Finance of America Reports Second Quarter 2023 Results
– Completed the sale of majority stake of Lender Services platform –
– Completed the sale of Title Insurance business effective July 3 –
– Finished the first half of 2023 with
Second Quarter 2023 Highlights
-
Net loss from continuing operations of
primarily due to non-cash, negative fair value changes on long-term assets and liabilities.$221 million -
For the quarter, the Company recognized an adjusted net loss(2) of
or$26 million per fully diluted share as it absorbed additional costs to integrate the American Advisors Group (“AAG”) platform and made investments in future growth.$0.12 - Completed the sale of a majority stake of the Lender Services platform on June 30, 2023.
- Completed the sale of the Title Insurance business on July 3, 2023.
-
For the first half of 2023, our subsidiary, Finance of America Reverse maintained
39% market share in the HECM Reverse market.(1)
(1) Source: https://www.newviewadvisors.com/commentary/2023-first-half-hmbs-issuer-league-tables/; Measured by HMBS issuance
(2) See the sections titled “Reconciliation to GAAP “ and “Non-GAAP Financial Measures” for reconciliations to the most directly comparable GAAP measures and other important disclosures.
Graham A. Fleming, Chief Executive Officer commented, “Finance of America delivered on each strategic initiative we set out to accomplish as we pursue our goal to help even more Americans embrace a modern retirement and understand the value and benefits of home equity. The Company is now transformed into a leading modern retirement solutions platform. After completion of the AAG integration, we believe we will be well positioned for long-term success.”
Second Quarter Financial Summary of Continuing Operations
($ amounts in millions, except per share data) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||
|
|
Q2’23 |
|
Q1’23 |
|
Q2'23 vs Q1’23 |
|
Q2’22 |
|
Q2'23 vs Q2'22 |
|
YTD 2023 |
|
YTD 2022 |
|
2023 vs 2022 |
|||||
Funded volume |
|
$ |
447 |
|
$ |
357 |
|
25 % |
|
$ |
1,647 |
|
(73) % |
|
$ |
804 |
|
$ |
3,170 |
|
(75) % |
Total revenue |
|
|
(112) |
|
|
141 |
|
(179) % |
|
|
(21) |
|
(433) % |
|
|
29 |
|
|
25 |
|
16 % |
Total expenses and other, net |
|
|
112 |
|
|
83 |
|
35 % |
|
|
99 |
|
13 % |
|
|
195 |
|
|
207 |
|
(6) % |
Pre-tax income (loss) from continuing operations |
|
|
(224) |
|
|
58 |
|
(486) % |
|
|
(120) |
|
(87) % |
|
|
(166) |
|
|
(182) |
|
9 % |
Net income (loss) from continuing operations |
|
|
(221) |
|
|
55 |
|
(502) % |
|
|
(118) |
|
(87) % |
|
|
(165) |
|
|
(172) |
|
4 % |
Adjusted net income (loss)(1) |
|
|
(26) |
|
|
(15) |
|
(73) % |
|
|
6 |
|
(533) % |
|
|
(42) |
|
|
44 |
|
(195) % |
Adjusted EBITDA(1) |
|
|
(26) |
|
|
(12) |
|
(117) % |
|
|
17 |
|
(253) % |
|
|
(38) |
|
|
78 |
|
(149) % |
Basic income (loss) per share |
|
$ |
(0.91) |
|
$ |
0.29 |
|
(414) % |
|
$ |
(0.34) |
|
(168) % |
|
|
(0.80) |
|
|
(0.56) |
|
(43) % |
Diluted income (loss) per share(2) |
|
$ |
(0.91) |
|
$ |
0.22 |
|
(514) % |
|
$ |
(0.49) |
|
(86) % |
|
|
(0.80) |
|
|
(0.73) |
|
(10) % |
Adjusted diluted earnings (loss) per share(2) |
|
$ |
(0.12) |
|
$ |
(0.08) |
|
(50) % |
|
$ |
0.03 |
|
(500) % |
|
|
(0.20) |
|
|
0.23 |
|
(187) % |
(1) See Reconciliation to GAAP section for a reconciliation of Adjusted net income (loss) and Adjusted EBITDA to Net income (loss).
(2) Calculated on an if-converted basis except when anti-dilutive. See Reconciliation to GAAP section for more detail.
Balance Sheet Highlights
|
|
June 30, |
|
March 31, |
|
Variance (%) |
||
($ amounts in millions) |
|
|
2023 |
|
|
2023 |
|
Q2 2023 vs. Q1 2023 |
Cash and cash equivalents |
|
$ |
56 |
|
$ |
69 |
|
(19) % |
Securitized loans held for investment (HMBS & nonrecourse) |
|
|
24,812 |
|
|
24,998 |
|
(1) % |
Total assets |
|
|
26,549 |
|
|
26,826 |
|
(1) % |
Total liabilities |
|
|
26,275 |
|
|
26,336 |
|
— % |
Total equity |
|
|
274 |
|
|
490 |
|
(44) % |
-
Ended the first quarter with cash and cash equivalents from continuing operations of
. The decrease in cash was primarily attributable to operational losses during the quarter.$56 million - Securitized loans held for investment (HMBS & nonrecourse) remained relatively flat as new production was offset by the change in fair value related to market rates and spreads.
-
Total assets decreased
1% in line with the change in securitized loans held for investment. - Total liabilities also remained flat to prior quarter, in line with the change in assets.
Segment Results
Retirement Solutions
The Retirement Solutions segment generates revenue and earnings in the form of net origination gains and origination fees earned on the origination of reverse mortgage and home improvement loans.
|
|
|
|
Var (%) |
|
|
|
Var (%) |
|
|
|
|
|
Var (%) |
|||||||
($ amounts in millions) |
|
Q2’23 |
|
Q1’23 |
|
Q2’23 vs Q1’23 |
|
Q2’22 |
|
Q2’23 vs Q2’22 |
|
YTD 2023 |
|
YTD 2022 |
|
2023 vs 2022 |
|||||
Funded volume |
|
$ |
447 |
|
$ |
357 |
|
25 % |
|
$ |
1,647 |
|
(73) % |
|
$ |
804 |
|
$ |
3,170 |
|
(75) % |
Total revenue |
|
|
41 |
|
|
26 |
|
58 % |
|
|
83 |
|
(51) % |
|
|
67 |
|
|
192 |
|
(65) % |
Pre-tax income (loss) |
|
|
(18) |
|
|
(9) |
|
(100) % |
|
|
32 |
|
(156) % |
|
|
(27) |
|
|
98 |
|
(128) % |
Adjusted net income (loss) |
|
|
(5) |
|
|
2 |
|
(350) % |
|
|
31 |
|
(116) % |
|
|
(3) |
|
|
87 |
|
(103) % |
-
Funded volume increased
25% quarter over quarter as the Company began the operational integration of the retail platform of AAG. -
Second quarter revenue increased
58% from first quarter to due to higher volumes and a higher margin associated with the increase in volume through the AAG retail platform.$41 million
Portfolio Management
The Portfolio Management segment generates revenue and earnings in the form of gain on sale of loans, fair value gains or losses, interest income, servicing income, fees for underwriting, advisory and valuation services and other ancillary fees.
|
|
|
|
Var (%) |
|
|
|
Var (%) |
|
|
|
|
|
Var (%) |
|||||||
($ amounts in millions) |
|
Q2’23 |
|
Q1’23 |
|
Q2’23 vs Q1’23 |
|
Q2’22 |
|
Q2’23 vs Q2’22 |
|
YTD 2023 |
|
YTD 2022 |
|
2023 vs 2022 |
|||||
Assets under management |
|
$ |
26,064 |
|
$ |
26,327 |
|
(1) % |
|
$ |
19,881 |
|
31 % |
|
$ |
26,064 |
|
$ |
19,881 |
|
31 % |
Assets excluding HMBS and non-recourse obligations |
|
|
1,605 |
|
|
1,887 |
|
(15) % |
|
|
2,360 |
|
(32) % |
|
|
1,605 |
|
|
2,360 |
|
(32) % |
Total revenue |
|
|
(146) |
|
|
124 |
|
(218) % |
|
|
(95) |
|
(54) % |
|
|
(22) |
|
|
(148) |
|
85 % |
Pre-tax income (loss) |
|
|
(168) |
|
|
99 |
|
(270) % |
|
|
(129) |
|
(30) % |
|
|
(69) |
|
|
(217) |
|
68 % |
Adjusted net income (loss) |
|
|
1 |
|
|
4 |
|
(75) % |
|
|
(2) |
|
150 % |
|
|
6 |
|
|
5 |
|
20 % |
- Second quarter revenue was materially impacted by negative 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.
Reconciliation to GAAP
($ amounts in millions)(1) |
Q2’23 |
|
Q1’23 |
|
Q2’22 |
|
YTD 2023 |
|
YTD 2022 |
|||||
Reconciliation of net income (loss) from continuing operations to adjusted net income (loss) and adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|||||
Net income (loss) from continuing operations |
$ |
(221) |
|
$ |
55 |
|
$ |
(118) |
|
$ |
(165) |
|
$ |
(172) |
Add back: Benefit (provision) for income taxes |
|
3 |
|
|
(3) |
|
|
2 |
|
|
1 |
|
|
10 |
Net income (loss) from continuing operations before taxes |
|
(224) |
|
|
58 |
|
|
(120) |
|
|
(166) |
|
|
(182) |
Adjustments for: |
|
|
|
|
|
|
|
|
|
|||||
Changes in fair value(2) |
|
171 |
|
|
(94) |
|
|
111 |
|
|
77 |
|
|
207 |
Amortization of intangible assets(3) |
|
9 |
|
|
9 |
|
|
9 |
|
|
19 |
|
|
19 |
Share-based compensation(4) |
|
3 |
|
|
4 |
|
|
4 |
|
|
7 |
|
|
11 |
Certain non-recurring costs(5) |
|
4 |
|
|
2 |
|
|
5 |
|
|
6 |
|
|
8 |
Adjusted net income (loss) before taxes |
|
(36) |
|
|
(21) |
|
|
9 |
|
|
(57) |
|
|
63 |
(Provision) benefit for income taxes(6) |
|
10 |
|
|
6 |
|
|
(3) |
|
|
15 |
|
|
(19) |
Adjusted net income (loss) |
|
(26) |
|
|
(15) |
|
|
6 |
|
|
(42) |
|
|
44 |
Provision (benefit) for income taxes(6) |
|
(10) |
|
|
(6) |
|
|
3 |
|
|
(15) |
|
|
19 |
Depreciation |
|
3 |
|
|
1 |
|
|
1 |
|
|
4 |
|
|
2 |
Interest expense on non-funding debt |
|
8 |
|
|
8 |
|
|
7 |
|
|
15 |
|
|
13 |
Adjusted EBITDA |
$ |
(26) |
|
$ |
(12) |
|
$ |
17 |
|
$ |
(38) |
|
$ |
78 |
OTHER KEY METRICS |
|
|
|
|
|
|
|
|
|
|||||
Cash paid for income taxes |
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|||||
($ amounts in millions except shares and $ per share) |
Q2’23 |
|
Q1’23 |
|
Q2’22 |
|
YTD 2023 |
|
YTD 2022 |
|||||
GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|
|
|
|||||
Net income (loss) from continuing operations attributable to controlling interest |
$ |
(80) |
|
$ |
19 |
|
$ |
(21) |
|
$ |
(61) |
|
$ |
(34) |
Weighted average outstanding share count |
|
87,409,861 |
|
|
64,016,845 |
|
|
62,379,041 |
|
|
75,777,975 |
|
|
61,580,900 |
Basic income (loss) per share from continuing operations |
$ |
(0.91) |
|
$ |
0.29 |
|
$ |
(0.34) |
|
$ |
(0.80) |
|
$ |
(0.56) |
If-converted method net earnings (loss) from continuing operations |
$ |
(80) |
|
$ |
42 |
|
$ |
(91) |
|
$ |
(61) |
|
$ |
(138) |
Weighted average diluted share count |
|
87,409,861 |
|
|
190,301,012 |
|
|
187,818,225 |
|
|
75,777,975 |
|
|
188,629,076 |
Diluted earnings (loss) per share from continuing operations(7) |
$ |
(0.91) |
|
$ |
0.22 |
|
$ |
(0.49) |
|
$ |
(0.80) |
|
$ |
(0.73) |
|
|
|
|
|
|
|
|
|
|
|||||
NON-GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|
|
|
|||||
Adjusted net income (loss) |
$ |
(26) |
|
$ |
(15) |
|
$ |
6 |
|
$ |
(42) |
|
$ |
44 |
Weighted average diluted share count |
|
228,997,995 |
|
|
190,301,012 |
|
|
187,818,225 |
|
|
208,700,162 |
|
|
188,629,076 |
Adjusted diluted earnings (loss) per share |
$ |
(0.12) |
|
$ |
(0.08) |
|
$ |
0.03 |
|
$ |
(0.20) |
|
$ |
0.23 |
(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, warrant liability, and minority investments.
(3) Includes amortization of intangibles recognized from the business combination with Replay Acquisition Corp. (“Replay”) recognized during the periods presented.
(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).
(7 )Calculated on an if-converted basis except when anti-dilutive.
Adjusted Net Income by Segment (Continuing Operations)
|
|
|||||||
For the six months ended June 30, 2023 |
|
|
||||||
($ amounts in millions except shares and $ per share)(1) |
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
||||
Pre-tax loss |
$ |
(27) |
$ |
(69) |
$ |
(70) |
$ |
(166) |
Adjustments for: |
|
|
|
|
||||
Changes in fair value(2) |
|
— |
|
76 |
|
1 |
|
77 |
Amortization of intangible assets(3) |
|
19 |
|
— |
|
— |
|
19 |
Share-based compensation(4) |
|
2 |
|
1 |
|
4 |
|
7 |
Certain non-recurring costs(5) |
|
2 |
|
— |
|
4 |
|
6 |
Adjusted net income (loss) before taxes |
$ |
(4) |
$ |
8 |
$ |
(61) |
$ |
(57) |
Provision (benefit) for income taxes(6) |
|
(1) |
|
2 |
|
(16) |
|
(15) |
Adjusted net income (loss) |
$ |
(3) |
$ |
6 |
$ |
(45) |
$ |
(42) |
Weighted average diluted share count |
|
208,700,162 |
|
208,700,162 |
|
208,700,162 |
|
208,700,162 |
Adjusted diluted earnings (loss) per share |
$ |
(0.02) |
$ |
0.03 |
$ |
(0.21) |
$ |
(0.20) |
|
|
|||||||
For the three months ended June 30, 2023 |
|
|
||||||
($ amounts in millions except shares and $ per share)(1) |
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
||||
Pre-tax loss |
$ |
(18) |
$ |
(168) |
$ |
(38) |
$ |
(224) |
Adjustments for: |
|
|
|
|
||||
Changes in fair value(2) |
|
— |
|
169 |
|
2 |
|
171 |
Amortization of intangible assets(3) |
|
9 |
|
— |
|
— |
|
9 |
Share-based compensation(4) |
|
1 |
|
— |
|
2 |
|
3 |
Certain non-recurring costs(5) |
|
1 |
|
— |
|
3 |
|
4 |
Adjusted net income (loss) before taxes |
$ |
(7) |
$ |
1 |
$ |
(31) |
$ |
(36) |
Benefit for income taxes(6) |
|
(2) |
|
— |
|
(8) |
|
(10) |
Adjusted net income (loss) |
$ |
(5) |
$ |
1 |
$ |
(23) |
$ |
(26) |
Weighted average diluted share count |
|
228,997,995 |
|
228,997,995 |
|
228,997,995 |
|
228,997,995 |
Adjusted diluted earnings (loss) per share |
$ |
(0.02) |
$ |
0.01 |
$ |
(0.10) |
$ |
(0.12) |
|
|
|||||||
For the three months ended March 31, 2023 |
|
|
||||||
($ amounts in millions except shares and $ per share)(1) |
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
||||
Pre-tax income (loss) |
$ |
(9) |
$ |
99 |
$ |
(32) |
$ |
58 |
Adjustments for: |
|
|
|
|
||||
Changes in fair value(2) |
|
— |
|
(93) |
|
(1) |
|
(94) |
Amortization of intangible assets(3) |
|
9 |
|
— |
|
— |
|
9 |
Share-based compensation(4) |
|
2 |
|
— |
|
2 |
|
4 |
Certain non-recurring costs(5) |
|
1 |
|
— |
|
1 |
|
2 |
Adjusted net income (loss) before taxes |
$ |
3 |
$ |
6 |
$ |
(30) |
$ |
(21) |
Provision (benefit) for income taxes(6) |
|
1 |
|
2 |
|
(8) |
|
(6) |
Adjusted net income (loss) |
$ |
2 |
$ |
4 |
$ |
(22) |
$ |
(15) |
Weighted average diluted share count |
|
190,301,012 |
|
190,301,012 |
|
190,301,012 |
|
190,301,012 |
Adjusted diluted earnings (loss) per share |
$ |
0.01 |
$ |
0.02 |
$ |
(0.12) |
$ |
(0.08) |
|
|
||||||||||||||
For the six months ended June 30, 2022 |
|
|
|||||||||||||
($ amounts in millions except shares and $ per share)(1) |
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
|||||||||||
Pre-tax income (loss) |
$ |
98 |
$ |
(217) |
$ |
(63) |
$ |
(182) |
|||||||
Adjustments for: |
|
|
|
|
|||||||||||
Changes in fair value(2) |
|
— |
|
221 |
|
(14) |
|
207 |
|||||||
Amortization of intangible assets(3) |
|
19 |
|
— |
|
— |
|
19 |
|||||||
Share-based compensation(4) |
|
4 |
|
2 |
|
6 |
|
11 |
|||||||
Certain non-recurring costs(5) |
|
(3) |
|
1 |
|
11 |
|
8 |
|||||||
Adjusted net income (loss) before taxes |
$ |
118 |
$ |
7 |
$ |
(60) |
$ |
63 |
|||||||
Provision (benefit) for income taxes(6) |
|
31 |
|
2 |
|
(13) |
|
19 |
|||||||
Adjusted net income (loss) |
$ |
87 |
$ |
5 |
$ |
(47) |
$ |
44 |
|||||||
Weighted average diluted share count |
|
188,629,076 |
|
188,629,076 |
|
188,629,076 |
|
188,629,076 |
|||||||
Adjusted diluted earnings (loss) per share |
$ |
0.46 |
$ |
0.02 |
$ |
(0.24) |
$ |
0.23 |
|||||||
|
|
||||||||||||||
For the three months ended June 30, 2022 |
|
|
|||||||||||||
($ amounts in millions except shares and $ per share)(1) |
|
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
||||||||||
Pre-tax income (loss) |
|
$ |
32 |
$ |
(129) |
$ |
(23) |
$ |
(120) |
||||||
Adjustments for: |
|
|
|
|
|
||||||||||
Changes in fair value(2) |
|
|
— |
|
125 |
|
(14) |
|
111 |
||||||
Amortization of intangible assets(3) |
|
|
9 |
|
— |
|
— |
|
9 |
||||||
Share-based compensation(4) |
|
|
2 |
|
1 |
|
2 |
|
4 |
||||||
Certain non-recurring costs(5) |
|
|
— |
|
— |
|
5 |
|
5 |
||||||
Adjusted net income (loss) before taxes |
|
$ |
43 |
$ |
(3) |
$ |
(30) |
$ |
9 |
||||||
Provision (benefit) for income taxes(6) |
|
|
12 |
|
(1) |
|
(8) |
|
3 |
||||||
Adjusted net income (loss) |
|
$ |
31 |
$ |
(2) |
$ |
(22) |
$ |
6 |
||||||
Weighted average diluted share count |
|
|
187,818,225 |
|
187,818,225 |
|
187,818,225 |
|
187,818,225 |
||||||
Adjusted diluted earnings (loss) per share |
|
$ |
0.17 |
$ |
(0.02) |
$ |
(0.11) |
$ |
0.03 |
||||||
(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, warrant liability, and minority investments.
(3) Includes amortization of intangibles recognized from the business combination with Replay recognized during the periods presented.
(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).
Finance of America Companies Inc. and Subsidiaries
Selected Financial Information
Condensed Consolidated Statements of Financial Condition
(In thousands, except share data)
(Unaudited)
|
June 30, 2023 |
|
March 31, 2023 |
||
ASSETS |
|
|
|
||
Cash and cash equivalents |
$ |
55,591 |
|
$ |
69,313 |
Restricted cash |
|
265,542 |
|
|
228,302 |
Loans held for investment, subject to HMBS related obligations, at fair value |
|
16,883,718 |
|
|
16,623,561 |
Loans held for investment, subject to nonrecourse debt, at fair value |
|
7,928,414 |
|
|
8,374,827 |
Loans held for investment, at fair value |
|
685,033 |
|
|
736,968 |
Loans held for sale, at fair value |
|
53,500 |
|
|
77,494 |
MSR, at fair value, |
|
9,456 |
|
|
13,713 |
Fixed assets and leasehold improvements, net |
|
8,196 |
|
|
10,610 |
Intangible assets, net |
|
278,525 |
|
|
287,822 |
Other assets, net |
|
256,289 |
|
|
251,929 |
Assets of discontinued operations |
|
124,406 |
|
|
151,450 |
TOTAL ASSETS |
$ |
26,548,670 |
|
$ |
26,825,989 |
|
|
|
|
||
LIABILITIES AND EQUITY |
|
|
|
||
HMBS related obligations, at fair value |
$ |
16,665,535 |
|
$ |
16,407,629 |
Nonrecourse debt, at fair value |
|
7,796,545 |
|
|
8,032,552 |
Other financing lines of credit |
|
1,072,113 |
|
|
1,113,367 |
Payables and other liabilities |
|
273,839 |
|
|
306,717 |
Notes payable, net (includes amounts due to related parties of |
|
411,784 |
|
|
408,990 |
Liabilities of discontinued operations |
|
55,119 |
|
|
66,302 |
TOTAL LIABILITIES |
|
26,274,935 |
|
|
26,335,557 |
|
|
|
|
||
EQUITY |
|
|
|
||
Class A Common Stock, |
|
9 |
|
|
9 |
Class B Common Stock, |
|
— |
|
|
— |
Additional paid-in capital |
|
935,911 |
|
|
926,910 |
Accumulated deficit |
|
(710,381) |
|
|
(631,241) |
Accumulated other comprehensive loss |
|
(254) |
|
|
(209) |
Noncontrolling interest |
|
48,450 |
|
|
194,963 |
TOTAL EQUITY |
|
273,735 |
|
|
490,432 |
TOTAL LIABILITIES AND EQUITY |
$ |
26,548,670 |
|
$ |
26,825,989 |
|
Q2’23 |
|
Q1’23 |
|
Q2’22 |
|
YTD 2023 |
|
YTD 2022 |
|||||
|
(Unaudited) |
|||||||||||||
REVENUES |
|
|
|
|
|
|
|
|
|
|||||
Gain (loss) on sale and other income from loans held for sale, net |
$ |
(4,054) |
|
$ |
(12,426) |
|
$ |
(4,763) |
|
$ |
(16,480) |
|
$ |
5,448 |
Net fair value gains (losses) on mortgage loans and related obligations |
|
(93,133) |
|
|
176,394 |
|
|
2,165 |
|
|
83,261 |
|
|
5,135 |
Fee income |
|
13,824 |
|
|
6,352 |
|
|
6,840 |
|
|
20,176 |
|
|
62,013 |
Net interest expense: |
|
|
|
|
|
|
|
|
|
|||||
Interest income |
|
3,200 |
|
|
2,091 |
|
|
1,609 |
|
|
5,291 |
|
|
2,793 |
Interest expense |
|
(31,734) |
|
|
(31,556) |
|
|
(27,025) |
|
|
(63,290) |
|
|
(50,505) |
Net interest expense |
|
(28,534) |
|
|
(29,465) |
|
|
(25,416) |
|
|
(57,999) |
|
|
(47,712) |
TOTAL REVENUES |
|
(111,897) |
|
|
140,855 |
|
|
(21,174) |
|
|
28,958 |
|
|
24,884 |
|
|
|
|
|
|
|
|
|
|
|||||
EXPENSES |
|
|
|
|
|
|
|
|
|
|||||
Salaries, benefits, and related expenses |
|
51,098 |
|
|
40,814 |
|
|
58,804 |
|
|
91,912 |
|
|
117,903 |
Occupancy, equipment rentals, and other office related expenses |
|
2,554 |
|
|
1,909 |
|
|
1,700 |
|
|
4,463 |
|
|
3,889 |
General and administrative expenses |
|
56,353 |
|
|
41,054 |
|
|
52,315 |
|
|
97,407 |
|
|
102,237 |
TOTAL EXPENSES |
|
110,005 |
|
|
83,777 |
|
|
112,819 |
|
|
193,782 |
|
|
224,029 |
OTHER, NET |
|
(1,937) |
|
|
936 |
|
|
14,154 |
|
|
(1,001) |
|
|
17,138 |
NET INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
|
(223,839) |
|
|
58,014 |
|
|
(119,839) |
|
|
(165,825) |
|
|
(182,007) |
Provision (benefit) for income taxes |
|
(3,215) |
|
|
2,532 |
|
|
(2,201) |
|
|
(683) |
|
|
(9,923) |
NET INCOME (LOSS) FROM CONTINUING OPERATIONS |
|
(220,624) |
|
|
55,482 |
|
|
(117,638) |
|
|
(165,142) |
|
|
(172,084) |
NET LOSS FROM DISCONTINUED OPERATIONS |
|
(1,857) |
|
|
(40,890) |
|
|
(50,185) |
|
|
(42,747) |
|
|
(59,734) |
NET INCOME (LOSS) |
|
(222,481) |
|
|
14,592 |
|
|
(167,823) |
|
|
(207,889) |
|
|
(231,818) |
Noncontrolling interest |
|
(143,341) |
|
|
11,538 |
|
|
(127,143) |
|
|
(131,803) |
|
|
(182,645) |
NET INCOME (LOSS) ATTRIBUTABLE TO CONTROLLING INTEREST |
$ |
(79,140) |
|
$ |
3,054 |
|
$ |
(40,680) |
|
$ |
(76,086) |
|
$ |
(49,173) |
|
|
|
|
|
|
|
|
|
|
|||||
EARNINGS PER SHARE |
|
|
|
|
|
|
|
|
|
|||||
Basic weighted average shares outstanding |
|
87,409,861 |
|
|
64,016,845 |
|
|
62,379,041 |
|
|
75,777,975 |
|
|
61,580,900 |
Basic net income (loss) per share from continuing operations |
$ |
(0.91) |
|
$ |
0.29 |
|
$ |
(0.34) |
|
$ |
(0.80) |
|
$ |
(0.56) |
Basic net loss per share from discontinued operations |
$ |
(0.00) |
|
$ |
(0.24) |
|
$ |
(0.31) |
|
$ |
(0.20) |
|
$ |
(0.24) |
Diluted weighted average shares outstanding |
|
87,409,861 |
|
|
190,301,012 |
|
|
187,818,225 |
|
|
75,777,975 |
|
|
188,629,076 |
Diluted net income (loss) per share from continuing operations |
$ |
(0.91) |
|
$ |
0.22 |
|
$ |
(0.49) |
|
$ |
(0.80) |
|
$ |
(0.73) |
Diluted net loss per share from discontinued operations |
$ |
(0.00) |
|
$ |
(0.15) |
|
$ |
(0.21) |
|
$ |
(0.20) |
|
$ |
(0.27) |
Webcast and Conference Call
Management will host a webcast and conference call on Tuesday, August 8th at 5:00 pm Eastern Time to discuss the Company’s results for the second quarter ended June 30, 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:
a. 1-888-414-4458 (Domestic)
b. 1-646-960-0166 (International)
c. Conference ID: 5714344
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 August 22, 2023. 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, including reverse mortgages and home improvement loans as well as home-sharing services. In addition, FOA offers capital markets and portfolio management capabilities to optimize distribution 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 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 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 GAAP. Management believes these key financial measures provide an additional view of our performance over the long-term and provide useful information that we use in order to maintain and grow our business.
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 determined 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 relate to the variability of: (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, which are not necessarily indicative of the results that may be expected for any future period of for the full year.
A reconciliation of our forward-looking Adjusted Diluted 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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230808028067/en/
For Finance of America Media: pr@financeofamerica.com
For Finance of America Investor Relations: ir@financeofamerica.com
Source: Finance of America Companies Inc.