UWM Q4 2024 Earnings Call Transcript

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February 26, 2025
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Operator

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. Blake Colo, you may begin the conference.

Blake Kolo
Blake Kolo
Chief Business Officer & Head of Investor Relations at UWM

Good morning. This is Blake Colow, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the fourth quarter and full year twenty twenty four UWM Holdings Corporation's earnings call. Before we start, I would like to remind everyone that this conference call includes forward looking statements. For more information about factors that may cause actual results to differ materially from forward looking statements, please refer to the earnings release that we issued this morning.

Blake Kolo
Blake Kolo
Chief Business Officer & Head of Investor Relations at UWM

Our commentary today will also include non GAAP financial measures. For information on our non GAAP metrics and the reconciliations between the GAAP and non GAAP metrics for the reported results, please refer to the earnings release issued earlier today, as well as our filings with the SEC. I will now turn the call over to Matt Ishpia, Chairman and CEO of UWM's Holdings Corporations and United Wholesale Mortgage.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Thanks, Blake. And thank you everyone for joining us today. 2024 was another fantastic year. I think you saw the headlines of one of the toughest mortgage years in a while. Obviously, the last three years have been tough.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

We grew 29% year over year about $139,000,000,000 Our gain on sale was up 20% to 110 basis points. And the broker channel, which is the biggest indicator, all things we've been talking about grew quite a bit as well. I think the third quarter metric was made 27.4%, which is far higher than we've seen in in fifteen years. All of the themes we've been talking about have continued to happen. We continue to dominate the purchase market, leverage our competitive advantage in talent technology and world class service and like I said, help the brokerage channel grow its highest share of industry in years.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And so exciting to see we retained our title as the largest mortgage company in The U. S. Now I think that's in 2024 was the third consecutive year we're the number one mortgage company in America. The fourth consecutive year the largest purchase lender in America. Now I think it's the tenth consecutive year as the number one wholesale lender.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

So we're very proud of what we're doing here at UWM. Twenty twenty four was an amazing year and we're super excited about 2025. As I've spoken in the past few quarters, we continue to invest in cutting edge technology including AI, investing in our people and we're the best positioned to capitalize on any change in the current market dynamics. There are about $2,500,000,000,000 and growing in mortgage rates over 6% and so it won't take much for a shift in rates for those loans to be in the money. No matter what happens in the market, we are focused on what we can control and making sure we are more prepared than our competition.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

You've all heard me say this before, I'll say it again, the unique thing about UWM is that our business is strong enough that we can simultaneously win big now, while also preparing for the future, whether it be interest rates dropping, consumer trends changing, new technology or even regulatory changes. And 2024 was the lowest home sales year since 1995 and UWM had our best purchase year of all time, over $96,000,000,000 of production. We actually think that might be the highest of all time for any direct lender in history. But either way, we had an amazing 2024. Like I said, $139,400,000,000 of overall production, 29% increase.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

We also tripled our refinance business in 2024 compared to 2023 despite the interest rate environment, which we'll talk about a little bit later. We delivered about $330,000,000 of net income, dollars 329,400,000.0 to be exact and our gain margin is 110 basis points, which is up from 92 basis points last year. Turning to the fourth quarter, we had an amazing quarter across the board, dollars 38,700,000,000.0 in production well within our guidance. It's also worth pointing out in that quarter, we did over 17,000,000,000 in the month of October. There's like a five week minor rate drop, what was it in August and September.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And with that little thing, we almost doubled our business. And if you kind of do a quick run rate, you're thinking $51,000,000,000.52000000000 dollars 50 3 billion dollars with a small rate drop. What can happen if actually a bigger rate drop happens? We're going to all find out, but we are prepared here to double our business plus, which is exciting. Gain margin was 105 basis points well within the guidance for the quarter and obviously we did $40,600,000 of net income.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

So once again, great year, great quarter, firing on all cylinders at UWM. We're ready for whatever the market gives us and whatever the market does, we're ready to dominate here. So I'm going to turn it over to our CFO, Andrew Huwbacher. He'll give you some more information.

Andrew Hubacker
Andrew Hubacker
Senior VP, Chief Accounting Officer & Interim Principal Financial Officer at UWM

Thank you, Matt. Matt already covered many aspects of our Q4 and full year financial performance, so I will just focus on a few just a few additional highlights. We remained profitable operationally in 2024 with $460,000,000 in adjusted EBITDA. For Q4, our adjusted EBITDA was $118,200,000 These operational results were largely consistent with the prior year even as we invested significantly in people, processes and technology to prepare the company for continued growth. We've invested in growing our operations, underwriting and technology teams to support increased production volume, and we believe that we have greater operational capacity than we did in 2021 when our origination volume exceeded $226,000,000,000 Said differently, we believe that we can currently handle more than $100,000,000,000 of additional origination volume without increasing our fixed expenses.

Andrew Hubacker
Andrew Hubacker
Senior VP, Chief Accounting Officer & Interim Principal Financial Officer at UWM

And despite our significant short and long term investments, we earned $329,000,000 on a GAAP basis and $460,000,000 on an operational basis in 2024. We also maintained our liquidity and capital and leverage ratios within targeted ranges in the current environment. As of the end of the year, we had approximately $2,100,000,000 of total equity, just over $500,000,000 of cash, approximately $2,500,000,000 of total accessible liquidity and an MSR portfolio with a fair value of approximately $4,000,000,000 We talked about this throughout the year, but in so many ways, 2024 was a year of investing in our operational capabilities to prepare the company and the wholesale channel for what we see as significant market opportunities. We've also focused on being prepared for these opportunities from a capital and liquidity perspective, and we believe that we remain well positioned operationally and financially for any cycle. I will now turn things back over to our Chairman, President and CEO, Matt Ishbia, for closing remarks.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Thanks, Andrew. I'll close a few points before the Q and A. 2024 was a banner year. From a production perspective, as you can see, we did lower grade income as well, really cashed our third year over where we dominated in a down mortgage market. What you can't see in the numbers in 2024 is a huge year of technology and artificial intelligence front.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

We invested in AI in three major categories knowledge, efficiency and growth. And we are winning on all fronts. And you'll see some of those things start to result in 2025, '20 '20 '6 in our financials and our production. The broker channel continues to show incredible momentum. In third quarter twenty twenty four obviously the fourth quarter numbers aren't out yet for it.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

The broker channel share of all direct fund was 27.4 percent, up seven percentage points from twenty twenty two third quarter. So in two years, grew 7% and almost double from where it was the third quarter twenty twenty. So in four years, it's almost doubled. It's amazing to see, can we do it again, right? Do we have it again?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Can we double it in the next four years again? I don't know. But I know we're working hard towards it and the broker channel is gaining momentum just like we said it would since we went public years ago. Additionally, by our calculations, over 16,000 loan officers joined the broker channel with over half of them actually leaving from the retail channel to join the brokers. This momentum is continuing like we talked about in 2023 and 2024.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

We're excited to see how it continues to grow going forward. With all these great things with technology, brokerage, it always comes back to our people at UWM. The care factor and the culture we've created at UWM is what differentiates us. Also 25,000 clients we welcome on our campus for training each year, help spread the culture of the broker channel. Our team loves coming to work every day and our training program both internally and for our clients remains world class so our people can continue to grow and flourish here at UWM.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

In 2025, our priorities remain the same, build the best technology and provide the best service to the broker channel, take incredible care of our team members and clients by treating them like family, win every single day by doming on purchase and staying prepared for a shift in rates and continue to reward our shareholders. I'm very proud of what we did in 2024 and I'm excited about 2025. Now, looking to the guidance in Q1, we expect to do $28,000,000,000 to $35,000,000,000 As you guys always know, the first quarter is always the lowest production quarter. And so we expect that to carry on this year as well. Last year, we did $27,600,000,000 So that's actually below what our low end of the guidance is this year.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

We also expect D and R margin to be between 90 basis points and 115 basis points for the first quarter. So we're expecting a great first quarter, but even more importantly an amazing 2025 here at UWM. So now I'm going to turn it over to questions. Thanks for your time today.

Operator

Our first question comes from the line of Terry Ma with Barclays. Please go ahead.

Terry Ma
Terry Ma
Senior Equity Research Analyst at Barclays

Hey, thank you. Good morning. Maybe just first starting with operating expenses. It was quite a bit higher than what we were expecting this quarter. I'm just curious if there is anything one time in there and kind of like what we should expect for a runway going forward?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Yes. No, it's a one time investment, but we're going to do it every month. So what we're doing is we're investing in our business to dominate. So the expenses are not even a thought in my mind. We're prepared as Andrew said $100,000,000,000 more, but maybe to more than do that.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Like we can literally double our business. And so preparation is key. As you guys saw the little refi boom in October, we've almost doubled our business. Nobody else can do that. And so we're prepared for that, not only from the refi perspective, but also the purchase as the momentum is really, really strong right now and we're prepared to dominate.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And so our business model is not nickel dime every expense. Our business model is win. And so these are investments not expenses. And in the big scheme of things, these little investments that we're talking about are going to pay such huge dividends just like we've always done. And so the expenses, we probably don't need to hire many more people.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

So we're going to be more flat line is how we think about it from a perspective of replacing attrition. So it's not like our expenses will go up more, but these were investments. 2024 was an investing year and a technology building year and 2025 is a dominant year.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

That's what we're going for.

Terry Ma
Terry Ma
Senior Equity Research Analyst at Barclays

Got it. Okay. And maybe just on kind of refi, you mentioned you kind of tripled it in 2024. Maybe just talk about all the initiatives you're doing around that, kind of what the outlook is for share and refi kind of going forward? Thank you.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Yes. Well, share and refi will be interesting to see. But in general, the outlook is we are prepared back to my earlier statement on the same topic to double our business. And you saw we tripled the refi share, but I'm still doing more purchase business, which is phenomenal. I think it was the largest purchase year in history by any lender.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Obviously, it was a slow year from a purchase sales and all those stuff in the market. So we think 2025 will be a better year. There's more houses for sale. And then on the refi side, you're talking about like there's trillions of dollars that just need about a quarter lower rate than we are right now like we're not far off. The ten years at $4.30 I think ish.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

I always tell you $3.75 is where the money is at. But if we get down closer to 4 you're going to start seeing some of this and we are prepared. And so we're excited about the opportunity on refi. We're continuing to dominate on purchase and we're excited for what's going to happen in 2025. We really think it's going to be a heck of a year.

Operator

Our next question comes from the line of Eric Hagen with BTIG. Please go ahead.

Eric Hagen
Managing Director at BTIG

Hey, thanks. Good morning. Good to hear from you guys. Okay. So you guys have been really active with various incentives offering other ways for successful brokers to pass along savings to borrowers.

Eric Hagen
Managing Director at BTIG

How do you maybe measure the success for these initiatives? Like how do you benchmark that success at different levels for interest rates maybe or mortgage rates?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Yes. Thanks, Eric. Appreciate the question. There's a lot of ways I can go through and it's probably more complicated and more detailed than I'm going to do on this call. But the key thing here is this is a lot of the if you notice I bumped our margin for the first time from 85 to 110 to 90 to 115.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

15 million dollars. So first time for years we were at $75,000,000 to $100,000,000 in the troughs. I believe the opportunity is coming. Now I don't doesn't mean we're going to be on the high end of these things. I think we're going to be consistent like delivering what I always deliver, which I tell you we're going to do it, we do it.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

But what I'll tell you is, you see these incentives and these marketing things and these are all great, but also you got to understand the all in margin that we deliver a focus of ours. And so the way I look at these, there's measurements on retention of those brokers and the LOs and what percentage of their business they use UWM for, how do we get them in the door? How do we get them bought into more of our products and services from training? We had success track like this week alone in the February in Michigan. We have over 900 clients that flew to Pontiac, Michigan.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

I know Eric you've been here before. It's beautiful, but it's freezing out here. But people still flew out here because they're getting trained. And so like those are some of the ways you measure those investments. It's like I'm investing and giving a price incentive that might do this that drives them to understand what we do, which helps them grow their business, which then helps them get more business, which then drives the UWM.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Once again, that's a very layman's way of saying it and I have a team of analytic people that have detail beyond detail about how it actually works and how we make it happen. And so a small little thing if you looked at I kind of mentioned it in the pre talk where like in October, we doubled like overnight and it's like a $52,000,000,000 to $54,000,000,000 run rate with really not even a refi. So it's like how do I train our brokers and coach them ready to do refi streamlines or IRRs? Or how do I teach them how to do cash outs? And how do we do these things to getting them prepared?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

It's all about preparation so that they can dominate and then we can dominate.

Eric Hagen
Managing Director at BTIG

Great stuff. Appreciate that. Always appreciate your thoughtful answers. I mean, looking here at the volume and margin guidance you gave for the first quarter, I mean, how much of that drop quarter over quarter would you just attribute to the just seasonality versus there being an actual falloff in demand at these rates? And is there like a baseline minimum volume of originations you might expect right now even if rates were to go higher than they are today?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Yes. Gunnar, great question, Eric. Appreciate it, your thoughts on it. And so, yes, we guided to '28 to '35. Last year, I think we did 27.6 in the first quarter.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

I don't remember what I guided to last year, but I would say it's materially less than what we're at right now. These numbers, I expect us to do more each quarter. We're trying to build upon building. So the way we look at it is right now these numbers are actually really good. If you see what everyone else will guide you and everyone else thinks you're going to do, being able to guide to 20 to 35.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Once again, I'm not going to exceed those numbers. Like I'm trying to give you real numbers where I think I'll be in this range on margin and at the same time volume. But we feel really good about that. And to do $30,000,000,000 let's just call that a number $29,000,000,000 30 billion dollars in the first quarter, I don't know the last time that's been done besides in 2020 and 2021. And so if you think of the last ten years of any mortgage company, once you find anyone that's done $30,000,000,000 in the first quarter besides 2020 and 2021, I don't think it's happened.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Maybe 2022 because there was some holdover from the rates. But it's what I'm saying is, it's a great going to be an amazing quarter. And knowing that the second and third quarters always pick up, we kind of look at this as the low quarter. First quarter is always the worst. Fourth quarter is the second worst.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Second and third are always awesome.

Eric Hagen
Managing Director at BTIG

Yes. Great stuff. Thank you guys so much.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Appreciate you.

Operator

Our next question comes from the line of Derek Sommers with Jefferies. Please go ahead.

Derek Sommers
Equity Research Senior Associate at Jefferies LLC

Hey, good morning, everyone. To follow-up on the guidance question related to volume, in the first half of the year, we saw purchase mix at around 80% and the second half, call it around 60%. Kind of what are your expectations for that mix heading into 2025?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And you're saying in the purchase mixture of the market?

Derek Sommers
Equity Research Senior Associate at Jefferies LLC

Both of the market and UWM.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Okay. Yes, I mean a lot of it is dependent on interest rates, right? So like the way I look at it and our focus is like how do we do $100,000,000,000 of purchase, right? And then refi, we did $96,000,000,000 of purchase this year and we had there wasn't much refi. Can we do $100,000,000,000 to $150,000,000,000 to refi?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Possibly. If rates go up to $7,500,000,000 well, we'll do $20,000,000,000 to refi, $30,000,000,000 to refi, right? And so understand what the market and the ten year that's why it's like literally where no one else will be able to tell you this Derek that like I can do $130,000,000,000 to $140,000,000,000 this year or I could do $260,000,000,000 this year, right. And I could do it at 90 basis points of margin. I could do it at 130 basis points of margin.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Like that's how wide of a range it is, but everyone else will say, oh, well, if the market turns and this happens and like we're actually prepared to do that right now. Like if the rates drop tomorrow, something happens, like we'll do we could do $60,000,000,000 in the second quarter, right, at good margins. So that's how comfortable we are. That's back to the first question about expenses. It's not expenses, it's investments in the business, investments in the future.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And while making these massive investments from technology and operations and people, while making those massive investments, we're still profitable, right? And very profitable, we don't count the MSR fluctuation, which I have no control of, obviously. And so, we feel really good about that. And I think we're really ready to so 60%, it gets hard to predict the number. It's all dictated on the rates.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

But for us, 60%, sixty five % purchase, 65% to 70% purchase in a higher rate and then it could flip to fiftyfifty. It could go sixty-forty refi if the rates drop far enough.

Derek Sommers
Equity Research Senior Associate at Jefferies LLC

Got it. Thank you. Helpful commentary there. And just what's your current approach to managing servicing UPB levels kind of relative to origination trends?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Yes. So we monitor very closely. We understand the servicing asset very, very well. And we're still probably the only one out there originating at such a high level that our asset goes up as a volume perspective with newer originations. But, we look at all the time.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

We decide whether do we want to opt to just simply sell. We could go through the process there. We're going to retain it all and just double the servicing book over this year, right? And we could do that as well. There's a lot of things that we look at.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

We like the asset in general, but at the same time when people are going to pay us seven multiple, well, I'll sell it for seven multiple, right? And so we look at some of these numbers and sometimes people are looking at paying those numbers. And if they're not then we retain it because we feel really good about the asset. And so it's a balancing act, understanding cash and cash consumption while at the same time building our servicing portfolio and helping our brokers continue to grow. So we feel good about where we're at right now.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And you can ask me like what the vision is, what the strategy is. I could tell you all that stuff and I could say, but tomorrow something could change and I'll modify it, right. And that's how we look at it. We look at it every day because that's we're in the weeds of the business.

Derek Sommers
Equity Research Senior Associate at Jefferies LLC

Got it. Thank you for taking my questions.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Thank you.

Operator

Our next question will come from the line of Bo Stewart with KBW. Please go ahead.

Bose George
Managing Director at Keefe, Bruyette & Woods (KBW)

Hey, good morning. Actually just following up on that question on the MSR. I mean given that you guys issued debt, you obviously have a lot of cash on your balance sheet, a lot of liquidity you've paid down the warehouse line. Does that change how you might what you might do in terms of MSR sales or those two kind of independent decisions?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Everything is tied into it, right? So everything is part of the equation, but nothing drives the equation, right? Besides the conversations, the data, understanding the marketplace. And so it's hard to answer the question, but like going through like what comes into the thing. We have a risk committee.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

We meet with everyone organizationally make decisions on these things. And so it depends on the situation. I could give you the exact answer right now and then someone calls back and say, okay, we'll bump that option to the MSR deal to this number and we'll say, okay, well, for an extra $30,000,000 in cash, all right, we'll do it, right? And so, all those things are coming to it. The nice part for us on the MSRs is we actually continuously make it.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

It's like we make it. So we originate. No one else makes it at the levels we make it. So therefore, everyone else is trying to buy it and get something that we make. I can go make more, right, anytime.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And so we go make more every single month, every single quarter, where no one else originates the levers we do. And so we're constantly originating and making the MSR asset. And therefore, we look at all aspects of it and make decisions on whether we sell or not. We can sell excess, but we replenish it every single month, every single day. Like the numbers are so it's not as much of a concern where other places are like, oh, they sold their MSRs or they're not selling, but our number moves materially based on how much we originate.

Bose George
Managing Director at Keefe, Bruyette & Woods (KBW)

Okay. Yes, makes sense. Thanks. And then actually going back to I think Andrew made that comment $100,000,000,000 you could originate without increasing fixed expenses. I was just curious, is there a good way to think about fixed versus variable in that sort of scenario?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

No. Not really. I mean, like we're prepared fixed wise. Obviously, there are variable expense every loan whereas credit report costs and all these things go up all the time. But we feel really good about and I know you're trying to figure out how to do a model, which I respect and understand.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

But we're in a really great position from a fixed expenses. We don't have as much, like the fixed expenses operationally and then there's obviously variable on every single file, but sometimes there's less, variable expense that you will realize and a lot of these numbers hit the bottom line. And I think although I can't show you each example from the month, but like the gain on sale margin that will go up and the volume that will go up is so excessively more than any expenses fixed or variable that come on our balance sheet or come on our expense or come on our income statement that it's going to be a huge, huge difference in a positive way. And that's why we're prepared because if you miss that window which is what everyone else does is they keep their expenses low and then the market moves what happens like look at 2021 when that stuff happens and we're able to make $1,000,000,000 plus in a quarter, right? Like and so but if you're not prepared for that like these things pass you by.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And so we're prepared There are going to be variable expenses that are a little more than normal if you do more volume, but it's not a big number relative to it. And it's going to be a huge amount of money hitting the bottom line, which is what we're prepared for.

Bose George
Managing Director at Keefe, Bruyette & Woods (KBW)

Okay. Makes sense. Thanks a lot.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Thank you.

Operator

Our next question comes from the line of Brad Capuzzi with Piper Sandler. Please go ahead.

Brad Capuzzi
Brad Capuzzi
Vice President at Piper Sandler Companies

Hi. Thanks for taking my question. Just wanted to talk about if you guys had any updates on the dynamics playing out within the broker channel. Obviously, some of your peers have been talking it up and UWMC has a very strong hold on the channel, but was wondering if pricing has been rational and if you're seeing any increased competition.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Yes. So the broker channel is winning. It's growing. And I think I don't know how long you've been doing it Brad, but, and even to our office once before, you probably understand, a little bit about the business. But like the broker channel is growing.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

It's growing faster than I even thought it would grow to be honest with you. It's seeing that it's almost doubled in four years. It's crazy even talk about. I said it when we went public. And so you can go back and pull my roadshow and all the stuff and everyone else's roadshow.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Everyone said they're going to focus on wholesale because it's growing. No one thought it would grow as much as I said it would and it has. And at the same time, everyone says they're going to get into it and I love it. I love it when these guys try to come play with us, because it's only good for the brokers and at the same time they can't compete. Anytime a broker uses one of these other lenders they just kind of say, oh my gosh, I can't use them again.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And so it's okay. I like the company that we have not seen any increase in pricing competition to be honest with you. We are very clear our margins actually you just saw were up 20% year over year and we did more business over almost 30% more year over year. And so, yes, everyone's coming for the wholesale channel. Everyone wants to be involved with the brokers, but none of them are willing to do what it takes.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And what it takes is technology, partnership, helping brokers win and grow and we are in that game all day every day. They're going to follow our margins. I tell you, we control it. I set the margins daily and we set them and everyone else follows us. We are the leader and it's not close, but great for the competition.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

I think it's important that they tell you that stuff so you can move their price targets up, all that BS. You should probably move ours up too by the way because yours is a little low with yourself. But anyways like all that stuff is silliness right? People want to come in they've been saying it for years. All of them are coming we're going to be the number one wholesale.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Why don't you go back and pull it? We're going to be number one wholesale that we're going to take UWM down. We have almost 50% of the market. So we're excited about it. We love the competition.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

But the best part about the whole thing that I just went through is brokers are winning. Those loan officers, retail loan officers, they're leaving to join broker channels. Brokers are growing because they're cheaper, faster and easier. And with the new administration, it's only going to help brokers even more. You watch out.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

It's going to help brokers grow and we're going to keep growing with them.

Brad Capuzzi
Brad Capuzzi
Vice President at Piper Sandler Companies

Thanks. And then can you just talk about the interest rate derivative hedges you put on this year? Do Do you expect these hedges to continue in 2025? And are you guys have any internal target on a hedge ratio?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Yes. No, those weren't really even hedges. The way I look at it is there's a lot of stuff that we looked at with market volatility to understand while the election process is going on and we pulled some of those we wanted to make sure we had some security and some safety on both ways up and down during the volatility of the markets and that's smart business and we'll continue to do that type of stuff. But we pulled that stuff off in December. And so we do not have that stuff tied to it.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

I don't look at them as hedges like me you said, but that's not how we looked at it. But we looked at it as protecting the business, understand the markets, understand volatility, who knew what would happen with presidential elections along with other regulatory things. And so, but we do not have those in place as of December. After the election, we made a decision to not go forward with that. And at the same time, we can put them back on tomorrow and make different decisions as we meet all the time, but that's not part of the equation for 2025 at this point.

Brad Capuzzi
Brad Capuzzi
Vice President at Piper Sandler Companies

Thanks for taking my questions.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Thank you.

Operator

Our next question will come from the line of Doug Harter with UBS. Please go ahead.

Douglas Harter
Douglas Harter
Equity Research Analyst at UBS Group

Thanks. Hoping you

Douglas Harter
Douglas Harter
Equity Research Analyst at UBS Group

could talk a little bit about your outlook for kind of the leverage net funding debt went up and kind of how you think about what is the level of equity you need to run this efficient business?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Thanks Doug. Appreciate the question. We look at all these things every day CFO, finance team, everyone's on top of all these details. Net worth is obviously important. We make income.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

We obviously pay a great dividend out to all our shareholders which we'll continue to do. But you're talking about stuff that I don't think really impacts the business at the level that we should be talking about in this earning volume. Go through all of course we're going to meet all the metrics and all the different things. But building up capital is important. Having liquidity is the most important.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And we have those things at UWM. We'll continue to have those things as we earn income. We have access to getting more liquidity with lines of credit as you know, selling MSRs. At the same time, we're selling a lot of MSRs and you make money on some of these because people are bidding higher and higher numbers because the truth is we're the only ones originating them. So in general our all of our ratios are really strong and we feel really good about where we stand.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And we monitor it every single month, quarter, however you want to think about it. And we're in really, really strong position not only for this year, but for future years as well. All right. Thank you, Matt.

Operator

Our next question will come from the line of Jeff Adelson with Morgan Stanley. Please go ahead.

Jeffrey Adelson
Jeffrey Adelson
Executive Director at Morgan Stanley

Hey, good morning, guys. Thanks for taking my questions. Matt, last quarter you commented on some of the new changes coming through with the new administration in place today. Obviously, we're seeing a lot of news flow coming out each day with different changes at the various agencies like the CFPB. There's been talk of GSE reform, etcetera.

Jeffrey Adelson
Jeffrey Adelson
Executive Director at Morgan Stanley

Can you just maybe give us an update on your latest views here, what maybe you see coming out on the regulatory political front and how that flows to United and broader mortgage industry? Thanks.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Yes. No, I think it's all very positive to be honest with you. So, President Trump's come in and done a lot of things he said he was going to do. I think he's put some really good people in place. I think they're not confirmed yet, but the new FHFA Director who I think comes from the industry, which is a huge success for our industry, new CFPB Director, which with a different focus than what they had before.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

I think these things are massive, massive wins for our industry. And I'm extremely bullish on those things, the next three or four years, obviously with President Trump in place, President Trump's leading and doing things and doing all things he said he'll do with making cuts and different things. I think it's all upside, all positive. The only thing that you question is how does it impact interest rates, which a lot of people want to talk about. And so if it impacts interest rates positively, then this is a bull run like you haven't seen probably since 2020, '20 '20 '1.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

If it doesn't impact interest rates positively and interest rates stand stay where they are, well, it's still a positive uptick. My expenses will be lower in certain spots, the opportunities will be lower, because of some of these better leaders in place. And I'll just say, I don't mean disrespect to the past people, but quite honestly, there was not a great connection to the industry. And so it's only better. The new FHF director will be better.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

The new HUD director will be better. The new CFPB director will be better. All these things will be better than we had before. So anyone monitoring our industry will say, oh, the industry is going to have upside and better opportunities than they had the last four years. Now, the last four years, we did a heck of a job.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

I feel pretty good about it. So if it's going to be better, I'm happy with it. And I think President Trump is doing good things and it's great to have a leader lead and hopefully do good things for not only our industry but America in general.

Jeffrey Adelson
Jeffrey Adelson
Executive Director at Morgan Stanley

And just in the float strategy from here, I know you've already taken some recent action to increase that, but can you just maybe give us an update on the thinking for the rest of the year here? And would you guys be looking to maybe achieve some of that via acquisitions or other methods?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Yes. No, I appreciate it. We look at everything. We look at everything all the time. How do we make things better?

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Getting more float out there is important. But at the same time the stock price is so low. It's hard for me to sell or do anything at this stock price. It's just silliness. Even your price target is silly too.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

I saw yours as well. But once again, we're going to do better. We're going to keep winning. And people that buy into and understand what UWM does will understand that and will continue to grow with us. And so, yes, we will have more float and I have plans and strategies around it.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

That's first. Second, when we look at acquisitions, yes, I look at everything and there's opportunities out there. People want to be part of our team. And then third and finally is like UWM wins regardless of these things, right? Like people want to talk about the stock price and I kind of tease you guys a little bit about some of the stuff, but it doesn't really matter at the end of the day because we are winning every single month, every single quarter.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

And anyone that invests in UWM gets a massive return from the dividend and at the same time the growth that we're having. And so there's nobody that doesn't think that the industry is going to have a better four years than we had the last two or three, right? There's no one. I don't think there's a human being out there. So if you can just understand that, that in the last three years have been the trough, there's no way the next four are going to be worse.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

That's factual. So we're going to grow, we're going to win, the stock price will grow, the float will grow, opportunities will grow, UWM will make more money, brokers will grow, like it's all upside, better politicians, better politics stuff, better regulatory, like all of us better, better, better, better. And so the way I look at it is all upside right now, does that upside happen tomorrow Or does that have to send in three months, six months, twelve months, eighteen months, but it's all better than the last three years. And there's no smart person on this call or in the room that will say that they don't think it will be better in the next three to four years.

Operator

And our next question will come from the line of Mikhail Goberman with Citizens. Please go ahead.

Mikhail Goberman
VP - Equity Research at Citizen JMP

Hey, good morning. Thanks for taking my question. Just to follow-up on an earlier theme, hypothetical scenario, supposing this bond rally continues down into the 4% range and maybe even down to that sweet spot you mentioned earlier of 3.75%. How do you guys see the interplay between the origination side of your business and the servicing side of your business specifically how that would affect servicing earnings and valuations there? Thanks.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

No. Hey, great question. I love what you're thinking because we talk about that stuff a lot. In a hypothetical and positive and optimistic situation where the ten year drops to April or March and all of a sudden the rate drop with $2,500,000,000,000 3 trillion dollars of borrowers that are going to want to refinance and take advantage of while also making home more affordable for purchases which I think is a great thing for everybody. Yes, it's going to be massive.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

So first thing you'll run across the only thing you're going to run on the interplay between MSR valuations and originations is just a timing issue. So if that hypothetical rate drop happened March 29, you're going to have a huge write down of MSRs and you won't have a huge write up of originations until the second the next quarter. Now if it happens on April 1 as an example, then you're going to there's going to be there's not going to be a big interplay. It's going to be like, hey, we made $800,000,000 this quarter of originations and we had to write down a $500,000,000 of MSRs and it's like, okay, and you understand what it is and you keep replenishing that MSR book. So that's how we look at it.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

But I look at it as a huge opportunity because volumes and margins will go up. Now other players back to my comment earlier, we talked about other players have that same dynamic. You've got a servicing book, but they're not prepared to do that $60,000,000,000 in the quarter at a higher margin to be able to take advantage of it. So you kind of are going to get flat be flat across the board. We're prepared to double originations, make the profits huge, obviously have MSR write down, which once again I don't pay attention to because it doesn't really impact I can't run that, I can't control that.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

I can control our business and prepare for everything else. And so we feel really good about that, but that's also why selling MSRs make sense because you never know what's going to happen. People don't like selling MSRs because they can't originate them. But we can originate them and we make them every single day, so we feel good about that.

Mikhail Goberman
VP - Equity Research at Citizen JMP

Great. Thanks, Matt. Best of luck going forward.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Hey, thanks a lot. Appreciate it.

Operator

And that will wrap up the Q and A portion. I would like to turn the call back over to Matt Ishbia for closing comments.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Well, just thank you for joining. Hopefully, you got some valuable information. We look forward to talk to you in the next quarter. Lot of good things happening. We're very excited about what's happening at UWM and we appreciate the support and partnership for all of you guys.

Mat Ishbia
Mat Ishbia
Chairman and CEO at UWM

Have a fantastic day.

Operator

This concludes today's conference call. You may now disconnect.

Executives
    • Blake Kolo
      Blake Kolo
      Chief Business Officer & Head of Investor Relations
    • Mat Ishbia
      Mat Ishbia
      Chairman and CEO
    • Andrew Hubacker
      Andrew Hubacker
      Senior VP, Chief Accounting Officer & Interim Principal Financial Officer
Analysts
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Key Takeaways

  • UWM reported a record29% YoY production growthto $139.4 billion in 2024, including a $96 billion purchase loan volume, the highest ever for any direct lender.
  • The company’sgain-on-sale marginrose 20% year-over-year to 110 bps, while full-year net income reached $329.4 million and Q4 generated $118.2 million of adjusted EBITDA.
  • UWM maintains strong operational leverage, with capacity to originate over $100 billion morevolume without raising fixed expenses and holding $2.5 billion of accessible liquidity alongside a $4 billion MSR portfolio.
  • Significant investments in AI, technology and talent in 2024 have positioned UWM to capture market opportunitiesfrom any future interest-rate shifts amid $2.5 trillion of mortgages above 6%.
  • The broker channel continues to gain momentum, with share hitting 27.4% in Q3—a 7-point increase since 2022—and over 16,000 loan officers joining, boosting UWM’s dominant wholesale position.
AI Generated. May Contain Errors.
Earnings Conference Call
UWM Q4 2024
00:00 / 00:00

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