loanDepot, Inc.

Good afternoon and welcome to Loan Depot's fourth quarter and year-end 2023 earnings call. After the speaker's remarks, we will have a question and answer session. If you'd like to ask a question during that time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw your question, again, press star one. Thank you. I would now like to turn the conference over to Gerhard Erdely, Senior Vice President, Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining Loan Depot's fourth quarter and year-end 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 factor section of our filings with the SEC. A webcast and 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 Dave 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 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 the market and on our results. Loan Depot made significant progress in 2023, substantially resetting our cost structure and making critical investments in our organization, technology platforms, as well as business processes, which we believe position us to capture the benefits of the eventual rebound in mortgage volumes. Our revenues were down 22% for the full year of 2023. This decline was largely the result of lower market volumes and our exit of the wholesale channel in the middle of 2022. Over the same period of time, we reduced our expenses 36% as we continued our laser focus on implementing Vision 2025. The aggressive reset of our cost structure resulted in a significant narrowing of our adjusted net loss from $458 million in 2022 to $142 million in 2023. Together with investments in platforms and systems, our vision 2025 productivity improvements achieved in 2022 and 2023, combined with in-flight actions expected to benefit 2024, are the necessary foundation of our planned return to profitability. As you may recall, Vision 2025 focused on four main areas. First, transforming our originations business to drive purchase money transactions with an expanded emphasis on purpose-driven lending. Second, investing in profitable growth-generating initiatives and critical business operating platforms and processes to support operating leverage at best-in-class quality and delivery. Third, aggressively right-sizing our cost structure to address current and future projected market conditions. And fourth and finally, optimizing and simplifying our organization structure. Since we launched Vision 2025 in July of 2022, we have reduced our annualized non-volume related expenses by over $666 million, or approximately 40%. At the same time, we invested in successful growth-related initiatives, such as expanding our servicing portfolio and launching our HELOC product. In addition, we achieved significantly improved quality and delivery metrics and implemented an important process and platform improvements, which we expect will continue to benefit the company post-market recovery. Finally, we reinvested in our team with expanded employee benefits and training programs. In the fourth quarter, on a year-over-year basis, our revenues were 35% higher on relatively flat pull-through weighted lock volume. This was primarily due to the increase in our servicing revenue and the benefit of our heightened focus on loan quality, which resulted in lower repurchase reserves. In late 2022, the launch and growth of our HELOC offering was also a meaningful contributor to our year-over-year revenue growth. Over the same period, Quarter 4 expenses decreased 12% due to the positive results of our Vision 2025 program, primarily from lower salary and occupancy costs. Regarding 2024, we expect to achieve additional productivity benefits of approximately $120 million on an annualized basis. These gains will come primarily from lower third-party spend, process and organizational efficiencies, and lower real estate-related expenses. Loan Depot has continued to make significant investments in our systems, platforms, and processes that align with our strategy of being the partner of choice for the increasingly diverse communities representing a growing number of homebuyers. Looking ahead, we expect higher levels of automation, and the benefit of productivity programs will support expanded operating leverage and fund important reinvestment in our servicing and origination platforms. One tangible example of recent reinvestments is our automated MellowNow underwriting engine. MellowNow utilizes a digital verification process that swiftly analyzes credit reports, detects fraud, and validates income and employment data at the point of sale and delivers a conditional loan approval to customers in minutes rather than hours or days. The launch of MellowNow helped Loan Depot earn HousingWire's 2024 Tech 100 Mortgage Award, which celebrates the most innovative organizations in housing. I believe Loan Depot has a longstanding reputation of forward-thinking excellence in the technology space, and with this initiative and others like it, we expect to continue to build our brand as a leading innovator in the mortgage industry. We are entering 2024 with a more durable revenue model built around a strong multi-channel origination business and an efficient, high-quality servicing platform that underpins our strategy to become a trusted partner for the entire home ownership journey. In 2023, we successfully brought our half a million customer servicing portfolio in-house. Despite all the challenges that were presented by the market in 2023, we prioritized growing our assets under management, which ended the year at $145 billion, up from $141 billion in 2022. As we look ahead to this year, we believe market volumes will improve from 2023 levels. Most recently published forecasts from the Mortgage Bankers Association call for a boost in 2024 mortgage unit volumes of approximately 17%. Higher mortgage market volumes, together with our successful implementation of Vision 2025 imperatives, are expected to provide foundational support as we push to achieve our goal of returning to profitability. Before I turn the call over to Dave, I'd like to briefly touch on the cyber incident we experienced in January. As we recently disclosed, that event will have an impact on our first quarter financial results, but is not expected to have a material impact from a full-year perspective. Although the company is able to recover from this event operationally in short order, sensitive personal information related to approximately 16.9 million individuals was subject to unauthorized access. We deeply regret any possible concern or impact this has on these individuals. The company has moved very quickly to provide credit monitoring and identity theft protection services at no charge to these individuals. The challenges presented by the increasing sophistication of the perpetrators of cyber attacks requires unprecedented focus and close coordination between the public and private sectors to ensure that the private sector's ability to prevent these types of intrusions in the future. Due to the sensitive nature of the cyber incident, we will not take any questions related to this matter in Q&A portion of this call. I want to conclude my prepared remarks today by thanking Team Loan Depot and other key stakeholders for their support. Our markets remain challenging, no doubt, but I believe we have demonstrated very important positive change and forward momentum for the company. I'll now turn this call over to Dave, who will take us through our financial results in more detail.