BETHESDA, Md.–(BUSINESS WIRE)–Walker & Dunlop, Inc. (NYSE: WD) reported total revenues of $228.1 million for the first quarter of 2024, a decrease of 4% year over year. First quarter total transaction volume was $6.4 billion, down 5% year over year. Net income for the first quarter of 2024 was $11.9 million, or $0.35 per diluted share, down 55% and 56%, respectively, year over year. Adjusted EBITDA was up 9% to $74.1 million, reflecting the strength of the Company’s recurring revenue streams. As well, adjusted core EPS, which primarily strips out non-cash revenues and expenses, was up 2% from the first quarter of 2023 to $1.19. The Company’s Board of Directors declared a dividend of $0.65 per share for the second quarter of 2024.
“Q1 2024 began with optimism for imminent Fed rate cuts and ended with broad acceptance of ‘higher for longer.’ The market uncertainty along with rising rates slowed transaction volume significantly. The W&D team closed $6.4 billion of total transaction volume in the quarter, down 5% from Q1 2023,” commented Walker & Dunlop Chairman and CEO Willy Walker. “While lower origination volumes with the GSEs and HUD reduced mortgage servicing rights as well as non-cash revenues and diluted EPS, both adjusted core EPS and adjusted EBITDA, which eliminate the impact of non-cash revenues and expenses, were up 2% and 9%, respectively, on the quarter. These numbers exemplify the durability of the W&D business model.”
“As we enter Q2, there are plenty of signs that commercial real estate investors are working ‘higher for longer’ into their actions — to refinance properties, buy and sell properties, or raise new capital,” continued Walker. “We believe our full-year 2024 financial guidance is achievable given the volume of loan refinancings and equity capital looking to be deployed between now and year-end. And while higher rates and uncertain Fed policy are headwinds, the onus is on our team to provide our clients with solutions in challenging markets.”
“Finally,” added Walker, “Walker & Dunlop’s business model — that includes a scaled, low risk servicing business generating strong cash flow — allows us to invest in our people, brand, and technology to continue exceeding our clients’ expectations.”
|
CONSOLIDATED FIRST QUARTER 2024 OPERATING RESULTS |
|||||||||||||
|
TRANSACTION VOLUMES |
|||||||||||||
|
(dollars in thousands) |
|
Q1 2024 |
|
Q1 2023 |
|
$ Variance |
|
% Variance |
|||||
|
Fannie Mae |
|
$ |
903,368 |
|
$ |
1,358,708 |
|
$ |
(455,340 |
) |
|
(34 |
)% |
|
Freddie Mac |
|
|
974,926 |
|
|
975,737 |
|
|
(811 |
) |
|
– |
|
|
Ginnie Mae – HUD |
|
|
14,140 |
|
|
127,599 |
|
|
(113,459 |
) |
|
(89 |
) |
|
Brokered (3) |
|
|
3,319,074 |
|
|
2,363,754 |
|
|
955,320 |
|
|
40 |
|
|
Principal Lending and Investing (4) |
|
|
15,800 |
|
|
– |
|
|
15,800 |
|
|
N/A |
|
|
Debt financing volume |
|
$ |
5,227,308 |
|
$ |
4,825,798 |
|
$ |
401,510 |
|
|
8 |
% |
|
Property sales volume |
|
|
1,167,151 |
|
|
1,894,682 |
|
|
(727,531 |
) |
|
(38 |
) |
|
Total transaction volume |
|
$ |
6,394,459 |
|
$ |
6,720,480 |
|
$ |
(326,021 |
) |
|
(5 |
)% |
Discussion of Results:
- Total transaction volume decreased 5% from the first quarter of 2023, primarily due to a 20% decrease in the Fannie Mae and the Freddie Mac (collectively, the “GSEs”) transaction volume and a decrease in property sales volume, partially offset by a 40% increase in brokered transactions.
- The decrease in HUD debt financing volume reflects the impacts of high interest rates and elongated processing times for construction loans. Walker & Dunlop was the second largest HUD construction loan lender by volume for HUD’s 2023 fiscal year.
- The 40% increase in brokered debt volume drove our 8% increase in debt financing volume in the first quarter of 2024, as there was increased activity from life insurance companies, banks, CMBS and other private capital providers in the first quarter 2024 compared to 2023.
- Property sales volume decreased as fewer multifamily owners seek to sell their investments under these market conditions, resulting in the market’s lowest quarter of multifamily property sales volume since the second quarter of 2020, according to Real Capital Analytics. Volatility in interest rates and increased supply in select markets from new deliveries have caused cap rates for multifamily assets to widen, and sellers remain hesitant to pursue sales in this market.
|
MANAGED PORTFOLIO |
|||||||||||||
|
(dollars in thousands, unless otherwise noted) |
|
Q1 2024 |
|
Q1 2023 |
|
$ Variance |
|
% Variance |
|||||
|
Fannie Mae |
|
$ |
64,349,886 |
|
$ |
59,890,444 |
|
$ |
4,459,442 |
|
|
7 |
% |
|
Freddie Mac |
|
|
39,665,386 |
|
|
38,184,798 |
|
|
1,480,588 |
|
|
4 |
|
|
Ginnie Mae – HUD |
|
|
10,595,841 |
|
|
10,027,781 |
|
|
568,060 |
|
|
6 |
|
|
Brokered |
|
|
17,312,513 |
|
|
16,285,391 |
|
|
1,027,122 |
|
|
6 |
|
|
Principal Lending and Investing |
|
|
40,139 |
|
|
187,505 |
|
|
(147,366 |
) |
|
(79 |
) |
|
Total Servicing Portfolio |
|
$ |
131,963,765 |
|
$ |
124,575,919 |
|
$ |
7,387,846 |
|
|
6 |
% |
|
Assets under management |
|
|
17,465,398 |
|
|
16,654,566 |
|
|
810,832 |
|
|
5 |
|
|
Total Managed Portfolio |
|
$ |
149,429,163 |
|
$ |
141,230,485 |
|
$ |
8,198,678 |
|
|
6 |
% |
|
Custodial escrow account balance at period end (in billions) |
|
$ |
2.3 |
|
$ |
2.2 |
|
|
|
|
|
||
|
Weighted-average servicing fee rate (basis points) |
|
|
24.0 |
|
|
24.3 |
|
|
|
|
|
||
|
Weighted-average remaining servicing portfolio term (years) |
|
|
8.0 |
|
|
8.7 |
|
|
|
|
|
||
Discussion of Results:
- Our servicing portfolio continues to expand with the addition of GSE debt financing volumes over the past 12 months. Although loan origination volumes have slowed down over the past year, higher interest rates are leading to fewer loan prepayments within the servicing portfolio.
- During the first quarter of 2024, we added $1.5 billion of net loans to our servicing portfolio, and over the past 12 months, we added $7.4 billion of net loans to our servicing portfolio, 88% of which were GSE or HUD (collectively, “Agency”) loans.
- $10.7 billion of Agency loans in our servicing portfolio are scheduled to mature over the next two years. These loans, with a low weighted-average servicing fee of 20 basis points, represent only 9% of the total Agency loans in our portfolio.
- The mortgage servicing rights (“MSRs”) associated with our servicing portfolio had a fair value of $1.4 billion as of both March 31, 2024 and 2023.
- Assets under management as of March 31, 2024 consisted of $15.2 billion of low-income housing tax credit (“LIHTC”) funds, $1.4 billion of debt funds, and $0.9 billion of equity funds. The $0.8 billion increase was primarily related to syndication activity of the tax credit funds over the past year.
|
KEY PERFORMANCE METRICS |
|||||||||||||
|
(dollars in thousands, except per share amounts) |
|
Q1 2024 |
|
Q1 2023 |
|
$ Variance |
|
% Variance |
|||||
|
Walker & Dunlop net income |
|
$ |
11,866 |
|
$ |
26,665 |
|
$ |
(14,799 |
) |
|
(55 |
)% |
|
Adjusted EBITDA |
|
|
74,136 |
|
|
67,975 |
|
|
6,161 |
|
|
9 |
|
|
Diluted EPS |
|
$ |
0.35 |
|
$ |
0.79 |
|
$ |
(0.44 |
) |
|
(56 |
)% |
|
Adjusted core EPS |
|
$ |
1.19 |
|
$ |
1.17 |
|
$ |
0.02 |
|
|
2 |
% |
|
Operating margin |
|
|
6 |
% |
|
14 |
% |
|
|
|
|
||
|
Return on equity |
|
|
3 |
|
|
6 |
|
|
|
|
|
||
|
Key Expense Metrics (as a percentage of total revenues): |
|
|
|
|
|
|
|
|
|
|
|
||
|
Personnel expenses |
|
|
49 |
% |
|
50 |
% |
|
|
|
|
||
|
Other operating expenses |
|
|
13 |
|
|
10 |
|
|
|
|
|
||
Discussion of Results:
- Net income and diluted EPS decreased 55% and 56%, respectively, in the first quarter of 2024, compared to the same period in 2023. The first quarter of 2023 included a $10.8 million benefit for credit losses, a $4.4 million benefit from the refinancing of debt assumed in the acquisition of Alliant, and a $7.5 million investment banking transaction, with no comparable transaction activity in the first quarter of 2024, which contributed to the decrease in our income from operations. Adjusted core EPS, which excludes, among other items, the impacts of non-cash MSR revenues, the provision for loan losses, and acquisition related costs (such as amortization of intangible assets) was $1.19 in the first quarter 2024, an increase of 2% year over year.
- The increase in adjusted EBITDA was primarily the result of increased placement fees and other interest income, higher servicing fees, and decreased personnel expenses, partially offset by decreases in loan origination and debt brokerage fees, net and property sales broker fees.
- Operating margin decreased primarily due to changes in our non-cash activity, including: (i) a decline of MSR income due to lower Fannie Mae volume, and (ii) a change from a large benefit for credit losses in 2023 to a small provision for credit losses in 2024.
- Return on equity declined primarily due to the 55% decrease in net income combined with a 2% increase in stockholders’ equity over the past year.
|
KEY CREDIT METRICS |
||||||||||||
|
(dollars in thousands) |
|
|
Q1 2024 |
|
Q1 2023 |
|
$ Variance |
|
% Variance |
|||
|
At-risk servicing portfolio (5) |
|
$ |
59,498,851 |
|
$ |
54,898,461 |
|
$ |
4,600,390 |
|
8 |
% |
|
Maximum exposure to at-risk portfolio (6) |
|
|
12,088,698 |
|
|
11,132,473 |
|
|
956,225 |
|
9 |
|
|
Defaulted loans (7) |
|
$ |
63,264 |
|
$ |
36,983 |
|
$ |
26,281 |
|
71 |
% |
|
Key credit metrics (as a percentage of the at-risk portfolio): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Defaulted loans |
|
|
0.11 |
% |
|
0.07 |
% |
|
|
|
|
|
|
Allowance for risk-sharing |
|
|
0.05 |
|
|
0.06 |
|
|
|
|
|
|
|
Key credit metrics (as a percentage of maximum exposure): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allowance for risk-sharing |
|
|
0.25 |
% |
|
0.30 |
% |
|
|
|
|
|
Discussion of Results:
- Our at-risk servicing portfolio, which is comprised of loans subject to a defined risk-sharing formula, increased primarily due to the level of Fannie Mae loans added to the portfolio during the past 12 months.
- As of March 31, 2024, six at-risk loans were in default with an aggregate unpaid principal balance (“UPB”) of $63.3 million compared to two at-risk loans with an aggregate UPB of $37.0 million that were in default as of March 31, 2023. The collateral-based reserve on defaulted loans was $5.1 million and $4.4 million as of March 31, 2024 and March 31, 2023, respectively. The remaining at-risk servicing portfolio continues to exhibit strong credit quality, with very low levels of delinquencies and strong operating performance of the underlying properties in the portfolio.
- We take credit risk exclusively on loans backed by multifamily assets and have no credit exposure to losses in any other sector of the commercial real estate lending market.
- During the first quarter of 2024, we repurchased a Fannie Mae loan for $13.5 million in cash. We have an immaterial reserve for credit losses related to this loan.
- In 2023, we received repurchase requests from Freddie Mac related to two loans with UPBs of $11.4 million and $34.8 million, respectively. In March 2024, we entered into a forbearance and indemnification agreement with Freddie Mac that, among other things, delayed the repurchases of these loans for six and twelve months, respectively, and transferred the risk of loss for both loans from Freddie Mac to Walker & Dunlop. As of March 31, 2024, our estimate of the fair value of the indemnification agreements was $2.0 million, which is included in the provision for credit losses for the first quarter of 2024.
FIRST QUARTER 2024
FINANCIAL RESULTS BY SEGMENT
Interest expense on corporate debt is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s use of that corporate debt.
Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income from operations, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity.
The following details explain the changes in these expense items at a consolidated corporate level:
- Interest expense on corporate debt increased $2.4 million, or 16%, from the first quarter of 2023, primarily as a result of an increase in interest rates year over year, as our term loan carries a floating interest rate.
- Income tax expense decreased $4.3 million, or 60%, from the first quarter of 2023, primarily as a result of the 60% decrease in income from operations, as our effective tax rate remained flat at 21% year over year.
|
FINANCIAL RESULTS – CAPITAL MARKETS |
|||||||||||||||
|
(dollars in thousands) |
|
Q1 2024 |
Q1 2023 |
$ Variance |
|
% Variance |
|||||||||
|
Loan origination and debt brokerage fees, net (“Origination fees”) |
|
$ |
43,700 |
|
$ |
46,956 |
|
$ |
(3,256 |
) |
|
(7 |
)% |
||
|
Fair value of expected net cash flows from servicing, net (“MSR income”) |
|
|
20,898 |
|
|
30,013 |
|
|
(9,115 |
) |
|
(30 |
) |
||
|
Property sales broker fees |
|
|
8,821 |
|
|
11,624 |
|
|
(2,803 |
) |
|
(24 |
) |
||
|
Net warehouse interest income (expense), loans held for sale (“LHFS”) |
|
|
(1,574 |
) |
|
(1,689 |
) |
|
115 |
|
|
(7 |
) |
||
|
Other revenues |
|
|
10,052 |
|
|
17,100 |
|
|
(7,048 |
) |
|
(41 |
) |
||
|
Total revenues |
|
$ |
81,897 |
|
$ |
104,004 |
|
$ |
(22,107 |
) |
|
(21 |
)% |
||
|
Personnel |
|
$ |
79,187 |
|
$ |
90,462 |
|
$ |
(11,275 |
) |
|
(12 |
)% |
||
|
Amortization and depreciation |
|
|
1,137 |
|
|
1,186 |
|
|
(49 |
) |
|
(4 |
) |
||
|
Interest expense on corporate debt |
|
|
4,851 |
|
|
4,269 |
|
|
582 |
|
|
14 |
|
||
|
Other operating expenses |
|
|
5,052 |
|
|
5,644 |
|
|
(592 |
) |
|
(10 |
) |
||
|
Total expenses |
|
$ |
90,227 |
|
$ |
101,561 |
|
$ |
(11,334 |
) |
|
(11 |
)% |
||
|
Income from operations |
|
$ |
(8,330 |
) |
$ |
2,443 |
|
$ |
(10,773 |
) |
|
(441 |
)% |
||
|
Income tax expense (benefit) |
|
|
(1,744 |
) |
|
504 |
|
|
(2,248 |
) |
|
(446 |
) |
||
|
Net income before noncontrolling interests |
|
$ |
(6,586 |
) |
$ |
1,939 |
|
$ |
(8,525 |
) |
|
(440 |
)% |
||
|
Less: net income (loss) from noncontrolling interests |
|
|
114 |
|
|
1,435 |
|
|
(1,321 |
) |
|
(92 |
) |
||
|
Walker & Dunlop net income (loss) |
|
$ |
(6,700 |
) |
$ |
504 |
|
$ |
(7,204 |
) |
|
(1,429 |
)% |
||
|
Key revenue metrics (as a percentage of debt financing volume): |
|||||||||||||||
|
Origination fee rate (8) |
|
|
0.84 |
% |
|
0.97 |
% |
|
|
|
|
||||
|
MSR rate (9) |
|
|
0.40 |
|
|
0.62 |
|
|
|
|
|
||||
|
Agency MSR rate (10) |
|
|
1.10 |
|
|
1.22 |
|
|
|
|
|
||||
|
Key performance metrics: |
|
|
|
|
|
|
|
|
|
||||||
|
Operating margin |
|
|
(10 |
)% |
|
2 |
% |
|
|
|
|
||||
|
Adjusted EBITDA |
|
$ |
(19,297 |
) |
$ |
(18,687 |
) |
$ |
(610 |
) |
|
3 |
% |
||
Capital Markets – Discussion of Quarterly Results:
The Capital Markets segment includes our Agency lending, debt brokerage, property sales, appraisal and valuation services, investment banking, and housing market research businesses.
- The decrease in origination fees was primarily the result of the 13-basis-point decrease in our origination fee rate, partially offset by an 8% increase in debt financing volume. The decrease in the origination fee rate was driven by an increase in brokered debt financing volume as a percentage of total debt financing volume and decreases in the Fannie Mae and HUD percentages. Brokered loans have lower origination fees than Agency loans.
- The decrease in MSR income was primarily attributable to the decreases in Fannie Mae and HUD debt financing volumes Fannie Mae loans have higher weighted-average servicing fee (“WASF”) than our other products, resulting in higher MSR income from this product than our other products.
- The decrease in property sales broker fees was primarily driven by the 38% decrease in property sales transaction volume.
- The decrease in other revenues was primarily related to the closing of the largest investment banking deal in the Company’s history, a $7.5 million transaction, which closed in the first quarter of 2023, with no comparable activity in the first quarter of 2024.
- Personnel expense decreased primarily due to a decrease in commission costs on lower transaction revenues, combined with a decrease in other personnel costs due to lower headcount. Our lower headcount was due to a workforce reduction undertaken in the second quarter of 2023.
|
FINANCIAL RESULTS – SERVICING & ASSET MANAGEMENT |
|||||||||||||||
|
(dollars in thousands) |
|
Q1 2024 |
Q1 2023 |
$ Variance |
|
% Variance |
|||||||||
|
Origination fees |
|
$ |
40 |
|
$ |
128 |
|
$ |
(88 |
) |
|
(69 |
)% |
||
|
Servicing fees |
|
|
80,043 |
|
|
75,766 |
|
|
4,277 |
|
|
6 |
|
||
|
Investment management fees |
|
|
13,520 |
|
|
15,173 |
|
|
(1,653 |
) |
|
(11 |
) |
||
|
Net warehouse interest income, loans held for investment (“LHFI”) |
|
|
458 |
|
|
1,690 |
|
|
(1,232 |
) |
|
(73 |
) |
||
|
Placement fees and other interest income |
|
|
35,603 |
|
|
28,824 |
|
|
6,779 |
|
|
24 |
|
||
|
Other revenues |
|
|
11,571 |
|
|
11,615 |
|
|
(44 |
) |
|
(0 |
) |
||
|
Total revenues |
|
$ |
141,235 |
|
$ |
133,196 |
|
$ |
8,039 |
|
|
6 |
% |
||
|
Personnel |
|
$ |
18,055 |
|
$ |
15,341 |
|
$ |
2,714 |
|
|
18 |
% |
||
|
Amortization and depreciation |
|
|
53,071 |
|
|
54,010 |
|
|
(939 |
) |
|
(2 |
) |
||
|
Provision (benefit) for credit losses |
|
|
524 |
|
|
(10,775 |
) |
|
11,299 |
|
|
(105 |
) |
||
|
Interest expense on corporate debt |
|
|
11,191 |
|
|
9,582 |
|
|
1,609 |
|
|
17 |
|
||
|
Other operating expenses |
|
|
5,123 |
|
|
1,480 |
|
|
3,643 |
|
|
246 |
|
||
|
Total expenses |
|
$ |
87,964 |
|
$ |
69,638 |
|
$ |
18,326 |
|
|
26 |
% |
||
|
Income from operations |
|
$ |
53,271 |
|
$ |
63,558 |
|
$ |
(10,287 |
) |
|
(16 |
)% |
||
|
Income tax expense (benefit) |
|
|
11,153 |
|
|
13,104 |
|
|
(1,951 |
) |
|
(15 |
) |
||
|
Net income before noncontrolling interests |
|
$ |
42,118 |
|
$ |
50,454 |
|
$ |
(8,336 |
) |
|
(17 |
)% |
||
|
Less: net income (loss) from noncontrolling interests |
|
|
(1,165 |
) |
|
(630 |
) |
|
(535 |
) |
|
85 |
|
||
|
Walker & Dunlop net income (loss) |
|
$ |
43,283 |
|
$ |
51,084 |
|
$ |
(7,801 |
) |
|
(15 |
)% |
||
|
Key performance metrics: |
|
|
|
|
|
|
|
|
|
||||||
|
Operating margin |
|
|
38 |
% |
|
48 |
% |
|
|
|
|
||||
|
Adjusted EBITDA |
|
$ |
119,658 |
|
$ |
112,975 |
|
$ |
6,683 |
|
|
6 |
% |
||
Servicing & Asset Management – Discussion of Quarterly Results:
The Servicing & Asset Management segment includes loan servicing, principal lending and investing, management of third-party capital invested in tax credit equity funds focused on the affordable housing sector and other commercial real estate, and real estate-related investment banking and advisory services.
- The $7.4 billion net increase in the servicing portfolio over the past 12 months was the principal driver of the growth in servicing fees year over year, partially offset by a slight decrease in the servicing portfolio’s weighted-average servicing fee.
- Investment management fees decreased primarily as a result of a decline in revenue from our LIHTC funds as fewer dispositions were expected to be realized in Q1 2024 compared to Q1 2023.
- Placement fees and other interest income increased largely as a result of higher custodial escrow balances and higher placement fees earned on those escrow deposits due to higher short-term interest rates.
- The increase in personnel expense was primarily the result of an increase in salaries and benefits as the average headcount for the segment increased. The increase in average headcount was due to additional personnel hired in our LIHTC operations as we continue to scale and integrate those operations.
- The provision for credit losses in 2024 was primarily attributable to losses related to the forbearance and indemnification agreement with Freddie Mac noted above, partially offset by a small benefit for risk-sharing obligations resulting from an update to our historical loss rate and forecast-period loss rate. The benefit for credit losses in 2023 was primarily due to the annual update of our historical loss rate and forecast-period loss rates that resulted in a decrease to the calculated CECL. The ratio of the forecast-period loss rate to the historical loss rate was 3.8 at March 31, 2023, compared to 7.7 at March 31, 2024, reflecting the high inflation, higher interest rates and continued uncertainty in the macroeconomic environment.
- The increase in other operating expenses was primarily driven by the write-off of the unamortized premium associated with the payoff of the note payable of one of our subsidiaries that occurred in the first quarter of 2023, with no comparable activity in the current year.
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|
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FINANCIAL RESULTS – CORPORATE |
|||||||||||||||
|
(dollars in thousands) |
|
Q1 2024 |
|
Q1 2023 |
|
$ Variance |
|
% Variance |
|||||||
|
Other interest income |
|
$ |
3,799 |
|
|
$ |
2,100 |
|
|
$ |
1,699 |
|
|
81 |
% |
|
Other revenues |
|
|
1,128 |
|
|
|
(554 |
) |
|
|
1,682 |
|
|
(304 |
) |
|
Total revenues |
|
$ |
4,927 |
|
|
$ |
1,546 |
|
|
$ |
3,381 |
|
|
219 |
% |
|
Personnel |
|
$ |
14,221 |
|
|
$ |
12,810 |
|
|
$ |
1,411 |
|
|
11 |
% |
|
Amortization and depreciation |
|
|
1,683 |
|
|
|
1,770 |
|
|
|
(87 |
) |
|
(5 |
) |
|
Interest expense on corporate debt |
|
|
1,617 |
|
|
|
1,423 |
|
|
|
194 |
|
|
14 |
|
|
Other operating expenses |
|
|
18,668 |
|
|
|
16,939 |
|
|
|
1,729 |
|
|
10 |
|
|
Total expenses |
|
$ |
36,189 |
|
|
$ |
32,942 |
|
|
$ |
3,247 |
|
|
10 |
% |
|
Income (loss) from operations |
|
$ |
(31,262 |
) |
|
$ |
(31,396 |
) |
|
$ |
134 |
|
|
(0 |
)% |
|
Income tax expense (benefit) |
|
|
(6,545 |
) |
|
|
(6,473 |
) |
|
|
(72 |
) |
|
1 |
|
|
Walker & Dunlop net income (loss) |
|
$ |
(24,717 |
) |
|
$ |
(24,923 |
) |
|
$ |
206 |
|
|
(1 |
)% |
|
Key performance metric: |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Adjusted EBITDA |
|
$ |
(26,225 |
) |
|
$ |
(26,313 |
) |
|
$ |
88 |
|
|
(0 |
)% |
Corporate – Discussion of Quarterly Results:
The Corporate segment consists of corporate-level activities including accounting, information technology, legal, human resources, marketing, internal audit, and various other corporate groups (“support functions”). The Company does not allocate costs from these support functions to its other segments in presenting segment operating results.
- The increase in total revenues was primarily driven by the increase in interest income earned on our corporate cash balances due to a higher short-term interest rate environment, combined with an increase in income from equity-method investments.
- The increase in personnel expense was primarily related to an increase in subjective bonus accrual, partially offset by a decrease in salaries and benefits, driven by lower headcount as a result of our workforce reduction undertaken in the second quarter of 2023.
- The increase in other operating expenses was primarily the result of increased office and software expenses in the first quarter of 2024, partially offset by decreased professional fees.
CAPITAL SOURCES AND USES
On May 1, 2024, the Company’s Board of Directors declared a dividend of $0.65 per share for the second quarter of 2024. The dividend will be paid on May 31, 2024 to all holders of record of the Company’s restricted and unrestricted common stock as of May 16, 2024.
In January 2023, the Company entered into a lender joinder agreement and amendment to our existing credit agreement that provided for an incremental term loan with a principal amount of $200 million. The incremental term loan bears interest at a rate equal to adjusted Term SOFR plus 3.00% per annum and matures in December 2028. Proceeds from the debt were used to repay $116 million of debt assumed in an acquisition and to strengthen the balance sheet for general corporate purposes.
On February 14, 2024, our Board of Directors authorized the repurchase of up to $75.0 million of the Company’s outstanding common stock over a 12-month period ending February 23, 2025 (“2024 Share Repurchase Program”).
Any purchases made pursuant to the 2024 Share Repurchase Program will be made in the open market or in privately negotiated transactions, from time to time, as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The repurchase program may be suspended or discontinued at any time.
_____________________________________
|
(1) |
Adjusted EBITDA is a non-GAAP financial measure the Company presents to help investors better understand our operating performance. For a reconciliation of adjusted EBITDA to net income, refer to the sections of this press release below titled “Non-GAAP Financial Measures,” “Adjusted Financial Measure Reconciliation to GAAP” and “Adjusted Financial Measure Reconciliation to GAAP by Segment.” |
|
(2) |
Adjusted core EPS is a non-GAAP financial measure the Company presents to help investors better understand our operating performance. For a reconciliation of Adjusted core EPS to Diluted EPS, refer to the sections of this press release below titled “Non-GAAP Financial Measures” and “Adjusted Core EPS Reconciliation.” |
|
(3) |
Brokered transactions for life insurance companies, commercial banks, and other capital sources. |
|
(4) |
Includes debt financing volumes from our interim loan program, our interim loan joint venture, and Walker & Dunlop Investment Partners, Inc. (“WDIP”) separate accounts. |
|
(5) |
At-risk servicing portfolio is defined as the balance of Fannie Mae Delegated Underwriting and Servicing (“DUS”) loans subject to the risk-sharing formula described below, as well as a small number of Freddie Mac loans on which we share in the risk of loss. Use of the at-risk portfolio provides for comparability of the full risk-sharing and modified risk-sharing loans because the provision and allowance for risk-sharing obligations are based on the at-risk balances of the associated loans. Accordingly, we have presented the key statistics as a percentage of the at-risk portfolio. |
|
|
For example, a $15 million loan with 50% risk-sharing has the same potential risk exposure as a $7.5 million loan with full DUS risk sharing. Accordingly, if the $15 million loan with 50% risk-sharing were to default, we would view the overall loss as a percentage of the at-risk balance, or $7.5 million, to ensure comparability between all risk-sharing obligations. To date, substantially all of the risk-sharing obligations that we have settled have been from full risk-sharing loans. |
|
(6) |
Represents the maximum loss we would incur under our risk-sharing obligations if all of the loans we service, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. The maximum exposure is not representative of the actual loss we would incur. |
|
(7) |
Defaulted loans represent loans in our Fannie Mae at-risk portfolio that are probable of foreclosure or that have foreclosed and for which we have recorded a collateral-based reserve (i.e., loans where we have assessed a probable loss). Other loans that have defaulted but not foreclosed or that are not probable of foreclosure are not included here. Additionally, loans that have foreclosed or are probable of foreclosure but are not expected to result in a loss to us are not included here. |
|
(8) |
Origination fees as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing. |
|
(9) |
MSR income as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing. |
|
(10) |
MSR income as a percentage of Agency debt financing volume. |
ABOUT WALKER & DUNLOP
Walker & Dunlop (NYSE: WD) is one of the largest commercial real estate finance and advisory services firms in the United States. Our ideas and capital create communities where people live, work, shop, and play. The diversity of our people, breadth of our brand and technological capabilities make us one of the most insightful and client-focused firms in the commercial real estate industry.
