Walker & Dunlop, Inc

And welcome to the Q4 2023 Walker & Dunlop, Inc. Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kelsey Duffy, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Karen. Good morning, everyone. Thank you for joining Walker & Dunlop's fourth quarter and full year 2023 Earnings Call. I have with me this morning our Chairman and CEO, Willie Walker, and our CFO, Greg Florkowski. This call is being webcast live on our website and a recording will be available later today. Both our earnings press release and website provide details on accessing the archive webcast. This morning, we posted our earnings release and presentation to the investor relations section of our website, www.walkerdunlop.com. These slides serve as a reference point for some of what Willie and Greg will touch on during the call. Please also note that we will reference the non-GAAP financial metrics, adjusted EBITDA, and adjusted core EPS during the course of this call. please refer to the appendix of the earnings presentation for a reconciliation of these non-GAAP financial metrics. Investors are urged to carefully read the forward-looking statements language in our earnings release. Statements made on this call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe our current expectations, and actual results may differ materially. Walker & Dunlop is under no obligation to update or alter our forward-looking statements, whether as a result of new information, future events, or otherwise, and we expressly disclaim any obligation to do so. More detailed information about risk factors can be found in our annual and quarterly reports filed with the SEC. I'll now turn the call over to Willie.

Thank you, Kelsey, and good morning, everyone. 2023 was a challenging year for the commercial real estate industry. And the fourth quarter started out with the same headwinds that we saw throughout the year. But the lower than expected CPI print in November drove 100 basis point rally in rates, and the deals in our pipeline held together for the first time all year, resulting in $9.3 billion of total transaction volume in the quarter. This was still down 17% from Q4 of 22, but up sequentially from the third quarter and our highest quarterly volume of the year. A nice way to end the year. As you can see on slide three, our Q4 financial performance was solid across the board, including total revenues of $274 million, down just 3% from Q4 of 22, and diluterings per share of 93 cents. EPS was off more than other metrics, largely due to two transaction-related adjustments unique to Q4 of last year. Adjusted Core EPS, which strips out a good deal of non-cash revenues and expenses, was up 1% from the same period last year. Finally, reflecting the strength of the W&D business model, Adjusted EBITDA grew each quarter throughout the year from $68 million in Q1 to $88 million in Q4, down only 5% from Q4 of 2022. Q4 results were a nice uptick after a very challenging 2023. when full-year total transaction volume was down 48% to $33 billion. Yet due to our underlying business model, significant cost management, and the exceptional WMD team, full-year adjusted EBITDA was $300 million, down only 8% from 2022. We are hopeful that we have effectively weathered the great tightening and that as rates stabilize and potentially head down, we are extremely well positioned to benefit from the market's eventual recovery the market's belief that the fed is done tightening and will start to ease in 2024 is welcome news and very constructive for the commercial real estate industry yet there are clearly questions around when and by how much the fed will ease and the answer to those questions will have a dramatic impact on the market we are currently seeing a slow start to the year as investors and developers try to incorporate rate cuts or not into their business planning. As shown on this slide, we started 2023 with a 3.88% 10-year, which moved up to 5% over the subsequent three quarters, only to rally back down to 3.88% in Q4. That type of rate volatility makes it exceedingly difficult for buyers and sellers of commercial real estate to establish pricing, determine their cost of capital, and compute an IRR on the sale or acquisition of an asset. If the Fed begins easing in Q2 and continues to ease, we would expect a nice uptick in transaction volume this year, and also an improvement in the credit landscape. Our multifamily property sales team closed $2.9 billion of sales in the fourth quarter, bringing our full year volume to $8.8 billion, down 55% from 2022, slightly less than the broader market decline of 61%. As a result, we increased market share from 6.7% in 2022 to 7.4% in 2023. Debt brokerage volume declined 34% in Q4 to $2.9 billion and was down 55% for the full year to $11.7 billion. Our GSE volumes and market share remain strong. Once again, finishing the year as Fannie Mae's largest dust lender for the fifth consecutive year at $6.6 billion, and Freddie Mac's third largest partner at $4.6 billion of loan deliveries. Our focus on affordable housing and small balance lending added significant loan volume to our GSE totals. Our research arm, Zellman, provided W&D with stable subscription revenues as their research continues to be known as some of the very best covering the housing industry. We also expanded Zellman's investment banking capabilities into the commercial market in 2023. And in the fourth quarter, the investment banking team closed three transactions, albeit all in the single-family sector, that boosted revenues and expanded the W&D brand significantly. I mentioned our small balance lending group's importance to our GSE volumes, and thanks to the team and technology we've invested in that business, we ended 2023 as the third largest small balance lender with Fannie Mae, and the fourth largest with Freddie Mac, expanding market share nicely with both. And our other tech-enabled business, Apprise, grew faster than the market last year and in the year with 11% market share, up from 6% in 2022. I'll now turn the call over to Greg to review our quarter and full-year financial results in more detail. Greg?