Q4 2024 UWM Holdings Corp Earnings Call

Regina: Good morning, my name is Regina and I will be your conference operator today. At this time, I would like to welcome everyone to the UWM Holdings Corporation 4th Quarter and Full Year 2024 Earnings Conference Call.

Speaker Change: All lines have been placed on mute to prevent any background noise.

Speaker Change: Good morning, this is Blake Kolo, Chief Business Officer at Hattive Investor Relations.

Speaker Change: Thank you for joining us and welcome to the fourth quarter and full year 2024 UWM Holdings Corporation's earnings call. Before we start, I would like to remind everyone that this conference call includes forward-looking statements. For more information about factors that may cause actual results to differ materially from forward-looking statements, please refer to the earnings release that we issued this morning.

Speaker Change: Our commentary today will also include non-GAAP financial measures. For information on our non-GAAP metrics and the reconciliations between the GAAP and non-GAAP metrics for the reported results, please refer to the earnings release issued earlier today, as well as our filings with the SEC.

Speaker Change: I will now turn the call over to Matt Ishbia, Chairman and CEO of UWM's Holdings Corporations and United Wholesale Mortgage.

Thanks, Blake.

Speaker Change: And thank you everyone for joining us today. You know, 2024 was another fantastic year. And I think you saw the headlines of, you know.

Speaker Change: You know, one of the toughest mortgage years in a while, obviously the last three years have been tough. We grew 29% year-over-year, about $139 billion. Our gain on sale is up 20%, 110 base points. And the broker channel, which is the biggest indicator, all the things we've been talking about, grew quite a bit as well. I think the third quarter metric was made at 27.4%, which is far higher than we've seen in, you know, 15 years.

Speaker Change: All of the themes we've been talking about have continued to happen. We've continued to dominate the purchase market, leveraged our competitive advantages in talent, technology, and world-class service.

Speaker Change: and like I said help the broker channel grow its you know highest share of industry in years. So exciting to see we retained our title as the largest mortgage company in the U.S. now I think that's 20 in 2024 was the third consecutive year with the number one mortgage company in America.

Speaker Change: As I've spoken in the past few quarters, we continue to invest in cutting-edge technology, including AI, investing in our people, and we're in the best position to capitalize on any change in the current market dynamics.

Speaker Change: There are about two and a half trillion dollars and growing in mortgage rates over six percent

Speaker Change: And so it won't take much for a shift in rates for those loans to be in the money. No matter what happens in the market, we are focused on what we can control and making sure we are more prepared than our competition.

Speaker Change: You've all heard me say this before, I'll say it again. The unique thing about UWM is that our business is strong enough that we can simultaneously win big now while also preparing for the future. Whether it be interest rates dropping, consumer trends changing, new technology, or even regulatory changes.

and 2024.

Speaker Change: was the lowest home sales year since 1995 and UWM had our best purchase year of all time. Over $96 billion in production. We actually think that might be the highest of all time for any direct lender in history. But either way,

Speaker Change: We had an amazing 2024. Like I said, $139.4 billion in overall production, 29% increase. We also tripled our refinance business in 2074 compared to 2023 despite the interest rate environment.

Speaker Change: which we'll talk about a little bit later. We deliver about 330 million dollars of net income, 329.4 to be exact and our game margin is 110 basis points which is up from 92 basis points last year.

Speaker Change: Turning to the fourth quarter, you know, we had an amazing quarter across the board 38.7 billion dollars in production well within our guidance You know, it's also worth pointing out in that quarter. We did over 17 billion in the month of October

Speaker Change: You know, this is like a five-week minor rate drop, what was it in, you know, August and September. And with that little thing, we almost doubled our business, and if you kind of do a quick run rate, you're thinking $51, $52, $53 billion with a small rate drop. What can happen if actually a bigger rate drop happens? We're going to all find out, but we are prepared here to double our business plus, which is exciting. Gain margin was 105 basis points, well within the guidance for the quarter, and obviously we did $40.6 million of net income.

Speaker Change: Thank you Matt, Matt already covered many aspects of our Q4 and full year financial performance so I will just focus on a few, just a few additional highlights.

Speaker Change: We remained profitable operationally in 2024 with $460 million in adjusted EBITDA.

For Q4, our adjusted EBITDA was $118.2 million.

Speaker Change: These operational results were largely consistent with the prior year, even as we invested significantly in people, processes, and technology to prepare the company for continued growth.

Speaker Change: We've invested in growing our operations, underwriting, and technology teams to support increased production volume, and we believe that we have greater operational capacity than we did in 2021 when our origination volume exceeded $226 billion. Said differently, we believe that we can currently handle more than $100 billion of additional origination volume without increasing our fixed expenses.

Speaker Change: and despite our significant short and long-term investments, we earned $329 million on a gap basis and $460 million on an operational basis in 2024.

Speaker Change: We also maintained our liquidity and capital and leverage ratios within targeted ranges in the current environment.

Speaker Change: As of the end of the year, we had approximately $2.1 billion of total equity, just over $500 million of cash, approximately $2.5 billion of total accessible liquidity, and an MSR portfolio with a fair value of approximately $4 billion.

Speaker Change: We talked about this throughout the year, but in so many ways, 2024 was a year of investing in our operational capabilities to prepare the company and the wholesale channel for what we see as significant market opportunities.

Speaker Change: We've also focused on being prepared for these opportunities from a capital and liquidity perspective and we believe that we remain well positioned operationally and financially for any market cycle.

Speaker Change: What you can't see in the numbers in 2024 is a huge year of technology and artificial intelligence. We invested in AI in three major categories, knowledge, efficiency, and growth, and we are winning on all fronts. You'll see some of those things start to result in 2025, 2026 in our financials and our production.

Speaker Change: The Broker Channel continues to show incredible momentum. In third quarter 2024, obviously the fourth quarter numbers aren't out yet, for the Broker Channel's share of AllDirect Fund was 27.4 percent.

Speaker Change: up 7 percentage points from 22 third quarter, so in two years grew 7% and almost double from where it was the third quarter 2020.

Speaker Change: So in four years, it's almost doubled. It's amazing to see. Can we do it again? Right? The way I look at it, can we double it in the next four years again? I don't know. But I know we're working hard towards it and the broker channel is getting momentum just like we said it would since we went public years ago. Additionally, by our calculations, over 16,000 loan officers joined the broker channel with over half of them actually leaving from the retail channel to join the brokers.

Speaker Change: Also, 25,000 clients we welcome on our campus for training each year help spread the culture of the Broker Channel. Our team loves coming to work every day and our training program, both internally and for our clients, remains world-class so our people can continue to grow and flourish here at UWM. In 2025, our priorities remain the same. Build the best technology and provide the best service to the Broker Channel.

Speaker Change: Take incredible care of our team members and clients by treating them like family.

Speaker Change: win every single day by dominating on purchase and staying prepared for a shift in rates.

and continue to reward our shareholders.

Speaker Change: I'm very proud of what we did in 2024, and I'm excited about 2025. Now, looking at the guidance in Q1, we expect to do $28 to $35 billion.

Speaker Change: As you guys always know, the first quarter is always the lowest production quarter, and so we expect that to carry on this year as well. Last year we did 27.6 billion, so that's, you know, actually below what our low end of the guidance is this year. We also expect the D&I margin to be between 90 and 115 basis points for the first quarter.

Speaker Change: So we're expecting a great first quarter, but even more importantly, an amazing 2025 here at UWM. So now I'm going to turn it over to questions. Thanks for your time today.

Speaker Change: At this time I would like to remind everyone in order to ask a question press star then the number one on your telephone keypad. If at any time you would like to remove yourself from the queue press star one a second time. We'll pause momentarily to assemble our roster.

Speaker Change: We will now begin the Q&A session. Our first question comes from the line of Terry Ma with Barclays. Please go ahead.

Terry MA: Hey, thank you. Good morning. Maybe just for starting with operating expenses, it was quite a bit higher than what we were expecting, you know, this quarter. I'm just curious if there was anything one time in there and kind of like what we should expect for the runway going forward.

Yeah, no, it's a one-time investment.

But we're going to do it every month.

Speaker Change: So what we're doing is we're investing in our business to dominate. So the expenses are not even a thought in my mind. We're prepared, as Andrew said, a hundred billion more, but maybe to more than do that. Like we can literally double our business. And so preparation is key. As you guys saw with the little refi boom in October, we almost doubled our business. Nobody else can do that. And so we're prepared for that, not only from the refi perspective, but also the purchase as the momentum is really, really strong right now,

Please see the complete disclaimer at https://sites.google.com

Speaker Change: And so these are investments, not expenses, and in the big scheme of things, these little investments that we're talking about are going to pay such huge dividends, just like we've always done. And so, you know, the expense is we probably don't need to hire many more people, so we're kind of be more flatline is how we think about it from a perspective of, you know, replacing attrition. So it's not like our expenses will go up more, but these were investments. 2024 was an investing year and a technology building year, and 25 is a dominant year. That's what we're going for.

Speaker Change: Got it. Okay, maybe just on kind of refi, you mentioned you kind of tripled it in 2024. Maybe just talk about all the initiatives you're doing around that, kind of what, you know, the outlook is for share and refi kind of going forward. Thank you.

Speaker Change: Yeah, well share and refi will be interesting to see, but in general, the outlook is, you know, we are prepared, back to my earlier statement on the same topic, to double our business. And like you saw, we tripled the refi share while still doing more purchase business, which is phenomenal. I think it was the largest purchase year in history by any lender. And obviously, it was a slow year from a purchase sales and all those stuff in the market. So, you know, we think 2025 will be a better year. There's more houses for sale. And then on the refi side, you're talking about like...

There's trillions of dollars that are just need about...

Speaker Change: You know, a quarter lower rate than we are right now, like we're not far off. The tenure's at $430,000 I think-ish, you know, I always tell you $375,000 is where the money's at. You know, but if it gets down closer to $4,000, you're going to start seeing some of this and we are prepared. And so, we're excited about the opportunity on refi. We're going to continue to dominate on purchase and we're excited for what's going to happen in 2025. We really think it's going to be a heck of a year.

Speaker Change: Our next question comes from the line of Eric Hagen with VTIG. Please go ahead.

Eric Hagen: You guys have been really active with various incentives, offering other ways for successful brokers to pass along savings to borrowers. How do you maybe measure the success for these initiatives?

Eric Hagen: Like how do you how do you like benchmark that success at different levels for?

Terry MA: Thanks Eric, appreciate the question, there's a lot of ways I can go through and it's probably more complicated and more detailed than I'm going to do on this call, but the key thing here is this.

Terry MA: is a lot of the, if you notice, I bumped our margin.

Terry MA: for the first time from 85 to 110, to 90 to 115. So, first time, for years, we were at 75 to 100 in the troughs. I believe the opportunity is coming. Now, it doesn't mean we're going to be on the high end of these things. I think we're going to be consistent, like delivering what I always deliver, which I tell you, we're going to do what we do it.

Terry MA: But what I'll tell you is you see these incentives and these marketing things, and these are all great, but also you've got to understand the all-in margin that we deliver is really a focus of ours. And so the way I look at these, there's measurements on retention of those brokers and LOs and what percentage of their business they use UWM for. How do we get them in the door? How do we get them bought into more of our products and services from training? We have success tracks like this week alone in the middle of February in Michigan. We have over 900 clients that flew to Pontiac, Michigan. I know, Eric, you've been here before.

Terry MA: It's beautiful, but it's freezing out here. But people still flew out here because they're getting trained. And so those are some of the ways you measure those investments. It's like I'm investing and giving a price incentive that might do this, that drives them to understand what we do, which helps them grow their business, which then helps them get more business, which then drives the UWM. Once again, that's a very layman's way of saying it. And I have a team of analytic people that have detailed beyond detail about how it actually works and how we make it happen. And so a small little thing, if you looked at,

Terry MA: in the pre-talk, where in October, we doubled overnight, and it's like a 52 to $54 billion run rate with really not even a refi. So it's like, how do I train our brokers and coach them ready to do refis, streamlines, or earls? Or how do I teach them how to do cash outs? And how do we do these things to getting them prepared? It's all about preparation so that they can dominate, and then we can dominate.

Speaker Change: great stuff appreciate that you know always appreciate your thoughtful answers I mean the

Speaker Change: Looking here at the volume and margin guidance you gave for the first quarter, I mean, how much of that drop quarter over quarter would you just attribute to, you know, just seasonality versus there being an actual fall off in demand at these rates? And is there like a baseline minimum volume of originations you might expect right now, even if rates were to go higher than they are today?

Speaker Change: Yeah, no, great question, Eric. Appreciate it, your thoughts on it. And so, yeah, we guided to 28 to 35 last year. I think we did 27.6 in the first quarter. I don't remember what I guided to last year, but I would say it's materially less than what we're at right now.

These numbers, I expect us to do more.

Speaker Change: We are trying to build upon building. The way we look at it is, right now, these numbers are actually really good. If you see what everyone else will guide you and what everyone else thinks you are going to do, being able to guide to 20 to 35. Once again, I am not going to exceed those numbers. I am trying to give you real numbers where I think I will be in this range on margin and efficiency.

Speaker Change: I don't know the last time that's been done besides in 2020 and 2021.

Yep, great stuff. Thank you guys so much. Appreciate you.

Speaker Change: Our next question comes from the line of Derek Summers with Jeffries. Please go ahead.

Derek Summers: Hey, good morning everyone. To follow up on the guidance question related to volume, in the first half of the year we saw a purchase mix at around 80% and the second half, you know, called it around 60%. Kyle, what are your expectations for that mix heading into 25?

And you're saying in the purchase mixture of the market?

both of the market and UWM.

Derek Summers: Okay. Yeah, I mean, a lot of it's dependent on interest rates, right? So, like, the way I look at it and our focus is, like, how do we do $100 billion of purchase?

Right and then revise

Derek Summers: We did $96 billion of purchase this year and there wasn't much refi. Can we do $100 billion, $150 billion of refi? Possibly. If rates go up to $7.5 billion, well, we'll do $20 billion of refi, $30 billion of refi, right? And so understanding what the market in the 10-year, that's why it's like literally.

Derek Summers: where no one else will be able to tell you this, Derek, that like I can do $130 to $140 billion this year or I can do $260 billion this year.

Derek Summers: Right? And I could do it at 90 basis points of margin, or I could do it at 130 basis points of margin. Like, that's how wide of a range it is. But everyone else will say, oh, well, if the market turns and this happens, and like, they're... We're actually prepared to do that right now. Like, if the rates drop tomorrow, something happens, like...

Derek Summers: We could do $60 billion in the second quarter at good margins.

Derek Summers: That's back to the first question about expenses, it's not expenses, it's investments in the business.

Derek Summers: investments in the future and while making these massive investments from technology and operations and people while making those massive events we're still profitable.

Derek Summers: Right and very probably don't count the MSR fluctuation, which I have, you know, no control of obviously And so we feel really good about that And I think we're really really ready to be so 60% like it's hard to predict the number. It's all Dictated on rates, but for us You know 60 65 percent purchase 65 to 70 percent purchase in a higher rate and then it could flip to 50 50 It could go 60 40 refi if the rates drop far enough

Speaker Change: Got it. Thank you. Helpful commentary there. And just, what's your current approach to managing servicing UPV levels kind of relative to origination trends?

Derek Summers: Yeah, so we monitor very closely. We understand the servicing asset very, very well. And we're still probably the only one out there originating at such a high level that our asset goes up as a volume perspective with newer originations. But we look at it all the time. We decide whether do we want to opportunistically sell. We could go through the process and say, hey, we're going to retain it all and just double the servicing book over this year. We could do that as well. There's a lot of things that we look at.

Derek Summers: We like the asset in general, but at the same time when people are going to pay us, you know, a seven multiple

You know, well...

I'll sell it for a seven multiple.

Derek Summers: right? And so we look at some of these numbers and sometimes people are looking at paying those numbers And if they're not then we retain it because we feel really good about the asset and so it's a it's a balancing act understanding cash and cash Consumption while at the same time building our servicing portfolio and helping our brokers continue to grow so we feel good about where we're at right now and You know You can ask me like what the vision is what the strategy is I could tell you all that stuff and I could say but tomorrow something could change

Derek Summers: and I'll modify it, right? And that's how we look at it. We look at it every day because we're in the weeds of the business.

Got it. Thank you for taking my questions. Thank you.

Speaker Change: Our next question will come from the line of Bo George with KBW. Please go ahead.

Bo George: Hey, good morning. Actually, just following up on that question on the MSR, I mean, given that, you know, you guys issued debt, you obviously have a lot of cash on your balance sheet, a lot of liquidity you've paid down the warehouse line. You know, does that change how you might, you know, what you might do in terms of MSR sales or those two kind of independent decisions?

Make it.

Bo George: It's like we make it, so we originate. No one else makes it at the level we make it. So therefore, everyone else is trying to buy it and get something that we make. I can go make more, right, anytime. And so we go make more every single month, every single quarter, where no one else originates as the lovers we do. And so we're constantly originating and making the MSR asset. And therefore, we look at all the aspects of it and make decisions on whether we sell or not. We can sell excess, but we replenish it every single,

Bo George: Month every single day like it's like the numbers are so it's not as much of a concern where other places like oh They sold their MSRs or they're not selling but our number moves materially based on how much we originate

Speaker Change: Okay, yeah, makes sense. Thanks. And then actually going back to, I think Andrew made that comment, a hundred billion, you could originate without increasing fixed expenses. I was just curious, is there a good way to think about fixed versus variable, you know, in that sort of scenario?

Speaker Change: No, you know, you know, not not really. I mean like we're prepared fixed wise Obviously, there are variable expenses every loan has credit report costs and all these things go up all the time But we feel really good about and you're trying to figure out how to do a model which I respect and understand But like we're in a really great position from a fixed expenses. We don't have as much You know, like the fixed expenses operationally and then there's obviously variable on every single file, but sometimes there's less

Speaker Change: variable expense that people realize, and a lot of these numbers hit the bottom line.

Speaker Change: example from the month, but the gain on sale margin that will go up and the volume that will go up is so excessively more than any expenses fixed or variable that come on our balance sheet or come on our income statement that.

Speaker Change: It's going to be a huge huge difference in a positive way And that's why we're prepared because if you miss that window, which is what everyone else does is they keep their expenses low? And then the market moves, you know what happens like look at 2021 when that stuff happens in like we're able to make

Speaker Change: Billion plus in a quarter, right? But if you're not prepared for that, these things pass you by. And so we're prepared. There are gonna be variable expenses that are a little more than normal if you do more volume, but it's not a big number relative to it. And it's gonna be a huge amount of money hitting the bottom line, which is what we're prepared for.

Okay, makes sense. Thanks a lot

Thank you.

Speaker Change: Our next question comes from the line of Brad Capuzzi with Piper Sandler. Please go ahead.

Brad Capuzzi: Hi, thanks for taking my question. Just wanted to talk about if you guys had any updates on the dynamics playing out within the broker channel.

Speaker Change: Obviously, some of your peers have been talking it up and, you know, UWMC has a very stronghold on the channel, but was wondering if pricing has been rational and if you're seeing any increased competition.

Speaker Change: Yeah, so the Broker Channel is winning. It's growing and I think like you know I know I don't know how long you've been doing it Brad but you've been to our office once before you probably understand a little bit about the business but like the Broker Channel is growing. It's growing faster than I even thought it would grow to be honest with you. You know seeing that it's almost

Speaker Change: almost doubled in four years. It's crazy to even talk about.

Speaker Change: I said it when we went public, and so you can go back and pull my...

Speaker Change: Roadshow, and everyone else's Roadshow, everyone said they're going to focus on wholesale because it's growing. No one thought it would grow as much as I said it would, and it has, and at the same time, everyone says they're going to get into it, and I love it. I love it when these guys try to come play with us, because it's only good for the brokers, and at the same time, they can't compete. Anytime a broker uses one of these other lenders, they just kind of say, oh my gosh.

Speaker Change: I can't use them again, and so it's okay. I like the company. We have not seen any increase in pricing competition to be honest with you We are very clear our margins actually you saw

were up 20% year-over-year and we did more business.

Speaker Change: Over almost 30% more year over year. And so yes, everyone's coming for the wholesale channel Everyone wants to be involved with the brokers, but none of them are willing to do what it takes and what it takes is Technology partnership helping brokers win and grow and we are in that game all day every day

Speaker Change: They're gonna follow our margins. I tell you we control it I set the margins daily and we set them and everyone else follows us. We are the leader and it's not close But you know great for the competition I think it's important that they tell you that stuff so you can move their price targets up all that BS

Speaker Change: You should probably move ours up too, by the way, because yours is a little low but yourself But anyways, like all that stuff is is silliness, right? People want to come in. They've been saying it for years Oh, we're coming. We're gonna be the number one wholesale. Why don't you go back and pull it? We're gonna be number one wholesale. We're gonna take UWM down

Speaker Change: We have almost 50% of the market. So we're excited about it We love the competition, but the best part about the whole thing that I just went through is brokers are winning

Speaker Change: Those loan officers, retail loan officers, they're leaving to join broker channels. Brokers are growing because they're cheaper, faster, and easier. And with the new administration, it's only going to help brokers even more. You watch out. It's going to help brokers grow, and we're going to keep growing with them.

Speaker Change: Thanks, and then can you just talk about the interest rate derivative hedges you put on this year? Do you expect these hedges to continue in 2025, and do you guys have any internal target on a hedge ratio?

Speaker Change: Yeah, no, those weren't really even hedges. The way I looked at it, there was a lot of stuff that we looked at with market volatility to understand while the election process was going on, and we pulled some of those.

Speaker Change: We wanted to make sure we had some security and some safety on both ways, up and down during the volatility of the markets. And that's smart business, and we'll continue to do that type of stuff. But we pulled that stuff off in December, and so we do not have that stuff tied to it. I don't look at them as hedges like maybe you said, but that's not how we looked at it. But we looked at it as protecting the business, understanding the markets, understanding volatility, who knew what would happen with presidential elections along with other regulatory things.

Thompson and John McAleenan.

Thanks for taking my questions.

Speaker Change: Thank you. Our next question will come from the line of Doug Harder with UBS. Please go ahead.

Speaker Change: Thanks. Hoping you could talk a little bit about your outlook for kind of the leverage, you know, net funding that went up, you know, and kind of how you think about what is the, you know, the level of equity you need to run this efficient business.

Thanks, Doug.

Speaker Change: Appreciate the question. You know, we look at all these things every day, CFO, finance team, everyone's on top of all these details. You know, net worth is obviously important. We make income. We actually pay a great dividend out to all our shareholders, which we'll continue to do.

Speaker Change: But, you know, you're talking about stuff that I don't think really impacts the business at the level that we should be talking about in this article. I can go through all of it. Of course, we're going to meet all the metrics and all the different things, but building up capital is important. Having liquidity is the most important, and we have those things at UWM and we'll continue to have those things as we earn income. We have access to getting more liquidity with lines of credit, as you know, selling MSRs. At the same time, we're selling a lot of MSRs, and you make money on some of these because people are bidding higher and higher numbers because the truth is we're the only ones who

Speaker Change: All of our ratios are really strong, and we feel really good about where we stand, and we moderate every single month, quarter, however you want to think about it, and we're in a really, really strong position, not only for this year, but for future years as well.

All right. Thank you, Matt.

Speaker Change: Our next question will come from the line of Jeff Adelson with Morgan Stanley. Please go ahead.

Jeff Adelson: Hey, good morning, guys. Thanks for taking my questions. Matt, last quarter you commented on some of the new changes coming through with the new administration in place today. You know, obviously we're seeing a lot of news flow coming out each day with different changes at the various agencies like the CFPB. You know, there's been talk of GSE reform, et cetera. Can you just maybe give us an update on your latest views here? What maybe you see coming out on the regulatory political front and how that flows to United and broader mortgage industry? Thanks.

Jeff Adelson: Yeah, no, I think it's all very positive to be honest with you. So President Trump's come in and done a lot of things he said he was going to do. I think he's put some really good people in place. I think they're not confirmed yet, but the new FHFA director, who I think comes from the industry, which is a huge success for our industry.

Jeff Adelson: new CFPB director with a different focus than what they've had before. I think these things are massive, massive wins for our industry, and I'm extremely bullish on those things for the next three or four years, obviously with President Trump in place. President Trump's leading and doing all the things he said he was going to do with making cuts and different things. I think it's all upside, all positive. The only thing that you question is how does it impact interest rates, which a lot of people want to talk about.

a bull run like you haven't seen probably since...

Jeff Adelson: 2020, 2021. If it doesn't impact interest rates positively and interest rates stay where they are, well, it's still a positive uptick. My expenses will be lower in certain spots. The opportunities will be lower because of some of these better leaders in place. And I'll just say, I don't mean disrespectfully to the past people, but

Jeff Adelson: Quite honestly, there was not a great connection to the industry and so

Jeff Adelson: It's only better. The new FHFA director will be better. The new HUD director will be better. The new CFPB director will be better. All these things will be better than we had before. So anyone monitoring our industry will say, oh, the industry is going to have upside and better opportunities than it had the last four years. Now, the last four years we did a heck of a job. I feel pretty good about it. So if it's going to be better,

Jeff Adelson: I'm happy with it, and I think President Trump's doing good things, and it's great to have a leader lead, and hopefully do good things for, you know, not only our industry, but America in general.

Speaker Change: And just in the float strategy from here, I know you've already taken some recent action to increase that, but can you just maybe give us an update on the thinking for the rest of the year here? And would you guys be looking to maybe achieve some of that via acquisitions or other methods?

Speaker Change: Yeah, no, I appreciate it. We look at everything. You know, we look at everything all the time. How do we make things better? You know, getting more flow out there is important, but at the same time, the stock price is so low, it's hard for me to.

Speaker Change: sell or do anything at this stock price. It's just silliness, even your price target is silly too. I saw yours as well. But once again, we're going to do better.

We're going to keep winning.

Speaker Change: and people that buy into and understand what UWM does will understand that and will continue to grow with us. And so, yes, we will have more float and I have plans and strategies around it. That's first. Second, do we look at acquisitions? Yes, I look at everything and there's opportunities out there. People want to be part of our team. And then third...

And finally is like

Speaker Change: UWM wins regardless of these things, right? Like people want to talk about the stock price and I kind of teased you guys a little bit about some of this stuff, but it doesn't really matter at the end of the day because we are winning every single month, every single quarter. Anyone that invests in UWM gets a massive return from the dividend and at the same time, the growth that we're having. And so there's nobody that doesn't think that the industry is going to have a better four years than we had the last two or three, right? There's no one. I don't think there's a human being out there. So if you just understand that, that, hey, the last three years have been

Speaker Change: the trough, there's no way the next four are going to be worse. That's factual.

Speaker Change: So, we're going to grow, we're going to win, the stock price will grow, the float will grow, opportunities will grow, UWM will make more money, brokers will grow, like, it's all upside. Better politicians, better politics stuff, better regulatory, like, all is better, better, better, better. And so, the way I look at it, it's all upside right now. Does that upside happen tomorrow? Or does it happen in three months, six months, 12 months, 18 months? But it's all better than the last three years. And there's no smart person on this call or in the room that will say that they don't think it'll be better in the next.

3-4 years.

Speaker Change: Once again for any questions press star 1 and our next question will come from the line of Mikkel Goberman with Citizens. Please go ahead.

Mikkel Goberman: Hey, good morning. Thanks for taking my question. Just to follow up on an earlier theme, hypothetical scenario, supposing this bond rally continues down into the 4% range and maybe even down to that sweet spot you mentioned earlier of $375,000.

Speaker Change: How do you guys see the interplay between the origination side of your business and the servicing side of your business, specifically how that would affect servicing earnings and valuations there? Thanks.

Speaker Change: No, hey, great question. I love what you're thinking, because we talk about that stuff a lot.

Speaker Change: in a hypothetical and positive and optimistic situation where the tenure drops to 400 or 375 and all of a sudden the rate drops with two and a half, three trillion dollars of borrowers.

Speaker Change: that are going to want to refinance and take advantage of it while also making homes more affordable for purchases, which I think is a great thing for everybody.

Speaker Change: Yeah, it's going to be massive. So first thing you'll run across, the only thing you're going to run on is an interplay between MSR valuations.

Speaker Change: and Originations is just a timing issue. So if that hypothetical rate drop happened March 29th, you're gonna have a huge write-down of MSRs and you won't have a huge write-up of Originations until the next quarter. Now if it happens on April 1st, as an example, then.

Speaker Change: There's not going to be a big interplay, it's going to be like, hey, we made $800 million this quarter of Originations, and we had to write down $500 million of MSRs, and it's like, okay, you understand what it is, and you keep replenishing that MSR book. So that's how we look at it, but I look at it as a huge opportunity, because volumes and margins will go up. Now other players, back to my comment earlier, we talked about other players have that same dynamic, you've got a service zoom book, but they're not prepared to do that $60 billion

double originations

Speaker Change: Make the profits huge, obviously have MSR right down, which once again, I don't pay attention to because it doesn't really impact, I can't run that, I can't control that. I can control our business and be prepared for everything else. And so we feel really good about that, but that's also why selling MSRs makes sense because you never know what's gonna happen.

Speaker Change: People don't like selling FSRs because they can't originate them, but we can originate them and we make them every single day So we feel good about that

Great, thanks Matt. Best of luck going forward.

Hey, thanks a lot. I appreciate it.

Speaker Change: And that will wrap up the Q&A portion. I would like to turn the call back over to Mathew Ishbia for closing comments.

Mathew Ishbia: Thank you for joining. Hopefully you got some valuable information. We look forward to talking to you next quarter. A lot of good things happening. We're very excited about what's happening at UWM and we appreciate the support and partnership from all of you guys. Have a fantastic day.

This concludes today's conference call and you may now disconnect.

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