Walker & Dunlop Reports Third Quarter 2024 Financial Results
Walker & Dunlop (NYSE: WD) reported strong Q3 2024 results with total transaction volume up 36% to $11.6 billion. The company achieved total revenues of $292.3 million, up 9% year-over-year, and net income of $28.8 million, up 34%. Diluted earnings per share increased 33% to $0.85. The servicing portfolio grew to $134.1 billion, up 4% from the previous year. Property sales volume surged 44% to $3.6 billion, while debt financing volume increased 33% to $8.0 billion. The company declared a quarterly dividend of $0.65 per share for Q4 2024.
Walker & Dunlop (NYSE: WD) ha riportato risultati solidi per il terzo trimestre del 2024, con un volume totale delle transazioni in aumento del 36% a $11,6 miliardi. L'azienda ha raggiunto un fatturato totale di $292,3 milioni, con un incremento del 9% rispetto all’anno precedente, e un utile netto di $28,8 milioni, in aumento del 34%. Gli utili per azione diluiti sono aumentati del 33% a $0,85. Il portafoglio di servizi è cresciuto a $134,1 miliardi, con un incremento del 4% rispetto all’anno precedente. Il volume delle vendite immobiliari è aumentato del 44% a $3,6 miliardi, mentre il volume di finanziamento del debito è cresciuto del 33% a $8,0 miliardi. L'azienda ha dichiarato un dividendo trimestrale di $0,65 per azione per il quarto trimestre del 2024.
Walker & Dunlop (NYSE: WD) reportó resultados sólidos en el tercer trimestre de 2024, con un volumen total de transacciones que aumentó un 36% a $11.6 mil millones. La compañía logró ingresos totales de $292.3 millones, un incremento del 9% en comparación con el año anterior, y un ingreso neto de $28.8 millones, un aumento del 34%. Las ganancias por acción diluidas crecieron un 33% a $0.85. La cartera de servicios creció a $134.1 mil millones, un aumento del 4% respecto al año anterior. El volumen de ventas de propiedades se disparó un 44% a $3.6 mil millones, mientras que el volumen de financiamiento de deudas aumentó un 33% a $8.0 mil millones. La compañía declaró un dividendo trimestral de $0.65 por acción para el cuarto trimestre de 2024.
워커 앤 던롭(Walker & Dunlop, NYSE: WD)은 2024년 3분기 결과로 총 거래량이 36% 증가하여 116억 달러에 달했다고 보고했습니다. 이 회사는 총 수익 2억 9,230만 달러를 달성했으며, 이는 지난해 대비 9% 증가한 수치입니다. 순이익은 2,880만 달러로 34% 증가했습니다. 희석 주당 순이익은 33% 증가하여 0.85달러에 이르렀습니다. 서비스 포트폴리오는 1,341억 달러로 4% 증가했습니다. 부동산 판매량은 44% 증가하여 36억 달러에 도달했으며, 부채 금융량은 33% 증가하여 80억 달러에 이르렀습니다. 회사는 2024년 4분기 주당 0.65달러의 분기를 배당금으로 선언했습니다.
Walker & Dunlop (NYSE: WD) a reported des résultats solides pour le troisième trimestre 2024, avec un volume total des transactions en hausse de 36% à 11,6 milliards de dollars. L'entreprise a atteint des revenues totales de 292,3 millions de dollars, en hausse de 9% par rapport à l'année précédente, et un revenu net de 28,8 millions de dollars, en hausse de 34%. Le bénéfice par action dilué a augmenté de 33% pour atteindre 0,85 dollar. Le portefeuille de services a crû à 134,1 milliards de dollars, soit une augmentation de 4% par rapport à l'année précédente. Le volume des ventes de biens a explosé de 44% pour atteindre 3,6 milliards de dollars, tandis que le volume du financement de la dette a augmenté de 33% pour atteindre 8,0 milliards de dollars. L'entreprise a déclaré un dividende trimestriel de 0,65 dollar par action pour le quatrième trimestre de 2024.
Walker & Dunlop (NYSE: WD) hat für das dritte Quartal 2024 starke Ergebnisse berichtet, mit einem Gesamttransaktionsvolumen von 36% im Anstieg auf 11,6 Milliarden US-Dollar. Das Unternehmen erzielte Gesamtumsätze von 292,3 Millionen US-Dollar, was einem Anstieg von 9% im Vergleich zum Vorjahr entspricht, und einen Nettogewinn von 28,8 Millionen US-Dollar, was einen Anstieg von 34% bedeutet. Der verwässerte Gewinn pro Aktie stieg um 33% auf 0,85 US-Dollar. Das Dienstleistungsportfolio wuchs auf 134,1 Milliarden US-Dollar, was einem Anstieg von 4% im Vergleich zum Vorjahr entspricht. Das Verkaufsvolumen von Immobilien stieg um 44% auf 3,6 Milliarden US-Dollar, während das Volumen der Schuldenfinanzierung um 33% auf 8,0 Milliarden US-Dollar zunahm. Das Unternehmen erklärte eine vierteljährliche Dividende von 0,65 US-Dollar pro Aktie für das vierte Quartal 2024.
- 36% increase in total transaction volume to $11.6 billion
- 33% increase in diluted EPS to $0.85
- 34% increase in net income to $28.8 million
- 44% increase in property sales volume to $3.6 billion
- 4% growth in servicing portfolio to $134.1 billion
- Year-to-date net income down 16% from 2023
- Operating margin declined to 33% from 41% in Servicing & Asset Management segment
- Investment management fees decreased 12% year-over-year
Insights
Walker & Dunlop's Q3 2024 results demonstrate strong operational performance with total transaction volume up
The company's servicing portfolio grew to
The operating margin improved to
The credit profile shows mixed signals. While the servicing portfolio maintains strong overall performance, the emergence of seven defaulted loans totaling
The repurchase and indemnification agreements for
THIRD QUARTER 2024 HIGHLIGHTS
-
Total transaction volume of
$11.6 billion 36% from Q3’23 -
Total revenues of
$292.3 million 9% from Q3’23 -
Net income of
$28.8 million $0.85 34% and33% , respectively, from Q3’23 -
Adjusted EBITDA(1) of
$78.9 million 7% from Q3’23 -
Adjusted core EPS(2) of
$1.19 7% from Q3’23 -
Servicing portfolio of
$134.1 billion 4% from September 30, 2023 -
Declared quarterly dividend of
$0.65
YEAR-TO-DATE 2024 HIGHLIGHTS
-
Total transaction volume of
$26.5 billion 12% from 2023 -
Total revenues of
$791.0 million 1% from 2023 -
Net income of
$63.3 million $1.87 16% and17% , respectively, from 2023 -
Adjusted EBITDA(1) of
$234.0 million 10% from 2023 -
Adjusted core EPS(2) of
$3.60 11% from 2023
“The commercial real estate market continues to improve, supported by strong fundamentals that are attracting capital to the market and driving an increase in acquisition and financing activity,” commented Walker & Dunlop Chairman and CEO Willy Walker. “As a result, nearly all of our key financial results improved in the third quarter, including a
“We carried the market’s momentum into the fourth quarter, and while rate movements and the presidential election have been headwinds, it is our belief that we are at the beginning of the next commercial real estate cycle where profits will be harvested, loans will be refinanced, and capital will be deployed – all generating demand for Walker & Dunlop’s capital and services,” continued Walker. “Our scaled servicing and asset management business will continue to generate strong recurring cash revenues as our Capital Markets business recovers and grows in the next cycle. Our continued investments in the people of Walker & Dunlop, our brand, and our technology position us extremely well to grow our financial results on the top and bottom line over the next several years.”
| _______________ | |
(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.” |
CONSOLIDATED THIRD QUARTER 2024 OPERATING RESULTS |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
TRANSACTION VOLUMES |
|||||||||||||||
(in thousands) |
|
|
Q3 2024 |
|
|
Q3 2023 |
|
$ Variance |
|
% Variance |
|||||
Fannie Mae |
|
$ |
2,001,356 |
|
$ |
1,739,332 |
|
$ |
262,024 |
|
15 |
% |
|||
Freddie Mac |
|
|
1,545,939 |
|
|
|
1,072,048 |
|
|
|
473,891 |
|
|
44 |
|
Ginnie Mae - HUD |
|
|
272,054 |
|
|
|
86,557 |
|
|
|
185,497 |
|
|
214 |
|
Brokered (1) |
|
|
4,028,208 |
|
|
|
3,149,457 |
|
|
|
878,751 |
|
|
28 |
|
Principal Lending and Investing (2) |
|
|
165,875 |
|
|
|
- |
|
|
|
165,875 |
|
|
N/A |
|
Debt financing volume |
|
$ |
8,013,432 |
|
|
$ |
6,047,394 |
|
|
$ |
1,966,038 |
|
|
33 |
% |
Property sales volume |
|
|
3,602,675 |
|
|
|
2,508,073 |
|
|
|
1,094,602 |
|
|
44 |
|
Total transaction volume |
|
$ |
11,616,107 |
|
|
$ |
8,555,467 |
|
|
$ |
3,060,640 |
|
|
36 |
% |
(1) |
Brokered transactions for life insurance companies, commercial banks, and other capital sources. |
(2) |
Includes debt financing volumes from our interim loan program, our interim loan joint venture, and Walker & Dunlop Investment Partners, Inc. (“WDIP”) separate accounts. |
DISCUSSION OF QUARTERLY RESULTS:
-
As interest rates stabilized during the third quarter of 2024, capital flows increased causing a surge in multifamily property sales this quarter. Consequently, our property sales volume increased dramatically to
$3.6 billion 44% increase over the third quarter of 2023. -
The acceleration of multifamily property sales activity caused an increased need for debt financing, as many sales transactions rely on debt financing. Fannie Mae and Freddie Mac are the largest providers of capital to the multifamily sector, and we are the largest Fannie Mae lender and third largest Freddie Mac lender. Consequently, our lending volumes with the GSE’s grew to a combined
$3.5 billion 26% over the same quarter last year. - The year-over-year increase in HUD financing volume solidified Walker & Dunlop as the 2nd largest HUD lender for their fiscal year ended September 30, 2024, up from 5th in 2023.
-
The
28% increase in brokered volume was primarily the result of an expanding supply of capital from life insurance companies, banks, CMBS and other private capital providers, highlighted by a$1.2 billion
MANAGED PORTFOLIO |
|||||||||||||||
(dollars in thousands, unless otherwise noted) |
|
|
Q3 2024 |
|
|
Q3 2023 |
|
$ Variance |
|
% Variance |
|||||
Fannie Mae |
|
$ |
66,068,212 |
|
$ |
62,850,853 |
|
$ |
3,217,359 |
|
|
5 |
% |
||
Freddie Mac |
|
|
40,090,158 |
|
|
|
38,656,136 |
|
|
|
1,434,022 |
|
|
4 |
|
Ginnie Mae - HUD |
|
|
10,727,323 |
|
|
|
10,320,520 |
|
|
|
406,803 |
|
|
4 |
|
Brokered |
|
|
17,156,810 |
|
|
|
17,091,925 |
|
|
|
64,885 |
|
|
- |
|
Principal Lending and Investing |
|
|
38,043 |
|
|
|
40,000 |
|
|
|
(1,957 |
) |
|
(5 |
) |
Total Servicing Portfolio |
|
$ |
134,080,546 |
|
|
$ |
128,959,434 |
|
|
$ |
5,121,112 |
|
|
4 |
% |
Assets under management |
|
|
18,210,452 |
|
|
|
17,334,877 |
|
|
|
875,575 |
|
|
5 |
|
Total Managed Portfolio |
|
$ |
152,290,998 |
|
|
$ |
146,294,311 |
|
|
$ |
5,996,687 |
|
|
4 |
% |
Custodial escrow account balance at period end (in billions) |
|
$ |
3.1 |
|
|
$ |
2.8 |
|
|
|
|
|
|
||
Weighted-average servicing fee rate (basis points) |
|
|
24.1 |
|
|
|
24.2 |
|
|
|
|
|
|
||
Weighted-average remaining servicing portfolio term (years) |
|
|
7.7 |
|
|
|
8.4 |
|
|
|
|
|
|
||
DISCUSSION OF QUARTERLY RESULTS:
- Our servicing portfolio continues to expand as a result of additional Agency debt financing volumes over the past 12 months, partially offset by principal paydowns and loan payoffs.
-
During the third quarter of 2024, we added
$1.3 billion $5.1 billion -
$11.4 billion 10% 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 September 30, 2024 consisted of
$15.8 billion $1.5 billion $1.0 billion 5% increase in assets under management was due to increases in all three categories.
|
|
|
|
|
|
|
|
|
|
|
|||||
KEY PERFORMANCE METRICS |
|||||||||||||||
(in thousands, except per share amounts) |
|
|
Q3 2024 |
|
Q3 2023 |
$ Variance |
|
% Variance |
|||||||
Walker & Dunlop net income |
|
$ |
28,802 |
|
$ |
21,458 |
|
$ |
7,344 |
|
34 |
% |
|||
Adjusted EBITDA |
|
|
78,905 |
|
|
74,065 |
|
|
4,840 |
|
|
7 |
|
||
Diluted EPS |
|
$ |
0.85 |
|
$ |
0.64 |
|
$ |
0.21 |
|
|
33 |
% |
||
Adjusted core EPS |
|
$ |
1.19 |
|
$ |
1.11 |
|
$ |
0.08 |
|
|
7 |
% |
||
Operating margin |
|
|
13 |
% |
|
10 |
% |
|
|
|
|
|
|||
Return on equity |
|
|
7 |
|
|
5 |
|
|
|
|
|
|
|||
Key Expense Metrics (as a % of total revenues): |
|
|
|
|
|
|
|
|
|
|
|||||
Personnel expenses |
|
|
50 |
% |
|
51 |
% |
|
|
|
|
|
|||
Other operating expenses |
|
|
11 |
|
|
11 |
|
|
|
|
|
|
|||
DISCUSSION OF QUARTERLY RESULTS:
-
Net income and diluted EPS increased
34% and33% , respectively, in the third quarter of 2024 compared to the same period in 2023, primarily driven by higher origination fees and non-cash MSR income from increased Agency debt financing volume year over year. The increase in net income also drove the increase in return on equity to7% for the third quarter of 2024. -
The
7% increase in adjusted EBITDA was largely due to higher origination fees, servicing fees, and property sale broker fees, partially offset by decreases in investment management fees, and other revenues and increases in variable personnel expenses tied to higher transaction activity, and other operating expenses. -
Adjusted core EPS, which excludes, among other items, the impacts of non-cash MSR income and amortization, the provision for credit losses, and acquisition-related costs, such as amortization of intangible assets, rose to
$1.19 $1.11 -
The operating margin increase in the third quarter of 2024 was largely due to the growth in total transaction volume that drove a
33% increase to our income from operations.
|
|
|
|
|
|
|
|
|
|
|
|||||
KEY CREDIT METRICS |
|||||||||||||||
(in thousands) |
|
|
Q3 2024 |
|
Q3 2023 |
$ Variance |
|
% Variance |
|||||||
At-risk servicing portfolio (1) |
|
$ |
61,237,535 |
|
$ |
57,857,659 |
|
$ |
3,379,876 |
|
6 |
% |
|||
Maximum exposure to at-risk portfolio (2) |
|
|
12,454,158 |
|
|
11,750,068 |
|
|
704,090 |
|
|
6 |
|
||
Defaulted loans (3) |
|
$ |
59,645 |
|
$ |
— |
|
$ |
N/A |
|
|
N/A |
% |
||
Key credit metrics (as a % of the at-risk portfolio): |
|
|
|
|
|
|
|
|
|
|
|||||
Defaulted loans |
|
|
0.10 |
% |
|
0.00 |
% |
|
|
|
|
|
|||
Allowance for risk-sharing |
|
|
0.05 |
|
|
0.05 |
|
|
|
|
|
|
|||
Key credit metrics (as a % of maximum exposure): |
|
|
|
|
|
|
|
|
|
|
|||||
Allowance for risk-sharing |
|
|
0.24 |
% |
|
0.26 |
% |
|
|
|
|
|
|||
| _______________ | |||||||||
(1) |
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 |
||||||||
(2) |
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. |
||||||||
(3) |
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 are delinquent 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. |
||||||||
DISCUSSION OF QUARTERLY 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. 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.
-
As of September 30, 2024, seven at-risk loans were in default with an aggregate unpaid principal balance (“UPB”) of
$59.6 million $6.5 million -
During the first quarter of 2024, we repurchased a Fannie Mae loan for
$13.5 million $11.4 million $34.8 million $61.8 million $8.4 million -
During the third quarter of 2024, we recorded a provision for credit losses of
$3.0 million
THIRD 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
4% from the third quarter of 2023, primarily due to an increase in interest expense on borrowings to support our LIHTC operations, which is included as a component of interest expense on corporate debt. -
Income tax expense increased
$1.8 million 25% , from the third quarter of 2023, primarily as a result of the33% increase in income from operations, partially offset by a decrease in the effective tax rate from25% to24% year over year. The decrease in the effective tax rate was primarily due to a$1.1 million
FINANCIAL RESULTS – CAPITAL MARKETS |
|||||||||||||||
(in thousands) |
|
|
Q3 2024 |
|
Q3 2023 |
|
$ Variance |
% Variance |
|||||||
Loan origination and debt brokerage fees, net ("origination fees") |
|
$ |
72,723 |
|
$ |
56,149 |
|
$ |
16,574 |
|
30 |
% |
|||
Fair value of expected net cash flows from servicing, net ("MSR income") |
|
|
43,426 |
|
|
35,375 |
|
|
8,051 |
|
23 |
|
|||
Property sales broker fees |
|
|
19,322 |
|
|
16,862 |
|
|
2,460 |
|
15 |
|
|||
Net warehouse interest income (expense), loans held for sale ("LHFS") |
|
|
(2,798 |
) |
|
(2,565 |
) |
|
(233 |
) |
(9 |
) |
|||
Other revenues |
|
|
11,039 |
|
|
11,875 |
|
|
(836 |
) |
(7 |
) |
|||
Total revenues |
|
$ |
143,712 |
|
$ |
117,696 |
|
$ |
26,016 |
|
22 |
% |
|||
Personnel |
|
$ |
104,987 |
|
$ |
97,973 |
|
$ |
7,014 |
|
7 |
% |
|||
Amortization and depreciation |
|
|
1,137 |
|
|
1,137 |
|
|
— |
|
— |
|
|||
Interest expense on corporate debt |
|
|
4,888 |
|
|
4,874 |
|
|
14 |
|
0 |
|
|||
Goodwill impairment |
|
|
— |
|
|
14,000 |
|
|
(14,000 |
) |
(100 |
) |
|||
Fair value adjustments to contingent consideration liabilities |
|
|
(1,366 |
) |
|
(14,000 |
) |
|
12,634 |
|
90 |
|
|||
Other operating expenses |
|
|
5,137 |
|
|
4,193 |
|
|
944 |
|
23 |
|
|||
Total expenses |
|
$ |
114,783 |
|
$ |
108,177 |
|
$ |
6,606 |
|
6 |
% |
|||
Income (loss) from operations |
|
$ |
28,929 |
|
$ |
9,519 |
|
$ |
19,410 |
|
204 |
% |
|||
Income tax expense (benefit) |
|
|
7,073 |
|
|
2,386 |
|
|
4,687 |
|
196 |
|
|||
Net income (loss) before noncontrolling interests |
|
$ |
21,856 |
|
$ |
7,133 |
|
$ |
14,723 |
|
206 |
% |
|||
Less: net income (loss) from noncontrolling interests |
|
|
26 |
|
|
83 |
|
|
(57 |
) |
(69 |
) |
|||
Walker & Dunlop net income (loss) |
|
$ |
21,830 |
|
$ |
7,050 |
|
$ |
14,780 |
|
210 |
% |
|||
Key revenue metrics (as a % of debt financing volume): |
|
|
|
|
|
|
|
|
|||||||
Origination fee rate (1) |
|
|
0.93 |
% |
|
0.93 |
% |
|
|
|
|||||
MSR rate (2) |
|
|
0.55 |
|
|
0.58 |
|
|
|
|
|||||
Agency MSR rate (3) |
|
|
1.14 |
|
|
1.22 |
|
|
|
|
|||||
Key performance metrics: |
|
|
|
|
|
|
|
|
|||||||
Operating margin |
|
|
20 |
% |
|
8 |
% |
|
|
|
|||||
Adjusted EBITDA |
|
$ |
(4,601 |
) |
$ |
(15,704 |
) |
$ |
11,103 |
|
71 |
% |
|||
| _______________ | |
(1) |
Origination fees as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing. |
(2) |
MSR income as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing. |
(3) |
MSR income as a percentage of Agency debt financing volume. |
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.
-
Origination fees increased in the third quarter of 2024 primarily because of the increase in debt financing volume. MSR income increased primarily due to
32% growth in Agency financing volume that was partially offset by a decline in the Agency MSR rate, largely driven by a decrease in FNMA loans as a percentage of Agency debt financing volume during the quarter. -
Property sales broker fees increased year over year as a result of the
44% increase in property sales volumes, partially offset by a decrease in the fee margin. - Personnel expense increased in the third quarter of 2024 primarily due to an increase in commission expenses related to higher origination fees and property sales broker fees, and an increase in subjective bonus expense tied to overall company performance.
- During the third quarter of 2024, the fair value adjustments made to contingent consideration liabilities were associated with a much smaller acquisition than those made in the prior year, leading to the change year over year. Additionally, the fair value adjustments made in the third quarter of 2024 did not trigger a goodwill impairment consideration event, while the adjustments in the third quarter of 2023 did, resulting in the decrease in goodwill impairment year over year.
FINANCIAL RESULTS – SERVICING & ASSET MANAGEMENT |
|||||||||||||||
(in thousands) |
|
Q3 2024 |
|
|
Q3 2023 |
|
|
$ Variance |
|
% Variance |
|||||
Origination fees |
|
$ |
823 |
|
|
$ |
— |
|
|
$ |
823 |
|
|
N/A% |
|
Servicing fees |
|
|
82,222 |
|
|
|
79,200 |
|
|
|
3,022 |
|
|
4 |
|
Investment management fees |
|
|
11,744 |
|
|
|
13,362 |
|
|
|
(1,618 |
) |
|
(12 |
) |
Net warehouse interest income, loans held for investment ("LHFI") |
|
|
651 |
|
|
|
534 |
|
|
|
117 |
|
|
22 |
|
Placement fees and other interest income |
|
|
40,299 |
|
|
|
39,475 |
|
|
|
824 |
|
|
2 |
|
Other revenues |
|
|
9,145 |
|
|
|
15,569 |
|
|
|
(6,424 |
) |
|
(41 |
) |
Total revenues |
|
$ |
144,884 |
|
|
$ |
148,140 |
|
|
$ |
(3,256 |
) |
|
(2 |
)% |
Personnel |
|
$ |
20,951 |
|
|
$ |
17,139 |
|
|
$ |
3,812 |
|
|
22 |
% |
Amortization and depreciation |
|
|
54,668 |
|
|
|
54,375 |
|
|
|
293 |
|
|
1 |
|
Provision (benefit) for credit losses |
|
|
2,850 |
|
|
|
421 |
|
|
|
2,429 |
|
|
577 |
|
Interest expense on corporate debt |
|
|
11,711 |
|
|
|
11,096 |
|
|
|
615 |
|
|
6 |
|
Other operating expenses |
|
|
6,611 |
|
|
|
5,039 |
|
|
|
1,572 |
|
|
31 |
|
Total expenses |
|
$ |
96,791 |
|
|
$ |
88,070 |
|
|
$ |
8,721 |
|
|
10 |
% |
Income (loss) from operations |
|
$ |
48,093 |
|
|
$ |
60,070 |
|
|
$ |
(11,977 |
) |
|
(20 |
)% |
Income tax expense (benefit) |
|
|
10,756 |
|
|
|
15,040 |
|
|
|
(4,284 |
) |
|
(28 |
) |
Net income (loss) before noncontrolling interests |
|
$ |
37,337 |
|
|
$ |
45,030 |
|
|
$ |
(7,693 |
) |
|
(17 |
)% |
Less: net income (loss) from noncontrolling interests |
|
|
(145 |
) |
|
|
(397 |
) |
|
|
252 |
|
|
63 |
|
Walker & Dunlop net income (loss) |
|
$ |
37,482 |
|
|
$ |
45,427 |
|
|
$ |
(7,945 |
) |
|
(17 |
)% |
Key performance metrics: |
|
|
|
|
|
|
|
|
|
|
|
||||
Operating margin |
|
|
33 |
% |
|
41 |
% |
|
|
|
|
||||
Adjusted EBITDA |
|
$ |
117,455 |
|
|
$ |
124,849 |
|
|
$ |
(7,394 |
) |
|
(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
$5.1 billion - Investment management fees decreased primarily due to a decline in the accrual for investment management fees from our LIHTC funds resulting from lower anticipated revenues for the year.
-
Other revenues primarily decreased as a result of lower syndication and other revenues related to a
78% decline in gross equity raised year over year, as the closing of one of our LIHTC funds was delayed in the third quarter of 2024. -
Personnel expense increased primarily due to increased salaries and benefits resulting from an
8% increase in average segment headcount year over year combined with an increase in variable compensation costs. -
The provision for credit losses in 2024 was primarily attributable to the
$3.0 million - Other operating expenses increased primarily as a result of costs associated with operating properties controlled through loan repurchase or indemnification, with no comparable activity in the prior year.
FINANCIAL RESULTS – CORPORATE |
|||||||||||||||
(in thousands) |
|
Q3 2024 |
|
Q3 2023 |
|
$ Variance |
|
% Variance |
|||||||
Other interest income |
|
$ |
3,258 |
|
|
$ |
3,525 |
|
|
$ |
(267 |
) |
|
(8 |
)% |
Other revenues |
|
|
450 |
|
|
|
(618 |
) |
|
|
1,068 |
|
|
173 |
|
Total revenues |
|
$ |
3,708 |
|
|
$ |
2,907 |
|
|
$ |
801 |
|
|
28 |
% |
Personnel |
|
$ |
19,600 |
|
|
$ |
21,395 |
|
|
$ |
(1,795 |
) |
|
(8 |
)% |
Amortization and depreciation |
|
|
1,756 |
|
|
|
1,967 |
|
|
|
(211 |
) |
|
(11 |
) |
Interest expense on corporate debt |
|
|
1,633 |
|
|
|
1,624 |
|
|
|
9 |
|
|
1 |
|
Other operating expenses |
|
|
20,236 |
|
|
|
19,297 |
|
|
|
939 |
|
|
5 |
|
Total expenses |
|
$ |
43,225 |
|
|
$ |
44,283 |
|
|
$ |
(1,058 |
) |
|
(2 |
)% |
Income (loss) from operations |
|
$ |
(39,517 |
) |
|
$ |
(41,376 |
) |
|
$ |
1,859 |
|
|
4 |
% |
Income tax expense (benefit) |
|
|
(9,007 |
) |
|
|
(10,357 |
) |
|
|
1,350 |
|
|
13 |
|
Walker & Dunlop net income (loss) |
|
$ |
(30,510 |
) |
|
$ |
(31,019 |
) |
|
$ |
509 |
|
|
2 |
% |
Key performance metric: |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Adjusted EBITDA |
|
$ |
(33,949 |
) |
|
$ |
(35,080 |
) |
|
$ |
1,131 |
|
|
3 |
% |
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.
- Other revenues, which primarily consist of gains and losses on equity-method investments, shifted from a loss in the third quarter of 2023 to a gain in the third quarter of 2024.
-
The decrease in personnel expense was primarily driven by a decrease in subjective bonus expenses tied to company performance, principally for our executive officers. This decrease was partially offset by an increase in salaries and benefits from a
2% higher average segment headcount year over year.
YEAR-TO-DATE 2024
CONSOLIDATED OPERATING RESULTS
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
$3.9 million 8% , from 2023, primarily as a result of an increase in interest rates on our term loan year over year, as our term loan carries a floating interest rate. Additionally, interest expense on borrowings to support our LIHTC operations, which is also included as a component of interest expense on corporate debt, increased year over year as the amount of borrowings increased. -
Income tax expense decreased
$5.1 million 21% , from 2023, primarily as a result of the20% decrease in income from operations and the aforementioned decrease in international tax accruals.
OPERATING RESULTS AND KEY PERFORMANCE METRICS |
|||||||||||||||
(in thousands) |
|
YTD Q3 2024 |
|
YTD Q3 2023 |
|
$ Variance |
|
% Variance |
|||||||
Debt financing volume |
|
$ |
20,158,458 |
|
$ |
17,781,027 |
|
$ |
2,377,431 |
|
|
13 |
% |
||
Property sales volume |
|
|
6,300,609 |
|
|
5,907,138 |
|
|
393,471 |
|
|
7 |
|
||
Total transaction volume |
|
$ |
26,459,067 |
|
$ |
23,688,165 |
|
$ |
2,770,902 |
|
|
12 |
% |
||
Total revenues |
|
|
791,039 |
|
|
780,104 |
|
|
10,935 |
|
|
1 |
|
||
Total expenses |
|
|
711,658 |
|
|
681,274 |
|
|
30,384 |
|
|
4 |
|
||
Walker & Dunlop net income |
|
$ |
63,331 |
|
$ |
75,758 |
|
$ |
(12,427 |
) |
|
(16 |
)% |
||
Adjusted EBITDA |
|
|
233,972 |
|
|
212,541 |
|
|
21,431 |
|
|
10 |
|
||
Diluted EPS |
|
$ |
1.87 |
|
$ |
2.25 |
|
$ |
(0.38 |
) |
|
(17 |
)% |
||
Adjusted core EPS |
|
$ |
3.60 |
|
$ |
3.25 |
|
$ |
0.35 |
|
|
11 |
% |
||
Operating margin |
|
|
10 |
% |
|
13 |
% |
|
|
|
|
|
|||
Return on equity |
|
|
5 |
|
|
6 |
|
|
|
|
|
|
|||
DISCUSSION OF YEAR-TO-DATE RESULTS:
-
The
12% increase in total transaction volume was primarily driven by the27% increase in brokered debt financing volume and7% increase in property sales financing volume, partially offset by a17% decline in Fannie Mae debt financing volume. -
The
16% decrease in Walker & Dunlop net income was primarily as a result of a20% decrease in income from operations driven by: (i) a9% decline in non-cash MSR income from lower Fannie Mae debt financing volume, (ii) a16% decrease in other revenues, (iii) a net provision for credit losses in 2024 compared to a net benefit in 2023, and (iv) a12% increase in other operating expenses. These factors driving income from operations down were partially offset by a (i)9% increase in origination fees due to the increase in debt financing volume, partially offset by a decrease in Agency debt financing volume as a percentage of overall debt financing volume; (ii)5% growth in servicing fees, and (iii) a13% increase in placement fees and other interest income primarily due to elevated earnings rates on deposits tied to short-term interest rates. - The decrease in other revenues was primarily attributable to (i) a decrease in investment banking revenues year over year, as we closed the largest investment banking transaction in our history in 2023 with no similar transaction in the current year, (ii) a decline in syndication and other revenues related to a decline in gross equity raised year over year as the closing of one of our LIHTC funds was delayed in the third quarter of 2024, and (iii) the write-off of debt premium related to the payoff of fixed-rate debt in 2023 with no comparable activity in 2024.
-
The provision for credit losses in 2024 was primarily related to a
$7.6 million - The increase in other operating expenses was primarily related to increases in expenses associated with multi-year software and data contracts that are used throughout our business, and miscellaneous expenses, including the costs associated with operating properties noted above.
-
Adjusted EBITDA increased
10% primarily due to increased origination fees, servicing fees, and placement fees and other interest income and a decrease in net write-offs, partially offset by decreases in investment management fees and other revenues and increases in personnel and other operating expenses. -
Diluted EPS decreased
17% year over year, compared to an11% increase in our adjusted core EPS year over year. The main drivers of the difference between diluted EPS and adjusted core EPS relate to a decrease in non-cash MSR income and an increase to non-cash provision for credit loss expenses, which are removed from adjusted core EPS. Diluted EPS incorporates the impact of those items, while adjusted core EPS excludes those items and reflects the year-over-year growth of our recurring revenue streams. Additionally, net write-offs, a cash-related reduction for adjusted core EPS decreased, resulting in increased adjusted core EPS. This cash-related reduction for adjusted core EPS is not included in diluted EPS. - Operating margin decreased primarily due to changes in our non-cash activity, including: (i) a decline of MSR income due to lower Fannie Mae debt financing volume, (ii) a change from a large benefit for credit losses in 2023 to a provision for credit losses in 2024, and (iii) other changes as noted above describing the decrease in income from operations.
YEAR-TO-DATE 2024
FINANCIAL RESULTS BY SEGMENT
FINANCIAL RESULTS – CAPITAL MARKETS |
|||||||||||||||
(in thousands) |
|
|
YTD Q3 2024 |
|
YTD Q3 2023 |
|
$ Variance |
|
% Variance |
||||||
Origination fees |
|
$ |
180,264 |
|
$ |
167,679 |
|
$ |
12,585 |
|
|
8 |
% |
||
MSR income |
|
|
97,673 |
|
|
107,446 |
|
|
(9,773 |
) |
|
(9 |
) |
||
Property sales broker fees |
|
|
39,408 |
|
|
38,831 |
|
|
577 |
|
|
1 |
|
||
Net warehouse interest income (expense), LHFS |
|
|
(6,322 |
) |
|
(7,006 |
) |
|
684 |
|
|
10 |
|
||
Other revenues |
|
|
32,756 |
|
|
40,735 |
|
|
(7,979 |
) |
|
(20 |
) |
||
Total revenues |
|
$ |
343,779 |
|
$ |
347,685 |
|
$ |
(3,906 |
) |
|
(1 |
)% |
||
Personnel |
|
$ |
276,655 |
|
$ |
281,502 |
|
$ |
(4,847 |
) |
|
(2 |
)% |
||
Amortization and depreciation |
|
|
3,412 |
|
|
3,412 |
|
|
— |
|
|
— |
|
||
Interest expense on corporate debt |
|
|
15,038 |
|
|
13,870 |
|
|
1,168 |
|
|
8 |
|
||
Goodwill impairment |
|
|
— |
|
|
14,000 |
|
|
(14,000 |
) |
|
(100 |
) |
||
Fair value adjustments to contingent consideration liabilities |
|
|
(1,366 |
) |
|
(14,000 |
) |
|
12,634 |
|
|
90 |
|
||
Other operating expenses |
|
|
14,831 |
|
|
15,037 |
|
|
(206 |
) |
|
(1 |
) |
||
Total expenses |
|
$ |
308,570 |
|
$ |
313,821 |
|
$ |
(5,251 |
) |
|
(2 |
)% |
||
Income (loss) from operations |
|
$ |
35,209 |
|
$ |
33,864 |
|
$ |
1,345 |
|
|
4 |
% |
||
Income tax expense (benefit) |
|
|
8,689 |
|
|
8,462 |
|
|
227 |
|
|
3 |
|
||
Net income (loss) before noncontrolling interests |
|
$ |
26,520 |
|
$ |
25,402 |
|
$ |
1,118 |
|
|
4 |
% |
||
Less: net income (loss) from noncontrolling interests |
|
|
353 |
|
|
1,741 |
|
|
(1,388 |
) |
|
(80 |
) |
||
Walker & Dunlop net income (loss) |
|
$ |
26,167 |
|
$ |
23,661 |
|
$ |
2,506 |
|
|
11 |
% |
||
Key revenue metrics (as a % of debt financing volume): |
|
|
|
|
|
|
|
|
|
||||||
Origination fee rate |
|
|
0.91 |
% |
|
0.94 |
% |
|
|
|
|
||||
MSR rate |
|
|
0.49 |
|
|
0.60 |
|
|
|
|
|
||||
Agency MSR rate |
|
|
1.14 |
|
|
1.20 |
|
|
|
|
|
||||
Key performance metrics: |
|
|
|
|
|
|
|
|
|
||||||
Operating margin |
|
|
10 |
% |
|
10 |
% |
|
|
|
|
||||
Adjusted EBITDA |
|
$ |
(32,431 |
) |
$ |
(44,725 |
) |
$ |
12,294 |
|
|
27 |
% |
||
CAPITAL MARKETS – DISCUSSION OF YEAR-TO-DATE RESULTS:
-
The increase in origination fees was largely driven by a
13% increase in debt financing volume year over year, partially offset by a slight decline in our origination fee rate due to the shift in the mix of our debt financing volume towards brokered debt financing volume. -
The decreases in our MSR income and Agency MSR rate were primarily attributable to a decline in Fannie Mae debt financing volume in 2024. Fannie Mae volume as a percentage of total debt financing volume decreased from
30% to22% year over year. Fannie Mae loans produce higher MSR income compared to our other product types, due to their higher weighted average servicing fees. -
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 year over year primarily as a result of a
7% lower average segment headcount, partially offset by increased commission costs related to higher origination fees in 2024. - During 2024, the fair value adjustments made to contingent consideration liabilities were associated with a much smaller acquisition than those made in the prior year, leading to the change year over year. Additionally, the fair value adjustments made in 2024 did not trigger a goodwill impairment consideration event, while the adjustments in 2023 did, resulting in the decrease in goodwill impairment year over year.
FINANCIAL RESULTS – SERVICING & ASSET MANAGEMENT |
|||||||||||||||
(in thousands) |
|
|
YTD Q3 2024 |
|
YTD Q3 2023 |
|
$ Variance |
|
% Variance |
||||||
Origination fees |
|
$ |
2,356 |
|
$ |
522 |
|
$ |
1,834 |
|
|
351 |
% |
||
Servicing fees |
|
|
242,683 |
|
|
232,027 |
|
|
10,656 |
|
|
5 |
|
||
Investment management fees |
|
|
40,086 |
|
|
44,844 |
|
|
(4,758 |
) |
|
(11 |
) |
||
Net warehouse interest income, LHFI |
|
|
1,475 |
|
|
3,450 |
|
|
(1,975 |
) |
|
(57 |
) |
||
Placement fees and other interest income |
|
|
113,072 |
|
|
100,636 |
|
|
12,436 |
|
|
12 |
|
||
Other revenues |
|
|
34,679 |
|
|
42,697 |
|
|
(8,018 |
) |
|
(19 |
) |
||
Total revenues |
|
$ |
434,351 |
|
$ |
424,176 |
|
$ |
10,175 |
|
|
2 |
% |
||
Personnel |
|
$ |
59,083 |
|
$ |
53,669 |
|
$ |
5,414 |
|
|
10 |
% |
||
Amortization and depreciation |
|
|
160,912 |
|
|
161,935 |
|
|
(1,023 |
) |
|
(1 |
) |
||
Provision (benefit) for credit losses |
|
|
6,310 |
|
|
(11,088 |
) |
|
17,398 |
|
|
157 |
|
||
Interest expense on corporate debt |
|
|
33,848 |
|
|
31,385 |
|
|
2,463 |
|
|
8 |
|
||
Other operating expenses |
|
|
18,462 |
|
|
16,465 |
|
|
1,997 |
|
|
12 |
|
||
Total expenses |
|
$ |
278,615 |
|
$ |
252,366 |
|
$ |
26,249 |
|
|
10 |
% |
||
Income (loss) from operations |
|
$ |
155,736 |
|
$ |
171,810 |
|
$ |
(16,074 |
) |
|
(9 |
)% |
||
Income tax expense (benefit) |
|
|
38,430 |
|
|
42,931 |
|
|
(4,501 |
) |
|
(10 |
) |
||
Net income (loss) before noncontrolling interests |
|
$ |
117,306 |
|
$ |
128,879 |
|
$ |
(11,573 |
) |
|
(9 |
)% |
||
Less: net income (loss) from noncontrolling interests |
|
|
(3,891 |
) |
|
(3,364 |
) |
|
(527 |
) |
|
(16 |
) |
||
Walker & Dunlop net income (loss) |
|
$ |
121,197 |
|
$ |
132,243 |
|
$ |
(11,046 |
) |
|
(8 |
)% |
||
Key performance metrics: |
|
|
|
|
|
|
|
|
|
||||||
Operating margin |
|
|
36 |
% |
|
41 |
% |
|
|
|
|
||||
Adjusted EBITDA |
|
$ |
361,614 |
|
$ |
346,283 |
|
$ |
15,331 |
|
|
4 |
% |
||
SERVICING & ASSET MANAGEMENT – DISCUSSION OF YEAR-TO-DATE RESULTS:
-
The
$5.1 billion - Investment management fees decreased primarily due to a decline in the accrual for investment management fees from our LIHTC funds due to lower anticipated revenues for the year.
- Placement fees and other interest income increased largely as a result of higher placement fees earned on deposits due to higher short-term interest rates. Additionally, the average escrow balance increased in 2024.
- The decrease in other revenues was primarily related to a decline in syndication and other revenues related to a decline in gross equity raised year over year as the closing of one of our LIHTC funds was delayed in the third quarter of 2024.
-
Personnel expense increased primarily due to increased salaries and benefits due to a
5% increase in average segment headcount year over year. -
The provision for credit losses in 2024 was primarily related to a
$7.6 million
FINANCIAL RESULTS – CORPORATE |
|||||||||||||||
(in thousands) |
|
|
YTD Q3 2024 |
|
|
YTD Q3 2023 |
|
|
$ Variance |
|
% Variance |
||||
Other interest income |
|
$ |
10,927 |
|
|
$ |
8,674 |
|
|
$ |
2,253 |
|
|
26 |
% |
Other revenues |
|
|
1,982 |
|
|
|
(431 |
) |
|
|
2,413 |
|
|
560 |
|
Total revenues |
|
$ |
12,909 |
|
|
$ |
8,243 |
|
|
$ |
4,666 |
|
|
57 |
% |
Personnel |
|
$ |
54,330 |
|
|
$ |
53,254 |
|
|
$ |
1,076 |
|
|
2 |
% |
Amortization and depreciation |
|
|
5,171 |
|
|
|
5,390 |
|
|
|
(219 |
) |
|
(4 |
) |
Interest expense on corporate debt |
|
|
4,879 |
|
|
|
4,623 |
|
|
|
256 |
|
|
6 |
|
Other operating expenses |
|
|
60,093 |
|
|
|
51,820 |
|
|
|
8,273 |
|
|
16 |
|
Total expenses |
|
$ |
124,473 |
|
|
$ |
115,087 |
|
|
$ |
9,386 |
|
|
8 |
% |
Income (loss) from operations |
|
$ |
(111,564 |
) |
|
$ |
(106,844 |
) |
|
$ |
(4,720 |
) |
|
(4 |
)% |
Income tax expense (benefit) |
|
|
(27,531 |
) |
|
|
(26,698 |
) |
|
|
(833 |
) |
|
(3 |
) |
Walker & Dunlop net income (loss) |
|
$ |
(84,033 |
) |
|
$ |
(80,146 |
) |
|
$ |
(3,887 |
) |
|
(5 |
)% |
Key performance metric: |
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA |
|
$ |
(95,211 |
) |
|
$ |
(89,017 |
) |
|
$ |
(6,194 |
) |
|
(7 |
)% |
CORPORATE – DISCUSSION OF YEAR-TO-DATE RESULTS:
- Total revenues increased as a result of higher interest income earned on our corporate and fund cash balances and an increase in income from equity-method investments.
- The increase in other operating expenses was primarily the result of increased travel and entertainment, software, and miscellaneous expenses year over year.
CAPITAL SOURCES AND USES
On November 6, 2024, the Company’s Board of Directors declared a dividend of
In May 2024, the Company entered into a second amendment to the existing credit agreement that, among other things, decreased the interest rate of the incremental
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.
CONFERENCE CALL INFORMATION
Listeners can access the Company’s quarterly conference call for more information regarding our financial results 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.
|
|
Earnings Call: |
Thursday, November 7, 2024 at 8:30am EST |
Phone: |
(888) 256-1007 from within |
Confirmation Code: |
1186507 |
Webcast Link: |
https://event.webcasts.com/viewer/event.jsp?ei=1655311&tp_key=70e4b5c240 |
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 compensation expense, 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 |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
||||||||||
|
2024 |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
||||||||||
(in thousands) |
|
|
|
|
|
|
|
|
|
||||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
$ |
179,759 |
|
$ |
208,095 |
|
$ |
216,532 |
|
$ |
328,698 |
|
$ |
236,321 |
|||||
Restricted cash |
|
39,827 |
|
|
|
35,460 |
|
|
|
21,071 |
|
|
|
21,422 |
|
|
|
17,768 |
|
Pledged securities, at fair value |
|
203,945 |
|
|
|
197,936 |
|
|
|
190,679 |
|
|
|
184,081 |
|
|
|
177,509 |
|
Loans held for sale, at fair value |
|
1,024,984 |
|
|
|
814,883 |
|
|
|
497,933 |
|
|
|
594,998 |
|
|
|
758,926 |
|
Mortgage servicing rights |
|
836,896 |
|
|
|
850,831 |
|
|
|
881,834 |
|
|
|
907,415 |
|
|
|
921,746 |
|
Goodwill |
|
901,710 |
|
|
|
901,710 |
|
|
|
901,710 |
|
|
|
901,710 |
|
|
|
949,710 |
|
Other intangible assets |
|
170,713 |
|
|
|
174,467 |
|
|
|
178,221 |
|
|
|
181,975 |
|
|
|
185,927 |
|
Receivables, net |
|
307,407 |
|
|
|
272,827 |
|
|
|
250,406 |
|
|
|
233,563 |
|
|
|
265,234 |
|
Committed investments in tax credit equity |
|
333,713 |
|
|
|
151,674 |
|
|
|
122,332 |
|
|
|
154,028 |
|
|
|
212,296 |
|
Other assets |
|
580,277 |
|
|
|
567,515 |
|
|
|
565,194 |
|
|
|
544,457 |
|
|
|
552,414 |
|
Total assets |
$ |
4,579,231 |
|
|
$ |
4,175,398 |
|
|
$ |
3,825,912 |
|
|
$ |
4,052,347 |
|
|
$ |
4,277,851 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Warehouse notes payable |
$ |
1,019,850 |
|
|
$ |
810,114 |
|
|
$ |
521,977 |
|
|
$ |
596,178 |
|
|
$ |
790,742 |
|
Notes payable |
|
769,376 |
|
|
|
770,707 |
|
|
|
772,037 |
|
|
|
773,358 |
|
|
|
774,677 |
|
Allowance for risk-sharing obligations |
|
29,859 |
|
|
|
30,477 |
|
|
|
30,124 |
|
|
|
31,601 |
|
|
|
30,957 |
|
Commitments to fund investments in tax credit equity |
|
289,250 |
|
|
|
134,493 |
|
|
|
114,206 |
|
|
|
140,259 |
|
|
|
196,250 |
|
Other liabilities |
|
724,543 |
|
|
|
695,813 |
|
|
|
651,660 |
|
|
|
764,822 |
|
|
|
754,234 |
|
Total liabilities |
$ |
2,832,878 |
|
|
$ |
2,441,604 |
|
|
$ |
2,090,004 |
|
|
$ |
2,306,218 |
|
|
$ |
2,546,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common stock |
$ |
332 |
|
|
$ |
331 |
|
|
$ |
331 |
|
|
$ |
329 |
|
|
$ |
328 |
|
Additional paid-in capital |
|
412,570 |
|
|
|
407,426 |
|
|
|
427,184 |
|
|
|
425,488 |
|
|
|
420,062 |
|
Accumulated other comprehensive income (loss) |
|
1,466 |
|
|
|
415 |
|
|
|
(492 |
) |
|
|
(479 |
) |
|
|
(1,864 |
) |
Retained earnings |
|
1,295,459 |
|
|
|
1,288,728 |
|
|
|
1,288,313 |
|
|
|
1,298,412 |
|
|
|
1,287,653 |
|
Total stockholders’ equity |
$ |
1,709,827 |
|
|
$ |
1,696,900 |
|
|
$ |
1,715,336 |
|
|
$ |
1,723,750 |
|
|
$ |
1,706,179 |
|
Noncontrolling interests |
|
36,526 |
|
|
|
36,894 |
|
|
|
20,572 |
|
|
|
22,379 |
|
|
|
24,812 |
|
Total equity |
$ |
1,746,353 |
|
|
$ |
1,733,794 |
|
|
$ |
1,735,908 |
|
|
$ |
1,746,129 |
|
|
$ |
1,730,991 |
|
Commitments and contingencies |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total liabilities and stockholders' equity |
$ |
4,579,231 |
|
|
$ |
4,175,398 |
|
|
$ |
3,825,912 |
|
|
$ |
4,052,347 |
|
|
$ |
4,277,851 |
|
Walker & Dunlop, Inc. and Subsidiaries Condensed Consolidated Statements of Income and Comprehensive Income Unaudited |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Quarterly Trends |
|
Nine months ended |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|||||||||||
(in thousands, except per share amounts) |
Q3 2024 |
|
Q2 2024 |
|
Q1 2024 |
|
Q4 2023 |
|
Q3 2023 |
|
2024 |
|
2023 |
||||||||||||||
Revenues |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Origination fees |
$ |
73,546 |
|
|
$ |
65,334 |
|
|
$ |
43,740 |
|
|
$ |
66,208 |
|
|
$ |
56,149 |
|
|
$ |
182,620 |
|
|
$ |
168,201 |
|
MSR income |
|
43,426 |
|
|
|
33,349 |
|
|
|
20,898 |
|
|
|
34,471 |
|
|
|
35,375 |
|
|
|
97,673 |
|
|
|
107,446 |
|
Servicing fees |
|
82,222 |
|
|
|
80,418 |
|
|
|
80,043 |
|
|
|
79,887 |
|
|
|
79,200 |
|
|
|
242,683 |
|
|
|
232,027 |
|
Property sales broker fees |
|
19,322 |
|
|
|
11,265 |
|
|
|
8,821 |
|
|
|
15,135 |
|
|
|
16,862 |
|
|
|
39,408 |
|
|
|
38,831 |
|
Investment management fees |
|
11,744 |
|
|
|
14,822 |
|
|
|
13,520 |
|
|
|
537 |
|
|
|
13,362 |
|
|
|
40,086 |
|
|
|
44,844 |
|
Net warehouse interest income (expense) |
|
(2,147 |
) |
|
|
(1,584 |
) |
|
|
(1,116 |
) |
|
|
(2,077 |
) |
|
|
(2,031 |
) |
|
|
(4,847 |
) |
|
|
(3,556 |
) |
Placement fees and other interest income |
|
43,557 |
|
|
|
41,040 |
|
|
|
39,402 |
|
|
|
45,210 |
|
|
|
43,000 |
|
|
|
123,999 |
|
|
|
109,310 |
|
Other revenues |
|
20,634 |
|
|
|
26,032 |
|
|
|
22,751 |
|
|
|
34,965 |
|
|
|
26,826 |
|
|
|
69,417 |
|
|
|
83,001 |
|
Total revenues |
$ |
292,304 |
|
|
$ |
270,676 |
|
|
$ |
228,059 |
|
|
$ |
274,336 |
|
|
$ |
268,743 |
|
|
$ |
791,039 |
|
|
$ |
780,104 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Personnel |
$ |
145,538 |
|
|
$ |
133,067 |
|
|
$ |
111,463 |
|
|
$ |
125,865 |
|
|
$ |
136,507 |
|
|
$ |
390,068 |
|
|
$ |
388,425 |
|
Amortization and depreciation |
|
57,561 |
|
|
|
56,043 |
|
|
|
55,891 |
|
|
|
56,015 |
|
|
|
57,479 |
|
|
|
169,495 |
|
|
|
170,737 |
|
Provision (benefit) for credit losses |
|
2,850 |
|
|
|
2,936 |
|
|
|
524 |
|
|
|
636 |
|
|
|
421 |
|
|
|
6,310 |
|
|
|
(11,088 |
) |
Interest expense on corporate debt |
|
18,232 |
|
|
|
17,874 |
|
|
|
17,659 |
|
|
|
18,598 |
|
|
|
17,594 |
|
|
|
53,765 |
|
|
|
49,878 |
|
Goodwill impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
48,000 |
|
|
|
14,000 |
|
|
|
— |
|
|
|
14,000 |
|
Fair value adjustments to contingent consideration liabilities |
|
(1,366 |
) |
|
|
— |
|
|
|
— |
|
|
|
(48,500 |
) |
|
|
(14,000 |
) |
|
|
(1,366 |
) |
|
|
(14,000 |
) |
Other operating expenses |
|
31,984 |
|
|
|
32,559 |
|
|
|
28,843 |
|
|
|
34,355 |
|
|
|
28,529 |
|
|
|
93,386 |
|
|
|
83,322 |
|
Total expenses |
$ |
254,799 |
|
|
$ |
242,479 |
|
|
$ |
214,380 |
|
|
$ |
234,969 |
|
|
$ |
240,530 |
|
|
$ |
711,658 |
|
|
$ |
681,274 |
|
Income from operations |
$ |
37,505 |
|
|
$ |
28,197 |
|
|
$ |
13,679 |
|
|
$ |
39,367 |
|
|
$ |
28,213 |
|
|
$ |
79,381 |
|
|
$ |
98,830 |
|
Income tax expense |
|
8,822 |
|
|
|
7,902 |
|
|
|
2,864 |
|
|
|
10,331 |
|
|
|
7,069 |
|
|
|
19,588 |
|
|
|
24,695 |
|
Net income before noncontrolling interests |
$ |
28,683 |
|
|
$ |
20,295 |
|
|
$ |
10,815 |
|
|
$ |
29,036 |
|
|
$ |
21,144 |
|
|
$ |
59,793 |
|
|
$ |
74,135 |
|
Less: net income (loss) from noncontrolling interests |
|
(119 |
) |
|
|
(2,368 |
) |
|
|
(1,051 |
) |
|
|
(2,563 |
) |
|
|
(314 |
) |
|
|
(3,538 |
) |
|
|
(1,623 |
) |
Walker & Dunlop net income |
$ |
28,802 |
|
|
$ |
22,663 |
|
|
$ |
11,866 |
|
|
$ |
31,599 |
|
|
$ |
21,458 |
|
|
$ |
63,331 |
|
|
$ |
75,758 |
|
Net change in unrealized gains (losses) on pledged available-for-sale securities, net of taxes |
|
1,051 |
|
|
|
907 |
|
|
|
(13 |
) |
|
|
1,385 |
|
|
|
(399 |
) |
|
|
1,945 |
|
|
|
(296 |
) |
Walker & Dunlop comprehensive income |
$ |
29,853 |
|
|
$ |
23,570 |
|
|
$ |
11,853 |
|
|
$ |
32,984 |
|
|
$ |
21,059 |
|
|
$ |
65,276 |
|
|
$ |
75,462 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Effective Tax Rate |
|
24 |
% |
|
|
28 |
% |
|
|
21 |
% |
|
|
26 |
% |
|
|
25 |
% |
|
|
25 |
% |
|
|
25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic earnings per share |
$ |
0.85 |
|
|
$ |
0.67 |
|
|
$ |
0.35 |
|
|
$ |
0.94 |
|
|
$ |
0.64 |
|
|
$ |
1.87 |
|
|
$ |
2.26 |
|
Diluted earnings per share |
|
0.85 |
|
|
|
0.67 |
|
|
|
0.35 |
|
|
|
0.93 |
|
|
|
0.64 |
|
|
|
1.87 |
|
|
|
2.25 |
|
Cash dividends paid per common share |
|
0.65 |
|
|
|
0.65 |
|
|
|
0.65 |
|
|
|
0.63 |
|
|
|
0.63 |
|
|
|
1.95 |
|
|
|
1.89 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Basic weighted-average shares outstanding |
|
33,169 |
|
|
|
33,121 |
|
|
|
32,978 |
|
|
|
32,825 |
|
|
|
32,737 |
|
|
|
33,090 |
|
|
|
32,654 |
|
Diluted weighted-average shares outstanding |
|
33,203 |
|
|
|
33,154 |
|
|
|
33,048 |
|
|
|
32,941 |
|
|
|
32,895 |
|
|
|
33,135 |
|
|
|
32,853 |
|
SUPPLEMENTAL OPERATING DATA Unaudited |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Quarterly Trends |
Nine months ended |
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
September 30, |
||||||||||||||||
(in thousands, except per share data and unless otherwise noted) |
Q3 2024 |
Q2 2024 |
Q1 2024 |
Q4 2023 |
Q3 2023 |
2024 |
|
2023 |
|
||||||||||||||||||
Transaction Volume: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Components of Debt Financing Volume |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Fannie Mae |
$ |
2,001,356 |
|
$ |
1,510,804 |
|
$ |
903,368 |
|
$ |
1,692,405 |
|
$ |
1,739,332 |
|
$ |
4,415,528 |
|
$ |
5,328,992 |
|
||||||
Freddie Mac |
|
1,545,939 |
|
|
1,153,190 |
|
|
974,926 |
|
|
1,308,263 |
|
|
1,072,048 |
|
|
3,674,055 |
|
|
3,260,672 |
|
||||||
Ginnie Mae - HUD |
|
272,054 |
|
|
185,898 |
|
|
14,140 |
|
|
316,960 |
|
|
86,557 |
|
|
472,092 |
|
|
361,929 |
|
||||||
Brokered (1) |
|
4,028,208 |
|
|
3,852,851 |
|
|
3,319,074 |
|
|
2,885,454 |
|
|
3,149,457 |
|
|
11,200,133 |
|
|
8,829,434 |
|
||||||
Principal Lending and Investing (2) |
|
165,875 |
|
|
214,975 |
|
|
15,800 |
|
|
218,750 |
|
|
— |
|
|
396,650 |
|
|
— |
|
||||||
Total Debt Financing Volume |
$ |
8,013,432 |
|
$ |
6,917,718 |
|
$ |
5,227,308 |
|
$ |
6,421,832 |
|
$ |
6,047,394 |
|
$ |
20,158,458 |
|
$ |
17,781,027 |
|
||||||
Property Sales Volume |
|
3,602,675 |
|
|
1,530,783 |
|
|
1,167,151 |
|
|
2,877,399 |
|
|
2,508,073 |
|
|
6,300,609 |
|
|
5,907,138 |
|
||||||
Total Transaction Volume |
$ |
11,616,107 |
|
$ |
8,448,501 |
|
$ |
6,394,459 |
|
$ |
9,299,231 |
|
$ |
8,555,467 |
|
$ |
26,459,067 |
|
$ |
23,688,165 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Key Performance Metrics: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating margin |
|
13 |
% |
|
10 |
% |
|
6 |
% |
|
14 |
% |
|
10 |
% |
|
10 |
% |
|
13 |
% |
||||||
Return on equity |
|
7 |
|
|
5 |
|
|
3 |
|
|
7 |
|
|
5 |
|
|
5 |
|
|
6 |
|
||||||
Walker & Dunlop net income |
$ |
28,802 |
|
$ |
22,663 |
|
$ |
11,866 |
|
$ |
31,599 |
|
$ |
21,458 |
|
$ |
63,331 |
|
$ |
75,758 |
|
||||||
Adjusted EBITDA (3) |
|
78,905 |
|
|
80,931 |
|
|
74,136 |
|
|
87,582 |
|
|
74,065 |
|
|
233,972 |
|
|
212,541 |
|
||||||
Diluted EPS |
|
0.85 |
|
|
0.67 |
|
|
0.35 |
|
|
0.93 |
|
|
0.64 |
|
|
1.87 |
|
|
2.25 |
|
||||||
Adjusted core EPS (4) |
|
1.19 |
|
|
1.23 |
|
|
1.19 |
|
|
1.42 |
|
|
1.11 |
|
|
3.60 |
|
|
3.25 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Key Expense Metrics (as a percentage of total revenues): |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Personnel expenses |
|
50 |
% |
|
49 |
% |
|
49 |
% |
|
46 |
% |
|
51 |
% |
|
49 |
% |
|
50 |
% |
||||||
Other operating expenses |
|
11 |
|
|
12 |
|
|
13 |
|
|
13 |
|
|
11 |
|
|
12 |
|
|
11 |
|
||||||
Key Revenue Metrics (as a percentage of debt financing volume): |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Origination fee rate (5) |
|
0.93 |
% |
|
0.95 |
% |
|
0.84 |
% |
|
1.05 |
% |
|
0.93 |
% |
|
0.91 |
% |
|
0.94 |
% |
||||||
MSR rate (6) |
|
0.55 |
|
|
0.50 |
|
|
0.40 |
|
|
0.56 |
|
|
0.58 |
|
|
0.49 |
|
|
0.60 |
|
||||||
Agency MSR rate (7) |
|
1.14 |
|
|
1.17 |
|
|
1.10 |
|
|
1.04 |
|
|
1.22 |
|
|
1.14 |
|
|
1.20 |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Other Data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Market capitalization at period end |
$ |
3,834,715 |
|
$ |
3,311,629 |
|
$ |
3,406,853 |
|
$ |
3,719,589 |
|
$ |
2,433,494 |
|
|
|
|
|
||||||||
Closing share price at period end |
$ |
113.59 |
|
$ |
98.20 |
|
$ |
101.06 |
|
$ |
111.01 |
|
$ |
74.24 |
|
|
|
|
|
||||||||
Average headcount |
|
1,356 |
|
|
1,321 |
|
|
1,323 |
|
|
1,341 |
|
|
1,344 |
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Components of Servicing Portfolio (end of period): |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Fannie Mae |
$ |
66,068,212 |
|
$ |
64,954,426 |
|
$ |
64,349,886 |
|
$ |
63,699,106 |
|
$ |
62,850,853 |
|
|
|
|
|
||||||||
Freddie Mac |
|
40,090,158 |
|
|
39,938,411 |
|
|
39,665,386 |
|
|
39,330,545 |
|
|
38,656,136 |
|
|
|
|
|
||||||||
Ginnie Mae - HUD |
|
10,727,323 |
|
|
10,619,764 |
|
|
10,595,841 |
|
|
10,460,884 |
|
|
10,320,520 |
|
|
|
|
|
||||||||
Brokered (8) |
|
17,156,810 |
|
|
17,239,417 |
|
|
17,312,513 |
|
|
16,940,850 |
|
|
17,091,925 |
|
|
|
|
|
||||||||
Principal Lending and Investing (9) |
|
38,043 |
|
|
25,893 |
|
|
40,139 |
|
|
40,139 |
|
|
40,000 |
|
|
|
|
|
||||||||
Total Servicing Portfolio |
$ |
134,080,546 |
|
$ |
132,777,911 |
|
$ |
131,963,765 |
|
$ |
130,471,524 |
|
$ |
128,959,434 |
|
|
|
|
|
||||||||
Assets under management (10) |
|
18,210,452 |
|
|
17,566,666 |
|
|
17,465,398 |
|
|
17,321,452 |
|
|
17,334,877 |
|
|
|
|
|
||||||||
Total Managed Portfolio |
$ |
152,290,998 |
|
$ |
150,344,577 |
|
$ |
149,429,163 |
|
$ |
147,792,976 |
|
$ |
146,294,311 |
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Key Servicing Portfolio Metrics (end of period): |
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Custodial escrow deposit balance (in billions) |
$ |
3.1 |
|
$ |
2.7 |
|
$ |
2.3 |
|
$ |
2.7 |
|
$ |
2.8 |
|
|
|
|
|
||||||||
Weighted-average servicing fee rate (basis points) |
|
24.1 |
|
|
24.1 |
|
|
24.0 |
|
|
24.1 |
|
|
24.2 |
|
|
|
|
|
||||||||
Weighted-average remaining servicing portfolio term (years) |
|
7.7 |
|
|
7.9 |
|
|
8.0 |
|
|
8.2 |
|
|
8.4 |
|
|
|
|
|
||||||||
| _______________ | |
(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 |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
September 30, |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 30, |
||||||||||
(dollars in thousands) |
2024 |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
||||||||||
Risk-sharing servicing portfolio: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Fannie Mae Full Risk |
$ |
57,032,839 |
|
$ |
55,915,670 |
|
$ |
55,236,618 |
|
$ |
54,583,555 |
|
$ |
53,549,966 |
|
||||
Fannie Mae Modified Risk |
|
9,035,373 |
|
|
9,038,756 |
|
|
9,113,268 |
|
|
9,115,551 |
|
|
9,295,368 |
|
||||
Freddie Mac Modified Risk |
|
69,400 |
|
|
69,510 |
|
|
69,510 |
|
|
23,415 |
|
|
23,415 |
|
||||
Total risk-sharing servicing portfolio |
$ |
66,137,612 |
|
$ |
65,023,936 |
|
$ |
64,419,396 |
|
$ |
63,722,521 |
|
$ |
62,868,749 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Non-risk-sharing servicing portfolio: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Fannie Mae No Risk |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
5,519 |
|
||||
Freddie Mac No Risk |
|
40,020,758 |
|
|
39,868,901 |
|
|
39,595,876 |
|
|
39,307,130 |
|
|
38,632,721 |
|
||||
GNMA - HUD No Risk |
|
10,727,323 |
|
|
10,619,764 |
|
|
10,595,841 |
|
|
10,460,884 |
|
|
10,320,520 |
|
||||
Brokered |
|
17,156,810 |
|
|
17,239,417 |
|
|
17,312,513 |
|
|
16,940,850 |
|
|
17,091,925 |
|
||||
Total non-risk-sharing servicing portfolio |
$ |
67,904,891 |
|
$ |
67,728,082 |
|
$ |
67,504,230 |
|
$ |
66,708,864 |
|
$ |
66,050,685 |
|
||||
Total loans serviced for others |
$ |
134,042,503 |
|
$ |
132,752,018 |
|
$ |
131,923,626 |
|
$ |
130,431,385 |
|
$ |
128,919,434 |
|
||||
Interim loans (full risk) servicing portfolio |
|
38,043 |
|
|
25,893 |
|
|
40,139 |
|
|
40,139 |
|
|
40,000 |
|
||||
Total servicing portfolio unpaid principal balance |
$ |
134,080,546 |
|
$ |
132,777,911 |
|
$ |
131,963,765 |
|
$ |
130,471,524 |
|
$ |
128,959,434 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Interim Loan Joint Venture Managed Loans (1) |
$ |
424,774 |
|
$ |
570,299 |
|
$ |
711,541 |
|
$ |
710,041 |
|
$ |
736,320 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
At-risk servicing portfolio (2) |
$ |
61,237,535 |
|
$ |
60,122,274 |
|
$ |
59,498,851 |
|
$ |
58,801,055 |
|
$ |
57,857,659 |
|
||||
Maximum exposure to at-risk portfolio (3) |
|
12,454,158 |
|
|
12,222,290 |
|
|
12,088,698 |
|
|
11,949,041 |
|
|
11,750,068 |
|
||||
Defaulted loans(4) |
|
59,645 |
|
|
48,560 |
|
|
63,264 |
|
|
27,214 |
|
|
— |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Defaulted loans as a percentage of the at-risk portfolio |
|
0.10 |
% |
|
0.08 |
% |
|
0.11 |
% |
|
0.05 |
% |
|
0.00 |
% |
||||
Allowance for risk-sharing as a percentage of the at-risk portfolio |
|
0.05 |
|
|
0.05 |
|
|
0.05 |
|
|
0.05 |
|
|
0.05 |
|
||||
Allowance for risk-sharing as a percentage of maximum exposure |
|
0.24 |
|
|
0.25 |
|
|
0.25 |
|
|
0.26 |
|
|
0.26 |
|
||||
| _______________ | |
(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 are delinquent 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 |
|
Nine months ended |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|||||||||||
(in thousands) |
Q3 2024 |
|
Q2 2024 |
|
Q1 2024 |
|
Q4 2023 |
|
Q3 2023 |
|
2024 |
|
2023 |
||||||||||||||
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Walker & Dunlop Net Income |
$ |
28,802 |
|
|
$ |
22,663 |
|
|
$ |
11,866 |
|
|
$ |
31,599 |
|
|
$ |
21,458 |
|
|
$ |
63,331 |
|
|
$ |
75,758 |
|
Income tax expense |
|
8,822 |
|
|
|
7,902 |
|
|
|
2,864 |
|
|
|
10,331 |
|
|
|
7,069 |
|
|
|
19,588 |
|
|
|
24,695 |
|
Interest expense on corporate debt |
|
18,232 |
|
|
|
17,874 |
|
|
|
17,659 |
|
|
|
18,598 |
|
|
|
17,594 |
|
|
|
53,765 |
|
|
|
49,878 |
|
Amortization and depreciation |
|
57,561 |
|
|
|
56,043 |
|
|
|
55,891 |
|
|
|
56,015 |
|
|
|
57,479 |
|
|
|
169,495 |
|
|
|
170,737 |
|
Provision (benefit) for credit losses |
|
2,850 |
|
|
|
2,936 |
|
|
|
524 |
|
|
|
636 |
|
|
|
421 |
|
|
|
6,310 |
|
|
|
(11,088 |
) |
Net write-offs(1) |
|
(468 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,008 |
) |
|
|
(468 |
) |
|
|
(8,041 |
) |
Stock-based compensation expense |
|
6,532 |
|
|
|
6,862 |
|
|
|
6,230 |
|
|
|
5,374 |
|
|
|
7,427 |
|
|
|
19,624 |
|
|
|
22,468 |
|
MSR income |
|
(43,426 |
) |
|
|
(33,349 |
) |
|
|
(20,898 |
) |
|
|
(34,471 |
) |
|
|
(35,375 |
) |
|
|
(97,673 |
) |
|
|
(107,446 |
) |
Write-off of unamortized premium from corporate debt repayment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,420 |
) |
Goodwill impairment, net of contingent consideration liability fair value adjustments(2) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(500 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted EBITDA |
$ |
78,905 |
|
|
$ |
80,931 |
|
|
$ |
74,136 |
|
|
$ |
87,582 |
|
|
$ |
74,065 |
|
|
$ |
233,972 |
|
|
$ |
212,541 |
|
| _______________ | |
(1) |
The net write-offs for the nine months ended September 30, 2023 includes the |
(2) |
For the three and nine months ended September 30, 2023, includes goodwill impairment of |
ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP BY SEGMENT Unaudited |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Capital Markets |
||||||||||||||
|
Three months ended
|
|
Nine months ended
|
||||||||||||
(in thousands) |
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA |
|
|
|
|
|
|
|||||||||
Walker & Dunlop Net Income (Loss) |
$ |
21,830 |
|
|
$ |
7,050 |
|
|
$ |
26,167 |
|
|
$ |
23,661 |
|
Income tax expense (benefit) |
|
7,073 |
|
|
|
2,386 |
|
|
|
8,689 |
|
|
|
8,462 |
|
Interest expense on corporate debt |
|
4,888 |
|
|
|
4,874 |
|
|
|
15,038 |
|
|
|
13,870 |
|
Amortization and depreciation |
|
1,137 |
|
|
|
1,137 |
|
|
|
3,412 |
|
|
|
3,412 |
|
Stock-based compensation expense |
|
3,897 |
|
|
|
4,224 |
|
|
|
11,936 |
|
|
|
13,316 |
|
MSR income |
|
(43,426 |
) |
|
|
(35,375 |
) |
|
|
(97,673 |
) |
|
|
(107,446 |
) |
Goodwill impairment, net of contingent consideration liability fair value adjustments(1) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Adjusted EBITDA |
$ |
(4,601 |
) |
|
$ |
(15,704 |
) |
|
$ |
(32,431 |
) |
|
$ |
(44,725 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Servicing & Asset Management |
||||||||||||||
|
Three months ended
|
|
|
Nine months ended
|
|||||||||||
(in thousands) |
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA |
|
|
|
|
|
|
|||||||||
Walker & Dunlop Net Income (Loss) |
$ |
37,482 |
|
|
$ |
45,427 |
|
|
$ |
121,197 |
|
|
$ |
132,243 |
|
Income tax expense (benefit) |
|
10,756 |
|
|
|
15,040 |
|
|
|
38,430 |
|
|
|
42,931 |
|
Interest expense on corporate debt |
|
11,711 |
|
|
|
11,096 |
|
|
|
33,848 |
|
|
|
31,385 |
|
Amortization and depreciation |
|
54,668 |
|
|
|
54,375 |
|
|
|
160,912 |
|
|
|
161,935 |
|
Provision (benefit) for credit losses |
|
2,850 |
|
|
|
421 |
|
|
|
6,310 |
|
|
|
(11,088 |
) |
Net write-offs(2) |
|
(468 |
) |
|
|
(2,008 |
) |
|
|
(468 |
) |
|
|
(8,041 |
) |
Stock-based compensation expense |
|
456 |
|
|
|
498 |
|
|
|
1,385 |
|
|
|
1,338 |
|
Write-off of unamortized premium from corporate debt repayment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4,420 |
) |
Adjusted EBITDA |
$ |
117,455 |
|
|
$ |
124,849 |
|
|
$ |
361,614 |
|
|
$ |
346,283 |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Corporate |
||||||||||||||
|
Three months ended
|
|
|
Nine months ended
|
|||||||||||
(in thousands) |
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA |
|
|
|
|
|
|
|||||||||
Walker & Dunlop Net Income (Loss) |
$ |
(30,510 |
) |
|
$ |
(31,019 |
) |
|
$ |
(84,033 |
) |
|
$ |
(80,146 |
) |
Income tax expense (benefit) |
|
(9,007 |
) |
|
|
(10,357 |
) |
|
|
(27,531 |
) |
|
|
(26,698 |
) |
Interest expense on corporate debt |
|
1,633 |
|
|
|
1,624 |
|
|
|
4,879 |
|
|
|
4,623 |
|
Amortization and depreciation |
|
1,756 |
|
|
|
1,967 |
|
|
|
5,171 |
|
|
|
5,390 |
|
Stock-based compensation expense |
|
2,179 |
|
|
|
2,705 |
|
|
|
6,303 |
|
|
|
7,814 |
|
Adjusted EBITDA |
$ |
(33,949 |
) |
|
$ |
(35,080 |
) |
|
$ |
(95,211 |
) |
|
$ |
(89,017 |
) |
| _______________ | |
(1) |
For the three and nine months ended September 30, 2023, includes goodwill impairment of |
(2) |
The net write-offs for the nine months ended September 30, 2023 includes the |
ADJUSTED CORE EPS RECONCILIATION Unaudited |
|||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Quarterly Trends |
|
Nine months ended |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|||||||||||
(in thousands) |
Q3 2024 |
|
Q2 2024 |
|
Q1 2024 |
|
Q4 2023 |
|
Q3 2023 |
|
2024 |
|
2023 |
||||||||||||||
Reconciliation of Walker & Dunlop Net Income to Adjusted Core Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Walker & Dunlop Net Income |
$ |
28,802 |
|
|
$ |
22,663 |
|
|
$ |
11,866 |
|
|
$ |
31,599 |
|
|
$ |
21,458 |
|
|
$ |
63,331 |
|
|
$ |
75,758 |
|
Provision (benefit) for credit losses |
|
2,850 |
|
|
|
2,936 |
|
|
|
524 |
|
|
|
636 |
|
|
|
421 |
|
|
|
6,310 |
|
|
|
(11,088 |
) |
Net write-offs(1) |
|
(468 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,008 |
) |
|
|
(468 |
) |
|
|
(8,041 |
) |
Amortization and depreciation |
|
57,561 |
|
|
|
56,043 |
|
|
|
55,891 |
|
|
|
56,015 |
|
|
|
57,479 |
|
|
|
169,495 |
|
|
|
170,737 |
|
MSR income |
|
(43,426 |
) |
|
|
(33,349 |
) |
|
|
(20,898 |
) |
|
|
(34,471 |
) |
|
|
(35,375 |
) |
|
|
(97,673 |
) |
|
|
(107,446 |
) |
Goodwill impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
48,000 |
|
|
|
14,000 |
|
|
|
— |
|
|
|
14,000 |
|
Contingent consideration accretion and fair value adjustments |
|
(1,204 |
) |
|
|
822 |
|
|
|
512 |
|
|
|
(47,637 |
) |
|
|
(13,426 |
) |
|
|
130 |
|
|
|
(13,073 |
) |
Income tax expense adjustment(2) |
|
(3,602 |
) |
|
|
(7,413 |
) |
|
|
(7,543 |
) |
|
|
(5,916 |
) |
|
|
(5,285 |
) |
|
|
(19,196 |
) |
|
|
(11,267 |
) |
Adjusted Core Net Income |
$ |
40,513 |
|
|
$ |
41,702 |
|
|
$ |
40,352 |
|
|
$ |
48,226 |
|
|
$ |
37,264 |
|
|
$ |
121,929 |
|
|
$ |
109,580 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Reconciliation of Diluted EPS to Adjusted core EPS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Walker & Dunlop Net Income |
$ |
28,802 |
|
|
$ |
22,663 |
|
|
$ |
11,866 |
|
|
$ |
31,599 |
|
|
$ |
21,458 |
|
|
$ |
63,331 |
|
|
$ |
75,758 |
|
Diluted weighted-average shares outstanding |
|
33,203 |
|
|
|
33,154 |
|
|
|
33,048 |
|
|
|
32,941 |
|
|
|
32,895 |
|
|
|
33,135 |
|
|
|
32,853 |
|
Diluted EPS |
$ |
0.85 |
|
|
$ |
0.67 |
|
|
$ |
0.35 |
|
|
$ |
0.93 |
|
|
$ |
0.64 |
|
|
$ |
1.87 |
|
|
$ |
2.25 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Adjusted Core Net Income |
$ |
40,513 |
|
|
$ |
41,702 |
|
|
$ |
40,352 |
|
|
$ |
48,226 |
|
|
$ |
37,264 |
|
|
$ |
121,929 |
|
|
$ |
109,580 |
|
Diluted weighted-average shares outstanding |
|
33,203 |
|
|
|
33,154 |
|
|
|
33,048 |
|
|
|
32,941 |
|
|
|
32,895 |
|
|
|
33,135 |
|
|
|
32,853 |
|
Adjusted Core EPS |
$ |
1.19 |
|
|
$ |
1.23 |
|
|
$ |
1.19 |
|
|
$ |
1.42 |
|
|
$ |
1.11 |
|
|
$ |
3.60 |
|
|
$ |
3.25 |
|
| _______________ | |
(1) |
The net write-offs for the nine months ended September 30, 2023 includes the |
(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/20241107957729/en/
Headquarters:
7272 Wisconsin Avenue, Suite 1300
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
What was Walker & Dunlop's (WD) total transaction volume in Q3 2024?
How much did Walker & Dunlop's (WD) earnings per share grow in Q3 2024?
What was Walker & Dunlop's (WD) servicing portfolio value as of September 30, 2024?
