Good afternoon, and welcome to loanDepot's Fourth Quarter and Year End 2023 Earnings Call. After the speaker’s remarks, we will have a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the conference over to Gerhard Erdelji, Senior Vice President, Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining loadDepot's fourth quarter and year-end 2023 earnings call. Before we begin, I would like to remind everyone that this conference call may include forward-looking statements regarding the company's operating and financial performance in future periods. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including but not limited to guidance to our pull-through weighted rate lock volume, origination volume, pull-through weighted gain on sale margin and expense trends. These statements are based on the company's current expectations and available information. Actual results for future periods may differ materially from these forward-looking statements due to risks or other factors that are described in the Risk Factors section of our filings with the SEC. A webcast and transcript of this call will be posted on the company's Investor Relations website at investors.loandepot.com under the Events and Presentations tab. On today's call, we have loanDepot President and Chief Executive Officer, Frank Martell; and Chief Financial Officer, Dave Hayes to provide an overview of our quarter as well as our financial and operational results, outlook and to answer your questions. We are also joined by LDI Mortgage President, Jeff Walsh to help address any questions you might have after our prepared remarks. And with that, I'll turn things over to Frank to get us started. Frank?

Thank you, Gerhard, and thank you all for joining us today. I look forward to sharing my perspective on the market and on our results. loanDepot made significant progress in 2023 substantially resetting our cost structure and making critical investments in our organization, technology platforms, as well as business processes, which we believe position us to capture the benefits of the eventual rebound in mortgage volumes. Our revenues were down 22% for the full year of 2023. This decline was largely the result of lower market volumes and our exit of the wholesale channel in the middle of 2022. Over the same period of time, we reduced our expenses 36% as we continued our laser focus on implementing Vision 2025. The aggressive reset of our cost structure resulted in a significant narrowing of our adjusted net loss from $458 million in 2022 to $142 million in 2023. Together with investments in platforms and systems our Vision 2025 productivity improvements achieved in 2022 and 2023 combined with in-flight actions expected to benefit 2024 are the necessary foundation of our planned return to profitability. As you may recall, Vision 2025 is focused on four main areas; first, transforming our origination business to drive purchase money transactions with an expanded emphasis on purpose-driven lending; second, investing in profitable growth, generating initiatives and critical business operating platform or the processes to support operating leverage at best-in-class quality and delivery; third, aggressively rightsizing our cost structure to address current and future projected market conditions; and fourth and finally, optimizing and simplifying our organization structure. Since we launched Vision 2025 in July of 2022, we have reduced our annualized non-volume-related expenses by over $666 million or approximately 40%. At the same time we invested in successful growth related initiatives such as expanding our servicing portfolio and…

Thanks, Frank and good afternoon, everyone. During the fourth quarter, our adjusted net loss modestly increased from $25.4 million in the third quarter to $26.7 million. This was primarily driven by the lower revenues due to seasonal slowdown in home purchase activity offset somewhat by higher servicing fee income. Our quarterly expenses also included higher non-recurring restructuring costs and asset impairment charges as we began implementing our supplemental cost reduction program. During the fourth quarter loan origination volume was $5.4 billion a decrease of 12% from the third quarter of 2023 primarily reflecting seasonality. This was within the guidance we issued last quarter of between $4 billion and $6 billion. Fourth quarter volume consisted of $4.1 billion in purchase loan originations and $1.3 billion in refinance loan originations, primarily cash-out refinances. As part of Vision 2025, our focus on purpose-driven lending and the launch of new products and services, contributed to the company's growth in market share during the quarter. Based on data from the Mortgage Bankers Association, our unit share improved from 177 basis points in the third quarter to 180 basis points in the fourth quarter and purchased share improved even more from 132 basis points to 143 basis points quarter-over-quarter. Despite the headwinds, we are competing effectively and growing market share. Our pull-through weighted rate lock volume of $4.4 billion for the fourth quarter contributed to the total revenue of $220 million, which represented a 14% decrease from the third quarter, primarily reflecting the seasonal decrease in the home purchase season. Rate lock volume also came in within the guidance we issued last quarter of $3.8 billion to $5.8 billion. The decrease in revenue is primarily a result of lower loan origination income from a decrease in rate lock volume offset somewhat by higher gain on sale…

Thank you. [Operator Instructions] Your first question comes from the line of Doug Harter from UBS. Please go ahead.

Thanks. On the incremental expense saves that you're talking about for 2024, can you talk about those? Are those kind of non-volume expenses? Is that the lowering of or increased productivity in volume-related expenses? Or how should we think about those?

Yes David. The vast majority of those are non-volume related, approximately 100 million of the 120.

Great. And then I guess along those lines, how do you think about the scalability of the expense base, kind of, if when industry volumes start to ramp backup?

Yes. I'll take that one. So, I think that I know a lot of what we've done the last two years is really invest in fundamental systems of automation. So, we feel pretty good about our ability to leverage those and drive have you had the benefits of productivity operating leverage as the market does rebound. So, a good example is known now, for example, which is a specific items I discussed earlier, which automates up a chunk of the underwriting process and also helps on delivery time. So, we think those investments despite the pressure of the market we've been able to make those, and we think will benefit for those significantly as we go forward.

Great. Thank you.

Your next question comes from the line of Kyle Joseph from Jefferies. Please go ahead.

Hey. Good afternoon. Thanks for taking my questions. Just kind of I’m want to get a sense for the cadence of originations quarter-to-date. How are they trending in January and then kind of the post -- post the January CPI print were they ahead of your expectations in January? And also kind of on that note, what sort of impact, Dave can you give us a ballpark, do you think on it on the data breach? And how much is that impacting your guidance for this quarter?

Well, this is Jeff. In terms of kind of volume recovery, we feel we're in good shape. We did regain our ability to operate fairly quickly, and did have -- did a good job of hanging on to our pipeline and point to the loans that we had at the time of the event. So, we seem to now have kind of been stabilized and we're back on track and tracking towards our goal in Q1.

Got it. Yes. And kind of on that note, in terms of your outlook for margins, obviously, relatively strong compared with last year, particularly on a year-over-year basis and sequentially. So, in terms of competitive dynamics, has the industry really gotten to an equilibrium or just gives us give a sense of the evolution of the competitive environment?

Yes, I mean we've obviously seen a good amount of capacity come out of the marketplace. And based on the recent numbers that I've seen, we're still seeing capacity come out of the marketplace and know that bodes well for those of us who are in the game for the duration and have the infrastructure and the ability to capitalize when the market turns. But that certainly plays a big role on the margin improvement as we see capacity further come out of the marketplace.

Great, that's it for me. Thanks for taking my questions.

[Operator Instructions] Your next question comes from the line of John Davis from Raymond James. Please go ahead.

Hey guys, thanks for taking my question. This is Taylor on for JD. Maybe just to start with on purchase originations. It's good to see unit market share increase over 8% quarter-over-quarter. So, could you just give any additional color on what drove this relative success during the fourth quarter?

Yes, this is Jeff again. We're strong in the builder space both in our in our JV partnership channel as well as in our retail channel, we're the number one kind of non-builder-owned builder lender. So, we certainly take advantage from the market share increase of new build as well as our end markets originators where we've kind of shifted our profile over the last year and really been able to maintain our top talent in the business. And so I think all of that kind of played into our ability to kind of kept -- gain momentum in Q4 and carried into this year.

Got it. Thanks. And then on just on the refi consumer direct recapture rate, it looks like it decreased quarter-over-quarter to 58%. So, just any color there on what kind of drove the quarter-over-quarter decline would be great?

Yes, it was still just seasonally driven as well as you know some operational impact in the -- in Q4. It was a much smaller number. So, from a unit impact basis it wasn't that big. But on a percentage basis, it looks large, but we see now that those percentages have kind of stabilized back to historical levels.

Got it. Thank you. That's it for me.

Your next question comes from the line of Doug Harter UBS. Please go ahead.

Yes, first a follow-up question on the servicing income. Was there -- what was behind the $11 million sequential increase on what looks like a similar sized portfolio?

Yes, hi. This is David again. So, you'll see as we've said before and you will see timing important variations quarter-to-quarter depending on cash collections for the period. So, some of the seasonality impact of that came in. We also saw a slight reduction in prepay speeds, which favorably impacted the number. And then finally, we did have a reclass of some interest income out of net interest margin into a servicing fee that slightly elevated that as well.

Got it. I guess just on the seasonality I guess -- or just how to think about the normalized run rate for 2024, should we think about the 3Q or 4Q level as more representative?

I would say 3Q that was slightly higher with the reclass it probably in the 121 to 122 range.

Okay. Got it. And then just on the overall market size, I guess is what you're seeing so far in the first quarter, is that kind of consistent with the up 17% that for MBA volumes that you're talking about? Or kind of how are you viewing kind of the overall market size given kind of where rates are versus kind of what some of those expect those forecasts assume?

Yes, I think -- Doug, this is Frank. I think the MBA forecast was for roughly 2 trillion for this year. That's against a 2023 number at a 1.6 trillion. So they're up that's on a dollar basis. If you look at the units obviously, you have to be a little bit. But I think that a little bit slower in the first part of the year, because they were assuming a more aggressive rate profile and I think is actually going to play out. But assuming that we get some moderation rate the second half. It's going to come pretty close we think. It may be a little bit more back-end loaded, but most of that pressure will be in the first quarter. And from what we're seeing now in our volumes, we're trending pretty closely to what we had forecast. So far so good on that perspective. But we're still thinking the MBA number for the full year is a pretty good one. And it may be a little bit timing wise, a little bit more skewed to the second half than the first half.

Great. Appreciate that. And if I could sneak in one more. Just you're about a year and a half away from the first or a little more than a year and a half away from the first unsecured debt issuance, debt maturity. Kind of how are you thinking about your unsecured debt?

Yes. We're actively monitoring that. We're very closely focused on the debt markets that are quite constructive. Our goal is to get that sort of resolved probably in the second or third quarter of this year. So we'll be focused on it during those periods. We'll hit the market when it's appropriate.

Great. Thank you.

And we have no further questions in our queue at this time. I will now turn the call back over to Frank Martell for closing remarks.

Okay. Thanks, Krista. Hello, thank you all for joining us today. And we appreciate the questions as well. On behalf of David, Gerhard, Jeff and myself and the rest of team loanDepot, we really thank everybody, including our key stakeholders for their support. We look forward to improving market conditions this year, which are being forecast, as I just discussed, by the Mortgage Bankers Association and others come. And certainly, we're looking forward to a constructive second half from a mortgage volume perspective, as we push toward profitability. And look we'll continue to keep everybody praised as we progress. And we're laser focused on delivering against Vision 2025, which we think is the foundation for the future of the company as the market rebounds. So, with that, thanks again for joining us today.

This concludes today's conference call. Thank you for your participation and you may now disconnect.