Walker & Dunlop Annual Review 2020

2020 was a year like no other. The COVID-19 pandemic had far-reaching impacts on the global economy and the commercial real estate industry, and touched each one of us personally. Yet the people, brand, and technology of Walker & Dunlop came together to produce record financial results for the year, positioning us for continued growth and future success. Our people expertly navigated a challenging year while working remotely and preserving our award-winning culture. We launched the Walker Webcast, which grew our digital marketing and social media presence dramatically and expanded the WD brand across every channel. And we leveraged our technology investments to change the dialogue with our clients, and the results were truly outstanding. During the year, 66% of our refinancing volume were new loans to Walker & Dunlop, and 23% of our total transaction volume was with new clients who had never before worked with Walker & Dunlop. These data points on the new business we are attracting to Walker & Dunlop are extremely exciting, as they demonstrate the power of our great people, expanding brand, and innovative technology, which drove our fantastic financial performance in 2020. Our team was more productive than ever before, closing a record $41.1 billion of total transaction volume for the year, up 29% from 2019, and generating $1.1 billion of total revenue, up 33% year-over-year. This surpassed the ambitious goal that we set in 2015 of growing our revenues to $1 billion by 2020, and resulted in an 18% compound annual growth rate in revenues over the past five years. We also established a goal of growing our debt financing volume to $30 billion by 2020, and we ended the year at $35 billion, a 17% compound annual growth rate from 2015. The growth in debt financing volume helped us to achieve the goal set in 2015 to more than double the size of our servicing portfolio to $100 billion, which we achieved in July and finished the year at more than $107 billion. Finally, we grew our property sales business to $6.1 billion of total volumes in 2020, a compound annual growth rate of 32% over the past five years. All of these achievements in the year generated diluted earnings of $7.69 per share in 2020, up 41% over 2019. I've now been the CFO of Walker & Dunlop for eight years, and I've never been as excited as I am today about the opportunities before us. We are extremely well positioned to continue growing in the coming years by continuing to hire great people, leveraging our unique brand, and making additional investments in technology. Looking to 2021, we've established another set of ambitious financial objectives for the year, targeting double-digit growth in both earnings per share and adjusted EBITDA. We expect to generate an operating margin in the range of 29% to 32% in 2021, and return on equity in the range of 19% to 22% for the year. We have a strong track record of using our capital to reinvest in the business and drive future growth, and we end 2020 with significant capital available to continue making those investments in the future. And we will do this while also returning capital to shareholders through our dividend and opportunistic share repurchases over time. In February of 2021, our board of directors raised our quarterly dividend by 39% to $0.50 per share, the third increase since we initiated the dividend three years ago. After successfully closing out Vision 2020 with record financial performance, we are moving on to our next set of ambitious five-year objectives called the Drive to 25. We remain focused on our mission to become the premier commercial real estate finance company in the United States and have established clear goals to achieving that mission. The component parts of the Drive to 25 are to grow debt financing volumes to over $65 billion a year, including $5 billion of small-balance loans. We plan to grow our servicing portfolio to over $160 billion. We'll also grow our property sales volume to over $25 billion per year, and we'll focus on new businesses like establishing an investment bank, including growing our assets under management to over $10 billion in Walker & Dunlop Investment Partners. And while accomplishing those highly ambitious business goals, we will be a leader with our environmental, social, and governance efforts. We are extremely focused on our long-term initiatives, including reducing our company emissions while remaining carbon neutral, promoting diversity and inclusion both internally and throughout the commercial real estate industry, and maintaining our best-in-class corporate governance practices. If we achieve the components of the Drive to 25 over the next five years, we will grow revenues to $2 billion, and if we achieve that level of growth, we should generate earnings per share of between $13 and $15. These projected numbers are extremely exciting. And by hiring the very best people, expanding our brand, and building best-in-class technology, we are achieving economies of scale and expanding our reach each and every day. For our first 10 years as a public company, Walker & Dunlop delivered total shareholder return of a staggering 874%. We did this by staying focused on our mission and reinvesting capital back into the business to maintain our dramatic growth rate. If we are successful in achieving the Drive to 25, we will have again delivered incredible financial results and shareholder returns, while also making a difference for our clients, the environment, our employees, and our communities. I want to thank you for being part of our continuing journey, as I firmly believe the best is yet to come. Thank you.