UWM Holdings Corporation (NYSE:UWMC) Q4 2024 Earnings Call Transcript

UWM Holdings Corporation (NYSE:UWMC) Q4 2024 Earnings Call Transcript February 26, 2025

UWM Holdings Corporation misses on earnings expectations. Reported EPS is $0.01 EPS, expectations were $0.07.

Regina: 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 2024 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. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Thank you. Blake Kolo, you may begin the conference.

Blake Kolo: Good morning. This is Blake Kolo, Chief Business Officer and Head of Investor Relations. Thank you for joining us, and welcome to the fourth quarter and full year 2024 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. 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 Mathew Ishbia, Chairman and CEO of UWM Holdings Corporation, United Wholesale Mortgage.

Mathew Ishbia: Thanks, Blake. And thank you everyone for joining us today. You know, 2024 was another fantastic year. You know, I think you saw the headlines of, you know, in one of the toughest mortgage years in a while. Obviously, the last three years have been tough. We grew 29% year over year, about $139 billion. Our gain on sale was up 20%, 110 basis points. And the broker channel, which is the biggest indicator, all these we have 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 have seen in, you know, 15 years. All of the things that we talk about continued to happen. We continue to dominate the purchase market, leverage our competitive advantages and talent to technology and world-class service, like I said, help the broker channel grow its, you know, highest share industry in years.

So exciting to see. We retained our title as the largest mortgage company in the US. Now I think it’s in 2024, it was a third consecutive year with the number one mortgage company in America. The fourth consecutive year, the largest purchase lender in America. And now I think it’s the tenth consecutive year as the number one wholesale lender. So we are very proud of what we are doing here at UWM. 2024 was an amazing year, and we are super excited about 2025. As I have spoken in the past few quarters, we continue to invest in cutting-edge technology, including AI, investing in our people, we are the best position to capitalize on any change in the current market dynamics. There are about $2.5 trillion 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. You have all heard me say this before. I will say it again. The only 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 trend changing, new technology, or even regulatory changes. In 2024, was the lowest home sales year since 1995, and UWM had our best purchase year of all time. Over $96 billion 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, $139.4 billion in overall production, 29% increase.

Q&A Session

We also tripled our refinance business in 2024 compared to 2023 despite the interest rate environment, which we will talk about a little bit later. Deliver about $330 million of net income, $329.4 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, you know, we had an amazing quarter across the board, $38.7 billion in production well within our guidance. You know, it’s also worth pointing out in that quarter, we did over $17 billion in the month of October. You know, there’s like a five-week minor rate drop, what was it in, you know, August and September. And with that little thing, we almost doubled our business. And if you kinda do a quick run rate, anything in $51, $52, $53 billion with a small rate drop.

What happens if, actually, a bigger rate drop happens, we are gonna 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 $40.6 million of net income. So once again, great year, great quarter, firing on all cylinders at UWM. We are ready for whatever the market gives us and whatever market does. We are ready to dominate here. So I’m gonna turn over our CFO, Andrew Hubacker. He’ll give you some more information.

Andrew Hubacker: Thank you, Matt. Matt covered many aspects of our Q4 and full-year financial performance, I will just focus on a few additional highlights. Remain profitable operationally in 2024 with $460 million in adjusted EBITDA. For Q4, our adjusted EBITDA was $118.2 million. 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 we have greater operational capacity than we did in 2021, which our origination volume exceeded $226 billion. Said differently, we believe that we can currently handle more than $100 billion of additional origination volume without increasing our fixed expenses.

And despite our significant short and long-term investments, we earned $29 million on a GAAP basis and $460 million on an operational basis. In 2024. We also maintained our liquidity and capital and leverage ratios within targeted ranges in the current environment. At the end of the year, we had approximately $2.1 billion of total equity, just over $500 million of cash, approximately $2.5 billion of total accessible liquidity, in an MSR portfolio with a fair value of approximately $4 billion. We talked about this throughout the year but in so many ways, 2024 was a year of investing. 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 market cycle. I will now turn things back over to our Chairman, President, and CEO, Mathew Ishbia for closing remarks.

Mathew Ishbia: Thanks, Andrew. I’ll close with two points before the Q&A. 2024 was a banner year. From a production perspective, as you can see, we did a great income as well. Really, cash is our third year over where we dominate in a down mortgage market. What you can’t see in the numbers in 2024 is a huge year of technology artificial intelligence. Right? We invest in AI in three major categories, knowledge, efficiency, and growth. And we are winning on all fronts. You’ll see some of those things start to result in 2025, 2026, in our financials and our production. The broker channel continues to show incredible momentum. In the third quarter of 2024, obviously, the four core numbers aren’t out yet, for the broker channel share of all direct fund was 27.4%.

Up seven percentage points from 2022 third quarter. So in two years, grew 7% and almost double from where it was the third quarter of 2020. So in four years, it’s almost doubled. It’s amazing to see, can we do it again? Right? Do we have a guess? 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 broker. This momentum is continuing. Like we talked about in 2023 and 2024, we’re excited to see how it continues to grow going forward.

With all these great things with technology, brokerage, you’ll always come 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. 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 dominating our 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 at the guidance in Q1, we expect to do $28 to $35 billion. 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 $27.6 billion. So that’s, you know, actually below what our low end of the guidance is this year. We also expect gain margin to be between 90 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 gonna turn over to questions. Thanks for your time today.

Regina: At this time, I would like to remind everyone in order to ask a question, press star one on your telephone keypad. If at any time you would like to remove yourself from the queue, press star one a second time. We’ll pause momentarily to assemble our roster. We will now begin the Q&A session. Our first question comes from the line of Terry Ma with Barclays. Please go ahead.

Terry Ma: 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 kinda like what we should expect for a runway going forward.

Mathew Ishbia: No. It’s a one-time investment. But we’re gonna 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 on my mind. We’re prepared, as Andrew said, a hundred billion more, but maybe to more than do that. Like, we can literally double our business. And so preparation is key. As you guys saw with the little refi boom in October, you know, we’ve almost doubled our business. Nobody else can do that. And so we’re prepared for that, not only from the refi momentum is really, really strong right now. And we’re prepared to dominate. And so our business model is not, you know, 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 gonna pay such huge dividends just like we’ve always done. And so, you know, the expenses, we probably don’t need to hire many more people. We’re gonna be more flatlined is how we think about it from a perspective of, you know, replacing attrition. So it’s not like our expense will go up more, but these were investments. 2024 was an investing year. And a technology building year, and 2025 is a dominant year. That’s what we’re going for.

Terry Ma: Got it. Okay. And maybe just on kinda refi, you mentioned you kinda tripled it in 2024. Maybe just talk about all the initiatives you’re doing around that, kinda what know, the outlook is for share and refi kinda going forward. Thank you.

Mathew Ishbia: Yeah. Well, share and refi will be interesting to see, but in general, the outlook is, you know, 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’ll still doing more purchase business, which is phenomenal. I think it was the largest purchase year in history. By any lender. You know, obviously, it was a slow year from a purchase sales and all those stuff in the market. So, you know, we think 2025 would be a better year. There’s more houses for sale. And then on the refi side, you’re talking about, like, like, three trillions of dollars that it just need about, you know, a quarter lower rate than we are right now. Like, we’re not far off.

The tenure’s at 4.30, I think ish. You know, I always tell you 3.75 is where the money’s at. You know, but if it gets down closer to four, gonna start seeing some of this and we are prepared. And so we’re excited about the opportunity on refi. We’re gonna continue to dominate on purchase, and we’re excited for what’s gonna happen in 2025. We really think it’s gonna be a heck of a year.

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

Eric Hagen: 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. How do you make maybe measure the success for these initiatives? Like, how do you how do you, like, benchmark success. At different levels for interest rates maybe or mortgage rates.

Mathew Ishbia: Oh, thanks, Eric. Appreciate the question. Yeah. There’s a lot of ways I can go through. It’s probably more complicated and more detailed than I’m gonna do on this call. But the key thing here is this. Is a lot of the you know, I if you’ve noticed, I bumped our margin for the first time from 85 to 110 to 90 to 115. So first time, we for years, we are at 75 to 100 in the trough. I believe the opportunity is coming. Now I don’t doesn’t mean we’re gonna be on the high end of these things. I think we’re gonna be consistent, like, delivering what I always deliver, which tell you we’re to do, we do it. But what I’ll tell you is, you see these incentives and these marketing things and these are all great, also you gotta understand the all-in margin that we deliver.

A focus of ours. And so the way I look at this, 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 our products and services from training? We have success tracks like you know, this week alone in middle of February in Michigan, we have over 900 clients that flew to Pontiac, Michigan. 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 in giving you a price instead of that might do this, that’s drives them to understand what we do, which helps them grow their business, which then helps them get more business, which then drives UWM.

Once again, that’s a very layman’s way of saying it, and I have a, you know, a team of analytic people that have detail beyond detail about how it actually works and how we make it happen. And so, you know, a small little thing, if you looked at I kinda missed it in the in the in the pre-talk where, like, in October, like, we we we doubled, like, overnight. It’s like a 52 to 54 billion dollar run rate with really not even a refi. So it’s like, how do I train our brokers and coach them ready to do rebuy 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? It’s all about preparation so that they can dominate and then we can dominate.

Eric Hagen: Great stuff. Appreciate that. Know, always appreciate your thoughtful answers. I mean, the 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 you know, just seasonality versus there being an actual falloff in demand at these 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.

Mathew Ishbia: Yeah. Bruno, great question, Eric. Appreciate it, your your thoughts on it. And so we we guided to 28 to 35. Last year, I think we did 27.6 in the first quarter. 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 these numbers, like, I expect us to do more. Know, each quarter. Like, we’re trying to build build upon building. So way we look at it is right now, these numbers are actually really good. If you see what everyone else will guide you and whatever things you’re gonna do, being able to guide to 28 to 35. Once again, I’m not gonna I’m not gonna exceed those numbers. We’re like, I’m trying to give you real numbers where I think I’ll be in this range.

On margin and and at the same time volume. But, we feel really good about that. And to do 30 billion, let’s just call that the number, 29, 30 billion 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 billion in the first quarter besides 2020 and 2021, I don’t think it’s happened. Maybe 2022 because it was a holdover from the rates. But it’s what I’m saying is it’s a gonna be an amazing quarter. And and knowing that the second and third quarters always pick up, we kinda look at this as the low quarter. First quarter is always the worst. Fourth quarter is the second worst. Second and third are always awesome.

Eric Hagen: Yep. Great stuff. Thank you guys so much.

Mathew Ishbia: Appreciate you.

Regina: Our next question comes from the line of Derek Summers with Jefferies. Please go ahead.

Derek Summers: Hey. Good morning, everyone. To follow-up on on on the guidance question related to volume, in the first half, of the year, we saw purchase mix at around 80% in the second half. Call it around 60%. Kinda what are your expert expectations for that mix? Heading into 2025.

Mathew Ishbia: And you’re saying in the in the purchase mixture of the market?

Derek Summers: Both, of the market and and UWM.

Mathew Ishbia: Okay. Yeah. I mean, a lot of it’s dependent on interest rates. Right? You know? So, like, the way I look at it in our focus is, like, how do we do a hundred billion of purchase? Right. And then rebuise you know, if you go, we did 96 billion at first this year and we had one of the most refi. Can we do a hundred billion, a hundred and fifty billion of refi? Possibly. If rates go up to seven and a half, well, we’ll do twenty billion to refi, thirty billion to refi. Right? And so understand what the market and the tenure, that’s why it’s like, literally where no one else will be able to tell you this, Derek, that, like, I can do a hundred and thirty to a hundred and forty billion this year. Or I could do two hundred and sixty billion this year.

Right? And I could do it at ninety basis points of margin. I could do it at a hundred and thirty basis points of margin. Like, that’s how wide of a range it is. But everyone else will say, oh, well, if market turns and this happens and, like, different we’re actually prepared to do that right now. Like, if the rates drop tomorrow, something happens, like, we’ll do we could do, you know, sixty billion in the second quarter. Right, at a at a good margin. 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. And while making these massive investments, from technology and operations and people, while making those massive bets, we’re still profitable.

Right? And and very profitably don’t count the MSR fluctuation, which I have you know, no control of, obviously. And so we feel really good about that. And I think we’re really really ready to use. So sixty percent, it gets hard to predict the numbers. It’s all dictated on rates. But for us, you know, sixty, sixty-five percent purchase, sixty-five to seventy percent purchase in a in a higher rate, and then it could flip to fifty fifty. It could go sixty forty refi if the rates drop aren’t.

Derek Summers: Got it. Thank you. Helpful commentary there. And just how what what’s your current approach to managing servicing UBB levels kinda relative to origination trends.

Mathew Ishbia: Yeah. So we we we monitor it very closely. We understand the servicing asset very, very well. And you know, we’re still one probably the only one out there originally at such a high level that our asset goes up. As in a as a volume perspective with with new originations, But we look at it all the time. We decide whether do we wanna opportunistically sell could go through the process. Hey. We’re gonna retain it all and just 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 We like the asset in general, but at the same time, when people are gonna pay us, know, seven multiple, you know, 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 it’s a 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. And, you know, 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 I’ll modify it. And that’s how we look at it. We look at it every day because that that’s we’re in the weeds of the business.

Derek Summers: Got it. Thank you for taking my questions.

Mathew Ishbia: Thank you.

Regina: Our next question will come from the line of Bose George with KBW. Please go ahead.

Bose George: Hey. Good morning. Actually, just following up on that question on the MSR. I mean, given that, you know, 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 know, what you might do in terms of MSR sales or those two kind of independent decisions?

Mathew Ishbia: Everything’s tied into it. Right? So everything is part of the equation. But nothing drives the equation, right, besides the conversations, the data, understanding the the marketplace. And so it’s hard to answer the question both, you know, like, going through like, what comes into the thing. We have a risk committee meet with everyone organizationally who 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 that that option to the MSR deal to this number. We’ll say, okay. Well, for an extra thirty million in cash, alright, we’ll do it. Right? And so I could all those things are coming to it. The nice part for us on MSRs is we actually continuously make it.

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. 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 we sell or not. We can sell excess, but we replenish it every single month, every single day. Like, it’s like, the numbers are so it’s it’s not as much of a concern where other places are like, oh, they sold their MSRs or they’re not selling. Our our number moves materially based on how much we originate.

Bose George: Oh, okay. Yep. Makes makes sense. Thanks. And then, actually, going back to I think Andrew made that comment, a hundred billion you could originate without increasing fixed expenses. I was just curious. Is there a good way to think about fixed versus variable, you know, in in that sort of scenario?

Mathew Ishbia: No. You know you know, not not really. I mean, like, we’re prepared to fix slides. Obviously, there are variable expense every loan with credit report costs, and all these things go up all the time. But feel really good about and I know you’re trying to figure out how to do a model, which I respect and understand, but I we’re in a really great position from a fixed expenses. We don’t have as much you know, like, the fixed expenses operationally, and then there’s obviously variable on every single file. But sometimes there’s less variable expense if you will realize. And a lot of these numbers hit the bottom line. And I think I I so although I can’t show you each you know, 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 gonna 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, You know, what happens? Like, look at 2021 when that stuff happened and she goes, like, we’re able to make you know, billion plus in a quarter. Right? Like and so but if you’re not prepared for that, like, these things pass you by. And so we’re prepared. Are gonna be variable expenses that are a little more than than than than normal if you do more volume, but it’s not a big number relative to it. And it’s gonna be a huge amount of money hitting the bottom line, which is what we’re prepared for.

Bose George: Okay. Makes sense. Thanks a lot.

Mathew Ishbia: Thank you.

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

Brad Capuzzi: 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, you know, UWM has a very strong hold on the channel, but was wondering if pricing has been rational and if you’re seeing any increased competition.

Mathew Ishbia: Yeah. So the Brevard channel is winning. It’s growing. And I think, like, you know, I know I don’t know how long you’ve been doing it, Brad, but I know you’ve been to our office once before. You probably understand a little bit about the business. But, like, the broker channel is growing. It’s growing faster than I even thought it would grow, to be honest with you. You know, it’s seeing that it’s almost Almost doubled in four years. It’s crazy to even talk about. I said it when we went public. And so you can go back and pull my you know, roadshow and all the stuff and everyone else’s roadshow. Everyone said they’re gonna focus on wholesale because it’s growing. No one thought it would grow as much as I said it would, and it has.

At the same time, everyone says they’re gonna 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 kinda say, oh my gosh. I can’t use them again. And so it’s okay. I like the company. We’ve not seen any increase in pricing competition, to be honest with you. We are very clear. Our margins actually as you saw, were up 20% year over year, and we did more business over almost 3% 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 do what it takes. And what it takes is technology, partnership, helping brokers win and grow, and we are in that game all day every day.

They’re they’re gonna follow our margins. I I 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. You know, great for the competition. I I think it’s important that they tell you that stuff so you can move their price targets up, all that b 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 is is silliness. Right? People wanna come in. They’ve been staying here for years. Oh, we’re coming. We’re gonna be the number one wholesaler. Why don’t you go back and pull We have almost 50% of the market. So we’re excited about it. We love the competition, but 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 gonna help brokers even more. You watch out. It’s gonna help brokers grow, and we’re gonna keep growing with them.

Brad Capuzzi: Actually, then, could you just talk about the rate derivative hedges you put on this year? Do you expect these hedges to continue in 2025? And and are you guys have any additional target on a hedge ratio?

Mathew Ishbia: Yeah. No. Those weren’t really even hedges. The way I look at it is there’s a lot of stuff that we look with market volatility to understand while the election process is going on. And we pulled some of those We 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. 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, understanding the markets, understanding volatile 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: Thanks for taking my questions.

Mathew Ishbia: Thank you.

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

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

Mathew Ishbia: Thanks, Doug. Appreciate the question. You know, we look at all these things every day CFO, finance team, everyone’s on top of all these details. You know, net worth is obviously important. We make income. We obviously pay a great dividend out all our shareholders, which we’ll continue to do. But, you know, you’re you’re talking about stuff that I don’t think really impacts the business at the level that, we should talking about. And this already gone through all the of course, we’re gonna meet all the metrics and all the different things, but building up capital is important. Having liquidity is the most important. 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. It seems that we’re selling a lot of MSRs, and you make money on some of these because people are bidding bidding higher and higher numbers because the truth is we’re the only ones originating them.

So know, in general, our our our all of our ratios are really strong. And we feel really good about where we stand. And we moderate every single month, quarter, however you wanna think about it, and we’re in really, really strong position, not only for this year, but future years as well.

Douglas Harter: Alright. Thank you, Matt.

Regina: Next question will come from the line of Jeff Adelson with Morgan Stanley. Please go ahead.

Jeff Adelson: 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. You know, obviously, we’re seeing a lot of news flow coming out each day with different changes at the various agencies like the CFPB, No. There’s been talk of GSE reform, etcetera. You just give maybe give us an update on your latest views here? What maybe you see coming out on the regulatory political front and and how that flows to United and broader mortgage industry?

Mathew Ishbia: Yeah. 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 gonna 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 will you know, with a different focus than what they’ve had before, 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, the place president Trump’s leading and doing things and doing all the things he said he’d do with making cuts and different things.

I think it’s all upside, all positive. The only thing that it you question is how does it impact interest rates, which a lot of people wanna talk about. And so if it impacts interest rates positively, then this is a a a bull run like you haven’t seen probably since 2020, 2021. If it if it doesn’t impact interest rates positively and interest rates stay where they are, well, it’s still a positive uptick. My expenses will be lower in certain spots. The opportunity will be lower. Because of some of these better leaders in place. And I’ll just say, I don’t want me disrespected to the past people, but quite honestly, there was not a great connection to the industry. And so you know, it’s only better. The new FHFA director will be better. The new HUD director, Scott, will be better.

The new CFPB director, McCurley, will be better. All these things will be better than we had before. So anyone monitoring our industry will say, oh, the industry is gonna have upside and better opportunities than it had the last four years. Now the last four years, we did a heck of a job. I feel pretty good about it. So if it’s gonna be better, I’m happy with it. And I think president Trump’s doing good things, and it’s great to have a leader lead and hopefully do good things for, you know, not only our industry, but America in general.

Jeff Adelson: And just doing the float strategy from here, I know you’ve already taken some recent to to increase that, but can you just maybe give us an update on on the thinking for the rest of the year here? And would you guys be looking to maybe Maybe. Achieve some of that via via acquisitions or other other methods?

Mathew Ishbia: Yeah. No. I appreciate it. We look at everything. You know, we look at everything all the time. How do we make things better? You know, getting more flow 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 it’s just silliness. Even your price target is silly too. That’s not yours as well. But once again, we’re gonna do better. We’re gonna keep winning. And, people that buy into it 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. That’s first. Second, do we look at acquisitions? Yes. I look at everything.

There’s opportunities out there. People wanna be part of our team. And then third, and finally is, like, UWM wins regardless of these things. Right? Like, the like, people wanna talk about the stock price, and I I kinda teased you guys a little bit about some of the stuff, but it doesn’t really matter within the day because we are winning every single month, every single quarter. 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 gonna have a better four years than we had the last two or three. There’s no one. I I don’t think there’s a human being out there. So if you just understand that that hey, the last three years have been the trough.

There’s no way the next four are gonna be worse. That’s factual. So we’re gonna grow. We’re gonna win. The stock price will grow. The float will grow. Opportunities will grow. UWM will make more money. Brokers will grow. Like, it’s it’s all upside. Better politicians, better better politics stuff, better regulatory. Like, all those better, better, better, better. And so the way I look at it is it’s all upside right now. Does that upside happen tomorrow, or does that have to 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 we’d be better in the next three to four years.

Regina: Once again, for any questions, press star one. Our next question will come from the line of MacKel Gohmerman with Citizens. Please go ahead.

MacKel Gohmerman: 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 four percent range and maybe even down in that sweet spot you mentioned earlier of 3.75. Do you guys see the interplay between the origination side of your business and the servings servicing side of your business, specifically how that would affect servicing earnings and valuations there.

Mathew Ishbia: Thanks. No. Hey. Great question. I love what you’re thinking because you know, we we talk about that stuff a lot. You know? You know, in a in a hypothetical and positive and optimistic situation where the tenure drops to four hundred or 3.75 and always then the rate drop with two and a half, three trillion dollars of borrowers are gonna wanna refinance and take advantage while also making home more affordable for purchases, which is why I think it’s a great thing for everybody. Yeah. It’s gonna be massive. So what first thing you’ll run across only thing you’re gonna run on the interplay between MSR valuations and origination is just a timing issue. So if if that hypothetical rate drop happened March 29th, you’re gonna have a huge write down of MSRs, and you won’t have a huge write up of originations until the second the next quarter.

How it happens on April first, as an example, then you’re gonna there’s gonna be there’s not gonna be a big interplay. It’s gonna be like, hey. We made, you know, eight hundred million dollars this quarter of originations and we had to write down a five hundred million dollars of of MSRs. And it’s like, okay. You know? And you understand that it what it is, and you keep replenishing that MSR book. So that’s how we look at it, but I look at it as the 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 got a service book, but they’re not prepared to do that you know, sixty billion dollars in the quarter at a at a higher margin to be able to take advantage of it.

So you kind of are gonna get flat you know, be flat across the board. We’re prepared to double originations, make the profits huge. Obviously, you have MSR write down, which, once again, I I don’t pay attention to because it doesn’t really impact I can’t run that. I can’t control that. 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 makes sense because you never know what’s gonna happen. People don’t like selling MSRs because they can’t originate, but we can originate them, and we make them every single day, so we feel good about that.

MacKel Gohmerman: Great. Thanks, Matt. Best of luck going forward.

Mathew Ishbia: Hey. Thanks a lot. Appreciate it.

Regina: And that will wrap up the Q&A portion. I would like to turn the call back over to Mathew Ishbia for closing comments.

Mathew Ishbia: Well, thank you for joining. Hopefully, some valuable information. We look forward to talking to you next quarter. Lot of good things happening. We’re very excited about what’s happening at UWM, and we appreciate the support and partnership with all of you guys. Have a fantastic day.

Regina: This concludes today’s conference call. You may now disconnect.