Continues focused execution of Vision 2025

Narrows net loss for third consecutive quarter and maintains strong liquidity position

Expands productivity program, expected to yield additional $120 million in run-rate benefits

  • Revenue decreased $6 million or 2% to $266 million from second quarter 2023, primarily driven by lower pull through weighted lock volume partially offset by higher pull through weighted gain on sale margin.
  • Total expenses decreased $25 million or 8% to $305 million from second quarter 2023, driven by cost reductions across almost all expense categories.
  • Expands Vision 2025 productivity program targeting $120 million of annualized cost reductions, including $100 million of non-volume related expenses.
  • Quarterly net loss narrowed by $15 million or 31% to $34 million from the second quarter of 2023.
  • Adjusted net loss declined by $7 million or 22% to $27 million from the second quarter of 2023.
  • Company continues to maintain strong liquidity profile; cash balance of $717 million compared to $719 million at end of second quarter 2023.

loanDepot, Inc. (NYSE: LDI) (together with its subsidiaries, “loanDepot” or the “Company”), a leading provider of home lending solutions that enable customers to achieve the dream of home ownership, today announced results for the third quarter ended September 30, 2023.

“loanDepot continues to make significant progress against the strategic imperatives laid out in our Vision 2025 plan,” said President and Chief Executive Officer Frank Martell. “We delivered our third successive quarter of significantly lower operating losses driven by margin expansion and the continued benefits of cost reduction, productivity, and operating leverage. Importantly, we also benefited from contributions from our servicing platform, builder partnerships, and home equity lending.

“We continue to aggressively reset our cost structure to address the impact of generationally low unit volumes as we maintain our focused execution of Vision 2025, including capturing opportunities to expand purpose-driven lending in support of the increasingly diverse communities of first-time homebuyers. We believe our proven diversified channel strategy, highly talented team, operating scale, and ongoing cost productivity program will position us well to capitalize on the eventual recovery of the housing market,” Martell added.

“Our focus on cost reduction, margin expansion and effective capital management have been the key drivers underpinning our ability to maintain a strong liquidity position in the face of the ongoing market contraction. Importantly, we ended the third quarter with cash balances essentially unchanged from the prior quarter end,” said Chief Financial Officer David Hayes. “We remain laser focused on maintaining significant levels of liquidity as we work toward run-rate profitability.”

Third Quarter Highlights:

Financial Summary

 

Three Months Ended

 

Nine Months Ended

($ in thousands except per share data)

(Unaudited)

Sep 30,

2023

 

Jun 30,

2023

 

Sep 30,

2022

 

Sep 30,

2023

 

Sep 30,

2022

Rate lock volume

$

8,295,935

 

 

$

8,973,666

 

 

$

12,032,026

 

 

$

25,738,036

 

 

$

61,620,241

 

Pull through weighted lock volume(1)

 

5,685,209

 

 

 

6,057,179

 

 

 

8,755,082

 

 

 

17,067,876

 

 

 

40,968,021

 

Loan origination volume

 

6,083,143

 

 

 

6,273,543

 

 

 

9,849,927

 

 

 

17,301,023

 

 

 

47,395,713

 

Gain on sale margin(2)

 

2.74

%

 

 

2.75

%

 

 

1.80

%

 

 

2.66

%

 

 

1.66

%

Pull through weighted gain on sale margin(3)

 

2.93

%

 

 

2.85

%

 

 

2.03

%

 

 

2.69

%

 

 

1.92

%

Financial Results

 

 

 

 

 

 

 

 

 

Total revenue

$

265,661

 

 

$

271,833

 

 

$

274,192

 

 

$

745,395

 

 

$

1,086,141

 

Total expense

 

305,128

 

 

 

330,148

 

 

 

435,125

 

 

 

949,760

 

 

 

1,602,038

 

Net loss

 

(34,262

)

 

 

(49,759

)

 

 

(137,482

)

 

 

(175,743

)

 

 

(452,623

)

Diluted loss per share

$

(0.09

)

 

$

(0.13

)

 

$

(0.37

)

 

$

(0.48

)

 

$

(1.29

)

Non-GAAP Financial Measures(4)

 

 

 

 

 

 

 

 

 

Adjusted total revenue

$

266,363

 

 

$

275,709

 

 

$

249,663

 

 

$

768,263

 

 

$

1,027,540

 

Adjusted net loss

 

(26,859

)

 

 

(34,329

)

 

 

(116,846

)

 

 

(121,457

)

 

 

(367,101

)

Adjusted EBITDA (LBITDA)

 

18,493

 

 

 

6,499

 

 

 

(114,133

)

 

 

(4,345

)

 

 

(380,049

)

(1)

Pull through weighted rate lock volume is the principal balance of loans subject to interest rate lock commitments, net of a pull-through factor for the loan funding probability.

(2)

Gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by loan origination volume during period.

(3)

Pull through weighted gain on sale margin represents the total of (i) gain on origination and sale of loans, net, and (ii) origination income, net, divided by the pull through weighted rate lock volume.

(4)

See “Non-GAAP Financial Measures” for a discussion of Non-GAAP Financial Measures and a reconciliation of these metrics to their closest GAAP measure.

Operational Highlights

  • Quarterly non-volume related expenses decreased $18.7 million since the second quarter of 2023, primarily due to lower salaries and benefits resulting from lower headcount and lower legal expenses.
  • Incurred expenses related to Vision 2025 plan of $2.5 million during the quarter, including $1.2 million of Vision 2025-related professional services fees, $0.8 million of personnel related expenses and $0.5 million of lease and other asset impairment charges. Vision 2025-related expenses totaled $6.8 million in the second quarter of 2023.
  • Accrued $2.0 million of legal expenses related to the expected settlement of outstanding litigation.
  • Pull through weighted lock volume of $5.7 billion for the third quarter 2023, a decrease of $0.4 billion or 6% from the second quarter of 2023, resulting in quarterly total revenue of $265.7 million, a decrease of $6.2 million, or 2%, over the same period.
  • Loan origination volume for the third quarter of 2023 was $6.1 billion, a decrease of $0.2 billion or 3% from the second quarter of 2023.
  • Purchase volume decreased to 71% of total loans originated during the third quarter, down from 73% of total loans originated during the second quarter of 2023 and up from 70% of total loans originated during the third quarter of 2022.
  • For the three months ended September 30, 2023, our preliminary organic refinance consumer direct recapture rate1 increased to 71% from the second quarter’s refinance rate of 68%. This highlights the effectiveness of our marketing efforts, the strength of our customer relationships, and the value of our servicing portfolio for adjacent and complementary revenue opportunities.
  • Net loss for the third quarter of 2023 of $34.3 million as compared to net loss of $49.8 million in the second quarter of 2023. Net loss decreased quarter over quarter primarily due to a decrease in expenses exceeding the decrease in revenue.
  • Adjusted EBITDA for the third quarter of 2023 was $18.5 million as compared to adjusted EBITDA of $6.5 million for the second quarter of 2023.

_______________

1 We define organic refinance consumer direct recapture rate as the total unpaid principal balance (“UPB”) of loans in our servicing portfolio that are paid in full for purposes of refinancing the loan on the same property, with the Company acting as lender on both the existing and new loan, divided by the UPB of all loans in our servicing portfolio that paid in full for the purpose of refinancing the loan on the same property. The recapture rate is finalized following the publication date of this release when external data becomes available.

Outlook for the fourth quarter of 2023

  • Origination volume of between $4 billion and $6 billion.
  • Pull-through weighted rate lock volume of between $3.8 billion and $5.8 billion.
  • Pull-through weighted gain on sale margin of between 240 basis points and 280 basis points.

Servicing

 

 

Three Months Ended

 

Nine Months Ended

Servicing Revenue Data:

($ in thousands)

(Unaudited)

 

Sep 30,

2023

 

Jun 30,

2023

 

Sep 30,

2022

 

Sep 30,

2023

 

Sep 30,

2022

Due to changes in valuation inputs or assumptions

 

$

68,651

 

 

$

26,138

 

 

$

75,366

 

 

$

73,422

 

 

$

373,158

 

Due to collection/realization of cash flows

 

 

(38,502

)

 

 

(41,619

)

 

 

(49,519

)

 

 

(114,777

)

 

 

(193,022

)

Realized gains (losses) on sales of servicing rights, net (1)

 

 

3,516

 

 

 

7,021

 

 

 

(13,489

)

 

 

10,677

 

 

 

(5,949

)

Net loss from derivatives hedging servicing rights

 

 

(69,353

)

 

 

(30,014

)

 

 

(50,837

)

 

 

(96,290

)

 

 

(314,557

)

Changes in fair value of servicing rights, net

 

$

(35,688

)

 

$

(38,474

)

 

$

(38,479

)

 

$

(126,968

)

 

$

(140,370

)

 

 

 

 

 

 

 

 

 

 

 

Servicing fee income

 

$

118,783

 

 

$

117,737

 

 

$

113,544

 

 

$

355,482

 

 

$

341,929

 

(1)

Includes the provision for sold MSRs.

 

 

Three Months Ended

 

Nine Months Ended

Servicing Rights, at Fair Value:

($ in thousands)

(Unaudited)

 

Sep 30,

2023

 

Jun 30,

2023

 

Sep 30,

2022

 

Sep 30,

2023

 

Sep 30,

2022

Balance at beginning of period

 

$

1,998,762

 

 

$

2,016,568

 

 

$

2,204,593

 

 

$

2,025,136

 

 

$

1,999,402

 

Additions

 

 

80,068

 

 

 

75,866

 

 

 

124,244

 

 

 

215,229

 

 

 

574,459

 

Sales proceeds

 

 

(73,972

)

 

 

(85,164

)

 

 

(331,922

)

 

 

(171,167

)

 

 

(751,276

)

Changes in fair value:

 

 

 

 

 

 

 

 

 

 

Due to changes in valuation inputs or assumptions

 

 

68,651

 

 

 

26,138

 

 

 

75,366

 

 

 

73,422

 

 

 

373,158

 

Due to collection/realization of cash flows

 

 

(38,502

)

 

 

(41,619

)

 

 

(49,519

)

 

 

(114,777

)

 

 

(193,022

)

Realized gains (losses) on sales of servicing rights

 

 

3,647

 

 

 

6,973

 

 

 

(9,493

)

 

 

10,811

 

 

 

10,548

 

Balance at end of period (1)

 

$

2,038,654

 

 

$

1,998,762

 

 

$

2,013,269

 

 

$

2,038,654

 

 

$

2,013,269

 

(1)

Balances are net of $14.7 million, $13.3 million, and $16.8 million of servicing rights liability as of September 30, 2023, June 30, 2023, and September 30, 2022, respectively.

 

 

 

% Change

Servicing Portfolio Data:

($ in thousands)

(Unaudited)

Sep 30,

2023

 

Jun 30,

2023

 

Sep 30,

2022

 

Sep-23

vs

Jun-23

 

Sep-23

vs

Sep-22

 

 

 

 

 

 

 

 

 

 

Servicing portfolio (unpaid principal balance)

$

143,959,705

 

 

$

142,479,870

 

 

$

139,709,633

 

 

1.0

%

 

3.0

%

 

 

 

 

 

 

 

 

 

 

Total servicing portfolio (units)

 

490,191

 

 

 

482,266

 

 

 

463,471

 

 

1.6

 

 

5.8

 

 

 

 

 

 

 

 

 

 

 

60+ days delinquent ($)

$

1,235,443

 

 

$

1,192,377

 

 

$

1,365,774

 

 

3.6

 

 

(9.5

)

60+ days delinquent (%)

 

0.9

%

 

 

0.8

%

 

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing rights, net to UPB

 

1.42

%

 

 

1.40

%

 

 

1.44

%

 

 

 

 

Balance Sheet Highlights

 

 

 

 

 

 

 

% Change

 

($ in thousands)

(Unaudited)

Sep 30,

2023

 

Jun 30,

2023

 

Sep 30,

2022

 

Sep-23

vs

Jun-23

 

Sep-23

vs

Sep-22

Cash and cash equivalents

$

717,196

 

$

719,073

 

$

1,143,948

 

(0.3

)%

 

(37.3

)%

Loans held for sale, at fair value

 

2,070,748

 

 

 

2,256,551

 

 

 

2,692,820

 

 

(8.2

)

 

(23.1

)

Servicing rights, at fair value

 

2,053,359

 

 

 

2,012,049

 

 

 

2,030,026

 

 

2.1

 

 

1.1

 

Total assets

 

6,078,529

 

 

 

6,203,505

 

 

 

7,378,536

 

 

(2.0

)

 

(17.6

)

Warehouse and other lines of credit

 

1,897,859

 

 

 

2,046,208

 

 

 

2,529,436

 

 

(7.2

)

 

(25.0

)

Total liabilities

 

5,309,594

 

 

 

5,406,160

 

 

 

6,300,039

 

 

(1.8

)

 

(15.7

)

Total equity

 

768,935

 

 

 

797,344

 

 

 

1,078,497

 

 

(3.6

)

 

(28.7

)

A decrease in loans held for sale at September 30, 2023, resulted in a corresponding decrease in the balance on our warehouse lines of credit. Total funding capacity with our lending partners was $3.9 billion at September 30, 2023 and $3.9 billion at June 30, 2023. Available borrowing capacity was $1.8 billion at September 30, 2023.

Consolidated Statements of Operations

($ in thousands except per share data)

(Unaudited)

Three Months Ended

 

Nine Months Ended

 

Sep 30,

2023

 

Jun 30,

2023

 

Sep 30,

2022

 

Sep 30,

2023

 

Sep 30,

2022

REVENUES:

 

 

 

 

 

 

 

 

 

Interest income

$

37,253

 

 

$

33,060

 

 

$

51,202

 

 

$

98,271

 

 

$

166,888

 

Interest expense

 

(34,642

)

 

 

(30,209

)

 

 

(41,408

)

 

 

(91,612

)

 

 

(121,220

)

Net interest income

 

2,611

 

 

 

2,851

 

 

 

9,794

 

 

 

6,659

 

 

 

45,668

 

 

 

 

 

 

 

 

 

 

 

Gain on origination and sale of loans, net

 

148,849

 

 

 

154,335

 

 

 

156,300

 

 

 

411,336

 

 

 

665,993

 

Origination income, net

 

17,740

 

 

 

18,332

 

 

 

21,268

 

 

 

48,088

 

 

 

119,449

 

Servicing fee income

 

118,783

 

 

 

117,737

 

 

 

113,544

 

 

 

355,482

 

 

 

341,929

 

Change in fair value of servicing rights, net

 

(35,688

)

 

 

(38,474

)

 

 

(38,479

)

 

 

(126,968

)

 

 

(140,370

)

Other income

 

13,366

 

 

 

17,052

 

 

 

11,765

 

 

 

50,798

 

 

 

53,472

 

Total net revenues

 

265,661

 

 

 

271,833

 

 

 

274,192

 

 

 

745,395

 

 

 

1,086,141

 

 

 

 

 

 

 

 

 

 

 

EXPENSES:

 

 

 

 

 

 

 

 

 

Personnel expense

 

141,432

 

 

 

157,799

 

 

 

218,819

 

 

 

440,258

 

 

 

861,382

 

Marketing and advertising expense

 

33,894

 

 

 

34,712

 

 

 

42,940

 

 

 

104,520

 

 

 

205,289

 

Direct origination expense

 

15,749

 

 

 

17,224

 

 

 

19,463

 

 

 

50,352

 

 

 

106,616

 

General and administrative expense

 

46,522

 

 

 

54,817

 

 

 

83,412

 

 

 

157,473

 

 

 

197,089

 

Occupancy expense

 

5,903

 

 

 

6,099

 

 

 

9,889

 

 

 

18,083

 

 

 

28,673

 

Depreciation and amortization

 

10,592

 

 

 

10,721

 

 

 

10,243

 

 

 

31,339

 

 

 

32,110

 

Servicing expense

 

8,532

 

 

 

5,750

 

 

 

14,221

 

 

 

19,116

 

 

 

46,472

 

Other interest expense

 

42,504

 

 

 

43,026

 

 

 

36,138

 

 

 

128,619

 

 

 

83,671

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

40,736

 

Total expenses

 

305,128

 

 

 

330,148

 

 

 

435,125

 

 

 

949,760

 

 

 

1,602,038

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

(39,467

)

 

 

(58,315

)

 

 

(160,933

)

 

 

(204,365

)

 

 

(515,897

)

Income tax benefit

 

(5,205

)

 

 

(8,556

)

 

 

(23,451

)

 

 

(28,622

)

 

 

(63,274

)

Net loss

 

(34,262

)

 

 

(49,759

)

 

 

(137,482

)

 

 

(175,743

)

 

 

(452,623

)

Net loss attributable to noncontrolling interests

 

(17,663

)

 

 

(26,316

)

 

 

(77,401

)

 

 

(92,793

)

 

 

(256,873

)

Net loss attributable to loanDepot, Inc.

$

(16,599

)

 

$

(23,443

)

 

$

(60,081

)

 

$

(82,950

)

 

$

(195,750

)

 

 

 

 

 

 

 

 

 

 

Basic loss per share

$

(0.09

)

 

$

(0.13

)

 

$

(0.37

)

 

$

(0.48

)

 

$

(1.29

)

Diluted loss per share

$

(0.09

)

 

$

(0.13

)

 

$

(0.37

)

 

$

(0.48

)

 

$

(1.29

)

Consolidated Balance Sheets

($ in thousands)

Sep 30,

2023

 

Jun 30,

2023

 

Dec 31,

2022

 

(Unaudited)

 

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

$

717,196

 

$

719,073

 

$

863,956

Restricted cash

 

114,765

 

 

 

61,295

 

 

 

116,545

 

Accounts receivable, net

 

53,845

 

 

 

68,581

 

 

 

145,279

 

Loans held for sale, at fair value

 

2,070,748

 

 

 

2,256,551

 

 

 

2,373,427

 

Derivative assets, at fair value

 

86,622

 

 

 

80,382

 

 

 

39,411

 

Servicing rights, at fair value

 

2,053,359

 

 

 

2,012,049

 

 

 

2,037,447

 

Trading securities, at fair value

 

89,334

 

 

 

93,442

 

 

 

94,243

 

Property and equipment, net

 

76,762

 

 

 

82,677

 

 

 

92,889

 

Operating lease right-of-use asset

 

32,558

 

 

 

34,040

 

 

 

35,668

 

Prepaid expenses and other assets

 

124,756

 

 

 

129,675

 

 

 

155,982

 

Loans eligible for repurchase

 

639,806

 

 

 

647,418

 

 

 

634,677

 

Investments in joint ventures

 

18,778

 

 

 

18,322

 

 

 

20,410

 

Total assets

$

6,078,529

 

 

$

6,203,505

 

 

$

6,609,934

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

LIABILITIES:

 

 

 

 

 

Warehouse and other lines of credit

$

1,897,859

 

 

$

2,046,208

 

 

$

2,146,602

 

Accounts payable and accrued expenses

 

462,521

 

 

 

407,356

 

 

 

488,696

 

Derivative liabilities, at fair value

 

49,742

 

 

 

8,790

 

 

 

67,492

 

Liability for loans eligible for repurchase

 

639,806

 

 

 

647,418

 

 

 

634,677

 

Operating lease liability

 

53,579

 

 

 

56,552

 

 

 

61,675

 

Debt obligations, net

 

2,206,087

 

 

 

2,239,836

 

 

 

2,289,319

 

Total liabilities

 

5,309,594

 

 

 

5,406,160

 

 

 

5,688,461

 

EQUITY:

 

 

 

 

 

Total equity

 

768,935

 

 

 

797,344

 

 

 

921,473

 

Total liabilities and equity

$

6,078,529

 

 

$

6,203,504

 

 

$

6,609,934

 

Loan Origination and Sales Data

 

($ in thousands)

(Unaudited)

 

Three Months Ended

 

Nine Months Ended

 

Sep 30,

2023

 

Jun 30,

2023

 

Sep 30,

2022

 

Sep 30,

2023

 

Sep 30,

2022

Loan origination volume by type:

 

 

 

 

 

 

 

 

 

 

Conventional conforming

 

$

3,158,107

 

$

3,323,678

 

$

6,002,765

 

$

9,375,605

 

$

32,107,768

FHA/VA/USDA

 

 

2,354,630

 

 

 

2,337,946

 

 

 

3,038,467

 

 

 

6,371,168

 

 

 

10,665,287

 

Jumbo

 

 

126,408

 

 

 

148,077

 

 

 

571,509

 

 

 

405,551

 

 

 

3,955,056

 

Other

 

 

443,998

 

 

 

463,842

 

 

 

237,186

 

 

 

1,148,699

 

 

 

667,602

 

Total

 

$

6,083,143

 

 

$

6,273,543

 

 

$

9,849,927

 

 

$

17,301,023

 

 

$

47,395,713

 

 

 

 

 

 

 

 

 

 

 

 

Loan origination volume by purpose:

 

 

 

 

 

 

 

 

 

 

Purchase

 

$

4,337,476

 

 

$

4,552,919

 

 

$

6,938,408

 

 

$

12,403,166

 

 

$

24,469,338

 

Refinance - cash out

 

 

1,660,578

 

 

 

1,614,747

 

 

 

2,682,330

 

 

 

4,599,564

 

 

 

18,181,170

 

Refinance - rate/term

 

 

85,089

 

 

 

105,877

 

 

 

229,189

 

 

 

298,293

 

 

 

4,745,205

 

Total

 

$

6,083,143

 

 

$

6,273,543

 

 

$

9,849,927

 

 

$

17,301,023

 

 

$

47,395,713

 

 

 

 

 

 

 

 

 

 

 

 

Loans sold:

 

 

 

 

 

 

 

 

 

 

Servicing retained

 

$

4,175,126

 

 

$

3,943,845

 

 

$

6,604,979

 

 

$

11,396,678

 

 

$

34,296,344

 

Servicing released

 

 

2,092,762

 

 

 

2,134,024

 

 

 

5,132,350

 

 

 

6,345,660

 

 

 

18,220,561

 

Total

 

$

6,267,888

 

 

$

6,077,869

 

 

$

11,737,329

 

 

$

17,742,338

 

 

$

52,516,905

 

Third Quarter Earnings Call

Management will host a conference call and live webcast today at 5:00 p.m. ET on loanDepot’s Investor Relations website, investors.loandepot.com, to discuss its earnings results.

The conference call can also be accessed by dialing (888) 440-6385. Please call five minutes in advance to ensure that you are connected prior to the call. A webcast can also be accessed at https://events.q4inc.com/attendee/845777270.

A replay of the webcast and transcript will also be made available on the Investor Relations website following the conclusion of the event, or can be accessed by dialing (800) 770-2030, conference ID: 2021948, following the conclusion of the event through December 7, 2023.

For more information about loanDepot, please visit the company’s Investor Relations website: investors.loandepot.com.

Non-GAAP Financial Measures

To provide investors with information in addition to our results as determined by GAAP, we disclose certain non-GAAP measures to assist investors in evaluating our financial results. We believe these non-GAAP measures provide useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. They facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in hedging strategies, changes in valuations, capital structures (affecting interest expense on non-funding debt), taxation, the age and book depreciation of facilities (affecting relative depreciation expense), and other cost or benefit items which may vary for different companies for reasons unrelated to operating performance. These non-GAAP measures include our Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share (if dilutive), and Adjusted EBITDA (LBITDA). We exclude from these non-GAAP financial measures the change in fair value of MSRs and related hedging gains and losses as they add volatility and are not indicative of the Company’s operating performance or results of operation. We also exclude stock-based compensation expense, which is a non-cash expense, gains or losses on extinguishment of debt and disposal of fixed assets, non-cash goodwill impairment, and other impairment charges to intangible assets and operating lease right-of-use assets as management does not consider these costs to be indicative of our performance or results of operations. Adjusted EBITDA (LBITDA) includes interest expense on funding facilities, which are recorded as a component of “net interest income (expense),” as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on our non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA (LBITDA). Adjustments for income taxes are made to reflect historical results of operations on the basis that it was taxed as a corporation under the Internal Revenue Code, and therefore subject to U.S. federal, state and local income taxes. Adjustments to Diluted Weighted Average Shares Outstanding assumes the pro forma conversion of weighted average Class C shares to Class A common stock. These non-GAAP measures have limitations as analytical tools, and should not be considered in isolation or as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Some of these limitations are:

  • they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;
  • Adjusted EBITDA (LBITDA) does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;
  • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted Total Revenue, Adjusted Net Income (Loss), and Adjusted EBITDA (LBITDA) do not reflect any cash requirement for such replacements or improvements; and
  • they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.

Because of these limitations, Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) are not intended as alternatives to total revenue, net income (loss), net income (loss) attributable to the Company, or Diluted Earnings (Loss) Per Share or as an indicator of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. See below for a reconciliation of these non-GAAP measures to their most comparable U.S. GAAP measures.

Reconciliation of Total Revenue to Adjusted Total Revenue

($ in thousands)

(Unaudited)

 

Three Months Ended

 

Nine Months Ended

 

Sep 30,

2023

 

Jun 30,

2023

 

Sep 30,

2022

 

Sep 30,

2023

 

Sep 30,

2022

Total net revenue

 

$

265,661

 

$

271,833

 

$

274,192

 

 

$

745,395

 

$

1,086,141

 

Change in fair value of servicing rights, net of hedging gains and losses(1)

 

 

702

 

 

 

3,876

 

 

 

(24,529

)

 

 

22,868

 

 

 

(58,601

)

Adjusted total revenue

 

$

266,363

 

 

$

275,709

 

 

$

249,663

 

 

$

768,263

 

 

$

1,027,540

 

(1)

Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights.

Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss)

($ in thousands)

(Unaudited)

 

Three Months Ended

 

Nine Months Ended

 

Sep 30,

2023

 

Jun 30,

2023

 

Sep 30,

2022

 

Sep 30,

2023

 

Sep 30,

2022

Net loss attributable to loanDepot, Inc.

 

$

(16,599

)

 

$

(23,443

)

 

$

(60,081

)

 

$

(82,950

)

 

$

(195,750

)

Net loss from the pro forma conversion of Class C common shares to Class A common shares (1)

 

 

(17,663

)

 

 

(26,316

)

 

 

(77,401

)

 

 

(92,793

)

 

 

(256,873

)

Net loss

 

 

(34,262

)

 

 

(49,759

)

 

 

(137,482

)

 

 

(175,743

)

 

 

(452,623

)

Adjustments to the benefit for income taxes(2)

 

 

4,845

 

 

 

6,916

 

 

 

20,124

 

 

 

25,054

 

 

 

66,787

 

Tax-effected net loss

 

 

(29,417

)

 

 

(42,843

)

 

 

(117,358

)

 

 

(150,689

)

 

 

(385,836

)

Change in fair value of servicing rights, net of hedging gains and losses(3)

 

 

702

 

 

 

3,876

 

 

 

(24,529

)

 

 

22,868

 

 

 

(58,601

)

Stock-based compensation expense

 

 

3,940

 

 

 

5,754

 

 

 

4,773

 

 

 

15,619

 

 

 

11,794

 

Gain on extinguishment of debt

 

 

(1,651

)

 

 

(39

)

 

 

 

 

 

(1,690

)

 

 

(10,528

)

Loss on disposal of fixed assets

 

 

93

 

 

 

751

 

 

 

11,026

 

 

 

1,105

 

 

 

11,026

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40,736

 

Other impairment

 

 

129

 

 

 

686

 

 

 

9,149

 

 

 

470

 

 

 

15,112

 

Tax effect of adjustments(4)

 

 

(655

)

 

 

(2,514

)

 

 

93

 

 

 

(9,140

)

 

 

9,196

 

Adjusted net loss

 

$

(26,859

)

 

$

(34,329

)

 

$

(116,846

)

 

$

(121,457

)

 

$

(367,101

)

(1)

Reflects net loss to Class A common stock and Class D common stock from the pro forma exchange of Class C common stock.

(2)

loanDepot, Inc. is subject to federal, state and local income taxes. Adjustments to income tax benefit reflect the effective income tax rates below, and the pro forma assumption that loanDepot, Inc. owns 100% of LD Holdings.

 

 

Three Months Ended

 

Nine Months Ended

 

Sep 30,

2023

 

Jun 30,

2023

 

Sep 30,

2022

 

Sep 30,

2023

 

Sep 30,

2022

Statutory U.S. federal income tax rate

 

21.00

%

 

21.00

%

 

21.00

%

 

21.00

%

 

21.00

%

State and local income taxes (net of federal benefit)

 

6.43

%

 

5.28

%

 

5.00

%

 

6.00

%

 

5.00

%

Effective income tax rate

 

27.43

%

 

26.28

%

 

26.00

%

 

27.00

%

 

26.00

%

(3)

Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights.

(4)

Amounts represent the income tax effect using the aforementioned effective income tax rates, excluding certain discrete tax items.

Reconciliation of Adjusted Diluted Weighted Average Shares Outstanding to Diluted Weighted Average Shares Outstanding

($ in thousands except per share data)

(Unaudited)

 

Three Months Ended

 

Nine Months Ended

 

Sep 30,

2023

 

Jun 30,

2023

 

Sep 30,

2022

 

Sep 30,

2023

 

Sep 30,

2022

Net loss attributable to loanDepot, Inc.

 

$

(16,599

)

 

$

(23,443

)

 

$

(60,081

)

 

$

(82,950

)

 

$

(195,750

)

Adjusted net loss

 

 

(26,859

)

 

 

(34,329

)

 

 

(116,846

)

 

 

(121,457

)

 

 

(367,101

)

 

 

 

 

 

 

 

 

 

 

 

Share Data:

 

 

 

 

 

 

 

 

 

 

Diluted weighted average shares of Class A and Class D common stock outstanding

 

 

175,962,804

 

 

 

173,908,030

 

 

 

162,464,369

 

 

 

173,568,986

 

 

 

151,803,928

 

Assumed pro forma conversion of weighted average Class C shares to Class A common stock

 

 

147,171,089

 

 

 

148,597,745

 

 

 

156,677,534

 

 

 

148,741,661

 

 

 

167,796,888

 

Adjusted diluted weighted average shares outstanding

 

 

323,133,893

 

 

 

322,505,775

 

 

 

319,141,903

 

 

 

322,310,647

 

 

 

319,600,816

 

Reconciliation of Net Income (Loss) to Adjusted EBITDA (LBITDA)

($ in thousands)

(Unaudited)

 

Three Months Ended

 

Nine Months Ended

 

Sep 30,

2023

 

Jun 30,

2023

 

Sep 30,

2022

 

Sep 30,

2023

 

Sep 30,

2022

Net loss

 

$

(34,262

)

 

$

(49,759

)

 

$

(137,482

)

 

$

(175,743

)

 

$

(452,623

)

Interest expense - non-funding debt (1)

 

 

42,504

 

 

 

43,026

 

 

 

36,138

 

 

 

128,619

 

 

 

83,671

 

Income tax benefit

 

 

(5,205

)

 

 

(8,556

)

 

 

(23,451

)

 

 

(28,622

)

 

 

(63,274

)

Depreciation and amortization

 

 

10,592

 

 

 

10,721

 

 

 

10,243

 

 

 

31,339

 

 

 

32,110

 

Change in fair value of servicing rights, net of hedging gains and losses(2)

 

 

702

 

 

 

3,876

 

 

 

(24,529

)

 

 

22,868

 

 

 

(58,601

)

Stock-based compensation expense

 

 

3,940

 

 

 

5,754

 

 

 

4,773

 

 

 

15,619

 

 

 

11,794

 

Loss on disposal of fixed assets

 

 

93

 

 

 

751

 

 

 

11,026

 

 

 

1,105

 

 

 

11,026

 

Goodwill impairment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

40,736

 

Other impairment (recovery)

 

 

129

 

 

 

686

 

 

 

9,149

 

 

 

470

 

 

 

15,112

 

Adjusted EBITDA (LBITDA)

 

$

18,493

 

 

$

6,499

 

 

$

(114,133

)

 

$

(4,345

)

 

$

(380,049

)

(1)

Represents other interest expense, which includes gain on extinguishment of debt and amortization of debt issuance costs, in the Company’s consolidated statements of operations.

(2)

Represents the change in the fair value of servicing rights due to changes in valuation inputs or assumptions, net of gains or losses from derivatives hedging servicing rights.

Forward-Looking Statements

This press release may contain "forward-looking statements," which reflect loanDepot's current views with respect to, among other things, our business strategies, including the Vision 2025 plan, including our expanded productivity program, our progress toward run-rate profitability, our HELOC product, financial condition and liquidity, competitive position, industry and regulatory environment, potential growth opportunities, the effects of competition, operations and financial performance. You can identify these statements by the use of words such as "outlook," "potential," "continue," "may," "seek," "approximately," "predict," "believe," "expect," "plan," "intend," "estimate," “project,” or "anticipate" and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as "will," "should," "would" and "could." These forward-looking statements are based on current available operating, financial, economic and other information, and are not guarantees of future performance and are subject to risks, uncertainties and assumptions, including but not limited to, the following: our ability to achieve the expected benefits of our Vision 2025 plan and the success of our cost-reduction initiatives, such as the expanded productivity program; our ability to achieve run-rate profitability; our loan production volume; our ability to maintain an operating platform and management system sufficient to conduct our business; our ability to maintain warehouse lines of credit and other sources of capital and liquidity; cyberattacks, information or security breaches and technology disruptions or failures, of ours or of our third party vendors; the outcome of legal proceedings to which we are a party; adverse changes in macroeconomic and U.S. residential real estate and mortgage market conditions, including increases in interest rate levels; changing federal, state and local laws, as well as changing regulatory enforcement policies and priorities; and other risks detailed in the "Risk Factors" section of loanDepot, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Reports on Form 10-Q as well as any subsequent filings with the Securities and Exchange Commission, which are difficult to predict. Therefore, current plans, anticipated actions, financial results, as well as the anticipated development of the industry, may differ materially from what is expressed or forecasted in any forward-looking statement. loanDepot does not undertake any obligation to publicly update or revise any forward-looking statement to reflect future events or circumstances, except as required by applicable law.

About loanDepot

loanDepot (NYSE: LDI) is a digital commerce company committed to serving its customers throughout the home ownership journey. Since its launch in 2010, loanDepot the pioneering leader of the mortgage industry with a digital-first approach that makes it easier, faster and less stressful to purchase or refinance a home. Today, as one of the nation's largest non-bank mortgage lenders, loanDepot enables customers to achieve the American dream of homeownership through a broad suite of lending and real estate services that simplify one of life's most complex transactions. With headquarters in Southern California and offices nationwide, loanDepot is committed to serving the communities in which its team lives and works through a variety of local, regional and national philanthropic efforts.

LDI-IR

Investor Relations Contact: Gerhard Erdelji Senior Vice President, Investor Relations (949) 822-4074 gerdelji@loandepot.com

Media Contact: Rebecca Anderson Senior Vice President, Communications & Public Relations (949) 822-4024 rebeccaanderson@loandepot.com

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