains (losses) on locks and mortgage loans
held for sale, net hedging results, the provision for the
representation and warranty reserve, and differences between
modeled and actual pull-through.(2) Calculated as gain on sale
divided by Fallout Adjusted Lock Volume. Gain on sale includes gain
on loans, net, loan fee income, interest income (expense), net, and
loan servicing fees (expense) for the Origination segment.
Summary Segment Results
($mm) |
For the quarter ended June 30, 2022 |
|
Origination |
|
Servicing |
|
SegmentsTotal |
|
All Other |
|
Total |
|
ReconciliationItem1 |
|
SegmentsTotal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on loans, net |
$ |
13.2 |
|
|
$ |
— |
|
|
$ |
13.2 |
|
|
$ |
— |
|
|
$ |
13.2 |
|
|
$ |
— |
|
|
$ |
13.2 |
|
Loan fee
income |
|
15.3 |
|
|
|
— |
|
|
|
15.3 |
|
|
|
— |
|
|
|
15.3 |
|
|
|
— |
|
|
|
15.3 |
|
Loan
servicing fees |
|
— |
|
|
|
62.9 |
|
|
|
62.9 |
|
|
|
— |
|
|
|
62.9 |
|
|
|
— |
|
|
|
62.9 |
|
Change in
fair value of mortgage servicing rights |
|
— |
|
|
|
(29.9 |
) |
|
|
(29.9 |
) |
|
|
— |
|
|
|
(29.9 |
) |
|
|
— |
|
|
|
(29.9 |
) |
Interest
income (expense), net |
|
8.6 |
|
|
|
1.5 |
|
|
|
10.1 |
|
|
|
(11.5 |
) |
|
|
(1.4 |
) |
|
|
— |
|
|
|
(1.4 |
) |
Other
income |
|
0.1 |
|
|
|
— |
|
|
|
0.1 |
|
|
|
0.7 |
|
|
|
0.8 |
|
|
|
9.1 |
|
|
|
9.9 |
|
Total Revenue |
$ |
37.2 |
|
|
$ |
34.5 |
|
|
$ |
71.7 |
|
|
$ |
(10.8 |
) |
|
$ |
60.9 |
|
|
$ |
9.1 |
|
|
$ |
70.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin |
$ |
(29.9 |
) |
|
$ |
20.0 |
|
|
$ |
(9.9 |
) |
|
$ |
(48.7 |
) |
|
$ |
(58.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($mm) |
For the quarter ended March 31, 2022 |
|
Origination |
|
Servicing |
|
SegmentsTotal |
|
All Other |
|
Total |
|
Reconciliation Item1 |
|
SegmentsTotal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on loans, net |
$ |
45.4 |
|
|
$ |
— |
|
|
$ |
45.4 |
|
|
$ |
— |
|
|
$ |
45.4 |
|
|
$ |
— |
|
|
$ |
45.4 |
|
Loan fee
income |
|
19.9 |
|
|
|
— |
|
|
|
19.9 |
|
|
|
— |
|
|
|
19.9 |
|
|
|
— |
|
|
|
19.9 |
|
Loan
servicing fees |
|
— |
|
|
|
81.1 |
|
|
|
81.1 |
|
|
|
— |
|
|
|
81.1 |
|
|
|
— |
|
|
|
81.1 |
|
Change in
fair value of mortgage servicing rights |
|
— |
|
|
|
17.2 |
|
|
|
17.2 |
|
|
|
— |
|
|
|
17.2 |
|
|
|
— |
|
|
|
17.2 |
|
Interest
income (expense), net |
|
7.5 |
|
|
|
0.7 |
|
|
|
8.2 |
|
|
|
(14.2 |
) |
|
|
(6.0 |
) |
|
|
— |
|
|
|
(6.0 |
) |
Other
(expense) income |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4.7 |
) |
|
|
(4.7 |
) |
|
|
5.3 |
|
|
|
0.6 |
|
Total Revenue |
$ |
72.8 |
|
|
$ |
99.0 |
|
|
$ |
171.8 |
|
|
$ |
(18.9 |
) |
|
$ |
152.9 |
|
|
$ |
5.3 |
|
|
$ |
158.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin |
$ |
(8.4 |
) |
|
$ |
83.2 |
|
|
$ |
74.8 |
|
|
$ |
(58.7 |
) |
|
$ |
16.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($mm) |
For the quarter ended June 30, 2021 |
|
Origination |
|
Servicing |
|
SegmentsTotal |
|
All Other |
|
Total |
|
Reconciliation Item1 |
|
SegmentsTotal |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Gain on loans, net |
$ |
75.0 |
|
|
$ |
— |
|
|
$ |
75.0 |
|
|
$ |
— |
|
|
$ |
75.0 |
|
|
$ |
— |
|
|
$ |
75.0 |
|
Loan fee
income |
$ |
39.5 |
|
|
$ |
— |
|
|
$ |
39.5 |
|
|
$ |
— |
|
|
$ |
39.5 |
|
|
$ |
— |
|
|
$ |
39.5 |
|
Loan
servicing fees |
$ |
— |
|
|
$ |
85.6 |
|
|
$ |
85.6 |
|
|
$ |
— |
|
|
$ |
85.6 |
|
|
$ |
— |
|
|
$ |
85.6 |
|
Change in
fair value of mortgage servicing rights |
$ |
— |
|
|
$ |
(106.9 |
) |
|
$ |
(106.9 |
) |
|
$ |
— |
|
|
$ |
(106.9 |
) |
|
$ |
— |
|
|
$ |
(106.9 |
) |
Interest
income (expense), net |
$ |
2.7 |
|
|
$ |
0.4 |
|
|
$ |
3.1 |
|
|
$ |
(12.6 |
) |
|
$ |
(9.5 |
) |
|
$ |
— |
|
|
$ |
(9.5 |
) |
Other
income (expense) |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
13.8 |
|
|
$ |
13.8 |
|
|
$ |
(13.1 |
) |
|
$ |
0.7 |
|
Total Revenue |
$ |
117.2 |
|
|
$ |
(20.9 |
) |
|
$ |
96.3 |
|
|
$ |
1.2 |
|
|
$ |
97.5 |
|
|
$ |
(13.1 |
) |
|
$ |
84.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution margin |
$ |
(20.9 |
) |
|
$ |
(39.6 |
) |
|
$ |
(60.5 |
) |
|
$ |
(40.0 |
) |
|
$ |
(100.5 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company includes the income from its equity method
investments in the All Other category. In order to reconcile to
Total net revenue on the condensed consolidated statements of
operations, it must be removed as is presented above.
GAAP to Non-GAAP Reconciliations
RECONCILIATION OF ADJUSTED REVENUE TO TOTAL REVENUE,
NET |
|
|
|
|
|
|
($mm) |
For the quarter ended |
|
6/30/2022 |
|
3/31/2022 |
|
6/30/2021 |
|
|
|
|
|
|
Total revenue, net |
$ |
70.0 |
|
|
$ |
158.2 |
|
|
$ |
84.4 |
|
(Loss)
income from equity method investment |
|
(9.1 |
) |
|
|
(5.3 |
) |
|
|
13.2 |
|
Change in
fair value of MSR, net of hedge |
|
(3.5 |
) |
|
|
(66.1 |
) |
|
|
29.2 |
|
Adjusted
revenue |
$ |
57.4 |
|
|
$ |
86.8 |
|
|
$ |
126.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF ADJUSTED NET INCOME TO TOTAL NET (LOSS)
INCOME |
|
|
|
|
|
|
($mm) |
For the quarter ended |
|
6/30/2022 |
|
3/31/2022 |
|
6/30/2021 |
|
|
|
|
|
|
Total net
(loss) income |
$ |
(44.4 |
) |
|
$ |
11.9 |
|
|
$ |
(73.2 |
) |
Change in
fair value of MSR, net of hedge |
|
(3.5 |
) |
|
|
(66.1 |
) |
|
|
29.2 |
|
Income
tax effect of change in fair value of MSR, net of hedge |
|
1.0 |
|
|
|
13.2 |
|
|
|
(7.0 |
) |
Adjusted
net loss |
$ |
(46.9 |
) |
|
$ |
(41.0 |
) |
|
$ |
(51.0 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF ADJUSTED NET MARGIN TO NET
MARGIN |
|
|
|
|
|
|
($mm) |
For the quarter ended |
|
6/30/2022 |
|
3/31/2022 |
|
6/30/2021 |
|
|
|
|
|
|
Total
revenue, net |
$ |
70.0 |
|
|
$ |
158.2 |
|
|
$ |
84.4 |
|
Total net
(loss) income |
|
(44.4 |
) |
|
|
11.9 |
|
|
|
(73.2 |
) |
Net margin |
|
(63.4 |
)% |
|
|
7.5 |
% |
|
|
(86.7 |
)% |
|
|
|
|
|
|
Adjusted
revenue |
$ |
57.4 |
|
|
$ |
86.8 |
|
|
$ |
126.8 |
|
Adjusted
net loss |
|
(46.9 |
) |
|
|
(41.0 |
) |
|
|
(51.0 |
) |
Adjusted net margin |
|
(81.7 |
)% |
|
|
(47.2 |
)% |
|
|
(40.2 |
)% |
|
|
|
|
|
|
Non-GAAP Financial Measures
To provide investors with information in
addition to our results as determined under Generally Accepted
Accounting Principles (“GAAP”), we disclose Adjusted revenue,
Adjusted net Income, and Adjusted net margin as “non-GAAP
measures,” which management believes 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 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.
We define Adjusted revenue as Total net revenue
exclusive of the impact of the change in fair value of MSRs related
to changes in valuation inputs and assumptions, net of MSRs hedge
and adjusted for Income from equity method investment.
We define Adjusted net income as Net income
(loss) exclusive of the impact of the change in fair value of MSRs
related to changes in valuation inputs and assumptions, net of MSRs
hedge.
We exclude changes in fair value of MSRs, net of
hedge from each of Adjusted revenue and Adjusted net income (loss)
as they add volatility and are not indicative of the Company’s
operating performance or results of operation. This adjustment does
not include changes in fair value of MSRs due to realization of
cash flows, which remain in each of Adjusted revenue and Adjusted
net income (loss). Realization of cash flows occurs when cash is
collected as customers make scheduled payments, partial prepayments
of principal, or pay their mortgage in full.
We define Adjusted net margin by dividing
Adjusted net income by Adjusted revenue.
We believe that Adjusted revenue, Adjusted net
Income, and Adjusted net margin can provide useful information to
investors and others in understanding and evaluating our operating
results. These measures are not financial measures calculated in
accordance with GAAP and should not be considered as a substitute
for 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.
We believe that the presentation of Adjusted
revenue, Adjusted net Income, and Adjusted net margin provides
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. Adjusted revenue, Adjusted net Income, and Adjusted net
margin provide indicators of performance that are not affected by
fluctuations in certain costs or other items. Accordingly,
management believes that these measurements are useful for
comparing general operating performance from period to period, and
management relies on these measures for planning and forecasting of
future periods. The Company measures the performance of the
segments primarily on a contribution margin basis. Additionally,
these measures allow management to compare our results with those
of other companies that have different financing and capital
structures. However, other companies may define Adjusted revenue,
Adjusted net Income, and Adjusted net margin differently, and as a
result, our measures of Adjusted revenue, Adjusted net Income, and
Adjusted net margin may not be directly comparable to those of
other companies.
Investor Relations Contact:
Home Point Capital:Lesley Alliinvestor@hpfc.com
Media Contact:
Home Point Capital:Brad Pettifordmedia@hpfc.com
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