Finance of America Reports Fourth Quarter and Full Year 2021 Results
Finance of America Companies (FOA) reported a net loss of $1,336 million or $(6.61) per share for Q4 2021, driven by a $1,381 million impairment of goodwill and intangible assets. Despite this, adjusted net income was $70 million, aligning with earnings guidance. Full year originations reached $35.6 billion, a 9% increase from 2020, mainly from Reverse and Commercial segments. However, total revenue declined 4% to $1,736 million. The company aims to focus on growth in its Reverse and Commercial business while adapting its Mortgage segment to a purchasing market.
- Adjusted net income for Q4 2021 was $70 million, or $0.37 per share, aligning with earnings guidance.
- Total originations for 2021 amounted to $35.6 billion, a 9% increase from 2020.
- Specialty Finance and Services segments showed a 53% increase in revenue, offsetting declines in Mortgage revenue and contributing significantly to adjusted net income.
- The company reported a net loss of $1,336 million for Q4 2021, mainly due to a $1,381 million impairment charge.
- Total revenue for 2021 decreased by 4% compared to the previous year, reflecting the challenges in the mortgage market.
- Total equity dropped 55% to $1.08 billion, primarily due to the impairment of goodwill and intangible assets.
– Net loss for the quarter of
– Adjusted net income* for the quarter of
Fourth Quarter and Full Year 2021 Financial Highlights
-
Full year 2021 total originations were
$35.6 billion 9% compared to 2020 due to strong growth in Reverse and Commercial segments. -
Total revenue for 2021 of
$1,736 million 4% decrease compared to the full year 2020, as a53% increase in Specialty Finance and Services (SF&S) segments revenue almost entirely offset the decline in Mortgage revenue similarly experienced by the broader market. -
The Company performed its annual goodwill impairment analysis as part of the year end 2021 financial statement close process. Due to a sustained decline in the Company’s stock price, the Company recognized a
$1,381 million -
The above-mentioned impairment contributed to a net loss for the quarter of
$1,336 million $(6.61) $(6.72) $15 million -
For the fourth quarter of 2021, the Company generated adjusted net income* of
$70 million $0.37
*See the sections titled “Reconciliation to GAAP” and “Non-GAAP Financial Measures” for reconciliations to the most directly comparable GAAP measures and other important disclosures.
“Finance of America delivered another solid quarter and met our guidance despite a decline in the mortgage market,” stated
We believe our Reverse and Commercial businesses operate in markets with systemic tailwinds and we will continue to invest in these businesses to fuel further growth. Lender Services saw an expansion in third-party clients as well as increased sales to existing clients, which lead to an increase in operating margins. We remain focused on the growth and profitability of our Home Improvement business and anticipate it will begin contributing to our bottom line in 2022.”
“In our Mortgage business we remain focused on profitability as the market pivots to purchase. Our non-agency products continue to find traction as volume grew
Fourth Quarter Financial Summary
($ amounts in millions, except margin and per share data) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||||
|
|
Q4'21 |
|
Q3'21 |
|
Q4'21 vs Q3'21 |
|
Q4'20 |
|
Q4'21 vs Q4'20 |
|
|
2021 |
|
|
2020 |
|
2021 vs 2020 |
||||||||
|
|
Successor |
|
|
|
Predecessor(5) |
|
|
|
Combined(1) |
|
Predecessor(5) |
|
|
||||||||||||
Funded volume |
|
$ |
8,793 |
|
|
$ |
8,988 |
|
(2 |
)% |
|
$ |
9,769 |
|
(10 |
)% |
|
$ |
35,637 |
|
|
$ |
32,628 |
|
9 |
% |
Total revenue |
|
|
383 |
|
|
|
457 |
|
(16 |
)% |
|
|
539 |
|
(29 |
)% |
|
|
1,736 |
|
|
|
1,800 |
|
(4 |
)% |
Total expenses and other, net |
|
|
364 |
|
|
|
402 |
|
(9 |
)% |
|
|
386 |
|
(6 |
)% |
|
|
1,562 |
|
|
|
1,300 |
|
20 |
% |
Pre-tax income (loss) |
|
|
(1,362 |
) |
|
|
55 |
|
(2576 |
)% |
|
|
152 |
|
(996 |
)% |
|
|
(1,196 |
) |
|
|
500 |
|
(339 |
)% |
Net income (loss) |
|
|
(1,336 |
) |
|
|
50 |
|
(2772 |
)% |
|
|
152 |
|
(979 |
)% |
|
|
(1,177 |
) |
|
|
498 |
|
(336 |
)% |
Pre-tax income excluding impairment of goodwill and intangible assets(4) |
|
|
18 |
|
|
|
55 |
|
(67 |
)% |
|
|
152 |
|
(88 |
)% |
|
|
184 |
|
|
|
500 |
|
(63 |
)% |
Adjusted net income(2) |
|
|
70 |
|
|
|
75 |
|
(7 |
)% |
|
|
122 |
|
(43 |
)% |
|
|
308 |
|
|
|
430 |
|
(28 |
)% |
Adjusted EBITDA(2) |
|
|
104 |
|
|
|
110 |
|
(5 |
)% |
|
|
172 |
|
(40 |
)% |
|
|
456 |
|
|
|
598 |
|
(24 |
)% |
Basic earnings (loss) per share |
|
$ |
(6.61 |
) |
|
$ |
0.36 |
|
(1936 |
)% |
|
|
N/A |
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
N/A |
|
Diluted earnings (loss) per share(3) |
|
$ |
(6.72 |
) |
|
$ |
0.22 |
|
(3155 |
)% |
|
|
N/A |
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
N/A |
|
Adjusted diluted earnings per share(3) |
|
$ |
0.37 |
|
|
$ |
0.39 |
|
(5 |
)% |
|
$ |
0.64 |
|
(42 |
)% |
|
$ |
1.61 |
|
|
$ |
2.25 |
|
(28 |
)% |
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
(2) See Reconciliation to GAAP section for a reconciliation of Adjusted Net Income and Adjusted EBITDA to Net Income (Loss). |
(3) Calculated on an if-converted basis. See Reconciliation to GAAP section for more detail. |
(4) Calculated for each period as Pre-tax income (loss), excluding impairment of goodwill and intangible assets. |
(5) Predecessor includes all periods as of and prior to |
Balance Sheet Highlights
($ amounts in millions) |
|
|
|
|
|
Variance (%) |
|||
|
|
2021 |
|
2021 |
|
Q4'21 vs Q3'21 |
|||
Cash and cash equivalents |
|
$ |
141 |
|
$ |
192 |
|
(27 |
)% |
Securitized loans held for investment (HMBS & nonrecourse) |
|
|
16,774 |
|
|
16,287 |
|
3 |
% |
Mortgage Servicing Rights (MSR) |
|
|
428 |
|
|
341 |
|
26 |
% |
Total assets |
|
|
21,789 |
|
|
22,668 |
|
(4 |
)% |
Total liabilities |
|
|
20,706 |
|
|
20,236 |
|
2 |
% |
Total equity |
|
|
1,083 |
|
|
2,432 |
|
(55 |
)% |
Total tangible equity(1) |
|
|
480 |
|
|
441 |
|
9 |
% |
(1) Total Tangible Equity calculated as Total Equity less |
-
Cash and cash equivalents ended the fourth quarter at
$141 million $51 million -
Total assets declined
4% from prior quarter due to the impairment of goodwill and intangible assets partially offset by increased securitized loans held for investment. -
Total liabilities grew
$470 million $486 million -
The decline in total equity is solely due to the impairment of goodwill and intangible assets during the quarter. Total tangible equity increased
$39 million
Segment Results
Mortgage Originations
The Mortgage Originations segment generates revenue through fee income from loan originations and gain on sale of mortgage loans into the secondary market.
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||||||||||
|
|
Q4'21 |
|
Q3'21 |
|
Q4'21 vs Q3'21 |
|
Q4'20 |
|
Q4'21 vs Q4'20 |
|
2021 |
|
2020 |
|
2021 vs 2020 |
|||||||||||||
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Combined (1) |
|
Predecessor |
|
|
|||||||||||||||
Funded volume (Total) |
|
$ |
6,891 |
|
|
$ |
7,383 |
|
|
(7 |
)% |
|
$ |
8,808 |
|
|
(22 |
)% |
|
$ |
29,607 |
|
|
$ |
29,064 |
|
|
2 |
% |
Funded volume (Purchase) |
|
|
3,405 |
|
|
|
3,759 |
|
|
(9 |
)% |
|
|
3,097 |
|
|
10 |
% |
|
|
13,323 |
|
|
|
9,877 |
|
|
35 |
% |
Funded volume (Non-agency) |
|
|
1,242 |
|
|
|
994 |
|
|
25 |
% |
|
|
1,123 |
|
|
11 |
% |
|
|
4,068 |
|
|
|
1,914 |
|
|
113 |
% |
Net rate lock volume |
|
|
6,198 |
|
|
|
7,679 |
|
|
(19 |
)% |
|
|
7,855 |
|
|
(21 |
)% |
|
|
28,952 |
|
|
|
30,158 |
|
|
(4 |
)% |
Mortgage originations margin |
|
|
2.52 |
% |
|
|
2.61 |
% |
|
(3 |
)% |
|
|
4.31 |
% |
|
(42 |
)% |
|
|
2.86 |
% |
|
|
3.88 |
% |
|
(26 |
)% |
Total revenue |
|
|
187 |
|
|
|
235 |
|
|
(20 |
)% |
|
|
367 |
|
|
(49 |
)% |
|
|
959 |
|
|
|
1,292 |
|
|
(26 |
)% |
Impairment of goodwill and intangible assets |
|
$ |
(775 |
) |
|
$ |
— |
|
|
N/A |
|
|
$ |
— |
|
|
N/A |
|
|
$ |
(775 |
) |
|
$ |
— |
|
|
N/A |
|
Pre-tax income (loss) |
|
$ |
(783 |
) |
|
$ |
15 |
|
|
(5320 |
)% |
|
$ |
129 |
|
|
(707 |
)% |
|
$ |
(679 |
) |
|
$ |
460 |
|
|
(248 |
)% |
Pre-tax income (loss) excluding impairment of goodwill and intangible assets(2) |
|
$ |
(8 |
) |
|
$ |
15 |
|
|
(153 |
)% |
|
$ |
129 |
|
|
(106 |
)% |
|
$ |
96 |
|
|
$ |
460 |
|
|
(79 |
)% |
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
(2) Calculated for each period as Pre-tax income (loss), excluding impairment of goodwill and intangible assets. |
-
Funded purchase volume for 2021 totaled
$13,323 million 35% increase year over year. This represented45% of total funded volume in 2021. -
Non-agency volume continued its strong growth, up
25% in Q4 2021 compared to the prior quarter and113% compared to the prior year. -
Fourth quarter mortgage originations margin declined
3% relative to last quarter, driven by an increased share of wholesale originations and decreased share of retail originations. -
Pre-tax loss excluding impairment of goodwill and intangible assets of
$8 million
Reverse Originations
The Reverse Originations segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of reverse mortgage loans.
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||||
|
|
Q4'21 |
|
Q3'21 |
|
Q4'21 vs Q3'21 |
|
Q4'20 |
|
Q4'21 vs Q4'20 |
|
|
2021 |
|
|
2020 |
|
2021 vs 2020 |
||||||||
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Combined (1) |
|
Predecessor |
|
|
||||||||||||
Funded volume |
|
$ |
1,322 |
|
|
$ |
1,157 |
|
14 |
% |
|
$ |
655 |
|
102 |
% |
|
$ |
4,261 |
|
|
$ |
2,707 |
|
57 |
% |
Total revenue |
|
|
114 |
|
|
|
111 |
|
3 |
% |
|
|
55 |
|
107 |
% |
|
|
389 |
|
|
|
194 |
|
101 |
% |
Impairment of goodwill and intangible assets |
|
|
(408 |
) |
|
|
— |
|
N/A |
|
|
|
— |
|
N/A |
|
|
|
(408 |
) |
|
|
— |
|
N/A |
|
Pre-tax income (loss) |
|
|
(333 |
) |
|
|
69 |
|
(583 |
)% |
|
|
33 |
|
(1109 |
)% |
|
|
(165 |
) |
|
|
107 |
|
(254 |
)% |
Pre-tax income (loss) excluding impairment of goodwill and intangible assets(2) |
|
|
75 |
|
|
|
69 |
|
9 |
% |
|
|
33 |
|
127 |
% |
|
|
243 |
|
|
|
107 |
|
127 |
% |
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
(2) Calculated for each period as Pre-tax income (loss), excluding impairment of goodwill and intangible assets. |
-
Fourth quarter funded volume and revenue of
$1,322 million $114 million -
2021 funded volume of
$4,261 million 57% relative to 2020 funded volume of$2,707 million -
2021 revenue of
$389 million 101% compared to 2020 revenue of$194 million -
As a result, Reverse Originations generated
$243 million 127% higher than the prior year.
Commercial Originations
The Commercial Originations segment provides business purpose lending solutions for residential real estate investors. The Commercial Originations segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of mortgage loans.
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||||
|
|
Q4'21 |
|
Q3'21 |
|
Q4'21 vs Q3'21 |
|
Q4'20 |
|
Q4'21 vs Q4'20 |
|
2021 |
|
|
2020 |
|
|
2021 vs 2020 |
||||||||
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Combined (1) |
|
Predecessor |
|
|
||||||||||||
Funded volume |
|
$ |
580 |
|
|
$ |
448 |
|
29 |
% |
|
$ |
307 |
|
89 |
% |
|
1,769 |
|
|
$ |
855 |
|
|
107 |
% |
Total revenue |
|
|
30 |
|
|
|
28 |
|
7 |
% |
|
|
13 |
|
131 |
% |
|
95 |
|
|
|
37 |
|
|
157 |
% |
Impairment of goodwill and intangible assets |
|
|
(76 |
) |
|
|
— |
|
N/A |
|
|
|
— |
|
N/A |
|
|
(76 |
) |
|
|
— |
|
|
N/A |
|
Pre-tax income (loss) |
|
|
(68 |
) |
|
|
6 |
|
(1233 |
)% |
|
|
1 |
|
(6900 |
)% |
|
(58 |
) |
|
|
(4 |
) |
|
(1350 |
)% |
Pre-tax income (loss) excluding impairment of goodwill and intangible assets(2) |
|
|
8 |
|
|
|
6 |
|
33 |
% |
|
|
1 |
|
700 |
% |
|
18 |
|
|
|
(4 |
) |
|
550 |
% |
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
(2) Calculated for each period as Pre-tax income (loss), excluding impairment of goodwill and intangible assets. |
-
Fourth quarter funded volume of
$580 million 29% . -
2021 produced record funded volume of
$1,769 million $95 million 107% and157% over 2020, respectively. -
Pre-tax income excluding impairment of goodwill and intangible assets grew
33% quarter over quarter driven by growth in funded volume due to strong borrower and investor demand.
Lender Services
The Lender Services business generates revenue and earnings in the form of fees. Lender Services supports over 1,900 third party clients across the lending industry.
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||||||
|
|
Q4'21 |
|
Q3'21 |
|
Q4'21 vs Q3'21 |
|
Q4'20 |
|
Q4'21 vs Q4'20 |
|
|
2021 |
|
|
2020 |
|
2021 vs 2020 |
||||||||||
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Combined (1) |
|
Predecessor |
|
|
||||||||||||||
Total revenue |
|
$ |
83 |
|
|
$ |
88 |
|
|
(6 |
)% |
|
$ |
66 |
|
|
26 |
% |
|
$ |
328 |
|
|
205 |
|
|
60 |
% |
% of revenue from third-party clients |
|
|
82 |
% |
|
|
81 |
% |
|
1 |
% |
|
|
79 |
% |
|
4 |
% |
|
|
81 |
% |
|
79 |
% |
|
3 |
% |
Impairment of goodwill and intangible assets |
|
|
(110 |
) |
|
|
— |
|
|
N/A |
|
|
|
— |
|
|
N/A |
|
|
|
(110 |
) |
|
— |
|
|
N/A |
|
Pre-tax income (loss) |
|
|
(101 |
) |
|
|
9 |
|
|
(1222 |
)% |
|
|
4 |
|
|
(2625 |
)% |
|
|
(71 |
) |
|
20 |
|
|
(455 |
)% |
Pre-tax income (loss) excluding impairment of goodwill and intangible assets(2) |
|
|
9 |
|
|
|
9 |
|
|
— |
% |
|
|
4 |
|
|
125 |
% |
|
|
39 |
|
|
20 |
|
|
95 |
% |
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
(2) Calculated for each period as Pre-tax income (loss), excluding impairment of goodwill and intangible assets. |
-
2021 total revenue for Lender Services increased by
60% , to$328 million $205 -
For the year, Lender Services earned pre-tax income excluding impairment of goodwill and intangible assets of
$39 million 95% increase over the prior year. -
Revenue from third-party clients increased to
82% in Q4 2021, up from79% in Q4 2020.
Portfolio Management
The Portfolio Management segment generates revenue and earnings in the form of gain on sale of loans, fair value gains, interest income, servicing income, fees for underwriting, advisory and valuation services and other ancillary fees.
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||||||
|
|
Q4'21 |
|
Q3'21 |
|
Q4'21 vs Q3'21 |
|
Q4'20 |
|
Q4'21 vs Q4'20 |
|
|
2021 |
|
|
|
2020 |
|
|
2021 vs 2020 |
||||||||
|
|
Successor |
|
|
|
Predecessor |
|
|
|
Combined (1) |
|
Predecessor |
|
|
||||||||||||||
Assets under management |
|
$ |
18,974 |
|
|
$ |
18,403 |
|
|
3 |
% |
|
$ |
16,896 |
|
12 |
% |
|
$ |
18,974 |
|
|
$ |
16,896 |
|
|
12 |
% |
Assets excluding HMBS and non-recourse obligations(2) |
|
|
2,431 |
|
|
|
2,356 |
|
|
3 |
% |
|
|
1,835 |
|
32 |
% |
|
|
2,431 |
|
|
|
1,835 |
|
|
32 |
% |
Mortgage Servicing Rights (MSR) |
|
|
428 |
|
|
|
341 |
|
|
26 |
% |
|
|
181 |
|
136 |
% |
|
|
428 |
|
|
|
181 |
|
|
136 |
% |
Total revenue |
|
|
(29 |
) |
|
|
10 |
|
|
(390 |
)% |
|
|
38 |
|
(176 |
)% |
|
|
17 |
|
|
|
69 |
|
|
(75 |
)% |
Impairment of goodwill and intangible assets |
|
|
(12 |
) |
|
|
— |
|
|
N/A |
|
|
|
— |
|
N/A |
|
|
|
(12 |
) |
|
|
— |
|
|
N/A |
|
Pre-tax income (loss) |
|
|
(69 |
) |
|
|
(20 |
) |
|
(245 |
)% |
|
|
8 |
|
(963 |
)% |
|
|
(109 |
) |
|
|
(22 |
) |
|
(395 |
)% |
Pre-tax income (loss) excluding impairment of goodwill and intangible assets(3) |
|
|
(57 |
) |
|
|
(20 |
) |
|
(185 |
)% |
|
|
8 |
|
(813 |
)% |
|
|
(97 |
) |
|
|
(22 |
) |
|
(341 |
)% |
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
(2) Calculated for each period as Assets under management less HMBS related obligations, at fair value and nonrecourse debt, at fair value. |
(3) Calculated for each period as Pre-tax income (loss), excluding impairment of goodwill and intangible assets. |
-
Fourth quarter Mortgage Servicing Rights grew to
$428 million 26% from the prior quarter as we retained servicing on agency loans originated in the retail channel. - Revenue in the fourth quarter was negative predominantly due to fair value marks resulting from faster than modeled prepayment speeds in Reverse assets. These marks reflect lifetime impacts across the portfolio. The decrease in total revenue and pre-tax income (loss) excluding impairment of goodwill and intangible assets compared to the prior quarter reflects the impact of fair value adjustments related predominantly to Reverse assets.
Reconciliation to GAAP
($ amounts in millions) |
Q4'21 |
|
Q3'21 |
|
|
Q4'20 |
|
|
2021 |
|
|
|
2020 |
|
||||||
|
Successor |
|
|
Predecessor |
|
Combined (1) |
|
Predecessor |
||||||||||||
Reconciliation of Net income (loss) to Adjusted Net income and Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) |
$ |
(1,336 |
) |
|
$ |
50 |
|
|
|
$ |
152 |
|
|
$ |
(1,177 |
) |
|
$ |
498 |
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Changes in fair value(2) |
|
52 |
|
|
|
20 |
|
|
|
|
4 |
|
|
|
108 |
|
|
|
58 |
|
Amortization and impairment of goodwill and intangibles(3) |
|
1,395 |
|
|
|
13 |
|
|
|
|
1 |
|
|
|
1,422 |
|
|
|
3 |
|
Equity based compensation(4) |
|
11 |
|
|
|
11 |
|
|
|
|
— |
|
|
|
32 |
|
|
|
— |
|
Certain non-recurring costs(5) |
|
— |
|
|
|
3 |
|
|
|
|
7 |
|
|
|
53 |
|
|
|
20 |
|
Tax effect on net income (loss) attributable to noncontrolling interest(6) |
|
63 |
|
|
|
(7 |
) |
|
|
|
(39 |
) |
|
|
28 |
|
|
|
(128 |
) |
Tax effect of adjustments(6) |
|
(115 |
) |
|
|
(15 |
) |
|
|
|
(3 |
) |
|
|
(158 |
) |
|
|
(21 |
) |
Adjusted Net Income |
$ |
70 |
|
|
$ |
75 |
|
|
|
$ |
122 |
|
|
$ |
308 |
|
|
$ |
430 |
|
Effective income taxes |
|
25 |
|
|
|
26 |
|
|
|
|
43 |
|
|
|
110 |
|
|
|
152 |
|
Depreciation |
|
2 |
|
|
|
2 |
|
|
|
|
3 |
|
|
|
10 |
|
|
|
8 |
|
Interest expense on non-funding debt |
|
7 |
|
|
|
7 |
|
|
|
|
4 |
|
|
|
28 |
|
|
|
8 |
|
Adjusted EBITDA |
$ |
104 |
|
|
$ |
110 |
|
|
|
$ |
172 |
|
|
$ |
456 |
|
|
$ |
598 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER KEY METRICS |
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash paid for income taxes |
$ |
— |
|
|
$ |
— |
|
|
|
$ |
1 |
|
|
$ |
2 |
|
|
$ |
1 |
|
Provision (benefit) for income taxes |
$ |
(26 |
) |
|
$ |
4 |
|
|
|
$ |
1 |
|
|
$ |
(20 |
) |
|
$ |
1 |
|
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
(2) Changes in fair value include changes in fair value of loans and securities held for investment, deferred purchase price obligations, warrant liability, and minority investments. |
(3) Successor period amortization includes amortization of intangibles recognized from the business combination with Replay. |
(4) Funded |
(5) Certain non-recurring costs relate to various one-time expenses and adjustments that management believes should be excluded as these do not relate to a recurring part of the core business operations. These items include certain one-time charges including amounts recognized for settlement of legal and regulatory matters, acquisition related expenses and other one-time charges. |
(6) We applied a |
($ amounts in millions, except shares and $ per share) |
|
Q4'21 |
|
Q3'21 |
|
|
Q4'20 |
|
2021 |
|
2020 |
||||||
|
|
Successor |
|
|
Predecessor |
|
Combined (1) |
|
Predecessor |
||||||||
GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income (loss) attributable to controlling interest |
|
$ |
(395 |
) |
|
$ |
21 |
|
|
|
N/A |
|
|
N/A |
|
|
N/A |
Weighted average outstanding share count |
|
|
59,806,378 |
|
|
|
59,861,171 |
|
|
|
N/A |
|
|
N/A |
|
|
N/A |
Basic earnings (loss) per share |
|
$ |
(6.61 |
) |
|
$ |
0.36 |
|
|
|
N/A |
|
|
N/A |
|
|
N/A |
If-converted method net income (loss) |
|
|
(1,273 |
) |
|
|
43 |
|
|
|
N/A |
|
|
N/A |
|
|
N/A |
Weighted average diluted share count |
|
|
189,436,869 |
|
|
|
191,161,431 |
|
|
|
N/A |
|
|
N/A |
|
|
N/A |
Diluted earnings (loss) per share |
|
$ |
(6.72 |
) |
|
$ |
0.22 |
|
|
|
N/A |
|
|
N/A |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
||||||
NON-GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|
|
|
|
|
||||||
Adjusted net income |
|
$ |
70 |
|
|
$ |
75 |
|
|
$ |
122 |
|
$ |
308 |
|
$ |
430 |
Weighted average diluted share count |
|
|
189,436,869 |
|
|
|
191,161,431 |
|
|
|
191,200,000 |
|
|
190,745,873 |
|
|
191,200,000 |
Adjusted diluted EPS |
|
$ |
0.37 |
|
|
$ |
0.39 |
|
|
$ |
0.64 |
|
$ |
1.61 |
|
$ |
2.25 |
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
($ amounts in millions, except shares and $ per share) |
|
|
|
|
|
|
||||||
Reconciliation of Pre-tax income (loss) to Adjusted Net Income for Q4 2021 |
|
SF&S |
|
Mortgage |
|
Total |
||||||
Pre-tax loss |
|
$ |
(579 |
) |
|
$ |
(783 |
) |
|
$ |
(1,362 |
) |
Adjustments for: |
|
|
|
|
|
|
||||||
Amortization and impairment of goodwill and intangibles(2) |
|
|
618 |
|
|
|
777 |
|
|
|
1,395 |
|
Changes in fair value(1) |
|
|
52 |
|
|
|
— |
|
|
|
52 |
|
Equity-based compensation(3) |
|
|
9 |
|
|
|
2 |
|
|
|
11 |
|
Tax effect on pre-tax loss(4) |
|
|
(115 |
) |
|
|
204 |
|
|
|
89 |
|
Tax effect of adjustments*(4) |
|
|
88 |
|
|
|
(203 |
) |
|
|
(115 |
) |
Adjusted Net Income |
|
$ |
73 |
|
|
$ |
(3 |
) |
|
$ |
70 |
|
(1) Changes in fair value include changes in fair value of loans and securities held for investment, deferred purchase price obligations, warrant liability, and minority investments. |
(2) Successor period amortization includes amortization of intangibles recognized from the business combination with Replay and impairment of goodwill and intangible assets. |
(3) Funded |
(4) We applied a |
Selected Financial Information Consolidated Statements of Financial Condition (In thousands, except share data) (Unaudited) |
|||||||
|
|
|
|
||||
ASSETS |
|
|
|
||||
Cash and cash equivalents |
$ |
141,238 |
|
|
$ |
191,736 |
|
Restricted cash |
|
322,403 |
|
|
|
325,226 |
|
Loans held for investment, subject to HMBS related obligations, at fair value |
|
10,556,054 |
|
|
|
10,347,459 |
|
Loans held for investment, subject to nonrecourse debt, at fair value |
|
6,218,194 |
|
|
|
5,939,651 |
|
Loans held for investment, at fair value |
|
1,031,328 |
|
|
|
1,077,670 |
|
Loans held for sale, at fair value |
|
2,052,378 |
|
|
|
2,047,015 |
|
Mortgage servicing rights, at fair value, |
|
427,942 |
|
|
|
340,949 |
|
Derivative assets |
|
48,870 |
|
|
|
54,993 |
|
Fixed assets and leasehold improvements, net |
|
29,256 |
|
|
|
29,503 |
|
|
|
— |
|
|
|
1,298,796 |
|
Intangible assets, net |
|
602,900 |
|
|
|
692,676 |
|
Other assets, net |
|
358,383 |
|
|
|
322,419 |
|
TOTAL ASSETS |
$ |
21,788,946 |
|
|
$ |
22,668,093 |
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
||||
HMBS related obligations, at fair value |
$ |
10,422,358 |
|
|
$ |
10,216,310 |
|
Nonrecourse debt, at fair value |
|
6,111,242 |
|
|
|
5,831,083 |
|
Other financing lines of credit |
|
3,347,442 |
|
|
|
3,325,156 |
|
Payables and other liabilities |
|
471,511 |
|
|
|
509,803 |
|
Notes payable, net |
|
353,383 |
|
|
|
353,567 |
|
TOTAL LIABILITIES |
|
20,705,936 |
|
|
|
20,235,919 |
|
EQUITY |
|
|
|
||||
|
|
— |
|
|
|
— |
|
Class A Common Stock, |
|
6 |
|
|
|
6 |
|
Class B Common Stock, |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
831,620 |
|
|
|
821,316 |
|
Accumulated deficit |
|
(443,613 |
) |
|
|
(48,164 |
) |
Accumulated other comprehensive income (loss) |
|
(110 |
) |
|
|
(92 |
) |
Noncontrolling interest |
|
695,107 |
|
|
|
1,659,108 |
|
TOTAL EQUITY |
|
1,083,010 |
|
|
|
2,432,174 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
21,788,946 |
|
|
$ |
22,668,093 |
|
Selected Financial Information Consolidated Statements of Operations (In thousands, except share data) (Unaudited) |
||||||||||||||||||||
|
Q4'21 |
|
Q3’21 |
|
|
Q4'20 |
|
|
2021 |
|
|
|
2020 |
|
||||||
|
Successor |
|
Predecessor |
|
Combined(1) |
|
Predecessor |
|||||||||||||
REVENUES |
|
|
|
|
|
|
|
|
|
|
||||||||||
Gain on sale and other income from mortgage loans held for sale, net |
$ |
166,853 |
|
|
$ |
210,095 |
|
|
|
$ |
342,094 |
|
|
$ |
855,859 |
|
|
$ |
1,178,995 |
|
Net fair value gains on mortgage loans and related obligations |
|
88,090 |
|
|
|
122,509 |
|
|
|
|
90,060 |
|
|
|
418,413 |
|
|
|
311,698 |
|
Fee income |
|
149,476 |
|
|
|
145,725 |
|
|
|
|
123,867 |
|
|
|
547,436 |
|
|
|
389,869 |
|
Net interest expense: |
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest income |
|
14,912 |
|
|
|
15,862 |
|
|
|
|
12,969 |
|
|
|
56,586 |
|
|
|
42,584 |
|
Interest expense |
|
(36,377 |
) |
|
|
(37,691 |
) |
|
|
|
(29,836 |
) |
|
|
(142,060 |
) |
|
|
(123,001 |
) |
Net interest expense |
|
(21,465 |
) |
|
|
(21,829 |
) |
|
|
|
(16,867 |
) |
|
|
(85,474 |
) |
|
|
(80,417 |
) |
TOTAL REVENUES |
|
382,954 |
|
|
|
456,500 |
|
|
|
|
539,154 |
|
|
|
1,736,234 |
|
|
|
1,800,145 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EXPENSES |
|
|
|
|
|
|
|
|
|
|
||||||||||
Salaries, benefits and related expenses |
|
231,374 |
|
|
|
262,000 |
|
|
|
|
253,231 |
|
|
|
1,006,635 |
|
|
|
868,265 |
|
Occupancy, equipment rentals and other office related expenses |
|
8,386 |
|
|
|
8,283 |
|
|
|
|
6,826 |
|
|
|
30,986 |
|
|
|
29,621 |
|
General and administrative expenses |
|
131,335 |
|
|
|
141,358 |
|
|
|
|
122,097 |
|
|
|
519,449 |
|
|
|
395,871 |
|
TOTAL EXPENSES |
|
371,095 |
|
|
411,641 |
|
|
|
|
382,154 |
|
|
|
1,557,070 |
|
|
|
1,293,757 |
|
|
IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS |
|
(1,380,630 |
) |
|
|
— |
|
|
|
|
— |
|
|
|
(1,380,630 |
) |
|
|
— |
|
OTHER, NET |
|
6,287 |
|
|
|
9,691 |
|
|
|
|
(3,807 |
) |
|
|
5,250 |
|
|
|
(6,131 |
) |
NET INCOME (LOSS) BEFORE INCOME TAXES |
|
(1,362,485 |
) |
|
|
54,550 |
|
|
|
|
153,193 |
|
|
|
(1,196,216 |
) |
|
|
500,257 |
|
Provision (benefit) for income taxes |
|
(26,197 |
) |
|
|
4,440 |
|
|
|
|
770 |
|
|
|
(19,534 |
) |
|
|
2,344 |
|
NET INCOME (LOSS) |
|
(1,336,288 |
) |
|
|
50,110 |
|
|
|
|
152,423 |
|
|
|
(1,176,682 |
) |
|
|
497,913 |
|
CRNCI |
|
— |
|
|
|
— |
|
|
|
|
1,210 |
|
|
|
— |
|
|
|
(21,749 |
) |
Noncontrolling interest |
|
(940,839 |
) |
|
|
28,726 |
|
|
|
|
198 |
|
|
|
(924,741 |
) |
|
|
1,274 |
|
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST |
$ |
(395,449 |
) |
|
$ |
21,384 |
|
|
|
$ |
151,015 |
|
|
$ |
(251,941 |
) |
|
$ |
518,388 |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EARNINGS (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic weighted average shares outstanding |
|
59,806,378 |
|
|
|
59,861,171 |
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Basic net income (loss) per share |
$ |
(6.61 |
) |
|
$ |
0.36 |
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Diluted weighted average shares outstanding |
|
189,436,869 |
|
|
|
191,161,431 |
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
Diluted net income (loss) per share |
$ |
(6.72 |
) |
|
$ |
0.22 |
|
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
Webcast and Conference Call
Management will host a webcast and conference call on
To listen to the audio webcast of the conference call, please visit the “Investors” section of the Company's website at https://www.financeofamerica.com. The conference call can also be accessed by dialing the following:
-
1-844-200-6205 (Domestic)
-
1-929-526-1599 (International)
- Conference ID: 647952
Replay
A replay of the call will also be available on the Company's website approximately two hours after the conclusion of the conference call through
About
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the
Non-GAAP Financial Measures
The Company’s management evaluates performance of the Company through the use certain non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA and Adjusted Diluted Earnings per Share.
We define Adjusted Net Income as net income (loss) adjusted for change in fair value of loans and securities held for investment due to assumption changes, amortization and other impairments, equity based compensation, change in fair value of deferred purchase price obligations (including earnouts and TRA obligations), warrant liability, and minority investments and certain non-recurring costs.
We define Adjusted EBITDA as Adjusted Net Income (defined above) adjusted for taxes, interest on non-funding debt and depreciation.
We define Adjusted Diluted Earnings Per Share as Adjusted Net Income (defined above) divided by our weighted average diluted share count, which includes our issued and outstanding Class A Common Stock shares plus Finance of America Equity Capital LLC’s
The presentation of non-GAAP measures is used to enhance investors’ understanding of certain aspects of our financial performance. This discussion is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with
These non-GAAP financial measures should not be considered as an alternate to (i) net income (loss) or any other performance measures determined in accordance with GAAP or (ii) operating cash flows determine in accordance with GAAP. Adjusted Net Income and Adjusted EBITDA have important limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Some of the limitations of these metrics are: (i) cash expenditures for future contractual commitments; (ii) cash requirements for working capital needs; (iii) cash requirements for certain tax payments; and (iv) all non-cash income/expense items.
Because of these limitations, Adjusted Net Income, Adjusted EBITDA, and Adjusted Diluted Earnings per Share should not be considered as measures of discretionary cash available to us to invest in the growth of our business or distribute to stockholders. We compensate for these limitations by relying primarily on our GAAP results and using our non-GAAP financial measures only as a supplement. Users of our interim unaudited consolidated financial statements are cautioned not to place undue reliance on our non-GAAP financial measures.
View source version on businesswire.com: https://www.businesswire.com/news/home/20220302005898/en/
For Finance of America Media: pr@financeofamerica.com
For Finance of America Investor Relations: ir@financeofamerica.com
Source:
FAQ
What were Finance of America’s Q4 2021 earnings results?
How did Finance of America's total originations perform in 2021?
What was the adjusted net income for Finance of America in Q4 2021?
Why did Finance of America report a significant net loss?
