Walker & Dunlop, Inc · NYSE:WD
Walker & Dunlop — Investor Day (May 2022)
52 slides from Walker & Dunlop's investor day presentation, May 19, 2022
Slide 1: Join Us As We Continue to Drive to '25
SX JOIN US AS WE CONT | RIVE TO 25 iN VIRTUAL SRE BS
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements Some of the statements contained in this presentation may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, projections, plans and strategies, anticipated events or trends and simil
Slide 3: Welcome - Willy Walker, Chairman & CEO
WELCOME WILLY WALKER Chairman & CEO
Slide 4: Business at the Intersection of Finance, Real Estate Services, and Technology
BUSINESS AT THE INTERSECTION OF FINANCE, REAL ESTATE SERVICES, AND TECHNOLOGY 4
Slide 5: Strong Historical Financial Performance
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Total Revenue (in thousands) $152,350 $ 256,770 $319,039 $360,772 $468,198 $575,276 $711,857 $725,246 $817,219 $1,083,707 $1,259,178 Net Income (in thousands) $34,864 $ 33,772 $41,530 $51,422 $82,128 $113,897 $211,127 $161,439 $173,373 $246,177
Slide 6: Quote by Brene Brown
6 Vulnerability is the birthplace of innovation, creativity and change." - BRENE BROWN 6
Slide 7: Dramatic Financial Growth Over Past Decade
$1.60 $8.15 2011 2021 $152,350 $1,259,178 2011 2021 7 Total Revenues (in thousands) Diluted EPS Adjusted EBITDA1 (in thousands) $32,163 $309,278 2011 2021 1) This is a non-GAAP financial measure. For a reconciliation of the metric to GAAP net income, refer to the appendix of this presentation DRAMAT
Slide 8: INSERT CSH VIDEO STILL OR IMAGE OF MURAL
INSERT CSH VIDEO STILL OR IMAGE OF MURAL 8
Slide 9: Where We Are Going
WHERE WE ARE GOING GROW DEBT FINANCING VOLUME GROW PROPERTY SALES VOLUME GROW INVESTMENT BANKING AND ASSET MANAGEMENT BUSINESSES ENVIRONMENTAL, SOCIAL AND GOVERNANCE $60B+ Origination Volume / $5B+ Small Balance Loans / $160B Servicing Portfolio $25B+ Sales Volume $10B+ Assets Under Management Incre
Slide 10: Agenda
AGENDA Introduction – Willy Walker Investment Banking/Research – Ivy Zelman Small Balance Lending – Alison Williams Apprise – Meghan Czechowski GeoPhy and Technology – Teun van den Dries Alliant and Affordable Housing – Sheri Thompson Bringing All of W&D to our Clients – Kelly Mitchell Operating Per
Slide 11: Ivy Zelman - Investment Banking & Research
IVY ZELMAN Chief Executive Officer, Zelman & Associates INVESTMENT BANKING & RESEARCH
Slide 12: Alison Williams - Small Balance Lending
ALISON WILLIAMS SVP & Chief Production Officer, Small Balance Lending SMALL BALANCE LENDING “SBL”
Slide 13: Significant Opportunity to Capture Market Share in SBL Sector
$470 billion Total Multifamily Origination Volume $85 billion Estimated Small Multifamily Origination Volume $269 $285 $339 $364 $360 $470 $85 5.2% 7.1% 6.3% 6.1% 8.6% 9.0% 2016 2017 2018 2019 2020 2021 Total Multifamily Originations Estimated Small Multifamily Originations WD Multifamily Originatio
Slide 14: Dramatic SBL Growth Will Be Driven by Technology
DRAMATIC SBL GROWTH WILL BE DRIVEN BY TECHNOLOGY SBL Origination Volume (in millions) $500+ $516 $1,300 $5,000 2021 2022 Budget 2025 Goal YTD Progress 15
Slide 15: Benefits of Creating an ACC
BENEFITS OF CREATING AN ACC WALKER & DUNLOP Privacy Poly
Slide 16: SBL + GeoPhy Capabilities
SBL + GEOPHY CAPABILITIES Automated processing tools to increase efficiency Digitally-sourced deal leads Data aggregation and insights into SBL market GOAL Cut loan processing times by 15% by 2022 GOAL Source 50% of SBL volume through technology by 2025 GOAL Leverage GeoPhy technology to become one-
Slide 17: Meghan Czechowski - Apprise
MEGHAN CZECHOWSKI Senior Vice President, Apprise APPRISE
Slide 18: Apprise Removes Challenges of Traditional Appraisal Processes
Time consuming for appraiser & client Inconsistent Quality highly dependent on individual appraiser Long lag Hard to get to the insights Fewer appraisers tackling more work APPRISE REMOVES CHALLENGES OF TRADITIONAL APPRAISAL PROCESSES 19
Slide 19: Technological Capabilities Have Allowed Dramatic Scale in Appraisal Volume
52 248 711 13 49 82 Q1 2020 Q1 2021 Q1 2022 # of Appraisals # of Employees TECHNOLOGICAL CAPABILITIES HAVE ALLOWED FOR DRAMATIC SCALE IN APPRAISAL VOLUME # of Appraisals vs. # of Apprise Employees 20
Slide 20: Differentiated Business Model Drives Revenue Generation
DIFFERENTIATED BUSINESS MODEL DRIVES REVENUE GENERATION Total Apprise Revenues $9M $22M 2021 2022 Goal 21
Slide 21: Apprise Growth Drivers
Industry’s best appraisers have richer data and more time to substantiate assessments Our co-pilot approach reduces lag time in providing an appraisal Consistent appraisal process and data presentation, nationwide Apprise delivers high-quality reports in one week less than competition APPRISE GROWTH
Slide 22: Massive Opportunity for Growth Within Multifamily Appraisal Market
23 $4.4 billion Total Commercial Real Appraisal Market Revenues $2.0 billion Multifamily Appraisal Market Revenues MASSIVE OPPORTUNITY FOR GROWTH WITHIN MULTIFAMILY APPRAISAL MARKET 2% Walker & Dunlop Multifamily Appraisal Revenue Market Share1 1) Calculated using annualized quarterly revenues from
Slide 23: Teun van den Dries - GeoPhy and Technology
TEUN VAN DEN DRIES Executive Vice President, GeoPhy GEOPHY AND TECHNOLOGY
Slide 24: Sheri Thompson - Alliant & Affordable Housing
SHERI THOMPSON Executive Vice President, Affordable Housing and Investment Management/Proprietary Capital ALLIANT & AFFORDABLE HOUSING
Slide 25: Alliant: Creating Exceptional Impact in Affordable Housing
ALLIANT: CREATING EXCEPTIONAL IMPACT IN AFFORDABLE HOUSING Alliant Capital, Ltd. Alliant Strategic Investments ALLIANT BUSINESS LINES ADC Communities Alliant is a vertically integrated investment manager with a focus on the affordable housing sector 1 2 3 26
Slide 26: Investments and Ownership in Affordable Housing Units
INVESTMENTS AND OWNERSHIP IN Affordable Housing Units 27
Slide 27: Alliant + WD Synergies at Work
ALLIANT + WD SYNERGIES AT WORK • Property Development • Tax Credit Equity • WD Financing • Refinance/ Dispositions after Tax Compliance Period • Affordable Property Built • Creating Workforce Housing Opportunities + 28
Slide 28: Coordinated Execution Strategies
COORDINATED EXECUTION STRATEGIES Bridge Debt /Investment Management solutions Debt executions through the GSEs, HUD and our Capital Markets teams Equity Fundraising and placement through Alliant Capital Investment Sales Capabilities 29
Slide 29: Sizeable LIHTC Syndication Market Presents Opportunity for Market Share Growth
30 SIZEABLE LIHTC SYNDICATION MARKET PRESENTS OPPORTUNITY FOR MARKET SHARE GROWTH Low Income Housing Tax Credit Volume in billions 1) Calculated using the syndicated portion of the market LIHTC volume Source: Cohn Reznick 2021 Housing Credit Equity Volume Survey 1 $17 $16 $17 $18 $18 $22 3.4% 0.0% 1
Slide 30: Kelly Mitchell - Bringing All of W&D to Our Clients
KELLY MITCHELL Managing Director, Client Services BRINGING ALL OF W&D TO OUR CLIENTS
Slide 31: Our Business Today: Client View
OUR BUSINESS TODAY: CLIENT VIEW Connected, client-centric, tech-enabled platform of products and services that meet many of our clients’ needs 33
Slide 32: A Customer Journey
33 A CUSTOMER JOURNEY ILP – Bridge/ Pref Equity • Since 2015 Investment Sales • Since 2017 • Since 2021 Capital Markets Apprise • 2022 Opportunity • Annual Fund Valuation • Since 2007 GSE Debt $705 Million Total Transaction Volume • $272 MM in 2021 • $287 MM in 2021 • $121 MM in 2021 • $25 MM in 202
Slide 33: Scaling the Process to Serve Whole Client
SCALING THE PROCESS TO SERVE WHOLE CLIENT 34 INCREASE REVENUES GROW VOLUME • Customer Needs • Customer Market Share IMPROVE SALES PROCESS • Sales Tools • Partnership • Sell All Services • Transact On All Asset Types
Slide 34: Steve Theobald - Operating Performance
STEVE THEOBALD Executive Vice President & Chief Financial Officer OPERATING PERFORMANCE
Slide 35: Exceptional Growth and Financial Performance
$319,039 $1,259,178 2013 2021 37 Total Revenues (in thousands) Diluted EPS $1.21 $8.15 2013 2021 EXCEPTIONAL GROWTH AND FINANCIAL PERFORMANCE $56,783 $309,278 2013 2021 Adjusted EBITDA1 1) This is a non-GAAP financial measure. For a reconciliation of the metric to GAAP net income, refer to the appen
Slide 36: Financial Synergies from Alliant
FINANCIAL SYNERGIES FROM ALLIANT Estimated 2022 Alliant Impact Total Revenues $90 to $100 million Adjusted EBITDA1 approximately $60 million Diluted Earnings Per Share $0.45 to $0.60 per share 1) This is a non-GAAP financial measure. For a reconciliation of the metric to GAAP net income, refer to th
Slide 37: GeoPhy Earnout Structure
GEOPHY EARNOUT STRUCTURE 1) Earn-out opportunity is structured in four phases. A portion of the earn-out payment can be earned if the specified target within a phase is achieved. 2) Full earn-out potential requires achievement of all phases of volume and MBGs milestones by 2025. Earn-out is measured
Slide 38: GeoPhy Earnout Structure
GEOPHY EARNOUT STRUCTURE 1) Earn-out includes revenue and productivity targets, with the latter target based upon the annual average number of appraisals issued per month per appraiser 2) Earn-out opportunity is structured in three phases. A portion of the earn-out payment can be earned if the speci
Slide 39: Total Revenues and Diluted EPS Targets
Total Revenues $2.0B Diluted EPS $13.00 to $15.00 41
Slide 40: Greg Florkowski - Operating Performance
GREG FLORKOWSKI Executive Vice President, Business Development OPERATING PERFORMANCE
Slide 41: New Operating Segment Details
NEW OPERATING SEGMENT DETAILS 43 • Servicing • Asset Management • Proprietary Capital • Investment Research • Lending • Debt Brokerage • Property Sales • Appraisals • Infrastructure • Treasury • Other Corporate Services CORPORATE SERVICING & ASSET MANAGEMENT CAPITAL MARKETS
Slide 42: Capital Markets FY 2021 and 2019 Key Financial Metrics
43 CAPITAL MARKETS FY 2021 AND 2019 KEY FINANCIAL METRICS 1 (in millions) FY 2021 FY 2019 % Change Total Transaction Volume $68 $32 113% Total Revenues $873 $476 83% Net Income $272 $136 100% Adjusted EBITDA1 $90 $10 800% 1) This is a non-GAAP financial measure. For a reconciliation of the metric to
Slide 43: Servicing and Asset Management FY 2021 and 2019 Key Financial Metrics
44 SERVICING AND ASSET MANAGEMENT “SAM” FY 2021 AND 2019 KEY FINANCIAL METRICS 1 (in millions) FY 2021 FY 2019 % Change Total Servicing Portfolio $115,701 $93,225 24% Total Assets Under Management $16,438 $1,958 740% Total Revenues $387 $338 15% Net Income $106 $109 (3%) Adjusted EBITDA1 $335 $303 1
Slide 44: Corporate FY 2021 and 2019 Key Financial Metrics
45 CORPORATE FY 2021 AND 2019 KEY FINANCIAL METRICS (in millions) FY 2021 FY 2019 % Change Total Revenues ($1) $3 (142%) Net Income ($112) ($72) (56%) Adjusted EBITDA1 ($116) ($66) (76%) 1) This is a non-GAAP financial measure. For a reconciliation of the metric to GAAP net income, refer to the appe
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Slide 46: Appendix
Appendix
Slide 47: Consolidated Adjusted EBITDA Reconciliation to Consolidated Net Income
CONSOLIDATED ADJUSTED EBITDA RECONCILIATION TO CONSOLIDATED NET INCOME For the year ended December 31, (in thousands) 2020 2019 2018 2017 2016 2015 2014 2012 2011 Walker & Dunlop Net Income $246,177 $173,373 $161,439 $211,127 $113,897 $82,128 $51,422 $33,772 $34,864 Adjustments: Income tax expense 8
Slide 48: Consolidated Adjusted EBITDA Reconciliation to Consolidated Net Income
CONSOLIDATED ADJUSTED EBITDA RECONCILIATION TO CONSOLIDATED NET INCOME (in thousands) Full year ended December 31, 2021 Full year ended December 31, 2013 Walker & Dunlop Net Income $265,762 $41,530 Adjustments: Income tax expense 86,428 25,257 Interest expense 7,981 3,743 Amortization and depreciati
Slide 49: Estimated Alliant Adjusted EBITDA Reconciliation to Net Income
ESTIMATED ALLIANT ADJUSTED EBITDA RECONCILIATION TO NET INCOME For the year ended (in thousands) December 31, 20221 December 31, 20222 Estimated Alliant Net Income $15,000 $20,000 Adjustments: Income tax expense 5,500 7,500 Interest expense 22,000 22,000 Amortization and depreciation 17,500 10,500 P
Slide 50: Adjusted EBITDA Reconciliation to Net Income by Segment: Capital Markets
ADJUSTED EBITDA RECONCILIATION TO NET INCOME BY SEGMENT (in millions) Full year ended December 31, 2021 Full year ended December 31, 2019 Walker & Dunlop Net Income $272 $136 Adjustments: Income tax expense 89 45 Interest expense on corporate debt _ _ Amortization and depreciation _ _ Provision (ben
Slide 51: Adjusted EBITDA Reconciliation to Net Income by Segment: Servicing & Asset Management
ADJUSTED EBITDA RECONCILIATION TO NET INCOME BY SEGMENT (in millions) Full year ended December 31, 2021 Full year ended December 31, 2019 Walker & Dunlop Net Income $106 $109 Adjustments: Income tax expense 34 36 Interest expense on corporate debt _ _ Amortization and depreciation 205 149 Provision
Slide 52: Adjusted EBITDA Reconciliation to Net Income by Segment: Corporate
ADJUSTED EBITDA RECONCILIATION TO NET INCOME BY SEGMENT (in millions) Full year ended December 31, 2021 Full year ended December 31, 2019 Walker & Dunlop Net Income ($112) ($72) Adjustments: Income tax expense (37) (24) Interest expense on corporate debt 8 14 Amortization and depreciation 5 4 Provis