Finance of America Reports Second Quarter 2022 Results
Finance of America Companies Inc. (NYSE: FOA) reported a net loss of $168 million for Q2 2022, equating to $(0.65) per basic share, driven by negative fair value marks amid rising credit spreads. The adjusted net loss was $22 million, or $(0.12) per diluted share. Total revenue fell by 47% to $141 million while total expenses decreased by 10% to $310 million. The Mortgage Originations segment faced significant challenges with a 39% drop in funded volume year-over-year. The company aims to enhance margins and has reduced operational expenses in response to market volatility.
- Reverse Originations segment achieved a record funded volume of $1,580 million, a 7% increase from Q1 2022 and a 56% increase year-over-year.
- The company utilized cash generated from hedge gains to pay down debt and reduce balance sheet volatility.
- Net loss for the quarter was $168 million, a 163% increase from the prior quarter.
- Total revenue decreased 64% year-over-year, from $389 million to $141 million.
- Pre-tax losses increased significantly in multiple segments due to wider credit spreads and lower origination volumes.
– Net Loss for the quarter of
– Adjusted net loss* for the quarter of
Second Quarter 2022 Financial Highlights
-
For the second quarter of 2022, the Company recognized a net loss of
$168 million $0.65 $0.70 -
Net loss includes negative changes in fair value of long-term assets and liabilities carried at fair value* of
$111 million -
For the second quarter of 2022, the Company recognized an adjusted net loss* of
$22 million $0.12 -
The combined Specialty Finance and Services (SF&S) businesses produced a pre-tax loss of
$134 million $1 million $0.01
*See the sections titled “Reconciliation to GAAP” and “Non-GAAP Financial Measures” for reconciliations to the most directly comparable GAAP measures and other important disclosures.
We are committed to position FOA for long-term success and utilized the cash generated from hedge gains in the first half of 2022 to pay down our lines of credit and reduce volatility of the balance sheet. In addition, we have dramatically reduced run-rate expenses across the Company, but specifically in the Mortgage Originations segment, which has seen the biggest impact to volumes.
As we move forward, we remain focused on our strategic initiatives and will continue to take the necessary actions to return the company to profitability and ensure the long-term success of Finance of America.”
Second Quarter Financial Summary
($ amounts in millions, except margin and per share data) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||||||
|
|
Q2'22 |
|
Q1'22 |
|
Q2'22 vs
|
|
Q2'21 |
|
Q2'22 vs
|
|
YTD 2022 |
|
YTD 2021 |
|
2022 vs
|
||||||||||||
|
|
Successor |
|
Successor |
|
|
|
Successor |
|
|
|
Successor |
|
Combined (1) |
|
|
||||||||||||
Funded volume |
|
$ |
6,349 |
|
|
$ |
7,153 |
|
|
(11 |
)% |
|
$ |
8,342 |
|
|
(24 |
)% |
|
$ |
13,502 |
|
|
$ |
17,856 |
|
(24 |
)% |
Total revenue |
|
|
141 |
|
|
|
267 |
|
|
(47 |
)% |
|
|
389 |
|
|
(64 |
)% |
|
|
408 |
|
|
|
897 |
|
(55 |
)% |
Total expenses and other, net |
|
|
310 |
|
|
|
345 |
|
|
(10 |
)% |
|
|
403 |
|
|
(23 |
)% |
|
|
655 |
|
|
|
785 |
|
(17 |
)% |
Pre-tax net income (loss) |
|
|
(169 |
) |
|
|
(77 |
) |
|
(119 |
)% |
|
|
(14 |
) |
|
(1,107 |
)% |
|
|
(246 |
) |
|
|
112 |
|
(320 |
)% |
Net income (loss) |
|
|
(168 |
) |
|
|
(64 |
) |
|
(163 |
)% |
|
|
(15 |
) |
|
(1,020 |
)% |
|
|
(232 |
) |
|
|
109 |
|
(313 |
)% |
Adjusted net income(1) |
|
|
(22 |
) |
|
|
37 |
|
|
(159 |
)% |
|
|
57 |
|
|
(139 |
)% |
|
|
15 |
|
|
|
164 |
|
(91 |
)% |
Adjusted EBITDA(2) |
|
|
(19 |
) |
|
|
60 |
|
|
(132 |
)% |
|
|
87 |
|
|
(122 |
)% |
|
|
41 |
|
|
|
241 |
|
(83 |
)% |
Basic (loss) earnings per share |
|
$ |
(0.65 |
) |
|
$ |
(0.14 |
) |
|
(364 |
)% |
|
$ |
0.04 |
|
|
(1,725 |
)% |
|
$ |
(0.80 |
) |
|
|
N/A |
|
N/A |
|
Diluted loss per share(3) |
|
$ |
(0.70 |
) |
|
$ |
(0.30 |
) |
|
(133 |
)% |
|
$ |
(0.05 |
) |
|
(1,300 |
)% |
|
$ |
(1.00 |
) |
|
|
N/A |
|
N/A |
|
Adjusted diluted (loss) earnings per share(2) |
|
$ |
(0.12 |
) |
|
$ |
0.20 |
|
|
(160 |
)% |
|
$ |
0.30 |
|
|
(140 |
)% |
|
$ |
0.08 |
|
|
$ |
0.86 |
|
(91 |
)% |
(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 (loss) and Adjusted EBITDA to Net (loss) income. |
(3) Calculated on an if-converted basis. See Reconciliation to GAAP section for more detail. |
Balance Sheet Highlights
($ amounts in millions) |
|
|
|
|
|
Variance (%) |
|||
|
|
2022 |
|
2022 |
|
Q2 2022 vs. Q1 2022 |
|||
Cash and cash equivalents |
|
$ |
219 |
|
$ |
227 |
|
(4 |
)% |
Securitized loans held for investment (HMBS & nonrecourse) |
|
|
17,483 |
|
|
16,908 |
|
3 |
% |
Mortgage servicing rights (MSRs) |
|
|
359 |
|
|
426 |
|
(16 |
)% |
Total assets |
|
|
21,736 |
|
|
22,078 |
|
(2 |
)% |
Total liabilities |
|
|
20,873 |
|
|
21,046 |
|
(1 |
)% |
Total equity |
|
|
863 |
|
|
1,032 |
|
(16 |
)% |
Total tangible equity(1) |
|
|
288 |
|
|
443 |
|
(35 |
)% |
(1) Total tangible equity calculated as total equity less goodwill and intangible assets, net. |
-
Cash and cash equivalents ended the second quarter at
$219 million $8 million -
MSR balances declined
16% quarter over quarter following a strategic asset sale in the period. -
Total assets declined
2% from prior quarter due to reduced loan and MSR balances on the balance sheet, in addition to derivative asset positions rolling off, as hedge gains were realized during the quarter. -
Total liabilities declined
$173 million -
The decline in total equity is primarily due to fair value adjustments recognized during the quarter resulting from widening credit spreads. As a result, total tangible equity decreased
$155 million $288 million
Segment Results
Mortgage Originations
The Mortgage Originations segment generates revenue through fee income from loan originations and gain on sale of mortgage loans into the secondary market.
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||||||||||
|
|
Q2'22 |
|
Q1'22 |
|
Q2'22 vs
|
|
Q2'21 |
|
Q2'22 vs
|
|
YTD 2022 |
|
YTD 2021 |
|
2022 vs
|
|||||||||||||
|
|
Successor |
|
Successor |
|
|
|
Successor |
|
|
|
Successor |
|
Combined (1) |
|
|
|||||||||||||
Funded volume (Total) |
|
$ |
4,229 |
|
|
$ |
5,106 |
|
|
(17 |
)% |
|
$ |
6,928 |
|
|
(39 |
)% |
|
$ |
9,335 |
|
|
$ |
15,333 |
|
|
(39 |
)% |
Funded volume (Purchase) |
|
|
3,336 |
|
|
|
2,766 |
|
|
21 |
% |
|
|
3,495 |
|
|
(5 |
)% |
|
|
6,102 |
|
|
|
6,159 |
|
|
(1 |
)% |
Funded volume (non-agency) |
|
|
945 |
|
|
|
1,119 |
|
|
(16 |
)% |
|
|
795 |
|
|
19 |
% |
|
|
2,064 |
|
|
|
1,832 |
|
|
13 |
% |
Net rate lock volume |
|
|
3,800 |
|
|
|
5,317 |
|
|
(29 |
)% |
|
|
6,669 |
|
|
(43 |
)% |
|
|
9,117 |
|
|
|
15,074 |
|
|
(40 |
)% |
Mortgage originations margin |
|
|
2.14 |
% |
|
|
2.11 |
% |
|
1 |
% |
|
|
2.78 |
% |
|
(23 |
)% |
|
|
2.12 |
% |
|
|
3.13 |
% |
|
(32 |
)% |
Total revenue |
|
|
103 |
|
|
|
135 |
|
|
(24 |
)% |
|
|
218 |
|
|
(53 |
)% |
|
|
238 |
|
|
|
538 |
|
|
(56 |
)% |
Pre-tax income (loss) |
|
$ |
(35 |
) |
|
$ |
(22 |
) |
|
(59 |
)% |
|
$ |
(6 |
) |
|
(483 |
)% |
|
$ |
(57 |
) |
|
$ |
90 |
|
|
(163 |
)% |
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
-
Net rate lock volume totaled
$3,800 million $5,317 million -
Year-to-date funded purchase volume is essentially flat compared to the same period in 2021, and up
21% quarter over quarter. -
Year-to-date funded non-agency volume is up
13% compared to the same period in 2021, despite the dramatic increase in interest rates. -
Total revenue of
$103 million $135 million -
Pre-tax loss was
$35 million $22 million 15% compared to the prior quarter. - During the course of Q2 and in early Q3, further expense reductions were made in Mortgage Originations and the full effects of those reductions will be realized over the remainder of the year.
Reverse Originations
The Reverse Originations segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of reverse mortgage loans.
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||
|
|
Q2'22 |
|
Q1'22 |
|
Q2'22 vs
|
|
Q2'21 |
|
Q2'22 vs
|
|
YTD 2022 |
|
YTD 2021 |
|
2022 vs
|
||||||||
|
|
Successor |
|
Successor |
|
|
|
Successor |
|
|
|
Successor |
|
Combined (1) |
|
|
||||||||
Funded volume |
|
$ |
1,580 |
|
$ |
1,475 |
|
7 |
% |
|
$ |
1,013 |
|
56 |
% |
|
$ |
3,055 |
|
$ |
1,782 |
|
71 |
% |
Total revenue |
|
|
80 |
|
|
108 |
|
(26 |
)% |
|
|
95 |
|
(16 |
)% |
|
|
188 |
|
|
164 |
|
15 |
% |
Pre-tax income |
|
$ |
36 |
|
$ |
68 |
|
(47 |
)% |
|
$ |
53 |
|
(32 |
)% |
|
$ |
104 |
|
$ |
99 |
|
5 |
% |
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
-
Second quarter 2022 funded reverse volume was
$1,580 million 7% from the prior quarter, which set a fifth consecutive quarterly volume record. The growth in volume is attributable primarily to market penetration with new-to-reverse customers. -
Second quarter 2022 revenue of
$80 million 26% from the first quarter 2022 due primarily to the impact of widening credit spreads during the quarter, which negatively affected origination margins. -
Year-to-date 2022 revenue of
$188 million 15% increase compared to the same period in 2021, which was driven by strong growth in volumes period over period.
Commercial Originations
The Commercial Originations segment provides business purpose lending solutions for residential real estate investors. The Commercial Originations segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of mortgage loans.
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||||||||
|
|
Q2'22 |
|
Q1'22 |
|
Q2'22 vs
|
|
Q2'21 |
|
Q2'22 vs
|
|
YTD 2022 |
|
YTD 2021 |
|
2022 vs
|
|||||||||||
|
|
Successor |
|
Successor |
|
|
|
Successor |
|
|
|
Successor |
|
Combined (1) |
|
|
|||||||||||
Funded volume |
|
$ |
540 |
|
|
$ |
573 |
|
|
(6 |
)% |
|
$ |
400 |
|
35 |
% |
|
$ |
1,113 |
|
|
$ |
741 |
|
50 |
% |
Total revenue |
|
|
13 |
|
|
|
21 |
|
|
(38 |
)% |
|
|
23 |
|
(43 |
)% |
|
|
34 |
|
|
|
37 |
|
(8 |
)% |
Pre-tax income (loss) |
|
$ |
(12 |
) |
|
$ |
(2 |
) |
|
(500 |
)% |
|
$ |
3 |
|
(500 |
)% |
|
$ |
(14 |
) |
|
$ |
4 |
|
(450 |
)% |
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
-
Second quarter 2022 funded volume of
$540 million 6% decline quarter over quarter, and a35% increase compared to prior year quarter. Year to date volumes of$1,113 million 50% increase over prior year. -
Pre-tax loss of
$12 million
Lender Services
The Lender Services business generates revenue and earnings in the form of lender service support fees. Lender Services supports over 2,600 third party clients across the lending industry.
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||||||||||
|
|
Q2'22 |
|
Q1'22 |
|
Q2'22 vs
|
|
Q2'21 |
|
Q2'22 vs
|
|
YTD 2022 |
|
YTD 2021 |
|
2022 vs
|
|||||||||||||
|
|
Successor |
|
Successor |
|
|
|
Successor |
|
|
|
Successor |
|
Combined (1) |
|
|
|||||||||||||
Total revenue |
|
$ |
58 |
|
|
$ |
76 |
|
|
(24 |
)% |
|
$ |
81 |
|
|
(28 |
)% |
|
$ |
134 |
|
|
$ |
157 |
|
|
(15 |
)% |
% of revenue from third-party clients |
|
|
81 |
% |
|
|
81 |
% |
|
— |
% |
|
|
80 |
% |
|
1 |
% |
|
|
81 |
% |
|
|
78 |
% |
|
4 |
% |
Pre-tax income (loss) |
|
$ |
(5 |
) |
|
$ |
7 |
|
|
(171 |
)% |
|
$ |
8 |
|
|
(163 |
)% |
|
$ |
2 |
|
|
$ |
21 |
|
|
(90 |
)% |
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
-
Second quarter 2022 revenue was
$58 million 24% compared to the prior quarter as the segment faced pressure from rising interest rates. -
Second quarter 2022 pre-tax loss of
$5 million $18 million $7 million -
Revenue from third-party clients was
81% in the second quarter of 2022, flat from the prior quarter.
Portfolio Management
The Portfolio Management segment generates revenue and earnings in the form of gain on sale of loans, fair value gains or losses, interest income, servicing income, fees for underwriting, advisory and valuation services and other ancillary fees.
($ amounts in millions) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||||||||||
|
|
Q2'22 |
|
Q1'22 |
|
Q2'22 vs
|
|
Q2'21 |
|
Q2'22 vs
|
|
YTD 2022 |
|
YTD 2021 |
|
2022 vs
|
|||||||||||||
|
|
Successor |
|
Successor |
|
|
|
Successor |
|
|
|
Successor |
|
Combined (1) |
|
|
|||||||||||||
Assets under management |
|
$ |
19,881 |
|
|
$ |
19,629 |
|
|
1 |
% |
|
$ |
17,967 |
|
|
11 |
% |
|
|
19,881 |
|
|
$ |
17,967 |
|
|
11 |
% |
Assets excluding HMBS and non-recourse obligations |
|
|
2,398 |
|
|
|
2,757 |
|
|
(13 |
)% |
|
|
2,372 |
|
|
1 |
% |
|
|
2,398 |
|
|
|
2,372 |
|
|
1 |
% |
Mortgage servicing rights (MSRs) |
|
|
359 |
|
|
|
426 |
|
|
(16 |
)% |
|
|
291 |
|
|
23 |
% |
|
|
359 |
|
|
|
291 |
|
|
23 |
% |
Total revenue |
|
|
(95 |
) |
|
|
(51 |
) |
|
(86 |
)% |
|
|
7 |
|
|
(1457 |
)% |
|
|
(146 |
) |
|
|
36 |
|
|
(506 |
)% |
Pre-tax loss |
|
$ |
(129 |
) |
|
$ |
(86 |
) |
|
(50 |
)% |
|
$ |
(27 |
) |
|
(378 |
)% |
|
$ |
(215 |
) |
|
$ |
(21 |
) |
|
(924 |
)% |
(1) Financial results of combined successor and predecessor of the business combination with Replay. |
-
Second quarter 2022 mortgage servicing rights were down
16% to$359 million - Revenue in the second quarter 2022 was negative due to fair value adjustments on long-term assets and liabilities, as we updated model assumptions to account for substantially higher credit spreads and increased interest rates.
Reconciliation to GAAP
($ amounts in millions) |
Q2'22 |
|
Q1'22 |
|
Q2'21 |
|
YTD 2022 |
|
YTD 2021 |
|||||||||||
|
Successor |
|
Combined (1) |
|||||||||||||||||
Reconciliation of net income (loss) to adjusted net income (loss) and adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) |
$ |
(168 |
) |
|
$ |
(64 |
) |
|
$ |
(15 |
) |
|
$ |
(232 |
) |
|
$ |
109 |
|
|
Add back: Benefit (provision) for income taxes |
|
1 |
|
|
|
13 |
|
|
|
(1 |
) |
|
|
14 |
|
|
|
(2 |
) |
|
Net income (loss) before taxes |
|
(169 |
) |
|
|
(77 |
) |
|
|
(14 |
) |
|
|
(246 |
) |
|
|
111 |
|
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
|||||||||||
Changes in fair value(2) |
|
111 |
|
|
|
96 |
|
|
|
24 |
|
|
|
207 |
|
|
|
36 |
|
|
Amortization and impairment of goodwill and intangibles(3) |
|
14 |
|
|
|
14 |
|
|
|
13 |
|
|
|
28 |
|
|
|
14 |
|
|
Share-based compensation(4) |
|
7 |
|
|
|
9 |
|
|
|
11 |
|
|
|
16 |
|
|
|
11 |
|
|
Certain non-recurring costs(5) |
|
9 |
|
|
|
8 |
|
|
|
44 |
|
|
|
17 |
|
|
|
50 |
|
|
Adjusted net income (loss) before taxes |
|
(28 |
) |
|
|
50 |
|
|
|
78 |
|
|
$ |
22 |
|
|
$ |
222 |
|
|
(Provision) benefit for income taxes(6) |
|
6 |
|
|
|
(13 |
) |
|
|
(21 |
) |
|
|
(7 |
) |
|
|
(58 |
) |
|
Adjusted net income (loss) |
|
(22 |
) |
|
|
37 |
|
|
|
57 |
|
|
|
15 |
|
|
|
164 |
|
|
Provision (benefit) for income taxes(6) |
|
(6 |
) |
|
|
13 |
|
|
|
21 |
|
|
|
7 |
|
|
|
58 |
|
|
Depreciation |
|
2 |
|
|
|
3 |
|
|
|
2 |
|
|
|
5 |
|
|
|
4 |
|
|
Interest expense on non-funding debt |
|
7 |
|
|
|
7 |
|
|
|
7 |
|
|
|
14 |
|
|
|
15 |
|
|
Adjusted EBITDA |
$ |
(19 |
) |
|
$ |
60 |
|
|
$ |
87 |
|
|
$ |
41 |
|
|
$ |
241 |
|
|
OTHER KEY METRICS |
|
|
|
|
|
|
|
|
|
|||||||||||
Cash paid for income taxes |
$ |
— |
|
|
$ |
— |
|
|
$ |
2 |
|
|
$ |
— |
|
|
$ |
2 |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
($ amounts in millions except shares and $ per share) |
Q2'22 |
|
Q1'22 |
|
Q2'21 |
|
YTD 2022 |
|
YTD 2021 |
|||||||||||
|
Successor |
|
Combined (1) |
|||||||||||||||||
GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|
|
|
|||||||||||
Net income (loss) attributable to controlling interest |
$ |
(41 |
) |
|
|
(8 |
) |
|
|
2 |
|
|
$ |
(49 |
) |
|
|
N/A |
|
|
Weighted average outstanding share count |
|
62,379,041 |
|
|
|
60,773,891 |
|
|
|
59,881,714 |
|
|
|
61,580,900 |
|
|
|
N/A |
|
|
Basic loss per share |
$ |
(0.65 |
) |
|
$ |
(0.14 |
) |
|
$ |
0.04 |
|
|
$ |
(0.80 |
) |
|
|
N/A |
|
|
If-converted method net loss |
|
(131 |
) |
|
|
(57 |
) |
|
|
(10 |
) |
|
|
(188 |
) |
|
|
N/A |
|
|
Weighted average diluted share count |
|
187,818,225 |
|
|
|
189,448,936 |
|
|
|
191,200,000 |
|
|
|
188,629,076 |
|
|
|
N/A |
|
|
Diluted loss per share |
$ |
(0.70 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.05 |
) |
|
$ |
(1.00 |
) |
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
NON-GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|
|
|
|||||||||||
Adjusted net income (loss) |
$ |
(22 |
) |
|
$ |
37 |
|
|
$ |
57 |
|
|
$ |
15 |
|
|
$ |
164 |
|
|
Weighted average diluted share count |
|
187,818,225 |
|
|
|
189,448,936 |
|
|
|
191,200,000 |
|
|
|
188,629,076 |
|
|
|
191,200,000 |
|
|
Adjusted diluted EPS |
$ |
(0.12 |
) |
|
$ |
0.20 |
|
|
$ |
0.30 |
|
|
$ |
0.08 |
|
|
$ |
0.86 |
|
|
($ amounts in millions) |
SF&S |
|
Mortgage |
|
|
Total |
|||||||
Reconciliation of net income (loss) before taxes to adjusted net income (loss) for 2Q 2022 |
|
|
|
|
|
|
|||||||
Net loss before taxes |
$ |
(134 |
) |
|
$ |
(35 |
) |
|
|
$ |
(169 |
) |
|
Adjustments for: |
|
|
|
|
|
|
|||||||
Changes in fair value(2) |
|
111 |
|
|
|
— |
|
|
|
|
111 |
|
|
Amortization and impairment of goodwill and intangibles(3) |
|
12 |
|
|
|
2 |
|
|
|
|
14 |
|
|
Share-based compensation(4) |
|
5 |
|
|
|
2 |
|
|
|
|
7 |
|
|
Certain non-recurring costs(5) |
|
6 |
|
|
|
3 |
|
|
|
|
9 |
|
|
Adjusted net loss before taxes |
|
— |
|
|
|
(28 |
) |
|
|
|
(28 |
) |
|
Provision (benefit) for income taxes(6) |
|
(1 |
) |
|
|
7 |
|
|
|
|
6 |
|
|
Adjusted net loss |
$ |
(1 |
) |
|
$ |
(21 |
) |
|
|
$ |
(22 |
) |
|
|
|
|
|
|
|
|
|||||||
($ amounts in millions, except shares and $ per share) |
SF&S |
|
Mortgage |
|
|
Total |
|||||||
NON-GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|||||||
Adjusted net loss |
$ |
(1 |
) |
|
$ |
(21 |
) |
|
|
$ |
(22 |
) |
|
Weighted average diluted share count |
|
187,818,225 |
|
|
|
187,818,225 |
|
|
|
|
187,818,225 |
|
|
Adjusted diluted EPS |
$ |
(0.01 |
) |
|
$ |
(0.11 |
) |
|
|
$ |
(0.12 |
) |
|
(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 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). |
|
||||||||
Selected Financial Information |
||||||||
Consolidated Statements of Operations |
||||||||
(In thousands, except share data) |
||||||||
(Unaudited) |
||||||||
|
|
|
|
|||||
|
|
|
|
|||||
ASSETS |
|
|
|
|||||
Cash and cash equivalents |
$ |
219,033 |
|
|
$ |
226,846 |
|
|
Restricted cash |
|
354,803 |
|
|
|
315,980 |
|
|
Loans held for investment, subject to HMBS related obligations, at fair value |
|
10,882,441 |
|
|
|
10,672,152 |
|
|
Loans held for investment, subject to nonrecourse debt, at fair value |
|
6,600,762 |
|
|
|
6,235,990 |
|
|
Loans held for investment, at fair value |
|
1,058,410 |
|
|
|
1,218,990 |
|
|
Loans held for sale, at fair value |
|
1,229,594 |
|
|
|
1,709,357 |
|
|
Mortgage servicing rights (“MSRs”), at fair value, |
|
359,006 |
|
|
|
426,102 |
|
|
Derivative assets |
|
55,186 |
|
|
|
281,205 |
|
|
Fixed assets and leasehold improvements, net |
|
29,805 |
|
|
|
29,933 |
|
|
Intangible assets, net |
|
575,284 |
|
|
|
589,092 |
|
|
Other assets, net |
|
371,902 |
|
|
|
372,260 |
|
|
TOTAL ASSETS |
$ |
21,736,226 |
|
|
$ |
22,077,907 |
|
|
|
|
|
|
|||||
LIABILITIES AND EQUITY |
|
|
|
|||||
HMBS related obligations, at fair value |
$ |
10,745,879 |
|
|
$ |
10,548,131 |
|
|
Nonrecourse debt, at fair value |
|
6,752,084 |
|
|
|
6,323,777 |
|
|
Other financing lines of credit |
|
2,593,290 |
|
|
|
3,189,756 |
|
|
Payables and other liabilities |
|
428,768 |
|
|
|
630,952 |
|
|
Notes payable, net |
|
353,005 |
|
|
|
353,196 |
|
|
TOTAL LIABILITIES |
|
20,873,026 |
|
|
|
21,045,812 |
|
|
|
|
|
|
|||||
EQUITY |
|
|
|
|||||
Class A Common Stock, |
|
6 |
|
|
|
6 |
|
|
Class B Common Stock, |
|
— |
|
|
|
— |
|
|
Additional paid-in capital |
|
860,232 |
|
|
|
845,002 |
|
|
Accumulated deficit |
|
(492,786 |
) |
|
|
(452,106 |
) |
|
Accumulated other comprehensive loss |
|
(262 |
) |
|
|
(99 |
) |
|
Noncontrolling interest |
|
496,010 |
|
|
|
639,292 |
|
|
TOTAL EQUITY |
|
863,200 |
|
|
|
1,032,095 |
|
|
TOTAL LIABILITIES AND EQUITY |
$ |
21,736,226 |
|
|
$ |
22,077,907 |
|
|
|
||||||||||||||||||||||
Selected Financial Information |
||||||||||||||||||||||
Consolidated Statements of Operations |
||||||||||||||||||||||
(In thousands, except share data) |
||||||||||||||||||||||
(Unaudited) |
||||||||||||||||||||||
|
Q2’22 |
|
Q1’22 |
|
Q2’21 |
|
YTD 2022 |
|
|
|
YTD 2021 |
|||||||||||
|
Successor |
|
|
|
Combined(1) |
|||||||||||||||||
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Gain on sale and other income from mortgage loans held for sale, net |
$ |
71,805 |
|
|
$ |
118,352 |
|
|
$ |
187,577 |
|
|
$ |
190,157 |
|
|
|
|
$ |
478,911 |
|
|
Net fair value gains on mortgage loans and related obligations |
|
1,613 |
|
|
|
10,435 |
|
|
|
131,151 |
|
|
|
12,048 |
|
|
|
|
|
207,814 |
|
|
Fee income |
|
88,681 |
|
|
|
157,605 |
|
|
|
90,864 |
|
|
|
246,286 |
|
|
|
|
|
252,235 |
|
|
Net interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Interest income |
|
15,853 |
|
|
|
13,873 |
|
|
|
13,151 |
|
|
|
29,726 |
|
|
|
|
|
25,812 |
|
|
Interest expense |
|
(36,834 |
) |
|
|
(32,830 |
) |
|
|
(33,626 |
) |
|
|
(69,664 |
) |
|
|
|
|
(67,992 |
) |
|
Net interest expense |
|
(20,981 |
) |
|
|
(18,957 |
) |
|
|
(20,475 |
) |
|
|
(39,938 |
) |
|
|
|
|
(42,180 |
) |
|
TOTAL REVENUES |
|
141,118 |
|
|
|
267,435 |
|
|
|
389,117 |
|
|
|
408,553 |
|
|
|
|
|
896,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Salaries, benefits and related expenses |
|
194,294 |
|
|
|
209,076 |
|
|
|
274,731 |
|
|
|
403,370 |
|
|
|
|
|
513,261 |
|
|
Occupancy, equipment rentals and other office related expenses |
|
7,262 |
|
|
|
7,838 |
|
|
|
6,720 |
|
|
|
15,100 |
|
|
|
|
|
14,317 |
|
|
General and administrative expenses |
|
123,457 |
|
|
|
132,623 |
|
|
|
119,301 |
|
|
|
256,080 |
|
|
|
|
|
246,488 |
|
|
TOTAL EXPENSES |
|
325,013 |
|
|
|
349,537 |
|
|
|
400,752 |
|
|
|
674,550 |
|
|
|
|
|
774,066 |
|
|
OTHER, NET |
|
15,132 |
|
|
|
4,772 |
|
|
|
(2,103 |
) |
|
|
19,904 |
|
|
|
|
|
(10,995 |
) |
|
NET INCOME (LOSS) BEFORE INCOME TAXES |
|
(168,763 |
) |
|
|
(77,330 |
) |
|
|
(13,738 |
) |
|
|
(246,093 |
) |
|
|
|
|
111,719 |
|
|
Provision (benefit) for income taxes |
|
(940 |
) |
|
|
(13,335 |
) |
|
|
1,086 |
|
|
|
(14,275 |
) |
|
|
|
|
2,223 |
|
|
NET INCOME (LOSS) |
|
(167,823 |
) |
|
|
(63,995 |
) |
|
|
(14,824 |
) |
|
|
(231,818 |
) |
|
|
|
|
109,496 |
|
|
CRNCI |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
4,260 |
|
|
Noncontrolling interest |
|
(127,143 |
) |
|
|
(55,502 |
) |
|
|
(17,089 |
) |
|
|
(182,645 |
) |
|
|
|
|
(16,888 |
) |
|
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST |
$ |
(40,680 |
) |
|
$ |
(8,493 |
) |
|
$ |
2,265 |
|
|
$ |
(49,173 |
) |
|
|
|
$ |
122,124 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
EARNINGS (LOSS) PER SHARE |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Basic weighted average shares outstanding |
|
62,379,041 |
|
|
|
60,773,891 |
|
|
|
59,881,714 |
|
|
|
61,580,900 |
|
|
|
|
|
N/A |
|
|
Basic net earnings (loss) per share |
$ |
(0.65 |
) |
|
$ |
(0.14 |
) |
|
$ |
0.04 |
|
|
$ |
(0.80 |
) |
|
|
|
|
N/A |
|
|
Diluted weighted average shares outstanding |
|
187,818,225 |
|
|
|
189,448,936 |
|
|
|
191,200,000 |
|
|
|
188,629,076 |
|
|
|
|
|
N/A |
|
|
Diluted net loss per share |
$ |
(0.70 |
) |
|
$ |
(0.30 |
) |
|
$ |
(0.05 |
) |
|
$ |
(1.00 |
) |
|
|
|
|
N/A |
|
|
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/investors. The conference call can also be accessed by dialing the following:
- 800-267-6316 (Domestic)
- 203-518-9783 (International)
- Conference ID: FOAQ222
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 presentation 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 adjusted for change in fair value of loans and securities held for investment due to assumption changes, change in fair value of deferred purchase price obligations (including earnouts and TRA obligations), warrant liability, and minority investments, amortization and other impairments, equity based compensation, 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, Adjusted EBITDA, and Adjusted Diluted Earnings per Share 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/20220804005954/en/
For Finance of America Media: pr@financeofamerica.com
For Finance of America Investor Relations: ir@financeofamerica.com
Source:
FAQ
What were the financial results for Finance of America (FOA) in Q2 2022?
How much revenue did Finance of America (FOA) report for Q2 2022?
What actions is Finance of America (FOA) taking to improve margins?
What was the funded volume for the Reverse Originations segment in Q2 2022 for FOA?
What impact did credit spreads have on Finance of America (FOA)'s Q2 2022 results?
