UWM Holdings Corp Q3 FY2024 earnings call

• Over the past couple of years, UWM achieved goals of growing purchase market share and preparing for refi boom. Purchase market share has grown ~300% since 2019 and is retained when grown. - Prepared for refi boom, capitalizing on a preview while others were caught flat-footed. - Technology adoption: Track Plus, PA Plus, Bolt Technology, Chat UWM, and Mortgage Match Up seeing increased usage; BrokerX launched in Q3 to help brokers train and license new loan officers. - Leadership consistency: Since 2016, no direct reports have left outside of CFO Tim Forrester's passing, providing continuity. - Broker channel: Achieved highest market share since 2009, attributed to saving consumers money and faster, easier process.

Total production in the third quarter was $39.5 billion, the biggest quarter in three years. Year-to-date total production is $100.8 billion, a 20% increase from 2023. Purchase production was over $26 billion in the third quarter, with 2024 on track to break the full-year all-time purchase production record. Refi production was $13.3 billion in the third quarter, the biggest refi quarter in a couple of years. Gain margin was 118 basis points in the third quarter, well ahead of guidance; year-to-date gain margin increased to 111 basis points from 92 basis points in 2023. Net income was almost $32 million, inclusive of a $446 million decline in fair value of MSRs. Ended Q3 with an MSR portfolio of approximately $212 billion; year-to-date net cash proceeds from MSR sales approximated $2.6 billion.

Expect third quarter production to be between $34 billion and $41 billion. Gain margin is expected to remain between 85 and 110 basis points.

• Interest rate fluctuations: Impact on refi volume and margin, as seen with recent rate movements affecting Q3 results. - Market uncertainty: Unpredictability in interest rate movements and their effect on refi market materialization.

Q: In the EBITDA bridge, is the line-item gain on other interest rate derivatives related to hedging the MSR?

A: No, not a hedge; interest rate derivatives are analyzed with the risk committee, not a hedge on MSRs.

Q: Trends in fourth quarter gain on sale with rate backup and seasonality?

A: Guidance is based on current market, ancillary products like Track Plus and PA Plus contribute, and margin can fluctuate with rate changes.

Q: Traction on ancillary products like Track and Track Plus?

A: Going well, helping consumers save money, brokers differentiate, and build UWM's position.

Q: Adjusted EBITDA reflection of cash earnings and MSR sales?

A: Adjusted EBITDA not a direct reflection of cash flow from MSRs; MSR sales are considered opportunistically.

Q: Refi share upside and investment inning?

A: Prepared and ready to scale with technology and efficiency, waiting for rate movement to capitalize on refi share growth.

Q: MSR sales expectations going forward?

A: Opportunistic, based on cash needs and market multiples, managed with risk committee analysis.

Q: Higher gain on sale tied to purchase vs refi or capacity/technology?

A: Tied to capacity and ability to handle volume, with rates affecting margin, and UWM prepared to capitalize when rates drop.