UWMC - UWM Holdings Corporation Announces Third Quarter 2021 Results

$329.9 million in 3Q21 Net Income;
Record Quarterly Total Loan Volume of $63.0 billion and Purchase Volume of $26.5 billion

UWM Holdings Corporation ( NYSE: UWMC ), the publicly traded indirect parent of United Wholesale Mortgage (“UWM”), the #1 wholesale mortgage lender in America, today announced its results for the third quarter ended September 30, 2021. UWMC reported 3Q21 net income of $329.9 million and diluted earnings per share of $0.16. Loan origination volume for the quarter was a record of $63.0 billion, which included $26.5 billion in purchase volume. Net income for the third quarter was inclusive of a $170.5 million decline in fair value of mortgage servicing rights (MSRs).

Mat Ishbia, Chairman and CEO of UWMC, said: "UWM broke company records yet again in Q3 for overall originations and purchase originations, demonstrating continued momentum for both UWM and the broker channel. I'm proud of our newest technology launches, BOLT, The Source, and UWM Appraisal Direct. These enhancements are just another in a long line of technology initiatives that UWM has pioneered over the years for the benefit of independent mortgage brokers, and by extension, consumers that are wise enough to use them rather than our retail competitors. Now more than ever, the broker channel is the fastest, easiest and cheapest way for a consumer to get a mortgage."

Third Quarter 2021 Financial Highlights

• Originations of $63.0 billion, a 16% increase from $54.3 billion in 3Q20 and a 6% increase from $59.2 billion in 2Q21
• Purchase originations of $26.5 billion, a 119% increase compared to $12.1 billion in 3Q20 and a 10% increase from $24.1 billion in 2Q21
• Total gain margin of 94 bps in 3Q21 compared to 318 bps in 3Q20 and 81 bps in 2Q21
• Third quarter 2021 net income of $329.9 million inclusive of a $170.5 million decline in fair value of MSRs as compared to $1.5 billion of net income for 3Q20 inclusive of $68.9 million of expenses related to amortization, impairment, and pay-offs of MSRs and $138.7 million of net income for 2Q21 inclusive of a $219.1 million decline in fair value of MSRs
• Total equity of $3.0 billion at September 30, 2021 as compared to $2.0 billion at September 30, 2020 and $2.7 billion at June 30, 2021
• Unpaid principal balance of mortgage servicing rights increased to $284.9 billion at September 30, 2021 from $153.1 billion at September 30, 2020 and $260.5 billion at June 30, 2021
• Sale of MSRs in 3Q21 on loans with an aggregate unpaid principal balance of approximately $22.7 billion for proceeds of approximately $269.9 million
• Continued stock buyback, repurchasing 1,952,018 Class A shares in 3Q21; through September 30, 2021, total Class A shares repurchased by the Company of 2,742,617 for $21.0 million for an average price per share of $7.66

Technology Update

• UWM launched three new technologies in Q3 which are intended to speed-up the loan process and help independent mortgage brokers grow their business:
  • BOLT allows broker clients to obtain an initial underwrite approval for qualified borrowers in as little as 15 minutes which will unlock underwriter capacity and ultimately drive down UWM's cost-per-loan.
  • UWM Appraisal Direct will streamline the appraisal process delivering faster appraisals and a long list of benefits to appraisers and borrowers alike to offer a better experience and relieve a key pain point in the mortgage industry.
  • The Source is a mortgage search engine that learns from past searches and allows for the creation of a personalized hub for every UWM broker client to customize and track the information most important to them from pricing matrices to GSE guidelines and even job aids on all of UWM's technology.

Operational and Community Highlights

• We maintained an average application to clear to close time (“Days to Close”) of approximately 19 days in 3Q21 while management estimates that the industry remains at an average of 43 days during the third quarter 2021, as released in the August ICE Mortgage Technology Origination Insight Report
• Our 1.01% 60+ days delinquency and our 0.83% forbearance rates, as of September 30, 2021, are significantly better than the industry averages of 3.91% and 2.62%, respectively, highlighting our strong credit quality
• Executed $1.17 billion in Private Label Securitization deals and sold MSRs on loans with an aggregate unpaid principal balance of approximately $22.7 billion for proceeds of approximately $269.9 million
• UWM celebrated National Mortgage Broker Day by inviting 100 mortgage brokers to ring the NYSE closing bell on July 21st

Chairman and CEO of UWMC, Mat Ishbia, added: “As the mortgage market shifts from heavy refinance to more purchase, UWM and the wholesale channel, are uniquely positioned to best serve the needs of the American consumer as a team. Brokers, by nature, are embedded in their local housing markets and UWM provides them elite technology, speed, and service, especially on purchase loans. Technologies like BOLT and UWM Appraisal Direct will continue to fuel broker channel growth for years to come.”

Fourth Quarter 2021 Outlook

We anticipate fourth quarter production to be in the $52-$60 billion range, with expected gain margin between 85 and 105 bps.

Dividend

Subsequent to September 30, 2021, for the fourth consecutive quarter, the UWMC Board of Directors declared a cash dividend of $0.10 per share on the outstanding shares of Class A common stock. The dividend is payable on January 6, 2022 (the “Dividend Payment Date”) to stockholders of record at the close of business on December 10, 2021. On or before the Dividend Payment Date, the Board, in its capacity as the Manager of UWM Holdings LLC ("Holdings LLC") and pursuant to its authority under the Holdings LLC Amended and Restated Operating Agreement, will determine whether to (a) make distributions from Holdings LLC to only UWM Holdings Corporation, as the owner of the Class A Units of Holdings LLC with the proportional amount due to SFS Holding Corp. ("SFS Corp.") as the owner of the Class B Units of Holdings LLC, being distributed upon the sooner to occur of (i) the Board making a determination to do so or (ii) the date on which Class B Units of Holdings LLC are converted into shares of Class B common stock of UWMC or (b) make proportional and simultaneous distributions from Holdings LLC to both UWM Holdings Corporation, as the owner of the Class A Units of Holdings LLC and to SFS Corp. as the owner of the Class B Units of Holdings LLC.

Earnings Conference Call Details

As previously announced, UWMC will hold a conference call for financial analysts and investors on Tuesday, November 9 at 9:00 AM ET to review the results and answer questions. Interested parties may register for a toll-free dial-in number by visiting:

• https://conferencingportals.com/event/YModynrv

Please dial in at least 15 minutes in advance to ensure a timely connection to the call. Audio webcast, taped replay and transcript will be available on the UWMC investor relations website at https://investors.uwm.com/ .

Key Operational Metrics

“Closed loan volume” and “Total gain margin” are key operational metrics that UWMC management uses to evaluate the performance of the business. “Closed loan volume” is the aggregate principal of the residential mortgage loans originated by UWMC during a period. “Total gain margin” represents total loan production income divided by total loan production.

Non-GAAP Metrics

UWMC's net income for periods prior to the first quarter of 2021 does not reflect a significant income tax provision, since UWM (UWMC's accounting predecessor) is a pass-through entity not subject to federal and most state income taxes. For periods commencing with the first quarter of 2021, UWMC's net income does not reflect the income tax provision that would otherwise be reflected if 100% of the economic interest in UWM was owned by UWMC. Therefore, for comparison purposes, UWMC provides “Adjusted net income”, which is our pre-tax income adjusted for a 23.60% estimated annual effective tax rate. “Adjusted net income” is a Non-GAAP Metric.

We also disclose Adjusted EBITDA, which we define as earnings before interest expense on non-funding debt, provision for income taxes, depreciation and amortization of premises and equipment, stock-based compensation expense, the change in fair value of MSRs due to valuation inputs or assumptions (for periods subsequent to the election of the fair value method accounting for MSRs), and the impairment or recovery of MSRs (for periods prior to the election of the fair value method of accounting for MSRs), the impact of non-cash deferred compensation expense, the change in fair value of Public and Private Warrants, and the change in Tax Receivable Agreement liability. We exclude the change in Tax Receivable Agreement liability, the change in fair value of Public and Private Warrants and the change in fair value of MSRs due to valuation inputs or assumptions, or impairment or recovery of MSRs prior to the election of the fair value method of accounting for MSRs, as these represent non-cash, non-realized adjustments to our earnings, which are not indicative of our performance or results of operations. Adjusted EBITDA includes interest expense on funding facilities, which are recorded as a component of interest expense, as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA.

In addition, we disclose “Non-funding debt” and the “Non-funding debt to equity ratio” as a Non-GAAP metric. We define “Non-funding debt” as the total of UWMC's senior notes, operating lines of credit, borrowings against investment securities, equipment note payable, and finance leases as reported on our balance sheet, and the “Non-funding debt to equity ratio” as total Non-funding debt divided by UWMC’s total equity.

Management believes that these Non-GAAP metrics provide useful information to investors. These measures are not financial measures calculated in accordance with GAAP and should not be considered as a substitute for any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies.

The following table presents these non-GAAP financial measures along with their most directly comparable financial measure calculated in accordance with GAAP (dollars in thousands):

Forward Looking Statements

This press release and our earnings call include forward-looking statements. These forward-looking statements are generally identified by the use of words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” and similar words indicating that these reflect our views with respect to future events. Forward-looking statements in this press release include statements regarding: (1) our foundation and strategies for growth and the drivers of that growth; (2) our “All-In” initiative and its impact on our business and industry; (3) our performance in shifting market conditions and the comparison of such performance against our competitors; (4) growth of the wholesale channel and the benefits to our business of such growth; (5) our investments in technology and the impact to our operations and financial results; (6) our purchase production and product mix; and (7) our anticipated ranges for production volume and margin in the third quarter of 2021. These statements are based on management’s current expectations, but are subject to risks and uncertainties, many of which are outside of our control, and could cause future events or results materially differ from those stated or implied in the forward-looking statements, including (i) UWM’s dependence on macroeconomic and U.S. residential real estate market conditions, including changes in U.S. monetary policies that affect interest rates; (ii) UWM’s reliance on its warehouse facilities and the risk of a decrease in the value of the collateral underlying certain of its facilities causing an unanticipated margin call; (iii) UWM’s ability to sell loans in the secondary market; (iv) UWM’s dependence on the government sponsored entities such as Fannie Mae and Freddie Mac; (v) changes in the GSEs’, FHA, USDA and VA guidelines or GSE and Ginnie Mae guarantees; (vi) UWM’s dependence on Independent Mortgage Advisors to originate mortgage loans; (vii) the risk that an increase in the value of the MBS UWM sells in forward markets to hedge its pipeline may result in an unanticipated margin call; (viii) UWM’s inability to continue to grow, or to effectively manage the growth of, its loan origination volume; (ix) UWM’s ability to continue to attract and retain its Independent Mortgage Advisor relationships; (x) UWM’s ability to implement technological innovation; (xi) UWM’s ability to continue to comply with the complex state and federal laws regulations or practices applicable to mortgage loan origination and servicing in general; and (xii) other risks and uncertainties indicated from time to time in our filings with the Securities and Exchange Commission including those under “Risk Factors” therein. With respect to expectations regarding the share repurchase program, the amount and timing of share repurchases will depend upon, among other things, market conditions, share price, liquidity targets, regulatory requirements. We wish to caution readers that certain important factors may have affected and could in the future affect our results and could cause actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of us. We undertake no obligation to update forward-looking statements to reflect events or circumstances after the date hereof.

About UWM Holdings Corporation and United Wholesale Mortgage

Headquartered in Pontiac, Michigan, UWM Holdings Corporation is the publicly traded indirect parent of United Wholesale Mortgage (“UWM”). UWM is the #1 wholesale lender in the nation six years in a row, providing state-of-the-art technology and unrivaled client service. UWM underwrites and provides closing documentation for residential mortgage loans originated by independent mortgage brokers, correspondents, small banks and local credit unions. UWM focuses on providing highly efficient, accurate and expeditious lending support. UWM’s exceptional teamwork and focus on technology result in the delivery of innovative mortgage solutions that drive the company’s ongoing growth in market share and its leadership position as the foremost advocate for independent mortgage brokers. For more information, visit www.uwm.com .

Addendum to Exhibit 99.1

This addendum includes the Company's Condensed Consolidated Balance Sheets as of September 30, 2021 and the preceding four quarters and Statements of Operations for the quarter ended September 30, 2021 and the preceding four quarters, for purposes of providing historical quarterly trending information to investors.

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INVESTOR CONTACT
MATT ROSLIN
InvestorRelations@uwm.com

MEDIA CONTACT
NICOLE YELLAND
Media@uwm.com