Ditech — Presentation (December 2018)
27 slides from Ditech's investor presentation, Dec 14, 2018
Slide 1: Stakeholder Discussion Materials
Stakeholder Discussion Materials Exhibit 99.1
Slide 2: Disclaimer
DISCLAIMER CONFIDENTIAL INFORMATION This document has been prepared by Ditech Holding Corporation (“DHCP” or the “Company”), and is for information purposes only. By accepting this document, you hereby acknowledge that (a) the information contained herein (the "Confidential Information") contains ma
Slide 3: Disclaimer (cont.)
DISCLAIMER (cont.) uncertainties relating to the status and future role of GSEs and agencies, and the effects of any changes to the origination and/or servicing requirements of the GSEs, agencies or various regulatory authorities or the servicing compensation structure for mortgage servicers pursuan
Slide 4: Disclaimer (cont.)
DISCLAIMER (cont.) risks and potential costs associated with technology and cybersecurity, including: the risks of technology failures and of cyber-attacks against us or our vendors; our ability to adequately respond to actual or attempted cyber-attacks; and our ability to implement adequate interna
Slide 5: Disclaimer (cont.) Certain Company Forecasts
DISCLAIMER (cont.) CERTAIN COMPANY FORECASTS DHCP does not publicly disclose detailed financial projections and forecasts as to future performance, earnings or other results due to various reasons, including the uncertainty and subjectivity of the underlying assumptions and estimates, the difficulty
Slide 6: Introduction
Introduction On June 27, 2018, Ditech Holding Corporation (“DHCP” or the “Company”) announced that its Board of Directors had initiated a process to evaluate strategic alternatives to enhance stockholder value This review process considered a range of potential strategic alternatives, including: A s
Slide 7: Strategic Alternatives Review Considerations
Strategic Alternatives Review Considerations Business Plan and Financial Performance The Company is continuing to implement its transformational business plan across Servicing, Originations and Reverse The business plan contemplates further cost reductions, operational enhancements and streamlining
Slide 8: Strategic Alternatives
Strategic Alternatives Option A(1) Sale of the entire company to an industry participant who would acquire the Company’s platforms, integrate all operations and assume all assets Based on non-binding and preliminary letters received by the Company, Option A may require concessions from the Second Li
Slide 9: Appendix: 2018 – 2020 Outlook
Appendix: 2018 – 2020 Outlook
Slide 10: Outlook Assumptions
Outlook Assumptions The financial outlook in this presentation is predicated upon: Implementing the Company’s operational initiatives to reduce cost, enhance margins and improve performance Maintaining adequate access to operating debt facilities at commercially satisfactory terms to finance new ori
Slide 11: Consolidated DHCP Outlook
Consolidated DHCP Outlook $ millions Consolidated DHCP Projected Income Statement The Company’s financial outlook assumes growth in origination volume and subservicing and plans to execute cost reduction initiatives at the segment-level and corporate-level Revenue: Consolidated revenue stabilization
Slide 12: Consolidated DHCP Balance Sheet
Consolidated DHCP Balance Sheet Consolidated DHCP Balance Sheet $ millions Please note that numbers may not foot due to rounding Estimated ratios calculated in accordance with the terms of the 2018 Credit Agreement
Slide 13: Projected Cash Flows
Projected Cash Flows DHCP Projected Cash Flows $ millions Represents originated MSRs that have been capitalized upon transfer of loans net of flow MSR sales Represents originations activity, including purchases and originations of residential loans held for sale, proceeds from sale and payments on r
Slide 14: Servicing Segment Overview
Expressed in terms of UPB Servicing Segment Overview Strategy Overview Historical and Projected Mortgage Loan Servicing Portfolio (end of period) $ billions To support the Company’s objective to transition to a subservicer, DHCP has been and projects to continue selling newly originated GSE MSRs on
Slide 15: Servicing Segment Outlook
Servicing Segment Outlook Forecasted improvement in cost to service is supported by headcount expense rationalization efforts as well as unit growth from new subservicing clients DHCP’s projected financial performance is expected to be stable in the Servicing segment throughout the outlook periods W
Slide 16: Originations Segment Overview
Originations Segment Overview Strategy Overview Historical and Projected Funded Origination Volume $ billions The Company’s volume outlook reflects growth in mortgage origination volume despite a projected decline in overall market volume The overall impact is a decline in originations volume throug
Slide 17: Originations Segment Outlook
Originations Segment Outlook Earnings growth is projected in 2019 and 2020 as the Company continues executing on strategic initiatives to grow volume, increase market share and achieve better margins, while reducing costs and improving the overall efficiency of its funding process DHCP’s projected r
Slide 18: Reverse Segment Overview
Reverse Segment Overview Reverse has proven high-touch capabilities and is a best in class reverse servicer but is currently challenged by peaking buyout volumes and recent regulatory changes by HUD Strategy Overview Total Reverse Servicing Portfolio (End of Period) $ billions Projected Monthly GNMA
Slide 19: Reverse Segment Outlook
Reverse Segment Outlook Reverse segment growth primarily driven by a targeted increase in subservicing volume and a decline in buyout volume in 2019E and 2020E Outlook for Reverse from 2018 to 2020 is driven by: Increasing servicing revenue and fees driven by the addition of new subservicing clients
Slide 20: Appendix: Reconciliation of Non-GAAP Items
Appendix: Reconciliation of Non-GAAP Items
Slide 21: Use of Non-GAAP Financial Measures
Use of Non-GAAP Financial Measures 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 EBITDA. Management considers Adjust
Slide 22: Use of Non-GAAP Financial Measures (cont.)
Use of Non-GAAP Financial Measures (cont.) Adjusted EBITDA does not reflect non-cash compensation that is and will remain a key element of our overall long-term incentive compensation package; Adjusted EBITDA does not reflect the change in fair value due to changes in valuation inputs and other assu
Slide 23: Reconciliation of Non-GAAP Items – 2017
Reconciliation of Non-GAAP Items Reconciliation of Non-GAAP Items – 2017 $ millions Please note that numbers may not foot or crossfoot due to rounding
Slide 24: Reconciliation of Non-GAAP Items – 2018 Predecessor and Successor
Reconciliation of Non-GAAP Items Reconciliation of Non-GAAP Items – 2018 Predecessor $ millions Reconciliation of Non-GAAP Items – 2018 Successor $ millions Please note that numbers may not foot or crossfoot due to rounding
Slide 25: Reconciliation of Non-GAAP Items – 2018 Consolidated
Reconciliation of Non-GAAP Items Reconciliation of Non-GAAP Items – 2018 Consolidated $ millions Please note that numbers may not foot or crossfoot due to rounding
Slide 26: Reconciliation of Non-GAAP Items – 2019
Reconciliation of Non-GAAP Items Reconciliation of Non-GAAP Items – 2019 $ millions Please note that numbers may not foot or crossfoot due to rounding
Slide 27: Reconciliation of Non-GAAP Items – 2020
Reconciliation of Non-GAAP Items Reconciliation of Non-GAAP Items – 2020 $ millions Please note that numbers may not foot or crossfoot due to rounding