Finance of America Reports Second Quarter 2024 Results
– Net loss from continuing operations of
– Announced Exchange Offer Support Agreement and reverse stock split –
– Adjusted EBITDA for the quarter of
Second Quarter 2024 Highlights
-
Net loss from continuing operations for the second quarter
of $
5 million or
$0.20 basic loss per share.
-
For the quarter, the Company recognized an adjusted net loss(1) of
$1 million or$0.05 per share.
- The second quarter 2024marks the fourth consecutive quarter of improved operating performance on an adjusted net basis.
-
Adjusted EBITDA for the quarter of
$9 million represents the first positive quarter since 2022.
- Announced Exchange Offer Support Agreement and that holders of over 93% of our senior unsecured notes had indicated their intent to participate in the exchange offer. Currently over 99% of holders of our senior unsecured notes have indicated their intent to participate in the exchange offer.
-
Announced reverse stock split in
June 2024 and completed reverse stock split inJuly 2024 , bringing FOA back into compliance with NYSE continued listing standards.
(1) See the sections titled “Reconciliation to GAAP” and “Non-GAAP Financial Measures” for reconciliations to the most directly comparable GAAP measures and other important disclosures.
Second Quarter Financial Summary of Continuing Operations
($ amounts in millions, except per share data) |
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
|||||||||||||||
|
|
Q2'24 |
|
Q1'24 |
|
Q2'24 vs Q1'24 |
|
Q2'23 |
|
Q2'24 vs Q2'23 |
|
YTD 2024 |
|
YTD 2023 |
|
2024 vs 2023 |
|||||||||||||
Funded volume |
|
$ |
447 |
|
|
$ |
424 |
|
|
5 |
% |
|
$ |
447 |
|
|
— |
% |
|
$ |
871 |
|
|
$ |
804 |
|
|
8 |
% |
Total revenues |
|
|
79 |
|
|
|
75 |
|
|
5 |
% |
|
|
(112 |
) |
|
171 |
% |
|
|
154 |
|
|
|
29 |
|
|
431 |
% |
Total expenses and other, net |
|
|
83 |
|
|
|
90 |
|
|
(8 |
)% |
|
|
112 |
|
|
(26 |
)% |
|
|
173 |
|
|
|
195 |
|
|
(11 |
)% |
Pre-tax loss from continuing operations |
|
|
(4 |
) |
|
|
(16 |
) |
|
75 |
% |
|
|
(224 |
) |
|
98 |
% |
|
|
(20 |
) |
|
|
(166 |
) |
|
88 |
% |
Net loss from continuing operations |
|
|
(5 |
) |
|
|
(16 |
) |
|
69 |
% |
|
|
(221 |
) |
|
98 |
% |
|
|
(21 |
) |
|
|
(165 |
) |
|
87 |
% |
Adjusted net loss(1) |
|
|
(1 |
) |
|
|
(7 |
) |
|
86 |
% |
|
|
(26 |
) |
|
96 |
% |
|
|
(9 |
) |
|
|
(42 |
) |
|
79 |
% |
Adjusted EBITDA(1) |
|
|
9 |
|
|
|
(1 |
) |
|
1000 |
% |
|
|
(26 |
) |
|
135 |
% |
|
|
7 |
|
|
|
(38 |
) |
|
118 |
% |
Basic net loss per share |
|
$ |
(0.20 |
) |
|
$ |
(0.58 |
) |
|
66 |
% |
|
$ |
(9.11 |
) |
|
98 |
% |
|
$ |
(0.78 |
) |
|
$ |
(8.04 |
) |
|
90 |
% |
Diluted net loss per share(2) |
|
$ |
(0.29 |
) |
|
$ |
(0.58 |
) |
|
50 |
% |
|
$ |
(9.11 |
) |
|
97 |
% |
|
$ |
(0.88 |
) |
|
$ |
(8.04 |
) |
|
89 |
% |
Adjusted loss per share(1) |
|
$ |
(0.05 |
) |
|
$ |
(0.33 |
) |
|
85 |
% |
|
$ |
(1.16 |
) |
|
96 |
% |
|
$ |
(0.37 |
) |
|
$ |
(2.00 |
) |
|
82 |
% |
(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) |
|
|
|
|
|
Variance (%) |
|||
|
|
|
2024 |
|
|
2024 |
|
Q2'24 vs Q1'24 |
|
Cash and cash equivalents |
|
$ |
47 |
|
$ |
48 |
|
(2 |
)% |
Securitized loans held for investment (HMBS & nonrecourse) |
|
|
26,614 |
|
|
26,458 |
|
1 |
% |
Total assets |
|
|
27,974 |
|
|
27,684 |
|
1 |
% |
Total liabilities |
|
|
27,723 |
|
|
27,428 |
|
1 |
% |
Total equity |
|
|
251 |
|
|
256 |
|
(2 |
)% |
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) |
|
Q2'24 |
|
Q1'24 |
|
Q2'24 vs Q1'24 |
|
Q2'23 |
|
Q2'24 vs Q2'23 |
|
YTD 2024 |
|
YTD 2023 |
|
2024 vs 2023 |
|||||||||||||
Funded volume |
|
$ |
447 |
|
|
$ |
424 |
|
|
5 |
% |
|
$ |
447 |
|
|
— |
% |
|
$ |
871 |
|
|
$ |
804 |
|
|
8 |
% |
Total revenue |
|
|
47 |
|
|
|
46 |
|
|
2 |
% |
|
|
41 |
|
|
15 |
% |
|
|
93 |
|
|
|
67 |
|
|
39 |
% |
Pre-tax loss |
|
|
(2 |
) |
|
|
(4 |
) |
|
50 |
% |
|
|
(18 |
) |
|
89 |
% |
|
|
(6 |
) |
|
|
(27 |
) |
|
78 |
% |
Adjusted net income (loss)(1) |
|
|
6 |
|
|
|
5 |
|
|
20 |
% |
|
|
(5 |
) |
|
220 |
% |
|
|
11 |
|
|
|
(3 |
) |
|
467 |
% |
(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.
-
For the quarter, the segment recognized pre-tax loss of
$2 million and adjusted net income of$6 million as a result of increased volumes and reduced expenses.
- Compared to the second quarter 2023, total revenue increased by 15% primarily due to an increase in revenue margin, which led to a 220% improvement in adjusted net income.
-
Total expenses decreased significantly from the second quarter 2023 from
$59 million to$49 million as the business completed the integration of the retail platform acquired fromBloom Retirement Holdings Inc. (formerly known asAmerican Advisors Group ) and streamlined business operations.
Portfolio Management
The Portfolio Management segment primarily generates revenue and earnings in the form of net interest income and fair value changes on our portfolio assets, monetized through securitization, sale, or other financing of those assets.
|
|
|
|
Variance (%) |
|
|
|
Variance (%) |
|
|
|
|
|
Variance (%) |
||||||||||||
($ amounts in millions) |
|
Q2'24 |
|
Q1'24 |
|
Q2'24 vs Q1'24 |
|
Q2'23 |
|
Q2'24 vs Q2'23 |
|
YTD 2024 |
|
YTD 2023 |
|
2024 vs 2023 |
||||||||||
Assets under management |
|
$ |
27,655 |
|
$ |
27,357 |
|
1 |
% |
|
$ |
26,064 |
|
|
6 |
% |
|
$ |
27,655 |
|
$ |
26,064 |
|
|
6 |
% |
Assets excluding HMBS and nonrecourse obligations |
|
|
1,624 |
|
|
1,632 |
|
— |
% |
|
|
1,605 |
|
|
1 |
% |
|
|
1,624 |
|
|
1,605 |
|
|
1 |
% |
Total revenue |
|
|
41 |
|
|
37 |
|
11 |
% |
|
|
(146 |
) |
|
128 |
% |
|
|
79 |
|
|
(22 |
) |
|
459 |
% |
Pre-tax income (loss) |
|
|
22 |
|
|
14 |
|
57 |
% |
|
|
(168 |
) |
|
113 |
% |
|
|
36 |
|
|
(69 |
) |
|
152 |
% |
Adjusted net income(1) |
|
|
12 |
|
|
6 |
|
100 |
% |
|
|
1 |
|
|
1100 |
% |
|
|
17 |
|
|
6 |
|
|
183 |
% |
(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.
-
For the quarter, the segment recognized pre-tax income of
$22 million and adjusted net income of$12 million , an improvement against the prior quarter and second quarter 2023 primarily due to increased yield on the Company’s retained interests in securitized loans held for investment.
-
Net fair value adjustments during the second quarter totaled
$6 million as changes in market interest rates were more than offset by credit spread and home price appreciation adjustments.
Selected Financial Information
Condensed Consolidated Statements of Financial Condition
(in thousands, except share data)
(unaudited)
|
|
|
|
||||
ASSETS |
|
|
|
||||
Cash and cash equivalents |
$ |
46,509 |
|
|
$ |
48,229 |
|
Restricted cash |
|
200,104 |
|
|
|
195,349 |
|
Loans held for investment, subject to HMBS related obligations, at fair value |
|
18,196,092 |
|
|
|
18,050,772 |
|
Loans held for investment, subject to nonrecourse debt, at fair value |
|
8,418,195 |
|
|
|
8,407,602 |
|
Loans held for investment, at fair value |
|
677,726 |
|
|
|
535,910 |
|
Intangible assets, net |
|
234,936 |
|
|
|
244,233 |
|
Other assets, net |
|
196,134 |
|
|
|
194,183 |
|
Assets of discontinued operations |
|
4,658 |
|
|
|
7,290 |
|
TOTAL ASSETS |
$ |
27,974,354 |
|
|
$ |
27,683,568 |
|
|
|
|
|
||||
LIABILITIES AND EQUITY |
|
|
|
||||
HMBS related obligations, at fair value |
$ |
17,980,232 |
|
|
$ |
17,827,060 |
|
Nonrecourse debt, at fair value |
|
8,050,708 |
|
|
|
7,897,896 |
|
Other financing lines of credit |
|
1,073,844 |
|
|
|
1,071,191 |
|
Notes payable, net (includes amounts due to related parties of |
|
442,971 |
|
|
|
436,193 |
|
Payables and other liabilities |
|
157,273 |
|
|
|
174,858 |
|
Liabilities of discontinued operations |
|
18,029 |
|
|
|
20,647 |
|
TOTAL LIABILITIES |
|
27,723,057 |
|
|
|
27,427,845 |
|
|
|
|
|
||||
EQUITY |
|
|
|
||||
Class A Common Stock, |
|
1 |
|
|
|
1 |
|
Class B Common Stock, |
|
— |
|
|
|
— |
|
Additional paid-in capital |
|
951,535 |
|
|
|
950,597 |
|
Accumulated deficit |
|
(724,010 |
) |
|
|
(721,921 |
) |
Accumulated other comprehensive loss |
|
(296 |
) |
|
|
(266 |
) |
Noncontrolling interest |
|
24,067 |
|
|
|
27,312 |
|
TOTAL EQUITY |
|
251,297 |
|
|
|
255,723 |
|
TOTAL LIABILITIES AND EQUITY |
$ |
27,974,354 |
|
|
$ |
27,683,568 |
|
Selected Financial Information
Condensed Consolidated Statements of Financial Condition
(in thousands, except share data)
(unaudited)
|
Q2'24 |
|
Q1'24 |
|
Q2'23 |
|
YTD 2024 |
|
YTD 2023 |
||||||||||
PORTFOLIO INTEREST INCOME |
|
|
|
|
|
|
|
|
|
||||||||||
Interest income |
$ |
478,091 |
|
|
$ |
463,979 |
|
|
$ |
414,661 |
|
|
$ |
942,070 |
|
|
$ |
725,625 |
|
Interest expense |
|
(412,618 |
) |
|
|
(393,804 |
) |
|
|
(349,582 |
) |
|
|
(806,422 |
) |
|
|
(597,969 |
) |
NET PORTFOLIO INTEREST INCOME |
|
65,473 |
|
|
|
70,175 |
|
|
|
65,079 |
|
|
|
135,648 |
|
|
|
127,656 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
|
||||||||||
Net origination gains |
|
40,260 |
|
|
|
39,657 |
|
|
|
32,926 |
|
|
|
79,917 |
|
|
|
57,401 |
|
Gain on securitization of HECM tails, net |
|
11,031 |
|
|
|
10,726 |
|
|
|
5,604 |
|
|
|
21,757 |
|
|
|
9,995 |
|
Fair value changes from model amortization |
|
(47,813 |
) |
|
|
(57,608 |
) |
|
|
(55,238 |
) |
|
|
(105,421 |
) |
|
|
(105,504 |
) |
Fair value changes from market inputs or model assumptions |
|
11,260 |
|
|
|
13,562 |
|
|
|
(162,410 |
) |
|
|
24,822 |
|
|
|
(49,719 |
) |
Net fair value changes on loans and related obligations |
|
14,738 |
|
|
|
6,337 |
|
|
|
(179,118 |
) |
|
|
21,075 |
|
|
|
(87,827 |
) |
Fee income |
|
7,880 |
|
|
|
6,236 |
|
|
|
13,824 |
|
|
|
14,116 |
|
|
|
20,176 |
|
Gain (loss) on sale and other income from loans held for sale, net |
|
216 |
|
|
|
86 |
|
|
|
(4,054 |
) |
|
|
302 |
|
|
|
(16,480 |
) |
Non-funding interest expense, net |
|
(9,268 |
) |
|
|
(8,152 |
) |
|
|
(7,628 |
) |
|
|
(17,420 |
) |
|
|
(14,567 |
) |
NET OTHER INCOME (EXPENSE) |
|
13,566 |
|
|
|
4,507 |
|
|
|
(176,976 |
) |
|
|
18,073 |
|
|
|
(98,698 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||||
TOTAL REVENUES |
|
79,039 |
|
|
|
74,682 |
|
|
|
(111,897 |
) |
|
|
153,721 |
|
|
|
28,958 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
EXPENSES |
|
|
|
|
|
|
|
|
|
||||||||||
Salaries, benefits, and related expenses |
|
35,053 |
|
|
|
39,023 |
|
|
|
51,098 |
|
|
|
74,076 |
|
|
|
91,912 |
|
Loan production and portfolio related expenses |
|
5,662 |
|
|
|
8,613 |
|
|
|
6,934 |
|
|
|
14,275 |
|
|
|
14,926 |
|
Loan servicing expenses |
|
7,632 |
|
|
|
8,218 |
|
|
|
8,638 |
|
|
|
15,850 |
|
|
|
15,274 |
|
Marketing and advertising expenses |
|
10,706 |
|
|
|
8,512 |
|
|
|
8,719 |
|
|
|
19,218 |
|
|
|
10,675 |
|
Depreciation and amortization |
|
9,753 |
|
|
|
9,678 |
|
|
|
12,372 |
|
|
|
19,431 |
|
|
|
22,477 |
|
General and administrative expenses |
|
16,241 |
|
|
|
17,271 |
|
|
|
22,244 |
|
|
|
33,512 |
|
|
|
38,518 |
|
TOTAL EXPENSES |
|
85,047 |
|
|
|
91,315 |
|
|
|
110,005 |
|
|
|
176,362 |
|
|
|
193,782 |
|
IMPAIRMENT OF OTHER ASSETS |
|
— |
|
|
|
(600 |
) |
|
|
— |
|
|
|
(600 |
) |
|
|
— |
|
OTHER, NET |
|
2,240 |
|
|
|
1,453 |
|
|
|
(1,937 |
) |
|
|
3,693 |
|
|
|
(1,001 |
) |
NET LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
|
(3,768 |
) |
|
|
(15,780 |
) |
|
|
(223,839 |
) |
|
|
(19,548 |
) |
|
|
(165,825 |
) |
Provision (benefit) for income taxes from continuing operations |
|
1,153 |
|
|
|
— |
|
|
|
(3,215 |
) |
|
|
1,153 |
|
|
|
(683 |
) |
NET LOSS FROM CONTINUING OPERATIONS |
|
(4,921 |
) |
|
|
(15,780 |
) |
|
|
(220,624 |
) |
|
|
(20,701 |
) |
|
|
(165,142 |
) |
NET LOSS FROM DISCONTINUED OPERATIONS |
|
(203 |
) |
|
|
(4,524 |
) |
|
|
(1,857 |
) |
|
|
(4,727 |
) |
|
|
(42,747 |
) |
NET LOSS |
|
(5,124 |
) |
|
|
(20,304 |
) |
|
|
(222,481 |
) |
|
|
(25,428 |
) |
|
|
(207,889 |
) |
Noncontrolling interest |
|
(3,035 |
) |
|
|
(12,766 |
) |
|
|
(143,341 |
) |
|
|
(15,801 |
) |
|
|
(131,803 |
) |
NET LOSS ATTRIBUTABLE TO CONTROLLING INTEREST |
$ |
(2,089 |
) |
|
$ |
(7,538 |
) |
|
$ |
(79,140 |
) |
|
$ |
(9,627 |
) |
|
$ |
(76,086 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||||
EARNINGS PER SHARE |
|
|
|
|
|
|
|
|
|
||||||||||
Basic weighted average shares outstanding |
|
9,898,182 |
|
|
|
9,648,558 |
|
|
|
8,740,986 |
|
|
|
9,773,370 |
|
|
|
7,577,797 |
|
Basic net loss per share from continuing operations |
$ |
(0.20 |
) |
|
$ |
(0.58 |
) |
|
$ |
(9.11 |
) |
|
$ |
(0.78 |
) |
|
$ |
(8.04 |
) |
Basic net loss per share |
$ |
(0.21 |
) |
|
$ |
(0.78 |
) |
|
$ |
(9.05 |
) |
|
$ |
(0.99 |
) |
|
$ |
(10.04 |
) |
Diluted weighted average shares outstanding |
|
23,084,189 |
|
|
|
9,648,558 |
|
|
|
8,740,986 |
|
|
|
23,013,742 |
|
|
|
7,577,797 |
|
Diluted net loss per share from continuing operations |
$ |
(0.29 |
) |
|
$ |
(0.58 |
) |
|
$ |
(9.11 |
) |
|
$ |
(0.88 |
) |
|
$ |
(8.04 |
) |
Diluted net loss per share |
$ |
(0.30 |
) |
|
$ |
(0.78 |
) |
|
$ |
(9.05 |
) |
|
$ |
(1.06 |
) |
|
$ |
(10.04 |
) |
(unaudited)
Reconciliation to GAAP
($ amounts in millions)(1) |
Q2'24 |
|
Q1'24 |
|
Q2'23 |
|
YTD 2024 |
|
YTD 2023 |
||||||||||
Reconciliation of net loss from continuing operations to adjusted net loss and adjusted EBITDA |
|
|
|
|
|
|
|
|
|
||||||||||
Net loss from continuing operations |
$ |
(5 |
) |
|
$ |
(16 |
) |
|
$ |
(221 |
) |
|
$ |
(21 |
) |
|
$ |
(165 |
) |
Add back: (Provision) benefit for income taxes |
|
(1 |
) |
|
|
— |
|
|
|
3 |
|
|
|
(1 |
) |
|
|
1 |
|
Net loss from continuing operations before taxes |
|
(4 |
) |
|
|
(16 |
) |
|
|
(224 |
) |
|
|
(20 |
) |
|
|
(166 |
) |
Adjustments for: |
|
|
|
|
|
|
|
|
|
||||||||||
Changes in fair value(2) |
|
(8 |
) |
|
|
(9 |
) |
|
|
171 |
|
|
|
(18 |
) |
|
|
77 |
|
Amortization or impairment of intangibles and impairment of other assets(3) |
|
9 |
|
|
|
10 |
|
|
|
9 |
|
|
|
20 |
|
|
|
19 |
|
Equity-based compensation(4) |
|
— |
|
|
|
3 |
|
|
|
3 |
|
|
|
3 |
|
|
|
7 |
|
Certain non-recurring costs(5) |
|
2 |
|
|
|
2 |
|
|
|
4 |
|
|
|
3 |
|
|
|
6 |
|
Adjusted net loss before taxes |
|
(1 |
) |
|
|
(10 |
) |
|
|
(36 |
) |
|
|
(12 |
) |
|
|
(57 |
) |
Benefit for income taxes(6) |
|
— |
|
|
|
2 |
|
|
|
10 |
|
|
|
3 |
|
|
|
15 |
|
Adjusted net loss |
|
(1 |
) |
|
|
(7 |
) |
|
|
(26 |
) |
|
|
(9 |
) |
|
|
(42 |
) |
Benefit for income taxes(6) |
|
— |
|
|
|
(2 |
) |
|
|
(10 |
) |
|
|
(3 |
) |
|
|
(15 |
) |
Depreciation |
|
— |
|
|
|
— |
|
|
|
3 |
|
|
|
1 |
|
|
|
4 |
|
Interest expense on non-funding debt |
|
10 |
|
|
|
8 |
|
|
|
8 |
|
|
|
18 |
|
|
|
15 |
|
Adjusted EBITDA |
$ |
9 |
|
|
$ |
(1 |
) |
|
$ |
(26 |
) |
|
$ |
7 |
|
|
$ |
(38 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||||
($ amounts in millions except shares and $ per share) |
Q2'24 |
|
Q1'24 |
|
Q2'23 |
|
YTD 2024 |
|
YTD 2023 |
||||||||||
GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|
|
|
||||||||||
Net loss from continuing operations attributable to controlling interest |
$ |
(2 |
) |
|
$ |
(6 |
) |
|
$ |
(80 |
) |
|
$ |
(8 |
) |
|
$ |
(61 |
) |
Weighted average outstanding share count |
|
9,898,182 |
|
|
|
9,648,558 |
|
|
|
8,740,986 |
|
|
|
9,773,370 |
|
|
|
7,577,797 |
|
Basic net loss per share from continuing operations |
$ |
(0.20 |
) |
|
$ |
(0.58 |
) |
|
$ |
(9.11 |
) |
|
$ |
(0.78 |
) |
|
$ |
(8.04 |
) |
If-converted method net loss from continuing operations |
$ |
(7 |
) |
|
$ |
(6 |
) |
|
$ |
(80 |
) |
|
$ |
(20 |
) |
|
$ |
(61 |
) |
Weighted average diluted share count |
|
23,084,189 |
|
|
|
9,648,558 |
|
|
|
8,740,986 |
|
|
|
23,013,742 |
|
|
|
7,577,797 |
|
Diluted net loss per share from continuing operations(7) |
$ |
(0.29 |
) |
|
$ |
(0.58 |
) |
|
$ |
(9.11 |
) |
|
$ |
(0.88 |
) |
|
$ |
(8.04 |
) |
|
|
|
|
|
|
|
|
|
|
||||||||||
NON-GAAP PER SHARE MEASURES |
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted net loss |
$ |
(1 |
) |
|
$ |
(7 |
) |
|
$ |
(26 |
) |
|
$ |
(9 |
) |
|
$ |
(42 |
) |
Weighted average share count |
|
23,084,189 |
|
|
|
22,943,295 |
|
|
|
22,899,799 |
|
|
|
23,013,742 |
|
|
|
20,870,016 |
|
Adjusted loss per share |
$ |
(0.05 |
) |
|
$ |
(0.33 |
) |
|
$ |
(1.16 |
) |
|
$ |
(0.37 |
) |
|
$ |
(2.00 |
) |
(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 due to market inputs or model assumptions, deferred purchase price obligations, contingent earnout, warrant liability, and minority investments.
(3) Includes amortization or 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 100% by existing non-controlling shareholders or outstanding Class A Common Stock. As of
(5) Reflects 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) Pro-forma income tax benefit adjustments to apply an effective combined corporate tax rate to adjusted net loss before taxes.
(7) Calculated on an if-converted basis except when anti-dilutive.
Adjusted Net Income by Segment (Continuing Operations)
|
|
|||||||||||
For the three months ended |
|
|
||||||||||
($ amounts in millions except shares and $ per share)(1) |
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
||||||||
Pre-tax income (loss) |
$ |
(2 |
) |
$ |
22 |
|
$ |
(24 |
) |
$ |
(4 |
) |
Adjustments for: |
|
|
|
|
||||||||
Changes in fair value(2) |
|
— |
|
|
(6 |
) |
|
(2 |
) |
|
(8 |
) |
Amortization or impairment of intangibles and impairment of other assets(3) |
|
9 |
|
|
— |
|
|
— |
|
|
9 |
|
Certain non-recurring costs(5) |
|
1 |
|
|
— |
|
|
1 |
|
|
2 |
|
Adjusted net income (loss) before taxes |
$ |
8 |
|
$ |
16 |
|
$ |
(25 |
) |
$ |
(1 |
) |
Provision (benefit) for income taxes(6) |
|
2 |
|
|
4 |
|
|
(7 |
) |
|
— |
|
Adjusted net income (loss) |
$ |
6 |
|
$ |
12 |
|
$ |
(18 |
) |
$ |
(1 |
) |
Weighted average share count |
|
23,084,189 |
|
|
23,084,189 |
|
|
23,084,189 |
|
|
23,084,189 |
|
Adjusted earnings (loss) per share |
$ |
0.26 |
|
$ |
0.52 |
|
$ |
(0.78 |
) |
$ |
(0.05 |
) |
|
|
|||||||||||
For the three months ended |
|
|
||||||||||
($ amounts in millions except shares and $ per share)(1) |
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
||||||||
Pre-tax income (loss) |
$ |
(4 |
) |
$ |
14 |
|
$ |
(26 |
) |
$ |
(16 |
) |
Adjustments for: |
|
|
|
|
||||||||
Changes in fair value(2) |
|
— |
|
|
(7 |
) |
|
(2 |
) |
|
(9 |
) |
Amortization or impairment of intangibles and impairment of other assets(3) |
|
9 |
|
|
— |
|
|
1 |
|
|
10 |
|
Equity-based compensation(4) |
|
1 |
|
|
— |
|
|
2 |
|
|
3 |
|
Certain non-recurring costs(5) |
|
— |
|
|
— |
|
|
2 |
|
|
2 |
|
Adjusted net income (loss) before taxes |
$ |
6 |
|
$ |
8 |
|
$ |
(24 |
) |
$ |
(10 |
) |
Provision (benefit) for income taxes(6) |
|
2 |
|
|
2 |
|
|
(6 |
) |
|
(2 |
) |
Adjusted net income (loss) |
$ |
5 |
|
$ |
6 |
|
$ |
(18 |
) |
$ |
(7 |
) |
Weighted average share count |
|
22,943,295 |
|
|
22,943,295 |
|
|
22,943,295 |
|
|
22,943,295 |
|
Adjusted earnings (loss) per share |
$ |
0.22 |
|
$ |
0.26 |
|
$ |
(0.80 |
) |
$ |
(0.33 |
) |
|
|
|||||||||||
For the three months ended |
|
|
||||||||||
($ 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 or impairment of intangibles and impairment of other assets(3) |
|
9 |
|
|
— |
|
|
— |
|
|
9 |
|
Equity-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 share count |
|
22,899,799 |
|
|
22,899,799 |
|
|
22,899,799 |
|
|
22,899,799 |
|
Adjusted earnings (loss) per share |
$ |
(0.22 |
) |
$ |
0.05 |
|
$ |
(1.02 |
) |
$ |
(1.16 |
) |
|
|
|||||||||||
For the six months ended |
|
|
||||||||||
($ amounts in millions except shares and $ per share)(1) |
Retirement Solutions |
Portfolio Management |
Corporate & Other |
FOA |
||||||||
Pre-tax income (loss) |
$ |
(6 |
) |
$ |
36 |
|
$ |
(50 |
) |
$ |
(20 |
) |
Adjustments for: |
|
|
|
|
||||||||
Changes in fair value(2) |
|
— |
|
|
(14 |
) |
|
(4 |
) |
|
(18 |
) |
Amortization or impairment of intangibles and impairment of other assets(3) |
|
19 |
|
|
— |
|
|
1 |
|
|
20 |
|
Equity-based compensation(4) |
|
1 |
|
|
— |
|
|
2 |
|
|
3 |
|
Certain non-recurring costs(5) |
|
1 |
|
|
— |
|
|
2 |
|
|
3 |
|
Adjusted net income (loss) before taxes |
$ |
15 |
|
$ |
23 |
|
$ |
(50 |
) |
$ |
(12 |
) |
Provision (benefit) for income taxes(6) |
|
4 |
|
|
6 |
|
|
(13 |
) |
|
(3 |
) |
Adjusted net income (loss) |
$ |
11 |
|
$ |
17 |
|
$ |
(37 |
) |
$ |
(9 |
) |
Weighted average share count |
|
23,013,742 |
|
|
23,013,742 |
|
|
23,013,742 |
|
|
23,013,742 |
|
Adjusted earnings (loss) per share |
$ |
0.48 |
|
$ |
0.74 |
|
$ |
(1.61 |
) |
$ |
(0.37 |
) |
|
|
|||||||||||
For the six months ended |
|
|
||||||||||
($ 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 or impairment of intangibles and impairment of other assets(3) |
|
19 |
|
|
— |
|
|
— |
|
|
19 |
|
Equity-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 share count |
|
20,870,016 |
|
|
20,870,016 |
|
|
20,870,016 |
|
|
20,870,016 |
|
Adjusted earnings (loss) per share |
$ |
(0.15 |
) |
$ |
0.29 |
|
$ |
(2.15 |
) |
$ |
(2.00 |
) |
(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 due to market inputs or model assumptions, deferred purchase price obligations, contingent earnout, warrant liability, and minority investments.
(3) Includes amortization or impairment of intangibles and impairment of certain other 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 100% by existing non-controlling shareholders or outstanding Class A Common Stock. As of
(5) Reflects 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)
Pro-forma income tax provision (benefit) adjustments to apply an effective combined corporate tax rate to adjusted net income (loss) before taxes.
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://ir.financeofamericacompanies.com/. 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
About
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
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 consolidated net income (loss) from continuing operations adjusted for:
- Changes in fair value of loans and securities held for investment and related obligations due to market inputs or model assumptions, deferred purchase price obligations (including earnouts and Tax Receivable Agreements (“TRA”) obligation), contingent earnout, warrant liability, and minority investments.
- Amortization or impairment of intangibles and impairment of certain other long-lived assets.
-
Equity-based compensation for Replacement Restricted Stock Units and Earnout Right Restricted Stock Units, which are funded 100% by existing non-controlling shareholders or outstanding Class A Common Stock. As of
April 1, 2024 , there is no further compensation cost associated with the Replacement Restricted Stock Units and Earnout Right Restricted Stock Units. - 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.
- Pro-forma income tax provision (benefit) adjustments to apply an effective combined corporate tax rate to adjusted net income (loss) before taxes.
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
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 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
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For Finance of America Media: pr@financeofamerica.com
For Finance of America Investor Relations: ir@financeofamerica.com
Source: