loanDepot, Inc.

Good afternoon and welcome to Loan Depot's second quarter 2023 earnings call. All participants have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I'd like now to turn the call over to Gerhard Erdely, Senior Vice President, Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining Loan Depot's second quarter 2023 earnings call. Before we begin, I would like to remind everyone that this conference call may include forward-looking statements regarding the company's operating and financial performance in future periods. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to, guidance to our pull-through weighted rate lock volume, origination volume, pull-through weighted gain on sale margin, and expense trends. These statements are based on the company's current expectations and available information. Actual results for future periods may differ materially from these forward-looking statements due to risks or other factors that are described in the risk factors section of our filings with the SEC. A webcast and a transcript of this call will be posted on the company's investor relations website at investors.loandepot.com under the events and presentations tab. On today's call, we have Loan Depot President and Chief Executive Officer Frank Martell and Chief Financial Officer David Hayes to provide an overview of our quarter, as well as our financial and operational results, outlook, and to answer your questions. We are also joined by our Chief Investment Officer, Jeff Degurian, and LDI Mortgage President, Jeff Walsh, to help address any questions you might have after our prepared remarks. And with that, I'll turn things over to Frank to get us started. Frank?

Thank you, Gerhard, and thank you all for joining us today. I look forward to sharing my perspective on market conditions and our results. Before I begin, I'd like to welcome David Haste to call. David brings a strong track record of financial and business leadership as well as deep mortgage industry knowledge to Loan Depot. I know David well and look forward to partnering with him as we continue to execute our Vision 2025 plan. I also want to take this opportunity to express my gratitude to Pat Flanagan for his leadership and commitment to Loan Depot. Pat helped shepherd the company from private to public ownership And most recently, he helped the company address the critical challenges arising from the dramatic market downturn last year. We wish Pat the very best in his future endeavors. Despite the historic downturn in the housing market, I believe that our second quarter and first half results represent an objective marker of our progress on the strategic imperatives we laid out in our Vision 2025 plan. As you may recall, Vision 2025, which was announced in July of 2022, has four pillars. Pillar one focuses on transforming our originations business to drive purchase money transactions with an expanded emphasis on purpose-driven lending. Pillar two calls for aggressively rightsizing our cost structure in line with current and anticipated market conditions, as well as internally set targets to achieve first quartile operating performance. Pillar 3 covers investing in profitable growth-generating initiatives and critical business operating platforms and processes to support operating leverage and best-in-class quality and delivery. And finally, Pillar 4 relates to optimizing our organization structure. The second quarter was our second consecutive quarter of strong sequential top-line growth and margin expansion. At the same time, we continue to aggressively drive cost productivity and operating leverage. Our second quarter 2023 revenues were up $64 million or 31% sequentially from the first quarter to a primarily by higher purchase transaction volumes and gain on sale margins. Purchase transactions accounted for approximately 73% of all originations in Q2. During the second quarter, our costs increased by $16 million, or 5%. This growth was primarily driven by variable expenses associated with higher origination volumes. In a moment, David will go through our operating results, including our volume-related expenses, Vision 2025 program costs, and legal accruals attributable to the settlement of certain legacy litigation. If these expenses were to be excluded due to their non-recurring nature, This would result in a 4% quarter-over-quarter reduction in our core operating expenses. Profitable growth, together with our laser focus on productivity and operating leverage, accounted for a $42 million, or 46%, sequential reduction in our Q2 net loss. This follows a $66 million reduction in our sequential quarterly net loss in the first quarter. While we continue to work on resetting our cost structure to align with generation-low unit volumes, We are also focused on the other pillars of Vision 2025, including our strategy to expand purpose-driven lending that supports first-time homebuyers and diverse communities. During 2022, Loan Depot ranked as the country's third largest mortgage lender for all minorities. In addition to ranking third overall for all minorities, Loan Depot is also the number three lender serving Hispanics, the number four lender serving African Americans, the number four lender serving Native Americans, and the number six lender serving Asian Americans. As we all know, homeownership is the bedrock of the American dream and plays a vital role in helping to build strong and stable communities. Further deepening our support for diverse and first-time homebuyers is a critical component of our vision 2025. As a purpose-driven lender, Our team is passionate about making homeownership accessible and achievable for more families. Through our products, our people, and our digital tools, we're working hard every day to create a more inclusive and sustainable path to homeownership. Our HELOC product, which provides our customers with a powerful option for achieving their financial goals, also demonstrated consistent growth with strong customer adoption during the quarter. Finally, as outlined in Pillar 4 of our Vision 2025 plan, we continue to make significant strides towards optimizing our organization structure. During Q2, we promoted Darren Grayler as our Chief Accounting Officer and Alec Hansen as our Chief Marketing Officer. We also recruited talent executives including David as our Chief Financial Officer and Melanie Graper as our Chief Human Resources Officer. Finally, we consolidated our LDI Digital Division under LDI Mortgage President Jeff Walsh. Our entire leadership team is energized and committed to continuing to deliver improved financial performance and superior value for our customers and our shareholders. I want to conclude my prepared remarks today by thanking Team Loan Depot and our other key stakeholders for their support. Our markets remain challenging, no doubt, but I believe This is also a very important period of positive change and forward momentum for the company. I believe we're seeing the positive and tangible results of our continued focus on the four pillars of our Vision 2025 strategic plan. With over $700 million in cash on hand, ongoing operating efficiency initiatives, and consistently growing revenues exiting the first half, we believe we are increasingly well-positioned to navigate through the present market downturn and emerge as a stronger and more valuable company. With that, I will now turn the call over to David, who will take us through the financial results in more detail.