SECOND QUARTER 2022 HIGHLIGHTS
YEAR-TO-DATE 2022 HIGHLIGHTS
BETHESDA, Md., Aug. 4, 2022 /PRNewswire/ -- Walker & Dunlop, Inc. (NYSE: WD) (the "Company" or "W&D") reported total revenues of $340.8 million for the second quarter of 2022, an increase of 21% year over year. Second quarter total transaction volume was $22.5 billion, up 67% year over year, reflecting the Company's expanding brand and ability to meet more of its client's needs. Net income for the second quarter of 2022 was $54.3 million or $1.61 per diluted share, down 3% and 7%, respectively, from the second quarter of 2021, predominantly due to a decrease in non-cash mortgage servicing rights revenues. Second quarter 2022 adjusted EBITDA1 was $94.8 million, up 43% over the same period in 2021, driven by growth in cash revenues from services businesses. The Company's Board of Directors declared a dividend of $0.60 per share for the third quarter of 2022. The Company had $151.3 million of cash as of June 30, 2022.
"Our exceptional second quarter financial results demonstrate the strong return on investment we've made in our people, brand, and technology over the past few years," commented Willy Walker, Chairman and CEO. "The dramatic growth in our origination volume led to adjusted EBITDA growth of 43% year over year, reflecting our transition from a lending-centric mortgage bank to a broader, technology-enabled financial services company."
Mr. Walker continued, "The multifamily market continues to perform exceptionally well from a credit and fundamentals standpoint. W&D enters the second half of 2022 with very strong pipelines across our business, particularly with the GSEs and HUD which supply counter-cyclical liquidity as other capital providers struggle to digest rising rates and recessionary fears. Walker & Dunlop's business model is designed to perform through all cycles, with outperformance in both the pandemic-hobbled year of 2020 and Fed-induced free money year of 2021 as two dramatically different examples. The investments we've made in people, brand and technology have made us more relevant to our clients today than ever before, driving dramatic growth in our banking and brokerage volumes. The breadth of our platform, investments we continue to make in emerging, technologically-driven businesses, and corporate culture set us apart from the competition and will continue to drive financial success over the coming years."
CONSOLIDATED SECOND QUARTER 2022 OPERATING RESULTS
TRANSACTION VOLUMES | ||||||||||||
(dollars in thousands) | Q2 2022 | Q2 2021 | $ Variance | % Variance | ||||||||
Fannie Mae | $ | 3,918,400 | $ | 1,911,976 | $ | 2,006,424 | 105 | % | ||||
Freddie Mac | 1,141,034 | 1,003,319 | 137,715 | 14 | ||||||||
Ginnie Mae - HUD | 201,483 | 672,574 | (471,091) | (70) | ||||||||
Brokered (2) | 9,258,490 | 6,280,578 | 2,977,912 | 47 | ||||||||
Principal Lending and Investing (3) | 131,551 | 318,237 | (186,686) | (59) | ||||||||
Debt financing volume | $ | 14,650,958 | $ | 10,186,684 | $ | 4,464,274 | 44 | % | ||||
Property sales volume | 7,892,062 | 3,341,532 | 4,550,530 | 136 | ||||||||
Total transaction volume | $ | 22,543,020 | $ | 13,528,216 | $ | 9,014,804 | 67 | % |
Discussion of Results:
MANAGED PORTFOLIO | ||||||||||||
(dollars in thousands, unless otherwise noted) | Q2 2022 | Q2 2021 | $ Variance | % Variance | ||||||||
Fannie Mae | $ | 57,122,414 | $ | 51,077,660 | $ | 6,044,754 | 12 | % | ||||
Freddie Mac | 36,886,666 | 37,887,969 | (1,001,303) | (3) | ||||||||
Ginnie Mae - HUD | 9,570,012 | 9,904,246 | (334,234) | (3) | ||||||||
Brokered | 15,190,315 | 13,129,969 | 2,060,346 | 16 | ||||||||
Principal Lending and Investing | 252,100 | 276,738 | (24,638) | (9) | ||||||||
Total Servicing Portfolio | $ | 119,021,507 | $ | 112,276,582 | $ | 6,744,925 | 6 | % | ||||
Assets under management | 16,692,556 | 1,801,577 | 14,890,979 | 827 | ||||||||
Total Managed Portfolio | $ | 135,714,063 | $ | 114,078,159 | $ | 21,635,904 | 19 | % | ||||
Custodial escrow account balance at period end (in billions) | $ | 2.3 | $ | 3.0 | ||||||||
Weighted-average servicing fee rate (basis points) | 24.9 | 24.5 | ||||||||||
Weighted-average remaining servicing portfolio term (years) | 8.9 | 9.2 |
Discussion of Results:
KEY PERFORMANCE METRICS | ||||||||||||
(dollars in thousands, except per share amounts) | Q2 2022 | Q2 2021 | $ Variance | % Variance | ||||||||
Walker & Dunlop net income | $ | 54,286 | $ | 56,058 | $ | (1,772) | (3) | % | ||||
Adjusted EBITDA | 94,844 | 66,514 | 28,330 | 43 | ||||||||
Diluted EPS | $ | 1.61 | $ | 1.73 | $ | (0.12) | (7) | % | ||||
Operating margin | 22 | % | 26 | % | ||||||||
Return on equity | 14 | 18 | ||||||||||
Key Expense Metrics (as a percentage of total revenues): | ||||||||||||
Personnel expenses | 49 | % | 50 | % | ||||||||
Other operating expenses | 11 | 7 |
Discussion of Results:
KEY CREDIT METRICS | ||||||||||||
(dollars in thousands) | Q2 2022 | Q2 2021 | $ Variance | % Variance | ||||||||
At-risk servicing portfolio (7) | $ | 51,905,985 | $ | 46,866,767 | $ | 5,039,218 | 11 | % | ||||
Maximum exposure to at-risk portfolio (8) | 10,525,093 | 9,517,609 | 1,007,484 | 11 | ||||||||
Defaulted loans | $ | 78,659 | $ | 48,481 | $ | 30,178 | 62 | % | ||||
Key credit metrics (as a percentage of the at-risk portfolio): | ||||||||||||
Defaulted loans | 0.15 | % | 0.10 | % | ||||||||
Allowance for risk-sharing | 0.09 | 0.13 | ||||||||||
Key credit metrics (as a percentage of maximum exposure): | ||||||||||||
Allowance for risk-sharing | 0.46 | % | 0.63 | % |
Discussion of Results:
SECOND QUARTER 2022 - FINANCIAL RESULTS BY SEGMENT
FINANCIAL RESULTS - CAPITAL MARKETS | ||||||||||||
(dollars in thousands) | Q2 2022 | Q2 2021 | $ Variance | % Variance | ||||||||
Loan origination and debt brokerage fees, net | $ | 102,085 | $ | 105,583 | $ | (3,498) | (3) | % | ||||
Fair value of expected net cash flows from servicing, net ("MSR income") | 51,949 | 61,849 | (9,900) | (16) | ||||||||
Property sales broker fees | 46,386 | 22,454 | 23,932 | 107 | ||||||||
Net warehouse interest income, LHFS | 3,707 | 2,884 | 823 | 29 | ||||||||
Other revenues | 3,895 | 3,135 | 760 | 24 | ||||||||
Total revenues | $ | 208,022 | $ | 195,905 | $ | 12,117 | 6 | % | ||||
Personnel | $ | 138,913 | $ | 119,994 | $ | 18,919 | 16 | % | ||||
Amortization and depreciation | 810 | 18 | 792 | 4,400 | ||||||||
Other operating expenses | 4,583 | 3,598 | 985 | 27 | ||||||||
Total expenses | $ | 144,306 | $ | 123,610 | $ | 20,696 | 17 | % | ||||
Income from operations | $ | 63,716 | $ | 72,295 | $ | (8,579) | (12) | % | ||||
Income tax expense | 16,476 | 17,739 | (1,263) | (7) | ||||||||
Walker & Dunlop net income | $ | 47,240 | $ | 54,556 | $ | (7,316) | (13) | % | ||||
Key revenue metrics (as a percentage of debt financing volume): | ||||||||||||
Origination fee margin (4) | 0.71 | % | 1.07 | % | ||||||||
MSR margin (5) | 0.36 | 0.63 | ||||||||||
Agency MSR margin (6) | 0.99 | 1.72 | ||||||||||
Key performance metrics: | ||||||||||||
Operating margin | 31 | % | 37 | % | ||||||||
Adjusted EBITDA | $ | 16,880 | $ | 14,215 | $ | 2,665 | 19 | % |
Capital Markets - Discussion of Quarterly Results:
The Capital Markets segment includes our Agency lending, debt brokerage, property sales, and appraisal and valuation services.
FINANCIAL RESULTS - SERVICING & ASSET MANAGEMENT | ||||||||||||
(dollars in thousands) | Q2 2022 | Q2 2021 | $ Variance | % Variance | ||||||||
Loan origination and debt brokerage fees, net | $ | 520 | $ | 1,889 | $ | (1,369) | (72) | % | ||||
Servicing fees | 74,260 | 69,052 | 5,208 | 8 | ||||||||
Investment management fees | 10,282 | 3,815 | 6,467 | 170 | ||||||||
Net warehouse interest income, LHFI | 1,561 | 1,746 | (185) | (11) | ||||||||
Escrow earnings and other interest income | 6,648 | 1,768 | 4,880 | 276 | ||||||||
Other revenues | 39,280 | 6,885 | 32,395 | 471 | ||||||||
Total revenues | $ | 132,551 | $ | 85,155 | $ | 47,396 | 56 | % | ||||
Personnel | $ | 21,881 | $ | 9,447 | $ | 12,434 | 132 | % | ||||
Amortization and depreciation | 58,760 | 47,395 | 11,365 | 24 | ||||||||
Provision (benefit) for credit losses | (4,840) | (4,326) | (514) | 12 | ||||||||
Other operating expenses | 6,559 | 2,604 | 3,955 | 152 | ||||||||
Total expenses | $ | 82,360 | $ | 55,120 | $ | 27,240 | 49 | % | ||||
Income from operations | $ | 50,191 | $ | 30,035 | $ | 20,156 | 67 | % | ||||
Income tax expense | 12,850 | 7,475 | 5,375 | 72 | ||||||||
Net income before noncontrolling interests | $ | 37,341 | $ | 22,560 | $ | 14,781 | 66 | % | ||||
Less: net income (loss) from noncontrolling interests | (179) | ? | (179) | N/A | ||||||||
Walker & Dunlop net income | $ | 37,520 | $ | 22,560 | $ | 14,960 | 66 | % | ||||
Key performance metrics: | ||||||||||||
Operating margin | 38 | % | 35 | % | ||||||||
Adjusted EBITDA | $ | 105,062 | $ | 73,703 | $ | 31,359 | 43 | % |
Servicing & Asset Management - Discussion of Quarterly Results:
The Servicing & Asset Management segment includes loan servicing, principal lending and investing, managing third-party capital invested in tax credit equity funds focused on the affordable housing sector and other commercial real estate, and real estate-related investment banking and advisory services, including housing market research.
FINANCIAL RESULTS - CORPORATE | ||||||||||||
(dollars in thousands) | Q2 2022 | Q2 2021 | $ Variance | % Variance | ||||||||
Escrow earnings and other interest income | $ | 103 | $ | 55 | $ | 48 | 87 | % | ||||
Other revenues | 172 | 296 | (124) | (42) | ||||||||
Total revenues | $ | 275 | $ | 351 | $ | (76) | (22) | % | ||||
Personnel | $ | 7,574 | $ | 11,980 | $ | (4,406) | (37) | % | ||||
Amortization and depreciation | 1,533 | 1,097 | 436 | 40 | ||||||||
Interest expense on corporate debt | 6,412 | 1,760 | 4,652 | 264 | ||||||||
Other operating expenses | 25,053 | 13,546 | 11,507 | 85 | ||||||||
Total expenses | $ | 40,572 | $ | 28,383 | $ | 12,189 | 43 | % | ||||
Income from operations | $ | (40,297) | $ | (28,032) | $ | (12,265) | 44 | % | ||||
Income tax expense | (9,823) | (6,974) | (2,849) | 41 | ||||||||
Walker & Dunlop net income | $ | (30,474) | $ | (21,058) | $ | (9,416) | 45 | % | ||||
Key performance metric: | ||||||||||||
Adjusted EBITDA | $ | (27,098) | $ | (21,404) | $ | (5,694) | 27 | % |
Corporate - Discussion of Quarterly Results:
CONSOLIDATED YEAR-TO-DATE 2022 OPERATING RESULTS
YEAR-TO-DATE OPERATING RESULTS AND KEY PERFORMANCE METRICS | ||||||||||||
(dollars in thousands) | YTD Q2 2022 | YTD Q2 2021 | $ Variance | % Variance | ||||||||
Debt financing volume | $ | 23,785,975 | $ | 17,835,303 | $ | 5,950,672 | 33 | % | ||||
Property sales volume | 11,423,752 | 4,737,292 | 6,686,460 | 141 | ||||||||
Total transaction volume | $ | 35,209,727 | $ | 22,572,595 | $ | 12,637,132 | 56 | % | ||||
Total revenues | 660,292 | 505,699 | 154,593 | 31 | ||||||||
Total expenses | 496,692 | 358,231 | 138,461 | 39 | ||||||||
Walker & Dunlop net income | $ | 125,495 | $ | 114,110 | $ | 11,385 | 10 | % | ||||
Adjusted EBITDA | 157,480 | 127,181 | 30,299 | 24 | ||||||||
Diluted EPS | $ | 3.73 | $ | 3.52 | $ | 0.21 | 6 | % | ||||
Operating margin | 25 | % | 29 | % | ||||||||
Return on equity | 16 | 19 |
Discussion of Results:
YEAR-TO-DATE 2022 - FINANCIAL RESULTS BY SEGMENT
YEAR-TO-DATE FINANCIAL RESULTS - CAPITAL MARKETS | ||||||||||||
(dollars in thousands) | YTD Q2 2022 | YTD Q2 2021 | $ Variance | % Variance | ||||||||
Loan origination and debt brokerage fees, net | $ | 183,908 | $ | 180,878 | $ | 3,030 | 2 | % | ||||
Fair value of expected net cash flows from servicing, net ("MSR income") | 104,679 | 119,784 | (15,105) | (13) | ||||||||
Property sales broker fees | 69,784 | 31,496 | 38,288 | 122 | ||||||||
Net warehouse interest income, LHFS | 7,237 | 5,343 | 1,894 | 35 | ||||||||
Other revenues | 6,658 | 5,695 | 963 | 17 | ||||||||
Total revenues | $ | 372,266 | $ | 343,196 | $ | 29,070 | 8 | % | ||||
Personnel | $ | 237,639 | $ | 192,629 | $ | 45,010 | 23 | % | ||||
Amortization and depreciation | 810 | 539 | 271 | 50 | ||||||||
Other operating expenses | 10,694 | 7,000 | 3,694 | 53 | ||||||||
Total expenses | $ | 249,143 | $ | 200,168 | $ | 48,975 | 24 | % | ||||
Income from operations | $ | 123,123 | $ | 143,028 | $ | (19,905) | (14) | % | ||||
Income tax expense | 29,323 | 32,354 | (3,031) | (9) | ||||||||
Walker & Dunlop net income | $ | 93,800 | $ | 110,674 | $ | (16,874) | (15) | % |
Capital Markets - Discussion of Year-to-Date Results:
YEAR-TO-DATE FINANCIAL RESULTS - SERVICING & ASSET MANAGEMENT | ||||||||||||
(dollars in thousands) | YTD Q2 2022 | YTD Q2 2021 | $ Variance | % Variance | ||||||||
Loan origination and debt brokerage fees, net | $ | 1,007 | $ | 2,473 | $ | (1,466) | (59) | % | ||||
Servicing fees | 146,941 | 135,030 | 11,911 | 9 | ||||||||
Investment management fees | 22,930 | 6,551 | 16,379 | 250 | ||||||||
Net warehouse interest income, LHFI | 2,804 | 3,842 | (1,038) | (27) | ||||||||
Escrow earnings and other interest income | 8,406 | 3,767 | 4,639 | 123 | ||||||||
Other revenues | 61,529 | 11,657 | 49,872 | 428 | ||||||||
Total revenues | $ | 243,617 | $ | 163,320 | $ | 80,297 | 49 | % | ||||
Personnel | $ | 40,519 | $ | 16,558 | $ | 23,961 | 145 | % | ||||
Amortization and depreciation | 113,691 | 92,773 | 20,918 | 23 | ||||||||
Provision (benefit) for credit losses | (14,338) | (15,646) | 1,308 | (8) | ||||||||
Other operating expenses | 12,678 | 4,857 | 7,821 | 161 | ||||||||
Total expenses | $ | 152,550 | $ | 98,542 | $ | 54,008 | 55 | % | ||||
Income from operations | $ | 91,067 | $ | 64,778 | $ | 26,289 | 41 | % | ||||
Income tax expense | 21,689 | 14,653 | 7,036 | 48 | ||||||||
Net income before noncontrolling interests | $ | 69,378 | $ | 50,125 | $ | 19,253 | 38 | % | ||||
Less: net income (loss) from noncontrolling interests | (858) | ? | (858) | N/A | ||||||||
Walker & Dunlop net income | $ | 70,236 | $ | 50,125 | $ | 20,111 | 40 | % |
Servicing & Asset Management - Discussion of Year-to-Date Results:
YEAR-TO-DATE FINANCIAL RESULTS - CORPORATE | ||||||||||||
(dollars in thousands) | YTD Q2 2022 | YTD Q2 2021 | $ Variance | % Variance | ||||||||
Escrow earnings and other interest income | $ | 148 | $ | 173 | $ | (25) | (14) | % | ||||
Other revenues | 44,261 | (990) | 45,251 | (4,571) | ||||||||
Total revenues | $ | 44,409 | $ | (817) | $ | 45,226 | (5,536) | % | ||||
Personnel | $ | 34,391 | $ | 28,449 | $ | 5,942 | 21 | % | ||||
Amortization and depreciation | 2,754 | 2,069 | 685 | 33 | ||||||||
Interest expense on corporate debt | 12,817 | 3,525 | 9,292 | 264 | ||||||||
Other operating expenses | 45,037 | 25,478 | 19,559 | 77 | ||||||||
Total expenses | $ | 94,999 | $ | 59,521 | $ | 35,478 | 60 | % | ||||
Income from operations | $ | (50,590) | $ | (60,338) | $ | 9,748 | (16) | % | ||||
Income tax expense | (12,049) | (13,649) | 1,600 | (12) | ||||||||
Walker & Dunlop net income | $ | (38,541) | $ | (46,689) | $ | 8,148 | (17) | % |
Corporate - Discussion of Year-to-Date Results:
CAPITAL SOURCES AND USES
On August 3, 2022, the Company's Board of Directors declared a dividend of $0.60 per share for the third quarter of 2022. The dividend will be paid on September 2, 2022 to all holders of record of the Company's restricted and unrestricted common stock as of August 18, 2022.
On February 2, 2022, our Board of Directors authorized the repurchase of up to $75.0 million of the Company's outstanding common stock over the coming one-year period ("2022 Share Repurchase Program"). During the first quarter of 2022, the Company did not repurchase any shares of its common stock under the 2022 Share Repurchase Program. During the second quarter of 2022, the Company repurchased 0.1 million shares of its common stock under the share repurchase program at a weighted average price of $101.77 per share and immediately retired the shares, reducing stockholders' equity by $11.1 million. As of June 30, 2022, the Company had $63.9 million of authorized share repurchase capacity remaining under the 2022 Share Repurchase Program.
Any future purchases made pursuant to the 2022 Share Repurchase Program will be made in the open market or in privately negotiated transactions from time to time as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The repurchase program may be suspended or discontinued at any time.
(1) | Adjusted EBITDA is a non-GAAP financial measure the Company presents to help investors better understand our operating performance. For a reconciliation of adjusted EBITDA to net income, refer to the sections of this press release below titled "Non-GAAP Financial Measures," "Adjusted Financial Measure Reconciliation to GAAP" and "Adjusted Financial Measure Reconciliation to GAAP by Segment." |
(2) | Brokered transactions for life insurance companies, commercial banks, and other capital sources. |
(3) | Includes debt financing volumes from our interim loan program, our interim loan joint venture, and WDIP separate accounts. |
(4) | Loan origination and debt brokerage fees, net as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing. |
(5) | MSR income as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing. |
(6) | MSR income as a percentage of Agency debt financing volume. |
(7) | At-risk servicing portfolio is defined as the balance of Fannie Mae DUS loans subject to the risk-sharing formula described below, as well as a small number of Freddie Mac loans on which we share in the risk of loss. Use of the at-risk portfolio provides for comparability of the full risk-sharing and modified risk-sharing loans because the provision and allowance for risk-sharing obligations are based on the at-risk balances of the associated loans. Accordingly, we have presented the key statistics as a percentage of the at-risk portfolio. |
For example, a $15 million loan with 50% risk-sharing has the same potential risk exposure as a $7.5 million loan with full DUS risk sharing. Accordingly, if the $15 million loan with 50% risk-sharing were to default, we would view the overall loss as a percentage of the at-risk balance, or $7.5 million, to ensure comparability between all risk-sharing obligations. To date, substantially all of the risk-sharing obligations that we have settled have been from full risk-sharing loans. | |
(8) | Represents the maximum loss we would incur under our risk-sharing obligations if all of the loans we service, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. The maximum exposure is not representative of the actual loss we would incur. |
CONFERENCE CALL INFORMATION
The Company will host a conference call to discuss its quarterly results on Thursday, August 4, 2022 at 8:30 a.m. Eastern time. Listeners can access the webcast via the link: https://walkerdunlop.zoom.us/webinar/register/WN_3KzScGmYQ1eHcJbaPOUnDg or by dialing +1 408 901 0584, Webinar ID 844 4342 0334, Password 270631. Presentation materials related to the conference call will be posted to the Investor Relations section of the Company's website prior to the call. An audio replay will also be available on the Investor Relations section of the Company's website, along with the presentation materials.
ABOUT WALKER & DUNLOP
Walker & Dunlop (NYSE: WD) is one of the largest providers of capital to the commercial real estate industry in the United States, enabling real estate owners and operators to bring their visions of communities ? where people live, work, shop and play ? to life. Our people, brand, and technology make W&D one of the most insightful and customer-focused firms in our industry. With more than 1,400 employees across every major U.S. market, Walker & Dunlop has consistently been named one of Fortune's Great Places to Work® and is committed to making the commercial real estate industry more inclusive and diverse while creating meaningful social, environmental, and economic change in our communities.
NON-GAAP FINANCIAL MEASURES
To supplement our financial statements presented in accordance with United States generally accepted accounting principles ("GAAP"), the Company uses adjusted EBITDA, a non-GAAP financial measure. The presentation of adjusted EBITDA is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. When analyzing our operating performance, readers should use adjusted EBITDA in addition to, and not as an alternative for, net income. Adjusted EBITDA represents net income before income taxes, interest expense on our term loan facility and Alliant's note payable, and amortization and depreciation, adjusted for provision (benefit) for credit losses net of write-offs, stock-based incentive compensation charges, the fair value of expected net cash flows from servicing, net, and non-cash charges associated with the extinguishment of long-term debt, and the gain associated with the revaluation of our previously held equity-method investment in connection with our acquisition of GeoPhy. Because not all companies use identical calculations, our presentation of adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, adjusted EBITDA is not intended to be a measure of free cash flow for our management's discretionary use, as it does not reflect certain cash requirements such as tax and debt service payments. The amounts shown for adjusted EBITDA may also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges that are used to determine compliance with financial covenants.
We use adjusted EBITDA to evaluate the operating performance of our business, for comparison with forecasts and strategic plans and for benchmarking performance externally against competitors. We believe that this non-GAAP measure, when read in conjunction with the Company's GAAP financials, provides useful information to investors by offering:
We believe that adjusted EBITDA has limitations in that it does not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP and that adjusted EBITDA should only be used to evaluate the Company's results of operations in conjunction with net income on both a consolidated and segment basis. For more information on adjusted EBITDA, refer to the section of this press release below titled "Adjusted Financial Measure Reconciliation to GAAP" and "Adjusted Financial Measure Reconciliation to GAAP By Segment."
FORWARD-LOOKING STATEMENTS
Some of the statements contained in this press release 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 expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," or "potential" or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans, or intentions.
The forward-looking statements contained in this press release reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ significantly from those expressed or contemplated in any forward-looking statement.
While forward-looking statements reflect our good faith projections, assumptions and expectations, they are not guarantees of future results. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by applicable law. Factors that could cause our results to differ materially include, but are not limited to: (1) general economic conditions and multifamily and commercial real estate market conditions, (2) regulatory and/or legislative changes to Freddie Mac, Fannie Mae or HUD, (3) our ability to retain and attract loan originators and other professionals, (4) risks related to our recently completed acquisitions, including our ability to integrate and achieve the expected benefits of such acquisitions, and (5) changes in federal government fiscal and monetary policies, including any constraints or cuts in federal funds allocated to HUD for loan originations.
For a further discussion of these and other factors that could cause future results to differ materially from those expressed or contemplated in any forward-looking statements, see the section titled "Risk Factors" in our most recent Annual Report on Form 10-K and any updates or supplements in subsequent Quarterly Reports on Form 10-Q and our other filings with the SEC. Such filings are available publicly on our Investor Relations web page at www.walkerdunlop.com.
Walker & Dunlop, Inc. and Subsidiaries | ||||||||||||||
Condensed Consolidated Balance Sheets | ||||||||||||||
Unaudited | ||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | ||||||||||
2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||
(in thousands) | ||||||||||||||
Assets | ||||||||||||||
Cash and cash equivalents | $ | 151,252 | $ | 141,375 | $ | 305,635 | $ | 318,188 | $ | 326,518 | ||||
Restricted cash | 34,361 | 41,584 | 42,812 | 34,875 | 15,842 | |||||||||
Pledged securities, at fair value | 149,560 | 148,647 | 148,996 | 148,774 | 146,548 | |||||||||
Loans held for sale, at fair value | 931,516 | 703,629 | 1,811,586 | 2,711,900 | 1,718,444 | |||||||||
Loans held for investment, net | 247,243 | 216,620 | 269,125 | 233,685 | 272,033 | |||||||||
Mortgage servicing rights | 978,745 | 976,554 | 953,845 | 929,825 | 915,519 | |||||||||
Goodwill | 937,881 | 908,744 | 698,635 | 333,249 | 266,465 | |||||||||
Other intangible assets | 207,024 | 211,405 | 183,904 | 8,454 | 1,553 | |||||||||
Derivative assets | 59,810 | 112,023 | 37,364 | 85,486 | 36,751 | |||||||||
Receivables, net | 236,786 | 249,305 | 212,019 | 106,228 | 80,196 | |||||||||
Committed investments in tax credit equity | 187,393 | 223,771 | 177,322 | ? | ? | |||||||||
Other assets, net | 413,201 | 405,974 | 364,746 | 206,198 | 163,252 | |||||||||
Total assets | $ | 4,534,772 | $ | 4,339,631 | $ | 5,205,989 | $ | 5,116,862 | $ | 3,943,121 | ||||
Liabilities | ||||||||||||||
Warehouse notes payable | $ | 1,125,677 | $ | 924,280 | $ | 1,941,572 | $ | 2,848,579 | $ | 1,823,982 | ||||
Notes payable | 719,210 | 726,555 | 740,174 | 289,763 | 290,498 | |||||||||
Allowance for risk-sharing obligations | 48,475 | 53,244 | 62,636 | 61,607 | 60,329 | |||||||||
Derivative liabilities | 17,176 | 12,400 | 6,403 | 13,263 | 30,411 | |||||||||
Commitments to fund investments in tax credit equity | 173,740 | 206,605 | 162,747 | ? | ? | |||||||||
Other liabilities | 784,719 | 779,376 | 714,250 | 519,714 | 444,406 | |||||||||
Total liabilities | $ | 2,868,997 | $ | 2,702,460 | $ | 3,627,782 | $ | 3,732,926 | $ | 2,649,626 | ||||
Stockholders' Equity | ||||||||||||||
Common stock | $ | 323 | $ | 324 | $ | 320 | $ | 312 | $ | 310 | ||||
Additional paid-in capital | 403,668 | 387,009 | 393,022 | 271,562 | 255,676 | |||||||||
Accumulated other comprehensive income (loss) | (222) | 1,588 | 2,558 | 2,737 | 2,578 | |||||||||
Retained earnings | 1,229,712 | 1,205,384 | 1,154,252 | 1,090,506 | 1,034,931 | |||||||||
Total stockholders' equity | $ | 1,633,481 | $ | 1,594,305 | $ | 1,550,152 | $ | 1,365,117 | $ | 1,293,495 | ||||
Noncontrolling interests | 32,294 | 42,866 | 28,055 | 18,819 | ? | |||||||||
Total equity | $ | 1,665,775 | $ | 1,637,171 | $ | 1,578,207 | $ | 1,383,936 | $ | 1,293,495 | ||||
Commitments and contingencies | ? | ? | ? | ? | ? | |||||||||
Total liabilities and stockholders' equity | $ | 4,534,772 | $ | 4,339,631 | $ | 5,205,989 | $ | 5,116,862 | $ | 3,943,121 |
Walker & Dunlop, Inc. and Subsidiaries | ||||||||||||||||||||
Condensed Consolidated Statements of Income and Comprehensive Income | ||||||||||||||||||||
Unaudited | ||||||||||||||||||||
Quarterly Trends | Six months ended | |||||||||||||||||||
June 30, | ||||||||||||||||||||
(in thousands, except per share amounts) | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | 2022 | 2021 | |||||||||||||
Revenues | ||||||||||||||||||||
Loan origination and debt brokerage fees, net | $ | 102,605 | $ | 82,310 | $ | 139,421 | $ | 123,242 | $ | 107,472 | $ | 184,915 | $ | 183,351 | ||||||
Fair value of expected net cash flows from servicing, net ("MSR income") | 51,949 | 52,730 | 77,879 | 89,482 | 61,849 | 104,679 | 119,784 | |||||||||||||
Servicing fees | 74,260 | 72,681 | 72,808 | 70,628 | 69,052 | 146,941 | 135,030 | |||||||||||||
Property sales broker fees | 46,386 | 23,398 | 54,808 | 33,677 | 22,454 | 69,784 | 31,496 | |||||||||||||
Investment management fees | 10,282 | 12,648 | 13,699 | 2,564 | 3,815 | 22,930 | 6,551 | |||||||||||||
Net warehouse interest income | 5,268 | 4,773 | 7,340 | 5,583 | 4,630 | 10,041 | 9,185 | |||||||||||||
Escrow earnings and other interest income | 6,751 | 1,803 | 2,178 | 2,032 | 1,823 | 8,554 | 3,940 | |||||||||||||
Other revenues | 43,347 | 69,101 | 39,056 | 19,082 | 10,316 | 112,448 | 16,362 | |||||||||||||
Total revenues | $ | 340,848 | $ | 319,444 | $ | 407,189 | $ | 346,290 | $ | 281,411 | $ | 660,292 | $ | 505,699 | ||||||
Expenses | ||||||||||||||||||||
Personnel | $ | 168,368 | $ | 144,181 | $ | 195,670 | $ | 170,181 | $ | 141,421 | $ | 312,549 | $ | 237,636 | ||||||
Amortization and depreciation | 61,103 | 56,152 | 61,405 | 53,498 | 48,510 | 117,255 | 95,381 | |||||||||||||
Provision (benefit) for credit losses | (4,840) | (9,498) | 1,093 | 1,266 | (4,326) | (14,338) | (15,646) | |||||||||||||
Interest expense on corporate debt | 6,412 | 6,405 | 2,690 | 1,766 | 1,760 | 12,817 | 3,525 | |||||||||||||
Other operating expenses | 36,195 | 32,214 | 36,484 | 24,836 | 19,748 | 68,409 | 37,335 | |||||||||||||
Total expenses | $ | 267,238 | $ | 229,454 | $ | 297,342 | $ | 251,547 | $ | 207,113 | $ | 496,692 | $ | 358,231 | ||||||
Income from operations | $ | 73,610 | $ | 89,990 | $ | 109,847 | $ | 94,743 | $ | 74,298 | $ | 163,600 | $ | 147,468 | ||||||
Income tax expense | 19,503 | 19,460 | 30,117 | 22,953 | 18,240 | 38,963 | 33,358 | |||||||||||||
Net income before noncontrolling interests | $ | 54,107 | $ | 70,530 | $ | 79,730 | $ | 71,790 | $ | 56,058 | $ | 124,637 | $ | 114,110 | ||||||
Less: net income (loss) from noncontrolling interests | (179) | (679) | (201) | 69 | ? | (858) | ? | |||||||||||||
Walker & Dunlop net income | $ | 54,286 | $ | 71,209 | $ | 79,931 | $ | 71,721 | $ | 56,058 | $ | 125,495 | $ | 114,110 | ||||||
Net change in unrealized gains (losses) on pledged available-for-sale securities, net of taxes | (1,810) | (970) | (179) | 159 | 768 | (2,780) | 610 | |||||||||||||
Walker & Dunlop comprehensive income | $ | 52,476 | $ | 70,239 | $ | 79,752 | $ | 71,880 | $ | 56,826 | $ | 122,715 | $ | 114,720 | ||||||
Basic earnings per share | $ | 1.63 | $ | 2.14 | $ | 2.46 | $ | 2.23 | $ | 1.75 | $ | 3.77 | $ | 3.57 | ||||||
Diluted earnings per share | 1.61 | 2.12 | 2.42 | 2.21 | 1.73 | 3.73 | 3.52 | |||||||||||||
Cash dividends paid per common share | 0.60 | 0.60 | 0.50 | 0.50 | 0.50 | 1.20 | 1.00 | |||||||||||||
Basic weighted-average shares outstanding | 32,388 | 32,219 | 31,343 | 31,064 | 31,019 | 32,304 | 30,922 | |||||||||||||
Diluted weighted-average shares outstanding | 32,694 | 32,617 | 31,956 | 31,459 | 31,370 | 32,657 | 31,322 |
SUPPLEMENTAL OPERATING DATA | |||||||||||||||||||||
Unaudited | |||||||||||||||||||||
Quarterly Trends | Six months ended | ||||||||||||||||||||
June 30, | |||||||||||||||||||||
(in thousands, except per share data) | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | 2022 | 2021 | ||||||||||||||
Transaction Volume: | |||||||||||||||||||||
Components of Debt Financing Volume | |||||||||||||||||||||
Fannie Mae | $ | 3,918,400 | $ | 1,998,374 | $ | 2,585,100 | $ | 3,271,765 | $ | 1,911,976 | $ | 5,916,774 | $ | 3,445,000 | |||||||
Freddie Mac | 1,141,034 | 987,849 | 1,546,883 | 2,591,906 | 1,003,319 | 2,128,883 | 2,016,039 | ||||||||||||||
Ginnie Mae - HUD | 201,483 | 391,693 | 523,899 | 522,093 | 672,574 | 593,176 | 1,294,707 | ||||||||||||||
Brokered (1) | 9,258,490 | 5,643,081 | 12,684,294 | 6,402,862 | 6,280,578 | 14,901,571 | 10,583,070 | ||||||||||||||
Principal Lending and Investing (2) | 131,551 | 114,020 | 474,873 | 472,142 | 318,237 | 245,571 | 496,487 | ||||||||||||||
Total Debt Financing Volume | $ | 14,650,958 | $ | 9,135,017 | $ | 17,815,049 | $ | 13,260,768 | $ | 10,186,684 | $ | 23,785,975 | $ | 17,835,303 | |||||||
Property Sales Volume | 7,892,062 | 3,531,690 | 9,287,312 | 5,230,093 | 3,341,532 | 11,423,752 | 4,737,292 | ||||||||||||||
Total Transaction Volume | $ | 22,543,020 | $ | 12,666,707 | $ | 27,102,361 | $ | 18,490,861 | $ | 13,528,216 | $ | 35,209,727 | $ | 22,572,595 | |||||||
Key Performance Metrics: | |||||||||||||||||||||
Operating margin | 22 | % | 28 | % | 27 | % | 27 | % | 26 | % | 25 | % | 29 | % | |||||||
Return on equity | 14 | 19 | 23 | 22 | 18 | 16 | 19 | ||||||||||||||
Walker & Dunlop net income | $ | 54,286 | $ | 71,209 | $ | 79,931 | $ | 71,721 | $ | 56,058 | $ | 125,495 | $ | 114,110 | |||||||
Adjusted EBITDA (3) | 94,844 | 62,636 | 109,667 | 72,430 | 66,514 | 157,480 | 127,181 | ||||||||||||||
Diluted EPS | 1.61 | 2.12 | 2.42 | 2.21 | 1.73 | 3.73 | 3.52 | ||||||||||||||
Key Expense Metrics (as a percentage of total revenues): | |||||||||||||||||||||
Personnel expenses | 49 | % | 45 | % | 48 | % | 49 | % | 50 | % | 47 | % | 47 | % | |||||||
Other operating expenses | 11 | 10 | 9 | 7 | 7 | 10 | 7 | ||||||||||||||
Key Revenue Metrics (as a percentage of debt financing volume): | |||||||||||||||||||||
Origination fee margin (4) | 0.71 | % | 0.90 | % | 0.80 | % | 0.95 | % | 1.07 | % | 0.78 | % | 1.04 | % | |||||||
MSR margin (5) | 0.36 | 0.58 | 0.45 | 0.70 | 0.63 | 0.44 | 0.69 | ||||||||||||||
Agency MSR margin (6) | 0.99 | 1.56 | 1.67 | 1.40 | 1.72 | 1.21 | 1.77 | ||||||||||||||
Other Data: | |||||||||||||||||||||
Market capitalization at period end | $ | 3,113,884 | $ | 4,192,900 | $ | 4,835,508 | $ | 3,540,501 | $ | 3,239,332 | |||||||||||
Closing share price at period end | $ | 96.34 | $ | 129.42 | $ | 150.88 | $ | 113.50 | $ | 104.38 | |||||||||||
Average headcount | 1,406 | 1,353 | 1,128 | 1,084 | 1027 | ||||||||||||||||
Components of Servicing Portfolio (end of period): | |||||||||||||||||||||
Fannie Mae | $ | 57,122,414 | $ | 54,000,550 | $ | 53,401,457 | $ | 52,317,953 | $ | 51,077,660 | |||||||||||
Freddie Mac | 36,886,666 | 36,965,185 | 37,138,836 | 38,039,014 | 37,887,969 | ||||||||||||||||
Ginnie Mae - HUD | 9,570,012 | 9,954,262 | 9,889,289 | 9,894,893 | 9,904,246 | ||||||||||||||||
Brokered (7) | 15,190,315 | 15,115,619 | 15,035,439 | 13,429,801 | 13,129,969 | ||||||||||||||||
Principal Lending and Investing (8) | 252,100 | 221,649 | 235,543 | 238,713 | 276,738 | ||||||||||||||||
Total Servicing Portfolio | $ | 119,021,507 | $ | 116,257,265 | $ | 115,700,564 | $ | 113,920,374 | $ | 112,276,582 | |||||||||||
Assets under management (9) | 16,692,556 | 16,687,112 | 16,437,865 | 2,309,332 | 1,801,577 | ||||||||||||||||
Total Managed Portfolio | $ | 135,714,063 | $ | 132,944,377 | $ | 132,138,429 | $ | 116,229,706 | $ | 114,078,159 | |||||||||||
Key Servicing Portfolio Metrics: | |||||||||||||||||||||
Custodial escrow account balance (in billions) | $ | 2.3 | $ | 2.5 | $ | 3.7 | $ | 3.0 | $ | 3.0 | |||||||||||
Weighted-average servicing fee rate (basis points) | 24.9 | 25.0 | 24.9 | 24.6 | 24.5 | ||||||||||||||||
Weighted-average remaining servicing portfolio term (years) | 8.9 | 9.1 | 9.2 | 9.2 | 9.2 |
(1) | Brokered transactions for life insurance companies, commercial banks, and other capital sources. |
(2) | Includes debt financing volumes from our interim lending platform, our interim lending joint venture, and WDIP separate accounts. |
(3) | This is a non-GAAP financial measure. For more information on adjusted EBITDA, refer to the section above titled "Non-GAAP Financial Measures." |
(4) | Loan origination and debt brokerage fees, net as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing. |
(5) | MSR income as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing. |
(6) | MSR income as a percentage of Agency debt financing volume. |
(7) | Brokered loans serviced primarily for life insurance companies. |
(8) | Consists of interim loans not managed for our interim loan joint venture. |
(9) | Alliant & WDIP assets under management and interim loans serviced for our interim loan joint venture. Alliant assets under management were acquired in December 2021. |
KEY CREDIT METRICS | |||||||||||||||
Unaudited | |||||||||||||||
June 30, | March 31, | December 31, | September 30, | June 30, | |||||||||||
(dollars in thousands) | 2022 | 2022 | 2021 | 2021 | 2021 | ||||||||||
Risk-sharing servicing portfolio: | |||||||||||||||
Fannie Mae Full Risk | $ | 47,461,520 | $ | 46,194,756 | $ | 45,581,476 | $ | 44,069,885 | $ | 42,444,569 | |||||
Fannie Mae Modified Risk | 9,651,421 | 7,794,710 | 7,807,853 | 8,235,475 | 8,617,020 | ||||||||||
Freddie Mac Modified Risk | 23,715 | 23,715 | 33,195 | 36,883 | 36,894 | ||||||||||
Total risk-sharing servicing portfolio | $ | 57,136,656 | $ | 54,013,181 | $ | 53,422,524 | $ | 52,342,243 | $ | 51,098,483 | |||||
Non-risk-sharing servicing portfolio: | |||||||||||||||
Fannie Mae No Risk | $ | 9,473 | $ | 11,084 | $ | 12,127 | $ | 12,593 | $ | 16,071 | |||||
Freddie Mac No Risk | 36,862,951 | 36,941,470 | 37,105,641 | 38,002,131 | 37,851,075 | ||||||||||
GNMA - HUD No Risk | 9,570,012 | 9,954,262 | 9,889,289 | 9,894,893 | 9,904,246 | ||||||||||
Brokered | 15,190,315 | 15,115,619 | 15,035,438 | 13,429,801 | 13,129,969 | ||||||||||
Total non-risk-sharing servicing portfolio | $ | 61,632,751 | $ | 62,022,435 | $ | 62,042,495 | $ | 61,339,418 | $ | 60,901,361 | |||||
Total loans serviced for others | $ | 118,769,407 | $ | 116,035,616 | $ | 115,465,019 | $ | 113,681,661 | $ | 111,999,844 | |||||
Interim loans (full risk) servicing portfolio | 252,100 | 221,649 | 235,543 | 238,713 | 276,738 | ||||||||||
Total servicing portfolio unpaid principal balance | $ | 119,021,507 | $ | 116,257,265 | $ | 115,700,562 | $ | 113,920,374 | $ | 112,276,582 | |||||
Interim Loan Joint Venture Managed Loans (1) | $ | 899,287 | $ | 930,296 | $ | 848,196 | $ | 918,518 | $ | 629,532 | |||||
At-risk servicing portfolio (2) | $ | 51,905,985 | $ | 50,176,521 | $ | 49,573,263 | $ | 48,209,532 | $ | 46,866,767 | |||||
Maximum exposure to at-risk portfolio (3) | 10,525,093 | 10,178,454 | 10,056,584 | 9,784,054 | 9,517,609 | ||||||||||
Defaulted loans | 78,659 | 78,659 | 78,659 | 48,481 | 48,481 | ||||||||||
Defaulted loans as a percentage of the at-risk portfolio | 0.15 | % | 0.16 | % | 0.16 | % | 0.10 | % | 0.10 | % | |||||
Allowance for risk-sharing as a percentage of the at-risk portfolio | 0.09 | 0.11 | 0.13 | 0.13 | 0.13 | ||||||||||
Allowance for risk-sharing as a percentage of maximum exposure | 0.46 | 0.52 | 0.62 | 0.63 | 0.63 |
(1) | This balance consists entirely of interim loan joint venture managed loans. We indirectly share in a portion of the risk of loss associated with interim loan joint venture managed loans through our 15% equity ownership in the joint venture. We had no exposure to risk of loss for the loans serviced directly for our interim loan joint venture partner. The balance of this line is included as a component of assets under management in the Supplemental Operating Data table. |
(2) | At-risk servicing portfolio is defined as the balance of Fannie Mae DUS loans subject to the risk-sharing formula described below, as well as a small number of Freddie Mac loans on which we share in the risk of loss. Use of the at-risk portfolio provides for comparability of the full risk-sharing and modified risk-sharing loans because the provision and allowance for risk-sharing obligations are based on the at-risk balances of the associated loans. Accordingly, we have presented the key statistics as a percentage of the at-risk portfolio. For example, a $15 million loan with 50% risk-sharing has the same potential risk exposure as a $7.5 million loan with full DUS risk sharing. Accordingly, if the $15 million loan with 50% risk-sharing were to default, we would view the overall loss as a percentage of the at-risk balance, or $7.5 million, to ensure comparability between all risk-sharing obligations. To date, substantially all of the risk-sharing obligations that we have settled have been from full risk-sharing loans. |
(3) | Represents the maximum loss we would incur under our risk-sharing obligations if all of the loans we service, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. The maximum exposure is not representative of the actual loss we would incur. |
ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP | |||||||||||||||||||||
Unaudited | |||||||||||||||||||||
Quarterly Trends | Six months ended | ||||||||||||||||||||
June 30, | |||||||||||||||||||||
(in thousands) | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | 2022 | 2021 | ||||||||||||||
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA | |||||||||||||||||||||
Walker & Dunlop Net Income | $ | 54,286 | $ | 71,209 | $ | 79,931 | $ | 71,721 | $ | 56,058 | $ | 125,495 | $ | 114,110 | |||||||
Income tax expense | 19,503 | 19,460 | 30,117 | 22,953 | 18,240 | 38,963 | 33,358 | ||||||||||||||
Interest expense on corporate debt | 6,412 | 6,405 | 2,690 | 1,766 | 1,760 | 12,817 | 3,525 | ||||||||||||||
Amortization and depreciation | 61,103 | 56,152 | 61,405 | 53,498 | 48,510 | 117,255 | 95,381 | ||||||||||||||
Provision (benefit) for credit losses | (4,840) | (9,498) | 1,093 | 1,266 | (4,326) | (14,338) | (15,646) | ||||||||||||||
Net write-offs | ? | ? | ? | ? | ? | ? | ? | ||||||||||||||
Stock-based compensation expense | 10,329 | 11,279 | 9,637 | 10,708 | 8,121 | 21,608 | 16,237 | ||||||||||||||
Gain from revaluation of previously held equity-method investment | ? | (39,641) | ? | ? | ? | (39,641) | ? | ||||||||||||||
Unamortized issuance costs from corporate debt retirement | ? | ? | 2,673 | ? | ? | ? | ? | ||||||||||||||
Fair value of expected net cash flows from servicing, net | (51,949) | (52,730) | (77,879) | (89,482) | (61,849) | (104,679) | (119,784) | ||||||||||||||
Adjusted EBITDA | $ | 94,844 | $ | 62,636 | $ | 109,667 | $ | 72,430 | $ | 66,514 | $ | 157,480 | $ | 127,181 |
ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP BY SEGMENT | |||||||||||
Unaudited | |||||||||||
Capital Markets | |||||||||||
Three months ended | Six months ended | ||||||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA | |||||||||||
Walker & Dunlop Net Income | $ | 47,240 | $ | 54,556 | $ | 93,800 | $ | 110,674 | |||
Income tax expense | 16,476 | 17,739 | 29,323 | 32,354 | |||||||
Amortization and depreciation | 810 | 18 | 810 | 539 | |||||||
Stock-based compensation expense | 4,303 | 3,751 | 8,882 | 7,563 | |||||||
Fair value of expected net cash flows from servicing, net | (51,949) | (61,849) | (104,679) | (119,784) | |||||||
Adjusted EBITDA | $ | 16,880 | $ | 14,215 | $ | 28,136 | $ | 31,346 | |||
Servicing & Asset Management | |||||||||||
Three months ended | Six months ended | ||||||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA | |||||||||||
Walker & Dunlop Net Income | $ | 37,520 | $ | 22,560 | $ | 70,236 | $ | 50,125 | |||
Income tax expense | 12,850 | 7,475 | 21,689 | 14,653 | |||||||
Amortization and depreciation | 58,760 | 47,395 | 113,691 | 92,773 | |||||||
Provision (benefit) for credit losses | (4,840) | (4,326) | (14,338) | (15,646) | |||||||
Stock-based compensation expense | 772 | 599 | 1,557 | 1,217 | |||||||
Adjusted EBITDA | $ | 105,062 | $ | 73,703 | $ | 192,835 | $ | 143,122 | |||
Corporate | |||||||||||
Three months ended | Six months ended | ||||||||||
(in thousands) | 2022 | 2021 | 2022 | 2021 | |||||||
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA | |||||||||||
Walker & Dunlop Net Income | $ | (30,474) | $ | (21,058) | $ | (38,541) | $ | (46,689) | |||
Income tax expense | (9,823) | (6,974) | (12,049) | (13,649) | |||||||
Interest expense on corporate debt | 6,412 | 1,760 | 12,817 | 3,525 | |||||||
Amortization and depreciation | 1,533 | 1,097 | 2,754 | 2,069 | |||||||
Stock-based compensation expense | 5,254 | 3,771 | 11,169 | 7,457 | |||||||
Gain from revaluation of previously held equity-method investment | ? | ? | (39,641) | ? | |||||||
Adjusted EBITDA | $ | (27,098) | $ | (21,404) | $ | (63,491) | $ | (47,287) | |||
SOURCE Walker & Dunlop, Inc.
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