UWMC - UWM Holdings stock swoons after Q1 revenue slammed by MSR value change

2023-05-10 09:52:11 ET

UWM Holdings ( NYSE: UWMC ) stock sank 11% in Wednesday morning trading after the wholesale mortgage company's revenue took a hit from a decline in the fair value of its mortgage servicing rights ((MSRs)).

The company expects Q2 loan production of $23B-$30B, rising from Q1's $22.3B level. Furthermore, it expects Q2's gain margin, a measure of profitability, to be 75 to 100 basis points vs. 92 bps in Q1.

Q1 revenue of $161.3M, falling far short of the $396.4M consensus, dropped from $302.4M in Q4 and from $821.8M in Q1 2022. The current quarter included a change in fair value of mortgage servicing rights ((MSRs)), that reduced revenue by $337.8M. That compared with a $150.8M reduction of MSR fair value in Q4 2022 and a $172.0M increase in Q1 2022.

Q1 adjusted net income of -$606.6M vs. -$53.3M in the prior quarter and from $352.0M in the year-ago period.

Q1 originations of $22.3B, compared with its guidance of $16B-$23B, dropped from $25.1B in the prior quarter and from $38.8B in Q1 2022.

Total gain margin was 92 bps, vs 51 bps in Q4 2022 and 99 bps in Q1 2022.

Unpaid principal balance of its MSR  of $297.9B with a weighted average coupon (WAC) of 3.66% compares with MSRs of $312.5B with a WAC of 3.64% at Dec. 31, 2022.

Conference call at 10:30 AM ET.

Earlier, UWM Holdings ( UWMC ) GAAP EPS of -$0.07, revenue of $161.27M

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