Walker & Dunlop Reports Results for Q4 2023
- Strongest quarterly results in Q4 2023 with $9.3 billion transaction volume and $274.3 million revenues
- Net income of $31.6 million and diluted earnings per share of $0.93, down 24% and 25% respectively from Q4 2022
- Adjusted EBITDA of $87.6 million, down 5% from Q4 2022
- Declared quarterly dividend of $0.65 per share for Q1 2024, up 3% from Q4 2023
- Servicing portfolio increased by 6% to $130.5 billion as of December 31, 2023
- Total transaction volume down 17% from Q4 2022
- Total revenues down 3% from Q4 2022
- Net income and diluted earnings per share down 24% and 25% respectively from Q4 2022
- Total transaction volume for full year 2023 down 48% from 2022
- Total revenues for full year 2023 down 16% from 2022
- Net income and diluted earnings per share for full year 2023 down 50% from 2022
- Adjusted EBITDA down 8% for full year 2023
- Adjusted core EPS down 16% for full year 2023
Insights
The reported decrease in total transaction volume and net income for Walker & Dunlop suggests a contraction in their business operations, likely attributed to broader market conditions affecting the commercial real estate sector. A 17% decline in transaction volume year over year indicates reduced deal-making activity, which could be a result of higher interest rates, economic uncertainty, or increased market competition. Despite this, the company's ability to maintain a relatively stable Adjusted EBITDA highlights a resilient revenue stream, potentially from servicing and asset management which tend to be less volatile.
Investors may view the modest increase in the dividend as a positive signal of the company's commitment to shareholder returns, even amidst declining earnings. However, the 48% decrease in annual sales and financing volumes is a significant drop that could raise concerns about future growth prospects. The management's commentary on a conservative credit culture and focus on the multifamily industry suggests a strategic positioning that may mitigate risk and capitalize on any market recovery.
Walker & Dunlop's performance must be contextualized within the broader commercial real estate market trends. The sector has been experiencing headwinds due to economic uncertainties and as such, the company's performance, though showing quarterly strength, may not fully counteract the annual downturn. The multifamily focus is a strategic choice, often considered more resilient during economic downturns due to the essential nature of housing. Their performance in this niche market, especially in the face of a 6% increase in the servicing portfolio, indicates a strategic advantage that could serve them well in a rebound.
It is important to note that while the adjusted core EPS showed a slight increase, this metric adjusts for items considered non-recurring or not indicative of ongoing operations and therefore may not fully represent the underlying financial health of the company. Investors and analysts should also consider macroeconomic factors, such as potential rate cuts, which could alleviate some of the pressure on the commercial real estate market and improve transaction volumes.
The financial results of Walker & Dunlop reflect underlying economic conditions, such as interest rate fluctuations and economic slowdowns, which have a direct impact on the commercial real estate market. The decline in net income and earnings per share is consistent with a broader economic trend of reduced investment activity. However, the company's increase in its servicing portfolio suggests a growing asset base, which could provide more stable, recurring income.
The mention of rate cuts in the CEO's statement is significant, as it implies that the company's future performance is tied to monetary policy decisions. If the Federal Reserve were to implement rate cuts, this could potentially lower borrowing costs and stimulate the commercial real estate market, leading to increased transaction volumes for companies like Walker & Dunlop.
Strongest Quarterly Results of the Year Driven by Highest Transaction Volume of 2023
FOURTH QUARTER 2023 HIGHLIGHTS
-
Total transaction volume of
$9.3 billion 17% from Q4’22 -
Total revenues of
$274.3 million 3% from Q4’22 -
Net income of
$31.6 million $0.93 24% and25% , respectively, from Q4’22 -
Adjusted EBITDA1 of
$87.6 million 5% from Q4’22 -
Adjusted core EPS2 of
$1.42 1% from Q4’22 -
Servicing portfolio of
$130.5 billion 6% from December 31, 2022 -
Declared quarterly dividend of
$0.65 3% from the fourth quarter of 2023
FULL YEAR 2023 HIGHLIGHTS
-
Total transaction volume of
$33.0 billion 48% from 2022 -
Total revenues of
$1.1 billion 16% from 2022 -
Net income of
$107.4 million $3.18 50% from 2022 -
Adjusted EBITDA of
$300.1 million 8% from 2022 -
Adjusted core EPS of
$4.68 16% from 2022
“We ended 2023 with solid fourth quarter financial results thanks to
“Walker & Dunlop's consistently conservative credit culture and focus on the multifamily industry paid dividends in 2023 and positions us well for any market rebound in 2024," continued Walker. "But the commercial real estate market has plenty of challenges ahead, and the severity of those challenges will depend on the timing, pace, and degree of rate cuts. We are very bullish about Walker & Dunlop's long-term outlook, and optimistic that 2024 will bring an uptick in financing and sales volumes throughout the CRE ecosystem." Walker concluded, "W&D has the people, brand and technology to continue gaining market share and outperforming the competition."
CONSOLIDATED FOURTH QUARTER 2023 OPERATING RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
||
TRANSACTION VOLUMES |
|||||||||||||
(dollars in thousands) |
|
|
Q4 2023 |
|
|
Q4 2022 |
|
$ Variance |
|
% Variance |
|||
Fannie Mae |
|
$ |
1,692,405 |
|
$ |
994,590 |
|
$ |
697,815 |
|
|
70 |
% |
Freddie Mac |
|
|
1,308,263 |
|
|
2,305,826 |
|
|
(997,563 |
) |
|
(43 |
) |
Ginnie Mae - HUD |
|
|
316,960 |
|
|
186,784 |
|
|
130,176 |
|
|
70 |
|
Brokered (3) |
|
|
2,885,454 |
|
|
4,375,704 |
|
|
(1,490,250 |
) |
|
(34 |
) |
Principal Lending and Investing (4) |
|
|
218,750 |
|
|
31,512 |
|
|
187,238 |
|
|
594 |
|
Debt financing volume |
|
$ |
6,421,832 |
|
$ |
7,894,416 |
|
$ |
(1,472,584 |
) |
|
(19 |
)% |
Property sales volume |
|
|
2,877,399 |
|
|
3,315,287 |
|
|
(437,888 |
) |
|
(13 |
) |
Total transaction volume |
|
$ |
9,299,231 |
|
$ |
11,209,703 |
|
$ |
(1,910,472 |
) |
|
(17 |
)% |
Discussion of Results:
-
Total debt financing volume decreased
19% due to the continued challenging macroeconomic environment in the fourth quarter of 2023. The$9.3 billion 9% sequential increase in transaction volume from the third quarter and our highest quarterly volume of 2023. -
Fannie Mae transaction volume increased
70% in the fourth quarter of 2023 and solidified our ranking as the #1 Fannie Mae Lender in 2023 for the fifth consecutive year. We ended the year as the #3 Freddie Mac Optigo Lender and the second largest combined GSE lender in the country. -
The
70% increase in HUD debt financing volumes reflected our strongest quarter of the year amidst high interest rates and elongated processing times, which impacted our overall HUD pipeline throughout the year. - The decrease in brokered debt and property sales volume was driven by higher interest rates, decreased liquidity supplied to the commercial real estate sector, and dramatically lower acquisition and capital markets activity as the commercial real estate industry continues to adjust to this macroeconomic environment.
|
|
|
|
|
|
|
|
|
|
|
|
||
MANAGED PORTFOLIO |
|||||||||||||
(dollars in thousands, unless otherwise noted) |
|
|
Q4 2023 |
|
|
Q4 2022 |
|
$ Variance |
|
% Variance |
|||
Fannie Mae |
|
$ |
63,699,106 |
|
$ |
59,226,168 |
|
$ |
4,472,938 |
|
|
8 |
% |
Freddie Mac |
|
|
39,330,545 |
|
|
37,819,256 |
|
|
1,511,289 |
|
|
4 |
|
Ginnie Mae - HUD |
|
|
10,460,884 |
|
|
9,868,453 |
|
|
592,431 |
|
|
6 |
|
Brokered |
|
|
16,940,850 |
|
|
16,013,143 |
|
|
927,707 |
|
|
6 |
|
Principal Lending and Investing |
|
|
40,139 |
|
|
206,835 |
|
|
(166,696 |
) |
|
(81 |
) |
Total Servicing Portfolio |
|
$ |
130,471,524 |
|
$ |
123,133,855 |
|
$ |
7,337,669 |
|
|
6 |
% |
Assets under management |
|
|
17,321,452 |
|
|
16,748,449 |
|
|
573,003 |
|
|
3 |
|
Total Managed Portfolio |
|
$ |
147,792,976 |
|
$ |
139,882,304 |
|
$ |
7,910,672 |
|
|
6 |
% |
Custodial escrow account balance at period end (in billions) |
|
$ |
2.7 |
|
$ |
2.7 |
|
|
|
|
|
||
Weighted-average servicing fee rate (basis points) |
|
|
24.1 |
|
|
24.5 |
|
|
|
|
|
||
Weighted-average remaining servicing portfolio term (years) |
|
|
8.2 |
|
|
8.8 |
|
|
|
|
|
||
Discussion of Results:
- Our servicing portfolio continues to expand as a result of the additional GSE debt financing volumes over the past 12 months, partially offset by principal paydowns and loan payoffs.
-
During the fourth quarter of 2023, we added
$1.5 billion $7.3 billion 82% of which were Fannie Mae and Freddie Mac loans. -
$10.2 billion 9% of our total Agency loans in the portfolio. -
The mortgage servicing rights (“MSRs”) associated with our servicing portfolio had a fair value of
$1.4 billion -
Assets under management as of December 31, 2023 consisted of
$15.1 billion $1.4 billion $0.9 billion $0.6 billion
|
|
|
|
|
|
|
|
|
|
|
|
||
KEY PERFORMANCE METRICS |
|||||||||||||
(dollars in thousands, except per share amounts) |
|
|
Q4 2023 |
|
|
Q4 2022 |
|
$ Variance |
|
% Variance |
|||
Walker & Dunlop net income |
|
$ |
31,599 |
|
$ |
41,492 |
|
$ |
(9,893 |
) |
|
(24 |
)% |
Adjusted EBITDA |
|
|
87,582 |
|
|
92,625 |
|
|
(5,043 |
) |
|
(5 |
) |
Diluted EPS |
|
$ |
0.93 |
|
$ |
1.24 |
|
$ |
(0.31 |
) |
|
(25 |
)% |
Adjusted core EPS |
|
$ |
1.42 |
|
$ |
1.41 |
|
$ |
0.01 |
|
|
1 |
% |
Operating margin |
|
|
14 |
% |
|
17 |
% |
|
|
|
|
||
Return on equity |
|
|
7 |
|
|
10 |
|
|
|
|
|
||
Key Expense Metrics (as a percentage of total revenues): |
|
|
|
|
|
|
|
|
|
|
|
||
Personnel expenses |
|
|
46 |
% |
|
49 |
% |
|
|
|
|
||
Other operating expenses |
|
|
13 |
|
|
9 |
|
|
|
|
|
||
Discussion of Results:
-
The decrease in Walker & Dunlop net income was the result of a
17% decrease in income from operations and an increase in our effective tax rate due to a one-time benefit in 2022. - The decrease in adjusted EBITDA was primarily the result of lower investment management fees, from a decline in disposition activity due to the challenging market, largely offset by increased placement fees and other interest income and lower personnel expenses.
- Operating margin decreased due to the decline in total transaction volume that lowered income from operations. Our transaction-related businesses are scaled to execute a significantly larger volume of business, and lower commercial real estate transaction activity continues to put downward pressure on our operating margins.
-
Return on equity declined primarily due to the
24% decrease in net income combined with a2% increase in stockholders’ equity over the past year. -
Personnel expenses as a percentage of total revenues decreased to
46% , driven by the impact of our workforce reduction that became effective in May of 2023 and decreased variable compensation costs for our production team. -
Other operating expenses as a percentage of total revenues increased as a result of a
$13.5 million
|
|
|
|
|
|
|
|
|
|
|
|
||
KEY CREDIT METRICS |
|||||||||||||
(dollars in thousands) |
|
|
Q4 2023 |
|
|
Q4 2022 |
|
$ Variance |
|
% Variance |
|||
At-risk servicing portfolio (5) |
|
$ |
58,801,055 |
|
$ |
54,232,979 |
|
$ |
4,568,076 |
|
|
8 |
% |
Maximum exposure to at-risk portfolio (6) |
|
|
11,949,041 |
|
|
10,993,596 |
|
|
955,445 |
|
|
9 |
|
Defaulted loans (7) |
|
$ |
27,214 |
|
$ |
36,983 |
|
$ |
(9,769 |
) |
|
(26 |
)% |
Key credit metrics (as a percentage of the at-risk portfolio): |
|
|
|
|
|
|
|
|
|
|
|
||
Defaulted loans |
|
|
0.05 |
% |
|
0.07 |
% |
|
|
|
|
||
Allowance for risk-sharing |
|
|
0.05 |
|
|
0.08 |
|
|
|
|
|
||
Key credit metrics (as a percentage of maximum exposure): |
|
|
|
|
|
|
|
|
|
|
|
||
Allowance for risk-sharing |
|
|
0.26 |
% |
|
0.40 |
% |
|
|
|
|
||
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 December 31, 2023, three at-risk loans were in default with an aggregate UPB of
$27.2 million $37.0 million $2.8 million $4.4 million -
The on-balance sheet interim loan portfolio, which is comprised of loans for which we have full risk of loss, was
$40.1 million $206.8 million $14.7 million $14.2 million $710.0 million $892.8 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.
FOURTH QUARTER 2023 - 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
$6.5 million 54% from the fourth quarter of 2022 to the fourth quarter of 2023 due to increases in (i) the interest rate as our corporate debt’s floating rate is tied to short-term interest rates, (ii) the outstanding principal balance of corporate debt. -
Income tax expense increased
$0.8 million 8% from the fourth quarter of 2022 to the fourth quarter of 2023 primarily as a result of a decrease in realizable excess tax benefits and a one-time tax benefit during 2022 related to the GeoPhy acquisition, partially offset by a17% decrease in income from operations.
|
|
|
|
|
|
|
|
|
|
||||
FINANCIAL RESULTS - CAPITAL MARKETS |
|||||||||||||
(dollars in thousands) |
|
|
Q4 2023 |
|
Q4 2022 |
|
$ Variance |
|
% Variance |
||||
Loan origination and debt brokerage fees, net ("Origination fees") |
|
$ |
64,946 |
|
$ |
72,119 |
|
$ |
(7,173 |
) |
|
(10 |
)% |
Fair value of expected net cash flows from servicing, net ("MSR income") |
|
|
34,471 |
|
|
31,790 |
|
|
2,681 |
|
|
8 |
|
Property sales broker fees |
|
|
15,135 |
|
|
20,490 |
|
|
(5,355 |
) |
|
(26 |
) |
Net warehouse interest income (expense), LHFS |
|
|
(2,491 |
) |
|
252 |
|
|
(2,743 |
) |
|
(1,088 |
) |
Other revenues |
|
|
17,020 |
|
|
11,208 |
|
|
5,812 |
|
|
52 |
|
Total revenues |
|
$ |
129,081 |
|
$ |
135,859 |
|
$ |
(6,778 |
) |
|
(5 |
)% |
Personnel |
|
$ |
93,948 |
|
$ |
113,355 |
|
$ |
(19,407 |
) |
|
(17 |
)% |
Amortization and depreciation |
|
|
1,138 |
|
|
893 |
|
|
245 |
|
|
27 |
|
Interest expense on corporate debt |
|
|
4,909 |
|
|
3,159 |
|
|
1,750 |
|
|
55 |
|
Goodwill impairment |
|
|
48,000 |
|
|
— |
|
|
48,000 |
|
|
N/A |
|
Fair value adjustments to contingent consideration liabilities |
|
|
(48,500 |
) |
|
(18,000 |
) |
|
(30,500 |
) |
|
169 |
|
Other operating expenses |
|
|
4,957 |
|
|
6,945 |
|
|
(1,988 |
) |
|
(29 |
) |
Total expenses |
|
$ |
104,452 |
|
$ |
106,352 |
|
$ |
(1,900 |
) |
|
(2 |
)% |
Income from operations |
|
$ |
24,629 |
|
$ |
29,507 |
|
$ |
(4,878 |
) |
|
(17 |
)% |
Income tax expense |
|
|
6,362 |
|
|
(1,070 |
) |
|
7,432 |
|
|
(695 |
) |
Net income before noncontrolling interests |
|
$ |
18,267 |
|
$ |
30,577 |
|
$ |
(12,310 |
) |
|
(40 |
)% |
Less: net income (loss) from noncontrolling interests |
|
|
748 |
|
|
102 |
|
|
646 |
|
|
633 |
|
Walker & Dunlop net income |
|
$ |
17,519 |
|
$ |
30,475 |
|
$ |
(12,956 |
) |
|
(43 |
)% |
Key revenue metrics (as a percentage of debt financing volume): |
|||||||||||||
Origination fee margin (8) |
|
|
1.05 |
% |
|
0.92 |
% |
|
|
|
|
||
MSR margin (9) |
|
|
0.56 |
|
|
0.40 |
|
|
|
|
|
||
Agency MSR margin (10) |
|
|
1.04 |
|
|
0.91 |
|
|
|
|
|
||
Key performance metrics: |
|
|
|
|
|
|
|
|
|
||||
Operating margin |
|
|
19 |
% |
|
22 |
% |
|
|
|
|
||
Adjusted EBITDA |
|
$ |
(1,608 |
) |
$ |
6,411 |
|
$ |
(8,019 |
) |
|
(125 |
)% |
Capital Markets - Discussion of Quarterly Results:
The Capital Markets segment includes our Agency lending, debt brokerage, property sales, appraisal and valuation services, and housing market research businesses.
-
The decrease in origination fees was primarily the result of a decrease in our overall debt financing volume, partially offset by an increase in the origination fee margin due to an increase in Agency debt financing volume as a percentage of overall debt financing volume from
44% in the fourth quarter of 2022 to52% in the fourth quarter of 2023. - The increase in MSR income was attributable to the increase in the Agency MSR margin shown above due to an increase in Fannie Mae volume as a percentage of Agency debt financing volume, which increased the estimated fair value of the future cash flows, partially offset by a decrease in Agency debt financing volume.
- The decrease in property sales broker fees was primarily driven by the decrease in transaction activity and a decline in the profitability of the sales.
- The decrease in net warehouse interest income was driven by an inverted yield curve during the fourth quarter of 2023. Short-term interest rates upon which we incur interest expense were higher than the long-term mortgage rates upon which we earn interest income.
- The increase in other revenues is primarily related to an increase in investment banking revenues year over year.
- Personnel expense decreased primarily due to decreases in (i) commissions expense as a result of the decline in origination fees and property sales broker fees and (ii) salaries and bonuses due to the workforce reduction in the second quarter of 2023.
- The goodwill impairment in the fourth quarter of 2023 was due to market conditions leading to lower projected cash flows from the GeoPhy acquisition, compared to no impairment in 2022.
-
In the fourth quarter of 2023, the fair value adjustment to contingent consideration liabilities resulted in a
$48.5 million $18.0 million - The decrease in adjusted EBITDA was due to the decreases in origination fees, property sales broker fees, and net warehouse interest income (expense), partially offset by the increase in other revenues, the decrease in personnel expenses and the decrease in other operating expenses.
|
|
|
|
|
|
|
|
|
|
||||
FINANCIAL RESULTS - SERVICING & ASSET MANAGEMENT |
|||||||||||||
(dollars in thousands) |
|
|
Q4 2023 |
|
Q4 2022 |
|
$ Variance |
|
% Variance |
||||
Origination fees |
|
$ |
1,262 |
|
$ |
115 |
|
$ |
1,147 |
|
|
997 |
% |
Servicing fees |
|
|
79,887 |
|
|
77,275 |
|
|
2,612 |
|
|
3 |
|
Investment management fees |
|
|
537 |
|
|
24,586 |
|
|
(24,049 |
) |
|
(98 |
) |
Net warehouse interest income, LHFI |
|
|
414 |
|
|
1,504 |
|
|
(1,090 |
) |
|
(72 |
) |
Placement fees and other interest income |
|
|
40,738 |
|
|
24,844 |
|
|
15,894 |
|
|
64 |
|
Other revenues |
|
|
16,829 |
|
|
18,336 |
|
|
(1,507 |
) |
|
(8 |
) |
Total revenues |
|
$ |
139,667 |
|
$ |
146,660 |
|
$ |
(6,993 |
) |
|
(5 |
)% |
Personnel |
|
$ |
20,738 |
|
$ |
16,759 |
|
$ |
3,979 |
|
|
24 |
% |
Amortization and depreciation |
|
|
53,043 |
|
|
55,014 |
|
|
(1,971 |
) |
|
(4 |
) |
Provision (benefit) for credit losses |
|
|
636 |
|
|
1,142 |
|
|
(506 |
) |
|
(44 |
) |
Interest expense on corporate debt |
|
|
11,104 |
|
|
8,233 |
|
|
2,871 |
|
|
35 |
|
Fair value adjustments to contingent consideration liabilities |
|
|
— |
|
|
4,488 |
|
|
(4,488 |
) |
|
(100 |
) |
Other operating expenses |
|
|
12,117 |
|
|
10,715 |
|
|
1,402 |
|
|
13 |
|
Total expenses |
|
$ |
97,638 |
|
$ |
96,351 |
|
$ |
1,287 |
|
|
1 |
% |
Income from operations |
|
$ |
42,029 |
|
$ |
50,309 |
|
$ |
(8,280 |
) |
|
(16 |
)% |
Income tax expense |
|
|
11,269 |
|
|
3,209 |
|
|
8,060 |
|
|
251 |
|
Net income before noncontrolling interests |
|
$ |
30,760 |
|
$ |
47,100 |
|
$ |
(16,340 |
) |
|
(35 |
)% |
Less: net income (loss) from noncontrolling interests |
|
|
(3,311 |
) |
|
(3,959 |
) |
|
648 |
|
|
(16 |
) |
Walker & Dunlop net income |
|
$ |
34,071 |
|
$ |
51,059 |
|
$ |
(16,988 |
) |
|
(33 |
)% |
Key performance metrics: |
|
|
|
|
|
|
|
|
|
||||
Operating margin |
|
|
30 |
% |
|
34 |
% |
|
|
|
|
||
Adjusted EBITDA |
|
$ |
110,543 |
|
$ |
114,541 |
|
$ |
(3,998 |
) |
|
(3 |
)% |
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
$7.3 billion - Investment management fees decreased as a result of lower dispositions revenue from our LIHTC funds. As tax credit investments in our managed portfolio mature, they are sold or recapitalized. The disruption in the acquisitions market and tighter liquidity led to a slowdown in disposition activity year over year.
- Placement fees and other interest income increased largely as a result of higher placement fees from escrow deposits due to substantially higher short-term interest rates.
- The increase in personnel expense was primarily the result of increases in salaries and benefits and commission costs. The aforementioned workforce reduction did not have a material impact on this segment given the stability in earnings and operations. Commission expense increased primarily due to an increase in syndication fees from higher annual syndication volumes in 2023 compared to 2022.
- The change in fair value adjustments to contingent consideration liabilities was primarily due to a contingent consideration revaluation related to Alliant in the fourth quarter of 2022 with no comparable activity in the fourth quarter of 2023.
- Other operating expenses increased primarily as a result of elevated professional fees, due to increased syndication activity. Much of the professional fees incurred from the syndication activity are reimbursable from the LIHTC funds.
- Adjusted EBITDA decreased primarily due to the decrease in investment management fees.
|
|
|
|
|
|
|
|
|
|
|
|
||||
FINANCIAL RESULTS - CORPORATE |
|||||||||||||||
(dollars in thousands) |
|
|
Q4 2023 |
|
|
Q4 2022 |
|
|
$ Variance |
|
% Variance |
||||
Other interest income |
|
$ |
4,472 |
|
|
$ |
1,303 |
|
|
$ |
3,169 |
|
|
243 |
% |
Other revenues |
|
|
1,116 |
|
|
|
(972 |
) |
|
|
2,088 |
|
|
(215 |
) |
Total revenues |
|
$ |
5,588 |
|
|
$ |
331 |
|
|
$ |
5,257 |
|
|
1,588 |
% |
Personnel |
|
$ |
11,179 |
|
|
$ |
7,644 |
|
|
$ |
3,535 |
|
|
46 |
% |
Amortization and depreciation |
|
|
1,834 |
|
|
|
2,023 |
|
|
|
(189 |
) |
|
(9 |
) |
Interest expense on corporate debt |
|
|
2,585 |
|
|
|
718 |
|
|
|
1,867 |
|
|
260 |
|
Other operating expenses |
|
|
17,281 |
|
|
|
22,588 |
|
|
|
(5,307 |
) |
|
(23 |
) |
Total expenses |
|
$ |
32,879 |
|
|
$ |
32,973 |
|
|
$ |
(94 |
) |
|
(0 |
)% |
Income (loss) from operations |
|
$ |
(27,291 |
) |
|
$ |
(32,642 |
) |
|
$ |
5,351 |
|
|
(16 |
)% |
Income tax expense (benefit) |
|
|
(7,300 |
) |
|
|
7,400 |
|
|
|
(14,700 |
) |
|
(199 |
) |
Walker & Dunlop net income (loss) |
|
$ |
(19,991 |
) |
|
$ |
(40,042 |
) |
|
$ |
20,051 |
|
|
(50 |
)% |
Key performance metric: |
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA |
|
$ |
(21,353 |
) |
|
$ |
(28,327 |
) |
|
$ |
6,974 |
|
|
(25 |
)% |
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 from our corporate cash balances due to higher short-term interest rates, combined with an increase in average balances held in interest earning accounts. Additionally, other revenues, which primarily consist of gains and losses on equity-method investments, shifted from a loss in the fourth quarter of 2022 to a gain in the fourth quarter of 2023 due to improved performance of several equity-method investments.
- The increase in personnel expense was related to an increase in subjective bonuses, partially offset by small decreases in other personnel expenses. Subjective bonuses were reduced for company performance in the fourth quarter of 2022 by a greater amount than the fourth quarter of 2023.
- The decrease in other operating expenses was the result of our cost-reduction initiatives in 2023.
CONSOLIDATED FULL YEAR 2023 OPERATING RESULTS
|
|
|
|
|
|
|
|
|
|
|
|
||
FULL YEAR OPERATING RESULTS AND KEY PERFORMANCE METRICS |
|||||||||||||
(dollars in thousands) |
|
|
2023 |
|
|
2022 |
|
$ Variance |
|
% Variance |
|||
Debt financing volume |
|
$ |
24,202,859 |
|
$ |
43,605,984 |
|
$ |
(19,403,125 |
) |
|
(44 |
)% |
Property sales volume |
|
|
8,784,537 |
|
|
19,732,654 |
|
|
(10,948,117 |
) |
|
(55 |
) |
Total transaction volume |
|
$ |
32,987,396 |
|
$ |
63,338,638 |
|
$ |
(30,351,242 |
) |
|
(48 |
)% |
Total revenues |
|
|
1,054,440 |
|
|
1,258,753 |
|
|
(204,313 |
) |
|
(16 |
) |
Total expenses |
|
|
916,243 |
|
|
993,788 |
|
|
(77,545 |
) |
|
(8 |
) |
Walker & Dunlop net income |
|
$ |
107,357 |
|
$ |
213,820 |
|
$ |
(106,463 |
) |
|
(50 |
)% |
Adjusted EBITDA |
|
|
300,123 |
|
|
325,095 |
|
|
(24,972 |
) |
|
(8 |
) |
Diluted EPS |
|
$ |
3.18 |
|
$ |
6.36 |
|
$ |
(3.18 |
) |
|
(50 |
)% |
Adjusted core EPS |
|
$ |
4.68 |
|
$ |
5.60 |
|
$ |
(0.92 |
) |
|
(16 |
)% |
Operating margin |
|
|
13 |
% |
|
21 |
% |
|
|
|
|
||
Return on equity |
|
|
6 |
|
|
13 |
|
|
|
|
|
||
Discussion of Full Year Results:
-
The decrease in total transaction volume was driven by declines in every type of execution, including a
29% decrease in Agency debt financing volume and a55% decrease in both brokered debt financing volume and property sales volume. - The decrease in Walker & Dunlop net income was primarily driven by the decreased transaction volume.
-
The
8% decrease in adjusted EBITDA was primarily the result of (i) lower fee income from the decline in total transaction volumes, (ii) decreases in investment management fees from lower LIHTC dispositions, and (iii) a decrease net warehouse interest income due to an inverted yield curve. These decreases were largely offset by increased placement fees and other interest income and lower personnel and other operating expenses resulting from our cost reduction initiatives implemented throughout 2023. - Operating margin decreased, primarily as a result of the significant decline in our transaction activity, coupled with a one-time acquisition related benefit from the GeoPhy transaction in 2022, and a net benefit from contingent consideration liability revaluations with no comparable benefit in 2023.
-
Adjusted core EPS was down only
16% despite the48% decline in transaction volumes, illustrating the strength of our core operating results. -
Return on equity declined, largely as a result of the
50% decrease in net income combined with a2% increase in stockholders’ equity over the past year.
FULL YEAR 2023 – 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
$34.2 million 100% , from 2022 to 2023, due to increases in (i) the interest rate, as our corporate debt’s floating rate is tied to short-term interest rates and (ii) the outstanding principal balance of corporate debt. -
Income tax expense decreased
$21.0 million 37% , from 2022 to 2023, primarily as a result of a48% decrease in income from operations, partially offset by a decrease in realizable excess tax benefits and a one-time tax benefit during 2022 resulting from the GeoPhy acquisition, with no comparable activity in 2023.
|
|
|
|
|
|
|
|
|
|
|
|
||||
FULL YEAR FINANCIAL RESULTS - CAPITAL MARKETS |
|||||||||||||||
(dollars in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
|
$ Variance |
|
% Variance |
||
Origination fees |
|
$ |
232,625 |
|
|
$ |
345,779 |
|
|
$ |
(113,154 |
) |
|
(33 |
)% |
MSR income |
|
|
141,917 |
|
|
|
191,760 |
|
|
|
(49,843 |
) |
|
(26 |
) |
Property sales broker fees |
|
|
53,966 |
|
|
|
120,582 |
|
|
|
(66,616 |
) |
|
(55 |
) |
Net warehouse interest income (expense), LHFS |
|
|
(9,497 |
) |
|
|
9,667 |
|
|
|
(19,164 |
) |
|
(198 |
) |
Other revenues |
|
|
57,755 |
|
|
|
41,046 |
|
|
|
16,709 |
|
|
41 |
|
Total revenues |
|
$ |
476,766 |
|
|
$ |
708,834 |
|
|
$ |
(232,068 |
) |
|
(33 |
)% |
Personnel |
|
$ |
375,450 |
|
|
$ |
485,958 |
|
|
$ |
(110,508 |
) |
|
(23 |
)% |
Amortization and depreciation |
|
|
4,550 |
|
|
|
3,084 |
|
|
|
1,466 |
|
|
48 |
|
Interest expense on corporate debt |
|
|
18,779 |
|
|
|
8,647 |
|
|
|
10,132 |
|
|
117 |
|
Goodwill impairment |
|
|
62,000 |
|
|
|
— |
|
|
|
62,000 |
|
|
N/A |
|
Fair value adjustments to contingent consideration liabilities |
|
|
(62,500 |
) |
|
|
(18,000 |
) |
|
|
(44,500 |
) |
|
247 |
|
Other operating expenses |
|
|
19,994 |
|
|
|
29,817 |
|
|
|
(9,823 |
) |
|
(33 |
) |
Total expenses |
|
$ |
418,273 |
|
|
$ |
509,506 |
|
|
$ |
(91,233 |
) |
|
(18 |
)% |
Income from operations |
|
$ |
58,493 |
|
|
$ |
199,328 |
|
|
$ |
(140,835 |
) |
|
(71 |
)% |
Income tax expense |
|
|
14,824 |
|
|
|
42,153 |
|
|
|
(27,329 |
) |
|
(65 |
) |
Net income before noncontrolling interests |
|
$ |
43,669 |
|
|
$ |
157,175 |
|
|
$ |
(113,506 |
) |
|
(72 |
)% |
Less: net income (loss) from noncontrolling interests |
|
|
2,489 |
|
|
|
1,097 |
|
|
|
1,392 |
|
|
127 |
|
Walker & Dunlop net income |
|
$ |
41,180 |
|
|
$ |
156,078 |
|
|
$ |
(114,898 |
) |
|
(74 |
)% |
Capital Markets - Discussion of Full Year Results:
- The decrease in origination fees was primarily the result of a decrease in our overall debt financing volume, partially offset by an increase in the origination fee margin due to (i) an increase in Agency debt financing volume as a percentage of overall debt financing volume and (ii) increased profitability in our GSE debt financing volume.
-
The decrease in MSR income was primarily attributable to a
29% decrease in Agency debt financing volume. -
The decrease in property sales broker fees was driven by a
55% decrease in property sales volumes. - The decrease in net warehouse interest income was primarily due to an inverted yield curve during 2023. Short-term interest rates upon which we incur interest expense were higher than the long-term mortgage rates upon which we earn interest income.
- The increase in other revenues was primarily related to an increase in investment banking revenues, as our investment banking team closed several large transactions in 2023 after a relatively quiet year for investment banking services in 2022.
- The decrease in personnel expense was primarily driven by a decrease in commissions and other production incentive expenses related to lower transaction volumes year over year. Additionally, salaries and benefits costs and subjective bonus expense decreased as average headcount decreased due to the workforce reduction announced in April 2023.
- The decrease in other operating expenses was due to cost-reduction initiatives across a variety of cost categories, with the most prominent decreases in professional fees and travel and entertainment costs.
|
|
|
|
|
|
|
|
|
|
|
|
||||
FULL YEAR FINANCIAL RESULTS - SERVICING & ASSET MANAGEMENT |
|||||||||||||||
(dollars in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
|
$ Variance |
|
% Variance |
||
Origination fees |
|
$ |
1,784 |
|
|
$ |
2,228 |
|
|
$ |
(444 |
) |
|
(20 |
)% |
Servicing fees |
|
|
311,914 |
|
|
|
300,191 |
|
|
|
11,723 |
|
|
4 |
|
Investment management fees |
|
|
45,381 |
|
|
|
71,931 |
|
|
|
(26,550 |
) |
|
(37 |
) |
Net warehouse interest income, LHFI |
|
|
3,864 |
|
|
|
6,110 |
|
|
|
(2,246 |
) |
|
(37 |
) |
Placement fees and other interest income |
|
|
141,374 |
|
|
|
51,010 |
|
|
|
90,364 |
|
|
177 |
|
Other revenues |
|
|
59,526 |
|
|
|
75,960 |
|
|
|
(16,434 |
) |
|
(22 |
) |
Total revenues |
|
$ |
563,843 |
|
|
$ |
507,430 |
|
|
$ |
56,413 |
|
|
11 |
% |
Personnel |
|
$ |
74,407 |
|
|
$ |
69,970 |
|
|
$ |
4,437 |
|
|
6 |
% |
Amortization and depreciation |
|
|
214,978 |
|
|
|
225,515 |
|
|
|
(10,537 |
) |
|
(5 |
) |
Provision (benefit) for credit losses |
|
|
(10,452 |
) |
|
|
(11,978 |
) |
|
|
1,526 |
|
|
(13 |
) |
Interest expense on corporate debt |
|
|
42,489 |
|
|
|
23,621 |
|
|
|
18,868 |
|
|
80 |
|
Fair value adjustments to contingent consideration liabilities |
|
|
— |
|
|
|
4,488 |
|
|
|
(4,488 |
) |
|
(100 |
) |
Other operating expenses |
|
|
28,582 |
|
|
|
26,250 |
|
|
|
2,332 |
|
|
9 |
|
Total expenses |
|
$ |
350,004 |
|
|
$ |
337,866 |
|
|
$ |
12,138 |
|
|
4 |
% |
Income from operations |
|
$ |
213,839 |
|
|
$ |
169,564 |
|
|
$ |
44,275 |
|
|
26 |
% |
Income tax expense |
|
|
54,198 |
|
|
|
35,859 |
|
|
|
18,339 |
|
|
51 |
|
Net income before noncontrolling interests |
|
$ |
159,641 |
|
|
$ |
133,705 |
|
|
$ |
25,936 |
|
|
19 |
% |
Less: net income (loss) from noncontrolling interests |
|
|
(6,675 |
) |
|
|
(5,986 |
) |
|
|
(689 |
) |
|
12 |
|
Walker & Dunlop net income |
|
$ |
166,316 |
|
|
$ |
139,691 |
|
|
$ |
26,625 |
|
|
19 |
% |
Servicing & Asset Management - Discussion of Full Year Results:
-
The
$7.3 billion - Investment management fees decreased as a result of lower dispositions revenue from our LIHTC funds. As tax credit investments in our managed portfolio mature, they are sold or recapitalized. The disruption in the acquisitions market and tighter liquidity led to a slowdown in disposition activity year over year.
- Placement fees and other interest income increased largely as a result of higher placement fee revenue on escrow deposit accounts and an increase in interest income from pledged securities due to substantially higher short-term interest rates.
- Other revenues decreased primarily due to a significant decrease in prepayment activity, partially offset by an increase in syndication fees due to the higher volume of capital syndicated into our LIHTC funds.
- The increase in personnel expense was primarily the result of increases in salaries and benefits and commission costs. The increase in salaries and benefits was due to annual salary increases, as the aforementioned workforce reduction did not have a material impact on this segment given the stability in earnings and operations. Commission accruals increased primarily due to the aforementioned increase in syndication fees.
- The decrease in amortization and depreciation was largely the result of a reduction in write offs of MSRs due to early loan prepayments in a higher interest rate environment, partially offset by an increase in amortization expense for existing MSRs.
- Other operating expenses increased primarily as a result of elevated professional fees, largely resulting from increased syndication activity.
|
|
|
|
|
|
|
|
|
|
|
|
||||
FULL YEAR FINANCIAL RESULTS - CORPORATE |
|||||||||||||||
(dollars in thousands) |
|
|
2023 |
|
|
|
2022 |
|
|
|
$ Variance |
|
% Variance |
||
Other interest income |
|
$ |
13,146 |
|
|
$ |
1,820 |
|
|
$ |
11,326 |
|
|
622 |
% |
Other revenues |
|
|
685 |
|
|
|
40,669 |
|
|
|
(39,984 |
) |
|
(98 |
) |
Total revenues |
|
$ |
13,831 |
|
|
$ |
42,489 |
|
|
$ |
(28,658 |
) |
|
(67 |
)% |
Personnel |
|
$ |
64,433 |
|
|
$ |
51,438 |
|
|
$ |
12,995 |
|
|
25 |
% |
Amortization and depreciation |
|
|
7,224 |
|
|
|
6,432 |
|
|
|
792 |
|
|
12 |
|
Interest expense on corporate debt |
|
|
7,208 |
|
|
|
1,965 |
|
|
|
5,243 |
|
|
267 |
|
Other operating expenses |
|
|
69,101 |
|
|
|
86,581 |
|
|
|
(17,480 |
) |
|
(20 |
) |
Total expenses |
|
$ |
147,966 |
|
|
$ |
146,416 |
|
|
$ |
1,550 |
|
|
1 |
% |
Income (loss) from operations |
|
$ |
(134,135 |
) |
|
$ |
(103,927 |
) |
|
$ |
(30,208 |
) |
|
29 |
% |
Income tax expense (benefit) |
|
|
(33,996 |
) |
|
|
(21,978 |
) |
|
|
(12,018 |
) |
|
55 |
|
Walker & Dunlop net income (loss) |
|
$ |
(100,139 |
) |
|
$ |
(81,949 |
) |
|
$ |
(18,190 |
) |
|
22 |
% |
Corporate - Discussion of Full Year Results:
- The increase in other interest income was driven by interest income from our corporate cash balances due to higher short-term interest rates year over year combined with an increase in the average balance held in interest earnings accounts.
-
The decrease in other revenues was primarily driven by a
$39.6 million - The increase in personnel expense was primarily the result of increases in (i) subjective bonuses which were reduced below target payouts in both 2023 and 2022 due to Company performance, but to a greater extent in 2022, and (ii) deferred compensation costs with an equal and offsetting impact to revenues as the assets held in the trust are marked-to-market periodically, partially offset by (i) a decrease in stock compensation expense as we were accruing performance-based stock compensation at a lower overall rate in 2023 than in 2022.
- The decrease in other operating expenses was largely the result of our cost-reduction initiatives in 2023.
CAPITAL SOURCES AND USES
On February 14, 2024, the Company’s Board of Directors declared a dividend of
On January 12, 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 20, 2023, our Board of Directors authorized the repurchase of up to
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 WDIP separate accounts. |
|
(5) |
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 |
|
(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 which 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, February 15, 2024 at 8:00 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: 8217003
Webcast Link: https://event.webcasts.com/starthere.jsp?ei=1653633&tp_key=8cfbb57f45
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 the gain associated with the revaluation of our previously held equity-method investment in connection with an acquisition, one-time benefit to tax expense related to our corporate restructuring and repatriation of intellectual property from an acquired subsidiary, and 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, the gain from revaluation of a previously held equity-method investment, 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 Consolidated Balance Sheets Unaudited |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
||||||||||
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2023 |
|
|
2022 |
|
|||||
(in thousands) |
|
|
|
|
|
|
|
|
|
||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
$ |
328,698 |
|
|
$ |
236,321 |
|
|
$ |
228,091 |
|
|
$ |
188,389 |
|
|
$ |
225,949 |
|
Restricted cash |
|
21,422 |
|
|
|
17,768 |
|
|
|
21,769 |
|
|
|
20,504 |
|
|
|
17,676 |
|
Pledged securities, at fair value |
|
184,081 |
|
|
|
177,509 |
|
|
|
170,666 |
|
|
|
165,081 |
|
|
|
157,282 |
|
Loans held for sale, at fair value |
|
594,998 |
|
|
|
758,926 |
|
|
|
1,303,686 |
|
|
|
934,991 |
|
|
|
396,344 |
|
Mortgage servicing rights |
|
907,415 |
|
|
|
921,746 |
|
|
|
932,131 |
|
|
|
946,406 |
|
|
|
975,226 |
|
Goodwill |
|
901,710 |
|
|
|
949,710 |
|
|
|
963,710 |
|
|
|
959,712 |
|
|
|
959,712 |
|
Other intangible assets |
|
181,975 |
|
|
|
185,927 |
|
|
|
189,919 |
|
|
|
194,208 |
|
|
|
198,643 |
|
Receivables, net |
|
233,563 |
|
|
|
265,234 |
|
|
|
242,397 |
|
|
|
224,776 |
|
|
|
202,251 |
|
Committed investments in tax credit equity |
|
154,028 |
|
|
|
212,296 |
|
|
|
165,136 |
|
|
|
207,750 |
|
|
|
254,154 |
|
Other assets, net |
|
541,103 |
|
|
|
552,414 |
|
|
|
589,919 |
|
|
|
651,235 |
|
|
|
658,122 |
|
Total assets |
$ |
4,048,993 |
|
|
$ |
4,277,851 |
|
|
$ |
4,807,424 |
|
|
$ |
4,493,052 |
|
|
$ |
4,045,359 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Warehouse notes payable |
$ |
596,178 |
|
|
$ |
790,742 |
|
|
$ |
1,342,187 |
|
|
$ |
1,031,277 |
|
|
$ |
537,531 |
|
Notes payable |
|
773,358 |
|
|
|
774,677 |
|
|
|
775,995 |
|
|
|
777,311 |
|
|
|
704,103 |
|
Allowance for risk-sharing obligations |
|
31,601 |
|
|
|
30,957 |
|
|
|
32,410 |
|
|
|
33,087 |
|
|
|
44,057 |
|
Deferred tax liabilities, net |
|
241,169 |
|
|
|
243,442 |
|
|
|
243,442 |
|
|
|
243,424 |
|
|
|
243,485 |
|
Commitments to fund investments in tax credit equity |
|
140,259 |
|
|
|
196,250 |
|
|
|
156,617 |
|
|
|
196,522 |
|
|
|
239,281 |
|
Other liabilities |
|
520,299 |
|
|
|
510,792 |
|
|
|
532,276 |
|
|
|
496,335 |
|
|
|
560,073 |
|
Total liabilities |
$ |
2,302,864 |
|
|
$ |
2,546,860 |
|
|
$ |
3,082,927 |
|
|
$ |
2,777,956 |
|
|
$ |
2,328,530 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common stock |
$ |
329 |
|
|
$ |
328 |
|
|
$ |
327 |
|
|
$ |
327 |
|
|
$ |
323 |
|
Additional paid-in capital |
|
425,488 |
|
|
|
420,062 |
|
|
|
412,182 |
|
|
|
405,303 |
|
|
|
412,636 |
|
Accumulated other comprehensive income (loss) |
|
(479 |
) |
|
|
(1,864 |
) |
|
|
(1,465 |
) |
|
|
(1,621 |
) |
|
|
(1,568 |
) |
Retained earnings |
|
1,298,412 |
|
|
|
1,287,653 |
|
|
|
1,287,334 |
|
|
|
1,281,119 |
|
|
|
1,278,035 |
|
Total stockholders’ equity |
$ |
1,723,750 |
|
|
$ |
1,706,179 |
|
|
$ |
1,698,378 |
|
|
$ |
1,685,128 |
|
|
$ |
1,689,426 |
|
Noncontrolling interests |
|
22,379 |
|
|
|
24,812 |
|
|
|
26,119 |
|
|
|
29,968 |
|
|
|
27,403 |
|
Total equity |
$ |
1,746,129 |
|
|
$ |
1,730,991 |
|
|
$ |
1,724,497 |
|
|
$ |
1,715,096 |
|
|
$ |
1,716,829 |
|
Commitments and contingencies |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total liabilities and stockholders' equity |
$ |
4,048,993 |
|
|
$ |
4,277,851 |
|
|
$ |
4,807,424 |
|
|
$ |
4,493,052 |
|
|
$ |
4,045,359 |
|
Walker & Dunlop, Inc. and Subsidiaries Consolidated Statements of Income and Comprehensive Income Unaudited |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Quarterly Trends |
|
Years ended |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|||||||||||
(in thousands, except per share amounts) |
Q4 2023 |
|
Q3 2023 |
|
Q2 2023 |
|
Q1 2023 |
|
Q4 2022 |
|
2023 |
|
|
2022 |
|
||||||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Origination fees |
$ |
66,208 |
|
|
$ |
56,149 |
|
|
$ |
64,968 |
|
|
$ |
47,084 |
|
|
$ |
72,234 |
|
|
$ |
234,409 |
|
|
$ |
348,007 |
|
MSR income |
|
34,471 |
|
|
|
35,375 |
|
|
|
42,058 |
|
|
|
30,013 |
|
|
|
31,790 |
|
|
|
141,917 |
|
|
|
191,760 |
|
Servicing fees |
|
79,887 |
|
|
|
79,200 |
|
|
|
77,061 |
|
|
|
75,766 |
|
|
|
77,275 |
|
|
|
311,914 |
|
|
|
300,191 |
|
Property sales broker fees |
|
15,135 |
|
|
|
16,862 |
|
|
|
10,345 |
|
|
|
11,624 |
|
|
|
20,490 |
|
|
|
53,966 |
|
|
|
120,582 |
|
Investment management fees |
|
537 |
|
|
|
13,362 |
|
|
|
16,309 |
|
|
|
15,173 |
|
|
|
24,586 |
|
|
|
45,381 |
|
|
|
71,931 |
|
Net warehouse interest income (expense) |
|
(2,077 |
) |
|
|
(2,031 |
) |
|
|
(1,526 |
) |
|
|
1 |
|
|
|
1,756 |
|
|
|
(5,633 |
) |
|
|
15,777 |
|
Placement fees and other interest income |
|
45,210 |
|
|
|
43,000 |
|
|
|
35,386 |
|
|
|
30,924 |
|
|
|
26,147 |
|
|
|
154,520 |
|
|
|
52,830 |
|
Other revenues |
|
34,965 |
|
|
|
26,826 |
|
|
|
28,014 |
|
|
|
28,161 |
|
|
|
28,572 |
|
|
|
117,966 |
|
|
|
157,675 |
|
Total revenues |
$ |
274,336 |
|
|
$ |
268,743 |
|
|
$ |
272,615 |
|
|
$ |
238,746 |
|
|
$ |
282,850 |
|
|
$ |
1,054,440 |
|
|
$ |
1,258,753 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Personnel |
$ |
125,865 |
|
|
$ |
136,507 |
|
|
$ |
133,305 |
|
|
$ |
118,613 |
|
|
$ |
137,758 |
|
|
$ |
514,290 |
|
|
$ |
607,366 |
|
Amortization and depreciation |
|
56,015 |
|
|
|
57,479 |
|
|
|
56,292 |
|
|
|
56,966 |
|
|
|
57,930 |
|
|
|
226,752 |
|
|
|
235,031 |
|
Provision (benefit) for credit losses |
|
636 |
|
|
|
421 |
|
|
|
(734 |
) |
|
|
(10,775 |
) |
|
|
1,142 |
|
|
|
(10,452 |
) |
|
|
(11,978 |
) |
Interest expense on corporate debt |
|
18,598 |
|
|
|
17,594 |
|
|
|
17,010 |
|
|
|
15,274 |
|
|
|
12,110 |
|
|
|
68,476 |
|
|
|
34,233 |
|
Goodwill impairment |
|
48,000 |
|
|
|
14,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
62,000 |
|
|
|
— |
|
Fair value adjustments to contingent consideration liabilities |
|
(48,500 |
) |
|
|
(14,000 |
) |
|
|
— |
|
|
|
— |
|
|
|
(13,512 |
) |
|
|
(62,500 |
) |
|
|
(13,512 |
) |
Other operating expenses |
|
34,355 |
|
|
|
28,529 |
|
|
|
30,730 |
|
|
|
24,063 |
|
|
|
40,248 |
|
|
|
117,677 |
|
|
|
142,648 |
|
Total expenses |
$ |
234,969 |
|
|
$ |
240,530 |
|
|
$ |
236,603 |
|
|
$ |
204,141 |
|
|
$ |
235,676 |
|
|
$ |
916,243 |
|
|
$ |
993,788 |
|
Income from operations |
$ |
39,367 |
|
|
$ |
28,213 |
|
|
$ |
36,012 |
|
|
$ |
34,605 |
|
|
$ |
47,174 |
|
|
$ |
138,197 |
|
|
$ |
264,965 |
|
Income tax expense |
|
10,331 |
|
|
|
7,069 |
|
|
|
10,491 |
|
|
|
7,135 |
|
|
|
9,539 |
|
|
|
35,026 |
|
|
|
56,034 |
|
Net income before noncontrolling interests |
$ |
29,036 |
|
|
$ |
21,144 |
|
|
$ |
25,521 |
|
|
$ |
27,470 |
|
|
$ |
37,635 |
|
|
$ |
103,171 |
|
|
$ |
208,931 |
|
Less: net income (loss) from noncontrolling interests |
|
(2,563 |
) |
|
|
(314 |
) |
|
|
(2,114 |
) |
|
|
805 |
|
|
|
(3,857 |
) |
|
|
(4,186 |
) |
|
|
(4,889 |
) |
Walker & Dunlop net income |
$ |
31,599 |
|
|
$ |
21,458 |
|
|
$ |
27,635 |
|
|
$ |
26,665 |
|
|
$ |
41,492 |
|
|
$ |
107,357 |
|
|
$ |
213,820 |
|
Net change in unrealized gains (losses) on pledged available-for-sale securities, net of taxes |
|
1,385 |
|
|
|
(399 |
) |
|
|
156 |
|
|
|
(53 |
) |
|
|
(108 |
) |
|
|
1,089 |
|
|
|
(4,126 |
) |
Walker & Dunlop comprehensive income |
$ |
32,984 |
|
|
$ |
21,059 |
|
|
$ |
27,791 |
|
|
$ |
26,612 |
|
|
$ |
41,384 |
|
|
$ |
108,446 |
|
|
$ |
209,694 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Effective Tax Rate |
|
26 |
% |
|
|
25 |
% |
|
|
29 |
% |
|
|
21 |
% |
|
|
20 |
% |
|
|
25 |
% |
|
|
21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic earnings per share |
$ |
0.94 |
|
|
$ |
0.64 |
|
|
$ |
0.82 |
|
|
$ |
0.80 |
|
|
$ |
1.25 |
|
|
$ |
3.20 |
|
|
$ |
6.43 |
|
Diluted earnings per share |
|
0.93 |
|
|
|
0.64 |
|
|
|
0.82 |
|
|
|
0.79 |
|
|
|
1.24 |
|
|
|
3.18 |
|
|
|
6.36 |
|
Cash dividends paid per common share |
|
0.63 |
|
|
|
0.63 |
|
|
|
0.63 |
|
|
|
0.63 |
|
|
|
0.60 |
|
|
|
2.52 |
|
|
|
2.40 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic weighted-average shares outstanding |
|
32,825 |
|
|
|
32,737 |
|
|
|
32,695 |
|
|
|
32,529 |
|
|
|
32,361 |
|
|
|
32,697 |
|
|
|
32,326 |
|
Diluted weighted-average shares outstanding |
|
32,941 |
|
|
|
32,895 |
|
|
|
32,851 |
|
|
|
32,816 |
|
|
|
32,675 |
|
|
|
32,875 |
|
|
|
32,687 |
|
SUPPLEMENTAL OPERATING DATA Unaudited |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Trends |
|
Years ended |
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
||||
(in thousands, except per share data and unless otherwise noted) |
Q4 2023 |
|
Q3 2023 |
|
Q2 2023 |
|
Q1 2023 |
|
Q4 2022 |
|
2023 |
|
2022 |
|
|||||||
Transaction Volume: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Debt Financing Volume |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fannie Mae |
$ |
1,692,405 |
|
$ |
1,739,332 |
|
$ |
2,230,952 |
|
$ |
1,358,708 |
|
$ |
994,590 |
|
$ |
7,021,397 |
|
$ |
9,950,152 |
|
Freddie Mac |
|
1,308,263 |
|
|
1,072,048 |
|
|
1,212,887 |
|
|
975,737 |
|
|
2,305,826 |
|
|
4,568,935 |
|
|
6,320,201 |
|
Ginnie Mae - HUD |
|
316,960 |
|
|
86,557 |
|
|
147,773 |
|
|
127,599 |
|
|
186,784 |
|
|
678,889 |
|
|
1,118,014 |
|
Brokered (1) |
|
2,885,454 |
|
|
3,149,457 |
|
|
3,316,223 |
|
|
2,363,754 |
|
|
4,375,704 |
|
|
11,714,888 |
|
|
25,878,519 |
|
Principal Lending and Investing (2) |
|
218,750 |
|
|
— |
|
|
— |
|
|
— |
|
|
31,512 |
|
|
218,750 |
|
|
339,098 |
|
Total Debt Financing Volume |
$ |
6,421,832 |
|
$ |
6,047,394 |
|
$ |
6,907,835 |
|
$ |
4,825,798 |
|
$ |
7,894,416 |
|
$ |
24,202,859 |
|
$ |
43,605,984 |
|
Property Sales Volume |
|
2,877,399 |
|
|
2,508,073 |
|
|
1,504,383 |
|
|
1,894,682 |
|
|
3,315,287 |
|
|
8,784,537 |
|
|
19,732,654 |
|
Total Transaction Volume |
$ |
9,299,231 |
|
$ |
8,555,467 |
|
$ |
8,412,218 |
|
$ |
6,720,480 |
|
$ |
11,209,703 |
|
$ |
32,987,396 |
|
$ |
63,338,638 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Performance Metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin |
|
14 |
% |
|
10 |
% |
|
13 |
% |
|
14 |
% |
|
17 |
% |
|
13 |
% |
|
21 |
% |
Return on equity |
|
7 |
|
|
5 |
|
|
7 |
|
|
6 |
|
|
10 |
|
|
6 |
|
|
13 |
|
Walker & Dunlop net income |
$ |
31,599 |
|
$ |
21,458 |
|
$ |
27,635 |
|
$ |
26,665 |
|
$ |
41,492 |
|
$ |
107,357 |
|
$ |
213,820 |
|
Adjusted EBITDA (3) |
|
87,582 |
|
|
74,065 |
|
|
70,501 |
|
|
67,975 |
|
|
92,625 |
|
|
300,123 |
|
|
325,095 |
|
Diluted EPS |
|
0.93 |
|
|
0.64 |
|
|
0.82 |
|
|
0.79 |
|
|
1.24 |
|
|
3.18 |
|
|
6.36 |
|
Adjusted core EPS (4) |
|
1.42 |
|
|
1.11 |
|
|
0.98 |
|
|
1.17 |
|
|
1.41 |
|
|
4.68 |
|
|
5.60 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Expense Metrics (as a percentage of total revenues): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Personnel expenses |
|
46 |
% |
|
51 |
% |
|
49 |
% |
|
50 |
% |
|
49 |
% |
|
49 |
% |
|
48 |
% |
Other operating expenses |
|
13 |
|
|
11 |
|
|
11 |
|
|
10 |
|
|
9 |
|
|
11 |
|
|
10 |
|
Key Revenue Metrics (as a percentage of debt financing volume): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Origination fee margin (5) |
|
1.05 |
% |
|
0.93 |
% |
|
0.93 |
% |
|
0.97 |
% |
|
0.92 |
% |
|
0.97 |
% |
|
0.80 |
% |
MSR margin (6) |
|
0.56 |
|
|
0.58 |
|
|
0.61 |
|
|
0.62 |
|
|
0.40 |
|
|
0.59 |
|
|
0.44 |
|
Agency MSR margin (7) |
|
1.04 |
|
|
1.22 |
|
|
1.17 |
|
|
1.22 |
|
|
0.91 |
|
|
1.16 |
|
|
1.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market capitalization at period end |
$ |
3,719,589 |
|
$ |
2,433,494 |
|
$ |
2,586,519 |
|
$ |
2,489,200 |
|
$ |
2,542,476 |
|
|
|
|
|
|
|
Closing share price at period end |
$ |
111.01 |
|
$ |
74.24 |
|
$ |
79.09 |
|
$ |
76.17 |
|
$ |
78.48 |
|
|
|
|
|
|
|
Average headcount |
|
1,341 |
|
|
1,344 |
|
|
1,385 |
|
|
1,440 |
|
|
1,464 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of Servicing Portfolio (end of period): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Fannie Mae |
$ |
63,699,106 |
|
$ |
62,850,853 |
|
$ |
61,356,554 |
|
$ |
59,890,444 |
|
$ |
59,226,168 |
|
|
|
|
|
|
|
Freddie Mac |
|
39,330,545 |
|
|
38,656,136 |
|
|
38,287,200 |
|
|
38,184,798 |
|
|
37,819,256 |
|
|
|
|
|
|
|
Ginnie Mae - HUD |
|
10,460,884 |
|
|
10,320,520 |
|
|
10,246,632 |
|
|
10,027,781 |
|
|
9,868,453 |
|
|
|
|
|
|
|
Brokered (8) |
|
16,940,850 |
|
|
17,091,925 |
|
|
16,684,115 |
|
|
16,285,391 |
|
|
16,013,143 |
|
|
|
|
|
|
|
Principal Lending and Investing (9) |
|
40,139 |
|
|
40,000 |
|
|
71,680 |
|
|
187,505 |
|
|
206,835 |
|
|
|
|
|
|
|
Total Servicing Portfolio |
$ |
130,471,524 |
|
$ |
128,959,434 |
|
$ |
126,646,181 |
|
$ |
124,575,919 |
|
$ |
123,133,855 |
|
|
|
|
|
|
|
Assets under management (10) |
|
17,321,452 |
|
|
17,334,877 |
|
|
16,903,055 |
|
|
16,654,566 |
|
|
16,748,449 |
|
|
|
|
|
|
|
Total Managed Portfolio |
$ |
147,792,976 |
|
$ |
146,294,311 |
|
$ |
143,549,236 |
|
$ |
141,230,485 |
|
$ |
139,882,304 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key Servicing Portfolio Metrics (end of period): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Custodial escrow deposit balance (in billions) |
$ |
2.7 |
|
$ |
2.8 |
|
$ |
2.8 |
|
$ |
2.2 |
|
$ |
2.7 |
|
|
|
|
|
|
|
Weighted-average servicing fee rate (basis points) |
|
24.1 |
|
|
24.2 |
|
|
24.3 |
|
|
24.3 |
|
|
24.5 |
|
|
|
|
|
|
|
Weighted-average remaining servicing portfolio term (years) |
|
8.2 |
|
|
8.4 |
|
|
8.6 |
|
|
8.7 |
|
|
8.8 |
|
|
|
|
|
|
|
(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, formerly known as “Alliant” 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 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
|||||
(dollars in thousands) |
2023 |
|
2023 |
|
2023 |
|
2023 |
|
2022 |
|
|||||
Risk-sharing servicing portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fannie Mae Full Risk |
$ |
54,583,555 |
|
$ |
53,549,966 |
|
$ |
52,383,701 |
|
$ |
50,713,349 |
|
$ |
50,046,219 |
|
Fannie Mae Modified Risk |
|
9,115,551 |
|
|
9,295,368 |
|
|
8,947,292 |
|
|
9,170,127 |
|
|
9,172,626 |
|
Freddie Mac Modified Risk |
|
23,415 |
|
|
23,415 |
|
|
23,515 |
|
|
23,515 |
|
|
23,615 |
|
Total risk-sharing servicing portfolio |
$ |
63,722,521 |
|
$ |
62,868,749 |
|
$ |
61,354,508 |
|
$ |
59,906,991 |
|
$ |
59,242,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-risk-sharing servicing portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fannie Mae No Risk |
$ |
— |
|
$ |
5,519 |
|
$ |
25,561 |
|
$ |
6,968 |
|
$ |
7,323 |
|
Freddie Mac No Risk |
|
39,307,130 |
|
|
38,632,721 |
|
|
38,263,685 |
|
|
38,161,283 |
|
|
37,795,641 |
|
GNMA - HUD No Risk |
|
10,460,884 |
|
|
10,320,520 |
|
|
10,246,632 |
|
|
10,027,781 |
|
|
9,868,453 |
|
Brokered |
|
16,940,850 |
|
|
17,091,925 |
|
|
16,684,115 |
|
|
16,285,391 |
|
|
16,013,143 |
|
Total non-risk-sharing servicing portfolio |
$ |
66,708,864 |
|
$ |
66,050,685 |
|
$ |
65,219,993 |
|
$ |
64,481,423 |
|
$ |
63,684,560 |
|
Total loans serviced for others |
$ |
130,431,385 |
|
$ |
128,919,434 |
|
$ |
126,574,501 |
|
$ |
124,388,414 |
|
$ |
122,927,020 |
|
Interim loans (full risk) servicing portfolio |
|
40,139 |
|
|
40,000 |
|
|
71,680 |
|
|
187,505 |
|
|
206,835 |
|
Total servicing portfolio unpaid principal balance |
$ |
130,471,524 |
|
$ |
128,959,434 |
|
$ |
126,646,181 |
|
$ |
124,575,919 |
|
$ |
123,133,855 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interim Loan Joint Venture Managed Loans (1) |
$ |
710,041 |
|
$ |
736,320 |
|
$ |
895,491 |
|
$ |
894,829 |
|
$ |
892,808 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At-risk servicing portfolio (2) |
$ |
58,801,055 |
|
$ |
57,857,659 |
|
$ |
56,430,098 |
|
$ |
54,898,461 |
|
$ |
54,232,979 |
|
Maximum exposure to at-risk portfolio (3) |
|
11,949,041 |
|
|
11,750,068 |
|
|
11,346,580 |
|
|
11,132,473 |
|
|
10,993,596 |
|
Defaulted loans(4) |
|
27,214 |
|
|
— |
|
|
36,983 |
|
|
36,983 |
|
|
36,983 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Defaulted loans as a percentage of the at-risk portfolio |
|
0.05 |
% |
|
0.00 |
% |
|
0.07 |
% |
|
0.07 |
% |
|
0.07 |
% |
Allowance for risk-sharing as a percentage of the at-risk portfolio |
|
0.05 |
|
|
0.05 |
|
|
0.06 |
|
|
0.06 |
|
|
0.08 |
|
Allowance for risk-sharing as a percentage of maximum exposure |
|
0.26 |
|
|
0.26 |
|
|
0.29 |
|
|
0.30 |
|
|
0.40 |
|
(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 which 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 |
|
Years ended |
|
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|
|||||||||||
(in thousands) |
Q4 2023 |
|
Q3 2023 |
|
Q2 2023 |
|
Q1 2023 |
|
Q4 2022 |
|
2023 |
|
|
2022 |
|
|
||||||||||||
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Walker & Dunlop Net Income |
$ |
31,599 |
|
|
$ |
21,458 |
|
|
$ |
27,635 |
|
|
$ |
26,665 |
|
|
$ |
41,492 |
|
|
$ |
107,357 |
|
|
$ |
213,820 |
|
|
Income tax expense |
|
10,331 |
|
|
|
7,069 |
|
|
|
10,491 |
|
|
|
7,135 |
|
|
|
9,539 |
|
|
|
35,026 |
|
|
|
56,034 |
|
|
Interest expense on corporate debt |
|
18,598 |
|
|
|
17,594 |
|
|
|
17,010 |
|
|
|
15,274 |
|
|
|
12,110 |
|
|
|
68,476 |
|
|
|
34,233 |
|
|
Amortization and depreciation |
|
56,015 |
|
|
|
57,479 |
|
|
|
56,292 |
|
|
|
56,966 |
|
|
|
57,930 |
|
|
|
226,752 |
|
|
|
235,031 |
|
|
Provision (benefit) for credit losses |
|
636 |
|
|
|
421 |
|
|
|
(734 |
) |
|
|
(10,775 |
) |
|
|
1,142 |
|
|
|
(10,452 |
) |
|
|
(11,978 |
) |
|
Net write-offs (1) |
|
— |
|
|
|
(2,008 |
) |
|
|
(6,033 |
) |
|
|
— |
|
|
|
(4,631 |
) |
|
|
(8,041 |
) |
|
|
(4,631 |
) |
|
Stock-based compensation expense |
|
5,374 |
|
|
|
7,427 |
|
|
|
7,898 |
|
|
|
7,143 |
|
|
|
6,833 |
|
|
|
27,842 |
|
|
|
33,987 |
|
|
MSR income |
|
(34,471 |
) |
|
|
(35,375 |
) |
|
|
(42,058 |
) |
|
|
(30,013 |
) |
|
|
(31,790 |
) |
|
|
(141,917 |
) |
|
|
(191,760 |
) |
|
Gain from revaluation of previously held equity-method investment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(39,641 |
) |
|
Write-off of unamortized premium from corporate debt repayment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,420 |
) |
|
|
— |
|
|
|
(4,420 |
) |
|
|
— |
|
|
Goodwill impairment, net of contingent consideration liability fair value adjustments |
|
(500 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(500 |
) |
|
|
— |
|
|
Adjusted EBITDA |
$ |
87,582 |
|
|
$ |
74,065 |
|
|
$ |
70,501 |
|
|
$ |
67,975 |
|
|
$ |
92,625 |
|
|
$ |
300,123 |
|
|
$ |
325,095 |
|
|
(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) |
2023 |
|
|
2022 |
|
||
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA |
|||||||
Walker & Dunlop Net Income |
$ |
17,519 |
|
|
$ |
30,475 |
|
Income tax expense |
|
6,362 |
|
|
|
(1,070 |
) |
Interest expense on corporate debt |
|
4,909 |
|
|
|
3,159 |
|
Amortization and depreciation |
|
1,138 |
|
|
|
893 |
|
Stock-based compensation expense |
|
3,435 |
|
|
|
4,744 |
|
MSR income |
|
(34,471 |
) |
|
|
(31,790 |
) |
Goodwill impairment, net of contingent consideration liability fair value adjustments(1) |
|
(500 |
) |
|
|
— |
|
Adjusted EBITDA |
$ |
(1,608 |
) |
|
$ |
6,411 |
|
|
|
|
|
|
|
||
|
Servicing & Asset Management |
||||||
|
Three months ended
|
||||||
(in thousands) |
2023 |
|
|
2022 |
|
||
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA |
|||||||
Walker & Dunlop Net Income |
$ |
34,071 |
|
|
$ |
51,059 |
|
Income tax expense |
|
11,269 |
|
|
|
3,209 |
|
Interest expense on corporate debt |
|
11,104 |
|
|
|
8,233 |
|
Amortization and depreciation |
|
53,043 |
|
|
|
55,014 |
|
Provision (benefit) for credit losses |
|
636 |
|
|
|
1,142 |
|
Net write-offs |
|
— |
|
|
|
(4,631 |
) |
Stock-based compensation expense |
|
420 |
|
|
|
515 |
|
Adjusted EBITDA |
$ |
110,543 |
|
|
$ |
114,541 |
|
|
|
|
|
|
|
||
|
Corporate |
||||||
|
Three months ended
|
||||||
(in thousands) |
2023 |
|
|
2022 |
|
||
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA |
|||||||
Walker & Dunlop Net Income (Loss) |
$ |
(19,991 |
) |
|
$ |
(40,042 |
) |
Income tax expense (benefit) |
|
(7,300 |
) |
|
|
7,400 |
|
Interest expense on corporate debt |
|
2,585 |
|
|
|
718 |
|
Amortization and depreciation |
|
1,834 |
|
|
|
2,023 |
|
Stock-based compensation expense |
|
1,519 |
|
|
|
1,574 |
|
Adjusted EBITDA |
$ |
(21,353 |
) |
|
$ |
(28,327 |
) |
|
|
|
|
|
|
||
(1) |
For the three months ended December 31, 2023, includes goodwill impairment of |
ADJUSTED CORE EPS RECONCILIATION Unaudited |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Quarterly Trends |
|
Years ended |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, |
|||||||||||
(in thousands) |
Q4 2023 |
|
Q3 2023 |
|
Q2 2023 |
|
Q1 2023 |
|
Q4 2022 |
|
2023 |
|
|
2022 |
|
||||||||||||
Reconciliation of Walker & Dunlop Net Income to Adjusted Core Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Walker & Dunlop Net Income |
$ |
31,599 |
|
|
$ |
21,458 |
|
|
$ |
27,635 |
|
|
$ |
26,665 |
|
|
$ |
41,492 |
|
|
$ |
107,357 |
|
|
$ |
213,820 |
|
Provision (benefit) for credit losses |
|
636 |
|
|
|
421 |
|
|
|
(734 |
) |
|
|
(10,775 |
) |
|
|
1,142 |
|
|
|
(10,452 |
) |
|
|
(11,978 |
) |
Net write-offs(1) |
|
— |
|
|
|
(2,008 |
) |
|
|
(6,033 |
) |
|
|
— |
|
|
|
(4,631 |
) |
|
|
(8,041 |
) |
|
|
(4,631 |
) |
Amortization and depreciation |
|
56,015 |
|
|
|
57,479 |
|
|
|
56,292 |
|
|
|
56,966 |
|
|
|
57,930 |
|
|
|
226,752 |
|
|
|
235,031 |
|
MSR income |
|
(34,471 |
) |
|
|
(35,375 |
) |
|
|
(42,058 |
) |
|
|
(30,013 |
) |
|
|
(31,790 |
) |
|
|
(141,917 |
) |
|
|
(191,760 |
) |
Goodwill impairment |
|
48,000 |
|
|
|
14,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
62,000 |
|
|
|
— |
|
Contingent consideration accretion and fair value adjustments |
|
(47,637 |
) |
|
|
(13,426 |
) |
|
|
176 |
|
|
|
177 |
|
|
|
(12,637 |
) |
|
|
(60,710 |
) |
|
|
(8,870 |
) |
Gain from revaluation of previously held equity-method investment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(39,641 |
) |
Income tax expense adjustment(2)(3) |
|
(5,916 |
) |
|
|
(5,285 |
) |
|
|
(2,227 |
) |
|
|
(3,372 |
) |
|
|
(4,279 |
) |
|
|
(17,141 |
) |
|
|
(3,763 |
) |
Adjusted Core Net Income |
$ |
48,226 |
|
|
$ |
37,264 |
|
|
$ |
33,051 |
|
|
$ |
39,648 |
|
|
$ |
47,227 |
|
|
$ |
157,848 |
|
|
$ |
188,208 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Reconciliation of Diluted EPS to Adjusted core EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Walker & Dunlop Net Income |
$ |
31,599 |
|
|
$ |
21,458 |
|
|
$ |
27,635 |
|
|
$ |
26,665 |
|
|
$ |
41,492 |
|
|
$ |
107,357 |
|
|
$ |
213,820 |
|
Diluted weighted-average shares outstanding |
|
32,941 |
|
|
|
32,895 |
|
|
|
32,851 |
|
|
|
32,816 |
|
|
|
32,675 |
|
|
|
32,875 |
|
|
|
32,687 |
|
Diluted EPS |
$ |
0.93 |
|
|
$ |
0.64 |
|
|
$ |
0.82 |
|
|
$ |
0.79 |
|
|
$ |
1.24 |
|
|
$ |
3.18 |
|
|
$ |
6.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Adjusted Core Net Income |
$ |
48,226 |
|
|
$ |
37,264 |
|
|
$ |
33,051 |
|
|
$ |
39,648 |
|
|
$ |
47,227 |
|
|
$ |
157,848 |
|
|
$ |
188,208 |
|
Diluted weighted-average shares outstanding |
|
32,941 |
|
|
|
32,895 |
|
|
|
32,851 |
|
|
|
32,816 |
|
|
|
32,675 |
|
|
|
32,875 |
|
|
|
32,687 |
|
Adjusted Core EPS |
$ |
1.42 |
|
|
$ |
1.11 |
|
|
$ |
0.98 |
|
|
$ |
1.17 |
|
|
$ |
1.41 |
|
|
$ |
4.68 |
|
|
$ |
5.60 |
|
(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 Consolidated Statements of Income and Comprehensive Income in this “press release.” |
|
(3) |
Income tax expense adjustment for Q3 2022 included an adjustment for a one-time tax benefit of |
Category: Earnings
View source version on businesswire.com: https://www.businesswire.com/news/home/20240215066607/en/
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
What were Walker & Dunlop's total transaction volume and total revenues in Q4 2023?
How did net income and diluted earnings per share change in Q4 2023 compared to Q4 2022?
What was the adjusted EBITDA for Q4 2023?
Did Walker & Dunlop declare a dividend for Q1 2024?
How much did the servicing portfolio increase by as of December 31, 2023?
