loanDepot, Inc.

Good afternoon and welcome to Loan Depot's second quarter 2024 earnings call. All lines 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 would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. Thank you. I would now like to turn the call over to Gerhard Erdely, Senior Vice President, Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone, and thank you for joining Loan Depot's second quarter 2024 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, the status of litigation, 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. Our presentation today contains certain non-GAAP financial measures that we believe provide additional insight into analyzing and benchmarking the performance and value of our business and facilitating company-to-company operating performance comparisons. For more details on these non-GAAP financial measures, including reconciliation to the most directly comparable GAAP measures, please refer to today's earnings release, which is available on our website at investors.loandepot.com. A webcast and transcript of this call will be posted to our website after the conclusion of this call. 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 Chief Investment Officer Jeff DeGurion, 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. I appreciate everyone taking the time to join us on the call this afternoon. Today, I look forward to sharing my perspectives on the following three topics. First, the progress we're making toward achieving our Vision 2025 Strategic Program. second loan depot's q2 operational and financial performance highlights which i believe validate the significant progress and impact of vision 2025 and third and finally our current view of market conditions and the outlook for the balance of 2024 and 2025. as you know we announced division 2025 in mid 2022 in response to one of the most abrupt and significant contractions in housing and mortgage volumes in a generation. Over the past two years, Vision 2025, with its four strategic pillars, has been the battle plan that we followed to tackle market realities in the short term while positioning the company for profitable growth, market leadership, and sustained value creation in the years ahead. A brief description of the scope of the four pillars of Vision 2025 as well as a short synopsis of the progress we've made against each of these pillars follows. Pillar number one focuses on transforming the company's origination business and driving purchase transactions with expanded emphasis on purpose-driven lending and first-time homebuyers. Over the past two years, we've added new products that address affordability issues, such as Access One Plus and Access Zero, We've expanded our VA lending operation, and we've invested in our point of sale and mellow home platforms. Pillar number two, which centers on investing in profitable growth-generating initiatives and launching innovative, cutting-edge solutions that form the foundation of a lifecycle relationship with first-time homebuyers and homeowners. In this area, we launched and expanded our home equity suite of products, including a home equity line of credit and standalone second mortgage loan. We deployed our next generation MellowNow digital underwriting engine, brought our servicing business in-house, and expanded our unique joint venture business with home builders. Pillar three calls for the reducing complexity and simplifying our organization structure with an emphasis on driving client engagement, quality, automation, and operating leverage. To date, we have revamped our compensation programs to drive revenue and best-in-class quality, as well as support recruitment and retention of best available talent. We've also reduced the number of organizational management layers and eliminated unnecessary silos in many parts of the organization, including loan production and operations. And finally, Pillar 4 targets the aggressive rightsizing of Loan Depot's cost structure to be in line with marketing realities while investing in our long-term goal of becoming the lowest cost, highest quality producer of home lending solutions. By the end of 2023, we had reduced annualized non-volume related expenses by over $660 million from the second quarter of 2022. During the first half of this year, we completed an additional $120 million productivity program. The implementation of Vision 2025 has been instrumental in successfully navigating the historic downturn in the mortgage market over the past few years. We've reset the organization for the reality of markets while building our operational capabilities. While we've delivered on a comprehensive reduction of our expense base, Vision 2025 is far more than just a cost-cutting exercise. It also requires us to continually invest in our people, products, and technology platforms. We believe these investments position the company to significantly expand market share and grow profitability going forward. Over the coming months, we will be pivoting from Vision 2025 to a new strategic plan, which will lay out the roadmap we plan to follow to innovate and drive sustainable market leadership and durable profitable growth as a lifetime partner for customers over the course of their entire homeownership journey. We plan to announce the details of our new strategic plan during our upcoming Q3 earnings release cycle. Now, in terms of our second quarter performance, by most measures, I believe we delivered our strongest operational results since the beginning of the market downturn. As I mentioned earlier, I also believe that Loan Depot's Q2 operational financial performance provides important points of reference for the progress and impact of Vision 2025. Our positive operational momentum was driven by profitable adjusted total revenue growth, as well as our ongoing commitment to cost discipline and the progressive introduction of platforms and tools which support automation and operating leverage. We also continued to see strong contributions from our well-regarded servicing operation. The combination of those factors contributed to higher margins and market share gain in our origination business in Q2. In terms of total profitability, in Q2 we achieved positive adjusted EBITDA of $35 million and reduced our adjusted net loss by 56% year-on-year to $16 million. One final and important note on Q2, During the quarter, we successfully completed a tender exchange of our 2025 unsecured notes and reached a tentative agreement to settle class action litigation associated with our January cyber attack. These milestone achievements, which Dave will elaborate on a bit later, provide important clarity and visibility for all of our stakeholders. Looking forward to the balance of 2024 and into 2025, In July, the Mortgage Bankers Association increased their forecast of 2025 mortgage market volumes to $2.1 trillion. This compares with their current estimate of $1.8 trillion for 2024. As we look ahead, based on increasing potential for moderation of mortgage interest rates, as well as more homes for sale going into 2025, we believe there is an increasing possibility of an upward trend in housing transactions and mortgage market activity led initially by growing household formation trends and the demand for home equity-linked mortgage products for home improvement, debt consolidation, and or personal liability management. Over the past six months, we have been investing in our origination capabilities by boosting the number of loan officers and operational staff as well as investing in products and processes that will provide operating leverage with specific focus on a range of home equity solutions, as well as refinancing and purchase products. The company is also actively working to expand our in-market retail franchise with additional staffing and product offerings, which primarily serves the largest portion of the market home purchase. With the investment in new products, people, and platforms that we've made to date, and those currently in flight, we believe we're increasingly well positioned to expand market share and accelerate our revenue growth with our expanding portfolio of lending and lending adjacent solutions for homeowners as market volumes begin to track upward heading into 2025. I want to conclude my prepared remarks today by thanking Team Loan Depot and our other stakeholders for their ongoing support. Our focus on delivering against our vision 2025 imperatives is positioning us for the future while creating a pathway for market leadership and profitability as the market returns to more normal levels of activity. With that, I'll turn the call over to Dave, who will take us through our financial results in more detail.