Finance of America Reports Fourth Quarter and Full Year 2023 Results
- Net income of $171 million for the quarter with $0.72 basic earnings per share.
- 20% improvement in adjusted net basis over the prior quarter.
- 37% share of HECM Reverse market maintained by Finance of America.
- Strategic transactions establishing the company as a premier platform for homeowners 55 and older.
- Excitement for future growth with a strong position in modern retirement solutions.
- Financial results show positive trends in revenue margin and reduced expenses.
- Adjusted net loss of $20 million for the quarter.
- Decline in funded volume by 65% compared to the previous year.
- Increase in total liabilities by $541 million on a sequential-quarter basis.
- Impairment of intangibles and other assets affecting financial performance.
Insights
Finance of America's reported earnings indicate a significant turnaround in the fourth quarter, with a net income from continuing operations of $171 million. This figure is particularly noteworthy when juxtaposed with the adjusted net loss of $20 million. The improvement in net income is primarily attributed to non-cash, positive fair value changes, which can be volatile and are not necessarily indicative of operational performance. However, the reported 20% improvement on an adjusted net basis over the prior quarter does suggest some underlying operational progress.
From a financial analysis perspective, the substantial increase in total revenues, reporting a 494% increase quarter-over-quarter, is a positive sign. However, this must be tempered by the fact that the funded volume has decreased, with a 13% decline from the prior quarter and a 36% decline year-over-year. This contraction may raise concerns about the company's growth trajectory and market demand for its products.
The company's 37% market share in the HECM Reverse market suggests a strong positioning within its niche, yet the overall decrease in funded volume could signal market saturation or increased competition. Investors should monitor how these market dynamics evolve and how the company adapts its strategies accordingly.
The Retirement Solutions segment of Finance of America is a critical area to watch, as it drives revenue through net origination gains and fees from reverse mortgage loans. The 67% improvement in adjusted net loss in this segment is a positive development, especially considering the higher revenue margin and reduced expenses. However, the decrease in funded volume may be a point of concern, potentially reflecting a downturn in consumer demand or a strategic shift within the company.
On the other hand, the Portfolio Management segment's performance, with a 333% increase in total revenue, is largely due to non-cash fair value adjustments. This indicates that while the segment's performance looks robust on paper, the underlying operational results are break-even, highlighting the importance of scrutinizing non-cash items that can significantly influence reported earnings.
The increase in total equity by 162% is a strong indicator of improved financial health, which may be reassuring to investors. However, the 30% decrease in cash and cash equivalents could be a liquidity concern and warrants further investigation into the company's cash flow management and investment strategies.
While the financial report does not raise any immediate legal concerns, the use of non-GAAP financial measures, such as adjusted net income (loss) and adjusted EBITDA, is worth noting. These measures exclude certain items that the company deems non-recurring or not reflective of core business operations. While permitted and often used to provide additional insight into a company's performance, these measures lack standardization and can vary significantly between companies. It is crucial for stakeholders to understand the adjustments made and to consider these figures in conjunction with GAAP measures to gain a comprehensive view of the company's financial health.
Additionally, the report mentions certain non-recurring costs and adjustments, which may include legal and regulatory matters. Stakeholders should be aware that such costs, although not specified in detail, could have implications for the company's risk profile and should be monitored for any potential future legal liabilities or regulatory actions.
– Net income from continuing operations of
–
– Finished the year with
Fourth Quarter and Full Year 2023 Highlights
-
Net income from continuing operations for the fourth quarter of
$171 million $0.72 -
For the quarter, the Company recognized an adjusted net loss(1) of
$20 million $0.09 20% over the prior quarter. -
67% improvement in adjusted net loss in Retirement Solutions in the fourth quarter driven by higher revenue margin and reduced expenses compared to the prior quarter. -
For the full year, our subsidiary, Finance of America Reverse maintained
37% share of the HECM Reverse market.(2)
(1) See the sections titled “Reconciliation to GAAP” and “Non-GAAP Financial Measures” for reconciliations to the most directly comparable GAAP measures and other important disclosures.
(2) Source: https://www.newviewadvisors.com/commentary/2023-full-year-hmbs-issuer-league-tables/; measured by HMBS issuance.
Graham A. Fleming, Chief Executive Officer commented, “2023 was a transformational period for Finance of America and I want to thank our entire team for their hard work and determination over the course of the year. We completed a series of strategic transactions that helped establish the Company as the preeminent platform for homeowners 55 and older seeking to benefit from their home equity. With most of these efforts now behind us, we are excited to move forward. As a business, we are firmly positioned as the leading provider of modern retirement solutions with the potential to reach tens of millions of customers nationwide.”
Fourth Quarter Financial Summary of Continuing Operations
($ amounts in millions, except per share data) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||||||||||
|
|
Q4'23 |
|
Q3'23 |
|
Q4'23 vs Q3'23 |
|
Q4'22 |
|
Q4'23 vs Q4'22 |
|
|
2023 |
|
|
|
2022 |
|
|
2023 vs 2022 |
|||||||||
Funded volume |
|
$ |
446 |
|
|
$ |
512 |
|
|
(13 |
)% |
|
$ |
701 |
|
|
(36 |
)% |
|
$ |
1,762 |
|
|
$ |
5,076 |
|
|
(65 |
)% |
Total revenues |
|
|
276 |
|
|
|
(70 |
) |
|
494 |
% |
|
|
65 |
|
|
325 |
% |
|
|
234 |
|
|
|
53 |
|
|
342 |
% |
Total expenses and other, net |
|
|
95 |
|
|
|
102 |
|
|
(7 |
)% |
|
|
107 |
|
|
(11 |
)% |
|
|
392 |
|
|
|
386 |
|
|
2 |
% |
Pre-tax income (loss) from continuing operations |
|
|
172 |
|
|
|
(173 |
) |
|
199 |
% |
|
|
(48 |
) |
|
458 |
% |
|
|
(167 |
) |
|
|
(343 |
) |
|
51 |
% |
Net income (loss) from continuing operations |
|
|
171 |
|
|
|
(172 |
) |
|
199 |
% |
|
|
(49 |
) |
|
449 |
% |
|
|
(166 |
) |
|
|
(326 |
) |
|
49 |
% |
Adjusted net income (loss)(1) |
|
|
(20 |
) |
|
|
(25 |
) |
|
20 |
% |
|
|
(5 |
) |
|
(300 |
)% |
|
|
(87 |
) |
|
|
54 |
|
|
(261 |
)% |
Adjusted EBITDA(1) |
|
|
(18 |
) |
|
|
(25 |
) |
|
28 |
% |
|
|
1 |
|
|
(1,900 |
)% |
|
|
(82 |
) |
|
|
107 |
|
|
(177 |
)% |
Basic net earnings (loss) per share |
|
$ |
0.72 |
|
|
$ |
(0.74 |
) |
|
197 |
% |
|
$ |
(0.22 |
) |
|
427 |
% |
|
$ |
(0.75 |
) |
|
$ |
(1.03 |
) |
|
27 |
% |
Diluted net income (loss) per share(2) |
|
$ |
0.55 |
|
|
$ |
(0.74 |
) |
|
174 |
% |
|
$ |
(0.22 |
) |
|
350 |
% |
|
$ |
(0.75 |
) |
|
$ |
(1.58 |
) |
|
53 |
% |
Adjusted earnings (loss) per share(1) |
|
$ |
(0.09 |
) |
|
$ |
(0.11 |
) |
|
18 |
% |
|
$ |
(0.03 |
) |
|
(200 |
)% |
|
$ |
(0.40 |
) |
|
$ |
0.29 |
|
|
(238 |
)% |
(1) 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.
(2) Calculated on an if-converted basis except when anti-dilutive.
Balance Sheet Highlights
($ amounts in millions) |
|
December 31, |
|
September 30, |
|
Variance (%) |
|||
|
|
2023 |
|
2023 |
|
Q4 2023 vs. Q3 2023 |
|||
Cash and cash equivalents |
|
$ |
46 |
|
$ |
66 |
|
(30 |
)% |
Securitized loans held for investment (HMBS & nonrecourse) |
|
|
25,821 |
|
|
25,098 |
|
3 |
% |
Total assets |
|
|
27,108 |
|
|
26,397 |
|
3 |
% |
Total liabilities |
|
|
26,835 |
|
|
26,294 |
|
2 |
% |
Total equity |
|
|
272 |
|
|
104 |
|
162 |
% |
-
Ended the fourth quarter with cash and cash equivalents from continuing operations of
$46 million -
Securitized loans held for investment (HMBS & nonrecourse) increased
3% as new production combined with the positive change in fair value related to market rates and spreads. -
Total assets increased
3% in line with the change in securitized loans held for investment. -
Total liabilities increased
$541 million
Segment Results
Retirement Solutions
The Retirement Solutions segment primarily generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of reverse mortgage loans.
|
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||||||
($ amounts in millions) |
|
Q4'23 |
|
Q3'23 |
|
Q4'23 vs Q3'23 |
|
Q4'22 |
|
Q4'23 vs Q4'22 |
|
|
2023 |
|
|
|
2022 |
|
2023 vs 2022 |
|||||||||
Funded volume |
|
$ |
446 |
|
|
$ |
512 |
|
|
(13 |
)% |
|
$ |
701 |
|
|
(36 |
)% |
|
$ |
1,762 |
|
|
$ |
5,076 |
|
(65 |
)% |
Total revenue |
|
|
41 |
|
|
|
40 |
|
|
3 |
% |
|
|
32 |
|
|
28 |
% |
|
|
149 |
|
|
|
300 |
|
(50 |
)% |
Pre-tax income (loss) |
|
|
(13 |
) |
|
|
(20 |
) |
|
35 |
% |
|
|
(13 |
) |
|
— |
% |
|
|
(60 |
) |
|
|
117 |
|
(151 |
)% |
Adjusted net income (loss) |
|
|
(2 |
) |
|
|
(6 |
) |
|
67 |
% |
|
|
4 |
|
|
(150 |
)% |
|
|
(12 |
) |
|
|
122 |
|
(110 |
)% |
-
Funded volume decreased
13% quarter over quarter due to minimal Home Improvement production, as a result of the continued wind-down of the Home Improvement business, seasonality and the commencement of a loan origination system migration in December. Within our Reverse business, funded volume decreased to$436 million 7% from the prior quarter. -
Fourth quarter revenue increased
3% from the third quarter to$41 million
Portfolio Management
The Portfolio Management segment generates revenue and earnings in the form of fair value gains or losses, gain on sale of loans, interest income, servicing income, fees for underwriting, advisory and valuation services and other ancillary fees.
|
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||||
($ amounts in millions) |
|
Q4'23 |
|
Q3'23 |
|
Q4'23 vs Q3'23 |
|
Q4'22 |
|
Q4'23 vs Q4'22 |
|
|
2023 |
|
|
2022 |
|
|
2023 vs 2022 |
|||||||
Assets under management |
|
$ |
26,773 |
|
$ |
26,023 |
|
|
3 |
% |
|
$ |
20,186 |
|
33 |
% |
|
$ |
26,773 |
|
$ |
20,186 |
|
|
33 |
% |
Assets excluding HMBS and nonrecourse obligations |
|
|
1,515 |
|
|
1,232 |
|
|
23 |
% |
|
|
1,846 |
|
(18 |
)% |
|
|
1,515 |
|
|
1,846 |
|
|
(18 |
)% |
Total revenue |
|
|
240 |
|
|
(103 |
) |
|
333 |
% |
|
|
30 |
|
700 |
% |
|
|
115 |
|
|
(220 |
) |
|
152 |
% |
Pre-tax income (loss) |
|
|
217 |
|
|
(124 |
) |
|
275 |
% |
|
|
3 |
|
7133 |
% |
|
|
25 |
|
|
(347 |
) |
|
107 |
% |
Adjusted net income |
|
|
— |
|
|
— |
|
|
— |
% |
|
|
7 |
|
(100 |
)% |
|
|
6 |
|
|
16 |
|
|
(63 |
)% |
- Fourth quarter revenue was materially impacted by positive non-cash fair value adjustments on assets held for investment and related liabilities, as we updated model assumptions to account for changes in market interest rates, home price appreciation and credit spreads during the quarter.
- Excluding these adjustments, the segment was break-even for the quarter.
Reconciliation to GAAP
($ amounts in millions)(1) |
Q4'23 |
|
Q3'23 |
|
Q4'22 |
|
|
2023 |
|
|
|
2022 |
|
||||||
Reconciliation of net income (loss) from continuing operations to adjusted net income (loss) and adjusted EBITDA |
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) from continuing operations |
$ |
171 |
|
|
$ |
(172 |
) |
|
$ |
(49 |
) |
|
$ |
(166 |
) |
|
$ |
(326 |
) |
Add back: Benefit (provision) for income taxes |
|
(1 |
) |
|
|
1 |
|
|
|
(1 |
) |
|
|
1 |
|
|
|
17 |
|
Net income (loss) from continuing operations before taxes |
|
172 |
|
|
|
(173 |
) |
|
|
(48 |
) |
|
|
(167 |
) |
|
|
(343 |
) |
Adjustments for: |
|
|
|
|
|
|
|
|
|
||||||||||
Changes in fair value(2) |
|
(221 |
) |
|
|
120 |
|
|
|
12 |
|
|
|
(24 |
) |
|
|
334 |
|
Amortization and impairment of intangibles and other assets(3) |
|
17 |
|
|
|
9 |
|
|
|
15 |
|
|
|
44 |
|
|
|
47 |
|
Share-based compensation(4) |
|
3 |
|
|
|
3 |
|
|
|
4 |
|
|
|
13 |
|
|
|
18 |
|
Certain non-recurring costs(5) |
|
2 |
|
|
|
6 |
|
|
|
9 |
|
|
|
14 |
|
|
|
19 |
|
Adjusted net income (loss) before taxes |
|
(27 |
) |
|
|
(34 |
) |
|
|
(7 |
) |
|
|
(118 |
) |
|
|
76 |
|
Benefit (provision) for income taxes(6) |
|
7 |
|
|
|
8 |
|
|
|
2 |
|
|
|
31 |
|
|
|
(21 |
) |
Adjusted net income (loss) |
|
(20 |
) |
|
|
(25 |
) |
|
|
(5 |
) |
|
|
(87 |
) |
|
|
54 |
|
Provision (benefit) for income taxes(6) |
|
(7 |
) |
|
|
(8 |
) |
|
|
(2 |
) |
|
|
(31 |
) |
|
|
21 |
|
Depreciation |
|
1 |
|
|
|
1 |
|
|
|
1 |
|
|
|
5 |
|
|
|
4 |
|
Interest expense on non-funding debt |
|
8 |
|
|
|
8 |
|
|
|
7 |
|
|
|
31 |
|
|
|
28 |
|
Adjusted EBITDA |
$ |
(18 |
) |
|
$ |
(25 |
) |
|
$ |
1 |
|
|
$ |
(82 |
) |
|
$ |
107 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
($ amounts in millions except shares and $ per share) |
Q4'23 |
|
Q3'23 |
|
Q4'22 |
|
|
2023 |
|
|
|
2022 |
|
||||||
GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) from continuing operations attributable to controlling interest |
$ |
64 |
|
|
$ |
(65 |
) |
|
$ |
(14 |
) |
|
$ |
(61 |
) |
|
$ |
(64 |
) |
Weighted average outstanding share count |
|
88,425,793 |
|
|
|
87,726,231 |
|
|
|
63,204,118 |
|
|
|
81,977,533 |
|
|
|
62,298,532 |
|
Basic net income (loss) per share from continuing operations |
$ |
0.72 |
|
|
$ |
(0.74 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.75 |
) |
|
$ |
(1.03 |
) |
If-converted method net income (loss) from continuing operations |
$ |
128 |
|
|
$ |
(65 |
) |
|
$ |
(14 |
) |
|
$ |
(61 |
) |
|
$ |
(298 |
) |
Weighted average diluted share count |
|
229,300,885 |
|
|
|
87,726,231 |
|
|
|
63,204,118 |
|
|
|
81,977,533 |
|
|
|
188,236,513 |
|
Diluted net income (loss) per share from continuing operations(7) |
$ |
0.55 |
|
|
$ |
(0.74 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.75 |
) |
|
$ |
(1.58 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||||
NON-GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted net income (loss) |
$ |
(20 |
) |
|
$ |
(25 |
) |
|
$ |
(5 |
) |
|
$ |
(87 |
) |
|
$ |
54 |
|
Weighted average share count |
|
229,300,885 |
|
|
|
229,166,288 |
|
|
|
187,822,766 |
|
|
|
219,051,258 |
|
|
|
188,236,513 |
|
Adjusted earnings (loss) per share |
$ |
(0.09 |
) |
|
$ |
(0.11 |
) |
|
$ |
(0.03 |
) |
|
$ |
(0.40 |
) |
|
$ |
0.29 |
|
(1) Totals may not foot due to rounding.
(2) Changes in fair value include changes in fair value of loans and securities held for investment and related obligations, deferred purchase price obligations, contingent earnout, warrant liability, and minority investments.
(3) Includes amortization and impairment of intangibles and impairment of certain other long-lived assets during the periods presented.
(4) Includes equity-based compensation for Replacement Restricted Stock Units and Earnout Right Restricted Stock Units, which are funded
(5) Certain non-recurring costs 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 amounts recognized for settlement of legal and regulatory matters, acquisition or divestiture-related expenses, and other one-time charges.
(6) We applied an effective combined corporate tax rate to adjusted consolidated pre-tax income (loss) for the respective period to determine the tax effect of adjusted consolidated net income (loss).
(7) Calculated on an if-converted basis except when anti-dilutive.
Adjusted Net Income by Segment (Continuing Operations)
|
|
|||||||||||||||
For the three months ended December 31, 2023 |
|
|
||||||||||||||
($ amounts in millions except shares and $ per share)(1) |
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
||||||||||||
Pre-tax income (loss) |
$ |
(13 |
) |
$ |
217 |
|
$ |
(33 |
) |
$ |
172 |
|
||||
Adjustments for: |
|
|
|
|
||||||||||||
Changes in fair value(2) |
|
— |
|
|
(224 |
) |
|
3 |
|
|
(221 |
) |
||||
Amortization and impairment of intangibles and other assets(3) |
|
9 |
|
|
6 |
|
|
1 |
|
|
17 |
|
||||
Share-based compensation(4) |
|
1 |
|
|
— |
|
|
2 |
|
|
3 |
|
||||
Certain non-recurring costs(5) |
|
— |
|
|
— |
|
|
2 |
|
|
2 |
|
||||
Adjusted net loss before taxes |
$ |
(3 |
) |
$ |
— |
|
$ |
(24 |
) |
$ |
(27 |
) |
||||
Benefit for income taxes(6) |
|
(1 |
) |
|
— |
|
|
(6 |
) |
|
(7 |
) |
||||
Adjusted net loss |
$ |
(2 |
) |
$ |
— |
|
$ |
(18 |
) |
$ |
(20 |
) |
||||
Weighted average share count |
|
229,300,885 |
|
|
229,300,885 |
|
|
229,300,885 |
|
|
229,300,885 |
|
||||
Adjusted loss per share |
$ |
(0.01 |
) |
$ |
— |
|
$ |
(0.08 |
) |
$ |
(0.09 |
) |
||||
|
||||||||||||||||
For the three months ended September 30, 2023 |
|
|
||||||||||||||
($ amounts in millions except shares and $ per share)(1) |
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
||||||||||||
Pre-tax loss |
$ |
(20 |
) |
$ |
(124 |
) |
$ |
(28 |
) |
$ |
(173 |
) |
||||
Adjustments for: |
|
|
|
|
||||||||||||
Changes in fair value(2) |
|
— |
|
|
124 |
|
|
(4 |
) |
|
120 |
|
||||
Amortization of intangible assets(3) |
|
9 |
|
|
— |
|
|
— |
|
|
9 |
|
||||
Share-based compensation(4) |
|
1 |
|
|
— |
|
|
2 |
|
|
3 |
|
||||
Certain non-recurring costs(5) |
|
1 |
|
|
— |
|
|
4 |
|
|
6 |
|
||||
Adjusted net loss before taxes |
$ |
(8 |
) |
$ |
— |
|
$ |
(26 |
) |
$ |
(34 |
) |
||||
Benefit for income taxes(6) |
|
(2 |
) |
|
— |
|
|
(6 |
) |
|
(8 |
) |
||||
Adjusted net loss |
$ |
(6 |
) |
$ |
— |
|
$ |
(19 |
) |
$ |
(25 |
) |
||||
Weighted average share count |
|
229,166,288 |
|
|
229,166,288 |
|
|
229,166,288 |
|
|
229,166,288 |
|
||||
Adjusted loss per share |
$ |
(0.03 |
) |
$ |
— |
|
$ |
(0.08 |
) |
$ |
(0.11 |
) |
||||
|
|
|||||||||||||||
For the three months ended December 31, 2022 |
|
|
||||||||||||||
($ amounts in millions except shares and $ per share)(1) |
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
||||||||||||
Pre-tax income (loss) |
$ |
(13 |
) |
$ |
3 |
|
$ |
(37 |
) |
$ |
(48 |
) |
||||
Adjustments for: |
|
|
|
|
||||||||||||
Changes in fair value(2) |
|
— |
|
|
6 |
|
|
6 |
|
|
12 |
|
||||
Amortization and impairment of intangibles and other assets(3) |
|
13 |
|
|
— |
|
|
2 |
|
|
15 |
|
||||
Share-based compensation(4) |
|
1 |
|
|
— |
|
|
2 |
|
|
4 |
|
||||
Certain non-recurring costs(5) |
|
4 |
|
|
— |
|
|
5 |
|
|
9 |
|
||||
Adjusted net income (loss) before taxes |
$ |
5 |
|
$ |
9 |
|
$ |
(22 |
) |
$ |
(7 |
) |
||||
Provision (benefit) for income taxes(6) |
|
1 |
|
|
2 |
|
|
(6 |
) |
|
(2 |
) |
||||
Adjusted net income (loss) |
$ |
4 |
|
$ |
7 |
|
$ |
(16 |
) |
$ |
(5 |
) |
||||
Weighted average share count |
|
187,822,266 |
|
|
187,822,266 |
|
|
187,822,266 |
|
|
187,822,266 |
|
||||
Adjusted earnings (loss) per share |
$ |
0.02 |
|
$ |
0.04 |
|
$ |
(0.09 |
) |
$ |
(0.03 |
) |
||||
|
||||||||||||||||
For the year ended December 31, 2023 |
|
|
||||||||||||||
($ amounts in millions except shares and $ per share)(1) |
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
||||||||||||
Pre-tax income (loss) |
$ |
(60 |
) |
$ |
25 |
|
$ |
(132 |
) |
$ |
(167 |
) |
||||
Adjustments for: |
|
|
|
|
||||||||||||
Changes in fair value(2) |
|
— |
|
|
(24 |
) |
|
— |
|
|
(24 |
) |
||||
Amortization and impairment of intangibles and other assets(3) |
|
37 |
|
|
6 |
|
|
1 |
|
|
44 |
|
||||
Share-based compensation(4) |
|
3 |
|
|
1 |
|
|
9 |
|
|
13 |
|
||||
Certain non-recurring costs(5) |
|
3 |
|
|
1 |
|
|
10 |
|
|
14 |
|
||||
Adjusted net income (loss) before taxes |
$ |
(16 |
) |
$ |
8 |
|
$ |
(110 |
) |
$ |
(118 |
) |
||||
Provision (benefit) for income taxes(6) |
|
(4 |
) |
|
2 |
|
|
(29 |
) |
|
(31 |
) |
||||
Adjusted net income (loss) |
$ |
(12 |
) |
$ |
6 |
|
$ |
(81 |
) |
$ |
(87 |
) |
||||
Weighted average share count |
|
219,051,258 |
|
|
219,051,258 |
|
|
219,051,258 |
|
|
219,051,258 |
|
||||
Adjusted earnings (loss) per share |
$ |
(0.06 |
) |
$ |
0.03 |
|
$ |
(0.37 |
) |
$ |
(0.40 |
) |
||||
|
|
|||||||||||||||
For the year ended December 31, 2022 |
|
|
||||||||||||||
($ amounts in millions except shares and $ per share)(1) |
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
||||||||||||
Pre-tax income (loss) |
$ |
117 |
|
$ |
(347 |
) |
$ |
(113 |
) |
$ |
(343 |
) |
||||
Adjustments for: |
|
|
|
|
||||||||||||
Changes in fair value(2) |
|
— |
|
|
362 |
|
|
(28 |
) |
|
334 |
|
||||
Amortization and impairment of intangibles and other assets(3) |
|
41 |
|
|
4 |
|
|
2 |
|
|
47 |
|
||||
Share-based compensation(4) |
|
6 |
|
|
2 |
|
|
11 |
|
|
18 |
|
||||
Certain non-recurring costs(5) |
|
1 |
|
|
1 |
|
|
17 |
|
|
19 |
|
||||
Adjusted net income (loss) before taxes |
$ |
165 |
|
$ |
22 |
|
$ |
(111 |
) |
$ |
76 |
|
||||
Provision (benefit) for income taxes(6) |
|
43 |
|
6 |
|
|
(29 |
) |
|
21 |
|
|||||
Adjusted net income (loss) |
$ |
122 |
|
$ |
16 |
|
$ |
(83 |
) |
$ |
54 |
|
||||
Weighted average share count |
|
188,236,513 |
|
|
188,236,513 |
|
|
188,236,513 |
|
|
188,236,513 |
|
||||
Adjusted earnings (loss) per share |
$ |
0.65 |
|
$ |
0.09 |
|
$ |
(0.44 |
) |
$ |
0.29 |
|
||||
(1) Totals may not foot due to rounding.
(2) Changes in fair value include changes in fair value of loans and securities held for investment and related obligations, deferred purchase price obligations, contingent earnout, warrant liability, and minority investments.
(3) Includes amortization and impairment of intangibles and impairment of certain long-lived assets recognized during the periods presented.
(4) Includes equity-based compensation for Replacement Restricted Stock Units and Earnout Right Restricted Stock Units, which are funded
(5) Certain non-recurring costs 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 amounts recognized for settlement of legal and regulatory matters, acquisition or divestiture-related expenses, and other one-time charges.
(6) We applied an effective combined corporate tax rate to adjusted consolidated pre-tax income (loss) for the respective period to determine the tax effect of adjusted consolidated net income (loss).
Finance of America Companies Inc. and Subsidiaries
|
|||||||
|
December 31, 2023 |
|
September 30, 2023 |
||||
ASSETS |
|
|
|
||||
Cash and cash equivalents |
$ |
46,482 |
|
|
$ |
66,341 |
|
Restricted cash |
|
178,319 |
|
|
|
216,273 |
|
Loans held for investment, subject to HMBS related obligations, at fair value |
|
17,548,763 |
|
|
|
17,185,552 |
|
Loans held for investment, subject to nonrecourse debt, at fair value |
|
8,272,393 |
|
|
|
7,912,759 |
|
Loans held for investment, at fair value |
|
575,228 |
|
|
|
467,319 |
|
Loans held for sale, at fair value |
|
4,246 |
|
|
|
23,956 |
|
Intangible assets, net |
|
253,531 |
|
|
|
269,228 |
|
Other assets, net |
|
221,907 |
|
|
|
247,678 |
|
Assets of discontinued operations |
|
6,721 |
|
|
|
8,356 |
|
TOTAL ASSETS |
$ |
27,107,590 |
|
|
$ |
26,397,462 |
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
||||
HMBS related obligations, at fair value |
$ |
17,353,720 |
|
|
$ |
16,978,168 |
|
Nonrecourse debt, at fair value |
|
7,904,200 |
|
|
|
7,812,570 |
|
Other financing lines of credit |
|
928,479 |
|
|
|
852,813 |
|
Notes payable, net (includes amounts due to related parties of |
|
410,911 |
|
|
|
411,124 |
|
Payables and other liabilities |
|
219,569 |
|
|
|
220,818 |
|
Liabilities of discontinued operations |
|
18,304 |
|
|
|
18,360 |
|
TOTAL LIABILITIES |
|
26,835,183 |
|
|
|
26,293,853 |
|
|
|
|
|
||||
EQUITY |
|
|
|
||||
Class A Common Stock, |
|
10 |
|
|
|
9 |
|
Class B Common Stock, |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
946,929 |
|
|
|
940,717 |
|
Accumulated deficit |
|
(714,383 |
) |
|
|
(775,744 |
) |
Accumulated other comprehensive loss |
|
(249 |
) |
|
|
(221 |
) |
Noncontrolling interest |
|
40,100 |
|
|
|
(61,152 |
) |
TOTAL EQUITY |
|
272,407 |
|
|
|
103,609 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
27,107,590 |
|
|
$ |
26,397,462 |
|
Finance of America Companies Inc. and Subsidiaries Selected Financial Information
Consolidated Statements of Operations
(Unaudited) |
|||||||||||||||||||
|
Q4'23 |
|
Q3'23 |
|
Q4'22 |
|
|
2023 |
|
|
|
2022 |
|
||||||
REVENUES |
|
|
|
|
|
|
|
|
|
||||||||||
Net fair value gains (losses) on loans and related obligations |
$ |
292,203 |
|
|
$ |
(53,135 |
) |
|
$ |
94,598 |
|
|
$ |
322,329 |
|
|
$ |
89,489 |
|
Fee income |
|
10,073 |
|
|
|
13,201 |
|
|
|
9,590 |
|
|
|
43,450 |
|
|
|
81,815 |
|
Loss on sale and other income from loans held for sale, net |
|
(1,530 |
) |
|
|
(6,984 |
) |
|
|
(5,689 |
) |
|
|
(24,994 |
) |
|
|
(5,931 |
) |
Net interest expense: |
|
|
|
|
|
|
|
|
|
||||||||||
Interest income |
|
2,459 |
|
|
|
4,443 |
|
|
|
718 |
|
|
|
12,193 |
|
|
|
6,038 |
|
Interest expense |
|
(27,473 |
) |
|
|
(27,965 |
) |
|
|
(34,610 |
) |
|
|
(118,728 |
) |
|
|
(118,649 |
) |
Net interest expense |
|
(25,014 |
) |
|
|
(23,522 |
) |
|
|
(33,892 |
) |
|
|
(106,535 |
) |
|
|
(112,611 |
) |
TOTAL REVENUES |
|
275,732 |
|
|
|
(70,440 |
) |
|
|
64,607 |
|
|
|
234,250 |
|
|
|
52,762 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EXPENSES |
|
|
|
|
|
|
|
|
|
||||||||||
Salaries, benefits, and related expenses |
|
37,850 |
|
|
|
48,557 |
|
|
|
43,252 |
|
|
|
178,319 |
|
|
|
206,943 |
|
Loan production and portfolio related expenses |
|
5,194 |
|
|
|
6,370 |
|
|
|
11,896 |
|
|
|
26,490 |
|
|
|
52,079 |
|
Loan servicing expenses |
|
7,455 |
|
|
|
8,000 |
|
|
|
7,250 |
|
|
|
30,729 |
|
|
|
33,063 |
|
Marketing and advertising expenses |
|
9,729 |
|
|
|
11,491 |
|
|
|
1,459 |
|
|
|
31,896 |
|
|
|
13,031 |
|
Depreciation and amortization |
|
9,939 |
|
|
|
9,954 |
|
|
|
9,959 |
|
|
|
42,369 |
|
|
|
42,028 |
|
General and administrative expenses |
|
22,632 |
|
|
|
21,054 |
|
|
|
27,212 |
|
|
|
82,204 |
|
|
|
71,082 |
|
TOTAL EXPENSES |
|
92,799 |
|
|
|
105,426 |
|
|
|
101,028 |
|
|
|
392,007 |
|
|
|
418,226 |
|
IMPAIRMENT OF INTANGIBLES AND OTHER ASSETS |
|
(8,738 |
) |
|
|
(558 |
) |
|
|
(5,728 |
) |
|
|
(9,296 |
) |
|
|
(9,528 |
) |
OTHER, NET |
|
(2,641 |
) |
|
|
3,853 |
|
|
|
(5,614 |
) |
|
|
211 |
|
|
|
31,992 |
|
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
|
171,554 |
|
|
|
(172,571 |
) |
|
|
(47,763 |
) |
|
|
(166,842 |
) |
|
|
(343,000 |
) |
Provision (benefit) for income taxes from continuing operations |
|
193 |
|
|
|
(103 |
) |
|
|
1,282 |
|
|
|
(593 |
) |
|
|
(17,132 |
) |
NET INCOME (LOSS) FROM CONTINUING OPERATIONS |
|
171,361 |
|
|
|
(172,468 |
) |
|
|
(49,045 |
) |
|
|
(166,249 |
) |
|
|
(325,868 |
) |
NET LOSS FROM DISCONTINUED OPERATIONS |
|
(6,698 |
) |
|
|
(2,464 |
) |
|
|
(132,965 |
) |
|
|
(51,909 |
) |
|
|
(389,660 |
) |
NET INCOME (LOSS) |
|
164,663 |
|
|
|
(174,932 |
) |
|
|
(182,010 |
) |
|
|
(218,158 |
) |
|
|
(715,528 |
) |
Noncontrolling interest |
|
103,302 |
|
|
|
(109,569 |
) |
|
|
(124,987 |
) |
|
|
(138,070 |
) |
|
|
(524,846 |
) |
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST |
$ |
61,361 |
|
|
$ |
(65,363 |
) |
|
$ |
(57,023 |
) |
|
$ |
(80,088 |
) |
|
$ |
(190,682 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||||
EARNINGS PER SHARE |
|
|
|
|
|
|
|
|
|
||||||||||
Basic weighted average shares outstanding |
|
88,425,793 |
|
|
|
87,726,231 |
|
|
|
63,204,118 |
|
|
|
81,977,533 |
|
|
|
62,298,532 |
|
Basic net income (loss) per share from continuing operations |
$ |
0.72 |
|
|
$ |
(0.74 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.75 |
) |
|
$ |
(1.03 |
) |
Basic net income (loss) per share |
$ |
0.69 |
|
|
$ |
(0.75 |
) |
|
$ |
(0.90 |
) |
|
$ |
(0.98 |
) |
|
$ |
(3.06 |
) |
Diluted weighted average shares outstanding |
|
229,300,885 |
|
|
|
87,726,231 |
|
|
|
63,204,118 |
|
|
|
81,977,533 |
|
|
|
188,236,513 |
|
Diluted net income (loss) per share from continuing operations |
$ |
0.55 |
|
|
$ |
(0.74 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.75 |
) |
|
$ |
(1.58 |
) |
Diluted net income (loss) per share |
$ |
0.53 |
|
|
$ |
(0.75 |
) |
|
$ |
(0.90 |
) |
|
$ |
(0.98 |
) |
|
$ |
(3.12 |
) |
Webcast and Conference Call
Management will host a webcast and conference call on Wednesday, March 6th at 5:00 pm Eastern Time to discuss the Company’s results for the fourth quarter and full year ended December 31, 2023. A copy of this press release will be posted prior to the call under the “Investors” section on Finance of America’s website at https://www.financeofamerica.com/investors.
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/investors. The conference call can also be accessed by dialing the following:
- 1-800-715-9871 (Domestic)
- 1-646-307-1963 (International)
- Conference ID: 5706924
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 until March 20, 2024. To access the replay, dial 1-800-770-2030 (
About Finance of America
Finance of America (NYSE: FOA) is a modern retirement solutions platform that provides customers with access to an innovative range of retirement offerings centered on the home. In addition, FOA offers capital markets and portfolio management capabilities primarily to optimize the distribution of its originated loans to investors. FOA is headquartered in
Forward-Looking Statements
This release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the
All of these factors are difficult to predict, contain uncertainties that may materially affect actual results and may be beyond our control. New factors emerge from time to time, and it is not possible for our management to predict all such factors or to assess the effect of each such new factor on our business. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and any of these statements included herein may prove to be inaccurate. Given 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. Please refer to “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (the “SEC”) on March 16, 2023, for further information on these and other risk factors affecting us, as such factors may be amended and updated from time to time in the Company’s subsequent periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov.
Non-GAAP Financial Measures
The Company’s management evaluates performance of the Company through the use of certain measures that are not prepared in accordance with
We define Adjusted Net Income (Loss) as net income (loss) from continuing operations adjusted for changes in fair value of loans and securities held for investment and related obligations due to assumption changes, deferred purchase price obligations (including earnouts and Tax Receivable Agreement (“TRA”) obligations), contingent earnout, warrant liability, and minority investments, amortization and impairment of intangibles and other assets, equity-based compensation, certain non-recurring costs, and pro-forma income tax provision adjustments to apply an effective combined corporate tax rate to adjusted consolidated pre-tax income (loss) from continuing operations.
We define Adjusted EBITDA as Adjusted Net Income (Loss) (defined above) adjusted for taxes, interest on non-funding debt, and depreciation.
We define Adjusted Earnings (Loss) Per Share as Adjusted Net Income (Loss) (defined above) divided by our weighted average outstanding shares, which includes our outstanding Class A Common Stock plus Finance of America Equity Capital LLC’s Class A LLC units owned by our noncontrolling interests on an if-converted basis.
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 alternative to net income (loss), operating cash flows, or any other performance measures determined in accordance with
Because of these limitations, Adjusted Net Income (Loss), Adjusted EBITDA, and Adjusted Earnings (Loss) 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 shareholders. We compensate for these limitations by relying primarily on our
A reconciliation of our forward-looking Adjusted Earnings per Share outlook to GAAP Earnings per Share and Net Income cannot be provided without unreasonable effort because of the inherent difficulty of accurately forecasting the occurrence and financial impact of the various adjusted items necessary for such reconciliation that have not yet occurred, are out of our control, or cannot be reasonably predicted. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a material impact on its future GAAP financial results.
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For Finance of America Media: pr@financeofamerica.com
For Finance of America Investor Relations: ir@financeofamerica.com
Source: Finance of America Companies Inc.
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