– Quarterly Origination Volume of
–
– Available liquidity of
– Fourth Quarter 2022 Net Loss of
“As 2022 was largely characterized by an increasingly challenging market, our primary strategic focus was on resetting the organization to navigate the current environment and best position Home Point for long-term sustainability,” said
Fourth Quarter and Full Year 2022 Financial and Key Performance Indicator Summary
($mm, except per share values) | For the quarter ended | For the year ended 12/31 | |||||||||||||||
2022 | 2021 | ||||||||||||||||
Total Funded Origination Volume | $ | 1,691.3 | $ | 4,142.0 | $ | 20,516.0 | $ | 27,680.3 | $ | 96,203.4 | |||||||
Total Fallout Adjusted Lock Volume | $ | 1,403.1 | $ | 3,734.7 | $ | 17,332.7 | $ | 26,605.2 | $ | 83,144.6 | |||||||
Gain on sale margin (bps)1 | 22 | 4 | 59 | 43 | 90 | ||||||||||||
Servicing portfolio - Units | 315,478 | 331,264 | 425,989 | 315,478 | 425,989 | ||||||||||||
Servicing portfolio - UPB | $ | 88,668.6 | $ | 94,087.8 | $ | 128,359.6 | $ | 88,668.6 | $ | 128,359.6 | |||||||
Total revenue, net | $ | 19.2 | $ | 8.3 | $ | 180.5 | $ | 255.6 | $ | 961.5 | |||||||
Origination segment direct expenses | 27.2 | 46.1 | 99.5 | 221.5 | 513.6 | ||||||||||||
Servicing segment direct expenses | 13.0 | 14.8 | 15.9 | 58.0 | 70.9 | ||||||||||||
Corporate expenses | 22.9 | 54.8 | 36.8 | 155.4 | 168.1 | ||||||||||||
Total expenses | 63.1 | 115.7 | 152.2 | 434.9 | 752.6 | ||||||||||||
Net (loss) income | $ | (36.8 | ) | $ | (94.3 | ) | $ | 19.3 | $ | (163.7 | ) | $ | 166.3 | ||||
Net (loss) income per share | $ | (0.27 | ) | $ | (0.68 | ) | $ | 0.14 | $ | (1.18 | ) | $ | 1.19 | ||||
(1) Calculated as gain on sale divided by Fallout Adjusted Lock Volume. Gain on sale includes gain on loans, net, loan fee income, and interest income (expense), net for the Origination segment. |
Fourth Quarter 2022 Highlights
- Quarterly funded origination volume was
$1.7 billion , compared to$20.5 billion in the fourth quarter of 2021, and$4.1 billion in the third quarter of 2022. - Total revenue, net of
$19.2 million , compared to$180.5 million in the fourth quarter of 2021 and$8.3 million in the third quarter of 2022. - Total revenue in the Origination segment of
$3.0 million , compared to$102.9 million in the fourth quarter of 2021 and$1.7 million in the third quarter of 2022. - Gain on sale margin attributable to channels, before giving effect to the impact of capital markets and other activity, was 86 basis points in the fourth quarter of 2022, compared to 58 basis points in the fourth quarter of 2021 and 51 basis points in the third quarter of 2022.
- Total expenses of
$63.1 million improved 58.5% versus the fourth quarter of 2021 and 45.5% from the third quarter of 2022. - Net loss of
$36.8 million (or$(0.27) per basic and diluted share), compared to net income of$19.3 million (or$0.14 per basic and diluted share) in the fourth quarter of 2021, and net loss of$94.3 million (or$(0.68) per basic and diluted share) in the third quarter of 2022. Broker Partners of 9,259 as ofDecember 31, 2022 increased by 1,247 from the fourth quarter of 2021, and increased by 143 from the third quarter of 2022.- We had 1,658 active broker partners In the fourth quarter of 2022.
- Servicing customers of 315,478, down 25.9% from the fourth quarter of 2021, and down 4.8% compared to the third quarter of 2022.
- Servicing portfolio UPB totaled
$88.7 billion as ofDecember 31, 2022 , down 30.9% from the fourth quarter of 2021, and down 5.8% from the third quarter of 2022. - Servicing portfolio delinquencies of 60 days or more of 0.9% remained relatively consistent with 0.7% in the fourth quarter of 2021 and 1.0% in the third quarter of 2022. The MSR multiple for the fourth quarter of 2022 of 6.0x increased from 4.6x in the fourth quarter of 2021 and was comparable with 5.8x in the third quarter of 2022, primarily driven by slower prepayment speeds due to higher mortgage interest rates.
- Company’s available liquidity of
$662.5 million as ofDecember 31, 2022 . - In October, 2022, we completed the previously announced sale of our ownership stake in Longbridge Financial for a purchase price of approximately
$38 .9 million in cash. - In December, 2022, HPC completed the previously announced sale of its equity interests in HPAM and its wholly owned subsidiary HPMAC. The purchase price for this transaction was
$3 .2 million in cash. The sale resulted in a$2 .8 million gain. - During the fourth quarter, we sold approximately
$6 billion UPB of ourGinnie Mae servicing for proceeds totaling$87.8 million .
Full Year 2022 Highlights
- Funded origination volume was
$27.7 billion , compared to$96.2 billion in 2021. - Total revenue, net of
$255.6 million , compared to$961.5 million in 2021. - Total revenue in the Origination segment of
$114.6 million , compared to$750.6 million in 2021. - Gain on sale margin attributable to channels, before giving effect to the impact of capital markets and other activity, was 60 basis points, compared to 85 basis points in 2021.
- Total expenses of
$434.9 million included$14.2 million restructuring and$10.8 million goodwill impairment charges. Excluding those charges, total expense improved 45.5% versus 2021 due to the Company’s cost management initiatives. - Net loss of
$163.7 million (or$(1.18) per basic and diluted share), compared to net income of$166.3 million (or$1.19 per basic and diluted share) in 2021.
Origination Segment
Home Point Capital’s Origination segment originates and sells residential real estate mortgage loans. These loans are sourced through two channels. The primary channel is Wholesale, where the Company works with mortgage brokerages to source new customers. The Direct channel retains serviced customers in the
The Origination segment recorded a contribution loss of
Origination Segment – Financial Highlights and Summary of Key Performance Indicators
($mm) | For the quarter ended | For the year ended 12/31 | |||||||||||||||||
2022 | 2021 | ||||||||||||||||||
Gain on loans, net | $ | (1.3 | ) | $ | (10.3 | ) | $ | 64.2 | $ | 47.1 | $ | 585.8 | |||||||
Loan fee income | 3.3 | 7.6 | 32.8 | 46.0 | 150.9 | ||||||||||||||
Interest income, net and other income | 1.0 | 4.4 | 5.9 | 21.5 | 13.9 | ||||||||||||||
Total Origination segment revenue | 3.0 | 1.7 | 102.9 | 114.6 | 750.6 | ||||||||||||||
Directly attributable expense | 27.2 | 46.1 | 99.5 | 221.5 | 513.6 | ||||||||||||||
Contribution margin | $ | (24.2 | ) | $ | (44.4 | ) | $ | 3.4 | $ | (106.9 | ) | $ | 237.0 | ||||||
Key Performance Indicators1 | For the quarter ended | For the year ended 12/31 | |||||||||||||||||
2022 | 2021 | ||||||||||||||||||
Total Funded Origination Volume | $ | 1,691 | $ | 4,142 | $ | 20,516 | $ | 27,680 | $ | 96,203 | |||||||||
Total Fallout Adjusted Lock Volume | $ | 1,403 | $ | 3,735 | $ | 17,333 | $ | 26,605 | $ | 83,145 | |||||||||
Gain on Sale Margin (bps)2 | 22 | 4 | 59 | 43 | 90 | ||||||||||||||
Origination Volume by Purpose: | |||||||||||||||||||
Purchase | 83.8 | % | 81.1 | % | 37.5 | % | 61.3 | % | 31.1 | % | |||||||||
Refinance | 16.2 | % | 18.9 | % | 62.5 | % | 38.7 | % | 68.9 | % | |||||||||
Number of | 9,259 | 9,116 | 8,012 | 9,259 | 8,012 | ||||||||||||||
Number of | N/A | N/A | 676 | N/A | 676 | ||||||||||||||
(1) See Appendix for additional volume and gain on sale information by channel. | |||||||||||||||||||
(2) Calculated as gain on sale divided by Fallout Adjusted Lock Volume. Gain on sale includes gain on loans, net, loan fee income, and interest income (expense), net for the Origination segment. | |||||||||||||||||||
(3) Number of |
Servicing Segment
Home Point Capital’s Servicing segment generates revenue through contractual fees earned by performing daily administrative and management activities for mortgage loans that were primarily sourced by the Company’s Originations segment. These loans are serviced on behalf of investors/guarantors, primarily Fannie Mae, Freddie Mac and
The Servicing segment generated a contribution margin of
Servicing Segment – Financial Highlights and Key Performance Indicators
($mm) | For the quarter ended | For the year ended 12/31 | |||||||||||||||||
2022 | 2021 | ||||||||||||||||||
Loan servicing fees | $ | 61.2 | $ | 60.1 | $ | 83.6 | $ | 265.3 | $ | 331.4 | |||||||||
Interest income, net and other income | 5.9 | 4.1 | 0.4 | 12.2 | 2.1 | ||||||||||||||
Total Servicing segment revenue | 67.1 | 64.2 | 84.0 | 277.5 | 333.5 | ||||||||||||||
Directly attributable expense | 13.0 | 14.8 | 15.9 | 58.0 | 70.9 | ||||||||||||||
Primary Margin | 54.1 | 49.4 | 68.1 | 219.5 | 262.6 | ||||||||||||||
Change in MSR fair value: amortization | (20.8 | ) | (28.7 | ) | (66.7 | ) | (131.8 | ) | (307.6 | ) | |||||||||
Adjusted contribution margin | 33.3 | 20.7 | 1.4 | 87.7 | (45.0 | ) | |||||||||||||
Change in MSR fair value: mark-to-market, net of hedge | (18.0 | ) | (17.5 | ) | 73.0 | 34.1 | 230.7 | ||||||||||||
Contribution margin | $ | 15.3 | $ | 3.2 | $ | 74.4 | $ | 121.8 | $ | 185.7 | |||||||||
Key Performance Indicators | For the quarter ended1 | For the year ended 12/31 | |||||||||||||||||
2022 | 2021 | ||||||||||||||||||
MSR servicing portfolio - UPB | $ | 88,669 | $ | 94,088 | $ | 128,360 | $ | 88,669 | $ | 128,360 | |||||||||
Average MSR servicing portfolio - UPB | $ | 91,378 | $ | 92,302 | $ | 127,096 | $ | 108,514 | $ | 108,318 | |||||||||
MSR servicing portfolio - Units | 315,478 | 331,264 | 425,989 | 315,478 | 425,989 | ||||||||||||||
Weighted average coupon rate | 3.35 | % | 3.30 | % | 2.96 | % | 3.35 | % | 2.96 | % | |||||||||
60+ days delinquent, incl. forbearance | 0.9 | % | 1.0 | % | 0.7 | % | 0.9 | % | 0.7 | % | |||||||||
MSR multiple | 6.0 | 5.8 | 4.6 | 6.0 | 4.6 | ||||||||||||||
(1) Figures as of period end, except "Average MSR servicing portfolio - UPB" which is average for the period. |
Balance Sheet and Liquidity Highlights
($mm) | As of | |||||||
Cash and cash equivalents | $ | 97.2 | $ | 130.3 | $ | 171.0 | ||
Mortgage servicing rights (at fair value) | $ | 1,402.5 | $ | 1,492.5 | $ | 1,525.1 | ||
Warehouse lines of credit | $ | 496.5 | $ | 870.6 | $ | 4,718.7 | ||
Term debt and other borrowings, net | $ | 942.1 | $ | 941.3 | $ | 1,226.5 | ||
Total shareholders' equity | $ | 603.4 | $ | 639.1 | $ | 776.6 | ||
Dividend and Stock Repurchase Program
During the quarter, the Company did not repurchase any shares under its
Home Point Capital’s board of directors (the “Board”) intends to reassess the payment of cash dividends on a quarterly basis. Future determinations to declare and pay cash dividends, if any, will be made at the discretion of the Board and will depend on a variety of factors, including general macroeconomic, business and financial market conditions; applicable laws; the Company’s financial condition, results of operations, contractual restrictions, capital requirements, and business prospects; and other factors the Board may deem relevant at the time.
Conference Call and Webcast
Members of Home Point Capital’s management team will host a conference call and live webcast on
The conference call may be accessed by dialing (877) 423-9813 (toll-free) or (201) 689-8573 (international), using the passcode 13733909. The number should be dialed at least ten minutes prior to the start of the call. A simultaneous webcast will also be available and can be accessed through the Investor Relations section of Home Point Capital’s website at investors.homepoint.com.
An investor presentation will be referenced during the call, and it will be available prior to the call through the Investor Relations section of Home Point Capital’s website.
A telephonic replay of the call will be available approximately two hours after the live call through
About
Forward Looking Statements
This press release contains certain “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to, statements relating to our future financial performance, our business prospects and strategy, anticipated financial position, liquidity and capital needs, the industry in which we operate and other similar matters. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” “continue,” “potential,” “should” and the negative of these terms or other comparable terminology often identify forward-looking statements. Forward-looking statements are not guarantees of future performance, are based upon assumptions, and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements. Factors, risks, and uncertainties that could cause actual outcomes and results to be materially different from those contemplated include, among others: our reliance on our financing arrangements to fund mortgage loans and otherwise operate our business; the dependence of our loan origination and servicing revenues on macroeconomic and
Consolidated Statements of Income (Loss)
($ in millions, except per share data)
(Unaudited)
($mm, except per share values) | For the quarter ended | For the year ended 12/31 | |||||||||||||||||
2022 | 2021 | ||||||||||||||||||
(Loss) gain on loans, net | $ | (1.3 | ) | $ | (10.3 | ) | $ | 64.0 | $ | 47.1 | $ | 585.8 | |||||||
Loan fee income | 3.3 | 7.6 | 32.8 | 46.0 | 150.9 | ||||||||||||||
Interest income | 15.4 | 21.5 | 39.5 | 91.4 | 136.5 | ||||||||||||||
Interest expense | (23.9 | ) | (26.3 | ) | (46.8 | ) | (112.3 | ) | (169.4 | ) | |||||||||
Interest expense, net | (8.5 | ) | (4.8 | ) | (7.3 | ) | (20.9 | ) | (32.9 | ) | |||||||||
Loan servicing fees | 61.2 | 60.1 | 83.6 | 265.3 | 331.4 | ||||||||||||||
Change in fair value of mortgage servicing rights | (38.8 | ) | (46.2 | ) | 6.3 | (97.7 | ) | (76.8 | ) | ||||||||||
Other income | 3.3 | 1.9 | 1.1 | 15.8 | 3.1 | ||||||||||||||
Total revenue, net | 19.2 | 8.3 | 180.5 | 255.6 | 961.5 | ||||||||||||||
Compensation and benefits | 29.1 | 62.8 | 98.7 | 256.9 | 494.2 | ||||||||||||||
Loan expense | 1.9 | 4.0 | 12.1 | 21.9 | 63.9 | ||||||||||||||
Loan servicing expense | 11.3 | 11.2 | 5.1 | 35.4 | 27.4 | ||||||||||||||
Production technology | 3.3 | 3.7 | 6.8 | 16.2 | 31.9 | ||||||||||||||
General and administrative | 11.2 | 12.5 | 20.9 | 60.3 | 95.5 | ||||||||||||||
Depreciation and amortization | 2.8 | 2.6 | 2.6 | 10.7 | 10.1 | ||||||||||||||
Impairment of goodwill | — | 10.8 | — | 10.8 | — | ||||||||||||||
Other expenses | 3.5 | 8.1 | 6.0 | 22.7 | 29.6 | ||||||||||||||
Total expenses | 63.1 | 115.7 | 152.2 | 434.9 | 752.6 | ||||||||||||||
(Loss) income before income tax | (43.9 | ) | (107.4 | ) | 28.3 | (179.3 | ) | 208.9 | |||||||||||
Pre-tax margin | (229)% | (1294)% | 16 | % | (70)% | 22 | % | ||||||||||||
Income tax benefit (expense) | $ | 7.1 | $ | 25.0 | $ | (7.7 | ) | $ | 41.9 | $ | (58.0 | ) | |||||||
(Loss) income from equity method investment | $ | — | $ | (11.9 | ) | $ | (1.3 | ) | $ | (26.3 | ) | $ | 15.4 | ||||||
Net (loss) income | $ | (36.8 | ) | $ | (94.3 | ) | $ | 19.3 | $ | (163.7 | ) | $ | 166.3 | ||||||
Net margin | (192)% | (1136)% | 11 | % | (64)% | 17 | % | ||||||||||||
(Loss) earnings per share: | |||||||||||||||||||
Basic | $ | (0.27 | ) | $ | (0.68 | ) | $ | 0.14 | $ | (1.18 | ) | 1.19 | |||||||
Diluted | $ | (0.27 | ) | $ | (0.68 | ) | $ | 0.14 | $ | (1.18 | ) | 1.19 | |||||||
Basic weighted average common stock outstanding (mm) | 138.4 | 138.4 | 139.1 | 138.6 | 139.2 | ||||||||||||||
Diluted weighted average common stock outstanding (mm) | 138.4 | 138.4 | 140.8 | 138.6 | 140.0 | ||||||||||||||
Adjusted income statement metrics 1: | |||||||||||||||||||
Adjusted revenue | $ | 37.2 | $ | 13.9 | $ | 106.2 | $ | 195.2 | $ | 746.2 | |||||||||
Adjusted net (loss) income | $ | (21.7 | ) | $ | (80.9 | ) | $ | (33.8 | ) | $ | (189.8 | ) | $ | (0.3 | ) | ||||
Adjusted net margin | (58)% | (582)% | (32)% | (97)% | — | % | |||||||||||||
(1) Non-GAAP measures. See non-GAAP reconciliation for a reconciliation of each measure to the nearest GAAP measure. |
Consolidated Balance Sheet
($ in millions)
(Unaudited)
($mm) | As of | |||||||
Assets: | ||||||||
Cash and cash equivalents | $ | 97.2 | $ | 130.3 | $ | 171.0 | ||
Restricted cash | 11.3 | 18.1 | 36.8 | |||||
Cash and cash equivalents and Restricted cash | 108.5 | 148.4 | 207.8 | |||||
Mortgage loans held for sale (at fair value) | 643.0 | 917.8 | 5,107.1 | |||||
Mortgage servicing rights (at fair value) | 1,402.5 | 1,492.5 | 1,525.1 | |||||
Property and equipment, net | 11.7 | 13.4 | 21.9 | |||||
Accounts receivable, net | 124.7 | 167.7 | 129.1 | |||||
Derivative assets | 25.6 | 72.2 | 84.4 | |||||
— | — | 10.8 | ||||||
85.9 | 194.5 | 65.2 | ||||||
Assets held for sale | — | 38.9 | 63.7 | |||||
Other assets | 36.2 | 36.8 | 43.2 | |||||
Total assets | $ | 2,438.1 | $ | 3,082.2 | $ | 7,258.3 | ||
Liabilities and Shareholders’ Equity: | ||||||||
Warehouse lines of credit | 496.5 | 870.6 | 4,718.7 | |||||
Term debt and other borrowings, net | 942.1 | 941.3 | 1,226.5 | |||||
Accounts payable and accrued expenses | 64.3 | 82.9 | 138.2 | |||||
85.9 | 194.5 | 65.2 | ||||||
Deferred tax liabilities | 183.9 | 193.9 | 229.8 | |||||
Derivative liabilities | 4.1 | 92.8 | 26.7 | |||||
Other liabilities | 57.9 | 67.1 | 76.6 | |||||
Total liabilities | 1,834.7 | 2,443.1 | 6,481.7 | |||||
Shareholders’ Equity: | ||||||||
Common stock | — | — | — | |||||
Additional paid in capital | 513.6 | 512.5 | 523.8 | |||||
Retained earnings | 89.8 | 126.6 | 252.8 | |||||
— | — | — | ||||||
Total shareholders' equity | 603.4 | 639.1 | 776.6 | |||||
Total liabilities and shareholders' equity | $ | 2,438.1 | $ | 3,082.2 | $ | 7,258.3 |
Volume and Margin Detail by Channel
VOLUME DETAIL BY CHANNEL | ||||||||||||||
($mm) | For the quarter ended | For the year ended 12/31 | ||||||||||||
2022 | 2021 | |||||||||||||
Funded Origination Volume by Channel | ||||||||||||||
Wholesale | $ | 1,673.3 | $ | 4,019.9 | $ | 15,046.9 | $ | 22,393.3 | $ | 69,450.7 | ||||
Correspondent | — | 64.1 | 4,499.7 | 4,529.2 | 21,872.4 | |||||||||
Direct | 18.0 | 58.0 | 969.3 | 757.8 | 4,880.3 | |||||||||
Total Funded Origination Volume | $ | 1,691.3 | $ | 4,142.0 | $ | 20,515.9 | $ | 27,680.3 | $ | 96,203.4 | ||||
Fallout Adjusted Lock Volume by Channel | ||||||||||||||
Wholesale | $ | 1,396.6 | $ | 3,688.8 | $ | 12,605.7 | $ | 22,132.4 | $ | 61,021.7 | ||||
Correspondent | N/A | N/A | 4,042.1 | 3,879.9 | $ | 18,827.7 | ||||||||
Direct | 6.5 | 45.9 | 684.8 | 592.9 | $ | 3,295.2 | ||||||||
Total Fallout Adjusted Lock Volume | $ | 1,403.1 | $ | 3,734.7 | $ | 17,332.6 | $ | 26,605.2 | $ | 83,144.6 | ||||
GAIN ON SALE MARGIN DETAIL BY CHANNEL | ||||||||||||||||||
($mm) | For the quarter ended | |||||||||||||||||
$ Amount | Basis Points | $ Amount | Basis Points | $ Amount | Basis Points | |||||||||||||
Gain on Sale Margin by Channel | ||||||||||||||||||
Wholesale | $ | 11.6 | 85 | $ | 17.9 | 48 | $ | 76.4 | 61 | |||||||||
Correspondent | N/A | N/A | N/A | N/A | 7.4 | 18 | ||||||||||||
Direct | 0.2 | 254 | $ | 1.2 | 260 | 17.5 | 256 | |||||||||||
Margin Attributable to Channels | 11.8 | 86 | $ | 19.1 | 51 | 101.3 | 58 | |||||||||||
Other (Loss) Gain on Sale1 | (8.7 | ) | (64 | ) | $ | (17.4 | ) | (47 | ) | 1.6 | 1 | |||||||
Gain on Sale Margin2 | $ | 3.1 | 22 | $ | 1.7 | 4 | $ | 102.9 | 59 | |||||||||
(1) Includes interest income (expense), net, realized and unrealized gains (losses) on locks and mortgage loans held for sale, net hedging results, the provision for the representation and warranty reserve, and differences between modeled and actual pull-through. | ||||||||||||||||||
(2) Calculated as gain on sale divided by Fallout Adjusted Lock Volume. Gain on sale includes gain on loans, net, loan fee income, and interest income (expense), net for the Origination segment. |
Summary Segment Results
($mm) | For the quarter ended | |||||||||||||||||||||||||
Origination | Servicing | Segments Total | All Other | Total | Reconciliation Item | Segments Total | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
(Loss) gain on loans, net | $ | (1.3 | ) | $ | — | $ | (1.3 | ) | $ | — | $ | (1.3 | ) | $ | — | $ | (1.3 | ) | ||||||||
Loan fee income | 3.3 | — | 3.3 | — | 3.3 | — | 3.3 | |||||||||||||||||||
Loan servicing fees | — | 61.2 | 61.2 | — | 61.2 | — | 61.2 | |||||||||||||||||||
Change in fair value of mortgage servicing rights | — | (38.8 | ) | (38.8 | ) | — | (38.8 | ) | — | (38.8 | ) | |||||||||||||||
Interest income (expense), net | 1.0 | 5.9 | 6.9 | (15.4 | ) | (8.5 | ) | — | (8.5 | ) | ||||||||||||||||
Other income | — | — | — | 3.3 | 3.3 | — | 3.3 | |||||||||||||||||||
Total Revenue | $ | 3.0 | $ | 28.3 | $ | 31.3 | $ | (12.1 | ) | $ | 19.2 | $ | — | $ | 19.2 | |||||||||||
Contribution margin | $ | (24.2 | ) | $ | 15.3 | $ | (8.9 | ) | $ | — | $ | (8.9 | ) | |||||||||||||
($mm) | For the quarter ended | |||||||||||||||||||||||||
Origination | Servicing | Segments Total | All Other | Total | Reconciliation Item | Segments Total | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
Gain on loans, net | $ | (10.3 | ) | $ | — | $ | (10.3 | ) | $ | — | $ | (10.3 | ) | $ | — | $ | (10.3 | ) | ||||||||
Loan fee income | 7.6 | — | 7.6 | — | 7.6 | — | 7.6 | |||||||||||||||||||
Loan servicing fees | — | 60.1 | 60.1 | — | 60.1 | — | 60.1 | |||||||||||||||||||
Change in fair value of mortgage servicing rights | — | (46.2 | ) | (46.2 | ) | — | (46.2 | ) | — | (46.2 | ) | |||||||||||||||
Interest income (expense), net | 4.4 | 4.1 | 8.5 | (13.3 | ) | (4.8 | ) | — | (4.8 | ) | ||||||||||||||||
Other income | — | — | — | (10.0 | ) | (10.0 | ) | 11.9 | 1.9 | |||||||||||||||||
Total Revenue | $ | 1.7 | $ | 18.0 | $ | 19.7 | $ | (23.3 | ) | $ | (3.6 | ) | $ | 11.9 | $ | 8.3 | ||||||||||
Contribution margin | $ | (44.4 | ) | $ | 3.2 | $ | (41.2 | ) | $ | (77.9 | ) | $ | (119.1 | ) | ||||||||||||
($mm) | For the quarter ended | |||||||||||||||||||||||
Origination | Servicing | Segments Total | All Other | Total | Reconciliation Item | Segments Total | ||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
(Loss) gain on loans, net | $ | 64.2 | $ | (0.2 | ) | $ | 64.0 | $ | — | $ | 64.0 | $ | — | $ | 64.0 | |||||||||
Loan fee income | 32.8 | — | 32.8 | — | 32.8 | — | 32.8 | |||||||||||||||||
Loan servicing fees | — | 83.6 | 83.6 | — | 83.6 | — | 83.6 | |||||||||||||||||
Change in fair value of mortgage servicing rights | — | 6.3 | 6.3 | — | 6.3 | — | 6.3 | |||||||||||||||||
Interest income (expense), net | 5.9 | 0.6 | 6.5 | (13.8 | ) | (7.3 | ) | — | (7.3 | ) | ||||||||||||||
Other income (expense) | — | — | — | (0.3 | ) | (0.3 | ) | 1.4 | 1.1 | |||||||||||||||
Total Revenue | $ | 102.9 | $ | 90.3 | $ | 193.2 | $ | (14.1 | ) | $ | 179.1 | $ | 1.4 | $ | 180.5 | |||||||||
Contribution margin | $ | 3.4 | $ | 74.4 | $ | 77.8 | $ | (50.8 | ) | $ | 27.0 | |||||||||||||
($mm) | For the year | |||||||||||||||||||||||||
Origination | Servicing | Segments Total | All Other | Total | Reconciliation Item | Segments Total | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
(Loss) gain on loans, net | $ | 47.1 | $ | — | $ | 47.1 | $ | — | $ | 47.1 | $ | — | $ | 47.1 | ||||||||||||
Loan fee income | 46.0 | — | 46.0 | — | 46.0 | — | 46.0 | |||||||||||||||||||
Loan servicing fees | — | 265.3 | 265.3 | — | 265.3 | — | 265.3 | |||||||||||||||||||
Change in fair value of mortgage servicing rights | — | (97.7 | ) | (97.7 | ) | — | (97.7 | ) | — | (97.7 | ) | |||||||||||||||
Interest income (expense), net | 21.4 | 12.2 | 33.6 | (54.5 | ) | (20.9 | ) | — | (20.9 | ) | ||||||||||||||||
Other income | 0.1 | — | 0.1 | (10.6 | ) | (10.5 | ) | 26.3 | 15.8 | |||||||||||||||||
Total Revenue | $ | 114.6 | $ | 179.8 | $ | 294.4 | $ | (65.1 | ) | $ | 229.3 | $ | 26.3 | $ | 255.6 | |||||||||||
Contribution margin | $ | (106.9 | ) | $ | 121.8 | $ | 14.9 | $ | (220.2 | ) | $ | (205.3 | ) | |||||||||||||
($mm) | For the year | |||||||||||||||||||||||||
Origination | Servicing | Segments Total | All Other | Total | Reconciliation Item | Segments Total | ||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||||
(Loss) gain on loans, net | $ | 585.8 | $ | — | $ | 585.8 | $ | — | $ | 585.8 | $ | — | $ | 585.8 | ||||||||||||
Loan fee income | $ | 150.9 | $ | — | $ | 150.9 | $ | — | $ | 150.9 | $ | — | $ | 150.9 | ||||||||||||
Loan servicing fees | $ | — | $ | 331.4 | $ | 331.4 | $ | — | $ | 331.4 | $ | — | $ | 331.4 | ||||||||||||
Change in fair value of mortgage servicing rights | $ | — | $ | (76.8 | ) | $ | (76.8 | ) | $ | — | $ | (76.8 | ) | $ | — | $ | (76.8 | ) | ||||||||
Interest income (expense), net | $ | 13.9 | $ | 1.9 | $ | 15.8 | $ | (48.7 | ) | $ | (32.9 | ) | $ | — | $ | (32.9 | ) | |||||||||
Other income (expense) | $ | — | $ | 0.2 | $ | 0.2 | $ | 18.3 | $ | 18.5 | $ | (15.4 | ) | $ | 3.1 | |||||||||||
Total Revenue | $ | 750.6 | $ | 256.7 | $ | 1,007.3 | $ | (30.4 | ) | $ | 976.9 | $ | (15.4 | ) | $ | 961.5 | ||||||||||
Contribution margin | $ | 237.0 | $ | 185.8 | $ | 422.8 | $ | (198.6 | ) | $ | 224.2 | |||||||||||||||
GAAP to Non-GAAP Reconciliations
RECONCILIATION OF TOTAL REVENUE, NET TO ADJUSTED REVENUE | |||||||||||||||||||
($mm) | For the quarter ended | For the year ended 12/31 | |||||||||||||||||
2022 | 2021 | ||||||||||||||||||
Total revenue, net | $ | 19.2 | $ | 8.3 | $ | 180.5 | $ | 255.6 | $ | 961.5 | |||||||||
Loss from equity method investment | — | (11.9 | ) | (1.3 | ) | (26.3 | ) | 15.4 | |||||||||||
Change in fair value of MSR, net of hedge | 18.0 | 17.5 | (73.0 | ) | (34.1 | ) | (230.7 | ) | |||||||||||
Adjusted revenue | $ | 37.2 | $ | 13.9 | $ | 106.2 | $ | 195.2 | $ | 746.2 | |||||||||
RECONCILIATION OF TOTAL NET (LOSS) INCOME TO ADJUSTED NET (LOSS) INCOME | |||||||||||||||||||
($mm) | For the quarter ended | For the year ended 12/31 | |||||||||||||||||
2022 | 2021 | ||||||||||||||||||
Total net (loss) income | $ | (36.8 | ) | $ | (94.3 | ) | $ | 19.3 | $ | (163.7 | ) | $ | 166.3 | ||||||
Change in fair value of MSR, net of hedge | 18.0 | 17.5 | (73.0 | ) | (34.1 | ) | (230.7 | ) | |||||||||||
Income tax effect of change in fair value of MSR, net of hedge | (2.9 | ) | (4.1 | ) | 19.9 | 8.0 | 64.1 | ||||||||||||
Adjusted net (loss) income | $ | (21.7 | ) | $ | (80.9 | ) | $ | (33.8 | ) | $ | (189.8 | ) | $ | (0.3 | ) | ||||
RECONCILIATION OF NET MARGIN TO ADJUSTED | |||||||||||||||||||
($mm) | For the quarter ended | For the year ended 12/31 | |||||||||||||||||
2022 | 2021 | ||||||||||||||||||
Total revenue, net | $ | 19.2 | $ | 8.3 | $ | 180.5 | $ | 255.6 | $ | 961.5 | |||||||||
Total net (loss) income | (36.8 | ) | (94.3 | ) | 19.3 | (163.7 | ) | 166.3 | |||||||||||
Net margin | (192)% | (1136)% | 11 | % | (64)% | 17 | % | ||||||||||||
Adjusted revenue | $ | 37.2 | $ | 13.9 | $ | 106.2 | $ | 195.2 | $ | 746.2 | |||||||||
Adjusted net (loss) income | (21.7 | ) | (80.9 | ) | (33.8 | ) | (189.8 | ) | (0.3 | ) | |||||||||
Adjusted net margin | (58)% | (582)% | (32)% | (97)% | — | % | |||||||||||||
Non-GAAP Financial Measures
To provide investors with information in addition to our results as determined under Generally Accepted Accounting Principles (“GAAP”), we disclose Adjusted revenue, Adjusted net Income (Loss), and Adjusted net margin as “non-GAAP measures,” which management believes provide useful information to investors. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies.
We define Adjusted revenue as Total net revenue exclusive of the impact of the change in fair value of MSRs related to changes in valuation inputs and assumptions, net of MSRs hedge and adjusted for Income from equity method investment.
We define Adjusted net income as Net income (Loss) exclusive of the impact of the change in fair value of MSRs related to changes in valuation inputs and assumptions, net of MSRs hedge.
We exclude changes in fair value of MSRs, net of hedge from each of Adjusted revenue and Adjusted net income (loss) as they add volatility and are not indicative of the Company’s operating performance or results of operation. This adjustment does not include changes in fair value of MSRs due to realization of cash flows, which remain in each of Adjusted revenue and Adjusted net income (Loss). Realization of cash flows occurs when cash is collected as customers make scheduled payments, partial prepayments of principal, or pay their mortgage in full.
We define Adjusted net margin by dividing Adjusted net income (Loss) by Adjusted revenue.
We believe that Adjusted revenue, Adjusted net Income (Loss), and Adjusted net margin provide useful information to investors and others in understanding and evaluating our operating results. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for net income, or any other operating performance measure calculated in accordance with GAAP and may not be comparable to a similarly titled measure reported by other companies.
We believe that the presentation of Adjusted revenue, Adjusted net Income, and Adjusted net margin provides useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. Adjusted revenue, Adjusted net Income (Loss), and Adjusted net margin provide indicators of performance that are not affected by fluctuations in certain costs or other items. Accordingly, management believes that these measurements are useful for comparing general operating performance from period to period, and management relies on these measures for planning and forecasting of future periods. The Company measures the performance of the segments primarily on a contribution margin basis. Additionally, these measures allow management to compare our results with those of other companies that have different financing and capital structures. However, other companies may define Adjusted revenue, Adjusted net Income (Loss), and Adjusted net margin differently, and as a result, our measures of Adjusted revenue, Adjusted net Income (Loss), and Adjusted net margin may not be directly comparable to those of other companies.
Investor Relations Contact:
investor@hpfc.com
Media Contact:
media@hpfc.com
Source:
2023 GlobeNewswire, Inc., source