UWM Holdings Corporation Class A

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation third quarter 2022 earnings conference 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 at any time you would like to remove yourself from the queue, please repress star one. Thank you. Blake Colo, you may begin your conference.

Good morning. This is Blake Colo, Chief Business Officer and Head of Investor Relations. Thank you for joining us and welcome to the third quarter 2022 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. I will now turn the call over to Matt Ishpia, Chairman and CEO of UWM Holdings Corporation and United Wholesale Mortgage. Thanks, Blake, and thank you everyone for joining us.

Today, we are excited to be hosting this call as the number one overall mortgage lender in America. There has never been a 100% wholesale lender that has earned this title, and we are very proud to be number one. What a great day for the UWM family, our team members, our mortgage broker partners, and our investors. Well, I didn't know when I was confident this day would come because as I continue to say, brokers are the best place for consumers to get a loan, and Wholesale Channel is the best place for a loan officer to work. And that is why we are number one together as a community with our brokers. At this point... I would hope everyone realizes we consistently deliver on what we say. We said we dominate the purchase market. We just had our best purchase quarter of all time and nearly $28 billion of purchase volume. We believe the combination of brokers and their real estate partners, coupled with UWM efficiencies and technologies, make for a championship combination for the American consumer. We told you when we launched All In in March of 2021 that this decision would help the broker channel grow and ultimately our share of the channel. Some questioned us and thought we would lose brokers and market share. However, the exact opposite has happened. I estimate that our share in the wholesale channel in the third quarter will be the largest ever recorded in history. I believe we'll be north of 40% and perhaps even closer to 50%. Most recently, we told you our game-on strategy would separate us even further from our competitors. Since the start of game-on, we've had thousands of loan officers try us for the first time, experiencing our technology, our service, and quickly realizing that partnering with UWM can help them win in any market. We've said that loan officers would migrate from retail to wholesale this year and accelerate during game on. This has happened. We estimated over 17,000 loan officers joined the mortgage broker channel this year and about half of them coming directly from the retail channel. These are highest numbers we've ever seen since tracking this data. We also told you that it would be better for us to focus on growing our market share organically instead of by acquisition. How has that played out? I'll tell you. This has played out extremely well. There were a lot of uncommitted wholesale lenders in the market. And with game on, some of them decided to exit because of their lack of efficiency and lack of commitment to the broker community. There are many committed wholesale lenders in the market that are doing very, very well. And brokers have so many choices, over 50 great wholesale options to choose from. But I want to make one thing very clear. The decisions we make continually force every wholesale lender competing in the wholesale channel to level up their game, which is a massive positive for every broker and consumer in America. Many people express their disbelief that a company only fighting for two out of every 10 loans, UWM and the broker channel, could ever be the largest lender in America. And here we are, the number one overall mortgage company in America, about one year after I first publicly said that that was a possibility and that we would do it. One other thing we've talked about that also sets UWM apart is that we've never had a layoff and never will have layoffs. We don't need to lay off people to control our expenses. Year to date, we've made about a billion dollars in one of the most difficult mortgage environments of all time. And we do this by leaning into technology, our operational efficiencies, things such as Bolt and other technologies that we've built from scratch here at UWM. We are about people and family and our culture. Layoffs have never been on the table and never will be, but controlling our expenses and managing our cost per loan is always a major priority at UWM. We told you the dividends would continue, and I'm happy to announce for the eighth consecutive quarter, we will be paying 10 cents per share, which right now represents over a 10% annual yield. Now I'm going to tell you what else is going to happen. We are the best strategic position we've ever been in at UWM because brokers are growing, our competitors who are uncommitted to the channel are struggling, And retail is falling apart, just like we said it would. I'm very confident sometime in the very near future, whether it's 2024, 2025, 2026, we'll have years just like 2020 or even better. We are excited about the future, and we are in great position to dominate. We've been questioned about all in. We've been questioned about game on. We've been questioned on whether we'd ever be number one, whether the dividend would continue, whether we'd win in purchase, whether the broker channel would grow. I don't know what else to say, but what we have said would happen has happened. Maybe, just maybe, there really is one elite mortgage company in America. Maybe there's one CEO and his leadership team that really is in the weeds of the business and knows the business better than the rest. Who knows? That's what we believe. I hope you're starting to believe it as well. All right. Let's get into the third quarter highlights. We closed about $33.5 billion in production for the quarter, handily beating our guidance. 27.7% of this was purchase volume, 24% higher than last quarter. I described our purchase performance last quarter as dominant, and 24% more is even more dominant. Again, we averaged about $24 billion in purchase for the last six quarters. We are winning in the purchase market. I'm also proud to say we delivered $325.6 million of net income for the quarter. with a gain margin of about 52 basis points, which was within our guidance. I'm still confident we'll average about 75 to 100 basis points for the full year, as I've been saying all along. We continue to deliver world-class service levels. Our NPS is plus 88 for the year, and our speed of close is nearly twice as fast as the rest of the industry. In addition, we delivered about fully diluted earnings of about 13 cents per share. Andrew will provide more color on some of these numbers in a few minutes, but I want to dig deeper on the long-term perspective of GameOn. As a refresher, GameOn is a long-term investment in our business and the broker channel. We launched it on June 22nd, and this strategy will help brokers and UWM win long-term as partners together. We know with brokers having the best technology, service, partnership, they can win. But now, with a massive pricing advantage, they will grow and recruit even more loan officers, and they will continue to build their real estate relationships. This is a winning combination, and brokers are winning right now, and GameOn is a big part of it. Just like the all-in from March of 2021, GameOn received criticism from our competitors and other industry pundits. It's undeniable that GameOn has been a massive success for the broker community. Brokers are adding LOs faster now than we've ever tracked. As I said earlier, brokers have added over 17,000 loan officers this year to our channel, with a good amount of those coming in Q3. At UWM, since the launch of Game On, we've also converted nearly 12,000 loan officers that have never worked with us before or haven't worked with us in a long time. We are winning with these new clients that are trying us for price and working with us because of how great we are from a service, technology, and partnership perspective. The broker channel is growing. Loan officers are joining the broker channel. Game On is a huge part of this. As you can tell, I'm fired up. about how far we've come and where we are going. Our business and the broker channel have never had more momentum than it has right now, and we're going to continue to grow together. I'll now turn things over to our principal financial officer, Andrew Huboffer.