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Guild Holdings Company (GHLD) Q2 2022 Earnings Call Transcript


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Guild Holdings Company (GHLD -2.77%)
Q2 2022 Earnings Call
Aug 04, 2022, 6:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to the Guild Holdings Company’s second quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions to follow at that time. As a reminder, this call is being recorded.

And I would now like to turn the conference over to Michael Kim of investor relations. Please go ahead, Michael.

Michael KimInvestor Relations

Thank you, and good afternoon, everyone. Before we begin, I’d like to remind everyone that comments on this conference call contain certain forward-looking statements regarding the company’s expected operating and financial performance for future periods and industry trends. These statements are based on the company’s current expectations. Actual results for future periods may differ materially from those expressed or implied by these forward-looking statements due to a number of risks or other factors that are described in greater detail under the section titled risk factors in Guild’s Form 10-K and 10-Q and in other reports filed with the U.S.

Securities and Exchange Commission. Additionally, today’s remarks will refer to certain non-GAAP financial measures. Reconciliations of non-GAAP financial measures to the corresponding GAAP measures can be found in our earnings release filed today with the SEC and are also available on Guild’s investor relations website. Participating in the call today are Chief Executive Officer Mary Ann McGarry, President Terry Schmidt, and Chief Financial Officer Amber Kramer.

Now I’d like to turn the call over to Mary Ann McGarry. Mary Ann?

Mary Ann McGarryChief Executive Officer

Thank you, Michael. Good afternoon, everyone, and thank you for joining us. As always, I’m joined by our president, Terry Schmidt; and our chief financial officer, Amber Kramer. Our chief operating officer, David Neylan, will join us for Q&A after our prepared remarks.

Despite higher interest rates, excess capacity, and limited inventories, I am pleased we were once again able to deliver solid financial results for the second quarter of 2022. Adjusted net income and adjusted earnings per share came in at $14 million and $0.23 per share, respectively, for the second quarter of this year compared to $32 million and $0.53 per share for the prior quarter. Much of the sequential declines in revenue and income can be tied to lower origination volumes and margins consistent with broader industry trends. From our perspective, as cycles turn, near-term challenges present longer-term opportunities, and our tenured management team maintains a proven track record of generating consistent financial performance over market cycles.

We believe our differentiated purchase-focused business model positions us well going forward as refinancing volumes continue to fade. In the second quarter, purchase loans accounted for 84% of our total origination volume compared to 66% in the prior quarter and an estimated 70% for the mortgage industry according to the Mortgage Bankers Association. We remain focused on product development to stay in front of shifting market trends. Last quarter, we discussed our new GreenSmart Advantage product in partnership with the Home Depot.

The program is designed to help homebuyers save on utility costs and manage multiple payments by bundling the cost of new energy-efficient appliances into mortgage loans. This quarter, we introduced CashPass, a new program to help homebuyers compete all cash offers in today’s competitive housing market. Guild’s CashPass program allows homebuyers to write a cash offer and be more competitive against other all-cash bids or multiple offers. In July, we introduced Complete Rate, a new program that provides a more inclusive path to homeownership based on residual income analysis and rent payment history, an alternative to the traditional FICO credit score.

As indicated by our operating history during many market cycles, we rightsized the business to align costs with volume trends, while capitalizing on market dislocation. Through the first half of this year, we realized approximately $40 million of cost savings, primarily through headcount reductions on an annualized basis, and we will continue to manage the business as market dynamics evolve. Our strong and liquid balance sheet remains a key differentiating factor. We maintain favorable leverage ratios and healthy liquidity levels to fund growth despite market conditions.

Pursuant to our share repurchase program, we recently…



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