Walker & Dunlop, Inc · NYSE:WD
Walker & Dunlop — Q4 2022 Earnings Presentation
22 slides from Walker & Dunlop's earnings presentation, Feb 21, 2023
Slide 1: Fourth Quarter and Full-Year 2022 Earnings
Q4 FOURTH QUARTER AND FULL -YEAR 2022 EARNINGS February 21, 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: Top 10 Fannie Mae Lenders with Highest Business Volumes Since 2018
T O P 1 0 FA N N I E M A E LENDERS WITH HIGHEST BUSINESS VOLUMES SINCE 2018 3 Source: CoStar
Slide 4: Top 10 Fannie Mae Lenders with Highest Business Volumes Since 2018
T O P 1 0 FA N N I E M A E LENDERS WITH HIGHEST BUSINESS VOLUMES SINCE 2018 4 Source: CoStar
Slide 5: 13% Market Share Makes W&D Top GSE Lender for 2022
13% MARKET SHARE MAKES W&D TOP GSE LENDER FOR 2022 Combined GSE Market Share ($ in millions) 12.7% $18,000,000,000 12.3% $16,000,000,000 11.4% 10.2% $14,000,000,000 9.8% $12,000,000,000 $10,000,000,000 $19,606 $18,070 $8,000,000,000 $15,121 $15,891 $13,959 $6,000,000,000 $4,000,000,000 $2,000,000,00
Slide 6: WDIS Growth Outperforms Broader Multifamily Sales Market
WDIS GROWTH OUTPERFORMS BROADER M U LT I FA M I LY S A L E S M A R K E T Top Brokers of Multifamily Properties in 2022 Brokers representing sellers in deals of at least $25 million 2022 Amount 2021 Amount Market ’21 – ’22 Market Share Company (millions) (millions) Share Change 1 CBRE $ 25,086 14.4%
Slide 7: Opportunity Ahead for W&D to Continue Gaining Market Share
O P P O RT U N I T Y A H E A D F O R W & D TO C O N T I N U E GAINING MARKET SHARE Total Multifamily Loan Originations Total Commercial Loan Originations (in billions) (in billions) $891 $906 $487 $486 $459 $804 $384 $684 2021 2022 2023 Forecast 2024 Forecast 2021 2022 2023 Forecast 2024 Forecast 7
Slide 8: Significant Market Growth Ahead in 2024
SIGNIFICANT MARKET GROWTH AHEAD IN 2024 Total Multifamily Loan Originations Total Commercial Loan Originations (in billions) (in billions) $891 $906 $487 $486 $459 $804 $384 $684 2021 2022 2023 Forecast 2024 Forecast 2021 2022 2023 Forecast 2024 Forecast 8 Source: Mortgage Banker’s Association
Slide 9: W&D Outperforms Peers Across Various Efficiency Metrics
W & D O U T P E R F O R M S P E E R S E T A C R O S S VA R I O U S EFFICIENCY METRICS Annual Revenue Per Employee1 Efficiency Ratio3 Adjusted EBITDA5 margin 93% 93% 92% $0.9 86% 26% 80% 21% 60% 17% 17% $0.5 $0.5 13% 14% $0.4 $0.3 $0.2 2 2 2 CIGI CWK JLL NMRK CBRE WD CBRE JLL CWK CIGI NMRK WD CWK CIG
Slide 10: Full-Year 2022 Results
2022 FINANCIAL PERFORMANCE FULL-YEAR 2022 RESULTS Total Transaction Volumes DOWN 7% Total Revenues FLAT Adjusted EBITDA UP 5% Diluted Earnings Per Share DOWN 22% Operating Margin 21% 8 Return on Equity 13%
Slide 11: Capital Markets FY 2022 Key Financial Metrics
C A P I TA L M A R K E T S FY 2022 KEY FINANCIAL METRICS (in thousands) 2022 2021 % Change Total Transaction Volumes $63,338,638 $68,165,817 (7%) Total Revenues $708,834 $882,024 (20%) Net Income $156,078 $262,194 (40%) Adjusted EBITDA $36,201 $84,626 (57%) • Decline in total revenues due primarily
Slide 12: Servicing & Asset Management FY 2022 Key Financial Metrics
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 ” ) FY 2022 KEY FINANCIAL METRICS (in thousands) 2022 2021 % Change Total Revenues $507,430 $378,477 34% Income from Operations $169,564 $139,084 22% Net Income $139,691 $105,142 33% Adjusted EBITDA $410,429 $333,292 23% • Ended 2022 with to
Slide 13: Escrow Earnings and Term Loan Upsize Provide Strategic Capital Flexibility
ESCROW EARNINGS AND TERM LOAN UPSIZE P R O V I D E S T R AT E G I C C A P I T A L F L E X I B I L I T Y Interest Expense and SAM Escrow Earnings Corporate Debt to Adjusted EBITDA ratio2 + $60- $80 (in millions) $120-$130 2.4x 2.2x + $19 $53 $50- $60 $34 FLAT $8 $8 FY 2021 FY 2022 FY 2023 Forecast 1
Slide 14: 2023 Financial Outlook
2023 FINANCIAL OUTLOOK FULL-YEAR 2023 TARGETS Diluted Earnings Per Share FLAT Adjusted Core Earnings Per Share1 DOUBLE-DIGIT GROWTH Adjusted EBITDA DOUBLE-DIGIT GROWTH Operating Margin LOW-TWENTIES Return on Equity LOW-TEENS 14 1) This is a non-GAAP financial measure. For a reconciliation of the mea
Slide 15: Adjusted Core EPS - A New Perspective to W&D's Financial Performance
ADJUSTED CORE EPS- A NEW PERSPECTIVE TO W&D’S FINANCIAL PERFORMANCE For the year ended December 31, 2022 2021 2020 (in thousands) Adjusted Core EPS $6.29 Walker & Dunlop Net Income $213,820 $265,762 $246,177 $5.60 Adjustments: Provision (benefit) for credit losses (11,978) (13,287) 37,479 $4.19 Net
Slide 16: Appendix
APPENDIX
Slide 17: 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 A T I O N T O C O N S O L I D A T E D N E T I N C O M E A N D C O N S O L I D AT E D ADJUSTED EBITDA MARGIN TO NET INCOME MARGIN (in thousands) Year ended December 31, 2022 Walker & Dunlop Net Income $213,820 Adjustments: Income ta
Slide 18: 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 (in thousands) Year ended December 31, 2022 Year ended December 31, 2021 Walker & Dunlop Net Income $156,078 $262,194 Adjustments: Income tax expense 42,153 85,333 Interest expense on corporate debt 8,64
Slide 19: 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 (in thousands) Year ended December 31, 2022 Year ended December 31, 2021 Walker & Dunlop Net Income $139,691 $105,142 Adjustments: Income tax expense 35,859 34,144 Interest expense on corp
Slide 20: Corporate Debt to Adjusted EBITDA Reconciliation
C O R P O R AT E D E B T T O A D J U S T E D E B I T D A R E C O N C I L I A T I O N T O C O R P O R AT E D E B T T O N E T INCOME Year ended Year ended (in thousands) December 31, 2022 December 31, 2021 Walker & Dunlop Net Income $213,820 $265,762 Adjustments: Income tax expense 56,034 86,428 Inter
Slide 21: Adjusted Core Net Income and Adjusted Core EPS Reconciliation
ADJUSTED CORE NET INCOME AND ADJUSTED C O R E E P S R E C O N C I L I AT I O N T O N E T I N C O M E Three months Three months Three months Three months Twelve months For the Three months Three months Three months Three months ended ended ended ended ended ended June ended March ended June ended Mar
Slide 22: 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 (in thousands) Year ended December 31, 2022 Year ended December 31, 2021 Walker & Dunlop Net Income $213,820 $265,762 Adjustments: Income tax expense 56,034 86,428 Interest expe