Ditech — Q2 2018 Earnings Presentation
21 slides from Ditech's earnings presentation, Aug 9, 2018
Slide 1: Second Quarter 2018 Earnings Presentation
Second Quarter 2018 Earnings Presentation August 9, 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation constitute “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. Statements that are not historical fact are forwa
Slide 3: Operations Snapshot
Operations Snapshot (as of and for the three months ended June 30, 2018) Servicing Ditech is the 7th largest non-bank servicer (1) in the industry (by UPB) with approximately 1.5 million loans serviced. $178.4 BN 8.7% $148.1 MN $50.5 MN Serviced UPB 30+ Day Revenue Pre-tax Income 41% owned; 59% subs
Slide 4: Financial Overview
Financial Overview Key Metrics Expense Trend ($ in millions) Q2 2018 Q1 2018 Q2 2017 Expenses ($MN) Reorganization Costs ($MN) Headcount (FTEs) Total revenues $ 198.5 $ 278.5 $ 208.8 Includes ~$61 MN related Total expenses 251.7 279.4 292.6 500 to debt restructuring and 4,800 reorganization costs Pr
Slide 5: Servicing Second Quarter Highlights
Servicing Second Quarter Highlights Servicing Portfolio as of 6/30/18 (UPB in $BN) ($ in millions) Q2 2018 Q1 2018 Variance Q2 2017 Variance Serviced Subserviced Revenues $ 148.1 $ 202.4 $ (54.3) $ 117.4 $ 30.7 Total expenses (1) 100.8 116.2 (15.4) 150.7 (49.9) Q2 2018 Q1 2018 Q2 2017 Pre-tax income
Slide 6: Originations Second Quarter Highlights
Originations Second Quarter Highlights Key Operating Metrics ($ in millions) Q2 2018 Q1 2018 Variance Q2 2017 Variance ($ in billions) Q2 2018 Q1 2018 Q2 2017 Revenues $ 47.8 $ 61.3 $ (13.5) $ 80.5 $ (32.7) Pull-through adjusted locked volume $ 2.8 $ 2.8 $ 4.2 Total expenses (1) 56.3 74.7 (18.4) 56.
Slide 7: Illustrative Opportunity: Cash-out Refinance
Illustrative Opportunity: Cash-out Refinance(1) (2) ~1,500,000 Serviced Loans 280,000 426,000 112,000 Marketable with Equity Marketable with Equity + Marketable with Equity + ($12 BN of Equity) Consumer Debt + Same Consumer Debt Term $9.7 BN 280,000 $3.9 BN Consumer Debt Marketable with Consumer Deb
Slide 8: Reverse Second Quarter Highlights
Reverse Second Quarter Highlights Overview ($ in millions) Q2 2018 Q1 2018 Variance Q2 2017 Variance • Pre-tax loss of $29.6 MN in Q2 2018 Revenues $ 5.8 $ 18.0 $ (12.2) $ 15.4 $ (9.6) ◦ Revenue decreased $9.6 MN from Q2 2017, Total expenses (1) 35.4 38.3 (2.9) 29.0 6.4 mainly due to fair value adju
Slide 9: Balance Sheet and Liquidity
Balance Sheet and Liquidity Balance Sheet Snapshot Liquidity & Funding ($ in millions) 6/30/2018 3/31/2018 • During the current quarter, cash and cash equivalents Cash and cash equivalents $ 218.6 $ 216.8 remained relatively constant due to: Servicing rights 689.2 734.7 ◦ Proceeds of $74.1 MN from b
Slide 10: 2018 Company Initiatives
2018 Company Initiatives Servicing • Reduction of spans/layers and excess capacity; ~50 FTE • Process re-engineering: headcount reduction from Q1 to Q2 ◦ Advance claim reimbursement rates have increased • Decreased 60+ day delinquency rate for GSEs & GNMA in Q2 as compared to Q1 portfolio from 5.29%
Slide 11: Appendix: Supplemental Information and Reconciliations
Appendix: Supplemental Information and Reconciliations
Slide 12: Reconciliation of Non-GAAP Measures Q2 2018
Reconciliation of Non-GAAP Measures Q2 2018 Q2 2018 Reverse Corporate Total ($ in thousands) Servicing Originations Mortgage and Other Consolidated Income (loss) before income taxes $ 50,513 $ (8,428) $ (29,648) $ (52,658) $ (40,221) Adjustments to income (loss) before income taxes Changes in fair v
Slide 13: Reconciliation of Non-GAAP Measures Q1 2018
Reconciliation of Non-GAAP Measures Q1 2018 Q1 2018 Reverse Corporate Total ($ in thousands) Servicing Originations Mortgage and Other Consolidated Income (loss) before income taxes $ 71,747 $ (3,805) $ (12,802) $ 411,889 $ 467,029 Adjustments to income (loss) before income taxes Reorganization item
Slide 14: Reconciliation of Non-GAAP Measures Q2 2017
Reconciliation of Non-GAAP Measures Q2 2017 Q2 2017 Reverse Corporate Total ($ in thousands) Servicing Originations Mortgage and Other Consolidated Income (loss) before income taxes $ (33,849) $ 23,784 $ (13,634) $ (68,916) $ (92,615) Adjustments to income (loss) before income taxes Changes in fair
Slide 15: Securitized Reverse Mortgages and VIEs
Securitized Reverse Mortgages and VIEs (1) As of June 30, 2018 ($ in millions) Reverse Mortgage - Securitized Portfolio Assets $ 8,209.0 Net fair value liability of $(85.7) MN in securitized Reverse Mortgage portfolio Liabilities 8,294.7 $ (85.7) Residual Trusts Assets $ 428.6 $8.2 MN of residual in
Slide 16: Definitions and Assumptions: Cash-out Refinance Opportunity
Definitions and Assumptions: Cash-out Refinance Opportunity Notes/definitions: “Cash-out” means a refinancing of an existing mortgage where the borrower receives cash in connection with the refinancing where the cash represents and is limited to the equity the borrower had in their home prior to the
Slide 17: Use of Non-GAAP Measures and Definitions
Use of Non-GAAP Measures and Definitions We manage our company in three reportable segments: Servicing, Originations and Reverse Mortgage. We evaluate the performance of our business segments through the following measures: income (loss) before income taxes and Adjusted Earnings (Loss). Management c
Slide 18: Forward-Looking Statements
Forward-Looking Statements Certain statements in this presentation constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Statements that are not historical fact are forward-looking statements. Certain of these forward-loo
Slide 19: Forward-Looking Statements
Forward-Looking Statements • our ability to maintain our loan servicing, loan origination or collection agency licenses, or any other licenses necessary to operate our businesses, or changes to, or our ability to comply with, our licensing requirements; • our ability to comply with the terms of the
Slide 20: Forward-Looking Statements
Forward-Looking Statements • local, regional, national and global economic trends and developments in general, and local, regional and national real estate and residential mortgage market trends in particular, including the volume and pricing of home sales and uncertainty regarding the levels of mor
Slide 21: Forward-Looking Statements
Forward-Looking Statements • risks related to our relationship with Walter Energy and uncertainties arising from or relating to its bankruptcy filings and liquidation proceedings, including potential liability for any taxes, interest and/or penalties owed by the Walter Energy consolidated group for