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Walker & Dunlop Reports Second Quarter 2024 Financial Results

SECOND QUARTER 2024 HIGHLIGHTS

  • Total transaction volume of $8.4 billion, flat from Q2’23
  • Total revenues of $270.7 million, down 1% from Q2’23
  • Net income of $22.7 million and diluted earnings per share of $0.67, both down 18% from Q2’23
  • Adjusted EBITDA(1) of $80.9 million, up 15% from Q2’23
  • Adjusted core EPS(2) of $1.23, up 26% from Q2’23
  • Servicing portfolio of $132.8 billion as of June 30, 2024, up 5% from June 30, 2023
  • Declared quarterly dividend of $0.65 per share for the third quarter 2024

YEAR-TO-DATE 2024 HIGHLIGHTS

  • Total transaction volume of $14.8 billion, down 2% from 2023
  • Total revenues of $498.7 million, down 2% from 2023
  • Net income of $34.5 million and diluted earnings per share of $1.02, down 36% and 37%, respectively, from 2023
  • Adjusted EBITDA(1) of $155.1 million, up 12% from 2023
  • Adjusted core EPS(2) of $2.39, up 12% from 2023

Walker & Dunlop, Inc. (NYSE: WD) (the “Company,” “Walker & Dunlop,” or “W&D”) reported quarterly total transaction volume of $8.4 billion, in line with last year’s second quarter, which drove total revenues of $270.7 million, down 1% year over year. Net income for the second quarter of 2024 was $22.7 million, or $0.67 per diluted share, both down 18% year over year. Adjusted EBITDA increased 15% to $80.9 million, reflecting the strength of the Company’s recurring revenue streams and recovery in transaction volumes. Adjusted core EPS, which removes primarily non-cash revenues and expenses, was up 26% year over year to $1.23. The Company’s Board of Directors declared a dividend of $0.65 per share for the third quarter 2024.

"The second quarter of 2024 was the first quarter in almost two years with consistent rates and the ability for commercial real estate owners to transact, pushing Walker & Dunlop's total transaction volume up 32% from Q1'24 to $8.4 billion,” commented Walker & Dunlop Chairman and CEO Willy Walker. “Increased transaction volumes, combined with our durable, recurring revenue streams from servicing and asset management, generated 3% growth in adjusted core EPS and 9% growth in adjusted EBITDA from the first quarter, evident of the momentum building in the market.”

Mr. Walker continued, “It is clear that rate stability and the need to deploy, and recycle, capital is driving increased transaction volumes from owners of commercial real estate, and Walker & Dunlop is extremely well positioned to outperform and take advantage of that growth.”

________________________

(1)

Adjusted EBITDA is a non-GAAP financial measure the Company presents to help investors better understand our operating performance. For a reconciliation of adjusted EBITDA to net income, refer to the sections of this press release below titled “Non-GAAP Financial Measures,” “Adjusted Financial Measure Reconciliation to GAAP” and “Adjusted Financial Measure Reconciliation to GAAP by Segment.”

(2)

Adjusted core EPS is a non-GAAP financial measure the Company presents to help investors better understand our operating performance. For a reconciliation of Adjusted core EPS to Diluted EPS, refer to the sections of this press release below titled “Non-GAAP Financial Measures” and “Adjusted Core EPS Reconciliation.”

CONSOLIDATED SECOND QUARTER 2024

OPERATING RESULTS

 

 

 

 

 

 

 

 

 

 

 

 

 

TRANSACTION VOLUMES

(in thousands)

 

Q2 2024

 

Q2 2023

 

$ Variance

 

% Variance

Fannie Mae

 

$

1,510,804

 

$

2,230,952

 

$

(720,148

)

 

(32

)

%

Freddie Mac

 

 

1,153,190

 

 

1,212,887

 

 

(59,697

)

 

(5

)

 

Ginnie Mae - HUD

 

 

185,898

 

 

147,773

 

 

38,125

 

 

26

 

 

Brokered (1)

 

 

3,852,851

 

 

3,316,223

 

 

536,628

 

 

16

 

 

Principal Lending and Investing (2)

 

 

214,975

 

 

-

 

 

214,975

 

 

N/A

 

 

Debt financing volume (3)

 

$

6,917,718

 

$

6,907,835

 

$

9,883

 

 

-

 

%

Property sales volume

 

 

1,530,783

 

 

1,504,383

 

 

26,400

 

 

2

 

 

Total transaction volume (3)

 

$

8,448,501

 

$

8,412,218

 

$

36,283

 

 

-

 

%

(1)

Brokered transactions for life insurance companies, commercial banks, and other capital sources.

(2)

Includes debt financing volumes from our interim loan program, our interim loan joint venture, and Walker & Dunlop Investment Partners, Inc. (“WDIP”) separate accounts.

(3)

Debt financing volume and total transaction volume increased less than 1% in Q2 2024.

DISCUSSION OF QUARTERLY RESULTS:

  • Debt financing volume and total transaction volume increased less than 1% in the second quarter of 2024. The increase in brokered volume was primarily offset by the decline in our transaction volume with Fannie Mae, largely reflective of Fannie Mae’s decline in debt financing volume.
  • The 16% increase in brokered volume was primarily the result of increased demand for capital, coupled with an increased supply of capital from life insurance companies, banks, CMBS and other private capital providers year over year.
  • Principal lending and investing volume, which represents originations for our investment management business, Walker & Dunlop Investment Partners (“WDIP”), increased primarily as a result of an increased supply of capital from new and existing funds managed by WDIP as well as an increase in market demand. Transaction activity was still limited in the second quarter of 2023 as the market was adjusting to a volatile rate environment and declining fundamentals for some asset classes.

 

 

 

 

 

 

 

 

 

 

 

 

 

MANAGED PORTFOLIO

(dollars in thousands, unless otherwise noted)

 

Q2 2024

 

Q2 2023

 

$ Variance

 

% Variance

Fannie Mae

 

$

64,954,426

 

$

61,356,554

 

$

3,597,872

 

 

6

 

%

Freddie Mac

 

 

39,938,411

 

 

38,287,200

 

 

1,651,211

 

 

4

 

 

Ginnie Mae - HUD

 

 

10,619,764

 

 

10,246,632

 

 

373,132

 

 

4

 

 

Brokered

 

 

17,239,417

 

 

16,684,115

 

 

555,302

 

 

3

 

 

Principal Lending and Investing

 

 

25,893

 

 

71,680

 

 

(45,787

)

 

(64

)

 

Total Servicing Portfolio

 

$

132,777,911

 

$

126,646,181

 

$

6,131,730

 

 

5

 

%

Assets under management

 

 

17,566,666

 

 

16,903,055

 

 

663,611

 

 

4

 

 

Total Managed Portfolio

 

$

150,344,577

 

$

143,549,236

 

$

6,795,341

 

 

5

 

%

Custodial escrow account balance at period end (in billions)

 

$

2.7

 

$

2.8

 

 

 

 

 

 

Weighted-average servicing fee rate (basis points)

 

 

24.1

 

 

24.3

 

 

 

 

 

 

Weighted-average remaining servicing portfolio term (years)

 

 

7.9

 

 

8.6

 

 

 

 

 

 

DISCUSSION OF QUARTERLY RESULTS:

  • Our servicing portfolio continues to expand with the addition of GSE debt financing volumes. Although debt financing volumes have been lower than in previous years, higher interest rates and lower levels of scheduled maturities have contributed to fewer loan payoffs within our servicing portfolio.
  • During the second quarter of 2024, we added $0.8 billion of net loans to our servicing portfolio, and over the past 12 months, we added $6.1 billion of net loans to our servicing portfolio, 92% of which were GSE or HUD (collectively, “Agency”) loans.
  • $11.0 billion of Agency loans in our servicing portfolio are scheduled to mature over the next two years. These loans, with a lower weighted-average servicing fee of 20.1 basis points, represent only 9% of the total Agency loans in our portfolio.
  • The mortgage servicing rights (“MSRs”) associated with our servicing portfolio had a fair value of $1.4 billion as of both June 30, 2024 and 2023.
  • Assets under management as of June 30, 2024 consisted of $15.2 billion of low-income housing tax credit (“LIHTC”) funds, $1.5 billion of debt funds, and $0.9 billion of equity funds managed by WDIP.

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY PERFORMANCE METRICS

(in thousands, except per share amounts)

 

Q2 2024

 

Q2 2023

 

$ Variance

 

% Variance

Walker & Dunlop net income

 

$

22,663

 

$

27,635

 

$

(4,972

)

 

(18

)

%

Adjusted EBITDA

 

 

80,931

 

 

70,501

 

 

10,430

 

 

15

 

 

Diluted EPS

 

$

0.67

 

$

0.82

 

$

(0.15

)

 

(18

)

%

Adjusted core EPS

 

$

1.23

 

$

0.98

 

$

0.25

 

 

26

 

%

Operating margin

 

 

10

%

 

13

%

 

 

 

 

 

Return on equity

 

 

5

 

 

7

 

 

 

 

 

 

Key Expense Metrics (as a % of total revenues):

 

 

 

 

 

 

 

 

 

 

 

 

Personnel expenses

 

 

49

%

 

49

%

 

 

 

 

 

Other operating expenses

 

 

12

 

 

11

 

 

 

 

 

 

DISCUSSION OF QUARTERLY RESULTS:

  • Net income and diluted EPS both decreased 18% in the second quarter of 2024, compared to the same period in 2023, primarily driven by lower non-cash MSR revenues from lower Fannie Mae loan originations year over year, and a higher provision for loan losses. The 22% decrease in income from operations was partially offset by a lower estimated annual effective tax rate in the second quarter of 2024 than the second quarter of 2023 due to the timing of executive bonus compensation expense. The deductibility of executive compensation is limited for income tax purposes.
  • Adjusted EBITDA increased 15% year over year largely due to higher servicing fees, and placement fees and other interest income, partially offset by an increase in other operating expenses. Additionally, there were no net write-offs in the second quarter of 2024 compared to net writes-offs of $6.0 million in the second quarter of 2023.
  • Adjusted core EPS, which excludes, among other items, the impacts of non-cash MSR revenues and amortization, the provision for credit losses, and acquisition-related costs, such as amortization of intangible assets, was $1.23 in the second quarter of 2024, an increase of 26% year over year.
  • Operating margin decreased primarily due to changes in our non-cash activity, including: (i) a decline of MSR income due to lower Fannie Mae volume, and (ii) a change from a small benefit for credit losses in 2023 to a provision for credit losses in 2024. Additionally, other operating expenses increased year over year.
  • Return on equity declined primarily due to the 18% decrease in net income, partially offset by a less than 1% decrease in stockholders’ equity year over year.

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY CREDIT METRICS

(in thousands)

 

Q2 2024

 

Q2 2023

 

$ Variance

 

% Variance

At-risk servicing portfolio (1)

 

$

60,122,274

 

$

56,430,098

 

$

3,692,176

 

7

%

Maximum exposure to at-risk portfolio (2)

 

 

12,222,290

 

 

11,346,580

 

 

875,710

 

8

 

Defaulted loans (3)

 

$

48,560

 

$

36,983

 

$

11,577

 

31

%

Key credit metrics (as a % of the at-risk portfolio):

 

 

 

 

 

 

 

 

 

 

 

 

Defaulted loans

 

 

0.08

%

 

0.07

%

 

 

 

 

 

Allowance for risk-sharing

 

 

0.05

 

 

0.06

 

 

 

 

 

 

Key credit metrics (as a % of maximum exposure):

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for risk-sharing

 

 

0.25

%

 

0.29

%

 

 

 

 

 

__________________

(1)

At-risk servicing portfolio is defined as the balance of Fannie Mae Delegated Underwriting and Servicing (“DUS”) loans subject to the risk-sharing formula described below, as well as a small number of Freddie Mac loans on which we share in the risk of loss. Use of the at-risk portfolio provides for comparability of the full risk-sharing and modified risk-sharing loans because the provision and allowance for risk-sharing obligations are based on the at-risk balances of the associated loans. Accordingly, we have presented the key statistics as a percentage of the at-risk portfolio.

 

 

For example, a $15 million loan with 50% risk-sharing has the same potential risk exposure as a $7.5 million loan with full DUS risk sharing. Accordingly, if the $15 million loan with 50% risk-sharing were to default, we would view the overall loss as a percentage of the at-risk balance, or $7.5 million, to ensure comparability between all risk-sharing obligations. To date, substantially all of the risk-sharing obligations that we have settled have been from full risk-sharing loans.

 

 

(2)

Represents the maximum loss we would incur under our risk-sharing obligations if all of the loans we service, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. The maximum exposure is not representative of the actual loss we would incur.

 

 

(3)

Defaulted loans represent loans in our Fannie Mae at-risk portfolio that are probable of foreclosure or that have foreclosed and for which we have recorded a collateral-based reserve (i.e., loans where we have assessed a probable loss). Other loans that are delinquent but not foreclosed or that are not probable of foreclosure are not included here. Additionally, loans that have foreclosed or are probable of foreclosure but are not expected to result in a loss to us are not included here.

DISCUSSION OF QUARTERLY RESULTS:

  • Our at-risk servicing portfolio, which is comprised of loans subject to a defined risk-sharing formula, increased primarily due to the level of Fannie Mae loans added to the portfolio during the past 12 months. We take credit risk exclusively on loans backed by multifamily assets and have no credit exposure to losses in any other sector of the commercial real estate lending market.
  • As of June 30, 2024, five at-risk loans were in default with an aggregate unpaid principal balance (“UPB”) of $48.6 million compared to two at-risk loans with an aggregate UPB of $37.0 million that were in default as of June 30, 2023. The collateral-based reserve on defaulted loans was $5.6 million and $3.5 million as of June 30, 2024 and June 30, 2023, respectively. The approximately 3,000 other loans in the at-risk servicing portfolio continue to exhibit strong credit quality, with very low levels of delinquencies and strong operating performance of the underlying properties in the portfolio.
  • During the first quarter of 2024, we repurchased a Fannie Mae loan for $13.5 million in cash. We have an immaterial reserve for credit losses related to this loan. In 2023, we received repurchase requests from Freddie Mac related to two loans with UPBs of $11.4 million and $34.8 million, respectively. We entered into a forbearance and indemnification agreement with Freddie Mac that, among other things, delayed the repurchases of these loans for six and 12 months, respectively, and transferred the risk of loss for both loans from Freddie Mac to Walker & Dunlop in the first quarter of 2024. As of June 30, 2024, our estimate of the fair value of the indemnification agreements was $4.6 million, an increase of $2.6 million from March 31, 2024, which is included in the provision for credit losses for the second quarter of 2024.

SECOND QUARTER 2024

FINANCIAL RESULTS BY SEGMENT

Interest expense on corporate debt is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s use of that corporate debt. Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income from operations, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity. The following details explain the changes in these expense items at a consolidated corporate level:

  • Interest expense on corporate debt increased 5% from the second quarter of 2023, primarily as a result of an increase in interest rates year over year, as our term loan carries a floating interest rate.
  • Income tax expense decreased $2.6 million, or 25%, from the second quarter of 2023, primarily as a result of the 22% decrease in income from operations, as well as a decrease in the effective tax rate from 29% to 28% year over year.

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL RESULTS - CAPITAL MARKETS

(in thousands)

 

 

Q2 2024

 

 

Q2 2023

 

 

$ Variance

 

% Variance

 

Loan origination and debt brokerage fees, net ("Origination fees")

 

$

63,841

 

 

$

64,574

 

 

$

(733

)

 

(1

)

%

Fair value of expected net cash flows from servicing, net ("MSR income")

 

 

33,349

 

 

 

42,058

 

 

 

(8,709

)

 

(21

)

 

Property sales broker fees

 

 

11,265

 

 

 

10,345

 

 

 

920

 

 

9

 

 

Net warehouse interest income (expense), loans held for sale ("LHFS")

 

 

(1,950

)

 

 

(2,752

)

 

 

802

 

 

(29

)

 

Other revenues

 

 

11,665

 

 

 

11,760

 

 

 

(95

)

 

(1

)

 

Total revenues

 

$

118,170

 

 

$

125,985

 

 

$

(7,815

)

 

(6

)

%

Personnel

 

$

92,480

 

 

$

93,067

 

 

$

(587

)

 

(1

)

%

Amortization and depreciation

 

 

1,138

 

 

 

1,089

 

 

 

49

 

 

4

 

 

Interest expense on corporate debt

 

 

5,299

 

 

 

4,727

 

 

 

572

 

 

12

 

 

Other operating expenses

 

 

4,642

 

 

 

5,200

 

 

 

(558

)

 

(11

)

 

Total expenses

 

$

103,559

 

 

$

104,083

 

 

$

(524

)

 

(1

)

%

Income (loss) from operations

 

$

14,611

 

 

$

21,902

 

 

$

(7,291

)

 

(33

)

%

Income tax expense (benefit)

 

 

3,359

 

 

 

5,572

 

 

 

(2,213

)

 

(40

)

 

Net income (loss) before noncontrolling interests

 

$

11,252

 

 

$

16,330

 

 

$

(5,078

)

 

(31

)

%

Less: net income (loss) from noncontrolling interests

 

 

213

 

 

 

223

 

 

 

(10

)

 

(4

)

 

Walker & Dunlop net income (loss)

 

$

11,039

 

 

$

16,107

 

 

$

(5,068

)

 

(31

)

%

Key revenue metrics (as a % of debt financing volume):

 

 

 

 

 

 

 

 

 

 

 

 

Origination fee rate (1)

 

 

0.95

 

%

 

0.93

 

%

 

 

 

 

 

MSR rate (2)

 

 

0.50

 

 

 

0.61

 

 

 

 

 

 

 

Agency MSR rate (3)

 

 

1.17

 

 

 

1.17

 

 

 

 

 

 

 

Key performance metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

12

 

%

 

17

 

%

 

 

 

 

 

Adjusted EBITDA

 

$

(8,532

)

 

$

(10,334

)

 

$

1,802

 

 

(17

)

%

_______________________

(1)

Origination fees as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing.

(2)

MSR income as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing.

(3)

MSR income as a percentage of Agency debt financing volume.

CAPITAL MARKETS - DISCUSSION OF QUARTERLY RESULTS:

The Capital Markets segment includes our Agency lending, debt brokerage, property sales, appraisal and valuation services, investment banking, and housing market research businesses.

  • The decreases in our MSR income and MSR rate were primarily attributable to the 32% decrease in Fannie Mae debt financing volume. Fannie Mae volume as a percentage of total transaction volume decreased from 27% in the second quarter of 2023 to 18% in the second quarter of 2024. Additionally, the weighted-average duration of Fannie Mae loans decreased year over year due to the continued high interest rate environment. Partially offsetting these factors was an increase in the weighted-average servicing fee (“WASF”) on Fannie Mae loans. Fannie Mae loans have higher WASF than our other products, producing higher MSR income than our other product types.
  • There were no other significant changes from the second quarter of 2023 to the second quarter of 2024.

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL RESULTS - SERVICING & ASSET MANAGEMENT

(in thousands)

 

 

Q2 2024

 

 

Q2 2023

 

 

$ Variance

 

% Variance

 

Origination fees

 

$

1,493

 

 

$

394

 

 

$

1,099

 

 

279

 

%

Servicing fees

 

 

80,418

 

 

 

77,061

 

 

 

3,357

 

 

4

 

 

Investment management fees

 

 

14,822

 

 

 

16,309

 

 

 

(1,487

)

 

(9

)

 

Net warehouse interest income, loans held for investment ("LHFI")

 

 

366

 

 

 

1,226

 

 

 

(860

)

 

(70

)

 

Placement fees and other interest income

 

 

37,170

 

 

 

32,337

 

 

 

4,833

 

 

15

 

 

Other revenues

 

 

13,963

 

 

 

15,513

 

 

 

(1,550

)

 

(10

)

 

Total revenues

 

$

148,232

 

 

$

142,840

 

 

$

5,392

 

 

4

 

%

Personnel

 

$

20,077

 

 

$

21,189

 

 

$

(1,112

)

 

(5

)

%

Amortization and depreciation

 

 

53,173

 

 

 

53,550

 

 

 

(377

)

 

(1

)

 

Provision (benefit) for credit losses

 

 

2,936

 

 

 

(734

)

 

 

3,670

 

 

(500

)

 

Interest expense on corporate debt

 

 

10,946

 

 

 

10,707

 

 

 

239

 

 

2

 

 

Other operating expenses

 

 

6,728

 

 

 

9,946

 

 

 

(3,218

)

 

(32

)

 

Total expenses

 

$

93,860

 

 

$

94,658

 

 

$

(798

)

 

(1

)

%

Income (loss) from operations

 

$

54,372

 

 

$

48,182

 

 

$

6,190

 

 

13

 

%

Income tax expense (benefit)

 

 

16,521

 

 

 

14,787

 

 

 

1,734

 

 

12

 

 

Net income (loss) before noncontrolling interests

 

$

37,851

 

 

$

33,395

 

 

$

4,456

 

 

13

 

%

Less: net income (loss) from noncontrolling interests

 

 

(2,581

)

 

 

(2,337

)

 

 

(244

)

 

10

 

 

Walker & Dunlop net income (loss)

 

$

40,432

 

 

$

35,732

 

 

$

4,700

 

 

13

 

%

Key performance metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

37

 

%

 

34

 

%

 

 

 

 

 

Adjusted EBITDA

 

$

124,502

 

 

$

108,459

 

 

$

16,043

 

 

15

 

%

SERVICING & ASSET MANAGEMENT - DISCUSSION OF QUARTERLY RESULTS:

The Servicing & Asset Management segment includes loan servicing, principal lending and investing, management of third-party capital invested in tax credit equity funds focused on the affordable housing sector and other commercial real estate, and real estate-related investment banking and advisory services.

  • The $6.1 billion net increase in the servicing portfolio over the past 12 months was the principal driver of the growth in servicing fees year over year, partially offset by a slight decrease in the servicing portfolio’s WASF.
  • Investment management fees decreased primarily as a result of a decline in revenue from our Principal Investing funds due to lower asset sales year over year.
  • Placement fees and other interest income increased primarily as a result of higher placement fees earned on escrow deposits related to higher short-term interest rates.
  • Other revenues primarily decreased as a result of lower syndication revenues related to lower equity syndication volume year over year.
  • The provision for credit losses in 2024 was primarily attributable to losses related to the forbearance and indemnification agreement with Freddie Mac as noted above. The benefit for credit losses in 2023 was driven by an update in our collateral-based reserve for a property that was settled with Fannie Mae.
  • Other operating expenses decreased primarily as a result of decreased miscellaneous expenses year over year, largely from our affordable operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL RESULTS - CORPORATE

(in thousands)

 

 

Q2 2024

 

 

Q2 2023

 

 

$ Variance

 

% Variance

 

Other interest income

 

$

3,870

 

 

$

3,049

 

 

$

821

 

 

27

 

%

Other revenues

 

 

404

 

 

 

741

 

 

 

(337

)

 

(45

)

 

Total revenues

 

$

4,274

 

 

$

3,790

 

 

$

484

 

 

13

 

%

Personnel

 

$

20,510

 

 

$

19,049

 

 

$

1,461

 

 

8

 

%

Amortization and depreciation

 

 

1,732

 

 

 

1,653

 

 

 

79

 

 

5

 

 

Interest expense on corporate debt

 

 

1,629

 

 

 

1,576

 

 

 

53

 

 

3

 

 

Other operating expenses

 

 

21,189

 

 

 

15,584

 

 

 

5,605

 

 

36

 

 

Total expenses

 

$

45,060

 

 

$

37,862

 

 

$

7,198

 

 

19

 

%

Income (loss) from operations

 

$

(40,786

)

 

$

(34,072

)

 

$

(6,714

)

 

20

 

%

Income tax expense (benefit)

 

 

(11,978

)

 

 

(9,868

)

 

 

(2,110

)

 

21

 

 

Walker & Dunlop net income (loss)

 

$

(28,808

)

 

$

(24,204

)

 

$

(4,604

)

 

19

 

%

Key performance metric:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

(35,039

)

 

$

(27,624

)

 

$

(7,415

)

 

27

 

%

CORPORATE - DISCUSSION OF QUARTERLY RESULTS:

The Corporate segment consists of corporate-level activities including accounting, information technology, legal, human resources, marketing, internal audit, and various other corporate groups (“support functions”). The Company does not allocate costs from these support functions to its other segments in presenting segment operating results.

  • The increase in personnel expense was primarily driven by increases in variable compensation arrangements, including our subjective bonus compensation expense.
  • Other operating expenses increased primarily due to increases in travel and entertainment costs, as we held an all company retreat in the second quarter of 2024, something we did not do in 2023. The retreat is an important part of the Walker & Dunlop community and corporate culture. Annual increases in multi-year software and data contracts used throughout our business also contributed to the increase in other operating expenses.

YEAR-TO-DATE 2024

CONSOLIDATED OPERATING RESULTS

Interest expense on corporate debt is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s use of that corporate debt. Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income from operations, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity. The following details explain the changes in these expense items at a consolidated corporate level:

  • Interest expense on corporate debt increased $3.2 million, or 10%, from the second quarter of 2023, primarily as a result of an increase in interest rates year over year, as our term loan carries a floating interest rate.
  • Income tax expense decreased $6.9 million, or 39%, from the second quarter of 2023, primarily as a result of the 41% decrease in income from operations.

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING RESULTS AND KEY PERFORMANCE METRICS

(in thousands)

 

YTD Q2 2024

 

YTD Q2 2023

 

$ Variance

 

% Variance

Debt financing volume

 

$

12,145,026

 

$

11,733,633

 

$

411,393

 

 

4

 

%

Property sales volume

 

 

2,697,934

 

 

3,399,065

 

 

(701,131

)

 

(21

)

 

Total transaction volume

 

$

14,842,960

 

$

15,132,698

 

$

(289,738

)

 

(2

)

%

Total revenues

 

 

498,735

 

 

511,361

 

 

(12,626

)

 

(2

)

 

Total expenses

 

 

456,859

 

 

440,744

 

 

16,115

 

 

4

 

 

Walker & Dunlop net income

 

$

34,529

 

$

54,300

 

$

(19,771

)

 

(36

)

%

Adjusted EBITDA

 

 

155,067

 

 

138,476

 

 

16,591

 

 

12

 

 

Diluted EPS

 

$

1.02

 

$

1.61

 

$

(0.59

)

 

(37

)

%

Adjusted core EPS

 

$

2.39

 

$

2.14

 

$

0.25

 

 

12

 

%

Operating margin

 

 

8

%

 

14

%

 

 

 

 

 

Return on equity

 

 

4

 

 

6

 

 

 

 

 

 

DISCUSSION OF YEAR-TO-DATE-RESULTS:

  • The decrease in total transaction volume was primarily driven by a 22% decrease in Agency debt financing volume and a 21% decrease in property sales volume, partially offset by the 26% increase in brokered debt financing volume.
  • The 36% decrease in Walker & Dunlop net income was primarily a result of a 41% decrease in income from operations driven by: (i) a decline in non-cash MSR revenues from lower Agency financing volume; (ii) higher provision for loan loss expense in 2024 compared to a net benefit in 2023; (iii) a write-off of debt premium related to the payoff of fixed-rate debt in 2023 with no comparable activity in 2024; and (iv) lower investment banking revenues year over year as we closed the largest investment banking transaction in our history in 2023 with no similar transaction this year. These were partially offset by an increase in losses allocated to noncontrolling interests.
  • The increase in adjusted EBITDA was primarily the result of increased placement fees and other interest income, higher servicing fees, and decreased personnel expenses, partially offset by decreases in origination fees, investment banking revenues, and an increase in other operating expenses. Additionally, there were no net write offs in 2024 compared to $6.0 million in 2023.
  • Diluted EPS decreased 37% year over year, compared to a 12% increase in our adjusted core EPS year over year. As explained above, the decrease in income from operations year over year was driven largely by reductions in non-cash revenues or atypical transaction related drivers, like a debt refinancing, which are removed from adjusted core EPS. Diluted EPS incorporates the impact of those items and decreased year over year, while adjusted core EPS excludes those items and reflects the year over year growth of our recurring revenue streams.
  • Operating margin decreased primarily due to changes in our non-cash activity, including: (i) a decline of MSR income due to lower Fannie Mae volume, and (ii) a change from a large benefit for credit losses in 2023 to a provision for credit losses in 2024. Additionally, other operating expenses increased year over year.
  • Return on equity declined due to a 36% decrease in net income, partially offset by a less than 1% decrease in stockholders’ equity year over year.

YEAR-TO-DATE 2024

FINANCIAL RESULTS BY SEGMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

FINANCIAL RESULTS - CAPITAL MARKETS

(in thousands)

 

YTD Q2 2024

 

YTD Q2 2023

 

$ Variance

 

% Variance

Origination fees

 

$

107,541

 

 

$

111,530

 

 

$

(3,989

)

 

(4

)

%

MSR income

 

 

54,247

 

 

 

72,071

 

 

 

(17,824

)

 

(25

)

 

Property sales broker fees

 

 

20,086

 

 

 

21,969

 

 

 

(1,883

)

 

(9

)

 

Net warehouse interest income (expense), LHFS

 

 

(3,524

)

 

 

(4,441

)

 

 

917

 

 

(21

)

 

Other revenues

 

 

21,717

 

 

 

28,860

 

 

 

(7,143

)

 

(25

)

 

Total revenues

 

$

200,067

 

 

$

229,989

 

 

$

(29,922

)

 

(13

)

%

Personnel

 

$

171,667

 

 

$

183,529

 

 

$

(11,862

)

 

(6

)

%

Amortization and depreciation

 

 

2,275

 

 

 

2,275

 

 

 

 

 

-

 

 

Interest expense on corporate debt

 

 

10,150

 

 

 

8,996

 

 

 

1,154

 

 

13

 

 

Other operating expenses

 

 

9,694

 

 

 

10,844

 

 

 

(1,150

)

 

(11

)

 

Total expenses

 

$

193,786

 

 

$

205,644

 

 

$

(11,858

)

 

(6

)

%

Income (loss) from operations

 

$

6,281

 

 

$

24,345

 

 

$

(18,064

)

 

(74

)

%

Income tax expense (benefit)

 

 

1,615

 

 

 

6,076

 

 

 

(4,461

)

 

(73

)

 

Net income (loss) before noncontrolling interests

 

$

4,666

 

 

$

18,269

 

 

$

(13,603

)

 

(74

)

%

Less: net income (loss) from noncontrolling interests

 

 

327

 

 

 

1,658

 

 

 

(1,331

)

 

(80

)

 

Walker & Dunlop net income (loss)

 

$

4,339

 

 

$

16,611

 

 

$

(12,272

)

 

(74

)

%

Key revenue metrics (as a % of debt financing volume):

 

 

 

 

 

 

 

 

 

 

 

 

Origination fee margin

 

 

0.90

 

%

 

0.95

 

%

 

 

 

 

 

MSR margin

 

 

0.46

 

 

 

0.61

 

 

 

 

 

 

 

Agency MSR margin

 

 

1.14

 

 

 

1.19

 

 

 

 

 

 

 

Key performance metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

3

 

%

 

11

 

%

 

 

 

 

 

Adjusted EBITDA

 

$

(27,829

)

 

$

(29,021

)

 

$

1,192

 

 

(4

)

%

CAPITAL MARKETS - DISCUSSION OF YEAR-TO-DATE-RESULTS:

  • The decrease in origination fees was primarily the result of a change in the mix of our debt financing volume, driven by an increase in brokered debt financing volume as a percentage of total debt financing volume and a decrease in Fannie Mae volume as a percentage of total debt financing volume, partially offset by an increase in overall debt financing volume. The change in the mix of our debt financing volume also led to the drop in the origination fee margin. Fannie Mae debt financing is our most-profitable product, while brokered debt financing is our least profitable.
  • The decrease in MSR income is primarily attributable to a 33% decrease in Fannie Mae debt financing volume. Additionally, the weighted-average duration of Fannie Mae loans decreased year over year due to the continued high interest rate environment. Partially offsetting these factors was an increase in the WASF on Fannie Mae loans.
  • The decrease in other revenues was primarily related to the closing of the largest investment banking deal in the Company’s history, a $7.5 million transaction, which closed in the first quarter of 2023, with no comparable activity in 2024.
  • Personnel expenses decreased primarily due to a decrease in commission costs on lower origination and property sales broker fees, combined with a decrease in other personnel costs due to lower headcount. Our lower headcount was due to a workforce reduction undertaken in the second quarter of 2023.

FINANCIAL RESULTS - SERVICING & ASSET MANAGEMENT

(in thousands)

 

YTD Q2 2024

 

YTD Q2 2023

 

$ Variance

 

% Variance

Origination fees

 

$

1,533

 

 

$

522

 

 

$

1,011

 

 

194

 

%

Servicing fees

 

 

160,461

 

 

 

152,827

 

 

 

7,634

 

 

5

 

 

Investment management fees

 

 

28,342

 

 

 

31,482

 

 

 

(3,140

)

 

(10

)

 

Net warehouse interest income, LHFI

 

 

824

 

 

 

2,916

 

 

 

(2,092

)

 

(72

)

 

Placement fees and other interest income

 

 

72,773

 

 

 

61,161

 

 

 

11,612

 

 

19

 

 

Other revenues

 

 

25,534

 

 

 

27,128

 

 

 

(1,594

)

 

(6

)

 

Total revenues

 

$

289,467

 

 

$

276,036

 

 

$

13,431

 

 

5

 

%

Personnel

 

$

38,132

 

 

$

36,530

 

 

$

1,602

 

 

4

 

%

Amortization and depreciation

 

 

106,244

 

 

 

107,560

 

 

 

(1,316

)

 

(1

)

 

Provision (benefit) for credit losses

 

 

3,460

 

 

 

(11,509

)

 

 

14,969

 

 

(130

)

 

Interest expense on corporate debt

 

 

22,137

 

 

 

20,289

 

 

 

1,848

 

 

9

 

 

Other operating expenses

 

 

11,851

 

 

 

11,426

 

 

 

425

 

 

4

 

 

Total expenses

 

$

181,824

 

 

$

164,296

 

 

$

17,528

 

 

11

 

%

Income (loss) from operations

 

$

107,643

 

 

$

111,740

 

 

$

(4,097

)

 

(4

)

%

Income tax expense (benefit)

 

 

27,674

 

 

 

27,891

 

 

 

(217

)

 

(1

)

 

Net income (loss) before noncontrolling interests

 

$

79,969

 

 

$

83,849

 

 

$

(3,880

)

 

(5

)

%

Less: net income (loss) from noncontrolling interests

 

 

(3,746

)

 

 

(2,967

)

 

 

(779

)

 

26

 

 

Walker & Dunlop net income (loss)

 

$

83,715

 

 

$

86,816

 

 

$

(3,101

)

 

(4

)

%

Key performance metrics:

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

 

37

 

%

 

40

 

%

 

 

 

 

 

Adjusted EBITDA

 

$

244,159

 

 

$

221,434

 

 

$

22,725

 

 

10

 

%

SERVICING & ASSET MANAGEMENT - DISCUSSION OF YEAR-TO-DATE-RESULTS:

  • The $6.1 billion net increase in the servicing portfolio over the past 12 months was the principal driver of the growth in servicing fees year over year, partially offset by a decrease in the servicing portfolio’s weighted-average servicing fee.
  • Investment management fees decreased primarily as a result of a decline in revenue from our LIHTC funds due to fewer dispositions year over year.
  • Placement fees and other interest income increased largely as a result of higher placement fees earned on those escrow deposits due to higher short-term interest rates.
  • The provision for credit losses in 2024 was primarily attributable to the estimated fair value of the liability related to the forbearance and indemnification agreements with Freddie Mac noted above, partially offset by a small benefit for risk-sharing obligations resulting from an update to our historical loss rate and forecast-period loss rate. The benefit for credit losses in 2023 was primarily due to the annual update of our historical loss rate and forecast-period loss rates that resulted in a decrease to the calculated expected credit losses.

FINANCIAL RESULTS - CORPORATE

(in thousands)

 

YTD Q2 2024

 

YTD Q2 2023

 

$ Variance

 

% Variance

Other interest income

 

$

7,669

 

 

$

5,149

 

 

$

2,520

 

 

49

 

%

Other revenues

 

 

1,532

 

 

 

187

 

 

 

1,345

 

 

719

 

 

Total revenues

 

$

9,201

 

 

$

5,336

 

 

$

3,865

 

 

72

 

%

Personnel

 

$

34,731

 

 

$

31,859

 

 

$

2,872

 

 

9

 

%

Amortization and depreciation

 

 

3,415

 

 

 

3,423

 

 

 

(8

)

 

(0

)

 

Interest expense on corporate debt

 

 

3,246

 

 

 

2,999

 

 

 

247

 

 

8

 

 

Other operating expenses

 

 

39,857

 

 

 

32,523

 

 

 

7,334

 

 

23

 

 

Total expenses

 

$

81,249

 

 

$

70,804

 

 

$

10,445

 

 

15

 

%

Income (loss) from operations

 

$

(72,048

)

 

$

(65,468

)

 

$

(6,580

)

 

10

 

%

Income tax expense (benefit)

 

 

(18,523

)

 

 

(16,341

)

 

 

(2,182

)

 

13

 

 

Walker & Dunlop net income (loss)

 

$

(53,525

)

 

$

(49,127

)

 

$

(4,398

)

 

9

 

%

Key performance metric:

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

(61,263

)

 

$

(53,937

)

 

$

(7,326

)

 

14

 

%

CORPORATE - DISCUSSION OF YEAR-TO-DATE-RESULTS:

  • Total revenues increased as a result of higher interest income earned on our corporate and fund cash balances due to the elevated short-term interest rate environment, combined with an increase in income from equity-method investments.
  • The increase in personnel expense was primarily related to increases in variable compensation, including our subjective bonus compensation expense, partially offset by decreases in salaries and benefits and stock compensation expenses, driven by lower headcount as a result of our workforce reduction undertaken in the second quarter of 2023 and the departure of two executives.
  • The increase in other operating expenses was primarily the result of increased travel and entertainment, software, and miscellaneous expenses year over year.

CAPITAL SOURCES AND USES

On August 7, 2024, the Company’s Board of Directors declared a dividend of $0.65 per share for the third quarter of 2024. The dividend will be paid on September 6, 2024, to all holders of record of the Company’s restricted and unrestricted common stock as of August 22, 2024.

In May 2024, the Company entered into a second amendment to the existing credit agreement that, among other things, decreased the interest rate of the incremental $200 million borrowing by 0.75% per annum, to Term SOFR plus 2.25% per annum, and combined the incremental term loan with the initial term loan to create a single fungible $800 million senior secured term loan.

On February 14, 2024, our Board of Directors authorized the repurchase of up to $75.0 million of the Company’s outstanding common stock over a 12-month period ending February 23, 2025 (“2024 Share Repurchase Program”). We have not repurchased any shares of common stock under the 2024 Share Repurchase Program.

Any purchases made pursuant to the 2024 Share Repurchase Program will be made in the open market or in privately negotiated transactions, from time to time, as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The repurchase program may be suspended or discontinued at any time.

CONFERENCE CALL INFORMATION

Listeners can access the Company’s quarterly conference call for more information regarding our financial results via the dial-in number and webcast link below. Presentation materials related to the conference call will be posted to the Investor Relations section of the Company’s website prior to the call. An audio replay will also be available on the Investor Relations section of the Company’s website, along with the presentation materials.

Earnings Call:

Thursday, August 8, 2024 at 8:30am EDT

Phone:

(888) 256-1007 from within the United States; (773) 305-6853 from outside the United States

Confirmation Code:

5034007

Webcast Link:

https://event.webcasts.com/starthere.jsp?ei=1655292&tp_key=5b0e21c116

ABOUT WALKER & DUNLOP

Walker & Dunlop (NYSE: WD) is one of the largest commercial real estate finance and advisory services firms in the United States. Our ideas and capital create communities where people live, work, shop, and play. The diversity of our people, breadth of our brand and technological capabilities make us one of the most insightful and client-focused firms in the commercial real estate industry.

NON-GAAP FINANCIAL MEASURES

To supplement our financial statements presented in accordance with United States generally accepted accounting principles (“GAAP”), the Company uses adjusted EBITDA, adjusted core net income, and adjusted core EPS, which are non-GAAP financial measures. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. When analyzing our operating performance, readers should use adjusted EBITDA, adjusted core net income, and adjusted core EPS in addition to, and not as an alternative for, net income and diluted EPS.

Adjusted core net income and adjusted core EPS represent net income adjusted for amortization and depreciation, provision (benefit) for credit losses, net write-offs, the fair value of expected net cash flows from servicing, net, the income statement impact from periodic revaluation and accretion associated with contingent consideration liabilities related to acquired companies, and other one-time adjustments, such as goodwill impairment. Adjusted EBITDA represents net income before income taxes, interest expense on our corporate debt, and amortization and depreciation, adjusted for provision (benefit) for credit losses, net write-offs, stock-based compensation expense, the fair value of expected net cash flows from servicing, net, the write-off of the unamortized balance of premium associated with the repayment of a portion of our corporate debt, goodwill impairment, and contingent consideration liability fair value adjustments when the fair value adjustment is a triggering event for a goodwill impairment assessment. Furthermore, adjusted EBITDA is not intended to be a measure of free cash flow for our management's discretionary use, as it does not reflect certain cash requirements such as tax and debt service payments. The amounts shown for adjusted EBITDA may also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges that are used to determine compliance with financial covenants. Because not all companies use identical calculations, our presentation of adjusted EBITDA, adjusted core net income and adjusted core EPS may not be comparable to similarly titled measures of other companies.

We use adjusted EBITDA, adjusted core net income, and adjusted core EPS to evaluate the operating performance of our business, for comparison with forecasts and strategic plans and for benchmarking performance externally against competitors. We believe that these non-GAAP measures, when read in conjunction with the Company's GAAP financial information, provide useful information to investors by offering:

  • the ability to make more meaningful period-to-period comparisons of the Company's on-going operating results;
  • the ability to better identify trends in the Company's underlying business and perform related trend analyses; and
  • a better understanding of how management plans and measures the Company's underlying business.

We believe that these non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP and that these non-GAAP financial measures should only be used to evaluate the Company's results of operations in conjunction with the Company’s GAAP financial information. For more information on adjusted EBITDA, adjusted core net income, and adjusted core EPS, refer to the section of this press release below titled “Adjusted Financial Measure Reconciliation to GAAP” and “Adjusted Financial Measure Reconciliation to GAAP By Segment.”

FORWARD-LOOKING STATEMENTS

Some of the statements contained in this press release may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, projections, plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” or “potential” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans, or intentions.

The forward-looking statements contained in this press release reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ significantly from those expressed or contemplated in any forward-looking statement.

While forward-looking statements reflect our good faith projections, assumptions and expectations, they are not guarantees of future results. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by applicable law. Factors that could cause our results to differ materially include, but are not limited to: (1) general economic conditions and multifamily and commercial real estate market conditions, (2) changes in interest rates, (3) regulatory and/or legislative changes to Freddie Mac, Fannie Mae or HUD, (4) our ability to retain and attract loan originators and other professionals, (5) success of our various investments funded with corporate capital, and (6) changes in federal government fiscal and monetary policies, including any constraints or cuts in federal funds allocated to HUD for loan originations.

For a further discussion of these and other factors that could cause future results to differ materially from those expressed or contemplated in any forward-looking statements, see the section titled “Risk Factors” in our most recent Annual Report on Form 10-K and any updates or supplements in subsequent Quarterly Reports on Form 10-Q and our other filings with the SEC. Such filings are available publicly on our Investor Relations web page at www.walkerdunlop.com.

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

2024

 

2024

 

2023

 

2023

 

2023

(in thousands)

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

208,095

 

$

216,532

 

 

$

328,698

 

 

$

236,321

 

 

$

228,091

 

Restricted cash

 

35,460

 

 

21,071

 

 

 

21,422

 

 

 

17,768

 

 

 

21,769

 

Pledged securities, at fair value

 

197,936

 

 

190,679

 

 

 

184,081

 

 

 

177,509

 

 

 

170,666

 

Loans held for sale, at fair value

 

814,883

 

 

497,933

 

 

 

594,998

 

 

 

758,926

 

 

 

1,303,686

 

Mortgage servicing rights

 

850,831

 

 

881,834

 

 

 

907,415

 

 

 

921,746

 

 

 

932,131

 

Goodwill

 

901,710

 

 

901,710

 

 

 

901,710

 

 

 

949,710

 

 

 

963,710

 

Other intangible assets

 

174,467

 

 

178,221

 

 

 

181,975

 

 

 

185,927

 

 

 

189,919

 

Receivables, net

 

272,827

 

 

250,406

 

 

 

233,563

 

 

 

265,234

 

 

 

242,397

 

Committed investments in tax credit equity

 

151,674

 

 

122,332

 

 

 

154,028

 

 

 

212,296

 

 

 

165,136

 

Other assets

 

567,515

 

 

565,194

 

 

 

544,457

 

 

 

552,414

 

 

 

589,919

 

Total assets

$

4,175,398

 

$

3,825,912

 

 

$

4,052,347

 

 

$

4,277,851

 

 

$

4,807,424

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warehouse notes payable

$

810,114

 

$

521,977

 

 

$

596,178

 

 

$

790,742

 

 

$

1,342,187

 

Notes payable

 

770,707

 

 

772,037

 

 

 

773,358

 

 

 

774,677

 

 

 

775,995

 

Allowance for risk-sharing obligations

 

30,477

 

 

30,124

 

 

 

31,601

 

 

 

30,957

 

 

 

32,410

 

Commitments to fund investments in tax credit equity

 

134,493

 

 

114,206

 

 

 

140,259

 

 

 

196,250

 

 

 

156,617

 

Other liabilities

 

695,813

 

 

651,660

 

 

 

764,822

 

 

 

754,234

 

 

 

775,718

 

Total liabilities

$

2,441,604

 

$

2,090,004

 

 

$

2,306,218

 

 

$

2,546,860

 

 

$

3,082,927

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

$

331

 

$

331

 

 

$

329

 

 

$

328

 

 

$

327

 

Additional paid-in capital

 

407,426

 

 

427,184

 

 

 

425,488

 

 

 

420,062

 

 

 

412,182

 

Accumulated other comprehensive income (loss)

 

415

 

 

(492

)

 

 

(479

)

 

 

(1,864

)

 

 

(1,465

)

Retained earnings

 

1,288,728

 

 

1,288,313

 

 

 

1,298,412

 

 

 

1,287,653

 

 

 

1,287,334

 

Total stockholders’ equity

$

1,696,900

 

$

1,715,336

 

 

$

1,723,750

 

 

$

1,706,179

 

 

$

1,698,378

 

Noncontrolling interests

 

36,894

 

 

20,572

 

 

 

22,379

 

 

 

24,812

 

 

 

26,119

 

Total equity

$

1,733,794

 

$

1,735,908

 

 

$

1,746,129

 

 

$

1,730,991

 

 

$

1,724,497

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

$

4,175,398

$

3,825,912

$

4,052,347

$

4,277,851

$

4,807,424

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Statements of Income and Comprehensive Income

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly Trends

 

Six months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

(in thousands, except per share amounts)

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

2024

 

2023

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origination fees

$

65,334

 

 

$

43,740

 

 

$

66,208

 

 

$

56,149

 

 

$

64,968

 

 

$

109,074

 

 

$

112,052

 

MSR income

 

33,349

 

 

 

20,898

 

 

 

34,471

 

 

 

35,375

 

 

 

42,058

 

 

 

54,247

 

 

 

72,071

 

Servicing fees

 

80,418

 

 

 

80,043

 

 

 

79,887

 

 

 

79,200

 

 

 

77,061

 

 

 

160,461

 

 

 

152,827

 

Property sales broker fees

 

11,265

 

 

 

8,821

 

 

 

15,135

 

 

 

16,862

 

 

 

10,345

 

 

 

20,086

 

 

 

21,969

 

Investment management fees

 

14,822

 

 

 

13,520

 

 

 

537

 

 

 

13,362

 

 

 

16,309

 

 

 

28,342

 

 

 

31,482

 

Net warehouse interest income (expense)

 

(1,584

)

 

 

(1,116

)

 

 

(2,077

)

 

 

(2,031

)

 

 

(1,526

)

 

 

(2,700

)

 

 

(1,525

)

Placement fees and other interest income

 

41,040

 

 

 

39,402

 

 

 

45,210

 

 

 

43,000

 

 

 

35,386

 

 

 

80,442

 

 

 

66,310

 

Other revenues

 

26,032

 

 

 

22,751

 

 

 

34,965

 

 

 

26,826

 

 

 

28,014

 

 

 

48,783

 

 

 

56,175

 

Total revenues

$

270,676

 

 

$

228,059

 

 

$

274,336

 

 

$

268,743

 

 

$

272,615

 

 

$

498,735

 

 

$

511,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

$

133,067

 

 

$

111,463

 

 

$

125,865

 

 

$

136,507

 

 

$

133,305

 

 

$

244,530

 

 

$

251,918

 

Amortization and depreciation

 

56,043

 

 

 

55,891

 

 

 

56,015

 

 

 

57,479

 

 

 

56,292

 

 

 

111,934

 

 

 

113,258

 

Provision (benefit) for credit losses

 

2,936

 

 

 

524

 

 

 

636

 

 

 

421

 

 

 

(734

)

 

 

3,460

 

 

 

(11,509

)

Interest expense on corporate debt

 

17,874

 

 

 

17,659

 

 

 

18,598

 

 

 

17,594

 

 

 

17,010

 

 

 

35,533

 

 

 

32,284

 

Goodwill impairment

 

 

 

 

 

 

 

48,000

 

 

 

14,000

 

 

 

 

 

 

 

 

 

 

Fair value adjustments to contingent consideration liabilities

 

 

 

 

 

 

 

(48,500

)

 

 

(14,000

)

 

 

 

 

 

 

 

 

 

Other operating expenses

 

32,559

 

 

 

28,843

 

 

 

34,355

 

 

 

28,529

 

 

 

30,730

 

 

 

61,402

 

 

 

54,793

 

Total expenses

$

242,479

 

 

$

214,380

 

 

$

234,969

 

 

$

240,530

 

 

$

236,603

 

 

$

456,859

 

 

$

440,744

 

Income from operations

$

28,197

 

 

$

13,679

 

 

$

39,367

 

 

$

28,213

 

 

$

36,012

 

 

$

41,876

 

 

$

70,617

 

Income tax expense

 

7,902

 

 

 

2,864

 

 

 

10,331

 

 

 

7,069

 

 

 

10,491

 

 

 

10,766

 

 

 

17,626

 

Net income before noncontrolling interests

$

20,295

 

 

$

10,815

 

 

$

29,036

 

 

$

21,144

 

 

$

25,521

 

 

$

31,110

 

 

$

52,991

 

Less: net income (loss) from noncontrolling interests

 

(2,368

)

 

 

(1,051

)

 

 

(2,563

)

 

 

(314

)

 

 

(2,114

)

 

 

(3,419

)

 

 

(1,309

)

Walker & Dunlop net income

$

22,663

 

 

$

11,866

 

 

$

31,599

 

 

$

21,458

 

 

$

27,635

 

 

$

34,529

 

 

$

54,300

 

Net change in unrealized gains (losses) on pledged available-for-sale securities, net of taxes

 

907

 

 

 

(13

)

 

 

1,385

 

 

 

(399

)

 

 

156

 

 

 

894

 

 

 

103

 

Walker & Dunlop comprehensive income

$

23,570

 

 

$

11,853

 

 

$

32,984

 

 

$

21,059

 

 

$

27,791

 

 

$

35,423

 

 

$

54,403

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Effective Tax Rate

 

28

%

 

 

21

%

 

 

26

%

 

 

25

%

 

 

29

%

 

 

26

%

 

 

25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

0.67

 

 

$

0.35

 

 

$

0.94

 

 

$

0.64

 

 

$

0.82

 

 

$

1.02

 

 

$

1.62

 

Diluted earnings per share

 

0.67

 

 

 

0.35

 

 

 

0.93

 

 

 

0.64

 

 

 

0.82

 

 

 

1.02

 

 

 

1.61

 

Cash dividends paid per common share

 

0.65

 

 

 

0.65

 

 

 

0.63

 

 

 

0.63

 

 

 

0.63

 

 

 

1.30

 

 

 

1.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted-average shares outstanding

 

33,121

 

 

 

32,978

 

 

 

32,825

 

 

 

32,737

 

 

 

32,695

 

 

 

33,050

 

 

 

32,612

 

Diluted weighted-average shares outstanding

 

33,154

 

 

 

33,048

 

 

 

32,941

 

 

 

32,895

 

 

 

32,851

 

 

 

33,101

 

 

 

32,834

 

SUPPLEMENTAL OPERATING DATA

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly Trends

 

Six months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

(in thousands, except per share data and unless otherwise noted)

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

2024

 

2023

 

Transaction Volume:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Components of Debt Financing Volume

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fannie Mae

$

1,510,804

 

$

903,368

 

$

1,692,405

 

$

1,739,332

 

$

2,230,952

 

$

2,414,172

 

$

3,589,660

 

Freddie Mac

 

1,153,190

 

 

974,926

 

 

1,308,263

 

 

1,072,048

 

 

1,212,887

 

 

2,128,116

 

 

2,188,624

 

Ginnie Mae - HUD

 

185,898

 

 

14,140

 

 

316,960

 

 

86,557

 

 

147,773

 

 

200,038

 

 

275,372

 

Brokered (1)

 

3,852,851

 

 

3,319,074

 

 

2,885,454

 

 

3,149,457

 

 

3,316,223

 

 

7,171,925

 

 

5,679,977

 

Principal Lending and Investing (2)

 

214,975

 

 

15,800

 

 

218,750

 

 

 

 

 

 

230,775

 

 

 

Total Debt Financing Volume

$

6,917,718

 

$

5,227,308

 

$

6,421,832

 

$

6,047,394

 

$

6,907,835

 

$

12,145,026

 

$

11,733,633

 

Property Sales Volume

 

1,530,783

 

 

1,167,151

 

 

2,877,399

 

 

2,508,073

 

 

1,504,383

 

 

2,697,934

 

 

3,399,065

 

Total Transaction Volume

$

8,448,501

 

$

6,394,459

 

$

9,299,231

 

$

8,555,467

 

$

8,412,218

 

$

14,842,960

 

$

15,132,698

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Performance Metrics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

 

10

%

 

6

%

 

14

%

 

10

%

 

13

%

 

8

%

 

14

%

Return on equity

 

5

 

 

3

 

 

7

 

 

5

 

 

7

 

 

4

 

 

6

 

Walker & Dunlop net income

$

22,663

 

$

11,866

 

$

31,599

 

$

21,458

 

$

27,635

 

$

34,529

 

$

54,300

 

Adjusted EBITDA (3)

 

80,931

 

 

74,136

 

 

87,582

 

 

74,065

 

 

70,501

 

 

155,067

 

 

138,476

 

Diluted EPS

 

0.67

 

 

0.35

 

 

0.93

 

 

0.64

 

 

0.82

 

 

1.02

 

 

1.61

 

Adjusted core EPS (4)

 

1.23

 

 

1.19

 

 

1.42

 

 

1.11

 

 

0.98

 

 

2.39

 

 

2.14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Expense Metrics (as a percentage of total revenues):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel expenses

 

49

%

 

49

%

 

46

%

 

51

%

 

49

%

 

49

%

 

49

%

Other operating expenses

 

12

 

 

13

 

 

13

 

 

11

 

 

11

 

 

12

 

 

11

 

Key Revenue Metrics (as a percentage of debt financing volume):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Origination fee rate (5)

 

0.95

%

 

0.84

%

 

1.05

%

 

0.93

%

 

0.93

%

 

0.90

%

 

0.95

%

MSR rate (6)

 

0.50

 

 

0.40

 

 

0.56

 

 

0.58

 

 

0.61

 

 

0.46

 

 

0.61

 

Agency MSR rate (7)

 

1.17

 

 

1.10

 

 

1.04

 

 

1.22

 

 

1.17

 

 

1.14

 

 

1.19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Market capitalization at period end

$

3,311,629

 

$

3,406,853

 

$

3,719,589

 

$

2,433,494

 

$

2,586,519

 

 

 

 

 

 

 

Closing share price at period end

$

98.20

 

$

101.06

 

$

111.01

 

$

74.24

 

$

79.09

 

 

 

 

 

 

 

Average headcount

 

1,321

 

 

1,323

 

 

1,341

 

 

1,344

 

 

1,385

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Components of Servicing Portfolio (end of period):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fannie Mae

$

64,954,426

 

$

64,349,886

 

$

63,699,106

 

$

62,850,853

 

$

61,356,554

 

 

 

 

 

 

 

Freddie Mac

 

39,938,411

 

 

39,665,386

 

 

39,330,545

 

 

38,656,136

 

 

38,287,200

 

 

 

 

 

 

 

Ginnie Mae - HUD

 

10,619,764

 

 

10,595,841

 

 

10,460,884

 

 

10,320,520

 

 

10,246,632

 

 

 

 

 

 

 

Brokered (8)

 

17,239,417

 

 

17,312,513

 

 

16,940,850

 

 

17,091,925

 

 

16,684,115

 

 

 

 

 

 

 

Principal Lending and Investing (9)

 

25,893

 

 

40,139

 

 

40,139

 

 

40,000

 

 

71,680

 

 

 

 

 

 

 

Total Servicing Portfolio

$

132,777,911

 

$

131,963,765

 

$

130,471,524

 

$

128,959,434

 

$

126,646,181

 

 

 

 

 

 

 

Assets under management (10)

 

17,566,666

 

 

17,465,398

 

 

17,321,452

 

 

17,334,877

 

 

16,903,055

 

 

 

 

 

 

 

Total Managed Portfolio

$

150,344,577

 

$

149,429,163

 

$

147,792,976

 

$

146,294,311

 

$

143,549,236

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Servicing Portfolio Metrics (end of period):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Custodial escrow deposit balance (in billions)

$

2.7

 

$

2.3

 

$

2.7

 

$

2.8

 

$

2.8

 

 

 

 

 

 

 

Weighted-average servicing fee rate (basis points)

 

24.1

 

 

24.0

 

 

24.1

 

 

24.2

 

 

24.3

 

 

 

 

 

 

 

Weighted-average remaining servicing portfolio term (years)

 

7.9

 

 

8.0

 

 

8.2

 

 

8.4

 

 

8.6

 

 

 

 

 

 

 

_________________

(1)

Brokered transactions for life insurance companies, commercial banks, and other capital sources.

(2)

Includes debt financing volumes from our interim lending platform, our interim lending joint venture, and WDIP separate accounts.

(3)

This is a non-GAAP financial measure. For more information on adjusted EBITDA, refer to the section above titled “Non-GAAP Financial Measures.”

(4)

This is a non-GAAP financial measure. For more information on adjusted core EPS, refer to the section above titled “Non-GAAP Financial Measures.”

(5)

Origination fees as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing.

(6)

MSR income as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing.

(7)

MSR income as a percentage of Agency debt financing volume.

(8)

Brokered loans serviced primarily for life insurance companies.

(9)

Consists of interim loans not managed for our interim loan joint venture.

(10)

Walker & Dunlop Affordable Equity, assets under management, commercial real estate loans and funds managed by WDIP, and interim loans serviced for our interim loan joint venture.

KEY CREDIT METRICS

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

(dollars in thousands)

2024

 

2024

 

2023

 

2023

 

2023

 

Risk-sharing servicing portfolio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fannie Mae Full Risk

$

55,915,670

 

$

55,236,618

 

$

54,583,555

 

$

53,549,966

 

$

52,383,701

 

Fannie Mae Modified Risk

 

9,038,756

 

 

9,113,268

 

 

9,115,551

 

 

9,295,368

 

 

8,947,292

 

Freddie Mac Modified Risk

 

69,510

 

 

69,510

 

 

23,415

 

 

23,415

 

 

23,515

 

Total risk-sharing servicing portfolio

$

65,023,936

 

$

64,419,396

 

$

63,722,521

 

$

62,868,749

 

$

61,354,508

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-risk-sharing servicing portfolio:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fannie Mae No Risk

$

 

$

 

$

 

$

5,519

 

$

25,561

 

Freddie Mac No Risk

 

39,868,901

 

 

39,595,876

 

 

39,307,130

 

 

38,632,721

 

 

38,263,685

 

GNMA - HUD No Risk

 

10,619,764

 

 

10,595,841

 

 

10,460,884

 

 

10,320,520

 

 

10,246,632

 

Brokered

 

17,239,417

 

 

17,312,513

 

 

16,940,850

 

 

17,091,925

 

 

16,684,115

 

Total non-risk-sharing servicing portfolio

$

67,728,082

 

$

67,504,230

 

$

66,708,864

 

$

66,050,685

 

$

65,219,993

 

Total loans serviced for others

$

132,752,018

 

$

131,923,626

 

$

130,431,385

 

$

128,919,434

 

$

126,574,501

 

Interim loans (full risk) servicing portfolio

 

25,893

 

 

40,139

 

 

40,139

 

 

40,000

 

 

71,680

 

Total servicing portfolio unpaid principal balance

$

132,777,911

 

$

131,963,765

 

$

130,471,524

 

$

128,959,434

 

$

126,646,181

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interim Loan Joint Venture Managed Loans (1)

$

570,299

 

$

711,541

 

$

710,041

 

$

736,320

 

$

895,491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At-risk servicing portfolio (2)

$

60,122,274

 

$

59,498,851

 

$

58,801,055

 

$

57,857,659

 

$

56,430,098

 

Maximum exposure to at-risk portfolio (3)

 

12,222,290

 

 

12,088,698

 

 

11,949,041

 

 

11,750,068

 

 

11,346,580

 

Defaulted loans(4)

 

48,560

 

 

63,264

 

 

27,214

 

 

 

 

36,983

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defaulted loans as a percentage of the at-risk portfolio

 

0.08

%

 

0.11

%

 

0.05

%

 

0.00

%

 

0.07

%

Allowance for risk-sharing as a percentage of the at-risk portfolio

 

0.05

 

 

0.05

 

 

0.05

 

 

0.05

 

 

0.06

 

Allowance for risk-sharing as a percentage of maximum exposure

 

0.25

 

 

0.25

 

 

0.26

 

 

0.26

 

 

0.29

 

______________________

(1)

This balance consists entirely of interim loan joint venture managed loans. We indirectly share in a portion of the risk of loss associated with interim loan joint venture managed loans through our 15% equity ownership in the joint venture. We had no exposure to risk of loss for the loans serviced directly for our interim loan joint venture partner. The balance of this line is included as a component of assets under management in the Supplemental Operating Data table.

 

(2)

At-risk servicing portfolio is defined as the balance of Fannie Mae DUS loans subject to the risk-sharing formula described below, as well as a small number of Freddie Mac loans on which we share in the risk of loss. Use of the at-risk portfolio provides for comparability of the full risk-sharing and modified risk-sharing loans because the provision and allowance for risk-sharing obligations are based on the at-risk balances of the associated loans. Accordingly, we have presented the key statistics as a percentage of the at-risk portfolio.

 

 

For example, a $15 million loan with 50% risk-sharing has the same potential risk exposure as a $7.5 million loan with full DUS risk sharing. Accordingly, if the $15 million loan with 50% risk-sharing were to default, we would view the overall loss as a percentage of the at-risk balance, or $7.5 million, to ensure comparability between all risk-sharing obligations. To date, substantially all of the risk-sharing obligations that we have settled have been from full risk-sharing loans.

 

(3)

Represents the maximum loss we would incur under our risk-sharing obligations if all of the loans we service, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. The maximum exposure is not representative of the actual loss we would incur.

 

(4)

Defaulted loans represent loans in our Fannie Mae at-risk portfolio that are probable of foreclosure or that have foreclosed and for which we have recorded a collateral-based reserve (i.e. loans where we have assessed a probable loss). Other loans that are delinquent but not foreclosed or that are not probable of foreclosure are not included here. Additionally, loans that have foreclosed or are probable of foreclosure but are not expected to result in a loss to us are not included here

ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly Trends

 

Six months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

(in thousands)

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

2024

 

2023

 

Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walker & Dunlop Net Income

$

22,663

 

 

$

11,866

 

 

$

31,599

 

 

$

21,458

 

 

$

27,635

 

 

$

34,529

 

 

$

54,300

 

 

Income tax expense

 

7,902

 

 

 

2,864

 

 

 

10,331

 

 

 

7,069

 

 

 

10,491

 

 

 

10,766

 

 

 

17,626

 

 

Interest expense on corporate debt

 

17,874

 

 

 

17,659

 

 

 

18,598

 

 

 

17,594

 

 

 

17,010

 

 

 

35,533

 

 

 

32,284

 

 

Amortization and depreciation

 

56,043

 

 

 

55,891

 

 

 

56,015

 

 

 

57,479

 

 

 

56,292

 

 

 

111,934

 

 

 

113,258

 

 

Provision (benefit) for credit losses

 

2,936

 

 

 

524

 

 

 

636

 

 

 

421

 

 

 

(734

)

 

 

3,460

 

 

 

(11,509

)

 

Net write-offs (1)

 

 

 

 

 

 

 

 

 

 

(2,008

)

 

 

(6,033

)

 

 

 

 

 

(6,033

)

 

Stock-based compensation expense

 

6,862

 

 

 

6,230

 

 

 

5,374

 

 

 

7,427

 

 

 

7,898

 

 

 

13,092

 

 

 

15,041

 

 

MSR income

 

(33,349

)

 

 

(20,898

)

 

 

(34,471

)

 

 

(35,375

)

 

 

(42,058

)

 

 

(54,247

)

 

 

(72,071

)

 

Write-off of unamortized premium from corporate debt repayment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,420

)

 

Goodwill impairment, net of contingent consideration liability fair value adjustments

 

 

 

 

 

 

 

(500

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

80,931

 

 

$

74,136

 

 

$

87,582

 

 

$

74,065

 

 

$

70,501

 

 

$

155,067

 

 

$

138,476

 

 

______________________

(1)

The net write-off in Q2 2023 was related to the write off of the collateral-based reserves related to a loan held for investment.

ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP BY SEGMENT

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Markets

 

Three months ended

June 30,

 

Six months ended

June 30,

(in thousands)

2024

 

2023

 

2024

 

2023

Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA

 

 

 

 

 

 

Walker & Dunlop Net Income (Loss)

$

11,039

 

 

$

16,107

 

 

$

4,339

 

 

$

16,611

 

Income tax expense (benefit)

 

3,359

 

 

 

5,572

 

 

 

1,615

 

 

 

6,076

 

Interest expense on corporate debt

 

5,299

 

 

 

4,727

 

 

 

10,150

 

 

 

8,996

 

Amortization and depreciation

 

1,138

 

 

 

1,089

 

 

 

2,275

 

 

 

2,275

 

Stock-based compensation expense

 

3,982

 

 

 

4,229

 

 

 

8,039

 

 

 

9,092

 

MSR income

 

(33,349

)

 

 

(42,058

)

 

 

(54,247

)

 

 

(72,071

)

Adjusted EBITDA

$

(8,532

)

 

$

(10,334

)

 

$

(27,829

)

 

$

(29,021

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing & Asset Management

 

Three months ended

June 30,

 

Six months ended

June 30,

(in thousands)

2024

 

2023

 

2024

 

2023

Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA

 

 

 

 

 

 

Walker & Dunlop Net Income (Loss)

$

40,432

 

 

$

35,732

 

 

$

83,715

 

 

$

86,816

 

Income tax expense (benefit)

 

16,521

 

 

 

14,787

 

 

 

27,674

 

 

 

27,891

 

Interest expense on corporate debt

 

10,946

 

 

 

10,707

 

 

 

22,137

 

 

 

20,289

 

Amortization and depreciation

 

53,173

 

 

 

53,550

 

 

 

106,244

 

 

 

107,560

 

Provision (benefit) for credit losses

 

2,936

 

 

 

(734

)

 

 

3,460

 

 

 

(11,509

)

Net write-offs(1)

 

 

 

 

(6,033

)

 

 

 

 

 

(6,033

)

Stock-based compensation expense

 

494

 

 

 

450

 

 

 

929

 

 

 

840

 

Write-off of unamortized premium from corporate debt repayment

 

 

 

 

 

 

 

 

 

 

(4,420

)

Adjusted EBITDA

$

124,502

 

 

$

108,459

 

 

$

244,159

 

 

$

221,434

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate

 

Three months ended

June 30,

 

Six months ended

June 30,

(in thousands)

2024

 

2023

 

2024

 

2023

Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA

 

 

 

 

 

 

Walker & Dunlop Net Income (Loss)

$

(28,808

)

 

$

(24,204

)

 

$

(53,525

)

 

$

(49,127

)

Income tax expense (benefit)

 

(11,978

)

 

 

(9,868

)

 

 

(18,523

)

 

 

(16,341

)

Interest expense on corporate debt

 

1,629

 

 

 

1,576

 

 

 

3,246

 

 

 

2,999

 

Amortization and depreciation

 

1,732

 

 

 

1,653

 

 

 

3,415

 

 

 

3,423

 

Stock-based compensation expense

 

2,386

 

 

 

3,219

 

 

 

4,124

 

 

 

5,109

 

Adjusted EBITDA

$

(35,039

)

 

$

(27,624

)

 

$

(61,263

)

 

$

(53,937

)

 

 

 

 

 

 

 

 

 

 

 

 

____________________

(1)

The net write-off in Q2 2023 was related to the write off of the collateral-based reserves related to a loan held for investment.

ADJUSTED CORE EPS RECONCILIATION

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly Trends

 

Six months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

(in thousands)

Q2 2024

 

Q1 2024

 

Q4 2023

 

Q3 2023

 

Q2 2023

 

2024

 

2023

Reconciliation of Walker & Dunlop Net Income to Adjusted Core Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walker & Dunlop Net Income

$

22,663

 

 

$

11,866

 

 

$

31,599

 

 

$

21,458

 

 

$

27,635

 

 

$

34,529

 

 

$

54,300

 

Provision (benefit) for credit losses

 

2,936

 

 

 

524

 

 

 

636

 

 

 

421

 

 

 

(734

)

 

 

3,460

 

 

 

(11,509

)

Net write-offs(1)

 

 

 

 

 

 

 

 

 

 

(2,008

)

 

 

(6,033

)

 

 

 

 

 

(6,033

)

Amortization and depreciation

 

56,043

 

 

 

55,891

 

 

 

56,015

 

 

 

57,479

 

 

 

56,292

 

 

 

111,934

 

 

 

113,258

 

MSR income

 

(33,349

)

 

 

(20,898

)

 

 

(34,471

)

 

 

(35,375

)

 

 

(42,058

)

 

 

(54,247

)

 

 

(72,071

)

Goodwill impairment

 

 

 

 

 

 

 

48,000

 

 

 

14,000

 

 

 

 

 

 

 

 

 

 

Contingent consideration accretion and fair value adjustments

 

822

 

 

 

512

 

 

 

(47,637

)

 

 

(13,426

)

 

 

176

 

 

 

1,334

 

 

 

353

 

Income tax expense adjustment(2)

 

(7,413

)

 

 

(7,543

)

 

 

(5,916

)

 

 

(5,285

)

 

 

(2,227

)

 

 

(16,063

)

 

 

(5,990

)

Adjusted Core Net Income

$

41,702

 

 

$

40,352

 

 

$

48,226

 

 

$

37,264

 

 

$

33,051

 

 

$

80,947

 

 

$

72,308

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Diluted EPS to Adjusted core EPS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Walker & Dunlop Net Income

$

22,663

 

 

$

11,866

 

 

$

31,599

 

 

$

21,458

 

 

$

27,635

 

 

$

34,529

 

 

$

54,300

 

Diluted weighted-average shares outstanding

 

33,154

 

 

 

33,048

 

 

 

32,941

 

 

 

32,895

 

 

 

32,851

 

 

 

33,101

 

 

 

32,834

 

Diluted EPS

$

0.67

 

 

$

0.35

 

 

$

0.93

 

 

$

0.64

 

 

$

0.82

 

 

$

1.02

 

 

$

1.61

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Core Net Income

$

41,702

 

 

$

40,352

 

 

$

48,226

 

 

$

37,264

 

 

$

33,051

 

 

$

80,947

 

 

$

72,308

 

Diluted weighted-average shares outstanding

 

33,154

 

 

 

33,048

 

 

 

32,941

 

 

 

32,895

 

 

 

32,851

 

 

 

33,101

 

 

 

32,834

 

Adjusted Core EPS

$

1.23

 

 

$

1.19

 

 

$

1.42

 

 

$

1.11

 

 

$

0.98

 

 

$

2.39

 

 

$

2.14

 

____________________

(1)

The net write-off in Q2 2023 was related to the write off of the collateral-based reserves related to a loan held for investment.

(2)

Income tax impact of the above adjustments to adjusted core net income. Uses quarterly or annual effective tax rate as disclosed in the Condensed Consolidated Statements of Income and Comprehensive Income in this “press release.”

Category: Earnings

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