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loanDepot Announces Second Quarter 2023 Financial Results

2023-08-08 16:01 ET - News Release

Company reports second consecutive quarter of sequential double-digit revenue growth and ongoing cost productivity gains resulting in significant narrowing of net loss

  • Revenue up 31% or $63.9 million from first quarter 2023, primarily driven by higher pull through weighted lock volume and gain on sale margin.
  • Total expenses increased 5% or $15.7 million from first quarter 2023, primarily driven by Vision 2025 related costs and higher direct costs attributable to increased origination volumes, partially offset by cost productivity.
  • Quarterly net loss narrowed by 46% to $49.8 million, or $42.0 million, from first quarter 2023 net loss of $91.7 million primarily due to increased revenues and cost productivity.
  • Adjusted net loss for the second quarter of 2023 was $34.3 million as compared to $60.2 million for the first quarter of 2023.
  • Company continues to maintain strong liquidity profile, exiting the quarter with cash balance of $719.1 million.

 


IRVINE, Calif. -- (Business Wire)

loanDepot, Inc. (NYSE: LDI), (together with its subsidiaries, “loanDepot” or the “Company”), today announced results for the second quarter ended June 30, 2023.

“loanDepot continues to make significant progress against the strategic imperatives laid out in our Vision 2025 plan,” said President and Chief Executive Officer Frank Martell. “We delivered our second successive quarter of strong top line growth and margin expansion on a sequential basis, and at the same time, continued to drive cost productivity and operating leverage. Importantly, we reduced our sequential quarterly net loss by $66.0 million in the first quarter of 2023 and by $42 million in the second quarter.

“While we continue the work of resetting our cost structure to align with generationally low unit volumes, we are also focused on the other pillars of Vision 2025, including capturing opportunities inherent in our strategy to expand purpose-driven lending that supports first-time homebuyers and diverse communities. During 2022, loanDepot ranked as the country’s third largest mortgage lender for all minorities1. Home ownership is a bedrock of the American Dream and plays a vital role in helping to build strong, stable communities, and further deepening our support for diverse and first-time homebuyers is a critical component of our Vision 2025 plan,” Martell added.

“As we move forward in the second half of 2023, we plan to continue maintaining a strong liquidity position and aggressively reduce our costs,” said Chief Financial Officer, David Hayes. “Importantly, we are also investing in critical operating platforms, which we expect will deliver higher levels of automation and operating leverage and position us for additional growth and margin expansion in 2024.”

_______________
1
Based on 2022 Home Mortgage Disclosure Act (HMDA) data collected by the Consumer Financial Protection Bureau (CFPB).

Second Quarter Highlights:

Financial Summary

 

 

Three Months Ended

 

Six Months Ended

($ in thousands except per share data)

(Unaudited)

Jun 30,
2023

 

Mar 31,
2023

 

Jun 30,
2022

 

Jun 30,
2023

 

Jun 30,
2022

Rate lock volume

$

8,973,666

 

 

$

8,468,435

 

 

$

19,596,763

 

 

$

17,442,101

 

 

$

49,588,215

 

Pull through weighted lock volume(1)

 

6,057,179

 

 

 

5,325,488

 

 

 

12,412,894

 

 

 

11,382,667

 

 

 

32,212,939

 

Loan origination volume

 

6,273,543

 

 

 

4,944,337

 

 

 

15,995,055

 

 

 

11,217,880

 

 

 

37,545,786

 

Gain on sale margin(2)

 

2.75

%

 

 

2.43

%

 

 

1.16

%

 

 

2.61

%

 

 

1.62

%

Pull through weighted gain on sale margin(3)

 

2.85

%

 

 

2.26

%

 

 

1.50

%

 

 

2.57

%

 

 

1.89

%

Financial Results

 

 

 

 

 

 

 

 

 

Total revenue

$

271,833

 

 

$

207,901

 

 

$

308,639

 

 

$

479,734

 

 

$

811,949

 

Total expense

 

330,148

 

 

 

314,484

 

 

 

560,657

 

 

 

644,632

 

 

 

1,166,913

 

Net loss

 

(49,759

)

 

 

(91,721

)

 

 

(223,822

)

 

 

(141,480

)

 

 

(315,141

)

Diluted loss per share

$

(0.13

)

 

$

(0.25

)

 

$

(0.66

)

 

$

(0.38

)

 

$

(0.93

)

Non-GAAP Financial Measures(4)

 

 

 

 

 

 

 

 

 

Adjusted total revenue

$

275,709

 

 

$

226,190

 

 

$

273,273

 

 

$

501,899

 

 

$

777,877

 

Adjusted net loss

 

(34,329

)

 

 

(60,247

)

 

 

(168,863

)

 

 

(94,623

)

 

 

(250,255

)

Adjusted EBITDA (LBITDA)

 

6,499

 

 

 

(29,336

)

 

 

(191,510

)

 

 

(22,838

)

 

 

(265,916

)

(1)

Pull through weighted rate lock volume is the principal balance of loans subject to interest rate lock commitments, net of a pull-through factor for the loan funding probability.

(2)

Gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by loan origination volume during period.

(3)

Pull through weighted gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by the pull through weighted rate lock volume.

(4)

See “Non-GAAP Financial Measures” for a discussion of Non-GAAP Financial Measures and a reconciliation of these metrics to their closest GAAP measure.

Operational Highlights

  • Quarterly non-volume related expenses increased $2.2 million since the first quarter of 2023, primarily due to higher Vision 2025 related expenses and legal accruals.
  • Incurred expenses related to the Vision 2025 plan of $6.8 million during the quarter, including $4.5 million of personnel related expenses and $2.3 million of lease and other asset impairment charges. Vision 2025 expenses totaled $2.6 million in the first quarter of 2023.
  • Accrued $7.5 million of legal expenses related to the settlement of outstanding litigation.
  • Pull through weighted lock volume of $6.1 billion for the three months ended June 30, 2023, an increase of $0.7 billion or 14% from the first quarter of 2023, resulting in quarterly total revenue of $271.8 million, an increase of $63.9 million, or 31%, over the same period.
  • Loan origination volume for the second quarter of 2023 was $6.3 billion, an increase of $1.3 billion or 27% from the first quarter of 2023.
  • Purchase volume increased to 73% of total loans originated during the second quarter, up from 71% of total loans originated during the first quarter of 2023 and up from 59% of total loans originated during the second quarter of 2022.
  • For the three months ended June 30, 2023, our preliminary organic refinance consumer direct recapture rate2 increased to 69% from the first quarter’s refinance rate of 67%. This highlights the efficacy of our marketing efforts, the strength of our customer relationships, and the value of our servicing portfolio for adjacent and complementary revenue opportunities.
  • Net loss for the second quarter of 2023 of $49.8 million as compared to net loss of $91.7 million in the first quarter of 2023. Net loss decreased quarter over quarter primarily due to an increase in revenues and operating efficiency benefits.
  • Adjusted EBITDA for the second quarter of 2023 was positive $6.5 million as compared to adjusted LBITDA of negative $29.3 million for the first quarter of 2023. Adjusted EBITDA (LBITDA) excludes the impact of interest expense on non-funding debt, fair value changes of our mortgage servicing rights, net of hedging results, impairment charges, and other operating expenses.

______________
2
We define organic refinance consumer direct recapture rate as the total unpaid principal balance (“UPB”) of loans in our servicing portfolio that are paid in full for purposes of refinancing the loan on the same property, with the Company acting as lender on both the existing and new loan, divided by the UPB of all loans in our servicing portfolio that paid in full for the purpose of refinancing the loan on the same property. The recapture rate is finalized following the publication date of this release when external data becomes available.

Outlook for the third quarter of 2023

  • Origination volume of between $5 billion and $7 billion.
  • Pull-through weighted rate lock volume of between $5.5 billion and $7.5 billion.
  • Pull-through weighted gain on sale margin of between 245 basis points and 285 basis points.

Servicing

 

 

Three Months Ended

 

Six Months Ended

Servicing Revenue Data:

($ in thousands)

(Unaudited)

 

Jun 30,
2023

 

Mar 31,
2023

 

Jun 30,
2022

 

Jun 30,
2023

 

Jun 30,
2022

Due to changes in valuation inputs or assumptions

 

$

26,138

 

 

$

(21,368

)

 

$

98,795

 

 

$

4,771

 

 

$

297,792

 

Due to collection/realization of cash flows

 

 

(41,619

)

 

 

(34,657

)

 

 

(66,380

)

 

 

(76,276

)

 

 

(143,502

)

Realized gains (losses) on sales of servicing rights

 

 

7,021

 

 

 

140

 

 

 

(2,493

)

 

 

7,161

 

 

 

7,540

 

Net (loss) gain from derivatives hedging servicing rights

 

 

(30,014

)

 

 

3,079

 

 

 

(63,429

)

 

 

(26,936

)

 

 

(263,720

)

Changes in fair value of servicing rights, net

 

$

(38,474

)

 

$

(52,806

)

 

$

(33,507

)

 

$

(91,280

)

 

$

(101,890

)

 

 

 

 

 

 

 

 

 

 

 

Servicing fee income

 

$

117,737

 

 

$

118,961

 

 

$

117,326

 

 

$

236,699

 

 

$

228,385

 

 

 

Three Months Ended

 

Six Months Ended

Servicing Rights, at Fair Value:

($ in thousands)

(Unaudited)

 

Jun 30,
2023

 

Mar 31,
2023

 

Jun 30,
2022

 

Jun 30,
2023

 

Jun 30,
2022

Balance at beginning of period

 

$

2,016,568

 

 

$

2,025,136

 

 

$

2,078,187

 

 

$

2,025,136

 

 

$

1,999,402

 

Additions

 

 

75,866

 

 

 

59,295

 

 

 

180,455

 

 

 

135,161

 

 

 

450,215

 

Sales proceeds, net

 

 

(78,191

)

 

 

(11,838

)

 

 

(86,464

)

 

 

(90,030

)

 

 

(399,314

)

Changes in fair value:

 

 

 

 

 

 

 

 

 

 

Due to changes in valuation inputs or assumptions

 

 

26,138

 

 

 

(21,368

)

 

 

98,795

 

 

 

4,771

 

 

 

297,792

 

Due to collection/realization of cash flows

 

 

(41,619

)

 

 

(34,657

)

 

 

(66,380

)

 

 

(76,276

)

 

 

(143,502

)

Balance at end of period (1)

 

$

1,998,762

 

 

$

2,016,568

 

 

$

2,204,593

 

 

$

1,998,762

 

 

$

2,204,593

 

(1)

Balances are net of $13.3 million, $12.2 million, and $9.1 million of servicing rights liability as of June 30, 2023, March 31, 2023, and June 30, 2022, respectively.

 

 

 

% Change

Servicing Portfolio Data:

($ in thousands)

(Unaudited)

Jun 30,
2023

 

Mar 31,
2023

 

Jun 30,
2022

 

Jun-23

vs

Mar-23

 

Jun-23
vs
Jun-22

 

 

 

 

 

 

 

 

 

 

Servicing portfolio (unpaid principal balance)

$

142,479,870

 

 

$

141,673,464

 

 

$

155,217,012

 

 

0.6

%

 

(8.2

)%

 

 

 

 

 

 

 

 

 

 

Total servicing portfolio (units)

 

482,266

 

 

 

475,765

 

 

 

507,231

 

 

1.4

 

 

(4.9

)

 

 

 

 

 

 

 

 

 

 

60+ days delinquent ($)

$

1,192,377

 

 

$

1,282,432

 

 

$

1,511,871

 

 

(7.0

)

 

(21.1

)

60+ days delinquent (%)

 

0.8

%

 

 

0.9

%

 

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing rights, net to UPB

 

1.4

%

 

 

1.4

%

 

 

1.4

%

 

 

 

 

 

As of June 30, 2023, approximately $115.3 million, or 0.1%, of our servicing portfolio was in active forbearance. This represents a decrease from $174.0 million, or 0.1%, as of March 31, 2023.

Balance Sheet Highlights

 

 

 

 

 

 

 

% Change

 

($ in thousands)

(Unaudited)

Jun 30,
2023

 

Mar 31,
2023

 

Jun 30,
2022

 

Jun-23
vs
Mar-23

 

Jun-23
vs
Jun-22

Cash and cash equivalents

$

719,073

 

$

798,119

 

$

954,930

 

(9.9

)%

 

(24.7

)%

Loans held for sale, at fair value

 

2,256,551

 

 

2,039,367

 

 

4,656,338

 

10.6

 

 

(51.5

)

Servicing rights, at fair value

 

2,012,049

 

 

2,028,788

 

 

2,213,700

 

(0.8

)

 

(9.1

)

Total assets

 

6,203,504

 

 

6,190,791

 

 

9,195,187

 

0.2

 

 

(32.5

)

Warehouse and other lines of credit

 

2,046,208

 

 

1,830,319

 

 

4,265,343

 

11.8

 

 

(52.0

)

Total liabilities

 

5,406,160

 

 

5,349,629

 

 

7,981,324

 

1.1

 

 

(32.3

)

Total equity

 

797,344

 

 

841,162

 

 

1,213,863

 

(5.2

)

 

(34.3

)

 

An increase in loans held for sale at June 30, 2023, resulted in a corresponding increase in the balance on our warehouse lines of credit. Total funding capacity with our lending partners was $3.9 billion at June 30, 2023 and $4.1 billion at March 31, 2023. Available borrowing capacity was $1.7 billion at June 30, 2023.

Consolidated Statements of Operations

($ in thousands except per share data)

(Unaudited)

Three Months Ended

 

Six Months Ended

 

Jun 30,
2023

 

Mar 31,
2023

 

Jun 30,
2022

 

Jun 30,
2023

 

Jun 30,
2022

REVENUES:

 

 

 

 

 

 

 

 

 

Interest income

$

33,060

 

 

$

27,958

 

 

$

62,722

 

 

$

61,017

 

 

$

115,687

 

Interest expense

 

(30,209

)

 

 

(26,760

)

 

 

(39,923

)

 

 

(56,969

)

 

 

(79,813

)

Net interest income

 

2,851

 

 

 

1,198

 

 

 

22,799

 

 

 

4,048

 

 

 

35,874

 

 

 

 

 

 

 

 

 

 

 

Gain on origination and sale of loans, net

 

154,335

 

 

 

108,152

 

 

 

146,562

 

 

 

262,487

 

 

 

509,692

 

Origination income, net

 

18,332

 

 

 

12,016

 

 

 

39,108

 

 

 

30,349

 

 

 

98,181

 

Servicing fee income

 

117,737

 

 

 

118,961

 

 

 

117,326

 

 

 

236,699

 

 

 

228,385

 

Change in fair value of servicing rights, net

 

(38,474

)

 

 

(52,806

)

 

 

(33,507

)

 

 

(91,280

)

 

 

(101,890

)

Other income

 

17,052

 

 

 

20,380

 

 

 

16,351

 

 

 

37,431

 

 

 

41,707

 

Total net revenues

 

271,833

 

 

 

207,901

 

 

 

308,639

 

 

 

479,734

 

 

 

811,949

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Personnel expense

 

157,799

 

 

 

141,027

 

 

 

296,569

 

 

 

298,826

 

 

 

642,563

 

Marketing and advertising expense

 

34,712

 

 

 

35,914

 

 

 

60,837

 

 

 

70,626

 

 

 

162,350

 

Direct origination expense

 

17,224

 

 

 

17,378

 

 

 

33,996

 

 

 

34,603

 

 

 

87,153

 

General and administrative expense

 

54,817

 

 

 

56,134

 

 

 

63,927

 

 

 

110,951

 

 

 

113,675

 

Occupancy expense

 

6,099

 

 

 

6,081

 

 

 

9,388

 

 

 

12,180

 

 

 

18,784

 

Depreciation and amortization

 

10,721

 

 

 

10,026

 

 

 

11,323

 

 

 

20,747

 

 

 

21,867

 

Servicing expense

 

5,750

 

 

 

4,834

 

 

 

10,741

 

 

 

10,583

 

 

 

32,252

 

Other interest expense

 

43,026

 

 

 

43,090

 

 

 

33,140

 

 

 

86,116

 

 

 

47,533

 

Goodwill impairment

 

 

 

 

 

 

 

40,736

 

 

 

 

 

 

40,736

 

Total expenses

 

330,148

 

 

 

314,484

 

 

 

560,657

 

 

 

644,632

 

 

 

1,166,913

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(58,315

)

 

 

(106,583

)

 

 

(252,018

)

 

 

(164,898

)

 

 

(354,964

)

Income tax benefit

 

(8,556

)

 

 

(14,862

)

 

 

(28,196

)

 

 

(23,418

)

 

 

(39,823

)

Net loss

 

(49,759

)

 

 

(91,721

)

 

 

(223,822

)

 

 

(141,480

)

 

 

(315,141

)

Net loss attributable to noncontrolling interests

 

(26,316

)

 

 

(48,813

)

 

 

(122,894

)

 

 

(75,130

)

 

 

(179,472

)

Net loss attributable to loanDepot, Inc.

$

(23,443

)

 

$

(42,908

)

 

$

(100,928

)

 

$

(66,350

)

 

$

(135,669

)

 

 

 

 

 

 

 

 

 

 

Basic loss per share

$

(0.13

)

 

$

(0.25

)

 

$

(0.66

)

 

$

(0.38

)

 

$

(0.93

)

Diluted loss per share

$

(0.13

)

 

$

(0.25

)

 

$

(0.66

)

 

$

(0.38

)

 

$

(0.93

)

Consolidated Balance Sheets

($ in thousands)

Jun 30,
2023

 

Mar 31,
2023

 

Dec 31,
2022

 

(Unaudited)

 

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

$

719,073

 

$

798,119

 

$

863,956

Restricted cash

 

61,294

 

 

90,084

 

 

116,545

Accounts receivable, net

 

68,581

 

 

99,381

 

 

145,279

Loans held for sale, at fair value

 

2,256,551

 

 

2,039,367

 

 

2,373,427

Derivative assets, at fair value

 

80,382

 

 

84,624

 

 

39,411

Servicing rights, at fair value

 

2,012,049

 

 

2,028,788

 

 

2,037,447

Trading securities, at fair value

 

93,442

 

 

95,561

 

 

94,243

Property and equipment, net

 

82,677

 

 

88,877

 

 

92,889

Operating lease right-of-use asset

 

34,040

 

 

35,362

 

 

35,668

Prepaid expenses and other assets

 

129,675

 

 

139,904

 

 

155,982

Loans eligible for repurchase

 

647,418

 

 

672,458

 

 

634,677

Investments in joint ventures

 

18,322

 

 

18,266

 

 

20,410

Total assets

$

6,203,504

 

$

6,190,791

 

$

6,609,934

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

Warehouse and other lines of credit

$

2,046,208

 

$

1,830,319

 

$

2,146,602

Accounts payable and accrued expenses

 

407,356

 

 

449,641

 

 

488,696

Derivative liabilities, at fair value

 

8,790

 

 

35,662

 

 

67,492

Liability for loans eligible for repurchase

 

647,418

 

 

672,458

 

 

634,677

Operating lease liability

 

56,552

 

 

57,837

 

 

61,675

Debt obligations, net

 

2,239,836

 

 

2,303,712

 

 

2,289,319

Total liabilities

 

5,406,160

 

 

5,349,629

 

 

5,688,461

EQUITY:

 

 

 

 

 

Total equity

 

797,344

 

 

841,162

 

 

921,473

Total liabilities and equity

$

6,203,504

 

$

6,190,791

 

$

6,609,934

Loan Origination and Sales Data

 

($ in thousands)

(Unaudited)

 

Three Months Ended

 

Six Months Ended

 

Jun 30,
2023

 

Mar 31,
2023

 

Jun 30,
2022

 

Jun 30,
2023

 

Jun 30,
2022

Loan origination volume by type:

 

 

 

 

 

 

 

 

 

 

Conventional conforming

 

$

3,323,678

 

 

$

2,893,821

 

 

$

10,392,730

 

 

$

6,217,499

 

 

$

26,105,003

 

FHA/VA/USDA

 

 

2,337,946

 

 

 

1,678,591

 

 

 

3,658,309

 

 

 

4,016,537

 

 

 

7,626,820

 

Jumbo

 

 

148,077

 

 

 

131,066

 

 

 

1,595,843

 

 

 

279,143

 

 

 

3,383,547

 

Other

 

 

463,842

 

 

 

240,859

 

 

 

348,173

 

 

 

704,701

 

 

 

430,416

 

Total

 

$

6,273,543

 

 

$

4,944,337

 

 

$

15,995,055

 

 

$

11,217,880

 

 

$

37,545,786

 

 

 

 

 

 

 

 

 

 

 

 

Loan origination volume by purpose:

 

 

 

 

 

 

 

 

 

 

Purchase

 

$

4,552,919

 

 

$

3,512,771

 

 

$

9,500,164

 

 

$

8,065,690

 

 

$

17,530,930

 

Refinance - cash out

 

 

1,614,747

 

 

 

1,324,239

 

 

 

5,669,205

 

 

 

2,938,986

 

 

 

15,498,840

 

Refinance - rate/term

 

 

105,877

 

 

 

107,327

 

 

 

825,686

 

 

 

213,204

 

 

 

4,516,016

 

Total

 

$

6,273,543

 

 

$

4,944,337

 

 

$

15,995,055

 

 

$

11,217,880

 

 

$

37,545,786

 

 

 

 

 

 

 

 

 

 

 

 

Loans sold:

 

 

 

 

 

 

 

 

 

 

Servicing retained

 

$

3,943,845

 

 

$

3,277,707

 

 

$

10,568,649

 

 

$

7,221,552

 

 

$

27,691,365

 

Servicing released

 

 

2,134,024

 

 

 

2,118,874

 

 

 

7,342,889

 

 

 

4,252,898

 

 

 

13,088,211

 

Total

 

$

6,077,869

 

 

$

5,396,581

 

 

$

17,911,538

 

 

$

11,474,450

 

 

$

40,779,576

 

 

 

 

 

 

 

 

 

 

 

 

Loan origination margins:

 

 

 

 

 

 

 

 

 

 

Gain on sale margin

 

 

2.75

%

 

 

2.43

%

 

 

1.16

%

 

 

2.61

%

 

 

1.62

%

Second Quarter Earnings Call

Management will host a conference call and live webcast today at 5:00 p.m. ET on loanDepot’s Investor Relations website, investors.loandepot.com, to discuss its earnings results.

The conference call can also be accessed by dialing (888) 440-6385 using conference ID number 2021948. Please call five minutes in advance to ensure that you are connected prior to the call. A replay of the webcast and transcript will also be made available on the Investor Relations website following the conclusion of the event, or can be accessed by dialing (800) 770-2030 following the conclusion of the event through September 7, 2023.

For more information about loanDepot, please visit the company’s Investor Relations website: investors.loandepot.com.

Non-GAAP Financial Measures

To provide investors with information in addition to our results as determined by GAAP, we disclose certain non-GAAP measures to assist investors in evaluating our financial results. We believe these non-GAAP measures provide useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. They facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in hedging strategies, changes in valuations, capital structures (affecting interest expense on non-funding debt), taxation, the age and book depreciation of facilities (affecting relative depreciation expense), and other cost or benefit items which may vary for different companies for reasons unrelated to operating performance. These non-GAAP measures include our Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share (if dilutive), and Adjusted EBITDA (LBITDA). We exclude from these non-GAAP financial measures the change in fair value of MSRs and related hedging gains and losses as they add volatility and are not indicative of the Company’s operating performance or results of operation. We also exclude stock-based compensation expense, which is a non-cash expense, gains or losses on extinguishment of debt and disposal of fixed assets, non-cash goodwill impairment, and other impairment charges to intangible assets and operating lease right-of-use assets as management does not consider these costs to be indicative of our performance or results of operations. Adjusted EBITDA (LBITDA) includes interest expense on funding facilities, which are recorded as a component of “net interest income (expense)”, as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on our non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA (LBITDA). Adjustments for income taxes are made to reflect historical results of operations on the basis that it was taxed as a corporation under the Internal Revenue Code, and therefore subject to U.S. federal, state and local income taxes. Adjustments to Diluted Weighted Average Shares Outstanding assumes the pro forma conversion of weighted average Class C shares to Class A common stock. These non-GAAP measures have limitations as analytical tools, and should not be considered in isolation or as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Some of these limitations are:

  • they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;
  • Adjusted EBITDA (LBITDA) does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;
  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted Total Revenue, Adjusted Net Income (Loss), and Adjusted EBITDA (LBITDA) do not reflect any cash requirement for such replacements or improvements; and
  • they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.

Because of these limitations, Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) are not intended as alternatives to total revenue, net income (loss), net income (loss) attributable to the Company, or Diluted Earnings (Loss) Per Share or as an indicator of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. See below for a reconciliation of these non-GAAP measures to their most comparable U.S. GAAP measures.

Reconciliation of Total Revenue to Adjusted Total Revenue

($ in thousands)

(Unaudited)

 

Three Months Ended

 

Six Months Ended

 

Jun 30,
2023

 

Mar 31,
2023

 

Jun 30,
2022

 

Jun 30,
2023

 

Jun 30,
2022

Total net revenue

 

$

271,833

 

$

207,901

 

$

308,639

 

 

$

479,734

 

$

811,949

 

Change in fair value of servicing rights, net of hedging gains and losses(1)

 

 

3,876

 

 

18,289

 

 

(35,366

)

 

 

22,165

 

 

(34,072

)

Adjusted total revenue

 

$

275,709

 

$

226,190

 

$

273,273

 

 

$

501,899

 

$

777,877

 

(1) Represents the change in the fair value of servicing rights attributable to changes in assumptions, net of hedging gains and losses.

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)

($ in thousands)

(Unaudited)

 

Three Months Ended

 

Six Months Ended

 

Jun 30,
2023

 

Mar 31,
2023

 

Jun 30,
2022

 

Jun 30,
2023

 

Jun 30,
2022

Net loss attributable to loanDepot, Inc.

 

$

(23,443

)

 

$

(42,908

)

 

$

(100,928

)

 

$

(66,350

)

 

$

(135,669

)

Net loss from the pro forma conversion of Class C common shares to Class A common shares (1)

 

 

(26,316

)

 

 

(48,813

)

 

 

(122,894

)

 

 

(75,130

)

 

 

(179,472

)

Net loss

 

 

(49,759

)

 

 

(91,721

)

 

 

(223,822

)

 

 

(141,480

)

 

 

(315,141

)

Adjustments to the benefit for income taxes(2)

 

 

6,916

 

 

 

13,316

 

 

 

31,952

 

 

 

20,120

 

 

 

46,663

 

Tax-effected net loss

 

 

(42,843

)

 

 

(78,405

)

 

 

(191,870

)

 

 

(121,360

)

 

 

(268,478

)

Change in fair value of servicing rights, net of hedging gains and losses(3)

 

 

3,876

 

 

 

18,289

 

 

 

(35,366

)

 

 

22,165

 

 

 

(34,072

)

Stock-based compensation expense

 

 

5,754

 

 

 

5,926

 

 

 

4,712

 

 

 

11,679

 

 

 

7,021

 

Gain on extinguishment of debt

 

 

(39

)

 

 

 

 

 

 

 

 

(39

)

 

 

(10,528

)

Loss on disposal of fixed assets

 

 

751

 

 

 

261

 

 

 

 

 

 

1,012

 

 

 

 

Goodwill impairment

 

 

 

 

 

 

 

 

40,736

 

 

 

 

 

 

40,736

 

Other impairment (recovery)

 

 

686

 

 

 

(345

)

 

 

5,963

 

 

 

341

 

 

 

5,963

 

Tax effect of adjustments(4)

 

 

(2,514

)

 

 

(5,973

)

 

 

6,962

 

 

 

(8,421

)

 

 

9,103

 

Adjusted net loss

 

$

(34,329

)

 

$

(60,247

)

 

$

(168,863

)

 

$

(94,623

)

 

$

(250,255

)

 

 

 

 

 

 

 

 

 

 

 

(1)

Reflects net loss to Class A common stock and Class D common stock from the pro forma exchange of Class C common stock.

(2)

loanDepot, Inc. is subject to federal, state and local income taxes. Adjustments to income tax benefit reflect the effective income tax rates below, and the pro forma assumption that loanDepot, Inc. owns 100% of LD Holdings.

 

 

Three Months Ended

 

Six Months Ended

 

Jun 30,
2023

 

Mar 31,
2023

 

Jun 30,
2022

 

Jun 30,
2023

 

Jun 30,
2022

Statutory U.S. federal income tax rate

 

21.00

%

 

21.00

%

 

21.00

%

 

21.00

%

 

21.00

%

State and local income taxes (net of federal benefit)

 

5.28

%

 

6.28

%

 

5.00

%

 

5.78

%

 

5.00

%

Effective income tax rate

 

26.28

%

 

27.28

%

 

26.00

%

 

26.78

%

 

26.00

%

(3)

Represents the change in the fair value of servicing rights attributable to changes in assumptions, net of hedging gains and losses.

(4)

Amounts represent the income tax effect using the aforementioned effective income tax rates, excluding certain discrete tax items. Reporting periods after June 30, 2022 include the income tax effect of excess tax benefits or deficiencies on vested RSUs. Prior periods were adjusted to conform to current presentation.

Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares Outstanding

($ in thousands except per share data)

(Unaudited)

 

Three Months Ended

 

Six Months Ended

 

Jun 30,
2023

 

Mar 31,
2023

 

Jun 30,
2022

 

Jun 30,
2023

 

Jun 30,
2022

Net loss attributable to loanDepot, Inc.

 

$

(23,443

)

 

$

(42,908

)

 

$

(100,928

)

 

$

(66,350

)

 

$

(135,669

)

Adjusted net loss

 

 

(34,329

)

 

 

(60,247

)

 

 

(168,863

)

 

 

(94,623

)

 

 

(250,255

)

 

 

 

 

 

 

 

 

 

 

 

Share Data:

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares of Class A and Class D common stock outstanding

 

 

173,908,030

 

 

 

170,809,818

 

 

 

153,822,380

 

 

 

172,358,924

 

 

 

146,415,135

 

Assumed pro forma conversion of weighted average Class C shares to Class A common stock

 

 

148,597,745

 

 

 

149,210,417

 

 

 

165,281,304

 

 

 

149,535,576

 

 

 

173,245,208

 

Adjusted diluted weighted average shares outstanding

 

 

322,505,775

 

 

 

320,020,235

 

 

 

319,103,684

 

 

 

321,894,500

 

 

 

319,660,343

 

Reconciliation of Net Income (Loss) to Adjusted EBITDA (LBITDA)

($ in thousands)

(Unaudited)

 

Three Months Ended

 

Six Months Ended

 

Jun 30,
2023

 

Mar 31,
2023

 

Jun 30,
2022

 

Jun 30,
2023

 

Jun 30,
2022

 

 

(Unaudited)

 

(Unaudited)

 

 

Net loss

 

$

(49,759

)

 

$

(91,721

)

 

$

(223,822

)

 

$

(141,480

)

 

$

(315,141

)

Interest expense - non-funding debt (1)

 

 

43,026

 

 

 

43,090

 

 

 

33,140

 

 

 

86,116

 

 

 

47,533

 

Income tax benefit

 

 

(8,556

)

 

 

(14,862

)

 

 

(28,196

)

 

 

(23,418

)

 

 

(39,823

)

Depreciation and amortization

 

 

10,721

 

 

 

10,026

 

 

 

11,323

 

 

 

20,747

 

 

 

21,867

 

Change in fair value of servicing rights, net of

hedging gains and losses(2)

 

 

3,876

 

 

 

18,289

 

 

 

(35,366

)

 

 

22,165

 

 

 

(34,072

)

Stock-based compensation expense

 

 

5,754

 

 

 

5,926

 

 

 

4,712

 

 

 

11,679

 

 

 

7,021

 

Loss on disposal of fixed assets

 

 

751

 

 

 

261

 

 

 

 

 

 

1,012

 

 

 

 

Goodwill impairment

 

 

 

 

 

 

 

 

40,736

 

 

 

 

 

 

40,736

 

Other impairment (recovery)

 

 

686

 

 

 

(345

)

 

 

5,963

 

 

 

341

 

 

 

5,963

 

Adjusted EBITDA (LBITDA)

 

$

6,499

 

 

$

(29,336

)

 

$

(191,510

)

 

$

(22,838

)

 

$

(265,916

)

(1)

Represents other interest expense, which includes gain on extinguishment of debt and amortization of debt issuance costs, in the Company’s consolidated statements of operations.

(2)

Represents the change in the fair value of servicing rights attributable to changes in assumptions, net of hedging gains and losses.

Forward-Looking Statements

This press release may contain "forward-looking statements," which reflect loanDepot's current views with respect to, among other things, its business strategies, including the Vision 2025 plan, our HELOC product, financial condition and liquidity, competitive position, industry and regulatory environment, potential growth opportunities, the effects of competition, operations and financial performance. You can identify these statements by the use of words such as "outlook," "potential," "continue," "may," "seek," "approximately," "predict," "believe," "expect," "plan," "intend," "estimate," “project,” or "anticipate" and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as "will," "should," "would" and "could." These forward-looking statements are based on current available operating, financial, economic and other information, and are not guarantees of future performance and are subject to risks, uncertainties and assumptions, including the risks in the "Risk Factors" section of loanDepot, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Reports on Form 10-Q as well as any subsequent filings with the Securities and Exchange Commission, which are difficult to predict. Therefore, current plans, anticipated actions, financial results, as well as the anticipated development of the industry, may differ materially from what is expressed or forecasted in any forward-looking statement. loanDepot does not undertake any obligation to publicly update or revise any forward-looking statement to reflect future events or circumstances, except as required by applicable law.

About loanDepot

loanDepot (NYSE: LDI) is a digital commerce company committed to serving its customers throughout the home ownership journey. Since its launch in 2010, loanDepot has revolutionized the mortgage industry with a digital-first approach that makes it easier, faster and less stressful to purchase or refinance a home. Today, as one of the nation's largest non-bank retail mortgage lenders, loanDepot enables customers to achieve the American dream of homeownership through a broad suite of lending and real estate services that simplify one of life's most complex transactions. With headquarters in Southern California and offices nationwide, loanDepot is committed to serving the communities in which its team lives and works through a variety of local, regional and national philanthropic efforts.

LDI-IR

Contacts:

Investor Relations Contact:
Gerhard Erdelji
Senior Vice President, Investor Relations
(949) 822-4074
gerdelji@loandepot.com

Media Contact:
Rebecca Anderson
Senior Vice President, Communications & Public Relations
(949) 822-4024
rebeccaanderson@loandepot.com

Source: loanDepot, Inc.

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