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Guild Holdings Company Reports Second Quarter 2022 Results

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SAN DIEGO, August 04, 2022--(BUSINESS WIRE)--Guild Holdings Company (NYSE: GHLD) ("Guild" or the "Company"), a growth-oriented mortgage company that employs a relationship-based loan sourcing strategy to execute on its mission of delivering the promise of homeownership, today announced results for the second quarter ended June 30, 2022.

$5.7 billion
Originations

$288 million
Net Revenue

$58 million
Net Income

$14 million
Adjusted Net Income

Second Quarter
2022
Highlights

Total in-house originations of $5.7 billion compared to $6.1 billion in the prior quarter

Net revenue of $287.5 million compared to $481.8 million in the prior quarter

Net income of $58.3 million compared to $208.0 million in the prior quarter

Servicing portfolio unpaid principal balance of $75.9 billion, up 4% compared to $73.3 billion as of March 31, 2022

Adjusted net income and Adjusted EBITDA totaled $13.9 million and $22.0 million, respectively, compared to $32.1 million and $46.7 million, respectively, in the prior quarter

Return on equity of 20.1% and adjusted return on equity of 4.8%, compared to 81.2% and 12.5%, respectively, in the prior quarter

Year-To-Date
2022
Highlights

Total in-house originations of $11.8 billion compared to $17.9 billion in the prior year

Net revenue of $769.3 million compared to $820.3 million in the prior year

Net income of $266.3 million compared to $169.5 million in the prior year

Servicing portfolio unpaid principal balance of $75.9 billion, up 16% compared to $65.7 billion as of June 30, 2021

Adjusted net income and Adjusted EBITDA totaled $46.0 million and $68.6 million, respectively, compared to $158.7 million and $219.2 million, respectively, in the prior year

Return on equity of 50.5% and adjusted return on equity of 8.7%, compared to 42.8% and 40.1%, respectively, in the prior year

CEO Commentary

"We delivered solid financial results for the second quarter of 2022 despite higher interest rates, excess capacity and limited inventories," said Mary Ann McGarry, CEO. "Despite shifting market conditions, our tenured management team has a proven track record across cycles and our differentiated purchase-focused business model positions us well, as refinancing volumes continue to weaken. In fact, purchase loans accounted for 84% of our total origination volumes in the second quarter. Also, we remain focused on ongoing product development to stay in front of shifting market trends, as well as rightsizing the business. During periods of disruption, we maintain the flexibility to further align our costs with volume trends.

"Every market creates opportunities. We are well-capitalized, and our leverage ratios and liquidity levels position us well to capitalize on M&A opportunities as we continue to build our business. Broader market disruptions are driving a flight to quality, with sales people, teams, and companies considering Guild because of our long and successful history through market cycles, and our ability to take advantage of dislocations in the market."

- Mary Ann McGarry, CEO of Guild Holdings Company

Second Quarter
2022
Results

Originated 84% of closed loan origination volume from purchase business, compared to the Mortgage Bankers Association estimate of 70%

Gain on sale margins on originations of 363 bps

Gain on sale margins on pull-through adjusted locked volume of 357 bps

UPB of servicing portfolio grew 4% compared to the prior quarter to $76 billion

Purchase recapture rate of 29%

Second Quarter Summary

($ amounts in millions, except per share amounts)

2Q’22

1Q’22

%∆

YTD’22

YTD’21

%∆

Total in-house originations

$

5,721.9

$

6,061.6

(6

) %

$

11,783.5

$

17,941.2

(34

) %

Gain on sale margin on originations (bps)

363

400

(9

) %

382

433

(12

) %

Gain on sale margin on pull-through adjusted locked volume (bps)

357

334

7

%

347

454

(24

) %

UPB of servicing portfolio (period end)

$

75,856.6

$

73,250.6

4

%

$

75,856.6

$

65,670.3

16

%

Net revenue

$

287.5

$

481.8

(40

) %

$

769.3

$

820.3

(6

) %

Total expenses

$

209.1

$

203.6

3

%

$

412.7

$

592.8

(30

) %

Net income

$

58.3

$

208.0

(72

) %

$

266.3

$

169.5

57

%

Return on equity

20.1

%

81.2

%

(75

) %

50.5

%

42.8

%

18

%

Adjusted net income

$

13.9

$

32.1

(57

) %

$

46.0

$

158.7

(71

) %

Adjusted EBITDA

$

22.0

$

46.7

(53

) %

$

68.6

$

219.2

(69

) %

Adjusted return on equity

4.8

%

12.5

%

(62

) %

8.7

%

40.1

%

(78

) %

Earnings per share

$

0.95

$

3.41

(72

) %

$

4.36

$

2.83

54

%

Diluted earnings per share

$

0.95

$

3.38

(72

) %

$

4.31

$

2.81

53

%

Adjusted earnings per share

$

0.23

$

0.53

(57

) %

$

0.75

$

2.64

(72

) %

Second Quarter Origination Segment Results

Origination segment net income decreased 60% quarter-over-quarter to $25.6 million compared to $63.4 million primarily driven by lower origination volumes as a result of higher interest rates, as well as less favorable adjustment to the fair value of contingent liabilities related to acquisitions. Gain on sale margins on pull-through adjusted locked volume increased 7% quarter-over-quarter to 357 bps and total pull-through adjusted locked volume in the second quarter of 2022 was $5.8 billion.

($ amounts in millions)

2Q’22

1Q’22

%∆

YTD’22

YTD’21

%∆

Total in-house originations

$

5,721.9

$

6,061.6

(6

) %

$

11,783.5

$

17,941.2

(34

) %

In-house originations # (000’s)

18

19

(5

) %

37

62

(40

) %

Net revenue

$

212.1

$

245.6

(14

) %

$

457.7

$

780.5

(41

) %

Total expenses

$

186.5

$

182.2

2

%

$

368.7

$

541.6

(32

) %

Net income allocated to origination

$

25.6

$

63.4

(60

) %

$

89.1

$

238.9

(63

) %

Second Quarter Servicing Segment Results

Net income attributed to the servicing segment was $63.9 million compared to $226.8 million in the prior quarter. The Company retained servicing rights for 89% of total loans sold in the second quarter of 2022.

Net revenue totaled $76.9 million compared to $237.6 million in the prior quarter driven by a lower upward adjustment to the fair value of the Company’s mortgage servicing rights, which was $21.1 million in the second quarter of 2022, compared to $184.6 million in the prior quarter reflecting increasing interest rates and lower prepayment speeds. Guild’s purchase recapture rate was 29% in the second quarter of 2022, which reinforces the Company’s focus on customer service and synergistic business model.

($ amounts in millions)

2Q’22

1Q’22

%∆

YTD’22

YTD’21

%∆

UPB of servicing portfolio (period end)

$

75,856.6

$

73,250.6

4

%

$

75,856.6

$

65,670.3

16

%

# Loans serviced (000’s) (period end)

314

307

2

%

314

287

9

%

Loan servicing and other fees

$

54.6

$

53.2

3

%

$

107.8

$

92.9

16

%

Valuation adjustment of MSRs

$

21.1

$

184.6

(89

%)

$

205.7

$

(49.0

)

519

%

Net revenue

$

76.9

$

237.6

(68

) %

$

314.5

$

42.7

636

%

Total expenses

$

13.0

$

10.9

20

%

$

23.9

$

24.5

(3

) %

Net income allocated to servicing

$

63.9

$

226.8

(72

) %

$

290.7

$

18.2

NM

Share Repurchase Program

On May 5, 2022, the Board of Directors of Guild authorized the Company to repurchase up to $20.0 million of the Company’s outstanding shares of Class A common stock over the next 24 months. During the three months ended June 30, 2022, the Company repurchased and subsequently retired 141,952 shares of Guild's Class A common stock at an average purchase price of $10.18 per share. As of June 30, 2022, $18.6 million remains available for repurchase.

Balance Sheet and Liquidity Highlights

The Company’s operating cash position was $249.0 million as of June 30, 2022. The Company’s unutilized loan funding capacity was $1.6 billion as of June 30, 2022, while the unutilized mortgage servicing rights line of credit was $235.0 million, based on total committed amounts and borrowing base limitations. The Company’s leverage ratio was 1.3x as of June 30, 2022, defined as total secured debt including funding divided by tangible stockholders’ equity.

(in millions)

June 30,
2022

December 31,
2021

Cash and cash equivalents

$

249.0

$

243.1

Mortgage servicing rights, net

$

1,030.3

$

675.3

Warehouse lines of credit

$

1,148.6

$

1,927.5

Notes payable

$

118.8

$

250.2

Total stockholders’ equity

$

1,187.8

$

920.0

Webcast and Conference Call

The Company will host a webcast and conference call on Thursday, August 4, 2022 at 6:00 p.m. Eastern Time to discuss the Company’s results for the second quarter ended June 30, 2022.

The conference call will be available on the Company's website at https://ir.guildmortgage.com/. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time to register. The conference call can also be accessed by the following dial-in information:

  • 1-877-407-0789 (Domestic)

  • 1-201-689-8562 (International)

A replay of the call will be available on the Company's website at https://ir.guildmortgage.com/ approximately two hours after the live call through August 18, 2022. The replay is also available by dialing 1-844-512-2921 (United States) or 1-412-317-6671 (international). The replay pin number is 13730259.

About Guild Holdings Company

Founded in 1960 when the modern U.S. mortgage industry was just forming, Guild Holdings Company is a nationally recognized independent mortgage lender providing residential mortgage products and local in-house origination and servicing. Guild’s collaborative culture and commitment to diversity and inclusion enable it to deliver a personalized experience for each customer. With more than 4,500 employees and over 250 retail branches, Guild has relationships with credit unions, community banks, and other financial institutions and services loans in 49 states and the District of Columbia. Guild’s highly trained loan professionals are experienced in government-sponsored programs such as FHA, VA, USDA, down payment assistance programs and other specialized loan programs. Its shares of Class A common stock trade on the New York Stock Exchange under the symbol GHLD.

Forward-Looking Statements

This press release contains forward-looking statements, including statements about future profitability and positioning to capitalize on M&A opportunities and statements regarding our intention to continue to repurchase shares of the Company’s Class A common stock pursuant to the share repurchase program. These forward-looking statements reflect our current views with respect to, among other things, future events and our financial performance. These statements are often, but not always, made through the use of words or phrases such as "may," "should," "could," "predict," "potential," "believe," "will likely result," "expect," "continue," "will," "anticipate," "seek," "estimate," "intend," "plan," "projection," "would" and "outlook," or the negative version of those words or other comparable words or phrases of a future or forward-looking nature. These forward-looking statements are not historical facts and are based on current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although we believe that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements.

Important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements include, but are not limited to, the following: any disruptions in the secondary home loan market and their effects on our ability to sell the loans that we originate; any changes in macroeconomic and U.S. residential real estate market conditions; any changes in certain U.S. government-sponsored entities and government agencies, and any organizational or pricing changes in these entities, their guidelines or their current roles; any changes in prevailing interest rates or U.S. monetary policies; the effects of any termination of our servicing rights; the effects of our existing and future indebtedness on our liquidity and our ability to operate our business; any disruption in the technology that supports our origination and servicing platform; our failure to identify, develop and integrate acquisitions of other companies or technologies; the effects of the ongoing COVID-19 pandemic; pressure from existing and new competitors; any failure to maintain or grow our historical referral relationships with our referral partners; any delays in recovering service advances; inaccuracies in the estimates of the fair value of the substantial portion of our assets that are measured on that basis (including our mortgage servicing rights, or "MSRs"); any failure to adapt to and implement technological changes; the failure of the internal models that we use to manage risk and make business decisions to produce reliable or accurate results; the degree of business and financial risk associated with certain of our loans; any cybersecurity breaches or other vulnerability involving our computer systems or those of certain of our third-party service providers; our inability to secure additional capital, if needed, to operate and grow our business; the impact of operational risks, including employee or consumer fraud, the obligation to repurchase sold loans in the event of a documentation error, and data processing system failures and errors; any repurchase or indemnification obligations caused by the failure of the loans that we originate to meet certain criteria or characteristics; the seasonality of the mortgage origination industry; any failure to protect our brand and reputation; any non-compliance with the complex laws and regulations governing our mortgage loan origination and servicing activities; our control by, and any conflicts of interest with, McCarthy Capital Mortgage Investors, LLC; the risks related to our status as a "controlled company"; the significant influence on our business that members of our board and management team are able to exercise as stockholders; our dependence, as a holding company, upon distributions from Guild Mortgage Company LLC to meet our obligations; the risks related to the trading market of our Class A common stock due to our dual class common stock structure; our ability to complete repurchases under the share repurchase program in the amount authorized or at all and the impact of the share repurchase program on our business and financial condition; the identification of material weaknesses in our internal control over financial reporting; and the other risks, uncertainties and factors set forth under Item IA. – Risk Factors and all other disclosures appearing in Guild’s Annual Report on Form 10-K for the year ended December 31, 2021, Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 as well as other documents Guild files from time to time with the Securities and Exchange Commission.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this press release. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Many of the important factors that will determine these results are beyond our ability to control or predict. Accordingly, you should not place undue reliance on any such forward-looking statements.

Any forward-looking statement speaks only as of the date on which it is made, and, except as otherwise required by law, we undertake no obligation to update any forward-looking statement made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with GAAP and to provide investors with additional information regarding our GAAP financial results, we disclose certain financial measures for our consolidated and operating segment results on both a GAAP and a non-GAAP (adjusted) basis. The non-GAAP financial measures disclosed should be viewed in addition to, and not as an alternative to, results prepared in accordance with GAAP. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled measures presented by other companies.

Adjusted Net Income. We define Adjusted Net Income as earnings attributable to Guild before the change in the fair value measurements related to our MSRs, contingent liabilities related to completed acquisitions due to changes in valuation assumptions, amortization of acquired intangible assets and stock-based compensation. We exclude these items because we believe they are non-cash expenses that are not reflective of our core operations or indicative of our ongoing operations. Adjusted Net Income is also adjusted by applying an implied tax effect to these adjustments. In addition we exclude the change in the fair value of MSRs due to changes in model inputs and assumptions from Adjusted Net Income and Adjusted EBITDA below because we believe this non-cash, non-realized adjustment to net revenues is not indicative of our operating performance or results of operations but rather reflects changes in model inputs and assumptions (e.g., prepayment speed, discount rate and cost to service assumptions) that impact the carrying value of the Company’s MSRs from period to period.

Adjusted Earnings Per Share. We define Adjusted Earnings Per Share as our adjusted net income divided by the basic weighted average shares outstanding of our Class A and Class B common stock.

Adjusted EBITDA. We define Adjusted EBITDA as earnings before interest (without adjustment for net warehouse interest related to loan fundings and payoff interest related to loan prepayments), taxes, depreciation and amortization and net income attributable to the non-controlling interest exclusive of any change in the fair value measurements of the MSRs due to valuation assumptions, contingent liabilities from business acquisitions and stock-based compensation. We exclude these items because we believe they are non-cash expenses that are not reflective of our core operations or indicative of our ongoing operations.

Adjusted Return on Equity. We define Adjusted Return on Equity as annualized Adjusted Net Income as a percentage of average beginning and ending stockholders’ equity during the period.

We use these non-GAAP financial measures to evaluate our operating performance, to establish budgets and to develop operational goals for managing our business. These non-GAAP financial measures are designed to evaluate operating results exclusive of fair value adjustments that are not indicative of management’s operating performance. Accordingly, we believe that these financial measures provide useful information to investors and others in understanding and evaluating our operating results, enhancing the overall understanding of our past performance and future prospects.

Our non-GAAP financial measures are not prepared in accordance with GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of these non-GAAP financial measures rather than net income (loss) or net income (loss) attributable to Guild, which are the most directly comparable financial measures calculated and presented in accordance with GAAP for Adjusted Net Income and Adjusted EBITDA, and Return on Equity, which is the most directly comparable financial measure calculated and presented in accordance with GAAP for Adjusted Return on Equity. These limitations include that these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and many of the adjustments to the GAAP financial measures reflect the exclusion of items that are recurring and may be reflected in the Company’s financial results for the foreseeable future. In addition, other companies may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.

For more information on these non-GAAP financial measures, please see the "GAAP to Non-GAAP Reconciliations" included at the end of this release.

Condensed Consolidated Balance Sheets (unaudited)

(in thousands, except share and per share amounts)

June 30,
2022

December 31,
2021

Assets

Cash and cash equivalents

$

248,987

$

243,108

Restricted cash

5,592

5,012

Mortgage loans held for sale

1,249,809

2,204,216

Ginnie Mae loans subject to repurchase right

616,335

728,978

Accounts and interest receivable

23,517

68,359

Derivative assets

23,080

27,961

Mortgage servicing rights, net

1,030,310

675,340

Intangible assets, net

37,050

41,025

Goodwill

173,434

175,144

Other assets

192,845

214,061

Total assets

$

3,600,959

$

4,383,204

Liabilities and stockholders’ equity

Warehouse lines of credit

$

1,148,551

$

1,927,478

Notes payable

118,750

250,227

Ginnie Mae loans subject to repurchase right

616,638

729,260

Accounts payable and accrued expenses

44,488

56,836

Accrued compensation and benefits

46,711

75,079

Investor reserves

16,919

18,437

Contingent liabilities due to acquisitions

1,557

59,500

Derivative liabilities

4,121

2,079

Operating lease liabilities

91,272

97,836

Note due to related party

1,580

2,614

Deferred compensation plan

95,040

101,600

Deferred tax liabilities

227,502

142,245

Total liabilities

2,413,129

3,463,191

Commitments and contingencies

Stockholders’ equity

Preferred stock, $0.01 par value; 50,000,000 shares authorized; no shares issued and outstanding

Class A common stock, $0.01 par value; 250,000,000 shares authorized; 20,616,015 and 20,723,912 shares issued and outstanding at June 30, 2022 and December 31, 2021

206

207

Class B common stock, $0.01 par value; 100,000,000 shares authorized; 40,333,019 shares issued and outstanding at June 30, 2022 and December 31, 2021

403

403

Additional paid-in capital

43,666

42,175

Retained earnings

1,143,489

877,194

Non-controlling interest

66

34

Total stockholders' equity

1,187,830

920,013

Total liabilities and stockholders’ equity

$

3,600,959

$

4,383,204

Condensed Consolidated Statements of Income (unaudited)

Three Months Ended

Six Months Ended
June 30,

(in thousands, except per share amounts)

Jun 30, 2022

Mar 31, 2022

2022

2021

Revenue

Loan origination fees and gain on sale of loans, net

$

207,972

$

242,639

$

450,611

$

777,347

Loan servicing and other fees

54,595

53,177

107,772

92,851

Valuation adjustment of mortgage servicing rights

21,074

184,601

205,675

(49,046

)

Interest income

14,823

15,263

30,086

29,734

Interest expense

(10,949

)

(14,138

)

(25,087

)

(30,720

)

Other income, net

22

220

242

130

Net revenue

287,537

481,762

769,299

820,296

Expenses

Salaries, incentive compensation and benefits

178,192

187,329

365,521

499,287

General and administrative

6,371

(5,630

)

741

58,701

Occupancy, equipment and communication

18,973

18,312

37,285

29,494

Depreciation and amortization

3,808

3,913

7,721

3,262

Provision (relief) for foreclosure losses

1,796

(321

)

1,475

2,019

Total expenses

209,140

203,603

412,743

592,763

Income before income tax expense

78,397

278,159

356,556

227,533

Income tax expense

20,108

70,186

90,294

57,991

Net income

58,289

207,973

266,262

169,542

Net income attributable to non-controlling interest

17

15

32

Net income attributable to Guild

$

58,272

$

207,958

$

266,230

$

169,542

Net income per share attributable to Class A and Class B Common Stock:

Basic

$

0.95

$

3.41

$

4.36

$

2.83

Diluted

$

0.95

$

3.38

$

4.31

$

2.81

Weighted average shares outstanding of Class A and Class B Common Stock:

Basic

61,064

61,057

61,060

60,000

Diluted

61,650

61,494

61,779

60,234

Key Performance Indicators

Management reviews several key performance indicators to evaluate our business results, measure our performance and identify trends to inform our business decisions. Summary data for these key performance indicators is listed below.

Three Months Ended

Six Months Ended June 30,

($ and units in thousands)

Jun 30, 2022

Mar 31, 2022

2022

2021

Origination Data

$ Total in-house origination(1)

$

5,721,931

$

6,061,553

$

11,783,484

$

17,941,190

# Total in-house origination

18

19

37

62

$ Retail in-house origination

5,538,743

5,779,346

11,318,089

17,424,164

# Retail in-house origination

17

18

35

60

$ Retail brokered origination(2)

65,275

53,095

118,370

32,671

Total originations

$

5,787,206

$

6,114,648

$

11,901,854

$

17,973,861

Gain on sale margin (bps)(3)

363

400

382

433

Pull-through adjusted locked volume(4)

5,824,911

7,257,489

12,997,291

17,120,941

Gain on sale margin on pull-through adjusted locked volume (bps)(5)

357

334

347

454

Refinance recapture rate(6)

39

%

55

%

50

%

64

%

Purchase origination %

84

%

66

%

75

%

47

%

Servicing Data

UPB (period end)(7)

$

75,856,564

$

73,250,575

$

75,856,564

$

65,670,291

_________________

(1) Includes retail and correspondent loans and excludes brokered loans.

(2) Brokered loans are defined as loans we originate in the retail channel that are processed by us but underwritten and closed by another lender. These loans are typically for products we choose not to offer in-house.

(3) Represents loan origination fees and gain on sale of loans, net divided by total in-house origination to derive basis points.

(4) Pull-through adjusted locked volume is equal to total locked volume multiplied by pull-through rates of 92.7%, 93.8% and 90.7% as of June 30, 2022, March 31, 2022 and June 30, 2021, respectively. We estimate the pull-through rate based on changes in pricing and actual borrower behavior using a historical analysis of loan closing data and "fallout" data with respect to the number of commitments that have historically remained unexercised.

(5) Represents loan origination fees and gain on sale of loans, net divided by pull-through adjusted locked volume.

(6) Refinance recapture rate is calculated as the total UPB of our clients that originated a new mortgage with us to refinance an existing mortgage in a given period, divided by the total UPB of our clients that paid off their existing mortgage and originated a new mortgage in the same period.

(7) Excludes subserviced portfolios of $0.6 billion as of June 30, 2021. During the fourth quarter of 2021, we sold our subservicing portfolios.

GAAP to Non-GAAP Reconciliations

Reconciliation of Net Income Attributable to Guild to Adjusted Net Income

(unaudited)

Three Months Ended

Six Months Ended June 30,

(in millions, except per share amounts)

Jun 30, 2022

Mar 31, 2022

2022

2021

Net income

$

58.3

$

208.0

$

266.3

$

169.5

Net income attributable to non-controlling interest(1)

Net income attributable to Guild

$

58.3

$

208.0

$

266.2

$

169.5

Add adjustments:

Change in fair value of MSRs due to model inputs and assumption

(46.9

)

(209.5

)

(256.4

)

(30.8

)

Change in fair value of contingent liabilities due to acquisitions

(16.5

)

(28.9

)

(45.4

)

13.1

Amortization of acquired intangible assets

2.0

2.0

4.0

Stock-based compensation

1.7

1.3

3.0

3.1

Tax impact of adjustments(2)

15.3

59.3

74.6

3.7

Adjusted Net Income

$

13.9

$

32.1

$

46.0

$

158.7

Weighted average shares outstanding of Class A and Class B Common Stock

61

61

61

60

Earnings per share

$

0.95

$

3.41

$

4.36

$

2.83

Adjusted earnings per share

$

0.23

$

0.53

$

0.75

$

2.64

_________________

Amounts may not foot due to rounding

(1) Net income attributable to non-controlling interest was $17 thousand, $15 thousand and $32 thousand for the three months ended June 30, 2022 and March 31, 2022 and the six months ended June 30, 2022, respectively.

(2) Implied tax rate used was 25.6%, 25.2%, 25.3% and 25.5% for the three months ended June 30, 2022 and March 31, 2022 and the six months ended June 30, 2022 and 2021, respectively.

Reconciliation of Net Income to Adjusted EBITDA

(unaudited)

Three Months Ended

Six Months Ended June 30,

(in millions)

Jun 30, 2022

Mar 31, 2022

2022

2021

Net income

$

58.3

$

208.0

$

266.3

$

169.5

Add adjustments:

Interest expense on non-funding debt

1.4

1.7

3.2

3.0

Income tax expense

20.1

70.2

90.3

58.0

Depreciation and amortization

3.8

3.9

7.7

3.3

Change in fair value of MSRs due to model inputs and assumptions

(46.9

)

(209.5

)

(256.4

)

(30.8

)

Change in fair value of contingent liabilities due to acquisitions

(16.5

)

(28.9

)

(45.4

)

13.1

Stock-based compensation

1.7

1.3

3.0

3.1

Adjusted EBITDA

$

22.0

$

46.7

$

68.6

$

219.2

_________________

Amounts may not foot due to rounding

Reconciliation of Return on Equity to Adjusted Return on Equity

(unaudited)

Three Months Ended

Six Months Ended June 30,

($ in millions)

Jun 30, 2022

Mar 31, 2022

2022

2021

Numerator: Adjusted Net Income

$

13.9

$

32.1

$

46.0

$

158.7

Denominator: Average stockholders’ equity

1,158.5

1,024.6

1,053.9

792.3

Adjusted Return on Equity

4.8

%

12.5

%

8.7

%

40.1

%

Return on Equity

20.1

%

81.2

%

50.5

%

42.8

%

View source version on businesswire.com: https://www.businesswire.com/news/home/20220804005892/en/

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