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

    11/09/16

    TAMPA, Fla., Nov. 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 September 30, 2016.

    Third Quarter 2016 Operational Highlights and Recent Developments

    • New leadership and engaged workforce
      • New Chief Executive Officer began September 12, 2016 and restructured management team into a more streamlined and simple organization
    • Capital efficiency
      • Transactions with New Residential Mortgage LLC ("NRM")
        • Closed previously announced ~$32 BN UPB MSR sale to NRM on October 3, 2016 with sub-servicing retained
        • Agreed in October to sell incremental $5.0 BN UPB of MSR to NRM, with sub-servicing expected to be retained(1)
        • Negotiating transaction documents relating to Walter Capital Opportunity ("WCO") asset sale and related transactions(2)
      • Repurchased $47.5 MN principal balance of Convertible Notes during Q3 2016 for $24.8 MN
      • Issuance of $300 million of 2-year term notes under GTAAFT facility
    • Process efficiency
      • New leadership fully engaged in reassessment of high impact areas and timelines

    Third Quarter 2016 Financial Results

    GAAP net loss for the quarter ended September 30, 2016 was $101.8 million, or ($2.82) per share, as compared to a GAAP net loss of $76.9 million, or ($2.04) per share for the quarter ended September 30, 2015. The 2016 net loss includes goodwill and intangible assets impairment charges of $60.6 million after tax, or ($1.68) per share(3), and non-cash charges of $17.0 million after tax, or ($0.47) per share(3), resulting from fair value changes due to changes in valuation inputs and other assumptions. Adjusted EBITDA ("AEBITDA") for the current quarter was $93.7 million and Adjusted Loss was $6.3 million after tax, or ($0.17) per share(3).

    (1) Transaction remains subject to GSE approval and other conditions to closing.
    (2) Transactions subject to negotiation, finalization and execution of transaction documents and, thereafter, GSE approval and other conditions to closing, as applicable.
    (3) Goodwill and intangible assets impairment charges of $97.7 million and non-cash charges of $27.4 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%.

    The goodwill impairment charge incurred in the current quarter relates to the Servicing reporting unit and was primarily the result of lower forecasted cash flows due to continued level of elevated expenses during the third quarter. As a result of this goodwill impairment charge, the Servicing reporting unit no longer has goodwill. The intangible assets impairment was related to the Reverse Mortgage segment and was driven by the shift in strategic direction and reduced profitability expectations for the business.

    "Since joining Walter I have channeled my energy to spending time in our business centers evaluating our organization front to back. Clearly we have work to do in a number of important areas but I was encouraged with what I learned and took quick initial actions to simplify, flatten and focus Walter on our customers, operational fundamentals, integration opportunities across our businesses and, most importantly, execution and performance accountability," said Anthony N. Renzi, Walter Investment's Chief Executive Officer and President. "I believe that the strategic pillars of capital efficiency, process efficiency and new leadership along with an engaged workforce are the foundation to achieving our goals of delivering consistent profitability and sustainable growth.

    We continue to progress on our capital efficiency goals, including the transition to a more fee-for-service business, by completing a series of transactions with New Residential Mortgage, including selling MSRs with sub-servicing retained. These transactions allow us to reduce our interest rate risk exposure and free up capital. Additionally, the cash expected to be generated will enable us to further reduce our debt in the most efficient way possible.

    Finally, we continue to take actions to reduce our cost structure and generate additional ways in which we can leverage Lean process improvements, technologies and automation, and employee training to drive process efficiencies and additional productivity. As we progress on these goals, we consistently focus on our core business fundamentals of caring for customers, managing risk and generating cash, with a strong emphasis on performance management and controls. I am excited to be a part of this organization and am ready to face the challenges ahead, confident that the changes underway will put Walter in the best position to succeed," concluded Mr. Renzi.

    Third Quarter 2016 Financial and Operating Overview

    Total revenue for the third quarter of 2016 was $297.3 million, an increase of $77.9 million as compared to the prior year quarter, primarily due to $113.4 million higher net servicing revenue and fees partially offset by $34.0 million lower fair value gains on reverse loans and liabilities. The increase in net servicing revenue resulted from $138.9 million lower fair value losses on mortgage servicing rights primarily due to market-driven changes in interest rates. Offsetting this increase was a $10.3 million unfavorable fair value change on servicing rights related liabilities, $7.9 million lower incentive and performance fees driven by lower completed modifications and $7.2 million lower servicing fees primarily due to run-off of the servicing portfolio and the sale of servicing rights for which we did not retain sub-servicing.

    Total expenses for the third quarter of 2016 were $465.8 million, an increase of $101.7 million as compared to the prior year quarter, reflecting $97.7 million of goodwill and intangible assets impairment charges in the Servicing and Reverse Mortgage reporting units, respectively.

    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 2.0 million accounts, with a UPB of approximately $235.0 billion as of September 30, 2016. On October 3, 2016, the Company closed on the previously announced sale of mortgage servicing rights to NRM, with sub-servicing retained. The Company also agreed in October to the sale of an incremental $5.0 billion UPB of mortgage servicing rights to NRM, with sub-servicing expected to be retained(1).  Additionally, Walter Investment, WCO and NRM are negotiating transaction documents relating to a sale of substantially all of WCO's assets to NRM, including approximately $24.0 billion UPB of base MSR related to WCO excess servicing spread assets(2). Ditech expects to sub-service all of the mortgage servicing rights to be sold by WCO and Ditech to NRM in connection with these transactions.  During the three months ended September 30, 2016, the Company experienced a net disappearance rate of 17.7%, an increase of 3.3% as compared to the prior year quarter.

    (1) Transaction remains subject to GSE approval and other conditions to closing.
    (2) Transactions subject to negotiation, finalization and execution of transaction documents and, thereafter, GSE approval and other conditions to closing, as applicable.

    The Servicing segment reported $161.6 million of pre-tax loss for the third quarter of 2016 as compared to a pre-tax loss of $152.8 million in the prior year quarter. During the current quarter, the segment generated revenue of $148.9 million, a $117.7 million increase as compared to the third quarter of 2015. This increase was primarily the result of $138.9 million lower fair value losses on our mortgage servicing rights, partially offset by $10.3 million of unfavorable fair value changes on servicing rights related liabilities and $7.5 million lower servicing fees driven by the run-off of the servicing portfolio and the sale of servicing rights for which we did not retain sub-servicing.

    Expense for the Servicing segment was $309.7 million, an increase of $116.9 million as compared to the prior year quarter, reflecting $91.0 million of goodwill impairment charges. Operating expenses were $189.7 million, $25.7 million higher as compared to the prior year quarter, driven by additional costs to support efficiency and technology-related initiatives including our servicing platform conversion as well as higher legal accruals for loss contingencies and other legal expenses. Current quarter expenses also included $16.7 million of interest expense and $12.3 million of depreciation and amortization.

    The segment generated AEBITDA of $48.4 million and Adjusted Loss of $17.7 million, a decline of $40.8 million and $32.3 million, respectively, as compared to the prior year quarter.  These declines were primarily due to a higher level of expenses coupled with lower incentive and performance fees and lower servicing fees.

    Originations

    Ditech is nationally ranked as a top 20 originator by UPB, generating total pull-through adjusted locked volume for the third quarter of $5.8 billion. While total pull-through adjusted locked volumes declined $0.5 billion as compared to the prior year quarter, there was an increase in locked volumes of $0.2 billion in the higher margin consumer lending channel. Funded loans in the current quarter totaled $5.3 billion, a decrease of 23% from the prior year quarter, primarily driven by declines in the correspondent channel. The combined direct margin for the current quarter was 109 bps, an increase of 3 bps from the prior year quarter, consisting of a weighted average of 189 bps direct margin in the consumer lending channel and 53 bps direct margin in the correspondent channel. The Originations business delivered a recapture rate of 16% for the current quarter.

    The Originations segment reported $51.7 million of pre-tax income for the three months ended September 30, 2016, an increase of $15.2 million over the prior year quarter. The segment generated revenue of $133.4 million in the third quarter of 2016, relatively flat as compared to the prior year quarter. Net gains on sales of loans improved $5.7 million as compared to the prior year quarter, primarily due to strong margins driven by a channel mix shift to the higher margin consumer channel, partially offset by $4.3 million lower originations fee income on lower volumes. 

    Expenses for the Originations segment of $81.8 million declined 14% compared to the prior year quarter, driven by $5.6 million lower salaries and benefits on lower average headcount and $4.6 million lower general and administrative expenses primarily driven by a lower volume of loan fundings and decreased advertising. Expenses for the quarter also included $8.7 million of interest expense and $2.3 million of depreciation and amortization.

    The segment generated Adjusted Earnings of $55.7 million and AEBITDA of $58.0 million for the third quarter of 2016, an increase of $11.8 million and $7.0 million, respectively as compared to the prior year quarter, driven primarily by lower expenses.

    Reverse Mortgage

    The Reverse Mortgage business grew its serviced portfolio 5% as compared to the prior year quarter to $20.8 billion of UPB at September 30, 2016. During the third quarter, the business securitized $246 million of HECM loans.

    The Reverse Mortgage segment reported $23.0 million of pre-tax loss in the current quarter, as compared to $22.5 million of pre-tax income in the prior year quarter. The segment generated revenue of $27.0 million for the quarter, a decline of $38.4 million as compared to the prior year quarter primarily due to $34.0 million of lower net fair value gains on reverse loans and related HMBS obligations largely resulting from a flattening in the interest rate curve in 2016 as compared to 2015.  Current quarter revenues included $18.6 million net fair value gains on reverse loans and related HMBS obligations, $7.2 million in net servicing revenue and fees and $1.2 million of other revenues.  Total expenses for the third quarter of $50.0 million increased $7.2 million as compared to the prior year quarter, primarily driven by $6.7 million of intangible assets impairment charges.

    The segment reported an Adjusted Loss of $12.4 million and AEBITDA of ($10.9) million for the third quarter of 2016, a decrease of approximately $13.2 million in each metric as compared to the prior year period, reflecting lower securitization volumes driving 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 $25.3 million of pre-tax loss for the third quarter of 2016, an improvement of $12.5 million as compared to the prior year quarter, primarily due to a $13.7 million net gain on debt extinguishment largely attributable to the repurchase of a portion of our Convertible Notes with a carrying value of $39.3 million. The segment reported nominal revenue in both the current and prior year quarters. Total expenses of $36.1 million in the current quarter decreased 16% as compared to the prior year quarter, driven by the resolution of certain matters within the Investment Management business and $1.4 million lower interest expense.

    The Other non-reportable segment had an Adjusted Loss of $35.7 million and AEBITDA of ($1.7) million for the third quarter of 2016 as compared to an Adjusted Loss of $32.6 million and AEBITDA of $3.1 million in the third quarter of 2015.

    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 5,000 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 third quarter results and other general business matters during a conference call and live webcast to be held on Wednesday, November 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," "seeks," "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, June 30, 2016 and September 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 laws, rules, regulations and contractual commitments 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 laws, rules, regulations and contracts;
    • 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  our ability to comply with the various contracts to which we are a party, and reputational risks;
    • risks related to the significant amount of senior management turnover recently experienced by the Company;
    • risks related to our substantial levels of indebtedness, including our ability to comply with covenants contained in our debt agreements or obtain any necessary waivers or amendments, 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; execute and realize planned operational improvements and efficiencies; make arrangements with potential capital partners; 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; and develop new business, including acquisitions of MSRs or entering into new subservicing arrangements;
    • uncertainties relating to the potential sale of substantially all of our insurance business;
    • 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 September 30, 2017, 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 or more current technology such as MSP,  the use of vendors (including offshore 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;
    • the risk that we could have an "ownership change" under Section 382 of the Internal Revenue Code of 1986, as amended, that could limit our ability to use tax losses to offset future taxable income;
    • 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, June 30, 2016 and September 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 September 30,


    For the Nine Months
     Ended September 30,



    2016


    2015


    2016


    2015

    REVENUES









    Net servicing revenue and fees


    $

    111,629



    $

    (1,771)



    $

    37,803



    $

    313,031


    Net gains on sales of loans


    122,014



    116,218



    306,667



    360,844


    Interest income on loans


    11,332



    12,410



    35,352



    62,537


    Net fair value gains on reverse loans and related HMBS
    obligations


    18,627



    52,644



    61,485



    90,233


    Insurance revenue


    10,000



    8,763



    31,644



    34,323


    Other revenues


    23,728



    31,129



    78,623



    81,715


    Total revenues


    297,330



    219,393



    551,574



    942,683











    EXPENSES









    Salaries and benefits


    133,199



    142,088



    399,519



    432,473


    General and administrative


    151,792



    132,067



    417,174



    402,814


    Goodwill and intangible assets impairment


    97,716





    313,128



    56,539


    Interest expense


    65,302



    66,728



    193,950



    210,264


    Depreciation and amortization


    16,580



    20,646



    45,543



    53,371


    Other expenses, net


    1,206



    2,595



    5,609



    8,043


    Total expenses


    465,795



    364,124



    1,374,923



    1,163,504











    OTHER GAINS (LOSSES)









    Net gains on extinguishment


    13,734





    14,662




    Other net fair value gains (losses)


    (3,302)



    1,119



    (6,265)



    3,573


    Other


    (150)



    12,054



    (1,706)



    21,013


    Total other gains


    10,282



    13,173



    6,691



    24,586











    Loss before income taxes


    (158,183)



    (131,558)



    (816,658)



    (196,235)


    Income tax benefit


    (56,357)



    (54,630)



    (309,729)



    (50,180)


    Net loss


    $

    (101,826)



    $

    (76,928)



    $

    (506,929)



    $

    (146,055)











    Comprehensive loss


    $

    (101,840)



    $

    (76,793)



    $

    (506,902)



    $

    (145,804)











    Net loss


    $

    (101,826)



    $

    (76,928)



    $

    (506,929)



    $

    (146,055)











    Basic and diluted loss per common and common equivalent share


    $

    (2.82)



    $

    (2.04)



    $

    (14.15)



    $

    (3.87)











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


    36,144



    37,802



    35,828



    37,760


     

     

    Walter Investment Management Corp. and Subsidiaries
    Consolidated Balance Sheets
    (in thousands, except share and per share data)




    September 30,
     2016


    December 31,
     2015



    (unaudited)



    ASSETS





    Cash and cash equivalents


    $

    285,682



    $

    202,828


    Restricted cash and cash equivalents


    300,268



    708,099


    Residential loans at amortized cost, net (includes $3,224 and $4,457 in allowance for loan
          losses at September 30, 2016 and December 31, 2015, respectively)


    616,936



    541,406


    Residential loans at fair value


    12,640,302



    12,673,439


    Receivables, net (includes $15,010 and $16,542 at fair value at September 30, 2016 and 
         December 31, 2015, respectively)


    196,939



    214,398


    Servicer and protective advances, net (includes $124,055 and $120,338 in allowance for
          uncollectible advances at September 30, 2016 and December 31, 2015, respectively)


    1,274,641



    1,595,911


    Servicing rights, net (includes $1,195,014 and $1,682,016 at fair value at September 30, 
         2016 and December 31, 2015, respectively)


    1,284,543



    1,788,576


    Goodwill


    65,302



    367,911


    Intangible assets, net


    68,075



    84,038


    Premises and equipment, net


    94,586



    106,481


    Deferred tax assets, net


    425,878



    108,050


    Other assets (includes $80,435 and $58,512 at fair value at September 30, 2016 and
          December 31, 2015, respectively)


    255,259



    200,364


    Total assets


    $

    17,508,411



    $

    18,591,501







    LIABILITIES AND STOCKHOLDERS' EQUITY





    Payables and accrued liabilities (includes $18,522 and $6,475 at fair value at September 30, 2016 and 
         December 31, 2015, respectively)


    $

    763,950



    $

    639,980


    Servicer payables


    141,422



    603,692


    Servicing advance liabilities


    1,023,770



    1,229,280


    Warehouse borrowings


    1,362,209



    1,340,388


    Servicing rights related liabilities at fair value


    119,267



    117,000


    Corporate debt


    2,124,541



    2,157,424


    Mortgage-backed debt (includes $529,373 and $582,340 at fair value at September 30, 2016
          and December 31, 2015, respectively)


    970,065



    1,051,679


    HMBS related obligations at fair value


    10,699,720



    10,647,382


    Total liabilities


    17,204,944



    17,786,825







    Commitments and contingencies (Note 15)










    Stockholders' equity:





    Preferred stock, $0.01 par value per share:





    Authorized - 10,000,000 shares





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





    Common stock, $0.01 par value per share:





    Authorized - 90,000,000 shares





    Issued and outstanding - 36,311,037 and 35,573,405 shares at September 30, 2016 
         and December 31, 2015, respectively


    363



    355


    Additional paid-in capital


    597,139



    591,454


    Retained earnings (accumulated deficit)


    (294,875)



    212,054


    Accumulated other comprehensive income


    840



    813


    Total stockholders' equity


    303,467



    804,676


    Total liabilities and stockholders' equity


    $

    17,508,411



    $

    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 segment 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 and intangible assets 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 segment level, plus; amortization of servicing rights and other fair value adjustments; interest expense on corporate debt; depreciation and amortization; goodwill and intangible assets 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.

    The Company intends to revise its method of calculating Adjusted Earnings (Loss) beginning with its Form 10-K for the fiscal year ended December 31, 2016 (and related earnings materials) to eliminate adjustments for step-up depreciation and amortization, which represents depreciation and amortization costs related to the increased basis in assets (including servicing rights and sub-servicing contracts) acquired within business combination transactions.

    • 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 September 30, 2016
    (in thousands)




    Servicing

    Originations

    Reverse Mortgage

    Other

    Eliminations

    Total Consolidated

    REVENUES:








    Servicing revenue and fees


    $

    107,473


    $


    $

    7,155


    $


    $

    (2,999)


    $

    111,629


    Gain on loan sales, net


    (2,271)


    123,285




    1,000


    122,014


    Interest income on loans


    11,320


    12





    11,332


    Insurance revenue


    10,000






    10,000


    Net fair value gains on reverse loans and related
    HMBS obligations




    18,627




    18,627


    Other income


    22,351


    10,143


    1,241


    (194)


    (9,813)


    23,728


    Total revenues


    148,873


    133,440


    27,023


    (194)


    (11,812)


    297,330


    EXPENSES:








    Interest expense


    16,657


    8,718


    2,941


    36,986



    65,302


    Depreciation and amortization


    12,322


    2,341


    1,917




    16,580


    Goodwill and intangible assets impairment


    90,981



    6,735




    97,716


    Other expenses, net


    189,700


    70,709


    38,453


    (853)


    (11,812)


    286,197


    Total expenses


    309,660


    81,768


    50,046


    36,133


    (11,812)


    465,795


    OTHER GAINS (LOSSES)








    Gain (loss) on extinguishment of debt





    13,734



    13,734


    Net fair value gains (losses)


    (644)




    (2,658)



    (3,302)


    Other


    (150)






    (150)


    Total other gains (losses)


    (794)




    11,076



    10,282


    Income (loss) before income taxes


    (161,581)


    51,672


    (23,023)


    (25,251)



    (158,183)


    ADJUSTED EARNINGS (LOSS)








    Goodwill and intangible assets impairment


    90,981



    6,735




    97,716


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


    26,672






    26,672


    Step-up depreciation and amortization


    6,632


    156


    966




    7,754


    Step-up amortization of sub-servicing rights


    4,335






    4,335


    Non-cash interest expense


    829




    2,835



    3,664


    Share-based compensation expense


    1,178


    357


    157


    259



    1,951


    Fair value to cash adjustment for reverse loans




    690




    690


    Restructuring and exit costs


    1,396


    (16)


    160


    1,102



    2,642


    Other(1)


    11,842


    3,488


    1,961


    (14,666)



    2,625


    Total adjustments


    143,865


    3,985


    10,669


    (10,470)



    148,049


    Adjusted Earnings (Loss)


    (17,716)


    55,657


    (12,354)


    (35,721)



    (10,134)


    ADJUSTED EBITDA








    Amortization of servicing rights and other fair value
    adjustments


    61,170



    432




    61,602


    Interest expense on debt


    1,518




    34,152



    35,670


    Depreciation and amortization


    5,690


    2,185


    951




    8,826


    Other(2)


    (2,215)


    119


    32


    (146)



    (2,210)


    Total adjustments


    66,163


    2,304


    1,415


    34,006



    103,888


    Adjusted EBITDA


    $

    48,447


    $

    57,961


    $

    (10,939)


    $

    (1,715)


    $


    $

    93,754



    (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 September 30, 2015
    (in thousands)




    Servicing

    Originations

    Reverse Mortgage

    Other

    Eliminations

    Total Consolidated

    REVENUES:








    Servicing revenue and fees


    $

    (9,859)


    $


    $

    11,247


    $


    $

    (3,159)


    $

    (1,771)


    Gain on loan sales, net


    (2,286)


    117,580




    924


    116,218


    Interest income on loans


    12,397


    13





    12,410


    Insurance revenue


    8,763






    8,763


    Net fair value gains on reverse loans and related
    HMBS obligations




    52,644




    52,644


    Other income


    22,171


    14,433


    1,504


    739


    (7,718)


    31,129


    Total revenues


    31,186


    132,026


    65,395


    739


    (9,953)


    219,393


    EXPENSES:








    Interest expense


    17,303


    10,211


    843


    38,371



    66,728


    Depreciation and amortization


    11,437


    7,204


    2,001


    4



    20,646


    Other expenses, net


    163,992


    78,093


    40,008


    4,610


    (9,953)


    276,750


    Total expenses


    192,732


    95,508


    42,852


    42,985


    (9,953)


    364,124


    OTHER GAINS (LOSSES)








    Net fair value gains (losses)


    (213)




    1,332



    1,119


    Other


    8,937




    3,117



    12,054


    Total other gains (losses)


    8,724




    4,449



    13,173


    Income (loss) before income taxes


    (152,822)


    36,518


    22,543


    (37,797)



    (131,558)


    ADJUSTED EARNINGS (LOSS)








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


    147,900






    147,900


    Step-up depreciation and amortization


    6,945


    5,068


    1,329




    13,342


    Step-up amortization of sub-servicing contracts


    4,737






    4,737


    Non-cash interest expense


    375




    2,759



    3,134


    Share-based compensation expense


    3,346


    1,487


    929


    154



    5,916


    Fair value to cash adjustments for reverse loans




    (27,441)




    (27,441)


    Curtailment expense




    450




    450


    Legal and regulatory matters




    2,158




    2,158


    Restructuring and exit costs


    3,756


    664


    973


    127



    5,520


    Other(1)


    335


    137


    26


    2,188



    2,686


    Total adjustments


    167,394


    7,356


    (21,576)


    5,228



    158,402


    Adjusted Earnings (Loss)


    14,572


    43,874


    967


    (32,569)



    26,844


    ADJUSTED EBITDA








    Amortization of servicing rights and other fair value
    adjustments


    68,098



    499




    68,597


    Interest expense on debt


    2,270



    1


    35,612



    37,883


    Depreciation and amortization


    4,492


    2,136


    672


    4



    7,304


    Other(2)


    (232)


    4,950


    76


    22



    4,816


    Total adjustments


    74,628


    7,086


    1,248


    35,638



    118,600


    Adjusted EBITDA


    $

    89,200


    $

    50,960


    $

    2,215


    $

    3,069


    $


    $

    145,444



    (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 Nine Months Ended September 30, 2016
    (in thousands)




    Servicing

    Originations

    Reverse Mortgage

    Other

    Eliminations

    Total Consolidated

    REVENUES:








    Servicing revenue and fees


    $

    25,954


    $


    $

    21,065


    $


    $

    (9,216)


    $

    37,803


    Gain on loan sales, net


    (7,998)


    311,625




    3,040


    306,667


    Interest income on loans


    35,315


    37





    35,352


    Insurance revenue


    31,644






    31,644


    Net fair value gains on reverse loans and related
    HMBS obligations




    61,485




    61,485


    Other income


    73,516


    32,264


    4,705


    (119)


    (31,743)


    78,623


    Total revenues


    158,431


    343,926


    87,255


    (119)


    (37,919)


    551,574


    EXPENSES:








    Interest expense


    53,549


    24,729


    6,870


    108,802



    193,950


    Depreciation and amortization


    33,807


    6,934


    4,792


    10



    45,543


    Goodwill and intangible assets impairment


    306,393



    6,735




    313,128


    Other expenses, net


    537,510


    198,575


    112,774


    11,362


    (37,919)


    822,302


    Total expenses


    931,259


    230,238


    131,171


    120,174


    (37,919)


    1,374,923


    OTHER GAINS (LOSSES)








    Gain (loss) on extinguishment of debt





    14,662



    14,662


    Net fair value gains (losses)


    (418)




    (5,847)



    (6,265)


    Other


    (682)



    (1,024)




    (1,706)


    Total other gains (losses)


    (1,100)



    (1,024)


    8,815



    6,691


    Income (loss) before income taxes


    (773,928)


    113,688


    (44,940)


    (111,478)



    (816,658)


    ADJUSTED EARNINGS (LOSS)








    Goodwill and intangible assets impairment


    306,393



    6,735




    313,128


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


    385,826






    385,826


    Step-up depreciation and amortization


    19,967


    608


    2,755




    23,330


    Step-up amortization of sub-servicing rights


    8,313






    8,313


    Non-cash interest expense


    818




    8,642



    9,460


    Share-based compensation expense


    5,119


    590


    1,080


    867



    7,656


    Fair value to cash adjustment for reverse loans




    (2,507)




    (2,507)


    Legal and regulatory matters


    2,196






    2,196


    Restructuring and exit costs


    7,403


    2,083


    567


    1,329



    11,382


    Other(1)


    18,215


    5,003


    4,407


    (4,670)



    22,955


    Total adjustments


    754,250


    8,284


    13,037


    6,168



    781,739


    Adjusted Earnings (Loss)


    (19,678)


    121,972


    (31,903)


    (105,310)



    (34,919)


    ADJUSTED EBITDA








    Amortization of servicing rights and other fair value
    adjustments


    191,422



    1,338




    192,760


    Interest expense on debt


    5,504




    100,161



    105,665


    Depreciation and amortization


    13,840


    6,326


    2,037


    10



    22,213


    Other(2)


    (3,317)


    (3,093)


    86


    201



    (6,123)


    Total adjustments


    207,449


    3,233


    3,461


    100,372



    314,515


    Adjusted EBITDA


    $

    187,771


    $

    125,205


    $

    (28,442)


    $

    (4,938)


    $


    $

    279,596



    (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 Nine Months Ended September 30, 2015
    (in thousands)




    Servicing

    Originations

    Reverse Mortgage

    Other

    Eliminations

    Total Consolidated

    REVENUES:








    Servicing revenue and fees


    $

    286,405


    $


    $

    34,568


    $


    $

    (7,942)


    $

    313,031


    Gain on loan sales, net


    1,418


    358,600


    (98)



    924


    360,844


    Interest income on loans


    62,487


    50





    62,537


    Insurance revenue


    34,323






    34,323


    Net fair value gains on reverse loans and related
    HMBS obligations




    90,233




    90,233


    Other income


    64,512


    32,378


    4,791


    4,886


    (24,852)


    81,715


    Total revenues


    449,145


    391,028


    129,494


    4,886


    (31,870)


    942,683


    EXPENSES:








    Interest expense


    67,062


    27,958


    3,074


    112,170



    210,264


    Depreciation and amortization


    34,322


    13,083


    5,955


    11



    53,371


    Goodwill impairment




    56,539




    56,539


    Other expenses, net


    474,548


    238,706


    145,800


    16,146


    (31,870)


    843,330


    Total expenses


    575,932


    279,747


    211,368


    128,327


    (31,870)


    1,163,504


    OTHER GAINS (LOSSES)








    Net fair value gains (losses)


    (545)




    4,118



    3,573


    Other


    6,134




    14,879



    21,013


    Total other gains (losses)


    5,589




    18,997



    24,586


    Income (loss) before income taxes


    (121,198)


    111,281


    (81,874)


    (104,444)



    (196,235)


    ADJUSTED EARNINGS (LOSS)








    Goodwill impairment




    56,539




    56,539


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


    157,312






    157,312


    Step-up depreciation and amortization


    20,912


    6,856


    3,985




    31,753


    Step-up amortization of sub-servicing contracts


    14,564






    14,564


    Non-cash interest expense


    1,493




    7,983



    9,476


    Share-based compensation expense


    8,474


    3,737


    1,749


    385



    14,345


    Fair value to cash adjustments for reverse loans




    (7,647)




    (7,647)


    Curtailment expense




    23,012




    23,012


    Legal and regulatory matters


    2,218



    5,020




    7,238


    Restructuring and exit costs


    5,739


    985


    973


    851



    8,548


    Other(1)


    1,583


    559


    456


    6,470



    9,068


    Total adjustments


    212,295


    12,137


    84,087


    15,689



    324,208


    Adjusted Earnings (Loss)


    91,097


    123,418


    2,213


    (88,755)



    127,973


    ADJUSTED EBITDA








    Amortization of servicing rights and other fair value
    adjustments


    184,019



    1,576




    185,595


    Interest expense on debt


    6,987



    2


    104,187



    111,176


    Depreciation and amortization


    13,410


    6,227


    1,970


    11



    21,618


    Other(2)


    (5,640)


    7,493


    175


    109



    2,137


    Total adjustments


    198,776


    13,720


    3,723


    104,307



    320,526


    Adjusted EBITDA


    $

    289,873


    $

    137,138


    $

    5,936


    $

    15,552


    $


    $

    448,499



    (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 Nine Months Ended



    September 30, 2016


    September 30,
    2015


    September 30, 2016


    September 30, 2015

    Net loss


    $

    (101.8)



    $

    (76.9)



    $

    (506.9)



    $

    (146.0)


    Adjust for: income tax expense (benefit)


    (56.4)



    (54.7)



    (309.7)



    (50.2)


    Loss before income taxes


    (158.2)



    (131.6)



    (816.6)



    (196.2)


    Add/(Subtract):









    Goodwill and intangible assets impairment


    97.7





    313.1



    56.5


    Amortization of servicing rights and other fair value adjustments


    92.6



    221.2



    586.9



    357.5


    Interest expense


    39.3



    41.0



    115.1



    120.7


    Depreciation and amortization


    16.6



    20.6



    45.5



    53.4


    Legal and regulatory matters




    2.2



    2.2



    7.2


    Curtailment expense




    0.5





    23.0


    Share-based compensation expense


    2.0



    5.9



    7.7



    14.3


    Fair value to cash adjustment for reverse loans


    0.7



    (27.4)



    (2.5)



    (7.6)


    Restructuring and exit costs


    2.6



    5.5



    11.4



    8.5


    Other(1)


    0.4



    7.5



    16.8



    11.2


    Sub-total


    251.9



    277.0



    1,096.2



    644.7











    Adjusted EBITDA


    $

    93.7



    $

    145.4



    $

    279.6



    $

    448.5



    (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 Nine Months Ended



    September 30,
    2016


    September 30,
    2015


    September 30,
    2016


    September 30,
    2015

    Net loss


    $

    (101.8)



    $

    (76.9)



    $

    (506.9)



    $

    (146.0)


    Adjust for: income tax expense (benefit)


    (56.4)



    (54.7)



    (309.7)



    (50.2)


    Loss before income taxes


    (158.2)



    (131.6)



    (816.6)



    (196.2)


    Add/(Subtract):









    Goodwill and intangible assets impairment


    97.7





    313.1



    56.5


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


    26.7



    147.9



    385.8



    157.3


    Legal and regulatory matters




    2.2



    2.2



    7.2


    Curtailment expense




    0.5





    23.0


    Step-up depreciation and amortization


    7.8



    13.3



    23.3



    31.8


    Step-up amortization of sub-servicing rights


    4.3



    4.7



    8.3



    14.6


    Share-based compensation expense


    2.0



    5.9



    7.7



    14.3


    Non-cash interest expense


    3.7



    3.1



    9.5



    9.5


    Fair value to cash adjustment for reverse loans


    0.7



    (27.4)



    (2.5)



    (7.6)


    Restructuring and exit costs


    2.6



    5.5



    11.4



    8.5


    Other(1)


    2.6



    2.7



    22.9



    9.1


    Adjusted Earnings (Loss)


    $

    (10.1)



    $

    26.8



    $

    (34.9)



    $

    128.0


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


    (3.8)



    10.2



    (13.3)



    48.7


    Adjusted Earnings (Loss) after tax


    $

    (6.3)



    $

    16.6



    $

    (21.6)



    $

    79.3


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


    $

    (0.17)



    $

    0.44



    $

    (0.60)



    $

    2.10


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


    36.1



    37.8



    35.8



    37.8



    (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.

     

    To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/walter-investment-management-corp-announces-third-quarter-2016-highlights-and-financial-results-300359685.html

    SOURCE Walter Investment Management Corp.

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