Walker & Dunlop, Inc · NYSE:WD
Walker & Dunlop — Q2 2022 Earnings Presentation
21 slides from Walker & Dunlop's earnings presentation, Aug 4, 2022
Slide 1: Second Quarter 2022 Earnings
Q2 SECOND QUARTER 2022 EARNINGS August 4, 2022
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: Q2'22 Consolidated Key Performance Metrics
E X C E P T I O N A L F I N A N C I A L R E S U LT S R E F L E C T C O N T I N U E D D I V E R S I F I C AT I O N O F P L AT F O R M Q2’22 Consolidated Key Performance Metrics Total Transaction Volume Total Revenues Adjusted EBITDA1 (in millions) (in thousands) (in thousands) $94,844 $22,543 $340,84
Slide 4: Transformation towards cash-and-carry businesses generates strong cash revenues
T R A N S F O R M A T I O N T O WA R D S C A S H - A N D - C A R R Y B U S I N E S S E S G E N E R AT E S S T R O N G C A S H R E V E N U E S Total Revenues (in thousands) $340,848 15% $281,411 22% +21% 85% 78% Q2'21 Q2'22 Cash Revenues Non-Cash Revenues 1 4 1) Fair value of the expected net cash fl
Slide 5: Surge in debt brokerage and property sales has diversified total transaction volume
S U R G E I N D E B T B R O K E R A G E A N D P R O P E RT Y S A L E S H A S D I V E R S I F I E D T O TA L T R A N S A C T I O N V O L U M E Debt Brokerage Volume Property Sales Volume (in millions) (in millions) $7,892 $9,258 +47% $6,281 +136% $3,342 +320% +648% $1,496 $447 Q2'20 Q2'21 Q2'22 Q2'20
Slide 6: People, Technology, Brand Q2 2022
PEOPLE Q2 2022 BRAND 68% of refinancing volume1 was new loans 25% of total transaction volume was with new clients 6 1) Represents refinancings that were added to Walker & Dunlop TECHNOLOGY 6 servicing portfolio in Q2’22
Slide 7: Strength in transaction volume propels GSE market share
STRENGTH IN TRANSACTION VOLUME PROPELS GSE MARKET SHARE Combined GSE Market Share $19,606 $18,000,000,000 $15,891 13.9% $16,000,000,000 $15,121 $13,959 12.3% $14,000,000,000 11.4% 10.2% $12,000,000,000 9.8% $10,000,000,000 $8,932 $8,000,000,000 $6,000,000,000 $4,000,000,000 $2,000,000,000 $0 2018 20
Slide 8: Business at the intersection of finance, real estate services, and technology
BUSINESS AT THE INTERSECTION OF FINANCE, REAL ESTATE SERVICES, AND TECHNOLOGY 8
Slide 9: W&D revenue and adjusted EBITDA growth in line with leading CRE technology firm
W&D REVENUE AND ADJUSTED EBITDA1 GROWTH IN LINE WITH LEADING CRE TECHNOLOGY FIRM W&D Total Annual Revenues W&D Adjusted EBITDA (in millions) $1,259 (in millions) $310 17% $575 5-YEAR COMPOUND $130 ANNUAL GROWTH RATE1 $152 $32 2011 2016 2021 2011 2016 2021 CoStar Annual Revenues CoStar Adjusted EBITD
Slide 10: W&D adjusted EBITDA stronger than leading CRE services peers
W&D ADJUSTED EBITDA1 STRONGER THAN L E A D I N G C R E S E RV I C E S P E E R S CBRE Adjusted EBITDA3 $3,074 (in millions) $1,561 15% 5-YEAR FY 2021 Adjusted EBITDA Margin COMPOUND ANNUAL GROWTH RATE2 2016 2021 25% JLL Adjusted EBITDA4 $1,497 (in millions) 18% 18% 19% $658 5-YEAR COMPOUND ANNUAL GRO
Slide 11: Capital Markets: Q2 Key Financial Metrics
C A P I TA L M A R K E T S Q2 KEY FINANCIAL METRICS (in thousands) Q2’22 Q2’21 % Change Total Revenues $208,022 $195,905 6% Net Income $47,240 $54,556 (13%) Adjusted EBITDA1 $16,880 $14,215 19% Operating Margin 31% 37% • Stagnant growth in total revenues due to declining HUD volumes offsetting reven
Slide 12: Servicing & Asset Management (SAM): Q2 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 ” ) Q2 KEY FINANCIAL METRICS (in thousands) Q2’22 Q2’21 % Change Total Revenues $132,551 $85,155 56% Net Income $37,520 $22,560 66% Adjusted EBITDA1 $105,062 $73,703 43% Operating Margin 38% 35% • Ended Q2’22 with total managed portfolio of
Slide 13: Corporate: Q2 Key Financial Metrics
C O R P O R AT E Q2 KEY FINANCIAL METRICS (in thousands) Q2’22 Q2’21 % Change Total Revenues $275 $351 (22%) Net Income ($30,474) ($21,058) 45% Adjusted EBITDA1 ($27,098) ($21,404) 27% • Segment net income and adjusted EBITDA will typically be negative for the Corporate segment 13 1) This is a non-G
Slide 14: QTD and YTD Consolidated Key Financial Metrics
Q T D A N D Y T D C O N S O L I D AT E D K E Y F I N A N C I A L M E T R I C S Operating Margin Return on Equity Personnel Expense as % of Revenues 26% 50% 18% 49% 14% 22% Q2 2022 Q2'21 Q2'22 Q2'21 Q2'22 Q2'21 Q2'22 29% 19% 47% 47% 16% YTD 25% 2022 YTD 2021 YTD 2022 YTD 2021 YTD 2022 YTD 2021 YTD 20
Slide 15: Updated Financial Outlook: Full-Year 2022 Targets
U P D AT E D 2 0 2 2 F I N A N C I A L O U T L O O K FULL-YEAR 2022 TARGETS Total Revenues DOUBLE DIGIT GROWTH Diluted Earnings Per Share FLAT TO 10% GROWTH Adjusted EBITDA DOUBLE DIGIT GROWTH Operating Margin 24% to 27% Return on Equity 15% to 18% 15
Slide 16: Appendix
APPENDIX
Slide 17: Consolidated Adjusted EBITDA Reconciliation to 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 Twelve months Twelve months Twelve months Three months Three months ended ended ended (in thousands) e
Slide 18: Adjusted Net Income and Adjusted Diluted EPS Reconciliation
ADJUSTED NET INCOME AND ADJUSTED D I L U T E D 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 ended June 30, Three months ended June 30, (in thousands) 2022 2021 Walker & Dunlop Net Income $54,286 $56,058 Adjustments: Amortization and depreciation 61,103 48,510 Provision (benefi
Slide 19: 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) Three months ended June 30, 2022 Three months ended June 30, 2021 Walker & Dunlop Net Income $47,240 $54,556 Adjustments: Income tax expense 16,476 17,739 Amortization and depreciation 810
Slide 20: Adjusted EBITDA Reconciliation to Net Income by Segment: SAM
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 SAM Three months ended June 30, Three months ended June 30, (in thousands) 2022 2021 Walker & Dunlop Net Income $37,520 $22,560 Adjustments: Income tax expense 12,850 7,475 Amortization and depreciation 58,760 47,395 Pr
Slide 21: 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 ended June 30, Three months ended June 30, (in thousands) 2022 2021 Walker & Dunlop Net Income ($30,474) ($21,058) Adjustments: Income tax expense (9,823) (6,974) Interest expense on corporate deb