DETROIT, Feb. 25, 2021 /PRNewswire/ -- Rocket Companies,
Inc. (NYSE: RKT) ("Rocket Companies" or the "Company"), a
Detroit-based holding company
consisting of tech-driven real estate, mortgage and eCommerce
businesses – including Rocket Mortgage, Amrock, Rocket Homes and
Rocket Auto – today announced results for the quarter and year
ended December 31, 2020.
"Rocket Companies' record-breaking fourth quarter and full year
2020 results demonstrate the sheer power of the technology platform
we have built and refined for more than two decades," said
Jay Farner, Rocket Companies' Vice
Chairman and CEO. "In the midst of a pandemic, we successfully
drove growth in every segment of our business, while never losing
focus on meeting the needs of our team members, clients and
communities. As a result of our highly profitable and capital light
business model, I'm excited to announce that the Board of Directors
has approved a significant special dividend of $1.11 per share. We are delighted to be able to
share our success with those who have supported our vision and
share our excitement for the future.
"As more and more consumers shift their preferences toward an
increasingly digital experience, we are better positioned than ever
to provide them with innovative, technology-driven solutions that
simplify even the most stressful and complex transactions. Looking
ahead, we will continue to invest in our world-class technology
driven solutions that allow us to diversify our scalable platform
business model."
Fourth Quarter
Financial Summary1
|
|
ROCKET
COMPANIES
|
(Units in '000s, $
amounts in millions, except per share)
|
|
|
Q4-20
|
|
Q4-19
|
|
Change
Q4-20 vs
Q4-19
|
|
FY
20
|
|
FY
19
|
|
Change
FY 20 vs FY 19
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
Total revenue,
net
|
$
|
4,699
|
|
|
$
|
1,928
|
|
|
144
|
%
|
|
$
|
15,735
|
|
|
$
|
5,117
|
|
|
208
|
%
|
Total
expenses
|
$
|
1,810
|
|
|
$
|
1,171
|
|
|
55
|
%
|
|
$
|
6,204
|
|
|
$
|
4,213
|
|
|
47
|
%
|
Net income
|
$
|
2,841
|
|
|
$
|
754
|
|
|
277
|
%
|
|
$
|
9,399
|
|
|
$
|
897
|
|
|
948
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Revenue
|
$
|
4,775
|
|
|
$
|
1,825
|
|
|
162
|
%
|
|
$
|
16,938
|
|
|
$
|
5,907
|
|
|
187
|
%
|
Adjusted Net
Income
|
$
|
2,263
|
|
|
$
|
503
|
|
|
350
|
%
|
|
$
|
8,177
|
|
|
$
|
1,306
|
|
|
526
|
%
|
Adjusted
EBITDA
|
$
|
3,116
|
|
|
$
|
724
|
|
|
330
|
%
|
|
$
|
11,132
|
|
|
$
|
1,946
|
|
|
472
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
EPS
|
$
|
1.09
|
|
|
N/A
|
|
N/A
|
|
$
|
1.76
|
|
|
N/A
|
|
N/A
|
Adjusted Diluted
EPS
|
$
|
1.14
|
|
|
N/A
|
|
N/A
|
|
$
|
4.11
|
|
|
N/A
|
|
N/A
|
|
|
(Units in '000s, $
amounts in millions)
|
|
|
Q4-20
|
|
Q4-19
|
|
Change
Q4-20 vs
Q4-19
|
|
FY
20
|
|
FY
19
|
|
Change
FY 20 vs FY 19
|
Select
Metrics
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
Closed loan
origination volume
|
$
|
107,199
|
|
|
$
|
50,833
|
|
|
111
|
%
|
|
$
|
320,209
|
|
|
$
|
145,180
|
|
|
121
|
%
|
Gain on sale
margin
|
4.41
|
%
|
|
3.41
|
%
|
|
29
|
%
|
|
4.46
|
%
|
|
3.19
|
%
|
|
40
|
%
|
Net rate lock
volume
|
$
|
95,971
|
|
|
$
|
43,879
|
|
|
119
|
%
|
|
$
|
338,667
|
|
|
$
|
152,184
|
|
|
123
|
%
|
Amrock closings
(units)
|
347.5
|
|
|
165.2
|
|
|
110
|
%
|
|
1,040.1
|
|
|
444.9
|
|
|
134
|
%
|
Rocket Auto car sales
(units)
|
9.4
|
|
|
7.2
|
|
|
31
|
%
|
|
32.1
|
|
|
20.0
|
|
|
61
|
%
|
Fourth Quarter Highlights
During the fourth quarter of 2020, Rocket Companies:
- Grew total revenue, net, for Rocket Companies to $4.7 billion from $1.9
billion in Q4 2019 and Adjusted Revenue to $4.8 billion from $1.8
billion in Q4 2019.
- Grew net income to $2.8 billion
from $0.8 billion in Q4 2019 and
Adjusted Net Income to $2.3 billion
from $0.5 billion in Q4 2019.
- Generated record closed loan origination volume of $107.2 billion and net rate lock volume of
$96.0 billion in the fourth quarter
of 2020, which represented improvements of 111% and 119%,
respectively, as compared to the fourth quarter of 2019.
- Increased gain on sale margin by 100 basis points
year-over-year to 4.41%.
- Rocket Auto, our automotive retail marketplace, facilitated the
sale of 9,400 auto units, up more than 2,000 units as compared to
fourth quarter of 2019.
- Rocket Homes, our digital platform creating a seamless,
integrated home buying and selling experience, assisted clients
with nearly $1.6 billion of real
estate transactions during the fourth quarter of 2020.
- Increased other income to $549.9
million from $265.7 million in
Q4 2019, including record growth from Amrock's title insurance
services, property valuation, and settlement services which
increased to $448.2 million in Q4
2020 from $197.9 million in Q4
2019.
Full Year Highlights
During 2020, Rocket Companies:
- Grew total revenue, net, to $15.7
billion from $5.1 billion in
2019 and Adjusted Revenue to $16.9
billion from $5.9 billion in
2019.
- Increased net income to $9.4
billion from $0.9 billion in
2019 and Adjusted Net Income to $8.2
billion from $1.3 billion in
2019.
- Generated record closed loan origination volume of $320.2 billion and net rate lock volume of
$338.7 billion, which represented
year-over-year improvements of 121% and 123%, respectively.
- Increased gain on sale margin by 127 basis points
year-over-year to 4.46%.
- Rocket Auto, our automotive retail marketplace, facilitated
more than $750 million in Gross
Merchandise Value2 (GMV) of automotive e-commerce
transactions during 2020. Rocket Auto facilitated the sale of over
32,000 auto units in 2020, representing year-over-year unit growth
of 61%.
- Increased other income to $1.8
billion from $0.7 billion in
2019, including record growth from Amrock which increased to
$1.3 billion in 2020 from
$0.6 billion in 2019.
Other Highlights
Platform Reach
- The Rocket Companies' platform generated 153 million unique
visitors in 2020, a 61% increase from 2019. Our vast data lake
includes proprietary first-party data on more than 58 million
consumers and extends to 220 million consumers in total or 85% of
the population of adults in the United
States. Rocket Companies' partner relationships include over
25,000 real estate agents, 50,000 mortgage professionals, and 9,000
partners and our internal Rocket Cloud Force3 includes
more than 6,600 professionals.
- Using our data science capabilities and leveraging our data
lake, we recently crossed an important milestone, generating more
than $75 billion in application
volume over the past two years.
- Formed a partnership with Morgan Stanley Private Bank by which
Rocket Mortgage will originate and service conforming mortgages for
Morgan Stanley and E*Trade clients.4
- Our 2021 Super Bowl ads, featuring Tracy Morgan, Liza
Koshy, Joey Bosa and
Dave Bautista, were ranked #1 and #2
by USA Today's Ad Meter.
- We launched a national mortgage broker directory on
RocketMortgage.com, further enabling clients to easily start the
mortgage process through the Rocket platform in the way that works
best for them, whether that is through a self-serving digital
experience, interacting with one of our mortgage bankers on the
phone or via chat, or connecting with a local mortgage broker. The
directory includes nearly every broker in the United States.
- Our net client retention rate was 91% over the 12 months ended
December 31, 2020. There is a strong
correlation between this metric and client lifetime value and we
believe our net client retention rate is superior to many
subscription-based businesses.
Product & Platform Development
- Our best in class technology platform continues to allow us to
scale profitably and support life's most complex transactions as
reflected in the record levels of clients served and financial
results achieved during 2020.
- Rocket Companies deployed nearly 4,500 new product features
during 2020, implementing improvements to our digital products and
platform infrastructure every 28 minutes on average throughout the
year.
- More than 25,000 real estate agents have signed up for Rocket
Pro Insight (RPI) following its launch in October 2020. RPI is our newly launched digital
platform providing real estate agents with real-time updates on the
status of their clients' mortgages and the ability to assist in the
mortgage process.
- During the fourth quarter, we generated a record level of
purchase closed loan volume through our self-serve digital
experience; throughout 2020 the digital experience has been our
fastest growing channel.
- We recently launched an initial pilot of Rocket Logic, our
in-house created, next generation workflow management platform. The
new platform guides users through the next best action, resulting
in faster, more accurate workflows. To date, transactions flowing
through Rocket Logic are processed 20% faster than transactions
outside of this workflow management platform.
- Rocket Companies continues to drive automation in our
operational workflows, expanding our ethical AI and robotic process
automation solutions to automate decisions and manual processes.
We've tripled the volume of documents we can process automatically
through machine learning and advanced optical character recognition
(OCR) approaches, driving operational scale and efficiency, while
reducing time to close for our clients.
- Nexsys Technologies, a subsidiary company that provides a suite
of digital closing solutions, released Clear HOI, a groundbreaking
homeowners insurance verification tool, to all mortgage lenders.
Clear HOI digitizes and automates the communication between
mortgage lenders and homeowners insurance companies enabling this
step to be completed in a matter of minutes. Historically this
process has required manual confirmation and could take days to
complete.
Supporting Our Communities
- In November, we launched a second national marketing campaign
to raise awareness around Built for Zero - a national movement to
end veteran and chronic homelessness. Through support of Built for
Zero, Rocket Mortgage has partnered with more than 80 communities
to connect people with permanent supportive housing. Already, 12
communities have ended veteran homelessness, five communities have
ended chronic homelessness, and three have ended both. In our home
city of Detroit, our efforts have
contributed to a 40% decrease in veteran homelessness in the three
years since the launch of Built for Zero in our community.
- Earlier this month we announced an expansion of our partnership
with HomeFree-USA, which will
continue financial education and career preparation through its
flagship education initiative, The Center for Financial Advancement
at six historically Black colleges and universities (HBCUs).
Through this partnership, we are developing a pipeline to bring
diverse new talent to Rocket Companies by investing in career
preparation that will allow HBCU students to access fields where
they are traditionally underrepresented.
- Rocket Companies has been selected by the City of Detroit to manage all logistics for
the city's COVID vaccination program for residents.
Special Dividend
- Our Company's Board of Directors declared a special dividend of
$1.11 per share payable on
March 23, 2021 to holders of our
Class A common stock of record at the close of business on
March 9, 2021. During the year, we
achieved significant growth and generated capital at a rate where
we were able to fully re-invest in our business and have excess
funds available to distribute to our shareholders. We will fund the
special dividend from cash distributions of approximately
$2.2 billion.
First Quarter 2021 Outlook
We expect the following ranges in Q1 2021:
- Closed loan volume of between $98
billion and $103 billion, or
an increase of 90% to 99% compared to $51.7
billion in the first quarter of 2020.
- Net rate lock volume of between $88
billion and $95 billion, which
would represent an increase of 57% to 70% compared to $56.0 billion in the first quarter of 2020.
- Gain on sale margins of 3.60% to 3.90%, which would be an
improvement of 35 to 65 basis points compared to 3.25% in the first
quarter of 2020.
Direct-to-Consumer
In the Direct-to-Consumer segment, clients have the ability to
interact with the Rocket Mortgage app and/or with the Company's
mortgage bankers. The Company markets to potential clients in this
segment through various performance marketing channels. The
Direct-to-Consumer segment derives revenue from originating,
closing, selling and servicing predominantly agency-conforming
loans, which are pooled and sold to the secondary market. This also
includes providing title insurance services, appraisals and
settlement services to these clients as part of the Company's
end-to-end mortgage origination experience it provides to its
clients. Servicing activities are fully allocated to the
Direct-to-Consumer segment as they are viewed as an extension of
the client experience with the primary objective being to establish
and maintain positive, regular touchpoints with our clients, which
positions the Company to have high retention and to recapture the
clients' next refinance or purchase mortgage transaction. These
activities position the Company to be the natural choice for
clients' next refinance, purchase, personal loan, and auto
transactions.
DIRECT TO
CONSUMER5
|
($ amounts in
millions)
|
|
|
Q4-20
|
|
Q4-19
|
|
Change
Q4-20 vs
Q4-19
|
|
FY
20
|
|
FY
19
|
|
Change
FY 20 vs
FY 19
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
Funded loan
volume
|
$
|
67,825
|
|
|
$
|
32,013
|
|
|
112
|
%
|
|
$
|
199,842
|
|
|
$
|
88,939
|
|
|
125
|
%
|
Funded loan gain on
sale margin
|
5.89
|
%
|
|
4.64
|
%
|
|
27
|
%
|
|
5.48
|
%
|
|
4.45
|
%
|
|
23
|
%
|
Revenue,
net
|
$
|
3,556
|
|
|
$
|
1,568
|
|
|
127
|
%
|
|
$
|
11,807
|
|
|
$
|
4,191
|
|
|
182
|
%
|
Adjusted
Revenue
|
$
|
3,632
|
|
|
$
|
1,465
|
|
|
148
|
%
|
|
$
|
13,010
|
|
|
$
|
4,981
|
|
|
161
|
%
|
Contribution
margin
|
$
|
2,604
|
|
|
$
|
761
|
|
|
242
|
%
|
|
$
|
9,287
|
|
|
$
|
2,410
|
|
|
285
|
%
|
Partner Network
The Rocket Pro platform supports the Partner Network segment and
enables the ability to offer mortgage solutions with a superior
client experience. The Company's two primary types of partnerships
are marketing and influencer. Marketing partnerships consist of
well-known, consumer-focused companies that find value in the
Company's award-winning client experience and want to offer their
clients mortgage solutions with our trusted, widely recognized
brand. Influencer partnerships are typically with companies that
employ licensed mortgage professionals who find value in our client
experience, technology and efficient mortgage process. In some
cases, mortgages are not their primary offering.
PARTNER
NETWORK
|
($ amounts in
millions)
|
|
|
Q4-20
|
|
Q4-19
|
|
Change
Q4-20 vs
Q4-19
|
|
FY
20
|
|
FY
19
|
|
Change
FY 20 vs
FY 19
|
|
(Unaudited)
|
|
|
|
(Unaudited)
|
|
|
Funded loan
volume
|
$
|
37,897
|
|
|
$
|
17,015
|
|
|
123
|
%
|
|
$
|
106,530
|
|
|
$
|
46,737
|
|
|
128
|
%
|
Funded loan gain on
sale margin
|
2.57
|
%
|
|
0.83
|
%
|
|
210
|
%
|
|
2.19
|
%
|
|
0.77
|
%
|
|
184
|
%
|
Revenue,
net
|
$
|
960
|
|
|
$
|
228
|
|
|
321
|
%
|
|
$
|
3,180
|
|
|
$
|
596
|
|
|
434
|
%
|
Adjusted
Revenue
|
$
|
960
|
|
|
$
|
228
|
|
|
321
|
%
|
|
$
|
3,180
|
|
|
$
|
596
|
|
|
434
|
%
|
Contribution
margin
|
$
|
795
|
|
|
$
|
159
|
|
|
400
|
%
|
|
$
|
2,643
|
|
|
$
|
351
|
|
|
653
|
%
|
Balance Sheet and Liquidity
We remain in a strong liquidity position, with total liquidity of
$7.7 billion, which includes
$2.0 billion of cash on-hand,
$2.8 billion of undrawn lines of
credit, $0.3 billion of undrawn MSR
lines, and $2.6 billion of corporate
cash used to self-fund loan originations, a portion of which could
be transferred to funding facilities (warehouse lines) at our
option. During the quarter, we repaid the $1.25 billion of 5.750% senior notes due 2025
with funds received from the $750
million of 3.625% senior notes due 2029, and the
$1.25 billion of 3.875% senior notes
due 2031, issued on September 14,
2020. The remaining net proceeds from the senior notes are
expected to be used for general corporate purposes.
BALANCE SHEET
HIGHLIGHTS
|
($ amounts in
millions)
|
|
|
December 31,
2020
|
|
December 31,
2019
|
|
(Unaudited)
|
|
(Unaudited)
|
Cash and cash
equivalents
|
$
|
1,971
|
|
|
$
|
1,395
|
|
Mortgage servicing
rights (MSRs), at fair value
|
$
|
2,863
|
|
|
$
|
2,875
|
|
Funding
facilities
|
$
|
17,743
|
|
|
$
|
12,042
|
|
Other financing
facilities and debt
|
$
|
3,678
|
|
|
$
|
2,595
|
|
Equity
|
$
|
7,882
|
|
|
$
|
3,516
|
|
Fourth Quarter Earnings Call
Rocket Companies will host a live conference call at 4:30 p.m. ET on February
25, 2021 to discuss its results for the quarter and year
ended December 31, 2020. A live webcast of the event will be
available online by clicking on the "Investor Info" section
of our website. The webcast will also be available via
rocketcompanies.com.
A replay of the webcast will be available on the Investor
Relations site following the conclusion of the event. If you are
having issues viewing the webcast, please see the event help guide
at the link here.
|
|
|
|
|
|
|
|
1 "GAAP" stands for Generally
Accepted Accounting Principles in the U.S. On August 6, 2020,
Rocket Companies' stock began trading on the NYSE and it did not
have any shares outstanding or calculations of earnings per share
for any periods prior to this date. Under GAAP, the basic and
diluted earnings per share calculations for the three and twelve
months ended December 31, 2020, include only the period from
August 6, 2020 to December 31, 2020. Please see the sections of
this document titled "Non-GAAP Financial Measures" and "GAAP to
non-GAAP Reconciliations" for more information on the Company's
non-GAAP measures and its share count. Certain figures in the
tables throughout this document may not foot due to
rounding.
|
2 Gross Merchandise Value is
calculated by applying the estimated average unit sales price of
the vehicles sold multiplied by the number of units sold during the
period.
|
3 Our
Rocket Cloud Force consists of all sales force team members across
our platform.
|
4 Morgan Stanley will continue to
originate its own jumbo mortgages.
|
5 We
measure the performance of the Direct to Consumer and Partner
Network segments primarily on a contribution margin basis.
Contribution margin is intended to measure the direct profitability
of each segment and is calculated as Adjusted Revenue less directly
attributable expenses. Directly attributable expenses include
salaries, commissions and team member benefits, general and
administrative expenses, and other expenses, such as direct
servicing costs and origination costs. A loan is considered
"funded" when it is sold to investors on the secondary market. See
"Summary Segment Results" section later in this document and the
footnote on "Segments" in the "Notes to Consolidated Financial
Statements" in the Company's forthcoming filing on Form 10-K for
more information.
|
Condensed
Consolidated Statements of Income
|
($ In Thousands,
Except Shares and Per Share Amounts)
|
(Unaudited)
|
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Income:
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
Gain on sale of
loans:
|
|
|
|
|
|
|
|
Gain on sale of loans
excluding fair value of MSRs, net
|
$
|
3,131,808
|
|
|
$
|
898,780
|
|
|
$
|
11,946,044
|
|
|
$
|
3,139,656
|
|
Fair value of
originated MSRs
|
1,082,760
|
|
|
612,586
|
|
|
3,124,659
|
|
|
1,771,651
|
|
Gain on sale of loans,
net
|
4,214,568
|
|
|
1,511,366
|
|
|
15,070,703
|
|
|
4,911,307
|
|
Loan servicing
(loss) income:
|
|
|
|
|
|
|
|
Servicing fee
income
|
295,163
|
|
|
249,131
|
|
|
1,074,255
|
|
|
950,221
|
|
Change in fair value
of MSRs
|
(375,381)
|
|
|
(132,049)
|
|
|
(2,294,240)
|
|
|
(1,596,631)
|
|
Loan servicing (loss)
income, net
|
(80,218)
|
|
|
117,082
|
|
|
(1,219,985)
|
|
|
(646,410)
|
|
Interest
income:
|
|
|
|
|
|
|
|
Interest
income
|
97,622
|
|
|
78,464
|
|
|
329,593
|
|
|
250,750
|
|
Interest expense on
funding facilities
|
(82,942)
|
|
|
(44,450)
|
|
|
(245,523)
|
|
|
(134,916)
|
|
Interest income,
net
|
14,680
|
|
|
34,014
|
|
|
84,070
|
|
|
115,834
|
|
Other
income
|
549,912
|
|
|
265,659
|
|
|
1,800,394
|
|
|
736,589
|
|
Total revenue,
net
|
4,698,942
|
|
|
1,928,121
|
|
|
15,735,182
|
|
|
5,117,320
|
|
Expenses
|
|
|
|
|
|
|
|
Salaries, commissions
and team member benefits
|
884,279
|
|
|
573,617
|
|
|
3,238,301
|
|
|
2,082,797
|
|
General and
administrative expenses
|
289,119
|
|
|
194,030
|
|
|
1,053,080
|
|
|
685,028
|
|
Marketing and
advertising expenses
|
279,184
|
|
|
228,036
|
|
|
949,933
|
|
|
905,000
|
|
Depreciation and
amortization
|
26,683
|
|
|
17,778
|
|
|
74,316
|
|
|
74,952
|
|
Interest and
amortization expense on non-funding debt
|
82,010
|
|
|
37,634
|
|
|
186,301
|
|
|
136,853
|
|
Other
expenses
|
248,885
|
|
|
119,841
|
|
|
701,594
|
|
|
328,250
|
|
Total
expenses
|
1,810,160
|
|
|
1,170,936
|
|
|
6,203,525
|
|
|
4,212,880
|
|
Income before income
taxes
|
2,888,782
|
|
|
757,185
|
|
|
9,531,657
|
|
|
904,440
|
|
Provision for income
taxes
|
(48,018)
|
|
|
(3,019)
|
|
|
(132,381)
|
|
|
(7,310)
|
|
Net income
|
2,840,764
|
|
|
754,166
|
|
|
9,399,276
|
|
|
897,130
|
|
Net income
attributable to non-controlling interest
|
(2,700,716)
|
|
|
(754,166)
|
|
|
(9,201,325)
|
|
|
(897,130)
|
|
Net income
attributable to Rocket Companies
|
$
|
140,048
|
|
|
$
|
—
|
|
|
$
|
197,951
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
Earnings per share of
Class A common stock:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.21
|
|
|
N/A
|
|
$
|
1.77
|
|
|
N/A
|
Diluted
|
$
|
1.09
|
|
|
N/A
|
|
$
|
1.76
|
|
|
N/A
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
115,372,565
|
|
|
N/A
|
|
111,926,619
|
|
|
N/A
|
Diluted
|
1,988,435,424
|
|
|
N/A
|
|
116,238,493
|
|
|
N/A
|
Condensed
Consolidated Balance Sheets
|
($ In Thousands,
Except Shares and Per Share Amounts)
|
(Unaudited)
|
|
|
December
31,
2020
|
|
December
31,
2019
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
1,971,085
|
|
|
$
|
1,394,571
|
|
Restricted
cash
|
83,018
|
|
|
61,154
|
|
Mortgage loans held
for sale, at fair value
|
22,865,106
|
|
|
13,275,735
|
|
Interest rate lock
commitments ("IRLCs"), at fair value
|
1,897,194
|
|
|
508,135
|
|
Mortgage servicing
rights ("MSRs"), at fair value
|
2,862,685
|
|
|
2,874,972
|
|
MSRs collateral for
financing liability, at fair value
|
205,033
|
|
|
205,108
|
|
Notes receivable and
due from affiliates
|
22,172
|
|
|
89,937
|
|
Property and
equipment, net
|
211,161
|
|
|
176,446
|
|
Deferred tax asset,
net
|
519,933
|
|
|
—
|
|
Lease right of use
assets
|
238,546
|
|
|
278,921
|
|
Forward commitments,
at fair value
|
20,584
|
|
|
3,838
|
|
Loans subject to
repurchase right from Ginnie Mae
|
5,696,608
|
|
|
752,442
|
|
Other
assets
|
941,477
|
|
|
501,587
|
|
Total
assets
|
$
|
37,534,602
|
|
|
$
|
20,122,846
|
|
Liabilities and
equity
|
|
|
|
Liabilities:
|
|
|
|
Funding
facilities
|
$
|
17,742,573
|
|
|
$
|
12,041,878
|
|
Other financing
facilities and debt:
|
|
|
|
Lines of
credit
|
375,000
|
|
|
165,000
|
|
Senior Notes,
net
|
2,973,046
|
|
|
2,233,791
|
|
Early buy out
facility
|
330,266
|
|
|
196,247
|
|
MSRs financing
liability, at fair value
|
187,794
|
|
|
189,987
|
|
Accounts
payable
|
251,960
|
|
|
157,397
|
|
Lease
liabilities
|
272,274
|
|
|
314,353
|
|
Forward commitments,
at fair value
|
506,071
|
|
|
43,794
|
|
Investor
reserves
|
87,191
|
|
|
54,387
|
|
Notes payable and due
to affiliates
|
73,896
|
|
|
62,225
|
|
Tax receivable
agreement liability
|
550,282
|
|
|
—
|
|
Loans subject to
repurchase right from Ginnie Mae
|
5,696,608
|
|
|
752,442
|
|
Other
liabilities
|
605,485
|
|
|
395,790
|
|
Total
liabilities
|
29,652,446
|
|
|
16,607,291
|
|
Equity:
|
|
|
|
Net parent
investment
|
—
|
|
|
3,510,698
|
|
Class A common stock,
$0.00001 par value - 10,000,000,000 shares authorized, 115,372,565
shares issued and outstanding as of December 31,
2020
|
1
|
|
|
—
|
|
Class B common stock,
$0.00001 par value - 6,000,000,000 shares authorized, none issued
and outstanding as of December 31, 2020
|
—
|
|
|
—
|
|
Class C common stock,
$0.00001 par value - 6,000,000,000 shares authorized, none issued
and outstanding as of December 31, 2020
|
—
|
|
|
—
|
|
Class D common stock,
$0.00001 par value - 6,000,000,000 shares authorized, 1,869,079,483
shares issued and outstanding as of December 31,
2020
|
19
|
|
|
—
|
|
Additional paid-in
capital
|
282,743
|
|
|
—
|
|
Retained
earnings
|
207,422
|
|
|
—
|
|
Accumulated other
comprehensive income (loss)
|
317
|
|
|
(151)
|
|
Non-controlling
interest
|
7,391,654
|
|
|
5,008
|
|
Total
equity
|
7,882,156
|
|
|
3,515,555
|
|
Total liabilities and
equity
|
$
|
37,534,602
|
|
|
$
|
20,122,846
|
|
Summary
Segment Results for the Three Months Ended December 31, 2020
and 2019,
|
and Year Ended
December 31, 2020 and 2019 ($ amounts in millions)
|
(Unaudited)
|
|
Three Months
Ended
December 31, 2020
|
Direct to
Consumer
|
|
Partner
Network
|
|
Segments
Total
|
|
All
Other
|
|
Total
|
Total U.S. GAAP
revenue , net
|
$
|
3,557
|
|
|
$
|
960
|
|
|
$
|
4,517
|
|
|
$
|
182
|
|
|
$
|
4,699
|
|
Plus: Decrease in
MSRs due to valuation assumptions
|
76
|
|
|
—
|
|
|
76
|
|
|
—
|
|
|
76
|
|
Adjusted
Revenue
|
$
|
3,633
|
|
|
$
|
960
|
|
|
$
|
4,593
|
|
|
$
|
182
|
|
|
$
|
4,775
|
|
Directly attributable
expenses
|
1,029
|
|
|
165
|
|
|
1,194
|
|
|
130
|
|
|
1,324
|
|
Contribution
margin(1)
|
$
|
2,604
|
|
|
$
|
795
|
|
|
$
|
3,399
|
|
|
$
|
52
|
|
|
$
|
3,451
|
|
|
Three Months
Ended
December 31, 2019
|
Direct to
Consumer
|
|
Partner
Network
|
|
Segments
Total
|
|
All
Other
|
|
Total
|
Total U.S. GAAP
revenue, net
|
$
|
1,568
|
|
|
$
|
228
|
|
|
$
|
1,796
|
|
|
$
|
132
|
|
|
$
|
1,928
|
|
Plus: Decrease in
MSRs due to valuation assumptions
|
(103)
|
|
|
—
|
|
|
(103)
|
|
|
—
|
|
|
(103)
|
|
Adjusted
Revenue
|
$
|
1,465
|
|
|
$
|
228
|
|
|
$
|
1,693
|
|
|
$
|
132
|
|
|
$
|
1,825
|
|
Directly attributable
expenses
|
704
|
|
|
69
|
|
|
773
|
|
|
50
|
|
|
823
|
|
Contribution
margin(1)
|
$
|
761
|
|
|
$
|
159
|
|
|
$
|
920
|
|
|
$
|
82
|
|
|
$
|
1,002
|
|
|
Year Ended
December 31, 2020
|
Direct to
Consumer
|
|
Partner
Network
|
|
Segments
Total
|
|
All
Other
|
|
Total
|
Total U.S. GAAP
revenue , net
|
$
|
11,807
|
|
|
$
|
3,180
|
|
|
$
|
14,987
|
|
|
$
|
748
|
|
|
$
|
15,735
|
|
Plus: Decrease in
MSRs due to valuation assumptions
|
1,203
|
|
|
—
|
|
|
1,203
|
|
|
—
|
|
|
1,203
|
|
Adjusted
Revenue
|
$
|
13,010
|
|
|
$
|
3,180
|
|
|
$
|
16,190
|
|
|
$
|
748
|
|
|
$
|
16,938
|
|
Directly attributable
expenses
|
3,723
|
|
|
537
|
|
|
4,260
|
|
|
412
|
|
|
4,672
|
|
Contribution
margin(1)
|
$
|
9,287
|
|
|
$
|
2,643
|
|
|
$
|
11,930
|
|
|
$
|
336
|
|
|
$
|
12,266
|
|
|
Year Ended
December 31, 2019
|
Direct to
Consumer
|
|
Partner
Network
|
|
Segments
Total
|
|
All
Other
|
|
Total
|
Total U.S. GAAP
revenue, net
|
$
|
4,191
|
|
|
$
|
596
|
|
|
$
|
4,787
|
|
|
$
|
330
|
|
|
$
|
5,117
|
|
Plus: Decrease in
MSRs due to valuation assumptions
|
790
|
|
|
—
|
|
|
790
|
|
|
—
|
|
|
790
|
|
Adjusted
Revenue
|
$
|
4,981
|
|
|
$
|
596
|
|
|
$
|
5,577
|
|
|
$
|
330
|
|
|
$
|
5,907
|
|
Directly attributable
expenses
|
2,571
|
|
|
245
|
|
|
2,816
|
|
|
203
|
|
|
3,019
|
|
Contribution
margin(1)
|
$
|
2,410
|
|
|
$
|
351
|
|
|
$
|
2,761
|
|
|
$
|
127
|
|
|
$
|
2,888
|
|
|
|
|
|
|
|
(1) We measure
the performance of the segments primarily on a contribution margin
basis. Contribution margin is intended to measure the direct
profitability of each segment and is calculated as Adjusted Revenue
less directly attributable expenses. Adjusted Revenue is a non-GAAP
financial measure described above. Directly attributable expenses
include salaries, commissions and team member benefits, general and
administrative expenses, and other expenses, such as direct
servicing costs and origination costs.
|
GAAP to non-GAAP
Reconciliations
|
Reconciliation of
Adjusted Revenue to Total Revenue, net ($ amounts in
millions)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(Unaudited)
|
|
(Unaudited)
|
Total revenue,
net
|
$
|
4,699
|
|
|
$
|
1,928
|
|
|
$
|
15,735
|
|
|
$
|
5,117
|
|
Change in fair value
of MSRs due to valuation assumptions (1)
|
76
|
|
|
(103)
|
|
|
1,203
|
|
|
790
|
|
Adjusted
Revenue
|
$
|
4,775
|
|
|
$
|
1,825
|
|
|
$
|
16,938
|
|
|
$
|
5,907
|
|
|
|
|
|
|
|
(1) Reflects changes
in assumptions including discount rates and prepayment speed
assumptions, mostly due to changes in market interest
rates.
|
Reconciliation of
Adjusted Net Income to Net Income Attributable to Rocket
Companies
|
($ amounts in
millions)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(Unaudited)
|
|
(Unaudited)
|
Net income
attributable to Rocket Companies
|
$
|
140
|
|
|
$
|
—
|
|
|
$
|
198
|
|
|
$
|
—
|
|
Net income impact from
pro forma conversion of Class D common shares to Class A common
shares(1)
|
2,701
|
|
|
755
|
|
|
9,203
|
|
|
898
|
|
Adjustment to the
provision for income tax (2)
|
(670)
|
|
|
(185)
|
|
|
(2,235)
|
|
|
(217)
|
|
Tax effected net
income (2)
|
2,171
|
|
|
570
|
|
|
7,166
|
|
|
681
|
|
Non-cash stock
compensation expense
|
43
|
|
|
14
|
|
|
136
|
|
|
40
|
|
Change in fair value
of MSRs due to valuation assumptions (net of hedges) (3)
|
76
|
|
|
(103)
|
|
|
1,203
|
|
|
790
|
|
Tax impact of
adjustments (4)
|
(30)
|
|
|
22
|
|
|
(332)
|
|
|
(205)
|
|
Other tax adjustments
(5)
|
3
|
|
|
—
|
|
|
4
|
|
|
—
|
|
Adjusted Net
Income
|
$
|
2,263
|
|
|
$
|
503
|
|
|
$
|
8,177
|
|
|
$
|
1,306
|
|
|
(1) Reflects net
income to Class A common stock from pro forma exchange and
conversion of corresponding shares of our Class D common
shares held by non-controlling interest holders as of
December 31, 2020 and 2019.
|
|
(2) Rocket Companies,
Inc. will be subject to U.S. Federal income taxes, in addition to
state, local and Canadian taxes with respect to its allocable share
of any net taxable income of RKT Holdings, LLC. The adjustment to
the provision for income tax reflects the effective tax rates
below, assuming Rocket Companies, Inc. owns 100% of the non-voting
common interest units of RKT Holdings, LLC. The effective income
tax rate for Adjusted Net Income was 24.87% for the year ended
December 31, 2020 and 24.77% for the year ended December 31,
2019.
|
|
(3) Reflects changes
in assumptions including discount rates and prepayment speed
assumptions, mostly due to changes in market interest
rates.
|
|
(4) Tax impact of
adjustments gives effect to the income tax related to non-cash
stock compensation expense and change in fair value of MSRs due to
valuation assumptions at the above described effective tax rates
for each period.
|
|
(5) Represents tax
benefits due to the amortization of intangible assets and other tax
attributes resulting from the purchase of RKT Holdings units, net
of payment obligations under Tax Receivable Agreement.
|
Reconciliation of
Adjusted Diluted Weighted Average Shares Outstanding to Diluted
Weighted Average Shares Outstanding
|
($ in millions,
except per share)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(Unaudited)
|
|
(Unaudited)
|
Diluted weighted
average Class A common shares outstanding
|
1,988,435,424
|
|
N/A (3)
|
|
116,238,493
|
|
|
N/A (3)
|
Assumed pro forma
conversion of Class D shares(1)
|
—
|
|
N/A (3)
|
|
1,872,476,780
|
|
|
N/A (3)
|
Adjusted diluted
weighted average shares outstanding
|
1,988,435,424
|
|
N/A (3)
|
|
1,988,715,273
|
|
|
N/A (3)
|
|
|
|
|
|
|
|
|
Adjusted Net Income
(2)
|
$
|
2,263
|
|
N/A (3)
|
|
$
|
8,177
|
|
|
N/A (3)
|
Adjusted Diluted
EPS
|
$
|
1.14
|
|
N/A (3)
|
|
$
|
4.11
|
|
|
N/A (3)
|
|
(1) Reflects the pro
forma exchange and conversion of all non-dilutive Class D common
stock to Class A common stock.
|
|
(2) Represents
Adjusted Net Income for the full period as presented.
|
|
(3) This non-GAAP
measure is not applicable in for these periods, as the
reorganization transactions had not yet occurred.
|
Reconciliation of
Adjusted EBITDA to Net Income
|
($ amounts in
millions)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
(Unaudited)
|
|
(Unaudited)
|
Net
income
|
$
|
2,841
|
|
|
$
|
754
|
|
|
$
|
9,399
|
|
|
$
|
897
|
|
Interest and
amortization expense on non-funding debt
|
82
|
|
|
38
|
|
—
|
186
|
|
|
137
|
|
Income tax
provision
|
48
|
|
|
3
|
|
|
132
|
|
|
7
|
|
Depreciation and
amortization
|
27
|
|
|
18
|
|
|
74
|
|
|
75
|
|
Non-cash stock
compensation expense
|
43
|
|
|
14
|
|
|
136
|
|
|
40
|
|
Change in fair value
of MSRs due to valuation assumptions (net of hedges) (1)
|
76
|
|
|
(103)
|
|
|
1,203
|
|
|
790
|
|
Adjusted
EBITDA
|
$
|
3,116
|
|
|
$
|
724
|
|
|
$
|
11,132
|
|
|
$
|
1,946
|
|
|
(1) Reflects changes
in assumptions including discount rates and prepayment speed
assumptions, mostly due to changes in market interest
rates.
|
Non-GAAP Financial Measures
To provide investors with information in addition to our results as
determined under Generally Accepted Accounting Principles ("GAAP"),
we disclose Adjusted Revenue, Adjusted Net Income, Adjusted Diluted
EPS, and Adjusted EBITDA as "non-GAAP measures" which management
believes provide useful information to investors. These measures
are not financial measures calculated in accordance with GAAP and
should not be considered as a substitute for revenue, net income,
or any other operating performance measure calculated in accordance
with GAAP, and may not be comparable to a similarly titled measure
reported by other companies.
We define "Adjusted Revenue" as total revenues net of the change
in fair value of mortgage servicing rights ("MSRs") due to
valuation assumptions. We define "Adjusted Net Income" as
tax-effected earnings before stock-based compensation expense and
the change in fair value of MSRs due to valuation assumptions, and
the tax effects of those adjustments. We define "Adjusted Diluted
EPS" as Adjusted Net Income divided by the diluted weighted average
number of shares of Class A common stock outstanding for the
applicable period, which assumes the pro forma exchange and
conversion of all outstanding Class D common shares for shares of
Class A common stock. We define "Adjusted EBITDA" as earnings
before interest and amortization expense on non-funding debt,
income tax, and depreciation and amortization, net of the change in
fair value of MSRs due to valuation assumptions (net of hedges) and
stock-based compensation expense. We exclude from each of these
non-GAAP revenues the change in fair value of MSRs due to valuation
assumptions (net of hedges) as this represents a non-cash
non-realized adjustment to our total revenues, reflecting changes
in assumptions including discount rates and prepayment speed
assumptions, mostly due to changes in market interest rates, which
is not indicative of our performance or results of operation.
Adjusted EBITDA includes interest expense on funding facilities,
which are recorded as a component of "interest income, net", as
these expenses are a direct cost driven by loan origination volume.
By contrast, interest and amortization expense on non-funding debt
is a function of our capital structure and is therefore excluded
from Adjusted EBITDA. Any non-GAAP earnings margin is calculated by
using the non-GAAP metric in question (such as Adjusted EBITDA) as
the numerator and Adjusted Revenue as the denominator.
We believe that the presentation of our non-GAAP financial
measures provide useful information to investors regarding our
results of operations because each measure assists both investors
and management in analyzing and benchmarking the performance and
value of our business. Our non-GAAP measures provide indicators of
performance that are not affected by fluctuations in certain costs
or other items. Accordingly, management believes that these
measurements are useful for comparing general operating performance
from period to period, and management relies on these measures for
planning and forecasting of future periods. Additionally, these
measures allow management to compare our results with those of
other companies that have different financing and capital
structures. However, other companies may define Adjusted Revenue,
Adjusted Net Income, Adjusted Diluted EPS, and Adjusted EBITDA
differently, and as a result, our non-GAAP financial measures may
not be directly comparable to those of other companies.
Although we use our non-GAAP financial measures to assess the
performance of our business, such use is limited because they do
not include certain material costs necessary to operate our
business. Additionally, our definitions of our non-GAAP financial
measures allows us to add back certain non-cash charges and deduct
certain gains that are included in calculating the most comparable
figures calculated under GAAP. However, these expenses and gains
vary greatly, and are difficult to predict. They can represent the
effect of long-term strategies as opposed to short-term results.
Adjusted Revenue, Adjusted Net Income, Adjusted Earnings per Share,
and Adjusted EBITDA should be considered in addition to, and not as
a substitute for, total revenues, net income attributable to Rocket
Companies, net income (loss), and Earnings per share in accordance
with U.S. GAAP as measures of performance. Our presentation of
non-GAAP financial measures should not be construed as an
indication that our future results will be unaffected by unusual or
nonrecurring items.
Adjusted Revenue, Adjusted Net Income, and Adjusted EBITDA have
limitations as analytical tools, and you should not consider them
in isolation or as a substitute for analysis of our results as
reported under U.S. GAAP. Some of these limitations are: (a) they
do not reflect every cash expenditure, future requirements for
capital expenditures or contractual commitments; (b) Adjusted
EBITDA does not reflect the significant interest expense or the
cash requirements necessary to service interest or principal
payment on our debt; (c) although depreciation and amortization are
non-cash charges, the assets being depreciated and amortized will
often have to be replaced or require improvements in the future,
and Adjusted Revenue, Adjusted Net Income and Adjusted EBITDA do
not reflect any cash requirement for such replacements or
improvements; and (d) they are not adjusted for all non-cash income
or expense items that are reflected in our statements of cash
flows.
Because of these limitations, Adjusted Revenue, Adjusted Net
Income, and Adjusted EBITDA are not intended as alternatives to
total revenue, net income attributable to Rocket Companies or net
income (loss) as an indicator of our operating performance and
should not be considered as measures of discretionary cash
available to us to invest in the growth of our business or as
measures of cash that will be available to us to meet our
obligations. We compensate for these limitations by using Adjusted
Revenue, Adjusted Net Income and Adjusted EBITDA along with other
comparative tools, together with U.S. GAAP measurements, to assist
in the evaluation of operating performance.
Forward Looking Statements
Some of the statements contained in this document are
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. These forward-looking
statements are generally identified by the use of words such as
"anticipate," "believe," "could," "estimate," "expect," "intend,"
"may," "plan," "potential," "predict," "project," "should,"
"target," "will," "would" and, in each case, their negative or
other various or comparable terminology. These forward-looking
statements reflect our views with respect to future events as of
the date of this document and are based on our management's current
expectations, estimates, forecasts, projections, assumptions,
beliefs and information. Although management believes that the
expectations reflected in these forward-looking statements are
reasonable, it can give no assurance that these expectations will
prove to have been correct. All such forward-looking statements are
subject to risks and uncertainties, many of which are outside of
our control, and could cause future events or results to be
materially different from those stated or implied in this document.
It is not possible to predict or identify all such risks. These
risks include, but are not limited to, the risk factors that are
described under the section titled "Risk Factors" in our Quarterly
Report on Form 10-Q, Current Reports on Form 8-K, and other filings
with the Securities and Exchange Commission. These factors should
not be construed as exhaustive and should be read in conjunction
with the other cautionary statements that are included in this
document and in our SEC filings. We expressly disclaim any
obligation to publicly update or review any forward-looking
statements, whether as a result of new information, future
developments or otherwise, except as required by applicable
law.
About Rocket Companies
Rocket Companies is a Detroit-based holding company consisting of
personal finance and consumer technology brands including Rocket
Mortgage, Rocket Homes, Rocket Loans, Rocket Auto, Rock Central,
Amrock, Core Digital Media, Rock Connections, Lendesk and Edison
Financial. Since 1985, Rocket Companies has been obsessed with
helping its clients achieve the American dream of home ownership
and financial freedom. Rocket Companies offers an industry-leading
client experience powered by our simple, fast, and trusted digital
solutions. Rocket Companies has approximately 24,000 team members
across the United States and
Canada. Its flagship company,
Rocket Mortgage, has been named to Fortune magazine's list of "100
Best Companies to Work For" for 17 consecutive years. For more
information, please visit our Corporate Website, Investor
Relations Website, Twitter page, and our LinkedIn
page.
Investor Relations Contact:
John Shallcross
ir@rocketcompanies.com
(313) 373-7990
Media Contact:
Aaron Emerson
aaronemerson@rockcentraldetroit.com
(313) 373-3035
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SOURCE Rocket Companies, Inc.