Walker & Dunlop Reports First Quarter 2024 Financial Results
Walker & Dunlop, Inc. (NYSE: WD) reported total revenues of $228.1 million for Q1 2024, down 4% YoY. Net income was $11.9 million, diluted EPS $0.35, both down 55% YoY. Adjusted EBITDA increased 9% to $74.1 million. Adjusted core EPS was $1.19, up 2% YoY. Declared dividend of $0.65 per share for Q2 2024. Transaction volume down 5% YoY to $6.4 billion. Servicing portfolio grew by 6% to $132.0 billion.
Adjusted EBITDA increased by 9% to $74.1 million, reflecting the strength of recurring revenue streams.
Total revenues decreased by 4% year over year to $228.1 million in Q1 2024.
Insights
The financial results of Walker & Dunlop for the first quarter of 2024 highlight a mixed bag of performance metrics, demonstrating resilience in some areas while experiencing declines in others. Notably, the decrease in net income and diluted EPS by 55% and 56% respectively, is a concerning signal for profitability and would likely be scrutinized by investors seeking stable or growing earnings. The drop in total revenues by 4% could reflect competitive pressures or a cooling off in the market segments.
On the positive side, the 9% increase in Adjusted EBITDA indicates a degree of operational efficiency and the ability to generate cash flows. Additionally, an increase of 2% in adjusted core EPS may suggest that the company is managing its core operations effectively, particularly when stripping out non-cash revenues and expenses. The 6% growth in the servicing portfolio is also a good sign for future revenue potential.
Considering the mixed results, an investor will be weighing the strong servicing portfolio growth against the significant drops in net income and EPS. The board's decision to declare a dividend could be seen as a sign of confidence in the company's cash flow.
Observing the broader market context, the downturn in transaction volume, particularly with Government-Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac, needs contextual understanding. Walker & Dunlop's 5% decline in total transaction volume is likely a reflection of high interest rates and a cautious investment environment in the real estate sector. The 40% increase in brokered transactions, however, may indicate a strategic pivot towards other capital providers, which could be a smart maneuver to diversify revenue streams in a challenging market.
The company's servicing portfolio growth is buoyed by the addition of GSE debt financing volumes over the past 12 months, which could provide a buffer against the volatility seen in transaction volumes. The report also suggests healthy credit quality within their portfolio, a critical factor for long-term stability.
From an investor's perspective, understanding these market dynamics and the company’s strategic responses is crucial. The insights into multifamily assets, which are a core focus for Walker & Dunlop, could inform decisions about the resilience of the company's business model in the face of market uncertainty.
Walker & Dunlop's foothold in the GSE sector, particularly with Fannie Mae and HUD, has experienced a contraction, which might be symptomatic of regulatory changes, economic cycles, or shifts in investor behavior towards real estate assets. The significant decrease in net income and diluted EPS could be alarming for investors, particularly those focused on the short-term returns, but the company’s increment in Adjusted EBITDA and core EPS could indicate some underlying strengths in the face of broader market headwinds.
The competitive positioning of the company, given the increase in brokered transactions, suggests agility in responding to market trends. Their servicing portfolio's expansion, coupled with a low weighted-average servicing fee, could speak to a competitive cost structure in servicing loans. However, the drop in origination fees and property sales broker fees could be seen as a challenge to revenue diversification.
For an investor, the long-term value proposition may lie in the company’s ability to navigate interest rate changes and market volatility while leveraging its diversified servicing portfolio and capitalizing on any upcoming rate cuts as hinted by the company's outlook.
FIRST QUARTER 2024 HIGHLIGHTS
-
Total transaction volume of
$6.4 billion 5% from Q1’23 -
Total revenues of
$228.1 million 4% from Q1’23 -
Net income of
$11.9 million $0.35 55% and56% , respectively, from Q1’23 -
Adjusted EBITDA1 of
$74.1 million 9% from Q1’23 -
Adjusted core EPS2 of
$1.19 2% from Q1’23 -
Servicing portfolio of
$132.0 billion 6% from March 31, 2023 -
Declared quarterly dividend of
$0.65
“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
"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:
-
Total transaction volume decreased
5% from the first quarter of 2023, primarily due to a20% decrease in the Fannie Mae and the Freddie Mac (collectively, the “GSEs”) transaction volume and a decrease in property sales volume, partially offset by a40% increase in brokered transactions. - The decrease in HUD debt financing volume reflects the impacts of high interest rates and elongated processing times for construction loans. Walker & Dunlop was the second largest HUD construction loan lender by volume for HUD’s 2023 fiscal year.
-
The
40% increase in brokered debt volume drove our8% increase in debt financing volume in the first quarter of 2024, as there was increased activity from life insurance companies, banks, CMBS and other private capital providers in the first quarter 2024 compared to 2023. - Property sales volume decreased as fewer multifamily owners seek to sell their investments under these market conditions, resulting in the market’s lowest quarter of multifamily property sales volume since the second quarter of 2020, according to Real Capital Analytics. Volatility in interest rates and increased supply in select markets from new deliveries have caused cap rates for multifamily assets to widen, and sellers remain hesitant to pursue sales in this market.
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:
- Our servicing portfolio continues to expand with the addition of GSE debt financing volumes over the past 12 months. Although loan origination volumes have slowed down over the past year, higher interest rates are leading to fewer loan prepayments within the servicing portfolio.
-
During the first quarter of 2024, we added
$1.5 billion $7.4 billion 88% of which were GSE or HUD (collectively, “Agency”) loans. -
$10.7 billion 9% of the total Agency loans in our portfolio. -
The mortgage servicing rights (“MSRs”) associated with our servicing portfolio had a fair value of
$1.4 billion -
Assets under management as of March 31, 2024 consisted of
$15.2 billion $1.4 billion $0.9 billion $0.8 billion
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:
-
Net income and diluted EPS decreased
55% and56% , respectively, in the first quarter of 2024, compared to the same period in 2023. The first quarter of 2023 included a$10.8 million $4.4 million $7.5 million $1.19 2% year over year. - The increase in adjusted EBITDA was primarily the result of increased placement fees and other interest income, higher servicing fees, and decreased personnel expenses, partially offset by decreases in loan origination and debt brokerage fees, net and property sales broker fees.
- Operating margin decreased primarily due to changes in our non-cash activity, including: (i) a decline of MSR income due to lower Fannie Mae volume, and (ii) a change from a large benefit for credit losses in 2023 to a small provision for credit losses in 2024.
-
Return on equity declined primarily due to the
55% decrease in net income combined with a2% increase in stockholders’ equity over the past year.
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:
- Our at-risk servicing portfolio, which is comprised of loans subject to a defined risk-sharing formula, increased primarily due to the level of Fannie Mae loans added to the portfolio during the past 12 months.
-
As of March 31, 2024, six at-risk loans were in default with an aggregate unpaid principal balance (“UPB”) of
$63.3 million $37.0 million $5.1 million $4.4 million - We take credit risk exclusively on loans backed by multifamily assets and have no credit exposure to losses in any other sector of the commercial real estate lending market.
-
During the first quarter of 2024, we repurchased a Fannie Mae loan for
$13.5 million -
In 2023, we received repurchase requests from Freddie Mac related to two loans with UPBs of
$11.4 million $34.8 million $2.0 million
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:
-
Interest expense on corporate debt increased
$2.4 million 16% , from the first quarter of 2023, primarily as a result of an increase in interest rates year over year, as our term loan carries a floating interest rate. -
Income tax expense decreased
$4.3 million 60% , from the first quarter of 2023, primarily as a result of the60% decrease in income from operations, as our effective tax rate remained flat at21% year over year.
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.
-
The decrease in origination fees was primarily the result of the 13-basis-point decrease in our origination fee rate, partially offset by an
8% increase in debt financing volume. The decrease in the origination fee rate was driven by an increase in brokered debt financing volume as a percentage of total debt financing volume and decreases in the Fannie Mae and HUD percentages. Brokered loans have lower origination fees than Agency loans. - The decrease in MSR income was primarily attributable to the decreases in Fannie Mae and HUD debt financing volumes Fannie Mae loans have higher weighted-average servicing fee (“WASF”) than our other products, resulting in higher MSR income from this product than our other products.
-
The decrease in property sales broker fees was primarily driven by the
38% decrease in property sales transaction volume. -
The decrease in other revenues was primarily related to the closing of the largest investment banking deal in the Company’s history, a
$7.5 million - Personnel expense decreased primarily due to a decrease in commission costs on lower transaction revenues, combined with a decrease in other personnel costs due to lower headcount. Our lower headcount was due to a workforce reduction undertaken in the second quarter of 2023.
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.
-
The
$7.4 billion - Investment management fees decreased primarily as a result of a decline in revenue from our LIHTC funds as fewer dispositions were expected to be realized in Q1 2024 compared to Q1 2023.
- Placement fees and other interest income increased largely as a result of higher custodial escrow balances and higher placement fees earned on those escrow deposits due to higher short-term interest rates.
- The increase in personnel expense was primarily the result of an increase in salaries and benefits as the average headcount for the segment increased. The increase in average headcount was due to additional personnel hired in our LIHTC operations as we continue to scale and integrate those operations.
- The provision for credit losses in 2024 was primarily attributable to losses related to the forbearance and indemnification agreement with Freddie Mac noted above, partially offset by a small benefit for risk-sharing obligations resulting from an update to our historical loss rate and forecast-period loss rate. The benefit for credit losses in 2023 was primarily due to the annual update of our historical loss rate and forecast-period loss rates that resulted in a decrease to the calculated CECL. The ratio of the forecast-period loss rate to the historical loss rate was 3.8 at March 31, 2023, compared to 7.7 at March 31, 2024, reflecting the high inflation, higher interest rates and continued uncertainty in the macroeconomic environment.
- The increase in other operating expenses was primarily driven by the write-off of the unamortized premium associated with the payoff of the note payable of one of our subsidiaries that occurred in the first quarter of 2023, with no comparable activity in the current year.
|
|
|
|
|
|
|
|
|
|
|
|
||||
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.
- The increase in total revenues was primarily driven by the increase in interest income earned on our corporate cash balances due to a higher short-term interest rate environment, combined with an increase in income from equity-method investments.
- The increase in personnel expense was primarily related to an increase in subjective bonus accrual, partially offset by a decrease in salaries and benefits, driven by lower headcount as a result of our workforce reduction undertaken in the second quarter of 2023.
- The increase in other operating expenses was primarily the result of increased office and software expenses in the first quarter of 2024, partially offset by decreased professional fees.
CAPITAL SOURCES AND USES
On May 1, 2024, the Company’s Board of Directors declared a dividend of
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
On February 14, 2024, our Board of Directors authorized the repurchase of up to
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 |
(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
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
NON-GAAP FINANCIAL MEASURES
To supplement our financial statements presented in accordance with
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:
- the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results;
- the ability to better identify trends in the Company's underlying business and perform related trend analyses; and
- a better understanding of how management plans and measures the Company's underlying business.
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 |
(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 |
(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
|
||||||
(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
|
||||||
(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
|
||||||
(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
Source: Walker & Dunlop, Inc.
FAQ
<p>What were Walker & Dunlop's total revenues for Q1 2024?</p>
Walker & Dunlop reported total revenues of $228.1 million for Q1 2024.
<p>What was the net income for Walker & Dunlop in Q1 2024?</p>
Net income for Walker & Dunlop in Q1 2024 was $11.9 million.
<p>Did Walker & Dunlop declare a dividend for Q2 2024?</p>
Yes, Walker & Dunlop declared a dividend of $0.65 per share for the second quarter of 2024.
<p>How did the transaction volume change in Q1 2024 compared to Q1 2023?</p>
The transaction volume decreased by 5% from Q1 2023 to $6.4 billion in Q1 2024.
<p>What was the percentage change in adjusted core EPS from Q1 2023 to Q1 2024?</p>
Adjusted core EPS increased by 2% from Q1 2023 to $1.19 in Q1 2024.
