• Total Originations: Increased 57% year over year to $24 billion.
• Net Revenue: Increased 60% to $1 billion.
• Net Income: $97.1 million compared to a net loss of $39 million in the prior year.
• Adjusted Net Income: $90.2 million, an 88% increase from the previous year.
• Adjusted EBITDA: $134.8 million, up 80% year over year.
• Diluted Adjusted EPS: Grew 86% year over year.
• Purchase Originations: Represented 88% of closed loan volume.
• Servicing Portfolio: Expanded to approximately $93 billion, a 9% increase from the prior year.
• Refinance Capture Rate: 44%, with a total recapture rate of 35%.
• Fourth Quarter Originations: $6.7 billion, an 86% increase year over year.
• Fourth Quarter Net Income: $97.9 million compared to a net loss of $93.1 million in the prior year period.
• Fourth Quarter Adjusted EBITDA: $30.9 million compared to $13.2 million in the prior year period.
• Gain on Sale Margin: 317 basis points in Q4, with a full year margin of 332 basis points.
• Cash and Cash Equivalents: $118 million as of December 31.
• Leverage Ratio: 1.7 times at quarter end.
• Tangible Net Book Value per Share: $16.59.
• Share Repurchase: Approximately 28,000 shares repurchased at an average price of $13.95 per share.
• Special Cash Dividend: $0.50 per share declared, payable on March 31, 2025.

• Warning! GuruFocus has detected 5 Warning Signs with GHLD.

Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Guild Holdings Co (NYSE:GHLD) reported a 57% increase in total originations year over year, significantly outpacing the industry's 22% growth.
• Net revenue increased by 60% to $1 billion, while expenses rose by only 33%, indicating effective cost management and realization of scale benefits.
• The company achieved an 88% purchase origination rate, outperforming the industry average of 72%, showcasing its strong focus on purchase originations.
• Guild Holdings Co (NYSE:GHLD) expanded its servicing portfolio to approximately $93 billion, a 9% increase from the previous year, maintaining a high-quality portfolio.
• The company received several industry accolades, including being named the top large independent mortgage banker nationwide by Stratmor's MortgageCX best-in-class program.

Negative Points

• Despite strong growth, Guild Holdings Co (NYSE:GHLD) still represents less than 2% of the total market, indicating limited market penetration.
• The company anticipates ongoing rate headwinds, which could impact future growth and profitability.
• The servicing portfolio's unpaid balance has been gradually decreasing year over year, which may affect future cash flow and business opportunities.
• Market conditions remain volatile, with potential fluctuations in interest rates impacting MSR valuations and overall financial performance.
• The company faces challenges in maintaining its high retention rate for mortgage servicing rights, with market conditions influencing retention decisions.

Q & A Highlights

Q: Can you provide commentary on how the spring home buying season is shaping up and any key rate thresholds that could make the environment more constructive? A: Terry Schmidt, CEO, noted that the spring buying season is experiencing normal seasonality, with activity starting to pick up. David Neylan, COO, added that borrowers recognize rates will remain higher for longer, which is pulling in potential buyers who were previously on the sidelines. Guild is well-positioned for both purchase and potential refinance activities.

Q: Are the loan officers from recent acquisitions fully integrated, and how does this affect same-store growth versus acquired growth? A: Terry Schmidt, CEO, confirmed that the loan officers are fully integrated, with the last acquisition hitting its one-year anniversary. Desiree Kramer, CFO, added that significant growth is seen quarter over quarter, attributable to both acquisitions and organic growth.

Q: What is causing the gradual drift down in the UPB of the retained MSR, and where should it stabilize? A: Desiree Kramer, CFO, explained that the retention rate is slightly lower due to aggressive service release correspondent pricing in a heavy purchase market. David Neylan, COO, mentioned the goal is to retain 80% to 85% of originations to maintain customer relationships, but market conditions influence this.

Q: How have MSR valuations responded to the drop in interest rates since year-end, and are there any hedges in place? A: Desiree Kramer, CFO, stated that a drop in rates would naturally lead to a decrease in MSR valuations. The company's business model uses the origination segment as a natural hedge against servicing valuation changes.

Q: Can you explain the timing of MSR capitalization and valuation changes? A: Desiree Kramer, CFO, clarified that MSR valuation is included in the fair value at the time of lock and follows through to the loan's sale. Any valuation changes occur at the end of the month based on rates, with intra-month changes not affecting the valuation.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.