Walker & Dunlop Reports First Quarter 2025 Financial Results
FIRST QUARTER 2025 HIGHLIGHTS
-- Total transaction volume of $7.0 billion, up 10% from Q1'24
-- Total revenues of $237.4 million, up 4% from Q1'24
-- Net income of $2.8 million and diluted earnings per share of $0.08, both
down 77% from Q1'24
-- Adjusted EBITDA(1) of $65.0 million, down 12% from Q1'24
-- Adjusted core EPS(2) of $0.85, down 29% from Q1'24
-- Servicing portfolio of $135.6 billion as of March 31, 2025, up 3% from
March 31, 2024
-- Declared quarterly dividend of $0.67 per share for the second quarter
2025
BETHESDA, Md.--(BUSINESS WIRE)--May 01, 2025--
Walker & Dunlop, Inc. $(WD)$ (the "Company", "Walker & Dunlop" or "W&D") reported first quarter total transaction volume of $7.0 billion, up 10% year over year. Total revenues were $237.4 million for the first quarter of 2025, a 4% increase year over year, while total expenses were up 8%. Although transaction activity and total revenues grew, total expenses increased largely due to increased personnel expenses, the write-off of unamortized issuance costs from our corporate debt paydown, and an increase in the provision for credit losses. Those increased costs drove net income down for the first quarter of 2025 to $2.8 million, or $0.08 per diluted share, both down 77% year over year. Adjusted EBITDA was also down 12% in the first quarter of 2025, and adjusted core EPS, which primarily removes the impact of non-cash revenues and expenses, was down 29%, against the first quarter of 2024. The Company's Board of Directors declared a dividend of $0.67 per share for the second quarter of 2025.
"2025 began with continued improvement in transaction volumes and revenues, up 10% and 4%, respectively, from Q1 2024, as the US commercial real estate market began to transition from higher rates and dramatically lower transaction activity to the beginning of the next investment cycle," commented Walker & Dunlop Chairman and CEO Willy Walker. "W&D's Q1 GAAP net income was down significantly due to increased severance expense, fees associated with a corporate debt issuance, and credit losses that are normal for this time in the credit cycle. Adjusted core net income and adjusted EBITDA were down materially less, reflecting the strength of W&D's business model and durable profit streams."
Walker continued, "There is a growing sense that the pent-up demand for financing and capital deployment in commercial real estate is going to drive transaction volumes higher over the coming months and years. The initial deregulatory changes at HUD and the GSEs are welcome, and it is our assumption that the Trump Administration continues to work on getting short and long-term interest rates down. W&D will continue to invest in our Capital Markets platform to meet our clients' growing needs and expand as the next cycle takes off. Our outlook for 2025, and our guidance, have not changed."
________________________________________
(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 FIRST QUARTER 2025
OPERATING RESULTS
TRANSACTION VOLUMES
(in thousands) Q1 2025 Q1 2024 $ Variance % Variance
--------------- ---------- ---------- ---------- ------------
Fannie Mae $1,511,794 $ 903,368 $ 608,426 67%
Freddie Mac 808,247 974,926 (166,679) (17)
Ginnie Mae - HUD 148,158 14,140 134,018 948
Brokered (1) 2,552,943 3,319,074 (766,131) (23)
Principal
Lending and
Investing (2) 175,500 15,800 159,700 1,011
---------------- --------- --------- -------- ------ ----
Debt financing
volume $5,196,642 $5,227,308 $ (30,666) (1)%
---------------- --------- --------- -------- ------
Property sales
volume 1,839,290 1,167,151 672,139 58
---------------- --------- --------- -------- ------ ----
Total
transaction
volume $7,035,932 $6,394,459 $ 641,473 10%
---------------- --------- --------- -------- ------ ---
(1) Brokered transactions for life insurance companies, commercial banks,
and other capital sources.
(2) Includes debt financing volumes from Walker & Dunlop Investment
Partners, Inc. ("WDIP") separate accounts.
DISCUSSION OF RESULTS:
-- Total transaction volume increased 10% in the first quarter of 2025 to
$7.0 billion from the first quarter of 2024.
-- Transaction volumes with Fannie Mae and Freddie Mac (collectively, the
"GSEs") increased 24% year over year, led by a 67% increase in Fannie Mae
volumes. Walker & Dunlop continues to be a top GSE lender.
-- Property sales volume increased 58% in the first quarter of 2025,
outperforming the 36% year-over-year increase in market-wide multifamily
property sales volume, according to Real Capital Analytics. Multifamily
property sales activity in the first quarter of 2024 reached its lowest
levels since the Great Financial Crisis, and the growth in 2025 reflects
increasing demand for multifamily assets based on the strength of the
fundamentals underlying the sector.
-- Multifamily completions reached an all-time high 585,000 units in 2024,
particularly in high demand sunbelt markets, according to RealPage. Yet
absorption remained extremely strong, with 663,000 units, outpacing
supply for the first time since 2021. The cost of owning a single-family
home has increased dramatically since the beginning of the Great
Tightening, and new construction starts in multifamily have fallen to
just 234,000 units. The strength of those fundamentals, coupled with low
unemployment, have improved investment conviction in the multifamily
sector and driven the strength in our property sales and GSE lending
volumes in the first quarter of 2025.
-- HUD debt financing volumes increased in the first quarter of 2025, as our
team executed well in the face of a challenging market environment.
Walker & Dunlop was ranked as the second largest HUD lender for HUD's
fiscal year ended September 30, 2024.
-- The decrease in brokered debt financing volume was driven by volatility
in the market during the first quarter of 2025, which caused investors to
remain selective on transaction timing. The supply of capital from life
insurance companies, banks, commercial mortgage-backed securities, and
other private capital providers remains strong, and the demand for
commercial real estate assets is expected drive increased acquisition and
financing activity throughout the remainder of the year.
MANAGED PORTFOLIO
(dollars in thousands,
unless otherwise
noted) Q1 2025 Q1 2024 $ Variance % Variance
----------------------- ------------ ------------ ------------ ------------
Fannie Mae $ 69,176,839 $ 64,349,886 $ 4,826,953 8%
Freddie Mac 38,556,682 39,665,386 (1,108,704) (3)
Ginnie Mae - HUD 10,882,857 10,595,841 287,016 3
Brokered 17,032,338 17,312,513 (280,175) (2)
Principal Lending and
Investing - 40,139 (40,139) (100)
------------------------ ----------- ----------- ---------- ----- ----
Total Servicing
Portfolio $135,648,716 $131,963,765 $ 3,684,951 3%
------------------------ ----------- ----------- ---------- ----- ----
Assets under management 18,518,413 17,465,398 1,053,015 6
------------------------ ----------- ----------- ---------- ----- -----
Total Managed Portfolio $154,167,129 $149,429,163 $ 4,737,966 3%
------------------------ ----------- ----------- ---------- ----- ----
Custodial escrow account
balance at period end
(in billions) $ 2.4 $ 2.3
Weighted-average
servicing fee rate
(basis points) 24.4 24.0
Weighted-average
remaining servicing
portfolio term (years) 7.5 8.0
DISCUSSION OF RESULTS:
-- Our servicing portfolio continues to expand as a result of additional
Agency debt financing volumes over the past 12 months, partially offset
by principal paydowns and loan payoffs.
-- During the first quarter of 2025, we added $0.4 billion of net loans to
our servicing portfolio, and over the past 12 months, we added $3.7
billion of net loans to our servicing portfolio, almost all of which were
Agency loans.
-- $10.3 billion of Agency loans in our servicing portfolio are scheduled to
mature over the next two years. These loans, with a weighted-average
servicing fee of 28.9 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 March 31, 2025 and
2024.
-- Assets under management as of March 31, 2025 consisted of $16.0 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. The 6% increase
in assets under management was driven by increases in all three
categories.
KEY PERFORMANCE METRICS
(in thousands,
except per share
amounts) Q1 2025 Q1 2024 $ Variance % Variance
----------------- ----------- ----------- ------------ ------------
Walker & Dunlop
net income $ 2,754 $11,866 $ (9,112) (77)%
Adjusted EBITDA 64,966 74,136 (9,170) (12)
------------------ ------ ------ ------- ---- -----
Diluted EPS $ 0.08 $ 0.35 $ (0.27) (77)%
------------------ ------ ------ ------- ---- ----
Adjusted core EPS $ 0.85 $ 1.19 $ (0.34) (29)%
------------------ ------ ------ ------- ---- ----
Operating margin 2% 6%
Return on equity 1 3
Key Expense
Metrics (as a %
of total
revenues):
Personnel expenses 51% 49%
Other operating
expenses 14 13
DISCUSSION OF KEY PERFORMANCE METRICS:
-- Walker & Dunlop net income and diluted EPS both decreased 77% in the
first quarter of 2025, as the increase in total expenses outpaced the
increase in total revenues. Additionally, our effective tax rate
increased year over year, as described below. The decrease in net income
also drove the decrease in return on equity to 1% for the first quarter
of 2025.
-- The increase in personnel expenses as a percentage of total revenues for
the first quarter of 2025 was principally the result of increases in
severance expense and variable compensation related to the growth in
total transaction volume. Other operating expenses as a percentage of
total revenues increased during the first quarter of 2025 largely due to
the acceleration of unamortized debt issuance costs related to
refinancing our corporate debt.
-- Adjusted EBITDA decreased 12%, primarily due to decreases in placement
fees and other interest income and investment management fees and an
increase in personnel expense. These changes were partially offset by
increases in loan origination and debt brokerage fees, net ("origination
fees") and servicing fees.
-- Adjusted core EPS decreased to $0.85 in the first quarter of 2025 from
$1.19 in the first quarter of 2024. The decrease was primarily driven by
an increase in personnel expense and a decrease in investment management
fees in the first quarter of 2025 compared to the first quarter of 2024,
partially offset by increases in origination fees, servicing fees, and
property sales broker fees.
KEY CREDIT METRICS
(in thousands) Q1 2025 Q1 2024 $ Variance % Variance
------------------- --------------- --------------- ---------- ------------
At-risk servicing
portfolio (1) $64,450,319 $59,498,851 $4,951,468 8%
Maximum exposure to
at-risk portfolio
(2) 13,200,846 12,088,698 1,112,148 9
-------------------- ---------- ---------- --------- ---- ------
Defaulted loans (3) $ 108,530 $ 63,264 $ 45,266 72%
-------------------- ---------- ---------- --------- ---- -----
Key credit metrics
(as a % of the
at-risk
portfolio):
Defaulted loans 0.17% 0.11%
Allowance for
risk-sharing 0.05 0.05
Key credit metrics
(as a % of maximum
exposure):
Allowance for
risk-sharing 0.24% 0.25%
________________________________________
(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 KEY CREDIT METRICS:
-- 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 March 31, 2025, eight at-risk loans were in default with an
aggregate unpaid principal balance ("UPB") of $108.5 million compared to
six at-risk loans in default with an aggregate UPB of $63.3 million as of
March 31, 2024. The collateral-based reserves on defaulted loans were
$7.5 million and $5.1 million as of March 31, 2025 and 2024,
respectively. The approximately 3,200 remaining loans in the at-risk
servicing portfolio continue to exhibit strong credit quality, with low
levels of delinquencies and strong operating performance of the
underlying properties in the portfolio.
-- During 2024, the Company received requests to repurchase five GSE loans.
As of March 31, 2025, the Company has repurchased three of the loans in
full and still has forbearance and indemnification agreements in place
for the other two loans. The Company foreclosed on one of the repurchased
loans and now holds an immaterial Other Real Estate Owned ("OREO") asset.
The aggregate balance of assets not yet repurchased was $46.1 million as
of March 31, 2025, all of which will require a cash outlay over the
coming year. All repurchased and indemnified loans are delinquent and in
non-accrual status.
-- We recorded a provision for credit losses of $3.7 million in the first
quarter of 2025, primarily related to the newly defaulted loans this
quarter, combined with a slight increase to our risk-sharing obligations
resulting from an increase in the at-risk servicing portfolio.
FIRST QUARTER 2025
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, which pays a variable interest rate,
decreased 12% year over year, primarily due to a 100-basis point decrease
in short-term interest rates year over year. Our corporate debt carries a
floating rate of interest tied to one-month Secured Overnight Financing
Rate ("SOFR") that resets monthly and decreases in that index rate
directly impact our cost of borrowing. Additionally, in the first quarter
of 2025, we refinanced our corporate debt, writing off $4.2 million of
unamortized debt issuance costs, as detailed in the Capital Sources and
Uses section below. The impact of this write-off is included in other
operating expenses and allocated to each of the segments proportionally
in the same manner as corporate debt expense.
-- Income tax expense decreased 12% from the first quarter of 2024. The
decline was largely attributable to a 62% decline in income from
operations, partially offset by a change in excess tax benefits year over
year. The Company recognized a $1.3 million shortfall from realizable
excess tax benefits recognized during the first quarter of 2025 compared
to a benefit of $0.6 million during the first quarter of 2024, resulting
from changes between the grant date fair value and vesting date fair
value of share-based compensation awards that vested during the first
quarter of 2025.
FINANCIAL RESULTS - CAPITAL MARKETS
---------------------------------------------------------------------------
(in thousands) Q1 2025 Q1 2024 $ Variance % Variance
------------------ ------------ ------------ ------------ ------------
Loan origination
and debt
brokerage fees,
net
("Origination
fees") $ 45,297 $ 43,700 $ 1,597 4%
Fair value of
expected net
cash flows from
servicing, net
("MSR income") 27,811 20,898 6,913 33
Property sales
broker fees 13,521 8,821 4,700 53
Net warehouse
interest income
(expense),
loans held for
sale ("LHFS") (786) (1,574) 788 (50)
Other revenues 16,727 10,052 6,675 66
------------------- ------- ------- ------- ----- -----
Total revenues $102,570 $ 81,897 $ 20,673 25%
------------------- ------- ------- ------- ----- ----
Personnel $ 86,466 $ 79,187 $ 7,279 9%
Amortization and
depreciation 1,141 1,137 4 0
Interest expense
on corporate
debt 4,187 4,851 (664) (14)
Other operating
expenses 6,235 5,052 1,183 23
------------------- ------- ------- ------- ----- -----
Total expenses $ 98,029 $ 90,227 $ 7,802 9%
------------------- ------- ------- ------- ----- ----
Income (loss) from
operations $ 4,541 $ (8,330) $ 12,871 (155)%
Income tax
expense
(benefit) 2,181 (1,744) 3,925 (225)
------- ------- ------- ----- ----
Net income (loss)
before
noncontrolling
interests $ 2,360 $ (6,586) $ 8,946 (136)%
Less: net income
(loss) from
noncontrolling
interests -- 114 (114) (100)
------------------- ------- ------- ------- ----- ----
Walker & Dunlop net
income (loss) $ 2,360 $ (6,700) $ 9,060 (135)%
------------------- ------- ------- ------- ----- ---
Key revenue
metrics (as a % of
debt financing
volume):
Origination fee
rate (1) 0.90% 0.84%
MSR rate (2) 0.55 0.40
Agency MSR rate
(3) 1.13 1.10
Key performance
metrics:
Operating margin 4% (10)%
Adjusted EBITDA $(13,327) $(19,297) $ 5,970 (31)%
Diluted EPS $ 0.07 $ (0.20) $ 0.27 (135)%
________________________________________
(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 increase in origination fees was the result of the increase in our
Fannie Mae and HUD debt financing volume, partially offset by declines in
our Freddie Mac and brokered transactions volume. Our Fannie Mae and HUD
debt financing volume as a percentage of our overall debt financing
volume increased from 18% for the first quarter of 2024 to 33% of our
volume for the first quarter of 2025, which led to an increase in the
origination fee rate as our Fannie Mae and HUD executions have higher
origination fee rates than Freddie Mac and brokered executions.
-- The increase in our MSR income was similarly driven by the increase in
Fannie Mae and HUD debt financing volume, partially offset by a decrease
in the weighted-average service fee rate on Fannie Mae debt financing
volume. Fannie Mae is our most-profitable debt financing product.
-- Property sales broker fees increased year over year as a result of the
58% increase in property sales volumes, partially offset by a decrease in
the property sale fee rate.
-- The increase in other revenues was primarily related to an increase in
investment banking revenues year over year, driven by several M&A
transactions that closed during the first quarter of 2025.
-- Personnel expense increased in the first quarter of 2025 primarily due to
an increase in commission expenses related to the growth in transaction
volumes and severance expense. Severance expense increased largely as a
result of the separation of several underperforming producers. We expect
to recognize around $5 million of severance and related expenses from
separations during the first half of 2025, with $2.4 million of that
expense recognized in the first quarter of 2025.
FINANCIAL RESULTS - SERVICING & ASSET MANAGEMENT
---------------------------------------------------------------------------
(in thousands) Q1 2025 Q1 2024 $ Variance % Variance
------------------ ------------ ------------ ------------ ------------
Origination fees $ 1,084 $ 40 $ 1,044 2,610%
Servicing fees 82,221 80,043 2,178 3
Investment
management
fees 9,682 13,520 (3,838) (28)
Net warehouse
interest
income, loans
held for
investment -- 458 (458) (100)
Placement fees
and other
interest
income 29,622 35,603 (5,981) (17)
Other revenues 9,294 11,571 (2,277) (20)
------------------- ------- ------- ------- ------ ---
Total revenues $131,903 $141,235 $ (9,332) (7)%
------------------- ------- ------- ------- ------
Personnel $ 19,546 $ 18,055 $ 1,491 8%
Amortization and
depreciation 54,498 53,071 1,427 3
Provision
(benefit) for
credit losses 3,712 524 3,188 608
Interest expense
on corporate
debt 9,931 11,191 (1,260) (11)
Other operating
expenses 7,468 5,123 2,345 46
------------------- ------- ------- ------- ------ ----
Total expenses $ 95,155 $ 87,964 $ 7,191 8%
------------------- ------- ------- ------- ------ ---
Income (loss) from
operations $ 36,748 $ 53,271 $ (16,523) (31)%
Income tax
expense
(benefit) 17,651 11,153 6,498 58
------- ------- ------- ------ ----
Net income (loss)
before
noncontrolling
interests $ 19,097 $ 42,118 $ (23,021) (55)%
Less: net income
(loss) from
noncontrolling
interests (29) (1,165) 1,136 (98)
------------------- ------- ------- ------- ------ ---
Walker & Dunlop net
income (loss) $ 19,126 $ 43,283 $ (24,157) (56)%
------------------- ------- ------- ------- ------
Key performance
metrics:
Operating margin 28% 38%
Adjusted EBITDA $107,902 $119,658 $ (11,756) (10)%
Diluted EPS $ 0.55 $ 1.28 $ (0.73) (57)%
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 $3.7 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, combined with a small increase in the average servicing fee rate.
-- Investment management fees decreased primarily due to a reduction in the
accrual for investment management fees from our LIHTC funds that are
driven by asset dispositions within the funds and a decrease in
realization revenues from our private credit investment management
strategies.
-- Placement fees and other interest income decreased largely as a result of
a decline in our placement fees on escrow deposits, which declined
primarily as a result of lower placement fee rates due to the lower
average short-term interest rate environment in the first quarter of 2025
compared to the same period in 2024.
-- The decrease in other revenues was primarily related to a decrease in
income from equity method investments and a reduction in syndication fees
related to the decline in gross equity raised within our LIHTC investment
management strategies year over year.
-- Personnel costs increased largely due to small increases in (i) salaries
resulting from standard annual increase for employees, (ii) severance
expense related to the pending sale of a subsidiary, and (iii) production
bonuses.
-- The increase in amortization and depreciation was primarily driven by an
increase in amortization of mortgage servicing rights.
-- The increase in provision for credit losses was attributable to changes
in (i) the provision associated with risk-sharing loans collectively
evaluated, (ii) the provision for risk-sharing loans with
collateral-based reserves, and (iii) the provision for other credit
losses. During the first quarter of 2024, we had a large benefit for
credit losses associated with our risk-sharing loans collectively
evaluated compared to a small provision for credit losses during the
first quarter of 2025. The change from a benefit to a provision year over
year related to the annual update to our historical loss factor. In 2024,
the historical loss factor decreased significantly, while in 2025, it
remained unchanged. Partially offsetting the increase in provision for
credit losses associated with collectively evaluated at-risk loans were
decreases in the provisions for loans evaluated based on property
collateral and for other credit losses. The provision for credit losses
associated with collateral-based reserves decreased as we had two
defaults in the first quarter of 2025 compared to three defaults in the
first quarter of 2024. The decrease in the provision for other credit
losses was the result of decreased repurchase request activity year over
year.
FINANCIAL RESULTS - CORPORATE
------------------------------------------------------------------
(in thousands) Q1 2025 Q1 2024 $ Variance % Variance
--------------- --------- --------- ------------ ------------
Other interest
income $ 3,589 $ 3,799 $ (210) (6)%
Other revenues (695) 1,128 (1,823) (162)
---------------- ------- ------- ------- ----- ----
Total revenues $ 2,894 $ 4,927 $ (2,033) (41)%
---------------- ------- ------- ------- ----- ---
Personnel $ 15,378 $ 14,221 $ 1,157 8%
Amortization and
depreciation 1,982 1,683 299 18
Interest expense
on corporate
debt 1,396 1,617 (221) (14)
Other operating
expenses 20,183 18,668 1,515 8
---------------- ------- ------- ------- ----- -----
Total expenses $ 38,939 $ 36,189 $ 2,750 8%
---------------- ------- ------- ------- ----- ----
Income (loss)
from
operations $(36,045) $(31,262) $ (4,783) 15%
Income tax
expense
(benefit) (17,313) (6,545) (10,768) 165
---------------- ------- ------- ------- ----- -----
Walker & Dunlop
net income
(loss) $(18,732) $(24,717) $ 5,985 (24)%
---------------- ------- ------- ------- ----- ---
Key performance
metric:
Adjusted EBITDA $(29,609) $(26,225) $ (3,384) 13%
Diluted EPS $ (0.54) $ (0.73) $ 0.19 (26)%
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 decrease in other revenues was primarily due to a decrease in
miscellaneous revenues.
-- Personnel expense increased primarily due to an increase in salaries,
benefits, and stock compensation due to an increase in average headcount,
partially offset by a decrease in subjective bonuses tied to company
performance and a $1.2 million decrease in other compensation expenses.
-- The increase in other operating expenses was primarily related to
increased professional fees, coupled with the write-off of unamortized
issuance costs related to the partial paydown of our term loan in the
first quarter of 2025, with no comparable activity in 2024.
CAPITAL SOURCES AND USES
On April 30, 2025, the Company's Board of Directors declared a dividend of $0.67 per share for the second quarter of 2025. The dividend will be paid on May 29, 2025, to all holders of record of the Company's restricted and unrestricted common stock as of May 15, 2025.
On March 14, 2025, the Company completed an offering of $400 million aggregate principal amount of senior unsecured notes due 2033. The notes bear interest at a rate equal to 6.625% per annum. The notes are guaranteed on a senior unsecured basis by certain of the Company's subsidiaries. Concurrently with the closing of the notes offering, the Company paid down its senior secured term loan to a balance of $450.0 million and then amended and restated the senior secured term loan agreement for the remaining $450.0 million balance to extend the maturity date of the term loan agreement to 2032 and provide for a separate three-year $50 million revolving credit facility. The Company wrote-off $4.2 million of the unamortized deferred issuance costs related to the $800 million senior secured term loan as a result of paying down the remaining balance to $450.0 million.
The $450 million term loan facility under the amended and restated credit agreement will initially bear interest at a rate equal to SOFR plus 2.00%. Following the first full fiscal quarter ending after the closing date, the applicable interest margin on the term loan facility will be subject to a 25 basis points step down if the Company's total leverage ratio (as defined in the amended and restated credit agreement) is equal to or less than 2.00 to 1.00. The Company's Consolidated Corporate Leverage ratio as of March 31, 2025 was 2.70 to 1.00. The amended and restated credit agreement also includes for a separate three-year, $50 million revolving credit facility that bears interest at a rate equal to SOFR plus 1.75%.
On February 12, 2025, 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 starting from February 21, 2025 (the "2025 Share Repurchase Program"). As of March 31, 2025, we have not repurchased any shares of common stock under the 2025 Share Repurchase Program. Any purchases made pursuant to the 2025 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, May 1, 2025, at 8:30 a.m. EST
(888) 394-8218 from within the United States; (773)
Phone: 305-6853 from outside the United States
Confirmation Code: 3709282
Webcast Link: https://event.webcasts.com/starthere.jsp?ei=1691689&tp_
key=b39351272b
ABOUT WALKER & DUNLOP
Walker & Dunlop (NYSE: WD) is one of the largest commercial real estate finance and advisory services firms in the United States and internationally. Our ideas and capital create communities where people live, work, shop, and play. Our innovative people, breadth of our brand, and our 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 based on the final resolution of the defaulted loans or collateral, 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, goodwill impairment and other adjustments. 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 based on the final resolution of the defaulted loans or collateral, stock-based incentive compensation charges, the fair value of expected net cash flows from servicing, net, the write-off of the unamortized balance of deferred issuance costs 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
December September
March 31, 31, 30, June 30, March 31,
(in thousands) 2025 2024 2024 2024 2024
---------- ---------- ---------- ---------- -------------
Assets
Cash and cash
equivalents $ 180,971 $ 279,270 $ 179,759 $ 208,095 $ 216,532
Restricted cash 32,268 25,156 39,827 35,460 21,071
Pledged
securities, at
fair value 214,374 206,904 203,945 197,936 190,679
Loans held for
sale, at fair
value 946,372 780,749 1,024,984 814,883 497,933
Mortgage
servicing
rights 825,761 852,399 836,896 850,831 881,834
Goodwill 868,710 868,710 901,710 901,710 901,710
Other
intangible
assets 153,139 156,893 170,713 174,467 178,221
Receivables,
net 372,689 335,879 307,407 272,827 250,406
Committed
investments in
tax credit
equity 337,510 313,230 333,713 151,674 122,332
Other assets 580,084 562,803 580,277 567,515 565,194
--------- --------- --------- --------- ---------
Total assets $4,511,878 $4,381,993 $4,579,231 $4,175,398 $3,825,912
========= ========= ========= ========= =========
Liabilities
Warehouse notes
payable $ 931,002 $ 781,706 $1,019,850 $ 810,114 $ 521,977
Notes payable 825,556 768,044 769,376 770,707 772,037
Allowance for
risk-sharing
obligations 31,871 28,159 29,859 30,477 30,124
Commitments to
fund
investments in
tax credit
equity 295,052 274,975 289,250 134,493 114,206
Other
liabilities 684,308 769,246 724,543 695,813 651,660
--------- --------- --------- --------- ---------
Total liabilities $2,767,789 $2,622,130 $2,832,878 $2,441,604 $2,090,004
--------- --------- --------- --------- ---------
Stockholders'
Equity
Common stock $ 333 $ 332 $ 332 $ 331 $ 331
Additional
paid-in
capital 432,788 429,000 412,570 407,426 427,184
Accumulated
other
comprehensive
income (loss) 1,295 586 1,466 415 (492)
Retained
earnings 1,297,764 1,317,945 1,295,459 1,288,728 1,288,313
--------- --------- --------- --------- ---------
Total
stockholders'
equity $1,732,180 $1,747,863 $1,709,827 $1,696,900 $1,715,336
--------- --------- --------- --------- ---------
Noncontrolling
interests 11,909 12,000 36,526 36,894 20,572
--------- --------- --------- --------- ---------
Total equity $1,744,089 $1,759,863 $1,746,353 $1,733,794 $1,735,908
--------- --------- --------- --------- ---------
Commitments and
contingencies -- -- -- -- --
--------- --------- --------- --------- ---------
Total liabilities
and stockholders'
equity $4,511,878 $4,381,993 $4,579,231 $4,175,398 $3,825,912
========= ========= ========= ========= =========
Walker & Dunlop, Inc. and Subsidiaries
Condensed Consolidated Statements of Income and Comprehensive Income
Unaudited
Quarterly Trends
--------------------------------------------------------------------
(in thousands, except per
share amounts) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024
------------ ------------ ------------ ------------ ------------
Revenues
Origination fees $ 46,381 $ 93,942 $ 73,546 $ 65,334 $ 43,740
MSR income 27,811 55,920 43,426 33,349 20,898
Servicing fees 82,221 82,961 82,222 80,418 80,043
Property sales broker
fees 13,521 21,175 19,322 11,265 8,821
Investment management
fees 9,682 (3,110) 11,744 14,822 13,520
Net warehouse interest
income (expense) (786) (2,186) (2,147) (1,584) (1,116)
Placement fees and
other interest
income 33,211 43,962 43,557 41,040 39,402
Other revenues 25,326 48,787 20,634 26,032 22,751
------- ------- ------- ------- -------
Total revenues $237,367 $341,451 $292,304 $270,676 $228,059
------- ------- ------- ------- -------
Expenses
Personnel $121,390 $169,178 $145,538 $133,067 $111,463
Amortization and
depreciation 57,621 68,054 57,561 56,043 55,891
Provision (benefit)
for credit losses 3,712 4,529 2,850 2,936 524
Interest expense on
corporate debt 15,514 15,921 18,232 17,874 17,659
Goodwill impairment -- 33,000 -- -- --
Fair value adjustments
to contingent
consideration
liabilities -- (48,955) (1,366) -- --
Other operating
expenses 33,886 47,604 31,984 32,559 28,843
------- ------- ------- ------- -------
Total expenses $232,123 $289,331 $254,799 $242,479 $214,380
------- ------- ------- ------- -------
Income from operations $ 5,244 $ 52,120 $ 37,505 $ 28,197 $ 13,679
Income tax expense 2,519 10,955 8,822 7,902 2,864
------- ------- ------- ------- -------
Net income before
noncontrolling
interests $ 2,725 $ 41,165 $ 28,683 $ 20,295 $ 10,815
------- ------- ------- ------- -------
Less: net income
(loss) from
noncontrolling
interests (29) (3,671) (119) (2,368) (1,051)
------- ------- ------- ------- -------
Walker & Dunlop net
income $ 2,754 $ 44,836 $ 28,802 $ 22,663 $ 11,866
======= ======= ======= ======= =======
Net change in
unrealized gains
(losses) on
pledged
available-for-sale
securities, net of
taxes 709 (880) 1,051 907 (13)
------- ------- ------- ------- -------
Walker & Dunlop
comprehensive income $ 3,463 $ 43,956 $ 29,853 $ 23,570 $ 11,853
======= ======= ======= ======= =======
Effective Tax Rate 48% 21% 24% 28% 21%
Basic earnings per share $ 0.08 $ 1.32 $ 0.85 $ 0.67 $ 0.35
Diluted earnings per
share 0.08 1.32 0.85 0.67 0.35
Cash dividends paid per
common share 0.67 0.65 0.65 0.65 0.65
Basic weighted-average
shares outstanding 33,264 33,192 33,169 33,121 32,978
Diluted weighted-average
shares outstanding 33,296 33,223 33,203 33,154 33,048
SUPPLEMENTAL OPERATING DATA
Unaudited
Quarterly Trends
----------------------------------------------------------------------------------------
(in thousands,
except per share
data and unless
otherwise noted) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024
---------------- ---------------- ---------------- ---------------- ----------------
Transaction
Volume:
Components of
Debt Financing
Volume
Fannie Mae $ 1,511,794 $ 3,225,633 $ 2,001,356 $ 1,510,804 $ 903,368
Freddie Mac 808,247 1,553,495 1,545,939 1,153,190 974,926
Ginnie Mae -
HUD 148,158 116,437 272,054 185,898 14,140
Brokered (1) 2,552,943 4,893,643 4,028,208 3,852,851 3,319,074
Principal
Lending and
Investing
(2) 175,500 207,000 165,875 214,975 15,800
----------- ----------- ----------- ----------- -----------
Total Debt
Financing
Volume $ 5,196,642 $ 9,996,208 $ 8,013,432 $ 6,917,718 $ 5,227,308
----------- ----------- ----------- ----------- -----------
Property Sales
Volume 1,839,290 3,450,614 3,602,675 1,530,783 1,167,151
----------- ----------- ----------- ----------- -----------
Total Transaction
Volume $ 7,035,932 $ 13,446,822 $ 11,616,107 $ 8,448,501 $ 6,394,459
=========== =========== =========== =========== ===========
Key Performance
Metrics:
Operating margin 2% 15% 13% 10% 6%
Return on equity 1 10 7 5 3
Walker & Dunlop
net income $ 2,754 $ 44,836 $ 28,802 $ 22,663 $ 11,866
Adjusted EBITDA
(3) 64,966 94,577 78,905 80,931 74,136
Diluted EPS 0.08 1.32 0.85 0.67 0.35
Adjusted core EPS
(4) 0.85 1.34 1.19 1.23 1.19
Key Expense
Metrics (as a
percentage of
total revenues):
Personnel
expenses 51% 50% 50% 49% 49%
Other operating
expenses 14 14 11 12 13
Key Revenue
Metrics (as a
percentage of
debt financing
volume):
Origination fee
rate (5) 0.90% 0.94% 0.93% 0.95% 0.84%
MSR rate (6) 0.55 0.57 0.55 0.50 0.40
Agency MSR rate
(7) 1.13 1.14 1.14 1.17 1.10
Other Data:
Market
capitalization
at period end $ 2,901,726 $ 3,282,018 $ 3,834,715 $ 3,311,629 $ 3,406,853
Closing share
price at period
end $ 85.36 $ 97.21 $ 113.59 $ 98.20 $ 101.06
Average headcount 1,394 1,391 1,356 1,321 1,323
Components of
Servicing
Portfolio (end of
period):
Fannie Mae $ 69,176,839 $ 68,196,744 $ 66,068,212 $ 64,954,426 $ 64,349,886
Freddie Mac 38,556,682 39,185,091 40,090,158 39,938,411 39,665,386
Ginnie Mae -
HUD 10,882,857 10,847,265 10,727,323 10,619,764 10,595,841
Brokered (8) 17,032,338 17,057,912 17,156,810 17,239,417 17,312,513
Principal
Lending and
Investing
(9) -- -- 38,043 25,893 40,139
----------- ----------- ----------- ----------- -----------
Total Servicing
Portfolio $135,648,716 $135,287,012 $134,080,546 $132,777,911 $131,963,765
----------- ----------- ----------- ----------- -----------
Assets under
management (10) 18,518,413 18,423,463 18,210,452 17,566,666 17,465,398
----------- ----------- ----------- ----------- -----------
Total Managed
Portfolio $154,167,129 $153,710,475 $152,290,998 $150,344,577 $149,429,163
=========== =========== =========== =========== ===========
Key Servicing
Portfolio Metrics
(end of period):
Custodial escrow
deposit balance
(in billions) $ 2.4 $ 2.7 $ 3.1 $ 2.7 $ 2.3
Weighted-average
servicing fee
rate (basis
points) 24.4 24.2 24.1 24.1 24.0
Weighted-average
remaining
servicing
portfolio term
(years) 7.5 7.7 7.7 7.9 8.0
________________________________________
(1) Brokered transactions for life insurance companies, commercial banks,
and other capital sources.
(2) Includes debt financing volumes from our 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) WDAE 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
March 31, December 31, September 30, June 30, March 31,
(dollars in thousands) 2025 2024 2024 2024 2024
---------------- ---------------- ---------------- ---------------- ----------------
Risk-sharing servicing
portfolio:
Fannie Mae Full Risk $ 60,493,946 $ 59,304,888 $ 57,032,839 $ 55,915,670 $ 55,236,618
Fannie Mae Modified
Risk 8,682,893 8,891,856 9,035,373 9,038,756 9,113,268
Freddie Mac Modified
Risk 15,000 15,000 69,400 69,510 69,510
----------- ----------- ----------- ----------- -----------
Total risk-sharing
servicing portfolio $ 69,191,839 $ 68,211,744 $ 66,137,612 $ 65,023,936 $ 64,419,396
----------- ----------- ----------- ----------- -----------
Non-risk-sharing
servicing portfolio:
Fannie Mae No Risk $ -- $ -- $ -- $ -- $ --
Freddie Mac No Risk 38,541,682 39,170,091 40,020,758 39,868,901 39,595,876
GNMA - HUD No Risk 10,882,857 10,847,265 10,727,323 10,619,764 10,595,841
Brokered 17,032,338 17,057,912 17,156,810 17,239,417 17,312,513
----------- ----------- ----------- ----------- -----------
Total non-risk-sharing
servicing portfolio $ 66,456,877 $ 67,075,268 $ 67,904,891 $ 67,728,082 $ 67,504,230
----------- ----------- ----------- ----------- -----------
Total loans serviced
for others $135,648,716 $135,287,012 $134,042,503 $132,752,018 $131,923,626
=========== =========== =========== =========== ===========
Loans held for
investment (full
risk) $ 36,926 $ 36,926 $ 38,043 $ 25,893 $ 40,139
Interim Loan Joint
Venture Managed Loans
(1) 173,315 173,315 424,774 570,299 711,541
At-risk servicing
portfolio (2) $ 64,450,319 $ 63,365,672 $ 61,237,535 $ 60,122,274 $ 59,498,851
Maximum exposure to
at-risk portfolio (3) 13,200,846 12,893,593 12,454,158 12,222,290 12,088,698
Defaulted loans(4) 108,530 41,737 59,645 48,560 63,264
Defaulted loans as a
percentage of the
at-risk portfolio 0.17% 0.07% 0.10% 0.08% 0.11%
Allowance for
risk-sharing as a
percentage of the
at-risk portfolio 0.05 0.04 0.05 0.05 0.05
Allowance for
risk-sharing as a
percentage of maximum
exposure 0.24 0.22 0.24 0.25 0.25
________________________________________
(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
-------------------------------------------------------
(in thousands) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024
--------- --------- --------- --------- -----------
Reconciliation
of Walker &
Dunlop Net
Income to
Adjusted
EBITDA
Walker & Dunlop
Net Income $ 2,754 $ 44,836 $ 28,802 $ 22,663 $ 11,866
Income tax
expense 2,519 10,955 8,822 7,902 2,864
Interest
expense on
corporate
debt 15,514 15,921 18,232 17,874 17,659
Amortization
and
depreciation 57,621 68,054 57,561 56,043 55,891
Provision
(benefit) for
credit losses 3,712 4,529 2,850 2,936 524
Net write-offs -- -- (468) -- --
Stock-based
compensation
expense 6,442 7,702 6,532 6,862 6,230
MSR income (27,811) (55,920) (43,426) (33,349) (20,898)
Write-off of
unamortized
issuance costs
from corporate
debt paydown 4,215 -- -- -- --
Goodwill
impairment,
net of
contingent
consideration
liability fair
value
adjustments(1) -- (1,500) -- -- --
------- ------- ------- ------- -------
Adjusted EBITDA $ 64,966 $ 94,577 $ 78,905 $ 80,931 $ 74,136
======= ======= ======= ======= =======
________________________________________
(1) For the three months ended December 31, 2024, includes goodwill
impairment of $33.0 million and contingent consideration liability fair
value adjustments of $34.5 million
ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP BY SEGMENT
Unaudited
Capital Markets
--------------------------------------
Three months ended
March 31,
--------------------------------------
(in thousands) 2025 2024
------------------- -----------------
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA
Walker & Dunlop Net Income (Loss) $ 2,360 $ (6,700)
Income tax expense (benefit) 2,181 (1,744)
Interest expense on corporate debt 4,187 4,851
Amortization and depreciation 1,141 1,137
Stock-based compensation expense 3,351 4,057
MSR income (27,811) (20,898)
Write-off of unamortized issuance
costs from corporate debt paydown 1,264 --
----------- ----------
Adjusted EBITDA $ (13,327) $ (19,297)
=========== ==========
Servicing & Asset Management
--------------------------------------
Three months ended
March 31,
--------------------------------------
(in thousands) 2025 2024
------------------- -----------------
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA
Walker & Dunlop Net Income (Loss) $ 19,126 $ 43,283
Income tax expense (benefit) 17,651 11,153
Interest expense on corporate debt 9,931 11,191
Amortization and depreciation 54,498 53,071
Provision (benefit) for credit
losses 3,712 524
Net write-offs -- --
Stock-based compensation expense 455 436
Write-off of unamortized issuance
costs from corporate debt paydown 2,529 --
----------- ----------
Adjusted EBITDA $ 107,902 $ 119,658
=========== ==========
Corporate
--------------------------------------
Three months ended
March 31,
--------------------------------------
(in thousands) 2025 2024
------------------- -----------------
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA
Walker & Dunlop Net Income (Loss) $ (18,732) $ (24,717)
Income tax expense (benefit) (17,313) (6,545)
Interest expense on corporate debt 1,396 1,617
Amortization and depreciation 1,982 1,683
Stock-based compensation expense 2,636 1,737
Write-off of unamortized issuance
costs from corporate debt paydown 422 --
----------- ----------
Adjusted EBITDA $ (29,609) $ (26,225)
=========== ==========
ADJUSTED CORE EPS RECONCILIATION
Unaudited
Quarterly Trends
-------------------------------------------------------
(in thousands) Q1 2025 Q4 2024 Q3 2024 Q2 2024 Q1 2024
--------- --------- --------- --------- -----------
Reconciliation of
Walker & Dunlop
Net Income to
Adjusted Core Net
Income
Walker & Dunlop
Net Income $ 2,754 $ 44,836 $ 28,802 $ 22,663 $ 11,866
Provision
(benefit) for
credit losses 3,712 4,529 2,850 2,936 524
Net write-offs -- -- (468) -- --
Amortization and
depreciation 57,621 68,054 57,561 56,043 55,891
MSR income (27,811) (55,920) (43,426) (33,349) (20,898)
Goodwill
impairment -- 33,000 -- -- --
Contingent
consideration
accretion and
fair value
adjustments 40 (48,822) (1,204) 822 512
Write-off of
unamortized
issuance costs
from corporate
debt paydown 4,215 -- -- -- --
Income tax
expense
adjustment(1) (11,355) (177) (3,602) (7,413) (7,543)
------- ------- ------- ------- -------
Adjusted Core Net
Income $ 29,176 $ 45,500 $ 40,513 $ 41,702 $ 40,352
======= ======= ======= ======= =======
Reconciliation of
Diluted EPS to
Adjusted core
EPS
Walker & Dunlop
Net Income $ 2,754 $ 44,836 $ 28,802 $ 22,663 $ 11,866
Diluted
weighted-average
shares
outstanding 33,296 33,223 33,203 33,154 33,048
------- ------- ------- ------- -------
Diluted EPS $ 0.08 $ 1.32 $ 0.85 $ 0.67 $ 0.35
======= ======= ======= ======= =======
Adjusted Core Net
Income $ 29,176 $ 45,500 $ 40,513 $ 41,702 $ 40,352
Diluted
weighted-average
shares
outstanding 33,296 33,223 33,203 33,154 33,048
------- ------- ------- ------- -------
Adjusted Core EPS $ 0.85 $ 1.34 $ 1.19 $ 1.23 $ 1.19
======= ======= ======= ======= =======
________________________________________
(1) 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." The effective rate is adjusted for the impacts of excess tax
benefits and shortfalls.
Category: Earnings
View source version on businesswire.com: https://www.businesswire.com/news/home/20250501221089/en/
CONTACT: Headquarters:
7272 Wisconsin Avenue, Suite 1300
Bethesda, Maryland 20814
Phone 301.215.5500
info@walkeranddunlop.com
Investors:
Kelsey Duffey
Senior Vice President, Investor Relations
Phone 301.202.3207
investorrelations@walkeranddunlop.com
Media:
Carol McNerney
Chief Marketing Officer
Phone 301.215.5515
info@walkeranddunlop.com
(END) Dow Jones Newswires
May 01, 2025 06:00 ET (10:00 GMT)
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