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    Walter Investment Management Corp. Announces Second Quarter 2016 Highlights And Financial Results

    08/09/16

    TAMPA, Fla., Aug. 9, 2016 /PRNewswire/ -- Walter Investment Management Corp. (NYSE: WAC) ("Walter Investment" or the "Company") today announced operational highlights and financial results for the quarter ended June 30, 2016.

    Second Quarter 2016 Operational Highlights and Recent Developments

    • Capital efficiency
      • Entered into a series of agreements with a subsidiary of New Residential Investment Corp (NYSE: NRZ) for the sale of mortgage servicing rights for approximately $231 million, which Ditech will sub-service, and a forward flow arrangement for originated MSR
      • Increased cash and cash equivalents by $118.5 MN during the quarter
      • Completed MSR sales of $8.5 billion UPB, retaining servicing on $4.1 billion UPB with shared recapture economics
      • Improved liquidity by approximately $60 million as a result of advance initiatives
    • Process efficiency
      • Actions already completed this year expected to result in approximately $75 million of annual savings
      • Actions taken during the current quarter include workforce reduction, exit of 5 regional servicing locations, consolidation of IT staff into centers of excellence, and redesign of certain servicing operational groups
    • Engaged workforce and new leadership
      • New executive chairman and interim CEO effective June 30, 2016
      • Industry veteran hired as permanent CEO expected to begin Q4 2016

    Second Quarter 2016 Financial Results

    GAAP net loss for the quarter ended June 30, 2016 was $232.4 million, or ($6.49) per share, as compared to a GAAP net loss of $38.1 million, or ($1.01) per share for the quarter ended June 30, 2015. The 2016 net loss includes goodwill impairment charges of $133.6 million after tax, or ($3.73) per share(1), and non-cash charges of $82.7 million after tax, or ($2.31) per share(1), resulting from fair value changes due to changes in valuation inputs and other assumptions.  Adjusted EBITDA ("AEBITDA") for the current quarter was $98.8 million and Adjusted Earnings was $2.4 million after tax, or $0.07 per share(1).

    The goodwill impairment charges incurred in the current quarter relate to the Servicing and ARM reporting units within the Servicing segment and were primarily the result of elevated discount rates applied to lower re-forecasted cash flows.

    "While second quarter performance showed improvement in some areas as compared to the prior quarter, our results continue to fall short of expectations, driven by both external factors such as the declining interest rate environment as well as internal operational inefficiencies," said George M. Awad, Walter Investment's Executive Chairman of the Board and Interim Chief Executive Officer. "We remain resolute on achieving sustainable growth, delivering consistent profitability and maximizing our capital allocation.  Our strategy to achieve these goals is founded on three pillars: capital efficiency, process efficiency and an engaged workforce and new leadership.

    For capital efficiency, we have entered into a strategic capital arrangement that bolsters our transition to a more fee-for-service business model, including sales of mortgage servicing rights, origination flow purchases and expansion of sub-servicing opportunities.  We are also pursuing additional opportunities to establish flow arrangements with other entities.  Furthermore, we are evaluating strategic options for the Reverse Mortgage business and continuing to focus on de-leveraging opportunities, including debt reduction as well as aggressive efforts to reduce advances.

    Process efficiencies have been a key focus of the Company, as we announced a company-wide process re-engineering initiative earlier this year that includes a comprehensive review of our cost structure and operations.  We have already taken actions this year in conjunction with our transformation efforts that will result in approximately $75 million of annual savings, including further site consolidation, operational realignment, a more focused collections strategy and the redesign of certain operational procedures.  Additionally, we are targeting at least $75 million of incremental annual savings through identified actions to be completed by the end of 2017.  Technology enhancement and automation are key drivers of achieving our process efficiencies.

    Lastly, our success isn't possible without an engaged and unified workforce.  Building off of our brand consolidation from 2015, we are extending our solidarity as a unified company by forming a single culture across the organization based on newly launched values.  Additionally, I am delighted to announce that Anthony Renzi will be joining Walter as Chief Executive Officer, and is expected to be on board in the fourth quarter.  Mr. Renzi brings with him over 30 years of experience in the mortgage industry and will be an integral part of leading Walter through its transformation.

    I am excited to be leading the Company through this transformative period as we continue to strive to become our customers' lifelong partner in homeownership.  By executing on our strategy, we are positioning ourselves to deliver future earnings growth and drive value for our stakeholders," concluded Awad.

    Second Quarter 2016 Financial and Operating Overview

    Total revenue for the second quarter of 2016 was $187.5 million, a decrease of $225.0 million as compared to the prior year quarter, primarily due to $192.0 million lower net servicing revenue and fees, including $188.6 million higher fair value losses on mortgage servicing rights driven by a higher assumed conditional prepayment rate resulting from declining interest rates and forward projections of interest rate curves.  Additionally, the current quarter reflects $19.2 million lower net gains on sales of loans primarily due to a lower volume of locked loans in the current quarter as compared to the prior year quarter, $8.1 million lower other revenues driven by lower fair value gains relating to charged-off loans, and $6.3 million lower interest income on loans primarily due to the sale of the residual interests in seven of the Residual Trusts in the prior year quarter.

    Total expenses for the second quarter of 2016 were $565.7 million, 32% higher as compared to the prior year quarter, reflecting a $158.9 million higher goodwill impairment charge as compared to the charge taken in the prior year quarter. Operating expenses for the period declined $15.3 million as compared to the prior year period with $9.5 million lower salaries and benefits largely from fewer employees as compared to the prior year quarter and $6.3 million lower general and administrative expenses.

    Segment Results

    Results for the Company's segments are presented below.

    Servicing

    Ditech is nationally ranked as a top 10 servicer by UPB, servicing approximately 2.1 million accounts, with a UPB of approximately $248.6 billion as of June 30, 2016. During the three months ended June 30, 2016, the Company completed MSR sales of $8.5 billion UPB, retaining sub-servicing and shared recapture economics on approximately $4.1 billion. During the three months ended June 30, 2016, the Company experienced a net disappearance rate of 15.6%, essentially flat as compared to the prior year quarter.

    The Servicing segment reported $356.0 million of pre-tax loss for the second quarter of 2016 as compared to pre-tax income of $82.3 million in the prior year quarter.  During the current quarter, the segment generated revenue of $72.8 million, a $201.4 million decline as compared to the second quarter of 2015, reflecting $188.6 million higher fair value losses on our mortgage servicing rights and $6.3 million lower interest income on loans due to the April 2015 sale of the residual interests in seven of the Residual Trusts.

    Expense for the Servicing segment was $428.4 million, an increase of $239.4 million as compared to the prior year quarter, primarily due to $215.4 million goodwill impairment charges in the current quarter driven by a elevated discount rates applied to lower re-forecasted cash flows.  Operating expenses were $26.9 million higher as compared to the prior year quarter, resulting primarily from additional costs to support efficiency and technology-related initiatives including our servicing platform conversion, lower salaries and benefits expense and higher legal accruals for loss contingencies and other legal expenses. Current quarter expenses also included $10.7 million of depreciation and amortization costs.

    The segment generated AEBITDA of $64.7 million and Adjusted Loss of $0.8 million, a decline of $32.8 million and $37.2 million, respectively, as compared to the prior year quarter, primarily due to lower revenues driven by a declines incentive and performance fees and interest income.

    Originations

    Ditech is nationally ranked as a top 20 originator by UPB, generating total pull-through adjusted locked volume for the second quarter of $5.3 billion. Because we increased our return hurdles for acquired MSR and faced increased market competition in 2016, our pull-though adjusted locked volumes declined approximately $1.0 billion in the second quarter of 2016 as compared to the prior year quarter. Funded loans in the current quarter totaled $4.8 billion, a decrease of 34% from the prior year quarter, with approximately 33% of that volume in the consumer lending channel and approximately 67% generated by the correspondent channel. The combined direct margin for the current quarter was 87 bps, a decrease of 13 bps from the prior year quarter, consisting of a weighted average of 195 bps direct margin in the consumer lending channel and 42 bps direct margin in the correspondent channel.  The Originations business delivered a recapture rate of 18% for the current quarter.

    The Originations segment reported $45.6 million of pre-tax income for the three months ended June 30, 2016, an increase of $12.7 million over the prior year quarter.  The segment generated revenue of $110.2 million in the second quarter of 2016, a decline of $18.5 million as compared to the prior year quarter primarily due to a $15.2 million decrease in net gains on sales of loans.  The decrease in net gains on sales of loans was driven by a lower volume of locked loans during the current quarter as compared to the prior year quarter resulting from increased market competition, an increase in our return hurdles for servicing acquired through our correspondent channel and lower HARP volumes, as well as a slight market shift from refinancing to purchase money volume. Expenses for the Originations segment of $64.6 million, which include $7.7 million of interest expense and $2.2 million of depreciation and amortization, declined 33% compared to the prior year quarter, driven by $14.9 million lower salaries and benefits largely due to the closure of the Retail channel and volume declines and $14.6 million lower general and administrative expenses primarily driven by a reduction of $10.1 million related to a change in estimate of the liability associated with our originations representations and warranty reserve in the current quarter.

    The segment generated Adjusted Earnings of $48.4 million and AEBITDA of $43.5 million for the second quarter of 2016, an increase of $13.2 million and $4.0 million, respectively as compared to the prior year quarter, driven primarily by lower expenses largely due to the closure of the Retail channel.

    Reverse Mortgage

    The Reverse Mortgage business grew its serviced portfolio 6% as compared to the prior year quarter to $20.5 billion of UPB at June 30, 2016.  During the second quarter, the business securitized $188 million of HECM loans.

    The Reverse Mortgage segment reported $26.9 million of pre-tax loss in the current quarter, an improvement of $64.0 million as compared to the prior year quarter. The segment generated revenue of $16.1 million for the quarter, a decrease of $4.0 million as compared to the prior year quarter driven by lower net servicing revenue and fees of $4.9 million reflecting a decrease in incentive and performance fees related to the management of real estate owned.  Current quarter revenues included $7.7 million net fair value gains on reverse loans and related HMBS obligations, $7.0 million in net servicing revenue and fees and $1.5 million of other revenues.  Total expenses for the second quarter of $43.1 million were 61% lower as compared to the prior year period, reflecting the absence of a goodwill impairment charge, lower levels of curtailment expense and a decrease in salaries and benefits.

    The segment reported an Adjusted Loss of $9.1 million and AEBITDA of ($8.0) million for the second quarter of 2016 as compared to Adjusted Earnings of $2.5 million and AEBITDA of $3.7 million in the second quarter of 2015, reflecting lower securitization volumes and a reduction in net servicing revenue and fees, partially offset by a decrease in salaries and benefits.

    Other Non-Reportable Segment

    The Other Non-Reportable segment reported $42.2 million of pre-tax loss for the second quarter of 2016, slightly below pre-tax loss of $39.3 million in the prior year quarter.  The segment reported nominal revenue in both the current and prior year quarters.  Total expenses of $41.3 million in the current quarter decreased slightly as compared to the prior year quarter, and included $35.9 million of interest expense related to corporate debt.

    The Other non-reportable segment had an Adjusted Loss of $34.6 million and AEBITDA of ($1.5) million for the second quarter of 2016 as compared to an Adjusted Loss of $34.8 million and AEBITDA of ($0.4) million in the second quarter of 2015.

    About Anthony Renzi
    Anthony Renzi most recently served as the Chief Operating Officer, Managing Director and Head of Operations for Citi's North America Retail Bank, Commercial Bank and CitiMortgage (2012 - 2016).  In that capacity he provided executive operations leadership for customer contact centers, core banking and mortgage operations, branch operations support, investor reporting / servicing accounting, default operations and servicing technology.  With over 30 years of experience in mortgage banking, he is an accomplished executive with demonstrated success creating and leading top national financial services organizations, including serving as the Executive Vice President of the Single Family Business, Operations and Technology at Freddie MAC (2010 - 2012) and the Chief Operating Officer of GMAC Residential Capital and President of GMAC Mortgage LLC (2001 - 2010).  Mr. Renzi earned a Bachelor's Degree in Business Administration from Holy Family University in Philadelphia and an MBA from Philadelphia University.

    About Walter Investment Management Corp.

    Walter Investment Management Corp. is a diversified mortgage banking firm focused primarily on the servicing and origination of residential loans, including reverse loans.  Based in Tampa, Fla., the Company has approximately 5,600 employees and services a diverse loan portfolio.  For more information about Walter Investment Management Corp., please visit the Company's website at www.walterinvestment.com.  The information on our website is not a part of this release.

    Conference Call Webcast

    Members of the Company's leadership team will discuss Walter Investment's second quarter results and other general business matters during a conference call and live webcast to be held on Tuesday, August 9, 2016, at 9 a.m. Eastern Time.  To listen to the event live or in an archive, and to access presentation slides (which include supplemental information) which will be available for at least 30 days, visit the Company's website at www.walterinvestment.com.

    This press release and the accompanying reconciliations include non-GAAP financial measures.  For a description of these non-GAAP financial measures, including the reasons management uses each measure, and reconciliations of these non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP, please see the reconciliations as well as "Non-GAAP Financial Measures" at the end of this press release.

    Disclaimer and Cautionary Note Regarding Forward-Looking Statements

    This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Statements that are not historical fact are forward-looking statements. Certain of these forward-looking statements can be identified by the use of words such as "believes," "anticipates," "expects," "intends," "plans," "projects," "estimates," "assumes," "may," "should," "will," "targets," or other similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors, and our actual results, performance or achievements could differ materially from future results, performance or achievements expressed in these forward-looking statements. These forward-looking statements are based on our current beliefs, intentions and expectations. These statements are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, those factors, risks and uncertainties described below and in more detail under the caption "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2015 and in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2016 and June 30, 2016 and in our other filings with the SEC.

    In particular (but not by way of limitation), the following important factors, risks and uncertainties could affect our future results, performance and achievements and could cause actual results, performance and achievements to differ materially from those expressed in the forward-looking statements:

    • our ability to operate our business in compliance with existing and future rules and regulations affecting our business, including those relating to the origination and servicing of residential loans, the management of third-party assets and the insurance industry (including lender-placed insurance), and changes to, and/or more stringent enforcement of, such rules and regulations;
    • increased scrutiny and potential enforcement actions by federal and state authorities;
    • the substantial resources (including senior management time and attention) we devote to, and the significant compliance costs we incur in connection with, regulatory compliance and regulatory examinations and inquiries, and any consumer redress, fines, penalties or similar payments we make in connection with resolving such matters;
    • uncertainties relating to interest curtailment obligations and any related financial and litigation exposure (including exposure relating to false claims);
    • potential costs and uncertainties, including the effect on future revenues, associated with and arising from litigation, regulatory investigations and other legal proceedings;
    • our dependence on U.S. government-sponsored entities (especially Fannie Mae) and agencies and their residential loan programs and our ability to maintain relationships with, and remain qualified to participate in programs sponsored by, such entities, our ability to satisfy various existing or future GSE, agency and other capital, net worth, liquidity and other financial requirements applicable to our business, and our ability to remain qualified as a GSE approved seller, servicer or component servicer, including the ability to continue to comply with the GSEs' respective residential loan and selling and servicing guides;
    • uncertainties relating to the status and future role of GSEs, and the effects of any changes to the origination and/or servicing requirements of the GSEs or various regulatory authorities or the servicing compensation structure for mortgage servicers pursuant to programs of GSEs or various regulatory authorities;
    • our ability to maintain our loan servicing, loan origination, insurance agency or collection agency licenses, or any other licenses necessary to operate our businesses, or changes to, or our ability to comply with, our licensing requirements;
    • our ability to comply with the terms of the stipulated order resolving allegations arising from an FTC and CFPB investigation of Ditech Financial;
    • operational risks inherent in the mortgage servicing and mortgage originations businesses, including reputational risk;
    • risks related to our substantial levels of indebtedness, including our ability to comply with covenants contained in our debt agreements, generate sufficient cash to service such indebtedness and refinance such indebtedness on favorable terms, as well as our ability to incur substantially more debt;
    • our ability to renew advance financing facilities or warehouse facilities and maintain adequate borrowing capacity under such facilities;
    • our ability to maintain or grow our servicing business and our residential loan originations business;
    • our ability to achieve our strategic initiatives, particularly our ability to: execute and complete balance sheet management activities; complete the sale of our insurance business; make arrangements with potential counterparties; complete sales of assets to, and enter into other arrangements with, third parties; increase the mix of our fee-for-service business; reduce our debt; enhance efficiencies and streamline processes; and develop new business, including acquisitions of MSRs or entering into new subservicing arrangements;
    • changes in prepayment rates and delinquency rates on the loans we service or sub-service;
    • the ability of our clients and credit owners to transfer or otherwise terminate our servicing or sub-servicing rights;
    • a downgrade of, or other adverse change relating to, our servicer ratings or credit ratings;
    • our ability to collect reimbursements for servicing advances and earn and timely receive incentive payments and ancillary fees on our servicing portfolio;
    • our ability to collect indemnification payments and enforce repurchase obligations relating to mortgage loans we purchase from our correspondent clients and our ability to collect in a timely manner indemnification payments relating to servicing rights we purchase from prior servicers;
    • local, regional, national and global economic trends and developments in general, and local, regional and national real estate and residential mortgage market trends in particular, including the volume and pricing of home sales and uncertainty regarding the levels of mortgage originations and prepayments;
    • uncertainty as to the volume of originations activity we will benefit from prior to, and following, the expiration of HARP, which is scheduled to occur on December 31, 2016, including uncertainty as to the number of "in-the-money" accounts we may be able to refinance;
    • risks associated with the origination, securitization and servicing of reverse mortgages, including changes to reverse mortgage programs operated by FHA, HUD or Ginnie Mae, our ability to accurately estimate interest curtailment liabilities, continued demand for HECM loans and other reverse mortgages, our ability to fund HECM repurchase obligations, our ability to fund principal additions on our HECM loans, and our ability to securitize our HECM loans and tails;
    • our ability to realize all anticipated benefits of past, pending or potential future acquisitions or joint venture investments;
    • the effects of competition on our existing and potential future business, including the impact of competitors with greater financial resources and broader scopes of operation;
    • changes in interest rates and the effectiveness of any hedge we may employ against such changes;
    • risks and potential costs associated with technology and cybersecurity, including: the risks of technology failures and of cyber-attacks against us or our vendors; our ability to adequately respond to actual or alleged cyber-attacks; and our ability to implement adequate internal security measures and protect confidential borrower information;
    • risks and potential costs associated with the implementation of new technology such as MSP, the use of new vendors or the transfer of our servers or other infrastructure to new data center facilities;
    • our ability to comply with evolving and complex accounting rules, many of which involve significant judgment and assumptions;
    • uncertainties regarding impairment charges relating to our goodwill or other intangible assets;
    • our ability to maintain effective internal controls over financial reporting and disclosure controls and procedures;
    • our ability to manage conflicts of interest relating to our investment in WCO and maintain our relationship with WCO; and
    • risks related to our relationship with Walter Energy and uncertainties arising from or relating to its bankruptcy filings, including potential liability for any taxes, interest and/or penalties owed by the Walter Energy consolidated group for the full or partial tax years during which certain of the Company's former subsidiaries were a part of such consolidated group and certain other tax risks allocated to us in connection with our spin-off from Walter Energy.

    All of the above factors, risks and uncertainties are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors, risks and uncertainties emerge from time to time, and it is not possible for our management to predict all such factors, risks and uncertainties.

    Although we believe that the assumptions underlying the forward-looking statements (including those relating to our outlook) contained herein are reasonable, any of the assumptions could be inaccurate, and therefore any of these statements included herein may prove to be inaccurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made, except as otherwise required under the federal securities laws. If we were in any particular instance to update or correct a forward-looking statement, investors and others should not conclude that we would make additional updates or corrections thereafter except as otherwise required under the federal securities laws.

    Amounts or metrics that relate to future earnings projections are forward-looking and subject to significant business, economic, regulatory and competitive uncertainties, many of which are beyond the control of us and our management, and are based upon assumptions with respect to future decisions, which are subject to change. Actual results will vary and those variations may be material. Nothing in this press release should be regarded as a representation by any person that any target will be achieved and we undertake no duty to update any target. Please refer to the disclosures in this press release, in our Annual Report on Form 10-K for the year ended December 31, 2015, our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2016 and June 30, 2016 and our other filings with the SEC for important information regarding forward-looking statements and the use and limitations of non-GAAP financial measures.

    In addition, this press release may contain statements of opinion or belief concerning market conditions and similar matters.  In certain instances, those opinions and beliefs could be based upon general observations by members of our management, anecdotal evidence and/or our experience in the conduct of our business, without specific investigation or statistical analyses. Therefore, while such statements reflect our view of the industries and markets in which we are involved, they should not be viewed as reflecting verifiable views and such views may not be shared by all who are involved in those industries or markets.

     

    Walter Investment Management Corp. and Subsidiaries

    Consolidated Statements of Comprehensive Income (Loss)

    (in thousands)

     








    For the Three Months
     Ended June 30,


    For the Six Months
     Ended June 30,



    2016


    2015


    2016


    2015

    REVENUES









    Net servicing revenue and fees


    $

    31,936



    $

    223,915



    $

    (73,826)



    $

    314,802


    Net gains on sales of loans


    100,176



    119,399



    184,653



    244,626


    Interest income on loans


    11,849



    18,186



    24,020



    50,127


    Net fair value gains on reverse loans and related HMBS obligations


    7,650



    6,815



    42,858



    37,589


    Insurance revenue


    11,277



    11,429



    21,644



    25,560


    Other revenues


    24,585



    32,689



    54,895



    50,586


    Total revenues


    187,473



    412,433



    254,244



    723,290











    EXPENSES









    Salaries and benefits


    133,681



    143,157



    266,320



    290,385


    General and administrative


    135,776



    142,100



    265,382



    270,747


    Goodwill impairment


    215,412



    56,539



    215,412



    56,539


    Interest expense


    64,400



    68,665



    128,648



    143,536


    Depreciation and amortization


    14,540



    16,093



    28,963



    32,725


    Other expenses, net


    1,897



    1,401



    4,403



    5,448


    Total expenses


    565,706



    427,955



    909,128



    799,380











    OTHER GAINS (LOSSES)









    Gain on extinguishment






    928




    Other net fair value gains (losses)


    (819)



    3,326



    (2,963)



    2,454


    Other


    (532)



    (2,803)



    (1,556)



    8,959


    Total other gains (losses)


    (1,351)



    523



    (3,591)



    11,413











    Loss before income taxes


    (379,584)



    (14,999)



    (658,475)



    (64,677)


    Income tax expense (benefit)


    (147,183)



    23,120



    (253,372)



    4,450


    Net loss


    $

    (232,401)



    $

    (38,119)



    $

    (405,103)



    $

    (69,127)











    Comprehensive loss


    $

    (232,385)



    $

    (38,030)



    $

    (405,062)



    $

    (69,011)











    Net loss


    $

    (232,401)



    $

    (38,119)



    $

    (405,103)



    $

    (69,127)











    Basic and diluted loss per common and common equivalent share


    $

    (6.49)



    $

    (1.01)



    $

    (11.35)



    $

    (1.83)











    Weighted-average common and common equivalent shares outstanding — basic and diluted


    35,811



    37,759



    35,679



    37,739


     

    Walter Investment Management Corp. and Subsidiaries

    Consolidated Balance Sheets

    (in thousands, except share and per share data)

     




    June 30,
     2016


    December 31,
     2015



    (unaudited)



    ASSETS





    Cash and cash equivalents


    $

    312,893



    $

    202,828


    Restricted cash and cash equivalents


    209,898



    708,099


    Residential loans at amortized cost, net (includes $4,329 and $4,457 in allowance for loan losses at June 30, 2016 and December 31, 2015, respectively)


    565,061



    541,406


    Residential loans at fair value


    12,723,753



    12,673,439


    Receivables, net (includes $12,681 and $16,542 at fair value at June 30, 2016 and December 31, 2015, respectively)


    251,116



    214,398


    Servicer and protective advances, net (includes $124,387 and $120,338 in allowance for uncollectible advances at June 30, 2016 and December 31, 2015, respectively)


    1,309,096



    1,595,911


    Servicing rights, net (includes $1,255,351 and $1,682,016 at fair value at June 30, 2016 and December 31, 2015, respectively)


    1,350,276



    1,788,576


    Goodwill


    156,283



    367,911


    Intangible assets, net


    77,910



    84,038


    Premises and equipment, net


    103,642



    106,481


    Deferred tax assets, net


    273,816



    108,050


    Other assets (includes $79,597 and $58,512 at fair value at June 30, 2016 and December 31, 2015, respectively)


    256,031



    200,364


    Total assets


    $

    17,589,775



    $

    18,591,501







    LIABILITIES AND STOCKHOLDERS' EQUITY





    Payables and accrued liabilities (includes $36,408 and $6,475 at fair value at June 30, 2016 and December 31, 2015, respectively)


    $

    631,771



    $

    639,980


    Servicer payables


    158,654



    603,692


    Servicing advance liabilities


    1,002,451



    1,229,280


    Warehouse borrowings


    1,396,102



    1,340,388


    Servicing rights related liabilities at fair value


    120,825



    117,000


    Corporate debt


    2,159,947



    2,157,424


    Mortgage-backed debt (includes $548,067 and $582,340 at fair value at June 30, 2016 and December 31, 2015, respectively)


    999,499



    1,051,679


    HMBS related obligations at fair value


    10,717,148



    10,647,382


    Total liabilities


    17,186,397



    17,786,825







    Commitments and contingencies (Note 13)










    Stockholders' equity:





    Preferred stock, $0.01 par value per share:





    Authorized - 10,000,000 shares





    Issued and outstanding - 0 shares at June 30, 2016 and December 31, 2015





    Common stock, $0.01 par value per share:





    Authorized - 90,000,000 shares





    Issued and outstanding - 36,137,082 and 35,573,405 shares at June 30, 2016 and December 31, 2015, respectively


    361



    355


    Additional paid-in capital


    595,212



    591,454


    Retained earnings (accumulated deficit)


    (193,049)



    212,054


    Accumulated other comprehensive income


    854



    813


    Total stockholders' equity


    403,378



    804,676


    Total liabilities and stockholders' equity


    $

    17,589,775



    $

    18,591,501


     


    Non-GAAP Financial Measures

    We manage our Company in three reportable segments: Servicing, Originations and Reverse Mortgage. We measure the performance of our business segments through the following measures: income (loss) before income taxes, Adjusted Earnings (Loss), and Adjusted EBITDA. Management considers Adjusted Earnings (Loss) and Adjusted EBITDA, both non-GAAP financial measures, to be important in the evaluation of our business segments and of the Company as a whole, as well as for allocating capital resources to our segments. Adjusted Earnings (Loss), Adjusted Earnings per share and Adjusted EBITDA are supplemental metrics utilized by management to assess the underlying key drivers and operational performance of the continuing operations of the business. In addition, analysts, investors, and creditors may use these measures when analyzing our operating performance. Adjusted Earnings (Loss) and Adjusted EBITDA are not presentations made in accordance with GAAP and our use of these measures and terms may vary from other companies in our industry.

    Adjusted Earnings (Loss) and Adjusted Earnings per share is defined as net income (loss) with respect to the consolidated entity, and income (loss) before income taxes at the subsidiary level plus changes in fair value due to changes in valuation inputs and other assumptions; certain depreciation and amortization costs related to the increased basis in assets (including servicing rights and sub-servicing contracts) acquired within business combination transactions (or step-up depreciation and amortization); goodwill impairment, if any; a portion of the provision for curtailment expense, net of expected third-party recoveries; share-based compensation expense; non-cash interest expense; restructuring costs; estimated settlements and costs for certain legal and regulatory matters; fair value to cash adjustments for reverse loans; and select other cash and non-cash adjustments primarily including severance; gain or loss on extinguishment of debt; the net impact of the Non-Residual Trusts; transaction and integration costs; and certain non-recurring costs. Adjusted Earnings (Loss) and Adjusted Earnings per share exclude unrealized changes in fair value of MSRs that are based on projections of expected future cash flows and prepayments. Adjusted Earnings (Loss) and Adjusted Earnings per share include both cash and non-cash gains from mortgage loan origination activities. Non-cash gains are net of non-cash charges or reserves provided. Adjusted Earnings (Loss) and Adjusted Earnings per share include cash generated from reverse mortgage origination activities. Adjusted Earnings (Loss) and Adjusted Earnings per share may from time to time also include other adjustments, as applicable based upon facts and circumstances, consistent with the intent of providing investors with a supplemental means of evaluating our operating performance.

    Adjusted EBITDA eliminates the effects of financing, income taxes and depreciation and amortization. Adjusted EBITDA is defined as net income (loss) with respect to the consolidated entity, and income (loss) before income taxes at the subsidiary level; amortization of servicing rights and other fair value adjustments; interest expense on corporate debt; depreciation and amortization; goodwill impairment, if any; a portion of the provision for curtailment expense, net of expected third-party recoveries; share-based compensation expense; restructuring costs; estimated settlements and costs for certain legal and regulatory matters; fair value to cash adjustments for reverse loans; and select other cash and non-cash adjustments primarily the net provision for the repurchase of loans sold; non-cash interest income; severance; gain or loss on extinguishment of debt; interest income on unrestricted cash and cash equivalents; the net impact of the Non-Residual Trusts; the provision for loan losses; Residual Trust cash flows; transaction and integration costs; servicing fee economics; and certain non-recurring costs. Adjusted EBITDA includes both cash and non-cash gains from mortgage loan origination activities. Adjusted EBITDA excludes the impact of fair value option accounting on certain assets and liabilities and includes cash generated from reverse mortgage origination activities. Adjusted EBITDA may also include other adjustments, as applicable based upon facts and circumstances, consistent with the intent of providing investors a supplemental means of evaluating our operating performance.

    Adjusted Earnings (Loss), Adjusted Earnings per share and Adjusted EBITDA should not be considered as alternatives to (i) net income (loss) or any other performance measures determined in accordance with GAAP or (ii) operating cash flows determined in accordance with GAAP. Adjusted Earnings (Loss), Adjusted Earnings per share and Adjusted EBITDA have important limitations as analytical tools, and should not be considered in isolation or as substitutes for analysis of our results as reported under GAAP. Some of the limitations of these metrics are:

    • Adjusted Earnings (Loss), Adjusted Earnings per share and Adjusted EBITDA do not reflect cash expenditures for long-term assets and other items that have been and will be incurred, future requirements for capital expenditures or contractual commitments;
    • Adjusted Earnings (Loss), Adjusted Earnings per share and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
    • Adjusted Earnings (Loss), Adjusted Earnings per share and Adjusted EBITDA do not reflect certain tax payments that represent reductions in cash available to us;
    • Adjusted Earnings (Loss), Adjusted Earnings per share and Adjusted EBITDA do not reflect any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future;
    • Adjusted Earnings (Loss), Adjusted Earnings per share and Adjusted EBITDA do not reflect non-cash compensation which is and will remain a key element of our overall long-term incentive compensation package;
    • Adjusted Earnings (Loss), Adjusted Earnings per share and Adjusted EBITDA do not reflect the change in fair value due to changes in valuation inputs and other assumptions;
    • Adjusted EBITDA does not reflect the change in fair value resulting from the realization of expected cash flows; and
    • Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our servicing rights related liabilities and corporate debt, although it does reflect interest expense associated with our servicing advance liabilities, master repurchase agreements, mortgage-backed debt, and HMBS related obligations.

    Because of these limitations, Adjusted Earnings (Loss), Adjusted Earnings per share and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using Adjusted Earnings (Loss), Adjusted Earnings per share and Adjusted EBITDA only as supplements. Users of our financial statements are cautioned not to place undue reliance on Adjusted Earnings (Loss), Adjusted Earnings per share and Adjusted EBITDA.

     

     

    Walter Investment Management Corp.

    Segment Results of Operations and Non-GAAP Financial Measures

    For the Three Months Ended June 30, 2016

    (in thousands)



















    Servicing

    Originations

    Reverse Mortgage

    Other

    Eliminations

    Total Consolidated

    REVENUES:








    Servicing revenue and fees


    $

    28,001


    $


    $

    7,001


    $


    $

    (3,066)


    $

    31,936


    Gain on loan sales, net


    (1,191)


    100,358




    1,009


    100,176


    Interest income on loans


    11,837


    12





    11,849


    Insurance revenue


    11,277






    11,277


    Net fair value gains on reverse loans and related HMBS obligations




    7,650




    7,650


    Other income


    22,889


    9,839


    1,486


    45


    (9,674)


    24,585


    Total revenues


    72,813


    110,209


    16,137


    45


    (11,731)


    187,473


    EXPENSES:








    Interest expense


    18,330


    7,736


    2,414


    35,920



    64,400


    Depreciation and amortization


    10,704


    2,248


    1,587


    1



    14,540


    Goodwill impairment


    215,412






    215,412


    Other expenses, net


    183,996


    54,610


    39,080


    5,399


    (11,731)


    271,354


    Total expenses


    428,442


    64,594


    43,081


    41,320


    (11,731)


    565,706


    OTHER GAINS (LOSSES)








    Net fair value gains (losses)


    135




    (954)



    (819)


    Other


    (532)






    (532)


    Total other gains (losses)


    (397)




    (954)



    (1,351)


    Income (loss) before income taxes


    (356,026)


    45,615


    (26,944)


    (42,229)



    (379,584)


    ADJUSTED EARNINGS (LOSS)








    Goodwill impairment


    215,412






    215,412


    Changes in fair value due to changes in valuation inputs and other assumptions


    118,825






    118,825


    Step-up depreciation and amortization


    6,601


    157


    894




    7,652


    Step-up amortization of sub-servicing rights


    1,049






    1,049


    Non-cash interest expense


    18




    2,940



    2,958


    Share-based compensation expense


    3,160


    820


    610


    256



    4,846


    Fair value to cash adjustment for reverse loans




    14,512




    14,512


    Legal and regulatory matters








    Restructuring costs


    4,126


    303


    407




    4,836


    Other(1)


    6,065


    1,515


    1,398


    4,393



    13,371


    Total adjustments


    355,256


    2,795


    17,821


    7,589



    383,461


    Adjusted Earnings (Loss)


    (770)


    48,410


    (9,123)


    (34,640)



    3,877


    ADJUSTED EBITDA








    Amortization of servicing rights and other fair value adjustments


    60,911



    446




    61,357


    Interest expense on debt


    1,251




    32,979



    34,230


    Depreciation and amortization


    4,103


    2,091


    693


    1



    6,888


    Other(2)


    (767)


    (7,013)


    21


    169



    (7,590)


    Total adjustments


    65,498


    (4,922)


    1,160


    33,149



    94,885


    Adjusted EBITDA


    $

    64,728


    $

    43,488


    $

    (7,963)


    $

    (1,491)


    $


    $

    98,762



    (1) Includes the net provision for the repurchase of loans sold, non-cash interest income, severance, gain on extinguishment of debt, interest income on unrestricted cash and cash equivalents, the net impact of the Non-Residual Trusts, the provision for loan losses, Residual Trust cash flows, transaction and integration costs; servicing fee economics; and certain non-recurring costs.

    (2) Includes severance, gain on extinguishment of debt, the net impact of the Non-Residual Trusts; transaction and integration costs; and certain non-recurring costs.

     

     

    Walter Investment Management Corp.

    Segment Results of Operations and Non-GAAP Financial Measures

    For the Three Months Ended June 30, 2015

    (in thousands)





    Servicing

    Originations

    Reverse Mortgage

    Other

    Eliminations

    Total Consolidated

    REVENUES:








    Servicing revenue and fees


    $

    214,437


    $


    $

    11,915


    $


    $

    (2,437)


    $

    223,915


    Gain on loan sales, net


    3,795


    115,604





    119,399


    Interest income on loans


    18,174


    12





    18,186


    Insurance revenue


    11,429






    11,429


    Net fair value gains on reverse loans and related HMBS obligations




    6,815




    6,815


    Other income


    26,361


    13,086


    1,442


    854


    (9,054)


    32,689


    Total revenues


    274,196


    128,702


    20,172


    854


    (11,491)


    412,433


    EXPENSES:








    Interest expense


    20,534


    9,934


    1,132


    37,065



    68,665


    Depreciation and amortization


    11,412


    2,692


    1,986


    3



    16,093


    Goodwill impairment




    56,539




    56,539


    Other expenses, net


    157,053


    83,111


    51,475


    6,510


    (11,491)


    286,658


    Total expenses


    188,999


    95,737


    111,132


    43,578


    (11,491)


    427,955


    OTHER GAINS (LOSSES)








    Net fair value gains (losses)


    (98)




    3,424



    3,326


    Other


    (2,803)






    (2,803)


    Total other gains (losses)


    (2,901)




    3,424



    523


    Income (loss) before income taxes


    82,296


    32,965


    (90,960)


    (39,300)



    (14,999)


    ADJUSTED EARNINGS (LOSS)








    Goodwill impairment




    56,539




    56,539


    Changes in fair value due to changes in valuation inputs and other assumptions


    (64,359)






    (64,359)


    Step-up depreciation and amortization


    6,923


    618


    1,328




    8,869


    Step-up amortization of sub-servicing contracts


    4,940






    4,940


    Non-cash interest expense


    363




    2,660



    3,023


    Share-based compensation expense


    3,123


    1,453


    284


    146



    5,006


    Fair value to cash adjustments for reverse loans




    24,149




    24,149


    Curtailment expense




    6,488




    6,488


    Legal and regulatory matters


    544



    4,628




    5,172


    Restructuring costs


    1,578


    130



    184



    1,892


    Other(1)


    976


    85


    63


    1,493



    2,617


    Total adjustments


    (45,912)


    2,286


    93,479


    4,483



    54,336


    Adjusted Earnings (Loss)


    36,384


    35,251


    2,519


    (34,817)



    39,337


    ADJUSTED EBITDA








    Amortization of servicing rights and other fair value adjustments


    59,649



    522




    60,171


    Interest expense on debt


    2,121




    34,405



    36,526


    Depreciation and amortization


    4,489


    2,074


    658


    3



    7,224


    Other(2)


    (5,090)


    2,140


    25


    26



    (2,899)


    Total adjustments


    61,169


    4,214


    1,205


    34,434



    101,022


    Adjusted EBITDA


    $

    97,553


    $

    39,465


    $

    3,724


    $

    (383)


    $


    $

    140,359



     

    (1) Includes the net provision for the repurchase of loans sold, non-cash interest income, severance, gain on extinguishment of debt, interest income on unrestricted cash and cash equivalents, the net impact of the Non-Residual Trusts, the provision for loan losses, Residual Trust cash flows, transaction and integration costs; servicing fee economics; and certain non-recurring costs.

    (2) Includes severance, gain on extinguishment of debt, the net impact of the Non-Residual Trusts; transaction and integration costs; and certain non-recurring costs.

     

     

     

    Walter Investment Management Corp.

    Segment Results of Operations and Non-GAAP Financial Measures

    For the Six Months Ended June 30, 2016

    (in thousands)




    Servicing

    Originations

    Reverse Mortgage

    Other

    Eliminations

    Total Consolidated

    REVENUES:








    Servicing revenue and fees


    $

    (81,519)


    $


    $

    13,910


    $


    $

    (6,217)


    $

    (73,826)


    Gain on loan sales, net


    (5,727)


    188,340




    2,040


    184,653


    Interest income on loans


    23,995


    25





    24,020


    Insurance revenue


    21,644






    21,644


    Net fair value gains on reverse loans and related HMBS obligations




    42,858




    42,858


    Other income


    51,165


    22,121


    3,464


    75


    (21,930)


    54,895


    Total revenues


    9,558


    210,486


    60,232


    75


    (26,107)


    254,244


    EXPENSES:








    Interest expense


    36,892


    16,011


    3,929


    71,816



    128,648


    Depreciation and amortization


    21,485


    4,593


    2,875


    10



    28,963


    Goodwill impairment


    215,412






    215,412


    Other expenses, net


    347,810


    127,866


    74,321


    12,215


    (26,107)


    536,105


    Total expenses


    621,599


    148,470


    81,125


    84,041


    (26,107)


    909,128


    OTHER GAINS (LOSSES)








    Gain (loss) on extinguishment of debt





    928



    928


    Net fair value gains (losses)


    226




    (3,189)



    (2,963)


    Other


    (532)



    (1,024)




    (1,556)


    Total other gains (losses)


    (306)



    (1,024)


    (2,261)



    (3,591)


    Income (loss) before income taxes


    (612,347)


    62,016


    (21,917)


    (86,227)



    (658,475)


    ADJUSTED EARNINGS (LOSS)








    Goodwill impairment


    215,412






    215,412


    Changes in fair value due to changes in valuation inputs and other assumptions


    359,154






    359,154


    Step-up depreciation and amortization


    13,335


    452


    1,789




    15,576


    Step-up amortization of sub-servicing rights


    3,978






    3,978


    Non-cash interest expense


    (11)




    5,807



    5,796


    Share-based compensation expense


    3,941


    233


    923


    608



    5,705


    Fair value to cash adjustment for reverse loans




    (3,197)




    (3,197)


    Legal and regulatory matters


    2,196






    2,196


    Restructuring costs


    6,007


    2,099


    407


    227



    8,740


    Other(1)


    6,373


    1,515


    2,446


    9,996



    20,330


    Total adjustments


    610,385


    4,299


    2,368


    16,638



    633,690


    Adjusted Earnings (Loss)


    (1,962)


    66,315


    (19,549)


    (69,589)



    (24,785)


    ADJUSTED EBITDA








    Amortization of servicing rights and other fair value adjustments


    130,252



    906




    131,158


    Interest expense on debt


    3,986




    66,009



    69,995


    Depreciation and amortization


    8,150


    4,141


    1,086


    10



    13,387


    Other(2)


    (1,102)


    (3,212)


    54


    347



    (3,913)


    Total adjustments


    141,286


    929


    2,046


    66,366



    210,627


    Adjusted EBITDA


    $

    139,324


    $

    67,244


    $

    (17,503)


    $

    (3,223)


    $


    $

    185,842



    (1) Includes the net provision for the repurchase of loans sold, non-cash interest income, severance, gain on extinguishment of debt, interest income on unrestricted cash and cash equivalents, the net impact of the Non-Residual Trusts, the provision for loan losses, Residual Trust cash flows, transaction and integration costs; servicing fee economics; and certain non-recurring costs.

    (2) Includes severance, gain on extinguishment of debt, the net impact of the Non-Residual Trusts; transaction and integration costs; and certain non-recurring costs.

     

     

    Walter Investment Management Corp.

    Segment Results of Operations and Non-GAAP Financial Measures

    For the Six Months Ended June 30, 2015

    (in thousands)





    Servicing

    Originations

    Reverse Mortgage

    Other

    Eliminations

    Total Consolidated

    REVENUES:








    Servicing revenue and fees


    $

    296,264


    $


    $

    23,321


    $


    $

    (4,783)


    $

    314,802


    Gain on loan sales, net


    3,704


    241,020


    (98)




    244,626


    Interest income on loans


    50,090


    37





    50,127


    Insurance revenue


    25,560






    25,560


    Net fair value gains on reverse loans and related HMBS obligations




    37,589




    37,589


    Other income


    42,341


    17,945


    3,287


    4,147


    (17,134)


    50,586


    Total revenues


    417,959


    259,002


    64,099


    4,147


    (21,917)


    723,290


    EXPENSES:








    Interest expense


    49,759


    17,747


    2,231


    73,799



    143,536


    Depreciation and amortization


    22,885


    5,879


    3,954


    7



    32,725


    Goodwill impairment




    56,539




    56,539


    Other expenses, net


    310,556


    160,613


    105,792


    11,536


    (21,917)


    566,580


    Total expenses


    383,200


    184,239


    168,516


    85,342


    (21,917)


    799,380


    OTHER GAINS (LOSSES)








    Net fair value gains (losses)


    (332)




    2,786



    2,454


    Other


    (2,803)




    11,762



    8,959


    Total other gains (losses)


    (3,135)




    14,548



    11,413


    Income (loss) before income taxes


    31,624


    74,763


    (104,417)


    (66,647)



    (64,677)


    ADJUSTED EARNINGS (LOSS)








    Goodwill impairment




    56,539




    56,539


    Changes in fair value due to changes in valuation inputs and other assumptions


    9,412






    9,412


    Step-up depreciation and amortization


    13,967


    1,788


    2,656




    18,411


    Step-up amortization of sub-servicing contracts


    9,827






    9,827


    Non-cash interest expense


    1,118




    5,224



    6,342


    Share-based compensation expense


    5,128


    2,250


    820


    231



    8,429


    Fair value to cash adjustments for reverse loans




    19,794




    19,794


    Curtailment expense




    22,562




    22,562


    Legal and regulatory matters


    2,218



    2,862




    5,080


    Restructuring costs


    1,983


    321



    724



    3,028


    Other(1)


    1,248


    422


    430


    4,282



    6,382


    Total adjustments


    44,901


    4,781


    105,663


    10,461



    165,806


    Adjusted Earnings (Loss)


    76,525


    79,544


    1,246


    (56,186)



    101,129


    ADJUSTED EBITDA








    Amortization of servicing rights and other fair value adjustments


    115,921



    1,077




    116,998


    Interest expense on debt


    4,717



    1


    68,575



    73,293


    Depreciation and amortization


    8,918


    4,091


    1,298


    7



    14,314


    Other(2)


    (5,408)


    2,543


    99


    87



    (2,679)


    Total adjustments


    124,148


    6,634


    2,475


    68,669



    201,926


    Adjusted EBITDA


    $

    200,673


    $

    86,178


    $

    3,721


    $

    12,483


    $


    $

    303,055



    (1) Includes the net provision for the repurchase of loans sold, non-cash interest income, severance, gain on extinguishment of debt, interest income on unrestricted cash and cash equivalents, the net impact of the Non-Residual Trusts, the provision for loan losses, Residual Trust cash flows, transaction and integration costs; servicing fee economics; and certain non-recurring costs.

    (2) Includes severance, gain on extinguishment of debt, the net impact of the Non-Residual Trusts; transaction and integration costs; and certain non-recurring costs.

     

     

    Reconciliation of GAAP Net Loss to

    Non-GAAP AEBITDA

    (in millions)




    For the Three Months Ended


    For the Six Months Ended



    June 30, 2016


    June 30, 2015


    June 30, 2016


    June 30, 2015

    Net loss


    $

    (232.4)



    $

    (38.1)



    $

    (405.1)



    $

    (69.1)


    Adjust for: income tax expense (benefit)


    (147.2)



    23.1



    (253.4)



    4.4


    Loss before income taxes


    (379.6)



    (15.0)



    (658.5)



    (64.7)


    Add/(Subtract):









    Goodwill impairment


    215.4



    56.5



    215.4



    56.5


    Amortization of servicing rights and other fair value adjustments


    181.2



    0.8



    494.3



    136.2


    Interest expense


    37.2



    39.5



    75.8



    79.6


    Depreciation and amortization


    14.6



    16.1



    29.0



    32.7


    Legal and regulatory matters




    5.2



    2.2



    5.1


    Curtailment expense




    6.5





    22.6


    Share-based compensation expense


    4.9



    5.0



    5.7



    8.4


    Fair value to cash adjustment for reverse loans


    14.5



    24.1



    (3.2)



    19.8


    Restructuring costs


    4.8



    1.9



    8.7



    3.0


    Other(1)


    5.8



    (0.3)



    16.4



    3.8


    Sub-total


    478.4



    155.3



    844.3



    367.7











    Adjusted EBITDA


    $

    98.8



    $

    140.3



    $

    185.8



    $

    303.0



    (1) Includes the net provision for the repurchase of loans sold, non-cash interest income, severance, gain on extinguishment of debt, interest income on unrestricted cash and cash equivalents, the net impact of the Non-Residual Trusts, the provision for loan losses, Residual Trust cash flows, transaction and integration costs; servicing fee economics; and certain non-recurring costs.

     

     

    Reconciliation of GAAP Net Loss to

    Non-GAAP Adjusted Earnings (Loss)

     (in millions, except per share amounts)




    For the Three Months Ended


    For the Six Months Ended



    June 30, 2016


    June 30, 2015


    June 30, 2016


    June 30, 2015

    Net loss


    $

    (232.4)



    $

    (38.1)



    $

    (405.1)



    $

    (69.1)


    Adjust for: income tax expense (benefit)


    (147.2)



    23.1



    (253.4)



    4.4


    Loss before income taxes


    (379.6)



    (15.0)



    (658.5)



    (64.7)


    Add/(Subtract):









    Goodwill impairment


    215.4



    56.5



    215.4



    56.5


    Changes in fair value due to changes in valuation inputs and other assumptions


    118.8



    (64.3)



    359.2



    9.4


    Legal and regulatory matters




    5.2



    2.2



    5.1


    Curtailment expense




    6.5





    22.6


    Step-up depreciation and amortization


    7.7



    8.9



    15.6



    18.4


    Step-up amortization of sub-servicing rights


    1.0



    4.9



    4.0



    9.8


    Share-based compensation expense


    4.9



    5.0



    5.7



    8.4


    Non-cash interest expense


    3.0



    3.0



    5.8



    6.3


    Fair value to cash adjustment for reverse loans


    14.5



    24.1



    (3.2)



    19.8


    Restructuring costs


    4.8



    1.9



    8.7



    3.0


    Other(1)


    13.4



    2.6



    20.3



    6.5


    Adjusted Earnings (Loss)


    $

    3.9



    $

    39.3



    $

    (24.8)



    $

    101.1


    Tax expense (benefit) at estimated effective tax rate of 38%


    1.5



    14.9



    (9.4)



    38.4


    Adjusted Earnings (Loss) after tax


    $

    2.4



    $

    24.4



    $

    (15.4)



    $

    62.7


    Adjusted Earnings (Loss) after taxes per common and common equivalent share


    $

    0.07



    $

    0.65



    $

    (0.43)



    $

    1.66


    Weighted-average common and common equivalent shares outstanding — basic and diluted


    35.8



    37.8



    35.7



    37.7



    (1) Includes severance, gain on extinguishment of debt, the net impact of the Non-Residual Trusts; transaction and integration costs; and certain non-recurring costs.

     

    (1) Goodwill impairment charge of $215.4 million and non-cash charges of $133.3 million from fair value changes due to changes in valuation inputs and other assumptions are reflected net of tax using the Company's estimated effective tax rate of 38%.

    To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/walter-investment-management-corp-announces-second-quarter-2016-highlights-and-financial-results-300310930.html

    SOURCE Walter Investment Management Corp.

    Investor: Kimberly Perez, SVP & Chief Accounting Officer, 813.421.7694, investorrelations@walterinvestment.com