Walker & Dunlop, Inc · NYSE:WD
Walker & Dunlop — Q2 2023 Earnings Presentation
22 slides from Walker & Dunlop's earnings presentation, Aug 3, 2023
Slide 1: Second Quarter 2023 Earnings
Q2 SECOND QUARTER 2023 EARNINGS August 3, 2023
Slide 2: Forward-Looking Statements
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 similar
Slide 3: Rapidly Rising Interest Rates Have Disrupted Capital Flows and Transaction Activity
R A P I D L Y R I S I N G I N T E R E S T R A T E S H AV E D I S R U P T E D C A P I TA L F L O W S A N D T R A N S A C T I O N A C T I V I T Y (volume in millions) $22,543 $25,000 6.00% $16,919 5.00% $20,000 $12,667 4.00% $15,000 $11,210 $8,412 3.00% $6,720 $10,000 2.00% $5,000 1.00% $0 0.00% WD To
Slide 4: Financial Performance Bolstered by Recurring Revenues
FINANCIAL PERFORMANCE BOLSTERED BY RECURRING REVENUES Q2’23 Consolidated Key Performance Metrics Total Transaction Volume Total Revenues Adjusted EBITDA1 (in millions) (in thousands) (in thousands) $22,543 $340,848 $94,844 $272,615 $70,501 $8,412 Q2'22 Q2'23 Q2'22 Q2'23 Q2'22 Q2'23 4 1) This is a no
Slide 5: Financial Performance Bolstered by Recurring Revenues (EPS)
FINANCIAL PERFORMANCE BOLSTERED BY RECURRING REVENUES Q2’23 Consolidated Key Performance Metrics Cont’d. Diluted EPS Adjusted Core EPS1 $1.61 $1.74 $0.98 $0.82 Q2'22 Q2'23 Q2'22 Q2'23 5 1) This is a non-GAAP financial measure. For a reconciliation of the measure to Diluted EPS, refer to the appendix
Slide 6: Q2 Total Transaction Volumes Grew Sequentially
Q 2 T O TA L T R A N S A C T I O N V O L U M E S G R E W 2 5 % S E Q U E N T I A L LY Total Transaction Volume (in millions) $3,500 $3,316 $3,000 $2,500 $2,364 $2,231 $2,000 $1,895 $1,504 $1,500 $1,359 $1,213 $976 $1,000 $500 $148 $128 $- Fannie Mae Freddie Mac HUD Brokered Property Sales Q1'23 Q2'2
Slide 7: Capital Markets: Q2'23 Key Financial Metrics Year-over-Year
C A P I TA L M A R K E T S Q2’23 KEY FINANCIAL METRICS YEAR-OVER-YEAR Q2’23 Q2’22 % Change (in thousands) Total Transaction Volumes $8,412,218 $22,543,020 (63%) Total Revenues $125,985 $215,618 (42%) Net Income $16,107 $50,259 (68%) Adjusted EBITDA1 ($10,334) $22,830 (145%) • Decline in total revenu
Slide 8: Capital Markets: Q2'23 Key Financial Metrics Quarter-over-Quarter
C A P I TA L M A R K E T S Q2’23 KEY FINANCIAL METRICS QUARTER-OVER-QUARTER Q2’23 Q1’23 % Change (in thousands) Total Transaction Volumes $8,412,218 $6,720,480 25% Total Revenues $125,985 $104,004 21% Net Income $16,107 $504 3,096% Adjusted EBITDA1 ($10,334) $(18,687) 45% • Increase in total revenue
Slide 9: Servicing & Asset Management: Q2'23 Key Financial Metrics Year-over-Year
S E RV I C I N G & A S S E T M A N A G E M E N T ( “ S A M ” ) Q2’23 KEY FINANCIAL METRICS YEAR-OVER-YEAR (in thousands) Q2’23 Q2’22 % Change Total Revenues $142,840 $124,955 14% Net Income $35,732 $33,367 7% Adjusted EBITDA1 $108,459 $103,371 5% • Ended Q2’23 with total managed portfolio of $143.5
Slide 10: Corporate: Q2'23 Key Financial Metrics Year-over-Year
C O R P O R AT E Q2’23 KEY FINANCIAL METRICS YEAR-OVER-YEAR (in thousands) Q2’23 Q2’22 % Change Total Revenues $3,790 $275 1,278% Net Income ($24,204) ($29,340) (18%) Adjusted EBITDA1 ($27,624) ($31,357) (12%) • Strong growth in total revenues due to increase in interest income from our corporate ca
Slide 11: W&D's At-Risk Portfolio Has Strong Credit Fundamentals
W & D ’ S AT- R I S K P O R T F O L I O H A S S T R O N G C R E D I T F U N D A M E N TA L S At-Risk Servicing Portfolio — Key Credit Metrics WAVG Debt Service Coverage Ratio1 2.32x Underwritten Loan-to-Value2 61% Fixed-Rate Loans3 90% Maturities Over Next 18 Months $1.5B Defaulted Loans3 0.07% 1) W
Slide 12: YTD 2023 Financial Performance Reflects Challenging Market Environment
YTD 2023 FINANCIAL PERFORMANCE REFLECTS CHALLENGING MARKET ENVIRONMENT YTD’23 Consolidated Key Performance Metrics Total Transaction Volumes Adjusted EBITDA1 Adjusted Core EPS2 (in thousands) (in thousands) $35,209,727 $157,480 $2.83 $138,476 $2.14 $15,132,698 YTD 2022 YTD 2023 YTD 2022 YTD 2023 YTD
Slide 13: Full-Year 2023 Financial Outlook Ranges
FULL-YEAR 2023 FINANCIAL OUTLOOK RANGES1 LOW END HIGH END Diluted Earnings Per Share DOWN 35% FLAT Adjusted Core Earnings Per Share DOWN NO MORE THAN 10% DOUBLE-DIGIT GROWTH Adjusted EBITDA DOWN NO MORE THAN 10% DOUBLE-DIGIT GROWTH Operating Margin MID-TEENS LOW-TWENTIES Return on Equity HIGH SINGLE
Slide 14: Where We Are Going
WHERE WE ARE GOING GROW DEBT FINANCING VOLUME $60B+ Origination Volume / $5B+ Small Balance Loans / $160B Servicing Portfolio GROW PROPERTY SALES VOLUME $25B+ Sales Volume GROW INVESTMENT BANKING AND ASSET MANAGEMENT BUSINESSES $10B+ Assets Under Management ENVIRONMENTAL, SOCIAL AND GOVERNANCE Incre
Slide 15: Appendix
APPENDIX
Slide 16: SAM: Q2'23 Key Financial Metrics Quarter-over-Quarter
SAM Q2’23 KEY FINANCIAL METRICS QUARTER-OVER-QUARTER (in thousands) Q2’23 Q1’23 % Change Total Revenues $142,840 $133,196 7% Net Income $35,732 $51,084 (30%) Adjusted EBITDA1 $108,459 $112,975 (4%) • Ended Q2’23 with total managed portfolio of $143.5 billion, including $126.6 billion servicing portf
Slide 17: Corporate: Q2'23 Key Financial Metrics Quarter-over-Quarter
C O R P O R AT E Q2’23 KEY FINANCIAL METRICS QUARTER-OVER-QUARTER (in thousands) Q2’23 Q1’23 % Change Total Revenues $3,790 $1,546 145% Net Income ($24,204) ($24,923) (3%) Adjusted EBITDA1 ($27,624) ($26,313) 5% • Strong growth in total revenues due to increase in interest income from our corporate
Slide 18: Consolidated Adjusted EBITDA Reconciliation to Consolidated Net Income
C O N S O L I D AT E D A D J U S T E D E B I T D A R E C O N C I L I AT I O N T O C O N S O L I D AT E D N E T I N C O M E Three months Three months Six months Three months ended Six months ended (in thousands) ended March 31, ended June 30, ended June 30, June 30, 2023 June 30, 2022 2023 2022 2023
Slide 19: Adjusted Core EPS Reconciliation
A D J U S T E D C O R E E P S R E C O N C I L I AT I O N Three months Three months Three months Six months Six months (in thousands), except per share amounts ended June 30, ended March 31, ended June 30, ended June 30, ended June 30, 2023 2023 2022 2023 2022 Walker & Dunlop Net Income $27,635 $26,6
Slide 20: Adjusted EBITDA Reconciliation to Net Income by Segment: Capital Markets
A D J U S T E D E B I T D A R E C O N C I L I AT I O N T O NET INCOME BY SEGMENT Capital Markets Three months Three months Three months Six months Six months (in thousands) ended June 30. ended March 31, ended June 30, ended June 30, ended June 30, 2023 2023 2022 2023 2022 Walker & Dunlop Net Income
Slide 21: Adjusted EBITDA Reconciliation to Net Income by Segment: Servicing and Asset Management
A D J U S T E D E B I T D A R E C O N C I L I AT I O N T O NET INCOME BY SEGMENT Servicing and Asset Management Three months Three months Three months Six months Six months (in thousands) ended June 30. ended March 31, ended June 30, ended June 20, ended June 30, 2023 2023 2022 2023 2022 Walker & Du
Slide 22: Adjusted EBITDA Reconciliation to Net Income by Segment: Corporate
A D J U S T E D E B I T D A R E C O N C I L I AT I O N T O NET INCOME BY SEGMENT Corporate Three months Three months Three months Six months Six months (in thousands) ended June 30. ended March 31, ended June 30, ended June 30, ended June 30, 2023 2023 2022 2023 2022 Walker & Dunlop Net Income ($24,