Strong operational results highlighted by expanded market share and gain on sale margins; continues to invest in key growth initiatives and platforms.

Highlights:

• Revenue of $265 million as higher origination and servicing revenues partially offset negative net change in fair value of servicing rights.
• Adjusted revenue of $278 million, the highest level since the beginning of the market downturn.
• Pull-through weighted gain on sale margin of 322 basis points, the highest margin since the beginning of the market downturn.
• Completed $120 million Vision 2025 supplemental productivity program.
• Net loss of $66 million, including non-operational charges of $27 million related to the first quarter 2024 cybersecurity incident and $6 million loss on the extinguishment of debt related to the successful tender exchange.
• Adjusted net loss decreased 56% to $16 million compared to second quarter of 2023.
• Adjusted EBITDA of $35 million, the highest level since the beginning of market the downturn.
• Completed tender exchange of 2025 unsecured notes, extending maturity and reducing outstanding corporate debt by $137 million.
• Reached tentative agreement to settle class action litigation related to cybersecurity incident.
• Strong liquidity profile with cash balance of $533 million.

loanDepot, Inc. (NYSE: LDI), (together with its subsidiaries, “loanDepot” or the “Company”), a leading provider of lending solutions that make the American dream of homeownership more accessible and achievable for all, today announced results for the second quarter ended June 30, 2024.

“During the second quarter, by most measures, we delivered our strongest operational results since the beginning of the market downturn that began in the first quarter of 2022,” said President and Chief Executive Officer Frank Martell. “As we near the completion of our Vision 2025 strategic plan, which was launched in July 2022, we have dramatically improved our operational results while positioning the company for long-term success. Our positive operational momentum was driven by profitable adjusted revenue growth as well as our ongoing commitment to cost discipline.

“Importantly, we continue to make critical and strategic investments in our people, products and technology platforms. We believe these investments position the company to capture the opportunities to expand market share and profitability presented by higher forecasted market volumes in 2025. This quarter, the company continued to build our in-market retail franchise, which contributed to our expanded margins and market share growth.

“In addition, we believe the company is increasingly well positioned to capitalize on the record levels of home equity available to homeowners for debt consolidation and home improvement, as well as the inevitable increase in rate and term refinance volume as mortgage interest rates are expected to decrease. At loanDepot, we believe home means everything and our expanding team of professionals delivers a complete suite of products and services that fuel the American dream.”

Added Chief Financial Officer David Hayes, “We are laser focused on our commitment to profitability and continue to work with discipline to grow revenue and manage costs. During the second quarter we successfully delivered the $120 million benefit targeted by our supplemental productivity program.

“As we approach a return to sustainable profitability, the second quarter was marked by two very significant milestones. The first is our successful tender and exchange of $500 million of corporate notes coming due in the fourth quarter of 2025. The net result of the exchange was to reduce the principal balance of our debt by $137 million and extend the maturity to 2027. As part of the debt exchange, we took advantage of strong market conditions and monetized approximately $29 billion of unpaid principal balance of our mortgage servicing rights to end the quarter with a strong balance sheet, including $533 million in cash. Second, we also reached a settlement in principle related to the class-action litigation attributable to the January cyber incident. We are presently negotiating the terms of a settlement agreement, and plaintiffs will likely submit it for court approval later in the third quarter. We believe the settlement will remove significant uncertainty for our stakeholders going forward.”

Year-over-Year Operational Highlights

• Non-volume related expenses increased $11.5 million from the second quarter of 2023, primarily due to costs related to the January 2024 cyber incident (“Cybersecurity Incident”) and debt exchange, offset somewhat by lower headcount related salary expenses and marketing costs.
• Incurred $26.9 million of expenses related to the first quarter Cybersecurity Incident, including accrual to settle outstanding legal claims against the company.
• Incurred restructuring and impairment charges totaling $4.3 million, a decrease of $1.7 million from the second quarter of 2023.
• Pull-through weighted lock volume of $5.8 billion for the second quarter of 2024, a decrease of $0.3 billion or 5% from the second quarter of 2023.
• Loan origination volume for the second quarter of 2024 was $6.1 billion, a decrease of $0.2 billion or 3% from the second quarter of 2023.
• Purchase volume totaled 72% of total loans originated during the second quarter, down slightly from 73% during the second quarter of 2023.
• Our preliminary organic refinance consumer direct recapture rate¹ increased to 70% from the second quarter 2023’s refinance rate of 68%.
• Net loss for the second quarter of 2024 of $65.9 million as compared to net loss of $49.8 million in the second quarter of 2023. Net loss increased primarily due to higher expenses, which included costs related to the first quarter 2024 cyber incident and charges related to the debt exchange transaction.
• Adjusted net loss for the second quarter of 2024 was $15.9 million as compared to adjusted net loss of $36.1 million for the second quarter of 2023.

Outlook for the third quarter of 2024

• Origination volume of between $5 billion and $7 billion.
• Pull-through weighted rate lock volume of between $5 billion and $7 billion.
• Pull-through weighted gain on sale margin of between 280 basis points and 300 basis points.

An increase in loans held for sale at June 30, 2024, resulted in a corresponding increase in the balance on our warehouse lines of credit. Total funding capacity with our lending partners was $3.1 billion at June 30, 2024, and $3.9 billion at June 30, 2023. Available borrowing capacity was $0.8 billion at June 30, 2024.

Second Quarter Earnings Call

Management will host a conference call and live webcast today at 5:00 p.m. ET on loanDepot’s Investor Relations website, investors.loandepot.com, to discuss the Company’s earnings results.

The conference call can also be accessed by dialing (800) 715-9871, Conference ID: 9881136. Please call five minutes in advance to ensure that you are connected prior to the call. A webcast can also be accessed at https://events.q4inc.com/attendee/410319294.

A replay of the webcast will be made available on the Investor Relations website following the conclusion of the event.

For more information about loanDepot, please visit the company’s Investor Relations website: investors.loandepot.com.

Non-GAAP Financial Measures

To provide investors with information in addition to our results as determined by GAAP, we disclose certain non-GAAP measures to assist investors in evaluating our financial results. We believe these non-GAAP measures provide useful information to investors regarding our results of operations because each measure assists both investors and management in analyzing and benchmarking the performance and value of our business. They facilitate company-to-company operating performance comparisons by backing out potential differences caused by variations in hedging strategies, changes in valuations, capital structures (affecting interest expense on non-funding debt), taxation, the age and book depreciation of facilities (affecting relative depreciation expense), and other cost or benefit items which may vary for different companies for reasons unrelated to operating performance. These non-GAAP measures include our Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share (if dilutive), and Adjusted EBITDA (LBITDA). We exclude from these non-GAAP financial measures the change in fair value of MSRs, gains (losses) from the sale of MSRs and related hedging gains and losses that represent realized and unrealized adjustments resulting from changes in valuation, mostly due to changes in market interest rates, and are not indicative of the Company’s operating performance or results of operation. Beginning in the second quarter of 2024, we began to include the gains (losses) from the sale of MSRs in valuation changes in servicing rights, net of hedging gains and losses to appropriately capture all valuation changes in MSRs up to and including the sales date. Prior periods have been revised to conform with this new presentation. We also exclude stock-based compensation expense, which is a non-cash expense, expenses directly related to the Cybersecurity Incident, net of expected insurance recoveries, including costs to investigate and remediate the Cybersecurity Incident, the costs of customer notifications and identity protection, professional fees, including legal expenses, litigation settlement costs, and commission guarantees, gains or losses on extinguishment of debt and disposal of fixed assets, non-cash goodwill impairment, and other impairment charges to intangible assets and operating lease right-of-use assets, as well as certain costs associated with our restructuring efforts, as management does not consider these costs to be indicative of our performance or results of operations. Adjusted EBITDA (LBITDA) includes interest expense on funding facilities, which are recorded as a component of “net interest income (expense),” as these expenses are a direct operating expense driven by loan origination volume. By contrast, interest expense on our non-funding debt is a function of our capital structure and is therefore excluded from Adjusted EBITDA (LBITDA). Adjustments for income taxes are made to reflect historical results of operations on the basis that it was taxed as a corporation under the Internal Revenue Code, and therefore subject to U.S. federal, state and local income taxes. Adjustments to Diluted Weighted Average Shares Outstanding assumes the pro forma conversion of weighted average Class C shares to Class A common stock. These non-GAAP measures have limitations as analytical tools and should not be considered in isolation or as a substitute for revenue, net income, or any other operating performance measure calculated in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Some of these limitations are:

• they do not reflect every cash expenditure, future requirements for capital expenditures or contractual commitments;
• Adjusted EBITDA (LBITDA) does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payment on our debt;
• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced or require improvements in the future, and Adjusted Total Revenue, Adjusted Net Income (Loss), and Adjusted EBITDA (LBITDA) do not reflect any cash requirement for such replacements or improvements; and
• they are not adjusted for all non-cash income or expense items that are reflected in our statements of cash flows.

Because of these limitations, Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) are not intended as alternatives to total revenue, net income (loss), net income (loss) attributable to the Company, or Diluted Earnings (Loss) Per Share or as an indicator of our operating performance and should not be considered as measures of discretionary cash available to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We compensate for these limitations by using Adjusted Total Revenue, Adjusted Net Income (Loss), Adjusted Diluted Earnings (Loss) Per Share, and Adjusted EBITDA (LBITDA) along with other comparative tools, together with U.S. GAAP measurements, to assist in the evaluation of operating performance. See below for a reconciliation of these non-GAAP measures to their most comparable U.S. GAAP measures.