UWM Holdings Corporation Class A

Good morning. My name is Lisa, and I'll be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation's second quarter 2023 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 the star followed by the number one on your telephone keypad. If at any time you would like to remove yourself from the queue, that is star one again. Like Koho, 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 second quarter 2023 UWM Holdings Corporation 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 Ishbia, Chairman and CEO of UWM Holdings Corporation and United Wholesale Mortgage. Thanks, Blake.

Well, I'd like to start by thanking everyone for joining the call. I really appreciate it. We're very excited here at UWM, proud of our team members, proud of our clients, and really proud of the amazing quarter we've had at UWM. The market, the data, the numbers we're seeing are all really strong, and we're going to talk more about that soon. But before I get into that, I want to start with one of the overarching themes in our industry, and that's the market. It's been a very difficult mortgage market over the last 18 months, but UWM has demonstrated this strength because of the foundation we have built for years and years. We can succeed in all market environments, as I have said dating back to my initial roadshow when we went public, and every quarter recalls since. This quarter is evidence, once again, that UWM can succeed in all these markets. While other companies are exiting the market, losing money, shrinking, and laying people off, we are the exact opposite. We are profitable. We are hiring. We're investing in technology and we're planning to continue to grow. We know the refi boom, whether it's a long sustained one or a mini refi boom, is going to come soon. The opportunities are usually in the first three, six months, maybe nine months to really make money from a volume and margin perspective and really grow your business. We're prepared for that now. Scale is the name of the game and that is why we've been winning and we're going to continue to win going forward. Our business model succeeds in the up markets and the down markets. This is the ultimate down market and we are still winning. I can't wait for the big market to come. It's going to come. I don't know when, as I said, but we are prepared at UWM, and that's why we are different than everyone else. Let's get into the quarters numbers first. We delivered $31.8 billion in overall production, beating our guidance. We set another new all-time quarterly record for purchase volume, $28 billion. We did $28 billion of purchase. That's more business than anybody else did business altogether, just our purchase volume, and we're on pace for an all-time record purchase year here at UWM. Our gain margin was 88 basis points, well within guidance. We made $228.8 million in net income, which is very profitable, and more than we made last year in the second quarter when the market was significantly better and stronger. With that being said, some of the net income includes value of MSR moving up a small amount of it. Just like I spoke last quarter, MSR value moving up and down doesn't really play into my business or our mind at all. So maybe we made only about $200 million. When you take out the MSR adjustment, just like last quarter, people hit us for it. It doesn't really matter. We are running a profitable, successful business no matter which way you look at it. And this is a hell of a quarter given the environment. Before turning it over to Andrew, our CFO, I want to touch on a few other highlights. The broker channel continues to gain momentum. In addition to the share growth we've seen in the channel the past year, we also continue to see loan officers joining the broker channel in big, big numbers. These things go hand in hand in my mind. You know, it's actually a multiplier effect. When a loan officer joins the broker channel, it's not like we just get loans one time. We get loans for potentially years and years to come. So it's a big deal when they make the jump from retail to wholesale. In the second quarter, we track thousands more loan officers joining the broker channel with more than half of them leaving the retail channel to join the broker channel. I've said it before and I'll say it again. Not only is the broker channel the best place for a consumer to get a loan, it's also the best place for a loan officer to work. In the second quarter, we really enhanced our products as well. We rolled out a 1% down program, which is really helping lower-income borrowers achieve the dream of homeownership, which we feel is very important. We are excited about how that has been going. On the other side of the spectrum, we enhanced our jumbo products significantly to drive more volume there, too, and help more consumers by clarifying programs for brokers and helping them succeed. We think there's a big opportunity in jumbo coming soon as well. We already win in the conventional and government loans, you know, in practice to help us win brokers, but helping the lower-end and higher-end loan sizes we're focused on as well to really round out what UWM does. We also had UWM Live event in the second quarter, which was a record event for us with about 6,000 brokers and real estate agents attending. A lot of excitement and energy around the broker channel. We announced two big enhancements, one, the UWM Portal, which helps the technology and efficiency for brokers, and the other one is PA+, which is really preparing brokers for scale. As I said before, a lot of our competitors are laying people off. A lot of people aren't prepared for the next mini boom or big refi boom when it comes. Brokers are no different. UWM is prepared, and PA Plus is a way to help them scale by helping them process and facilitate their loans so they can go out and get new business. So if a broker has to double or triple their business, they'll be ready because of UWM's PA Plus. We're really excited about that and the UWM portal, and we rolled those out just a couple months ago. Those things are things we're investing in now that we might hit our expenses now that we will see the rewards next year or whenever the refi boom comes. We're excited about both those things. These new products and processes are proof of the never relaxed commitment that UWM has to the broker channel and growing at UWM. Now I'm going to turn it over to Andrew for a few more details on our financials.